III--CONCLUSION

In accordance with our opinion, the contract price in this case is not to be reduced, since overstatements do not exceed understatements, and are offset to the extent of the understatements. Moreover, proceedings on the amount to be added to the target cost for the Transco quotation are suspended, pending negotiations between the Contracting Officer and the contractor.

For the foregoing reasons, plaintiff's motion for summary judgment on the "Duplication" issue is granted, thereby reversing the Board, and plaintiff's motion for summary judgment on the "Luneberg lens" issue is denied, thereby affirming the Board, Defendant's cross-motion for summary judgment is therefore denied as to the "Duplication" issue, and granted as to the "Luneberg lens" issue. Judgment is therefore entered for plaintiff on the "Duplication" issue, with proceedings suspended pursuant to Rule 167 for a period of 90 days. The petition is dismissed as to the "Luneberg lens" issue.

*

HONEYWELL, INC.

ASBCA No. 12353 (1968)

ON MOTION TO DISMISS

By letter dated 9 May 1966 the contracting officer wrote to appellant concerning certain findings by the General Accounting Office on the subject of alleged overpricing on this contract. The letter requested a refund in the amount of the alleged overpricing.

The parties did not agree and on 1 November 1966 the Assistant Secretary of the Navy (Installations and Logistics) advised appellant that it had been decided to transmit the case to the Department of Justice for appropriate action. The Department of Justice made a demand on the contractor for $155,596 by letter of Feb., 1967. 14 February 1967 appellant requested a contracting officer's decision pursuant to the Disputes clause of the contract. contracting officer replied on 13 March 1967 as follows:

The

"'*** As you and your counsel know, this matter has been
referred to the Department of Justice, which has made a
demand upon your company under the False Claims Act.

On

"The demand by the Navy which you rejected has now
been superseded and preempted by the demand made by the
Department of Justice. It is considered that the ques-
tion of your liability under the False Claims Act is not
justiciable under the Disputes provision of your con-
tract with the Navy. If it should become necessary to
litigate the matter, the Federal courts would present
the appropriate forum.

"Hence, it is not considered that there is any basis for issuing a Contracting Officer's decision."

Appellant filed a notice of appeal on 17 March 1967 from the contracting officer's refusal to issue a decision. The complaint followed on 28 April and on 23 May the Government moved for dismissal. The file contains a copy of a letter of 3 May 1967 to the Navy from the Assistant Attorney General, Civil Division, pertinent portions of which follow:

"As you know, we recently forwarded a complaint
for filing to the United States Attorney for the Middle
District of Florida. We have been informally advised
that the complaint was filed on 1 May 1967. The
damages alleged in the complaint were $155,596. This
figure is subject to doubling plus forfeitures under
the False Claims Act, 31 U.S.C. 231.

"Although Honeywell's complaint in appeal is ambiguous regarding specific issues of fact, it would appear that the primary issue raised is whether the Government suffered damages under the contract. This issue, of course, is closely intertwined with Honeywell's potential liability under the False Claims Act. And the appropriate forum for a suit under the False Claims Act is a Federal Court (31 U.S.C. 232), not an administrative board. Accordingly, we recommend that a motion to dismiss Honeywell's appeal be filed at this time.

"Incidentally, it should be noted that the reference to $278,500 in Honeywell's complaint is outdated. By both our demand letter of 1 February 1967, and subsequent negotiations, this Department demanded $155,596, as stated in our complaint."

The appellant asked the Board not to rule on the Government's motion to dismiss the appeal pending a ruling by the District Court on a motion by appellant to dismiss the suit. Appellant had sought dismissal of the suit on the ground that its subject matter "'*** is by contractual agreement within the original jurisdiction of the Armed Services Board of Contract Appeals, subject to judicial review as provided by statute, 41 U.S.C. 321-22" and that an appeal to the Board had duly been taken. The court denied appellant's motion by order dated 29 January 1968. We must now rule on the Government's motion to dismiss the appeal.

The clause entitled "Price Reduction for Defective Pricing Data" (ASPR 7-104.29) was not physically incorporated in the contract. Appellant contends, nevertheless, that it is a part of the contract on the ground that the contract did not become effective until after the effective date of the contract and the force and applicability of the Christian case,1 issues

that we do not decide.

It is clear from the record that the contracting officer did not purport to issue a decision pursuant to the Disputes clause. Rather, decisions were made by the Assistant Secretary of the Navy to transmit the case to the Department of Justice for appropriate action and by the Department of Justice to demand damages and then to sue under the False Claims Act. A claim under that statute must be based on allegations of the presentation of false, fictitious or fraudulent claims or other acts specified in the statute. The relief to be sought is the forfeiture of:

"'* * * $2000,00, and, in addition, double the amount of damages which the United States may have sustained by reason of the doing or committing such act, together with the costs of suit; and such forfeiture and damages shall be sued for in the same suit. R.S. 3490, 5438." 31 U.S.C. 231 (Emphasis supplied.)

Section 231 of Title 31 spells out the liability of persons making false claims. Section 232 provides that the United States District Courts shall "'* * * have full power and jurisdiction to hear, try, and determine such suit." This Board does not have such jurisdiction. It is incumbent upon the Department of Justice to decide on the pursuit of such claims and for the District Court, not this Board, to adjudicate them.

The price reduction clause provides for a determination by the contracting officer in pursuit of a contractual right to reduce the price and gives the contractor an administrative right of appeal. Such a claim "arises under the contract." The statute, on the other hand, provides for suit for forfeiture and double damages. Such a claim arises under the statute. The disputes procedure, contrary to appellant's argument, is plainly not the exclusive remedy in the instance of defective cost or pricing data. The Government's choices whether and when to pursue remedies provided by contract are to be made by officials charged with administering the contract and by the Justice Department. While there are occasions when the Board will not relinquish its jurisdiction. This is not such a case. Apart from the clear distinction between the contractual and statutory remedies, the District Court presumably will preside over the trial of some of the same issues that would be heard by the Board and may render Board decisions on them unnecessary. On that ground alone we can and do decline to exercise jurisdiction.

The appeal is dismissed, subject to reinstatement if appellant believes that disputed issues survive the District Court proceedings.

1G.L. Christian and Associates v. United States, 312 F. 2d 418 (1963), aff. on rehearing, 320 F. 2d. 345 (1963), cert. denied 382 U.S. 821 (1965).

NORRIS INDUSTRIES, INC.

ASBCA No. 15,442 (1974)

DECISION

1. Threshold Questions

Appellant has presented several general arguments each of which is said to undercut all or a major portion of the claims asserted by the Government. Two of these arguments raise threshold questions which we now discuss as applicable to resolution of the entire appeal.

The clause entitled Price Reduction for Defective Cost or Pricing Data, quoted above, contractually implements the provisions of the Truth in Negotiations Act, P.L. 87-653, 76 Stat. 528 (1962), 10 U.S. C. Sec. 2306 (f). The statute provides that contracts subject there to should contain a provision for adjustment of the contract price:

. to exclude any significant sums by which it may be determined by the head of the agency that such price was increased because the contractor or any subcontractor required to furnish such a certificate, which, as of a date agreed upon between the parties (which date shall be as close to the date of agreement on the negotiated price as is practicable), was inaccurate, incomplete, or noncurrent. ." (10 U.S.C. 2306 (f) (4))

The statute further provides that the above requirement as to a contractual provision for price adjustment need not be applied where the contract is awarded under certain circumstances, one of which is

"where the price negotiated is based on adequate price
competition."

(10 U.S.C. 2306(f) (4))

The phrase "adequate price competition" is defined in ASPR Section 3-807.1(b)(1). Paragraph a provides in part that

"Price competition exists if offers are solicited and (i)
at least two responsible offerors (ii) who can satisfy the
purchaser's (e.g., the Government's) requirements (iii)
independently contend for a contract to be awarded to the
responsive and responsible offeror submitting the lowest
evaluated price (iv) by submitting priced offers responsive
to the expressed requirements of the solicitation.'

Paragraph c further provides that:

"A price is 'based on' adequate price competition if
it results directly from such competition or, if price
analysis (not cost analysis) shows clearly that the price
is reasonable in comparison with current or recent prices
for the same or substantially the same items procured in
comparable quantities under contracts awarded as a result
of adequate price competition (e.g., (ii) an item is
normally procured competitively but in a particular
situation only one offer is solicited or received, and the
price clearly is reasonable in comparison with recent
purchases of comparable quantities for which there was
adequate price competition)."

ASPR Section 3-807.3(a), which sets forth the circumstances under which the contractor must be required to certify the accuracy, completeness and currency of its submitted cost or pricing data, provides an exemption where "the price negotiated is based on adequate price competition."

Appellant contends that the Government is barred from obtaining price reductions under the two contracts involved in this dispute in the ground that the contract prices, including the price for Mod 10 to contract 9763A, were based upon adequate price competition. In so contending appellant has set forth in its brief what it calls a price analysis indicating that the negotiated prices were reasonable in comparison with recent prices obtained by the Government through competition. Appellant says in effect that the prices for the three procurements involved in this appeal were "based on" adequate price competition within the meaning of ASPR Section 3-807.1(c).

In our opinion the ASPR text relied upon by appellant provides a narrow exemption, applicable where an item is normally procured competitively in similar quantities, but due to special circumstances, e.g. urgency, a particular procurement is itself noncompetitive, and the contractor's price is reasonably close to recently-obtained competitive prices. By the time contract 9763A was negotiated competition was no longer the normal means for procuring bomb bodies since the Department of Defense had embarked upon a policy of allocating its requirements among individual suppliers and negotiating with each of them subject to obtaining reasonable prices. Appellant does call to our attention its four formally-advertised contracts, and the two competitive procurements awarded to AMF and IMCO on 20 July 1965. The first of appellant's advertised contracts, calling for 100,000 units, was awarded over a year prior to the contract 9763A solicitation. Of the other contracts referred to, only one, the AFM contract calling for 140,750 units, involved a quantity comparable to the quantities respectively procured under contracts 9763A & 10350A. In comparison with contract 9763A the AMF contract price was about $15.00 per unit lower. Appellant explains that this