CHAPTER TEN REMEDIES-CONTRACTOR Section 1. Jurisdiction of the ASBCA A. Completed Contracts BURROUGHS CORPORATION ASBCA No. 10065 (1965) OPINION BY COLONEL BOOTH ON MOTION TO DISMISS. On the basis of a post-contract audit, the Comptroller General has asserted that by means of withholding information during negotiation of these contracts the appellant, Burroughs Corporation, overcharged the Government by $556,150. Demand for refund of that amount was made on Burroughs by the contracting officer, and this appeal ensued. The Government filed a Motion to Dismiss, which Burroughs opposes. A hearing has been held at which arguments relative to the motion were presented by both parties. The Government concedes that for the purpose of passing on the motion, the facts stated in the complaint must be regarded as true. It appears that the contracts were awarded by the United States Army Signal Procurement Office, Fort George G. Meade, Maryland. These were negotiated fixed price contracts for the production of spare electronic parts. * The total amount of the three contracts was *** $1,433,788. * * These three contracts were the subject of a report by the Comptroller General of the United States, based on an examination of Burroughs' books and records. The Comptroller General asserted that by failing to disclose certain cost experience data during negotiation of these contracts, Burroughs had contrived to overcharge the Government by $556,150. A draft of the Comptroller General's proposed report was furnished to the Department of the Army, and the matter was discussed at a meeting between Burroughs officials and the contracting officer on 8 February 1963. By letter dated 18 February 1963, the contracting officer reiterated that the Army "position is to seek reimbursement to the Government of the total claimed overpricing." Subsequent negotiations did not produce a settlement, and on 8 May 1964 the contracting officer wrote Burroughs demanding payment of $556,150. He stated that any amount not paid in 30 days would draw interest at 6%, and threatened offset against current bills. By letter dated 25 May 1964 Burroughs appealed to the Secretary of the Army. The Government has moved to dismiss this appeal on the grounds that the Board has no jurisdiction: A. Over claims based on misrepresentation; B. Over claims outside the contract; C. Over breaches of contract or torts; D. To review a decision of the Comptroller General; and E. Over administrative withholding of funds. Although not listed as a ground for the action, Government counsel conclude it with a statement that: "the Secretary of the Army has already administratively concurred in the recommendation of the Comptroller General thus preempting any action by the Board."' The authority of this Board stems primarily from the Disputes clause found in Department of Defense contracts. Like other such contracts, the three here in question contain the standard Disputes clause. This clause provides for decision by "the Secretary or his duly authorized representative" of "any dispute concerning a question of fact arising under this contract. This Board is the designated representative of the Secretary of the Army for the stated purpose. The Government implication that the Secretary has acted in this case must, thus, be examined critically, for if his authority with respect to this appeal has been exercised, we would not be free to review it or exercise it again. Counsel's assertion of secretarial action appears to be an allusion to a letter dated 28 September 1962, which was addressed to the Associate Director of the General Accounting Office's Defense Accounting and Auditing Division by the Deputy Assistant Secretary of the Army (I & L) (Logistics). The letter, which comments on a draft of the Comptroller General's proposed report, does state that "The Department of the Army agrees with the findings and conclusions as stated in the report." Even assuming this language states the personal opinion of the Secretary, we do not read it as being intended to withdraw from this Board any jurisdiction or authority it may have with respect to this case. At most it is believed to reflect a willingness to pursue certain corrective measures recommended by the Comptroller General. Such corrective measures have been pursued, and in fact included the demand for refund which generated this appeal. Actually, the contracting officer's demand for refund and the failure to agree on an amount constitute the dispute which is being appealed. Thus, the dispute arose after the Comptroller General's audit report and the Assistant Secretary's letter, so that the Secretary could not have had this dispute under consideration. Among the grounds formally asserted by the Government in support of its Motion to Dismiss, it is stated (E) that this Board has no authority over the administrative withholding of funds. Although set-off was threatened by the contracting officer, it was agreed at the hearing that no set-off or withholding has actually taken place. This is not an appeal from an actual set-off. In this situation no useful purpose would be served by exploration of this point. It was also asserted (D) that we have no authority to review a decision of the Comptroller General. In areas over which that official has been given exclusive, final, or superior authority, the assertion has merit. This Board has, for example, refused to review decisions dealing with matters which predate the award and govern or condition the very existence of the contract itself. Invalidation of a contract has been held to defeat jurisdiction by nullifying the Disputes clause along with the contract's other provisions. The Board has no jurisdiction in the absence of a valid contract with an operative Disputes clause. As to other areas, where the Comptroller General's authority is less precisely defined or not patently superior, this Board has not hesitated to act notwithstanding a position already taken by the General Accounting Office. In fact, this board recently rejected the two-pronged argument that an opinion of the Comptroller General has established the underlying question to be one of law beyond our cognizance, and that it had pre-empted the possibility of final resolution of the matter within the Department of the Army. The soundness of the Board's position rejecting such arguments, particularly as applied to cases like this, was underscored recently by Comptroller General Joseph Campbell in testimony before a Congressional committee. The Comptroller General also recognizes that available administrative remedies must be pursued in situations to which they are appropriate before his office can take binding action. Moreover, as already observed, this dispute arose after the Comptroller General published his report. Additionally, as already indicated, the Government asserts that this Board has no jurisdiction over: A. Claims based on misrepresentation; B. Claims outside the contract; or, C. Breaches of contract or torts. Burroughs answers that: 1. It has a contract right to a hearing; 2. The Board can grant the relief sought; and 3. The Board has consistently assumed jurisdiction to review a contracting officer's assessment of damages against a contractor. Reduced to its simplest terms, we have a contracting officer's demand that a contractor return more than 38% of the total amount of compensation paid under the contract, and an appeal from that demand. Burroughs contends that the Payments clause of the contract at least implies that the contractor is entitled to keep money paid pursuant to its provisons. It is further contended that the contracting officer's demand for return of the money and Burrough's refusal of that demand together constitute a "dispute concerning a question of fact arising under this contract" within the meaning of the contract's Disputes clause. Counsel have cited no case precisely like this one, and our research has revealed none. However, we believe this motion may be disposed of without exhaustive discussion of the various cases which counsel have called to our attention. By an interesting coincidence of timing, one day after the last of the final payments under these contracts, the President signed Public Law 87-653. That statute provides, inter alia, that in negotiated procurements exceeding $100,000, the contractor must, except in certain enumerated circumstances, submit cost or pricing data and certify that it is accurate, complete, and current. Implementation of that statute was accomplished by regulations and by promulgation of mandatory clauses for inclusion in appropriate Defense Department contracts. Generally, |