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Both the prime and subcontract are cost-plus-fixed-fee type contracts. Electrac alleges it is entitled to payment of $19,097.58 arising out of the performance of the subcontract. This claim for payment raises two issues:
1. The correctness of the action by the Government auditor in sus pending certain costs claimed by the subcontractor; and
2. Whether the subcontractor is barred from recovering any cost by the Limitation of Cost clause in its subcontract.
The ultimate issue, and we so find, is whether the prime contractor is entitled to be reimbursed by the Government for those costs to be incurred in connection with his performance on the prime contract.
The invoice claiming the contested costs was presented to the appellant after delivery under the subcontract was complete. Appellant rejected them on the basis of the cost limitation provision of the subcontract. An audit was performed by the Army Audit Agency. The auditors were of the opinion that payment of the requested costs should be suspended, some of them as unallowable, and some as unproved. Apparently appellant and the contracting officer agreed with the auditor and Electrac was so informed, but this was not in the form of a formal rejection of the invoice.
The contracting officer refused to consider the claim on its merits on the basis that there was no dispute between the prime contractor and the Government. The subcontract did not contain a disputes clause. The appellant and Electrac amended the subcontract to include a disputes clause in accord with ASPR 3-903.5. The appellant forwarded this change to the contracting officer and again requested a decision. The latter refused to either approve the change order to the subcontract or to issue a decision on the merits of Electrac's claim. Appellant again requested a decision, received a refusal, and brought this appeal.
The appeal letter states that it is brought in its own name, on behalf of its subcontractor, Electrac, and is signed by a vice president of the appellant corporation.
The Government has moved for dismissal on the ground that there is no dispute between the prime contractor and the Government. The contracting officer and the Board do not decide disputes between prime and subcontractors. The argument is eloquent, and is persuasive that the two contractors could not bind the Government to a subcontract disputes clause not authorized or approved by the contracting officer. It does not overcome the fact, however, that the appeal was brought by the prime contractor, in its own name, and was signed by one of its principal officers.
The only question remaining is whether the appellant has good ground to bring the appeal. An appealable interest was recently defined in TRN, Inc., ASBCA No. 11373, on Motion for Reconsideration, 66-2 par. 5882. Applying that definition here, the appellant has sufficient grounds for bringing this appeal. Thus established, the present appeal is identical in form to Westinghouse Electric Corp., ASBCA No. 10899, 66-1 BCA par. 5687, in which the Board took jurisdiction and decided the subcontractor's claim on its merit. The motion to dismiss is denied.
The complaint requests that we remand the matter to the contracting officer with instructions that he decide this claim on its merits. Mandamus is not one of the remedies readily available to the Board. However, the refusal of a contracting officer to make a decision is itself appealable, Leader Manufacturing Company, ASBCA No. 4416, 58-2 BCA par. 1877. If the contracting officer advises that he will now consider the claim, the Board will dismiss this appeal, without prejudice. Otherwise, the Board will consider the appeal.
IDEAL UNI FORM CAP COMPANY V. THE UNITED STATES
181 Ct. ci. 21 (1967)
COLLINS, Judge, delivered the opinion of the court:
Plaintiff is a contractor suing for the recovery of $42,503.91 a figure which represents the aggregate of three similar claims, each arising under separate contracts. Earlier proceedings before the Armed Services Board of Contract Appeals (hereinafter the Board) resulted in the dismissal - for lack of timely appeal • of two these claims; left standing was the contracting officer's decision recognizing plaintiff's right to the recovery of $921.40 on his third claim. Now proceeding here under an assignment of errors, plaintiff challenges the correctness of the Board's dismissal action. In response, the Government offers alternative contentions, arguing first in behalf of a rejection of all three claims and, secondly, in favor of the Board's result. In our view, the Board's decision is controlling.
Three contracts for the manufacture of service caps were awarded to plaintiff. The dates of execution were February 8, 1950, March 30, 1951, and May 27, 1953. Final delivery under the first two contracts occurred within 1 year of the respective execution dates; final delivery on the third contract occurred in October 1954. Each contract called for numerous payments to plaintiff, and under the price-discount provision (provided in cach agreement), promptness in the making of such payments permitted the Government to claim a 5-percent-cost reduction. The genesis of the present suit relates to the correctness of the discounts claimed (and taken) by the Government.
Never pressed during the time of performance, plaintiff's firstvoiced disagreement with the propriety of the Government's discounts appeared in the petition filed in this court on February 28, 1957. This alleged that, as to certain payments, discounts had been taken outside of the prescribed time period; plaintiff's claims were cast in terms of "breach of contract." The Government rejected the claims both in substance and in their denomination. It insisted that the disputes were susceptible
to administrative relief (i.e., that the issues were within the scope of the disputes clauses); hence, it moved for summary judgment on the ground that plaintiff had failed to exhaust his administrative remedies. Additionally, it sought dismissal of the first-executed contract claim (M1761) for lack of timeliness.* We held the matter in suspension pending the administrative disposition of other claims arising out of the same contracts.
In April 1963, argument was heard on the Government's motion for summary judgment, and on May 10, 1963, the following order was entered:
IT IS ORDERED that further proceedings, including action with regard to defendant's motion for summary judgment, be and the same are suspended to afford plaintiff opportunity for pursuit and completion of administrative remedies and relief, proceedings for which are to be instituted and completed within a reasonable time.
As directed, plaintiff submitted his dispute to the contracting officer. The latter, in response, requested that plaintiff furnish copies of the invoices that had been listed under his first two contract claims i.e., those invoices allegedly reflecting erroneous discounts taken under contract (M 1761 (the first-executed contract) and contract M 13919 (the second-executed contract). Plaintiff ignored the request or at least never responded to this demand. The contracting officer - aware of the previous untimely death of plaintiff's counsel - repeated his request for invoice copies. Again plaintiff did not respond. Thereafter, on May 8, 1964, the contracting officer issued two separate final decisions, the first (designated Modification No. 7) related to contract QM 1761; the second (designated Modification No. 3), to contract QM 13919. Identical in substance, each cited the absence of supporting documentation as its basis for rejecting the claim. At the same time, plaintiff was advised of his right to protest the contracting officer's determinations: each decision emphasized that an appeal, if desired, would have to be requested within 30 days. No such appeal was made.
On May 21, 1964, the contracting officer issued his findings and decision with respect to plaintiff's third and final claim. This, too, was rejected, but not for lack of documentation. Here, unlike the first two decisions, plaintiff did instrument a timely protest. The letter to this effect, dated June 22, 1964, stated:
Reference is made to your Findings of Fact and Decision of May 21 pertaining to Contract No. DA-30352-TAP-1933 (011991-C-53).
Consider this notice that we wish to appeal this decision to the Armed Services Board of Contract Appeals.
*The Government argued that since the last delivery under this contract had occurred on January 31, 1951, the filing of a petition more than 6 years after this date would clearly be untimely. Plaintiff argued against both the accuracy and the relevancy of the contract delivery date.
On July 15, 1964, and prior to plaintiff's Board hearing, the contracting officer modified the last-issued decision (that pertaining to contract TAP-1933). This revision conceded that the Government had, as claimed, taken erroneous discounts in the amount of $921.40. Upon receipt of this revision, plaintiff addressed the following letter to the Board on August 13, 1964:
In reference to my recent request for a
Due to the recent death of my attorney, * * *
As previously noted, the subsequent Board proceedings affirmed the contracting officer's decision awarding $921.40 under contract TAP-1933; with respect to the other two claims, the Board concluded that "appellant failed to timely appeal from the decisions pertaining to Contract Nos. QM-1761 and QM-13919 and accordingly the (Government's) Motion to Dismiss is granted and said appeals are dismissed.'
At the outset, we are met once again with arguments previously raised and previously rejected. Thus, the Government, for its part, has resurrected the contention that all of plaintiff's claims now warrant dismissal because of his initial failure to have sought administrative relief, while plaintiff, in turn, reiterates the argument that the pursuit of administrative relief was not essential because his claims represented "breach of contract" actions. Implicit in our order of May 10, 1963 (directing plaintiff to seek administrative relief), was the rejection of each of these arguments. Neither now merits much discussion.
Whatever exhaustion problems may have attended p intiff's first presention of his claims in this court, it is certain now - in light of the administrative proceedings that were had - that such initial defects have become moot. And unless we are to ignore or term invalid both the contracting officer's decisions and the subsequent Board proceedings (points for which the Government does not argue), then clearly the matter of plaintiff's initial failure to seek administrative relief can no longer raise a legally relevant consideration.
Equally precluded is plaintiff's argument that we may now assess the merits of his claims independent of their administrative resolutions that is, that we may treat them as "breach" claims. That prerogative
normally obtains only where the claim - by its basic nature - falls outside the scope of the "disputes" clause, i.e., where the controversy relates to matters which cannot be handled under one or more of the standard adjustment clauses such as the "changes" or "changed conditions'' clauses. See United States v. Utah Constr. & Mining Co., 384 U.S. 394 (1966), and United States v. Anthony Grace & Sons, Inc., 384 U.S. 424 (1966). Admittedly, neither of these clauses points with unerring certainty to the scope of their coverage, and disputes, such as plaintiff's (dealing with the taking of erroneous discounts), might arguably be viewed as pure breach claims. Nevertheless, we directed plaintiff to seek out administrative relief because the matter of claim denomination is a subject that is better settled in the light of accepted administrative practices than through the reflections of abstract analysis. The availability of administrative relief - evidenced by numerous board decisions entertaining claims concerning improperly taken discounts, e.g., Resolute Paper Prods. Corp., 57-2 BCA par. 1394 (ASBCA); Carolina Paper Mills, Inc., 58-2 BCA par. 1832 (ASBCA); Crown Coat Front Co., 61-2 BCA par. 3157 (ASBCA) was the functional basis of our order of May 10, 1963; we reaffim our rejection of plaintiff's "breach" argument by again pointing to the teachings of settled administrative practice. Plaintiff's claims were matters properly within the cognizance of the administrative fact-finder; such being the case, the only question now is whether the Board was wrong in rejecting them because of plaintiff's failure to timely appeal the two earlier decisions of the contracting officer.
Ever since United States v. Blair, 321 U.S. 730 (1944), it has been established doctrine that literal adherence to the terms of the "disputes" clause is essential to the disposition of all questions "arising under" a standard Government contract. Typically, this clause provides for an initial resolution of contract disputes through a contracting officer's determination. Further, it affords a contractor the opportunity to challenge such determinations through the offices of an administrative (board) hearing. Fulfillment of each of these requisites is essential in order to insure judicial review; where such compliance cannot be shown, then there exists a jurisdictional void which we are not at liberty to ignore. United States v. Joseph A. Holpuch Co., 328 U.S. 234 (1946). And in the same manner that the exhaustion of administrative remedies operates sine qua non of our contract jurisdiction so also does "timeliness" in appealing a contracting officer's determination serve as the source of the administrative appeal board's jurisdiction. The view has been consistently espoused that a contracting officer's determination shall be considered final and conclusive unless an appeal is lodged within the 30 day period set out in the disputes clause. Appeals after such time cannot be entertained. Maitland Bros., 66-1 BCA par. (ASBCA), and authorities cited therein.
In distinct awareness of these principles, plaintiff now urges that the Board committed error in rejecting his claims for lack of timeliness. The argument is made that a consequence of this court's order of May 10, 1963 (di recting plaintiff to pursue administrative relief), his claims were merged into one cause of action which demanded but one contracting officer decision and which necessitated but one timely appeal. No authority is offered in support of this proposition, and clearly our order does not substantiate it.