holding that the regulation need not be in effect when the contract was awarded so long as adoption of the regulation was remedial and intended to afford safeguards to the contractor
How later courts described this case
- holding that the regulation need not be in effect when the contract was awarded so long as adoption of the regulation was remedial and intended to afford safeguards to the contractor
- reasonableness of profits as measured by the Defense Department Weighted Guideline Standards
Written by the judges who cited it.
The opinion
SKELTON, Judge
(dissenting):
I respectfully dissent. In my opinion, Newport News Shipbuilding & Dry Dock Co. v. United States, 179 Ct.Cl. 97 , 374 F.2d 516 (1967), does not control this case and it should not be sent back to the board (ASBCA) in order to allow it to use the guidelines of the Department of Defense regulation published in 1963 (28 Fed.Reg. 12546, 12555, amending 32 C.F.R. §§ 3.808 and ff. (part 3)), to determine the profit of the plaintiff in this case, for the following reasons:
(1) This regulation was not in existence at the time the contracts involved here were executed and could not have been contemplated by the parties. Although this same situation existed in Newport News, the facts in the two cases are completely different. There the court held that the regulation must be applied to the original competitive prices as well as to escalated prices, but that cannot be done in the instant case because the bids here were not competitive. It is improper to apply the regulation retroactively under these circumstances in our case. In fact, it is impossible to apply the decision in Newport News to the original prices here.
(2) The contracts before us were negotiated between the parties and were not the result of competitive bids. In fact, they amounted to a subsidy by the government, and without them the plaintiff would have had to have closed its doors and gone out of business. Plaintiff was not the lowest bidder, as two other companies submitted lower bids. The government gave it the contracts after negotiation to keep it in operation. As a result, the plaintiff has been subsidized to the extent of a five percent profit on the undertaking, but instead of being grateful for this generosity, now sues for more. It is impractical, if not impossible, to apply the regulation to the prices thus negotiated between the parties.
(3) The parties submitted guidelines to the Board that they wished it to consider. The Board did consider them fully, as indicated in its opinion. The plaintiff did not ask the Board to consider any additional guidelines and did not mention those set forth in the regulation which was in force at the time of the Board’s decision. No request was made that the guidelines in the regulation be considered. It is too late, in my opinion, for the plaintiff to make such a request, and it is error for us to allow it to do so.
(4) The Board found as a fact that the parties agreed that plaintiff’s profit would be five percent, and plaintiff has not challenged this finding. Consequently, the finding is final and we are bound by it and have no authority to set it aside.
I would grant defendant’s cross-motion for summary judgment, deny plaintiff’s motion, and dismiss plaintiff’s petition.