# Petition for Writ of Certiorari — Evans Reamer & Machine Co. v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385603_1206%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1968 - **Citation:** 390 U.S. 982 ## Text LIBRARY | sass SUPREME COURT. U. & of. FEB 9° 196g In the Supreme Court of the. United States OCTOBER TERM, 1967. No 1.09 '7 fe EVANS REAMER. & MACHINE COMPANT, Petitioner, THE UNITED STATES, 0 Respondent. | | PETITION FOR A WRIT OF CERTIORARI 20 THE UNITED STATES ,COURT OF: ‘CLAIMS. i ” Ricwagrp F. Stevens, a | 1950 Union Commerce Building, ‘Cleveland; Ohio, © Attorney for Petitioner. 2 Of Counsel: ‘3 a 3 Hersert A. SPRING, ns VicToR STRIMBU, JR., Davin J. Srrauss. THE GATES LEGAL PUBLISHING CO., CLEVELAND, OHIO—TEL. (216) 621-5647 Ky 2 ‘ 6 wis ware lt SP hil Ay esi snapahia caplet a a staat. inte esiers iebcnstivitie , TABLE OF CONTENTS. Opinion Below _-.---.____ alenaninaiai cesuate eens 1 Jurisdiction ates saat en PrN RBE OR: 1 Statute and Regulations edieel .. ots, ae Questions Presented er cued 2 Statement of the Case _2..-----_. a - Reasons for Granting the Writ se padicalbceedaleeheiiaaa aan Conclusion SPC Gro = oe Appendix, (Attached): | 2 - : ' Opinion of the United States Court of Claims -_- 1a Statutes _ | ateesandocerem are arayin enue ieciouasloiaaeasm meeres 6la_ . Procurement Regulations _....__-_________- 8 per bomb to $87.9391 retroactive to the first bomb pro- duced. Despite the relief it obtained, Aircraftsmen was unable to meet its delivery schedule and the Government terminated Aircraftsmen’s contract in March, 1956. (App. 50a-51a, Opinion.) Petitioner soni relief under Title II, First War Powers Act, in October, 1956. The Army Contract Ad- -justment Board denied Petitioner’s application in June, 1957 stating that it was unable to find that the current productive capacity of Petitioner and its parent company,, Lempco Products, Inc., would be substantially impaired as a result of the losses suffered. Petitioner requested the Board to reconsider its decision on December 11, 1957. The Board denied the request for reconsideration on March 25, 1958. (App. 53a-54a, Opinion.) Petitioner initiated the present case against the a ao | States in the Court of Claims, contending: (1) that the contracting officer’s intentional concealment of informa- tion material to the negotiations which was solely in his possession constituted actual fraud which misled Petitioner to its detriment and, thus, Petitioner was entitled to refor- mation of its-contract; (2) that assuming the contracting officer’s failure to disclose information material to the negotiations was not intentional, then such failure consti- tuted constructive fraud, and thus, Petitioner Was entitled to the rélief sought in its Petition; (3) that the parties entered into the basic contract under a mutual mistake of fact; (4) that the contracting officer violated the stand- ards of fair play and good faith and knowingly took an unconscionable advantage of the inferior bargaining posi-' tion of Petitioner, and, therefore, Petitioner was entitled to the relief sought in its Petition; and (5) that the con- tracting officer, by insisting that applicable regulations prohibited his granting Petitioner a price per bomb in ex- 9 cess of the ‘award price in the cieneatatie: contract, erred in his interpretation of the applicable regulations, induced Petitioner mistakenly to believe it could not receive an increase in its unit price because of the reduced produc- tion rate in the set-aside contract and, thus, Petitioner was entitled to reformation of its contract. Pursuant to Court of Claims Rule 53 (a), Petitioner’: Ss _case was referred to a Commissioner for action pursuant — to Rule 52() of said Rules. On October 21, 1966, in com- pliance with Rule 57, the Commissioner filed his opinion which dismissed Petitioner’s Petition. The Commissioner rejected the first and second con-— ‘tentions stating that the most the record in this case could be said to support was that the contracting officer had be- --—eome aware in a general way that Aircraftsmen was ex- periencing both production and financial difficulties in the performance of its contract and that the contracting officer had only surmises, not verified facts, as to the nature of - Aircraftsmen’s problems. The Commissioner said the con- tracting officer could not be charged with fraud, either actual or constructive, in failing to disclosé facts which he did not actually know to be ‘facts. (App. 17a-18a, Opinion.) The Commissionef rejected the third contention on the ground that the written contract precisely expressed the terms and. conditions upon which both parties’ had F- agreed in their antecedent negotiations. .(App. 15a, Opin- ion.) © ear . ee > SEB IANA LEE IA ARENT EH NS ‘The Commissioner did not expressly reject the fourth contention. Apparently, the fourth contention was not discussed because of the Commissioner’s ‘ruling oh the first and second contentions. The Commissioner did not rule on Petitioner’s fifth contention. (App. 13a-15a, Opinion. ) 7 Commissioner merely noted that both par- du ere 10 ties had persuasive arguments regarding the proper inter- pretation of the applicable regulations. | ‘Petitioner filed Exceptions to the Commissioner’s Re- port tothe Court of Claims. In a per curiam opinion, Judge Nichols dissenting, the Court of Claims adopted the : -Commissioner’s findings of fact, opinion and recommended conclusion of law. J udge Nichols dissented on the basis that a ground rule ‘had been established in the negotiations that the Government would: not pay more than the Aircraftsmen price and Petitioner would not take less and that, under the circumstances of this case, the contracting officer was under a duty to warn Petitioner before its contract was executed by both parties if he entertained’any expectation that the Aircraftsmen price might not hold firm. (App. 20a-21a, Opinion.) Judge Nichols further stated that:, ““* * * The commissioner says (in the opinion, not the findings) that before the award to plaintiff the con- ° tracting officer had ‘only surmises, not verified facts, as to the nature, of Aircraftsmen’s problems * * *.’ To sustain the result reached, it is vital that this characterization be correct. The commissioner had. ‘the officer before him as a witness, and no doubt was as well situated to Jook into the man’s mind as triers of fact ever are. But I question whether any well ad-. vised contracting officer would throw out such a broad _ hint to a contractor to apply for the extraordinary relief, available only to contractors in grave enough difficulty, under Title II, as this one did on February 15, (Finding 30), because of troubles he merely sur- mised. Their letter to him of February 11, (Finding 29); I would hold of itself afforded more than surmise, disclosing as it did that they had been unable to pay approximately two-thirds of their expenses. I do not think ‘surmise’ is the mot juste, and if the commis- sioner had selected one more in accord with his detail =) 11 findings, the result ‘might wal have been different. _ ‘I miss here the equitable approach of National Presto Industries, Inc. v. United States, 167 Ct. Cl. 749, 338 F.2d 99 (1964). If this case is not to go down in his- - tory as an instance of atavism in the evolution of law, it must be explained in the peculiar, and to me inex- ' plicable, view the court and the commissioner take as to the ultimate facts.” (App. 21a-22a, Opinion.) REASONS FOR GRANTING THE WRIT. The decision of the Court of Claims.enunciates a novel but nevertheless fundamental principle that during nego- . tiations a contracting officer need not divulge to a con+ tractor information.jn his possession which is relevant and ‘ material to the contract but which he has not verified as being accurate or true. “The Court of Claims has said, in effect, that a contracting officer may be in sole Possession . of certain facts material to the negotiations for a contract which, if true, would most certainly affect the decision of the contractor to enter into a contract but need not make the contractor aware of said information until he has veri- fied the accuracy of the information eventhough the con- _ tractor may, , in the meantime, execute the contract and thus ufiwittingly plunge into an abyss from which there is no escape. The Court of Claims did not even limit the above rule by requiring the contracting officer ‘to suspend negotiations with the contractor until he investigated and ascertained . whether the information was accurate or not. Thus, a con- tracting officer may, under the rule enunciated by the Court of Claims, wait until after , contractor with whom he is dealing executes his contract before ascertaining whether the information material to negotiations which came into his possession during negotiations is accurate. If the contract subsequently proves to be a ruinous one for | "2 the contractor, the Government is absolved of all respon- sibility for failing to either divulge the information or suspend the negotiations until the information could be’ * verified. The new rule actually encourages a contracting officer not to investigate and verify information in his pos- session which the contractor needs but would not have any 25 way of obtaining. The Court of Claims has for many years adhered to - the rule that where the Government possesses vital infor- mation which it is aware a contractor needs but would _ not have, it cannot properly remain silent and betray a contractor into a ruinous course of action. Albert & Har- rison, Inc. v. United States, 68 F.Supp. 732 (Ct. Cl. 1946); Potashnick .v. United States, 105 F’‘Supp. 837 (Ct. Cl. 1952); Ragonese v. United States, 120 F.Supp. 768 (Ct. Cl. 1954); Bateson-Stolte, Inc. v. United States; 172 F. Supp. 454 -(Ct. Cl. 1959); Snyder-Lynch Motors, Ine. v. United States, 292 F.2d 907 (Ct. Cl. 1961); Helene Curtis Industries, Inc. v. United States, 312 F.2d 774 (Ct. Cl. _ 1963); Natienal Presto Industries, Inc. Ww. x United States, | 338 F.2d 99 (Ct. Cl. 1964) ; Chernick v. United States, 372° F.2d 492 (Ct. Cl. 1967); Maxisell Dynamometer Company | v. United States, No. 120- 62 codices RE I ccantataties (decided Nov. 9, 1967). Adherence to said rule is particularly im- portant in cases such as the one at bar where the Govern- ment has asserted ‘that the price per bomb to be paid to Petitioner could not exceed the price paid per bomb to Air- craftsmen. . The Court of Claims has now made a basic change in the long-established rule and has stated that during con- tract negotiations, the Government need not divulge vital information which it is aware a contractor needs but would not have, until after it has verified the information. Such a basic change in the law applicable to approximately ~ , gations of one party to the other in government contract 13, 180 billion Sellers in Government contracts per year ought not be made without any appellate review. A rule of contract law followed for many decades and uniformly endorsed by the courts forms an unusually solid - foundation for reliance by parties on the duties and obli- negotiations. The rule requiring the divulgence of vital information which the Government knows a contractor needs but would not have is such a rule. Petitioner be- _ lieves that the new rule stated by the Court of Claims, in this case is as wrong in principle as it will be upsetting . in- practice, for it clearly places contractors at the complete mercy: of the Government procurement officials. At the. very least, the new rule merits full consideration by the Court. ; 2. In 1954-55, the ASPR dealing with set-aside con- tracts prohibited the payment of a price differential to the contractor producing the set-aside portion of a procure- ment. (ASPR 3.219. D(a), 32 CFR 3. 219.5(a) (1954).) While the ASPR just cited was deleted on October 9, 1959 by Amendment 47, 24 FR 8219, the pertinent language’ of that regulation has been incorporated: into ASRR 1-802, 32 CFR 1.802 (1967 ) ASPR 1-803(a)(i), 32 CFR . 1.803(a) (1) (1967)..The aforesaid procurement regula- ° tions are set forth in full in the Appendix. : During the negotiations for a contract, the Govern- ment reduced the production rate, in Petitioner’s contract, from 8,000 bombs per: month to 3,000 bombs per month. The contract of the non-set-aside contractor, Aircraftsmen, was not changed. Petitioner requested an increase in the price to be paid per bomb or the inclusion of-an escalation clause in its contract for the reduction in, production rate greatly increased the time period within which the con- tract was to be performed and thus exposed Petitioner to é.. d fa * P4 » ? Re nan aR AR He een DleE LEI aiiiakie sy dbUtEE Ss ? . *. assent diss CLLR ON ah SpiSiets CSTE ia eho ° se ota 8 14 probable increases in cost 6f material and other increases in cost that Aircraftsmen would not have to contend with. The contracting officer refused to grant Petitioner’s' requests stating in a forceful and unequivocal manner that the ASPR’s dealing with “set-aside” contracts prohibited the granting of a unit price in the bagic set-aside contract that would exeeed the award price of the non-set-aside contract. Petitioner entered into’a contract with the Gov- - ernment in reliance on the. contracting officer’s intetpreta- tion of the pertinent ASPR. ' In‘ the Court below, Petitioner contended that it was - entitled to reformation of its contract because the con- tracting officer erred in his interpretation of the pertinent | “regulations and that Petitioner reasonably relied upon the ~ ' representations of the contracting officer to its detriment... Petitioner contended that the prohibition in the regula- tions against. a price differential was intended to apply only ‘where all material provisions in the two contracts, the non-set-aside. and the set-aside contracts, were the same. oe The f'rial Commissioner stated in his opinion, which was adopted by the Court below, that: “Whether the contracting officer was. right or wrong in this interpretation of the set-aside regula, —, tions seems beside the point. - Typically, the remedy of reformation is intended to give relief from a con-' tract which does not conform to antecedent expres- sions on which the parties have agreed. It is not a proper remedy for the enforcement of terms to which the defendant never assented.” (App. 13a-14a, Opin- ion. ) te SO stating, the Trial Conmmiasidisée and the Court: of Claims: ‘rejected Petitioner's argument that the proper rule of contract law in cases such as this is as follows: ty &e ®. 15 “If the mistake of law that induced the making or the performance of a contract by one party was ~ caused by a fraudulent misrepresentation of the law " * by: the other, or by-his innocent misrepresentation if the relations of the parties are such as to make it reasonable for the one. to rely upon the representa- tions of the other, the appropriate relief by rescission, . restitution, or reformation -will be given the injured party. * * *” 3 Corbin, Contracts § 618 (1960). See _also: Staten Island Hygeia Ice & Cold Storage Co. v. United States, 85 F.2d 68, 71-72 (2d Cir. 1936)... The Court of Claims refused to decide whether the _ contracting officer’s interpretation of the set-aside regula- tions was right or wrong on the ground that reformation was not the proper remedy even if he was wrong in his interpretation. One flaw if the Court of Claims’ analysis is that theré is a rule of contract law which does permit reformation of a contract in cases such as this. Petitioner submits that itis entitled to continued recognition of said rule of contract law. Pa Cs a * Moreover, the decision of the Court of Claims has left unclear the proper interpretation. of the set-aside regula- tions. The Government has asserted: that the price to be paid per unit in a set-aside contract can never exceed the award price per unit in the non-set-aside contract regard- _less of the differences that may exist in the terms and con- ° ditions of the two contracts. Petitioner has stated this interpretation is erroneous. The Court of Claims found | both positions. persuasive. ae Re i In’ view of the.-Government’s expressed policy of | alleviating the plight of workers in economically depressed areas by placing set-aside contracts in said areas and the large number. of Government contracts involved, it is vitally important that this issue be resolved. The unset-. <> | 16 | tling consequences of the decision of the Court of Claims can only be forestalled by a: decision of this Court finally repolving the’ question left unanswered below. CONCLUSION. For the foregoing reasons, it is respectfully submitted that this Petition for a Writ of ete aeae should be granted. $ Ricuarp F. ravens, Attorney for Petitioner. Of Counsel: | - bn. : HERBERT A. SPRING, ; . Victor StRIMBU, JR., ‘Davip J. STRAUSS. February 1968. ~~ ’ , : . ‘ , f 4 6 e. ; 3 Pe ° ° % ; F . “2 id . . + APPENDIX os ’ e 4 , F ° . : . * a . > ‘ 4 ‘ b i | : . x - » . ‘ ’ : : ‘ | : eo, See “2 ‘ ° 7 + - ~—b = ‘ . if ; - s ~ : Poe Y Pa : 7 5 ° ; ‘ a s ° . . @ : . . - : c : . . ° e se . é oe . --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385603_1206%3A1. Public record. Not legal advice.