Reply Brief — Essex Electro Engineers, Inc. v. United States, 113 S. Ct. 408 (1992) (No. 92-263)

Supreme Court, U.S.

FILED

|’ OCT 20 1992

No. 92-263 OFFICE OF THE ¢

a

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1992

ESSEX ELECTRO ENGINEERS, INC.,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

REPLY AND SUPPLEMENTAL BRIEF

FOR PETITIONER, ESSEX ELECTRO ENGINEERS, INC.

CHAPLES E. RALEY

Counsel of Record

for Petitioner

ESSEX ELECTRO

ENGINEERS, INC.

ISRAEL & RALEY, CHARTERED

- 1019 19th Street, N.W.

Penthouse One

Washington, D.C. 20036

(202) 659-9533

October 21, 1992

A RECENT CONTRADICTORY DECISION OF

THE FEDERAL CIRCUIT HIGHLIGHTS

THE NECESSITY FOR GUIDANCE.............. 1

NS 6665 66040664660 E600 bes ve keRe ka 10

SET CSTE Tee Tee TTT Tee eee Attached

Transame :

Vv. United States, No. 92-5044

(Fed. Cir., Sep. 4, 1992).

(i)

v. United States,

811 F.2d 586 (Fed.Cir.1987)........++47

v. United States, No. 92-5044

(Fed. Cir., Sep. 4, 1992) ....+e.eee--PASSIN

[Attached }

340 U.S. 543, 548-50, 71 S.Ct. 399,

95 L. BG. S23 (iSG2) svcccieseaves eoceeed M2

STATUTES

Contract Disputes Act,

41 U.S.C. § 601, SE BOG. ccccveccccecs PASSIM

Office of Federal Procurement Policy Act,

41 U.&.C. § 401, OE B@G.-cccceces eovceed

Tort Claims Act,

28 U.S.C. $421, Ob B@G.- co ccccce scaosvecsed Risa

REGULATIONS

FAR § 52.233-1: "Disputes (1984)"........1, 6

OTHER SOURCES

S.Rep. No. 1118, 95th Cong.,

2d Sess. 1 (1978),

reprinted in 1978 U.S.C.C.A.N. 5235...8

(ii)

A RECENT CONTRADICTORY DECISION OF

THE FEDERAL CIRCUIT HIGHLIGHTS

THE NECESSITY FOR GUIDANCE!’

The United States, in its opposition, pays

no heed to the CDA nor its legislative history

nor to any of the contradictory and confusing

precedents discussed in the Petition. Rather,

the opinions below and the government here rely

upon a single general procurement policy state-

ment in the Office of Federal Procurement Policy

("OFPP") Act as a grant of unfettered legisla-

tive authority to the executive agencies. While

completely ignoring the entire line of prece-

dents on the standards for legislative authori-

ty, the executive branch argues that simply

because its agencies’ regulation may be a "part

of the FAR" it is axiomatically "valid" in

governing access to the rights and remedies

mandated by Congress in the Contract Disputes

Act ("CDA"). (Gov.Brf. pp. 8-9).

' Essex Electro Engineers, Inc., is a

small business with no parent nor any

subsidiaries.

As a consequence of approving this self-

fulfilling argument, the opinions below create

and perpetuate a situation such that the private

party’s access to the rights and remedies

afforded by the CDA is uncertain and subject to

the dictates of the agencies themselves. This

uncertainty is no more evident than in the

complete conflict with the Essex opinions that

is found in the recent decision of the Federal

Circuit in Transamerica Insurance Corporation,

Inc. v. United States, No. 92-5044 (Fed. Cir.,

Sep. 4, 1992). [{Appendix, hereto].

Notwithstanding Essex’s express intention

to submit a "CDA claim." certified as required,

the opinions below declare that a "claim" must

also pass the litmus of the following elements

before the submission may exist as a "claim" so

that a resolution may be obtained under the CDA:

a) the agency must have chosen to express

a "dispute" as to the subject of the "claim"

before the "claim" itself has been submitted;

b) the contractor must have abandoned all

negotiations before submission of the "claim";

and

c) the "claim" must consist of a written

demand for the payment of a sum certain as a

matter of right.?

The result of these definitiona2 hurdles is

that the private party who contracts with his

government has no assurance as to when, if ever,

. The government asserts another

agency regulation apparently as an example

of a restrictive definition imposed on a

congressional use of the term "claim" in

the Tort Claims Act. ([Gov.Brf. p. 8].

However, the government’s argument here

ignores yet another precedent by this

Court which rejected similar attempts by

the executive to "whittle . . . down" the

"Clear and sweeping" breadth of the word

"claim" in the Tort Claims Act which has a

“common usage" and is not a "term of art."

340 U.S. 543, 548-50, 71 S.Ct. 399, 95

L.Ed. 528 (1951).

his claim will be resolved on its merits. The

private party must finance the government’s

liability for additional work ordered by the

government until the government chooses to

dispute the private party’s right to be paid.’

Further, the private party may not invoke the

rights intended by Congress in the CDA unless he

refuses to negotiate with the government.

The confusion and uncertainty demonstrated

by the decisions set forth in Essex’s Petition

{pp. 39-57] must now be expanded to include

> The government argues that being

forced to finance the cost of performing

unexpected additional work unilaterally

imposed by a government change order is

not inequitable because "[{ijt is common"

to incur the costs of an item until pay-

ment of the purchase price has been made

"under an existing contract" or by "inter-

im progress payments." (Gov.Brf.p. 10). A

party may plan for and include in his

price the carrying charges for known costs

expected to be incurred until that price

is paid. However, no plan can exist for

unilateral change orders and, accordingly,

Congress mandated the payment of interest

in the CDA to reimburse the cost of fi-

nancing such unexpected additional work.

4

Transamerica Insurance Corporation, _Inc.,

supra., decided by the Federal Circuit on

September 4, 1992 [Appendix, hereto]. In

Transamerica, as here, a panel was called upon

to review a decision of the Claims Court which

had dismissed a contractor’s complaint because

of a Government motion that a CDA "claim" did

not exist. In that case, as here, the claim

consisted of a letter reciting a sum as a

request for an equitable adjustment and included

a certification consistent with the CDA.

In Essex a Government Form 1411 was submit-

ted with the claim letters. In Transamerica the

contractor waited six months before submitting

the Form 1411. In Essex, the panel affirmed the

dismissal based on labeling Essex’s "claim"

letter with the Form 1411 as an equitable

adjustment "proposal." In Transamerica, the

panel reversed the Claims Court and found a

"claim" in the earlier letter and that the

subsequent Form 1411 was a submission of "sup-

plemental information." (Transamerica, Appendix,

pp. 6 and 8}. The Transamerica panel does not

mention the agencies’ "Disputes" Regulation nor

any of the few citations upon which the Essex

panel relied.

In Transamerica, the panel held that the

intent of the contractor that "his letter serve

as a statutory claim" was a controlling factor.

{[Id., Appendix, p. 22]. On the other hand, in

Essex, notwithstanding Essex’s consistent

position that CDA claims were intended, the

panel approved the concept that a "dispute" by

the agency was the controlling condition prece-

dent before the contractor’s submission would be

permitted to be a "claim." Rather than holding

that the agencies’ self-serving regulation

vested control in the agency, the Transamerica

panel held that--

"This court will not require contractois

to do more than to comply as fully and

reasonably as possible with the statutory

requirements of the CDA when this court

has definitively stated that certain

‘magic words’ need not be used and that

the intent of the ‘claim’ governs. See

Contract Cleaning, 811 F.2d at 592."

kkk

"‘All that is required is that the con-

tractor submit in writing to the contract-

ing officer adequate notice of the basis

and amount of the claim.’ Id. at 592.

This view is obviously consonant with the

CDA itself which, besides the direction

given in section 605(a)...does not address

the specific requirements which a claim

must contain." [(Transamerica, Appendix,

pp. 23-25).

The Essex panel also disregarded the

contracting officer’s repeated recognition of

the existence of "claims" by Essex. [Pet.App.

pp. 23-24). Yet, in Transamerica, the panel

reiterated the decision in Contract Cleaning

Maintenance, Inc. v. United States, 811 F.2d 586

(Fed.Cir.1987) that the letters "constituted a

claim" as the Government "itself explicitly

recognized." (Transamerica, Appendix, p. 26).

In the final analysis, the Transamerica

panel directly contradicted the view of the

Essex panel that approved a need to abandon

negotiations in order for a "claim" to exist.

While the Essex panel did not even address the

intent of Congress in the CDA, the Transamerica

panel held:

"There is no necessary inconsistency be-

tween the existence of a valid CDA claim

and an expressed desire to continue to

mutually work toward a claim’s resolution.

S.Rep. No. 1118, 95th Cong., 2d Sess. 1

(1978), reprinted in 1978 U.S.C.C.A.N.

5235, states that the purpose of the Con-

tract Disputes Act was to ‘induce resolu-

tion of more contract disputes by negotia-

tion prior to litigation....’ ©All tribu-

nals should foster negotiation as a mecha-

nism for the resolution of disputes jin-

stead of erecting definitional structures

which preclude, for their own validity,

ongoing settlement measures." (Id., Appen-

dix, pp. 26-27; emphasis supplied).

Any consistency between the Essex decision

and the decision in Transamerica Insurance

Corporation, Inc., cannot be perceived.

The confusion and contradictions generated

by the executive’s assumption of legislative

authority to restrict access to the CDA has

resulted in the expenditure of an inordinate

amount of time and money by private contractors,

attorneys and the boards and courts in address-

ing useless government arguments and motions

propounding the "claim" is not a "claim" theory.

This exercise only serves to postpone resolving

the merits of the claims while forcing the

contractors to finance the burden of additional

costs resulting from actions ordered or taken by

the Government.

As here, the agencies are routinely ignor-

ing the time limit in the CDA for resolving

Claims and are taking months and even years to

enter into meaningful discussions to settle

Claims before litigation. The administrative

boards are commonly taking one or more years to

issue decisions in contract actions after

hearings and briefs. This length of time is

certainly exacerbated by the agencies’ "claim is

not a-claim" arguments which postpone contract-

ing officer decisions and require time to be

devoted to pleadings, argument and decisions on

agencies’ dismissal motions. The intent of

Congress that claims be submitted and settled as

soon as possible with the accrual of interest as

the incentive has been totally frustrated by the

agencies’ assumption of legislative authority to

impose a definitional barrier that confuses and

postpones access to the resolution procedures

and rights afforded by the CDA.

CONCLUSION

Granting Essex’s petition for a writ of

certiorari is essential in order to provide

definitive guidance by this Court for the first

time on the standards for access to the claim

resolution rights and remedies of the CDA and to

end the rampant confusion and contradictions

that exist in opinions of administrative boards

and the courts. Inordinate time and expense is

10

being generated to resolve the existence of a

"claim" rather than the merits of the claim

itself. The necessity for guidance has been

reinforced by the recent decision of the Federal

Circuit in Transamerica, supra., entered after

the instant Petition was filed.

Respectfully submitted,

By:

Charles E. Raley

Counsel for Petitioner

October 21, 1992

11

APPENDIX

Cae Bi eS.

---F.2d---

(Cite as: 1992 WL 213073 (Fed. Cir.))

TRANSAMERICA INSURANCE CORPORATION, INC.,

for and on behalf of Stroup Sheet

Metal Works, Plaintiff-Appellant,

Vv.

The UNITED STATES, Defendant-Appellee.

92-5044.

United States Court of Appeals,

Federal Circuit.

Sept. 4, 1992.

Before LOURIE, Circuit Judge, BENNETT,

Senior Circuit Judge, and RADER, Circuit

Judge.

BENNETT

DECISION

Transamerica Insurance Corporation

appeals from a bench ruling of the Unites

States Claims Court which granted the

United States’ motion to dismiss Trans-

americans complaint for lack of subject

matter jurisdiction. The Claims Court

found that the contractor’s submissions

did not constitute a claim under the Con-

tract Disputes Act of 1978 (CDA), 41

U.S.C. § 601, because they did not request

a final decision from the contracting

officer. In the alternative, the Claims

Court held that the contractor’s claim

certification was fatally flawed because

it was unduly qualified. This court re-

verses and remands.

BACKGROUND

On September 15, 1987, the United

States Army Corps of Engineers (Govern-

ment) entered a contract with contractor

Bodenhamer Building Corporation (BBC) for

the construction of Bowley Elementary

School at Fort Bragg, North Carolina, for

the contract price of $3,804,000. On

October 6, 1987, Bodenhamer entered into a

subcontract with Stroup Sheet Metal Works

for specified roofing work under the con-

tract. Transamerica Insurance Corp.,

acting as surety, issued payment and per-

formance bonding for the Bowley project.

TN |

Construction under the roofing con-

tract began in late summer 1988 at which

time Stroup discovered a disparity between

the actual requirements of the subcontract

and the roof plan on which it had based

its bid and so informed BBC. In an August

2, 1988 letter, BBC notified the Area

Engineer at Fort Bragg of the specifica-

tion discrepancy, informing him that the

roof plan was incorrectly scaled and that

in actuality there was “approximately two

times the square footage shown on the roof

plan." BBC further notified the Govern-

ment that this discrepancy would require

additional material, labor and time, with

delays affecting the completion date, and

that as of 3 p.m. on August 2, Stroup’s

roofing operation had been stopped until

direction could be received on how to

proceed.

Responding to BBC in a letter dated

August 3, 1988, the contracting officer’s

authorized representative stated that:

(1) as the contractor, BBC was responsible

for and should have reviewed the drawings

and that "approval by the contracting

officer shall not relieve the contractor

from responsibility for any errors or

omissions in such drawings;" (2) the con-

tractor should have notified the contract-

ing officer of these discrepancies earli-

er; (3) drawings which purport to be done

to scale are not necessarily binding; (4)

"the Contractor shall compare all drawings

and verify the figures before laying out

the work and will be responsible for any

errors which might have been avoided th-

ereby;" and (5) BBC was requested to sub-

mit a written corrective plan of action by

August 10, 1988.

4

ee

On August 9, 1988, BBC drafted two

letters, one to its subcontractor Stroup

and one to the contracting officer. The

Stroup letter notified the subcontractor

of the Government’s denial of responsibil-

ity, instructed Stroup to continue to work

on the project pending resolution of the

Claim, and offered to be the "conduit" for

an equitable adjustment claim which Stroup

could make to the contracting officer.

The letter to the contracting officer

stated BBC’s position that the problem in

the specifications arose due to errors in

the contract drawings and thus that "this

problem is a design error which is the

responsibility of the Government and not

the Contractor." BBC further stated,

"(wje can offer no written corrective plan

of action inasmuch as we have done nothing

wrong which needs to be corrected.... We

recognize your letter as a directive ...

5

which constitutes a constructive change to

the Contract. Accordingly, we hereby

notify you that we are proceeding as di-

rected by you and reserving all rights

granted us under the Contract for an equi-

table adjustment in the Contract for all

additional costs incurred, both direct and

indirect as a result of this design defi-

ciency."

In an August 26, 1988 letter, Stroup

submitted to BBC a request for equitable

adjustment of the subcontract, maintaining

that the alleged defect in the roofing

specifications increased the cost of per-

formance by $241,919. As part of the

equitable adjustment request, Stroup in-

cluded a certification signed by Stroup’s

president. In a September 1, 1988 letter,

BBC submitted Stroup’s claim and request

for equitable adjustment to the contract-

ing officer and included a certification

executed by BBC’s president.

Or. or about September 6, 1988, BBC

notified the Government of its intention

to abandon its contractual obligations and

on September 8, 1988, the Government ter-

minated the BBC contract for default. On

September 15, 1988, Stroup learned that

BBC’s contract was in default and that the

surety Transamerica would be taking over

the project through completion contractor

Sebco. Thereafter, Transamerica entered a

ratification agreement with Stroup for the

completion of Stroup’s contractual obliga-

tions on the project. On November 7,

1988, Transamerica and the Government

entered into a surety takeover agreement

under which Transamerica agreed to take

over and complete performance of the BBC

contract. The agreement provided that the

"surety shall have the right to pursue and

7

settle all existing and future claims that

arise under this contract." On November

25, 1988, Stroup wrote the Chief of the

Claims Section of the U.S. Army Corps of

Engineers, urging him to make an expedi-

tious decision on the pending equitable

adjustment claim which had been submitted

on September 1. On February 21, 1989,

Stroup talked by telephone with both the

Government and the former general contrac-

tor in an effort to get a final decision

on its claim. After the conversation, on

March 8, 1989, Stroup submitted to Transa-

merica and to the Government a revised

cost summary on Form 1411 with a revised

claim for equitable adjustment. On March

15, 1989, the contracting officer request-

ed submission of supplemental information,

including all cost and pricing data as

well as a recertification of the claim by

the surety. The contracting officer also

required that Transamerica adopt Stroup’s

Claim as its own “since Stroup does not

enjoy privity of contract with the Gov-

ernment" and that if the request for more

time was “intended to assert a right to a

contract time extension, Stroup and/or

Transamerica should submit full justifica-

tion for the requested time extension."

On March 28, 1989, the contracting

officer issued a preliminary decision

denying the request for equitable adjust-

ment. The decision stated: "the claim is

presented as a request for equitable ad-

justment and the basis of it is not clear-

ly stated.... I acknowledge that the gra-

phic scale provided was erroneous and

reliance upon dimensions scaled from that

undimensioned schematic plan would have

resulted in quantities of the various

elements of the roofing system which were

substantially less than the quantities

9

actually required to be performed....

Under the circumstances of these bid docu-

ments, any reliance upon the Roof Plan for

quantities of required work was imprudent

and such reliance is at the risk of the

bidder. Based on the above, it is my

present intent to deny your claim; howev-

er, this is not my final decision. I will

consider any additional information you

may have or meet with you to discuss the

claim." On May 17, 1989, Stroup’s counsel

took exception to the contracting off-

icer’s request for a second certification

by Transamerica as requested in the March |

15 letter. But on May 18, 1989, Trans-

america submitted to the Government its

certification of Stroup’s claim signed by

the Eastern Bond Claims Manager for Trans-

america.

On July 5, 1989, Stroup completed all

work required under the subcontract on the

10

ee |

Bowley project. On August 8, 1989, Trans-

america submitted to the Government a

contract pricing proposal cover sheet,

revising the equitable adjustment claim

upward to $265,549.89 plus interest. On

April 13, 1990, the contracting officer

issued a unilateral contract modification

adjusting the contract price upward by

$179,530.25 plus interest, based upon the

contracting officer’s determination that

the erroneous roof scale constituted a

changed condition entitling the contractor

to an equitable adjustment of its contract

amount. [FN1]) On April 23-24, 1990,

Stroup’s counsel protested the “accord and

satisfaction" language of the change or-

der, but after the Government agreed that

acceptance of the modification amount did

not waive its right to pursue the remain-

der of the equitable adjustment costs on

appeal, Transamerica and Stroup agreed to

11

accept the modification as partial payment

only.

On October 24, 1990, Transamerica

filed a complaint in the Claims Court,

seeking a judgment against the Government

in the amount of $86,019.64 plus interest

(the difference between the amount awarded

in the unilateral contract modification

and the amount sought as equitable adjust-

ment), reasonable costs and attorney fees

and any other relief considered appropri-

ate. On July 12, 1991, the court conduct-~

ed a status conference which included

arguments on jurisdictional issues, and on

October 31, 1991, the court conducted a

hearing on the Government’s motion to

dismiss, at the end of which the Claims

Court pronounced its findings and conclu-

sions from the bench, granting the United

States’ motion to dismiss for lack of

subject matter jurisdiction and finding

12

that Transamericans letters (mainly the

September 1, 1988 letter but also consid-

ering the August 26, 1988 letter) did not

constitute a claim under the CDA because

they did not request a final decision from

the contracting officer. In the alterna-

tive, the Claims Court held that certifi-

cation of the claim was invalid because

language in the cover letter submitted

with the certification impermissibly qual-

ified it. On November 1, 1991, the com-

plaint was dismissed on the jurisdictional

grounds set out in the bench ruling.

Transamerica appealed.

DISCUSSION

Standard of Review

"This court reviews Claims Court

judgments to determine whether they are

‘incorrect as a matter of law’ or, pre-

mised on ‘clearly erroneous’ factual de-

13

terminations." Whitney Benefits Inc. v.

United States, 926 F2d 1169, 1171

(Fed.Cir.), cert. denied, 112 S.Ct. 406

(1191), quoting Heisig v. United States,

F.2d 1153, 1158 (Fed.Cir. 1983). The

court reviews a dismissal for lack of

jurisdiction de novo, jurisdiction being a

question of law.

Request for a Contracting Officer’s Final

Decision

The main question before this court

on appeal is whether the Claims Court

erred in holding that BBC’s September 1

submissions did not include a request for

a final decision, either express or im-

plied, as the Government alleges it was

required to do under the CDA and case law.

Transamerica argues that the claim as

submitted by BBC to the contracting offi-

cer met all the requirements of the CDA

14

and thus conferred jurisdiction on the

Claims Court. Section 605(a) of Title 41

U.S.C. states: "all claims by a contrac-

tor against the government relating to a

contract shall be in writing and shall be

submitted to the contracting officer for a

decision." Section 605(a) by requiring

submittal of a written claim "for deci-

sion" does not of itself add any authority

to the argument that there must be an

explicit request for a contracting offic-

er’s final decision. The statute’s broad

language demonstrates tht as long as what

the contractor desires by its submissions

is a final decision, that prong of the CDA

claim test is met.

Besides the little actual guidance

the statute provides on this issue, the

Government in this case relies on this

court’s decision in Mingus Constructors,

Inc. v. United States, 812 F.2d 1387

15

(Fed.Cir. 1987), for the statement that

Mingus’ letters sent to the contracting

officer purporting to be claims under the

contract did not qualify as claims be-

cause, in addition to noncompliance with

other claim factors, "[t])hey do not re-

quest a decision from the contracting

officer nor could they." Id. at 1395. In

Mingus, this court affirmed the Claims

Court’s grant of summary judgment in favor

of the Government on Mingus’ equitable

adjustment claim for damages arising out

of a road construction contract on the

Hopi Indian Reservation in Navajo County,

Arizona. The court found inter alia, that

certain letters from the contractor to the

contracting officer which expressed an

intent to file a claim and stated that the

contractor was in the process of assessing

impact tren changed conditions, did not

constitute claims. As Transamerica aptly

16

points out, Mingus turned upon this Cou-

rt’s consideration of "the special and

limited circumstances under which a claim

can be considered despite the execution of

a release." Mingus, 1395. No similar

issue exists in this case. As Mingus

itself points out, "any extension of the

opinion’s language beyond what was needed

to decide the facts of that case is prop-

erly characterized as dicta." Mingus,

1394. The language the Government relies

on in Mingus is thus dicta, that case not

turning on nor deciding the issue of whet-

her or not a request for a decision of a

contracting officer was necessary nor how

specific that request need be, and this

case does not deal with the consideration

of claim attempted to be submitted after a

release of claims has been executed.

In setting out the aforementioned

language, the Mingus court cited the

17

Claims Court’s decision in Hoffman Con-

struction Co. v. United States, 7 Cl.Ct.

518 (1895). Mingus, 812 F.2d at 1395.

The Claims Court in Hoffman stated: "(t)he

court believes that in order to establish

that a ‘claim’ has been submitted to a

contracting officer the relief requested

must include an expression of interest in

a final decision by the contracting offi-

cer. Such a belief is supported by the

language in section (c)(iii) of the Dis-

putes Clause which states that a written

claim shall be submitted to the contract-

ing officer for decision. See also 41

U.S.C. § 605(a). 7 Cl.Ct. at 525-26 (em-

phasis added)." For this proposition,

Hoffman relied on section 605(a), in and

on the Court of Claims’ decision in Para-

gon Energy Corp. v. United States, 645

F.2d 966 (Ct.Cl. 1981).

18

As explained above, section 605(a)

does not speak authoritatively to the

issue sought to be proved by the Claims

Court in this case. Furthermore, the

citation to Paragon Energy for authority

for this "requirement" is also off the

mark. While it is true that the Paragon

court considered the question of whether

the written claim was "submitted to the

contracting officer for a decision" under

section 605(a), in that case the Court of

Claims found that because the "letter

expressed Paragon’s interest ina ‘final

decision’ with regard to its ‘request for

contract reformation," that sufficed to

meet the standard of section 605(a).

However, the Paragon court, in no way set

up such a requirement under section 605-

(a). It simply found that the particular

factual showing in its case met the artic-

ulated statutory standard. Thus, the

19

Claims Court’s decision in Hoffman does

not. provide support for the proposition

that the claim must explicitly request a

contracting officer’s decision, but that

all that need be shown is an "expression

of interest," which may be made implic-

itly.

The Claims Court relied in its ruling

in this case on Mingus and on its own pre-

vious opinion in Sun Eagle Corp. v. United

States, 23 Cl1.Ct. 465 (1991). In Sun

Eagle, the Claims Court stated that "plai-

ntiff did not expressly request a final

decision in the November 29 letter, nor is

there any implication that plaintiff de-

sired a final decision. The letter sets

forth a statement of rights and payment

amounts and requests a meeting to discuss

these issues. Indeed, it would be incon-

sistent to find that plaintiff impliedly

requested a final decision when it ex-

20

— ee |

pressly requested a meeting to discuss the

situation." Although the Claims Court may

have been correct in Sun Eagle in its

assessment that there was no implication

-hat the plaintiff sought a contracting

officer’s final decision, we must disagree

with its general statement on the incon-

sistency between a request for a final

decision and the suggestion of discussions

on the issue.

In fact, there are two immediate

distinctions between the Sun Eagle case

and this case: first, in this case, it is

impossible as a matter of logic and in

light of the “rine. to state that

there is no implication that plaintiff

desired a final decision; that is obvious-

ly what Stroup desired-- a final decision

by the contracting officer on this equita-

ble adjustment claim; second, the state-

ment as to inconsistency between a request

21

for a final decision and the request for

future meetings was clearly ruled on pre-

viously by this court in Contract Cleaning

Maintenance, Inc. v. United States, 811

F.2d 586 (Fed. Cir. 1987), of which case,

the Claims Court was obviously aware in

its Sun Eagle opinion. We address these

issues seriatim.

I.

The September 1 letter submitted to

the contractor did not use the explicit

words "we request a final decision from

the contracting officer," but it is clear

from the language of the letter itself

that is what BBC wanted. BBC considered

this letter a CDA claim filed with the

authorized representative of the contract-

ing officer. Clearly, BBC desired a re-

sponse to this letter, and since BBC in-

tended this letter to serve as a statutory

claim, it also intended that the contract-

22

fen

ing officer either grant or deny the claim

in a final decision.

Further, the contracting officer was

on notice that Stroup wanted a final deci-

sion on its claim dating back to Stroup’s

November 25, 1988 letter to the Chief of

the Claims Section of the U.S. Army Corps

of Engineers which requested a prompt

decision on the pending equitable adjustm-

ent claim. Stroup’s February 21, 1989

telephone conversation with the Government

and the former general contractor also

notified the Government that it sought a

final decision on its claim. This court

will not require contractors to do more

than to comply as fully and reasonably as

possible with the statutory requirements

of the CDA when this court has definitive-

ly stated that certain “magic words" need

not be used and that the intent of the

23

"claim" governs. See Contract Cleaning,

811 F.2d at 592.

The September 1 letter was in writ-

ing, was submitted to the contracting

officer for a decision, requested payment

of a sum certain, and gave the contracting

officer adequate notice of the basis and

the amount of the claim. This court is

loathe to believe that in this case a

reasonable contractor would submit to the

contracting officer a letter containing a

payment request after a dispute had arisen

solely for the contracting officer’s in-

formation and without at the very least an

implied request that the contracting offi-

cer make a decision as to entitlement.

Any other finding offends logic.

Il.

As a general proposition, this court

clearly stated in Contract Cleaning, "[wje

24

know of no requirement in the Disputes Act

that a ‘claim’ must be submitted in any

particular form or use any particular

wording. All that is required is that the

contractor submit in writing to the con-

tracting officer adequate notice of the

basis and the amount of the claim." Id.

at 592. This view is obviously consonant

with the CDA itself which, besides the

direction given in section 605(a) as set

out herein, does not address the specific

requirements which a claim must contain.

In Contract Cleaning, one of the appealed

issues was whether certain letters submit-

ted by the contractor requesting payment

for contract amounts constituted CDA

Claims. The letters requested the payment

of monies allegedly owed under the con-

tract and indicated the contractor’s will-

ingness to work with the contracting offi-

cer to "finalize and conclude this mat-

25

4

<

:

“~ |

ter," suggesting that the parties nit

down, discuss, and resolve the matter

through negotiation. Jd. at 588-89. The

Government in that case disputed whether

any of the letters constituted CDA claims,

but this court stated that "[(tjhe letters

the appellant wrote to the government ...

constituted a claim under the Disputes

Act--as GSA itself explicitly recognized

with respect to at least on of those let-

ters." [FN2] The Contract Cleaning court,

coritradicting the Claims Court’s state-

ments in its ruling in this case, stated,

"[t)he fact that in those letters the

appellant frequently expressed the hope

that the dispute could be settled and

suggested meeting to accomplish that re-

sult does not mean that those letters did

not constitute claims." Id. to 811 F.2d

at 592. There is no necessary inconsis-

tency between the existence of a valid CDA

26

claim and an expressed desire to continue

to mutually work toward a claim’s resolu-

tion. S.Rep. No. 1118, 95th Cong., 2d

Sess. 1 (1978), reprinted in 1978 U.S.c.-

C.A.N. 5235, states that the purpose of

the Contract Disputes Act was to "induce

resolution of more contract disputes by

negotiation prior to litigation..." All

tribunals should foster negotiation as a

mechanism for the resolution of disputes

instead of erecting definitional struc-

tures which preclude, for their own valid-

ity, ongoing settlement measures. In this

case, the fact that BBC’s submissions on

behalf of Stroup stated that the contrac-

tor desired to meet and discuss the equi-

table adjustment request does not prevent

the qualification of those requests as

Claims under CDA.

Transamerica states in its Reply

Brief, “(ijt is the position of Trans-

27

america that the CDA statutory require-

ments as interpreted by this Court suggest

a common sense analysis to determine whe-

ther (1) the contractor asserted in writ-

ing and with sufficient specificity a

right to additional compensation, (2) the

government disputed that right, and (3)

the contractor communicated his desire for

a contracting officer decision. This

court agrees. Applying such a logical,

common sense analysis in this case, BBC’s

submissions were sufficient to qualify as

CDA claims.

Certification

Despite the fact that the Claims

Court stated that once making a finding on

the "claim" issue, it did not "deem it

necessary to continue to argue the point

of proper or improper certification," the

court, in its ruling, reached as an alter-

native basis for its "claim" decision the

28

a

issue of the sufficiency of BBC’s certif-

ication. The court found that the certif-

ication was defective because it was undu-

ly qualified, relying for this finding on

language found in the cover letter append-

ed to the certification.

Section 605(c)(1) of Title 41 states

on the issue of claim certification: For

Claims of more than $50,000, the contrac-

tor shall certify that the claim is made

in good faith, that the supporting data

are accurate and complete to the best of

his knowledge and belief, and that the

amount requested accurately reflects the

contract adjustment for which the contrac-

tor believes the government is liable.

The Court of Claims discussed the impor-

tance and purpose of the certification

requirement in Paul E. Lehman, Inc. v.

United States, 673 F.2d 352, (Ct.Cl.1982):

An important objective of Congress was to

29

"discourag[e] the submission of unwarrant-

ed contractor claims." S. Rep. No. 1118,

95th Cong., 2d Sess. 5, reprinted in

[1978] U.S.C.C.A.N. 5235, 5239. One meth-

od of accomplishing this purpose was pro-

vided in section 5 of the Act, 41 U.SC.C §

604, which makes a contractor liable for

the amount of any portion of its claim

that it is unable to support because of

misrepresentation or fraud. Another was

the certification requirement. This court

in Fidelity Construction Co. v. United

States, 700 F.2d 1379, 1384 (Fed.Cir.),

cert. denied, 464 U.S. 826 (1983), stated

that the certification requirement was one

of the "most significant provisions of the

CDA" and that Congress viewed the certifi-

cation requirement "as a mechanism to

discourage the submission of unwarranted

claims and encourage prompt settlements."

30

In this case there appears to be some

inconsistency between what the Claims

Court stated at the preliminary hearing

and what it said in its ruling on the

certification issue. The court stated at

its July 12 hearing: "[{y]Jou’ve got an ade-

quate certification as such, the real

issue is whether the cover letter dimin-

ishes it to the extent that the general

contractor could not be ‘held liable...

The certification itself sounds like it

does meet the requirements of 605(c)...

This certification is not qualified. It

is accompanied by a cover letter that

attempts to inch out of it. However, the

individual has put his John Henry to the

certification and I think could be held

liable.

kak

The only purpose here that is served

is to answer the question of has the con-

31

tractor put himself in a position where he

could be prosecuted for making a fraudu-

lent claim or statement to the contracting

officer? ... this kind of self-serving

other language that the contractor includ-

ed in his cover letter, sounded like an

attempt to diminish the certification

a but nonetheless, the certification was

made. (Emphasis added.)"

The clear import of the court’s stat-

ements at the July 12 preliminary hearing

was that in its opinion the certification

was valid and that the major policy of

certification of being able to hold a

contractor personally liable for fraudu-

lent claims was clearly satisfied in this

case. The court clearly erred when it

ultimately found that the BBC certifica-

tion was impermissibly qualified by the

cover letter’s language.

32

eerie

In United States v. Turner Construc-

tion co., 827 F.2d 1554 (Fed.Cir.1987),

alluded to by the Claims Court, the Gov-

ernment argued "that the certification

must not only be submitted in good faith

but must reflect the prime contractor’s

own belief that the submitted claim re-

flects the amount owed by the government

and that to allow the prime to substitute

the subcontractor’s belief for its own in

making a certification would make a sham

of the certification requirement, regard-

less of the merits of the submitted clain,

and would render meaningless the prohibi-

tion against direct appeals by subcontrac-

tors." 827 F.2d at 1561. The Turner

court did not find this argument persua-

sive, stating "{wje further agree ... that

the certification requirement requires not

that the prime contractor believe the

subcontractor’s claim to be certain, but

33

that the prime contractor believe that

there is good ground for the claim." This

court agrees with that enunciation. The

language of BBC’s September 1, 1988 cover

letter, which the Government alleges qual-

ified BBC’s certification, is perfectly

consistent with that standard set out in

Turner. BBC stated in its letter, "[(tjhis

claim is being filed by our subcontractor

and inasmuch as they do not have contract

privity with you, we are acting as a con-

duit on their behalf in this matter. We

do net have access to their books and

records and, therefore, cannot make any

statement with respect to the amount of

their claim. However, we have no reason

to believe that their cost figures and

delay estimates are incorrect."

This court has previously found that

even when a proposed claim certification

lacks certain elements specified in the

ee |

statutory standard of 41 U.S.C. § 605(c)-

(1), the certification can still be valid

if in "substantial compliance" with the

statute and its purposes. In United

States v. General Electric Corp., 727 F.2d

1567 (Fed.Cir.1984), this court ruled that

although the certification failed to state

the amount of the claim and did not in-

clude language to the effect "that the

amount requested accurately reflects the

contract adjustment for which the contrac-

tor believes the government is liable," it

contained the critical information re-

quired by the statute and was therefore in

"substantial compliance" with it.

The Claims Court erred in relying

upon the "qualified certification" issue

as an alternative basis for its judgment.

The certification made by BBC was binding,

as the court correctly recognized at the

July 12 hearing. Further, the allegedly

35

qualifying statement in the cover letter

underscored BBC’s belief that Stroup had

“good ground" for its clain. overall, the

certification was, at the very least, in

substantial compliance with the CDA’s cer-

tification requirement. Thus, the Claims

Court’s reliance on the impermissible

qualification of the certification as an

alternative basis for its decision was

clear error.

CONCLUSION

We reverse the Claims court’s judg-

ment that it did not have jurisdiction

over Stroup’s equitable adjustment claim.

The claim, considered in context, con-

tained a readily ascertainable request for

a contracting officer’s final decision.

We further hold that BBC’s certification

was valid and not so qualified as to make

it imeffective. The certification clearly

complied with the chief policy underlying

36

anemone

the CDA certification requirement, that

being the purpose of submitting the con-

tractor to liability for fraud. We remand

to the Claims Court for adjudication on

the merits of the claim for equitable

adjustment with interest.

COsTS

No costs.

REVERSED AND REMANDED.

FN1. The Modification stated,

(i)t is understood and agreed

that on account of the foregoing

modification of said contract,

additional time will not be al-

lowed. It is further understood

and agreed that the adjustment

constitutes compensation for all

coasts and markup directly and

indirectly attributable to the

change ordered, for all delays

related thereto, and for perfor-

mance of the change within the

time frame stated."

FN2. Transamerica states in

this case that the contractor’s

intent in its submissions "was

not only discernable, but clear-

ly understood by the contracting

officer as evidenced by subse-

quent correspondence." Just as

occurred in Contract Cleaning

37

Maintenance, Inc. v. United

States, 811 F.2d 586 (Fed.Cir.1-

987), the Government in this

case referred to BBC’s September

1 submission as a "claim." See

March 15, 1989 Contracting Offi-

cer letter, and March 28, 19889

Contracting Officer letter. The

fact that the Government re-

ferred to the operative submis-

sion(s) as "claims" was found

persuasive by this court in its

contract Cleaning analysis. Id.

at 592.

38