Appendix — United States v. Anthony Grace & Sons, Inc.

Supreme Court brief1966

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Supreme Court of the United States

OCTOBER TERM, 1965

No. 439

UNITED STATES, PETITIONER

vs.

ANTHONY GRACE & SONS, INC.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF CLAIMS

INDEX

Original Print

Record from the United States Court of Claims

Petition : 1 1

Exhibit 3—Letter of acceptability from De-

partment of the Air Force to Anthony

Grace & Sons, Inc., dated October 29,

1958 .... 23 13

Exhibit 7—Letter, cancelling letter of ac-

ceptability, from Department of the Air

Force to Anthony Grace & Sons, Inc.,

dated October 1, 1959 .............0...0.02..000.-... 42 18

Defendant’s answer .............22.--.---.sccecccseeeeeeeeeeee-eee 44 20

ii INDEX

Original Print

Record from the United States Court of Claims—

Continued

Defendant’s motion for summary ——

(omitted in printing) . ip Pe ESA wren 51 25

Exhibit Pap aeemD aR rot WN ; 51-A 25

Opinion of Armed Services Board of

Contract Appeals . ms B1-A 26

Letter cot Shales A, ree to

George S, Robinson, dated October

et ctcetoeiencns 61-L 40

Letter from Gee? ®. Robinace to , Sal-

vatore A, Locurto, dated October 19,

1959 . ead ei 61-N 42

Leiter ss - aiid iii: to ‘Sale

vatore A, Locurto, dated December

©, FID wevcacccvniniccinsssesseerererccenversererervers 61-0 438

Letter from Salvatore A. Locurto to

Secretary of the Air Force James H.

Douglas, dated December 16, 1959. §1-P 44

Letter from Captain Lloyd H, Purdy

to Anthony Grace & Sons, Inc., dated

December 22, 9859 .. sadconts 51-R 46

Paragraph 3% of Bid nk seein

Services Housing Project .......... 51-S 47

Opinion of Commissioner and aaa atl

for conclusion of law LEAMA LEE ES, 48

Opinion, Cowen, Chil... RE a 66

Dissenting opinion, Davis, J. ... i odeliiaicemhaa 9,5 a 88

Clerk's certificate (omitted in printing) ......... 219 91

Order allowing certiorari... Se ia hi ae ae 92

—

(fol. 1)

IN THE UNITED STATES COURT OF CLAIMS

No. 133-61

ANTHONY GRACE & Sons, INC., PLAINTIFF

Against

THE UNITED STATES OF AMERICA, DEFENDANT

PETITION—Filed April 5, 1961

The Petition of Anthony Graze & Sonis, Inc. respectfully

shows to this Honorable Court and alleges:

1, Plaintiff, Anthony Grace & Sons, Inc. is a New York

corporation with its principal office for the regular trans-

action of business at 151-45 6th Road, Whitestone, City

and State of New York.

2. Jurisdiction is conferred upon the Court of Claims

to render judgment in this action pursuant to 28 U.S.

Code, Section 1491,

8. Plaintiff is a building and construction contractor

who was, during the period herein set forth, qualified by

experience and financial responsibility to construct hous-

ing units fn accordance with the provisions of Section 408

(b) of Title IV of the Housing Amendment of 1955, as

amended,

4. On or about the Ist day of September, 1958, the De-

fendant, through the Department of Air Force, trans-

(fol. 2] mitted to the Plaintiff certain documents, includ-

ing Invitation For Bid (IFB) No, 19-608-59-15, relating

to the construction of 177 Units of Capehart Family

Housing at Topsham Air Force Station, Maine, designated

FHA Projects Nos, 022-81015-Air 12 and 022.81016-Air

18. Said bid had as its opening date September 30, 1958,

and

was opened on that date.

In part pertinent hereto the Invitation defined the

undertaking of the bidders, including this Plaintiff, in the

following language:

[fol.

“2. Sealed bids (in triplicate) for the construction

through FHA insured mortgage financing of the

above described total housing project, including the

furnishing of all necessary labor, equipment and

materials and the performing of all work, services

and arrangements, in strict accordance with the

terms of a Letter of Acceptability and a Housing

Contract, specimen forms of each being attached

hereto, will be received at Installation Engineers

Office, Attention: Topsham Monitor, Topsham

A.F.B., Maine until 2:00 P.M, E.S.T. on 80 Septem-

ber, 1958.”

“1. b. When bids are received and after consulta-

tion with the Federal Housing Commissioner (here-

inafter called the ‘Commissioner’), the Department

determines the person, partnership, firm or corpora-

tion, qualified by experience and financial responsi-

bility, who has submitted the lowest acceptable bid.”

‘e, The Department issues to that bidder (herein-

after caller the ‘eligible bidder’) a Letter of Accept-

abilty. That letter requires the eligible builder,

among other things, to take four actions: first, to

form 2 new corporation(s) (hereinafter called the

‘mortgagor-builder’) ; second, to arrange financing

for the cost of the total project, including profit, by

Building Loan Agreements between the mortgagor-

builder and mortgage lenders (hereinafter called the

‘mortgagees’); third, to cause each mortgagee to

8] obtain the Commissioner’s Commitment for Insur-

ance; and fourth, to execute a three-party Housing

Contract which defines the rights and obligations of

the Department, the eligible builder and the mort-

gagor-builders. The Letter of Acceptability also re-

quires the Department to execute a lease of a project

site to each mortgagor-builder.”

[ fol.

“d. Once the foregoing arrangements are made,

the parties in interest effect a ‘closing’ in which the

relationships of the parties are definitely established

by the delivery of all legal instruments.”

“4... . Should the bidder find discrepancies in, or

omissions from, such Drawings and Specifications

or other documents attached hereto, or should he be

in doubt as to their meaning, he should at once noti-

fy the Contracting Officer, Otis Air Force Base,

Massachusetts, and obtain clarification prior to sub-

mitting a bid. Information given will be transmitted

to all known interested bidders, . . .”

“5. Under the provisions of Title IV of the Hous-

ing Amendments of 1955, as amended, the total prin-

ciple [sic] amount of the mortgages is limited, among

other things to the amount of the bid of the eligible

builder. However, the Davis Bacon Act and Section

212(a) of the National Housing Act as amended

require that wages paid to laborers and mechanics

be the prevailing wage as determined by the Secre-

tary of Labor not more than ninety (90) days prior

to the commencement of construction. Since more

than ninety (90) days may elapse from the date of

this Invitation for Bids to the commencement of con-

struction, the bids called for by this Invitation For

Bids will include a provision for adjustment of the

dollar amount therein specified to reflect any differ-

ence between the tentative minimum wage schedule

attached hereto and the applicable minimum wage

scheduie as finally determined by the Secretary of

Labor. Any such adjustment will be in an amount

4] determined by the Commissioner to reflect such

differences, and the amount of the lowest acceptable

bid and the FHA estimated total replacement cost

of the projects will be amended in the amount so

determined by the Commissioner; except that, if such

an adjustment would increase the amount of the bid

above the amount of any other statutory maximum

applicable to the insurable mortgages, the eligible

builder will have the option of reducing his bid to

such statutory maximum or of withdrawing his bid.

E. “8. Each bidder is required to submit with his bid

a certified check in the amount of $25,000, payable to

the Treasurer of the United States, to insure that if

he is the lowest acceptable bidder for the total of 177

family housing units he will perform the necessary

preliminary steps and effect a closing with FHA

within the time prescribed in the Letter of Accepta-

bility, including the furnishing of an acceptable per-

formance and payment bond. In the event the lowest

acceptable bidder fails to effect a closing with FHA

within the time prescribed, his deposit will be for-

feited and become the property of the Government

as damages unless the Department finds that he has

made every effort to effect such closing and extends

the time to effect such closing. If the lowest accept-

able bidder effects a timely closing with the FHA

the amount of his deposit will be refunded to him

24 hours after the initial closing with FHA....

“a. ‘Timely Closing, as referred to in this para-

graph of the Invitation For Bids and closi:g period

as referred to elsewhere in these forms is construed

to be a period of approximately 60 days from the

date of opening of bids.”

F. “24. Bidders are further advised that the Housing

Contract will also be subject to certain other statu-

tory provisions with respect to labor and other mat-

ters as shown in the specimen form of Housing

Contract.”

[fol.5] 6. That the Contracting Officer is clearly identi-

fied as that Government officer resident at Otis Air Force

Base.

7. That additional documents transmitted with said

IFB included:

A. Plans and specifications prepared by Kelly &

Gruzen, architects.

B. A schedule of rates of wages determined by the

Secretary of Labor as applicable to the work to be

perfc ‘med. Said schedule is entitled, “Schedule A—

Rates of Wages Predetermination No. $23,731, Date

of Predeterminations June 19, 1958 Expiration Date

IRON SEAL AS PE NY TID ASS GLAAD, ARTES GET ORE” og SEE MRSC SPOR OR RE I

[fol.

of Predetermination September 18, 1958”. A copy

of this schedule is hereto annexed and made a part

hereof and designated Exhibit 1. In substance said

schedule sets forth minimum rates of wages per hour

for specific laborers and mechanics, including spe-

cifically designated building laborers (page 1); an

apprentice schedule (page 2) ; hourly rates for Build-

ing Construction personnel (page 3) ; and Heavy and

Highway Construction personnel (page 4).

C. A statement issued by the Federal Housing Ad-

ministration dated August 6, 1958 entitled, “Final

Appraisal and Eligibility Statement” consisting of a

Schedule A and Schedule B, together with a listing of

additive alternates. A copy of said statement is an-

nexed hereto and made a part hereof and designated

Exhibit 2. The aforementioned Schedule B spe-

cifically provided as follows:

“Off-site improvements to be furnished by the

Government and/or which the Government will

not be reimbursed out of mortgage proceeds:

(list items of off-site improvements

estimated above)

Certain earthwork, seeding, streets and paving,

sanitary sewer and necessary additions to sewer-

6] age disposal system, storm drainage, manholes,

headwalks, water and electrical distribution and

landscaping.”

D. A set of Specifications clearly segregating and

defining the scope and situs of the work to be per-

formed, namely, “Section 1 on-site, site preparation”

and “Section 2 on-site, Excavation, Filling and Back-

filling For Building Construction”,

1. That the said Section 2 in paragraph 2-01

defines the scope of on-site work, as follows:

“2-01 Scope

(a) Wo.k Included. The work covered by

this section of the Specifications consists in

furnishing all plant, labor, equipment and

materials and in performing all operations

in connection with excavating, filling, back-

filling and rough grading, complete for the

building and for building utilities lines to a

point five (5) feet outside the foundation

line, and other related items in strict accord-

ance with this Section of the Specifications

and the applicable Drawings, and subject to

the terms and conditions of the contract.”

“(b) Work not Included. Clearing and grub-

bing, excavation, filling and grading for

parking areas, roads, walks, drainage, sew-

ers and other sub-surface utilities systems,

and excavation for the building utilities be-

yond planes five(5) feet outside the building

line are not included under this Section of

the Specifications. Stripping of topsoil is

specified in Section 1, Site Preparation.”

8. That, on or about about September 30, 1958, Plain-

tiff duly submitted its bid bearing the same date in re-

sponse to and in accordance with and in reliance upon the

terms and conditions of said Invitation and documents

related and appended thereto. Plaintiff, in its bid, offered

to construct said housing and furnish the necessary serv-

[fol. 7] ices connected therewith at a base price of $2,-

653,022.00, and to furnish certain additive alternatives

at a price of $213,071.00 or a total price of $2,866,093.

9. Thereafter, by letter dated October 29, 1958, the De-

fendant, acting through the Department of Air Force, ad-

vised the Plaintiff that it was the “eligible bidder” and

had submitted the lowest acceptable bid. This letter of the

Department of Air Force and the documents referenced

therein, is entitled “Letter of Acceptability” and from it

emerges the contract between this Plaintiff and the De-

fendant. Said “Letter of Acceptability” is annexed hereto

and made a part hereof, and is designed Exhibit 3.

10. That said Letter of Acceptability, provided in part

as follows:

“2. Failure to perform all obligations prior to the

é time prescribed for closing will be just cause for

| cancelling all commitments undertaken with you in

PRI ae Ee

connection with the housing project and for the re

covery under your bid security of liquidated damages

in the sum of $25,000, together with actual damages

to the Department, such actual damages to be

itemized and determined by the Contracting Officer,

whose decision will be reduced to writing and fur-

nished to you by mail or otherwise. Such decision

shall be final and conclusive unless, within 30 days

from the receipt thereof, you appeal in writing to the

head of the Department or his duly authorized repre-

sentative, and his decision shall, unless determined by

us as necessarily to imply bad faith, or not supported

a court of competent jurisdiction to have been fraudu-

lent or capricious or arbitrary, or so grossly errone-

by substantial evidence, be final and conclusive. In

connection with any appeal under this paragraph

you will be afforded an opportunity to be heard and

to offer evidence in support of your appeal.”

“6. You are required to be ready for the closing on

or before January 8, 1959, and your failure to do so

(fol. 8] will indicate your inability to carry out the obliga-

tions and terms of your bid and this Letter of Accept-

ability, provided that the Contracting Office: may

extend the date of closing in writing upon your sub-

mission of written documented proof that the delay

was caused by conditions beyond your control.”

11. That Plaintiff duly entered upon performance of

the conditions of said contract on its part to be performed,

as s.t forth hereinabove in paragraph 5. Further, Plain-

tiff on or about the 19th day of November, 1958 applied

for an appropriate wage determination as required under

the following provision set forth in said Letter of Accept-

ability.

“1, n. Make aplication through the Contracting

Officer, Otis A.F.B., Massachusetts, to the Secretary

of Labor for an appropriate wage determination,

if necessary (on a Department of Labor form DB-11,

which will be supplied upon request by the Contract-

ing Officer) for use in the construction of the project,

and to furnish a copy of such wage determination

to the Contracting Officer and the Commissioner.

Such wage determination will be used by the Com-

missioner to increase or decrease the bid price in the

manner specified in your bid.”

12. That the original closing date of January 8, 1959

as set forth in the Letter of Acceptability, was, by mutual

consent of the parties, postponed and extended on several

occasions because of conditions beyond the control of the

Plaintiff and principally for the reason that Defendant

was unable and unwilling and in any event, did not furn-

ish to Plawtiff, as required by it under said Letter of

Acceptability, the appropriate and final revision applicable

to the final wage determination,

18. Plaintiff's repeated and successive best efforts to

secure such revisions arising out of said applicable and

appropriate wage determinations were unsuccessful, Con-

flicting rulings and interpretations arose within certain

(fol. 9} agencies of the Defendant, including the Director

of Federal Housing, Department of Labor and the Depart-

ment of the Air Force as to the appropriate increase ap-

plicable to this agreement. Plaintiff was not a party to

these conflicts and did not directly or indirectly contribute

thereto,

14. That, as heretofore stated in paragraph 11, Plain-

tiff, after having entered into performance under said

agreement, had, on the 19th day of November, 1958 made

application for an appropriate wage determination, It

was not until January 28, 1959 that Plaintiff received

two new schedules of wage rates, each dated January 28,

1959 and expiring April 29, 1959, herein referred to as

Decision 2A and 2B. A copy of said Decision 2A desig-

nated “Decision of the Secretary”, U.S, Department of

Labor, bears Decision No, T18 569 and is annexed here-

to and made a part hereof and designated Exhibit 4. It

sets forth hourly wage rates for various classifications,

including “Laborers (Building)". The companion De-

cision, referred to as Decision 2B, bears No, T14 020 and

is annexed hereto and made a part hereof and designated

Exhibit 5. It sets forth wage rates for “Heavy and High-

way Construction” under the subject of “Construction

. Streets and Roads in connection with Capehart Hous-

ng”.

A. The initial and base schedule of rates and re-

lated scope of work section of the specifications clear-

ly covered work from the building foundation line

“to a point five (5) feet outside the foundation line”

(Exhibit 1). The new schedule of rates (Decision

2A, Exhibit 4) arbitrarily disregarded the five (5)

feet limitation and extended the higher building con-

struction rates to all work beyond the five (5) ft.

from the foundation so as to cover all work in the

proposed project except for work covering construc-

tion of the streets,

B. The companion decision 2B (Exhibit 5) similar-

ly materially differs from the basic schedule of rates

d (Exhibit 1) and imposes the low rates of wages for

: “heavy and highway areas” on additional areas, not

: (fol.10] originally contemplated, namely, Section 1, Para-

graph 1.14 and Sections 28 and 29 of the specifica-

tions,

15. That the revisions evidenced in said Decisions 2A

and 2B (Exhibits 4 and 5) constituted a substantial

change in labor rates as well as applicable areas for which

the work at such rates was to be performed, materially

differing from the requirements and rates spelled out in

the original Invitation For Bid and the bid of the Plain-

tiff. Plaintiff promptly endeavored to expedite the pro-

cessing of a revision of its bid price by requesting the

Defendant through the Department of Air Force to re-

quest of the FHA a revised final appraisal and eligibility

statement,

16, That various conferences were held between Plain-

tiff and the interested Departments representing the

Defendant, including Department of Air Force, Depart-

ment of Labor, and the Federal Housing Administration,

and correspondence exchanged, all in an effort to finalize

the applicable labor rates pertinent to Plaintiff's per-

formance under its contract with the Defendant. Plain-

tiff was advised that it was entitled to an increase in

price as a result of said Decisions 2A and 2B, as is evi-

denced by letter Plaintiff received from the Federal Hous-

ing Administration dated May 18, 1959, copy of which

~ Deng hereto and made a part hereof and designated

t 6,

17. That, by telegram dated March 28, 1959 the Di-

rector of the Federal Housing Administration advised the

Plaintiff to prepare recalculation of price based on the

new wage schedules so that same might be reviewed.

Pursuant thereto, Plaintiff submitted to the FHA a sched-

ule representing revised costs reflecting said Decisions

2A and 2B, the then current wage determinations.

18. Thereafter, conferences were held with officials of

Department of Air Force and Department of Labor and

flowing therefrom and in accordance therewith Plaintiff

prepared a revised schedule of prices based on the current

{fol. 11] Department of Labor wage rates submitting

same to the FHA and Department of Air Force on or

about May 14, 1959.

19. During this entire period, the closing date originally

scheduled for January 8, 1959 had been adjourned from

time to time and the Plaintiff expressed its desire and

willingness to set a firm closing date in their letter to the

Department of Air Force dated July 2, 1959 immediately

upon the interested agencies within the Government re-

solving the appropriate increases applicable to the wage

determinations pertinent to this particular contract.

20. That thereafter, through no fault of Plaintiff, but

wholly through the negligence, failure and refusal of the

Defendant, acting through its duly authorized representa-

tives, Plaintiff was unable to secure the appropriate in-

creases in said wage determinations, despite its best ef-

forts to do so.

21. That on or about June 26, 1959 the Department of

the Air Force advised Plaintiff that it would not grant

any revisions in the current wage scales allowing Plaintiff

additional increase in contract price.

22. That on October 1, 1959, the Department of Air

Force cancelled the Letter of Acceptability theretofore en-

tered into with Plaintiff, a copy of which letter is hereto

annexed and made a part hereof and designated Exhibit

23. That on October 7, 1959 Plaintiff unsuccessfully

sought to continue in its performance under said agree-

ment, which offers and opportunities were denied Plaintiff,

ee n

24. That on or about December 31, 1959 Plaintiff en-

tered an appeal with the Armed Services Board of Con-

tract Appeals ASBCA #6167. Said ASBCA, on June 29,

1960, dismissed Plaintiff’s appeal on the ground that

Plaintiff’s appeal was not filed within the required 30

(fol. 12] day period from the alleged decision of the Con-

tracting Officer. Said Board of Contract Appeals, however,

did not consider any questions or matters other than the

timeliness of the appeal and did not accept the Plaintiff’s

position that they did not recognize the particular official

of the Department of Air Force as its Contracting Officer

or the letter from said official as a “final decision”.

25. That Defendant’s arbitrary and capricious action,

in direct violation of its contractual obligations, made it

impossible for the Plaintiff to continue in its efforts to

perform under this contract by refusing to issue the ap-

propriate revised wage determination reflecting pertinent

increases applicable to the contract. To the contrary, said

Defendant wilfully and without cause unilaterally altered

the scope of work provisions and sought to issue and did

issue wage schedules in direct contravention of its con-

tractual obligations.

26. That Defendant has failed, neglected and refused,

without just cause, to permit Plaintiff in continuance of

said agreement and that the Plaintiff has duly performed

all the conditions of the said contract on its part to be

performed so far as it was permitted so to do by the said

Defendant.

27. The Plaintiff is ready and willing and able to per-

form said agreement in accordance with the terms there-

of, including the wage schedules applicable to and refer-

enced in said Letter of Eligibility theretofore granted it.

28. That Plaintiff's damages, arising out of Defend-

ant’s breach of this agreement, including sums expended ~

by Plaintiff in its performance under the agreement prior

to cancellation thereof, counsel fees, and proposed profit,

together with interest and including sum deposited in the

amount of $25,000, in accordance with the terms and con-

ditions of its agreement, is in the amount of $450,000.

na reeyamtenepacneeenito a

(fol. 13] WHEREFORE, Plaintiff demands judgment in the

sum of $450,000, together with interest, costs, disburse-

ments and legal fees.

DAVID FROMSON,

Attorney for Plaintiff

Office & P.O, Address

Franklin National Bank

Building

600 Old Country Road

Garden City, New York

[fols. 14-22] ** *

(fol. 23]

EXHIBIT 8 TO PETITION

29 OCT 1958

Gentlemen:

1. Your bid dated September 30, 1958, in the amount of

$2,866,098, offering to construct through mortgage financ-

ing the housing projeci consisting of 177 units at Top-

sham Air Force Station, Maine (Invitation No. 19-603-

59-15, FHA Projects Nos. 022-81015-Air 12 and 022-

81016-Air-13) under Title IV of the Housing Amend-

ments of 1955 (Public Law 345, 84th Congress), as

amended, has been determined by the Department of the

Air Force (hereinafter referred to as the “Department” )

after consultation with the Federal Housing Commissioner

(hereinafter called the “Commissioner”’) to be the lowest

acceptable bid. This acceptance of your bid price of

$2,866,093 includes the construction and provision of the

following Additive Alternates: No. 1 Carports; No, 2

Garbage Disposal Units; No. 8 Gutters and Downspouts;

No. 4 Hardwood Floors; No. 5 Venetian Blinds; No. 6

Combination Storm and Screen Sash; No. 7 Outdoor

Clothes Dryers; No. 8 TV Antenna System; No. 9 Side-

walks; No, 10 Ceramic Tile; No. 11 Landscaping; and

No. 12 Landscaping. The above Additive Alternates were

contained in paragraph 10 of the Invitation For Bids, as

amended, and paragraph 1 of the Bid Form, and are in-

cluded in the plans and specifications. Issuance of this

Letter of Acceptability obligates you, at your expense and

within the condition of your bid security, to:

a. Complete in conformity with the requirements of the

Federal Housing Commissioner the corporate organization

ANTHONY GRACE & Sons INc.

RECEIVED

NOV 8 1958

\f0..24] of Topsham AFB Housing, Inc., and Topsham

AFB Housing No. Two, Inc., (hereinafter referred to as

the “Mortgagor-Builder”) in accordance with the laws of

the State of Delaware, with each having a paid-in capital

—

stock of $1,000, cause them to be qualified to do business

in the State in which the housing project is to be located,

cause the mortgagor-builder to hold an immediate election

of officers with authority on behalf of the mortgagor-

builder to execute with the Department two leases of land

from the Department, to execute the Housing Contract

hereinafter referred to, and such other instruments as

may be required by the Commissioner or the mortgagee.

b. Immediately following such incorporation of the two

corporations and election of officers, cause the stockhalders

of the mortgagor-builder to execute a stock transfer and

escrow agreement for each of the corporations in a form

approved by the Commissioner.

ce. Complete the necessary arrangements with a mort-

gage lender acceptable to the Commissioner as a mort-

gagee for financing the total cost, including your profit, of

said housing project through the execution of mortgages

and mortgage notes for a period of tweny-five years and

bearing interests at four and one-quarter per centum per

annum, with the option of prepayment without penalty at

the end of fiteen years; cause the mortgagor-builder and

said mortgage lender to enter into a Building Loan Agree-

ment for each corporation, a specimen form of which is

attached to the Invitation For Bids; cause said mortgage

lender to apply to the Commissioner for mortgage insur-

ance for each corporation, and take all steps necessary to

cause the Commissioner to issue a Commitment for Insur-

ance to provide insurance during and after construction

of said housing project.

d. Cause the mortgagor-builder to execute in Topsham,

Maine, two leases, a form of which is attached to the

Invitation For Bids, with the appropriate officer of the

Department.

[fol. 25] e. Make arrangements for and obtain such

title insurance policies or other evidence of title, based

upon the surveys of the housing project sites and the

descriptions contained in the leases mentioned in the

preceding subparagraphs, as may be required by such

mortgagee and the Commissioner, or either of them. For

this purpose, you may obtain from the Contracting Officer

copies of the surveys made in connection with the Archi-

tect-Engineer contract.

f. Make all necessary arrangements with the Depart-

ment or otherwise for the utility services required and be

prepared at the closing (as defined in your bid) to furnish

evidence in the form of written contracts or commitments

that there will be made avaliable to you during the con-

struction period at the housing project sites such utility

services as will be adequate for construction.

g. Be prepared to pay or cause to be paid prior to or

at the closing: (1) to the Commissioner, the filing fee,

processing fee, commitment fee and initial premium for

mortgage insurance during the construction period; (2) to

the Contracting Officer, $60,500 representing the cost of

the Architect-Engineer services for the design of the

Housing Project, the inspection fee in the amount of

$44,704, and the sum of $2,000 as consideration for the

two leases; and (3) any other expenses incurred by the

mortgagor-builder and the bidder pursuant to the Invi-

tation For Bids and the documents thereto attached.

h. Be prepared at the closing to furnish a properly

executed performance and payment bond (FHA Form

2452C, Performance Bond-Dual Obligee, FHA Form

2452CP, Payment Bond-Dual Obligee) as required pur-

suant to Article XIII of the form of Housing Contract

attached to the Invitation For Bids.

i. Execute prior to or at the time of closing the Hous-

ing Contract and all other documents required to be exe-

cuted or delivered by you at such closing.

(fol. 26] j. Cause the mortgagor-builder and the mort-

gagee through their duly authorized representatives prior

to or at the time of closing to execute all documents re-

quired to be executed and delivered by them respectively

at the closing.

k. Furnish the Air Force representative with two (2)

photostatic copies of each of the FHA Commitments for

Insurance and the FHA Project Analyses as soon as pos-

sible after issuance thereof, and two copies of all addition-

al closing papers required by the Commissioner or said

mortgagee.

1. Furnish prior to the closing an approved and exe-

cuted Trade Payment Breakdown, FHA Form 2536, in-

cluding the signature thereon of the mortgagor-builder.

m. Acknowledge in writing receipt of this letter of ac-

ceptability and attach an estimated schedule showing dates

upon which you will have accomplished the several steps

required above.

n. Make application through the Contracting Officer,

Otis Air Force Base, Massachusetts, to the Secretary of

Labor for an appropriate wage determination, if neces-

sary, (on a Department of Labor Form DB-11 which will

be supplied upon request by the Contracting Officer) for

use in the construction of the project, and furnish a copy

of such wage determination to the Contracting Officer and

the Commissioner. Such wage determination will be used

by the Commissioner to increase or decrease the bid price

in the manner specified in your bid.

2. Failure to perform all obligations prior to the time

prescribed for closing will be just cause for cancelling all

commitments undertaken with you in connection with the

housing project and for the recovery under your bid se-

curity of liquidated damages in the sum of $25,000, to-

gether with actual dawages to the Department, such ac-

tual damages to be itemized and determined by the Con-

tracting Officer, whose decision will be reduced to writing

and furnished to you by mail or otherwise. Such decision

(fol. 27] shall be final and conclusive unless, within 30

days from the receipt thereof, you appeal in writing to the

head of the Department or his duly authorized representa-

tive, and his decision shall, unless determined by a court

of competent jurisdiction to have been fraudulent or

capricious or arbitrary, or so grossly erroneous as neces-

sarily to imply bad faith, or not supported by substantial

evidence, be final and conclusive. In connection with any

appeal under this paragraph you will be afforded an op-

portunity to be heard and to offer evidence in support of

your appeal.

3. All payments to the Contracting Officer shall be by

certified or cashier’s check made payable to the Treasurer

of the United States, and all payments to the Commis-

sioner shall be by certified or cashier’s check made payable

to the Commissioner of FHA, but separate checks shall be

made to each, respectively.

a '

4. This Letter of Acceptability commits the Department

to execute two leases substantially in the form attached to

the Invitation For Bids upon compliance by you with the

provisions of subparagraph “a” hereof ; and to enter into

negotiations with you for any utility services to be furn-

ished by the Department during the construction period.

5. You are required to furnish written proof satisfac-

tory to the Contracting Officer within 30 days of the date

of this Letter of Acceptability that you have a firm ar-

rangement (1) with an acceptable financial institution to

furnish the contstruction fin:.ncing evidenced by the filing

of an application for mortgage insurance with the Federal

Housing Insuring Office; and (2) a written commitment

by a qualified lender to purchase the mortgage as a long-

term lender, Your failure to furnish this proof within

the 30 days will be determined to be evidence that you are

unable to fulfill the terms of you bid and this Letter of

Acceptability and result in this Letter of Acceptability

being of no further effect, provided that the Contracting

Officer in writing may extend the date for furnishing the

(fol. 28] information required in (1) and (2) above, upon

your submission of written documented proof that the de-

lay was caused by conditions beyond your control.

6. You are required to be ready for the closing on or

before January 8, 1959, and your failure to do so will in-

dicate your inability to carry out the obligations and

terms of your bid and this Letter of Acceptability, pro-

vided that the Contracting Officer may extend the date of

closing in writing upon your submission of written docu-

mented proof that the delay was caused by conditions be-

yond your control.

Sincerely yours,

| GEORGE S. ROBINSON

Deputy Special Assistant for Installations

Anthony Grace & Sons, Inc,

151-45 6th Road

Whitestone

Queens, New York

{fols. 29-41] ** *

[fol, 42] EXHIBIT 7 TO PETITION

DEPARTMENT OF THE AIR FORCE

WASHINGTON

OFFICE OF THE SECRETARY

OCT 1 1959

Gentlemen:

1. In your letter to the Department of the Air Force

dated July 2, 1959 you have indicated an unwillingness to

set a closing date for your contract to build a 177 unit

family housing project at Topsham Air Force Station,

Maine. Paragraph 6 of the Letter of Acceptability dated

October 29, 1958 required you to be ready for closing on

or before 8 January 1959. The Department, at your re-

quest, has repeatedly extended this closing date in an

effort to have resolved the questions raised by you pertain-

ing to the application of certain wage rates to the con-

struction of the project. On 26 June 1959 you were in-

formed by letter as to the position of the Department and

requested to state your position within 10 days of the date

of the letter. Your reply of July 2, 1959 indicating an un-

willingness to set a closing date constitutes a failure on

your part to perform your obligations under your bid and

under the letter of acceptability.

2. You have alleged in your letter that a failure of the

Department to act promptly in this matter has caused the

long delay in resolving the questions of applicable wage

rates. In this connection, your attention is directed to the

fact that your request for a determination of the position

of the Air Force was not made until 29 May 1959, over

four months subsequent to the date when you were re-

quired to be ready for closing.

{fol.48] 3. Accordingly, pursuant to paragraph 2 of

the letter of acceptability, the Department hereby cancels

all commitments undertaken with you in connection with

Co ON IRE,

the housing project, reserving all its rights with respect

to the recovery of damages,

Sincerely,

GEORGE S, ROBINSON

Deputy Special Assistant for Installation

Anthony Grace & Sons, Ince,

151-45 6th Road

Whitestone

Queens, New York

| CC: S. Locurto

| I. Monforte

| S. Pollack

File

[fol. 44]

IN THE UNITED STATES COURT OF CLAIMS

No. 133-61

[Title Omitted]

DEFENDANT’S ANSWER—Filed July 19, 1961

Defendant, in answer to the petition filed herein, ad-

mits, denies, and alleges as follows:

1. Denies the allegations of paragraph 1 for lack of in-

formation znd knowledge sufficient to form a belief as to

the truth thereof.

2. Alleges that the allegations of paragraph 2 are ones

of law not requiring answer.

3. Admits the allegations contained in paragraph 3.

4, Admits the allegations contained in paragraph 4 ex-

cept as to the date the Air Force transmitted certain

documents and the Invitation for bids to the plaintiff,

which defendant denies for lack of information and

[fol. 45] knowledge of defendant’s attorneys sufficient to

form a belief as to the truth thereof; avers that the In-

vitation was dated August 22, 1958.

5. Admits that the paragraphs quoted, insofar as they

are correctly quoted, are part of the aforesaid Invitation

for Bids but alleges that they are not quoted in sequence,

that the paragraphs quoted do not constitute all of the

pertinent portions thereof, that reference to the whole

instrument and the documents annexed thereto is neces-

sary for an understanding thereof, and that the document

speaks for itself.

6. Admits the allegations contained in paragraph 6.

[In only one place is any reference made to contracting

officer, i.e., paragraph 4 quoted by plaintiff at p. 3.]

——————

7. Admits that the documents listed by plaintiff in

paragraph 7, among others, accompanied the Invitation

for Bids; insofar as said quotations by plaintiff in the ex-

hibits attached to its petition conform to the Bid docu-

ments, admits them and insofar as they do not conform

to the Bid documents, denies them; alleges further that

said documents speak for themselves.

8. Admits the allegations contained in paragraph 8.

9. Admits the allegations contained in the first and

third sentences of paragraph 9; admits the allegations of

the second sentence down to and including the words

“Letter of Acceptability” but denies that there emerged

a contract between plaintiff and defendant as a result

thereof; answering further, defendant avers that the

[fol. 46] conditions enunciated in the Letter of Accepta-

bility constituted conditions precedent to the housing con-

tract, that plaintiff never agreed to or effected a closing

of said contract and that in accordance with paragraph 6

thereof the Letter of Acceptability was withdrawn; de-

fendant further alleges that the failure to effect a closing

of the contract was due to plaintiff’s own fault.

10. Admits that the paragraphs quoted from the Letter

of Acceptability in paragraph 10 appear in said Letter

and insofar as said quotations conform to the aforemen-

tioned document admits them and insofar as they do not

conform to the aforementioned document, denies them ;

alleges further that said Letter of Acceptability speaks

for itself,

11. Admits that plaintiff entered upon performance of

the conditions precedent to the contract and that plain-

tiff applied for a wage determination but avers that

plaintiff refused to accept the applicable wage determina-

tions issued by the Department of Labor.

12. Denies the allegations in paragraph 12, except ad-

mits that the original closing date of January 8, 1959,

was postponed and extended on several occasions but avers

that such postponements and extensions were because of

plaintiff’s refusal to accept the appropriate wage deter-

minations furnished and because FHA determined that

application of the interpretation of the wage determina-

tions by plaintiff would result in a mortgage in excess of

the statutory limit set forth in Section 803(b) (3) (B)

of the National Housing Act (12 U.S.C. 1748b).

(fol. 47} 18. Denies the allegations contained in para-

graph 13, except admits that the wage revisions were not

consummated because of plaintiff's repeated refusals to

accept applicable wage determinations issued by the De-

partment of Labor as interpreted by FHA and the De-

partment of the Air Force; by way of further answer

defendant avers that plaintiff delayed submitting neces-

sary information to process the application for mortgage

insurance and required fees,

14, Admits that the plaintiff made application for ap-

propriate wage determinations and that, on January 28,

1959, plaintiff received two new schedules of ny rates;

denies the remaining allegations on the ground that they

constitute conclusions of law.

15. Denies the allegations of the first sentence of para-

graph 15; avers that the Government attorneys lack

sufficient information and knowledge sufficient to form

a belief as to the truth of the allegations of the second

sentence and they are therefore denied,

16. Admits the allegations contained in paragraph 16

except avers that the date of the FHA letter referred to

in the second sentence was March 18, 1959, not May 18,

1959,

17. Admits that by telegram dated March 28, 1959, the

Director of the Federal Housing Administration requested

that plaintiff submit an amended application suk louse

and advised that the entire situation would be reviewed;

avers that defendant's attorneys lack sufficient informa-

tion and knowledge sufficient to form a belief as to

whether said application and figures were submitted,

[fol. 48} 18, Admits that conferences were held with of-

fficials of the Department of Air Force and Labor but

denies the remaining allegations for lack of information

and knowledge of counsel for the defendant,

19, Admits that the original closing date of January

8, 1959, had been extended from time to time but, ex-

cept as so admitted, denies all remaining allegations and

specifically denies that the referenced letter of July 2,

1959, indicated a desire and willingness to set a firm

closing date,

—

20, Denies the allegations in paragraph 20; answering

further, defendant alleges that defendant was willing at

all times pertinent hereto to issue a revision in the con-

tract price based on the applicable wage determinations

but that plaintiff refused to accept the applicable wage

increases offered by the FHA in accordance with law,

21. Denies the allegations contained in paragraph 21

and, answering further, alleges that on June 26, 1959,

the Department of the Air Force advised plaintiff ‘that it

did not concur in plaintiff's position regarding justifica-

tion for an increase in the contract price and in the same

letter asked plaintiff for advice as to whether it intended

to effect a closing,

22. Admits the allegations of paragraph 22 but alleges

further that plaintiff failed to perform its obligations un-

der the Letter of Acceptability by refusing to close the

contract, causing the defendant, a year after the opening

of bids, to withdraw said Letter of Acceptability,

23. Denies the allegations contained in paragraph 23.

(fol. 49] 24, Admits the allegations contained in para-

graph 24,

25. Denies the allegations of paragraph 25,

26. Denies the allegations of paragraph 26.

27. Denies the allegations of paragraph 27.

28. Denies that plaintiff is entitled to the amount

sought or to any other amount or to any other relief

and denies that defendant breached its agreement or is

indebted to plaintiff for the sum claimed or for any other

sum, Defendant affirmatively alleges that the retention

it of the $25,000.00 was in accord with the provisions

the Letter of Acceptability and constituted reasonable

liquidated damages,

29. Denies each and every allegation not hereinbefore

expressly admitted, denied, or qualified,

AFFIRMATIVE DEFENSE

30. Defendant alleges that plaintiff's failure to file a

timely appeal after the withdrawal by the Air Force of

the Letter of Acceptability constitutes a failure to ex-

haust avaliable administrative remedies and, further,

that plaintiff has also failed to avail itself of adminis-

trative remedies dealing with the problem of minimum

wage rates in that it failed to seek withdrawal of its bid

and release, as provided for, when escalation raised the

per unit price of Capehart housing above the statutory

maximum,

[fol. 50] WHEREFORE, defendant prays for dismissal] of

the petition.

WILLIAM H. ORRICK, JR.

Assistant Attorney General

Civil Division

DAVID ORLIKOFF

Attorney, Civil Division

Department of Justice

Mary J. TURNER

Attorney, Of Counsel

Department of Justice

(fol. 51]

IN THE UNITED STATES COURT OF CLAIMS

No, 133-61

* * * *

DEFENDANT’S MOTION FoR SUMMARY JUDGMENT—

Filed October 18, 1963

[Omitted in printing]

(fol. 51-A]

EXHIBIT A TO DEFENDANT’S MOTION FOR SUMMARY

JUDGMENT (EXCERPTS)

ARMED SERVICES BOARD OF

CONTRACT APPEALS

WASHINGTON, D. C.

ASBCA No. 6167

Appeal of—

Anthony Grace & Sons, Ine.

Under Invitation No. 19-603-59- 15,

dated 22 August 1958, and

Letter of Acceptability,

dated 29 October 1958

APPEARANCES FOR THE GOVERNMENT:

BRIGADIER GENERAL A, W. RigsBy, USAF

Chief Trial Attorney

WILBUR J. SMOLKA, Esq.

Trial Attorney

APPEARANCES FOR THE APPELLANT:

SALVATORE A. LocurTo, Esq.

ON MOTION TO DISMISS

The instant contract, which became operative upon

dispatch by the Government of the Letter of Acceptability

described above, related to the construction of 177 units

of Capehart Family Housing at Topsham Air Force Sta-

tion, Maine.

In the covering letter by which the cited Invitation was

forwarded appellant was notified that “The following

listed documents are applicable to this project and are

furnished for your information and use: (Bidders’ Check

List is also enclosed)

“a, INVITATION FOR BIDS (IFB) 19-603-59-15

ae . * e

“eo, Letter of Acceptability

oe * a e

“i, Department of Labor Wage Determination No.

S 23,731

* * * #)

The opening portion of the Invitation also notified ap-

pellant that:

“1. a. The Department of the Air Force (herein-

after called the ‘Department’) issues an Invitation

[fol. 51-B] For Bids and receives bids,

“bh, When bids are received and after consultation

with the Federal Housing Commissioner (herein-

after called the ‘Commissioner’), the Department

determines the person, partnership, firm or corpora-

tion, qualified by experience and financial responsi-

bility, who has submitted the lowest acceptable bid.

“ce, The Department issues to that bidder (herein-

after called the ‘eligible builder’) a Letter of Accept-

ability. That letter requires the eligible builder,

among other things, to take four actions: first, to

form 2 new corporation(s) (hereinafter called the

‘mortgagor-builder’) ; second, to arrange financing

for the cost of the total project, including profit, by

Building Loan Agreements between the mortgagor

builder and mortgage lenders (hereinafter called the

‘mortgagees’) ; third, to cause each mortgagee to ob-

ott

tain the Commissioner’s Commitment for Insurance;

and fourth, to execute a three-party Housing Con-

tract which defines the rights and obligations of the

Department, the eligible builder and the mortgagor-

builders. The Letter of Acceptability also requires

the Department to execute a lease of a project site

to each mortgagor-builder,

“d. Once the foregoing arrangements are made,

the parties in interest effect a ‘closing’ in which the

relationships of the parties are definitely established

by the delivery of all legal instruments. Among other

things at the closing, each mortgagor-builder delivers

to its mortgagee a note and mortgage with an amorti-

zation period of 25 years (with the option of pre-pay-

ment without premium at the end of 15 years) and

bearing interest at not to exceed four and one quar-

ter (44) per centum per annum, and the eligible

builder deposits in escrow with the mortgagees the

capital stock of the newly formed mortgagor-builder

corporations for ultimate delivery to the Department,

in accordance with the escrow agreements,

. . a” *

In part pertinent hereto the Invitation went on to de-

fine appellant’s undertaking in the following language: .

“2. Sealed bids (in triplicate) for the construction

through FHA insured mortgage financing of the

above described total housing project, including the

furnishing of all necessary labor, equipment and

materials and the performing of all work, services

and arrangements, in strict accordance with the

terms of a Letter of Acceptability and a Housing

Contract, specimen forms of each being attached

hereto, will be received at Installation Engineers

Office, attention: Topsham Capehart ‘Monitor, Top-

[fol. 51-C] sham AFS, Maine until 2:00 P.M EST on 80

September 1958. Riis

. oJ eo a

“4. The bidder should carefully examine the pro-

visions of the form of Housing Contract attached

hereto, including the Drawings and Specifications

made a part thereof; visit the site of the housing

projects; and fully inform himseif as to all conditions

and matters which can in any manner affect the

financing of the construction and the constructing

of the housing projects or their cost. Should the

bidder find discrepancies in, or omissions from, such

Drawings and Specifications or other documents at-

tached hereto, or should he be in doubt as to their

meaning, he should at once notify the Contracting

Officer, Otis Air Force Base, Massachusetts, and ob-

tain clarification prior to submitting a bid. Infor-

mation given will be transmitted to all known inter-

ested bidders.

“5, Under the provisions of Title IV of the Hous-

ing Amendments of 1955, as amended, the total prin-

ciple [sic] amount of the mortgages is limited, among

other things to the amount of the bid of the eligible

builder. However, the Davis Bacon Act and Section

212(a) of the National Housing Act as amended

require that wages paid to laborers and mechanics

be the prevailing wage as determined by the Secre-

tary of Labor not more than ninety (90) days prior

to the commencement of construction. Since more

than ninety (90) days may elapse from the date of

this Invitation For Bids to the commencement of

construction, the bids called for by this Invitation For

Bids will iaclude a provision for adjustment of the

dollar amount therein specified to reflect any differ-

ence between the tentative minimum wage schedule

attached hereto and the applicable minimum wage

schedule as finally determined by the Secretary of

Labor. Any such adjustment will be in an amount

determined by the Commissioner to reflect such dif-

ferences, and the amount of the lowest acceptable bid

and the FHA estimated total replacement cost of the

projects will be amended in the amount so determined

by the Commissioner; except that, if such an adjust-

ment would increase the amount of the bid above the

amount of any other statutory maximum applicable

to the insurable mortgages, the eligible builder will

—_

have the option of reducing his bid to such statutory

maximum or of withdrawing his bid.

* * * *

“8. Each bidder is required to submit with his bid

a certified check in the amount of $25,000, payable

(fol. 51-D] to the Treasurer of the United States, to

insure that if he is the lowest acceptable bidder for

the total of 177 family housing units he will perform

the necessary preliminary steps and effect a closing

_ with FHA within the time prescribed in the Letter

of Acceptwhility, including the furnishing of an

acceptable performance and payment bond. In the

event the lowest acceptable bidder fails to effect a

closing with FHA within the time prescribed, his

deposit will be forfeited and become the property of

the Government as damages unless the Department

finds that he has made every effort to effect such

closing and extends the time to effect such closing.

If the lowest acceptable bidder effects a timely clos-

ing with the FHA the amount of his deposit wi!! be

refunded to him 24 hours after the initial closing

with FHA. The deposits of unsuccessful bidders will

be returned to them not later than 60 days after the

opening of the bids. Each prospective bidder is ad-

vised that the failure to submit such certified check

with his bid will render his bid defective and will

be cause for its rejection,

“a. “Timely Closing’ as referred to in this para-

graph of the Invitation For Bids and closing period

as referred to elsewhere in these forms is constured

to be a period of approximately 60 days from the

date of opening of bids.

* * + *

“24. Bidders are further advised that the Housing

Contract will also be subject to certain other statu-

tory provisions with respect to labor and other mat-

ters as shown in the specimen form of Housing Con-

tract.

. .

The cited Letter of Acceptability, which presumably

conformed to the specimen letter attached to the Invita-

tion and which notified appellant that its bid had been

accepted, contained the following stipulation:

“2 Failure to perform all obligations prior to the

time prescribed for closing will be just cause for

cancelling all commitments undertaken with you in

connection with the housing project and for the

recovery under your bid security of liquidated dam-

ages in the sum of $25,000, together with actual

damages to the Department, such actual damages to

be itemized and determined by the Contracting Offi-

cer, whose decision will be reduced to writing and

furnished to you by mail or otherwise. Such decision

shall be final and conclusive unless, within 80 days

from the receipt thereof, you appeal in writing to

the head of the Department or his duly authorized

representative, and his decision shall, unless deter-

mined by a court of competent jurisdiction to have

(fol. 51-E] been fraudulent or capricious or arbitrary,

or so grossly erroneous as necessarily to imply bad

faith, or not supported by substantial evidence, be

final and conclusive. In connection with any appeal

under this paragraph you will be afforded an oppor-

tunity to be heard and to offer evidence in support

of your appeal.”

As lowest acceptable bidder under the Invitation appel-

lant had of course posted a bid deposit with the Govern-

ment in the sum of $25,000.00 as required. Following

receipt of the Letter of Acceptability a dispute arose

between the parties which, to the limited extent revealed

in the arguments made at the hearing of this motion,

exclusively concerned itself with the application and effect

of certain wage determinations rendered by the Secretary

of Labor. As a result of the disagreement “the closing”,

hereinbefore mentioned and stipulated originally to take

place on or before 8 January 1959, was postponed until a

later date. Neither passage of time nor ensuing discus-

sions served to smooth the way to unanimity of opinion

with the result that by letter dated 1 October 1959 the

Government advised appellant as follows:

eames

“Gentlemen :

“1. In your letter to the Department of the Air Force

dated July 2, 1959 you have indicated an unwilling-

ness to set a closing date for your contract to build

177 unit family housing project at Topsham Air

Force Station, Maine. Paragraph 6 of the Letter of

Acceptability dated October 29, 1958 required you

to be ready for-closing on or before 8 January 1959.

The Department, at your request, has repeatedly

extended this closing date in an effort to have re-

solved the questions raised by you pertaining to the

application of certain wage rates to the construction

of the project. On 26 June 1959 you were informed

by letter as to the position of the Department and

requested to state your position within 10 days of the

date of the letter. Your reply of July 2, 1959 indi-

cating an unwillingness to set a closing date consti-

tutes a failure on your part to perform your obliga-

be under your bid and under the letter of accepta-

ty.

“2. You have alleged in your letter that a failure of

the Department to act promptly in this matter has

caused the long delay in resolving the questions of ap-

plicable wage rates. In this connection, your atten-

tion is directed to the fact that your request for a

determination of the position of the Air Force was

not made until 29 May 1959, over four months sub-

sequent to the date when you were required to be

ready for closing.

(fol. 51-F] “8. Accordingly, pursuant to paragraph 2 of

the letter of acceptability, the Department hereby

cancels all commitments unc urtaken with you in con-

nection with the housing project, reserving all its

rights with request to the recovery of damages.”

The above letter of 1 October 1959 was signed by The

Deputy Special Assistant For Installations, Office of the

Secretary of the Air Force, the same official who in keep-

ing with normal practice previously signed the Letter of

Acceptability by which appellant’s low bid was accepted

by the Government.

Under date of 7 October 1959 appellant, through coun-

sel, addressed that official in a letter which read:

[ fol.

“Dear Sir:

“Receipt is hereby acknowledged of your letter

dated October Ist, 1959, wherein you have advised

me and my client, Anthony Grace & Sous, Inc., that

the Department of the Air Force has cancelled its

committment [sic] in connection with the above re-

ferred to Housing Projects.

“My client has never indicated an unwillingness

to set a closing date, as alleged in your letter, but

rather has made all possible efforts to cooporate with

your Department.

“An examination of your files will indicate that

there is correspondence dated as early as November,

1958, countless trips to Washington and Maine, and

many conferences with the FHA Bangor, Maine, De-

partment of Labor, Washington, D. C., and the offices

of Lt, Col, Wayne R. Pipher and Col, Goddard.

“In addition thereto the necessary Delaware corpo-

rations were organized and the certificates filed in

Delaware on January 12th, 1959, and the same quali-

fied in Maine on March 10th, 1959. It was the fail-

ure to your office to apply the Wage Determinations,

as issued by the Department of Labor prior to clos-

ing that gave rise to the existing problems. In ad-

dition thereto, a notice of cancellation was not sent

out by the Air Force until my letter dated September

22nd, 1959, inquiring as to the status of the subject

Housing Project, was received by your office.

“Throughtout all this time you have held my

client’s bid check in the sum of $25,000.00, and I am

therefore requesting that the bid check be returned

to my client, Anthony Grace & Sons, Inc., immediate-

ly upon receipt of this letter.

51-G] “I am also advising you that my client,

Anthony Grace & Sons, Inc., is reserving all of its

rights with respect to recovery of damages due to the

failure of the Department of the Air Force to com-

ply with all of the bid instructions and regulations

thereby creating the situation that exists.”

In response the Deputy Special Assistant for Installa-

tions advised appellant’s counsel as follows:

“19 October 1959

“Dear Mr. Locurto:

“I have your letter of 7 October 1959, requesting

the return of the $25,000 check deposited by your

client, Anthony Grace & Sons, Inc., as security for

its bid on the Topsham project. Since the | epart-

ment’s cancellation of its commitments was compelled

by your client’s repeated refusals to perform its

obligations under its bid and the Letter of Accepta-

bility, with the result that it was necessary to revise

the plans and rebid the project, the return of the

bid security would be manifestly improper. Your

request must therefore be denied.”

The most the Government is able to say with regard to

appellant’s receipt of the Government’s letter of 19

October 1959 is that it was released on 20 October 1959,

for dispatch to U. S. Post Office channels and ultimate de-

livery to the addressee, It would appear however that

for some unknown reason the letter never reached the

hands of appellant’s counsel. Prompted by a concern that

his letter of 7 October 1959 was still unanswered appel-

lant’s counsel made inquiry by telephone on 4 December

1959; a copy of the letter of 19 October 1959 was furn-

ished him by mail on 8 December 1959. Shortly thereafter

the following notice of appeal was filed:

“Dear Mr. Douglas:

“As counsel for Anthony Grace & Sons, Ine., I

have been requested to appeal the decision of Mr.

George S. Robinson dated October Ist, 1959,

“On October 7th, 1959, I formally appealed the de-

cision in Robinson’s letter dated October Ist, 1959

: and in my reply requested the return of my client’s

: bid deposit check and also set forth facts in con-

tradiction to Mr. Robinson’s allegations. Hearing

nothing further, on December 4th, 1959, I called the

office of the Department of the Air Force, and spoke

with Mr, Samuel Hanenberg concerning a reply to my

appeal dated October 7th, 1959. I thereafter, on

December 9th, 1959, received a letter from Mr. Han-

(fol. 51-H] enberg wherein he furnished me with a copy

of a reply sent to my office by Mr. Robinson on Oc-

tober 19th, 1959. This letter was never received by

my office.

“You are hereby notified of my intention to appeal

the decision of Mr. Robinson to withdraw and cancel

the Letter of Acceptability dated October 29th, 1958

and his refusal to return the $25,000.00 bid deposit.

I am of the opinion that the facts and circum-

stances as set forth in my letter forwarded to Mr.

Robinson on October 7th, 1959, clearly sets forth that

the delays caused by the Government Agencies in-

volved made it impossible for the builder to comply

with the terms of the Letter of Acceptability.

“In view of the aforementioned, the Letter of Ac-

ceptability should have been terminated for the con-

venience of the Government and the $25,000.00 bid

deposit returned to Anthony Grace & Sons, Inc.

“T request that this Notice of Appeal, as previously

set forth in my letter dated October 7th, 1959 be

processed in accordance with the Rules of the Armed

Services Board of Contract Appeals. Upon receipt

of Notice of Docketing I will file a formal Bill of

Complaint.

“T sincerely request that this appeal be expedited

= order that a hearing be held at the earliest possible

ate.”

After the foregoing notice was forwarded appellant also

received a letter from the procurement contracting con-

tracting officer, who was stationed at Otis Air Force

Base, Massachusetts, the installation responsible for the

issuance of the Invitation cited above. The letter, dated

22 December 1959, was as follows:

“Gentlemen:

“Reference is made to letter dated 1 October 1959 ad-

dressed to you and letter addressed to Salvatore A.

Locurto, Esq., dated 1 October 1959, both signed by

Mr. George S. Robinson, Deputy Special Assistant

for Installations and both in regard to cancellation

———

of all commitments undertaken with you in connec-

tion with the Capehart Housing Project at Topsham

Air Force Station, Maine. Mr. Robinson was acting

in my behalf and I agree with the action taken by

him in this matter.”

The Government has moved that the appeal be dismissed

upon the ground that there is no timely appeal before the

Board. It argues that the requirements of a decision and

an appeal were exclusively fulfilled by the Government’s

letter of 1 October 1959 and appellant’s 16 December

(fol. 51-I] 1959 appeal notice respectively; and that since

the interval between receipt of the former and filing of

the latter is in excess of thirty days no jurisdiction at-

taches.

Although it raises other grounds, appellant argues for

denial of the motion principally on the ground that the

only correspondence which constituted an appealable de-

cision was the letter dated 19 October 1959; and inas-

much as that letter was not received until 8 December

1959 appeallant’s appeal notice of 16 December 1959

was more than adequate to vest the Board vith juris-

diction. An examination of appellant’s letter of 16 De-

cember 1959 reveals that the argument appellant now

advances in connection with the motion represents a com-

plete departure from the position taken when the letter

was written. On 16 December 1959 appellant unequivocal-

ly labelled the Government’s letter of 1 October 1959 as

the “decision” and the reply thereto of 7 October 1959 as

“my appeal”. For reasons hereinafter set forth we are

persuaded that appellant’s characterization was correct

in the instance of the first letter and incorrect with re-

spect to the second.

Appellant likewise suggests that the Deputy Special

Assistant for Installations who signed the Government’s

1 October 1959 letter was not the contracting officer for

the purposes of a decision rendered pursuant to the “dis-

putes clause” of the Letter of Acceptability; and in this

regard points to the letter written to appellant by the

contracting officer, Otis Air Force Base, under date of 22

December 1959. If we were to accept appellant’s sug-

gestion it would be necessary to ignore undisputed evi-

dence that the Deputy Special Assistant for Installations

was the Government’s representative in all dealings of

legal consequence between the parties. The Otis Air Force

Base contracting officer was at all times a virtual stranger

to appellant. On the other hand, the Deputy Special

Assistant for Installations signed the Invitation upon

which appellant bid; signed the Letter of Acceptability,

the letter of 1 October 1959, and the letter of 19 October

1959 which appellant now claims forms the basis of a

timely appeal; and at all times headed the office with

which appellant dealt in connection with the contract.

Appellant nowhere alleges that the presence of the signa-

ture of the Deputy Special Assistant for Installations on

the 1 October 1957 letter misled appellant with regard to

its right of appeal. Indeed the record shows quite the con-

trary. As indicated by argument upon the motion, appel-

lant did not question the Government’s 1 October 1959

letter on the ground that its signatory was the Deputy

Special Assistant for Installation but rather because in

appellant’s view “issues” were not reached until appel-

lant received the 19 October 1959 letter wherein the

Government refused to return appellant’s bid deposit.

As has just been intimated, appellant also implies that

the Government’s 1 October 1959 letter was not a final

decision because “an actual issue” between the parties

had not yet been reached. Even a hurried reading of the

letter demonstrates that contention is worthy of no con-

sideration. What could have more finality than a letter

(fol. 51-J] which told appellant insofar as the instant

contract is concerned that “the Department hereby cancels

all commitments undertaken with you in connection with

the housing project * * *”?

The parties are in complete agreement that it was and

is their mutual interpretation that in the event a timely

appeal is taken thereunder the “disputes paragraph” of

the Letter of Acceptability confers jurisdiction on the

Board to review a decision relating to cancellation of

commitments, withholding of bid security, and itemization

and determination of actual damages. The Government’s

letter of 1 October 1959 is such a decision. That appellant

so understood it is established by the contents of the open-

a——,

ing paragraph of the letter appellant wrote on 7 October

1959. The latter however falls short of meeting the re-

quirements of a notice of appeal. Although it mentions

that appellant “is reserving all of its rights with respect

to recovery of damages due to the failure of the Depart-

ment of the Air Force to comply with all of the bid in-

structions and regulations thereby creating the situation

that exists”, in the circumstances here present it would

be unjust to read into that language a declaration of a

then present intent on appellant’s part to invoke the right

of appeal. Appeal of Reading Clothing Manufacturing

Co., ASBCA No, 3912, 57-1 BCA 1290, 7 May 1957. That

the foregoing conclusion is the correct or.e and that appel-

lant itself did not on 7 October 1959 consider that it was

declaring such an intent is evidenced by appellant’s ac-

count of the reason why it made a telephonic inquiry on

4 December 1959. As stated by appellant during argu-

ment on the instant motion, the sole purpose of the 4 De-

cember telephone call was to obtain information as to why

the Government had not furnished “an answer” to appel-

lant’s 7 October letter. If appellant on 4 December 1959

(or previously) considered its 7 October 1959 letter to be

a notice upon the Government that an appeal would be

forthcoming, no inquiry into the matter of “an answer”

would have been instituted because no reply could have

reasonably been expected.

With respect to the argument that 8 December 1959 is

the critical date exclusively determinative of appellant’s

right to be heard on the merits of the controversy (first

raised in oral argument and written memorandum sub-

mitted in connection with the instant appeal) our here-

inbefore expressed conclusion that the Government’s 1

October 1959 letter was an appealable, final decision re-

quires that we go no further than decide whether the

Government, during the thirty day period following the

letter’s receipt by appellant, agreed to reconsider the de-

cision therein contained. No such agreement is asserted

and we find none in the record before us. Since there is

no evidence that the Government ever assented to recon-

sideration of the 1 October 1957 decision, appellant’s

appeal to be timely should have been filed within thirty

Nees.»

days of 7 October 1957, the date which the record shows

beyond peradventure of a doubt to be the date on which

appellant was in receipt of the decision.

{fol.51-K] In accordance with the foregoing the Gov-

ernment’s motion is granted and the appeal is dismissed.

Dated 29 June 1960.

/s/ Henry F. Mlotkowski,

HENRY F, MLOTKOWSKI,

Lt. Colonel, USAF

Member of Division No. 3,

Air Force Contract Appeals Panel

I Concur

/s/ George W. Crawford

GEORGE W. CRAWFORD

Chairman of the Air Force Contract

Appeals Panel 2nd Member of

Division No. 3

DONALD W. NOFRI,

Lt. Colonel, USAF

Member of Division No. 3,

Air Force Contract Appeals Panel,

did not participate in this decision.

——

I certify that the foregoing is a true copy of the find-

ings of fact, decision and views of the Air Force Con-

tract Appeals Panel of the Armed Services Board of Con-

tract Appeals in ASBCA No. 6167, appeal of Anthony

Grace & Sons, Inc., under Invitation No. 19-603-59-15,

dated 22 August 1958 and Letter of Acceptability, dated

29 October 1958. I further certify that there has been

filed with the Recorder a statement by the Chairmen of

the respective Panels of the Board that they have re-

viewed on behalf of their respective Services the above-

captioned decision of the Air Force Contract Appeals

Panel and that in their opinion further, formal and ex-

clusive decision by the three Panel Chairmen is not re-

Dated

GEoRGE L. HAWKES, Recorder

Armed Services Board of

Contract Appeals

(fol. 51-L]

October 7th, 1959

Mr. George S. Robinson, Deputy Special

Assistant for Installations

Department of the Air Force

Temporary Building 8

89th Street and Newark Street N W

Washington, D. C.

RE: Topsham Air Force Station

FHA Project Nos, 022-8105

and 022-8106

Dear Sir:

Receipt is hereby acknowledged of your letter datec

October 1st, 1959, wherein you have advised me and my

client, Anthony Grace & Sons, Inc., that the Department

of the Air Force has cancelled its committment in con-

nection with the above referred to Housing Projects.

My client has never indicated an unwillingness to set a

closing date, as alleged in your letter, but rather has made

all possible efforts to cooperate with your Department.

An examination of your files will indicate that there is

correspondence dated as early as November, 1958, count-

less trips to Washington and Maine, and many confer-

ences with the FHA Bangor, Maine, Department of Labor,

Washington, D.C., and the offices of Lt. Col. Wayne R.

Pipher and Col. Goddard.

In addition thereto the necessary Delaware corporations

were organized and the certificates filed in Delaware on

January 12th, 1959, and the same qualified in Maine on

March 10th, 1959. It was the failure to your office to

apply the Wage Determinations, as issued by the Depart-

ment of Labor prior to closing that gave rise to the exist-

ing problems. In addition thereto, a notice of cancella-

tion was not sent out by the Air Force until my letter

dated September 22nd, 1959, inquiring as to the status of

the subject Housing Project, was received by your office.

(fol. 61-M]

Mr, George S, Robinson October 7th, 1959

Throughout all this time you have held my client’s bid

eck in the sum of $25,000.00, and I am therefore re-

questing that the bid check be returned to my client,

Pig J Grace & Sons, Inc., immediately upon receipt of

this letter.

I am also advising you that my client, Anthony Grace

& Sons, Inc., is reserving all of its rights with respect to

recovery of damages due to the failure of the Depart-

ment of the Air Force to comply with all of the bid in-

structions and regulations thereby creating the situation

that exists.

Very truly yours,

SALVATORE A, LOcURTO

A: VT

ce: Lt. Col. Anderson, Maj. Gen. M. R. Tidwell, Jr.

(fol. 51-N]

DEPARTMENT OF THE AIR FORCE

WASHINGTON

OFFICE OF THE SECRETARY

19 October 1959

Dear Mr. Locurto:

I have your letter of 7 October 1959, requesting the

return of the $25,000 check deposited by your client,

Anthony Grace & Sons, Inc., as security for its bid on

the Topsham project. Since the Department’s can: Jla-

tion of its commitments was compelled by your client’s

repeated refusals to perform its obligations under its bid

and the Letter of Acceptability, with the result that it

was necessary to revise the plans and rebid the project,

the return of the bid security would be manifestly im-

proper. Your request must therefore be denied.

Sincerely yours,

/s/ George S. Robinson

GEORGE S. ROBINSON

Deputy Special Assistant for Instailations

Mr. Salavatore A. Locurto

391 East 149th Street

Bronx 55, New York

ec: Major General M, R. Tidwell, Jr.

Lt. Colonel J. B. Anderson

ih ape Lalani oee home ee a

EE NN TN et RE Pk RSS ATER

(fol. 51-0)

DEPARTMENT OF THE AIR FORCE

WASHINGTON

OFFICE OF THE SECRETARY

7 Dec 1959

Dear Mr. Locurto:

During our telephone conversation on December 4, 1959,

you stated that the Air Force had not replied to your

letter of October 7, 1959, with respect to the Topsham

Air Force Station Capehart Project. Inclosed for your

information is a copy of a letter to you dated October 19,

1959, from Mr. George §, Robinson, Deputy Special As-

sistant for Installations, Office of the Secretary of the Air

Force.

Sincerely yours,

/8/ Samuel Hanenberg

SAMUEL HANENBERG

Assistant General Counsel]

Incl.

Mr. Salvatore A, Locurto

°°] East 149th Street

Bronx 55, New York

(fol. 51-P]

December 16th, 1959

Honorable James H. Douglas

Secretary of the Air Force

Washington 25, D.C.

RE: Topsham Air Force Station,

Maine, 177 Unit Capehart

Housing Project

Dear Mr. Douglas:

As counsel for Anthony Grace & Sons, Inc., I have

been requested to appeal the decision of Mr. George Ss.

Robinson dated October Ist, 1959.

On October 7th, 1959, I formally appealed the decision

in Robinson’s letter dated October 1st, 1959 and in my

reply requested the return of my client’s bid deposit

check and also set forth facts in contradiction to Mr.

Robinson’s allegations. Hearing nothing further, on De-

cember 4th, 1959, I cailed the office of the Department of

the Air Force, and spoke with Mr. Samuel Hanenberg

concerning a reply to my appeal dated October 7th, 1959.

I thereafter, on December 9th, 1959, received a letter

from Mr. Hanenberg wherein he furnished me with a

copy of a reply sent to my office by Mr. Robinson on

} ~ ao 19th, 1959. This letter was never received by my

office.

You are hereby notified of my intention to appeal the

decision of Mr. Robinson to withdraw and cance] the

Letter of Acceptability dated October 29th, 1958 and his

refusal to return the $25,000.00 bid deposit. I am of the

opinion that the facts and circumstances as set forth in

my letter forwarded to Mr. Robinson on October 7th,

1959, clearly sets forth that the delays caused by the

Government Agencies involved made it impossible for the

builder to comply with the terms of the Letter of Ac-

ceptability.

a ——————

[fol. 51-Q]

Honorable James H. Douglas December 16, 1958

In view of the aforementioned, the Letter of Accepta-

bility should have been terminated for the convenience of

the Government and the $25,000.00 bid deposit returned to

Anthony Grace & Sons, Inc,

I request that this Notice of Appeal, as previously set

forth in my letter dated October 7th, 1959 be processed

in accordance with the Rules of the Armed Services

Board of Contract Appeals. Upon receipt of Notice of

Docketing I will file a formal Bill of Complaint.

I sincerely request that this appeal be expedited in

order that a hearing be held at the earliest possible date.

Very truly yours,

SALVATORE A. LOCURTO

>A.

g opm

George S. Robinson

Anthony Grace & Sons, Inc,

[fol.51-R] © PROCUREMENT OFFICE

PR 22 December 1959

Topsham Air Force Station Capehart Housing Project

Anthony Grace & Sons, Inc.

151-45 - Sixth Road

Whitestone, New York

Gentlemen :

Reference is made to letter dated 1 October 1959 ad-

dressed to you and letter addressed to Salvatore A.

Locurto, Esq., dated 1 October 1959, both signed by Mr.

George S. Robinson, Deputy Special Assistant for Instal-

lations and both in regard to cancellation of all commit-

ments undertaken with you in connection with the Cape-

hart Housing Project at Topsham Air Force Station,

Maine. Mr. Robinson was acting in my behalf and I agree

with the action taken by him in this matter.

Yours very truly,

LLoyp H. PURDY

Captain, USAF

Contracting Officer

Copies to:

Salvatore A. Locurto, Esq.

391 E 149th St.

Bronx 55, New York

Hq USAF

AFOCE-HC (2)

Col Nelson

Lt Col Podolak

(fol. 51-S)

DEPARTMENT OF THE AIR FORCE

* * * *

BID FORM

ARMED SERVICES HOUSING PROJECT

* e & +

[fol.51-T] 3. The bidder understands that, if this bid is

determined to be the lowest acceptable bid, the Depart-

ment will issue io him a Lettér of Acceptability in the

form attached to the Invitation For Bids, and the bidder

[fol. 51-U] agrees that upon issuance of such Letter of

Acceptability he becomes obligated to carry out its terms

within the times therein Stated, at his own expense, with-

in the conditions of his bid security, and without further

acceptance, award, advice or other action by the Depart-

ment.

Such obligations include an obligation to cause perform-

ance by the mortgagor-builder corporations, to be formed

by the bidder, of each and every act required of it in the

[fols. 52-154] * * *

(fol. 155}

IN THE UNITED STATES COURT OF CLAIMS

No. 133-61

ANTHONY GRACE & Sons, INC.

THE UNITED STATES

OPINION OF COMMISSIONER AND RECOMMENDATION FOR

CoNCLUSION OF Law—Filed September 22, 1964

To the honorable the CHIEF JUDGE AND ASSOCIATE

JUDGES OF THE UNITED STATES COURT OF

CLAIMS:

The following opinion and recommendation for conclu-

sion of law are submitted pursuant to the order of the

court under Rule 54(b) :

In this action plaintiff seeks to recover its bid deposit

and damages it allegedly incurred as a result of cancella-

tion by defendant of commitments made by the Depart-

ment of the Air Force to plaintiff for the construction

of a military housing project under the Capehart Act.’

[fol. 156] The case is before the court on defendant’s

motion for summary judgment on the grounds that plain-

tiff has failed to exhaust its administrative remedies and

has failed to state a claim for which relief may be

granted.

On August 22, 1958, the Department of the Air Force

issued an invitation for bids for the construction of 177

142 U.S.C. §§ 1594-1594j(f); 12 U.S.C. §§ 1748-17481. For a

brief explanation of the procedures under the Capehart Act, see

Anthony P. Miller, Inc. V. United States, Ct.Cl. No. 3-62, decided

April 5, 1963.

__ —————————

military Capehart housing units at Topsham Air Force

Station in Maine. The invitation, after setting forth the

purposes of the Capehart Act, provided in pertinent part:

[fol.

* * * *

4. The bidder should carefully examine the pro-

visions of the form of Housing Contract attached

hereto, including the Drawings and Specifications

made a part thereof; visit the site of the housing

projects; and fully inform himself as to all condi-

tions and matters which can in any manner affect the

financing of the construction and the constructing

of the housing projects or their cost. Should the

bidder find discrepancies in, or omissions from, such

Drawings and Specifications or other documents at-

tached hereto, or should he be in doubt as to their

meaning, he should at once notify the Contracting

Officer, Otis Air Force Base, Massachusetts, and

obtain clarification prior to submitting a bid. In-

formation given will be transmitted to all known

interested bidders.

5. Under the provisions of Title IV of the Housing

Amendments of 1955, as amended, the total principle

amount of the mortgages is limited, among other

things to the amount of the bid of the eligible builder.

However, the Davis Bacon Act and Section 212(a)

of the National Housing Act as amended require that

157] wages paid to laborers and mechanics be the

prevailing wage as determined by the Secretary of

Labor not more than ninety (96) days prior to the

commencement of construction. Since more than

ninety (90) days may elapse from thie date of this

Invitation For Bids to the commencement of con-

struction, the bids called for by this Invitation For

Bids will include a provision for adjustment of the

dollar amount therein specified to reflect any differ-

ence between the tentative minimum wage schedule

attached hereto and the applicable minimum wage

schedule as finally determined by the Secretary of

Labor. Any such adjustment will be in an amount

determined by the Commissioner to reflect such dif-

ferences, and the amount of the lowest acceptable

adjustment would increase the amount of the bid

above the amount of any other statutory maximum

applicable to the insurable mortgages, the eligible

builder will have the option of reducing his bid to

such statutory maximum or of withdrawing his bid.

8. Each bidder is required to submit with his bid

a certified check in the amount of $25,000, payable to

the Treasurer of the United States, to insure that if |

he is the lowest acceptable bidder for the total of 177

family housing units he will perform the necessary ;

preliminary steps and effect a closing with FHA

within the time prescribed in the Letter of Accepta-

bility, including the furnishing of an acceptable per-

formance and payment bond. In the event the lowest j

acceptable bidder fails to effect a closing with FHA ;

within the time prescribed, his deposit will be for-

feited and become the property of the Government

as damages unless the Department finds that he has

made every effort to effect such closing and extends

the time to effect such closing. If the lowest accepta-

ble bidder effects a timely closing with the FHA the

amount of his deposit will be refunded to him 24

hours after the initial closing with FHA. The de-

posits of unsuccessful bidders will be returned to

besa not later than 60 days after the opening of the

ids. ...

[fol. 158] a. “Timely Closing” as referred to in this

paragraph of the Invitation For Bids and closing

period as referred to elsewhere in these forms is con-

strued to be a period of approximately 60 days from

the date of opening of bids.

OE ag er es

a EN A Mt ik tte OTERO TE

Slt Si ee, Pee oo eS

12. Bidders are advised that the maximum total of

the insurable mortgages may not exceed the lesser

of three items being (1) amount of the lowest ac-

ceptable bid. (2) FHA Total of the estimated re-

placement cost of the property or projects or (3) an

average per family unit of $16,500 less the estimated

value of any usable utilities within the property or

projects where owned by the Department or fur-

nished by other than mortgage proceeds. Attention

is invited to FHA’s Final Appraisal and Eligibility

Statements attached hereto. The bidder will be re-

quired to pay the fees and costs prescribed in such

statements.

. * . *

22. The eligible builder, and all his subcontractors,

will be required to pay all mechanics and laborers

employed for working directly upon the sites of the

housing projects not less than the prevailing wages

as determined by the Secretary of Labor. A tenta-

tive wage scale is attached hereto. Such tentative

wage scale is, however, subject to revision prior to

actual start of construction in accordance with Sec-

retary of Labor reqirements. For the effect of such

revision see paragraph 5 above.

we * * ”

Bid Form:

8. The bidder understands that, if this bid is deter-

mined to be the lowest acceptable bid, the Department

will issue to him a Letter of Acceptability in the

form attached to the Invitation For Bids, and the

bidder agrees that upon issuance of such Letter of

Acceptability he becomes obligated to carry out its

terms within the times therein stated, at his own ex-

pense, within the conditions of his bid security, and

[fol. 159] without further acceptance, award, advice or

other action by the Department. Such obligations in-

clude an obligation to cause performance by the

mortgagor-builder corporations, to be formed by the

bidder, of each and every act required of it in the

Letter of Acceptability, to cause the execution by

said mortgagor-builder corporations of a Housing

Contract containing the same terms, conditions, pro-

visions and Drawings and Specifications as the speci-

men form of Housing Contract with good and suffi-

[fol.

cient surety or sureties as required therein, within

the times specified in and in accordance with the

Letter of Acceptability.

* * * *

4. The Bidder represents that he is aware of the

statutory requirements of Section 212(a) of the

National Housing Act, as amended, and of the Davis

Bacon Act that wages to be paid to laborers and

mechanics employed in the construction of the proj-

ects are required to be not less than those contained

in the prevailing wage determination of the Secretary

of Labor, and that, in order to comply with these

statutory provisions, the bid price is subject to in-

crease or decrease by an amount determined by the

Federal Housing Commissioner (hereinafter called

the “Commissioner’”) to represent the difference in

the “Total Estimate of Replacement Cost of the

Total Project,” computed according to the wage

schedule attached to the Invitation For Bids, and

computed according to the wage schedule as amended

by the “prevailing wage determination” as that term

is defined in Paragraph 19 of the specimen form of

the Housing Contract attached to the Invitation For

Bids. Moreover, the Bidder realizes that, if the

amount of his bid as specified in the Letter of Ac-

ceptability, is thereby increased so as to exceed the

maximum total amount of the insurable mortgages

as determined by the Commissioner, the Bidder shall

have the option of reducing his bid to the amount of

the maximum total insurable mortgages as deter-

mined by the Commissioner, or of withdrawing his

bid.

* * * *

160] 8. The bidder. agrees that, if issued a Letter

of Acceptability, and if he does not exercise the op-

tion of withdrawing his bid pursuant to Paragraph

4 above, he will commence the work called for by the

Drawings and Specifications within 15 calendar days

after the date of closing, and that he will complete

the work called for by the Housing Contract as

RAE RES a

a—e,

expeditiously as possible, but in no event later than

450 calendar days after date of closing.

* * * *

Attached to the invitation for bids was a tentative

minimum wage schedule which contained the following

introductory language:

The latest wage determination made by the Secre-

tary of Labor for the country in which the work is

being performed is included herein. The complete

determination is incorporated in the contract specifi-

cations regardless of whether the Contractor will em-

ploy all the classes of laborers and mechanics listed.

The schedule set forth the minimum rates of wages per

hour for certain classes of laborers and mechanics, ap-

prentices, building construction personnel, and heavy and

highway construction personnel. The rates in the schedule

for the heavy and highway construction personnel were

lower than the rates for the building construction person-

nel. The schedule bore an expiration date of September

18, 1958.

There were also attached to the invitation for bids,

specifications which defined the scope and situs of the

work to be performed.

(fol. 161] These specifications included a breakdown into

“Section 1 on-site, site preparation” and “Section 2 on-

site, Excavation, Filling and Back-filling for Building

Construction.” Section 1 of paragraph 1-18 of the speci-

fications provided in part:

On Site

Site Preparation

1-18 EXCAVATION, TRENCHING, AND BACK-

FILLING FOR UTILITIES SYSTEM:

(a) The work consists of furnishing all plant,

labor, equipment, appliances, and materials, and in

performing all operations in connection with excava-

tion, trenching, and backfiling for utilities system,

complete, in strict accordance with this section of the

specifications and the applicable drawings,

etic

(b) All excavation for utilities systems occurring

within the enclosing walls or appurtenances of build-

ings or other structures and out to a line 5 feet out-

side of the walls or appurtenances thereof, is covered

under EXCAVATION and GRADING FOR BUILD-

ING CONSTRUCTION, and is not included under

this section of the specifications.

Section 2 of paragraph 2-01 of the specifications pro-

vided :

2-01 Scope

(a) Work Included. The work covered by this sec-

tion of the Specifications consists in furnishing all

plant, labor, equipment and materials and in per-

forming all operations in connection with excavating,

filling, backfilling and rough grading, complete for

the building and for building utilities lines to a point

five (5) feet outside the foundation line, and other

related items in strict accordance with this Section

of the Specifications and the applicable Drawings,

[fol. 162] and subject to the terms and conditions of the

contract.

(b) Work not Included. Clearing and grubbing, ex-

cavation, filling and grading for parking areas, roads,

walks, drainage, sewers and other sub-surface utili-

ties systems, and excavation for the building utili-

ties beyond planes five (5) feet outside the building

line are not included under this Section of the Speci-

fications. Stripping of topsoil is specified in Section

1, Site Preparation.

On or about September 30, 1958, plaintiff submitted its

bid to construct the housing project at a base price of

$2,653,022, with an additional price of $213,071, for cer-

tain additive alternatives, or at a total price of $2,866,093.

Plaintiff submitted with its bid a deposit, as required by

paragraph 8 of the invitation for bids, in the amount of

$25,000.

On October 29, 1958, Mr. George S. Robinson, deputy

special assistant for installations, Department of the Air

Force sent to plaintiff a “Letter of Acceptability” in

which plaintiff was advised that its bid of $2,866,098,

for the housing project, including the additives, was the

lowest acceptable bid; and, in which, plaintiff was fur-

ther advised of its obligations to complete a number of

arrangements before the “closing” which was scheduled

on or before January 8 1959. The letter of acceptability

specified that among the arrangements which plaintiff

was to make prior to the closing was the following:

(fol. 163]

* * * *

n. Make application through the Contracting Offi-

cer, Otis Air Force Base, Massachusetts, to the Secre-

tary of Labor for an appropriate wage determina-

tion, if necessary, (on a Department of Labor Form

DB-11 which will be supplied upon request by the

Contracting Officer) for use in the construction of

the project, and furnish a copy of such wage deter-

mination to the Contracting Officer and the Commis-

sioner. Such wage determination will be used by the

Commissioner to increase or decrease the bid price

in the manner specified in your bid.

The letter of acceptability also provided in part:

2. Failure to perform all obligations prior to the

time prescribed for closing will be just cause for

cancelling all commitments undertaken with you in

connection with the housing project and for the re-

covery under your bid security of liquidated damages

in the sum of $25,000, together with actual] damages

to the Department, such actual damages to be item-

ized and determined by the Contracting Officer, whose

decision will be reduced to writing and furnished to

you by mail or otherwise. Such decision shall be final

and conclusive unless, within 30 days from the receipt

thereof, you appeal in writing to the head of the

Department or his duly authorized representative,

and his decision shall, unless determined by a court of

competent jurisdiction to have been fraudulent or

capricious or arbitrary, or so grossly erroneous as

necessarily to imply bad faith, or not Supported by

substantial evidence, be final and conclusive. In con-

nection with any appeal under this paragraph you

will be afforded an opportunity to be heard and to

offer evidence in support of your appeal.

6. You are required to be ready for the closing on

or before January 8, 1959, and your failure to do so

will indicate your inability to carry out the obliga-

tions and terms of your bid and this Letter of Ac-

ceptability, provided that the Contracting Officer

may extend the date of closing in writing upon your

{fol. 165] submission of written documented proof that

the delay was caused by conditions beyond your con-

trol.

On November 19, 1958, pursuant to the obligations

specified in the letter of acceptability, plaintiff made a

request of the Secretary of Labor for an appropriate

wage determination. On January 28, 1959, there were

issued by the Secretary of Labor two separate wage rate

decisions, with expiration dates of April 29, 1959. One of

the decisions contained a description of work as “General

Construction of 177 family housing units” and set forth

rates for laborers and mechanics, apprentices and build-

ing construction personnel. The other decision contained

a description of work as “Cynstruction of Streets and

Roads in connection with Capehart Housing” and set

forth rates for heavy and highway construction personnel.

As in the instance of the tentative minimum wage sched-

ule which was attached t) the invitation for bids, the rates

set forth in the wage rate decisions for the heavy and

highway construction personnel were lower than the rates

for the building construction personnel.

After receiving the wage rate decisions of the Secretary

of Labor, plaintiff concluded that the effect of the de-

cisions was to require it to pay the higher building con-

struction rates for a greater area of the work than pro-

[fol. 166] vided by the specifications, and that plaintiff’s

bid price should be increased, in accordance with the

letter of acceptability, to reflect the higher rates. In

essence, plaintiff’s position was that under the specifi-

eations it was required to pay the higher building con-

—

struction rates for work to a point 5 feet outside the

building foundation line, and that for work beyond this

point it was required to pay only the lower heavy and

highway construction rates; but, that under the descrip-

tions of work contained in the decisions it was required

to pay the higher building construction rates for all work

beyond the above-indicated point, except for work covering

construction of streets and roads. Because of difference

between the parties arising out of the foregoing decisions,

the original closing date of January 8, 1959, set forth in

the letter of acceptability, was extended on several oc-

casions while conferences were held by the parties on the

matter.

By letter of March 18, 1959, the director of the Federal

Housing Administration advised plaintiff that there would

be an increase in the wage rates allowed plaintiff in some

categories where the promulgated rates had been increased,

but that there had been no change in the rates for either

heavy and highway personnel or for building construction

(fol. 167] power operators and that he had not been able

to justify an increase based upon plaintiff's interpreta-

tion.

On May 29, 1959, following exchanges of correspondence

and meetings of the parties, plaintiff requested a deter-

mination of the Department of the Air Force relative to

plaintiff’s interpretation of the pertinent documents from

which plaintiff concluded that it was entitled to an ad-

ditional increase of $85,884 in bid price. By letter of

June 26, 1959, plaintiff was advised by George S. Robin-

son, deputy special assistant for installations, Department

of the Air Force that he did not concur in plaintiff’s

position. The letter continued:

If you intend to effect a closing, you should advise

me promptly in order that the Letter of Accepta-

bility may be amended. If you decide not to effect a

closing, or advice as to your intention is not with-

drawn in 10 days, the letter of acceptability will be

withdrawn,

On July 2, 1959, plaintiff wrote to Mr. Robinson that

it did not approve of his decision; that, as a result of the

delay in the matter, plaintiff had sustained considerable

monetary losses; and, that plaintiff was not in a position

—— a definite closing date until the matters were re-

solved.

By letter dated October 1, 1959, Mr. Robinson advised

plaintiff that its letter of July 2, 1959, “indicating an

[fol. 168] unwillingness to set a closing date constitutes a

failure on your part to perform your obligations under

your bid and under the letter of acceptability.” The letter

continued :

* * * *

8. Accordingly, pursuant to paragraph 2 of the

letter of acceptability, the Department hereby cancels

all commitments undertaken with you in connection

with the housing project, reserving all its rights with

respect to the recovery of damages.

By letter dated October 7, 1959, addressed to Mr.

Robinson, plaintiff, through its counsel, denied that it

had indicated an unwillingness to set a closing date,

charged the Air Force with the responsibility for the

then existing problems, requested return of the bid de-

posit, and stated that plaintiff “is reserving all of its

rights with respect to recovery of damages due to the

failure of the Department of the Air Force to comply with

all of the bid instructions and regulations thereby creat-

ing the situation that exists.”

By letter dated October 19, 1959, Mr. Robinson replied

to plaintiff’s counsel that the cancellation of the commit-

ments was compelled by plaintiff’s “repeated refusals

to perform its obligations under its bid and the Letter of

Acceptability, with the result that it was necessary to

revise the plans and rebid the project,” and that the re-

quest for the return of the bid deposit was denied. For

(fol. 169] some unexplained reason, the letter of October

19, 1959, did not reach plaintiff’s counsel, who, prompted

by concern that he had received no reply to his letter of

October 7, 1959, made inquiry by telephone of defendant

on December 4, 1959, and was then furnished a copy

of the letter of October 19, 1959, which he received on

December 9, 1959.

By letter dated December 16, 1959, plaintiff’s counsel

wrote to the Secretary of the Air Force as follows:

OEE NES PRED e SERS

EER, ERAS TTR —————

pe wy

[ fol.

As counsel for Anthony Grace & Sons, Inc., I have

been requested to appeal the decision of Mr. George S.

Robinson dated October Ist, 1959.

On October 7th, 1959, I formally appealed the de-

cision in Robinson’s letter dated October Ist, 1959

and in my reply requested the return of my client’s

bid deposit check and also set forth facts in contra-

diction to Mr. Robinson’s allegations. Hearing noth-

ing further, on December 4th, 1959, I called the

office of the Department of the Air Force, and spoke

with Mr, Samuel Hanenberg concerning a reply to

my appeal dated October 7th, 1959. I thereafter,

on December 9th, 1959, received a letter from Mr.

Hanenberg wherein he furnished me with a copy of a

reply sent to my office by Mr. Robinson on October

19th, 1959. This letter was never received by my

office.

You are hereby notified of my intention to appeal

the decision of Mr. Robinson to withdraw and cancel

the Letter of Acceptability dated October 29th, 1958

and his refusal to return the $25,000.00 bid deposit.

I am of the opinion that the facts and circumstances

as set forth in my letter forwarded to Mr. Robinson

on October 7th, 1959, clearly sets forth that the de-

lays caused by the Government Agencies involved

170] made it impossible for the builder to comply

with the terms of the Letter of Acceptability.

In view of the aforementioned, the Letter of Ac-

ceptability should have been terminated for the con-

venience of the Government and the $25,000.00 bid

deposit returned to Anthony Grace & Sons, Inc,

I request that this Notice of Appeal, as previously

set forth in my letter dated October 7th, 1959 be pro-

cessed in accordance with the Rules of the Armed

Services Board of Contract Appeals. Upon receipt

of Notice of Docketing I will file a formal Bill of

Complaint.

I sincerely request that this appeal be expedited in

order that a hearing be held at the earliest possible

date.

By letter dated December 22, 1959, the procurement

contracting officer advised plaintiff that Mr. Robinson

had been acting in his behalf in regard to cancellation of

the commitments and that he agreed with the action taken

by Mr. Robinson.

The letter of December 16, 1959, to the Secretary of

the Air Force from plaintiff’s counsel was docketed by the

Armed Services Board of Contract Appeals on December

31, 1959. Thereafter, the Government moved to dismiss

the appeal on the grounds that Mr. Robinson’s letter of

October 1, 1959, canceling the commitments undertaken

with plaintiff, was “an appealable decision”; and, that no

written appeal was taken from that letter or from Mr.

Robinson’s letter of October 19, 1959 within 30 days, as

[fol.171] provided by paragraph 2 of the letter of ac-

ceptability.

Plaintiff contended before the Board that the letter of

October 1, 1959, from Mr. Robinson was not a final de-

cision within the “disputes clause” (paragraph 2) of the

letter of acceptability, but that, nevertheless, the letter of

October 7, 1959, from plaintiff’s counsel did constitute an

appeal; that the only correspondence from the Govern-

ment which constituted an appealable decision within the

disputes clause was the letter from Mr. Robinson of Oc-

tober 19, 1959, and that since that letter was not received

until December 8, 1959, the letter of December 16, 1959,

from plaintiff’s counsel containing the appeal notice was

timely. Plaintiff also contended that Mr. Robinson, the

deputy special assistant for installations, who signed

pertinent letters on defendant’s behalf was not the con-

tracting officer for the purposes of the disputes clause,

and that plaintiff had already filed its appeal by the time

the contracting officer had, by his letter of December 22,

1959, made his decision.

The Board concluded that the letter of October 1, 1959,

from Mr. Robinson constituted an appealable decision and

was at the time so regarded by plaintiff; and that the let-

ter of October 7, 1959, from plaintiff’s counsel did not

[fol. 172] contain “a then present intent * * * to invoke

the right of appeal,” and, hence, did not constitute an ap-

peal within the disputes clause. Since the December 16,

1959, letter from plaintiff’s counsel] containing the appeal

notice was after the period of 30 days from the October

1, 1959, letter, the Board found that the appeal was not

timely. Regarding the status of Mr. Robinson, the Board

stated in effect that he had been “the Government’s

representative in all dealing of legal consequence between

the parties,” had signed the invitation for bids, the letter

of acceptability, and various other pertinent letters, in-

cluding the letter from which plaintiff contended it had

appealed, and that the contracting officer “was at all times

a virtual stranger” to plaintiff,

Accordingly, the Board, on June 29, 1960, granted

the Government’s motion and dismissed the appeal.

In considering the issue of timeliness of plaintiff's

appeal to the Armed Services Board of Contract Appeals,

it is apparent that the question presented, namely, inter-

pretation of the provisions of the cont.act documents

which set forth the specifies of an appeal and the corres-

ponding interpretation of the effect of letters which alleg-

edly constituted “decisions” and/or “appeals,” is a ques-

tion of law; hence, it and related factual issues are to be

(fol. 173] resolved independently by the court even though

the sole record before the court is the administrative rec-

ord. P.L.S. Coat & Suit Corp. v. United States, 148 Ct.Cl.

296 (1960); Beacon Construction Co. v. United States,

Ct.Cl. No. 44-58, decided March 6, 1963, 314 F. 2d 501;

WPC Enterprises, Incorporated v. United States, Ct.Cl.

No. 256-59, decided October 11, 1963, 323 F, 2d 874;

Stein Bros. Mfg. Co. v. United States, Ct.Cl. No. 389-59,

decided July 12, 1963; Wingate Construction Co. v. United

States, Ct. Cl. No. 394-60, decided January 24, 1964.

The parties are agreed that the governing provisions

of the contract documents regarding an appeal appear in

paragraph 2, the “disputes clause,” of the letter of ac-

ceptability which, though heretofore set forth, bears re-

peating for closer examination, as follows:

2. Failure to perform all obligations prior to the

time prescribed for closing will be just cause for

cancelling all commitments undertaken with you in

connection with the housing project and for the re-

covery under your bid security of liquidated damages

in the sum of $25,000, together with actual damages

to the Department, such actual damages to be item-

ized and determined by the Contracting Officer, whose

decision will be reduced to writing and furnished

to you by mail or otherwise. Such decision shall be

final and conclusive unless, within 30 days from the

receipt thereof, you appeal in writing to the head

of the Department or his duly authorized representa-

tive, and his decision shall, unless determined by a

court of competent jurisdiction to have been fraudu-

(fol. 174] lent or capricious or arbitrary, or so grossly

erroneous as necessarily to imply bad faith, or not

supported by substantial evidence, be final and con-

elusive. In connection with any appeal under this

paragraph you will be afforded an opportunity to be

heard and to offer evidence in support of your appeal.

In light of the foregoing disputes clause, let us turn to

the pertinent language of the letter of October 1, 1959, to

plaintiff from Mr. Robinson to determine if there was

therein a “decision” which would become “final and con-

clusive” unless appealed from within 30 days. This per-

tinent language reads:

am * * .

3. Accordingly, pursuant to paragraph 2 of the

letter of acceptability, the Department hereby cancels

all commitments undertaken with you in connection

with the housing project, reserving all its rights with

respect to the recovery of damages.

A fair reading of the provisions of the disputes clause

compels the conclusion that the decision of the contracting

officer should include not only language canceling the

commitments, but also language setting forth a conclusion

regarding recovery of the bid security and itemization of

such actual damages which the contracting officer deter-

mined should be recovered.

It is clear from the pertinent language of the October 1,

1959, letter that all of the elements of a decision required

[fol. 175] by the disputes clause are not present, because

the only reference to damages (whether liquidated or

actual) is that defendant was “reserving all its rights

———

with respect to the recovery of damages.” Upon reading

this letter, plaintiff could not tell whether defendant had

decided to recover liquidated damages, whether defend-

ant was claiming actual damages or in what amount, or

even when defendant expected to reach a conclusion as to

liquidated or actual damages. Conceivably, plaintiff could

have concluded that if there was to be no recovery sought

by defendant of liquidated damages or of actual damages,

it would be satisfied for the commitments to be canceled

and would not appeal; but, plaintiff could not make an

intelligent determination on the matter from the contents

of the letter. It is concluded that the letter did not con-

stitute a “decision” within the disputes clause, even

though, as defendant points out, plaintiff in subsequent

correspondence did refer to the “decision” in the October

1, 1959, letter. Having reached this conclusion, it is un-

necessary to consider whether or not the letter of October

7, 1959, from plaintiff’s counsel requesting return of the

bid deposit and advising that plaintiff was “reserving all

of its rights with respect to recovery of damages” con-

[fol. 176] stitutes an appeal, because the letter from

plaintiff’s counsel of December 16, 1959, which admittedly

constituted an appeal was within the 30-day period after

the receipt by plaintiff’s counsel on December 8, 1959,

of defendant’s letter of October 19, 1959. It is likewise

unnecessary to consider the question raised by plaintiff as

to the status of Mr. Robinson, the deputy special assistant

for installations.

It is accordingly concluded that plaintiff did make time-

ly appeal and, therefore, did exhaust its administrative

remedies, and is entitled to seek relief in this court.

Defendant contends that, irrespective of the issue of

exhaustion of administrative remedies, plaintiff may not

maintain its action in the court, because under the terms

of the letter of acceptability plaintiff could not refuse

to “close” a Capehart contract over a disagreement on the

administrative determinations of appropriate minimum

wages for the housing project, and that such determina-

tions are not subject to judicial review.

Plaintiff has pleaded in its petition that defendant

“unilaterally altered the scope of work provisions” and

issued “wage schedules in direct contravention of its con-

[fol. 177] tractual obligations,” and that defendant’s ac-

tion made it impossible for plaintiff to continue in its

efforts to perform under the contract. Plaintiff further

contends that its interpretation of the plans and specifica-

tions is correct “in light of the interpretation given such

ove and specifications by custom and usage in the

trade.”

Obvivusly the parties are in disagreement over the

nature of the issue presented and, of course, the Armed

Services Board of Contract Appeals, having reached its

decision solely on the matter of the timeliness of plain-

tiff’s appeal, did not consider any other issue.

If the issue could be stated in the terms which are sug-

gested by defendant, then it could be resolved solely on the

basis of the contract documents before the court. Plain-

tiff alleges in effect, however, that defendant did some-

thing more than merely make an administrative deter-

mination of appropriate minimum wages, but that defend-

ant unilaterally altered the scope of work provisions and

that defendant’s action made it impossible for plaintiff to

perform; i.e. that defendant, rather than plaintiff, was

at fault. Since the issue then, at least as presented by

plaintiff, involves an alleged breach of contract, this

court is not in the consideration of the issue, subject to

(fol. 178] the strictures of United States v. Carlo Bianchi

& Co., Inc., 373 U.S, 709 (June 3, 1968), pertaining to a

question arising under a “disputes” clause. There appear,

moreover, to be factual issues bearing on the alleged

breach which should be resolved, but, regarding which,

the record in its present state before the court is barren.

For example, the question of the custom and usage in the

trade from which plaintiff derives its conclusion that its

interpretation of the plans and specifications is correct

might properly be explored. Again, it is probable that the

conduct and/or statements of the parties, in their numer-

ous conferences over the matters in dispute, might have

significant bearing on whether plaintiff or defendant was

at fault. This is not to suggest that the foregoing should

necessarily be the subject of testimony at a trial, but only

that, because of its peculiar history, the case does not in

its present posture contain a record touching on the vari-

ous factual issues which plaintiff, in its reply to defend-

ant’s motion for summary judgment, requests opportunity

to try.

(fol. 179)

RECOMMENDATION FOR CONCLUSION OF LAW

It is recommended that the court adopt the following

concusion of law:

On the administrative record and briefs of the parties

and for the reasons stated above, the court concludes as a

matter of law that defendant’s motion for summary judg-

ment is denied,

Respectfully submitted,

RICHARD ARENS, Commissioner.

[fols, 180-195] * * *

[fol. 196]

IN THE UNITED STATES COURT OF CLAIMS

No. 133-61

ANTHONY GRACE & Sons, INC.

Vv.

THE UNITED STATES

David Fromson for the plaintiff.

David Orlikoff, with whom was Assistant Attorney

General John W. Douglas, for the defendant. Mary J.

Turner was on the brief.

Before COWEN, Chief Judge, LARAMORE, DURFEE, DAVIS

and COLLINS, Judges.

OPINION—Decided May 14, 1965

ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

CowEN, Chief Judge, delivered the opinion of the court:

In this action plaintiff seeks to recover its bid deposit

and damages it allegedly incurred as a result of cancella-

tion by defendant of commitments made by the Depart-

ment of the Air Force to plaintiff for the construction of

a military housing project under the Capehart Act. The

case is before the court on defendant’s motion for sum-

mary judgment on the grounds that plaintiff has failed

142 U.S.C. §§ 1594-1594j; 12 U.S.C. §§ 1748-1748i. For a brief

explanation of the procedures under the Capehart Act, see Anthony

P. Miller, Inc. v. United States, No. 3-62, Ct. Cl. April 5, 1963.

— ——————

to exhaust its administrative remedies and has failed to

state a claim for which relief may be granted.

This motion was referred to Trial Commissioner Rich-

ard Arens, under Rule 54(b), for his opinion and recom-

mendations for a conclusion of law. Commissioner Arens

has submitted an opinion and recommendaticns, The de-

(fol. 197] fendant sought review of both, and the case was

set for argument. The plaintiff submitted on the briefs

but the defendant presented oral argument.

The first issue is whether the plaintiff failed to exhaust

its administrative remedies because its appeal to the

Board of Contract Appeals from the cancellation (and the

refusal to return its deposit) was untimely (as the Board

held). Commissioner Arens’ opinion concludes that the

appeal was not untimely and the Board erred in dismiss-

ing it on that ground, The court agrees (with slight

modifications) with that portion of the Commissioner’s

opinion (set forth in Part III, infra) and adopts it, as so

modified, as the basis for rejecting the defendant’s argu-

ment that plaintiff is barred from suing in this court be-

cause it failed properly to exhaust its administrative

remedy.

The second issue is whether, in any event, plaintiff

states a cause of action. Defendant contends that, irre-

spective of the issue of exhaustion of administrative reme-

dies, plaintiff may not maintain its action because under

the terms of the letter of acceptability plaintiff could not

refuse to “close” a Capehart contract over a disagreement

on the administrative determinations of appropriate mini-

mum wages for the housing project, and that such de-

terminations are not subject to judicial review.

Plaintiff has pleaded in its petition that defendant

“unilaterally altered the scope of work provisions” and

issued “wage schedules in direct contravention of its con-

tractual obligations,” and that defendant’s action made it

impossible for plaintiff to continue in its efforts to per-

form under the contract. Plaintiff further contends that

its interpretation of the plans and specifications is correct

—

“in light of the interpretation given such plans and speci-

fications by custom and usage in the trade.”

Thus, the parties are in disagreement over the nature

of the issue presented and, of course, the Armed Services

Board of Contract Appeals, having reached its decision

solely on the matter of the timeliness of plaintiff’s appeal,

did not consider any other issue.

{fol. 198] The Trial Commissioner recommended that

the decision on defendant’s contention that plaintiff fails

to state a cause of action should be resolved only after

trial. In the Trial Commissioner’s view, the issues are

not now precisely framed; evidence as to the conduct of

the parties may shed some light on the issues, and there

are unresolved issues of fact.

Even where a motion for summary judgment meets the

technical requirements for the granting of the motion, the

court may in its discretion deny the motion. See Ct. Cl.

R. 64; Fed. R. Civ. P. 56; Williams v. Howard Johnson’s

Inc. of Washington, 323 F. 2d 102 (4th Cir. 1963); S. J.

Groves & Sons Co, v. Ohio Turnpike Commission, 315 F.

2d 285 (6th Cir. 1963). Denial of the motion is appro-

priate when the legal issues are of particular significance,

or particularly complex, or where the legal issues can be

intelligently resolved only upon a fully developed record.

See Kennedy v. Silas Mason Co., 334 U.S. 249 (1948) ;

Pacific American Fisheries, Inc. v. Mu'laney, 191 F. 2d

137 (9th Cir. 1951). We believe this to be a proper case

for the exercise of that discretion.”

Having determined that the Armed Services Board of

Contract Appeals improperly refused to consider plain-

2 See 6 Moore F. P. §§ 56.15[6],'56.16 (2d Ed. 1953), the former

section comments at pp. 2158-2159:

“«* * * the court must necessarily evaluate the character of

_ the record in light of the legal issues; and it should take care

not to adjudicate difficult or complicated legal issues, either of

a private or public nature, upon an inadequate factual basis. A

sound appraisal may demand that the motion be denied and

that the case proceed to trial. * * *” See also United States v.

Small, 24 F.R.D. 429 (S.D.N.Y. 1959).

tiff’s appeal on its merits (Part III hereof), we must con-

sider whether we should suspend action in this court and

direct the plaintiff to return the case to the Board, or

whether we should deny defendant’s motion and remand

the litigation to our Trial Commissioner,

It is an accepted principle that where the administra-

tive remedy is inadequate, a party will no longer be re-

quired to exhaust that remedy as a prerequisite to main-

taining an action in court. Davis, Administrative Law,

(fol. 199] § 189 (1951) This court has entertained an

action without requiring further recourse to the contrac-

tual administrative procedures where the contracting of-

ficer has refused to render a decision as required by the

contract or has delayed his decision excessively. Mazxan

Dress Corp. v. United States, 126 Ct. Cl. 484, 115 F.

Supp. 439 (1953) ; United States Casualty Co. v. United

States, 107 Ct. Cl. 46, 67 F. Supp. 950 (1946). The same

rule has been applied where the head of the agency simi-

larly erred. Southeastern Oil Florida, Inc. v. United

States, 127 Ct. Cl. 480, 115 F. Supp. 198 (1953); Heid

Bros., Inc. v. United States, 69 Ct. Cl. 704 ( 1930) ; Cape

Ann Granite Co., Inc. v. United States, 100 Ct. Cl. 53,

cert. denied, 321 U.S. 790; Cf. Hele v. United States, 100

Ct. Cl. 289 (1948) and 108 Ct. Cl. 472 (1945).

In Southeastern Oil Florida, supra, the plaintiff had

contracted to transport government gasoline. The con-

tracting officer determined that the plaintiff was respon-

sible for the contamination of some of the gasoline and

withheld moneys due under the contract. The contractor

pursued his remedies under the contract and appealed to

the Secretary of the Navy. For 2 years the appeal was

not acted upon, and the contractor filed suit. This court

commented, 127 Ct. Cl. 480, 484:

Defendant argues that because plaintiff’s appeal to

the head of the department is stil] pending, this

court has no jurisdiction of plaintiff’s claim. It is

5 See generally, Brister & Koester Lumber Corp. v. United States,

188 F. 2d 986 (D.C. Cir. 1951) ; United States v. Blake, 161 F. Supp.

76 (E.D.N.C. 1958) ; Wessel, Duval & Co. v. United States, 126 F.

Supp. 79 (S.D.N.Y. 1954).

_ nee.

true that a contractor must exhaust the administra-

tive remedies provided in the contract before it is en-

titled to bring suit in this court. United States v.

Blair, 321 U.S. 730, 735; United States v. Holpuch

Co., 328 U.S. 234, 240. These cases also set forth

the exception to this rule, however, which is that a

contractor is not prevented from suing in this court

where the administrative appeal procedure provided

in its contract is, in fact, inadequate or unavailable.

In the Blair case, the Supreme Court recognized that

(p. 736) :

If it were shown that the appeal procedure

provided in the contract was in fact inadequate

* * * we would have a quite different case.

Likewise, in the Holpuch decision, the Supreme

Court stated that (p. 240):

And in the absence of some clear evidence that

the appeal procedure is inadequate or unavail-

[fol. 200] able, that procedure must be pursued and ex-

hausted before a contractor can be heard to com-

plain in a court.

In this case, the plaintiff having appealed to the

head of the department, and the head of the depart-

ment having failed for more than two years to indi-

cate whether he would or would not take jurisdiction

of the appeal, the plaintiff was justified in regard-

ing the administrative appeal procedure as _inade-

quate and in filing its suit in this court. Having

filed its suit, it was not required te abandon that suit

and resume the administrative procedure.

We must now query whether the decision in United

States v. Carlo Bianchi & Co., Inc., 373 U.S. 709 (1963)

alters the rule announced in the cases cited above. Since

the Bianchi case was handed down, this court has decided

that the failure of the contracting officer to perform his

adjudicatory functions permits an action to be maintained

in this court without any further administrative proceed-

ings, C. J. Langenfelder & Sons, Inc. v. United States,

No. 291-68, Ct. Cl., February 19, 1965, 334 F. 2d 600;

Satan isbe idea Reb notice mee oie ee

SPREE LIER PERLE PIES ON tC MTT

H. B. Zachry Co, v. United States, No. 332-61, Ct. Cl.,

April 16, 1965. We believe that if a contracting officer’s

failure to act allows immediate recourse to the courts, it

follows a fortiori that a similar lack of action by a con-

tract appeals board should also permit such immediate

resort to the courts.

The decisions in Langenfelder and Zachry, supra, dic-

tate that in the case before us, we retain the case for trial

in this court.

[fol. 201] We believe that this result is in accord with

the Supreme Court’s decision in the Bianchi case, supra.

Justice Harlan, speaking for the majority in that case,

made the following observations on the sanctions to be

imposed by this court when confronted with an unaccept-

able administrative record. (873 U.S. 709, 717-718) :

* * * Second, in situations where the court believed

that the existing record did not warrant such a

course, but that the departmental determination

could not be sustained under the standards laid down

by Congress, we see no reason why the court could

not stay its own proceedings pending some further

action before the agency involved. Cf. Pennsylvania

R. Co. v. United States, 363 U.S. 202. Such a stay

would certainly be justified where the department

had failed to make adequate provision for a record

“In cases where the court’s decision was contrary to that of the

administrative boards and the board had made no findings on the

quantum of an equitable adjustment determined to be due, this court

retained the case and permitted a trial on that issue, E. H. Sales,

Inc. v. United States, No. 75-61, Ct. Cl., January 22, 1965. Jack

Stone Co. v. United States, No. 312-62, April 16, 1965.

But see, Utah Construction and Mining Co. v. United States, No.

8-61, Ct. Cl., December 11, 1964, where the court resolved, on a hy-

pothetical basis, the disposition of the concrete aggregate claim

which had been rejected by the administrative board as untimely.

The issue of whether to suspend proceedings was not, at that time,

squarely before the court; the issue was only marginally raised by

defendant and was not briefed. Since that time, in this and sev-

eral other cases, we have had the benefit of argument, briefs, and

more detailed reflection on the question. Therfore, the conclusion in

the Utah case does not, in view of the circumstances under which it

was made, foreclose our reconsideration of the issue.

that could be subjected to judicial scrutiny, for it

was clearly part of the legislative purpose to achieve

uniformity in this respect. And in any case in which

the department failed to remedy the particular sub-

stantive or procedural defect or inadequacy, the sanc-

tion of judgment for the contractor would always be

available to the court.

The foregoing comment must be read in, the light of

the Supreme Court’s policy to expedite the disposition of

such litigation—a policy stated in the same opinion at

page 717 as follows:

* * * The consequences of such a procedure [duplica-

tion of trials] would in many instances be a needless

duplication of evidentiary hearings and a heavy ad-

ditional burden in time and expense required to bring

litigation to an end.

A suspension of proceedings in this court for additional

action by an administrative board should be ordered only

where the suspension will actually expedite handling of

the litigation or where the Supreme Court has indicated

that a stay of court proceedings is justified. It should be

emphasized that we have no remand power in these cases.

Therefore, where an appeals board has refused jurisdic-

tion in a case, or where its prior decisions demonstrate

that it will not entertain jurisdiction of a particular dis-

(fol. 202] pute, a return of the proceedings to the board

is a useless gesture which will be productive only of fur-

ther delay in the litigation.°

It is to be noted that in Bianchi, the Supreme Court did

not have before it, nor did it discuss, a situation where

a contract appeals board has refused jurisdiction. But

the Court in that case squarely addressed itself to the

problems of delay. Accordingly, we conclude that the re-

5’ The Armed Services Board of Contract Appeals has consistently

held that it did not have jurisdicticn to review the decisions of the

Federal Housing Commissioner on contracts such as that in issue

here, Len Co. and Associates, 1962 BCA 17854 (ASBCA 1962); An-

thony Grace & Sons, Inc., 1962 BCA 17882 (ASBCA 1962) ; see also

Centex Constr. Co. v. United States, No. 342-60, Ct. Cl., June 7,

1963.

tention of this case for trial in this court best accords

with the enunciated policy of speeding contract litigation.*

Ill

Commissioner Arens’ opinion on the timeliness of plain-

tiff’s appeal to the Board of Contract Appeals, as modified

and adopted by the court, is as follows:

On August 22, 1958, the Department of the Air Force

issued an invitation for bids for the construction of 177

military Capehart housing units at Topsham Air Force

Station in Maine. The invitation, after setting forth the

purposes of the Capehart Act, provided in pertinent part:

4. The bidder should carefully examine the provi-

sions of the form of Housing Contract attached here-

to, including the Drawings and Specifications made a

part thereof; visit the site of the housing projects ;

and fully inform himself as to all conditions and mat-

ters which can in any manner affect the financing of

the construction and the constructing of the housing

projects or their cost. Should the bidder find discrep-

ancies in, or omissions from, such Drawings and

Specifications or other documents attached hereto, or

should he be in doubt as to their meaning, he should

at once notify the Contracting Officer, Otis Air Force

Base, Massachusetts, and obtain clarification prior to

submitting a bid. Information given will be trans-

mitted to all known interested bidders.

(fol. 203] 5. Under the provisions of Title IV of the

Housing Amendments of 1955, as amended, the total

principle [sic] amount of the mortgages is limited,

among other things to the amount of the bid of the

eligible builder. However, the Davis-Bacon Act and

Section 212(a) of the National Housing Act as

amended require that wages paid to laborers and me-

chanics be the prevailing wage as determined by the

Secretary of Labor not more than ninety (90) days

* See Schultz, Wunderlich Revisited: New Limits on Judicial Re-

view of Administrative Determination of Government Contract Dis-

putes, 29 Law & Contemp. Prob. 115, 127 (1964); Spector, Js Jt

“Bianchi’s Ghost”—Or “Much Ado About Nothing” ?, 16 Ad. L. Rev.

265, 289 (1964).

prior to the commencement of construction. Since

more than ninety (90) days may elapse from the

date of this Invitation For Bids to the commence-

ment of construction, the bids called for by this Invi-

tation For Bids will include a provision for adjust-

ment of the dollar amount therein specified to reflect

any difference between the tentative minimum wage

schedule attached hereto and the applicable minimum

wage schedule as finally determined by the Secretary

of Labor, Any such adjustment will be in an amount

determined by the Commissioner to reflect such dif-

ferences, and the amount of the lowest acceptable bid

and the FHA estimated total replacement cost of the

projects will be amended in the amount so deter-

mined by the Commissioner; except that, if such an

adjustment would increase the amount of the bid

above the amount of any other statutory maximum

applicable to the insurable mortgages, the eligible

builder will have the option of reducing his bid to

such statutory maximum or of withdrawing his bid.

8. Each bidder is required to submit with his bid a

certified check in the amount of $25,000, payable to

the Treasurer of the United States, to insure that if

he is the lowest acceptable bidder for the total of 177

family housing units he will perform the necessary

preliminary steps and effect a closing with FHA

within the time prescribed in the Letter of Accepta-

bility, including the furnishing of an acceptable per-

formance and payment bond. In the event the lowest

acceptable bidder fails to effect a closing with FHA

within the time prescribed, his deposit will be for-

feited and become the property of the Government

as damages unless the Department finds that he has

made every effort to effect such closing and extends

the time to effect such closing. If the lowest accepta-

ble bidder effects a timely closing with the FHA the

amount of his deposit will be refunded to him 24

hours after the initial closing with FHA. The de-

posits of unsuccessful bidders will be returned to

— a later than 60 days after the opening of

e i ‘ ** #

(fol. 204] a. “Timely Closing” as referred to in this

paragraph of the Invitation For Bids and closing

period as referred to elsewhere in these forms is

construed to be a period of approximately 60 days

from the date of opening of bids.

12. Bidders are advised that the maximum total of

the insurable mortgages may not exceed the lesser of

three items being (1) amount of the lowest accepta-

ble bid, (2) FHA Total of the estimated replacement

cost of the property or projects or (8) an average

per family unit of $16,500 less the estimated value

of any usable utilities within the property or projects

where owned by the Department or furnished by

other than mortgage proceeds, Attentiin is invited to

FHA’s Final Appraisal and Eligibility Statements

attached hereto. The bidder will be required to pay

the fees and costs prescribed in such statements,

22. The eligible builder, and al! his subcontyactors,

will be required to pay all mechanics and laborers

employed for working directly upon the sites of the

housing projects not less than the prevailing wages

as determined by the Secretary of Labor. A tentative

wage scale is attached hereto. Such tentative wage

scale is, however, subject to revision prior to actual

start of construction in accordance with Secretary of

Labor requirements. For the effect of such revision

see paragraph 5 above,

Bid Form:

8. The bidder understands that, if this bid is deter-

mined to be the lowest acceptable bid, the Department

will issue to him a Letter of Acceptability in the form

attached to the Invitation For Bids, and the bidder

agrees that upon issuance of such Letter of Accept-

ability he becomes obligated to carry out its terms

within the times therein stated, at his own expense,

within the conditions of his bid security, and without

———

further acceptance, award, advice or other action by

the Department. Such obligations include an obliga-

tion to cause performance by the mortgagor-builder

corporations, to be formed by the bidder, of each and

every act required of it in the Letter of Acceptability,

to cause the execution by said mortgagor-builder

corporations of a Housing Contract centaining the

same terms, conditions, provisions and Drawings and

[fol. 205] Specifications as the specimen form of Housing

Contract with good and sufficient surety or sureties as

required therein, within the times specified in and in

accordance with the Letter of Acceptability.

4. The Bidder represents that he is aware of the

statutory requirements of Section 212(a) of the

National Housing Act, as amended, and of the Davis

Bacon Act that wages to be paid to laborers and

mechanics employed in the construction of the proj-

ects are required to be not less than those contained

in the prevailing wage determination of the Secretary

of Labor, and that, in order to comply with these

statutory provisions, the bid price is subject to in-

crease or decrease by an amount determined by the

Federal Housing Commissioner (hereinafter called

the “Commissioner”) to represent the difference in

the “Total Estimate of Replacement Cost of the Total

Project,” computed according to the wage schedule

attached to the Invitation For Bids, and computed

according to the wage schedule as amended by the

“prevailing wage determination” as that term is de-

fined in Paragraph 19 of the specimen form of the

Housing Contract attached to the Invitation For

Bids. Moreover, the Bidder realizes that, if the

amount of his bid as specified in the Letter of Ac-

ceptability, is thereby increased so as to exceed the

maximum total amount of the insurable mortgages

as determined by the Commissioner, the Bidder shall

have the option of reducing his bid to the amount of

the maximum total insurable mortgages as deter-

mined by the Commissioner, or of withdrawing his

bid.

8. The bidder agrees that, if issued a Letter of Ac-

ceptability, aud if he does not exercise the option of

withdrawing his bid pursuant to Paragraph 4 above,

he wviil commence the work called for by the I raw-

ings and Specifications within 15 calendar days after

the date of closing, and that he will complete the

work called for by the Housing Contract as expedi-

tiously as possible, but in no event later than 450

calendar days after date of closing.

Attached to the invitation for bids was a tentative

minimum wage scledule which contained the following in-

troductory language:

The latest wage determination made by the Secre-

tary of Labor for the country in which the work is

(fol. 206] being performed is included herein. The com-

plete determination is incorporated in the contract

specifications regardless of whether the Contractor

will employ all the classes of laborers and mechanics

listed.

The schedule set forth the minimum rates of wages per

hour for certain classes of laborers and mechanics, ap-

prentices, building construction personnel, and heavy and

highway construction personnel. The rates in the schedule

for the heavy and highway construction personne] were

lower than the rates for the building construction person-

nel. The schedule bore an expiration date of September

18, 1958.

There were also attached to the invitation for bids,

specifications which defined the Scope and situs of the

work to be performed,

These specifications included a breakdown into “Section

1 on-site, site preparation” and “Section 2 on-site, Exca-

vation, Filling and Back-filling for Building Construc-

tion.” Section 1 of paragraph 1-18 of the specifications

provided in part:

On Site

Site Preparation

1-18 EXCAVATION, TRENCHING, AND BACK-

FILLING FOR UTILITIES SYSTEM:

(a) The work consists of furnishing all plant,

labor, equipment, appliances, and materials, and in

performing all operations in connection with excava-

tion, trenching, and backfilling for utilities system,

complete, in strict accordance with this section of the

specifications and the applicable drawings.

(b) All excavation for utilities systems occurring

within the enclosing walls or appurtenances of build-

ings or other structures and out to a line 5 feet out-

side of the walls or appurtenances thereof, is covered

under EXCAVATION AND GRADING FOR

BUILDING CONSTRUCTION, and is not included

under this section of the specifications.

* — + *

Section 2 of paragraph 2-01 of the specifications pro-

vided :

2-01 Scope

(a) Work Included. The work covered by this section

of the Specifications consists in furnishing all plant,

labor, equipment and materials and in performing all

operations in connection with excavating, filling, back-

[fol. 207] filling and rough grading, complete for the

building and for building utilities lines to a point

five (5) feet outside the foundation line, and other

related items in strict accordance with this Section

of the Specifications and the applicable Drawings,

and subject to the terms and conditions of the con-

tract.

(b) Work not Included. Clearing and grubbing, ex-

cavation, filling and grading for parking areas, roads,

walks, drainage, sewers and other sub-surface utili-

ties systems, and excavation for the building utilities

beyond planes five (5) feet outside the building line

are not included under this Section of the Specifica-

tions. Stripping of topsoil is specified in Section 1,

Site Preparation.

On or about September 30, 1958, plaintiff submitted its

bid to construct the housing project at a base price of

$2,653,022, with an additional price of $213,071, for cer-

tain additive alternatives, or at a total price of $2,866,093.

Plaintiff submitted with its bid a deposit, as required by

paragraph 8 of the invitation for bids, in the amount of

$25,000. |

On October 29, 1958, Mr. George S, Robinson, deputy

special assistant for installations, Department of the Air

Force, sent to plaintiff a “Letter of Acceptability” in

which plaintiff was advised that its bid of $2,866,098, for

the housing project, including the additives, was the lowest

acceptable bid; and, in which, plaintiff was further ad-

vised of its obligations to complete a number of arrange-

ments before the “closing” which was scheduled on or be-

fore January 8, 1959. The letter of acceptability specified

that among the arrangements which plaintiff was to make

prior to the closing was the following:

* * * *

n. Make application through the Contracting Offf-

cer, Otis Air Force Base, Massachusetts, to the Secre-

tary of Labor for an appropriate wage determina-

tion, if necessary, (on a Department of Labor Form |

DB-11 which wil] be supplied upon request by the

Contracting Officer) for use in the construction of the

project, and furnish a copy of such wage determina-

tion to the Contracting Officer and the Commissioner.

Such wage determination will be used by the Com-

missioner to increase or decrease the bid price in the

manner specified in your bid.

The letter of acceptability also provided in part:

(fol. 208] 2. Failure to perform all obligations prior to

the time prescribed for closing will be just cause for

cancelling all commitments undertaken with you in

connection with the housing project and for the re-

covery under your bid security of liquidated damages

in the sum of $25,000, together with actual damages

to the Department, such actual damages to be item-

ized and determined by the Contracting Officer, whose

decision will be reduced to writing and furnished to

you by mail or otherwise. Such decision shall be

final and conclusive unless, within 30 days from the

receipt thereof, you appeal in writing to the head

of the Department or his duly authorized representa-

tive, and his decision shall, unless determined by a

court of competent jurisdiction to have been fraudu-

lent or capricious or arbitrary, or s0 grossly errone-

ous as necessarily to imply bad faith, or not sup-

ported by substantial evidence, be final and conclu-

sive. In connection with any appeal under this para-

graph you will be afforded an opportunity to be heard

and to offer evidence in support of your appeal.

+ * * *

6. You are required to be ready for the closing on

or before January 8, 1959, and your failure to do so

will indicate your inability to carry out the obliga-

tions and terms of your bid and this Letter of Ac-

ceptability, provided that the Contracting Officer may

extend the date of closing in writing upon your sub-

mission of written documented proof that the delay

was caused by conditions beyond your control.

On November 19, 1958, pursuant to the obligations

specified in the letter of acceptability, plaintiff made a re-

quest of the Secretary of Labor for an appropriate wage

determination. On January 28, 1959, there were issued

by the Secretary of Labor two separate wage rate de-

cisions, with expiration dates of April 29, 1959. One of

the decisions contained a description of work as “General

Construction of 177 family housing units” and set forth

rates for laborers and mechanics, apprentices and build-

ing construction personnel. The other decision contained

a description of work as “Construction of Streets and

Roads in connection with Capehart Housing” and set

forth rates for heavy and highway construction person-

nel. As in the instance of the tentative minimum wage

schedule which was attached to the invitation for bids, the

rates set forth in the wage rate decisions for the heavy

[fol. 209] and highway construction personnel were lower

than the rates for the building construction personnel.

a ——

After receiving the wage rate decisions of the Secretary

of Labor, plaintiff concluded that the effect of the deci-

sions was to require it to pay the higher building con-

struction rates for a greater area of the work than pro-

vided by the specifications, and that plaintiff’s bid price

should be increased, in accordance with the letter of ac-

ceptability, to reflect the higher rates. In essence, plain-

tiff’s position was that under the specifications it was re-

quired to pay the higher building construction rates for

work to a point 5 feet outside the building foundation line,

and that for work beyond this point it was required to

pay only the lower heavy and highway construction rates ;

but, that under the descriptions of work contained in the

decisions it was required to pay the higher building con-

struction rates for all work beyond the above-indicated

point, except for work covering construction of streets

and roads. Because of difference between the parties

arising out of the foregoing decisions, the original closing

date of January 8, 1959, set forth in the letter of ac-

ceptability, was extended on several occasions while con-

ferences were held by the parties on the matter.

By letter of March 18, 1959, the director of the Federal

Housing Administration advised plaintiff that there would

be an increase in the wage rates allowed plaintiff in some

categories where the promulgated rates had been in-

creased, but that there had been no change in the rates

for either heavy and highway personnel or for building

construction power operators and that he had not been

able to justify an increase based upon plaintiff’s interpre-

tation.

On May 29, 1959, following exchanges of correspond-

ence and meetings of the parties, plaintiff requested a

determination of the Department of the Air Force relative

to plaintiff’s interpretation of the pertinent documents

from which plaintiff concluded that it was entitled to an

additional increase of $85,834 in bid price. By letter of

June 26, 1959, plaintiff was advised by George S. Robin-

son, deputy special assistant for installations, Department

of the Air Force, that he did not concur in plaintiff’s

position. The letter continued:

—

If you intend to effect a closing, you should advise

me promptly in order that the Letter of Acceptability

[fol. 210] may be amended. If you decide not to effect a

closing, or advice as to your intention is not with-

drawn in 10 days, the letter of acceptability will be

withdrawn.

On July 2, 1959, plaintiff wrote to Mr. Robinson that it

di@® not approve of his decision; that, as a result of the

delay in the matter, plaintiff had sustained considerable

monetary losses; and, that plaintiff was not in a position

to set a definite closing date until] the matters were re-

solved.

By letter dated October 1, 1959, Mr. Robinson advised

plaintiff that its letter of July 2, 1959, “indicating an un-

willingness to set a closing date constitutes a failure on

your part to perform your obligations under your bid and

under the letter of acceptability.” The letter continued:

* * * *

3. Accordingly, pursuant to paragraph 2 of the

letter of acceptability, the Department hereby cancels

all commitments undertaken with you in connection

with the housing project, reserving all its rights with

respect te the recovery of damages.

By letter dated October 7, 1959, addressed to Mr. Robin-

son, plaintiff, through its counsel, denied that it had indi-

cated an unwillingness to set a closing date, charged the

Air Force with the responsibility for the then existing

problems, requested return of the bid deposit, and stated

that plaintiff “is reserving all of its rights with respect to

recovery of damages due to the failure of the Department

of the Air Force to comply with all of the bid instructions

and regulations thereby creating the situation that exists.”

By letter dated October 19, 1959, Mr. Robinson replied

to plaintiff’s counsel that the cancellation of the commit-

ments was compelled by plaintiff’s “repeated refusals to

perform its obligations under its bid and the Letter of

Acceptability, with the result that it was necessary to re-

vise the plans and rebid the project,” and that the request

. for the return of the bid deposit was denied. For some

unexplained reason, the letter of October 19, 1959, did not

reach plaintiff’s counsel, who, prompted by concern that

he had received no reply to his letter of October 7, 1959,

made inquiry by telephone of defendant on December 4,

1959, and was then furnished a copy of the letter of Oc-

tober 19, 1959, which he received on December 9, 1959.

(fol. 211] By letter dated December 16, 1959, plaintiff’s

counsel wrote to the Secretary of the Air Force as follows:

As counsel for Anthony Grace & Sons, Inc., I have

been requested to appeal the decision of Mr. George

S. Robinson dated October Ist, 1959,

On October 7th, 1959, I formally appealed the de-

cision in Robinson’s letter dated October Ist, 1959

and in my reply requested the return of my client’s

bid deposit check and also set forth facts in contra-

diction to Mr. Robinson’s allegations. Hearing noth-

ing further, on December 4th, 1959, I called the office

of the Department of the Air Force, and spoke with

Mr. Samuel Hanenberg concerning a reply to my ap-

peal dated October 7th, 1959. I thereafter, on Decem-

ber 9th, 1959, received a letter from Mr. Hanenberg

wherein he furnished me with a copy of a reply sent

to my office by Mr. Robinson on October 19th, 1959.

This letter was never received by my office,

You are hereby notified of my intention to appeal

the decision of Mr. Robinson to withdraw and cancel

the Letter of Acceptability dated October 29th, 1958

and his refusal to return the $25,000.00 bid deposit.

I am of the opinion that the facts and circumstances

as set forth in my letter forwarded to Mr. Robinson

on October 7th, 1959, clearly sets forth that the de-

lays caused by the Government Agencies involved

made it impossible for the builder to comply with the

terms of the Letter of Acceptability.

In view of the aforementioned, the Letter of Ac-

ceptability should have been terminated for the con-

venience of the Government and the $25,000.00 bid

deposit returned to Anthony Grace & Sons, Ine,

I request that this Notice of Appeal, as previously

set forth in my letter dated October 7th, 1959 be

processed in accordance with the Rules of the Armed

Services Board of Contract Appeals. Upon receipt of

Notice of Docketing I will file a formal Bill of Com-

plaint.

I sincerely request that this appeal be expedited in

— that a hearing be held at the earliest possible

te.

By letter dated December 22, 1959, the procurement

contracting officer advised plaintiff that Mr. Robinson had

been acting in his behalf in regard to cancellation of the

commitments and that he agreed with the action taken by

Mr. Robinson,

The letter of December 16, 1959, to the Secretary of the

Air Force from plaintiffs counsel was docketed by the

[fol. 212] Armed Services Board of Contract Appeals on

December 31, 1959. Thereafter, the government moved to

dismiss the appeal on the grounds that Mr. Robinson’s

letter of October 1, 1959, canceling the commitments un-

dertaken with plaintiff, was “an appealable decision” ;

and, that no written appeal was taken from that letter

or from Mr. Robinson’s letter of October 19, 1959, within

30 days, as provided by paragraph 2 of the letter of ac-

ceptability.

Plaintiff contended before the Board that the letter of

October 1, 1959, from Mr. Robinson was not a final de-

cison within the “disputes clause” (paragraph 2) of the

letter of acceptability, but that, nevertheless, the letter of

October 7, 1959, from plaintiff’s counsel did constitute an

appeal; that the only correspondence from the government

which constituted an appealable decision within the dis-

putes clause was the letter from Mr. Robinson of October

19, 1959, and that since that letter was not received until

December 8, 1959, the letter of December 16, 1959, from

plaintiff’s counsel containing the appeal notice was timely.

Plaintiff also contended that Mr. Robinson, the deputy

special assistant for installations, who signed pertinent

letters on defendant’s behalf was not the contracting

officer for the purposes of the disputes clause, and that

plaintiff had already filed its appeal by the time the con-

tracting officer had, by his letter of December 22, 1959,

made his decision.

The Board concluded that the letter of October 1, 1959,

from Mr. Robinson constituted an appealable decision and

was at the time so regarded by plaintiff; and that the

letter of October 7, 1959, from plaintiff’s counsel did not

contain “a then present intent * * * to invoke the right

of appeal,” and, hence, did not constitute an appeal with-

in the disputes clause. Since the December 16, 1959, letter

from plaintiff’s counsel containing the appeal notice was

after the period of 30 days from the October 1, 1959,

letter, the Board found that the appeal was not timely.

Regarding the status of Mr. Robinson, the Board stated in

effect that he had been “the Government’s representative

in all dealings of legal consequence between the parties,”

had signed the invitation for bids, the letter of accepta-

bility, and various other pertinent letters, including the

letter from which plaintiff contended it had appealed, and

([fol. 218] that the contracting officer “was at all times

a virtual stranger” to plaintiff.

Accordingly, the Board, on June 29, isp

0, granted the

government’s motion and dismissed the ap

eal.

(1960) ; Beacon Construction Co. v. United States, 314

F, 2d 501 (Ct. Cl. 1963) ; WPC Enterprises, Incorporated

v. United States, 323 F. 24 874 (Ct. Cl. 1963); Stein

Bros. Mfg. Co. v. United States, 337 F. 2d 861 (Ct. Cl.

1963) ; Wingate Construction Co. v. United States, No.

394-60 Ct. Cl., January 24 1964,

The parties are agreed that the governing provisions of

the contract documents regarding an appeal appear in

paragraph 2, the “disputes clause,” of the letter of ac-

ceptability which, though heretofore set forth, bears re-

peating for closer examination, as follows:

2, Failure to perform all obligations prior to the

time prescribed for closing will be just cause for can-

celling all commitments undertaken with you in con-

nection with the housing project and for the recovery

under your bid security of liquidated damages in the

sum of $25,000, together with actual damages to the

Department, such actual damages to be itemized and

determined by the Contracting Officer, whose decision

will be reduced to writing and furnished to you by

mail or otherwise. Such decision shall be final and

conclusive unless, within 30 days from the receipt

thereof, you appeal in writing to the head of the De-

partment or his duly authorized representative, and

his decision shall, unless determined by a court of

competent jurisdiction to have been fraudulent or

capricious or arbitrary, or so grossly erroneous as

necessarily to imply bad faith, or not supported by

(fol. 214] substantial evidence, be final and conclusive.

In connection with any appeal under this paragraph

you will be afforded an opportunity to be heard and

to offer evidence in support of your appeal.

In light of the foregoing disputes clause, let us turn to

the pertinent language of the letter of October 1, 1959,

to plaintiff from Mr. Robinson to determine if there was

therein a “decision” which would become “final and con-

clusive” unless appealed from within 30 days. This per-

tinent language reads:

” * 7 7.

8. Accordingly, pursuant to paragraph 2 of the

letter of acceptability, the Department hereby cancels

all commitments undertaken with you in connection

with the housing project, reserving all its rights with

respect to the recorvery of damages.

A fair reading of the provisions of the disputes clause

compels the conclusion that the decision of the contracting

officer should include not only Janguage canceling the com-

mitments, but also languag« setting forth a conclusion

regarding recovery of the bid security and itemization of

such actual damages which the contracting officer deter-

mined should be recovered.

— ————————

It is clear from the pertinent language of the October 1,

1959, letter that all of the elements of a decision required

by the disputes clause are not present, because the only

reference to damages (whether liquidated or actual) is

that defendant was “reserving all its rights with respect

to the recovery of damages.” Upon reading this letter,

plaintiff could not tell whether defendant had decided to

recover liquidated damages, whether defendant was claim-

ing actual damages or in what amount, or even when de-

fendant expected to reach a conclusion as to liquidated

or actual damages. Conceivably, plaintiff could have con-

cluded that if there was to be no recovery sought by de-

fendant of liquidated damages or of actual damages, it

would be satisfied for the commitments to be caneeled and

would not appeal; but, plaintiff could not make an intelli-

gent determination on the matter from the contents of the

letter. It is concluded that the letter did not constitute a

“decision” within the disputes clause, even though, as

(fol. 215] defendant points, out, plaintiff in subsequent

correspondence did refer to the “decision” in the October

1, 1959, letter. Having reached this conclusion, it is un-

necessary to consider whether or not the letter of October

7, 1959, from plaintiff’s counsel requesting return of the

bid deposit and advising that plaintiff was “reserving all

of its rights with respect to recovery of damages” con-

stitutes an appeal, because the letter from plaintiff’s coun-

sel of December 16, 1959, which admittedly constituted an

appeal was within the 30-day period after the receipt

by plaintiff’s counsel on December 8, 1959, of defendant’s

letter of October 19, 1959. It is likewise unnecessary to

consider the question raised by plaintiff as to the status

Bc Robinson, the deputy special assistant for instal-

ations.

It is accordingly concluded that plaintiff did make time-

ly appeal and, therefore, did exhaust

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