Opposition Brief — United States v. Peotzer

Page

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Contract Provisions Involved ...............eeeeee. 2

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Reasons for Denying the Writ ................eeee8: 8

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CITATIONS.

Casks:

Bein, et al. v. United States, 101 C. Cls. 144........ 16

Kihlberg v. United States, 97 U.S. 398 ............ 15

King v. United States, 100 C. Cls. 475 .............. 12

Langevin v. United States, 100 C. Cls. 15 .......... 12

Martinsburg & Potomac R. R. Co. v. March, 114 U. 8.

TEL Neh cekekdebahadedGauhaevswandshiesea 15

McCloskey € Co. v. United States, 108 C. Cls. 253.... 12

John McShain, Inc. v. United States, 88 C. Cls. 284,

a ee a ee WE, OD 5b was cess ckdeasdcecnneve 13

Merrill-Ruckgaber v. United States, 241 U. 8S. 387.. 13

Plumley v. United States, 226 U.S. 545........... 12,13

Ripley v. United States, 223 U. S. 695............ 15, 16

Saalfield v. United States, 246 U.S. 610........... 15, 16

Union Paving Co. v. United States, i07 C. Cls. 405.. 12

United States v. Beuttas, 324 U. 8. 768 ........... 13, 14

United States v. Blair, 321 U. S. 730.............. 10

United States v. Gleason, 175 U.S. 588............. 15

. United States v. Holpuch, 328 U. S. 234............ 10

MISCELLANEOUS:

1 Contract Cases Federal (Commerce Clearing

SEE MD whos 5 4546-05 np cndnceedecccseniancnsse

IN THE

Supreme Court of the Gnited States

Ocrosper TERM 1948,

No. 332.

Tue Unirep States, Petitioner,

Vv.

Epmonp Prorzer and E. Joun Prorzer, Co-partners,

Respondents.

BRIEF IN OPPOSITION TO PETITION FOR A WRIT

OF CERTIORARI TO THE COURT OF CLAIMS.

OO

Opinion Below.

The opinion of the Court of Claims (R. 46-62) has not

yet been reported.

Jurisdiction.

The judgment of the Court of Claims was entered on

May 3, 1948 (R. 62). Motion for new trial was denied July

6, 1948 (R. 63). The jurisdiction of this Court is invoked

under 28 U. S. C. 1255.

ee

2

Questions Presented.

1. Where under a standard form of Government contract

reserving to the contracting officer the right to determine

only disputed questions of fact, no dispute exists as to the

contractors’ obligation to perform certain work under the

contract and no dispute exists as to the manner, adequacy

or extent of their performance, does the Government, by

virtue of clauses in a technical specification which provide

that ‘‘the Contractor shall furnish all materials, plant, sup-

plies, equipment, labor, etc., necessary to complete the work

according to the true intent and meaning of the drawings

and specifications, of which intent and meaning the Con-

tracting Officer shall be the interpreter’’, which interpreta-

tion should be subject to administrative appeal to the head

of the department whose decision should be final, possess

the right through its administrative officers to declare the

law of the contract by determining whether the Govern-

ment has breached its contract by failing to pay to the con-

tractors the contract consideration for such work admit-

tedly required and performed under the contract.

2. Assuming arguendo that it was intended that a deci-

sion of the contracting officer and on appeal the decision of

the head of the department should be final under Article 15

of the contract and paragraphs 1-07 and 1-08 of the speci-

fications on all questions of interpretation of the specifica-

tions and drawings, including one involving the question of

payment alone, is such a decision binding in the face of an

uncontroverted finding of the Court below that the same

was not supported by any substantial evidence or by any

provision in the contract documents, and that the fair and

reasonable interpretation of the contract required payment.

Contract Provisions Involved.

The pertinent contract provisions appear in an Appendix

to the petition (pp. 28-29).

3

Statement.

Petitioner’s statement, pp. 3-10, is inadequate in certain

particulars.

1. The last full sentence at p. 4 of petitioner’s statement

does not adequately recite the provisions of paragraphs

1-07 and 1-08 of the specifications upon which petitioner

relies. In lieu thereof respondents submit that the follow-

ing should be substituted:

Paragraph 1-07 of the specifications provided that

the contractor was to furnish all materials, plant, sup-

plies, equipment, labor, ete. necessary to complete the

work within the true intent and meaning of the draw-

ings and specifications, of which intent and meaning

the contracting officer would be the interpreter (R. 63-

64). Paragraph 1-08 of the specifications provided

that if the contractor considered any work demanded

of him to be outside of the requirements of the contract,

or considered any action or ruling of the contracting

officer or of the inspectors to be unfair he should pro-

test in writing to the contracting officer who would

render a decision thereon which was appealable within

30 days to the Secretary of War, whose decision should

be final.

2. Petitioner’s statement, p. 4, is also inadequate in that

it fails to relate that the form of contract itself contained

limitations upon deviations therefrom, and prohibitions

against the adoption of contract provisions inconsistent

with the standard form or involving questions of policy.

There should therefore be inserted after the last full sen-

tence on p. 4 of the petition the following:

The present contract which by its 15th Article em-

powered the contracting officer to decide only ‘‘dis-

putes concerning questions of fact’? contained on the

back of the last page, ‘‘Directions for Preparation of

Contract’? which (a) prohibited deviation from the

standard contract form except as authorized by the

Director of Procurement; (b) provided that all addi-

tions or alterations should be inserted in an article of

+

the contract entitled ‘‘ Alterations’’; (c) warned that

the inclusion of such article entitled ‘‘ Alterations’”’

should not be construed as general authority to devi-

ate from the standard form; and, (d) prohibited the

inclusion in the specifications of any additional provi-

sions inconsistent with the standard form or involving

questions of policy (R. 61).

Claim for $3,217.80 for Formed Concrete Beams

(R. 33-34; 51-53).

3. Respondents submit that the first sentence in the first

full paragraph on p. 6 of the petition is vague and indefinite

and in lieu thereof the following should be substituted:

The beams were shown only on the foundation

drawings and the same were not described in the speci-

fications, the only reference thereto being to concrete

‘‘beams’’ or ‘‘girders’’, used in connection with re-

inforcement (R. 34).

4. Petitioner’s statement should also include at p. 7 the

following finding of the court below:

The Court of Claims found as a fact that the fair

and reasonable interpretation of the bid form, which

was a part of the specifications, including the language

of the note on page 3 thereof and the information

shown on the contract drawings, was that the contract

intended that these formed reinforced concrete beams

should be paid for at the unit price bid under item 6

for ‘‘ Formed concrete foundations’’ (R. 34). Further,

it found that the decisions of the Contracting Officer

and the head of the department on this claim were not

supported by any substantial evidence or by any pro-

vision in the contract documents (R. 34).

Claim for $2,018 for Excavation and Concrete Floor Slabs

for Wash Racks (R. 34-35; 53-54).

5. Petitioner’s statement of the facts relating to this

claim (R. 7-9), is inadequate, ignores the fact that the slabs

in questiom rested on gravel which is highly determinative

5

of the question whether respondents should be paid there-

for, and by only passing reference to a ‘‘Note’’ on the Bid

Form completely de-emphasizes the importance of that

note to the controversy here involved. An adequate presen-

tation of these facts necessitates a complete restatement

as follows:

The Bid Form which was a part of the contract

called for two automobile wash racks (R. 28, Item 33;

R. 34).

Construction of these wash racks necessitated the

excavation of 109 cubic yards of earth (R. 34); the

placement of gravel in such excavated area (R. 35),

and the placement on top of such gravel of concrete

floor slabs comprising 60 cubie yards of concrete (R.

35). The original plans had shown such concrete floor

slabs resting directly upon the earth, but petitioner

subsequently ordered and separately paid for the plac-

ing of the gravel on which the concrete slabs were laid

(R. 35). The wash racks also required among other

things plumbing, water pipes and connections, fixtures

and drains (R. 35).

Item 2 of the Bid Form provided a price of $2 per

cubie yard for ‘‘Excavation for * * * floor slabs”’

(R. 27).

Item 6 of the Bid Form provided a price of $30 per

cubie yard for ‘‘Concrete * * * for floor slabs’’ (R.

27). The specifications provided that ‘‘Concrete * * *

shall be paid for as set up in the Bid Form”’ (R. 35).

The Bid Form also contained a ‘‘Note’’ following

Bid Item 6 referred to above which provided that the

‘Unit price for each of the buildings listed hereinafter

shall include all work, materials, labor and incidentals

required to construct them complete * * * except

* * * foor slabs on earth or gravel’? (R. 27).

Immediately after the note was the caption ‘‘Struc-

tures’’, and under that caption appeared Bid Item 33,

which provided a lump sum price of $1200 for ‘*Wash

Rack, Mod. (25’ x 60’) (5-Car) (Excluding Booster

Pump and connections) ’”’, the quantity called for being

two (R. 27-28).

The Bid Form was made a part of the contract by

Article 1 of the contract (R. 30-31; R. 50-51).

6

In making their bid for wash racks respondents did

not include in their unit price for such wash racks,

Bid Item 33, any of the cost of the excavation or con-

crete (R. 35; R. 54).

Respondents sought payment for such excavation

and concrete under Bid Items 2 and 6 referred to above

(R. 35).

The contracting officer disallowed their claim stating

‘‘It is the interpretation of this office that the wash

racks are to be paid for at the unit price stated in Item

No. 33, complete in place, excluding booster pump and

connections’’, and on plaintiff’s appeal the disallow-

ance was affirmed (R. 35).

Such administrative decisions were contrary to the

provisions contained in the Bid Form (R. 35), and

clearly erroneous (R. 54).

The provisions in the Bid Form were the only pro-

visions contained in the contract or specifications relat-

ing to the wash racks (R. 35).

The wash racks were shown on a drawing which is

not in evidence’ (R. 53).

There is nothing in the record to support petitioner’s

assertion (pp. 8-9) that this drawing was ‘‘considered

of prime significance by petitioner’s administrative

officers in their disallowance of the claim,’’ there being

no question at any time of respondents’ obligation to

perform the exact work set forth in that drawing.”

1 Respondents did not introduce this drawing because it did no

more than outline the work to be performed, and no controversy

existed as to either respondents’ obligation to perform such work

or the fact that it was performed, the only issue in the case being

one of payment for work admittedly required under the contract.

That petitioner’s view was the same is evidenced by the fact that

it likewise did not offer this drawing in evidence.

2It is noted that petitioner cites nothing in support of its state-

ment that such drawing was of ‘‘prime significance’’ to the ad-

ministrative officers who disallowed the claim. In footnote 7 on

p. 8 in support of another point, petitioner refers to the adminis-

trative disallowance (1 Contract Cases Federal, Commerce Clear-

ing House, 230, 238, 239), an examination of which shows that the

only significance attached to the drawing by the War Department

Board of Contract Appeals was their conclusion that such drawing

7

6. The full paragraph on p. 9 of the petition does not

adequately or fairly summarize the general portion of the

opinion of the Court below (R. 59-62). In lieu thereof the

following should be substituted:

The Court below held (1) that Article 15 of the con-

tract was intended to limit administrative decisions

to questions of fact (R. 60); (2) that the specifications

only related and were intended to relate to the furnish-

ing by the contractor of materials, plant, supplies,

equipment, labor, ete., necessary to complete the work

in accordance with the drawings and specifications (R.

61-62), and (3) that the specifications did not purport

to make final and conclusive the contracting officer’s

interpretation of the plans and specifications with ref-

erence to amounts due (R. 62).

In arriving at these conclusions the Court below

stated that Article 15, which limited the authority of

administrative officers to the determination of disputed’

questions of fact, laid down a rule of policy (R. 60)

and that only in Article 23 (‘*Alterations’’) might the

Government, acting through the contracting agency or

the head of the department, insert modifications or

changes of that policy (R. 60-61).

It also pointed out that the directions for the prepa-

ration of the contract, as they appear on the contract

form, prohibit the insertion of provisions in the speci-

fications which deviated from the policies defined by

the contract (R. 61). The reasoning of the Court

clearly indicates that it found no inconsistency between

the provisions of Article 15 and the provisions of the

specifications. It was aided in this conclusion by the

fact that the language of the specifications clearly

showed that the power of administrative decision in

the specifications was restricted to questions involving

materials, plant, supplies, equipment, labor, ete., neces-

sary to complete the work in accordance with the draw-

showed ‘‘that the principal work to be performed was the concrete

work and incidental excavation,’’ patently not pertinent to the

question whether Bid Items 2 and 6, specifically relating to Exca-

vation and Concrete, provided for payment for such work.

8

ings and specifications (R. 61-62). It was further aided

in this conclusion by the fact that Article 23 of the con-

tract contained nothing indicating an intention on the

part of the Government to change the policy stated in

Article 15 of the contract (R. 60). It concluded that

the power to declare the law of the contract remained

in the Courts (R. 62).

Reasons for Denying the Writ.

1. The decision of the Court below is not of sufficient im-

portance to justify the granting of the writ. The case in-

volves only the legal determination of the right to be paid

under the terms of the contract for work admittedly re-

quired to be performed under the drawings and specifica-

tions. No technical questions of compliance or non-com-

pliance with the specifications and drawings have ever

arisen. The merit of the claims is manifest and it is not

disputed that the contract required the payments claimed

by the respondents.’

Admittedly the work was called for by the original con-

tract and no dispute has ever arisen that the performance

of such work was in the nature of an extra or change, or

that respondents in the performance of such work did any-

thing less than what the specifications or drawings called

for. Respondents know of no case, and petitioner has cited

none, where any court has been presented with a similar

3 Petitioner in its brief has not challenged the finding of the

court below with respect to the claim for concrete foundation

beams that the ‘‘fair and reasonable interpretation’’ of the Bid

Form required payment (R. 34, Finding 14) and that the decisions

of the contracting officer and head of the department disallowing

such payment were not supported by any substantial evidence or

by any provision in the contract documents (R. 34). With respect

to the wash racks petitioner also fails to dispute the finding that the

disallowance was ‘‘contrary to the provisions contained in the Bid

Form which constituted a part of the contract specifications’ (R.

35), and that ‘‘The provisions in the Bid Form were the only pro-

visions contained in the contract or specifications relating to the

wash racks’’ (R. 35).

——

9

question, all of the cases cited by petitioner turning in-

stead upon the question whether work was required of a

contractor under the terms of the contract.* It is therefore

obvious that the question here involved is not one which

will frequently occur, will in no wise hamper the administra-

tion of Government contracts, and is not of sufficient mo-

ment to justify the granting of the writ.

2. The case was correctly decided by the court below.

(a) The Court of Claims has not ‘‘once again refused to

apply the established provisions of government construc-

tion contracts, long accepted by contractors, which desig-

nate certain contractual disputes for administrative settle-

ment’’, as stated by petitioner (p. 11), nor has it ‘‘ignored

the traditional clause providing for administrative inter-

pretation * * * used for years in thousands of contracts

and often applied by the courts’’ as stated by petitioner

(p. 12). Such reckless statements would indicate that the

Court of Claims is comprised of a group of judges whose

primary concern is to avoid long established safeguards to

the expenditures of Government funds under public con-

tracts. Nothing could be further from the case. Instead,

that Court has consistently enforced provisions of Govern-

ment contracts similar to those involved in paragraphs

1-07 and 1-08 of the specifications in this case, without,

however, relinquishing to the Government’s administrative

officers the Court’s jurisdictional right to determine the

laws of such contract.

There are acceptable reasons why various phases of Gov-

ernment contract administration should be settled with

finality by Government officers. There should never be a

question regarding the Government’s right to order addi-

tional work and it is not unreasonable to place in the hands

of an administrative officer the authority to finally deter-

mine what an equitable adjustment for such work should

be. It is not unreasonable that Government officers should

4 An analysis of this Court’s decisions appears infra, pp. 12-14.

10

also have the authority to determine whether work is re-

quired by the specifications and drawings and whether work

so performed meets the requirements of the specifications

and drawings. One justification for giving such an ad-

ministrative officer authority to make such determinations,

subject to an appeal to the head of the department, is that

these questions involve technical knowledge which is more

apt to be possessed by a technical man than by the courts.

A second justification is that the power of administrative

decision can be used to settle disputes during the perform-

ance of the work and thereby operate to prevent a course

of conduct which might ultimately result in large claims for

damages against the Government.®

None of the above reasons would justify the finality of

a decision by the contracting officer on the question pre-

sented by this case for here there are no technical questions

involving an interpretation of the work requirements of

the specifications and drawings. The only question here

presented is whether the language which the Government

saw fit to employ in the preparation of this contract cre-

ated a legal obligation to pay for the work. An engineer

or an administrative officer has no background of experi-

ence or training which would render him fit to make this

determination. Neither is it desirable, nor can it be said

that the parties contemplated that thev entrusted to an em-

ployee of one of the parties the right to determine finally

the legal obligations arising under the contract and thereby

deprive the Court of Claims of its jurisdiction. If any such

radical departure from the standard form of Government

contract had been intended it would have been made ap-

parent by a revision of Article 15 and would not have been

buried in a technical specification in such language as would

clearly indicate that the power of decision was intended to

be restricted to questions involving the furnishing of ma-

5 United States v. Blair, 321 U. S. 730, 785; United States v.

Holpuch Co., 328 U. 8. 234, 239.

ll

terials, plant, supplies, equipment, labor, etc., necessary

to complete the work.

The other reason for permitting an employee of cne of

the parties to have final decision on such questions is like-

wise not present in this case. Here, there is no question of

permitting a higher Government official to correct the rul-

ings of a subordinate and thus mitigate or avoid the dam-

ages flowing from an incorrect ruling upon the part of the

subordinate. Here, the only question is whether or not the

contractor shall receive any payment for a substantial

quantity of work that he performed which all parties ad-

mit was and necessarily had to be performed under the

specifications and drawings.

It would be fundamentally wrong to place all powers of

decision, factual and legal, in the hands of one of the inter-

ested parties to the contract and the undesirability of such

a condition has been recognized by the Government itself.

From 1933 to 1940, while the Government was lending sup-

port to the economy of the country through the letting of

contracts by the Public Works Administration, that Ad-

ministration modified Article 15 of the contract from one

authorizing the head of the department to finally decide

only disputed questions of fact to one authorizing such offi-

cer to finally decide ‘‘all’’ disputes arising under the con-

tract.°. However, the obvious inequity of such a provision

was soon realized by the Government and a return was

made to the earlier Article 15 which reserved the power

of final decision only on disputed questions of fact. The

foregoing history demonstrates that the policy makers of

the Government have foreseen the shortsightedness of any

attempt to deprive competitive contractors of their right

to seek redress in the courts for failure of the Government

to abide by the obligations of its written contracts. Were

the Government permitted to be the final judge of the extent

of its legal obligations, there could be no firm commitment

® See explanatory remarks under fn. 15, p. 17 of petition.

aaa,

by the Government for performance of its obligation to pay

for work and the many advantages that have flowed to the

Government through competitive bidding would cease.

The present case involves a provision in the specifications

vesting in the contracting officer authority to interpret the

plans and specifications. The Court of Claims has long

recognized and enforced provisions of this nature and has

held that the decision of the contracting officer, subject to

appeal, was final on the question whether work or material

was required by the drawings and specifications. Union

Paving Co. v. United States, 107 C. Cls. 405, 417; McClos-

key € Co. v. United States, 103 C. Cls. 253, 264, 265; Lange-

vin v. United States, 100 C. Cls. 15, 40, 41; King v. United

States, 100 C. Cls. 475, 482, 490.

The present petition is simply an attempt to enlarge this

power of decision beyond the scope of the contract itself

and beyond any excusable need for a power of decision at

an administrative level and, in the last analysis, petitioner

secs to confer upon itself the power to finally decide

whether or not it has performed its own contract obligation

to pay for work admittedly required by the contract.

(b) The decision of the court below is not in conflict with

any decision of this Court. An examination of the deci-

sions of this Court will reveal that the court below in de-

claring that a legal obligation existed to pay for work ad-

mittedly required and performed in accordance with the

specifications did not contravene any principles that this

Court has laid down in recent years in the law of Govern-

ment contracts,

In Plumley v. United States, 226 U. S. 545, 546, 547, a

construction contract was terminated and thereafter the

Government entered into another contract with Plumley

to complete the work. Disputes arose as to whether a ven-

tilator system and certain drain pipes were required under

Plumley’s contract. Plumley’s claim was rejected by the

architect and on appeal by the Secretary. The Court held

that the decision of the Secretary was binding on the con-

13

tractor because the contract provided that if there was any

discrepancy between the plans and specifications or between

the first contract and that of Plumley, Plamley would have

to abide by the decision of the Secretary. In this case the

question presented was whether the work was required,

and the interpretation of the administrative officer was

upheld.

In Merrill-Ruckgaber Co. v. United States, 241 U.S. 387,

393, a dispute arose as to whether the specifications re-

quired the contractor to underpin one building or two build-

ings. The Supervising Architect ruled that the contractor

had to underpin both buildings. The Court held that his

decision was final under a provision authorizing him to

finally interpret the drawings and specifications. Here

again the question involved was whether the work was re-

quired by the drawings and specifications,

In John McShain, Inc. v. United States, 308 U. S. 512,

513, 520, reversing 88 C. Cls. 284, a dispute existed as to

whether the plans and specifications required certain drains

to be backfilled with gravel. The Government engineer

contended that the gravel was required even though there

Was a discrepancy between the specifications and the plans

(88 C. Cls. 289, Fdg. 7). Although the decisions of the

court below and of this Court do not clearly indicate that

this contract contained the ‘‘all’’ disputes clause as dis-

tinguished from the ‘‘disputed questions of fact’? clause,

the fact was that it contained the ‘‘all’’ disputes clause and

the petitioner admits this in footnote 21, p. 22 of the peti-

tion in the present case. By per curiam opinion citing

Plumley v. United States, 226 U. S. 545, 547, and Merrill-

Ruckgaber Co. v. United States, 241 U. S. 387, 393, this

Court reversed the decision of the court below. As in the

other cases this decision turned upon the requirements of

the specifications and drawings further complicated by dis-

crepancies between the plans and specifications.

In United States v. Beuttas, 324 U. S. 768, 771-772, the

contract contained an ‘‘all’’ disputes clause. The question

Eee.

14

arose whether the contractor could recover certain in-

creases in wages which he had to pay because the Govern-

ment had required a higher minimum rate to be paid under

another contract on the same project. The contractor’s

claim was administratively disallowed. The contractor

contended before this Court that the ‘‘all’’ disputes clause

could not encompass such a situation since the question

presented was purely a matter of law. This Court ruled

that it was not necessary to pass upon this point and de-

nied recovery for another reason. There is no analogy

between the Beuttas case and the present one as far as the

contract provisions are concerned, though the Beuttas case

indicates that even where a broader Article 15 is present

authorizing final decision of all disputes, this Court was

unwilling to recognize that administrative officers could be

given the right of final decision on purely legal questions.

From the above cases it is clear that the decision of the

court below is not in conflict with the decisions of-this Court

since it does not involve the technical question whether

work was required by the plans and specifications, which

question was present in each of the decisions referred to

above.

(c) Assuming arguendo that it was intended that peti-

tioner’s administrative officers might finally determine

under the provisions of the specifications in question

whether petitioner had fulfilled its legal obligation under

the contract to pay for work admittedly required and per-

formed, and that such provision would be valid, such a de-

cision cannot be final in view of the finding of the court

below with respect to the claim for concrete beams that the

fair and reasonable interpretation of the specifications is

that payment should be made at the contract unit price for

concrete, and that the administrative decisions denying

payment were not supported by any substantial evidence

or by any provision of the contract documents (R. 34) and

in view of the finding of the court below, with respect to

the claim for wash racks, that the administrative decisions

15

denying payment were contrary to the only provision of

the contract or specifications relating to wash racks (R. 35),

none of which findings petitioner has challenged.

This Court has laid down the rule that the decision of a

contracting officer cannot be final where there is fraud, a

failure to exercise an honest judgment, or if it is so grossly

erroneous as to imply bad faith. Kihlberg v. United States,

97 U. S. 398, 402; Martinsburg & Potomac R. R. Co. v.

March, 114 U. 8S. 549, 553; United States v. Gleason, 175

U. S. 588, 607. In establishing this rule, however, it is clear

that this Court was fully aware of the difficulties of proving

bad faith and wished it to be well understood that it could

be inferred from the grossly erroneous character of the de-

cision itself. Later cases elaborated on this ground and

referred to the objective standard of reasonableness. For

example, in Ripley v. United States, 223 U. S. 695, 701-702,

the Court after stating the above rule, said:

‘*But the very extent of the power and the conclusive

character of his decision raised a corresponding duty

that the agent’s judgment should be exercised—not

capriciously or fraudulently, but reasonably and with

due regard to the rights of both the contracting parties.

* * *.’? (Italics supplied.)

In Saalfield v. United States, 246 U. S. 610, 613, where a

contract for the manufacture of guns provided for certain

tests and for the determination of disputes by the Chief of

Ordnance subject to the final decision of the Secretary of

War, this Court held:

««* * * It is apparent from these excerpts that the

contract contemplates the making and testing of a ‘type

gun’ of each caliber; that the acceptance of additional

guns was dependent on this one ‘passing its test satis-

factorily,’ and that the Chief of Ordnance and his su-

perior officer, the Secretary of War, were to decide, not

arbitrarily, but candidly and reasonably, whether the

gun had satisfied the required test. Ripley v. United

States, 223 U. S. 695, 701-702.”’ (Italics supplied.)

zn

16

Thus it is clear that this Court recognizes an objective

standard for determining bad faith and permits it to be

inferred from the decision itself. It is also clear that the

decision of an administrative official cannot be final where

he fails to act reasonably, and with due regard to the rights

of both of the contracting parties.

Certainly the administrative officers in this case cannot

be said to have acted reasonably or with due regard to the

rights of both parties in disallowing the claim for concrete

beams when, as found by the court below, the fair and rea-

sonable interpretation of the specifications called for pay-

ment at the contract unit price for concrete, and that the

administrative decisions denying payment were not sup-

ported by any substantial evidence or by any provision of

the contract documents (R. 34). -In the light of the Ripley

and Saalfield cases, supra, this is the equivalent of finding

that the decisions of these administrative officials were so

grossly erroneous as to imply bad faith. It is submitted

that in cases involving the finality of a decision of an officer

under a Government contract, as in cases involving the

finality of the findings of quasi-judicial fact-finders, the

courts are not bound by decisions which are not supported

by substantial evidence and that the courts should not be

required to indulge in name-calling in order to exercise the

right of review (see concurring opinion of Judge Madden

in Bein, et al. v. United States, 101 C. Cls. 144, 168-169).

Regarding the disallowance of the claim for wash racks,

it is likewise submitted that the decisions of the administra-

tive officers in this case cannot be final where, as found by

the court below (R. 35), these decisions were contrary to

the only provisions of the contract and specifications relat-

ing to wash racks.

3. The reasons stated by petitioner for granting the writ

are based upon an erroneous interpretation of the opinion

of the court below.

Petitioner contends (pp. 16-24) that the court below erred

in holding that the contracting officer had no authority to in-

17

corporate the disputed clauses of the specifications in the

contract. Its entire argument under this point is based

upon the fallacious assumption that the court below held the

contracting officer had no authority to incorporate such pro-

visions of the specification of the contract. As stated, supra

(pp. 7-8) what the court below actually held was that

the specifications were only intended to relate to the fur-

nishing by the contractor of materials, plant, supplies,

equipment, labor, etc., necessary to complete the work in

accordance with the drawings and specifications, and did

not purport to make final and conclusive the contracting

officer’s interpretation of the plans and specifications with

reference to amounts due. Thus it is clear from the Court’s

opinion that it did not consider the specifications to be a

deviation from the policy prescribed by the standard form

of contract or that the contracting officer had no authority

to incorporate these provisions of the specifications. Fur-

ther, the cases cited supra, p. 12, show that the court below

has consistently observed and enforced specification pro-

visions similar to those here involved.

Another reason urged by petitioner for granting the

writ (pp. 12-16) is that a contractor would have no standing

to challenge the disputed provisions of the specifications

even if the contracting officer were without authority to in-

clude the disputed provisions in the specifications. This

reason, like the one before, disregards the fact that the

court below actually upheld the validity of the provision of

the specifications in question, interpreting it as giving the

contracting officer authority to decide whether or not the

contractor had furnished materials, plant, supplies, equip-

ment, labor, ete., necessary to complete the work in ac-

cordance with the drawings and specifications. The court

below did not hold that the contracting officer was without

authority to include this provision in the specifications.

Thus there is no occasion to pass upon the question whether

or not the contractor would have any standing to challenge

the validity of the clause.

18

Petitioner’s third reason (pp. 24-26) for granting the

writ is that the court below ignored paragraph 1-07 of the

specifications and held that the clause was not designed to

apply to matters of amounts due, and in support of this

reason petitioner cites several decisions of this Court and

of the Court of Claims for the proposition that these courts

have always accepted clauses of this type in cases directly

involving questions of contract price or amounts due. Here

again, petitioner’s argument is based upon the fallacious

assumption that the Court of Claims ignored paragraph

1-07 of the specifications. Moreover, the cases cited by peti-

tioner (pp. 25-26) do not, as petitioner would imply, in-

volve a situation like the present one where the work was

admittedly required by the specifications and drawings and

was admittedly performed in accordance therewith, thus

leaving for administrative determination only the question

whether the Government had breached its obligation to pay

for such work in accordance with the terms of the contract.

In none of the cases cited by petitioner was the issue re-

stricted to the single question of whether the contractor

should be paid for work that was admittedly required by

the contract. Each involved an interpretation of the work

requirements of the specifications and drawings, which in

the words of petitioner would call for the exercise of

‘*expertise’’ in such technical matters.

4. The decision of the Court of Claims will not, as peti-

tioner urges (pp. 26-27) operate to deprive the Government

‘‘of the benefits of the administrative machinery it has cre-

ated to adjudicate disputes and to avoid large damage

claims.’’ As previously pointed out this and other decisions

of the Court below do not reject but recognize the justifica-

tion for leaving to technical men the final determination of

the question whether work or materials in a particular

instance are required by the plans and specifications. Like-

wise, it has been demonstrated that the decision of the court

below will not interfere with the administrative machinery

—

19

set up for the purpose of affording an opportunity to cor-

rect errors of subordinate administrative officials and thus

mitigate or avoid large damage claims based upon such

errors. Moreover, to seek to extend the scope of adminis-

trative determination, as petitioner urges, would in the long

run operate to the Government’s disadvantage. To permit

administrative officials of one of the contracting parties to

finally decide the extent of its obligation to pay for work

admittedly required under the contract would render so

uncertain the Government’s obligation to pay that the ben-

efit which the Government now derives from competitive

bidding would be destroyed or at least seriously impaired.

Conclusion.

For the reasons stated it is respectfully submitted that

this petition should be denied.

Joun W. Gaskins,

Attorney for Respondents.

Harry D. Ruppman,

Of Counsel.