D. Moody & Co. v. United States

32 Cont. Cas. Fed. 72,390, 5 Cl. Ct. 70, 1984 U.S. Claims LEXIS 1444
CourtUnited States Court of Claims
DecidedApril 4, 1984
DocketNo. 296-83C
StatusPublished
Cited by17 cases

This text of 32 Cont. Cas. Fed. 72,390 (D. Moody & Co. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
D. Moody & Co. v. United States, 32 Cont. Cas. Fed. 72,390, 5 Cl. Ct. 70, 1984 U.S. Claims LEXIS 1444 (cc 1984).

Opinion

OPINION

NETTESHEIM, Judge.

This case is before the court on defendant’s motion for partial summary judgment and plaintiff's opposition thereto. The court is presented with the difficult question of determining the viability of the Fulford doctrine after enactment of the Contract Disputes Act of 1978, Pub.L. No. 95-563, 92 Stat. 2383 (codified as amended at 41 U.S.C.A. §§ 601-613 (West Supp.1983)) (the “CDA”).

FACTS

Plaintiff D. Moody & Co., Inc., entered into a contract with the United States Air Force on June 19, 1980, for the delivery of 50 units of aircraft sleeves, which are tubular machine parts designed to connect two other parts. After inspection the Air Force on June 10, 1981, rejected the 50 sleeves initially shipped by plaintiff. Although plaintiff provided test results from its source that allegedly discounted the existence of defects, plaintiff tendered a second shipment of 38 sleeves that on October 20, 1981, also was rejected. Plaintiff contests the adequacy and conclusions of defendant’s inspections and resultant rejections.

On November 23, 1981, the Air Force issued a cure notice allowing plaintiff ten days to furnish acceptable replacements absent which the contract would be terminated for default. Plaintiff submitted additional test results which allegedly proved the acceptability of the sleeves. By letter dated February 5, 1982, the Air Force informed plaintiff that the tests proffered by plaintiff revealed that the sleeves still failed to meet the contract specifications and that the Air Force therefore was processing the contract for default termination. A telegram dated March 1, 1982, terminated the contract for default. On the same day, the Air Force issued a contract modification confirming termination of the contract. The contract modification reached plaintiff on March 17, 1982.

The Air Force awarded a reproeurement contract for 13 sleeves. By final decision of October 27, 1982, the contracting officer assessed $17,631.25 in excess reprocurement costs against plaintiff. Plaintiff appealed this determination and the underlying default termination in its complaint filed in this court on May 10, 1983.

DISCUSSION

Among the innovations the CDA wrought in 1978 was allowing contractors “direct access” to courts on disputes arising under the provisions of a contract, which theretofore could only be appealed to agency boards of contract appeals. 41 [72]*72U.S.C. § 609(a). Section 10(a)(3) of the CDA, 92 Stat. 2388 (codified at 41 U.S.C. 609(a)(3) (Supp. Y 1981)), provides in full:

Any action under paragraph (1) [brought in the United States Claims Court] ... shall be filed within twelve months from the date of the receipt by the contractor of the decision of the contracting officer concerning the claim, and shall proceed de novo in accordance with the rules of the appropriate court.

Prior to • the CDA, when a contractor could seek judicial review of adverse agency decisions on non-breach claims only after appeal to agency boards, the contractor was allowed six years from the date of a board decision within which to appeal to the United States Court of Claims. The period for the initial appeal to the board was not set by statute, but by the standard Disputes clause, which required a contractor to appeal to the appropriate board within 30 days from receipt of the contracting officer’s written decision. See generally Sen.Rep. No. 95-1118, 95th Cong., 2d Sess. 5-6, reprinted in 1978 U.S.Code Cong. & Ad.News 5235, 5239-40 [hereinafter cited as “Senate Report”]. Section 7 of the CDA, 92 Stat. 2385 (codified at 41 U.S.C. § 606), made the contract appeal period statutory and enlarged from 30 to 90 days the time for appealing a contracting officer’s decision to an agency board. See Senate Report at 23, 1978 U.S.Code Cong. & Ad.News at 5257. Section 7 of the CDA provides in full:

Within ninety days from the date of receipt of a contracting officer’s decision under section 605 of this title, the contractor may appeal such decision to an agency board of contract appeals, as provided in section 607 of this title.

Defendant grounds its motion for partial summary judgment on the time limitation of section 10(a)(3). Almost 14 months elapsed from plaintiff’s receipt on March 17, 1982, of the contracting officer’s decision terminating the contract for default and the commencement of plaintiff's suit on May 10, 1983. Although plaintiff filed its complaint within 12 months after the assessment of excess reproeurement costs, defendant urges that the complaint should be dismissed as time barred insofar as it challenges the contracting officer’s default termination decision. Because 41 U.S.C. § 605(b) renders an unappealed contracting officer’s decision “final and conclusive and not subject to review by any forum, tribunal or Government agency,” defendant would not allow plaintiff to contest the default termination as a defense to the assessment of excess costs. Defendant also argues that the finality of the contracting officer’s decision pursuant to section 605(b) establishes plaintiff’s liability for excess reprocurement costs in an amount to be determined in further proceedings.

Plaintiff interposes the “Fulford doctrine,” first articulated by the Armed Services Board of Contract Appeals (the “ASBCA”) in Fulford Manufacturing Co., ASBCA Nos. 2143, 2144 (May 20, 1955), 6 Cont.Cas.Fed. (CCH) 1161,815 (May 20, 1955) (digest only). Fulford was decided when disputes between a contracting officer and a contractor were heard first by an agency board. The simple proposition embodied by the Fulford doctrine is that when a contractor timely appeals an assessment of excess reprocurement costs, the propriety of the Government’s default determination can be challenged even though the default termination decision was not appealed.

Neither the Court of Claims nor the United States Claims Court has addressed the doctrine, although boards of contract appeals have employed it consistently since 1955. See, e.g., Cosmic Construction Co., 84-1 B.C.A. (CCH) ¶ 17,028 (Dec. 9, 1983); MPT Enterprises, 83-2 B.C.A. (CCH) If 16,-767 (Aug. 8, 1983); John T. Penrod, 80-2 B.C.A. (CCH) 1114,789 (Nov. 14, 1980). Moreover, since the CDA has been in effect, government agency counsel have advised contractors that default issues could be raised upon assessment of excess costs. See, e.g., J. Robert Dowie & Co., 82-2 B.C.A. (CCH) ¶ 15,876, at 78,748 (June 17, [73]*731982); Big Star Testing Co., 81-2 B.C.A. (CCH) ¶ 15,335, at 75,937 (Sept. 17, 1981).

1. Plaintiff offers two rationales to support the Fulford doctrine. First, according to plaintiff, the doctrine avoids unnecessary litigation. A contractor may not be interested in contesting a default determination as a matter of principle, but does have an interest or motive when that decision costs it money, i.e., when excess reprocurement costs are assessed. See, e.g., Polaroid Corp., 60-1 B.C.A. (CCH) If 2,618, at 12,936 (Apr. 29, 1960).

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32 Cont. Cas. Fed. 72,390, 5 Cl. Ct. 70, 1984 U.S. Claims LEXIS 1444, Counsel Stack Legal Research, https://law.counselstack.com/opinion/d-moody-co-v-united-states-cc-1984.