Ferguson Propeller, Inc. v. United States

59 Fed. Cl. 51, 2003 U.S. Claims LEXIS 345, 2003 WL 23004764
CourtUnited States Court of Federal Claims
DecidedAugust 26, 2003
DocketNo. 96-718C
StatusPublished
Cited by3 cases

This text of 59 Fed. Cl. 51 (Ferguson Propeller, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ferguson Propeller, Inc. v. United States, 59 Fed. Cl. 51, 2003 U.S. Claims LEXIS 345, 2003 WL 23004764 (uscfc 2003).

Opinion

OPINION

FIRESTONE, Judge.

This contract case comes before the court on the defendant United States’ (“government’s”) motion for summary judgment. At issue are four claims on five contracts awarded to plaintiff Ferguson Propeller, Inc. (“Ferguson”) by the United States Naval Sea Systems Command (“NAVSEA”), for the manufacture and delivery of ship propellers. In general, Ferguson claims that it is entitled to compensation for the additional costs it incurred because of (1) alleged problems with government-furnished equipment and (2) “over-inspections” by government quality assurance personnel.1 For the reasons that follow, the government’s motion for summary judgment is GRANTED IN PART and DENIED IN PART.

BACKGROUND FACTS

This litigation arises from a series of firm-fixed price contracts that were awarded to Ferguson by NAVSEA in the early and mid-1980s for the manufacture of propellers for several classes of ships. All of the below-noted claims were presented to the contracting officer and denied. Each contract will examined separately.

I. The Submarine Contracts — Nos. N00024-82-C-4124 and N00024-84-C-4098

The submarine contracts were awarded on March 16, 1982, and October 25, 1983, respectively, for the manufacture of twenty-[54]*54four submarine propellers and associated equipment. As far as the claims remaining in this litigation, Ferguson raised the following issues in its combined claim on these two contracts: (1) the government’s liability for providing late and defective government furnished equipment, here a ring gage; (2) the government’s liability for providing an inaccurate forming die drawing; (3) the government’s failure to disclose the existence of a Submarine Propeller Repair Manual (“PRM”), with respect to the first contract (Ferguson claims the PRM included welding requirements that it did not anticipate in pricing the contract); and (4) the government’s liability for costs associated with NAVSEA’s decision to insist on the presence of a government quality inspector to observe the inspections for every submarine propeller manufactured after February 1988. The government seeks partial summary judgment only with respect to the claims associated with the PRM and the over-inspection.2

In connection with the application of the PRM to the first submarine contract, Ferguson does not dispute that the PRM was not directly invoked under the first contract. Plaintiffs Response to Defendant’s Motion for Summary Judgment (“Pl.Resp.Br.”) 3. However, Ferguson contends that NAVSEA imposed requirements from the PRM on the manufacture of the propellers under the first submarine contract. In particular, Ferguson states that it could not pass the testing requirements without following the manual. The undisputed facts show that, although Ferguson was required to follow the PRM on the second submarine contract and had the PRM before making its bid on the second contract, Ferguson bid the same number of machining hours for each propeller on both contracts. Ferguson contends that the pricing of the second contract is irrelevant because “there were added requirements [in the first contract], and they caused Plaintiff to perform extra work.” Id. Ferguson claims $218,9053 for the increased work it needed to perform to comply with the PRM.

With respect to the “over-inspection” claim, it is not disputed that the two submarine contracts contained Defense Acquisition Regulation (DAR) 7-103.5(a), which was in effect until the Federal Acquisition Regulation (“FAR”) took effect on April 1, 1984. See FAR clause 52.246-2, “Inspection of Supplies-fixed Price,” 48 C.F.R. § 52.246-2 (1985) (“The Government shall perform inspections and tests in a manner that will not unduly delay the work.”). On February 4, 1988, NAVSEA invoked its authority to require 100% verification inspections, after Ferguson had demonstrated quality problems with some of its submarine propellers. See Defendant’s Proposed Findings of Fact (“Def.PFF”) KH101-02. Imposition of the 100% inspection requirement meant that a government quality inspector was to witness and verify that the inspection performed by Ferguson’s inspectors had been performed fully and correctly. Id. at 11104. The imposition of the 100% verification inspection did not change the number of points that Ferguson was required to measure. Id. at 11107.

In order to carry out the 100% verification requirement, the government assigned two government inspectors to Ferguson’s facility. Id. at 11119. Ferguson was informed that two quality inspectors were scheduled so that at least one would be on site at all hours during a four-week period, from 8:00 a.m. to 11:30 p.m. on Monday through Friday and 8:30 a.m. to 4:30 p.m. on Saturdays. Mr. Marti, Ferguson’s quality assurance manager, testified at his deposition that he did “recall problems with the government [inspectors] being unavailable for inspection” on “some occasions,” but could not recall “any specific instance.” See id. at 11108.

According to the government, the imposition of the 100% verification inspection did not end the quality problems with Ferguson’s propellers. See id. at UH110-12. The 100% [55]*55verification requirement continued through 1992.

Ferguson claims that the government’s insistence on 100% inspection of Ferguson’s work by the government’s quality inspectors was unreasonable, and that it went on for too long. Ferguson contends that its propellers did not warrant imposition of a 100% verification inspection by the government. Ferguson points to internal government meeting notes that state that Ferguson was manufacturing acceptable propellers before the 100% verification requirement was imposed, and that NAVSEA had been wrong about certain quality problems. Plaintiffs Trial Exhibit (“P. Tr. Ex.”) B8 & B5. Ferguson also relies on a December 17, 1990 letter NAVSEA wrote to the Defense Contract Management Agency (“DCASMA”) regarding the 100% verification inspection requirement. Id at B4. The letter states, in relevant part, as follows:

It was not the intent of reference (a) [which imposed a 100 percent verification inspection requirement on February 4, 1988)], to permanently impose a 100 percent verification inspection. The amount of verification inspection, which must be sufficient to ensure high quality propellers, should be discretionary with the local [DCASMA] representatives. Thus, the NAVSEA request in reference (a) ... is rescinded____ This letter should not be construed as a NAVSEA mandate to discontinue 100 percent verification inspection. Rather, the local [DCASMA] organization, because of their first hand experience with the contractor, is best qualified and therefore should determine the amount of verification inspection necessary to assure a quality propeller.

Id See also Def. PFF U113. Ferguson asserts that despite the recision of the 100% verification inspection requirement, the 100% inspection continued unabated and that Ferguson complained to the government about the delay caused by the requirement. PI. Tr. Ex. B6. Ferguson also states that at trial it intends to call Frank Halpern, a “recognized expert,” to show that Ferguson’s propellers were acceptable. Ferguson did not submit a sworn statement from Mr. Halpern to that effect, however.

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Bluebook (online)
59 Fed. Cl. 51, 2003 U.S. Claims LEXIS 345, 2003 WL 23004764, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ferguson-propeller-inc-v-united-states-uscfc-2003.