Gardner Machinery Corp. v. United States

34 Cont. Cas. Fed. 75,441, 14 Cl. Ct. 286, 1988 U.S. Claims LEXIS 18, 1988 WL 9558
CourtUnited States Court of Claims
DecidedFebruary 9, 1988
DocketNo. 54-87C
StatusPublished
Cited by11 cases

This text of 34 Cont. Cas. Fed. 75,441 (Gardner Machinery Corp. 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
Gardner Machinery Corp. v. United States, 34 Cont. Cas. Fed. 75,441, 14 Cl. Ct. 286, 1988 U.S. Claims LEXIS 18, 1988 WL 9558 (cc 1988).

Opinion

[287]*287OPINION

YOCK, Judge.

This contract case is currently before the Court on defendant’s motion to dismiss for lack of jurisdiction. For the reasons discussed herein, the defendant’s motion is granted and the plaintiff’s complaint is to be dismissed without prejudice.

Facts

On March 31, 1983, Gardner Machinery Corporation, Inc. (Gardner), the plaintiff in this action, was awarded Contract No. V797P-6852 which required the plaintiff to design, manufacture, and install a laundry system at the Veterans Administration (VA) Hospital located in Hines, Illinois. On June 15, 1983, the contract was terminated by the contracting officer for the convenience of the Government. By letter dated December 21, 1983, the plaintiff submitted a settlement proposal to the contracting officer. The letter stated:

In accordance to the above termination of contract # V797P-6852, we have complied with the terms of the termination and herewith submit our settlement proposal as follows:
General and Administrative Expenses including Termination Expenses $20,871.12
Architectural & Engineering Expenses 70,208.01
Cancellation Charges by Suppliers
G.A. Braun, Inc. Items 1, 2, 15, 17, 18, 19 & 20 97,450.00
Thermal Engineering Item 29 9,630.00
Gardner Machinery Suppliers Items 7, 8, 9,12,13,14, 16, 21, 22, 23 & 28 16,870.00
TOTAL $215,029.13
I have examined the claims of the subcontractors and certify that they are allo-cable to the terminated portion of the prime contract and that the settlement is fair and reasonable, was negotiated in good faith, and is not more favorable to the subcontractor than if the Government were not involved.

Following the receipt of the plaintiff’s settlement proposal, the contracting officer sent an audit request to the VA Inspector General’s Office on January 5, 1984. The contracting officer’s audit request, in turn, was forwarded by the VA’s Inspector General to the Defense Contract Audit Agency (DCAA) on February 23, 1984. The DCAA thereafter requested that the plaintiff’s settlement proposal he submitted on the appropriate “total cost basis” forms which were provided. On April 12, 1984, the plaintiff resubmitted its settlement proposal to the contracting officer on Government Standard Form 1436. The plaintiff’s cover letter stated (in pertinent part):

I am enclosing the executed original form and one copy which you sent me to compete [sic] in support of our Termination Proposal dated December 21, 1983.
If you need any further information, please call me.

On Government Standard Form 1436, under “Section II—Proposed Settlement” and the column entitled “Total Proposed to Date,” the plaintiff, on the “net payment requested” line, had written the amount of $215,029.13. The certification of the proposal stated:

This is to certify that the undersigned, individually, and as an authorized representative of the Contractor, has examined this termination settlement proposal and that, to the best knowledge and belief of the undersigned:
(a) AS TO THE CONTRACTOR’S OWN CHARGES. The proposed settlement (exclusive of charges set forth in Item 14) and supporting schedules and explanations have been prepared from the books of account and records of the Contractor in accordance with recognized commercial accounting practices; they include only those charges allocable to the terminated portion of this contract; they have been prepared with knowledge that they will, or may, be used directly or indirectly as the basis of settlement of a [288]*288termination settlement proposal or claim against an agency of the United States; and the charges as stated are fair and reasonable.
(b) AS TO THE SUBCONTRACTORS’ CHARGES. (1) The Contractor has examined, or caused to be examined, to an extent it considered adequate in the circumstances, the termination settlement proposals of its immediate subcontractors (exclusive of proposals filed against these immediate subcontractors by their subcontractors)-, (2) The settlements on account of immediate subcontractors’ own charges are fair and reasonable, the charges are allocable to the terminated portion of this contract, and the settlements were negotiated in good faith and are not more favorable to its immediate subcontractors than those that the Contractor would make if reimbursement by the Government were not involved; (3) The Contractor has received from all its immediate subcontractors appropriate certificates with respect to their termination settlement proposals, which certificates are substantially in the form of this certificate; and (4) the Contractor has no information leading it to doubt (i) the reasonableness of the settlements with more remote subcontractors or (ii) that the charges for them are allocable to this contract. Upon receipt by the Contractor of amounts covering settlements with its immediate subcontractors, the Contractor will pay or credit them promptly with the amounts so received; to the extent that it has not previously done so. The term “subcontractors,” as used above, includes suppliers.
NOTE: The Contractor shall, under conditions stated in FAR 15.804-2, be required to submit a Certificate of Current Cost or Pricing Data (see FAR 15.804-2(a) and 15.804-6). [Emphasis in original.]

Immediately following the certification was the signature of the plaintiffs president.

On April 29,1985, the contracting officer sent the completed DCAA audit to the plaintiff, requesting his comments. He specifically called attention to “the questionable amout [sic] of $195,573 of your claim,” and suggested that a negotiation date would be established after the receipt of the plaintiff’s comments. On October 15, 1985, the contracting officer again wrote to the plaintiff requesting information as to when he may expect a reply to the audit report.

Sometime thereafter, the parties entered into negotiations and were able to agree on a partial settlement of the plaintiff’s cost proposals. By letter dated June 24, 1986, the contracting officer wrote to the plaintiff's attorney and stated (in pertinent part):

This is to confirm that a request for funds in the amount of $107,080.00 was submitted to our VA Central Office, Washington, DC on June 5,1986. This is for a partial payment to be made for subcontractor’s costs, against your claim 4PE-A19-022.

On August 15,1986, the plaintiff’s attorney wrote to the contracting officer, acknowledging receipt of the partial payment and seeking to reopen negotiations as to the remaining portion of the plaintiff’s claim. The letter stated (in pertinent part):

This is to acknowledge, on behalf of Gardner Machinery Corporation, the receipt on August 8, 1986 of the sum of $107,080.00 from the Fiscal Division, which sum represents a partial payment for sub-contractors’ costs claimed by Gardner Machinery Corporation for the VA’s termination of contract V797P-6852.
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Bluebook (online)
34 Cont. Cas. Fed. 75,441, 14 Cl. Ct. 286, 1988 U.S. Claims LEXIS 18, 1988 WL 9558, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gardner-machinery-corp-v-united-states-cc-1988.