International Transducer Corp. v. United States

39 Cont. Cas. Fed. 76,630, 30 Fed. Cl. 522, 1994 U.S. Claims LEXIS 47, 1994 WL 67263
CourtUnited States Court of Federal Claims
DecidedMarch 8, 1994
DocketNo. 92-821C
StatusPublished
Cited by18 cases

This text of 39 Cont. Cas. Fed. 76,630 (International Transducer Corp. 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
International Transducer Corp. v. United States, 39 Cont. Cas. Fed. 76,630, 30 Fed. Cl. 522, 1994 U.S. Claims LEXIS 47, 1994 WL 67263 (uscfc 1994).

Opinion

OPINION

NETTESHEIM, Judge.

This case comes before the court after argument on defendant’s motion to dismiss for failure to state a claim upon which relief can be granted, pursuant to RCFC 12(b)(4), and plaintiffs motion for partial summary judgment. The issue to be decided is wheth[523]*523er the Navy is obligated to pay a contractor for the cost impact as a result of its ordering part or a portion of the quantity set forth in an option contract between the parties.1

FACTS

The following facts are undisputed, unless otherwise noted. Pursuant to solicitation by the Naval Sea Systems Command (“NAVSEA”), the Department of the Navy issued Request for Proposal (“RFP”) N00024-89-R-6000(Q) for the purchase of various types of hydrophones. Hydrophones are sophisticated sensors used with underwater equipment to measure the depth, location, and speed of underwater objects. International Transducer Corp. (“plaintiff’), one of a limited number of companies capable of manufacturing such sensors, obtained a copy of the NAVSEA solicitation and submitted a bid on or about August 30, 1989.

NAVSEA awarded Contract No. N00024-90-C-6086 to plaintiff on March 14, 1990, to manufacture three different hydrophones. The contract contained various contract line items, with each line item assigned a contract line item number (“CLIN”) that described the particular transducer being purchased. The contract referred to each CLIN as an “Item Number.” Each CLIN was further broken down into subline item numbers (“SLINs”).

The use of contract line items in military procurement is governed by the Uniform Contract Line Item Numbering System, Federal Acquisition Regulation (“FAR”) 204.71 — 204.7109, 48 C.F.R. §§ 204.71-204.-7109 (1989), in force at the time the contract was awarded. This provision describes the use of contract line item numbers and subline item numbers:

Subline items that have a separate delivery schedule, require a separate identification at the time of shipment, and/or are separately priced for payment purposes (alpha suffix) shall be established in lieu of line items at the discretion of the contracting officer. This category subline item shall be established whenever a capability must be provided to accumulate separately identified price and/or quantity data at the contract line item level.
Whenever subline items of this category (alpha suffix) [SLINs] are established, the associated contract line item shall serve only as a common denominator for the accumulation of management data by the procuring activity and all requirements for the associated contract line item will be identified as subline items. (All shipments and payments will be made at the subline item level.)

48 C.F.R. § 204.7104-2(b) (emphasis added). To further clarify the usage of line and sub-line items, the regulations stress:

In no instance will the contract line item/subline item structure be constructed in such a way as to require the identification of contractor products or services (shipment or performance) at the subline item level and contractor payment at the contract line item level____

48 C.F.R. § 204.7104-2(c)(2).

The regulations also provide guidance on how to price contract line and subline items under the contract. Each CLIN is required to have “a single unit price or, if no unit price is established, a single total price or amount.” 48 C.F.R. § 204.7103-l(a)(l). This pricing scheme does not apply, however, in contracts such as the one at bar where “associated subline items of other than an informational nature are separately priced in accordance with 204.7104r-2(c)(2), in which case, no price shall be assigned to the contract line item____” 48 C.F.R. § 204.7103-1(a)(1). The CLINs in plaintiffs contract were not assigned either a single unit price or a single total price, but, instead, each CLIN contained several SLINs, each of which was separately priced by unit price [524]*524and total quantity price. Each SLIN listed beneath its parent CLIN contained exactly the same single item as the CLIN. The CLINs and SLINs in issue are listed as “Groups.” Thus, an item purchased under SLIN 0095AA, the first item in Group 3, was exactly the same as that purchased under SLIN 0095AD.

In the excerpt below, taken from the schedule attached to the original contract, 0095 is the CLIN for the DT-574 Hydrophone. Item Nos. 0095AA through 0095AD are SLINs for this CLIN. In this excerpt all information, except for the dollar amounts under “Unit Price” and “Amount,” was part of the solicitation. Plaintiff supplied the dollar amounts with its offer, and these were incorporated into the resulting contract. The pertinent portion of the Schedule in which this information was listed stipulates:

ITEM NO. SUPPLIES/SERVICES (GROUP 3) QUANTITY UNIT UNIT PRICE AMOUNT
0095 DT-574 Hydrophone (Production Equipment)
0095AA DT-574 Hydrophone (Production Equipment) PMS 409 (FY88) (SON) 944 Ea $207 $195,408
0095AB DT-574 Hydrophone (Production Equipment) PMS 409 (PY89) (SON) 944 Ea $207 $195,408
0095AC DT-574 Hydrophone (Production Equipment) PMS 418 (FY89) (SON) 1400 Ea $207 $289,800
0095AD DT-574 Hydrophone (Production Equipment) PMS 409 (PY90) (SCN) 944 Ea $207 $195,408
0096 Intentionally Blank
0097 DT-574 Hydrophone (Production Equipment)
0097AA DT-574 Hydrophone (Production Equipment) (FY91) (SCN) 4592 Ea $196 $900,032 (SEE NOTE A)
0097AJ3 DT-574 Hydrophone (Production Equipment) (FY91) (OPN) 980 Ea $196 $192,080 (SEE NOTE A)
0097AC DT-574 Hydrophone (Production Equipment) (FY92) (SCN) 6888 Ea $194 $1,336,272 (SEE NOTE A)
0097AD DT-574 Hydrophone (Production Equipment) (FY92) (OPN) 980 Ea $194 $190,120 (SEE NOTE A)

[525]*525As the regulations note, SLINs are used, inter alia, as an accounting tool that allows the parties to identify the source of funding for each item. The SLINs associated with a particular CLIN differed only in the quantify being ordered; the fiscal year in which the quantities were to be delivered; and, in some cases, the appropriation classification from which payment would be made, i.e., either the Ship Construction, Navy (“SCN”) account or Other Procurement, Navy (“OPN”) account. In addition, SLINs were not listed ' separately from the CLINs; rather, the CLINs and SLINs were both listed under the title “Item Number.”

The notation “SEE NOTE A,” referenced with certain SLINs, states:

Option Item to which clause entitled “OPTION FOR ITEMS ...

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39 Cont. Cas. Fed. 76,630, 30 Fed. Cl. 522, 1994 U.S. Claims LEXIS 47, 1994 WL 67263, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-transducer-corp-v-united-states-uscfc-1994.