Interwest Construction v. Jesse Brown, Secretary of Veterans Affairs

29 F.3d 611, 39 Cont. Cas. Fed. 76,676, 1994 U.S. App. LEXIS 17025, 1994 WL 328539
CourtCourt of Appeals for the Federal Circuit
DecidedJuly 12, 1994
Docket94-1040
StatusPublished
Cited by67 cases

This text of 29 F.3d 611 (Interwest Construction v. Jesse Brown, Secretary of Veterans Affairs) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Interwest Construction v. Jesse Brown, Secretary of Veterans Affairs, 29 F.3d 611, 39 Cont. Cas. Fed. 76,676, 1994 U.S. App. LEXIS 17025, 1994 WL 328539 (Fed. Cir. 1994).

Opinions

MICHEL, Circuit Judge.

Interwest Construction, Inc. (Interwest) appeals the decision of the Department of Veterans Affairs Board of Contract Appeals (Board) upholding the contracting officer’s decision denying Interwest’s claim for an equitable adjustment. Interwest Constr. v. VA Medical Ctr., Salt Lake City, Utah, Nos. DVABCA-3724 & 3890, slip op. at 15, 1993 WL 390518 (DVABCA, Sept. 20, 1993). In-terwest claimed it was entitled to $72,293, the additional cost of upgraded air conditioners, because of an ambiguity in its contract with the Department of Veterans Affairs Medical Center, Salt Lake City, Utah (VA), with regard to the cooling capacity required. In its decision, however, the Board found that the contract between the VA and Interwest was unambiguous as to the required cooling capacity. Moreover, the Board held that, even if the contract requirement was ambiguous, the ambiguity was patent, placing a burden upon Interwest to inquire what capacity the contract actually required, which Interwest failed to do. Because we conclude that the Board did not err in either determination and because, in any event, Interwest’s interpretation was unreasonable, we affirm.

BACKGROUND

The contract explicitly specified that the contractor “[pjrovide components matched to ensure that performance will meet the requirements shown on the drawings,” and the drawings specified that the air conditioning system produce 900 tons of cooling capacity. In addition, the contract stated that

[t]he chillers shall be either furnished with refrigerants [with] an ozone depletion factor (ODF) of .05 or less, or have the capability of conversion to refrigerants HCFC-123 or HFC-134a [low ODF refrigerants] at a later date.

See section 15650, clause 2.1.P.1 of the contract.

After being selected as the lowest bidder, Interwest provided the VA with a 900 ton cooling capacity air conditioning system that contained a high ODF refrigerant, but, in accordance with the second option in clause 2.1.P.1 of the contract specifications, could be converted for use with a low ODF refrigerant. However, because Interwest’s chiller system was admittedly unable to operate at a 900 ton capacity level after conversion, the VA rejected the system.

Interwest responded that, although its chiller system used a high ODF refrigerant, it did provide the VA with an air conditioner capable of operating at the 900 tons cooling level. Further, per Interwest, it was unclear whether the contract required a converted, low ODF refrigerant chiller system to meet the 900 tons cooling capacity requirement and, in any event, there were no 900 ton chiller units in existence which, when converted, could still provide such performance. Thus, Interwest argued that the contract was ambiguous and that its interpretation that a [614]*614converted chiller system did not have to achieve a 900 ton cooling capacity after conversion was reasonable.

Interwest then posited that the VA, not Interwest, was responsible for the additional cost of procuring a more expensive chiller system that met the VA’s specifications and submitted a claim for equitable adjustment in the amount of $72,293. The contracting officer denied Interwest’s claim stating that the contract clearly required both unconverted and converted chillers to achieve 900 tons of cooling capacity. The Board upheld the contracting officer’s denial, and Interwest now appeals the decision of the Board.

After careful review, we conclude that the Board properly saw no ambiguity in the contract and that, even assuming an ambiguity, it was patent, thereby placing a duty upon Interwest to clarify the contractual requirements, which it failed to do. Finally, we conclude that Interwest’s interpretation was not reasonable so that, even assuming a latent ambiguity, it could not recover.

ANALYSIS

I. Standard of Review.

The Board’s conclusion that the contract was unambiguous is subject to de novo review. See, e.g., Fortec Constructors v. United States, 760 F.2d 1288, 1291 (Fed.Cir.1985) (ease involving a claim of ambiguity in which the court held that “[t]he interpretation' of a contract is a question of law to be decided by the court and an administrative interpretation of a contract is not binding on the court”). Furthermore, whether ambiguities are latent or patent and whether the contractor’s interpretation thereof is reasonable are also questions of law subject to de novo review.

In reviewing such a contract, our court must first consider whether the contract language, taken as a whole, was ambiguous. Id. If we conclude that the contract language was ambiguous, we must then determine whether that ambiguity was patent so as to impose a duty to seek clarification, or only latent. Newsom v. United States, 676 F.2d 647, 650, 230 Ct.Cl. 301 (1982). Finally, even if we conclude the ambiguity was latent, we must decide if the contractor’s interpretation was reasonable. Id.

II. Presence or Absence of Ambiguity.

As noted above, we conclude that the contract provisions that are the subject of this dispute are clear and unambiguous. Section 15650, clause 2.1.A of the contract explicitly specifies that the chiller units were to meet the requirements in the contract drawings. Contract drawing H-3 indicates, among other things, that the units must provide 900 tons of cooling capacity. The chiller units were additionally required to contain either: (1) a low ODF refrigerant from the outset; or (2) a high ODF refrigerant upon delivery but convertible to a low ODF refrigerant in the future. See section 15650, clause 2.1.P.1 of the contract. In addition, Federal Acquisition Regulation (FAR) § 52.-236.21 was incorporated into the contract and reads:

Anything mentioned in the specifications and not shown on the drawings, or shown on the drawings and not mentioned in the specifications, shall be of like effect as if shown or mentioned in both.

Interwest argues that, because the contract does not expressly state that a chiller which has been converted from a high ODF refrigerant to a low ODF refrigerant must still meet the cooling capacity requirement, the contract is ambiguous, and the government is responsible for costs associated with the ambiguity. Interwest further argues that, because it was technically and commercially infeasible to convert a high ODF refrigerant chiller to a low ODF refrigerant chiller without sacrificing performance, the contract was ambiguous or, at minimum, the “conversion option” in section 15650, clause 2.1.P.1 would have been read out of the contract.

When the contract provisions are read together, however, they clearly require a chiller system capable of operating at the 900 ton cooling level, regardless of whether they are filled with high ODF or low ODF refrigerant. The contract explicitly stated that system characteristics shown in the drawing were “performance requirements” and, like [615]*615all other performance requirements, the 900 ton cooling capacity requirement is unqualified and establishes a minimum that must be met. As stated by John Cibinic, Jr. and Ralph C. Nash, Jr. in FORMATION of Government CONTRACTS 341 (2d ed.

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Cite This Page — Counsel Stack

Bluebook (online)
29 F.3d 611, 39 Cont. Cas. Fed. 76,676, 1994 U.S. App. LEXIS 17025, 1994 WL 328539, Counsel Stack Legal Research, https://law.counselstack.com/opinion/interwest-construction-v-jesse-brown-secretary-of-veterans-affairs-cafc-1994.