Leavell-Morrison-Knudsen-Hardeman v. The United States

436 F.2d 451, 193 Ct. Cl. 949, 1971 U.S. Ct. Cl. LEXIS 96

• Court: United States Court of Claims
• Decided: January 22, 1971
• Docket: 224-68
• Status: Published

Opinions

ON PLAINTIFF’S MOTION AND DEFENDANT’S CROSS-MOTION FOR SUMMARY JUDGMENT

PER CURIAM:

This case was referred to Trial Commissioner Mastín G. White with directions to prepare and file his opinion on the issues of plaintiff’s motion and defendant’s cross-motion for summary judgment under the order of reference and Rule 166(c). The commissioner has done so in an opinion and report filed on April 10, 1970, wherein such facts as are necessary to the opinion are set forth. Defendant filed a request for review by the court of the commissioner’s opinion and report and plaintiff has urged that the court adopt the commissioner’s opinion and conclusion. The case has been submitted to the court on oral argument of counsel and the briefs of the parties. The court agrees with Commissioner White and adopts his opinion with modifications.

* The best that can be said for the defendant is that the contract documents were ambiguous in their indications of what were “ducts” for insulation purposes; that being so, the plaintiff’s interpretation, which was undoubtedly reasonable must be accepted since the government was the drafter. United States v. Seckinger, 397 U.S. 203, 216, 90 S.Ct. 880, 25 L.Ed.2d 224 (1970). Accordingly, the court adopts the commissioner’s opinion and recommended conclusion, with modifications, as hereinafter set forth, together with the above, as the basis for its judgment in this case. Therefore, plaintiff’s motion for summary judgment is granted and defendant’s cross-motion is denied; and judgment is entered for plaintiff in accordance with the opinion, with further proceedings stayed for a period of 90 days pursuant to Rule 167 pending an administrative determination of the equitable adjustment to which plaintiff is entitled.

Commissioner White’s opinion, with modifications by the court, is as follows:

The question presented in this case is whether the decision which the Corps of Engineers Board of Contract Appeals rendered on November 29, 1967 (Eng BCA No. 2791), to the effect that the plaintiff was not entitled to an equitable adjustment under the “Changes” provision of Contract No. DA-41-443ENG(NASA)-18 (“the contract”), should be upheld or reversed on being reviewed in accordance with the standards prescribed in the Wunderlich Act (41 U.S.C. §§ 321, 322).

It is my opinion that the administrative decision is not entitled to finality under the Wunderlich Act standards and, accordingly, should be reversed.

The plaintiff is a joint venture, consisting of C. H. Leavell & Company, Morrison-Knudsen Company, Inc., and Paul Hardeman, Inc.

The contract was entered into between the plaintiff and the defendant (represented by the U. S. Army Engineer District, Corps of Engineers, Forth Worth, Texas) on November 30, 1962. It covered the construction by the plaintiff for the defendant of several buildings comprising phase III of the Manned Spacecraft Center, National Aeronautics and Space Administration, located at Clear Lake, Harris County, Texas. The total estimated contract price was $19,-180,625.39. The contract contained the standard “Changes” and “Disputes” provisions that are customarily found in Government construction contracts.

The contract provided for the installation of an air-conditioning system in the buildings that were to comprise phase III of the Manned Spacecraft Center. The plaintiff entered into a subcontract with Natkin & Company relative to the installation of the air-conditioning equipment under the contract; and the subcontractor, in turn, entered into a sub-subcontract with Mundet Cork Corporation relative to the insulation of the air-conditioning equipment.¹ Subsequently, the insulation division of Mundet Cork Corporation was acquired by Baldwin-Ehret-Hill, Inc., which thereby became the insulation sub-subcontractor.

The controversy in the present case relates primarily to the portion of the contract specifications governing the insulation of air-conditioning ducts, i. e., paragraph 58-25 (b) of the technical provisions of the contract. Paragraph 58-25(b) stated in pertinent part as follows :

(b) Duct Insulation. — Ducts shall be insulated with 1-inch thickness as hereinafter specified. Insulation ‘for circular ducts shall be of the flexible type with a minimum density of 1% lb. per cubic foot. Insulation for rectangular ducts shall be of semi-rigid type and shall have a minimum density of 3-lb.-per-cubic-foot and with flame resistant factory applied reinforced foil and kraft paper laminate, or laminated aluminum foil consisting of two plies of 1-mill aluminum foil with glass-yarn reinforcing. * * * All fresh-air-intake ducts and air conditioning supply ducts * * * shall be insulated with 1-inch-thick material as specified hereinbefore * * *.

On its face, the contract provision quoted in the preceding paragraph was unambiguous. It plainly required — and the plaintiff does not contend otherwise —that “ducts” in the air-conditioning system be insulated.²

The insulation sub-subcontractor began its work on the second floor of Building 2, which was one of the buildings covered by the contract. After the insulation work had been completed there (with the approval of the defendant’s inspector on the job), the second-floor ceiling had been installed beneath the air-conditioning equipment, and the insulation sub-subcontractor was proceeding with its work elsewhere, the contracting officer’s representative discovered that the sub-subcontractor was not insulating the flexible connectors which connected the air-conditioning ductwork on the low-pressure side of the system with the ceiling slot diffusers for the dissemination of conditioned air throughout the occupied space in the different rooms. The connectors in question were hollow, flexible, concertina-like pieces of hose, about 4 feet long and about 6 inches in diameter. They were made of fabric, although the fabric was reinforced with a spiral of steel in the form of a round wire or a narrow strip, which kept the fabric from sagging inwardly. The function of the connectors was to convey air between the air-conditioning ductwork and the ceiling slot diffusers previously mentioned.

The plaintiff, the air-conditioning subcontractor, and the insulation sub-subcontractor had construed the provisions of the contract as not requiring that the flexible connectors mentioned in the preceding paragraph be insulated; and they had based their respective cost estimates upon such construction. The defendant’s inspector had similarly construed the provisions of the contract and had so informed the insulation sub-subcontractor.

The contracting officer’s representative wrote a letter to the plaintiff (i. e., the prime contractor) on September 9, 1963, and stated in part as follows;

A recent inspection of your construction work indicated that the flexible connection ducts utilized in the distribution of air conditioning and heating in various buildings are not being insulated in accordance with the applicable provision of your contract specifications, particularly paragraph 58-25.

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It is requested that this office be advised as to the method your organization proposes to accomplish the insulation of the flexible ducts.

The plaintiff replied on September 12, 1963, to the letter mentioned in the preceding paragraph, and stated in part as follows:

Reference your letter, dated 9 September 1963, relative to an alleged deficiency in air conditioning duct work insulating procedure, particularly alleging that flexible connections between ceiling slot diffusers and low pressure air distribution systems are not being insulated. You, also, request that you be advised as to the method we propose to employ in applying insulation to such flexible connections.

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We, do not at this time, intend to apply insulation to flexible connectors in any other structures, being constructed under this contract until receipt of an official directive based upon an interpretation by the Contracting Officer.

The contracting officer’s representative then wrote to the plaintiff on September 16, 1963, and stated in part as follows:

* * * you are informed that the insulation of the flexible ducts in the A/C Systems is considered a contract requirement and you are therefore directed to prosecute the work attendant with the insulation of the flexible ducts in the remaining buildings with such diligence as will insure completion of the structures within the allotted time.

In consideration of the status of work on the second floor of Building 2, this office will entertain an equitable credit for the non-ihsulation of the flexible ducts located in finished ceiling areas. Prompt submission of your credit quotation therefor will be appreciated.

The insulation sub-subcontractor, in accordance with the directive of September 16, 1963, proceeded, under protest, to insulate the flexible connectors on the low-pressure side of the air-conditioning system, except for the flexible connectors on the second floor of Building 2, where the ceiling had already been installed.

Under the date of April 23, 1964, the plaintiff submitted to the defendant’s resident engineer a claim for additional compensation in the amount of $127,300. The basis for the claim was a contention that the insulation of the flexible connectors on the low-pressure side of the air-conditioning system was not required by the provisions of the original contract (i. e., that the directive which required the placement of such insulation was a constructive change order entitling the plaintiff to an equitable adjustment upward in the contract price under the “Changes” provision of the contract). The claim was supported by documents from Natkin & Company, the subcontractor, and Baldwin-Ehret-Hill, Inc. (successor to Mundet Cork Corporation), the sub-subcontractor. ■

The plaintiff was unwilling for the contract price to be adjusted downward because of the failure to insulate the flexible connectors on the second floor of Building 2. In view of this, the contracting officer on June 12, 1964, unilaterally issued a change order, which stated in part as follows:

Delete insulating the flexible ducts to the combination light fixture-air diffusers indicated on Drawing No. MA-2-5, Sequence 194, Volume II to be located east of Column Line 7 on the 2nd floor of Building No. 2.

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Because of the work deleted by this modification the approximate amount of the contract is decreased $1,561.68. * * *

The contracting officer denied the plaintiff’s claim by means of a letter dated July 6, 1965. The letter was accompanied by findings of fact.

The plaintiff appealed under the “Disputes” provision of the contract to the Chief of Engineers by means of a letter dated July 28, 1965.

The Corps of Engineers Board of Contract Appeals (acting for the Chief of Engineers) held a hearing in March 1967, and then rendered its decision on November 29, 1967 (Eng BCA No. 2791), denying the plaintiff’s appeal.

The plaintiff filed its petition with this court on August 5, 1968.

The Corps of Engineers Board of Contract Appeals (“the Board”) denied the plaintiff’s appeal on the basis of the Board’s conclusion “that it would be clear to one bidding the job that the specification drafter thought the connectors here involved were ducts,” and that “it necessarily follows that bidders must have understood that the connectors were to be insulated with 1-inch thick material * *

The Board’s conclusion, as quoted in the preceding paragraph, was not supported by substantial evidence in the administrative record. The Board’s conclusion was really an inference drawn from the circumstance that “the specification drafter,” in prescribing specifications for the flexible connectors, referred to them several times as “flexible ducts” or “flexible duct.” The particular specifications were contained in paragraph 58-14(b) (1)/ of the technical provisions of the contract, which stated in pertinent part as follows:

/. Flexible ducts for connection to high pressure mixing * * * [boxes] and ceiling slot diffusers shall be of the spiral reinforced fabric type. Flexible connections to ceiling slot diffusers shall have a minimum diameter of 6 inches. The spiral reinforced fabric weighing not less than 10 ounce [s] per square yard and a spiral reinforcement which may be either a round steel wire or crimped steel strip. * * * Flexible ducts shall not exceed five feet in length. Flexible duct shall meet the NBFU Standards, Pamphlet 90A, paragraph 113 (a) 3. * * * Entire flexible hose shall be air tight by factory tests * * *. Flexible ducts to lighting fixtures shall be 6-inch round and shall be provided with a transition piece from the flexible duct size to light fixture connection size. [Emphasis in original.]

It will be noted that although “the specification drafter” referred to the flexible connectors several times in this paragraph as “flexible ducts” or “flexible duet,” he also referred to them in the same provision as “flexible connections” and as “flexible hose.” This was semantic ineptness — not (as the Board concluded) a clear indication to bidders “that the specification drafter thought the connectors here involved were ducts.”

Actually, it is plain from an overall consideration of the contract specifications that “the specification drafter” did not regard flexible connectors as ducts. Paragraph 58-14 (a) of the technical provisions of the contract expressly provided that “Ductwork shall be constructed of galvanized steel or aluminum sheets”; and paragraphs 58-14(b) and 58-14(c) then specified in great detail the respective gages and other characteristics of the metal that was to be used in constructing the different sizes of ducts. As previously noted, paragraph 58-14(b) (1)/ of the technical provisions provided that the “flexible ducts” or “flexible connections” or “flexible hose” with which we are concerned in the present case should be made of “spiral reinforced fabric weighing not less than 10 ounce [s] per square yard” — not of galvanized steel or aluminum sheets.

The plaintiff contended before the Board — and contends before the court— that there is a general trade practice in the air-conditioning industry not to insulate flexible connectors on the low-pressure side of an air-conditioning sys-tern. With respect to this contention, the Board made a finding as follows:

* * * Actually a consistent generally accepted trade practice does not seem to exist. Designers sometimes do and sometimes do not call for insulation. The choice is presumably dependent upon local weather conditions and other factors not fully explained in the record.

The Board’s finding, as set out in the preceding paragraph, was supported by substantial evidence in the administrative record. However, the issue in the present case is not whether the customary trade practice in the air-conditioning industry does or does not call for the insulation of flexible connectors on the low-pressure side of an air-conditioning system. Rather, the question is whether the contract specifications did or did not call for such insulation. As to this, the contract specifications called for the insulation of air-conditioning ducts, but not for the insulation of flexible connectors, which are not ducts.³

It is concluded, therefore, that the provisions of the original contract did not require the plaintiff to insulate the flexible connectors on the low-pressure side of the air-conditioning system; and that the directive requiring such insulation was a constructive change order entitling the plaintiff to apply for an equitable adjustment in the contract price under the “Changes” provision of the contract.⁴

The dissenting opinion of SKELTON, Judge, follows the opinion of the Trial Commissioner which has been adopted by the court as modified.

1 . The subcontract and the sub-subcontract also covered other matters that are immaterial in so far as the present litigation is concerned.

2 . There were some exceptions, but they are not pertinent here.

3 . The specifications referred to the flexible connectors on the high-pressure side of the mixing boxes as “flexible ducts,” but there was no such characterization for the flexible connectors on the low-pressure side (which are the only ones involved in this case).

4 . The insulation sub-subcontractor, without receiving any directive to do so, insulated the flexible connectors on the high-pressure side of the air-conditioning system. This was done in accordance with customary trade practice. No claim for extra compensation is made on account of this particular phase of the work.