Salsbury Industries v. United States

35 Cont. Cas. Fed. 75,661, 17 Cl. Ct. 47, 1989 U.S. Claims LEXIS 82, 1989 WL 52197
CourtUnited States Court of Claims
DecidedMay 17, 1989
DocketNo. 481-85C
StatusPublished
Cited by10 cases

This text of 35 Cont. Cas. Fed. 75,661 (Salsbury Industries 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
Salsbury Industries v. United States, 35 Cont. Cas. Fed. 75,661, 17 Cl. Ct. 47, 1989 U.S. Claims LEXIS 82, 1989 WL 52197 (cc 1989).

Opinion

OPINION

ANDEWELT, Judge.

In this government contract action, plaintiff, Salsbury Industries (Salsbury), alleges that the United States Postal Service (Postal Service) breached its contract with plaintiff for the production and delivery of aluminum post office lockboxes. This action is presently before the court on cross-motions for summary judgment. For the reasons explained herein, plaintiff’s motion for summary judgment is denied, and defendant’s cross-motion is granted.

[49]*49 Facts 1

The contract in issue arose out of a May 20, 1982, solicitation by the Postal Service (Solicitation No. 104230-82-B-0068). The solicitation requested bids for the manufacture and delivery of aluminum post office lockboxes that would be installed in post offices for rental to the public. Salsbury and eight other firms submitted bids. On January 28, 1983, Salsbury and four of the other bidders were awarded contracts. One of the unsuccessful bidders, Doninger Metal Products Corporation (Doninger), had not been permitted to submit a “best and final offer” because the contracting officer had determined that Doninger was not a responsible offeror.

Salsbury’s contract required it to produce and deliver a definite quantity of lock-boxes at a contract price of $9,703,877.84 in accordance with a specified delivery timetable. To encourage early performance, the contract contained an incentive clause that provided an additional ten percent payment for lockboxes delivered ahead of schedule. Plaintiff began making deliveries pursuant to the contract and all of the lockboxes delivered prior to termination of the contract qualified for the delivery incentive.

On September 15, 1983, Doninger filed suit in the United States District Court for the District of Columbia challenging the contracting officer’s determination that Doninger was not a responsible bidder. In its complaint, Doninger requested, inter alia, an injunction requiring the Postal Service to terminate for convenience all contracts awarded under the solicitation and to either award a lockbox contract to Doninger or issue a new solicitation for lockboxes. The Postal Service advised Salsbury of the existence of Doninger’s suit, but Salsbury did not seek to intervene.2

In an order dated January 9, 1984, the district court held that the contracting officer’s finding of nonresponsibility was the product of an unlawful de facto suspension of Doninger by the Postal Service. The court ordered the Postal Service to take the following action:

[Defendant United States Postal Service shall forthwith suspend the performance of so much of the contracts awarded pursuant to [the solicitation] as would have been awarded to [Doninger] in January 1983 had [Doninger’s] offer been accepted in full and award an aluminum door lockbox contract to [Doninger] in accordance with that offer.

Doninger Metal Products Corp. v. United States Postal Service, Civil No. 83-2725 (D.D.C. Jan. 9, 1984) (order denying defendant’s motion to dismiss).

On January 12, 1984, the Postal Service, by telex, issued a stop-work order to plaintiff and the other four firms that had received lockbox contracts. The stated rationale for the stop-work order was “to implement the order of the United States District Court for the District of Columbia [in the Doninger case].” In the stop-work order, Salsbury was told: (1) not to accept any further delivery orders from the Postal Service or order any new materials; (2) to take inventory of all raw materials and lockboxes (including those in progress and those on hand and ready for shipment); and (3) to complete only the boxes that were on the assembly line.

By telex, dated January 27, 1984, the contracting officer notified plaintiff that for the balance of the quantity of lockboxes due, plaintiff’s contract was thereby “terminated for the convenience of the Postal Service pursuant to clause 8 of the General Provisions for Fixed Price Contracts.” Clause 8 provided, in pertinent part:

(a) The performance of work under this contract may be terminated by the Postal Service in accordance with this clause in whole, or from time to time in part, whenever the Contracting Officer shall determine that such termination is [50]*50in the best interest of the Postal Service. Any such termination shall be effected by delivery to the Contractor of a Notice of Termination specifying the extent to which performance of work under the contract is terminated, and the date upon which such termination becomes effective.

The January 27, 1984, notice of termination was confirmed by a letter from the contracting officer dated January 81, 1984, which explained the steps plaintiff should take in view of the termination for convenience.

Prior to the notice of termination, plaintiff had produced and delivered nearly half of the units required by its contract and had earned over $260,000 in delivery incentives. Subsequent to termination, the Postal Service authorized plaintiff to deliver all units that had been finished but not yet delivered. On February 6, 1984, Doninger was awarded a lockbox contract for in excess of $15 million.

Thereafter, plaintiff submitted to the contracting officer a series of certified claims relating to its terminated contract. Plaintiffs first claim, submitted May 30, 1984, sought $112,639.09 in delivery incentive payments allegedly earned prior to termination. In a final decision dated September 4, 1984, the contracting officer allowed $23,745.75 of that claim to cover the incentives earned on those lockboxes actually delivered prior to the January 27, 1984, termination. The contracting officer denied the remaining $88,893.34 of the claim, which sought delivery incentives for lock-boxes that were manufactured prior to termination but delivered, pursuant to the Postal Service’s authorization, after termination. The contracting officer reasoned that the delivery incentive provision of the original contract did not apply to post-termination deliveries and that lockboxes delivered after termination were subject to the provisions of the termination for convenience clause, which did not contain an incentive clause.

After a series of negotiations, on December 7, 1984, the parties executed a termination settlement agreement which granted plaintiff an additional $3.4 million, bringing plaintiff’s total payments under the contract to slightly over $8 million. The agreement provided that the $3.4 million settlement payment, combined with prior payments, “constitute[d] payment in full and complete settlement of the amount due the contractor by reason of the complete termination of work under the contract and of all other claims and liabilities of the contractor and the Postal Service under the contract, except as hereinafter provided [i.e., reserved].” The settlement agreement does not contain a specific or express reservation relating to the $88,893.34 claim denied in the contracting officer’s final decision of September 4, 1984. It does, however, contain a stipulated reservation of a separate claim by plaintiff, which had not yet been presented in certified form, for $630,767 in incentive payments. The settlement agreement was incorporated in the contract through a January 2, 1985, contract modification.

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35 Cont. Cas. Fed. 75,661, 17 Cl. Ct. 47, 1989 U.S. Claims LEXIS 82, 1989 WL 52197, Counsel Stack Legal Research, https://law.counselstack.com/opinion/salsbury-industries-v-united-states-cc-1989.