Solar Turbines International v. United States

31 Cont. Cas. Fed. 71,259, 3 Cl. Ct. 489, 1983 U.S. Claims LEXIS 1710
CourtUnited States Court of Claims
DecidedJune 15, 1983
DocketNo. 373-80C
StatusPublished
Cited by11 cases

This text of 31 Cont. Cas. Fed. 71,259 (Solar Turbines International 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
Solar Turbines International v. United States, 31 Cont. Cas. Fed. 71,259, 3 Cl. Ct. 489, 1983 U.S. Claims LEXIS 1710 (cc 1983).

Opinion

[491]*491OPINION

MILLER, Judge:

This case is before the court on cross-motions for summary judgment.1 Plaintiff, Solar Turbines International (Solar), seeks reversal under the Wunderlich Act, 41 U.S.C. §§ 321-22 (1976) of a decision2 by the Armed Services Board of Contract Appeals (ASBCA or the Board) denying claims by Solar for itself and on behalf of its principal subcontractor, Teledyne Inet, Inc. (Inet), for an equitable adjustment in the contract price for increased costs incurred under a 5-year requirements contract.

Plaintiff contends that the contract was for the purchase by the government in each of the 5 years of stated minimum quantities of the items set forth in the contract schedule, with orders to be placed at the beginning of each year, so as to enable plaintiff and Inet to achieve continuous levelized and economical production of the items; whereas, it charges, the government constructively changed the contract by taking the position that the contract merely required it to purchase its requirements for the items from the plaintiff as needed and by placing its orders on a haphazard and arbitrary basis. Defendant adheres to the view that the contract only bound it to purchase its requirements exclusively from plaintiff at the fixed prices, without regard to any particular dates or minimum quantities, and that the quantities referred to in the contract were merely the government’s best estimates of its potential requirements set forth for plaintiff’s convenience. Plaintiff also contends and defendant denies that the government terminated part of the contract for its own convenience by failing to order some of the items. The Board having upheld defendant’s view of the contract and ruled that there was no termination for convenience, defendant urges affirmance of the Board’s decision.

Both parties’ motions are denied and the case is remanded to the ASBCA for further proceedings, as set forth hereinafter. The pertinent facts and reasons follow.

On March 27, 1968, the Air Force awarded to Solar Contract No. F04606-68-D-0643 (the contract). In the contract, the government agreed to purchase within maximum limits exclusively from Solar and, in return, Solar agreed to supply at level prices the Air Force’s requirements for 5 years for two types of power plants and two types of generator sets.

The power plants and additional generator sets were for use in the field, primarily for the operation of highly mobile communications and electronic equipment for the command and control of tactical air operations, including radios, radar, telephones, computers and shelters for equipment and personnel.

The contract originated with the Sacramento (California) Air Material Area (SMAMA), which is part of the Air Force Logistics Command and is located at McClellan Air Force Base. The solicitation which resulted in the contract was actually the second attempt to make the procurement. SMAMA had initially issued a Letter Request for Technical Proposals on the power plants and generator sets in March 1967. Following evaluation of the proposals, and as a second step in the procurement, it sent Invitations For Bids (IFB) to the three firms that had submitted acceptable proposals. This second-step invitation contemplated a one-year indefinite quantity contract with options allowing the government to extend the contract up to 4 years. It requested bids on an incremental basis in [492]*492accordance with a schedule of quantity ranges, and it stated a guaranteed minimum and maximum for each of the two types of power equipment. However, as a result of a protest from Solar, the Air Force determined that there were major deficiencies in the procurement and that the invitation should be cancelled and readvertised.

The second invitation, which gave rise to the contract herein involved, was issued in February 1968. That invitation and contract contained four principal contract line items (CLINS). CLINS 1 and 2 were for power plants and CLINS 3 and 4 covered generator sets. The Air Force’s anticipated requirements for the equipment were listed in the contract Schedule, which set forth, on a year by year basis, its “Best Estimated Quantity” (BEQ) and “Maximum Quantity” for each of the four CLINS as follows:

CLIN NO. 1st Year 2nd Year 3rd Year 4th Year 5th Year
1 BEQ MAX QTY 10 25 24 50 68 100 56 100 45 75
2 BEQ MAX QTY 35 50 40 75 54 100 52 100 13 50
3 BEQ MAX QTY 40 75 5 25 34 75 91 150 60 100
4 BEQ MAX QTY 1 10 5 25 5 25 5 25 5 25
TOTALS
Power Plants (CLINS 1 & 2) BEQ MAX QTY 45 75 64 125 122 200 108 200 58 125
Generator Sets (CLINS 3 & 4) BEQ MAX QTY 41 85 10 50 39 100 96 175 65 125

Thus the aggregate BEQ for all 5 program years was 397 power plants (CLINS 1 & 2) and 251 generator sets (CLINS 3 & 4). Since there were two generators per power plant, the total BEQ was the equivalent of 1,045 generators or engines. The maximum quantity which the government could order was 725 power plants and 535 generator sets, or the equivalent of 1,985 engines. The schedule stated that the government intended to order the entire BEQ of each CLIN shown for the first program year at the time of issuance of its first delivery order.

Although the price per unit was fixed, to insure that the contractor would receive sufficient revenues from government orders to recover its non-recurring start-up costs, the contractor was also entitled to an additional 5 percent of the aggregate amount of the BEQs reduced by the ratio of the dollar amount of the actual orders to the aggregate BEQ dollar amount.

On May 13,1968, Solar submitted a value engineering change proposal which suggested the elimination of the production items from CLINS 1 and 3 and the reallocation of those items to CLINS 2 and 4. Solar explained that with minor modifications the functions of the CLIN 1 and 3 items could be performed by the CLIN 2 and 4 items respectively. The government accepted the proposal and, on October 11, 1968, the parties executed an agreement to that effect. The following table reflects the revised BEQ quantities of the four CLINS, as well as the actual orders for each CLIN placed by the government each year.3 Although [493]*493the maximum quantities were also modified, those quantities are not relevant to the decision in the case and accordingly are not shown below.

CLIN 1st Year 2nd Year 3rd Year 4th Year 5th Year Total
1 BEQ ACTUAL 3 3 0 0 0 0 0 0 0 0 3 3
2 BEQ ACTUAL 42 129 64 5 122 162 108 111 58 125 394 532
3 BEQ ACTUAL 1 1 0 0 0 0 0 0 0 0 1 1
4 BEQ ACTUAL 40 44 10 3 39 9 96 0 65 35 250 91

Solar argues that the Board erred as a matter of law in finding that, other than for the first year, the BEQs set forth in the contract schedule were not known, annual quantities, which the government was obligated to order at the beginning of each program year. Solar argues that under the rule of contra proferentem the government must be bound by Solar’s reasonable interpretation of the term.

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Bluebook (online)
31 Cont. Cas. Fed. 71,259, 3 Cl. Ct. 489, 1983 U.S. Claims LEXIS 1710, Counsel Stack Legal Research, https://law.counselstack.com/opinion/solar-turbines-international-v-united-states-cc-1983.