Sperry Flight Systems Division of Sperry Rand Corp. v. United States

548 F.2d 915, 23 Cont. Cas. Fed. 80,998, 212 Ct. Cl. 329, 1977 U.S. Ct. Cl. LEXIS 19
CourtUnited States Court of Claims
DecidedJanuary 26, 1977
DocketNo. 40-75
StatusPublished
Cited by89 cases

This text of 548 F.2d 915 (Sperry Flight Systems Division of Sperry Rand Corp. 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
Sperry Flight Systems Division of Sperry Rand Corp. v. United States, 548 F.2d 915, 23 Cont. Cas. Fed. 80,998, 212 Ct. Cl. 329, 1977 U.S. Ct. Cl. LEXIS 19 (cc 1977).

Opinions

BeNhett, Judge,

delivered the opinion of the court:

This contract case comes before the court on appeal by way of plaintiff’s request for review of the opinion of Trial Judge [332]*332John P. Wiese, filed on April 19, 1976, and defendant’s motion to adopt that opinion with modifications. At issue is the finality, under Wunderlich Act standards, 41 U.S.C. §§ 321, 322 (1970), of a decision of the Armed Services Board of Contract Appeals (the board), which upheld the right of a contracting officer to require the submission of cost data from a contractor in support of a proposed catalog price for a commercial item being purchased by the Government on a negotiated procurement basis. Sperry Flight Sys.-Div. of Sperry Rand Corp., ASBCA No. 17375, 74-1 BCA ¶10,648. The case has been submitted to the court on the briefs and oral arguments of counsel. Upon consideration thereof the court agrees with portions of the trial judge’s opinion and adopts, with minor modifications, parts I and IIB of that opinion. Part IIA of the opinion is substantially revised, for the reasons set forth in the discussion of that part, below. As explained herein, the board’s decision is affirmed.

I. Facts

On October 31,1969, plaintiff and the United States, acting through the Navy’s Aviation Supply Office, entered into a 2-year contract pursuant to which plaintiff was to supply, upon order, various types of aeronautical equipment that it manufactured. This contract, more descriptively referred to by the parties as a basic ordering agreement, contemplated two types of orders, priced and unpriced. The priced order, as the name implies, was an order issued to the contractor by the Navy after price and delivery terms had been agreed upon; an unpriced order, on the other hand, meant an order issued in the absence of prior agreement on price.

The mechanics for the pricing of an unpriced order called for the contractor’s submission of a proposed price for each item within 45 days after receipt of an order together with such price supporting information as the contracting officer might request. Within 60 days thereafter, the contracting officer was required to indicate whether the price quoted was acceptable to the Government or whether further negotiations would be necessary. In the event of a failure to agree on price, the matter was then to be resolved by resort to the standard “disputes clause” procedures.

[333]*333On December 15,1971, the order which eventually gave rise to this litigation was issued. It was an unpriced order calling for delivery of 660 model ML-1 remote compass transmitters, also sometimes referred to in the trade as flux valves. This is an electrical induction sensing device which measures the earth’s magnetic field and it is used primarily in aircraft as part of a directional gyrocompass system. There had been three previous unpriced orders for ML-1 transmitters processed under the instant contract and on each of these past occasions the contractor had proposed and was paid its then current catalog price for the item. However, in this instance, the then newly assigned contracting officer declined to accept the contractor’s proposed price, namely, its catalog price of $351 per unit, and asked instead for substantiating cost data. This data the contractor declined to furnish.

Then, and now, the refusal to supply the requested data rested on the contention that under the relevant statute, generally referred to as the Truth In Negotiations Act, 10 U.S.C. § 2306(f) (1970), and the procurement regulations issued pursuant thereto, such data was not to be required when— as was claimed to be the case here — the item involved was a commercial item previously sold in substantial quantities to the general public 'and the price proposed was either (i) the established catalog price for such item, or (ii) a price “based upon” such a catalog priced item.

There followed an extensive written exchange of views as well as negotiations between the parties, all of which proved fruitless. Thereafter, the contracting officer — whose initial request for cost data had, in the interim, been specifically approved by his superior — issued a final decision, which unilaterally established a price for the ML-1 at $204, and set forth specific reasons for the rejection of the contractor’s proposed price of $351. These reasons, which were repeated among the board’s own later findings in the matter, were the following. First, the catalog price of the ML-1 (i.e., the proposed price) was not an acceptable pricing criterion to the Government because that unit had not been sold in substantial quantities to the general public. Second, the proposed price of the ML-1 could not be considered to be “based upon” the established catalog price of the functionally comparable [334]*334“thin valve” because tbe latter unit, even though admittedly similar to the ML-1 and conceded'ly sold in substantial quantities to the general public, had previously been sold to the Air Force at a price 42 percent less than its established catalog price. Third, the price at which the ML-1 unit had been sold by the company’s manufacturing facility to its marketing facility (the intracorporate selling price) was only .$138.78.

Based upon these three considerations, the contracting officer considered it inappropriate to accept the proposed price of $351. Instead, using .certain limited financial data then available to him, he determined that a fair and reasonable price was $204. As a consequence of this determination, and plaintiff’s disagreement with it, the matter was carried on to the board for hearing and determination, and the result there, as previously noted, was in favor of the contracting officer. The case here followed next.

II. Discussion

A. 8evercmc& of Issues

Before the board plaintiff requested and was granted a severance of the issues in tile case. As a result of the severance, the board hearing and decision was limited to the question of plaintiff’s entitlement to payment of its proposed catalog price without having to furnish supporting cost data. Postponed to a future date were the proceedings that would determine, at defendant’s behest, the price payment to which plaintiff was entitled should it have been decided, in the first board decision, that plaintiff was required to furnish the cost data in support of its proposed price upon request of the contracting officer. Plaintiff sought this severance for the highly practical reason that it would need to bring in the cost data to counter a- separate challenge by defendant to the contracting officer’s.decision that $204 was a reasonable and fair price, and yet, in plaintiff’s counsel’s words, “if we are to put in cost data at this time to meet the Government’s objections with regard to 'the contracting officer’s finding as to reasonable price, we moot the appeal [on the need to furnish cost data at all].” When plaintiff received the board [335]*335decision adverse to it on tbe catalog price issue, it came directly to this court. Accordingly, the board has never had the opportunity to hear evidence and rule on defendant’s challenge to the contracting officer’s price determination.

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548 F.2d 915, 23 Cont. Cas. Fed. 80,998, 212 Ct. Cl. 329, 1977 U.S. Ct. Cl. LEXIS 19, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sperry-flight-systems-division-of-sperry-rand-corp-v-united-states-cc-1977.