Tester Corp. v. United States

30 Cont. Cas. Fed. 70,544, 1 Cl. Ct. 370, 1982 U.S. Claims LEXIS 2299
United States Court of Claims·Decided November 22, 1982·No. No. 191-80C·Published·Cited by 16 cases

Opinion

OPINION

LYDON, Judge:

This construction contract case is before the court on motions for partial summary judgment, and oppositions thereto, filed by the parties. In its motion, plaintiff contends that certain costs incurred by the government in contract reprocurement and completion brought on by a valid termination of plaintiff’s contract for default are, as a matter of law, not properly recoverable. Plaintiff maintains that the costs in issue are not recoverable under the terms of the contract, particularly the Termination For Default clause, and under established procurement principles and precedents. Defendant’s position is that these costs are proper recovery items under the above-mentioned clause and under established case law. For reasons set forth below, it is concluded that defendant’s position correctly reflects the existing state of the law.

I.

On April 17, 1975, the Army and Air Force Exchange Service (AAFES) awarded a fixed price contract to plaintiff. This contract called for the construction of a service station at the Walter Reed Army Medical Center in Forest Glen, Maryland. The contract required the construction of a service station building, a protective pre-engineered canopy, four pump islands, and underground gasoline storage tanks and piping. The contract also required the pavement of certain surface areas and landscaping. The original contract price was $299,998. Five amendments were subsequently issued which increased the contract price to $404,432.91. The scheduled contract completion date was December 16, 1975.

During the course of contract performance, disputes arose concerning, inter alia, work involving the canopy, paving, the [372] backfill around the storage tanks, and the underground piping from the gasoline storage tanks to the distribution pumps. Relative thereto, the contracting officer directed plaintiff to perform certain corrective work. Plaintiff failed to do so. On May 12, 1976, the contracting officer terminated the contract for default on the grounds that plaintiff failed to perform the corrective work within the time specified by the contracting officer and that plaintiff failed to show why its failure to complete the work as required was beyond its control or without its fault or negligence. After soliciting bids for the completion of the work remaining to be done under the construction contract, the contracting officer awarded the defaulted contract to Coe Construction Company as low bidder.

Plaintiff appealed the contracting officer’s termination for default to the Armed Services Board of Contract Appeals (Board) on June 14, 1976. The Board denied plaintiff’s appeal on July 20, 1978, finding that the default termination was supported by the evidence. Tester Corp. ASBCA No. 21312, 78-2 BCA ¶ 13,373; plaintiff’s motion for reconsideration was subsequently denied by the Board, 79-1 BCA ¶ 13,725. By letter dated October 22, 1979, the contracting officer rendered a final quantum decision holding that $164,358.84, plus interest, should be assessed against plaintiff as “excess costs of reprocurement” or “damages” resulting from the plaintiff’s unexcused default. Plaintiff subsequently filed a petition in the United States Court of Claims requesting Wunderlich Act review of the adverse Board decision. The government, in its answer to this petition, asserted a counterclaim in the amount of $164,358.84 for damages it claimed were incurred as a result of plaintiff’s unexcused default.

Subsequently, the court upheld the termination for default and remanded the matter to the Trial Division, now the United States Claims Court, for further proceedings concerning the issue of the government’s re-procurement damages. Tester Corp. v. United States, Ct.Cl. No. 191-80C (order entered April 7, 1981), rehearing denied (order entered May 15, 1981).1

Upon remand, a pretrial order requiring quantum submissions by the parties was issued and thereafter the parties engaged in pretrial discovery. In its pretrial submission, the government reduced the amount of its reprocurement damages claim from $164,358.84 to $143,007.60. In its quantum schedules, the government set forth, inter alia, claims for recovery of: (a) design and inspection costs ($27,239.02); (b) travel costs of government personnel ($4,076.32); and (c) testing costs ($15,462.27).2 These costs are the subject of the motions presently before the court for decision. Plaintiff has not, as yet, proffered its pretrial submission.

[373] II.

Plaintiff contends that, under the terms of its contract with AAFES, the cost items set forth above, i.e., design and inspection services, travel expenses and testing services, are not recoverable in default termination situations as a matter of law because these costs are not specifically set forth in the pertinent contract clause as recoverable items. A reading of the relevant provisions of the contract in question does not support plaintiff’s position.

Paragraph 8 of the General Provisions of the contract between plaintiff and AAFES provided in pertinent part:

8. TERMINATION FOR DEFAULT DAMAGES FOR DELAY TIME EXTENSIONS. a. If the CONTRACTOR breaches any provision of this contract or refuses or fails to prosecute the work or any separable part thereof, with such diligence as will insure its completion within time specified in this contract, or any extensions thereof, or fails to complete said work within such time, the AAFES may, by written notice to the CONTRACTOR, terminate his right to proceed with the work, or such part of the work as to which there has been delay. In such event the AAFES may take over the work and prosecute the same to completion, by contract or otherwise, and may take possession of and utilize in completing the work such materials, appliances, and plant as may be on the site of the work and necessary therefor. Whether or not the CONTRACTOR’S right to proceed with the work is terminated, he and his sureties shall be liable for any damage to the AAFES resulting from his refusal or failure to complete the work within the specified time.
b. If fixed and agreed liquidated damages are provided in the contract and if the AAFES so terminates the CONTRACTOR’S right to proceed, the resulting damage will consist of such liquidated damages until such reasonable time as may be required, for final completion of the work together with any increased costs occasioned by the AAFES in completing the work.
f. The rights and remedies of the AAFES provided in this clause are in addition to any other rights and remedies provided by law or under this contract.

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Tester Corp. v. United States, 30 Cont. Cas. Fed. 70,544, 1 Cl. Ct. 370, 1982 U.S. Claims LEXIS 2299 (cc 1982).

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