United States Steel Corp. v. United States

536 F.2d 921, 22 Cont. Cas. Fed. 80,364, 210 Ct. Cl. 228, 1976 U.S. Ct. Cl. LEXIS 14
CourtUnited States Court of Claims
DecidedJune 16, 1976
DocketNo. 405-74
StatusPublished
Cited by12 cases

This text of 536 F.2d 921 (United States Steel 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
United States Steel Corp. v. United States, 536 F.2d 921, 22 Cont. Cas. Fed. 80,364, 210 Ct. Cl. 228, 1976 U.S. Ct. Cl. LEXIS 14 (cc 1976).

Opinion

Skelton, Judge,

delivered the opinion of the court: -

This is an appeal by United States Steel Corporation (USS), plaintiff, from a decision of the Department of Labor Board of Contract Appeals (the Board), in which USS claims damages for an alleged breach of contract by the Department of Labor (DOL), with which it had a contract, and also claims alleged mitigating damages, plus a recovery on an alleged implied contract. The United States, defendant, denies that a breach of the contract occurred, and contends that there are no compensable mitigating damages, that no recovery can be allowed on an implied contract theory, and that the Board did not have jurisdiction of the case. The case is before us on cross-motions for summary judgment. The defendant has summarized the basic facts in the case, which we use in part, with additions and changes, to explain the nature of the case.

On November 12,1969, plaintiff, United States Steel Corporation and defendant, Department of Labor, entered into a JOBS MA-5 fixed price contract, No. 16-0-5005-000. The contract period was from January 5, 1970 to June 5, 1971. The contract contained a disputes clause but no changes clause. .

In general, the contract called for the filling of 1,872 entry level job slots at USS by training hard-core unemployed individuals certified by the Indiana State Employment Service (SES) and the Concentrated Employment Program (CEP). The cost of the contract was based upon only the training needed to make hard-core unemployed persons employable — the training USS normally gave to new employees was not part of the contract.

Instead of being directly reimbursed for the costs of the training program as they were incurred, USS was to be paid $13.94 for each day worked by a JOBS trainee, up to a maximum of 195 days in each of the 1,872 job slots. The maximum amount payable under the contract, therefore, was $2,717.68 per job slot, or $5,087,497 overall.

Although the contract was designed to maximize the contractor’s incentive to keep trainees on its payroll, it was [233]*233acknowledged that, for many reasons, not all trainees would work the full 195 days needed for USS to receive the maximum contract amount. The contractor was allowed, therefore, to replace a lost trainee in a given job slot with a new recruit. By so doing, USS could continue to receive payment for the days worked in that job slot until the combined number of days worked by the initial trainee and any replacement (s) equalled 195.

Because it took 195 work days (39 weeks) for USS to receive the maximum contract amount for each job slot, it was anticipated that all the job slots would be filled initially by the time there were only 39 weeks left in the contract period. This meant that an average of 48 new trainees was needed during each of the first 39 weeks of the contract..

During the first 10 weeks of the contract, SES and CEP provided USS with 510 trainees, 30 more than the rate of 48 per week. During the next three weeks — the last three weeks in March 1970 — the trainees numbered only 108, 36 less than the rate of 48 per week. That made the cumulative number of trainees provided during the first 13 weeks of the contract 618, six trainees short of the rate of 48 per week (an average of 47.54 trainees per week). The following week — the first week of April — 62 new trainees weire accepted into the program.

Beginning April 1, 1970, USS conducted its own special recruiting program to supplement the recruits obtained through SES, CEP, and the contractor’s normal recruiting operation. This special recruiting effort eventually included the distribution of handbills, the intermittent use of a mobile recruiting van, and the services of three USS recruiters. USS has claimed the cost of the special recruiting to be $70,753. It is undisputed that this effort was not part of the express contract between the parties.

On April 20, 1970, USS hired six job trainers who were, given the title of Head Job Trainers. It is undisputed that these were in addition to the job trainers called for in the contract. The head job trainers were employed in that capacity for various lengths of time but no later than September 1, 1971. USS claims the cost of the head job trainers was $135,954.

[234]*234On June 22, 1970, a meeting occurred at the contractor’s plant in Gary, Indiana (Gary Works). Present were Eugene E. Harris for USS and Michael S. White of the Regional Manpower Administrator’s Office, Department of Labor. The meeting occurred during one of Mr. White’s regular visits to Gary Works to monitor the contract performance of USS. He was not the contracting officer. It is. undisputed this meeting was the first time USS advised DOL of the head job trainers. It is also undisputed that USS gave Mr. White no indication that USS expected to be paid for the head job trainers except as they might increase the number of days invoiced under the contract for work by JOBS trainees. Nor was any indication given that USS felt DOL had breached the contract or that DOL was in any way responsible for the cost of the special recruiting effort.

During September 1970, USS began to lay off employees in departments affected by a labor dispute at General Motors. Because of its own labor agreement, USS could not place new trainees in those departments so long as more senior employees were laid off. Although trainees did not begin to work in a given department until the 13th week of employment at USS, they had been pre-assigned to departments during the first week of training and to a certain extent their training differed depending on the department to which they were assigned. Plence at the same time it began to lay off its regular employees in a given department, USS also had a number of trainees in various stages of preparedness to take jobs in those departments. To avoid laying off these, trainees at the end of their twelfth week, i.e., at the time they would normally 'begin to work in their assigned department, USS kept them in the training program, retraining them to work in different departments. US'S claims the cost of this “special training program” was $277,069.

On November 13,1970, a meeting occurred at Gary Works between Eugene E. Harris of USS. and Paul Burse. It is undisputed that at no relevant time was Mr. Burse an employee of the Government. He was, however, employed by Henderson & Associates,-which had a contract with the Government to audit the USS JOBS MA-5 contract. It is also undisputed [235]*235that Mr. Burse was advised as to the special training program at that meeting.

On November 17, 1970, at the request of DOL, a second meeting was held with USS representatives at Gary Works. Present were Bichard Beece, J. H. Cawley, and Michael White for DOL and D. W. Braithwaite, P. C. Fissinger, V. C. Sutcliffe, and Mr. Harris for USS. This meeting occurred seven months after the hiring of the head job trainers and the commencement of the special recruiting effort and almost two months after the beginning of the special training program. It is undisputed that all three areas were discussed, that this was the first time DOL employees had been officially advised of the special training program, and that USS indicated that these efforts had been undertaken with the continuing expectation that their cost would be more than recouped by improving the ratio of days worked per trainee, thereby increasing USS’s payments under the contract.

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Bluebook (online)
536 F.2d 921, 22 Cont. Cas. Fed. 80,364, 210 Ct. Cl. 228, 1976 U.S. Ct. Cl. LEXIS 14, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-steel-corp-v-united-states-cc-1976.