JAMES A. BOYAJIAN, ASSIGNEE OF TRIUMPH MANUFACTURINGCOMPANY, BANKRUPT v. THE UNITED STATES

No. 261-60

UNITED STATES COURT OF CLAIMS

191 Ct. Cl. 233; 423 F.2d 1231; 1970 U.S. Ct. Cl. LEXIS 27

March 20, 1970, Decided

CASE SUMMARY:

PROCEDURAL POSTURE: Plaintiff filed exceptions to the opinions and conclusions of the trialcommissioner, wherein the commissioner refused to apply a total cost theory for computation of damages forplaintiff's combined claims in its breach of contract action against defendant founded on delays in aproduction contract.

OVERVIEW: Plaintiff filed a petition for damages based on a variety of claims, which arose from an allegedbreach of production contract entered into with defendant. Plaintiff unsuccessfully combined separate claimsof breach of contract into one claim for total loss for purposes of computation of a damage award. The courtheld there was no authority for combining alleged breaches without, in any way, attributing specific damageitems to any particular breach. The determination of specific items of damages or increased costs from delaywas usually measurable with a reasonable degree of accuracy, but plaintiff failed to present any reliableproof on any specific issue. Recovery without a demonstration that the damages claimed resulted from, andwere caused by the particular breach, was not available by mere subtraction of total expenditures fromcontract receipts. Regardless of the merits of the claim for damages, without reliable proof, the actionrequired dismissal.

OUTCOME: The court adopted the commissioner's findings of fact and conclusions of law and found plaintiffwas not entitled to recover damages for breach of contract. Plaintiff's claim for total cost damages based onits combined petition was not applicable to the facts, and the evidence presented did not support plaintiff'sclaim.

CORE TERMS: contractor's, modulator, testing, specification, air, tester, preproduction, laboratory,calibration, advance payments, inspection, equitable, shipment, interference pattern, contracting, bid, pool,causes of action, phase, delivery, expenditure, tested, interval, engineer, plant, dwell, satisfactory,engineering, overhead, setup

LexisNexis(R) Headnotes

Contracts Law > Breach > General OverviewContracts Law > Remedies > Compensatory Damages > General OverviewPublic Contracts Law > Costs & Prices > Compensable Delay[HN1] Recovery of damages for a breach of contract is not allowed unless acceptable evidencedemonstrates that the damages claimed resulted from and were caused by the breach. The costs must betied in to fault on defendant's part.

Contracts Law > Breach > Causes of Action > General OverviewContracts Law > Remedies > Compensatory Damages > General OverviewPublic Contracts Law > Costs & Prices > Compensable Delay

Page 1

[HN2] As in all breach of contract cases, the proper measure of damages for defendant's breaches is theamount of plaintiff's extra costs directly attributable to said breaches. These take the form of delay damagescompensated as increased overhead incurred as a result of the protracted performance. Moreover, thecontractor is entitled to recover its additional expenditures directly attributable to the breach. In computingthe additional overhead, the court has held that a contractor is entitled to recover as damages the amount ofoverhead on a daily basis allocable to the period of overrun for which the government is responsible.

Contracts Law > Remedies > Compensatory Damages > General OverviewPublic Contracts Law > Costs & Prices > Compensable Delay[HN3] The ascertainment of increased costs directly attributable to delay resulting from a breach of contractby defendant is normally measurable with a reasonable degree of accuracy.

Contracts Law > Remedies > Compensatory Damages > General Overview[HN4] A contractor is not entitled to recover expenses which would properly have been incurred regardless ofthe breach.

Contracts Law > Remedies > Compensatory Damages > General Overview[HN5] The court has consistently rejected damage claims based on the theory that all unreimbursed contractexpenditures of every nature made throughout the life of the contract should be reimbursed.

Contracts Law > Breach > Causes of Action > General OverviewContracts Law > Remedies > Compensatory Damages > General OverviewPublic Contracts Law > Costs & Prices > Compensable Delay[HN6] The proper measure of damages in a case where various alleged delays are caused by theGovernment is to permit the plaintiff to recover its costs during the periods of delay, and that the burden ofallocating costs to the particular periods involved is upon the plaintiff. The plaintiff of course can recover onlyfor those expenses occasioned from the breach by the defendant. The plaintiff may not include all costsarising from the performance of the contract as the basis for its recovery.

Contracts Law > Remedies > Compensatory Damages > General Overview[HN7] Recoverable damages cannot be proved by a naked claim for a return of costs even where they areverified. The costs must be tied in to fault on defendant's part.

Contracts Law > Remedies > Compensatory Damages > General OverviewEvidence > Documentary Evidence > Writings > Summaries[HN8] A schedule of verified costs is not proof of damages but only a starting point. Such a schedule verifiedby defendant is not an admission of anything but the accuracy of the statement reflecting the contents ofbooks and records examined and the allocations and computations based thereon.

Contracts Law > Breach > Causes of Action > General OverviewContracts Law > Remedies > Compensatory Damages > General OverviewEvidence > Documentary Evidence > Writings > Summaries[HN9] Plaintiff's costs appearance on plaintiff's damage schedule does not by itself amount to probativeevidence in the absence of anything else. Proof that the plaintiff's costs exceeded his payments under thecontract would not in the usual case give rise to his right to recover the difference.

Contracts Law > Remedies > Compensatory Damages > General OverviewEvidence > Documentary Evidence > Writings > Summaries[HN10] The mere fact that a plaintiff's books and records do not, in segregated form, show the amounts ofthe increased costs attributable to the breaches do not give it automatic license to use the "total cost"method. Contractors rarely keep their books in such fashion. Such failure, however, normally does notprevent the submission of reasonably satisfactory proof of increased costs incurred during certain contractperiods or flowing from certain events based, for instance, on acceptable cost allocation principles or onexpert testimony.

Contracts Law > Remedies > Compensatory Damages > General Overview

Page 2191 Ct. Cl. 233, *; 423 F.2d 1231, **;

1970 U.S. Ct. Cl. LEXIS 27, ***

Public Contracts Law > Costs & Prices > Compensable Delay[HN11] The total cost theory has never been favored by the court and has been tolerated only when no othermode was available and when the reliability of the supporting evidence was fully substantiated. Theacceptability of the method hinges on proof that (1) the nature of the particular losses make it impossible orhighly impracticable to determine them with a reasonable degree of accuracy; (2) the plaintiff's bid orestimate was realistic; (3) its actual costs were reasonable; and (4) it was not responsible for the addedexpenses.

Contracts Law > Remedies > Compensatory Damages > General OverviewEvidence > Procedural Considerations > Burdens of Proof > General Overview[HN12] The contractor's obligation of carrying its burden of submitting satisfactory proof of damage alsoincludes the burden of submitting fully substantiated supporting evidence that its actual costs are reasonable.Consequently, it is clear that a contractor does not meet such burden by simply proving what its totalexpenditures were, and then resting on a presumption of reasonableness.

Contracts Law > Remedies > Compensatory Damages > General OverviewEvidence > Procedural Considerations > Burdens of Proof > General Overview[HN13] In situations where the court has rejected the "total cost" method of proving damages, but where therecord nevertheless contains reasonably satisfactory evidence of what the damages are, computed on anacceptable basis, the court has adopted such other evidence, or where such other evidence, although notsatisfactory in and of itself upon which to base a judgment, has nevertheless been considered at leastsufficient upon which to predicate a jury verdict award, it has rendered a judgment based on such a verdict.However, where the record is blank with respect to any such other alternative evidence, the court has beenobliged to dismiss the claim for failure of damage proof, regardless of the merits.

Contracts Law > Contract Interpretation > General Overview[HN14] Under familiar principles, a harmonious interpretation is preferred to one which would result in aconflict with other contract provisions, rendering them inoperative.

Public Contracts Law > Contract Interpretation > Ambiguities & Contra Proferentem > GeneralOverview[HN15] Where a conflict is obvious, and certainly where the contractor actually is cognizant of it, he mustmake appropriate inquiry.

SYLLABUS

[***1] ON THE PROOFS

Contracts; delays; damages; total cost method; preproduction testing. -- Plaintiff entered into threecontracts with the Air Force to supply Modulators and one contract to supply Interval and Dwell Testers.Three of the six causes of action are based on delays and damages allegedly incident to defective contracttesting specifications for the Modulator preproduction models which failed to pass the designated calibrationtests, as well as delays when plaintiff was required to obtain a testing device which was later prescribed butnot immediately available. Plaintiff also alleges breach of an Advance Payment Pool Agreement underwhich the Government allegedly agree to advance a specified sum to expedite large-scale production. Incomputing its damages as to these three counts plaintiff used the "total cost" method, i.e. it subtracted itstotal contract receipts from its total contract costs. Two of the remaining three counts relate to costs oftesting and storage of completed articles under the Interval and Dwell Testers contract. The final countrelates to a V-loan agreement, which claim depends for entitlement of recovery on the other counts.Defendant urges [***2] inter alia that the three Modulator causes of action should be dismissed for failure ofdamage proof. It is held that plaintiff's total cost method is here unacceptable and since no alternativeevidence was introduced, the three claims are dismissed for failure of damage proof. It is also held thatplaintiff was not relieved of its contract imposed obligation to perform its own preproduction testing of theTester simply because the contract also provided for preproduction testing for design approval by theprocuring agency at its laboratory. It is also held that plaintiff cannot recover on its storage claim since theTester contract provided for non-fabrication of the articles pending approval of the preproduction model and

Page 3191 Ct. Cl. 233, *; 423 F.2d 1231, **;

1970 U.S. Ct. Cl. LEXIS 27, ***

plaintiff violated this provision when it completed the full number of articles prior to such approval. Plaintiff isnot entitled to recover on any of its claims, and the petition is dismissed.

Contracts; damages; measure of damages; total cost theory; when applicable.

Recovery of damages for a breach of a Government contract is not allowed unless acceptable evidencedemonstrates that the damages claimed resulted from and were caused [***3] by the breach. A contractorwill not be permitted to rest on a "total cost" proof of damages consisting of his disbursements less hisreceipts, where he makes no effort to relate any specific amount of increased costs to any particular allegedbreach, makes no allocation of excess costs between periods of nondelay and periods ofGovernment-caused delay, does not account for price and cost increases which may have been responsiblefor losses during nondelay periods, and makes no allowance for acceptance of an unduly low contract priceor for production interruptions not attributable to the Government. In the few instances where the total costmethod of proving damages has been allowed, recovery based on total cost was refined by appropriateadjustments and where the particular record showed no other method was available.

Contracts; damages; measure of damages; total cost theory; breaches consolidated for damagepurposes.

The Court of Claims has never permitted a contractor to prove its damages under a Government contractclaim by the "total cost" method, i.e. subtracting its contract receipts from its disbursements, where severalbreaches are alleged but consolidated for damage [***4] purposes into a claimed unadjusted "total cost"recovery.

Contracts; interpretation; contract as a whole; clauses construed together.

A harmonious interpretation of a Government contract provision is to be preferred to one which would resultin a conflict with other contract provisions, rendering them inoperative.

Contracts; interpretation; ambiguity; clarification, necessity for seeking.

Where a conflict between specification and other provisions of a Government contract is obvious, andcertainly where the contractor actually is cognizant of it at the time he submitted his bid, he must makeappropriate inquiry.

COUNSEL: David V. Anthony, attorney of record, for plaintiff. Sellers, Conner & Cuneo, of counsel.

Michael J. Rubin, with whom was Assistant Attorney General William D. Ruckelshaus, for defendant.

JUDGES: Cowen, Chief Judge, Laramore, Durfee, Davis, Collins, Skelton and Nichols, Judges.

OPINION BY: PER CURIAM

OPINION

[*234] [**1232] This case was referred to Trial Commissioner Saul Richard Gamer with directions to makefindings of fact and recommendation for conclusions of law under [*235] the order of reference and Rule57(a) [since [***5] September 1, 1969, Rule 134(h)]. The commissioner has done so in an opinion andreport filed on April 30, 1969. Exceptions to the commissioner's opinion, findings and recommendedconclusion of law were taken by plaintiff, defendant urged their adoption, and the case has been submitted tothe court on oral argument of counsel and the briefs of the parties. The commissioner's discussion of, andrefusal to apply, the "total cost" theory of damages is wholly consistent with our recent decision in H. JohnHoman Co., Inc. v. United States, 189 Ct. Cl. 500, 418 F. 2d 522 (1969). In Homan there were factors --pointed out in the opinion in that case -- calling for use of that theory which are absent here. Since the courtagrees with the opinion, findings and recommended conclusion of law of the trial commissioner, ashereinafter set forth, it hereby adopts the same as the basis for its judgment in this case. Therefore, plaintiff

Page 4191 Ct. Cl. 233, *; 423 F.2d 1231, **;

1970 U.S. Ct. Cl. LEXIS 27, ***2

is not entitled to recover and the petition is dismissed.

OPINION OF COMMISSIONER

Gamer, Commissioner: The petition herein sets forth, in six causes of action, various claims arising out ofproduction contracts which the Triumph Manufacturing [***6] Company, an Illinois corporation, entered intowith the Air Force in 1955 and 1956. Triumph was adjudged a bankrupt in 1958, and in 1960, as authorizedby an order of the bankruptcy court, all of its right, title, and interest in the claims herein were assigned toplaintiff, who was Triumph's president and principal stockholder. For convenience, however, Triumph willsometimes be referred to as the plaintiff.

On defendant's motion for summary judgment, the court, by order of October 30, 1964, dismissed the fifthcause of action. Thereafter, trial proceedings were conducted with respect to the remaining five causes.

The causes of action left for consideration are grounded upon contracts for the manufacture of "Modulators,"1 as well [*236] as a contract for the manufacture of "Interval and Dwell Testers." 2 There [**1233] werethree Modulator contracts dated October 24, 1955, May 2, 1956, and July 20, 1956, respectively, but theywere generally administered as one. (Essentially, the second and third contracts constituted additions to theoriginal quantity.) 3 Accordingly, they will sometimes be referred to collectively as the Modulator contract.The Interval and Dwell [***7] Tester contract was dated February 10, 1955.

1 A Modulator is an item of electronic test equipment used at maintenance depots to calibrate radio receiving equipment whichis to be used in aircraft. The Modulator reproduces the signals generated by ground transmitters to aircraft in flight. Suchsignals are given to direct the course on which the plane is to fly.

2 An Interval and Dwell Tester is also an item of test equipment used in the testing of aircraft bomb release interval controls,involving both the foot spacing ("Interval," i.e., the distance measured along the flight path between points of impact of twosuccessive bombs) and time duration ("Dwell," i.e., the percentage of the time the bomb release is "on" to the total timebetween two successive bomb releases).

3 Contract No. AF33(604)12150, dated October 24, 1955, was in the amount of $ 135,845, and provided for the production of163 Modulators at the unit price of $ 815. Contract No. AF33(604)13021, dated May 2, 1956, was in the amount of $ 110,025,and called for the production of 135 units at the same unit price. Contract No. AF33(604)14201, dated July 20, 1956, in theamount of $ 188,265, provided for the production of 231 units, also at the same unit price. All the contracts also provided forthe furnishing of spare parts and certain engineering and maintenance data.

[***8] THE MODULATOR CONTRACT CLAIMS

First Cause of Action

The contract provided that preproduction models, referred to as "First Articles," be submitted to defendant fortesting and approval prior to the commencement of full-scale production. Plaintiff contends that itmanufactured the three required models and, prior to their submission to defendant, it proceeded, asprovided by the contract, to test them to make certain they were properly calibrated; that such tests wereperformed in accordance with a method authorized by the contract, i.e., the "interference pattern method";that, in applying such test method, plaintiff complied in all respects with the specified procedures; thatdefendant, however, knew from past experience on previous contracts, but wrongfully failed to disclose toplaintiff, that such procedures were defective and that it would, therefore, be difficult to attain propercalibration with their use; that, upon plaintiff's submission of the models in October 1956, defendant testedthem by using a different method, i.e., by employing certain test equipment called a "Zifor"; 4 that the Ziforwas a relatively [*237] new item, manufactured by the [***9] Collins Radio Company, which quickly gaveaccurate calibration results; that defendant's Zifor tests showed that the three submitted First Articles werenot properly calibrated, resulting in their rejection; that defendant then wrongfully insisted that the FirstArticles, as well as all 529 Modulators to be produced, be thereafter tested and calibrated only in accordancewith the Zifor; that, although defendant lent a Zifor to plaintiff for the limited purpose of properly calibratingthe First Articles, which were thereafter accepted on January 31, 1957, plaintiff was required to purchase a

Page 5191 Ct. Cl. 233, *235; 423 F.2d 1231, **1232;

1970 U.S. Ct. Cl. LEXIS 27, ***5

Zifor from the Collins Radio Company for use in its contract production operations and that plaintiff could not,therefore, commence such operations until it had obtained a Zifor; and that defendant's insistence uponplaintiff's use of a Zifor caused a six-month delay in the performance of the contract in that plaintiff was notable to obtain one until April 1957 and could, therefore, make no substantial or effective production progressuntil such time. Plaintiff says that the furnishing by defendant of inaccurate and defective interferencepattern method calibration procedures, as well as its [***10] knowledge, but failure to make disclosure, ofsuch defective procedures and the resultant difficulties of obtaining accurate results from the use thereof,constituted breaches of the contract. It argues that, had it known in October 1955, when the contract wasawarded, that the interference pattern method would be useless, and that defendant would insist on the Ziforprocedure instead, it could have then promptly ordered a Zifor and would have had ample time to obtain itprior to the submission of the First Articles a [**1234] year later in October 1956, 5 so that production couldhave then immediately commenced. Thus, says plaintiff, the six-month delay in production to April 1957,during which period plaintiff's overhead and other expenses continued, would have been avoided. Thiscause of action is based upon such delay damages.

4 Acronym for "Zero Indicator For Omni-Range."

5 Plaintiff originally had five months within which to submit the First Articles. The submission in October 1956, a year after thefirst contract of October 1955, followed duly granted extensions of time to September 15, 1956.

[***11] [*238] Second Cause of Action

Plaintiff contends that the aforesaid six-month delay in production to April 1957 depleted its capital to suchan extent that it was unable to continue with performance; that, to enable plaintiff to continue, plaintiff and theAir Force, under date of April 10, 1957, entered into an "Advance Payment Pool Agreement" under whichdefendant agreed to advance to plaintiff amounts not to exceed $ 250,000; that defendant, on April 10, 1957,and July 18, 1957, advanced the sums of $ 160,000 and $ 20,000, respectively, but despite plaintiff's needfor the balance of $ 70,000 to obtain the smooth production flow incident to large-scale production, defendantarbitrarily and capriciously refused to advance any additional sums; and that defendant's refusal was, underthe circumstances, a breach of contract, resulting in inefficient, costly, and delayed contract performance. 6

6 The contract provided that five units of every shipment, no matter how small or large the shipment was, would be subject toinspection by inspectors stationed at the plant. Plaintiff contends that defendant's refusal to advance the $ 70,000 balancenecessitated plaintiff's satisfying its current, continuous, needs for cash by constantly making small shipments (instead ofshipments in lots of 65, as the contract permitted), the payments for which constituted the only method plaintiff had forgenerating cash. Plaintiff complains that this caused a continuous disruption of its production line in order to permit numerousinspections.

[***12] Third Cause of Action

This cause is grounded upon the same facts as the first cause of action. The difference between the twocauses relates only to the damages. On the first cause, plaintiff claims only delay damages resulting fromthe alleged breaches of contract. On this third cause, damages are based on alleged "additional work, laborand services not contemplated by the contract." Petition, para. 14.

Damages

Plaintiff combines all three causes together for damage purposes. Such damages are equated with the lossit incurred in completing the contract. Plaintiff takes its total claimed contract costs of $ 694,735, subtractstherefrom its total contract receipts of $ 486,210, and seeks to recover the difference of $ 208,525.

Page 6191 Ct. Cl. 233, *237; 423 F.2d 1231, **1233;

1970 U.S. Ct. Cl. LEXIS 27, ***9

Defendant contests plaintiff's right to recover on these causes both on the facts and the law. As to the firstand [*239] third causes, it particularly relies on its defense of failure to exhaust administrative remediesunder the contract Changes and Disputes clauses. Plaintiff did not submit any of its claims to the ArmedServices Board of Contract Appeals. Defendant says that the causes of action grounded upon the required[***13] use of the Zifor are in effect based only on an alleged change in contract requirements susceptible toappropriate handling under such contract clauses. Defendant concedes, however, that the contract clausesdo not provide any administrative remedy with respect to the second cause of action based upon an allegedbreach of the Advance Payment Pool Agreement.

Defendant urges further that, in any event, and regardless of the merits of the three causes of action,plaintiff's attempt to obtain recovery on the basis of its total expenditures less contract receipts is, under thefacts and circumstances here involved, wholly inappropriate, [**1235] and that, since the record contains noother proof indicating what, on a proper basis, plaintiff's damages attributable to defendant's allegedbreaches were, the three causes of action should be dismissed for failure of damage proof.

Defendant's defense based on plaintiff's failure to prove damages is, on this record, required to be sustained.The so-called "total cost" method upon which plaintiff relies is here unacceptable. Accordingly, there is noneed to make any determination on the merits of these three causes, for even assuming they [***14] arevalid and that defendant's conduct amounted to the claimed breaches, plaintiff's failure to make anysatisfactory showing of the amount of damages flowing from such breaches would require the dismissal ofsuch causes anyway. 7

7 If plaintiff's "breach" analysis on the first and third causes is erroneous and if instead, as defendant argues, administrativeremedies were available, plaintiff's failure to pursue such remedies would require the dismissal of such causes in any event.

[HN1] Recovery of damages for a breach of contract is not allowed unless acceptable evidencedemonstrates that the damages claimed resulted from and were caused by the breach. "The costs must betied in to fault on defendant's part." River Construction Corp. v. United States, 159 Ct. Cl. 254, 270 (1962).As the court held in J. D. Hedin Construction Co. [*240] v. United States, 171 Ct. Cl. 70, 108, 347 F. 2d235, 259 (1965):

[HN2] As in all breach of contract cases, the proper measure of damages for defendant's breaches [***15] is theamount of plaintiff's extra costs directly attributable to said breaches. Saddler v. United States, supra. [152 Ct. Cl. 557,287 F.2d 411 (1961)] These take the form of delay damages compensated as increased overhead incurred as a resultof the protracted performance. Moreover, the contractor is entitled to recover its additional expenditures directlyattributable to the breach. In computing the additional overhead, we have held that a contractor is entitled to recoveras damages the amount of overhead on a daily basis allocable to the period of overrun for which the government isresponsible. McGraw & Company v. United States, 131 Ct. Cl. 501 (1955); Comb Co. v. United States, 103 Ct. Cl. 174(1945).

Defendant properly contends that the excess costs claimed must be tied in to defendant's breaches. * * *

However, contrary to these basic causal-connection damage principles, no attempt is here made to relateany specific amount of increased costs to any particular alleged breach. Nor is any satisfactory explanationgiven as to why such an attempt was not made or why it would not have produced reasonably accurateresults. Instead, the damage [***16] proof consists only of an accountant's schedule (and the accountant'stestimony in support thereof), setting forth computations, based on plaintiff's books and records, of plaintiff'stotal expenditures in performing the contract, and subtracting therefrom the total contract receipts, thusarriving at a total "loss" figure, for which plaintiff demands recoupment. The first cause of action is basedsolely on a defined, limited delay period resulting from the requirement that a Zifor be obtained. As waspointed out in J. D. Hedin Construction Co. v. United States, supra, [HN3] the ascertainment of increasedcosts directly attributable to delay resulting from a breach of contract by defendant is normally measurablewith a reasonable degree of accuracy. The records in a very large number of cases before this court, whichhave been deemed sufficient to support judgments for such delay damages (including alleged laborinefficiency and indirect overhead expenses, which plaintiff claims resulted from the alleged delays here

Page 7191 Ct. Cl. 233, *238; 423 F.2d 1231, **1234;

1970 U.S. Ct. Cl. LEXIS 27, ***12

[*241] involved), 8 attest to [**1236] this fact. The second cause of action is similarly based on delays. 9

And the third cause of action is grounded [***17] on the necessity "to perform additional work, labor andservices," again because of the need to obtain a Zifor. Surely, a reasonable attempt could have been madeto show how much more work, labor and services had to be performed because of the necessity of obtaininga Zifor.

8 Pltf. Brief, p. 14.

9 In a letter dated August 27, 1958, written to defendant in support of an application plaintiff had made on March 18, 1958, forrelief under Title II of the First War Powers Act of 1941, in which plaintiff sought to recover its loss in the amount of $ 223,000under the three Modulator contracts, plaintiff stated that "* * * the failure of the government to make the further advancepayments agreed upon, delayed production under the contracts some additional seven months * * *." The first request forfurther funds which plaintiff specified it made and which was denied was on August 16, 1957.

On this record, it is not possible to conclude that plaintiff's total contract loss, i.e., the difference betweenplaintiff's [***18] contract expenditures and its contract receipts, is reasonably to be equated with theincreased costs directly resulting from defendant's alleged breaches.

The first of the three contracts herein was entered into on October 24, 1955. The First Articles were notsubmitted to defendant until October 15, 1956, almost one year later. The rejection of the First Articles,which is the basis of the first breach claimed, thus did not take place until after their submission on October15, 1956. However, no Government-caused delay of any kind is alleged during this one-year period whichmight have in any way affected plaintiff's costs. Although plaintiff shows no contract costs incurred in 1955,substantial expenditures were made in 1956, and, while such 1956 costs are not segregated on apre-October or post-October basis, it is evident that significant costs were incurred up to October 15, 1956.This 1956 period, which involves most of the year, covers the time when the setup for the plannedlarge-scale production was being established, when at least some materials were being purchased, andwhen the work on the First Articles was being accomplished. Yet, plaintiff seeks full reimbursement [***19]for all of its labor, material, and overhead costs for the entire year 1956, i.e., to the extent that they were notcovered by contract receipts and [*242] contributed to its contract loss. 10 Thus, defendant would be calledupon to indemnify plaintiff against any price and cost increases which contributed to plaintiff's loss, eventhough such increases occurred during nondelay periods and for which defendant could in no wise be heldresponsible. It is settled, however, that [HN4] a contractor is not entitled to recover "expenses which wouldproperly have been incurred regardless of the [breach]." Saddler v. United States, 152 Ct. Cl. 557, 564, 287F. 2d 411, 415 (1961). And even accepting, under their broadest aspects, the contentions made by plaintiffas to the various alleged delay periods, it is plain that there were, in addition, other nondelay periods duringthe entire time of contract performance, which time extended into 1958 (the last shipment having been madeon April 17, 1958). The alleged six-month delay due to the necessity of obtaining a Zifor is conceded to haveterminated in April 1957, when plaintiff was finally able to obtain one. 11 At [**1237] [***20] the same time,the Advance Payment Pool Agreement was executed and $ 160,000 advanced thereunder, giving plaintiffthe funds without which it was unable to proceed with contract performance. 12 This new financing, plus theacquisition of the Zifor, admittedly enabled plaintiff to proceed with its production activities. It was not untilsome three months [*243] later, i.e., sometime after July 18, 1957, when defendant made its $ 20,000advance under the Advance Payment Pool Agreement, that plaintiff began complaining that its productionactivities were being hampered because defendant would not advance any further part of the $ 70,000 stillavailable under the agreement. Thus, even were plaintiff's delay contentions accepted, there would be anadditional nondelay period between April 17, 1957, and the time later in the year when the alleged delaysattributable to defendant's refusal to make any further advances under the agreement occurred. 13 Yet, bythe "total cost" method here urged, plaintiff makes no distinction between the delay and nondelay periods.All contract expenditures throughout the entire contract period of performance are indiscriminately lumped,and insofar [***21] as contract receipts failed to cover them, reimbursement is asked in full. It is noted,however, that when, on March 12, 1958, plaintiff sought an equitable adjustment because it "was required toacquire Zifor test equipment and resubmit first articles and was subjected to a four months delay andadditional engineering and labor costs on account of this change in specifications," it evidently did arrive at

Page 8191 Ct. Cl. 233, *241; 423 F.2d 1231, **1235;

1970 U.S. Ct. Cl. LEXIS 27, ***16

what it felt was an approximate specific sum for this particular matter since it stated: "This change andresulting delays on these contracts involved additional costs to the contractor in the amount of $ 25,000." 14

10 For the full year 1956, plaintiff expended $ 12,928 for "Direct Labor," $ 12,390 for "Engineering Labor," $ 25,463 for"Manufacturing Overhead," and $ 15,390 for "General and Administrative Expenses," the four items totaling $ 66,171. Materialcosts for 1956, 1957, and 1958 totaled $ 316,324.

11 Plaintiff makes no allowance for a reasonable testing period by defendant even had the First Articles originally beencalibrated by plaintiff by the Zifor method. In the aforesaid application of March 18, 1958, which plaintiff made for relief underTitle II of the First War Powers Act of 1941 for its loss under the three Modulator contracts, it stated that it "was subjected to afour months delay" because it was "required to acquire Zifor test equipment." A similar application plaintiff had filed on February26, 1957, also was based on a four-month delay (such period apparently being attributable, however, to the period from thedate the First Articles were submitted in October 1956 to the date they were approved in January 1957). Similarly, plaintiff'srequest of March 12, 1958, for an equitable adjustment based on the Zifor requirement also claimed only a four-month delay.

[***22]

12 Plaintiff testified that by April 17, 1957, when the Advance Payment Pool Agreement was executed, its capital had beendepleted as a result of the six-month delay because its overhead continued; it was necessary to maintain its labor force; andcontract supplies and materials had to be paid for. However, in its application of March 18, 1958, for relief under the First WarPowers Act, plaintiff stated that in April 1957 it had available $ 190,000 under a V-loan from the First National Bank of Chicago,which loan was guaranteed by the Air Force, in addition to the funds made available under the Advance Payment PoolAgreement.

13 As noted (n. 9), in plaintiff's letter of August 27, 1958, in support of its First War Powers Act application for relief, it specifiedAugust 16, 1957 as the date of its first request for further funds which was denied.

14 The request for the equitable adjustment contains no breakdown or other computation as to the basis for the $ 25,000 figure.However, in a letter written on April 22, 1957, in support of a claim it had submitted for relief under the First War Powers Act,plaintiff claimed that "as a result of these changes [in the testing procedure]," it had suffered a loss of $ 128,423. Again nobreakdown of this figure is set forth.

[***23] Furthermore, if plaintiff proceeded on the basis of definite delay periods, and increased costs directlyattributable thereto, it would of necessity be obliged to take into account the fact that productive work wasactually proceeding during such periods. The "delay" periods complained about were in no way marked bycomplete inactivity. By plaintiff's own admission, its forces were performing at least some [*244] work onthe making of subassemblies while awaiting the Zifor. 15

15 Record, vol. 1, at 43.

[**1238] In this connection, it should be noted that, should complete reimbursement be made to plaintiff ofall of its contract costs, such costs would include, presumably, all of the interest it paid on a V-loan which ithad (granted on September 7, 1956, in the amount of $ 140,000, and increased to $ 190,000 on January 25,1957), insofar as such loan proceeds were used in connection with the Modulator contracts (the loan couldbe used for any defense contract work plaintiff had), as well as the [***24] interest it paid on the $ 180,000 inadvances it had received under the Advance Payment Pool Agreement. Thus, plaintiff, in connection withthe performance of the contracts, would receive interest-free Government financing. 16 Similarly, it wouldinclude reimbursement to plaintiff of an expenditure for one thousand handbooks, the justification for whichplaintiff itself could not explain, since the contract requirement with respect thereto had been canceled. 17

16 As of August 4, 1958, i.e., after plaintiff was put into involuntary bankruptcy, the unpaid balance of the V-loan was over $160,000.

17 Record, vol. 4, at 589-92.

Page 9191 Ct. Cl. 233, *243; 423 F.2d 1231, **1237;

1970 U.S. Ct. Cl. LEXIS 27, ***21

Nor does plaintiff make any satisfactory showing that its losses were not at least in part attributable to anunduly low unit price. On the first contract, plaintiff originally bid $ 880 per unit, but, as a result ofnegotiation, lowered the unit price to $ 815. On the two subsequent awards, plaintiff maintained its $ 815unit price, although no other bidder would come down [***25] to that level.

Finally, the record further shows production interruptions and delays caused by events in no way attributableto defendant but for which plaintiff makes no adjustments whatsoever. For instance, Eastern Air Devices,Inc., plaintiff's important subcontractor for the necessary motors, required, because of its own productionscheduling needs, substantial "lead time," and this caused an initial delay of around three months in plaintiff'sproduction when plaintiff, after finally having obtained the Zifor and the necessary financing under theAdvance Payment Pool Agreement, was prepared to embark on full-scale production. At the trial plaintiffconceded that defendant was not responsible for this particular delay [*245] caused by Eastern. 18 Thesame delay would have occurred had the First Articles been approved in October 1956. 19 Similarly, it was,as set forth in plaintiff's own formal request, "delays in deliveries of packaging materials," as well as "amachinery breakdown at the company manufacturing the aluminum extrusions for the transit cases," whichnecessitated its second advance of $ 20,000 under the Advance Payment Pool Agreement. 20 Also, althoughthe [***26] First Articles were originally due to be submitted on June 9, 1956, they were, pursuant toextensions of time requested by plaintiff, not submitted until October 1956. 21

18 Record, vol. 1, at 108.

19 Record, vol. 2, at 163-64.

20 Plaintiff's letter of July 3, 1957, to defendant.

21 Prior to the final extension, consideration was given to a default termination because of plaintiff's delinquency in thesubmission of these Articles.

In situations similar to the instant one, [HN5] the court has consistently rejected damage claims based onthe theory that all unreimbursed contract expenditures of every nature made throughout the life of thecontract should be reimbursed. Urban Plumbing & Heating Co. v. United States, 187 Ct. Cl. 15, 408 F. 2d382 (1969), cert. denied, 389 U.S. 958 (1970); Phillips Construction Co. v. United States, 184 Ct. Cl. 249,394 F. 2d 834 (1968); WRB Corp. v. United States, 183 Ct. Cl. 409 (1968); Turnbull, Inc. v. United States,180 Ct. Cl. [***27] 1010, 389 F. 2d 1007 (1967); Roberts v. United States, 174 Ct. Cl. 940, 357 F. 2d 938(1966); Wunderlich Contracting Co., et al. v. United States, 173 Ct. Cl. 180, 351 F. 2d 956 (1965); LaburnumConstruction Corp. v. United States, 163 Ct. Cl. 339, 325 F. 2d 451 (1963); River Construction Corp. v.United States, supra; [**1239] Snyder-Lynch Motors, Inc. v. United States, 154 Ct. Cl. 476, 480, 292 F. 2d907, 910 (1961); Lilley-Ames Co., Inc. v. United States, 154 Ct. Cl. 544, 293 F. 2d 630 (1961); F. H. McGraw& Co. v. United States, 131 Ct. Cl. 501, 130 F. Supp. 394 (1955); Christensen Construction Co. v. UnitedStates, 72 Ct. Cl. 500, 514 (1931).

In Christensen Construction Co. v. United States, supra at 514, the court, noting that "the amount of [theclaimed] recovery is based upon the alleged total expenditures of the entire work less the amount receivedfrom the Government," held that "[t]his is not the proper basis for recovery. To [*246] include all costs toplaintiff on the project, proper and improper, would place upon the Government the necessity of reimbursingit for whatever losses it incurred, [***28] notwithstanding their nature." In Laburnum Construction Corp. v.United States, supra. 163 Ct. Cl. at 351-52, 325 F. 2d at 458-59, the court, after rejecting a calculation of"plaintiff's damages by deducting from its overall direct costs the contract price that had been paid for it," heldthat [HN6] "[t]he proper measure of damages in a case such as this [i.e., various alleged delays caused bythe Government] is to permit the plaintiff to recover its costs during the periods of delay," and that "[t]heburden of allocating costs to the particular periods involved is upon the plaintiff." In Lilley-Ames Co., Inc. v.United States, supra, 154 Ct. Cl. at 549, 293 F. 2d at 632, the court held that "[t]he plaintiff of course canrecover only for those expenses occasioned from the [breach] by the defendant. The plaintiff may notinclude all costs arising from the performance of the contract as the basis for its recovery." And in Turnbull,

Page 10191 Ct. Cl. 233, *244; 423 F.2d 1231, **1238;

1970 U.S. Ct. Cl. LEXIS 27, ***24

Inc., et al. v. United States, supra, 180 Ct. Cl. at 1025, 389 F. 2d at 1015, the court, noting the contractor'sfailure "to prove increased costs or damages relating to specific or separate items," refused to measure the[***29] amount of an equitable adjustment based upon "the difference between its bid price and the actualcost of performing the entire contract." It reiterated its past criticism of "this 'total cost' method of computingrecovery" as being unsatisfactory.

In the instant case, the proof of "damages" in effect consisted only of a schedule, supported by anaccountant's testimony, indicating what plaintiff's books and records showed were plaintiff's total contractcosts, the total contract receipts, and plaintiff's total loss, being the difference between the costs and thereceipts. That this is not in and of itself acceptable "proof," was made plain in River Construction Corp. v.United States, supra, 159 Ct. Cl. at 270-71, where the court held: [HN7] "Recoverable damages cannot beproved by a naked claim for a return of costs even where they are verified. The costs must be tied in to faulton defendant's part. Plaintiff's claim is something like an attempt to secure damages based on the differencebetween costs and the contract price or a bid price. Such a method was rejected by the court in [*247] F.H. McGraw & Co. v. United States, 131 Ct. Cl. 501, 511 * * *. [HN8] A schedule [***30] of verified costs * * *is not proof of damages but only a starting point * * *. Such a schedule verified by defendant is not anadmission of anything but the accuracy of the statement reflecting the contents of books and recordsexamined and the allocations and computations based thereon. Plaintiff's one witness who testified aboutcosts only verified that they were incurred on the job * * *. That did not prove defendant's responsibility forthose costs nor their reasonableness." And in Roberts v. United States, supra, 174 Ct. Cl. at 949, 357 F. 2dat 944-45, the court again noted "* * * their [ [HN9] plaintiff's costs] appearance on plaintiff's damageschedule does not by itself amount to probative evidence in the absence of anything else * * *. * * * [P]roofthat the plaintiff's costs * * * exceeded his payments under the contract would not in the usual case give riseto his right to recover the difference."

[**1240] It is true, as plaintiff points out, that a calculation of a contractor's total expenditure in theperformance of his contract has been used in a few cases as the basis for a determination of his damages orincreased costs resulting from some act of the [***31] defendant. However, an examination of each suchcase in this court demonstrates that in none of them did the damage proof relied on consist, as it does here,only of a single subtraction of contract receipts from total expenditures. In all of them, the total costcomputation was used as "only a starting point" ( River Construction Corp. v. United States, supra, at 271),with such adjustments thereafter made in such computation as allowances for various factors as to convincethe court that the ultimate, reduced, figure fairly represented the increased costs the contractor directlysuffered from the particular action of defendant which was the subject of the complaint. Similarly, in none ofthem were separate alleged breaches of contract combined for damage purposes into one "total loss" figure,with no attempt made to segregate the increased costs flowing directly from each breach.

Great Lakes Dredge & Dock Co. v. United States, 119 Ct. Cl. 504, 96 F. Supp. 923 (1951), cert. denied, 342U.S. 953 (1952), involved an equitable adjustment to which the court [*248] held the contractor to beentitled as a result of a changed condition. The contract provided, [***32] in accordance with the usualstandard clause, that such an adjustment should be based upon an "increase or decrease of cost." In suchcases the starting point for the calculation of the amount of the equitable adjustment is invariably acomputation of the contractor's cost of performing the extra work ordered by a change order or resulting froma changed condition. See Bruce Construction Corp., et al. v. United States, 163 Ct. Cl. 97, 324 F. 2d 516(1963). In Great Lakes Dredge, the court rejected the contracting officer's equitable adjustment allowancewhich was based not on the contractor's actual increased costs but on what the costs would have been hada different system of coping with the changed condition been used. Instead, the court based the equitableadjustment on the difference between the contractor's actual and originally estimated costs after making,however, an adjustment for the contractor's underestimated bid, as well as adjustments for other costs, asshown by the record, for which the contractor was responsible and which were not attributable to thechanged condition. On the record, the court concluded that the resulting amount was "the fairest basis[***33] for determining plaintiff's increased costs due to the encountering of this subterranean water * * *."119 Ct. Cl. at 559, 96 F. Supp. at 926.

MacDougald Construction Co. v. United States, 122 Ct. Cl. 210 (1952), also involved an equitableadjustment type of reimbursement resulting from plans and specifications changes. Here too the court

Page 11191 Ct. Cl. 233, *246; 423 F.2d 1231, **1239;

1970 U.S. Ct. Cl. LEXIS 27, ***28

refused to equate the recovery with the contractor's "total loss" or "total cost." Instead, it again adjusted such"loss" and "cost" by making allowances, in amounts shown by the record, for the contractor's underbid andfor costs incurred due to reasons other than the Government's action which led to the increasedexpenditures.

In F. H. McGraw & Co. v. United States, supra, decided shortly after Great Lakes Dredge and MacDougaldConstruction Co., the court, in rejecting the proffered "total cost" damage proof, pointed out that what wasinvolved in Great Lakes Dredge was a contract clause providing that "if unforeseen conditions wereencountered, 'any increase or decrease in cost' should be adjusted." 131 Ct. Cl. at 511, 130 F. [*249] Supp.at 400. The court, after stating that "[t]his [total cost] method of [***34] proving damage is by no meanssatisfactory, because, among other things, it assumes plaintiff's costs were reasonable and that plaintiff wasnot responsible for any increases in cost, and because it assumes plaintiff's bid was accurately computed,which is not always the case, by any [**1241] means" (id.), flatly stated that its opinion in Great LakesDredge "was not intended to give approval to this method of proving damage, except in an extreme case andunder proper safeguards," and that "[a]pproval was not given to proof of damages for breach of contract byshowing the difference in plaintiff's bid and his costs on the entire job."

It is true we were forced in that case by the lack of other proof to compute the increased cost resulting from theunforeseen conditions encountered by taking plaintiff's actual costs incurred on account thereof and deductingtherefrom certain costs for which plaintiff was responsible and then deducting from the balance the average of all bidsand the defendant's estimate of the cost of the work. But by so doing we did not intend to give approval to proof ofdamages by showing difference of cost and bid on the entire job. [Id. [***35] ]

And the court considered MacDougald to be in the same category as Great Lakes Dredge, stating: "In theMacDougald case substantially the same thing was done [as in Great Lakes Dredge]." Id. In McGraw, thecourt, as to the equitable adjustment phase of the case, accepted the contracting officer's finding of theamount of such adjustment (after pointing out that in Great Lakes Dredge the contracting officer had failed tomake such a finding). And as to the damages for delay, the court, on the basis of "proof of these damagesmore reliable than the difference in plaintiff's estimate and its actual costs" (131 Ct. Cl. at 512, 130 F. Supp.at 400), reimbursed plaintiff for its overhead allocable to the specific delay period involved (48 days), whichthe record satisfactorily showed.

Oliver-Finnie Co. v. United States, 150 Ct. Cl. 189, 279 F. 2d 498 (1960), is another case that has beencited 22 as having [*250] permitted the use of the "total cost" method of computing damages. In that caseone component of the breach of contract damages allowed as flowing from an unjustifiable stoporder wasincreased direct assembly-line labor costs. [***36] The proof satisfied the court that under the particularcircumstances an accurate determination of such increased labor costs could not be made. It wasdetermined, however, that a reasonably accurate method of measuring this one component of the damageswas to calculate the excess of plaintiff's actual direct assembly-line labor costs over its original estimatethereof (the record satisfying the court that plaintiff's estimate on the item was not too low and that its costswith respect thereto were not unreasonable). Although the court, after eliminating one item of direct laborcost (premium pay for a certain class) which it concluded was not attributable to the breach, felt that in thisinstance the damage amount for the item in question was, as so computed, fair and reasonable, itnevertheless went on to say that "we view basing damages on the difference between bid estimate andactual costs with trepidation" (150 Ct. Cl. at 201, 279 F.2d at 506), and reiterated its F. H. McGraw & Co.conclusion that such "method of proving damages * * * is by no means satisfactory * * *." 150 Ct. Cl. at 200,279 F.2d at 505-06. All other items of damage were, however, specifically calculated [***37] and definitelyshown to be attributable to the breach, including delay damages related to a specific number of days.Plainly, the court's action on the one direct labor item which was tied into the one stop-order breach involvedin the case cannot be considered as authority for the propriety of combining, as plaintiff does here, allegedbreaches and, without in any way attempting to relate any specific damage items to any particular breach,simply claiming the excess of the entire amount spent in performing the contract over the total contractamount received.

22 See Phillips Construction Co. v. United States, 184 Ct. Cl. 249, 260, 394 F. 2d 834, 841 (1968). Also see Rubin, The Total

Page 12191 Ct. Cl. 233, *248; 423 F.2d 1231, **1240;

1970 U.S. Ct. Cl. LEXIS 27, ***33

Cost Method of Computing An Equitable Adjustment, 26 Fed. B. J. 303, 307 (1966).

[**1242] Finally, J. D. Hedin Construction Co. v. United States, supra, upon which plaintiff particularly relies,involved reimbursement for additional foundation work performed as a result of a change in specificationsconcerning [***38] the piles to be used. Thus, the amount claimed for the particular work in controversywas, as the court recognized, "in the form of [*251] an equitable adjustment resulting from the change inspecifications * * *." 171 Ct. Cl. at 86, 347 F. 2d at 246. For the delays involved, the contractor sought only itsoverhead, and for the increased foundation work costs resulting from the change in the piles specification,which was the work involved in the "total cost" method dispute, plaintiff sought reimbursement for suchexpenditures as re-excavation for sloughed-in footings, additional backfill, additional form work and grading,additional labor costs and water pumping. The amount allowed for the excess costs involved wasspecifically found to be "reasonable under the circumstances" (id), and the "total cost" method of determiningthem the "only possible method by which these damages can be computed * * *." 171 Ct. Cl. at 87, 347 F. 2dat 247. On another item of claim, however (loss incurred by reason of having to take over a subcontract),where it was the Government which pressed for the adoption of the "total cost" method because the amountproduced thereby happened in this [***39] instance to be to its advantage, the court refused to adopt themethod "since the exact amount of excess costs which plaintiff incurred as a result of defendant's breach canbe precisely computed." 171 Ct. Cl. at 105, 347 F. 2d at 257.

Analysis thus indicates that in each of the four above cases, the "total cost" computation was regarded as"only a starting point." River Construction Corp. v. United States, supra, 159 Ct. Cl. at 271. In each, therecovery based on total cost was refined by appropriate adjustments. Thus the court used the "methodunder proper safeguards." J. D. Hedin Construction Co. v. United States, supra, 171 Ct. Cl. at 86, 347 F. 2dat 247. Furthermore, the method was used only when the record showed "no other method was available"and "there is no other alternative." Id. And, as shown, in three of the four cases (Great Lakes Dredge,MacDougald, and Hedin), the computation involved reimbursement in the nature of an equitable adjustment,with the fourth (Oliver-Finnie) involving only a labor computation which constituted but one component of thedamages. It was not, in the usual "total cost" sense, based upon total contract expenditures.

[***40] [*252] None of such cases were comparable to the instant one, in which several breaches arealleged but consolidated for damage purposes into a claimed unadjusted "total cost" recovery. The abovereview indicates that the court has never allowed such a recovery in such a case. On the other hand, it hasconsistently insisted on a showing that "the excess costs claimed must be tied in to defendant's breaches" (J. D. Hedin Construction Co., supra, 171 Ct. Cl. at 108, 347 F. 2d at 259), especially where, as here, there isan insufficient showing that such a direct damage calculation could not as a practical matter be made.

[HN10] Nor does the mere fact that plaintiff's books and records do not, in segregated form, show theamounts of the increased costs attributable to the breaches give it automatic license to use the "total cost"method. Contractors rarely keep their books in such fashion. Such failure, however, normally does notprevent the submission of reasonably satisfactory proof of increased costs incurred during certain contractperiods or flowing from certain events based, for instance, on acceptable cost allocation principles or onexpert testimony. See Turnbull, Inc., [***41] et al. v. United States, supra, 180 Ct. Cl. at 1024-25, 389 F.2d at 1014-15.

Finally, plaintiff says that although in the past one of the principal grounds for criticizing the "total cost"method has been that, as stated in F. H. McGraw & Co. v. United States, supra, 131 Ct. Cl. at 511, 130 F.Supp. at 400, "it assumes [**1243] plaintiff's costs were reasonable * * * which is not always the case, byany means," nevertheless this court, in Bruce Construction Corp. et al. v. United States, supra, recentlyadopted a different view, i.e., that a contractor's expenditures made in the performance of the contract wouldbe presumed to be reasonable. However, the issue in Bruce in no way involved the application of the "totalcost" method of proving damages in a breach of contract case. Bruce involved the question of theappropriate amount of an equitable adjustment. There, the contractor was required to substitute a differentbuilding block for the block originally specified. Although the contractor actually paid the same price for thedifferent block as it would have paid for the originally specified block, it nevertheless claimed the substituted[***42] block had [*253] a greater fair market value and that it was entitled to an equitable adjustment

Page 13191 Ct. Cl. 233, *250; 423 F.2d 1231, **1241;

1970 U.S. Ct. Cl. LEXIS 27, ***37

which reflected such value. The court rejected the contention, holding that the purpose of an equitableadjustment "is to safeguard the contractor against increased costs engendered by the modification" and thatthe amount thereof, therefore, "cannot be the value received by the Government * * *." Id., 163 Ct. Cl. at 100,324 F. 2d at 518. It therefore held that the equitable adjustment should be "based on cost and not on fairmarket value" ( id., 163 Ct. Cl. at 100-01, 324 F. 2d at 518), provided that such cost is reasonable. And inthis connection, the court held that where the contractor itself, as in that case, was claiming that the price ithad paid was not "reasonable," in the sense that it was below fair market value, so that "there is an allegeddisparity between 'historical' and 'reasonable' costs, the historical costs are presumed reasonable," and "theburden would then be upon claimant to overcome the presumption of reasonableness." Id., 163 Ct. Cl. at101-02, 324 F. 2d at 519.

That the court does not construe such a "historical cost" presumption of reasonableness [***43] in anequitable adjustment situation, such as was involved in Bruce where the contractor was itself attempting toreject the reasonableness of its own costs, as carrying over in full force to a "total cost" damage contention ismade evident by the cases of WRB Corp., et al. v. United States, supra; Turnbull, Inc., et al. v. United States,supra; Phillips Construction Co. v. United States, supra; Urban Plumbing & Heating Co. v. United States,supra; and Wunderlich Contracting Co., et al. v. United States, supra, all decided subsequent to Bruce, allrejecting the "total cost" method, and all reiterating or quoting with approval said oftcited statement from F. H.McGraw & Co., supra, which plaintiff argues was superseded by Bruce. For instance, in WRB Corp., thecourt stated: " [HN11] This theory has never been favored by the court and has been tolerated only when noother mode was available and when the reliability of the supporting evidence was fully substantiated.[Citations omitted.] The acceptability of the method hinges on proof that (1) the nature of the particular lossesmake it impossible or highly impracticable to determine them [***44] with a reasonable degree of accuracy;(2) the plaintiff's bid or estimate was [*254] realistic; (3) its actual costs were reasonable; and (4) it was notresponsible for the added expenses." And the court went on to state that it was not satisfied "that plaintiffsufficiently proved the reasonableness of its estimates or its actual costs." [Emphasis supplied.] 183 Ct. Cl. at426. Thus, the court made clear that in such a case, [HN12] the contractor's obligation of carrying its burdenof submitting satisfactory proof of damage also includes the burden of submitting "fully substantiated * * *supporting evidence" that "its actual costs were reasonable." Id. Consequently, it is clear that a contractordoes not meet such burden by simply proving what its total expenditures were, and then resting on apresumption of reasonableness as was applied by the court in the quite peculiar equitable adjustmentcircumstances involved in the Bruce Construction Corp. case.

[**1244] [HN13] In situations where the court has rejected the "total cost" method of proving damages, butwhere the record nevertheless contains reasonably satisfactory evidence of what the damages are,computed on an [***45] acceptable basis, the court has adopted such other evidence, ChristensenConstruction Co. v. United States, supra; Lilley-Ames Co., Inc. v. United States, supra; F. H. McGraw & Co.v. United States, supra; Turnbull, Inc., et al. v. United States, supra; or where such other evidence, althoughnot satisfactory in and of itself upon which to base a judgment, has nevertheless been considered at leastsufficient upon which to predicate a "jury verdict" award, it has rendered a judgment based on such a verdict.WRB Corp., et al. v. United States, supra, 183 Ct. Cl. at 425-26. Cf. Phillips Construction Co. v. UnitedStates, supra, 184 Ct. Cl. at 263, 394 F. 2d at 842. However, where the record is blank with respect to anysuch other alternative evidence, the court has been obliged to dismiss the claim for failure of damage proof,regardless of the merits. Roberts v. United States, supra, 174 Ct. Cl. at 946, 949, 357 F. 2d at 943-44;Snyder-Lynch Motors, Inc. v. United States, supra, 154 Ct. Cl. at 480, 292 F. 2d at 910; WunderlichContracting Co., et al. v. United States, supra, 173 Ct. Cl. at 192-93, 351 F. 2d at 964-65. Cf. [***46] RiverConstruction Corp. v. United States, supra, 159 Ct. Cl. at 259. The instant case falls in the [*255] lattercategory. Accordingly, plaintiff's three causes of action based upon the Modulator contract must bedismissed.

THE INTERVAL AND DWELL TESTER CONTRACT CLAIMS

Fourth Cause of Action

Paragraph (a) of Part II of the contract Schedule, which part was headed "First Article Inspection," requiredthat, as a "First Article," one tester "shall be tested to determine compliance with the applicable

Page 14191 Ct. Cl. 233, *253; 423 F.2d 1231, **1243;

1970 U.S. Ct. Cl. LEXIS 27, ***42

specifications"; that "[a]ll testing of the First Article shall be performed at the Contractor's or at a commercialtesting laboratory"; that the "'test set up' to be used in First Article testing, including wiring diagram, shall besubmitted to the Project Engineer before the First Article is tested"; that the tests be witnessed by an AirForce inspector; that the contractor should prepare the test results in report form and submit them todefendant "for evaluation and approval"; and that after satisfactory completion of the tests and thesubmission of the test data, "the said First Article shall then be forwarded" to defendant "for engineeringevaluation and approval."

[***47] Paragraphs (d) and (f) of such part further provided, respectively, that "[p]ending approval of the saidFirst Article, the remaining articles of the said item shall not be fabricated, produced, or shipped," and that"[a]t least fifteen (15) days prior to the start of testing of the First Article the Contractor shall send writtennotification thereof together with a test schedule" to defendant.

Furthermore, the contract specifications, denominated "Exhibit No. WCL-625," contained a Section 4 whichwas headed "Sampling, Inspection, and Test Procedures," and which classified the inspection and testing ofthe testers into "preproduction tests" and "inspection tests." 23 Paragraph 4.3 was addressed to thepreproduction tests and Paragraph 4.4 to the inspection tests. Paragraph 4.4.3, headed "Contractor's [*256]Responsibility," although set forth under the section relating to the inspection tests, nevertheless containedthe broad [**1245] provision that "[c]ontractors not having laboratory testing facilities satisfactory to theGovernment shall engage the services of a commercial testing laboratory capable of conducting tests todetermine compliance with all the requirements [***48] and tests in the exhibit, and acceptable to theGovernment." [Emphasis supplied.]

23 Paragraph 4.1.1, headed "Preproduction Tests," provided that such tests would be accomplished "to determine that theproduction equipment meets the requirements of this exhibit." Paragraph 4.1.2, headed "Inspection Tests," provided that suchtests would be accomplished "to determine that they [the testers] are equivalent in performance and construction to theapproved preproduction sample." Paragraph (f) of Part I of the Schedule provided that such a sample would be lent bydefendant to the contractor as a guide to assist in the fabrication of the testers.

Initially plaintiff disregarded all these provisions requiring it to make the preproduction test. It simplyproduced a tester and, in May 1955, submitted it to defendant without making such test. Its justification forso proceeding was that Paragraph 4.3.1 of the aforesaid specification section relating to the "preproductiontest," provided that: "One tester as specified [***49] in the contract will be tested for design approval at theProcuring Agency's Laboratory by the agency." 24 Plaintiff interpreted this paragraph as providing that thepreproduction test was to be performed by defendant.

24 Paragraphs 4.3.2, 4.3.2.1, and 4.3.2.2 further provided that the preproduction test should include (a) "environmental tests,"including testing for humidity, temperature, and altitude, and (b) a "life test" covering "a period of 200 operating hours withoutrequiring servicing." In addition, the preproduction test was to include all of the tests described in the "Inspection Test" section.

However, defendant refused to accept the First Article without the conduct by plaintiff or a commercial testinglaboratory engaged by plaintiff of the tests specified in the above-mentioned portions of the contract andspecifications and without the prior submission by plaintiff of its proposed test procedure. Plaintiff's relianceon Paragraph 4.3.1 of the specifications in support of its contention that [***50] it was the Government andnot plaintiff which was required to perform the preproduction test was rejected. Accordingly, plaintiffsubmitted its proposed test procedure on June 6, 1955, which defendant approved on June 20, 1955, andplaintiff then conducted the test in its own plant. On August 4, 1955, plaintiff again submitted the First Articleto defendant, together with the test results. Plaintiff then proceeded to manufacture the 116 testers called forby the contract, holding them in its plant, however, until it received advice from defendant of acceptance ofthe First Article.

[*257] Defendant then submitted the Article to an independent commercial testing laboratory of its own

Page 15191 Ct. Cl. 233, *255; 423 F.2d 1231, **1244;

1970 U.S. Ct. Cl. LEXIS 27, ***46

choosing to ascertain whether it was in compliance with contract requirements, and for this purpose causedthe laboratory to conduct the identical tests that plaintiff had already performed at its own plant. Plaintiffconstrues this action on defendant's part to constitute a reversal of defendant's original position that plaintiff,not defendant, was required to perform the test. It accordingly complains that it was required to performextra work not called for by the contract. Defendant contends, [***51] however, that its action in submittingthe Article to an independent laboratory for testing was consistent with the portion of Part II which providedthat, after contractor testing, the Article was to be submitted to defendant for "engineering evaluation andapproval," as well as with Paragraph 4.3.1 of the specifications providing that the Article would be "tested fordesign approval" by defendant.

Plaintiff further complains that, as a result of defendant's submission of the Article to its commercial testinglaboratory, contract performance was delayed until approximately January 28, 1957, because it was not untilthen that the laboratory finally approved the Article. Plaintiff charges that this 18-month delay from August 4,1955, the date it submitted the First Article to defendant, to January 28, 1957, the date the First Article wasfinally approved, constituted a breach of contract. Defendant denies this, justifying the delay on the groundsthat there were repeated failures of the Article (the laboratory ultimately tested four testers before the Articlewas approved). Plaintiff counters that the failures were attributable only to the [**1246] fact of unnecessaryduplicate [***52] testing, resulting in unusual strains on the Article.

Plaintiff seeks recovery of $ 9,000 as the value of the tests it performed. 25

25 Plaintiff says it spent 600 hours on the various tests (i.e., 200 hours each on the humidity, temperature, and altitude tests)and that the then prevailing laboratory fee for such testing was $ 15 per hour.

As stated, after its submission of the tested First Article on August 4, 1955, plaintiff completed production ofthe entire contract quantity (116) of the testers. However, since the Article was not approved until some 18months later, [*258] plaintiff had to store the 116 completed testers in its plant for such period of time.Plaintiff seeks recovery of $ 1,800 as damages to compensate it for such storage. 26

26 One hundred dollars a month for 18 months.

On August 16, 1957, which was [***53] subsequent to the ultimate approval by defendant of the First Articleand the delivery by plaintiff of all the testers, plaintiff submitted a claim to the contracting officer for anequitable adjustment based on the alleged unnecessary preproduction testing requirement imposed on it aswell as the alleged unreasonable length of time defendant took to approve the First Article. 27

27 The claim was a general one "to recover financial losses incurred" on the contract "due to acts of Government." It wassupplemented by a letter of September 24, 1957, claiming on a "total cost" basis, i.e., plaintiff's costs were $ 39,306.62, and itscontract receipts were $ 17,903.20, resulting in a "total loss" of $ 21,403.42, which plaintiff claimed.

By decision of September 8, 1958, the contracting officer denied the claim. Since the alleged unnecessarytesting was performed by plaintiff in the summer of 1955, but claim with respect thereto was not made untilAugust 1957, the contracting officer held it to be untimely (Article [***54] 2 of the General Provisions of thecontract required claims for equitable adjustments arising out of changes in the contract to be made "within30 days from the date of receipt by the Contractor of the notification of change"). As to any increased costsresulting from the alleged unreasonable delay caused plaintiff in the performance of the contract, thecontracting officer ruled that "[r]egardless of the merits of your claim, there is no contractual provision underwhich the adjustment you request can be made."

Page 16191 Ct. Cl. 233, *257; 423 F.2d 1231, **1245;

1970 U.S. Ct. Cl. LEXIS 27, ***50

On October 2, 1958, plaintiff appealed the denial of its claim to the Armed Services Board of ContractAppeals. However, on June 29, 1960, plaintiff advised the Board that it "consider[ed] the issue involved inthe subject appeal to solely involve a question of law for which your Board would have no jurisdiction" andthat "[u]nder the circumstances [plaintiff] desires to withdraw the subject appeal." On July 6, 1960, the Board(by its "Recorder") advised that, in accordance with plaintiff's letter, its appeal had been withdrawn from theBoard's docket.

For the reasons following, these claims as above-described cannot be allowed.

[*259] The Test Costs Claim

[***55] It is not understood how the Paragraph 4.3.1 sentence of the specifications upon which plaintiffrelies, which provides that the preproduction model "will be tested for design approval at the ProcuringAgency's Laboratory by the agency," can reasonably be interpreted as relieving plaintiff of the requirement ofmaking the preproduction test which, as shown, was specifically imposed upon plaintiff by theabove-described detailed provisions of Part II of the contract Schedule, as well as by Paragraph 4.4.3("Contractor's Responsibility") of the specifications. The specification paragraph relied upon by plaintiffmerely calls for defendant's testing the model "for design approval" at defendant's laboratory. Such "designapproval" test is, however, wholly consistent with plaintiff's making the preproduction test. Indeed, asindicated, Schedule Part II specifically provided [**1247] that, upon completion by the contractor of the FirstArticle tests and the submission by the contractor of the certified test data, the Article should then beforwarded to defendant "for engineering evaluation and approval." Thus, the sentence upon which plaintiff'scase rests simply does not say, nor [***56] can it reasonably be interpreted as meaning, what plaintiffcontends. Furthermore, the contrary meaning results in a harmonious interpretation of all parts of thecontract and specifications. [HN14] Under familiar principles, such an interpretation is preferred to one whichwould result in a conflict with other contract provisions, rendering them inoperative. Hol-Gar ManufacturingCorp. v. United States, 169 Ct. Cl. 384, 395-96, 351 F. 2d 972, 979 (1965).

Even assuming that, under some strained interpretation, specification Paragraph 4.3.1 could conceivably beconstrued as plaintiff urges, nevertheless plaintiff does not explain how all the other provisions of the contractand specifications specifically requiring it to make the preproduction test could justifiably be ignored. At theleast there would be a plain inconsistency. And here the inconsistency would necessarily have to beresolved in favor of the Schedule Part II provisions requiring the contractor to make the test since thecontract further explicitly provided that "to the extent of any [*260] inconsistency between the Schedule * * *and any specifications * * *, the Schedule * * * shall control."

Finally, plaintiff's [***57] testimony shows that at the time it submitted its bid it recognized the alleged conflictin the provisions. 28 That plaintiff could not have regarded the preproduction test as an inconsequentialcontract item is demonstrated by the fact that, although the entire contract amounted to approximately $17,500, plaintiff's testing cost claim here asserted is in the amount of $ 9,000. Yet, inexplicably, it sought noclarification of what it considered to be a conflict, nor did it bring the alleged inconsistency to anyone'sattention. Cf. Gelco Builders & Burjay Construction Corp. v. United States, 177 Ct. Cl. 1025, 1031, 369 F.2d 992, 997 (1966). However, in such a situation it is plain that plaintiff was not at liberty to rely on the onespecification provision it interpreted as not requiring it to make the test, and simply to ignore all of the otherSchedule and specification provisions requiring it to make the test. [HN15] Where a conflict is obvious, andcertainly where the contractor actually is cognizant of it, he must make appropriate inquiry. JeffersonConstruction Co. v. United States, 176 Ct. Cl. 1363, 364 F. 2d 420 (1966), cert. denied, 386 U.S. 914 (1967);[***58] Jefferson Construction Co. v. United States, 151 Ct. Cl. 75 (1960). 29

28 Record, vol. 1 at 116-17.

29 The disposition of this claim on the merits makes it unnecessary to consider defendant's further defense that plaintiff's failureproperly to exhaust the administrative remedies available to it under the "Changes" clause of the contract bars consideration ofthe claim by the court.

Page 17191 Ct. Cl. 233, *258; 423 F.2d 1231, **1246;

1970 U.S. Ct. Cl. LEXIS 27, ***54

The Storage Claim

As above pointed out, Paragraph (d) of Part II of the Schedule specifically provided that "[p]ending approvalof the said First Article, the remaining articles of the said item shall not be fabricated, produced, or shipped."This provision would be applicable without regard to whether plaintiff or defendant was to make thepreproduction test. Even if plaintiff were to make it, and plaintiff were thus satisfied that the Article was in fullcompliance with all contract and specification provisions, Part II(a) of the Schedule nevertheless required, aspreviously mentioned, that the Article [***59] was to be forwarded to defendant "for engineering evaluationand approval." [*261] Plaintiff could not make the unilateral determination that the Article was satisfactoryand then proceed to produce the full contract quantity; and this would be so whether or not it was proper fordefendant, in making such [**1248] engineering evaluation, to submit the Article to the same tests thatplaintiff had already conducted.

Accordingly, plaintiff's completion of the full number of testers called for by the contract prior to the approvalof the First Article by defendant was in clear violation of the provisions of the Schedule and therefore at itsown risk. Had the contract terms been observed and the testers not been produced until after the FirstArticle was approved, there would have been no storage problem or claim with respect thereto. 30

30 The parties are in agreement that since this claim is grounded upon defendant's delay in approving the First Article, thecontract provided no administrative remedy for its disposition. The only delay cost here sought is this storage claim.

[***60] CLAIM RE V-LOAN

Sixth Cause of Action

Pursuant to a V-loan agreement dated September 20, 1956, $ 190,000 was advanced to plaintiff, upon whichthere is a balance due of $ 128,846.17, plus accrued interest, and which interest is still accruing.

Plaintiff's claim with respect to this cause of action rests upon the first four causes of action. It says thatdefendant should not be entitled to charge plaintiff with interest on the loan following plaintiff's allegedentitlement to be paid the moneys owed to plaintiff by defendant on said four causes. See Wire Corporationv. United States, 143 Ct. Cl. 688, 166 F. Supp. 744 (1958). To the extent that defendant is found herein to beindebted to plaintiff in an amount equal to or exceeding $ 128,846.17, plaintiff seeks the crediting of suchamount against the V-loan nunc pro tunc, thus stopping the running of interest after such credit dates on theamounts credited. Plaintiff further seeks recovery of any interest accrued and paid subsequent to October1956, the date when the delay on the Modulator contracts is alleged to have commenced. To the extent alesser sum is found to be due, plaintiff similarly seeks the [***61] crediting of such lesser sum nunc pro[*262] tunc with the same effect on plaintiff's liability for interest with respect thereto.

There is no need to consider the validity of plaintiff's theory. Even assuming its soundness, this cause ofaction must in any event be dismissed since, as above shown, plaintiff is not entitled to any recovery withrespect to the first four causes of action.

Findings of Fact

1. Plaintiff is a resident of Golf, Illinois. Triumph Manufacturing Company (hereinafter referred to as Triumph)was an Illinois corporation with its principal place of business in Cicero, Illinois. Plaintiff purchased Triumphin 1951, at which time it was an established concern. Thereafter plaintiff was the president, the principalstockholder, and a substantial creditor of Triumph.

2. On or about July 31, 1958, Triumph was adjudged a bankrupt by the bankruptcy court of the United StatesDistrict Court for the Northern District of Illinois, Eastern Division. By an order of the bankruptcy court dated

Page 18191 Ct. Cl. 233, *260; 423 F.2d 1231, **1247;

1970 U.S. Ct. Cl. LEXIS 27, ***58

March 16, 1960, the trustee in bankruptcy was directed to assign and transfer to plaintiff all Triumph's right,title and interest to the claims involved herein. Plaintiff [***62] purchased all such right, title and interest, bysale and assignment, from the trustee in bankruptcy on July 7, 1960. "Plaintiff" and "Triumph" are hereafterused interchangeably.

THE MODULATOR CONTRACTS -- CAUSES OF ACTION 1, 2, AND 3

3. (a) Pursuant to a Proposal Request issued by the Dayton Air Force Depot of the Department of the AirForce for the manufacture and supply of 163 units of an electromechanical device described as "ModulatorMD-83/ARN," together with maintenance spare parts, engineering data, and maintenance data (the bids tobe opened on June 21, 1955), plaintiff, on June 20, 1955, submitted a bid in which it set forth the price of $880 per unit for the Modulator. The Modulator is an item of electronic test equipment used at maintenancedepots to calibrate aircraft radio receiving equipment. It reproduces the signals which are generated byground transmitters to aircraft in flight. Such signals are given to [*263] direct the course (the "beam") uponwhich the aircraft is to fly.

(b) Thereafter, plaintiff and the Air Force representatives entered upon negotiations with respect to the unitprice, and plaintiff was given an opportunity to review its proposal [***63] and to submit any revision itdesired. Thereafter, on September 19, 1955, plaintiff submitted a revised quotation in which it lowered theunit price of the Modulator to $ 815 (as well as lowering the amounts for the maintenance spare parts andthe engineering data).

4. (a) On October 24, 1955, Triumph and the Dayton Air Force Depot of the Department of the Air Forceexecuted Contract No. AF33(604)12150 for the manufacture and supply of 163 Modulators at a unit price of$ 815. In addition, there was a requirement for maintenance spare parts, engineering data, andmaintenance data. The total price was $ 162,414. The unit was to conform to military specificationMIL-M-8270 (USAF) dated February 19, 1953.

(b) The contract included in its general provisions standard "Changes" and "Disputes" clauses.

(c) The contract contained a First Article inspection clause which required Triumph to submit threepreproduction samples for test and approval before production of the required units.

5. (a) Under the respective dates of May 2, 1956, and July 20, 1956, Contract Nos. AF33(604)13021 andAF33(604)14201 requiring the manufacture and supply of 366 additional units were entered into by the[***64] same Air Force agency and Triumph, at the same unit price of $ 815 (135 units under the secondcontract and 231 under the third). The total number of units to be delivered under all three contracts wasthus 529. The coordinated delivery schedule of the three contracts required delivery of fifty units per month,beginning 150 days after approval of the First Articles under the first contract. The two subsequent contractsfor the identical item did not require First Article submissions. The total amount of the two additionalcontracts was $ 298,290.

(b) The two additional contracts were entered into after formal advertising. Plaintiff was the low bidder oneach. On the second contract, the next two low bids were $ 850 and [*264] $ 853. On the third contract,the next two low bids were $ 835 and $ 840.

6. The first contract dated October 24, 1955, required delivery of the First Articles within 150 days after thedate of receipt by the contractor of an executed copy of the contract. Under this provision, delivery of thethree First Articles to defendant was due on or about June 8, 1956 (since the signed copy of the contract wasnot mailed to plaintiff until January 5, 1956). [***65] In addition, Part II(b) of the contract requiredsubmission of a proposed testing program at least 45 days prior to formal testing by the contractor. On June6, 1956, defendant agreed to an extension of the delivery schedule for the First Articles until July 20, 1956.Also by telegram dated June 20, 1956, Triumph was authorized to delay the submission of its proposed testprogram until after submission of the First Articles.

7. On July 20, 1956, Triumph had still not submitted the First Articles and defendant considered defaulttermination. By letter dated August 6, 1956, defendant advised Triumph as follows:

Page 19191 Ct. Cl. 233, *262; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***61

This is to confirm conversation between you and Mr. Piekos of this office on 3 August 1956, wherein you stated the firstarticle would be ready for submission in approximately one week. This item is urgently needed and the date of contractdelivery is past. Accordingly, you are urged to expedite the submission of the first article, and in the event any delay ofsuch submission would extend beyond 17 August 1956, the Government must consider the advisability of effecting atermination for default.

However, on August 22, 1956, the parties entered into a supplemental [***66] agreement which, amongother things, extended the delivery date of the First Articles and the test reports to September 15, 1956.

8. Under the Modulator contracts, plaintiff was required to manufacture and calibrate instruments whichwould comply with the provisions of Paragraphs 3.4.1.1 and 3.4.1.2 of the applicable specification(MIL-M-8270, dated February 19, 1953). These paragraphs provided as follows:

3.4.1.1. Variable Phase Signal. -- The variable phase signal shall be a 30 cycle per second sine wave whose [*265]harmonic distortion shall not be more than 2 percent and whose frequency stability shall be directly proportional to thefrequency stability of the power source. This signal shall be continuously variable in phase from 0 to 360 degrees withrespect to the reference signal by a control on the front panel and shall be capable of being set to within plus or minus0.1 degree.

3.4.1.2. Variable Phase Change. -- The variable phase shall not vary more than plus or minus 0.2 degree of its presetreference phase under any combination of service conditions specified herein.

The specification did not require any particular method by which accurate [***67] calibration was to beachieved.

9. (a) The variable phase signal is expressed in degrees and represents the relationship between twoelectrical impulses. The Modulators were to be calibrated so that when the two impulses were in phase, or incoincidence with respect to time, the variable phase signal dial on the front of the Modulator read zerodegrees. The phase angle calibration of the Modulator was, therefore, central to its purpose for if thecalibration were in error by several degrees, the radios adjusted to the Modulator signal would receiveincorrect course instructions, fly in improper air space, and cause a serious hazard to navigation.

(b) In order to prevent collision hazards, calibration standards for all aircraft -- commercial as well as military-- were set up and were at this time supervised by the Civil Aeronautics Authority, the forerunner of theFederal Aviation Agency.

10. (a) In 1956, when Triumph was fabricating its First Articles, at least two methods had been developed toachieve accurate phase angle calibration: the interference pattern, and the Zifor.

(b) The interference pattern was developed in the early 1950's and was the industry standard at the [***68]time that plaintiff was performing these contracts. The method required an extensive test setup involving ahigh quality oscilloscope and shielded filter. Before any actual calibration adjustment could be made, theinterference pattern test setup had to be free from any distortion, phase shift, and pickup. The exactprocedures to be followed in constructing the test setup were [*266] dependent upon the equipment beingused, particularly the scope.

(c) Another procedure for phase angle calibration involved the use of a simple instrument called a "Zifor," 1

which was developed in 1954 by the Collins Radio Company in order to provide a fast, easy method ofphase angle calibration in connection with its own Modulator production. Prior to the development of theZifor, the interference pattern method was the only calibration method available. The Zifor, unlike theinterference pattern method, required no adjustments or elaborate setup before use. Calibration using theZifor required only connecting the Zifor to the Modulator, taking simple readings, and adjusting the Modulatoras necessary. The entire operation, including the Modulator adjustment, took only about 15 to 20 minutes.[***69]

1 Acronym for "Zero Indicator for Omni-Range."

Page 20191 Ct. Cl. 233, *264; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***65

11. When properly used, both the interference pattern method and the Zifor method yield the same result. Ofthe two methods, the Zifor is the simpler, the cheaper, and has less possibility of human error. Because boththe interference pattern and the Zifor gave the same result when properly used, initially defendant did notcare which method the contractor employed so long as its results were accurate.

12. In calibrating the First Articles, which it ultimately submitted to defendant in October 1956, plaintiff couldhave used any method to achieve the specification requirements. Plaintiff chose the industry standardinterference pattern method. Plaintiff believed it had the proper equipment available for the use of suchmethod.

13. (a) After the award of the contract, Triumph received a sample Modulator, built by National ElectronicsLaboratories. This sample was furnished in accordance with Part I(j) of the first contract (AF33(604)12150)and Paragraph 6.2.2 [***70] of the specification.

(b) Part I(j) of the first contract provided as follows:

It is contemplated by the parties hereto that the Government will loan to the Contractor the item listed below for use inconnection with the performance of this contract, and that an appropriate written agreement of bailment will be enteredinto by and between the parties hereto for that purpose. In the event of failure or delay [*267] of the Government toloan such property, as aforesaid, the provisions of the clause of this contract entitled "Government-Furnished-Property"or "Government Property" relating to failure or delay in the furnishing of property, shall be applicable. It is furtherunderstood and agreed by the parties hereto that the property listed below is to be used as a guide only to assist theContractor in the fabrication of the articles called for by this contract and that in the event any conflict arises betweenthe property listed below and the specifications set forth by this contract, the specifications shall govern.

One (1) Modulator MD-83A/ARN

(c) Paragraph 6.2.2 of the applicable specification provided:

Sample Modulator. -- A sample modulator will be furnished [***71] to the contractor, upon request. When adiscrepancy exists between the specification and the sample modulator, the specification shall govern.

14. (a) Packed with the sample Modulator was a handbook, written by National Electronics Laboratories,entitled "Handbook, Operation and Service Instructions, Modulator MD-83A/ARN." It was dated September 1,1955, and was published under the authority of the Secretary of the Air Force and the Chief of the Bureau ofAeronautics as "Technical Order 33A1-8-36-31."

(b) Item 4 of Part I(a) of the contract Schedule called for Triumph to provide certain "Maintenance Data" forthe Modulators in accordance with an exhibit attached to the contract, referred to as "MCMTT Exhibit No.1-16," entitled "Technical Publication Requirements for Test Equipment," and for which the contract providedadditional compensation ($ 2,000). Among the publications required by the exhibit was one with respect to"Operation and Service."

(c) By Supplemental Agreement No. 1, dated August 22, 1956, the requirement for Maintenance Data, Item4, was amended to require more publications and to increase the contract price for the item (to $ 4,000).The requirement for [***72] an "Operation and Service" publication was, however, deleted. BySupplemental Agreement No. 4, dated March 13, 1958, Item 4 was canceled in its entirety and the contractprice accordingly decreased (by $ 4,000). Nevertheless, for [*268] unexplained reasons, plaintiff purchasedone thousand handbooks at a cost of $ 2,000 and packaged one each with every Modulator it shipped.

15. With respect to phase angle calibration, the handbook which Triumph received described both theinterference pattern and the Zifor methods. The first method was the interference pattern method and wasset forth in paragraphs 3-19 through 5-28. The handbook described, among other things, the "General TestSet-Up" required to use the interference pattern method, and listed several factors which would affect theaccuracy of the method. Some of these factors involved the nature of the individual scope being used.Accordingly, the setup could be described only in general terms. A level of technical skill in addition tosuperior quality equipment was necessary to produce satisfactory results. Paragraph 5-28 of the handbook

Page 21191 Ct. Cl. 233, *266; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***69

described a "Step by Step Calibration Procedure" for the interference pattern [***73] method, which set forthinstructions for calibration once the proper setup was achieved. The second calibration method using a Ziforwas set forth in paragraph 5-29, subparagraph (a) of which refers to the procedure as an "alternatecalibration procedure."

16. By September 1956, Triumph did not have sufficient capital to continue work on any of its Governmentcontracts. Triumph entered into a V-loan agreement on September 12, 1956, with the First National Bank ofChicago, under which the Federal Reserve Bank of Chicago, as Fiscal Agent of the United States,guaranteed First National against any loss. Pursuant to said agreement, the sum of $ 190,000 waseventually advanced to Triumph. This sum was for application toward all of the Government contractsawarded Triumph. The agreement originally provided for a line of credit not to exceed $ 140,000. The loanbore interest at the rate of 5 percent per annum.

17. On or about October 15, 1956, approximately one month after the extended First Article delivery date,Triumph submitted three First Articles for approval. The Articles were hand-carried to defendant's projectengineer, Mr. Richard Goode, at Wright Patterson Air Force Base. [***74] In calibrating the First Articles bythe interference pattern [*269] method, plaintiff attempted to follow the data set forth in the handbook whichhad been enclosed with the model furnished by defendant. Plaintiff's chief engineer, who had no priorexperience on the MD-83 Modulators, set up the test equipment and procedures.

18. During the period from the original date for the First Articles' submission to their actual submission inOctober, defendant was concerned about Triumph's delinquency, and made efforts to expedite thesubmission. Defendant did nothing which prevented the contractor from making an earlier submission.During this period plaintiff was incurring contract costs which are not alleged to be attributable to defendantand which were not anticipated in its bid.

19. The Government laboratory where plaintiff's First Article submissions were checked included both aninterference pattern setup and a Zifor. The interference pattern setup was checked for accuracy periodicallyagainst the Civil Aeronautics Authority standard and against other users. In addition, the Zifor andinterference pattern setups were checked against each other periodically to assure that [***75] both weregiving the same answer.

20. (a) In preliminary testing of the First Articles submitted by Triumph, Goode checked their phase anglecalibration both by the interference pattern and Zifor methods. The result of both tests showed the FirstArticles to be out of calibration by about three degrees, while the specification required that the signal "shallbe capable of being set to within plus or minus 0.1 degree." The error was, in the estimation of the projectengineer, a gross one, being thirty times greater than the tolerance allowed by the specification. Because thefinal Modulators to be produced would not pass through a Government laboratory, but would go directly intouse at the maintenance depots, it was of the utmost importance that Triumph be able to make the calibrationadjustment accurately in its plant.

(b) On or about October 23, 1956, the First Articles were returned to plaintiff as unacceptable under thespecification requirements.

21. Defendant's engineer properly rejected plaintiff's First [*270] Articles in October 1956 because suchArticles did not meet the calibration accuracy requirements of the specification.

22. Following rejection of Triumph's [***76] First Articles in October 1956 the project engineer, Mr. RichardGoode, on October 23, 1956, discussed the calibration problem with plaintiff's engineer, Mr. KennethTollstam. Goode ascertained that Triumph had used the interference pattern method to calibrate the Articlesand concluded that the calibration inaccuracy was due to an error in the interference pattern setup whichTriumph had used. Goode had acted as project engineer on at least four similar modulation contracts since1950 on which all the contractors had used the interference pattern method, such method being the only oneavailable during the early 1950's. Every contractor had experienced trouble with the method, which was adifficult one to set up properly. Goode had worked with the engineers of such contractors in their plants andwas familiar with the difficulties inherent in the method. Prior to the execution of plaintiff's contracts here

Page 22191 Ct. Cl. 233, *268; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***72

involved, Goode had conducted briefings, to which all prospective bidders had been invited, at which thecalibration problem difficulties were discussed. However, no one from plaintiff's organization had attendedsuch briefings. Knowing of the many vagaries in getting the [***77] interference pattern method properly setup, concluding that there must be something radically wrong with plaintiff's setup, and being familiar with therelatively new and simpler Zifor test method and the accurate results it could quickly achieve, Goodesuggested that plaintiff obtain a Zifor. In so suggesting, Goode also considered the vital importance of thecalibration problem and plaintiff's apparent inability to solve it with the interference pattern method.

23. Tollstam reported to Triumph's president, Mr. James Boyajian, Goode's suggestion that plaintiff use theZifor method. However, upon inquiry, plaintiff found that it was unable to obtain a Zifor from the CollinsRadio Company within the immediate future. Boyajian thereupon brought the matter to the attention of thecontracting officer, Mr. Wayne Dixon, on November 1, 1956. At the meeting on that date Boyajian statedthat, if the Government insisted upon use of a Zifor, it would be necessary for the Government to aid [*271]plaintiff in obtaining one since plaintiff had been unsuccessful in procuring one directly from Collins. Notbeing an engineer, Dixon told Boyajian that, under the circumstances, he felt obliged [***78] to go along withthe recommendation of his engineer (Goode) in such matters. Accordingly, plaintiff was required to use theZifor method. Boyajian then stated that if plaintiff had from defendant something in writing stating that it wasnecessary for plaintiff to use a Collins Zifor on its contract, such writing could be presented to Collins insupport of the Zifor order plaintiff would place with Collins. Accordingly, the contracting officer prepared thefollowing letter, dated November 1, 1956, and delivered it by hand to Boyajian:

Your company can obtain a Zifor from the Collins Radio Company in Cedar Rapids, Iowa, for use in the calibration ofModulator MD-83, to be manufactured on subject contract. The Collins Radio model number is 478A-1. This Zifor is anecessity in the calibration of subject equipment and the Modulator MD-83 is very urgently required by the Air Force.Request your company contact the Collins Radio Company as soon as possible to obtain one of these units forcalibration purposes.

24. The next day, November 2, 1956, plaintiff placed an order with the Collins Radio Company for a Zifor,and was advised by Collins that delivery could not be made until [***79] the latter part of February 1957.Plaintiff informed Goode of this fact and requested that in the meantime the contractor be lent the Zifor whichwas at Wright Field. This Zifor was, however, only on loan from Collins to defendant. Accordingly,defendant felt it was not possible for it to lend this instrument to plaintiff. However, in early December 1956,defendant purchased this Zifor from Collins. Shortly thereafter defendant's project engineer, Mr. LeonVangunten (who had succeeded Goode the previous month), temporarily lent to Triumph the recentlypurchased Zifor in order to assist Triumph in calibrating its First Articles.

25. Plaintiff then used the borrowed Zifor to calibrate, and on December 12, 1956, again submitted FirstArticles for approval. The Zifor used to calibrate the Articles was then returned to defendant. This time theFirst Articles met the specification requirements with respect to phase angle calibration, [*272] anddefendant completed full environmental testing, all of which required about six weeks.

26. On January 28, 1957, plaintiff's V-loan agreement was amended so as to increase the limit to $ 190,000.The $ 140,000 previously advanced had [***80] been used in large part to finance other Governmentcontracts which plaintiff had.

27. By letter dated January 31, 1957, from the contracting officer, plaintiff was notified of First Articleapproval. The letter of approval stated as follows:

First Articles of Modulator MD-83A/ARN submitted by your company under subject contracts have been tested by theproject engineer and are hereby approved for production provided Eastern Air Devices motors and alternators areused. The Eastern Air Devices Motors and alternators are the only ones which have passed non-standard partstesting.

Your company may submit other suppliers motors and alternators to the project engineer at W.A.D.C. for non-standardparts testing and approval if you so desire.

28. When Triumph submitted First Articles in October 1956, it had not yet ordered the important rotating

Page 23191 Ct. Cl. 233, *270; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***76

components. It did not obtain defendant's approval of the devices which could be used until January 31,1957, such approval being contained, as hereinabove set forth, in the same letter which approved the FirstArticles. The supplier of these components, Eastern Air Devices, because of its own scheduling andproduction problems, required [***81] sixty to ninety days' lead time after the order was placed. Ashereinafter set forth, Triumph did not actually order these components until March 1957, and did not receivethem until July 1957.

29. Shortly after approval of the First Articles, Boyajian asked the contracting officer for compensation for theZifor change. The contracting officer stated that he had no authority to grant such relief and advised thatrelief might be available under Title II of the First War Powers Act. Accordingly, by letter of February 26,1957, plaintiff requested such relief. In this letter, plaintiff stated that it had used the calibration test methoddescribed in the handbook Technical Order whereas the Air Force had used the Zifor method, resulting indifferent readings; that the contracting officer's letter of November 1, 1956, stated "that the Zifor ismandatory" [*273] and that plaintiff had accordingly ordered one from Collins Radio Company the followingday; that although plaintiff advised the Air Force "from time to time that delivery could not be made until thelatter part of February, 1957," plaintiff was at first refused the use of defendant's Zifor for calibrating its FirstArticles, [***82] but on December 3, 1956, was lent defendant's Zifor, which was used to calibrate theArticles; that on December 12, 1956, the Articles were again submitted and were approved on January 31,1957; that defendant's use of the Zifor to test the First Articles and insistence on plaintiff's procuring one forproduction purposes had delayed plaintiff's performance; that "because of the delays, our plant has beenplaced in a precarious financial position due to the large inventory on hand and the cost of maintaining ourstaff and facilities in readiness for production"; that plaintiff's operation "is based on a break even point of $40,000.00 per month gross production sales," and that "the four month delay due to the above describedcircumstances has caused a total monetary loss of $ 160,000.00 for which we are seeking reimbursement";that thus far plaintiff had "accumulated an inventory consisting of tools, material, labor and overheadaggregating close to $ 200,000.00"; and that but for "the four month delay in the first article approval,"plaintiff would have completed the contracts by December 31, 1956, or January 31, 1957, whereas now thedelivery schedule would be extended to July or [***83] August 1957. Plaintiff requested that defendant"make available the funds necessary to enable us to proceed with this program."

30. On March 1, 1957, plaintiff ordered from Eastern Air Devices, Inc., the full quantity (529) of motors andalternators which it required for the Modulator contracts. The delivery schedule set forth in the order was inaccordance with that fixed by Eastern in its letter of February 27, 1957, to plaintiff, i.e., 2 to 10 sets within 30days, 100 sets in 90 days, and 100 sets thereafter per month.

31. The Zifor was scheduled for delivery around the middle of April 1957. However, by early April plaintiffwas again financially unable to proceed with Modulator production, the additional V-loan funds received inJanuary 1957 [*274] either having been consumed or the remaining amount being insufficient for thepurpose. Consequently, plaintiff requested an advance payment on the Modulator contracts. Under date ofApril 10, 1957, Triumph and the Department of the Air Force entered into an "Advance Payment PoolAgreement," under which the Government agreed to advance to Triumph an amount not to exceed $250,000 for the performance of the Modulator contracts. [***84] The purpose of the agreement was toenable Triumph to complete the contracts. Without the agreement and the funds made available thereunderTriumph would have ceased operations in April 1957. The agreement was authorized under Title II of theFirst War Powers Act, as amended.

32. The Advance Payment Pool Agreement operated in the following manner: advances under theagreement were deposited in a restricted bank account to be used only for expenses allocable to theModulator contracts (such as overhead, materials, etc.). As the contractor made shipments under theModulator contracts, payments were deposited in the same account, after deductions for interest. Checksdrawn on the account were countersigned by an Air Force representative in Chicago, Illinois, and appliedtoward performance of the Modulator contracts. The advances were eventually paid back to theGovernment, in the form of a check to the Treasury, from the proceeds of the contracts in the restrictedaccount.

33. The Advance Payment Pool Agreement required that requests for payments under the agreement be

Page 24191 Ct. Cl. 233, *272; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***80

directed to the administering office in Dayton, Ohio, and that they be approved only upon a finding ofnecessity. [***85] Written requests for advances were required to be approved by the administering office inDayton, Ohio.

34. The local Chicago Air Force representative in charge of administering the advance payment account wasMr. Adolph Piekos, who was assisted by Mr. Hugh T. Lavery. Their primary responsibilities were to facilitateperformance of the contracts, to make certain that the funds advanced were applied toward the subjectcontracts, and to insure that the advances were recouped. Mr. Piekos had the title of AdministrativeContracting Officer and was generally responsible [*275] for administering the Advance Payment PoolAgreement. Checks on the restricted account had to be signed by plaintiff and Mr. Piekos. Mr. Piekos hadnever before handled an advance payment pool agreement. However, such agreements are rare, and thiswas the first one ever handled in the Chicago Air Procurement District.

35. (a) Plaintiff's initial request for an advance payment was made on April 10, 1957, and requested $160,000 as "our estimated budget requirements for the period April 12 through June 28, 1957 * * *." Therequest detailed the use to which such sum would be put, which included $ 5,000 for [***86] payments tocreditors who had already supplied materials; $ 48,000 for payrolls; $ 28,000 as an advance payment toEastern Air Devices, which required such an advance; $ 26,000 to pay for c.o.d. shipments from Eastern;and $ 50,000 for other Modulator materials.

(b) Plaintiff's request was granted and the advance was made.

36. At the time the Advance Payment Pool Agreement was entered into, defendant had studied cash flowsheets provided by Triumph, and had discussed the problem with plaintiff at a number of meetings. Bothplaintiff and defendant believed that an advance of $ 160,000 would be sufficient to enable the contractor tocomplete the Modulator contracts. It was thought that such an advance would enable plaintiff to get intoproduction, to commence shipping completed articles, and to begin receiving payment therefor. It wascalculated that such receivables would be sufficient to finance the balance of the required production. Thus,plaintiff's letter of June 7, 1957, to Piekos setting forth its estimated budget requirements for the three-monthperiod June 1, 1957, through August 31, 1957, showed its prospective expenses (labor, material, andoverhead) as $ 148,500, and [***87] its estimated shipments (of 250 units) during such period as generatingpayments to it in the amount of $ 203,750. Plaintiff planned to ship 25 units in June, 100 in July, and 125 inAugust.

37. Plaintiff received the Zifor from the Collins Radio Company on or about April 15, 1957. The record doesnot indicate the extent of the delay caused plaintiff in the completion of the contract by reason of its beingrequired to [*276] obtain a Zifor, or the amount of increased costs, if any, attributable to such delay. Inaddition, the record does not show the increased amount, if any, of work, labor, or services caused plaintiff inthe performance of the contract by reason of such requirement.

38. (a) By letter of April 22, 1957, to defendant written in support of its First War Powers Act reliefapplication, plaintiff stated that the change in calibration and the necessity of purchasing a Zifor causedplaintiff "to hold back its scheduled production plans" since a Zifor could not be obtained until April 15, 1957;that "[s]ince Triumph could not proceed under its original planning, certain work along the lines ofsub-assemblies was placed into production, on a reduced basis"; and [***88] that "[a]s a result of thesechanges, beyond the control of the contractor," plaintiff "has suffered a financial loss, to date," on theModulator contracts "in the amount of $ 128,423.00." No breakdown of this figure was set forth.

(b) No relief was granted to plaintiff under the First War Powers Act pursuant to the aforesaid application.

39. Regardless of its difficulties with calibration, Triumph was not able to go into production of Modulators inOctober 1956 because, as shown, it had not as yet ordered all of the necessary components. Had the FirstArticles been approved in October 1956, rather than rejected, and the rotating components then beenordered from Eastern Air Devices, the same two-to-three-month delay would have occurred because of thelead time Eastern required. Plaintiff did not have the required funds sufficiently in advance of October 1956to have obtained the necessary components from Eastern in time to commence production with them in

Page 25191 Ct. Cl. 233, *274; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***84

October. As stated, because of its financial plight, plaintiff was not, in September 1956, able to proceed onany of its Government contracts, which condition necessitated the $ 140,000 V-loan agreement entered intoon September [***89] 12, 1956.

40. (a) Phase angle calibration is the final stage of production, performed after the Modulator is completelyfabricated. The lack of a Zifor, therefore, did not in itself prevent Triumph from proceeding with production.

(b) However, Triumph did not proceed, on a full-scale production basis, to fabricate items during the periodbetween [*277] January 31, 1957, and April 1957. One reason for this was that the company hadinsufficient funds therefor. The funds which had been provided under the V-loan could be used to financeany Government contract work and plaintiff also used such funds on other Government contracts which ithad. Consequently, plaintiff lacked necessary components, such as motors and alternators, which were tobe supplied by Eastern Air Devices, Inc. However, during the period between January 31, 1957, and April1957, Triumph was able to proceed with some subassembly work on the Modulator contracts.

41. As part of their administration of the advance payment account, Piekos visited the Triumph plant aboutonce a week, and Lavery was in the plant two or three times a week throughout the period the account wasin existence. They were thus familiar [***90] with the contractor's progress and the operation of Triumph'splant.

42. During the administration of the Advance Payment Pool Agreement, all obligations of Triumph allocableto the Modulator contracts were paid as they came due. These obligations included, but were not limited to,payrolls, material invoices, and letters of credit required by the supplier of rotating components, Eastern AirDevices.

43. (a) Plaintiff was not able to maintain the schedule set forth in its letter of June 7, 1957, showing its budgetrequirements for the three-month period commencing June 1, 1957. The shipment of 25 units scheduled forJune was not made. Consequently, by July 1, 1957, no receivables had been generated and plaintiff was inneed of further funds. By letter of July 3, 1957, plaintiff requested an additional advance of $ 20,000 underthe Advance Payment Pool Agreement. Plaintiff stated that "[t]his additional request is necessary due todelays in deliveries of packaging materials and to a machinery breakdown at the company manufacturing thealuminum extrusions for the transit cases." The letter set forth plaintiff's budget requirements (for labor,materials, and overhead) for the [***91] period July 8, 1957, through July 26, 1957, as $ 20,000.

(b) Plaintiff's request was granted and the advance made.

44. Triumph made its first shipment, consisting of 27 Modulators, on July 19, 1957, and shipments continueduntil the [*278] contract amount of 529 was completed by the last shipment made on April 17, 1958.

45. Despite the second advance in July and the commencement of shipments that month, which resulted incontract funds being provided to plaintiff, in August plaintiff felt that it required further funds and on August16, 1957, inquired of Piekos whether he would approve the making of further advances. Piekos stated thathe would not so approve at that time. He was fearful that, considering plaintiff's financial condition, it wouldnot be capable of liquidating any larger loan than the $ 180,000 already advanced. He had been concernedabout plaintiff's inability to adhere to the schedule planned when the initial $ 160,000 advance was made.Under that schedule, the proposed June Modulator shipments would have provided funds to plaintiff which,he felt, would have made unnecessary the second $ 20,000 advance. He concluded that henceforth, plaintiffshould [***92] adhere to the plan upon which the original $ 160,000 advance was based, when both plaintiffand defendant felt such an advance would be sufficient to carry plaintiff through to contract completion, withplaintiff generating the funds it required by making shipments. He therefore urged plaintiff to obtain theproduction funds it needed by adhering to the planned delivery schedule. He felt that if plaintiff so produced,it would be able to complete the contract without the need for further advances and defendant would be ableto recoup the $ 180,000 already advanced.

46. Piekos did not have the final authority to deny or grant plaintiff's requests for funds under the AdvancePayment Pool Agreement. Only the administering office in Dayton had authority to approve or disapprove

Page 26191 Ct. Cl. 233, *276; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***88

advances under the agreement. However, plaintiff concluded it would be futile to submit a formal request foran additional advance without Piekos' approval. Accordingly after July 1957, when it received its secondadvance, Triumph did not submit any further requests to that office. Consequently, the total amountadvanced to plaintiff was $ 180,000.

47. Since it did not have any substantial capital reserve [***93] upon which it could draw to finance itsproduction, its only funds source being contract payments for shipments, whenever [*279] plaintiff requiredfunds, such as to meet its weekly payrolls, it felt obliged to make a shipment of whatever number ofModulators was then completed. However, the inspection procedure under the Modulator contracts providedthat five Modulator units be inspected from each lot of 65 units or of lots of lesser quantity. Thus, plaintiffwas required to generate income through shipments of lots of less than 65 units and this required morefrequent inspections by defendant. Plaintiff had only one inspection station which was at the end of itsproduction line. Whenever defendant's inspectors took over the station to inspect five Modulators from theproposed shipment, plaintiff's production line operations were hampered since tests had to be made duringthe production assembly procedure, and these tests could not be made while defendant was manning thetest station to make its tests. Defendant would consume approximately three days to complete its tests onthe five Modulators. Thus the necessity to make frequent shipments to obtain funds hampered plaintiff's[***94] production activities and delayed completion of the contract as compared to what the situation wouldhave been had plaintiff had sufficient capital to finance production runs of 65 units at a time, with only onefive-Modulator inspection of such a shipment. Plaintiff completed the contract by making 23 shipments. (Asto 1957, 1 in July; 4 in August; 3 in September; 3 in October; 3 in November; and 2 in December. As to1958, 4 in January; 1 in February; and 1 in April.) Neither the number of days by which the completion of thecontract was delayed, nor the amount of increased costs caused, by reason of this factor, is shown by therecord.

48. Each time Triumph made a shipment, payment would be made promptly into the restricted account. Theproceeds, after retention by defendant of amounts representing interest and principal payments with respectto the loan advances, were under plaintiff's control. All bills were paid from the restricted account as quicklyas they became due.

49. By letter of March 12, 1958, to the contracting officer, plaintiff requested an equitable adjustment in thecontract price of the Modulator contracts. It stated that it calibrated the First Articles [***95] in accordancewith the handbook Technical Order supplied with the Modulator model furnished by defendant [*280] butthat defendant, by its letter of November 1, 1956, directed plaintiff instead to calibrate with the Zifor; that the"first articles were not accepted because the contractor used the preferred method of calibration as set out inthe Handbook"; that plaintiff "was required to acquire Zifor test equipment and resubmit first articles and wassubjected to a four months delay and additional engineering and labor costs on account of this change inspecifications"; that plaintiff was "entitled to equitable adjustment because of the change in specificationsdirected by the contracting officer after award of the contract"; and that "[t]his change and resulting delays onthese contracts involved additional costs to the contractor in the amount of $ 25,000.00."

50. By letter of March 18, 1958, to the contracting officer, plaintiff amended its previous application for reliefpursuant to Title II of the First War Powers Act with respect to its performance of the Modulator contracts.Plaintiff stated that in the performance of the contracts it had suffered a loss of $ 223,000, [***96] whichthreatened to cause its bankruptcy. In addition to the Zifor matter, plaintiff stated, among other things, that inMarch 1957, plaintiff was ready to proceed with production since it then had a $ 190,000 V-loan, but that"[b]ecause of delays on these [Modulator] contracts and on another contract with the Army Ordnance whichinvolved in excess of $ 100,000.00 of the contractor's working capital, it was necessary to ask for advancepayments of these three contracts"; that on April 10, 1957, when the Advance Payment Pool Agreement wasentered into, plaintiff "was in the position upon performance to receive a total of $ 434,115.00 out of invoicingon these contracts from which it would pay out $ 440,000.00 ($ 190,000.00 V-Loan plus $ 250,000.00Advance Payments) to the Government"; that defendant advanced only $ 180,000, and not $ 250,000; thatdefendant's failure to make "the further advance payments agreed upon, delayed production under thecontracts some additional seven months and caused the contractor a tremendously increased productioncost on these contracts"; that plaintiff had contemplated "production runs of 65 units," the contract calling forinspection of five units [***97] per shipment; that, because of the need for funds, "the production runs were

Page 27191 Ct. Cl. 233, *278; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***92

limited to 10 to [*281] 20 units with inspection of five units out of each such production run"; that this"multiplied the production runs and setups and generated very substantial delays"; that plaintiff was placedon the "Controlled Bidder's List" in April 1956, depriving plaintiff of other Government work; and that delayscaused by defendant on the Modulator contract "absorbed so much of the contractor's funds" that it hadinsufficient funds to pay the V-loan.

51. (a) By letter dated July 24, 1958, defendant requested further information concerning plaintiff'sapplication for relief. In its response of August 27, 1958, plaintiff elaborated on the impediment caused it bydefendant's failure to advance the full $ 250,000 under the Advance Payment Pool Agreement. It stated thatmost of the $ 180,000 advanced went to Eastern Air Devices for the motors and generators it was supplyingand which were paid for under a letter of credit arrangement; that plaintiff was scheduled to purchase themotors and generators at the rate of 100 sets a month at $ 260 per set; that as of August 16, 1957, plaintiffhad [***98] received and paid for 255 sets of motors and generators but had shipped only 71 Modulators;that "[w]e were instructed by the Air Force that in order to comply with our agreement with Eastern AirDevices, we had to submit another Letter of Credit in the amount of $ 26,000.00 for 100 sets of motors andgenerators"; that the receivables generated up to that time and "the total advance made to us of $180,000.00 [were] insufficient to carry on the accelerated production program and meet the currentexpenditures"; that plaintiff therefore requested another $ 20,000 advance in August, which Piekos denied onAugust 22, 1957, and instead "we were told to step up production to generate more receivables"; that to doso, plaintiff had to "break down our production line on several occasions to such low quantities as 9, 12, 13,etc., of which 5 units still had to go through the routine inspection procedure, which meant a three day letdown on our production for each lot for shipment inspected"; that plaintiff's "production required the use ofthe only test position that we had"; that "each unit had to be thoroughly checked and aligned by the onlyziphor in our possession"; that plaintiff could [***99] not secure another Zifor "to set up a second testposition to enable us [*282] to have the units inspected as well as carry out our production schedule,therefore, each inspection routine delayed our production by three days"; that the need "to meet our payrolland other contingent expenses as well as comply with our commitment of sending another Letter of Credit for100 sets of motors and generators" to Eastern "forced" plaintiff "to submit small production lots of modulatorsfor inspection"; that plaintiff made requests to Piekos "for financial relief two or three times a week fromAugust 16, 1957 to October 1, 1957" but that Piekos always insisted "that from hereon, we would have togenerate funds for our production requirements from production and subsequent receivables generated"; thatdefendant's failure to make further advances "delayed production under the contracts some additional sevenmonths and caused the contractor a tremendously increased production cost on these contracts"; that but for"the method of handling the advance payments," plaintiff "would have completed delivery early in November1956"; and that defendant's "failure to properly disburse funds for production" [***100] and the "delaysencountered due to changes in test specifications outlined in our claims of March 18, 1958," caused plaintiff"losses to the extent of $ 223,000.00," for which plaintiff sought restitution.

(b) Plaintiff did not receive any part of the relief requested. One of the prerequisites to such relief was adetermination that the contractor was essential to the national defense. It was determined, however, thatplaintiff was not so essential.

52. (a) Based on its books and records (as supported by the testimony of an accountant), plaintiff's total losson the Modulator contracts was $ 170,283, computed as follows:Direct Labor Costs

1956 $ 12,928

1957 70,283

1958 16,145

Total 99,356

Engineering Labor Costs

1956 12,390

1957 15,360

Page 28191 Ct. Cl. 233, *280; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***97

1958 9,737

Total 37,487

Manufacturing Overhead Costs

1956 25,463

1957 75,203

1958 30,998

Total 131,664

General & Administrative Expense

1956 15,390

1957 36,216

1958 20,056

Total 71,662

Material Costs

1956, 1957, 1958 316,324

Total Cost of Contract 656,493

Less:

Total Receipts 486,210

Net Loss 170,283

[***101] [*283] (b) It is not shown what, if any, part of said loss is attributable to any action on defendant'spart concerning which plaintiff complains herein. 2

2 Plaintiff presented an exhibit (Pltf. Ex. 51), supported by testimony, and proposed a finding, with respect to the total costs itincurred for the period October 17, 1956, through April 17, 1957. (Defendant's audit resulted in a different figure.) However, nofinding is made with respect thereto since plaintiff's brief to the commissioner makes no mention thereof and bases no damageargument thereon. The only damages claimed in the brief relate to the combined first three causes of action and are based onthe total amount expended throughout the entire contract period. Any damage argument based on costs incurred during thelimited October 17, 1956-April 17, 1957 period is, therefore, deemed abandoned. In any event, the record also fails to showwhat, if any, part of such total expenditures during such period is attributable to any action on defendant's part about whichplaintiff complains.

[***102] THE INTERVAL AND DWELL TESTER CONTRACT -- CAUSE OF ACTION 4

53. (a) On December 1, 1954, Triumph bid on 116 Interval and Dwell Testers, Type MF-1, to be built "inaccordance with Exhibit WCL-625." This bid was in response to RFP-33-(604)-55-1963 of which ExhibitWCL-625 was made a part. Triumph was awarded Contract No. AF33(604)10483 under date of February10, 1955. The contract price for the Dwell Testers was $ 142.70 per unit, making a total of $ 16,553.20, plus$ 850 for maintenance and engineering data, for a total contract price of $ 17,403.20. The contract providedthat "[t]he parties hereto agree that the Contractor shall furnish and deliver all the supplies and perform allthe services set forth in the attached Schedule, for the consideration stated therein." Exhibit WCL-625, whichwas in the nature [*284] of specifications, was incorporated in the Schedule by reference.

Page 29191 Ct. Cl. 233, *282; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***100

(b) An Interval and Dwell Tester is an item of equipment used in the testing of aircraft bomb release intervalcontrols, involving both the foot spacing ("Interval," i.e., the distance measured along the flight path betweenpoints of impact of two successive bombs) and time duration ("Dwell," [***103] i.e., the percentage of thetime the bomb release is "on" to the total time between two successive bomb releases).

54. (a) Part II of the contract Schedule, which part is entitled "First Article Inspection," provided as follows:

(a) One (1) each First Article of Item 1, shall be tested to determine compliance with the applicable specifications. Alltesting of the First Article shall be performed at the Contractor's or at a commercial testing laboratory. The "Test setup"to be used in First Article testing, including wiring diagram, shall be submitted to the Project Engineer before the FirstArticle is tested. The performance of such tests shall be continuous until completed. Such First Article tests shall bewitnessed by an Air Force Procurement Inspector assigned by the cognizant Air Procurement District and/or theassigned Air Force Project Engineer. The Contractor shall prepare three (3) copies of all test results in the form of areport, one (1) copy of which shall be reproducible. Such results shall be certified to by both the Contractor and the AirForce Procurement Inspector and shall be sent for evaluation and approval to:

Director of Procurement and [***104] Production

Dayton Air Force Depot

Gentile Air Force Station

Dayton 10, Ohio

ATTN: MDPCB-47, Robert C. Moon, Buyer

After satisfactory completion of the above tests and the submission of the certified data, the said First Article shall thenbe forwarded to Service Area, 909 DSO, Fairborn, Ohio, Directorate of Labs, ATTN: WCLGW-3, for engineeringevaluation and approval.

(b) During the performance of any tests to be performed hereunder, the Government shall not be liable for any damageto or loss of the said First Article.

(c) If, as a result of the aforementioned tests, changes in specifications are required, the same will be processed inaccordance with the General Provisions entitled "Changes."

[*285] (d) Pending approval of the said First Article, the remaining articles of the said item shall not be fabricated,produced, or shipped.

(e) The Contractor will be notified in writing by the Contracting Officer upon approval of the First Article. After approvalby the Government, said First Article shall be shipped back to the Contractor's plant by an appropriate method ofshipment, and at the Contractor's expense, in its then condition and may be submitted by the [***105] Contractor as acontract item provided all worn, broken, or defective parts and finishes are replaced and/or repaired by him.

(f) At least fifteen (15) days prior to the start of testing of the First Article the Contractor shall send written notificationthereof together with a test schedule to the address listed under paragraph (a) above.

(b) The contract also included a division entitled "General Provisions." These provisions included standardsupply contract "Changes" and "Disputes" clauses as well as a standard "Inspection" clause which provided,among other things, that "[a]ll supplies * * * shall be subject to inspection and test by the Government * * *prior to final acceptance."

(c) Exhibit WCL-625 provided in part as follows:

4. SAMPLING, INSPECTION, AND TEST PROCEDURES

4.1 Classification of Tests. -- The inspection and testing of interval and dwell tester shall be classified as follows:

4.1.1 Preproduction Tests. -- Preproduction tests are those tests accomplished on a sample representative of theproduction tester, to determine that the production equipment meets the requirements of this exhibit.

4.1.2 Inspection Tests. -- Inspection tests [***106] are those tests accomplished on testers submitted for acceptanceunder contract to determine that they are equivalent in performance and construction to the approved preproductionsample. No equipments shall be accepted prior to the approval of the preproduction sample.

* * *

Page 30191 Ct. Cl. 233, *284; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***102

4.3.1 Preproduction Test:

* * *

4.3.2 The preproduction test shall consist of the following tests and those specified under the inspection test methods.

[*286] 4.3.2.1 Environmental tests shall include the following of Specification MIL-T-945:

(1) Humidity

(2) Temperature and Altitude

4.3.2.2 Life test shall cover a period of 200 operating hours without requiring servicing.

4.4 Inspection Test:

* * *

4.4.3 Contractor's Responsibility. -- Unless otherwise specified, contractor's records of all inspection work and tests,giving the results of tests required to determine compliance with the requirements and tests specified herein, shall bekept complete and shall be available to the Government representative at all times. The tests shall be accomplishedon articles to be supplied on the contract or order. The record or report of inspection and test shall be signed orapproved [***107] by a responsible person specifically assigned by the contractor. Contractors not having laboratorytesting facilities satisfactory to the Government shall engage the services of a commercial testing laboratory capable ofconducting tests to determine compliance with all the requirements and tests in the exhibit, and acceptable to theGovernment.

55. Plaintiff, in the preparation of its bid, interpreted Paragraph 4.3.1 of Exhibit WCL-625 as meaning that theprocuring agency laboratory would be responsible for the preproduction testing. Plaintiff detected what itconstrued as an inconsistency or conflict between such paragraph and Paragraph 4.4.3 of the Exhibit, aswell as contract Schedule Part II. However, plaintiff concluded that Paragraph 4.3.1 controlled. Plaintiff didnot make inquiry of any official or employee of the defendant with respect to such supposed conflict.

56. In early May 1955, Triumph's First Article was hand-carried and submitted to Milton H. Gray, the projectengineer, at Wright Air Development Center, Wright Patterson Air Force Base, Dayton, Ohio. Prior theretoplaintiff had not submitted the testing procedures referred to in Paragraph (f) of Part II [***108] of theSchedule, nor had it given the Article the preproduction test.

57. Mr. Gray refused to accept Triumph's First Article. He took the position that the contract placed theresponsibility of testing First Articles on the contractor. Mr. Gray [*287] also stated that First Article testingcould be performed at the contractor's plant or at a commercial testing laboratory, but that in either case itwas to be the contractor's responsibility. He requested that the testing procedure be submitted for approvalprior to Triumph's conducting the preproduction tests, as required by Part II of the contract Schedule.

58. Plaintiff submitted its proposed testing procedure on June 6, 1955, and the procedure was approved bydefendant's laboratory on June 20, 1955. Thereafter, testing of the First Articles was conducted in plaintiff'splant and witnessed by Signal Corps resident inspectors from the Chicago Signal Corps. On August 4, 1955,Triumph submitted the First Article, together with certified test results, to defendant and then proceeded toproduce the entire contract quantity of 116 testers. Plaintiff was not specifically advised by defendant that ithad shipped the preproduction [***109] model to an independent laboratory until plaintiff had almostcompleted the production.

59. After receiving plaintiff's First Article, defendant submitted it to an independent laboratory, theBowser-Morner Testing Laboratory in Dayton, Ohio, for the performance by the laboratory of preproductiontests on the Article to determine whether it met the requirements of the contract and the specification, ExhibitWCL-625.

60. Testing at the Bowser-Morner Laboratory was conducted on Triumph's First Article under the supervisionof Mr. Earl G. Haber, Jr. Because of repeated failures of Triumph's submissions the laboratory eventuallytested a total of four Interval and Dwell Testers produced by Triumph under the contract.

Page 31191 Ct. Cl. 233, *285; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***106

61. The first Interval and Dwell Tester tested by Bowser-Morner was identified as Serial No. 87. Testing wascompleted on December 5, 1955. This Article failed during testing for the reason that the meter pointersstuck on the scale. Following this initial failure, Triumph and the project engineer, who was at this timeAirman First Class Welch, decided to replace the meters with new ones. Bowser-Morner continued testingthe new set of meters, but after a nominal 96 hours [***110] of humidity exposure, the new meters began tostick [*288] on the scale. The laboratory's report to defendant with respect to this test was dated March 30,1956.

62. In January 1956, Bowser-Morner tested a second Interval and Dwell Tester unit produced by Triumphunder the contract. This unit was designated as Serial No. 75. The test was completed on January 11,1956. During testing of this unit, the meters again stuck during the humidity exposure test. The laboratory'sreport to defendant with respect to this test is dated April 2, 1956.

63. Thereafter a third unit produced by Triumph was tested by Bowser-Morner, the test being completed onMarch 6, 1956. The unit involved in these tests was designated as Serial No. 95. This unit failed the lifetest. The laboratory's report to defendant with respect to this test is dated March 27, 1956.

64. By letters dated July 12, 1956, and July 18, 1956, defendant advised plaintiff that its First Articles hadbeen rejected because of failure during testing. The reasons for the rejections were specified in the letters.

65. The fourth and final unit tested by Bowser-Morner was received by the laboratory on September 11,1956. It [***111] was designated as Serial No. 73. The testing of this unit was completed on November 9,1956, and it passed all tests satisfactorily. The laboratory's report to defendant with respect to this test isdated December 21, 1956.

66. By letter dated January 28, 1957, defendant advised that the First Article had been approved.

67. Thereupon, plaintiff shipped to defendant all of the 116 testers called for by the contract. All of suchtesters were accepted by defendant.

68. Under date of August 16, 1957, after Triumph had completed deliveries of the testers, it made a claim tothe Air Force for an equitable adjustment to cover the loss it sustained on the contract. It stated that when itbid, it had not made provision for the First Article preproduction test since it construed Paragraph 4.3.1 ofExhibit WCL-625 as placing responsibility for the test upon defendant; that upon defendant's insistence,plaintiff made the test; that upon submission, defendant then caused the test to be made all over [*289]again by its laboratory, which was "a reversal from his [Mr. Gray's] initial interpretation of Part II of thecontract"; that, since the Article had been tested and approved at [***112] plaintiff's plant, plaintiff hadproceeded to procure the materials for, and to assemble, the 116 testers; that the Article was submitted todefendant on August 4, 1955, but approval was not forthcoming until January 28, 1957, "a very unreasonablelength of time, over and above that normally allotted for preproduction approval"; that as a result ofdefendant's actions, plaintiff "sustained a considerable monetary cost over and above that indicated in ourbid"; and that plaintiff therefore requested "that the necessary financial adjustments be made to overcomethe losses sustained, due to the acts of the Government."

69. By further letter of September 24, 1957, concerning its requested equitable adjustment, plaintiff gave a"breakdown of the monies expended in the execution of the contract." Plaintiff's breakdown showed its "TotalCosts" to be $ 39,306.62. These costs included the figure of $ 9,000 for "Test Costs at Manufacturer's Plant"and the figure of $ 1,800 as "Storage 100.00 per month for 18 mos." From the "Total Costs," it deducted the"Contract Price" of $ 17,903.20, making a "Total Loss" of $ 21,403.42, which amount plaintiff claimed.

70. The contracting officer denied [***113] Triumph's claim for an equitable adjustment by letter datedSeptember 8, 1958, which stated:

1. In accordance with the provisions of the above-numbered contract, the undersigned Contracting Officer has dulyconsidered your request for alleged financial losses due to acts of the Government. The acts of the Governmentreferred to include alleged unusual delay upon the part of the Government and the Government's requirement that thecontractor perform pre-production testing.

Page 32191 Ct. Cl. 233, *287; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***109

2. The undersigned Contracting Officer has decided that your request, as set forth above, is disallowed in whole for thefollowing reasons:

a. You claim your testing of the first article was not called for by the contract but required by the Government and thatyou are entitled to an equitable adjustment [*290] to do this extra work. You had this testing performed in theSummer of 1955 and reported the result of the test to the Government on 29 July 1955. However, your letter dated 16August 1957 is your first request for any adjustment for this work. Any claim for adjustment for an alleged extra mustbe asserted within 30 days of the purported change (General Provisions 2 and 3 of the contract). Regardless [***114]of the merits of your present claim, it is now untimely and the facts do not justify consideration of the claim, particularlyin view of Mr. Gray's death and the dispersal of Government witnesses.

b. You claim you were unreasonably delayed in your performance. Regardless of the merits of your claim, there is nocontractual provision under which the adjustment you request can be made.

3. The "Disputes" clause of the contract provides that within 30 days from the date of receipt hereof the contractor mayappeal from this decision by mailing or otherwise furnishing to the Contracting Officer a written appeal addressed to theSecretary of the Air Force. Two copies should accompany the original notice of appeal. The notice of appeal shouldidentify the contract (by number), the decision from which the appeal is taken and be signed by appellant or an officerof appellant organization or by a duly authorized representative or attorney. Within thirty (30) days after receipt ofnotice of docketing of the appeal by the Board, the appellant shall file with the Board a complaint setting forth simple,concise and direct statement of each claim showing entitlement to relief.

71. On October [***115] 2, 1958, Triumph appealed to the Armed Services Board of Contract Appeals thedecision of the contracting officer "erroneously denying the contractor's request for equitable adjustmentunder paragraph 2 of the General Provisions for additional work done at the Government's direction onaccount of conflicts and ambiguities in the contract provisions." However, under date of June 29, 1960,plaintiff, by its counsel, advised the Recorder, Air Force Panel, Armed Services Board of Contract Appeals,that plaintiff "considers the issue involved in the subject appeal to solely involve a question of law for whichyour Board would have no jurisdiction," and that "[u]nder the circumstances Mr. Boyajian desires to withdrawthe subject appeal." Under [*291] date of July 6, 1960, the Recorder advised plaintiff's attorney that, asrequested in said letter of June 29, 1960, "You are hereby notified that the above-entitled appeal has beenwithdrawn from the docket of this Board." There is no evidence that plaintiff made any subsequent efforts topursue administrative remedies with respect to claims under the contract.

72. In this action plaintiff claims $ 9,000 for performing the environmental [***116] tests portion of thepreproduction test, as set forth in Paragraph 4.3.2.1 of Exhibit WCL-625. The basis for this computation is atesting charge of $ 15 per hour for 200 hours of humidity testing, 200 hours for temperature testing, and 200hours for altitude testing. The testing charge of $ 15 per hour is reasonable when compared with the hourlyfee then being charged by commercial testing laboratories for such testing. The actual costs which plaintiffitself incurred in conducting the environmental tests in its own plant are not shown by the record.

73. Plaintiff claims $ 1,800 for storage of the 116 Interval and Dwell Testers which it produced for a period of18 months awaiting First Article approval at the rate of $ 100 per month. The basis for this computation isnot shown by the record. It is apparently not based upon what the charge of a commercial storage companywould have been to store such number of testers for such a period of time. Instead, it appears to representan estimate of the increased costs plaintiff incurred in its general production operations resulting from theinterferences encountered by the presence in the plant of the 116 completed testers. The record [***117]does not show what was the amount, if any, of such costs which plaintiff actually incurred.

74. The unpaid balance on plaintiff's V-loan is $ 128,846.17, plus interest.

Conclusion of Law

Upon the foregoing findings of fact and conclusions of law, which are adopted by the court and made a partof the judgment herein, the court concludes as a matter of law that plaintiff is not entitled to recover and thepetition is dismissed.

Page 33191 Ct. Cl. 233, *289; 423 F.2d 1231, **1248;

1970 U.S. Ct. Cl. LEXIS 27, ***113