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GENERAL SHIP CONTR. CORP. v. UNITED STATES

June 8, 1962

GENERAL SHIP CONTRACTING CORP., Plaintiff,
v.
UNITED STATES of America, and its Agency, U.S. Naval Supply Depot, Bayonne, New Jersey, Defendants



The opinion of the court was delivered by: WORTENDYKE

On March 21, 1962 the defendant, United States, and the U.S. Naval Supply Depot, Bayonne, New Jersey, the two co-defendants in this action, noticed a motion to dismiss as to the U.S. Naval Supply Depot, Bayonne, New Jersey, and to strike the plaintiff's demand for a jury trial. The latter motion was based upon 28 U.S.C.A. 2402.

Upon the adjourned return date of these motions, a further motion for summary judgment by the defendants was also heard. The motion seeking to dismiss as to the defendant U.S. Naval Supply Depot, Bayonne, New Jersey, was consented to by the plaintiff, and the request to strike the demand for jury trial was granted by the Court.

  Decision upon the motion for summary judgment was reserved and is disposed of as hereinafter indicated. On this motion, the United States relies upon the whole record of the proceedings had before the Navy Contract Appeals Panel of the Armed Services Board of Contract Appeals (Board) which is on file in the case. The plaintiff contests the right of the United States to rely upon the record before the administrative tribunal, and seeks a trial de novo, citing, in support of its position, Jordan v. United Insurance Company of America, 1961, 110 U.S.App.D.C. 112, 289 F.2d 778. In the cited case, the narrow question presented to the Court was whether or not it was proper for the appellee (plaintiff) to have had a trial de novo in the Federal District Court; the appellant contending that it should have been limited to the administrative record. The Court held that under the facts of that case it was proper for plaintiff to have a trial de novo, even without specific statutory authorization. However, the distinguishing fact in that case was that plaintiff was not afforded a quasi-judicial administrative hearing, the statute speaking of an investigation which the Court said was not equatable to a due process hearing. The Court agreed with the appellant that plaintiff was not entitled to two due process hearings. In the case at bar, the plaintiff was afforded a quasi-judicial hearing which satisfies the due process of law requirement. The plaintiff is accordingly bound by the administrative record, and this Court is limited to a review thereof. Wells & Wells, Inc. v. United States, D.C.Mo.E.D. 1958, 164 F.Supp. 26; Hoffmann v. United States, 10 Cir. 1960, 276 F.2d 199.

 The present record reveals that on September 26, 1958 the plaintiff, a general contractor, entered into contract NBY 16923 with the United States for the exterior painting of water tanks and steel tower structures 53B and 1B at the U.S. Naval Supply Depot, Bayonne, N.J., and on September 29, 1958, plaintiff was awarded contract NBY 16922 in the amount of $ 5,600 for the painting of the exterior and interior of buildings 21, 31 and 44A at said Depot. The contract for the painting of the tank and tower structures was in the amount of $ 2,100; thus making the total award $ 7,700. On November 28, 1958 plaintiff was notified by letter of the termination of both contracts by default, by reason of a bribery attempt on the part of one Paxos, the president of plaintiff, who had signed the contracts on its behalf. On November 14, 1958 the Grand Jury in and for the District of New Jersey returned a true bill charging that Nick Paxos 'did knowingly and unlawfully give money to an employee * * * of the United States Department of the Navy * * * In violation of Section 201 of 18 U.S.C.' The accused was subsequently found guilty of this charge. On November 5, 1959, and March 11, 1960, the United States awarded completion contracts solely for the completion of the work contemplated by the two contracts entered into with the plaintiff. The aggregate amounts of the completion contracts were $ 3,940 in excess of the $ 7,700 obligation which had been assumed by the United States under the contracts previously entered into between it and the plaintiff herein.

 A brief history of the procedural aspects of this case shows that plaintiff initially appealed the termination to the Board of Contract Appeals, where his claim for compensation was dismissed as premature, because no claim had been presented to the Contracting Officer. A.S.B.C.A. No. 5419, 60-1 B.C.A. para. 2557. Plaintiff then initiated an action in this Court, (Docket No. C-269-60) presenting a similar claim, which was also dismissed as premature because the plaintiff had not exhausted its administrative remedies. Plaintiff then filed a claim with the Contracting Officer for $ 6,952.44 which was denied, as was his subsequent appeal to the Armed Services Board of Contract Appeals.

 The plaintiff, before the Board, presented no witnesses, but limited itself, by cross-examination of respondent's sole witness, Gilman, the Senior Civilian Representative at the Bayonne Naval Shipyards, to an attempt to establish that it had substantially completed its obligation under the contracts. Plaintiff introduced into evidence invoices of bills for debts it had incurred pursuant to the work being performed and certain payroll records; plaintiff's position being that proof of partial completion would ipso facto entitle it to payment from the United States. Clause 47(f) of 'The Contract' *fn1" states in part:

 'Upon Termination of work pursuant to this clause, the Government * * * shall pay the Contractor the following amounts:

 '(1) For work performed which is in place at the site on the effective date of termination * * *: The reasonable value thereof (including in the discretion of the Contracting Officer, a fair profit) * * *

 '(2) For all property transferred and delivered to the Government * * *: The reasonable value of such property (without duplication of any amount fixed under paragraph(f)(1) and including in the discretion of the Contracting Officer, a fair profit) * * *

 '(4) The reasonable value or reasonable rental value, as the case may be, of material, equipment, and plant utilized by the Government * * *.'

 Plaintiff, however, has failed to notice subparagraph (e) of Clause 47, which states:

 'In effecting the completion of work under this Clause, the Government may, in addition to all rights otherwise conferred, take possession of and utilize such material, equipment and plant as may be at the site of the work or on order and which the Contracting Officer may deem necessary or useful in facilitating such completion. Upon completion of such work, or so much thereof as is to be completed, the Contracting Officer shall determine the cost to the Government of such completion, which determination shall be final, subject only to appeal under Clause (57). If the cost of such completion, plus all payments otherwise made to the Contractor, exceeds the contract price, the excess cost shall be charged to the Contractor and the Contractor or his surety, if any, shall pay such amount to the Government upon demand.'

 The amount for which the Government became obligated under the completion contracts being in excess of its obligation under the original contracts, the United States is not required to pay the Contractor for its work performed, including its costs incurred pursuant thereto and in furtherance thereof. Where a contractor objects to the price of a reprocurement contract he has the burden of proof of making such a showing. See United States v. Warsaw Elevator Co., 2 Cir. 1954, 213 F.2d 517. In the instant case the record is devoid of any such evidence. Parenthetically, it is noted that the record contains a letter dated March 15, 1961, written on behalf of the United States Casualty Co. to the Bureau ...


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