U. S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS

Microform Data System Inc.
February 1, 1980

CAB No. 79-3
Lawrence W. Kennelly, Chairman
William Klugh, Member
John F. Cavanaugh, Member

Re: Respondent's Motion to Dismiss

This motion was made by the Respondent alleging that the disputes
clause of the contract excludes breach of contract claims from
its coverage.

Background

On June 8, 1979, the Appellant wrote to the Public Printer and
appealed the final decision of the Contracting Officer.  In his
decision, the Contracting Officer made the following
determination:

"a.  The Contract was properly terminated for convenience,
inasmuch as the equipment was never accepted.  It did not meet
the condition of the contract that it be operational for a period
of 30 days with no more than 10 percent total down-time (Section
F), and this condition was never waived.  The equipment was not
integrated into the normal operation of the GPO, but was used in
tandem with existing equipment because it was necessary that the
original system remain fully operational until a replacement
system was functioning properly.

b.  Settlement of the contract costs will be based on an amount
of rent equivalent to 2.5 percent of the purchase price of the
equipment, per month, for the period of April 6 through July 16,
1978, for a total of $8,065.71.  This has been determined to be
the average rent charged for equipment of this complexity, and is
therefore considered fair and reasonable.  Settlement expenses of
$3,000, operator training and manuals costing $2,000, and crating
and shipping expenses of $550 will also be allowed, for a total
of $13,615.71.  The equipment will be crated and returned to
Microform at Government expense.

c.  Microform Data Systems, Inc., remains liable for rental of
the space occupied by this equipment, as provided by letter of
October 31, 1978, from December 1, 1978 until such time as it is
removed."

On August 24, 1979, Counsel for the Appellant.filed his complaint
and requested a preliminary conference to establish procedures
and other matters.

The conference was held on September 7, 1979 at the Government
Printing Office and Counsel for the Appellant, Respondent and
Contracting Officer were present with the full Appeals Board.

The discussion at this meeting centered around the situs of where
the appeal would be heard and some discussion of the question of
whether there was jurisdiction to hear the appeal.  The Appellant
raised the question of whether the Respondent was going to answer
the complaint.

There was some discussion concerning an audit and it was
suggested this be done by the General Accounting Office.  The
Respondent's attorney indicated that he was going to make a
Motion For A More Definite Statement.  There was an attempt to
have the GAO do the audit but this failed.

There was another prehearing conference on October 10, 1979.  At
this conference the attorney for the Appellant, attorney for the
Contracting Officer and the Contracting Officer were present with
the Chairman of the Appeals Board.

A motion was made by the Respondent for a more definite statement
and the Appellant was given an opportunity to respond in 10 days.

The Respondent then indicated that there would be another motion
that the Board lacks jurisdiction.

The Board denied the motion for a more definite statement and on
November 19, 1979, the Respondent made a Motion to Dismiss or a
General Denial.

The Respondent stated in his motion that the complaint of the
Appellant appears to question the termination rather than the
Contracting Officer's decision.  The jurisdiction of the
Government Printing Office Board of Contract Appeals depends upon
the contract itself.  In the contract, jurisdiction of the Board
is limited to the consideration of factual issues in disputes
"arising under this contract." The Respondent cited as his
authority U.S. v. Utah Construction and Mining Co., 384 US 394
(1966) that states:

". . . the settled construction of the disputes clause excludes
breach of contract claims form its coverage . . ."

He then cited a number of cases that were decided by Boards of
Contract Appeals that consistently found that breach of contract
claims were beyond the jurisdiction of the Board.

Jack Clark  (1957) ASBCA No. 3672, 57-2 BCA  1402;
Alco Lumber Co. Inc.  (1964) ASBCA No. 9461, 1964 BCA  4349;
E. & E. J. Pfotzer (1965) Eng BCA No. 2656, 65-2 BCA  5144.

He also cited a decision of the Government Printing Office Board
of Contract Appeals that was decided in 1977.  Harbor Printing &
Copy Service, Inc.,  GPO CAB CA 77-5 (1977) in which the Contract
Appeals Board dismissed a claim for a breach of contract on the
basis that the Board had no jurisdiction to decide such a claim,
see also Information Systems Inc.  GPO CAB CA-78-11(1979).

The Appellant's response to the Motion to Dismiss states:

1.Appellants complaint identifies two contracts that are subject
to the present dispute.

2. Inspection, Testing and Acceptance in Section F, of the
contract is a subject of dispute.

3. The Government putative termination of the contact pursuant to
the respective "Termination  for Convenience Clause."

4. Appellant's complaint refers to the Contracting Officer's
final decision and Appellant's timely appeal, both actions taken
under the Disputes Clause of the contract.

5. Other portions of the Appellant's complaint identifying
miscellaneous terms of the disputed contract such as the price of
the delivered equipment, contract specifications and contract
delivery terms.

The Appellant takes the position that Respondent's reliance on
Utah Mining Co.,  supra, is not applicable here because the case
dealt with a holding concerning a Court of Claims procedure and
should be understood as such.

The Appellant states:

"The ultimate success of Respondent's Motion depends on
Respondent's self-serving interpretation of the facts underlying
the present appeal.  However, the Respondent's factual assertions
(made without benefit of source citation) are irrelevant since
for the purpose of ruling on Respondent's Motion to Dismiss, the
Board is bound by the facts alleged in Appellant's complaint and
the terms of the underlying contract to determine whether a
decision favorable to Appellant could be rendered . . ." The
Appellant then cited a number of cases.  (Citations omitted)

In a footnote the Appellant stated:

. "The Disputes Act of 1978, in force when the present appeal was
docketed, effectively reversed by congressional action the
holding in the Utah case.  See, Baltimore Contractors Inc. v.
United States,  U.S. Court of Claims Trial Division, No.  272-70
(September 18, 1979).''

The Appellant then made a cross Motion For A Summary Judgment.

Discussion

The Board is confronted with the task of deciding whether the
appeal of a contractor to action taken by a Government
Contracting Officer should be considered within its jurisdiction.
What occurred in the case was that two contracts were made by the
Appellant with the Government Printing Office for seven
operational independent "Ultrafiche Systems" including masters,
print frames, readers, copiers, control modules, and training
manuals for support.

One contract was terminated for the convenience of the Government
under paragraph 27 of the General provisions of the contract by a
letter dated July 13, 1978.  When such termination occurs, the
contract provides that the compensation due the contractor is
actual costs and reasonable profits, overhead and settlement
expenses.

In his brief, the Appellant alleged that he was entitled to the
full contract price of $97,830 plus interest thereon, settlement
expenses and attorney fees.  (The total contract price was
$145,414.41 including $47,592.41 for conversion of GPO data base
to "ultrafiche" format which is not a subject of the present
dispute).

The Appellant alleges that the contract had been completed when
the Contracting Officer terminated the contract for the
convenience of the Government.  On that basis, the Appellant
claims that he is entitled to the full contract price.

The Respondent's position is that is was not a completed contract
because the GPO had not accepted the equipment.

The purchase order number 8556 was issued on September 30, 1977.
The equipment was scheduled for delivery on March 30, 1978, and
arrived April 5 and 6, 1978.  The Respondent states it was not
accepted at that time because, as a condition of acceptance, the
contract requires that the equipment be operated in accordance
with the specifications for a period of 30 consecutive days with
no more than 10 percent total down time.  The Contracting Officer
was notified by memorandum dated June 21, 1978, from the
Documents Sales Service, the using organization, that although
vendor considered the installation complete on May 2, 1978, the
Service Report had not been signed due to numerous instances
where the system had proven to be inoperable more than 10 percent
of the time since installation.  After due consideration in a
letter dated July 13, 1978, the Appellant was notified of the
termination of the contract for the convenience of the
Government.

Subsequent to this, there were discussions between the parties as
to the amount of money due the Appellant.  After various attempts
on the part of the Contracting Officer, over the period December
1978 - May 1979 to secure an audit, the Contracting Officer, on
May 14, 1979, issued a final decision determining the quantum at
$13,615.71.

The Appellant filed his appeal seeking the full contract price.

Opinion

It is apparent that we have a basic question that must be
answered; was the contract completed, and if so, was the failure
on the part of the Government to live up to its part of the
contract, namely to pay the full price, a breach of that
contract?  It is a question that must be answered before this
Board can take jurisdiction.  Our jurisdiction under the Dispute
Clause, Section 12 of General Provision is:

(a) ". . . any dispute concerning a question of fact arising
under this contract which is not disposed of by agreement.

(b) This Disputes clause does not preclude consideration of law
questions in connection with decisions provided for in paragraph
(a) above: Provided, that nothing in the contract shall be
construed as making final the decision of any administrative
official, representative or board on a question of law."

In U.S. v. Utah Mining Co., supra, the Court held that the or a
Government contract "Disputes" clause does not extend to breach
of contract claims not redressable under other clauses of the
contract.  When the Court discussed this it said:

"An illustration of the disestablishment of breach of contract
claims through the fashioning of additional contract adjustment
provisions is provided by contractual provisions designed to deal
with such claims for delay damages as are presented here." 384 US
394 at p. 415.

The Court gave an example of such a clause:

"A more extensive clause for 'Price Adjustment for Suspension
Delays, or Interruption of Work' . . . was promulgated in 1961
for optional use in Department of Defense fixed price
construction contracts." 384 US 394, 416.

The Court also pointed out that an Interagency Task Group is
currently reviewing the clauses in the standard contract form
including the changes, changed Conditions and Suspension of work
clauses to determine whether they should be expanded in coverage
to prevent fragmentation of remedies.

The Court said:

"While in one respect it can be said that clauses broadening
remedies under the contract have been adopted in response to
restrictive interpretation of the Disputes clause and express
dissatisfaction with the unavailability of one administrative
remedy, the fact that the response has taken this measured form
has manifested the parties' reliance on the prior interpretation
and has properly tendered to reinforce it.  As the ASBCA remarked
in Simmel Industries , supra, '[i]t is noteworthy that when
intended to provide an administrative remedy for Government
delays, specific contract clauses have been developed and set
forth for that purpose' 1961-1 BCA at 15, 234." 384 U.S. 394 at
417.

It is our opinion that what the Court is saying in this case is
that unless there is specific language in the contract to convert
what would otherwise be claims for damages for breach of contract
into claims payable under such contract and hence to be regarded
as "arising under the contract," the Appeals Board does not have
authority to entertain a breach of contract case.

There is no language in this contract that would convert a pure
breach of contract claim into one that would bring it under the
provisions of the Disputes clause.  Therefore, this case comes
squarely under the rule set down in U.S. v..Utah Mining Co.,
supra  where at p. 412 it states: "Thus the settled construction
of disputes clause excludes breach of contract claims from its
coverage . . ."

This is the same position taken by the U.S. Government Printing
Office Contract Appeals Board in Information Systems Inc. v. U.S.
Government Printing Office,  supra  and Harbor Printing & Copy
Service Inc. v. U.S., Jacket 229-626, Program 404M, Print Order
67.

Appellant in his response has stated that the Disputes Act of
1978 effectively reversed by Congressional action the holding in
the Utah case.  He cites Baltimore Contractors, Inc. v. U.S..
Court of Claims, Trial Division No. 272-70 (September 18, 1979).

In Baltimore Contractors, supra , the Court said:

"The issue in this case is whether or not, given the nature of
these contract claims and the character and composition of the
available administrative procedures, plaintiff is entitled to a
trial in this court on the substantive matters presented by the
claims. [l] That issue has been central to this case since long
prior to the filing of the petition herein on August 6, 1970.  It
is an issue which could not have arisen under the present
governing legal principles because the Contract Disputes Act of
1978 [2] authorizes a Government Contractor to 'bring an action
directly on [a contract] claim in the United States Court of
Claims, notwithstanding any contract provision,  regulation, or
rule of law to the contrary. [3] Prior to passage of the Disputes
Act, this issue was governed by the so called Wunderlich Act [4]
as thereafter interpreted by the U. S. Supreme Court in a trilogy
of Opinions."

1. Jurisdiction is conferred by 28 U. S. C.   1491(1976).
"The court of Claims shall have jurisdiction to render judgment
upon any claim against the United States founded * * * upon any
express or implied contract with the United States * * *."

2. Pub. L. No. 95-563, 92 Stat. 2383 (codified at 41 U. S. C. A.
 601-613 (West Supp. 1979)).

3. Sec. 10 (a) (i) of the Contract Disputes Act, 41 U. S. C. A. 
609 (a) (i) (West Supp.  1979).

14

4. 41 U. S. C.  321-322 (1976). Section 321 provides:
"No provision of any contract entered into by the United States,
relating to the finality or conclusiveness of any decision of the
head of any department or agency or his duly authorized
representative or board in a dispute involving a question arising
under such contract, shall be pleaded in any suit now filed or to
be filed as limiting judicial review of any such decision to
cases where fraud by such official or his said representative or
board is alleged: Provided, however, that any such decision shall
be final and conclusive unless the same is fraudulent or
capricious or arbitrary or so grossly erroneous as necessarily to
imply bad faith, or is not supported by substantial evidence."

Under the Wunderlich Act, when there was a Disputes Clause in a
Government Contract, the proper forum to have a factual issue
decided was through the Appeals Board.  A decision on the facts
would be final unless there was fraud, or it was capricious,
arbitrary or so grossly erroneous as to necessarily imply bad
faith or not supported by substantial evidence (41 USC 321).

41 USC 322, part of the same act, provides that Government
contracts shall not contain a provision that makes a decision of
any administrative official final on a question of law.

15

The Disputes Act of 1978 provided that a contractor could go
directly to the Court of Claims in lieu of appealing to the
Contract Appeals Board.  It retained the language on questions of
law and provided in 41 USC 609 (b):

"In the event of an appeal by a contractor or the the Government
from a decision of any agency board pursuant to section 607 of
this title, notwithstanding any contract provision, regulation or
rules of law to the contrary, the decision of the agency board on
any question of law shall not be final or conclusive, but the
decision on any question of fact shall be final and conclusive
and shall not be set aside unless the decision is fraudulent, or
arbitrary, or capricious or so grossly erroneous as to
necessarily imply bad faith, or if such decision is not supported
by substantial evidence."

If the Disputes Act of 1978 was in effect prior to Utah Mining,
supra,  there may have been a difference in the some aspects of
the the decision, but it would not have affected a question
similar to the one before this Board.  We are not considering a
fact question, but one of law, and both the Wunderlich Act and
the Disputes Act of 1978 are consistent with regard to decisions
by Contract Boards of Appeal on questions of Law and that is they
are not final when an Appeals Board decides them.

In our situation, we have a termination for convenience, and an
Appeal alleging the contract was complete, which.makes it a
breach of contract question.  In Colonial Metals Co. v. U.S., 204
Ct. Cl. 320 at p. 330 the Court said:

"The Convenience-termination clause provides for termination
"whenever the Contracting Officer shall determine that such
termination is in the best interest of the Government." [4] It is
designed to provide a mechanism whereby the Government may end
its obligation on a contract and yet limit its liability to the
contractor's costs and profits on the preparations made and work
done . . ." (footnote omitted)

In Commercial Cable Co. v. The United States, 170 Ct. Cl. 813
(1965) at p. 821-822:

"The Plaintiff submitted alleged costs in the negotiations about
termination which are substantially similar in character and
amount to those now asserted.  This understandable coincidence
does not mean that the Assistant Secretary was considering a
breach of contract claim or even a dispute of the character
contemplated in the disputes clause.  He is barred by statute
from any final decision on the former.  He could consider the
latter only if that clause was invoked, as where, for instance,
there was a termination and a difference of opinion arose on
allowable costs.  The contractor could appeal an adverse decision
thereon under the procedures of the disputes clause . . .

Plaintiff's claim here is for breach of contract and depends for
its resolution upon interpretation of the contract which is a
question of law asserted now by plaintiff for the first time.
Claims for unliquidated damages are outside the disputes clause
and not properly a subject for unilateral administrative
determination.

. . .It has been repeatedly held that the disputes clause is not
applicable to claims for damages for breach of contract against
the Government . . .

It cannot be said in this situation that plaintiff has any
administrative remedy it had the responsibility to pursue.  Ekco
Products, supra; Railroad Waterproofing, supra.  Plaintiff was
not given and could not be granted relief administratively for
the alleged breach.  To be compelled now to go through expensive
and time-consuming, fact-finding procedures administratively,
under the circumstances of this case, would be an exercise in
futility which would not expedite the administration of justice.
Such procedures are not required by the contract, nor by statute,
court decision or reason."

If there was a dispute as to costs and profits that were due
under the termination for convenience, that and that alone would
be considered, but here we are faced with a claim of a completed
contract and that is a legal question that this Board has no
jurisdiction over.

Therefore it is the opinion of this Appeals Board that the
Appellant has presented a legal question to this Board, and we
have no jurisdiction to hear it.

Decision

Motion to dismiss granted.

Motion for summary judgment denied.