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Benju Corp. v. Peters

January 04, 1999


Before Newman, Rader, and Bryson, Circuit Judges.

The opinion of the court was delivered by: Rader, Circuit Judge.

Opinion for the court filed by Circuit Judge RADER. Circuit Judge NEWMAN Dissents-in-part and concurs-in-part.

The Armed Services Board of Contract Appeals (Board) sustained the decision of the United States Air Force to terminate for default BenJu Corporation's (BenJu's) contract. The Board also denied BenJu's claim for an equitable adjustment to the contract and ordered BenJu to remit to the Government $37,235 which the Government had erroneously paid BenJu, plus interest. Because substantial evidence supports the Board's decision, this court affirms.


On August 31, 1990, Warner Robins Air Logistics Center (WR-ALC) awarded (on behalf of the United States Air Force) Contract No. F09603-90-C-1990 to BenJu. The contract required BenJu to supply to the Air Force portable floor cranes for maintenance of F-16 fighter jets. The Air Force agreed to pay BenJu $2,255,185 for the cranes. Contract line item (CLIN) 0001AB required BenJu to deliver "first article test procedures" (FATP) to the Air Force forty-five days after contract award. The Air Force then had forty-five days to approve or disapprove BenJu's FATP. Delivery of acceptable FATP entitled BenJu to a payment of $37,235.

The contract expressly incorporated Purchase Description PD88VRS68 (the PD), which described various performance specifications for the cranes. Paragraph 4.4.2 of the PD states that the "first article tests shall consist of all tests listed under [paragraph] 4.6, performed in order." Paragraph 4.6, entitled "Test Methods," requires in subparagraph 1 that the cranes be "inspected to determine compliance with the requirements of this purchase description." (Emphasis added.) The contract sets forth the "requirements" of the purchase description in paragraph 3 of the PD, "Requirements," which lists seventy detailed technical requirements. Thus, the contract required BenJu to produce FATP for each of seventy technical requirements.

The contract also incorporated data item description number DI-T-4901 (the DID), as authority for the first article test procedures. The DID requires contractors to prepare and submit a "step-by-step method to be followed for satisfying the particular requirements of the specification, purchase description or contract." The DID further requires that the contractor's recommended procedures "demonstrate confidence that the examination and test data to be generated will assure that the requirements of the applicable specification, purchase description or contract are met."

On October 12, 1990, BenJu submitted FATP to the Government's contracting officer. In an apparent attempt to show compliance with the seventy technical specifications in paragraph 3 of the PD, BenJu submitted a checklist which merely recited verbatim the seventy subparagraphs along with spaces for "yes" or "no" answers corresponding to each subparagraph. BenJu did not submit any procedures for performing tests for any of the specifications in the checklist. The Air Force rejected this proposed FATP in a letter to BenJu on November 29, 1990, stating that "[t]ests and inspections cannot be verified by a simple yes/no response." In the letter, the Air Force also listed forty-seven specific deficiencies in BenJu's submission, some of which were related to BenJu's yes/no checklist and some of which were related to other technical problems.

BenJu then submitted a second set of FATP. Before the Air Force acted upon this second submission, the parties conducted a design review. BenJu's representatives insisted that the seventy technical specifications in PD paragraph 3 were not part of the FATP under the contract. However, the contracting officer directed BenJu to include in its FATP these paragraph 3 specifications. Shortly after the design review, on January 17, 1991, the Air Force rejected BenJu's second FATP submission. The Air Force listed thirty-seven deficiencies and reiterated that the contract requires compliance with PD paragraph 3.

BenJu submitted a third set of FATP on February 19, 1991. The third set included proposed procedures for the PD paragraph 3 specifications. The Air Force rejected the third set on April 5, 1991, citing four discrepancies. The Air Force sent BenJu a final cure notice giving BenJu ten days to submit acceptable test procedures. BenJu refused to correct its procedures and submit additional FATP. On August 1, 1991, the Air Force terminated the contract for default.

Before submitting its third set of FATP, BenJu submitted to the contracting officer a claim of $37,235 for its FATP on January 21, 1991. Without waiting for the contracting officer to respond, BenJu also submitted an invoice in the same amount to the Defense Contract Administration Services Management Area (DCASMA). The contracting officer did not respond to the claim. The DCASMA, however, paid BenJu the $37,235 on March 21, 1991.

BenJu also submitted an equitable adjustment claim to the contracting officer on June 28, 1991, demanding $137,875.15 for delays caused by the Air Force's rejection of the FATP. Before the contracting officer issued a decision, BenJu appealed the deemed denial of its claim. The contracting officer denied BenJu's equitable adjustment claim on December 17, 1991.

On June 9, 1993, the contracting officer issued a decision ordering BenJu to return the $37,235, which the Government paid in error.

BenJu appealed to the Board the Air Force's termination of the contract for default, the denial of its equitable adjustment claim, and the decision ordering return of the $37,235. The Board consolidated the appeals. In a decision dated September 15, 1997, the Board sustained the termination for default, denied BenJu's equitable adjustment claim, and ordered BenJu to repay ...

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