BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
In the matter of )
)
the Appeal of )
)
COMMERCIAL DATA CENTER, INC. ) Docket No. GPOBCA 18-99
)
Program C237-S )
Purchase Order 94925 )
For the Appellant: Frederic G. Antoun, Jr., Esq., Chambersburg, Pennsylvania.
For the Respondent: Drew Spalding, Esq., Deputy General Counsel, U.S.
Government Printing Office, Washington, DC.
Before KERRY L. MILLER, Administrative Judge.
DECISION
Commercial Data Center, Inc., (CDC) appeals the Contracting Officer's decision
denying CDC's request for additional compensation incurred as a result of the
Government's decision to transmit certain data on Saturdays. For the reasons
that follow, Respondent's motion for summary judgment is granted; Appellant's
motion for summary judgment is denied and the appeal is denied.
FINDINGS OF FACT
1. In August 1998, the U.S. Government Printing Office (GPO) Term Contracts
Division, issued an Invitation for Bids (IFB) for Program C237-S, a requirements
contract for the printing and mailing of six different types of personalized
notices for the Social Security Administration (SSA). Rule 4 File, Tab A at 1.
2. The IFB was mailed to 39 potential bidders. Rule 4 File, Tab B. The GPO
received three sealed bids that were opened on August 17, 1998. The bids were
as follows:
Commercial Data Center, Inc. $1,378,337.06
Digital Ink $2,777,913.24
KPT, Inc. $5,355,544.29
Rule 4 File, Tab D.
3. Following the GPO's on-site pre-award survey and a Government review of CDC's
Production and Quality Plan, GPO awarded the contract to CDC on September 18,
1998. Rule 4 File, Tabs F, G, H.1
4. Under the terms of the contract, CDC was required to receive electronically
transmitted Government data, print personalized notices from that data, combine
the notices with pre-printed items and mail the materials to Social Security
applicants and recipients. Rule 4 File, Tab A at 12. These products were
collectively referred to in the contract as Title XVI2 Notices. Program C237-S
was a new contract. Rule 4 File, Tab A at 1. However, the IFB did contain the
following estimates, based on historical Government data:
MAILER 1. (ZN8125) Daily Average - 500
Min. - Max. - 100 - 800
Comp - Less than 100
Daily + Comp - 10,500 per month
Leaves - 1 - 5 (100%) (English only)
MAILER 2. (ZNOTABLE) Daily Average - 31,000
Min. - Max. - 11,000 - 63,000
Comp - 227,200
Daily + Comp - 850,500 per month
SPIKE - 70,000 each month
(February/August)
Ranges of Leaves: -
1 - 5 93% of notices (English only)
6 - 12 7% of notices (English only or
bilingual English/Spanish)
Insert - None
Folding - Trifold
MAILER 3. (ZNAONS) Daily Average - 3,000
Min. - Max. - 200 - 6,000
Comp - Not Applicable
Daily + Comp - 55,500 per month
Ranges of Leaves: -
1 - 5 1% of notices (English only)
6 - 15 99% of notices (English only
or bilingual English/Spanish)
Insert - Reply Envelope
Folding - Bifold
MAILER 4. (ZNAWARD) Daily Average - 2,500
Min. - Max. - 1,000 - 3,000
Comp - Less than 100
Daily + Comp - 46,000 per month
Ranges of Leaves: -
1 - 5 30% of notices (English only)
6 - 17 65% of notices (English only or
bilingual English/Spanish)
Insert - Pamphlet 133 x 203 mm (5-/4 x 8")
Folding - Bifold
MAILER 5. (ZNDENY) Daily Average - 650
Min. - Max. - 500 - 1,000
Comp - Less than 100
Daily + Comp - 14,000 per month
Ranges of Leaves: -
1 - 5 80% of notices (English only)
6 - 19 10% of notices (English only)
10% of notices (Bilingual
English/Spanish)
Insert - Pamphlet 89 x 203 mm (3-1/2 x
8")
Folding - Trifold
MAILER 6. (ZNPLNACT) Daily Average - 12,500
Min. - Max. - 5,000 - 23,000
Comp - 125,000
Daily + Comp - 375,000 per month
Ranges of Leaves: -
1 - 5 87% of notices (English only)
6 - 15 13% of notices (English only,
or bilingual English/Spanish)
Insert - None
Folding - Trifold
Rule 4 File, Tab A at 1, 13-14.
5. The contract contained, inter alia, requirements describing the three types
of production runs that the contractor would be obligated to produce. "Spike
runs" were defined as "large additional quantities run one Saturday during the
month of February, and one Saturday during the month of August." Rule 4 File,
Tab A at 13. A "Comp run" was defined as a "monthly run occurring around the
third week of each month." Id. "Daily runs" were not defined.
6. The contractor was required to interface with the SSA's national File
Transfer Management System (FTMS) to receive the transmission of Title XVI data
files from the SSA. The contract required CDC's FTMS software "be operational
for the receipt of data files from 00:01 ET Monday until 16:00 ET Saturday,
excluding Federal holidays." Rule 4 File, Tab A at 17.
7. The contract required "complete production and mailing must be made on daily,
comp, and spike runs within 5 workdays after receipt of each transmitted file."
(Emphasis in original.) Rule 4 File, Tab A at 26. The term "workday" was not
defined in Program C237-S. However, GPO Contract Terms, GPO Publication 310.2
(Rev. 9-88), incorporated by reference, defined "workday" as "Monday through
Friday of each week, exclusive of the days on which Federal Government holidays
are observed." Rule 4 File, Tab A at 2; GPO Contract Terms, Clause 3.
8. After contract award Appellant learned that the Government planned to
transmit the monthly comp run on Saturdays. Affidavit of Frank Klan, ¶ 7.
9. During the initial months of the contract, Appellant failed to complete
production and mailing of comp runs within 5 workdays as required by the
contract. According to Appellant, the tardiness was due to the fact that it had
no weekend production shifts to begin production on Saturday, the day it
received the comp file transmission. Appellant's Statement of Undisputed Facts
11, 13. Thus, the comp runs had to be produced with its Monday through Friday
production shifts.
10. Appellant argued that the specifications in the IFB failed to alert bidders
that the monthly comp runs would be transmitted on Saturday and requested the
Government allow it seven calendar days to complete the work. Rule 4 File, Tab
K. The Contracting Officer declined to allow any additional time for production
of the comp runs. Rule 4 File, Tab L. Appellant requested the Government issue
a change order or a contract price adjustment to compensate it for alleged
additional expenses caused by the Saturday transmission of comp runs. Rule 4
File, Tab N.
11. In a Final Decision dated June 22, 1999, the Contracting Officer denied
Appellant's claim for additional compensation for Saturday comp runs,
explaining:
On page 17 of 31 in the contract specifications it states:
"The contractor's FTMS software shall be operational for the receipt of data
files from 00:01 ET Monday until 16:00 ET Saturday, excluding Federal holidays."
On page 26 of 31 in the contract specifications it states:
"Complete production and mailing must be made on Daily, Comp, and Spike Runs
within 5 workdays after receipt of each transmitted file. "
In accordance with the contract, when any file that meets the specifications is
transmitted and received prior to 16:00 ET on Saturday complete production and
mailing must be accomplished within 5 workdays, which is on or before the
following Friday, exclusive of Federal Government holidays.
If Commercial Data Center, Inc., has made a business decision to start the
production process on Saturday or Sunday when a Saturday transmission occurs, it
does not constitute the basis for an equitable price adjustment under the
contract. Therefore, your request for additional compensation is denied.
Rule 4 File, Tab O.
8. Thereafter, on August 20, 1999, Appellant filed a timely notice of appeal
with the GPO Board of Contract Appeals.
DISCUSSION
This case is before the Board on Appellant's Motion for Summary Judgment and
Respondent's Opposition to Appellant's Motion for Summary Judgment and Cross
Motion for Summary Judgment. Appellant argues that the contract was ambiguous
and that its interpretation of the contract, that comp runs would not be
transmitted on Saturdays, is a reasonable one. Respondent argues that it is
entitled to judgment in its favor because Appellant's production problems were
the result of assumptions it made prior to bidding and without making prior
inquiry of the Contracting Officer. Respondent concludes that Appellant should
bear the risk of its erroneous assumptions. Given the undisputed facts in this
case, Respondent is entitled to summary judgment in its favor.
Summary Judgment Standard
In deciding summary judgment3 motions, the Board is guided by Rule 56 of the
Federal Rules of Civil Procedure. See The George Marr Co., GPOBCA No. 31-94,
(April 23, 1996), 1996 GPOBCA LEXIS 43, 1996 WL 273662, slip op. at 35. Accord,
Christie-Willamette, NASA BCA No. 283-4, 87-3 BCA ¶ 19,981 (citing Astro
Dynamics, Inc., NASA BCA No. 476-1, 77-1 BCA ¶ 12,230); Automated Services,
Inc., EBCA Nos. 386-3-87, 391-5-87, 87-3 BCA ¶ 20,157. Under Rule 56, courts
are instructed to grant a motion for summary judgment if the pleadings and
supporting affidavits and other submissions "show that there is no genuine issue
as to any material fact and that the moving party is entitled to judgment as a
matter of law." FED. R. CIV. P. 56(c).
Thus, the principal judicial inquiry required by Rule 56 is whether a genuine
issue of material fact exists. See The George Marr Co., supra, slip op. at
35-36; RBP Chemical Corp., GPOBCA No. 4-91 (Jan. 23, 1992), 1992 GPOBCA LEXIS
16, 1992 WL 487876, slip op. at 22. Accord, John's Janitorial Services, Inc.,
ASBCA No. 34234, 90-3 BCA ¶ 22,973 (citing, General Dynamics Corporation, ASBCA
Nos. 32660, 32661, 89-2 BCA ¶ 21,851); Ite, Inc., NASA BCA No. 1086-6, 88-1 BCA
¶ 20,269. A material fact is one that will make a difference in the outcome of
the case. McDonnell Douglas Services, Inc., ASBCA No. 45556, 95-1 BCA ¶ 27,333
at 136,229 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)).
Stated otherwise, on a motion for summary judgment, a court cannot try issues of
fact; it can only determine whether there are issues to be tried. See IBM
Poughkeepsie Employees Federal Credit Union v. Cumis Insurance Society, Inc.,
590 F. Supp. 769, 771 (S.D.N.Y. 1984) (citing Schering Corp. v. Home Insurance
Co., 712 F.2d 4, 9 (2d Cir. 1983)). If no triable issues exist, the rule
permits the immediate entry of summary judgment. See, e.g., Reingold v.
Deloitte, Haskins and Sells, 599 F. Supp. 1241, 1261 (S.D.N.Y. 1984); United
States v. ACB Sales and Service, Inc., 590 F. Supp. 561 (D. Ariz. 1984).
Indeed, the United States Supreme Court has stated that summary judgment is
mandatory in the absence of a genuine issue of any material fact. See Celotex
Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
The burden is on the party moving for summary judgment to demonstrate that there
is no genuine issue as to any material fact, and that it is entitled to judgment
as a matter of law. See Celotex Corp. v. Catrett, supra, 477 U.S. at 322-23;
Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970). That burden is an
affirmative one, and is not met merely by disproving the unsupported claims of
its opponent. See Celotex Corp. v. Catrett, supra, 477 U.S. at 323. On the
other hand, while the nonmoving party also has an evidentiary burden, it is not
a heavy one; it is simply required to go beyond allegations in the pleadings and
designate specific facts in the record or by affidavits to show there is a
genuine issue to be heard. See, e.g., McDonnell v. Flaharty, 636 F.2d 184 (7th
Cir. 1980); United States v. Kates, 419 F. Supp. 846 (D. Pa. 1976); Upper West
Fork River Watershed Association v. Corps of Engineers, 414 F. Supp. 908 (D.
W.Va. 1976), aff'd 556 F.2d 576 (4th Cir. 1977), cert. denied 434 U.S. 1010
(1978). See generally, Vanier Graphics, Inc., GPOBCA No. 12-92 (May 17, 1994),
1994 GPOBCA LEXIS 39, 1994 WL 275102, slip op. at 32-38; RBP Chemical Corp.,
supra, slip op. at 17-26. The Federal summary judgment rule provides: "[A]n
adverse party may not rest upon the mere allegations or denials of the adverse
party's pleadings, but the adverse party's response, by affidavits or as
otherwise provided in this rule, must set forth specific facts showing that
there is a genuine issue for trial. If the adverse party does not so respond,
summary judgment, if appropriate, shall be entered against the adverse party."
FED. R. CIV. P. 56(e). See Celotex Corp. v. Catrett, supra, 477 U.S. at 324;
First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289 (1968);
Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1390-91 (Fed. Cir.
1987). See also, Do-Well Machine Shop, Inc., ASBCA No. 34898, 89-1 BCA ¶ 21,491
at 108,281; Ite Inc., supra, 88-1 BCA at 102,595.
Contract interpretation is a matter of law and, as such, is amenable to
disposition on summary judgment. V.N. Products, Inc., GPOBCA No. 10-00 (April
25, 2002), 2002 GPOBCA LEXIS 2, 2002 WL 1420008; see also Textron Defense Sys.
v. Widnall, 143 F.3d 1465, 1468 (Fed.Cir. 1998); Dalton v. Cessna Aircraft Co.,
98 F.3d 1298, 1305 (Fed.Cir. 1996); ECC Intern. Corp. v. United States, 43 Fed.
Cl. 359, 365 (1999).
Decision on Summary Judgment
In the instant appeal, after the Government began transmitting monthly comp run
data on Saturdays, Appellant had difficulty completing production of the comp
runs within 5 workdays as required by the contract and had to devote additional
resources to the task. Appellant argues that the contract language did not put
it on notice that comp run transmissions would occur on Saturdays. In addition,
Appellant argues that since the contract did not designate Saturday as a
"workday" for the transmission of comp run data, its interpretation that the GPO
could not force it to begin production of comp runs on Saturdays was reasonable.
Appellant concludes an ambiguity therefore exists and since its interpretation
is a reasonable one, it is entitled to judgment in its favor under the principle
of contra proferentem.4
Respondent has a substantially different view of the contract. Respondent
argues that the contract described clearly the work to be ordered and that
Appellant's production problems stem from various pre-bid assumptions it made
that proved to be erroneous. Respondent concludes that it is Appellant who
should bear the consequences that flow from Appellant's erroneous assumptions.
Once again, the Board is presented with two very different interpretations of
the same contract provisions. Such a situation is common in litigation and does
not lead inevitably to the conclusion that the contract is ambiguous. V.N.
Products, Inc., GPOBCA No. 10-00 (April 25, 2002), 2002 GPOBCA LEXIS 2, 2002 WL
1420008. To establish an ambiguity both contract interpretations must fall
within a zone of reasonableness. Metric Constructions, Inc. v. National
Aeronautics and Space Administration, 169 F.3d 747, 751 (Fed. Cir. 1999).
Whether an interpretation falls within the zone of reasonableness cannot be
ascertained until the Board performs an analysis of the contract's language.
The Board's primary task here is to apply well-established rules of contract
interpretation to ascertain the meaning and legal consequences of the disputed
contract provisions.
The purpose of any rule of contract interpretation is to carry out the intent of
the parties, Hegeman-Harris & Co., 194 Ct. Cl. 574, 440 F.2d 1009 (1971),
and to give effect to the "spirit and purpose" of the agreement. Julius
Goldman's Egg City v. United States, 697 F.2d 1051 (Fed. Cir. 1983); Thanet Corp
v. United States, 591 F.2d 629 (Ct. Cl. 1979). The Board must first seek to
resolve a contract interpretation dispute by trying to determine the mutual
intent of the parties as manifested in the contract itself. IBI Security
Services, Inc. v. United States, ASBCA No. 3492, 88-1 BCA ¶ 20,364; Coastal Dry
Dock & Repair Corp., ASBCA No. 31894, 87-1 BCA ¶ 19,618. The test for
ascertaining intent is an objective one; i.e., the question is what would a
reasonable contractor have understood, not what did the drafter or the bidder
subjectively intend. Corbetta Construction Co. v. United States, 198 Ct. Cl.
712, 461 F.2d 1330 (1972); see also Salem Engineering and Construction Corp. v.
United States, 2 Cl. Ct. 803, 806 (1983). The provisions of the contract itself
should provide the evidence of the objective intent of the parties.
In interpreting a contract, the Board's examination should begin with the plain
language used in the contract. Textron Defense Sys., 143 F.3d 1465, 1469 (Fed.
Cir. 1998); Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991);
Craft Mach. Works Inc. v. United States, 926 F.2d 1110, 1113 (Fed. Cir. 1991).
In the instant appeal the relevant contract terms are:
The contractor's FTMS software shall be operational for the receipt of data
files from 00:01 ET Monday until 16:00 ET Saturday, excluding Federal holidays.
Rule 4 File, Tab A at 17.
REGULAR PRODUCTION SCHEDULE:
Live production files will be transmitted on a daily basis except for Federal
Government holidays, in which case the data will be wire transmitted on the next
day.
Complete production and mailing must be made on Daily, Comp, and Spike Runs
within 5 workdays after receipt of each transmitted file.
(Emphasis in original). Rule 4 File, Tab A at 26. GPO Contract Terms, GPO
Publication 310.2 (Rev. 9-88), incorporated by reference, defined "workday" as
"Monday through Friday of each week, exclusive of the days on which Federal
Government holidays are observed." Rule 4 File, Tab A at 2; GPO Contract Terms,
Clause 3. In addition, the contract advised:
The figures show the: average daily run; minimum and maximum quantities required
daily; comp run (monthly run occurring around the third week of each month)...
Rule 4 File, Tab A at 13.
A. APPELLANT'S INTERPRETATION OF THE CONTRACT IS ERRONEOUS AND UNREASONABLE
Appellant contends that the contract did not put it on notice that comp runs
would be transmitted on Saturdays. The Board agrees with this contention.
Nothing in the contract designates a particular day of the week for the
transmission of comp run data. Instead, the parties agreed to an indefinite
schedule where transmission of comp run data would occur "around the third week
of each month." Rule 4 File, Tab A at 13.
The contract itself did not define the term "week." In construing a contract,
the language of the instrument is given its ordinary and commonly accepted
meaning, unless it is shown that the parties intended otherwise. Hol-Gar Mfg.
Corp. v. United States, 169 Ct. Cl. 384, 351 F.2d 972, 976 (1965). Where the
provisions of a contract are phrased in clear and unambiguous language, "the
words of those provisions must be given their plain and ordinary meaning by the
court in defining the rights and obligations of the parties. . . ." See The
George Hyman Construction Company v. United States, 832 F.2d 574, 579 (Fed. Cir.
1987) (quoting Elden v. United States, 617 F.2d 254, 260-61 (Ct. Cl. 1980);
Julius Goldman's Egg City v. United States, 697 F.2d 1051, 1057 (Fed. Cir.
1982), cert. denied, 464 U.S. 814, 104 S. Ct. 68, 78 L.Ed.2d 83 (1983).
Therefore, the term "week" as used in the instant contract means the ordinary,
commonly understood meaning of a 7-day cycle beginning on Sunday and ending on
Saturday.
However, the Board also reads another part of the contract as placing a
limitation on the Government's right to transmit data during the week. The
contract stipulates that the contractor's software need not be operational for
the receipt of data files for the entire 7-day week, but only from 00:01 ET
Monday until 16:00 ET Saturday, excluding Federal holidays. Rule 4 File, Tab A
at 17.
The Board is guided by the well accepted and basic principle of contract
construction that the document should be interpreted as a whole. See Hol-Gar
Manufacturing Corp. v. United States, 169 Ct. Cl. 384, 388, 351 F.2d 972, 975
(1965); The George Marr Co., GPOBCA No. 31-94 (April 23, 1996), 1996 GPOBCA
LEXIS 43, 1996 WL 273662 slip op. at 43. A court or board must give reasonable
meaning to all parts of the contract and not render portions of the contract
meaningless. See McAbee Constr., Inc. v. United States, 97 F.3d 1431, 1424
(Fed. Cir. 1996), reh'g denied No. 96-5004 (Fed. Cir.) March 13, 1996; Fortec
Constr. v. United States, 760 F.2d 1288, 1292 (Fed. Cir. 1985) (citing United
States v. Johnston Controls, Inc., 713 F.2d 1541, 1555 (Fed. Cir. 1983)). In
doing so the Board must also avoid surplusage or conflict. Granite Const. Co.
v. United States, 962 F.2d 998, 1003 (Fed. Cir. 1992). See also Input/Output
Technology, Inc. v. United States, 44 Fed. Cl. 65, 70 (1999).
Thus, when applying the above-referenced principles of contract construction and
reading the contract as a whole, the Board concludes that the contract
authorizes the Government to transmit data files, including comp run data files,
00:01 ET Monday through 16:00 ET Saturday "around the third week of each month."
As to Appellant's contention that the contract does not authorize the Government
to require Appellant to work on Saturdays, the Board agrees in part. Nothing in
the contract mandates that Appellant begin processing or printing comp run data
on Saturday. The only exception is the above-cited contractual requirement that
Appellant's software must be operational to receive the Government-transmitted
data files on Saturday until 16:00 ET. See Rule 4 File, Tab A at 17. The
contract specifications left the scheduling or manner of production to the
discretion of the contractor.
The Board recognizes that comp runs were projected by the contract solicitation
to be the largest single data loads transmitted by the Government under Program
C237-S. See Rule 4 File, Tab A at 13-14. Appellant apparently planned to use
its existing second and third shift employees to work on any comp run data
transmitted Monday to Friday. Klan Affidavit ¶ 6. This gave Appellant 5
workdays for production plus additional hours on Saturday and Sunday should more
production time be needed.5 For any work transmitted on Saturday, the five
workdays provided under the contract would begin Monday and end Friday. However
Appellant did not have an existing second or third shift on Saturday. In short,
because of Appellant's workforce arrangement and the contract's delivery terms,
Appellant would not have as many potential production hours to complete work
transmitted on Saturday as it would have for work transmitted Monday to Friday,
even though it would have the same number of "workdays." Appellant seeks to
have the Board read the contract in a way that will guarantee it 7 calendar days
production time regardless of when the data is transmitted. No such guarantee
is presently found in the contract.
In support of its interpretation Appellant proffers the affidavit of its
President, Frank Klan. Mr. Klan concluded from the solicitation language that
Saturday transmission of files would be limited to the daily data files for
Monday or to the twice-yearly spike runs. According to Klan:
However, because there was no mention of the fact that Social Security would
transmit the large comp runs on Saturday, we concluded that the comp runs would
be transmitted on a normal workday. We based this conclusion on the fact that
in the specs, GPO informed us that the large spike runs would be delivered on
Saturday (not a typical GPO or Social Security workday) but it made no such
statement regarding the comp run.
¶ 4, Affidavit of Frank Klan.
The issue for the Board to decide is not what Appellant's President actually
thought, or what the Government may have subjectively intended. In analyzing
disputed contract language, the courts and contract appeals boards place
themselves in the shoes of a reasonably prudent contractor and give the language
of the contract that meaning which a reasonably intelligent contractor
acquainted with the circumstances surrounding the contract would give it. See
The George Marr Co., supra, slip op. at 41-42; Professional Printing of Kansas,
Inc., GPOBCA No. 2-93 (May 19, 1995), 1995 GPOBCA Lexis 19, 1995 WL 488488, slip
op. at 47; General Business Forms, Inc., GPOBCA No. 2-84 (Dec. 3, 1985), 1985
GPOBCA Lexis 21, 1985 WL 154846 slip op. at 18 (citing, Salem Engineering and
Construction Corp. v. United States, 2 Cl. Ct. 803, 806 (1983)).
The Board concludes that Appellant's reading of the contract is not reasonable
when basic contract interpretation rules are applied. One pertinent rule is
that an interpretation which gives a reasonable meaning to all parts of a
contract will be preferred to one which leaves a portion of it "useless,
inexplicable, inoperative, void, insignificant, meaningless, superfluous, or
achieves a weird and whimsical result." Gould, Inc. v. United States, 935 F.2d
1271, 1274 (Fed. Cir. 1991), quoting Arizona v. United States, 216 Ct. Cl. 221,
235-36, 575 F.2d 855, 863 (1978).
Appellant's interpretation would render meaningless the explicit requirement
that its equipment be available to receive transmissions of data from the
Government each Saturday until 16:00 ET. The Board concludes it is unreasonable
to read a contract provision requiring a contractor to have the capacity to
receive data on Saturday as also prohibiting the Government from transmitting
data on Saturday.6
In interpreting the contract, Appellant also assumed that Saturdays would be
reserved for spike run data transmission or "limited volume" daily file
transmission. Klan Affidavit ¶¶ 2, 4. The plain language of the contract does
not support this assumption, as there is no provision in the contract reserving
Saturdays exclusively for the transmission of spike runs. The contract required
Appellant to maintain Saturday data receipt capability 52 weeks a year. Since
spike runs would only be transmitted on two Saturdays per year, it was
unreasonable to assume that the Government was precluded from transmitting comp
run data on the other 50 Saturdays.7 Such an interpretation would render the
language requiring data receipt capability superfluous for the other 50
Saturdays each year.
Appellant's interpretation also ignored the fact that the parties agreed to a
very generalized schedule for the transmission of comp run data. The contract
language spoke of transmissions "around" the third week of each month. By
agreeing to such a non-specific contract term Appellant assumed certain risks.
First, it assumed the risk of uncertainty regarding the exact day of the week
the comp runs were to be transmitted. Second, since the quoted language carries
no guarantee of consistency in data delivery, there was no assurance that the
day chosen for comp run data transmission would not vary from month to month.
Thus Mr. Klan's interpretations regarding comp run data transmissions were based
on erroneous assumptions and are not supported by the contract's terms.
While the term "around the third week in each month" is not as definite a
contract term as one that designates a particular day of the week, it is not an
ambiguous term. Rather, it is a contract term that gives the Government the
flexibility to transmit comp run data on any day during the period of 00:01
Monday to 16:00 Saturday during the third week of each month. Since the
Government's comp run data transmissions during the term of Program C237-S
occurred within that time period, Appellant was contractually obligated to
produce the comp runs within 5 workdays. Accordingly, Appellant is not entitled
to the additional compensation it has claimed.
B. APPELLANT HAD A DUTY TO INQUIRE ABOUT THE SCHEDULE FOR COMP RUN
TRANSMISSIONS.
Even if this Board were to assume arguendo that the contract term "around the
third week of each month" was ambiguous, Respondent would still be entitled to
summary judgment, because the ambiguity argued by Appellant is a "patent" one.
What constitutes a patent ambiguity "cannot be defined generally, but [must be
determined] on an ad hoc basis, Max Drill, Inc. v. United States, 192 Ct. Cl.
608, 626 (1970) (citation omitted), by considering whether the ambiguity "would
be apparent to a reasonable person in the claimant's position." Lockheed Martin
IR Imaging Systems, Inc. v. West, 108 F.3d 319, 322 (Fed. Cir. 1997). The
patent ambiguity doctrine is aimed at avoiding costly post-award litigation,
S.O.G. of Arkansas v. United States, 212 Ct. Cl. 125 (1976), as well as
protecting the integrity of the bidding process by ensuring that all offerors
bid on the same specifications. Newsom v. United States, 230 Ct.Cl 301, 303,
676 F.2d 647, 649-50 (1982).
If a contract contains a patent ambiguity, the contractor is under a duty to
inquire and must seek clarification of the proper contract interpretation prior
to submitting a bid. Community Heating & Plumbing Co. v. Kelso, 987 F.2d 1575,
1579 (Fed. Cir. 1993) (citing Interstate Gen. Gov't Contractors, Inc. v. Stone,
980 F.2d 1433 (Fed. Cir. 1992). This duty to inquire prevents contractors from
exploiting contract ambiguities by adopting narrow interpretations in preparing
their bids and then, after award seeking equitable adjustments to perform the
"additional" work that the government actually wanted. Triax Pac., Inc. v.
West, 130 F.3d 1469, 1475 (Fed. Cir. 1997). This duty to inquire exists
regardless of the reasonableness of the contractor's interpretation. Fortec
Constructors v. United States, 760 F.2d 1288, 1291 (Fed. Cir. 1985) (citing
Newsom v. United States, 230 Ct.Cl 301, 676 F.2d 647, 649-50 (1982)). If a
contractor does not inquire, any patent ambiguity will be resolved against the
contractor. Triax at 1475.
In the instant appeal, Appellant could have questioned the government about the
full scope of its responsibilities prior to bidding and sought a schedule for
the transmission of comp data more definite than "around the third week of each
month." This generalized delivery term was apparent on the face of the contract
solicitation. As such, Appellant had the option of remaining silent and leaving
the scheduling of the contract's single largest data transmission entirely up to
the government's discretion, or of seeking clarification, or of requesting the
solicitation be amended to provide for a more definite transmission schedule.
Since Appellant chose to remain silent the ambiguity must be resolved against
it.
CONCLUSION
Having considered all of Appellant's arguments, whether or not expressly
mentioned, the Board concludes that Respondent is entitled to summary judgment
as a matter of law. Accordingly, Respondent's Cross-Motion for Summary Judgment
is granted and Appellant's Motion for Summary Judgment is denied. The appeal is
denied.
July 30, 2003 KERRY L. MILLER
Administrative Judge
___________________
1 Appellant's claim for post-award relief from an alleged error in its bid was
denied by the Contracting Officer. Appellant's subsequent appeal was denied by
the Board in Commercial Data Center, Inc., GPOBCA No. 12-99 (July 26, 2001),
2001 GPOBCA LEXIS 3, 2001 WL 870207.
2 Title XVI of the Social Security Act, established a program to provide
supplemental security income to individuals 65 and over, or who are blind or
disabled. 42 U.S.C. § 1381.
3 Although the Board's rules in effect when this appeal was filed did not
provide explicitly for a summary relief procedure, the Board has routinely
entertained summary judgment motions. See WBC, Inc., GPOBCA No. 17-98 (Sept.
22, 1999), 1999 GPOBCA LEXIS 12, 1999 WL 33176277; Graphicdata, Inc., GPOBCA No.
35-94 (June 14, 1996), slip op. at 47, 1996 GPOBCA LEXIS 28, 1996 WL 812875, and
cases cited therein.
4 If after going through all other rules of construction the only remaining
question is which of two possible and reasonable meanings should be adopted,
courts will often chose the meaning that is less favorable to the party who
authored the contract. This tie breaking technique is known as "contra
proferentem." The device is intended to aid a party whose bargaining power was
less than that of the draftsperson. Corbin on Contracts Revised Ed. § 24.27
(1978); United States v. Haas & Haynie Corp., 577 F.2d 568, 574 (9th Cir 1978);
see also Restatement (Second) of Contracts § 206. Government contracts are
likely to be construed against the government as the drafting party. Restatement
(Second) of Contracts § 207, comment a. It must be emphasized that this rule is
not to be used at all if there is only one reasonable meaning to be applied.
Pitcher v. Principal Mut. Life Ins. Co., 870 F.Supp 903 (S.D. Ind. 1994) aff'd
93 F.3d 407 (7th Cir. 1996).
5 Weekends are not counted as "workdays" in the contract's production schedule.
See Clause 3, GPO Contract Terms, GPO Publication 310.2 (Rev. 9-88).
6 The contract carefully described this requirement as one that was applicable
Monday to Saturday and did not use a more restrictive term such as "workday"
which would have limited the requirement to Monday through Friday.
7 Indeed, it was more logical to assume SSA would transmit the larger comp files
on Saturday rather than during the Monday through Friday period, a time when it
was normally transmitting daily data files.