MR. JUSTICE WHITE delivered the opinion of the Court.
The Standard disputes clause in government contracts requires that "any dispute concerning a question of fact arising under this contract," not disposed of by agreement, shall be decided by the contracting officer, with the right of appeal within 30 days to the department head or his representative (normally a board of contract appeals) whose decision shall be final "unless determined by a court of competent jurisdiction to have been fraudulent, arbitrary, capricious, or so grossly erroneous as necessarily to imply bad faith."
The facts are quite simple. On May 14, 1956, petitioner contracted with the United States to furnish a specified number of canteen covers which were to be
Since the decision below, the Court of Claims has decided Nager Electric Co., Inc. v. United States, 177 Ct. Cl. 234, 368 F.2d 847, a unanimous decision by that court supported by an exhaustive opinion by Judge Davis dealing with the application of the "first accrual" language of 28 U. S. C. § 2501
1. We start with the obvious: Section 2401 (a) provides a time limit upon bringing civil actions against the United States. The "civil action" referred to is a civil action in a court of competent jurisdiction. Cf. Unexcelled Chemical Corp. v. United States, 345 U.S. 59. Such a civil suit is seemingly barred if the right to bring it first accrued more than six years prior to the date of filing the suit. Our initial inquiry is, therefore, when the right of the contractor in this case to bring suit in the District Court
With respect to claims arising under the typical government contract, the contractor has agreed in effect to convert what otherwise might be claims for breach of contract into claims for equitable adjustment. The changes clause, for example, permits the Government to make changes in contract specifications. Such changes are not breaches of contract. They do give rise to claims for equitable adjustments which the Government agrees to make, if the cost of performance is increased or the time for performance changed. But whether and to what extent an adjustment is required are questions to be answered by the methods provided in the contract itself. The contractor must present his claim to the contracting officer, whose decision is final unless appealed for final action by the department head or his representative, here the Armed Services Board of Contract Appeals. Until that Board has acted, the contractor's claim is not subject to adjudication in the courts.
It is now crystal clear that the contractor must seek the relief provided for under the contract or be barred from any relief in the courts. In United States v. Holpuch Co., 328 U.S. 234, the question was whether a contractor's failure to exhaust the administrative appeal provisions of a government construction contract bars him from bringing suit in the Court of Claims to recover damages. The Court held that it did. According to the Court, the disputes clause
See also United States v. Blair, 321 U.S. 730, and United States v. Callahan Walker Co., 317 U.S. 56, 61, where the disputes clause procedures are described as the "only avenue for relief."
2. Even when the contractual scheme has run its course and the contractor is free to file his suit in court, he is not entitled to demand a de novo determination of
3. To hold that the six-year time period runs from the completion of the contract, as the Government insists, would have unfortunate impact. The contractor is compelled to resort to administrative proceedings which may be protracted and which may last not only beyond the completion of the contract but continue for more than six years thereafter. If the time bar starts running from the completion date, the contractor could thus be barred from the courts by the time his administrative appeal is finally decided. This would be true whether he wins or loses before the board of appeals. Even if he prevailed there and was granted the equitable adjustment he sought, the Government would be immune from suit to enforce the award if more than six years had passed since the completion of the contract. This is not an appealing result, nor, in our view, one that Congress intended. The Wunderlich Act evidences a congressional purpose to insure adequate judicial review of administrative decisions on claims arising under government contracts; it is very doubtful that it anticipated no review at all if administrative proceedings, compulsory on the contractor, continued for more than six years beyond the contract's completion date.
4. The Government challenges what the Court of Claims in Nager Electric considered to be the long-standing rule found in its own past cases. It asserts that many of the cases from which the purported rule was sifted do not involve the standard disputes clause and those that do state the rule by way of dictum only. But we think the Court of Claims fairly reflected the thrust and tenor
5. This brings us to the cases in this Court upon which the Government and the Court of Appeals have relied: McMahon v. United States, 342 U.S. 25; Soriano v. United States, 352 U.S. 270; and Unexcelled Chemical Corp. v. United States, 345 U.S. 59. None of them was a Tucker Act suit involving a disputes clause claim. McMahon was an action brought by an injured seaman against the United States for negligence and unseaworthiness. The Suits in Admiralty Act requires actions to be brought within two years after "the cause of action arises." The Clarification Act, 57 Stat. 45, 50 U. S. C.
The Court has pointed out before, however, the hazards inherent in attempting to define for all purposes when a "cause of action" first "accrues." Such words are to be "interpreted in the light of the general purposes of the statute and of its other provisions, and with due regard to those practical ends which are to be served by any limitation of the time within which an action must be brought." Reading Co. v. Koons, 271 U.S. 58, 62; see also United States v. Dickinson, 331 U.S. 745, 748. Cases under the Suits in Admiralty Act do not necessarily rule Tucker Act claims. The purpose of the Clarification Act was to prevent unnecessary litigation by providing for notice of injury to the United States and for the opportunity to settle claims administratively. But while suit was permitted only if a claim had been "disallowed," the applicable regulations provided that if a claim was not rejected within 60 days after filing, it would be deemed to have been administratively disallowed and the claimant would be free to enforce his claim. There was no chance for administrative action to consume the entire limitations period and therefore bar all resort to the courts.
In disputes clause cases, however, final administrative action, which the claimant must await, may occur more
Nor do Soriano or Unexcelled control this case. In Soriano the six-year time bar was held to run from the date of the requisitioning of foodstuffs and equipment by Philippine guerrilla forces and not from the date of the disallowance of a claim filed with the Army Claims Service. The majority in that case expressly held that the administrative action was not a prerequisite to suit in the Court of Claims. Likewise, in Unexcelled, where the statutory period was held to run from the date of the breach of statutory duty under the Walsh-Healey Act (49 Stat. 2036), rather than from the date of the administrative determination of the liquidated damages due the Government, it seems apparent that the United States, to which damages were payable, could have brought suit without first resorting to administrative remedies.
6. Finally, the Government relies on Public Law 89-505, 80 Stat. 304, 28 U. S. C. § 2415 (1964 ed., Supp. II), enacted on July 18, 1966, which for the first time established a general statute of limitations on government tort claims and on suits by the Government for money damages founded on any contract, express or implied. Such suits must now be brought within "six years after the right of action accrues or within one year after final decisions have been rendered in applicable administrative proceedings required by contract or by law." As an example of such administrative proceedings, the relevant committee reports and hearings mentioned the administrative proceedings required under the standard disputes clause contained in government contracts. H. R. Rep. No. 1534, 89th Cong., 2d Sess., at 4; S. Rep. No. 1328, 89th Cong., 2d Sess., at 3; Hearing on H. R. 13652 before Subcommittee
This argument is not without force. There is no question of the power of Congress to define the limits of its waiver of sovereign immunity. But we are not convinced that Congress intended to issue any determinative construction of § 2401 in formulating and passing § 2415. Neither in the hearing on H. R. 13652 nor in the committee reports did Congress focus on the first accrual language of § 2401, on the existing construction of that language by the Court of Claims or any other court or on the situation of the government contractor desiring to sue the United States during or after the conclusion of administrative proceedings under the disputes clause. The bill was recommended to the Congress by the Department of Justice at the time the Department was litigating Nager Electric in the Court of Claims in which the Department ultimately took the position that the private contractor's right of action first accrues no later than the completion of the contract.
We therefore conclude that if the claim filed by the contractor in this case was a claim "arising under" the contract and was therefore subject to administrative determination, (1) its right to bring a civil action first accrued when the Armed Services Board of Contract Appeals finally ruled on its claim and (2) its suit in the District Court was timely filed. The Government in its answer to the complaint, however, denied that the claim arose under the contract, characterized it instead as a pure breach of contract claim which accrued no later than the date of the completion of the contract. The District Court did not decide this issue; nor do we. This matter will be open on remand to the District Court. If the claim is not within the disputes clause, the court may then determine whether it is time-barred.
Reversed and remanded.
FootNotes
"Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. Within 30 days from the date of receipt of such copy, the Contractor may appeal by mailing or otherwise furnishing to the Contracting Officer a written appeal addressed to the Secretary, and the decision of the Secretary or his duly authorized representative for the hearing of such appeals shall, unless determined by a court of competent jurisdiction to have been fraudulent, arbitrary, capricious, or so grossly erroneous as necessarily to imply bad faith, be final and conclusive; provided that, if no such appeal is taken, the decision of the Contracting Officer shall be final and conclusive. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contract and in accordance with the Contracting Officer's decision."
For the disputes clause presently in use, see 32 CFR § 597.103-12.
"The Contracting Officer may at any time, by a written order, and without notice to the sureties, make changes, within the general scope of this contract, in any one or more of the following: (i) Drawings, designs, or specifications, where the supplies to be furnished are to be specially manufactured for the Government in accordance therewith; (ii) method of shipment or packing; and (iii) place of delivery. If any such change causes an increase or decrease in the cost of, or the time required for the performance of any part of the work under this contract, whether changed or not changed by any such order, an equitable adjustment shall be made in the contract price or delivery schedule, or both, and the contract shall be modified in writing accordingly. Any claim by the Contractor for adjustment under this clause must be asserted within 30 days from the date of receipt by the Contractor of the notification of change, provided, however, that the Contracting Officer, if he decides that the facts justify such action, may receive and act upon any such claim asserted at any time prior to final payment under this contract. Where the cost of property made obsolete or excess as result of a change is included in the Contractor's claim for adjustment, the Contracting Officer shall have the right to prescribe the manner of disposition of such property. Failure to agree to any adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled `Disputes.' However, nothing in this clause shall excuse the Contractor from proceeding with the contract as changed." 32 CFR § 7.103-2.
The excerpted version of the changes clause in this case appears in the unreported opinion of the District Court, and it seems substantially identical to the full clause quoted above.
"Reading them all together, these opinions show, we think, that where a contractor has both `disputes-clause' items and `breach-type' claims under a single contract, the following standards have controlled in this court: (i) there should be only one suit to enforce the various claim-items; (ii) the contractor can bring suit on the ripened `breach-type' items before completion of the administrative process on the `disputes-clause' items, but if he does so he may well lose the latter claims unless he includes them (by proper amendment, if necessary, as they mature) in his court action; but (iii) the contractor need not file suit on the `breach-type' items until after the end of the administrative process, when all the items have ripened and can be included in the one petition. In sum, our rule has been that the time-bar will not fall until six years after the administrative determination, but suit can be filed earlier, with the plaintiff taking the risk that he may thereby split his cause of action." 177 Ct. Cl., at 248-249, 368 F. 2d, at 857.
"§ 321. Limitation on pleading contract-provisions relating to finality; standards of review.
"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 fradulent [sic] or capricious or arbitrary or so grossly erroneous as necessarily to imply bad faith, or is not supported by substantial evidence.
"§ 322. Contract-provisions making decisions final on questions of law.
"No Government contract shall contain a provision making final on a question of law the decision of any administrative official, representative, or board."
"The United States has known for decades that contract suits will be timely in this court if they are filed within six years after the administrative determination, and has probably acted on that assumption in keeping records and retaining evidence. On the other hand, to say abruptly at this moment that limitation runs from the contract's completion, regardless of subsequent mandatory administrative proceedings, would undoubtedly cut off scores of contractors who, relying on our past decisions, have waited to bring suit until the ending of the administrative process. There is no adequate reason to disrupt these justified expectations." 177 Ct. Cl., at 253-254, 368 F. 2d, at 860.
Electric Boat Co. v. United States, 81 Ct. Cl. 361, 367-368, cert. denied, 297 U.S. 710; Austin Eng'r Co. v. United States, 88 Ct. Cl. 559, 562-564; Holton, Seelye & Co. v. United States, 106 Ct. Cl. 477, 501, 65 F.Supp. 903, 907; Griffin v. United States, 110 Ct. Cl. 330, 372-373, 77 F.Supp. 197, 206, rev'd on other grounds, sub nom. United States v. Jones, 336 U.S. 641; Art Center School v. United States, 136 Ct. Cl. 218, 226, 142 F.Supp. 916, 921; Empire Institute of Tailoring, Inc. v. United States, 142 Ct. Cl. 165, 168, 161 F.Supp. 409, 411; International Potato Corp. v. United States, 142 Ct. Cl. 604, 606-607, 161 F.Supp. 602, 604-605; Clifton Products, Inc. v. United States, 144 Ct. Cl. 806, 809, 169 F.Supp. 511, 512-513; Cosmopolitan Mfg. Co. v. United States, 156 Ct. Cl. 142, 144, 297 F.2d 546, 547, cert. denied sub nom. Arlene Coats v. United States, 371 U.S. 818; Steel Improvement & Forge Co. v. United States, 174 Ct. Cl. 24, 29-30, 355 F.2d 627, 631.
The Court of Claims also dealt with Aktiebolaget Bofors v. United States, 139 Ct. Cl. 642, 644, 153 F.Supp. 397, 399, a case containing statements seemingly contrary to those found in the above cases.
"Similarly, the contractor in the cases before us (and the mass of such cases) is not left at large to present his claim administratively whenever he likes. The Disputes clause does not itself fix a time within which a disputed issue of fact must be presented to the contracting officer, but that is not ordinarily true of the various substantive contractual clauses which lead to equitable adjustments or comparable relief under the contract. Those specific clauses usually have built-in time limits, and where no specific period is established in the contract the contractor cannot delay unreasonably. Cf. Dawnic Steamship Corp. v. United States, 90 Ct. Cl. 537, 579 (1940). Neither this court nor the administrative tribunals have had any great difficulty in handling belated claims by contractors under the various contract-adjustment articles. Contractors have not been able to extend the limitations period unduly by unilaterally postponing the commencement of the administrative process." 177 Ct. Cl., at 259-260, 368 F. 2d, at 864.
The court also noted that:
"The standard Changes clause in construction contracts provides that claims for adjustment must be asserted within 10 days; the Changed Conditions clause calls for an immediate notification to the contracting officer; the Delays-Damages clause contemplates a notice within 10 days of excusable delays; the Price Adjustment for Suspension, Delays, or Interruption of Work clause sets 20 days as the normal period. See United States v. Utah Constr. & Mining Co., 384 U.S. 394, 397-399 n. 1, 416 n. 14, 86 S.Ct. 1545, 16 L. Ed. 2d 642 (1966)." Id., at 259, n. 29, 368 F. 2d, at 864, n. 29.
The 30-day period within which a fixed-price supply contractor must assert his claim for equitable adjustment arising from changes, see text above and supra, n. 3, may be shortened in accordance with Department procedure, 32 CFR § 7.103-2, or with negotiations, 32 CFR § 597.103-2.
"In the event that any action to which this section applies is timely brought and is thereafter dismissed without prejudice, the action may be recommenced within one year after such dismissal, regardless of whether the action would otherwise then be barred by this section. In any action so recommenced the defendant shall not be barred from interposing any claim which would not have been barred in the original action." 28 U. S. C. § 2415 (e) (1964 ed., Supp. II).
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