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United States v. Newport News Shipbuilding and Dry Dock Co.

Decided: May 20, 1991; As Corrected May 30, 1991.

THE UNITED STATES, APPELLANT,
v.
NEWPORT NEWS SHIPBUILDING AND DRY DOCK COMPANY, APPELLEE



Appealed from: Armed Services Board of Contract Appeals.

Markey,*fn* Michel, and Rader, Circuit Judges.

Michel

MICHEL, Circuit Judge

The United States appeals the decision of the Armed Services Board of Contract Appeals ("Board"), Appeal of Newport News Shipbuilding and Dry Dock Co., ASBCA No. 36751, 1990 ASBCA LEXIS 165 (Apr. 26, 1990), granting summary judgment to appellee, Newport News Shipbuilding and Dry Dock Company ("Newport News"), and holding that it had subject matter jurisdiction to entertain Newport News' contract claim. As to jurisdiction, the Board based its decision on the ground that the government failed to create a genuine issue of material fact, precluding summary judgment on the merits, because it did not offer any evidence that Newport News' Executive Vice President did not have overall responsibility for the company's affairs and thus was not qualified under the applicable regulation to certify its claim. Because the Board correctly decided that no genuine issue of fact existed concerning jurisdiction -- the only issue on appeal -- we affirm.

BACKGROUND

On August 29, 1986, the Defense Contract Audit Agency ("DCAA") suspended payments under 33 contracts with Newport News "because the contractor denied [it] access to tax return information and financial statement data." Newport News, slip op. at 2. The amount withheld totalled $1,162,125. Id. On February 6, 1987, Newport News filed a claim for the entire amount withheld plus interest. The claim was certified by J.E. Turner, Jr., as Executive Vice President of Newport News, and received by the Navy contracting officer on February 9, 1987. Id.

While the contracting officer's decision was pending, DCAA issued a subpoena duces tecum demanding production of additional financial documents from Newport News. Although it produced some of the requested documents, Newport News also filed suit in federal district court, attempting to invalidate the subpoena. The government moved for enforcement, but its motion was denied. United States v. Newport News Shipbuilding and Dry Dock Co., 655 F. Supp. 1408 (E.D. Va. 1987). The government appealed the denial to the United States Court of Appeals for the Fourth Circuit, which affirmed the district court's order. United States v. Newport News Shipbuilding and Dry Dock Co., 837 F.2d 162 (4th Cir. 1988).

While a second appeal to the Fourth Circuit concerning DCAA's subpoena power was pending, United States v. Newport News Shipbuilding and Dry Dock Co., 862 F.2d 464 (4th Cir. 1988), DCAA released the amounts withheld from Newport News. In a final decision dated February 8, 1988, the contracting officer denied Newport News' claim for interest "because the costs were properly suspended when they were considered not to constitute allowable cost reimbursable at the time." Letter from C.G. Griffith, Contracting Officer, to Newport News (Feb. 8, 1988). Newport News appealed the decision to the Board on the issue of the entitlement to interest. The government opposed Newport News' summary judgment motion by challenging, inter alia, "jurisdiction on the basis of claim certification by an improper person." Govt. Br. at 4.

In its decision granting summary judgment, the Board held that the claim was properly certified, and thus, it had jurisdiction to hear Newport News' appeal. Newport News, slip op. at 4. As to the merits, the Board concluded that Newport News was entitled to interest on the amounts withheld because "once the monies were paid by the contracting officer, both the underlying basis for their retention and the reason for their payment became irrelevant." Id. at 5.

On appeal to this court, the government challenges only the Board's threshold rulings that certification was proper and therefore it had jurisdiction to decide the claim.

Jurisdiction and Standard of Review

Our jurisdiction over appeals from decisions of boards of contract appeals arises under 28 U.S.C. § 1295(a)(10) (1988) (exclusive jurisdiction from a final decision of an agency board of contract appeals under the Contract Disputes Act), and our review is limited by the Contract Disputes Act. A Board decision on an issue of fact will not be set aside unless it "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." 41 U.S.C. § 609(b) (1988). On questions of law, however, Board decisions are neither final nor conclusive, but are "freely reviewable." American Elec. Laboratories, Inc. v. United States, 774 F.2d 1110, 1112 (Fed. Cir. 1985).

Discussion

The Contract Disputes Act requires that for a claim against the government ...


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