Leavell v. United States (530 F.2d 878, 1976)

PER CURIAM:

This case comes before the court on plaintiff’s and defendant’s requests filed July 7, and 10, 1975, for review by the court of the recommended decision filed on May 13, 1975, by Trial Judge Lloyd Fletcher, pursuant to Rule 166(c), and the parties’ responses thereto. He reviewed and would reverse a decision of the Corps of Engineers BCA No. 3082, 73-2 BCA 1110,349. The case has been submitted to the court on the briefs of the parties and oral argument of counsel. We have also had the benefit of amicus briefing and oral argument by the Association of General Contractors. Upon consideration thereof, since the court agrees with the said recommended decision, as hereinafter set forth, it hereby affirms and adopts the same as the basis for its judgment in this case.

The Army Engineers awarded plaintiff a long-term construction contract without having appropriated funds available for obligation in the full contract amount, as they are authorized to do by 33 U.S.C. Sec. 621. As the result of an appropriation curtailment in a later year, funds were exhausted and work had to be suspended from January 14 to June 16, 1969. Plaintiff claims an equitable adjustment for its added cost, pursuant to the “Suspension of Work” clause, GP-42, a standard provision. Defendant denied and here denies liability because of the “Funds Available” clause SP — 19, which is also standard in Army Engineers contracts of a continuing nature. We agree with plaintiff, the Association of General Contractors, and the trial judge, that an equitable adjustment is available under GP-42 for an unreasonable suspension even though the cause is an appropriation cut-off, whose possibility the parties contemplate and whose consequences they deal with under SP-19. This conclusion obtains even though defendant’s officers acted reasonably, as the trial judge held they did, in allocating the restricted funds available between plaintiff’s contract and other claimants against the same appropriation item. Plaintiff, in requesting review, urges they acted unreasonably, an issue we find unnecessary to reach in the circumstances.

The Board reasoned that plaintiff did not incur its loss without its own “fault or negligence” and therefore the Suspension of Work Clause by its own stated limitations does not apply. The Board considered that plaintiff followed an “accelerated schedule” in spite of full knowledge it would exhaust the funds available for contractual progress payments, on which it relied for working capital to keep the work going. It properly should have decelerated, says the Board. Actually, at the time of suspension, plaintiff was behind a progress schedule defendant had agreed to, subject only to fund availability. Defendant repeatedly had given notice that funds were about to run out and just as repeatedly, until the final occasion, it found more money somewhere. There is no evidence these notices were intended to give plaintiff a factual basis for planning a decelerated work schedule, nor were they in any way helpful for that purpose. Plaintiff gave notice in its letter of July 23, 1968, that it was unable to plan a deceleration. The Board finds the schedule plaintiff tried to adhere to would, if uninterrupted, have produced “optimum profits,” an inverse way of finding that a decelerated schedule would have been more costly. The “Funds Available” clause reads to assure a contractor of an extension of time in case of an entire work stoppage due to exhaustion of funds, but says nothing as to a deceleration made by the contractor sua sponte because of his anticipation that funds would run out. If a contractor voluntarily decelerated, and then the Engineers found still another untapped financial resource, quaere whether any extension would have been available against the substantial liquidated damages the contract called for.

A construction contractor, such as the plaintiff, may be knowledgeable about the Engineers’ financing, but is hardly likely to be as much so as the Engineers themselves. If they in their best judgment think a deceleration of work will make the consequences of an anticipated stringency of funds less painful than a later total stoppage, they have ample authority to order one under the Changes and Suspension of Work Clauses, either or both. We think it wholly arbitrary and capricious to accuse a contractor of “fault or negligence” because it does not initiate a decelerated schedule on its own, without orders. The most it might be expected to do is recommend or request deceleration orders, if it sees clearly that deceleration will be more economical than complete stoppage for a shorter period. No such possibility is shown here. By the standards of the Wunderlich Act, 41 U.S.C. Secs. 321, 322, the position of the Board cannot be sustained.

Nothing we say should be read as holding that an unordered deceleration is not a constructive partial suspension of work if made under pressure of compelling circumstances for which defendant is responsible. We are not here considering whether plaintiff would have had a claim for partial suspension of work under GP-42 if it had decelerated as the Board says it should have done. Cf. Merritt-Chapman & Scott Corp. v. United States, 429 F.2d 431, 192 Ct.Cl. 848 (1970).

Therefore, judgment is entered for plaintiff and the cause is remanded to the Board, under Rule 149, for proceedings to ascertain the quantum of equitable adjustment to which plaintiff is entitled. Further proceedings in this court are stayed for six months. Counsel for plaintiff is designated to advise the court of the status of proceedings as required by Rule 149(f).

The opinion and conclusion of law of the trial judge follow:

FLETCHER, Trial Judge: In this contract case the court is called upon for the first time to explore the interrelationship between two standard Government contract provisions which are included most frequently in so-called “continuing contracts”. The two clauses are generally referred to as “Funds Available for Payments” (hereinafter frequently called the “funds available clause”), and “Price Adjustment for Suspension, Delays, or Interruption of Work” (hereinafter frequently called the “suspension of work clause”). The objective facts do not appear to be in significant dispute although the parties vary widely in their interpretation and application of those facts to the problem at hand.

The contract involved is a unit-price “continuing contract” which the Army C