U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
Appeal of
FRY COMMUNICATIONS, INC. / INFOCONVERSION JOINT VENTURE
Docket No. GPO BCA 9-85
Jacket No. 421-710
Purchase Order 33846
August 5, 1991
STUART M. FOSS, Administrative Law Judge
DECISION ON REMAND
I. Statement of the Case
On February 5, 1991, the United States Claims Court (Claims
Court) reversed the Board's prior decision in this appeal, dated
July 29, 1986, and remanded the matter to the Board, pursuant to
RUSCC 60.1, for proceedings consistent with the Claims Court's
opinion. Fry Communications, Inc. / InfoConversion Joint Venture
v. United States, No. 174-89C (February 5, 1991). Specifically,
the Claims Court charged the Board with taking evidence on the
factual issue of -- whether Fry Communications, Inc. /
InfoConversion Joint Venture (Appellant or InfoConversion)
actually relied, when it prepared its bid, on its interpretation
of the Invitation for Bids (IFB) as allowing two transaction
charges following a single search of the text, a deletion of
material, and an addition of material at the same location. Id.,
Slip. op. at 26.
On April 4, 1991, a hearing on the sole factual issue remanded by
the Claims Court was conducted by the Board in Washington,
D.C., at which the Appellant and the Respondent Agency (GPO or
Respondent) were represented by counsel and afforded full
opportunity to adduce evidence, call, examine and cross-examine
witnesses and argue orally. Posthearing briefs were filed by
both the Appellant and the Respondent and have been carefully
considered.
The following findings of fact on the reliance issue are based
upon the record developed at the hearing, my observation of the
witnesses and their demeanor, and from my evaluation of the
evidence.
II. Background
A. Differences in Contract Interpretation
The factual background regarding this dispute was set forth in
detail in both the Board's initial opinion, and the Claims
Court's decision on appeal, and is repeated here only to the
extent necessary for consideration of the reliance issue. This
appeal is rooted in a single award, "requirements" contract for
data capture, printing, binding, and distribution of the
Department of the Army's (Army) "Army Update Publications", which
GPO awarded the Appellant on February 9, 1984. 1/ Step 2 of the
procurement process asked
bidders who had submitted acceptable technical proposals (Step 1)
to quote their prices for a variety of activities contemplated by
the contract, including updating and/or editing, to be measured
on a transaction basis. R4 File, Tab A (IFB, � I.9., pp. 11-12).
The underscored terms were defined for bidders as follows:
Updating and Editing: Any deviation from the original copy made
at the direction of the ordering agency after initial
keyboarding, and may consist of:
(1) Change or Addition -- a single move or addition of word(s).
May be a code, a word, a phrase, a sentence, a paragraph, or a
block of continuous raising matter inserted at one place.
(2) Deletion -- An elimination at a single place.
* * * * * * * * * *
Transaction: The act of making an update or edit in the data
base. It includes searching the data base for the location of
the alteration and the movement or deletion of existing data.
R4 File, Tab A (IFB, pp. 5-6). 2/
The core dispute between the parties arose when the Appellant
began to submit payment vouchers to GPO for updating and/or
editing work seeking double compensation for the deletion and
addition of words at the same location on the ground that they
were separate transactions. GPO, focusing on the measurement and
payment provisions of the IFB, took the position that only a
single transaction charge was appropriate under those
circumstances. R4 File, Tab B. In the final analysis, however,
both parties relied on the above quoted definitional clauses of
the contract to support their respective, but contrary,
positions. R4 File, Tabs C and D.
Insofar as it is relevant to the issue before the Board here, the
Appellant's initial response to GPO's rejection of its claim also
informed the Respondent, in pertinent part:
The plain wording of the contract documents supports the
interpretation which we have made, which we used to price the
contract and to submit bills on the 400-S Program.
* * * * * * * * * *
. . . . Making an update or edit may be a "Change or Addition" or
a "Deletion". A "Change or Addition" is not the replacement of
words by other words at a single place, it is a move or addition
of words. The definition of "deletion" is obvious. In your
letter you have erroneously introduced the new term "replaced".
The contract documents do not discuss replacement, only deletions
and additions.
The UPDATE publishing process had an [sic] unique way of
identifying new changes in a publication. The text that is being
changed is struck-through and the new text is underscored. If
this same change was made using traditional methodology the word
being changed would just be replaced.
Therefore when we where [sic] pricing this program it made
complete sense that the word replacement did not appear in the
definition of Changes. The impetus of this program has been one
of getting changes handled electronically. The contractor . . .
had to design a system that would separate [sic] additions and
deletions and to handle them as individual transactions not as
transactions that are done in conjunction with each other.
[Emphasis added.]
R4 File, Tab C (Letter from Donald B. Mandery (Mandery), Manager,
Business Operations, InfoConversion, to R. E. Lee, Jr. (Lee), GPO
Printing and Procurement Division, dated November 29, 1984). 3/
The Contracting Officer's final decision letter of January 23,
1985, specifically rejected each of the Appellant's arguments.
R4 File, Tab D. In that regard, the final decision set forth
GPO's view that: (1) under the contract definition of
"transaction," the act of making an update or edit included
searching the data base for the location of the alteration and
the movement or deletion of exiting data; (2) the definition of
updating and editing involved three distinct processes -- change
or addition and deletion; (3) under the contract, where the
contractor has to search the data base to remove a word or group
of words from a single place in the text and add new words in
that same spot, the search and removal may be compensated as a
transaction but the keying in of the new material is charged for
as adding characters to the file; and (4) the updatepublishing
process whereby new changes are identified by
strikethroughs of old material and underscoring of the new, is
only for the benefit of the reader, and is not intended to
indicate a new way of making changes in the data base. R4 File,
Tab D. 4/
Thereafter, by letter dated April 15, 1985, the Appellant invoked
the procedures of the Board to protest the Lee's final decision
rejecting its interpretation of the data capture provisions of
the contract as allowing two transaction charges following a
single search of the text, a deletion of material, and an
addition of material at the same location. 5/ At the Prehearing
Conference held on July 23, 1985, both parties filed Cross
Motions for Summary Judgment, and in this posture the issue was
considered by the Board.
B. The Board's Initial Decision
On July 29, 1986, the Board rendered its decision on the parties'
contract interpretation dispute.
Both parties had argued to the Board that the "plain language" of
the contract governed their dispute, but each had a diametrically
opposed viewpoint as to the meaning of that "plain language."
Recognizing that these divergent ways of looking at the "plain
language" of the contract presented it with a dilemma, the Board
relied on the treatise published by Professors John D. Calamari
and Joseph M. Perillo, for guidance in interpreting the contract.
Fry Communications, Inc. / InfoConversion Joint Venture, Docket
No. GPO BCA 9-85 (July 29, 1986), Sl. op. at 12. 6/ In that
regard, among the interpretive theories discussed in the
treatise, the Board favored Professor Williston's "standard of
reasonable expectation" as providing the best criterion by which
to measure the meaning of the contract. Id. Under this
yardstick, contract language is given "the meaning that the party
making the manifestation should reasonably expect the other party
to give it," or stated otherwise "what a reasonable person in the
position of the parties would have concluded." 7/ Applying that
standard, the Board concluded that the word "change" was used in
its "ordinary" sense and did not have any special meaning under
contract, notwithstanding that it was used to help define the
technical term "updates and edits." Id., at 13.
Furthermore, relying on the usual definitions ascribed to the
word "change" by the dictionary (Random House Unabridged
Dictionary), the Board also concluded that the use of that term
in the contract was fully consistent with its ordinary meaning.
Id. Consequently, the Board believed that the word "change" has
subsumed in its meaning the concomitant correlative concept of
"deletion" as a necessary process to its accomplishment. Id., at
14. Moreover, the Board felt that the separate recognition of
the word "deletion" within the definition of the technical term
"edits and updates" was intended to recognize that on occasion
the contractor might be called upon to search the data base for
the sole purpose of locating and removing previously entered
material only. Id.
Therefore, the Board held that under the terms of the contract,
Appellant was entitled to be paid only one "per transaction"
update and editing charge when, nearly simultaneously, it had to
make both a deletion and an addition to the data base at
precisely the same physical point in the data base file. Id., at
15. Accordingly, the Board denied the Appellant's Motion for
Summary Judgment and granted the Respondent's Cross Motion. Id.
C. Decision of the Claims Court
In its review of the case, the Claims Court reached a contrary
conclusion with respect to the meaning of the term "transaction"
under the contract, and reversed the Board. Fry Communications,
Inc. / InfoConversion Joint Venture v. United States, No.
174-89C (Cl. Ct., Feb. 5, 1991). Viewing its principal task as
deciding whether the IFB was ambiguous, and if so to what extent,
the Claims Court rejected the Board's "dictionary" approach to
resolving the dispute at the outset. Id., Sl. op. at 13-15. 8/
As the Claims Court indicated, contractual language is ambiguous
if it will sustain different reasonable interpretations. Id., Sl.
op. at 11 (citing, Edward R. Marden Corporation v. United States,
803 F.2d 701, 705 (Fed. Cir. 1986); Sun Shipbuilding & Drydock
Co. v. United States, 183 Ct. Cl. 358, 372 (1968)). In that
regard, the Claims Court observed that the Respondent could not
prevail simply by showing that its interpretation of the IFB is
somehow "better" than [the Appellant's]; " . . . the crucial
issue in this connection is whether [the Appellant's]
interpretation is within the zone of reasonableness." Id., at 15
(citing, WPC Enterprises, Inc. v. United States, 163 Ct. Cl. 1, 6
(1963)).
Looking at the Respondent's interpretation against this standard,
which was predicated on the view that the essence of a
transaction is an alteration performed after a search of the
text, 9/ the Claims Court concluded that it fell within the
"zone of reasonableness;" i.e., the Respondent drew inferences
which were rational and consistent with contract language
(citing, Sun Shipbuilding & Drydock Co. v. United States, supra,
183 Ct. Cl. at 372), and not based on any obvious errors, gross
discrepancies, or glaring gaps (citing, WPC Enterprises, Inc. v.
United States, supra, 163 Ct. Cl. at 6). Id., Sl. op. at 17. 10/
Similarly, the Claims Court believed that the Appellant's
interpretation of a "transaction" was also reasonable. The crux
of the Appellant's argument was that the IFB does not explicitly
require a search before each deletion and addition at the same
location in order to have multiple transaction charges.
Therefore, according to the Appellant, it was reasonable to
believe that the
IFB permitted a charge for a deletion as one transaction, and a
charge for an addition as a second transaction, even though the
alterations were made in the same location. Id., Sl. op. at 18.
In the Claims Court's view, the Appellant's position is fully
consistent with the IFB itself. Id., Sl. op. at 18-20. 11/
Accordingly, the Claims Court rejected the Respondent's argument
that the Appellant's interpretation is unreasonable because it
renders certain provisions of the IFB meaningless -- the eight
line items for adding characters to the file, as well as the
explicit estimate of over 19,000,000 characters to be added to
the file annually -- for two reasons: (1) the Respondent's
unstated premise; that bidder is charged with knowing the
principle of contract
construction which prefers an interpretation giving meaning and
effect to all portions of an instrument over one that leaves any
portion meaningless; ignored the operative inquiry before the
Claims Court, namely, whether the interpretation advanced by Fry
-- ostensibly staffed by laymen -- is reasonable; and (2) in any
event, the Appellant could reasonably have interpreted the
provisions for adding characters to the file at face value and
moved on. Id., Sl. op. 20-21.
Because the Claims Court found that both the Respondent and
Appellant advanced interpretations falling within the zone of
reasonableness, it concluded that the IFB was ambiguous. Id.,
Sl. op. at 21 (citing, Edward R. Marden Corporation v. United
States, supra, 803 F.2d at 705). Further, the Claims Court
stated that under the doctrine of contra proferentem, the
Appellant's reasonable interpretation of the IFB drafted by the
Respondent will be adopted, provided: (1) the IFB was not
patently ambiguous; and (2) that the Appellant relied on its
interpretation in preparing its bId. Id., Sl. op. at 21-22
(citing, William F. Klingensmith, Inc. v. United States, 205 Ct.
Cl. 651, 657 (1974); Fruin-Colnon Corporation v. United States,
912 F.2d 1426, 1430 (Fed. Cir. 1990)).
A patent ambiguity would exist if the IFB contained a gross
discrepancy, an obvious error in drafting, or a glaring gap, as
seen through the eyes of a "reasonable man" on an ad hoc basis.
Id., Sl. op. at 22 (citing, Max Drill, Inc. v. United States, 192
Ct. Cl. 608, 626 (1970); WPC Enterprises, Inc. v. United States,
supra, 163 Ct. Cl. at 6). If such discrepancies, errors, or gaps
are not present, the ambiguity is latent and not patent. On the
other hand, if the Claims Court finds that the ambiguity is
patent, the Appellant would have been obligated to seek
clarification of the IFB prior to bidding, which it failed to do.
Id., Sl. op. at 22 (citing, Newsom v. United States, 230 Ct. Cl.
301, 303 (1982)). In that regard, the Claims Court's examination
of the IFB failed to reveal arguable gross discrepancies, obvious
errors, or glaring gaps, and it therefore concluded that the
ambiguity was latent only. Id., Sl. op. at 22. 12/
However, the final issue before the Claims Court -- whether the
Appellant relied on its interpretation of the IFB in preparing
its bid -- placed it in a quandary. 13/ Although the Appellant
has alleged throughout these appellate proceedings, i.e., before
both the Board and the Claims Court, that when its bid was
prepared, it believed that it could charge for two transactions
following a search, when making a deletion and an addition at the
same location in the text -- and supported this position with the
affidavit of George E. Devine (Devine), the president of joint
venturer InfoConversion -- there was no substantive evidence in
the record on the issue. Id., Sl. op. at 24-25. 14/ In the view
of the Claims Court:
For the purposes of the present case, . . . [the Appellant] must
show that when it prepared its bid -- specifically, when it
arrived at its bid of $3.06 per transaction -- it believed that
it could charge for two transactions whenever a deletion and an
addition were made at the same location in the text. There is no
testimony in the record on this issue, nor are there any
worksheets, notes, or other materials in the record which might
shed some light on
how [the Appellant] arrived at its $3.06 figure. The record
developed thus far on the reliance issue consists merely of
allegations (which the government neither admits nor denies) and
self-serving statements made after the dispute arose. [Citation
omitted.] Such allegations and statements on this record are,
therefore, not sufficient to enable [the Appellant] to carry its
burden of proof on the reliance issue.
Id., Sl. op. at 24-25.
The record showed that Board had disposed of the matter without a
hearing and without making any factual findings on the reliance
issue, even though the Appellant had explicitly argued that when
it prepared its bid, it reasonably and actually interpreted the
IFB to allow two transaction charges following a single search
when an addition and a deletion were made at the same location.
As a consequence, the Claims Court believed that the Appellant
was entitled to an evidentiary hearing on the reliance issue.
Id., Sl. op. at 25. Accordingly, because the Claims Court itself
could not conduct such a hearing, the matter was remanded to the
Board to take evidence on the sole factual issue of whether the
Appellant actually relied, at the time it prepared its bid, on
its present interpretation of the IFB. Id., Sl. op. at 25-26
(citing, 28 U.S.C. � 1491(a)(2) and RUSCC 60.1). 15/
III. Findings of Fact
At the hearing on April 4, 1991, the Appellant called two
witnesses -- Devine and Mandery -- and introduced three exhibits.
16/ The Respondent called no witnesses. From the evidence taken
at the hearing it is clear that no dispute exists concerning the
facts relevant to the reliance issue.
As indicated earlier, InfoCoversion was one of several bidders
who had submitted acceptable technical proposals (Step 1) for
Program 400-S, and was invited to quote its prices at Step 2 of
the procurement process for a variety of activities contemplated
by the contract, including updating and/or editing. The Step 2
IFB was sent by GPO to InfoConversion on or about January 9,
1984, and was received by the Appellant shortly thereafter. Its
bid had to be submitted to GPO by January 31, 1984. With the
receipt of the Step 2 IFB, InfoConversion became aware for the
first time of the schedule of items to be priced and the number
of units that would be used as multipliers for the evaluation of
the winning bidder. 17/
The preparation and submission of the schedule of prices in
InfoConversion's Step 2 bid was essentially a two-man endeavor
by Devine and Mandery. 18/
The critical pricing item involved in this dispute was the charge
for updating and/or editing (line item 9.(a)), i.e., making a
deletion, a change, or an addition, which was measured on a
transaction basis. See C-1, at 11. Devine and Mandery were
generally familiar with the meaning of the term "transaction"
from their previous experience with Government contracts. In
this particular instance, however, they were faced with deciding
whether an addition and a deletion of material at one location
was one transaction or two, because it was significant in terms
of arriving at a price for that line item. Therefore, Devine and
Mandery were compelled to consider the meaning of the term
"transaction" in the IFB for Program 400-S during the bid
preparation process. But they admit that their discussions about
the matter were not lengthy because they felt sure about what the
Government intended to
cover by the term.
The basis for their confidence was essentially three-fold.
First, the Step 1 Request for Proposals (RFP) and the Step 2 IFB
for Program 400-S told potential bidders that this was a contract
for Army Update Publications. The Appellant knew "Update" to be
the name of an Army program, with the acronym RC PAC, under which
administrative manuals were periodically updated, edited and
changed. 19/ More importantly, the Army had used private
contractors for its RC PAC program in the past, and
InfoConversion had been the contractor for all of the prepress
work. 20/ As a consequence, the Appellant was familiar with the
process by which the manuals were prepared and published. In
that regard, according to the Appellant the key to the "Update"
program was the way in which changes were identified for the
reader by the appropriate use of strikethroughs and underlines;
i.e., strikethroughs identified deleted material while
replacement data (new or changed) was underlined (in the
following edition of the publication the struck material was
eliminated altogether and the underscoring was removed from the
new material). Thus, when Devine and Mandery discussed how to
count transactions for pricing line item 9.(a), they
extrapolated from their RC PAC experience and applied the same
method to Program 400-S. That is, since a deletion (a
strikethrough) and an addition (an underscore) were considered
two separate transactions under RC PAC even if they occurred at
the same location, InfoConversion prepared its price for Program
400-S updates and/or edits with that approach in mind. 21/
Second, Devine and Mandery reviewed other GPO solicitations for
similar work on which they had submitted bids in the past to see
if they shed light on the use of the term "transaction" in this
instance. In particular, at the same time they were working on
InfoConversion's bid for Program 400-S, Devine and Mandery were
also looking at another data capture and photocomposition IFB
from GPO -- Program 280-M. See C-2. The Appellant had
unsuccessfully bid on Program 280-M in the past, and believed
that it covered work similar to Program 400-S. 22/ Therefore, as
part of the bid preparation for Program 400-S, Devine and Mandery
examined a copy
of the IFB for Program 280-M. In that regard, apart from finding
that Program 280-M shared several requirements and general
concepts with Program 400-S, they discovered the following
Program 280-M instruction regarding compensation for changes
involving both a deletion and an addition of material taking
place at the same location:
. . . A transaction is any alteration of the
database at any single location within the database. It
includes, but is not necessarily limited to, the following:
* * * * * * * * * *
The deletion of a word or sequential block of words in a single
location, regardless of their number, where no replacement
word(s) are to be inserted. If a deletion and insertion occur at
the same point, two transaction charges will be allowed.
See C-2, at 14. Because of the perceived similarities between
Program 280-M and Program 400-S, Devine and Mandery concluded
that the same compensation instructions applied to the latter and
priced line item 9.(a) accordingly.
Moreover, Devine and Mandery said they saw their interpretation
buttressed by the words in the Program 400-S IFB itself. That
is, the word "deletion" appeared in both solicitations, and to
them the word "addition" in Program 400-S was synonymous with
"insertion" in Program 280-M. Since they thought that GPO was
referring to the same type of functional operation in both cases,
Devine and Mandery believed that the clear compensation
instructions in 280-M applied to both cases; i.e., it was
inconceivable to them that GPO would count a deletion and an
addition in one location as two transactions in one instance
(Program 280-M), and as a single transaction in the other
(Program 400-S). In that regard, Devine recognized that the
wording in the Program 400-S IFB was not as precise as Program
280-M in terms of the compensation rules. However, he saw
Program 400-S' definition of "Updating and Editing," which shows
"deletion" and "addition" as separate functions, and its
definition of "transaction," which specifically refers to "making
an update or edit in the data base," as sufficiently clear to
indicate a parallel intent by GPO to pay for two transactions.
In reaching this conclusion, Devine and Mandery also relied on
the technical aspects of the work as they knew it. That is, as
indicated previously, their experience showed that the Army
"Update" system provided for deletions (strikethroughs) and
additions (underlining) of material by means of different
electronic codes. Technically, entering each code at the same
location to delete and add material amounted to two separate
electronic searches since different function keys were used for
underscoring and strikethoughs on the computer terminals leased
by InfoConversion for the Army "Update" work. 23/ Accordingly,
the Appellant developed an accounting system for Program 400-S in
which the final electronic file actually tallied the number of
additions, deletions, underscores, and strikethroughs, and billed
them as separate transactions. 24/
Working under the impression that the pertinent terms of Program
400-S allowed InfoConversion two transaction charges where an
addition and a deletion were made at the same place in the data
base, Devine and Mandery prepared the Appellant's bid from the
Appellant's internal records with respect to work it had done for
the Government on other electronic contracts, and from
information provided by the Publications Service staff who had
been working on RC PAC. 25/ In effect, to arrive at
InfoConversion's bid, Devine and Mandery compared the previous
jobs, including RC PAC, with the specifications for Program 400-S
for similarities with respect to the type of tasks required,
amount of hourly effort which would
be expended, labor resources and job skills needed, and the
necessary machinery and equipment. Once this analysis was
complete, they applied InfoConversion's costing methodology to
the factors involved, 26/ and then translated those costs to the
bid sheet in the required format; i.e., per transaction,
character, illustration, month, page proof, tape, etc. Aware
that Program 400-S would involve a lot of electronic transfer
work, and presuming that InfoConversion would be allowed to
charge additions and deletions at one place as two transactions,
Devine and Mandery relied primarily on the cost data developed
under the RC PAC to arrive at a per transaction price of $3.06
for "Updating and/or Editing" (line item 9a). According to
Devine, if the Appellant had known that only one transaction
charge would have been allowed in these circumstances, the cost
figures would have been divided by a much lower number, which
would have resulted in a higher per transaction price.
It is clear from the record that during the bid preparation
process Mandery developed notes or worksheets reflecting the
various components such as hours, labor resources, equipment
resources, overhead, general and administrative expenses which
were used to develop the per transaction price of $3.06. 27/ In
fact,
developing such worksheets is a normal practice followed by
InfoConversion for submitting bids on any Government contract.
This supporting cost information, however, did not have to
accompany the bid submitted for Program 400-S. Since 1984, those
worksheets have disappeared and are no longer available.
Apparently, the worksheets were not kept with the Program 400-S
file, and Mandery's attempt to locate them prior to the hearing
was unsuccessful. 28/ Accordingly, there is no documentary
evidence in the record such as worksheets, notes, or other
materials, which would "shed some light" on how the Appellant
arrived at its figure of $3.06 per transaction for updating
and/or editing the data base.
IV. Positions of the Parties
A. Position of the Appellant
Relying basically on the testimony of Devine and Mandery, the
Appellant argues that it has sustained its burden of proof of
showing that it relied on its "two transaction" interpretation of
the contract when it prepared and submitted its bid. Thus, when
the Program 400-S contract was reviewed by them with regard to
"Updates and Edits," which had to be quoted on a per transaction
basis, they reasonably concluded that the addition and deletion
of material at one location in the text would entitle it to
charge for two transactions. This conclusion was consistent with
Appellant's experience on a contract for similar work for the
Army and with the terms of another solicitation, Program 280-M,
that Appellant had recently bid. In that regard, the Appellant
reviewed its cost experience for doing virtually the same type of
updates and edits for the same types of publications on the Army
job, totaled the number of transactions accomplished on that
contract, and determined its Program 400-S bid by counting an
addition and deletion of material at one location in the text as
two transactions. By doing so, the per transaction bid for
updates and edits was substantially lower than if Appellant had
considered additions and deletions in the same location to be
only one transaction. Thus, the Appellant's bid was predicated
on this understanding of the contract terms.
Certainly, Devine and Mandery knew from experience that making
additions and deletions at one data base location occurred
frequently in these sorts of contracts, so the issue was a
significant factor in their pricing deliberations. They relied
on that experience in calculating the total costs associated with
the updating and editing work on Program 400-S. In fact, they
set up the billing system to accommodate this "two transaction"
viewpoint, and did not change it until the initial claim was
denied.
The Appellant sees no significance in the fact that the
worksheets and notes developed by Devine and Mandery as part of
the bid process are no longer available. First, the Appellant
doubts that such records as these would have been kept unless
this litigation had been anticipated, in which case the files
might have been artificially documented with matters not normally
maintained in them; e.g., notes to the file relating to the
assumptions on which the calculations were based. Second, Devine
and Mandery only had three weeks to develop the bid for all line
items, so time was of the essence and they probably did not
document everything that went into their figures. Third, the
worksheets, even if available probably would not have been
probative on the reliance issue. That is, the worksheets would
undoubtedly only have contained the results of the analysis of
the historical cost data on the RC PAC contract; they would not
have revealed what assumptions were made by the Appellant
concerning the definition of a "transaction" in Program 400-S.
At this stage, the best evidence of the assumptions made is the
corroborated and uncontroverted testimony of Devine and Mandery,
the two persons most knowledgeable about how the Appellant
collected its costs on the RC PAC contract and how the Appellant
formulated its bid for doing updates and edits on Program 400-S.
Accordingly, the Appellant submits that not only has it sustained
its burden of proof, but also that the record evidence clear
shows that, as a matter of law, it actually relied on its "two
transaction" interpretation of the at the time it prepared its
bid.
B. Position of the Respondent
Contrary to the Appellant, the Respondent believes that the
failure of InfoConversion to produce the documents and worksheets
it developed in formulating its bid is fatal to its case. As
Counsel for the Respondent observed in his oral summation at the
hearing, the Appellant had the burden of presenting credible
evidence to support its contention that it interpreted the
provisions of Program 400-S in a particular way and that it
relied upon that interpretation. Here, however, although the
witnesses testified that worksheets showing the accounting
records dealing with the resources required, the cost of those
resources, and the pricing formula applied, were in fact
developed and existed at the time the Appellant submitted its
bid, those contemporaneous documents are not now available to
support the Appellant's generalizations about the thinking or the
calculations which went into the development of a per transaction
price for updates and edits.
Similarly, the Respondent contends that the Appellant's
failure to produce evidence concerning the computer program which
it developed for billing purposes, and which it now claims that
it changed when GPO would not accept its "two transaction" theory
of compensation for updates and edits, is also a major omission.
In addition, the Respondent believes that any changes to such an
electronic accounting program should have been in writing.
However, no documentation was produced at the hearing showing
either the existence of such a program, or any change to it.
Although Mandery went to InfoConversion prior to the hearing to
retrieve the worksheets and documents from the files there, they
could not be found. In the Respondent's view, these documents
are the best evidence of whether in submitting its bid the
Appellant relied on the interpretation of the Program 400-S IFB
which it now advances; otherwise nothing is left but "inadequate
self-serving statements" made seven years later.
Furthermore, the Respondent sees the Appellant's "bootstrap" use
of the Program 280-M solicitation as undermining the very grounds
on which it prevailed before the Claims Court; i.e., that at the
time it was preparing its bid on Program 400-S, the Appellant saw
the ambiguity in the term "transaction" and used the definition
in Program 280-M to clarify it. As a consequence, the Respondent
believes the reliance on Program 280-M is evidence of the fact
that perhaps the ambiguity issue was decided wrongly by the
Claims Court. To the Respondent, the testimony Devine and
Mandery clearly showed that at the time they prepared the
Appellant's bid for updates and edits, they had a question about
GPO's intent in using the word "transaction" in the Program 400-S
IFB. The Respondent also contends that because Devine and
Mandery could not find the meaning of that in the Program 400-S
IFB itself, they searched for other guideposts outside that
program. Therefore, according to the Respondent, regardless of
whether the ambiguity was latent, as decided by the Claims Court,
or patent, it was nonetheless incumbent on Devine and Mandery to
seek a clarification from the Contracting Officer. 29/
In summary, it is the Respondent's position that the Appellant's
evidence consists of nothing more than personal recollections and
speculation about what might have happened in developing the bid
for Program 400-S, and allegations and self-serving statements
made after the dispute arose. As such, the
Respondent argues, the evidence fails to show that at the time
the Appellant submitted its bid, it in fact relied upon an
interpretation of the contract which allowed compensation for two
transactions where an addition and a deletion were made at the
same location in the data base. Accordingly, the Respondent
believes that the Appellant has failed to meet its required
burden of proof under the law.
V. Issue Presented
The sole issue presented for the consideration of the Board on
remand is whether or not the Appellant actually relied, at the
time it prepared its bid, on its present interpretation of the
Program 400-S IFB, which would allow it to charge for two
transactions when it made an addition and a deletion at the same
place in the text? 30/
VI. Analysis and Conclusions
It is a fundamental principal of Government contract law that an
appellant, to prevail, bears the burden of proving its
affirmative claim against the Government and establishing its
entitlement by a preponderance of the evidence. See, e.g.,
Singleton Contracting Corporation, GSBCA No. 8548 (January 18,
1990), 90-2 BCA � 22,748; Tri-State Services of Texas, Inc.,
ASBCA No. 38010 (June 5, 1989), 89-3 BCA � 22,064 (citing,
Wunderlich Contracting Company v. United States, 173 Ct. Cl. 180,
351 F.2d 956 (1965); Air-A-Plane Corporation, ASBCA No. 3842,
60-1 BCA � 2547; Coastal Contracting and Engineering Company,
Inc., ASBCA No. 4835, 58-2 BCA � 1875). "Preponderance of the
evidence" simply means such evidence as, when weighed against
that opposed to it, is more convincing that something is more
likely so than not so. Cf., Hopkins v. Price Waterhouse, 737
F.Supp. 1202, 1204, n. 3 (D.D.C. 1990). That is, to meet this
standard of proof a party is required to present evidence
sufficient to persuade the finder of fact that the proposition is
more likely true than not true. Id., at 1206
(citing, E. Devit, C. Blackmar, M. Wolff, FEDERAL JURY PRACTICE
AND INSTRUCTIONS � 7-2.02 (4th ed. 1987). Stated in terms of
this case, this means that the Appellant has the burden of
showing, by a preponderance of the evidence, that when it
prepared its bid, it actually relied on its interpretation of the
"Updates and Edits" section of the IFB that two "transaction"
charges were allowed for deletions and additions made in the same
location. Fry Communications, Inc. / InfoConversion Joint
Venture v. United States, supra, Sl. op. at 24. See also, Fruin-
Colnon Corporation v. United States, supra, 912 F.2d at 1430;
Edward R. Marden Corporation v. United States, supra, 803 F.2d at
705; Framlau Corporation v. United States, 568 F.2d 687, 693 (Ct.
Cl. 1977); Dale Ingram, Inc. v. United States, 475 F.2d 1177,
1185 (Ct. Cl. 1973); Castillo Printing Company, Docket No. GPO
BCA 10-90 (May 8, 1991) Sl. op. at 39 (citing, Fry
Communications, Inc. / InfoConversion Joint Venture v. United
States, No. 174-89C (Cl. Ct., Feb. 5, 1991)). As the Claims
Court has observed, this rule of law is well settled. Fruin-
Colnon Corporation v. United States, supra, 912 F.2d at 1430
(citing, Lear Siegler Management Services Corporation v. United
States, supra, 867 F.2d at 603; Edward R. Marden Corporation v.
United States, supra, 803 F.2d at 705).
In this case, the Claims Court remanded the matter to the Board
because the Appellant had not been afforded an opportunity to
present the evidence necessary for it to carry its burden of
proof on the reliance issue; i.e., the appellate record on that
issue consisted merely of allegations and self-serving statements
made after the dispute arose. 31/ Fry Communications, Inc. /
InfoConversion Joint Venture v. United States, supra, Sl. op. at
25. Specifically, the appellate record lacked testimony and
documentary evidence such as worksheets and notes, which might
explain how the Appellant arrived at its "per transaction" figure
of $3.06, and the Claims Court expected the Appellant, on remand,
to supply the missing proof. 32/ Id., Sl. op. at 24-25. Thus,
from the Claims Court's opinion, it is clear that for the
Appellant to sustain its burden of proof on the reliance issue,
it had to offer evidence which showed not only whether it relied
on its "two transaction" interpretation of the Program 400-S IFB
in formulating its bid for updates and edits, but also how that
interpretation affected its bid. The Board believes that when
the evidence presented at the hearing is properly weighed and
considered, the conclusion is inescapable that the Appellant has
failed to carry its burden of proof on the reliance issue by a
preponderance of the evidence.
The Appellant's case rests primarily on the testimony of its two
witnesses, Devine and Mandery, who prepared InfoConversion's
bid. From the record developed at the hearing, it is clear that
when they first saw the Step 2 IFB for Program 400-S, Devine and
Mandery knew immediately that in pricing the line item for
"Updates and Edits," their most significant decision would be
determining whether an addition and a deletion of material at one
location was one transaction or two. Notwithstanding the
importance of the matter, Devine and Mandery spent little time
discussing the meaning of the term "transaction" when
formulating the Appellant's bid because they felt sure they knew
what the GPO intended to cover by the term from their previous
experience with Government contracts.
While Devine and Mandery did not ignore the words in the Program
400-S IFB, it seems clear to the Board that their deliberations
concerning the meaning of the term "transaction" centered
primarily on outside sources. In the opinion of the Board, the
Appellant's interpretation that two transaction charges were
allowed where an addition and a deletion were made at the same
location in the data base, is principally rooted in: (1) the
understandings they derived from InfoConversion's previous work
on the Army's RC PAC program; and (2) the definitions found in
the solicitation for Program 280-M, which they were reviewing
contemporaneously with Program 400-S. In the latter regard, the
specific instruction in the Program 280-M solicitation which said
that "[i]f a deletion and insertion occur at the same point, two
transaction charges will be allowed," seems to have been
controlling because the language was practically the same (if one
considers the word "addition" in Program 400-S was synonymous
with "insertion" in Program 280-M), and the same type of
functional operation seemed to be involved in both programs;
hence, Devine and Mandery believed that the clear compensation
instructions in 280-M applied to Program 400-S as well. As for
their experience with RC PAC, because a deletion (a
strikethrough) and an addition (an underscore) were considered
two separate transactions under that program even if they
occurred at the same location, Devine and Mandery applied the
same method to Program 400-S when counting transactions for
pricing line item 9.(a). In light of this analytical approach
taken by Devine and Mandery, the Board is compelled to conclude
that the Appellant did not actually rely, at the time it prepared
its bid, on its present interpretation of the Program 400-S IFB.
See, Lear Siegler Management Services Corporation v. United
States, supra, 867 F.2d at 604 ("[t]he actual basis on which
appellant prepared its bid was its prior experience with a
similar contract at Warner Air Force Base."). See also, Edward
R. Marden Corporation v. United States, supra, 803 F.2d at 705
("[h]ere it is obvious that in the preparation of its bid, . . .
Marden did not rely on an interpretation that composition or
latex flooring was unnecessary in the mechanical rooms.").
The Board's conclusion is reenforced by the fact that the
Appellant's worksheets and notes, which the record discloses were
developed by Mandery as part of the bid preparation process, have
since disappeared. Those notes or worksheets, which were
compiled from the Appellant's internal records with respect to
work it had performed on other Government contracts and the RC
PAC program, reflected the various components such as job tasks,
hours, labor resources, equipment resources, overhead, general
and administrative expenses. In that regard, it is clear that
Devine and Mandery relied primarily on the cost data developed
under the RC PAC to arrive at a per transaction price of $3.06
for "Updating and/or Editing" (line item 9a). These documents,
however, were not introduced at the hearing because they are no
longer available. The testimony in the record is that this
supporting cost information did not have to accompany the
Appellant's bid, the data was never an official part of the
Program 400-S files, and since 1984, the worksheets have
disappeared. Accordingly, there is no documentary evidence in
the record such as worksheets, notes, or other materials, which,
in the words of the Claims Court, would "shed some light" on how
the Appellant arrived at its figure of $3.06 per transaction for
updating and/or editing the data base.
Given the state of this record, the Board must agree with the
Respondent that the Appellant's failure to produce the worksheets
and notes which Devine and Mandery developed in the bid
preparation stage of the procurement, is a fatal omission because
without those documents the Appellant cannot show how its
interpretation affected its bid; i.e., how the figure of $3.06
was determined. See, e. g., Malloy Construction Company, ASBCA
No. 25055, 82-2 BCA � 16,104
(". . . [Appellant] failed to produce documents upon which it
purportedly relied in formulating its bid. . . . In the absence
of documentary evidence revealing such reliance, we hold that
appellant has failed to produce credible evidence to meet its
burden of proof."). See also, G W Mechanical Contractors, Inc.,
ASBCA No. 36430, 88-3 BCA � 21,126.
Even though the Counsel for the Appellant expressed his concern
at the hearing about the Appellant's inability to locate the
missing records, the Appellant nonetheless believes that their
omission is without significance because: (1) such worksheets and
notes probably would not have been kept unless this litigation
had been anticipated, in which case the files might have been
artificially documented with matters not normally maintained in
them (e.g., notes to the file relating to the assumptions on
which the calculations were based); (2) Devine and Mandery were
pressed for time to develop the bid for all line items, so they
most likely did not document everything that went into their
figures; (3) the worksheets, even if available, probably would
not have been probative on the reliance issue because they would
undoubtedly only have contained the analysis of the cost data on
the RC PAC contract and not disclosed the assumptions made by the
Appellant concerning the definition of a "transaction" in Program
400-S; and (4) the "best evidence" of the Appellant's
interpretation is the corroborated and uncontroverted testimony
of Devine and Mandery. Hearing Transcript, at 81-83;
Appellant's Brief, dated May 29, 1991 (unnumbered) pages 5-6
(App. Brf.). Furthermore, while
Appellant's Counsel admits the possibility that the Appellant
could have formulated its interpretation after its bid was
prepared, he also believes that because the first billing to GPO
for updates and edits charged the Government for two transactions
where material was added and deleted at one location in the text,
that fact makes such a possibility less probable. App. Brf., at
6.
The Board believes it is unnecessary to address each of these
arguments advanced by the Appellant. Suffice it to say, that it
seems to the Board that at least since November 8, 1984, when GPO
rejected the Appellant's first billing showing two transaction
charges for additions and deletions made at the same place in the
text (R4 File, Tab B), a reasonably prudent contractor would in
have preserved the relevant files and records, whether in
anticipation of litigation or to support its claim. Furthermore,
the Board is unable to tell whether the worksheets and notes,
even if available, would have had probative value on the reliance
issue because they were never introduced. Consequently, in light
of the Appellant's failure to explain how the documents came to
be missing, the Board agrees with Counsel for the Respondent that
the "best evidence" of the contents of the missing worksheets and
notes are the documents themselves, not the testimony of Devine
and Mandery. 33/ R. Brf., at 9. Cf., Bendix Corporation v.
United States, 600 F.2d 1364, 220 Ct. Cl. 507 (Ct. Cl. 1979),
appeal after remand 676 F.2d 606, 230 Ct. Cl. 247 (Ct. Cl. 1982).
Moreover, because the Appellant has not introduced evidence to
explain why the documents are missing, the accepted legal
principles allow the Board to draw a negative inference in favor
of the Respondent that the contents would be harmful to the
Appellant's case. See, e.g., Jen-Beck Associates, VABCA Nos.
2107-10, 2133-2117, 2119-20, 2122, 2124-25, 2127, 2129-35, 2186,
87-2 BCA � 19,831. See also, Morowitz v. United States, 15 Cl.
Ct. 621, 631 ("[i]nasmuch as a party's failure to bring forth
evidence within his control, or to explain such omission,
warrants an inference that the evidence, if proffered, would be
unfavorable to his cause [citations omitted], we conclude that
the plaintiff's failure to call the foregoing
witnesses and introduce certain Darby, Inc. records, . . ., is
motivated by the negative impact that such evidence would have
had on their tenuous contention.").
In the final analysis, the Board is left with the conclusion that
the Appellant's evidence supporting its claim that it relied on
its "two transaction" interpretation of the Program 400-S IFB in
submitting its bid, consists of nothing more than the self-
serving testimony of Devine and Mandery, which is not enough to
sustain the Appellant's burden of proof in this matter. See.
e.g., Singleton Contracting Corporation, supra, 90-2 BCA �
22,748. As indicated previously, assertions and allegations
standing alone do not constitute proof. 34/
VII. Decision
Because the Appellant has offered insufficient proof supporting
its claim that it relied on its present interpretation of the
Program 400-S IFB, when it submitted its bid, the appeal must be
denied.
_______________
1. The initial contract term was until July 31, 1984, but was
extendable for one year increments up to and including 1988, as
funds became available. Rule 4 File, Tab A (Specifications --
cover page; Part Two Invitation for Bids -- "NOTICE TO BIDDERS,"
p. 1) (hereinafter R4 File).
2. The IFB also contained detailed instructions concerning how
updates and/or edits would be measured and paid for. Rule 4
File, Tab A (IFB, p. 6). Among other things, those instructions
stated that: (1) the maximum allowable charge for updates and/or
edits on any particular page would be an amount equal to the cost
of initial data capture for that page; (2) the charge for
deleting or transposing typed lines without setting and inserting
new material will be on "per transaction" charge for each group,
regardless of the number of lines in a group; (3) transpositions
of type, including deletions and insertions, and/or pages of
made-up pages, would entitle the contractor to charge two "per
transaction" charges per transposition; and (4) transpositions on
made-up pages of components such as tables or spaces for an
illustration, would allow the contractor to charge two "per
transaction" charges for each affected column -- e.g., a table
which prints across three columns would result in a transposition
charge based on six "transactions".
3. Similarly with respect to the issue herein, in its formal
complaint to the Board, the Appellant alleged, in pertinent part,
that: "...[i]n preparing its bid for the subject Contract,
Appellant reasonably interpreted this language as allowing a one
transaction charge for a change or addition and a second
transaction charge for a deletion, even if these two transactions
occurred at the same location in the text." [Emphasis added.]
Official File. Tab 8 (hereinafter OF).
4. The Respondent's Answer to the Complaint further amplified
its position on (4) above by adding that the strikethrough and
underscoring system of identifying changes had no relevance to
the definition of "transaction" under the contract or the method
of paying for them; indeed, the same method had been applied for
many years to changes in congressional bills and other documents
regardless of the manner in which they were composed. OF, Tab
11, � 10.
5. The original appeal also disputed GPO's billing system under
the contract, including the supporting material required to be
submitted with the Appellant's invoices. However, the parties
bilaterally resolved this second issue shortly after the appeal
was filed, and by letter dated May 1, 1985, the Appellant
notified the Board that it was withdrawn from the case. R4 File,
Tab J.
6. John D. Calamari and Joseph M. Perillo, The Law of Contract,
West Publishing Co., St. Paul, Minnesota (1977) (herinafter
Calamari and Perillo).
7. See, Calamari and Perillo, � 310, at p. 118, and discussion
in n. 18 (citing, James v. Goldberg, 256 Md. 520, 261 A.2d 753
(1970)).
8. In the Claims Court's view, "...context and intent of the
parties are more important than bland dictionary definitions."
Fry Communications, Inc. / InfoConversion Joint Venture v. United
States, Sl. op. at 11 (citing, Rice v. United States, 192 Ct. Cl.
903, 908 (1970)). While the general rule is that contractual
terms are to be given their plain and ordinary meaning unless it
is shown that the parties intended otherwise, Id., at 10.
(citing, Hol-Gar Manufacturing Corporation v. United States, 169
Ct. Cl. 384, 390 (1965), here it was clear that the contract
itself supplied the applicable definition of the key term
"transaction." Id., at 14. Thus, it was "fundamental error" for
the Board to disregard the special meanings given to the term in
the contract (which included the subterms "update and edit,"
"change or addition" and "deletion" "a single move of addition"
and an "elimination"), in favor the selective application of
common dictionary definitions. Id., at 14-15.
9. The Respondent argued that because a deletion and an addition
at the same location requires just one search, only one
transaction is involved. Therefore, adding material at the
location of a deletion should only entitle plaintiff to a charge
for "adding characters to the file" and not a charge for a second
transaction. According to the Respondent, for the Appellant to
be entitled to two transaction charges where there is a deletion
and an addition to the data base, there must be a separate
location for each activity. Fry Communications, Inc. /
InfoConversion Joint Venture v. United States, Sl. op. at 16-17.
10. The Claims Court was compelled to note, however, that the
Respondent always had the power, and perhaps the duty, to make
its intent clear in the IFB itself; i.e., with a provision which
simply said "[a]n alteration requiring only one search of the
text, where a deletion and an addition is made at the same
location, entitles the contractor to only transaction charge."
Id., Sl. op. at 17. Since the IFB did not contain a provision
explicitly stating that a search of the text was an indispensable
element of a "transaction," the Appellant was caught in
"...precisely the sort of 'hidden trap,' the risk of which should
fall on the drafter." Id. (citing, Sturm v. United States, 190
Ct. Cl. 691, 697 (1970); WPC Enterprises, Inc. v. United States,
supra, 163 Ct. Cl. at 6).
11...The Claims Court found support for the Appellant's position
in" (1) paragraph (2) of "Measurement of and Payment for Updating
and/or Editing" (IFB at 6); (2) the full definition of "Updating
and Editing;" and (3) paragraph (9) of the Schedule of Prices
(IFB at 11). With respect to the standards for measurement and
payment, the IFB allows one transaction charge "deleting or
transposing type lines without setting and inserting new
material." (Emphasis supplied by Court.) Thus, by negative
inference, the Claims Court found it reasonable to conclude that
an additional transaction charge is permitted when new material
is inserted. Id., Sl. op. at 18. Similarly, in agreement with
the Appellant, the Claims Court saw the full definition of
"Updating and Editing" which set forth three fundamental ways to
alter the existing data base (moving material, eliminating
material, and adding material), as supporting a reasonable
interpretation of the IFB to allow a transaction charge for an
"addition" (following a "deletion") whenever words, phrases,
sentences, or paragraphs are added to the text, regardless of
whether one or two searches are involved. Id., Sl. op. at 19.
Finally, insofar as paragraph (9) of the Schedule of Prices
provides that for updating and/or editing (a definition of a
"transaction") a flat charge for making a deletion, a change, or
an addition is computed "per transaction," the Claims Court
believed it was reasonable to interpret a "change" as a "single
move [of existing material]"; and "addition" is "addition [of new
material]"; and "deletion" is "elimination [of existing
material.]" Id. Indeed, the Claims Court felt that such an
approach, which accounts for all possible types of alterations in
the Schedule of Prices, comports with two fundamental principles
of contract construction: (i) meaning and effect should be given
to all parts of a contract (citing, Fortec Constructors v. United
States, 760 F.2d 1288, 1292 (Fed. Cir. 1985)); and (ii) when
there is a clear intention to depart from the ordinary meaning of
terms, the contractual definitions govern over ordinary meaning
(citing, Rice v. United States, supra, 192 Ct. Cl. at 908; Hol-
Gar Manufacturing Corporation v. United States, supra, 169 Ct.
Cl. at 390). Id., Sl. op. at 20.
12. At best, the Claims Court found only a few "minor
discrepancies and esoteric gaps," which were not so obvious and
glaring that the Appellant should have noticed and sought to have
them clarified. Id., Sl. op. at 22. As the Claims Court
observed, a contractor "is not normally required (absent a clear
warning in the contract) to seek clarification of any and all
ambiguities, doubts, or possible differences in interpretation."
Id. (citing, WPC Enterprises, Inc. v. United States, supra, 163
Ct. Cl. at 6). Indeed, to the Claims Court the only arguable
patent ambiguity is whether a "transaction" included an
"addition" because the latter term, at first blush, is not
contained in the contractual definition of the former. Id., Sl.
op. at 23 (citing, Public Utility Dist. No. 1 of Ferry County v.
United States, 20 Cl. Ct. 696 (1990) (generally, the expression
of one thing in a contract is the exclusion of another).
However, even though the missing term appears in another portion
of the contract (the detailed circumstance, ipso facto, rendered
the IFB patently ambiguous because no gross discrepancies,
obvious errors, or glaring gaps were thereby created.
Essentially, the Claims Court held that because the fuller
definition of "Update and/or Edit" specifically included an
"addition" as an example of a "transaction," it controlled over
the more general definition of "transaction" elsewhere,
especially since the latter directly refers a bidder to the
"Update and/or Edit" provisions for more specific examples of
"transactions." Id., Sl. op. at 23 (citing, United Pacific
Insurance Company v. United States, 204 Ct. Cl. 686, 694 (1974)
(when there are two conflicting clauses in a contract, the clause
which is specially directed to particular matter controls over a
clause which is general in its terms, even though the specific
matter may be included within those general terms).
13. As the Claims Court noted, the reason for the well-settled
rule that "where a contractor seeks recovery based on his
interpretation of an ambiguous contract, he must show that he
relied on this interpretation in submitting his bid," is to
prevent contractors from recovering additional compensation under
a contract based on a mere afterthought. Id., Sl. op. at 23-24
(citing, Fruin-Colnon Corp. v. United States, supra, 912 F.2d at
1430 [quoting, Lear Siegler Management Services v. United States,
867 F.2d 600, 603 (Fed. Cir. 1989)]). Thus, the "actual
reliance" rule compels a contractor to prove an actual injury
from a government-drafted latently ambiguous provision; if a
contractor did not formulate its bid actually relying on its
interpretation, it cannot later claim that failure to adopt its
post-bid interpretation will result in a pecuniary loss. Id.,
Sl. op. at 24.
14. As the Claims Court observed, the Respondent has neither
admitted nor denied the Appellant's allegations concerning the
reliance issue, nor contested the statements made in Devine's
affidavit. Id., Sl. op. at 24.
15. The Claims Court in a Wunderlich Act case is strictly
limited to a review of the factual record developed before the
agency; it may not take evidence to supplement the record. Id.,
Sl. op. at 25 (citing, United States v. Anthony Grace & Sons,
Inc., 384 U.S. 424, 432 (1966); Titan Pacific Construction
Corporation v. United States, 17 Cl. Ct. 630, 632 n. 4 (1989),
aff'd mem. 899 F.2d 1227 (Fed. Cir. 1990)).
16. The exhibits were marked C-1 through C-3, inclusive.
Briefly, C-1 is the Step 2 of the IFB for Program 400-S (the
pricing stage), dated January 9, 1984; C-2 is a 16-page
solicitation for Program 280-M, a multiple award contract for
data capture and/or photocomposition, beginning February 1, 1983
and ending January 31, 1984; and C-3 is a list prepared by
InfoConversion summarizing the disallowed transactions under
Program 400-S. It should be noted that C-1 duplicates part of
Tab A in the Rule 4 File.
17. A unit multiplier is the Government's estimate of the number
of times a particular item in the schedule of prices would occur
over the life of the contract, usually a year. As such, it not
only allows the Government to evaluate a bidder's price
quotations for specific tasks, but also provides the potential
contractor with a reasonable estimate of the number of items that
would be ordered under the contract. According to Devine, the
multipliers for Program 400-S were, for the most part, accurate
and realistic predictions of the activity which could be expected
under the contract. While a few multipliers might have been
lower than anticipated, they were a small part of the contract in
terms of the total price.
18. InfoConversion was only responsible for preparing the
prepress portion of the joint venture's bid. The remainder of
the bid was formulated by Fry. Furthermore, even though Devine
and Mandery were responsible for preparing InfoConversion's bid,
the record shows that other employees were also involved. In
that regard, they held conversations with the staff of
InfoConversion's publications services with regard to the hours
worked and the effort expended on the contract with the Army
called RC PAC. See note 19 infra. For example, Devine
specifically remembered speaking to Jeanette Viaino, RC PAC group
leader, and Janet Whitcomb, RC PAC project manager, who was
scheduled to perform the same function for Program 400-S. Devine
and Mandery were particularly interested in the RC PAC contract
for the mirror it held to possible item costs on such things as
the camera-ready copy pages. For items where InfoConversion's
computerized accounting system did not exactly fit the pricing
line item in Program 400-S, Devine and Mandery manually worked
out the bid figures. The final bid numbers, including
appropriate discounts, were entered on the bid sheet in pencil
and pen by Mandery, and initialed by Devine before it was
submitted to GPO.
19. "RC PAC" involved updates and changes to publications,
regulations and manuals concerning the Army's Reserve Components,
including pay and other personnel matters affecting reservists.
20. InfoConversion's contract for this work was with the Army
directly, and not with GPO. Indeed, the product sample attached
to the Program 400-S procurement, was a previous "Update" -- RC
PAC-4 -- on which InfoConversion had done the prepress work.
According to Devine the specifications for RC PAC-4 were not as
detailed as Program 400-S', so it was necessary to consult
InfoConversion's publications staff in the pricing process,
particularly in determining how many pages of changes could be
accomplished in an hour, and how many transactions were involved.
However, the staff was not asked if an addition and a deletion at
the same location was counted as one or two transactions. The
discussion focused instead on how many author's alterations could
be accomplished in a particular time period.
21. The Appellant's experience under RC PAC also allowed it to
estimate how many of the updates and/or edits which might occur
in Program 400-S would involve an addition and a deletion of
material at one location. In that regard, at the time it
prepared its bid, the Appellant believed that between 40 to 60
percent of the Program 400-S changes would have been so
classified. In actuality, about 50 percent of the updates and/or
edits in Program 400-S were combined changes; i.e., additions and
deletions of material made in the same place in the text.
22. Program 280-M covered a multiple award contract for the
production or updating of data base tapes and/or photocomposition
for GPO and various other agencies. See, C-2, at 1, 5. The IFB
was issued, and the contract awarded, on an annual basis.
23. Devine also testified that because Program 400-S did not
include coding in the count of "characters" used as the basis for
compensating the contractor, it differed significantly from
InfoConversion's prior contract for the Army "Update" work and
other similar Government contracts he had reviewed in the past.
He also said that it had an impact on how transactions would be
paid for under Program 400-S, because in order to make additions
and deletions at the same place in the data base it was necessary
to enter two different sets of codes, neither of which was
compensable under the line items for adding characters to the
file. See C-2, at 12 (line items 9 (b)-(e)).
24. The record shows that InfoConversion has a costing system
that its uses to assess jobs, and an electronic accounting system
which supports that system. Once the dispute arose,
InfoConversion rewrote this accounting program for transaction.
However, the Appellant continued to maintain a list of the
disallowed transactions under Program 400-S. See , C-3. While
this list, by definition, was not a document relied on by the
Appellant in the preparation of its bid, the Board nonetheless
allowed its admission at the hearing for the limited purpose of
showing the extent of the dispute between InfoConversion and GPO.
See, GPO Instruction 110.12, Subject: Board of Contract Appeals
Rules of Practice and Procedure, September 17, 1984, Rule 20, at
12 ("Letters or copies thereof, affidavits, or other evidence not
ordinarily admissible under the generally accepted rules of
evidence, may be admitted in the discretion of the Board. The
weight to be attached to evidence presented in any particular
form will be within the discretion of the Board, taking into
consideration all the circumstances of the particular case.")
25. See, note 18 supra.
26. Under InfoConversion's costing methodology, unit costs
included the price of the task, associated overhead costs,
general and administrative expenses, and profit. With regard to
Program 400-S, the per transaction price for updates and edits
was arrived at by first determining how much time it took an
operator to handle a transaction, multiplying that effort by
current pay rates, and applying the above formula (adding
overhead costs, general and administrative expenses, and profit)
to arrive at the bid price of $3.06.
27. These worksheets were basically information concerning the
number of hours expended on a particular job being compared with
Program 400-S, the number of author's alterations (which were
viewed as synonymous with additions and deletions), and the time
it took to accomplish them, as well as the hours spent on
proofreading and keying in data. The figures would have been
totaled on an adding machine or calculator.
28. Mandery left the Appellant in 1987 to go to work for Grumman
Data systems, InfoConversion's parent company, as Manager of
Business Operations. Mandery testified that before the hearing,
he went back to InfoConversion to look for the old files, which
he had left there, but could not find them. Mandery thought that
he might have been able to locate the files a few years ago, but
"realistically" some of the material was not physically attached
into the contract file and so may have been disposed of, while
other information would not have been kept with the file in any
case. Furthermore, Mandery believed that the personnel changes
which have taken place at InfoConversion since 1984 would also
make locating the worksheets difficult.
29. See, Respondent's Post Hearing Brief, dated May 24, 1991, at
5-8 (hereinafter R. Brf.). In effect, the Respondent argues that
since the Appellant had a question about whether it could charge
for one or two transactions prior to the time it submitted its
bid, it was improper for it to use self-help to interpret the IFB
instead of seeking a clarification from the Contracting Officer.
R. Brf., at 6-7. Further, in light of the fact that Devine
admitted that the alleged ambiguity was known to the Appellant
before it submitted its bid, the doctrine of contra proferentum
is inapplicable to these circumstances. Id., at 7 (citing, James
A. Mann, Inc. v. United States, 535 F.2d 51, 61 (Ct. Cl. 1976)
(the contra proferentum rule does not apply where the plaintiff
knew of alleged ambiguity before it submitted its bid). Instead,
the Respondent argues that because the Appellant was on notice of
the incipient problem, it had an affirmative duty to contact the
Contracting Officer for a solution, and its failure to do so
deprives it of access to the principle that ambiguities in
contracts written by the Government are held against the drafter.
Id. (citing, Beacon Construction Co. v. United States, 314 F.2d
501, 504, 161 Ct. Cl. 1, 6-7 (1963)). Moreover, the obligation
to ask for a clarification from the Contracting Officer arises
where a prospective contractor has actual knowledge of an
ambiguity irrespective of whether it is patent. Id., at 8
(citing, Solar Turbines International v. United States, 3 Cl. Ct.
489, 497 (1983)). According to the Respondent, sound policy
reasons support the requirement that a potential contractor
should ask the Contracting Officer to clarify any ambiguities
before a bid is submitted, i.e., (1) it provides a "level playing
field" for all potential bidders; (2) it discourages contractors
from taking advantage of the Government; and (3) it prevents
post-award litigation. Id. (citing, Enrico Roman, Inc. v. United
States, 2 Cl. Ct. 104, 107 (1983)).
30. The Respondent's Post Hearing Brief raises an additional
issue, namely whether the Appellant, knowing of the ambiguity
concerning the meaning of the word "transaction" in the Program
400-S IFB, and failing to seek a clarification from the
Contracting Officer, losses the benefit of the doctrine of contra
proferentum and instead bears the risk of misinterpretation. R.
Brf., at 5. The Respondent's view rests on Devine's admission at
the hearing that he was doubtful about GPO's intent in using the
word "transaction" at the time he was preparing the Appellant's
Program 400-S bid for updates and edits, and nonetheless resolved
the matter himself without asking the Contracting Officer for an
explanation. In effect, the Respondent is asking the Board to
reverse the so much of the Claims Court's ruling that, as a
matter of law: (1) the ambiguity here was latent, not patent;
and (2) the doctrine of contra proferentum would apply if the
Appellant establishes that it actually relied on its reasonable
interpretation of the IFB drafted by the Respondent in preparing
its bid. Fry Communications, Inc. / InfoConversion Joint Venture
v. United States, supra, Sl. op. at 21-22, 26. (The Respondent
seems to imply that the Claims Court has already applied the
doctrine of contra proferentum in this case, and did so based on
an incomplete record, i.e., before the Appellant admitted that it
knew an ambiguity existed at the time it was preparing its bid.
R. Brf., at 7, fn. 7. The Respondent's argument proves too much.
As the Board sees it, the Claims Court's contra proferentum
ruling is conditional only, and depends on a factual finding of
the Board that the Appellant actually relied on its
interpretation of the Program 400-S IFB in preparing its bid to
be given effect.) The Claims Court's review of the issues was
conducted under the provisions of the Wunderlich Act, 41 U.S.C.
�� 321, 322. Fry Communications, Inc. / InfoConversion Joint
Venture v. United States, supra, Sl. op. at 6, fn. 6. As the
Claims Court observed, "[i]n a Wunderlich Act case, the court
sits, in effect, as an appellate tribunal,...". Id., Sl. op. at
10. Consequently, in the Board's view, this administrative body
has no authority in this case to overturn the rulings of the
Claims Court on matters of law. Indeed, the very notion that an
inferior adjudicatory body can overrule the competent legal
decisions of a superior forum is foreign to the American scheme
of jurisprudence. Simply stated, the Wunderlich Act rulings of
the Claims Court on issues of law are binding on this Board.
Therefore, if the Respondent wishes a reversal of any of those
rulings on the grounds stated (Devine's hearing testimony), the
appropriate forum is the Claims Court itself. RUSCC 60.(b) (2).
31. As the Claims Court observed, such allegations and
statements are not sufficient to enable an appellant to carry its
burden of proof on the reliance issue. Fry Communications, Inc.
/ InfoConversion Joint Venture v. United States, supra, Sl. op.
at 25. See also, Tri-State Services of Texas, Inc., supra, 89-3
BCA � 22,064 (citing, Gemini Services, Inc., ASBCA No. 30247,
86-1 BCA � 18,736).
32. The Claims Court apparently believed that such worksheets
would most likely show an estimate of the amounts of labor,
equipment and time required for the contract and the calculations
by which the Appellant's arrived at its price. Cf., Hof
Construction, Inc. (Engineered Fire Protection, Inc.), GSBCA No.
7027-R, 87-2 BCA � 19.838.
33. As expressed in the Federal Rules of Evidence, the "best
evidence" rule states that to prove the content of a writing,
recording, or photograph, the original writing, recording, or
photograph is required, except as otherwise provided the rules of
evidence or by Act of Congress. FED. RULES EVIDENCE, RULE 1002,
28 U.S.C.A. Thus, the "best evidence" rule is a rule of
exclusion and applies only if party offering evidence is seeking
to prove contents of a writing. See, e.g., Jackson v. Crews, 873
F.2d 1105 (8th Cir. 1989). Secondary evidence to establish the
contents or the originals is allowed under the rule, however, see
e.g., United States v. United States Trust company, 660 F.Supp.
1085 (D. Mass. 1986), so long as the party seeking to prove
contents of writing can establish the existence of the original
and give a proper excuse for nonproduction of the documents. See
e.g., A.F.L. Falck, S.P.A. v. E. A. Karay Company, Inc., 722
F.Supp. 12 (D.S.D.N.Y.1989). Under Rule 1004 of the Federal
Rules of Evidence, secondary evidence of original documents which
are lost or destroyed is allowed, but the burden of proving the
loss or destruction is on the proponent of the evidence, and
provided that the evidence was not lost or destroyed by him in
bad faith. FED. RULES EVIDENCE, RULE 1004 (1), 28 U.S.C.A. See,
e.g., Seiler v. Lucasfilm, Ltd., 613 F.Supp. 1253 (D.C.Cal.
1984), 808 F.2d 1316 (9th Cir. 1987), certiorari denied 108 S.
Ct. 92, 484 U.S. 826 (1987). Also, admitting such secondary
evidence requires the finder of fact to make preliminary findings
that the original has become unavailable otherwise than through
the fault of proponent and that a reasonable search has been made
for it. See, e.g., Sylvania Electric Products, Inc. v. Flanagan,
352 F.2d 10055 (1st Cir. 1965). In this appeal, the testimony of
Devine and Mandery on the contents of the missing worksheets and
notes was admitted without objection from the Respondent.
Nonetheless, in the estimation of the Board, the Appellant, who
had the burden of explaining how the documents became lost or
missing, did not do so. Further, it is the Board's opinion that
the brief visit of Mandery to the InfoConversion office's prior
to the hearing in order to find the documents was not a
reasonable search, particularly since the Claims Courts remand
order alerted the Appellant that they would be required.
34. See note 31 supra.