the uncompleted work by readvertisement had completed their contracts and received payments thereunder, and 'in accordance with the terms of Condition 13 of the subject contract, you are responsible for excess costs and damages incurred in the completion of these contracts,' namely, $ 102,456.77.
By letters of March 8, 1955, and April 24, 1956, demands for payment of a debt of about $ 103,000 were made of defendant.
On July 3, 1956, the plaintiff filed suit in this court.
Defendant's answer, in effect, sets forth defenses that:
(1) The contract was experimental in nature and defendant was prevented from completing the contract within the required time due to unforeseeable causes beyond his control and without any fault or negligence on his part.
(2) Defendant was refused requested extensions of time by which he could have completed the contract in the same time it took under the latter contracts awarded to others.
(3) By requiring performance bonds on the later contracts, some potential bidders were eliminated and much higher bids were submitted than if the contract had been readvertised under the same terms as the contract sued on, so that the damages claimed by plaintiff are excessive.
(4) The Statute of Limitations prevents the Government from pursuing this action.
As to the defenses labeled (1) and (2) set forth above, defendant may not rely upon the claims that the contract was experimental in nature and that the delay in performance of the contract was due to 'causes beyond the control and without the fault or negligence of the Contractor,' since these contentions, at the least, raise questions of fact that this court does not have jurisdiction to consider.
Condition 14 of the contract provides the remedy of the defendant in disputes concerning questions of fact:
'14. Disputes. -- Except as otherwise specifically provided in this contract, all disputes concerning questions of fact which may arise under this contract, and which are not disposed of by mutual agreement, shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail a copy thereof to the Contractor. Within 30 days from said mailing the Contractor may appeal to the Secretary of War, whose decision or that of his designated representative, representatives, or board shall be final and conclusive upon the parties hereto. Pending decision of a dispute hereunder the Contractor shall diligently proceed with the performance of this contract.'
The letter of March 25, 1949, giving notice of termination by the contracting officer, was a decision from which defendant could have appealed to the Secretary of War,
and in the absence of an allegation that the appeal procedure provided in the contract was in fact inadequate for the correction of the alleged unreasonable attitude of the subordinate Government official, defendant's not having pursued the administrative appeal provisions of the contract bars him from asserting this defense to plaintiff's claim.
United States v. Blair, 1944, 321 U.S. 730, 64 S. Ct. 820, 88 L. Ed. 1039; United States v. Joseph A. Holpuch Co., 1946, 328 U.S. 234, 66 S. Ct. 1000, 90 L. Ed. 1192.
Thus, the effect of this disputes clause is to deprive the courts of jurisdiction of any claim
covered by it, until the administrative procedure has been completed. Atlantic Carriers v. United States, D.C.S.D.N.Y.1955, 131 F.Supp. 1, rehearing denied, 131 F.Supp. 5.
For these reasons, the plaintiff is entitled to a finding in its favor on the issue of liability.
Defendant's third defense that the requirement of a performance bond in the later contracts 'resulted in much higher bids being submitted than would have been submitted had the contract been readvertised under the same terms as the contract sued on' and that such 'performance bond constituted a fundamentally different contract, involving a much higher bid price,' raises a more difficult question. Plaintiff contends that the measure of damages is 'the difference between the cost of the successor contracts * * * and the balance due the defendant had he fully performed, less the cost of the performance bonds * * *.'
However, the fact that a performance bond was required under the new contracts, requiring time-taking contacts with the bonding company, may well have resulted in higher bids by the subsequent contractors, even after deducting the costs of the performance bonds, than would have been made if such bonds had not been required. The defendant is entitled to a trial to support its contention on the issue of damages as outlined in this third defense.
Finally, as to the fourth defense, the United States is not bound by the state Statute of Limitations. United States v. Summerlin, 1940, 310 U.S. 414, 60 S. Ct. 1019, 84 L. Ed. 1283.
And Now, June 4, 1957, It Is Ordered (a) that defendant Smith's motion for summary judgment, filed March 11, 1957, is Denied, (b) that plaintiff's motion for summary judgment, filed December 27, 1956, is Granted as to the issue of defendant's liability, and (c) that the action shall proceed to trial on the issue of damages.