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STELLAR MFG. CO. v. TVA

March 2, 1989

STELLAR MANUFACTURING COMPANY
v.
TENNESSEE VALLEY AUTHORITY


Marvin Katz, United States District Judge.


The opinion of the court was delivered by: KATZ

MARVIN KATZ, UNITED STATES DISTRICT JUDGE

 FINDINGS OF FACT

 A. Introduction

 1. Tennessee Valley Authority ("TVA") is an agency and instrumentality of the United States. Stellar Manufacturing Company ("Stellar") is a closely held business, owned 76 percent by Peter M. Sarraiocco and 24 percent by Samuel R. Caiazzo. On April 23, 1976, TVA awarded Contract No. 76K70-820118 to Stellar, in the original base amount of $ 2,844,000. Change orders totalling $ 2,211,038 increased the contract price 78 percent to $ 5,055,038. Further adjustments, backcharges, and escalations brought the actual disbursements to $ 6,486,871.04.

 2. Plaintiff's contract required it to fabricate under close tolerances, and ship to TVA, stainless steel fuel pool liner panels with structural steel supports for six nuclear power plants. The plants were known by designations X17 through X22. The panels were to be assembled and erected in the field by TVA. Four of those plants were located at Hartsville, Tennessee and two at Phipps-Bend, Tennessee. The original contract completion date was March 1, 1979, for delivery of the last of the fuel pool liners for the six power plants.

 3. Plaintiff's panels and fabrications, when erected at the site, would create four rectangular pools at each of the six nuclear plants, for a total of 24 pools. Each pool was approximately 43' high, and the pools varied in length and width, the largest being approximately 29' x 33'. Further, each pool required the fabrication by Stellar of numerous large stainless steel panels, with rear supports, which varied in length and width, the largest being approximately 8' x 22'. Each panel required several hundred feet of continuous/intermittent welds.

 4. In addition to these units and quantities, Stellar was required to fabricate the gate frames which linked these fuel pools and were part of the mechanism which controlled the flow of liquids between the tanks. Three massive gate frames were required for each of the six nuclear units. Their dimensions were approximately as follows:

 1. 15 1/2' h x 12 1/2' w x 3 1/2' d

 2. 27' h x 7' w x 4' d

 3. 27' h x 6' w x 2' d

 Each gate frame was fabricated with 1/4" thick stainless steel and weighed, assembled by plaintiff, several tons. The fabrication required hundreds of feet of continuous welding.

 5. General Electric Company ("GE") served as the technical engineer for the contract (i.e., GE was responsible for developing the technical specifications and drawings). GE, in turn, contracted with C. F. Braun & Co. ("Braun") to perform technical reviews and develop specifications. The nuclear units were to be designed and built in accordance with GE's standard reactor island design (STRIDE) program which was developed by GE to standardize the construction of nuclear plants. 6. As originally agreed, Stellar was to complete its work and deliver the pool liners according to the following schedule: X17 February 1, 1977 X18 December 1, 1977 X19 June 1, 1977 X20 June 1, 1978 X21 March 1, 1978 X22 March 1, 1979

 These dates were extended by subsequent change orders. Ultimately, the completion date for X22 was extended by TVA to March 13, 1980.

 7. There were a total of 14 change orders to the contract. Of these change orders, some dealt with clarifications and resequencing of performance dates (Nos. 5, 6, 7, 9, 11); some dealt with the designation of the TVA purchasing agent (Nos. 8, 14) and with the allocation of work for the purpose of calculating progress payments (No. 3). Change orders Nos. 4 and 10 granted contract extensions. Change order No. 12 added the purchase and delivery of stainless steel plates to the contract. Change order No. 13 provided TVA a credit for deletion of work associated with the liquid dye penetrant examination of welds. The remaining two change orders (Nos. 1, 2) increased the contract price and extended the performance date for each unit.

 8. In the summer of 1976, approximately four months after the contract was awarded, TVA issued Revision No. 1 to the contract drawings which involved design changes in the work being done by Stellar. On October 13, 1976, Stellar informed TVA of the total cost and time impact of all changes and delays to date. This submittal was subsequently amended by Stellar on November 30 and December 7, to alter the terms of payment.

 9. Change order No. 1 to the contract was issued on February 24, 1977. Under change order No. 1, Stellar received an additional net sum of $ 1,784,877, the full amount of increased compensation Stellar had requested for all changes and delays to date, including those associated with Revision No. 1 to the contract drawings. In addition, as requested by Stellar, change order No. 1 revised the payment terms of the contract to provide for progress payments based upon percentages of work completed rather than upon actual deliveries to TVA. Also, as requested by Stellar, change order No. 1 granted a 184-day extension for completion of work on the contract.

 10. In May, 1977, TVA issued Revision No. 2 to the contract drawings, which also involved design changes to the work being done by Stellar. After a series of meetings among TVA, GE, Braun, and Stellar to discuss Revision No. 2 and other design matters, Stellar submitted, on July 29, 1977, its written proposal for cost and time adjustments to compensate Stellar for all changes and delays to date. Stellar amended its proposal on October 1 and November 21.

 11. Change order No. 2 to the contract was issued November 28, 1977. Under change order No. 2, Stellar received an additional $ 449,557. The work completion dates were also adjusted to add contract extensions for each unit as requested in Stellar's written proposal of July 29, 1977. 12. The annual totals of Stellar's invoices to TVA, based upon Stellar's percentage of work completed under the contract, were as follows: 1977 $1,150,481.14 1978 $ 786,526.98 1979 $2,315,661.84 1980 $2,184,803.09 1981 $ 122,118.83 1982 $ 78,267.08

 13. Stellar completely performed its work under the contract on or about April 2, 1982, with its last shipment on that date. 14. On March 31, 1977, TVA awarded Contract No. 77K71-820116 to Stellar in the amount of $ 996,372. The contract, which was subject to various labor and materials escalation adjustments, called for the fabrication and delivery to TVA of stainless steel weirwall liners for units X17 through X22. Work under the contract was scheduled to be completed as follows: X17 June 1, 1977 X18 April 1, 1978 X19 December 1, 1977 X20 December 1, 1978 X21 July 1, 1978 X22 March 1, 1979

 16. On October 10, 1983, Stellar submitted a series of claims to TVA, which were ultimately certified as required by the Contract Disputes Act of 1978, 41 U.S.C. §§ 601-613, on June 13, 1984. As certified, Stellar claims relating to Contract No. 76K70-820118, the fuel pool liner contract, involved eight separate areas: general delays through May 15, 1978, lack of information relating to tolerance criteria, lack of information relating to field erection procedures, liquid dye penetrant examination, backcharges for scupper and liner panel repair, purchase of stainless steel plate, gate frames redesign, and contract retainage. Stellar asserted it was due a total of $ 2,679,003 in connection with these claims, together with a contract extension of 1,177 days which would have entitled Stellar to a further unspecified amount due to labor and material escalation adjustments. With regard to Contract No. 77K71-820116, Stellar claimed that it was unjustly backcharged $ 10,187.57 for repairs to weirwall liners. The claims asserted in Stellar's complaint generally mirror the claims asserted in the administrative context. On December 18, 1984, Stellar sent TVA supplemental information in support of Stellar's claims.

 17. As part of the claims process, TVA submitted a claim of its own to the Contracting Officer. TVA's claim was for $ 19,800.18 in connection with repairs TVA made to defective work performed by Stellar on weirwall liner panels. TVA's counterclaim in this action mirrors the claim it submitted earlier to the Contracting Officer.

 18. On March 14, 1985, TVA's Contracting Officer issued a decision denying Stellar's claims and ...


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