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Cascade Pacific International v. United States

September 16, 1985

CASCADE PACIFIC INTERNATIONAL, APPELLANT
v.
THE UNITED STATES, APPELLEE



Appealed from: General Services Administration Board of Contract Appeals

Before Baldwin and Kashiwa, Circuit Judges, and Miller,*fn* Senior Circuit Judge.

Miller

MILLER, Senior Circuit Judge.

This is an appeal by Cascade Pacific International ("CPI"), from a decision of the General Services Administration Board of Contract Appeals under the Contract Disputes Act of 1978, 41 U.S.C. ยงยง 601-613 (1982) ("CDA"), upholding the Contracting Officer's decisions to default terminate the subject contract and to grant in part the Government's claim for breach of contract damages. We affirm.

The issues on appeal are (1) whether the board's denial of CPI's claim that the General Services Administration wrongfully terminated its contract for default is supported by substantial evidence, (2) whether the board properly concluded that the Government was entitled to damages for CPI's breach of the contract, and (3) whether the board's assessment of damages incurred as a result of CPI's breach denied CPI its due process right to adequate notice of the assessment imposed upon it.

BACKGROUND*fn1

CPI entered into a one-year fixed-price supply requirements contract with the General Services Administration ("GSA") for builders' hardware (GS-04S-23598) ("'598"), including full surface and half surface spring hinges, on July 1, 1980. The contract prices per pair of full surface spring hinges ranged from $2.125 to $2.585, and those for half surface spring hinges ranged from $2.485 to $2.545. The specification indicated that the spring hinges were required to conform to Federal Specification FF-H-116E, which mandated, inter alia, that the spring hinges be plated and have a US10 finish,*fn2 that the thickness of the metal be 0.082 +- 0.005 inches, and that the spring hinges have button tips.

The contract also contained the standard Inspection and Default clauses, Standard Form 32, April 1975 Revision. Under the contract, the spring hinges were to be submitted for inspection and testing within forty-five days after receipt of an order, before delivery, but the contract language regarding finish or performance testing by the Government was the following:

4. QUALITY ASSURANCE PROVISIONS

4.2 Visual And Dimensional Examination. Hinges furnished under this specification shall be examined for the defects . . . . The inspection level shall be level II . . . with an acceptable quality level . . . .

4.3 Finish and performance. When specified . . . samples of hinges from each lot shall be selected in accordance with [regulations]. Samples shall be tested in accordance with 4.4 and 4.5 . . . .

4.4 Finish testing. Finishes of hinges shall be tested in accordance with the procedure detailed in ANSI [American National Standards Institute] A156.1.

4.5 Performance testing. Hinges . . . shall be tested in accordance with the applicable sections of ANSI A156.1 . . . .

6.5 Finishes.

6.5.4 Comparison of standard finishes. Owing to differences in the processes of producing hardware finishes and the variety of metals to which they are applied, it is commercially impracticable to attain an exact match. Therefore, it is understood that hardware delivered in a standard finish from two or more sources will compare reasonably when the items are viewed at arm's length and approximately two feet apart. Federal Specification ("FF-H-116E").

ANSI A156.1 paragraphs 4.1-4.6, describe wear tests for certain types of hinges (but not, explicitly, spring hinges), including a finish test ("Salt Spray" test) that consists of exposing a finished hinge to a salt fog over a period of time followed by visual inspection for signs of corrosion. The test requires that the commercial equivalent of a US10 finish show no "red rust" corrosion to the unaided eye at eighteen hours of salt fog. Builders' Hardware Manufacturers Association 101, paragraph 5.2, rev. Sept. 1976.

Prior to initiation of the '598 contract, GSA had procured full surface and half surface spring hinges from Mallin Lock Manufacturing Co. ("Mallin"), a competitor of CPI. Although Mallin obtained some of its hardware from Lawrence Brothers, Inc. ("Lawrence"), another of CPI's competitors, ...


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