Law School Case Brief
Cessna Aircraft Co. v. Dalton - 126 F.3d 1442 (Fed. Cir. 1997)
Pursuant to the Contracts Disputes Act, 41 U.S.C.S. §§ 601-613, the court reviews agency decisions under the following standard: the decision of the agency board on any question of law shall not be final or conclusive, but the decision on any question of fact shall be final and conclusive and shall not be set aside unless the decision is fraudulent, or arbitrary, or capricious, or so grossly erroneous as to necessarily imply bad faith, or if such decision is not supported by substantial evidence. 41 U.S.C.S. § 609(b).
Cessna was awarded a contract by the Navy, under which Cessna was required to provide training, and related technical and maintenance support, for undergraduate naval flight officers at the U.S. Naval Air Station in Pensacola, Florida. The contract called for Cessna to provide flight training services during five program years, commencing August 1, 1984, and ending September 30, 1988. The contract also contained an option provision allowing the Navy to extend contract performance for three additional years. Cessna reiterated its view that the Navy had to exercise the option by September 30, 1988, while the Navy contended that it had until October 1 because funds had not been appropriated by September 30, 1988. On October 1, 1988, after the President had signed the appropriation act, the CO executed the necessary contract modification and faxed the modification to Cessna. However, Cessna took the position that the purported modification was ineffective. Nevertheless, the CO responded that the option was exercised properly on October 1, 1988, and instructed Cessna to continue performance in accordance with the contract as modified by the option. Cessna provided services throughout the three year option period. In April of 1991, Cessna submitted a certified claim to the Armed Services Board of Contract Appeals, seeking approximately $ 25.7 million as additional compensation for work performed during the three-year option period. The Armed Services Board of Contract Appeals denied Cessna's claim that the Navy failed to exercise, in a proper and timely manner, certain options under a contract between the two parties. The decision was appealed.
Did the Armed Services Board of Contract Appeals properly deny Cessna's claim?
The United States Court of Appeals for the Federal Circuit affirmed the district court's decision denying the aircraft company compensation for services rendered. The court held that the aircraft company's contract with the Navy was governed by the Contract Disputes Act. The Court held that exercise of the option did not violate the Antideficiency Act, even though funds were obligated before they were apportioned. The Court held that the Antideficiency Act, 31 U.S.C.S. §§ 1511-1519, did not impose time limitations upon the apportionment of funds. Because the company was not compelled to perform the services at issue, the Court held that the company could not rely upon the Antideficiency Act, 31 U.S.C.S. § 1341(a), as evidence that the government violated the Antideficiency Act by obligating funds before they were apportioned.
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