See McBride, Wachtel, Touhey, GOVERNMENT CONTRACTS § 5.40 (1984); Nash, Government Contract Claims 141 (1981), citing FPR 1-2.406-4. See also Cannon Construction Co. v. United States, 319 F.2d 173, 177-80, 162 Ct.Cl. 94 (1963), where the United States Court of Claims said: Significantly, plaintiffs have cited us no cases where this court has invalidated, on the ground of lack of authority, any agreement made by the contracting officer in the settlement of a claim for damages for breach of contract.
Thus, we accept the contention of plaintiff that the exculpatory clause did not affect plaintiff's liability to its subcontractor insofar as claims under the prime contract were concerned. Therefore, if the present claims are encompassed by the terms of plaintiff's contract with the Navy, then the Severin rule is not a bar. In Cannon Constr. Co. v. United States, Ct.Cl. No. 89-57 (June 7, 1963), slip op., p. 11, 319 F.2d 173 (1963), this court stated: "The * * * [`Suspension of Work'] clause converts an action for damages into a matter properly for determination and payment under and pursuant to the contract in the form of an equitable adjustment." Unlike the contract involved in Cannon Constr. Co., the contract between plaintiff and the Navy did not contain a standard "Suspension of Work" clause.
With respect to the whole question of settlement, the Government contends that the early restrictive construction of the disputes clause was based in part on the belief that the various departments and their contracting officers had no authority to settle pure breach of contract claims, which view is asserted to have now been abandoned. See Cannon Constr. Co. v. United States, 162 Ct. Cl. 94, 319 F.2d 173 (1963). Since the authority of contracting officers to grant relief for all claims, through settlement, is now established, the argument continues, all contract claims may now be the basis of a dispute reviewable under the disputes clause.
"The suspension clause converts an action for damages into a matter properly for determination and payment under and pursuant to the contract in the form of an equitable adjustment." Cannon Construction Co. v. United States, 162 Ct.Cl. 94, 319 F.2d 173, 179 (1963). See Merritt-Chapman Scott Corp. v. United States, 194 Ct.Cl. 461, 439 F.2d 185, 192-93 (1971).
Yet even in this circumstance courts construing government contracts have consistently considered extrinsic evidence in their efforts to determine whether the parties intended that the modification agreement incorporate impact costs. Thus, for example, in both Fraass Surgical Mfg. Co. v. United States, 505 F.2d 707, 711-712, 205 Ct.Cl. 585 (1974), and Cannon Construction Co. v. United States, 319 F.2d 173, 176, 162 Ct.Cl. 94 (1963), the court looked to the conduct of the parties to determine the intended scope of the modification agreements. Even in Seeds v. United States, 92 Ct.Cl. 97 (1940), cert. denied, 312 U.S. 697, 61 S.Ct. 731, 85 L.Ed. 1131 (1941), the case primarily relied on by the District Court, the Court of Claims looked at subsequent developments as evidence that the contractor's claim was an "after-thought" and that the parties intended that an earlier agreement dispose of all claims growing out of the contract.
Id. at 991. See generally Bobbi's Decorating and Renovation Co. v. United States, 218 Ct.Cl. 653 (1978); Fraass Surgical Mfg. Co. v. United States, 205 Ct.Cl. 585, 593-594, 505 F.2d 707, 711-712 (1974); Cannon Construction Co. v. United States, 162 Ct.Cl. 94, 100, 319 F.2d 173, 176 (1963). "It is one thing to inform a creditor when sending a check that the debtor will not pay any more, and a very different thing to advise him that the check is sent upon condition that if he accepts it, he will do so in full settlement of the account."
Langoma Industries, Inc. v. United States, 135 F. Supp. 282, 285, 133 Ct.Cl. 248, 253 (1955). In Cannon Construction Company v. United States, 319 F.2d 173, 176, 162 Ct. Cl. 94, 100 (1963), we said, "[t]here is no ambiguity in language which states that a certain sum shall constitute full compensation for delays." Similarly, there is no ambiguity in language which states that a payment to the contractor "constitutes the entire equitable adjustment due the contractor.
Based on its findings of fact, and relying on this court's definition of an accord and satisfaction in Brock Blevins Co. v. United States, 343 F.2d 951, 952, 170 Ct.Cl. 52, 54 (1965), the board finds that all of the elements of an accord are present. It concludes that "both parties tried to fix a firm price on the contract price increase attributable to the change and the delays and difficulties associated with it, and that the subject of their negotiation was a complete settlement of the price which would thereafter be binding on them." It places no weight on the present assertions of Magaw to the contrary, because the electrical subcontractor was not a party to the contract, and its participation in the preliminary negotiations would only have a bearing upon the intent of the plaintiff Merritt-Chapman. Further relying on the decision of this court in Cannon Construction Co. v. United States, 319 F.2d 173, 177, 162 Ct.Cl. 94, 101 (1963), the board concludes: * * * On a settlement of such broad scope as that contemplated by the contracting parties in this case, any reservation of particular items for future claim and payment should be clear and explicit, and we find upon the evidence of record that not only was there no such reservation by the general contractor but there is an absence of any evidence that the general contractor actually intended to limit the scope of the settlement by reservation of possible future revival of claim. If the general contractor's representative was unaware, as he well might have been, of the legal effect of his agreement with the Contracting Officer on claims that might be reasserted by the subcontractor in the future, it is of no consequence. It is well-settled that mere ignorance of legal consequence does not prevent one's voluntary acts from having such consequences.
This latter function is actually an administrative substitute for a breach of contract claim. Cannon Construction Company et al. v. United States, 319 F.2d 173, 179, 162 Ct. Cl. 94, 105 (1963). This function has been previously described as follows:
The record made before the Board is the record in this case, and its presence readily permits examination of the counterclaim on its merits. Consideration of the plaintiff's plea to the counterclaim — an accord and satisfaction by the payment of the $14,805 — perhaps logically the first question for disposition, would require a hearing to determine the facts underlying the claimed accord and satisfaction. Compare Cannon Construction Co., Inc. v. United States, 319 F.2d 173, 162 Ct.Cl. 94 (1963) with Construction Service Co. v. United States, 357 F.2d 973, 976-978, 174 Ct.Cl. 756, 762-765 (1966). It is appropriate first to examine the merits of the counterclaim.