67

The referenced correspondence contains no hint of any disagreement by Cen-Vi-Ro with the Bureau's interpretation of what constituted small diameter pipe. Other actions of Cen-Vi-Ro personnel at the time are also consistent with acceptance of or acquiescence in the Bureau's interpretation of internal pipe diameter requirements. While Mr. Franklin testified and Mr. Thomas confirmed that there were numerous discussions concerning interpretations of the specifications, how pipes were to be measured, why small diameter pipes were produced and how they could be eliminated, Mr. Franklin admitted that he did not object to the Bureau's interpretation at first, and was less than positive as to any later disagreement with the Bureau's interpretation.68 Indeed, at one point he admitted that it was pure speculation as to what he said (Tr. 570). In later testimony he asserted that Bureau representatives were told that their method of measuring the pipes was incorrect (Tr. 571, 572). While he indicated that these conversations occurred in late October 1964, he subsequently stated that he did not know the dates of these conversations. His explanation for not sub

67 An Inspectors Daily Report, dated October S. 1964, states that Cen-Vi-Ro was checking internal pipe diameters prior to Bureau inspection in order to avoid having patchers waste time on small diameter pipes. Inspectors Daily Reports, dated October 9, 1964, and thereafter, reflect the acceptance as reclaims of pipes upon which the interiors had been ground out to enlarge the bore.

Tr. 353, 569, 1434. He stated "I feel sure that I expressed my opinion that the pipe probably would meet the measurement specifications on proper interpretation." (Tr. 569.)

mitting the matter to the Bureau in writing was that it did not occur to him that it would be expected (Tr. 575). We note that at the conference of October 30, 1964, Cen-ViRo's representatives were asked to comment on Government procedures which they considered were delaying the work and that the reported response was that they were cognizant of no such procedures, either at the work site or at the pipe manufacturing plant (letter, dated October 30, 1964, note 14, supra). The only documented instance of Mr. Franklin's disagreement with the Bureau's interpretation occurred at the meeting of August 25, 1966 (memorandum, dated September 20, 1966, note 62, supra).

Mr. W. B. Murray testified that in late January 1965 he protested verbally to Mr. Thomas and Mr. Lincoln the criteria applied by the Bureau in determining that pipes were small diameter (Tr. 837, 886, 887). He stated that the specification was reviewed word for word, that a free-hand sketch of the Bureau's and Cen-Vi-Ro's interpretations was prepared and that Mr. Charles Davis, Bureau inspector, was present (Tr. 887-888). He did not have any explanation of why a written protest was not made to the Bureau. Mr. Lincoln stated flatly that Cen-Vi-Ro's representatives did not indicate any disagreement with the Bureau's interpretation of small diameter pipe between June and October 1964 (Tr. 1900). When asked whether prior to March of 1965 a request had been made to ac

69

Mr. Thomas testified that he did not believe Cen-Vi-Ro indicated any disagreement with the Bureau's interpretation of small diameter pipe prior to March of 1965 (Tr. 1434). He testified that during the first week in March 1965, he had a conversation with Mr. Franklin concerning small diameter pipe under paragraph 67.j. of the specification. He stated that Mr. Franklin had made up a sketch showing variations in diameter compared to lengths of pipe and inquired if pipe could be accepted in accordance with the sketch.70 He asserted that even then it was not a question of whether the Bureau's interpretation was correct, but simply whether pipe could be accepted in accordance with those tolerances (Tr. 1435). The Board finds that any

A memorandum, dated February 8, 1965, signed by Mr. M. J. Franklin, refers on page 2 to recent trips to the project construction engineer's office in which he requested relief for installation of pipes with slightly smaller bore (Cen-Vi-Ro Correspondents).

70 Tr. 1434, 1435. The sketch was similar to that shown on page G-6 of Exhibit 5M (Tr. 1905), which is dated November 23, 1965.

disagreement by Cen-Vi-Ro with the Bureau's interpretation of internal pipe diameter tolerances was not conveyed to the Bureau until late January 1965 at the earliest.

72

Cen-Vi-Ro's request was discussed with the Chief Engineer's Office in Denver by telephone on March 8, 1965, and it was determined that the pipe could be accepted." Mr. Lincoln testified that Cen-Vi-Ro was notified of the approval within a day or two thereafter. In earlier testimony, Mr. Thomas referred to the date the Bureau agreed to accept small diameter pipe as about March 19, 1965 (Tr. 1318). This resulted in the acceptance of pipes having a restricted. area double the first permissible overfill even though the restricted area extended more than one-fourth the length of the pipe (Tr. 1905). There were no final rejects under DC-6000 due to pipes being classified as small diameter by the Bureau (Tr. 589, 590). The Government

71 Tr. 1905, 1906, 2051, Mr. Thomas testified that if Cen-Vi-Ro had expressed disagreement with the Bureau's interpretation at an earlier date, he would have taken the matter up with his superiors and there would be memoranda to that effect (Tr. 1434). However, the only documentary evidence in the record of the Bureau's relaxation of pipe diameter tolerances is a memorandum signed by Mr. Lincoln, dated September 20, 1966 (note 62, supra), which is long after the events in question. While the memorandum confirms the March 8, 1965, telephone conversation with the Chief Engineer's Office, it does not state when Cen-Vi-Ro was notified of the decision to relax internal pipe diameter tolerances.

72 However, Mr. Franklin, whose recollection was refreshed by reference to a Cen-Vi-Ro diary entry not in evidence, testified that Cen-Vi-Ro was not notified of the relaxation of internal pipe diameter tolerances until April 12, 1965 (Tr. 369-371). We accept this testimony as accurate.

states that the relaxation of pipe diameter tolerances was a waiver of strict compliance with the specifications and not an acknowledgment that the Bureau's interpretation was incorrect. Mr. Lincoln testified that the reason for the waiver was that Cen-Vi-Ro had improved its techniques so that small diameters were being eliminated and the few that were being made were not a threat to the properties of the line (Tr. 1907).

Mr. Murray testified that, when he arrived at the plant in January 1965, the principal problem was considered to be the production of small diameter pipe (Tr. 887). He stated that the project engineer's letter of January 21, 1965 (Exh. 14), increased the concern that CenVi-Ro would be unable to substitute small diameter pipe and made it more imperative that pipe be produced in accordance with the Bureau's interpretation of the specifications. He asserted that he insisted that the operators not make small diameter pipe even though he disagreed with the Bureau's interpretation (Tr. 890-892).

Permissible variations in internal diameter for the various pipe sizes are contained in Subparagraph 67.j. (1), Specifications DC-6000. This subparagraph provides in part:

j. Miscellaneous requirements.

(1) Sizes and permissible variationsVariations of the internal diameter shall not exceed plus or minus 1.50 percent for pipe having an internal diameter of 12 to 24 inches, inclusive; 1 percent for pipe 27

to 36 inches, inclusive; and 0.75 percent for 39-inch diameter and larger; Provided, That in not more than 10 percent of the pipe units of any one size to be installed in one continuous reach of pipeline, up to two times the above listed permissible variations will be accepted if such variation does not extend more than one-fourth of the length of the pipe unit. Within this distance the net area of the pipe opening shall not be reduced by more than 4 percent for pipe having internal diameters of 12 to 36 inches, inclusive, or more than 3 percent for pipe having internal diameters 39 inches and larger and the transitions to the restricted area shall be gradual and smooth.

Contentions of the parties concerning the proper interpretation of this subparagraph are reflected on the drawings (pp. G2 and G6 of Exh. 5M; Exhs. 5P and 118). The Government asserts that this language clearly means that any variation in permissible diameter in addition to the original 0.75 percent for pipe 39 inches in diameter or larger must not exceed one-fourth the length of the pipe. 73 This was the interpretation enforced by the Bureau until April of 1965 (note 72, supra) and the interpretation adopted by the contracting officer. Cen-Vi-Ro, on the other hand, vigorously argues that the quoted paragraph can only mean that a variation of two times 0.75 percent of the pipe diameter may extend for one-quarter the length of the pipe and that in addition there shall be a gradual and smooth transition to the restricted one-fourth area.74

73 Statement of Position, IBCA-718-5-68, pp. 27-31.

74 Pages 5-8, Notice of Appeal, Exh. 6.

Decision

If "restricted area" in the phrase "and the transitions to the re

stricted area” be read as referring to an area one-fourth the length of the pipe, there can be no doubt that Cen-Vi-Ro's interpretation has something to be said for it. The language "does not extend more than one-fourth of the length of the pipe" would seem to warrant the view that the maximum variation can extend up to one-fourth the length of the pipe. However, if the transitions to the "restricted area" must be within one-fourth the length of the pipe, the maximum permissible variation cannot extend for one-fourth the length of the pipe, but, of necessity must be somewhat less. Nevertheless, to accept Cen-Vi-Ro's position would largely nullify the one-fourth of the length of the pipe limitation. This is so because under Cen-Vi-Ro's inter

75

pretation one-fourth of the length of the pipe operates as a restriction only on the maximum permissible variation and is inapplicable to all lesser variations beyond the origi

75 This is illustrated by the drawing (Exh. 5P) which the Government alleges represents the correct interpretation of the cited subparagraph. The effect of the Bureau's interpretation was to preclude Cen-Vi-Ro from taking advantage of the maximum permissible variation for one-fourth of the length of the pipe since Mr. Murray testified that it was impossible with the straight line of the packer roller to have the roller riding on the end rings and still be able to obtain the maximum tolerance allowed by the specifications for a 4- or 5-foot section in the center of the pipe (Tr. 888). Of course, this result is not peculiar to the Cen-Vi-Ro process, but is inherent in the view that transitions must be within onefourth the length of the pipe.

nal variation and all transitions to the second variation. In addition, Cen-Vi-Ro's position does not appear to recognize the opening phrase of the final sentence, “With

in this distance***." which in our view can only refer to a distance of one-fourth the length of the pipe and serves to eliminate doubts that transitions to any variation in addition to the 0.75 percent for pipes 39 inches in diameter and larger must be within one-fourth of the length of the pipe. It is, of course, well settled that an interpretation which gives effect to all terms of a contract is to be preferred to one which would nullify or render meaningless other terms of the contract.76

Another reason why the Government's interpretation is to be preferred is that in mid-October 1964 when the magnitude of the small diameter problem was brought to its attention with the classification of 1,045 pipes as undersize, Cen-Vi-Ro took actions which are only consistent with acceptance or acquiescence in the Bureau's interpretation. First, it milled the forming rings at the end of the pressure roller and built up the roller in the center in order to increase the diameter of the pipes and instructed the operators not to overfill the forms. Secondly, it took measures to grind the interiors. of pipes rejected for small diameter, in order to enlarge the bore of the pipes and gain their acceptance. Thirdly, it wrote the letter of Oc

76 Hol-Gar Manufacturing Corp. v. United States, 169 Ct. Cl. 384 (1965), and cases cited.

teber 30, 1964, requesting approval of substitutions of larger diameter pipes in order to compensate for excess friction loss through installation of the small diameter pipes without expressing any disagreement with the Bureau's interpretation. The letter stated in part "corrective measures have been initiated which have substantially eliminated the manufacturing of small diameters." Although the letter is explainable by Mr. Franklin's testimony that the pipes upon which substitution were requested would have been small diameter even under CenVi-Ro's interpretation (note 64, supra), acceptance of this testimony would largely negate the small diameter claim. Mr. Franklin admitted that Cen-Vi-Ro did not object to the Bureau's interpretation at first. The conclusion is inescapable that Cen-Vi-Ro found the Bureau's interpretation sufficiently reasonable in the first instance that it did not take issue therewith. Under these circumstances, the doctrine of contemporaneous construction is for application. Even if Mr. Murray's testimony that he protested the Bureau's interpretation in late January of 1965 is accepted, we hold that a disagreement with the Bureau's interpretation first expressed over three months after the problem was

See cases note 43, supra. Or as stated by the Court "* * the construction that the parties have themselves placed on a contract provision ante litem motum should not be disturbed when at a later date, the meaning of the provision is called into question by one of them." S. S. Silberblatt, Inc. v. United States, 193 Ct. Cl. 269-319 at 278 (1970).

brought to the fore comes too late to alter the result.78

Cen-Vi-Ro argues that the fact the Bureau to this day insists that its view of the contract is the only and correct interpretation establishes that a written protest would have been unavailing and that the Bureau has not shown that it was prejudiced by the absence of such a protest. The doctrine of contemporaneous construction is not dependent on a showing of prejudice but is instead founded on the premise that the actions of the parties prior to a dispute is the most persuasive evidence of the meaning to be accorded a contract provision which might reasonably be susceptible to differing interpretations.

For the reasons set forth above, we hold that the Bureau did not misinterpret the contract as to permissible internal pipe diameter tolerances and that even if Subparagraph 67.j.(1) be regarded as ambiguous and Cen-Vi-Ro's interpretation reasonable, Cen-Vi-Ro accepted and acquiesced in the Bureau's interpretation. The appeal as to the criteria for determining small diameter pipes is denied.

Drummy Concrete

Cen-Vi-Ro asserts that the Bureau improperly rejected many pipes for alleged drummy concrete (Claim of October 13, 1966, Exh. 5m, p. C4). These were pipes manufactured on the 20-foot spinner (principally prior to May 15, 1965),

78 The Jordan Company, ASBCA No. 10874 (December 15, 1966), 66-2 BCA par. 6030.