to the Government's own admission contained the only improvements necessary for its needs and was based on standards not specified in the contract. On balance, the appellant's fault was less serious than the Government's fault.22

No duty of inquiry being present, there is for application the rule that ambiguities will be construed against the drafter.23 It follows that appellant's position must be sustained. Liability having been found, quantum would ordinarily be the number of stations improved times the contract unit price less any payments for stations of road improvement previously made. However, as we have seen, the record is unclear as to whether road improvement at all stations for which claim has been made were to specification requirements. Accordingly, we conclude that it is appropriate to remand 24 this matter to the contracting officer for determination of the amount due based upon such information as is or may be made available to him. If the parties are unable to agree,

V.

22 See Helene Curtis Industries, Inc. United States, 160 Ct. Cl. 437, 444 (1963). John M. Keltch, Inc., IBCA-831-3-70 (June 21, 1971), 71-1 BCA par. 8914, affirmed on reconsideration (Aug. 13, 1971), 71-2 BCA par. 9038.

24 Under quite similar circumstances, we have remanded matters left unresolved by the contracting officer. James Hamilton Construction Company and Hamilton's Equipment Rentals, Inc., IBCA-493-5-65 (July 18, 1968), 75 I.D. 207 at 218-19, 68-2 BCA par. 7127 at 33,035. See also Bergen Construction, Inc., GSBCA No. 1058 (November 20, 1964), 65-1 BCA par. 4554 at 21,817-818. Cf. Charles R. Shepherd, Inc., ASBCA No. 13412 (October 20, 1970), 70-2 BCA par. 8531 at 39,663-664 (on reconsideration).

appellant may, of course, again appeal to this Board.

CONCLUSION

The appeal is sustained. SPENCER T. NISSEN, Member.

WE CONCUR:

WILLIAM F. MCGRAW, Chairman.

SHERMAN P. KIMBALL, Member.

K SQUARE CORPORATION A/K/A

ULTRASCAN COMPANY

IBCA-959-3-72

Decided November 29, 1973

Contract No. 14-08-0001-12024, Geological Survey.

Sustained.

Contracts: Disputes and Remedies: Termination for Default-Contracts: Performance or Default: Acceptance of Performance-Contracts: Construction and Operation: Warranties-Contracts: Disputes and Remedies: Termination for Convenience

Under the Standard Form Supply Contract Default clause, a termination for default, following acceptance, of a contract for the purchase of a scanning electron microscope on the grounds it was defective, latently, and by virtue of various breaches of warranty, was improper in the absence of a notice preceding the termination affording the contractor at least ten days within which to cure the defects, and was, accordingly, treated as a termination for the convenience of the Government.

APPEARANCES: Mr. Henry T. Benedetto, Treasurer, K Square Corporation a/k/a Ultrascan Company, Cleveland, Ohio, for appellant; Mr. Edward G. Ketchen, Department Counsel, Washington, D.C., for the Government.

OPINION BY MR. KIMBALL

INTERIOR BOARD OF CONTRACT APPEALS

On June 27, 1969, the Government awarded a contract for the purchase of a scanning electron microscope from the appellant for $74,650. The instrument was install

ed in September 1969, thereafter rebuilt and finally accepted in February 1971. Subsequently, by notice dated February 16, 1972, the contracting officer terminated the contract for default, on the ground that the microscope was "defective" and "not acceptable," thereby precipitating this appeal.1

The Government's action was taken under two provisions of the contract and two sections of the Uniform Commercial Code relating to implied warranties. According to the Government, the appellant failed to comply with the "Guarantee of Equipment" clause 2

1 The Government seeks the return of the purchase price, plus incidental and consequential damages of $9,618, or a total recovery of $84.268. The damages are based upon employees' "time spent * in working with the defective instrument." Government Posthearing Brief 59-60.

2 "The equipment delivered, and the services performed under this contract shall be guaranteed against defective design, workmanship, material, and deviation from the operating specifications of the contract for a period of one year. Any defective design, workmanship, material, or deviation in operation from the contract specification within the one year

contained in the specifications and breached the implied warranties of merchantability and fitness for a particular purpose. The assertion has also been made that acceptance was not conclusive, having been induced by gross mistakes amounting to fraud, and the defects being latent, as provided for by paragraph (d) of the Inspection clause.*

The Facts

A scanning electron microscope is essentially a closed-circuit television system in which the subject of the picture is illuminated by a beam of electrons. It achieves much higher resolution than an ordinary light microscope because electrons are utilized which have a much shorter shorter the wavelength used in miwavelength than visible light. The croscopy, the higher the resolution.

period shall be repaired, replaced, or corrected by the Contractor without cost to the Government. The guarantee period shall start on the date of the Government's acceptance after the Contractor's demonstration of satisfactory operation." By letter dated February 26, 1971, the appellant agreed to extend the warranty period beyond one year to March 16, 1972 (Appeal File, Tab A6). Unless otherwise indicated, all subsequent references to exhibits are to those in the appeal file.

3 Uniform Commercial Code Secs. 2-314, 2-315.

"5. * ** (d) * * Except as otherwise provided in this contract, acceptance shall be conclusive except as regards latent defects, fraud, or such gross mistakes as amount to fraud." Standard Form 32 (June 1964 edition) incorporated by reference in the contract (Solicitation, Offer and Award, Standard Form 33, 1966 edition, p. 1) (Tab C).

5 The description of the operation of a scanning electron microscope and its various parts is based upon Everhart and Hayes. The Scanning Electron Microscope, SCIENTIFIC AMERICAN, January 1972, pp. 55-69 (Joint Exhibit AA); Ultrascan SM 2-012 Scanning Electron Microscope Operating Manual, pp. 3-5 (Appellant's Exhibit H).

Images are ultimately seen on a cathode ray tube and have a threedimensional quality.

The beam of electrons (known as primary electrons) originates at a highly negative cathode heated by current. The electrons emitted are accelerated by an electron gun from the cathode through a grid and then through an anode, that is at ground potential, down the electron optics column.

The beam of electrons is focused onto the subject by magnetic lenses. Sets of deflection coils inside the objective lens deflect the beam across the surface of the subject in a raster pattern. A set of stigmator electrodes corrects any lens astigmatism. When the primary electrons strike the subject they give rise to secondary electrons. The secondary electrons are collected by a detector and produce a scanning electron micrograph.

Acquisition of the microscope was intended to enable fossil specimens to be viewed at high magnification and to be photographed for use as illustrations in scientific publications. Commencing shortly after delivery in September 1969, however, the instrument was allegedly beset by various problems which prevented the Government from utilizing it for the purposes for which it was purchased. Eventually the microscope was returned to the contractor on March 31, 1970,

6 Memorandum of Norman F. Sohl, dated February 16, 1972 (Tab A3).

and, after rebuilding, was reinstalled on October 20, 1970.7

8

Further correction and repairs by the appellant were necessary subsequent to redelivery. Ultimately, on February 12, 1971, the Government accepted the microscope, following a demonstration of satisfactory operation, as required by the Guarantee of Equipment clause.9

According to the Government, shortly after acceptance took place, various "defects, deficiencies and malfunctions" began to occur, some of which had not arisen previously, but many of which were similar to problems of the pre-acceptance period. 10 As a result, Mr. David Massie, the operator of the microscope, estimated at the hearing that its "down time" for repairs was 50 percent. Instead of being able to take 75 pictures a day which he maintained was possible with a functioning instrument, he allegedly only could take "something on the order of 30 to 50 total" during the entire existence of the contract.12

11

7 Memorandum of David H. Massie, dated December 9, 1971, p. 4 (Tab A5).

s Appellant's letter, dated January 25, 1971, attached to Government's letter, dated January 29, 1971 (Tab B).

A formal document of acceptance dated February 12, 1971, and executed by Norman F. Sohl for the Government is attached as Appendix I to the appellant's complaint. In its letter dated February 22, 1971, the Government stated that "official acceptance of the instrument was accomplished on February 16, 1971." (Tab A6.) We regard the formal document of February 12, 1971, as the best evidence of acceptance and controlling.

10 Government's Posthearing Brief, 10; Tr. 9. 11 Tr. 357. Between October 1969 and February 1971, the instrument could be used only 10% of the time, according to Mr. Massie (Tr. 79).

12 Tr. 164. 357.

At the hearing Mr. Massie testified extensively regarding the various malfunctions that occurred, relying upon logs that he, or at times his supervisor, Mr. K. Norman Sachs, Jr., maintained in connection with the microscope.13 Between the period commencing February 18, 1971, shortly after acceptance, to January 19, 1972, one month before termination, the following problems are said to have developed: aperture micrometer leaks; inoperative stage motion; scan generator malfunction; malfunction and drift in the magnification meter; failures of the Granville-Phillips vacuum pump; failure of printed circuit boards; scratched pole pieces allegedly caused by objective aperture bar; poor image quality; gun control malfunction; failure of the Hastings vacuum gauge; failure. in the high and low voltage power supplies; erratically functioning solenoid valve; warped and melted aperture bar and strips allegedly caused by the electron beam; failure of the automatic sequencing set-up of the vacuum system; inoperative objective valve; damaged pole pieces, allegedly caused by the electron beam; inoperating tilt and rotation unit; and damaged anode of the electron gun, allegedly caused by the electron beam.14

14

Most frequently the difficulties in

13 Tr. 27. The logs consist of two volumes, titled SEM Log I and SEM Log II (Government's Exhibits 2A and 2B). In Log I, the first entry is dated September 5, 1969, and the last entry is dated November 9, 1971. In Log II, the first entry is dated November 10, 1971, and the last entry is dated April 19, 1972.

14 Memorandum of David Massie, dated February 16, 1972 (Tab A3); Government's Posthearing Brief, 39 (incorrectly numbered "40").

volved the functioning of the scan generator and the magnification meter.15 A scan generator controls the electron beam movement and is regarded as the "heart" of the microscope's electronic system.16 The meter measures the approximate magnification achieved.17

As a result of the defects and malfunctions, Dr. Norman F. Sohl, Chief of the procuring agency's paleontology and stratigraphy branch, stated that during the total time the instrument was in its possession "sufficient photographs of suitable quality to illustrate even one single report" could not be obtained.1s In his decision terminating the contract, pursuant to Clause 11(a) of the General Provisions, the contracting officer found that the appellant made 18 service calls since acceptance took place, but the instrument operated unsatisfactorily.19

15 Tr. 237.

16 Appellant's Exhibit H, note 5, supra, p. 5. 17 Id. at 49.

18 Tr. 292-93; note 6, supra.

19 Contracting Officer's letter, dated February 16, 1972 (Tab A2). Clause 11(a) of Standard Form 32 reads:

"11. DEFAULT

"(a) The Government may, subject to the provisions of paragraph (c) below, by written notice of default to the Contractor, terminate the whole or any part of this contract in any one of the following circumstances:

"(1) if the Contractor fails to make delivery of the supplies or to perform the services within the time specified herein or any extension thereof or

"(ii) if the Contractor fails to perform any of the other provisions of this contract, or so fails to make progress as to endanger performance of this contract in accordance with its terms, and in either of these two circumstances does not cure such failure within a period of 10 days (or such longer period as the Contracting Officer may authorize in writing) after receipt of notice from the Contracting Officer specifying such failure."

Appellant contends that the microscope was mishandled by the Government's operator, Mr. Massie. In letters dated July 30, 1971, and January 18, 1972, to neither of which any substantive reply was received, the appellant complained to the Government that Mr. Massie was calling upon it unnecessarily to perform cleaning and minor adjustments which were ordinarily performed by its customers.20 While admitting that some malfunctions occurred, they were not, according to the appellant, of such nature or frequency as to prevent satisfactory operations. It is, therefore, the appellant's view that termination for default was unjustified.

Decision

This appeal has raised a variety of legal and factual issues. Among them are the following: Of what relevance are the deficiencies and malfunctions that occurred prior to acceptance? Has the appellant complied with the express provisions of the Guarantee of Equipment clause? If not, does noncompliance constitute such a failure to perform as justifies a termination for default? Are the warranties of merchantability and fitness for a particular purpose of the Uniform Commercial Code implied provisions of this contract, or are they negated by the presence of express provisions? If the implied warranties are applicable and have not been met, does the failure to per

20 Tab A4, A6.

21 Appellant's Posthearing Brief, 27.

form such a provision of the contract constitute a default for which termination is appropriate? Or, is termination for default for any reason other than the exceptions contained in the Inspection clause barred by the finality of acceptance?

Still other questions raised are: Has the Government met its burden of establishing that acceptance was not conclusive because it was induced by gross mistakes amounting to fraud? Were the defects and malfunctions of the instrument brought about by the Government's improper use? Or, has the Government met its burden of establishing the existence of latent defects at the time of acceptance not discoverable by reasonable inspection and that such defects were the most probable cause of the microscope's failure to operate properly?

We need not decide any of these questions, however, although we will touch upon some of them in passing, because one issue that has not been raised is paramount. It turns upon a provision of the Default clause of the contract and its resolution is determinative of the appeal. We are obligated to consider the point even though neither party has broached it.22

22 John A. Johnson Contracting Corp. v. United States, 132 Ct. Cl. 645, 656 (1955) (“* * * No fault is imputed to the Board in failing to see that the real problem, under the contract, was one not urged by the parties. ** The plaintiff's failure to analyze with greater nicety the appropriate theory for its claim should not have the effect of a forfeiture of its rights. ***"); Onus Company, ASBCA No. 16706 (October 5, 1972), 72-2 BCA par. 9722.