United States v. Acme Process Equipment Company

PETITIONER: United States
RESPONDENT: Acme Process Equipment Company
LOCATION: Multnomah County Circuit Court

DECIDED BY: Warren Court (1965-1967)

CITATION: 385 US 138 (1966)
ARGUED: Nov 09, 1966
DECIDED: Dec 05, 1966

Facts of the case


Media for United States v. Acme Process Equipment Company

Audio Transcription for Oral Argument - November 09, 1966 in United States v. Acme Process Equipment Company

Earl Warren:

Number 86, United States versus Acme Process Equipment Company.

Mr. Solicitor General.

Thurgood Marshall:

Mr. Chief Justice, may it please the Court.

This case is here on review of the decision and judgment of the United States Court of Claims.

The Court of Claims held that the Government was not entitled to cancel the contract with Acme Process Equipment Company for the violation of the Anti-Kickback Statute committed allegedly by key officials of that company.

In addition to Court of Claims, disagreeing with its trial commissioner in contrary we say to the traditional measure of damages permitted Acme restitutional relief, that is, it measured Acme's damages by the costs the company had expanded thus putting Acme in the position it occupied before the contract was made.

That measure resulted, we will contend in an unjustified windfall to Acme since ordinary damages would have been compensated for the loss caused by the breach.

On this hearing, we alleged two points.

The first issue, the first question to be decided is whether the Government is entitled in the case of this type to cancel a contract because responsible officials of the prime contractor have accepted kickbacks from some contractors in violation of the specific statute prohibiting such kickbacks.

And the second question is that if the Government was not justified in canceling the contract from statutory violations, then an additional issue is presented as to the proper measure of damages for the alleged breach of contract.

The salient facts surrounding the kickbacks are as follows: Acme was a company owned by Joshua Epstein, Samuel Fisher, their children and other close relatives.

They manufactured boilers and other items of the likes -- type of machinery.

In 1952, it became interested in diversifying.

And in October of that year, it hired James S. Norris and Harry J. Tucker, Jr. who represented themselves as experts in obtaining and administering government procurement contracts.

Indeed, ensure -- Norris was proposed and it was agreed that he would become the General Manager for production and Tucker was placed in charge of sales and government contracts and have proposed new addition to the Acme firm in a plant yet to be leased.

Tucker had already made arrangements with several companies under which he was to receive kickbacks on sales by the companies to customers procured by him and these would include of course Acme.

Indeed, Tucker agreed to share these kickbacks to Norris.

One of these companies develops as All Metals Industries which would become the principal subcontractor.

Tucker heard that the Army Ordinates Corps in Philadelphia was the contractor, the manufacturer of recoilless rifles, seventy five millimeter rifles; and acting on Tucker's advice that a bid of $350 per rifle would probably insure an award of contract, Acme submitted a bid of $337.23 per rifle.

Acme's bid was signed by Norris.

Sometime between the date of the bid and the award of the contracts three months later, the Army Ordinates Corps advised Acme that it was -- it might have been a mistake for them to have hired Tucker because Tucker's father was suspected of kickback activities.

But Joshua Epstein, the President of Acme, ignored this advice and made no effort to investigate Tucker despite the fact that Tucker's contract with Acme included a provision that he represent and will continue to represent firms in other lines of business.

One point I should mention on the rifles, the bid of three $337.23 was far below any other bid.

For example, the two other bids were $484 and $930 respectively.

And the two final bids were four hundred twenty three and six hundred and eighty four.

But Acme put in a bid of three hundred thirty seven and twenty-three cents.

On January 1953, the contractor for the manufacturing of 2751 recoilless rifles was awarded to Acme as the low bidder.

But the contracting officials thought Acme's bid might be too low, these were the government officials, and in view of its inexperience in this type of defense work and the Government offered to let Acme withdraw and the offer of Acme refused and let the bid in.

Of course, as most government contracts in munitions, the project was largely to be subcontracted with Acme furnishing the rifle valve and the finishing and assembling the component parts into the completed rifles.

Indeed, because of the large amounts of subcontracting, All Metals Industries, the principal subcontractor, whose subcontract was to amount to some one third of the total contract price participated in the negotiations for the prime contract, one between Acme and the Army and its subcontracting plans were reviewed by the Army itself.