United States v. Carlo Bianchi & Company, Inc.

PETITIONER: United States
RESPONDENT: Carlo Bianchi & Company, Inc.
LOCATION: Beaumont Mills

DECIDED BY: Warren Court (1962-1965)

CITATION: 373 US 709 (1963)
ARGUED: Apr 29, 1963
DECIDED: Jun 03, 1963

Facts of the case


Media for United States v. Carlo Bianchi & Company, Inc.

Audio Transcription for Oral Argument - April 29, 1963 in United States v. Carlo Bianchi & Company, Inc.

Earl Warren:


David L. Rose:

Mr. Chief Justice, may it please the Court.

This case presents a narrow question of statutory interpretation, but a question which is fundamental to the process of resolving disputes under government contracts.

In this case, the Court of Claims has reversed administrative findings of fact as not supported by substantial evidence on the basis of evidence, which had never been presented to the administrative decision maker.

The administrative findings were made pursuant to the Standard Disputes Clause of government contracts, which in effect charges certain government officials with resolving factual disputes arising under the contract and it makes their decisions final.

The Wunderlich Act, which is before us here today, provides for judicial review of such decisions for arbitrariness fraud or lack of substantial evidence.

And the question presented therefore is whether, as the Court of Claims has held, a Court reviewing such findings is free to upset them as not being supported by substantial evidence or as being arbitrary on the basis of evidence, which has never been presented to the administrative decision maker.

It is of course our position that judicial review under the Wunderlich Act, like judicial review in most other instances, is to be made only on the administrative record and not on the basis of evidence, which is never been before the administrative decision maker.

I'll note that our position is supported by the decision of every District Court and Court of Appeals, which has passed on this issue.


David L. Rose:

Well, I would say that at least one has clearly.

I think that two others have clearly indicated that this is the view they take.

In order to set the issue in its context, I should like briefly to recall to the Court the facts which give rise to it.

In July 1946, the respondent was a successful bidder on a contract to build an earthen dam in Upper New York State.

Included in the contract was the construction of certain outlet works, including a tunnel, which was to be 710 feet in length and which was to be aligned with concrete.

The tunnel was designed to carry water from in front of the dam to the stream below it, it was not designed for the people to go through.

The tunnel was to be constructed through rock and was to be free standing that is, it was designed on the premise that the rock was sufficiently stable to allow the tunnel to stand without any permanent ceiling supports, except for a short period -- short piece at either end of 50 feet in length.

By the end of March 1947, a subcontractor had dug the tunnel through or, hold the tunnel out to use the engineering terminology, without ceiling supports of any kind either permanent or temporary.

Before placing the concrete however, a factual dispute arose.

The respondent took the position that the underground rock was materially different from that which have been shown in this specifications in borings and that permanent steel supports were necessary in order to hold the tunnel up and that they should be installed at the government’s expense before placing the concrete.

It sought the payment under Article 4 of the contract, which has to do with conditions materially different from those shown in the specifications are normally to be expected.

The contracting officer denied the respondent's claim on the ground that the rock was in fact sufficiently stable for a free standing tunnel, and that it was of a kind which was to be expected from the borings in specifications.

Pursuant to the disputes clause, respondent appealed to the Corps of Engineers Claims and Appeals Board, which held a full trial type hearing where each side introduced all the evidence it desired to introduce.

Respondent produced nine witnesses there, but introduced the testimony of only four, including engineers and a geologist.

The government introduced the testimony of three witness, all of whom had personal knowledge of the fact and whose testimony fully supported the government's position.

I think the geologist's testimony on each side is the critical testimony before the Board.

The record before the Board was in our view, a classic instance of sharply conflicting testimony by lay and expert witnesses who had personal knowledge of the facts and where the finder of fact could reasonably find either way.

The Board found that the underground rock was of a kind to be expected and that permanent tunnel protection was unnecessary, thereby sustaining the contracting officer's decision.

The respondent filed a suit in the Court of Claims approximately six years later.

Potter Stewart:

Any statute limitation?