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Liebherr Crane Corp. v. United States

Decided: February 5, 1987.


Appeal from the Armed Services Board of Contract Appeals.

Friedman, Davis and Smith, Circuit Judges.


DAVIS, Circuit Judge.

Liebherr Crane Corporation (Liebherr) appeals from a decision of the Armed Services Board of Contract Appeals (ASBCA or Board), Liebherr Crane Corporation, 85-3 BCA para. 18,353 (1985), that upheld the contracting officer's denial of Liebherr's claim for price relief. We affirm.


The facts found by the Board, all supported by substantial evidence and the extensive and detailed ASBCA findings, show this: On February 13, 1976, the Great Lakes Branch, Northern Division, of the Naval Facilities Engineering Command (Navy), issued a competitive solicitation seeking bids for the construction of two 50-gross ton portal cranes, with an option to provide and secure an additional 50-gross ton portal crane. The request for proposals included a 98-page technical specification which set forth detailed design requirements.

Mr. Heinz Schiller, president of Liebherr, assumed responsibility for the preparation of Liebherr's proposal. There is no doubt that Schiller was careless in his perusal of the specification. Because he limited his examination to the principal performance requirements in the specification (3 or 4 pages out of 98), he overlooked certain special sections of substance which pertained to industry and military specification standards. The short of it is that Schiller's cursory examination convinced him that Liebherr's light-weight standard commercial crane, with minor modifications, would satisfy the Navy's design specifications. Accordingly, he formulated a bid based upon the approximate weight of Liebherr's standard Form 1500 crane (270 tons) multiplied by a factor of $4.00 per kilogram.*fn1 However, a careful reading of the specifications and the performance requirements would have disclosed the need for a much heavier crane. Although there were no explicit weight requirements prescribed by the specifications, in actual fact they required Liebherr to provide custom-designed cranes weighing between 705 and 786 tons each. Not surprisingly, Liebherr's bid of $3,725,600 was dramatically lower than the next lowest bid of $7,131,860.*fn2 Indeed, the Government's own estimate was $6,963,950, a figure which did not include a 24 percent escalation and 5 percent Washington state sales tax.

The Navy immediately noted the wide disparity between Liebherr's bid and the range of the other responsive proposals, and requested Liebherr to confirm its bid. (The discrepancies between the various bids and estimates were not then pointed out to Liebherr.) By telegram dated May 5, 1976, Liebherr responded:

We confirmed [sic] herewith that all prices which we quoted to you under the . . . solicitation . . . are as intended and remain unchanged. Our prices and our proposal, as submitted, present full technical performance to all contracts, specifications as stated therein. We further inform you that we are complying with your request to submit in writing, evidence of our previous experience in accordance with Clause Number J-9 as stated in your solicitation. Please be advised that we have been building portal cranes since 1948, and that since 1948 we are one of the world's largest crane manufacturers.

Liebherr's confirmation failed fully to reassure the Navy. On two separate occasions, the Navy sought further verification of Liebherr's intent to honor its bid and perform the contract according to specifications. First, by letter dated May 14, 1976, the Navy invited all bidders to submit "a best and final offer" before May 25, 1976. Liebherr's response of May 20, 1976 reiterated the same prices quoted in its original proposal and even included an alternate proposal offering a discount of $30,000 per crane.

Because the submission of "best and final offers" did nothing to reduce the great disparity between Liebherr's price and the range of other bids, the Navy summoned Liebherr representatives, including Schiller, to a pre-award conference on May 27, 1976. Apparently, the intended purpose of the meeting was to determine whether Liebherr understood the specification requirements and was capable of performing.

During the meeting, Navy personnel reviewed four drawings and miscellaneous brochures furnished by Liebherr. In addition, the parties discussed certain technical matters including the design engineering requirements and several individual specification elements. Also, part of the meeting was devoted to discussion of the drawing submission requirements under the contract.*fn3

Although the Navy's Procuring Contracting Officer previously had instructed Schiller to bring cost data to the conference, the latter failed to do so. Instead, he broke Liebherr's bid down into its component parts, assigning relative percentages to engineering, materials and labor. Schiller estimated the cost of crane erection alone to be 5 percent of the total cost ($60,000). When Navy personnel remarked that this was quite low, Schiller commented that an error of $10,000 to $12,000 for this component was relatively small when compared to the total amount of procurement involved.*fn4

Based on the information obtained at that meeting, the Navy concluded that Liebherr had both the ability and intent to perform the contract in accordance with the specifications. This conclusion was bolstered in part by Schiller's emphatic reassurances during the course of the meeting that Liebherr intended to provide the crane as ...

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