Fred T. Ley & Co. v. United States
Headline: Contractor’s claim for liability insurance costs denied and judgment affirmed because the contracting officer never approved the expense, limiting recovery to insurance expressly approved or required by the contract.
Holding:
- Prevents contractors from recovering insurance costs unless the contracting officer approved or required them.
- Affirms that record findings of no approval bind later courts.
- Limits reliance on other cantonment cases when no blanket government approval appears.
Summary
Background
A contractor entered into a cost-plus contract with the government to build army cantonment buildings at Camp Devens, Massachusetts. The contract allowed reimbursement for expenditures made in performing the work, including bonds and insurance, if the contracting officer approved or required them. The contractor paid for public liability insurance and sued in the Court of Claims to recover those costs. The Court of Claims found no evidence that the contracting officer or his representative approved or required the insurance and ruled for the government.
Reasoning
The central question was whether the contractor could recover insurance costs without proof that the contracting officer approved or required them. The Supreme Court accepted the Court of Claims’ factual finding that no approval occurred and explained that finding binds the Court. The opinion distinguished two earlier cantonment cases: in one the contracting officer had approved the particular insurance, and in the other the decision followed the earlier case by agreement. Because the record here lacks approval, the Court concluded no substantial question was presented and affirmed the judgment.
Real world impact
The decision means contractors on cost-plus government contracts must show contracting-officer approval or a contract requirement to recover insurance expenses. Contractors who buy liability insurance without such approval are unlikely to get reimbursement. This ruling is limited to the record before the Court and affirms the lower court’s judgment.
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