United States v. Moorman

Background

A contractor working under a standard government construction contract and the War Department disagreed about whether certain demanded work was part of the contract. The contract’s specifications said a contractor could appeal such questions to the head of the department, and that the department head’s decision would be "final and binding on the parties." The Board of Contract Appeals, acting for the Secretary of War, affirmed the contracting officer’s decision. The Court of Claims earlier held the contracting officer’s and department head’s decisions could not be sustained under the specifications and were not final and conclusive. The Supreme Court reversed that judgment in an opinion by Justice Black. Mr. Justice Douglas took no part in the case.

Reasoning

The main question was whether a federal court may review an administrative decision made under a contract clause that makes the department head’s determination final. The Court explained that these final-settlement contract provisions have long been used by the Government, have been sustained by prior decisions, are not forbidden by Congress, and should not be defeated by judicial re-interpretation. The Court held that, whether the issue involved questions of fact or law, the dispute fell within the clear language of the clause providing final administrative settlement, so the Court of Claims may not review that administrative decision.

Real world impact

The ruling makes department-level decisions under such contract clauses binding on contractors and removes the Court of Claims as a path for challenging those decisions in this setting. Contractors and agencies that rely on standard form final-decision clauses will have those administrative rulings treated as conclusive under this decision.