Meva Corp. v. United States

Per Curiam : This case comes before the court on exceptions by the plaintiff and the defendant to the recommended decision, filed January 11, 19T4, by Trial Judge Harry E. Wood pursuant to Buie 134 (h). The court has considered the case on the briefs and oral argument of counsel for the parties — 207 — and the Amicus Curiae. Since the court agrees with the recommended decision of the trial judge, as supplemented by the court, and as hereinafter set forth, it hereby affirms and adopts the recommended decision, as supplemented, as the basis for its judgment in this case. Therefore, plaintiff is entitled to recover and judgment is entered for plaintiff in the sum of $600,000. OPINION OP TRIAL JUDGE Wood, Trial Judge: In this contract action, plaintiff, a California corporation, contends that in the facts and circumstances of this cause defendant’s refusal after contract award to permit plaintiff either (1) to substitute another subcontractor for one listed by plaintiff in its bid as the subcontractor who would (should plaintiff be awarded the contract) perform clearing and footings work, or (2) to perform the clearing and footings work itself, constituted a breach of contract, and that defendant is accordingly liable to it for its resulting damages, alleged to amount to some $1,600,000. Defendant’s position is that the Contracting Officer never rendered “a decision that was final as to the contractor’s right to substitute”; that, assuming arguendo the Contracting Officer did make “an arbitrary and final decision”, plaintiff’s claim for resulting damages is nonetheless barred by estoppel or waiver; that in any event plaintiff’s “total cost” approach to the problem of damages is deficient; and that, there being “no other competent proof of damages, plaintiff cannot recover.”1 For the reasons which follow, it is concluded that plaintiff is entitled to recover, in the amount of $600,000. I Early in 1964, defendant, acting through the Bureau of Reclamation, Department of the Interior, issued an invitation for bids (IFB) for the construction and completion of a proposed “Flagstaff-Pinnacle Peak” 345-kilovolt transmission line running from near Winona, Arizona, to the Bureau of Reclamation’s Pinnacle Peak 'Substation some 14 — 208 — miles north, of Scottsdale, Arizona. Bids were to be opened in Phoenix May 12,1964. The IFB indicated that the work to be performed (which included, inter alia, clearing and footings work) was to be divided into two schedules, each approximately 57 miles in length; that work should begin within 30 calendar days after the contractor’s receipt of notice to proceed; and that all of the contract work should be completed within 630 days from the date of receipt of such notice. The IFB also included Special Condition 24, Specifications No. DC-6090, “Listings of Subcontractors”, the genesis of this litigation. Briefly, paragraph b of Special Condition 24 required that a bidder submit with his bid the firm name and address of each subcontractor to whom a subcontract would be awarded for each category of work listed in a “Supplement to Bid Form, S.F. 21 — List of Subcontractors”. Paragraph b further stated that, “Except as otherwise provided herein, the bidder agrees, if awarded the contract, not to contract to have any of the listed categories of work performed by any subcontractor other than the subcontractor named for the performance of such work.” Special Condition 24 also provided in part as follows: e. No substitution for any named subcontractor will be permitted prior to award, and only in unusual situations after award and then only upon the contractor’s submission, in writing, to the Contracting Officer of a complete justification therefor and after obtaining the Contracting Officer’s written approval thereof. * * * Mr. S. M. Rivers, who had become an employee of plaintiff on April 27, 1964, was responsible for the preparation of plaintiff’s bid on the proposed transmission line. Despite his intent to subcontract the clearing and footings work, Mr. Rivers proceeded on his own to prepare a prime contract bid for plaintiff. He endeavored to obtain bids on the clearing and footings work, and as part of this effort solicited a bid from a Mr. Hal Perry, a Phoenix contractor doing business as Sun States Contracting Company. Mr. Rivers received a bid from Sun States on the evening of May 11,1964, the day before bid opening. — 209 — Perhaps because of the timing of the Sun States bid, plaintiff’s prime contract bid to defendant did not reflect Sun States’ bid figures on the clearing and footings work (a total of about $1,523,000), but instead contained Mr. Rivers’ own higher bid figures for that work (a total of about $1,864,-000).2 In bidding on the proposed transmission line, Mr. Rivers, for plaintiff, did list Sun States (as “Sun States Construction Co.”) as a subcontractor for both clearing and footings work pursuant to Special Condition 24, supra. At some time prior to coming to work for plaintiff, Mr. Rivers had checked Mr. Perry’s “credit” and had found it to be “slow but good”. No further pre-bid investigation of either Mr. Perry’s or Sun States’ financial situation was then made. At bid opening May 12, 1964, plaintiff’s bid of $6,148,581 on the proposed transmission line was within about $115,000 of defendant’s engineer’s estimate (of some $6,265,000), but was about $850,000 less than that of the next lowest bidder, a construction company which had just completed a parallel transmission line along the same right-of-way. Plaintiff was awarded a contract for construction of the Flagstaff-Pinnacle Peak 345-kilovolt transmission line, at an estimated price of some $6,133,000, June 5,1964. In the meantime, and following May 12,1964, plaintiff had begun to investigate Sun States’ financial situation. After an unsuccessful effort to obtain information from Mr. Perry, receipt, on May 20, 1964, of a financial report showing Mr. Perry’s net worth to be rather small, and advice on June 9, 1964, from Sun States that it had secured a line of credit at a Phoenix bank (and from the bank that there was no such line of credit), two of plaintiff’s representatives visited the Bureau of Reclamation’s office in Phoenix on June 9, 1964, to inquire about the possibility of substituting another contractor for Sun States (whose financial condition was then mentioned) or of doing the clearing and footings work itself. During this same period of time, however, representatives of Sun States, in conversations with representatives of defendant in Phoenix, had made a number of allegations re — 210 — specting plaintiff. Among other things, defendant was told that plaintiff was trying to “dump” Sun States, and that plaintiff was “bid shopping”. The latter term describes a situation where, after bid opening and award, a successful government prime contract bidder who has utilized a particular potential subcontractor’s bid figure in submitting its prime contract bid “shops” the subcontract work to other potential subcontractors in an effort either to obtain from another subcontractor a lower price for the work to be subcontracted or to drive down that of the subcontractor whose figures were used in computing the prime bid. The Office of the Chief Engineer of the Bureau of Reclamation (“the Contracting Officer”), in Denver, Colorado, was promptly advised by his subordinates in Phoenix of the substance of Sun States’ assertions about plaintiff, and of the comments and questions of plaintiff’s representatives at the Bureau’s Phoenix office on June 9,1964. On June 12, 1964, by letter to the Contracting Officer, plaintiff requested “permission to withdraw the name of the sub-contractor [Sun States] which we listed in our Bid Documents submitted May 12, 1964.” Plaintiff’s said letter further stated that: Our detailed examination of the financial resources of this Corporation reveals that, in our opinion, they are inadequate to support performance of this sub-contract. We have examined the Corporation’s financial statement and the personal financial statements of the Officers, have discussed this matter with the Sun States banking affiliate — The Valley National Bank, Mr. Norman J. Miles, Assistant Vice President, and have also obtained Dun and Bradstreet Reports. We believe that the satisfactory performance of this work covered by this subcontract would be seriously affected by this lack of financial stability. If approval is obtained for this withdrawal, we intend to provide a sub-contractor or contractors of definite financial responsibility or will provide performance by our own organization. By letter dated June 15, 1964, defendant gave plaintiff written confirmation of a telephonic postponement of a pre-construction conference scheduled for June 17, 1964, and advised plaintiff that the conference would be rescheduled — 211 — when its request to withdraw Sun States had been resolved. By letter dated June 17, 1964, from the Contracting Officer, plaintiff was advised in pertinent part that: It appears that there has been no change in the circumstances existing at time of submittal of your bid to justify substitution of subcontractors as requested. Accordingly, approval of any substitution is denied. While the Contracting Officer had concluded by June 17, 1964, that plaintiff might be “bid shopping”, defendant’s representatives made no effort, at any time during the period 1964-66, to ascertain whether or not Sun States’ allegations with respect to plaintiff had any basis in fact. There is no credible evidence in the record of “bid shopping”. Moreover, the proof establishes that plaintiff was never told by anyone, prior to 1967, that Mr. Rivers or plaintiff had supposedly made any pre-bid promises to Sun States with respect to financing or bonding, as Sun States was asserting to defendant in mid-1964. On June 24, 1964, at plaintiff’s request, a conference between representatives of plaintiff and the Contracting Officer (and other representatives of defendant) was held in Denver, Colorado. The Contracting Officer was then told that plaintiff, having received Sun States’ bid just prior to bid opening, had been unable to make a pre-bid appraisal of Sun States’ capabilities, that Sun States had no financing and could not make bond, and that plaintiff wanted either to obtain a subcontractor with adequate financing to do the clearing and footings work or perhaps to do that work itself. A decision under Special Condition 24 was requested. While plaintiff was then told that Sun States had approached defendant in opposition to any possible substitution for Sun States by another subcontractor (or by plaintiff), none of Sun States’ assertions to defendant about plaintiff (and one of those assertions, of pre-bid promises with respect to financing and bonding, at least tended to confirm Sun States’ financial instability) were even mentioned. The Contracting Officer reiterated that, absent a showing of some change in Sun States’ circumstances following bid opening, any substitution for Sun States was — 212 — unjustifiable, and that plaintiff’s doing the work itself “would be considered a substitution.” In consequence of that position, plaintiff did not give the Contracting Officer documents respecting Sun States’ financial condition it then had, and to which its June 12, 1964 letter to the Contracting Officer had referred. Had plaintiff done so, however, it would have made no difference. Even with clear proof of Sun States’ insolvency in June 1964, the Contracting Officer would have denied plaintiff’s request had Sun States been equally insolvent May 12, 1964, since only a postbid change in circumstances was, in his judgment, an “unusual” situation within the meaning of Special Condition 24. Thereafter plaintiff entered into negotiations with Sun States with a view to reaching a subcontract with Sun States, and it eventually did so July 15, 1964. Two days later, on July 17,1964, the Contracting Officer gave plaintiff notice to proceed with the work covered by the contract in suit. In the meantime, on July 9, 1964, plaintiff had written to the Contracting Officer to advise that subcontract negotiations with Sun States were in process, but that, should they fail, the Contracting Officer would probably receive a request for reconsideration of his denial of plaintiff’s request to “substitute the proposed subcontractor, or that the work be performed by ourselves.” In the latter connection, plaintiff asked for an interpretation of the language of Special Condition 24 relating to substitution of subcontractors as it pertained to work performed by a prime contractor. The Contracting Officer’s response, some days after a pre-construction conference attended by representatives of plaintiff, Sun States, and defendant had been held, was in substance that plaintiff was precluded by Special Condition 24 from doing the clearing and footings work, and that if plaintiff should decide not to enter into a subcontract with Sun States, and instead request approval “for substitution of yourself as prime contractor for work previously listed for performance by that subcontractor, I will be glad to give you a formal and final decision on the matter upon request being made therefor,” — 213 — Sun States subcontracted the clearing work, at a price of $210,000,3 and that work was completed without any apparent difficulty or delay. The footings work, however, did not proceed so well. For liability purposes, it suffices to say that Sun States never achieved the required production rate of 10 miles of footings work per month, in fact completing no more than 10 miles of footings work during the period August-December 1964. The basic reason for Sun States’ failure to make progress was a lack of financial capability and resources, i.e., it did not have enough personnel, equipment, or material on the project to do the footings work at the required rate of progress. By agreement dated December 23, 1964, between plaintiff and Sun States, the subcontract between the two was terminated effective December 31,1964. Sometime in January 1965 defendant was orally advised of the termination agreement, and made no objection either to that agreement or to plaintiff’s intent to complete the footings work itself. Plaintiff completed the subcontract work in 1965. Plaintiff contends that defendant’s refusal to permit it to substitute either another subcontractor, or itself, for Sun States constituted a breach of contract entitling plaintiff to recover for any damages thereby caused, on the grounds (1) that having shown an “unusual” situation constituting a “complete justification therefor * * it was entitled, pursuant to Special Condition 24, to replace Sun States; (2) that the Contracting Officer acted arbitrarily and capriciously, and under the influence of “bid shopping” charges, in denying its requests to substitute for Sun States, neither informing plaintiff of those charges nor affording it an opportunity to respond to them; (3) that by compelling plaintiff to subcontract with Sun States, defendant breached its implied obligation not to hinder plaintiff, or to render its performance more costly; and (4) that defendant’s refusal to permit plaintiff to do the work itself was in any event a breach of contract.4 — 214 — Defendant argues, however, that the Contracting Officer “never rendered a decision that was final as to the contractor’s right to substitute”;5 that plaintiff subcontracted with Sun States without any “force, compulsion, or duress by the Contracting Officer”; and that, if the union between the two were unwilling to any degree, the cause was pressures by Sun States on, and concessions from Sun States to, plaintiff, with defendant playing no part in the matter. Defendant’s view of the facts leading to plaintiff’s subcontract with Sun States is not a tenable one. Winter work on the northern half of the proposed transmission line, in northern Arizona, is, because of altitude and terrain, virtually impossible. Plaintiff had therefore originally planned to commence clearing and footings work on the northern end of the project in mid-June 1964, and to proceed south without interruption, completing these portions of the work in about a year. When plaintiff notified defendant on June 12, 1964, of its desire to “withdraw” Sun States, defendant immediately postponed a preconstruction conference scheduled for June 17, 1964. Moreover, that request, albeit not the only factor, clearly affected the timing of defendant’s issuance of a notice to plaintiff to proceed with the contract work on July 17,1964, two days after plaintiff’s agreement with Sun States. In the period of time between June 12 and July 17,1964, the Contracting Officer twice denied plaintiff’s request for approval of substitution on the ground that to obtain his approval plaintiff would have to show some change in Sun States’ circumstances after bid opening. There was neither a reservation of decision pending presentation of further facts, nor anything tentative about these rulings. In all the circumstances then facing plaintiff, it reasonably concluded that it had no choice but to proceed as it did by way of a subcontract with Sun States, on terms as favorable to plaintiff as it could obtain. Defendant’s reliance on plaintiff’s July 9, 1964 letter to the Contracting Officer as showing that the matter of substitution remained unresolved after June 24, 1964, fails. In — 215 — that letter, plaintiff, recognizing the Contracting Officer’s position, simply advised him that it was proceeding as his decision required, but that it might again request reconsideration should it be unable to comply with that decision. Nothing therein detracts from the finality of the Contracting Officer’s earlier rulings. Thus, plaintiff’s contention of breach of contract by defendant’s refusal to permit it to substitute either another subcontractor or itself for Sun States may not be finessed on the ground that plaintiff’s dealings with Sun States were the product of choice, untainted by a final decision of the Contracting Officer denying plaintiff’s request for substitution. It is, of course, apparent that Special Condition 24, to which plaintiff agreed in submitting its bid, vested in the Contracting Officer a considerable measure of discretion. That discretion, however, was not, and cannot have been intended to be absolute. See General Electric Co. v. United States, 194 Ct. Cl. 678, 440 F. 2d 420 (1971); Argonaut Insurance Co. v. United States, 193 Ct. Cl. 483, 434 F. 2d 1362 (1970). And, it is clear from the record in this case that that discretion was exercised arbitrarily, capriciously, and in breach of the Contracting Officer’s obligations to plaintiff. General Electric Co. v. United States, supra; see also Hardeman-Monier-Hutcherson v. United States, 198 Ct. Cl. 472, 487, 458 F. 2d 1364, 1371-72 (1972); Penner Installation Corp. v. United States, 116 Ct. Cl. 550, 89 F. Supp. 545, aff'd 340 U.S. 898 (1950). While plaintiff did receive one other bid on a portion of the footings work, Sun States was the sole bidder to plaintiff on the clearing and footings portion of the proposed contract work. Sun States’ bid reached plaintiff on the evening before bid opening. There was obviously little or no time for any investigation of Sun States by plaintiff. Even its corporate name was inaccurately listed in plaintiff’s bid documents, and plaintiff’s, not Sun States’, bid prices for clearing and footings work were used. When, shortly after bid opening, plaintiff came to the conclusion that Sun States lacked adequate financial resources to perform a subcontract for the clearing and footings work— — 216 — a conclusion which the events of the following several months proved devastatingly accurate — it twice sought the Contracting Officer’s permission, on this ground, to substitute someone else for Sun States. Sun States’ allegations to defendant of promises by plaintiff as to bonding and financing bore out Sun States’ own financial instability. The Contracting Officer knew, or should have known, that Sun States was at least a risk. Notwithstanding, he neither advised plaintiff of Sun States’ allegations to defendant about plaintiff, and thereby in effect denied plaintiff an opportunity to refute them, nor even tried to find out whether those allegations had any basis in fact. Perhaps influenced by alleged (but clearly not proven) bid shopping, he simply insisted that a post-bid change in circumstances must be shown to obtain his approval for substitution pursuant to Special Condition 24. In all of the facts and circumstances of this cause, the Contracting Officer acted arbitrarily and capriciously, and in breach of his contractual obligations to plaintiff, in thus denying plaintiff’s requests for substitution. See General Electric Co. v. United States, supra; Argonaut Insurance Co. v. United States, supra; Penner Installation Corp. v. United States, supra. Plaintiff also vigorously urges that by compelling plaintiff to subcontract with an incapable subcontractor, defendant violated its implied obligation not to hinder plaintiff, nor to render its performance more costly. Cf. Space Corp. v. United States, 200 Ct. Cl. 1, 10, 470 F. 2d 536, 541 (1972); Dale Constr. Co. v. United States, 168 Ct. Cl. 692, 700 (1964); Commerce International Co. v. United States, 167 Ct. Cl. 529, 536, 338 F. 2d 81, 85 (1964). Except for denying that the Contracting Officer rendered a final decision requiring plaintiff to subcontract with Sun States, defendant does not really controvert this argument. In view of the conclusions herein-above set forth, however, the issue need not be, and is not, here reached. Defendant does contend that, should the court conclude that the Contracting Officer did render a final and arbitrary decision, the claim herein is nonetheless barred by the doctrines of estoppel or waiver. These contentions have no merit. — 217 — One argument is that by its letter of July 9,1964, plaintiff somehow lulled the Contracting Officer into believing that plaintiff no longer sought to submit facts necessary to justify a final decision in its favor. This is specious. The Contracting Officer had twice told plaintiff that only a post-bid change in circumstances would be considered. Plaintiff obviously could not make such a showing, and it had in effect told the Contracting Officer just that. The notion that plaintiff somehow lulled or misled defendant lacks any foundation.5a Defendant also urges that by failing to advise it that plaintiff was contracting with Sun States under protest or disagreed with the Contracting Officer’s decision, and by failing to go over the Contracting Officer’s head administratively, in 1964, plaintiff is “estopped, by acquiescence or otherwise, from basing a claim upon the actions or inactions of the Contracting Officer.”6 Plaintiff’s June 24, 1964, request for reconsideration was itself clearly sufficient to show the Contracting Officer that plaintiff protested, and disagreed with, his decision. Moreover, the Contracting Officer knew, or should have known from what Sun States and plaintiff had both told him, that withholding approval for substitution might well result in a claim. The proposition that plaintiff’s failure to “appeal” is a bar is supported neither by authority nor logic. Defendant further asserts that plaintiff acquiesced in “the Contracting Officer’s position that, where the subcontractor was alleging prebid understandings concerning financing of the subcontract work, the complete facts surrounding such understandings must be brought out before substitution on the ground of ‘financial instability.’”7 This position falls, on the facts found. Finally, Harvey Radio Laboratories, Inc. v. United States, 126 Ct. Cl. 383, 115 F. Supp. 444 (1953), cert. denied, 346 U.S. 937 (1954), and Ling-Temco-Vought, Inc. v. United — 218 — States, 201 Ct. Cl. 135, 475 F. 2d 630 (1973), cited by defendant as controlling on the estoppel question, are, on this record, wholly inapposite. Cf. Petrofsky v. United States, 203 Ct. Cl. 347, 488 F. 2d 1394 (1973). No sound reason for invoking the doctrine is suggested, or appears. Defendant also avers that waiver should be applied, asserting that the “law requires a contractor who claims the Government has committed a material breach of the contract to give prompt notice of such claim, and to state that it is continuing performance under protest if it elects to preserve its remedy.”8 As plaintiff correctly notes, 5 Williston on Contracts § 688 (3d ed.), cited by defendant in support of this proposition, pertains to loss of an excuse for nonperformance, and has no relevance to the situation here present. See Restatement of Contracts, §410; 5 A Corbin on Contracts §1244. In sum, plaintiff protested the Contracting Officer’s initial ruling, without success. After denial of that protest, it proceeded, as it was entitled (indeed, as plaintiff reasonably concluded, required) to proceed, by dealing with Sun States as best it could. While defendant suggests that it relied to its detriment on plaintiff’s failure to continue to protest, the record is very clear that throughout 1964 defendant was, or at the very least should have been, aware of Sun States’ performance (or, more accurately, lack of performance), and of the fact that Sun States was on the job only over plaintiff’s protest. If, in these premises, defendant failed to protect itself, the blame must ultimately lie at defendant’s, and not plaintiff’s, doorstep. Defendant’s speculations that the Contracting Officer might have either terminated the contract or made a full investigation (the latter something he should have done in any event) had plaintiff persisted even further than it did, or that defendant might have kept more detailed records of plaintiff’s and Sun States’ performance, furnish no basis for any different conclusion. Plaintiff’s claim is in no way barred by the doctrines of waiver or estoppel. — 219 — ii Having concluded that plaintiff is entitled to recover from defendant its damages attributable to defendant’s breach of contract, the difficult issues relating to the extent of such damages remain to be considered.. It is undisputed that plaintiff’s “total costs” of performing the clearing and footings work were either $2,539,505 (utilizing AGO equipment costs in the computation) or $2,448,938 (utilizing booked equipment costs in the computation).9 There, however, agreement ceases. Plaintiff would remove from either of the above sums what it asserts are its clearing costs, utilizing for this purpose the sum of $210,000 for which Mr. Bonner, Sun States’ sub-subcontractor, actually performed the clearing work. To each of the resulting net figures, plaintiff would then add 3 percent, as “Unbilled Corporate Charges”, and a profit factor of 5.37 percent. The resulting sums adjusted “total costs”, with and without AGO equipment costs) are, respectively, $2,509,669 and $2,429,994. From each of these two figures, plaintiff would then subtract either (1) its revenues from the footings portion of the contract work ($1,032,028) or (2) “Average Unit Bids, 2nd, 3rd, & 4th Bidders w/10.0% Profit Removed (Assumed Included)” ($1,230,920). Plaintiff has also proffered a number of other alternative calculations, reflecting a variety of assumptions. Plaintiff’s several damage calculations in evidence vary, from a high of $1,609,314 (in its initial claim summary) to a low of $1,075,186, depending on the assumptions on which a particular calculation is based. All of the calculations have in common, however, the factual premises that plaintiff’s “total costs” were reasonable, and that none of its excess costs in connection with the footings work were attributable to plaintiff. — 220 — Defendant objects generally to all of plaintiff’s calculations of damages, vigorously contending that a “total cost” approach is improper, but adding that in any event plaintiff has erred (1) in utilizing AGO equipment costs, rather than available booked equipment costs, (2) in utilizing a “fictional” 3 percent unbilled corporate charges factor, (3) in utilizing plaintiff’s own, unreasonably low, bid figures for footings work in calculating its damages, (4) in failing to average “all of the other items with the Government estimate * * (5) in adding a profit factor to plaintiff’s costs, rather than deducting a profit factor from plaintiff’s (or an averaged) bid figure for footings work, (6) in failing to recognize that plaintiff’s costs were unreasonable, thus requiring “some ‘jury verdict’ reduction * * *” in the costs claimed, and (7) in failing to take into account “the average clearing item bid * * *” or, at the least, $435,000, Sun States’ bid price to plaintiff for the clearing work, in removing the clearing work from the calculation.10 Plaintiff’s theory of the claim “has never been favored by the court and has been tolerated only when no other mode was available and when the reliability of the supporting evidence was fully substantiated.” WRB Corp. v. United States, 183 Ct. Cl. 409, 426 (1968). See also Seger v. United States, 199 Ct. Cl. 766, 786, 469 F. 2d 292, 304 (1972); Law v. United States, 195 Ct. Cl. 370, 381-87 (1971); Boyajian v. United States, 191 Ct. Cl. 233, 238-55, 423 F. 2d 1231, 1234-44 (1970). As defendant asserts, that theory may not properly be invoked here. Plaintiff’s low bid aside, the record precludes a finding that all of plaintiff’s costs were reasonable, or that “it was not responsible for the added expenses.” WRB Corp. v. United States, supra. It is equally clear, however, that plaintiff suffered substantial monetary damage in direct consequence of defendant’s breach of contract. And, an examination of the record shows it to be sufficient to permit the ascertainment by way of “jury verdict”, with a reasonable degree of accuracy, of the extent of such damages. Law v. United States, supra, 195 Ct. Cl. at 386-87; Boyajian v. United States, supra, 191 Ct. Cl. at 254, 423 F. 2d at 1244; WRB Corp. v. United States, supra, 183 Ct. — 221 — Cl. at 425-27. In the circumstances, plaintiff’s claim does not fail for lack of proof. Implicit in any “jury verdict”, however, is the necessity for resolution of the conflicting claims of the parties as to several factors to be weighed in reaching such a verdict: whether AGC or booked equipment costs are to be considered; the propriety of considering unbilled corporate charges (and a profit factor) vel non; and the appropriate method of viewing plaintiff’s clearing costs herein. Actual, booked, equipment costs being available, AGC equipment costs may not be considered in assessing plaintiff’s damages. Bennett v. United States, 178 Ct. Cl. 61, 371 F. 2d 859 (1967); L. L. Hall Constr. Co. v. United States, 177 Ct. Cl. 870, 379 F. 2d 559 (1966).10a A reasonable overhead factor may be taken into account in the assessment process, however, and plaintiff has proven that the 3 percent factor plaintiff would apply to its “total costs” is within the zone of reasonableness. Bennett v. United States, supra; Luria Bros. & Co. v. United States, 177 Ct. Cl. 676, 369 F. 2d 701 (1966). A profit factor, on the other hand, may not be taken into account in reaching a “jury verdict” herein. Bennett v. United States, supra, and cases there cited. Too, plaintiff’s attempt to remove clearing work from its “total costs” by subtraction therefrom of Sun States’ sub-subcontract price of $210,000, rather than its own contract price of $435,000, fails. The record shows that the sub-subcontractor did the clearing work without difficulty or delay, and fails to show that plaintiff’s cost for that work should be equated with Sun States’, rather than its own. — 222 — Upon the basis of a careful weighing of the record as a whole, including plaintiff’s actual costs of performing the clearing and footings work; the factors enumerated in the preceding two paragraphs, as there indicated; defendant’s estimate of the cost of the clearing and footings work, and all bids on that work opened May 12, 1964; the differences between the said bids (in terms of bid items) and the as-built footings work; and the fact that a definite, if not precisely measurable, part of plaintiff’s costs in performing the footings work cannot fairly be charged to defendant in any event, it is found by way of “jury verdict” that plaintiff was damaged by defendant’s breach of contract in the amount of $600,000. Cf. Teitelbaum v. United States, 198 Ct. Cl. 150, 165, 458 F. 2d 72, 81 (1972); WRB Corp. v. United States, supra, 183 Ct. Cl. at 425. BINDINGS OP PACT 1. Plaintiff at all times here relevant was, and is, a corporation organized and existing under the laws of the State of California. 2. In early 1964, defendant, acting through the Bureau of Eeclamation, Department of the Interior, issued an invitation for bids (“IFB”) for the construction and completion of “the Flagstaff-Pinnacle Peak 345-'KV Transmission Line No. 2, Transmission Division, Arizona, Colorado River Storage Project”, in accordance with (inter alia) Specifications No. DC-6090. The said IFB provided that bids thereon would be opened in Phoenix, Arizona, May 12,1964. 3. (a) The proposed transmission line was described in the IFB as a 345-kilovolt, 3-phase, 60-cycle, single-circuit transmission line, to be located in Coconino, Yavapai and Maricopa Counties, Arizona. The IFB indicated that the work was to be divided into two schedules, each 57 miles in length, with Schedule No. 1 extending from a tower at Station 0+00 (located about 1.5 miles southeast of Winona, Arizona) to Station 3028+20, and Schedule No. 2 extending from Station 3028+20 to the Bureau of Reclamation’s Pinnacle Peak Substation (about 14 miles north of Scottsdale, Arizona). — 223 — (b) The IFB provided that the work to be performed in the construction of the proposed transmission line would consist of furnishing and installing gates in right-of-way fences; furnishing and installing cattle guards and culverts; clearing land and right-of-way; famishing and installing tower leg grounds; constructing tower footings; testing, famishing, and erecting steel towers; furnishing and attaching tower signs; furnishing and installing fence grounds; furnishing and stringing conductors and overhead ground wires complete with all accessories; and installing one 345-kilovolt transmission line approach span. It also provided that work should begin within 30 calendar days after the contractor’s receipt of notice to proceed and be completed within 630 calendar days from the date of receipt of such notice.1 (c) Included in the IFB was Special Condition 24, Specifications No. DC-6090, “Listings of Subcontractors”, providing in pertinent part as follows: $ ‡ ‡ ‡ * b. The bidder shall submit with his bid the firm name and address of each subcontractor to whom a subcontract will be awarded for each category of work listed in the “Supplement to Bid Form, S.F. 21 — List of Subcontractors” attached to S.F. 21. Except as otherwise provided herein, the bidder agrees, if awarded the contract, not to contract to have any of the listed categories of work performed by any subcontractor other than the subcontractor named for the performance of such work. c. * * * With respect to a project in Category B herein, and if no entries appear in the “Categories of Work” column in the Supplement to Bid Form, S.F. 21, the contractor shall insert the categories of work he proposes to subcontract and the name and address of each proposed subcontractor. In case of * * * Category B, if no subcontract is to be awarded for any category of work listed, the bidder will be required to insert his name and address opposite each such category and to perform such work with his forces and all such personnel shall be carried on his own payroll. d. In the event the bidder fails in his bid (1) to identify the subcontractors as required by Subpara-graph 5., or (2) to comply with Subparagraph c. if the — 224 — bidder himself intends to perform one or more listed categories of work, the bid will be rejected as nonre-sponsive to the invitation. e. No substitution for any named subcontractor will be permitted prior to award, and only in -unusual situations after award and then only upon the contractor’s submission, in writing, to the 'Contracting Officer of a complete justification therefor and after obtaining the Contracting Officer’s written approval thereof. This provision applies also to those categories for which the bidder lists himself. ‡ ‡ CATEGORY B PROJECTS Dams Docks and Piers Canals Airport Runways Transmission Lines Fishways Switchyards Pumping Plants Eoads Power Plants Eailroads Substations Sewer and Water Saline Water Conversion Plants Systems Sewage Treatment Systems Clearing Contracts Water Treatment Plants Bridges Wells 4. (a) In a December 6,1963 news release, the Secretary of the Interior stated that the requirement for bidder listing of subcontractors in bids on Interior Department construction work was being instituted “on a limited trial basis”, in an “experiment” confined to contracting in New Mexico, Arizona, and such parts of the Navajo Indian Eeservation as might extend into Utah and Colorado, in response “to growing industrial concern over the practice of bid peddling in the construction trades.” The said news release also stated that GSA had been prompted by that same factor to initiate a similar requirement in contracts for the construction of public buildings, and that the “broader GSA experiment” would be closely watched and evaluated. (b) Bid peddling, or bid shopping, describes a situation where, after bid opening and award, a successful government prime contract bidder who has utilized a particular potential subcontractor’s bid figures in submitting a prime contract bid “shops” the subcontract work to other potential subcontractors in an effort either to obtain from a different subcontractor a lower price for the work to be subcontracted, — 225 — or to drive down that of the subcontractor whose figures were used in computing the prime bid. 5. (a) Prior to bidding on the Flagstaff-Pinnacle Peak Transmission Line, plaintiff had been, in essence, an electrical subcontractor. To that time, it had never built a power transmission line. In May 1964, its Transmission Line Department was staffed solely by S. M. Eivers, a former employee of Paul Hardeman, Inc., who had been employed by plaintiff April 27,1964. Plaintiff did, however, then have a Power and Special Projects Section, and a nucleus from which a capacity to do footings work could have been built up. (b) Mr. Eivers did not have actual authority from plaintiff to enter into or amend a contract. His payroll position was that of “Estimator,” although he did not know that in 1964. A letter of May 12, 1964, from plaintiff to defendant, advising that plaintiff’s bid had been predicated on being awarded all or none of the work, was signed by Mr. Eivers as “Manager, Transmission Line Department”, and plaintiff’s organization chart, submitted by it to defendant shortly after bid opening, also described him as occupying that position. The organization chart also reflected that if plaintiff obtained the transmission line contract, Mr. Eivers would be directly responsible for “its management and construction.” Prior to contract award, however, defendant was advised that another MevA employee would serve as project manger. (c) Plaintiff’s bid on the Flagstaff-Pinnacle Peak Transmission Line was prepared by Mr. Eivers. He had no help in doing so. He had not to that time, and has not thereafter, estimated a project of such magnitude by himself. 6. (a) On a parallel transmission line in Arizona built prior to and during 1964 by another contractor, footings work had been performed by members of a union of operating engineers. Plaintiff had a contract with the International Brotherhood of Electrical Workers (IBEW), however, and while the national office of the IBEW did not assert jurisdiction over “underground work” in 1964, the Arizona IBEW Local did then claim the right to do such work. To avoid potential arguments with the Arizona IBEW Local over whether plaintiff had a right to perform the footings work itself, using operating engineers (at lesser cost than would — 226 — be involved were IBEW personnel to be nsed), Mr. Rivers, assuming that a subcontractor would be free to employ operating engineers, decided to try to subcontract the clearing and footings work covered by the IFB, and thereafter endeavored to obtain bids on that portion of the work. Prior to May 12,1964, however, Mr. Rivers became aware that the IBEW Local was claiming the right to perform all of the work required on the proposed transmission line in any event. (b) Despite his intent to subcontract the clearing and footings work, Mr. Rivers proceeded on his own to prepare a prime contract bid for plaintiff, utilizing his previous experience and knowledge of the job. In doing so, he reached in a few instances what he called “shotgun” numbers on items of footings work, i.e., figures with little or no real basis. In determining a bid figure for clearing, Mr. Rivers engaged in “front-loading”, i.e., he “put early money in.” The record does not reveal the exact source, in terms of work items, for the “early money.” (c) Plaintiff received a bid from the Foundation and Structure Corporation, in the amount of $1,263,720, on a portion of the footings work for the Flagstaff-Pinnacle Peak Transmission Line project. One “special condition” of the proposal was that no provision was made “to work under the agreement of the United Brotherhood of Electrical Workers”, and that “If this is necessary, a complete reappraisal of labor costs would be required.” On the assumption that IBEW personnel would be used to do the work, the bid was increased to $1,648,340. (d) Mr. Rivers also solicited a bid on clearing and footings work from Hal Perry, a Phoenix contractor doing business as Sun States Contracting Company, from whom Mr. Rivers had received bids while with Paul Hardeman, Inc. Mr. Rivers did not discuss with Mr. Perry whether Sun States’ bid should be based on use of IBEW or operating engineer personnel. Mr. Rivers testified that that “was his area, and he knew what was the approach * * Mr. Perry was aware, prior to May 12,1964, that the IBEW Local was claiming the right to do all of the labor on the proposed transmission line. — 227 — (e) While with Paul Hardeman, Inc., Mr. Rivers had checked Mr. Perry’s “credit”, and had found it to be “slow but good.” He did not then have access to Mr. Perry’s bank balance, however. He did not make any further investigation into Mr. Perry’s (or Sun States’) financial situation prior to May 12, 1964:. (f) Mr. Rivers did not receive Sun States’ bid on clearing and footings work until the evening of May 11, 1964. Bid opening was scheduled for May 12, 1964. Sun States’ bid to plaintiff for clearing and footings work totaled $1,522,843. Although Sun States’, bid figures on items of footings work, applied to estimated contract quantities, were in some instances higher (and in some lower) than the bid figures Mr. Rivers had determined for the same work, Mr. Rivers did not use Sun States’ bid figures. Instead, plaintiff’s prime contract bid contained the bid figures Mr. Rivers himself had reached for clearing and footings work (finding 6(b)). Plaintiff’s bid to defendant on the clearing and footings work was some $350,000 more than Sun States’ total bid to plaintiff, but plaintiff’s bid to defendant on the footings portion of the work alone was some $145,000 less than Sun States’ bid to plaintiff on that portion of the work. (g) In bidding on the Flagstaff-Pinnacle Peak Transmission Line, Mr. Rivers, for plaintiff, listed Sun States (as “Sun States Construction Company”) as a subcontractor for both clearing and footings work pursuant to Special Condition 24, Specifications No. DC-6090 (finding 3(c)). Mr. Rivers and Mr. Perry subsequently agreed orally that, should a subcontract be awarded to Sun States, it would be at the unit prices set forth in Sun States’ bid, with the exception of overruns of estimated quantities, for which plaintiff would pay Sim States at plaintiff’s prime contract bid prices. This agreement was made in consequence of Mr. Rivers’ realization that paying Sun States’ unit prices on footings work items would cost plaintiff quite a bit of money even without overruns.2 — 228 — 7. At bid opening May 12, 1964, plaintiff’s bid (of $6,148,581) was within about $115,000 of defendant’s engineer’s estimate, but was some $850,000 less than that of the next lowest bidder, a construction company which had just completed a parallel transmission line along the same right-of-way. 8. (a) Following May 12,1964, plaintiff began to investigate Sun States’ financial situation. After a fruitless request to Mr. Perry for information about financial resources, plaintiff received, on May 20, 1964, a Dun and Bradstreet report showing Mr. Perry’s net worth to be about $43,000, and indicating Mr. Perry’s declination to furnish any information about “individual contracting and logging activities at Stafford.” (b) On May 25, 1964, plaintiff forwarded to Sun States a copy of a “standard AGO subcontract agreement.” Inter alia, the said agreement provided for a subcontract bond. (c) On June 5,1964, plaintiff was awarded a contract for the “construction of Flagstaff-Pinnacle Peak 345-kilovolt Transmission Line No. 2 * * *” at an estimated price of $6,132,587. Payment for work performed was to be made on a unit price or a lump-sum basis, as specified in contract schedules. (d) Between May 12 and early June 1964, representatives of Sun States made to representatives of defendant in Phoenix a number of allegations respecting plaintiff. Inter alia, defendant was told that plaintiff was “bid shopping”, that Mr. Perry had worked closely with Mr. Livers in preparing plaintiff’s bid, that Sun States had prepared the clearing and footings portion of plaintiff’s bid, and that plaintiff was looking for a new subcontractor and trying to “dump” Sun States. (e) At a meeting in Phoenix on June 9, 1964, between representatives of plaintiff and Mr. Perry (and two of his associates whose exact connection with Sun States is less than clear), plaintiff obtained some financial information with respect to Mr. Perry, Sun States, and the two associates, and was told Mr. Perry had secured a line of credit at a Phoenix bank. On investigation at the bank, however, plaintiff was told there was no such line of credit. — 229 — (f) On June 9, 1964, two of plaintiffs representatives visited the Bureau of Reclamation’s Phoenix office, inquiring about the possibility of either substituting another subcontractor for Sun States (whose financial condition was then mentioned), or of plaintiff’s doing the clearing and footings work itself. (g) The Office of the Chief Engineer of the Bureau of Reclamation (“the Contracting Officer”), in Denver, Colorado, was promptly advised of the substance of both Sun States’ assertions about plaintiff (finding 8 (d)) and plaintiff’s representatives’ comments and questions. (Finding 8(f)). (h) There is no credible evidence in the record that plaintiff ever engaged in “bid shopping” in connection with the contract in suit. 9. (a) On June 12, 1964, plaintiff addressed a letter to the Contracting Officer reading as follows: The MevA Corporation, persuant [sic] to Specification Section 24e, request permission to withdraw the name of the sub-contractor which we listed in our Bid Documents submitted May 12,1964. The name listed was the Sun States Contracting Company, 1401 East Camel-back Road, Phoenix, Arizona. Our detailed examination of the financial resources of this Corporation reveals that, in our opinion, they are inadequate to support performance of this sub-contract. We have examined the Corporation’s financial statement and the personal financial statements of the Officers, have discussed this matter with the Sun States banking affiliate — The Valley National Bank, Mr. Norman J. Miles, Assistant Vice President, and have also obtained Dun and Bradstreet Reports. We believe that the satisfactory performance of this work covered by this subcontract would be seriously affected by this lack of financial stability. If approval is obtained for this withdrawal, we intend to provide a sub-contractor or contractors of definite financial responsibility or will provide performance by our own organization. (b) By letter from defendant dated June 15,1964, plaintiff received written confirmation of a telephonic postponement of a preconstruction conference scheduled for June 17, 1964. The said letter stated in part that the conference would — 230 — be rescheduled when plaintiff’s request to withdraw Sun States had been resolved. (c) On June 16,1964, plaintiff’s representatives met with representatives of Sun States in Phoenix. Mr. H. C. Tognoni, an attorney whom Sun States had retained that day, was present at the meeting.3 Precisely what occurred is in some dispute. See finding 15. While Mr. Tognoni testified in 1967 at a hearing before an Interior Department Board of Contract Appeals that he told plaintiff the purpose of the meeting as he understood it was to reduce an oral contract between plaintiff and Sun States to writing, and that his clients understood plaintiff was to furnish financing and would not require a bond from Sun States, the preponderance of the credible evidence is that plaintiff was never told by any representatives of Sun States (or by anyone else), prior to the 1967 administrative hearing, that either Mr. Rivers or plaintiff had assertedly made any prebid promises to Sun States with respect to financing or bonding. (d) On June 17,1964, Mr. Tognoni met with a representative of defendant in Phoenix, asserting that Sun States had a pre-bid understanding with plaintiff that plaintiff would finance the subcontract work and “bond Mr. Perry”, and that there had been no change in circumstances since bid opening. (e) By letter dated June 17, 1964, the Contracting Officer advised plaintiff in pertinent part as follows: It appears that there has been no change in the circumstances existing at time of submittal of your bid to justify substitution of subcontractors as requested. Accordingly, approval of any substitution is denied. (f) At the time the said letter of June 17,1964, was written, the Contracting Officer was aware of Sun States’ allegations about plaintiff (findings 8(d), 9(d)) and he had concluded, particularly in light of plaintiff’s June 12, 1964 request (finding 9 (a)), that plaintiff might be bid shopping. Defendant’s representatives made no effort, at any time during the period 1964-66, however, to ascertain whether or not — 231 — Sun States’ allegations with respect to plaintiff had any foundation in fact. 10. (a) On June 22,1964, Mr. Tognoni met with personnel of the Bureau of Reclamation in Washington, D.C. (b) The Contracting Officer was informed by telephone prior to June 24, 1964, of Mr. Tognoni’s meeting with Bureau personnel. A speedletter, dated June 23,1964, from the Assistant Commissioner of the Bureau to the Contracting Officer (received in Denver on June 24, 1964), reflects that Mr. Tognoni had indicated that “while there were alleged to be several reasons for Meva to not retain the subcontractor, the only concrete reason that he could ascertain was lack of finances”, and that “He [Mr. Tognoni] was in the process of arranging for finances and * * * that Sun States should have this available early this week * * At the 1967 administrative hearing, Mr. Tognoni agreed that the said speed-letter reflected the substance of his conversation with Bureau personnel. 11. (a) Sometime between June 17 and June 24, 1964, representatives of plaintiff requested a conference with the Contracting Officer. Such a conference was held in the Contracting Officer’s office in Denver June 24, 1964. (b) At the conference, plaintiff told defendant that Sun States could not make bond and had no financing, and that plaintiff wanted either to obtain a subcontractor with adequate financing to perform the clearing and footings work, or perhaps to do that work with its own resources. Plaintiff also told defendant that Sun States’ bid had been received just prior to bid opening, and that plaintiff had therefore not been able to make any pre-bid appraisal of Sun States’ capabilities. While defendant advised plaintiff that Sun States had been in touch with the defendant in opposition to any possible substitution by plaintiff of another subcontractor (or plaintiff itself) for Sun States, defendant did not tell plaintiff of Sun States’ charges that plaintiff was bid shopping, nor were any promises plaintiff had supposedly made to Sun States about financing and bond mentioned. Plaintiff requested a decision under Special Condition 24, and was told by the Contracting Officer that absent a showing of some change in Sun States’ circumstances f ol232 lowing May 12,1961, any substitution for Sun States was in his view unjustifiable. In consequence of this advice, plaintiff did not furnish to defendant documents containing financial information on Sun States (including Mr. Perry and others) it then had, and which had been mentioned in its letter of June 12, 1964, to the Contracting Officer. At trial in 1972, the Contracting Officer candidly admitted that even had plaintiff given him clear proof of Sun States’ insolvency in June 1964, he would nonetheless have denied plaintiff’s request to substitute, had Sun States been equally insolvent on May 12, 1964, since, in his view, in 1964 and thereafter, the requirement of a post-bid change in circumstances was implicit in Special Condition 24. (c) There is testimony in the record that plaintiff was told at the June 24, 1964 conference that the Eegional Solicitor would obtain from the Bureau’s Washington office an opinion whether Special Condition 24 prohibited plaintiff from doing the clearing and footings work itself. The Contracting Officer’s diary for June 24,1964, reflects, however, that prior to the meeting with plaintiff on that day a Bureau attorney in Washington (not in the office of the Solicitor, Department of the Interior) “had stated that a prime doing the work themselves in lieu of a listed sub was a substitution and could not be permitted * * The Contracting Officer’s diary entry respecting the June 24,1964 meeting with plaintiff also reflects advice by plaintiff that Sun States “proposed to sub the work themselves to other subs in its entirety”, that the Eegional Solicitor expressed doubt about the propriety of this course “but said he would check with Washington and they should call him the next day”, and that the Eegional Solicitor advised plaintiff that “doing the work themselves would be considered a substitution.” The contemporaneous entries are here credited. (d) There is conflicting evidence whether or not plaintiff was told on June 24, 1964, that, if plaintiff persisted in a demand for substitution, Sim States would have to be given a chance to be heard. Plaintiff’s witnesses flatly denied that any such statement was made, while government witnesses of equal credibility testified to the contrary. It is found that the government witnesses were mistaken. The Contracting — 233 — Officer’s diary for June 26, 1964, reflects that during a conversation with Mr. Tognoni on that date, “I told him we had told Meva that if they wanted a substitution considered it would be necessary they present it formally and that we would give Sun States an opportunity to answer the charges.” The weight of the credible evidence is that the Contracting Officer told Mr. Tognoni on June 26 that Sun States would be heard if plaintiff persisted, but that he did not so inform plaintiff on June 24,1964. 12. (a) Following June 24, 1964, plaintiff, faced with the Contracting Officer’s denial on June 17, 1964, of “approval of any substitution” on the ground of lack of any change in circumstances existing on May 12,1964, and the Contracting Officer’s June 24, 1964 affirmation that absent a showing of such a change in circumstances there could be no substitution of another subcontractor (or plaintiff) for Sun States, entered into extensive negotiations with Sun States with a view to reaching a subcontract with Sun States. (b) By letter dated July 9,1964, to the Contracting Officer, plaintiff advised the Contracting Officer that it had met with Sun States on several occasions, was hopeful that a subcontract would soon be consummated, and that every effort was being made to reach a mutually acceptable subcontract with Sun States, but that, should subcontract negotiations fail, “it is likely that a request will be made for a reconsideration of our request to substitute the proposed subcontractor, or that the work be performed by ourselves.” Plaintiff’s said letter further stated that: When we previously met with you, a question was raised as to whether or not it would be necessary to obtain the consent of the Bureau of Reclamation in the event the prime contractor desired to perform the work instead of the proposed subcontractor. It would be appreciated if your office will advise us of its interpretation of the language contained in the contractual documents relating to “substitution of subcontractors” as it pertains to work performed by the prime contractor. One interpretation that possibly could be made is that it would not be necessary to obtain the consent of the Bureau of Reclamation when a prime contractor decides to perform work previously shown on the contract documents as work to be performed by a listed subcontractor. — 234 — This interpretation would be based on the theory that when the work is performed by the prime contractor, there is no “substitution of subcontractors.” (c) On July 15, 1964, plaintiff entered into a subcontract with Sun States. In a formal written contract between the two dated July 20, 1964, Sun States agreed {inter alia) to use IBEW labor and plaintiff agreed (inter alia) that Sun States needed not furnish plaintiff a bond. (d) By letter dated July 17, 1964, to plaintiff, received by plaintiff July 20, 1964, the Contracting Officer notified plaintiff to proceed with the work covered by the contract plaintiff had been awarded June 5, 1964. Plaintiff, in turn, gave Sun States notice to proceed on its subcontract with plaintiff by telegram dated July 20, 1964. While there is evidence that the Bureau had some difficulty in obtaining rights-of-way on two parcels of land at the southern end of the proposed transmission line project, the northern end was, in the summer of 1964, the critical work area, because of weather, and it is reasonable to conclude from the record that plaintiff’s request for permission to substitute for Sun States, which led to cancellation of the preconstruction conference scheduled for June 17, 1964, and plaintiff’s failure to reach agreement with Sun States until July 15, 1964, affected the timing of the issuance to plaintiff of the notice to proceed. The end of the fiscal year was, however, a busy period, followed by a holiday, and those factors too may have contributed to the timing of the issuance of the notice to proceed. (e) On July 22, 1964, a preconstruction conference was held in Phoenix, Arizona. Representatives of plaintiff, Sun States, and defendant were in attendance. Plaintiff’s proposed construction program was tentatively approved. Plaintiff advised defendant that plaintiff would provide close surveillance to the work. (f) By letter, dated July 28, 1964, in response to plaintiff’s letter of July 9, 1964, the Contracting Officer advised plaintiff that, in his view, Special Condition 24 precluded plaintiff “as prime contractor from performing any work shown in the contract as work to be performed by a listed — 235 — subcontractor unless written permission is obtained from the contracting officer,” and that: If it should be your final decision not to proceed to enter into a subcontract with your listed subcontractor and, as a result, you choose, as an alternate, to request my approval for substitution of yourself as prime contractor for work previously listed for performance by that subcontractor, I will be glad to give you a formal and final decision on the matter upon request being made therefor. The said letter contains no suggestion that the Contracting Officer had changed his mind as to the necessity for a postbid change in circumstances, but, in any event, by the time it was written plaintiff had already entered into a contract with Sun States, and Sim States had attended the July 22,1964, pre-construction conference. 13. (a) The geographic location in which the proposed transmission line was to be built is at such altitudes, and in such terrain, that winter work on the northern half of the project (called Schedule No. 1), in northern Arizona, was virtually impossible. The southern half of the project (called Schedule No. 2) is at lower altitudes where work can be performed throughout the year, although excessive heat in the summer might hamper the conduct of construction operations. (b) Plaintiff’s work plan and schedule, as originally submitted to defendant, was to start clearing and footings work on the northern end of the project beginning June 15, 1964, and to proceed toward the southern end of the project without interruption, completing these portions of the work in about a year. The July 17, 1964 issuance of notice to proceed obviously precluded effectuation of plaintiff’s original timing of the start of work. (c) Sun States was obligated by its subcontract with plaintiff to maintain a production schedule of an average of not less than 10 miles of acceptable footings per month. Clearing work at the north end of Schedule No. 1 was to begin first. Clearing work, sub-subcontracted by Sun States to Mr. B. B. Bonner at a price of $210,000, began July 28,1964, and was completed without any apparent difficulty or delay. Sun States was obligated to commence footings excavation at the north end of Schedule No. 1 within 14 days after clearing — 236 — work started, or by August 11, 1964. The subcontract also provided that the 10-mile a month production schedule should “begin at same time as start of footing excavation.” In fact, Sim States did not begin footings excavation until August 27, 1964. While plaintiff had originally planned to start work at the north end of the project and to proceed to the southern end without interruption, Sun States’ subcontract provided instead that it would “maintain the rates of production on Schedule No. 1 until it is mutually agreed that weather conditions prevent further practical progress”, then to transfer operations to the south end of the project and work north, returning to work on Schedule No. 1 when weather again permitted. 14. (a) Shortly after Sun States began to perform the footings portion of the work, plaintiff (and defendant) became aware that Sun States was not making satisfactory progress on the job. Sun States never achieved the required production rate of 10 miles of footings per month, in fact completing no more than 10 miles of footings during the period August-December 1964. Throughout this period, plaintiff repeatedly complained to Sun States about the latter’s operations. As early as October 22, 1964, plaintiff stated to Sun States that if the work did not proceed in an orderly manner, plaintiff would have to take “more drastic steps,” and by letter dated November 2,1964, plaintiff advised Sun States that absent an increase in production plaintiff’s only alternative would “be to take over the operation and complete it ourselves.” Throughout this same period, plaintiff’s project manager and defendant’s project engineer met frequently to discuss job progress. (b) The record establishes that the basic reason for Sun States’ failure to make the progress it had agreed to make was a lack of financial capability and resources that it did not have enough personnel, equipment, or material on the project) to do the footings work at the required rate of progress. (c) At a November 12, 1964 meeting between representatives of plaintiff and Sun States, it was agreed that effective November 16, 1964, plaintiff’s project manager would manage the Sun States operation at the north end of the project — 237 — for Sim States, with. Mr. Perry to devote full time to the southern end of the project. Plaintiff also stated that it was instituting a quality control program and would assign an engineer to inspect each operation. Defendant was so advised. ( d) By agreement dated December 23,1964, between plaintiff and Sun States, the subcontract between the two was terminated effective December 31, 1964. Plaintiff assumed and paid all obligations of Sun States for labor, materials, equipment and supplies incurred in Sun States’ attempted performance of the footings work. Plaintiff also employed Mr. Perry as a safety engineer. Defendant was orally advised, sometime in January 1965, of the said termination agreement, and made no objection to either that agreement or plaintiff’s intent to complete the footings work itself. (e) While the record is not precise as to time, operations at the north end of the project continued for several, and perhaps as much as 7 or 8, weeks after plaintiff’s project manager took over management of that portion of the work, when work on Schedule No. 1 was shut down. See finding 13(a). Except for some completed footings, much of the footings work done at the north end of the project prior to the shutdown promptly deteriorated and had to be redone in 1965, and was essentially useless in terms of advancing completion of the project. (f) The subcontract between plaintiff and Sun States provided, inter alia, that time of performance was of the essence of the subcontract, and that Sun States would be responsible to plaintiff for all damages caused by its delay. Plaintiff also had the right, after giving 48 hours’ written notice, to terminate Sun States’ right to proceed with the work should Sun States (among other things) fail in any respect “to properly and diligently prosecute the work covered by this Agreement * * It is fair to conclude from the record as a whole that plaintiff had ample legal grounds upon which to terminate its subcontract with Sun States, either by agreement as it did effective December 31, 1964, or by the exercise of the powers above described, at least several weeks prior to December 31,1964. (g) During the period January-April 1965, progress on the work (at the south end of the job) fell well short of the — 238 — 10 miles of footings per month originally scheduled. By about March 1, 1965, if not earlier, plaintiff had decided to acquire Power City Construction and Equipment, Inc., for the purpose (inter alia) of completing the footings portion of the contract work, and in or around that month it did so. Power City personnel began to work on the project late in April or early in May 1965, and during the period June-mid-October 1965 progressed the footings work at a rate of better than 10 miles per month. (h) The record does not reflect any attempts by plaintiff, in or after December 1964, to subcontract the uncompleted portion of the footings work to another subcontractor. (i) A definite, if not precisely measurable, part of plaintiff’s costs in performing the footings work resulted from (a) efforts to work at the north end of the project, notwithstanding weather conditions, into early 1965; (b) plaintiff’s hesitance in taking action to terminate Sun States’ right to proceed, notwithstanding the latter’s grossly inadequate performance in and after August 1964; (c) plaintiff’s failure until after April 1965 to make satisfactory progress on the footings work; (d) adverse weather conditions in March and April 1965; and (e) plaintiff’s problems in obtaining a sufficient supply of labor for footings work. 15. (a) By letter dated September 13, 1966, to the Contracting Officer, plaintiff made a claim for {inter alia) $1,114,364 as the “Direct increased cost of performance of subcontract items” in consequence of the Contracting Officer’s denial of plaintiff’s request either to substitute a new subcontractor for Sun States or to do the clearing and footings work itself. By decision dated May 2,1967,4 the Contracting Officer denied plaintiff’s claim, stating, inter alia, that lack of financial responsibility of a listed subcontractor was insufficient to justify a substitution on grounds of an unusual situation, absent a showing of a significant change of circumstances from those understood by the contractor based on reasonable inquiry at the time of bidding. Plaintiff duly appealed the said decision pursuant to the Disputes Clause. — 239 — (b) In November 1967, a bearing was beld before tbe Department of Interior Board of Contract Appeals on plaintiff’s appeal from tbe said decision of May 2, 1967. Tbe administrative record resulting from that bearing contains some 560 pages of testimony, and a considerable number of documents received in evidence. Following that hearing, the Department of Interior Board of Contract Appeals concluded that it was “without jurisdiction over tbe claims asserted”, that plaintiff could receive no relief under the terms of the contract, and that plaintiff’s appeal was dismissed. (c) At trial of this cause in Phoenix, Arizona, August 14-17, 1972, the transcript of testimony made during the administrative hearing and all exhibits there received in evidence, were received in evidence, by agreement of the parties, to be considered in making findings of fact herein as though presented in open court. (d) In many respects, the record in this cause presents irreconcilable conflicts of testimony. In the course of pretrial, the trial judge “suggested '[to the parties] that, in the event of any questions of credibility arising from the administrative record, opportunity to observe and evaluate the credibility of witnesses at trial would be a desirable opportunity.” (e) During the administrative hearing both plaintiff and defendant presented a number of witnesses. One witness for plaintiff whose administrative testimony raised some questions as to credibility (Mr. Trimbach) did not testify at trial. Two of defendant’s witnesses during the administrative hearing whose prior testimony conflicted with plaintiff’s evidence (Mr. Perry and Mr. Tognoni) did not testify at trial. Despite this lack of opportunity to observe certain important witnesses whose testimony is, by stipulation, nonetheless part of the record of trial, every effort has been made to resolve conflicts in the record in accordance with the preponderance of the credible evidence. 16. (a) In light of the Contracting 'Officer’s June 12,1964, denial of plaintiff’s request to “withdraw” Sun States and either to furnish a subcontractor of definite financial responsibility or to do the work itself (finding 9(a)) on the ground that there had been no “change in circumstances existing at time of submittal of your bid * * *” (finding — 240 — 9(e)), the Contracting Officer’s June 24, 1964, oral reiteration to plaintiff that, absent a showing of a change in Sun States’ circumstances following May 12, 1964, any substitution for Sun States was in his view unjustifiable (finding 11 (b) ), and the circumstances then facing plaintiff (findings 9(b), 12(a), 12(d), 18(a), 13(b)), the Contracting Officer’s said decisions were reasonably construed by plaintiff as final decisions leaving plaintiff no choice but to proceed as it did by way of a subcontract, on terms as favorable to plaintiff as it could obtain, with Sun States. Plaintiff’s July 9, 1964, letter to the Contracting Officer (finding 12(b)) is clearly not inconsistent with that reasonable construction. Eather, recognizing the Contracting Officer’s position, plaintiff told him it would proceed as his decision required, reserving the right to come back to him should it be unable to do so. (b) In light of the findings of fact herein above made, and the record ’as a whole, plaintiff’s failure to advise the Contracting Officer that it was proceeding under protest, to appeal his decision, or to advise defendant at the time that increased costs might result from the Contracting Officer’s action, furnish no basis for invoking estoppel against plaintiff “by ’[in defendant’s words] acquiescence or otherwise,” on the ground that “plaintiff prevented the Contracting Officer from having an opportunity to make a determination under Special Condition 24 on the basis of all the facts, including facts concerning prebid dealings”, nor for any conclusion that plaintiff “waived any right it might otherwise have possessed to substitute itself or another subcontractor for Sun States before beginning work.”5 17. (a) Plaintiff’s bid for the clearing portion of the contract work was $920,000. Its bid for the footings portion of the contract work (utilizing plaintiff’s unit bid prices, extended to as-built quantities for certain contract items)6 was $1,030,015. (b) Sun States’ bid to plaintiff for the clearing portion of the contract work was $435,000. Sun States’ bid to plaintiff — 241 — for tbe footings portion of the contract work (utilizing Sun States’ unit bid prices and estimated contract quantities) was $1,087,848. Thus, Sun States’ total bid for clearing and footings work ($1,522,843) was less than plaintiff’s bid to defendant on that portion of the contract work, when the two bids are compared utilizing estimated contract quantities. As noted in finding 6(f), however, Sim States’ bid to plaintiff on the footings work alone was, on this same basis, about $145,000 higher than plaintiff’s bid to defendant. (c) The clearing portion of the contract work was sub-subcontracted by Sun 'States to Mr. B. B. Bonner at a cost of $210,000, and was satisfactorily performed by Mr. Bonner without difficulty or delay. 18. The abstract of bids on the proposed transmission line reflects a government engineer’s estimate of the cost of the work, and that seven bids were opened May 12, 1964. In relevant part, the information in the abstract of bids can be summarized as follows: Total Clearing Total Bid 7 and Footings Source of Figures {estimated cost) Clearing Work Footings-Work 8 Work Engineer’s Esti-mate_$6,265,058 $640,000 $1,049,987 $1,689,987 Plaintiff... 6, 148, 581 920, 000 944, 280 1, 864, 280 Bidder A_ 7, 001, 399 249, 500 1, 289, 799 1, 539, 299 Bidder B_ 7, 089, 657 832, 500 1, 088, 680 1, 921, 180 Bidder C_ 7, 163, 845 1, 114, 820 1, 261, 750 2, 376, 570 Bidder D_ 7,802,418 969,000 1,653,299 2,622,299 Bidder E_ 7, 899, 621 466, 720 1, 545, 857 2, 012, 577 Bidder F_ 8, 909, 315 706, 830 2, 273, 323 2, 980, 153 19. Plaintiff’s “total costs” of performing the clearing and footings work are agreed by the parties to be $2,539,505 (utilizing ACC equipment costs in the computation), or $2,448,938 (utilizing booked equipment costs in the computation).9 Plaintiff would then subtract, from either of its al — 242 — ternative starting points, cleaning costs which it asserts should be removed from the claim, utilizing for purposes of this deduction the $210,000 figure for which Mr. Bonner, 'Sun States’ sub-subcontractor, actually performed the clearing wort. To each of the two net figures resulting from this deduction, plaintiff would add 3 percent, as “Unbilled Corporate Charges”, and a profit factor of 5.37 percent. The resulting sums adjusted “total costs” with and without AGC equipment costs) are, respectively, $2,509,669 and $2,429,994. From each of these two figures, plaintiff would then substract either (1) its revenues from the footings portion of the contract work ($1,032,028) or (2) “Average Unit Bids, 2nd, 3rd, & 4th Bidders w/10.0% Profit Bemoved (Assumed Included)” ($1,230,920). A number of other alternative calculations, reflecting a variety of differing assumptions, are also in evidence. In general terms, plaintiff’s calculations of its damages in consequence of defendant’s asserted breach of contract vary from a high of $1,609,314 (on its initial claim summary) to a low of $1,075,186, depending on the assumptions on which a particular calculation is based. Basic to all of plaintiff’s calculations, however, are (among other things) the factual premises that its “total costs” were reasonable, and that it was not responsible for any portion of its excess costs in connection with the footings work. 20. Beyond its contention of no liability to plaintiff at all, defendant objects generally to plaintiff’s calculations of damages, urging that a “total cost” approach is improper, but that in any event plaintiff’s claim is unsound (1) in its use of AGC, rather than booked, equipment costs, (2) in utilizing a “fictional” 3 percent unbilled corporate charges factor, (3) in utilizing plaintiff’s own, unreasonably low, bid figures for footings work in calculating damages, (4) in failing to average “all of the other items with the Government estimate * * (5) in adding a profit factor to plaintiff’s costs, rather than deducting a profit factor from plaintiff’s (or an averaged) bid figure for footings work, (6) in failing to recognize that plaintiff’s costs were unreasonable, thereby necessitating “some ‘jury verdict’ reduction * * *” in the costs claimed, and (7) in connection with the clearing work, in failing to take into account “the average clearing — 243 — item bid * * * ” or, at the least, $435,000, the amount of Sun States’ bid to plaintiff for clearing work.10 Ultimate Conclusions 21. In the facts and circumstances of this canse, the Contracting Officer’s denials of plaintiff’s requests to substitute either another, financially capable, subcontractor, or itself, for Sun States were arbitrary, capricious, and in breach of his contractual obligations to plaintiff. Plaintiff’s claim to resulting damages is barred neither by estoppel nor waiver. 22. (a) While it is clear from the record as a whole that plaintiff suffered substantial monetary damage in direct consequence of the Contracting Officer’s denials of plaintiff’s requests for approval to substitute for Sun States, the record also precludes any finding that plaintiff’s bid on the clearing and footings work (or on the footings work alone) was reasonable, that all of plaintiff’s costs were reasonable, or that it was not responsible for any portion of such costs. See finding 14. On this record, therefore, (1) plaintiff’s “total cost” approach is in appropriate, (2) the amount of such monetary damage cannot be measured with any precision, and (3) the amount of such damage can be arrived at only by way of a “jury verdict” from the evidence as a whole. See WRB Corp. v. United States, 183 Ct. Cl. 409 (1968). (b) Plaintiff has failed to establish that it is entitled to have AGC equipment costs, rather than its available booked equipment costs, taken into account in assessing its damages for breach of contract. Bennett v. United States, 178 Ct. Cl. 61, 371 F. 2d 859 (1967); L. L. Hall Constr. Co. v. United States, 177 Ct. Cl. 870, 379 F. 2d 559 (1966). (c) Plaintiff is entitled to have a reasonable overhead factor taken into account in assessing its damages for breach of contract, and the record establishes that the 3 percent factor it would apply to its “total costs” is within the zone of reasonableness. Bennett v. United States, supra; Luria Bros. & Co. v. United States, 177 Ct. Cl. 676, 369 F. 2d 701 (1966). (d) Plaintiff is not entitled to have a profit factor taken into account in assessing its damages for breach of contract. Bennett v. United States, supra, and cases there cited. — 244 — (e) The record does not establish the propriety of plaintiff’s attempt to remove clearing work from its “total costs” by deletion therefrom of Sun States’ sub-subcontract price of $210,000. That work having been performed without difficulty or delay, plaintiff has not established that its cost for this work was only $210,000, and not $435,000, the amount of Sun States’ bid to plaintiff on the clearing work. On this record, defendant is entitled to have the latter figure, and not the former, taken into account in assessing plaintiff’s damages for breach of contract. 23. Based upon the record as a whole, including plaintiff’s actual costs of performing the clearing and footings operation ; the factors enumerated in finding 22 as there indicated ; defendant’s estimate, and each of the bids, listed in finding 18; the differences between the said bids (in terms of bid items) and the as-built footings work; and that, as finding 14 reflects, a definite, if not precisely measurable, portion of plaintiff’s costs in performing the footings work cannot fairly be charged to defendant in any event, it is found by way of a “jury verdict” that plaintiff was damaged by defendant’s breach of contract in the amount of $600,000. CONCLUSION OE LAW Upon the foregoing findings of fact and ultimate conclusions, which are adopted by the court and made a part of the judgment herein, the court concludes as a matter of law that plaintiff is entitled to recover the amount of $600,000, and judgment is entered to that effect. Footnotes [1] Defendant’s Brief, pp. 5,12, 34. [2] Plaintiff’s bid to defendant on the footings portion of the work was, however, some $145,000 less than Snn States’ bid to plaintiff on that portion of the work. [3] Plaintiff’s bid price to defendant on the clearing work was $920,000; Sun States’ bid price to plaintiff on the clearing work was $435,000. [4] Plaintiff candidly disclaims any challenge to the Contracting Officer’s integrity, asserting rather that his actions and judgments in the matter failed to comport with his contractual obligations to plaintiff. [5] Defendant’s Brief p. 5. [5a] Plaintiff was then proceeding on the assumption that the controversy could well be one arising “under the contract” which would be remedied administratively. On that assumption, the disputes clause required that the contractor proceed as the Government directed, pending resolution of the dispute, [footnote by the court] [6] Defendant’s Brief, p. 19. [7] Defendant’s Brief, p. 20. [8] Defendant’s Brief, pp. 19-20. [9] See finding 19, n. 9. Plaintiff says that using AGO costs the total was actually $2,522,398, but this error in equipment costs (if it be one) does not work to plaintiff’s advantage and is immaterial to the disposition of the case since the trial judge and we both use booked equipment costs in assessing damages. The record shows that the total figure of $2,448,938 utilizing booked equipment costs is not dependent on the AGC equipment costs but was in effect arrived at independently of those AGC costs, [footnote by the court] [10] Defendant's Objections to Plaintiff’s Requested Findings of Fact. [10a] In the absence of a regulation or directive such as In Nolan Brothers, Inc. V. United States, 194 Ct. Cl. 1, 437 F. 2d 1371 (1971), the burden is on the party seeking to substitute AGC costs for the contractor’s own actual, booked costs to demonstrate that the contractor’s own costs (as shown) are Inadequate or Incomplete or do not fairly represent the full costs rightly attributable to the particular contract. In this case, plaintiff did not succeed In bearing that burden; Its effort to Invoke AGC costs consisted mainly of general testimony as to the normal practice of building contractors, not criticism directed specifically to the $2,448,93S of costs calculated from its own actual, booked equipment costs in this particular instance. The plaintiff has simply failed to prove that In this case actual, booked costs are Inadequate or Incomplete or do not represent the full costs rightly attributable to the contract, [footnote by the court] [1] The IFB also included, inter alia, provisions respecting “Liquidated Damages”, “Construction Program”, “Equipment Allowances for Contract Adjustments”, and “Staking Out Work”. [2] The clearing work was on a lump-sum basis, while the footings work involved unit prices and estimated quantities. Sun States’ bid on the clearing work was at a considerably lower price than plaintiff’s, but as to the footings work the reverse was true. [3] Mr. Tognoni represented Sun States to about mid-July 1964. At about that same time, Mr. Perry’s two associates (finding 8(e)) also dropped out of the picture, so far as the record shows. [4] A preliminary draft of the Contracting Officer's decision was prepared in the Phoenix office of the Bureau of Reclamation. A draft was then prepared in the Bureau’s Denver office. The Contracting Officer then reviewed the draft. [5] Defendant’s Requested Binding 34. [6] See n. 9, infra. [7] Figures to the nearest dollar. [8] Figures derived from Items 2-28, 63A, 03B, and 65-90. Of. n. 9, infra. [9] Plaintiff’s as-built calculations exclude certain Items (5, 7, 9—12, 15, 20, 69, 71-74, 77, and 82) Included in both Sun States’ bid to plaintiff and the calculations appearing in finding IS, and include certain Items (29 and 91) not included in either Sun States’ bid to plaintiff or the calculations appearing in finding 18. Defendant has not objected to plaintiff’s as-built calculations as either improperly omitting or improperly including Items. Comparison of figures is, however, made somewhat more difficult by the absence of a common base for all calculations. [10] Defendant’s Objections to Plaintiff’s Requested Findings of Pact.