MAYFAIR CONSTRUCTION COMPANY, PETITIONER V. UNITED STATES OF
   AMERICA

   No. 88-423

   In the Supreme Court of the United States

   October Term, 1988

   On Petition for a Writ of Certiorari to the United States Court of
Appeals for the Federal Circuit

   Memorandum for the United States in Opposition

   Petitioner, a construction company, seeks review of the court of
appeals' decision affirming the determination of the Armed Services
Board of Contract Appeals that petitioner was not entitled to interest
on the sum contained in a settlement proposal.

   1. In September 1980, the Department of the Air Force awarded a
contract to petitioner in the amount of $4,176,296 for the "Pacer
Down" facilities restoration project at McConnell Air Force Base,
Kansas.  The contract contained a dispute clause that incorporated by
reference the March 1979 version of the Defense Acquisition Regulation
Disputes Clause.  /1/ In January 1982, the contracting officer
terminated the contract for the convenience of the government.
Petitioner, in June 1982, sent a letter to the contracting officer
containing a "termination settlement proposal" in the amount of
$990,937.29.  Two months later, petitioner sent a second letter to the
contracting officer denominating the earlier settlement proposal as a
"claim" under the Contract Disputes Act of 1978 (CDA), 41 U.S.C. 601
et seq.; petitioner also enclosed a "certification" of the proposal as
a claim.  In June and August 1984, petitioner submitted certified
updates to the settlement proposal, both of which tendered settlement
costs less than the original settlement offer of $990,937.29.  Pet.
App. 3-5, 46.

   In December 1984, petitioner submitted an updated termination
settlement proposal in the amount of $610,172, and certified this
latest proposal as a claim under the CDA.  In that proposal,
petitioner included a request for $146,612.12 in interest, which
petitioner designated as an element of its settlement expenses.
Ultimately, in February 1985, petitioner and the government entered
into Termination Supplemental Agreement No. A00001.  Under that
agreement, the government paid petitioner the undisputed amount of
$438,346 for its termination costs;  the agreement expressly reserved
petitioner's demand for interest.  The contracting officer, however,
denied petitioner's interest demand, concluding that the settlement
proposal and its various updated versions were not "claims" as defined
by the applicable regulations incorporated in the original contract.
Pet. App. 4-5, 46-48.

   2. Petitioner appealed the contracting officer's decision to the
Armed Services Board of Contract Appeals (Board).  The Board
determined that the Disputes Clause of the contract defined "claim" to
require the existence of a dispute.  The Board found that "(e)xcept
for the interest sought ($146,612.12), the settlement amount
ultimately agreed upon ($438,346) was only $25,213.88 less than
(petitioner's) updated proposal in December 1984 ($610,172).  Thus,
aside from the interest issue introduced by (petitioner's) counsel,
the termination for convenience settlement proceeded to agreement
without apparent dispute" (Pet. App. 62).  Given the absence of the
requisite dispute, the Board concluded that no "claim" existed.
Accordingly, the Board held that petitioner was not entitled to
interest and denied petitioner's appeal.  Pet. App. 5, 61-66.

   3. The court of appeals affirmed.  The court concluded that
substantial evidence supported the Board's factual finding that no
dispute existed between petitioner and the government.  Moreover,
under the controlling disputes clause in the contract, "no claim
exists unless it involves a dispute" (Pet. App. 6).  Accordingly,
petitioner was not entitled to interest because its termination
settlement proposal did not constitute a claim under the contract.
Pet. App. 6-8.  /2/

   4. The decision of the court of appeals is correct.  It does not
conflict with any decision of this Court or of any other court of
appeals.  Accordingly, review by this Court is not warranted.

   a. The CDA provides for the payment of interest on "claims" due
contractors (41 U.S.C. 611), but does not define the meaning of a
"claim" for these purposes.  See 41 U.S.C. 601 ("Definitions").
Petitioner contends (Pet. 8-11), nevertheless, that the CDA mandates a
definition of claims that includes -- and thus requires the payment of
interest on all contract settlements, regardless of whether any issues
are in dispute.  But petitioner points to nothing in either the
language or the legislative history of the CDA to suggest that
Congress specifically intended to require such a definition of a
claim.  The 1979 Defense Acquisition Regulation defining claims more
narrowly to include only matters that are in dispute was therefore
entirely consistent with the statute, and thus was entitled to
judicial deference.  See Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984).

   In any event, as the court of appeals made clear (Pet. App. 9n.*),
petitioner's request for interest was governed by a disputes clause
incorporated by the parties into the contractual provision that
controlled the transaction.  As the court of appeals correctly pointed
out (Pet. App. 9-10), under these circumstances it was irrelevant
whether the CDA implicitly adopts a broader definition of a claim,
because "this would not mean that the CDA prohibits the parties from
agreeing to such a requirement, and there is nothing in the language
of the CDA to suggest such a prohibition" (ibid. (emphasis in
original)).  Accordingly, given the express terms of petitioner's
contract, the court of appeals correctly concluded that petitioner's
settlement proposals were not "claims" requiring payment of interest.
/3/

   b. In any event, the court of appeals' resolution of that narrow
issue has no prospective importance.  The contract clause contested in
this case, Defense Acquisition Regulation (DAR) 7-602.6(b) (Disputes)
(1979), was superseded by a clause issued on April 30, 1980, which
applied to solicitations issued on or after June 1, 1980.  The 1980
regulation does not contain the requirement which the court of appeals
found to be dispositive, namely, that a "claim" must involve a matter
in dispute.  45 Fed. Reg. 31035-31037 (1980);  see Pet. App. 8-9,
90-100.  The court of appeals' decision accordingly concerns what is
at most a problem of diminishing importance and thus does not warrant
this Court's review.

   It is therefore respectfully submitted that the petition for a writ
of certiorari should be denied.

   CHARLES FRIED

      Solicitor General

   NOVEMBER 1988

   /1/ Defense Acquisition Regulation (DAR) 7-602.6(b) (Disputes)
(1979) contained the following definition of "claim" (44 Fed. Reg.
12524 (1979)):

         (1) a written request submitted to the Contracting Officer;

         (2) for payment of money, adjustment of contract terms, or
      other relief;

         (3) which is in dispute or remains unresolved after a
      reasonable time for its review and disposition by the
      Government;  and

         (4) for which a Contracting Officer's decision is demanded.

   /2/ Because the contract itself resolved petitioner's request for
interest, the court of appeals did not address petitioner's contention
that the CDA does not require that a "claim" involve a disputed matter
(Pet. App. 9-10).

   Judge Bennett dissented.  He first disagreed with the Board's
conclusion that there was no "dispute." In his view, the record showed
that the parties had substantial disagreements.  Pet. App. 12-15.
Judge Bennett also concluded that the CDA does not require a "claim"
to be disputed and that the parties, by contractual provisions, should
not be able to "sidestep()" (Pet. App. 23) Congress's intention of
permitting contractors to recover interest (Pet. App. 15-29).

   /3/ Petitioner does not challenge the court of appeals' upholding
of the Board's factual finding that petitioner's settlement was not a
"disputed" claim.