AFFIRMED ON RECONSIDERATION: October 14, 1992 GSBCA 11003-R EMPLOYERS MUTUAL CASUALTY COMPANY, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Michael P. Duray and Paul F. Vernon of Vernon & Duray, L.L.P., Dallas, TX, counsel for Appellant. Marie N. Adamson, Real Property Division, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges BORWICK, DANIELS, and HYATT. DANIELS, Board Judge. In ruling on motions for summary relief by appellant, Employers Mutual Casualty Company (EMC), we have written two decisions, the first of which favored respondent, the General Services Administration (GSA), and the second of which favored appellant. In this opinion, we grant GSA's motion for reconsideration of the second decision, but then affirm that decision on reconsideration. In so doing, we attempt to explain our reasoning more clearly, with respect to both the decision itself and the relationship between that holding and the one on the earlier motion for summary relief. Background EMC was the surety on a construction contract between GSA and Richerson Construction Inc. (Richerson). GSA terminated that contract for default, and EMC entered into a takeover agreement with GSA to complete contract performance. That agreement was also terminated for default. This case involves the validity of the termination for default of EMC's contract. Richerson and EMC each appealed the termination of its contract. The Board granted Richerson's appeal by entering a stipulated judgment for the contractor in accordance with the terms of a settlement agreement made between that firm and GSA. The termination for default of the Richerson contract was thereby converted into a termination for the convenience of the Government. In the first motion for summary judgment, EMC asked us to find as a matter of law that once Richerson's default termination was reversed by us, the need for the takeover agreement became a nullity, so the EMC contract could not be terminated for default. We denied this motion. We held that once EMC entered into the agreement, it succeeded to all the obligations Richerson had had, and that the Government should not be deprived of its rights to have the work performed simply because it now had a contract with a surety rather than an independent completion contractor. Employers Mutual Casualty Co., GSBCA 11003, 91-3 BCA 24,202 (1991). On appellant's motion for reconsideration of this decision, we held that the contractual relationship between Richerson and EMC, in which the contractor had agreed to indemnify the surety for certain expenses, cannot affect this administrative tribunal's decision as to rights and responsibilities of the parties to the contract between the Government and EMC. 92-1 BCA 24,442 (1991). In a separate case, Richerson remained before the Board, contesting the extent of termination costs to which it was entitled. In the course of that litigation, Richerson and GSA stipulated that the agency accepted, during contract performance, the items as to which failure to make progress triggered the default of the takeover agreement. These items were courtroom pews; in response to a question from the Board, Government counsel stated that acceptance of the pews occurred before GSA turned to EMC for completion of contract work. EMC's second motion for summary relief was based on the theory that this stipulation vitiates the justification for the default of the GSA-EMC contract. We granted this motion -- and with it, the appeal. We held that the takeover agreement could not be read to impose on the surety requirements beyond those of the original contract; that instrument called for the supply and installation of a single set of pews, and because the agency had accepted the set provided by Richerson, GSA could neither demand a second set from EMC nor default terminate EMC for not providing one. We relied on holdings of the Courts of Appeals for the Seventh and Ninth Circuits in deciding that a stipulation made in one lawsuit may be given full effect in another. Employers Mutual Casualty Co., GSBCA 11003, 92-1 BCA 24,594 (1991). This last decision was issued on November 14, 1991. On December 16, GSA timely moved for reconsideration. At EMC's request, and without opposition from GSA, the Board suspended proceedings on this motion until after a decision had been issued on Richerson's remaining appeals. Once that decision was rendered, the Board convened a conference to discuss further proceedings on the motion. The parties agreed that EMC would respond to the motion by September 30, 1992, and that the Board should subsequently make its ruling. We now have in hand appellant's opposition to the motion. Discussion GSA advances several arguments in support of the proposition that our latest decision in this case is wrong and inconsistent with the decision on the earlier motion for summary relief. As to error within the decision itself, GSA makes four points. First, the agency suggests that summary relief was inappropriate because material facts were in dispute and therefore should have been construed in favor of GSA, the non- moving party. The key fact for GSA is the meaning of the stipulation that the agency accepted the pews supplied by Richerson. GSA cites these passages from its letter stating the date of acceptance: The Stipulation entered into between the Government and Richerson . . . is not an admission. The Stipulation only removed the issue of pew acceptance from the litigation of the Richerson termination for convenience claim. Material facts pertaining to the pew acceptance are still in dispute and are relevant to the appellant's appeals. Although the pews were in the courtroom at the time appellant entered into a takeover agreement with GSA, and were being used, the fact of the matter is that those pews were in the courtroom because Richerson refused to remove them, even after being ordered to do so by the contracting officer. In addition, the pews Richerson installed not only failed to conform to GSA's approved submittal drawing, but also failed to possess the contractually required catalyzed polyurethane finish. Letter to Board (Oct. 4, 1991). Second, GSA asserts that the Board mischaracterized the stipulation, in that we did not cite the words "for purposes of determining the amount due RCI [Richerson] under the Termination for Convenience clause," which appear in the statement. If the Board had taken evidence as to the Government's intent in agreeing to the stipulation, GSA says, we would have understood why ignoring those words altered the meaning of the statement. Third -- and closely related to the second point -- the agency contends that we did not correctly apply the teaching of Kaminer Construction Corp. v. United States, 200 Ct. Cl. 182, 197, 488 F.2d 980, 988 (1973), that a stipulation may be disregarded where it is "inadvertent, contrary to law, contrary to fact, or made without proper authority." GSA maintains, "It is inconceivable that had the Government known of the future impact of this stipulation as decided by the Board, it would have entered into the subject stipulation." Respondent's Motion for Reconsideration at 5. Fourth, GSA contends that the issue of acceptance of Richerson's pews is irrelevant to the factual basis for EMC's termination for default, since the contract called for a set of pews that complied with contract requirements and the Government never received such a set from either Richerson or EMC. The agency then notes what it believes to be inconsistencies between the decision on the first motion for summary relief and the decision on the second motion, on which reconsideration is sought. (1) In the former decision, we held that the agreement under which surety EMC assumed responsibilities for completing defaulted contractor Richerson's work was a contract separate from the instrument linking Richerson and GSA; in the latter decision, we found that Richerson and EMC were responsible for fulfilling identical duties. (2) We first found that the stipulated judgment altering the nature of Richerson's termination did not vitiate the agency's right to default terminate the contract with EMC; later, we considered another stipulation between Richerson and GSA to be an admission against interest by the agency. (3) Originally, we held that the Government should be in a similar position vis-a-vis a surety who completes the defaulted contractor's work as it would be relative to a firm with a separate contract to finish the job; later, we allowed the surety to be in a far better position than an independent completing contractor would have been, since the surety escaped a contract responsibility when we found that the agency had accepted an item before the takeover agreement went into effect. Whatever the merits of our two decisions in this case may be, GSA's motion shows that we have not made ourselves clear to at least one party. We grant the motion for the purpose of reviewing the second opinion and ensuring that it is correct and consistent with the first decision. On second thought, we remain convinced of the validity of our earlier reasoning and conclusions. We use this opinion to address GSA's criticisms and, in so doing, to attempt to clarify our position. We turn first to GSA's contentions of error within the decision now under review. To respond to the agency's assertions, it may help to set out in full the stipulation agreed to by GSA and Richerson in the litigation between those parties: The parties stipulate that the pews supplied by RCI and manufactured by Trinity Church Furniture were accepted by the GSA and that, for purposes of determining the amount due RCI under the Termination for Convenience clause (FAR [Federal Acquisition Regulation] 52.249-2), $7,026 was incurred for those pews and that these costs are allowable under FAR Part 31. Furthermore, the Respondent [GSA] will not assert a credit against the contract amount for costs incurred in replacement of those pews. Appeal File, Exhibit 30. It may help also to set out in full counsel's statement as to when acceptance of the pews occurred: "This date of acceptance is February 19, 1990, and is the subject of the Stipulation entered into between Richerson and the Government." Letter to Board (Oct. 4, 1991). The first clause of the first sentence of the stipulation is the only portion of that statement that pertains to acceptance of the pews. This clause and counsel's affirmation are clear and definitive pronouncements as to the critical point in this case. As appellant says in response to the motion for reconsideration: [T]he stipulation is neither vague nor ambiguous and therefore should not be open to interpretation by parol evidence. In addition, no evidence of "intent" was ever presented by affidavit or other competent summary relief form in response to [EMC's second] Motion for [Summary Relief], as required by Rule 8(g). Response to Motion for Reconsideration at 1. It is true that a document submitted with agency counsel's letter regarding the date of acceptance shows that on the date specified, a Government representative marked Richerson's submittal of pew drawings "approved as noted," rather than "approved." The obvious effect of the stipulation, however, is to remove the contingency from this statement, as well as to say that whatever differences existed between the pews Richerson supplied and the ones specified in the contract were waived by GSA. Thus, the stipulation removed from dispute any material facts as to the acceptability of Richerson's pews. We emphasize two points here. First, as a matter of law, a buyer may "accept" goods not only by signifying to the seller that the items conform to all specifications, but also by deciding "that he will take or retain them in spite of their non- conformity." Uniform Commercial Code 2-606(1)(a) (1989). What GSA labels "material facts" goes to the conformity of the pews to the Government's specifications; it is not relevant to acceptance. Second, a stipulation, as a form of agreement between parties, is in the nature of a contract and therefore is subject to the rules of interpretation of contracts. Jeff D. v. Andrus, 899 F.2d 753, 759 (9th Cir. 1989); Browning v. Navarro, 743 F.2d 1069, 1080 (5th Cir. 1984). Fundamental among those rules is that "[w]here the provisions of a contract are phrased in clear and unambiguous language, the words of those provisions must be given their plain and ordinary meaning." Triax-Pacific v. Stone, 958 F.2d 351, 354 (Fed. Cir. 1992). The words of this stipulation are clear and unambiguous, so we should be loathe to look behind them. In coming to this conclusion, we are mindful of the teaching of the Supreme Court, that parties generally have different purposes for entering into an agreement which waives their right to litigate an issue, so the meaning of such an agreement should be discerned where possible within the statement's four corners, rather than by reference to the intent of one of the parties. United States v. Armour & Co., 402 U.S. 673, 681-82 (1971). Further, the stipulation is not limited in the way GSA believes. The clause beginning "for purposes of determining the amount due RCI under the Termination for Convenience clause" is entirely independent of the key clause; it restricts the application of the stipulation only for the purpose of determining compensation due Richerson under a termination for convenience claim. If counsel had meant to restrict the application of the stipulation in another way, she should have been more careful when drafting the statement.1 The statement was hardly inadvertent; GSA obviously meant to use it in limiting the scope of the Richerson litigation. Nor was it contrary to law; GSA has cited no limitation on the Government's power to accept non-conforming goods. Counsel has not maintained, either, ____________________ 1 In an earlier termination for default case, we faced a similar problem with a stipulation agreed to by GSA. We referenced but did not rely on a stipulation that an agency action was "not fair and equitable action leading to a default termination of the contract; was unreasonable, arbitrary and capricious . . . ; and was not an acceptable action by GSA." American Power, Inc., GSBCA 8752, 90-2 BCA 22,811, at 114,556. ____________________ On reconsideration (requested by the agency) we said, "One of the aspects of any case over which a judicial tribunal exercises no control is the proposal and acceptance of stipulations. [Appellant] proposed this stipulation, and GSA of its own volition accepted it. The stipulation admits of no exceptions; for us to open the record now to determine why GSA accepted the proposal is not appropriate." American Power, Inc., GSBCA ______________________ 8752-R, 90-3 BCA 22,983, at 115,403. Agency counsel is concerned here that "[i]f this is the effect of stipulations, then the Board's decision will have a deleterious effect on the future use of stipulations." Motion for Reconsideration at 6. Perhaps a more appropriate result would be a deleterious effect on the improvident use of stipulations. ___________ that she signed the stipulation without proper authority. GSA appears to believe that the stipulation was contrary to fact, but it has proffered no evidence on the basis of which we could reach such a conclusion; the assertions made do not controvert a determination that the agency accepted Richerson's pews even though it believed that the pews did not meet established specifications. Based on the record in this case, it is uncontroverted that GSA accepted from Richerson pews necessary to meet the requirements of that firm's contract. Those pews may not have met all the specifications in the contract, but GSA accepted them nonetheless. Thus, by the time EMC took over Richerson's contract, the provision of pews was not among the responsibilities remaining to be fulfilled. For GSA to use the failure to deliver pews as grounds for default terminating the agency's relationship with EMC was consequently improper. Nor is this decision inconsistent with the one we rendered on EMC's first motion for summary relief. The change in the nature of the termination of Richerson's contract, from one for default to one for the convenience of the Government, in and of itself had no implication for the validity of the default termination of EMC's contract. An agency may convert a termination from default to convenience for any one of a number of reasons, including the simple expedient of litigation strategy. The conversion of Richerson's termination, standing alone, did not limit the obligation of the surety under its takeover agreement. That obligation was to complete whatever contract work had not been performed by Richerson to the Government's satisfaction. Had GSA entered into an entirely new contract with an independent completion contractor, instead of dealing with the surety, the independent firm would have had to do work identical to what EMC had to do. The contract of either the independent firm or EMC might well have been terminated for default if the completer did not do that work properly. The scope of the work should not have extended to provision of courtroom pews, however, because -- under GSA's stipulation and admission -- when the Richerson contract was ended, the pews had already been accepted. Our having entered judgment for Richerson on the basis of a stipulation as to how one case should end does not preclude us from giving effect, in the instant appeal, to a stipulation of fact made in a case closely related to it. Decision GSA's motion for reconsideration is GRANTED. On reconsideration, our decision is AFFIRMED. _________________________ STEPHEN M. DANIELS Board Judge We concur: _________________________ _________________________ ANTHONY S. BORWICK CATHERINE B. HYATT Board Judge Board Judge