Opinion of the Court. 337 U.S. letter of intent. February 3, the respondent's representatives submitted a letter from a surety company indicating that that company thought that a bond in connection with a contract of this size would have to be reinsured and that, unless some change were made in the financial setup, reinsurance would be declined. It added, however, that, if either of two suggested plans relative to refinancing were accomplished and if the respondent furnished certain information as to new key personnel to be engaged by the respondent, then the reinsurance could be obtained and the surety company could execute a bond. The findings of fact disclose a difference in the testimony as to the reaction of the Government's representative to this letter. There is no finding that the Government's requirement in this regard ever was met. Much in the following findings of fact Nos. 5–8 is vital to the issue before us: "5. On January 16 and 17, 1942, plaintiff's plant was visited by inspectors of the Philadelphia Inspection District of the Navy Department to instruct plaintiff's personnel as to the Navy inspection requirements. At the time there was no one at the plant except the watchman and the local manager. No work at all was being performed at the time. On February 19, 1942, a production specialist from the War Production Board visited the plant. His duties were to assist production in factories in the production of naval ordnance. At that time only the watchman was at the plant. The production specialist inspected the plant with the local manager, who was called from his real estate office, and also talked with Mr. Johnson [the new assistant to the president], who was called to Waynesboro for that purpose. Reports of these visits were given to the Navy Department. At that time the company was 198 Opinion of the Court. not prepared to undertake work of the character proposed by the contract, and would not for an. indefinite time be prepared successfully to complete a contract for 150 gun mounts. Plaintiff's foundry was incapable of production of the cast steel forgings required for the gun mounts. It was plaintiff's plan, as shown by its proposal to the Government, to subcontract for these castings, as well as for other parts of the work. Plaintiff had contacted certain producers, who were willing to furnish castings and other parts, but no contracts for the castings or any other parts had been made by plaintiff. There was no reason to suppose that the plaintiff could not have obtained these parts from subcontractors. Plaintiff planned to use around 150 mechanics, skilled, semi-skilled, and unskilled, in the machining and assembling of the gun mounts. Plaintiff had expected to secure former railroad shop mechanics residing near Waynesboro as the bulk of its employees. The construction of gun mounts is difficult and exacting work. Manufacturers experienced in somewhat similar work with large organizations and trained mechanics required from seven months to one year from the time of receiving notice to proceed until the first gun mounts were produced. Plaintiff had no manufacturing organization and no force of trained personnel to train unskilled employees. Plaintiff's proposed general manager was at this time a regular employee of another company in Ohio. He had been assisting plaintiff in its plans under the expectation that he would sever his connection with the other company and become plaintiff's general manager. A contract between plaintiff and the engineer under the terms of which the engineer was engaged as general manager was executed on February 24, 1942. Opinion of the Court. 337 U.S. "6. Under date of February 23, 1942, the Navy Department mailed to plaintiff a notice of award of contract, No. LL96553, for gun mounts, in the amount of $2,087,555, which notice of award was received by the plaintiff on February 24, 1942. On February 24, 1942, after it had received the notice of award, plaintiff received a telegram as follows: "NOTICE OF AWARD CONTRACT NOS 96553 FORWARDED IN ERROR RETURN FOR CANCELLATION NO AWARD TO YOU ACKNOWLEDGE REFERRING SYMBOL SPF "RAY SPEAR PAYMASTER GENERAL NAVY "On March 5, 1942, the Navy Department prepared and mailed to plaintiff a letter as follows: "As it is apparent that you cannot secure a bond to insure faithful performance of the contract, no contract will be issued to you, and the Letter of Intent LL-NOs-96553 (SPC), dated 29 December 1941, is hereby cancelled. "Since no authority has been given you to incur any expenses under the Letter of Intent, there can be no liability on the Government by reason of the cancellation of the Letter of Intent. "Please return the original and all copies of the Letter of Intent, unsigned, to the Bureau of Supplies and Accounts for cancellation. "7. . . . The evidence does not disclose that any expenditures or expenses were incurred in reliance on the letter of intent or notice of award of contract. "8. If the plaintiff had been permitted to perform its contract, it would have made a net profit of not less than $80,000." (Emphasis supplied.) 110 Ct. Cl. at pp. 378–381. 198 Opinion of the Court. We are bound by the foregoing findings in testing the court's conclusion of law and judgment that the respondent is entitled to recover $80,000 for the loss of anticipated but unearned profits. United States v. Causby, 328 U. S. 256, 267; United States v. Seminole Nation, 299 U. S. 417, 422; United States v. Esnault-Pelterie, 299 U. S. 201, 205, 206; Crocker v. United States, 240 U. S. 74, 78; Stone v. United States, 164 U. S. 380, 382, 383. The restricted scope of the errors sought to be reached by the petition for certiorari has eliminated all questions as to the binding force of the contract.' The Government, however, argues that, under the then existing statutes and regulations, it had a right to cancel the contract at its option without incurring liability for the respondent's alleged loss of anticipated profits caused by such cancellation. It argues also that the practice of insert 1 The Government's brief says in a footnote that "The finding of the court below that a binding contract was consummated is, in our view, of doubtful soundness." However, in the same brief, the Government says that "The United States does not question in this Court the Court of Claims' holding that the notice of award sent by the Award Section of the Navy Department's Bureau of Supplies and Accounts created a binding contract between the United States and respondent on February 23, 1943 [1942]." The Court of Claims said in its opinion: "We think that the Government made a contract with the plaintiff, and that no mistake of the kind which would vitiate a contract occurred." 110 Ct. Cl. at p. 385. In its specification of errors to be urged, and in its statement of the questions presented by its. petition for a writ of certiorari, the Government does not question the binding force of the contract. "Only the questions specifically brought forward by the petition for writ of certiorari will be considered." Rule 38, 12, of this Court. ? Title II, First War Powers Act of 1941, c. 593, 55 Stat. 839, § 201, 50 U. S. C. App § 611; Executive Order No. 9001, 3 C. F. R. Cum. Supp. 1054-1056. See also, Contract Settlement Act of 1944, c. 358, 58 Stat. 649, 41 U.. S. C. § 101, et seq.; Act of August 7, 1946, c. 864, 60 Stat. 902, 41 U. S. C. § 106 note; Regulation No. 7, Office of Contract Settlement, 32 C. F. R. 1944 Supp., § 8006.3 (c), Opinion of the Court. 337 U.S. ing, in each contract for war supplies, an express provision permitting such a cancellation by the United States had developed to such an extent that we should recognize the provisions as constituting a part of the formal contract which the Government stated was to follow the award made to the respondent, February 23, 1942.3 It is p. 3065; Office of Contract Settlement, A History of War Contract Terminations and Settlements, p. 27 (July, 1947). As to comparable legislation affecting contracts for supplies in World War I, see Act of June 15, 1917, c. 29, 40 Stat. 182; Act of March 2, 1919, c. 94, 40 Stat. 1272; De Laval Steam Turbine Co. v. United States, 284 U. S. 61; Barrett Co. v. United States, 273 U. S. 227; College Point Boat Corp. v. United States, 267 U. S. 12; Russell Co. v. United States, 261 U.S. 514. 3 See letter from James Forrestal, Acting Secretary of the Navy, October 10, 1943, Hearings before a Subcommittee on Contract Termination of the Senate Committee on Military Affairs on S. 1268, S. 1280 and S. J. Res. 80, 78th Cong., 1st Sess. 270-273 (1943), in which he said (p. 271): "The Navy Department commenced in the summer of 1941 the consideration of contract termination as it might affect procurement. At that time there were few actual terminations in contemplation. Contractors were, nevertheless, questioning the Government's right to terminate contracts and fair provisions permitting such termination without cause and defining the rights of the parties in such event were deemed necessary to facilitate the urgently needed procurement and to minimize difficulties in the event of changing needs. A contract clause endeavoring to meet the procurement problem and safeguard the interests of both the Government and the contractors was then adopted and, except in respect of the ship construction contracts (a special problem), is in general form and substance in use in Navy contracts today." See also, memorandum of the Industrial Readjustment Branch, submitted by James Forrestal, as Under Secretary of the Navy, January 11, 1944, in which it was stated that in the Navy "Standard termination clauses for fixed price contracts were developed late in 1941, and in general form and substance have been inserted in most contracts entered into since that time except for ship-construction contracts, 'which constitute a separate problem. The Department has not undertaken to modify outstanding contracts by the insertior of such clauses." Appendix II, id. at p. 553 (1944). |