## Facts

- The Navy awarded John C. Grimberg Company, Inc. a construction contract requiring fabrication and installation of exterior precast concrete wall panels at a naval facility in Maryland.
- Grimberg’s bid relied on a domestic supplier’s quotation (Arban & Carosi) totaling $245,000, including $165,000 in materials.
- After award, Grimberg could not secure a subcontract with that supplier and had only made telephone attempts, without written follow-up.
- Grimberg obtained higher quotations from other domestic sources and then subcontracted with a Canadian firm (Beer Precast Concrete, Ltd.) for $237,000, including $120,000 in materials.
- The Navy rejected submittals identifying the Canadian fabricator as noncompliant with the Buy American Act (BAA) and declined to grant a post-award waiver.
- Grimberg ultimately procured the panels domestically at a materials cost of about $200,000 and sought an equitable adjustment for its increased costs.
- The Armed Services Board of Contract Appeals denied relief, finding no entitlement to a BAA waiver and attributing cost increases largely to Grimberg’s subcontracting decisions.
- Grimberg appealed the Board’s decision to the U.S. Court of Appeals for the Federal Circuit.

## Issues

1. Whether Grimberg proved that domestic precast panel costs were “unreasonable” under the BAA and implementing regulations so as to require a waiver permitting foreign materials.
2. Whether the Navy’s refusal to waive the BAA entitled Grimberg to an equitable adjustment.
3. Whether the Board’s findings and application of the BAA standard were unsupported by substantial evidence or otherwise unlawful under the applicable review standard.

## Decision

- The Federal Circuit affirmed the Board’s decision.
- The court upheld the determination that Grimberg did not establish that domestic costs were “unreasonable” within the meaning of the BAA and regulations.
- The court rejected Grimberg’s equitable-adjustment claim because the Navy’s enforcement of the BAA and refusal to waive it did not constitute a compensable government act or breach.
- The court concluded the Board’s findings were supported by substantial evidence and were not arbitrary, capricious, or contrary to law.

## Legal Principles

- The BAA establishes a domestic preference in federal procurement and permits foreign materials only when statutory/regulatory exceptions apply, including a defined “unreasonable cost” exception.
- A contractor seeking a cost-based waiver bears the burden to prove domestic materials are “unreasonable” under the governing regulatory comparison methodology, not merely that foreign materials are cheaper.
- Cost increases caused by a contractor’s reliance on a nonbinding subcontractor quote, or failure to secure commitments before bidding, are ordinarily business risks borne by the contractor rather than compensable government-caused costs.
- An equitable adjustment generally requires a compensable government action (e.g., change, constructive change, or breach); insistence on statutory and contractual compliance and denial of discretionary waiver does not, by itself, support recovery.
- On appeal from a board of contract appeals, factual findings are upheld if supported by substantial evidence, and legal conclusions are reviewed for legal error under the governing administrative review standards.

## Conclusion

The Federal Circuit held that Grimberg failed to justify a Buy American Act waiver because it did not prove domestic precast panel costs were “unreasonable” under applicable regulations, and it was not entitled to an equitable adjustment where the Navy merely enforced statutory and contract requirements and the contractor’s added costs stemmed from its own subcontracting risk.


John C. Grimberg Co. v. United States, 869 F.2d 1475 (Fed. Cir. 1989)