## Facts

- The U.S. Air Force awarded NavCom a prime contract to produce a radar altimeter system.
- NavCom subcontracted with Ball to design and manufacture antennas for the system.
- The Air Force required the antennas to satisfy pass/fail criteria including a MIL-STD-810 salt-fog test; NavCom created an Air Force–approved “NavCom Salt Fog Test Procedure.”
- The subcontract required Ball’s antennas to pass NavCom’s salt-fog procedure; Ball contended the procedure was more stringent than the Air Force criteria but performed the test.
- NavCom asserted the antennas failed; Ball asserted they met the Air Force pass/fail criteria.
- NavCom directed Ball to redesign; Ball sought an equitable adjustment of $1,467,949, asserting the prototype failed only due to NavCom’s stricter procedure and that NavCom chose a more expensive redesign option.
- The subcontract contained both (1) a provision stating that a contracting officer’s decision about the prime contract would be binding on the parties in subcontract disputes and (2) a provision requiring arbitration of disputes not settled by agreement.
- NavCom submitted a claim to the Air Force contracting officer describing the NavCom–Ball dispute and arguing the Air Force should bear increased costs due to ambiguous pass/fail criteria; Ball cooperated to some extent but objected to submitting the claim.
- The contracting officer denied the claim; Ball then demanded arbitration against NavCom.
- NavCom sued in federal district court to enjoin arbitration, asserting the contracting officer decision was binding and precluded arbitration.

## Issues

1. Whether the subcontract’s “binding” contracting-officer decision provision precluded Ball from arbitrating its dispute with NavCom after the contracting officer denied NavCom’s claim.
2. Whether, under the Federal Arbitration Act and contract interpretation principles, the subcontract should be construed to preserve Ball’s right to arbitrate absent an explicit waiver.

## Decision

- The Ninth Circuit affirmed the district court’s denial of Ball’s motion to dismiss.
- The Ninth Circuit reversed summary judgment for NavCom.
- The Ninth Circuit vacated the order enjoining Ball from arbitrating.
- The case was remanded for entry of an order consistent with enforcing the arbitration agreement.

## Legal Principles

- Under the Federal Arbitration Act, arbitration agreements are enforced according to their terms, and ambiguities are generally resolved in favor of arbitration.
- A waiver or displacement of a contractual right to arbitrate must be clear; courts will not infer waiver from nonexclusive or ambiguous dispute-resolution language.
- A subcontract clause making a government contracting officer’s prime-contract decision “binding” may bind the parties on certain determinations, but it does not automatically make the contracting-officer process the exclusive forum for resolving the parties’ private disputes.
- Contract provisions addressing government administrative decisions and provisions requiring arbitration should be harmonized where reasonably possible, rather than construing one to nullify the other without explicit language.

## Conclusion

The Ninth Circuit held that the subcontract did not clearly eliminate Ball’s contractual right to arbitrate merely because NavCom invoked the Air Force contracting-officer process and received an adverse decision; the anti-arbitration injunction was vacated and the matter remanded to permit arbitration to proceed.


NavCom Def. Elecs., Inc. v. Ball Corp., 92 F.3d 877 (9th Cir. 1996)