At an earlier stage of this controversy we rejected the Government's assertion, on its then motion for summary judgment, that plaintiffs' first cause of action (based on an allegedly improper termination-for-default) should be dismissed as barred by the statute of limitations, but specifically reserved the Government's alternative ground that the claim is one arising "under the contract" and the plaintiffs failed to exhaust their administrative remedies. We also withheld decision on plaintiffs' contention that, even if the cause of action is not one for breach of contract, defendant is estopped from so claiming by the conduct of its representative at the administrative level. Nager Elec. Co. v. United States, 368 F.2d 847, 866, 177 Ct. Cl. 234, 263 (1966).

The defendant has now renewed its exhaustion defense as the basis for summary judgment on plaintiffs' first cause of action, and plaintiffs have countered with the estoppel point. The necessary documents are all before us. We hold that the termination claim did arise "under the contract", that plaintiffs adequately pursued their administrative remedy, that defendant is estopped from claiming that the issue must be determined, if at all, by an administrative tribunal, and, therefore, that plaintiffs may have a trial in this court on the cause of action.

The background facts pertinent to the present motion are simple enough. Plaintiffs contracted with the Atomic Energy Commission to build "second phase" facilities at an AEC laboratory in the State of New York. In July and August 1958, the project manager (or contracting officer), relying on the contract's "termination-for-default" article, canceled twenty-five of the items in plaintiffs' contract and later deducted about $18,000 from payments to the contractors as the cost of acquiring substitute performance of the terminated work. Plaintiffs seek recovery of that amount.1

The first question is whether the claim is one "arising under the contract" or whether it "falls outside the scope of the `disputes' clause" because it "relates to matters which cannot be handled under one or more of the standard adjustment clauses" — in this case the "termination" clauses. Schlesinger v. United States, 383 F.2d 1004, 1007, 181 Ct. Cl. 1004 (1967). We think that the wording of the default clause, as well as the practice of this court and of the boards of contract appeals, make it very clear that this dispute — which centers on the plaintiffs' claim that their default was justified by Government interference — is subject to administrative resolution.2 In the absence of a waiver by the parties of the administrative processes, we have always treated such factual questions imbedded in termination-for-default controversies as within the scope of the "disputes" clause,3 and so have the administrative boards.4

The stage is therefore set for the argument that the plaintiffs did not properly prosecute their partial-termination claim before the contracting officer and the Commission's hearing examiner, each of whom held — erroneously — that he had no jurisdiction over the claim. The defendant's argument indicates, however, that it expected too much of plaintiffs, so much so that it wanted the contractors to play the Government's role as well as their own.

A contractor's part in presenting a claim to the contracting officer is to "invite a ruling" by putting him "on notice both as to the relief requested and the contract clause on which the request [is] based." Acme Proc. Equip. Co. v. United States, 347 F.2d 509, 534, 171 Ct. Cl. 324, 366, (1965), reversed on other grounds, 385 U.S. 138, 87 S. Ct. 350, 17 L. Ed. 2d 249 (1966). Conversely, "ambiguous requests for adjustments or possible negotiations regarding adjustments as distinguished from demands predicated upon an expressed contractual right" may result in dismissal of the suit for failure to exhaust administrative remedies. Specialty Assembling & Packing Co. v. United States, 298 F.2d 794, 796, 156 Ct. Cl. 252, 255 (1962). The plaintiffs have fulfilled the minimum role defined in those cases.

The contracting officer was well aware that plaintiffs considered the termination and assessment of completion costs an improper application of the "termination-for-default" article and that they wanted him to decide all factual issues under the "disputes" clause. In a September 1958 letter to the AEC manager, counsel for plaintiffs stated the "desire to exhaust all administrative remedies and have a final determination by the contracting officer and the Commission, as provided under the Disputes Article of the Contract, so that we may proceed from that point without any contention being made against us that we failed to exhaust our administrative remedies." In a subsequent letter to the Commission's chief counsel (at the Schenectady regional office), to whom the manager had referred the matter, plaintiffs indicated that their primary objection to the termination was "the fact that the General Electric Company, Agent for the Atomic Energy Commission, was interfering with the contractor's performance."

Despite the regional counsel's constant request that the "issues * * * be delineated" further, we think that plaintiffs' correspondence adequately informed the contracting officer of the nature of their claim.5 Further proof that a precise issue was posed for decision is contained in the acting manager's letter to plaintiffs, summarizing the matters left unsettled after an August 1959 conference in his office. He wrote that "it is not clear that Clause 6 [`disputes'] is applicable to the Government's claim * * * [for] the actual cost * * * for performing that part of the contract work which was not performed by you because of termination action under the provisions of Clause 5 [`termination-for-default']."

The Government emphasizes that the plaintiffs never responded to the acting manager's further statement (in the same letter) that he would "be glad to have an expression of your views * * in this regard." Plaintiffs explain that they did not read this as a demand for briefing and that they had made their position as clear as need be, thus eliminating the necessity for further correspondence at that point. We agree.

After the manager found that "there was [no] dispute concerning a question of fact" with respect to the termination,6 the contractors appealed to the Commission, contending that "the default order was improper and the amount charged * * * excessive." At the hearing before the AEC examiner, plaintiffs' counsel submitted the termination question as "a factual issue, * * subject to [AEC] review." He added that "to protect our rights for [judicial] review * * * we must follow our administrative remedies and exhaust these administrative remedies" and that, "[if] this Board feels it has no jurisdiction, at least we have taken our appeal and have protected the record."

After questioning plaintiffs' attorney as to the reason why he considered the termination unjustified, the hearing examiner expressed the view that the issue "seems to be beyond the scope of the jurisdiction of this type of proceeding" "since it involves, clearly, a breach." With this plaintiffs' counsel agreed "as an attorney to an attorney" and reiterated that his objective was to avoid a failure-to-exhaust defense in any subsequent judicial suit. The examiner then dismissed the witness plaintiffs had brought to testify on the termination and concluded that the appellate tribunal had no jurisdiction over the matter.7 The Commission's legal representative, as well as plaintiff's lawyer, explicitly assented to this disposition of the claim.

On the basis of this undisputed evidence, we cannot accept the defendant's contention that plaintiffs have not "pursued" their administrative remedy. The hearing officer was cognizant of the basis for plaintiffs' claim, and the plaintiffs were ready to present their witnesses if the hearing examiner decided he had authority to grant relief. The defendant has cited nothing, including agency regulations, that requires more.8 What defendant seems to object to is not that plaintiffs failed to present their claim but that they displayed a notable lack of conviction in doing so, especially before the examiner. If, however, the claim is actually presented on appeal, the strength of the claimant's support of it is irrelevant for the purpose of deciding an issue of exhaustion. See note 7 supra.

In any event, the misinformation of the manager and the hearing examiner is as much (and probably more) attributable to defendant as to plaintiffs. The AEC attorney did not stand idly in the wings. Prior to the manager's initial decision he took the stand — adopted by the manager — that "the question of whether the termination was justified * * * involves a determination of the legal rights and obligations of the parties rather than a determination of factual issues." Later, in his opening remarks at the examiner's hearing, he argued that the Commission "is not the proper forum for consideration of that kind of claim" because "it pertains not to a dispute arising in the performance under the contract, which is the kind of dispute contemplated by the disputes article, but it covers matters arising outside of the contract — work that they [plaintiffs] did not do"; "I, therefore, reiterate the position of the Contracting Officer that with respect to this item, * * * [plaintiffs' counsel] is not before the right [forum]." While he did not join in the colloquy just preceding the examiner's final jurisdictional pronouncement, he did expressly agree with the disposition of the termination dispute.

In these circumstances, it is plain that the plaintiffs cannot be convicted of having failed to seek and pursue administrative relief, and that the defendant's motion for summary judgment on that ground must be denied.

The next question is whether proceedings here should be suspended to permit the plaintiffs to return, at this time, to the AEC to pursue and complete the administrative remedy which they sought but were not allowed. The defendant seeks that disposition if we do not dismiss the cause of action entirely. The contractors urge that the Government is estopped from asking that we take that course, and we so hold. We think that the Government, because of the firm and clear position taken at the administrative level by its representative, should be estopped from saying that the controversy arises "under the contract" and that plaintiffs must now pursue their administrative remedy. Because of the special circumstances, the claim should be treated as for a "breach" — the way the parties characterized it at the administrative stage — even though that is not an accurate representation.

A contractor, of course, is not free to lead an administrative official astray on the scope of his authority. But the Government must also shoulder its responsibility as an advocate of the proper utilization of the "disputes" mechanism since a change of position when it reaches court may create a trap for an unsuspecting contractor.9 We do not at all suggest that the Government planned it this way. Quite to the contrary, it is obvious that the Commission attorney who advised the manager and appeared at the hearing was as mistaken as were the plaintiffs. Even so, we cannot allow the Government to have it both ways.

The Government is not faced with the potential dilemma of a contractor who administratively presents his claim to protect his position even though he would prefer, and thinks he is entitled to, a judicial remedy. If he does not vigorously defend the applicability of the "disputes" clause, the Government, as in this case, would have us hold that he failed to exhaust his administrative remedies. If he argues too hard for administrative jurisdiction, he is likely to be faced with an estoppel argument. See note 9 supra. The Government will not be placed in such a quandary.

If the Government believes that a dispute (or class of disputes) is subject to administrative resolution and that its best interest lies in following that route, the argument should be made at the administrative level. Had the Government's "wealth of authority" — now properly urged for saying that the dispute was "under the contract" — been cited to the hearing examiner or the contracting officer, the merits of the present case probably would long since have been determined and in the very forum the Government now contends is proper. Instead, its counsel at the AEC successfully pushed for administrative dismissal, indicating that the claim was for a "breach", and its counsel here now requests a judicial dismissal or suspension. This change-of-position has resulted in delay and should not be permitted.10 The delay has prejudiced both the plaintiffs and the adjudicatory process. Since the use of the "disputes" mechanism can be waived (see, e.g., WRB Corp. v. United States, 177 Ct. Cl. 909, 914-915 (1966); Sun Shipbuilding & Dry Dock Co. v. United States, 393 F.2d 807, 183 Ct.Cl. ___ (April 1968)), as can the bar to a judicial trial of issues arising "under the contract" (Stein Bros. Mfg. Co. v. United States, 337 F.2d 861, 862-863, 162 Ct. Cl. 802, 806-808 (1963); WPC Enterprises Inc. v. United States, 323 F.2d 874, 878, 163 Ct. Cl. 1, 8, (1963), and similar rulings), we see no sufficient reason why estoppel cannot be used against the defendant in circumstances such as we have here.11 Cf. Pacific Far East Line Inc. v. United States, 394 F.2d 989, 184 Ct.Cl. ___ (May 1968); Roberts v. United States, 357 F.2d 938, 946-947, 174 Ct. Cl. 940, 952-953 (1966). The defendant could waive the contractual requirement that this dispute be handled under the "disputes" procedure. We simply hold that by its conduct the defendant must be treated as having voluntarily waived this right and therefore as estopped to assert it now. Accordingly, the termination cause of action should be dealt with as a "breach" claim not arising "under" the contract.

Defendant's motion for partial summary judgment is denied and the case is remanded to the trial commissioner for further proceedings.