U.S. Government Printing Office
Board of Contract Appeals
Panel 1-79
Drew Spalding, Chairman
Robert W. Armentrout, Member
Joe W. Sapp, Member
Appeal of Crystal-Date Watch Calendar Company
September 28, 1979
This appeal was filed on March 27, 1978, by Crystal-Date Watch
Calendar Company, 690 West Freemont Boulevard, Box 2277,
Sunnyvale, California 94087, to the assessment of liquidated
damages in the amount of $126.00 on GPO Jacket No. 759-385. The
decision herein was reached pursuant to the Board of Contract
Appeals rules of practice and procedure established in U.S.
Government Printing Office Instruction 110.10 dated June 6, 1979.
Course of Dealings
Based on the written submissions of the contracting officer and
appellant, the following sequence of dealings can be established.
On December 8, 1977, Mr. Charles Baker, an employee of the
Columbus Regional Printing Procurement Office of the Government
Printing Office (GPO), acting on behalf of the contracting
officer, solicited quotations from Mr. Arnold Buckendorf, Sales
Manager, of Crystal-Date Watch Calendar Company (appellant) for
the production of 7,000 watch calendars with an overall trim size
of 3-3/4" x 3-1/2" to be used for promotional advertising by an
army ROTC unit at Fort Knox, Kentucky (user agency). A critical
portion of this conversation is somewhat in dispute. The
contracting officer maintains that Mr. Baker asked for the
appellant's quotation and pointed out a change in the overall
size in layout from a previous GPO purchase from the appellant.
The contracting officer asserts that Mr. Baker asked Mr.
Buckendorf "specifically" whether the different layout size would
be a problem, and Mr. Buckendorf replied that there was "no
problem." (Contracting Officer's statement, dated March 28,
1978.)
The appellant has submitted the statement of Mr. Buckendorf,
wherein he states in part:
"During this phone call at no time did I promise on behalf of
[appellant] to supply any calendars other than our standard size
calendar with custom imprint. The copy for the custom imprint
was to be in the GPO specification.
"During the phone call, I called to Mr. Baker's attention that we
had supplied these calendars previously and that if the imprint
copy were to be changed, this would pose 'no problem'."
(Statement dated April 20, 1978.) (Emphasis in original.) 1
On the same day as the telephone solicitation, December 8, 1977,
Mr. Buckendorf wrote to Mr. Baker as follows:
"Re: Your Jacket Number 759-385
7,000 Crystal-Date watch calendars same size as previous order.
January 1978 calendar starts, black calendars with red imprint
per copy to be submitted.
7,000 $0.15 each (delivered)
Artwork to be submitted by December 12, 1977. Shipping date:
December 27, 1977." (Appeal File (AF), Exh. 3(b).)
Purchase Order No. H1361 was executed at the Columbus Office
dated December 9, 1977. The "Description" portion of this
purchase order reads:
"Labels, 'Watch Calendar' . . . "
. . .
In strict accordance with your telephone quotation Dated December
8, and our specifications." (AF, Tab 3(a).)
The specifications and a proof copy of the layout were enclosed
with the purchase order which was received by appellant on
December 12, 1977. The specifications indicated that the GPO
would furnish the contractor with one piece of camera copy by
December 12, 1977, that no proof copy was required to be sent to
the Columbus office by appellant and that in accepting the
contract, the contractor specifically agreed to all the terms and
conditions of Contract Terms No. 1 and GPO Form 2459D "Special
Terms and Conditions," revised December 1, 1971.
On or after December 12, 1977, appellant executed an
"Acknowledgement" indicating that GPO Jacket No. 759-385 had been
received on December 12, 1977. Besides showing the quantity
ordered (7,000), the item is described as "Crystal-Date Watch
Calendars (Custom)," at a unit price of $0.15 per item and that a
"Proof" would be supplied at no charge to the GPO. The section
of this "Acknowledgement" entitled "Customer's Advertising
Imprint" reads in part as follows:
"compliments of . . . ARMY ROTC (logo)
(etc. as per copy submitted)."
(AF, Tab 3(c).)
The Appellant has indicated in its response to a Board inquiry
that this "Acknowledgement" was included with a letter to the
contracting officer of December 14, 1977. Appellant explained
that when the GPO purchase order arrived, it realized the
specifications called for a product different from that which it
had offered. As a result, appellant prepared a proof copy
showing the layout it could provide and transmitted this in the
letter dated December 14, 1977, to Mr. Baker from Mr. Robert G.
Merrick, President of the appellant company. (AF, Tab 8.) This
letter, received by the Columbus office of the GPO on December
16, 1977, read in relevant part as follows:
"Enclosed is a copy of a proof showing our layout of the color
imprint.
"By copy of this letter, I am transmitting a second copy of this
proof to Fort Knox, Kentucky.
"It would be appreciated very much if either your office or Fort
Knox would approve this copy by telephone so that we could go
into production and meet the shipping date of December 27, 1977.
We would have to have word from you no later than December 19th
in order to avoid delays." (AF, Tab 4.)
On or about December 20, the Columbus office contacted the user
agency and was informed that they wanted the calendars to be
produced as per the specifications. As of that date, the user
agency still had not received the carbon copy of the December
14th letter from Mr. Merrick to Mr. Baker with the proof copy
enclosed. On approximately December 22, Mr. Merrick called the
contracting officer to find out whether the proofs that they had
submitted were satisfactory. According to the contracting
officer's telephone log the appellant refused to print until the
Columbus office gave its approval; however, appellant would
expedite the order on receipt of the "ok to print." (AF, Tab 5.)
On December 29, 1977, the contracting officer had another
telephone conversation with Mr. Merrick in which they discussed
the contract. The contracting officer's telephone log shows that
Mr. Merrick indicated that the appellant could provide either
watch calendars in accordance with the specifications or from
off-the-shelf. (AF, Tab 5.) The contracting officer adds that
the appellant indicated the specifications design would take
considerably more time to produce than the off-the-shelf item.
(Contracting Officer's Statement dated March 28, 1978, p. 2.)
On December 30, 1977, the user agency informed the Columbus
office that they had received the proofs from the appellant, and
although they were not what they had wanted, due to their need
for the calendars, they would accept delivery with the layout
offered by appellant. On that same day, the contracting officer
advised the appellant to print using the format of the proofs it
had submitted. (AF, Tab 5.) By letter dated December 30, 1977,
the contracting officer confirmed this telephone conversation
with the appellant stating in part:
"The user will accept the watch calendar labels per the proofs
submitted by your firm owing to the need for the items. Please
expedite shipment.
"We wish to caution you relative to telephone quotations to this
office. All bids must be in strict accordance with our
specifications. Should you be awarded an order in the future
that is not strictly in accordance with your understanding of the
requirements quoted, you must notify us immediately." (AF, Tab
6.)
The contracting officer did not indicate either in his phone
conversation or in his letter that liquidated damages would be
assessed against appellant for each day that delivery was made
after the original delivery date of December 27. (AF, Tab 6, Tab
8, and response of contracting officer to Board's questions,
dated July 24, 1978). In addition, no new delivery date was
established at this time by the contracting officer.
Appellant proceeded to produce the items in accordance with this
new arrangement and made final delivery on January 13, 1978.
Appellant subsequently submitted an invoice for the delivered
items. The contracting officer, in turn, authorized a deduction
for liquidated damages of one percent for each working day the
delivery was late after December 27, for a total deduction of
$126.00 in accordance with the liquidated damages provisions of
GPO Form 2459D, which was referenced in the original
specifications. Appellant objected to this deduction in its
letter dated March 10, 1978 (AF, Tab 8), and the contracting
officer responded by a letter dated March 14, 1978, which states
in part:
"Our order called for a custom label in accordance with
specifications initially furnished and bid by telephone
subsequently furnished in our written purchase order H1361. Your
Acknowledgement of our order (copy attached) specified 'custom'
watch calendar and imprint 'as per copy submitted' by the
Government.
"Your firm did not proceed diligently with performance of the
contract per specifications. Instead, your firm submitted a
proof offering a 'stock' item with imprints. Proofs were not
requested and the alternate design offerred [sic] was not in
accordance with our specifications. Delays occurred as a result
of this unilateral action by your firm.
. . .
"We wish to point out that acceptance by the Government of the
product is not to be construed as a waiver of any rights the
Government may have under contract.
"In order to be excused under the provisions of Contract Terms
No. 1, Article 17 - Delay in Deliveries, you must demonstrate
that the delay was neither foreseeable nor caused by any fault or
negligence of either your firm or your firm's supplier.
"We are unable to find from the available information on a basis
for entitlement of a delivery schedule extension for excusable
delay. . . ." (AF, Tab 9.)
This letter additionally indicated that this was a final decision
of the contracting officer taken in accordance with Article 29 of
Contract Terms No. 1, to which appellant could appeal within the
30 days after receipt of the letter.
In a letter dated March 20, 1978, and received in the Columbus
office of the GPO on March 27, 1978, appellant appealed the
refusal of the contracting officer to restore liquidated damages.
The appellant's Mr. Merrick stated in part:
". . . apparently you [Contracting Officer] are trying to show
that we acknowledged a totally custom watch calendar order, when
the fact of the matter is that every order we produce for our
customers is acknowledged as a 'custom' order to the extent its
advertising imprint is custom. We did not take exception to the
imprint submitted, only to the totally different layout called
for in your specifications." (AF, Tab .10.) (Emphasis in
original.)
With these facts as background, we turn now to a discussion and
decision on this appeal.
Discussion
The issues in this case, while not necessarily simple to decide,
are simply stated: At what point during the course of dealings
between these parties was there a binding contract, if one was
created, and what were the terms?
The Board must first consider whether we have the authority to
decide the question of whether there was in fact a contract in
this case. We conclude that this Board does have such authority
and can proceed to analyze the facts to arrive at a conclusion on
the issues. See, Vitro Corporation of America, ASBCA No. 14448,
72-1 BCA ¶ 9287, at page 43,027 and cases cited therein.
In the normal course of Government contracting, a contractor will
make a written offer to the Government which is thereafter
accepted in writing by the contracting officer. In the instant
case, we have a markedly different situation. As we view the
facts, the phone call on December 8, 1977, from Mr. Baker to Mr.
Buckendorf, and the purchase order which followed the phone call
dated December 9, 1977, were in the form of offers to the
contractor to produce the watch calendars with a certain
prescribed overall dimension. See, Ordnance Parts & Engineering
Co., ASBCA No. 12820, 68-1 BCA ¶ 6870. The question then becomes
whether there was an acceptance by the appellant, resulting in a
binding contract. This, in turn, depends upon an expression of
the intent to accept the offer of the Government. See generally,
Nash & Cibinic, Federal Procurement Law, Vol 1, Contract
Formation, 3rd Edition (1977), pages 108 - 124.
From the facts, it is clear that the Government's offer was not
accepted unequivocally. Rather, by letter dated December 14, to
Mr. Baker from Mr. Merrick, the appellant rejected the proposed
offer by making a counter offer in terms of what it could produce
within the available time. See, Aero Corp., ASBCA No. 8178, 1963
BCA ¶ 3665. At this point no contract had been formed and there
was no meeting of the minds.
The appellant presented the contracting officer with an option.
The Government could either choose the off-the-shelf calendars
and have them delivered timely, or it could insist upon the
dimensions required in the original specifications with an
attendant delay in the delivery date. The contracting officer,
after consulting with the user agency, communicated another offer
to produce the watch calendars on December 30, 1977. As with the
earlier offer, there was no requirement that the appellant accept
the offer in writing, and we believe that this is characteristic
of an offer to enter into a unilateral contract which would be
accepted by performance. Klass Engineering, lnc., ASBCA No.
22052, 78-2 BCA ¶ 13235. As a result, not only was there no
contract until after the original delivery date, there was no new
delivery date established. The contractor accepted this offer by
performing in accordance with the newly reached meeting of the
minds and completed delivery on January 13, 1978.
It is clearly inappropriate to assess liquidated damages based
upon a delivery date which precedes the formation of a contract.
In addition, since no new delivery date was established by the
contracting officer, and the contractor appears to have complied
in a seasonable manner with the December 30, offer, we can see no
basis upon which the contracting officer could have assessed
liquidated damages, even assuming the new contract incorporated
the liquidated damages provisions of the earlier offer.
Decision
We hold in favor of the appellant and sustain its appeal. The
matter is remanded to the contracting officer for appropriate
action in accordance with this decision.
_______________
1 At the request of the Board, the appellant submitted a copy of
Mr. Buckendorf's notes taken during the conversation with Mr.
Baker. These notes tend to corroborate Mr. Buckendorf's
statement, since they simply contain the notation "Re-order."
Also, there is no indication of the total layout size of the
product which the contracting officer claimed Mr. Baker
specifically discussed with Mr. Buckendorf.