January 24, 1978
CONTRACT APPEALS BOARD
OFFICE OF GENERAL COUNSEL
U.S. GOVERNMENT PRINTING OFFICE
Appeal of DiLine Litho, Incorporated - C.A. 77-3
Findings of Fact
This appeal involves the propriety of an assessment of liquidated damages due to delay.
Appellant was party to a multiple award term contract, Program 1952-M, for the printing and binding
of books and pamphlets.1 On July 20, 1976, during the course of performance on this contract,
appellant was notified by Bell Industries Graphic Arts Supply Division (hereinafter Bell), on which
it depended for its supply of press plates, of significant changes in that company's purchasing
procedures. These resulted from the fact that the S.D. Warren Company (hereinafter Warren) which
manufactured graphic arts materials, distributed by Bell, had set up a new distribution system.
After July 1, 1976, orders placed were to be shipped from Warren's regional distribution centers to
a Warren dealer for redelivery, or direct to a Government user, rather than from dealer inventory.
Apparently, then, Bell would not have an inventory stock to supply appellant's needs.
As explained in a letter from Bell to appellant:
"[T]he Government stopped letting Warren dealers stock plates for GSA customers under their new GSA
contract. GS-OOS-34066 was issued July 1, 1976. On page 1, line 9 the contract states they will
deliver '30 days following receipt of order.' Distribution of the GSA Contract from S.D. Warren
was late so we had no notification of the no stocking dealers restriction. S.D. Warren has had
some difficulty catching up with all their direct shipments to GSA customers. It seems they did
not have enough plates manufactured or at their distribution points to take up the dealer stock.
"I might add Bob, that we experienced long delays in receiving large plates for other than GSA
customers during the same time period." (Emphasis added.) Letter from Garry Goodbar, Supply Sales
Manager, Bell Industries, to Robert L. Custer, President, DiLine Litho, October 18, 1976.
On July 21, 1977, appellant notified the San Francisco Regional Office of the Government Printing
Office concerning this information.
Bell had been appellant's sole supplier for press plates, which are essential to carry out the
printing operation. On July 20, 1976, the same day on which it had been notified of the new
distribution system, appellant issued its first purchase order to Warren for direct shipment of
plates. While waiting for the direct shipments to begin, it purchased from Bell the plates
remaining in Bell's inventory at the time of the change. These plates were purchased at regular
dealer prices rather than special prices established by Warren under the GSA contract for
commercial printers performing Federal contracts. The notification concerning the changes from
Warren to its dealers, including Bell, is dated June 25, 1976. There is no indication on the
record why Bell did not notify appellant until July 20, 1976, nearly a month later.
According to the GSA contract, Warren was to deliver its goods within 30 days of order. However,
during August, September and October 1976, many of the orders took longer. During this period,
appellant contacted local graphics dealers in search of substitute plates. The dealers were Smart
Supply Company, Griffin Brothcro, Robertson Porter and Forrest Chemical. Additionally, Bell
contacted various suppliers throughout the west coast in an effort to aid appellant. Apparently,
they met with little success. The local dealers had a few, if any, plates available. Bell was
able to supply some plates, which were purchased by appellant at regular dealer prices.
On September 20, 1976, appellant was informed by Warren that a shipment of plates ordered August
25, 1976, would be delayed. No reason for this delay is given on the record. Warren was unable to
supply a firm delivery date. Appellant contacted Mr. W.L. Gardner of the San Francisco office, the
contracting officer in this case, and explained that the plate shortage had become critical.
Gardner contacted other printers performing under Program 1952-M to see whether any of them were
having this problem; none were. The contracting officer, however, was unable to provide any more
definitive statement concerning this determination.
While the accounts of the two sides up to this point are relatively harmonious, they begin to
diverge here. The contracting officer maintains that the plates were available from McClellan Air
Force Base, as well as from commercial sources. He contends that Robert Custer, appellant's
president, stated to him verbally that the plates should be available at the same cost as through
the GSA contract, since its bid had been based on that source.
Appellant, on the other hand, vigorously denies that the pricing of the plates played any part in
its failure to obtain them. It concedes that other printers contacted by the contracting officer
about the shortage may well have had no problem, since appellant was the only printer with a 35" x
45" press with such a heavy workload when larger plates were not available. Of course, the fact
that other printers may have had no trouble obtaining plates at this time does not necessarily mean
that appellant did not have such a problem.
Concerning the availability of the plates at McClellan Air Force Base, appellant contends that the
contracting officer simply refused to initiate a transfer of these plates, without explanation. At
any rate, appellant states that the efficacy of the available plates would have been limited, since
they were probably not of the type which could be used in appellant's machinery.
The contracting officer vigorously denies refusing to aid appellant. Rather, he states that Mr.
Hubert, his assistant, informed Mr. Custer that he should directly contact the McClellan Printing
Plant Manager, Frank McKain, regarding these plates.
We do not accept the contention that the contracting officer callously refused to help appellant.
No explanation is given by appellant for this behavior, and it is difficult to surmise why the
Government officer charged with administration of a contract would jeopardize its timely
completion. At any rate, we do not attach great significance to this episode since, at best, only
a small quantity of plates was available, and there are indications that these would not have been
of any use to appellant.
On September 23, 1976, appellant met with the contracting officer and his assistant at the San
Francisco office. Appellant requested an extension of time on various print orders due to the
plate shortage. The contracting officer informed him that the alleged shortage was not an
excusable delay, but offered to reevaluate the situation if more evidence was furnished.
While appellant contends that a written request for extension of time was also made, no such
request appears on record. However, on November 23, 1976, in response to a phone call from the
contracting officer, appellant sent a letter explaining the late deliveries in the same manner that
has been recounted here.2
On December 9, 1976, the contracting officer sent a letter to appellant which stated, in pertinent
part:
"Your request for relief from liquidated damages due to a subcontractor's failure to furnish
materials on schedule has been reviewed. I have concluded that there is no basis for relief under
the terms of the contract. The evidence presented does not meet the requirements for relief from
damages as specified in 'Article 17. Delay in deliveries, Contract Terms No. 1,' which is part of
this contract." Letter from W.L. Gardner, Manager, San Francisco Regional Printing Procurement
Office to R. L. Custer, DiLine Litho, Government's Exhibit I.
This letter was acknowledged by appellant on December 20, 1976. At that time, appellant requested
the contracting officer to grant "a 30 day extension beyond the January 8 deadline for the written
letter of appeal." Letter from R.L. Custer to W.L. Gardner, Government's Exhibit L. The express
purpose for this request was to assemble additional information in support of the appeal. While
appellant received no reply to this letter, the contracting officer noted on the letter that the
extension was granted by telephone. Appellant denies this. However, if the extension had not been
granted, we do not understand why appellant, in light of its need for the extra time, would not
have followed up on its request. However, as discussed below, we do not consider this disagreement
determinative in the disposition of this appeal.
Other findings of fact are made as necessary during the course of the decision.
Decision
A. Timeliness of Appeal
According to the terms of the "Disputes" clause, U.S. Government Printing Office Contract Terms No.
1, Article 29:
"[t]he decision of the Contracting Officer shall be final and conclusive unless, within 30 days
from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the
Contracting Officer a written appeal addressed to the Public Printer."
Here, the contracting officer's final decision was dated December 9, 1976. On December 20, 1976,
well within 30 days, appellant replied to the letter, "requesting a 30 day extension beyond the
January 8, [1977] deadline,' which would be February 7, 1977. This sequence of events raises two
separate issues which we feel should be resolved before we turn to the merits of the complaint.
First, it is established law that the contracting officer may extend the contractor's time for
appeal if he does so before the expiration of the official 30-day period. Maney Aircraft Parts,
Inc., 72-1 BCA ¶ 9449 at 43887 (ASBCA 1972); Maitland Brothers, 66-1 BCA ¶ 5416 a: 25430 (ASBCA
1966). The extension of time granted here by Mr. Gardner was thus well within his power as a
contracting officer.
It is also now established that "[t]he 30-day requirement is contractual and not jurisdictional and
may be tolled or excused by the Board, in the exercise of its discretion, if the contractor has
good cause for failing to file his appeal within such time period." Maney Aircraft Parts, Inc. v.
United States, 202 Ct. Cl. 54, 479 F.2d 1350, 1353 (1973); Monroe M. Tapper and Associates v.
United States, 198 Ct. Cl. 72, 458 F.2d 66 (1972), appeal after remand, 206 Ct. Cl. 446, 514 F.2d
1003 (1973); S.W.H. Company, 72-2 BCA ¶ 9570 (DOT CAB 1972); see generally Kintisch, Discretion:
Should Boards of Contract Appeals Resist?, 33 Fed. B.J. 229 (1974), reprinted at 11 YPA 643
(1974). While the appellant's letter of December 20, 1976, mentions January 8th as his appeal
deadline, his request is for a 30-day extension beyond the appeal period. Counting from December
9, 1976, this period would expire on Saturday, January 8, 1977. In conformity with Rule 6, Federal
Rules of Civil Procedure, we would not compute the last day of such a period to include a Saturday
or Sunday. Thus, the proper expiration date for the original time for appeal was January 10, 1977.
The February 8, 1977, letter is within 30 days of this date. Additionally, we note that under
Article 29, the 30-day period commences to run from the date of receipt by the contractor of the
contracting officer's decision. We take notice of the fact that a decision" issued December 9,
1976, would not be received until at least one day later. Calculated from that date, the period
would end on January 10, 1977, as well. In view of this, and the fact that absolutely no prejudice
to the Government has occurred here, we find these circumstances proper to invoke our discretion
and assume the appeal to be timely. We hasten to add, however, that the Board does view the 30-day
limitation contained in Article 29 very seriously, and will not hesitate to dismiss an appeal on
that basis if extenuating circumstances are not present.
B. Excusable Delay
The resolution of this controversy is governed by Article 17, United States Government Printing
Office Contract Terms No. 1 (1970), which provides, in pertinent part:
"Delay in deliveries. - Penalties and/or damages shall not be applied against the contractor for
delays in delivery occasioned by unforeseeable causes beyond the control and without the fault or
negligence of the contractor, including, but not restricted to, acts of God, or the public enemy,
acts of the Government, fires, floods, epidemics, quarantine restrictions, strikes, freight
embargoes, unusually severe weather, and delays of a subcontractor due to such causes unless the
contracting officer shall determine that the services, materials, or supplies to be furnished under
the subcontract were obtainable from other sources in sufficient time to permit the contractor to
meet the required delivery schedule: Provided, That the contractor shall, within 10 calendar days
from the beginning of such delay, notify the contracting officer in writing of the cause of delay:
Provided further, That such notice to the contracting officer shall contain justification for such
delay."
The burden of proving that a delay is excusable under the terms of this clause is, of course, the
contractor's. e.g., Aargus Poly Bag, 76-2 BCA ¶ 11927 (GSBCA 1976); Free-Flow Packaging
Corporation, 75-1 BCA ¶13105 motion to reconsider denied, 75-1 BCA ¶ 11332. (GSBCA 1975).3
In the situation before us, we will assume that appellant was without fault or negligence with
reference to the cause of the delays concerning which it appeals.4 We find that the appellant made
reasonable efforts under the circumstances, considering its resources, to acquire substitute
materials. We do not feel that the contracting officer determined that plates were available from
other sources in sufficient time to allow appellant to meet its schedule except possibly from
McClellan Air Force Base. As we have noted, the plates possibly available at McClellan were of
questionable utility, and this was the only alternative source of supply to which the contracting
officer pointed. Otherwise, he seemed concerned only whether other contractors were having the
same sort of problems as appellant, rather than locating for appellant alternative sources of
supply.
We are also convinced that the clause proviso on notice has been met. As soon as appellant was
apprised of the change in the terms by which it obtained plates, it notified the contracting
officer. Later, when the plate shortage became critical, a written notice containing the
information prescribed by the contract language was furnished to the contracting officer.
The issue then becomes whether appellant's subcontractors were without fault or negligence with
respect to the delay. In construing Article 17, we are bound by the Court of Claim's reading of a
similar clause:
"The tenor of [this clause] suggests that the term 'subcontractors,' in the context in which it is
used, means those whom the principal contractor could control or for whom it was contractually
responsible, and not those concerning whose conduct and reliability a contractor could only
hopefully and helplessly speculate. . . . [T]he Government, as the author, must shoulder the burden
of seeing that the words employed communicate the proper notion, and if it was the Government's
intention that the clause was to include those not in privity of contract with plaintiff, it should
have specifically said so in the contract." Schweigert, Inc. v. United States, 181 Ct. Cl. 1184,
1189-90, 388 F.2d 697, 770-01 (1967) (citations omitted).
Since Article 17 of U.S. Government Printing Office Contract Terms No. 1 lacks such specificity, we
are constrained under Schweigert to hold that a contractor may be excused for subcontractor delay
if there is no negligence or fault on the part of the prime contractor, its first tier
subcontractor, or those in privity of contract with the prime. Reynolds Construction Company, 68-1
BCA ¶ 6756 (ASBCA 1967).5 Thus, a delay in delivery caused entirely by a second tier (or lower)
subcontractor may be an excusable delay for which it is improper to assess liquidated damages.
We must then look at the conduct of Bell, appellant's original first tier subcontractor. We
recognize that under the proper circumstances, delay caused by the failure of a subcontractor's
supplier can be excusable. See, e.g., Rusty's, Inc. 69-2 BCA ¶ 8065 (ASBCA 1969); Automated
Extruding & Packaging, Inc. 74-2 BCA ¶ 10949 (GSBCA 1974) motion to reconsider denied, 75-1 BCA ¶
11067 (GSBCA 1975). However, our examination of Bell's actions in the relevant time frame, as
recounted on the record, does not convince us that the instant case falls under the scope of these
decisions. We quote appellant's answer to Interrogatory 9 in its entirety for a description of
Bell's efforts during the plate shortage:
"Bell Industries, during the plate shortage period, worked closely with us in trying to obtain
plates from any source:
1. By contacting every cooperating dealer on the west coast for a possible purchase.
2. When some regular dealer's stock would come in Bell would sell the complete shipment to us,
putting off other customers.
3. Almost daily phone calls to S.D. Warren Co. trying to get straight answers as to where their
shipments were or when their shipments would arrive.
4. Contacting their customers who had presses of our sizes trying to purchase any extra plates
that may have been available."
The critical point, it seems to us, is what Bell failed to do rather than what it did. There is no
indication that Bell made any effort to purchase plates from other manufacturers, and there is no
assertion on the record that Warren was the sole source for the necessary types of press plates.
Perhaps even more important, the S.D. Warren announcement changing the distribution system is dated
June 25, 1976. See Appellant's Answers to Interrogatories, Enclosure 1. The distribution change
went into effect July 1, 1976. We would find it difficult to understand that Bell was not aware of
the change at the time it went into effect. Yet, Bell did not notify appellant until July 20,
1976, twenty days later. The record does not reveal any reason for this delay. While it cannot be
said for certain that an earlier notification would have aided the appellant in procuring plates
from other sources, it is incumbent upon the appellant to show that the extra time would not have
been any help.
C. Conclusion
We must conclude that Bell is not totally without fault or negligence concerning these delays. We
therefore hold that appellant has not met its burden of proving the delays in delivery were beyond
the fault or control of its first tier subcontractor. The appeal therefore must be denied.
This case was decided entirely upon written submissions. Because the record as originally
presented was insufficient, the Board issued interrogatories to both sides. Responses were
received, as well as supplements to those responses. The resulting record, which could have been
clearer, was sufficient to allow this decision. We feel that while this is a close case, appellant
has not met its burden, as we have discussed. The Board will, however, entertain a motion to
reconsider its decision if sufficient specific evidence is submitted within 30 days of receipt of
this opinion.
VINCENT T. McCARTHY
Chairman, Contract Appeals Board
SAMUEL SOOPPER
Member, Contract Appeals Board
DREW SPALDING
Member, Contract Appeals Board
1The late deliveries involved apparently extend through two different contracts, September 1,
1975 - August 31, 1976 and September 1, 1976 August 31, 1977. The contracts are identical in
all material respects and both incorporate U.S. Government Printing Office Contract Terms No. 1
(1970). We treat these as one contract for purposes of this appeal.
2The show cause order of November 23, 1976, Government's Exhibit G, apparently involved
different print orders from those on which liquidated damages were assessed. We do not
therefore consider this material in the decision of this appeal.
3Article 3, U.S. Government Printing Office Contract Terms No. 1 (1970) prohibits
subcontracting without the approval of the contracting officer. However, it defines
subcontracting so as to exclude the procurement of plates, involved here, and other printing
materials. Obviously, the use of the term "subcontractor" in Article 17 does not comport with
this prior article. We think the reasonable interpretation is to define the term subcontractor
and supplier interchangeably throughout the course of this decision.
4Appellant purchased supplies regularly from Bell prior to July 1, 1976.
Additionally, appellant kept an inventory of plate material of at lease 250 plates per large press
size, such as those involved in this case. Appellant thus reasonably assured itself of a
sufficient plate supply.
The contracting officer contends that the appellant was negligent in accepting orders under the
contract, which it did not have to do, when it was aware of the plate problem. While this may be
true, we find the record unclear as to the relevant dates and thus prefer to reach our decision on
different grounds. If appellant did indeed place orders when it was foreseeable that supplier
difficulties would cause a delay in performance, this delay would not be excusable.
The contracting officer additionally attacks appellant's use of the GSA price schedule. We do not
see this as relevant to the dispute before us.
5This result was changed by many Federal agencies through an alteration of the contract
language to specifically include subcontractors at any tier. See e.g.. 41 C.F.R. 1-8.708
(1976); compare Reynolds Construction Company, supra (applying Schweigert), with Douglas K.
Tracy, Inc., 76-1 BCA ¶11657 (GSBCA 1976) (applying current contract language).