UNITED STATES GOVERNMENT PRINTING OFFICE BOARD OF CONTRACT APPEALS Appeal of Bay Ridge Press Filed: July 22, 1983 Decision: September 15, 1983 Panel 4-82 THOMAS O. MAGNETTI Chairman JAMES A. HICKEY MORRIS J. MERVIS Members Preliminary Statement On January 12, 1983, this panel of the U.S. Government Printing Office (GPO) Board of Contract Appeals issued a decision in favor of an appeal submitted by Bay Ridge Press (hereafter the contractor). The contract to produce printed material which the contractor had with the GPO had been terminated for default because of the contractor's alleged poor performance and its alleged refusal to accept work under the contract. The default was appealed and this panel ruled that the contractor had cured its failure to make progress. As there were no other grounds for finding the contractor in default, the panel found that the termination was improper. The default termination was then converted to a termination for convenience and remanded to the Contracting Officer to take appropriate action in accordance with the contract procedures set out in Articles 2-17 and 2-18(e) of Contract Terms No. 1, GPO Publication 310.2, revised October 1, 1980. Exhibit 2 of the Appeal File. This document was incorporated by reference into the Specifications of the contract and remains binding on this panel for purposes of this action. Exhibit 1. The specifications were incorporated by reference into the Purchase Order for this contract. Exhibit 4. Decision The substance of the instant dispute arises because of the failure of the contractor and the Contracting Officer to agree to the compensation that is due to the contractor under the termination for convenience clause of the contract. On July 22, 1983, the contractor filed this appeal with the panel, alleging that the Contracting Officer's rejection of a claim for $75,000, that the contractor had described as a "margin of profit had [the] contract been completed" was improper. After receipt of this appeal, the panel requested both parties supply it with any documentation or written argument relating to the contractor's claim. Both parties took the opportunity to respond. The record indicates that this $75,000 claim relates solely to the contractor's demand to be paid for profits lost because the Government terminated the contract. A contractor's recovery under a termination for convenience is based upon its incurred costs; those costs being the unreimbursed costs of performance. G.L.Christian & Associates v. United States, 160 Ct.Cl. 1, 11, 15-17 (1963), cert. denied. 375 U.S. 954 (1963). This right to recovery only for work actually performed is set out in Article 2-17 of the Contract Terms No. 1, supra; the applicable portion of which reads as follows: (d) If the contractor and the Contracting Officer fail to agree as provided in paragraph (c) upon the whole amount to be paid to the contractor by reason of the termination of work pursuant to this article, the Contracting Officer shall, subject to any review required by the GPO's regulations in effect as of the date of execution of the contract, determine the amount, if any, due to the contractor by reason of the termination and shall pay to the contractor the amounts determined as follows: (1) For completed articles accepted by the Government . . . and not previously paid for, a sum equivalent to the aggregate price for such articles computed in accordance with the price(s) specified in the contract, appropriately adjusted for any saving of freight or other charges; (2) The total of - (i) The costs incurred in the performance of the work terminated; (ii) The cost of settling and paying claims arising out of the termination of work under subcontracts or orders as provided in (b)(5) of this article, which are properly chargeable to the terminated portion of the contract . . .; and (iii)A sum, as profit on (i) above, determined by the Contracting Officer to be fair and reasonable: Provided, however, That if it appears that the contractor would have sustained a loss on the entire contract had it been completed, no profit shall be included or allowed under this subparagraph (iii) and an appropriate adjustment shall be made reducing the amount of the settlement to reflect the indicated rate of loss. (Emphasis added.) This formula for recovery must be used in cases where the contractor was defaulted for termination and later that termination was converted to a termination for convenience. See Article 2-18(e). Since we are dealing with such a conversion, the contractor can only be compensated for work actually performed and any profit that can be ascribed to that work. Profit anticipated over the term of the contract and now lost because of the shortened term is not recoverable. Therefore, the contractor's appeal on its claim for its anticipated profits is denied in its entirety. 1/ _______________ 1/ The contractor has submitted a document identified as Claim Form With Detailed Explanations. This document presents a claim for compensation different from the claim involved in this appeal. As it is necessary for a Contracting Officer to determine the validity of any claim before the filing of an appeal before the Board of Contract Appeals, this panel does not intend to address the contents of this document. See Article 2-17, supra.