U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, D.C. 20401
In the Matter of )
)
The Appeal of )
)
BIG RED ENTERPRISES ) Docket No. GPO BCA 07-93
Jacket No. 651-368 )
Purchase Order H-7187 )
DECISION AND ORDER
By letter dated February 25, 1993, Big Red Enterprises (Appellant
or Contractor), 329 North 2nd Street, Purcell, Oklahoma 73080,1
filed a timely appeal from the February 1, 1993, final decision
of Contracting Officer David G. Sever of the U.S. Government
Printing Office's (Respondent or GPO or Government) Columbus
Regional Printing Procurement Office (CRPPO), 1335 Dublin Road,
Suite 112-B, Columbus, Ohio 43215-7034, terminating the
Appellant's contract identified as Jacket No. 651-368, Purchase
Order H-7187, for default "for failure to produce and acceptable
product (hickies/spots, skewness, loss of ink density, loss of
halftone detail, etc.)," and for failure to "correct the defects
as directed by the December 14, 1992[,] 'Cure Notice-Reprint'"
(R4 File, Tab Q).2 Board Rules, Rules 1(a) and 2. Thereafter,
on April 24, 1993, the Appellant filed a Complaint with the
Board, in which it also protested the Respondent's assessment of
excess reprocurement costs against its account (R4 File, Tabs R
and S).3 Board Rules, Rule 6(a). Subsequently, on August 6,
1993, the Board conducted a presubmission conference to discuss
the issues in the appeal, at which it was determined that the
record was incomplete. See RPTC, at 7. Therefore, the parties
were directed to obtain and submit to the Board by August 17,
1993, additional evidence in the form of affidavits and any other
relevant documents.4 See RPTC, at 7-8. In addition, the Board
gave the parties until September 10, 1993, to furnish written
statements or briefs with respect to their positions of the two
issues involved in the appeal. See RPTC, at 8.
Following the presubmission conference there were numerous delays
in augmenting the record, stemming from, among other things, the
need of both parties for enlargements of time in which to provide
the documents and affidavits, and the Board's adjusting the
briefing dates in light of their extension requests. See Order
Enlarging Time to Submit Documents Under the Small Claims
(Expedited) Procedure, dated August 30, 1993, at fn. 1.
Consequently, the Appellant's "Final Brief" in this case
(hereinafter referred to as App. Brf.) was not submitted until
February 16, 1994. Furthermore, because an administrative
oversight, the Board did not initially settle the record until
July 15, 1994. See Order Settling the Record, dated July 15,
1994, at 2. Thereafter, when the Board started to prepare its
decision in this appeal, it noticed that the record was
incomplete with respect to the Contractor's liability for excess
reprocurement costs-a major issue in the case. Accordingly, the
Board exercised its authority under Rule 13(b) of its procedures
and reopened the record to afford both parties an opportunity to
submit additional evidence and argument on that question. See
Order Reopening the Record and Directing the Parties to Submit
Additional Evidence, February 20, 1996, at 5-6.
On March 21, 1996, the Respondent submitted its additional
arguments and evidence in support of its position that the
Government was entitled to excess reprocurement costs. See
Respondent's Submission on Reprocurement, dated March 21, 1996
(hereinafter cited as R. Sub.). Attached to GPO's submission
were copies of the following documents: (1) the reprocurement
request from the Defense Printing Service (DPS); (2) the
reprocurement solicitation (Jacket No. 751-771); (3) the bid list
(Jacket No. 751-771); (4) the abstract of quotes (Jacket No.
751-771); (5) the Government's estimates; (6) the reprocurement
contract (Jacket No. 751-771); (7) the original bid list (Jacket
No. 651-368); (8) the original bid abstract (Jacket No. 651-368);
and (9) the declaration of Philip L. Jones, Chief, Examination
Billing Branch, Procurement Accounting Division, Financial
Management Services, U.S. Government Printing Office (hereinafter
referred to as Tabs 1-9). Thereafter, on April 9, 1996, the
Contractor filed with the Board a document entitled "Appellant's
Response on Reprocurement Cost and Contract Rebid" (hereinafter
cited as App. R. Repro.). Board Rules, Rules 11 and 13. With
the receipt of the Respondent's Submission on Reprocurement and
the "Appellant's Response on Reprocurement Cost and Contract
Rebid," the record was finally settled, and the case was ripe for
decision. See Order Settling the Record, dated July 3, 1996.
For the reasons which follow, the decision of the Contracting
Officer defaulting the contract and assessing excess
reprocurement costs is hereby AFFIRMED, and the appeal is
DENIED.5
I. FINDINGS OF FACT6
1. On October 14, 1992, the CRPPO awarded a small purchase
contract (Purchase Order H-7187, Jacket No. 651-368) to the
Appellant for the production of 50 copies of an 836 page book
plus cover entitled "History of ASD-1991" for the DPS at a
contract price of $3,338.00 (R4 File, Tab A).7
2. Among other things, the contract specifications required: (a)
the covers were to be printed on canary yellow vellum finish
cover paper (JCP L-20); (b) the text of the book was to be
printed in black ink on white offset book paper with a minimum
50% waste paper content (JCP A-60); (c) the trim size of the book
was 81/2 x 11"; (d) the book was be perfect bound on the 11"
side; and (e) the wrap-around covers were to be trimmed flush and
glued on (R4 File, Tab A, at 1). Additionally, the
specifications provided, in pertinent part:
DESCRIPTION: GPO imprint must appear per GPO Pub. 310.2 Contract
Terms.8 Cover 1 prints, Covers 2, 3 & 4 blank. Center spine
image all sides. 834 text pages print, 2 blank pages. 36 half
tones print throughout text as follows: 18 square-finish
halftones (with finished sizes: two at 34-35 sq. ins., two at 61
sq. ins., and fourteen in the 50-52 sq. in. range) on the same
number of pages. Balance of 18 are square-finish portrait
halftones printing on the same number of pages consisting of one
large portrait and one small portrait for each of nine
photoprints. The large portrait halftones range in size from 48
to 58 sq. ins., the small portrait halftones range in size from 6
to 9 sq. ins. Shoot/crop all furnished color/B & W photoprints
as marked, 133-line or finer. The 27 photoprints are keyed for
page position and range in size and type as follows: (Note: All
photoprint & halftone sizes are approximate)
Black & White photoprints Two 5 x 6"
Six 5 x 7"
Six 8 x 10"
Full Color photoprints Thirteen 8 x 10"
See R4 File, Tab A, at 2. The Purchase Order also indicated that
the finished product had to meet the Quality Level 3 of standards
of GPO's Quality Assurance Through Attributes Program
(hereinafter referred to as QATAP) (R4 File, Tab A, at 1).9 In
that regard, the job was subject to the following quality
standards:
Quality Assurance Standards: The following standards shall apply
to these specifications:
(a) Non-destructive Tests - General Inspection Level I.
(b) Destructive Tests - Special Inspection Level S-2.
Specified Standards.--The specified standards for the attributes
requiring them shall be:
Attribute Specified Standard
P-7. Type Quality and Uniformity Camera Copy
P-8. Halftone Match (Single and Black & White/
double Impression) Full Color Photoprints
REJECTION: Items which fail to meet the quality requirements of
these specifications shall be processed pursuant to GPO Pub.
310.1.
See R4 File, Tab A, at 2. As for Government-furnished material
(hereinafter referred to as GFM), the Purchase Order said the
Appellant would receive camera copy for the covers, spine and
text, and 27 photoprints and page sequence sheets, which would be
available for pick up at the CRPPO on October 15, 1992 (R4 File,
Tab A, at 1). Finally, the specifications provided that the
finished product was to be delivered, along with the GFM and two
(2) printed samples, to the DPS facility located at Building 20,
Area B, Room 101, Wright-Patterson AFB, Ohio 45433-6503, by
October 30, 1992. (R4 File, Tab A, at 1).
3. The record shows that on October 29, 1992, the day before the
books were due at Wright-Patterson AFB, David Kroth, the
Appellant's Owner/President, telephoned Michael Sommer, the CRPPO
Compliance Officer for the contract, and told him that the books
would not be delivered on time because his binding subcontractor
could not perfect bind them; i.e., the thickness of the books
exceeded the bindery equipment's capability (R4 File, Tab B;
Notice of Filing, Sommer Declaration, ¶ 4). When Sommer
responded that it was the Contractor's responsibility to bind the
books in accordance with the contract, or find a bindery that
could, and advised him that failure to delivery the completed job
by October 30, 1992, might result in the contract being
terminated for default, Kroth said that he would try to find
another subcontractor in Dallas, Texas to complete the order (R4
File, Tab B; Notice of Filing, Sommer Declaration, ¶ 4).
4. Later that day, Kroth called Sommer again, and requested an
extension of the contract's delivery date to November 6, 1992 in
consideration for a $100.00 reduction in the contract price (R4
File, Tab B; Notice of Filing, Sommer Declaration, ¶ 5). In
reply, Sommer said, in effect, that he had no authority to grant
the contract extension, since that was the prerogative of the
Contracting Officer and the DPS, and that the delivery date of
October 30, 1992, was firm unless the Appellant heard otherwise
(R4 File, Tab B; Notice of Filing, Sommer Declaration, ¶ 5).
5. After this conversation with Kroth, Sommer telephoned Michael
E. Gallagher, the DPS Printing Specialist for the contract, to
inform him of the delivery delay caused by the Contractor's
bindery problems, and asked him to find out if the customer-
agency was agreeable to a new delivery date of November 6, 1992
(R4 File, Tab B; Notice of Filing, Gallagher Declaration, ¶ 6).
On October 30, 1992, Les Mosher of ASD's Graphics Department,
notified Gallagher that the new delivery date of November 6,
1992, was approved (R4 File, Tab B; Notice of Filing, Gallagher
Declaration, ¶ 6).
6. Although the Appellant notified the CRPPO that the 50 books
had been shipped to Wright-Patterson AFB on November 5, 1992, the
record indicates that they were not received until November 13,
1992 (R4 File, Tab D; Notice of Filing, Sommer Declaration, ¶ 7,
Gallagher Declaration, ¶ 6).10 However, the record also tells us
that the originals and negatives were not included with the
shipment, as called for by the contract (R4 File, Tab E; Notice
of Filing, Gallagher Declaration,¶ 6).11 Although the delivery
was made seven (7) days late under the revised contractual due
date, timeliness is not an issue in this case. See, RPTC, at 3.
7. When they were delivered, ASD inspected the books and
discovered numerous quality defects (R4 File, Tab E; Notice of
Filing, Gallagher Declaration, ¶ 6). Specifically, the customer-
agency found the following discrepancies: (a) hickies or spots;
(b) image skewness (text copy was not aligned on the pages); (c)
the GPO imprint was missing; and (d) unmatching halftone
densities-an overall problem, since it appears the entire book
(halftones and text) was printed too light (R4 File, Tab E;
Notice of Filing, Gallagher Declaration, ¶ 6). Accordingly,
Mosher notified Gallagher of the quality problems, and said the
books were being rejected because they did not meet the contract
specifications (Notice of Filing, Gallagher Declaration, ¶ 6).
Gallagher, in turn, prepared a "Notice of Quality Defects" and
submitted it to the CRPPO, along with eight (8) random samples,
and asked the Respondent to have the entire order reprinted (R4
File, Tab E; Notice of Filing, Sommer Declaration, ¶ 8).
8. DPS' "Notice of Quality Defects" was received by the CRPPO on
November 18, 1992 Notice of Filing, Sommer Declaration, ¶ 8).
That same day, Contracting Officer Robert G. Seibert sent a
letter entitled "Suspect Letter" to the Appellant, advising it
that the books it had delivered were deemed "possibly not
acceptable" by the customer-agency (R4 File, Tab F). The letter
also said, in pertinent part:
Preliminary examination of the product indicates, but may not be
limited to, the following discrepancies: P-1. Hickies and Spots;
P-5. Text and Illustration Image Position; P-8. Halftone Match;
Camera copy and photos not returned to the use agency.
An intensive examination will be made by the Government Printing
Office. If our examination reveals that the deviation(s)
reported by the user agency-or any additional deviation(s)
confirmed during the inspection-would affect the acceptance of
this product, corrective action may be necessary. Such action
may include, but not be limited to: (1) have the defective
products replaced by your firm[;] (2) have the defect(s)
corrected[;] (3) accept the products with an appropriate
reduction in cost[;] (4) termination of the purchase order for
default[;] or (5) appropriate corrective action as determined by
the contracting officer.
See R4 File, Tab F.
9. On November 24, 1992, Sommer performed an initial quality
inspection on the eight (8) random samples submitted by the DPS
(R4 File, Tab I; Notice of Filing, Sommer Declaration, ¶ 9). His
inspection confirmed DPS' complaint about the books, especially
the noticeable variation in printing ink density, the overall
loss of halftone detail, the presence of hickies and spots within
the halftones, inconsistent margins, image skewness, and a
missing GPO imprint line on the last printed text page (R4 File,
Tab I; Notice of Filing, Sommer Declaration, ¶¶ 9, 20). Thus,
following the QATAP guidelines, Sommer found the product
deficient with respect to printing attributes P-7 (type quality
and uniformity) because of ink density variation, and P-8
(halftone match) for loss of detail/contrast and failure to
maintain dot structure, and assessed eight (8) major demerits
each for those quality defects (R4 File, Tab I; Notice of Filing,
Sommer Declaration, ¶¶ 9, 20). Accordingly, he recommended that
the product be rejected and reprinted by the Appellant (R4 File,
Tab I; Notice of Filing, Sommer Declaration, ¶ 20). However,
Sommer also suggested that the Contractor be given an extra
workweek to complete the job, because it was almost the
Christmas/New Year's holidays, and the "subcontractor/bindery may
be unable to schedule work during [the holiday period]" (R4 File,
Tab I). On December 14, 1992, the Contracting Officer concurred
in the recommended action (R4 File, Tab I).
10. In the meantime, on December 4, 1993, Sommer spoke to Kroth
and told him that the books had failed GPO's quality inspection
because of their poor halftone reproduction an ink density
variation (R4 File, Tab G; Notice of Filing, Sommer Declaration,
¶ 10). Sommer also said that the Appellant basically had two
options: (a) reprint the entire publication in accordance with
GPO Quality Level 3 requirements, and in the same amount of time
(11 workdays); (b) or be defaulted and assessed any excess costs
of reprocurement (R4 File, Tab G; Notice of Filing, Sommer
Declaration, ¶ 10). In response, Kroth stated that he would
consider these options, and advise GPO by December 7, 1993, if he
would reprint the books (R4 File, Tab G; Notice of Filing, Sommer
Declaration, ¶ 10).
11. On December 7, 1992, Kroth telephoned Sommer and told him
that the Appellant would reprint the books (R4 File, Tab H;
Notice of Filing, Sommer Declaration, ¶ 11). Accordingly, he
asked Sommer to make arrangements for the Contractor to pick up
the rejected books, GFM and the film negatives (R4 File, Tab H;
Notice of Filing, Sommer Declaration, ¶ 11). However, Sommer
informed Kroth that as of that date the GFM and the negatives,
which the Appellant said it had returned, had still not been
received by the customer-agency (R4 File, Tab H; Notice of
Filing, Sommer Declaration, ¶ 11). In response, the Contractor
stated that it would provide proof from its carrier, UPS, that it
had, in fact, returned the missing GFM and negatives (R4 File,
Tab H, Notice of Filing, Sommer Declaration, ¶ 11).
12. The following day, December 8, 1992, Sommer received a
telephone call from Ms. Krezeal Olinger, a Printing Assistant at
DPS, informing him that UPS had just delivered two (2) boxes to
the customer-agency, one with the GFM and photographs and the
other containing the Appellant's film negatives (R4 File, Tab H;
Notice of Filing, Sommer Declaration, ¶ 12, Gallagher
Declaration, ¶ 6). Olinger said that she would hold the film
negatives at the DPS for the Appellant to pick up along with the
rejected books, but would send the GFM (camera copy and
photographs) to the CRPPO pursuant to the "Specified Standards"
provisions regarding QATAP in the contract (R4 File, Tabs A and
H; Notice of Filing, Sommer Declaration, ¶ 12, Gallagher
Declaration, ¶ 6). Sommer received the GFM on December 10, 1992
(Notice of Filing, Sommer Declaration, ¶ 13).
13. On December 14, 1992, Contracting Officer Sever sent a
document entitled "Cure Notice Reprint" (Cure Notice), to the
Appellant (R4 File, Tab J). The Cure Notice stated, in pertinent
part:
You are notified that the [GPO] considers your failure to produce
an acceptable product . . . a condition that is endangering
performance of the contract in accordance with its terms.
Therefore, unless such condition is cured within the time
specified the Government may terminate the contract for default
pursuant to the paragraph entitled "Default", U.S. GPO Contract
Terms (Pub. 310.2).
FAILURE: The 50 books delivered to the [DPS], Wright-Patterson
AFB, [Ohio] were not in conformance with the specifications due
to various printing defects. The defects included the following
QATAP attributes (GPO Pub. 310.1): P-1. HICKIES AND SPOTS-
throughout all halftones; P-5. TEXT IMAGE POSITION-Image
skewness; P-7. TYPE QUALITY AND UNIFORMITY-loss of ink density
(ink density washed out), variation in ink density throughout the
books (i.e., light and dark type); and P-8. HALFTONE MATCH-loss
of ink density/contrast/detail, and visible variation in density;
also, the require GPO imprint is missing from each book. The
entire quantity is hereby rejected and is to be reprinted.
Your firm is to correct the defects by reprinting the 50 books
and exercising tight quality control procedures to insure that
the product meets all specification requirements and Quality
Level 3 attributes. The rejected books, along with the film
negatives, are to be picked up from the [DPS facility at the]
delivery address on the purchase order/specifications. Contact
Mr. Mike Gallagher at (513) 255-2038 for the purposes of
establishing the date and method of transportation to be used to
pick up the rejected product and film negatives. The original
Government furnished camera copy/photographs are available for
pick-up at the [CRPPO]; notify this office at (614) 488-4505 if
your firm desires the return of these materials.
All of the above is to be accomplished at no further expense to
the Government. Any failure to pick up the rejected products may
be cause for the Government to dispose of, and charge all costs
to the contract.
Cure Time: The printing and delivery of the reprinted 50 books,
at the required destination, shall be completed by January 11,
1993.
See R4 File, Tab J. See also Notice of Filing, Sommer
Declaration, ¶ 14.
14. On January 5, 1993, John Bryan, Procurement Assistant in the
CRPPO's Compliance Section, informed the DPS that the delivery
date for the reprint was January 11, 1993 (Notice of Filing,
Gallagher Declaration, ¶ 6). However, the Appellant did not
deliver the reprinted books to DPS by that date.
15. On January 21, 1993, Gallagher telephoned ASD and spoke to
both Mosher (Graphics Office), as well an employee named Corrine
Erickson (History Office), who told him that the reprinted books
had not been delivered (Notice of Filing, Gallagher Declaration,
¶ 6). Consequently, when Bryan called later that same day,
Gallagher informed him that the reprints never arrived (Notice of
Filing, Sommer Declaration, ¶ 15, Gallagher Declaration, ¶ 6).
16. After his conversation with Gallagher, Bryan immediately
telephoned the Appellant to inquire about the reprint status of
the rejected books (R4 File, Tab K; Notice of Filing, Sommer
Declaration, ¶ 15, Bryan Declaration, ¶ 3). Kroth told him that
the negatives and rejected books had not been made available to
the Contractor, even though it had twice sent its carrier, UPS,
to the DPS' Wright-Patterson AFB facility (R4 File, Tab K; Notice
of Filing, Bryan Declaration, ¶ 3).12 When Bryan asked the
Appellant if he had received the Cure Notice, Kroth replied that
he could not find any such letter (R4 File, Tab K; Notice of
Filing, Bryan Declaration, ¶ 3). Finally, the Appellant said he
assumed the rejected books were being used by the DPS, and
therefore he had made no further attempt to reprint them (R4
File, Tabs K and P; Notice of Filing, Bryan Declaration, ¶ 3).
Bryan ended the conversation by telling Kroth that someone from
the CRPPO would be in touch with him (R4 File, Tab K; Notice of
Filing, Bryan Declaration, ¶ 3).
17. Bryan then discussed the matter with Contracting Officer
Sever (R4 File, Tab K; Notice of Filing, Bryan Declaration, ¶ 3).
The record indicates that Sever instructed Bryan to contact the
CRPPO's carrier, Federal Express, to verify the delivery of the
Cure Notice to the Appellant (R4 File, Tabs J and K; Notice of
Filing, Bryan Declaration, ¶ 3). Accordingly, Bryan telephoned
Federal Express and spoke to an employee named Tommie Robbins,
who confirmed that Federal Express Letter Package No. 5407425520
had been delivered to the Contractor's facility on December 15,
1992, at 4:30 p.m., and signed for by a "D. Kroth" (Notice of
Filing, Bryan Declaration, ¶ 3). On receiving this information,
Bryan asked Robbins to send a copy of the signature receipt to
the CRPPO, and then shared the information with Contracting
Officer Sever (Notice of Filing, Bryan Declaration, ¶ 3).
18. On January 22, 1993, Bryan telephoned Gallagher and asked
about the status of the rejected books, and was told that the
reprint had not been delivered (R4 File, Tab L; Notice of Filing,
Bryan Declaration, ¶ 4; Gallagher Declaration, ¶ 6). Gallagher
also mentioned his conversation with Kroth on December 8, 1992,
and the fact that he had instructed the Appellant to have UPS
report to Building 20, Room 101 at Wright-Patterson AFB, for
directions to the rejected books and negatives (R4 File, Tab L;
Notice of Filing, Bryan Declaration, ¶ 4). Bryan asked Gallagher
to provide him with the name of a person to contact at the
facility, as well as the location of the rejected books and
negatives (R4 File, Tab L; Notice of Filing, Bryan Declaration, ¶
4).13 The record also indicates that the same day Kroth
telephoned Gallagher and told him that UPS had tried to pick up
the books and negatives at Building 20 and the material was not
available (Notice of Filing, Bryan Declaration, ¶ 4). However,
when Gallagher checked with Mosher, he was advised the rejected
books were still there (Notice of Filing, Bryan Declaration, ¶
4).
19. On January 25, 1993, Contracting Officer Sever spoke to Kroth
and was informed that on December 22, 1992, the Appellant had
sent UPS to pick up the rejected books and negatives at Building
20, Room 101, but when the carrier arrived the materials were not
available to be picked up (R4 File, Tab M). Kroth also said that
he assumed the books were being used, and hence the Government
would have to pay for them (R4 File, Tab M). Sever responded by
saying that it was almost certain that the Contractor would be
defaulted because: (a) it had failed to comply with the Cure
Notice; (b) it did not notify the CRPPO on December 22, 1992,
that "allegedly" the books were unavailable;14 and (c) it was
inexcusably delinquent in producing a quality product (R4 File,
Tab M). After talking to Kroth, Sever instructed Sommer to call
DPS confirm the whereabouts of the rejected books and negatives,
and to find out if indeed the Appellant had not yet picked them
up, whether UPS had come to pick up the material (R4 File, Tab M,
Notice of Filing, Sommer Declaration, ¶ 16).
20. The following day, Gallagher telephoned Sommer and told him
that all of the rejected books were still at the DPS facility
waiting for the Appellant to retrieve them (R4 File, Tab L;
Notice of Filing, Sommer Declaration, ¶ 17). However, Gallagher
also said that the location of the film negatives was not known,
but that he would continue to look for them (R4 File, Tab L;
Notice of Filing, Sommer Declaration, ¶ 17).
21. On January 27, 1993, Sommer called Gallagher and asked him to
find out from the other DPS employees if they had seen UPS
attempt to retrieve the rejected books and negatives for the
Appellant, or leave "Call Tags" for the pick up, and further if
the cartons had been moved after they were made available to the
Contractor (R4 File, Tab N; Notice of Filing, Gallagher
Declaration, ¶ 6). In checking, Gallagher spoke to Mosher who
told him that the material was still in the High Bay Area,
Building 20, Area B (Notice of Filing, Gallagher Declaration, ¶
6). Accordingly, Gallagher telephoned Sommer and informed him
that both the rejected books and the negatives were in the same
location where they had placed in December 1992 (R4 File, Tab N;
Notice of Filing, Gallagher Declaration, ¶ 6; Sommer Declaration,
¶ 18). Apparently, the carton containing the film negatives had
been included with seven (7) cartons set aside for the Appellant
to pick up in the High Bay Area (R4 File, Tab N; Notice of
Filing, Gallagher Declaration, ¶ 6; Sommer Declaration, ¶ 18).
Gallagher also told Sommer that he had no recollection of UPS
"Call Tags" ever being received for the pickup of the negatives
and rejected books (R4 File, Tab N).
22. On January 28, 1993, after speaking to two other DPS
employees-Kathy Anderson and Jeri Pruitt-Gallagher telephoned
Sommer and told him that no one else at the High Bay location had
any recollection of a UPS request to pick up the cartons for the
Appellant, nor did they receive any "Call Tags" (R4 File, Tab O;
Notice of Filing, Sommer Declaration, ¶ 18).
23. On January 27, 1993, Contracting Officer Sever sought the
approval of the Respondent's Contract Review Board (CRB) to
terminate the contract for default (R4 File, Tab P).15
Termination was requested because of the Appellant's "failure to
properly produce the order in accordance with the specifications
and the December 14, 1992[,] 'Cure Notice-Reprint'" (R4 File, Tab
P). The CRPPO received the CRB's approval to default the
Appellant on January 28, 1993 (R4 File, Tab P).
24. Accordingly, by letter dated February 1, 1993, expressly
titled "Notice of Termination-Complete," the Contracting Officer
terminated the Appellant's contract for default because of its
"failure to produce an acceptable product (hickies/spots, image
skewness, loss of ink density, loss of halftone detail, etc.)[.]"
and its failure "to correct the defects as directed by the
December 14, 1992 'Cure Notice-Reprint'" (R4 File, Tab Q). The
"Notice of Termination-Complete" also informed the Appellant that
it was potentially liable for any excess reprocurement costs (R4
File, Tab Q).
25. On February 3, 1993, Sommer told Gallagher that the
Appellant's contract had been defaulted, and asked that the DPS
submit a new SF-1 printing requisition to start the reprocurement
process (Notice of Filing, Gallagher Declaration, ¶ 6). He also
told Gallagher to retain the rejected books and negatives because
the Appellant could request that they be returned (Notice of
Filing, Gallagher Declaration, ¶ 6).16 The DPS provided the new
SF-1 to the CRPPO on February 5, 1993 (Notice of Filing,
Gallagher Declaration, ¶ 6; Respondent's Submission on
Reprocurement, at 2; Exhibit No. 1).
26. On February 10, 1993, the Respondent advertised the
reprocurement solicitation under the same small purchase
procedures as the original contract (R. Sub., at 2; Tab 6). With
the exception of the contract due date, which allowed the
reprocurement contractor 33 days to deliver the books instead of
the 15 days given to the Appellant, the terms and conditions
remained the same (R4 File, Tab A; R. Sub., at 2; Tab 6).17 The
solicitation was publicly posted and mailed to six (6)
contractors selected from the GPO's ABLS (R. Sub., at 2; Tab
3).18 Five offers were received, the lowest of which was from
Dickson's Graphics, Inc. (Dickson's) for $4,410.00, including a
two (2) percent prompt payment discount (R. Sub., at 2; Tab 4).19
Since the GPO contract price estimate was $4,400.00 to $4,900.00,
the Contracting Officer determined that Dickson's price was fair
and reasonable, and on February 18, 1993, it was awarded the
reprocurement contract (R. Sub., at 2; Tabs 5 and 6). The record
also indicates that Dickson's fully performed the reprocurement
contract, and was paid $4,410.00 on April 21, 1993, by an
electronic funds transfer (R. Sub., at 2; Tab 9). The Appellant
was assessed excess reprocurement costs of $1,162.00 (R4 File,
Tab S; R. Sub., at 2; Tab 9).
27. In the meantime, by letter dated February 19, 1993, the CRPPO
notified the Appellant that the defaulted contract had been
reprocured for $4,500.00, and therefore it owed the Government
$1,162.00 (the difference between the repurchase price and the
Contractor's price of $3,338.00) (R4 File, Tab R). Since the
Respondent's payment records showed that the Appellant had
already been paid $3,237.86 for the job, it was told to
immediately remit the sum of $4,399.86 to the Government
($3,237.86 + $1,162.00) (R4 File, Tab R). That same day, the
CRPPO also notified the Respondent's central office Voucher
Examination Branch, Financial Management Service that the
Appellant had been terminated for default, and asking it to
recoup $1,162.00 in excess reprocurement costs and the $3,237.86
which the Contractor had already been paid (R4 File, Tab S).
28. By letter dated February 25, 1993, the Appellant timely
appealed the Contracting Officer's default termination decision.
Thereafter, in its Complaint of April 24, 1993, the Contractor
also protested the Government's assessment of excess
reprocurement costs.
II. ISSUES PRESENTED
Three questions require resolution in this case:
1. Did the Government fail to meet its inherent duty to cooperate
with the Appellant in curing the defects by not providing the
Contractor or UPS with the necessary information to enable it to
retrieve the rejected books and film negatives in time to reprint
and deliver the new books by the due date set forth in the Cure
Notice?
2. Could the Respondent properly hold the Appellant responsible
for producing Quality Level 3 work under QATAP since it was known
that the Appellant was only a Quality Level 4 contractor?
3. Has the Government proved its claim of entitlement to excess
reprocurement costs in this case, and if so, in what amount?
III. POSITION OF THE PARTIES
The Appellant's defense in this case is very simple. The
Contractor says that while it was willing to reprint the books
and deliver them to the DPS by January 11, 1993, its failure to
do so was the direct result of the Government's lack of
cooperation with UPS, when the carrier went to Wright-Patterson
AFB on December 21, 1992, and December 24, 1992, respectively, to
pick up the rejected books and film negatives, pursuant to
previous arrangements between the Kroth and Gallagher, and the
material was not there. See RPTC, at 5-6; App. Brf., at 1, ¶¶ 1,
2; App. F. Brf., ¶ 1. Conceding that the Respondent was "within
[its] rights to turn down the job," the Appellant believes that
it then became the Government's responsibility to have the
rejected books and negatives "ready for pick up by UPS," and
GPO's failure "to send [the Contractor] the books" within a
reasonable time, justifies awarding it the full price for the
books retained by DPS, as well as denying the assessment of
excess reprocurement costs.20 See App. Brf., at 1-2, ¶¶ 1, 3-4.
The key to the Appellant's excess reprocurement argument is its
contention that as a Quality Level 4 contractor, it cannot be
held liable for its inability to produce a Quality Level 3 job.
See RPTC, at 6; App. R. Repro., at 1 (second paragraph). Indeed,
the Contractor suggests that GPO was "bargain hunting," and
accepted its low Quality Level 4 bid, fully intending to rebid
the contract at Quality Level 3 if the work turned out to be
rejectable, and thus "save $1[,]100 for thier [sic] trouble[.]"
See App. R. Repro., at 1 (third and fourth paragraphs). Finally,
the Appellant says that since the job was estimated to cost
between $4,400.00 and $4,900.00, the Government's rejection of
the original Quality Level 4 work at the contract price of
$3,338.00 absolves the Contractor of any responsibility for the
difference, just as acceptance of the books would not have
obligated GPO "to pay us the difference that we saved them . .
."; i.e., the Government "own[s] the job at the estimated cost."
See App. R. Repro., at 1 (first paragraph). Accordingly, the
Appellant states that the Respondent owes it a total
reimbursement of $4,500.00, consisting of the $3,338.00 it cost
to print the original order of books, and the $1,162.00 in excess
reprocurement, and it asks the Board to direct such payment.21
See RPTC, at 6; App. Brf., at 2, ¶ 4; Complaint.
The Respondent, on the other hand, contends that the Contractor's
failure to reprint the books by the Cure Notice due date of
January 11, 1993, warranted defaulting its contract and the
assessment of excess reprocurement costs (R4 File. Tabs Q and R).
See RPTC, at 5. The Government says that it is well-settled that
a contractor must continue performance notwithstanding the
existence of a contract dispute, and its remedy is to seek
additional compensation later. See R. Brf., at 3 (citing Brenner
Metal Products Corp., ASBCA No. 25294, 82-1 BCA ¶ 15,462; Eriez
Construction, Inc., VACAB No. 1273, 78-2 BCA ¶ 13,547). In this
case, despite being directed by the Contracting Officer to print
the books by January 11, 1993, the Appellant did not do so. See
RPTC, at 5; R. Brf., at 3. The Respondent rejects the
Contractor's excuse that its failure to reprint was related to
its inability to retrieve the rejected materials from the DPS,
notwithstanding two tries by UPS, because the record shows that
the Appellant took no action after the second attempt; i.e., it
did not alert either DPS or the CRPPO to the problem, nor did
make a third try. See R. Brf., at 4. Furthermore, GPO states
that the Contractor did not need the rejected publications and
negatives to reprint the books. Id. Rather, the critical
material for reprint purposes was the GFM held at the CRPPO. Id.
Even though the Cure Notice told the Appellant that the CRPPO had
the GFM, the record shows that the Contractor made no attempt to
pick it up. Id. Consequently, for these reasons the Respondent
asserts that the Appellant's excuse for nonperformance is without
merit. Id.
With respect to the Contractor's contention that it cannot be
held liable for its inability to produce a Quality Level 3 job
because it is a Quality Level 4 contractor, the Respondent has a
simple answer-the Appellant should not have bid on the contract.
See R. Brf., at 5-6. GPO's argument rests on black letter law
which holds that the Government is entitled to strict compliance
with its contract specifications, including those of fixed-price
supply contracts. See R. Brf., at 5 (citing American Electric
Contracting Corp. v. United States, 217 Ct. Cl. 338, 579 F.2d 602
(1978); Red Circle Corp. v. United States, 185 Ct. Cl. 1, 398
F.2d 836 (1968); Jefferson Construction Co. v. United States,
151 Ct. Cl. 75 (1960); Fry Communications Inc., GPO BCA 1-87
(June 1, 1989), 1989 WL 384980; Copigraph, Inc., GPO BCA 20-86
(May 25, 1989), 1989 WL 385174; Dependable Printing Co., Inc.,
GPO BCA 5-84 (September 12, 1985), 1985 WL 154847; Vogard
Printing, GPOCAB 7-84 (January 7, 1986)).22 A purpose of the
rule is to protect the integrity of the bidding system. Id.
(citing Ideal Restaurant Supply Co., VACAB No. 570, 67-1 BCA ¶
6,237). The Respondent says that the Appellant submitted an
offer in response to the solicitation which clearly showed that
the contract was for the printing of a Quality Level 3 product.
Id. (citing R4 File, Tab A). If the Contractor believed the
Quality Level 3 performance was beyond its capabilities, it could
have returned the GFM to the CRPPO at no penalty. See R. Brf.,
at 6. When it failed to do so, but instead started to
substantially perform the job, a contract was formed under the
small purchase procedures. See R. Brf., at 5-6 (citing PPR,
Chap. VII, Sect. 4, ¶ 1(b)). Thereafter, the Appellant was
contractually bound to comply with the specification. See R.
Brf., at 6.
Finally, the Respondent states that it has complied with all of
the requirements necessary to secure its entitlement to excess
reprocurement costs. See R. Sub., at 1. Specifically, GPO
claims that the evidence of record shows: (1) the reprocurement
contract was performed under substantially the same terms and
conditions as the original contract; (2) it acted within a
reasonable time following default to repurchase the books; (3) it
employed a reprocurement method which would maximize competition
under the circumstances; (4) it obtained the lowest reasonable
price; and (5) the work has been completed and final payment made
so that the excess costs assessment is based upon liability for a
sum certain. See R. Sub., at 1-2. Accordingly, for all of these
reasons, the Government asserts the record supports the
conclusion that both the default termination and the assessment
of excess reprocurement were justified in this case, and that the
Contracting Officer's actions should be affirmed. See RPTC, at
5; R. Brf., at 6; R. Sub., at 1.
IV. DISCUSSION
Although the Appellant has phrased the issues in terms of the
Respondent's inherent duty to cooperate in curing the defective
books, and its insistence that a Quality Level 4 contractor
should not be required to produce Quality Level 3 work, basically
this appeal is nothing more than a typical default case. Thus,
no matter how the questions are posed, the Board is essentially
asked to decide whether or not the contract was erroneously
defaulted, and if the termination was proper, is the Contractor
nonetheless excused from liability for excess reprocurement
costs? At the outset, therefore, it is worthwhile to repeat the
legal principles which apply to these issues.
First, GPO's "Default" clause provides that a contracting officer
may, upon written notice of default to the contractor, terminate
a contract, in whole or in part, if the contractor fails to: (1)
deliver the supplies or perform the required services within the
time specified or any extension which may have been granted; (2)
make progress on the work, so as to endanger performance of the
contract; or (3) perform any of the other provisions of the
contract. See GPO Contract Terms, Contract Clauses, ¶ 20(a)(1)
(I),(ii),(iii). Furthermore, where a contract is terminated for
default and the work must be reprocured, the contractor will be
held responsible for excess procurement costs and possible
liquidated damages. See GPO Contract Terms, Contract Clauses, ¶¶
20(b), 22(d). However, the contractor is excused from paying
such reprocurement costs or damages if the failure to perform or
to deliver on time results from causes beyond its control and
without its fault or negligence.23 See GPO Contract Terms,
Contract Clauses, ¶¶ 20(c), 22(e), 23. Such causes include, but
are not limited to, acts of God or of the public enemy, acts of
the Government in either its sovereign or contractual capacity,
fires, floods, epidemics, quarantine restrictions, strikes,
freight embargoes, and unusually severe weather-but in each case,
the failure to perform must be beyond the control and without the
fault or negligence of the contractor. See GPO Contract Terms,
Contract Clauses, ¶ 20(c). See also Univex International, supra,
slip op. at 17; K.C. Printing Co., GPO BCA 02-91 (February 22,
1995), slip op. at 9, 1995 WL 488531; Printing Unlimited, supra,
slip op. at 16; Chavis and Chavis Printing, supra, slip. op. at
11. Where the failure to perform is caused by the default of a
supplier or subcontractor, the cause of the default must be
beyond the control of both the contractor and subcontractor, and
without the fault or negligence of either, in order for the
contractor not to be liable for any excess costs for failure to
perform, unless the subcontracted supplies or services could have
been secured from other sources in sufficient time to meet the
required delivery schedule. See GPO Contract Terms, Contract
Clauses, ¶ 20(d). See also Univex International, supra, slip op.
at 17; K.C. Printing Co., supra, slip op. at 10; Chavis and
Chavis Printing, supra, slip op. at 11.
Second, a default termination is a drastic action which may only
be taken for good cause and on the basis of solid evidence.24
See Univex International, supra, slip op. at 17; K.C. Printing
Co., supra, slip op. at 10; Shepard Printing, supra, slip op. at
10-11; R.C. Swanson Printing and Typesetting Co., GPO BCA 31-90
(February 6, 1992), slip op. at 25, 1992 WL 487874, aff'd, Civil
Action No. 92-128C (U.S. Claims Court, October 2, 1992);25
Stephenson, Inc., supra, slip op. at 20 (citing Mary Rogers
Manley d/b/a Mary Rogers Real Estate, HUDBCA No. 76-27, 78-2 BCA
¶ 13,519; Decatur Realty Sales, HUDBCA No. 75-26, 77-2 BCA ¶
12,567). Consequently, the Government has the burden of proving
the basis for the default, while the contractor has the burden of
showing that its failure to perform was excusable. See Univex
International, supra, slip op. at 18; K.C. Printing Co., supra,
slip op. at 10; Shepard Printing, supra, slip op. at 11; R.C.
Swanson Printing and Typesetting Co., supra, slip op. at 28;
Chavis and Chavis Printing, supra, slip op. at 11. Accord Lisbon
Contractors v. United States, 828 F.2d 759 (Fed. Cir. 1987));
Switlik Parachute Co. v. United States, 216 Ct. Cl. 362 (1978);
J.F. Whalen and Co., AGBCA Nos. 83-160-1, 83-281-1, 88-3 BCA ¶
21,066; B. M. Harrison Electrosonics, Inc., ASBCA No. 7684, 1963
BCA ¶ 3,736. If the Government fails to meet its burden of
proof, then the termination is converted into one of convenience
and the contractor is allowed to recover for the work performed.
See GPO Contract Terms, Contract Clauses, ¶ 20(g). See also
Graphics Image, Inc., supra, slip. op. at 24-28. Cf. Univex
International, supra, slip op. at 18; K.C. Printing Co., supra,
slip op. at 11; Stephenson, Inc., supra, slip op. at 17-18;
Chavis and Chavis Printing, supra, slip op. at 9.
Third, where the default termination is based on untimely
performance, as in this case, the failure to deliver the
corrected books by the established reprint date, the contractor's
burden of proof is four-fold: (1) to prove affirmatively that the
delay was caused by or arose out of a situation which was beyond
the contractor's control and that it was not at fault or
negligent; (2) to show that performance would have been timely
but for the occurrence of the event which is claimed to excuse
the delay; (3) to show that it took every reasonable precaution
to avoid foreseeable causes for delay and to minimize their
effect; and (4) to establish a precise period of time that
performance was delayed by the causes alleged. See Univex
International, supra, slip op. at 18-19; K.C. Printing Co.,
supra, slip op. at 11; Chavis and Chavis Printing, supra, slip
op. at 12. This burden must be carried by substantial evidence-
unsupported reasons by way of explanation are not enough-and the
contractor must also show that the delay in contract performance
was due to unforeseeable causes beyond its control and without
any contributory negligence on its part. See Univex
International, supra, slip op. at 19; K.C. Printing Co., supra,
slip op. at 11; Chavis and Chavis Printing, supra, slip op. at
12-13.
Finally, a default termination is a discretionary act which can
be challenged on an abuse of discretion standard. See Univex
International, supra, slip op. at 19; K.C. Printing Co., supra,
slip op. at 12; Graphics Image, Inc., supra, slip op. at 24-25;
Shepard Printing, supra, slip op. at 12. Accord Darwin
Construction Co., Inc. v. United States, 811 F.2d 593 (Fed. Cir.
1987); Quality Environment Systems v. United States, 7 Cl. Ct.
428 (1985); Jamco Constructors, Inc., VABCA Nos. 3271, 3516T,
94-1 BCA ¶ 26,405, reconsid. denied, 94-2 BCA ¶ 26,792; Walsky
Construction Co., ASBCA No. 41541, 94-1 BCA ¶ 26.264, reconsid.
denied, 94-2 BCA ¶ 26,698. The burden is on the contractor to
prove abuse of discretion. See Univex International, supra, slip
op. at 19; K.C. Printing Co., supra, slip op. at 12; Shepard
Printing, supra, slip op. at 12. Accord Kit Pack Co., Inc.,
ASBCA No. 33135, 89-3 BCA ¶ 22,151; Lafayette Coal Co., ASBCA No.
32174, 89-3 BCA ¶ 21,963.
Applying these principles to the facts in the record, the Board
reaches the following conclusions:
A. The Respondent's failure to assist the Appellant in making
arrangements to retrieve the rejected books and film negatives
from the DPS was not such conduct which would amount to a breach
of its implied duty to cooperate with the Contractor in the
performance of the contract. Thus, the Appellant has not shown
that its failure to perform arose from causes beyond its control
and without its fault or negligence.
1. When the Contracting Officer terminated the contract because
of a "failure to produce an acceptable product (hickies/spots,
image skewness, loss of ink density, loss of halftone detail,
etc.)[,]" (R4 File, Tab Q), he was clearly defaulting the
Contractor for a failure to "[d]eliver the supplies or to perform
the services within the time specified or any extension,
thereof;. . .". See GPO Contract Terms, Contract Clauses, ¶
20(a)(1)(I).26 The Appellant does not dispute the Contracting
Officer's finding in that regard. Besides the record clearly
supports the conclusion that the defects in the rejected books
were major, not minor, discrepancies under QATAP (R4 File, Tab
I).27 Under GPO's regulations the Contracting Officer is the
only person authorized to make final determinations on whether
products submitted by a contractor conform to contract
specifications.28 See PPR, Chap. XIII, Sec. 1, ¶ 4.f. See also
Sterling Printing, Inc., GPO BCA 20-89 (March 28, 1994), slip op.
at 34-35, fn. 46, 1994 WL 275104, reconsid. denied, GPO BCA 20-89
(July 5, 1994), 1994 WL 377592, second motion for reconsid.
denied, GPO BCA 20-89 (August 12, 1994); Hurt's Printing Co.,
Inc., supra, slip op. at 21-22. . Accordingly, in the absence of
credible evidence in the record to show that the Contracting
Officer's judgment was somehow erroneous or flawed, there is no
basis to disturb his decision, and the Board will let it stand.
See Univex International, supra, slip op. at 23; Printing
Unlimited, supra, slip op. at 21-22; Stabbe Senter Press, GPO BCA
13-85 and 19-85 (May 12, 1989), slip op. at 53, 1989 WL 384977.
2. The Appellant's objection to the default action focuses on the
second reason given in the February 1, 1993, "Notice of
Termination-Complete," namely, the Contractor's failure ""to
correct the defects as directed by the December 14, 1992 'Cure
Notice-Reprint'" (R4 File, Tab Q).29 Hence, this not a situation
where a contractor is defaulted because its supplies, which were
timely delivered, are subsequently found to be nonconforming.
Rather, the Contracting Officer only resorted to default when
there was no delivery at all of the reprinted books by January
11, 1993, the date established by the Respondent in a final
effort to secure a satisfactory product for the DPS (R4 File, Tab
J). See GPO Contract Terms, Contract Clauses, ¶ 14(h)
(Inspections and Tests) ("If the contractor fails to promptly
remove, replace, or correct rejected supplies that are required
to be removed or to be replaced or corrected, the Government may
. . . (2) terminate for default as provided in article 20
'Default'." [Emphasis added.]).
3. The Appellant blames its inability to deliver the reprinted
books squarely on the Respondent, whom it says was responsible
for having the rejected books and film negatives "ready for pick
up by UPS," but failed to give it the proper instructions so that
its carrier could retrieve the material from the DPS. See RPTC,
at 5-6; App. Brf., at 1, ¶¶ 1, 2; App. F. Brf., ¶ 1. Although
the Contractor does not tell us why it needed the rejected books
and negatives since the GFM was available for pick up at the
CRPPO throughout the cure period, its assertions amount to an
allegation that the Government failed to cooperate with it in the
performance of the contract.
4. A well-settled principle states that in every public contract
there is an implied affirmative obligation on the part of the
Government that it will do whatever is necessary to enable the
contractor to perform.30 See Univex International, supra, slip
op. at 25; Hurt's Printing Co., Inc., supra, slip op. at 24;
Stephenson, Inc., supra, slip op. at 38-39 (citing Nanofast,
Inc., supra; The Kehm Corp. v. United States, 119 Ct. Cl. 454, 93
F.Supp. 620 (1950); United States v. Speed, 75 U.S. (8 Wall.) 77
(1868)). Under this doctrine, the Government will be held liable
for breaching its implied duty to cooperate if it wrongfully
fails or refuses to take some action, within its control, which
is essential for the contractor's performance. See Univex
International, supra, slip op. at 26; Hurt's Printing Co., Inc.,
supra, slip op. at 24; Stephenson, Inc., supra, slip op. at 39.
Where such a breach occurs, the contractor has a legal right to
avoid the contract, is discharged from its duty to perform, and
is relieved of the default termination and its consequences. See
Malone v. United States, 849 F.2d. 1441, 1446 (Fed. Cir. 1988).
In most cases applying this principle, there is a clear nexus
between the Government's breaching conduct and the performance
period itself. See e.g., Maitland Brothers Co. and Maitland
Brothers Co. and St. Paul Fire and Marine Insurance Co., ASBCA
Nos. 30,089, 30,764, 31,032, 32,071, 32,605, 34,659, 90-1 BCA ¶
22,367; Singleton Contracting Corp., GSBCA No. 8,552, 90-1 BCA ¶
22,298; G. W. Galloway Co., ASBCA Nos. 17,436, 17,723, 17,836,
17,911, 18,324, 77-2 BCA ¶ 12,640. Moreover, the Government's
liability also depends on the reasonableness of its conduct under
the circumstances, see PBI Electrical Corp. v. United States, 17
Cl. Ct. 128 (1989); Ben C. Gerwick, Inc. v. United States, 152
Ct. Cl. 69, 285 F.2d 432 (1961); John McCabe, ASBCA No. 36958,
90-2 BCA ¶ 22,785; Tolis Cain Corp., DOTCAB No. 72-2, 76-2 BCA ¶
11,954, and whether that conduct has harmed the contractor, see
Commerce International Co. v. United States, 167 Ct. Cl. 529, 338
F.2d 81 (1964); Toombs & Co., ASBCA No. 34590, 91-1 BCA ¶ 23,403.
5. No detailed survey of the cases involving the Government's
duty to cooperate with a contractor is necessary here. However,
it should be noted that a violation of the duty to cooperate can
occur if an agency fails to help solve a problem which has arisen
during contract performance, see e.g., Hardrives, Inc., IBCA No.
2319, 94-1 BCA ¶ 26,267; James R. Lowe, Inc., ASBCA No. 42026,
92-2 BCA ¶ 24,835, reconsid. denied, 93-1 BCA ¶ 25,516; Robert R.
Marquis, Inc., ASBCA No. 38438, 92-1 BCA ¶ 24,692; Pittsburgh-Des
Moines Corp., EBCA No. 314-3-84, 89-2 BCA ¶ 21,525, or provide
the contractor with pertinent information, see e.g., Spectrum
Leasing Corp., GSBCA Nos. 7,347, 7,379, 7,425-27, 90-3 BCA ¶
22,984; Ballenger Corp., DOTCAB No. 74-32, 84-1 BCA ¶ 16,973,
modified on other grounds, 84-2 BCA ¶ 17,277; Hardie-Tynes
Manufacturing Co., ASBCA No. 20,582, 76-2 BCA ¶ 11,972. On the
other hand, as this Board has held, the Government has no
obligation to provide assistance where the contractor could have
resolved the problem on its own. See Professional Printing of
Kansas, Inc., GPO BCA 02-93 (May 19, 1995), slip op. at 81, fn.
83, 1995 WL 488488. Accord Moore Mill & Lumber Co., AGBCA
87-172-1, 90-3 BCA ¶ 23,111; John S. Vayanos Contracting Co.,
PSBCA No. 2317, 89-1 BCA ¶ 21,494, at 108,294). Applying these
principles in this case, the Board finds no basis for holding
that the Respondent breached its implied duty of cooperation with
the Appellant's performance.
6. First, as already discussed, before defaulting the contract,
the Respondent made an independent test of the rejected product
in order to confirm the DPS's complaint that the books contained
major defects under QATAP, notified the Appellant of the
deficiencies involved (ink density variation, and loss of
detail/contrast and failure to maintain dot structure), and
afforded the Contractor ample opportunity to correct the defects
by reprinting the books.31 See Univex International, supra, slip
op. at 27-28 (Government did not violate its duty to cooperate
where record showed that it tested the product twice in order to
confirm the customer-agency's complaint that the rejected books
contained major defects, notified the contractor of the
deficiencies involved as well as the probable source of the
problem, and gave the contractor a chance to cure the problem by
reprinting the books); Stephenson, Inc., supra, slip op. at 42-44
(the Board rejected the contractor's breach claim where the
record showed that the defects were "critical," not "minor," and
the contractor was, in fact, given a chance to repair the books,
but was unable to do so within a reasonable time). Rather, it
seems to the Board that the reason the reprinted books were not
delivered by January 11, 1993, the cure date established by the
Respondent, is that the Appellant itself either misunderstood, or
was indifferent to its own responsibilities for correcting its
mistakes. As the Board reads the record, after it tried twice
unsuccessfully to retrieve the rejected books and film negatives,
the Contractor apparently thought that the burden to return that
material then shifted to the Government. See App. Brf., at 2, ¶
4.
7. Second, assuming that the Appellant was correct in believing
that the rejected books and negatives were necessary for
producing the reprints, the simple fact is that the Respondent
did not become aware of the unsuccessful efforts to pick up the
material at the customer-agency until January 21, 1993, ten (10)
days after the books were to be delivered to the DPS, when the
CRPPO employees telephoned the Contractor to check on the
delivery status of the reprints. (R4 File, Tab K; Notice of
Filing, Bryan Declaration, ¶ 3; Sommer Declaration, ¶ 15).
Instead, the Government's evidence, which is not refuted by the
Appellant, is that no one representing the Appellant ever
telephoned the CRPPO to ask for assistance in making arrangements
to pick up the rejected books and film negatives (Notice of
Filing, Bryan Declaration, ¶ 6; Sommer Declaration, ¶ 19). Thus,
the record clearly shows that between December 24, 1992, the date
of UPS' last trip to the DPS facility at Wright-Patterson AFB,
and January 21, 1993, period of nearly a month, the Contractor
kept silent about his difficulties in retrieving the materials
and left it to the Respondent to take the next step. Recently,
in another context, the Board observed that the Government "is
not required to be clairvoyant . . .". See GraphicData, Inc.,
GPO BCA 35-94 (June 14, 1996), slip op. at 62, 83, 1996 WL______
(quoting Womack v. United States, 182 Ct. Cl. 399, 413, 389 F.2d
793, 801 (1968)). See also Cibinic & Nash, at 254. Accord,
Contract Management, Inc., ASBCA No. 44885, 95-2 BCA ¶ 27,886, at
139,108; Fa. Kammerdiener GmbH & Co., KG, ASBCA No. 45248, 94-3
BCA ¶ 27,197, at 135,554; Integrity Management International,
Inc., ASBCA Nos. 34802, 35412, 36149, 37140, 89-3 BCA ¶ 21,996,
at 110,605. Consequently, it is incongruous for the Appellant to
now claim that the Government failed to cooperate with it picking
up the rejected books and negatives, when the record clearly
shows that it never sought or asked for such cooperation in the
first place.
8. Third, when the Board considers the fact that the Contractor
knew since December 15, 1992, that the GFM-the material really
needed to produce the reprints-was being held for it at the CRPPO
(R4 File, Tab J), and made no effort to pick it up, it has no
trouble concluding that the Appellant was hardly acting with the
"diligence" required to meet its obligations under the "Disputes"
clause. GPO Contract Terms, Contract Clauses, ¶ 5(d) (Disputes)
("Pending final decision a dispute hereunder, the contractor
shall proceed diligently with performance in accordance with the
Contracting Officer's decision."). See Univex International,
supra, slip op. at 29; Sterling Printing, Inc., supra, slip op.
at 36, 44, fn. 51; Nor Cal Trade School of Offset Printing, GPO
BCA 1-85 (September 12, 1986), slip op. 8-9, 1986 WL 181455.
Accord Altina Trucking, PSBCA No. 3341, 93-3 BCA ¶ 26,256; Twigg
Corp., NASA BCA No. 62-0192, 93-1 BCA ¶ 25,318; A. N. Xepapas,
AIA, VABCA No. 3087, 91-2 BCA ¶ 23,799. In the last analysis,
contrary to what the Appellant might believe, the duties and
responsibilities set forth in a Government contract are mutual;
they are not a "one-way street" flowing only from the Government
to the Contractor. See Univex International, supra, slip op. at
29 (citing Malone v. United States, supra, 849 F.2d. at 1445;
John S. Vayanos Contracting Co., supra, 89-1 BCA at 108,294).
9. Finally, there is no merit to the Appellant's contention that
GPO's failure to give it the proper instructions so that UPS
could retrieve the rejected books and negatives from the DPS
somehow also breached the Government's implied duty of
cooperation.32 The Contractor does not tell us why it needed the
rejected books and negatives. However, since the GFM was always
available to it at the CRPPO, it seems clear that the purpose for
wanting the return of the material at the DPS was solely for the
convenience of the Appellant and was not essential for
performance of the reprint. See Univex International, supra,
slip op. at 29-30 (Government action or inaction constituting
breach must be essential for the contractor to perform). See
also Hurt's Printing Co., Inc., supra, slip op. at 24 Stephenson,
Inc., supra, slip op. at 39. Furthermore, the record discloses
that the Appellant made its arrangements to pick up the rejected
books and film negatives directly with DPS, who told the
Contractor that the material was located in the High Bay area,
Building 20, Area B on Wright-Patterson AFB (R4 File, Tab M;
Notice of Filing, Gallagher Declaration, ¶ 6). Although the
record shows that as of December 8, 1992, the Respondent was
aware that the DPS was holding the rejected books and negatives
for the Appellant, there is absolutely no evidence that GPO knew
exactly where the material was being stored, or that the
Contractor's carrier was having trouble retrieving it until after
January 11, 1993, the reprint due date, nor has the Appellant
attempted to present such proof (R4 File, Tabs H and M; Notice of
Filing, Bryan Declaration, ¶¶ 3, 4 (January 21-22, 1993), Sommer
Declaration, ¶¶ 12, 16, 18 (January 25-27, 1993)). In order to
find a cooperation breach based on a failure to pass along
instructions for picking up rejected material, some evidence of
knowledge of the proper procedure or arrangements by the
Respondent is required; anything less is pure speculation. See
Univex International, supra, slip op. at 30.
10. Taking all of the evidence into consideration, the Board
concludes that the Appellant has not met its burden of proof with
respect to excusing its failure to make a timely shipment of the
reprinted books; i.e., it has not shown that its failure to
perform arose from causes beyond its control and without its
fault or negligence. See Univex International, supra, slip op.
at 31; K.C. Printing Co., supra, slip op. at 18; Hurt's Printing
Co., Inc., supra, slip op. at 29; Chavis and Chavis Printing,
supra, slip op. at 15. Accord Johnson Textile and Plastics Co.,
ASBCA No. 25985, 84-2 BCA ¶ 17,467; Affiliated Metal Products
Co., ASBCA No. 15567, 71-2 BCA ¶ 8,947. On this record, the
Contractor's case is essentially a collection of unverified
assertions amounting to little more than argument, which standing
alone cannot substitute for proof. Cf. Reese Manufacturing,
Inc., ASBCA No. 35144, 88-1 BCA ¶ 20,358. Indeed, the Board has
never allowed such unsubstantiated contentions to form the basis
for recovery. See B & B Reproductions, GPO BCA 09-89 (June 30,
1995), slip op. at 39, 1995 WL 488447; Hurt's Printing Co., Inc.,
supra, slip op. at 29; Printing Unlimited, supra, slip op. at 12;
Stephenson, Inc., supra, slip op. at 57. Accord Singleton
Contracting Corp., GSBCA No. 8548, 90-2 BCA ¶ 22,748; Tri-State
Services of Texas, Inc., ASBCA No. 38019, 89-3 BCA ¶ 22,064));
Gemini Services, Inc., ASBCA No. 30247, 86-1 BCA ¶ 18,736.
Accordingly, the Board concludes that under the circumstances of
this case, the Contracting Officer was justified in terminating
the contract for default, and his decision is affirmed.
B. Even though the Appellant was a Quality Level 4 contractor, it
was not improper for the Respondent to hold it responsible for
producing Quality Level 3 work under QATAP.
1. The Appellant's argument that as a Quality Level 4 contractor,
it cannot be held liable for its inability to produce a Quality
Level 3 job, is easily disposed of. First, to the extent that
the Contractor suggests that GPO accepted its low Quality Level 4
bid with the intention of rebidding the work at Quality Level 3
if it could not deliver an acceptable product, and charge the
Contractor with the additional costs, such a belief is mere
conjecture and speculation. Moreover, the assertion amounts to
an accusation that the Respondent was acting in "bad faith" when
it awarded the Appellant the contract. The Board has said on
numerous occasions, an allegation of bad faith must be
established by "well-nigh irrefragable proof" because there is a
strong presumption that Government officials properly and
honestly carry out their functions.33 See MPE Business Forms,
Inc., GPO BCA 10-95 (August 16, 1996), slip op. at 27-28, fn. 34,
1996 WL_____; New South Press & Assoc., Inc., supra, slip op. at
36; Asa L. Shipman's Sons, Ltd., GPO BCA 06-95 (August 29,
1995), slip op. at 12, fn. 16, 1995 WL 818784, reconsid. denied
February 13, 1996; Professional Printing of Kansas, Inc., supra,
slip op. at 43, fn. 58; Universal Printing Co., supra, slip op.
at 24, fn. 24; B. P. Printing and Office Supplies, supra, slip
op. at 16; Stephenson, Inc., supra, slip op. at 54; The Standard
Register Co., GPO BCA 4-86 (October 28, 1987), slip op. at 12-13,
1987 WL 228972. Accord Brill Brothers, Inc., ASBCA No. 42573,
94-1 BCA ¶ 26,352; Karpak Data and Design, IBCA No. 2944 et al.,
93-1 BCA ¶ 25,360; Local Contractors, Inc., ASBCA No. 37108, 92-1
BCA ¶ 24,491. The key to such evidence is that there must be a
showing of specific intent on the part of the Government to
injure the Contractor. See MPE Business Forms, Inc., supra, slip
op. at 27-28, fn. 34; New South Press & Assoc., Inc., supra, slip
op. at 36, fn. 52; Stephenson, Inc., supra, slip op. at 54.
Accord Kalvar Corp. v. United States, 543 F.2d 1298, 1302 (Ct.
Cl. 1976), cert. denied 434 U.S. 830 (1977). See also Solar
Turbines, Inc. v. United States, 23 Cl. Ct. 142 (1991). In the
Board's view, no such "irrefragable proof" of the Respondent's
bad faith exists in this record. Certainly, there is absolutely
no evidence which would show that GPO by itself, or in concert
with the DPS, specifically set out to harm the Appellant. See
Asa L. Shipman's Sons, Ltd., supra, slip op. at 12, fn 16;
Stephenson, Inc., supra, slip op. at 57.
2. Second, the Contractor is basically asking the Board to
review the Contracting Officer's responsibility determination.
Stated otherwise, the Appellant is in effect protesting its own
award. However, Federal Government contract appeals boards, as a
rule, have no jurisdiction over bid protests, but rather are
limited to hearing post-award and not pre-award disputes.34 See
Carolina Oil Distributing Co., Inc., ASBCA No. 48093, 95-2 BCA ¶
27,797; Dill's Star Route, Inc., PSBCA No. 3699, 95-2 BCA ¶
27,608; C & J Associates, VABCA No. 3924, 94-2 BCA ¶ 26,628.
This is especially true in this case because the Board is not a
creature of statute, but rather derives all of its powers from
the "Disputes" clause of the contract itself, and thus its
jurisdiction is narrowly defined. See GraphicData, Inc., supra,
slip op. at 57; R.C. Swanson Printing and Typesetting Co., GPO
BCA 15-90 (March 6, 1992), slip op. at 26-27, 1992 WL 382924; The
Wessel Co., Inc., GPO BCA 8-90 (February 28, 1992), slip op. at
32, 1992 WL 487877; Automated Datatron, Inc., GPO BCA 20-87
(March 31, 1989), slip op. at 4-5, 1989 WL 384973; Bay Printing,
Inc., GPO BCA 16-85 (January 30, 1987), slip op. at 9, 1987 WL
228967; Peak Printers, Inc., GPO BCA 12-85 (November 12, 1986),
slip op. at 6, 1986 WL 181453. See generally, Matthew S. Foss,
U.S. Government Printing Office Board of Contract Appeals: The
First Decade, 24 PUB. CONT. L. J. 579, 584-85 (1995) (hereinafter
Foss, The First Decade). Specifically, as the Board interprets
GPO Instruction 110.10C, Subject: Establishment of the Board of
Contract Appeals, dated September 17, 1984-its "enabling
statute"-and the jurisdictional provisions of its rules of
practice and procedure, see Board Rules, Preface to Rules, ¶ I
(Jurisdiction), it sees its authority as purely derivative and
contractual, and has consistently confined the exercise of its
remedial powers to the contract before it. See GraphicData,
Inc., supra, slip op. at 57; Shepard Printing, Inc., supra, slip
op. at 9, fn. 8; R.D. Printing Associates, Inc., GPO BCA 2-92
(December 16, 1992) slip op. at 9, 13, fns. 9, 15, 1992 WL
516088; Peak Printers, Inc., supra, slip op. at 6. See also
Automated Datatron, Inc.,supra, slip op. at 4-5 ("The Public
Printer has not under the provision of paragraph 5 of GPO
Instruction 110.10C delegated authority to this Board to consider
legal questions existing outside the contract itself."). Accord
Wehran Engineering Corp., GSBCA No. 6055-NAFC, 84-3 BCA ¶ 17,614.
See generally, Foss, The First Decade, at 585-86. Furthermore,
the Respondent's printing regulations clearly state that protests
of GPO contracts must be taken to either the agency's Office of
the General Counsel or General Accounting Office-the Board has
been assigned no role in this process. See PPR, Chap. X, Sec. 2,
¶¶ 1.(b), 2-3.
3. Third, to the extent that it can be said that the Appellant's
allegation may be "related to" the contract, much like a "mistake
in bid" claim, see e.g., Web Business Forms, Inc., GPO BCA 16-89
(September 30, 1994), slip op. 27,1994 WL 837423; Peak Printers,
Inc., supra, slip op. at 6; Great Lakes Lithograph Co., GPO BCA
18-84 (May 22, 1985), slip op. at 18, 1985 WL 154849, the well-
settled rule is that if a determination with respect to a
contractor's reliability and dependability is made in good faith
and is reasonable under the applicable law and regulations, it
should be upheld. See Wright Industries, Inc., ASBCA No. 18282,
78-2 BCA ¶ 13,396, at 65,492 (citing Warren Brothers Roads Co. v.
United States, 173 Ct. Cl. 714, 720-21 (1965); Coastal Cargo Co.,
Inc. v. United States, 173 Ct. Cl. 259 (1965); Brown & Son
Electric Co. v. United States, 163 Ct. Cl. 465 (1963)). It has
also been held with respect to determinations of responsibility
and responsiveness that a contracting officer has authority, when
acting in good faith and in a manner reasonable under the
circumstances, to make a valid award to an otherwise unqualified
bidder. See Wright Industries, Inc., supra, 78-2 BCA at 65,492
(citing John Reiner & Company v. United States, 163 Ct. Cl. 381
(1963), cert. denied, 377 U.S. 931 (1964); 46 Comp. Gen. 275
(1966); 44 Comp. Gen. 221 (1964)). The Board has just found that
the record in this case contains no evidence of bad faith on the
part of the Respondent in its dealings with the Contractor. Nor
can it be said, under all of the circumstances in this appeal,
that the Contracting Officer was arbitrary or capricious in
deciding that the Appellant was qualified for award of the
contract. Accordingly, for these reasons, the Board agrees with
the Government that once the Contractor submitted its offer and
accepted the contract, which clearly showed that it was expected
to produce a Quality Level 3 product, it was obligated to perform
in accordance with the specifications, and it is no excuse for
the Appellant to now claim that it was only a Quality Level 4
contractor.
C. The Government has proved its claim of entitlement to excess
reprocurement costs in the amount assessed.
1. The last issue concerns the scope of the Appellant's liability
for excess reprocurement costs, if any. In K.C. Printing, Co.,
the Board summarized the legal principles governing questions
concerning excess reprocurement costs:
The assessment of excess reprocurement costs is considered a
Government claim. See Sterling Printing, Inc., supra, [Slip op.]
at 50-51 (and cases cited therein). Consequently, the Government
has the burden of demonstrating the propriety of the repurchase
and proving its entitlement to the amount of excess costs it
claims. Id., [Slip op.] at 51 (and cases cited therein). In
doing so, the Government must satisfy five criteria to establish
an entitlement to recovery against a defaulting contractor,
namely, it must show that: (a) the reprocurement contract was
performed under substantially the same terms and conditions as
the original contract; (b) it acted within a reasonable time
following default to repurchase the supplies; (c) it employed a
reprocurement method which would maximize competition under the
circumstances; (d) it obtained the lowest reasonable price; and
(e) the work has been completed and final payment made so that
the excess costs assessment is based upon liability for a sum
certain. [Footnote omitted.] Id., [Slip op.] at 52-53 (and
cases cited therein). Furthermore, the Government claim must be
supported by evidence in the record as to each element of the
claim. Id., [Slip op.] at 53 (and cases cited therein). Failure
to satisfy even one criterion may result in a reduction of the
excess costs claimed. Id., [Slip op.] at 53-54 (and cases cited
therein).
See K.C. Printing, Co., supra, slip op. at 18-19. [Original
emphasis.] Whether the Government's repurchase was improper, and
if so, what is the amount of reasonable excess costs under the
circumstances, are questions of fact. See Univex International,
supra, slip op. at 33; K.C. Printing Co., supra, slip op. at 19,
fn. 20; Sterling Printing, Inc., supra, slip op. at 50 (citing
Cable Systems and Assembly Co., ASBCA No. 17844, 73-2 BCA ¶
10,172, at 47,892). The Board finds that the Respondent has
satisfied all of the necessary elements in this case.
2. First, the Board's own comparison of the original and
reprocurement contracts leaves no question but that the
reprocurement contractor, Dickson's, was asked to produce and
deliver the identical books as those in the Appellant's original
contract, under essentially the same terms and conditions.
Compare R4 File, Tabs A and R. Sub., Tab 2. Indeed, the
Appellant does not allege otherwise. Both the Appellant and
Dickson's were asked to produce 50 copies of an 836 page book
plus cover entitled "History of ASD-1991" for the DPS. Among
other things, the original and reprocurement contracts described
the same product in terms of printing of covers and text, trim
size, paper weight and color, ink color, perfect binding, wrap-
around covers, GPO imprint, and QATAP quality level. Indeed, the
only observable differences between the two contracts was the
assignment of a new Jacket number (751-771) and an increase in
the performance schedule from 15 to 33 days. While the greater
time allowed for delivery of the repurchased books was certainly
a change in the terms and conditions of the contract, it was not
a material alteration because it had no pecuniary impact; i.e.,
it did not cause a substantial increase in the price of the
reprocurement contract. See Sterling Printing, Inc., supra, slip
op. at 59-60 (citing AGH Industries, ASBCA Nos. 27960, 31150,
89-2 BCA ¶ 21,637; Ace Reforestration, Inc., AGBCA No. 84-271-1,
83-2 BCA ¶ 20,218; T.M. Industries, ASBCA No. 21025, 77-1 BCA ¶
12,545; Churchill Chemical Corp., GSBCA No. 4353, 77-1 BCA ¶
12,318, aff'd, 221 Ct. Cl. 284, 602 F.2d 358 (1979); Solar
Laboratories, Inc., ASBCA No. 19957, 76-2 BCA ¶ 12,115; Arjay
Machine Co., ASBCA No. 16535, 73-2 BCA ¶ 10,179; Marmac
Industries, ASBCA No. 12158, 72-1 BCA ¶ 9,249). Accord Schmalz
Construction, Ltd., AGBCA No. 92-177-1, 94-1 BCA ¶ 26,423; Meyer
Labs, Inc., ASBCA No. 19525, 87-2 BCA ¶ 19,810; Lester Phillips,
Inc., ASBCA No. 20735, 77-1 BCA ¶ 12,447. See generally Cibinic
& Nash, at 1007-09, 1011-12. In any event, it was the
Appellant's burden of proof to show that the Respondent's
changes made the reprocurement contract "materially different"
from the one it received by demonstrating that the increase in
performance time also caused an unreasonable increase of a
specified amount in the price of the repurchase. See Sterling
Printing, Inc., supra, slip op. at 61 (citing Theodore R.
Korotie, AGBCA No. 86-245-1, 89-3 BCA ¶ 22,214; Ace
Reforestration, Inc., supra; Solar Laboratories, Inc., supra);
Knepper Press, GPOCAB Nos. 2-84 and 3-84 (October 2, 1984), slip
op. at 4, 1984 WL 148107. The Contractor has not done so in this
case. Accordingly, the Board concludes that the Respondent has
met the first condition for excess reprocurement costs, namely,
showing that the reprocurement contract purchased the same or
similar items, and was performed under substantially the same
terms and conditions as the original contract. See Univex
International, GPO BCA 23-90, Supplemental Decision on Excess
Reprocurement Costs and Order (July 5, 1996), slip op. at 5-6,
1996 WL _____ (hereinafter Univex Supp.); Asa L. Shipman's Sons,
Ltd., supra, slip op. at 29; K.C. Printing Co., supra, slip op.
at 19; Sterling Printing, Inc., supra, slip op. at 62-63. Accord
B & M Construction, Inc., AGBCA No. 90-165-1, 93-1 BCA ¶ 25,431;
Zan Machine Co., ASBCA No. 39462, 91-3 BCA ¶ 24,085; Boston
Pneumatics, Inc., ASBCA Nos. 26188, 26190, 26825, 26984, 27605,
27606, 87-1 BCA ¶ 19,395.
3. Second, the Board has no trouble in concluding that the
reprocurement was accomplished in a timely fashion. The record
in this case shows that the Appellant's contract was terminated
for default on February 1, 1993 (R4 File, Tab Q). The
reprocurement contract was awarded to Dickson's 17 days later, on
February 18, 1993 (R. Sub., Tab 6). Accordingly, on this record
the Board finds that the Respondent acted with reasonable
dispatch and without undue delay to reprocure the defaulted
books, and thus it has satisfied its evidentiary burden for the
second criterion. See Univex Supp., supra, slip op. at 6; Asa L.
Shipman's Sons, Ltd., supra, slip op. at 29-30; K.C. Printing
Co., supra, slip op. at 20; Sterling Printing, Inc., supra, slip
op. at 63-65. Accord Astro-Space Laboratories, Inc. v. United
States, 200 Ct. Cl. 282, 470 F.2d 1003 (1972); Puroflow Corp.,
ASBCA No. 36058, 93-3 BCA ¶ 26,191; John L. Hartsoe, AGBCA No.
88-116-1, 93-2 BCA ¶ 25,614; Sequal, Inc., ASBCA No. 30838, 88-1
BCA ¶ 20,382; Disan Corp., ASBCA Nos. 21297, 22221, 79-1 BCA ¶
16,677.
4. Third, the Board believes that the Contracting Officer chose a
reasonable method to repurchase the books. See Univex Supp.,
supra, slip op. at 6-7; Asa L. Shipman's Sons, Ltd., supra, slip
op. at 30; K.C. Printing Co., supra, slip op. at 20-23. Cf.
Sterling Printing, Inc., supra, slip op. at 73. As a rule, a
contracting officer has very broad discretionary powers in
reprocuring items on a defaulted contract, and the choice of
which procurement method to use is one of them. See Univex
Supp., supra, slip op. at 6-7; Asa L. Shipman's Sons, Ltd.,
supra, slip op. at 30; Sterling Printing, Inc., supra, slip op.
at 17, fn. 25 (citing Astro-Space Laboratories, Inc. v. United
States, supra; Old Dominion Security, Inc., GSBCA No. 9126, 90-2
BCA ¶ 22,745; Columbia Loose Leaf Corp., GSBCA Nos. 5805(5067)-
REIN, 5806(5230)-REIN, 82-1 BCA ¶ 15,464). See also Venice Maid
Co., Inc. v. United States, 639 F.2d 690 (Ct. Cl. 1980); Zan
Machine Co., supra. Although the Government has an obligation in
reprocuring a defaulted contract to mitigate the defaulted
contractor's excess cost liability by selecting a method that
will maximize competition and obtain the best or lowest
reasonable price under the circumstances, see e.g., Scalf
Engineering Co. and Pike County Construction Co., A Joint
Venture, IBCA No. 2328, 89-3 BCA ¶ 21,950 at 110,425 (citing
Techcraft Systems, VABCA Nos. 1894, 2027, 86-3 BCA ¶ 19,320)
(hereinafter Scalf Engineering); Sequal, Inc., supra, 88-1 BCA at
103,067, the law also allows a contracting officer to limit
competition for the repurchase if the situation demands it-e.g.,
the Government's need to assure a quick award to a firm which
could begin work almost immediately-since a reprocurement is
technically a purchase for the defaulted contractor's account,
see Univex Supp., supra, slip op. at 7; Asa L. Shipman's Sons,
Ltd., supra, slip op. at 31; Sterling Printing, Inc., supra, slip
op. at 67. Accord William A. Hulett, AGBCA Nos. 91-230-3,
92-133-3, 92-196-3, 93-1 BCA ¶ 25,389, at 126,459; Old Dominion
Security, Inc., supra, 90-2 BCA at 114,165 (citing Camrex
Reliance Paint Co., GSBCA No. 6870, 85-3 BCA ¶ 18,376; Century
Tool Co., GSBCA No. 3999, 76-1 BCA ¶ 11,850); Sequal, Inc.,
supra, 88-1 BCA at 103,067.35 The test used in determining the
adequacy of a repurchase solicitation is one of reasonableness,
and the burden is on the Government to prove that it acted
reasonably in selecting the reprocurement method and in
mitigating the contractor's excess costs.36 See Univex Supp.,
supra, slip op. at 8; Asa L. Shipman's Sons, Ltd., supra, slip
op. at 31; K.C. Printing, supra, slip op. at 21 (citing Sam's
Electric Co., GSBCA Nos. 9359, 10044, 90-3 BCA ¶ 12,128; Fancy
Industries, Inc., ASBCA No. 26578, 83-2 BCA ¶ 16,659); Sterling
Printing, Inc., supra, slip op. at 67. However, the Government's
obligation to mitigate costs "is not one of perfection, but one
of reasonableness and prudence under the circumstances."37 See
Mid-America Painters, Inc., ENG BCA No. 5703, 91-1 BCA ¶ 23,367,
at 117,232; Barrett Refining Corp., supra, 91-1 BCA at 118,145.
This duty may be satisfied by a variety of repurchase methods,
including soliciting those firms which bid on the original
procurement.38 See Univex Supp., supra, slip op. at 8; Asa L.
Shipman's Sons, Ltd., supra, slip op. at 32; K.C. Printing,
supra, slip op. at 22 (citing American Marine Upholstery Co. v.
United States, 170 Ct. Cl. 564, 345 F.2d 577 (1965); Mid-America
Painters, Inc., supra). In this case, the Contracting Officer
utilized the same small purchase procedures to reprocure the
contract, as he had in making the initial award (R. Sub., at 2,
Tab 2). Like the original solicitation, potential contractors for
the repurchase were selected from the GPO's ABLS (R. Sub., at 2;
Tab 3).39 However, three (3) more potential contractors bid on
the reprocurement contract than responded to the original
solicitation (R. Sub., at 2, Tabs 4 and 8). On the evidence
before it, the Board is satisfied that the reprocurement method
chosen by the Respondent was reasonable in that a sufficient
number of potential contractors were contacted to assure
competitive prices, and that further solicitation of other firms
would not have resulted in lower prices and therefore would have
been unnecessary. See Univex Supp., supra, slip op. at 9; K.C.
Printing, supra, slip op. at 22-23 (citing Century Tool Co.,
GSBCA No. 4007, 78-1 BCA ¶ 13,050, at 63,735, reconsid. denied,
78-2 BCA ¶ 13,345; Sterling Printing, Inc., supra, slip op. at
73). Accordingly, the Board believes that the Respondent has met
its burden with respect to the third criterion necessary to
establish an entitlement to recovery of excess reprocurement
costs against a defaulting contractor. See Univex Supp., supra,
slip op. at 9; K.C. Printing, supra, slip op. at 23 (citing
Sterling Printing, Inc., supra, slip op. at 73).
5. Fourth, mitigation of damages also requires the Government to
show that it obtained the lowest reasonable reprocurement price-
the lowest reasonable price for the Government under
circumstances, not the defaulted Contractor.40 See Univex Supp.,
supra, slip op. at 10; Asa L. Shipman's Sons, Ltd., supra, slip
op. at 35; K.C. Printing Co., supra, slip op. at 23-24. Accord
Barrett Refining Corp., supra; Scalf Engineering, supra; Sequal,
Inc., supra; Fancy Industries, Inc., supra. In that regard, the
Board has observed that ". . . the most common method used for
recalculating excess costs is simply to take the difference
between the original contract price and the second low bid on the
original contract." See Sterling Printing, Inc., supra, slip op.
at 84-85. Accord Mid-America Painters, Inc., supra; Sequal,
Inc., supra; Fancy Industries, Inc., supra; Zero-Temp, Inc.,
ASBCA No. 21590, 78-1 BCA ¶ 13,212. Under that way of figuring,
the Appellant's excess cost liability would have been $2,008.00
(Sterling Press' bid of $5,346.00 on the original contract minus
the Appellant's contract price of $3,338.00) (R4 File, Tab A; R.
Sub., Tab 8). However, in this case, the Contractor was actually
assessed excess costs of $1,162.00 (the difference between the
price paid to Dickson's for the repurchased work-$4,410.00-and
the Appellant's original bid after certain adjustments were made)
(R4 File, Tabs R and S; R. Sub., Tab 9). Therefore, the question
is whether the extra $1,162.00 is a reasonable assessment under
the circumstances. The Board believes that it is. First, while
Dickson's did not bid on the original contract, its repurchase
offer of $4,500.00 not only was at the low end of the
Government's cost estimate ($4,400.00 to $4,900.00) for the work,
and was also approximately 16 percent less than Sterling Press'
second low bid on the initial solicitation. Second, and just as
revealing, is the fact that Dickson's repurchase offer of
$4,500.00 is about 13 percent lower than Neal Printing's bid of
$5,141.00-the next lowest reprocurement bid-and the closeness of
the two offers indicates a reasonable market price. See American
Kal Enters, Inc., GSBCA No. 4449, 76-2 BCA ¶ 11,929. Third,
while Dickson's repurchase offer is nearly 35 percent higher than
the Appellant's bid on the original contract, it is well-settled
that the mere fact of a significant price increase in the
reprocurement does not render it unreasonable in the face of
Government due care and diligence. See Univex Supp., supra, slip
op. at 11; K.C. Printing Co., supra, slip op. at 23. Accord
Futura Systems, Inc., ENG BCA No. 6037, 95-2 BCA ¶ 27,654; Foster
Refrigerator Corp., ASBCA No. 34021, 89-2 BCA ¶ 21,591; Boston
Pneumatics, Inc., supra; Fancy Industries, Inc., supra. Fourth,
this is not a situation where the reprocurement occurred shortly
after the original award; i.e., four (4) months elapsed between
the time the Appellant received the original contract (October
14, 1992) and the date Dickson's was given the repurchase
agreement (February 18, 1993) (R4 File, Tab A; R. Sub., Tab 6).
Cf. Century Tool Co., GSBCA No. 4000, 76-1 BCA ¶ 11,855 (no
mitigation where reprocurement unit price was three (3) cents
greater than a bid by same contractor two weeks earlier);
International Technology Corp., B-250377.5, 93-2 CPD ¶ 102
(original offers satisfied competition requirement where only a
few months had passed between the default termination and
original competition for a hazardous waste management contract).
The Board has upheld repurchase awards at prices significantly
higher than the original contract where less time has passed
between the initial award and the reprocurement. See Asa L.
Shipman's Sons, Ltd., supra (contract price 39 percent higher on
reprocurement made three (3) months after the original award);
K.C. Printing Co., supra (contract price three times higher on
reprocurement made less than two (2) months after original
award). Finally, the Appellant has not objected to the
Respondent's excess reprocurement cost figure of $1,162.00, and
in the absence of such a challenge the Government's cost
assessment is presumed to be correct.41 See Pickett
Enterprises, Inc., GSBCA No. 9472, 9890, 10051, 10102, 10426,
92-1 BCA ¶ 24,668. Accordingly, the Board finds that the
Respondent has carried its evidentiary burden of showing that the
excess reprocurement costs assessed in this case mitigated the
Appellant's liability and represented the lowest reasonable price
for the Government under the circumstances. See Univex Supp.,
supra, slip op. at 12; Asa L. Shipman's Sons, Ltd., supra, slip
op. at 36; K.C. Printing Co., supra, slip op. at 25. Cf.
Sterling Printing, Inc., supra, slip op. at 77.
6. Finally, in order to establish a right to excess reprocurement
costs, the Government must demonstrate that the repurchased work
has been completed, and final payment made to the reprocurement
contractor so that the excess costs assessment is based upon
liability for a sum certain. See Univex Supp., supra, slip op.
at 12; Asa L. Shipman's Sons, Ltd., supra, slip op. at 36 (citing
Whitlock Corp. v. United States, 141 Ct. Cl. 758, 159 F.Supp. 602
(1958), cert. denied, 358 U.S. 815 (1958); John L. Hartsoe,
supra; Lafayette Coal Co., ASBCA Nos. 32174, 33311, 87-3 BCA ¶
20,116). See also K.C. Printing Co., supra, slip op. at 25-26;
Sterling Printing, Inc., supra, slip op. at 78. Where the
Government fails to offer evidence that a reprocurement contract
was awarded, performed, or paid for, the assessment of excess
costs against a defaulted contractor will be denied. See Univex
Supp., supra, slip op. at 12-13; Sterling Printing, Inc., supra,
slip op. at 85. Accord, Patty Armfield, AGBCA Nos. 91-185-1,
92-141-1, 92-143-1, 93-1 BCA ¶ 25,235; Pyramid Packing, Inc.,
AGBCA No. 86-128-1, 92-2 BCA ¶ 24,831; Scalf Engineering, supra.
Here, the relevant documentation presented by the Respondent
consists of: (a) Dickson's reprocurement contract (R. Sub., Tab
6); (b) the Contracting Officer's memorandum, dated February 19,
1993, informing the FMS that the Appellant's defaulted contract
had been reprocured for $4,500.00 and asking that the excess
costs be charged to the Contractor (R4 File, Tab S); and (c) a
statement from FMS' Chief, Examination and Billing Branch,
Procurement Accounting Division, that Dickson's had been paid
$4,410.00 for the completed work by electronic funds transfer on
April 21, 1993, and assessing $1,162.00 against the Appellant's
as its excess cost obligation (R. Sub., Tab 9). In the Board's
view, this evidence is sufficient to prove that Dickson's was
awarded the contract, produced and delivered the books, and
received final payment for the work. Accordingly, the Board
finds that the Respondent has carried its burden of proof with
respect to the last element necessary to establish its
entitlement to excess reprocurement costs. See Univex Supp.,
supra, slip op. at 13; Asa L. Shipman's Sons, Ltd., supra, slip
op. at 37; K.C. Printing Co., supra, slip op. at 26. Cf.
Sterling Printing, Inc., supra, slip op. at 83. Also cf. Patty
Armfield, supra; Pyramid Packing, Inc., supra; Scalf Engineering,
supra.
ORDER
Considering the record as a whole, the Board finds and concludes:
(1) the Respondent did not breach its implied duty to cooperate
with the Contractor in the performance of the contract; (2) the
Government could properly hold the Appellant responsible for
Quality Level 3 work under QATAP even though it was a Quality
Level 4 contractor; and (3) GPO has sustained is burden of proof
with regard to the Contractor's liability for excess
reprocurement costs. THEREFORE, the Contracting Officer's
decision terminating the Appellant's contract for default, and
his assessment of excess reprocurement costs is hereby AFFIRMED,
and the appeal is DENIED.
It is so Ordered.
August 30, 1996 STUART M. FOSS
Administrative Judge
_______________
1 At the time the appeal was filed, the Appellant's address was
112 South 3rd Street, Purcell, Oklahoma 73080.
2 The Contracting Officer's appeal file, assembled pursuant to
Rule 4 of the Board's Rules of Practice and Procedure, was
submitted to the Board on April 22, 1993. GPO Instruction
110.12, Subject: Board of Contract Appeals Rules of Practice and
Procedure, dated September 17, 1984, Rule 4(a) (Board Rules). It
will be referred to herein as R4 File, with an appropriate Tab
letter also indicated. The R4 File contains 19 documents
identified as Tabs A through S.
3 The amount of excess reprocurement costs shown in the record is
$1,162.00 (R4 File, Tabs R and S). However, the Government also
sought reimbursement of the $3,237.86 which had already been paid
to the Appellant on the defaulted contract, for a total recovery
of $4,399.86 (R4 File, Tabs R and S). This $3,237.86 figure was
apparently the discounted price for the books, because both in
its Complaint and at the presubmission conference held on August
6, 1993, see Board Rules, Rule 10, the Contractor asked for the
full contract price of $3,338.00 on the product it delivered,
making its total claim $4,500.00. See Complaint (last two
sentences); Report of Presubmission Conference, dated August 17,
1993, at 6 (hereinafter RPTC).
4 The Appellant was asked to obtain a notarized affidavit from a
representative of the United Parcel Service (UPS) clearly
detailing it efforts to pick up the film negatives and rejected
books, including the dates, the persons contacted, and the
locations visited by the carrier. The Respondent was told to
obtain an affidavit from the customer-agency's representative,
Mike Gallagher, stating precisely what instructions he gave UPS
concerning retrieving the film negatives and rejected books,
whether anyone came to pick up these materials, the location
where the materials were available, etc., as well as any other
pertinent details. See RPTC, at 7.
5 The Contractor originally sought to have this appeal processed
under the Board's optional Small Claims (Expedited) Procedure.
Board Rules, Rules 12.1(a), 12.2. However, because of numerous
delays in augmenting the record, stemming from, among other
things, the need of both parties for enlargements of time in
which to provide additional documents and affidavits, and the
Board's adjusting the briefing dates in light of their extension
requests, the initial settlement of the record did not occur
until July 15, 1994, nearly 17 months after the appeal was filed.
Then, after the record was reopened by the Board on February 20,
1996, for the purpose of receiving additional evidence and
arguments from the parties on the issue of excess reprocurement
costs, it was not finally settled until July 3, 1996.
Accordingly, the Appellant's election of the option Small Claims
(Expedited) Procedure has become moot, and the matter has been
processed under the Board's regular procedure for handling cases
submitted on the record without a hearing. Board Rules, Rule 11.
See e.g., Universal Printing Co., GPO BCA 09-90 (June 22, 1994),
slip op. at 2, fn. 3, 1994 WL 377586; McDonald & Eudy Printers,
Inc., GPO BCA 06-91 (May 6, 1994), slip op. at 1, fn. 2, 1994 WL
377581. See also Univex International, GPO BCA 23-90 (July 31,
1995), slip op. at 2, fn. 1., 1995 WL 488438, reconsid. denied
February 7, 1996, 1006 WL 112554.
6 The record on which this decision is based consists of: (a) the
Appellant's Notice of Appeal, dated February 25, 1993; (b) the R4
File; (c) the Appellant's Complaint, dated April 24, 1993; (d)
the Contractor's letter, dated May 27, 1993, attaching copies of
United Parcel Service (hereinafter UPS) "Call Tags," dated
December 21, 1992; (e) the Respondent's "general denial," dated
June 17, 1993; (f) the Report of Prehearing Telephone Conference,
dated August 17, 1993; (g) the Appellant's brief, dated August
23, 1993 (hereinafter cited as App. Brf.), attaching copies of
UPS "Call Tags," dated December 22, 1992; (h) GPO's Notice of
Filing, dated September 8, 1993, enclosing declarations of
Michael E. Gallagher, DPS Printing Specialist, John C. Bryan,
Procurement Assistant in the Compliance Section of the CRPPO, and
Michael J. Sommer, Quality Assurance/Contract Compliance Officer
at the CRPPO (hereinafter referred to as the Gallagher, Bryan,
and Sommer Declarations, respectively); (i) the Respondent's
brief, dated September 27, 1993 (hereinafter referred to as R.
Brf.); (j) the Appellant's "Final Brief," dated February 16, 1994
(hereinafter cited as App. F. Brf.); (k) the Respondent's
Submission on Reprocurement, dated March 21, 1996; and (l) he
"Appellant's Response on Reprocurement Cost and Contract Rebid,"
dated March 28, 1996. Board Rules, Rule 13(a). The facts, which
are essentially undisputed, are recited here only to the extent
necessary for this decision.
7 The record indicates that the Respondent solicited the contract
under its Automated Bid List System (ABLS) to four (4)
contractors, and that the Appellant's offer was the low bid of
only two offers received on the contract, the other bidder being
Sterling Press (R. Sub., Tabs 7 and 8).
8 GPO Contract Terms, Solicitation Provisions, Supplemental
Specifications, and Contract Clauses, GPO Publication 310.2,
effective December 1, 1987 (Rev. 9-88) (GPO Contract Terms).
9 GPO Contract Terms, Quality Assurance Through Attributes
Program for Printing and Binding, GPO Publication 310.1,
Effective May 1979 (Revised November 1989).
10 In the interim, the Contracting Officer Sever had issued a
"Show Cause" notice to the Appellant on November 3, 1992,
informing the Contractor that it could be defaulted because it
had failed to deliver the books by October 30, 1992, and
affording it an opportunity to explain the reasons for the non-
delivery, in writing, by November 9, 1992 (R4 File, Tab C; Notice
of Filing, Sommer Declaration, ¶ 6). By letter, dated November
6, 1992, Kroth responded to the "Show Cause" notice by
reiterating his conversation with Sommer on October 29, 1992, and
telling the Contracting Officer that the bindery problem has
since been rectified, and the books shipped to Wright-Patterson
AFB on November 5, 1992 (R4 File, Tab D; Notice of Filing, Sommer
Declaration, ¶ 7).
11 The GFM was finally received sometime between November 13,
1992, and December 8, 1992 (Notice of Filing, Gallagher
Declaration, ¶ 6; Sommer Declaration, ¶ 12).
12 The two occasions referred to are December 21, 1992, and
December 24, 1992. See note 6 supra (attachments to Appellant's
letter of May 27, 1993, and brief of August 23, 1993).
13 On January 25, 1993, Gallagher called Bryan and gave him the
names, location, and telephone number of Mosher, Tom Gooseman,
and Kelli Cradelbaugh, as the persons to contact in the customer
agency as this matter (Notice of Filing, Bryan Declaration, ¶ 5).
14 Neither Bryan or Sommer can recall anyone representing the
Appellant ever asking to pick up the materials at DPS or
requesting the CRPPO's assistance in making arrangements to do so
(Notice of Filing, Bryan Declaration, ¶ 6; Sommer Declaration, ¶
19).
15 Under the Respondent's printing procurement regulation, the
Contracting Officer must submit a proposal to terminate a
contract for default to the CRB for its review and concurrence.
See Printing Procurement Regulation, GPO Publication 305.3
(September 1, 1988), Chap. I, Sec. 10, ¶ 4.b.(i) (hereinafter
PPR). See also Univex International, supra, slip op. at 9; fn.
12; Hurt's Printing Co., Inc., GPO BCA 27-91 (January 24, 1994),
slip op. at 7, fn. 10, 1994 WL 275098; Graphics Image, Inc., GPO
BCA 13-92 (August 31, 1992), slip. op. at 9, fn. 10, 1992 WL
487875.
16 The record indicates that the DPS still had the rejected books
and negatives (the reprocurement contractor reprinted the books
using new negatives) as late as March 10, 1993 (Notice of Filing,
Gallagher Declaration, ¶ 6). But, by the end of August 1993, the
books and negatives had disappeared from the High Bay area
(Notice of Filing, Gallagher Declaration, ¶ 6).
17 The Respondent indicates that the purpose of the additional
production time was to allow more bidders to make an offer, and
thus mitigate excess reprocurement costs through increased
competition (R. Sub., at 2).
18 The six ABLS contractors were Marek Lithographics, Graphics
East, Inc; McClain Printing Company; RVR, Incorporated; CPW
Business Services, Inc., and Crossmark Graphics, Inc. (R. Sub.,
Tab 3).
19 Dickson's name is misspelled in the bid abstract as "Dixon"
(R. Sub., Tab 4).
20 The Appellant thinks this is especially true because the
rejected books have since been either misplaced or are being used
by the Government. See App. F. Brf., ¶ 6.
21 To the extent that the Contractor also now implies that it
should not be held responsible for the poor quality of the
original job because the Government provided it with bad
negatives, see App. F. Brf., ¶¶ 3, 6, that issue is not before
the Board. Under the "Government Furnished Property (GFP)"
clause of GPO Contract Terms, which was incorporated in the
Appellant's contract by reference, see GPO Contract Terms,
Contract Clauses, ¶ 7, the Contractor had an affirmative duty to
notify the Contracting Officer of any problems or discrepancies
"prior to the performance of any work." See Web Business Forms,
Inc., GPO BCA 31-89 (July 22, 1995), slip op. at 13-14, 1995 WL
488523; Printing Unlimited, GPO BCA 21-90 (November 30, 1993),
slip op. at 13, 1993 WL 516844; Custom Printing Co., GPO BCA
10-87 (May 10, 1988), slip op. at 12; 1988 WL 363328. Accord
Southern Athletic Co., Inc., ASBCA No. 9258, 65-1 BCA ¶ 4649;
Sidran Sportswear Co., Inc., ASBCA No. 9557, 65-1 BCA ¶ 4632.
The record clearly shows that the Appellant did not take its
complaint about the GFM to the Contracting Officer "prior to the
performance of any work." Therefore, it is too late now to raise
the GFM issue in these proceedings. See Web Business Forms,
Inc., supra, slip op. at 15. See also Shepard Printing, GPO BCA
37-92 (January 28, 1994), slip op. at 27, 1994 WL 275077 (the
Board lacks jurisdiction over contractor's allegations not first
presented to the Contracting Officer).
22 The Board was created by the Public Printer in 1984. See GPO
Instruction 110.10C, Subject: Establishment of the Board of
Contract Appeals, dated September 17, 1984. Before then, ad hoc
panels considered disputes between contractors and GPO. Even
though it was decide in January 1986, Vogard Printing was an ad
hoc panel case. The Board cites the decisions of these ad hoc
boards as GPOCAB. While the Board is not bound by their
decisions, its policy is to follow the rulings of the ad hoc
panels where applicable and appropriate. See The George Marr
Co., GPO BCA 31-94 (April 23, 1996), slip op. at 50, fn. 40, 1996
WL ______; New South Press & Assoc., Inc., GPO BCA 14-92 (January
31, 1996), slip op. at 32, fn. 45, 1996 WL 112555; Shepard
Printing, GPO BCA 23-91 (April 29, 1993), slip op. at 14, fn. 19,
1993 WL 526848; Stephenson, Inc., GPO BCA 02-88 (December 20,
1991), slip op. at 18, fn. 20, 1991 WL 439274; Chavis and Chavis
Printing, GPO BCA 20-90 (February 6, 1991), slip op. at 9, fn. 9,
1991 WL 439270.
23 While the excusable events listed in the "Default" clause, all
of which must be beyond the control and without the fault or
negligence of the contractor, are set forth in the context of
relieving the contractor from responsibility for excess
reprocurement costs, it is well-settled that the same occurrences
extend the time available for performance and make termination
prior to that time improper. See e.g., FKC Engineering Co.,
ASBCA No. 14856, 70-1 BCA ¶ 8,312.
24 Default terminations-as a species of forfeiture-are strictly
construed. See D. Joseph DeVito v. United States, 188 Ct. Cl.
979, 413 F.2d 1147, 1153 (1969). See also Murphy, et al. v.
United States, 164 Ct. Cl. 332 (1964); J. D. Hedin Construction
Co. v. United States, 187 Ct. Cl. 45, 408 F.2d 424 (1969);
Foremost Mechanical Systems, Inc., GSBCA Nos. 12335, 12384, 95-1
BCA ¶ 27,382.
25 Since October 29, 1992, the United States Claims Court has
been known as the United States Court of Federal Claims. See
Federal Courts Administration Act of 1992, Pub. L. No. 102-572,
106 Stat. 4506 (1992) (Title IX).
26 Clauses such as ¶ 20(a)(1)(I) have uniformly been held to
apply not only to late deliveries of the contracted goods,
Stephenson, Inc., supra, slip op. at 19 (citing Chavis and Chavis
Printing, supra, slip op. at 12-15; Jomar Enterprises, Inc., GPO
BCA 13-86 (May 25, 1989), slip op. at 3-5), but also to the
timely delivery of nonconforming supplies. Id. (citing KOPA
Kopier Produckte, ASBCA No. 29,471, 85-3 BCA ¶ 18,367; Meyer
Labs, Inc., ASBCA No. 18,347, 77-1 BCA ¶ 12,539). See also Delta
Industries, Inc., DOT BCA No. 2601, 94-1 BCA ¶ 26, 318;
Industrial Data Link Corp., ASBCA No. 31570, 91-1 BCA ¶ 23,382.
The rationale for this dual application of the default clause is
simple. As explained in a leading text on the subject of public
contracts: "While these clauses explicitly make untimely
performance the basis for the default action, it is important to
recognize that nearly every Government contract spells out the
contractor's required performance in terms of the nature of the
product or service which is to be delivered or performed as well
as the time by which this performance is to be completed. Thus,
in order for the contractor to render 'timely performance,' two
basic requirements must be satisfied: (1) the product, service or
construction work must conform to the required design/performance
specifications, and (2) the product must be delivered or the work
completed by the specified due date. Citing Radiation
Technology, Inc. v. United States, 177 Ct. Cl. 227, 366 F.2d 1003
(1966); Nash Metalware Co., GSBCA No. 11951, 94-2 BCA ¶ 26,780;
Air, Inc., GSBCA No. 8847, 91-1 BCA ¶ 23,352." See John Cibinic,
Jr. & Ralph C. Nash, Jr., Administration of Government Contracts
3d ed., (The George Washington University, 1995), at 908
(hereinafter Cibinic & Nash).
27 Whether a defect is minor is a question of fact, based upon a
consideration of: (a) whether the items are usable; (b) the
nature of the product; (c) the urgency of the Government's needs;
and (d) the extent of repair and adjustment necessary to produce
a fully conforming product. See Cibinic & Nash, at 915 (citing
Kain Cattle Co., ASBCA No. 17124, 73-1 BCA ¶ 9,999). In that
regard, numerous minor defects, when considered together, can
constitute a major nonconformity. See Astro Science Corp. v.
United States, 200 Ct. Cl. 354, 471 F.2d 624 (1973);
Environmental Tectonics Corp., supra; Kain Cattle Co., supra.
Furthermore, even if a defect is minor, if it is not readily
correctable the contractor cannot claim the benefit of the
"substantial compliance" doctrine. See Inforex, Inc., GSBCA No.
3859, 76-1 BCA ¶ 11,679; Levelator Corp., VACAB No. 1069, 74-2
BCA ¶ 10,763; Nuclear Equipment Corp., NASABCA No. 1170-18, 73-1
BCA ¶ 9,815. The "substantial compliance doctrine" is a limited
exception to the general rule applicable to situations where a
contractor has timely shipped nonconforming goods which deviate
from the specifications in only minor respects. See Radiation
Technology, Inc. v. United States, supra. Under the so-called
"substantial compliance" doctrine, a defaulting contractor is
afforded an opportunity, by operation of law, to correct minor
defects in shipments to the Government. Cf. Hurt's Printing Co.,
Inc., supra, slip op. at 17; B. P. Printing and Office Supplies,
GPO BCA 22-91 (February 5, 1993), slip op. at 12, 1993 WL 311371;
Stephenson, Inc., supra, slip op. at 24, 48-54. For the
"substantial compliance rule to apply to a particular shipment of
nonconforming goods, the contractor must show that: (a) a timely
delivery of goods was made; (b) he/she reasonably believed, in
good faith, that the supplies conformed to the contract when
shipped and that they would be acceptable; and (c) the defects
are minor in nature and capable of correction within a reasonable
period of time. See Radiation Technology, Inc. v. United States,
supra. See generally Cibinic & Nash, at 912-17. A contractor
who ships nonconforming goods is only protected by the Radiation
Technology rule to the extent that he/she can satisfy all
elements of the test. See Univex International, supra, slip op.
at 21, fn. 21. See Stephenson, Inc., supra, slip op. at 51, fn.
55 (citing Norwood Precision Products, Textron, Inc., ASBCA Nos.
38095, 38196, 90-3 BCA ¶ 23,200; Introl Corp., ASBCA No. 27,610,
85-2 BCA ¶ 18,044 at 90,578; Environmental Tectonics Corp.,
supra, 76-2 BCA ¶ 12,134). The Radiation Technology doctrine is
clearly an encroachment on the Government's right to terminate.
However, "substantial compliance" does not apply in this case.
28 Indeed, the general view is that the Contracting Officer's
discretion to decide whether a product is conforming or
nonconforming is inherent in his/her administration of the
contract. See Univex International, supra, slip op. at 23, fn.
24 (citing Vogard Printing, supra, slip op. at 6; Thomas W. Yoder
Co., Inc., VACAB No. 997, 74-1 BCA ¶ 10,424).
29 As a general rule, no "cure notice" is required where a
contract is to be terminated because of the contractor's failure
to timely deliver or perform. See Univex International, supra,
slip op. at 21; K.C. Printing Co., supra, slip op. at 13; B. P.
Printing and Office Supplies, supra, slip op. at 12; Shepard
Printing, supra, slip op. at 13; Stephenson, Inc., supra, Slip
op. at 19-20. Accord Chambers-Thompson Moving and Storage, Inc.,
ASBCA No. 43260, 93-3 BCA ¶ 26,033, at 129,408; Sonico, Inc.,
ASBCA Nos. 31110, 34269, 89-2 BCA ¶ 21,611. However, in this
case, despite the general rule, the Appellant was offered an
opportunity to cure the defects by reprinting the order (R4 File,
Tab J). See Univex International, supra, slip op. at 23; Hurt's
Printing Co., Inc., supra, slip op. at 21-22; Shepard Printing,
supra, slip op. at 14. It should be noted that while GPO's
printing procurement regulation, like the procurement rules of
other Federal agencies, recommends the issuance of a show cause
letter, "where practicable," prior to the default termination of
a contract for failure to make timely deliveries or perform
services within the time required by the contract, see PPR, Chap.
XIV, Sec. 1, ¶ 3(c)(1); cf. Lewis B. Udis v. United States, 7 Cl.
Ct. 379, 385-86 (1985), none was issued in this case. However,
the omission of a "show cause notice" by the Government is not
generally a procedural defect to a termination based on the
contractor's failure to make timely deliveries or perform timely
services. See Univex International, supra, slip op. at 24, fn.
25; Shepard Printing, supra, slip op. at 14, fn. 20; Stephenson,
Inc., supra, slip op. at 20, fn. 22. Accord Kit Pack Co., Inc.,
supra, 89-3 BCA at 111,486-87 (citing H. N. Bailey & Associates,
ASBCA No. 21,300, 77-2 BCA ¶ 12,681).
30 See Cibinic & Nash, at 295-300. There is also an implied
negative obligation on the part of the Government that it will
not do that which will interfere with the contractor in the
performance of the contract. Id., at 300-05. See e.g.,
Nanofast, Inc., ASBCA No. 12,545, 69-1 BCA ¶ 7,566 (citing Fern
E. Chalender d/b/a Chalender Construction Co. of Springfield,
Missouri v. United States, 127 Ct. Cl. 557 (1954); George A.
Fuller Co. v. United States, 108 Ct. Cl. 70, 69 F.Supp. 409
(1947); Restatement, Contracts, §§ 295, 315). Both implied
duties are part of every Government contract. See George A.
Fuller Co. v. United States, supra.
31 Thus, the record shows that while the time for performance of
the original order was 15 days (October 15, 1992, to October 30,
1992), the Contracting Officer nearly doubled the amount of
performance time to accomplish the reprint, based on Sommer's
recommendation because of the Christmas/New Year's holidays;
i.e., there were 26 days between the date Kroth received the Cure
Notice (December 15,1992) and the date established for delivery
of the reprinted books (January 11, 1993) (R4 File, Tabs A, I and
J; Notice of Filing, Bryan Declaration, ¶ 3; Sommer Declaration,
¶ 20). Moreover, the record discloses that as late as January
21, 1992, more than a month after the Appellant had received the
Cure Notice, the CRPPO was stilling looking for the delivery of
the reprints, and the Contracting Officer had not yet made up his
mind to default the contract (Notice of Filing, Bryan
Declaration, ¶ 3; Sommer Declaration, ¶ 15).
32 The Appellant does not contend, nor is there any evidence,
that the Government tortiously interfered with the carrier's
attempt to pick up the rejected books and negatives. Cf. Kellner
Equipment, Inc., ASBCA No. 26006, 82-2 BCA ¶ 16.077 (evidence
that military policemen checked the identification of the
contractor's employees before allowing them on the job site did
not excuse the delay which resulted in default termination for
failure to complete performance by the due date, since it is
anticipated that policemen will take such action).
33 "Irrefragable" proof simply means evidence which is incapable
of being refuted; i.e., indisputable evidence. See Stephenson,
Inc., supra, slip op. at 54 (citing Webster's New Work Dictionary
(1988), at 714).
34 The GSBCA is an exception to this general rule. By statute,
it has been granted protest authority for automated data
processing and telecommunication disputes involving Federal
agencies. See Technology Advancement Group, Inc. v. Department
of the Navy; Dulles Networking Associates, Inc., Intervenor,
GSBCA No. 12709-P, 94-2 BCA ¶ 26,714; Executone Information
Systems, Inc. v. Department of Health and Human Services;
Government Telecommunications, Inc., Intervenor, GSBCA No. 12402-
P, 94-1 BCA ¶ 26,274.
35 GPO procedures are consistent with the general theory and
practice in Government reprocurements. See PPR, Chap. XIV, Sec.
1, ¶ 3.f.(2).
36 In most cases, the Government satisfies this burden by showing
that it used sealed bid advertising to repurchase defaulted
supplies and services. See e.g., H & H Manufacturing Co. v.
United States, 168 Ct. Cl. 873 (1964); Lester Brothers, Inc. v.
United States, 151 Ct. Cl. 536 (1960); Star Food Processing,
Inc., ASBCA Nos. 34161, 34163, 34164, 34165, 35544, 35545, 35546,
35547, 90-1 BCA ¶ 22,390; Erickson Enterprises, AGBCA 77-168,
79-1 BCA ¶ 13,628.
37 This duty is to be carried out within the confines of Federal
procurement statutes, regulations, policies and directives, and
in pursuit of the Government's own best interests, whether or not
that results in a lower price for a defaulted contractor. See
Barrett Refining Corp., ASBCA Nos. 36590, 37093, 91-1 BCA ¶
23,566, at 118,145.
38 Indeed, such a mitigation step is considered presumptively
reasonable, even if the reprocurement price itself seems
unreasonable. See Univex Supp., supra, slip op. at 8; Asa L.
Shipman's Sons, Ltd., supra, slip op. at 32; K.C. Printing,
supra, slip op. at 22 (citing Mid-America Painters, Inc., supra);
Sterling Printing, Inc., supra, slip op. at 69-70 (citing Zoda v.
United States, 148 Ct. Cl. 49, 180 F.Supp. 419 (1980); United
Microwave Co., ASBCA No. 7947, 1963 ¶ 3,701). Cf. American
Photographic Industries, Inc., ASBCA Nos. 29272, 29832, 90-1 BCA
¶ 22,728 (the Government failed to mitigate damages because it
did not contact the second low bidder on the original contract).
See also Dillon Tool Maintenance, Inc. v. United States, 218 Ct.
Cl. 732 (1978); AAA Janitorial Services, ASBCA No. 9603, 67-1 BCA
¶ 6,091 (the law creates a rebuttable presumption that the
repurchase could have been completed at the price previously
quoted by a lower bidder if an effort had been made to do so).
In fact, if the Government fails to make a reasonable effort at
contacting the original bidders, the result may result in a
denial or reduction of the excess cost assessment. See Univex
Supp., supra, slip op. at 8, fn. 6; Asa L. Shipman's Sons, Ltd.,
supra, slip op. at 32, fn. 32; K.C. Printing, supra, slip op. at
22, fn. 23 (citing Associated Cleaning, Inc., GSBCA No. 8320,
91-1 BCA ¶ 23,360; Old Dominion Security, Inc., supra; Barrett
Chemical Co., Inc., GSBCA No. 4544, 77-2 BCA ¶ 12,625).
39 See notes 7 and 18 supra.
40 In fulfilling the obligation to secure the best price for the
Government, a contracting officer must follow the same standard
of reasonableness and prudence under the circumstances which
he/she exercised in the timing and selecting of the method of
reprocurement. See William A. Hulett, supra; Barrett Refining
Corp., supra; Mid-America Painters, Inc., supra.
41 The Respondent apparently calculated excess reprocurement
costs by subtracting the Appellant's undiscounted contract price
($3,338.00) from Dickson's undiscounted bid ($4,500.00) (R4 File,
Tab A; R. Sub., Tabs 4 and 8). However, neither contractor was
actually paid those amounts. The Board's own calculations based
on the discounted payments, rounded off to the nearest dollar,
show the Appellant's liability to be actually $1,172.00
(Dickson's $4,410.00 minus the Appellant's $3,237.86).
Regardless, the legal maxim de minimis non curat lex (the law
does not take notice of trifles) clearly covers this situation,
and the Board will leave the Respondent's figures undisturbed.
See Univex Supp., supra, at 12, fn. 8.