BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
R.C. SWANSON PRINTING AND ) Docket No. GPO BCA 15-90
TYPESETTING COMPANY )
Jacket No. 241-699 )
Purchase Order 70992 )
Program D404-M )
SUPPLEMENTAL DECISION AND ORDER
On March 6, 1992, the Board issued its Decision and Order in
the above-captioned appeal of R.C. Swanson Printing and
Typesetting Company (hereinafter Appellant or Contractor),
from the final decision of Contracting Officer Katherine M.
Phillips (hereinafter Contracting Officer), of the U.S.
Government Printing Office (hereinafter Respondent or GPO),
disallowing nearly all of the Appellant's claim for
termination costs of $245,796.75, arising out the Respondent's
termination of the Appellant's contract identified as Purchase
Order 70992, Program D404-M, Jacket No. 241-699, for the
convenience of the Government (R4 File, Tab U).1 In its
Decision and Order, the Board dismissed the Contractor's claim
for breach of contract damages for lack of jurisdiction, but
ruled that the appeal from the Contracting Officer's denial of
its claim for termination costs was a justiciable
controversy.2 R.C. Swanson Printing and Typesetting Company,
GPO BCA 15-90 (March 6, 1992), Sl. op. at 2. However, because
the termination cost question could not be decided on the
record as it existed, the Board ordered a hearing to take
evidence on that issue. Id., Sl. op. pp. 41-42. GPO
Instruction 110.12, Rules 8, 17-25.
Accordingly, a hearing was conducted by the Board on June 2,
1992, for the purpose of developing evidence on the issue of
termination costs (Tr. 4).3 At the hearing, the Respondent
was represented by counsel, while the Appellant appeared pro
se. Thereafter, both parties filed timely briefs and reply
briefs with the Board addressing the issues involved.4 Based
on the record in this case, including the evidence developed
at the hearing and the written arguments of the parties
contained in their posthearing briefs, the Contracting
Officer's decision disposing of the Appellant's termination
cost claim is REVERSED, and the matter is REMANDED to the
Contracting Officer for further action in accordance with this
opinion.
I. BACKGROUND
The relevant facts in this appeal are undisputed and were set
forth at length in the Board's Decision and Order of March 6,
1992. They are repeated here only to the extent necessary for
the Board's decision on the termination cost issue.
This controversy stems from the Respondent's issuance, on
December 1, 1988, of Purchase Order 70992 to the Appellant for
the production of legal briefs for the Department of Justice
(DOJ) under Program D404-M (R4 File, Tabs A, pp. 1, 5 and D).
Purchase Order 70992 was a term contract for the period
beginning December 1, 1988, and ending November 30, 1989. The
Appellant's contract price for the work over the term was
$504,702.66. Id.
Among other contract specifications, Program D404-M provided,
in pertinent part:
QUANTITIES: . . . The quantities of items specified herein
are estimates only, and are not purchased hereby. Except
as may be otherwise provided in this contract, if the
Government's requirements for the items set forth herein do
not result in orders in the amounts or quantities described
as "estimated," it shall not constitute the basis for an
equitable price adjustment under this contract (R4 File,
Tab A, p. 3). [Emphasis added.]
Except as otherwise provided in this contract, the
Government shall order from the contractor(s) all the items
set forth which are required to be purchased by the
Government activity identified on page 1 (R4 File, Tab A,
p. 3). [Emphasis added.]
The Government shall not be required to purchase from the
contractor(s), requirements in excess of the limit on total
orders under this contract, if any (R4 File, Tab A, p. 3).
* * * * * * * * * *
Subject to any limitations elsewhere in this contract, and
pursuant to the section entitled "DETERMINATION OF AWARD
AND PLACEMENT OF WORK," the low contractor and each
successive low contractor shall furnish to the Government
all items set forth herein which are called for by print
orders issued in accordance with the "Ordering" clause of
this contract, except when the shipping/delivery schedule
cannot be met (R4 File, Tab A, p. 4).
* * * * * * * * * *
FREQUENCY OF ORDERS: Approximately 65 orders per month (R4
File, Tab A, p. 5).
QUANTITY: Approximately 50 to 1,000 copies per order.
(Most orders will be for 400 copies or less.) (R4 File, Tab
A, p. 5).
NUMBER OF PAGES: 4 to 400 pages per order. (Most order[s]
will be for 64 page[s] or less, however an occasional order
may have up to 1,200 pages.) (R4 File, Tab A, p. 5).
* * * * * * * * * *
DETERMINATION OF AWARD AND PLACEMENT OF WORK
The Government will make multiple awards under this
solicitation since it is anticipated that one firm may not
be able to meet all of the requirements (R4 File, Tab A, p.
11).
In order to make multiple awards and to determine the
sequence of bidders, the Government will apply the prices
quoted by each bidder in the "Schedule of Prices" to the
following units of production which are the estimated
requirements to produce one year's under this contract.
These units do not constitute, nor are they construed as a
guarantee of the volume of work which may be ordered for a
like period of time (R4 File, Tab A, p. 11).5 [Emphasis
added.]
On April 11, 1989, the Contracting Officer asked GPO's
Contract Review Board (CRB) to approve termination of the
Appellant's Program D404-M contract for the convenience of the
Government because the DOJ had decided that its needs had
changed. Specifically, the DOJ wanted briefs produced from
both manuscript copy and electronically transmitted data, and
the existing Program D404-M did not provide for the production
of briefs from dual sources; i.e., it was strictly a
manuscript copy contract. By April 12, 1989, all members of
the CRB had given their approval for the proposed termination
action (R4 File, Tab E). See, PPR, Chapter XIV, Section 2 ¶
3.(a).
On May 19, 1989, the Respondent telephoned the Appellant to
inform it that Program D404-M was being terminated for the
convenience of the Government, and to seek its agreement to
terminate the contract without additional cost (R4 File, Tabs
F and H).6 The Appellant would not agree to a no-cost
cancellation of the contract, and instead filed a claim for
$237,000 with the Contracting Officer (R4 File, Tab I). As
stated in its letter, dated September 9, 1989, the basis of
the Appellant's claim was, in pertinent part:
Purchase Order 70992 was issued, effective December 1, 1988
through November 30, 1989. It was issued to cover work
performed under Program [D]404-[M]. Swanson was the low
bidder with a bid of $560,780.73 . . . As of September 6,
1989, when the contract was terminated, Swanson had been
paid, or was still owed, $288,261.48. This means the
contract still had an estimated $272,519.25 of work to
expect under the contract.
Swanson had been the [No.]1 contractor since September 1,
1984 and had every reason to believe and expect the [G]
overnment to procure the total amount as they had the prior
years. September, October and November have traditionally
been the busiest months.
Swanson acquired certain capital equipment in 1984 and 1985
specifically gearing its facilities for this legal brief
work. These capital expenditures were tied to Swanson's
plans to keep the [D]404-[M] program to cover these costs.
There are still amounts left owing on these capital
acquisitions which would have been paid off if the [GPO]
had not terminated the contract.
These capital purchases have a balance of approximately
$70,500.00 which would have been paid up with proceeds from
the remaining $272,519.25 of Purchase Order 70992.
Furthermore, the loss of this contract suddenly with no
adjustment period does not allow Swanson adequate time to
replace such a substantial portion of its sales. Swanson's
gross sales during the 9 months that Purchase Order 70992
was in effect were $418,479.33. Purchase Order 70992
represented 69% of gross sales for that 9 month period. . .
.
. . . [T]he bill [for a typical job under the contract]
would be $842.16, Swanson's direct costs [would be]
$109.17. This would have yielded a gross profit of $732.99
to go towards capital costs and overhead. 87.04%
represented gross profit. Swanson expected to receive on
the remaining $272,519.25 of Purchase Order 70092[,]
87.04%, or $237,200.76 to go to overhead and capital debt
elimination as well as profit.
Swanson hereby makes a claim for $237,200.76 on the
Government's Termination for convenience of Purchase Order
70992 plus any future costs incurred in relation to this
claim (R4 File, Tab I).
On September 26, 1989, the Respondent issued a formal "Notice
of Termination" (Notice) to the Appellant (R4 File, Tab J).
The Notice informed the Appellant that the effective date of
termination was September 6, 1989, which was approximately 3
months or 12 weeks prior to the end of the contract term
(November 30, 1989) (R4 File, Tab J). The Notice also
instructed the Appellant, among other things, to submit a
settlement proposal on GPO Form 911 (which was enclosed) in
accordance with the "Termination for Convenience of the
Government" (TCG) clause in the contract (R4 File, Tab J).
See, GPO Contract Terms, Contract Clauses, ¶ 19(c).
Accordingly, by letter dated October 2, 1989, the Appellant
sent the Contracting Officer a properly filled out GPO Form
911 with a claim in the amount of $245,796.75 (R4 File, Tab
K).7
The Appellant's termination settlement proposal was referred
to GPO's Office of the Inspector General (OIG) for an audit
(R4 File, Tabs M and N). In referring the Appellant's
proposal, the Contracting Officer asked the OIG to "determine
the basis for and the accuracy of the amounts included in that
claim[.]" (R4 File, Tab M). [Emphasis added.] The OIG issued
its audit report of the Appellant's claim on February 27, 1990
(R4 File, Tab Q) (hereinafter OIG Audit Report). The audit
report was based on an examination of the Appellant's
settlement proposal, documents in GPO's procurement file, and
records furnished by the contractor (R4 File, Tab Q,
Attachment I). Of the Appellant's claim of $245,796.75, the
audit report questioned $244,265.86, leaving a balance of
$1,530.89 (R4 File, Tab Q, Attachment III, p. 1).
With respect to the "Basis of the Claim," the OIG Audit Report
states, in pertinent part:
[The Appellant] estimated the dollar value of the
terminated portion of the contract to be $272,519. [The
Appellant] arrived at this figure by estimating the total
dollar value of the contract to be $560,781 and deducting
the $288,261 that the contractor claimed had been shipped
and invoiced on the contract. However, the contract
specifications stated, "The quantities of items specified
herein are estimates only, and are not purchased hereby.
Except as may be otherwise provided in this contract, if
the Government's requirements for the items set forth
herein do not result in orders in the amounts or quantities
described as 'estimated,' it shall not constitute the basis
for an equitable price adjustment under this contract."
See, OIG Audit Report, p. 1. [Emphasis added.]
As for the specific items encompassed in the Appellant's
settlement proposal, the OIG Audit Report discloses the
following:
1. Labor Costs: Of the Appellant's claim for labor costs
($6,468.00), the audit found that the Contractor could only
support $809.80 ($404.80 for health care premiums and
$405.00 for severance pay) with documentation. Thus, the
report questioned $5,658.20 of the claim.8
2. Overhead Expenses: The Appellant claimed overhead
expenses of $136,230.00. Although the auditors did not
question the Appellant's overhead rate of 48.51 percent,
they applied that rate only to the costs which they felt
were directly associated with the termination of the
contract-the labor costs. As a result, the report
determined that $392.83 was allowable on the claim. As for
indirect costs, the auditors said that they should be
disallowed as unabsorbed overhead. [Citing, Technology,
Inc., ASBCA No. 14083, 71-2 BCA ¶ 8956.]
3. Capital Acquisition Debt: The Appellant asked for
$46,901.00 as reimbursement for the equipment it had
purchased to perform work under Program D404-M when it
first acquired the contract five years previously. The
auditors noted that Program D404-M was procured annually,
thus the Appellant was never guaranteed more than a year's
work under a Program D404-M contract. Furthermore, the OIG
auditors relied on the Contracting Officer's representation
that GPO did not have an agreement with the Appellant to
purchase machinery, that specialized machinery was not
required to perform the contract, and that the machinery in
question would have been used on any typesetting job, to
support their conclusion that the capital acquisition claim
should be denied in its entirety.
4. General and Administrative Expenses: Using a rate of
5.51 percent for general and administrative expenses, the
Appellant claimed $15,016.00 in such expenses on the
terminated portion of the contract. Although the auditors
accepted the Appellant's rate of 5.51 percent, when they
applied it to the "small dollar value of direct costs"
involved they allowed only $44.62 toward general and
administrative expenses. As for general and administrative
expenses which were not related to direct costs, the
auditors believed that they should be disallowed as being
merely a claim for lost business. [Citing, Chamberlain
Manufacturing Company, ASBCA No. 16877, 73-2 BCA ¶ 10,139.]
5. Lost Profit: The Appellant claimed $40,878.00 as lost
profit on the remainder of the contract. The OIG auditors,
however, found that the entire claim was disallowable on
the ground that the Government is not responsible in
termination for convenience cases for paying for work which
is neither ordered or performed. [Citing, Shin
Enterprises, Inc., ASBCA No. 16542, 72-1 BCA ¶ 9,391.]
6. Settlement Expenses: The Appellant claimed settlement
expenses of $303.75, which represented 27 hours of
termination proposal preparation time at an hourly rate of
$11.25. The auditors, however, found that the records of
the actual hours and pay rates of the employees who worked
on the proposal only supported a settlement expense figure
of $283.64.9 See, R4 File, Tab Q, Attachment III, pp. 3-6.
On March 23, 1990, the Contracting Officer wrote to the
Appellant offering to settle the termination claim essentially
as recommended by the OIG auditors (R4 File, Tab S).10 By
letter dated March 29, 1990, the Appellant rejected the
Contracting Officer's settlement offer (R4 File, Tab T).
Accordingly, on April 10, 1990, the Contracting Officer issued
a final decision on the Appellant's termination settlement
proposal, which disallowed all of the Contractor's claim
except for $283.53 (R4 File, Tab U). In that regard, the
Contracting Officer wrote, in pertinent part:
In your letter [of March 29, 1990], you fail to address any
specific points from my March 23, 1990 letter to you or to
provide any additional information in support of your claim
which would provide a basis for further discussion.
Therefore I have concluded that, of the $245,796.75 claim
in your October 2, 1989 settlement proposal, all claimed
costs are denied with the exception of $283.64 representing
the costs of preparing your settlement proposal. This
decision is made based on the reasons as stated in my March
23, 1990 letter (R4 File, Tab U).
The Appellant responded by filing this appeal with the Board
(R4 File, Tab V).
II. ISSUES PRESENTED
In its Decision an Order of March 6, 1992, the Board described
the central issue with regard to the disposition of the
Appellant's termination proposal as:
Was the Contracting Officer's decision denying nearly all
of the Appellant's claim for settlement costs correct, and
if not what should be the appropriate termination costs?11
It is clear, however, that subsumed in this overall question
are two others which must be answered in order to resolve the
dispute over the Contracting Officer's disallowance of nearly
the whole termination claim submitted by the Appellant:
1. Did the Contracting Officer use the proper cost basis
for considering the Appellant's settlement proposal in this
case?
2. Has the Appellant provided sufficient proof to show
that it incurred the costs connected with the terminated
contract described in its claim?
III. POSITIONS OF THE PARTIES
The respective positions of the parties on the issues
presented in this appeal were set forth in the Board's
Decision and Order of March 6, 1992. R.C. Swanson Printing
and Typesetting Company, supra, Sl. op. at 19-22. Suffice it
to say, the Appellant believes that the proper measure for
termination costs is the estimated value of the contract over
its entire term. See, App. Brf., p. 1-2, ¶¶ 3-5; App. R.
Brf., pp. 1, 5; Tr. 13, 19-20, 28; PCR, p. 8. Furthermore,
the Appellant contends that its claim for termination costs is
fully justified and reasonable under the circumstances.12
See, App. Brf., pp. 2, 3 ¶¶ 5,6, 8 ; App. R. Brf., 1-3, Tr.
14-15.
The Respondent, on the other hand, believes that the cost
basis of the contract became fixed at the moment of
termination-that is the practical effect of its position that
each print order is a separate contract. R. Brf., pp. 7-8;
Tr. 97-98; PCR, p. 6. Furthermore, since the Government had
already paid the Appellant for all the work it performed, the
Respondent believes that there is no basis for any additional
claim. R. Brf., p. 7; Tr. 22, 97-98; PCR, p. 6. The
Respondent also rejects the major underlying assumption of the
Appellant's claim, namely, that the contract implied a
guarantee of a certain quantity of work. R. Brf., pp. 2, 7-8;
R. R. Brf., p. 4; Tr. 19-20, 97-98; PCR, p. 6. Moreover,
since Program D404-M is awarded annually through open
competition and there is no guarantee that the Appellant will
be the successful bidder each time, the Respondent believes
that no basis exists for the Government to defray the cost of
the machinery which the Contractor had purchased several years
ago and used in performing the contract. R. Brf., p. 5; Tr.
62-63; PCR, p. 6. Finally, since the Contractor has the
burden of establishing the amount of its incurred costs
associated with the termination for convenience, the
Respondent contends that the Appellant's inability to provide
the Contracting Officer and/or the OIG auditors with tangible
support for its settlement proposal, warrants disallowance of
the claim.13 R. Brf., pp. 2, 8-9; R. R. Brf., p. 4; Tr. 4-5;
PCR. p. 6. See, PPR, Chapter XIV, Section 2 ¶ 3.j(7)(c)
(i)-(iii).
IV. DECISION14
1. In considering the Appellant's settlement proposal, the
Contracting Officer failed to take into account that the
terminated contract was a "requirements" contract. Thus,
the decision disallowing nearly all of the claim for
termination costs was made using the wrong cost basis.
In its initial Decision and Order of March 6, 1992, ruling on
the "breach of contract" issue raised by the Appellant, the
Board held that it had no jurisdiction to consider "pure"
breach of contract questions because, inter alia: (1) the
Board was essentially a creature of the "Disputes" clause of
the contract; and (2) its jurisdiction was derivative and
contractual, and hence it was limited to the "four corners" of
the agreement in deciding disputes. R.C. Swanson Printing and
Typesetting Company, supra, Sl. op. at 24-27 (citing, The
Wessel Company, GPO BCA 8-90 (February 28, 1992), Sl. op. at
32-33, 46; Peake Printers, Inc., GPO BCA 12-85 (November 12,
1986), Sl. op. at 6; Bay Printing, Inc., GPO BCA 16-85
(January 30, 1987), Sl. op. at 9). Consequently, in resolving
the dispute over settlement costs which divides the parties
here, the Board is constrained to look for guidance in the TCG
clause of the contract itself.
In that regard, the TCG clause provides, in pertinent part:
(d) Subject to paragraph (c) above, the contractor and
the Contracting Officer may agree upon the whole or any
part of the amount to be paid because of the termination.
The amount may include a reasonable allowance for profit on
work done. However, the agreed amount, whether under this
paragraph (d) or paragraph (e) below, exclusive of costs
shown in subparagraph (e)(3) below, may not exceed the
total contract price as reduced by (1) the amount of
payments previously made, and (2) the contract price of
work not terminated. The contract shall be amended and the
contractor paid the agreed amount. . . .
(e) If the contractor and the Contracting Officer fail to
agree on the whole amount to be paid because of the
termination of work, the Contracting Officer shall pay the
contractor the amounts determined by the Contracting
Officer as follows, but without duplication of any amounts
agreed on under paragraph (d) above:
(1) The contract price for completed supplies or services
accepted by the Government . . . not previously paid for,
adjusted for any savings of freight and other charges.
(2) The total of-
(i) The costs incurred in the performance of the work
terminated, including initial costs and preparatory
expenses allocable thereto, but excluding any costs
attributable to supplies or services paid or to be paid
under subparagraph (e)(1) above;
(ii) The cost of settling and paying termination
settlement proposals under terminated subcontracts that
are properly chargeable to the terminated portion if not
included in subdivision (i) above; and
(iii) A sum, as profit on subdivision (i) above,
determined by the Contracting Officer to be fair and
reasonable; . . .
(3) The reasonable costs of settlement of the work
terminated, . . . GPO Contract Terms, Contract Clauses, ¶¶
19(d),(e). [Emphasis added.]
A comparison of the above-quoted TCG provisions with the
termination for convenience clauses in the Federal Acquisition
Regulation (FAR), discloses that the GPO clause is essentially
a verbatim adoption of the FAR provisions relating to
convenience terminations of fixed price contracts. See, FAR,
Part 52, §§ 52.249-2(e)(f).
As the TCG clause indicates, under a termination for
convenience, a contractor is generally entitled to reasonable
costs incurred, a reasonable profit on them, and the costs of
settlement; i.e., preparing the termination settlement
proposal. See, e.g., Humphrey Logging Company, supra, 85-3
BCA ¶ 18,433; Bay Ridge Press, GPOCAB No. 4-82, Sl. op. at 3
(September 15, 1983).15 Although a termination settlement
should compensate the contractor fairly, it is the contractor
who has the burden of establishing both that costs were
actually incurred and the amount of its incurred costs. Cf.,
Building Maintenance Specialists, Inc., ENGBCA No. 5654, 90-3
BCA ¶ 23,032. Indeed, actual incurrence of costs is a
prerequisite to recovery under a termination for convenience;
i.e., if the contractor has incurred no cost, there is no
recovery.16 Seiler Instrument and Manufacturing Company,
Inc., ASBCA No. 44380, 93-1 BCA ¶ 25,436. Accordingly, in
these cases the contractor's cost, not the value of the
performance to the Government, is the measure of recovery.
See, e.g., Fil-Coil, ASBCA No. 23,137, 79-1 BCA ¶ 13,618
(1978), mot. for reconsid. denied, 79-1 BCA ¶ 13,683 (1979);
Scope Electronics, Inc., ASBCA No. 20359, 77-1 BCA ¶ 12,404,
mot. for reconsid. denied, 77-2 BCA ¶ 12,586 (1977); Arnold H.
Leibowitz, GSBCA CCR-1, 76-2 BCA ¶ 11,930 (1976).
A second aspect of TCG clauses is the limitation placed on the
contractor's recovery, namely, the "total contract price."
GPO Contract Terms, Contract Clauses, ¶¶ 19(d); FAR, Part 52,
§ 52.249-2(e). An examination of the cases discloses three
things about the concept of "total contract price": (1) it
sets the maximum amount a contractor may recover under a
termination for convenience; (2) it is important when
considering the recovery of costs continuing after
termination; cf., Nolan Brothers, Inc. v. United States, 194
Ct.Cl. 1, 437 F.2d 1371 (1971); Celesco Industries, Inc.,
ASBCA No. 22460, 84-2 BCA ¶ 17,295; Pioneer Recovery Systems,
Inc., ASBCA No. 24658, 81-1 BCA ¶ 15,059 (1981); Chamberlain
Manufacturing Corporation, supra, 73-2 BCA ¶ 10,139 (1973);
and (3) it is variable insofar as the "total contract price"
is directly related to the type of contract involved in the
termination of convenience. See, e.g., Alta Construction
Company, PSBCA No. 1463, 92-2 BCA ¶ 24,824; Okaw Industries,
Inc., ASBCA Nos. 17863, 17864, 77-2 BCA ¶ 12,793 (in
indefinite quantities contracts, the "total contract price" is
the minimum price plus quantities ordered in excess of
minimum). In other words, where a contract has been
terminated for the convenience of the Government, the "total
contract price" establishes the cost basis of the termination
settlement.
The core controversy in this appeal involves the parties'
differing views about the proper measurement of the "total
contract price," where, as here, a requirements contract is
terminated for convenience. As indicated above, the Appellant
believes that in such a case termination costs should be based
on the estimated value of the contract over its entire term.
See, App. Brf., p. 1-2, ¶¶ 3-5; App. R. Brf., pp. 1, 5. The
Respondent, rejecting the Appellant's contention that the
contract implied a guarantee of a certain quantity of work,
argues that because each print order is a separate contract,
the cost basis of the contract became fixed at the moment of
termination. R. Brf., pp. 2, 7-8; R. R. Brf., p. 4. Thus, as
the Board interprets the Respondent's theory, GPO seems to be
arguing that the convenience termination of the Appellant's
requirements contract in effect converted it into a fixed
price contract-or a series of fixed price contracts (print
orders)-for termination settlement purposes. Contrary to the
Respondent's position, however, a reading of the cases in this
area tells the Board that for a requirements contract the
"total contract price" for the purpose of the TCG clause is,
as claimed by the Appellant, the estimated contract price.17
See, e.g., Albano Cleaners, Inc. v. United States, 197 Ct.Cl.
450, 455 F.2d 556 (1972); Aviation Specialists Inc., DOT BCA
No. 1967, 91-1 BCA ¶ 23,534.
Aviation Specialists Inc. is particularly instructive in
understanding why the "total contract price" for a terminated
requirements contract is the "estimated contract price." In
that case, where a requirements contract for use of a
particular aircraft was terminated for convenience, the
Department of Transportation Board of Contract Appeals
(DOTBCA) permitted the contractor to recover its post-
termination costs for the six months remaining in a one year
contract including depreciation, overhead and profit.
Aviation Specialists Inc., supra, 91-1 BCA ¶ 23,534, at
117,992, 117,994. Although it limited the Contractor's
recovery to the "total contract price" established by using
the Federal Aviation Administration's (FAA) pre-award estimate
of its requirements, the DOTBCA observed that the FAA could
have avoided liability altogether if it had let the contract
expire instead of terminating it. Id., at 117,992.
As set forth at length in the DOTBCA's decision, the rationale
for equating the "total contract price" with the "estimated
contract price" in a terminated requirements contract is, in
pertinent part:
A requirements contract is a contract by which one party,
the seller, agrees to satisfy all of the buyer's
requirements for services and/or items for a specified
period of time. That contract is violated if either the
buyer does not purchase all of its requirements from the
seller, or, if the seller fails to satisfy all of the
buyer's needs. The consideration that makes such a
contract binding is the buyer's promise to purchase all of
its requirements from the seller and the seller's promise
to satisfy those requirements. We cannot take lightly the
FAA's obligation to purchase all of its requirements from
appellant. The appellant had a right to rely on this
obligation when planning to perform the contract. . . .
Id., at 117,991. [Emphasis added.]
* * * * * * * * * *
The "Termination for Convenience" clause of the contract
provided that the cost principles of Part 31 of the Federal
Acquisition Regulation would govern all costs claimed in
the event of such a termination. Part 31 provides that
costs which cannot be discontinued immediately after
termination are allowable. After termination, appellant
made reasonable, though unsuccessful, efforts to promptly
dispose of the plane. Aviation Specialists also acted
reasonably in attempting to mitigate damages. It was able
to lease the plane during some of the period and apply the
profits received from these operations against its
continuing costs. Thus, under the contract provisions,
Aviation Specialists is entitled to be reimbursed for its
continuing costs after termination.18 Id., at 117,992.
* * * * * * * * * *
We find that, . . . , Aviation Specialists is entitled to
recover its costs relating to the aircraft which continued
after the date of termination. These costs are
recoverable, pursuant to the plain language of the contract
including Part 31 of the Federal Acquisition Regulation.
The costs which appellant had claimed were incurred as a
direct result of obligation Aviation Specialists undertook
to perform the contract. These costs could not reasonably
be discontinued during the remaining contract term. . . .19
Id.
* * * * * * * * * *
The "Termination for Convenience" provision states that a
contractor's entitlement to payment cannot exceed the
"total contract price" as reduced by the payments
previously made and the price of the work not terminated.
This contract does not contain any amount denominated as
the "total contract price." Were this a fixed price
contract the Government's liability would be limited by the
price of the contract. Surely under a requirements
contract where the Government has no obligation to purchase
any fixed amount of supplies, the parties could not have
intended for that obligation to become limitless in the
event of termination. On the other hand, . . . , limiting
the FAA's obligations to those services actually ordered
would have the effect of permitting the FAA to avoid its
obligation at any time, at no cost. Under such
circumstances there would be no binding obligation and the
contract would fail for lack of consideration. [Citation
omitted.] The portion of the termination for convenience
clause limiting a contractor's recovery to the total
contract price is ambiguous in its application to
requirements contracts. We must therefore determine the
limits of the FAA's obligation. Id., at 117,993.
[Emphasis added.]
* * * * * * * * * *
Under an indefinite quantities contract the "total contract
price" for purposes of the Termination of Convenience
clause is the minimum price set forth in the contract plus
the value of any services ordered in excess of that
minimum. [Citation omitted.] . . . However, there is a
significant difference between the parties' rights and
obligations under a indefinite quantities contract and
under a requirements contract. In the former case the
contractor is aware that the Government's obligation is
only to order the minimum quantity set forth in the
contract. After the Government has satisfied that
obligation, the Government can purchase its requirements
from other sources.
However, under a requirements contract, the Government's
obligation is not so limited. While there may be no
minimum quantity that must be obtained, the Government must
purchase all of its needs from the contractor for the
contract period.
Thus, when planning its performance under a requirements
contract, the contractor has a right to rely on the
estimated quantity as set forth by the Government in the
contract. In Albano Cleaners, Inc. v. United States, [17
CCF ¶ 81,144] 455 F.2d 556, 197 Ct.Cl. 450 (1972), the
court had before it a contract which contained a minimum
contract price, as in an indefinite quantities agreement.
The contract otherwise was similar to a requirements
contract in that the Government was required to order all
of its needs from the contractor. The court held that
under a termination for convenience, the contractor was not
limited by the minimum contract price, but was entitled to
receive all of the expenses it incurred in preparing to
fulfill its contractual obligations.
Here, the FAA agreed that for one year it would purchase
all of its specified needs from Aviation Specialists. It
estimated that 500 hours of airplane time at a cost of
$212,250.00 would be required. Based on this
representation appellant purchased an aircraft for use on
the contract. We conclude that under a requirements
contract the "total contract price" for the purpose of the
termination for convenience clause is the estimated
contract price. Thus, FAA must reimburse appellant is
allowable costs as we have set forth above, up to a maximum
of $212,250.00. Id., at 117,994. [Emphasis added.]
Applying the principles of Aviation Specialists Inc. to this
appeal, which also involves a requirements contract, it is
clear that the Appellant's argument that termination costs
should be based on the estimated value of the contract over
its entire term, is consistent with the law. Consequently, by
using the Government's estimates of work over the life of the
contract to extrapolate a total contract price of $560,780.73
for its settlement proposal, the Appellant computed the "total
contract price" for the purposes of the TCG clause by the
proper method (R4 File, Tab K).20 Therefore, the Board also
finds that the Respondent's reliance on so much of the
contract specifications which told bidders, inter alia, that
the contract quantities were estimates only and not a
guarantee of work or a basis for an equitable price
adjustment, is misplaced in the context of this case. When
the Contracting Officer applied that view to the Appellant's
settlement proposal, the effect was to treat the terminated
contract as if it were one for a fixed price instead of the
requirements contract which the parties had bargained for.21
For this reason, the Board concludes that the Respondent
employed the wrong cost basis of the contract when it
considered the Appellant's settlement proposal, and thus the
decision disallowing nearly all of the claim for termination
costs was erroneous as a matter of law. Accordingly, the
Board REVERSES the Contracting Officer's termination cost
decision, and will REMAND the matter to the Contracting
Officer for further action in accordance with this opinion.22
Cf., RD Printing Associates, Inc., GPO BCA 02-92 (December 16,
1992), Sl. op. at 37 [citing, General Business Forms, Inc.,
GPO BCA 2-84 (December 3, 1985), Sl. op. at 23].
V. CONCLUSION
For the above reasons, the Board finds and concludes that: (1)
the Appellant correctly figured its termination settlement
proposal on the basis of the estimated contract price over the
life of the contract; (2) the Contracting Officer's failure to
take into account that the terminated agreement was a
requirements contract resulted in a decision which disallowed
nearly all of the Appellant's claim for termination costs by
using the wrong cost basis; and (3) the record in this case
does not provide the Board with the necessary factual
information to determine the appropriate settlement allowances
for the Appellant's claim in light of the rule expressed in
Aviation Specialists, Inc. ACCORDINGLY, the decision of the
Contracting Officer is REVERSED, and the appeal is allowed.
FURTHERMORE, the matter is REMANDED to the Contracting Officer
with instructions to reconsider the Appellant's claim in light
of this Supplemental Decision and Order, and to offer
compensation in settlement which is fair and reasonable under
the circumstances. See, Codex Corporation v. United States,
226 Ct.Cl. 693, 698 (1981). Also see, PPR, Chapter XIV,
Section 2 ¶ 3.k(1)(iii).
It is so Ordered.
July 1, 1993 STUART M. FOSS
Administrative Judge
_______________
1 The Contracting Officer's appeal file, assembled pursuant
to Rule 4 of the Board's Rules of Practice and Procedure, was
delivered to the Board on June 29, 1990. GPO Instruction
110.12, Subject: Board of Contract Appeals Rules of Practice
and Procedure (GPO Instruction 110.12), dated September 17,
1984 (Board Rules), Rule 4. It will be referred to hereafter
as R4 File, with an appropriate Tab letter also indicated.
The R4 File consists of documents identified as Tab A through
Tab V.
2 The bifurcated nature of the Appellant's appeal was clear
from the pleadings and documentation in the appeal file.
See, R4 File, Tab V; Appeal File, Tabs 1 and 6 (the Board's
appeal file will be referred to hereafter as App. F., with an
appropriate Tab number also indicated). See also, Prehearing
Telephone Conference Report (PCR), pp. 11-12.
3 The court reporter's transcript shall be referred to herein
as "Tr." with an appropriate page number thereafter.
4 Although the Respondent's initial brief is entitled
"Respondent's Closing Argument on Issue of Termination
Costs," it will be referred to hereinafter as "R. Brf.", with
an appropriate page citation thereafter. The Appellant's
initial brief will be cited as "App. Brf.," with an
appropriate page number thereafter.
The Respondent's reply brief and the Appellant's reply brief
shall be referred to as "R. R. Brf." and "App. R. Brf.,"
respectively, with an appropriate page citation thereafter.
5 As indicated in the Board's March 6, 1992, Decision and
Order in this matter, the invitation for bids (IFB) on
Program D404-M also provided that the contract would be
governed by GPO Contract Terms effective December 1, 1987.
R.C. Swanson Printing and Typesetting Company, supra, Sl. op.
at 3, fn. 4. In its undated posthearing brief, which the
Board received on July 20, 1992, the Appellant advanced the
argument that this IFB provision meant that the 1987 version
of GPO Contract Terms governed the dispute, and that the
Respondent's reliance on the 1988 revision was misplaced.
App. Brf., p. 1, ¶¶ 1, 2. The gravamen of the Appellant's
contention was that the 1987 version of GPO Contract Terms
made no provision for the application of "any cost accounting
standards" to this dispute. App. Brf., p. 1, ¶ 1. In its
reply brief of July 27, 1992,, the Respondent's disputed the
Appellant's argument. R. R. Brf., pp. 1-3. The Board
resolved this issue in footnote 4 of its Decision and Order
when it held that the 1988 version of GPO Contract Terms was
the relevant regulation for the purpose of this appeal. R.C.
Swanson Printing and Typesetting Company, supra, Sl. op. at
3, fn. 4. Thus, the Board observed that: (a) the IFB was
issued and the contract awarded after the 1988 revisions to
GPO Contract Terms went to effect-September 1988; and (b)
even the revised IFB for Program D404-M issued by the
Respondent on May 23, 1989, for the period from July 1, 1989,
to June 30, 1990, still referred to GPO Contract Terms
effective December 1, 1987 (R4 File, Tab G, p. 2). Id. In
any event, GPO's Printing Procurement Regulation, which was
in effect on the date the contract was awarded to the
Appellant, specifically states that the Contracting Officer
shall use cost principles, inter alia, in "[p]roposing,
negotiating, or determining costs under terminated
contracts[;]". GPO Printing Procurement Regulation, GPO
Publication 305.3, revised September 1, 1988, Chapter VIII,
Section 1 ¶ 3.b(1) (hereinafter PPR).
6 In termination for convenience cases, it is GPO policy for
the Contracting Officer to explore the possibility of a no-
cost settlement with the contractor, where it looks as if
very small costs were incurred on the terminated portion of
the contract and the contractor may be willing to waive
his/her right to collect in order to avoid the administrative
work and expense associated with processing a claim. PPR,
Chapter XIV, Section 2 ¶¶ 2, 3.j(4). In fact, one of the
other contractors on the Program D404-M contract, Wilson-
Epes, did agree to a no-cost settlement (R4 File, Tab F).
R.C. Swanson Printing and Typesetting Company, supra, Sl. op.
at 10, fn. 11.
7 The settlement proposal submitted by the Appellant
discloses the following information: (a) Section I (Bid Price
Cost Breakdown)-material ($28,946.00), labor ($39,922.00),
overhead ($280,391.00), general and administrative expense
($127,405.00), and profit ($84,117.00); (b) Section II
(Status of Contract At Effective Date of
Termination)-$288,261.00 previously shipped and invoiced, and
$272,519.00 not to be completed, for a total covered by the
contract of $560,781.00; and (c) Section III (Settlement
Proposal)-labor ($6,468.00), overhead ($136,230.00), capital
acquisition debt ($46,901.00), general and administrative
expense ($15,016.00), lost profit ($40,878.00), and
settlement expenses ($303.75), for a total proposal price of
$245,796.75 (R4 File, Tab K).
8 As indicated in the OIG Audit Report, the Appellant's labor
costs were a combination of health premiums and severance
pay. OIG Audit Report, Attachment III, p. 3, fn. 1.
Subsequently, by letter dated April 15, 1992, to Counsel for
GPO, the Appellant sought payment for additional labor costs
based on a potential increase in its contribution to the
State of Maryland unemployment fund because it had to lay off
employees when the contract was terminated. The Respondent
contends, inter alia, that this aspect of the Appellant's
labor cost claim cannot be considered by the Board because it
is untimely. R. Brf., p. 4. The Board agrees. The TCG
clause in the contract clearly states that a contractor shall
submit his/her termination settlement proposal ". . .
promptly, but no later than 3 months from the effective date
of termination, unless extended in writing by the Contracting
Officer upon written request of the contractor within this 3-
month period." GPO Contract Terms, Contract Clauses, ¶
19(c). In the Board's view, the Appellant's claim based on
its contribution to the Maryland unemployment compensation
fund is not so much a request for additional labor costs as
it is a demand that the Government defray its tax burden to
the State. As such, it is not an amendment to an existing
claim, but a new one. Under the circumstances, the Board has
no jurisdiction over a claim filed by the Appellant after the
contractual period for filing a termination settlement
proposal (3 months). See, e.g., Mictonics, Inc., ASBCA No.
30262, 85-2 BCA ¶ 18,119.
9 On March 21, 1990, the Contracting Officer contacted Laurel
Wilson of the OIG staff for additional information on the
settlement expenses portion of the audit report (R4 File, Tab
R). According to Wilson, one problem with performing the
audit was that the Appellant did not explain how he arrived
at his figures, although a list of hours worked, well as the
hourly rate for two employees-Rita Langford and Larry Ford-
was provided to the OIG auditors (R4 File, Tab R). While no
hourly rate was provided for Richard Swanson, the auditors
believed $15.00 an hour was fair compensation (R4 File, Tab
R).
10 An examination of the Contracting Officer's letter of
March 23, 1990, discloses the following disposition of the
Appellant's claim: (1) Labor costs for severance pay
($6,468.00 claimed)-$809.80 of the claim could be supported
if the Appellant proved that amount was actually paid, that
the employees spent a substantial amount of their time on
contract work, and the employees were released because of the
termination of Program D404-M (the balance of the claim was
denied); (2) Overhead expenses ($136,230 claimed)-provided
that the labor costs of $809.80 was supported with additional
evidence, $392.83 (based on a claimed overhead rate of 48.51
percent) could be allowed (the balance of the claim,
representing all overhead not related to direct labor costs,
was denied); (3) Capital acquisition debt ($46,901.00
claimed)-the entire amount was denied because the Appellant
was not guaranteed an award of the contract in any given
year, nor a was it assured of a position in the sequence of
bidders, and the equipment in question could be used for a
variety of composition and printing contracts; (4) General
and administrative expenses ($15,016.00 claimed)-provided
that the labor costs of $809.80 was supported with additional
evidence, $44.62 (based on a claimed rate of 5.51 percent)
could be allowed (the balance of such costs not related to
direct labor costs was denied); (5) Lost profit ($40,878.00
claimed)-the entire amount was denied on the ground that
profit on work which was neither ordered nor performed is not
allowed in a termination for convenience; and (6) Settlement
expenses ($303.75 claimed)-$283.64 was allowed as
reimbursement for the cost of preparing the settlement
proposal (the balance was denied because it was not supported
by documentation) (R4 File, Tab S).
11 R.C. Swanson Printing and Typesetting Company, supra, Sl.
op. at 18.
12 During the preliminary stages of this appeal, the
Appellant also argued that the Contracting Officer's
settlement offer was not made in good faith and hence was not
acceptable. See, R.C. Swanson Printing and Typesetting
Company, supra, Sl. op. at 20 (citing, PCR, p. 10). However,
at the hearing and in its post-hearing briefs to the Board,
the Appellant did not pursue that allegation, thus the Board
deems it abandoned for the purpose of this appeal. In any
event, such a "bad faith" claim needs to be established by
"well-nigh irrefragable" proof because of the strong
presumption that Government officials properly and honestly
carry out their functions. See, e.g., Shepard Printing, GPO
BCA 23-92 (April 23, 1993), Sl. op. at 7-8, fn. 11; B. P.
Printing and Office Supplies, GPO BCA 14-91 (August 10,
1992), Sl. op. at 16; Stephenson, Inc., GPO BCA 02-88
(December 19, 1991), Sl. op. at 55; The Standard Register
Company, GPO BCA 4-86 (October 28, 1987); Sl. op. at 12-13.
Also see, Melvin R. Kessler, PSBCA No. 2820, 92-2 BCA ¶
24,857, aff'd on resconsid. 92-2 BCA ¶ 25,092; Federal Data
Corporation, DOTBCA No. 2389, 91-3 BCA ¶ 24,063; 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 a
specific intent on the part of the Government to injure the
contractor. See, Solar Turbines, Inc. v. United States, 26
Cl.Ct. 1249, 1275 (citing, Kalvar Corporation v. United
States, 211 Cl.Ct. 192, 199, 543 F.2d 1298, 1302 (1976),
cert. denied, 434 U.S. 830 (1977)); Stephenson, Inc., supra,
Sl. op. at 54. In the Board's view, no such "irrefragable"
proof of the Respondent's bad faith exists in this record.
Certainly, there is absolutely nothing in the record which
would show that the employees of two separate Government
entities-GPO and the DOJ-set out to harm the Appellant or
that they acted in concert to achieve that specific result.
Id., Sl. op. at 57.
13 See generally, John Cibinic, Jr. & Ralph C. Nash, Jr.,
Administration of Government Contracts 2d ed., (The George
Washington University, 1986), p. 842 (hereinafter Cibinic and
Nash). It is "black letter" law in this area that the
contractor has the burden of proof concerning termination
costs, and in the absence of evidence provided by the
contractor, the contracting officer's allowance will be
accepted. See, e.g., R & B Bewachungs GmbH, ASBCA No. 42214,
92-3 BCA ¶ 25,105; American Geometrics Construction Company,
Inc., ASBCA No. 37334, 92-1 BCA ¶ 24,545; Humphrey Logging
Company, AGBCA Nos. 84-359-3, 85-204-3, 85-3 BCA ¶ 18,433;
Roberts International Corporation, ASBCA No. 15,118, 71-1 BCA
¶ 8869 (1971); Delaware Tool & Die Works, Inc., ASBCA No.
14033, 71-1 BCA ¶ 8860 (1971), mot. for reconsid. denied,
72-1 BCA ¶ 9206 (1972). Also see, PPR, Chapter XIV, Section
2 ¶ 3.j(7)(c)(i)-(iii). While it is preferable to establish
incurred costs from accounting records, if such documentation
is not available due to no fault of the contractor, the costs
may be established on the basis of estimates. See, e.g.,
Bailey Specialized Buildings, Inc., ASBCA No. 10576, 71-1 BCA
¶ 8699 (1971). However, even if estimates are used, the
contractor still has the burden of proof. See, e.g.,
Lagarelli Brothers Construction Company, Inc., ASBCA No.
34793, 88-1 BCA ¶ 20,363 (A contractor's claim for
termination costs was denied because he did not provide
evidence to prove his losses. Cost estimates are acceptable
only if accounting records are unavailable due to no fault of
the contractor. Here the contractor testified to his
estimate of losses, but failed to show that the accounting
records were unavailable). See also, e.g., Clary
Corporation, ASBCA No. 19,274, 74-2 BCA ¶ 10,947 (1974); R.
G. Robbins & Company, ASBCA No. 27,516, 83-1 BCA ¶ 16,420
(1983) (disallowing recovery for general and administrative
expenses not supported by cost data or accounting testimony).
14 The record on which the Board's supplemental decision is
based consists of: (1) the Appellant's letter, dated April
12, 1990, appealing the Contracting Officer's final decision;
(2) the R4 File (Tabs A-V); (3) the Appellant's letter, dated
July 5, 1990, furnish additional information; (4) the
Prehearing Telephone Conference Report; (5) the transcript of
the evidentiary hearing conducted by the Board on June 2,
1992; (6) the Respondent's initial brief, dated July 17,
1992, as amended by its "Erratum" of July 30, 1992; (7)
Appellant's initial brief (undated, but received by the Board
on July 20, 1992; (8) the Respondent's reply brief, dated
July 27, 1992; and (9) the Appellant's reply brief (undated,
but received by the Board on July 27, 1992).
15 The Board was established by the Public Printer in 1984.
GPO Instruction 110.10C, Subject: Establishment of the Board
of Contract Appeals, dated September 17, 1984. Prior to the
Board's creation, appeals from decisions of GPO Contracting
Officers were considered by ad hoc contract appeals boards
(the decisions of these ad hoc boards are hereinafter cited
as GPOCAB). R.C. Swanson Printing and Typesetting Company,
supra, Sl. op. at 28, fn. 30. While the decisions of these
ad hoc boards are not legally binding on the Board, it is
Board policy to follow them where applicable and appropriate.
See, e.g., Chavis and Chavis Printing, GPO BCA 20-90
(February 6, 1991), Sl. op. at 9, fn. 9; Stephenson, Inc.,
supra, Sl. op. at 18, fn. 20.
16 In short, allowable costs incurred, plus profit, will be
recovered, subject to the overall limitation of the contract
price and the possible application of the loss adjustment
provisions. See generally, Cibinic and Nash, note 13 supra,
p. 841.
17 See generally, Cibinic and Nash, note 13 supra, p. 868.
18 Part 31 of the FAR is entitled "Contract Cost Principles
and Procedures." Although this appeal is not covered by the
FAR, for reasons already stated by the Board the standard
cost principles applicable to Government contracts apply to
the terminated contract involved in this dispute, as well.
See, note 5 supra.
19 Specifically, the DOTBCA found that the appellant had
incurred expenses of depreciation, insurance, maintenance,
facilities capital, overhead, and advertising following
termination. The DOTBCA held that these costs were
recoverable as continuing costs under the FAR because they
could not be "reasonably discontinued immediately." Aviation
Specialists Inc., supra, 91-1 BCA ¶ 23,534, at 117,993.
20 See, note 7 supra.
21 Indeed, practically all of the cases cited to the Board by
the Respondent in support of its position involve some
variation of a fixed price contract. See, e.g., KDI
Precision Products, Inc., ASBCA No. 21522, 79-1 BCA ¶ 13,640
(firm fixed price); Chamberlain Manufacturing Company, supra,
73-2 BCA ¶ 10,139 (fixed price incentive); Shin Enterprises,
Inc., supra, 72-1 BCA ¶ 9,391 (fixed price); Technology,
Inc., supra, 71-2 BCA ¶ 8,956 (cost plus fixed fee). The
exception appears to be Dairy Sales Corporation, ASBCA No.
20193, 75-2 BCA ¶ 11,613, aff'd sub nom., Dairy Sales
Corporation v. United States, 593 F.2d 1002 (Ct.Cl. 1979),
which involved the convenience termination of an item in a
requirements contract which was awarded by mistake and on
which no work had been performed. The Respondent cites Dairy
Sales Corporation for two propositions: (a) the burden of
proof regarding the amounts due in a termination settlement
remains with the contractor; and (b) anticipatory profits are
not recoverable. R. Brf., p. 9; R. R. Brf., p. 4, fn. 2. In
Dairy Sales Corporation, both the Armed Services Board of
Contract Appeals and the Claims Court relied on a specific
provision in the Armed Services Procurement Regulation (ASPR)
which provided, inter alia, that: " [a]nticipatory profits
and consequential damages shall not be allowed. . . . " in
disallowing the appellant's claims for anticipatory profits.
See, Dairy Sales Corporation v. United States, supra, 593
F.2d at 1004 (citing, ASPR § 8-303(a)). That identical
language is not only repeated in the FAR, see, FAR, Part 49,
§ 49.202(a) (Profit), but it also appears in GPO's Printing
Procurement Regulation. See, PPR, Chapter XIV, Section 2 ¶
3.n. (Allowance for Profit). Consequently, it seems to the
Board that the award of a small (1.3 percent) profit on the
appellant's continuing costs in Aviation Specialists, Inc.,
is an exception to the general rule against allowing
anticipatory profits in convenience terminations which the
DOTBCA crafted because of the special circumstances of that
case.
22 The Board is remanding the Appellant's claim to the
Contracting Officer for reconsideration in light of the rule
of Aviation Specialists, Inc. which the Board adopts here;
i.e., that the parameters for settlement of a termination for
convenience claim under a requirements contract is
established by the estimated contract price. The Board
expects that its decision will have the greatest impact on
any recomputation of allowances for the Appellant's overhead,
capital acquisition, and general and administrative expenses.
Unlike the situation in Aviation Specialists, Inc., the
record in this case, including the testimony taken at the
hearing conducted by the Board on June 2, 1992, does not
provide the Board with the necessary factual information to
make the determination in those areas for itself. For
example, while the Appellant might be allowed a reasonable
allowance for depreciation on its machinery for the three
months remaining in the contract term, there is no evidence
in the record to show how much depreciation had been taken on
that machinery in the past. Cf., Hugo Auchter Gmbh, ASBCA
No. 39462, 91-1 BCA ¶ 23,645; Metered Laundry Services, ASBCA
No. 21573, 78-1 BCA ¶ 13,206, modified on reconsid., 78-2 BCA
¶ 13,451. Moreover, there is nothing in the record which
would allow the Board to make a finding as to which of the
Appellant's costs could or could not "reasonably be
discontinued during the remaining contract term." Aviation
Specialists, Inc., supra, 91-1 BCA ¶ 23,534, at 117,992.
Finally, the Contractor is reminded that although the Board
has endorsed its theory of the case, it still has the burden
of proving its claim for settlement costs, see, e.g., R & B
Bewachungs GmbH, supra, 92-3 BCA ¶ 25,105; American
Geometrics Construction Company, Inc., supra, 92-1 BCA ¶
24,545; Humphrey Logging Company, supra, 85-3 BCA ¶ 18,433;
Roberts International Corporation, supra, 71-1 BCA ¶ 8869
(1971); Delaware Tool & Die Works, Inc., supra, 71-1 BCA ¶
8860 (1971), mot. for reconsid. denied, 72-1 BCA ¶ 9206
(1972), even if estimates are used. See, e.g., Lagarelli
Brothers Construction Company, Inc., supra, 88-1 BCA ¶
20,363; Bailey Specialized Buildings, Inc., supra, 71-1 BCA ¶
8699 (1971). Also see, PPR, Chapter XIV, Section 2 ¶ 3.j(7)
(c)(i)-(iii).