BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
WICKERSHAM PRINTING COMPANY, INC. ) Docket No. GPOBCA 23-96
Program D688-S )
Purchase Order 95912 )
For the Appellant: Wickersham Printing Company, Inc., Lancaster,
Pennsylvania, by Frederic G. Antoun, Jr., Attorney at Law,
Chambersburg, Pennsylvania.
For the Government: Kerry L. Miller, Esq., Associate General
Counsel, U.S. Government Printing Office.
Before BERGER, Ad Hoc Chairman.
DECISION ON MOTION FOR RECONSIDERATION AND ORDER
Wickersham Printing Company, Inc. (Appellant) has filed a Motion
for Reconsideration of the Board's Decision on Motions for
Summary Judgment and Order of December 18, 1998, in the above-
captioned appeal, in which the Board denied the Appellant's
motion for summary judgment but granted the motion for summary
judgment of the U.S. Government Printing Office (GPO or
Respondent). For the reasons which follow, the Motion is GRANTED
but upon reconsideration the original decision is AFFIRMED.
I. BACKGROUND
In its appeal the Appellant challenged the excess costs of
reprocurement that were assessed after its contract, for loose-
leaf printed products, was terminated for default. This
challenge was predicated on the Contracting Officer's alleged
failure to mitigate the excess reprocurement costs by not taking
into account a decline in paper prices before awarding the
reprocurement contract to the next low bidder at its original bid
prices. The Board held that on the facts presented the Appellant
was not entitled to summary judgment on that issue, but that
summary judgment for the Respondent was appropriate. The Board
ruled in favor of the Respondent because final statistics for the
period involved from the Bureau of Labor Statistics (BLS) showed
that the price of offset paper, the paper primarily used on the
contract, increased each month from the time of bidding on the
original contract until the reprocurement contract was let, so
that the reprocurement, based on prices offered before that
increase, could not have subjected the Appellant to unreasonable
reprocurement costs because of any changes in the price of paper.
II. DISCUSSION
The Motion for Reconsideration is based on the Board's issuance
of its decision prior to receipt of the Appellant's brief
opposing the Respondent's summary judgment motion. As the
Appellant states:
A telephone conversation between Appellant's attorney's secretary
and the Board's secretary apparently resulted in a
misunderstanding: the Board secretary was under the impression
that not only was Appellant not going to file a response to the
Respondent's Response to Appellant's Motion for Summary Judgment,
but that Appellant was also not going to file a response to the
Respondent's Motion for Summary Judgment; Appellant's Counsel's
secretary was under the impression she conveyed that Appellant
was 1/4 going to file a response to Respondent's Motion for
Summary Judgment.
The Appellant's Brief in Response to Respondent's Motion for
Summary Judgment, along with a
supporting affidavit, was filed on December 21, 1998, one
business day after the Board's decision
was issued on December 18.
Rule 29 of the Board's Rules of Practice and Procedure allows
either party to an appeal to file a motion for reconsideration
within 30 days of the party's receipt of the Board's decision.
The traditional grounds for reconsideration are newly discovered
or newly available evidence, or error in the Board's findings of
fact or conclusions of law; reconsideration, however, is
discretionary with the Board and will not be granted in the
absence of specific and compelling reasons. Qualitype, Inc.,
GPOBCA 21-95 (June 24, 1998), slip op. at 2, 1998 WL 350480;
Univex International, GPOBCA 23-90 (February 7, 1996), slip op.
at 4-5, 1996 WL 112554; Sterling Printing, Inc., GPOBCA 20-89
(July 5, 1994), slip op. at 3-4, 1994 WL 377592; Graphic Litho,
Inc., GPOBCA 17-85 (September 30, 1988), slip op. at 2-3, 1988 WL
363516. Arguments already made, reinterpretation of old
evidence, and mere disagreement with the Board's decision do not
provide a basis for reconsideration. Univex International, Inc.,
supra.
The Respondent, opposing the motion, points out that the motion
is not based on an alleged factual or legal error in the Board's
decision, and states that the motion also "presents no relevant
evidence that was not considered by the Board." The Respondent
concludes that the only basis for the motion is that the Board
did not have the opportunity to consider the Appellant's December
21 submission and that while the timing of the Appellant's
submission "may have been caused by its
misunderstanding, that misunderstanding does not state a valid
ground for reconsideration." Respondent's Opposition to
Appellant's Motion for Reconsideration.
The misunderstanding, however, was not about the timing of the
December 21 submission. The misunderstanding was over whether
there was going to be such a submission at all. The Board
understood that the Appellant did not intend to file a brief in
response to the Respondent's summary judgment motion; had the
Board understood that the Appellant's intention was to the
contrary, as the Appellant believed the Board had been advised,
it would not have issued a decision on December 18. Moreover,
while the Appellant's Motion for Reconsideration does not itself
present any new evidence, the Appellant's December 21 submission
included evidence in the form of an affidavit. This affidavit,
which the Board obviously did not consider before issuing its
decision, dealt with the efficacy of the Contracting Officer's
reliance on BLS statistics to determine market prices.
Although reconsideration of the Board's decisions is strongly
disfavored, Univex International, supra, at 5-6, the Board, as
are other administrative forums, is sensitive to fundamental
notions of justice and fair play. Id. at 12; see, e.g., Freedom,
NY, Inc., ASBCA 43965, 35671, 96-2 BCA ¶ 28,502; Washington State
Comm'n for Vocational Education, 64 Comp. Gen. 681 (1985), 85-2
CPD ¶ 59. Through a mutual misunderstanding, the Board issued a
decision without considering the evidence and arguments the
Appellant intended to present and did present within the Board's
time frame for such a submission. In the Board's view,
therefore, fundamental notions of fairness require that the Board
reconsider its decision in light of the Appellant's December 21
submission. Accordingly, the Appellant's motion is granted.
In its brief the Appellant argues that the Respondent failed to
mitigate reprocurement costs
because it did not employ the reprocurement methodsealed
biddingwarranted by the circumstances and mandated by GPO's
Printing Procurement Regulation, GPO Pub. 305.3 (Rev. 10-90).
The Appellant further argues that the Contracting Officer failed
to obtain the lowest reasonable price because he improperly
relied on BLS data. In this regard, the Appellant furnishes an
affidavit from the president of a GPO printing contractor in
which the affiant explains why BLS data would not be relevant to
a contracting officer's proper determination of market price.
Since the decision of the Board was predicated on BLS statistics,
it is this second argument to which the Board turns.
The affidavit is from Richard Lindemann, who states that he is
the president of TPS Enterprises, Inc., "which has produced GPO
products for many years." Mr. Lindemann states that he is
familiar with the BLS monthly paper price index utilized by GPO
and that since the early 1990s he has found the BLS pricing "to
be consistently in error." According to Mr. Lindemann, BLS
"indices and pricing related to paper are often based on the
suggested or retail price set by paper manufacturers or mills"
and that BLS relies on prices furnished by the mills and
manufacturers rather than conducting a market survey of printers
or paper merchants from which printers acquire paper. Mr.
Lindemann further states that BLS does not calculate "market-
oriented discounts offered by the individual paper merchants or
distributors." BLS figures, says Mr. Lindemann, "do not
accurately reflect the prices which TPS and other printers have
paid for paper since 1994, including the period of time between
January 1996 and June 1996."
The BLS Producer Price Index does indeed reflect pricing set by
producers and reported by them to BLS. BLS Handbook of Methods,
Ch. 14 (April 1997 ed.). It also does not take into account
discounts and rebates offered by dealers and wholesalers if that
cost is not absorbed by the manufacturer. Id. It does, however,
reflect the producers' actual selling prices for what is shipped
each month. Id. In this regard, and contrary to what is
suggested by Mr. Lindemann and by the Appellant in its brief, BLS
states that the Index does not routinely reflect producers' list
prices. In this regard, BLS states that "it emphasizes 1/4 the
need for reports of realistic transaction prices 1/4 rather than
list or book prices," that the use of list prices "has been the
exception rather than the rule," and that the use of list prices
under current methodology is infrequent. Id. Moreover, the
courts, while recognizing that BLS statistics do not always take
every possible factor into account, regard the statistics as the
most reliable data available and on which an agency may
reasonably rely. See, e.g., Mt. Diablo Hospital v. Shalala, 3
F.3d 1226 (9th Cir. 1993); Timken Co. v. United States, 788 F.
Supp. 1216 (Ct. Int. Trade 1992).
In the Board's view, while there can be some disparity between
what a buyer experiences when acquiring a commodity through a
middleman and what is indicated by BLS producer price data for
the period, in general the producer pricing levels and trends
reflected in BLS data should be an overall accurate picture of
what transpired in the marketplace. For example, if producer
prices are holding steady or rising, it is not apparent why
wholesalers or other middlemen would routinely be lowering prices
and maintaining lower price levels in the face of steady or
rising prices from their suppliers. In other words, although the
wholesalers/middlemen might have any number of business reasons
at a given time for offering some kind of discount pricing to
bolster sales, the general pricing trend necessarily is set by
the producers. Thus, despite the middleman discounting that may
occur, ultimately pricing must move in the direction set by the
producers. Accordingly, unless there is persuasive evidence of
some meaningful reason for market pricing varying substantially
from that reflected by BLS data, the Board is not inclined to
view the BLS data as unreliable. While Mr. Lindemann states that
he has routinely found the BLS data to be unreliable, neither he
nor the Appellant has provided any persuasive evidence of why
that should be so. Under the circumstances, the Board remains of
the view that the final BLS data, indicating that price of offset
paper increased between the time of bidding for the initial
contract and the reprocurement, can be reasonably relied upon as
indicative of what occurred during that time period. That being
so, the Board also remains of the view that the bid prices that
would have been received had the Contracting Officer conducted
a new competition for the reprocurement would not likely have
been lower than the next low bidder's price from the original
competition.
Moreover, even if the Board were to conclude that it should not
rely on the final BLS statistics, the Respondent would still be
entitled to summary judgment. In the Board's original decision
it noted several weaknesses in the Respondent's position,
particularly with respect to the Contracting Officer's
explanation for his decision to award the reprocurement contract
to the next low bidder on the original procurement. Rather than
determine whether the Contracting Officer acted reasonably
notwithstanding those weaknesses, the Board simply determined on
the basis of the final BLS data that "the Contracting Officer did
not fail in his duty to the Appellant because, had the
Contracting Officer conducted a competition for the
reprocurement, the resulting bid prices would not likely have
been lower than the original prices and well may have been
higher." The Board has now considered the facts of record and
concluded that, despite its concerns regarding aspects of the
Respondent's position, the Contracting Officer did act
reasonably in the circumstances.
Bid opening and award of the original contract occurred on April
1996. The contract was terminated for default on July 17, 1996,
and a reprocurement contract was awarded on July 22 to Goodway
Graphics of Virginia, the next low bidder, after that firm agreed
to accept award at its original bid prices. The Respondent's
Contract Review Board (CRB) approved the reprocurement contract
with one member dissenting. The dissenting member was concerned
that in light of declining paper prices the Contracting Officer's
reprocurement approach did not sufficiently mitigate the excess
costs of reprocurement. In response to that concern the
Contracting Officer examined certain BLS data available to him
and concluded that "there was little likelihood that 1/4 paper
prices would have a significant effect on reprocurement costs."
He reached this conclusion after noting that paper represented
only slightly more than a third of the total contract price and
finding from the BLS data that significant paper price decreases
had occurred earlier in 1996 but that paper prices had fallen
just under 5 percent from April to May and for offset paper, the
type primarily used on the contract, the price drop was only .9
percent. He also noted that paper price adjustments under a GPO
price adjustment clause found in certain GPO term contracts were
not warranted for the April to July period. The Board did not
find all aspects of this explanation to be completely convincing;
it pointed out that under the clause price adjustments are
warranted only when there has been a change in the relevant BLS
index of more than 5 percent, so that it was possible that paper
price decreases approaching 5 percent had occurred and that such
a price decrease could have resulted in lower bid prices.
Nonetheless, it is well established that the Contracting
Officer's duty is not to obtain the lowest possible price-his
obligation is to act reasonably and prudently under the
circumstances to obtain a reasonable price. Cascade Pac. Int'l
v. United States, 773 F.2d 287 (Fed. Cir. 1985); Barrett Refining
Corp., ASBCA 36590, 91-1 BCA ¶ 23,566; Gold Country Litho, GPOBCA
22-93 (September 30, 1996), slip op. at 30-31, 1996 WL 812956.
The Contracting Officer here determined that the original bid
price of Goodway Graphics represented a reasonable price because
a new competition was not likely to produce significantly lower
prices in that offset paper prices had declined only slightly and
paper represented only 35.7 percent of Goodway Graphics' total
price ($77,986.40 out of $218,013.30). In other words, the
Contracting Officer considered that a new competition might
produce bid prices that were lower by only approximately $700 (.9
percent of $77,986.40).
The Contracting Officer's analysis was based on BLS data for
April. He apparently had no comparable information regarding
offset paper for May and June. Thus, it is possible that,
unbeknownst to the Contracting Officer, offset paper prices could
have decreased by more than .9 percent during those two months.
The Contracting Officer, however, is not required to base his
decisions on information that is not reasonably available to him,
and there is no suggestion from the Appellant that the May and
June BLS data were or should have been available to the
Contracting Officer or that they would have reflected a more
substantial drop in the price of offset paper. Thus, based on
what the Contracting Officer actually knew in July1, his
determination that the market price for offset paper had not
dropped significantly in the April to July time frame was
reasonable.
As the Board has noted, the Contracting Officer's duty is not to
obtain the lowest possible price on reprocurement, but the lowest
reasonable price. Given the cost and delay attendant to
conducting any new competition, the fact that a new competition
might result in a lower price than that available from the next
low offeror on the initial procurement does not require the
Contracting Officer to resort to a new competition if the price
likely to be obtained thereby would not be meaningfully lower.
In the Board's view, whether a price would be meaningfully lower
would depend not only on the actual dollar amount of the
difference but also on the relationship of that difference to the
total value of the procurement. Here, the Goodway Graphics total
bid price was just over $218,000. The potential decrease in bid
pricing perceived by the Contracting Officer was less than .3
percent of that amount. In the Board's opinion, neither that
amount nor any other amount that the Contracting Officer, from
the information before him, could have reasonably ascertained as
a likely decrease from the Goodway Graphics pricing would give
rise to a meaningful price difference such that the Contracting
officer was required to conduct a new competition. Accordingly,
the Board concludes that the Contracting Officer's decision not
to conduct a new competition and to negotiate a reprocurement
contract with Goodway Graphics at that company's initial bid
prices was a reasonable one.
The Appellant points out that the PPR states that when
reprocuring "the Contracting Officer should use sealed bidding
procedures except where negotiation is necessary." PPR, Chap.
XIV, Sec. 1, ¶ 3.f.(2). The Appellant asserts that there is no
evidence that negotiation was "necessary" here. The Appellant
further asserts that the Contracting Officer failed to comply
with the further requirement in the same PPR section that he note
in the contract file the reason for deciding to negotiate.
In the Board's view the PPR is not quite as restrictive as the
Appellant would read it. The first sentence of section 1, ¶
3.f.(2) states that "If the repurchase is for a quantity not in
excess of the undelivered quantity terminated for default,
requirements for advertising are not mandatory." The second
sentence goes on to state that the Contracting Officer "should"
use sealed bidding except where negotiation is "necessary."
While the PPR does not define or describe what might be regarded
as "necessary" under this provision, it is clear from the prior
decisions of the Board that where solicitation of firms
reasonably is not expected to result in lower prices than those
produced in the original competition, such solicitation would be
unnecessary. See, e.g., Gold Country Litho, supra, at 32-33, and
cases cited thereat. Where that is the case and the prior
bids/offers received have expired, negotiation obviously becomes
necessary so that the Respondent can obtain the agreement of the
offeror that was next in line for award to perform the remainder
of the contract at its original prices. The evidence establishes
that this is precisely what occurred here. While the PPR may
anticipate that the Contracting Officer will document the
contract file as to the reason for negotiating a reprocurement
contract, the Board views the Contracting Officer's failure to do
so under these circumstances as a procedural defect that does not
affect the validity of the award process.
III. ORDER
For the reasons set forth above, the Appellant's Motion for
Reconsideration is GRANTED. Upon reconsideration, however, the
prior decision granting summary judgment for the Respondent is
AFFIRMED.
It is so Ordered.
March 1, 1999 Ronald Berger
Ad Hoc Chairman
GPO Board of Contract Appeals
_______________
1 The Board considers only BLS data to be relevant here since the
evidence establishes only that the Contracting Officer had that
data available to him. While the Appellant makes much of the
differing data found in Pulp & Paper Week, there is no evidence
that the Contracting Officer was aware of that data. Indeed, the
Appellant has never even alleged that the Contracting Officer
knew or should have known of that data. Moreover, there is no
indication in the record that anyone at GPO involved in this case
was aware of the Pulp & Paper data. In this regard, the
dissenting member of the CRB, who first expressed concern about
declining paper prices, stated in a Declaration that his concern
was based "solely" on BLS data and "not on any other data."