BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
In the Matter of )
)
The Appeal of )
)
ROSE PRINTING, INC. ) Docket No. GPO BCA 32-95
Program C37-S )
Purchase Order 94841 )
Print Orders 20001 and )
20002 )
DECISION AND ORDER
By letter dated October 26, 1995, Rose Printing, Inc. (Appellant
or Contractor), 4382 Mount Carmel Tobasco Road, Cincinnati, Ohio
45244, timely appealed the final decision of Contracting Officer
Jack Scott, of the U.S. Government Printing Office's (hereinafter
Respondent or GPO or Government), Printing Procurement Department
(PPD), Washington, DC 20401, dated July 26, 1995, terminating the
Appellant's contract identified as Program C37-S, Purchase Order
94841, for default because of its inability to perform. GPO
Instruction 1110.12, Subject: Board of Contract Appeals Rules of
Practice and Procedure, dated September 17, 1994, Rules 1(a) and
(2) (Board Rules). See R4 File, Tab X.1 For the reasons which
follow, the Contracting Officer's default decision is hereby
AFFIRMED, and the appeal is DENIED.
I. BACKGROUND2
1. On May 8, 1995, the Respondent issued an Invitation for Bid
(IFB) for Program C37-S, a single-award, fixed price
"requirements" contract for the production of the "Joint Federal
Travel Regulations, Volumes 1 and 2" (hereinafter JFTR) for the
Department of the Navy (Navy). See R4 File, Tab A, at 1. The
IFB was advertised as a "Small Disadvantaged Business" set aside
contract under the provisions of GPO Printing Procurement
Department Instruction 347.1C, and the National Defense
Authorization Act for FY 1989, Pub. L. No. 100-456, § 843, as
amended by § 806, Pub. L. No. 102-484. Id.
2. The procurement was publicly advertised and IFBs were sent
to 35 prospective bidders. See R4 File, Tab B. The Government
received four offers, including the Appellant's. See R4 File,
Tabs C and I.3
3. After the bids were opened, the low bidder, T.A.M.'s
Printing, claimed an error in bid. See R4 File, Tab E; Scott
Declaration, ¶ 4. Specifically, T.A.M.'s Printing said that it
had made a transcription error in preparing its offer, so that
instead of a running rate price of $2.95 per 1,000 copies, its
bid sheet showed a rate of $1.05 per 1,000 copies. See R4 File,
Tab F. When the Contracting Officer reviewed the supporting
documentation,4 he found that the contractor's mistake in bid
claim had merit. See Scott Declaration, ¶ 4. Accordingly, the
Contracting Officer notified GPO's Contract Review Board (CRB)
of his findings,5 see R4 File, Tab G, and T.A.M.'s Printing was
allowed to withdraw its offer, see R4 File, Tab H. See also
Scott Declaration, ¶ 4.
4. The next lowest bidder was the Appellant. See Scott
Declaration, ¶ 5 Prior to making the award to the Appellant,
Michael J. Sebold, a PPD Printing Specialist, contacted John
Dass, the Contractor's President, and asked him to review and
confirm his bid prices. See R4 File,
Tab J. In reply to Sebold's inquiry, Dass confirmed his bid
prices both orally and in writing. See R4 File, Tab J and K.
See also Scott Declaration, ¶ 5.
5. Thereafter, on June 8, 1995, the Contracting Officer
himself spoke to Dass about the procurement in order to see if
the Appellant could meet the production schedule. See R4 File,
Tab L. See also Scott Declaration, ¶ 6. The record discloses
that Dass told Scott that in addition to the Contractor's
current printing capability, another press would be delivered
within a few days.6 See R4 File, Tab L. Dass also referred the
Contracting Officer to GPO's Columbus Regional Printing
Procurement Office (CRPPO), which had just performed an on-site
pre-award survey of the Appellant's facilities for an unrelated
contract (Program 421-M). Id. Based on all the available
information, including the CRPPO's favorable report, the
Contracting Officer concluded that the Contractor was a
responsible bidder and eligible for award of Program C37-S.
See R4 File, Tab N. See also Scott Declaration, ¶ 6.
Accordingly, on June 9, 1995, the Contracting Officer issued
Purchase Order 94841 to the Appellant awarding it the contract
to produce the JFTRs.7 See R4 File, Tab P.
6. The record indicates that on June 26, 1995, the Navy issued
Print Orders 20001 and 20002 to the Appellant, the first two
orders under the contract. See Notice of Filing, Scott
Declaration, Attachments 1 and 2. Print Order 20001 required
the production of 26,332 copies of JFTR, Volume 1, Change 104
(NAVSO P-6034-1-104), at an estimated cost of $23,277.00. See
Notice of Filing, Scott Declaration, Attachment 1. Print Order
20002 was for the production of 20,644 copies of JFTR, Volume 2,
Change 358 (NAVSO P-6034-2-358), at an estimated contract price
of $6,340.00. See Notice of Filing, Scott Declaration,
Attachment 2. The JFTRs covered by both of these print orders
had a common ship/delivery date, July 12, 1995. See Notice of
Filing, Scott Declaration, Attachments 1 and 2.
7. On June 23, 1995, the Appellant notified the Respondent
that its paper supplier, Sabin Robbins (hereinafter Sabin), had
reneged on its promise to provide the required paper stock at
its previously quoted price, and instead had increased its
prices 30%. See R4 File, Tab Q. See also Scott Declaration, ¶
7. Moreover, the Appellant said its supplier had indicated
that it would take at least four weeks to supply the large
quantities of paper needed to perform the contract. See R4
File, Tab Q. The Appellant concluded: "[u]nder such sudden
scarcity of paper, and increase in the cost, it is not possible
to carry out the [contract]." Id.
8. The Contracting Officer interpreted the Appellant's letter
as a claim of an error in bid, and invited it to submit proof in
support of its claim.8 See R4 File, Tab R. See also Scott
Declaration, ¶ 7. By facsimile transmission, dated June 27,
1995, the Contractor responded to the Contracting Officer's
invitation by submitting an affidavit, signed by Dass, and
copies of its worksheets for this purpose. See R4 File, Tab S.
The Appellant justified its error in bid claim on three grounds:
(a) a drastic increase in the cost of paper; (b) a limited
availability of the needed required paper in the required
quantities; and (c) an inability to hold the price due to a
continuous rise in the cost of paper and its timely
availability. Id. See also Scott Declaration, ¶ 7. Finally,
the Contractor said because of these mistakes its original bid
should have been nearly 50% higher; i.e., $605.059.52, not
$405,404.62. See R4 File, Tab S.
9. When the Contracting Officer evaluated the evidence
provided by the Appellant, he concluded that there was no error
in bid, but rather the problem rested squarely with the paper
supplier. See R4 File, Tab T. Specifically, in his memorandum
to the CRB,9 the Contracting Officer explained, in pertinent
part:
* * * * * * * * * *
Award was based on prices being considered fair and reasonable
based on the current contract prices. In addition, during the
certification process, on June 1, 1995[,] the [C]ontractor
reviewed the bid specifications and confirmed his prices in
writing. The terms and
conditions of the contract and prices submitted were reviewed and
confirmed for a second time with the [C]ontractor on June 8,
1995.
* * * * * * * * * *
In claims of mistakes in bid discovered after award,
determinations favorable to the contractor, can be made only on
the basis of clear and convincing evidence of the error claimed
and of the bid actually intended, and that either the mistake was
mutual or the unilateral mistake made by the contractor was so
apparent as to have charged the Contracting Officer with
constructive notice of the probability of mistake. In this case,
although the price submitted was low, the contractor reviewed the
bid specifications and confirmed the prices submitted twice
before award. Therefore, the Contracting Officer was not on
notice of an error.
Id.
10. By letter dated June 30, 1995, the Contracting Officer
denied the Appellant's post-award mistake in bid claim, and
refused its request to correct the offer or withdraw it. See R4
File, Tab U. See also Scott Declaration, ¶ 8. The Contracting
Officer also told the Contractor, in effect, that it was expected
to perform the work at "the contract prices as awarded . . .".
See R4 File, Tab U.
11. On July 12, 1995, the contract due dates for Print Orders
20001 and 20002, the Contracting Officer received a letter from
Dass informing him that Appellant was unable to purchase
sufficient quantities of paper to complete the work on those
orders, and thus he was returning the Print Orders, along with
the Government-furnished camera copy, to the Respondent. See R4
File, Tab V. See also Scott Declaration, ¶ 9. The Contractor
stated, in pertinent part:
. . . [W]e have only been able to get 212,000 of [the] sheets of
23 x 35 to start the completion of above print orders. The paper
company has informed us that the balance of 240,000 sheets which
will be required to complete both print orders will be delivered
sometime in [the] next
forty-five days. Even this approximate time of delivery of [the]
paper is not a certain period of time.
Further, I want to reassure you that we do wish to complete this
program, but in [the] absence of required paper to be delivered
to us on time we are just unable to carry out with this program.
Moreover, you would notice our sincere efforts from the enclosed
list of some new equipment that we have purchased within the past
week just to comply with this program.10
Therefore, the failure to perform is caused by the absence of
availability of required paper which is beyond our control or
negligence, . . . . Consequently, we are unable to complete the
above program, and regretfully return the above print orders and
the manuscripts to your attention.
See R4 File, Tab V.11
12. On July 18, 1995, the Contracting Officer sought the CRB's
approval to terminate Print Orders 20001 and 20002, as well as
the balance of the contract for default, because of the
Appellant's stated inability to perform.12 See R4 File, Tab W.
The Contracting Officer's memorandum also requested permission to
reprocure the work without the small disadvantage business set
aside, and to charge any excess reprocurement costs to the
Contractor. Id. He received the CRB's concurrence on July 19,
1995. Id.
13. That same day (July 19, 1995), GPO issued Print Order 30854
to News Printing, Inc. (News Printing), reprocuring the work
under Print Order 20002. See Notice of Filing, Scott
Declaration,¶ 12, Attachment 3; Jones Declaration, ¶ 4. The
Print Order 20001 job was repurchased the next day (July 20,
1995), by the issuance of Print Order 30853 to Braceland
Brothers, Inc. (Braceland). See Notice of Filing, Scott
Declaration, ¶ 12, Attachment 3; Jones Declaration, ¶ 2. The two
defaulted print orders were reprocured under Program A814-M, an
already existing "general usage" printing contract.13 See Notice
of Filing, Scott Declaration, ¶¶ 11, 12. The reason for choosing
Program A814-M as the reprocurement vehicle was because the Navy
had an immediate need for the overdue JFTRs, and a reaward
following readvertisement would have taken too long. See Notice
of Filing, Scott Declaration, ¶ 11; Attachment 5. Indeed, the
"Ship/Delivery Date" box on both Print Orders 30853 and 30854
were annotated "MUST!" See Notice of Filing, Attachment 3.
14. A week later, by letter dated July 26, 1995, and captioned
"Notice of Termination-Complete," (Notice) the Contracting
Officer notified the Appellant that its contract was terminated
for default because of its inability to perform. See R4 File,
Tab X. See also Scott Declaration, ¶ 10. The Notice also told
the Contractor that if the Government exercised its right to
repurchase the same or similar items, the Contractor would be
liable for excess reprocurement costs. Id. GPO's Financial
Management Service (FMS) was advised of the default the same day,
and asked to recover any excess costs from the Appellant. See
Notice of Filing, Scott Declaration, ¶ 12, Attachment 3.
15. On August 2, 1995, while the Respondent was in the process
of readvertising Program C37-S, the Navy requested changes to the
contract's specifications. See Notice of Filing, Scott
Declaration, ¶ 13, Attachment 4. Although the customer agency
was informed that alterations in the contract terms would
terminate the Government's right to recover any future excess
reprocurement costs, the Navy insisted that the changes be made,
and Program C37-S be reprocured as amended. Id. Accordingly,
the Contracting Officer canceled the reprocurement, rewrote the
specifications, and rebid the contract. Id. The Navy's changes
to the specifications for Program C37-S resulted in limiting the
Appellant's liability for excess reprocurement costs to the JFTRs
covered by Print Orders 20001 (Print Order 30853) and 20002
(Print Order 30854). See Notice of Filing, Scott Declaration, ¶
14.
16. The record shows that after the work was completed on Print
Order 30853, Braceland was paid $23,264.12 ($23,736.36 minus the
prompt payment discount of two (2) percent) by Electronic Funds
Transfer (EFT) on August 24, 1995, and that the excess
reprocurement costs assessed against the Appellant for this print
order was $167.20. See Notice of Filing, Scott Declaration, ¶
14; Jones Declaration, ¶ 3. Similarly, when News Printing
finished its job under Print Order 30854, it was paid $7,100.98
($7,118.49 minus the prompt payment discount of one-quarter (1/4)
percent) by EFT on September 5, 1995, and that excess costs
recovered from the Contractor for this print order was $746.54.
See Notice of Filing, Scott Declaration, ¶ 14; Jones Declaration,
¶ 5. Thus, the assessment of excess costs against the Appellant
amounted to a total of $913.74. See SRPTC, at 5, n. 6.
17. By letter dated October 26, 1995, the Appellant timely
appealed the Contracting Officer's termination and reprocurement
decisions to the Board.
II. POSITIONS OF THE PARTIES
A. The Appellant
The Appellant presents three arguments by way of a defense to the
default. First, while it admits that it was unable to perform
the contract, the Appellant places the onus for nonperformance on
Sabin, its paper supplier, who could not furnish paper stock in
the quantities and at the prices quoted to the Appellant during
bid preparation. See Appellant's letter of December 12, 1995, at
1; Ressler Memorandum; Complaint, at 2; SRPTC, at 4. Since the
paper subcontractor had no inkling that prices would rise, its
inability to furnish printing stock was also beyond its control
and without its fault or negligence.14 See App. R. Brf., at 4;
Appellant's Letter of December 12, 1995, at 1; Ressler
Memorandum; Complaint, at 2; SRPTC, at 4. Second, while the
Appellant admits that it told the Contracting Officer it had the
equipment and manpower to complete the work, it contends that
award of the contract to it was still erroneous because the
Contracting Officer knew, or should have known, that it was
incapable of performing the job.15 See App. Brf., at 1-2; App.
R. Brf., at 1-3; Complaint, at 1; SRPTC, at 4. Finally, the
Appellant contends that the Respondent, in bad faith, literally
forced the contract on it, knowing that paper costs would rise,
for the sole purpose of driving it out of business. See App.
Brf., at 2; App. R. Brf., at 5; SRPTC, at 4-5. Accordingly, the
Appellant demands that the default termination be set aside, and
that it be awarded damages in the amount of approximately
$138,000.00 as compensation for the losses it suffered in
connection with the contract, including the costs of paper and
other materials, the price of leased and purchased machinery, and
indirect losses such as equipment and labor downtime. See App.
Brf., at 3; App. R. Brf., at 6; SRPTC, at 5.
B. The Respondent
The Respondent asserts that the Appellant's contract was properly
terminated for default, and the Government was entitled to
recover the excess reprocurement costs from the Appellant, as
provided for under the terms of the contract. See R. Brf., at
5-6, 11; SRPTC, at 5. GPO states that as the Contractor's
default is undisputed, thus entitling the Government to terminate
the contract immediately, see R. Brf., at 5 (citing GPO Contract
Terms, Contract Clauses, ¶ 20 (Default); Riggs Engineering Co.,
ASBCA No. 26509, 82-2 BCA ¶ 15,955; M.H. Colvin Co., GSBCA No.
5209, 79-2 BCA ¶ 13,981; National Farm Equipment Co., GSBCA No.
4921, 78-1 BCA ¶ 13,195), the only issue in this case is whether
or not the reason given by the Appellant for its default is
enough to forgive its nonperformance, see R. Brf., at 5; SRPTC,
at 5. In that regard, the Government submits that the Contractor
has failed to carry its burden of showing that its proffered
excuse for the default-Sabin could not supply the required amount
of paper at the prices quoted at the time the bid was prepared-
occurred for reasons beyond the control of both the Appellant and
its paper supplier, and without the fault or negligence of
either, as required by the contract's "Default" clause, see R.
Brf., at 6- 7, 11 (citing GPO Contract Terms, Contract Clauses,
¶¶ 20(c),(d); Beco, Inc., ASBCA No. 9702, 1964 BCA ¶ 4493;
Woodside Screw Machine Co., ASBCA No. 6936, 1962 BCA ¶ 3308;
Williams Drapery Co., ASBCA No. 5484, 61-2 BCA ¶ 3111, aff'd, 177
Ct. Cl. 776, 369 F.2d 729 (1966)), or that it could have
performed on time but for the event claimed as an excusable
delay, see R. Brf., at 7 (citing Lee K. Geiger Construction Co.,
GSBCA Nos. 2152, 2164, 67-1 BCA ¶ 6189; American Construction
Co., GSBCA No. 1097, 65-2 BCA ¶ 4964). Instead, the Government
believes that the real reason for the default was the Appellant's
unwillingness or inability to buy the paper stock at the prices
being asked by its supplier.16 See R. Brf., at 8-9 (citing R4
File, Tabs Q and S; Appellant's Letter of December 12, 1995, at
1; Ressler Memorandum). However, a contractor's poor financial
condition will not excuse a default, see R. Brf., at 9 (citing
Summitt Group, ASBCA No. 45138, 93-3 BCA ¶ 26,240; Karpak Data
and Design, IBCA No. 2944, 93-1 BCA ¶ 23,360), since its
financing is a matter solely within its control, and it is
obligated to ensure that it has adequate financial resources to
perform when it signs a contract with the Government, id. (citing
Southeastern Airways Corp. v. United States, 230 Ct. Cl. 47, 673
F.2d 368 (1982); Marwel Engineering Co., ASBCA No. 17758, 74-2
BCA ¶ 10788; Schaecher-Kux Lumber Co., ASBCA No. 1390 (1953)).17
Indeed, the Government contends that contractors who submit bids
when prices are volatile, assume the risks of increases in
material costs. See R. Brf., at 10 (citing Aargus Poly Bag,
GSBCA No. 4314, 76-2 BCA ¶ 11,927; So Ros Sahakij, Ltd., ASBCA
No. 19238, 75-1 BCA ¶ 11,028. The Respondent states that the
Appellant was ultimately responsible for obtaining the materials
necessary to perform the contract, and the fact that paper could
not be obtained except at a cost greater than the price on which
its bid was based is not an excuse for the default. See R. Brf.,
at 10-11 (citing Environmental Devices, Inc., ASBCA No. 37430,
93-3 BCA ¶ 26,138; C & M Machine Products, Inc., ASBCA No. 43348,
93-2 BCA ¶ 25,748; Free-Flow Packaging Corp., GSBCA No. 3992,
75-1 BCA ¶ 11,105, reconsid. denied, 75-1 BCA ¶ 11,332; Betsy
Ross Flag Co., ASBCA No. 12124, 67-2 BCA ¶ 6688). Consequently,
GPO submits that the record is devoid of any evidence which would
demonstrate that the Contractor's default was excusable for a
legitimate or recognized reason. See R. Brf., at 11; SRPTC, at 5.
As for the Contractor's other contentions-that the Contracting
Officer's determination of responsibility was erroneous, and that
the job was awarded in bad faith-GPO gives them no credence
whatsoever. See R. R. Brf., at 2-4. In brief, the Respondent
believes that the Contractor's challenge to GPO's
"responsibility" finding reflects an inadequate understanding of
the rules applicable to bidding on Government contracts, see R.
R. Brf., at 1-3 (citing Ubique, Ltd., DOTCAB 71-28, 72-1 BCA ¶
9340; Valveaire, Aircraft Division Abbotwares, ASBCA No. 8322,
1964 BCA ¶ 4177; Polytronic Research, Inc., ASBCA No. 5918, 1962
BCA ¶ 3548; Hunter Outdoor Products, 54 Comp. Gen. 276 (1974),
74-2 CPD ¶ 207; Paul Shnitzer, Government Contract Bidding, at
5-2 (3rd ed. 1992)), and its "bad faith" argument is not
supported by the requisite "well-nigh irrefragable" proof showing
that the Contracting Officer specifically set out to harm the
Appellant, see R. R. Brf, at 4 (citing Union Pacific Railroad Co.
v. United States, 847 F.2d 1567 (Fed. Cir. 1988); Sanders v.
United States, 801 F.2d 1328 (Fed. Cir. 1986); American General
Leasing v. United States, Inc., 218 Ct. Cl. 367, 587 F.2d 54
(1979); Kalvar Corp. Inc. v. United States, 211 Ct. Cl. 192, 543
F.2d 1298 (1976), cert. denied 434 U.S. 830 (1977); Librach v.
United States, 147 Ct. Cl. 605 (1959); Marine Construction &
Dredging, Inc., ASBCA Nos. 38412, 38538, 38913, 39246, 39860,
39913, 40286, 42513, 95-1 BCA ¶ 27,286).18 Finally, the
Government argues that the Appellant's objections to the recovery
of excess reprocurement costs are equally unavailing, since the
Notice expressly told the Contractor that it would be responsible
for such costs, and besides the law mandates that the costs be
recovered.19 See R. R. Brf., at 4-5 (citing Maryland Small
Business Development Financing Authority v. United States, 4 Cl.
Ct. 76 (1983); Aetna Casualty & Surety Co. v. United States, 526
F.2d 1127 (Ct. Cl. 1975), cert. denied, 425 U.S. 973, 96A S.Ct.
2172 (1976); SRPTC, at 5 (citing GPO Contract Terms, Contract
Clauses, ¶ 20 (b) (Default); PPR, Chap. XIV, Sec. 1, ¶3(f)).
Accordingly, for these reasons, the Respondent contends that it
is entitled to judgment in its favor, and urges the Board to deny
the appeal. See R. Brf., at 11; R. R. Brf., at 5.
III. ISSUES PRESENTED20
1. Does the Board have jurisdiction over the Appellant's
assertion that the Contracting Officer's determination that it
was a responsible contractor was faulty, and therefore, his award
of the contract to it was erroneous? Stated otherwise, has the
Appellant shown that the Respondent awarded the contract in bad
faith, with the specific intent to force the Contractor out of
business?
2. Does the Board have jurisdiction to grant the Appellant's
demand for damages in the amount of approximately $138,000.00 to
compensate it for any losses it might have suffered in connection
with the contract; e.g., the price of leased and purchased
machinery?
3. Was the Contracting Officer's decision to terminate the
contract for default proper and correct, or has the Contractor
shown that its failure to perform arose from causes beyond its
control and without its fault or negligence, or beyond the
control and without the fault or negligence of its paper
supplier, Sabin?
4. Was the Respondent's award of the reprocurement contracts to
News Printing and Braceland prior to the date of default such a
procedural defect as would forfeit the Government's right to
excess reprocurement costs?
5. Has the Respondent proved its claim of entitlement to excess
reprocurement costs in this case, and if so, in what amount?
IV. DISCUSSION
In this case, it is undisputed that the Appellant failed to
perform the contract, and that there was adequate justification
for the Contracting Officer to terminate the contract for
default. The only question remaining, therefore, is has the
Contractor presented a legally sufficient excuse so that the
Board may hold it blameless for the default, and forgive its
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.21 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 Gold
Country Litho, GPO BCA 22-93 (September 30, 1996), slip op.
at 14, 1996 WL _____; A & E Copy Center, supra, slip op. at
15; Big Red Enterprises, GPO BCA 07-93 (August 30, 1996),
slip op. at 24, 1996 WL _____; Asa L. Shipman's Sons, Ltd.,
GPO BCA 06-95 (August 29, 1995), slip op. at 16, 1995 WL
818784, reconsid. denied, 1996 WL _____ (February 13, 1996);
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, GPO BCA 21-90 (November 30,
1993), slip op. at 16, 1993 WL 516844; Chavis and Chavis
Printing, GPO BCA 20-90 (February 6, 1991), slip. op. at 11,
1991 WL 439270. 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 Gold Country Litho, supra, slip
op. at 14-15; A & E Copy Center, supra, slip op. at 15; Big
Red Enterprises, supra, slip op. at 24; Asa L. Shipman's
Sons, Ltd., supra, slip op. at 16; 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.22
See Gold Country Litho, supra, slip op. at 15; A & E Copy Center,
supra, slip op. at 16; Big Red Enterprises, supra, slip op. at
24; Asa L. Shipman's Sons, Ltd., supra, slip op. at 16; Univex
International, supra, slip op. at 17; K.C. Printing Co., supra,
slip op. at 10; Shepard Printing, GPO BCA 23-92 (April 29, 1993),
slip op. at 10, 1993 WL 526848; 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) (unpublished);23 Stephenson, Inc., GPO
BCA 2-88 (December 20, 1991), slip op. at 20, 1991 WL 439274
(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 Gold Country Litho, supra, slip op. at 15; A & E
Copy Center, supra, slip op. at 16; Big Red Enterprises, supra,
slip op. at 25; Asa L. Shipman's Sons, Ltd., supra, slip op. at
16-17; 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. A failure by the Government to meet its burden
of proof converts the default into a termination for convenience,
and the contractor is allowed to recover for the work performed.
See GPO Contract Terms, Contract Clauses, ¶ 20(g). See also Gold
Country Litho, supra, slip op. at 16; A & E Copy Center, supra,
slip op. at 16-17; Graphics Image, Inc., supra, slip. op. at
24-28. Cf. Big Red Enterprises, supra, slip op. at 25; Asa L.
Shipman's Sons, Ltd., supra, slip op. at 17; 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, 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
Gold Country Litho, supra, slip op. at 16; Big Red Enterprises,
supra, slip op. at 26; Asa L. Shipman's Sons, Ltd., supra, slip
op. at 17; 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 Gold Country Litho, supra, slip op. at 16-17; Big Red
Enterprises, supra, slip op. at 26; Asa L. Shipman's Sons, Ltd.,
supra, slip op. at 18; 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 Gold
Country Litho, supra, slip op. at 17; A & E Copy Center, supra,
slip op. at 17; Big Red Enterprises, supra, slip op. at 26; Asa
L. Shipman's Sons, Ltd., supra, slip op. at 18; 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 Gold Country Litho, supra, slip
op. at 17; A & E Copy Center, supra, slip op. at 18; Big Red
Enterprises, supra, slip op. at 26; Asa L. Shipman's Sons, Ltd.,
supra, slip op. at 18; 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 this record, the Board reaches the
following conclusions:
A. The Board has no jurisdiction over the Appellant's challenge
to the Contracting Officer's "responsibility" determination.
Moreover, the Contractor has not shown that the Contracting
Officer was acting in bad faith when he awarded the contract.
Aside from its allegations concerning the actual merits of the
default action, the Appellant has raised two ancillary matters
which need to be addressed beforehand because they relate to the
Board's jurisdiction. The first is triggered by the Contractor's
contention that the Contracting Officer's "responsibility"
finding was erroneous, and therefore, his award of the contract
to it was improper. Specifically, from the very outset the
Appellant has maintained that the Contracting Officer knew, or
should have known, that it did not possess the manpower or the
equipment to do the work, notwithstanding its assurances to the
contrary, and therefore it should not have been awarded the
contract.24 See App. Brf., at 1-2; App. R. Brf., at 1-3;
Complaint, at 1; SRPTC, at 4. In effect, the Contractor is
challenging the Contracting Officer's responsibility
determination in this case. However, the Board believes that it
has no jurisdiction to decide such pre-award determinations. Id.
See PPR, Chap. I, Sec. 5, ¶¶ 1-5; GPO Contract Terms, Contract
Clauses, ¶ 5(a) (Disputes); Board Rules, Preface to Rules, ¶ I
(Jurisdiction).
The Respondent thinks that the Appellant's "responsibility"
protest raises an issue of first impression with the Board. See
R. R. Brf., at 1. However, in Big Red Enterprises, a GPO
contractor made a similar challenge. In that case, a "Quality
Level 4" contractor bid on and was awarded a "Quality Level 3"
job,25 which it ultimately could not produce, and was defaulted.
On appeal from the termination decision, it argued, inter alia,
that as "Quality Level 4" contractor it could not be held liable
for its inability to produce "Quality Level 3" work. The Board
found the contractor's position "easily disposed of." See Big
Red Enterprises, supra, slip op. at 36. In rejecting the
contractor's contentions, the Board reasoned:
. . . [T]he 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. [Footnote
omitted.] 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., [GPO BCA 35-94 (June 14, 1996)], 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.
. . . [T]o 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.
See Big Red Enterprises, supra, slip op. at 37-39. [Emphasis
added.] Here, as in Big Red Enterprises, the Board's limited
jurisdiction prevents it from reviewing the Contracting Officer's
determination that the Appellant was a responsible contractor.
Similarly, as in that case, the Board also finds nothing in this
record which would support the conclusion that the Respondent
acted in bad faith in dealing with the Contractor, or that the
Contracting Officer arbitrarily or capriciously decided that the
Appellant was qualified for award of the contract. In that
regard, the Board has said on numerous occasions that 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.26 See Big Red Enterprises, supra, slip op. at 36-37;
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., GPO BCA 14-92 (January 31, 1996), slip op. at 36, 1996 WL
112555; Asa L. Shipman's Sons, Ltd., supra, slip op. at 12, fn.
16; Professional Printing of Kansas, Inc., GPO BCA 2-93 (May 19,
1995), slip op. at 43, fn. 58, 1995 WL 488488; Universal Printing
Co., GPO BCA 09-90 (June 22, 1994), slip op. at 24, fn. 24, 1994
WL 377586; B. P. Printing and Office Supplies, GPO BCA 14-91
(August 10, 1992), slip op. at 16, 1992 WL 382917; 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, supra; 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 Big Red Enterprises,
supra, slip op. at 37; 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. Inc. v. United States, supra, 211 Ct. Cl. at 199,
543 F.2d at 1302. 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 Navy,
specifically set out to harm the Appellant. See Big Red
Enterprises, supra, slip op. at 37; Asa L. Shipman's Sons, Ltd.,
supra, slip op. at 12, fn 16; Stephenson, Inc., supra, slip op.
at 57. Accordingly, the Board concludes that its rationale in
Big Red Enterprises is equally applicable to this appeal, and
dispositive of the "responsibility" issue raised by the
Appellant. Therefore, for the reasons expressed that case, the
Board finds no merit in the Contractor's assertion that the
Contracting Officer's decision to award it the contract was
erroneous, and rejects its protest of his pre-award
determination.
B. The Board also has no jurisdiction to grant the Appellant's
demand for damages in the amount of approximately $138,000.00 to
compensate it for its losses in connection with the contract;
e.g., the price of leased and purchased machinery, because it is
a breach of contract claim.
The second jurisdictional issue is wrapped up in the Appellant's
demand for damages of $138,000.00 to reimburse it for the money
it spent, inter alia, on purchasing and leasing machinery and
equipment to perform the contract.27 See App. Brf., at 3; App.
R. Brf., at 6; SRPTC, at 5. In effect, the very nature of the
Contractor's demand makes it a "pure" breach of contract claim,
that is, a claim for damages not redressable under a specific
contract provision. See The Wessel Co., Inc., supra, slip op. at
27, n.29. However, it is settled law that this Board has no
jurisdiction over such breach of contract claims. See Id., slip
op. at 27-28 (". . . [T]he Board . . . lacks the authority to
entertain 'pure' breach of contract claims where redress is
sought in the form of damages." [Original emphasis]); R.C.
Swanson Printing and Typesetting Co.,supra, slip op. at 41. See
also Cloverleaf Enterprises, Inc., GPOCAB 79-12 (May 9, 1980),
slip op. at 10-11, 1980 WL 81267; Microform Data System, Inc.,
GPOCAB 3-79 (February 1, 1980), slip op. at 11-12, 1980 WL 81258;
Information Systems, Inc., GPOCAB 78-11 (January 18, 1979), slip
op. at 5-7, 1979 WL 28889; Harbor Printing & Copy Service, Inc.,
GPOCAB 77-5 (November 4, 1977), slip op. at 1, 1977 WL 24257.28
See generally, Foss, The First Decade, at 587.
The Board's inability to consider "pure" breach of contract
claims is mainly based on the same reasoning which prevents it
from reviewing pre-award determinations made by GPO contracting
officers; i.e., as a creature of contract, not of statute, the
Board's remedial authority is strictly limited, and confined to
the contract before it.29 See Olympic Graphic Systems, supra,
slip op. 36; Big Red Enterprises, supra, slip op. at 38;
GraphicData, II, supra, slip op. at 57; R.D. Printing Associates,
Inc., GPO BCA 02-92 (December 16, 1992), slip op. at 9, 13, ns.
9, 15, 1992 WL 516088; R.C. Swanson Printing and Typesetting Co.,
supra, slip op. at 26-27; The Wessel Co., Inc., supra, slip op.
at 32; Automated Datatron, Inc., supra, slip op. at 4-5; Bay
Printing, Inc., supra, slip op. at 9; Peak Printers, Inc., supra,
slip op. at 6. As a forum of limited jurisdiction whose remedial
powers are tied to the clauses in the contract, the Board
functions essentially as a pre-CDA board of contract appeals.
See Olympic Graphic Systems, supra, slip op. 37; GraphicData, II,
supra, slip op. at 85; R.C. Swanson Printing and Typesetting Co.,
GPO BCA 15-90, Supplemental Decision (July 1, 1993), slip op. at
28, 1993 WL 526638 (hereinafter Swanson Supp.); The Wessel Co.,
Inc.,supra, slip op. at 34. See also H.L. Eikenberg Co., GPOCAB
No. 76-13 (May 9, 1979), slip op. at 35, n. 21. Accord United
States v. Utah Construction and Mining Co., 384 U.S. 394 (1966);
Jet Services, Inc., DOT CAB No. 77-14, 78-2 BCA ¶ 13,223; Blake
Construction Co., Inc,, GSBCA No. 2205, 67-1 BCA ¶ 6,311. This
simply means that the Board must take the agreement as it finds
it, and unless the Board can locate the relief granting source
within the "four corners" of the contract, its hands are tied,
and the contractor will have to seek its remedy in another forum.
See Olympic Graphic Systems, supra, slip op. 37; R.C. Swanson
Printing and Typesetting Co., supra, slip op. at 40-41; The
Wessel Co., Inc., supra, slip op. at 45-46. In other words, even
if the Board concluded that the default was excusable in this
case, its remedial authority would not encompass awarding the
Appellant $138,000.00 as damages. Instead, as previously
mentioned, the traditional remedy in such a case is to convert
the default into a termination for the convenience of the
Government and allow the contractor to recover for the work
performed plus a reasonable profit.30 See Graphics Image, Inc.,
supra, slip. op. at 28; American Drafting & Laminating Co., GPO
BCA 6-85 (April 15, 1986), slip op. at 17, 1986 WL 181459. See
also New South Press & Assoc., Inc., supra, slip op. at 37;
Swanson Supp., slip op. at 17-18; Graphic Litho Co., Inc., GPO
BCA 17-85 (February 23, 1988), slip. op. at 10, 1988 WL 363329;
Bay Ridge Press, GPOCAB 4-82 (September 15, 1983), Supplemental
Decision, slip. at 3, 1983 WL 135370 (convenience termination
cases). Accord Youngstrand Surveying, AGBCA No. 90-150-1, 92-2
BCA ¶ 25,017; Humphrey Logging Co., AGBCA Nos. 84-359-3,
85-204-3, 85-3 BCA ¶ 18,433); Chamberlain Manufacturing
Corp.,ASBCA No. 16877, 73-2 BCA ¶ 10,139. Accordingly, for these
reasons, the Appellant's claim of compensation in the amount of
$138,000.00 for its expenditures on purchased and leased
machinery and equipment to perform the contract, must be, and is
hereby, DENIED.
C. The Contractor has not shown that its failure to perform arose
from causes beyond its control and without its fault or
negligence, or beyond the control and without the fault or
negligence of Sabin, its paper supplier. Therefore, the
Contracting Officer's termination of the contract for default was
not in error.
In this case, the basis for default-the Appellant's failure to
perform in accordance with the contract specifications-is not in
question. Instead, the crux of the dispute involves the
Contractor's belief that its nonperformance is excusable because
its paper supplier, Sabin, could not (or would not) furnish paper
to the Appellant at the prices it quoted during the bid
preparation stage, and in the quantities needed to complete the
contract. See Appellant's letter of December 12, 1995, at 1;
Ressler Memorandum; Complaint, at 2; SRPTC, at 4. Furthermore,
the Contractor believes that Sabin is also faultless because it
had no way to predict that paper prices would rise steeply. See
App. R. Brf., at 4; Appellant's Letter of December 12, 1995, at
1; Ressler Memorandum; Complaint, at 2; SRPTC, at 4. However,
the key condition raised as an excuse -rising paper prices-is not
such a circumstance as would excuse the Appellant's failure to
perform. See Gold Country Litho, supra, slip op. at 22.
This appeal bears a strong resemblance to the situation
confronting the Board in Gold Country Litho. There, the
contractor was the low bidder on a contract to provide 10,200
pads of Data Descriptor Labels (hereinafter DDLs) for the General
Services Administration (GSA). Among other things, the IFB
required that the paper stock for the DDLs be "White Opaque Vinyl
equal in all respects to Fasson's 'TamperFas' Destructive Vinyl,
G-70651." Because of the gap between its bid, and the next
lowest bidder, GPO asked the contractor two times to review and
confirm its bid price before it was awarded the contract. The
contractor did so, but shortly after award it returned the job to
the Government, stating, inter alia, that it could not do the
work. When GPO asked for an explanation prior to defaulting the
contract, the contractor responded, in pertinent part:
Originally, Gum Papers of America (Manuel Cordova) said they
would give Gold Country Lithography (my company), "terms" with
the cost of materials to produce [the] job. Therefore, I was
able to bid on this job (& [it] was also awarded). I was then
referred (by Mr. Cordova) to the credit department when I was
awarded the contract. At that point, Juan (credit mgr.) denied
my credit. I could not get the monies to do [the] job so I got
another supplier to send samples of another material that was
simular [sic] & sent samples to Charles Washington to be
approved.
* * * * * * * * * *
I was relying on the second paper company (Zellerbach Paper
Company) to issue credit & was waiting for approval of the paper
(of simular [sic] or equivalent stock) which has still been
unapproved.
See Gold Country Litho, slip op. at 7. Meanwhile, GPO's quality
control staff had tested a sample of the label stock which had
been submitted by the Contractor for approval and determined that
was not equal to the specifications because the paper was not
equal to Fasson's "TamperFas" Destructive Vinyl. Id., slip op.
at 8. Accordingly, GPO terminated the contract for default
because of the contractor's "inability to perform per
specifications (stock not equal to Fasson's S-730 Tampas [sic]
Destructible Vinyl)[,]" and reprocured the contract from the next
lowest original bidder. See Gold Country Litho, slip op. at 8-9.
On appeal to the Board, the contractor argued that GPO's default
action was erroneous because its failure to perform was the fault
of its stock supplier, who could not "produce the stock to match
specifications at the cost that was given on the original bid,"
and it was unable to find a "comparable substitute." See Gold
Country Litho, slip op. at 9, n. 7. To the Board, the
contractor's defense boiled to two contentions: (1) its paper
supplier could not provide stock equivalent to Fasson's
"TamperFas" Destructible Vinyl; and (2) its poor financial
condition precluded it from purchasing the label stock itself
elsewhere. However, neither of these reasons, in the Board's
view, fell within the range of acceptable occurrences or events
which would excuse the contractor's failure to perform. See Gold
Country Litho, slip op. at 18 (citing Chavis and Chavis Printing,
supra, slip op. at 13; Jomar Enterprises, Inc., GPO BCA 13-86
(May 25, 1989), slip op. at 3-5).
First, it seemed to the Board that the contractor's description
of its unsuccessful attempt to acquire the label stock was
nothing more than an allegation that somehow the Government
breached its implied warranty of commercial availability. See
Gold Country Litho, slip op. at 18-19. As a rule, before the
Government can express its specifications in terms of a "brand
name or equal" product (here the relevant contract language was
"equal in all respects to Fasson's "TamperFas" Destructible
Vinyl"), it has an obligation ". . . to ascertain and assure
bidders of the commercial availability of the component from its
manufacturer . . . , or failing that, to provide bidders with a
sufficient description of the physical specifications and
performance characteristics so that it may be duplicated by the
bidders either by in-house fabrication or by purchase from
suppliers[,]" see Gold Country Litho, slip op. at 19 (citing
Aerodex, Inc. v. United States, 189 Ct. Cl. 344, 354, 417 F.2d
1361 (1969); S & D Construction Co., VABCA No. 3885, 95-2 BCA ¶
27,609; Ocean Electric Corp., NASABCA 371-8, 73-2 BCA ¶ 10,335;
John Cibinic, Jr. & Ralph C. Nash, Jr., Administration of
Government Contracts 3d ed., (The George Washington University,
1995), at 284-86 (hereinafter Cibinic & Nash)). The Government's
duty to the contractor is a narrow one; i.e.:
. . . the Government only warrants that the product existed at
the time of solicitation, and the contractor assumes the risk
that the product may become unavailable. See James Reeves
Contractor, Inc., ASBCA No. 44065, 95-2 BCA ¶ 27,718; Parker's
Mechanical Constructors, Inc., ASBCA No. 29020, 84-2 BCA ¶
17,427; Omega Construction Co., ASBCA No. 22705, 78-2 BCA ¶
13,425. Similarly, the Government does not thereby become an a
insurer that the product will be available within the time period
contemplated for performance under the contract, see Franklin E.
Penny Co. v. United States, 207 Ct. Cl. 842, 524 F.2d 668 (1975),
or at a price and location which is less costly for the
contractor, see Callison Construction Co., AGBCA No. 88-309-1,
92-3 BCA ¶ 25,071. In no case, however, does the implied
warranty rule extend to unspecified equal products; i.e., the
Government makes no promise that acceptable substitutes are
available. See M.S.I. Corp., IBCA 554-4-66, 68-1 BCA ¶ 6983.
See also WRB Corp. v. United States, 183 Ct. Cl. 409 (1968);
James Walford Construction Co., GSBCA No. 6498, 83-1 BCA ¶ 16,277
(no warranty of commercial availability for generically described
products or products of listed manufacturers). Stated otherwise,
the law places on the contractor's shoulders the responsibility
for determining the availability of the supplies, materials, and
products necessary for performance prior to bidding, see
Interstate Coatings, Inc. v. United States, 7 Cl. Ct. 259 (1985);
ACS Construction Co., ASBCA No. 33832, 87-3 BCA ¶ 20,138, aff'd,
848 F.2d 1245 (Fed. Cir. 1988); DeLaval Turbine, Inc., ASBCA No.
21797, 78-2 BCA ¶ 13,521; Datametrics, Inc., ASBCA No. 16086,
74-2 BCA ¶ 10,742; Therm-Air Manufacturing Co., ASBCA No. 17128,
74-2 BCA ¶ 10,652, and the risk is not shifted to the Government
just because the contractor experiences difficulty in that
regard, see Pioneer Enterprises, Inc., ASBCA No. 43739, 93-1 BCA
¶ 25,395; Toyad Corp., ASBCA No. 26785, 85-3 BCA ¶ 18,354. See
also Alabama Dry Dock & Shipbuilding Corp., ASBCA No. 39215, 90-2
BCA ¶ 22,855 (Government only warranted that the supplier could
manufacture a conforming item, not that it would do so, and thus
it was not liable when the supplier delivered defect items).
See Gold Country Litho, slip op. at 20-21. [Original emphasis.]
However, on a record which showed that: (1) the contractor's
first paper supplier had said that its product was equivalent to
Fasson's "TamperFas" Destructible Vinyl, but would not extend
credit to the contractor to buy it; (2) its second paper company
assured the contractor that its stock was also equivalent to
Fasson's "TamperFas" Destructible Vinyl, but its samples failed
GPO's quality control tests; and (3) Fasson had told the
contractor it could supply the required paper stock, but only at
a price which was prohibitive as far as the contractor was
concerned, the Board had little trouble concluding that GPO had
met the requirements of the law. See Gold Country Litho, slip
op. at 21 (citing James Reeves Contractor, Inc., supra; Parker's
Mechanical Constructors, Inc., supra; Omega Construction Co.,
supra). As the Board observed:
[GPO] was not obligated to promise that label stock equal to
Fasson's "TamperFas" Destructible Vinyl would be available from
other suppliers, see WRB Corp. v. United States, supra; James
Walford Construction Co., supra; M.S.I. Corp., supra, or that
Fasson would sell the named material to the Appellant at a price
it was willing to pay, see Callison Construction Co., supra.
Rather, it was the Contractor's duty to determine the
availability of equal paper stock at a price it could afford (if
it did not want to or could not purchase "TamperFas" Destructible
Vinyl from Fasson) prior to submitting its bid. See Interstate
Coatings, Inc. v. United States, supra; ACS Construction Co.,
supra; DeLaval Turbine, Inc., supra; Datametrics, Inc., supra;
Therm-Air Manufacturing Co., supra. The Respondent is not
responsible for any difficulties or frustrations experienced by
the Appellant in its efforts to obtain label stock which would
satisfy the requirements of the contract. See Pioneer
Enterprises, Inc., supra; Toyad Corp., supra.
See Gold Country Litho, slip op. at 21-22. [Emphasis added.]
Therefore, in the Board's view, the contractor alone was
responsible, under the circumstances, for its failure to obtain
acceptable label stock prior to default. See Gold Country Litho,
slip op. at 22.
Next, the Board also rejected the contractor's claim that its
failure to perform was due to the financial difficulty it was
having at the time, which limited its options with respect to
purchasing proper label stock. The Board thought that this
second excuse identified the real reason the contractor was
unable to perform the contract. However, the Board observed
that:
It is "black letter" law that a contractor is responsible for
having the labor, plant, equipment, material and finances
adequate for contract performance prior to making a contract
commitment with the Government. See K.C. Printing Co., supra,
slip op. at 15; Chavis and Chavis Printing, supra, slip op. at
14-15. The reason for this rule is simple-implicit in a
contractor's promise to perform is its assurance that it has the
ability to perform. See K.C. Printing Co., supra, slip op. at
15; Chavis and Chavis Printing, supra, slip op. at 14.
See Gold Country Litho, slip op. at 22-23. In this regard, the
basic rule with regard to contractor finances was stated by the
Armed Services Board of Contract Appeals (ASBCA) in Dependable
Metal Products, Inc., ASBCA Nos. 41446, 41449, 94-3 BCA ¶ 26,963.
In that case, the contractor's failure to provide evidence from
its bank that the bank's negative financing decision was based on
Government action or inaction, as contended by the contractor,
resulted in the ASBCA's rejection of the contractor's attempt to
excuse its default based on its financial problems. As the ASBCA
observed:
While we hear appellant argue that repudiation was compelled, in
part, by a decision of a lender not to provide additional
financing, the general rule is that a contractor assumes the risk
of assuring adequate financing to perform the work. Southeastern
Airways Corporation v. United States [29 CCF ¶ 82,261], 673 F.2d
368 (Ct. Cl. 1982); International Equipment Services, Inc., ASBCA
Nos. 21104, 23170, 83-2 BCA ¶ 16,675. There is an exception
where the contractor can show that financing was denied because
of Government wrongdoing. TGC Contracting Corporation v. United
States [32 CCF ¶ 73,655], 736 F.2d 1512 (Fed. Cir. 1984).
See Dependable Metal Products, Inc., supra, 94-3 BCA ¶ 26,963, at
134,264. [Emphasis added.] See also K.C. Printing Co., supra,
slip op. at 16. Compare Litchfield Manufacturing Corp. v. United
States, 338 F.2d 94 (Ct. Cl. 1964) (bank vice president testified
that bank declined financing because of the Government's failure
to timely deliver necessary tooling). Similarly, as another
contract appeals board noted:
It is fundamental that the contractor assumes the risk of
providing funds to perform the contract. Consequently, neither
undercapitalization nor insolvency (actual or impending) will
excuse a failure to perform. Consolidated Airborne Systems, Inc.
v. United States [10 CCF ¶ 73,125], 172 Ct. Cl. 588, 597, 348
F.2d 941, 946 (1965); Willems Industries, Inc. v. United States
[8 CCF ¶ 71,693], 155 Ct. Cl. 360, 295 F.2d 822 (1961);
International Equipment Services, Inc., ASBCA Nos. 21104, 23170.
83-2 BCA ¶ 16,675; Medical Fabrics Company, ASBCA No. 1148, 66-2
BCA ¶ 5,887.
See El Greco Painting Co., ENG BCA No. 5693, 92-1 BCA ¶ 24,522,
at 122,379. [Emphasis added.] See also K.C. Printing Co., supra,
slip op. at 17. Accord Sierra Tahoe Manufacturing, Inc., GSBCA
No. 12679, 94-2 BCA ¶ 26,771; Centennial Leasing, GSBCA No.
12037, 94-1 BCA ¶ 26,398; Swiss Products, Inc., ASBCA No. 40031,
93-3 BCA ¶ 26,163; Local Contractors, Inc., ASBCA No. 37108, 92-1
BCA ¶ 24,491; Ralcon, Inc., ASBCA Nos. 38059, 38191, 40398,
41376, 92-2 BCA ¶ 24,971. In the Board's view, the general rule
was dispositive of dispute in Gold Country Litho, where the
undisputed facts warranted but one conclusion-the Appellant was
undercapitalized.31 See Gold Country Litho, supra, slip op. at
24. The Board reasoned:
It was the Appellant's obligation to have proper and adequate
financial resources to perform the contract. See K.C. Printing
Co., supra, slip op. at 17 (citing Ralcon, Inc., supra, 92-2 BCA
¶ 24,971, at 124,435). The Contractor's inability to acquire
sufficient funds for performance is not such an excuse "beyond
its control and without its fault or negligence" within the
meaning of the "Disputes" clause, unless it could show that its
financial incapacity was caused by the Government. Id. (citing
Local Contractors, Inc., supra, 92-1 BCA ¶ 24,491, at
122,235-36). Furthermore, financial problems not caused by
wrongful Government action do not form the basis to excuse a
failure to deliver. Id. (citing Midwest Satellite Equipment,
Inc., ASBCA No. 40713, 91-2 BCA ¶ 23,907, at 119,759; Unimach
Manufacturing, ASBCA No. 39883, 90-3 BCA ¶ 22,968, at 115,348).
Here, the Appellant has not shown any improper conduct on the
part of the Government affecting its ability to acquire
sufficient funds.
See Gold Country Litho, supra, slip op. at 25. Accordingly, the
Board found that the contractor had not met its burden of proof
with respect to excusing its failure to make a timely shipment of
the DDLs, and GPO was justified in terminating the contract for
default. See Gold Country Litho, supra, slip op. at 25-26
(citing K.C. Printing Co., supra; Chavis and Chavis Printing,
supra; Midwest Satellite Equipment , Inc., supra).
In the Board's view, its reasoning in Gold Country Litho also
applies to this dispute and is dispositive. First, to the extent
that the Appellant's allegations raise, by implication, an issue
regarding "commercial availability," the Board finds no evidence
of a Government breach on this record. As indicated above, the
Respondent's legal duty with respect to the paper required to
perform the contract went no farther than a promise that white
offset 50 lb. paper (JCP A60) existed at the time of
solicitation. See Gold Country Litho, supra, slip op. at 20.
The evidence of both parties clearly shows that JCP A60 paper was
available when GPO issued the IFB for Program C37-S, and indeed,
supplies of the stock existed when the first print orders were
issued. See Appellant's letter of December 12, 1995, Ressler
Memorandum; R. Brf., Moody Declaration, ¶¶ 3, 4, Kuhlman
Declaration, ¶ 2. The risk that the paper would become
unavailable after that, or would only be available at a price the
Appellant was unwilling to pay, was strictly the Contractor's.
See Gold Country Litho, supra, slip op. at 20. Accord James
Reeves Contractor, Inc., supra; Callison Construction Co., supra;
Parker's Mechanical Constructors, Inc., supra; Omega Construction
Co., supra.
Second, although the Board is not prepared to say on this record
that, like the contractor in Gold Country Litho, the Appellant
was undercapitalized, there seems no doubt but that the
Contractor failed in its duty to have adequate financing to
perform the work. See Gold Country Litho, supra, slip op. at 25;
See K.C. Printing Co., supra, slip op. at 17. Accord Dependable
Metal Products, Inc., supra; Ralcon, Inc., supra. In that
regard, the undisputed evidence of record shows that: (1)
although Sabin sold the Appellant a supply of the required stock
(238,000 sheets of white offset 50 lb. paper (JCP A60)) at the
bid price for the first print orders, additional quantities of
paper were unavailable because of "paper market conditions and a
change in price structure[;]" i.e., price increases, see
Appellant's letter of December 12, 1995, at 1; Ressler
Memorandum; R. Brf., Kuhlman Declaration, ¶ 2; (2) the Contractor
did not have any firm agreement with Sabin before it accepted the
award of Program C37-S under which Sabin would supply paper at a
fixed price in the quantities needed, see R. Brf., Kuhlman
Declaration, ¶ 3; SRPTC, at 4, n. 3; (3) instead, the Appellant,
in accordance with its usual practice, intended to obtain paper
from different suppliers or brokers for each print order,
depending on who had the lowest prices; see App. R. Brf., at 4;
SRPTC, at 4, n. 3; and (4) the defaulted contract did not contain
a "Paper Cost (or Price) Escalation" clause. See SRPTC, at 4, n.
2. From these facts, it seems clear to the Board that the
Appellant's chosen method of purchasing paper for this contract
was the essential ingredient in its failure to perform. In a
nutshell, the Contractor took a gamble that paper prices would at
least remain constant for the contract term and lost. Stated
otherwise, the Appellant was not financially prepared for the
change in market conditions in which the price of white offset 50
lb. paper (JCP A60) would rise steeply, and had not taken steps
to protect itself from such increases by entering a contract with
a paper vendor to supply stock at a fixed price. Since the
Appellant has not alleged or shown any improper conduct by the
Government affecting its ability to acquire sufficient funds for
performance, the Contractor itself must bear total responsibility
for its inadequate financial resources in this case. See Gold
Country Litho, supra, slip op. at 25; K.C. Printing Co., supra,
slip op. at 17. Therefore, considering the record on this issue
as a whole, the Board concludes that the Appellant has not
presented as a reason for its default such an excuse "beyond its
control and without its fault or negligence" within the meaning
of the "Disputes" clause. See Gold Country Litho, supra, slip
op. at 25; K.C. Printing Co., supra, slip op. at 17. Accord
Local Contractors, Inc., supra; Midwest Satellite Equipment,
Inc., supra; Unimach Manufacturing, supra. Likewise, the
Contractor has not shown that the cause of its default was an act
of its paper supplier which was beyond the control of both of
them, and without the fault or negligence of either. See Gold
Country Litho, supra, slip op. at 14-15; A & E Copy Center,
supra, slip op. at 15; K.C. Printing Co., supra, slip op. at 10;
Chavis and Chavis Printing, supra, slip op. at 11. Accordingly,
for the reasons given, the board finds that the Contractor has
not met its burden of proof in this case, and the Contracting
Officer was justified in terminating the contract for default.
See Gold Country Litho, supra, slip op. at 26; K.C. Printing Co.,
supra, slip op. at 18; Chavis and Chavis Printing, supra, slip
op. at 15. Accord Midwest Satellite Equipment, Inc., supra, 91-2
BCA at 119,759.
D. The Respondent's award of the reprocurement contracts to News
Printing and Braceland prior to the date of default was not such
a procedural defect as would forfeit its right to excess
reprocurement costs.
The final matter in this appeal involves the Respondent's
assessment of $913.74 in excess reprocurement costs against the
Appellant. However, before reaching the merits of the
Government's claim, a threshold question must be answered first-
one which, unlike the "responsibility" issue, truly involves a
matter of first impression for the Board. Specifically, a
question arises in this case concerning whether or not the
Respondent has forfeited its right to excess costs by making a
premature repurchase?32 Stated otherwise, did GPO commit a fatal
procedural error by reprocuring the abandoned work before it
terminated the contract for default?
In that regard, the undisputed chronology in this dispute shows
that although the Contracting Officer had received approval from
the CRB to default the Appellant, he actually reprocured the work
covered by Print Orders 20001 and 20002 before terminating the
contract itself (the CRB concurred in the default decision on
July 19, 1995, and Print Orders 30854 and 30853 were awarded on
July 19-20, 1995, respectively, but the default notice was not
issued for another week; i.e., on July 26, 1995). However, the
"Default" clause language concerning a contractor's liability for
excess reprocurement costs states, in pertinent part:
If the Government terminates in whole or in part, it may acquire,
under the terms and in the manner the Contracting Officer
considers appropriate, supplies or services similar to those
terminated, and the contractor will be liable to the Government
for any excess costs for those supplies or services. . . .
See GPO Contract Terms, Contract Clauses, ¶ 20(b). [Emphasis
added.] Furthermore, the PPR provides, in pertinent part:
f. Repurchase against contractor's account.
(1) Where the supplies or services are still required after
termination and the contractor is liable for excess costs,
repurchase of supplies or services which are the same as or
similar to those called for in the contract shall be made against
the contractor's account as soon as possible after termination. .
. .
See PPR, Chap. XIV, Sec. 1, ¶ 3.f. [Emphasis added.] The plain
and ordinary meaning of the word "after" in this context simply
refers to something (a need or an action) which is "later in
time," or "next." See WEBSTER'S NEW WORLD DICTIONARY 23 (3rd
coll. ed. 1988). Therefore, it would seem that before a second
contract can be construed a repurchase, the original agreement
must be defaulted, and if the Government attempts to assess
reprocurement costs under a contract awarded before termination,
the excess costs must fail. Or, simply stated, there cannot be
a repurchase unless there is first a default. Indeed, at one
time that was the rule. See Chemical Compounding Corp., GSBCA
No. 2476, 68-2 BCA ¶ 7388, aff'd on reconsid., 69-1 BCA ¶ 7525.
However, it is now well-settled that issuance of the default
notice is not a condition precedent to a reprocurement. See
Olean Case Corp., GSBCA Nos. 4673, 4721, 78-1 BCA ¶ 12,905;
Tilton Machine and Tool Co., GSBCA Nos. 4198, 4199, 76-1 BCA ¶
11,750 (expressly overruling Chemical Compounding Corp., supra);
Hyland Electrical Supply Co., ASBCA No. 19270, 75-2 BCA ¶ 11,466;
Allied Paint Manufacturing Co., Inc., ENG BCA Nos. 2962, 3043,
71-1 BCA ¶ 8765. As one contract appeals board observed:
In and of itself, there is nothing sacred in the date of award of
the contract under which the Government repurchases supplies
against the account of a defaulted contractor.
See Tilton Machine and Tool Co., supra, 76-1 BCA at 56,087.
Furthermore, the cases make clear that the rule allowing
contracting officer's to initiate a reprocurement in face of an
impending default, instead of waiting for actual termination of
the contract, is nothing more than an extension of the
Government's duty to act promptly to mitigate a defaulted
contractor's damages. See Olean Case Corp., supra, 78-1 BCA at
62,860; Tilton Machine and Tool Co., supra, 76-1 BCA at 56,987.
Indeed, the Government's interest against further delay is also
protected by a prompt repurchase under such circumstances. See
Allied Paint Manufacturing Co., Inc., supra, 71-1 BCA at 40,684.
In the Board's view, this common sense approach trumps any narrow
or technical reading of the words, underscored above, in the
"Default" clause and the PPR. Accordingly, the Board holds that
where, as here, all pre-default procedures (e.g., securing CRB
approval) have been complied with, and the action is imminent but
not yet effectuated, GPO does not forfeit its right to excess
costs if a contracting officer initiates a reprocurement of
needed supplies prior to terminating the original contract.
E. The Government has proved its claim of entitlement to excess
reprocurement costs in the amount indicated.
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). [Sterling Printing, Inc, GPO
BCA 20-89 (March 28, 1994),1994 WL 275104, reconsid. denied, July
5, 1994, 1994 WL 377592.] 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 Gold Country Litho,
supra, slip op. at 26-27; A & E Copy Center, supra, slip op. at
27; Big Red Enterprises, supra, slip op. at 41; Asa L. Shipman's
Sons, Ltd., supra, slip op. at 28; 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.
There is no question that GPO has met is evidentiary burden with
respect to the matter of "timeliness." See Gold Country Litho,
supra, slip op. at 29; Big Red Enterprises, supra, slip op. at
43; 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. Nor is there
any doubt that the reprocurement is "finalized;" i.e., the work
has been completed and paid for. See Gold Country Litho, supra,
slip op. at 35; Big Red Enterprises, supra, slip op. at 49-50;
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; Scalf Engineering, supra. The only open
questions relate to the elements of "similarity," "reasonable
method," and "reasonable price." In the Board's view, however,
the Respondent has successfully carried its burden on those
issues as well.
As for whether the reprocurement print orders were performed
under substantially the same terms and conditions as the
originals, the Board's own comparison of both sets shows that
Braceland and News Printing, the reprocurement contractors, were
asked to produce and deliver the same JFTRs under essentially the
same terms and conditions as the Appellant.33 Compare Notice of
Filing, Attachments 1 and 2 with Attachments 3 and 4. Indeed,
the Contractor does not allege otherwise. In fact, except for an
adjustment in the delivery date to account for the repurchase and
a few administrative changes (e.g., new contractor code, new
jacket number, new area/state code, etc.), the two sets of print
orders are identical. Certainly, these changes are not a
material alterations because they have no pecuniary impact; i.e.,
they are not such as would cause a substantial increase in the
price of the reprocurement contract.34 See Gold Country Litho,
supra, slip op. at 27; Big Red Enterprises, supra, slip op. at
41; Sterling Printing, Inc., supra, slip op. at 59-60 (citing AGH
Industries, ASBCA Nos. 27960, 31150, 89-2 BCA ¶ 21,637; Ace
Reforestation, 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.
Accordingly, the Board concludes that the Respondent has met its
burden with respect to 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 Gold Country Litho, supra, slip op. at 28; Big Red
Enterprises, supra, slip op. at 42; Univex Supp., slip op. at
5-6; 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.
The Board also believes that the Contracting Officer's choice of
Program A814-M as the vehicle for repurchasing the defaulted
JFTRs was reasonable under the circumstances.35 See Gold Country
Litho, supra, slip op. at 33; Big Red Enterprises, supra, slip
op. at 43; 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. In that regard, the Board places no particular significance
in the fact that, unlike Program C37-S, Program A814-M is not a
"Small Disadvantaged Business" set aside contract. See Stephen
Own Dickhoener, AGBCA No. 85-275-1, 86-1 BCA ¶ 18,661. 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 Gold Country
Litho, supra, slip op. at 29; Big Red Enterprises, supra, slip
op. at 43; 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).
Furthermore, a contracting officer may select a method which
limits competition for the repurchase if the situation demands
it36 -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.37 See Gold Country Litho, supra, slip op.
at 30; Big Red Enterprises, supra, slip op. at 44; Univex Supp.,
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., GSBCA No.
9126, 90-2 BCA ¶ 22,745, 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. Ultimately, however, the test applied to determine 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. See Gold Country
Litho, supra, slip op. at 30-31; Big Red Enterprises, supra, slip
op. at 44; 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.
In this case, the Contracting Officer placed the repurchase
orders under an existing term contract, Program A814-M. The use
of an existing term contract is an acceptable reprocurement
method, particularly where, as here, there is an urgent need for
the supplies. See Tilton Machine and Tool Co., supra, 76-1 BCA
at 56,087; Hyland Electrical Supply Co., supra, 75-2 BCA at
54,619. Indeed, it has been held that in certain circumstances
the Government's failure to use an existing term contract can be
considered a failure to mitigate damages. See Century Tool Co.,
GSBCA No. 4007, 78-1 BCA ¶ 13,050, reconsid. denied, 78-2 BCA ¶
13,345 (existing term contract had an item price identical to
that of the defaulted contract). Obviously, the decision about
whether or not to use an existing term contract is wholly within
a contracting officer's discretion. Interroyal Corporation,
supra, 83-1 BCA at 81,221; Tilton Machine and Tool Co., supra,
76-1 BCA at 56,087. See also American Kal Enterprises, Inc.,
GSBCA No. 4449, 76-2 BCA ¶ 11,929 (valid reasons may exist for
not reprocuring against an existing term contract). Here, the
Contracting Officer's decision to select Program A814-M was based
principally on the Navy's immediate need for the overdue JFTRs,
and his belief that a new solicitation would take too long. See
Notice of Filing, Scott Declaration, ¶ 11; Attachment 5. The
urgency of the repurchase was made clear to the reprocurement
contractors on the face of Print Orders 30853 and 30854 by the
annotation "MUST!" in the "Ship/Delivery Date" box of each of
them. See Notice of Filing, Attachment 3. Moreover, the record
makes clear that the vendors selected to participate in Program
A814-M have already submitted bid prices for various printing and
binding functions, and work is awarded only after GPO has
individually abstracted each print order to determine the lowest
price. See Notice of Filing, Scott Declaration, ¶ 11; Attachment
5, at 19. The Board believes that this process assured
sufficient competitive prices for the repurchase, and in its
opinion, further solicitation of other firms would not have
resulted in lower prices and was unnecessary. See Gold Country
Litho, supra, slip op. at 32-33; Big Red Enterprises, supra, slip
op. at 46; Univex Supp., supra, slip op. at 9; K.C. Printing,
supra, slip op. at 22-23 (citing Century Tool Co., supra, 78-1
BCA at 63,735; Sterling Printing, Inc., supra, slip op. at 73).
Accordingly, the Board believes that the Respondent has met its
burden with respect to the "reasonable method" element
establishing the Appellant's liability for excess reprocurement
costs. See Gold Country Litho, supra, slip op. at 33; Big Red
Enterprises, supra, slip op. at 46; Univex Supp., supra, slip op.
at 9; K.C. Printing, supra, slip op. at 23 (citing Sterling
Printing, Inc., supra, slip op. at 73).
Finally, the Government is also required to show that it obtained
the lowest reasonable reprocurement price-the lowest reasonable
price for the Government under circumstances, not the defaulted
Contractor.38 See Gold Country Litho, supra, slip op. at 33; Big
Red Enterprises, supra, slip op. at 46; 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. The record in this case
reveals that the Respondent's estimated cost for Print Orders
20001 and 20002 was $23,277.00 and $6,340.00, respectively. See
Notice of Filing, Attachments 1 and 2. On repurchase, the work
was secured from Braceland (Print Order 30853) and News Printing
(Print Order 30854) for $23,736.36 and $7,118.49, respectively.
See Notice of Filing, Jones Declaration, ¶¶ 3, 5, Attachment 3.
After the FMS took prompt payment discounts, it assessed excess
reprocurement costs against the Appellant in the amount of
$167.20 for Print Order 30853 (20001), and $746.54 for Print
Order 30854 (20002). See Notice of Filing, Jones Declaration, ¶¶
3, 5. By the Board's calculations, that means the contract price
of defaulted Print Order 20001 was increased 0.7% by the
repurchase, while there was an 11.7% increase in the cost of
defaulted Print Order 20002. In the Board's view, neither of
these increased prices can be deemed unreasonable; indeed, a 0.7%
price rise is, by definition, de minimis. It is well-settled
that even a significant price increase in the reprocurement does
not render it unreasonable in the face of Government due care and
diligence. See Gold Country Litho, supra, slip op. at 34; Big
Red Enterprises, supra, slip op. at 47; 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. The
Board has approved much higher reprocurement price increases in
the past. See Gold Country Litho, supra (35%); Big Red
Enterprises, supra (35%); Asa L. Shipman's Sons, Ltd, supra
(39%); Univex Supp., supra (23%); K.C. Printing Co., supra (82%).
Accordingly, the Board finds that GPO has carried its evidentiary
burden and shown 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 Gold Country Litho, supra, slip op. at 34;
Big Red Enterprises, supra, slip op. at 48; 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. Therefore, the
Contractor is obligated to the Government for excess costs in the
total amount of $913.74.
ORDER
Considering the record as a whole, the Board finds and concludes
that: (1) it lacks jurisdiction over both the Appellant's
challenge to the Contracting Officer's "responsibility"
determination and its demand for breach of contract damages; (2)
the default was not in error because the Appellant has not shown
that its failure to perform arose from causes beyond its control
and without its fault or negligence, or beyond the control and
without the fault or negligence of its paper supplier; (3) GPO's
award of the reprocurement contracts prior to the date of the
default was not such a procedural defect as would forfeit the
Government's right to excess reprocurement costs; and (4) the
Respondent has sustained its burden of proof with regard to the
Contractor's liability for excess reprocurement costs.
THEREFORE, the Contracting Officer's default termination
decision, and his assessment of excess reprocurement costs in the
amount of $913.74, are hereby AFFIRMED, and the appeal is DENIED.
It is so Ordered.
December 16, 1996 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 December 29, 1995. Board Rules, Rule
4(a). It will be referred to hereafter as the R4 File, with an
appropriate Tab letter also indicated. The R4 File consists of
twenty four (24) documents identified as Tab A through Tab X.
2 The Board's decision is based on: (a) the Appellant's Notice of
Appeal, dated October 26, 1995; (b) the Contractor's letter,
dated December 12, 1995, asking that the appeal be decided on the
record, see Board Rules, Rules 8 and 11; (c) the R4 File; (d) the
Appellant's letter, dated March 25, 1996, explaining the grounds
for its failure to perform, asking the Board for relief, and
otherwise meeting the requirements of a Rule 6(a) Complaint
(hereinafter Complaint); (e) the Respondent's "general denial,"
dated April 22, 1996; (f) the Respondent's Notice of Filing,
dated July 12, 1996, forwarding the declarations of Contracting
Officer, Jack Scott, and Philip L. Jones, Chief, Examining and
Billing Branch, Procurement Accounting Division, Office of the
Comptroller (hereinafter Scott Declaration and Jones Declaration,
respectively); (g) the Respondent's Brief, dated July 26, 1996
(hereinafter R. Brf.); (h) the Appellant's Brief, dated July 20,
1996, with supporting evidence (hereinafter App. Brf.); (i) the
Appellant's Reply Brief, dated August 5, 1996 (hereinafter App.
R. Brf.); (j) the Respondent's Reply Brief, dated August 9, 1996
(hereinafter R. R. Brf.); (k) the Appellant's letter, dated
August 26, 1996; and (l) the Summary Report of Presubmission
Telephone Conference, dated October 18, 1996 (hereinafter SRPTC).
The facts, which are essentially undisputed, are recited here
only to the extent necessary for this decision.
3 The four bids (undiscounted), from lowest to highest, were as
follows: (a) T.A.M's Printing ($216,727.14); (b) Rose Printing
($401,350.57); (c) Gray Graphics (the incumbent contractor)
($530,294.09); and (d) Graphic Communications ($561,446.94). See
R4 File, Tabs C and I.
4 The Respondent's printing procurement regulation provides, in
pertinent part: "Whenever a mistake in bid is alleged or
disclosed after award, the Contracting Officer shall advise the
contractor to support the alleged error by sworn statements and
by all pertinent evidence, such as the contractor's file copy of
the bid, the original worksheets and other data used in preparing
the bid, subcontractors' and suppliers' quotations (if any),
published price lists, and any other evidence which will serve to
establish the mistake, the manner in which it occurred, and the
bid actually intended." See Printing Procurement Regulation, GPO
Pub. 305.3 (Rev. 10-90), Chap. XI, Sec. 6, ¶¶ 4.e(i) (hereinafter
PPR).
5 Attached to the Contracting Officer's memorandum were copies of
all of the relevant evidence, as well as his proposed
"Determination and Findings" (R4 File, Tab G). See PPR, Chap.
XI, Sec. 6, ¶ 4.e(ii)(a)-(e). In that regard, the PPR states
that "[w]here the contractor furnishes evidence in support of an
alleged mistake, the case shall be referred through the Office of
General Counsel to the Chairperson, CRB together with the
following data: (a) [a]ll evidence furnished by the contractor[;]
(b) [a] copy of the contract, including a copy of the bid and any
specifications or drawings relevant to the alleged mistake, and
any change orders or supplemental agreements thereto[;] (c) [a]n
abstract or record of the bids received[;] (d) [a] written
statement by the Contracting Officer setting forth: (1) [s]
pecific information as to how and when the mistake was alleged or
disclosed; (2) [a] summary of the evidence submitted by the
contractor; (3) [a]n opinion whether a bona fide mistake was made
in the bid and whether the Contracting Officer was, or should
have been, on constructive notice of the mistake before award,
together with the reasons or data upon which the opinion is
based; (4) [a] quotation of a recent contract price for the
supplies or services involved, or, in the absence of a recent
comparable contract, the Contracting Officer's estimate of a fair
price for the supplies or services, and the basis for such
estimate; (5) [a]ny additional evidence considered pertinent,
including copies of all relevant correspondence between the
Contracting Officer and the contractor concerning the alleged
mistake; (6) [t]he course of action with respect to the alleged
mistake that the Contracting Officer considers proper on the
basis of the evidence, and, if other than a change in contract
price is recommended, the manner by which the item will otherwise
be procured; and (7) [t]he status of performance and payments
under the contract, including contemplated performance and
payments[;] (e) [a] proposed Determination and Findings." See
Olympic Graphic Systems, GPO BCA 01-92 (September 13, 1996), slip
op. at 10, n. 7, 1996 WL _____.
6 Subsequently, by letter dated June 8, 1995, the Appellant
confirmed its commitment to adhere to the contract terms, and
deliver advance copies along with the furnished material within
five (5) workdays, and make complete shipments to all
destinations within ten (10) workdays. See R4 File, Tab M.
7 Since the print orders under the contract were to be placed by
the Navy, see R4 File, Tab A, at 3, along with the Purchase Order
the Contracting Officer sent the Appellant a letter, also dated
June 9, 1995, specifically advising the Contractor, in pertinent
part: "For this program, direct contact between your company and
the ordering agency is authorized for transmitting print orders,
copy and other required materials. Representatives of the
ordering agency do not have authority to alter or change the
specifications, contract terms, or the print orders, once issued.
Changes and any resulting costs can only be authorized by a
Government Printing Office contracting officer." See R4 File,
Tab P. [Emphasis added.]. Under GPO's regulations, this sort of
arrangement is called a "direct-deal term contract." See
Printing Procurement Regulation, GPO Publication 305.3 (Rev.
10-90), Chap. XII, Sec. 1, ¶ 2 (hereinafter PPR). As defined in
the regulations, a "direct-deal term contract" is one which: ". .
. allow[s] the customer agency to place print orders (GPO Form
2511) directly with contractors rather than routing them through
the GPO for placement." See GPO Agency Procedural Handbook, GPO
Publication 305.1, dated March 1987, Sec. IV, ¶ 1, at 8
(hereinafter GPO Handbook). The purpose of this method of
contract administration is: ". . . to ensure that agency printing
needs are met in the most effective and efficient manner
possible." Id. It should be noted, however, that an agency's
direct-deal authority: ". . . extends only to the placement of
print orders and to the transmission of copy and proofs. . . .
All other authority rests with GPO's Contracting Officers." See
GPO Handbook, Sec. IV, ¶ 2, at 9. {Emphasis added.] See also
Graphicdata, Inc., GPO BCA 35-94 (June 14, 1996), slip op. at
60-61, n. 54, 1996 WL _____; B & B Reproductions, GPO BCA 09-89
(June 30, 1995), slip op. at 3, n. 5, 1995 WL 488447; McDonald &
Eudy Printers, Inc., GPO BCA 40-92 (January 31, 1994), slip op.
at 3, n. 4, 1994 WL 275096; Shepard Printing, GPO BCA 37-92
(January 28, 1994), slip op. at 2, n. 4, 1994 WL 275077.
8 See note 4 supra.
9 See note 5 supra.
10 Attached to the Notice of Appeal, dated October 26, 1995, and
the Appellant's letter of December 12, 1995, is a "List of
Equipment" owned by the Contractor, highlighting the machinery it
claims was specially purchased for the purpose of performing the
Program C37-S contract, namely: (a) a 42" Vijuk Programmable
Cutter-Schneider Senator; (b) Ryobi 3200 MCD with Continuous
Dampening System 13 x 18 print Area; (c) ITEK 9975 Perfector, 12
x 18 print area; (d) Stevenson Seal'n Shrink machine; (e)
Interlake Stitcher 73A (3/4" Book Stitcher); and (f) Crown Pallet
Mover. The Ryobi 3200 MCD, ITEK 9975 Perfecter, and the
Stevenson Seal'n Shrink machine, are identified as new equipment.
11 Also attached to the Appellant's letter of December 12, 1995
were: (a) a memorandum signed by William Ressler of Sabin
stating: " Rose Printing, Inc. bought 238,000 sheets of white
offset 50 lb. [paper] on July 6th, 1995. Any additional quantity
of similar number of sheets could not be provided immediately due
to paper market conditions and a change in price structure[.]"
(Appendix A); and (b) an article from "QP" magazine regarding
"Paper Trends" and captioned "Skyrocketing Prices" (Appendix B).
Ressler's memorandum was later confirmed by Mark Kuhlman, a Sabin
Sales Representative. See R. Brf., Kuhlman Declaration, ¶ 2.
However, Kuhlman also denied there was a contract under which
Sabin would supply paper to the Contractor "at a fixed price and
on a fixed delivery schedule" for the term of Program C37-S. See
R. Brf., Kuhlman Declaration, ¶ 3. Kuhlman stated, in pertinent
part: "Whenever our firm supplies a price quotation we make it
clear that the sale is subject to prior sale and availability
based on market conditions. . . .Given normal fluctuations in
paper prices and availability it would have been impossible for
our firm to have entered into an agreement with [the Appellant]
to supply paper at a price which would have remained constant for
a year." Id. Finally, at the presubmission conference, in
response to a question from the Board, the Government stated that
the defaulted contract did not contain a "Paper Cost (or Price)
Escalation" clause. See SRPTC, at 4, n. 2.
12 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 PPR, Chap. I, Sec. 10, ¶ 4.b.(i). See also A & E Copy
Center, GPO BCA 38-92 (September 25, 1996), slip op. at 16, n.
10, 1996 WL _____; Univex International, GPO BCA 23-90 (July 31,
1995), slip op. at 9; n. 12, 1995 WL 488438, reconsid. denied,
February 7, 1996, 1996 WL 112554, Supplemental Decision, July 5,
1996, 1996 WL _____ (hereinafter Univex Supp.); Hurt's Printing
Co., Inc., GPO BCA 27-91 (January 24, 1994), slip op. at 7, n.
10, 1994 WL 275098; Graphics Image, Inc., GPO BCA 13-92 (August
31, 1992), slip. op. at 9, n. 10, 1992 WL 487875.
13 Program A814-M is a multiple-award contract where many vendors
have submitted bid prices for various printing and binding
functions, and each order received for printing by an agency is
individually abstracted to determine the lowest price. See Notice
of Filing, Scott Declaration, ¶ 11; Attachment 5, at 19.
14 At the presubmission conference, the Appellant admitted that
it did not have an actual contractual commitment from Sabin,
principally because its practice was to "shop" for paper on a
retail basis; e.g., the Appellant intended to obtain paper from
different suppliers or brokers for each print order, depending on
who had the lowest prices. See SRPTC, at 4, n. 3. See also
App. R. Brf., at 4. In this case, however, because of market
conditions, there was no low price available. When the Board
asked how he arrived at a paper price for the Appellant's bid,
Dass answered that he had surveyed the market and Sabin quoted
the lowest price at the time. See SRPTC, at 4, n. 3.
15 The Appellant supported this argument by pointing out that
several GPO officials and contracting officers had held its bids
on other programs nonresponsive for various reasons, including
that it lacked the equipment and sufficient personnel to perform
the work. See App. Brf., at 2; App. R. Brf., at 1-2. However,
the Board notes that the actions taken by Contracting Officers
Robert G. Seibert (Program 2587-S), James T. Reingruber (Program
1227-S), Linwood Imlay (Program B210-S), and Douglas M. Faour
(Program 2380-S), which the Contractor relies on, all occurred
between August 21, 1985, and December 15, 1986, or approximately
10 years ago.
16 In so arguing, the Respondent rejects the Appellant's
arguments that: (a) Sabin reneged on its prior agreement with the
Contractor to supply paper at stated prices; and (b) in any
event, 50 pound white offset paper (JCP A60) was unavailable at
the time. See R. Brf., at 7-9. First, the Government states
that not only did the Contractor fail to produce evidence of its
agreement with the paper subcontractor, but the evidence
indicates that no such arrangement ever existed. See R. Brf., at
7 (citing Kuhlman Declaration, note 11 supra). Consequently, GPO
believes that the Appellant failed to meet its contractual
responsibilities to ensure that it had a binding commitment from
its paper supplier. See R. Brf., at 7-8 (citing Scale
Electronics Development, Inc., ASBCA No. 21725, 77-2 BCA ¶
12,615; Herbach & Rademan, Inc., ASBCA No. 12323, 67-2 BCA ¶
6639). Second, the Respondent states that the Contractor's
contention that the proper paper was unavailable is completely
without merit. In that regard, the Government's own records show
that JCP A60 paper-a commonly used printing stock-was available
in normal quantities during June 1995. See R. Brf., at 8 (citing
Moody Declaration, ¶¶ 3, 4). Furthermore, GPO contends even if
the Appellant's paper supplier could not obtain the stock, the
Contractor was still obligated to try to purchase the paper from
other sources or show why it could not. Id. (citing Gatewood &
Associates, Ltd. v. General Services Administration, GSBCA No.
9182, 93-1 BCA ¶ 25,247; Cryer & Parker Electronics, Inc., ASBCA
No. 15150, 71-2 BCA ¶ 8943). However, the Appellant has failed
to show that Sabin was the sole source for the required paper, or
that it contacted other suppliers to buy it. Id. Instead, its
evidence merely shows that Sabin changed its price structure, and
that was the reason no paper was supplied. Id. (citing
Appellant's Letter of December 12, 1995, at 1; Ressler Memorandum
). In the Respondent's view, the Appellant's failure of proof is
fatal. Id.
17 As GPO reads the relevant legal principles, a contractor is
not excused from default because its supplier will not ship the
raw materials unless paid in advance, see R. Brf., at 9-10
(citing National Equipment, Inc., GSBCA Nos. 5643, (5104)-REIN,
5309, 81-2 BCA ¶ 15365; Boyd Tools, Inc., GSBCA Nos. 3804, 3805,
73-2 BCA ¶ 10148; National Export Packing Company of Virginia,
GSBCA No. 2691, 69-1 BCA ¶ 7422; Mountain States Label Corp.,
GSBCA No. 2555, 68-2 BCA ¶ 7132), or will not extend credit, see
R. Brf., at 10 (citing Douglas Chemical Division, DEICO
Industries, Inc., ASBCA No. 15047, 70-2 BCA ¶ 8469; Geofabrics,
Inc., ASBCA No. 13512, 69-1 BCA ¶ 7629).
18 As the Respondent observes, there is a legal presumption that
Government officials carry out their duties in "good faith,"
which may only be rebutted by clear evidence to the contrary.
See R. R. Brf., at 4 (citing Custom Drapery Service v. United
States, 6 Cl. Ct. 811 (1984)).
19 GPO correctly notes that the Federal Government commonly
collects excess reprocurement costs by means of a set off, as
here. See R. R. Brf., at 5 (citing United States v. Munsey Trust
Co., 332 U.S. 234 (1947); Cecile Industries, Inc. v. Cheney, 995
F.2d 1052 (Fed. Cir. 1993); United States v. American Surety Co.,
158 F.2d 12 (5th Cir. 1946); 56 Comp. Gen. 264 (1977); 14 Comp.
Gen 849 (1935)).
20 During the presubmission conference, the Appellant also raised
a question concerning the Contracting Officer's denial of its
mistake in bid claim. See SRPTC, at 4, n. 4. However, the Board
informed the Appellant that while such a challenge is normally
reviewable by the Board, it was barred from this proceeding
because it was untimely; i.e., the Appellant's appeal letter of
October 26, 1995, was more than 90 days after the Contracting
Officer's final decision of June 30, 1995, rejecting the error in
bid claim, even allowing five days for its receipt by mail. See
GPO Contract Terms, Contract Clauses, ¶ 5(b) (Disputes); Board
Rules, Rule 1(a). Besides, the fact that in response to the
Government's inquiries, the Contractor verified its bid two times
before is sufficient to undermine its mistake in bid claim at
this point. See McClure Electrical Constructors, Inc., ASBCA No.
49711, 96-1 BCA ¶ _____, 1996 WL 549338 (September 26, 1996);
Klinger Constructors, Inc., ASBCA No. 41006, 91-3 BCA ¶ 24,218.
See also Turner-MAK (JV), ASBCA No. 37711, 96-1 BCA ¶ 28,208;
Solor Foam Insulation, ASBCA No. 46921, 94-2 BCA ¶ 26,901.
21 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.
22 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.
23 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).
24 The Appellant's theory is that it is entitled to bid on all
jobs regardless of its capacity to perform, and it is up to the
Government to decide if it can perform or not. See SRPTC, at 4,
n. 4.
25 These "Quality Levels" refer to those set forth in GPO
Contract Terms, Quality Assurance Through Attributes Program for
Printing and Binding, GPO Publication 310.1, Effective May 1079
(Revised November 1989), which is incorporated in GPO term
contracts by reference. See R4 File, Tab A, at 2 (GPO Contract
Terms).
26 "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).
27 See note 10 supra.
28 The Board was created by the Public Printer in 1984. 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.
Cloverleaf Enterprises, Inc., Microform Data System, Inc.,
Information Systems, Inc., and Harbor Printing & Copying Service,
Inc. were decided by ad hoc panels. The Board cites the
decisions of these ad hoc boards as GPOCAB. However, the Board
has consistently taken the position that it is a different entity
from the GPOCAB. See The Wessel Co., Inc., supra, slip op. at
25, n. 25. On the other hand, while the Board is not bound by
GPOCAB decisions, its policy is to follow the rulings of the ad
hoc panels where applicable and appropriate. See Olympic Graphic
Systems, supra, slip op. at 14, n. 14; The George Marr Co., GPO
BCA 31-94 (April 23, 1996), slip op. at 50, n. 40, 1996 WL
______; New South Press & Assoc., Inc., supra, slip op. at 32, n.
45; Shepard Printing (GPO BCA 37-92), supra, slip op. at 11, n.
10; 5077; Shepard Printing (GPO BCA 23-91), supra, slip op. at
14, n. 19; Stephenson, Inc., supra, slip op. at 18, n. 20;
Chavis and Chavis Printing, supra, slip op. at 9, n. 9.
29 In summary, the reasons why the Board lacks breach of contract
jurisdiction are: (a) unlike Executive branch contract appeals
boards which draw their jurisdiction from the Contract Disputes
Act of 1978, 41 U.S.C. § 601 et seq. (1994) (CDA), the Board's
powers flow from the "Disputes" clause of the contract, see GPO
Contract Terms, Contract Clauses, ¶ 5 (Disputes); (b) because the
Board has derivative jurisdiction its remedies must be found
within the provisions of the disputed agreement itself; (c)
breach of contract is a question of law, and under the relevant
statutes even if the Board could make the factual determinations
necessary to support a breach it could only render an advisory
opinion, so sound judicial policy justified withholding
jurisdiction because it cannot provide appellants with a
meaningful remedy; (d) Congress expressly excluded Legislative
branch agencies from the coverage of the CDA, see Tatelbaum v.
United States, 749 F.2d 729, 730 (Fed. Cir. 1984), and as such an
agency GPO has to be mindful of Congress intent; and (e) nothing
in 44 U.S.C. § 502 (1988), which spells out the Public Printer's
procurement authority, discloses an intent by Congress to waive
the Government's sovereign immunity. See R. C. Swanson Printing
and Typesetting Co., supra, slip op. at 24-25. See generally,
Foss, The First Decade, at 586-87.
30 Even in a termination for convenience situation, the Appellant
could not recover the price it paid for purchased and leased
equipment. At most, the Contractor would be allowed to collect
idle capacity costs for the equipment dedicated to the contract
and necessary for performance. See New South Press & Assoc.,
Inc., supra, slip op. at 61 (citing Fiesta Leasing and Sales,
Inc., ASBCA No. 29311, 86-3 BCA ¶ 19,045, reconsid. denied, 87-1
BCA ¶ 19,622). See also GPO Procurement Directive 306.2,
Subject: Contract Cost Principles and Procedures, dated April 1,
1988, ¶¶ 25(a), 49 (hereinafter GPO Cost Directive). Similarly,
if it could be shown that downtime costs could not be reasonably
immediately discontinued upon termination, there might be basis
for recovering idle facility costs. See New South Press &
Assoc., Inc., supra, slip op. at 62 (citing Fiesta Leasing and
Sales, Inc., supra; Metered Laundry Services, Inc., ASBCA No.
21573, 78-1 BCA ¶ 13,206; Bailfield Industries, Division of A-T-
O, Inc., ASBCA No. 20006, 76-2 BCA ¶ 12,096). See also GPO Cost
Directive, Sec. 3, ¶ 25(b). Under either theory, such costs
include, inter alia, repair, rent, property taxes, insurance, and
depreciation. See New South Press & Assoc., Inc., supra, slip
op. at 61-62 (citing GPO Cost Directive, Sec. 3, ¶ 25(a), (b).
31 Among other things, the evidence of record showed that: (a)
even before the contract was awarded, the contractor asked GPO
for a "letter of credit" to guarantee payment for the finished
job, which in effect was a request for payment in advance; (b)
the contractor bid on the contract after its first paper supplier
had assured it of "terms" regarding the cost of the stock, and
when the vendor reneged on its commitment for credit, the
contractor admitted that it was without funds to do the job; (c)
the contractor was relying on its second paper supplier for
credit; and (d) the contractor rejected the option of purchasing
"TamperFas" Destructible Vinyl from Fasson because the cost of
the stock was as much as the contractor's bid for the entire job.
See Gold Country Litho, supra, slip op. at 24-25.
32This issue is not to be confused with the problem of a
premature assessment of excess reprocurement costs. In that
situation the rule is well-settled that the Government is not
entitled to recover excess costs unless it can show, inter alia,
that the repurchased work has been completed and paid for. See
Sterling Printing, Inc., supra, slip op. at 83. Accord Patty
Armfield, AGBCA Nos. 91-185-1, 92-141-1, 92-142-1, 92-143-1, 93-1
BCA ¶ 25,235; C. Howdy Smith, AGBCA No. 90-154-1, 92-2 BCA¶
24,884; Scalf Engineering Co. and Pike County Construction Co., A
Joint Venture, IBCA No. 2328, 89-3 BCA ¶ 21,950 (hereinafter
Scalf Engineering); Orlotronics Corporation, ASBCA No. 23287,
79-2 BCA ¶ 13,912. Furthermore, for "requirements" contracts,
such as the terminated agreement in this case, the assessment of
excess costs prior to the expiration date of the original
contract is generally not allowed. See R.C. Swanson Printing and
Typesetting Co., supra, slip op. at 52-53, n. 28. Accord
American Photographic Industries, Inc., ASBCA Nos. 29272, 29832,
90-1 BCA ¶ 22,491, reconsid. denied, 90-2 BCA ¶ 22,728; The
Hackett Corporation, GSBCA No. 4488, 80-1 BCA ¶ 14,200. In the
latter case, however, the Government does not forfeit its right
to prematurely assessed excess costs, but rather the question is
set aside until it is ripe for appeal. See R.C. Swanson Printing
and Typesetting Co., supra, slip op. at 52-53, n. 28. Accord
American Photographic Industries, Inc., supra (matter left open
for a further contracting officer's decision); McQuiston
Associates, ASBCA No. 25484, 81-2 BCA ¶ 15,216 (premature appeal
dismissed without prejudice); Canadian Commercial Corporation,
ASBCA No. 20512, 76-2 BCA ¶ 12,054 (proceedings suspended while
awaiting a determination of excess costs actually incurred).
33 The fact that the Appellant performed no work under the
defaulted "requirements" contract is not an impediment to the
assessment of excess reprocurement costs. The rule is that when
such a contract is terminated and excess costs are incurred on
the reprocurement contract, the Government is entitled to recover
all excess costs; i.e., not only excess costs on the items
already ordered but also on those items which the Government
would have been entitled to order from the defaulting contractor.
See Donahines Investment Co., ASBCA No. 23825, 82-1 BCA ¶ 15,791,
at 78,219 (citing The Hackett Corporation, supra; Lucas Aircraft
Supply Co., ASBCA No. 11167, 66-1 BCA ¶ 5671). In this case, of
course, the Appellant's responsibility for future excess costs
ended when the Navy changed the Program C37-S contract during the
reprocurement period, limiting its liability to just the JFTRs
covered by the two print orders it received while it was still
the contractor. See Notice of Filing, Scott Declaration, ¶ 14.
34 This is true even though the reprocurement contracts slightly
increased the numbers of copies ordered in each case. In that
regard, Print Order 30853 requested the production of 26,681
JFTRs, compared to the 26,332 copies ordered under Print Order
20001, an increase of 349 copies. See Notice of Filing,
Attachments 1 and 3. Similarly, 115 extra copies of JFTRs were
procured under Print Order 30854 (20,759) than Print Order 20002
(20,644). See Notice of Filing, Attachments 2 and 3. However,
these increases are marginal to the point of being
inconsequential-1.3% for Print Order 20001 and 0.5% for Print
Order 20002, respectively-and are appropriate candidates for
application of the legal maxim de minimis non curat lex (the law
does not take notice of trifles). See Big Red Enterprises,
supra, slip op. at 48, n. 41; Univex Supp., supra, slip op. at
12, n. 8. In any event, the Appellant had the burden of proof of
showing that the Respondent's changes made the reprocurement
contract "materially different" from the one it received by
demonstrating that any increases in quantity and/or performance
time also caused an unreasonable increase of a specified amount
in the repurchase price. See Sterling Printing, Inc., supra,
slip op. at 61 (citing Theodore R. Korotie, AGBCA No. 86-245-1,
89-3 BCA ¶ 22,214; Ace Reforestation, 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.
35 While in the past the Board has expressed its reservations
about the use of Program A814-M for equitable adjustment
purposes, see Swanson Printing Co., GPO BCA 27-94 and GPO BCA
27A-94 (November 18, 1996), slip op. at 50, n. 58, 1996 WL_____;
New South Press & Associates, supra, slip op. at 52-54; Universal
Printing Co., supra, slip op. at 26, n. 27; RD Printing
Associates, Inc., supra, slip op. at 13, n. 15, it has no such
qualms where, as here, the repurchase of a defaulted contract is
concerned.
36 This duty may be satisfied by a variety of repurchase methods,
including soliciting those firms which bid on the original
procurement. See Gold Country Litho, supra, slip op. at 31; Big
Red Enterprises, supra, slip op. at 45; 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). 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., ENG BCA No. 5703, 91-1 BCA ¶ 23,367, at
117,232); 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., supra (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). Another way, if time
allows, is to use 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. On the other hand, a contracting officer can
use negotiation in lieu of formal advertising even when the
supplies are not urgently needed. See, Interroyal Corporation,
GSBCA No. 5439, 83-1 BCA ¶ 16,339; Orlotronics Corporation,
supra.
37 GPO procedures are consistent with the general theory and
practice in Government reprocurements. See PPR, Chap. XIV, Sec.
1, ¶ 3.f.(2).
38 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., ASBCA Nos. 36590, 37093, 91-1 BCA ¶ 23,566; Mid-America
Painters, Inc., supra. However, the Government's obligation to
mitigate costs "is not one of perfection, but one of
reasonableness and prudence under the circumstances." See
Barrett Refining Corp., supra, 91-1 BCA at 118, 145; Mid-America
Painters, Inc, supra, 91-1 BCA at 117, 232. 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., supra, 91-1 BCA at 118,145.