U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
GRAPHICDATA, INC. ) Docket No. GPO BCA 35-94
Program D306-S )
Purchase Order 94586 )
DECISION ON PARTIAL MOTION AND CROSS-MOTION
FOR SUMMARY JUDGMENT AND ORDER
I. STATEMENT OF THE CASE
On March 10, 1995, GraphicData, Inc.(Appellant or Contractor),
528 Fellowship Road, Mt. Laurel, New Jersey 08054, filed a
timely appeal from the final decision, dated February 28,
1995,1 of Contracting Officer Jack G. Marken of the U.S.
Government Printing Office's (Respondent or GPO or
Government), Printing Procurement Department, Washington, DC
20401, denying its equitable adjustment claim and request to
reprice its contract, identified as Program D306-S, Purchase
Order 94586 (R4 File, Tab W).2 Thereafter, on April 3, 1995,
the Appellant filed a timely appeal from the final decision,
dated March 15, 1995, of the Contracting Officer
exercising the Government's option to extend the contract (R4
File, Exh. No. 2). Separate Complaints in these appeals were
submitted to the Board on April 3, 1995. Board Rules, Rule 6(a).
The Board has consolidated both Complaints into this single
proceeding. On April 25, 1995, the Respondent filed a
Consolidated Answer with the Board addressing both Complaints.
Board Rules, Rule 6(b).
On June 16, 1995, the Board conducted a presubmission
conference in these appeals. Board Rules, Rule 10. The only
merits issue discussed at the meeting concerned the
Contracting Officer's denial of the Appellant's equitable
adjustment claim,3 which according to the OIG's Audit Report,
had ballooned to $710,380.00 (R4 File, Exh. No. 6).4 See
RPC, at 2 (citing GPO Office of Inspector General, Audit of
GraphicData, Inc.'s Equitable Adjustment Proposal for Term
Contract Program D306-S, OIG Report No. 95-11, dated April
1995). A review of the Audit Report showed that the OIG had
questioned the Appellant's entire claim "due to lack of
support for increased costs claimed by the Contractor as a
result of the Government change."5 Id. (citing OIG
Memorandum, dated April 13, 1995, p. 3 (R4 File, Exh. No. 6)).
Therefore, it was clear that a hearing was necessary, at which
the Contractor would have the burden of establishing both its
entitlement to and the amount of its equitable adjustment
claim. See RPC, at 5 (citing Board Rules, Rules 8 and 17
through 25). Accordingly, the Board used the conference to
establish a deadline for completion of discovery (November
30, 1995), and scheduled a hearing in the appeal for January
9, 1996. Id.
On August 9, 1995, following a discovery conference the
previous day,6 the Appellant submitted its First Amended
Complaint relating solely to the equitable adjustment issue,
its third such pleading in this case, and the second one
dealing with the pricing question.7 Board Rules, Rule 7(b).
The Government's Answer to First Amended Complaint was filed
with the Board on August 10, 1995. Id. Subsequently, at the
joint request of the parties the Board revised the discovery
schedule and set a new hearing date of February 21, 1996. See
Amendment to Scheduling Order, dated November 20, 1995.
On November 22, 1995, the parties filed a document entitled
"Stipulations Agreed to by Both Appellant and Respondent"
(hereinafter Jt. Stip.) with the Board. Thereafter, on
December 19, 1995, the Appellant submitted its Motion for
Partial Summary Judgment on Entitlement Only (hereinafter
Partial Motion), requesting that the Board hold it was
entitled to payment of the amount claimed in its original
Complaint and First Amended Complaint as a matter of law.
FED. R. CIV. P. 56(c). See Partial Motion, at 2. The
Government responded on January 5, 1996, by filing
Respondent's Motion Regarding Scheduling (Scheduling Motion),
informing the Board, inter alia, that GPO wished to submit a
cross-motion for summary judgment and an opposition to the
Partial Motion. Accordingly, the Respondent asked the Board
to endorse its suggested time table for processing the
parties' summary judgment motions, and furthermore to postpone
the hearing scheduled for February 21, 1996, until the
entitlement question was settled "in the interests of judicial
economy."8 See Scheduling Motion, at 2.
On January 16, 1996, the Board conducted a brief telephone
conference with the parties on the matters raised in the
Partial Motion and the Scheduling Motion. Board Rules, Rule
10. As a result of that meeting, the Board established a
schedule under which: (1) the Respondent would file its cross-
motion for summary judgment and opposition to the Partial
Motion by January 22, 1996; (2) the Appellant would submit its
opposition to the Government cross-motion for summary
judgment, by February 2, 1996; (3) the Board would render its
ruling on the entitlement issue by April 5, 1996; and (4) the
hearing set for February 21, 1996, would be postponed until
May 7, 1996. See Order Setting Time for Filing Cross-Motions
for Summary Judgment and Rescheduling Hearing, dated January
23, 1996, at 2. On January 22, 1996, in accordance with that
schedule, GPO filed three documents with the Board; i.e.,
Respondent's Motion for Summary Judgment and Respondent's
Opposition to Appellant's Motion for Partial Summary Judgment
(hereinafter Cross-Motion and Opposition), Respondent's
Statement of Material Facts as to Which There is No Genuine
Dispute (hereinafter Material Facts), and Respondent's
Memorandum of Points and Authorities in Support of
Respondent's Motion for Summary Judgment and in Opposition to
Appellant's Motion for Partial Summary Judgment on Entitlement
Only (hereinafter Points and Authorities). Thereafter, on
February 1, 1996, the Contractor filed Appellant's Reply to
Respondent's Motion for Summary Judgment and Respondent's
Opposition to Appellant's Motion for Summary Judgment on
Entitlement Only (hereinafter Appellant's Reply).
Subsequently, on February 8, 1996, the Appellant submitted a
Request for Leave to File Supplement to Appellant's Reply
Brief (hereinafter Appellant's Leave Request), which is hereby
granted by the Board. Board Rules, Rule 11. The Board has
carefully assessed the positions of the parties' against the
undisputed facts on the issue of entitlement, and for the
reasons which follow the Partial Motion is GRANTED, and the
Cross-Motion and Opposition is DENIED.9
II. BACKGROUND
The relevant facts concerning the entitlement issue are
essentially uncontroverted, and are set forth here as
presented in the R4 File, the transcript of the jurisdictional
hearing conducted by the Board on January 3, 1995,10 the
Respondent's statement of Material Facts, and the stipulation
of the parties.11 In that regard, it should be noted that
while the stipulations describe the events in this case in
their chronological sequence, the Board has reworded, combined
or reformatted some stipulations for stylistic reasons, or
changed their placement for smoother reading. However, in
doing so the Board has been careful not to alter the content
of the stipulations in any way.
1. On November 15, 1993, GPO issued a solicitation for
Program D306-S, a single- award, "requirements" contract,
involving the printing of issues of U.S. Patents, for the
Department of Commerce (Commerce), U.S. Patent and Trademark
Office (PTO) (hereinafter the November Solicitation). Jt.
Stip., ¶ 1; Material Facts, ¶ 1. The contract was for the
term of one (1) year, beginning on February 1, 1994, and
ending on January 31, 1995. Id.
2. The bids for Program D306-S were opened by the
Respondent on December 13, 1993, after which the Contracting
Officer began the required pre-award evaluation of the low
bidder's responsibility. Material Facts, ¶ 1 (citing
Deposition of Mr. Richard A. Bawcombe) (hereinafter Bawcombe
Deposition, at 33).12 See Printing Procurement Regulation,
GPO Publication 305.3 (Rev. 10-90), Chap. XI, Sec. 1
(hereinafter PPR).
3. While the Contracting Officer was engaged in this
review, and before the contract was awarded, the PTO
formulated a plan to substitute CD-ROM versions of patents
for the paper or microfilm copies it had been distributing to
certain foreign countries. Material Facts, ¶ 2. The
expected impact on Program D306-S from this substitution
program was a reduction in the number of sets of printed
patents purchased thereunder. Id.
4. On March 7, 1994, the PTO orally informed the Respondent
of the expected decrease in its need for printed patents
caused by the substitution of CD-ROM patents. Jt. Stip., ¶
5; Material Facts, ¶ 3. On that same day, the PTO also
transferred $150,000.00 to Commerce's National Technical
Information Service (NTIS) to cover the cost of mastering and
replicating the PTO's prototype CD-ROMs for United States
patents (hereinafter USAPat CD-ROMs).13 Jt. Stip., ¶ 6;
Material Facts, p. 1, fn. 3. Four days later, on March 11,
1994, representatives of the PTO met with the Contracting
Officer and discussed the expected decrease in PTO's needs
for printed patents in light of the new CD-ROM program. Jt.
Stip., ¶ 7; Material Facts, ¶ 3
5. On March 16, 1994, the Commissioner of Patents and
Trademarks signed a document entitled "Notice to Intellectual
Property Offices Having Patent Document Exchange Assignments
With the US PTO" (hereinafter the Notice), which was sent to
all countries with which the United States had an agreement
to exchange paper or microfilm copies of patent documents.
Jt. Stip., ¶¶ 2, 3; Material Facts, ¶ 4. The Notice stated
that effective October 1, 1994, the United States would
substitute CD-ROM patent documents for those currently
provided in paper or microfilm under exchange agreements.
Jt. Stip., ¶ 4; Material Facts, ¶ 4. However, the Notice
also provided that, on request, the PTO would continue to
furnish one (1) paper set of United States patents to any
foreign Intellectual Property Office which maintained a
classified paper search file, and continued to offer at least
one (1) paper set of their patent documents to the PTO. Id.
6. On March 21, 1994, the PTO's prototype "USAPat CD-ROMs"
were shipped to foreign countries. Jt. Stip., ¶ 8; Material
Facts, p. 1, fn. 3, ¶ 5.
7. On March 22, 1994, Bawcombe wrote to Contracting Officer
Weiss, advising him that the date established for the
reduction of printed copies because of the CD-ROM changeover
(October 1, 1994) "cannot be delayed." Jt. Stip., ¶¶ 9, 12;
Material Facts, ¶ 5. Accordingly, that same day, the GPO
canceled the November Solicitation because of "extensive
changes in the estimated requirements," a reference to, in
significant part, the reductions in printed copies of patents
anticipated as a result of the substitution of CD-ROMs for
paper copies. Jt. Stip., ¶¶ 10, 11. In that regard, from a
survey of its customer base, the PTO determined the seven (7)
countries had systems that could use CD-ROMs, and it
estimated that a total of twelve (12) sets of paper copies
could be eliminated by the conversion of patents to an
electronic format, i.e., four (4) sets for Germany; two (2)
sets each for Great Britain and Sweden; and one (1) set each
for the Russian Federation, Austria, the People's Republic of
China, and Denmark.14 Jt. Stip., ¶¶ 12,13; Material Facts,
p. 3, fn. 4, ¶ 5. Consequently, on April 1, 1994, Mr. Tom
Koontz of the PTO telecopied revised patent printing
contract numbers to Ms. Karen Biehl of the GPO reflecting a
reduction of twelve (12) printed sets. Jt. Stip., ¶ 15;
Material Facts, ¶ 6.
8. By letters dated April 7, 1994, April 15, 1994, and May
26, 1994, respectively, the Patent Offices of Austria,
Denmark, and the People's Republic of China wrote to the PTO
supporting the conversion policy and stating their readiness
to receive a CD-ROM set of patents.15 Jt. Stip., ¶¶ 16, 25,
52; Material Facts, ¶ 10.
9. However, the remaining targeted countries were not at
all pleased by the PTO's plan to substitute CD-ROM sets of
patents for paper sets. Thus, for example, on April 11,
1994, Mr. Hubert Rothe, Head of Industrial Property
Information Section, Office of the President of German
Patents, responded to the March 16, 1994, Notice with a
facsimile transmission to Mr. Robert Saifer, the exchange
coordinator in the PTO's Office of Search and Information
Resources (OSIR), stating that the German Patent Office could
not terminate the maintenance of its paper patent collections
before the year 2002. Jt. Stip., ¶ 19; Material Facts, ¶ 10.
In fact, Rothe even asked whether Germany could receive
additional paper collections besides the one set the PTO
proposed to provide, and requested the price for such extra
sets. Id.
10. Likewise, on May 9, 1994, Mr. William Lawson,
Administrator of the OSIR, received a letter from Mr. David J.
Burford, Principal Examiner, British Patent Office (BPO),
responding to the Notice, and stating that the PTO's proposed
reduction in paper sets would greatly increase the BPO's
photocopying load. Jt. Stip., ¶ 44; Material Facts, ¶ 10.
Accordingly, Burford requested that the PTO reconsider the
policy expressed in the Notice of reducing paper sets by
substituting CD-ROMs, and if not the policy, then the time
frame over which any changes would be introduced. Jt. Stip.,
¶ 45.
11. Similarly, by letter dated May 11, 1994, and received by
the PTO on May 31, 1994, the Director of the Russian Patent
Office sent a letter to Lawson saying that their office was
not ready to operate CD-ROM discs at the present time. Jt.
Stip., ¶ 46; Material Facts, ¶ 10. Russia also asked the PTO
to continue to supply "the former number of paper copies" of
United States patents. Jt. Stip., ¶ 46.
12. In addition, even though Switzerland was not one of the
countries slated to receive a CD-ROM set of patents, on April
8, 1994, Mr. V. Candolfi, of the Swiss Federal Intellectual
Property Office (SFIPO), Patent Information Section, also
responded to the Notice with a letter to Mr. William Lawson at
the PTO stating that United States patent documents
constituted an essential part of the Swiss classified search
file, and that since the SFIPO could not produce all of the
paper copies needed to maintain the search file from CD-ROMs,
it would "not give up the paper set of [United States]
patents" it was then receiving. Jt. Stip., ¶¶ 17, 18;
Material Facts, ¶ 10. Furthermore, Candolfi asked the PTO to
continue to provide the Swiss with one (1) paper set of United
States documents. Jt. Stip., ¶ 18.
13. Furthermore, the record shows that the above concerns of
Germany, Great Britain, and Sweden were also conveyed by
representatives of those countries to Saifer at a meeting of
the World Intellectual Property Organization, Permanent
Committee for Industrial Property Information,(hereinafter
WIPO/PCIPI) Ad Hoc Working Group on General Information, in
Geneva, Switzerland between April 18-22, 1994.16 Jt. Stip.,
¶¶ 29-32; Material Facts, ¶ 10. In a nutshell, all three
countries repeated that they were very disturbed about PTO's
new policy of substituting CD-ROM sets of United States
patents for the paper sets they were receiving, and expressed
their displeasure at the prospect of surrendering their paper
sets. Jt. Stip., ¶¶ 30-32; Material Facts, ¶ 10.
14. In the interim, on April 11, 1994, the GPO issued a new
solicitation for Program D306-S to cover a term beginning on
June 1, 1994, and ending February 28, 1995 (hereinafter the
April Solicitation). Jt. Stip., ¶ 20; Material Facts, ¶ 7;
R4 File, Tab A. Among other things, the April Solicitation
stated, in pertinent part:
SECTION 1.-GENERAL TERMS AND CONDITIONS
GPO CONTRACT TERMS: Any contract which results from this
Invitation for Bid will be subject to the applicable provisions,
clauses, and supplemental specifications of GPO Contract Terms
(GPO Pub. 310.2, effective December 1, 1987 (Rev. 9-88) and GPO
Contract Terms, Quality Assurance Through Attributes Program (GPO
Pub. 310.1, effective May 1979 (revised November 1989).17
* * * * * * * * * *
REQUIREMENTS: This is a requirements contract for the items and
for the period specified herein. Shipment/delivery of items or
performance of work shall be made only as authorized by orders
issued in accordance with the clause entitled "Ordering". The
quantities of items specified herein are estimates only, and are
not purchased hereby. Except as may be otherwise provided in
this contract, if the Government's requirements for the items set
forth herein do not result in orders in the amounts or quantities
described as "estimated", it shall not constitute the basis for
an equitable price adjustment under this contract.
Except as otherwise provided in this contract, the Government
shall order from the contractor all the items set forth which are
required to be purchased by the Government activity identified on
page 1 [PTO].
The Government shall not be required to purchase from the
contractor, requirements in excess of the limit on total orders
under this contract, if any.
* * * * * * * * * *
SECTION 2.-SPECIFICATIONS
SCOPE: These specifications cover the production of issues of
U.S. Patents, requiring such operations as making reproducibles,
printing/imaging, gathering, binding, packaging, mailing and
distribution.
The complex, timely distribution of high quality completely
accurate sets of each issued patent, and the proper mailing and
distribution thereof must be clearly recognized as a difficult
and vital mandatory requirement of this contract.
* * * * * * * * * *
NUMBER OF ORDERS: It is anticipated at this time that print
orders will be placed on a weekly basis.
QUANTITY: It is the intention of the Government to have a
contract in place that can meet the maximum weekly production
requirements stated herein, yet at the same time freely admit
that due to the nature of the product to be procured, it is
impossible for the Government to state with any degree of
accuracy the number of patents that will be required each year.
The Government has no control over, nor can they accurately
project actual long or short term requirements for this contract.
The projected production quantities stated are based on
historical data, projections and trends and should not be
construed as a guarantee of the volume of work which may be
ordered during the term of this contract. Contract requirements
have been known to fluctuate greatly over short period of time.
*******************************************************
NOTICE TO CONTRACTORS: All contractors planning to bid on this
solicitation are put on notice that beginning on October 1,
1994[,] the [PTO] will be offering to supply U.S. Patents sets to
their customers on CD-Rom [sic] rather than on paper. The basis
of award figures offered in this solicitation were compiled
utilizing two time periods. The first time period used was from
the beginning of this contract (June 1, 1994) through September
12, 1994. The second period is from September 12, 1994 (the time
the change-over to CD-ROM would go into effect), through the end
of the contract.
At this time it is unknown EXACTLY how many customers will
request the change-over to CD-ROM, but based on the [PTO's]
knowledge of their customers present capabilities, they
anticipate that as many as 25 customers now receiving paper sets
will switch to CD-ROM. The basis of award figures compiled for
the second time period reflects the 25 set drop.
Therefore, all contractors planning to submit bids on this
procurement are put on notice that the required quantities stated
in the specifications are the projected quantities anticipated at
this time. These quantities, which are the Government's best
estimates at this time, could change significantly during the
term of the contract.
Contractors bidding on this Program must do so with the knowledge
that: the estimated quantities stated in the "Determination of
Award" may be significantly reduced even further as customers
switch to CD-ROM; and, the Government WILL NOT renegotiate any
pricing due to these reductions.18
*******************************************************
* * * * * * * * * *
SECTION 3.-DETERMINATION OF AWARD
The Government will determine the lowest bid by applying the
prices offered in the "Schedule of Prices" to the following units
of production which are the estimated requirements to produce
eight months' orders under this contract. These units do not
constitute, nor are they to be construed as, a guarantee of the
volume of work which may be ordered for a like period of time.
* * * * * * * * * *
NOTICE: CONTRACTORS INTENDING TO SUBMIT BIDS ON THIS PROGRAM ARE
INSTRUCTED TO READ "NOTICE TO CONTRACTOR" ON PAGE 13 OF 30 PRIOR
TO SUBMISSION OF THEIR BID.
The following item designations correspond to those listed in the
"Schedule of Prices".
I. PRINTING AND BINDING PATENTS (Excluding Design Patents):
(1) (2) (3) (4)
a. 37,792 172,906 426,709
1,936,304
b. 100 100 1,373
1,000
c. 464,327 3,327,164 213,427 1,824,352
II. DESIGN PATENTS PRINTING AND BINDING:
(a) 32,372
III. DEDICATIONS, DISCLAIMERS, ADVERSE DECISIONS, AND SPECIAL
CERTIFICATES:
(a) 10,239
IV. CERTIFICATES OF CORRECTION:
(a) 1,351,133
V. GATHERING, COLLATING, BINDING, PACKING, AND DISTRIBUTION:
1.(a) 902 4. 20,272
(b) 3,230 5. 486
2. 53,056 6. 11,149
3. 10,597
VI. PAPER:
(a) 16,723
(b) 8,605
See R4 File, Tab A, pp. 11, 13, 26. [Emphasis added.] See also
Jt. Stip., ¶¶ 21-23; Material Facts, p. 4, fn. 5, ¶ 7.
15. The time and date established by the April Solicitation
for the opening of bids from potential contractors was "11:00
a.m., prevailing Washington, D.C. time, on May 5, 1994." See
R4 File, Tab A, p. 1.
16. Three days before bid opening, on May 2, 1994, the first
regular issuance of USAPat CD-ROMs was mailed to foreign
countries. Jt. Stip., ¶ 33; Material Facts, p. 1, fn. 3.
17. On May 3, 1994, two days before bid opening, the
Appellant submitted a protest to GPO regarding the April
Solicitation, asserting that it failed to estimate printing
requirements separately for each of the two time periods in
the contract. Jt. Stip., ¶ 34; Material Facts, ¶ 8. 18.
Accordingly, on May 4, 1994, the Respondent issued Amendment
No. 2 to the April Solicitation. Jt. Stip., ¶ 36; Material
Facts, ¶ 9; R4 File, Tab A. The sole purpose of Amendment
No. 2 was to divide production under the contract into two
distinct production periods-the first from June 1, 1994,
through August 1, 1994, and the second from August 2, 1994 to
February 28, 1995-and to separately estimate the production
requirements for each of them. Jt. Stip., ¶¶ 37, 38; Material
Facts, ¶ 9; R4 File, Tab A. The difference between the two
production periods was that all of the patent sets distributed
to foreign countries in the first one were to be paper sets,
while the second period involved the dissemination of patents
in CD-ROM format and an expected decrease in the number of
paper patent sets printed. Material Facts, p. 4, fn. 5.
Furthermore, Amendment No. 2 amended the "NOTICE TO
CONTRACTORS" in the April Solicitation by adding the following
sentence to the end of the first paragraph: "Printed Orders
issued after August 1, 1994, must be invoiced under pricing
for production period two in the Schedule of Prices." See R4
File, Tab A, Amendment No. 2, p. 1.
19. As revised, the estimated production requirements for
Program D306-S were as follows:
FIRST PRODUCTION PERIOD
(June 1, 1994 through August 1, 1994)
I. PRINTING AND BINDING PATENTS (Excluding Design Patents):
(1) (2) (3) (4)
a. 7,858 67,073 88,724
753,986
b. 20 20 290
125
c. 96,545 691,802 44,377
379,329
II. DESIGN PATENTS PRINTING AND BINDING:
(a) 6,731
III. DEDICATIONS, DISCLAIMERS, ADVERSE DECISIONS, AND SPECIAL
CERTIFICATES:
(a) 2,829
IV. CERTIFICATES OF CORRECTION:
(a) 448,197
V. GATHERING, COLLATING, BINDING, PACKING, AND DISTRIBUTION:
1.(a) 344 4. 7,731
(b) 272 5. 100
2. 10,883 6. 3,082
3. 4,041
VI. PAPER:
(a) 5,558
(b) 1,789
SECOND PRODUCTION PERIOD
(August 2, 1994 through February 28, 1995)
I. PRINTING AND BINDING PATENTS (Excluding Design Patents):
(1) (2) (3) (4)
a. 29,934 105,833 337,985 1,182,318
b. 80 80 1,083
875
c. 367,782 2,635,362 169,050 1,445,023
II. DESIGN PATENTS PRINTING AND BINDING:
(a) 25,641
III. DEDICATIONS, DISCLAIMERS, ADVERSE DECISIONS, AND SPECIAL
CERTIFICATES:
(a) 7,410
IV. CERTIFICATES OF CORRECTION:
(a) 902,936
V. GATHERING, COLLATING, BINDING, PACKING, AND DISTRIBUTION:
1.(a) 558 4. 12,541
(b) 2,958 5. 386
2. 42,173 6. 8,067
3. 6,556
VI. PAPER:
(a) 11,165
(b) 6,816
See R4 File, Tab A, Amendment No. 2, pp. 1-2.
20. In summary, as now amended, the April Solicitation
estimated: (a) 9,728,285 impressions for the first production
period, or a monthly average of 4,864,142.5; and (b)
19,411,385 impressions for the second production period, or a
monthly average of 2,773,055 impressions. Jt. Stip., ¶¶ 39,
40. Stated otherwise, the revised April Solicitation
indicated that between the first and second production period
monthly impressions were scheduled to decrease by 2,091,087.5,
or 42 percent. Jt. Stip., ¶ 41.
21. Since Amendment No. 2 resolved the concerns of the
Appellant regarding the April Solicitation, as originally
issued, it withdrew its protest. Material Facts, ¶ 9.
22. After Amendment No. 2 was issued, but before the
contract was awarded, the PTO continued to receive complaints
from foreign governments about its new CD-ROM policy. In that
regard, the record shows that Saifer attended Executive
Committee meetings of the WIPO/PCIPI in Geneva, Switzerland
between May 13-20, 1994, where representatives of the patent
offices of Great Britain, Sweden,19 and the Russian Federation
repeated their opposition to the PTO's conversion of patent
sets from paper to CD-ROMs, and again expressed their
displeasure at the prospect of losing paper sets of United
States patents. Jt. Stip., ¶¶ 47-50; Material Facts, ¶ 10.
23. On May 20, 1994, GPO issued Purchase Order 94586 to the
Appellant, awarding it the contract based on the April
Solicitation, as amended.20 Jt. Stip., ¶ 51; Material Facts,
¶ 11; R4 File, Tab D. At the time the contract was awarded,
both the PTO's OPP, which would issue the print orders, and
GPO's Contracting Officer were unaware of the responses which
the customer-agency had been receiving from foreign patent
offices about the new CD-ROM policy. Jt. Stip., ¶¶ 54-55;
Material Facts, ¶¶ 14, 16.
24. The record discloses that on May 31, 1994, after his
return from the WIPO/PCIPI meeting, Saifer apparently decided
that because of the adverse reactions to the new CD-ROM policy
expressed by the foreign patent offices in Geneva,
Switzerland, he would recommend a relaxation of that program
to his supervisor. Material Facts, ¶ 13 (citing Saifer
Deposition, at 114, 120-21). Accordingly, on June 27, 1994,
he met with Bawcombe and Lawson, as well as other interested
PTO officials to discuss the CD-ROM policy. Material Facts, ¶
14 (citing Saifer Deposition, at 125). At this meeting,
representatives of the OPP heard about the unfavorable
responses from the foreign patent offices for the first time.
Jt. Stip., ¶ 54; Material Facts, ¶ 14. The record indicates
that the consensus at the meeting was that the PTO probably
should modify the CD-ROM dissemination program. Material
Facts, ¶ 14 (citing Saifer Deposition, at 125-26).
25. On July 7, 1994, Lawson orally advised Bawcombe that the
PTO might decide to change its policy regarding the
substitution of CD-ROM for paper sets. Jt. Stip., ¶ 56;21
Material Facts, ¶ 15. Accordingly, that same day, Bawcombe
wrote a memorandum to Mr. Robert G. Cox, the Superintendent,
of GPO's Departmental Account Representative Division,
stating, in pertinent part:
We have been advised by Mr. William Lawson, Administrator of the
Search & Information Resources Office, that information
previously provided to this Office regarding PTO's policy for the
distribution of patent issues on CD-ROM has been rescinded.22
As a result, the patent printer, GraphicData, Inc. must continue
with the present print volumes until further notice. . . .
See R4 File, Tab E. See also Jt. Stip., ¶ 57; Material Facts, ¶
15. This correspondence was the first notification the
Respondent had that foreign patent offices were not responding
favorably to the PTO's CD-ROM policy. Jt. Stip., ¶ 55; Material
Facts, ¶ 16.
26. GPO promptly informed the Appellant that the PTO's CD-
ROM policy had changed and that the customer agency's printing
needs were now different. Material Facts, ¶ 17; R4 File, Tabs
G, H, I and J. In that regard, the record discloses that
between July 11, 1994, and July 14, 1994, the Respondent sent
revised contract estimates to the Contractor for its review.
R4 File, Tab H. In response, on July 15, 1994, the
Appellant's President, Mr. Kenneth Margulies, wrote to
Contracting Officer Weiss, stating, in pertinent part:
The data detailed in "Contract Estimates" sheets faxed to me from
7/11/94 through 7/14/94, have been thoroughly evaluated. It is
obvious that the schedule of prices submitted in our bid to
perform the requirements of Program D306-S, dated 5/11/94, is not
appropriate to the significant changes now planned in production
and printing. These changes will require a contract
modification.
See R4 File, Tab H.23
27. Thereafter, on July 12, 1994, an employee of the OPP,
Lois Grooms, sent Cox further information regarding the PTO's
re-examination of its CD-ROM policy. See R4 File, Tab F. In
her covering memorandum, Grooms stated, in pertinent part:
This memo transmits the package of information received from Mr.
William Lawson on July 8, 1994, which postpones indefinitely the
policy to distribute patent issues on CD-ROM. The PTO Executive
Committee is studying the alternatives suggested by Mr. Lawson,
and GPO will be informed of that decision upon its issuance.
Id. [Emphasis added.]
28. This written and oral exchange between the parties was
summarized by Contracting Officer Weiss in a letter, dated
July 21, 1994, which he wrote to Margulies, in which he
stated:
This will confirm our telephone conversation of July 11, 1994, in
which I notified you of a change in the stated requirements for
Program D306-S.
When this program was originally solicited, it was anticipated
that the production requirements would be drastically reduced
after September 13, 1994.
The Government Printing Office has recently been informed by the
Patent and Trademark Office, that the reduction in production
quantities they were projecting, due to their switch to the
distribution of patents on CD-ROM, will not occur within their
original schedule. They have further informed the GPO that this
plan has been postponed indefinitely, pending resolution of
certain international policy issues.
As a result of this schedule change, the present print volumes
will continue until further notice. These projected volumes were
faxed to you on July 13, 1994.
You are instructed to invoice for work performed in accordance
with the prices listed in the current Schedule of Prices. If due
to the above stated change, GraphicData, Inc. believes they are
entitled to additional compensation, they should submit their
request together with all evidence such as original worksheets,
and data used in preparing the bid, published price lists,
subcontractors' or suppliers' quotations if any, or any other
supporting documentation, which will help to support their
proposal for adjustment. This proposal for adjustment is to be
submitted within 30 days from the date of receipt of this
notification.
See R4 File, Tab J. See also R4 File, Tab G.
29. The PTO's decision to postpone its policy of
substituting CD-ROM patent sets for paper sets had an
immediate impact on the Appellant's production planning.
Specifically, the record shows that instead of producing a
reduced number of patents during the second production period
(August 2, 1994 through February 28, 1995), the Contractor had
to perform at approximately the same rate as it had in the
first production period (June 1, 1994 through August 1, 1994),
or about at the same pace it performed under the previous
contract. Material Facts, ¶ 17 (citing Tr. 28-29, 55). Thus,
after the changes were ordered by GPO in July 1994, the
Appellant's monthly impressions under the contract for the
second production increased from the 2,773,055 forecast in the
April Solicitation to 5,448,489. Jt. Stip., ¶ 43. Although
the April Solicitation had told the Contractor to expect a 42
percent decrease in the number of monthly impressions during
the second production period, instead the changes resulted in
additional impressions (2,675,434 per month) amounting to a
production increase of 96.4 percent. Id. This increase in
the number of monthly impressions was reflected in the figure
for total impressions, which increased to 38,139,425, or
5,448,489.29 per month, in the second production period. Jt.
Stip., ¶ 42.
30. In the meantime, on July 8, 1994, Lawson sent Bawcombe a
memorandum which stated that "there may be a delay in the
planned reductions in the number of sets of each weekly issue
of US Patents printed." Jt. Stip, ¶ 59; Material Facts, ¶ 18.
Lawson's memorandum also said that the PTO had not made a
decision to change the policy in the Notice of March 16, 1994,
but rather set forth "possible outcomes," including the
decision to proceed as then currently planned. Id.
31. On July 15, 1994, Lawson sent a memorandum to Michael
Kirk, Deputy Commissioner of Patents, through channels,
asking him to review the patent exchange policy promulgated in
the Notice of March 16, 1994. In his memorandum, Lawson
listed three (3) options: (a) implement the CD-ROM policy
without change; (b) make ad hoc accommodations based on the
needs or complaints of individual countries; and (c) suspend
implementation of the policy for one (1) year, plus offer
extra patent sets and certain CD-ROM enhancements at marginal
cost. Jt. Stip., ¶ 60; Material Facts, ¶ 19.
32. Lawson's memorandum and recommendations of July 15,
1994, were considered by the PTO's Business Council at a
meeting on August 1, 1994. Jt. Stip., ¶ 61; Material Facts, ¶
20. As a result of the meeting, the Business Council decided
to recommend the third option (suspension of the CD-ROM policy
for one (1) year) to the Commissioner of Patents and
Trademarks, who was the only official in the PTO authorized to
change the CD-ROM policy. Id.
33. The Commissioner of Patents and Trademarks accepted the
Business Council's recommendation. Accordingly, on September
7, 1994, the Commissioner wrote to countries having patent
exchange agreements with the United States, stating that
implementation of the CD-ROM policy announced in the Notice of
March 16, 1994, would be suspended for at least one year. Jt.
Stip, ¶ 62; Material Facts, ¶ 20. The Commissioner's letter
was the first official notification to the United States'
exchange partners of the PTO's decision to postpone the
previously announced policy of substituting CD-ROMs for paper
sets of patents. Jt. Stip, ¶ 63; Material Facts, ¶ 20.
III. POSITIONS OF THE PARTIES24
A. Appellant's Partial Motion
The Appellant's challenge to the Respondent's denial of its
equitable adjustment claim is fairly straightforward and
conventional, and its principal argument is a common one where
"requirements" contracts are in dispute. In that regard, the
Contractor fixes the blame for its financial loss squarely on
the contract's estimates of work, which it relied on in
bidding the job, and argues that they were negligently
prepared by the Government, without due care, and as a result,
recovery is justified in this case as a matter of law.25
Partial Motion, at 12-32; Appellant's Reply, at 11-17.
However, the Appellant also contends, in the alternative, that
the undisputed facts will support additional compensation
based on either a "mutual mistake" or "constructive change"
theory as well. Partial Motion, at 32-35; Appellant's Reply,
at 3-11, 18-21.
The Contractor's main argument is rooted in the well-settled
principle relating to "requirements contracts" which holds
that contractors who submit bids in reliance on negligently
prepared and incorrect estimates of work in the solicitation
are entitled to an equitable adjustment. Partial Motion, at
12; Appellant's Reply, at 11-13. In order for a contractor to
recover, it must be shown that the estimates of requirements
were prepared negligently, that the bidder relied on those
estimates, and that actual performance significantly differed
from the solicitation's estimates. Partial Motion, at 13-14
(citing Crown Laundry and Dry Cleaners, Inc. v. United States,
29 Fed. Cl. 506 (1993) (hereinafter Crown Laundry); Chemical
Technology, Inc. v. United States, 645 F.2d 934, 227 Ct. Cl.
120 (1981); Womack v. United States, 389 F.2d 793, 182 Ct. Cl.
399 (1968) (hereinafter Womack); Contract Management, Inc.,
supra; Pruitt Energy Sources, Inc., ENGBCA No. 6134, 95-2 BCA
¶ 27,840; Atlantic Garages, Inc., GSBCA No. 5891, 82-1 BCA ¶
15,479; Integrity Management, Inc., ASBCA No. 18289, 75-2 BCA
¶ 11,602).26 In effect, the rule means that Government must
make a diligent effort to obtain all reasonably available
information, take that data into account, and use it in
developing its contract work estimates. Partial Motion, at
14; Appellant's Reply, at 11-13. As the Appellant observes,
the Board has declared itself bound by the "negligent
estimates" doctrine, and has indicated that it will apply the
principle to GPO contracts, as appropriate. Partial Motion,
at 14-16 (citing McDonald & Eudy Printers, Inc., GPOBCA 40-92
(January 31, 1994), 1994 WL 275096; Shepard Printing, GPOBCA
37-92 (January 28, 1994), 1994 WL 275077 (relying on AGS-
Genesys Corp., ASBCA No. 35302, 89-2 BCA ¶ 21,702). Likewise,
the Contractor notes that the General Accounting Office (GAO),
another Legislative Branch entity, adheres to a version of
this rule in administering its dual roles as adjudicator of
bid protests and settler of claims against the Government;
i.e., proof of negligent estimates will sustain a protest or
permit recovery on a claim. Partial Motion, at 16-17 (citing
Gibson & Cushman Dredging Corp., B-194902, 80-1 CPD ¶ 122
(February 12, 1980); Kleen-Rite Corp., B-182266, 75-1 CPD ¶
190 (April 1, 1975); Lone Star Energy Co., B-199049.2, 83-1
CPD ¶ 6 (January 4, 1983); Input Data, B-179809, 74-1 CPD ¶ 87
(February 21, 1974); B-176750 (March 27, 1973); B-174345
(October 17, 1972); B-173356 (September 27, 1971); B-179037
(May 4, 1970)). Indeed, the Contractor says that GAO believes
that the discovery of negligent estimates justifies canceling
the solicitation and readvertising the work with the correct
figures. Partial Motion, at 18 (citing Heritage Reporting
Corp., B-248860, 92-2 CPD ¶ 276 (October 23, 1992); Air Life,
Inc., B-214823, 84-2 CPD ¶ 478 (October 30, 1984)).
The Appellant asserts that the undisputed facts in this case
cry out for application of the rule. The crux of the
Contractor's position that the contract estimates were faulty
derives from its belief that the Government agencies involved
in the procurement-GPO and the PTO-negligently failed to
factor in the known foreign opposition to the CD-ROM
substitution policy, an essential ingredient of the
solicitation, resulting in estimates for the second
production period which were artificially and significantly
low. Partial Motion, at 18-20; Appellant's Reply, at 11-12.
Stated otherwise, the Appellant believes that the Government's
negligence is to be found in the fact that both GPO and the
PTO prepared estimates for the solicitation which they knew
were inadequate because the figures did not reflect the latest
information available to them. Partial Motion, at 18-19;
Appellant's Reply, at 11. In that regard, the Contractor says
that the negligent behavior of GPO and the PTO in effect
nullified the terms of the contract itself, especially the
"Notice to All Contractors," which virtually announced to all
potential bidders that they should expect a decline in patent
orders once the CD-ROM policy was implemented, but instead,
without any prior forecast or warning, total monthly
impressions for the second production period actually
increased by 96 percent.27 Partial Motion, at 20-21, 28
(citing R4 File, Tab A, at 13; Jt. Stip., ¶ 43). The
Appellant notes that the size of the opposition immediately
prior to the date of award-countries slated to receive eight
(8) of the twelve (12) CD-ROM sets, or 66_ percent (eventually
reaching nine (9) of twelve (12), or 75 percent), were
absolutely hostile to the idea-should have placed the PTO on
notice that the CD-ROM portion of the contract was in jeopardy
and most likely would change. Partial Motion, at 21- 23
(citing Jt. Stip., ¶¶ 19, 29-32, 44, 47-51; Saifer Deposition,
at 10, 114); Appellant's Reply, at 12- 13. Since the PTO was
sensitive to foreign concerns, and had an interest in
promoting comity in the international patent community, it
knew "realistically" prior to the contract award date that the
CD-ROM policy would be modified, but nonetheless delayed
forty-seven (47) days to make GPO aware of the situation.28
Partial Motion, at 23-26 (citing Jt. Stip., ¶¶ 55-58. Saifer
Deposition, at 22; Lawson Deposition, 23-24, 40, 43);
Appellant's Reply, at 11-12, 14. Indeed, the Appellant
believes that the PTO simply compounded its own negligence by
the dilatory way in which the ultimate decision to suspend the
CD-ROM substitution program was processed through agency
channels, i.e., from July 7, 1994, when GPO was notified that
the printing of paper sets of patents would not be reduced
during the second production period, to September 7, 1994,
when the Commissioner of Patents and Trademarks approved the
staff recommendation to suspend the policy and the foreign
governments were notified of the fact, an additional sixty
(60) days elapsed. Partial Motion, at 24- 26 (citing Jt.
Stip., ¶¶ 55-60, 62-63). The Contractor says that its injury
arises from the fact that it relied on the erroneous estimates
in the solicitation in preparing its bid. Partial Motion, at
29. Thus, the Appellant figured that it would only take half
of the resources of the first production period, in terms of
staff, machinery, paper, etc., to print patents in the second
production period, and its bid reflected that fact. Partial
Motion, at 29-30 (citing Tr. 28-29). However, instead of
printing less patents in the second period, the postponement
of the CD-ROM program meant that the Contractor was expected
to print patents at nearly double the rate shown in the
solicitation estimate for the second production period.
Partial Motion, at 30-31 (citing Tr. 55-57). Consequently,
when the PTO's CD-ROM plan evaporated, the Appellant was
compelled to employ more resources in the second period than
it had contemplated in its bid in order to maintain the same
pace of production. Id. Accordingly, the Contractor asserts
that since the Government ignored the known adverse foreign
reactions to the CD-ROM program in estimating the second
period level of work when it should have reasonably suspected
that the policy would be canceled, and as the Appellant was
induced to lower its bid for second period work based on those
erroneous estimates, the conclusion is warranted that the
Government's negligent estimating was the proximate cause of
the Contractor's increased expenditures and it should be held
accountable. Partial Motion, at 29, 32, 36; Appellant's
Reply, at 17.
Secondly, the Appellant contends that the parties made a
"mutual mistake" of fact regarding the estimated quantity of
work, and the contract should be reformed to reflect the
actual situation since it relied upon those figures in
bidding. Partial Motion, at 32. The Contractor says that in
this instance reformation, an equitable remedy sanctioned by
law, is appropriate because the actual facts encountered in
performance of the contract have caused it specific hardship,
and it is only fair that each party bear a portion of the
unexpected costs. Partial Motion, at 33. In that regard, the
Appellant believes that the principles of National Presto
Industries, Inc. v. United States, 167 Ct. Cl. 749, 338 F.2d
99 (1964), cert. denied, 380 U.S. 962 (1965) (hereinafter
National Presto Industries), are applicable in this case
because the mistake of fact was mutual, the contract failed to
allocate the risk to either party, the Government obtained
work that it needed, and the parties would have agreed to a
higher price had the true facts been known at the time of the
bid. Partial Motion, at 33-34.
Finally, the Contractor asserts that an equitable adjustment
is appropriate under the "Changes" clause, because the
cancellation of the CD-ROM program and ensuing extraordinary
increase in the printing requirements for the second
production period was tantamount to a "constructive change" in
the contract. Partial Motion, at 34; Appellant's Reply, at 3.
See GPO Contract Terms, Contract Clauses, ¶ 4 (Changes). The
Appellant argues that the change in work estimates made by the
Contracting Officer for the second period, more than doubled
the expected volume of printing, and amounted to "excess
orders" for this "requirements" contract which were not
reasonably related to the estimates in the solicitation.29
Partial Motion, at 35 (citing Allied Paint Manufacturing Co.,
Inc. v. United States, 470 F.2d 556, 200 Ct. Cl. 313 (1972)).
Indeed, the Contractor says it was surprised by GPO's action
because it was totally at odds with both the original printing
estimates and the Government's excellent forecasts of
anticipated workloads in past contracts for this type of
work.30 Id. Furthermore, while the Appellant acknowledges
the general rule, advanced by GPO, that a deviation from
estimated quantities in a "requirements" contract is not
usually considered a compensable change, see Points and
Authorities, at 1, 20-22, it states that Respondent has
ignored substantial case precedent which holds that altering
or modifying the method used to fulfill the Government's
requirements is a change entitling the contractor to an
equitable adjustment for its increased costs. Appellant's
Reply, at 3-10 (citing Alamo Automotive Services, Inc., ASBCA
No. 9713, 1964 BCA ¶ 4,354; Escalante Garden Apartments, Inc.,
ASBCA No. 10287, 65-2 BCA ¶ 5,125; Del Rio Flying Service,
ASBCA No. 15487, 71-1 BCA ¶ 8,744; Maya Transit Co., ASBCA No.
20186, 75-2 BCA ¶ 11,552; California Bus Lines, ASBCA No.
19732, 75-2 BCA ¶ 11,601; California Bus Lines, ASBCA No.
19751, 76-1 BCA ¶ 11,655; Desco Service Contractors, ASBCA No.
21856, 77-2 BCA ¶ 12752; Raytheon Service Co., GSBCA No. 5264,
82-1 BCA ¶ 15,546; Gemsco v. United States, 115 Ct. Cl. 209
(1950)). The alteration or modification made in this case was
the Government's decision to cancel the solicitation's CD-ROM
substitution program and instead to continue to print patents,
which had a "disastrous effect" on the Appellant by forcing it
to produce patents at an unexpectedly high volume in the
second production period. Appellant's Reply, at 4-5. Thus,
while the central objective of the contract-satisfying the
PTO's requirements for the production of patents-was
unchanged, a specified and essential mechanism for fulfilling
those needs did change-the CD-ROM substitution program.
Appellant's Reply, at 10-11. Since the Appellant's bid for
the second production period was based on the solicitation's
work estimates predicated on the implementation of the CD-ROM
plan, the Government's decision not to use CD-ROMs was an ipso
facto change in the contract methodology from that announced
in the solicitation, which entitled the Contractor to
reimbursement for its increased costs under a "constructive
change" theory. Appellant's Reply, at 11.
Moreover, the Appellant says that a "constructive change" is
also proved by simply applying the rules of contract
construction which show that while it assumed the risk of any
changes which might occur from variations in the production of
printed patents, the risks associated with the CD-ROM
substitution program, a integral (but as it turned out
invalid) ingredient of the contract, were absorbed by the
Government because contractors were only warned in the
solicitation about additional reductions in printed quantities
from the use of CD-ROMs, and nothing was said about large
increases in printed copies if the CD-ROM plan was cancelled.
Appellant's Reply, at 18-21 (citing Brawley v. United States,
96 U.S. 168 (1877); Fortec Constructors v. United States, 760
F.2d 1288, 1291 (Fed. Cir. 1985); United States v. Johnson
Controls, Inc., 713 F.2d 1541, 1555 (Fed. Cir. 1983); Gemsco,
supra). Since GPO instructed the Contractor to craft its bid
on the assumption that CD-ROM substitutions would furnish a
significant quantity of the PTO's patent needs, when that
fundamental premise dissolved in the face of foreign
objections to the program, responsibility for the dramatic
increase in printing requirements under the contract because
the CD-ROMs were eliminated, devolved upon the Government, and
the Appellant is entitled to an equitable adjustment because
of the change. Appellant's Reply, at 20-21.
Accordingly, since there are no genuine issues of material
fact, for all of these reasons the Appellant contends that
judgment as a matter of law in its favor on the issue of
entitlement is warranted, and therefore, its Partial Motion
should be granted. Partial Motion, at 36; Appellant's Reply,
at 21-22.
B. Respondent's Cross-Motion and Opposition
The Respondent, on the other hand, thinks that it is entitled
to summary judgment essentially for four reasons: (1) the very
nature of a "requirements" contract precludes an equitable
adjustment simply because the amount of work performed varies
from the solicitation's estimates; (2) the Appellant has not
shown that the Government negligently prepared its estimates
for the quantity of work under Program D306-S; (3) the
Contractor's "mutual mistake of fact" theory is not supported
by the undisputed facts nor well-established case law; and (4)
a deviation from the estimated quantities in a "requirements"
contract does not constitute a compensable change under the
"Changes" clause.
The first argument advanced by the Respondent relies heavily
on the legal characteristics of "requirements" contracts.31
The Respondent observes that a prime purpose of
"requirements" contracts is to protect the Government from
liability in the event of a significant variation between the
contract estimates and the amount of its actual purchases.
Points and Authorities, at 6 (citing Clearwater Forest
Industries, Inc. v. United States, 227 Ct. Cl. 386, 650 F.2d
233, 240 (1981); Womack, supra). Stated otherwise, the only
obligation assumed by the Government under a "requirements"
contract is to allow the contractor to satisfy all of its
actual needs at the contract rate-it is not liable for
unordered supplies, and indeed, it may not even have any
requirements at all during the contract term.32 Id. (citing
Folge & Co. v. United States, 135 F.2d 117 (4th Cir. 1943);
National Laundry Co. v. United States, 63 Ct. Cl. 626 (1927);
AGS-Genesys Corp., supra; Alamo Automotive Service, Inc.,
ASBCA No. 8815, 63 BCA ¶ 3830; Metro Industrial Painting
Corp., ASBCA No. 6328, 62 BCA ¶ 3343). By contrast, the
contractor's duty under a "requirements" contract is to
perform regardless, which includes fulfilling all of the
Government's needs at the contract price even if the number or
orders placed exceeds the original estimates. Points and
Authorities, at 6-7 (citing Carstens Packing Co. v. United
States, 52 Ct. Cl. 430 (1917)). If a change in circumstances
alters the Government's requirements, the contractor is only
entitled to be reimbursed for services actually performed and
any additional compensation is not authorized.33 Points and
Authorities, at 8 (citing Tennessee Valley Authority v.
Imperial Professional Coatings, 599 F.Supp. 436 (E.D. Tenn.
1984); East Bay Auto Supply, Inc., ASBCA No. 25542, 81-2 BCA
¶15,204; Solano Aircraft Service, Inc., ASBCA Nos. 20677,
20941, 77-2 BCA ¶ 12,584; Gulf Coast Aviation, ASBCA Nos.
10189, 10380, 65-2 BCA ¶ 4928). As GPO points out, in the
past the Board itself has relied on these principles in
denying equitable adjustment claims by contractors. Points
and Authorities, at 7 (citing McDonald & Eudy Printers, Inc.,
GPO BCA 40-92 (January 31, 1994), 1994 WL 275096; Shepard
Printing, GPO BCA No. 37- 92 (January 28, 1994), 1994 WL
275077; B & W Press, GPOCAB 9-83 (March 8, 1984), 1984 WL
148109; Central Data Processing, GPOCAB 74-14 (January 7,
1975)).34 Accordingly, the Respondent contends that because
the meaning of the "Requirements" clause, as interpreted by
the cases, is so clear, the Appellant will have to look
elsewhere for its relief.35 Points and Authorities, at 8.
Second, the Respondent addresses the Appellant's main
contention by denying that the Government was negligent in
preparing the estimates for Program D306-S. Points and
Authorities, at 9. Noting that the Contractor has not
attacked the estimating methodology, GPO says that the
Appellant's assertion that the Government should have
anticipated the cancellation of PTO's CD-ROM plan in its
figures for the second production period is nothing more than
"20/20" hindsight. Id. In that regard, the Respondent tells
us that the standard of care expected of the Government in
calculating estimated quantities of work is not clairvoyancy,
but rather reasonableness; i.e., to be legally sufficient, the
estimates do not have to provide for every possible
contingency, but rather they simply have to be based on all
reasonably available and relevant information. Id. (citing
Womack, supra; Integrity Management International, Inc., ASBCA
No. 18289, 75-1 BCA ¶ 11,235, aff'd on reconsid., 75-2 BCA ¶
11,602; American Maintenance and Management Services, ASBCA
No. 18756, 75-2 BCA ¶ 11,407; Free-Flow Packaging Corp., GSBCA
No. 3992, 75-1 BCA ¶ 11,105).
GPO insists that the Government satisfied this legal standard
when it formulated the production estimates in this case.
Basically, the Respondent's contention is that it did base the
estimates for the second production period on all the relevant
information which was reasonably available to it when the
contract was solicited and awarded, since neither the
Contracting Officer nor the OPP, the PTO organization
responsible for developing the Program D306-S estimates, had
any knowledge, at that time, that the CD-ROM policy was being
criticized by foreign patent offices and would soon be
suspended. Points and Authorities, at 10-11 (citing Jt.
Stip., ¶¶ 54, 55; Bawcombe Deposition at 9-10). Furthermore,
GPO asserts that while the PTO International Liaison Staff was
aware of the adverse foreign opinion during this period, it
did not share that information with the OPP prior to award,
and moreover, that knowledge could not be imputed to the
Contracting Officer, the person who was ultimately responsible
for the contents of the solicitation. Id. (citing Jt. Stip.,
¶ 54; Bawcombe Deposition at 12-13, 35; Bateson-Solte, Inc. v.
United States, 158 Ct. Cl. 455, 305 F.2d 386 (1962); The
Bethlehem Corp., ASBCA No. 10595, 66-1 BCA ¶ 5,641). See also
GPO Contract Terms, Contract Clauses, ¶ 1 (Contractual
Responsibility).36 Finally, the Respondent states that
nothing in the record supports the Appellant's argument that
the PTO's International Liaison Staff should have known the
CD-ROM substitution program was likely to be postponed because
of foreign resistance to the idea. Points and Authorities, at
11, 14. In that regard, the undisputed chronology of the
relevant events in this case shows that: (1) the contract was
awarded on May 20, 1994; (2) although the contract called for
the CD-ROM program to be implemented on August 1, 1994, by the
date of award the reaction of the foreign patent community to
the electronic conversion plan was decidedly mixed, with both
negative (Germany, Great Britain, Sweden, the Russian
Federation) and positive feedback ( Austria, Denmark, China,
France, Egypt, Poland, the Czech Republic, New Zealand,
Malaysia) being received by the PTO's International Liaison
Staff; (3) on the date the contract was awarded, a PTO
international liaison staffer, Saifer, was at a meeting of
foreign patent offices in Geneva, Switzerland, where he heard
additional criticisms of the CD-ROM policy, especially from
Germany, a major recipient of United States patents; (4) about
the same time as Saifer was in Switzerland, his supervisor,
Lawson, was at a conference of patent officials in Tokyo,
Japan, where he also heard negative comments about the CD-ROM
substitution plan; (5) on his return from Switzerland, Saifer,
thought about the adverse reactions of the foreign governments
to the CD-ROM policy and concluded that it should be relaxed;
(6) on May 31, 1994, eleven (11) days after the contract for
Program D306-S was awarded, Saifer sent a memorandum to Lawson
recommending a change in policy; (7) shortly afterward, Saifer
and Lawson, who had reached the same conclusion, met to
discuss the issue, and decided since neither one of them had
authority to act on their own to change the policy, they would
"initiate a review" of the problem by asking the Commissioner
of Patents and Trademarks to reverse his previous decision
regarding CD-ROMs; (8) on June 27, 1994, before initiating
such a policy review, Saifer and Lawson met with other
interested PTO officials, including Bawcombe of the OPP (the
PTO's contact with GPO), where they were apprised, for the
first time, of the impact changing the CD-ROM plan would have
on Program D306-S; (9) on July 7, 1994, Lawson orally advised
Bawcombe that the CD-ROM policy might be changed; (10)
Bawcombe immediately notified the Respondent, in writing, that
same day, and told GPO that the Appellant would have to
"continue with the present print volumes until further
notice;" (11) GPO instantly informed the Contractor that the
CD-ROM plan was in jeopardy; (12) on July 15, 1994, a review
of the CD-ROM policy was formally initiated within the PTO;
(13) on August 1, 1994, the date on which CD-ROM patents were
scheduled to replace paper sets, the PTO Business Council
recommended suspension of the plan for one (1) year; and (14)
on September 7, 1994, the Commission of Patents and Trademarks
accepted the Business Council recommendation and postponed the
CD-ROM program for one (1) year, and notified the PTO's
foreign counterparts of his decision. Points and Authorities,
at 12-14 (citing Jt. Stip., ¶¶ 14, 16, 19, 24-25, 26-28,
30-32, 35, 44, 47-50, 52, 56-57, 60-63; Saifer Deposition, at
53, 55, 105-06, 114, 120-21, 123-24; Lawson Deposition, at 73,
84, 86-87). The Respondent argues that these undisputed facts
show that when the contract was awarded to the Appellant, both
GPO and the OPP were totally unaware of the PTO International
Liaison Staff's uncertainty about the CD-ROM policy, and
indeed, the international office had yet to form an opinion
about whether to recommend a change to it or not; i.e., no
definitive action was taken by anyone until after the contract
was already in effect.37 Points and Authorities, at 14.
Therefore, the Government says that since the GPO and the OPP
prepared the contract estimates using the facts as they knew
them prior to May 20, 1994, it cannot be said that there was a
failure of due care in this instance.38 Id.
Third, the Respondent disagrees that this case involves a
mutual mistake of fact warranting relief for the Appellant.
Points and Authorities, at 15. In that regard, GPO believes
that the Contractor's reliance on National Presto Industries,
to support its claim for reforming the contract is misplaced,
because none of the three criterion established by the court
is present here. Id. Thus, the Respondent says that the
"fact" relied on by the Appellant for its claim-the
Government's failure to foresee that the CD-ROM plan would not
be implemented after the contract was awarded and that the
actual level of work would outstrip the estimates for the
second production period by a large margin-is not the sort of
empirical and objectively verifiable knowledge contemplated in
the lead case necessary to support reformation or rescission
of a contract. Points and Authorities, at 16 (citing Robert
R. Michaud, B-182299, 75-1 CPD ¶ 52). Furthermore, insofar as
National Presto Industries requires a contract's silence with
regard the risk exposure of either party, GPO notes that by
definition "requirements" contracts allocate the risks to the
contractor. Points and Authorities, at 16, fn. 10 (citing
Integrity Management International, Inc., supra, 75-1 BCA at
53,481). Besides, the contract in this case contained no
guarantees of work, and its numerous "disclaimers" emphasized
the uncertain level of production in the future-indeed, the
very essence of a "requirements" contract is its
unpredictability. Points and Authorities, at 16-17 (citing R4
File, Tab A, at 1). Hence, the Respondent tells us that the
failure to predict the future, as distinguished from the risk
associated with the a bona fide mutual mistake of fact, does
not give rise to judicial relief. Points and Authorities, at
17-18 (citing Leasco Corp. v. Taussig, 473 F.2d 777 (2d Cir.
1972); 13 WILLISTON ON CONTRACTS § 1543 (3d ed. 1975), at 75;
3 CORBIN ON CONTRACTS § 598 (2nd ed. 1960), at 585-86;
RESTATEMENT (SECOND) OF CONTRACTS § 502). Moreover, GPO
states that the pricing mechanisms in the disputed contract
itself demonstrate the unwillingness of the Government to
share expenses in this case-the third National Presto
Industries criterion-but rather their inclusion invites
contractors to develop pricing strategies to protect them
from fluctuations in work levels and evinces the Government's
desire to place the onus for any volume variations on the
contractor.39 Points and Authorities, at 18 (citing The
Tommy Nobis Center, Inc., GSBCA Nos. 8988-TD, 9420-TD, 89-3
BCA ¶ 22,112). The record shows that the Appellant chose not
to avail itself of these pricing mechanisms.40 Points and
Authorities, at 19. Accordingly, the Government says that it
cannot be held responsible for the Contractor's gamble in
formulating its bid, which may have won the contract but
proved to be unwise in light of actual performance-the
Appellant alone must bear the risk of its business decision.41
Points and Authorities, at 19-20 (citing Nevada Fleet Service,
ASBCA Nos. 17198, 17859, 74-1 BCA ¶ 10,610).
Finally, GPO rejects the Appellant's idea that the increased
quantity of printed patents in the second production period,
when measured against the contract's estimates, constitutes a
compensable change under the "Changes" clause. Points and
Authorities, at 20. See GPO Contract Terms, Contract Clauses,
¶ 4 (Changes). In that regard, the Respondent believes that
Allied Paint Manufacturing Co., which the Contractor relies on
to support its theory, is inapposite, because the court in
that case ruled that a "requirements" contractor "accepted the
risk that heavy demands under those contracts could strain its
production capacities." Id. (citing Allied Paint
Manufacturing Co. v. United States, supra, 470 F.2d at 567).
Referring again to the nature and purpose of "requirements"
contracts, where uncertainty not predictability is the rule,
GPO argues that the Appellant's "Changes" position would shift
the risk for fluctuations in workload from the Contractor to
the Government, contrary to the reason why Program D306-S was
solicited as a "requirements" contract in the first place.
Points and Authorities, at 21 (citing Medart, Inc., supra;
AGS-Genesys Corp., supra; Lone Star Energy Co., supra; FAR §
16.503(b)). Furthermore, the Respondent assumes that the
Appellant's theory is one of a "constructive change" because
there is no allegation or evidence of a "change order" being
issued by the Contracting Officer. Id. (citing GPO Contract
Terms, Contract Clauses, ¶ 4 (Changes). However, the
Government says that the facts show that this principle is
inapplicable in this case. Id. (citing C & S Park Service,
Inc., ENG BCA Nos. 3624, 3625, 78-1 BCA ¶ 13,134 (diversion of
work to another contractor); Pacific Technology Enterprises,
Ltd., ASBCA No. 17087, 74-2 BCA ¶ 10,679 (same)).42 Indeed,
GPO says that a failure to order estimated quantities,
erroneous contract estimates, and even unforeseen events
affecting estimated requirements are not "constructive
changes." Points and Authorities, at 21-22 (citing Sentinel
Protective Services, Inc., ASBCA No. 23560, 81-2 BCA ¶ 15,194
(unforeseen event-a drought causing a steep decrease in need
for grass-cutting); Savon Wholesale Cleaners, ASBCA No. 18497,
74-2 BCA ¶ 10,810 (erroneous estimates); Toke Cleaners, IBCA
No. 1008-10-73, 74-1 BCA ¶ 10,633 (failure to order estimated
quantities raised the issue of good faith placement only);
Beiser Aviation Corp., ASBCA No. 6215, 61-2 BCA ¶ 3155
(erroneous estimates); Contra Crown Laundry & Dry Cleaners,
Inc., ASBCA 28889, 85-2 BCA ¶ 18,003 (erroneous estimates)).
Therefore, the Respondent believes that the Appellant's
"constructive change" theory fails for want of case support.
Points and Authorities, at 22.
Accordingly, GPO states that since it has established that
there are no genuine issues of material fact in this case, and
as the Contractor has not satisfied its burden of going
forward, all of the above reasons warrant summary judgment in
its favor, and the denial of the Partial Motion. Points and
Authorities, at 22-23 (citing Durable Metal Products, Inc. v.
United States, 27 Fed. Cl. 472, 477 (1993), quoting Campbell
v. United States, 2 Cl. Ct. 247, 249 (1983)).
IV. QUESTIONS PRESENTED
In this proceeding, the Board is asked to decide if the
suspension of the PTO's plan to substitute CD-ROMs for paper
sets of patents in the second production period entitles the
Appellant to additional compensation under its contract for
Program 306-S. In order to resolve the entitlement issue, two
questions need to be answered:
1. Was the Government derelict when it formulated its workload
estimates for Program D306-S, and awarded the contract, without
considering the possibility that the PTO's plan to replace paper
sets of patents with CD-ROMs in the second production period
might not be implemented because of foreign opposition to the
idea, thus failing to foresee that the concomitant and
significant reduction in sets of paper patents forecast for that
period might never materialize? Stated otherwise, did the
Government neglect to use all relevant information that was
reasonably available to it in establishing the estimates in the
solicitation, so that it can be said that they were negligently
prepared?
2. Assuming that under the circumstances of this case the
Government exercised due care and was not otherwise negligent in
preparing the workload estimates and awarding the Program D306-S
contract, is the Appellant nonetheless entitled to an equitable
adjustment or additional compensation under some other theory of
recovery; e.g., "mutual mistake of fact," "constructive change,"
etc.?
V. DECISION
Before addressing the issues raised by the parties, it is
necessary to say a few words about the nature of this
proceeding. First, it should be noted that there is nothing
in the Board Rules expressly providing for motions for summary
judgment.43 However, the Board has traditionally entertained
summary motions, even in the absence of such an express
authorization. See e.g., The George Marr Co.,supra, slip op.
at 34; Vanier Graphics, Inc., GPO BCA 12-92 (May 17, 1994),
1994 WL 275102; RAP Chemical Corp., GPO BCA 4-91 (January 23,
1992), 1992 WL 487876; International Lithographing, Inc., GPO
BCA 18-88 (February 21, 1990), 1990 WL 454981. See generally
Matthew S. Foss, U.S. Government Printing Office: The First
Decade, 24 PUB. CONT. L.J. 579, 594 (ABA 1995) (hereinafter
Foss, The First Decade).
Second, in deciding summary judgment motions, the Board is
guided by Rule 56 of the Federal Rules of Civil Procedure.
See The George Marr Co.,supra, slip op. at 35; Vanier
Graphics, Inc., supra, slip op. at 32; RAP Chemical Corp.,
supra, slip. op. at 17-18. Accord Christie-Willamette, NASA
BCA 283-4, 87-3 BCA ¶ 19,981 (citing Astro Dynamics, Inc.,
NASA BCA ¶ 476-1, 77-1 BCA ¶ 12.230); Automated Services,
Inc., EBCA Nos. 386-3-87, 391-5-87, 87-3 BCA ¶ 20,157. Under
Rule 56, courts are instructed to grant a motion for summary
judgment if the pleadings and supporting affidavits and other
submissions "show that there is no genuine issue as to any
material fact and that the moving party is entitled to
judgment as a matter of law."44 FED. R. CIV. P. 56(c). That
standard applies whether the moving party is seeking a
complete disposition of the case, or, as here, is asking for
partial summary judgment on a particular issue; e.g.,
entitlement. See McDonnell Douglas Services, Inc., ASBCA No.
45556, 95-1 BCA ¶ 27,333, at 136,230 (citing Cox & Palmer
Construction Corp., ASBCA No. 43438, 89-3 BCA ¶ 22,197).
Thus, the principal judicial inquiry required by Rule 56 is
whether a genuine issue of material fact exists.45 See The
George Marr Co.,supra, slip op. at 35-36; RBP Chemical Corp.,
supra, slip. op. at 22 (citing Castillo Printing Co., supra,
slip op. at 22). Accord John's Janitorial Services, Inc.,
ASBCA No. 34234, 90-3 BCA ¶ 22,973 (citing, General Dynamics
Corporation, ASBCA Nos. 32660, 32661, 89-2 BCA ¶ 21,851); Ite,
Inc., supra. Stated otherwise, on a motion for summary
judgment, a court cannot try issues of fact; it can only
determine whether there are issues to be tried. See IBM
Poughkeepsie Employees Federal Credit Union v. Cumis Insurance
Society, Inc., supra, 590 F.Supp. at 771 (citing Schering
Corp. v. Home Insurance Co., 712 F.2d 4, 9 (2d Cir. 1983)).
If no triable issues exist, the rule permits the immediate
entry of summary judgment. See e.g., Reingold v. Deloitte,
Haskins and Sells, 599 F.Supp. 1241, 1261 (S.D.N.Y. 1984);
United States v. ACB Sales and Service, Inc., 590 F.Supp. 561
(D. Ariz. 1984). Indeed, the United States Supreme Court has
stated that summary judgment is mandatory in the absence of a
genuine issue of any material fact.46 See Celotex Corp. v.
Catrett, supra, 477 U.S. at 322-23.
Third, the burden is on the party moving for summary judgment
to demonstrate that there is no genuine issue as to any
material fact, and that it is entitled to judgment as a matter
of law. See Celotex Corp. v. Catrett, supra, 477 U.S. at
322-23; Adickes v. S. H. Kress & Co., 398 U.S. 144, 157
(1970). In order to establish entitlement to an equitable
adjustment as a matter of law, the moving party must show
three necessary elements-liability, causation and resultant
injury. See McDonnell Douglas Services, Inc., supra, 95-1 BCA
at 136,230 (citing Wilner Construction Co. v. United States,
24 F.3d 1397, 1401 (Fed. Cir. 1994). See also Capital
Services, Inc., ASBCA No. 40510, 40511, 91-1 BCA ¶ 23,310, at
116,907 (even in a case heard on entitlement only, appellant
must establish liability, and at least the fact of resultant
injury) (citing Lemar Const. Co., ASBCA No. 31161, 31719, 88-1
BCA ¶ 20,429). That burden is an affirmative one, and is not
met merely by disproving the unsupported claims of its
opponent. See Celotex Corp. v. Catrett, supra, 477 U.S. at
323. On the other hand, while the nonmoving party also has an
evidentiary burden, it is not a heavy one; it is simply
required to go beyond allegations in the pleadings and
designate specific facts in the record or by affidavits to
show there is a genuine issue to be heard.47 See e.g.,
McDonnell v. Flaharty, 636 F.2d 184 (7th Cir. 1980); United
States v. Kates, 419 F.Supp. 846 (D.Pa. 1976); Upper West Fork
River Watershed Association v. Corps of Engineers, United
States Army, 414 F.Supp. 908 (D.W.Va. 1976), aff'd 556 F.2d
576 (4th Cir. 1977), cert. denied 434 U.S. 1010 (1978). See
generally, Vanier Graphics, Inc., supra, slip op. at 32-38;
RBP Chemical Corp., supra, slip. op. at 17-26.
Finally, whether the adjudicatory forum is faced with one
summary judgment motion or two, as here, the principles are
the same. See The George Marr Co.,supra, slip op. at 37;
Vanier Graphics, Inc., supra, slip op. at 38. As expressed by
the United States Court of Federal Claims, the rule governing
motions filed by both parties in the same proceeding is that:
Both plaintiff and defendant, as moving parties, have the burden
of establishing that there are no genuine material issues in
dispute and that, as movant, they are entitled to judgment as a
matter of law. [Citation omitted.] In opposing the other's
motion, each party has the burden of providing sufficient
evidence, not necessarily admissible at trial, to show that a
genuine issue of material fact indeed exits. [Citation omitted.]
If the non-movant's evidence is merely colorable, or not
sufficiently probative, summary judgment may be granted.
[Citations omitted.]
In resolving cross-motions, the court may not weigh the evidence
and determine the truth of the matter on summary judgment.
[Citation omitted.] Any evidence presented by the opponent is to
be believed and all justifiable inferences are to be drawn in its
favor. [Citation omitted.] With respect to any facts that may
be considered as contested, each party, in its capacity as the
opponent of summary judgment, is entitled to "all applicable
presumptions, inferences and intendments." [Citation omitted.]
That the parties, in their cross-motions, have separately alleged
the absence of genuine issues of material fact, does not relieve
the court of its responsibility to determine the appropriateness
of summary disposition of the matter. . . . [T]he court must
evaluate each party's motion on its own merits and drawing all
reasonable inferences against the party whose motion is being
considered.
See Bataco Industries, Inc. v. United States, 29 Fed. Cl. 318,
322 (1993) (quoted in The George Marr Co.,supra, slip op. at
37-38; Vanier Graphics, Inc., supra, slip op. at 38-39). See
also Baca v. United States, supra, 29 Fed. Cl. at 358-59.
There are no genuine issues of material fact in this case.
All of the essential facts which are needed to resolve the
entitltement question have been placed before the Board in the
R4 File, the transcript of the jurisdictional hearing, the
Respondent's statement of Material Facts, and the stipulation
of the parties. The only task left for the Board is to apply
those facts to the disputed contract, and contract
interpretation is clearly a question of law. See Fry
Communications, Inc.-InfoConversion Joint Venture v. United
States, 22 Cl. Ct. 497, 503 (Cl.Ct. 1991); Professional
Printing of Kansas, Inc., supra, slip op. at 46, fn. 62;
General Business Forms, Inc., GPO BCA 2-84 (December 3, 1985),
slip op. at 16, 1985 WL 154846 (citing John C. Grimberg Co. v.
United States, 7 Ct. Cl. 452 (1985)); RD Printing Associates,
Inc., GPO BCA 02-92 (December 16, 1992), slip op. at 13, 1992
WL 516088. See also Fortec Contractors v. United States,
supra, 760 F.2d at 1291; P.J. Maffei Building Wrecking Co. v.
United States, 732 F.2d 913, 916 (Fed. Cir. 1984); Pacificorp
Capital, Inc. v. United States, 25 Cl. Ct. 707, 715 (1992),
aff'd, 988 F.2d 130 (Fed. Cir. 1993); Ralph Construction, Inc.
v. United States, 4 Cl. Ct. 727, 731 (1984) (citing Torncello
v. United States, 681 F.2d 756, 760 (Ct.Cl. 1982)); Hol-Gar
Manufacturing Corp. v. United States, 169 Ct. Cl. 384, 386,
351 F.2d 972, 973 (1965). Accordingly, the threshold
entitlement issue is ripe for decision by summary judgment.
When the Board considers the Appellant's PartialMotion and
Appellant's Reply, and the Respondent's Cross-Motion and
Opposition, and Points and Authorities, against the record in
this case, including the parties' stipulations as augmented by
GPO's statement of Material Facts, it draws the following
conclusions:
A. The evidence presented to the Board does not allow it to
conclude that the Government failed to use all relevant
information that was reasonably available to it when it
formulated its estimates for the Program D306-S solicitation.
Thus, there is no basis for finding, without further proof, that
the Government's estimates, which did not take into account the
adverse foreign comments to the PTO's plan to substitute CD-ROM
patents for paper sets starting August 2, 1994, were negligently
prepared or were otherwise unreasonable on the date the Appellant
submitted its bid and received the contract award. The
Appellant's allegation that the Government should have foreseen,
and considered, the possibility that the PTO would subsequently
decide to postpone implementation of the CD-ROM program because
of foreign opposition to the idea, causing a significant increase
in the need for paper patents after August 1, 1994, is simply not
sustainable on this record.
This appeal is a rarity. In the combined annals of the Board
in the ad hoc panels which preceded it, only one other case
has involved a contractor's direct challenge to the workload
estimates of a "requirements" contract.48 See Datagraphics
Press, Inc., [No GPO CAB No.] (June 23, 1978), slip op. at
6-7. The adjudicatory history of this agency, which the Board
supposes mirrors the experience of its Executive Branch
counterparts, discloses that in most "requirements" contract
disputes, the validity of the estimates is a tangential
matter, since the typical complaint is that either too few
orders were placed according to the estimates, see e.g.,
Shepard Printing, supra; McDonald and Eudy Printers, Inc.;
supra; Information Systems, Inc., GPOCAB 78-11 (January 18,
1979), 1979 WL 28889; Central Data Processing, supra, or too
many, see e.g., Swanson I, supra; Castillo Printing Co.,
supra; Tamms Lithography, Inc., GPO BCA 14-89 (July 13, 1990),
1990 WL 454986; B & W Press, supra. Accord Medart, Inc. v.
Austin, supra (less work); Perini Corp. v. United States, 180
Ct. Cl. 768, 381 F.2d 403 (1967) (excess orders); LB & M
Associates, Inc., DOTBCA No. 2905, 96-1 BCA ¶ 28,173 (less
work); Independent Manufacturing and Service Companies of
America, Inc., ASBCA No. 47199, 95-1 BCA ¶ 27,56 (excess
work); California Bus Lines, Inc., ASBCA No. 42181, 91-3 BCA ¶
24,341 (less work); Command Tech Corp., ASBCA No. 40318, 90-3
BCA ¶ 23,215 (less work) (cited in McDonald and Eudy Printers,
Inc.; supra, slip op. at 16); The Tommy Nobis Center, Inc.,
supra (excess orders); Robert H. O'Hair and O'Hair
Construction Co., a joint venture, AGBCA No. 82-115-1, 89-1
BCA ¶ 21,384 (excess orders); LFS, Inc., LBCA No. 82-BCA- 10,
84-2 BCA ¶ 17,306 (excess orders); Miltex Industries, Inc.,
ASBCA Nos. 19449, 20886, 77-2 BCA ¶ 12,768 (excess orders);
Sponge Fishing Co., GSBCA No. 1386, 65-1 BCA ¶ 4627 (excess
orders).
In this case, while the gravamen of the complaint is generally
about the Government's excess orders, the Appellant does not
dispute the settled principle, which defines the meaning of a
"requirements" contract, that such a contractor is required to
supply all of the Government needs regardless of the extent to
which it may exceed the estimate. See e.g., The Tommy Nobis
Center, Inc., supra; Robert H. O'Hair and O'Hair Construction
Co., a joint venture, supra; Sponge Fishing Co., supra.
However, it should be noted that even this general rule has
its limits. For, as one contract appeals observed by way of
dicta: "[a]n argument can be made that where quantities are
increased in a "requirements" contract, the contractor must
furnish services. . . . However, there is a point when the
increase in amount may become so great that it would be
unreasonable to insist on performance." See LFS, Inc., supra
84-2 BCA at 86,245.
Furthermore, the scope and meaning of GPO's "Requirements"
clause is not at issue in this appeal. See Shepard Printing,
supra, slip op. at 20-23; McDonald and Eudy Printers, Inc.;
supra, slip op. at 11-14. Both the Appellant and the
Respondent also agree that Program D306-S is a "requirements"
contract, and fully understand the legal consequences of such
an arrangement with respect to the rights and obligations of
the contracting parties. Partial Motion, at 12-28; Points and
Authorities, at 5-8.49 What is new and distinct about this
dispute is that two of the three theories of recovery raised
by the Appellant-"negligent estimates" and "mutual mistake"-
involve not
so much performance problems as matters pertaining to the
formation of the contract itself. With specific regard to the
"negligent estimates" principle, which we address here, the
Government's liability is tied to pre-solicitation conduct which
plants contractual land mines for the innocent and unsuspecting
contractor.50 Therefore, the Board needs to take a moment to
clarify its jurisdiction in this case, because the source of its
remedial powers is quite different from those exercised by its
Executive Branch counterparts operating under the auspices of
the CDA.51
For years, whenever they have had to described the parties'
rights and obligations under a "requirements" contract, the
Board and the ad hoc panels have simply repeated, in almost
mantra-like fashion, the accepted principle that the
Government's obligation is merely to exercise due care in
preparing its estimates, see Shepard Printing, supra, slip op.
at 23-24 (citing Crown Laundry, supra; Dynamic Science, Inc.,
ASBCA No. 29510, 85-1 BCA¶ 17,710; Huff's Janitorial Service,
ASBCA No. 26860, 83-1 BCA ¶ 16,518); see McDonald and Eudy
Printers, Inc.; supra, slip op. at 15 (quoting Shepard
Printing, supra); Datagraphics Press, Inc., supra, slip op. at
7 (". . . the Government is only required to produce as
accurate an estimate as possible." Citing Womack, supra), and
thus no equitable price adjustment is available to the
contractor in the absence of evidence that the Government has
been negligent in the preparation of its estimates, see
McDonald and Eudy Printers, Inc.; supra, slip op. at 19.
However, in a recent decision the board of contract appeals
for the Department of Veterans Affairs (VABCA) explained the
basis for the Government's liability when it failed to meet
this due care standard:
The rationale for holding the Government liable for a
contractor's damages resulting from negligently prepared
estimates in its requirements contracts is that the contractor
has reasonably relied upon such estimates in the preparation of
its unit price(s) to the Government for such services. Since the
contractor then agrees to be bound to provide such services to
the Government at the price(s) bid, the Government is equally
bound to use its best information in preparing the quantity
estimates upon which the contractor has relied. Womack v. United
States [12 CCF ¶ 81,795], 182 Ct. Cl. 399, 412-13, 389 F.2d 793,
800-01 (1968).
It thus follows that failure to exercise due care in preparing
estimates, coupled with a contractor's financial losses directly
attributable to reasonable reliance on such estimates, subjects
the Government to liability. Since there is no remedy-granting
clause in the contract itself, the negligent misrepresentation
can be pursued as a common law breach of contract. Alert Care
Ambulance Service, VABCA No. 2844, 90-3 BCA ¶ 22,945; Atlantic
Garages, Inc., GSBCA No. 5891, 82-1 BCA ¶ 15,479, at 76,711.
See Ambulance Service & Transport of Marlin, VABCA Nos. 3485,
3486, 94-2 BCA ¶ 26,729, at 133,005. [Emphasis added.] See also
Everett Plywood & Door Corp. v. United States, 190 Ct. Cl. 80.
90-91. 419 F.2d 425, 430-31 (1969).
Unlike the VABCA, 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 e.g., 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, Foss, The First Decade, at 584-85. 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 the contract before it. See Shepard Printing,
Inc., supra, slip op. at 9, fn. 8; R.D. Printing Associates,
Inc., supra, slip op. at 9, 13, fns. 9, 15; 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.
Consequently, the Board has followed the trail blazed by the
ad hoc panels and steadfastly refused to entertain "pure"
breach of contract claims, that is, claims for damages not
redressable under a specific contract provision, on the twin
grounds that because of its limited jurisdiction it can only
mine for remedies in the contract clauses themselves, and that
any breach decision it might render would be no better than an
advisory opinion. See R.C. Swanson Printing and Typesetting
Co., supra, slip op. at 30-35; The Wessel Co., Inc., supra,
slip op. at 27, fn. 29, 33-41 (citing United States v. Utah
Construction and Mining Co., 384 U.S. 394, 407-11 (1966);
Blake Construction Co., Inc., GSBCA No. 2205, 67-1 BCA ¶
6,311, at 29,197- 98); Cloverleaf Enterprises, Inc., [No GPO
CAB No.] (May 9, 1980) slip op. at 11, 1980 WL 81267;
Microform Data System, Inc., GPOCAB 3-79 (February 1, 1980),
slip op. at 10-12, 1980 WL 81258; Information Systems, Inc.,
supra, slip op. at 5-6. See also H.L. Eikenberg Co., GPOCAB
76-13 (May 9, 1979), slip op. at 35, fn. 21 ("The Board can
only grant relief in situations where an administrative remedy
is provided under some remedy or relief clause in the
contracts." Quoting Federal Food Marketers Co., AGBCA Nos.
447, 448, 76-1 BCA ¶ 11,709, at 55,82. (Citations omitted.)).
See generally, Foss, The First Decade, at 587.
Therefore, the Appellant's "negligent estimates" claim would
seem to be beyond the reach of the Board since it has no
access to the traditional means for rectifying such Government
nonfeasance. However, the Court of Federal Claims has
provided the solution to this conundrum. In Crown Laundry, a
summary judgment proceeding like this appeal, the Court said:
In Womack v. United States, 182 Ct. Cl. 399, 401, 389 F.2d, 801
(1968), the Court of Claims pointed out that the government was
obligated to base solicitation estimates on "all relevant
information that is reasonably available to it." If the critical
element in this summary judgment matter is what relevant
information was available to Redstone Arsenal procurement
personnel relative to the estimate formulation utilized in the
solicitation at issue in this case, then the case is not ripe for
decision at this time. Indeed, the other areas were plaintiff is
critical of the government's estimate formulation practice and
procedure likewise needs to be ventilated at trial. On the other
hand, if the issue is confined to the question of reasonableness
of the government's estimate formulation and attendant
circumstances, then summary judgment is appropriate.
See Crown Laundry, supra, 29 Fed. Cl. at 522. [Emphasis added.]
Reviewing the reasonableness of actions by GPO Contracting
Officers is within the inherent authority of the Board, and is
accomplished by applying the so-called "abuse of discretion"
test. See Asa L. Shipman's Sons, Ltd., supra, slip op. at 18;
Univex International, supra, slip op. at 19; Graphic Image, Inc.,
GPO BCA 13- 92 (August 31, 1992), slip op. at 25, 1992 WL 487875;
Atlantic Research Corp., GPO BCA 22-87 (July 10, 1989), slip op.
at 5-6, 1989 WL 384985. Accord Darwin Construction Co. 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, 3515T, 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. It is on that basis that the Board assumes jurisdiction
over the "negligent estimates" issue.52
The Board's analysis begins with three observations. First,
only the Appellant and GPO were the parties to the contract in
question. See GPO Contract Terms, Contract Clauses, ¶ 1
(Contractual Authority).53 See also B & B Reproductions,
supra, slip op. at 37-38 (citing PPR, Chap. I, Sec. 2
(Definition of "Contracting Officer), Sec. 3, ¶ 2(d)
(Procurement Authority-Contracting Officers); RD Printing
Associates, Inc., supra, slip op. at 10, fn. 11. Thus, while
the PTO was certainly an active "participant" in the contract
by virtue of its "direct-deal" authority, it was not a
party54-a fact acknowledged by the customer agency. See
Bawcombe Deposition, at 36 ("It is GPO's contract, they would
have [the] final say."). Second, there is no disagreement
about the standard of care in these sorts of cases-the
Government's estimates should be realistic, and based on "all
relevant information that is reasonably available to it;"
i.e., the most current information available. See Crown
Laundry, supra, 29 Fed. Cl. at 522 (citing Womack, supra);
Medart, Inc. v. Austin, supra, 967 F.2d at 582; Contract
Management, Inc., supra, 95-2 BCA at 139,107 (citing FAR §
16.503(a)(1));55 Fa. Kammerdiener GmbH & Co., KG, ASBCA No.
45248, 94-3 BCA ¶ 27,197, at 135,554; Ambulance Service &
Transport of Marlin, supra, 94-2 BCA at 133,005. See also
Integrity Management International, Inc., ASBCA Nos. 34802,
35412, 36149, 37140, 89-3 BCA ¶ 21,996; Crown Laundry & Dry
Cleaners, Inc., ASBCA No. 28889, 85-2 BCA ¶ 18,003. In simple
terms, the Government is not free to carelessly guess at its
needs. See Crown Laundry, supra, 29 Fed. Cl. at 520; Medart
v. Austin, 967 F.2d at 581. Therefore, if the contractor can
prove by a preponderance of the evidence that the Government's
estimates are unreasonably inaccurate because it failed to
exercise due care, and that it relied on those faulty
estimates to its detriment in bidding, then the risk of any
shortfall, which is normally the contractor's under a
"requirements" contract, shifts to the Government and it will
be held liable. See Crown Laundry, supra, 29 Fed. Cl. at
519-20; Timber Investors, Inc. v. United States, supra, 587
F.2d at 478; Womack, supra, 389 F.2d at 801-02; Contract
Management, Inc., supra, 95-2 BCA at 139,107-08 (citing
Chemical Technology, Inc. v. United States, supra, 645 F.2d at
947-48); Fa. Kammerdiener GmbH & Co., KG, supra, 94-3 BCA ¶
27,197, at 135,554 (citing Apex International Management
Services, Inc., ASBCA Nos. 37813, 38178, 38224, 38278, 38297,
38354, 38514, 94-1 BCA ¶ 26,299); Ambulance Service &
Transport of Marlin, supra, 94-2 BCA at 133,005; Alert Care
Ambulance Service, supra, 90-3 BCA at 115,179; Maya Transit
Company, supra, 75-2 BCA at 55,126. Unless this were the
rule, then Government-furnished data in a bidding invitation,
whether an estimate, "historical" material, or empirical data,
which was not developed from relevant, current and available
information, would be "surplusage at best or deception at
worst." See Womack, supra, 389 F.2d at 801. See also
Emerald Maintenance, Inc., ASBCA No. 42908, 94-2 BCA ¶ 26,904,
at 133,970. Finally, the "all relevant and reasonably
available information" rule concerns matters of time, or more
properly timing. Perhaps the most quoted phrase from the
Womack decision is the Court of Claims' statement that the
Government "is not required to be clairvoyant . . .". Womack,
supra, 389 F.2d at 801. See e.g., Contract Management, Inc.,
supra, 95-2 BCA at 139,108; Fa. Kammerdiener GmbH & Co., KG,
supra, 94-3 BCA ¶ 27,197, at 135,554; Integrity Management
International, Inc., supra, 89-3 BCA at 110,605. See Shepard
Printing, supra, slip op. at 20-23; McDonald and Eudy
Printers, Inc.; supra, slip op. at 11-14; Datagraphics Press,
Inc., supra, slip op. at 7. See also Cibinic & Nash,
Administration, at 254. Accordingly, to paraphrase a famous
question from the Watergate era, the central issue in this
case boils down to-"What did the Contracting Officer know, and
when did he know it?"
The evidence of record clearly indicates that the Contractor
relied on the solicitation estimates for the second production
period in formulating its bid. Tr. 27-29, 57. Therefore, if
the Appellant is to prevail on its "negligent estimates" claim
it must prove, by a preponderance of the undisputed material
evidence, that the inaccuracy of those workload figures was a
direct consequence of the Contracting Officer's failure to
exercise due care in preparing them. In other words, its
evidence must show that before the award of the contract, the
Contracting Officer was aware of, but failed to take into
account, all relevant and reasonably available information at
his disposal when developing (or at least revising) the post-
August 1, 1994, work estimates. See e.g., Crown Laundry,
supra (by not checking out or verifying the estimates provided
by the user activities which the contracting officer felt were
"exaggerated" as a hedge against the possibility of increased
needs in the future-estimates which were nothing more than
wild guesses and which the Government admitted were
inaccurate-before the solicitation containing them was put out
for bids, the Government failed to exercise reasonable care
was liable to the contractor for damages); Contract
Management, Inc., supra (Government contractual estimates of
custodial requirements which were based on the prior year's
fixed-price contract, were negligent because they were not
revised to account for a projected funding shortfall which was
known before award-the most current financial information
available-so that the subsequent reduction of work for
budgetary reasons warranted an equitable adjustment in favor
of a janitorial contractor that was misled by the unadjusted
original estimate); Fa. Kammerdiener GmbH & Co., KG, supra
(Government estimates were negligent under a contract for
floor sanding and sealing work in unoccupied Army housing
units where the contracting officer awarded the contract using
the original estimates, which predicted certain dates of
unoccupancy, without considering a so-called "stop loss"
order, which he received before award, that kept the troops in
place and made the dates that the units would become vacant
uncertain, or without revising the estimates or making the
uncertain occupancy dates known the contractor); Ambulance
Service & Transport of Marlin, supra (although the Government
contended that its estimates under two "requirements"
contracts for ambulance services were prepared in good faith
using the best available historical data combined with
anticipated future needs, the board found that it had not
properly assessed the information in its possession regarding
past usage and projected needs in developing the estimates or
considered all of the relevant, available information; thus,
the Government failed to exercise due care and was liable to
the contractor for damages resulting from the contractor's
reasonable reliance on those negligently prepared estimates);
Alert Care Ambulance Service, supra (Government failed to
exercise due care in preparing its quantity estimates for each
type of trip it required in its solicitation for ambulance
services, because neglected to use historical data and also
relied on estimates from earlier contracts which had proven to
be inaccurate; i.e., there was no rational basis for the
projected ambulance usage which was significantly overstated).
See also Pruitt Energy Sources, Inc., supra (Government's
estimates of work under a "requirements" contract for computer
services were grossly and unreasonably inadequate because it:
(a) applied, without adjustment, a year's worth of historical
data on service calls to the contract base period of less than
seven months; (b) inflated the estimate for a one-year option
period by proportionally increasing the already inflated
seven-month base period estimate; (c) accounted for a 300
percent increase in its computer equipment inventory by
multiplying the estimate by three to take care of the overlap
between the period during which the inventory increased and
the period during which the government had gathered its
historical service call data, thus engaging in double
counting; and (d) guessed at the average travel time per
service call, without regard to available information as to
where most of the equipment was located and where most service
calls had occurred in the past).
Similarly, the parties agree that the Government's second
period estimates were inaccurate, perhaps whoppingly so, since
the difference between the job as bid and as actually
performed was 138 percent, which represents the gap between
the 42 percent reduction the Contractor had anticipated when
the CD-ROM program was implemented, and the 96 percent
increase in production it actually experienced under the
contract after August 1, 1994, when that electronic
dissemination plan was suspended. Jt. Stip., ¶¶ 41, 42, 43.
On the other hand, while the size of the discrepancy looks
suspicious, much like a telltale column of smoke in the
distance, that fact alone is insufficient to prove that the
Government failed to exercise due care when it prepared its
work estimates for Program D306-S. See Medart, Inc. v.
Austin, supra, 967 F.2d at 581; Crown Laundry, supra, 29 Fed.
Cl. at 520; Clearwater Forest Industries, Inc. v. United
States, 227 Ct. Cl. 386, 650 F.2d 233, 240 (1981); Womack,
supra, 389 F.2d at 802; Pruitt Energy Sources, Inc., supra,
95-2 BCA at 138,828; Alert Care Ambulance Service supra, 90-3
BCA at 115,180. See also Emerald Maintenance, Inc.,supra,
94-2 BCA at 133,970 (fact that actual experience varies
significantly from data furnished in a Government solicitation
does not, standing alone, create liability nor shift to the
Government the burden of proving the reasonableness of its
data); Gulf Construction Group, Inc., ENG BCA No. 5964, 94-1
BCA ¶ 26,524 (disparity with estimates alone do not show that
estimates are prepared without due care). What it does mean,
however, is that the magnitude of the forecasting error, when
considered in light of other factors, might be the final link
in a chain of evidence presented by the Appellant to show that
the Government's estimates were negligently prepared. See
Pruitt Energy Sources, Inc., supra, 95-2 BCA at 138,828
(citing Ambulance Service & Transport of Marlin, supra).
Compare Crown Laundry, supra (failure to verify estimates plus
45 percent shortfall was evidence of negligent preparation);
Pruitt Energy Sources, Inc., supra (estimates based on faulty
computation methods which resulted in an 84 percent shortfall
were negligent); Fa. Kammerdiener GmbH & Co., KG, supra
(Government negligence found in a failure to revise original
estimates in light of a "stop loss" order received before
award of the contract that changed vacancy dates of housing
units and led to a 90 percent shortfall); Ambulance Service &
Transport of Marlin, supra (shortfalls of 46 percent and 72
percent, respectively, on two contracts for transportation
services were the result of the Government's failure to
account for past shortfalls and future projections of
decreased hospital usage in preparing its estimates); and
Alert Care Ambulance Service supra (Government's estimates
were significantly overstated by 41 percent because it failed
to use historic data and relied on inaccurate estimates in
earlier contracts), with Medart, Inc. v. Austin, supra
(Government estimates based the previous year's demand for
metal storage cabinets were reasonable notwithstanding a
shortfall in actual orders of between 24 percent and 70
percent for the four types of cabinets covered by the
contract); Gulf Construction Group, Inc., supra (no showing
of basis for estimates so overrun of 115 percent not proof of
negligent preparation); Integrity Management International,
Inc., supra (using the historical workload under the
predecessor contract and adjusting for certain foreseeable
factors such as the level of troop strength, was a rational
approach for developing estimates for laundry services even
though there were shortfalls of 10.7 percent and 44.6 percent,
respectively, in actual work ordered under the two parts of
the contract); Datagraphics Press, Inc., supra (GPO estimates
based on the status of United States Postal Service postal
rate proceedings were not negligently prepared despite an 18
percent shortfall
in actual orders). Consequently, in a case like this the
spotlight is trained on how the Government arrived at the
estimates relied on by the bidding contractor, rather than on the
contractor's subsequent financial position stemming from the
failure of the actual level of work to represent some reasonable
relationship to the Government's projections.
In this case, the Appellant places the blame for the 138
percent discrepancy between the contract estimates for the
second production period and the number of actual orders
squarely on the shoulders of the Respondent and the PTO for
failing to take in to account the foreign opposition to the
CD-ROM plan when the estimates for Program D306-S were being
prepared. Partial Motion, at 18-20; Appellant's Reply, at
11-12. In so many words, the Contractor believes that the
scope of hostile opinion from the foreign community-66_
percent, and eventually 75 percent, of the countries slated to
the CD-ROM sets had expressed their disagreement with the new
electronic dissemination plan-was too large to be ignored,
should have alerted the Government to the possibility that the
CD-ROM program could change, thus affecting the workload in
the second production period. Partial Motion, at 21-23
(citing Jt. Stip., ¶¶ 19, 29-32, 44, 47-51; Saifer Deposition,
at 10, 114); Appellant's Reply, at 12-13. Since the reaction
of concerned foreign governments to the CD-ROM program was
known prior to award of the contract, and was information
which was relevant and reasonably available to GPO at the
time, the Appellant says that the Respondent's failure to
consider it amounts to lack of due care, and because the
erroneous estimates were the result of this negligence, it is
entitled to be reimbursed for the financial harm it suffered
by relying on them. Partial Motion, at 29, 32, 36;
Appellant's Reply, at 17.
In so arguing, the Appellant believes this case is "four
square" with the situation confronting the ASBCA in Contract
Management, Inc. See Appellant's Leave Request, at 3.
Contract Management, Inc., involved a "requirements" contract
for janitorial services at three Army posts in California-the
Presidio, Fort Baker, and Fort Mason. Although the workload
estimates in the solicitation were essentially the same as in
the prior custodial contract, which was fixed-price (the Army
switched to a "requirements" contract for administrative
reasons), before the new contract was awarded the Engineering
office, which oversaw the contract, projected a substantial
funding shortfall for janitorial services; i.e., there would
only enough funds to pay for three-quarters of the contract.
To compound the contract's anticipated financial difficulties,
prior to award of the contract Army headquarters advised the
Presidio commander that there would be a further twelve (12)
percent cut in funding for operations and maintenance, and the
local units be asked to absorb the increased costs. Army
headquarters recommended minimizing the "frequency of service
contracts such as custodial, refuse, entomology, etc." as a
way to reduce expenses. Also before the contract was awarded,
on the advise of the local budget committee, the Presidio
commander reduced the Engineering office's funding by
$690,000.00. Despite these "storm signals," the Government
did not revise its estimates to reflect this budgetary
information, and awarded the contract to Contract Management,
Inc. (CMI) with requirements figures still based on the prior
year's contract. Equally important, the Army never informed
CMI of any possible funding difficulties or discussed any
issue concerning the availability of funds with the
contractor; indeed, CMI was unaware of any funding problems
when the contract was signed. Seven (7) months into the
contract period, the Army issued a series of contract
modifications reducing the frequencies of scheduled cleaning
services and making numerous changes to the cleaning intervals
listed on the contract drawings, all of which the ASBCA found
to be caused by the budgetary problems foreseen by the
Engineering office and the funding cuts directed by Army
headquarters, both of which occurred prior to award. While
the ASBCA found no evidence of bad faith in this case, it
nonetheless held that the Government's negligent failure to
revise its contractual estimate of the amount of required
janitorial services to account for the projected funding
shortfall and budget reduction warranted an equitable
adjustment in favor of CMI because it was misled by the
estimate. . The ASBCA reasoned, in pertinent part:
As we stated in Crown Laundry & Dry Cleaners, Inc., ASBCA No.
28889, 85-2 BCA ¶ 18,003 at 90,259:
In a requirements contract providing estimates of future
quantities, the Government has a duty to consider all relevant
information in preparing estimates included in a solicitation.
Clearly the estimates here are not a guarantee, but absence of a
guarantee does not absolve the Government of liability for not
exercising due care when it ignores all relevant information.
Here, appellant relied upon the estimates provided by the
Government in preparing its bid as it was entitled to do. The
Government, however, did not amend the solicitation estimates
prior to contract award to reflect the November 1989 projection
that [the Engineering office] would experience a funding
shortfall for this contract in July 1990 and the $690,00
reduction to the [the Engineering office] budget in January 1990.
Thus, although highly relevant and the most current information
available, the Government's funding problems were not reflected
in the Government's estimates and were not otherwise made known
to appellant. We conclude that the Government did not exercise
due care when it ignored this funding information and failed to
amend or update its custodial services estimates. The Government
was negligent in preparing its estimates and misled appellant.
Womack v. United States, supra; Chemical Technology, Inc. v.
United States, supra.
* * * * * * * * * *
Instead, we perceive this case to be more like Maya Transit
Company, ASBCA No. 20186, 75-2 BCA ¶ 11,552, where the Government
canceled bus services it had contracted to purchase solely
because of budgetary limitations. There, as here, the
Government's needs did not change. We held that, having
contracted to purchase bus services in excess of its
capabilities, the Government could not eliminate needed bus
services by changing its budget priorities or redistributing its
own capabilities. 75-2 BCA at 55,125. Citing Womack, supra, we
further concluded that appellant did not assume the risk that the
Government would refuse to order needed bus services and that the
Government's internal "budgetary limitations" were not among the
risks that appellant agreed to assume under the contract. Id. at
55, 126.
See Contract Management, Inc.,supra, 95-2 BCA at 139,108-09.
On the surface, perhaps, Contract Management, Inc. shares some
factual features with this appeal. However, that case differs
from this matter in at least three important respects, so that
its usefulness here, beyond being a restatement of the Womack
principles, is somewhat limited. First, as a structural
matter, Contract Management, Inc. was not a summary judgment
proceeding, but rather was decided after a full hearing on the
merits. Indeed, the ASBCA had previously denied summary
judgment on CMI's claim because, inter alia, there were
genuine issues of material fact relating to whether the
contracting officer, confronted with funding difficulties,
acted in good faith in determining what the Government's
custodial requirements would be, as well as how to fulfill
them. See Contract Management, Inc., ASBCA No. 44885, 94-1
BCA ¶ 26,460, at 131,666. In that regard, the ASBCA ascribed
particular relevance to facts establishing what the Government
and CMI knew about the nature and extent of the funding
difficulties, both at the time the previous fixed-price
contract was restructured into a "requirements" contract and
when the contract was finally awarded, and what factors
influenced the contracting officer in his evaluation of
custodial needs, including the resources available, the
priorities and the most economical method of satisfying
conflicting needs. Id. c.f. Phillips National, Inc., ASBCA
Nos. 41654, 42764, 93-1 BCA ¶ 25,271 (no summary judgment on
issue of negligent preparation of estimates).56
The Board has searched the record for evidence of the
mechanics used to arrive at the disputed estimates in this
case, and the only thing it could find was the following
exchange in Bawcombe's deposition:
Q. [Mr. Lieberman] Did your office have some kind of procedure
for agreeing with the solicitation, saying that's acceptable to
the patent office?
A. [Mr. Bawcombe] We have a-the staff works directly with the
contracting officer and the contracting specialist at GPO.
Whenever a solicitation goes out, it's basically an agreement
between those two staffs.
Q. Is it fair to say that any time a D306-S patent printing
solicitation goes out, it's closely coordinated between your
office and the GPO?
A. Yes.57
Q. Is it also fair to say that your office would carefully
examine any estimates of requirements contained in such a
solicitation?
A. Yes.
Q. Have there ever been instances in which your office has either
objected to the requirements or requested that a change be made
in the requirements for D306-S?
[Objection omitted.]
A. There have been times when we requested changes, yes.
Q. Has the GPO made the changes you requested?
[Objection omitted.]
A. Yes.
Q. Is it also fair to say that whenever there are disagreements
between the two staffs, GPO and PTO, they're resolved to the
satisfaction of both organizations?
[Objection omitted.]
A. Usually.
Q. Well, who has the final say on what's in the solicitation?
The PTO or the GPO?
A. The GPO.
Q. Is that true with respect to the requirements that are
contained in the solicitation?
A. I'm sorry[.] What is true?
Q. What I'm asking is this. Here's a hypothetical. The patent
office says, we anticipate, because of a change in something,
that we're only going to need X copies of patents for the next 12
months, and GPO looks at that and says, "No. We think we'll need
1.5 times X, 50 percent more." Who would have the final say over
what goes into the solicitation" GPO or PTO?
A. It is GPO's contract, they would have the final say.
Q. Have you ever experienced a situation-how long have you been
involved in the printing of patents?
A. 22 years.
Q. And that whole time have you been involved in relationships
with the GPO printing on behalf of the PTO?
A. Through-I've been director for five and a half years, so
obviously-I was deputy director for 11 years prior to that, so,
yes, for the majority of that time.
Q. Is it a fair statement or isn't it a fair statement that if
the patent office identifies certain requirements, that GPO will
funnel those particular requirements into any solicitation?
[Objection omitted.]
A. It is a fair statement to say that they-yes. We have had some
difference of opinions, but it doesn't deal with volumes or
anything like that.
Q. So normally, the printing office accepts the patent office
estimates of what's necessary?
A. Yes. They question them sometimes, but then we sit down and
we explain them.
Q. So in your experience, they've either accepted them or, based
on an explanation, they've accepted them?
A. That's correct.
See Bawcombe Deposition, at 34-38.58
In the Board's view, this colloquy is not enough to warrant
the conclusion that there are no genuine issues of material
fact relating to what steps Contracting Officer Weiss took, in
this particular procurement, in formulating the estimates
which are now alleged to have been negligently prepared.
Nothing in the above exchange, or elsewhere in the record,
tells us about the nature and extent of the communications
between GPO and the PTO concerning the disputed solicitation,
explains the basis for the estimates (although a logical
place to start would have been the historical data on Program
D306-S in the hands of the customer-agency and/or GPO),
describes how the Government calculated the volume reduction
in paper sets because of the substitution of CD-ROM patents,
or otherwise casts a light on the rationality of the procedure
used to develop the estimates. Perhaps the most glaring
omission in the record on this issue is the absence of a
deposition from the Contracting Officer-the person with actual
contracting authority. The likelihood is that the pattern of
consultations described by Bawcombe was also followed in this
case, but summary judgment proceedings are no place for
guesses, and moreover, the Board has routinely declined to
substitute its assumptions for the hard evidence the parties
are required to introduce. See Univex International, supra,
at 35; Sterling Printing, Inc., supra, slip op. at 82.
Accordingly, summary judgment would be inappropriate here on
that basis alone.
Secondly, the issue in Contract Management, Inc. concerned a
reduction in the amount of estimated work for reasons outside
the scope of the contract, namely a lack of funds, while this
is dispute involves the financial impact on a contractor when
a specification in the solicitation itself fails. That is,
Contract Management, Inc. involved a situation where the Army
activity, an appropriated fund organization, knew before it
awarded the contract precisely how much money it would have to
spend for custodial services, and that if services were
provided at the level anticipated in the contract a funding
shortfall was certain, but nonetheless proceeded to award the
contract without revising its estimates. See Contract
Management, Inc., supra, 95-2 BCA at 139,105. Indeed, the
record showed that before the contract was awarded the
contract administrators discussed the need for reductions in
janitorial activity in light of the projected budget shortfall
and Army headquarters' announcement of further funding cuts;
i.e., before the contract was awarded, its administrators
recognized that the estimates were "out of kilter" with the
actual facts regarding the contract funding level, and
positively knew that they had a problem because not enough
money was available in the budget to completely pay for the
services identified as required in the contract. Id.
Assuring adequate funding is fundamental to every Government
contract; in fact, under the Anti-Deficiency Act, 31 U.S.C. §
1341, unless otherwise authorized by law, no contracting
officer or Federal employee may create or authorize an
obligation in excess of the funds available or in advance of
appropriations. See FAR § 32.702; PPR, Chap. VIII, Sec. 4, ¶
1. In most cases, and Contract Management, Inc. is no
exception, an appropriated fund activity knows its budget
before, or shortly after the start of the fiscal year, and it
is gross neglect not to factor that data into contract
estimates, indeed, an activity cannot make contracting plans
without such information, as the ASBCA so found. See Contract
Management, Inc., supra, 95-2 BCA at 139,108.
Here, by contrast, the postponement of the CD-ROM program,
which resulted in greater production of paper sets of patents
in the second period than accounted for in the Appellant's
bid, had nothing to do with the lack of funds, but rather was
a management decision made on the basis of external factors,
namely, adverse reaction to the idea by foreign customers.
Consequently, the Appellant's argument essentially comes down
to a claim that somehow the Government breached an implied
warranty of specifications in the disputed contract, namely
that the CD-ROM program would be used to supply a certain
number of patents and the requirements for paper sets would be
reduced accordingly. Assuming arguendo, that "implied
warranty" has any viability in the context of this appeal, the
Board would first have to decide what the affect the CD-ROM
specification had on the Contractor's own ability to perform.
See Professional Printing of Kansas, Inc., supra, slip op. at
55-56 (citing Hol-Gar Manufacturing Corp. v. United States,
175 Ct. Cl. 518, 360 F.2d 634 (1966); D.E.W., Incorporated,
ASBCA No. 358, 94-3 BCA ¶ 27,182 (and cases cited therein);
Santa Fe Engineers, Inc., ASBCA No. 45228, 93 BCA ¶ 25,555);
Colorgraphics Corp., GPO BCA 16-87 (March 31, 1989), slip op.
at 22, 1989 WL 384970 (citing Consolidated Diesel Electric
Corp, ASBCA No. 10496, 67-2 BCA ¶ 6669). The first step in
such an analysis, and indeed the key to it, would be to
decide, in the context of the contract, whether the CD-ROM
plan was a "design" specification or a "performance" one,
since the law makes a clear distinction between them with
respect to the rights and obligations of the parties to a
Government contract. Professional Printing of Kansas, Inc.,
supra, slip op. at 56 (citing Aleutian Constructors v. United
States, 24 Cl. Ct. 372 (1992)); Colorgraphics Corp., supra,
slip op. at 23 (citing Monitor Plastics Co., ASBCA No. 14447,
72-2 ¶ 9,626). See also Big Chief Drilling Co. v. United
States, 26 Cl. Ct. 1276 (1992); Geo-Con, Inc., ENG BCA Nos.
5749, 5976, 94-1 BCA ¶ 26,359; Southwest Marine, Inc., DOTBCA
No. 1661, 93-3 BCA ¶ 16,168. The simple matter is that there
is no evidence whatsoever in this record concerning the
nature, type and scope of the CD-ROM specification. Therefore,
even if the Board thought that the implied warranty theory had
some place in this case, and it does not, it would also have
to say that there are genuine material issues of fact
remaining to be decided, and thus summary judgment would be
inappropriate. See Boar Contractors, Inc., ASBCA Nos. 38857,
39731, 92-1 BCA ¶ 24,691 (no summary judgment on claim of
defective "density"specification); DataStat Corp., NASA BCA
No. 881-11, 83-2 BCA ¶ 16,879 (no summary judgment on claim of
defective specifications in Government's "technical data
package"). Cf. Jacksonville Shipyards, Inc., ASBCA No. 32300,
86-3 BCA ¶ 19,147 (summary judgment allowed where painting
contractor correctly used the paint system specified in the
contract and the paint system failed).
Finally, the third difference between the situation in
Contract Management, Inc. and this appeal, and perhaps the
most crucial one, is the fact that notwithstanding that
various offices within the chain-of-command may have had a
role to play in contracting for janitorial services, the ASBCA
was only dealing with a single contracting entity-the case
involved an Army contract, pure and simple-while here we must
sort out the contracting relationship of two Government
agencies, GPO and the PTO. And so, we reach the nub of the
problem regarding the Appellant's claim that the Government's
estimates for the Program D306-S contract were negligently
prepared, namely the issue of "imputed knowledge."
GPO, not the PTO, is the Appellant's contracting partner in
this case. Therefore, in order to succeed on its "negligent
estimates" claim, the Contractor has to show that the Program
D306-S estimates were unrealistic because GPO's Contracting
Officer, Weiss, did not consider the most current information
reasonably available to him before the contract was awarded.
See e.g., Crown Laundry, supra; Medart, Inc. v. Austin, supra;
Contract Management, Inc., supra; Ambulance Service &
Transport of Marlin, supra; Fa. Kammerdiener GmbH & Co., KG,
supra. Assuming arguendo, that the foreign patent office
complaints about the CD-ROM program would have been relevant
in the construction of the contract estimates for the second
production period, then the Appellant must prove that the
Contracting Officer knew about those criticisms and ignored
them in developing the estimates, or otherwise failed to
revise his figures in light of that information. Since the
parties agree that the Respondent did not learn of the foreign
opposition to the CD-ROM policy, or the possibility of a
change to it, until July 7, 1994-nearly two (2) months after
the contract was awarded-when the OPP informed GPO
(erroneously as it turned out) that the distribution of
patents on CD-ROMs had been rescinded (postponement of the
program was only under consideration at the time)-it would
seem that the Contractor has "proved itself out of court."
(Jt. Stip., ¶¶ 55-58; Material Facts, p. 6, fn. 7, ¶¶ 15-16;
R4 File, Tabs E and F). However, the Appellant asks the Board
to impute the knowledge acquired by the OSIR's International
Liaison Staff in the months of April and May 1994, before the
contract was awarded, that key foreign patent offices-Germany,
Great Britain, the Russian Federation, Switzerland, and
Sweden-were unhappy with the CD-ROM patent substitution plan
and that there was a chance it would change, even though it is
apparent that the International Liaison staff did not inform
the OPP of these foreign complaints, and as a consequence, GPO
was also unaware of them (Jt. Stip., ¶¶ 17-19, 29-32, 44-46,
47-50; Material Facts, ¶ 10).59 In short, the Contractor
argues that the adverse information gathered from foreign
patent offices, both orally and in writing, by the OSIR's
International Liaison office before May 20, 1994, should be
considered "reasonably available" to the Contracting Officer
for the purposes of the "Womack" standards. The Board
disagrees.
Imputing the knowledge or conduct of one Federal agency to
another one is not automatic. See Cryo-Sonics, Inc., ASBCA
No. 11483, 66-2 BCA ¶ 5,890, at 27,331. Indeed, there are
relatively few cases on the books involving imputed knowledge
or conduct, and the Board's research has disclosed none
precisely like this one. Where it is applied, the usual rule
is that imputation is appropriate if there is a "significant
bond" between the two agencies and their projects. See Weaver
Construction Co., supra, 91-2 BCA at 119,184 (Forest
Service's tortious interference with contract work performed
in a national forest which it supervised and regulated and
which caused a delay was imputed to the contracting agency,
Federal Highway Administration, because there was "a
significant bond" between the two agencies; i.e., coordination
between them concerning the contract was undoubtedly
essential. Citing Lewis-Nicholson, Inc. v. United States, 213
Ct. Cl. 192 (1977); L.W. Foster Sportswear Co. v. United
States, supra; J.A. Jones Construction Co. v. United States,
supra). But cf. Hawaiian Dredging & Construction Co., ASBCA
No. 25594, 84-2 BCA ¶ 17,290 (Board refused to impute
knowledge of the plans of the Department of Labor and the
Immigration and Naturalization Service to change the
regulations covering the use of alien workers on Guam to the
procuring agency, the Navy, which was as unaware of Labor's
plans as the contractor); Unitec, Inc., ASBCA No. 22025, 79-2
BCA ¶ 13,923 (Board refused to impute knowledge of Corps of
Engineers personnel to Army's Fort Stewart personnel because
there was no "meaningful connection."). Similarly, the rule
may be applied to impute the knowledge of one organization
within an agency to another. See Cryo-Sonics, Inc., supra,
66-2 BCA at 27,331-32 (knowledge of engineer in the Air Force
command that did the developmental work on a project was
charged to the Air Force command which negotiated and
administered the contract since the engineer's report was
referenced by the contractor's proposal). However, the Board
has been unable to find any case which, in effect, combines
the principles expressed in Weaver Construction Co. and Cryo-
Sonics, Inc.; i.e., one where a contracting agency with "a
significant bond" to another agency has been charged with
knowledge possessed by an organization within the latter
agency with which has no connection whatsoever.
Specifically, we can probably say that there is clearly "a
significant bond" or "meaningful relationship" between the PTO
and GPO in this situation, and it might be one thing if the
OPP had been made aware of the foreign complaints to the CD-
ROM program by the OSIR's International Liaison Staff, and
neglected to inform GPO. It is something else again to either
engage in "double imputation"-credit the OPP with the
information possessed by the OSIR and then by some process of
osmosis transfer it to the Respondent-or to "leap frog" over
the OPP altogether and impute the International Liaison
Staff's knowledge directly to GPO. Thus, the question is how
far into the PTO does the Board pursue "imputed knowledge"
before the theory loses force and becomes a farce?60
On careful consideration, the Board has concluded that in this
case applying the "imputed knowledge" theory would be
inappropriate. Accepted legal fictions such as "imputed
knowledge" have their purposes, see New South Press & Assoc.,
Inc., supra, slip op. at 39 (conventional wisdom that a fixed-
price contract terminated for convenience is converted into a
cost reimbursement contract is an accepted legal fiction and
not completely true. Citing Graphic Litho Co., Inc., GPO BCA
17-85 (February 23, 1988), slip op. at 9-10, 1988 WL 363327,
reconsid. denied, September 30, 1988), but they should not be
allowed to overcome clear, unmistakable and uncontroverted
facts. It has been said:
. . . [T]here is an implied duty upon all parties to "lay their
cards on the table" in the negotiation or bidding process, viz.,
a duty of communication, which, when complied with, would have a
salutary effect on the entire procurement from its inception.
See Automated Services, Inc., GSBCA Nos. EEOC-2, EEOC-3, 81-2 BCA
¶ 15,303, at 5,766. The record supports the view that, in fact,
the key offices in both the PTO and GPO responsible for dealing
with the disputed contract were true to this duty, but that an
important "user" activity within the PTO was not; i.e., instead
of "laying their cards on the table," the OSIR's International
Liaison Staff was "holding their cards close to the vest." In
this case, the record confirms that the OSIR's International
Liaison Staff was, in conjunction with the OEDPS, was
instrumental in moving the PTO toward the CD-ROM substitution
policy. See Saifer Deposition, at 22-24, 33-40. Therefore,
perhaps the OSIR had an obligation to tell the OPP (since it did
not talk directly to GPO) that 9 of 12 foreign governments slated
to receive patents in CD-ROM form were opposed to the idea and
leave it up to the OPP to convey that information to the
Respondent, but it did not, and those are the facts. Because the
OPP, as GPO's official contact point in the PTO, was unaware of
the foreign complaints, to claim that OSIR's knowledge should now
be imputed to the Respondent would be tantamount to establishing
the OSIR as a second contact point in the customer agency-a
management decision by which the Board would, in effect, be
usurping powers of the Commissioner of Patents and Trademark.
Overall, the Board believes that the situation in this case has
more in common with Hawaiian Dredging & Construction Co., supra,
than with Weaver Construction Co., supra, and that the "imputed
knowledge" theory is of dubious value where, as here, key
organizational elements to the contractual relationship are
completely "in the dark" about any potential problems with
respect to the solicitation and have no reason to inquire.
More importantly, using "imputed knowledge" as the basis for
finding the Contracting Officer negligent in his preparation
of the estimates for Program D306-S would violate one of the
principal teachings of Womack, namely, that the exercise of
due care is not synonymous with clairvoyancy. See Womack,
supra, 389 F.2d at 801. Obviously, the rules should protect
against careless guesswork by the Government as to its
requirements in formulating its estimates, see Medart v.
Austin, 967 F.2d at 581, but unlike the situation in Crown
Laundry, supra, where the contracting officer proceeded with
the solicitation and award without verifying the estimates of
the user activities, even though he thought they were
"exaggerated," there is nothing in this record about the
numbers given to him by the PTO for the solicitation, and on
which the contract awarded was based, which would have raised
a "red flag" in the Contracting Officer's mind or led him to
suspect that the estimates might be seriously flawed, see
Crown Laundry, supra, 29 Fed. Cl. at 523. Moreover, the
record is devoid of any evidence which would allow the Board
to find that during the relevant period during which Program
D306-S was solicited and awarded, the second period production
estimates were grossly erroneous or negligently prepared. In
that regard, the Appellant's reliance on the complaints of
foreign patent offices might lend some heft to its argument if
key PTO personnel knew, before the contract was awarded, that
the CD-ROM program would be canceled, and the Government
plunged ahead despite that fact. However, the parties have
stipulated that just the opposite is true. Thus, the Board is
told that one of the options in Lawson's memorandum of July
15, 1994, requesting review of the CD-ROM policy, was the
suggestion that it be left alone and implemented according to
plan. Jt. Stip., ¶ 60. See also Saifer Deposition, at
128-31. The PTO's decision to suspend the CD-ROM
dissemination program was made months after the contract was
awarded, and until then there was always the possibility that
the discussions within the PTO concerning foreign opposition
to the CD-ROM idea would have had no affect on the contract.
Jt. Stip., ¶¶ 61-62. Saifer Deposition, at 128-30.
Therefore, as far as GPO knew, on the date it awarded the
contract to the Appellant, the CD-ROM substitution program was
"alive and well," and an integral part of the PTO's scheme for
distributing United States patents to its foreign exchange
partners.61
But says, the Contractor, even though the formal decision to
drop the CD-ROM program for a year was made after it received
the contract, the principal management officials within the
PTO, and hence by imputation, GPO, should have known that a
change in policy was likely, and perhaps imminent. However,
until the Commissioner of Patents and Trademarks made the
actual decision to postpone the CD-ROM policy on September 7,
1994, what anyone else might have "known" would have been
nothing more than an "educated guess," at best, or "mere
speculation," at worst. Therefore, even assuming that the
Contracting Officer was aware of the adverse reaction of most
of the foreign government involved in the CD-ROM plan to that
idea and knew that PTO management was considering what to do
about the complaints, for Weiss to have based his contract
actions between April 11, 1994, the date of the solicitation,
and May 20, 1994, the date of award, on his own belief about
the ultimate outcome of the PTO's discussions, would have been
an attempt at clairvoyancy. GPO Contracting Officers have
many important responsibilities, but trying to predict the
future management actions of another agency with respect to
its contracts is not one of them, and it would be foolish for
them to try to do so. The Womack court would not impose a
requirement on contracting officers to be clairvoyant.
Neither will the Board.
Summary judgment is appropriate under Rule 56 only if the
evidence warrants the conclusion that there are no genuine
issues of material fact involved in the case. On this record,
including the stipulations of the parties, the Board cannot
say conclusively that the Government's estimates for Program
D306-S in the April Solicitation were negligently prepared.
B. Although the Board has jurisdiction to consider the
Appellant's claim for recovery on the basis of a "mutual mistake
of fact" when the contract was formed, the Government's estimates
for Program D306-S is not the sort of error contemplated by law
as warranting reformation of the contract.
The second "formation" issue involves the Appellant's attempt
to recover based on the principles of National Presto
Industries, by requesting reformation of the contract on the
ground that the parties made a "mutual mistake" of fact
regarding the estimated quantity of work. Partial Motion, at
32. Briefly, the four elements of National Presto Industries
are: (1) at the time of contract formation both the contractor
and the Government make a mistake as to (2) a "basic
assumption" on which the contract was based, which had (3) a
"material effect" upon performance, (4) provided that the
party seeking reformation did not assume the risk of that
mistake. See generally, Cibinic & Nash, Administration, at
322 (citing Restatement, Second, Contracts § 152. The
Respondent contends that National Presto Industries has no
bearing on this case. Points and Authorities, at 15-20. The
Government is correct. However, before addressing the merits
of the Contractor's allegations, the Board needs to take a
moment, as did with the "negligent estimates" question, and
clarify the scope of its jurisdiction with respect to "mutual
mistakes."
Admittedly, the Board's files may not contain copies of all of
GPO's contract appeals decisions prior to 1984. However, its
research of the 22 years worth of decisions it does have
discloses that all of the "mistake" cases considered by this
forum and the previous ad hoc panels, with one exception,
concerned unilateral mistakes in bid discovered after award.
See e.g., Web Business Forms, GPO BCA 16-89 (September 30,
1994), 1994 WL 837423; Taggart Printing Co., GPO BCA 11-85
(January 20, 1987), 1987 WL 228967; Peake Printing, Inc.,
supra; Great Lakes Lithograph Co., GPO BCA 18-84 (May 22,
1985), 1985 WL 154849; Citiplate, Inc., GPOCAB 4-84 (May 4,
1984), 1984 WL 148104. Only in McDonald & Eudy Printers,
Inc., supra did the Board discuss the theory of "mutual
mistake," and then simply as commentary in the context of that
decision. McDonald & Eudy Printers, Inc., involved a
contractor's equitable adjustment claim under a "requirements"
contract to cover the surplus paper it had purchased to meet
the Government's needs, but which went unused when less orders
were placed than estimated. Since there was no proof that the
estimates had been negligently prepared, the Board denied the
claim because the "Requirements" clause clearly states that
the Government's failure to order the estimated requirements
does not constitute the basis for an equitable adjustment.
See McDonald & Eudy Printers, Inc., supra, slip op. at 17-18
(citing Command Tech Corp., supra; University of Iowa, ASBCA
No. 14581, 70-1 BCA ¶ 8,218). Observing, that the excess
paper resulted from the contractor's erroneous business
judgment, which is not a ground for relief, id., slip at 19-20
(citing Hurt's Printing Co., Inc., GPO BCA 27-92 (January 21,
1994, 1994 WL 275098; Aydin Corp. v. United States, 229 Ct.
Cl. 309, 669 F.2d 681 (1982); American Ship Building Co. v.
United States, 228 Ct. Cl. 220, 654 F.2d 75 (1981); National
Refrigerants, Inc., GSBCA No. 7544, 85-2 BCA ¶ 17,996; Cibinic
& Nash, Formation), the Board compared the contractor's
position with the one rejected by the board in University of
Iowa, where the ASBCA said the contractor's belief that the
Government's estimated requirements were "relatively firm,"
amounted to:
[At most] . . . show a mutual mistake as to [those] requirements.
Relief for mutual mistake requires reformation of the contract.
This is a matter for the General Accounting Office or the courts.
It is beyond our authority to grant.
University of Iowa, supra, 70-1 BCA ¶ 8,218, at 38,214. [Emphasis
added.] Although it was dicta, the Board's reference to
University of Iowa was its way of reminding the parties that it
is a forum of limited jurisdiction, for the reasons stated
previously in this opinion, and that it functions essentially as
a pre-CDA board of contract appeals whose remedial powers are
tied to the clauses in the contract.62 See Swanson I, supra,
slip op. at 28; The Wessel Co., Inc.,supra, slip op. at 34. See
also H.L. Eikenberg Co., supra, slip op. at 35, fn. 21. Accord
AJN Reporters, GSBCA No. 5022, 78-2 BCA ¶ 13,298 (no equitable
authority to revise the terms of the contract); RIHA Construction
Co., ASBCA No. 21441, 77-1 BCA ¶ 12,324 (no authority to grant
reformation or remedy a mistake in bid without a relief provision
in the contract); American Standard, Inc., NASA BCA No. 771-14,
73-1 BCA ¶ 9,899 (no authority to reform the contract); Taiei
Co., Inc., ASBCA No. 17123, 72-2 BCA ¶ 9,738 (no jurisdiction to
consider a mutual mistake claim); Horton & Converse, VACAB No.
519, 65-2 BCA ¶ 4,995 (authority of the head of an agency to
reform contracts in limited situations not delegated to the
board).
Having said that, however, this does not mean that the Board's
remedial arsenal is without any equitable ammunition
whatsoever. For example, there is no doubt that the Board can
reform a contract to remedy a post-award discovery of a
unilateral mistake in bid. The sources of that remedial
authority are the phrase "related to the contract" in the GPO
"Disputes" clause, and the agency's printing procurement
regulations. GPO Contract Terms, Contract Clauses, ¶ 5(a)
(Disputes); PPR, Chap. XI, Sec. 6, ¶ 4. See Web Business
Forms, Inc., supra, slip op. at 27; Peake Printing, Inc.,
supra, slip op. at 6; Great Lakes Lithograph Co., supra, slip
op. at 18. See also, Foss, The First Decade, at 587, fn. 41.
Indeed, the PPR expressly provides, in pertinent part, that
where such a mistake claim is made, the Contracting Officer
may rescind or reform the contract:
(i) by deleting the item or items involved in the mistake; or
(ii) by increasing the price of the contract, as corrected, does
not exceed that of the next lowest acceptable bid under the
original invitation for bids.
c. Determinations under subparagraph 6.4b may be made only on the
basis of clear and convincing evidence that a mistake in bid was
made, and either that the mistake was mutual or that the
unilateral mistake made by the contractor was so apparent as to
have charged the Contracting Officer with notice of probability
of mistake. If the evidence does not warrant a determination
under subparagraph 6.4(b)(i) or (ii), a determination may be made
that no change shall be made in the contract as awarded.
See PPR, Chap. XI, Sec. 6, ¶¶ 4(b),(c). [Emphasis added.] Except
for some minor variations in language and structure, the above
quoted paragraphs of the PPR are identical to the provisions of
FAR § 14.406-4 (Mistakes after award). In that respect, both
regulations basically repeat the general rule of Government
contracts law which holds that a contractor who is awarded a
contract on the basis of a mistaken bid will be bound by its
erroneous offer if the mistake was neither induced nor shared by
the Government, unless the contracting officer knew or should
have known of the existence of the mistake at the time the bid
was accepted. See Web Business Forms, Inc., supra, slip op. at
28; Great Lakes Lithograph Co., supra, slip op. at 20-21 (citing,
Doke, Mistakes in Government Contracts-Error Detection Duty of
Contracting Officers, 18 S.W.L.J. 1 (1964)). The Board has
indicated on numerous occasions that where GPO adopts the
regulatory language of other agencies as its own then under
settled rules of construction the Board must presume that the
uniform interpretation given to those words has also been
accepted. See Web Business Forms, Inc., supra, slip op. at 29
(rules on post-award discovery of mistakes in bid); McDonald &
Eudy Printers, Inc., supra, slip op. at 11-12 ("Requirements"
clause); Shepard Printing, supra, slip op. at 21-22
("Requirements" clause); Banta Co., supra, slip. op. at 34
("Changes" clause). Furthermore, the purpose and scope of the
Board's authority was explained in Great Lakes Lithograph Co.,
supra, its leading case on the question of post-award discovery
of a mistake in bid, where it adopted the teachings of the Court
of Claims in Ruggiero v. United States, 190 Ct. Cl. 327, 420 F.2d
709, 715-16 (1970), when the Court stated in pertinent part:
. . . As we pointed out in [Charnick] v. United States, 372 F.2d
492, 178 Ct. Cl. 498 (1967), what we are really concerned with is
the overreaching of a contractor by a contracting officer when
the latter has the knowledge, actual or imputed as something he
ought to know, that the bid is based on or embodies a disastrous
mistake and accepts the bid in face of that knowledge. The
corrections of the mistake, perhaps in the teeth of general
conditions or specifications, by rescission or reformation,
represents an application of equitable principles in a legal
action. The mistake, to invoke such principles, must be, as in
the cases cited, a clear cut clerical or arithmetical error, or
misreading of specifications, and the authorities cited do not
extend to mistakes of judgment. . . . [A]n agreement cannot be
revised to reflect a plaintiff's subjective understanding the
defendant does not and should not know of. Benjamin v. United
States, 348 F.2d 502, 172 Ct. Cl. 118 (1965). See Great Lakes
Lithograph Co., supra, slip op. at 25-26. The Board subsequently
amplified these views in Taggart Printing Corp. when it stated,
in pertinent part:
Recently in Valley Forms, Inc., . . .and again in Peake Printers,
Inc., . . . , we cited Manistique Tool and Manufacturing Company,
ASBCA No. 29164, Aug. 13, 1984, 84-2 BCA [¶ 17,599], wherein at
page 87,677 it said:
As a general rule, neither a Board of Contract Appeals or the
Claims Court is authorized to relieve a bidder from its
obligations under a contract unless it is subject to invalidation
on recognized legal grounds, such as mutual mistake, or a mistake
of which the contracting officer was on notice or should have
been on notice. [Citations omitted.] Moreover, before relief by
reformation or rescission is available to relieve a contractor of
the effect of its mistake, the mistake must be a "clear cut
clerical or arithmetical error, or misreading of the
specifications" and such relief does not extend to mistakes of
judgment. [Citations omitted.]
See Taggart Printing Corp.,supra, slip op. at 7. [Emphasis
added.] See also Valley Forms, supra, slip op. at 11; Peake
Printers, Inc., supra, slip op. at 7-8. Thus, the Board's
authority to decide "mutual mistake" claims is clear, and, in the
final analysis, it will apply precisely the same rules as its
Executive Branch counterparts. See Web Business Forms, Inc.,
supra, slip op. at 33. See also e.g., Liebherr Crane Corp. v.
United States, 810 F.2d 1153 (Fed. Cir. 1987); Bromley
Contracting Co., Inc. v. United States, 794 F.2d 669 (Fed. Cir.
1986);United States v. Hamilton Enterprises, Inc.,711 F.2d 1038
(Fed. Cir. 1983); Aydin Corp. v. United States, 669 F.2d 681 (Ct.
Cl. 1982); Wender Presses, Inc. v. United States, 170 Ct. Cl.
483, 343 F.2d 961 (1965); Packard Construction Co., ASBCA No.
45996, 94-1 BCA ¶ 26,512; Construction Administrative Services,
Inc., ENG BCA No. 6033, 93-3 BCA ¶ 26,091; Outside Plant
Engineering & Construction Company, Inc., NASA BCA No. 58-1191,
93-1 BCA ¶ 25,489); Baltazar Torres, GSBCA No. 11472, 92-3 BCA ¶
25,178, at 125,469.
As indicated above, this dispute marks the first "pure mutual
mistake" claim in its annals. However, ample guidance is
provided by the precedent of Executive Branch boards to enable
the Board to resolve the issue. First, it is generally
recognized that reformation is an extraordinary remedy and is
not available to rewrite a contract to cover unforeseen
contingencies. See Jeppsen Sanderson, Inc. v. United States,
14 Cl. Ct. 624, 628 (1988) (citing American Employers
Insurance Co. v. United States, 812 F.2d 700, 705 (Fed. Cir.
1987). Indeed, in the courts generally "have been wary in
granting relief from innocent mutual mistakes imbedded in, or
underlying, consummated contracts." See Edwards v. United
States, 19 Cl. Ct. 663, 674 (1990) (quoting National Presto
Industries, supra, 167 Ct. Cl. at 761, 338 F.2d at 106-07).
Because reformation is an extraordinary remedy:
. . . . Its purpose is not to make a new agreement between the
parties, but to establish the true existing one. To justify
reformation, the mistake must have been mutual and must have been
made in reducing to writing the contract upon which the parties
agreed, not in making the agreement itself. Even a clear showing
that the parties would have made a different agreement if they
had been aware of the actual facts will not justify reformation.
See Edward Hines Lumber Co., B- 186775, 76-2 CPD ¶ 322, citing 39
Comp. Gen. 660, 664 (1960) and 1548 Williston on Contracts (Rev.
Ed.).
See LDG Timber Enterprises Incorporated, AGBCA No. 89-126-1, 92-3
BCA ¶ 25,070, at 124,945 (quoting Pacific Coast Molybdenum Co.,
ASBCA No. 84-161-1, 89-2 BCA ¶ 21,755). [Emphasis added.] See
also Atlas Corp. v. United States, 895 F.2d 745, 750 (Fed. Cir.
1990), cert. denied, 498 U.S. 811 (1990) (". . . the court may
reform the contract to bring the parties' agreement in accord
with the true state of facts."). Second, contract reformation is
only appropriate when it can be shown by clear and convincing
evidence that the parties intended to be bound by the terms of
the agreement as reformed. See Roseburg Lumber Co. v. United
States, 978 F.2d 660, 668-69 (Fed. Cir. 1992) (citing Edwards v.
United States, supra, 19 Cl. Ct. at 674); Jeppsen Sanderson, Inc.
v. United States, supra, 14 Cl. Ct. at 628 (citing Bromion, Inc.
v. United States, 411 F.2d 1020, 1022-23, 188 Ct. Cl. 31, 36
(1969); LDG Timber Enterprises Incorporated, supra, 92-3 BCA ¶
25,070, at 124,945 (citing Pacific Coast Molybdenum Co., supra).
See also Olson Plumbing & Heating Co. v. United States, 221 Ct.
Cl. 197, 602 F.2d 950 (1979); McNamara Construction Litd. of
Manitoba v. United States, 206 Ct. Cl. 1, 509 F.2d 1166, 1170
(1975); Flippin Materials Co. v. United States, 160 Ct. Cl.
357, 312 F.2d 408 (1963). Finally, reformation of a contract
requires that a contract appeals board find the existence of a
qualifying "mistake." See Web Business Forms, Inc., supra, slip
op. at 26, fn. 27 (citing Atlas Corp. et al. v. United States, 15
Cl. Ct. 681 (1988); Johns-Manville Corp. v. United States, 12 Cl.
Ct. 1 (1987); Olson Plumbing and Heating Co. v. United States,
supra; ITT Arctic Services, Inc. v. United States, 207 Ct. Cl.
533, 513 F.2d 588 (1975); Foster Wheeler Corp. v. United States,
206 Ct. Cl. 533, 513 F.2d 588 (1975); EDC/MTI Joint Venture, ENG
BCA No. 5631, 90-2 BCA ¶ 22,669). In that regard, the accepted
definition of the term "mistake" for the purposes of the rule is
as follows:
A mistake of fact supporting reformation does not arise based on
the inability to predict the future as distinguished from a bona
fide mistake regarding the existing facts on which a bargain is
based.
Hilton Construction Co., Ltd. [DOT CAB No. 1035, 80-1 BCA ¶
14,318]. In this regard, a mistake is a belief not in accord
with existing facts. Martin-Copeland Co., ASBCA No. 26551, 83-2
BCA ¶ 16,752. Thus,
[T]he word 'mistake' is not used here, as it is sometimes used in
common speech, to refer to an improvident act, including the
making of a contract, that is the result of such an erroneous
belief . . . Furthermore, the erroneous belief must relate to the
facts as they exist at the time of the making of the contract. A
party's prediction or judgment as to events to occur in the
future, even if erroneous, is not a 'mistake' as that word is
defined here.
Martin-Copeland Co., supra, quoting Restatement of the Law,
Contracts, 2d, Section 151, Comment a. See Hilton Construction
Co., Ltd., supra. . . .
See Southern Dredging Company, Inc., ENG BCA No. 5843, 92-2 BCA ¶
24,886, at 124,117. [Emphasis added.] In so many words, a
"mutual mistake" justifying reformation is essentially a genuine
misconception shared by the parties at the time a contract is
formed about a basic assumption of the agreement, which is
erroneous at the time they enter the contract, and not one which
subsequently turns out to be wrong. See e.g., Management &
Training Corp. v. General Services Administration, GSBCA Nos.
11182, 11297, 11673, 11698, 93-2 BCA ¶ 25,814 (mutual mistake
about the costs of providing chilled water and steam to the
buildings under the contracts); Air Compressor Products, Inc.,
ASBCA No. 40015, 91-2 BCA ¶ 23,957 (mutual mistake about the
nature of the product); Active Fire Sprinkler Corp., GSBCA No.
5461, 85-1 BCA ¶ 17,868 (mutual mistake regarding EPA asbestos
rules which made work processes more costly). On the other hand,
a shared belief, prediction, or judgment concerning future events
does not meet the "mutual mistake" test because it does not
relate to facts existing at the time the contract is formed and
on which the parties base their bargain. See e.g., Dairyland
Power Cooperative v. United States, 16 F.3d 1197 (Fed. Cir. 1994)
(purchaser of nuclear power plant not entitled to rescission of
contract because of the parties' mistake about the future
availability of commercial reprocessing for spent fuel); Jeppsen
Sanderson, Inc. v. United States supra (shared prediction as to
how trial judge would act not a mutual mistake); Southern
Dredging Company, Inc., supra (an unanticipated escalation of a
contractor's fuel costs following an Iraqi invasion of Kuwait did
not warrant reformation of the contract because the contractor
did not establish that the contract was based on a mutual mistake
concerning the stability of world oil prices); Chevron U.S.A.,
Inc., ASBCA No. 32323, 90-1 BCA ¶ 22,602 (contractor not entitled
to reformation of the contact because there was no proof that the
parties made a mutual mistake about the port for loading oil).
See also Jay P. Altmayer, Nancy Hirshler, Jane Beskin, Amsouth
Bank, N.A., as Trustee Under the Will of Claire Pollack, and Jay
P. Altmayer and Amsouth Bank, N.A., as Co-Trustees Under the Will
of Marvin C. Altmayer v. General Services Administration, GSBCA
No. 12720, 94-3 BCA ¶ 27,070 (a lessor's claim for reformation of
a building lease on the grounds that the parties were mutually
mistaken as to the total price of alteration work was rejected
because, even if a mistake existed, it did not constitute a basic
assumption underlying the lease or have a material effect on the
bargain).
In the Board's opinion, the Appellant's argument that
reformation of the Program D306-S contract is warranted on the
ground that the parties made a "mutual mistake" of fact
regarding the estimated quantity of work is without merit.
First, contract estimates, by definition, are not usually
considered facts, but rather are deemed opinions or judgments
based on facts which forecast the volume of work in the
future. See Emerald Maintenance, Inc., ASBCA No. 29948, 89-3
BCA ¶ 22,127. Consequently, the estimates themselves are not
normally the subject of a "mutual mistake claim," but rather
it is the underlying facts supporting the estimates which are
the focus of inquiry. For example, in Management & Training
Corp., supra, reformation was granted where the Government's
estimate failed to include the cost of chilled water for the
air conditioning systems to the buildings covered by the
contracts, neither party was aware of the true cost, and thus
their mutual mistake constituted an erroneous basic assumption
concerning the cost of material components of the contract
having a material effect on the bargain. See Management &
Training Corp., supra, 93-2 BCA ¶ 25,814, at 128,520. In
effect, the contract appeals board ruled that the estimates
had been negligently prepared because the historical cost was
available to the contracting officer, but simply not used, and
under the "Womack" principles the contractor should not bear
the risk of the mistake. Id. The Appellant seems to be
making the same sort of "mutual mistake of fact" claim in
this case, but there is a substantial difference between the
circumstances here and those in Management & Training Corp.
Whereas in Management & Training Corp. the mistake involved
the contracting officer's preparation of estimates without
referring to the existing and available historical cost data,
in this case the estimates for the second production period
were more or less honest projections based on the introduction
of a new electronic dissemination program; i.e., historical,
realistic and knowable cost information for the second period
simply did not exist, and so was not be a factor that could be
overlooked by the Contracting Officer. Indeed, contrary to
the finding of the contract appeals board in Management &
Training Corp., the Board has already found that the
Government's estimates in this case were not negligently
prepared.
Second, and more importantly, the cases make clear that a
mistake of fact justifying reformation must relate to facts
which exist at the time the contract is formed. It must be
conceded that in this situation the CD-ROM program constituted
a basic assumption of the agreement in the minds of both the
Appellant and the Contracting Officer. Perhaps it can also be
said that the PTO's plan to introduce the CD-ROM patent
substitution program on August 2, 1994, was an existing fact
when the contract was formed. However, to the extent that the
CD-ROM plan was postponed, then it was a fact which proved
erroneous, and thus it does not qualify as a "mutual mistake"
under the case law. See Southern Dredging Company, Inc.,
supra; Martin-Copeland Co., supra; Hilton Construction Co.,
Ltd., supra. Indeed, by definition in the contract, the CD-
ROM patent substitution program itself was a prediction of a
future event, which would have precluded the parties from
engaging in a "mutual mistake" when they negotiated their
contract on that basis. See e.g., Dairyland Power Cooperative
v. United States, supra; Jeppsen Sanderson, Inc. v. United
States supra; Southern Dredging Company, Inc., supra.
Accordingly, the Board finds that no "mutual mistake" occurred
in this case.63
Under Rule 56, the Board can only grant summary judgment if
the evidence warrants the conclusion that there are no genuine
issues of material fact involved in the case. On this record,
including the stipulations of the parties, the Board cannot
say conclusively that there a "mutual mistake of fact"
warranting reformation of the Program D306-S contract.
C. Even though the Appellant has not prevailed on its claims that
the Government's contract estimates were negligently prepared, or
that the parties made a "mutual mistake" justifying reformation
of the contract, it is entitled to summary judgment because the
PTO's decision to suspend the CD-ROM program after the contract
was awarded amounted to a "constructive change" to the contract.
The Appellant's last argument on the issue of entitlement is
its contention that an equitable adjustment is warranted
because the PTO's post-award cancellation of the CD-ROM
program for Program D306-S, which substantially increased
volume of printing in the second production period instead of
reducing the amount of work as expected, constituted a
"constructive change" in the contract. Partial Motion, at 34;
Appellant's Reply, at 3. The crux of the Contractor's
position is that notwithstanding the general rule for
"requirements" contracts that precludes equitable adjustments
for deviations from the estimated quantities, the cases do
allow relief if a contractor is damaged by the Government's
modification, alteration or change to the contractual method
used to satisfy its needs. Appellant's Reply, at 3-10. The
Respondent, on the other hand, asserts the Government's
traditional and familiar position in these sorts of case in
opposition to the claim, namely, that the nature and purpose
of a "requirements" contract precludes equitable adjustments
for variations between the contract estimates and the actual
quantities ordered; indeed, the "Requirements" clause
expressly says so, and application of the "Changes" clause
would defeat the very purpose of why a "requirements" contract
was employed for Program D306-S in the first place. Points
and Authorities, at 20-21. Furthermore, GPO says that the
Appellant's theory has no case support since erroneous
estimates, a failure to order estimated quantities, and even
unforeseen events affecting estimated requirements, are not
considered "constructive changes" under the law. Points and
Authorities, at 21-22.
In the Board's view, the "constructive change" issue is what
this dispute is all about. Moreover, it provides a vehicle
for the Board to answer the question which expressly avoided
in Shepard Printing, namely, whether, as argued by the
Respondent both in that appeal and here, the "Requirements"
clause precludes an equitable adjustment in any and all cases
involving differences between a contract's estimated
quantities and the amount of actual orders? See Shepard
Printing, supra, slip op. at 27, fn. 27. For the reasons
which follow, the Board believes that the general rule barring
recovery for deviations from a "requirements" contract's
estimated quantities is not absolute, that there are
exceptions, and this case illustrates one of them.
Before addressing the central question on its merits, two
observations are necessary. First, the Board notes that even
though they involved different types of contracts, there are
some procedural parallels between this dispute and Universal
Printing Co.-a true "Changes" clause case-insofar as both
contracting officers, when confronted by extraordinary actions
on the part of the customer-agency, continued to deal with the
contract as if it was a normal procurement. There, the Board
found itself in agreement with the contractor's argument that
instead of proceeding as if nothing was unusual about the
contract modification situation at issue, perhaps the
contracting officer should have exercised the Government's
rights under the contract's "Termination for the Convenience"
clause, GPO Contract Terms, Contract Clauses, ¶19, once he saw
that the extensive author's alterations being made by the
customer-agency were causing major disruptions in the contract
performance schedule, substantially reducing the product for
which bids had been solicited, and increasing the contractor's
costs.64 See Universal Printing Co., supra, slip at 32-33
(citing Swanson II, supra (a Department of Justice contract
for typesetting legal briefs from manuscript copy was
terminated for the convenience of the Government by GPO when
the customer-agency decided it also wanted to transmit brief
copy in an electronic format); Graphic Litho Company, Inc.,
supra (after extensive delays, a Department of Agriculture
contract for the production of maps was terminated for
convenience by GPO because the customer-agency still had not
indicated when it would have the corrected Government-
furnished material ready for the contractor). See also, New
South Press, supra (contract termination for convenience
before production because of grossly erroneous estimates). On
the other hand, the Board was also aware that in most cases
agency boards of contract appeals will not disturb a
contracting officer's choice of procedure, particularly where
the contractor has not challenged the exercise of that
discretion. See Universal Printing Co., supra, slip at 33
(citing Condor Reliability Services, Inc., ASBCA No. 40538,
90-3 BCA ¶ 23,254; Goetz Demolition Company, ASBCA No. 39129,
90-3 BCA ¶ 23,241; Kinetic Engineering & Construction, Inc.,
ASBCA No. 30726, 89-1 BCA ¶ 21,397; Celesco Industries, Inc.,
supra, 79-1 BCA ¶ 13,604). Therefore, in accordance with its
general policy, and in the absence of some "compelling
reason," and none was shown, the Board said it would not
question the parties's choice of procedure, but would decide
the matter in form presented to it. See Universal Printing
Co., supra, slip at 34 (citing Shepard Printing, supra, slip.
op. at 14-15, fn. 20; Stephenson, Inc., supra, slip op. at
19-20, fn. 22; Stabbe Senter Press, GPO BCA 13-85 and 19-85
(May 12, 1989), slip op. at 53, 1989 WL 384977. In this case,
too, it seems that the better course for the Government to
follow as soon as it was known the CD-ROM patent substitution
plan, which was a critical part of the Program D306-S
contract, was canceled, would have been to terminate the
contract for convenience and resolicit the work for the second
production period. See New South Press & Assoc., Inc., supra;
Swanson II, supra. However, the choice made by the
Contracting Officer was to continue with the contract as
awarded, and the Board will decide this dispute on that basis.
The second matter concerns the Respondent's assumption that
the Appellant is seeking to recover on the basis of a
"constructive change" because it did not allege that a formal
"change order" was issued in accordance with the "Changes"
clause in the contract. Points and Authorities, at 21. GPO's
"Changes" clause, which is incorporated by reference in the
disputed contract, provides:
(a) The Contracting Officer may at any time, by written order,
and without notice to the sureties, if any, make changes
within the general scope of this contract in any one or more
of the following:
(1) Drawings, designs, or specifications when the supplies
furnished are to be specially manufactured for the Government
in accordance with the drawings, designs, or specifications.
(2) Method of shipment or packing.
(3) Place of delivery.
(b) If any change causes an increase or decrease in the cost
of, or the time required for, performance of any part of the
work, whether or not changed by the order, the Contracting
Officer shall make an equitable adjustment in the contract
price, the delivery schedule, or both, and shall modify the
contract.
(c) The contractor must submit any "proposal for adjustment"
(hereinafter referred to as proposal) under this article
within 30 days from the date of receipt of the written order.
However, if the Contracting Officer decides that the facts
justify it, the Contracting Officer may receive and act upon a
proposal submitted anytime before final payment.
(d) If the contractor's proposal includes the cost of property
made obsolete or excess by the change, the Contracting Officer
shall have the right to prescribe the manner or the
disposition of the property.
(e) Failure to agree to any adjustment shall be a dispute
under article 5 "Disputes." However, nothing in this article
shall excuse the contractor from proceeding with the contract
as changed.
GPO Contract Terms, Contract Clauses, ¶ 4 (Changes). [Emphasis
added.] See R4 File, Tab A, at 2. The Board has mentioned before
that the above clause is identical to the FAR "Changes" clause
(FAR § 52.243-1 (Changes-Fixed-Price)). See Banta Co., supra,
slip op. at 34. Accordingly, the Board gives the same
interpretation to GPO's "Changes" clause, and the rules
pertaining thereto, that the Executive Branch contract appeals
boards and the courts apply to the FAR "Changes" clause. Id.
(Citing United States v. Aguon, 851 F.2d 1158 (9th Cir. 1988);
Van Cleef v. Aeroflex Corporation, 657 F.2d 1094 (9th Cir. 1981);
L.B. Foster v. Railroad Service, Inc., 734 F.Supp. 818 (N.D. Ill.
1990)).
To conform with the requirements of the "Changes" clause, a
formal "change order" must: (a) be directed to the contractor
by the person with contracting authority; (b) be in writing;
(c) be within the general scope of the contract and concern
the drawings, designs, specifications, method of shipment or
place of delivery; (d) provide for an equitable adjustment in
case costs are increased by the change; and (e) inform the
contractor that must submit any "proposal for adjustment"
within 30 days from the date of receipt of the written order.
See Queens Lithographing Corp., GPOCAB No. 9-77 (March 30,
1979), slip op. at 11, 1979 WL 28897. It seems to the Board
that the Contracting Officer's letter to the Appellant, dated
July 21, 1994, has all of these "change order" elements. See
R4 File, Tab J. In that regard, the letter (a writing) is
signed by the Contracting Officer (the contracting authority),
concerns a change in the "schedule" (a change to a
specification)-indeed, the Contracting Offer expressly states
the letter is a notification of "a change in the stated
requirements for Program D306-S"-directs the Contractor to
perform the additional work, informs the Appellant that it may
apply for an equitable adjustment "[i]f due to the above
stated change, GraphicData, Inc. believes they are entitled to
additional compensation" (equitable adjustment element), and
instructs the Contractor to submit its proposal "within 30
days from the date of receipt of this notification" (proposal
time frame). Clearly, any casual observer would say that the
July 21, 1994, was a "change order" within the meaning of the
"Changes" clause, and what it essentially does is convert a
contract with two separate periods-the first one just
involving the production of patents in paper sets, and the
second consisting of patents in both paper and CD-ROM form,
with the Appellant being responsible for the paper issues
throughout-into a contract with a single production period
only of paper patent sets; i.e., for all practical purposes,
it reinstated the terms and conditions of the earlier November
Solicitation for Program D306-S. Indeed, the Contractor acted
as if the July 21, 1994, letter was a "change order," and
submitted its equitable adjustment proposal, as instructed by
the Contracting Officer, and within the necessary time frame.
See R4 File, Tab K.
The Respondent, however, says that no "change order" was
issued in this case. Apparently, when the Government uses the
term "change order" it probably has in mind GPO Form 913,
entitled "Contract Modification," which has a box with the
following words after it: "This Change Order is issued
pursuant to_________." See PPR, Chap. XVI, Procurement Forms,
at 176. Furthermore, the PPR contains detailed instructions
concerning the use and processing of contract modifications,
including, in pertinent part:
1. General
* * * * * * * * * *
c. Bilateral Agreements, Unilateral Actions, and
Administrative Changes.
* * * * * * * * * *
(2) If the modification is authorized by a contract
provision, the Contracting Officer has the unilateral
right to issue a change order. Before issuing a
change order under the "Changes" clause, the
Contracting Officer shall try to reach an equitable
adjustment and issue a supplemental agreement in
accordance with the above paragraph. . . . Change
orders require the signature of the Contracting
Officer only. The contractor is required to comply
with the requested change regardless of whether a
bilateral agreement has been reached. . . .
2. Processing
a. CRB concurrence. All proposed modifications involving
an increase or decrease in excess of 25 percent of the
contract or print order price (if the increase/decrease
exceeds $5000), or any modification increasing or
decreasing the contract or print order price by $10,000
or more must be submitted to the central office CRB
[Contract Review Board].
b. GPO Form 913. All contract modifications shall be
issued by the Contracting Officer in writing on GPO Form
913, "Contract Modification,". . .
* * * * * * * * * *
e. Checkboxes on GPO Form 913. The appropriate box shall be
checked to distinguish between a change order and
supplemental agreement on GPO Form 913. The authority for
issuing the change order/supplemental agreement shall be
stated on the appropriate line. Change orders may be
issued pursuant to the "Changes" clause or other contract
provision. Supplemental agreements are entered into
pursuant to mutual agreement.
* * * * * * * * * *
See PPR, Chap. XII, Sec. 2, ¶¶ 1(c), 2(a), (b), (e) (Contract
Modifications). [Original emphasis.] Thus, the Government's
position seems to be that unless the Contracting Officer received
CRB concurrence for the modification, and informed the Appellant
of the change by signing and sending a copy of GPO Form 913 to
the Appellant, no "change order" within the contemplation of
GPO's regulations was issued.
The Board, however, does not believe that the "Changes" clause
is so limited. In that regard, the Board sees nothing in the
"Changes"clause which expressly tells the Contracting Officer
to use GPO Form 913 in making a change to the contract.
Certainly, the drafters of the "Changes" clause could have
specifically identified GPO Form 913 as the only official
"change order" for a GPO contract, just as they identified
other GPO Forms elsewhere in GPO Contract Terms, but they
failed to do so. See e.g., GPO Contract Terms, Contract
Clauses, ¶¶ 7 (Government Furnished Property, GPO Form 2511),
19 (Termination for the Convenience of the Government, GPO
Form 911), 24 (Payments on Purchase Order, GPO Form 199).
Indeed, a reference to GPO Form 913 is found in GPO's "Payment
for Accelerated Delivery" clause. See GPO Contract Terms,
Contract Clauses, ¶ 26 (Payment for Accelerated Delivery).
Accordingly, contrary to the Respondent, the Board believes
that the Contracting Officer did issue a "change order" in
this case-his letter of July 21, 1994. This is not to say
that the CRB role in contract modification matters has been
vitiated, but rather as the Board reads the PPR, any equitable
adjustment increasing the contract price must still be
submitted to the CRB for approval. However, insofar as the
change itself is concerned, that matter appears to have been
disposed of by the Contracting Officer on July 21, 1994.65
The Respondent argues, furthermore, that the reason there is
no "change order" (and as a consequence, some evidence of any
CRB action) in this case is that none was required because no
change occurred. In so many words, the Government believes
that the "Requirements" clause covers all situations where
actual orders deviate from the contract estimates, and that
the clause expressly states "if the Government's requirements
for the items set forth herein do not result in orders in the
amounts or quantities described as 'estimated', it shall not
constitute the basis for an equitable price adjustment." See
R4 File, Tab A, at 11. Furthermore, GPO believes that nothing
herein amounts to a "constructive change," as that term is
understood in the law. The Board disagrees. Accordingly, the
Board holds that, assuming arguendo, the Contracting Officer's
letter of July 21, 1994, failed as a formal "change order" in
this case, the Appellant is still entitled to recover on the
basis of a "constructive change." Cf. Merchant Service Co.
[No GPO CAB No.] (February 11, 1980), slip op. at 16, 1980 WL
81262 ("The 'constructive change' doctrine is the mechanism
used to direct the Government to retroactively compensate the
contractor for work which it should have been properly
compensated for under the "Changes" or "Extra" clauses during
the term of the contract."). See also Cibinic & Nash,
Administration, at 429 ("A constructive change occurs when the
contract work is actually changed but the procedures of the
Changes clause have not been followed.").
The Board's conclusion that there was a "constructive change"
in this situation is rooted in the following undisputed facts
in the record: (1) sometime in February or March 1994, a
decision was made within the PTO to substitute CD-ROM patents
for some of the paper sets procured under Program D306-S
(Saifer Deposition, at 67-68; Lawson Deposition, at 62-63);
(2) also in February or March 1994, the OPP was informed that
"there would be a change" in the Program D306-S contract,
namely the substitution of CD-ROM patents for paper sets and
as a result there would be a reduction in volume of paper sets
(Bawcombe Deposition, at 31-32); (3) on March 7, 1994, while
GPO was reviewing the low bidder's offer for a earlier
November Solicitation for Program D306-S, it was notified by
the OPP that CD-ROMs would replace printed patent sets and the
need for paper patents would decrease (Jt. Stip., ¶ 5;
Material Facts, ¶¶ 2, 3); (4) shortly thereafter, on March 11,
1994, the CD-ROM program and its impact on Program D306-S was
discussed at a meeting of GPO and PTO representatives (Jt.
Stip., ¶ 7; Material Facts, ¶ 3); (5) on March 16, 1994, the
PTO officially notified all countries that were parties to
exchange agreements for paper or microfilm copies of patents
that, effect October 1, 1994, CD-ROM patents would be
substituted (Jt. Stip., ¶¶ 2-4; Material Facts, ¶ 4); (6) on
March 22, 1994, GPO canceled the November Solicitation because
of "extensive changes in the estimated requirements" (Jt.
Stip., ¶¶ 10, 11); (7) on April 1, 1994, the PTO sent revised
patent printing contract numbers to GPO reflecting a reduction
of twelve (12) printed sets under Program D306-S (Jt. Stip., ¶
15; Material Facts, ¶ 6); (8) on April 11, 1994, GPO issued a
new solicitation for Program D306-S-the April Solicitation-
which, inter alia, notified potential offerors that starting
October 1, 1994, the PTO would be supplying patents on CD-ROMs
and that there would be twenty-five (25) less paper patent
sets required after that date (Jt. Stip., ¶ 20; Material
Facts, ¶ 7; R4 File, Tab A);66 (9) inaddition to a warning on
the first page of the solicitation that "[s]ignficant quantity
reductions may occur during the term of the contract," the
April Solicitation contained the following notice about the
new CD-ROM patent program for potential bidders:
NOTICE TO CONTRACTORS: All contractors planning to bid on this
solicitation are put on notice that beginning on October 1,
1994[,] the [PTO] will be offering to supply U.S. Patents sets to
their customers on CD-Rom [sic] rather than on paper. The basis
of award figures offered in this solicitation were compiled
utilizing two time periods. The first time period used was from
the beginning of this contract (June 1, 1994) through September
12, 1994. The second period is from September 12, 1994 (the time
the change-over to CD-ROM would go into effect), through the end
of the contract.
At this time it is unknown EXACTLY how many customers will
request the change-over to CD-ROM, but based on the [PTO's]
knowledge of their customers present capabilities, they
anticipate that as many as 25 customers now receiving paper sets
will switch to CD-ROM. The basis of award figures compiled for
the second time period reflects the 25 set drop.
Therefore, all contractors planning to submit bids on this
procurement are put on notice that the required quantities stated
in the specifications are the projected quantities anticipated at
this time. These quantities, which are the Government's best
estimates at this time, could change significantly during the
term of the contract.
Contractors bidding on this Program must do so with the knowledge
that: the estimated quantities stated in the "Determination of
Award" may be significantly reduced even further as customers
switch to CD-ROM; and, the Government WILL NOT renegotiate any
pricing due to these reductions.
[Emphasis added]; (10) on May 4, 1994, the Respondent issued
Amendment No. 2 to correct a structural error in the April
Solicitation-the failure to provide separate estimates for the
two production periods in the contract-which was brought to its
attention by the Contractor (Jt. Stip., ¶ 34, 36-38; Material
Facts, ¶¶ 8-9; R4 File, Tab A; (11) on May 20, 1994, GPO awarded
the contract for Program D306-S to the Appellant (Jt. Stip, ¶ 51;
Material Facts, ¶ 11); (12) when the contract was awarded, the
OPP, the PTO organization responsible for issuing the print
orders, and GPO, the contracting entity, were unaware of the
complaints made by foreign patent offices about the CD-ROM policy
to the International Liaison Staff because the OSIR did not share
that information with them (Jt. Stip., ¶¶ 54-55; Material Facts,
¶¶ 14, 16); (13) the OPP first heard about the unfavorable
foreign reactions to the CD-ROM program at a meeting on June 27,
1994, attended by the International Liaison Staff and other
interested PTO officials, where a consensus was reached that the
agency should probably modify the electronic dissemination
program (Jt. Stip., ¶ 54; Material Facts, ¶ 14; Saifer
Deposition, at 125-26); (14) the Respondent was not advised about
the foreign opposition to the CD-ROM policy, or the possibility
of a change to it, until July 7, 1994, when the OPP informed GPO
that the distribution of patents on CD-ROMs had been rescinded
(actually only postponement of the program was under
consideration) (Jt. Stip., ¶¶ 55-58; Material Facts, p. 6, fn. 7,
¶¶ 15-16; R4 File, Tabs E and F); (15) the Respondent promptly
told the Appellant that the PTO's CD-ROM policy had changed, and
between July 11, 1994, and July 14, 1994, GPO sent revised
estimates to the Contractor to review (Material Facts, ¶ 17; R4
File, Tabs, G, H, I and J); (16) on July 12, 1994, the OPP sent
the Respondent follow-up information pertaining to the CD-ROM
policy, noting that it was postponed indefinitely while the PTO's
Executive Committee decided what steps to take (R4 File, Tab F);
(17) between July 8, 1994, and September 7, 1994, the PTO
management chain considered three options regarding the CD-ROM
policy-implement it unchanged; make ad hoc accommodations for
specific countries; or suspend the program for one (1) year-and
decided to recommend suspension to the Commissioner of Patents
and Trademarks (Jt. Stip., ¶¶ 59-61; Material Facts, ¶¶ 18-20);
(18) on September 7, 1994, the Commissioner accepted the
recommendation, postponed the CD-ROM policy for one (1) year, and
so notified the United States' foreign patent exchange partners
(Jt. Stip., ¶¶ 62-63; Material Facts, ¶ 20); (19) in the interim,
on July 21, 1994, the Contracting Officer directed the Appellant
to continue printing paper patents and to invoice the work at
its bid prices (R4 File, Tabs G and J); and (20) as a result of
the changes ordered by the Contracting Officer, the Contractor's
production rate increased 96.4 percent (Jt. Stip., ¶¶ 42- 43).
In the Board's view, these stipulated facts satisfy the two
requirements for a "constructive change"-a "change" and an
"order"-and justify an equitable adjustment for the Appellant
on at least two grounds, each of which is encompassed under
the broad scope of the "constructive changes" doctrine. See
Cibinic & Nash, Administration, at 431(citing Industrial
Research Associates, Inc., DCAB WB-5, 68-1 BCA ¶ 7069).67 In
this case, the so-called "order" element is clear. See R4
File, Tabs G, H, I and J. As for the "change" element,
first, the Board agrees with the Appellant that the
cancellation of the CD-ROM program under the circumstances
above amounted to a change in the method or means of
performance for Program D306-S. Changes in the manner of
performance have long been recognized as permissible and
compensable on the theory that such changes were modifications
to the work itself and hence were changes to the
specifications. See Cibinic & Nash, Administration, at 397
(citing Farnsworth & Chambers Co., ASBCA No. 5408, 59-2 BCA ¶
2329; Carpenter Construction Co., NASABCA No. 18, 1964 BCA ¶
4452. As explained by the ASBCA in Desco Service
Contractors, a case cited by the Appellant:
. . . In a requirements-type contract, absent lack of good faith
on the part of the Government in placing orders for its needs,
the contractor takes the risk of the requirements falling short
of the estimates (Fischer & Sons, Ltd., ASBCA No. 7916, 1963 BCA
¶ 3702; Gulf Coast Aviation Co., Inc., ASBCA Nos. 10189 & 10380,
65-2 BCA ¶ 492; Gordon Associates, Inc., ASBCA No. 10364, 66-2
BCA ¶ 5907; Intercontinental Engine Service, Inc. v. United
States, 199 Ct. Cl. 297 (1972); Del Rio Flying Service, ASBCA No.
15304, et al., 71-1 BCA ¶ 8744; Machlett Laboratories, Inc.,
ASBCA No. 16194, 73-1 BCA ¶ 9929); however, he does not assume
the risk that the Government may change the requirements (Gemsco,
Inc. v. United States [4 CCF ¶ 60,844], 115 Ct. Cl. 209 (1950);
Escalante Garden Apartments, Inc., ASBCA No. 10287, 65-2 BCA ¶
5125 at pp. 24,134-5; Henry Angelo & Sons, Inc., ASBCA No. 15082,
72-2 BCA ¶ 9493). In the latter event, if the Government change
causes an increase in performance costs, the contractor is
entitled to an equitable adjustment under the Changes clause.
Alamo Automotive Services, Inc., ASBCA No. 9713, 1964 BCA ¶ 4354;
California Bus Lines, ASBCA No. 19732, 75-2 BCA ¶ 11,601. In
this case the Government changed the requirements when it changed
the frequency of inspections specified in the contractually
governing technical order. Cf. Alamo Automotive Services, Inc.,
ASBCA No. 8815, 1963 BCA ¶ 3830, where the technical order was
not a contractually governing documents.
See Desco Service Contractors, supra, 77-2 BCA at 61,962.
[Emphasis added.] See also Military Services, Inc. of Georgia,
ASBCA No. 21595, 78-1 BCA ¶ 13,214 (a mess hall services
contractor was entitled to an equitable adjustment under the
"Changes" clause when the Government added three new mess halls
to the contract (an approximately 25 percent increase) to make
the contractor whole as a consequence of the way the Government
administered the change).
If the Appellant had simply received orders in excess of the
estimated requirements, as suggested by the Respondent, then
the general rule assigning the risks of any variations between
the contract estimates and actual orders would clearly apply,
and that would be the end of the matter. But that is not this
case. To say, however, that a deviation from the estimated
quantities in a "Requirements" contract here does not result
in a compensable change, either under the "Changes" clause or
as a "constructive change" is to ignore the reason the changes
occurred in the first place.
In this case, when the Government, in mid-contract, changed
the method of producing patents for the second production
period from a dual approach involving paper patents and CD-
ROMs to a single method of paper patents only, and placed the
responsibility for satisfying all of the PTO's needs squarely
on the Appellant's lap, it caused an increase in orders which
flowed not from the fact that there was just more work, but
rather from a totally restructuring of the contract In
effect, the Government's elimination of the CD-ROM program
made the Appellant a party to a contract it never bargained
for-one closely resembling, if not exactly like, the canceled
November Solicitation. Certainly, there was nothing in the
solicitation which would have alerted the Contractor to this
possibility. There was nothing conjectural about the CD-ROM
plan in the solicitation-there are no "ifs," "ands," "buts,"
or "maybes" about the Government's intention to change its
method of dissemination of patents from totally paper to an
offer of CD-ROM substitutes. Potential bidders were clearly
informed by the "Notice to Contractors" contained in the
solicitation, inter alia, that: (1) the PTO "will" start
offering its customers patents in CD- ROM format instead of
paper on October 1, 1994; (2) accordingly, the basis of award
figures were divided into two time periods, the first running
from June 1, 1994, to September 12, 1994, in which all patents
would be printed, and the second from September 12, 1994 (the
change-over time to CD-ROMs) through the end of the contract;
(3) although the precise number of customers asking for CD-
ROM patents was not known, the PTO expected that as many as 25
paper customers would switch to CD-ROM patents, and the basis
of award figures for the second period reflected that decrease
in paper sets; (4) the required quantities were the
Government's best estimates at the time, but they could
"change significantly" during the contract term; (5) as
customers converted to CD-ROM patents, the estimated
quantities stated in the "Determination of Award" may be
"significantly reduced even further;" and (6) the "Government
WILL NOT renegotiate any pricing due to these reductions."
See R4 File, Tab A, at 13. The "Notice to Contractors"
contains no "red lights" warning of unexpected increases in
the amount of work-indeed, the plain language of the "Notice
to Contractors," as well as the "Requirements" clause itself,
speak in terms of less work, not more; i.e., the Government
was saying "This is how it is, and things may get worse, so
plan accordingly." Having led potential offerors, including
the Contractor, into making preparations for reduced
operations in accordance with the contract schedule , the
Government cannot now say, "Hey, we didn't mean it."
In the Board's view, the Respondent places too much reliance
in the raw meaning of the "Requirements" clause. While it is
true, as GPO says, that a "requirements" contract is meant to
be "used when the Government anticipates recurring needs but
cannot predetermine the precise quantities or future demands
at the time of award," Points and Authorities, at 6 (citing
Medart, Inc. v. Austin, supra), and will protect the
Government from liability for fluctuations between contract
estimates and actual requirements in the normal ordering
process, it is not intended to be a licence for the Government
to tinker with the methods or means of performance which
makeup the essence of the contract itself. Therefore, the
Board believes that when the Respondent canceled the CD-ROM
program for the second production period, and altered
performance for that portion of the contract from the
solicitation's mixture of CD-ROMs and paper patents, to the
production of patents on paper alone, it "constructively
changed" the agreement, and the Appellant is entitled to an
equitable adjustment on that basis.
The second reason for application of the "constructive change"
doctrine in this case is a wine of comparatively new vintage.
In that regard, a "constructive change" may be found where the
Government's estimates, while not negligent, are so grossly
inadequate that it would be unfair to hold the contract to
performing at the bid price. See e.g., Operational Service
Corporation, ASBCA Nos. 37059, 37466, 38461, 38703, 93-3 BCA ¶
26,190 (a grass mowing contractor was entitled to an equitable
adjustment for a "constructive change" due to a substantial
underestimation of the acreage to be mowed under a grounds
maintenance contract); J.V. Bailey Co., Inc., ENG BCA Nos.
5348, 5555, 90-3 BCA ¶ 23,179 (painting contractor that relied
on contract representations that 700-900 square feet of
surface area needed to be painted was entitled to an equitable
adjustment because the actual surface area was 1400 square
feet, which amounted to a "constructive change"). See also
LFS, Inc., supra (increase in quantities so great that it is
"unreasonable" to insist on performance).
While the Appellant may think that the situation in Contract
Management, Inc., supra, is "virtually identical" to its
situation, in the Board's opinion, Operational Service
Corporation is closer to the mark. In that case, the Army and
the contractor entered a one year grass mowing "requirements"
contract with two option years. The contract called for the
contractor to mow approximately 100 areas of different sizes.
However, the Army did not survey the areas because it
considered the cost of surveying prohibitive. During the
course of the contract when an issue concerning excessive
mowing acreage arose, the contractor had the areas surveyed
and determined that the contract estimates were about one-half
the actual mowing area. The Army also surveyed the areas and
concluded that the contract estimates were too low. The
matter was presented to the ASBCA on the issue of entitlement
only. Before the ASBCA, the contractor made essentially the
same claims as here, inter alia, that the Government's
estimates had been negligently prepared, and that it was
otherwise entitled to an equitable adjustment. In the context
of its opinion, the ASBCA rejected the contractor's negligent
estimates claim based on the Government's failure to order the
number of mowing listed in the contract, on the ground that it
was evident from the contract what the numbers indicated and
no bidder should have been misled, and besides bidders were
alerted to the fact that the number of mowings was dependent
on the weather. See Operational Service Corporation, supra,
93-3 BCA at 130,381. However, despite the fact that the
Government's estimates were not negligent, the ASBCA also held
that the contractor was entitled to an equitable adjustment
for a "constructive change" due to a substantial
underestimation of acreage to be mowed, because the estimates
were grossly inadequate and it is unconscionable to allow the
Government to benefit from its own inaccurate estimates. Id.,
93-3 BCA at 130,380. In so ruling, the ASBCA reasoned as
follows:
The difficulties with the results of both sets of surveys, in our
view, pertain not as much to their accuracy as to the
extrapolations made from them to the entire contract. Neither
survey meets the test of a valid statistical sample. However the
results of the surveys when weighted for number of times mowed
showing a variation calculated by appellant's expert of at least
43 percent could with other evidence in this record, including
the proposed Modification P00003 to the CA Contract (an
notwithstanding the Government's calculations based on
appellant's fuel and labor costs) convince us that the acreage
estimates in the contract were substantially underestimated.
This was a competitively bid contract and it was reasonable to
expect that the bidders would all base their bids on the
estimates in the solicitation and bear the risk of reasonable
deviations from the estimates. However, where the variations are
so large as to make the estimates grossly inadequate, it would be
unconscionable to allow the Government to benefit from its own
inaccurate estimates. See Briefing Papers #75-3 (Shedd
"Unconscionability in Contracts") and 1976 Revision Note
(Ruberry), 3 BPC 199. These estimates were not forecasts of
future events-for example, the number of service calls which
would be required (Emerald Maintenance, Inc., ASBCA No. 29948,
89-3 BCA ¶ 22,127)-but of the size of existing areas. Cf. Gregg,
Gibson & Gregg, Inc., ENGBCA No. 3041, 71-1 BCA ¶ 8677. We
conclude, therefore, that there was a constructive change to the
contract for which appellant should receive an equitable
adjustment.
Id. [Emphasis added.]
In the Board's view, the circumstances in Operational Service
Corporation offers a close fit to the situation in this case.
The Board has already determined that the Government's
estimates in this case were not negligently prepared because
they were based on all information readily available at the
time. On the other hand, the parties cannot escape the fact,
which they have stipulated to, that the Government's figures
for the second production period when the planned substitution
of CD-ROMs for paper patents was canceled, underestimated the
Appellant's actual production by 96.4 percent (Jt. Stip., ¶¶
42- 43). Therefore, the Board believes that the size of the
variation is "so large as to make the estimates grossly
inadequate, it would be unconscionable to allow the Government
to benefit from its own inaccurate estimates." See
Operational Services Corporation, supra, 93-3 BCA at 130,380.
Accordingly, the Board holds that because of these grossly
inadequate estimates, the Appellant has established a second
ground for a "constructive change," and it is entitled to an
equitable adjustment.68
On this record, including the stipulations of the
parties, the Appellant has proved its entitlement to an
equitable adjustment because the cancellation of the CD-
ROM patent substitution program in its contract for
Program D306-S amounted to a change of the agreement.
Therefore, to that extent the Contractor is entitled to
summary judgment under Rule 56, and the Partial Motion is
GRANTED, and the Cross-Motion and Opposition is DENIED.
See McDonnell Douglas Services, Inc., supra; Operational
Service Corporation, supra.
ORDER
The Board finds and concludes that: (1) contrary to the
Appellant's belief, the Government's estimates for Program
D306-S were based on all relevant and reasonably available
information at the time, and were not negligently prepared as
alleged; and (2) the undisputed facts do not disclose such a
"mutual mistake" as would warrant reformation of the contract.
THEREFORE, on those issues the Partial Motion is DENIED and
the Cross-Motion and Opposition is GRANTED.
On the Appellant's claim to an equitable adjustment based on
the cancellation of the CD- ROM patent substitution program in
its contract for Program D306-S, the Board finds and concludes
that the Government's postponement of the plan amounted to a
change of the agreement. THEREFORE, to that extent the
Contractor is entitled to summary judgment under Rule 56, and
the Partial Motion is GRANTED, and the Cross-Motion and
Opposition is DENIED.
It is so Ordered.
June 14, 1996 STUART M. FOSS
Administrative Judge
_______________
1 Although this summary judgment proceeding arises from the
Contracting Officer's action in February 1995, the parties have
been litigating in this forum since October 21, 1994, when the
Appellant filed both a Notice of Appeal and a Complaint alleging
that because the Contracting Officer at the time, Richard Weiss,
had failed to a issue a final decision on its equitable
adjustment claim of $532,092.74 within a reasonable time, the
Board should take jurisdiction over this matter. GPO Instruction
110.12, Subject: Board of Contract Appeals Rules of Practice and
Procedure, dated September 17, 1984, Rules 1(c), 6(a) (Board
Rules). Subsequently, the Respondent moved to dismiss the
Complaint on the ground that the Contracting Officer had not had
a reasonable amount of time in which to issue a final decision
since the original claim was only submitted on August 22, 1994,
and certified on September 20, 1994. See Motion to Dismiss,
dated November 4, 1994, at 2-3 (citing Cosmo Construction, IBCA
No. 412, 64 BCA ¶ 4059). Indeed, noting that the Board prefers
to review audited claims, the Government said that the
Contractor's claim was being reviewed by GPO's Office of the
Inspector General (OIG) when the Complaint was filed, and that no
audit report had yet been issued. Id., at 1-2 (citing Banta Co.,
GPO BCA 03-91 (November 15, 1993), slip op. at 57, 1993 WL
526843; R.C. Swanson Printing and Typesetting Co., GPO BCA 15-90,
Decision on Motion for Reconsideration and Order (December 20,
1993), slip op. at 14). Accordingly, the GPO argued that since
the OIG's audit report was necessary for any final decision on
the claim, the Board should dismiss the Complaint as premature.
Id., at 3 (citing Universal Printing Co., GPO BCA No. 9-90 (June
22, 1994), slip op. at 30, 1994 WL 377586). The Appellant
immediately filed its opposition to the Respondent's motion, see
Opposition to Government's Motion to Dismiss and Request for
Telephonic Conference, dated November 8, 1994, eliciting a reply
from the Government, see Respondent's Reply to Appellant's
Response to Motion to Dismiss, dated November 25, 1994, which
compelled the Board to scheduled a hearing to determine the
jurisdictional question, see GraphicData, Inc., GPO BCA 35-94,
Decision and Order Scheduling Hearing (December 21, 1994), slip
op. at 8-9 (citing Graphic Image, Inc., GPO BCA No. 05-94, Order
Scheduling Hearing, slip op. at 4; Board Rules, Rule 5), 1994 WL
837426. The hearing was conducted on January 3, 1995.
Thereafter, the Board issued its opinion agreeing with the
Respondent that the appeal was premature, see GraphicData, Inc.,
GPO BCA 35-94, Decision and Order Accepting Appeal and Denying
Motion to Dismiss (January 31, 1995), slip op. at 7-8 (citing
Executive Elevator Service, Inc., VABCA No. 2741, 88-3 BCA ¶
20,964; Roebbelen Engineering, Inc., DOT BCA No. 1814, 87-1BCA ¶
98,628), 1995 WL 488515, but ruling that fact was not fatal to
the justiciability of the appeal, id., slip op. at 8 (citing
Briggs Engineering and Testing Co., Inc. v. United States, 230
Ct. Cl. 828 (1982); So-Pak-Company, Inc., ASBCA No. 3906, 93-3
BCA ¶ 26,215; Rice King, ASBCA No. 43352, 92-2 BCA ¶ 24,805;
Emerson Electric Co., ASBCA No. 31184, 86-2 BCA ¶ 18,979). In
deciding to accept the Contractor's appeal (and stay further
proceedings pending the receipt of the Contracting Officer's
final decision), the Board found the fact that nearly 131 days
had elapsed between the date the claim was filed (August 22,
1994) and the date the OIG actually began its audit (January 9,
1995) to be particularly persuasive. Id., slip op. at 8-9. As
the Board noted, even though the Contracting Officer had
requested the audit much earlier (September 21, 1994), the OIG's
delay was imputed to him because the auditors were agents of the
Contracting Officer for the purpose of reviewing the claim, and
their obligations were no less than his. Id., slip op. at 8
(citing Computer Systems & Resources, Inc., GSBCA No. 8434-TD,
86-3 BCA ¶ 19,017). Since the OIG had promised to submit its
audit report by the end of January 1995, and the Contracting
Officer had said he would issue a final decision within two weeks
after receiving it, the Board believed that dismissing the appeal
at that juncture only to have a new appeal filed after the final
decision, would simply be promoting form over substance. Id.,
slip op. at 9 (citing Cessna Aircraft Co., ASBCA No. 43196, 92-1
BCA ¶ 24,425; So-Pak-Company, Inc., supra). Therefore, the Board
determined that it would accept the appeal, but give both the
auditors and the Contracting Officer a reasonable period of time
in which to complete review of the Appellant's claim and to issue
a decision. Id., slip op. at 9 (citing James Reeves Contractor,
Inc., ASBCA Nos. 35280-81, 35281-82, 87-3 BCA ¶ 20,173; Computer
Systems & Resources, Inc., supra). Further proceedings in the
matter were stayed until the Contracting Officer rendered his
final decision. Id., slip op. at 10 (citing EPCo Associates, GPO
BCA 26-93 (November 18, 1993), 1993 WL 526919; Improved Petroleum
Recovery, EBCA Nos. 348-1-86, 349-1-86, 87-1 BCA ¶ 19,431).
However, it should be noted that when the Contracting Officer
issued his final decision on February 28, 1995, the OIG still had
not submitted its audit report, so his decision was based on an
oral briefing by the auditors.
2 The Contracting Officer's original appeal file, assembled
pursuant to Rule 4 of the Board's Rules of Practice and
Procedure, was delivered to the Board on April 7, 1995. Board
Rules, Rule 4(a). The file consisted of 24 documents, labeled
Tabs A through X, inclusive. Thereafter, on April 25, 1995,
Counsel for GPO submitted six (6) additional documents for
inclusion in the appeal file, namely: (a) a letter from Counsel
for the Appellant, dated March 7, 1995 (Exhibit No. 1); (b) the
Contracting Officer's final decision, dated March 15, 1995,
concerning the Government's exercise of its option to extend the
contract (Exhibit No. 2); (c) a letter from Counsel for the
Appellant, dated March 21, 1995 (Exhibit No. 3); (d) a "show
cause" notice issued by the Contracting Officer on March 24, 1995
(Exhibit No. 4); (e) a letter from Counsel for the Appellant,
dated March 29, 1995 (Exhibit No. 5); and (f) the OIG audit
report on the Contractor's claim, dated April 13, 1995 (Exhibit
No. 6) (hereinafter Audit Report). At the presubmission
conference conducted by the Board on Jun 16, 1995, Counsel for
the Appellant stated that he had received copies of these
additional documents, and that Exhibit No. 6 was a complete copy
of the Audit Report. See Report of Presubmission Conference,
dated September 8, 1995, at 2, fn. 2 (hereinafter RPC). The
Contracting Officer's appeal file is hereinafter referred to as
R4 File, with an appropriate Tab letter or Exhibit number also
indicated.
3 One procedural matter was also addressed at the conference,
namely the question joined by the Appellant's March 10, 1995,
Motion for Sanctions (Motion), and the April 6, 1995,
Respondent's Opposition to Appellant's Motion for Sanctions
(Opposition), submitted by GPO. See RPC, at 2-5, The crux of
the Motion was the Contractor's dissatisfaction with the
Contracting Officer's final decision of February 28, 1995, and
the OIG's failure to submit a timely Audit Report, as directed by
the Board on January 31, 1995. See note 1 supra. Accordingly,
the Appellant asked for the following sanctions against GPO: (a)
excluding the Audit Report from the appeal record; (b) precluding
the OIG auditors from testifying in this appeal; and (c) levying
a monetary penalty of $5,000.00 against the Respondent. See RPC,
at 2-3. The Government's Opposition, on the other hand, asserted
that: (a) the Contracting Officer's final decision was "as clear,
concise and complete as possible;" (b) the OIG's inability to
complete the audit prior to February 28, 1995, was not tantamount
to a violation of the Board's January 31, 1995, Decision and
Order; (c) the Board lacked authority to compel the OIG, a
creature of statute, to give priority to the audit of the
Contractor's claim over other matters within its jurisdiction;
and (d) the Board's sanctioning authority pursuant to Rule 31 of
the Board Rules did not extend to monetary penalties. See RPC,
at 3. Responding to the parties, the Board observed that unlike
contract appeals boards in the Executive Branch, which take their
authority from the Contract Disputes Act (CDA), 41 U.S.C. §§ 601
et seq., the Board is a creature of the parties' contract and GPO
regulations, such as the Board Rules, and the agency's Printing
Procurement Regulation, GPO Publication 305.3 (Rev. 10-90)
(hereinafter PPR). See RPC, at 3-4. Thus, its ability to impose
sanctions is severely limited and not at all parallel to the
power possessed by the CDA boards. See RPC, at 4. In that
regard, the Board noted that the provisions of Rule 31, by its
terms, allowed it to tailor sanctions in order to secure
compliance with its case handling procedures, it supposed that it
could exclude both the Audit Report and any testimony from the
OIG auditors under Rule 31 if the allegations made in the Motion
are sustained. Id. However, the Board also said that even
without Rule 31, it has the traditional power inherent in all
adjudicatory bodies to exclude improperly withheld evidence or
draw adverse inferences where evidence which should be produced
is not. Id. Accordingly, while the Board agreed that it could
consider the evidentiary sanctions proposed by the Appellant, it
declined to rule on the Motion at the conference, but preferred
to dispose of the matter prior to the hearing. See RPC, at 4-5.
On the other hand, the Board stated that it was unaware of
anything in Rule 31 or elsewhere in GPO's regulations which would
authorize it to "fine" any offending party in any appeal. See
RPC, at 5. Consequently, to the extent that the Motion asked the
Board to impose monetary sanctions on the Respondent, it said
that it lacked the authority to grant such a request, and denied
that part of the Motion. Id.
4 As indicated, the Appellant's initial claim was for
$532,093.00. However, the OIG was asked to audit a claim which
the Contractor had increased to $710,380.00. Later, in its First
Amended Complaint, the Contractor returned to its original claim
amount. See First Amended Complaint, at 2, fn. 1.
5 The contract's "Changes" clause will be found in GPO
Contract Terms, Solicitation Provisions, Supplemental
Specifications, and Contract Clauses, GPO Publication 310.2,
Effective December 1, 1987 (Rev. 9-88), Contract Clauses, ¶ 4
(Changes) (hereinafter GPO Contract Terms), which is incorporated
by reference in the contract specifications (R4 File, Tab A, p.
2).
6 Prior to the discovery conference, on August 4, 1995,
Counsel for the Appellant submitted a Motion to Compel, asking
the Board to order the Respondent to answer certain
interrogatories and respond to certain requests for admission
which Counsel for GPO had object to; i.e., interrogatory numbers
53-57, inclusive, interrogatory numbers 59 and 60, interrogatory
numbers 62-64, inclusive, and requests for admission numbers 3
and 4. However, after the conference, Counsel for GPO informed
Counsel for the Appellant that he was withdrawing his objections
to those interrogatories and requests for admission.
Accordingly, on August 10, 1995, Counsel for the Appellant
withdrew his Motion to Compel to "eliminate the necessity for the
Board to rule on a motion that is likely to become moot." See
Letter to the Board from Richard D. Lieberman,Esq., dated August
10, 1995, at 2.
7 As noted previously, the amount of the claim in the First
Amended Complaint was the original $532,092.74, and not the
audited amount of $710,380.00. See note 4 supra.
8 GPO's arguments in favor of postponing the hearing, as set
forth in the Scheduling Motion, were: "[¶]The only issue to be
decided in the motions for summary judgment is whether the
Appellant is entitled to be paid more money under the contract.
Both parties have stipulated to certain facts which each believes
disposes of the question of liability. The parties will argue
their positions in the summary judgment pleadings. Given that
neither side believes there are factual questions to be resolved
by the Board, there is no need for a hearing on the issue of
entitlement. [¶] Similarly, if the question of Appellant's
entitlement is answered in the negative, no hearing is necessary
on the issue of quantum. To hold a hearing on February 21, 1996,
on the issue of quantum, before entitlement is established, would
be 'putting the cart before the horse.' As a practical matter,
should the issue of entitlement be decided in Appellant's favor,
given the undisputed facts in the case, as well as the
information already gleaned as a result of GPO's audit of the
claim, the amount of Appellant's recovery would most likely be
negotiated by the parties. [¶] Thus, it would not be an effective
use of either the parties' or the Board's resources to hold a
hearing on either entitlement or quantum at this time." See
Scheduling Motion, at 1-2.
9 Because of the press of other business, the Board was unable
to issue this summary judgment decision by April 5, 1996, as
promised in its Order of January 23, 1996. Accordingly, after
discussing the matter with the parties, the Board canceled the
hearing set for May 7, 1996, and rescheduled it for June 4, 1996.
See Amendment to Scheduling Order, dated April 29, 1996.
Subsequently, with the consent of the parties, the Board also
postponed the hearing set for June 4, 1996, and rescheduled it
for July 9, 1996. See Order Rescheduling Hearing, dated June 6,
1996.
10 See note 1 supra. The reporter's transcript of the
hearing shall be referred to hereinafter as "Tr.," with an
appropriate page number thereafter.
11 As a rule, a party is bound by its stipulations, and such
evidentiary agreements freely entered into are controlling and
conclusive on all issues of fact. See The George Marr Co., GPO
BCA 31-94 (April 23, 1996), slip op. at 3, fn. 3; Banta Co., GPO
BCA 03-91 (November 15, 1993), slip op. at 52-53, 1993 WL 526843
(citing Morelock v. NCR Corp., 586 F.2d 1096, 1107 (6th Cir.
1978), cert. denied 441 U.S. 906, 99 S.Ct. 1995 (1979); Bromley
Contracting Co., Inc. v. United States, 14 Cl. Ct. 69, 74 (1987),
aff'd 861 F.2d 729 (Fed. Cir. 1988); Gresham & Co. v. United
States, 200 Ct. Cl. 97, 112, 470 F.2d 542, 551 (1972); FED. R.
CIV. P. 16). While a court or board may reject a factual
stipulation if it is "demonstrably false" or contrary to the
record evidence, the record here fails to disclose any facts
which would contradict the stipulation in this case. See
Professional Printing of Kansas, Inc., GPO BCA 02-93 (May 19,
1995), slip op. at 43, fn. 57, 1995 WL 488488 (citing Dillon,
Read & Co., Inc. v. United States, 875 F.2d 293 (Fed. Cir. 1989);
Bromley Contracting Co., Inc. v. United States, supra, 14 Cl. Ct.
at 74; Kaminer Construction Corp. v. United States, 203 Ct. Cl.
182, 197, 488 F.2d 980, 988 (1973)). See also The George Marr
Co., supra, slip op. at 3, fn. 3; Banta Co., supra, slip op. at
53.
12 Bawcombe was Director of the PTO's Office of Patent
Publication and Dissemination (OPP). Material Facts, ¶ 5. The
OPP served as the PTO's contact point with GPO for Program D306-
S, which included responsibility for providing the Contracting
Officer with estimates of the volume of patent printing to be
acquired under the program. Id (citing Bawcombe Deposition, at
10).
13 NTIS is a self-supporting agency within Commerce charged
with being the central clearinghouse and Governmentwide resource
for scientific, technical, engineering, and other business-
related information. Its multimedia products range from paper
copy technical reports and periodicals to CD-ROMs, audiovisual
products, computer software and electronic databases, and on-line
services. See The United States Government Manual (1995/96 ed.),
at 168.
14 The record indicates that on March 31, 1994, France also
expressed an interest in receiving CD-ROM patents instead of the
paper copies. Jt. Stip., ¶ 14. However, the PTO had not
included the French Patent Office in its plan to reduce paper
sets of patents by converting to a CD-ROM format. Id. Other
countries expressing a wish and a willingness to receive a CD-ROM
set of patents that were not included in the PTO's reduction plan
for paper sets were Egypt (by letter dated April 12, 1994), the
Republic of Poland (by letter dated April 18, 1994), the Czech
Republic (by letter dated April 19, 1994), New Zealand (by letter
dated April 22, 1994), Malaysia (by letter dated May 4, 1994),
and Romania (by letter dated June 1, 1994). Jt. Stip., ¶ 24,
26-28, 35, 53.
15 These positive responses to the CD-ROM policy, as well as
the negative ones identified above, were received by the PTO's
International Liaison staff, which is responsible for
administering approximately eighty-one (81) patent exchange
agreements. Material Facts, at 4, fn. 6 (citing the Deposition
of Mr. Robert Saifer) (hereinafter Saifer Deposition), ¶ 10.
16 Sweden's dissatisfaction was conveyed to Saifer by
Switzerland's representatives at the meeting. See Saifer
Deposition, at 56. Insofar as the parties' original stipulation
identified the complainant as Switzerland itself (Jt. Stip., ¶
32), it is in error. See Partial Motion, at 7, fn. 3.
17 GPO Contract Terms, Solicitation Provisions, Supplemental
Specifications, and Contract Clauses, GPO Publication 310.2,
Effective December 1, 1987 (Rev. 9-88), which the contract
incorporates by reference, shall be referred to hereinafter as
GPO Contract Terms.
18 In addition to this notice, the solicitation also warned
potential bidders, at the very outset, that "[s]ignificant
quantity reductions may occur during the term of the contract."
See R4 File, Tab A, p.1.
19 See note 16 supra.
20 The Appellant, who was also the incumbent contractor on
Program D306-S, had submitted the only bid for the work. R4
File, Tab B.
21 The parties' stipulation misidentifies Bawcombe as an
employee of GPO, when clearly he was an official of the PTO,
i.e., the Director of the OPP. See Bawcombe Deposition, at 8; R4
File, Tab E.
22 The parties agree that Bawcombe was mistaken about the CD-
ROM policy being rescinded when he sent the memorandum to Cox.
At the time, the PTO had not postponed the CD-ROM program, but
rather it was still in effect. Jt. Stip., ¶ 58; Material Facts,
p. 6, fn. 7. Under PTO procedures, the decision to cancel the
CD-ROM policy was the prerogative of the agency's Executive
Committee, which had not yet considered the matter-it received
the issue for deliberation after July 7, 1994. See R4 File, Tab
F. See also Material Facts, p. 6, fn. 7.
23 Although Margulies outlined one contract modification
approach in an attachment to his letter, he subsequently offered
to provide the Government with alternatives based on different
approaches. See R4 File, Tab I.
24 The conflicting positions of the parties are amply set
forth in the Appellant's Partial Motion, Appellant's Reply, and
Appellant's Leave Request, and in the Respondent's statements of
Material Facts and Points and Authorities, as well as the
testimony in the hearing on January 3, 1995. Between them, the
parties have provided the Board with a comprehensive survey of
the case law in this area, and made its summary judgment task
much easier. The Board appreciates the briefing efforts of both
counsel in this case, and commends them for the professionalism
they have shown in representing their clients' interests.
25 While pursing its "Government negligence" argument at
great length, the Appellant briefly raises the specter that the
undisputed facts in this case may also establish a lack of good
faith on the part of GPO and PTO. Partial Motion, at 2, 16-17.
As the Board understands it, the Contractor reasons that because
Program D306-S was awarded despite the strenuous objections of
PTO's foreign patent exchange partners to substitution of CD-ROM
sets for the second production period, and with PTO fully aware
that cancellation of this new electronic conversion program was
imminent, the Government somehow engaged in bad faith conduct;
i.e., the PTO consciously ignored the best information available
to it in preparing the contract estimates of work. Partial
Motion, at 18-32; Appellant's Reply, at 11-14. The Respondent
denies any bad faith on the Government's part in preparing the
Program D306-S estimates. Points and Authorities, at 14-15. In
that regard, GPO makes three cogent observations: (a) variations
from the solicitation estimates in a "requirements" contract do
not amount to bad faith, see Points and Authorities, at 14
(citing DynCorp, ASBCA No, 38862, 91-2 BCA ¶ 24,044, aff'd 972
F.2d 1353 (Fed. Cir. 1992)); (b) there is no specific evidence of
intent on part of the Government to retaliate or injure the
Contractor, which is necessary is support such an allegation, see
Points and Authorities, at 15 (citing American General Leasing v.
United States, 218 Ct. Cl. 367, 374-75, 587 F.2d 54, 59 (1979);
Kalvar Corp., Inc. v. United States, 211 Ct. Cl. 192, 199, 543
F.2d 1298, 1302, (1976), cert. denied, 434 U.S. 830 (1977);
Librach v. United States, 147 Ct. Cl. 605, 612-14 (1959)); and
(c) the evidentiary standard of "well-nigh irrefragable proof"
for bad faith cases has not been met here, id (citing Union
Pacific Railroad Co. v. United States, 847 F.2d 1567, 1571
(1988); Sanders v. United States, 801 F.2d 1328, 1331 91986);
American General Leasing v. United States, supra, 218 Ct. Cl. at
374; Marine Construction & Dredging, Inc., ASBCA Nos. 38412,
38538, 38913, 39246, 39860, 39913, 40286, 42513, 95-1 BCA ¶
27,286). The Board agrees with the Respondent that Government
bad faith is not an issue in this case, basically for two
reasons. First, not every instance of negligence rises to the
level of bad faith. Second, and perhaps most important, there is
no inkling of malice, either actual or imputed, on the part of
the Government here. As the Board has said on numerous
occasions, an allegation of bad faith must be established by
"well-nigh irrefragable" proof because there is a strong
presumption that Government officials properly and honestly carry
out their functions. See e.g., New South Press & Assoc., Inc.,
GPO BCA 14-92 (January 31, 1996), slip op. 35-36, 1996 WL 112555;
Asa L. Shipman's Sons, Ltd., GPO BCA 06-95 (August 29, 1995),
slip op. at 12, fn. 16, 1995 WL 818784; Professional Printing of
Kansas, Inc., GPO BCA 02-93 (May 19, 1995), slip op. at 43, fn.
58, 1995 WL 488488; Universal Printing Co., supra, slip op. at
24, fn. 24; Sterling Printing, Inc., GPO BCA 20-89 (March 28,
1994), slip op. at 34-35, fn. 46, 1994 WL 275104; B. P. Printing
and Office Supplies, GPO BCA 14-91 (August 10, 1992), slip op. at
16, 1992 WL 382917; The Standard Register Co., supra, slip op. at
12-13. Accord Brill Brothers, Inc., ASBCA No. 42573, 94-1 BCA ¶
26,352; Karpak Data and Design, IBCA No. 2944 et al., 93-1 BCA ¶
25,360; Local Contractors, Inc., ASBCA No. 37108, 92-1 BCA ¶
24,491. Such "well-nigh irrefragable" proof does not exist in
this case. The key to such evidence is a showing of a specific
intent on the part of the Government to injure the contractor.
See Stephenson, Inc., GPO BCA 2-88 (December 20, 1991), slip op.
at 54, 1991 WL 439274. Accord Caldwell & Santmyer, Inc. v.
Glickman, 55 F.3d 1578, 1581 (Fed. Cir. 1995); Torncello v.
United States, 231 Ct. Cl. 20, 681 F.2d 756, 770 (1982); Kalvar
Corp. v. United States, supra. See also Solar Turbines, Inc. v.
United States, 23 Cl. Ct. 142 (1991). There is absolutely
nothing in this record which would show that the employees of two
separate entities-GPO and the PTO-set out to harm the Appellant
or that they acted in concert to achieve that specific result;
e.g., that they fraudulently solicited patents based on CD-ROMs
for the second production period in order to induce a lower bid
price from the Contractor, and then purposefully canceled the
plan for the sole purpose of taking advantage of the lower
prices. See Professional Printing of Kansas, Inc., supra, slip
op. at 43; Universal Printing Co., supra, slip op. at 24, fn. 24;
Stephenson, Inc., supra, slip op. at 57. Accordingly, the Board
deems it unnecessary to engage in any detailed treatment of the
Appellant's allegations of Government bad faith, and will confine
its analysis to the remaining issues; i.e., negligent preparation
of the contract estimates, mutual mistake, and constructive
change. Besides, a finding that the Government acted in bad
faith is not necessary to a finding that its estimates were also
negligently prepared. See Contract Management, Inc., ASBCA No.
44885, 95-2 BCA ¶ 27, 886; DynCorp, supra, 91-2 BCA at 120,350.
26 The Appellant discussed in detail the Armed Services Board
of Contract Appeals (ASBCA) opinion in Contract Management, Inc.
in its February 8, 1996, Request for Leave to File Supplement to
Appellant's Reply Brief.
27 The Appellant notes that it based its bid on the
solicitation's estimated a 42 percent reduction in total monthly
impressions between the first and second production periods.
Partial Motion, at 28 (citing Jt. Stip., ¶ 41). Thus, there was
a 138 percent difference between the work as bid and the job as
actually performed. Id.
28 The Appellant suspects that if the PTO had properly
informed the Respondent prior to May 20, 1994, that the CD-ROM
portion might not be implemented because of the objections of the
foreign patent offices, GPO would have had time to either amend
the work estimates for the second production period or cancel the
solicitation and readvertise it with the new figures. Partial
Motion, at 27. This would have allowed all bidders time to
revise their bids. Partial Motion, at 20. Furthermore, the
Contractor notes that although it received the first print order
on June 13, 1994, work for the first production period under the
contract did not actually begin until July 14, 1994, when the
Government-furnished material was received, or approximately
eight (8) weeks after it was awarded. Partial Motion, at 27, fn.
13. Thus, the Appellant suggests that the contract could have
been partially terminated for convenience and a separate
solicitation issued for the second production period. Id. See
GPO Contract Terms, Contract Clauses, ¶ 19 (Termination for the
Convenience of the Government).
29 A version of this "excess orders" argument was made by the
GPO contractor in R.C. Swanson Printing and Typesetting Co., GPO
BCA 31-90 (February 6, 1992), 1992 WL 487874, aff'd sub nom.
Richard C. Swanson, T/A R.C. Swanson Printing and Typesetting Co.
v. United States, Civil Action No. 92-128C (Cl. Ct. October 2,
1992) (unpublished) (hereinafter Swanson I), and was rejected by
the Board. In that case, the Board affirmed the contracting
officer's partial default of the appellant's contract for the
printing and binding of Department of Labor area and industry
wage surveys and bulletins on the ground that the appellant
failed to comply with the contract's delivery requirements. The
appellant admitted that it had problems making timely deliveries
for the first three months of its contract, but it blamed its
failure on, inter alia, an excessive number of print orders
issued by the Government. This argument was rejected by the
Board because it was based on an interpretation of the contract
which was found to be untenable.
30 While the Appellant commends the Government for the
accuracy of its previous Program D306-S estimates, the Respondent
notes that other contractors performing patent work under that
program would disagree. Points and Authorities, at 17, fn. 12
(citing EPCo Associates v. United States, Civil Action No.
93-309C (Fed. Cl. August 17, 1993); EPCo Associates, GPO BCA
16-91 and 16A-91 (November 18, 1993), 1993 WL 526882; EPCo
Associates, GPO BCA 26-93 (November 18, 1993), 1993 WL 526919.
31 As GPO notes, a "requirements" contract is formed when the
Government promises to fill all of its actual needs during the
contract period with purchases from the contractor, and the
latter commits to meeting those needs at the agreed contract
price. Points and Authorities, at 5-6 (citing Shader
Contractors, Inc. v. United States, 276 F.2d 1, 4 (Ct. Cl. 1960).
A key characteristic of "requirements" contacts is the very
uncertainty about actual purchases over the contract term, since
this type of arrangement is used when the Government anticipates
future recurring needs but cannot tell precisely what they will
be at the time the contract is awarded. Points and Authorities,
at 6 (citing Medart, Inc., v. Austin, 967 F.2d 579 (Fed. Cir.
1992). Another feature is the allocation of the risks associated
with the difference between the contract estimates and actual
purchase to the contractor, not the Government; i.e., contract
estimates alone, will not change a "requirements" contract to one
for a definite quantity. Id. (citing Medart, Inc., supra; Lone
Star Energy Co., VACAB No. 1163, 76-1 BCA ¶ 111,650). It is this
risk allocation element which is at the heart of this dispute.
32 Thus, GPO says that the Government's failure to order any
services whatsoever under a "requirements" contract does not
entitle the contractor to compensation. Points and Authorities,
at 8 (citing AGS-Genesys Corp., supra).
33 According to GPO, under a "requirements" contract the
contractor alone bears the risks associated with such
unanticipated changes. Points and Authorities, at 8 (citing
Henry Barracks Housing Corp. v. United States, 281 F.2d 196 (Ct.
Cl. 1960); Metro Industrial Painting Corp., supra).
34 B & W Press and Central Data Processing were decided by ad
hoc contract appeals panels which considered appeals from final
decisions of GPO Contracting Officers prior to the establishment
of the Board in 1984. GPO Instruction 110.10C, Subject:
Establishment of the Board of Contract Appeal, dated September
17, 1984. Decisions of these ad hoc panels are cited by the
Board in its decisions as "GPOCAB." While the Board is not bound
by the decisions of the ad hoc panels, its policy is to follow
their rulings where applicable and appropriate. Asa L. Shipman's
Sons, Ltd., supra, slip op. at 33, fn. 34; Univex International,
GPO BCA 23-90 (July 31, 1995), slip op. at 23, fn. 24, 1995 WL
488438, reconsid. denied, February 7, 1996, 1996 WL 112554;
Universal Printing Co., supra, slip op. at 11, fn. 9; Stephenson,
Inc., supra, slip op. at 18, fn. 20. See also Shepard Printing,
GPO BCA 23-92 (April 29, 1993), slip op. at 14, fn. 19, 1993 WL
526848; Chavis v. Chavis Printing, GPO BCA 20-90 (February 6,
1991), slip op. at 9, fn. 9, 1991 WL 43920.
35 The GPO "Requirements" clause, except for a few minor word
differences, repeats the standard "Requirements" clause set forth
in the Federal Acquisition Regulation (FAR) for Executive Branch
procurements. See FAR § 52.216-21 (Requirements). Perhaps more
importantly, the GPO clause, for all practical purposes, is a
verbatim copy of the "Requirements" clause found in Executive
Branch contracts prior to 1984. There is no confusion about the
scope and meaning of its terms. See McDonald & Eudy Printers,
Inc., supra, slip op. at 11-12; Shepard Printing, supra, slip op.
at 21.
36 This provision of GPO Contract Terms states: "Awards by GPO
for printing, binding, and related services are the sole
responsibility of GPO and not of its customer agencies.
Modifications shall have no force or effect unless addressed
before the fact to and subsequently confirmed in writing by the
Contracting Officer. Failure to comply with this article may be
cause for nonpayment of additional costs incurred or rejection of
the order." See also PPR, Chap. I, Sec. 2 (Definition of
"Contracting Officer"), Sec. 3, ¶ 2(d) (Procurement Authority-
Contracting Officers). As indicated previously, GPO Contract
Terms is incorporated by reference in the solicitation, and thus
the above-quoted language is part of the disputed contract. See
note 5 supra. Furthermore, the Board itself has recognized and
affirmed the exclusive contracting authority of GPO Contracting
Officers many times in the past. See e.g., B & B Reproductions,
GPO BCA 09-89 (June 30, 1995), slip op. at 37-38, 1995 WL 488447;
RD Printing Associates, Inc., GPO BCA 02-92 (December 16, 1992),
slip op. at 10, fn. 11, 1992 WL 487875; Castillo Printing Co.,
GPO BCA 10-90 (May 7, 1991), slip op. at 48, reconsid., denied,
March 30, 1992.
37 GPO also contends that the speed with which all parties
were notified once Lawson decided to initiate review of the CD-
ROM policy, is further proof that the Government acted reasonably
and responsibly under the circumstances. The Respondent says
that it was important to notify the Appellant quickly of the
change regarding the CD-ROM policy, even though it had not yet
been formally rescinded, because the date for implementation was
fast approaching, and while the Commissioner of Patents and
Trademarks had not issued an official decision, the Contractor
needed to know that the PTO's needs would not diminish as
expected on August 1, 1994. GPO says that without such a
warning, the Appellant might have scaled back its printing
capability to match the solicitation's lower estimates for the
second production period. Points and Authorities, at 14.
38 The Appellant, as might be expected, takes strenuous issue
with the Respondent's view of the facts on the negligence
question. Appellant's Reply, at 11-17. However, reduced to its
essentials, the Contractor's contrary interpretation of the facts
and the law is two-fold. First, the Appellant argues that the
source of the Government's negligence, and the real culprit in
this matter, was the PTO's International Liaison Staff, which
knew prior to May 20, 1994, that there was a question about the
viability of the plan to substitute CD-ROM patents for paper
sets because of the objections of key foreign countries, and yet
failed to alert the OPP and GPO so that the solicitation
estimates could be amended and potential bidders notified
accordingly. Appellant's Reply, at 12 (citing Jt. Stip., ¶ 57).
In that regard, as if this major failure of communication was not
enough, the Contractor also believes that the PTO's International
Liaison Staff proceeded to make matters worse by the dilatory way
in which they handled this adverse information; i.e., nearly
three (3) months passed between April 11, 1994, when Germany
first complained about the CD-ROM proposal, and July 7, 1994,
when the OPP and GPO were told that the electronic substitution
plan was in trouble, during which time the solicitation was "on
the street," the contract was awarded, and all the while the
Government officials actually involved with the contract, as well
as the Appellant, were kept completely "in the dark" about the
plan's possible cancellation. Appellant's Reply, at 13-14
(citing Jt. Stip., ¶¶ 29-32, 47-50). Second, the Appellant
disagrees with the Respondent's assertion that any knowledge
acquired by he PTO could not be imputed to GPO. Appellant's
Reply, at 15. As the Contractor sees the law, if two agencies
have a close contractual relationship, facts known by the
employees of one of them may be imputed to the other, especially
if either a reason to inquire, or a duty to receive or transmit
relevant information is present. Appellant's Reply, at 15-16
(citing J.A. Jones Construction Co. v. United States, 182 Ct. Cl.
615, 390 F.2d 886 (1968); In Re Agent Orange Product Liability
Litigation, 597 F.Supp. 740 (E.D.N.Y. 1984); RESTATEMENT (SECOND)
OF AGENCY §§ 272, 275 (1958)). In this case, according to the
Appellant, GPO's role as the PTO's agent with respect to the
contract, created the sort of "significant bond" or "meaningful
connection" between them which, in the eyes of the law, would
allow the Contractor to reasonably expect that they would consult
with one another and share information. Appellant's Reply, at 16
(citing L.W. Foster Sportswear Co., Inc. v. United States, 186
Ct. Cl. 499, 405 F. 2d 1285 (1969); J.A. Jones Construction Co.,
supra, 182 Ct. Cl. at 626; Weaver Construction Co., DOTCAB No.
2034, 91-2 BCA ¶ 23,800; National Standards Association, GSBCA
No. 10451-P (January 17, 1990), 1990 BPD ¶ 25; 44 U.S.C. §§
501-02). In the Appellant's view, when the Government agencies
involved in this procurement failed to share relevant information
affecting the contract, particularly about the plan to replace
paper patents with CD-ROM sets, it had a profound "ripple effect"
on the work estimates in the solicitation for the second
production period, and their nonfeasance justifies a finding of
negligence. Appellant's Reply, at 17.
39 The Respondent notes that the "Schedule of Prices" for
Program D306-S provides a two-tier system for pricing for
printing and binding for each production period under the
contract. Points and Authorities, at 18-19 (citing R4 File, Tab
A, Amendment No. 2, at 4-9). Specifically, bids were solicited
on the basis of a price for the "first 10 copies" printed and
another price for "each additional 5 copies or fraction thereof"
for each production period. Points and Authorities, at 18
(citing R4 File, Tab A, Amendment No. 2 at 4, 7 (Line Items
I(a)-(c)). This "rule of 5" for extra charges also applied to
some other contract line items besides printing and binding.
Points and Authorities, at 18-19 (citing R4 File, Tab A,
Amendment No. 2, at 4, 7 (Line Item II(a) requiring that copies
in addition to the specified 10 be charged under Line Item I(a)
(2),(4) and I(b)(2),(4)). GPO's contention is that a potential
contractor could tailor a protective pricing strategy by
manipulating "the rule of 5." Points and Authorities, at 18.
40 In that regard, the Contractor only submitted a price for
the "first 10 copies," and except for two (2) line items (of the
twelve (12) involved) entered "NC (No Charge)" for additional
copies. Points and Authorities, at 19 (citing R4 File, Tab C).
Similarly, the Contractor bid "NC" on other contract line items
which were asked for offers on a "per leaf" or "per set" basis.
Id. (citing R4 File, Tab C (Line Items III, IV, V)). The
Appellant did submit prices for each 1000 leafs of paper used for
printing. Id. (citing R4 File, Tab C (Line Item VI)).
41 The Respondent also questions whether or not the Appellant
was actually damaged by the PTO's postponement of the CD-ROM
policy. Points and Authorities, at 20, fn. 13. In that regard,
GPO contends that: (a) the Appellant was paid for each 1000
sheets of paper used regardless of the number of sets of patents
ordered; (b) the Contractor held the predecessor contract and the
level of effort on that contract and for the first production
period in this one was the same; (c) for the second production
period the actual level of effort was only "slightly (10 percent)
higher" than the first period; and (d) the Appellant's prices for
paper and "first 10 copies" in the second production period were
actually higher than the prices it charged for the same line
items in the first period. Id. (See R4 File, Tab C; Tr. 28-29,
55). From this the Government concludes that the Contractor
really received more compensation during the second production
period for only a slightly higher level of work. Whether or not
the Respondent's comments and calculations are accurate will not
be tested in this proceeding. Such matters relate to the quantum
issue, and the amount of relief, if any, would depend on the
Appellant's ability to prove its costs. See New South Press &
Assoc., Inc., supra, slip op. at 38; R.C. Swanson Printing and
Typesetting Co., GPO BCA 15-90, Supplemental Decision (July 1,
1993), slip op. at 19, 1993 WL 526638 (citing Building
Maintenance Specialists, Inc., ENG BCA No. 5654, 90-3 BCA ¶
23,032) (hereinafter Swanson II). Accord Lisbon Contractors,
Inc. v. United States, 828 F.2d 759, 767 (Fed. Cir. 1987); J.W.
Cook & Sons, Inc., ASBCA No. 39691, 92-3 BCA ¶ 25,053, at 124,863
(citing Tubergen & Associates, Inc., ASBCA Nos. 34106, 34107,
90-3 BCA ¶ 23,058); Youngstrand Surveying, AGBCA No. 90-150-1,
92-2 BCA ¶ 25,017, at 124,694 (citing Roberts International
Corp., ASBCA No. 15118, 71-1 BCA ¶ 8869). Consequently, the
scope of recovery could range anywhere from the total amount of
the Contractor's claim to a sum no greater than a "peppercorn."
42 See also Consolidated Security, Inc. v. General Services
Administration, GSBCA No. 12693, 94-2 BCA ¶ 26,892.
43 The Board Rules specifically identify only two types of
motions; i.e., motions for dismissal for lack of jurisdiction and
motions for reconsideration. See Board Rules, Rules 5, 12.4
(reconsideration in small claims (expedited) and accelerated
procedure cases) and 29 (reconsideration in cases conducted under
the regular procedure).
44 One of the principal purposes of summary judgment is to
isolate and dispose of factually unsupported claims or defenses,
see Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986), and to
cut through the pleadings and distinguish substantial issues from
phantom issues raised only in the pleadings, see Ite, Inc., NASA
BCA No. 1086-6, 88-1 BCA ¶ 20,269, at 102,595-96 (citing, 6 J.
MOORE, W. TAGGART & J. WICKER, MOORE'S FEDERAL PRACTICE §
56.15(2) (2d ed. 1985)). As a consequence, the procedure is
deemed "an integral part of the Federal Rules as a whole, which
are designed 'to secure the just, speedy and inexpensive
determination of every action.'" See Celotex Corp. v. Catrett,
supra, 477 U.S. at 327 (citing FED. R. CIV. P. 1; William W.
Schwarzer, Summary Judgment under the Federal Rules: Defining
Genuine Issues of Material Fact, 99 F.R.D. 465, 467 (1987)). See
also Board Rules, Preface to Rules, ¶ VI.C. Indeed, district
courts have the power to enter such judgments sua sponte,
provided that the losing party has notice that it must come
forward with all of its evidence. See Celotex Corp. v. Catrett,
supra, 477 U.S. at 326 (citing, 10A C. Wright, A. Miller & M.
Kane, Federal Practice and Procedure, § 2720, pp. 28-29 (1983)).
While courts are reluctant to deprive a litigant of the right to
a jury trial, nonetheless they recognize that the summary
procedure, "properly employed," is a useful device for unmasking
frivolous claims and putting a swift end to meritless litigation.
See IBM Poughkeepsie Employees Federal Credit Union v. Cumis
Insurance Society, Inc., 590 F.Supp. 769, 771 (S.D.N.Y. 1984)
(citing Quinn v. Syracuse Model Neighborhood Corp., 63 F.2d 438,
445 (2d Cir. 1980); Applegate v. Top Associates, Inc., 425 F.2d
92, 96 (2d Cir. 1970)). However, courts always have discretion
to deny the motion even where the moving party seems to have
discharged its summary judgment burden. See e.g., Flores v.
Kelley, 61 F.R.D. 442 (D.Ind. 1973); John Blair & Co. v. Walton,
47 F.R.D. 196, 197 (D.Del. 1969). In such cases, the thinking is
that regardless of whether the burden is met, the court should
have the freedom to allow the case to continue when it has any
doubt as to the wisdom of terminating the action prior to a full
trial. See e.g., Baca v. United States, 29 Fed. Cl. 354, 358
(1993) ("A trial court may deny summary judgment, if 'there is
reason to believe that the better course would be to proceed to
trial.'" [Citation omitted.]) See also Olberding v. Department
of Defense, et al., 564 F.Supp. 907, 908, fn. 1 (D.Ia. 1982),
aff'd 709 F.2d 621 (8th Cir. 1983). Furthermore, where difficult
legal issues are involved, the court can refuse summary judgment
on the ground that a fuller development of the facts may serve to
clarify the law or help indicate its application to the case.
See e.g., Davidson v. Stanadyne, Inc., 718 F.2d 1334, 1339, (5th
Cir. 1983); Security Pacific National Bank v. OL.s. Pacific
Pride, O/N, 549 F.Supp. 53, 55 ((D.Wash. 1982).
45 A material fact is on which will make a difference in the
outcome of the case. McDonnell Douglas Services, Inc., supra,
95-1 BCA at 136,229 (citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242 (1986)).
46 The Board's research indicates that agency contract
appeals boards are somewhat less strict in applying Rule 56 than
are the courts. See The George Marr Co., supra, slip op. at 36,
fn. 29; Vanier Graphics, Inc., supra, slip op. at 36, fn. 29.
The reason for this apparent leniency probably has something to
do with the nature of the administrative process itself. In that
regard, the Supreme Court instructs that: "Rule 56 must be
construed with due regard not only for the rights of persons
asserting claims and defenses that are adequately based in fact
to have those claims and defenses tried to a jury, but also for
the rights of persons opposing such claims and defenses to
demonstrate in the manner provided by the Rule, prior to trial,
that the claims and defenses have no factual basis." See Celotex
Corp. v. Catrett, supra 477 U.S. at 327. [Emphasis added.]
Administrative proceedings, of course, are not intended to
confront the parties with all the rigors of courtroom litigation
before a jury. Furthermore, it is axiomatic that in
administrative hearings the strict rules of evidence do not
apply. See Federal Trade Commission v. Cement Institute, 333
U.S. 683, 705-06 (1948). See also, Donovan v. Sarasota Concrete
Co., 693 F.2d 1061, 1066 (11th Cir. 1982); Calhoun v. Bailar, 626
F.2d 145, 148 (9th Cir. 1980). For evidence to be admitted in an
administrative proceeding it must only be relevant and material,
and no attention is paid to whether the proof would be admissible
in court. See Grant Associates, Inc. v. United States, 11 Cl.Ct.
816 (1987). Indeed, an administrative body may exclude evidence
otherwise admissible under the Federal Rules. See Carpenter
Sprinkler Corp. v. National Labor Relations Board, 605 F.2d 60,66
(2d Cir. 1979). Perhaps the best known difference between the
courts and administrative forums is the use of hearsay evidence,
which is fully admissible in administrative proceedings. See
Evosevich v. Consolidation Coal, 789 F.2d 1021 (3rd Cir. 1986);
Williams v. Department of Transportation, 781 F.2d 1573 (11th
Cir. 1986), rehearing denied 794 F.2d 687 (1987). In that
regard, hearsay proof is allowed if it is relevant and material,
see Veg- Mix, Inc. v. Department of Agriculture, 832 F.2d 601
(D.C. Cir. 1987), and otherwise reliable, adequate, probative and
fundamentally fair, see e.g. Mobile Consortium of CETA Alabama v.
Department of Labor, 745 F.2d 1416 (11th Cir. 1984); Diaz v.
Postal Service, 658 F.Supp. 484 (E.D. Cal. 1987). See also Pitts
on behalf of Pitts v. United States, 1 Cl.Ct. 148 (1983).
47 The Federal summary judgment rule provides: "[A]n adverse
party may not rest upon the mere allegations or denials of his
pleadings, but his response, by affidavits or as otherwise
provided in this rule, must set forth specific facts showing that
there is a genuine issue for trial. If he does not so respond,
summary judgment, if appropriate, shall be entered against him."
FED. R. CIV. P. 56(e). See Celotex Corp. v. Catrett, supra, 477
U.S. at 324; First National Bank of Arizona v. Cities Service
Co., 391 U.S. 253, 289 (1968); Mingus Constructors, Inc. v.
United States, 812 F.2d 1387, 1390-91 (Fed. Cir. 1987). See also
Do-Well Machine Shop, Inc., ASBCA No. 34898, 89-1 BCA ¶ 21.491,
at 108,281; Ite Inc., supra, 88-1 BCA at 102,595.
48 New South Press & Assoc., Inc., a recent decision, might
have been another such case. However, when the contractor
challenged the contract estimates as grossly inaccurate after it
received the first print order, but before performance began, the
Government terminated the contract for convenience. See New
South Press & Assoc., Inc., supra, slip op. 9-15. Since the
parties could not agree on the amount of compensation owed to the
contractor under the circumstances, the matter was heard by the
Board as a standard dispute involving a convenience termination
claim.
49 The Respondent states that the "Requirements" clause in
Program D306-S is "almost identical to the provisions contained
in other Government contracts which have been construed by the
courts and boards of contract appeals. Points and Authorities,
at 5 (citing R4File, Tab A, at 11). Actually, for all practical
purposes, the clause is a verbatim republication of the
"Requirements" clause found in Executive Branch contracts prior
to 1984. See Shepard Printing, supra, slip op. at 21; McDonald
and Eudy Printers, Inc.; supra, slip op. at 11-12.
50 The Board notes that this is the second time it has had
occasion to describe the Appellant as an "innocent bidder." See
GraphicData, Inc., GPO BCA 28-88 (February 9, 1990), slip op. at
9, 1990 WL 454980.
51 See note 3 supra.
52 Another theory which might be available to the Board is one
which says that Government estimates are impliedly warranted to
be reasonably accurate, and bases the Government's liability for
inaccurate estimates on a breach of that warranty. See Cedar
Lumber, Inc. v. United States, 5 Cl. Ct. 539, 546 (1984) (citing
Caffall Brothers Forest Products, Inc. v. United States, 230 Ct.
Cl. 517, 529-30, 678 F.2d 1071, 1078 (1982); Timber Investors,
Inc. v. United States, 218 Ct. Cl. 408, 417-20, 587 F.2d. 471,
476-78 (1978)). See also John Cibinic, Jr. and Ralph C. Nash,
Jr., Administration of Government Contracts, 3d ed., (The George
Washington University, 1995), at 254-255 (hereinafter Cibinic &
Nash, Administration). In that respect, the issue would be akin
to a Government breach of its implied duty to cooperate with the
Contractor in performance of the contract. See New South Press,
GPO BCA 45-92 (November 4, 1994), slip op. 25, 1994 WL 837425;
Stephenson, Inc., supra, slip op. at 38-39. Accord Oxwell, Inc.,
ASBCA Nos. 27523, 27524, 86-2 BCA ¶ 18,967 (Government failed to
provide proper GFP support); Robert J. DiDomenico, GSBCA No.
5539, 82-2 BCA ¶ 16,093 (Government breached its lease contract
by delivering the plans for building alterations four months late
which caused the contractor to incur additional costs from
performance in winter weather and from inability to schedule work
in the most efficient manner). Although, as indicated, the Board
has ruled that it is without jurisdiction to entertain "pure"
breach of contract claims, see R.C. Swanson Printing and
Typesetting Co., supra, slip op. at 41; The Wessel Co., Inc.,
supra, slip op. at 46, it has never expressly held that claims
relying on the Government's alleged breach of its implied duty to
cooperate with the contractor in performance of the contract are
barred from this forum as well, cf. Stephenson, Inc., supra, slip
op. at 46-47 (contractor's breach of duty allegation considered
and rejected by the Board). But cf. Professional Printing of
Kansas, Inc., supra, slip op. at 62 (Board upheld contractor's
claim based on implied warranty of specifications). Likewise,
since the Board's jurisdiction in this case is predicated on its
traditional power to review the reasonableness of Contracting
Officer actions, it deems it unnecessary to enter uncharted
waters and extend its inquiry to the examination the possible
breach of another type of implied warranty.
53 As made clear in the "Contractual Responsibility"
provision of GPO Contract Terms: "Awards by GPO for printing,
binding, and related services are the sole responsibility of GPO
and not of its customer agencies. Modifications shall have no
force or effect unless addressed before the fact to and
subsequently confirmed in writing by the Contracting Officer.
Failure to comply with this article may be cause for nonpayment
of additional costs incurred or rejection of the order."
54 As defined in GPO's 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 p. 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 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, Section IV, Sec. IV, ¶
2, at p. 9. [Emphasis added.] See also, B & B Reproductions,
supra, slip op. at 3, fn. 5; RD Printing Associates, Inc., supra,
slip op. at 6, fn. 6; supra; Swanson I, supra, slip op. at 6, fn.
4.
55 The Board is unaware of any requirement in the PPR
comparable to FAR § 16.503(a)(1). However, the PPR does state
that a term contract, such as here, is appropriate "[w]hen
requirements can be forecast with relative accuracy, . . .".
PPR, Chap. VII, Section 1, ¶ 2. In any event, the Board's cases
have generally assumed that the GPO Contracting Officers are
bound to the same standard of care as their Executive Branch
counterparts. See e.g., Shepard Printing, supra, slip op. at
23-24; McDonald & Eudy Printers, Inc., supra, slip op. at 15.
56 As a rule, negligence issues are poor candidates for
summary judgment. See Didier v. J.C. Penney Co., 868 F.2d 276,
281 (8th Cir. 1989). See generally, William W. Schwarzer, Alan
Hirsch and David J. Barrans, The Analysis and Decision of Summary
Judgment Motions (Federal Judicial Center, 1991), at 34; William
W. Schwarzer, Summary Judgment Under the Federal Rules: Defining
Issues of Material Fact, 99 F.R.D. 465, 471-72 (1987). The Board
suspects that this is because the proximate cause question is
particularly susceptible to the Rule 56 requirement that any
evidence presented by the party opposing summary judgment
(typically the one accused of negligence) must be believed and
all justifiable inferences are to be drawn in its favor. See
Baca v. United States, supra, 29 Fed. Cl. at 358-59; Bataco
Industries, Inc. v. United States, supra, 29 Fed. Cl. at 322.
57 Earlier in his deposition, Bawcombe identified his office-
the OPP-as the organization within the PTO responsible for
identifying patent printing requirements from the user offices in
the agency and communicating them to GPO. See Bawcombe
Deposition, at 9-10, 15.
58 This working relationship between GPO and the OPP seems to
have generated trustworthy estimates for Program D306-S in the
past, a fact admitted by the Contractor. Tr. 65. Indeed, the
Appellant has no complaint about the estimates for the first
production period, which seem to have followed the historical
pattern. Material Facts, ¶ 17 (citing Tr. 28-29, 55). Rather,
this appeal focuses entirely on the estimates for the second
period of performance.
59 The International Liaison Staff also received several
comments supporting the CD-ROM policy-from Austria, Denmark, the
People's Republic of China, France, Egypt, Poland, the Czech
Republic, New Zealand, Malaysia, and Romania (Jt. Stip., ¶¶ 14,
16, 24-28, 35 52-53 ; Material Facts, ¶ 10)-but these favorable
reactions are not germane to the issues in this proceeding.
60 Thus, for example, the record shows that the PTO's Office
of Electronic Data Products and Services (OEDPS) also played a
major role in the CD-ROM substitution policy. See Saifer
Deposition, at 36-37.
61 For the same reason, the so-called "superior knowledge"
doctrine is not applicable to this case. See See Professional
Printing of Kansas, Inc., supra, slip op. at 81, fn. 83. Accord
AIW-Alton, Inc., ASBCA No. 49917, 95-2 BCA ¶ 27,875; R.A.
Edwards, Inc., ENG BCA No. 5985, 94-2 ¶ 26,733.
62 The Board's inability to provide equitable relief also
extended to contractor requests for reinstatement of their
contracts. See Swanson I, supra, slip op. at 26, fn. 14 (where
the Board denied the contractor's request for reinstatement of
the contract because that form of equitable relief was solely
within the authority of GPO's contracting officers). Accord Crow
Fitting Co., Inc., ASBCA No. 25378, 81-1 BCA ¶ 14,951; Campbell &
Associates, GSBCA No. 5061, 78-2 BCA ¶ 13,354; Southwestern
Cooperative Educational Laboratory, LBCA No. 74-BCA-101, 75-1 BCA
¶ 11,309.
63 In light of this finding, the Board finds it unnecessary to
decide whether the Respondent would have been willing to accept a
higher price, as the Appellant contends, see Partial Motion, at
34, or whether the contract allocated the risk to the Contractor,
as contended by GPO, see Points and Authorities, at 18. However,
the Board notes that there is some evidence in the record showing
that the Contracting Officer was not averse to considering an
increase in the contract price after the CD-ROM program was
postponed by the PTO. See e.g., R4 File, Tabs J and M.
64 When to use the "Changes" clause, and under what
circumstances is the "Termination for Convenience" clause
appropriate, is a question that is constantly debated by the
contract appeals boards. See J.A. Jones Construction Co., IBCA
No. 3280, 94-3 BCA ¶ 27,103; Industrial Consultants, Inc., VABCA
No. 3249, 91-3 BCA ¶ 24,326. Both clauses provide a mechanism
for the deletion of contract work. However, the usual practice
is when major portions of the contract work is deleted, the
"Termination for Convenience" clause is more appropriate where no
additional work is substituted in its place, while deletion of a
minor item of work is considered to be within the ordinary
coverage of the "Changes" clause. See Manis Drilling, IBCA No.
2658, 93-3 BCA ¶ 25,931, at 128,980.
65 The Board supposes that an argument could be made that the
Contracting Officer's letter of July 21, 1994, was an ultra
vivres act. However, it is not necessary to get into that issue
because, even if the letter was not a "change order" within the
meaning of the "Changes" clause, then at the very least a
"constructive change" occurred in this case.
66 Nothing in the record explains how the PTO's projected
reduction of twelve (12) paper patent sets became a decrease of
twenty-five (25) paper patent sets in the April Solicitation.
67 In analyzing the "constructive change" doctrine, the board
in Industrial Research Associates, Inc., thought that the
"change" element involved an examination of the actual
performance to See whether it went beyond the minimum standards
demanded by the terms of the contract, while the "order" element
needed some Government action, in word or deed, requiring the
contractor to perform work which is not a necessary part of the
contract. See Industrial Research Associates, Inc., supra, 68-1
BCA at 32,685-86. Cibinic & Nash believe that this interpretation
is too narrow because it neglects changes where Government
"fault" is involved. In their view, Government "fault" can also
satisfy the "order" requirement, and thus it is more correct to
state that a "constructive change" requires work beyond the
contract requirements plus either an "order" or "fault" on the
part of the Government. See Cibinic & Nash, Administration, at
431.
68 A "constructive change" based on grossly inadequate
estimates is not the same as a "cardinal change" due to the
magnitude of the difference between the contract estimates and
the actual cost of the work to the contractor. See Edward R.
Marden Corp. v. United States, 194 Ct. Cl. 799, 442 F.2d 364, 369
(1971). Also cf. CCI Contractors, Inc., AGBCA No. 84-314-1, 91-3
BCA ¶ 24,225, at 121,168. Nothing in the Board's ruling in this
case is meant to imply that the grossly inaccurate estimates
caused by the postponement of the CD-ROM plan amounted to a
"drastic modification beyond the scope of the contract work"
which would have allowed the Appellant to cease work on the
contract. See Airprep Technology, Inc. v. United States, 30 Fed.
Cl. 488, 505 (1994); Air-A-Plane Corp. v. United States, 408 F.2d
1030, 87 Ct. Cl. 269, 275 (1969).