U.S. Government Printing Office Office of General Counsel Contract Appeals Board Appeal of Bonnar-Vawter, Incorporated October 24, 1974 Jay E. Eisen, Assistant Counsel Essie A. Ablove, Assistant Counsel Vincent T. McCarthy, General Counsel Panel 74-3 This is an appeal filed by Bonnar-Vawter, Incorporated, Keene, New Hampshire, herein also referred to as the contractor, on April 8, 1974 (Exhibit U), under the disputes clause of the contract, Program 374-M, Print Order 7, Article 29, U.S. GPO Contract Terms No. 1. The Office of General Counsel is the Public Printer's representative for the determination of appeals under the disputes clause. I. FINDINGS OF FACT (a) This case arises out of a contract entered into by the appellant Bonnar-Vawter, Incorporated, and the U.S. Government Printing Office, herein also referred to as the GPO, for the production of marginally punched continuous carbon interleaved forms DD 1348-1, in two, four, and six part sets. (b) The contract, designated as Program 374-M is a multiple award requirements type contract awarded as a result of formal advertising in February 1973. The period of the contract is for 12 months beginning April 1, 1973 and ending March 31, 1974. The contract provides that each print order offered thereunder be abstracted individually to determine the lowest contract as to price in sequence. The Government by the terms of the contract is obligated to offer each print order, initially to the low contractor thus determined, to the next low contractor in sequence, until the individual print order has been accepted. The only basis upon which the contractor has a right to refuse a printing order requirement is his inability to meet the Government's delivery requirements. (c) Print Order No. 7 (Exhibit E), was a requirement of the Department of the Air Force for the production of 8,838,200 four- part forms, with the first shipment of 1,000,000 forms to be delivered by September 21, 1973, 3,919,000 due by October 15, 1973 and the balance by October 30, 1973. (d) The prices submitted for the requirements of Print Order No. 7 were abstracted and the sequence established as follows: (1) Moore Business Forms, Fredericksburg, Va $49,500.78 (2) Moore Business Forms, Honesdale, Pa. $51,082.77 (3) Bonnar-Vawter, Inc., Rockland, Maine $60,133.61 (4) Uforma, Inc., Roseville, Michigan $67,198.21 (5) McGregor Printing Corp., Union Springs, AL. $68,312.10 (6) McGregor Printing Corp., York, Ala. $68,764.36 (Exhibit G) (e) None of the contractors listed above were able to comply with the Government's delivery schedule. At the time the offers were initially made, the contractors who were unable to meet the schedule were requested to submit the earliest dates that they would be able to make the deliveries. The schedule submitted by Bonnar-Vawter, through its recognized agent, Mr. Carl D. Ford was the most favorable alternate schedule received and was acceptable to the ordering agency, the Department of the Air Force (Exhibit H). Thereafter, the print order was again offered in the sequence with a revised shipping schedule until accepted by Bonnar-Vawter (Exhibits M and N). The Print Order No. 7, Purchase Order No. 11300, was forwarded to the contractor on July 19, 1973, with deliveries required as follows: January 28, 1974 1,000,000 Forms February 19, 1974 3,919,000 Forms March 7, 1974 3,919,000 Forms (Exhibits E and L) (f) The Government Printing Office received no further communication from Bonnar-Vawter, Incorporated until contacted by Mr. J. P. LeGory about the middle of October 1973, at which time the contractor requested that the contract be rescinded. The Government Printing Office received a copy of a letter, with enclosures, submitted by the contractor, which was dated October 4, 1973, and directed to Mr. J. P. LeGory, Federal Marketing Corporation, Falls Church, Virginia. Mr. LeGory was a duly authorized agent and represented the contractor in dealing with the GPO (Exhibit I). The appellant asserted in said letter that the "main inability to perform . . . is our total inability to secure the paper which is necessary to produce this order. Enclosed with this letter are copies of three letters from suppliers who have placed us on the requirement of cash with order for any and all purchases." The contractor, in addition, asserted that its former agent, Mr. Carl D. Ford, located in Arlington, Virginia, violated the corporation's instructions regarding its ability to make delivery of the contract requirements in 7 months, rather than a period of 11 months. (Exhibits J1, J2, J3) (g) In a letter to GPO, dated January 8, 1974, the contractor reported its acknowledgment of Purchase Order No. 11300, dated June 27, 1973. In pertinent part it stated the following: "Our initial shipment of 1,000,000 forms will be made, as ordered, on or before January 28th, 1974. "Although we have had numerous discussions as to our ability to make this delivery, I can now inform you that materials have been received and we are in production." (Exhibit N) This was consistent with the schedule of the shipment and quantities of the forms as provided in Print Order No. 7 dated June 27, 1973. (Exhibit E) (h) The contractor, by letter dated February 18, 1974, informed the GPO of its inability to make the February 1974 and March 1974 deliveries as scheduled, since the quantities of paper and carbon required were beyond its normal allocations for these materials. The contractor asserted, because of current shortages of paper . it would not be able to make its next shipment prior to August 1, 1974. (Exhibit P) (i) The proposed revised shipping schedule offered by the contractor was unacceptable to the Government. The contractor was notified by mailgram dated March 1, 1974, that its failure to comply with the schedule requirements was the basis for terminating the contract for default, in accordance with Article 18, GPO Contract Terms No. 1. (Exhibit Q) (j) The contractor responded by telegram dated March 11, 1974, as follows: "We have canvassed entire paper industry in United States and Canada, and cannot locate paper meeting specifications. . . . Accordingly, we believe that this contract should be terminated for the convenience of the Government, without penalty to Bonnar- Vawter." (Exhibit R) A letter to GPO dated March 12, 1974 made similar assertions. (Exhibit S) (k) In a letter from GPO to the contractor dated March 21, 1974, the contractor was notified in writing of its failure to furnish any evidence that the material required to produce the order was not obtainable during the 7 months that had elapsed since the time of acceptance. The contractor was also notified by the contracting officer of GPO that: ". . . since you have failed to make delivery of the supplies within the time specified in the contract, your right to proceed further with performance of the contract is terminated for default." (Exhibit T) (l) By letter to the Public Printer dated April 18, 1974, the contractor appealed under the disputes clause of the referenced contract. (Exhibit U) In a letter from GPO to the contractor dated May 7, 1974, it acknowledged the receipt of contractor's appeal and advised it of its right to submit any additional evidence in support thereof. (Exhibit U1) (m) The appeal letter of Bonnar-Vawter, Incorporated, dated June 7, 1974, addressed to the General Counsel of GPO, reiterated that the initial production of the forms which were shipped January 28, 1974, completely exhausted their allocations of the necessary paper and carbon. It stated that paper suppliers do not permit customers to save up allocations, and "[i]f not used in the month which they are operable, they are forfeited." It also contained the following: ". . . we quoted eleven month delivery; against our instructions our agent Mr. Carl Ford . . . changed this quotation to seven months. We were completely unable to deliver within seven months due to worldwide shortages of paper, pulp and energy. We terminated our contract . . . when it expired, in November of 1973. "Since that time we have attempted to perform to this contract, and on January 28th, 1974 we shipped . . . (988,400) of the forms as specified, . . . "This shipment completely exhausted our allocations of the necessary paper and carbon for this form, and consequently, although willing, we are totally unable to perform further, due to circumstances completely beyond our control." This letter further stated: ". . . that an unfavorable decision on our appeal will cause substantial harm to our company, possibly impairing our ability to continue operations. Cessation of operations would cause considerable economic hardship in the three communities in which our operations are presently located. . . ." (Exhibit U2) Attached to the appeal letter was a copy of a letter to a Colonel E. T. Nance from Mr. Eric White of the Canadian Department of Industry, Trade and Commerce which stated that reclassification actions on form bond paper by the United States Customs Service during 1973 further restricted the import of form bond paper from Canada and particularly from the E. B. Eddy Company and Domtar, Ltd. (Exhibit U2) II. QUESTION PRESENTED The question presented is whether the contractor was in default or whether contractor's failure to perform under the contract arose out of "causes beyond the control and without the fault or negligence of the contractor." Such causes are set forth in Article 18(c), GPO Contract Terms No. 1 which reads in pertinent part as follows: "Such causes may include, but are not restricted to, acts of God or of the public enemy, acts of the Government in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather; but in every case the failure to perform must be beyond the control and without the fault or negligence of the contractor." III. OPINION The default clause, when the evidence sustains the existence of one or more of the excusable causes of default, relieves the contractor of liability for excess costs or damages, and results in a termination for the convenience of the Government rather than a termination for default. The burden of proof is on the contractor to demonstrate that its failure to perform was due to causes beyond its control. The clause makes it incumbent upon the contractor to establish by a preponderance of the evidence that its failure was due to causes beyond its control and without its fault or negligence. Racon Electric Company. ASBCA 8020, October 3, 1962, 1962 BCA ¶ 3528 The contractor stated that its inability to make delivery of the forms as per schedule was because of the unavailability of the appropriate paper stock. It is recognized that a tight supply and demand condition was prevalent in the paper industry in the United States and Canada during the last year and continuing during the year 1974 to the present. However, the evidence of record does not support the relief sought by appellant. Indeed, appellant has offered nothing of consequence in the way of proof to bring it within those contract provisions which would relieve it of any excess costs. All that the contractor offers is a series of unsupported self-serving statements, such as the following: "We have canvassed entire paper industry in United States and Canada, and cannot locate paper meeting specifications. This survey has been confirmed by independent consulting organization. In addition, carbon paper deliveries and allocations limit availability of suitable carbon paper." (Exhibit R) In the Rimmco case, ASBCA No. 14386, May 14, 1970, 70-1 BCA ¶ 8290, the contractor offered evidence of $50.00 worth of long distance calls to potential suppliers. ASBCA upheld termination for default because such evidence did not prove the general unavailability of copper tubing. The contractor submitted a copy of a letter issued by the Canadian Department of Industry, Trade and Commerce, which stated that reclassification actions on form bond paper by the United States Custom Service during the year 1973 further restricted the import of form bond paper from Canada and contributed to its short supply. The letter does not sustain the appellant's burden. This does not bring the contractor within the contract provision which would excuse the contractor from default action. Eastern Realty & Construction Co. ASBCA No. 8066, January 18, 1963, 1963 BCA ¶ 3636; Hirsch, United Auto. Eng. Co., ASBCA No. 5662, August 8, 1960, 60-2 BCA ¶ 2758. The contractor's appeal letter with attachment was virtually the only documentation submitted in support of its position. It was a self serving statement. H. C. Thode Inc., ASBCA No. 18177, 18294, December 28, 1973, 74-1 BCA ¶ 10, 418. The next reason stated in its appeal is that its Washington, D.C. agent, Carl D. Ford, violated the corporation's instruction by quoting delivery of the material within 7 months, rather than in.ll months. However, even after raising the issue of the agent's violation of instructions, the contractor acted on the commitment of its agent by performing the first increment of the contract and making delivery on January 28, 1974. This agent had been authorized to act as agent of the company over a substantial period of time. The appellant states its belief that an unfavorable decision on this appeal may impair its ability to continue operations and that cessation of operations would cause considerable economic hardship by affecting employment in the three areas in which its plants are located. Such statement is not a basis for excusable default under the contract. Subject to some exceptions, the legal principles governing contracts to which the Government is a party are substantially the same as those which apply to contracts between private persons. When the United States "comes down from its position of sovereignty and enters the domain of commerce, it submits itself to the same laws that govern individuals there." Cooke v. United States, 91 U.S. 389, 398 (1875). See F. Trowbridge vom Baur, "Fifty years of Government Contract Law: The Evolution of the Government's Power to Contract," 29 Federal Bar Journal 308 (1970). It is concluded, therefore, that the contractor has not sustained its burden of proof; that appellant failed to deliver the material as per schedule in the contract and that the contractor's failure is not evidenced to be due to causes beyond its control and without its fault or negligence; that the contracting officer acted reasonably in terminating the contract for default; that the appeal is denied. The amount of excess procurement costs, if any, has not been considered in this appeal since it was not before the Contract Appeals Board.