Contract Appeals Board
Office of General Counsel
U.S. Government Printing Office
Appeal of Scanforms, Incorporated
This is an appeal filed on April 23, 1975, by scanforms,
Incorporated, Keystone Park, 181 Rittenhouse Circle, Bristol,
Pennsylvania 19007, herein also referred to as the contractor,
under the disputes clause of the contract, Article 29, United
States Government Printing Office Contract Terms No. 1.
I. Findings of Fact
a. This case arises out of a contract entered into by the
appellant contractor, Scanforms, Incorporated, and the U.S.
Government Printing Office, herein referred to as the GPO, for
the production of 521,110 two part snapset forms, 8-1/2" x 11"
carbonless paper sets, for optical scanning on an IBM 1232 Mark
Reader, paper white Mead Transrite, Part No. 1, CB 40, Part 2, CF
40, or any chemical transfer paper of comparable weight.
b. The contract, designed as GPO Jacket No. 534-743, Purchase
Order 58388, is a fixed price agreement for the procurement of
the form for use by the Department of Health, Education and
Welfare. The title of the form is designated as "Social Service
and Mental Health Report, Form No. HSA-125-2."
c. The bid of the contractor, dated April 5, 1974, in the net
amount of $12,065.93, was accepted by the Government on April 12,
1974, and the Purchase Order No. 58388, dated April 16, 1974, was
sent to the contractor. The contractor offered and agreed to
furnish any or all of the items upon which prices were quoted, in
exact accordance with specifications, unless exceptions were
noted. GPO Contract Terms No. 1, dated July 1, 1943, (Rev.
7/15/70), was incorporated by reference in the contract.
d. The schedule required that copy be furnished by GPO to the
contractor by April 17, 1974. It was mailed on April 17, 1974,
and its receipt acknowledged by the contractor on April 22, 1974.
The contractor was required to return the copy together with
three sets of proofs to the GPO. The contract provided that the
proofs will be withheld by GPO not more than 8 working days from
the receipt by GPO to receipt in contractor's plant; additional
instructions provided that "contractor must not print prior to
his receipt of an 'O.K. to Print'."
e. The delivery schedule called for complete shipment on or
before June 14, F.O.B., Bristol, Pennsylvania. The contract
stated that "The shipping schedule(s) must be maintained. See
'Liquidated Damages' and 'Penalty Payments' in GPO Form 2378c."
This form is entitled "Special Terms and Conditions"
(Supplemental to the Basic Specifications) and is incorporated in
the contract by reference.
f. The contractor by written communication, dated May 29, 1974,
asserted that the copy for the back of Part 2 of the form was not
received with the balance of the copy. A complete copy was
forwarded to the contractor on June 3, 1974. The contractor, by
letter dated May 23, 1974, recommended that the use of carbonless
paper is definitely contra-indicated and that the form be made
with a regular OCR Sheet for Part #1 followed by a sheet of
carbon and a sheet of regular bond for Part #2. The customer
agency was queried in reference to carbonless paper and indicated
they had experienced no problems on previous orders, and the
contractor was requested to proceed as per specifications and
submit the proofs as required. The contractor was notified by
mailogram on June 11, 1974, that its failure to deliver proofs
was endangering the performance of the contract and therefore
unless such condition was cured within ten days after receipt of
the mailogram notice, the GPO could terminate the contract for
default.
g. The proofs were returned to GPO on June 14, 1974. The
"O.K." to print proof was returned to the contractor on June 26,
1974, and receipt acknowledged on June 28, 1974. The contractor
telephoned GPO on July 2, 1974, stating its inability to obtain
the appropriate paper. The contractor was advised on July 8,
1974, that termination of the contract by default was under
consideration. A letter dated July 9, 1974, issued by the
contracting officer, GPO, to the contractor, notified the
contractor that the contract was terminated for default by reason
of the contractor's inability to obtain the paper necessary to
produce the order.
h. Letter from the contracting officer, dated July 17, 1974, to
the contractor, confirmed his telephone conversation of that date
with the contractor agreeing to rescind the termination notice,
dated July 9, 1974, predicated upon Scanforms, Inc. shipping
150,000 sets of the form by July 26, 1974, and the balance on or
before September 30, 1974. The contracting officer's letter
contained the following statement:
"This agreement does not modify the contract schedule.
Liquidated damages are an integral part of this contract and the
adjusted ship complete date of August 5, 1974, is still in
effect." (Emphasis added.)
i. The adjusted shipping date was extended to August 5, 1974,
subsequent to the recision of the termination of the contract by
default. An additional grace period of three days was added due
to a clerical error, revising the extension to a total of 38
workdays with the scheduled date of delivery extended to August
8, 1964. A partial shipment of 145,132 forms was delivered by
the contractor on July 26, 1974. Additional increments of the
forms were delivered on the days and in the quantities stated
below, together with data relative to the lateness of delivery
and the amounts of liquidated damages assessed due to the
contractor's delay in performance of the contract:
Number Amount of Total
Scheduled Delivery Days Damages
Liquidated
Quantity Date Date Late* Per Day*
Damages
105,000 8/8/74 10/8/74 43 $24.31 $1,045.33
54,000 8/8/74 10/10/74 45 12.50 562.50
72,000 8/8/74 10/18/74 50 16.67 833.50
144,978 8/8/74 10/21/74 51 33.56 1,711.56
$4,152.89
*Working days.
j. As a result of delays of performance and pursuant to the
terms of the contract, the contracting officer assessed the
$4,152.89 liquidated damages against the contractor. Damages
were not assessed against that part of the order shipped on
schedule July 26, 1974. The amount of damages was computed in
accordance with the specifications at the rate of one percent of
the contract price of the quantity not shipped for each working
day the contractor was in default of the shipping schedule.
k. On July 30, 1974, the contractor requested extension of the
shipping date to September 30, 1974. This was denied by the
contracting officer on August 13, 1974, and again on October 3,
1974. The contractor in its letter of December 20, 1974, stated
that delays in performance and delivery of the forms was due to
the inability of their paper supplier to deliver the required
type of paper. The contractor issued a purchase order to the
Wilcox Walter Furlong Paper Company, Philadelphia, Pennsylvania,
dated April 23, 1974, for delivery of the required type of paper
for shipment by June 3, 1974. The paper supplier replied by
letter that delivery by June 3, 1974, was not possible. An
alternate supplier, Paper Mart, Inc., Livingston, New Jersey
07039 agreed to fulfill the contractor's purchase order, dated
July 16, 1974, with a partial delivery on July 26, 1974, and with
the balance to arrive on August 26, 1974.
l. The contractor sought relief from the assessment of
liquidated damages by his letter of March 7, 1975, because of its
inability to obtain the required paper from his supplier in time
to avoid delay in performance of the contract.
m. The contracting officer on April 3, 1975, rendered his final
decision denying the contractor's appeal for relief of liquidated
damages. In pertinent part he stated the following: "Your
documentation fails to show an initial commitment to receive the
stock in time to produce the order as scheduled."
II. Opinion
The contract provided the following:
"The shipping schedules must be maintained. See 'Liquidated
Damages" and 'Penalty Payments' in GPO Form 2873c." (Emphasis
added.)
The reference to liquidated damages in GPO Form 2873c provides in
pertinent part:
'"Liquidated Damages: Should the contractor default on shipping
schedules stated in the specifications, the contractor will be
assessed liquidated damages against that part or parts of an
order which have not been shipped to the specified destination on
the specified date. Damages will not be assessed against that
part or parts of an order which have been shipped on schedule.
The amount of damages will be computed at the rate of one percent
(1%) of the contract price of the quantity not shipped in
accordance with specifications for each working day the
contractor is in default of the shipping schedule(s): Provided,
That the minimum amount of liquidated damages shall not be less
than $500 per day on the entire order, except the total damages
assessed against the contractor shall in no case exceed fifty
percent (50%) of the total value of the entire order. Liquidated
damages will not be assessed if the contractor has shipped at
least ninety percent (90%) of the quantity ordered for shipment
to a specified destination on or before the scheduled date."
* * *
"In the event an adjustment of schedule has been requested by the
contractor and is approved by the Government Printing Office and
ordering agency, the contractor will be required to meet the
adjusted shipping date and will be considered to be delinquent if
he fails to do so. In such instances no relief from liquidated
damages will be allowed."
It is well established that a contractor who claims that his late
performance and delivery is excusable has the burden of
establishing the same under the contract. The contractor must
prove affirmatively that the failure to achieve timely
performance was caused by or arose out of a situation which was
beyond his control and that he was not at fault or negligent. In
addition, the contractor must show that he could have performed
on time save for the occurrence of the event he claims as an
excusable delay. Lee K. Geiger Construction Company, GSBCA 67-1,
BCA 6189, American Construction Company, Inc., GSBCA 65-2, BCA
4964.
The appeal in this case arose out of the application of the
liquidated damages clause of the contract, based on delayed
performance. The contract provided that delivery of the
completed forms was to be made on or before June 14, 1974,
F.O.B., Bristol, Pennsylvania. The contract was terminated for
default on July 9, 1974, because of the appellant's inability to
obtain the specified type of paper. By agreement of the parties,
the termination notice was rescinded on July 17, 1974, upon the
contractor's offer to ship 150,000 sets of forms by July 26,
1974, and the balance on or before September 30, 1974. The
agreement did not modify the contract schedule with the shipping
date adjusted to August 5, 1974. According to appellant, the
basis of its appeal was:
"¼ the intended supplier of the paper refused to accept the order
when it was sent, and to this time we were unsuccessful in
locating an alternate source of supply. As you are doubtless
aware, the carbonless paper market went wild at this time, and in
about a month they had sold out forecast production some 18
months in advance."
The date of the issuance of the GPO purchase order to the
contractor was April 16, 1974. The contractor submitted its
order for paper on April 23, 1974, to acquire the needed paper
for delivery by June 3, 1974. The contractor submitted another
order for paper to his alternate supplier on July 16, 1974.
Every contractor impliedly represents, when he makes his bid,
that he can accomplish what he sets out to do, within the time
agreed. By such implied representation, he is not the eyes of
the law entitled to maintain a mental reservation to the effect
that he can perform within the time required provided he can
obtain the necessary paper in order to maintain the required
schedule. Woodhull Construction Company, ASBCA 57-1, BCA § 1260.
The contractor alleges that the specified nature of the delay
causing his supplier's inability to provide the adequate paper
stock was "the carbonless paper market went wild at this time,
and in about a month they had sold out forecast production some
18 months in advance." The appellant states "as of July 9th,
your Office was advised that the intended supplier of the paper
refused to accept the order when it was sent, and to this time we
were unsuccessful in locating an alternate source of supply.'
While it is noted that a tight supply and demand condition may
have been present in the paper industry during the period under
consideration in this appeal, the evidence of record does not
reflect in any substantial manner that paper stock of the
required quality and quantity was unavailable in the market
place. The cause of the delay was due to the contractor not
having a firm commitment from supplier on the date of tendering
his bid to the effect that the material will be delivered in time
to complete the order and meet the delivery schedule. The cause
of the delay was not unforeseeable and beyond the control and
without the fault or negligence of the contractor.
The contractor's initial notification to GPO of its inability to
obtain the appropriate paper was made on July 2, 1974. The
contractor reported that the Manager, Government Sales Division,
Scanforms, Inc., broke his left wrist and arm in 16 places on May
6, 1974. He was hospitalized and under total sedation for
several days. He was under some sedation until July 1, 1974. It
was alleged that because of his heavy sedation, it was not
possible to issue coherent instructions and that the primary
problem that developed as a consequence was lack of communication
due to unfamiliarity with the tasks involved. The contractor
stated that because of this incident, "unforeseen consequences of
an Act of God which affected all dealings in progress between the
contractor and the Government Printing Office from May 7, until
July 1, 1974. Therefore any delay of notification can only be
classed as an Act of God under the circumstances."
In considering the contractor's allegations respecting the time
lost due to the illness of the Manager, Government Sales
Division, the responsible officer, we must consider whether the
delay so caused is excusable. For application in cases of this
nature, the general rule is that a contractor's bid is considered
to be an unqualified representation that the contractor has the
supervision, personnel, equipment, skill and ability to do the
work upon which the contracting officer is entitled to rely.
There are cases in analogous situations, that upon a proper
showing, delays attributable to this type of cause would be
recognized as excusable. However, appellant has failed to show
by a preponderance of the evidence that the illness of its
Manager, Government Sales Division between May 7 and July 1,
1974, was a factor contributing materially to the delayed
performance of the contract. Lypta Cranes, Inc., IBCA 66-2, BCA
5737.
We are therefore constrained to hold that the cause of the delay
was not unforeseeable and that appellant is not entitled to an
extension of time to relieve it from the imposition of liquidated
damages for its delay in performing the contract.
On the basis of the facts found, the Board concludes that
liquidated damages were properly assessed for delayed performance
not found to be excusable delay.
In view of the foregoing, the appeal is denied.
___________________________________________
Vincent T. McCarthy, Chairman
Contract Appeals Board
___________________________________________
Jay E. Eisen, Member
Contract Appeals Board
___________________________________________
Essie A. Ablove, Member
Contract Appeals Board
Panel 75-5
October 23, 1975