BEFORE
U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, DC 20401
Nekoosa Press Inc. )
vs. ) Jacket 311-450 - Program 537 S
U.S. Government Printing )
Office ) Panel 80-7
Decision Of Board Of Contract Appeals
1/5/81
BEFORE
U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, DC 20401
Nekoosa Press Inc. )
vs. ) Jacket 311-450 - Program 537 S
U.S. Government Printing )
Office )
Decision Of Board Of Contract Appeals
This matter was brought to the Contract Appeals Board as a result
of an appeal dated May 7, I980, by Nekoosa Press Inc.,
hereinafter called the Company or Appellant. The Company
appealed the termination of a contract it had with the United
States Government Printing Office (GPO) for the printing of NASA
Tech Briefs. These were to be issued quarterly, four issues per
year. The Contract was terminated after the first issue, and
there were three more issues to be printed. The Appellant later
modified its appeal, taking the position that, it does not
challenge the decision to terminate the contract for default.
The appeal is directed exclusively to that part of the GPO's
termination decisions which requires the appellant to pay
approximately $45,000 of excess costs.
Facts
Invitation to Bid were sent to forty-one contractors on October
20, 1979. The Specifications covered the production of adhesive
bound books for the National Aeronautics and Space
Administration. The award to be made under the proposal would be
for a period of one year beginning January 1, 1980 and ending
December 31, 1980.
The title of the books was "NASA Tech Briefs" and they would be
issued quarterly, four issues per year. There was no specific
number of pages or copies guaranteed, it was estimated each order
would be for 54,075 copies averaging 174 pages per order
(including tearcards).
In the specifications it provided that strict adherence to the
performance schedule be maintained. The Contractor must complete
delivery and mailing within 7 workdays after "ok" to print.
The specifications included, "provided that the contract would be
subject to GPO 'Quality Assurance Through Attributes,' GPO
Publication No. 310.1, dated May 1979." The specifications also
stated that GPO Contract Terms No. 1, revised August 1, 1979,
(GPO Publication No. 310.2) were incorporated in the Contract.
The Bids were opened on November 19,1979, and the result was
Nekoosa Press (Appellant) was notified on November 28, 1979, it
may be in line for the award and it was requested to:
1. Review the specifications and confirm its bid.
2. To extend the effective date of the bid for 45 days.
3. To reaffirm its understanding of the shipping schedule
advancement as provided in GPO Contract Terms No. 1.
The Appellant signed a form letter confirming these points dated
November 28, 1979. It also sent an undated letter saying it had
reviewed all prices under every item and they are correct as
quoted.
On December 14, 1979, a pre-award survey of prospective
contractor showed that the Appellant had the capacity and
capability to perform satisfactory and had adequate back up
sources. An award was made on January 3, 1980 to the Appellant,
it was issued a purchase order. There was a change in the
mailing classification prior to the date of the award. This
resulted in negotiations between the Contracting Officer and the
Appellant and the contract price for mailing was increased $25
per thousand for all print orders. The Appellant was so advised,
he was also informed he had appeal rights. The Appellant
accepted this increase.
Print Order 1 was issued on January 22, 1980. Proofs were
submitted on time and marked "ok" to print. A press inspection
was conducted February 14th and 15th at which time a
specification error was discovered. This had to do with the ink
color. The cover was rejected four times prior to approval. The
complete delivery and mailing took place April 17, 1980.
On March 12, 1980, the Contracting Officer sent a Cure Notice for
Print Order No. 1. There was no response from the Appellant.
The Contracting Officer made the decision to permit the Appellant
to proceed because of the urgent need of the Government and the
telephone promise that deliveries would be made before March 17,
1980. The Appellant explained. Further delays as being caused
by the rescheduling at the bindery due to an urgent job, and the
fact that covers were spoiled in route to the bindery.
On April 1, 1980, the Contracting Officer recommended to the
Contract Review Board that the balance of the Contract (the
second, third and fourth quarter briefs) be terminated for
default.
The Contracting Officer then decided to withhold termination in
order to give the Appellant another chance. He then sent another
Cure Notice on April 14, 1980, requesting details of measures the
Contractor would take to insure timely delivery of an acceptable
product for the remainder of the term on the contract.
The response of the Appellant was not satisfactory. It was the
opinion of the Contracting Officer that the Appellant failed to
indicate a resolution of the problems which caused the delays,
and the opinion of the technical personnel that the Appellant
could not meet the attributes at the specified level and deliver
and mail the complete product in accordance with the specified
schedule.
A Notice Of Termination For Default was mailed to the Appellant
on May 1, 1980. When this notice was sent it informed the
Appellant of its right to appeal under the "Disputes" Article of
GPO Contract Terms No. 1.
On May 7, 1980, the Appellant sent in its Appeal. In this it
appealed the decision of the Contracting Officer on all counts.
In this letter it alleges that there were several changes made by
GPO for Print Order No. 1 that caused additional production time.
Ink was changed, all b,eake, pages with screens were changed from
70% to a 50% screen. The original specification called for one
tearcard, Print Order No. 1 required two tearcards. The GPO
agent from Chicago waited 5 days between visits. There was an
accident with covers that had to be reprinted, ink sent Appellant
was frozen and a chemist had to be called in to correct it. It
could not be corrected so a new batch of ink had to be ordered.
There was a problem with the paper sizing coming off of a sheet
and sticking to the cylinder and blanket, causing many stops on
the press and requiring cleaning. The Appellant had to wait for
replacement paper. There were other reasons for delay. It was
the opinion of the President of the Appellant that it acted in an
efficient and honorable way in correcting problems. It was
requested that the termination by default be reconsidered.
Position of Appellant
The Appellant presented a Memorandum of Law and Facts to support
the position it has taken. This was received by GPO one day
before the hearing. This memorandum enclosed an affidavit made
by the President of the Appellant that set forth the facts. The
Appellant in its Memorandum took the position that the Company is
not challenging the determination to terminate the Contract for
default. What is being appealed is that part of the termination
decision which requires the Appellant to pay approximately
$45,000 in excess costs associated with reprocurement.
The failure to deliver on time was caused by a series of mishaps
which were unforeseen and uncontrollable. If the termination was
due to the Appellants inability to perform, these facts were
known to the Government then went into problems prior to the
Contract award. The Appellant concerning late delivery:
(1) GPO publication of incorrect specification.
(2) Difficulties with paper and new shipments of ink.
(3) A trucking accident which damaged materials being shipped
to the bindery.
These could not be foreseen nor controlled by the Appellant.
Specification Error
The Appellant alleges the error in specification stating fourth
class mail, that was changed to third class mail before the
contract was awarded. This caused undue delay because the
bindery could not handle it. It had to be shipped to Appleton
Wisconsin for zip coding, sorting and mailing. The Appellant
advised GPO that it would not change its bid because it had been
assured by the local postmaster the change would not affect
procedures for mailing. Subsequent to this the Appellant was
Notified by the Postal Services, Chicago Regional, Office that
the change to third class would require drastic changes in
procedures. The Appellant notified GPO and an additional $25 per
thousand was allowed for. this.
Ink and Paper Problem
When a press inspection took place, an error in the
specifications with respect to ink color was discovered. The
result was new ink had to be ordered. This froze in transit and
again new ink had to be ordered.
When production began there was difficulties with the paper.
This resulted in the ordering of additional stock.
Bindery Problems
When the material was shipped to the Bindery on or about March
17, 1980, printed covers were damaged during shipment and had to
be reprinted. This in turn disrupted the schedule that had been
arranged.
Inability to Perform
The Appellant referred to Ex 34 a statement by Mr. Robert G.
Conley in which he states, quite clearly, the contract was
terminated in part because the Appellant lacked the facilities
and resources required to perform this type of contract.
Position of GPO
The Contracting Officer by statute has to make a decision before
he awards a contract that a contractor has the capacity and
capability to perform the contract.
This affirmative determination must be made before he awards the
contract. He makes it after receiving the best advice available
to him.
In this case we had a Contractor (Appellant) bidding on a
specification saying that he is ready, willing and able to
perform in the time required. In this case the Contracting
Officer had s pre-award survey made. The pre-award survey team
went into the financial, technical and personnel capability of
the contractor and found he had the equipment and ..nical ability
to perform satisfactorily. The pre-award survey also established
that the Contractor had adequate back up sources for all outside
purchases. The Contracting Officer made the decision to go ahead
because he was of the opinion the contractor had the-ability to
complete the contract with the capability he had at the time of
the Pre Award Survey, or that he was able to show he could
acquire that capability. The Appellant is not challenging the
termination for default, but only the assessment of excess costs.
The reasons for a Contracting Officer terminating for default and
assessing excess costs are the same. In this case the Appellant
is saying - you are right in assessing excess costs.
If the grounds for termination are valid and not questioned in
any way then for the Contracting Officer not to assess excess
costs would be tantamount to giving up a vested right of the
Government which cannot be done by statute.
Therefore argued the GPO, there is s basic inconsistency in the
whole procedure. then the Contracting Officer sent the Cure
Notice, and the Appellant did not present anything that could be
evaluated in a meaningful way it was referred to the technical
people. A Mr. Hughes of the Technical Staff went to considerable
lengths, even discussing the matter at some length with the
President of the Appellant so that he could make an informed
opinion as to whether the Appellant could perform the remainder
of the contract satisfactorily. When the decision was made that
the Appellant had not cured the problem he recommended to the
Contracting Officer that he could find -o way the Appellant could
perform satisfactorily. Then the Contracting Officer went ahead
with the termination for default and to reprocure the remainder
of the work from the second low bidder.
Discussion
It is apparent to this Board that we must do two things. 1.
Determine if the Termination for Default was warranted; 2. Make a
decision on the excess costs. The two matters are intertwined
and cannot be separated.
Under Article XVII Default Contract Terms No. 1 it provides:
"(a) The Government may, subject to the provisions of paragraph
(c) of this Article, by written notice of default to the
Contractor terminate the whole or any part of the contract in any
one of the following circumstances:
(1) If the contractor fails to make delivery of the supplies or
to perform, the services within the time specified herein or any
extension thereof; or
(2) If the contractor fails to perform any of the other
provisions of the contract, or so fails to make progress as to
endanger performance of the contract in accordance with its
terms, and in either of these two circumstances does not cure
such failure within a period of 10 days (or such other period as
the Contracting Officer may determine to be reasonable and
authorized in writing) after receipt of notice from the
Contracting Officer specifying such failure.
(b) In the event the Government terminates the contract in
whole or in part as provided in paragraph (s) of this article,
the Government may procure under such terms and in such manner as
the Contracting Officer may deem appropriate, supplies or
services similar to those so terminated, and the contractor shall
be liable to the Government for any excess costs for such similar
supplies and services: Provided, that the contractor shall
continue the performance of the contract to the extent not
terminated under the provisions of this contract.
(c) Except with respect to defaults of subcontractors, the
contractor shall not be liable for any excess costs if the
failure to perform the contract arises out of causes beyond the
control and without the fault or negligence of the contractor.
Such cause may include, but are not restricted to, acts of God or
the public enemy, acts of the Government in either its sovereign
or contractual capacity, fires, floods epidemics, quarantine
restrictions, strikes freight embargoes, and unusually sever
weather; but in every case the failure to perform must be beyond
the control and without the fault or negligence of the
contractor. If the failure to perform is caused by the default
of a subcontractor, and if such default arises out of causes
beyond the control of both the contractor and subcontractor, and
without the fault or negligence of either of them, the contractor
shall not be liable for any excess costs for failure to perform,
unless the supplies or services to be furnished by the
subcontractor were obtainable from other sources in sufficient
time to permit the contractor to meet the required delivery
schedules."
Article III Disputes
Under this Article the Contracting Officer is charged with the
responsibility of making decisions and they are final and binding
unless a written appeal is made to the Public Printer. Then the
decision of the Public Printer, or a duly authorized
representative, for the determination of Appeals shall be final
and conclusive unless determined, by a court of cocpetcnt
jurisdiction, to have been fraudulent, or capricious or
arbitrary, or so grossly erroneous as necessarily to imply bad
faith or not supported by substantial evidence.
In addition to the terms of Contract Terms No. 1 the contract was
subject to U.S. Government Printing Office Quality Assurance
Through Attributes (GPO Pub. 310.1) dated May 1, 1979. In this
case the level to be met was Level III.
A Cure Notice was sent to the Appellant on March 12, 1980, !or
Print Order No. 1. The Appellant did not respond and because of
the urgent need of the Government and the telephone promise to
make deliveries before March 17, 1980, the Contracting Officer
permitted the Appellant to continue.
It is the opinion of the Board that under Contract Terms No. 1
the Appellant could have been defaulted at that time because of
the failure to meet the specifications of the contract. The
original date of delivery under the Contract was February 21,
1980. This was then extended to March 3, 1980, because of the
Government error in the ink. On March 7, 1980, GPO agreed there
was an acceptable product. The Appellant said the completion
date would be March 17, 1980. When this date was not met the
Appellant informed the Contracting Officer that there was delay
at the bindery because it had a "Hot" job. The Appellant then
began giving later dates. First March 21, 1980; than March 25,
1980; and then April 4, 1980. The material was finally shipped
on April 14, 1980.
It is apparent that the original date of February 21, 1980, had
to be extended because of the wrong specification color of the
ink. This was done when 11 more days were added. Therefore, GPO
took into consideration the error in the specification. However
all of the other delays i.e.:
1. Wrong information from a local postmaster
2. Frozen ink
3. Paper problems.
Covers being damaged.
They are all chargeable to the Appellant because it was his
responsibility to, (1) double check on the mailing requirements;
(2) He was aware of the weather and should have foreseen that
this ink being shipped would be subject to inclement weather; (3)
Problem with the Paper Stock could have been foreseen. By proper
examination of the paper before it was used. This could have
been discovered. When a Contractor makes a bid and understands
the specifications, it is his responsibility to meet all of these
including the use if the right paper; (4) The damage to the
covers was due to banding material breaking. This again is the
responsibility of the Appellant because be should have foreseen
that this might happen.
Therefore, we find that the causes for delay except where the GPO
granted an extension of time due to a specification error were
not excusable under Article 17(c) of Contract Terms No 1.
The Board had a similar appeal before it in 1975. Barrington
Color Offset vs. GPO, decided September 19, 1975, the Board said:
"By the very nature of this contract, the contractor was required
to perform exactly in accordance with the details of the
specifications. It was Appellants obligation under the Contract
to plan for its performance prior to submitting its bid to assure
itself as to the availability of essential material prior to
obligating itself to deliver (Highway Products Inc. ASBCA 69-2
BCA 8064). . .
The burden of proof is on the Contractor to demonstrate that its
failure to perform was due to causes beyond his control and
without his fault or negligence (Article 18(c), GPO Contract
Terms No 1.)
The Appellant has not met his burden respecting excusability."
In Federal Procurement Law by Ralph C. Nash, Jr. and John
Cebinic, Jr. published by George Washington University Law Center
in 1966 it states on page 503:
"Closely related to the concept of foreseeability is the limiting
of delays on account of weather to those caused by 'unusually
severe weather. Under this concept, even though the contractor
is actually delayed by severe weather, the delay is not excusable
unless it can be shown that the weather was more severe than
normal. Cape Ann Granite Co vs. United States, 100 Ct. Cl.
53(1943).
As to the type of proof required to establish an excusable delay
on account of unusually severe weather see Allied Contractors
Inc" 1 BCA 265. 1962 BCA 3501 where the Board stated at 17868.
'We have consistently held that in order to establish a claim of
unforseeable and unusually severe weather it is necessary to
present proof of the weather for the month or period in question,
not only as to the year in which the contract performance was
affected, but for several Past years, an acceptable total for
establishing a pattern for comparison being 10 years . . .'"
In Delaware lithograph Co. Inc. vs. GPO ,(1974) this Board found:
"The default clause when the evidence sustains the existence of
one or more of the excusable causes for default, relieves the
contractor of liability for excess costs or damages and results
in 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 established by a preponderance of the evidence
that its failure was due to causes beyond its control and without
its fault or negligence. Racon Electric Co. ASBCA 8020, Oct. 3,
1962, 1962 BCA paragraph 3528."
Therefore, in view of all of the above it is the considered
opinion of this Board that the Appellant should have been
defaulted for failure to supply the material in a timely fashion
under Print Order No. 1. The Contracting Officer was lenient and
permitted the delays. The Contracting Officer then sent a second
Cure Notice on April 14, 1980, requesting details of measures the
Appellant would take to insure delivery of an acceptable product
for the remaining term of the contract. The response was not
satisfactory and in accordance with Article 17(a)(2) of Contract
Terms No. 1 where it provides for termination:
"If the contractor fails to perform are of the other provisions
of the contract, or so fails to make progress as to endanger
performance of the contract in accordance with its-terms. . ."
In Article 17(b) it provides:
"In the event the Government terminates the contract in whole or
in part as provided in paragraph (a) of this article, the
Government may procure, upon such terms and in such manner as the
Contracting Officer may deem appropriate, supplies or services
similar to those so terminated, and the contractor shall be
liable to the Government for any excess costs for such similar
supplies or services. . ."
Decision
It is the decision of this Board that the Contract was terminated
in accordance with its term and the Appellant is liable for the
excess costs of reprocurement which are estimated at $45,000 that
will be definitely ascertainable at the completion date of the
Contract.
LAWRENCE W. KENNELLLY, CHAIRMAN
Contract Appeals Board
FREDERICK HEMPHILL, MEMBER
GEORGE SIMMS, MEMBER
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Reading file copy
January 12, 1981
Michael Fisher, Esq.
Foley, Lardner, Hollabaugh & Jacobs
1775 Pennsylvania Avcnue NW.
Washington, D.C. 20006
Re: Appeal of Nekoosa Press Inc.
Program 538-S
Jacket No. 311-450
Dear Mr. Fischer:
Enclosed you will find the decision of the Contract Appeals Board
in the above entitled Appeal.
Sincerely,
LAWRENCE W. KENNELLY, CHAIRMAN
BOARD OF CONTRACT APPEALS
Eoclosure
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Reading file copy