U.S. Government Printing Office Contract Appeals Board Appeal of Allegheny Plastics, Inc. February 12, 1976 Vincent T. McCarthy, Chairman Robert M. Diamond, Member Essie A. Ablove, Member Panel 7-75 This is an appeal filed on July 29, 1975, by Allegheny Plastics, Inc. hereinafter also referred to as "Contractor", pursuant to the disputes clause, Article 29, United States Government Printing Office, Contract Terms No. 1. Findings of Fact 1. This case arises out of a fixed price contract, entered into by the contractor, Allegheny Plastics, Inc., and the U.S. Government Printing Office, hereinafter also referred to as "GPO'', for the manufacture of 421,950 (3-piece built-up construction type) slide calculators (fastened with grommets), designated as GPO Jacket No. 553-699, Purchase Order 32513. Delivery was to be f.o.b. Contractor's city with Contractor to receive material and purchase order on or before September 3, 1974, to ship on or before January 31, 1975. (Exhibit 1) 2. On October 7, 1974, Contractor wrote GPO requesting an extension to May 15, 1975, because of difficulties encountered with their vinyl supplier. (Exhibit 6) 3. On October 15, 1974, Contractor wrote GPO pointing out several discrepancies in the art submitted. (Exhibit 7) As a result copy was returned to GPO. (Exhibit 8) 4. On November 13, 1974, in connection with Contractor's request for an extension, GPO wrote Contractor requesting documentation of the initial obligation of the supplier as of the time of the award. Contractor was further advised to contact GPO upon return of the copy of the automatic adjusted shipping date which would result from the Government's delay. (Exhibit 9) 5. On December 17, 1974, new copy was sent to Contractor, who was advised to inform GPO of the revised shipping date after receipt of O.K. to print. (Exhibits 11, 12) 6. The contract was extended by 74 days to allow for the new camera copy (from September 3, 1974 to December 19, 1974), thereby extending the shipping date from January 31, 1975 to l!ay 15, 1975, the date originally requested by Contractor in his October 7, 1974 letter. (Exhibits 13, 6) 7. On March 19, 1975, Contractor requested an additional extension of the final shipping date to August 25, 1975, because of numerous problems they had encountered along the way. Contractor advised that they would ''start making partial shipments in May 1975 and each month thereafter until the contract is completed in August 1975." (Exhibit 15) 8. On April 7, 1975, Change Order No. 76592-P was issued, "to the extent that the shipping date is extended from January 31, 1975 to ship 50,000 copies on or before May 23, 1975; ship complete by July 25, 1975." The Change Order specifically provided as follows: "This change is authorized under the provisions of the Special Terms and Conditions supplement to Contract Terms No. 1 providing for adjustments in schedules following a delay by the Government in furnishing copy.'' (Exhibit 16) 9. On July 11, 1975, Contractor wrote GPO advising that "due to extreme manufacturing problems, we will be unable to meet the required shipment date of July 25, 1975." Contractor advised that the "dies . . . used for preproduction samples . . . at that time proved satisfactory, however, after approval was received and full production started, they did not last.'' Subsequently they had to be completely rebuilt, resulting in 4 weeks lost production time. "To increase the problem, the eyelet machines have not functioned properly'' but replacement parts were not available. Contractor stated he had increased his staff and was working 24 hours a day, 6 days a week, but even then could not make up the production time that had been lost. He further requested additional bills of lading in order to make partial shipments. (Exhibit 17) 10. On July 17, 1975, GPO wrote Contractor advising that the "circumstances outlined in [his] letter [of July 11, 1975,] fail to establish a basis for an extension of the shipping schedule.'' (Exhibit 19) 11. On July 22, 1975, Contractor wrote GPO providing more specific data on the causes for the delays. (Exhibit 20) On July 24, 1975, a meeting was held at GPO with Contractor's representative, Mr. Shalansky; GPO's Superintendent, Central Office Printing Procurement Division, Mr. Goltz; and GPO Printing Specialist, Mr. Grupe. At this time Contractor submitted his July 22, 1975 letter together with supporting documentation. Contractor was informed that this data would be taken into account in making the final determination on an extension of the schedule. (Exhibit 20A) 12. On July 30, 1975, GPO issued its Final Decision of the Contracting Officer, denying relief from liquidated damages on Jacket 553-699 by granting the requested extension of the shipping schedule beyond that already granted. Contractor was advised that he had failed to provide any information upon which such relief could be granted; that the information provided did not fall within the scope of Article 17 of Contract Terms No. 1, or state grounds upon which relief could be granted. (Exhibit 21) 13. On July 29, 1975, Contractor appealed to the Public Printer under Article 29 of GPO Contract Terms No. 1. (Exhibit 22) Discussion At the outset it is noted that in his appeal Contractor makes reference to ''Federal Procurement Regulation Public Law 85-807, Section 8," which he quotes as saying that "the Government in no way can/or should intentionally put a contractor into a financial burden. . .'' P.L. 85-807 (72 Stat. 975, August 28, 1958) is an act amending the laws granting education and training benefits to certain voters, which has no reference to procurement. If Contractor intended to cite P.L. 85-804, the National Defense Act of 1958 (72 Stat. 972, August 28, 1958), it also is not for application in this matter. That Act refers only to certain national security related procurements and situations and is not for application in the instant procurement which, although for the Department of the Army, was not for such security articles, but was made in the normal course of business. It is further pointed out that the Government is not proceeding intentionally to impose a burden on a contractor, but is seeking only to enforce the terms of the contract entered into by Contractor and GPO, the merits of which will be discussed below. GPO Form 2459D incorporated by reference into the contract provides in pertinent part as follows with respect to liquidated damages: "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 $5.00 for the entire order and not more 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." The appeal in this case arose from the application of the liquidated damages clause of the contract which resulted from delayed performance (not yet completed as of December 31, 1975). The initial delay in this matter was two-fold. Contractor had difficulty with its vinyl supplier, and simultaneously there were Government caused delays resulting from discrepancies in the camera copy furnished. As a result of its supplier problems, Contractor, on October 12, 1974, requested an extension from January 31, 1975 to May 31, 1975. The problems with the copy furnished by the Government were discovered on October 15, 1974, and the copy was subsequently returned to GPO. It was finally corrected and returned to Contractor December 19, 1974. Initially, because of the Government caused delays the determination was made to extend the new shipping date to May 15, 1975, the date originally requested by Contractor. However, following Contractor's March 19, 1975, request for an additional extension because ''of the numerous problems," and following additional conversations with both Contractor and the Department (Army), a change was approved authorizing 50,000 to be shipped on or before May 23, 1975, with complete shipment to be made on or before July 25, 1975. This extension amounted to an increase in production time of from 5 days for the first 50,000 to 48 days for the balance over and above the 103 production days originally allowed for the entire job. Subsequently Contractor wrote GPO advising that the dies used for manufactur-ing the pre-production samples, which at that time proved satisfactory, were no longer functioning properly, that they did not last. In addition, Contractor stated, the eyelet machines were not functioning properly, its supplier was on vacation, and it would not be able to get replacement parts for several weeks. Because of all these difficulties Contractor requested an additional extension of time be granted. Article 17 of Contract Terms No. 1 provides in pertinent part as follows: ''Penalties and/or damages shall not be applied against the contractor for delays in delivery occasioned by unforeseeable causes beyond the control and without the fault or negligence of the contractor, including, but not restricted to, acts of God, or the public enemy, acts of the Government, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, unusually severe weather, and delays of a subcontractor due to such causes. . .'' It is well settled that a contractor who claims that its late performance and delivery is excusable has the burden of proving the same under the terms of the contract. It must prove affirmatively that the failure to achieve timely performance was caused by or arose out of a situation beyond its control and without its fault or negligence. In addition it must show that it could have performed on time save for the occurrence of the event it claims as an excusable delay. Lee K. Geiger Construction Company, GSBCA 67-1 BCA � 6189; American Construction Company, Inc., GSBCA 65-2 BCA � 4964. In a similar case, the Department of Interior Board of Contract Appeals held that the unexplained breakdown of machinery in the contractor's plant was not a basis for an excusable delay under the default clause of the contract (which is substantially the same as Article 17 of GPO Contract Terms No. 1) The Board, in supporting the decision of the Contracting Officer, cited with approval the holding in Carnegie Steel Company v. United States, 240 U.S. 156 (1916), as follows: "'It will be observed that the point in the case is a short one. It is whether the causes of delay alleged in the petition were unavoidable, or were of the character described in the contract; that is, 'such as fires, storms, labor strikes, action of the United States, etc.' The contention that the alleged causes can be assigned to such category creates some surprise. It would seem that the very essence of the promise of a contract to deliver articles is ability to procure or make them. . . . '''But even if this cannot be asserted, the case falls within The Harriman, supra, where it is said that 'the principle deducible from the authorities is that if what is agreed to be done is possible and lawful, it must be done. Difficulty or improbability of accomplishing the undertaking will not avail the defendant. It must be shown that the thing cannot by any means be affected. Nothing short of this will excuse nonperformance.' "'And it was held in Sun Printing and Pub. Asso. v. Moore, (sic) 183 U.S. 642, 46 L. ed. 366, 22 Sup. Ct. Rep. 240, that 'it was a well-settled rule of law that if a party by his contract charges himself with an obligation possible to performed, he must make it good, unless its performance is rendered impossible by the act of God, the law, or the other party. UNFORESEEN DIFFICULTIES, HOWEVER GREAT, WILL NOT EXCUSE HIM.'. . . '''ABILITY TO PERFORM A CONTRACT IS OF ITS VERY ESSENCE. It would have no sense or incentive, no assurance of fulfillment, otherwise; and a delay resulting from the absence of such ability is not of the same kind enumerated in the contract--is not a cause extraneous to it and independent of the engagements and exertions of the parties.' (Emphasis supplied.) "The unexplained breakdown of machinery is not excusable per se since it is well settled that difficulty attending the performance of a contract is not an excusable cause of delay. "In KRAUSS v. GREENBERG, the Court stated explicitly: "'It seems clear in the light of these decisions that if a government contractor asked for an extension of time due to a breakdown of his machinery, not attributable to the causes specified or anything similar thereto, he could not obtain it because part of the ability to perform, which is the contractor's undertaking, is to have available machinery and replacement parts so that performance will not be delayed due to machinery breakdown. That is the very thing he undertakes to do when he agrees to perform within a given time.' "Hence, the appeal is denied." Vereinigte Osterreichische Eisen Und Stahlwerke Aktiengesellschaft, 1962 BCA � 3503 Although not exactly on the same facts, the IBCA also held in Fulton Shipyard. 71-1 BCA � 8616, that the time required to prepare machinery equipment and time lost when the equipment broke down did not constitute excusable delay. In that case the Board stated that "[i]t is a general rule that equipment breakdowns are not an excusable cause of delay. . . The reason for this rule is that it is the contractor's responsibility to have labor, plant, equipment, finances and material adequate for contract performance." The Board further held that the inclusion of a liquidated damages clause in a contract was proper and an assessment of liquidated damages could be made for delayed performance even in the absence of actual damages. It is well settled that the presence of actual damages is not a prerequisite to the assessment of liquidated damages. It was reasonable to assume under the circumstances that damages would result from delayed performance. Conclusion Based on the foregoing we are constrained to hold that the cause of the delay was not unforeseeable or without fault as negligence of Contractor. It was its responsibility to have the necessary dies and equipment and to ensure that both the dies and equipment would function sufficiently to perform the terms of the contract. Accordingly, it is held that Contractor 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.