BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
In the matter of )
)
the Appeal of )
)
FOTORECORD PRINT CENTER ) Docket No. GPOBCA 09-98
)
Program 6204-S )
Purchase Order X-7689 )
For the Appellant: Vincent J. Finoli, Esq., Stewart, McCormick,
McArdle & Sorice, Greensburg, Pennsylvania.
For the Respondent: Joyce B. Harris, Esq., Assistant General
Counsel, U.S. Government Printing Office.
Before KERRY L. MILLER, Administrative Judge.
DECISION
Fotorecord Print Center, (Fotorecord) appeals the Contracting
Officer's decision to terminate its printing contract for
default, after Fotorecord elected to discontinue performance.
For the reasons that follow, Respondent's motion for summary
judgment is granted and the appeal is DENIED.
FINDINGS OF FACT
1. On October 10, 1997, the U.S. Government Printing Office
(GPO) Pittsburgh Satellite Printing Procurement Office (SPPO)
issued an Invitation for Bids (IFB) for Program 6204-S, a one-
year, single-award, requirements contract for the printing of
pamphlets for the U.S. Department of Interior. Rule 4 File,
Tab B at 1. Under the terms of the IFB, the awardee would be
required to print, bind, pack and deliver 300 to 3,500 copies
of pamphlets containing from 4 to 32 pages per order. The IFB
estimated that 440 orders would be placed during the contract
year, with up to 8 orders placed in a single day. Id. at 4.
2. The normal trim size listed in the IFB for pamphlets
printed under Program 6204-S was 8-1/2 by 11 inches. Id.
However, the IFB also alerted bidders that:
Approximately 340 orders (4, 8, and 12 page self cover
publications) will require folding an average of 700 copies to
140 x 216 mm (5-1/2 x 8-1/2"). Folded pieces must then be sealed
with a wafer seal on the 216 mm (8-1/2") side.
Rule 4 File, Tab B at 5.
3. The IFB required bidders to submit prices for three
contract line items. The first two line items covered the
printing, binding and delivery of the "complete product." The
third contract line item was for "Additional Operations,"
described as: "Additional folding (4, 8 or 12 page products),
including wafer sealing." Rule 4 File Tab B at 9.
4. Appellant's net bid of $71,318.60 was the lowest received
in response to the IFB. The only other bidder's price was
$75,457.80. The lowest bid received for this contract the
previous year was $70,682.04. Rule 4 File, Tab F.
5. The GPO's Pittsburgh SPPO conducted an on-site pre-award
survey to determine if Appellant had the ability to perform
the contract. Rule 4 File, Tabs G, H. The pre-award survey
officer recommended that Appellant be awarded Program 6204-S.
Rule 4 File, Tab G.
6. After first receiving the concurrence of the GPO's
Contract Review Board, the Contracting Officer awarded Program
6204-S to Appellant on November 28, 1997. Rule 4 File, Tabs
I, J. The contract term began December 1, 1997. Rule 4 File,
Tab B at 1. On December 3, 1997, the Government issued 4
print orders (Nos. 80000, 80002, 80003 and 80004) to Appellant
calling for the printing of pamphlets. The next day, the
Government issued an additional 5 print orders (Nos. 80005,
80006, 80007, 80008 and 80009). Complaint, Exhibit C.
7. On December 4, 1997, Appellant's owner, Paul Nickoloff,
visited the Pittsburgh SPPO seeking advice on how to submit
bills to the GPO for payment under the contract. During that
visit, Mr. Nickoloff learned that his interpretation of the
services Appellant could charge for under the contract was
different from the GPO's interpretation. Complaint � 8. Mr.
Nickoloff believed he could bill under the "additional
operations" line item for folding each printed sheet from 17 x
11 inches to 8-1/2 x 11 inches. The GPO's position was that
the cost of folding the pamphlets to 8-1/2 x 11 inches was not
an "additional operation" and should have been included in
Appellant's "Running per 100 copies" contract line item price.
Under the GPO's interpretation, only the fold to 5-1/2 x 8-1/2
inches was deemed to be an "additional operation."
8. Later that day, Mr. Nickoloff faxed a letter to the
Pittsburgh SPPO stating:
I regretfully must inform you I am not able to perform the work
on Program Number 6204-S. The prices presented to you for this
particular Program were in error due to my misunderstanding of
pricing structures and estimating processes of the G.P.O.
After further review of the pricing after our meeting today, I
realized my pricing error, (the difference in charges for folding
and stitching, I thought "additional operations" included the
fold to 8 1/2 x 11 and the stitching operations in addition to
the mailing fold and the tabbing, and was not included in the
"Running per 100 copies" price) and am now informing you of my
cancellation of this contract between us.
Rule 4 File, Tab M.
9. After receiving the letter, Ms. Nancy Bednar-Escher of
the Pittsburgh SPPO telephoned Appellant and spoke with Mr.
Nickoloff. She explained to him that Appellant was obligated
to perform the contract and described the consequences of a
default termination. Mr. Nickoloff agreed to continue
performance. Rule 4 File, Tab M; Declaration of Nancy Bednar-
Escher � 5.
10. However, by letter dated December 5, 1997, Mr. Nickoloff
informed the Pittsburgh SPPO:
Due to the problems mentioned the previous letter, dated December
4, 1997, I am writing to inform you to formally terminate the
contract immediately with Fotorecord Print Center for Program
Number 6204-S.
The jobs due for 12-8-97 (8000-0, 8000-2, 8000-3, 8000-4) and
12-9-97 (8000-5, 8000-6, 8000-7, 8000-8, 8000-9) will be
delivered on their respective days. No further jobs will be
picked-up.
Upon review of the GPO Contract Terms - Publication 310.2, there
appears to be no formal format of the procedures for handling
such a case. Please fax or mail all pertinent information of
"contract termination by contractor" procedures for review by my
lawyers.
Rule 4 File, Tab N.
11. On December 11, 1997, the Contracting Officer terminated
Program 6204-S for default. The Contracting Officer's
termination notice stated that the action was being taken
because Appellant had "submitted written notification of
intent not to continue performance as required by the
contract." Rule 4 File, Tab P.
12. Thereafter, the Contracting Officer reprocured Program
6204-S using the same sealed bid procedures that were used in
the original procurement. Rule 4 File, Tabs Q-X. The GPO
incurred excess reprocurement costs in the amount of
$6,140.43. Declaration of Robert Colvin.
DISCUSSION
This case is before the Board on Respondent's Motion for
Summary Judgment and Appellant's Opposition. Respondent
argues it is entitled to judgment as a matter of law because
the undisputed facts demonstrate that Appellant abandoned
performance of the contract. Appellant argues that it was
entitled to stop performing because the Contracting Officer
refused to pay Appellant in accordance with Appellant's
interpretation of the contract. Given the undisputed facts in
this case, Respondent is entitled to summary judgment in its
favor.
Summary Judgment Standard
In deciding summary judgment1 motions, the Board is guided by
Rule 56 of the Federal Rules of Civil Procedure. See The
George Marr Co., GPOBCA No. 31-94, (April 23, 1996), 1996
GPOBCA LEXIS 43, 1996 WL 273662, slip op. at 35. Accord,
Christie-Willamette, NASA BCA No. 283-4, 87-3 BCA � 19,981
(citing Astro Dynamics, Inc., NASA BCA No. 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." FED. R. CIV. P. 56(c).
Thus, the principal judicial inquiry required by Rule 56 is
whether a genuine issue of material fact exists. See The
George Marr Co., supra, slip op. at 35-36; RBP Chemical Corp.,
GPOBCA No. 4-91 (Jan. 23, 1992), 1992 GPOBCA LEXIS 16, 1992 WL
487876, 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., NASA BCA No. 1086-6, 88-1 BCA � 20,269. A
material fact is one that will make a difference in the
outcome of the case. McDonnell Douglas Services, Inc., ASBCA
No. 45556, 95-1 BCA � 27,333 at 136,229 (citing Anderson v.
Liberty Lobby, Inc., 477 U.S. 242 (1986)). 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., 590 F. Supp. 769, 771 (S.D.N.Y.
1984) (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. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23
(1986).
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). 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. 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, 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.,
GPOBCA No. 12-92 (May 17, 1994), 1994 GPOBCA LEXIS 39, 1994 WL
275102, slip op. at 32-38; RBP Chemical Corp., supra, slip op.
at 17-26. 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.
Termination for Default Standard
A default termination is a drastic action that the Government
should take only for good cause and on the basis of solid
evidence. See R.C. Swanson Printing and Typesetting Company,
GPO BCA No. 31-90 (February 6, 1992), 1992 GPOBCA LEXIS 17,
1992 WL 487874, slip op. at 25, aff'd, Richard C. Swanson, T/A
R.C. Swanson Printing and Typesetting Company, No. 92-128C
(U.S. Claims Court, October 2, 1992); Stephenson, Inc., GPOBCA
No. 2-88 (Dec. 20, 1991), 1991 GPOBCA LEXIS 14, 1991 WL
439274, slip op. at 20 (citing, Mary Rogers Manley d/b/a Mary
Rogers Real Estate, HUDBCA No. 76-27, 78-2 BCA � 13,519;
Decatur Realty Sales, HUDBCA No. 75-26, 77-2 BCA � 12,567). A
decision to terminate a contract for default is an exercise of
discretion and, as such, must be a reasonable decision.
Nuclear Research Corp. v. United States, 814 F.2d 647 (Fed.
Cir. 1987); Darwin Construction Co. v. United States, 811 F.2d
593 (Fed. Cir. 1987). The Government has the burden of
proving that a decision to terminate a contract for default
was proper. See Lisbon Contractors v. United States, 828 F.2d
759 (Fed. Cir. 1987); Chavis and Chavis Printing, GPOBCA No.
20-90 (Feb. 6, 1991), 1991 GPOBCA LEXIS 15, 1991 WL 439270,
slip op. at 11 (and cases cited therein). Default
terminations-as a species of forfeiture-are strictly
construed. See D. Joseph DeVito v. United States, 188 Ct. Cl.
979, 413 F.2d 1147, 1153 (1969). See also, Murphy, et al. v.
United States, 164 Ct. Cl. 332 (1964); J. D. Hedin
Construction Co. v. United States, 187 Ct. Cl. 45, 408 F.2d
424 (1969). If the Government fails to meet its burden of
proof, the termination is converted into one of convenience
and the contractor can be paid for the work performed. See
GPO Contract Terms, GPO Publication 310.2 (Rev. 9-88), Clause
20(g). Cf., Shepard Printing, GPOBCA No. 23-92 (April 29,
1993), 1993 GPOBCA LEXIS 23, 1993 WL 526848, slip op. at 11;
Stephenson, Inc., supra, slip op. at 17-18; Chavis and Chavis
Printing, supra, slip op. at 9.
In the instant appeal, Appellant's contract was terminated for
default because the Contracting Officer concluded that
Appellant had repudiated the contract. In order to constitute
anticipatory repudiation there must be a "definite and
unequivocal manifestation of intention on the part of the
repudiator that he will not render the promised performance
when the time fixed for it in the contract arrives." Corbin
on Contracts �973. To support a default termination on the
basis of anticipatory repudiation by the contractor, the trier
of fact must find a: "positive, definite, unconditional, and
unequivocal manifestation of intent ... on the part of the
contractor ... not to render the promised performance ...."
United States v. DeKonty Corporation, 922 F.2d 826, 828 (Fed.
Cir. 1991) (citing, Cascade Pacific International v. United
States, 773 F.2d 287, 293 (Fed. Cir. 1985)). See also, James
B. Beard, D.O., ASBCA Nos. 42677, 42678, 93-3 BCA � 25,976, at
129,171; Altina Trucking, PSBCA No. 3341, 93-3 BCA � 26,256,
at 130,590-91. The Government has the burden of proving that
the contractor communicated an intent not to perform in a
positive, definite, unconditional and unequivocal manner.
James B. Beard, D.O., supra, at 129,171 (citing, United States
v. DeKonty Corporation, 922 F.2d 826 (Fed. Cir. 1991). See
also, Sealtite Corporation, GSBCA Nos. 7458, 7633, 88-3 BCA �
21,084, at 106,452.
That burden is usually met by showing: (1) a definite and
unequivocal statement by the contractor that he/she refused to
perform; or (2) actions that constitute actual abandonment of
performance. See Holt Roofing Company, Inc., GSBCA No. 8270,
91-1 BCA � 23,361 (a contractor unequivocally repudiated a
construction contract when its principal arrived on the
jobsite, ordered the subcontractor to stop work, and stated he
hoped that the Government would terminate the contract so that
he could resume a normal life). See also, Mary E. St.Clair
and Mack W. St.Clair, PSBCA Nos. 4088, 4089, 99-1 BCA �
30,233; HBS National Corp., GSBCA No. 14302, 98-2 BCA �
29,935; Tri Star Defense, ASBCA No. 46650, 98-1 BCA � 29,482;
Professional Building Services and Maintenance, ASBCA No.
42480, 91-3 BCA � 24,360.
The contractor, on the other hand, has the burden of proving
that its abandonment was excusable within the meaning of the
"Default" clause or was caused by the Government's material
breach of the contract. F & D Construction Company, Inc. and
D&D Management, Consulting and Construction Company, Inc.,
ASBCA Nos. 41441-44, 91-2 BCA � 23,983.
Decision on Summary Judgment
A. Anticipatory Default/Repudiation of Contractual Obligations.
The Board concludes that the undisputed facts in the record
amply support a finding that Appellant repudiated its contract
with the Government.
On the fourth day of contract performance, Appellant wrote to
the Contracting Officer and said it would not be able to
perform further work. Rule 4 File, Tab M. The next day
Appellant sent the Contracting Officer a letter that listed
the 9 Print Orders that it would complete, and again stated
that "no further jobs would be picked-up." Complaint � 9;
Rule 4 File, Tab N. Appellant also sought information from
the Contracting Officer on the proper procedures for handling
a "contract termination by contractor." Rule 4 File, Tab N.
Similar written attempts by contractors to terminate
Government contracts have been held to be anticipatory
repudiations. Menches Tool & Die, Inc., ASBCA No. 21469 78-1
BCA � 13,167; Midwest Aero Mfg. Co., Inc., ASBCA No. 7878, 62
BCA � 3568.
In the Board's view, the Contractor's announcement of its
"cancellation" of the contract and its refusal to pick up and
produce further orders was "positive, definite, unconditional,
and unequivocal" and manifested an "intent not to perform" the
contract. United States v. DeKonty Corporation, supra, 922
F.2d at 828; James B. Beard, D.O., supra, 93-3 BCA � 25,976,
at 129,171; Altina Trucking, supra, 93-3 BCA � 26,256, at
130,590-91; Twigg Corporation, supra, 93-1 BCA � 25,318, at
126,157. Consequently, on the basis of this record, the Board
has no trouble in concluding that the Contractor clearly and
absolutely repudiated the contract. Twigg Corporation, supra
at 126,157 (citing, West States Management Services, Inc.,
ASBCA Nos. 40212, 41438, 92-1 BCA � 24,714; National Union
Fire Insurance Company, ASBCA No. 34744, 90-1 BCA � 22,266,
aff'd, 907 F.2d 157 (Fed. Cir. 1990); Therm-Air Manufacturing
Company, Inc., NASA BCA Nos. 180-2, 1280-21, 82-2 BCA �
15,881).
An anticipatory repudiation also occurs when a contractor
fails to proceed pending resolution of its dispute with the
Government. Howell Tool & Fabricating, Inc., ASBCA No. 47939,
96-1 BCA � 28,225; CCB Industries, Inc., ASBCA No. 48009, 96-2
BCA � 28,414; Twigg Corporation, supra, 93-1 BCA � 25,318, at
126,157. See also, A. N. Xepapas, AIA, VABCA No. 3087, 91-2
BCA � 23,799, at 119,179. Among other things, the standard
GPO "Disputes" clause expressly provides:
Pending final decision of a dispute hereunder, the contractor
shall proceed diligently with performance and in accordance with
the Contracting Officer's decision.
GPO Contract Terms, GPO Publication 310.2 (Rev. 9-88), Clause
5(d). Although the language varies slightly, this is the same
policy applied to Executive branch contracts by the "Disputes"
clause in the Federal Acquisition Regulation (FAR). See 48
C.F.R. � 52.233-1(h).
This Board, as well as the ad hoc appeals panels that preceded
it, have held on numerous occasions that under the GPO
"Disputes" clause, a contractor is obligated to proceed with
performance regardless of the merits of the controversy. See,
e.g., International Lithographing, GPO BCA No. 1-88 (December
29, 1989), 1989 GPOBCA LEXIS 52, 1989 WL 384986; Colorgraphics
Corporation, GPO BCA No. 16-87 (March 31, 1989), 1989 GPOBCA
LEXIS 50, 1989 WL 384970; Custom Printing Company, GPO BCA No.
10-87 (May 10, 1988), 1988 GPOBCA LEXIS 12, 1988 WL 363328.
See also, e.g., Knepper Press, GPOCAB Nos. 2-84 and 3-84
(October 2, 1984), 1984 GPOBCA LEXIS 20, 1984 WL 14810;
Business Forms Service, Inc., GPOCAB No. 9-81 (October 20,
1981), 1981 GPOBCA LEXIS 31, 1981 WL 95444; Merchant Service
Company, GPOCAB No. 76-16 (February 11, 1980), 1980 GPOBCA
LEXIS 40, 1980 WL 81262. As the Veterans Administration Board
of Contract Appeals explained when it affirmed a contracting
officer's default termination decision on anticipatory
repudiation grounds:
[T]he existence of a dispute regarding contract specifications
does not excuse a refusal to perform. Charles Bainbridge, Inc.,
ASBCA Nos. 15843, 16204, 72-1 BCA � 9,351. The fact that the
parties are involved in a contract dispute does not justify
abandonment of the contract. Nasco Products Company, VACAB Nos.
974, 1000, 72-2 BCA � 9,556.
. . . After the Contracting Officer gives his interpretation of
the disputed provision of the contract, the Contractor must
perform as directed. If he believes the interpretation to be
erroneous, he may appeal. To the extent that the Contracting
Officer's instructions constitute a change in the specifications
or performance of work not required by the contract, the
Contractor would be entitled to an equitable adjustment in the
amount due and/or in the time required for performance. Charles
Wiggins d/b/a Wiggins Construction, ASBCA Nos. 4022, 4613, 58-1
BCA � 1,644. But he may not stop work pending final decision on
any claim for equitable adjustment. M. Rudolph Preuss v. U.S.,
188 Ct. Cl. 469 (1969).
A. N. Xepapas, AIA, supra, 91-2 BCA � 23,799, at 119,178-79
(quoting, Eriez Construction, Inc., VABCA No. 1273, 78-2 BCA �
13,547 at 66,363). See also, Computer Engineering Associates,
VABCA No. 1596, 84-2 � 17,246.
Accordingly, the Board concludes that Appellant repudiated its
obligations under the contract by failing to proceed with
performance pending resolution of its dispute with the
Contracting Officer. Therefore, the Contracting Officer was
warranted in terminating the contract because of Appellant's
default.2
In response to Respondent's motion for summary judgment,
Appellant argues that "a genuine issue of material fact exists
as to whether the appellant ("Fotorecord") was informed prior
to submitting its bid that the folding of sheets from 17" x
11" to 8 1/2" x 11" was to be included within the bid price
and not paid for in addition to the bid price." Appellant's
Answer to Respondent's Motion for Summary Judgment � 3.
However, Appellant did not designate specific facts in the
record or provide affidavits demonstrating this to be a
genuine issue, as required by FED. R. CIV. P. 56(e). Under
that rule "an adverse party may not rest upon the mere
allegation or denials of the adverse party's pleadings, but
the adverse party's response, by affidavits or as otherwise
provided in this rule, must set forth specific facts showing
that there is a genuine issue for trial." Id. Bare
assertions offered in conclusory fashion do not meet the
obligations imposed on a party opposing a motion for summary
judgment. Petroleo Brasileiro, S.A., Petrobras v. Ameropan
Oil Corp., 372 F. Supp. 503 (E.D.N.Y. 1974). Notwithstanding
Appellant's failure, the Board does not find this to be a
genuine issue of material fact, as it goes to the merits of
Appellant's contract interpretation disagreement with the
Contracting Officer, instead of to the default termination
that is being challenged.
Appellant also argues that "a genuine issue of material fact
exists as to whether the contract solicitation of GPO includes
folding services within the solicited bid price." Appellant's
Answer to Respondent's Motion for Summary Judgment � 6.
Appellant is mistaken on two counts.
First, it is well established that contract interpretation is
a question of law, not fact, and may appropriately be resolved
by a decision on summary judgment. See MIC Property & Cas.
Ins. Corp. v. International Ins. Co., 990 F.2d 573 (10th Cir.
1993); Fry Communications, Inc.-InfoConversion Joint Venture
v. United States, 22 Cl. Ct. 497, 503 (1991); Professional
Printing of Kansas, Inc., GPOBCA No. 2-93 (May 19, 1995), 1995
GPOBCA LEXIS 19, 1995 WL 488488, slip op. at 46, fn. 62;
General Business Forms, Inc., GPO BCA No. 2-84 (December 3,
1985), slip op. at 16, 1985 GPOBCA LEXIS 21, 1985 WL 154846
(citing John C. Grimberg Co. v. United States, 7 Ct. Cl. 452
(1985)). See also Fortec Contractors v. United States, supra,
760 F.2d 1288, 1291 (Fed. Cir. 1985); 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).
Second, the contract interpretation issue referenced by
Appellant is not a material one, as it was Appellant's
decision to stop performing the contract that formed the basis
for the default action that is being appealed. After learning
of the Contracting Officer's interpretation of the contract,
Appellant did not seek relief from the Contracting Officer's
interpretation, either by claiming a post-award error in bid3
or by requesting a contracting officer's final decision and
challenging the interpretation through an appeal. See GPO
Contract Terms, GPO Publication 310.2 (Rev. 9-88) Clause 5.
Instead, Appellant simply declared the contract to be at an
end and stopped performing.4
In deciding if the Contracting Officer's default termination
was justified, the Board does not have to interpret the
payment provisions of Program 6204-S. Regardless of the
merits of the contract interpretation issue, it is Appellant's
unilateral abandonment of the contract that is fatal to its
appeal, and is ground enough to sustain the default. See A.
N. Xepapas, AIA, supra at 119,178 (the merits of the
controversy have no effect on the requirement that a
contractor continue performance during the pendency of the
dispute. Citing, Detroit Designing & Engineering Company,
ASBCA No. 8807, 1964 BCA � 4214).
B. Discharge of Contractor's Obligations Due to Government
Breach
Appellant also argues that there is "a genuine issue of both
fact and law ... as to whether Fotorecord was justified in
refusing to provide further services to GPO after learning
that it would not be compensated for folding services."
Appellant's Answer to Respondent's Motion for Summary Judgment
� 7. Appellant again fails to designate specific facts in the
record or provide affidavits making this a genuine factual
dispute. Appellant also argues that a "genuine issue of law
exists" as to whether GPO first breached the contract by
refusing to pay for folding services in accordance with
Appellant's interpretation, thereby discharging Fotorecord
from any further liability under the contract. Appellant's
Answer to Respondent's Motion for Summary Judgment � 10.
As discussed supra, a contractor is required to continue
performance pending a final decision on a dispute. However,
that requirement will not be enforced where continued
performance is discharged through a material Government
breach. Drain-A-Way Systems, GSBCA No. 6473, 83-1 BCA �
16,202. The cases in this area follow the common law
principle that a party is under no duty to continue to perform
on a contract when the other party has committed a material
breach. RESTATEMENT (SECOND) OF CONTRACTS � 237.
Under certain circumstances the failure of the Government to pay
a contractor may constitute an excuse for nonperformance on the
part of the contractor. General Dynamics Corp., DOTCAB No. 1232,
83-1 BCA � 16,386. Whether the contractor will be discharged
depends on the "seriousness of the Government's breach, both the
nature of the breach and the impact on the contractor's ability
to perform." Seven Sciences, Inc., ASBCA No. 21079, 77-2 BCA �
12,730. As the court in Northern Helex Co. v. United States, 197
Ct. Cl. 118, 455 F.2d 546 (1972) stated:
[M]ere delay in payment for a while, would not be a material
breach but there is a clear distinction between delay of that
kind and a total failure to pay over many months.
Id. At 124.
The cases allowing a contractor to abandon performance because
of a Government breach are limited also to those situations
where the Government has failed to make payment on amounts
admittedly due the contractor. See General Dynamics Corp.,
DOTCAB No. 1232, 83-1 BCA � 16,386 (failure to pay five
invoices under a cost-reimbursement contract constitutes
breach); H.E. & C.F. Blinne Contracting Co., ENGBCA No. 4174,
83-1 BCA � 16,388 (government failure to pay proper amount of
progress payment was material breach). See also, Contract
Maintenance, Inc., ASBCA No. 19409, 75-1 BCA � 11,207 (failure
of Government to pay undisputed amounts for four months);
Valley Contractors, ASBCA No. 9397, 1964 BCA � 4071 (failure
of Government to pay undisputed half of monthly fee). But
see, NBJ Restoration, Inc., GSBCA No. 14487, 98-2 BCA � 29,987
(withholding payment because of IRS levy does not justify
abandonment of contract performance); Ultimare Janitorial
Services, Inc., GSBCA No. 6905, 84-1 BCA � 17,136. However,
disputed claims are covered by the standard Government
Disputes clause requiring continued performance pending
resolution of the dispute.
Thus, where the Government without good reason fails to make
payments called for in the contract, this failure is a breach
of a material condition triggering a contractor's right to
refuse to perform. U.S. Services Corp., ASBCA No. 8291, 63
BCA � 3703. However, before a contractor can rely on the
Government's failure to pay to justify abandoning performance,
it must show that the Government had the legal obligation to
make the payment. If it cannot, then the contractor has no
right to abandon performance. Al-Cal Painting Co., GSBCA No.
2806, 70-1 BCA � 8319.
In the instant case Appellant cannot rely on this defense.
First, the payments in question were in dispute between the
parties, as each party had a different interpretation of the
contract. Appellant quickly abandoned performance after learning
of this difference in interpretation.
Second, notwithstanding the disputed nature of the payment,
Appellant cannot establish the basic prerequisite to such an
argument; that the Government failed to make a payment. There is
no evidence in the record that Appellant ever submitted a voucher
for payment that was rejected by the GPO. The undisputed
evidence is that Appellant on December 4, 1997, after performing
four days of a 1-year contract, visited the Pittsburgh SPPO and
"requested information on completing the bottom billing portion
of the Print Orders." Complaint � 8. During the visit
Appellant's owner learned that he had made a mistake in his
interpretation of the contract. Rule 4 File, Tab M. Later that
same day Appellant announced that it was canceling the contract.
Id. This "cancellation" took place before any print orders had
been completed and delivered to the Government and before any
voucher had been submitted to the GPO seeking payment. Appellant
did not submit its first voucher to GPO for payment until
December 8, 1997, four days after its notification to GPO that it
was canceling the contract. See Complaint, Exhibit C. Thus it
cannot be found on this record that the GPO ever failed to make a
payment to Appellant.
The Board concludes that Appellant's anticipatory repudiation
of this contract was unjustified and that the Contracting
Officer appropriately terminated the contract for default.
C. Excess Reprocurement Costs
Respondent argues that: (1) the reprocurement contract was
performed under the same or substantially the same terms and
conditions as the original contract; (2) the Government acted
within a reasonable time following default to repurchase the
supplies; (3) the Government employed a reprocurement method
that would maximize competition under the circumstances; (4)
the Government obtained the lowest reasonable price; and (5)
the work has been completed and final payment made so that the
excess costs assessment is based upon liability for a sum
certain. Appellant does not dispute these allegations.
The record supports Respondent's position, and as all the
elements necessary to support recovery of excess reprocurement
costs have been met, Respondent is entitled to recover excess
reprocurement costs from Appellant in the amount of $6,140.43.
See Univex International, GPOBCA No. 23-90 (July 5, 1996),
1996 GPOBCA LEXIS 40, 1996 WL 812959.
CONCLUSION
For the foregoing reasons, the Board concludes that the
Respondent is entitled to summary judgment as a matter of law.
Accordingly, Respondent's Motion for Summary Judgment is
granted and the appeal is DENIED.
December 13, 1999 KERRY L. MILLER
Administrative Judge
_______________
1 Although the Board's rules that were in effect at the time this
appeal was filed did not provide explicitly for a summary relief
procedure, the Board has routinely entertained summary judgment
motions. See WBC, Inc., GPOBCA No. 17-98 (Sept. 22, 1999), 1999
GPOBCA LEXIS 12, 1999 WL ____; Wickersham Printing Co., GPOBCA
No. 23-96 (Dec. 18, 1998), 1998 GPOBCA LEXIS 24, 1998 WL 993636;
Artisan Printing, Inc., GPOBCA No. 15-93 (Feb. 6, 1998), 1998
GPOBCA LEXIS 30, 1998 WL 149001; Graphicdata, Inc., GPOBCA No.
35-94 (June 14, 1996), slip op. at 47, 1996 GPOBCA LEXIS 28, 1996
WL 812875, and cases cited therein.
2 A cure notice is not required when a contract is terminated
for default because of the contractor's repudiation. See
James B. Beard, D.O., supra, 93-3 BCA � 25,976, at 129,172
(citing, Beeston, Inc., ASBCA No. 38969, 91-3 BCA � 24,241).
See also, Scott Aviation, ASBCA No. 40776, 91-3 BCA � 24,123);
Superior Communications Services, Inc., ASBCA No. 38421, 89-3
BCA � 22,236; Metal-Tech Incorporated, ASBCA No. 14828, 72-2
BCA � 9,545.
3 See GPO Printing Procurement Regulation, GPO Publication 305.3
(Rev. 10-90), Ch. XI, � 6.4.
4 Appellant appears to have had a fundamental misconception about
the formation of Government contracts. An Invitation for Bids
(IFB) is, among other things, an invitation to submit an offer.
Appellant submitted a sealed bid in response to the IFB for
Program 6204-S. Rule 4 File, Tab E. The submission of a signed
bid in response to an IFB is an irrevocable offer to perform the
contract. This offer, upon acceptance by the Government, becomes
a binding contract. See PAUL SHNITZER, GOVERNMENT CONTRACT
BIDDING at 5-2 (3rd ed. 1992). The Government accepted
Appellant's offer and a binding contract was formed. Rule 4
File, Tab J. Under the terms of that contract Appellant was
obligated to provide the contracted for goods and services and to
proceed diligently should it have a dispute with the Government.
The contract does not contain a provision allowing termination at
the Contractor's option.