BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
STERLING PRINTING, INC. ) Docket No. GPO BCA 20-89
Jacket No. 226-948 )
Purchase Order 81288 )
DECISION AND ORDER
This appeal, timely filed by Sterling Printing, Inc.
(Appellant or Contractor), 2515 Lantrac Court, Decatur,
Georgia 30035, is from the final decision of Contracting
Officer William E. Flood, of the U.S. Government Printing
Office's (Respondent or GPO or Government) Printing
Procurement Department, Washington, DC 20401, dated April 13,
1989, terminating the Appellant's contract identified as
Jacket No. 226-948, Purchase Order 81288, for default for
refusing to correct the quality defects found in its product
to meet the requirements of the contract specifications (R4
File, Tab N).1 On April 28, 1992, and May 6, 1992,
respectively, a hearing was conducted by the Board for the
purpose of developing evidence on the two issues involved in
the case.2 At the hearing, both parties were represented by
counsel, who, thereafter, filed timely briefs with the Board
addressing the issues involved.3 Board Rules, Rule 23. Based
on the record in this case, including the evidence developed
at the hearing and the written arguments of the parties
contained in their posthearing briefs, the Contracting
Officer's decision terminating the Appellant's contract for
default is AFFIRMED.4 The Contractor's appeal of the
Contracting Officer's decision assessing excess reprocurement
costs is GRANTED.
I. BACKGROUND
A. The Default Termination
The facts, which are essentially undisputed, are recited here
only to the extent necessary for this decision. This case
arises from a contract awarded to the Appellant on January 6,
1989, to print 10,049 copies, including 32 samples, of a
perfect-bound two (2) color publication, consisting of 176
pages with a separate wraparound cover, entitled, "1985
National Survey of Fishing, Hunting, and Wildlife Associated
Recreation," (National Survey) for the U.S. Department of
Interior (Interior), Fish and Wildlife Service (R4 File, Tabs
B and D).5 The contract price for this work was $25,938.00
for the basic quantity of 10,017 copies, plus $70.84 for the
32 sample copies, for a total of $26,008.84 (R4 File, Tab D).
The contract specifications provided, in pertinent part:
STOCK/PAPER: The specifications of all paper furnished must
be in accordance with those listed herein or listed for the
corresponding JCP Code numbers in "Government Paper
Specification Standards No. 9"[,] dated December 1, 1981,
as amended through May 1, 1986.
Text: White Dull Coated Offset Book, basis size 25 x 38",
80 lbs. per 500 sheets, equal to JCP Code A260. All text
paper used in each copy must be of a uniform shade.
Cover: White Dull Coated Cover, basis size 20 x 26", 80
lbs. per 500 sheets, equal to JCP Code L60. All cover
paper must have the grain parallel to the spine.
PRINTING: Print Cover and text head-to-head in black ink
and a match of Pantone 159 brown.
* * * * * * * * * *
Coating: Coat (after printing) the entire surface of covers
1, 4, and backstrip with dull varnish.
* * * * * * * * * *
BINDING: Perfect-bind text and wraparound cover; trim three
sides.6
* * * * * * * * * *
QUALITY ASSURANCE LEVELS AND STANDARDS:7 The following
levels and standards shall apply to these specifications:
Product Quality Levels:
(a) Printing Attributes-Level III.
(b) Finishing Attributes-Level III.
Inspection Levels (from MIL-STD-105):
(a) Non-destructive Tests-General
Inspection Level I.
(b) Destructive Tests-Special
Inspection Level S-2.
Specified Standards: The specified standards for the
attributes requiring them shall be:
Attribute Specified Standard
P-7. Type Quality Furnished Camera
and Uniformity Copy
P-8. Halftone Match Furnished
(Single and Double Transparencies
Impression)
P-9. Solid and Pantone Matching
Screen Tint Color System
Match
DEPARTMENTAL QUALITY COPIES: All orders must be divided
into equal sublots . . . A random sample must be selected
from each sublot. Do not choose copies from the same
general area in each sublot. . . . . These randomly
selected samples must be packed separately and must be
identified by a special [G]overnment-furnished blue label,
which is to be affixed to each affected container. . . .
The random inspection samples constitute part of the total
quantity ordered, and no additional charge will be
allowed.8
* * * * * * * * * *
QUALITY ASSURANCE SAMPLES: In addition to the Departmental
Quality Copies, the contractor may be required to submit
quality assurance samples for inspection and testing for
compliance to the produce specifications. The purchase
order/specifications will indicate the number of samples
required, if any. When these samples are ordered, the
contractor must divide the entire order lot into equal
sublots and select a copy from each sublot. Each sample is
to be chosen from a different general area of each sublot.
. . . These samples will be paid for at the running rate
quoted in the contractor's bid . . .
* * * * * * * * * *
SCHEDULE:
* * * * * * * * * *
Submit proofs as soon as the contractor deems necessary in
order to comply with the shipping schedule. Proofs will be
withheld 7 workdays from receipt in the GPO until they are
made available for pickup by the contractor.
Ship 100 copies to [Interior] destination as indicated
under distribution to arrive at destination on or before
February 3, 1989.
Ship complete on or before February 10, 1989.
See, R4 File, Tab B, pp. 2-4.9
Although the parties expected the contract to be completed by
February 10, 1989, during the proofing stage Interior
discovered an error in the specifications, namely with the
duotones, which required a change in the color combination, a
reshooting of 22 duotones, and submission of revised proofs
before production started (R4 File, Tabs E and G).10 Tr.
108-09. As a consequence, the contract was modified to extend
the shipping date to March 17, 1989, and to reimburse the
Contractor an additional $850.00 for the extra work (R4 File,
Tabs F and G).11
On March 27, 1989, after the Appellant had completed delivery
of the National Survey, GPO received a complaint from Interior
concerning the quality of the book (R4 File, Tab H).
Specifically, Interior contended that: (a) the Contractor had
used the wrong paper; (b) the publication contained hickies or
spots; (c) the register was improper register, and; (d) the
adhesive was not durable (R4 File, Tab H). Tr. 49-51. In the
latter regard, Interior expressly mentioned that the pages
fell out of the binding when the book was opened flat (R4
File, Tab H).12
On receiving Interior's complaint, the Printing Procurement
Department immediately asked GPO's Quality Control and
Technical Department (QCTD) to test randomly selected samples
of the "blue label" copies provided by the Contractor for the
purpose of verifying the quality defects (R4 File, Tab I).
Tr. 50-51. The QCTD conducted separate tests on the paper and
the binding, and on March 28, 1989, issued a combined report
(R4 File, Tab I). With respect to the paper, the QCTD found
that the wrong paper stock was used for both the text and the
cover, and assessed a total of 168 demerits, or 20 major
defects, under QATAP for these faults (R4 File, Tab I).13 As
for the durability of the perfect binding, the Respondent's
test report states:
Sample 1 was tested on the flex tester and assessed a
Critical Defect. Performed subway test on samples 2-8.
The seven samples were assessed a Critical Defect.14
R4 File, Tab I. Tr. 37. For the sample size selected, this
binding defect was assessed 20 critical defects (R4 File, Tab
I).15
In light of these QCTD reports, the Respondent determined that
the books produced by the Appellant were rejectionable, and so
notified the Contractor (R4 File, Tab J).16 The Appellant was
also informed that the National Survey would have to be
reprinted to correct the problem. Tr. 49, 50-51, 93-94. The
record discloses that between March 29, 1989, and April 4,
1989, the Contracting Officer had several telephone
conversations with the Appellant's President, McDaniel, about
this matter and was told, inter alia, that: (a) since the
Government had approved the sample copies provided by the
Appellant prior to shipment, it was unfair to reject the job
after delivery had been completed;17 (b) glue does not adhere
well to the glossy paper stock specified in the contract and,
under normal usage, the pages will fall apart; (c) the
Contractor's paper supplier furnished the correct paper; (d)
Interior's complaint appeared to be untimely because the job
was shipped March 17, 1989 (R4 File, Tab K). When the
Contracting Officer asked for a reprint date, McDaniel
responded by stating that reprinting the job would be too
expensive-indeed, "it maybe cheaper for [the Contracting
Officer] to default her"-and, in any event, the Appellant
would not reprint the job without first coming to the
Respondent's main facility in Washington, DC, for a meeting
with the (then) Acting Public Printer, Joseph E. Jenifer,
among others (R4 File, Tab K).18
On April 11, 1989, the parties met at the Respondent's
headquarters in Washington, DC to discuss the binding problem
and what steps could be taken to correct it. Tr. 38, 73,
122-123. Present at the meeting for the Respondent were the
Contracting Officer, Flood, and the Superintendent of GPO's
Contract Management Branch, Harrison, while McDaniel and her
husband, Forte, attended for the Appellant.19 Tr. 94, 127.
Flood, Harrison, and McDaniel testified at the hearing, and
they all agree on the substance of the discussions which took
place at the meeting. In that regard, noting that copies of
the National Survey which the Appellant had delivered were
being used by the agencies that received them, McDaniel
offered the Respondent two choices in order to resolve the
matter: (a) a 15 percent discount off the contract price; or
(b) the Contractor would retrieve the books from the
agencies where they had been delivered (approximately 5,000
copies at various locations), staple the binding together, and
redistribute them (R4 File, Tab L). Tr. 37-38, 73-75, 104,
187, 189. To illustrate what she had in mind, McDaniel showed
Flood and Harrison a copy of the National Survey which had
been stapled from the outside.20 Tr. 41-42, 88-89, 122, 141.
See, App. Exh. No. 21. Both of the Appellant's options were
rejected by the Government. Tr. 38. The stapling suggestion,
in particular, was refused because that was not the product
ordered by Interior. Tr. 38, 42, 95. Instead, Flood insisted
that reprinting the job would be necessary in order to cure
the binding defect. Tr. 93-94, 129. However, McDaniel
contended that the Appellant could not afford to reprint the
National Survey because purchasing additional paper would cost
too much. Tr. 78, 145-46. Furthermore, she believed that
reprinting might be so expensive, when compared to the minor
costs associated with repairing the book, that the Contractor
would be forced to close its doors. In the alternative, it
was suggested either by Harrison or Forte McDaniel, that
perhaps the defect could be remedied by rebinding the book by
tearing off the covers, trimming the spine, and then regluing
it-a process which would slightly reduce the size of the
publication. Tr. 77-78, 127, 145-46, 90-92, 95. Flood
rejected that idea for three reasons: (a) the book was too
small for that sort of repair; (b) retrimming would amount to
changing the size specifications of the contract; and (c) such
rebinding would have reduced the usefulness of the
publication. Tr. 95-97, 102, 105. McDaniel also rebuffed
this suggestion, adamantly insisting that stapling the books
was the only cure method the Appellant could afford, and she
would consider no other. Tr. 91-92, 95. Consequently,
Harrison advised the Appellant to follow the Contracting
Officer's instructions and reprint the National Survey, and
then appeal its disagreement.21 Tr. 91. According to
Harrison, McDaniel responded by stating she would see her
Congressman first. Tr. 91. The meeting ended without any
resolution of the binding problem, and with the Respondent
continuing to demand a reprint of the book, while the
Contractor maintained it would only staple the publication.
On April 12, 1989, the Contracting Officer telephoned McDaniel
at the Appellant's office in Decatur, Georgia, and directed
the Contractor to reprint the National Survey (R4 File, Tab
L). As she had during the meeting the previous day, McDaniel
refused to reprint the book, insisting again that it would put
the Contractor out of business (R4 File, Tab L). Furthermore,
by letter addressed to the Contracting Officer, dated April
12, 1989, McDaniel confirmed the position she took on April
11, 1989, repeating, in pertinent part:
[At the meeting] . . . I offered several alternate plans in
lieu of reprinting this job.
Plan # 1
Pick up books from Washington, D.C. office and side stitch
on outside of cover. this action would take approximately
four (4) working days, after receipt in my plant, plus
shipping time to return the books.
Plan # 2
Deduct 15% from the printing price, but not the
reimbursable parcel post, of Government Bills of Lading.
The amount to be reduced from cost of job would be
$3,901.32.
This job is an acceptably printed commercial job in all
aspects. The agency has, so called complained, the paper
is not the proper weight. (I shall send you a copy of the
letter from the paper mill stating the paper to be 80# as
specified, when I receive it.)22
This job was perfect bound by the top book binder in
Atlanta. . . . My secretary has called, at random, six Fish
and Wildlife offices, in various states, and was told the
books are fine and are being used.23
. . . [The Appellant] cannot financially afford to reprint
this job. My cost on the first printing was approximately
$29,200.00. If we reprint, [the Appellant] must bear the
cost of mailing and shipping. With the cost of all
material involved and money already invested from the first
printing and second printing, shipping and mailing, my cost
would be approximately $62,400.00. My company cannot
withstand such cost and stay in business. . . . I contend
the job was printed as stated in the specifications. I
will not reprint the job, because it is now being used by
most of the departments to which it was sent. . . .
Reiterating, [the Appellant] may have to file for
bankruptcy if we are forced to reprint and ship the job.
R4 File, Tab L. [Emphasis added.]
Because of the Appellant's persistent refusal to reprint the
National Survey, on April 13, 1989, the Contracting Officer
wrote to GPO's Contract Review Board (CRB) for approval to
terminate the contract for complete default (R4 File, Tab
M).24 In his memorandum to the CRB, the Contracting Officer
gave as his reason for the default request:
The book was tested on the flextester and assessed a
Critical Defect. The cover and text stock also failed to
meet specifications.
[The Appellant] offered to correct the book with [s]taples,
which was unacceptable to [Interior]. [Interior] insists
upon a reprint.
Per telephone conversation with [McDaniel] on April 12, she
refused to reprint. She was informed of possible default
action.
R4 File, Tab M. [Emphasis added.] CRB concurrence was obtained
the following day, April 13, 1989 (R4 File, Tab M).
On April 13, 1989, the Contracting Officer issued a Notice of
Termination-Complete (Notice of Termination) to the Appellant
informing it that the contract had been terminated for default
because "of your refusal to correct the quality defects to
meet the [requirements] of the specifications" (R4 File, Tab
N). The Notice of Termination also told the Contractor that
the publication might be reprocured against its account, and
that it would be held liable for any excess reprocurement
costs (R4 File, Tab N).
B. The Contract Reprocurement
On April 18, 1989, after the contract was defaulted, the
Respondent took steps to reprocure the job (R4 File, Tab P).25
On April 25, 1989, Pensacola was awarded the contract at a
price of $32,777.32 for the basic quantity of 10,017 copies,
plus $63.29 for the 32 sample copies, for a total of
$32,840.61 (R4 File, Tab Q). Tr. 46. Pensacola submitted the
lowest bid on the reprocurement solicitation.26 Tr. 244. The
next day, the Respondent notified the Appellant that the
excess reprocurement costs would be deducted from its account
(R4 File, Tab O).27
An examination of the reprocurement contract discloses that
the specifications for the basic contract work-the production
of a perfect-bound two (2) color publication, consisting of
176 pages with a separate wraparound cover-was identical to
the Appellant's contract (R4 File, Tab P, p. 1). However,
there is a marked contrast between Pensacola's book and the
National Survey produced by the Appellant, one that is clearly
visible to the naked eye. Tr. 238. Compare, App. Exh. No.
17, with App. Exh. Nos. 20 and 22. In that regard, the
witnesses at the hearing who compared both publications,28
agreed that: (a) the duotone colors were changed from
predominantly brown to predominantly black for the repurchased
book;29 (b) the reprocured cover had a glossy finish while the
original one was dull; and (c) even the text paper appeared
different.30 Tr. 43, 46-47, 80-82, 109-10, 228-29, 238-40.
See, App. Exh. Nos. 17, 20 and 22.
Moreover, apart from two expected minor housekeeping
changes,31 a careful perusal and comparison of both contracts
reveals, inter alia, the following changes and/or additions in
the specified terms and conditions of the reprocurement
contract:
PROOFS:
* * * * * * * * * *
If any contractor's errors are serious enough in the
opinion of the GPO to require revised proofs, the revised
proofs are to be provided at no expense to the Government.
No extra time can be allowed for this reproofing; such
operations must be accomplished within the original
production schedule allotted in the specifications.
PRINTING:
* * * * * * * * * *
Press Sheet Inspection: Press sheets will be inspected at
the contractor's plant for quality conformance.32
* * * * * * * * * *
QUALITY ASSURANCE LEVELS AND STANDARDS;
* * * * * * * * * *
Specified Standards: The specified standards for the
attributes requiring them shall be:
Attribute Specified Standard
P-7. Type Quality O.K. Press Sheets
and Uniformity
P-8. Halftone Match O.K. Press Sheets
(Single and Double
Impression)
P-9. Solid and O.K. Press Sheets
Screen Tint Color
Match
Special Instructions: In the event that inspection of press
sheets is waived by the Government, the following listed
alternate standards (in order of precedence) shall become
the Specified Standards:
P-7. Camera copy, Government furnished negatives, average
type dimension in publication.
P-8. Camera copy, Government furnished negatives.
P-9. Government furnished sample, color swatch, Pantone
Matching System color, progressive proofs.
* * * * * * * * * *
SCHEDULE:
* * * * * * * * * *
Submit proofs as soon as the contractor deems necessary in
order to comply with the shipping schedule. Proofs must be
submitted as complete sets. Proofs will be withheld 7
workdays from receipt in the GPO until they are made
available for pickup by the contractor.
The contractor must notify the GPO of the date and time
press sheets will be available. In order that proper
arrangements can be made notification must be given at
least 72 hours in advance of the time for inspection of the
press sheets. Notify the U.S. Government Printing Office,
Contract Management Division, Quality Assurance Section
(PPSQ), Washington, DC 20401, or telephone area code (202)
275-3874.
Ship 100 copies to [Interior] destination as indicated
under distribution to arrive at destination on or before
May 31, 1989.
Ship complete on or before May 31, 1989.
See, R4 File, Tab P, pp. 2-5.33 In addition, Pensacola was not
required to produce a complete set of film negatives, as was the
Appellant (R4 File, Tab D; R4 File, Tab Q).
It is undisputed that Pensacola successfully completed its
contract and furnished copies of the National Survey which
Interior found satisfactory and acceptable. App. Exh. No. 17.
II. ISSUES PRESENTED
As indicated by the Board during the hearing (Tr. 44), this
appeal presents two issues for its consideration:
1. Did the Contracting Officer erroneously terminate the
contract for default, thus converting the termination into
one for the convenience of the Government, and if so, what
is the amount of the Contractor's compensation for work
performed?
2. Even if the Contracting Officer's default action was
justified, is the Appellant nonetheless excused from
responsibility for the excess reprocurement costs?
III. POSITIONS OF THE PARTIES34
Although the Appellant insists that it printed the National
Survey on the correct paper, it does not challenge the
Respondent's conclusion that the perfect-binding of the
publication it supplied to Interior was defective. PCR, pp.
7-8, 11; RSC, p. 4; Tr. 247-48, PCR, pp. 7-8, 11. The
Contractor argues, however, that the defect was relatively
minor, and that the contract, in essence, was really
terminated for the convenience of the Government.35 The
Appellant advances three major contentions in support of its
position: (1) the examination and approval of the 3 samples of
the National Survey by Interior prior to distribution, amounts
to acceptance of the product, thus waiving the Government's
right to subsequently reject the books and terminate the
contract for failure to follow specifications; (2) the
Contractor substantially performed the terms of the contract
and furnished a product which was useable, hence it was
unreasonable for the Respondent to ask that the book be
reprinted; and (3) the Appellant is excused from liability for
excess reprocurement costs because GPO repurchased a
materially different version of the National Survey.
The Appellant's first argument relies heavily on its
understanding of the meaning and import of Interior's desire,
transmitted through Kinsley, to look at 3 trimmed and bound
copies of the book before they were distributed. App. Brf.,
pp. 5-6; Tr. 247. In the Contractor's view, once those 3
samples had been reviewed and approved by Interior, and the
Appellant was instructed to proceed,36 the Government waived
any further right to reject the books and terminate the
contract.37 App. Brf., pp. 6-8 (citing, Joseph Morton
Company, Inc., ASBCA No. 19793, 78-1 BCA � 13,173; Ray M. Lee
Company, ASBCA No. 5103, 59-2 BCA � 2,457); PCR, p. 8; RSC, p.
4.
Secondly, the Appellant claims that it substantially performed
all the terms of the contract and furnished a useable product,
thus termination should not be allowed in this case. App.
Brf., p. 8; Tr. 247-48. Stated otherwise, the Contractor
believes that the default was erroneous because there was a de
facto acceptance of the product. App. Brf., pp. 8-10 (citing,
Wolfe Construction Company, ENGBCA Nos. 3610, 3608, 3607,
3853, 4752, 3609, 3611, 84-3 BCA � 17,701; Valley Asphalt
Corporation, ASBCA No. 17595, 74-2 BCA � 10,680; Bell & Flynn,
Inc., ASBCA No. 11038, 66-2 BCA � 5,855); PCR, pp. 7-8, 11;
RSC, p. 4. In that regard, the Appellant claims that the
paper it used to print the National Survey fully met the
contract specifications, and the binding defect was minor one
which could have been corrected easily and inexpensively.
PCR, p. 9-10; RSC, p. 4. As the Contractor sees it, by
rejecting its offer to staple the binding and insisting on a
reprint instead, the Respondent unreasonably deprived the
Appellant of an opportunity to cure the defect. App. Brf.,
pp. 9-10. Since, the Appellant believes that it had produced
a "totally acceptable commercial product", it contends that it
is entitled to payment from the Government.38 PCR, pp. 8-10
Finally, the Appellant contends that it cannot be held liable
for excess reprocurement costs because the repurchase contract
ordered a book which was materially different from the one it
was asked to produce. App. Brf., p. 11; Tr. 248. The
Contractor relies on the Respondent's own witnesses who
testified during the hearing that the repurchase contract
altered the duotone specifications, and also the finish of the
cover paper for the reprocured National Survey was
different.39 App. Brf., p. 11-12. Tr. 253, 254. Since these
revised contract specifications were of a material nature, the
Appellant argues that the law does not allow the Government to
recover excess reprocurement costs. App. Brf., pp. 12, 14
(citing, Theodore R. Korotie, AGBCA No. 86-245-1, 89-3 BCA �
22,214; Luis Martinez, AGBCA Nos. 86-148-1, 86-270-1, 87-3 BCA
� 20,219). See also, Tr. 248-49. Therefore, for these
reasons, the Contractor asks the Board to reverse the
Contracting Officer's default decision, direct the Respondent
to pay the Appellant for the job, and refund the excess
reprocurement costs assessed against its account. App. Brf.,
p. 15; Complaint, � 5, pp. 3-4.
The Respondent, on the other hand, offers five (5) reasons to
explain why the Contracting Officer was justified in
terminating the Appellant's contract for default in this case.
First, relying on the well-established principle which
entitles the Government to strict compliance with its contract
specifications, the Respondent argues that the Contractor's
failure to deliver a conforming product was a legitimate
reason for the Contracting Officer's decision to reject the
books and order a reprint. R. Brf., pp. 5-7 (citing, Cascade
Pacific International v. United States, 773 F.2d 287 (Fed.
Cir. 1985); American Electric Contracting Corporation v.
United States, 579 F.2d 602 (Ct.Cl. 1978); Dependable
Printing, Inc., GPO BCA 5-84 (September 12, 1985)). "Strict
compliance" means that the Government has a right to get
exactly what it asked for in the specifications. R. Brf., p.
5 (citing, Rohr Industries, Inc., ENGBCA No. 4058, 82-1 BCA �
15,732. Here, the contract's binding specifications required
the production of a "perfect-bound" book-a softcover
publication where the backs of the signature pages are sawed
off and glued onto the cover stock. R. Brf., p. 6. However,
the perfect-binding on the Appellant's books were defective,
because the pages popped away from the adhesive surface.
Since the Appellant's binding work failed to meet contract
specifications, the Contracting Officer had grounds to reject
the books and order a reprint. R. Brf., p. 7. According to
the Respondent, the Government is not obliged to accept
nonconforming supplies, and only the Contracting Officer is
authorized to decide whether a product conforms with the
specifications. Id. (citing, Famous Model Company, ASBCA No.
12526, 68-1 BCA � 6,902; Dependable Printing, Inc., supra, Sl.
op. at 24.
Second, the Respondent contends that the Appellant's offer to
either fix the binding defect by stapling, or to accept a
discount, was totally inadequate. R. Brf., pp. 7-8. GPO
notes that under the so-called "substantial compliance"
doctrine, a contractor has a reasonable period of time to cure
minor defects and deliver goods which substantially conform to
the contract specifications. R. Brf., p. 8 (citing, Radiation
Technology, Inc. v. United States, 177 Ct.Cl. 227, 366 F.2d
1003, 1006 (1966)). In this case, stapling the book, as
suggested by the Appellant, would have, in effect, substituted
one nonconforming binding for another; i.e., stapling is not
"perfect-binding," as that term is understood in the industry.
Id. Similarly, the Appellant's discount offer was nothing
more than an inducement to accept nonconforming work. Id.
Consequently, the Respondent believes that in order to procure a
conforming book, the only option available to the Contracting
Officer under these circumstances was to ask for a reprint of the
National Survey. R. Brf., p. 9 (citing, Cherry Meat Packers,
Inc., ASBCA No. 8974, 1963 BCA � 3937, for the proposition that
the Government cannot be forced to accept defective products at a
reduced price).
Third, GPO claims that the Appellant's refusal to reprint the
National Survey, as directed by the Contracting Officer,
constitutes a legitimate reason for default, in and of itself.
Id. According to the Respondent, the law requires the
contractor to continue to follow the Contracting Officer's
instructions regarding performance while a dispute is pending,
and to seek relief in the form of an equitable adjustment to
the contract. Id. (citing, Brenner Metal Products
Corporation, ASBCA No. 25294, 82-1 BCA � 15,462; Eriez
Construction, Inc., VACAB No. 1273, 78-2 BCA � 13,547). The
"Disputes" clause in GPO Contract Terms, applies this same
principle to GPO contracts such as the Appellant's. Id. GPO
Contract Terms, Contract Clauses, � 5(d). Since there is
nothing to indicate that the Contracting Officer's reprint
request was improper or impossible to comply with, the
Contractor's failure to follow his instructions warranted
default of the contract. Id. (citing, The American Press,
Inc., GPOCAB No. 17-84 (January 4, 1991).40
Fourth, the Respondent argues that the Interior's review of
the 3 sample copies of the National Survey prior to delivery,
did not constitute acceptance of the book by the Contracting
Officer. R. Brf., p. 10. GPO contends that under settled
principles, only the designated contracting officer is
empowered to accept or reject performance. R. Brf., p. 11
(citing, Trevco Engineering & Bales, VACAB No. 1021, 73-2 BCA
� 10,096; Wolverene Diesel Power Company, ASBCA No. 5079, 59-2
BCA � 2,327). Under the terms of the contract, the Government
was entitled to inspect and test the books before acceptance.
Id. (citing, GPO Contract Terms, Contract Clauses, � 14(c).
Once GPO was alerted to the problem with the National Survey
by Interior's complaint on March 27, 1989, after the books
were delivered, it acted quickly to ascertain the scope of the
defects and have the Appellant correct them. Id. Nothing in
the Respondent's behavior after March 27, 1989, can be
construed as acceptance of the shipment; indeed, the
Contractor was expressly told that the shipment was being
rejected. Id. In any event, Interior's inspection of the 3
prior to delivery samples could not, legally, estop GPO from
rejecting the rest of the shipment. R. Brf., pp. 11-12
(citing, Dee-Lite Industries, Inc., GSBCA No. 3088, 71-1 BCA �
8,788, affirmed on hearing, 72-1 BCA � 9,258; 44 Comp. Gen.
341). This is particularly true where the shipment contains
latent defects. R. Brf., p. 12 (citing, Kaminer Construction
Corporation v. United States, 488 F.2d 980 (Ct.Cl. 1973);
Castle Construction Company, ASBCA No. 28401, 84-1 BCA �
17,041 (1983); W.L. Spruill & Company, ASBCA No. 14390, 71-2
BCA � 8,930).
Finally, GPO believes that it was appropriate to assess excess
reprocurement costs against the Appellant in this case. Id.
The Respondent argues that in order to be excused from this
liability, the Contractor had to show that Pensacola's version of
the National Survey was materially different from the book it was
asked to produce. Id. However, a comparison of the two books
warrants the conclusion that they are more similar than
different. R. Brf., pp. 12-13 (citing, Environmental Techtonics
Corporation, ASBCA No. 21204, 78-1 BCA � 12,986; Marmac
Industries, Inc., ASBCA No. 12158, 72-1 � 9,249). In that
regard, the Respondent observes that the paper stock
specification in both the original and reprocurement contracts
were exactly the same, and that unlike Pensacola, the Appellant
failed to use the required paper. R. Brf., p. 13. The
Respondent admits that for the repurchase of the National Survey,
Interior decided to have the books printed in the original
duotone scheme, not as modified for the Appellant's contract, but
it argues that this slight change does not make Pensacola's book
"materially different." R. Brf., pp. 13-14 (citing, Guenther
Systems, Inc., ASBCA No. 16238, 73-1 BCA � 9,868; Max M.
Goldhaber, ASBCA No. 8277, 65-2 BCA � 5,083). These "minor"
differences between the duotones do not change in the "concept or
fundamental operation" of the procurement. R. Brf., p. 14
(citing, Max M. Goldhaber, supra, 65-2 BCA � 5,083, at 23,955).
Thus, the two books are "similar" within the meaning of the law,
and the Appellant is liable for the reprocurement costs.
Accordingly, for all of these reasons, GPO urges the Board to
affirm the decision of the Contracting Officer. R. Brf., p. 15.
IV. CONCLUSIONS41
The factual simplicity of this case cannot disguise its
significance for the jurisprudence of the Board. In no other
dispute heretofore considered by the Board, have the two
issues involved in this appeal been raised so clearly and so
precisely. First, this case squarely and starkly raises the
question not reached in Shepard I; i.e., did the Contractor's
refusal to reprint the order under the circumstances described
amount to an abandonment or anticipatory repudiation of the
contract?42 Second, this appeal provides the Board with an
opportunity to set forth the standards which it will apply in
determining challenges to a Contracting Officer's assessment
of excess reprocurement costs when items covered by a
defaulted contract are repurchased by the Government.
Accordingly, the Board makes the following findings and
conclusions of law.
A. The Appellant, both orally and in writing, evinced its
intention to abandon or repudiate the contract. Therefore,
regardless of the merits of the dispute, the Contracting
Officer's decision to terminate the contract for default
was justified and not in error.
It is axiomatic that a default termination is a drastic action
which may only be taken for good cause and on the basis of
solid evidence.43 See, Hurt's Printing Company, Inc., supra,
Sl. op. at 13-14; Shepard I, supra, Sl. Op. at 10; R.C.
Swanson Printing and Typesetting Company, GPO BCA 31-90
(February 6, 1992), Sl. 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);44 Stephenson, Inc.,
supra, Sl. 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).
The burden of proving the basis for the default is on the
Government. See, Lisbon Contractors v. United States, 828
F.2d 759 (Fed. Cir. 1987); Chavis and Chavis Printing, supra,
Sl. op. at 11 (and cases cited therein); Shepard Printing,
supra, Sl. Op. at 11; R.C. Swanson Printing and Typesetting
Company, supra, Sl. op. at 28. The contractor has the burden
of proving excusability.45 Switlik Parachute Company v.
United States, 216 Ct.Cl. 362 (1978); Davis v. United States,
180 Ct.Cl. 20 (1967); J.F. Whalen and Company, AGBCA Nos.
83-160-1, 83-281-1, 88-3 BCA � 21,066; B. M. Harrison
Electrosonics, Inc., ASBCA No. 7684, 1963 BCA � 3,736; Hy-Cal
Engineering Corporation, NASA BCA Nos. 871-18 and 772-7, 75-2
BCA � 11,399; Chavis and Chavis Printing, supra, Sl. op. at
11-12 (and cases cited therein); Shepard I, supra, Sl. Op. at
11; R.C. Swanson Printing and Typesetting Company, supra, Sl.
op. at 28. If the Government fails to meet its burden of
proof, then the termination is converted into one of
convenience and the contractor can be paid for the work
performed. See, GPO Contract Terms, Contract Clauses, �
20(g). Cf., Shepard I, supra, Sl. Op. at 11; Stephenson,
Inc., supra, Sl. op. at 17-18; Chavis and Chavis Printing,
supra, Sl. op. at 9.
In this case, the Contracting Officer based his decision to
terminate the Appellant's contract for default on the
Contractor's "refusal to correct the quality defects to meet
the [requirements] of the specifications" (R4 File, Tab N).
Stated otherwise, the contract was defaulted because the
Appellant refused to produce a perfect-bound National Survey
by reprinting it; i.e., while the Contractor's offer to staple
the book might have cured the binding defect, that method of
correction was something less than the perfect-binding called
for in the contract (R4 File, Tab M). Apart from its belief
that Interior's review and approval of the 3 advance copies of
the book prior to distribution estops the Government from
rejecting the complete order,46 the Appellant's main defense
to the merits of the default, in effect, is that the National
Survey it produced "substantially conformed" to the
specifications and other terms and conditions of the
contract.47 Indeed, most of the time at the hearing was spent
litigating whether the so-called "substantial compliance"
issue applied to the circumstances of this case.48 However,
in deciding if the Contracting Officer's default termination
was justified, the Board does not have to reach that question.
Regardless of the merits on the "substantial compliance"
issue, the Appellant's obstinate refusal to reprint the
National Survey at the direction of the Contracting Officer is
fatal to its appeal, and is ground enough to sustain the
default. See, A. N. Xepapas, AIA, VABCA No. 3087, 91-2 BCA �
23,799, at 119,178 ("The merits of the controversy has 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 � 4,214).
The Board takes its authority from the "Disputes" clause of
the contract. R.C. Swanson Printing and Typesetting Company,
GPO BCA 15-90 (March 6, 1992), Sl. op. at 27-28, 41; The
Wessel Company, Inc., GPO BCA 08-90 (February 28, 1992), Sl.
op. at 32-35, 46. See, GPO Contract Terms, Contract Clauses,
� 5. Among other things, the "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, Contract Clauses, � 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, FAR � 52.233-1(h).49
In order to sustain a termination for default based upon the
above provision of the "Disputes" clause two things are
required: (1) a clear direction by the contracting officer;
and (2) a refusal by the contractor to proceed with
performance. See, Ascani Construction & Realty Company, VABCA
Nos. 1572, 1584, 83-2 BCA � 16,635. See also, Max M.
Stoeckert v. United States, 183 Ct.Cl. 152, 391 F.2d 639
(1968); James W. Sprayberry Construction, IBCA No. 2130, 87-1
BCA � 19,645; G.W. Galloway Company, ASBCA No. 17436, 77-2 BCA
� 12,640; Pacific Devices, Inc., ASBCA No. 19379, 76-2 BCA �
12,179. Where such clear and unmistakable instructions
regarding performance are given by the contracting officer,
and the contractor nonetheless refuses to comply, a default
termination will be upheld on the theory that the contractor
anticipatorily repudiated or abandoned the contract.50 See,
e.g., Altina Trucking, PSBCA No. 3341, 93-3 BCA � 26,256;
Twigg Corporation, NASA BCA No. 62-0192, 93-1 BCA � 25,318; F
& D Construction Company, Inc., ASBCA No. 41441, 91-2 BCA �
23,983; A. N. Xepapas, AIA, supra, 91-2 BCA � 23,799; Holt
Roofing Company, Inc., GSBCA No. 8270, 91-1 BCA � 23,361; Kirk
Casavan, AGBCA No. 76-192, 78-2 BCA � 13,459. 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., supra, 78-2 BCA � 13,547 at
66,363). See also, Computer Engineering Associates, VABCA No.
1596, 84-2 � 17,246.
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, supra, 773 F.2d at 293). See also, 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. 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, 93-3 BCA � 25,976, at
129,171 (citing, United States v. DeKonty Corporation, 922 F.2d
826). 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 which
constitute actual abandonment of performance. See, Holt Roofing
Company, Inc., supra, 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, 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). In that
regard, a contractor's poor financial condition or economic
distress will not excuse a default. Holt Roofing Company, Inc.,
supra, 91-1 BCA � 23,361, at 117,174.
Although Twigg Corporation, supra, arose in the context of a
construction not a supply contract, as here, the facts are
analogous. In that case, the contractor received a contract
from the National Aeronautics and Space Administration (NASA)
for the construction of two-level concrete mezzanine in a
building at the Goddard Space Flight Center. Within 10 months
NASA observed substantial cracking in the concrete on one of
the levels. When NASA conducted tests on the material it
discovered that the concrete did not meet the specified
strength of 3,000 psi. As a consequence, the agency rejected
the work as nonconforming and directed the contractor to
replace, or otherwise correct, the two levels of concrete
without charge to the Government. After several months of
letters and meetings, during which time the contractor
maintained that the concrete cracking was due to a defective
design, the parties were unable to agree on a replacement
plan. NASA wanted the contractor to replace both mezzanine
levels, while the contractor said it would only replace the
single slab of defective concrete. Finally, in response to
written directions from NASA instructing the replacement of
both mezzanine levels, the contractor wrote back, saying, in
pertinent part:
We will remove any and all defective concrete work with the
mezzanine slabs . . . We have tested and submitted to you
the results of these tests to the top slab. These tests
show that this top slab is not defective and will not be
removed. . . . We will remove all defective material but
that is all. . . . We are waiting to hear when we may start
this repair.
Twigg Corporation, supra, 93-1 BCA � 25,318, at 126,156.
[Emphasis added.] Because of the contractor's written refusal to
correct the job as directed, NASA terminated the contract for
default.
In upholding NASA's default termination decision, the agency
appeals board reasoned, in pertinent part:
When there is a positive, definite, unconditional, and
unequivocal manifestation of intent not to perform, by
words or conduct, the Contracting Officer may terminate the
contract for default on the ground of anticipatory
repudiation. [Citation omitted.] Appellant's words in its
letter were that it would not replace the top slab because
it had tested the top slab and did not find it defective.
An anticipatory repudiation must be clear and absolute.
[Citations omitted.] Appellant argues that . . . the words
of its letter referring to a removal of "all defective
concrete work with the mezzanine slabs" were not a
repudiation of the Contract. We disagree. Appellant's
statements were clear that it would not replace work that
it did not consider defective, and that it did not consider
the top slab defective. We find nothing in the record that
reveals a contrary intention.
* * * * * * * * * *
A contractor's failure to proceed as directed pending
resolution of its dispute with the Government has been
equated with anticipatory breach of the contract by
repudiation that gives the Government the right to
summarily terminate the contract for default. [Citations
omitted.] In this case, we consider it significant that
Appellant failed to comply with the Government's directives
for replacement work for over seven months while it claimed
that the concrete cracking was due to a defective design.
Appellant does not assert, and we cannot infer, that the
Contractor was proceeding diligently with performance of
the Contract and compliance with directives of the
Contracting Officer as the Disputes Clauses requires. We
have concluded that Respondent has established on the
record evidence an anticipatory repudiation that was ground
for the default termination.
Twigg Corporation, supra, 93-1 BCA � 25,318, at 126,157-58.
[Emphasis added.]
As was the case in Twigg Corporation, the Board believes that
the facts here amply support a finding that the Appellant
repudiated its contract with the Government. In the Board's
view, the Contractor's refusal to follow the Contracting
Officer's explicit directions to reprint the National Survey
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. Not only
did McDaniel orally refuse the Contracting Officer's numerous
reprint requests, but her letter of April 12, 1989, is
particularly damaging to the Appellant's case. In words which
were incapable of being misunderstood, McDaniel's made it very
clear that the Appellant would not reprint the National
Survey, as directed, because: (1) the book was being used by
he departments which received it; (2) the job was printed in
accordance with the contract specifications; and (3) the
financial cost of reprinting would be too steep and might
force the Contractor into bankruptcy (R4 File, Tab L).
Indeed, McDaniel's remark that "it maybe cheaper for [the
Contracting Officer] to default her" (R4 File, Tab K), is also
indicative of the Contractor's "positive, definite,
unconditional, and unequivocal" opposition to the very idea of
reprinting the book in this case. Cf., Holt Roofing Company,
Inc., supra, 91-1 BCA � 23,361, at 117,173. Furthermore, the
Board is constrained to observe that one of principal reasons
given by the Appellant for not reprinting the books, namely,
that it would cost too much (R4 File, Tabs K and L), is not a
ground for refusing to proceed. Id., at 117,174 ("A
contractor's poor financial condition does not excuse a
default.").
When the record is considered as a whole, the Appellant's oral
and written statements evince a clear intent not to reprint the
National Survey for the reasons given. There is nothing to show
that the Contractor ever considered modifying that position once
it was taken. 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, 93-1 BCA � 25,318, 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).
Finally, an anticipatory repudiation also occurs when a
contractor fails to proceed as directed pending resolution of
its dispute with the Government.51 Twigg Corporation, supra,
93-1 BCA � 25,318, at 126,157. See also, A. N. Xepapas, AIA,
supra, 91-2 BCA � 23,799, at 119,179. The record shows that
the Appellant steadfastly offered to correct the binding
defect by stapling the copies of the National Survey.
However, there is nothing in the record to indicate any
willingness on the part of the Appellant to comply with the
Contracting Officer's directives to reprint the book; instead,
all the evidence is to the contrary. Indeed, it is
significant that once the Appellant's offer to staple the
books was rejected and the Respondent's representatives
clearly explained the proper procedure to follow in this
dispute-i.e., reprint the National Survey, and then file a
claim for the extra work, which, if denied, could be appealed
to the Board-the Appellant ignored that advice. This Board,
as well as the ad hoc appeals panels which preceded it, have
held on numerous occasions that under the GPO "Disputes"
clause, a contractor is obligated to follow the contracting
officer's directives regardless of the merits of the
controversy. See, e.g., International Lithographing, GPO BCA
1-88 (December 29, 1989); Colorgraphics Corporation, GPO BCA
16-87 (March 31, 1989); Custom Printing Company, GPO BCA 10-87
(May 10, 1988). See also, e.g., Knepper Press, GPOCAB Nos.
2-84 and 3-84 (October 2, 1984); Business Forms Service, Inc.,
GPOCAB 9-81 (October 20, 1981); Merchant Service Company, GPO
Contract Nos. 373 and 374 [No GPOCAB Docket Number] (February
11, 1980). In such cases, a contractor who then prevails on
the merits, would be:
. . . entitled to the full contract price for the reprint,
assuming its acceptance, and an equitably adjusted
discounted price for the quantity of publications used by
the Government from the first printing.
International Lithographing, supra, Sl. op. at 25. Accordingly,
the Board finds and concludes that the record establishes that
the Appellant repudiated is obligations under the contract.
Therefore, the Contracting Officer was warranted in terminating
the contract because of the Appellant's default.52
B. While the Respondent has shown that it was justified in
terminating the Appellant's contract for default, it has
not sustained its burden of proof with regard to excess
reprocurement costs.
In most previous cases considered by the Board and the ad hoc
appeals panels, the default termination decision also disposed
of the issue concerning excess reprocurement costs. See,
e.g., Hurt's Printing Company, Inc., supra, Sl. op. at 30;
Graphics Image, Inc., GPO BCA 13-92 (August 31, 1992), Sl. op.
at 28; Tamms Lithography, Inc., GPO BCA 14-89 (July 13, 1990).
Sl. op. at 9; Valley Printing Service, GPO BCA 3-84 (June 6,
1985), Sl. op. at 12; Vogard Printing Corporation, GPOCAB 7-84
(January 7, 1986), Sl. op. at 7; Knepper Press, supra, Sl. op.
at 4; Technical Publishing Services, Inc., GPO CAB 1-81
(January 20, 1982), Sl. op. at 6. A review of these prior
decisions indicates that the contractor usually only appealed
the underlying reasons for the default termination, and the
excess reprocurement cost issue was subsumed in the overall
arguments on the merits of the default.53 But see, e.g.,
Himark Printing Company, GPOCAB No. 1-84 (March 16, 1984);
Nekoosa Press, Inc., Program 538-S, Jacket No. 311-450 [No
GPOCAB Docket Number] (January 5, 1981) (litigation of excess
reprocurement cost issue only). In Custom Printing Company, a
GPO ad hoc panel dismissed a contracting officer's objection
to the panel's consideration of the excess cost issue because
the defaulting contractor had not sought a separate final
decision on the assessment, explaining:
We believe that this fact situation falls in line with that
of Conncor, Inc., GSBCA No. 4654, 77-1 BCA � 12,225. There
the appellant unsuccessfully appealed the default
termination, and it had not timely filed a subsequent
appeal to the assessment of excess costs. Disregarding
this, the Board concluded that the subject was properly
before it for adjudication. Also see, El-Tronics, Inc.,
ASBCA No. 5457, 61-1 BCA � 2,961 (1961); Si-Lite, Inc.,
GSBCA No. 2,442, 68-1 BCA � 7,032. In accord with this
line of so-called reverse "Fulford doctrine" cases, see,
Fulford Manufacturing Company, ASBCA Nos. 2143, 2144, 6 CCF
� 61,815 (1955), Pantronics, Inc., ASBCA No. 20982, 78-2
BCA � 13,285, at p. 64,984 (appeal of excess costs
assessment "opens-up" questions of validity of default
termination), we hold that the matter of excess costs has
also been appealed here and is properly before us for
decision of the propriety of the assessment.
See, Custom Printing Company, GPOCAB 2-79 (December 19, 1979),
Sl. op. at 14.54 Thus, the usual practice when a defaulted
contractor appeals from the termination decision is for the Board
to look at the excess reprocurement cost issue as well, provided
that question is ripe for consideration; i.e, such costs have
been assessed.55 This case represents one of the few times in
the combined history of the Board and the ad hoc appeals panels,
in which the parties have spent a substantial amount of time
addressing the excess reprocurement cost issue, both during
litigation and in their post-hearing briefs. See, e.g., Timsco,
Inc., GPOCAB 78-10 (July 24, 1979). Accordingly, the Board
believes that it is appropriate, in the context of this appeal,
to set forth in detail the criteria which it will apply in
determining challenges to a contracting officer's assessment of
excess costs.
At the outset, it must be mentioned that the authority vested
in GPO's contracting officers to levy excess reprocurement
costs is rooted in contract, not in statute. In that regard,
the standard "Default" clause in GPO contracts provides, in
pertinent part:
If the Government terminates in whole or in part, it may
acquire, under the terms and in the manner the Contracting
Officer considers appropriate, supplies or services similar
to those terminated, and the contractor will be liable to
the Government for any excess costs for those supplies or
services. . . .
GPO Contract Terms, Contract Clauses, � 20(b).56 Furthermore, in
exercising their repurchase authority, GPO contracting officers
are instructed that:
Where the supplies or services are still required after
termination and the contractor is liable for excess costs,
repurchase of supplies or services which are similar to
those called for in the contract shall be made against the
contractor's account as soon as possible after termination.
The repurchase shall be made at a price reasonable as can
be obtained considering the quality required and the time
within which the supplies or services are required.
PPR, Chap. XIV, Sec. 1, � 3.f.(1). [Emphasis added.]
By its terms, the "Default" clause excuses defaulting
contractors from liability for excess reprocurement costs if
they or their subcontractors failed to perform because of
events beyond their control and without their fault or
negligence. GPO Contract Terms, Contract Clauses, ��
20(c),(d). See, e.g., Printing Unlimited, GPO BCA 21-90
(November 30, 1993), Sl. op. at 16; B. P. Printing and Office
Supplies, GPO BCA 22-91 (February 5, 1993), Sl. op. at 10;
R.C. Swanson Printing and Typesetting Company, Sl. op. at 27,
fn. 16; Chavis and Chavis Printing, supra, Sl. op. at 11;
Vogard Printing Corporation, supra, Sl. op. at 7-8. However,
as implied in the above-quoted paragraph of the PPR, a
contractor will also be protected from the assessment of
excess reprocurement costs if the Government fails to meet its
responsibilities in cases of default. Whether the
Government's repurchase was improper, and if so, what is the
amount of reasonable excess costs under the circumstances, are
questions of fact. Cable Systems and Assembly Company, ASBCA
No. 17844, 73-2 BCA � 10,172 at 47,892.
The assessment of excess reprocurement costs is considered a
Government claim.57 See, John L. Hartsoe, AGBCA No. 88-116-1,
93-2 BCA � 25,614, at 127,501; B & M Construction, Inc., AGBCA
No. 90-165-1,93-1 BCA � 25,431, at 126,667; William A. Hulett,
AGBCA Nos. 91-230-3, 92-133-3, 92-196-3, 93-1 BCA � 25,389, at
126,460; Theodore R. Korotie, supra, 89-3 BCA � 22,214, at
111,728. See also, ATC Decal Company, GPOCAB 3-81 (July 14,
1981), Sl. op. at 8. Consequently, the Government has the
burden of demonstrating the propriety of the repurchase and
proving its entitlement to the amount of excess costs it
claims. See, John L. Hartsoe, supra, 93-2 BCA � 25,614, at
127,501 (citing, Jesse W. Wayne, AGBCA No. 410, 75-2 BCA �
11,394); William A. Hulett, supra, 93-1 BCA � 25,389, at
126,460; Rhocon Constructors, AGBCA No. 86-125-1, 91-1 BCA �
23,308, at 116,894; The Flooring Company, GSBCA No. 8297, 89-3
BCA � 22,167, at 111,548 (citing, Mattatuck Manufacturing
Company, GSBCA No. 4847, 80-1 BCA � 14,349); Ace
Reforestation, Inc., AGBCA No. 84-272-1, 83-2 BCA � 20,218, at
102,400 (citing, Elton E. Widdifield, et al., AGBCA No.
81-115-1 A-B, 83-2 BCA � 16,639). As voiced by the Federal
Circuit, the rule which is applied when the Government seeks
recovery of excess reprocurement costs is that they:
. . . may be imposed only when the Government meets its
burden of persuasion that the following conditions (factual
determinations) are met: (1) the reprocured supplies are
the same as or similar to those involved in the
termination; (2) the Government actually incurred excess
costs; and (3) the Government acted reasonably to minimize
the excess costs resulting from the default. [Citations
omitted.] The first condition is demonstrated by comparing
the item reprocured with the item specified in the original
contract. [Citation omitted.] The second condition
requires the Government to show what it spent in
reprocurement. [Citation omitted.] The third condition
requires that the Government act with a reasonable time of
the default, use the most efficient method of
reprocurement, obtain a reasonable price, and mitigate its
losses. [Citation omitted.] [Emphasis added.]
Cascade Pacific International v. United States, supra, 773 F.2d
at 293-94.58 See also, Puroflow Corporation, ASBCA No. 36058,
93-3 BCA � 26,191, at 130,392 (citing, AAR Allen Aircraft
Corporation, ASBCA No. 32702, 88-2 BCA � 20, 581); B & M
Construction, Inc., supra, 93-1 BCA � 25,431, at 126,667-68;
Interstate Forestry, Inc., AGBCA No. 89-114-1, 91-1 BCA � 23,660.
Subsequent contract appeals litigation has refined this test so
that it now has five basic elements; i.e., the Government bears
the burden of proving that: (1) the reprocurement contract was
performed under substantially the same terms and conditions as
the original contract; (2) it acted within a reasonable time
following default to repurchase the supplies; (3) it employed a
reprocurement method which would maximize competition under the
circumstances; (4) it 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. See, e.g, B & M Construction, Inc., supra, 93-1 BCA �
25,431, at 126,667-68 (citing, Cascade Pacific International v.
United States, supra, 773 F.2d at 293); William A. Hulett, supra,
93-1 BCA � 25,389, at 126,459 (citing, Delphi Industries, Inc.,
AGBCA No. 76-160-4 A & B, 84-1 BCA � 17,053); Zan Machine
Company, supra, 91-3 BCA � 24,085, at 120,542 (citing, Birken
Manufacturing Company, ASBCA No. 32590, 90-2 BCA � 22,845, at
114,716); Mid-America Painters, Inc., ENG BCA No. 5703, 91-1 BCA
� 23,367, at 117,232-33 (citing, Birken Manufacturing Company,
supra); Theodore R. Korotie, supra, 89-3 BCA � 22,214, at 111,728
(citing, John T. Penrod, AGBCA No. 79-169-4, 80-2 BCA � 14,789);
Sequal, Inc., ASBCA No. 30838, 88-1 BCA � 20,382, at 103,067
(citing, Match Maker Textiles, Inc., ASBCA No. 22382 and 23414,
80-1 BCA � 14,335); Boston Pneumatics, Inc., ASBCA Nos., 26188,
26190, 26825, 26984, 27605, 27606, 87-1 BCA � 19,395, at 98,084.
Furthermore, it is also well established that the Government
claim must be supported by evidence in the record as to each
element of the claim. Rhocon Constructors, supra, 91-1 BCA �
23,308, at 116,894 (citing, Delphi Industries, Inc., supra).
Failure to satisfy even one criterion may result in a reduction
of the excess costs claimed.59 See, e.g., Associated Cleaning,
Inc., GSBCA No. 8320, 8361, 91-1 BCA � 23,360; Birken
Manufacturing Company, supra, 90-2 BCA � 22,845; Action Group II,
Inc., ASBCA No. 30855, 87-1 BCA � 19,375; M.S.I. Corporation,
VABCA No. 599, 67-2 BCA � 6,643. Other forums will deny the
claim altogether if the Government the fails to prove a single
element.60 See, e.g., Consolidated Airborne Systems, Inc. v.
United States, 172 Ct. Cl. 588, 348 F.2d 941 (1965); See also,
e.g., Pyramid Packing, Inc., supra, 92-2 BCA � 24,831; Rhocon
Constructors, supra, 91-1 BCA � 23,308; American Technology
Resources, ASBCA No. 38232, 89-3 BCA � 22,239; AGH Industries,
ASBCA Nos. 27960, 31150, 89-2 BCA � 21,637; Scalf Engineering Co.
and Pike County Construction Co., A Joint Venture, IBCA No. 2328,
89-3 BCA � 21,950; Luis Martinez, supra, 87-3 BCA � 20,219;
Glenn's Heating, supra, 87-1 BCA � 19,355. Applying the
standards necessary to sustain a Government claim for excess
costs to this case, the Board is forced to conclude that while
two elements of the test are satisfied, the Respondent's evidence
falls short in three critical areas; i.e., there is insufficient
proof that the reprocurement method chosen maximized competition,
that the reprocurement contract price was reasonable under the
circumstances, and that final payment had been made.
1. The reprocurement contract awarded to Pensacola was for
substantially the same publication, under essentially the
same terms and conditions, as those in the Appellant's
original contract.
The threshold question where, as here, a contractor challenges
the Government's assessment of excess costs, involves a
comparison between the original contract and the reprocurement
contract to determine if they are similar or substantially the
same with respect to the supplies procured and the terms and
conditions of performance. Luis Martinez, supra, 87-3 BCA �
20,219, at 102,406. See, Cibinic and Nash, p. 763. Both
parties concentrate their evidence and their arguments in this
area. The Appellant, relying on the physical appearance of
Pensacola's National Survey, as well as certain revisions to
the contract specifications in Pensacola's contract, contends
that the repurchase contract was "materially different" from
the one it was awarded. Furthermore, the Contractor implies
that it received disparate treatment in this case because
there is no evidence that the Respondent ever tested
Pensacola's publication to see if it met the paper and binding
standards.61 Meanwhile, the Respondent, focusing on the end
product itself, claims that although Interior returned to the
original duotone scheme for Pensacola's National Survey, this
modification was "minor" and legally insignificant since there
was no change in the "concept or fundamental operation" of the
procurement; i.e., both the original and repurchase contracts
procured 10,049 copies of the exact same perfect-bound two (2)
color, 176-page book, with a separate wraparound cover, on a
specified paper stock. Thus, regardless of the "slight"
changes in the repurchase agreement, the Government says it
ordered the "same" or "substantially similar" book from
Pensacola.
It is well-established that the Government bears the initial
burden of proving that the reprocured supplies are similar to
the original material, and that the defaulted contractor must
then go forward and show that the variations actually adopted
by the contracting officer caused unreasonable increase in
costs of an identifiable amount. Theodore R. Korotie, supra,
89-3 BCA � 22,214, at 111,728; Ace Reforestation, Inc., supra,
83-2 BCA � 20,218, at 102,400; Solar Laboratories, Inc., ASBCA
No. 19957, 76-2 BCA � 12,115, at 58,195. See also, Knepper
Press, supra, Sl. op. at 4. Obviously, one way to test for
similarity is to compare the end item delivered on the
reprocurement contract with the item specified in the original
contract at the time of default, and see if they share similar
"physical and mechanical characteristics as well as functional
purpose." Marmac Industries, Inc., supra, 72-1 BCA � 9,249;
Lome Electronics, Inc., ASBCA Nos. 8642, 8701, 1963 BCA �
3,833. See also, B & M Construction, Inc., supra, 93-1 BCA �
25,431, at 126,668; Sequal, Inc., supra, 88-1 BCA � 20,382, at
103,067; AGH Industries, supra, 89-2 BCA � 21,637, at 108,863;
Wise Instrumentation and Control, Inc., NASA BCA Nos. 1072-12,
673-7, 75-2 BCA � 11,478, mot. for reconsid. denied, 76-1 BCA
� 11,641. On the other hand, while a contracting officer must
repurchase similar supplies, "similar" does not mean
"identical".62 Puroflow Corporation, supra, 93-3 BCA �
26,191, at 130,392; Sequal, Inc., supra, 88-1 BCA � 20,382, at
103,067; AGH Industries, supra, 89-2 BCA � 21,637, at 108,863.
Thus, while minor variations in the repurchased items will not
relieve a contractor of its liability for excess reprocurement
costs, substantial and material differences between the end
items in the original contract and reprocurement contract will
completely relieve a contractor of its liability for excess
costs.63 United States v. Axman, 234 U.S. 36 (1914);
California Bridge & Construction Company v. United States, 50
Ct.Cl. 40 (1915), affirmed, 245 U.S. 337 (1917); B & M
Construction, Inc., supra, 93-1 BCA � 25,431, at 126,668
(citing, Environmental Tectonics Corporation, supra, 78-1 BCA
� 12,986); AGH Industries, supra, 89-2 BCA � 21,637, at
108,863 (citing, Accutherm, Inc., ASBCA No. 25474, 83-1 BCA �
16,307). See generally, Cibinic and Nash, pp. 763-65.
The end product is not the only measure of "similarity"-the
boards and the courts also look at whether the reprocurement
contract was performed under the same terms and conditions as
the defaulted contract. See, e.g., B & M Construction, Inc.,
supra, 93-1 BCA � 25,431, at 126,668 (contract changed or
relaxed for each of three major items, i.e., the access ramp,
the field stone headwall, and on-site disposal and storage);
Old Dominion Security, Inc., GSBCA No. 9126, 90-2 BCA �
22,745, at 114,164 (changes regarding posts at which guard
service was required considered "slight-small" distinctions);
Theodore R. Korotie, supra, 89-3 BCA � 22,214, at 111,728 (the
reprocurement contract contained a liquidated damages clause
not in the original); Foster Refrigerator Corporation, ASBCA
No. 34021, 89-2 BCA � 21,591, at 108,722 (and changes in
F.O.B. points did not cause a significant price increase); AGH
Industries, supra, 89-2 BCA � 21,637, at 108,863
(reprocurement contract's changed specifications required more
stringent testing, which would cause greater acceptance or
rejection of one product over another and affected the
repurchase price); Ace Reforestation, Inc., supra, 87-3 BCA �
20,218, at 102,400 (the reprocurement contract changed the
project description in a significant way, e.g., gave a clearer
information about the amount of live vegetation that would be
encountered and of the number of planters required); Luis
Martinez, supra, 87-3 BCA � 20,219, at 102,406 (relaxation of
specifications so that defaulted contractor could have
performed); Pulley Ambulance, VABCA Nos. 1954, 1964, 84-3 BCA
� 17,655, at 88,008 (particular requirements which were the
basis for default waived on reprocurement). However, the
cases make clear that in order for contract changes to be
considered "material" they must have a pecuniary impact. Cf.,
Churchill Chemical Corporation, GSBCA No. 4353, 77-1 BCA �
12,318, aff'd 221 Ct. Cl. 284, 602 F.2d 358 (1979); T.M.
Industries, ASBCA No. 21025, 77-1 BCA � 12,545; Solar
Laboratories, Inc., supra, 76-2 BCA � 12,115; Marmac
Industries, Inc., supra, 72-1 BCA � 9,249; Arjay Machine
Company, ASBCA No. 16535, 73-2 BCA � 10,179. See generally,
Cibinic and Nash, pp. 766-69. In that regard, it is well-
accepted that:
A variation between a defaulted contract and a
reprocurement contract is material if it causes a
substantial increase in the price of the reprocurement
contract. [Citation omitted.] Further, a change in
specifications that increases the price of a reprocurement
generally must be reflected by a reduction in the amount of
excess costs for which a defaulted contractor is liable,
[Citation omitted], although the Government does not
necessarily forfeit all rights to excess costs. [Citation
omitted.]
Ace Reforestation, Inc., supra, 83-2 BCA � 20,218, at 102,400-01
(citing, Meyer Labs, Inc., ASBCA No. 19525, 87-2 BCA � 19,810;
Action Group II, Inc., supra, 87-1 BCA � 19,375; G. O'Connor,
AGBCA No. 75-154, 78-1 BCA � 12,981). Also cf., AGH Industries,
supra, 89-2 BCA � 21,637, at 108,864 ("Moreover, the changes to
the specifications had a cost impact on the repurchase price.
While we are not persuaded by either party's computation of this
impact, we hold that the impact was significantly greater than
admitted by the Government, that it affected the repurchase
price, and that it suggests a greater lack of similarity between
the items purchased under the reprocurement contract and those
purchased under appellant's contract than would be apparent by
simple comparison of the respective items.").
In this case, it is undisputed that when the Respondent
repurchased the National Survey, it made some changes to the
specifications in the contract it awarded to Pensacola. Among
other things, the reprocurement contract returned to the
original duotone scheme selected by Interior; added a
requirement for a press sheet inspection; changed the quality
assurance levels and standards specification in light of the
new provision for a press sheet inspection; and amended the
"Proofs" clause to require that revised proofs be furnished at
no expense to the Government (R4 File, Tab P, pp. 2-5, and Tab
Q). Furthermore, while the Appellant had to produce one
complete set of film negatives, Pensacola did not (R4 File,
Tab D; R4 File, Tab Q). On the other hand, the basic
procurement in both the Appellant's and Pensacola's contracts
was identical-10,049 copies of the same perfect-bound two (2)
color, 176-page book, with a separate wraparound cover, on a
specified paper stock, with essentially the same number of
days allowed between the pick-up of Government-furnished
material and final delivery (Pensacola had 36 days to complete
the repurchase contract, while the time in the original
contract, before it was extended, gave the Appellant 35 days
to deliver the books) ((R4 File, Tabs B and P). Consequently,
the onus was on the Appellant to prove its allegation that
notwithstanding the basic similarity in both procurements, the
changes made by the Respondent to the reprocurement contract
rendered it "materially different" from the one it received,
and that Pensacola's version of the National Survey was
substantially dissimilar from the publication it was asked to
produce. Knepper Press, supra, Sl. op. at 4. An essential
element of that burden of proof was a demonstration that those
alterations caused an unreasonable increase of a specified
amount in the price of the repurchase. Theodore R. Korotie,
supra, 89-3 BCA � 22,214, at 111,728; Ace Reforestation, Inc.,
supra, 83-2 BCA � 20,218, at 102,400; Solar Laboratories,
Inc., ASBCA No. 19957, 76-2 BCA � 12,115, at 58,195. In the
opinion of the Board, the Appellant has failed to meet its
evidentiary burden.
The Board has examined and compared both books, and there is
no doubt that in terms of physical appearance, Pensacola's
National Survey stands out in marked contrast to the
Appellant's with respect to the duotone colors, the finish on
the covers, and the text paper. Compare, App. Exh. No. 17,
with App. Exh. Nos. 20 and 22. Cf. Printing Unlimited, GPO
BCA 21-90 (November 30, 1993), Sl. op. at 20-21; Product of
Information Systems, GPO BCA 7-85 (November 25, 1986), Sl. op.
at 8. However, from the evidence it is also true that despite
the differences in their surface characteristics, both books
have the same functional purpose and use. B & M Construction,
Inc., supra, 93-1 BCA � 25,431; Zan Machine Company, supra,
91-3 BCA � 24,085; Boston Pneumatics, Inc., supra, 87-1 BCA �
19,395; Marmac Industries, Inc., supra, 72-1 BCA � 9,249; Lome
Electronics, Inc., supra, 1963 BCA � 3,833. Besides, the law
is clear that the Contracting Officer was only duty-bound to
repurchase a book which was similar to the Appellant's
National Survey, not one which was identical to it. Puroflow
Corporation, supra, 93-3 BCA � 26,191; B & M Construction,
Inc., supra, 93-1 BCA � 25,431; Sequal, Inc., supra, 88-1 BCA
� 20,382; AGH Industries, supra, 89-2 BCA � 21,637, at
108,863.
Furthermore, while there were more changes in the terms and
conditions of Pensacola's contract than admitted by the
Respondent at the hearing, the Board is nonetheless persuaded
that the variations were minor and did not alter the essential
thrust of the reprocurement. Zan Machine Company, supra, 91-3
BCA � 24,085; Old Dominion Security, Inc., supra, 90-2 BCA �
22,745. More importantly, the Appellant has not presented any
evidence which would show that the cost of the reprocurement
was increased because of the changes made in the repurchase
contract; i.e., there is no proof of the pecuniary impact
necessary to support a finding that the alterations were
"material". Cf., AGH Industries, supra, 89-2 BCA � 21,637;
Ace Reforestation, Inc., supra, 83-2 BCA � 20,218; G.
O'Connor, supra, 78-1 BCA � 12,981; T.M. Industries, supra,
77-1 BCA � 12,545; Solar Laboratories, Inc., supra, 76-2 BCA �
12,115; Marmac Industries, Inc., supra, 72-1 BCA � 9,249.
Accordingly, since the Appellant has not submitted any
evidence which would substantiate its allegation that
Pensacola's contract was "materially different" from its
contract, the Board finds that the Contractor has not met its
burden of proof.
2. The Respondent acted within a reasonable time following
the default termination to reprocure the contract.
The second element in the Respondent's burden of proof-that it
acted within a reasonable time following the termination to
reprocure the contract-is easily disposed of. It is well-
settled that when examining the reasonableness of the
Government's mitigation efforts, appeals boards will examine,
inter alia, whether the reprocurement was accomplished in a
timely fashion. Disan Corporation, ASBCA Nos. 21297, 22221,
79-1 BCA � 16,677. In that regard, it is generally accepted
that:
While the issue of timeliness of a reprocurement "is
determined by the facts and circumstances of each case, the
usual test is whether the contractor was charged a higher
price due to the passage of time; the contractor bears the
burden of proof that it was damaged by any delay." Birken
Manufacturing Company, ASBCA No. 32590, 90-2 BCA � 22,845
[at 114,716].
Puroflow Corporation, supra, 93-3 BCA � 26,191, at 130,393. See
also, Astro-Space Laboratories, Inc. v. United States, 200 Ct.Cl.
282, 470 F.2d 1003, 1018 (1972). By its terms, the test is a
flexible one, but normally an acceptable time frame between
default and reprocurement is measured in days or a few months,
not years. Compare, e.g. John L. Hartsoe, supra, 93-2 BCA �
25,614 (33 days was reasonable) and Sequal, Inc., supra, 88-1 BCA
� 20,382 (3 months was reasonable) with, B & M Construction,
Inc., supra, 93-1 BCA � 25,431 (a 5 month delay in a period of
high inflation was unreasonable) and AGH Industries, supra, 89-2
BCA � 21,637 (a 17 month delay was unreasonable when the
Government alleged it had an urgent need for the supplies).
The record in this case shows that the Appellant's contract
was terminated for default on April 13, 1989 (R4 File, Tab N).
Five days later, on April 18, 1989, the Respondent initiated a
reprocurement of the job by issuing a new solicitation clearly
marked "This is a repurchase!!" (R4 File, Tab P, p. 1).
Furthermore, the face of the repurchase solicitation shows
that there were only 3 days between the date of issuance and
the bid opening date (from April 18, 1989 to April 21, 1989)
(R4 File, Tab P, p. 1). Thereafter, on April 25, 1989,
Pensacola received the reprocurement contract (R4 File, Tab
Q). All told, only 12 days elapsed between the date of
default and the award of the reprocurement contract.
Accordingly, on this record the Board finds that the
Respondent acted with reasonable dispatch and without undue
delay to reprocure the National Survey contract, and thus it
has satisfied its evidentiary burden.
3. Although the Respondent selected a repurchase mechanism
designed to maximize competition-the sealed bid method-
there is insufficient evidence to show that it was
successful. Thus, the Board cannot say on this record that
the Government used the most efficient method of
reprocurement under the circumstances, or acted reasonably
to minimize the excess costs.
Another peg in the Government's duty to mitigate its damages
is its responsibility to accomplish the repurchase in a
reasonable manner. Mid-America Painters, Inc., supra, 91-1
BCA � 23,367; Puroflow Corporation, supra, 93-3 BCA � 26,191;
Gulf Paint & Chemical Company, Inc., ENG BCA PCC-27, 80-2 BCA
� 14,759; Disan Corporation, supra, 79-1 BCA � 16,677. See
generally, Cibinic and Nash, pp. 776-79. Like the second
element previously discussed:
[T]here is no hard and fast rule or formula to determine
whether the Government failed in its duty to mitigate
damages; the issue of whether the Government met its duty
is a fact question, resolved by inquiry [into the]
reasonableness of the Government's actions under the
existing circumstances.
Birken Manufacturing Company, supra, 90-2 BCA � 22,845, at
114,717. See also, Astro-Space Laboratories, Inc. v. United
States, supra, 200 Ct.Cl. 282, 470 F.2d at 1017; H & H
Manufacturing Company v. United States, 168 Ct.Cl. 873, 885
(1964); Puroflow Corporation, supra, 93-3 BCA � 26,191, at
130,393. However, it is clear from the cases while the method of
reprocurement is a discretionary matter for the contracting
officer, see, e.g., Venice Maid Company, Inc. v. United States,
639 F.2d 690, 697 (Ct.Cl. 1980), Zan Machine Company, supra, 91-3
BCA � 24,085, at 120,542; Old Dominion Security, Inc., supra,
90-2 BCA � 22,745, at 114,164, there is also a bias in the law in
favor of those mechanisms which will maximize competition and
secure the best or lowest reasonable price under the
circumstances.64 See, e.g., Scalf Engineering Co. and Pike
County Construction Co., A Joint Venture, supra, 89-3 BCA �
21,950, at 110,425 (citing, Techcraft Systems, VABCA Nos. 1894,
2027, 86-3 BCA � 19,320); Sequal, Inc., supra, 88-1 BCA � 20,382,
at 103,067. In that regard, the standard for determining the
adequacy of a repurchase solicitation was enunciated in Century
Tool Company, where the appeals board said:
. . . [W]e do not impose a burden upon the Contracting
Officer to solicit every known source of supply, nor do we
require that the reprocurement include all bidders of the
original (defaulted) procurement. Rather, the test is one
of reasonableness, and the principal criterion is that a
sufficient number of potential contractors are contacted in
the reprocurement solicitation to assure competitive prices
in order to discharge the Government's obligation to
mitigate the excess costs of the defaulted contractor.
Century Tool Company, GSBCA No. 4007, 78-1 BCA � 13,050, at
63,735, mot. for reconsid. denied, 78-2 BCA � 13,345. [Emphasis
added.]
The burden is on the Government to prove that the reprocurement
method it selected was conducive to obtaining full and open
competition, and that it acted reasonably to mitigate or minimize
excess costs. Cf., Associated Cleaning, Inc., supra, 91-1 BCA �
23,360; Rhocon Constructors, supra, 91-1 BCA � 23,308; Sam's
Electric Company, GSBCA Nos. 9359, 10044, 90-3 BCA � 12,128;
American Technology Resources, supra, 89-3 BCA � 22,239; Fancy
Industries, Inc., ASBCA No. 26578, 83-2 BCA � 16,659; Welmetco,
Ltd., ASBCA Nos. 25049, 25649, 83-1 BCA � 16,413.
Despite the general rule, the law allows a contracting officer
to limit competition for the repurchase if the situation
demands it-e.g., the Government's need to assure a quick award
to a firm which could begin work almost immediately-since a
reprocurement is technically a purchase for the defaulted
contractor's account. William A. Hulett, supra, 93-1 BCA �
25,389, at 126,459; Old Dominion Security, Inc., supra, 90-2
BCA � 22,745, at 114,165 (citing, Camrex Reliance Paint
Company, GSBCA No. 6870, 85-3 BCA � 18,376; Century Tool
Company, GSBCA No. 3999, 76-1 BCA � 11,850); Sequal, Inc.,
supra, 88-1 BCA � 20,382, at 103,067. Thus, appeals boards
usually apply a "reasonable person" standard when confronted
with a challenge to a contracting officer's reprocurement of a
defaulted contract. As recently explicated by one appeals
board:
The duty the Government owes the defaulted contractor in
reprocuring for its account is not one of perfection, but
one of reasonableness and prudence under the circumstances.
[Citations omitted.] This duty is to be carried out within
the confines of Federal procurement statutes, regulations,
policies and directives and the Government is not required
to change such policies to secure a better reprocurement
price for a defaulted contractor. [Citation omitted.]
Further, it is not the contracting officer's obligation to
do everything that he or she might to secure a lower price
for a defaulted contractor, and in the process subordinate
the Government's own best interests. [Citations omitted.]
Barrett Refining Corporation, supra, 91-1 BCA � 23,566, at
118,145. See also, Mid-America Painters, Inc., supra, 91-1 BCA �
23,367, at 117,232 ("On the other hand, the Corps 'is not
required to make extraordinary efforts to ferret out the single
best situation which will absolutely minimize the [defaulting]
party' damages. All that is required is that the [Corps] act
reasonably and promptly given the circumstances.'" Ketchikan
Pulp Co. v. United States, [20 Cl.Ct. 164 (1990)]).
A search of the cases indicates that while such procedures are
not required on reprocurement, see, Old Dominion Security,
Inc., supra, 90-2 BCA � 22,745, the Government normally uses
sealed bid advertising to repurchase defaulted supplies and
services.65
See, e.g., H & H Manufacturing Company v. United States, supra,
168 Ct.Cl. 873; Lester Brothers, Inc. v. United States, 151
Ct.Cl. 536 (1960); Star Food Processing, Inc., ASBCA Nos. 34161,
34163, 34164, 34165, 35544, 35545, 35546, 35547, 90-1 BCA �
22,390; Fancy Industries, Inc., supra, 83-2 BCA � 16,659, at
82,842; Erickson Enterprises, AGBCA 77-168, 79-1 BCA � 13,628;
Knepper Press, supra, Sl. op. at 4. See generally, Cibinic &
Nash, pp. 776-77. Furthermore, it is not uncommon for the
Government to solicit those firms which bid on the original
procurement. See, e.g., American Marine Upholstery Company v.
United States, 170 Ct.Cl. 564, 345 F,2d 577 (1965); Mid-America
Painters, Inc., supra, 91-1 BCA � 23,367. See generally, Cibinic
and Nash, pp. 778-79. In fact, if the Government fails to make a
reasonable effort at contacting the original bidders, the result
may result in a denial or reduction of the excess cost
assessment.66 See, e.g., Associated Cleaning, Inc., supra, 91-1
BCA � 23,360; Old Dominion Security, Inc., supra, 90-2 BCA �
22,745; Barrett Chemical Company, Inc., supra, 77-2 BCA � 12,625.
Although there is no requirement for the contracting officer to
contact the second low bidder on the original procurement when
he/she attempts to repurchase the defaulted supplies, see, e.g.,
Zoda v. United States, 148 Ct.Cl. 49, 180 F.Supp. 419 (1960);
United Microwave Company, ASBCA No. 7947, 1963 BCA � 3,701;
Valley Forms, Inc., GPO BCA 1-84 (January 15, 1986), nonetheless
such a mitigation step is considered presumptively reasonable,
even if the reprocurement price itself seems unreasonable. See,
e.g., Mid-America Painters, Inc., supra, 91-1 BCA � 23,367 (the
Government acted reasonably in taking the second low bid in the
original solicitation despite the fact that the reprocurement was
174 percent above the original contract, because that price was
well below the next bidder's price on the original procurement
and was 1/3 of the price offered by bidders on the high end of
the scale for the bids received); American Photographic
Industries, Inc., supra, 90-1 BCA � 22,491 (the Government failed
to mitigate damages because it did not contact the second low
bidder for the original contract). See also,Business Forms
Service, Inc., supra, Sl. op. at 9; ATC Decal Company, supra, Sl.
op. at 8-9; Technical Publishing Services, Inc., supra, Sl. op.
at 6 (negotiation with the lowest bidder from the original
solicitation). But see, Marine Engine Specialties Corporation,
ASBCA No. 20521, 76-1 BCA � 11,891 (the Government failed to
mitigate its excess costs by awarding the reprocurement contract
to the second low bidder on the original solicitation without
making an effort to contract three other contractors who had
submitted offers on the defaulted contract, where the repurchase
unit price was 25 percent greater than that of the original
contract).
Looking at the record in this case, the Board finds only the
barest evidence concerning the mechanics of the reprocurement.
In that regard, the record merely consists of: (1) a copy of the
repurchase solicitation (R4 File, Tab P); (2) a copy of the
reprocurement purchase order (R4 File, Tab Q); (3) a copy of the
Respondent's letter informing the Appellant of the reprocurement
and the amount of excess costs that would be deducted from its
account (R4 File, Tab O); and (4) the Contracting Officer's
testimony that the Respondent followed its customary formal
advertising procedures and awarded the repurchase contract to
Pensacola as the lowest bidder on the reprocurement (Tr. 244).
Unlike the evidence on the original solicitation, copies of the
repurchase bid list and abstract, and the winning contractor's
bid, are missing from the reprocurement record. See, R4 File,
Tabs A and C. Similarly, there is no testimony concerning the
number of bidders who responded to the repurchase solicitation
and the amount of their bids. Consequently, the record in this
case raises more questions than it answers about the repurchase.
Thus, for example, although we know that Pensacola was also a
bidder on the original contract, the record does not tell us
how many of the other 13 bidders in the initial group either
received a copy of the repurchase solicitation or were
contacted by the Respondent during the reprocurement process.
We also know that Harmony, with an offer of $28,450.00, was
the second lowest bidder on the original contract, but there
is nothing to tell us if the Respondent tried to contact this
company for the purposes of the reprocurement.67 See, e.g.,
Mid-America Painters, Inc., supra, 91-1 BCA � 23,367; American
Photographic Industries, Inc., supra, 90-1 BCA � 22,491;
Sequal, Inc., supra, 88-1 BCA � 20,382. In addition, there is
no information concerning the number of contractors besides
Pensacola-new or old-who submitted repurchase offers, or if
Pensacola was the only bidder. Assuming that Pensacola was
just one of several reprocurement bidders, the record is
devoid of any evidence concerning the range of the offers;
i.e., if Pensacola submitted the lowest bid, what was the
highest?68 None of the answers to these questions will be
found in the record.
The Board has no doubt that the Contracting Officer, by
choosing the sealed bid method to reprocure the defaulted
contract, was making a good faith attempt to mitigate excess
costs by trying to maximize competition. But "good faith" is
not the test. As indicated previously, the test for measuring
the adequacy of a repurchase solicitation is whether "a
sufficient number of potential contractors are contacted in
the reprocurement solicitation to assure competitive prices .
. .". Century Tool Company, supra, 78-1 BCA � 13,050, at
63,735. As a rule, the use of formal advertising could be
expected to result in enough competition to be considered a
reasonable method of reprocurement. However, there is not
enough evidence in the record to suggest that was the case
here.
Basically, the Respondent's problem in this case is that the
record concerning the mechanics of the reprocurement is
incomplete. Thus, on the evidence before it, the Board cannot
say on this record that "it is reasonable to believe that
further solicitation of other firms would not have resulted in
lower prices and therefore would have been unnecessary." Cf.,
Technical Publishing Services, Inc., supra, Sl. op. p. 6; ATC
Decal Company, supra, Sl. op. at 8-9. In the final analysis,
GPO had the burden of showing that it selected a method of
reprocurement which maximized competition. Given the state of
this record, the Board finds that the Respondent failed to
carry its burden of proof. Cf., Associated Cleaning, Inc.,
supra, 91-1 BCA � 23,360; American Technology Resources,
supra, 89-3 BCA � 22,239.
4. The same lack of evidence which prevents the Board from
saying that, on this record, the Government used the most
efficient repurchase method under the circumstances, or
acted reasonably to minimize the excess costs, also
precludes a finding that Pensacola's reprocurement price
was reasonable.
As the final part of its trinity of proof regarding the
mitigation of damages, the Government must establish that it
obtained the lowest reasonable reprocurement price. See,
e.g., Sequal, Inc., supra, 88-1 BCA � 20,382; Fancy
Industries, Inc., supra, 83-2 BCA � 16,659. In fulfilling the
obligation to secure the best price for the Government, a
contracting officer must follow the same standard of
reasonableness and prudence under the circumstances which
he/she exercised in the timing and selecting of the method of
reprocurement. Barrett Refining Corporation, supra, 91-1 BCA
� 23,566, at 118,145; Mid-America Painters, Inc., supra, 91-1
BCA � 23,367, at 117,232. See also, William A. Hulett, supra,
93-1 BCA � 25,389, at 126,459 ("A [Contracting Officer], in
reprocuring, is acting on behalf of the original contractor
and must, therefore, not unnecessarily do or not do things
which result in an increased cost to the defaulted
contractor."). The mere fact that there is a significant
price increase in the reprocurement does not render it
unreasonable in the face of Government due care and diligence.
See, Boston Pneumatics, Inc., supra, 87-1 BCA � 19,395, at
98,085 (citing, Churchill Chemical Corporation v. United
States, supra, 221 Ct.Cl. 284, 602 F.2d 358). See also, Fancy
Industries, Inc., supra, 83-2 BCA � 16,659; Foster
Refrigerator Corporation, supra, 89-2 BCA � 21,591; Knepper
Press, supra. However, in the absence of negotiations or some
other explanation for the increase in the price of repurchased
supplies, most appeals boards will reduce the amount of
recoverable excess costs. See, e.g., Puroflow Corporation,
supra, 93-3 BCA � 26,191, at 130,393; Sequal, Inc., supra,
88-1 BCA � 20,382, at 103,067; Solar Laboratories, Inc.,
supra, 76-2 BCA � 12,115, at 58,196.
As indicated above, in most situations the key to a finding
that the reprocurement price is reasonable is a repurchase
solicitation mechanism which draws a sufficient number of
potential contractors to assure adequate price competition.
Birken Manufacturing Company, supra, 90-2 BCA � 22,845, at
114,717; Sequal, Inc., supra, 88-1 BCA � 20,382, at 103,067;
Century Tool Company, supra, 78-1 BCA � 13,050, at 63,735.
Although it has been said that "[competitive reprocurement]
offers firm evidence that the price was reasonable, . . . .",
Astro-Space Laboratories, Inc. v. United States, supra, 200
Ct.Cl. 282, 470 F.2d at 1018, the Board is unaware of any case
which holds that mere formal advertising, without more, is
reasonable per se. Indeed, the law is clear that the mere
selection of the low bid, either on a reprocurement or the
original contract, in and of itself, does not establish a
reasonable price for the purposes of the mitigation rule.
Marine Engine Specialties Corporation, supra, 76-1 BCA �
11,891. Thus, as one appeals board has stated:
As for a reasonable price, a [contracting officer] cannot
"blindly accept" a reprocurement contractor's price and be
said to have acted in a reasonable and prudent manner.
[Citing, Wise Instrumentation and Control, Inc., supra,
75-2 BCA � 11,478.]
B & M Construction, Inc., supra, 93-1 BCA � 25,431, at 126,669
(the appeals board rejected the contracting officer's
calculations of excess costs because he used the reprocurement
contractor's prices as the starting point for calculating excess
costs without any determination as to reasonableness).
Similarly, there can be no reasonable repurchase price which does
not take into account work already performed by the defaulted
contractor that benefits a reprocurement contractor to some
extent, and gives credit to the defaulted contractor by
subtracting the price of that work from the calculation of excess
costs.69 William A. Hulett, supra, 93-1 BCA � 25,389, at
126,459-60.
The Board has already found that the evidence of competition
in this case is weak. Furthermore, the Contracting Officer's
own testimony tells us that he awarded the reprocurement
contract to Pensacola simply on the basis of its low bid. Tr.
244. There is no evidence of any additional inquiry on his
part, even though Pensacola's price for the reprocurement
contract ($32,840.61), while lower than its initial offer, was
almost 27 percent higher than Appellant's winning bid on the
original contract ($25,938.00), and 14 percent higher than the
second low bidder's-Harmony-offer on the original contract
($28,450.00) (R4 File, Tabs A and Q). Cf., Valley Forms,
Inc., supra, Sl. op. at 12. The failure to make such an
inquiry, standing alone, would be enough to warrant rejection
of the Respondent's excess cost assessment in this case. B &
M Construction, Inc., supra, 93-1 BCA � 25,431; Marine Engine
Specialties Corporation, supra, 76-1 BCA � 11,891; Wise
Instrumentation and Control, Inc., supra, 75-2 BCA � 11,478.
Thus, on the record before it, the Board cannot say that the
Respondent obtained the lowest reasonable repurchase price.
Sequal, Inc., supra, 88-1 BCA � 20,382; Fancy Industries, Inc.,
supra, 83-2 BCA � 16,659. Accordingly, the Board finds that the
Respondent failed to carry its burden of proof of showing that
its excess reprocurement cost assessment was correct, cf., The
Flooring Company, supra, 89-3 BCA � 22,167, at 111,548, or that
it mitigated its damages in this case. Puroflow Corporation,
supra, 93-3 BCA � 26,191, at 130,393; B & M Construction, Inc.,
supra, 93-1 BCA � 25,431, at 126,669.
5. The Respondent has failed to prove that final payment
was made to Pensacola so that the excess costs assessment
against the Appellant is based upon liability for a sum
certain.
The last element in the Government's burden of proof, it must
demonstrate that the repurchased work has been completed, and
final payment made to the reprocurement contractor so that the
excess costs assessment is based upon liability for a sum
certain. Whitlock Corporation v. United States, supra, 141
Ct.Cl. 758, 159 F.Supp. 602 (1958), cert. denied, 358 U.S. 815
(1958). See also, e.g., John L. Hartsoe, supra, 93-2 BCA �
25,614; Star Food Processing, Inc., supra, 90-1 BCA � 22,390;
Lafayette Coal Company, ASBCA Nos. 32174, 33311, 87-3 BCA �
20,116; Fancy Industries, Inc., supra, 83-2 BCA � 16,659;
Hunt's Janitor Service, ASBCA No. 27719, 83-1 BCA � 16,455.
See generally, Cibinic and Nash, p. 790. Where the Government
fails to offer evidence that a reprocurement contract was
awarded, performed, or paid for, the assessment of excess
costs against a defaulted contractor will be denied.70 See,
e.g., Patty Armfield, AGBCA No. 91-185-1, 93-1 BCA � 25,235;
Pyramid Packing, Inc., AGBCA No. 86-128-1, 92-2 BCA � 24,831;
Scalf Engineering Co. and Pike County Construction Co., A
Joint Venture, supra, 89-3 BCA � 21,950. The evidentiary
standard for this criterion, as described in Scalf Engineering
Co. and Pike County Construction Co., A Joint Venture, is as
follows:
. . . [W]here the Government asserts excess reprocurement
costs, it must demonstrate that the procurement action is
completed, and the reprocurement contractor paid.
[Citations omitted.]
. . . Based on an extensive review of the evidence, we are
unable to conclude that the Government has met these
requirements. Specifically, it has failed to show that it
actually made payment to the reprocurement contractor of
the excess costs it now seeks to assess against appellant.
In both the contracting officer's final decision, and the
attached memorandum detailing OSMRE's excess costs, there
is no evidence that such costs were finally paid, only that
they are referred to in various documents as "incurred"
(AF-1, Sec. III.M; Sec. X). Nowhere in Part II of the
appeal file which contains the documents pertaining to the
reprocurement contract with Fleetwood Johnson, is there any
evidence which demonstrates that OSMRE made payment for the
reprocurement work. There is no certified payment voucher,
or other documentation which establishes that OSMRE
actually made payment for the amounts it claims to have
incurred on reprocurement.
Without such evidence the Government's counterclaim lacks
merit. Essential facts upon which its excess costs claim
must be based are not in evidence. For these reasons, the
Government's counterclaim for excess reprocurement costs is
denied.
Id., at 110,425. [Emphasis added.]
A GPO contracting officer's administrative responsibilities in
a situation where excess reprocurement costs are to be
assessed against a defaulted contractor, are outlined in the
Respondent's printing procurement regulation; i.e., he/she
must:
. . . (i) advise the Financial Management Service,
Voucher Examination Branch (Stop FMCE) that such a
repurchase has been made;
(ii) provide the jacket number, the purchase order
number and contractor's name for both the terminated and
new contracts; and,
(iii) request that excess costs be computed and the
Contracting Officer advised.
When advised by the Voucher Examination Branch, the
Contracting Officer shall make a written demand (with a
copy to the Voucher Examination Branch) on the defaulted
contractor for the total amount of such excess including
increases or decreases in other costs such as
transportation and discounts. If the contractor fails to
make payment, the Voucher Examination Branch shall take
appropriate action to collect the amount due.
PPR, Chap. XIV, Sec. 1, � 3.f.(3). Furthermore, the "Payments on
Purchase Order" clause in GPO Contract Terms, which is also
incorporated by reference in Pensacola's repurchase contract (R4
File, Tab P), provides, in pertinent part, as follows:
(a) Payment will be made to the contractor upon submission
of a proper voucher (Standard Form 1034, Public Voucher for
Purchases and Services Other than Personal), in accordance
with GPO Form 199, "Billing Instructions." Vouchers should
be mailed to the U.S. Government Printing Office,
Examination and Certification-Stop: FMCE, Washington, DC
20401.
(1) Any of the forms listed below, properly filled out,
signed, and dated will be accepted as evidence of
shipment: . . . [List of forms omitted.]
(2) The following forms, filled out, signed, and dated
will be accepted as evidence of delivery: . . . [List of
forms omitted.]
(3) Evidence of return of plates, patterns, negatives,
excess stock, and other articles supplied by GPO shall
be in the form of delivery receipts, signed by a
representative of the Government. U.S. Postal Service
receipts, Government bill of lading memorandum copies,
or copies of commercial carrier airway bills or freight
bills will be acceptable as proof of shipment.
(4) One complete copy of the specified product (except
classified documents).
(5) A copy of the print order or purchase order as
applicable.
(b) Checks tendered by GPO in payment of any invoice
submitted by the contractor, whether equal to or less than
the amount invoiced, are tendered as final payment.
Acceptance of payment of any check so tendered shall
operate as a bar to the assertion of any exceptions by the
contractor to the amount paid by GPO unless the contractor
notifies the Contracting Officer in writing within 60
calendar days of the date of such check. Such notice shall
specify the exceptions taken to the sum tendered, and the
reasons therefor.
See, GPO Contract Terms, Contract Clauses, � 24. Cf., B. P.
Printing and Office Supplies, supra, Sl. op. at 26-27.
There is no doubt about the reprocurement contract being
completed-a copy of Pensacola's National Survey is in the
record as an Appellant's exhibit (App. Exh. No. 17). Cf.,
Timsco, Inc., supra, Sl. op. at 12 (contracting officer
testified as Appellant's witness). On the other hand, the
record in this case is a virtual desert when it comes to
evidence of GPO's final payment to Pensacola. Of the
repurchase documentation required by the regulations and GPO
Contract Terms, only the Contracting Officer's written notice
to the Appellant of the assessment of excess costs and the
reprocurement purchase order are in evidence (R4 File, Tabs O
and Q). None of the other necessary financial documentation
is in the record, nor was there testimony on this issue at the
hearing. Cf., Timsco, Inc., supra, Sl. op. at 12 (proof of
payment of excess costs found in the testimony of the
contracting officer that he certified the reprocurement
contractor's invoice and that GPO paid the bill, and in
supporting documentary evidence; e.g., a copy of the purchase
order that was forwarded to the disbursing office for
payment). Specifically, the Respondent has not shown the
Board: (1) any required backup memoranda which the Contracting
Officer may have sent GPO's Voucher Examination Branch; (2) a
copy of Pensacola's payment voucher or invoice for the
reprocured work; and/or (3) a copy of the canceled check by
which GPO paid Pensacola. Although it is reasonable for the
Board to assume that the Government probably did make final
payment to Pensacola on completion of the reprocurement
contract, it cannot substitute that presumption for the hard
evidence which the Government was required to produce in this
litigation.
Applying the law to this case, in the absence of Pensacola's
payment voucher or invoice and/or the Respondent's canceled
check, or such other evidence which would establish that
payment was actually made to Pensacola in the amount claimed
to have been incurred on repurchase, there is no merit to
GPO's claim for excess costs because essential facts upon
which the claim must be based are not in evidence. Scalf
Engineering Co. and Pike County Construction Co., A Joint
Venture, supra, at 110,425. Accordingly, the Board finds that
the Respondent has not proved that final payment made to the
reprocurement contractor so that the excess costs assessment
is based upon liability for a sum certain. Patty Armfield,
supra, 93-1 BCA � 25,235; Pyramid Packing, Inc., supra, 92-2
BCA � 24,831; Scalf Engineering Co. and Pike County
Construction Co., A Joint Venture, supra, 89-3 BCA � 21,950.
Since the Respondent was obligated to provide evidence in
support of each element of its claim for excess reprocurement
costs, Rhocon Constructors, supra, 91-1 BCA � 23,308, the only
question left to decide in light of the Respondent's failure
to prove its case is whether the Board should reduce the claim
or deny it altogether. As previously indicated, the various
forums are split on that issue. See, e.g., Associated
Cleaning, Inc., supra, 91-1 BCA � 23,360 (reduce recovery);
Birken Manufacturing Company, supra, 90-2 BCA � 22,845 (reduce
recovery); Action Group II, Inc., supra, 87-1 BCA � 19,375
(reduce recovery); Pyramid Packing, Inc., supra, 92-2 BCA �
24,831 (deny recovery); Rhocon Constructors, supra, 91-1 BCA �
23,308 (deny recovery); Scalf Engineering Co. and Pike County
Construction Co., A Joint Venture, supra, 89-3 BCA � 21,950
(deny recovery). The Board has never expressly taken a firm
position on the matter, but in at least one case it has
implied that it would reduce excess costs if the record
provides a fair basis for recalculating them, rather than
eliminate recovery of such costs entirely.71 Valley Forms,
Inc. supra, Sl. op. at 13.
Generally, excess reprocurement costs are figured on the basis
of the reasonable reprocurement price less the original
contract price. See, The Flooring Company, supra, 89-3 BCA �
22,167, at 111,548 (citing, Cascade Pacific International v.
United States, supra, 773 F.2d 187. Where, as here, there is
not enough evidence to determine if the winning reprocurement
bid was reasonable, the most common method used for
recalculating excess costs is simply to take the difference
between the original contract price and the second low bid on
the original contract. See, e.g., Mid-America Painters, Inc.,
supra, 91-1 BCA � 23,367; Birken Manufacturing Company, supra,
90-2 BCA � 22,845; Sequal, Inc., supra, 88-1 BCA � 20,382;
Zero-Temp, Inc., ASBCA No. 215, 78-1 BCA � 13,212;
Environmental Tectonics Corporation, supra, 78-1 BCA � 12,986;
Solar Laboratories, Inc., supra, 76-2 BCA � 12,115; Marine
Engine Specialties Corp., supra, 76-2 BCA � 12,034. See
generally, Cibinic and Nash, pp. 783-84. Under this formula,
the Respondent would be entitled to recover excess costs in
the amount of $2,512.00-the difference between the Appellant's
winning bid ($25,938.00), and Harmony's second low offer on
the original contract ($28,450.00) (R4 File, Tabs A).
However, the problem for the Board in this case stems not from
the Respondent's failure to demonstrate adequate competition
on the reprocurement and thus prove the reasonableness of the
repurchase price, or the lack of evidence concerning payment
of a sum certain to Pensacola. Rather, the difficulty comes
from the fact that there is nothing at all in the record
showing a final payment to Pensacola. The Board has said that
it will not fill a gap in the evidence with its own
assumptions, no matter how reasonable or sensible they may be.
Therefore, in this case, based on the evidence of record, the
Respondent's claim for excess reprocurement is denied in its
entirety. B & M Construction, Inc., supra, 93-1 BCA � 25,431;
Pyramid Packing, Inc., supra, 92-2 BCA � 24,831; Associated
Cleaning, Inc., supra, 91-1 BCA � 23,360; Rhocon Constructors,
supra, 91-1 BCA � 23,308; Scalf Engineering Co. and Pike
County Construction Co., A Joint Venture, supra, 89-3 BCA �
21,950; AGH Industries, supra, 89-2 BCA � 21,637.
Although the Appellant has prevailed on the excess
reprocurement cost issue, the Board wishes to make clear that
it has little sympathy for a contractor who repudiates a
contract and abandons performance. Nevertheless, the Board
has found that the Respondent has failed to prove that the
reprocurement method selected maximized competition, that the
reprocurement contract price was reasonable under the
circumstances, and that final payment had been made to
Pensacola. The Board concludes that these factors alone are
sufficient to support denial of the Government's claim for
excess costs. Cf., B & M Construction, Inc., supra, 93-1 BCA
� 25,431, at 126,669. Finally, it may seem anomalous that the
Appellant is allowed to escape the consequences of its breach
of contract in this case. However, the law appears to be
well-established, and the Board has a duty to apply it. Cf.,
C. Howdy Smith, supra, 92-2 BCA � 24,884, at 124,107.
ORDER
Considering the record as a whole, the Board finds and
concludes that the Respondent has proved that the Appellant,
both orally and in writing, evinced a "positive, definite,
unconditional, and unequivocal manifestation of intent" not to
reprint the National Survey, as instructed by the Contracting
Officer, and thus abandoned or repudiated the contract.
Accordingly, the Contracting Officer's decision to terminate
the contract for default was justified and not in error.
THEREFORE, the decision of the Contracting officer is
AFFIRMED, and the appeal is DENIED.
On the issue of excess costs, the Respondent has demonstrated
that the reprocurement contract was substantially the same as
the original contract, and that it acted within a reasonable
time following default to repurchase the supplies. However,
the Respondent failed to prove the reasonableness of the
method chosen to repurchase the contract and the reprocurement
price, nor did it show that final payment was made to the
reprocurement contractor. Accordingly, on this record the
Respondent has not established its entitlement to excess
reprocurement costs. THEREFORE, the
Contractor's appeal of the Respondent's decision assessing excess
costs is GRANTED, and the case is REMANDED to the Contracting
Officer with instructions to refund the amount of such excess
costs which were deducted from the Appellant's account.72 Cf.,
Banta Company, supra, Sl. op. at 62; RD Printing Associates,
Inc., supra, Sl. op. at 37.
It is so Ordered.
March 28, 1994 STUART M. FOSS
Administrative Judge
_______________
1 The Contracting Officer's appeal file, assembled pursuant
to Rule 4 of the Board's Rules of Practice and Procedure, was
delivered to the Board on July 31, 1989. GPO Instruction
110.12, Subject: Board of Contract Appeals Rules of Practice
and Procedure, dated September 17, 1984 (Board Rules), Rule
4. It will be referred to hereinafter as R4 File, with an
appropriate Tab letter also indicated. As originally
submitted, the R4 File consisted of fifteen (15) documents
identified as Tab A through Tab O.
2 The court reporter's transcript shall be referred to
hereinafter as "Tr." with an appropriate page number
thereafter. Since the Appellant's responsibility for excess
reprocurement costs was at issue, at the hearing on April 28,
1992, the Board directed the Respondent to furnish both the
contract specifications and the purchase order for the
reprocurement (Tr. 187). The specifications and the purchase
order were added to the R4 File as Tabs P and Q, respectively
(Tr. 189, 237). As a technical matter, after the close of
the hearing on May 6, 1992, the Appellant made a motion to
conform the pleadings to the evidence. See, Appellant's
Motion for the Pleadings to Conform to the Evidence, dated
May 15, 1992. The Appellant's motion is GRANTED. Board
Rules, Rule 7(b).
3 The Respondent's brief will be referred to hereinafter as
"R. Brf.", with an appropriate page citation thereafter. The
Appellant's brief will be cited as "App. Brf.," with an
appropriate page number thereafter. Furthermore, at the
hearing in this appeal both parties introduced documentary
evidence. The Appellant's exhibits will be referred to
hereinafter as "App. Exh. No.," with an appropriate number
thereafter. The Respondent's exhibits will be referred to
hereinafter as "R. Exh. No.," with an appropriate number
thereafter.
4 When the Board ordered a hearing in this case, two appeals
were pending involving the parties-the instant matter and
another default termination dispute which had been docketed
by the Board as GPO BCA 17-89. Both were scheduled for trial
on May 6, 1992. However, at the hearing the parties settled
GPO BCA 17-89, and that appeal has been dismissed (Tr.
251-52). See, Sterling Printing, Inc., Order Dismissing
Appeal, dated June 30, 1992.
5 The National Survey is referred to as the "National Hunting
and Fishing Survey National Report" in both the Invitation
for Bids, and Purchase Order 81288, which awarded the
contract to the Appellant (R4 File, Tabs B and D).
6 Perfect-binding is a variation of side-stitching which is
widely used on paperback books. However, instead of being
stitched, the pages of a perfect bound book are held together
by a flexible adhesive. Under this process, after the
signatures are collated, the backs are ground off, leaving a
rough surface. The adhesive is applied and a special lining
is put over the backbone, the cover is glued into place. If
done correctly, the adhesive should keep its strength and
resiliency for a long period of time. See, Pocket Pal,
International Paper Company, Memphis, Tennessee (14th ed.,
1989), p. 152. See also, Tr. 174-75.
7 GPO's Quality Assurance Through Attributes Program, GPO
Publication 310.1, effective May 1979 (revised September
1986) (QATAP), was incorporated in the contract by reference
(R4 File, Tab B, p. 1).
8 These departmental quality copies shall be referred to
hereinafter as "blue label" samples or copies.
9 In addition to these specifications, the contract was also
governed by applicable articles of GPO Contract Terms, GPO
Publication 310.2, effective December 1, 1987 (Rev. 9-88)
(GPO Contract Terms) (R4 File, Tab B, p. 1).
10 As originally specified, the duotones were to be 90
percent black and 10 percent brown. Tr. 108-09. The change
requested by Interior reversed that color combination; i.e.,
to 90 percent brown and 10 percent black. Tr. 109. See,
App. Exh. No. 3.
11 It is undisputed that prior to distribution of the
complete order, Interior asked Don Kinsley, GPO's Contract
Administrator, to secure 3 advance copies of the book from
the Contractor for the customer-agency's review and approval
(R4 File, Tab E). Tr. 32-35, 52, 62, 110, 113, 143.
Interior wanted to assure itself before the National Survey
was mailed that the publication conformed to the
specifications in terms of duotones, color match, paper, type
of binding and format. Tr. 35, 52, 113, 117, 143. In
response to the customer-agency's request, the Contractor
took 3 books from its production run, and sent them, through
Kinsley, to Interior. Tr. 62, 65. Apparently, the
Contractor had products rejected by GPO's central offices in
the past, and it, too, wanted to be sure that the National
Survey conformed to the contract. Tr. 113-14. When Interior
made its request, the remainder of the job had not been bound
by the Appellant's binding subcontractor-Paperfold Binderies,
Inc (Paperfold). Tr. 113-14. It is uncontested that once
Interior had reviewed the 3 samples, it told Kinsley that the
books were "O.K.", and he conveyed that message to the
Appellant with instructions to complete the job. Tr. 33,
62-63, 115. See, App. Exh. No. 5. However, Kinsley did not
alert the Contractor to any problems with the paper or
binding at this time because those attributes were not
inspected until distribution was completed and Interior had
filed its complaint with the Respondent. Tr. 34. After
receiving Kinsley's message, the Appellant sent the remaining
books to the bindery, where they were bound and then returned
to the Appellant for distribution. Tr. 115, 117, 119. In
that regard, 100 copies of the bound books were sent to
Interior first. Tr. 115, 117. It is clear from the record
that the Contractor did not ask its subcontractor to test the
binding of the books before returning them for mailing. Tr.
194.
12 The record indicates that after Interior's complaint was
received, the Contracting Officer personally conducted flex
tests on approximately 6 of the Appellant's books at the
customer-agency's warehouse, and in each instance the pages
"popped out." Tr. 50.
13 At the hearing, the issue of whether or not the
Appellant's paper stock conformed to specifications was
extensively litigated. The Appellant called John Lind,
Senior Research Chemist at the Graphics Art Technical
Foundation (GATF) in Pittsburgh, Pennsylvania, who testified
that he tested the text paper of the National Survey at the
request of the Contractor, and that it met the standards of
JCP A260 for opacity, gloss and color. Tr. 17-18, 24, 30.
See, GATF Report, App. Exh. No. 12. However, he was unable
to test the cover stock because it was printed or soiled.
Id. Similarly, Lois McDaniel, the Appellant's President,
testified that she asked her supplier, Beekman Paper Company
(Beekman), to test the paper and received a report which
showed that the paper stock substantially complied with the
specifications. Tr. 131, 133-34. See, Beekman Report, App.
Exh. No. 9. The Respondent, on the other hand, called Sylvia
Subt, Chief of the Paper Division, who testified that the
text paper failed to meet the requirements of the JCP A260
standard for 80-pound paper in three respects-low opacity, a
high gloss and color match. Tr. 205. See, GPO Paper Report,
R4 File, Tab I. Similarly, she stated the cover paper was
tested against the JCP L60 standard and did not measure up to
the specifications because the stock had a high basis weight,
and the gloss was low on one side. Tr. 206. Overall, she
concluded that the paper stock supplied by Beekman did not
meet the contract specifications. Tr. 206, 212, 224.
Indeed, Ms. Subt stated that Beekman's own tests showed that
the paper supplied was substandard; e.g., the specifications
required a minimum opacity reading of 95, but the paper stock
used for the contract only measured 92.6 in GPO's laboratory
and 93 in Beekman's. Tr. 207, 210. See, GPO Paper Report,
R4 File, Tab I; Beekman Report, App. Exh. No. 9. Moreover,
she believed that the GPO and GATF got different test results
because the same methodologies and equipment measurements
were not used; e.g., the nanometer setting for GPO's
spectrodensitometer was 572 while GATF's was 540, and the
"black body" calibration on their instruments was .5 and .6,
respectively. Tr. 213, 214-16, 226.
14 QATAP defines "perfect-bound book durability" as "the
durability of the adhesive binding under tests that simulate
normal usage of the book during its expected useful life."
See, QATAP, F-5. Perfect-Bound Book Durability, p. 34. In
testing the durability of the adhesive binding, 4 tests are
to be used: (a) the "subway test;" (b) the "page pull test;"
(c) the "page flex test;" and (d) the "adhesive temperature
stability test." Id. Under the "subway test," the book is
opened completely and the covers are brought back-to-back.
Id. In the absence of a machine such as a flex tester, this
method, which resembles newspaper reading in a crowded
subway, is the standard industry test for measuring the
sufficiency of binding strength. Tr. 171-73. The "page pull
test" measures the pounds of pull per inch of backbone
required separate the page from the adhesive line. See,
QATAP, F-5. Perfect-Bound Book Durability, p. 34. The "page
flex test" uses a machine to continuously open and close a
book at a particular page (at a minimum of three places in a
book) with 2.5 pounds of pull, until the page separates from
the adhesive line or 126 flexes are reached. Id. Tr.
170-72, 181, 184. As described by Charles E. Enterline,
Superintendent of the Respondent's Binding Division, who was
called as an expert witness during the hearing: "[T]he book
is put in a bird wing [gull wing] position on the machine, .
. . a clip that is attached to the top part of the book and
the machine is started and the book moves back and forth . .
. and at some point, when the binding becomes stressed
enough, the page may come out or it may not come out. If the
binding is well done the page will stay in. I've seen pages
stay in books for a thousand, two thousand flexes and then of
course there are pages that come out of the book after maybe
two or three flexes. The book comes apart, the page
releases." Tr. 170-71. The "adhesive temperature test"
merely tests the binding by one of the three other methods,
after the book has been treated at certain temperatures for a
specified number of hours. See, QATAP, F-5. Perfect-Bound
Book Durability, p. 34. In no instance should an individual
book be used for more than one of the tests. Id.
15 Unlike the paper stock issue, the Appellant has not
questioned the Respondent's finding that the perfect-binding
of the books it printed was poorly done. Indeed, at the
hearing, Enterline applied the "subway test" to two of the
Appellant's books, and in each instance the pages came out.
Tr. 173, 181, 184. See, R. Exh. No. 1-F (this exhibit was
randomly selected from a box of "blue label" samples ranging
from R. Exh. Nos. 1-A to 1-P); App. Exh. No. 22 (which had
been introduced by the Appellant as an example of its book in
which all the pages were well-seated. Tr. 54-55.). On the
other hand, when he performed the same test on a copy of the
National Survey printed by the reprocurement contractor,
Pensacola Engraving Company (Pensacola), Enterline found that
although the pages loosened when the spine broke, they did
not release from the book; in fact, he could hold the book by
one page and suspend it above the witness table. Tr. 178-79,
180, 184. Similarly, even Lind testified that although he
had only been asked to test the paper stock and not the
binding, the pages of the books sent to him by the Appellant
for testing pulled away from the spine easier than in other
perfect-bound books he has examined. Tr. 26. Instead, the
evidence introduced at the hearing on the binding durability
issue tended to focus on the reasons for this defect and the
ways to correct it. Thus, Enterline testified that his
examination of the Contractor's books disclosed that no glue
had been forced into the backbone-the key to adhesive binding
process. Tr. 174-75. In his opinion, the problem had one of
two causes: (a) the glue applicator drum on the binding
machine was improperly set; or (b) the glue itself was not
hot enough. Tr. 174-76. He also thought that an incorrect
glue wheel setting was the most likely reason, and that if
the operator had used the proper precautions and tested at
least one book before running the rest through the binder the
problem could have been avoided. Tr. 176. Like Enterline,
Howard Harrison, the Superintendent of GPO's Contract
Management Branch, believed that the main cause of the pages
falling out was mechanical, but he ascribed the problem to an
improper setting of the scoring blade on the binder; i.e.,
the blade did not cut deep enough to provide a sufficient
surface to hold the glue. Tr. 90. The Appellant's
President, McDaniel, was inclined to agree with Harrison's
view of the cause of the defect. Tr. 147-48. In any event,
she was certain it was not the glue itself. Tr. 129, 147.
See, R4 File, Tab L; App. Exh. No. 10. As for repairing the
binding defect, the witnesses mentioned several ways short of
reprinting the book by which this could be accomplished,
including trimming and regluing and stitching or stapling (in
the binding process, the terms "stitches" and "staples" are
synonymous). Tr. 90-92, 95-97, 141-42, 181-82. See, App.
Exh. Nos. 20 and 21.
16 Although GPO's official notification is dated March 31,
1989, it is clear from the record that the Contractor was
informed a few days earlier by telephone (R4 File, Tabs J and
K). According to McDaniel, who was "aghast" when told that
the job was being rejected, the Government's main concern
with her product was that "the pages were falling out." Tr.
117-18. See also, R4 File, Tab K; App. Exh. No. 8 (the
transcribed portion of a telephone conversation between
McDaniel and Harrison on April 7, 1989, in which he stated
that: ". . . [Interior] said [the] job must be reprinted
because the pages were falling out. They didn't care about
the paper . . . [and the] printed job is fine. They don't
have no complaint on the printed job. It's that the pages
are falling out. . . So that's where their problem is."
Apparently, Harrison was conveying information which had been
given to him by Bruce Scaggs, GPO's Chief of Staff. Tr. 71.
The tape on which this conversation was recorded was
introduced by the Government as R. Exh. No. 2). The record
also discloses that when she was informed that the problem
involved the perfect-binding, McDaniel contacted Ray Friend
at Paperfold to ask about the adhesive they had used, and was
told that it was only the best "hot metal" glue. Tr. 129,
147. See, R4 File, Tab L; App. Exh. No. 10.
17 See, note 11 supra.
18 On several occasions, McDaniel also told the Contracting
Officer that she was going to raise the matter with her
Congressman (R4 File, Tabs K and L).
19 Before coming to Washington, DC, for the meeting, McDaniel
had asked her daughter, Katie, to telephone a number of
recipients of the National Survey and ask if they had any
problems with the book. Tr. 123-24. According to the
hearing record, 6 agencies responded that their copies were
fine, while 2 of them indicated that there were problems with
the binding; i.e., the pages were separating from the book.
Tr. 123-24, 186-88, 192. See also, R. Exh. No. 2.
20 According to McDaniel, this copy of the National Survey
was prepared expressly for the purposes of the meeting to
show how the pages could be held together. Tr. 122-23. App.
Exh. No. 21. At the hearing, the Appellant introduced
another copy of the book with the staples inside the cover.
App. Exh. No. 20. This type of repair was made by the
Appellant after the April 11, 1989, meeting in case GPO asked
to see some other way of correcting the binding defect. Tr.
142. The Respondent did not make such a request, and hence,
it never saw the book with the inside stapling prior to the
hearing. Tr. 142.
21 At the hearing, the Contracting Officer also testified
that the terms of the contract's "Disputes" clause required
the Appellant to reprint the National Survey, as requested,
and appeal his decision afterward. Tr. 49. See, GPO
Contract Terms, Contract Clauses, � 5(d).
22 Beekman Report, App. Exh. No. 9.
23 At the hearing, McDaniel testified that, at her request,
two agencies-the South Carolina Wildlife and Marine Resources
Department and the Alabama Department of Conservation and
Natural Resources-had sent the Appellant copies of the
National Survey which they had received. Tr. 124-25. See,
App. Exh. Nos. 13 and 14. She also stated that the copies
have been in continuous use by them since the publication was
shipped in 1989. Tr. 127.
24 See, Printing Procurement Regulation, GPO Publication
305.3, dated September 1, 1988, Chap. I, Sec. 10, � 4.b.(i)
(PPR).
25 Although the Respondent's Printing Procurement Regulation
provides that in a repurchase situation, the "requirements
for advertising are not mandatory," it also states that ". .
. the Contracting Officer should use sealed procedures except
where negotiation is necessary." PPR, Chap. XIV, Sec. 1, �
3.f.(2). In this case, the Contracting Officer followed the
common practice in Government reprocurements and used the
same method-sealed bidding-to reprocure the contract that was
employed to award the contract initially (R4 File, Tabs B and
P). Tr. 244. See, Fancy Industries, Inc., ASBCA No. 26578,
83-2 BCA � 16,659, at 82,842. See also, John Cibinic, Jr. &
Ralph C. Nash, Jr., Administration of Government Contracts 2d
ed., (The George Washington University, 1986), p. 778
(hereinafter Cibinic and Nash). In any event, it is
established that "[i]n reprocuring items on a defaulted
contract, the contracting officer has very broad
discretionary powers," Astro-Space Laboratories, Inc. v.
United States, 200 Ct.Cl. 282, 308, 470 F.2d 1003, 1017
(1972), and the choice of which procurement method to use is
one of them. Old Dominion Security, Inc., GSBCA No. 9126,
90-2 BCA � 22,745, at 114,164; Columbia Loose Leaf
Corporation, GSBCA Nos. 5805(5067)-REIN, 5806(5230)-REIN,
82-1 BCA � 15,464, at 76,631 (a change in solicitation
vehicles is not, in itself, sufficient reason to invalidate
an agency's claim for excess reprocurement costs). It should
be noted, however, that the repurchase solicitation was only
"on the street" for 3 days (from April 18, 1989, to April 21,
1989), whereas 9 days had been allowed between the issuance
of the original invitation for bids (December 20, 1988) and
the bid opening date (December 29, 1988) (R4 File, Tabs B and
Q).
26 Pensacola had also submitted a bid in response to the
original solicitation (R4 File, Tab A). The Respondent
received 13 bids at that time, and Pensacola's price
quotation of $34,227.88 was seventh lowest (R4 File, Tab A).
Apart from the Appellant, other contractor's submitting bids
on the original contract which were lower than Pensacola's
were: (a) Harmony Printing Company (Harmony)-$28,450.00
(second lowest); (b) Edison Lithography-$30,300.00 (third
lowest); (c) Techna-Graphics, Inc.-$32,150..00 (fourth
lowest); (d) Artisan Printing-$32,865.00 (fifth lowest); and
(e) Baker-Webster Printing Company-$33,874.00 (sixth lowest)
(R4 File, Tab A). There is nothing in the record to indicate
how many of the original bidders either received a copy of
the repurchase solicitation or were contacted by the
Respondent during the reprocurement process. Furthermore,
for some reason not explained in the record, Pensacola's
reprocurement bid of $32,840.61 was $1,387.27 lower than its
bid on the initial contract ($34,227.88). Finally, the
Contracting Officer testified that GPO received one
telegraphic bid to the resolicitation, but it is not clear
whether that offer came from Pensacola or some other
contractor. Tr. 244.
27 The Respondent's excess reprocurement cost
figure-$5,976.77-is slightly in error. R. Brf., p. 12. The
correct amount is $5,966.77 (the repurchase price-$32,840.61,
minus $26,873.84, which equals the total of the original
contract price-$26,008.84, and the contract modification
price-$865.00). See, R4 File, Tabs D, G and Q. Also see,
Report of Status Conference, dated April 23, 1992, p. 4.
28 At McDaniel's request, Harrison sent the Appellant a copy
of Pensacola's National Survey, and it was introduced into
evidence at the hearing. Tr. 80. See, App. Exh. No. 17. It
seems clear that the request was honored as a matter of
courtesy, since the Respondent was under no legal obligation
to furnish the Contractor with a copy of the reprocured book.
See, e.g., Boyd Tools, Inc., GSBCA No. 3469, 73-1 BCA �
9,874, Betsy Ross Flag Company, GSBCA No. 2786, 69-1 BCA �
7,692; Hardware Corporation, ASBCA No. 10201, 68-2 BCA �
7,174. In that regard, the Armed Services Board of Contract
Appeals has observed that it was: ". . . [unaware] of any
case holding that in order to collect excess costs from a
defaulting seller the buyer must turn over to the seller for
inspection a representative sample of the repurchased items,
or permit a joint inspection, so that the seller can satisfy
himself that the repurchased items met specifications." Id.,
at 32,283.
29 That is, the duotones in the reprocured book were those in
the original specifications, instead of the duotones as
modified in the Appellant's contract. Tr. 109-10. See, note
10 supra.
30 The Contracting Officer for the repurchase, Jack Marken,
GPO's Assistant Superintendent of Term Contracts, was unable
to explain the reason for these differences. Tr. 238-40.
31 The reprocurement contract expressly states "This is a
Repurchase," and changes the date on which the Government-
furnished material would be available for pick-up (April 26,
1989), and the delivery due date (May 31, 1989) (R4 File, Tab
P, pp. 1, 4 and 5). Tr. 238. However, the time allowed
between material pick-up and complete delivery is essentially
the same (36 days under Pensacola's contract, and 35 days
under the Appellant's, before it was extended an additional
five weeks-from February 10, 1989, to March 17, 1989).
32 This was the only substantive change in the reprocurement
contract identified by Marken at the hearing. Tr. 238. It
should be noted, however, that although the Appellant's
contract did not contain a specification for a press sheet
inspection, such an examination was performed, at the
Contractor's request, by John Edridge, Assistant Manager of
the Respondent's Regional Printing Procurement Office in
Atlanta, Georgia. Tr. 111.
33 There were a few other language differences between the
Appellant's contract and Pensacola's, but the Board regards
them as either minor or insignificant; e.g., under the
"Distribution" provisions, in addition to the furnished
material and films (negatives), Pensacola had to ship one
sample copy of the National Survey to Interior, Attention: T.
Nebel (R4 File, Tab B, p. 4; R4 File, Tab P, p. 4).
34 As indicated previously, both parties filed posthearing
briefs with the Board. See, note 3 supra. The Appellant's
brief was filed with the Board on June 25, 1992. The
Respondent submitted a brief to the Board on August 13,
1992. In addition, although Counsel for GPO waived oral
argument at the close of the hearing, Counsel for the
Appellant made an oral summation of the Contractor's
position. Tr. 246-49. Neither party filed a reply brief.
The Board's understanding of the positions of the parties is
based on the Appellant's Complaint, dated August 31, 1989,
the Respondent's Answer, dated October 2, 1989, the
Prehearing Conference Report, dated April 10, 1990
(hereinafter PCR), the discussions at the status conference
held on March 24, 1992, as summarized in the Report of Status
Conference, dated April 23, 1992 (hereinafter RSC), the
evidence presented at the hearing on April 26, 1992, and May
6, 1992, and the formal briefs filed by the parties.
35 At the hearing, Counsel for the Appellant, for the first
time, advanced the argument that the primary reason for
defaulting the contract was that Interior wanted a different
looking book. Tr. 45. The Appellant's contention that the
contract was really terminated for the convenience of the
Government, and that the default termination was a "sham," is
based on the scope of the changes made to the contract
specifications when the publication was reprocured. Tr.
44-45. The Contractor's argument is, in effect, an
allegation that the Respondent's decision to cancel the
contract was made in bad faith so that Interior could make
cosmetic changes to the National Survey. However, the Board
has held on numerous occasions that because of the strong
presumption that Government officials properly and honestly
carry out their functions, an allegation of bad faith must be
established by "well-nigh irrefragable" proof. See, e.g.,
Hurt's Printing Company, Inc., GPO BCA 27-92 (January 21,
1994), Sl. op. at 11, fn. 15; Shepard Printing, GPO BCA 23-92
(April 23, 1993), Sl. op. at 7-8, fn. 11 (hereinafter Shepard
I); B. P. Printing and Office Supplies, GPO BCA 14-91 (August
10, 1992), Sl. op. at 16; Stephenson, Inc., GPO BCA 02-88
(December 19, 1991), Sl. op. at 55; The Standard Register
Company, GPO BCA 4-86 (October 28, 1987); Sl. op. at 12-13.
Also see, Karpak Data and Design, IBCA 2944 et al., 93-1 BCA
� 25,360; Local Contractors, Inc., ASBCA 37108, 92-1 BCA �
24,491. The key to such evidence is that there must be a
showing of a specific intent on the part of the Government to
injure the contractor. Kalvar Corporation v. United States,
543 F.2d 1298, 1302 (Ct.Cl. 1976), cert. denied, 434 U.S. 830
(1977); Stephenson, Inc., supra, Sl. op. at 54. In the
Board's view, no such "irrefragable" proof of the
Respondent's bad faith exists in this record. Certainly,
there is absolutely nothing in the record which would show
that the employees of two separate Government entities-GPO
and Interior-set out to harm the Appellant or that they acted
in concert to achieve that specific result. Id., Sl. op. at
57.
36 See, note 11 supra. See also, App. Exh. No. 5.
37 In its brief, the Appellant mischaracterizes the reason
for default as a "failure to follow specifications." App.
Brf., p. 5. As indicated in the Notice of Termination, the
contract was defaulted because of the Contractor's "refusal
to correct the quality defects," and provide a conforming
product, rather than simply failing to follow the
specifications (R4 File, Tab N).
38 Both the Board and the Respondent have difficulty with the
Appellant's concept of an "acceptable commercial product" in
the context of this appeal. During the prehearing
conference, the Board observed that Government standards do
not necessarily equate to "commercial" standards. PCR, p.
10. Furthermore, the Respondent contends in its brief that
arguments about commercial acceptability are not relevant
here because this is a Government procurement. Res. Brf., p.
5, fn. 5. The Board agrees.
39 The Appellant also notes that there is no evidence that
the Respondent ever tested Pensacola's publication to see if
it met the paper and binding standards. App. Brf., p. 14.
40 The Board was created by the Public Printer in 1984. GPO
Instruction 110.10C, Subject: Establishment of the Board of
Contract Appeals, dated September 17, 1984 (hereinafter GPO
Instruction 110.10C). Prior to that time, appeals from
decisions of GPO Contracting Officers were considered by ad
hoc panels of its predecessor, the GPO Contract Appeals Board
(GPOCAB). The Board has consistently taken the position that
it is a different entity from the GPOCAB. See, e.g., Shepard
Printing, GPO BCA 37-92 (January 28, 1994), Sl. op. at 11,
fn. 10 (hereinafter Shepard II); The Wessel Company, Inc.,
supra, Sl. op. at 25, fn. 25. Nonetheless, it has also been
the Board's policy to follow the holdings of the ad hoc
panels where applicable and appropriate, but the Board
differentiates between its decisions and the opinions of
those panels by citing the latter as GPOCAB. See, e.g.,
Stephenson, Inc., GPO BCA 02-88 (December 20, 1991), Sl. op.
at 18, fn. 20; Chavis and Chavis Printing, GPO BCA 20-90
(February 6, 1991), Sl. op. at 9, fn. 9.
41 The record on which the Board's decision is based consists
of: (1) the Notice of Appeal, dated July 10, 1989; (2) the R4
File (Tabs A-Q); (3) the Complaint, dated August 31, 1989;
(4) the Respondent's Answer, dated October 2, 1989; (5) the
Prehearing Conference Report, dated April 10, 1990; (6) the
Report of Status Conference, dated April 23, 1992(hereinafter
RSC); (7) the transcript of the hearing held on April 26,
1992, and May 6, 1992, respectively; (8) the brief filed by
the Appellant on June 25, 1992; and (9) the brief submitted
by the Respondent on August 13, 1992.
42 Although GPO claimed in Shepard I that the contractor's
reprint of the product amounted to an "anticipatory
repudiation" of the contract, the Board was unable to say, on
the facts of that case, that the appellant's words or conduct
manifested " . . . a positive, unconditional, and unequivocal
declaration of fixed purpose not to perform the contract in
any event or at any time." See, Shepard I, supra, Sl. op. at
9, fn. 12 (citing, Fairfield Scientific Corporation, ASBCA
No. 21151, 78-1 BCA � 13,082, at 63,908, mot. for reconsid.
denied, 78-2 BCA � 13,429, aff'd, 228 Ct.Cl. 264, 655.
[Emphasis added.] See also, Beeston, Inc., ASBCA No. 38969,
91-3 BCA � 24,241. In that regard, it was not clear from the
appeal record whether the contractor's refusal to reprint the
publication was based on an erroneously belief that
customer-agency now wanted a higher quality book than
originally specified, or that it was unable to deliver the
reprint within the timeframe demanded by GPO; thus there was
nothing to show that the appellant was intent on "walking
away from the job." Cf., M.V.I. Precision Machining, Ltd.,
ASBCA No. 37393, 91-2 BCA � 23,898; Kahaluu Construction
Company, Inc., ASBCA No. 31187, 89-1 BCA � 21,308.
43 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). Indeed, in the words of one contract
appeals board, in exercising its right to terminate for
default, the Government must "turn square corners in order to
prevail." Delfour, Inc., VABCA Nos. 2049, 2215, 2539, 2540,
89-1 BCA � 21,394, at 107,855 (citing, K & M Construction,
ENG BCA Nos. 2998, et al., 73-2 BCA � 10,034). The board was
quick to add, however, that this did not mean " . . . that
the Government [needed to] display clairvoyance [or] the
patience of Job in the management of its contracts." Id.
44 On October 29, 1992, certain provisions of the Federal
Courts Administration Act of 1992, Pub. L. No. 102-572, 106
Stat. 4506 (1992), became effective. Pursuant to Title IX,
the United States Claims Court was renamed the United States
Court of Federal Claims.
45 The standard "Default" clause identifies several grounds
which will excuse defaulting conduct by contractors,
including acts of the Government in either its sovereign or
contractual capacity. See, GPO Contract Terms, Contract
Clauses, � 20(c). While the excusable events listed in the
"Default" clause, all of which must be beyond the control and
without the fault or negligence of the contractor, are set
forth in the context of relieving the contractor from
responsibility for excess reprocurement costs, it is well-
settled that the same occurrences extend the time available
for performance and make termination prior to that time
improper. See, e.g., FKC Engineering Company, ASBCA No.
14856, 70-1 BCA � 8,312.
46 In any event, the Board rejects this argument of the
Contractor as contrary to law and regulation. See, Graphic
Litho, GPO BCA 21-84 (February 4, 1985), Sl. op. at 19-21.
The Respondent's Printing Procurement Regulation, expressly
states that the only person authorized to make final
determinations on whether products submitted by a contractor
conform to contract specifications is the Contracting
Officer. PPR, Chap. XIII, Sec. 1, � 4.f. See, Hurt's
Printing Company, Inc., supra, Sl. op. at 10, fn. 13.
Indeed, the general view is that the Contracting Officer's
discretion to decide whether a product is conforming or
nonconforming is inherent in his/her administration of the
contract. See, Vogard Printing Corporation, GPOCAB 7-84
(January 7, 1986), Sl. op. at 6 (citing, Thomas W. Yoder
Company, Inc., VACAB No. 997, 74-1 BCA � 10,424).
47 Throughout these proceedings, the Appellant has maintained
that the paper stock it used to print the National Survey, in
particular, fully met the contract specifications. See, note
13 supra. Based on the testimony at the hearing, as well as
the documentary evidence in the record, see, R4 File, Tab I
(GPO Paper Report); App. Exh. Nos. 9 (Beekman Report) and 12
(GATF Report), the Board is convinced that the variations in
the Respondent's paper from the quality standards established
in the contract, were marginal. Consequently, the Board also
believes that if the only problem with the book had been the
minor deviations in the paper stock from the specifications,
the Contracting Officer would probably have accepted the
books at a discount. Cf., Graphic Litho, supra, Sl. op. at
21-22; Dependable Printing, Inc., supra, Sl. op. at 26. The
reprint issue is a product of, and only concerns the binding
defect.
48 The "substantial compliance" or "substantial conformity"
rule is a limited exception, created by law, to the doctrine
which entitles the Government to strict compliance with its
specifications. See, Hurt's Printing Company, Inc., supra,
Sl. op. at 17; Shepard I, supra, Sl. Op. at 19-20. The rule,
which is confined to situations where a contractor has timely
shipped nonconforming goods which deviate from the
specifications in only minor respects, affords defaulting
contractors an opportunity to correct such defects. See,
Radiation Technology, Inc. v. United States, supra, 366 F.2d
1005-06. In order for that doctrine to apply to a particular
shipment of nonconforming goods, the contractor must show
that: (a) a timely delivery of goods was made; (b) he/she
reasonably believed, in good faith, that the supplies
conformed to the contract when shipped and that they would be
acceptable; and (c) the defects are minor in nature and
capable of correction within a reasonable period of time.
Id., 366 F.2d at 1006. See generally, Cibinic and Nash, pp.
680-84. The Radiation Technology rule only protects
contractors who can satisfy all elements of the test.
49 The basic language of FAR � 52.233-1(h) provides: "The
Contractor shall proceed diligently with performance of this
contract, pending final resolution of any request for relief,
claim, appeal, or action arising under the contract, and
comply with any decision of the Contracting Officer." There
is an alternative FAR � 52.233-1 clause which adds the words
"or relating to" to the underscored phrase. The statutory
underpinning for these provisions is to be found in the
Contract Disputes Act of 1978 (CDA), 41 U.S.C. �� 601 et
seq., which provides: "Nothing in this chapter shall prohibit
executive agencies from including a clause in government
contracts requiring that pending final decision of an appeal,
action, or final settlement, a contractor shall proceed
diligently with performance of the contract in accordance
with the contracting officer's decision." 41 U.S.C. �
605(b).
50 This is true even if the contracting officer based the
default decision on some other ground. See, James B. Beard,
D.O., ASBCA Nos. 42677, 42678, 93-3 BCA � 25,976, at 129,171
("A contracting officer's termination decision may be
sustained on other than the stated grounds as long as the
alternate grounds existed at the time of termination."
Citing, Joseph Morton Company, Inc. v. United States, [32 CCF
� 73,277], 757 F.2d 1273, 1277 (Fed. Cir. 1985)). It should
also be noted that 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., supra,
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.
51 Under the "Disputes" clause, the contractor is required to
follow the Contracting Officer's instructions for
performance, "diligently," which in common parlance and the
cases means nothing more than without undue delay. GPO
Contract Terms, Contract Clauses, � 5(d). In that regard,
while dawdling or inaction by the contractor, perhaps for
months as in Twigg Corporation, supra,, is usually the
earmark of a "diligency" violation, the Board finds nothing
in this record to indicate that even though the Appellant was
only given a few weeks to comply, the passage of more time
would have led McDaniel to change her mind. Therefore, on
the basis of this record, the Board cannot say that the
Contractor was proceeding diligently with performance of the
contract and compliance with directives of the Contracting
Officer as the "Disputes" clause requires.
52 This case should be distinguished from the situation in
General Business Forms, Inc., in which the contractor's
refusal to reprint the material covered by the contract was
excused on the ground that there was no merit to the
contracting officer's default decision. General Business
Forms, Inc., GPO BCA 2-84 (December 3, 1985), Sl. op. at 23.
General Business Forms, Inc., simply stands for the
proposition that if the publication is nonconforming because
of a latent ambiguity in the contract specifications, the
contractor is entitled to appeal to the Board without first
reprinting the job, and a default termination based on the
contractor's refusal to follow the contracting officer's
directions will not be sustained. In this case, there is no
misunderstanding over the meaning of the contract
specifications; i.e., both parties knew exactly what
performance was expected from the Appellant.
53 In that respect, the practice of the Board, and the ad hoc
panels before it, is consistent with the Court's holding in
Cascade Pacific International, which says that so long as a
contractor has notice of its responsibility for excess
reprocurement costs, a board may rule on that liability in
conjunction with consideration of the propriety of underlying
default termination. Cascade Pacific International v. United
States, supra, 773 F.2d at 293. The Board and its
predecessor panels have never insisted, contrary to some
other contract appeals boards, that a defaulted contractor
challenge the repurchase methods or cost calculations to
litigate excess reprocurement costs . See, e.g., Picket
Enterprises, Inc., GSBCA Nos. 9472, 9890, 10051, 10102,
10426, 92-1 BCA � 24,668; General Floorcraft, Inc., GSBCA No.
11112, 91-2 BCA � 24,026; John A. Fournier; John A. Fournier
and Maryanne Fournier, PSBCA Nos. 2337, 2338, 2339, 2340,
2377, 2378, 2379, 89-1 BCA � 21,574. Thus, there is no rule
in the Board's jurisprudence holding that if a contractor
loses on the merits of the default termination, and does not
present evidence specifically objecting to the propriety of
the reprocurement itself, the Government's cost assessment
will be presumed to be correct, and will stand. Picket
Enterprises, Inc., supra, 92-1 BCA � 24,668, at 123,095
(citing, General Floorcraft, Inc., supra, 91-2 BCA � 24,026,
at 120,295).
54 Apparently, the rule is different for Executive branch
contract appeals, where, by statute, a contracting officer's
decision is required for all contract claims by the
Government, including claims for excess reprocurement costs
following default. CDA, 41 U.S.C. � 605(a) ("[A]ll claims by
the Government against a contractor relating to a contract
shall be the subject of a decision by the contracting
officer."). See, Zan Machine Company, ASBCA No. 39462, 91-3
BCA � 24,085, at 120,542; Alonso & Carus Iron Works, Inc.,
ASBCA Nos. 37967 and 38312, 90-2 BCA � 22,642, at 113,573.
55 By way of contrast, although the Board affirmed the
contracting officer's default termination decision in R.C.
Swanson Printing and Typesetting Company, it reserved ruling
on the excess reprocurement cost issue for another
proceeding. R.C. Swanson Printing and Typesetting Company,
Sl. op. at 52-53, fn. 28. The reason for the Board's
reluctance was rooted in the nature of the contract itself-a
"requirements" contract-and its uncertainty whether all
excess reprocurement costs had finally been assessed by the
time the matter was ripe for decision. Id. In that regard,
the Board was applying the well-settled principle that where
a "requirements" contract is defaulted, excess reprocurement
costs cannot be assessed and litigated before the end of the
original contract term, and the Government will forfeit a
premature assessment. See, Whitlock Corporation v. United
States, 141 Ct. Cl. 758, 159 F.Supp. 602, cert. denied, 358
U.S. 815 (1958); C. Howdy Smith, AGBCA No. 90-154-1, 92-2 BCA
� 24,884; Zan Machine Company, supra, 91-3 BCA � 24,085;
American Photographic Industries, Inc., ASBCA Nos. 29272,
29832, 90-1 BCA � 22,491, mot. for reconsid. denied 90-2 BCA
� 22,728; Glenn's Heating, ASBCA No. 32723, 87-1 BCA �
19,355. In such cases, the practice is to decide the
underlying default termination issue and leave the excess
reprocurement cost question open for a further contracting
officer's decision. Zan Machine Company, supra, 91-3 BCA �
24,085, at 120,542; American Photographic Industries, Inc.,
supra, 90-1 BCA � 22,491, at p. 112,894 (citing, Canadian
Commercial Corporation, ASBCA No. 20512, 76-2 BCA � 12,054);
Glenn's Heating, supra, 87-1 BCA � 19,355, at 97,899. See
also, Chavis and Chavis Printing, supra, Sl. op. at 19, fn.
10 (although the Board affirmed the contracting officer's
default termination decision, it made no ruling on the
contractor's liability for excess reprocurement costs because
there was nothing in the record to indicate whether the
defaulted supplies had been repurchased, and if so, the
amount of excess costs).
56 This clause is practically identical to the same clause in
the FAR concerning the default of fixed-price supply and
service contracts. FAR � 52.249-8(b) ("If the Government
terminates this contract in whole or in part, it may acquire,
under the terms and in the manner the Contracting Officer
considers appropriate, supplies or services similar to those
terminated, and the contractor will be liable to the
Government for any excess costs for those supplies or
services. . . .". [Emphasis added.]).
57 In the Board's opinion, this is an additional reason, if
not the main one, why a defaulting contractor is not required
to seek a separate final decision from the contracting
officer concerning the post-termination assessment of excess
reprocurement costs. See, Custom Printing Company, supra,
Sl. op. at 14.
58 In its decision, the court essentially synthesized the
standards set forth by the appeals board in Environmental
Tectonics. See, Environmental Tectonics, supra, 78-1 BCA �
12,986, at 63,308-10. The Environmental Tectonics criteria
were adopted for GPO reprocurement contracts four years
earlier by the ad hoc panel in ATC Decal Company. See, ATC
Decal Company, supra, Sl. op. at 8 ("The three elements of a
Government claim for excess reprocurement costs are
similarity-the Government must repurchase products
substantially similar to those that were to be provided by
the defaulted contractor, incurrence-the Government must
actually reprocure and thereby incur extra costs, and
mitigation-the Government must act reasonably to minimize the
excess costs and damages that result from the default.
[Citation omitted.]" [Emphasis added.]).
59 However, even if the adjudicatory body is inclined to
reduce rather than forgive excess costs, the record must
still provide a proper basis for calculating them, otherwise
the Government's recovery will be denied. See, B & M
Construction, Inc., supra, 93-1 BCA � 25,431, at 126,670
(citing, Matthews Company, AGBCA No. 459, 76-2 BCA � 12,164,
mot. for reconsid. denied, 77-1 BCA � 12,434); Barrett
Chemical Company, GSBCA 4544, 77-2 BCA � 12,625; ASC Systems
Corporation, DOTCAB 73-37A, 78-1 BCA � 13,119, affirmed, 223
Ct. Cl. 672 (1980).
60 In those instances where the Government's failure of proof
provides the defaulted contractor with a complete defense,
recovery, if any, is limited to common law damages, which the
Government must show were both reasonable and foreseeable at
the time of contracting. Francis M. Marley v. United States,
191 Ct.Cl. 205, 221, 423 F.2d 324 (1970); Gibson Forestry,
AGBCA No. 87-325-1, 91-2 BCA � 23,874.
61 See, note 39 supra. In that regard, it is well-settled
that disparate treatment of the defaulted and reprocurement
contractors constitutes a material change. B & M
Construction, Inc., supra, 93-1 BCA � 25,431, at 126,668.
62 Occasionally, a broader test for determining similarity is
applied, namely whether the changes in specifications would
have fallen within the scope of the "Changes" clause of the
defaulted contract. See, e.g., Dave's Aluminum Siding, Inc.,
ASBCA No. 34092, 90-3 BCA � 23,053; Skiatron Electronics and
Television Corporation, ASBCA No. 9564, 65-2 BCA � 5098.
However, at least one appeals board has suggested that
variations in specifications falling within the scope of the
"Changes" clause will not cause the reprocured items to be
dissimilar unless they cause a functional change in the item.
Guenther Systems, Inc., ASBCA No. 18343, 77-1 BCA � 12,501.
Since the Government has broad rights under the "Changes"
clause, the application of this yardstick seems to be limited
to special fact situations, and is not widely used. See
generally, Cibinic and Nash, pp. 765-66.
63 As explained by Cibinic and Nash: "The rationale for this
dichotomy is that when the changes in the reprocured item are
substantial and make the work more "onerous," the
reprocurement price does not serve as a valid basis for
comparison." See, Cibinic and Nash, p. 763 (citing, Romeo P.
Yusi & Company, ASBCA No. 19810, 76-1 BCA � 11,835; Octagon
Process, Inc., ASBCA No. 3981, 58-1 BCA � 1,773.
64 The Government's mitigation efforts should, in appropriate
circumstances, include advertising the reprocurement
solicitation in the Commerce Business Daily. See, e.g., Auto
Skate Company, Inc., GSBCA No. 10510, 91-3 BCA � 24,260;
Continental Chemical Corporation, GSBCA 4483, 76-2 BCA �
11,948.
65 GPO procedures are consistent with this general practice
in Government reprocurements. See, note 25 supra (citing,
PPR, Chap. XIV, Sec. 1, � 3.f.(2)).
66 In effect, the law creates a rebuttable presumption that
the repurchase could have been completed at the price
previously quoted by a lower bidder if an effort had been
made to do so. See, Dillon Total Maintenance, Inc. v. United
States, 218 Ct.Cl. 732 (1978); American Marine Upholstery
Company v. United States, 170 Ct.Cl. 564, 354 F.2d 577
(1965); AAA Janitorial Services, ASBCA No. 9603, 67-1 BCA �
6,091. Furthermore, where the Government fails, without
adequate explanation, to solicit the second lowest bidder on
the defaulted contract, that bid will set the limit of
recovery for excess reprocurement costs. See, Birken
Manufacturing Company, supra, 90-2 BCA � 22,845, at 114,718;
Sequal, Inc., supra, 88-1 BCA � 20,382, at 103,067. See
also, Prestex, Inc., ASBCA Nos. 21284, 21372, 21453, 21467,
23184, 81-1 BCA � 14,882, at 73,613-14, aff'd on
reconsideration, 81-2 BCA � 15,397; Environmental Tectonics
Corp., supra, 78-1 BCA � 12,986; T.M. Industries, supra, 77-1
BCA � 12,400, aff'd on reconsideration, 77-1 BCA � 12,545;
Solar Laboratories, Inc., supra, 76-2 BCA � 12,115, at
58,196.
67 There is also nothing in the record which would tell us if
the Appellant was solicited on the reprocurement. However,
whether or not to solicit a bid from or award a contract to
the defaulted contractor is a matter within the sound
discretion of the Contracting Officer, leaving for Board
consideration on appeal the question of whether such
discretion was abused. See, e.g., Venice Maid Company, Inc.
v. United States, supra, 639 F.2d at 697; Astro-Space
Laboratories, Inc. v. United States, supra, 200 Ct.Cl. 282,
470 F.2d at 1017; Birken Manufacturing Company, supra, 90-2
BCA � 22,845, at 114,716; American Technology Resources,
supra, 89-3 BCA � 22,239, at 111,798. See also, Tachtronic
Instruments, Inc., ASBCA No. 24473, 81-2 BCA � 15,253.
68 By contrast, all of this information is in the record with
regard to the original solicitation (R4 File, Tab A). See,
note 26 supra. Thus, we know that GPO received 13 bids in
response to the initial invitation, and that the Appellant
submitted the lowest bid ($25,938.00) while the highest offer
($47,226.00) was submitted by Peake Printers (R4 File, Tab
A). Consequently, the bid range from the lowest to the
highest offers was $21,288.00, and Pensacola's price
quotation of $34,227.88, as the median bid (6 bids both above
and below it), was $12,998.12 lower than Peake's, but
$8,289.00 higher than the Appellant's (R4 File, Tab A).
69 The record discloses that in this case, the Appellant was
required to produce "one complete set for film negatives" (R4
File, Tab D). That requirement was omitted from the
reprocurement purchase order (R4 File, Tab Q). Furthermore,
the Contractor had to reshoot 22 duotones for revised proofs
before production started, and the contract was modified to
reimburse the Contractor an additional $850.00 for that extra
work (R4 File, Tabs E, F and G). Tr. 108-09. Although there
is no evidence of record on the point, it seems to the Board
that the reason Pensacola was not required to produce "one
complete set for film negatives" was because the Appellant's
film work was supplied to the reprocurement contractor as
part of the Government-furnished material (R4 File, Tab P, p.
1). However, it also appears that the Appellant was given
credit for this work by the Contracting Officer when he
calculated the amount of excess reprocurement costs. See,
note 27 supra.
70 In some cases, such as the repurchase of supplies or
services under a defaulted "requirements" contract, a
premature assessment of excess costs will be forfeited, but
otherwise the matter will be returned to the contracting
officer for a future assessment at an appropriate time in the
future. See, note 55 supra.
71 See, note 59 supra.
72 In its prayer for relief, the Appellant also asks the
Board to award it "reasonable attorneys fees and expenses in
having to bring this appeal." See, Complaint, � 5(c), p. 4.
However, such a remedy is beyond the power of the Board to
grant. The Board is aware, of course, that since 1985 its
counterparts in the Executive branch are authorized to award
attorneys fees under the Equal Access to Justice Act (EAJA),
5 U.S.C. � 504, to prevailing parties in administrative
hearings, because Congress amended that law to expressly
include the proceedings of agency contract appeals boards
held pursuant to the CDA within the definition of an
"adversary adjudication." See, 5 U.S.C. � 504(b)(1)(C).
See, e.g., Marty's Maid and Janitorial Service, GSBCA Nos.
11980-C (10614), 11981-C (10996), 93-2 BCA � 25,713; JR and
Associates, ASBCA No. 41377, 92-3 BCA � 25,121. Prior to
1985, CDA contract appeals boards were without jurisdiction
to award attorneys fees and litigation costs under the EAJA.
Fidelity Construction Company v. United States, 700 F.2d
1379, 1385 (Fed. Cir. 1983), cert. denied, 464 U.S. 826; C.S.
Smith Training, Inc., DOT CAB No. 1434, 84-3 BCA � 17,700.
Basically, it was the view of contract appeals boards that
the section of the Federal Procurement Regulation (FPR) which
related to the submission of fees and costs in termination
for convenience cases, 41 CFR �1-15.205-42(f)(1), did not
extend to fees involved in attempting to overturn a
termination for default. See, C.S. Smith Training, Inc.,
supra, 84-3 BCA � 17,700, at 88,298 (citing, A.T. Kearney,
Inc., DOT CAB No. 1263, 83-2 BCA � 16,835, motion for
reconsid. denied, 84-1 BCA � 17,052). The Board is not a
creature of the CDA because GPO, as a Legislative branch
agency, is excluded from the coverage of that statute. See,
Tatelbaum v. United States, 749 F.2d 729 (Fed. Cir. 1984).
See, 41 U.S.C. � 607(a) (establishing agency boards of
contract appeals within "an executive agency"). Furthermore,
because the EAJA also excludes the Legislative branch from
its sweep, the Board derives no powers or authority from that
law, either. 5 U.S.C. � 504(b)(2) (incorporating the
definitions of 5 U.S.C.� 551, which excludes "the Congress"
from the definition of "agency"). Cf., Mayo v. Government
Printing Office, 9 F.3d 1450, 1451 (9th Cir. 1993) (GPO
excluded from coverage of the Freedom of Information Act, 5
U.S.C. � 552); International Graphics v. United States, 4
Cl.Ct. 186, 197 (1983) (GPO not legally bound to follow the
prescripts of OMB Circular A-76, which establishes the
guidelines for determining whether commercial or industrial
type work need by the Government should be contracted-out to
the private sector or performed in-house using Government
facilities and personnel); Gray Graphics Corporation v. U.S.
Government Printing Office, et al., Civil Action No. 82-2869
(D.D.C. 1982) (GPO not covered by the Small Business Act, 15
U.S.C. � 631 et seq.). See also, Chavis and Chavis Printing,
supra, Sl. op. at 7, fn. 7 (where the Board held that GPO was
not subject to the Prompt Payment Act of 1982, as amended
(PPA), 31 U.S.C. � 3901 et seq., because the PPA defined its
agency coverage in terms of 5 U.S.C. � 551). As indicated
earlier, the Board takes its authority from the "Disputes"
clause of the contract. See, GPO Contract Terms, Contract
Clauses, � 5. See also, e.g., R.C. Swanson Printing and
Typesetting Company, supra, Sl. op. at 27-28, 41; The Wessel
Company, Inc., supra, Sl. op. at 32-35, 46. As such, the
Board, its proceedings, and its powers, are ". . . closer to
the administrative practice followed in contract appeals
prior to the enactment of the CDA, . . .". B. P. Printing
and Office Supplies, supra, Sl. op. at 20. Consequently, it
is important to note that GPO Contract Terms, which is
incorporated by reference in the Appellant's contract,
requires the application of the provisions of GPO Procurement
Directive 306.2, Subject: Contract Cost Principles and
Procedures, dated April 1, 1988 (GPO Contract Cost
Principles) to GPO contracts, in appropriate circumstances.
GPO Contract Terms, Contract Clauses, � 45. See, Banta
Company, GPO BCA 03-91 (November 15, 1993), Sl. op. 34-35.
Among the circumstances identified in GPO's procurement
regulations which mandate the use of GPO Contract Cost
Principles, is the determination of costs under terminated
contracts. PPR, Chap. VIII, Sec. 1, � 3.b.(1). In that
regard, GPO Contract Cost Principles expressly states, in
pertinent part, that: "[c]osts of legal . . . services and
directly associated costs incurred in connection with . . .
defense against Government claims or appeals, or the
prosecution of claims or appeals against the Government are
unallowable [Cross reference omitted.]." GPO Contract Cost
Principles, p. 28, � 3.41(d). [Emphasis added.] Thus, the
Board has no authority to award reasonable attorneys fees and
appeal expenses in proceedings such as this. Cf., Cloverleaf
Enterprises, Inc. (May 8, 1980), Sl. op. at 14 (citing, Dale
Construction Company v. United States, 168 Ct.Cl. 692,
denying recovery of attorneys fees for prosecuting disputes
before administrative boards because they were not incurred
in the performance of the contract).