U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, D.C. 20401
In the Matter of )
)
The Appeal of )
)
UNIVEX INTERNATIONAL ) Docket No. GPO BCA 23-90
Jacket No. 606-648 )
Purchase Order B-9708 )
DECISION AND ORDER
By letter dated June 14, 1990, Univex International (Appellant
or Contractor), 7325 Imperial Drive, Waco, Texas 76712, filed
a timely appeal from the March 16, 1990, final decision of
Contracting Officer Annamarie T. Mierson of the U.S.
Government Printing Office's (Respondent or GPO or Government)
Philadelphia Regional Printing Procurement Office (PRPPO),
Southampton Office Park, Suite A-190, 928 Jaymore Road,
Southampton, Pennsylvania 18966, terminating the Appellant's
contract identified as Jacket No. 606-648, Purchase Order
B-9708, for default because of the Appellant's failure to
print an acceptable product meeting the requirements for a
Quality Level IV job as specified in GPO's Quality Assurance
Through Attributes Program, GPO Publication 310.1 (QATAP),
which was incorporated by reference in the contract (R4 File,
Tabs A and U).1 For the reasons which follow, the decision of
the Contracting Officer defaulting the contract is hereby
AFFIRMED, and that portion of the appeal is DENIED.2 However,
insofar as the Contractor challenges the extent of its
liability, if any, for excess reprocurement costs, that matter
is REMANDED to the Contracting Officer for the submission of
additional evidence.
I. FINDINGS OF FACT3
1. On August 23, 1989, the Respondent awarded a
contract (Purchase Order B-9708, Jacket No. 606-648) to the
Appellant for the production of 605 copies of a 698-page
loose-leaf book with covers, and one complete set of films,
for the Department of the Navy (Navy) at a contract price
of $14,418.00 (R4 File, Tabs A and B).4 Among other
things, the contract specifications required: (a) the text
of the book was to be printed in black ink on white latex-
saturated paper (JCP O-40) trimmed to 5" x 8"; (b) the
publication was to have 24 die-cut laminated tabbed
dividers on white index paper (JCP K-10) trimmed to 5-3/4"
x 8-1/2"; (c) the book was to have light blue tenite covers
on both front and back, also trimmed to 5-3/4" x 8-1/2",
with a die-cut a window on the front cover; and (d) in
addition to trimming on four sides, the Contractor was to
drill three round holes, and collate the two pieces of
cover (R4 File, Tab A). The Purchase Order also indicates
that apart from mailing labels, the Government was to
furnish the Contractor with 8-1/2" x 11" camera copy for
the text and 8-1/2" x 14" copy for the dividers, which
would be available for pick-up by August 25, 1989 (R4 File,
Tab A). However, the Appellant was told that in order to
fit the textual material on a 5" x 8" page, the camera copy
would have to be reduced by 65 percent and 61 percent,
respectively (R4 File, Tab A). The specifications also
provided that each book was to be shrink-wrapped, and
delivery was to be completed by September 12, 1989 (R4
File, Tab A).5 As previously indicated, the job had to
meet the Quality Level IV standards of QATAP.6
2. The record discloses that the Appellant's paper
supplier, Olmsted-Kirk Paper Company, initially ordered the
necessary paper stock from Georgia-Pacific Company, but was
subsequently notified by the manufacturer that the grade of
paper required for the contract was no longer going to be
produced (R4 File, Tabs C, D and E). Although the paper
was eventually purchased from an alternate source, Appleton
Paper Company, because of the delay the stock was not
delivered to the Contractor until September 29, 1989 (R4
File, Tab E). Consequently, the Appellant was unable to
meet the original delivery date, and October 25, 1989, was
established as a new shipping date (R4 File, Tab F).7 See
Mierson Declaration, � 5.
3. The Contractor failed to deliver the books by October
25, 1989. See Mierson Declaration, � 6. Consequently, on
November 2, 1989, the Respondent sent a "Show Cause Notice"
to the Appellant, informing it, inter alia, that: (a) GPO
was considering terminating the contract for default; (b)
before a final decision was rendered, it would be necessary
to determine if the failure to perform arose out of causes
beyond the Appellant's control and without its fault or
negligence; and (c) it was being afforded an opportunity to
present, in writing, any extenuating facts bearing on the
matter to the Contracting Officer within five (5) days
after receipt of the notice (R4 File, Tab G). See Mierson
Declaration, � 6. The following day, the Appellant
telephoned the PRPPO and spoke to Compliance Officer
Dougherty. The Contractor informed Dougherty that it could
not meet the October 25, 1989, delivery date, and asked for
GPO's "help to get . . . out of it." See R4 File, Tab H;
Mierson Declaration, � 6. After consulting with the Navy's
representative, Lisa Gallagher, the Contractor was given an
extension until November 8, 1989, to ship the complete
order (R4 File, Tab H). Mierson Declaration, � 6. By
letter dated November 6, 1989, the Appellant confirmed the
new delivery date, and stated that it "presume[d] this
letter will cover the show cause letter . . ." (R4 File,
Tab I). Although the Appellant gave the completed books to
its shipper on November 8, 1989, as a "hot rush" shipment,
for some reason not disclosed in the record the Navy did
not receive them until November 27, 1989 (R4 File, Tab K).
See Mierson Declaration, � 6.8
4. After delivery, the Navy selected a random sample of
the books and inspected them. See Dougherty Declaration, �
3. By "Notice of Quality Defects (Notice)" dated December
20, 1989, the Navy informed GPO that the books were
unacceptable because they contained numerous printing and
finishing defects, and were improperly packaged. See
Dougherty Declaration, � 3; Attachment 1. While noting
that the defects varied with each book, the Navy said that
its inspection disclosed the following defects: (a)
printing which faded from light to dark across the page;
(b) image areas that bled off the page; (c) shadowed
images; (d) images that had been drilled through; (e)
smudges; (f) "chocolate" marks on pages; (g) marks on all
pages caused by not letting the ink dry; (h) missing pages;
(i) upside down pages; (j) wrong paper stock; and (k)
shrink-wrap torn to the extent that the books were
intermingled. Id.
Because of these defects, the Navy concluded that the books did
not meet specifications and were unusable, and it asked for a
reprinting of the entire order. Id.
5. The Notice was accompanied by three random samples of
the book for GPO's inspection. See Dougherty Declaration,
� 3; Attachment 1. On receiving the Navy's complaint,
Dougherty personally examined the samples provided, and
also concluded that the job was rejectable under QATAP
standards. See Dougherty Declaration, � 4. In his view,
"the major defects were poor type quality and uniformity as
well as missing information. . . . ," and the problem with
the image was "consistent with that which results when
produced on a press which has a dented blanket." Id.
Accordingly, on January 8, 1990, Dougherty telephoned the
Appellant and spoke to Don Franklin.9 Id. In their
conversation, Dougherty informed Franklin of the results of
his inspection, and asked the Contractor to think about
reprinting the job (R4 File, Tab L). See Dougherty
Declaration, � 4.
6. By letter dated January 17, 1990, Franklin wrote to
Dougherty and, in effect, challenged his inspection
findings (R4 File, Tab M). See Dougherty Declaration, � 5.
Specifically, the Appellant said, in pertinent part:
After our telephone conversation . . ., I have [sic]
called some of our ink and equipment vendors to
discuss the problem of the alleged variation of
thickness of ink placed on the sheets. I was assured
by three different people that the only way to
accurately read a denseometer [sic] is on a solid
block of ink. There is no way to take an accurate
reading on type only.
If the type on the art varies from light to dark,
then the thickness of the letters on the negative
would also vary. This would cause the letters to
appear lighter or darker on the sheet. Reducing the
original art to 65% the density of the original copy
would be very critical. If we had known this was
going to be a critical point of this job we would
have asked for the art to be re-set [sic].
See R4 File, Tab M.
7. Because the above letter did not suggest a reprint
date, on January 23, 1990, the Compliance Officer wrote to
Franklin and directed the Contractor to reprint the job and
ship the new books no later than February 16, 1990 (R4
File, Tab N). See Dougherty Declaration, � 5; Mierson
Declaration, � 7. As stated in his letter, Dougherty told
Franklin that a reprint was necessary because:
Examination of the product your firm has produced for
the order referenced above reveals the following
defects based on Quality Assurance Through Attributes
Program standards:
P-7-Type Quality and Uniformity. Density of the
image varies to the extent of an average demerit
level of 22.34.
F-17-Information missing. Information is missing
from different pages on various books.
Both defects are major. Based on these test results,
this product is rejected and must be reprinted in
strict accordance with the specifications at no
additional cost to the Government.
See R4 File, Tab N. In addition to establishing a reprint date,
Dougherty advised the Appellant that failure to complete the
reprint on time could result in the contract being defaulted (R4
File, Tab N). See GPO Contract Terms, Contract Clauses, � 20
(Default).
8. The Contractor did not reprint and deliver the books
to the Navy by February 16, 1990, as directed by the
Respondent. See Dougherty Declaration, � 6; Mierson
Declaration, � 8. Accordingly, on February 21, 1990, the
Respondent sent a second "Show Cause Notice" to the
Appellant, directing it to respond within five days (or by
February 26, 1990), or risk default of its contract (R4
File, Tab O). See Dougherty Declaration, � 6; Mierson
Declaration, � 8.
9. The Appellant did not answer the "Show Cause Notice"
within five days. However, on February 28, 1990, another
representative of the Appellant, Douglas Miller, telephoned
Dougherty and stated that the Contractor could not reprint
the books because it was unable to retrieve the rejected
publications from the Navy. See Dougherty Declaration, �
6; Mierson Declaration, � 9. As Miller explained in a
letter he sent to Dougherty later that day:
We have not yet seen examples of the stated defects.
As outlined to us, they are alleged in the printed
contents only and not the plastic binder covers and
plastic tab Index Dividers, which are part of the set
and also manufactured by us.
We have attempted to pick up and return the completed
books, 51 cartons, 1348 lbs., via Yellow Motor
Freight, but cannot get them from the agency.
If these are released to us, we will correct any
defeciencies [sic] in a timely manner.
See R4 File, Tab P. See also, Dougherty Declaration, � 7; R4
File, Tab W.
10. Since Dougherty had discussed retrieval of the initial
shipment with the Navy as part of the rejection process, he
telephoned Gallagher and inquired whether, in fact, there had
been any attempt to pick-up the materials. See Dougherty
Declaration, � 7; Mierson Declaration, � 9. Gallagher checked
and then told Dougherty that there was no record of such a try
by anyone.10 See Dougherty Declaration, � 7; Mierson
Declaration, � 9. She also talked with the Data Manager,
Stock Control Clerk, and Receipt Control Clerk at the base,
who stated that no one had come for the rejected materials (R4
File, Tabs Q and W).11 Id. In addition, the record discloses
that the Appellant never contacted the PRPPO at any time about
problems it might be having in retrieving the books, or to
arrange for the pick-up of the rejected product. See
Dougherty Declaration, � 8; Mierson Declaration, � 9.
11. On March 1, 1990, the Contracting Officer sought the
approval of the Respondent's Contract Review Board (CRB) to
terminate the contract for default (R4 File, Tab R).12 See
Mierson Declaration, � 10. Termination was requested because
of the Appellant's "failure to reprint a rejected product" (R4
File, Tab R). CRB approval was received by the PRPPO on March
5, 1990 (R4 File, Tab R).
12. Before defaulting the contract, however, the Contracting
Officer sought a second inspection of the books from GPO's
QAS. See Mierson Declaration, � 10. That QAS reexamination,
which was conducted on March 8, 1990, confirmed that the books
were rejectable, specifically for printing attribute, P-7,
Type Quality and Uniformity (R4 File, Tab T).13 See MacAfee
Declaration, � 4; Mierson Declaration, � 10.
13. Accordingly, by letter dated March 16, 1990, expressly
titled "Notice of Termination," the Contracting Officer
terminated the Appellant's contract for default because of its
"failure to print an acceptable product [according to QATAP
specifications]." See R4 File, Tab U. See also Mierson
Declaration, � 10. The Contracting Officer based her decision
on several factors, including those listed in the relevant
chapter of the PPR.14 See Mierson Declaration, � 11.
Specifically, she terminated the contract because:
I did not believe that the contractor had adequately
responded to our show cause notice within the time
required, had performed any action to reprint the
order within the time required, or taken any other
significant steps to perform the contract in
accordance with the specifications.
See Mierson Declaration, � 11.
14. The "Notice of Termination" also informed the Appellant
that it was potentially liable for any excess reprocurement
costs (R4 File, Tab U). In fact, after the contract was
defaulted, the Respondent immediately resolicited the job
under the same small purchase procedures, and terms and
conditions, including the time allotted for performance, as
the original contract. See Mierson Declaration, � 13. Two
offers were received-one from GMC ($24,372.00) and another
from Quadra Graphics ($20,514.00). See Mierson Declaration, �
13; Attachment 2. Since Quadra Graphics was the low bidder,
on April 3, 1990, less than three weeks after the termination
of the Appellant's contract, that company was awarded the
repurchase. See Mierson Declaration, � 13; Attachment 3.
15. By letter dated June 14, 1990, the Appellant timely
appealed the Contracting Officer's default termination
decision (R4 File, Tab V). Among other things, the
Contractor's appeal letter stated, in pertinent part:
The furnished artwork was incorrect. It was
necessary for us to make corrections. . . . We were
refused samples of the job illustrating the alleged
defects.
We noticed [to] you on February 28, 1990 that your
complaint concerned a fraction of the complete job
and in no way could have been the entirety since the
binders and indexes were never faulted, but rather
only the portion of the order that was produced from
your incorrect artwork.
Two attempts were made by us through Yellow Freight
to pick up this material for return to us to effect
inspection and possible replacement. Both times our
carrier was refused, even after notification to your
office February 28, 1990.
See R4 File, Tab V. With regard to the inability of its carrier
to pick-up the rejected material from the Navy, the Appellant
subsequently submitted to the Board, pursuant to Rule 4(b) of the
Board Rules, a letter from Irven Atkinson, Branch Manager, Yellow
Freight System, Waco, Texas, to the Contractor, dated August 15,
1990, which said:
This is a letter following up our earlier phone
conversations regarding a pickup that you had
requested we make in Philadelphia, Pa. You initially
called me on February 23 and asked that Yellow
Freight schedule a pickup in Philadelphia with the
[Receiving] Officer, Navy Publishing & Forms Center,
5801 Tabor Ave[.], Philadelphia, P[A] 19120. After
our conversation I called our city dispatcher in
Philadelphia and gave him the same information. He
informed me that he would make arrangements to have
the freight picked up on February 23rd or the 26th.
On Monday the 26th, the city dispatcher called me
back and said he could not make the pickup without
additional information as to where the freight could
be located. He said he would need more information
or someones [sic] name at the facility so they could
contact them for pickup. You called me back later
that day and gave me this additional info; M/F Stock
Replenishment, NAVAIR STOCK. After you gave me this
info, I called the city dispatcher back and passed it
on to him. On February 28th the dispatcher called me
back and said they had gone back to the facility and
that no one could locate this shipment. On that same
day I called you and advised you of the same. I am
sorry for any inconvenience this might have caused,
but we did try to make the pickup on 2 separate
occasions.
See App. Exh. A.
II. ISSUES PRESENTED
At the close of the prehearing conference held on April 16,
1993, the Board identified three questions as being presented
by the facts in this case. See RPTC, p. 6. Those issues can
be succinctly stated as follows:
1. Was it error for the Contracting Officer to
default the Appellant's contract for nondelivery of
the reprinted books, and reprocure them from another
source, without providing the Contractor with an
opportunity to cure the defects? Stated otherwise,
was the default action somehow procedurally
defective?
2. Was the Appellant's failure to retrieve the
rejected product from the Navy prior to, and for the
purpose of, reprinting the publication, due to causes
beyond its control and without its fault or
negligence, so that it should be excused from
liability for excess reprocurement costs? See GPO
Contract Terms, Contract Clauses, � 20(c) (Default).
Stated otherwise, can it be said that the reason for
the Contractor's inability to retrieve the rejected
product was the Respondent's lack of cooperation in a
making arrangements for the pick-up?
3. Assuming that the Appellant is responsible for
excess reprocurement costs, is it entitled to have
its liability reduced by an amount equivalent to the
cost of the plastic binding covers and tab dividers-
the parts of the book which allegedly conformed to
the contract specifications? Stated otherwise, what
is the extent of the Contractor's excess cost
liability in this case?
III. POSITION OF THE PARTIES
The Appellant asserts that while it was willing to reprint the
books, the Government failed to cooperate with it toward that
end. Specifically, the Contractor believes that the
Respondent's refusal to supply examples of the alleged defects
to the Appellant, or otherwise offer it assistance in
isolating the source of problem, deprived it of any meaningful
opportunity to fix the defective product. See RPTC, p. 5;
Complaint. Furthermore, the Appellant contends that GPO never
offered or gave it proper instructions for picking up the
rejected books from the Navy, and as a consequence, they could
not be retrieved for correction and redelivery.15 See RPTC,
p. 5; Complaint. This was a major obstacle to reprinting the
books because the Contractor wished to use the conforming
binder covers and rings, and the clear plastic die-cut
laminated index tab dividers, for the new copies. See
Complaint. In other words, the Appellant wanted to minimize
its potential losses by saving the good components and
limiting the cure process to just reprinting the defective
text pages, which would then be recollated, along with the
nondefective index dividers, into the binders. Moreover, the
Contractor thought that the reprint date established by the
Respondent was coercive and unrealistic because GPO knew that
it would by difficult for the Appellant to obtain the special
paper stock needed for the text pages in time. See Complaint.
Finally, the Appellant states that by repurchasing the
defaulted book in its entirety, without making an attempt to
use the conforming binders and index dividers, GPO failed to
mitigate the Contractor's damages-a requirement where the
Government seeks excess reprocurement costs. See RPTC, p. 5;
Complaint. Accordingly, for these reasons, the Contractor
submits that the default termination is in error, and should
be reversed.
The Respondent, on the other hand, believes that the
Appellant's contract was properly terminated because the books
it delivered failed to conform to the QATAP standards in all
respects, including the printed text.16 See RPTC, pp. 4-5.
Although the Appellant said that it had offered to correct any
deficiencies "in a timely manner" and for this purpose had
attempted to retrieve the books, the Navy has "categorically
denied" that any one representing the Contractor contacted it
about removing the rejected material from stock. See RPTC, p.
5. As for the Contractor's claim that GPO failed to mitigate
its damages by utilizing the conforming binders and index
dividers on the reprinted book, the Government says that it
would have been too impractical and too expensive for it to
expend considerable time and effort to decollate all 605
copies, extract 24 tabs from each book, and then reverse the
process. See Mierson Declaration, � 14. Even though this was
what the Appellant probably would have done if it had
reprinted the product, the cost of performing these manual
tasks would have exceeded the cost of the relatively
inexpensive binders and tabs, and hence was not a practical
option for the Government. Id. Finally, the Contracting
Officer based her decision to terminate the contract, in part,
on the relevant factors listed in the PPR. See Mierson
Declaration, � 11. Accordingly, for these reasons, GPO
asserts that the default decision was not in error, and the
Contracting Officer's action should be affirmed.
IV. DISCUSSION
In this appeal, the Board is asked to decide whether or not
the Appellant's contract was erroneously defaulted, and if the
termination was proper, is the Contractor nonetheless excused
from liability for excess reprocurement costs? At the outset,
therefore, it is worthwhile to repeat the legal principles
which apply to these issues.
First, GPO's "Default" clause provides that a contracting
officer may, upon written notice of default to the contractor,
terminate a contract, in whole or in part, if the contractor
fails to: (1) deliver the supplies or perform the required
services within the time specified or any extension which may
have been granted; (2) make progress on the work, so as to
endanger performance of the contract; or (3) perform any of
the other provisions of the contract. See GPO Contract Terms,
Contract Clauses, � 20(a)(1)(i),(ii),(iii). Further, where a
contract is terminated for default and the work must be
reprocured, the contractor will be held responsible for excess
procurement costs and possible liquidated damages. GPO
Contract Terms, Contract Clauses, �� 20(b), 22(d). However,
the contractor is excused from paying such reprocurement costs
or damages if the failure to perform or to deliver on time
results from causes beyond its control and without its fault
or negligence.17 GPO Contract Terms, Contract Clauses, ��
20(c), 22(e), 23. Such causes include, but are not limited
to, acts of God or of the public enemy, acts of the Government
in either its sovereign or contractual capacity, fires,
floods, epidemics, quarantine restrictions, strikes, freight
embargoes, and unusually severe weather-but in each case, the
failure to perform must be beyond the control and without the
fault or negligence of the contractor. GPO Contract Terms,
Contract Clauses, � 20(c). See K.C. Printing Co., GPO BCA
02-91 (February 22, 1995), Slip op. at 9; Printing Unlimited,
GPO BCA No. 21-90 (November 30, 1993), Slip op. at 16, 1993 WL
516844; Chavis and Chavis Printing, GPO BCA 20-90 (February 6,
1991), Slip. op. at 11, 1991 WL 439270. Where the failure to
perform is caused by the default of a supplier or
subcontractor, the cause of the default must be beyond the
control of both the contractor and subcontractor, and without
the fault or negligence of either, in order for the contractor
not to be liable for any excess costs for failure to perform,
unless the subcontracted supplies or services could have been
secured from other sources in sufficient time to meet the
required delivery schedule. GPO Contract Terms, Contract
Clauses, � 20(d). See K.C. Printing Co., supra, Slip op. at
10; Chavis and Chavis Printing, supra, Slip op. at 11.
Second, a default termination is a drastic action which may
only be taken for good cause and on the basis of solid
evidence.18 See K.C. Printing Co., supra, Slip op. at 10;
Shepard Printing, supra, Slip op. at 10-11; R.C. Swanson
Printing and Typesetting Co., GPO BCA 31-90 (February 6,
1992), Slip op. at 25, 1992 WL 487874, aff'd, Civil Action No.
92-128C (U.S. Claims Court, October 2, 1992);19 Stephenson,
Inc., supra, Slip op. at 20 (citing, Mary Rogers Manley d/b/a
Mary Rogers Real Estate, HUDBCA No. 76-27, 78-2 BCA � 13,519;
Decatur Realty Sales, HUDBCA No. 75-26, 77-2 BCA � 12,567).
Consequently, the Government has the burden of proving the
basis for the default, while the contractor has the burden of
showing that its failure to perform was excusable. See K.C.
Printing Co., supra, Slip op. at 10; Shepard Printing, supra,
Slip op. at 11; R.C. Swanson Printing and Typesetting Co.,
supra, Slip op. at 28; Chavis and Chavis Printing, supra, Slip
op. at 11. Accord, Lisbon Contractors v. United States, 828
F.2d 759 (Fed. Cir. 1987)); Switlik Parachute Co. v. United
States, 216 Ct. Cl. 362 (1978); J.F. Whalen and Co., 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. If the
Government fails to meet its burden of proof, then the
termination is converted into one of convenience and the
contractor is allowed to recover for the work performed. GPO
Contract Terms, Contract Clauses, � 20(g). Cf. K.C. Printing
Co., supra, Slip op. at 11; Stephenson, Inc., supra, Slip op.
at 17-18; Chavis and Chavis Printing, supra, Slip op. at 9.
Third, where the default termination is based on untimely
performance, as in this case the failure to deliver the
corrected books by the established reprint date, the
contractor's burden of proof is four-fold: (1) to prove
affirmatively that the delay was caused by or arose out of a
situation which was beyond the contractor's control and that
it was not at fault or negligent; (2) to show that performance
would have been timely but for the occurrence of the event
which is claimed to excuse the delay; (3) to show that it took
every reasonable precaution to avoid foreseeable causes for
delay and to minimize their effect; and (4) to establish a
precise period of time that performance was delayed by the
causes alleged. See K.C. Printing Co., supra, Slip op. at
11; Chavis and Chavis Printing, supra, Slip op. at 12 (and
cases cited therein). This burden must be carried by
substantial evidence-unsupported reasons by way of explanation
are not enough-and the contractor must also show that the
delay in contract performance was due to unforeseeable causes
beyond its control and without any contributory negligence on
its part. See K.C. Printing Co., supra, Slip op. at 11;
Chavis and Chavis Printing, supra, Slip op. at 12-13 (and
cases cited therein).
Finally, a default termination is a discretionary act which
can be challenged on an abuse of discretion standard. See
K.C. Printing Co., supra, Slip op. at 12; Graphics Image,
Inc., supra, Slip op. at 24-28; Shepard Printing, supra, Slip
op. at 12. Accord, Darwin Construction Co., Inc. v. United
States, 811 F.2d 593 (Fed. Cir. 1987); Quality Environment
Systems v. United States, 7 Cl. Ct. 428 (1985); Jamco
Constructors, Inc., VABCA Nos. 3271, 3516T, 94-1 BCA � 26,405,
reconsid. denied, 94-2 BCA � 26,792; Walsky Construction Co.,
ASBCA No. 41541, 94-1 BCA � 26.264, reconsid. denied, 94-2 BCA
� 26,698. The burden is on the contractor to prove abuse of
discretion. See K.C. Printing Co., supra, Slip op. at 12;
Shepard Printing, supra, Slip op. at 12. Accord, Kit Pack
Co., Inc., ASBCA No. 33135, 89-3 BCA � 22,151; Lafayette Coal
Co., ASBCA No. 32174, 89-3 BCA � 21,963.
Applying these principles to the facts in the record, the
Board reaches the following conclusions:
A. Although not required to, the Contracting Officer
did provide the Appellant with an opportunity to cure
the defects before defaulting the contract; i.e., by
directing it to reprint the books. When the
Contractor failed to deliver the corrected books by
the established delivery date for the reprints, the
Contracting Officer could, without more, default the
Appellant's contract, and reprocure the product from
another source. In short, the default action is not
procedurally defective.
1. When the Contracting Officer terminated the contract
for a "failure to print an acceptable product [according to
QATAP specifications]" (R4 File, Tab U), she was clearly
defaulting the Appellant for a failure to "[d]eliver the
supplies or to perform the services within the time
specified or any extension, thereof;. . .". GPO Contract
Terms, Contract Clauses, � 20(a)(1)(i).20 The Contracting
Officer expressly said so in her affidavit. See Mierson
Declaration, � 11 ("I did not believe that the contractor .
. . had performed any action to reprint the order within
the time required, . . .".). The Appellant does not
dispute the Contracting Officer's finding in that regard.
Rather, the Contractor contends that the Contracting
Officer's termination action was procedurally defective
because she failed to issue a "Cure Notice" or otherwise
afford it an opportunity to correct the performance problem
before the contract was defaulted. See RPTC, p. 5;
Complaint. The Appellant is mistaken. As a general rule,
no "cure notice" is required where a contract is to be
terminated because of the contractor's failure to timely
deliver or perform. See K.C. Printing Co., supra, Slip op.
at 13; B. P. Printing and Office Supplies, GPO BCA 22-91
(February 5, 1993), Slip op. at 12; Shepard Printing,
supra, Slip op. at 13; Stephenson, Inc., supra, Slip op. at
19-20. Accord, Chambers-Thompson Moving and Storage, Inc.,
ASBCA No. 43260, 93-3 BCA � 26,033, at 129,408; Sonico,
Inc., ASBCA Nos. 31110, 34269, 89-2 BCA � 21,611.
2. A limited exception to the general rule exists when a
contractor has timely shipped nonconforming goods which
deviate from the specifications in only minor respects.
See, Radiation Technology, Inc. v. United States, supra.
Under the so-called "substantial compliance" doctrine, a
defaulting contractor is afforded an opportunity, by
operation of law, to correct minor defects in shipments to
the Government.21 Cf. Hurt's Printing Co., Inc., supra,
Slip op. at 17, 1994 WL 275098; B. P. Printing and Office
Supplies, supra, Slip op. at 12; Stephenson, Inc., supra,
Slip op. at 24, 48-54. Also cf. Air, Inc., supra, 91-1 BCA
at 117,112. However, the "substantial compliance" doctrine
clearly does not apply here.
3. First, we are not dealing with a situation involving
timely delivery of supplies which are subsequently found to
be nonconforming; indeed, untimeliness has been the mark of
this Contractor throughout the contract.22 Instead, the
Contracting Officer only resorted to default when there was
no delivery at all of the reprinted books by February 16,
1990, the date established by the Respondent in a final
effort to secure a satisfactory product for the Navy (R4
File, Tab N). See GPO Contract Terms, Contract Clauses, �
14(h) (Inspections and Tests) ("If the contractor fails to
promptly remove, replace, or correct rejected supplies that
are required to be removed or to be replaced or corrected,
the Government may . . . (2) terminate for default as
provided in article 20 "Default". [Emphasis added.]).
4. Second, the two defects found in the Appellant's
books-variation in the density of the image and missing
information-are major, not minor, discrepancies under QATAP
(R4 File, Tab N).23 Under the PPR, the Contracting Officer
is the only person authorized to make final determinations
on whether products submitted by a contractor conform to
contract specifications.24 See PPR, Chap. XIII, Sec. 1, �
4.f. See Sterling Printing, Inc., GPO BCA 20-89 (March 28,
1994), Slip op. at 34-35, fn. 46, 1994 WL 275104, reconsid.
denied, GPO BCA 20-89 (July 5, 1994), 1994 WL 377592,
second motion for reconsid. denied, GPO BCA 20-89 (August
12, 1994); Hurt's Printing Co., Inc., supra, Slip op. at
21-22. Here, the Contracting Officer's initial conclusion
that the books contained major defects was confirmed by the
results of a second inspection performed by the QAS (R4
File, Tab T). See Mierson Declaration, � 10; MacAfee
Declaration, � 4. There is no credible evidence in the
record which would indicate that the Contracting Officer's
judgment was somehow erroneous or flawed. Accordingly,
there is no basis to disturb her decision, and the Board
will let it stand. See Printing Unlimited, supra, Slip op.
at 21-22; Stabbe Senter Press, GPO BCA 13-85 and 19-85 (May
12, 1989), Slip op. at 53, 1989 WL 384977.
5. Finally, the Board cannot ignore the facts in this
case which show that despite the general rule, the
Appellant was offered an opportunity to cure the defects by
reprinting the order (R4 File, Tab N). See Hurt's Printing
Co., Inc., supra, Slip op. at 21-22; Shepard Printing,
supra, Slip op. at 14. Where, as here, a contractor has
already been given a reasonable opportunity to correct the
discrepancies in its product, it may not later be heard to
say that the "substantial compliance" rule entitles it to a
second chance. See Hurt's Printing Co., Inc., supra, Slip
op. at 22 (citing, Electro-Neutronics, Inc., ASBCA No.
12947, 71-2 BCA � 8,961); Shepard Printing, supra, Slip op.
at 14. Accordingly, even if Radiation Technology applied
in this case, when GPO gave the Appellant an opportunity to
cure the defects by reprinting the books, it was relieved
of any further responsibility under the "substantial
compliance" doctrine.
6. In summary, the record evidence shows that: (a) the
Appellant's original shipment of books was found to contain
major defects as defined by QATAP; (b) the Respondent
afforded the Contractor an opportunity to correct the
problem by directing it to reprint the publication; (c) the
Contractor did not reprint and ship the books by the date
established by the Contracting Officer; (d) the Appellant
was given a chance to explain its failure to perform by the
PRPPO's issuance of a "Show Cause Notice";25 and (e) the
contract was not terminated until the Contractor's "show
cause" response was received and considered by the
Contracting Officer. On these facts, the Board concludes
that the Contracting Officer met all of her
responsibilities under the law and GPO's regulations prior
to defaulting the contract, and thus there is no procedural
error in this case. Accordingly, the Appellant's
contentions to the contrary are without merit. See K.C.
Printing Co., supra, Slip op. at 14; Shepard Printing,
supra, Slip op.
at 14; B. P. Printing and Office Supplies, supra, Slip op. at 15;
Chavis and Chavis Printing, supra, Slip op. at 13.
B. The Respondent's failure to make arrangements for
the Appellant to retrieve the rejected product from
the Navy was not such conduct which would amount to a
breach of its implied duty to cooperate with the
Contractor in the performance of the contract. Thus,
the Appellant has not shown that its failure to
perform arose from causes beyond its control and
without its fault or negligence.
1. The nub of the Appellant's position on the merits is
that it should be excused from responsibility for
nonperformance because: (a) the Respondent refused to
supply examples of the alleged defects or otherwise offer
help in isolating the source of the problem, despite the
Contractor's request; and (b) GPO never gave the Appellant
proper instructions for picking up the rejected books from
the Navy. See RPTC, p. 5; Complaint. The Contractor
argues that the Government's lack of assistance in the
latter regard was a particular hinderance since it wished
to reuse the original binder covers, rings and clear
plastic die-cut laminated index tab dividers for the
reprints. These assertions of the Appellant's amount to an
allegation that the Government failed to cooperate with it
in the performance of the contract.
2. A well-settled principle states that in every public
contract there is an implied affirmative obligation on the
part of the Government that it will do whatever is
necessary to enable the contractor to perform.26 See
Hurt's Printing Co., Inc., supra, Slip op. at 24;
Stephenson, Inc., supra, Slip op. at 38-39 (citing
Nanofast, Inc., supra; The Kehm Corp. v. United States, 119
Ct. Cl. 454, 93 F.Supp. 620 (1950); United States v. Speed,
75 U.S. (8 Wall.) 77 (1868)). Under this doctrine, the
Government will be held liable for breaching its implied
duty to cooperate if it wrongfully fails or refuses to take
some action, within its control, which is essential for the
contractor's performance. See Hurt's Printing Co., Inc.,
supra, Slip op. at 24; Stephenson, Inc., supra, Slip op. at
39. Where such a breach occurs, the contractor has a legal
right to avoid the contract, is discharged from its duty to
perform, and is relieved of the default termination and its
consequences. See Malone v. United States, 849 F.2d. 1441,
1446 (Fed. Cir. 1988). In most cases applying this
principle, there is a clear nexus between the Government's
breaching conduct and the performance period itself. See
e.g., Maitland Brothers Co. and Maitland Brothers Co. and
St. Paul Fire and Marine Insurance Co., ASBCA Nos. 30,089,
30,764, 31,032, 32,071, 32,605, 34,659, 90-1 BCA � 22,367;
Singleton Contracting Corp., GSBCA No. 8,552, 90-1 BCA �
22,298; G. W. Galloway Co., ASBCA Nos. 17,436, 17,723,
17,836, 17,911, 18,324, 77-2 BCA � 12,640. Moreover, the
Government's liability also depends on the reasonableness
of its conduct under the circumstances, see, PBI Electrical
Corp. v. United States, 17 Cl. Ct. 128 (1989); Ben C.
Gerwick, Inc. v. United States, 152 Ct. Cl. 69, 285 F.2d
432 (1961); John McCabe, ASBCA No. 36958, 90-2 BCA �
22,785; Tolis Cain Corp., DOTCAB No. 72-2, 76-2 BCA �
11,954, and whether that conduct has harmed the contractor,
see Commerce International Co. v. United States, 167 Ct.
Cl. 529, 338 F.2d 81 (1964); Toombs & Co., ASBCA No. 34590,
91-1 BCA � 23,403.
3. No detailed survey of the cases involving the
Government's duty to cooperate with a contractor is
necessary here. However, it should be noted that a
violation of the duty to cooperate can occur if an agency
fails to help solve a problem which has arisen during
contract performance, see e.g., Hardrives, Inc., IBCA No.
2319, 94-1 BCA � 26,267; James R. Lowe, Inc., ASBCA No.
42026, 92-2 BCA � 24,835, reconsid. denied, 93-1 BCA �
25,516; Robert R. Marquis, Inc., ASBCA No. 38438, 92-1 BCA
� 24,692; Pittsburgh-Des Moines Corp., EBCA No. 314-3-84,
89-2 BCA � 21,525, or provide the contractor with pertinent
information, see e.g., Spectrum Leasing Corp., GSBCA Nos.
7,347, 7,379, 7,425-27, 90-3 BCA � 22,984; Ballenger Corp.,
DOTCAB No. 74-32, 84-1 BCA � 16,973, modified on other
grounds, 84-2 BCA � 17,277; Hardie-Tynes Manufacturing Co.,
ASBCA No. 20,582, 76-2 BCA � 11,972. On the other hand, as
this Board has held, the Government has no obligation to
provide assistance where the contractor could have resolved
the problem on its own. See Professional Printing of
Kansas, Inc., GPO BCA 02-93 (May 19, 1995), Slip op. at 81,
fn. 83. Accord Moore Mill & Lumber Co., AGBCA 87-172-1,
90-3 BCA � 23,111; John S. Vayanos Contracting Co., PSBCA
No. 2317, 89-1 BCA � 21,494. Applying these principles in
this case, the Board finds no basis for holding that the
Respondent breached its implied duty of cooperation with
the Appellant's performance.
4. First, as already discussed, before defaulting the
contract, the Respondent tested the product twice in order
to confirm the Navy's complaint that the books contained
major defects under QATAP, notified the Appellant of the
deficiencies involved (poor type quality and missing
information) as well as the probable source of the problem
(a press with a dented blanket), and afforded the
Contractor ample opportunity to correct the defects by
reprinting the books.27 See Stephenson, Inc., supra, Slip
op. at 42-44 (the Board rejected the contractor's breach
claim where the record showed that the defects were
"critical," not "minor," and the contractor was, in fact,
given a chance to repair the books, but was unable to do so
within a reasonable time). Cf. Nanofast, Inc., supra, 69-1
BCA at 35,049 (a default for defects in delivered equipment
was improper because there was no evidence that the
Government actually tested the equipment, and moreover, the
Government refused to discuss the defects with the
contractor and prohibited any correction or replacement).28
The fact that the books were not delivered by February 16,
1990, the reprint date established by the Respondent, is
the fault of the Appellant, whose posture throughout has
been one of delay and circumvention. Instead of complying
with the Government's reprint request, the Appellant first
challenged the Government's inspection findings, and then
conditioned curing the problem on the recovery of the
rejected materials (R4 File, Tabs M, N and P). Indeed,
even its indefinite promise to reprint the books "in a
timely manner" was not conveyed to the Respondent until
February 28, 1990, nearly two weeks after the date
established for completion of performance (R4 File, Tab P).
Whatever the Appellant's intention, its conduct clearly
conveys the impression that even if the defects had been
minor it was not prepared to cure the problem within in a
reasonable time. See Stephenson, Inc., supra, Slip op. at
46-47 (the contractor's offer to reprint the defective
books was made too late to meet the needs of the customer-
agency). Furthermore, while the Contractor's conduct may
not amount to an anticipatory breach of the contract,29 it
can hardly be said that it was acting with the "diligence"
required to meet its obligations under the "Disputes"
clause. GPO Contract Terms, Contract Clauses, � 5(d)
(Disputes) ("Pending final decision a dispute hereunder,
the contractor shall proceed diligently with performance in
accordance with the Contracting Officer's decision."). See
Sterling Printing, Inc., supra, Slip op. at 36, 44, fn. 51;
Nor Cal Trade School of Offset Printing, GPO BCA 1-85
(September 12, 1986), Slip op. 8-9, 1986 WL 181455. Accord
Twigg Corp, supra, 93-1 BCA at 126,157-58. Contrary to
what the Appellant might believe, the duties and
responsibilities set forth in a Government contract are
mutual; they are not a "one-way street" flowing only from
the Government to the Contractor. See Malone v. United
States, supra, 849 F.2d. at 1445 (obligation of good faith
and fair dealing); John S. Vayanos Contracting Co., supra,
89-1 BCA at 108,294.
5. Second, there is no merit to the Appellant's
contention that GPO's failure to give it proper
instructions for retrieving the rejected books from the
Navy somehow also breached the Government's implied duty of
cooperation. The principal reason the Contractor wanted to
recover the original shipment was so that it could reuse
the nondefective plastic binder covers and index tabs to
reduce its reprint costs. See R4 File, Tab P; Complaint.
However, such a purpose was clearly for the convenience of
the Appellant and was not essential for performance of the
reprint. See Hurt's Printing Co., Inc., supra, Slip op. at
24 (Government action or inaction constituting breach must
be essential for the contractor to perform); Stephenson,
Inc., supra, Slip op. at 39. Furthermore, while the Navy
had a procedure governing the removal of material from the
base,30 there is absolutely no evidence that GPO knew of
that procedure, nor has the Appellant attempted to present
such proof. In order to find a cooperation breach based on
a failure to pass along instructions for picking up the
rejected material, some evidence of knowledge of the proper
procedure by the Respondent is required; anything less is
pure speculation. Regardless, the Appellant's own evidence
undermines its position on this issue because Yellow
Freight's letter shows that the Contractor first made
arrangements with its carrier to retrieve the rejected
material on February 23, 1990, seven days after the
reprints were required to be shipped to the Navy.31 See
App. Exh. A. See also Joseph J. Bonavire Co., GSBCA No.
4819, 78-1 BCA � 12,877 (default was proper because the
contractor's failure to clarify the delivery instructions
with his supplier resulted in the required materials being
delivered to the wrong location and caused a delay which
jeopardized performance). Thus, even if the Appellant had
recovered the rejected books, it is clear that timely
performance of the contract was no longer possible. See
John S. Vayanos Contracting Co., supra, 89-1 BCA at 108,294
(no evidence that the contractor would have performed the
contract on time even if it had received a requested
contract modification and express ruling from the
Government).
6. Finally, it has not escaped the Board's notice that
the Appellant missed at least three other delivery dates
prior to February 16, 1990-i.e., September 12, 1989,
October 25, 1989, and November 8, 1989-and was technically
in default of the contract on those occasions.
Consequently, the Respondent could have exercised its right
to terminate the contract at any one of those points, but
it withheld such a drastic action and allowed continued
performance by the Contractor. Thus, all of the evidence
of record compels the conclusion that the Respondent,
instead of failing to cooperate, as the Appellant alleges,
"bent over backwards" to provide the Contractor with every
fair and reasonable opportunity to complete the contract.
See Stephenson, Inc., supra, Slip op. at 47. Cf. Freeway
Ford Truck Sales, Inc., GSBCA No. 10662, 93-3 BCA � 26,019;
S.T. Research Corp., ASBCA No. 36000, 92-2 BCA � 24,838.
That the Appellant was not successful cannot be attributed
to the Government. See Hurt's Printing Co., Inc., supra,
Slip op. at 28; Stephenson, Inc., supra, Slip op. at 47.
7. Taking all of the evidence into consideration, the
Board concludes that the Appellant has not met its burden
of proof with respect to excusing its failure to make a
timely shipment of the reprinted books. See K.C. Printing
Co., supra, Slip op. at 18; Hurt's Printing Co., Inc.,
supra, Slip op. at 29; Chavis and Chavis Printing, supra,
Slip op. at 15. Accord Johnson Textile and Plastics Co.,
ASBCA No. 25985, 84-2 BCA � 17,467; Affiliated Metal
Products Co., ASBCA No. 15567, 71-2 BCA � 8,947. On this
record, the Contractor's case is essentially a collection
of unverified assertions amounting to little more than
argument, which standing alone cannot substitute for proof.
Cf. Reese Manufacturing, Inc., ASBCA No. 35144, 88-1 BCA �
20,358. Indeed, the Board has never allowed such
unsubstantiated contentions to form the basis for recovery.
See B & B Reproductions, GPO BCA 09-89 (June 30, 1995),
Slip op. at 39; Hurt's Printing Co., Inc., supra, Slip op.
at 29; Printing Unlimited, supra, Slip op. at 12;
Stephenson, Inc., supra, Slip op. at 57. Accord Singleton
Contracting Corp., GSBCA No. 8548, 90-2 BCA � 22,748; Tri-
State Services of Texas, Inc., ASBCA No. 38019, 89-3 BCA �
22,064)); Gemini Services, Inc., ASBCA No. 30247, 86-1 BCA
� 18,736. Accordingly, the Board concludes that under the
circumstances of this case, the Contracting Officer was
justified in terminating the contract for default, and her
decision is affirmed.
C. Although the Appellant is potentially liable for
excess reprocurement costs, the Board is unable to
determine the extent of that liability on the state
of this record.
1. The last issue concerns the scope of the Appellant's
liability for excess reprocurement costs, if any, and its
claim that by reprocuring the rejected book in toto-plastic
binding covers, tab dividers, and all-GPO failed to
mitigate the Contractor's damages, as required by law. See
RPTC, p. 5; Complaint. The Respondent believes that
repurchasing the publication without recovery of the covers
and tabs was entirely proper under the circumstances. See
Mierson Declaration, � 14. However, for the reasons which
follow, the state of this record prevents the Board from
resolving the parties' dispute.
2. Recently, in K.C. Printing, Co., the Board summarized
the legal principles governing questions concerning excess
reprocurement costs:
The assessment of excess reprocurement costs is
considered a Government claim. See Sterling
Printing, Inc., supra, [Slip op.] at 50-51 (and cases
cited therein). 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. Id., [Slip op.] at 51
(and cases cited therein). In doing so, the
Government must satisfy five criteria to establish an
entitlement to recovery against a defaulting
contractor, namely, it must show that: (a) the
reprocurement contract was performed under
substantially the same terms and conditions as the
original contract; (b) it acted within a reasonable
time following default to repurchase the supplies;
(c) it employed a reprocurement method which would
maximize competition under the circumstances; (d) it
obtained the lowest reasonable price; and (e) the
work has been completed and final payment made so
that the excess costs assessment is based upon
liability for a sum certain. [Footnote omitted.]
Id., [Slip op.] at 52-53 (and cases cited therein).
Furthermore, the Government claim must be supported
by evidence in the record as to each element of the
claim. Id., [Slip op.] at 53 (and cases cited
therein). Failure to satisfy even one criterion may
result in a reduction of the excess costs claimed.
Id., [Slip op.] at 53-54 (and cases cited therein).
See K.C. Printing, Co., supra, Slip op. at 18-19. [Original
emphasis.] 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. See K.C. Printing Co.,
supra, Slip op. at 19, fn. 20; Sterling Printing, Inc., supra,
Slip op. at 50 (citing, Cable Systems and Assembly Company, ASBCA
No. 17844, 73-2 BCA � 10,172, at 47,892).
3. However, before the Board will apply these rules to
the specific facts of a particular case, it must be
satisfied that the controversy is justiciable. As
explained in Sterling Printing, Inc., the Board's lead case
on the matter of excess costs:
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.
See Sterling Printing, Inc., supra, Slip op. at 48. [Original
emphasis.] Typically, evidence of assessment in the appeal
record consists of something in writing, either a memorandum or a
letter, from the Contracting Officer to GPO's Financial
Management Service (FMS) asking it to recover the amount of
excess costs, see e.g., K.C. Printing, Co., supra, Slip op. at 3,
5, or to the defaulted contractor notifying it that excess
reprocurement costs would be deducted from its account, see e.g.,
Sterling Printing, Inc., supra, Slip op. at 17-18.32
4. An examination of the record here discloses no such
proof of assessment. The only evidence presented by the
Respondent in the case file which pertains to the
reprocurement is: (a) a statement from the Contracting
Officer that she immediately resolicited the job under the
same terms, conditions and small purchase procedures, as
the original contract; (b) the bid abstract for the
repurchase showing offers from GMC and Quadra Graphics; and
(c) a copy of the reprocurement purchase order. See
Mierson Declaration, � 13; Attachments 2 and 3. There is
nothing in the record to indicate that the FMS was informed
of the default and asked to recover the amount of excess
reprocurement costs, or that the Contractor was notified it
that such excess costs would be deducted from its account.
Indeed, the record is even devoid of any affirmative
evidence showing that the Appellant was notified that the
contract had been reawarded, and that it was liable for the
excess reprocurement costs. Although the Contractor's
allusion to such costs in its Complaint, where they are
referred to as a "fine,"33 leads the Board to suspect this
was so, "it cannot substitute that presumption for the hard
evidence which the Government was required to produce in
this litigation." See Sterling Printing, Inc., supra, Slip
op. at 82. Without proof that excess reprocurement costs
were assessed, and in what amount, that issue is not "ripe
for consideration." Id., Slip op. at 48. Therefore, the
Board will remand the case to the Contracting Officer for
the submission of further evidence on the question of
excess costs in accordance with the Order below.34 See
R.C. Swanson Printing and Typesetting Company, supra, Slip
op. at 52-53, fn. 28.
ORDER
Considering the record as a whole, the Board finds and
concludes: (1) the Appellant was offered an opportunity to
cure the defects before the contract was terminated and the
default was not procedurally defective; and (b) the
Respondent did not breach its implied duty to cooperate with
the Contractor in the performance of the contract in this
case. Thus, the Appellant has not shown that its failure to
perform arose from causes beyond its control and without its
fault or negligence. THEREFORE, the Contracting Officer's
decision terminating the Appellant's contract for default is
hereby AFFIRMED, and the appeal is DENIED.
With respect to the issue of excess reprocurement costs, the
Board is unable to determine the extent of the Appellant's
liability on the state of this record. THEREFORE, the appeal
is REMANDED to the Contracting Officer for the submission of
additional evidence on that question, including, inter alia,
proof that such costs were assessed against the Appellant.
FURTHERMORE, the Contracting Officer shall submit such proof
to the Board within 30 days from the date of receipt of this
Decision and Order.
It is so Ordered.
July 31, 1995 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
submitted to the Board on July 18, 1990. GPO Instruction
110.12, Subject: Board of Contract Appeals Rules of Practice
and Procedure, dated September 17, 1984, Rule 4(a) (Board
Rules). It will be referred to herein as the R4 File, with
an appropriate Tab letter also indicated. The R4 File
contains 23 documents identified as Tab A through Tab W.
2 By letter dated July 24, 1990, the Appellant advised the
Board that it had selected the optional Accelerated
Procedure, and desired a hearing on its appeal. Board Rules,
Rules 8, 12.1(b), 12.3, and 17 though 25. However, numerous
delays have characterized this case from the beginning. For
example, although the Board docketed the Contractor's appeal
letter on June 15, 1990, an agency reorganization soon
afterward resulted in the reassignment of the Board's only
Administrative Judge to another senior position within GPO,
and a change in the composition of the Board. Consequently,
for administrative reasons the matter was held in abeyance
for nearly two years. Furthermore, there were four
postponements in the dates set by the Board for a prehearing
telephone conference before one was finally conducted on
April 16, 1993. See Report of Prehearing Telephone
Conference, dated June 4, 1993, p. 1 (RPTC). During the
conference, the Appellant withdrew its Accelerated Procedure
election because it was no longer feasible to resolve the
dispute within the time limits established for that optional
procedure under the Board Rules. See RPTC, p. 2, fn. 1.
Moreover, while the Board scheduled this matter for a
hearing, as requested by the Contractor, because the
prehearing conference disclosed material disputes of fact,
see RPTC, p. 6, the parties subsequently filed a joint
motion, which the Board granted, asking it to decide the
appeal without a hearing on the basis of the existing record
and any supplemental affidavits, documents, and briefs which
they might file. See Order Granting Joint Motion For
Submission Without a Hearing, dated July 16, 1993.
Accordingly, even though the Appellant initially elected the
optional Accelerated Procedure, this matter has been
processed under the Board's regular procedure for handling
cases submitted on the record without a hearing. Board
Rules, Rule 11. See, Universal Printing Co., GPO BCA 09-90
(June 22, 1994), Slip op. at 2, fn. 3, 1994 WL 377586;
McDonald & Eudy Printers, Inc., GPO BCA 06-91 (May 6, 1994),
Slip op. at 1, fn. 2, 1994 WL 377581.
3 The record on which this decision is based consists of: (a)
the Appellant's Notice of Appeal, dated June 14, 1990; (b)
the R4 File; (c) the Appellant's Complaint, dated July 24,
1990; (d) the Appellant's letter, dated August 15, 1991,
submitting additional information in accordance with Rule
4(b) of the Board Rules, namely correspondence from Yellow
Freight System, Inc. to the Contractor, dated August 15, 1990
(hereinafter App. Exh. A); (e) the Respondent's Answer, dated
August 27, 1990; (f) the Report of Prehearing Telephone
Conference, dated June 4, 1993; (f) the Appellant's letter,
dated June 15, 1993, clarifying a statement made at the
prehearing conference; and (g) the Respondent's letter, dated
July 12, 1993, enclosing declarations from Contracting
Officer Mierson, the PRPPO Compliance Officer, Arthur
Dougherty, and Printing Specialist Jeff D. MacAfee of GPO's
central office Quality Assurance Section (QAS) (hereinafter
referred to as the Mierson, Dougherty, and MacAfee
Declarations, respectively). Board Rules, Rule 13(a). The
facts, which are essentially undisputed, are recited here
only to the extent necessary for this decision.
4 The record discloses that the Appellant was one of five (5)
contractors submitting bids on the contract (R4 File, Tab B).
The second low offeror was Quadra Graphics with a bid of
$16,736.00 (R4 File, Tab B).
5 The record shows that the Contractor was to ship 411 copies
to the Navy in Philadelphia, and 192 copies to 41 different
Navy addresses (R4 File, Tab A). The remaining two copies
were samples which were to be sent to the Navy in Warminster,
Pennsylvania, along with the original negatives (R4 File, Tab
A).
6 In addition to QATAP, the contract was also governed by
applicable articles of GPO Contract Terms, Solicitation
Provisions, Supplemental Specifications, and Contract
Clauses, GPO Publication 310.2, effective December 1, 1987
(Rev. 9-88) (GPO Contract Terms) (R4 File, Tab A).
7 The Government agreed to the new delivery date as part of a
bilateral resolution of another problem involving the
contract. As indicated, the Purchase Order called for
reductions in the differing camera copy provided to the
Contractor of 65 percent and 61 percent, respectively (R4
File, Tab A). However, the record shows that the Appellant
received some copy marked with instructions for a 75 percent
reduction instead, which it discovered could not be
accommodated on the page (a further reduction to 65 percent
was required to fit the sheet perfectly) (R4 File, Tabs D and
E). See Mierson Declaration, � 5. To offset its failure to
meet the contract due date caused by the delay in the receipt
of the paper stock, and by way of consideration to establish
a new delivery date, the Appellant offered to produce the new
films at its own expense (R4 File, Tab D). The Government
accepted this offer. See Mierson Declaration, � 5.
8 The record also shows that on or about November 20, 1989,
nearly two weeks after the revised delivery date had passed,
the Navy asked the PRPPO to find out what had happened to the
shipment (R4 File, Tab J). Accordingly, the Compliance
Officer called the Appellant, who placed a tracer with its
shipper, and reported back that the books were in
Philadelphia and should be delivered on November 21, 1989 (R4
File, Tab J). Despite the fact that the Appellant missed all
three due dates established under the contract in this case
(September 12, 1989, October 25, 1989, and November 8, 1989),
the Respondent, in effect, waived its right to default the
Contractor on those occasions, which could have been done
without a "Cure Notice." See Shepard Printing, GPO BCA 23-92
(April 29, 1993), Slip op. at 13, 1993 WL 526848; Stephenson,
Inc., GPO BCA 2-88 (December 20, 1991), Slip op. at 19-20,
1991 WL 439274; GPO Contract Terms, Contract Clauses, � 20(a)
(2).
9 The Appellant recalls this conversation as taking place on
January 9, 1990 (R4 File, Tab M).
10 The record indicates that the Navy facility in question is
a tightly secured area, and any persons attempting to gain
entry are required to sign-in at the guard posts. See
Mierson Declaration, � 9.
11 The record shows that the Navy has a specific procedure
which must be followed before materials can be removed from
the facility. In this case, the correct procedure was: (a)
the Contractor notifies GPO when it is ready to pick-up the
books from the Navy; (b) GPO then telephones its Navy contact
to make arrangements for the pick-up; (c) the Navy contact in
turn telephones the activity Data Manager; (d) the Data
Manager sends a letter to Stock Control requesting a release
of the books from stock; (e) the Stock Control Clerk notifies
Receipt Control Clerk that the Appellant would be picking up
the rejected order and to have it ready; and (f) the
Contractor picks up the rejected books from the Receipt
Control Clerk. See R4 File, Tab W. These steps were never
followed. Id.
12 Under the Respondent's printing procurement regulation,
the Contracting Officer must submit a proposal to terminate a
contract for default to the CRB for its review and
concurrence. See, Printing Procurement Regulation, GPO
Publication 305.3 (September 1, 1988), Chap. I, Sec. 10, �
4.b.(i) (PPR). See also, Hurt's Printing Co., Inc., GPO BCA
27-91 (January 24, 1994), Slip op. at 7, fn. 10, 1994 WL
275098; Graphics Image, Inc., GPO BCA 13-92 (August 31,
1992), Slip. op. at 9, fn. 10, 1992 WL 487875.
13 The inspection was conducted by MacAfee, who stated that
he proceeded as follows: "Prior to starting the inspection, I
consulted MIL-STD-105D (Military Standard Sampling Procedures
and Tables for Inspection by Attributes). According to MIL-
STD-105D, since the size of the printing was 605 [copies], I
would have to inspect from a sample size of 16. From the 16
copies sent by the Philadelphia Regional Office, I randomly
pulled books and began measuring the type and quality with a
Print Contrast Meter (PCM). I would take three measurements
with the PCM, mark the results on the page, and average the
three results. [Citation omitted.] I also had the original
camera copy which had been furnished by the Government to the
contractor. Under MIL-STD-105D, only five defects are
required to reject the product. After finding five defects,
I discontinued [the] inspection and concluded that the
product was rejectable under QATAP for attribute, P-7, Type
Quality and Uniformity. [Citation omitted.]" See MacAfee
Declaration, � 4.
14 In that regard, the PPR lists eight factors which "[t]he
Contracting Officer shall consider" in determining whether to
terminate a contract for default: (i) the provisions of the
contract and applicable laws and regulations; (ii) the
specific failure of the contractor and the excuses, if any,
made by the contractor for such failure; (iii) the
availability of the supplies or services from other sources;
(iv) the urgency of the need for the supplies or services and
the period of time which would be required to obtain sources
as compared with the time in which delivery could be obtained
from the delinquent contractor; (v) the effect of a
termination for default upon the contractor's capability as a
supplier under other contracts; (vi) the effect of a
termination for default on the ability of the contractor to
liquidate progress payments; (vii) the availability of funds
to finance repurchase costs which may prove uncollectible
from the defaulted contractor, and the availability of funds
to finance termination costs if the default is determined to
be excusable; and (viii) any other pertinent facts and
circumstances. See PPR, Chap. XIV, Sec. 1, � 3.c.(3). See
also Shepard Printing, supra, Slip op. at 26, fn. 31;
Graphics Image, Inc., supra, Slip. op. at 26, fn. 31. The
PPR essential repeats the requirements contained in the
Federal Acquisition Regulation (FAR). See FAR � 49.402-3(f)
(1)-(7).
15 At the prehearing conference, the Appellant stated that it
did not know what happened to the books after their rejection
by the Government. See RPTC, p. 5. In that regard, on
August 15, 1990, when App. Exh. A was submitted to the Board,
the rejected product was apparently still being stored by the
Navy. Gallagher's memorandum of June 28, 1990, says that the
Navy would continue to hold the rejected stock until the
default is resolved (R4 File, Tab W). However, the
Contracting Officer states in her declaration: "I
subsequently learned that the [Navy] retained the materials
for 6 months, and when the contractor did not pick them up
after that time period, the [Navy] discarded the materials
because of lack of storage space." See Mierson Declaration,
� 12. Therefore, since the Contractor was defaulted on March
16, 1990, the Navy probably kept the rejected books until
they were disposed of sometime in September 1990.
16 During the prehearing conference, Counsel for GPO
construed the Appellant's stated understanding in its letter
of February 28, 1990, that the books were rejected based on
"printed contents only and not the plastic binder covers and
plastic tab Index Dividers which are part of the set and also
manufactured by us," see R4 File, Tab P, as not saying the
that the product was improperly rejected by the Respondent.
See RPTC, p. 4. After reviewing the prehearing conference
report, Counsel for the Appellant noted his disagreement with
that conclusion. See Letter from Frederic G. Antoun, Jr.,
Esq. to Hon. Stuart M. Foss, GPO Board of Contract Appeals,
dated June 15, 1993. In his view, the Contractor's February
28, 1990, statement "does not constitute an admission that
the printed contents were rejectable." Id., p. 1. Instead,
he thought the Appellant was merely accepting as true and
accurate GPO's own statements about the defects in the books
until it had a chance to confirm them, after which it would
correct any deficiencies "in a timely manner." Id. Since
the Respondent failed to provide the Contractor with samples
of the defects, and as the original order could not be picked
up, whether or not the product was actually rejectable was
still open to question. Id., p. 2.
17 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 Co., ASBCA No. 14856, 70-1 BCA � 8,312.
18 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); Foremost Mechanical Systems, Inc., GSBCA
Nos. 12335, 12384, 95-1 BCA � 27,382.
19 The United States Claims Court was renamed the United
States Court of Federal Claims on October 29, 1992, pursuant
to Title IX of the Federal Courts Administration Act of 1992,
Pub. L. No. 102-572, 106 Stat. 4506 (1992).
20 Clauses such as � 20(a)(1)(i) have uniformly been held to
apply not only to late deliveries of the contracted goods,
Stephenson, Inc., supra, Slip op. at 19 (citing, Chavis and
Chavis Printing, supra, Slip op. at 12-15; Jomar Enterprises,
Inc., GPO BCA 13-86 (May 25, 1989), Slip op. at 3-5), but
also to the timely delivery of nonconforming supplies. Id.
(citing, KOPA Kopier Produckte, ASBCA No. 29,471, 85-3 BCA �
18,367; Meyer Labs, Inc., ASBCA No. 18,347, 77-1 BCA �
12,539). See also, Delta Industries, Inc., DOT BCA No. 2601,
94-1 BCA � 26, 318; Industrial Data Link Corp., ASBCA No.
315, 91-1 BCA � 23,382. The rationale for this dual
application of the default clause is simple. As explained in
a leading text on the subject of public contracts: "While
these clauses explicitly make untimely performance the basis
for the default action, it is important to recognize that
nearly every Government contract spells out the contractor's
required performance in terms of the nature of the product or
service which is to be delivered or performed as well as the
time by which this performance is to be completed. Thus, in
order for the contractor to render `timely performance,' two
basic requirements must be satisfied: (1) the product,
service or construction work must conform to the required
design/performance specifications, and (2) the product must
be delivered or the work completed by the specified due date.
Citing, Radiation Technology, Inc. v. United States, 177 Ct.
Cl. 227, 366 F.2d 1003 (1966); Nash Metalware Co., GSBCA No.
11951, 94-2 BCA � 26,780; Air, Inc., GSBCA No. 8847, 91-1 BCA
� 23,352." [Emphasis added.] John Cibinic, Jr. & Ralph C.
Nash, Jr., Administration of Government Contracts 3d ed.,
(The George Washington University, 1995), p. 908 (hereinafter
Cibinic & Nash).
21 For the "substantial compliance" rule 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.
Radiation Technology, Inc. v. United States, supra. See
generally Cibinic & Nash, pp. 912-17. The Radiation
Technology doctrine is clearly an encroachment on the
Government's right to terminate. However, it is also
apparent that the rule merely stays for a reasonable period
the Government's right to terminate, and not its right to
insist on 100 percent conforming goods; i.e., the doctrine
concerns time, not the supplies themselves. Furthermore, the
"substantial compliance" rule is used to prevent surprise
rejections by the buyer after a contractor's timely shipment
in situations where performance departs in only minor
respects from that which has been promised. See Stephenson,
Inc., supra, Slip op. at 50-51, fn. 54 (citing Environmental
Tectonics Corp., ASBCA No. 20340, 76-2 BCA � 12,134). A
contractor who ships nonconforming goods is only protected by
the Radiation Technology rule to the extent that he/she can
satisfy all elements of the test. In most cases involving the
"substantial compliance" doctrine, the timeliness of the
contractor's shipment is generally not an issue. Rather, the
dispute usually involves the resolution of questions of
"reasonable belief" and the seriousness of the defects.
Absent such a "reasonable belief" by the contractor and proof
that only minor defects are involved, the supplier is not
entitled to the protection of the "substantial compliance"
principle. See Stephenson, Inc., supra, Slip op. at 51, fn.
55 (citing Norwood Precision Products, Textron, Inc., ASBCA
Nos. 38095, 38196, 90-3 BCA � 23,200; Introl Corp., ASBCA No.
27,610, 85-2 BCA � 18,044 at 90,578; Environmental Tectonics
Corp., supra, 76-2 BCA � 12,134).
22 As indicated in note 8 supra, the Appellant missed all
three contract due dates for the original shipment in this
case (September 12, 1989, October 25, 1989, and November 8,
1989). Nonetheless, it was not defaulted for a failure to
make a timely delivery. Even so, however, the Appellant's
poor "track record" with regard to timeliness is not without
its secondary consequences under the Radiation Technology
rule. That is, in light of this persistent untimeliness,
there is a strong inference that the Contractor could not
have given the Government what it wanted within a "reasonable
time." See Hurt's Printing Co., Inc., supra, Slip op. at 21;
Shepard Printing, supra, Slip op. at 22.
23 Whether a defect is minor is a question of fact, based
upon a consideration of: (a) whether the items are usable;
(b) the nature of the product; (c) the urgency of the
Government's needs; and (d) the extent of repair and
adjustment necessary to produce a fully conforming product.
See Cibinic & Nash, p. 915 (citing Kain Cattle Co., ASBCA No.
17124, 73-1 BCA � 9,999). Numerous minor defects, when
considered together, can constitute a major nonconformity.
See Astro Science Corp. v. United States, 200 Ct. Cl. 354,
471 F.2d 624 (1973); Environmental Tectonics Corp., supra;
Kain Cattle Co., supra. Furthermore, even if a defect is
minor, if it is not readily correctable the "substantial
compliance" doctrine will not apply. See Inforex, Inc.,
GSBCA No. 3859, 76-1 BCA � 11,679; Levelator Corp., VACAB No.
1069, 74-2 BCA � 10,763; Nuclear Equipment Corp., NASABCA No.
1170-18, 73-1 BCA � 9,815.
24 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, GPOCAB 7-84 (January 7, 1986)
Slip op. at 6 (citing Thomas W. Yoder Co., Inc., VACAB No.
997, 74-1 BCA � 10,424). It should be noted that Vogard
Printing was decided by one of the ad hoc contract appeals
panels which considered appeals from final decisions of GPO
Contracting Officers prior to the establishment of the Board
in 1984. GPO Instruction 110.10C, Subject: Establishment of
the Board of Contract Appeals, dated September 17, 1984.
Decisions of these ad hoc panels are cited by the Board in
its decisions as "GPOCAB." While the Board is not bound by
the decisions of the ad hoc panels, its policy is to follow
their rulings where applicable and appropriate. See,
Universal Printing Co., supra, Slip op. at 11, fn. 9; Shepard
Printing, supra, Slip op. at 14, fn. 19; Stephenson, Inc.,
supra, Slip op. at 18, fn. 20; Chavis and Chavis Printing,
supra, Slip op. at 9, fn. 9.
25 GPO's printing procurement regulation, like the
procurement rules of other Federal agencies, recommends the
issuance of a show cause letter, "where practicable," prior
to the default termination of a contract for failure to make
timely deliveries or perform services within the time
required by the contract. See PPR, Chap. XIV, Sec. 1, � 3(c)
(1). Cf. Lewis B. Udis v. United States, 7 Cl. Ct. 379,
385-86 (1985). However, the omission of a "show cause
notice" by the Government is not generally a procedural
defect to a termination based on the contractor's failure to
make timely deliveries or perform timely services. See
Shepard Printing, supra, Slip op. at 14, fn. 20; Stephenson,
Inc., supra, Slip op. at 20, fn. 22. Accord Kit Pack Co.,
Inc., supra, 89-3 BCA at 111,486-87 (citing H. N. Bailey &
Associates, ASBCA No. 21,300, 77-2 BCA � 12,681).
26 See Cibinic & Nash, pp. 295-300. There is also an implied
negative obligation on the part of the Government that it
will not do that which will interfere with the contractor in
the performance of the contract. Id., at pp. 300-05. See
e.g., Nanofast, Inc., ASBCA No. 12,545, 69-1 BCA � 7,566
(citing Fern E. Chalender d/b/a Chalender Construction Co. of
Springfield, Missouri v. United States, 127 Ct. Cl. 557
(1954); George A. Fuller Co. v. United States, 108 Ct. Cl.
70, 69 F.Supp. 409 (1947); Restatement, Contracts, �� 295,
315). Both implied duties are part of every Government
contract. See George A. Fuller Co. v. United States, supra.
27 Thus, the record shows that while the time for performance
of the original order was 18 days (August 25, 1989, to
September 12, 1989), there were 39 days between the date GPO
notified the Appellant of the defects and the need to reprint
the product (January 8, 1990), and the date established for
shipment of the reprints (February 16, 1990); i.e., more than
double the amount of time (R4 File, Tabs A, L and N).
28 The appeals board's rationale in Nanofast was based on the
standard inspection clause in the Armed Services Procurement
Regulation (ASPR) which gave the contractor specified rights
to replace or correct nonconforming supplies. ASPR 7-103.5.
Indeed, for years the ASBCA applied the cooperation rule only
in cases where the Government had an affirmative obligation
under the contract, such as performing inspections. See,
Quality Controlled Stamping, Inc., ASBCA No. 19,074, 74-2 BCA
� 10,757, at 51,149 (citing, Nanofast, Inc., supra).
However, an examination of more recent cases warrants the
conclusion that apart from the express language of the
contract, the Government's duty to cooperate can be imputed
from responsibilities inherent in the contractual
relationship itself. See, e.g., Spectrum Leasing Corp.,
supra, 90-3 BCA at 115,437.
29 An anticipatory breech occurs when there is a "positive,
definite, unconditional, and unequivocal manifestion of
intent . . . on the part of the contractor . . . not to
render the promised performance . . .". See United States v.
DeKonty Corp., 922 F.2d 826, 828 (Fed. Cir. 1991) (citing
Cascade Pacific International v. United States, 773 F.2d 287,
293 (Fed. Cir. 1985)). See also Sterling Printing, Inc.,
supra, Slip op. at 39. Accord Altina Trucking, PSBCA No.
3341, 93-3 BCA � 26,256; Twigg Corp., NASA BCA No. 62-0192,
93-1 BCA � 25,318; A. N. Xepapas, AIA, VABCA No. 3087, 91-2
BCA � 23,799. Such clear and affirmative proof of the
Contractor's intent is not present in this case.
30 See note 11 supra.
31 Moreover, there is nothing in Yellow Freight's letter
which would tend to show any wrongful interference by the
Government with the carrier's attempt to pick up the rejected
books. Cf. Kellner Equipment, Inc., ASBCA No. 26006, 82-2
BCA � 16.077 (evidence that military policemen checked the
identification of the contractor's employees before allowing
them on the job site did not excuse the delay which resulted
in default termination for failure to complete performance by
the due date, since it is anticipated that policemen will
take such action). Rather, it is clear that the carrier's
failure to retrieve the rejected shipment was due to
insufficient information about where the publications were
located, instead of any lack of cooperation by Navy
employees. See App. Exh. A.
32 The Respondent's procedure for recovering of excess
reprocurement costs is set forth in the PPR, which states:
"If repurchase is effected at a price in excess of the
supplies terminated, the Contracting Officer shall: (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 the
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." See PPR,
Chap. XIV, Sec. 1, � 3.f.(3).
33 The Contractor thinks that it is responsible for the
entire $20,103.72 due Quadra Graphics on the reprocurement
contract (the $20,514.00 repurchase price less the 2 percent
prompt payment discount, see Mierson Declaration, Attachment
2 (Payment Terms). See Complaint. However, this
understanding is clearly in error. By the express terms of
the "Default" clause, which merely states the existing law, a
defaulted contractor is only responsible for the excess costs
of the reprocured supplies or services. See GPO Contract
Terms, Contract Clauses, � 20(b). Thus, the maximum extent
of the Contractor's liability here is $5,685.72, which
represents the difference between the Appellant's bid
($14,418.00) and Quadra Graphics's repurchase offer
($20,103.72). See e.g., K.C. Printing, supra, Slip op. at 4
(excess costs computed as the difference between original bid
of defaulted contractor and the offer of the fourth lowest
bidder, who happened to be the next lowest responsible
offeror). Also see Sterling Printing, Inc., supra, Slip op.
18, fn. 27 (liability figured as the repurchase price minus
the total of the original contract price plus the price of a
contract modification). As the Board observed in Sterling:
"Generally, excess reprocurement costs are figured on the
basis of the reasonable reprocurement price less the original
contract price. [Citations omitted.] 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. [Citations omitted.]"
Sterling Printing, Inc., supra, Slip op. at 84.
34 In addition to proof of assessment, the record is also
silent with regard to the exact steps taken by the
Contracting Officer to recover excess costs, and there is
nothing to show if Quadra Graphics was paid. Such evidence
is essential to sustain the Government's claim for excess
reprocurement costs. See K.C. Printing, Co., supra, Slip op.
at 20-26.