BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
STUART M. FOSS
Administrative Law Judge
Appeal of R.C. SWANSON PRINTING AND TYPESETTING COMPANY
Docket No. GPO BCA 31-90
Jacket No. 262-267
Purchase Order 82905
Program C460-S
February 6, 1992
DECISION AND ORDER
This appeal, timely filed by R.C. Swanson Printing and
Typesetting Company, 5205 York Road, Baltimore, Maryland
21212 (hereinafter Appellant), is from the final decision,
dated August 23, 1990, of Contracting Officer, Mr. Julian
Lowery (hereinafter Contracting Officer), of the U.S.
Government Printing Office, North Capitol and H Streets,
NW., Washington, DC 20401 (hereinafter Respondent or GPO),
partially terminating the Appellant's contract identified as
Purchase Order 82905, Program C460-S, Jacket No. 262-267,
for default because of its "continuing failure to comply
with the delivery requirements" (R4 File, Tab S). 1/ For
the following reasons, the decision of the Contracting
Officer is hereby AFFIRMED. 2/
BACKGROUND
The relevant facts in this appeal are not in dispute and are
set forth here only to the extent necessary for the Board's
decision. The roots of this appeal lie in a Printing and
Binding Requisition (SF-1), dated October 1, 1989, from the
U.S. Department of Labor (Labor) for the procurement of Area
Wage Surveys under Program 460-S (R4 File, Tab A). On March
28, 1990, the Respondent issued an Invitation for Bids (IFB)
for Program 460-S, soliciting bids from potential
contractors for the production of Area Wage Survey
Summaries/Bulletins and Industry Wage Survey
Summaries/Bulletins for the Department of Labor (hereinafter
referred to as AWSSs, AWSBs, IWSSs, and IWSBs) (R4 File, Tab
B, p. 1). The successful bidder was to receive a "Single
Award" term contract, for the period beginning May 1, 1990,
and ending April 30, 1990 (R4 File, Tab B, p. 1).
Furthermore, like all such contracts, Program C460-S was to
be governed by applicable articles of GPO Contract Terms,
GPO Publication 310-2, effective December 1, 1987 (Rev.
9-88) (1988 Contract Terms), and GPO's Quality Assurance
Through Attributes Program, GPO Publication 310.1, Revised
September 1986 (QATAP) (R4 File), Tab B, p. 2). 3/
The work covered by Program C460-S was ". . . the production
of self and separate cover publications requiring such
operations as film making, printing, binding, packing, and
distribution" (R4 File, Tab B, p. 5). The following IFB
provisions are particularly pertinent to this appeal:
ORDERING: Items to be furnished under the contract shall be
ordered by the issuance of print orders by the Government. Orders
may be issued under the contract from May 1, 1990 through April
30, 1991. All print orders issued hereunder are subject to the
terms and conditions of the contract. The contract shall control
in the event of conflict with any print order. When mailed, a
print order shall be "issued" for the purposes of the contract
at the time the Government deposits the order in the mail (R4
File, Tab B, p. 3).
* * * * * * * * * *
REQUIREMENTS: This is a requirements contract for the items and
for the period specified herein. Shipment / delivery of items
or performance of work shall be made only as authorized by
orders
�
issued in accordance with the clause entitled "Ordering." The
quantities of items specified herein are estimates only, and are
not purchased hereby. Except as may be otherwise provided in
this contract, if the Government's requirements for the items set
forth herein do not result in orders in the amounts or
quantities described as "estimated", it shall not constitute the
basis for an equitable price adjustment under this contract (R4
File, Tab B, p. 4). [Emphasis added.]
Except as otherwise provided in this contract, the Government
shall order from the contractor all the items set forth which are
required to be purchased by the Government activity identified
on page 1 (R4 File, Tab B, p. 4).
* * * * * * * * * *
If shipment/delivery of any quantity of an item covered by the
contract is required by reason of urgency prior to the earliest
date that shipment/ delivery may be specified under this
contract, and if the contractor will not accept an order
providing for the accelerated shipment/delivery, the Government
may procure this requirement from another source (R4 File, Tab B,
p. 4).
The Government may issue orders which provide for
shipment/delivery to or performance at multiple destinations (R4
File, Tab B, p. 4).
Subject to any limitations elsewhere in this contract, the
contractor shall furnish to the Government all items set forth
herein which are called for by print orders issued in accordance
with the "Ordering" clause of this contract (R4 File, Tab B, p.
4).
* * * * * * * * * *
FREQUENCY OF ORDERS: It is impossible at this time to
predetermine the frequency or number of orders that will be
placed on this contract. However, based upon past history, it
is anticipated that approximately 104-265 orders will be placed
during the contract term as indicated below:
�
Approximate Approximate Approximate
Number of Number of Number of
Publication Orders Per Copies Per Pages Per
�
Title �
Year �
Order �
Area Wage
Survey
Bulletins 20 to 50 250 to 2,500 20 to 56*
Area Wage
Survey
Summaries 50 to 125 300 to 1,200 2 to 12
Industry
Wage Survey
Summaries 30 to 80 300 to 1,500 8 or 12
Industry
Wage Survey
Bulletins 4 to 10 800 to 2,000 40 to 256
* One or two annual issues may be ordered for up to approximately
192 pages.
No more than 30 print orders will be placed in any one month (R4
File, Tab B, p. 5). [Emphasis added.]
* * * * * * * * * *
SCHEDULE: Adherence to this schedule must be maintained.
Contractor must not start production of any job prior to receipt
of the individual print order.
* * * * * * * * * *
The following schedule begins the workday after notification of
the availability of print order and furnished material.
Complete production, distribution and mailing must be made within
five workdays.
Multiple orders may be placed in a single day.
Schedule for orders placed in excess of the stated limitations
(30 per month) shall be arranged by mutual agreement with the
contractor.
The ship/delivery dates indicated on the print order is the date
that products delivering f.o.b. destination must be received at
the destination(s) specified and the date that products
distributed f.o.b. contractor's city must be mailed/shipped (R4
File, Tab B, p. 9). [Emphasis added.]
�
The record discloses that the IFB was sent to 39
contractors, 11 of whom returned responsive bids (R4 File,
Tabs D and F). One of the responding bidders was the
Appellant, who submitted an offer, dated April 17, 1990, to
do the work at an estimated cost of $53,695.90 (R4 File,
Tab C). The record also shows that the Appellant's bid was
over 30 percent lower than the next lowest bidder. When the
Appellant was asked to review its price quotations, however,
it confirmed them (R4 File, Tab F). Accordingly, on April
30, 1990, the Appellant was awarded the contract for Program
C460-S by the issuance of Purchase Order 82905 (R4 File, Tab
G).
The first Print Order under Program C460-S was issued to the
Appellant by Labor on May 15, 1990 (R4 File, Tab AA). 4/
Between May 15, 1990 and August 23, 1990, when the contract
was terminated, 69 Print Orders were issued to the
Appellant, as follows:
�
Print Order�
Date Issued�
Scheduled Delivery Date
�
20001 May 15, 1990 May 22, 1990
20002 May 15, 1990 May 22, 1990
20003 May 16, 1990 May 23, 1990
20004 May 16, 1990 May 23, 1990
20005 May 16, 1990 May 23, 1990
20006 May 17, 1990 May 24, 1990
20007 May 17, 1990 May 24, 1990
20008 May 30, 1990 June 6, 1990
20009 May 30, 1990 June 6, 1990
20010 May 30, 1990 June 6, 1990
20011 May 30, 1990 June 6, 1990
20012 June 1, 1990 June 11, 1990
20013 June 1, 1990 June 11, 1990
20014 June 1, 1990 June 11, 1990
20015 June 1, 1990 June 11, 1990
20016 June 1, 1990 June 11, 1990
20017 June 1, 1990 June 11, 1990
20018 June 5, 1990 June 13, 1990
20019 June 5, 1990 June 13, 1990
20020 June 5, 1990 June 13, 1990
20021 June 5, 1990 June 13, 1990
20022 June 5, 1990 June 13, 1990
20023 June 5, 1990 June 13, 1990
20024 June 8, 1990 June 18, 1990
20025 June 8, 1990 June 18, 1990
20026 June 8, 1990 June 18, 1990
20027 June 8, 1990 June 18, 1990
20028 June 8, 1990 June 18, 1990
20029 June 12, 1990 June 20, 1990
20030 June 12, 1990 June 20, 1990
20031 June 12, 1990 June 20, 1990
20032 June 12, 1990 June 20, 1990
20033 June 12, 1990 June 20, 1990
20034 June 12, 1990 June 20, 1990
20035 June 12, 1990 June 20, 1990
20036 June 19, 1990 June 27, 1990
20037 June 19, 1990 June 27, 1990
20038 June 22, 1990 July 2, 1990
20039 June 22, 1990 July 2, 1990
20040 June 22, 1990 July 2, 1990
20041 June 22, 1990 July 2, 1990
20042 July 2, 1990 July 11, 1990
20043 July 2, 1990 July 11, 1990
20044 July 2, 1990 July 11, 1990
Print Order�
Date Issued�
Scheduled Delivery Date
�
20045 July 3, 1990 July 12, 1990
20046 July 3, 1990 July 12, 1990
20047 July 12, 1990 July 20, 1990
20048 July 18, 1990 July 26, 1990
20049 July 18, 1990 July 26, 1990
20050 July 18, 1990 July 26, 1990
20051 July 31, 1990 August 7, 1990
20052 July 31, 1990 August 7, 1990
20053 July 31, 1990 August 7, 1990
20054 July 31, 1990 August 7, 1990
20055 July 31, 1990 August 7, 1990
20056 August 6, 1990 August 14, 1990
20057 August 6, 1990 August 14, 1990
20058 August 6, 1990 August 14, 1990
20059 August 6, 1990 August 14, 1990
20060 August 6, 1990 August 14, 1990
20061 August 6, 1990 August 14, 1990
20062 August 10, 1990 August 20, 1990
20063 August 10, 1990 August 20, 1990
20064 August 15, 1990 August 23, 1990
20065 August 15, 1990 August 23, 1990
20066 August 15, 1990 August 23, 1990
20067 August 20, 1990 August 28, 1990
20068 August 20, 1990 August 28, 1990
20069 August 8, 1990 August 15, 1990
(R4 File, Tab AA).
The record shows that on June 26, 1990, John Fennell,
Labor's Chief, Production Services, sent a memorandum to the
Respondent's Customer Service Division (CSD) reporting that
publications covered by seven of the Print Orders issued to
the Appellant�"
numbers 20008, 20015, 20024, 20025, 20026, 20027, and 20029�"
had not been delivered on time and were "now long overdue" (R4
File, Tab J). 5/ According to Fennell, these delinquencies were
in addition to two other complaints raised by Labor earlier with
regard to the Appellant's performance (R4 File, Tab J). 6/
Consequently, Fennell believed that "at this point" the
Appellant's performance was "unacceptable," and unless there was
immediate improvement, Labor ". . . would like to see action
taken to get a new vendor" (R4 File, Tab J).
On June 27, 1990, after being informed of Fennell's
complaint, Jack Scott, who was the Contracting Officer at
the time, telephoned the Appellant's plant and spoke to
Larry Ford (R4 File, Tab J). Ford told Scott that the
missing Print Orders would be shipped between June 28, 1990
and July 2, 1990 (the original scheduled delivery dates for
these Print Orders were between June 6, 1990 and June 20,
1990) (R4 File, Tab J). Furthermore, Ford advised Scott
that the reason for the delay was "machine problems" (R4
File, Tab J).
On July 2, 1990, Scott mailed a "Cure Notice" to the
Appellant notifying it that the Respondent considered the
failure to meet the delivery schedule for the above seven
Print Orders ". . . a condition that is endangering
performance of the balance of the contract in accordance
with its terms" (R4 File, Tab J). 1988 Contract Terms, �
20.(a)(1)(ii). Accordingly, the Appellant was offered an
opportunity to inform the Respondent, in writing, within 10 days
of the measures that it had taken or would take to cure such
condition (R4 File, Tab J). 1988 Contract Terms, �
20.(a)(2). See also, GPO Printing Procurement Regulation
(GPOPPR), GPO Publication 305.3, Chap. XIV, Sec. 1, �
3.c.(2). Furthermore, the Appellant was warned that unless the
unsatisfactory condition had been cured, the Respondent might
terminate the balance of the contract for default pursuant to
the "Default" Clause of the GPO contract terms (R4 File, Tab J).
1988 Contract Terms, �
20.(a)(1)(i),(ii).
The record shows that on July 3, 1990, the Respondent's CSD
received another complaint from Fennell about the poor
quality of service the Appellant was providing under
contract (R4 File, Tab J). In this instance, Fennell told
the Respondent that now 20 Print Orders�"
numbers 20006, 20008, 20009, 20016, 20017, 20018, 20019, 20020,
20021, 20022, 20023, 20025, 20026, 20027, 20029, 20030, 20031,
20032, 20033 and 20036�"
were "due or past due" (R4 File, Tab J). These 20 Print Orders
represented nearly half of all the orders issued by Labor in May
and June 1990 with delivery due dates prior to July 3, 1990 (41
Print Orders). According to Fennell, the Appellant's late
deliveries were causing problems for the Superintendent of
Documents' operation because the AWSBs and IWSBs were sent out in
numerical order (R4 File, Tab J). In light of this, Fennell
reiterated his belief that if the Appellant could not provide the
service an immediate change should be made because "[a]t this
rate another two weeks and we will never catch up" (R4 File, Tab
J).
On receiving Fennell's second complaint, Scott made two
telephone calls to Ford�"
one on July 5, 1990 and the other on July 6, 1990�"
in order to find out when the missing Print Orders would be
shipped (R4 File, Tab J). Also on July 6, 1990, Scott prepared
and mailed a second "Cure Notice" to the Appellant, identical to
the first, except that this time the failure to meet the delivery
schedule for the aforementioned 20 Printing Orders was the
condition ". . . endangering performance of the balance of the
contract in accordance with its terms" (R4 File, Tab J). 7/ 1988
Contract Terms, �
20.(a)(1)(ii). Again, the Appellant was offered an opportunity
to inform the Respondent, in writing, within 10 days of the
measures that it had taken or would take to cure such condition,
and it was also informed that if it failed to rectify the
problem the balance of its contract could be terminated for
default (R4 File, Tab J). 1988 Contract Terms, �
20.(a)(1)(i), (ii),(2).
On July 9, 1990, Ford telephoned Scott and gave him new
shipping dates for the 20 delinquent Print Orders (R4 File,
Tab J). In that regard, Ford told Scott that the Appellant
would now ship those Print Orders on the following schedule:
�
Print Order�
�
Promised Shipping Date�
20006 May 29, 1990
20008 July 16, 1990
20009 July 13, 1990
20016 June 11, 1990
20017 June 11, 1990
20018 June 27, 1990
20019 June 26, 1990
20020 June 26, 1990
20021 July 12, 1990
20022 July 12, 1990
20023 July 12, 1990
20025 June 29, 1990
20026 June 29, 1990
20027 June 29, 1990
20029 July 10, 1990
20030 June 27, 1990
20031 June 27, 1990
20032 June 27, 1990
20033 June 27, 1990
20036 July 16, 1990
(R4 File, Tab J). The record also shows that between July 11,
1990, and July 12, 1990, the Respondent made two requests to the
Appellant for the signed shipping receipts for the Print Orders
which Labor claimed had not been delivered (R4 File, Tab J). The
Appellant gave the Respondent those receipts on July 13, 1990 (R4
File, Tab K).
In the meantime, on July 11, 1990, the Appellant wrote to
Scott in response to his "letter dated July 2, 1990," and
basically admitted that there was a problem with delinquent
deliveries but that corrective measures had been taken to
rectify the situation (R4 File, Tab J). As for the specific
reasons which caused the delays, the Appellant stated:
�
First, we had ordered a new press from Heidelberg that was
scheduled for delivery on April 14, 1990. Due to some damaged
parts that had to be obtained from Germany, the press was not
delivered until late June. This press was what we had planned to
run the [Program C460-S] contract on. The press is now in place
and running and we are almost completely caught up on the
contract.
Second, we have one other press that is an older model 2 color
that we were using to perform on this contract until our new
press came in. In late May/early June the press threw several
bushings and seized up. The press required major work to un-
seize it and this is where our lateness developed. Of course,
the break-down was unforeseen, but since that time the press has
been repaired and has been used to help catch up on the [Program
C460-S] contract.
Finally, on top of our two problems, the agency issued more work
than the maximum allowed under the contract. In June the agency
issued 34 Print Orders, almost 15% more than the maximum and
almost 2 1/2 times the minimum expected quantity. Furthermore,
they had an extremely large number of larger jobs (Bulletins) and
many of these had run lengths longer than the contract called for
and all of them
�
were at the maximum end of the scale which ran from 250 to 2500
copies.
Unfortunately, Murphy's Law prevailed, [and] we had several
problems reducing our productive capability, and the agency at
the same time required extraordinary productive capability. . . .
�
(R4 File, Tab J). Despite these difficulties, however, the
Appellant assured the Respondent that "[a]ll is on track and we
expect to be completely current on the contract before July 23"
(R4 File, Tab J).
Although the Appellant promised to have the delivery
situation under control before the end of July, the record
discloses that it was unable to meet the delivery schedule
on nine of the 14 Print Orders issued that month�"
numbers 20042, 20043, 20044, 20045, 20046, 20048, 20049, 20050
and 20051 �"
or approximately 64 percent of them (R4 File, Tab W). 8/
Similarly, of the 14 Print Orders received by the Appellant in
August 1990, publications covered by of them�"
numbers 20057, 20058, 20059, 20060, 2006�"
were sent to Labor after the contract due date (nearly 36
percent) (R4 File, Tab W). Overall, the record shows that of the
69 Print Orders issued to the Appellant under Program C460-S, it
was unable to deliver 43 of them on time (approximately 62
percent) (R4 File, Tab W). 9/
On August 10, 1990, after Labor had notified the Respondent
that the Appellant was late on eight Print Orders which were
due in July 1990�"
numbers 20042, 20043, 20044, 20045, 20046, 20048, 20049, and
20050�"
the Contracting Officer (Lowery) sent a third a "Cure Notice" to
the Appellant (R4 File, Tab O). This "Cure Notice" was identical
in all respects to the previous two, except that the Appellant
was only given five days to inform the Respondent, in writing, of
the measures that it had taken or would take to cure its
continuing failure to meet the contract delivery schedule (R4
File, Tab O). The record shows that the Appellant never replied
to this "Cure Notice."
Consequently, on August 22, 1991, the Contracting Officer
wrote to the Respondent's CRB seeking its concurrence in
terminating the Appellant's Program C460-S contract for
default (R4 File, Tab Q). See, GPOPPR, Chap. I, Sec. 10, �
4.b.(i). As he explained to the CRB, the Contracting Officer
believed the proposed action was justified for the following
reasons:
To date, [the Appellant] has received 61 print orders with 31 of
them being delivered late and 17 of them have not been given a
promised ship date, even though the action ship date has already
passed.
On July 2, 1990 and July 6, 1990 a cure notice was sent to [the
Appellant]. On July 11, 1990 a reply was received from Richard
Swanson. He claimed that their delivery problems were due to
the late arrival of a new press (it had been due in April and
not received until June) and mechanical problems on their old
press. Mr. Swanson expected Program C460-S to be on schedule
by July 23, 1990.
As of August 10, 1990 [the Appellant] was still not on schedule
on Program C460-S. Another cure notice, dated August 10, 1990,
was sent to [the Appellant]. No reply has been received.
* * * * * * * * * *
Based on [the Appellant's] continuing failure to comply with the
delivery requirements of Program C460-S, concurrence is sought
to terminate for default, the balance of the contract and to
procure the requirements with any excess reprocurement costs to
[the Appellant].
�
(R4 File, Tab Q). The CRB gave its approval to the action
recommended by the Contracting Officer that same day (R4 File,
Tab Q). 10/
On August 23, 1990, the Contracting Officer, sent the
Appellant a letter, entitled "Notice of
Termination/Complete," informing the contractor that its
contract ". . . identified as Purchase Order 82905, Program
C460-S, Print Order 20070 and the balance of the contract,
Jacket No. 262-267, is hereby terminated for default because
of your continuing failure to comply with the delivery
requirements" (R4 File, Tab S). The notice also told the
Appellant that the termination action was effective
immediately, and that it was liable for any excess costs in
the event that the Government decided to reprocure the work
covered by the canceled contract (R4 File, Tab S). The
Appellant responded with this appeal to the Board.
POSITIONS OF THE PARTIES
Neither party has filed a brief with the Board in this
appeal. See, Order Closing the Record and Filing of Briefs,
dated August 22, 1991, pp. 2-3. Therefore, the Board's
understanding of their respective positions is based on the
documents in the record, other material they have submitted,
and their statements during the prehearing telephone
conference held on December 12, 1990.
The Appellant admits that it had problems making timely
deliveries of Program C460-S work for the first three months
of its contract. On the other hand, it is uncontroverted in
the record that the last eight Print Orders �"
numbers 20062, 20063, 20064, 20065, 20066, 20067, 20068 and
20069 �"
were received by Labor on the scheduled delivery dates in August
1990 (R4 File, Tab V). However, as the Board understands the
Appellant's position it essentially places the blame for its
failure to timely deliver so many of the early Print Orders on
the Government. In the Appellant's view, if Labor had not
issued an excessive number of Print Orders �"
that is, more than the number of jobs allowed in a given period
by the contract itself �"
the default would not have occurred.
The Appellant supports its position with several arguments,
most of them predicated on averaging Labor's requirements
under the "FREQUENCY OF ORDERS" clause over the life of the
contract (R4 File, Tab V). Indeed, during the prehearing
telephone conference the Appellant stated that it had relied
on such averages to develop its cost estimates for bidding
purposes. PHR, p. 13.
First, the Appellant argues that the "FREQUENCY OF ORDERS"
clause told potential bidders that the range of total orders
over the contract term (12 months) for AWSBs, AWSSs, IWSBs
and IWSSs, would be between 104 and 265 Print Orders (R4
File, Tab B, p. 5). To the Appellant, this meant that it
could expect to receive between 8.6 and 22 orders a month,
or 15.3 jobs per month, on average (R4 File, Tab V). See
also, PHR, p. 13. When this figure is subdivided into work
days (the average month has 23 work days), the Appellant
expected an average of .66 jobs a day. According to the
Appellant, however, Labor issued 69 Print Orders between May
15, 1990 and August 20, 1990 (a period containing 65 work
days),
19
requiring the Appellant to work on an average of 1.06 jobs per
day, or at 160.61 percent of the "average expected volume" (R4
File, Tab V).
Second, the "FREQUENCY OF ORDERS" clause states that "[n]o
more than 30 print orders will be placed in any one month"
(R4 File, Tab B, p. 5). In contrast to the Respondent,
whose position is that the underscored phrase means a
"calendar month," the Appellant interprets those words to
mean "any 30-day period." PHR, pp. 13, 16. The Appellant
argues that the meaning it imputes to these words is the
only fair and equitable interpretation because under the
Government's view 60 Print Orders could be issued in a two
day period�"
30 on the last day of one month and 30 on the first day of the
next. PHR, p. 16. Furthermore, the Appellant believes that the
meaning it ascribes to the phrase is in accord with good business
practices because a reasonable agency would spread the work over
the 30-day period. Id. In this case, however, the Appellant
notes that during the first 30 days of its contract (May 15, 1990
to June 15, 1990), Labor issued 35 Print Orders. When those
orders are considered in light of the 19 work days available to
the Appellant, this meant that it had to accomplish 1.84 jobs per
day, or work at 278.79 percent of the average expected volume (R4
File, Tab V). A similar amount of work was received by the
Appellant over the 30 days between June 4, 1990 and July 5, 1990
(R4 File, Tab V). Although Labor issued less Print Orders
between July 5, 1990 and August 7, 1990 (20), and July 19, 1990
and August 20, 1990 (19), the Appellant nonetheless was compelled
to work on an average of .87 jobs a day (131.83 percent above the
average expected volume) and 1.19 jobs daily (180.30 percent over
expected volume), respectively (R4 File, Tab V). Consequently,
the Appellant contends that the number of Print Orders issued by
Labor not only exceeded the allowable maximums under the
contract for the first 30-day period, but generally was above the
expected volume of work the entire time that it had the contract
(R4 File, Tab V). See also, PHR, p. 15.
Third, the Appellant argues that while the "FREQUENCY OF
ORDERS" clause forecast between 20 and 50 Print Orders for
AWSBs (the "larger jobs"), Labor issued orders for them at a
much faster rate (R4 File, Tab V). In that regard, the
Appellant claims that even though it had the Program C460-S
contract for only 21.57 percent of its term, Labor issued 13
Print Orders for AWSBs during that period, which represented
65 percent of the minimum number of orders and 26 percent of
the maximum number (R4 File, Tab V). Assuming, as the
Appellant does, that an average of 35 AWSBs would be
required a year, then it accomplished 37.14 percent of the
annual work load, which meant that Labor was issuing AWSB
Print Orders at 172.18 percent of the expected volume, or at
an accelerated rate above the maximum number of such orders
(R4 File, Tab V).
Finally, the Appellant points to the "DETERMINATION OF
AWARD" provision of the contract, and states that it
requires the printing of four million impressions and 2,416
pages over the contract term (R4 File, Tab B, p. 11). See
also, PHR, p. 17. The Appellant argues that since it held
the contract for about one-quarter of the contract term, it
expected to accomplish one-fourth of that work, i.e., one
million impressions and 604 pages (R4 File, Tab V). However,
according to the Appellant, it received and completed Print
Orders for two million impressions and 1,052 pages (R4 File,
Tab V). In the Appellant's view, these figures also
demonstrated that Labor was sending it work at twice the
rate estimated in the contract (R4 File, Tab V). 11/ PHR,
p. 17.
The Appellant says that it informed the Contracting Officer
that it was having problems meeting the delivery schedule
because Labor was issuing Print Orders at a rate above the
contractual limits, and also because the installation of its
new press was delayed, but the Respondent was not
sympathetic to this explanation and terminated the contract
for default (R4 File, Tab V). The Appellant believes that
the contract clearly underestimated Labor's needs, and the
Contracting Officer should have shown some understanding of
the situation. In the Appellant's view, the termination for
default in this case was clearly unjustified. Therefore,
since the Appellant had caught up with the Program C460-S
work and was making timely deliveries after August 8, 1990,
it believes that it has demonstrated its ability to meet the
greater demand and, therefore it asks the Board to reinstate
its contract (R4 File, Tab V).
The Respondent, on the other hand, argues that the
Appellant's contract for Program C460-S was properly
terminated for default because of its inability to meet the
contractual delivery dates (R4 File, Tab S). See also, PHR,
p. pp. 12-13. The Respondent observes that as a
"requirements" contract, Program C460-S obligated the
Government to procure all the needed work from the
Appellant. PHR, p. 13. However, the "REQUIREMENTS" clause
of the contract clearly stated that "[t]he quantity of items
specified herein are estimates only, and are not purchased
hereby," and did not guarantee a specific amount of work to
be procured. Id. Furthermore, the estimated frequency and
number of orders shown in the "FREQUENCY OF ORDERS" clause
were just the Respondent's "best guess" based on projections
from the previous year, and were merely intended to inform
bidders that orders could be expected in a wide range of
quantities. Id. Consequently, the Respondent rejects the
Appellant's contention that the failure to meet the
scheduled shipment dates was due to an excess volume of work
because the contract does not fix a specific figure (only
ranges are given) against which to measure the frequency or
number of Print Orders issued by Labor.
The Respondent also disagrees with the Appellant's
interpretation of the phrase "any one month" in the
"FREQUENCY OF ORDERS" clause. It argues that the disputed
phrase is commonly understood to mean a "calendar month,"
not "any 30-day period," as contended by the Appellant.
PHR, p. 15. The Respondent contends that the "calendar
month" meaning is consistent with the way it keeps its
business records. PHR, p. 17. Furthermore, even if one
were to accept the Appellant's interpretation of the
disputed phrase, the Respondent does not believe it would
help or advance the contractor's position, because "any 30-
day period" could also be manipulated to produce results
different from those asserted by the Appellant. Id.
Finally, the Respondent states that if the Appellant had any
doubts about the meaning of the term "any one month," it was
obligated to ask the Contracting Officer for a clarification
before submitting its bid and accepting the contract. Id.
Contrary to the Appellant, the Respondent claims that Labor
never issued more than 30 Print Orders in any one calendar
month (R4 File, Tab AA). PHR, p. 15. Furthermore, the
Respondent points to the "SCHEDULE" clause of the contract
which provides that "[s]chedule for orders placed in excess
of the stated limitations (30 per month) shall be arranged
by mutual agreement with the contractor," and states that
under this provision the Appellant could have sought an
extension of the delivery schedule in the event that more
than 30 Print Orders were issued in a month (R4 File, Tab B,
p. 9). PHR, p. 13. An extension of delivery time would
have been particularly appropriate in such a case because
the "SCHEDULE" clause also holds the contractor to making a
"quick turn around" of work; i.e., "complete production,
distribution and mailing must be made within five work days"
(R4 File, Tab B, p. 9). PHR, pp. 13-14.
Finally, the Respondent contends that the Appellant's poor
performance in making timely deliveries under the contract
is amply supported in the record, and fully justified the
Contracting Officer's termination action in this case (R4
File, Tab W). PHR, p. 15. Accordingly, for all of these
reasons, the Respondent asks the Board to affirm the
Contracting Officer's partial termination of the Appellant's
contract for default (R4 File, Tab S).
DECISION 12/
The sole issue before the Board is whether or not the
Contracting Officer was in error in terminating the
remainder of the Appellant's contract for Program C460-S for
default. Because a default termination is a drastic action,
it may only be taken for good cause and on the basis of
solid evidence. 13/ See, e.g., Stephenson, Inc., GPO BCA
02-88 (December 19, 1991), 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.) If the Contracting Officer erroneously exercised his
default authority, then the termination is converted into one of
convenience and the Appellant would be allowed to recover for
the work performed. 14/ See, e.g., Stephenson, Inc., supra,
Sl. op. at 17; Chavis and Chavis Printing, supra, Sl. op. at 9;
Bonnar-Vawter, GPOCAB [No Docket Number], at 5 (1975) (citing,
Racon Electric Company, ASBCA No. 8020, 1962 BCA �
3,528. 15/ See also, 1988 Contract Terms, �
20.(g). In the judgment of the Board, the Appellant has
admitted to facts, amply supported in the record, concerning its
inability to meet the delivery schedules on numerous Print
Orders, which justified the termination of its Program C460-S
contract.
Under the standard "Default" clause in GPO contracts, a
Contracting Officer may, by 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.
1988 Contract Terms, �
20.(a)(1)(i), (ii),(iii). Furthermore , 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. Id., �
20.(b), 22.(d). However, the contractor must continue the work
not terminated. Id., �
20.(b). Moreover, 1988 Contract Terms provides that where the
default termination is based on the failure to ship/delivery or
perform the work within the time specified, the contractor will
not be liable for any excess costs if such a delinquency arises
from causes beyond the control and without the fault or
negligence of the contractor. Id., �
20(c) ("Default" clause), 22(e) ("Liquidated Damages" clause),
23 ("Delay in Deliveries" clause). 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.
Id., �
20.(c). 16/
The Government's initial burden in default cases is to show
that the contractor has failed, in some respect, to perform
on the contract. See, e.g., Chavis and Chavis Printing,
supra, Sl. op. at 11 ; Vogard Printing Corporation, GPOCAB
7-84 (January 7, 1986), Sl. op. at 5 (citing, Caskel Forge,
Inc., ASBCA No. 6205, 61-1 BCA �
2,891; National Aviation Electronics, Inc., ASBCA No. 18256,
74-2 BCA �
10,677). Because the findings and determinations of contracting
officers are, as a rule, considered prima facie correct, once
the default has been established, the contractor must then
demonstrate that the default was excusable. See, Chavis and
Chavis Printing, supra, Sl. op. at 11; Remco Business Systems,
Inc., GPOCAB [No Docket Number] (October 5, 1977), Sl. op. at
2-3 (citing, Norm Evans Construction Company, AGBCA No. 341,
75-1 BCA �
11,229); Mill River Press Lithographers, Printers, GPOCAB [No
Docket Number] (August 12, 1977), Sl. op. at 4 (citing, Beco,
Inc., ASBCA Nos. 9702, 9734, 1964 BCA �
4,493; Highway Products, Inc., ASBCA No. 14212, 69-2 BCA �
8,064); Vogard Printing Corporation, supra (citing. 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).
If the default termination is based on untimely performance,
the contractor's burden 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 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, Chavis and Chavis
Printing, supra, Sl. op. at 12; Loose Leaf Devices Company,
GPOCAB [No Docket Number] (1977), Sl. op. at 4-5 (citing, Ace
Electronics Associates, Inc., ASBCA No. 13899, 69-2 BCA �
7,922); Allegheny Plastics, Inc., GPOCAB [No Docket Number]
(1975), Sl. op. at 5; Scanforms, Incorporated, GPOCAB [No Docket
Number] (September 24, 1975), Sl. op, at 3; American Printing
and Publishing, Inc., GPOCAB [No Docket Number] (September 19,
1975), Sl. op. at 3-4 (citing, Lee K. Geiger Construction
Company, GSBCA Nos. 2152, 2164, 67-1 BCA �
6,189; American Construction Company, Inc., GSBCA No. 1097, 65-2
BCA �
4,964). 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, Chavis
and Chavis Printing, supra, Sl. op. at 12-13; Kaufman DeDell
Printing, Inc., GPOCAB [No Docket Number] (November 6, 1979), Sl.
op. at 5 (citing, Empire State Tree Service, VACAB No. 949, 71-1
BCA �
8,716); Bonnar-Vawter, Incorporated, supra, Sl. op. at 5-6
(citing, H. C. Thode, Inc., ASBCA Nos. 18177, 18294, 74-1 BCA �
10,418); Loose Leaf Devices Company, supra, Sl. op. at 7
(citing, Aargus Poly Bag, GSBCA Nos. 4314, 4315, 76-2 BCA �
11,927).
The Appellant in this case acknowledges that it failed to
meet the contract delivery dates for a substantial number of
Print Orders under the Program C460-S contract; i.e., the
Appellant admits that it was in default on those orders.
See, e.g., Chavis and Chavis Printing, supra, Sl. op. at 13.
As a general rule, the Government is entitled to strict
compliance with its specifications. 17/ See, e.g, Rose
Printing Company, GPO BCA 2-87 (June 9, 1989), Sl. op. at 6
(and cases cited therein); Fry Communications, Inc., GPO BCA
1-87 (June 1, 1989), Sl. op. at 5; Mid-America Business
Forms Corporation, GPO BCA 8-87 (December 30, 1988), Sl. op.
at 18-19. See also, Astro Dynamics, Inc., ASBCA No. 28320,
83-2 BCA �
16,900; Arnold Diamond, Inc., ASBCA No. 12335, 68-1 BCA �
8,672. Therefore, on June 26, 1990, when Labor first notified
the Respondent that seven of the Print Orders issued to the
Appellant�"
numbers 20008, 20015, 20024, 20025, 20026, 20027, and 20029�"
had not been delivered on time and were "now long overdue," it
would have been within its rights to terminate the contract
immediately. See, e.g., Stephenson, Inc., supra, Sl. op. at 21
(citing, Nuclear Research Associates, Inc., ASBCA No. 13563, 70-1
BCA �
8,237 (where the contractor's delivery was late by one day, the
Armed Services Board of Contract Appeals upheld the default
termination, stating that "once an appellant has failed to
deliver on time, the Government, absent excusable cause of
delay, has an indefensible right to terminate the contract,
unless its own conduct deprives it of that right."). See also,
e.g., Northeastern Manufacturing and Sales, ASBCA No. 35493,
89-3 BCA �
22,093; Appli Tronics, ASBCA No. 31540, 89-1 BCA �
21,555; Riggs Engineering Co., ASBCA No. 26509, 82-2 BCA �
15,955; R & O Industries, Inc., GSBCA No. 4804, 80-1 BCA �
14,196.
As a practical matter, however, the Government rarely
terminates contracts for slight delays, muchless
immediately. 18/ See, e.g., Stephenson, Inc., supra, Sl.
op. at 21-22; ACL-FILCO Corporation, ASBCA No. 26196, 83-1
BCA �
16,151 ("It has often been noted, . . . , that neither the
Government nor the contractor is well served by a precipitously
taken decision to terminate a contract for default . . .".).
Consequently, it is well-settled that the Government does not
waive its right to terminate a defaulted contract because it
fails to do so immediately when the
right to terminate accrues. 19/ See, Frank A. Pelliccia v.
United States, 208 Ct. Cl. 278, 525 F.2d 1035 (1975).
The decision to terminate a defaulted contract is a matter
largely within a contracting officer's discretion. See,
e.g., Stephenson, Inc., supra, Sl. op. at 23. As indicated
above, however, where the default action is based on the
failure to meet the delivery schedules specified, certain
provisions in the contract itself will excuse the delay if
it arose from causes beyond the control and without the
fault or negligence of the contractor. 20/ See, 1988
Contract Terms, �
20(c), 22(e), 23. Although the "Default" clause lists some types
of events which will excuse delays by contractors�"
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�"
these are examples only and the clause is not intended to be all
inclusive.
1988 Contract Terms, �
20.(c)
In this case, the Appellant essentially tenders two reasons
for its failure to meet the Program C460-S delivery
schedules: (1) the Appellant experienced major machinery
problems at the beginning of its contract because its new
Heidelberg press was not delivered until late June, and its
older model 2 color press (which was being used for Program
C460-S work in the interim) broke down in late May/early
June and it took time to fix it; and (2) Labor issued more
Print Orders in terms of frequency and number than the
maximum allowed by the contract itself. The Board believes
that neither of these reasons falls within the range of
acceptable occurrences or events which would excuse the
Appellant's failure to perform.
1. Machinery Problems
It is accepted that a contractor has an obligation to
reasonably assure itself of the availability of necessary
supplies and machinery prior to making a contract commitment
with the Government. See, Chavis and Chavis Printing,
supra, Sl. op. at 13-14; Scanforms, Incorporated, supra, Sl.
op. at 4 (citing, Woodhull Construction Company, ASBCA No.
3628, 57-1 BCA �
1,260; First Dominion Corporation (1967), GSBCA No. 2659, 69-1
BCA �
7,488); American Printing and Publishing, Inc., supra, Sl. op.
at 4; Allegheny Plastics, Inc., supra, Sl. op. at 5-7 (citing,
Vereinigte Osterreichische Eisen and Stahlwerke
Aktiengesellschaft, IBCA No. 327, 1962 BCA �
3,503). Indeed, as a general rule the unexplained breakdown of
machinery is not excusable per se; in fact, the difficulty
attending the performance of a contract is not an excusable
cause of delay. See, Chavis and Chavis Printing, supra, Sl. op.
at 14; Allegheny Plastics, Inc., supra, Sl. op. at 7 (citing,
Carnegie Steel Company v. United States, 240 U.S. 156 (1916)).
The reason for these rules is simple�"
implicit in a contractor's promise to perform is its assurance
that it has the ability to perform; i.e., that there is available
machinery and replacement parts so that performance will not be
delayed due to machinery breakdown. See, Chavis and Chavis
Printing, supra, Sl. op. at 14; Allegheny Plastics, Inc., supra,
Sl. op. at 7. See also, Jomar Enterprises, Inc., GPO BCA 13-86
(May 25, 1989), Sl. op. at 3. As explained by one of GPO's ad
hoc boards:
�
Every contractor impliedly represents, when he makes his bid,
that he can accomplish what he sets out to do, within the time
upon which there was an agreement; and by such implied
representation, he is not, in the eyes of the law, entitled to
maintain a mental reservation, to the effect, that he can perform
within the time required provided the material suppliers lives
[sic] up to their commitment and he can obtain the paper stock in
time to maintain the required schedule. [Citation omitted.] The
failure of the paper supplier to make timely delivery of the
necessary stock does not excuse the contractor from resulting
delays in contract completion. [Citation omitted.]
�
Scanforms, Incorporated, supra, at 4. In short, it is the
contractor's responsibility to have labor, plant, equipment,
finances and material adequate for contract performance. See,
Chavis and Chavis Printing, supra, Sl. op. at 14-15; Allegheny
Plastics Inc., supra, Sl. op. at 7 (citing, Fulton Shipyard, IBCA
No. 735-10-68, 71-1 BCA �
8,616). Therefore, the unexplained mechanical failure of the
Appellant's older model 2 color press in this case is not an
acceptable excuse which, under the law, would allow the
Appellant to escape the consequences of its failure to perform
the tasks required of it under the contract.
Similarly, although the Appellant asserts that the reason
its new press was unavailable when it commenced performance
under the contract was because of some damaged parts that
had to be obtained from Germany, it has offered no evidence
which would demonstrate that the failure of Heidelberg�"
its press supplier�"
to deliver the new machine on time was due to Heidelberg's
negligence or reasons beyond its control. Cf., Loose Leaf
Devices Company, supra, Sl. op. at 7 (citing, Williamsburg
Drapery Co. v. United States, 177 Ct. Cl. 776, 799, 369 F.2d 729
(1966)). In the Board's judgment, the Appellant's reliance on
the delay of its vendor of machinery to excuse its own failure to
meet the delivery schedules under the Program C460-S contract,
affords it no protection under the law. The Appellant had an
obligation under the contract to plan for its performance,
including, prior to submitting its bid and binding itself to the
delivery terms of the contract, assuring that essential materials
and machinery would be available. In the absence of any evidence
from the Appellant that the Heidelberg press was delivered late
because of the negligence on the part of
its press supplier, the Board must conclude that the untimely
shipment under Program C460-S was attributable to the Appellant's
own failure to properly plan for its performance.
The burden of proof was on the Appellant to demonstrate that
its failure to perform was due to causes beyond its control
and without its fault or negligence. However, in the
Board's opinion, the reasons offered by the Appellant to
excuse its delay were not unforeseeable and beyond its
control and without its fault or negligence. Accordingly,
as to this aspect of its defense, the Appellant has not met
its burden of proof with respect to excusing its failure to
make timely shipments under Program C460-S.
2. Excessive Print Orders Issued by Labor
The Appellant's principal excuse for its failure to meet the
Program C460-S delivery schedules is its claim that Labor
overtaxed its production capacity by issuing more Print
Orders than the maximum allowed under the contract. The
Appellant's position, detailed above, is based on its view
of Labor's "average" requirements over the life of the
contract. Interpreting the contract in that light, the
Appellant contends that: (1) the 69 Print Orders issued by
Labor between May 15, 1990 and August 20, 1990 represented
160.61 percent of the average expected volume;
(2) Labor ignored the contractual restriction against generating
more than the 30 Print Orders in "any one month," compelling the
Appellant to work at 278.79 percent of the average expected
volume between May 15, 1990 and July 5, 1990, and never less than
131.83 percent above the average expected volume at any time
during its performance of the contract; (3) Labor issued Print
Orders for the larger AWSB Print Orders at 172.18 percent of the
expected volume and required the Appellant to complete 37.14
percent of the annual work load between May 15, 1990 and August
23, 1990; and (4) the Print Orders received from Labor required
the Appellant to produce two million impressions and 1,052 pages,
or nearly one-half the amount expected over the contract term.
In summary, the gravamen of the Appellant's challenge to the
default termination action, and indeed the main reason it claims
that it was unable to meet the scheduled shipment dates, was that
Labor was ordering work at a rate nearly 200 percent, or double,
the quantities estimated in the contract specifications. PHR, p.
17.
In the Board's view, the Appellant's assertion blaming its
failure to meet the required delivery schedules under the
contract because Labor sent it excessive work is without
foundation in the record. At the outset, the Board is
mindful that Program C460-S was a "direct-deal term
contract," which allowed Labor to place Print Orders
directly with the Appellant rather than routing them through
the Respondent. GPO Handbook, Section IV, �
1, at 8. As indicated previously, agency direct-deal authority
". . . extends only the placement of print orders and to the
transmission of copy and proofs". GPO Handbook, Section IV, �
2, at 9. See, Castillo Printing Co., supra, Sl. op. at 3-4.
The authority of a customer agency's Printing Officer is
strictly circumscribed by the GPO Handbook, 1988 Contract Terms,
and the contract itself. Id., Sl. op. at 47. Generally, it is
limited to such tasks as issuing Print Orders, issuing bills of
lading, giving specific instructions regarding production, and
determining the production schedule for each Print Order. Id.
The Board sees nothing in this record to indicate that Fennell,
Labor's Printing Officer, deviated from these guidelines or
misunderstood his authority. Id., Sl. op. at 4, 47-48.
The key concept in the Appellant's position is that there was
an "average expected volume" of work arising from the
estimates contained in the "FREQUENCY OF ORDERS" clause. As
the Board understands it, the concept is based on certain
assumptions about the language in the "FREQUENCY OF ORDERS"
(and the "DETERMINATION OF AWARD" clause to some degree),
namely: (1) the language regulates the frequency at which
such orders could be issued over the life of the contract (a
maximum of 30 orders per month); and (2) the clause
guarantees the contractor a range of work over the contract
term with respect to number of orders, types of publications,
size of jobs and overall number of impressions and pages.
The concept also assumes that Labor would issue orders at a
reasonably uniform rate over the contract term. Accordingly,
taking these assumptions into account, the Appellant made
certain business calculations which apportioned the annual
estimates of
work contained in the "FREQUENCY OF ORDERS" clause on a monthly
and work day basis, to arrive at its bid for Program C460-S. The
Appellant's conclusion that Labor was ordering work at an
accelerated rate nearly double the quantities estimated in the
contract specifications is rooted in this "per month" and "per
work day" interpretation of the "FREQUENCY OF ORDERS" clause.
While the Board appreciates the business reasons which may have
led the Appellant to try to forecast a steady rate of work and
income, we believe that it has misconstrued the contract.
The first assumption made by the Appellant involves its
interpretation of so much of the "FREQUENCY OF ORDERS"
clause which provides: "No more than 30 print orders will be
placed in any one month" (R4 File, Tab B, p. 5). The
Appellant sees the key phrase "any one month," as meaning
"any 30-day period." PHR, pp. 13, 16. Under this view, the
Appellant is correct when it says that during the first 30
days of its Program C460-S contract (May 15, 1990 to June
15, 1990), Labor issued Print Orders (35) in excess of the
number of allowable number (30) (R4 File, Tab AA). However,
the Appellant's contention that Labor issued the same number
of Print Orders in the 30 days between June 4, 1990 and July
5, 1990, is not borne out by the record; i.e., only 29 Print
Orders�"
numbers 20018 to 20046�"
were issued in that period (R4 File, Tab AA). 21/
Nonetheless, if one accepts the Appellant's further refinement of
its concept and considers only the work days available for
contract performance, then its conclusion that Labor issued Print
Orders at a rate exceeding "average expected volume" throughout
the contract is probably true; e.g., 278.79 percent of the
average expected volume in the first 30 days under the contract,
never less than 131.83 percent above the average expected volume
at any time during the Appellant's performance, and 160.61
percent overall for the period May 15, 1990 to August 20, 1990
(R4 File, Tab V). See also, PHR, p. 15. Furthermore, applying
the Appellant's formula to the "DETERMINATION OF AWARD" clause in
the contract, there is some justification, at least
mathematically, for its statement that Labor was ordering work at
a rate nearly 200 percent, or double, the quantities estimated in
the contract specifications. PHR, p. 17.
Against the Appellant's "30 Print Orders in 30 days" view of
the "FREQUENCY OF ORDERS" clause, the Respondent's
interposes a much simpler interpretation�"
the disputed phrase "any one month," in common parlance, means a
"calendar month." PHR, p. 15. According to the Respondent, this
is particularly true because it keeps its business records on a
calendar month basis. PHR, p. 17. Certainly, the record supports
the Respondent's contention that Labor never issued more than 30
Print Orders in any one calendar month; i.e., the documentary
evidence confirms that Labor issued 69 Print Orders to the
Appellant in the following sequence�"
11 in May 1990, 30 during June 1990, 14 in July 1990 and 14
during August 1990 (up to August 20) (R4 File, Tabs W and AA).
(PHR, p. 15. However, by asserting during the prehearing
telephone conference that if the Appellant was unsure of the
intent of the phrase "any one month" in the "FREQUENCY OF ORDERS"
provision it was obligated to ask the Contracting Officer for a
clarification before submitting its bid, the Respondent has
raised, by implication, the possibility that the phrase may be
ambiguous. 22/ PHR, p. 17.
In fact, the word "month" can have the meaning ascribed to
it by both parties in this case; i.e., standard reference
sources define the word as either (1) a "calendar month," or
(2) the time from any date of one month to the corresponding
date of the next. WEBSTER'S NEW WORLD DICTIONARY 880 (3d
Coll. ed. 1988); BLACK'S LAW DICTIONARY 1159 (4th ed. 1968).
Consequently, on the surface at least, there might appear to
be an inherent ambiguity in the IFB's "FREQUENCY OF ORDERS"
clause. However, the Board has observed in the past that
the rules concerning ambiguous provisions come into play
only if the meaning of the disputed terms are not
susceptible to interpretation through the usual rules of
contract construction. Castillo Printing Co., supra, Sl. op.
at 27. The most basic principle of contract construction is
that the document should be interpreted as a whole. 23/
See, e.g., Hol-Gar Manufacturing Corporation v. United
States, 352 F.2d 972 (1965); Restatement (Second) Contracts,
�
202(2) (1981). Hence, it is well-accepted that all provisions
of a contract are to be given effect and no provision is to be
rendered meaningless. See, e.g., Fortec Constructors v. United
States, 760 F.2d 1288, 1292 (Fed. Cir. 1985); Jamsar, Inc. v.
United States, 442 F.2d 930 (Ct. Cl.
1971); Grace Industries, Inc., ASBCA No. 33553, 87-3 BCA �
20,171. Stated otherwise, a contract should be interpreted in a
manner which gives meaning to all its parts and in such a
fashion that the provisions do not conflict with each other, if
this is reasonably possible. See, e.g., B. D. Click Company v.
United States, 614 F.2d 748 (Ct. Cl. 1980).
In this particular case the "FREQUENCY OF ORDERS" clause
does not exist in a vacuum, but rather it must read in
conjunction with the "SCHEDULE" clause. When the Board
construes the relevant provisions as a whole, the
contractual scheme becomes readily apparent�"
normally no more than 30 Print Orders will be placed in any one
month ("FREQUENCY OF ORDERS" clause) but where the Government
issues more than 30 Print Orders, the contractor will be
entitled, on request, to an extended delivery schedule for the
additional work ("SCHEDULE" clause). Since the "SCHEDULE" clause
also envisions a brief performance period on Print Orders �"
"[c]omplete production, distribution and mailing must be made
within five workdays"�"
the Board finds itself in agreement with the Respondent that an
opportunity for longer due dates on orders in excess of 30 is a
reasonable accommodation to the extra strain on a contractor's
productive capacity. Furthermore, it seems highly unlikely to
the Board that if a contractor, attempting to satisfy the
Government's increased needs, asked for such an extension that
the Government would deny it, because such an adverse decision
could be construed as a breach of its implied duty to cooperate.
24/ See, e.g., Stephenson, Inc., supra, Sl. op. at 38-41. In
short, the contract itself foresees the possibility of additional
work and provides the appropriate relief. Under this
interpretation, whether a "month" is a calendar month or any 30-
day period extending from a given date of one month to the
corresponding date of the next, is immaterial; i.e., the subject
matter and principal concern of the relevant language in the
contract is the number of orders, not the number of days.
Therefore, because the Board sees no conflict between the
"FREQUENCY OF ORDERS" clause and the "SCHEDULE" clause, it also
finds that there is no ambiguity in the intent of the phrase "any
one month" in the former provision. 25/
While the Appellant contends that it was receiving more than
30 Print Orders a month, contrary to the limitation
contained in the "FREQUENCY OF ORDERS" clause, there is
nothing in the record to indicate that it sought the relief
provided for in the "SCHEDULE" clause of the contract when
it found its production capacity inadequate to adhere to the
order delivery schedules under those circumstances.
Although the Appellant asserts that it had informed the
Contracting Officer that Labor was exceeding the volume
indicated in the "FREQUENCY OF ORDERS" clause (R4 File, Tabs
J (letter of July 11, 1990) and V; PHR, pp. 16-17), the
record is devoid of any evidence prior to the termination
date of the contract to show that it either formally asked
for an extension of the required delivery schedules or
lodged an official protest with the Contracting Officer
about Labor's issuing an excessive number of Print Orders.
The Appellant's assertion in its complaint that it "notified
the Contracting Officer that the Agency was exceeding the
volume limits" is an insufficient basis for inferring that
it initiated either of these actions at the appropriate time
(R4 File, Tab V). Cf., Fry Communications,
Inc./InfoConversion Joint Venture, GPO BCA 9-85 ((Decision
on Remand, August 5, 1991), Sl. op. at 33, n. 31 ("As the
Claims Court observed [in Fry
Communications, Inc./InfoConversion Joint Venture v. United
States, No. 174-89C (Cl. Ct. February 5, 1991), Sl. op at 25],
such allegations and statements are not sufficient to enable an
appellant to carry its burden of proof on the reliance issue.").
Also cf., Singleton Contracting Corporation, GSBCA No. 8548
(January 18, 1990), 90-2 BCA �
22,748; Tri-State Services of Texas, Inc., ASBCA No. 38019, 89-3
BCA �
22,064 (citing, Gemini Services, Inc., ASBCA No. 30247, 86-1 BCA
�
18,736). Accordingly, even if the Board accepted the
Appellant's theory that the "FREQUENCY OF ORDERS" clause
absolutely limited Labor to issuing no more than 30 Print Orders
a month, and believed that the customer agency's generation of a
larger number of orders amounted to a violation of the contract
and was the principal cause for the contractor's failure to meet
the delivery schedules, there would be no basis for the Board to
reverse the Contracting Officer's termination decision because
it is well-settled that no recovery may be had if the contract
itself provides a remedy. Cf., Triax-Pacific, A Joint Venture,
ASBCA No. 36353, 91-2 BCA �
23,724.
Like its first assumption, the Appellant's second
supposition �"
that the contract guarantees the contractor a range of work over
the contract term with respect to number of orders, types of
publications, size of jobs and overall number of impressions and
pages �"
will not withstand scrutiny when measured against the express
language of the contract. Thus, the "REQUIREMENTS" clause
plainly
47
states that it ". . . is a requirements contract for the items
and for the period specified herein. . . ." and that ". . . [t]he
quantities of items specified herein are estimates only, and are
not purchased hereby" (R4 File, Tab B, p. 4). Furthermore, while
providing that ". . . the Government shall order from the
contractor all the items set forth which are required to be
purchased by the Government . . .", the "REQUIREMENTS" clause
also makes clear that ". . . if the Government's requirements for
the items set forth herein do not result in orders in the amounts
or quantities described as 'estimated', it shall not constitute
the basis for an equitable price adjustment under this contract."
Id. Moreover, the "REQUIREMENTS" clause states that ". . .[s]
ubject to any limitations elsewhere in this contract, the
contractor shall furnish to the Government all items called for
by the print orders issued in accordance with the 'Ordering'
clause of this contract." Id. Similarly, the first sentence in
the "FREQUENCY OF ORDERS" clause clearly states that "[i]t is
impossible at this time to predetermine the frequency or number
of orders that will be placed on this contract," and the next one
observes that ". . . based on past history, it is anticipated
that approximately 104-265 orders will be placed during the
contract term . . ." (R4 File, Tab B, p. 5). Indeed, the
"FREQUENCY OF ORDERS" clause also lists the potential number of
orders for AWSBs, AWSSs, IWSSs, and IWSBs, in terms of
approximations of orders per year, copies per order, and pages
per copy. Id. Finally, the pertinent language in the
"DETERMINATION OF AWARD" provision states ". . . the following
units of production . . . are the estimated requirements to
produce one year's production under this contract. These units
do not constitute, nor are they to be construed as, a guarantee
of the volume of work which may be ordered under this contract .
. . " (R4 File, Tab B, p. 11).
When these several provisions are considered as a whole, it
is clear that while the Government agreed to procure all of
its AWSB, AWSS, IWSS, and IWSB requirements between May 1,
1990 and April 30, 1990, from the Appellant, it made no
commitment as to a specific quantity of work. There is no
other way to read phrases such as "estimates only," "amounts
or quantities described as 'estimated'," "impossible at this
time to predetermine the frequency or number of orders,"
"approximately 104-265 orders," "estimated requirements,"
and "[t]hese units do not constitute, nor are they to be
construed as, a guarantee of the volume of work which may be
ordered," without distorting the clear meaning of the
contract. Cf., Tamms Lithography, Inc., GPO BCA 14-89 (July
13, 1990), Sl. op. at 7. These terms, all conveying the same
thought and appearing in several critical provisions, should
have alerted a reasonably prudent contractor that the
Respondent merely making a good faith guess, based on past
experience, as to the wide range of potential work which
could be expected under the contract. Accordingly, the
Board agrees with the Respondent that absent a specific
commitment from the Government with respect to an exact
volume of work, the Appellant's "average expected volume"
theory falls because there is no standard against which to
measure the frequency or number of
Print Orders generated by Labor in order to determine if the rate
at which it issued them was excessive.
This is not to say that the Appellant's "average expected
volume" concept has no usefulness whatsoever. Certainly,
from a business point of view, calculations based on an
average of anticipated work may serve as a convenient device
for determining contractor costs for the purpose of bidding
and for scheduling work in the plant, but it has nothing to
do with the scheduling of work under the contract by the
agency which requires it. Furthermore, the idea of an
"average expected volume" cannot be used to rewrite the
contract. That is, when the Appellant refines its concept
into anticipated amounts of work on a monthly and daily
basis, it is, in effect, attempting to impose its own view
of good business practices�"
in which orders are spread evenly over a fixed period of time�"
on the express language of the contract. PHR, p. 16. Contrary to
the Appellant's calculations, nothing in the "FREQUENCY OF
ORDERS" clause either mentions or can be construed as promising
work on an average "per month" or "per working day" basis;
instead the provision talks of approximate "orders per year,"
"copies per order," and "pages per copy." These terms are not
synonymous, and it is clear that the Government could order more
or less than one order, more or less copies per order or more or
less pages per copy of several types of publications and still be
within the approximate or annual quantity of work listed.
Moreover, the Appellant's "per month" or "per working day"
averages disappear
when one considers that under the express language of the
contract, assuming the maximum estimate of 265 orders were placed
at the maximum rate of 30 a month, the Government could have
satisfied its contractual obligations in less than nine months;
i.e., nothing in the contract required Labor to evenly distribute
its Program C460-S Print Orders over the entire contract term of
12 months, all that was necessary was that the agency place most
of its orders within that period. Cf., Tamms Lithography, Inc.,
supra, Sl. op. at 7.
Because there was no "average expected volume" of work under
the contract, and thus no standard against which to measure
the frequency or number of Print Orders issued by Labor, the
Appellant's claim that the amount of work ordered by the
agency exceeded by 200 percent the quantities estimated in
the contract specifications has no factual support. As a
consequence, the Board finds no merit to the Appellant's
assertion that its failure to meet the Print Order delivery
schedules under the contract was excusable because it
resulted from an excess of work required by Labor. Indeed,
based on this record, the Board believes that rather than
being the major source of the Appellant's delivery delays,
the frequency and number of Print Orders issued by Labor
only became a problem when the Appellant's new press failed
to arrive on time and its old press broke down. This view
is reenforced by the fact that the Appellant not only
continued to accept the work which it now contends was
"excess," but also
51
informed the Contracting Officer, on July 11, 1990, in response
to the first "Cure Notice," that everything was "on track" and
that it expected "to be completely current on the contract before
July 23," because its new Heidelberg press was "now in place and
running and we are almost completely caught up" (R4 File, Tab J).
26/
Accordingly, having examined the contract terms and the
facts in the record, the Board concludes that there is no
merit to the Appellant's contention that Labor was ordering
work at a rate nearly double the estimated quantities shown
in the contract specifications, and therefore, its defense
to the termination action based on that view must fail.
CONCLUSION
The Board's analysis of the record leads it to the
conclusion that the Contracting Officer was fully justified
in terminating the remainder of the Appellant's Program
C460-S contract for default for the grounds stated in his
"Notice of Termination/Complete," dated August 23, 1990.
The "SCHEDULE" clause of the contract clearly states that
"[a]dherence to this schedule must be maintained" (R4 File,
Tab B, p. 9). That time was of the essence in this contract
should have been apparent to the Appellant from the three
"Cure Notices" it received and the
numerous telephone calls concerning overdue Print Orders and
requests for rescheduled shipping dates. 27/ The Appellant only
replied to the first "Cure Notice." The Appellant then admitted
it was having problems meeting the Print Order delivery schedules
but sought to excuse the delays because of (1) the late arrival
of a new press; (2) the mechanical breakdown of its old press;
and (3) the issuance of an excessive number of orders by Labor.
Although the Appellant assured the Contracting Officer that with
its new press the backlog of work would be eliminated by July 23,
1990, subsequent complaints from Labor disclosed continued
unsatisfactory performance by the Appellant with respect to
meeting the Print Order delivery schedules. The Contracting
Officer's second and third "Cure Notices" elicited no response
from the Appellant. Because of the Appellant's continuing failure
to comply with the delivery requirements of Program C460-S, the
Contracting Officer terminated the balance of its contract
effective August 23, 1990 (R4 File, Tab S). 28/ Considering the
record before it as a whole, the Board is unable to say that the
Contracting Officer's
decision to partially terminate the contract for Program C460-S
for default under the circumstances described herein is clearly
erroneous. Therefore, the Board AFFIRMS the Contracting Officer's
decision and DENIES the appeal. �
It is so Ordered.
_______________
�
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 October 19, 1990. 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 hereafter as R4 File, with an appropriate Tab
letter also indicated. As originally submitted, the R4 File
consisted of documents identified as Tab A through Tab XYZ.
However, at the prehearing telephone conference held on December
12, 1990, Counsel for GPO requested permission to introduce
copies of all 69 Print Orders issued to the Appellant under the
contract as Tab AA. See, Prehearing Conference Report, dated May
8, 1991, p. 15 (hereinafter PCR). On December 20, 1990, the
Board received the Print Orders in question and made them part of
the record. A copy of the documents were also provided to the
Appellant.
�
With the consent of the parties, this case was joined for the
purposes of a prehearing telephone conference with another appeal
filed by the Appellant, GPO BCA Docket No. GPO BCA 15-90. During
the prehearing telephone conference, however, the parties were
assured by the Board that even though the appeals had been
consolidated for that limited purpose, separate decisions would
be rendered in each. See, PCR, p. 1 By Order, dated August 22,
1991, the Board officially severed both cases. See, Order
Closing the Record and Filing of Briefs, dated August 22, 1991,
p. 1.
�
The record discloses that the Program C460-S QATAP standards for
both Product Quality Levels (Printing Attributes and Finishing
Attributes) was Level IV (R4 File, Tab B, p. 2). The Inspection
Level standard for Non-Destructive tests was General Inspection
Level I, while the measurement for Destructive tests was Special
Inspection Level S-2 (R4 File, Tab B, p. 2). There were also two
specified standards�"
one relating to the Type Quality and Uniformity attribute (Camera
Copy/Films) and the other to the Solid and Screen Tint Color
Match attribute (Pantone Matching System) (R4 File, Tab B, p. 2).
�
The contract in question was a "direct-deal term contract." As
explained in the GPO Agency Procedural Handbook, GPO Publication
305.1, dated March 1987 (GPO Handbook): "[d]irect-deal term
contracts allow the customer agency to place print orders (GPO
Form 2511) directly with contractors rather than routing them
through the GPO for placement." GPO Handbook, Section IV, �
1, at 8. The purpose of this method of contract administration
is " . . . to ensure that agency printing needs are met in the
most effective and efficient manner possible." Id. It should
be noted, however, that agency direct-deal authority ". . .
extends only the placement of print orders and to the
transmission of copy and proofs. . . .All other authority rests
with GPO's Contracting Officers." GPO Handbook, Section IV, �
2, at 9. See, Castillo Printing Co., GPO BCA 10-90 (May 8,
1991), Sl. op. at 3-4.
5. The record does not clearly identify who served as Labor's
Printing Officer for the Program C460-S contract. Both Fennell
and a "D. Rucker" issued Print Orders for Labor, although Rucker
signed the vast majority of them (53) (R4 File, Tab AA).
However, no question has been raised in this case concerning an
improper exercise of direct deal authority by Labor's Printing
Officer, thus his/her exact identity is immaterial. See,
Castillo Printing Co., supra, Sl. op. at 14, 42-51. Therefore,
for the purposes of this decision, the Board will assume that
Fennell was Labor's Printing Officer because he was clearly the
Respondent's principal contact at the customer agency (R4 File,
Tabs J and P).
�
The complaints in question concerned quality shortcomings with
respect to Print Orders 20006 and 20007 (R4 File, Tabs H and I).
Print Order 20006 had several defects in printing and finishing,
including missing pages and the wrong binding, and Labor asked
that the order be reprinted (R4 File, Tab H). Similarly, Print
Order 20007 was delivered with several printing defects, but
Labor was willing to accept the order at a discount (R4 File, Tab
I). Apart from the two Print Orders mentioned by Fennell, the
record indicates that the Appellant had quality control problems
with some other deliveries, particularly with regard to "short
shipments;" i.e., Print Order 20001 (90 copies missing), Print
Order 20015 (135 copies missing), Print Order 20042 (19 copies
missing) and Print Order 20043 (40 copies missing) (R4 File, Tabs
M, N, X and Y). In addition, the record shows that Print Orders
20036, 20047, 20048 were shipped in the wrong containers, which
resulted in damage to the contents (R4 File, Tabs P, �
2, and U). However, since the Contracting Officer based the
termination action on the Appellant's failure to comply with the
contract's delivery requirements, and not on any quality
problems with the products shipped, the contractor's inability
to satisfy any other provision of the contract has not been
considered in the context of this decision.
�
The record indicates that on July 6, 1990, Scott believed that
his "Cure Notice" of July 2, 1990, had not been sent to the
Appellant (R4 File, Tab J). However, there is other evidence in
the record which indicates that Scott was mistaken. First, on
July 11, 1990, while not specifically referring to a "Cure
Notice," the Appellant wrote to Scott in response to his "letter
dated July 2, 1990," and proceeded to explain the reasons for the
late deliveries on Program C460-S, and to tell him of "the
corrective measures we have taken" to remedy the problem (R4
File, Tab J). Second, on August 22, 1990, when Lowery, who had
replaced Scott as Contracting Officer for Program C460-S, wrote
to the Respondent's Contract Review Board (CRB) seeking
permission to terminate the Appellant's contract for default, he
stated that "[o]n July 2, 1990, . . . a cure notice was sent to
[the Appellant]" (R4 File, Tab Q). Consequently, the Board
concludes that the "Cure Notice" of July 2, 1990, was in fact
sent to the Appellant, was received, and was answered on July 11,
1990.
�
The record contains two exhibits, both computer printouts, which
show the adjustments made in the delivery schedules of Print
Orders received by the Appellant under Program C460-S (R4 File,
Tabs R and W). One document, entitled "Contract Compliance
Section Exception Report, As of 8/20/90," was received from the
Appellant on August 22, 1990, and is labeled Tab R. The other,
identified as Tab W, is entitled "Contractor Performance History
on Program 460-S�"
Prior 5 Months to Present." The Board will refer to the latter
computer printout in this decision because it is a more complete
listing.
�
After the prehearing telephone conference in this case, by letter
dated February 12, 1991, Counsel for GPO informed the Appellant
that the Respondent would recommence setoff procedures to recoup
an additional amount of excess reprocurement costs on Program
C460-S Print Orders. See, Letter from Drew Spalding, Deputy
General Counsel to Mr. Richard Swanson, dated February 12, 1991.
Enclosed with his letters was a listing of reprocured orders.
According to this listing, 59 Print Orders had to be reprocured.
�
The Contracting Officer's memorandum is dated August 22, 1990.
By that date, however, all 69 Print Orders received by the
Appellant under Program C460-S had been issued by Labor, not the
61 indicated in the memorandum to the CRB (R4 File, Tab AA).
Apparently, the Contracting Officer, became aware of the
remaining eight Print Orders in the Appellant's hands after
August 22, 1990, since the termination notice issued the
following day reflects this knowledge; i.e., the cancellation is
effective beginning with Print Order 20070 (R4 File, Tab S).
�
At the prehearing telephone conference, the Appellant offered two
additional reasons the Government was at fault for its delivery
problems, namely (a) Labor erroneously gave Print Orders meant
for the Appellant to another company and it took time to retrieve
them, and (b) Labor issued some Print Orders with insufficient or
wrong information. PHR, p. 16. However, from the context of the
conference proceedings, it is clear to the Board that these
incidents, if true, are only marginal considerations. The
Appellant's main claim, and indeed the one which is the linchpin
of its position, is that Labor was ordering work far in excess of
the limits in the contract. PHR, p. 17.
�
The record on which the Board's decision is based consists of:
(a) the R4 File, consisting of documents labeled Tab A through
Tab XYZ, as originally filed by the Respondent on October 19,
1990; (b) the multi-document exhibit submitted by the Respondent
on December 20, 1990, consisting of the 69 Print Orders issued
under Program C460-S, and added to the R4 File as Tab AA; (c) the
Appellant's letter, dated August 31, 1990, protesting the
Contracting Officer's termination action and serving as the
Complaint in this case; (d) the Prehearing Conference Report; and
(6) the Respondent's letter, dated February 12, 1991, to the
Appellant concerning excess reprocurement costs on Program C460-
S. The record was officially closed on September 9. 1991,
pursuant to the Board's Order, dated August 22, 1991. See, Order
Closing the Record and Filing of Briefs, dated August 22, 1991,
p. 2. On November 12, 1991, the Board received a Request for
Decision (Request), dated November 8, 1991, from the Appellant in
which it sought, among other things, to present additional
information concerning excess reprocurement costs. Because the
Appellant's Request was received after the record was closed, it
has not been considered by the Board in the context of this
decision.
13. 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).
�
As indicated above, the remedy requested by the Appellant in its
complaint letter of August 31, 1990, was reinstatement of its
Program C460-S contract (R4 File, Tab V). The Board has stated
on numerous occasions that it derives powers solely from the
"Default" clause of the contract. See, e.g. Chavis and Chavis
Printing, GPO BCA 20-90 (February 6, 1991), Sl. op. at 10; Ascot
Tag and Label Company, Inc., GPO BCA 14-85 (August 7, 1987), Sl.
op. at 23; Peak Printers, Inc., GPO BCA 12-85 (November 12,
1986), Sl. op. at 6. This case is before the Board under the
"Disputes" clause because the Appellant is protesting the final
decision of a GPO Contracting Officer terminating the remainder
of its contract for default (R4 File, Tab S). 1988 Contract
Terms, �
5.(b). It is well-accepted in Government contract law that even
where jurisdiction exists, as here, a Board of Contract Appeals
will not grant a terminated contractor's request for
reinstatement of the contract because that is a matter within
the authority of the agency, as exercised by its contracting
officers. See, e.g., Crow Fitting Company, Inc., ASBCA No.
25378, 81-1 BCA �
14,951. The Board follows this general rule.
�
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. Prior to the Board's
creation, appeals from decisions of GPO Contracting Officers were
considered by ad hoc Contract Appeals Boards (the decisions of
these ad hoc boards are hereinafter cited as GPOCAB). While the
decisions of these ad hoc boards are not legally binding on the
Board, it is the Board's policy to follow them where applicable
and appropriate.
�
Where the failure to deliver or perform is caused by the default
of a supplier or subcontractor, the cause of the default must be
beyond the control of both the prime contractor and
subcontractor, and without the fault or negligence of either, in
order for the prime 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. 1988
Contract Terms, �
20.(d).
17. It is "black letter" Government contract law that time is of
the essence in any contract containing fixed dates for
performance. See, e.g., Clay Bernard Systems International, Ltd.
v. United States, 22 Cl. Ct. 804 (1991); D. Joseph DeVito v.
United States, supra, 413 F.2d at 1154. "Time is of the essence"
means that asserted facts regarding urgency are legally
irrelevant; i.e., there is simply no necessity that there be an
urgency to a delivery date requirement for time to be of the
essence. See, e.g., Kit Pack Company, Inc., ASBCA No. 33135,
89-3 BCA �
22,151; Control Mechanisms, Inc., ASBCA No. 27180, 84-2 BCA �
17,330. Although a contrary view was expressed in the Trial
Judge's opinion adopted by the Claims Court in Franklin E.
Penney Co. v. United States, 207 Ct. Cl. 842, 524 F.2d 668
(1975)�"
i.e., whether time is of the essence depends upon the nature of
the contract and the particular circumstances of the case�"
cases both before and after Penney have reinforced the absolute
"time is of the essence" rule. See, e.g., Clay Bernard Systems
International, Ltd. v. United States, supra, 22 Cl. Ct. 804
(1991); Simmons Precision Products, Inc. v. United States, 546
F.2d 886 (Ct. Cl. 1976); D. Joseph DeVito v. United States,
supra, 413 F.2d 1147 (Ct. Cl. 1969). See also, Stephenson, Inc.,
supra, Sl. op. at 25, n. 29, where the Board expressed its view
that the Penney factors are just additional considerations in
deciding whether a waiver has occurred and that the general
rule�"
time is of the essence in any contract containing fixed dates for
performance�"
still holds.
18. See, John Cibinic, Jr. & Ralph C. Nash, Jr., Administration
of Government Contracts 2d ed., (The George Washington
University, 1986), p. 677 (hereinafter Cibinic and Nash). As the
Court of Claims observed in DeVito: "[t]he Government is
habitually lenient in granting reasonable extensions of time for
contract performance, for it is more interested in production
than in litigation." D. Joseph DeVito v. United States, supra,
413 F.2d at 1153.
�
The law gives a contracting officer a reasonable period of time
to investigate the facts and to determine what course of action
would be in the best interest of the Government as the non-
defaulting party. During this forbearance period the Government
may terminate the contract at any time, without prior notice.
See, e.g., Raytheon Service Co., ASBCA No. 14746, 70-2 BCA �
8,390; Lapp Insulator Co., ASBCA No. 13303, 70-1 BCA �
8,219, mot. for reconsid. denied 70-2 BCA �
8,471. The extent of a reasonable forbearance period depends on
the facts and circumstances of each individual case. See, e.g.,
H. N. Bailey & Associates v. United States, 196 Ct. Cl. 156, 449
F.2d 387 (1971); Methonics, Incorporated v. United States, 210
Ct. Cl. 685 (1976).
�
The primary function of the excusable delays provision is to
protect the contractor from sanctions for late performance. To
the extent that his/her delay is excusable, the contractor is
protected from default termination, liquidated damages, actual
damages, or excess costs of reprocurement or completion. See,
Cibinic and Nash, note 18 supra, p. 410.
�
The Board notes that 18 of these 29 Print Orders �"
numbers 20018 to 20035 �"
would already be included in the initial 30-day period of May
15, 1990 to June 15, 1990. Consequently, the Appellant seems to
be engaging in a blatant case of double counting in order to
make a point.
�
Contractual language is ambiguous if it will sustain different
reasonable interpretations. See, e.g., Fry Communications,
Inc./InfoConversion Joint Venture, supra (Decision on Remand),
Sl. op. at 9; Fry Communications, Inc./InfoConversion Joint
Venture v. United States, supra, Sl. op at 11 (citing, Edward R.
Marden Corporation v. United States, 803 F.2d 701, 705 (Fed. Cir.
1986); Sun Shipbuilding & Drydock Co. v. United States, 183 Ct.
Cl. 358, 372 (1968)); Castillo Printing Co., supra, Sl. op. at
26. In cases involving a contest between two contrasting
interpretations of contract language, the dispute usually turns
on whether the ambiguity is latent or patent. Courts will find
a latent ambiguity where the disputed language, without more,
admits of two differing reasonable interpretations. See, e.g.,
Fry Communications, Inc./InfoConversion Joint Venture v. United
States, supra, Sl. op at 11 (citing, Edward R. Marden Corporation
v. United States, supra, 803 F.2d at 705; Castillo Printing Co.,
supra, Sl. op. at 37-38. In such cases, courts will apply the
doctrine of contra proferentem and construe the dispute language
against the drafter, see, e.g., Fry Communications,
Inc./InfoConversion Joint Venture v. United States, supra, Sl. op
at 11 (citing, William F. Klingensmith, Inc. v. United States,
205 Ct. Cl. 651, 657 (1974)); Castillo Printing Co., supra, Sl.
op. at 38, provided that the non-drafter can show that he/she
relied on the alternative reasonable interpretation in submitting
his/her bid. See, e.g, Fry Communications, Inc./InfoConversion
Joint Venture v. United States, supra, Sl. op at 23-24 (citing,
Fruin-Colon Corporation v. United States, 912 F.2d 1426, 1430
(Fed. Cir. 1990)); Lear Siegler Management Services v. United
States, 867 F.2d 600, 603 (Fed. Cir. 1989); Castillo Printing
Co., supra, Sl. op. at 38-39. On the other hand, a patent
ambiguity would exist if the contract language contained a gross
discrepancy, an obvious error in drafting, or a glaring gap, as
seen through the eyes of a "reasonable man" on an ad hoc basis.
See, e.g, Fry Communications, Inc./InfoConversion Joint Venture
v. United States, supra, Sl. op. at 22 (citing, Max Drill, Inc.
v. United States, 192 Ct. Cl. 608, 626 (1970); WPC Enterprises,
Inc. v. United States, 163 Ct. Cl. 1, 6 (1963)). Where such
discrepancies, errors, or gaps are present, the contractor has an
affirmative obligation to seek a clarification from the
contracting officer as to the true meaning of the contract
language before submitting its bid. Id., Sl. op. at 11-12
(citing, Newsom v. United States, 230 Ct. Cl. 301, 303 (1982));
Enrico Roman, Inc. v. United States, 1 Cl. Ct. 104 (1983); S.O.G.
of Arkansas v. United States, 212 Ct. Cl. 125, 546 F.2d 367 (Ct.
Cl. 1976); Beacon Construction v. United States, 314 F.2d 501
(Ct. Cl. 1963). The patent ambiguity doctrine is aimed at
avoiding costly post-award litigation, as well as protecting the
integrity of the bidding process by ensuring that all offerors
bid on the same specifications. Id., Sl. op. at 12 (citing,
S.O.G. of Arkansas v. United States, supra, 212 Ct. Cl. at 125;
Newsom v. United States, supra, 230 Ct. Cl. at 303). In this
case, by asserting that the Appellant had a duty to ask the
Contracting Officer to clarify the phrase "any one month" in the
"FREQUENCY OF ORDERS" clause before submitting its bid, the
Respondent implies that the ambiguity, if any, would be patent.
�
The purpose of any rule of contract interpretation is to carry
out the intent of the parties. Hegeman-Harris and Company, 440
F.2d 1009 (Ct. Cl. 1979). The test for ascertaining intent is an
objective one; i.e., the question is what would a reasonable
contractor have understood, not what did the drafter subjectively
intend. Corbetta Construction Company v. United States, 198 Ct.
Cl. 712, 461 F.2d 1330 (1972). The provisions of the contract
itself should provide the evidence of the objective intent of the
parties.
�
See, Cibinic and Nash, note 18 supra, at pp. 221-22, 223-25.
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.
222-23. See, e.g., Nanofast, Inc., ASBCA No. 12545, 69-1 BCA �
7,566 (citing, George A. Fuller Company, A Corporation v. United
States, 108 Ct. Cl. 70, 69 F.Supp. 409 (1947); Fern E. Chalender
d/b/a Chalender Construction Company of Springfield, Missouri v.
United States, 127 Ct. Cl. 557; Restatement, Contracts, �
295 and 315). Both implied duties are part of every Government
contract. George A. Fuller Company, A Corporation v. United
States, supra, 69 F.Supp. 409. In essence, the Government's
duty of cooperation means that it has implied affirmative
obligation to do whatever is necessary to enable the contractor
to perform. See, e.g., Nanofast, Inc., supra, 69-1 BCA �
7,566. (citing, The Kehm Corporation 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 to perform. In
most cases applying this principle to excuse a contractor's
default, there is a clear nexus between the Government's
breaching conduct and the performance period itself. See, e.g.,
Maitland Brothers Company and Maitland Brothers Company and St.
Paul Fire and Marine Insurance Company, ASBCA Nos. 30089, 30764,
31032, 32071, 32605, 34659, 90-1 BCA �
22,367; Singleton Contracting Corporation, GSBCA No. 8552, 90-1
BCA �
22,298; G. W. Galloway Company, ASBCA Nos. 17436, 17723, 17836,
17911, 18324, 77-2 BCA �
12,640.
25. This conclusion was indirectly expressed by the Board when
it told the parties that its ". . . review of the record
discloses no factual dispute between the parties which would
warrant an evidentiary hearing" and that it would ". . . decide
the matter on the basis of the record . . .". See, Order Closing
the Record and Filing of Briefs, dated August 22, 1991, p. 2.
The Board's view was buttressed by the agreement of the parties
at the prehearing telephone conference that the case was ripe for
decision in its present form, and that there were sufficient
facts in the record for the Board to make a decision. PHR, pp.
16-17. Furthermore, the Board thought it significant that the
Appellant had not requested a hearing, and had expressed the view
that the difference between the parties concerning the meaning of
the word "month" in the "FREQUENCY OF ORDERS" clause was not a
"major" one, but rather was only meant to emphasize that Labor
was ordering work at a rate 200 percent above the estimated
quantities set forth in the contract specifications, which the
Appellant contended was the main reason for its inability to meet
the scheduled shipment dates. PHR, p. 17.
26. Notwithstanding the Appellant's assurances, it was still
late on nine Print Orders after July 23, 1990�"
numbers 20048, 20049, 20050, 20051, 20057, 20058, 20059, 20060
and 20061.
27. Overall, the "Cure Notices" covered 35 Print Orders of the
69 issued to the Appellant�"
numbers 20008, 20015, 20024, 20025, 20026, 20027, and 20029 (the
first "Cure Notice"); numbers 20006, 20008, 20009, 20016, 20017,
20018, 20019, 20020, 20021, 20022, 20023, 20025, 20026, 20027,
20029, 20030, 20031, 20032, 20033, and, 20036 (the second "Cure
Notice"); and numbers 20042, 20043, 20044, 20045, 20046, 20048,
20049, and 20050 (the third "Cure Notice").
�
The termination notice of August 23, 1990, clearly advised the
Appellant that it could be liable for any excess costs associated
with the Respondent's reprocurement of the work covered by the
contract (R4 File, Tab S). The only documentation in the R4 File
concerning such reprocurement costs is a memorandum from George
Berard, Financial Management Service, to Rose Green, Term
Contracts, Section C, identifying the new contractor (R4 File,
Tab XYZ). During the prehearing telephone conference held on
December 12, 1990, the parties agreed that excess reprocurement
costs should not be recovered from the Appellant's invoices
unless these costs could first be established. PHR, p. 15.
Furthermore, while the Appellant claimed that excess costs in the
amount of $6,500 to $7,500 had already been recovered from its
account, Counsel for GPO informed the Board that the Respondent's
claim for excess costs would be finalized after April 30, 1991.
Id. Both parties, however, agreed that any question of excess
reprocurement costs could be the subject of a separate appeal;
indeed, the Appellant expressly reserved the right to raise the
quantum of excess costs in a separate proceeding. PHR, p. 16.
By letter dated December 20, 1990, Counsel for GPO notified the
Appellant that recoupment of excess costs incurred under the
defaulted contract would be suspended until the Respondent could
establish that the excess costs actually exceeded the amounts
that had been withheld from the Appellant's billings. At the
time, $6,004.76 had been withheld from the Appellant's invoices.
Thereafter, by letter dated February 12, 1991, Counsel for GPO
informed the Appellant that as of January 17, 1991, the excess
costs amounted to $7,804.55, and that the Respondent would
recommence setoff procedures to recoup the additional $1,799.79.
See, Letter from Drew Spalding, Deputy General Counsel to Mr.
Richard Swanson, dated February 12, 1991 (and enclosures), note 9
supra. The letter also told the Appellant that it could expect
additional charges against its account as excess costs were
incurred until the end of the term of the defaulted contract.
Id. The Board settled the record on September 9, 1991. See,
Order Closing the Record and Filing of Briefs, dated August 22,
1991, pp. 2-3. On November 12, 1991, the Appellant filed its
Request with the Board stating, among other things, that on
October 17, 1991, it had been informed by the Respondent that an
additional $17,183.71 in excess reprocurement costs had been
subtracted from the Appellant's account, bringing the total
excess reprocurement costs recovered on Program C460-S to
$24,988.26. See, Appellant's Request for Decision, note 12 supra,
p. 1. In light of the agreement of the parties at the prehearing
telephone conference, however, the Board has not considered the
issue of excess reprocurement costs as part of this appeal. It
is not clear to the Board at this time whether those excess costs
have now been finalized. If so, upon receipt of a properly filed
claim by the Appellant, the matter of excess reprocurement costs
is now ripe for consideration by the Board in a separate
proceeding.
BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
STUART M. FOSS
Administrative Law Judge
Appeal of R.C. SWANSON PRINTING AND TYPESETTING COMPANY
Docket No. GPO BCA 31-90
Jacket No. 262-267
Purchase Order 82905
Program C460-S
February 6, 1992
DECISION AND ORDER
This appeal, timely filed by R.C. Swanson Printing and
Typesetting Company, 5205 York Road, Baltimore, Maryland
21212 (hereinafter Appellant), is from the final decision,
dated August 23, 1990, of Contracting Officer, Mr. Julian
Lowery (hereinafter Contracting Officer), of the U.S.
Government Printing Office, North Capitol and H Streets,
NW., Washington, DC 20401 (hereinafter Respondent or GPO),
partially terminating the Appellant's contract identified as
Purchase Order 82905, Program C460-S, Jacket No. 262-267,
for default because of its "continuing failure to comply
with the delivery requirements" (R4 File, Tab S). 1/ For
the following reasons, the decision of the Contracting
Officer is hereby
AFFIRMED. 2/
BACKGROUND
The relevant facts in this appeal are not in dispute and are
set forth here only to the extent necessary for the Board's
decision. The roots of this appeal lie in a Printing and
Binding Requisition (SF-1), dated October 1, 1989, from the
U.S. Department of Labor (Labor) for the procurement of Area
Wage Surveys under Program 460-S (R4 File, Tab A). On March
28, 1990, the Respondent issued an Invitation for Bids (IFB)
for Program 460-S, soliciting bids from potential
contractors for the production of Area Wage Survey
Summaries/Bulletins and Industry Wage Survey
Summaries/Bulletins for the Department of Labor (hereinafter
referred to as AWSSs, AWSBs, IWSSs, and IWSBs) (R4 File, Tab
B, p. 1). The successful bidder was to receive a "Single
Award" term contract, for the period beginning May 1, 1990,
and ending April 30, 1990 (R4 File, Tab B, p. 1).
Furthermore, like all such contracts, Program C460-S was to
be governed by applicable
articles of GPO Contract Terms, GPO Publication 310-2, effective
December 1, 1987 (Rev. 9-88) (1988 Contract Terms), and GPO's
Quality Assurance Through Attributes Program, GPO Publication
310.1, Revised September 1986 (QATAP) (R4 File), Tab B, p. 2). 3/
The work covered by Program C460-S was ". . . the production
of self and separate cover publications requiring such
operations as film making, printing, binding, packing, and
distribution" (R4 File, Tab B, p. 5). The following IFB
provisions are particularly pertinent to this appeal:
�
ORDERING: Items to be furnished under the contract shall be
ordered by the issuance of print orders by the Government. Orders
may be issued under the contract from May 1, 1990 through April
30, 1991. All print orders issued hereunder are subject to the
terms and conditions of the contract. The contract shall control
in the event of conflict with any print order. When mailed, a
print order shall be "issued" for the purposes of the contract
at the time the Government deposits the order in the mail (R4
File, Tab B, p. 3).
* * * * * * * * * *
REQUIREMENTS: This is a requirements contract for the items and
for the period specified herein. Shipment / delivery of items
or performance of work shall be made only as authorized by
orders
�
issued in accordance with the clause entitled "Ordering." The
quantities of items specified herein are estimates only, and are
not purchased hereby. Except as may be otherwise provided in
this contract, if the Government's requirements for the items set
forth herein do not result in orders in the amounts or
quantities described as "estimated", it shall not constitute the
basis for an equitable price adjustment under this contract (R4
File, Tab B, p. 4). [Emphasis added.]
Except as otherwise provided in this contract, the Government
shall order from the contractor all the items set forth which are
required to be purchased by the Government activity identified
on page 1 (R4 File, Tab B, p. 4).
* * * * * * * * * *
If shipment/delivery of any quantity of an item covered by the
contract is required by reason of urgency prior to the earliest
date that shipment/ delivery may be specified under this
contract, and if the contractor will not accept an order
providing for the accelerated shipment/delivery, the Government
may procure this requirement from another source (R4 File, Tab B,
p. 4).
The Government may issue orders which provide for
shipment/delivery to or performance at multiple destinations (R4
File, Tab B, p. 4).
Subject to any limitations elsewhere in this contract, the
contractor shall furnish to the Government all items set forth
herein which are called for by print orders issued in accordance
with the "Ordering" clause of this contract (R4 File, Tab B, p.
4).
* * * * * * * * * *
FREQUENCY OF ORDERS: It is impossible at this time to
predetermine the frequency or number of orders that will be
placed on this contract. However, based upon past history, it
is anticipated that approximately 104-265 orders will be placed
during the contract term as indicated below:
�
Approximate Approximate Approximate
Number of Number of Number of
Publication Orders Per Copies Per Pages Per
�
Title �
Year �
Order �
Area Wage
Survey
Bulletins 20 to 50 250 to 2,500 20 to 56*
Area Wage
Survey
Summaries 50 to 125 300 to 1,200 2 to 12
Industry
Wage Survey
Summaries 30 to 80 300 to 1,500 8 or 12
Industry
Wage Survey
Bulletins 4 to 10 800 to 2,000 40 to 256
* One or two annual issues may be ordered for up to approximately
192 pages.
No more than 30 print orders will be placed in any one month (R4
File, Tab B, p. 5). [Emphasis added.]
* * * * * * * * * *
SCHEDULE: Adherence to this schedule must be maintained.
Contractor must not start production of any job prior to receipt
of the individual print order.
* * * * * * * * * *
The following schedule begins the workday after notification of
the availability of print order and furnished material.
Complete production, distribution and mailing must be made within
five workdays.
Multiple orders may be placed in a single day.
Schedule for orders placed in excess of the stated limitations
(30 per month) shall be arranged by mutual agreement with the
contractor.
The ship/delivery dates indicated on the print order is the date
that products delivering f.o.b. destination must be received at
the destination(s) specified and the date that products
distributed f.o.b. contractor's city must be mailed/shipped (R4
File, Tab B, p. 9). [Emphasis added.]
�
The record discloses that the IFB was sent to 39
contractors, 11 of whom returned responsive bids (R4 File,
Tabs D and F). One of the responding bidders was the
Appellant, who submitted an offer, dated April 17, 1990, to
do the work at an estimated cost of $53,695.90 (R4 File,
Tab C). The record also shows that the Appellant's bid was
over 30 percent lower than the next lowest bidder. When the
Appellant was asked to review its price quotations, however,
it confirmed them (R4 File, Tab F). Accordingly, on April
30, 1990, the Appellant was awarded the contract for Program
C460-S by the issuance of Purchase Order 82905 (R4 File, Tab
G).
The first Print Order under Program C460-S was issued to the
Appellant by Labor on May 15, 1990 (R4 File, Tab AA). 4/
Between May 15, 1990 and August 23, 1990, when the contract
was terminated,
69 Print Orders were issued to the Appellant, as follows:
�
Print Order�
Date Issued�
Scheduled Delivery Date
�
20001 May 15, 1990 May 22, 1990
20002 May 15, 1990 May 22, 1990
20003 May 16, 1990 May 23, 1990
20004 May 16, 1990 May 23, 1990
20005 May 16, 1990 May 23, 1990
20006 May 17, 1990 May 24, 1990
20007 May 17, 1990 May 24, 1990
20008 May 30, 1990 June 6, 1990
20009 May 30, 1990 June 6, 1990
20010 May 30, 1990 June 6, 1990
20011 May 30, 1990 June 6, 1990
20012 June 1, 1990 June 11, 1990
20013 June 1, 1990 June 11, 1990
20014 June 1, 1990 June 11, 1990
20015 June 1, 1990 June 11, 1990
20016 June 1, 1990 June 11, 1990
20017 June 1, 1990 June 11, 1990
20018 June 5, 1990 June 13, 1990
20019 June 5, 1990 June 13, 1990
20020 June 5, 1990 June 13, 1990
20021 June 5, 1990 June 13, 1990
20022 June 5, 1990 June 13, 1990
20023 June 5, 1990 June 13, 1990
20024 June 8, 1990 June 18, 1990
20025 June 8, 1990 June 18, 1990
20026 June 8, 1990 June 18, 1990
20027 June 8, 1990 June 18, 1990
20028 June 8, 1990 June 18, 1990
20029 June 12, 1990 June 20, 1990
20030 June 12, 1990 June 20, 1990
20031 June 12, 1990 June 20, 1990
20032 June 12, 1990 June 20, 1990
20033 June 12, 1990 June 20, 1990
20034 June 12, 1990 June 20, 1990
20035 June 12, 1990 June 20, 1990
20036 June 19, 1990 June 27, 1990
20037 June 19, 1990 June 27, 1990
20038 June 22, 1990 July 2, 1990
20039 June 22, 1990 July 2, 1990
20040 June 22, 1990 July 2, 1990
20041 June 22, 1990 July 2, 1990
20042 July 2, 1990 July 11, 1990
20043 July 2, 1990 July 11, 1990
20044 July 2, 1990 July 11, 1990
Print Order�
Date Issued�
Scheduled Delivery Date
�
20045 July 3, 1990 July 12, 1990
20046 July 3, 1990 July 12, 1990
20047 July 12, 1990 July 20, 1990
20048 July 18, 1990 July 26, 1990
20049 July 18, 1990 July 26, 1990
20050 July 18, 1990 July 26, 1990
20051 July 31, 1990 August 7, 1990
20052 July 31, 1990 August 7, 1990
20053 July 31, 1990 August 7, 1990
20054 July 31, 1990 August 7, 1990
20055 July 31, 1990 August 7, 1990
20056 August 6, 1990 August 14, 1990
20057 August 6, 1990 August 14, 1990
20058 August 6, 1990 August 14, 1990
20059 August 6, 1990 August 14, 1990
20060 August 6, 1990 August 14, 1990
20061 August 6, 1990 August 14, 1990
20062 August 10, 1990 August 20, 1990
20063 August 10, 1990 August 20, 1990
20064 August 15, 1990 August 23, 1990
20065 August 15, 1990 August 23, 1990
20066 August 15, 1990 August 23, 1990
20067 August 20, 1990 August 28, 1990
20068 August 20, 1990 August 28, 1990
20069 August 8, 1990 August 15, 1990
(R4 File, Tab AA).
The record shows that on June 26, 1990, John Fennell,
Labor's Chief, Production Services, sent a memorandum to the
Respondent's Customer Service Division (CSD) reporting that
publications covered by seven of the Print Orders issued to
the Appellant�"
numbers 20008, 20015, 20024, 20025, 20026, 20027, and 20029�"
had not been delivered on time and were "now long overdue" (R4
File, Tab J). 5/ According to Fennell, these delinquencies were
in addition to two other complaints raised by Labor earlier with
regard to the Appellant's performance (R4 File, Tab J). 6/
Consequently, Fennell believed that "at this point" the
Appellant's performance was "unacceptable," and unless there was
immediate improvement, Labor ". . . would like to see action
taken to get a new vendor" (R4 File, Tab J).
On June 27, 1990, after being informed of Fennell's
complaint, Jack Scott, who was the Contracting Officer at
the time, telephoned the Appellant's plant and spoke to
Larry Ford (R4 File, Tab J). Ford told Scott that the
missing Print Orders would be shipped between June 28, 1990
and July 2, 1990 (the original scheduled delivery dates for
these Print Orders were between June 6, 1990 and June 20,
1990) (R4 File, Tab J). Furthermore, Ford advised Scott
that the reason for the delay was "machine problems" (R4
File, Tab J). On July 2, 1990, Scott mailed a "Cure Notice"
to the Appellant notifying it that the Respondent considered
the failure to meet the delivery schedule for the above
seven Print Orders ". . . a condition that is endangering
performance of the balance of the contract in accordance
with its terms" (R4 File, Tab J). 1988 Contract Terms, �
20.(a)(1)(ii). Accordingly, the Appellant was offered an
opportunity to inform the Respondent, in writing, within 10 days
of the measures that it had taken or would take to cure such
condition (R4 File, Tab J). 1988 Contract Terms, �
20.(a)(2). See also, GPO Printing Procurement Regulation
(GPOPPR), GPO Publication 305.3, Chap. XIV, Sec. 1, �
3.c.(2). Furthermore, the Appellant was warned that unless the
unsatisfactory condition had been cured, the Respondent might
terminate the balance of the contract for default pursuant to
the "Default" Clause of the GPO contract terms (R4 File, Tab J).
1988 Contract Terms, �
20.(a)(1)(i),(ii).
The record shows that on July 3, 1990, the Respondent's CSD
received another complaint from Fennell about the poor
quality of service the Appellant was providing under
contract (R4 File, Tab J). In this instance, Fennell told
the Respondent that now 20 Print Orders�"
numbers 20006, 20008, 20009, 20016, 20017, 20018, 20019, 20020,
20021, 20022, 20023, 20025, 20026, 20027, 20029, 20030, 20031,
20032, 20033 and 20036�"
were "due or past due" (R4 File, Tab J). These 20 Print Orders
represented nearly half of all the orders issued by Labor in May
and June 1990 with delivery due dates prior to July 3, 1990 (41
Print Orders). According to Fennell, the Appellant's late
deliveries were causing problems for the Superintendent of
Documents' operation because the AWSBs and IWSBs were sent out in
numerical order (R4 File, Tab J). In light of this, Fennell
reiterated his belief that if the Appellant could not provide the
service an immediate change should be made because "[a]t this
rate another two weeks and we will never catch up" (R4 File, Tab
J).
On receiving Fennell's second complaint, Scott made two
telephone calls to Ford�"
one on July 5, 1990 and the other on July 6, 1990�"
in order to find out when the missing Print Orders would be
shipped (R4 File, Tab J). Also on July 6, 1990, Scott prepared
and mailed a second "Cure Notice" to the Appellant, identical to
the first, except that this time the failure to meet the delivery
schedule for the aforementioned 20 Printing Orders was the
condition ". . . endangering performance of the balance of the
contract in accordance with its terms" (R4 File, Tab J). 7/ 1988
Contract Terms, �
20.(a)(1)(ii). Again, the Appellant was offered an opportunity
to inform the Respondent, in writing, within 10 days of the
measures that it had taken or would take to cure such condition,
and it was also informed that if it failed to rectify the
problem the balance of its contract could be terminated for
default (R4 File, Tab J). 1988 Contract Terms, �
20.(a)(1)(i), (ii),(2).
On July 9, 1990, Ford telephoned Scott and gave him new
shipping dates for the 20 delinquent Print Orders (R4 File,
Tab J). In that regard, Ford told Scott that the Appellant
would now ship those Print Orders on the following schedule:
�
Print Order�
�
Promised Shipping Date�
20006 May 29, 1990
20008 July 16, 1990
20009 July 13, 1990
20016 June 11, 1990
20017 June 11, 1990
20018 June 27, 1990
20019 June 26, 1990
20020 June 26, 1990
20021 July 12, 1990
20022 July 12, 1990
20023 July 12, 1990
20025 June 29, 1990
20026 June 29, 1990
20027 June 29, 1990
20029 July 10, 1990
20030 June 27, 1990
20031 June 27, 1990
20032 June 27, 1990
20033 June 27, 1990
20036 July 16, 1990
(R4 File, Tab J). The record also shows that between July 11,
1990, and July 12, 1990, the Respondent made two requests to the
Appellant for the signed shipping receipts for the Print Orders
which Labor claimed had not been delivered (R4 File, Tab J). The
Appellant gave the Respondent those receipts on July 13, 1990 (R4
File, Tab K).
In the meantime, on July 11, 1990, the Appellant wrote to
Scott in response to his "letter dated July 2, 1990," and
basically admitted that there was a problem with delinquent
deliveries but that corrective measures had been taken to
rectify the situation (R4 File, Tab J). As for the specific
reasons which caused the delays, the Appellant stated:
�
First, we had ordered a new press from Heidelberg that was
scheduled for delivery on April 14, 1990. Due to some damaged
parts that had to be obtained from Germany, the press was not
delivered until late June. This press was what we had planned to
run the [Program C460-S] contract on. The press is now in place
and running and we are almost completely caught up on the
contract.
Second, we have one other press that is an older model 2 color
that we were using to perform on this contract until our new
press came in. In late May/early June the press threw several
bushings and seized up. The press required major work to un-
seize it and this is where our lateness developed. Of course,
the break-down was unforeseen, but since that time the press has
been repaired and has been used to help catch up on the [Program
C460-S] contract.
Finally, on top of our two problems, the agency issued more work
than the maximum allowed under the contract. In June the agency
issued 34 Print Orders, almost 15% more than the maximum and
almost 2 1/2 times the minimum expected quantity. Furthermore,
they had an extremely large number of larger jobs (Bulletins) and
many of these had run lengths longer than the contract called for
and all of them
�
were at the maximum end of the scale which ran from 250 to 2500
copies.
Unfortunately, Murphy's Law prevailed, [and] we had several
problems reducing our productive capability, and the agency at
the same time required extraordinary productive capability. . . .
�
(R4 File, Tab J). Despite these difficulties, however, the
Appellant assured the Respondent that "[a]ll is on track and we
expect to be completely current on the contract before July 23"
(R4 File, Tab J).
Although the Appellant promised to have the delivery
situation under control before the end of July, the record
discloses that it was unable to meet the delivery schedule
on nine of the 14 Print Orders issued that month�"
numbers 20042, 20043, 20044, 20045, 20046, 20048, 20049, 20050
and 20051 �"
or approximately 64 percent of them (R4 File, Tab W). 8/
Similarly, of the 14 Print Orders received by the Appellant in
August 1990, publications covered by of them�"
numbers 20057, 20058, 20059, 20060, 2006�"
were sent to Labor after the contract due date (nearly 36
percent) (R4 File, Tab W). Overall, the record shows that of the
69 Print Orders issued to the Appellant under Program C460-S, it
was unable to deliver 43 of them on time (approximately 62
percent) (R4 File, Tab W). 9/
On August 10, 1990, after Labor had notified the Respondent
that the Appellant was late on eight Print Orders which were
due in July 1990�"
numbers 20042, 20043, 20044, 20045, 20046, 20048, 20049, and
20050�"
the Contracting Officer (Lowery) sent a third a "Cure Notice" to
the Appellant (R4 File, Tab O). This "Cure Notice" was identical
in all respects to the previous two, except that the Appellant
was only given five days to inform the Respondent, in writing, of
the measures that it had taken or would take to cure its
continuing failure to meet the contract delivery schedule (R4
File, Tab O). The record shows that the Appellant never replied
to this "Cure Notice."
Consequently, on August 22, 1991, the Contracting Officer
wrote to the Respondent's CRB seeking its concurrence in
terminating the Appellant's Program C460-S contract for
default (R4 File, Tab Q). See, GPOPPR, Chap. I, Sec. 10, �
4.b.(i). As he explained to the CRB, the Contracting Officer
believed the proposed action was justified for the following
reasons:
To date, [the Appellant] has received 61 print orders with 31 of
them being delivered late and 17 of them have not been given a
promised ship date, even though the action ship date has already
passed.
On July 2, 1990 and July 6, 1990 a cure notice was sent to [the
Appellant]. On July 11, 1990 a reply was received from Richard
Swanson. He claimed that their delivery problems were due to
the late arrival of a new press (it had been due in April and
not received until June) and mechanical problems on their old
press. Mr. Swanson expected Program C460-S to be on schedule
by July 23, 1990.
As of August 10, 1990 [the Appellant] was still not on schedule
on Program C460-S. Another cure notice, dated August 10, 1990,
was sent to [the Appellant]. No reply has been received.
* * * * * * * * * *
Based on [the Appellant's] continuing failure to comply with the
delivery requirements of Program C460-S, concurrence is sought
to terminate for default, the balance of the contract and to
procure the requirements with any excess reprocurement costs to
[the Appellant].
�
(R4 File, Tab Q). The CRB gave its approval to the action
recommended by the Contracting Officer that same day (R4 File,
Tab Q). 10/
On August 23, 1990, the Contracting Officer, sent the
Appellant a letter, entitled "Notice of
Termination/Complete," informing the contractor that its
contract ". . . identified as Purchase Order 82905, Program
C460-S, Print Order 20070 and the balance of the contract,
Jacket No. 262-267, is hereby terminated for default because
of your continuing failure to comply with the delivery
requirements" (R4 File, Tab S). The notice also told the
Appellant that the termination action was effective
immediately, and that it was liable for any excess costs in
the event that the Government decided to reprocure the work
covered by the canceled contract (R4 File, Tab S). The
Appellant responded with this appeal to the Board.
POSITIONS OF THE PARTIES
Neither party has filed a brief with the Board in this
appeal. See, Order Closing the Record and Filing of Briefs,
dated August 22, 1991, pp. 2-3. Therefore, the Board's
understanding of their respective positions is based on the
documents in the record, other material they have submitted,
and their statements during the prehearing telephone
conference held on December 12, 1990.
The Appellant admits that it had problems making timely
deliveries of Program C460-S work for the first three months
of its contract. On the other hand, it is uncontroverted in
the record that the last eight Print Orders �"
numbers 20062, 20063, 20064, 20065, 20066, 20067, 20068 and
20069 �"
were received by Labor on the scheduled delivery dates in August
1990 (R4 File, Tab V). However, as the Board understands the
Appellant's position it essentially places the blame for its
failure to timely deliver so many of the early Print Orders on
the Government. In the Appellant's view, if Labor had not
issued an excessive number of Print Orders �"
that is, more than the number of jobs allowed in a given period
by the contract itself �"
the default would not have occurred.
The Appellant supports its position with several arguments,
most of them predicated on averaging Labor's requirements
under the "FREQUENCY OF ORDERS" clause over the life of the
contract (R4 File, Tab V). Indeed, during the prehearing
telephone conference the Appellant stated that it had relied
on such averages to develop its cost estimates for bidding
purposes. PHR, p. 13.
First, the Appellant argues that the "FREQUENCY OF ORDERS"
clause told potential bidders that the range of total orders
over the contract term (12 months) for AWSBs, AWSSs, IWSBs
and IWSSs, would be between 104 and 265 Print Orders (R4
File, Tab B, p. 5). To the Appellant, this meant that it
could expect to receive between 8.6 and 22 orders a month,
or 15.3 jobs per month, on average (R4 File, Tab V). See
also, PHR, p. 13. When this figure is subdivided into work
days (the average month has 23 work days), the Appellant
expected an average of .66 jobs a day. According to the
Appellant, however, Labor issued 69 Print Orders between May
15, 1990 and August 20, 1990 (a period containing 65 work
days), requiring the Appellant to work on an average of 1.06
jobs per day, or at 160.61 percent of the "average expected
volume" (R4 File, Tab V).
Second, the "FREQUENCY OF ORDERS" clause states that "[n]o
more than 30 print orders will be placed in any one month"
(R4 File, Tab B, p. 5). In contrast to the Respondent,
whose position is that the underscored phrase means a
"calendar month," the Appellant interprets those words to
mean "any 30-day period." PHR, pp. 13, 16. The Appellant
argues that the meaning it imputes to these words is the
only fair and equitable interpretation because under the
Government's view 60 Print Orders could be issued in a two
day period�"
30 on the last day of one month and 30 on the first day of the
next. PHR, p. 16. Furthermore, the Appellant believes that the
meaning it ascribes to the phrase is in accord with good business
practices because a reasonable agency would spread the work over
the 30-day period. Id. In this case, however, the Appellant
notes that during the first 30 days of its contract (May 15, 1990
to June 15, 1990), Labor issued 35 Print Orders. When those
orders are considered in light of the 19 work days available to
the Appellant, this meant that it had to accomplish 1.84 jobs per
day, or work at 278.79 percent of the average expected volume (R4
File, Tab V). A similar amount of work was received by the
Appellant over the 30 days between June 4, 1990 and July 5, 1990
(R4 File, Tab V). Although Labor issued less Print Orders
between July 5, 1990 and August 7, 1990 (20), and July 19, 1990
and August 20, 1990 (19), the Appellant nonetheless was compelled
to work on an average of .87 jobs a day (131.83 percent above the
average expected volume) and 1.19 jobs daily (180.30 percent over
expected volume), respectively (R4 File, Tab V). Consequently,
the Appellant contends that the number of Print Orders issued by
Labor not only exceeded the allowable maximums under the
contract for the first 30-day period, but generally was above the
expected volume of work the entire time that it had the contract
(R4 File, Tab V). See also, PHR, p. 15.
Third, the Appellant argues that while the "FREQUENCY OF
ORDERS" clause forecast between 20 and 50 Print Orders for
AWSBs (the "larger jobs"), Labor issued orders for them at a
much faster rate (R4 File, Tab V). In that regard, the
Appellant claims that even though it had the Program C460-S
contract for only 21.57 percent of its term, Labor issued 13
Print Orders for AWSBs during that period, which represented
65 percent of the minimum number of orders and 26 percent of
the maximum number (R4 File, Tab V). Assuming, as the
Appellant does, that an average of 35 AWSBs would be
required a year, then it accomplished 37.14 percent of the
annual work load, which meant that Labor was issuing AWSB
Print Orders at 172.18 percent of the expected volume, or at
an accelerated rate above the maximum number of such orders
(R4 File, Tab V).
Finally, the Appellant points to the "DETERMINATION OF
AWARD" provision of the contract, and states that it
requires the printing of four million impressions and 2,416
pages over the contract term (R4 File, Tab B, p. 11). See
also, PHR, p. 17. The Appellant argues that since it held
the contract for about one-quarter of the contract term, it
expected to accomplish one-fourth of that work, i.e., one
million impressions and 604 pages (R4 File, Tab V). However,
according to the Appellant, it received and completed Print
Orders for two million impressions and 1,052 pages (R4 File,
Tab V). In the Appellant's view, these figures also
demonstrated that Labor was sending it work at twice the
rate estimated in the contract (R4 File, Tab V). 11/ PHR,
p. 17.
The Appellant says that it informed the Contracting Officer
that it was having problems meeting the delivery schedule
because Labor was issuing Print Orders at a rate above the
contractual limits, and also because the installation of its
new press was delayed, but the Respondent was not
sympathetic to this explanation and terminated the contract
for default (R4 File, Tab V). The Appellant believes that
the contract clearly underestimated Labor's needs, and the
Contracting Officer should have shown some understanding of
the situation. In the Appellant's view, the termination for
default in this case was clearly unjustified. Therefore,
since the Appellant had caught up with the Program C460-S
work and was making timely deliveries after August 8, 1990,
it believes that it has demonstrated its ability to meet the
greater demand and, therefore it asks the Board to reinstate
its contract (R4 File, Tab V).
The Respondent, on the other hand, argues that the
Appellant's contract for Program C460-S was properly
terminated for default because of its inability to meet the
contractual delivery dates (R4 File, Tab S). See also, PHR,
p. pp. 12-13. The Respondent observes that as a
"requirements" contract, Program C460-S obligated the
Government to procure all the needed work from the
Appellant. PHR, p. 13. However, the "REQUIREMENTS" clause
of the contract clearly stated that "[t]he quantity of items
specified herein are estimates only, and are not purchased
hereby," and did not guarantee a specific amount of work to
be procured. Id. Furthermore, the estimated frequency and
number of orders shown in the "FREQUENCY OF ORDERS" clause
were just the Respondent's "best guess" based on projections
from the previous year, and were merely intended to inform
bidders that orders could be expected in a wide range of
quantities. Id. Consequently, the Respondent rejects the
Appellant's contention that the failure to meet the
scheduled shipment dates was due to an excess volume of work
because the contract does not fix a specific figure (only
ranges are given) against which to measure the frequency or
number of Print Orders issued by Labor.
The Respondent also disagrees with the Appellant's
interpretation of the phrase "any one month" in the
"FREQUENCY OF ORDERS" clause. It argues that the disputed
phrase is commonly understood to mean a "calendar month,"
not "any 30-day period," as contended by the Appellant.
PHR, p. 15. The Respondent contends that the "calendar
month" meaning is consistent with the way it keeps its
business records. PHR, p. 17. Furthermore, even if one
were to accept the Appellant's interpretation of the
disputed phrase, the Respondent does not believe it would
help or advance the contractor's position, because "any 30-
day period" could also be manipulated to produce results
different from those asserted by the Appellant. Id.
Finally, the Respondent states that if the Appellant had any
doubts about the meaning of the term "any one month," it was
obligated to ask the Contracting Officer for a clarification
before submitting its bid and accepting the contract. Id.
Contrary to the Appellant, the Respondent claims that Labor
never issued more than 30 Print Orders in any one calendar
month (R4 File, Tab AA). PHR, p. 15. Furthermore, the
Respondent points to the "SCHEDULE" clause of the contract
which provides that "[s]chedule for orders placed in excess
of the stated limitations (30 per month) shall be arranged
by mutual agreement with the contractor," and states that
under this provision the Appellant could have sought an
extension of the delivery schedule in the event that more
than 30 Print Orders were issued in a month (R4 File, Tab B,
p. 9). PHR, p. 13. An extension of delivery time would
have been particularly appropriate in such a case because
the "SCHEDULE" clause also holds the contractor to making a
"quick turn around" of work; i.e., "complete production,
distribution and mailing must be made within five work days"
(R4 File, Tab B, p. 9). PHR, pp. 13-14.
Finally, the Respondent contends that the Appellant's poor
performance in making timely deliveries under the contract
is amply supported in the record, and fully justified the
Contracting Officer's termination action in this case (R4
File, Tab W). PHR, p. 15. Accordingly, for all of these
reasons, the Respondent asks the Board to affirm the
Contracting Officer's partial termination of the Appellant's
contract for default (R4 File, Tab S).
DECISION 12/
The sole issue before the Board is whether or not the
Contracting Officer was in error in terminating the
remainder of the Appellant's contract for Program C460-S for
default. Because a default termination is a drastic action,
it may only be taken for good cause and on the basis of
solid evidence. 13/ See, e.g., Stephenson, Inc., GPO BCA
02-88 (December 19, 1991), 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.) If the Contracting Officer erroneously exercised his
default authority, then the termination is converted into one of
convenience and the Appellant would be allowed to recover for
the work performed. 14/ See, e.g., Stephenson, Inc., supra,
Sl. op. at 17; Chavis and Chavis Printing, supra, Sl. op. at 9;
Bonnar-Vawter, GPOCAB [No Docket Number], at 5 (1975) (citing,
Racon Electric Company, ASBCA No. 8020, 1962 BCA �
3,528. 15/ See also, 1988 Contract Terms, �
20.(g). In the judgment of the Board, the Appellant has
admitted to facts, amply supported in the record, concerning its
inability to meet the delivery schedules on numerous Print
Orders, which justified the termination of its Program C460-S
contract.
Under the standard "Default" clause in GPO contracts, a
Contracting Officer may, by 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.
1988 Contract Terms, �
20.(a)(1)(i), (ii),(iii). Furthermore , 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. Id., �
20.(b), 22.(d). However, the contractor must continue the work
not terminated. Id., �
20.(b). Moreover, 1988 Contract Terms provides that where the
default termination is based on the failure to ship/delivery or
perform the work within the time specified, the contractor will
not be liable for any excess costs if such a delinquency arises
from causes beyond the control and without the fault or
negligence of the contractor. Id., �
20(c) ("Default" clause), 22(e) ("Liquidated Damages" clause),
23 ("Delay in Deliveries" clause). 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.
Id., �
20.(c). 16/
The Government's initial burden in default cases is to show
that the contractor has failed, in some respect, to perform
on the contract. See, e.g., Chavis and Chavis Printing,
supra, Sl. op. at 11 ; Vogard Printing Corporation, GPOCAB
7-84 (January 7, 1986), Sl. op. at 5 (citing, Caskel Forge,
Inc., ASBCA No. 6205, 61-1 BCA �
2,891; National Aviation Electronics, Inc., ASBCA No. 18256,
74-2 BCA �
10,677). Because the findings and determinations of contracting
officers are, as a rule, considered prima facie correct, once
the default has been established, the contractor must then
demonstrate that the default was excusable. See, Chavis and
Chavis Printing, supra, Sl. op. at 11; Remco Business Systems,
Inc., GPOCAB [No Docket Number] (October 5, 1977), Sl. op. at
2-3 (citing, Norm Evans Construction Company, AGBCA No. 341,
75-1 BCA �
11,229); Mill River Press Lithographers, Printers, GPOCAB [No
Docket Number] (August 12, 1977), Sl. op. at 4 (citing, Beco,
Inc., ASBCA Nos. 9702, 9734, 1964 BCA �
4,493; Highway Products, Inc., ASBCA No. 14212, 69-2 BCA �
8,064); Vogard Printing Corporation, supra (citing. 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).
If the default termination is based on untimely performance,
the contractor's burden 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 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, Chavis and Chavis
Printing, supra, Sl. op. at 12; Loose Leaf Devices Company,
GPOCAB [No Docket Number] (1977), Sl. op. at 4-5 (citing, Ace
Electronics Associates, Inc., ASBCA No. 13899, 69-2 BCA �
7,922); Allegheny Plastics, Inc., GPOCAB [No Docket Number]
(1975), Sl. op. at 5; Scanforms, Incorporated, GPOCAB [No Docket
Number] (September 24, 1975), Sl. op, at 3; American Printing
and Publishing, Inc., GPOCAB [No Docket Number] (September 19,
1975), Sl. op. at 3-4 (citing, Lee K. Geiger Construction
Company, GSBCA Nos. 2152, 2164, 67-1 BCA �
6,189; American Construction Company, Inc., GSBCA No. 1097, 65-2
BCA �
4,964). 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, Chavis
and Chavis Printing, supra, Sl. op. at 12-13; Kaufman DeDell
Printing, Inc., GPOCAB [No Docket Number] (November 6, 1979), Sl.
op. at 5 (citing, Empire State Tree Service, VACAB No. 949, 71-1
BCA �
8,716); Bonnar-Vawter, Incorporated, supra, Sl. op. at 5-6
(citing, H. C. Thode, Inc., ASBCA Nos. 18177, 18294, 74-1 BCA �
10,418); Loose Leaf Devices Company, supra, Sl. op. at 7
(citing, Aargus Poly Bag, GSBCA Nos. 4314, 4315, 76-2 BCA �
11,927).
The Appellant in this case acknowledges that it failed to
meet the contract delivery dates for a substantial number of
Print Orders under the Program C460-S contract; i.e., the
Appellant admits that it was in default on those orders.
See, e.g., Chavis and Chavis Printing, supra, Sl. op. at 13.
As a general rule, the Government is entitled to strict
compliance with its specifications. 17/ See, e.g, Rose
Printing Company, GPO BCA 2-87 (June 9, 1989), Sl. op. at 6
(and cases cited therein); Fry Communications, Inc., GPO BCA
1-87 (June 1, 1989), Sl. op. at 5; Mid-America Business
Forms Corporation, GPO BCA 8-87 (December 30, 1988), Sl. op.
at 18-19. See also, Astro Dynamics, Inc., ASBCA No. 28320,
83-2 BCA �
16,900; Arnold Diamond, Inc., ASBCA No. 12335, 68-1 BCA �
8,672. Therefore, on June 26, 1990, when Labor first notified
the Respondent that seven of the Print Orders issued to the
Appellant�"
numbers 20008, 20015, 20024, 20025, 20026, 20027, and 20029�"
had not been delivered on time and were "now long overdue," it
would have been within its rights to terminate the contract
immediately. See, e.g., Stephenson, Inc., supra, Sl. op. at 21
(citing, Nuclear Research Associates, Inc., ASBCA No. 13563, 70-1
BCA �
8,237 (where the contractor's delivery was late by one day, the
Armed Services Board of Contract Appeals upheld the default
termination, stating that "once an appellant has failed to
deliver on time, the Government, absent excusable cause of
delay, has an indefensible right to terminate the contract,
unless its own conduct deprives it of that right."). See also,
e.g., Northeastern Manufacturing and Sales, ASBCA No. 35493,
89-3 BCA �
22,093; Appli Tronics, ASBCA No. 31540, 89-1 BCA �
21,555; Riggs Engineering Co., ASBCA No. 26509, 82-2 BCA �
15,955; R & O Industries, Inc., GSBCA No. 4804, 80-1 BCA �
14,196.
As a practical matter, however, the Government rarely
terminates contracts for slight delays, muchless
immediately. 18/ See, e.g., Stephenson, Inc., supra, Sl.
op. at 21-22; ACL-FILCO Corporation, ASBCA No. 26196, 83-1
BCA �
16,151 ("It has often been noted, . . . , that neither the
Government nor the contractor is well served by a precipitously
taken decision to terminate a contract for default . . .".).
Consequently, it is well-settled that the Government does not
waive its right to terminate a defaulted contract because it
fails to do so immediately when the right to terminate accrues.
19/ See, Frank A. Pelliccia v. United States, 208 Ct. Cl. 278,
525 F.2d 1035 (1975).
The decision to terminate a defaulted contract is a matter
largely within a contracting officer's discretion. See,
e.g., Stephenson, Inc., supra, Sl. op. at 23. As indicated
above, however, where the default action is based on the
failure to meet the delivery schedules specified, certain
provisions in the contract itself will excuse the delay if
it arose from causes beyond the control and without the
fault or negligence of the contractor. 20/ See, 1988
Contract Terms, �
20(c), 22(e), 23. Although the "Default" clause lists some types
of events which will excuse delays by contractors�"
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�"
these are examples only and the clause is not intended to be all
inclusive.
1988 Contract Terms, �
20.(c)
In this case, the Appellant essentially tenders two reasons
for its failure to meet the Program C460-S delivery
schedules: (1) the Appellant experienced major machinery
problems at the beginning of its contract because its new
Heidelberg press was not delivered until late June, and its
older model 2 color press (which was being used for Program
C460-S work in the interim) broke down in late May/early
June and it took time to fix it; and (2) Labor issued more
Print Orders in terms of frequency and number than the
maximum allowed by the contract itself. The Board believes
that neither of these reasons falls within the range of
acceptable occurrences or events which would excuse the
Appellant's failure to perform.
1. Machinery Problems
It is accepted that a contractor has an obligation to
reasonably assure itself of the availability of necessary
supplies and machinery prior to making a contract commitment
with the Government. See, Chavis and Chavis Printing,
supra, Sl. op. at 13-14; Scanforms, Incorporated, supra, Sl.
op. at 4 (citing, Woodhull Construction Company, ASBCA No.
3628, 57-1 BCA �
1,260; First Dominion Corporation (1967), GSBCA No. 2659, 69-1
BCA �
7,488); American Printing and Publishing, Inc., supra, Sl. op.
at 4; Allegheny Plastics, Inc., supra, Sl. op. at 5-7 (citing,
Vereinigte Osterreichische Eisen and Stahlwerke
Aktiengesellschaft, IBCA No. 327, 1962 BCA �
3,503). Indeed, as a general rule the unexplained breakdown of
machinery is not excusable per se; in fact, the difficulty
attending the performance of a contract is not an excusable
cause of delay. See, Chavis and Chavis Printing, supra, Sl. op.
at 14; Allegheny Plastics, Inc., supra, Sl. op. at 7 (citing,
Carnegie Steel Company v. United States, 240 U.S. 156 (1916)).
The reason for these rules is simple�"
implicit in a contractor's promise to perform is its assurance
that it has the ability to perform; i.e., that there is available
machinery and replacement parts so that performance will not be
delayed due to machinery breakdown. See, Chavis and Chavis
Printing, supra, Sl. op. at 14; Allegheny Plastics, Inc., supra,
Sl. op. at 7. See also, Jomar Enterprises, Inc., GPO BCA 13-86
(May 25, 1989), Sl. op. at 3. As explained by one of GPO's ad
hoc boards:
�
Every contractor impliedly represents, when he makes his bid,
that he can accomplish what he sets out to do, within the time
upon which there was an agreement; and by such implied
representation, he is not, in the eyes of the law, entitled to
maintain a mental reservation, to the effect, that he can perform
within the time required provided the material suppliers lives
[sic] up to their commitment and he can obtain the paper stock in
time to maintain the required schedule. [Citation omitted.] The
failure of the paper supplier to make timely delivery of the
necessary stock does not excuse the contractor from resulting
delays in contract completion. [Citation omitted.]
�
Scanforms, Incorporated, supra, at 4. In short, it is the
contractor's responsibility to have labor, plant, equipment,
finances and material adequate for contract performance. See,
Chavis and Chavis Printing, supra, Sl. op. at 14-15; Allegheny
Plastics Inc., supra, Sl. op. at 7 (citing, Fulton Shipyard, IBCA
No. 735-10-68, 71-1 BCA �
8,616). Therefore, the unexplained mechanical failure of the
Appellant's older model 2 color press in this case is not an
acceptable excuse which, under the law, would allow the
Appellant to escape the consequences of its failure to perform
the tasks required of it under the contract.
Similarly, although the Appellant asserts that the reason
its new press was unavailable when it commenced performance
under the contract was because of some damaged parts that
had to be obtained from Germany, it has offered no evidence
which would demonstrate that the failure of Heidelberg�"
its press supplier�"
to deliver the new machine on time was due to Heidelberg's
negligence or reasons beyond its control. Cf., Loose Leaf
Devices Company, supra, Sl. op. at 7 (citing, Williamsburg
Drapery Co. v. United States, 177 Ct. Cl. 776, 799, 369 F.2d 729
(1966)). In the Board's judgment, the Appellant's reliance on
the delay of its vendor of machinery to excuse its own failure to
meet the delivery schedules under the Program C460-S contract,
affords it no protection under the law. The Appellant had an
obligation under the contract to plan for its performance,
including, prior to submitting its bid and binding itself to the
delivery terms of the contract, assuring that essential materials
and machinery would be available. In the absence of any evidence
from the Appellant that the Heidelberg press was delivered late
because of the negligence on the part of its press supplier, the
Board must conclude that the untimely shipment under Program
C460-S was attributable to the Appellant's own failure to
properly plan for its performance.
The burden of proof was on the Appellant to demonstrate that
its failure to perform was due to causes beyond its control
and without its fault or negligence. However, in the
Board's opinion, the reasons offered by the Appellant to
excuse its delay were not unforeseeable and beyond its
control and without its fault or negligence. Accordingly,
as to this aspect of its defense, the Appellant has not met
its burden of proof with respect to excusing its failure to
make timely shipments under Program C460-S.
2. Excessive Print Orders Issued by Labor
The Appellant's principal excuse for its failure to meet the
Program C460-S delivery schedules is its claim that Labor
overtaxed its production capacity by issuing more Print
Orders than the maximum allowed under the contract. The
Appellant's position, detailed above, is based on its view
of Labor's "average" requirements over the life of the
contract. Interpreting the contract in that light, the
Appellant contends that: (1) the 69 Print Orders issued by
Labor between May 15, 1990 and August 20, 1990 represented
160.61 percent of the average expected volume;
(2) Labor ignored the contractual restriction against generating
more than the 30 Print Orders in "any one month," compelling the
Appellant to work at 278.79 percent of the average expected
volume between May 15, 1990 and July 5, 1990, and never less than
131.83 percent above the average expected volume at any time
during its performance of the contract; (3) Labor issued Print
Orders for the larger AWSB Print Orders at 172.18 percent of the
expected volume and required the Appellant to complete 37.14
percent of the annual work load between May 15, 1990 and August
23, 1990; and (4) the Print Orders received from Labor required
the Appellant to produce two million impressions and 1,052 pages,
or nearly one-half the amount expected over the contract term.
In summary, the gravamen of the Appellant's challenge to the
default termination action, and indeed the main reason it claims
that it was unable to meet the scheduled shipment dates, was that
Labor was ordering work at a rate nearly 200 percent, or double,
the quantities estimated in the contract specifications. PHR, p.
17.
In the Board's view, the Appellant's assertion blaming its
failure to meet the required delivery schedules under the
contract because Labor sent it excessive work is without
foundation in the record. At the outset, the Board is
mindful that Program C460-S was a "direct-deal term
contract," which allowed Labor to place Print Orders
directly with the Appellant rather than routing them through
the Respondent. GPO Handbook, Section IV, �
1, at 8. As indicated previously, agency direct-deal authority
". . . extends only the placement of print orders and to the
transmission of copy and proofs". GPO Handbook, Section IV, �
2, at 9. See, Castillo Printing Co., supra, Sl. op. at 3-4.
The authority of a customer agency's Printing Officer is
strictly circumscribed by the GPO Handbook, 1988 Contract Terms,
and the contract itself. Id., Sl. op. at 47. Generally, it is
limited to such tasks as issuing Print Orders, issuing bills of
lading, giving specific instructions regarding production, and
determining the production schedule for each Print Order. Id.
The Board sees nothing in this record to indicate that Fennell,
Labor's Printing Officer, deviated from these guidelines or
misunderstood his authority. Id., Sl. op. at 4, 47-48.
The key concept in the Appellant's position is that there was
an "average expected volume" of work arising from the
estimates contained in the "FREQUENCY OF ORDERS" clause. As
the Board understands it, the concept is based on certain
assumptions about the language in the "FREQUENCY OF ORDERS"
(and the "DETERMINATION OF AWARD" clause to some degree),
namely: (1) the language regulates the frequency at which
such orders could be issued over the life of the contract (a
maximum of 30 orders per month); and (2) the clause
guarantees the contractor a range of work over the contract
term with respect to number of orders, types of publications,
size of jobs and overall number of impressions and pages.
The concept also assumes that Labor would issue orders at a
reasonably uniform rate over the contract term. Accordingly,
taking these assumptions into account, the Appellant made
certain business calculations which apportioned the annual
estimates of work contained in the "FREQUENCY OF ORDERS"
clause on a monthly and work day basis, to arrive at its bid
for Program C460-S. The Appellant's conclusion that Labor
was ordering work at an accelerated rate nearly double the
quantities estimated in the contract specifications is rooted
in this "per month" and "per work day" interpretation of the
"FREQUENCY OF ORDERS" clause. While the Board appreciates
the business reasons which may have led the Appellant to try
to forecast a steady rate of work and income, we believe that
it has misconstrued the contract.
The first assumption made by the Appellant involves its
interpretation of so much of the "FREQUENCY OF ORDERS"
clause which provides: "No more than 30 print orders will be
placed in any one month" (R4 File, Tab B, p. 5). The
Appellant sees the key phrase "any one month," as meaning
"any 30-day period." PHR, pp. 13, 16. Under this view, the
Appellant is correct when it says that during the first 30
days of its Program C460-S contract (May 15, 1990 to June
15, 1990), Labor issued Print Orders (35) in excess of the
number of allowable number (30) (R4 File, Tab AA). However,
the Appellant's contention that Labor issued the same number
of Print Orders in the 30 days between June 4, 1990 and July
5, 1990, is not borne out by the record; i.e., only 29 Print
Orders�"
numbers 20018 to 20046�"
were issued in that period (R4 File, Tab AA). 21/
Nonetheless, if one accepts the Appellant's further refinement of
its concept and considers only the work days available for
contract performance, then its conclusion that Labor issued Print
Orders at a rate exceeding "average expected volume" throughout
the contract is probably true; e.g., 278.79 percent of the
average expected volume in the first 30 days under the contract,
never less than 131.83 percent above the average expected volume
at any time during the Appellant's performance, and 160.61
percent overall for the period May 15, 1990 to August 20, 1990
(R4 File, Tab V). See also, PHR, p. 15. Furthermore, applying
the Appellant's formula to the "DETERMINATION OF AWARD" clause in
the contract, there is some justification, at least
mathematically, for its statement that Labor was ordering work at
a rate nearly 200 percent, or double, the quantities estimated in
the contract specifications. PHR, p. 17.
Against the Appellant's "30 Print Orders in 30 days" view of
the "FREQUENCY OF ORDERS" clause, the Respondent's
interposes a much simpler interpretation�"
the disputed phrase "any one month," in common parlance, means a
"calendar month." PHR, p. 15. According to the Respondent, this
is particularly true because it keeps its business records on a
calendar month basis. PHR, p. 17. Certainly, the record supports
the Respondent's contention that Labor never issued more than 30
Print Orders in any one calendar month; i.e., the documentary
evidence confirms that Labor issued 69 Print Orders to the
Appellant in the following sequence�"
11 in May 1990, 30 during June 1990, 14 in July 1990 and 14
during August 1990 (up to August 20) (R4 File, Tabs W and AA).
(PHR, p. 15. However, by asserting during the prehearing
telephone conference that if the Appellant was unsure of the
intent of the phrase "any one month" in the "FREQUENCY OF ORDERS"
provision it was obligated to ask the Contracting Officer for a
clarification before submitting its bid, the Respondent has
raised, by implication, the possibility that the phrase may be
ambiguous. 22/ PHR, p. 17.
In fact, the word "month" can have the meaning ascribed to
it by both parties in this case; i.e., standard reference
sources define the word as either (1) a "calendar month," or
(2) the time from any date of one month to the corresponding
date of the next. WEBSTER'S NEW WORLD DICTIONARY 880 (3d
Coll. ed. 1988); BLACK'S LAW DICTIONARY 1159 (4th ed. 1968).
Consequently, on the surface at least, there might appear to
be an inherent ambiguity in the IFB's "FREQUENCY OF ORDERS"
clause. However, the Board has observed in the past that
the rules concerning ambiguous provisions come into play
only if the meaning of the disputed terms are not
susceptible to interpretation through the usual rules of
contract construction. Castillo Printing Co., supra, Sl. op.
at 27. The most basic principle of contract construction is
that the document should be interpreted as a whole. 23/
See, e.g., Hol-Gar Manufacturing Corporation v. United
States, 352 F.2d 972 (1965); Restatement (Second) Contracts,
�
202(2) (1981). Hence, it is well-accepted that all provisions
of a contract are to be given effect and no provision is to be
rendered meaningless. See, e.g., Fortec Constructors v. United
States, 760 F.2d 1288, 1292 (Fed. Cir. 1985); Jamsar, Inc. v.
United States, 442 F.2d 930 (Ct. Cl. 1971); Grace Industries,
Inc., ASBCA No. 33553, 87-3 BCA �
20,171. Stated otherwise, a contract should be interpreted in a
manner which gives meaning to all its parts and in such a
fashion that the provisions do not conflict with each other, if
this is reasonably possible. See, e.g., B. D. Click Company v.
United States, 614 F.2d 748 (Ct. Cl. 1980).
In this particular case the "FREQUENCY OF ORDERS" clause
does not exist in a vacuum, but rather it must read in
conjunction with the "SCHEDULE" clause. When the Board
construes the relevant provisions as a whole, the
contractual scheme becomes readily apparent�"
normally no more than 30 Print Orders will be placed in any one
month ("FREQUENCY OF ORDERS" clause) but where the Government
issues more than 30 Print Orders, the contractor will be
entitled, on request, to an extended delivery schedule for the
additional work ("SCHEDULE" clause). Since the "SCHEDULE" clause
also envisions a brief performance period on Print Orders �"
"[c]omplete production, distribution and mailing must be made
within five workdays"�"
the Board finds itself in agreement with the Respondent that an
opportunity for longer due dates on orders in excess of 30 is a
reasonable accommodation to the extra strain on a contractor's
productive capacity. Furthermore, it seems highly unlikely to
the Board that if a contractor, attempting to satisfy the
Government's increased needs, asked for such an extension that
the Government would deny it, because such an adverse decision
could be construed as a breach of its implied duty to cooperate.
24/ See, e.g., Stephenson, Inc., supra, Sl. op. at 38-41. In
short, the contract itself foresees the possibility of additional
work and provides the appropriate relief. Under this
interpretation, whether a "month" is a calendar month or any 30-
day period extending from a given date of one month to the
corresponding date of the next, is immaterial; i.e., the subject
matter and principal concern of the relevant language in the
contract is the number of orders, not the number of days.
Therefore, because the Board sees no conflict between the
"FREQUENCY OF ORDERS" clause and the "SCHEDULE" clause, it also
finds that there is no ambiguity in the intent of the phrase "any
one month" in the former provision. 25/
While the Appellant contends that it was receiving more than
30 Print Orders a month, contrary to the limitation contained
in the "FREQUENCY OF ORDERS" clause, there is nothing in the
record to indicate that it sought the relief provided for in
the "SCHEDULE" clause of the contract when it found its
production capacity inadequate to adhere to the order
delivery schedules under those circumstances. Although the
Appellant asserts that it had informed the Contracting
Officer that Labor was exceeding the volume indicated in the
"FREQUENCY OF ORDERS" clause (R4 File, Tabs J (letter of July
11, 1990) and V; PHR, pp. 16-17), the record is devoid of any
evidence prior to the termination date of the contract to
show that it either formally asked for an extension of the
required delivery schedules or lodged an official protest
with the Contracting Officer about Labor's issuing an
excessive number of Print Orders. The Appellant's assertion
in its complaint that it "notified the Contracting Officer
that the Agency was exceeding the volume limits" is an
insufficient basis for inferring that it initiated either of
these actions at the appropriate time (R4 File, Tab V). Cf.,
Fry Communications, Inc./InfoConversion Joint Venture, GPO
BCA 9-85 ((Decision on Remand, August 5, 1991), Sl. op. at
33, n. 31 ("As the Claims Court observed [in Fry
Communications, Inc./InfoConversion Joint Venture v. United
States, No. 174-89C (Cl. Ct. February 5, 1991), Sl. op at
25], such allegations and statements are not sufficient to
enable an appellant to carry its burden of proof on the
reliance issue."). Also cf., Singleton Contracting
Corporation, GSBCA No. 8548 (January 18, 1990), 90-2 BCA �
22,748; Tri-State Services of Texas, Inc., ASBCA No. 38019, 89-3
BCA �
22,064 (citing, Gemini Services, Inc., ASBCA No. 30247, 86-1 BCA
�
18,736). Accordingly, even if the Board accepted the
Appellant's theory that the "FREQUENCY OF ORDERS" clause
absolutely limited Labor to issuing no more than 30 Print Orders
a month, and believed that the customer agency's generation of a
larger number of orders amounted to a violation of the contract
and was the principal cause for the contractor's failure to meet
the delivery schedules, there would be no basis for the Board to
reverse the Contracting Officer's termination decision because
it is well-settled that no recovery may be had if the contract
itself provides a remedy. Cf., Triax-Pacific, A Joint Venture,
ASBCA No. 36353, 91-2 BCA �
23,724.
Like its first assumption, the Appellant's second
supposition �"
that the contract guarantees the contractor a range of work over
the contract term with respect to number of orders, types of
publications, size of jobs and overall number of impressions and
pages �"
will not withstand scrutiny when measured against the express
language of the contract. Thus, the "REQUIREMENTS" clause
plainly states that it ". . . is a requirements contract for the
items and for the period specified herein. . . ." and that ". .
. [t]he quantities of items specified herein are estimates only,
and are not purchased hereby" (R4 File, Tab B, p. 4).
Furthermore, while providing that ". . . the Government shall
order from the contractor all the items set forth which are
required to be purchased by the Government . . .", the
"REQUIREMENTS" clause also makes clear that ". . . if the
Government's requirements for the items set forth herein do not
result in orders in the amounts or quantities described as
'estimated', it shall not constitute the basis for an equitable
price adjustment under this contract." Id. Moreover, the
"REQUIREMENTS" clause states that ". . .[s]ubject to any
limitations elsewhere in this contract, the contractor shall
furnish to the Government all items called for by the print
orders issued in accordance with the 'Ordering' clause of this
contract." Id. Similarly, the first sentence in the "FREQUENCY
OF ORDERS" clause clearly states that "[i]t is impossible at
this time to predetermine the frequency or number of orders that
will be placed on this contract," and the next one observes that
". . . based on past history, it is anticipated that
approximately 104-265 orders will be placed during the contract
term . . ." (R4 File, Tab B, p. 5). Indeed, the "FREQUENCY OF
ORDERS" clause also lists the potential number of orders for
AWSBs, AWSSs, IWSSs, and IWSBs, in terms of approximations of
orders per year, copies per order, and pages per copy. Id.
Finally, the pertinent language in the "DETERMINATION OF AWARD"
provision states ". . . the following
units of production . . . are the estimated requirements to
produce one year's production under this contract. These units
do not constitute, nor are they to be construed as, a guarantee
of the volume of work which may be ordered under this contract .
. . " (R4 File, Tab B, p. 11).
When these several provisions are considered as a whole, it
is clear that while the Government agreed to procure all of
its AWSB, AWSS, IWSS, and IWSB requirements between May 1,
1990 and April 30, 1990, from the Appellant, it made no
commitment as to a specific quantity of work. There is no
other way to read phrases such as "estimates only," "amounts
or quantities described as 'estimated'," "impossible at this
time to predetermine the frequency or number of orders,"
"approximately 104-265 orders," "estimated requirements,"
and "[t]hese units do not constitute, nor are they to be
construed as, a guarantee of the volume of work which may be
ordered," without distorting the clear meaning of the
contract. Cf., Tamms Lithography, Inc., GPO BCA 14-89 (July
13, 1990), Sl. op. at 7. These terms, all conveying the same
thought and appearing in several critical provisions, should
have alerted a reasonably prudent contractor that the
Respondent merely making a good faith guess, based on past
experience, as to the wide range of potential work which
could be expected under the contract. Accordingly, the
Board agrees with the Respondent that absent a specific
commitment from the Government with respect to an exact
volume of work, the Appellant's "average expected volume"
theory falls because there is no standard against which to
measure the frequency or number of Print Orders generated by
Labor in order to determine if the rate at which it issued
them was excessive.
This is not to say that the Appellant's "average expected
volume" concept has no usefulness whatsoever. Certainly,
from a business point of view, calculations based on an
average of anticipated work may serve as a convenient device
for determining contractor costs for the purpose of bidding
and for scheduling work in the plant, but it has nothing to
do with the scheduling of work under the contract by the
agency which requires it. Furthermore, the idea of an
"average expected volume" cannot be used to rewrite the
contract. That is, when the Appellant refines its concept
into anticipated amounts of work on a monthly and daily
basis, it is, in effect, attempting to impose its own view
of good business practices�"
in which orders are spread evenly over a fixed period of time�"
on the express language of the contract. PHR, p. 16. Contrary to
the Appellant's calculations, nothing in the "FREQUENCY OF
ORDERS" clause either mentions or can be construed as promising
work on an average "per month" or "per working day" basis;
instead the provision talks of approximate "orders per year,"
"copies per order," and "pages per copy." These terms are not
synonymous, and it is clear that the Government could order more
or less than one order, more or less copies per order or more or
less pages per copy of several types of publications and still be
within the approximate or annual quantity of work listed.
Moreover, the Appellant's "per month" or "per working day"
averages disappear when one considers that under the express
language of the contract, assuming the maximum estimate of 265
orders were placed at the maximum rate of 30 a month, the
Government could have satisfied its contractual obligations in
less than nine months; i.e., nothing in the contract required
Labor to evenly distribute its Program C460-S Print Orders over
the entire contract term of 12 months, all that was necessary was
that the agency place most of its orders within that period.
Cf., Tamms Lithography, Inc., supra, Sl. op. at 7.
Because there was no "average expected volume" of work under
the contract, and thus no standard against which to measure
the frequency or number of Print Orders issued by Labor, the
Appellant's claim that the amount of work ordered by the
agency exceeded by 200 percent the quantities estimated in
the contract specifications has no factual support. As a
consequence, the Board finds no merit to the Appellant's
assertion that its failure to meet the Print Order delivery
schedules under the contract was excusable because it
resulted from an excess of work required by Labor. Indeed,
based on this record, the Board believes that rather than
being the major source of the Appellant's delivery delays,
the frequency and number of Print Orders issued by Labor
only became a problem when the Appellant's new press failed
to arrive on time and its old press broke down. This view
is reenforced by the fact that the Appellant not only
continued to accept the work which it now contends was
"excess," but also informed the Contracting Officer, on July
11, 1990, in response to the first "Cure Notice," that
everything was "on track" and that it expected "to be
completely current on the contract before July 23," because
its new Heidelberg press was "now in place and running and
we are almost completely caught up" (R4 File, Tab J). 26/
Accordingly, having examined the contract terms and the
facts in the record, the Board concludes that there is no
merit to the Appellant's contention that Labor was ordering
work at a rate nearly double the estimated quantities shown
in the contract specifications, and therefore, its defense
to the termination action based on that view must fail.
CONCLUSION
The Board's analysis of the record leads it to the
conclusion that the Contracting Officer was fully justified
in terminating the remainder of the Appellant's Program
C460-S contract for default for the grounds stated in his
"Notice of Termination/Complete," dated August 23, 1990.
The "SCHEDULE" clause of the contract clearly states that
"[a]dherence to this schedule must be maintained" (R4 File,
Tab B, p. 9). That time was of the essence in this contract
should have been apparent to the Appellant from the three
"Cure Notices" it received and the numerous telephone calls
concerning overdue Print Orders and requests for rescheduled
shipping dates. 27/ The Appellant only replied to the first
"Cure Notice." The Appellant then admitted it was having
problems meeting the Print Order delivery schedules but
sought to excuse the delays because of (1) the late arrival
of a new press; (2) the mechanical breakdown of its old
press; and (3) the issuance of an excessive number of orders
by Labor. Although the Appellant assured the Contracting
Officer that with its new press the backlog of work would be
eliminated by July 23, 1990, subsequent complaints from
Labor disclosed continued unsatisfactory performance by the
Appellant with respect to meeting the Print Order delivery
schedules. The Contracting Officer's second and third "Cure
Notices" elicited no response from the Appellant. Because of
the Appellant's continuing failure to comply with the
delivery requirements of Program C460-S, the Contracting
Officer terminated the balance of its contract effective
August 23, 1990 (R4 File, Tab S). 28/ Considering the
record before it as a whole, the Board is unable to say that
the Contracting Officer's decision to partially terminate
the contract for Program C460-S for default under the
circumstances described herein is clearly erroneous.
Therefore, the Board AFFIRMS the Contracting Officer's
decision and DENIES the appeal. �
It is so Ordered.
_______________
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 October 19, 1990. 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 hereafter as R4 File, with an appropriate Tab
letter also indicated. As originally submitted, the R4 File
consisted of documents identified as Tab A through Tab XYZ.
However, at the prehearing telephone conference held on December
12, 1990, Counsel for GPO requested permission to introduce
copies of all 69 Print Orders issued to the Appellant under the
contract as Tab AA. See, Prehearing Conference Report, dated May
8, 1991, p. 15 (hereinafter PCR). On December 20, 1990, the
Board received the Print Orders in question and made them part of
the record. A copy of the documents were also provided to the
Appellant.
�
With the consent of the parties, this case was joined for the
purposes of a prehearing telephone conference with another appeal
filed by the Appellant, GPO BCA Docket No. GPO BCA 15-90. During
the prehearing telephone conference, however, the parties were
assured by the Board that even though the appeals had been
consolidated for that limited purpose, separate decisions would
be rendered in each. See, PCR, p. 1 By Order, dated August 22,
1991, the Board officially severed both cases. See, Order
Closing the Record and Filing of Briefs, dated August 22, 1991,
p. 1.
�
The record discloses that the Program C460-S QATAP standards for
both Product Quality Levels (Printing Attributes and Finishing
Attributes) was Level IV (R4 File, Tab B, p. 2). The Inspection
Level standard for Non-Destructive tests was General Inspection
Level I, while the measurement for Destructive tests was Special
Inspection Level S-2 (R4 File, Tab B, p. 2). There were also two
specified standards�"
one relating to the Type Quality and Uniformity attribute (Camera
Copy/Films) and the other to the Solid and Screen Tint Color
Match attribute (Pantone Matching System) (R4 File, Tab B, p. 2).
�
The contract in question was a "direct-deal term contract." As
explained in the GPO Agency Procedural Handbook, GPO Publication
305.1, dated March 1987 (GPO Handbook): "[d]irect-deal term
contracts allow the customer agency to place print orders (GPO
Form 2511) directly with contractors rather than routing them
through the GPO for placement." GPO Handbook, Section IV, �
1, at 8. The purpose of this method of contract administration
is " . . . to ensure that agency printing needs are met in the
most effective and efficient manner possible." Id. It should
be noted, however, that agency direct-deal authority ". . .
extends only the placement of print orders and to the
transmission of copy and proofs. . . .All other authority rests
with GPO's Contracting Officers." GPO Handbook, Section IV, �
2, at 9. See, Castillo Printing Co., GPO BCA 10-90 (May 8,
1991), Sl. op. at 3-4.
5. The record does not clearly identify who served as Labor's
Printing Officer for the Program C460-S contract. Both Fennell
and a "D. Rucker" issued Print Orders for Labor, although Rucker
signed the vast majority of them (53) (R4 File, Tab AA).
However, no question has been raised in this case concerning an
improper exercise of direct deal authority by Labor's Printing
Officer, thus his/her exact identity is immaterial. See,
Castillo Printing Co., supra, Sl. op. at 14, 42-51. Therefore,
for the purposes of this decision, the Board will assume that
Fennell was Labor's Printing Officer because he was clearly the
Respondent's principal contact at the customer agency (R4 File,
Tabs J and P).
�
The complaints in question concerned quality shortcomings with
respect to Print Orders 20006 and 20007 (R4 File, Tabs H and I).
Print Order 20006 had several defects in printing and finishing,
including missing pages and the wrong binding, and Labor asked
that the order be reprinted (R4 File, Tab H). Similarly, Print
Order 20007 was delivered with several printing defects, but
Labor was willing to accept the order at a discount (R4 File, Tab
I). Apart from the two Print Orders mentioned by Fennell, the
record indicates that the Appellant had quality control problems
with some other deliveries, particularly with regard to "short
shipments;" i.e., Print Order 20001 (90 copies missing), Print
Order 20015 (135 copies missing), Print Order 20042 (19 copies
missing) and Print Order 20043 (40 copies missing) (R4 File, Tabs
M, N, X and Y). In addition, the record shows that Print Orders
20036, 20047, 20048 were shipped in the wrong containers, which
resulted in damage to the contents (R4 File, Tabs P, �
2, and U). However, since the Contracting Officer based the
termination action on the Appellant's failure to comply with the
contract's delivery requirements, and not on any quality
problems with the products shipped, the contractor's inability
to satisfy any other provision of the contract has not been
considered in the context of this decision.
�
The record indicates that on July 6, 1990, Scott believed that
his "Cure Notice" of July 2, 1990, had not been sent to the
Appellant (R4 File, Tab J). However, there is other evidence in
the record which indicates that Scott was mistaken. First, on
July 11, 1990, while not specifically referring to a "Cure
Notice," the Appellant wrote to Scott in response to his "letter
dated July 2, 1990," and proceeded to explain the reasons for the
late deliveries on Program C460-S, and to tell him of "the
corrective measures we have taken" to remedy the problem (R4
File, Tab J). Second, on August 22, 1990, when Lowery, who had
replaced Scott as Contracting Officer for Program C460-S, wrote
to the Respondent's Contract Review Board (CRB) seeking
permission to terminate the Appellant's contract for default, he
stated that "[o]n July 2, 1990, . . . a cure notice was sent to
[the Appellant]" (R4 File, Tab Q). Consequently, the Board
concludes that the "Cure Notice" of July 2, 1990, was in fact
sent to the Appellant, was received, and was answered on July 11,
1990.
�
The record contains two exhibits, both computer printouts, which
show the adjustments made in the delivery schedules of Print
Orders received by the Appellant under Program C460-S (R4 File,
Tabs R and W). One document, entitled "Contract Compliance
Section Exception Report, As of 8/20/90," was received from the
Appellant on August 22, 1990, and is labeled Tab R. The other,
identified as Tab W, is entitled "Contractor Performance History
on Program 460-S�"
Prior 5 Months to Present." The Board will refer to the latter
computer printout in this decision because it is a more complete
listing.
�
After the prehearing telephone conference in this case, by letter
dated February 12, 1991, Counsel for GPO informed the Appellant
that the Respondent would recommence setoff procedures to recoup
an additional amount of excess reprocurement costs on Program
C460-S Print Orders. See, Letter from Drew Spalding, Deputy
General Counsel to Mr. Richard Swanson, dated February 12, 1991.
Enclosed with his letters was a listing of reprocured orders.
According to this listing, 59 Print Orders had to be reprocured.
�
The Contracting Officer's memorandum is dated August 22, 1990.
By that date, however, all 69 Print Orders received by the
Appellant under Program C460-S had been issued by Labor, not the
61 indicated in the memorandum to the CRB (R4 File, Tab AA).
Apparently, the Contracting Officer, became aware of the
remaining eight Print Orders in the Appellant's hands after
August 22, 1990, since the termination notice issued the
following day reflects this knowledge; i.e., the cancellation is
effective beginning with Print Order 20070 (R4 File, Tab S).
�
At the prehearing telephone conference, the Appellant offered two
additional reasons the Government was at fault for its delivery
problems, namely (a) Labor erroneously gave Print Orders meant
for the Appellant to another company and it took time to retrieve
them, and (b) Labor issued some Print Orders with insufficient or
wrong information. PHR, p. 16. However, from the context of the
conference proceedings, it is clear to the Board that these
incidents, if true, are only marginal considerations. The
Appellant's main claim, and indeed the one which is the linchpin
of its position, is that Labor was ordering work far in excess of
the limits in the contract. PHR, p. 17.
�
The record on which the Board's decision is based consists of:
(a) the R4 File, consisting of documents labeled Tab A through
Tab XYZ, as originally filed by the Respondent on October 19,
1990; (b) the multi-document exhibit submitted by the Respondent
on December 20, 1990, consisting of the 69 Print Orders issued
under Program C460-S, and added to the R4 File as Tab AA; (c) the
Appellant's letter, dated August 31, 1990, protesting the
Contracting Officer's termination action and serving as the
Complaint in this case; (d) the Prehearing Conference Report; and
(6) the Respondent's letter, dated February 12, 1991, to the
Appellant concerning excess reprocurement costs on Program C460-
S. The record was officially closed on September 9. 1991,
pursuant to the Board's Order, dated August 22, 1991. See, Order
Closing the Record and Filing of Briefs, dated August 22, 1991,
p. 2. On November 12, 1991, the Board received a Request for
Decision (Request), dated November 8, 1991, from the Appellant in
which it sought, among other things, to present additional
information concerning excess reprocurement costs. Because the
Appellant's Request was received after the record was closed, it
has not been considered by the Board in the context of this
decision.
13. 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).
�
As indicated above, the remedy requested by the Appellant in its
complaint letter of August 31, 1990, was reinstatement of its
Program C460-S contract (R4 File, Tab V). The Board has stated
on numerous occasions that it derives powers solely from the
"Default" clause of the contract. See, e.g. Chavis and Chavis
Printing, GPO BCA 20-90 (February 6, 1991), Sl. op. at 10; Ascot
Tag and Label Company, Inc., GPO BCA 14-85 (August 7, 1987), Sl.
op. at 23; Peak Printers, Inc., GPO BCA 12-85 (November 12,
1986), Sl. op. at 6. This case is before the Board under the
"Disputes" clause because the Appellant is protesting the final
decision of a GPO Contracting Officer terminating the remainder
of its contract for default (R4 File, Tab S). 1988 Contract
Terms, �
5.(b). It is well-accepted in Government contract law that even
where jurisdiction exists, as here, a Board of Contract Appeals
will not grant a terminated contractor's request for
reinstatement of the contract because that is a matter within
the authority of the agency, as exercised by its contracting
officers. See, e.g., Crow Fitting Company, Inc., ASBCA No.
25378, 81-1 BCA �
14,951. The Board follows this general rule.
�
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. Prior to the Board's
creation, appeals from decisions of GPO Contracting Officers were
considered by ad hoc Contract Appeals Boards (the decisions of
these ad hoc boards are hereinafter cited as GPOCAB). While the
decisions of these ad hoc boards are not legally binding on the
Board, it is the Board's policy to follow them where applicable
and appropriate.
�
Where the failure to deliver or perform is caused by the default
of a supplier or subcontractor, the cause of the default must be
beyond the control of both the prime contractor and
subcontractor, and without the fault or negligence of either, in
order for the prime 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. 1988
Contract Terms, �
20.(d).
17. It is "black letter" Government contract law that time is of
the essence in any contract containing fixed dates for
performance. See, e.g., Clay Bernard Systems International, Ltd.
v. United States, 22 Cl. Ct. 804 (1991); D. Joseph DeVito v.
United States, supra, 413 F.2d at 1154. "Time is of the essence"
means that asserted facts regarding urgency are legally
irrelevant; i.e., there is simply no necessity that there be an
urgency to a delivery date requirement for time to be of the
essence. See, e.g., Kit Pack Company, Inc., ASBCA No. 33135,
89-3 BCA �
22,151; Control Mechanisms, Inc., ASBCA No. 27180, 84-2 BCA �
17,330. Although a contrary view was expressed in the Trial
Judge's opinion adopted by the Claims Court in Franklin E.
Penney Co. v. United States, 207 Ct. Cl. 842, 524 F.2d 668
(1975)�"
i.e., whether time is of the essence depends upon the nature of
the contract and the particular circumstances of the case�"
cases both before and after Penney have reinforced the absolute
"time is of the essence" rule. See, e.g., Clay Bernard Systems
International, Ltd. v. United States, supra, 22 Cl. Ct. 804
(1991); Simmons Precision Products, Inc. v. United States, 546
F.2d 886 (Ct. Cl. 1976); D. Joseph DeVito v. United States,
supra, 413 F.2d 1147 (Ct. Cl. 1969). See also, Stephenson, Inc.,
supra, Sl. op. at 25, n. 29, where the Board expressed its view
that the Penney factors are just additional considerations in
deciding whether a waiver has occurred and that the general
rule�"
time is of the essence in any contract containing fixed dates for
performance�"
still holds.
18. See, John Cibinic, Jr. & Ralph C. Nash, Jr., Administration
of Government Contracts 2d ed., (The George Washington
University, 1986), p. 677 (hereinafter Cibinic and Nash). As the
Court of Claims observed in DeVito: "[t]he Government is
habitually lenient in granting reasonable extensions of time for
contract performance, for it is more interested in production
than in litigation." D. Joseph DeVito v. United States, supra,
413 F.2d at 1153.
�
The law gives a contracting officer a reasonable period of time
to investigate the facts and to determine what course of action
would be in the best interest of the Government as the non-
defaulting party. During this forbearance period the Government
may terminate the contract at any time, without prior notice.
See, e.g., Raytheon Service Co., ASBCA No. 14746, 70-2 BCA �
8,390; Lapp Insulator Co., ASBCA No. 13303, 70-1 BCA �
8,219, mot. for reconsid. denied 70-2 BCA �
8,471. The extent of a reasonable forbearance period depends on
the facts and circumstances of each individual case. See, e.g.,
H. N. Bailey & Associates v. United States, 196 Ct. Cl. 156, 449
F.2d 387 (1971); Methonics, Incorporated v. United States, 210
Ct. Cl. 685 (1976).
�
The primary function of the excusable delays provision is to
protect the contractor from sanctions for late performance. To
the extent that his/her delay is excusable, the contractor is
protected from default termination, liquidated damages, actual
damages, or excess costs of reprocurement or completion. See,
Cibinic and Nash, note 18 supra, p. 410.
�
The Board notes that 18 of these 29 Print Orders �"
numbers 20018 to 20035 �"
would already be included in the initial 30-day period of May
15, 1990 to June 15, 1990. Consequently, the Appellant seems to
be engaging in a blatant case of double counting in order to
make a point.
�
Contractual language is ambiguous if it will sustain different
reasonable interpretations. See, e.g., Fry Communications,
Inc./InfoConversion Joint Venture, supra (Decision on Remand),
Sl. op. at 9; Fry Communications, Inc./InfoConversion Joint
Venture v. United States, supra, Sl. op at 11 (citing, Edward R.
Marden Corporation v. United States, 803 F.2d 701, 705 (Fed. Cir.
1986); Sun Shipbuilding & Drydock Co. v. United States, 183 Ct.
Cl. 358, 372 (1968)); Castillo Printing Co., supra, Sl. op. at
26. In cases involving a contest between two contrasting
interpretations of contract language, the dispute usually turns
on whether the ambiguity is latent or patent. Courts will find
a latent ambiguity where the disputed language, without more,
admits of two differing reasonable interpretations. See, e.g.,
Fry Communications, Inc./InfoConversion Joint Venture v. United
States, supra, Sl. op at 11 (citing, Edward R. Marden Corporation
v. United States, supra, 803 F.2d at 705; Castillo Printing Co.,
supra, Sl. op. at 37-38. In such cases, courts will apply the
doctrine of contra proferentem and construe the dispute language
against the drafter, see, e.g., Fry Communications,
Inc./InfoConversion Joint Venture v. United States, supra, Sl. op
at 11 (citing, William F. Klingensmith, Inc. v. United States,
205 Ct. Cl. 651, 657 (1974)); Castillo Printing Co., supra, Sl.
op. at 38, provided that the non-drafter can show that he/she
relied on the alternative reasonable interpretation in submitting
his/her bid. See, e.g, Fry Communications, Inc./InfoConversion
Joint Venture v. United States, supra, Sl. op at 23-24 (citing,
Fruin-Colon Corporation v. United States, 912 F.2d 1426, 1430
(Fed. Cir. 1990)); Lear Siegler Management Services v. United
States, 867 F.2d 600, 603 (Fed. Cir. 1989); Castillo Printing
Co., supra, Sl. op. at 38-39. On the other hand, a patent
ambiguity would exist if the contract language contained a gross
discrepancy, an obvious error in drafting, or a glaring gap, as
seen through the eyes of a "reasonable man" on an ad hoc basis.
See, e.g, Fry Communications, Inc./InfoConversion Joint Venture
v. United States, supra, Sl. op. at 22 (citing, Max Drill, Inc.
v. United States, 192 Ct. Cl. 608, 626 (1970); WPC Enterprises,
Inc. v. United States, 163 Ct. Cl. 1, 6 (1963)). Where such
discrepancies, errors, or gaps are present, the contractor has an
affirmative obligation to seek a clarification from the
contracting officer as to the true meaning of the contract
language before submitting its bid. Id., Sl. op. at 11-12
(citing, Newsom v. United States, 230 Ct. Cl. 301, 303 (1982));
Enrico Roman, Inc. v. United States, 1 Cl. Ct. 104 (1983); S.O.G.
of Arkansas v. United States, 212 Ct. Cl. 125, 546 F.2d 367 (Ct.
Cl. 1976); Beacon Construction v. United States, 314 F.2d 501
(Ct. Cl. 1963). The patent ambiguity doctrine is aimed at
avoiding costly post-award litigation, as well as protecting the
integrity of the bidding process by ensuring that all offerors
bid on the same specifications. Id., Sl. op. at 12 (citing,
S.O.G. of Arkansas v. United States, supra, 212 Ct. Cl. at 125;
Newsom v. United States, supra, 230 Ct. Cl. at 303). In this
case, by asserting that the Appellant had a duty to ask the
Contracting Officer to clarify the phrase "any one month" in the
"FREQUENCY OF ORDERS" clause before submitting its bid, the
Respondent implies that the ambiguity, if any, would be patent.
�
The purpose of any rule of contract interpretation is to carry
out the intent of the parties. Hegeman-Harris and Company, 440
F.2d 1009 (Ct. Cl. 1979). The test for ascertaining intent is an
objective one; i.e., the question is what would a reasonable
contractor have understood, not what did the drafter subjectively
intend. Corbetta Construction Company v. United States, 198 Ct.
Cl. 712, 461 F.2d 1330 (1972). The provisions of the contract
itself should provide the evidence of the objective intent of the
parties.
�
See, Cibinic and Nash, note 18 supra, at pp. 221-22, 223-25.
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.
222-23. See, e.g., Nanofast, Inc., ASBCA No. 12545, 69-1 BCA �
7,566 (citing, George A. Fuller Company, A Corporation v. United
States, 108 Ct. Cl. 70, 69 F.Supp. 409 (1947); Fern E. Chalender
d/b/a Chalender Construction Company of Springfield, Missouri v.
United States, 127 Ct. Cl. 557; Restatement, Contracts, �
295 and 315). Both implied duties are part of every Government
contract. George A. Fuller Company, A Corporation v. United
States, supra, 69 F.Supp. 409. In essence, the Government's
duty of cooperation means that it has implied affirmative
obligation to do whatever is necessary to enable the contractor
to perform. See, e.g., Nanofast, Inc., supra, 69-1 BCA �
7,566. (citing, The Kehm Corporation 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 to perform. In
most cases applying this principle to excuse a contractor's
default, there is a clear nexus between the Government's
breaching conduct and the performance period itself. See, e.g.,
Maitland Brothers Company and Maitland Brothers Company and St.
Paul Fire and Marine Insurance Company, ASBCA Nos. 30089, 30764,
31032, 32071, 32605, 34659, 90-1 BCA �
22,367; Singleton Contracting Corporation, GSBCA No. 8552, 90-1
BCA �
22,298; G. W. Galloway Company, ASBCA Nos. 17436, 17723, 17836,
17911, 18324, 77-2 BCA �
12,640.
25. This conclusion was indirectly expressed by the Board when
it told the parties that its ". . . review of the record
discloses no factual dispute between the parties which would
warrant an evidentiary hearing" and that it would ". . . decide
the matter on the basis of the record . . .". See, Order Closing
the Record and Filing of Briefs, dated August 22, 1991, p. 2.
The Board's view was buttressed by the agreement of the parties
at the prehearing telephone conference that the case was ripe for
decision in its present form, and that there were sufficient
facts in the record for the Board to make a decision. PHR, pp.
16-17. Furthermore, the Board thought it significant that the
Appellant had not requested a hearing, and had expressed the view
that the difference between the parties concerning the meaning of
the word "month" in the "FREQUENCY OF ORDERS" clause was not a
"major" one, but rather was only meant to emphasize that Labor
was ordering work at a rate 200 percent above the estimated
quantities set forth in the contract specifications, which the
Appellant contended was the main reason for its inability to meet
the scheduled shipment dates. PHR, p. 17.
26. Notwithstanding the Appellant's assurances, it was still
late on nine Print Orders after July 23, 1990�"
numbers 20048, 20049, 20050, 20051, 20057, 20058, 20059, 20060
and 20061.
27. Overall, the "Cure Notices" covered 35 Print Orders of the
69 issued to the Appellant�"
numbers 20008, 20015, 20024, 20025, 20026, 20027, and 20029 (the
first "Cure Notice"); numbers 20006, 20008, 20009, 20016, 20017,
20018, 20019, 20020, 20021, 20022, 20023, 20025, 20026, 20027,
20029, 20030, 20031, 20032, 20033, and, 20036 (the second "Cure
Notice"); and numbers 20042, 20043, 20044, 20045, 20046, 20048,
20049, and 20050 (the third "Cure Notice").
�
The termination notice of August 23, 1990, clearly advised the
Appellant that it could be liable for any excess costs associated
with the Respondent's reprocurement of the work covered by the
contract (R4 File, Tab S). The only documentation in the R4 File
concerning such reprocurement costs is a memorandum from George
Berard, Financial Management Service, to Rose Green, Term
Contracts, Section C, identifying the new contractor (R4 File,
Tab XYZ). During the prehearing telephone conference held on
December 12, 1990, the parties agreed that excess reprocurement
costs should not be recovered from the Appellant's invoices
unless these costs could first be established. PHR, p. 15.
Furthermore, while the Appellant claimed that excess costs in the
amount of $6,500 to $7,500 had already been recovered from its
account, Counsel for GPO informed the Board that the Respondent's
claim for excess costs would be finalized after April 30, 1991.
Id. Both parties, however, agreed that any question of excess
reprocurement costs could be the subject of a separate appeal;
indeed, the Appellant expressly reserved the right to raise the
quantum of excess costs in a separate proceeding. PHR, p. 16.
By letter dated December 20, 1990, Counsel for GPO notified the
Appellant that recoupment of excess costs incurred under the
defaulted contract would be suspended until the Respondent could
establish that the excess costs actually exceeded the amounts
that had been withheld from the Appellant's billings. At the
time, $6,004.76 had been withheld from the Appellant's invoices.
Thereafter, by letter dated February 12, 1991, Counsel for GPO
informed the Appellant that as of January 17, 1991, the excess
costs amounted to $7,804.55, and that the Respondent would
recommence setoff procedures to recoup the additional $1,799.79.
See, Letter from Drew Spalding, Deputy General Counsel to Mr.
Richard Swanson, dated February 12, 1991 (and enclosures), note 9
supra. The letter also told the Appellant that it could expect
additional charges against its account as excess costs were
incurred until the end of the term of the defaulted contract.
Id. The Board settled the record on September 9, 1991. See,
Order Closing the Record and Filing of Briefs, dated August 22,
1991, pp. 2-3. On November 12, 1991, the Appellant filed its
Request with the Board stating, among other things, that on
October 17, 1991, it had been informed by the Respondent that an
additional $17,183.71 in excess reprocurement costs had been
subtracted from the Appellant's account, bringing the total
excess reprocurement costs recovered on Program C460-S to
$24,988.26. See, Appellant's Request for Decision, note 12 supra,
p. 1. In light of the agreement of the parties at the prehearing
telephone conference, however, the Board has not considered the
issue of excess reprocurement costs as part of this appeal. It
is not clear to the Board at this time whether those excess costs
have now been finalized. If so, upon receipt of a properly filed
claim by the Appellant, the matter of excess reprocurement costs
is now ripe for consideration by the Board in a separate
proceeding.