U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
THE GEORGE MARR COMPANY ) Docket No. GPO BCA 31-94
Jacket No. 752-953 )
Purchase Order H-1775 )
DECISION ON MOTION AND CROSS-MOTION
FOR SUMMARY JUDGMENT AND ORDER
I. STATEMENT OF THE CASE
This appeal, timely filed by The George Marr Company (Appellant
or Contractor), 652 South Second Street, Louisville, Kentucky
40202, is from the final decision, dated July 5, 1994, of
Contracting Officer Aurelio E. Morales of the U.S. Government
Printing Office's (Respondent or GPO or Government), Columbus
Regional Printing Procurement Office (CRPPO), 1335 Dublin Road,
Suite 112-B, Columbus, Ohio 43215-7034, disallowing all but
$2,075.96 of the Appellant's settlement proposal of $38,104.26,
following the termination of its contract, identified as Jacket
No. 752-953, Purchase Order H-1775, for the convenience of the
Government (R4 File, Tab FF).1
The Board held a prehearing telephone conference in this matter
on February 28, 1995. Board Rules, Rule 10. At the conference,
the parties agreed that the material facts were essentially
undisputed, and any minor differences could be resolved through
stipulations. Report of Prehearing Telephone Conference, dated
April 17, 1995, p. 6 (RPTC). The Appellant believed, and the
Respondent concurred, that the only issue in the case was whether
the Contractor was entitled to continue work for which it could
be compensated under the contract while it was waiting for the
Government to return the first set of pre-production proofs?
RPTC, p. 6. To answer this question, the Board would be required
to interpret the contract, specifically the "Extension of
Schedules" clause. GPO Contract Terms, Solicitation Provisions,
Supplemental Specifications, and Contract Clauses, GPO
Publication 310.2, Effective December 1, 1987 (Rev. 9-88), �
12(c) (GPO Contract Terms). The parties also agreed that in
order to expedite matters, the Appellant would send GPO a draft
stipulation of facts by March 31, 1995, and thereafter, if
necessary, file a motion for summary judgment placing the legal
issue before the Board. RPTC, p. 6. In light of these
discussions, the Board decided that this appeal would be
processed on the basis of a stipulation of facts, cross-motions
for summary judgment, and written briefs. RPTC, p. 7.
Thereafter, on April 25, 1995, the Board conducted a telephone
status conference, during which the parties submitted their
stipulation of facts, and a summary judgment schedule was
established. Report of Telephone Status Conference, dated May
23, 1995, pp. 2-3 (RTSC). See Agreed Order of Stipulation, dated
April 25, 1995 (hereinafter referred to as Jt. Stip.). The
stipulation was endorsed by the Board immediately after the
meeting. RTSC, p. 2, fn. 1; Jt. Stip., at 6. See Banta Co., GPO
BCA 03-91 (November 15, 1993), slip op. at 2, 1993 WL 526843. In
accordance with that schedule: (1) on June 2, 1995, Counsel for
GPO filed Respondent's Motion for Summary Judgment (Motion); (2)
on June 29, 1995, Counsel for the Contractor submitted
Appellant's Response to Respondent's Motion for Summary Judgment
and Appellant's Motion for Summary Judgment (Cross-Motion),
including the supporting affidavit of Mr. Richard Flagstad, the
Appellant's Vice President (Flagstad Affidavit); and (3) on July
14, 1995, Counsel for GPO filed Respondent's Reply to Appellant's
Response and Cross[-]Motion for Summary Judgment (Reply).2 The
Board has carefully assessed the positions of the parties'
against the undisputed facts in this case, and for the reasons
which follow the Motion is GRANTED and the Cross-Motion is
DENIED. Accordingly, the matter is REMANDED to the parties for
further action consistent with this opinion.
II. BACKGROUND
A. The Termination Action
The essential facts in this appeal are uncontroverted and are set
forth here as they appear in the R4 File and the stipulation of
the parties.3
1. On August 9, 1993, the Respondent issued Amendment No. 1 to
the Invitation for Bid (IFB) for a contract to produce 200 sets
of a loose leaf book entitled "ORNL Integrated Facilities Plan"
(Plan) for the U.S. Department of Energy (DOE), Oak Ridge
National Laboratory, Oak Ridge, Tennessee (R4 File, Tab B, p. 4;
Jt. Stip., � 3). DOE's Oak Ridge facility was operated by Martin
Marietta Energy Systems, Inc. (MMES) under contract with the
Government. RPTC, p. 2 2. Among other things, the contract
specifications provided, in pertinent part:
PRE-PRODUCTION COPIES: Three printed pre-production sets of cover
and spine pages and collated text and maps are required. Each set
must be reproduced using the equipment and method of production
that will be used in producing the finished product. Paper must
be of the size, kind and quality that the Contractor will
furnish. Deliver two of these samples to the following address:
D.L. Barbra
Martin Marietta Energy Systems Inc.
K-25 Plant, P.O. Box 2003 Central Printing
Oak Ridge, TN 37831-7105
These samples must arrive not later than August 30, 1993 and will
be withheld not longer than 5 workdays from the date of receipt
to date of "OK to Print" given by telephone/telegraph or mail to
the Contractor's plant.4 At the same time as specified above,
deliver one set to the U.S. Government Printing Office,
ATTENTION: Compliance Unit, 1335 Dublin Road, Suite 112-B
Columbia Road, OH 43215.
* * * * * * * * * *
QUALITY ASSURANCE THROUGH ATTRIBUTES
The bidder agrees that any contract resulting from bidder's offer
under these specifications shall be subject to the terms and
conditions (as applicable to the products ordered) of GPO Pub.
310.1, "Quality Assurance through Attributes - Contract Terms"5
and MIL-STD-105 "Sampling Procedures and Tables for Inspection by
Attributes" in effect on the date of issuance of the Invitation
for Bid.
* * * * * * * * * *
LEVELS AND STANDARDS-The following levels and standards apply
only to the products ordered under these specifications:
* * * * * * * * * *
Specified Standards-The specified standards for the attributes
requiring them shall be:
ATTRIBUTE SPECIFIED STANDARD
P-7. Type Quality and
Uniformity OK Pre-Production Copies
[P-10] Process Color
Match OK Pre-Production Copies
* * * * * * * * * *
SCHEDULE: Furnished material will be available for Contractor
pick up at Columbus GPO by August 20, 1993.
Deliver F.O.B. destination complete on or before September 13,
1993.
See R4 File, Tab B, pp. 5, 13, 14. See also Jt. Stip., � 3.
3. By reference, the specifications also made the contract
subject to the applicable articles of GPO Contract Terms (R4
File, Tab B, p. 1). Insofar as is relevant to this case, GPO
Contract Terms contains the following contract clauses and
supplemental specifications:
SUPPLEMENTAL SPECIFICATIONS
* * * * * * * * * *
15. Determination of Lateness.
(a) Final product schedule. Individual schedules will be
established for each order. When the schedule establishes
delivery/shipment of the final product, with intermediate
schedules for the submission of proofs expressed in workdays, the
time limits established for delivery/shipment of the final
product will be the governing factor in determining the number of
workdays the contractor is late. Any lateness in complying with
intermediate schedules will be disregarded provided
delivery/shipment of the final product is made within the time
limits allowed in the specifications.
* * * * * * * * * *
CONTRACT CLAUSES
* * * * * * * * * *
2. Order of Precedence.
In the event of an inconsistency, the inconsistency shall be
resolved by giving precedence in the following order: (a)
specification; (b) supplemental specifications; (c) solicitation
provisions; (d) contract clauses; and (e) other provisions
whether incorporated by reference or otherwise.
3. Workday.
The term "workday" is defined as Monday through Friday of each
week, exclusive of the days on which Federal Government holidays
are observed. Also excluded are those days on which the
Government Printing Office is no open for the transaction of
business, such as days of national mourning, hazardous weather,
etc.
4. Changes.
(a) The Contracting Officer may at any time, by written order,
and without notice to the sureties, if any, make changes within
the general scope of this contract in any one or more of the
following:
(1) Drawings, designs, or specifications when the supplies to be
furnished are to specially manufactured for the Government in
accordance with the drawings, designs, or specifications.
(2) Method of shipment or packing.
(3) Place of delivery.
(b) If any such change causes an increase or decrease in the he
cost of, or the time required for, performance of any part of the
work, whether or not changed by the order, the Contracting
Officer shall make an equitable adjustment in the contract price,
the delivery schedule, or both, and shall modify the contract.
* * * * * * * * * *
12. Notice of Compliance With Schedules.
* * * * * * * * * *
(c) Extension of schedules.
(1) In the event a delay is caused by any action of the
Government, including failure to furnish purchase/print order,
copy, GBL [Government Bill of Lading] and/or materials as
scheduled, the shipping/delivery schedule will be extended
automatically by the total number of workdays that work was
delayed PLUS 1 workday for each day of delay; such period of
grace for any schedule will not exceed 3 workdays. For example:
Order, etc., 1 workday late + 1 workday grace = 2 workdays
extension
Order, etc., 2 workdays late + 2 workdays grace = 4 workdays
extension
Order, etc., 3 workdays late + 3 workdays grace = 6 workdays
extension
Order, etc., over 3 workdays late: total number of workdays late
+ 3 workdays grace = total number of workdays extension. No more
than 3 workdays grace will be allowed on any one order.
(2) If, as a result of Government-caused delay, additional time
is required beyond that provided for in paragraph (c)(1), the
contractor shall mail or otherwise furnish a written request to
the Contracting Officer within 10 calendar days from the end of
the Government-caused delay. If, in the opinion of the
Contracting Officer, additional time beyond the 10 calendar days
for submitting such written request is warranted, it may be
granted. . . .
* * * * * * * * * *
19. Termination for the Convenience of the Government.
(a) The Government may terminate performance of work in whole or
in part if the Contracting Officer determines that a termination
is in the Government's interest. The Contracting Officer shall
terminate by delivering to the contractor a Notice of Termination
specifying the extent of termination and the effective date.
* * * * * * * * * *
(c) After termination, the contractor shall submit a final
termination settlement proposal promptly, but no later than 3
months from the effective date of termination, unless extended in
writing by the Contracting Officer upon written request of the
contractor within this 3-month period. . . .
(d) Subject to paragraph (c) above, the contractor and the
Contracting Officer may agree upon the whole or any part of the
amount to be paid because of the termination. The amount may
include a reasonable allowance for profit on work done. However,
the agreed amount, whether under this paragraph (d) or paragraph
(e) below, exclusive of costs shown in subparagraph (e)(3) below,
may not exceed the total contract price as reduced by (1) the
amount of payments previously made, and (2) the contract price of
work not terminated. The contract shall be amended and the
contractor paid the agreed amount. Paragraph (e) below shall not
limit, restrict, or affect the amount that may be agreed upon to
be paid under this paragraph.
(e) If the contractor and the Contracting Officer fail to agree
on the whole amount to be paid because of the termination of
work, the Contracting Officer shall pay the contractor the
amounts determined by the Contracting Officer as follows, but
without duplication of any amounts agreed on under paragraph (d)
above:
(1) The contract price for completed supplies or services
accepted by the Government . . . not previously paid for,
adjusted for any savings of freight and other charges.
(2) The total of-
(i) The costs incurred in the performance of the work terminated,
including initial costs and preparatory expenses allocable
thereto, but excluding any costs attributable to supplies or
services paid or to be paid under subparagraph (e)(1) above;
(ii) The cost of settling and paying termination settlement
proposals under terminated subcontracts that are properly
chargeable to the terminated portion if not included in
subdivision (i) above; and
(iii) A sum, as profit on subdivision (i) above, determined by
the Contracting Officer to be fair and reasonable; however, if it
appears that the contractor would have sustained a loss on the
entire work had it been completed, the contracting Officer shall
allow no profit under this subdivision (iii) and shall reduce the
settlement to reflect the indicated rate of loss.
* * * * * * * * * *
(g) The cost principles and procedures of article 45, Contract
Clauses in effect on the date of this contract, shall govern all
costs claimed, agreed to, or determined under this clause.6
* * * * * * * * * *
45. Contract Cost Principles and Procedures.
When required, contracts shall be subject to section 3 of
Procurement Directive 306.2, Contract Cost Principles and
Procedures, dated April 1, 1988.7
4. Because the "Termination for Convenience" clause incorporates
by reference the "Contract Cost Principles and Procedures" clause
of GPO Contract Terms, see GPO Contract Terms, Contract Clauses,
�� 19(g), 45, the contract is also subject to relevant provisions
of the GPO Cost Directive. See New South Press II, supra, slip
op. at 5. In that regard, two such provisions of Section 3 of
the GPO Cost Directive relating to termination costs are
particularly pertinent to this dispute. Insofar as relevant
here, the GPO Cost Directive provides:
49. Termination costs.
Contract terminations generally give rise to the incurrence of
costs or the need for special treatment of costs that would not
have arisen had the contract not been terminated. The following
cost principles peculiar to termination situations are to be used
in conjunction with the other cost principles in this section:
(a) Common items. The costs of items reasonably usable on the
contractor's other work shall not be allowable unless the
contractor submits evidence that the items could not be retained
at cost without sustaining a loss. The contracting officer
should consider the contractor's plans and orders for current and
planned production when determining if items can reasonably be
used on other work of the contractor. Contemporaneous purchases
of common items by the contractor shall be regarded as evidence
that such items are reasonably usable on the contractor's other
work. Any acceptance of common items as allocable to the
terminated portion of the contract should be limited to the
extent that the quantities of such items on hand, in transit, and
on order are in excess of the reasonable quantitative
requirements of other work.
(b) Costs continuing after termination. Despite all reasonable
efforts by the contractor, costs which cannot be discontinued
immediately after the effective date of termination are generally
allowable. However, any costs continuing after the effective
date of the termination due to the negligent or willful failure
of the contractor to discontinue the costs shall be unallowable.
(c) Initial costs. Initial costs, including starting load and
preparatory costs, are allowable as follows:
(1) Starting load costs not fully absorbed because of termination
are nonrecurring labor, material, and related overhead costs
incurred in the early part of production and result from factors
such as-
(i) Excessive spoilage due to inexperienced labor;
(ii) Idle time and subnormal production due to testing and
changing production methods;
(iii) Training; and
(iv) Lack of familiarity or experience with the product,
materials, or manufacturing processes.
(2) Preparatory costs incurred in preparing to perform the
terminated contract include such costs as those incurred for
initial plant rearrangement and alterations, management and
personnel organization, and production planning. They do not
include special machinery and equipment and starting load costs.
. . . .
(d) Loss of useful value. Loss of useful value of special
tooling, and special machinery and equipment is generally
allowable, provided-
(1) The special tooling, or special machinery and equipment is
not reasonably capable of use in the other work of the
contractor;
(2) The Government's interest is protected by transfer of title
or by other means deemed appropriate by the contracting officer;
and
(3) The loss of useful value for any one terminated contract is
limited to that portion of the acquisition cost which bears the
same ratio to the total acquisition cost as the terminated
portion of the contract bears to the entire terminated contract
and other Government contracts for which the special tooling, or
special machinery and equipment was acquired.
* * * * * * * * *
(g) Settlement expenses. (1) Settlement expenses, including the
following, are generally allowable:
(i) Accounting, legal, clerical, an similar costs reasonably
necessary for-
(A) The preparation and presentation, including supporting data,
of settlement claims to the contracting officer; and
(B) The termination and settlement of contracts.
(ii) Reasonable costs for the storage, transportation,
protection, and disposition of property acquired or
produced for the contract.
(iii) Indirect costs related to salary and
wages incurred as settlement expenses in (i)
and (ii); normally, such indirect costs shall
be limited to payroll taxes, fringe benefits,
occupancy costs, and immediate supervision
costs.
* * * * * * * * * *
See GPO Cost Directive, Sec. 3, � 49.
5. Although IFBs were sent to 20 potential contractors, the
Appellant, a Kentucky Corporation, submitted the only
responsive bid of the 5 which were returned (R4 File, Tabs C,
D, E and G; Jt. Stip., � 22).8 In that regard, the
Contractor's bid, which was dated August 16, 1993, and signed
by Flagstad, offered to produce the Plan for $56,127.73 (R4
File, Tab D; RPTC, p. 2). See Flagstad Affidavit, � 2.
6. On August 24, 1993, the first Contracting Officer assigned to
this contract, Robert G. Seibert, of the CRPPO issued Purchase
Order No. H 1775 to the Appellant, awarding it the contract to
produce the Plan at the bid price of $56, 127.73 (R4 File, Tab H;
Jt. Stip., �� 4, 23; RPTC, p. 2).9 Under the terms of the
Purchase Order, delivery of the 200 copies of the Plan was to be
completed on or before September 13, 1993 (R4 File, Tab H).
However, because of a Government delay, the Contracting Officer
also issued Contract Modification No. One on August 24, 1993,
which extended the shipping date to September 15, 1993 (R4 File,
Tab I; Jt. Stip., � 5; RPTC, p. 4, fn. 2).10 All other
specifications were unchanged (R4 File, Tab I; Jt. Stip., � 5).
7. The Appellant sent timely pre-production proofs to both
the Compliance Officer and MMES, on August 27, 1993, and
August 30, 1993, respectively ((R4 File, Tabs J, K and L;
Jt. Stip., � 6; RPTC, p. 4). Those proofs were received by
the Government and MMES on Tuesday, August 31, 1993 (Jt.
Stip., � 6).11 Therefore, under the terms of the contract,
the holding period of 5 workdays ended the following Tuesday
(September 7, 1993) (R4 File, Tab B, p. 5).12 This date, by
which the samples were to be reviewed and returned by the
customer-agency to GPO annotated either "approved to print"
or "approved to print with corrections" as marked, or "not
approved to print, revised proofs/samples required," was
confirmed by memorandum dated August 31, 1993, to the MMES
from Ostrander (Jt. Stip., � 7).
8. On or about September 5, 1993, Flagstad telephoned Seibert
and asked if there were any changes to the pre-production samples
because the Contractor needed to plan its production time to
accomplish delivery by the contract due date of September 15,
1993. See Flagstad Affidavit, � 4. Flagstad says that Seibert
specifically told him that MMES had "only" 5 workdays in which to
submit its proof changes to the Appellant, and he was instructed
not to start printing the job during that holding period. Id.
[Original emphasis.]
9. The pre-production proofs were not approved, nor was an "OK
to Print" issued by the GPO within the 5 day holding period
specified in the contract (Jt. Stip., �� 8, 25; RPTC, p. 4). The
reason, as indicated in the record, was that MMES knew even
before it received the pre-production samples of the Plan that
changes/author's alterations were going to be made to the job (R4
File, Tab J).
10. The record discloses that on September 20, 1993, Flagstad
telephoned Michael J. Summers, the CRPPO's Compliance Officer,
about the status of the pre-production proofs (R4 File, Tab L).
During their conversation, Summers told Flagstad that the samples
were still being reviewed by the MMES, and that the Appellant
could not proceed without an "OK to Print" from GPO (R4 File, Tab
L).
11. By letter dated September 28, 1993, three weeks after the
expiration of the holding period, the MMES informed the
Respondent of numerous changes which had to be made in the job
(R4 File, Tab M; Jt. Stip., � 9; RPTC, p. 4). This letter, which
also asked that a second set of pre-production samples be
prepared, was received by GPO on October 1, 1993 (Jt. Stip., ��
9, 25).
12. After receiving the MMES's letter on October 1, 1993,
Ostrander immediately wrote to the Appellant: (a) listing the
author's changes required;13 (b) asking that 3 sets of revised
pre-production proofs be furnished to the CRPPO by October 13,
1993; and (c) stating that a new contractual delivery date would
be established upon approval of the revised samples (R4 File, Tab
N; Jt. Stip., � 10; RPTC, p. 4). Ostrander's letter also said,
in pertinent part:
If you do not understand any corrections marked, or if you have
any questions, do not proceed prior to contacting the
undersigned. If author's alterations are indicated, immediately
furnish an itemized listing of any additional charges to this
office. Any additional charges for Author's Alterations, or
requests for schedule extensions, are to be submitted in writing
to the Contracting Officer (through the Contract Administrator),
. . .
See R4 File, Tab N. See also Flagstad Affidavit, � 9.
13. The record shows that on October 4, 1993, Ostrander
received a telephone call from Flagstad during which they
discussed the MMES's changes (R4 File, Tab O).14 As a result of
this conversation, Ostrander promised to convey the Appellant's
comments to the MMES, and Flagstad said he would not do anything
until he heard from GPO (R4 File, Tab O).
14. On October 7, 1993, Ostrander received a telephone call
from Debra L. Barbra, MMES's Printing Procurement Specialist,
who, inter alia, asked him to secure the Appellant's total costs
for the work on the job as of that date (R4 File, Tab P).
Ostrander conveyed Barbra's request to Flagstad, who said he
would develop the cost figures and send them to the CRPPO by
facsimile transmission (R4 File, Tab P; RPTC, p. 4).
15. The Appellant responded to the Government's request for its
itemized costs by letter dated October 11, 1993, which showed
that the Contractor's total costs for producing the original pre-
production proofs and the revised samples was $12,941.00 (R4
File, Tab R; Jt. Stip., � 11; RPTC, pp. 4-5).15 However, the
Contractor also demanded payment of the full contract price of
$56,127.73, stating:
. . . The George Marr Company and Queen City Reprographics,
working as a joint venture, are in full agreement that we bid on
this project in good faith, that a valid purchase order was
issued to us to produce the entire job, that a contract was
agreed upon for us to produce the entire job, and that the
failure of the contracting party to observe the contract terms
obligates the contracting party to pay the full contract value of
$56,127.73, not just the amount of the costs incurred to date.
See R4 File, Tab R, p. 2. See also Complaint, �� 7-9.
16. The next day, October 12, 1993, Barbra telephoned Ostrander
and informed him that the MMES had received the 3 sets of revised
pre-production proofs from the Appellant. She indicated that
based on her understanding from their earlier conversation, the
Contractor was not going to produce revised samples until he was
told to proceed, and that all he was asked to provide was a
figure for its costs to that point (R4 File, Tab Q).
17. On October 20, 1993, Summers telephoned the Appellant and
directed it to return all Government-furnished materials (GFM) to
MMES because they were needed for a meeting on October 21, 1993
(R4 File, Tab S; Jt. Stip., � 12). The Contractor was also told
that GPO would advise it, in writing, when a determination was
made on the status of the contract; i.e., whether the contract
would be terminated for convenience or the Appellant ordered to
print the Plan (R4 File, Tab S; Jt. Stip., � 12).
18. On October 28, 1993, DOE notified the Respondent that it
had decided to terminate the contract for the convenience of the
Government (R4 File, Tab T; Jt. Stip., � 13).
19. By letter dated October 28, 1993, expressly entitled
"Notice of Termination-Termination for Convenience of the
Government) (hereinafter Notice)," the Respondent officially
notified the Appellant that its contract was terminated for the
convenience of the Government, effective that date (R4 File, Tab
U; Jt. Stip., � 14; RPTC, p. 5). See PPR, Chap. XIV, Sec. 2, ��
3.a.(1)(a)-(d). The Notice also informed the Contractor that:
(a) final settlement would be pursuant to Article 19, in GPO
Contract Terms; (b) any settlement proposal should be submitted
on GPO Form 911, which was enclosed; and (c) it was expected to
"take such other action as may be required by the Contracting
Officer or under the termination clause contained in your
contract[.]" (R4 File, Tab U; RPTC, p. 5). See GPO Contract
Terms, Contract Clauses, �� 19(a),(c). See also PPR, Chap. XIV,
Sec. 2, �� 3.c.(viii),(x).
B. The Termination Claim
1. On November 4, 1993, the Appellant wrote to Seibert
acknowledging receipt of the Notice (R4 File, Tab V; Jt. Stip., �
15). Also enclosed with the letter was the Contractor's claim
for reimbursement in the amount of $14,987.45, representing a
"complete accounting of all charges" which it incurred for work
on the contract (R4 File, Tab V; RPTC, p. 5). In summary, the
claim, which was limited to manufacturing the pre-production
proofs for the project, the listed the following items:
Pre-Production Proofs-September 2, 1993:
1. Processing Charge $1,200.00
2. Printing Charges 966.20
3. Black & White Printing Charges 24.25
Pre-Production Proofs-October 13, 1993:
1. Processing Charge 1,200.00
2. Printing Charges 966.20
3. Black & White Printing Charges 44.25
Material Costs Incurred 2,533.00
Subcontractor Expenses Incurred 2,084.00
Miscellaneous Shipping Charges 196.00
Overhead Expenses Allocated to
Pre-Production 1,491.42
Subtotal $10,705.32
Expected Minimum Profit on
Above Investment Amount 4,282.13
Net Settlement Amount $14,987.45
2. Following a conversation with Seibert on November 19, 1993,
the Appellant submitted a revised settlement proposal on November
23, 1993, which raised its reimbursement request to $38,104.26
(R4 File, Tabs W and X; Jt. Stip., � 16; RPTC, p. 5). In its
proposal letter, the Contractor explained the reason for the
increase as follows:
Our original settlement proposal was based on an erroneous
understanding in that it only covers the pre-production samples
we furnished to the Government and not all of the other work we
performed under the contract. This proposal includes our total
costs incurred in carrying out the provisions of the contract in
question.
In addition to providing the government with pre-production
samples as specified, The George Marr Company and Queen City
Reprographics, acting as a joint venture, had to take additional
steps to insure delivery on a timely basis as required by the
contract. Since the production of the index tabs had to be
performed by an outside contractor, we had to have these printed
and die cut in advance. Further, since the mylar reinforcement
strips were scheduled to take up to ten work days from the time .
. . the maps were made available, the maps had to be printed on
an accelerated basis in order to have a change to meet the 14-day
delivery time frame. As such, The George Marr Company and Queen
City Reprographics had to produce all the maps and charts early
in the production cycle with the intent of making necessary
revisions as they occurred. We were prepared to make those
revisions as called for and to delivery [sic] the finished
product on time.
The fact that the government has chosen to cancel the contract
for its convenience and not due to any fault of the contractor,
should obligate the government to cover all costs incurred by the
contractor in its best effort to carry out the terms of the
contract.
See R4 File, Tab X. [Emphasis added.] Accordingly, as revised
by the Appellant, its settlement costs were now:
Material Costs:
1. 63,600 Black & White Impressions
@ $ .013 per impression $ 826.80
2. 2,850 Color Prints 8-1/2 x 11
@ $ .61 per impression 1,738.50
3. 2,400 Color Prints 11 x 17
@ $1.22 per impression 2,928.00
4. 2,000 Tab Indexes 90 lb.
@ $ .12 each 240.00
5. 78 Color Prints 8-1/2 x 11
@ $ .61 per impression 47.58
6. 66 Color Prints 11 x 17
@ $ 1.22 per impression 80.52
7. 1,854 Color Maps 11 x 23.5
@ $ .62 per map 1,149.48
8. 1,442 Color Maps 11 x 23.5
@ $1.55 per map 2,235.10
9. 4,220 Mylar Reinforcement Strips
@ $325.00 per 1,000 1,374.88
Total Material Costs $10,620.86
Labor Costs:
1. Printing of 63,600 Black &
White Prints 8-1/2 x 11 13.0 hours
2. Printing of 2,850 Color Laser
Prints 8-1/2 x 11 10.0 hours
3. Printing of 2,400 Color Laser
Prints 11 x 17 16.0 hours
4. Printing of 2,000 Tab Indexes 0.5 hours
5. Collating Above Prints Into Sets 6.0 hours
6. Computer Interface Processing
to Color Copier 10.5 hours
7. elivery of Completed Work to
the Appellant 3.0 hours
8. Folding and Drilling of All
11 x 17 Color Copies 2.5 hours
9. Computer Processing of All
Large Format Color Maps 29.0 hours
10. Printing of All 11 x 23.5
Color Maps 38.0 hours
11. Printing of All 11 x 58.5
Color Maps 73.5 hours
12. Trim and Fold All Large
Format Color Maps 110.0 hours
Total Labor Manhours 312.0 hours
Total Labor Cost @ $45.00 per hour $14,040.00
Overhead Expenses (including pro-rated share of rent, business
insurance, and utility expenses):
1. Queen City Reprographics $ 1,434.00
2. The George Marr Company 2,737.00
Total Pro-Rated Overhead Expenses $ 4,171.00
General and Administrative (G & A) Expenses
(including pro-rated share of equipment
leases, payroll taxes, service on equipment,
freight charges, etc.):
1. Queen City Reprographics $ 1,690.00
2. The George Marr Company 1,231.70
Total Pro-Rated G & A Expenses $ 2,921.70
Profit: Calculated at 20% of Total Costs $ 6,350.70
Total Proposed Settlement $38,104.26
3. Because the Contractor's settlement proposal was over
$2,000.00, GPO regulations required that it be submitted to the
Contract Review Board (CRB) for approval. See PPR, Chap. I, Sec.
10, � 4.b.(iii); Chap. XIV, Sec. 2, � 3.l.(1)(ii). On January 5,
19938, the CRB rejected the Appellant's offer of $38,104.26 (R4
File, Tab BB; Jt. Stip., � 18).
4. By letter dated January 11, 1994, the new Contracting Officer,
White, informed the Appellant that its claim of November 23,
1993, was denied, and requested supplemental additional
documentation (R4 File, Tab Z; Jt. Stip., � 17; RPTC, p. 5). In
that regard, he wrote, in pertinent part:
The Government, by law, acknowledges your entitlement to all
costs relating to the preparation of the 3 prior-to-production
samples required by the contract. In addition, along with all
administrative and general expenses relating to this segment of
the contract including reasonable profit, you will be reimbursed
for all materials purchased which fit the following criteria:
they are unprinted; they are unusable in your general business
practice; and they cannot be returned/restocked for
consideration.
Your firm's settlement proposal of November 23, 1993, on its face
value, implies labor and material costs beyond the scope of that
portion of the contract authorized at the time of termination.
I request that your firm supply additional documentation to
substantiate that all claims relate to that portion of the
contract empowered prior to the termination notice. . . .
See R4 File, Tab Z.
5. In response to the rejection of the Appellant's claim,
Flagstad wrote to White on January 20, 1994, strongly disagreeing
with the Contracting Officer's view that the labor and material
costs were beyond the scope of the contract (R4 File, Tab AA).
Flagstad argued that even though the Government had violated the
established holding period for the pre-production proofs, other
provisions of the contract still obligated the Appellant to ship
the product on time (R4 File, Tab AA, pp. 1-2, citing GPO
Contract Terms, Supplement Specifications, � 15(a) (Determination
of Lateness)). As explained in his letter, the crux of the
Contractor's position that its claim was valid was that:
In order to complete this job on a timely basis and within the
delivery terms of the contract, The George Marr Company had to
order supplies not normally used in its operation, had to have
all subject tab indexes printed, and had to begin printing all
the maps called for in the contract and had to have all the maps
and charts mylar reinforced. We could either violate the terms
of the contract and be late in delivery, thereby giving the
Government cause to cancel or terminate the contract or go ahead
and deliver a finished product on time within the scope of the
contract. We chose to observe the delivery terms of the contract
since we had not been informed of any changes.
As stated in GPO Contract Terms, "Contract Clauses":
In the event of an inconsistency, the inconsistency shall be
resolved by giving precedence in the following order: (a)
specification; (b) supplemental specifications; (c) solicitation
provisions; (d) contract clauses; and (e) other provisions
whether incorporated by reference or otherwise.
. . . [E]ach party was expected to perform on a "time is of the
essence" basis. The Government's failure to respond within five
workdays with an "OK to Print" order or with any other progress
notification, did not change the shipping date required of The
George Marr Company. And since the contract specifications must
be given precedence in the event of an inconsistency, The George
Marr Company was forced to act as it did.
See R4 File, Tab AA, p. 2. [Emphasis added.] See also Flagstad
Affidavit, � 6.
6. On January 26, 1994, White wrote a memorandum to the CRB
requesting an audit of the Appellant's $38,104.26 settlement
proposal (R4 File, Tab BB; Jt. Stip., � 18; RPTC, p. 5). Noting
that the CRB had already disapproved it, White asked for the
audit because he believed that: (a) the proposal included
"charges for operations that were not authorized in performance
of the pre[-]production samples[;]" and (b) the requested
settlement amount of $38,104.26 was excessive (R4 File, Tab BB).
7. The audit was conducted by GPO's Office of the Inspector
General (OIG) (R4 File, Tab CC). On June 2, 1994, the OIG issued
its report in which it questioned $36,208.30 of the Appellant's
claim ($7,092.70 because there was no supporting documentation)
(R4 File, Tab CC, p. 1, Attachment D, p. 6; RPTC, p. 5). Among
other things, the audit report noted:
The contractor allegedly completed the full production run and is
claiming costs reflective of the first and second sets of pre-
production samples and the full production run. The amount
questioned represents costs incurred that were beyond the scope
authorized to be printed at the time of termination.
See R4 File, Tab CC, p. 1. See also R4 File, Tab CC, Attachment
B ("However, the contractor alleges that George Marr waited 5
workdays and after not hearing from the Government, completed the
entire production of the 200 books of [the Plan]. [�] The
contract was terminated for the convenience of the Government on
October 28, 1993. George Marr allegedly produced the full
production run before the contract was terminated."); Attachment
D, p. 5 ("The audit questioned $22,584.90 of the $24,660.86
claimed for material and labor costs claimed because George Marr
is claiming costs incurred that were beyond the scope authorized
in the contract.").
8. A review of the OIG's audit report discloses, inter alia,
that: (a) only $142.36 of the Appellant's $10,620.86 claim for
material costs was allowed on the grounds that most charges were
for the unauthorized full-production run, the second set of
proofs was produced without an "OK to Print," and even though the
CRPPO determined that the cost of the first set of samples was
fair and reasonable, two items-78 color prints (8 x 11) and 66
color prints (11 x 17)-were claimed twice; (b) only $1,933.60 of
the Contractor's $14,040.00 claim for labor costs was allowed
essentially for the same reasons, i.e., the charges were mostly
associated with the unauthorized full-production run, and also
because the claim sought reimbursement for certain items (tab
indexes) which were not included in the first set of pre-
production samples, as well as for operations (collating prints
into sets, delivery of completed work to Appellant, folding and
drilling of all 11 x 17 maps, etc.) which were not itemized on
the November 4, 1993, settlement proposal; (c) the entire
overhead claim of $4,171.00 was disallowed because the Appellant
provided no documentation to show how these costs were
determined; (d) similarly, all of the $2,921.70 claim for G & A
expenses was disallowed because there was no documentation to
support it; and (e) all of the Appellant's claim of $6,350.70 as
profit was disallowed, primarily because the amount represented
work outside the scope contract, but also because the Contracting
Officer, by regulation, is the one responsible for making a
profit analysis profit, see GPO Contract Terms, Contract Clauses,
� 19 (Termination for the Convenience of the Government); and
Federal Acquisition Regulation (FAR) subparts 15.9 and 49.202(a).
See R4 File, Tab CC, Attachment D. In summary, of the
Contractor's entire claim of $38,104.26, the OIG only allowed
$2.075.96. See R4 File, Tab CC, Attachment C.
9. On June 9, 1994, the third Contracting Officer in this
matter, Morales, wrote to Flagstad advising him of the results of
the audit, and offering to settle the Appellant's claims for
$2,075.96 (R4 File, Tab DD; Jt. Stip., � 19). In that regard,
Morales specifically told Flagstad, in pertinent part:
The amount authorized for settlement . . . represents the costs
incurred to produce the 3 pre[-]production copies provided prior
to the termination of the contract on October 18, 1993. The GPO
has disallowed $36,028.30 of your claimed amount as costs
incurred that were beyond the work authorized at the time of
termination.
See R4 File, Tab DD.
10. The Contractor rejected the Respondent's proposed
settlement offer of $2,075.96 by letter dated June 17, 1994 (R4
File, Tab EE; Jt. Stip., � 20).
11. Accordingly, on July 5, 1994, Morales issued a document
entitled "Contracting Officer Determination of Settlement,"
(Settlement Determination) which affirmed the Respondent's
decision to settle the Appellant's claim for $2,075.96, for the
reasons stated in his letter of June 9, 1994 (R4 File, Tab FF;
Jt. Stip., � 21; RPTC, p. 6). See PPR, Chap. XIV, Sec. 2, �
3.j.(7)(d). The Contracting's Officer's decision was implemented
by Contract Modification No. Two, also dated July 5, 1994, which
accompanied the Settlement Determination (R4 File, Tab FF; Jt.
Stip., � 21).
12. By letter dated September 14, 1994, the Appellant timely
appealed the Contracting Officer's Settlement Determination to
the Board (Jt. Stip., � 2). Board Rules, Rule 1(a). Since then,
the parties have timely filed all pleadings and adhered to all
procedural requirements of the Board (Jt. Stip., � 26).16
III. POSITIONS OF THE PARTIES
A. Respondent's Motion
It is undisputed that the Government is solely responsible for
the delay in returning the first set of pre-production proofs to
the Appellant, which is at the heart of this appeal. However,
the Respondent's Motion is based on a simple predicate, namely
that all of the relief which the Contractor is entitled to under
those circumstances, is to be found in the contract's "Extension
of Schedules" clause. Motion, p. 4 (citing GPO Contract Terms,
Contract Clauses, � 12(c)(1)); Reply, pp. 1-2. Consequently, GPO
rejects the Appellant's contention that it was contractually
obligated to produce and ship the Plan, by September 15, 1993,
regardless, because the delivery date was automatically extended
by the terms of the contract itself. Motion, p. 5 (citing New
South Press, GPO BCA 45-92 (November 4, 1994), slip op. at 25,
1994 WL 837425) (hereinafter New South Press I); Reply, p. 1.
Next, except for the proofs, the Respondent disclaims any
financial obligation to the Contractor for the full-production
run because the Plan was printed without an "OK to Print,"
contrary to the requirement contained in the contract
specifications.17 Motion, p. 6 (citing McDonald & Eudy Printers,
Inc., GPO BCA 25-92 (April 11, 1994), 1994 WL 275093)
(hereinafter McDonald & Eudy); Reply, p. 2. The Government
argues that the clear language of the contract, as well as the
reaffirming instructions it gave to the Appellant during this
period, shows that before production could proceed an affirmative
act by GPO-issuance of the "OK to Print"-was necessary; i.e., the
Contractor could not rely on the Respondent's silence as implied
consent for its decision to manufacture the Plan without an "OK
to Print." Motion, p. 6 (citing R4 File, Tabs B and L); Reply,
p. 2. Furthermore, GPO asserts that its disallowance of the
Appellant's claim for reimbursement for the full-production run
is "four square" with well-accepted principles applied by the
Court of Claims and other contract appeals boards. Motion, p. 6
(citing Midwest Construction Co. v. United States, 461 F.2d 794
(Ct.Cl. 1972); Derrick Electric Co., ASBCA No. 21246, 77-2 BCA �
12,643). Finally, the Respondent believes that since the
Contractor, despite Government instructions and express contract
provisions to the contrary, decided, on its own, to print the
Plan in accordance with the original, but superseded, delivery
date, that work is outside the scope of the contract and GPO is
not required to pay for it. Motion, pp. 6-7. Accordingly, since
there are no genuine issues of material fact, the Government
contends that it is entitled to judgment dismissing this appeal
as a matter of law. Motion, pp. 6-7.
B. Appellant's Cross-Motion
The Appellant concurs with the Respondent that this dispute
primarily involves a matter of contract interpretation. Cross-
Motion, pp. 2, 10. However, the Contractor disagrees with the
Government's view that the contract's "Extension of Schedules"
clause is controlling. Cross-Motion, pp. 4-5. Rather, the
Appellant believes that it is entitled to judgment in this
controversy essentially for three reasons: (1) it was acting
within the express terms of the contract by printing the Plan in
time to be delivered by September 15, 1993; (2) under well-
settled principles of contract interpretation, any ambiguity in
the relevant language of the contract must be resolved against
the drafter of the agreement-the Government; and (3) it
reasonably relied on the Respondent's failure to notify it of
changes to the pre-production samples within the 5 workday
holding period, and thus GPO should be equitably estopped from
using the absence of an "OK to Print" as a defense to the
Contractor's claim.
The Appellant's first argument rests in its belief that the
supplemental specification in GPO Contract Terms entitled
"Determination of Lateness" provides the basis for a favorable
ruling on its appeal. Cross-Motion, p. 4 (citing GPO Contract
Terms, Supplemental Specifications, � 15(a)). As the Appellant
reads that specification, the original delivery/shipment date in
the contract is the paramount consideration in measuring prompt
performance, because any delays in intermediate proofing dates
are discounted if the product is shipped or delivered on time.
Cross-Motion, p. 4. Consequently, notwithstanding the
Government's delay in returning the proofs, the Contractor
believes that it had no choice but to proceed as if the original
contract due date was still in effect in order to protect itself
from a possible default, since nothing in the contract's terms
indicated that its duties were merely executory until the "OK to
Print" was issued. Id. Indeed, the Appellant sees the
"clarifying distinction" between the Motion and Cross-Motion as
being the Respondent's idea, on the one hand, that
notwithstanding contract language which says that the samples
"will be withheld not longer than 5 workdays from the date of
receipt to date of "`OK to Print'," an affirmative authorization
to print was required even if the holding period had expired, and
the Contractor's view, on the other hand, that the contract
provision in question is self-executing if the Government remains
silent after those 5 workdays. Cross-Motion, p. 5. That is, the
Appellant interprets "the clear meaning" of the pertinent
contract language as allowing GPO to delay the printing process
only if notice of changes are given within 5 workdays after
receipt of the samples, otherwise the Contractor must perform
according to the contract requirements.18 Cross-Motion, p. 9.
Furthermore, the Appellant contends that it kept in touch with
the Contracting Officer throughout the holding period to see if
there would be any changes necessitating a delay in performance
of the contract, and it was mislead by key employees of the CRPPO
into thinking that September 7, 1993, was the firm date for the
MMES to review and respond to the pre-production samples.19
Cross-Motion, p. 9. Thus, when the holding period ended without
any affirmative act by the Respondent, the Appellant's obligation
to complete the production of the Plan for delivery by September
15, 1993, became fixed. Id. Accordingly, the Appellant asserts
that because it was "empowered" to proceed with performance when
GPO failed to return the proofs, or otherwise respond, within the
holding period, it is entitled to the full contract price,
especially since the job had been completed and was available for
delivery before October 28, 1993, the date on which the contract
was terminated.20 Cross-Motion, p. 6 (citing R4 File, Tab U; GPO
Contract Terms, Contract Clauses, � 19(b)(6)).21
Second, the Contractor says that if there is any ambiguity in the
contract's terms, the fault is the Government's, and thus it
should receive the benefit of the doctrine of contra
proferentum.22 Cross-Motion, p. 6 (citing 2 RESTATEMENT (SECOND)
OF CONTRACTS � 206 (1981)). Under this principle, where two
parties to a contract present conflicting reasonable
interpretations of its language, the dispute will be resolved
against the drafter of the language in question.23 Cross-Motion,
p. 7 (citing 3 ARTHUR LINTON CORBIN, CORBIN ON CONTRACTS � 559
(1960 ed.)). The Appellant states that contra proferentum is
especially applicable to Government sealed-bid-type contracts, as
here, because the contractor must take the terms and
specifications as it finds them. Cross-Motion, p. 7 (citing
Peter Kiewit Sons' Co. v. United States, 109 Ct. Cl. 390, 418,
(1947); SAMUEL WILLISTON, WILLISTON ON CONTRACTS � 621 (3rd ed.
1961)). In that regard, the Contractor notes that the doctrine
only requires it to show that its reading of the contract falls
within the "zone of reasonableness," not that it is more
reasonable than the Government's. Cross-Motion, p. 7 (citing
Neal & Co. v. United States, 19 Ct.Cl. 463, 473 (1990), aff'd 945
F.2d 385 (Fed. Cir. 1991)).
Finally, the Appellant asserts that it reasonably relied on the
express language of the contract limiting the Government's chance
to review the proofs to 5 workdays, and only proceeded to perform
when the Respondent failed to advise it of any changes or
problems by the end of that
period. Cross-Motion, pp. 6-7. Consequently, the Contractor
urges the Board to apply the doctrine of equitable estoppel
against the Government, and deny the Motion and grant the Cross-
Motion in this case.24 Cross-Motion, p. 7.
Accordingly, the Appellant contends that the undisputed facts and
the applicable law, warrant summary judgment in its favor,
instead of the Government's, on the question of entitlement.
Cross-Motion, p. 10. On the other hand, the Contractor also asks
the Board to limit its ruling in this dispute solely to the
entitlement issue, and reserve judgment on the amount of recovery
at this time.25 Id. The Appellant believes that regardless of
which party prevails on the threshold issue, any decision
concerning quantum must be delayed pending receipt of additional
evidence for the record on the matter of termination costs.
Cross-Motion, pp. 10-11.
IV. QUESTIONS PRESENTED
This appeal is before the Board because the Respondent terminated
the Appellant's contract for the convenience of the Government,
and the parties could not agree on the appropriate amount of a
termination settlement. However, when the Board reads the record
in this case, including the parties' stipulation, and considers
the arguments advanced in the Motion and the Cross-Motion, it
finds itself in agreement with the Contractor that the quantum
issue itself is not directly involved in this summary proceeding.
While the parties have indirectly pressed their respective
positions on the money question, it is clear that they have
concentrated their fire on the threshold entitlement issue, and
at this point the record does not contain enough evidence for the
Board to determine how much the Appellant is actually owed
because of the cancellation of its contract; i.e., what were its
true termination costs.26 Indeed, the Contractor tacitly
concedes as much with its request to submit supplementary proof
of costs no matter which summary motion is granted by the Board.
Cross-Motion, pp. 10-11. The absence of such evidence is
especially significant because proceedings before the Board are
conducted de novo. See Sterling Printing, Inc., supra, Decision
Denying Second Motion for Reconsideration and Order (August 12,
1994), slip op. at 1-2, fn. 1. See also Minority Enterprises,
Inc., ASBCA Nos. 45549, 45553, 45683, 45696, 95-1 BCA � 27,461 at
136,829 ("[W]hen `an action is brought following a [CO's]
decision, the parties start . . . before the board with a clean
slate.'"]; Allen County Builders Supply, ASBCA No. 41836, 93-1
BCA � 25,398, at 126,491-92 ("Once a contractor appeals to this
Board, we are no more bound by the Government's view of the claim
than we are bound by the contractor's view. The appeal has the
effect of vacating the contracting officer's decision on the
merits of the dispute."]. Accord Wilner v. United States, 24
F.3d 1397, 1401 (Fed. Cir. 1994); Assurance Co. v. United States,
813 F.2d 1202, 1206 (Fed. Cir. 1987); Blount Brothers Corp. v.
United States, 191 Ct.Cl. 784, 424 F.2d 1074, 1085 (1970);
Southwest Welding and Manufacturing Co. v. United States, 188
Ct.Cl. 925, 413 F.2d 1167, 1184 (1969). Therefore, the Board's
decision here is limited to the entitlement question.
In order to resolve the threshold issue, two questions need to be
answered:
1. Is the "PRE-PRODUCTION COPIES" specification in the contract
ambiguous, and if so, is that ambiguity latent or patent?
2. If the contract language unambiguously precludes the
Contractor's printing the entire ordered quantities of the Plan
before receipt of an "OK to Print" from the Government, under the
circumstances of this case is the Respondent nonetheless estopped
from asserting that defense to the Appellant's claim?
If both of these questions are answered in the negative, then the
matter is appropriate for remand. In such a case, a third
question needs to be addressed, namely:
3. Since the Appellant is clearly entitled to some compensation
because of the termination action, how should the amount of its
recovery be determined; i.e., what standards should apply?
V. DECISION
Before addressing the issues raised by the parties, it is
necessary to say a few words about the nature of this proceeding.
First, it should be noted that there is nothing in the Board
Rules expressly providing for motions for summary judgment.27
However, the Board has traditionally entertained summary motions,
even in the absence of such an express authorization. See e.g.,
Vanier Graphics, Inc., GPO BCA 12-92 (May 17, 1994), 1994 WL
275102; RBP Chemical Corp., GPO BCA 4-91 (January 23, 1992), 1992
WL 487876; International Lithographing, Inc., GPO BCA 18-88
(February 21, 1990), 1990 WL 454981. See generally Matthew S.
Foss, U.S. Government Printing Office: The First Decade, 24 PUB.
CONT. L.J. 579, 594 (ABA 1995).
Second, in deciding summary judgment motions, the Board is guided
by Rule 56 of the Federal Rules of Civil Procedure. See Vanier
Graphics, Inc., supra, slip op. at 32; RBP Chemical Corp., supra,
slip. op. at 17-18. Accord Christie-Willamette, NASA BCA 283-4,
87-3 BCA � 19,981 (citing Astro Dynamics, Inc., NASA BCA � 476-1,
77-1 BCA � 12.230); Automated Services, Inc., EBCA Nos. 386-3-87,
391-5-87, 87-3 BCA � 20,157. Under Rule 56, courts are
instructed to grant a motion for summary judgment if the
pleadings and supporting affidavits and other submissions "show
that there is no genuine issue as to any material fact and that
the moving party is entitled to judgment as a matter of law."28
FED. R. CIV. P. 56(c). Thus, the principal judicial inquiry
required by Rule 56 is whether a genuine issue of material fact
exists. See RBP Chemical Corp., supra, slip. op. at 22 (citing
Castillo Printing Co., GPO BCA 10-90 (May 7, 1991), slip op. at
22). Accord John's Janitorial Services, Inc., ASBCA No. 34234,
90-3 BCA � 22,973 (citing, General Dynamics Corporation, ASBCA
Nos. 32660, 32661, 89-2 BCA � 21,851); Ite, Inc., supra. Stated
otherwise, on a motion for summary judgment, a court cannot try
issues of fact; it can only determine whether there are issues to
be tried. See IBM Poughkeepsie Employees Federal Credit Union v.
Cumis Insurance Society, Inc., supra, 590 F.Supp. at 771 (citing
Schering Corp. v. Home Insurance Co., 712 F.2d 4, 9 (2d Cir.
1983)). If no triable issues exist, the rule permits the
immediate entry of summary judgment. See e.g., Reingold v.
Deloitte, Haskins and Sells, 599 F.Supp. 1241, 1261 (S.D.N.Y.
1984); United States v. ACB Sales and Service, Inc., 590 F.Supp.
561 (D. Ariz. 1984). Indeed, the United States Supreme Court has
stated that summary judgment is mandatory in the absence of a
genuine issue of any material fact.29 See Celotex Corp. v.
Catrett, supra, 477 U.S. at 322-23.
Third, the burden is on the party moving for summary judgment to
demonstrate that there is no genuine issue as to any material
fact, and that it is entitled to judgment as a matter of law.
See Celotex Corp. v. Catrett, supra, 477 U.S. at 322-23; Adickes
v. S. H. Kress & Co., 398 U.S. 144, 157 (1970). That burden is
an affirmative one, and is not met merely by disproving the
unsupported claims of its opponent. See Celotex Corp. v.
Catrett, supra, 477 U.S. at 323. On the other hand, while the
nonmoving party also has an evidentiary burden, it is not a heavy
one; it is simply required to go beyond allegations in the
pleadings and designate specific facts in the record or by
affidavits to show there is a genuine issue to be heard.30 See
e.g., McDonnell v. Flaharty, 636 F.2d 184 (7th Cir. 1980); United
States v. Kates, 419 F.Supp. 846 (D.Pa. 1976); Upper West Fork
River Watershed Association v. Corps of Engineers, United States
Army, 414 F.Supp. 908 (D.W.Va. 1976), aff'd 556 F.2d 576 (4th
Cir. 1977), cert. denied 434 U.S. 1010 (1978). See generally,
Vanier Graphics, Inc., supra, slip op. at 32-38; RBP Chemical
Corp., supra, slip. op. at 17-26.
Finally, whether the adjudicatory forum is faced with one summary
judgment motion or two, as here, the principles are the same.
See Vanier Graphics, Inc., supra, slip op. at 38. As expressed
by the United States Court of Federal Claims, the rule governing
motions filed by both parties in the same proceeding is that:
Both plaintiff and defendant, as moving parties, have the burden
of establishing that there are no genuine material issues in
dispute and that, as movant, they are entitled to judgment as a
matter of law. [Citation omitted.] In opposing the other's
motion, each party has the burden of providing sufficient
evidence, not necessarily admissible at trial, to show that a
genuine issue of material fact indeed exits. [Citation omitted.]
If the non-movant's evidence is merely colorable, or not
sufficiently probative, summary judgment may be granted.
[Citations omitted.]
In resolving cross-motions, the court may not weigh the evidence
and determine the truth of the matter on summary judgment.
[Citation omitted.] Any evidence presented by the opponent is to
be believed and all justifiable inferences are to be drawn in its
favor. [Citation omitted.] With respect to any facts that may
be considered as contested, each party, in its capacity as the
opponent of summary judgment, is entitled to "all applicable
presumptions, inferences and intendments." [Citation omitted.]
That the parties, in their cross-motions, have separately alleged
the absence of genuine issues of material fact, does not relieve
the court of its responsibility to determine the appropriateness
of summary disposition of the matter. . . . [T]he court must
evaluate each party's motion on its own merits and drawing all
reasonable inferences against the party whose motion is being
considered.
See Bataco Industries, Inc. v. United States, 29 Fed.Cl. 318, 322
(1993) (quoted in Vanier Graphics, Inc., supra, slip op. at
38-39). See also Baca v. United States, supra, 29 Fed.Cl. at
358-59.
There are no genuine issues of material fact in this case. By
their stipulations, and their agreement that the R4 File is
complete and correct,31 the parties have placed before the Board
all of the essential facts which it needs to resolve the
entitlement question. The only task left for the Board is to
apply those facts to the disputed contract terms, and contract
interpretation is clearly a question of law. See Fry
Communications, Inc.-InfoConversion Joint Venture v. United
States, 22 Cl. Ct. 497, 503 (Cl.Ct. 1991); Professional Printing
of Kansas, Inc., supra, slip op. at 46, fn. 62; General Business
Forms, Inc., GPO BCA 2-84 (December 3, 1985), slip op. at 16,
1985 WL 154846 (citing John C. Grimberg Co. v. United States, 7
Ct. Cl. 452 (1985)); RD Printing Associates, Inc., GPO BCA 02-92
(December 16, 1992), slip op. at 13, 1992 WL 516088. See also
Fortec Contractors v. United States, 760 F.2d 1288, 1291
(Fed.Cir. 1985); P.J. Maffei Building Wrecking Co. v. United
States, 732 F.2d 913, 916 (Fed. Cir. 1984); Pacificorp Capital,
Inc. v. United States, 25 Cl. Ct. 707, 715 (1992), aff'd 988 F.2d
130 (Fed. Cir. 1993); Ralph Construction, Inc. v. United States,
4 Cl. Ct. 727, 731 (1984) (citing Torncello v. United States, 681
F.2d 756, 760 (Ct.Cl. 1982)); Hol-Gar Manufacturing Corp. v.
United States, 169 Ct. Cl. 384, 386, 351 F.2d 972, 973 (1965).
Accordingly, the threshold entitlement issue is ripe for decision
by summary judgment.
When the Board considers the Respondent's Motion and Reply, and
the Appellant's Cross-Motion, against the record in this case,
including the parties' stipulations, it draws the following
conclusions:
A. Contrary to the Appellant's belief, when the contract is read
as a whole, the disputed sentence in the "PRE-PRODUCTION COPIES"
specification is not ambiguous, and clearly precludes the
Contractor from producing the Plan unless it has received an "OK
to Print" order from the Government.
The cause of this dispute is a single sentence in the contract's
"PRE-PRODUCTION COPIES" specification;
These samples must arrive not later than August 30, 1993 and will
be withheld not longer than 5 workdays from the date of receipt
to date of "OK to Print" given by telephone/telegraph or mail to
the Contractor's plant.
Forty words, more or less, have engaged the parties in a hotly
contested debate over whether or not the decision to print the
Plan automatically shifted to the Appellant once the 5 workday
period for holding the samples passed without the Respondent's
issuing an "OK to Print;" i.e., is the above language self-
executing? On the one hand, the Respondent, emphasizing the tail
end of the sentence, argues strenuously that an "OK to Print" was
the sine qua non for the Appellant to produce the Plan,
regardless of how long it took for the Government to review and
act on the proofs, and the cure for any delay was the operation
of the contract's "Extension of Schedules" clause. On the other
hand, the Appellant, focusing on the first portion of the
sentence, just as fervently contends that the 5 workdays was an
absolute limitation on the Government's right to make changes to
the Plan, because the "Determination of Lateness" supplemental
specification made the delivery/shipment date the contract's
controlling factor; i.e., after this narrow window for review
closed the Contractor was free to proceed to production without
an "OK to Print." Each party, of course, suggests that its
interpretation is the only reasonable one under the contract.
Since the parties have drawn different meanings from the "PRE-
PRODUCTION COPIES" specification, the Board's task is simple-it
must decide which of the two conflicting interpretations is
correct, or whether both readings may be reasonably derived from
the contract terms; in other words, is the contract ambiguous?
To answer that question, the Board must examine the disputed
language itself and derive its own interpretation of the
contract. See Professional Printing of Kansas, Inc., supra, slip
op. at 46; Web Business Forms, Inc., GPO BCA 16-89 (September 30,
1994) slip op. at 16-17, 1994 WL 837423; McDonald & Eudy
Printers, Inc., supra, slip. op. at 13; Shepard Printing, GPO BCA
37-92 (January 28, 1994), slip. op. at 15-16, 1994 WL 275098
(hereinafter Shepard II).
The focus of inquiry in this case is confined to the contract
itself. See Professional Printing of Kansas, Inc., supra, slip
op. at 46; Web Business Forms, Inc., supra, slip op. at 17;
Universal Printing Co., supra, slip op. at 26, fn. 27, RD
Printing Associates, Inc., supra, slip op. at 9, 13, fns. 9 and
15. Therefore, certain legal principles should be kept in mind
at the outset. First, when the parties confront the Board with
two different interpretations of the same contract language they
raise the possibility that the specifications may be ambiguous.
See McDonald & Eudy Printers, Inc., supra, slip op. at 13; R.C.
Swanson Printing and Typesetting Co., GPO BCA 31-90 (February 6,
1992), slip op. at 41, 1992 WL 487874, aff'd Civil Action No.
92-128C (Cl.Ct. October 2, 1992). Second, contractual language
is ambiguous if it will sustain more than one reasonable
interpretation.32 See Professional Printing of Kansas, Inc.,
supra, slip op. at 47; Webb Business Forms, Inc., supra, slip op.
at 17; R.C. Swanson Printing and Typesetting Co., supra, slip op.
at 41, fn. 22; General Business Forms, Inc., supra, slip op. at
16. See also Neal & Co. v. United States, supra, 19 Cl. Ct. at
471; Edward R. Marden Corp. v. United States, 803 F.2d 701, 705
(Fed. Cir. 1986); Sun Shipbuilding & Drydock Co. v. United
States, 183 Ct. Cl. 358, 372 (1968). Third, in analyzing
disputed contract language, the courts and contract appeals
boards place themselves in the shoes of a reasonably prudent
contractor, and give the language of the contract that meaning
which a reasonably intelligent contractor acquainted with the
circumstances surrounding the contract would give it. See
Professional Printing of Kansas, Inc., supra, slip op. at 47;
McDonald & Eudy Printers, Inc., supra, slip op. at 14; General
Business Forms, Inc., supra, slip op. at 18 (citing, Salem
Engineering and Construction Corp. v. United States, 2 Cl. Ct.
803, 806 (1983)). See also Norcoast Constructors, Inc. v. United
States, 196 Ct. Cl. 1, 9, 448 F.2d 1400, 1404 (1971); Firestone
Tire and Rubber Co. v. United States, 195 Ct. Cl. 21, 30, 444
F.2d 547, 551 (1971).
A dispute over contract language is not resolved simply by a
decision that an ambiguity exists-it is also necessary to
determine whether the ambiguity is latent or patent. Courts will
find a latent ambiguity where the disputed language, without
more, admits of two different reasonable interpretations.33 See
Fry Communications, Inc./InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 503 (citing, Edward R. Marden
Corporation v. United States, supra, 803 F.2d at 705);
Professional Printing of Kansas, Inc., supra, slip op. at 48; Web
Business Forms, Inc., supra, slip op. at 18; R.C. Swanson
Printing and Typesetting Co., supra, slip op. at 41, fn. 22. 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.34 See Fry Communications,
Inc./ InfoConversion Joint Venture v. United States, supra, 22
Cl. Ct. at 504 (citing, Max Drill, Inc. v. United States, supra,
192 Ct. Cl. at 626; WPC Enterprises, Inc. v. United States, 163
Ct. Cl. 1, 6 (1963)); Professional Printing of Kansas, Inc.,
supra, slip op. at 48; Webb Business Forms, Inc., supra, slip op.
at 19; General Business Forms, Inc., supra, slip op. at 17
(citing, Enrico Roman, Inc. v. United States, supra, 2 Cl. Ct. at
106).
However, the rules governing ambiguous contract language come
into play only if the meaning of the disputed terms are not
susceptible to interpretation through the usual rules of contract
construction. See Professional Printing of Kansas, Inc., supra,
slip op. at 49; Webb Business Forms, Inc., supra, slip op. at 19;
McDonald & Eudy Printers, Inc., supra, slip op. at 16; Shepard
II, supra, slip op. at 19; R.C. Swanson Printing and Typesetting
Co., supra, slip op. at 42. The most basic principle of contract
construction is that the document should be interpreted as a
whole.35 See Hol-Gar Manufacturing Corp. v. United States,
supra, 169 Ct. Cl. at 388, 351 F.2d at 975; Professional Printing
of Kansas, Inc., supra, slip op. at 49; Webb Business Forms,
Inc., supra, slip op. at 19-20; General Business Forms, Inc.,
supra, slip op. at 16. Hence, all provisions of a contract
should be given effect and no provision is to be rendered
meaningless. See Professional Printing of Kansas, Inc., supra,
slip op. at 49-50; Webb Business Forms, Inc., supra, slip op. at
20; General Business Forms, Inc., supra, slip op. at 16 (citing,
Raytheon Co. v. United States, 2 Cl. Ct. 763 (1983)). See also
Pacificorp Capital, Inc. v. United States, supra, 25 Cl. Ct. at
716; Fortec Constructors v. United States, supra, 760 F.2d at
1292; United States v. Johnson Controls, Inc., 713 F.2d 1541,
1555 (Fed. Cir. 1983); Jamsar, Inc. v. United States, 442 F.2d
930 (Ct.Cl. 1971); Grace Industries, Inc., ASBCA No. 33553, 87-3
BCA � 20,171. In other words, a contract should be interpreted
in a manner which gives meaning to all of its parts and in such a
fashion that the provisions do not conflict with each other, if
this is reasonably possible. See Professional Printing of
Kansas, Inc., supra, slip op. at 50; Webb Business Forms, Inc.,
supra, slip op. at 20. Accord Granite Construction Co. v. United
States, 962 F.2d 998 (Fed. Cir. 1992); B. D. Click Co. v. United
States, 614 F.2d 748 (Ct.Cl. 1980). That is, an interpretation
which gives a reasonable meaning to all parts of a contract will
be preferred to one which leaves a portion of it "useless,
inexplicable, inoperative, void, insignificant, meaningless,
superfluous, or achieves a weird and whimsical result."36 See
Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir.
1991) (quoting, Arizona v. United States, 216 Ct. Cl. 221,
235-36, 575 F.2d 855, 863 (1978)). See also ITT Arctic Service,
Inc. v. United States, 207 Ct. Cl. 743, 524 F.2d 680, 684 (1975)
(contract interpretation should be "without twisted or strained
out of context [and without] regard to the subjective unexpressed
intent of one of the parties. . .").
In interpreting the disputed language here, the parties have
staked out positions which are completely antithetical. The
Appellant says that because the contract shipping date was fixed
and immutable, the Government's chance to review the samples was
confined to the "5-workdays" allowed by the "PRE-PRODUCTION
COPIES" specification. The Respondent tells us that as long as
it refrained from issuing a "OK to Print," it had an unlimited
amount of time to examine the proofs. However, as emphasized
above, for an ambiguity to exist the differing interpretations of
the contract language must be reasonable. See Professional
Printing of Kansas, Inc., supra, slip op. at 51; Webb Business
Forms, Inc., supra, slip op. at 17; R.C. Swanson Printing and
Typesetting Co., supra, slip op. at 41, fn. 22; General Business
Forms, Inc., supra, slip op. at 16. When tested in that
crucible, Appellant's interpretation is "so unreasonable and
bizarre that the Board cannot imagine any self-respecting
contracting officer agreeing to such an absurd proposition." See
Professional Printing of Kansas, Inc., supra, slip op. at 51
(citing Gould, Inc. v. United States, supra, 935 F.2d at 1274;
Arizona v. United States, supra, 216 Ct. Cl. at 235-36, 575 F.2d
at 863). Consequently, if for no other reason, it must be
rejected on that basis alone. The gaping flaw in the
Contractor's interpretation of the disputed contract language is
its failure to recognize that a proof marked "OK to Print" is not
only a signal to begin production, but it also sets the standard
by which the quality of performance will be measured. That is,
the disputed language in the "PRE-PRODUCTION COPIES"
specification does not stand alone; there is a close connection
between a requirement for providing prior-to-production samples
and a contract's quality assurance provisions. See Professional
Printing of Kansas, Inc., supra, slip op. at 52 (relationship
between contract's "Printing" clause and QATAP). Here, for
example, the specified standards in the contract for printing
attributes P-7 (Type Quality and Uniformity) and P-10 (Process
Color Match) are "OK Pre-Production Copies" (R4 File, Tab B, p.
13). Furthermore, the QATAP Manual, which is made part of the
contract by reference, states, in pertinent part:
� 1-9. Specified Standards-The specified standards are the
criteria on which printing attributes P-7, P-8, P-9, and P-10 are
evaluated. For example, process color match (P-10) might be
evaluated by comparing a printed illustration with an "OK'd press
sheet." In this example, the "OK'd press sheet" would be listed
in the specifications as the specified standard for printing
attribute P-10.
Standards will be specified for the following attributes:
P-7 Type Quality and Uniformity
* * * * * * * * * *
P-10 Process Color Match
See QATAP Manual, p. 1. The inclusion of these specified quality
standards was a major consideration in the development of the
contract's specifications. See PPR, Chap. XIII, Sec. 1, � 4.c(1)
(iii). Moreover, for the purposes of this case, there is
absolutely no difference between the contract's "OK'd pre-
production copies," and the QATAP Manual's example of an "OK'd
press sheet" as a quality control mechanism. Thus, the printing
procurement regulation tells us, in pertinent part:
4. Functions, Authorities, Responsibilities and Procedures.
* * * * * * * * * *
a. Initial Determination of Required Quality. The customer
agencies are the best judges of their quality requirements.
They, therefore, have the authority to include on the requisition
any special requests concerning the quality requirements of
product components and production processes. They may also
request special quality assurance measures (e.g., samples,
proofs, press sheet inspections) they may deem necessary to
ensure that their requirements are met. . . .
See PPR, Chap. XIII, Sec. 1, � 4.a. [Emphasis added.]
Consequently, when read against the regulation, the contract's
specified standard of "OK'd pre-production copies," is simply the
DOE's/MMES' special quality assurance measure of choice.
However, the Appellant's misconstruction of the "PRE-PRODUCTION
COPIES" specification does not just impact the contract's QATAP
provisions. Since the reason the Respondent exceeded the
contract's holding period was because it was making changes to
the prior-to-production proofs, the Board also believes that the
Contractor's narrow reading of the disputed sentence is
incompatible with the authority bestowed on GPO's Contracting
Officers by the "CHANGES" clause, and in fact would render that
provision meaningless.37 In that regard, the "CHANGES" clause
allows Contracting Officers to order written changes within the
general scope of the contract "at any time." See GPO Contract
Terms, Contract Clauses, � 4(a). The Appellant's position, on
the other hand, is that the "PRE-PRODUCTION COPIES" specification
effectively placed a 5 workday "statute of limitations" on the
Government's right to revise the samples before the Plan was
produced, and any changes submitted to the Contractor after the
holding period expired would carry a penalty in the form of full
compensation for a complete reprinting of the text. Stated
otherwise, under the Contractor's theory the Government's only
avenue for avoiding such an adverse consequence would be to
accept, pay for, and thus wind up with a product which did not
meet its needs and which it did not want. Such a ludicrous
result stands the whole raison d'etre for Government contracts
"on its head."
A similar attempt to restrict the Government's rights under the
"CHANGES" clause was rejected by the Board in McDonald & Eudy, a
case cited by the Respondent, under circumstances which bear a
close resemblance to the situation in this case. Briefly,
McDonald & Eudy involved a contractor who was awarded a
"requirements" contract to produce and distribute certain
language proficiency test booklets for the Department of the Army
(Army). Among other things, the contract contained two important
provisions-a "PRIOR TO PRODUCTION SAMPLES" specification which,
inter alia, gave the Government 10 workdays to approve,
conditionally approve, or disapprove the samples, and stated that
"[m]anufacture of the final product prior to approval of the
sample submitted is at the contractor's risk[,]" and a "FILMS"
specification said that: "[t]he contractor must not print prior
to receipt of an `OK to print.'" The dispute arose when the
Government discovered that the required proofs for the first
print orders were incorrect because the Army had furnished the
wrong camera copy to the contractor. However, by the time the
Army provided corrected camera copy for the test booklets, and
asked for new samples to review, the contractor had already
finished production of the print orders concerned. The
contractor complied with the Army's request for new proofs, and
reprinted the corrected test booklets once the samples were
approved. Thereafter, it claimed an equitable price adjustment
for reprinting the full quantity of booklets ordered, but it was
denied by the Contracting Officer. The Contracting Officer
expressly relied on the "PRIOR TO PRODUCTION SAMPLES"
specification, reasoning that since the contractor was only
authorized to produce the samples at that stage of production,
the contractor's manufacture of the final product prior to
approval of the proofs was at its own risk. See McDonald & Eudy,
supra, slip op. at 9.
On appeal, the Board affirmed the Contracting Officer's
decision.38 Noting that few cases involving premature printing
by GPO contractors are found in its volumes,39 see McDonald &
Eudy, supra, slip op. at 19, the Board held, as a simple matter
of contract construction the agreement was clear and unambiguous
and meant what it said in the "PRIOR TO PRODUCTION SAMPLES" and
"FILMS" specifications, namely, that the contractor was not to
print the entire ordered quantity of test booklets unless and
until it received an "OK to Print" from the Government following
the review and approval of the sample advance copies, see
McDonald & Eudy, supra, slip op. at 18 (citing Shepard II, supra,
slip op. at 20; R.C. Swanson Printing and Typesetting Co., supra,
slip op. at 43-44; Export Packing & Crating Co., ASBCA No. 16133,
73-2 BCA � 10,066, at 47,215). Furthermore, the Board's believed
that a reasonably aware contractor ignored the "yellow warning
lights" in the contract at its peril. See McDonald & Eudy,
supra, slip op. at 18-19.
In so ruling, the Board specifically adopted the reasoning of the
ad hoc contract appeals panel in Serigraphic Arts, Inc.,40 see
McDonald & Eudy, supra, slip op. at 19, a case which also
involved a contractor who had printed the product ordered
(decals) before the original proofs were returned by the
Government. When the samples were returned, they showed that the
customer-agency had changed the color of the product, which
required the contractor to reprint it. The contractor
subsequently sought an equitable adjustment for the reprinting,
which was denied by the Contracting Officer on the ground that
the original run was not authorized under the contract's "PROOFS"
clause. The ad hoc panel agreed with the Contracting Officer's
view of the "PROOFS" specification, stating, in pertinent part:
When one reads the entire clause together, the reasonable
interpretation is that the contractor must receive the proofs
prior to printing. To begin printing without such authorization
is to act unilaterally and to assume the risk of incorrectly
interpreting the contract. California Shipbuilding and Dry Dock
Company, ASBCA No. 21394, April 14, 1978, 78-1 BCA � 13,168.
. . . [The contractor's] action, albeit taken under the time
limitations of the contract, risked the possibility that some
alteration of the proofs would be necessary.
See Serigraphic Arts, Inc., supra, slip op. at 7-8. [Emphasis
added.] Quoting the above passage with approval in McDonald &
Eudy,, the Board also observed that the rule which allocates to
the contractor the risk of its disregarding contract
specifications and any resulting premature performance of the
contract, is consistently applied in Government contract law.
See McDonald & Eudy, supra, slip op. at 18-19 (citing Hobbs
Construction and Development, Inc., ASBCA Nos. 30432, 32151, 91-2
BCA � 24,014; Gibson Hart Co., VABCA No. 2847, 89-2 BCA � 21,830;
Serigraphic Arts, Inc., supra).
Although the Board found in McDonald & Eudy that the only
reasonable interpretation of the relevant contract language,
which was so clear as to warrant no contrary reading, made the
receipt of an "OK to Print" following review and approval of the
pre-production samples, a condition precedent to the printing of
the entire ordered quantity of test booklets, it was constrained
to add:
Lastly, it should be clear that although the contract and the
Print Orders were drafted by the Respondent, the ultimate
beneficiary of strict adherence to the relevant language should
have been the Appellant. In the Board's view, the contractual
procedure was there to protect against just the sort of increased
costs experienced by the Contractor when, as here, the
Government, for whatever reason, makes changes to the product
after examining the original sample. Since the Appellant chose
to disregard these provisions, under the express terms of the
contract, it assumed the risk of any increased costs which might
have occurred from those changes. . . .
See McDonald & Eudy, supra, slip op. at 23-24. [Original
emphasis.]
In McDonald & Eudy, the Board was asked to interpret two contract
specifications-"PRIOR TO PRODUCTION SAMPLES" and "FILMS"-whereas
here one provision is involved-the "PRE-PRODUCTION COPIES"
specification. However, it is clear that this is a distinction
without a difference because the "PRE-PRODUCTION COPIES"
specification in this case merely places under a single umbrella
the same requirements for a withholding period (albeit for less
time) and an "OK to Print" which the McDonald & Eudy contract
divided between the "PRIOR TO PRODUCTION SAMPLES" and "FILMS"
specifications. In all other respects, these cases are
essentially the same. Accordingly, the Board believes that its
rationale in McDonald & Eudy is equally applicable to, and
dispositive of, this dispute.
In reaching this conclusion, the Board has considered the
Appellant's attempt to justify its premature printing of the Plan
on the basis of the contract's "Determination of Lateness"
provision. See GPO Contract Terms, Supplemental Specifications,
� 15(a). However, the Board finds the Contractor's position to
be simply without merit. A close reading of the paragraph
entitled "Final Product Schedule" in that clause, especially the
words ". . . the time limits established for delivery/shipment of
the final product will be the governing factor in determining the
number of workdays the contractor is late[.]," clearly shows that
it is meant to cover situations where the contract performance is
untimely in the absence of an intervening act by the Government
causing the delay. That is not this case, and thus the
Contractor's reliance on that supplement specification is
misplaced. For circumstances, as here, where the performance
delay is attributable to Government tardiness, any adverse impact
on a contractor's ability to meet the original due date is cured
by the contract itself, namely, application of the formula
contained within the "Extension of Schedules" clause. See New
South Press I, supra, slip op. at 25. Consequently, the
Appellant's fear of a possible default based on its failure to
meet the original delivery/shipment date, see Cross-Motion, p. 4,
was without foundation and completely illusory.
As a final observation, it seems to the Board that the only other
theory of recovery available to Appellant is that somehow the
Respondent breached its implied duty to cooperate with it in the
performance of the contract. See Stephenson, Inc., supra, slip
op. at 38-39. Accord Finesilver Manufacturing Co., ASBCA No
28955, 86-3 BCA � 19,243 (Government continually failed over the
term of the contract to timely furnish the fabric needed by the
contractor to make the number of trousers ordered by the
government, and its failure to do so constituted a breach of its
implied obligation under the contract to deliver fabric in
sufficient time and quantity to enable the contractor to
manufacture the specified pairs of trousers by the contract
completion date); Oxwell, Inc., ASBCA Nos. 27523, 27524, 86-2 BCA
� 18,967 (Government failed to provide proper GFP support);
Robert J. DiDomenico, GSBCA No. 5539, 82-2 BCA � 16,093
(Government breached its lease contract by delivering the plans
for building alterations four months late and causing the
contractor to incur additional costs resulting from performance
in winter weather and from inability to schedule work in the most
efficient sequence). Although the Board has ruled that it is
without jurisdiction to entertain "pure" breach of contract
claims, see The Wessel Co., Inc., supra, slip op. at 46; R.C.
Swanson Printing and Typesetting Co., supra, slip op. at 41, it
has never expressly held that claims relying on the Government's
alleged breach of its implied duty to cooperate with the
Contractor in performance of the contract are barred from this
forum as well, cf. Stephenson, Inc., supra, slip op. at 46-47
(contractor's breach of duty allegation considered and rejected
by the Board). However, it is unnecessary to reach that question
in this case. Settled law holds that breach of contract damages
are not recoverable if the contract itself provides a remedy.
See, New South Press I, supra, slip op. at 26; Banta Co., supra,
slip op. at 31, fn. 40 (citing Triax-Pacific, A Joint Venture,
ASBCA No. 36353, 91-2 BCA � 23,724); R.C. Swanson Printing and
Typesetting Co., supra, slip op. at 46. Accord, Dave Hakala,
AGBCA No. 85-219-3, 85-3 BCA � 18,382. In this case, the
automatic extension of the shipping schedule authorized by the
"Extension of Schedules" clause is the contractual remedy so
provided for the Government's delay in returning the pre-
production samples to the Appellant. See GPO Contract Terms,
Contract Clauses, � 12(c). Therefore, even if the Board, as a
theoretical matter, had breach jurisdiction over a failure by the
Respondent to cooperate with the Appellant in the performance of
the contract, damages would not lie in this case, in any event.
For all of these reasons, the Board, giving meaning to all parts
of the disputed contract, concludes that the controversial
sentence in the "PRE-PRODUCTION COPIES" specification is in
perfect consonance with the requirements of QATAP, as well as the
"CHANGES" clause, and does not negate the language of any part of
the contract, taken as a whole. See Professional Printing of
Kansas, Inc., supra, slip op. at 51-52; Webb Business Forms,
Inc., supra, slip op. at 21; R.C. Swanson Printing and
Typesetting Co., supra, slip op. at 43-48. Accord Granite
Construction Co. v. United States, supra; B. D. Click Co. v.
United States, supra. Thus, when properly read, the contract
says that even though the holding period for the Government to
review and approve the pre-production samples is 5 workdays, the
contractor is not authorized to print the entire ordered quantity
of the Plan unless and until it receives an "OK to Print." That
being the case, an experienced contractor would know that under
settled legal principles regarding premature performance, if it
performed the contract without receiving an "OK to Print," any
increased costs resulting from changes made to the product were
its own risk. The Respondent's interpretation is in complete
harmony with this view, while the Appellant's approach
effectively reads the "OK to Print" requirement out of the
contract. See Professional Printing of Kansas, Inc., supra, slip
op. at 53 (citing DWS, Inc., Debtor-in-Possession, ASBCA No.
29743, 93-1 BCA � 25,404, at 126,540; Falcon Jet Corp., DOT CAB
No. 78-32, 82-1 BCA � 15,477, at 76,693). Indeed, if, as the
Contractor contends, it was allowed to print the final product
simply upon the expiration of the holding period, the "OK to
Print" language would not be needed at all. As previously
mentioned, interpretations which leave portions of a contract
superfluous, useless, inoperative, or meaningless are disfavored
in the law. See Gould, Inc. v. United States, supra; Arizona v.
United States, supra. Accordingly, the Board finds the above
reading of the contract, which accepts the meaning ascribed to
the disputed sentence in the "PRE-PRODUCTION COPIES"
specification by the Respondent is the only reasonable
interpretation of the contract, taken as a whole. When a
contract admits to only one construction, it is not ambiguous.
See Professional Printing of Kansas, Inc., supra, slip op. at 54;
Webb Business Forms, Inc., supra, slip op. at 21; R.C. Swanson
Printing and Typesetting Co., supra, slip op. at 43-48. Accord
Falcon Jet Corp., supra, 82-1 BCA at 76,693 (citing Martin Lane
Co. v. United States, 193 Ct. Cl. 203 (1970); General Dynamics
Corp., DOT CAB 76-29, 79-1 BCA � 13,858).
B. The Respondent's delay in returning the samples within the
time frame stated in the "PRE-PRODUCTION COPIES" specification
does not give rise to an estoppel against the Government in this
case.
The Appellant's equitable estoppel claim essentially says that
the Government's failure to return the pre-production proofs
within 5 workdays, as required by the contract, misled it into
believing that it was authorized to print the Plan as originally
set up, and that under the circumstances, it reasonably relied on
the Government's inaction as tacit approval to go forward with
production. Cross-Motion, pp. 6-7; Flagstad Affidavit, � 6. In
that regard, the Contractor not only depends on its own
interpretation of the contract to support its position, but also
places particular significance in Contracting Officer Seibert's
telephone statement on September 5, 1993, that MMES had "only" 5
workdays to submit changes to the samples, and his caveat not to
start printing the Plan during the retention period (Background,
Sec. A, � 8). See Flagstad Affidavit, �� 4, 6. In the Board's
view, these are slender reeds indeed on which to build an
estoppel claim. Since this is simply the Appellant's attempt to
"bootstrap" its erroneous interpretation of the contract, which
the Board has just rejected, into a vehicle for equitable relief,
the estoppel claim is without merit.
Estoppel is an equitable doctrine invoked to avoid injustice in
particular cases, and the party claiming its benefit must have
relied on its adversary's conduct "in such manner as to change
his position for the worse." Heckler v. Community Health
Services of Crawford County, 467 U.S. 51, 59, 104 S.Ct. 2218,
2223, 81 L.Ed.2d 42 (1984) (hereinafter cited as Heckler); USA
Petroleum Corp. v. United States, 821 F.2d 622, 625 (Fed. Cir.
1987); Flag Real Estate, Inc., HUD BCA No. 84-899-C14, 88-3 BCA �
20,866, at 105,517. See also John Cibinic , Jr. & Ralph C. Nash,
Jr., Administration of Government Contracts, 3d ed. (1995), The
George Washington University, Washington, DC, p. 69 ("Estoppel is
a concept that prohibits a party from escaping liability for
statements, actions, of inactions if they have been relied on by
the other party.") (hereinafter Cibinic & Nash).41 However, the
Board has recently noted that the law of estoppel differs where a
contractor is dealing with the Government instead of a private
party. See B & B Reproductions, GPO BCA 9-89 (June 30, 1995),
slip op. at 30, 1995 WL 488447 (citing Office of Personnel
Management v. Richmond, 496 U.S. 414, 419-20, 110 S.Ct. 2465,
2469, 100 L.Ed.2d 387 (1990) (hereinafter cited as Richmond);
Heckler, supra, 467 U.S. at 60-61, 104 S.Ct. at 2224).42
In Government cases, estoppel arises when all of the following
four conditions are met: (1) the Government knows or has reason
to know the facts; (2) the Government either intends that its
conduct or statements be acted upon or acts in such a manner as
to give the contractor that impression; (3) the contractor must
not have knowledge of the true facts known by the Government; and
(4) the contractor detrimentally relies on the Government's
conduct or statements. See B & B Reproductions, supra, slip op.
at 32; Professional Printing of Kansas, Inc., supra, slip op. at
33, fn. 48 (( citing Heckler ,supra; OAO Corp. v. United States,
17 Cl. Ct. 91, 104 (1989); Granite Construction Co., ENG BCA No.
4642, 89-3 BCA � 21,946, at 110,395). See also Jana, Inc. v.
United States, 936 F.2d 1265, 1270 (Fed. Cir. 1991); USA
Petroleum Corp. v. United States, supra, 821 F.2d at 625;
American National Bank and Trust Co. of Chicago v. United States,
23 Cl. Ct. 542, 549 (1991); Colorado State Bank of Walsh v.
United States, 18 Cl. Ct. 611, 633 (1989), aff'd, 904 F.2d 45
(Fed. Cir. 1987); Hazeltine Corp. v. United States, 10 Cl.Ct.
417, 442 (1986), aff'd 820 F.2d 1190 (Fed. Cir. 1987); Taylor &
Sons Equipment Co., ASBCA No. 34675, 89-2 BCA � 21,584, at
108,680; Flag Real Estate, Inc., supra, 88-3 BCA � 20,866, at
105,518. Whether or not these four elements have been satisfied
is a question of fact.43 See B & B Reproductions, supra, slip
op. at 33; See Professional Printing of Kansas, Inc., supra, slip
op. at 33, fn. 48 (citing Tidewater Equipment Co. v. Reliance
Insurance Co., 650 F.2d 503, 506 (4th Cir. 1981)). But before
the contractor can take advantage of the normal common law rules
of estoppel, it first has to cross an evidentiary threshold,
namely, there must be a showing at the outset that: (1) the
Government representative whose statements or conduct forms the
basis for the estoppel was acting within the scope of his or her
authority; and (2) the Government was acting in its proprietary
capacity rather than its sovereign capacity.44 See B & B
Reproductions, supra, slip op. at 33; Professional Printing of
Kansas, Inc., supra, slip op. at 34, fn. 50 (citing Manloading &
Management Associates, Inc. v. United States, supra; Federal Crop
Insurance Corp. v. Merrill, supra). See also Burnside-Ott
Aviation Training Center, Inc. v. United States, supra, 985 F.2d
at 1581; United States v. Georgia-Pacific Co., 421 F.2d 92 (9th
Cir. 1970). But see Gould, Inc. v. United States, 67 F.3d 925,
930 (Fed. Cir. 1995) (equitable estoppel is inapplicable to
contract claims). However, to the extent that the Appellant
specifically relies on Seibert's representations of September 5,
1993, to support its estoppel argument, his authority was clear,
and thus the threshold question is not involved in this case.45
In the Board's view, the Appellant's estoppel argument fails
because it has not identified any Government conduct on which it
could have reasonably relied in concluding that certain contract
requirements had been waived. See Professional Printing of
Kansas, supra, slip op. at 80, fn. 83; Automated Datatron, Inc.,
GPO BCA 25-87 and 26-87 (April 12, 1989) slip op. at 6-8 and
cases cited therein. Accord Industrial Data Link Corp., ASBCA
No. 31570, 91-1 BCA � 23,382. To establish an estoppel here, the
Contractor had to establish four things: (1) the Respondent knew
or had reason to know that the Appellant would interpret the
contract as allowing it to print the Plan if the pre-production
samples were not returned within 5 workdays, and that after the
retention period expired the Contractor would proceed with
production without an express "OK to Print;"46 (2) the Government
either intended that its failure to return the proofs within 5
workdays should operate as a de facto "OK to Print" order, or by
taking no affirmative steps to stop the printing of the Plan gave
the Appellant that impression; (3) the Contractor was unaware
that GPO had a different view of the contract, which required an
express "OK to Print" to trigger production of the Plan, and that
the Government would deem starting before then as premature and
unauthorized; and (4) by relying on the Respondent's silence and
producing the Plan without an express "OK to Print," the
Appellant suffered a financial injury, namely it was "left
holding the bag" for the costs of printing the entire ordered
quantity of the Plan when the Contracting Officer disallowed
them. There is ample proof in the record to support the last two
elements (the Contractor's ignorance of GPO's interpretation of
the contract and its injury in producing the Plan without an "OK
to Print" from the Government). However, the Appellant has not
shown that GPO was aware that the Contractor believed the
contract authorized printing the Plan if the proofs were not
returned within 5 workdays, without more (the first criterion),
or that it intended that its failure to return the proofs within
5 workdays operate as a de facto "OK to Print," although the
Appellant argues that it was left with that impression (the third
criterion). See Professional Printing of Kansas, supra, slip op.
at 80, fn. 83. Accord GKS, Inc., ASBCA No. 45913, 94-3 BCA �
27,232 (in order for the Government to be estopped, it would have
to have possessed some knowledge that the contractor did not have
or could not have obtained).
Indeed, it was the Respondent who was surprised in this
case, since it had every reason to believe, prior to
November 23, 1993, when the Contractor submitted its revised
termination settlement proposal, that no work had been done
on the contract other than the tasks associated with making
the pre-production proofs. A case can be made that it was
the Government which was misled by the Appellant's conduct
into thinking that its instructions not to produce the Plan
without an "OK to Print" were being followed, and that the
Contractor's cost investment was not large when the contract
was terminated. In that regard, one needs only to look at
the following chronology of events: (1) on September 20,
1993, 5 days after contract's shipping date, Flagstad called
the CRPPO asking for a status report on the pre-production
proofs, and remarked that the Appellant "has time and money
invested and wants to move on (if possible) [emphasis
added]," and was told that the samples were still being
reviewed and he was not to proceed without an "OK to Print"
from GPO (R4 File, Tab L); (2) on October 1, 1993, Ostrander
returned the edited proofs to the Appellant with directions
to furnish 3 revised samples to the CRPPO by October 13,
1993, and stated that "[A] new contractual delivery date
will be established upon approval of any revised samples . .
." (R4 File, Tab N; Jt. Stip., � 10); (3) on October 4,
1993, Flagstad telephoned the CRPPO again to discuss some
technological problems regarding the production of the
revised samples, and said that the Appellant "won't do
anything [emphasis added]" until it heard from GPO with the
answers to its questions (R4 File, Tab O); (4) on October
11, 1993, the Contractor furnished 3 sets of amended pre-
production samples and a listing of its contract costs "to
date" to Ostrander, but also asserted that its contract
called for producing the entire job, and the Government's
failure to "observe the contract terms obligates [it] to pay
the full contract value of $56,127.73, not just the amount
of the costs incurred . . ." (R4 File, Tab R, p. 2; Jt.
Stip., � 11);47 (6) on October 20, 1993, Summers called
Flagstad, asking him to return the GFM, and telling him that
GPO would advise the Appellant, in writing, when a
determination was made whether to terminate the contract or
go ahead with it (R4 File, Tab S; Jt. Stip., � 12); (7) on
November 4, 1993, the Contractor acknowledged the
termination of the contract in a letter which also advised
GPO that "[a]ll work on this project was halted on October
20, 1993, when we returned the [GFM] to [MMES] in Oak Ridge,
Tennessee. [Emphasis added]" (R4 File, Tab V; Jt. Stip., �
15); and (8) in response to a request from the Government,
on November 23, 1993, the Appellant submitted its revised
settlement proposal which indicated, for the first time,
that it had done more work on the contract than just prepare
the pre-production samples, specifically it had also
performed the operations necessary "to insure delivery on a
timely basis . . .;" i.e., having the index tabs printed and
die cut in advance, as well producing all the maps and
charts (R4 File, Tab X; Jt. Stip., � 16; RPTC, p. 5).
From the foregoing, it is clear that in all of its contacts with
the CRPPO concerning the pre-production proofs before the
contract was terminated, the Appellant never told the Respondent
that it had already printed the Plan, although it had ample
opportunity to do so. The first inkling which GPO may have had
that the Contractor had done more than simply prepare the first
samples and revised proofs was the Appellant's reference in its
termination acknowledgement letter of November 4, 1993, to
stopping "all work on this project" on October 20, 1993.
However, the Contractor's revised settlement proposal of November
23, 1993, left no doubt as to the extent of its production
activity. Furthermore, while the Contractor claims that it was
compelled to print the Plan after the expiration of the holding
period in order to meet the contract's shipping date of September
15, 1993, the record shows that it never delivered the books or
notified the Government that they were ready to be assembled and
shipped. Indeed, the record tells us that the first conversation
between the Appellant and the CRPPO concerning the availability
of the Plan occurred on January 20, 1994, four months after the
contract due date, when Flagstad told Summers that "approximately
20 cartons of [miscellaneous] duplicating/tab dividers/etc. are
at [the George Marr Company] plant that were produced as ordered
by [the specifications]." See R4 File, Tab Y.
In the final analysis, it would be one thing if the Contractor
had reasonably and dutifully followed the terms of the contract,
as both parties understood it when awarded, and the Government
latter changed its mind to correct its mistake. See USA
Petroleum Corp. v. United States, supra, 821 F.2d at 626 (citing
Broad Avenue Laundry and Tailoring v. United States, 231 Ct. Cl.
1, 681 F.2d 746 (1982)). But that is not this case. Instead, we
have a situation where, according to the record, the parties have
ascribed diametrical meanings to the "PRE-PRODUCTION COPIES"
specification, the Appellant acted on its own interpretation, and
the Board has found that version palpably unreasonable.
Accordingly, the Board concludes that the Appellant's estoppel
position in this case is disingenuous, and clearly without merit.
C. The Appellant is clearly entitled to compensation on account
of the Respondent's termination of the contract for the
convenience of the Government. However, the quantum issue cannot
be decided on the record as it now stands. Therefore, the Board
will remand the matter to the parties for further development of
the record and/or settlement, consistent with this opinion.
By rejecting both the Appellant's interpretation of the contract
and its estoppel argument, the Board, in effect, also sustains
the GPO's denial of the November 23, 1993, revised settlement
offer of $38,104.26 (R4 File, Tabs Z, BB; Jt. Stip., �� 17, 18).
On the other hand, there is no doubt that the Contractor is
entitled to some compensation for the convenience termination of
its contract. Indeed, under all of the Respondent's regulations,
instructions and directives dealing with the matter; i.e., GPO
Contract Terms, the PPR, and the GPO Cost Directive, such
reimbursement is mandatory, where appropriate, and nothing in
the record suggests that GPO has tried to escape its
responsibility in that regard.
However, the purpose of a summary proceeding is to resolve
disputes where there is no genuine issue as to any material fact.
Although the entitlement question was clearly ripe for a summary
determination, the Board cannot say with certainty that the
quantum issue is also ready for decision in this proceeding
because of the present state the record. In that regard, the
record does not provide a sufficient evidentiary basis for the
Board to conclude that there are no genuine issues as to any
material fact with respect to the appropriate amount of
compensation due the Appellant from the Government 's termination
action, principally for two reasons. First, the Appellant
provided GPO with documentation to support two separate
settlement proposals-the original claim of November 4, 1993, in
the amount of $14,987.45, for work producing two sets of pre-
production proofs, and the revised offer of November 23, 1993,
for $38,104.26, to cover the costs it incurred printing the Plan
in advance ((R4 File, Tabs V and X). While the first claim
appears somewhat closer to the mark with respect to reimbursable
work in this termination situation, the fact is that no viable
claim is left in this proceeding because the original proposal
was withdrawn by the Contractor, and the revised version has been
denied by the Board.
Second, there is a good chance that both settlement proposals may
have been incomplete when they were filed. For example, the
Appellant confined its claim of November 4, 1993, to the costs
associated with producing the pre-production samples for review.
However, it is undisputed that while the Appellant submitted the
proofs in a timely fashion, the Government did not return them
within the 5 workday retention period established by the
contract, but rather kept the samples for nearly a month before
sending them back to the Contractor with extensive author's
changes (R4 File, Tabs B, p. 5, J, K, L, Jt. Stip., �� 6, 7, 10;
RPTC, p. 4). Under similar circumstances, the Board has found
that a contractor may be entitled to recover "idle time" costs
under the "Changes" clause, as well as receive an extension of
the delivery schedule.48 See Banta Co., supra, slip op. 35; GPO
Contract Terms, Contract Clauses, � 4(b). Also cf. New South
Press I, supra, slip op. at 17. In a like vein, the Appellant
may have incurred certain continuing costs, including machinery
downtime, for a reasonable period following the convenience
termination of the contract, which it was entitled to claim. See
New South Press II, supra, slip op. 60-61; GPO Cost Directive,
Sec. 3, �� 25(b), 49(b). Cost items such as these are not even
mentioned in either settlement proposal, and there may be others.
The Contractor, of course, has the burden of proving whatever
costs it claims because of the convenience termination. See New
South Press II, supra, slip op. at 38; R.C. Swanson, supra,
Supplemental Decision, slip. op. at 19 (citing Building
Maintenance Specialists, Inc., ENG BCA No. 5654, 90-3 BCA �
23,032). Accord Lisbon Contractors, Inc. v. United States, 828
F.2d 759, 767 (Fed. Cir. 1987); J.W. Cook & Sons, Inc., ASBCA No.
39691, 92-3 BCA � 25,053, at 124,863 (citing Tubergen &
Associates, Inc., ASBCA Nos. 34106, 34107, 90-3 BCA � 23,058).
Although all of the Appellant's "eggs" were "in one basket" in
this proceeding-its revised settlement proposal of November 23,
1993-it nonetheless "hedged its bet" by confining its Cross-
Motion to the entitlement question, and asking the Board to
withhold ruling on the quantum issue until the record could be
supplemented with additional evidence on the matter of costs.
See Cross-Motion, pp. 10-11. In past cases, the Board has
usually decided both entitlement and quantum in the same
proceeding, if the record contained sufficient evidence allowing
it to do so. See New South Press II, supra, slip op. at 73;,
Universal Printing Co, supra, slip op. at 49; Banta Co., supra,
slip op. at 46-47. However, the Board finds the record here
inadequate for that purpose, partly because the parties presented
the case principally as a question of contract interpretation,
rather than as a simple recovery matter. Therefore, the Board
agrees that the record needs to be supplemented with additional
proof of costs from the Contractor before the quantum issue can
be decided. Accordingly, it will remand the matter to the
parties for further action consistent with this opinion.
Specifically, in remanding the dispute to the parties, the Board
anticipates that the Contractor will submit another settlement
proposal and supporting documentation to the Contracting Officer,
and the latter will consider the claim in light of the Board's
recent opinion in New South Press II. In that case, the Board
discussed at great length the history, philosophy and purpose of
the Government's termination for convenience rules and how they
applied to contracts awarded by the Respondent.49 Among other
things, in setting forth the standards for GPO convenience
terminations, the Board stated, in pertinent part:
The Respondent's "Termination for Convenience" clause contains
the general rule that once a contract is terminated, the
contractor is entitled to recover its incurred costs plus a
reasonable profit. See GPO Contract Terms, Contract Clauses, �
19(d); PPR, Chap. XIV, Sec. 2, � 3.n. See also R.C. Swanson,
supra, Supplemental Decision, slip. op. at 17-18 (citing Humphrey
Logging Co., AGBCA Nos. 84-359-3, 85-204-3, 85-3 BCA � 18,433);
Graphic Litho Co., Inc., [GPO BCA 11-83 (May 25, 1984)], slip.
op. at 10 [1984 WL 148105]; Bay Ridge Press, [GPOCAB 4-82
(January 12, 1983), 1983 WL 135369], Supplemental Decision
(September 15, 1983), slip op. at 3. Accord, Youngstrand
Surveying, AGBCA No. 90-150-1, 92-2 BCA � 25,017, at 124,694;
Chamberlain Manufacturing Corp., [ASBCA No. 16877], 73-2 BCA [�
10,139] at 47,678. Recovery of anticipated profits is not
allowed. See PPR, Chap. XIV, Sec. 2, � 3.n. See also Bay Ridge
Press, supra, Supplemental Decision, slip op. at 3. Accord Plaza
70 Interiors, Ltd., supra, 95-2 BCA at 137,939 (citing FAR
49.202,; Steelcare, Inc., GSBCA No. 5491, 81-1 BCA � 15,143, at
74,901). See generally Cibinic & Nash, p. 1098 ("Perhaps the
major impact of the termination for convenience procedure is that
it relieves the Government from the obligation of paying
anticipated profits for unperformed work if terminates the
contractor's performance of the work." Citing Dairy Sales Corp.
v. United States, 219 Ct. Cl. 431, 593 F.2d 1002 (1979), aff'g
Dairy Sales Corp., ASBCA No. 20193, 75-2 BCA � 11,613).
Similarly, where a contractor is in a loss position on the
terminated contract, it is not entitled to recovery of any
profit. [Footnote omitted.] See GPO Contract Terms, Contract
Clauses, � 19(e)(2)(iii); PPR, Chap. XIV, Sec. 2, � 3.o. See
also Maitland Brothers Co., supra, 93-3 BCA at 129,304; Tom Shaw,
Inc., ENG BCA Nos. 5540, 5541, 5620-5628, 93-2 BCA � 25,742, at
128,082. The terminated contractor has the burden of
establishing both that it actually incurred costs and the amount
of its incurred costs. See R.C. Swanson, supra, Supplemental
Decision, slip. op. at 19 (citing Building Maintenance
Specialists, Inc., ENG BCA No. 5654, 90-3 BCA � 23,032). Accord
Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 767
(Fed. Cir. 1987); J.W. Cook & Sons, Inc., supra, 92-3 BCA at
124,863 (citing Tubergen & Associates, Inc., ASBCA Nos. 34106,
34107, 90-3 BCA � 23,058); Youngstrand Surveying, supra, 92-2 BCA
at 124,694 (citing Roberts International Corp., ASBCA No. 15118,
71-1 BCA � 8869). Indeed, actual incurrence of costs is a
prerequisite to recovery under a termination for convenience;
i.e., if the contractor has incurred no cost, there is no
recovery. See R.C. Swanson, supra, Supplemental Decision, slip.
op. at 19 (citing Seiler Instrument and Manufacturing Co., Inc.,
ASBCA No. 44380, 93-1 BCA � 25,436). Accordingly, in these cases
the contractor's cost, not the value of the performance to the
Government, is the measure of recovery. See e.g., Fil-Coil,
ASBCA No. 23,137, 79-1 BCA � 13,618 (1978), mot. for reconsid.
denied, 79-1 BCA � 13,683 (1979); Scope Electronics, Inc., ASBCA
No. 20359, 77-1 BCA � 12,404, mot. for reconsid. denied, 77-2 BCA
� 12,586 (1977); Arnold H. Leibowitz, GSBCA No. CCR-1, 76-2 BCA �
11,930 (1976). In short, the reimbursement formula for
convenience terminations permits the recovery of allowable costs
incurred, plus profit, subject to the overall limitation of the
contract price and the possible application of the loss
adjustment provisions. See Cibinic & Nash, p. 1098.
* * * * * * * * * *
Another immutable convenience termination rule is that the "total
contract price" sets the boundaries of the contractor's recovery.
[Footnote omitted.] See R.C. Swanson, supra, Supplemental
Decision, slip. op. at 19 (citing GPO Contract Terms, Contract
Clauses, � 19(d); FAR 52.249-2(e)). Accord Alta Construction
Co., PSBCA Nos. 1463, 2820, 94-3 BCA � 27,053, at 134,816; Tom
Shaw, Inc., [ ENG BCA Nos. 5540, 5541, 5620-5628], 93-2 BCA [�
25,742] at 128,073. Apparently, the theory is that the
contractor should not receive more than the contract price for
doing less than the full amount of work required by the contract.
Id. The "total contract price" concept encompasses three things:
(1) it sets the maximum amount a contractor may recover under a
termination for convenience; (2) it is important when considering
the recovery of costs continuing after termination; and (3) the
rules for setting the "total contract price" vary depending on
the type of contract terminated. See R.C. Swanson, supra,
Supplemental Decision, slip. op. at 19-20 (citing Nolan Brothers,
Inc. v. United States, [194 Ct. Cl. 1, 437 F.2d 1371 (1971)];
Alta Construction Co., PSBCA No. 1463, 92-2 BCA � 24,824; Celesco
Industries, Inc., ASBCA No. 22460, 84-2 BCA � 17,295; Pioneer
Recovery Systems, Inc., [ASBCA No. 24658, 81-1 BCA � 15,059];
Okaw Industries, Inc., ASBCA Nos. 17863, 17864, 77-2 BCA �
12,793; Chamberlain Manufacturing Corp., supra). Basically, the
"total contract price" establishes the value of the contract
(cost plus profit) for the purpose of compensating the terminated
contractor. See R.C. Swanson, supra, Supplemental Decision,
slip. op. at 20. GPO's "Termination for Convenience" clause
provides that the convenience termination settlement may not
generally exceed the "total contract price" as reduced by: (1)
the amount of payments previously made; and (2) the contract
price of work not terminated. See GPO Contract Terms, Contract
Clauses, � 19(d).
Finally, a significant number of contract appeals forums stress
that the Government must not ignore the underlying philosophy of
the procedure when compensating a terminated contractor. In that
regard, contracting officers are instructed that "fairness,"
rather than strict adherence to principles of cost accounting,
should guide their settlement calculations. See Richerson
Construction, Inc., [GSBCA Nos. 11161, 11263(11045)-REIN, 11430,
93-1 BCA � 25,239]; Youngstrand Surveying, supra; Industrial
Refrigeration Service Corp., VABCA 2532, 91-3 BCA � 24,093, at
120,595; Arctic Corner, Inc., VABCA No. 2393, 86-3 BCA � 19,278;
American Electric, Inc., ASBCA 16635, 76-2 BCA � 12,151. Thus,
the General Services Administration Board of Contract Appeals
(GSBCA) recently explained:
Under applicable Federal Acquisition Regulations (FAR), the
objective of a termination for convenience settlement is to
provide the contractor with "fair compensation" both for the work
that has been completed prior to termination and for preparations
made for terminated portions of the contract, including a
reasonable allowance for profit. FAR 49.201. . . . To this end,
the cost standards of the FAR, in part 31, are applied in
accordance with principles of business judgment and fairness,
Codex Corp. v. United States, 226 Ct. Cl. 693, 699 (1981), with
the ultimate objective of making the contractor "whole." See
Industrial Refrigeration Service Corp., VABCA 2532, 91-3 BCA �
24,093, at 120,595; American Electric, Inc., ASBCA 16635, 76-2
BCA � 12,151.
See Richerson Construction, Inc., supra, 93-1 BCA at 125,704.
See also General Electric Co., ASBCA No. 24111, 82-1 BCA �
15,725, reconsid. denied 83-1 BCA � 16,207.50
* * * * * * * * * *
Although a convenience termination settlement should compensate a
contractor fairly, this is not to say that the concept has no
boundaries. Certainly, a contractor may not use "fairness" as a
"sword to dispense with its obligation to prove its monetary
claim," whether a termination claim, or an equitable adjustment
claim for that matter. See J.W. Cook & Sons, Inc., supra, 92-3
BCA at 124,863. Moreover, in contrast to the opinions expressed
by other contract appeals boards, the ASBCA takes a narrower view
of "fairness" as a concept in termination settlements:
. . . It is not our province to fashion equitable or
extracontractual relief on the grounds of fairness, or otherwise.
In this context, "fairness" to the parties is the realization of
the benefit of each party's bargain through the contractual
instrument they signed. We exercise "fairness" through the
reasonable interpretation of that contractual instrument and the
related regulations, with due regard to all relevant
circumstances.
Id., 92-3 BCA at 124,865.51
* * * * * * * * * *
As the Board reads the GPO scheme for using cost principles in
convenience termination cases, the overall philosophy appears to
be similar to and in harmony with the approach taken by the Court
of Claims in Codex Corp. v. United States, and adopted by the
GSBCA in Richerson Construction, Inc., and the VABCA in
Industrial Refrigeration Service Corp., and Arctic Corner, Inc.
In that regard, the . . . GPO Cost Directive and the PPR appear
to be simply condensed versions of the regulatory provisions at
issue in Arctic Corner, Inc., supra, 86-3 BCA at 97,456.52 The
Board has said several times in the past, that where GPO adopts
the regulatory language followed by other agencies as its own, in
this case the cost principal rules governing contracts which are
terminated for convenience, we must presume that the uniform
interpretation given to those words has also been accepted. See
Sterling Printing, Inc., GPO BCA 20-89, Decision Denying Second
Motion for Consideration (August 12, 1994), slip op. at 3
(procedural rules); Banta Co., GPO BCA 03-91 (November 15, 1993),
slip op. at 34, 1993 WL 526843 ("Changes" clause); McDonald &
Eudy Printers, Inc., [GPO BCA 40-92 (January 31, 1994)], slip op.
at 11-12, [1994 WL 275096] ("Requirements" clause); Shepard
Printing, [GPO BCA 37-92 (January 28, 1994)], slip op. at 21-22,
[1194 WL 275077] ("Requirements" clause). Consequently, the
Board will administer the cost principles in the relevant
regulations of this agency-the GPO Cost Directive, the PPR, and
the implementing provisions of GPO Contract Terms-consistent with
the meaning and philosophy of the parallel provisions in the FAR,
as interpreted by the Claims Court, the GSBCA and the VABCA in
the above cited cases. Accordingly, the Board ". . . will
likewise approach the various disputed cost elements in this
appeal with an eye toward fair compensation rather than imposing
strict accounting principles upon the Appellant." [Footnote
omitted.] See Industrial Refrigeration Service Corp., supra,
91-3 at 120,594; Arctic Corner, Inc., supra, 86-3 BCA at 97,457.
See New South Press II, supra, slip op. at 37-48. [Emphasis
added.]
It should be clear that the Board's decision to align itself with
views of the Claims Court, the GSBCA and the VABCA and take a
"fair compensation" rather than a "strict accounting principles"
approach in resolving convenience termination disputes was a key
holding in New South Press II,.53 However, that ruling was not
just meant to let litigants know where the Board stood on the
issue, but it was also intended as a signal to GPO Contracting
Officer's to let them know that they had more flexibility in
settling such cases under the rules than perhaps they were aware
of. On the other hand, nothing in that holding relieves a
terminated contractor from its dual burden regarding settlement,
namely showing the total amount of its costs, see New South Press
II, supra, slip op. at 49; R.C. Swanson Printing Co., supra,
Supplemental Decision, slip. op. at 19; Lisbon Contractors, Inc.
v. United States, supra, 828 F.2d at 767; J. W. Cook & Sons,
Inc., supra, 92-3 BCA at 124,863; Youngstrand Surveying, supra,
92-2 BCA at 124,694, and demonstrating that its costs were
reasonable, see New South Press II, supra, slip op. at 49;
Universal Printing Co., supra, slip op. at 40 (citing Michael-
Mark, Ltd., IBCA Nos. 2697, 2890, 2891, 2892, 2893, 2894, 2895,
94-1 BCA � 26,453, also cf. Banta Co., supra, slip op. at 43
(citing Celesco Industries, ASBCA No. 22251, 79-1 BCA � 13,604;
Triple "A" Machine Shop, Inc., ASBCA No. 21561, 78-1 BCA � 13,065
(1978); Cal Constructors, ASBCA No. 21179, 78-1 BCA � 12,992
(1977)). Whether a contractor's costs are reasonable is a
question of fact depending on the circumstances.54 See New South
Press II, supra, slip op. at 50; Universal Printing Co., supra,
slip op. at 42 (citing Nager Electric Co., Inc., supra).
That the Appellant incurred some costs under the terminated
contract is not in dispute. However, the precise scope and
nature of those costs is not revealed in this record. Thus,
determining the Appellant's termination costs by summary
disposition would be inappropriate at this time. Therefore, on
remand it will be the Contractor's responsibility to demonstrate
what those costs were and the extent of the Government's
liability for terminating the contract. In that regard, since
the propriety of the termination is not an issue in this case,
the Appellant's recovery is limited to that available under the
contract's "Termination for Convenience" clause. See Plaza 70
Interiors, Ltd., supra, 95-2 BCA at 137,939 (citing Manuals,
Inc., ASBCA No. 24123, 80-2 BCA � 14,579). That clause, as
previously noted, entitles a terminated contractor to recover its
incurred costs plus a reasonable profit, subject, of course, to
the overall limitation of the contract price. See GPO Contract
Terms, Contract Clauses, � 19(d); PPR, Chap. XIV, Sec. 2, � 3.n.
See also New South Press II, supra, slip op. at 48-49; R.C.
Swanson Printing Co., supra, Supplemental Decision, slip. op. at
17-18; Graphic Litho Co., Inc., supra, slip. op. at 10.
Accordingly, with these precepts in mind, the Board remands the
dispute to the parties, trusting them to use their best efforts
to resolve it in a manner consonant with the philosophy and
purpose of the termination for convenience rules.
ORDER
The Board finds and concludes that: (a) contrary to the
Appellant's belief, the "PRE-PRODUCTION COPIES" specification in
the contract is not ambiguous and clearly precludes the
Contractor from producing the Plan unless it has received an "OK
to Print" from the Government; and (b) although the Respondent
failed to meet the time schedule in the "PRE-PRODUCTION COPIES"
specification for reviewing and returning the samples to the
Appellant, that delay does not estop the Government from denying
payment for the copies of the Plan which the Contractor
prematurely printed. THEREFORE, on the question of entitlement,
as framed by the Appellant's revised settlement proposal of
November 23, 1993, the Respondent's Motion is GRANTED and the
Appellant's Cross-Motion is DENIED.
FURTHERMORE, with regard to the quantum issue, the Board finds
and concludes that while the Government clearly owes the
Appellant some compensation on account of its termination of the
contract for convenience, it cannot resolve the parties' dispute
in this summary judgment proceeding because the record is
inadequate for that purpose; i.e., there are potential genuine
issues of material fact which are as yet undetermined.
ACCORDINGLY, that matter is REMANDED to the parties for further
development of the record and/or settlement, consistent with this
opinion.
It is so Ordered.
April 23, 1996 STUART M. FOSS
Administrative Judge
1 The Contracting Officer's appeal file, assembled pursuant
to Rule 4 of the Board's Rules of Practice and Procedure,
was delivered to the Board on October 28, 1994. GPO
Instruction 110.12, Subject: Board of Contract Appeals Rules
of Practice and Procedure, dated September 17, 1984, Rule 4
(Board Rules). The file consists of 32 documents, labeled
Tabs A through FF, inclusive. Hereinafter the file is
referred to as the R4 File, with an appropriate Tab letter
also indicated.
2 At the telephone status conference of April 25, 1995, the
Board said that if the parties adhered to the established
schedule it would attempt to render a decision in this
appeal by August 25, 1995. See RTSC, p. 3. However,
because of the press of other Board business, as well as the
untimely illness and subsequent death of the Board's Special
Assistant, it was not able to meet this target date.
3 The parties agree that the R4 File is correct and complete
(Jt. Stip., � 1). In that regard, a party is bound by its
stipulations, and such evidentiary agreements freely entered
into are controlling and conclusive on all issues of fact.
See Banta Co., supra, slip op. at 52-53 (citing Morelock v.
NCR Corp., 586 F.2d 1096, 1107 (6th Cir. 1978), cert. denied
441 U.S. 906, 99 S.Ct. 1995 (1979); Bromley Contracting Co.,
Inc. v. United States, 14 Cl. Ct. 69, 74 (1987), aff'd 861
F.2d 729 (Fed. Cir. 1988); Gresham & Co. v. United States,
200 Ct. Cl. 97, 112, 470 F.2d 542, 551 (1972); FED. R. CIV.
P. 16). While a court or board may reject a factual
stipulation if it is "demonstrably false" or contrary to the
record evidence, the record here fails to disclose any facts
which would contradict the stipulation in this case. See
Professional Printing of Kansas, Inc., GPO BCA 02-93 (May
19, 1995), slip op. at 43, fn. 57, 1995 WL 488488 (citing
Dillon, Read & Co., Inc. v. United States, 875 F.2d 293
(Fed. Cir. 1989); Bromley Contracting Co., Inc. v. United
States, supra, 14 Cl. Ct. at 74; Kaminer Construction Corp.
v. United States, 203 Ct. Cl. 182, 197, 488 F.2d 980, 988
(1973)). See also Banta Co., supra, slip op. at 53.
4 Under GPO's printing procurement regulation: ". . . the
period for approval/disapproval by the Government as
indicated in the specifications shall not begin until proper
samples are received by the Contracting Officer." See
Printing Procurement Regulation, GPO Publication 305.3 (Rev.
10-90), Chap. XII, Sec. 4, � 2.a. (hereinafter PPR).
5 GPO's Quality Assurance Through Attributes Program, GPO
Publication 310., effective May 1979 (Revised November
1989), which is incorporated in the contract by reference,
shall be referred to hereinafter as the QATAP Manual (R4
File, Tab B, p. 13).
6 The Board has previously observed that GPO's "Termination
for Convenience" clause is essentially a verbatim adoption
of the "long-form" clause in the Federal Acquisition
Regulation (hereinafter FAR), 41 C.F.R. 1.000 et seq.
(1994), relating to convenience terminations of fixed-price
contracts. See New South Press & Assoc., Inc., GPO BCA 14-92
(January 31, 1996), slip op. at 4-5 (hereinafter New South
Press II); R.C. Swanson Printing and Typesetting Co., GPO
BCA 15-90, Supplemental Decision (July 1, 1993), slip op. at
18, 1993 WL 526638 (citing FAR, 52.249-2).
7 Procurement Directive 306.2 shall hereinafter be referred
to as the GPO Cost Directive.
8 The record indicates that for the purposes of performing
this contract, the Appellant had entered into a joint
venture with another company-Queen City Reprographics and
Design of Cincinnati, Ohio (R4 File, Tabs D and F; Jt.
Stip., � 11). However, the joint venture agreement clearly
made the Contractor the controlling partner, with full
responsibility for fixing all work performed under the
contract, including its own, and providing all necessary
administrative services (R4 File, Tab F).
9 The parties stipulated that the Appellant has dealt with
three different GPO Contracting Officers during this
controversy; i.e., Robert G. Seibert (August 24, 1993 to
December 30, 1993); Roger White (January 10, 1994 to January
28, 1994); Aurelio E. Morales (February 22, 1994 to the
present). See Jt. Stip., � 23. The Contract Administrator
throughout has been Ronald L. Ostrander. Id.
10 By implication, this change also extended the contract
date for receipt of pre-production samples from August 30,
1993, to September 1, 1993. See GPO Contract Terms,
Contract Clauses, � 12(c).
11 The day of the week of a particular date is a matter
"capable of accurate and ready determination by resort to
sources whose accuracy cannot be questioned," e.g., a
calendar, and hence is a fact appropriate for judicial
notice by the Board for the purposes of this decision. FED.
R. EVID. 201(b)(2). See Asa L. Shipman's Sons, Ltd., GPO
BCA 06-95 (August 29, 1995), slip op. at 21, fn 24,
reconsid. denied Decision on Motion for Reconsideration and
Order (February 13, 1996).
12 The parties stipulated that by their calculations the 5
workdays of the withholding period ended on Wednesday,
September 8, 1993 (Jt. Stip., � 24). The Board interprets
this to mean that by September 8, 1993, the Government's
approval/disapproval/change window had closed. In the
context of this decision, however, the 1 day difference
between the parties stipulation and the Board's own
reference to the calendar is de minimis.
13 Among other things, MMES wanted: (a) two additional
signature pages to replace the original page labeled
"prepared by;" (b) pages viii, ix, xii, xiii, 4-6, 4-33
through 4-38, 4-65, 4-70, 4-76, 4-79, 4-82, and 6-1 through
6-117 changed (new camera copy was provided); (c) a heavier
and whiter paper for several maps; (d) correction of the
Figure 4-17 map and the Figure 7-1 chart which were upside
down; (e) lightening of the colors for Figure 4-21; and (f)
restoration of the circle showing the ANS reactor on Figure
8-3, which was missing on the sample (R4 File, Tab M).
14 Among other things, the Appellant noted that: (a) color
correcting samples produced on a Canon 500 would not be
possible on a Versatec 8944; (b) no circle denoting the ANS
reactor on Figure 8-3 was included on the original copy; (c)
the paper which the MMES though was not heavy or white
enough was the stock required on the Versatec 8944; and (d)
the revised pre-production samples would virtually look like
the original proofs (R4 File, Tab O).
15 The Contractor calculated its costs as follows: (a)
computer time-$2,700.00; (b) printing of large format
maps-$2,640.00; (c) toner, premix and intensifier for the
Versatec machine-$4,134.00; (d) paper for the Versatec
machine-$1,231.00; (e) toner for the Canon machine-$464.00;
(f) paper and running costs for black and white
copies-$477.00; (g) trimming of maps-$160.00; (h) Federal
Express and United Parcel Service delivery costs-$115.00;
(i) tabs-$710.00; and (j) reinforcing map edges-$310.00 (R4
File, Tab R).
16 The Contracting Officer's Settlement Determination was
based on the Appellant's proposal of November 23, 1993,
asking for compensation in the amount of $38,104.26.
However, before the Board the Contractor has renewed its
demand for payment of the full contract price of $56,127.73,
plus interest from September 15, 1993, until paid,
attorneys' fees and costs. See Complaint, � 10; R4 File,
Tab R. Indeed, on November 28, 1994, the Board received a
document from the Contractor entitled "Appellant's Rule
12.1(c) Election," which was not an election at all, but
rather a disclaimer of eligibility for either of the Board's
optional procedures; i.e., Small Claims (Expedited) or
Accelerated Procedure, because "its claim is for a sum in
excess of $50,000.00." See Board Rules, Rules 12.1-12.3.
17 To the extent that the Respondent acknowledges its duty
to pay for the pre-production samples, it asserts that its
offer of $2,075.96 was fair and in full satisfaction of the
Contractor's settlement proposal, and consistent with GPO
Contract Terms, Contract Clauses, � 19 (Termination for the
Convenience of the Government). RPTC, p. 6.
18 The Contractor also asserts that it was obligated to
proceed with performance because of the general rule which
requires a contractor to do so pending resolution of any
dispute regarding the contract. Cross-Motion, p. 8 (citing
Ross Engineering Co., Inc. v. United States, 92 Ct.Cl. 253
(1941), for the propositions: (a) the Government has an
implied obligation to provide a notice to proceed within a
reasonable time if the contract itself is silent as to the
date; and (b) the corollary is equally true, i.e., if the
contract does provide a specific "not to proceed" date, the
contractor must perform if such a notice is not
forthcoming.). However, the Appellant misconstrues the
principle, which is not applicable in this case. In that
regard, the contract's "Disputes" clause provides, in
pertinent part: "Pending final decision of a dispute
hereunder, the contractor shall proceed diligently with
performance in accordance with the Contracting Officer's
decision." See GPO Contract Terms, Contract Clauses, �
5(d). Except for some minor language variations, this is
the same policy applied to Executive Branch contracts by the
"Disputes" clause in the FAR. See FAR � 52.233-1(h). See
also Contract Disputes Act of 1978 (CDA), 41 U.S.C. �
605(b), which provides: "Nothing in this chapter shall
prohibit executive agencies from including a clause in
government contracts requiring that pending final decision
of an appeal, action, or final settlement, a contractor
shall proceed diligently with performance of the contract in
accordance with the contracting officer's decision." By its
terms, the precept requires, inter alia, a clear direction
from the Contracting Officer before the contractor is
obligated to proceed with performance. See Sterling
Printing, Inc., GPO BCA 20-89 (March 28, 1994), slip op. at
36-37, 1994 WL 275104, reconsid. denied Sterling Printing,
Inc., GPO BCA 20-89 (July 5, 1994), 1994 WL 377592. Accord
Altina Trucking, PSBCA No. 3341, 93-3 BCA � 26,256; Twigg
Corp., NASA BCA No. 62-0192, 93-1 BCA � 25,318; F & D
Construction Co., Inc., ASBCA No. 41441, 91-2 BCA � 23,983;
A. N. Xepapas, AIA, VABCA No. 3087, 91-2 BCA � 23,799.
Without such clear and unmistakable instructions from the
Contracting Officer, the contractor has no duty whatsoever
to proceed with performance while a dispute is pending.
Neither Seibert or White told the Appellant, in clear and
unmistakable terms, to complete the production-run of the
Plan, so the rule is not applicable in this case.
19 Specifically, the Contractor alleges that: (1)
Contracting Officer Seibert warned the Appellant not to
print before the holding period expired, thus implying that
the job was still due by September 15, 1993, unless timely
notice of required changes was given; and (2) Contract
Administrator Ostrander specifically told the MMES on August
31, 1993, to review the pre-production samples and either
approve or disapprove them by September 7, 1993, or advise
of any changes by that date so the job could be delayed.
Cross-Motion, p. 9 (citing Jt. Stip., � 7).
20 That the Appellant was ready, willing and able to perform
the contract at all times, and in fact did complete printing
the Plan prior to termination, is undisputed. Cross-Motion,
p. 8 (citing Flagstad Affidavit, � 8).
21 The Appellant cites GPO Contract Terms, Contract Clauses,
� 19(a)(6) as support for its claim "to be paid for all work
in progress or completed at the time of termination of the
contract. Cross-Motion, p. 6. The Contractor's reference
to � 19(a)(6) is an inadvertent typographic error-� 19(a)
has no subparagraphs. The appropriate citation is � 19(b)
(6), which provides: "As directed by the Contracting
Officer, [the contractor shall immediately] transfer title
and deliver to the Government (i) work in process, completed
work, supplies, and other material produced or acquired for
the work terminated, and (ii) the completed or partially
completed plans, drawings, information, and other property
that, if had been completed, would be required to be
furnished to the Government."
22 Although contra proferentum is usually applied in cases
where the parties have raised an ambiguity in contract
language, the Appellant asserts that an ambiguity may not
always be required for the doctrine to be appropriate.
Cross-Motion, p. 7 (citing United States v. Seckinger, 397
U.S. 203, 210-11 (1970); United States v. English, 521 F.2d
63 (9th Cir. 1975)).
23 The Respondent, on the other hand, argues that the
unreasonableness of Appellant's interpretation of the
contract precludes the application of contra proferentum in
this case. See Reply, pp. 2-3.
24 In that regard, the Appellant believes that the
Respondent's reliance on the decision of the Armed Services
Board of Contract Appeals (ASBCA) in Derrick Electric Co. is
misplaced. Cross-Motion, p. 6. The Contractor sees that
case as being distinguishable from this appeal because
Derrick Electric Co. concerned a dispute as to whether the
contracting officer had verbally approved an alleged
modification to a contract. The ASBCA held that the
contractor had no reason to believe its proposal had been
approved and, thus there was no basis for an equitable
estoppel against the Government. Similarly, the Appellant
says that while GPO contends the court's opinion in Midwest
Construction Co. supports its position, the decision also
stands for the proposition that when the Government
unreasonably delays the issuance of a notice to proceed with
the work under a binding contract, it must bear the cost
incurred by the contractor, at least until such time as the
contract is terminated. Cross-Motion, p. 8.
25 Although the Appellant's claim for the full contract
price ($56,127.73), includes, inter alia, its direct
material costs, G & A expenses, plus a 20 percent profit, it
also seeks settlement expenses and interest "pursuant to the
Contract Disputes Act." Cross-Motion, p. 10. [Emphasis
added.] While the Board can dispose of most all other
aspects of the Contractor's claim, it has no authority to
award interest. See Universal Printing Co., GPO BCA 9-90
(June 22, 1994), slip. op. at 55, fn. 54, 1994 WL 377586.
See also New South Press & Assoc., Inc., supra, slip op. at
28, fn. 42. It is well-settled that a contractor cannot
recover interest on a claim against the United States unless
there is an express provision in the contract or a relevant
statute permitting such payment. See Maitland Brothers Co.,
ASBCA No. 40388, 93-3 BCA � 26,007, at 129,305, motion for
reconsid. denied 94-1 BCA � 26,285. See also Fidelity
Construction Co. v. United States, 700 F.2d 1379 (Fed. Cir.
1983), cert. denied 464 U.S. 826 (1984); Reese Industries,
ASBCA No. 36077, 89-1 BCA � 21,255. Because GPO is an
entity of the Legislative Branch, and not an "agency" within
the Executive Branch, it is not covered by either the CDA,
see Universal Printing Co., supra, slip. op. at 2, fn. 3
(citing Tatelbaum v. United States, 749 F.2d 729, 730 (Fed.
Cir. 1984), or the interest provisions of the Prompt Payment
Act of 1982, as amended, 31 U.S.C. � 3901 et seq., see
Chavis and Chavis Printing, GPO BCA 20-90 (February 6,
1991), slip. op. at 7, n. 7, 1991 WL 439270. Furthermore,
the GPO Cost Directive, which as observed at the outset
applies to this contract, expressly disallows interest on
borrowings (however represented) and directly associated
costs. GPO Cost Directive, Sec. 3, � 28. Since the Board
takes its authority from the contract itself, see The Wessel
Co., Inc., GPO BCA 8-90 (February 28, 1992), slip. op. at
32-33, 1992 WL 487877; Automated Datatron, Inc., GPO BCA
20-87 (March 31, 1989), slip op. at 4-5, 1989 WL 384973; Bay
Printing, Inc., GPO BCA 16-85 (January 30, 1987), slip op.
at 9, 1987 WL 228975; Peak Printers, Inc., GPO BCA 12-85
(November 16, 1986), slip op. at 6, 1986 WL 181453. it
cannot award a contractor compensation which is specifically
prohibited by its terms, see Universal Printing Co., supra,
slip. op. at 55, fn. 54. Accordingly, regardless of the
ultimate outcome in this dispute with respect to the quantum
of the Appellant's recovery, its request for interest must
perforce be denied.
26 Perhaps that is not surprising since the Appellant's
position on entitlement is tantamount to a nullification of
the Government's termination action altogether; i.e., it
wants to be paid on the basis of full performance of the
contract (short of delivery).
27 The Board Rules specifically identify only two types of
motions; i.e., motions for dismissal for lack of
jurisdiction and motions for reconsideration. See Board
Rules, Rules 5, 12.4 (reconsideration in small claims
(expedited) and accelerated procedure cases) and 29
(reconsideration in cases conducted under the regular
procedure).
28 One of the principal purposes of summary judgment is to
isolate and dispose of factually unsupported claims or
defenses, see Celotex Corp. v. Catrett, 477 U.S. 317, 323-24
(1986), and to cut through the pleadings and distinguish
substantial issues from phantom issues raised only in the
pleadings, see Ite, Inc., NASA BCA No. 1086-6, 88-1 BCA �
20,269, at 102,595-96 (citing, 6 J. MOORE, W. TAGGART & J.
WICKER, MOORE'S FEDERAL PRACTICE � 56.15(2) (2d ed. 1985)).
As a consequence, the procedure is deemed "an integral part
of the Federal Rules as a whole, which are designed `to
secure the just, speedy and inexpensive determination of
every action.'" See Celotex Corp. v. Catrett, supra, 477
U.S. at 327 (citing FED. R. CIV. P. 1; William W. Schwarzer,
Summary Judgment under the Federal Rules: Defining Genuine
Issues of Material Fact, 99 F.R.D. 465, 467 (1987)). See
also Board Rules, Preface to Rules, � VI.C. Indeed,
district courts have the power to enter such judgments sua
sponte, provided that the losing party has notice that it
must come forward with all of its evidence. See Celotex
Corp. v. Catrett, supra, 477 U.S. at 326 (citing, 10A C.
Wright, A. Miller & M. Kane, Federal Practice and Procedure,
� 2720, pp. 28-29 (1983)). While courts are reluctant to
deprive a litigant of the right to a jury trial, nonetheless
they recognize that the summary procedure, "properly
employed," is a useful device for unmasking frivolous claims
and putting a swift end to meritless litigation. See IBM
Poughkeepsie Employees Federal Credit Union v. Cumis
Insurance Society, Inc., 590 F.Supp. 769, 771 (S.D.N.Y.
1984) (citing Quinn v. Syracuse Model Neighborhood Corp., 63
F.2d 438, 445 (2d Cir. 1980); Applegate v. Top Associates,
Inc., 425 F.2d 92, 96 (2d Cir. 1970)). However, courts
always have discretion to deny the motion even where the
moving party seems to have discharged its summary judgment
burden. See e.g., Flores v. Kelley, 61 F.R.D. 442 (D.Ind.
1973); John Blair & Co. v. Walton, 47 F.R.D. 196, 197
(D.Del. 1969). In such cases, the thinking is that
regardless of whether the burden is met, the court should
have the freedom to allow the case to continue when it has
any doubt as to the wisdom of terminating the action prior
to a full trial. See e.g., Baca v. United States, 29
Fed.Cl. 354, 358 (1993) ("A trial court may deny summary
judgment, if `there is reason to believe that the better
course would be to proceed to trial.'" [Citation omitted.])
See also Olberding v. Department of Defense, et al., 564
F.Supp. 907, 908, fn. 1 (D.Ia. 1982), aff'd 709 F.2d 621
(8th Cir. 1983). Furthermore, where difficult legal issues
are involved, the court can refuse summary judgment on the
ground that a fuller development of the facts may serve to
clarify the law or help indicate its application to the
case. See e.g., Davidson v. Stanadyne, Inc., 718 F.2d 1334,
1339, (5th Cir. 1983); Security Pacific National Bank v.
OL.s. Pacific Pride, O/N, 549 F.Supp. 53, 55 ((D.Wash.
1982).
29 The Board's research indicates that agency contract
appeals boards are somewhat less strict in applying Rule 56
than are the courts. See Vanier Graphics, Inc., supra, slip
op. at 36, fn. 29. The reason for this apparent leniency
probably has something to do with the nature of the
administrative process itself. In that regard, the Supreme
Court instructs that: "Rule 56 must be construed with due
regard not only for the rights of persons asserting claims
and defenses that are adequately based in fact to have those
claims and defenses tried to a jury, but also for the rights
of persons opposing such claims and defenses to demonstrate
in the manner provided by the Rule, prior to trial, that the
claims and defenses have no factual basis." See Celotex
Corp. v. Catrett, supra 477 U.S. at 327. [Emphasis added.]
Administrative proceedings, of course, are not intended to
confront the parties with all the rigors of courtroom
litigation before a jury. Furthermore, it is axiomatic that
in administrative hearings the strict rules of evidence do
not apply. See Federal Trade Commission v. Cement
Institute, 333 U.S. 683, 705-06 (1948). See also, Donovan
v. Sarasota Concrete Co., 693 F.2d 1061, 1066 (11th Cir.
1982); Calhoun v. Bailar, 626 F.2d 145, 148 (9th Cir. 1980).
For evidence to be admitted in an administrative proceeding
it must only be relevant and material, and no attention is
paid to whether the proof would be admissible in court. See
Grant Associates, Inc. v. United States, 11 Cl.Ct. 816
(1987). Indeed, an administrative body may exclude evidence
otherwise admissible under the Federal Rules. See Carpenter
Sprinkler Corp. v. National Labor Relations Board, 605 F.2d
60,66 (2d Cir. 1979). Perhaps the best known difference
between the courts and administrative forums is the use of
hearsay evidence, which is fully admissible in
administrative proceedings. See Evosevich v. Consolidation
Coal, 789 F.2d 1021 (3rd Cir. 1986); Williams v. Department
of Transportation, 781 F.2d 1573 (11th Cir. 1986), rehearing
denied 794 F.2d 687 (1987). In that regard, hearsay proof
is allowed if it is relevant and material, see Veg-Mix, Inc.
v. Department of Agriculture, 832 F.2d 601 (D.C. Cir. 1987),
and otherwise reliable, adequate, probative and
fundamentally fair, see e.g. Mobile Consortium of CETA
Alabama v. Department of Labor, 745 F.2d 1416 (11th Cir.
1984); Diaz v. Postal Service, 658 F.Supp. 484 (E.D. Cal.
1987). See also Pitts on behalf of Pitts v. United States,
1 Cl.Ct. 148 (1983).
30 The Federal summary judgment rule provides: "[A]n adverse
party may not rest upon the mere allegations or denials of
his pleadings, but his response, by affidavits or as
otherwise provided in this rule, must set forth specific
facts showing that there is a genuine issue for trial. If
he does not so respond, summary judgment, if appropriate,
shall be entered against him." FED. R. CIV. P. 56(e). See
Celotex Corp. v. Catrett, supra, 477 U.S. at 324; First
National Bank of Arizona v. Cities Service Co., 391 U.S.
253, 289 (1968); Mingus Constructors, Inc. v. United States,
812 F.2d 1387, 1390-91 (Fed. Cir. 1987). See also Do-Well
Machine Shop, Inc., ASBCA No. 34898, 89-1 BCA � 21.491, at
108,281; Ite Inc., supra, 88-1 BCA at 102,595.
31 See note 3 supra.
32 The United States Claims Court has observed that: "[a]
mere dispute over the terms does not constitute an
ambiguity, and an interpretation which is merely possible is
not necessarily reasonable." Ceccanti, Inc. v. United
States, 6 Cl. Ct. 526, 528 (1984). An ambiguity must have
two or more reasonable interpretations and the intent of the
parties must not be determinable by the normal rules of
interpretation. See McDonald & Eudy Printers, Inc., supra,
slip op. at 14, fn. 12; R.C. Swanson Printing and
Typesetting Co., supra, slip op. at 42. See also
International Business Investments, Inc. v. United States,
17 Cl. Ct. 122 (1989), aff'd 895 F.2d 1421 (Fed. Cir. 1990)
(contract terms are not rendered ambiguous by the mere fact
that the parties disagree as to their meaning; there must be
reasonable uncertainty of meaning); Perry & Wallis, Inc. v.
United States, 192 Ct. Cl. 310, 315, 427 F.2d 722, 725
(1970) (quoting Bishop Engineering Co. v. United States, 180
Ct. Cl. 411, 416 (1967)).
33 In such cases, the doctrine of contra proferentem applies
and the dispute language will be construed against the
drafter, see Fry Communications, Inc./InfoConversion Joint
Venture v. United States, supra, 22 Cl. Ct. at 503 (citing,
William F. Klingensmith, Inc. v. United States, 205 Ct. Cl.
651, 657 (1974)); Professional Printing of Kansas, Inc.,
supra, slip op. at 48, fn. 64; Web Business Forms, Inc.,
supra, slip op. at 18, fn. 18; R.C. Swanson Printing and
Typesetting Co., supra, slip op. at 41, fn. 22, if the non-
drafter can show that he/she relied on the alternative
reasonable interpretation in submitting his/her bid, see Fry
Communications, Inc./ InfoConversion Joint Venture v. United
States, supra, 22 Cl. Ct. at 510 (citing, Fruin-Colon Corp.
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)); Professional Printing of Kansas,
Inc., supra, slip op. at 48, fn. 64; Web Business Forms,
Inc., supra, slip op. at 19, fn. 18.
34 Where there are such discrepancies, errors, or gaps, the
contractor has an affirmative obligation to ask the
contracting officer to clarify the true meaning of the
contract language before submitting its bid. See Fry
Communications, Inc./InfoConversion Joint Venture v. United
States, supra, 22 Cl. Ct. at 504 (citing, Newsom v. United
States, supra, 230 Ct. Cl. at 303. See also Interstate
General Government Contractors, Inc. v. Stone, 980 F.2d 1433
(Fed. Cir. 1992); Enrico Roman, Inc. v. United States, 2 Cl.
Ct. 104, 106 (1983); S.O.G. of Arkansas v. United States,
212 Ct.Cl. 125, 546 F.2d 367 (1976); Beacon Construction v.
United States, 314 F.2d 501 (Ct.Cl. 1963)); Universal
Construction Co., NASA BCA No. 83-1092, 93-3 BCA � 26,173;
Harwood Construction Co., NASA BCA No. 1165-45, 68-1 BCA �
6768.
35 The purpose of any rule of contract interpretation is to
carry out the intent of the parties. Hegeman-Harris & Co.,
194 Ct. Cl. 574, 440 F.2d 1009 (1971). 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 Co. v. United States, 198 Ct. Cl. 712, 461 F.2d
1330 (1972). See also Salem Engineering and Construction
Corp. v. United States, supra, 2 Cl. Ct. at 806. The
provisions of the contract itself should provide the
evidence of the objective intent of the parties.
36 It is unnecessary to set forth in detail the rules of
contract construction which apply when interpreting an
agreement. Suffice it to say that, within the contract
itself, ordinary terms are to be given their plain and
ordinary meaning in defining the rights and obligations of
the parties. See Elden v. United States, 223 Ct. Cl. 239,
617 F.2d 254 (1980). Similarly, technical terms are given
their technical meaning. See Coastal Drydock and Repair
Corp., ASBCA No. 31894, 87-1 BCA � 19,618; Industrial
Finishers, Inc., ASBCA No. 6537, 61-1 BCA � 3,091.
Likewise, terms special to Government contracts will be
given their technical meanings. See General Builders Supply
Co. v. United States, 187 Ct. Cl. 477, 409 F.2d 246 (1969)
(meaning of "equitable adjustment"). As for extrinsic
evidence of the intent of the parties, the rules of
construction allow, inter alia, custom and trade usage to
explain or define terms. See W. G. Cornell Co. v. United
States, 179 Ct. Cl. 651, 376 F.2d 199 (1967); Harold Bailey
Painting Co., ASBCA No. 27064, 87-1 BCA � 19,601 (definition
of "spot painting"). However, custom and trade usage may
not contradict clear or unambiguous terms. See WRB Corp. v.
United States, 183 Ct. Cl. 409, 436 (1968).
37 In circumstances where the Government delay is caused by
such changes to the product, the contractor may be entitled
to an equitable adjustment in addition to an extension of
the delivery schedule. See GPO Contract Terms, Contract
Clauses, � 4(b). See also Banta Co., supra, slip op. 35.
38 In so doing, the Board expressly rejected the two main
arguments of the contractor, namely: (a) as long as the
initial samples conformed to the original specifications,
the "PRIOR TO PRODUCTION SAMPLES" specification prevented
the Government from rejecting them merely because of an
author's error; and (b) instead of making pre-production
proofs and then removing the job from the presses until the
samples are approved for final printing, the customary
practice in the trade is to print the entire quantity
ordered to save costs. See McDonald & Eudy, supra, slip
op. at 10-11. The Board viewed the contractor's contention
that samples which conformed to the original specifications
were not rejectable simply because of an author's error, as
so without merit as to warrant no discussion. In the
Board's opinion, there was no basis in procurement law for
the contractor's theory, under which the Government could
never correct an honest error without, in effect, being
penalized by paying double for the privilege of doing so.
See McDonald & Eudy, supra, slip op. at 22, fn. 19 (citing
Serigraphic Arts, Inc., GPOCAB 22-79 (May 8, 1980), 1980 WL
81264). As for the contractor's defense that in
prematurely printing the full quantity of test booklets
ordered it was merely following a cost-saving custom of the
trade, the Board applied the settled rule of construction
which holds that custom and trade usage may not contradict
clear or unambiguous terms. See McDonald & Eudy, supra,
slip op. at 21-22 (citing WRB Corp. v. United States,
supra, 183 Ct. Cl. at 436; Sterling Printing, Inc., supra.,
slip op. at 25, fn. 38.
39 The Board surmised that the reason for this paucity of
cases was because "the meaning of the key contract
provisions are so obvious that a reasonable contractor could
have no doubt as to their meaning-they are impossible to
misconstrue or misunderstand." See McDonald & Eudy, supra,
slip op. at 22.
40 The Board's was created by the Public Printer in 1984.
See GPO Instruction 110.10C, Subject: Establishment of the
Board of Contract Appeals, dated September 17, 1984. Before
then, ad hoc panels considered disputes between contractors
and GPO. The Board cites the decisions of these ad hoc
boards as GPOCAB. See note 38 supra. While the Board is
not bound by their decisions, its policy is to follow the
rulings of the ad hoc panels where applicable and
appropriate. See New South Press II, slip op. at 32, fn.
45; Shepard Printing, GPO BCA 23-91 (April 29, 1993), slip
op. at 14, fn. 19, 1993 WL 526848 (Shepard I); Stephenson,
Inc., GPO BCA 02-88 (December 20, 1991), slip op. at 18, fn.
20, 1991 WL 439274; Chavis and Chavis Printing, supra, slip
op. at 9, fn. 9.
41 Estoppel is often confused with the principle of
finality, which accomplishes the same result. However,
estoppel and finality differ in two important respects: (a)
only estoppel requires detrimental reliance by the party who
seeks to invoke it; and (b) finality depends on Government
statements or conduct which is contractually binding through
the operation of legal principles such as offer and
acceptance, acceptance of goods, etc., while estoppel rests
on elemental notions of fairness without regard to the
contractually binding nature of the Government's
representations or actions. See generally Cibinic & Nash,
pp. 71, 76-77 (citing H & M Moving, Inc. v. United States,
204 Ct. Cl. 696, 499 F.2d
660 (1974); Emeco Industries, Inc. v. United States, 202 Ct. Cl.
1006, 485 F.2d 652 (1973); Dana Corp. v. United States, 200 Ct.
Cl. 200, 470 F.2d 1032 (1972); Gresham & Co. v. United States,
200 Ct. Cl. 97, 470 F.2d 542 (1972); Manloading & Management
Associates, Inc. v. United States, 198 Ct. Cl. 628, 461 F.2d 1299
(1972); Litton Systems, Inc. v. United States, 196 Ct. Cl. 133,
449 F.2d 392 (1971); Mercury Machine & Manufacturing Co., ASBCA
No. 20068, 76-1 BCA � 11,809; Lockheed Shipbuilding &
Construction Co., ASBCA No. 18460, 75-1 BCA � 11,246, reconsid.
denied 75-2 BCA � 11,566; Unidynamics/St. Louis, Inc., ASBCA No.
17592, 73-2 BCA � 10,360; Peninsular ChemReseach, Inc., ASBCA No.
14384, 71-2 BCA � 9066; Fink Sanitary Service, Inc., 53 Comp.
Gen. 502 (B-179040), 74-1 CPD � 36).
42 Generally, estoppel in cases involving the Federal
Government are decided on an ad hoc basis. The Supreme
Court has consistently refused to adopt a flat rule that
estoppel may not in any circumstances run against the
Government. See Richmond, supra, 496 U.S. at 423, 110 S.Ct.
at 2470-71; Heckler, supra, 467 U.S. at 60, 104 S.Ct. at
2224. However, the case law also shows that the Supreme
Court takes a very strict approach to estoppel claims
involving public funds, and has never upheld such a claim
against the Government for the payment of money. See
Richmond, supra, 496 U.S. at 426-27, 110 S.Ct. at 2472-73;
Heckler, supra, 467 U.S. at 63, 104 S.Ct. at 2225. One
reason is that if estoppel against the Government is
extended to its logical conclusion in the context of payment
of money from the Treasury, it could in fact render the
Appropriations Clause of the United States Constitution a
nullity. U.S. CONST. art. I, � 9, cl. 7. See Richmond,
supra, 496 U.S. at 4428, 110 S.Ct. at 2473. The precise
effect of the Supreme Court's Richmond decision on contract
cases is unclear, primarily because the awards sought by
Government contractors are generally based on contract
principles that do not contravene the eligibility
requirements contained in federal statutes. Thus the lower
courts tend to limit the reach of Richmond to claims of
entitlement contrary to statutory appropriations. See
Gould, Inc. v. United States, 67 F.3d 925, 930 (Fed. Cir.
1995); Burnside-Ott Aviation Training Center, Inc. v. United
States, 985 F.2d 1574, 1581 (Fed. Cir. 1993); Tri-O, Inc. v.
United States, 28 Fed. Cl. 463, 473 (1993); Hoskins Lumber
Co., Inc. v. United States, 24 Cl.Ct. 259, 264 (1991).
43 It has been suggested that aside from these four
criterion, the contractor may also have to show affirmative
misconduct by Government employees. See Howard v. United
States, 23 Cl. Ct. 432 (1991); New England Tank Industries
of New Hampshire, Inc., ASBCA No. 26474, 88-1 BCA � 20,395,
vacated and remanded on other grounds, 861 F.2d 685 (Fed.
Cir. 1988). However, it is also clear that: ". . .the [G]
overnment does not engage in affirmative misconduct by
challenging the validity of its employees' acts or
agreements." See Hazeltine Corp. v. United States, supra,
10 Cl.Ct. at 444 (1986).
44 Where the actual authority of the Government
representative is at issue, the burden of proof is on the
contractor, and it is a substantial one. See B & B
Reproductions, supra, slip op. at 34 (citing Haber v. United
States, 17 Cl. Ct. 496 (1989), aff'd 904 F.2d 45 (1990);
Heckler, supra, 467 U.S. at 61, 104 S.Ct. at 2224 ("heavy
burden")). Specifically, the contractor must show that the
Government agent had actual authority to make or modify a
contract-apparent authority will not suffice. See B & B
Reproductions, supra, slip op. at 34; Printing Corp. of the
Americas, Inc., GPO BCA 14-84 (January 28, 1985), slip op.
at 11, 1985 WL 154851. See also Heckler, supra, 467 U.S. at
63, 104 S.Ct. at 2225, fn. 17; Federal Crop Insurance Corp.
v. Merrill, supra, 332 U.S. at 384, 68 S.Ct. at 3; Shearin
v. United States, 25 Cl. Ct. 294, 297 (1992). Stated
otherwise, an estoppel against the Government cannot be
based on the unauthorized actions or misrepresentations of
its agents, or acts beyond the scope of their authority.
See Howard v. United States, 31 Fed. Cl. 297 (1994); New
America Shipbuilders, Inc. v. United States, 15 Cl. Ct. 141
(1988); aff'd, 871 F.2d 1077 (Fed.Cir. 1989); Shearin v.
United States, supra; Hoskins Lumber Co., Inc. v. United
States, supra. See also Essen Mall Properties v. United
States, 21 Cl. Ct. 430 (1990) (Postal Service negotiator
lacked implied actual authority to bind the Postal Service
to a lease); Lance Dickinson & Co., ASBCA No. 36408, 89-3
BCA � 22,198, reconsid. denied, 90-1 BCA � 22,511 (no
implied contract where contractor knew that Government
employee lacked authority to contract). As the Supreme
Court has noted: "[t]his is consistent with the general rule
that those who deal with the Government are expected to know
the law and may not rely on the conduct of Government agents
contrary to law." See Heckler, supra, 467 U.S. at 63, 104
S.Ct. 2225. Finally, the contractor has an affirmative
obligation to ascertain the authority of the Government
employees with whom it deals, see Hoskins Lumber Co., Inc.
v. United States, supra, 24 Cl.Ct. at 264; Johnson v. United
States, 15 Cl.Ct. 169, 174 (1988); Prestex, Inc. v. United
States, 3 Cl.Ct. 373, 377 (1983), unless the requisite
authority can be implied as an integral part of the
employee's assigned duties, see H. Landau & Co. v. United
States, 886 F.2d 322 (Fed. Cir. 1989); Sigma Construction
Co., ASBCA No. 37040, 91-2 BCA � 23,926; Jordan & Nobles
Construction Co., GSBCA No. 8349, 91-1 BCA � 23,659; DOT
Systems, Inc., DOTCAB No. 1208, 82-2 BCA � 15,817; Switlik
Parachute Co., Inc., ASBCA No. 17920, 74-2 BCA � 10,970.
45 This is not to say that the Board does not have other
concerns about the statement attributed to Seibert.
Clearly, by entering the record through the Flagstad
Affidavit, the Seibert statement is hearsay. Hearsay is
defined as "a statement made by the out-of-court declarant
which is offered into evidence to prove the truth of the
matter asserted." FED. R. EVID. 801. See Asa L. Shipman's
Sons, Ltd., supra, slip op. 11-12, fn. 16 (quoting Taylor
Air Systems, Inc., ASBCA No. 25526, 84-1 BCA � 17,141, at
85,396), reconsid. denied GPO BCA 06-95 (February 13, 1996).
As a rule, credible hearsay is admissible in administrative
proceedings, including those of this Board. See Vanier
Graphics, Inc., supra, slip op. at 36, fn. 29 (hearsay
evidence is admissible in administrative proceedings
provided it is relevant and material, and otherwise
reliable, adequate, probative, and fundamentally fair.
[Citations omitted.]). Accord Southwest Marine, Inc.,
DOTBCA No. 1661, 93-3 BCA � 26,168; Rocky Mountain Trading
Co., GSBCA No. 8671-P, 87-1 BCA � 19,406; Johnson & Son
Erector Co., ASBCA No. 23689, 86-2 BCA � 18,931; Hof
Construction, Inc., GSBCA No. 7012, 84-1 BCA � 17,009. On
the other hand, "rank hearsay," that is statements more in
the nature of speculation, are not entitled to any credence
whatsoever and are inadmissible. See Asa L. Shipman's Sons,
Ltd., supra (citing Amdahl Corp. v. Department of Health and
Human Services, GSBCA No. 11998-P, 93-2 BCA � 25,612, at
127,488). The troubling aspect of the Flagstad Affidavit,
which is dated June 26, 1995, is, of course, that it was
submitted nearly a year and a half after Seibert retired
from GPO (December 31, 1993),a fact which the Board takes
judicial notice of for the purposes of this proceeding. See
Asa L. Shipman's Sons, Ltd., supra, slip op. at 21, fn. 24;
FED. R. EVID. 201(b)(2). Consequently, there was no
opportunity to ascertain the accuracy or veracity of what he
is reputed to have said, or to determine whether it was
reasonable for the Appellant to assume that it had his
permission to produce the Plan if the pre-production proofs
were not returned by the end of the 5 workday holding
period. However, the Respondent has not objected to the
Board's consideration of Seibert's statement, as related by
the Contractor. More importantly, the Board sees nothing in
the Contracting Officer's words as adding anything to the
contract itself; i.e., by its terms, the agreement only
allowed the Government 5 workdays to review and return the
pre-production proofs, and for reasons already given, it
would have been inconsistent with the contract for the
Appellant to print the Plan during that time. See McDonald
& Eudy, supra, slip op. at 18. Similarly, even if Seibert
really believed on September 5, 1995, that the MMES "only"
had 5 workdays to retain the samples, the contract's
"CHANGES" clause would have allowed the Government to alter
the holding period "at any time" after that date. See Banta
Co., supra, slip op. 35. Besides, the Board finds it
difficult to interpret that Seibert's explicit instructions
not to produce the Plan during the holding period, as
justification for the Appellant to automatically assume that
it was "OK to Print" it afterward. By analogy, nothing in
the command "Don't beat your wife today!" in any way implies
that it is alright to thrash her tomorrow simply because
"tomorrow is another day" (Scarlett O'Hara, Gone With The
Wind).
46 Or, in the alternative, the Appellant would have to argue
that GPO knew or had reason to know that DOE/MMES would
retain the proofs beyond the 5 workday limit notwithstanding
the express language of the contract, thus negating its
terms, and purposely misleading the Contractor into
believing that it was alright to print the Plan without the
return of the samples and receipt of an "OK to Print." Such
an allegation is tantamount to saying that either the
Respondent or
DOE/MMES, or the both of them together, acted in bad faith.
However, the Board has held on many occasions that because of the
strong presumption that Government officials properly and
honestly carry out their functions, an allegation of bad faith
must be established by "well-nigh irrefragable" proof. See e.g.,
Asa L. Shipman's Sons, Ltd., supra, slip op. at 12, fn. 16;
Professional Printing of Kansas, Inc., supra, slip op. at 43, fn.
58; Universal Printing Co., supra, slip op. at 24, fn. 24; B. P.
Printing and Office Supplies, GPO BCA 14-91 (August 10, 1992),
slip op. at 16, 1992 WL 382917; The Standard Register Co., GPO
BCA 4-86 (October 28, 1987), slip op. at 12-13, 1987 WL 228972.
Accord Brill Brothers, Inc., ASBCA No. 42573, 94-1 BCA � 26,352;
Karpak Data and Design, IBCA No. 2944 et al., 93-1 BCA � 25,360;
Local Contractors, Inc., ASBCA No. 37108, 92-1 BCA � 24,491. The
key to such evidence is that there must be a showing of a
specific intent on the part of the Government to injure the
contractor. See Stephenson, Inc., supra, slip op. at 54. See
also Kalvar Corp. v. United States, 543 F.2d 1298, 1302 (Ct. Cl.
1976), cert. denied, 434 U.S. 830 (1977). In the Board's view,
no such "irrefragable" proof of bad faith exists in this record.
47 The Appellant's argument amounted to a damage claim for
breach of contract. However, as previously mentioned, the
Board is without jurisdiction to entertain such "pure"
breach of contract claims. See The Wessel Co., Inc., supra,
slip op. at 46; R.C. Swanson Printing and Typesetting Co.,
supra, slip op. at 41.
48 See note 37 supra.
49 By way of prologue, the Board noted that: "The
Termination for Convenience of the Government clause is one
of the most unique provisions contained in Government
contracts. In no other area of contract law has one party
been given such complete authority to escape from
contractual obligations. This clause gives the Government
the broad right to terminate without cause and limits the
contractor's recovery to costs incurred, profit on work
done, and costs of preparing the termination settlement
proposal. Recovery of anticipated profit is precluded.
Thus, this mandatory provision confers a major contract
right on the Government with no commensurate advantage to
the contractor." See New South Press II, supra, slip op. at
33-34 (quoting Cibinic & Nash, p. 1073). See also Tom Shaw,
Inc., ENG BCA Nos. 5540, 5541, 89-3 BCA � 21,961 (the
Government's right to terminate a contract for its own
convenience without suffering the usual penalties for breach
of contract, is an extraordinary right with a commensurate
responsibility to be entirely fair in the exercise of the
right). The Board also said that, historically, the power
of the Government to terminate its contracts in the absence
of a breach by the non-governmental party arose in order to
limit the Government's liability during the unpredictable
circumstances of war, and to shift some of the risk of
changing conditions to the non-governmental party. See New
South Press II, supra, slip op. at 34, fn. 48 (citing Plaza
70 Interiors, Ltd., HUD BCA No. 94-C-150-C9, 95-2 BCA �
27,668, at 137,939; G.L. Christian & Associates v. United
States, 160 Ct. Cl. 1, 312 F.2d 418, cert. denied 375 U.S.
954 (1963); Cibinic & Nash, pp. 1073-74). The right to
terminate contracts for the convenience of the Government
was later expanded to civilian and peacetime contracts. See
New South Press II, supra, slip op. at 34, fn. 48 (citing
Torncello v. United States, 231 Ct. Cl. 20, 681 F.2d 756,
764-66 (1982)). However, the Board also observed that
because of the extraordinary powers vested in the Government
to terminate contracts for its convenience, the courts and
contract appeals boards have placed some limits on its
exercise, and the authority can never be used to "dishonor
[its] contractual obligations." See New South Press II,
supra, slip op. at 34 (citing Maxima Corp. v. United States,
847 F.2d 1549, 1553 (Fed. Cir. 1988); Torncello v. United
States, supra, 681 F.2d at 772).
50 The Board also quoted at length from the Veterans
Administration Board of Contract Appeals (VABCA) decision in
Arctic Corner, Inc. See New South Press II, supra, slip op.
at 42-44. In that case, the VABCA, relying on the Court of
Claims opinion in Codex Corp. v. United States, supra, 226
Ct. Cl. at 698-699, detailed its view of the "fairness"
concept under the relevant provisions of the Federal
Procurement Regulation (FPR), and stated, in pertinent part:
"We will likewise approach the various disputed cost
elements in this appeal with an eye toward fair compensation
rather than imposing strict accounting principles upon the
Appellant. . . .". See Arctic Corner, Inc., supra, 86-3 BCA
at 97,456-57. See also Industrial Refrigeration Service
Corp., supra, 91-3 BCA � 24,093, at 120,594-95.
51 If the Board read this passage correctly, it seemed as if
the ASBCA was respectfully disagreeing with the
interpretation of the "fairness" concept enunciated by the
Court of Claims in Codex Corp. v. United States, the ASBCA
decision cited with approval by the GSBCA in Richerson
Construction, Inc. and the VABCA in Arctic Corner, Inc. See
New South Press II, supra, slip op. at 44-45, fn. 58.
52 The Board's ruling specifically relied on so much of the
relevant provisions of the GPO Cost Directive and the PPR,
both of which said, in pertinent part: "Further,
notwithstanding the mandatory use of cost principles, the
objective will continue to be to negotiate prices that are
fair and reasonable, cost and other factors considered.
[Emphasis added.]" See New South Press II, supra, slip op.
at 45-46 (citing GPO Cost Directive, Sec. 2, � 3 (Fixed-
price contracts), p. 6,; PPR, Chap. VIII, Sec. 1, � 3.a., p.
83). The Board also noted that the Respondent's regulations
directed Contracting Officers not only to incorporate the
cost principles and procedures of the GPO Cost Directive by
reference in GPO contracts, but to use the precepts as the
basis for "[p]roposing, negotiating, or determining costs
under terminated contracts; . . .[Emphasis added.]" See New
South Press II, supra, slip op. at 46 (citing GPO Cost
Directive, Sec. 2, � 4(b)(3) (Contracts with commercial and
other organizations), p. 6; PPR, Chap. VIII, Sec. 1, � 3.b.,
p. 83; R.C. Swanson, supra, Supplemental Decision, slip. op.
at 5, fn. 5). Finally, the Board observed that the last
ingredient in the cost principle mix for GPO contracts which
are terminated for convenience, are the implementing
provisions in GPO Contract Terms, which incorporate the GPO
Cost Directive by reference. See New South Press II, supra,
slip op. at 46 (citing GPO Contract Terms, Contract Clauses,
�� 19(g), 45).
53 The Board did so fully aware that other contract appeals
boards, like the ASBCA, have different ideas about the
choice between "fairness" and strict adherence to cost
accounting rules. However, the Board selected the
philosophy which it believed was more in harmony with the
underlying purposes of a convenience termination settlement.
See New South Press II, supra, slip op. at 48, fn. 61.
54 In that regard, the "reasonable cost" concept: ". . .
includes both `objective' and `subjective' elements . . .
The objective focus is on the costs that would have been
incurred by a prudent businessman placed in a similar
overall competitive situation . . . However, unless it also
takes into account the subjective situation of the
contractor, a test of `reasonable cost' is incomplete." See
Nager Electric Co., Inc. and Keystone Engineering Corp. v.
United States, 194 Ct. Cl. 835, 851-53, 442 F.2d 936, 945-46
(1971) (hereinafter Nager Electric).