BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
GRAPHICDATA, INC. ) Docket No. GPO BCA 35-94
Program D306-S )
Purchase Order 94586 )
DECISION AND ORDER ACCEPTING APPEAL
AND DENYING MOTION TO DISMISS
On January 3, 1995, the Board conducted a hearing pursuant to
Rule 5 of its rules of practice and procedure for the purpose
of receiving the parties' arguments on the question of whether
it had jurisdiction to decide the claim of Graphicdata, Inc.
(Appellant or Contractor) because the Contracting Officer had
failed to render a final decision within a "reasonable time",
or, on the other hand, was the appeal premature? See,
Decision and Order Scheduling a Hearing, dated December 21,
1994, at 6-7 (Hearing Decision); GPO Instruction 110.12,
Subject: Board of Contract Appeals Rules of Practice and
Procedure, dated September 17, 1984, Rule 5 (Board Rules).
The issue was raised when the Respondent filed a "Motion to
Dismiss" (Motion) on November 4, 1994, contending that the
Contracting Officer, Richard Weiss, had not had a reasonable
amount of time to resolve the claim, and thus the Contractor's
appeal of October 21, 1994, should be dismissed as premature.1
See, Hearing Decision, at 2. At the hearing, both parties
were represented by counsel who presented oral argument
concerning their respective positions.2 In addition, the
Appellant offered testimony with regard to the question being
heard. The parties waived the filing of post-hearing briefs
in this matter (Tr.: 72-73).3 Board Rules, Rule 23. Based on
the testimony and arguments at the presented at the hearing,
the Board has concluded that the appeal should be ACCEPTED and
the Motion should be DENIED. Board Rules, Rule 1(c).4
A. STATEMENT OF FACTS
The facts pertaining to the jurisdictional question are
essentially undisputed and are set forth here only to the
extent necessary for this decision.
1. Program D306-S involves the printing and distribution of
U.S. patents (Tr.:26).5 Under the contract, the Appellant is
required to perform approximately 2 million printing
impressions each week, and make daily deliveries (Tr.: 26-27).
2. The contract was for nine months, divided into two
production periods-one of two months (eight issues) and the
other of seven months (31 one issues)-totalling 39 weeks of
performance (Tr.: 27-28). Although the contract is scheduled
to end on February 28, 1995 (Tr.:11), it is so structured that
there is an overlap period which will require the Appellant to
produce work until the end of April 1995 (Tr.: 49).6
3. The work under the contract was originally estimated to be
approximately 2 million impressions for the first production
period only, with a lower production rate of approximately 1
million impressions for the second period (Tr.: 28). This
estimated reduction in output was based on the U.S. Patent
Office's (Patent Office) intent to submit patents
electronically in the second production period, instead of in
hard copy (Tr.: 28). However, the Patent Office changed its
mind and decided to continue provide patents for reproduction
in hard copy, so the lower impression rate for the second
production period never materialized; i.e., the Appellant
continues to produce approximately 2 million impressions a
week (Tr.: 29).7
4. Because of this change, the Appellant was asked to submit
its proposal for an equitable adjustment in the contract
price. On August 22, 1994, the Contractor sent its equitable
adjustment claim to the Respondent (Tr.: 33; App. Exh. No. 1).
Thereafter, on September 20, 1994, in response to a telephone
call from the Contracting Officer, the Appellant certified its
claim (Tr.: 34; App. Exh. No. 1). The next day, September 21,
1994, the Contracting Officer sent a memorandum to GPO's
Office of the Inspector General (OIG) requesting an audit of
the claim (Tr.: 9). The Contracting Officer believed an audit
was necessary because the claim contained a number of line
items and issues and was complex (Tr.:59).
5. Between October 4, 1994, and October 7, 1994, the
Contracting Officer and the Appellant were in touch with each
other daily, exchanging proposals in an effort to find an
appropriate equitable adjustment figure and avoid a Government
audit (Tr.: 43-47: App. Exh. No. 1). When their efforts
proved unsuccessful, the Contracting Officer told the OIG to
proceed with the audit of the claim (Tr.: 47; App. Exh. No.
1).8
6. On October 12, 1994, Edwin L. Hawse, an OIG Supervisory
Auditor, telephoned the Contractor and said that a Ms. Anna
Sud had been assigned to inspect the claim, and that while Ms.
Sud would begin the audit as soon as possible, he could not
give the Appellant a definite date when it would be performed
(Tr.: 48; App. Exh. No. 1). Thereafter, on December 21, 1994,
the OIG sent a letter to the Appellant informing it that the
audit would be conducted at its New Jersey offices on January
9, 1995 (Tr.: 7, 8, 53).9
7. The OIG auditors promised to have a final audit report in
the Contracting Officer's hands by the end of January 1995,
and he has committed to issue a final decision on the claim
two weeks after that (Tr.: 7, 71).10
8. In the interim, when the Contracting Officer failed to
issue a final decision on the claim by October 14, 1994, as
demanded by its attorney (App. Exh. No. 1), the Appellant, on
October 21, 1994, filed its appeal with the Board.
B. QUESTION PRESENTED
The only issue in this proceeding is whether the Board has
jurisdiction over the Appellant's claim because the
Contracting Officer has had a "reasonable time" to render a
final decision, or should the appeal be dismissed because it
is premature?
C. CONCLUSIONS
From the parties' oral argument and the testimony of the
Appellant's witness at the hearing, the Board draws the
following conclusions:
1. Rule 1 of the Board Rules parallels section 605 of the
Contract Disputes Act (CDA), 41 U.S.C. � 605, to the extent
that a contracting officer is allowed 60 days to issue a final
decision for claims of $50,000 or less, or a "reasonable time"
for claims in excess of $50,000. Compare, Board Rules, Rules
1(b) and 1(c) with 41 U.S.C. �� 605(c)(1),(3).
2. What constitutes a "reasonable time" under the CDA is
determined by taking into account such factors as the size and
complexity of the claim and the adequacy in support of the
claim provided by the contractor. 41 U.S.C. � 605(c)(3).
See, Universal Contracting, DOT CAB Nos. 1565, 1600, 1601,
85-3 BCA � 18,326. However, the Board's reading of the CDA
cases tells it that whatever constitutes a "reasonable time",
it will most likely be more than 60 days.11 See, Roebbelen
Engineering, Inc., DOT BCA No. 1814, 87-1 BCA � 98,628;
3. There is no comparable definition of "reasonable time" in
the Board Rules, although the similarity between those
regulations and the CDA with respect to other relevant
language, as well as their shared procedural philosophy,
warrants the conclusion that the CDA's definition is implied
in the Board Rules. See, Banta Company, GPO BCA 03-91
(November 15, 1993), Sl. op. at 34.
4. By any definition, the claim in question clearly meets the
standard of a complex claim. Moreover, under GPO's
procurement regulations, as well as the terms of the contract,
given the size and scope of the claim it was not unreasonable
under the circumstances for the Contracting Officer to ask the
OIG to audit the claim before issuing a final decision. See,
PPR, Chap. X, � 4.a.; GPO Contract Terms, Solicitation
Provisions, Supplemental Specifications, and Contract Clauses,
GPO Publication 310.2, Effective December 1, 1987 (Rev. 9-88),
Contract Clauses, � 40. Therefore, the Board concludes that
when the Appellant filed its appeal with the Board on October
21, 1994, at the expiration of 60 days, it was acting
prematurely. See, Executive Elevator Service, Inc., VABCA No.
2741, 88-3 BCA � 20,964.
5. However, it is well settled that prematurity is not always
fatal to the justiciability of an appeal. See, Briggs
Engineering and Testing Company, Inc. v. United States, 230
Ct.Cl. 828 (1982); So-Pak-Company, Inc., ASBCA No. 38906, 93-3
BCA � 26,215; Rice King, ASBCA No. 43352, 92-2 BCA � 24,805;
Emerson Electric Company, ASBCA No. 31184, 86-2 BCA �
18,979.20. For example, under the CDA the filing of a
premature appeal does not relieve a contracting officer from
rendering a final decision on a claim in excess of $50,000
within the 60-day period prescribed by the statute. Atherton
Construction, Inc., ASBCA No. 41414, 91-1 BCA � 23,635; ACS
Construction Company, ASBCA No. 36535, 89-1 BCA � 21,406.
6. It is also settled that an audit alone will not shield a
contracting officer from his responsibility to issue a
decision. See, Robert Augustine & Sons, Inc., supra, 90-1 BCA
� 22,506. In conducting the audit in this case, the OIG
auditors are acting as the representative of the Contracting
Officer and their obligations are no less than his. See,
Computer Systems & Resources, Inc., GSBCA No. 8434-TD, 86-3
BCA � 19,017.
7. What bothers the Board about the audit in this case is the
delay involved. As it observed during the hearing, from the
time the Contracting Officer requested the OIG audit of the
claim (September 21, 1994) to the date it began (January 9,
1995), three and one-half months had elapsed (Tr.: 8-9).
Looked at another way, between the date the claim was filed
with the Contracting Officer (August 22, 1994) and the date of
the OIG audit 131 days had disappeared from the calendar.
8. The OIG auditors promised the Contracting Officer that they
would complete their examination by end of January 1995, and
he in turn has made a commitment to issue a final decision
within two weeks after he receives their report. Taking the
OIG at its word, the audit report should be in the Contracting
Officer's hands any day now. Therefore, while the Board is
not pleased with the dilatory and casual manner in which the
OIG handled the arrangements for the audit, it seems that the
appropriate remedy at this stage is to give both OIG and the
Contracting Officer a reasonable period of time in which to
complete review of the Appellant's claim and to issue a
decision. See, Computer Systems & Resources, Inc., supra,
86-3 BCA � 19,017. See also, James Reeves Contractor, Inc.,
ASBCA Nos. 35280-281, 35281-282, 87-3 BCA � 20,173. That is
exactly what the Board will do here. As the Board indicated
during the hearing, it believes that dismissal of the appeal
at this time, followed by the taking of a new appeal, and then
redocketing, would here appear to be inefficient and an
elevation of form over substance (Tr.: 23). See, Cessna
Aircraft Company, ASBCA No. 43196, 92-1 BCA � 24,425, at
121,909. See also, So-Pak-Company, Inc., supra, 93-3 BCA �
26,215.
9. THEREFORE, the Board DENIES the Respondent's Motion and
ACCEPTS the Contractor's appeal. Board Rules, Rules 1(c), 2
and c. FURTHERMORE, pursuant to Rule 1(d) of the Board Rules,
the Contracting Officer is hereby directed to issue a final
decision on the Appellant's claim which was submitted to him
on August 22, 1994, within two weeks after receiving the OIG's
audit report, but in no event later than February 28, 1995,
and furnish a copy of such decision to the Board. Board
Rules, Rule 1(d). ACCORDINGLY, further proceedings in this
matter are STAYED until such time as the Contracting Officer
issues his final decision in accordance with this Decision and
Order. Id. See, EPCo Associates, GPO BCA 26-93 (November 18,
1993). Accord, Improved Petroleum Recovery, EBCA Nos.
348-1-86, 349-1-86, 87-1 BCA � 19,431 (1987).12
It is so Ordered.
January 31, 1995 STUART M. FOSS
Administrative Judge
_____________
1 When the Board scheduled the jurisdictional hearing in
this matter, it understood that the Appellant's claim
amounted to $532,092.74. See, Hearing Decision, at 1, fn.
1. On January 20, 1995, after the close of the hearing,
Counsel for the U.S. Government Printing Office (Respondent
or GPO or Government) furnished the Board with a copy of a
letter from the Appellant's President, Kenneth Margulies, to
the Contracting Officer, dated January 17, 1995, contending
that the correspondence showed that during the audit
process, the Appellant revised its claim upward without
certifying it as required by the Respondent's regulations
governing the procurement of printing, see, Printing
Procurement Regulation, GPO Publication 305.3 (Rev. 10-90)
Chap. X, Section, � 3 (PPR), and thus the Contracting
Officer could not be expected to issue a final decision.
See, Notice of Filing, dated January 20, 1995, p. 1 (Notice
of Filing). On January 23, 1995, Counsel for the Appellant
responded with a document entitled "Motion to Strike GPO
Notice of Filing Dated January 20, 1995 and Motion for
Sanctions Pursuant to Rule 31" (Motion to Strike), which,
among other things, flatly denied that the Contractor was
increasing its claim, but rather was supplying the auditors
with more detailed information, and moreover, the
$532,092.74 claim it submitted was properly certified.
Motion to Strike, at 2-3. The Board has read the letter
from Mr. Margulies to the Contracting Officer and sees
nothing to alter its belief that it is dealing with a
$532,092.74 claim. However, there is nothing in the Board's
procedural rules which contemplate a Motion to Strike, nor
has the Appellant established any basis for such a motion at
this preliminary stage of the appeal under the Federal
rules. FED. R. CIV. P. 12(f). In the Board's view, the
Respondent's Notice of Filing is mere argument supplementing
the position it took at the hearing, and is not a defensive
pleading. Furthermore, nothing in the Notice of Filing
warrants the conclusion that the Respondent is attempting to
interfere with "the orderly prosecution or defense of an
appeal" so as to justify the imposition of sanctions under
Rule 31. Board Rules, Rule 31. Accordingly, the Motion to
Strike is DENIED.
2 References to the official transcript will be cited as
"Tr." followed by a full colon (:), with an appropriate page
number thereafter.
3 However, the Counsel for the Appellant did submit a copy
of the written statement which he had prepared for the
hearing (Tr.: 72).
4 Rule 1(c) of the Board's procedural regulations provides:
"Where the contractor has submitted a claim in excess of
$50,000 and has requested a final decision from the
contracting officer and the contracting officer has failed
to issue a decision within a reasonable time, the contractor
may file a notice of appeal as provided in subparagraph (a)
above, citing the failure to issue such decision." Board
Rules, Rule 1(c).
5 The record does not contain the Contracting Officer's
appeal file. Board Rules, Rule 4(a). However, for the
purposes of background, the Board accepts the testimony of
the Appellant's witness, Mr. Margulies, describing the scope
of the agreement. The Contractor also submitted a
contemporaneously written memorandum to the file from Mr.
Margulies, recording his recollection of events from October
4, 1994 to October 12, 1994, as Appellant's Exhibit No. 1
(hereinafter App. Exh. No. 1) (Tr.: 35-39).
6 Consequently, at the time of the hearing the Contractor
had been performing under the contract for only five months
(Tr.: 49).
7 The Contracting Officer informed the Appellant of the
Patent Office's decision on or about July 11, 1994,
approximately two or three weeks before the commencement of
the second production period (Tr.: 29-30, 31). Thereafter,
on July 21, 1994, the Contracting Officer provided the
Contractor with a letter stating that ". . . there would be
no reduction in print volumes, and `present print volumes
will continue until further notice. These projected volumes
were faxed to you on July 13, 1994.'" See, App. Exh. No. 1.
8 Among other things, the record shows that the Appellant
submitted a revised settlement proposal to the Contracting
Officer on October 6, 1994, which increased the rate on line
item I.(a)(3) for the second production period from $3.00 to
$4.21 (Tr.: 45; App. Exh. No. 1). The Contracting Officer
countered by offering to pay a rate of $3.65 for the same
line item (Tr.: 45: App. Exh. No. 1). The Contractor did
not accept the Contracting Officer's proposal, but offered
to split the difference between $4.21 and $3.65 to settle
the matter (Tr.: 46; App. Exh. No. 1). However, the
Contracting Officer rejected this second offer and told the
Appellant that he would have the claim audited by the OIG
(Tr.: 47-48; App. Exh. No. 1). In reply, the Contractor
requested the issuance of a contract modification increasing
the rate on line item I.(a)(3) in the second production
period from $3.00 to $3.65-the rate proposed by the
Contracting Officer-which would have provided a partial
settlement of the dispute and narrowed the scope of the
audit to the .56 rate difference between the Government and
the Appellant, but the Contracting Officer refused to do so
(Tr.: 48; App. Exh. No. 1).
9 At the hearing, Mr. Margulies testified that he had not
received the letter and was thus unaware that the audit was
to begin the following week (Tr.: 53). The Board was not
surprised because the letter was mailed during the U.S.
Postal Service's peak season-Christmas-and was sent by
regular mail.
10 However, as Counsel for GPO pointed out at the hearing,
the OIG's ability to keep its promise may only be as good as
current funding and staff levels, which are generally low
throughout the agency (Tr.: 7-8).
11 For certified claims in excess of $50,000, the only CDA
requirement imposed on a contracting officer who fails to
issue a decision within 60 days is to notify the contractor
of the time within which a decision will be issued. 41
U.S.C. � 605(c)(2)(B). See, John C. Grimberg Company, Inc.,
ASBCA No. 42695, 91-3 BCA � 24,074; Robert Augustine & Sons,
Inc., VABCA No. 3079, 90-1 BCA � 22,506. The Board Rules do
not contain a comparable provision. See, Hearing Decision,
at 6, fn. 8.
12 Shortly after the close of the jurisdictional hearing,
the Appellant submitted a motion asking the Board to order
the Contracting Officer to issue a contract modification
increasing the price of line item I.(a)(3) of the contract
from $3.00 to $3.65 as the undisputed portion of the claim,
because the "undisputed testimony" indicated that the
Contracting Officer agreed with the increase. See, Motion to
Order Contracting Officer to Pay Undisputed Portion of Claim
Immediately," dated January 3, 1995, at 1 (Motion to Pay).
The Respondent opposes the Motion to Pay on the ground that
Appellant has mischaracterized the evidence which shows that
the parties never had a meeting of the minds regarding the
amount due the Contractor as an equitable adjustment. See,
Respondent's Opposition to Appellant's Motion to Order
Contracting Officer to Pay Undisputed Portion of Claim
Immediately, January 11, 1995, at 1-2. GPO's printing
procurement regulation provides, in pertinent part: "In the
event of an appeal, the amount, if any, determined to be
payable in the decision of the Contracting Officer, less any
portion previously paid, should be paid in advance of any
decision by the board without prejudice to the rights of
either party or the appeal." PPR, Chap. X, Sec. 1, � 5.g.
[Emphasis added.] The plain meaning of the regulation tells
us that the sine qua non of a contractor's right to be paid
the undisputed amount of a claim while its appeal is pending
is the issuance of a final decision from the Contracting
Officer establishing that amount. THEREFORE, regardless of
any testimony at the hearing, the Appellant's Motion to Pay
is premature and is hereby DENIED. Once a final decision is
rendered on the claim, the Appellant may renew its demand
for payment of the undisputed amount (whatever that may be),
but the matter should first be presented to the Contracting
Officer.