U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, D.C. 20401
In the Matter of )
)
The Appeal of )
)
MCDONALD & EUDY PRINTERS, INC. ) Docket No. GPO BCA 40-92
Program C292-S )
Purchase Order 91331 )
DECISION AND ORDER
By letter dated October 16, 1992, McDonald & Eudy Printers,
Inc. (Appellant or Contractor), 4509 Beech Road, Temple Hills,
Maryland 20748, filed a timely appeal from the September 25,
1992, final decision of Contracting Officer Jack Scott, of the
U.S. Government Printing Office's (Respondent or GPO or
Government) Printing Procurement Department, Washington, DC
20401, rejecting the Appellant's request for an equitable
adjustment of $4,799.08 for excess paper stock purchased by
the Contractor in connection with its contract identified as
Program C292-S, Purchase Order 91331 (R4 File, Tab F).1 For
the reasons which follow, the decision of the Contracting
Officer is hereby AFFIRMED, and the appeal is DENIED.2
FINDINGS OF FACT3
1. On March 22, 1991, the Respondent issued an Invitation for
Bids (IFB), soliciting bids for a single-award, term contract
for the period May 1, 1991 through April 30, 1992, to produce
and distribute a Department of Health and Human Services,
National Institutes of Health (NIH) publication entitled "Age
Page Newsletter" (R4 File, Tab A, p. 1).
2. Among other specifications, the IFB contained a
"Requirements" clause, which stated, in pertinent part:
This is a requirements contract for the items and for the
period specified herein. Shipment/delivery of items or
performance of work shall be made only as authorized by
orders issued in accordance with the clause entitled
"Ordering".4 The quantities of items specified herein are
estimates only and are not purchased hereby. Except as may
be otherwise provided in this contract, if the Government's
requirements for the items set forth herein do not result
in orders in the amounts or quantities described as
"estimated", it shall not constitute the basis for an
equitable price adjustment under this contract.5
Except as otherwise provided in this contract, the
Government shall order from the contractor all the items
set forth which are required to be purchased by the
Government activity identified on page 1 (R4 File, Tab A,
pp. 3-4.)6 [Emphasis added.]
3. As originally drafted, the contract specifications
estimated a print order frequency of approximately 15 to 26
orders (R4 File, Tab A, p. 5). However, after the contract
had been awarded, the Contracting Officer issued Contract
Modification No. 1, increasing the maximum estimate of the
frequency of orders to 60 print orders for the contract term
(R4 File, Tab D). Contract Modification No. 1 was signed by
the Contracting Officer on May 20, 1991, and by the Appellant
on May 28, 1991 (R4 File, Tab D).
4. The Contractor submitted a low bid of $82,281.87 (R4 File,
Tab B). On April 29, 1991, the Respondent issued Purchase
Order 91331 awarding the contract to the Appellant (R4 File,
Tab C). It is undisputed that during the contract term the
NIH only issued 36 print orders for the "Age Page Newsletter"
(R4 File, Tab F). See, Report of Presubmission Telephone
Conference (March 26, 1993), p. 3 (PTCR).
5. On September 11, 1992, the Appellant wrote to GPO asking
for an equitable price adjustment of $4,799.08 to pay for the
paper stock which it had purchased for contract performance
and which was excess after the contract expired (R4 File, Tab
D). The Contractor believed it was entitled to reimbursement
because "the (NIH) failed to request the required orders per
contract specifications which resulted in a paper inventory
overage . . ." (R4 File, Tab D). Furthermore, the Appellant
said that since it could not "use the paper for any other
program," the Government "should be liable for the cost of the
paper stock in inventory, . . ." (R4 File, Tab D).
6. On September 24, 1992, the Contracting Officer spoke to the
Appellant on the telephone, and told the Contractor that its
equitable adjustment claim could not be considered under a
requirements contract (R4 File, Tab E).
7. On September 25, 1992, the Contracting Officer issued a
written final decision rejecting the equitable adjustment
claim for the following reason:
This is a requirements contract. . . . As stated in [the
"Requirements" clause], the quantities are estimates only.
The Government agrees that, for the contract period, it
will place orders to satisfy its actual requirements, which
may be more or less than the estimate. The contractor is
not entitled to compensation if the Government's failure to
place orders results from either risks assumed by the
contractor or good faith decisions of the Government to
reduce its activity because of unanticipated changes in its
situation. Therefore, your request for an equitable
adjustment is denied (R4 File, Tab F). [Emphasis added.]
8. The Contractor appealed the Contracting Officer's final
decision to the Board on October 16, 1992.
ISSUE PRESENTED
1. Does the "Requirements" clause of the disputed contract
foreclose the Appellant from pursuing a valid claim for an
equitable adjustment based on the difference between the
contract's estimated quantities and the quantities actually
ordered during the term of the contract? Stated otherwise,
is the Appellant entitled to recover the cost of excess
paper stock which remained in inventory after its
requirements contract expired?
POSITION OF THE PARTIES7
This appeal involves the proper scope and meaning of the
"Requirements" clause of the contract. The essence of the
Appellant's position in this case is that its excess paper
stock was the result of the Government's failure to order
NIH's "Age Page Newsletter" at the frequency rate set forth in
Contract Modification No. 1. Complaint, p.1. The Appellant
claims that it had to purchase this paper before actual orders
under Contract Modification No. 1 were received, so that it
could meet the anticipated increased requirements of the
Government. PTCR, p. 4. Furthermore, the paper stock needed
for performance-Cream Vellum Cover-was not readily available
from local paper suppliers and had to be "special ordered" in
advance, with a lead time of approximately 8 to 10 weeks for
production and delivery. Complaint, p. 1; PTCR, p. 4-5.
PTCR, p. 4. Because this paper was manufactured to meet the
needs of this particular contract, it could not be returned to
the paper mill, or otherwise disposed of, once the Government
failed to place the number of estimated print orders.8 PTCR,
p. 5. The Appellant recognizes that the contract at issue is
a requirements contract and that the Government's needs are
shown as estimates only, but it believes that a shortfall of
approximately 22 orders from the estimated total quantity
constitutes the basis for an equitable price adjustment here.9
Complaint, p. 2. Finally, the Appellant relies on the
Respondent's previous reimbursement of the Contractor for
surplus paper at the end of the contract term in another
requirements contract-Program D270-S, which procured the
Arthur M. Sackler Gallery Calendar for the Smithsonian
Institution.10 PTCR, p. 5. See, Appellant's Exhibit No. 1.
Accordingly, for these reasons the Contractor contends that it
is entitled to similar equitable relief in this case. Id.
The Respondent, on the other hand, believes that no equitable
price adjustment is warranted in this case. PTCR, p. 4. In
that regard, the Respondent argues that the quantities shown
in the contract's "Frequency of Orders" clause were estimates
only, and the "Requirements" clause expressly states that the
difference between those estimates and the quantities actually
ordered shall not constitute the basis for an equitable
adjustment under the contract. PTCR, pp. 3-4. The Respondent
contends that the settled law of requirements contracts merely
obligates the Government to fill all of its actual needs for a
particular item from the contractor during the contract term.
Res. Brf., p. 6 (citing, Shader Contractors, Inc. v. United
States, 149 Ct.Cl. 535, 538, 276 F.2d 1, 4 (1960)). More
importantly, GPO tells us that under the law the contractor,
not the Government, assumes the risk that covered items and
quantities might not be ordered. Res. Brf., p. 6 (citing,
Medart, Inc. v. Austin, 967 F.2d 579 (Fed. Cir. 1992); Res. R.
Brf., p. 2. Therefore, in this case the Appellant took the
chance that the paper it stockpiled for performance might be
in excess of the Government's actual requirements. PTCR, p.
4. Indeed, the law presumes that a contractor bidding on a
"requirements" contract takes into consideration that the
amount of work it actually produces could vary from the
estimates in the solicitation. Res. Brf., pp. 7-8 (citing,
Propane Industrials, Inc. v. General Motors Corporation, 419
F.Supp. 214, 218 (W.D. Mo. 1977); Shader Contractors, Inc. v.
United States, supra, 149 Ct.Cl. at 538, 276 F.2d at 4; B & W
Press, GPOCAB 9-83 (March 8, 1984)).11 Furthermore, even if
no orders are placed at all under a requirements contract, so
long as the Government's failure to order is bona fide, it has
no liability because its only obligation is to use the
contractor to fill any needs it does have. Res. Brf., p. 7
(citing, Folge & Company v. United States, 135 F.2d 117 (4th
Cir. 1943); National Laundry Company v. United States, 63
Ct.Cl. 626 (1927); AGS-Genesys Corporation, ASBCA No. 35302,
89-2 BCA � 21,702; Alamo Automotive Service, Inc., ASBCA No.
8815, 63 BCA � 3,3830; Metro Industrial Painting Corporation,
ASBCA No. 6328, 62 BCA � 3,343). The Appellant has not
alleged bad faith by the Government, nor does it contend that
the Respondent failed to order all of its actual requirements
from the Contractor.12 R. Brf., p. 7. Moreover, it is an
inherent difficulty in requirements contract that the
contractor must have on hand the material and equipment
necessary to perform at least the estimated amount of work.
However, the law is clear that if the quantity actually
ordered falls below the estimate, the contractor cannot
recover for supplies purchased and not used. R. Brf., p. 8
(citing, Lulu's Appliances, GSBCA No. 2003, 66-1 BCA � 5,584;
University of Iowa, ASBCA No. 14581, 70-1 BCA � 8,218).
Finally, the Respondent also tells us that "Requirements"
clauses have been interpreted to preclude an equitable
adjustment. Res. Brf., p. 8 (citing, Central Data Processing,
Inc., Contract No. 1749 (January 7, 1975)). Accordingly, for
these reasons the Respondent urges the Board to affirm the
decision of the Contracting Officer, deny the request for an
equitable price adjustment, and dismiss the appeal. PTCR, p.
4; Res. Brf., p. 9.
CONCLUSIONS13
A. The "Requirements" clause in the disputed contract is a
standard one. Thus, the rights and obligations of the
parties are those traditionally defined by such clauses.
Accordingly, the Appellant is not entitled to recover the
cost of excess paper which remained in inventory after its
requirements contract had expired.
This is a very simple case. In that regard, the Board's
research discloses that the relevant GPO language, except for
a few minor word differences, copies the standard
"Requirements" clause set forth in the Federal Acquisition
Regulation (FAR) for Executive branch procurements.14 See,
FAR � 52.216-21 (Requirements). Perhaps more importantly, the
disputed clause, for all practical purposes, is a verbatim
repeat of the "Requirements" clause found in Executive branch
contracts prior to 1984.15 There is no confusion in the case
law about the scope and meaning of its terms. See, Shepard
Printing, supra, Sl. op. at 20 (citing, R.C. Swanson Printing
and Typesetting Company, GPO BCA 31-90 (February 6, 1992), Sl.
op. at 43-44; Export Packing & Crating Company, ASBCA No.
16133, 73-2 BCA � 10,066, at 47,215).
In that regard, the United States Claims Court (Claims Court)
has consistently defined a requirements contract as a:
. . . contract in which the purchaser agrees to buy all of
its needs of a specified material from a particular
supplier, and the supplier agrees, in turn, to fill all of
the purchaser's needs during the period of the contract.
Inland Container, Inc. v. United States, 206 Ct.Cl. 478,
482-483, 512 F.2d 1073 (1975); Ready-Mix Concrete Co., Ltd.
v. United States, 141 Ct.Cl. 168, 169, 158 F.Supp. 571
(1958); Gemsco, Inc. v. United States, 115 Ct.Cl. 109
(1950); Johnstown Coal & Coke Co. v. United States, 66
Ct.Cl. 616 (1929).
See, Media Press, Inc. v. United States, 215 Ct.Cl. 985, 986
(1977).16 As explained by the Claims Court in Torncello v.
United States:
Requirements contracts also lack a promise from the buyer
to order a specific amount, but consideration is furnished,
nevertheless, by the buyer's promise to turn to the seller
for all such requirements as do develop. Such contracts
clearly are enforceable on that basis. Brawley v. United
States, 96 U.S. 168, 172, 24 L.Ed. 622 (1878); Shader
Contractors, Inc. v. United States, 149 Ct.Cl. 535, 540-43,
276 F.2d 1, 4-6 (1960); Gavin at 244-48 [Gavin, Government
Requirements Contracts, 5 Pub.Cont.L.J. 234 (1972)]. The
entitlement of the seller to all of the buyer's
requirements is the key, for if the buyer were able to turn
elsewhere for some of its needs, then the contract would
not be distinguishable from an indefinite quantities
contract with no stated minimum, unenforceable as we have
stated.
Torncello v. United States, 681 F.2d 756, 761-62 (Ct.Cl. 1982).
[Emphasis added.] Thus, the earmark of a requirements contract
is the existence of an exclusive relationship between the
contractor and the Government; i.e., an understanding that the
contractor has the exclusive right and legal obligation to fill
all of the Government's needs for the work of the kind described
in the contract, and that the Government will purchase those
needs from no one other than the contractor. Ralph Construction,
Inc. v. United States, supra, 4 Cl.Ct. at 731; Torncello v.
United States, supra, 681 F.2d at 761; Automated Services, Inc.,
DOTBCA No. 1753, 87-1 BCA � 19,459, at 98,350; Dynamic Science,
Inc., supra, 85-1 BCA � 17,710, at 88,383.
Recently, the Board has had occasion to examine and interpret
the scope and meaning of the same "Requirements" clause which
appears in the Appellant's contract.17 Shepard Printing,
supra, Sl. op. at 20-27. As here, Shepard Printing involved
an appeal from the final decision of a GPO contracting officer
rejecting the contractor's request for an equitable adjustment
because the Government did not order the Department of Labor
Annual Report called for in its requirements contract. In
dismissing the appeal, the Board stated:
While a requirements contract creates an exclusive
relationship between the Government and the contractor, it
is not a guarantee either of the volume of work,18 or any
work at all. Under the terms of a "Requirements" clause
such as the one here, the Government's obligations are
merely to exercise due care in preparing its estimates,19
see, Crown Laundry and Dry Cleaners, Inc. v. United States,
39 CCF � 76,575 (Fed.Cl. September 22, 1993); Dynamic
Science, Inc., supra, 85-1 BCA � 17,710; Huff's Janitorial
Service, ASBCA No. 26860, 83-1 BCA � 16,518, and to order
from the contractor, and no one else, the supplies or
services "required to be purchased" by the ordering
activity, Skip Kirchdorfer, Inc., supra, 83-2 BCA � 16,713,
at 83,138; Trans-Student Lines, Inc., [ASBCA No. 20230],
75-1 BCA � 11,343, at 54,027. In the absence of bad faith,
the Government does not have to order supplies or services
which are not needed or which can be provided in-house.
See, Skip Kirchdorfer, Inc., supra, 83-2 BCA � 16,713, at
83,138; Arcon-Pacific Contractors, supra, 82-2 BCA �
15,838, at 78,516; Trans-Student Lines, Inc., supra, 75-1
BCA � 11,343, at 54,027 (citing, Export Packing & Crating
Company, supra, 73-2 BCA � 10,066; Machlett Laboratories,
Inc., ASBCA No. 16194, 73-1 BCA � 9,929).
Shepard Printing, supra, Sl. op. at 23-24. [Original Emphasis.]
The Board's reasoning, in essence, adopted the rationale of AGS-
Genesys Corporation, supra, 89-2 BCA � 21,702, one of the cases
cited by the Respondent, where the ASBCA observed:
When the Government enters into a requirements contract
that provides, as this one does, that the Government will
order from the contractor all the services required to be
purchased by the Government, all that is guaranteed is that
the Government will order whatever its outside purchase
needs are and that the estimates were made in good faith
with the exercise of due care. [Citations omitted.] . . .
The very nature of a requirements contract mandates its use
when the future is uncertain concerning the Government's
requirements. If existing needs were certain, a
requirements contract would not be necessary. While it is
unfortunate that a requirement did not arise in the basic 7
month term of the contract . . . there is no proof that the
Government failed to exercise due case in its estimate or
took any action in bad faith. [Citation omitted.]
AGS-Genesys Corporation, supra, 89-2 BCA � 21,702, at 109,108.
[Emphasis added.] See, Shepard Printing, supra, Sl. op. at
25-26.
This appeal is not unlike the situation confronting the ASBCA
in Command Tech Corporation, a case in which the contractor
received a requirements contract for the cleaning of air
filers from the Government's vehicle fleet. Command Tech
Corporation, ASBCA No. 40318, 90-3 BCA � 23,215. The number
of air filters to be cleaned was estimated by determining how
many of each type of filter was needed for the fleet of cars,
factoring in the number of times of probable use during a
rotational schedule, and planning for some of the filters to
be unserviceable and needing to be replaced. Id., at 116,493.
The contractor's winning bid was based on a multiple of the
unit price for each category of air filter times the estimated
quantity for each category. Id. The Government ordered less
than the estimated quantities, and the contractor sought
reimbursement for the balance. Id., at 116,495. Specifically,
the contractor claimed that since the Government ordered less
than the estimated quantities, it was left with "an excess of
labor, materials and more rented transportation than needed"
which it had allocated to the total quantity of air filters.
Id., at 116,496. Therefore, the contractor believed it was
entitled to compensation because the Government obligated
itself to purchase the total amount. Id. However, the
contractor, neither in its claim nor in its pleadings, alleged
that the Government was negligent in arriving at its estimates
for the air filters. Id., at 116,493. In denying the
contractor's request for an equitable price adjustment, the
ASBCA employed the following reasoning:
The quantities for the air filters are labeled in the
Schedule as "Contract Period Estimates" and the air filters
in such quantities are expressly not purchased by the
contract. Appellant was to be paid a firm-fixed price for
each filter actually cleaned and "if the Government's
requirements [did] not result in orders in the quantities
described as 'estimated' in the Schedule, that fact [was
not to] constitute the basis for an equitable price
adjustment". The Government does not have to reimburse
appellant for its indirect costs it allocates to the
estimated quantities of services not ordered under the
requirements contract. See Dynamic Science, Inc., ASBCA
No. 29510, 85-1 BCA � 17,710.
We are mindful of situations where contractors have
obtained relief because the Government has been negligent
in its preparation of the estimates in a requirements
contract. The Government is required to exercise due care
in the preparation of its estimates. Huff's Janitorial
Service, ASBCA No. 26860, 83-1 BCA � 16,518. There is no
evidence on this point. . . .[A]ppellant, neither in its
claim nor in its pleadings, even alleges that the
Government was negligent in arriving at its estimates for
the air filters, although it does state, in its brief, a
belief that the Government was negligent. While the
Government has the ultimate burden to show that it
exercised due care in preparing its estimate, it is under
no obligation to present evidence of due care until
appellant has made out a prima facie case to the contrary.
This, appellant has failed to do.
Command Tech Corporation, supra, 90-3 BCA � 23,215, at 116,496.
[Emphasis added.] See also, University of Iowa, supra, 70-1 BCA
� 8,218 (surplus supplies and packaging materials).
In the Board's view, the ASBCA's rationale in Command Tech
Corporation is equally applicable to this dispute. Simply
stated,
the Board believes that the fact that the Government did not
place orders for all of the estimated number of publications in
Contract Modification No. 1, does not entitle the Contractor to
reimbursement for the surplus paper stock, because the
"Requirements" clause expressly provides that a failure to order
the full estimated quantities would not constitute the basis for
an equitable adjustment (R4 File, Tab A, pp. 3-4). In other
words, the Respondent is not responsible, under this contract,
for absorbing the cost of the extra paper purchased by the
Appellant in anticipation of receiving more orders than it
actually did. While the facts in this case raise some doubts in
the Board's mind about the due care exercised by the Government
in estimating the quantities of the "Age Page Newsletter" which
might be ordered under the contract,20 there is no proof here
that the estimates were negligently prepared; indeed, no such
allegation has been made by the Appellant in this case. See,
Shepard Printing, supra, Sl. op. at 26. Thus, the Board in this
appeal reaches the question not decided in Shepard Printing,21
and holds that under the express language of "Requirements"
clause no equitable price adjustment is available to a contractor
in the absence of evidence that the Government has been negligent
in its preparation of its estimates. Moreover, in agreement with
the ASBCA, the Board also holds that while the Government has the
ultimate burden of proving that its estimates are reasonable, it
has no obligation to present evidence of reasonableness in the
absence of allegations by a contractor that the Government, in
fact, failed to exercise due care. Command Tech Corporation,
supra, 90-3 BCA � 23,215, at 116,496.
In the final analysis, by seeking payment from GPO for the
surplus paper stock, the Appellant is asking the Respondent to
insure it against losses which may occur as a normal business
risk when a contractor enters into a requirements contract
with the Government. However, the Board has recently held
that errors in business judgment do not warrant any relief.
Hurt's Printing Company, Inc., supra, Sl. op. at 10-11, fn. 14
(citing, Aydin Corporation v. United States, 229 Ct.Cl. 309,
669 F.2d 681 (1982); American Ship Building Company v. United
States, 228 Ct.Cl. 220, 654 F.2d 75 (1981)). See generally,
John Cibinic, Jr. and Ralph C. Nash, Jr., Formation of
Government Contracts 2d ed., (The George Washington
University, 1986), p. 481-82. This view is in harmony with
that expressed by the General Services Board of Contract
Appeals (GSBCA) in National Refrigerants, Inc., where the
contractor entered into a requirements contract for the supply
and delivery of estimated quantities of refrigerant gases to
the Government. National Refrigerants, Inc., GSBCA No. 7544,
85-2 BCA � 17,996, at 90,226. When the Government subsequently
modified the contract to lower the estimated fill weights of
the gas cylinders for safety reasons, the Appellant sought a
price increase because of the decreased fill weight per
cylinder.22 Id., at 90,226-27. The GSBCA rejected the claim,
stating:
The Government made no promise to buy precise amounts from
appellant, nor did it do so. The quantities were stated as
estimates. The estimates were not tied to the numbers of
cylinders but rather to pounds. The Government did not
guarantee that it would buy a given number of cylinders nor
that it would purchase a specific number of pounds of the
refrigerant gas. If appellant predicated its bid on its
ability to fill the cylinders to capacity, it did so as a
business judgment, not as a contract requirement.
National Refrigerants, Inc., supra, 85-2 BCA � 17,996, at 90,227.
[Emphasis added.] Similarly, in University of Iowa, a case cited
to the Board by the Respondent, the contractor's argument that it
entered into the contract in the belief that the Government's
estimated requirements were "relatively firm," was thought by the
ASBCA to:
[At most] . . . show a mutual mistake as to [those]
requirements. Relief for mutual mistake requires
reformation of the contract. This is a matter for the
General Accounting Office or the courts. It is beyond our
authority to grant.
University of Iowa, supra, 70-1 BCA � 8,218, at 38,214. Accord,
R.C. Swanson Printing and Typesetting Company, supra, Sl. op. at
26, fn. 14 (where the Board denied the contractor's request for
reinstatement of the contract because that form of equitable
relief was solely within the authority of the agency's
contracting officers). See also, Crow Fitting Company, Inc.,
ASBCA No. 25378, 81-1 BCA � 14,951. Accordingly, for these
reasons, the Board concludes that the Contractor's request for an
equitable price adjustment in this case is without merit, and the
appeal is denied. ORDER
The Board finds and concludes that the Appellant has neither
alleged nor proved that the Government negligently prepared
its estimates regarding the number of orders for the "Age
Page Newsletter" under the disputed requirements contract,
and thus the Contractor is not entitled to recover the cost
of excess paper which remained in inventory after the
contract expired. THEREFORE, the decision of the
Contracting officer is AFFIRMED, and the appeal is DENIED.
It is so Ordered.
January 31, 1994 STUART M. FOSS
Administrative Judge
_______________
1 The Contracting Officer's appeal file, assembled pursuant
to Rule 4 of the Board's Rules of Practice and Procedure, was
delivered to the Board on November 30, 1992. GPO Instruction
110.12, Subject: Board of Contract Appeals Rules of Practice
and Procedure, dated September 17, 1984, Rule 4(a) (Board
Rules). It will be referred to hereinafter as R4 File, with
an appropriate Tab letter also indicated. The R4 File
consists of six (6) documents identified as Tabs A through F.
2 By letter dated December 9, 1992, the Appellant advised the
Board that it had selected the optional Accelerated Procedure
to process its appeal. Board Rules, Rules 12.1(b) and 12.3.
3 Decisions under the Accelerated Procedure are normally
brief and contain only summary findings of fact and
conclusions. Board Rules, Rule 12.3(b). In this case,
however, the Board believes that the nature of the
controversy entitles the parties to a fuller explanation of
the facts, issues, and reasons for the Board's decision than
would be found in a typical Accelerated Procedure case. See,
Shepard Printing, GPO BCA 37-92 (January 28, 1994), Sl. op.
at 2, fn. 3; Hurt's Printing Company, Inc., GPO BCA 27-92
(January 19, 1994), Sl. op. at 2, fn. 3; RD Printing
Associates, Inc., GPO BCA 02-92 (December 16, 1992), Sl. op
at 2, fn. 3. The Board also notes that this decision, unlike
its opinions under the Small Claims (Expedited) Procedure,
may be cited as precedent in future appeals. Cf., Graphics
Image, Inc., GPO BCA 13-92 (August 31, 1992), Sl. op. at 2,
fn. 3; Board Rules, Rule 12.2(d).
4 The "Ordering" clause of the contract provided, in
pertinent part, that: "Items to be purchased under the
contract shall be ordered by the issuance of print orders by
the Government[.]" (R4 File, Tab A, p. 3). Since, the
contract was to be a "direct-deal" arrangement, the NIH was
responsible for issuance of the print orders during the term
of the agreement (R4 File, Tab A, p. 4). See, Printing
Procurement Regulation, GPO Publication 305.3 (September 1,
1988), Chap. XII, Sec. 1, � 2 (hereinafter PPR).
5 The contract's "Determination of Award" section also
provided, in pertinent part, that: ". . . [T]he following
units of production . . . are the estimated requirements to
produce one year's production under this contract. These
units do not constitute, nor are they to be construed as, a
guarantee of the volume of work which may be ordered under
this contract for a like period of time[.]" (R4 File, Tab A,
p. 11).
6 Apart from the usual specifications pertaining to printing,
binding and delivery of the publications in question, the
contract was also governed by applicable articles of GPO
Contract Terms, GPO Publication 310.2, effective December 1,
1987 (Rev. 9-88) (GPO Contract Terms), and GPO's Quality
Assurance Through Attributes Program, GPO Publication 310.1,
effective May 1979 (revised November 1989) (QATAP), which
were incorporated by reference in the Purchase Order (R4
File, Tab A, p. 2).
7 Only the Respondent submitted a written brief setting forth
its position on the issues in this appeal. See, Respondent's
Brief, dated April 23, 1993 (hereinafter Res. Brf.). The
Board's understanding of the positions of the parties is
based on the Appellant's Complaint, the Appellant's Exhibit
No. 1 (a copy of Program D270-S, a single award requirements
contract for the period beginning February 1, 1990, and
ending January 31, 1991, under which GPO procured the Arthur
M. Sackler Gallery Calendar for the Smithsonian Institution),
the Respondent's Answer, the Respondent's brief, and the
discussions at the presubmission telephone conference on
March 18, 1993.
8 The Appellant also says that if Contract Modification No. 1
had not been issued, it would not have needed to buy
additional paper to cover anticipated increased orders.
Complaint, p. 1. This "but for" argument sounds to the Board
as if the Contractor is alleging that it was "entrapped" into
purchasing the additional paper stock. In a recent decision,
the Board had occasion to consider "entrapment", as it
applied to Government contracts. See, Hurt's Printing
Company, Inc., supra, Sl. op. at 10-11, fn. 14. As noted in
Hurt's Printing Company, Inc., the doctrine of "entrapment"
is peculiar to criminal law. Id. (citing, United States v.
Berry, 661 F.2d 618 (7th Cir. 1981)). It is rarely found,
and even then usually only by analogy, in administrative
proceedings. Id. (citing, Transportation Enterprises, Inc.
v. National Labor Relations Board, 630 F.2d 421 (5th Cir.
1980), where the court held that when the National Labor
Relations Board first rules that it has no jurisdiction over
an employer and then reverses itself, it can not find the
employer guilty of an unfair labor practice for conduct
engaged in after the initial ruling, on which the employer
relied). There is nothing in the evidence of record here
which would support such an "entrapment" defense.
9 The Appellant arrives at this figure of 22 orders by
subtracting the number of actual orders (36) from the maximum
estimate (60), and crediting the Government with the 2
additional orders for which the paper was on hand (the excess
paper stock) for a total of 38 orders. Complaint, p. 1.
10 The Respondent first saw and received a copy of
Appellant's Exhibit No. 1 at the presubmission conference.
PTCR, p. 5, fn. 6. Its research disclosed that Program D270-
S was terminated for the convenience of the Government
because of extensive budget cuts at the Smithsonian
Institution. Res. Brf., p. 8, Attachment 1. Accordingly,
the Appellant was reimbursed for its surplus paper as part of
a termination settlement agreement, not an equitable
adjustment. Id., Attachment 3 (Contract Modification No. 3,
dated March 7, 1991). See, PPR, Chap. XIV, Sec. 2, � 3.i;
GPO Contract Terms, Contract Clauses, � 19(d). Apart from
the fact that the circumstances surrounding Program D270-S
are distinguishable from this case, the Board also notes that
on numerous occasions it has ruled that in interpreting the
language of a particular contract, it will not consider the
terms and specifications of contracts unrelated to the one
under review in the case before it. See, Shepard Printing,
supra, Sl. op. at 8-9, fn. 8; RD Printing Associates, Inc.,
supra, Sl. op. at 9, 13, fns. 9 and 15; B. P. Printing and
Office Supplies, GPO BCA 14-91 (August 10, 1992), Sl. op. at
15. The reason is that the Board's authority is purely
derivative and contractual, and is limited to deciding
disputes within the parameters of the contract under review.
See, e.g., The Wessel Company, Inc., GPO BCA 8-90 (February
28, 1992), Sl. op. at 32-33; Bay Printing, Inc., GPO BCA
16-85 (January 30, 1987), Sl. op. at 9; Peake Printers, Inc.,
GPO BCA 12-85 (November 12, 1986), Sl. op. at 6.
Consequently, the Board has no authority to consider legal
questions existing outside the contract itself. Automated
Datatron, Inc., GPO BCA 20-87 (March 31, 1989), Sl. op. at
4-5.
11 The Board was created by the Public Printer in 1984. GPO
Instruction 110.10C, Subject: Establishment of the Board of
Contract Appeals, dated September 17, 1984. Prior to that
time, appeals from decisions of GPO Contracting Officers were
considered by ad hoc panels of its predecessor, the GPO
Contract Appeals Board (GPOCAB). The Board has consistently
taken the position that it is a different entity from the
GPOCAB. See, The Wessel Company, Inc., supra, Sl. op. at
25, fn. 25. Nonetheless, it has also been the Board's policy
to follow the holdings of the ad hoc panels where applicable
and appropriate, but the Board differentiates between its
decisions and the opinions of those panels by citing the
latter as GPOCAB. See, e.g., Stephenson, Inc., GPO BCA 02-88
(December 20, 1991), Sl. op. at 18, fn. 20; Chavis and Chavis
Printing, GPO BCA 20-90 (February 6, 1991), Sl. op. at 9, fn.
9.
12 The Board has held on numerous occasions that because of
the strong presumption that Government officials properly and
honestly carry out their functions, an allegation of bad
faith must be established by "well-nigh irrefragable" proof.
See, e.g., Shepard Printing, supra, Sl. op. at 14, fn. 14;
Hurt's Printing Company, Inc., supra, Sl. op. at 11, fn. 15;
Shepard Printing, GPO BCA 23-92 (April 29, 1993), Sl. op. at
7, fn. 11; B. P. Printing and Office Supplies, supra, Sl. op.
at 16; Stephenson, Inc., supra, Sl. op. at 55; The Standard
Register Company, GPO BCA 4-86 (October 28, 1987); Sl. op. at
12-13. Also see, Karpak Data and Design, IBCA 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. Kalvar Corporation
v. United States, 543 F.2d 1298, 1302 (Ct.Cl. 1976), cert.
denied, 434 U.S. 830 (1977); Hurt's Printing Company, Inc.,
supra, Sl. op. at 11, fn. 15; Shepard Printing, supra, Sl.
op. at 7, fn. 11; Stephenson, Inc., supra, Sl. op. at 54.
13 The record on which the Board's decision is based consists
of: (1) the Appellant's letter, dated October 16, 1992,
noting an appeal from the Contracting Officer's decision and
containing its Complaint; (2) the Appellant's supplementary
letter, dated December 9, 1992; (3) Appellant's Exhibit No.
1, filed with the Board on March 17, 1993; (4) the R4 File
(Tabs A-F); (4) the Respondent's Answer, dated January 8,
1993; (5) the Report of Presubmission Telephone Conference,
dated March 26, 1993; and (6) the Respondent's Brief, dated
April 23, 1993, with attachments.
14 The relevant provisions of the 1984 revision to the FAR
"Requirements" clause reads as follows: "(a) This is a
requirements contract for the supplies or services specified,
and effective for the period stated, in the Schedule. The
quantities of supplies or services specified in the Schedule
are estimates only and are not purchased by this contract.
Except as this contract may otherwise provide, if the
Government's requirements do not result in orders in the
quantities described as 'estimated' or 'maximum' in the
Schedule, that fact shall not constitute the basis for an
equitable adjustment.". . . "(c) Except as this contract
otherwise provides, the Government all order from the
Contractor all the supplies or services specified in the
Schedule that are required to be purchased by the Government
activity or activities specified in the Schedule." See, FAR
� 52.216-21(a),(c) (Requirements).
15 The 1966 version of the "Requirements" clause, as set
forth in the Armed Service Procurement Regulation (ASPR),
provided, in pertinent part: "(a) This is a requirements
contract for the supplies or services specified in the
Schedule, and for the period set forth herein. Delivery of
supplies or performance of services shall be made only as
authorized by orders issued in accordance with the clause
entitled 'Ordering'. The quantities of supplies or services
specified herein are estimates only and are not purchased
hereby. Except as may be otherwise provided herein, in the
event the Government's requirements for supplies or services
set forth in the Schedule do not result in orders in the
amounts or quantities described as 'estimated' or 'maximum'
in the Schedule, such event shall not constitute the basis
for an equitable price adjustment under this contract[.]";
and "(b) Except as otherwise provided in this contract, the
Government shall order from the Contractor all the supplies
or services set forth in the Schedule which are required to
be purchased by the Government activity identified in the
'Ordering' clause." ASPR 7-1102.2(a),(b). See, e.g.,
Dynamic Science, Inc., ASBCA No. 29510, 85-1 BCA � 17,710, at
88,378; Skip Kirchdorfer, Inc., ASBCA No. 22997, 83-2 BCA �
16,713, at 83,133-34; Arcon-Pacific Contractors, ASBCA No.
25057, 82-2 BCA � 15,837, at 78,514. The Armed Services
Board of Contract Appeals (ASBCA) also recognizes a "limited
form" requirements contract, which substitutes the following
language for paragraph (b) above: "Except as otherwise
provided in this contract, the Government shall order from
the Contractor all the supplies or services of the Government
activity named in the Schedule which the activity may itself
furnish within its own capabilities." See, Dynamic Science,
Inc., supra, 85-1 BCA � 17,710, at 88,383; Maya Transit
Company, ASBCA No. 20186, 75-2 BCA � 11,552. Contra, Ralph
Construction, Inc. v. United States, 4 Cl.Ct.727, 731 (1984).
16 Pursuant to Title IX of the Federal Courts Administration
Act of 1992, Pub. L. No. 102, 106 Stat. 4506 (1992), the
United States Claims Court was renamed the United States
Court of Federal Claims, effective October 29, 1992.
17 Contract interpretation is clearly a question of law, see,
e.g., Pacificorp Capital, Inc. v. United States, 25 Cl.Ct.
707, 715 (1992), aff'd 988 F.2d 130 (Fed. Cir. 1993); Fortec
Contractors v. United States, 760 F.2d 1288, 1291 (Fed.Cir.
1985); P.J. Maffei Building Wrecking Company v. United
States, 732 F.2d 913, 916 (Fed. Cir. 1984); Fry
Communications, Inc.-InfoConversion Joint Venture v. United
States, 22 Cl.Ct. 497, 503 (Cl.Ct. 1991); Hol-Gar Mfg. Corp.
v. United States, 169 Ct.Cl. 384, 386, 351 F.2d 972, 973
(1965); General Business Forms, Inc., GPO BCA 2-84 (December
3, 1985), Sl. op. at 16 (citing, John C. Grimberg Company v.
United States, 7 Ct.Cl. 452 (1985)); RD Printing Associates,
Inc., supra, Sl. op. at 13, as is definition of the contract.
See, Ralph Construction, Inc. v. United States, supra, 4
Cl.Ct. at 731 (citing, Torncello v. United States, supra, 681
F.2d at 760). Any decision by this Board concerning such a
matter is reviewable by the Courts under the Wunderlich Act,
41 U.S.C. �� 321, 322. Fry Communications, Inc./
InfoConversion Joint Venture v. United States, supra, 22
Cl.Ct. at 501, fn. 6; General Business Forms, Inc., supra,
Sl. op. at 16.
18 This fact is expressly stated in the disputed contract's
"Determination of Award" clause (R4 File, Tab A, p. 11).
19 Since the Appellant has not alleged a lack of due care by
the Respondent in preparing its estimates, that issue is not
before the Board. Cf., Dynamic Science, Inc., supra, 85-1
BCA �17,710, at 88,382.
20 The original estimate for the publication shown in the
solicitation was between 15 to 26 print orders over the life
of the contract (R4 File, Tab A, p. 5). Less than a month
after the contract was awarded, the Contracting Officer
issued Contract Modification No. 1, which increased the
estimate of the maximum number of orders to 60 print orders,
or more than double the original estimate (R4 File, Tab D).
Indeed, the number of actual orders (36) was nearly 40
percent more than the original maximum estimate. This tells
the Board that the original estimate, on which the Appellant
predicated its bid, was clearly undervalued. However, there
is no evidence in the record to indicate how the Government
arrived at its estimated figures, nor has the Contractor
alleged that they are unreasonable. Indeed, the Appellant's
"guesstimate" of its paper requirements in response to
Contract Modification No. 1 was fairly close to the number of
actual orders in this case; i.e., the surplus paper stock is
only enough to satisfy 2 more orders, not 24. See, note 9
supra.
21 See, Shepard Printing, supra, Sl. op. at 27, fn. 27.
22 As in this case, both parties in National Refrigerants,
Inc. had signed the contract modification. National
Refrigerants, Inc., supra, 85-2 BCA � 17,996, at 90,227.
See, Contract Modification No. 1 (R4 File, Tab D).