BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
K.C. PRINTING COMPANY ) Docket No. GPO BCA 02-91
Jacket Nos. 278-448, 278-449 )
and 278-450 )
Purchase Order 54958 )
DECISION AND ORDER
This appeal, timely filed by K.C. Printing Company (Appellant
or Contractor), 968 Atlantic Avenue, Brooklyn, New York 11238,
is from the final decision of Contracting Officer James L.
Leonard, of the U.S. Government Printing Office's (Respondent
or GPO or Government) Printing Procurement Department,
Washington, DC 20401, dated January 9, 1991, assessing excess
reprocurement costs following a default of its contract for
failure to meet the delivery schedule (R4 File, Tab E).1 For
the reasons which follow, the Contracting Officer's decision
is AFFIRMED, and the appeal is DENIED.2
I. BACKGROUND
The facts in this appeal are essentially undisputed and are
briefly set out here only to the extent necessary for the
purposes of this decision.
1. On November 2, 1990, the Respondent issued Purchase
Order 54958 to the Appellant awarding it a contract to
produce three sets of pamphlets for the U.S. Army Corps of
Engineers (COE) (R4 File, Tab A).3 The estimated cost of
the contract was $5,124.00, based on the Contractor's bid
(R4 File, Tab A).
2. Under terms of the contract, the Appellant was to
complete delivery of the pamphlets to the COE by November
30, 1990 (R4 File, Tab A). However, on December 13, 1990,
the COE notified GPO that the pamphlets had not been
received as of that date (R4 File, Tab B).
3. On December 18, 1990, after obtaining the concurrence
of GPO's Contract Review Board, the Contracting Officer
terminated the Appellant's contract for default because of
the Contractor's failure to meet the delivery schedule (R4
File, Tabs C and D). The termination notice also advised
the Appellant that it would be liable for any excess
reprocurement costs (R4 File, Tab D). It is undisputed
that the contract was defaulted without affording the
Appellant an opportunity to "cure" the delinquent delivery.
4. Almost immediately the Contracting Officer solicited
new bids for the work (R4 File, Tab D-1). Although the
Contracting Officer contacted six potential contractors, he
received only two bids-one from West Shore Printing for
$19,255.00 and the other from Hiller Industries for
$18,764.00 (R4 File, Tab D-1). On January 8, 1991, the
Contracting Officer awarded the repurchase contract to
Hiller at its bid price (R4 File, Tabs D-1 and K).4 Hiller
completed the work and was paid by Government check on
February 27, 1991 (Check No. 30537679) (R4 File, Tab M).5
Meanwhile, on January 9, 1991, the Contract Officer
notified GPO's Financial Management Service (FMS) of the
reprocurement and asked it to recover the additional costs
incurred by the Government ($13,640.00) from the Appellant
(R4 File, Tab E).
5. When the Appellant was informed of the repurchase
action, its response was to write a letter to the Board,
dated January 28, 1991, challenging the Contracting
Officer's reprocurement award to Hiller on the ground that
the contract price of $18,764.00 was "excessively high",
and asking the Board to make "an inquiry into the procedure
of the new award" (R4 File, Tab E-1). The Contractor
argued that since the second lowest bid on the original
contract was $6,800.00 (submitted by American Litho), while
the third lowest was for $8,760.00 (submitted by West Shore
Printing), there was no justification for awarding the
repurchase contract to Hiller at a price of $18,760.00 (R4
File, Tab E-1).
6. On being informed that the Appellant had filed an
appeal with the Board,6 the Contracting Officer reviewed
his repurchase decision. Thereafter, by letter dated
February 27, 1991, the Contracting Officer informed the
Contractor that upon re-examination of the contract file,
he was reducing the excess reprocurement cost liability
from $13,640.00 to $4,201.00,7 based on the price quotation
of K.S. Press, the fourth lowest bidder on the original
contract, but the next lowest responsible offeror, who had
bid $9,325.00 for the job (R4 File, Tab G). As explained
by the Contracting Officer:
This determination was made to mitigate the
contractor's costs. On the original solicitation,
award [could not have been] made to American Litho.
American Litho had a compliance and quality problem.
The next contractor was Westshore [sic] Printing who
wanted to revise his price by a considerable
increase. This was reflected in the new
solicitation.
See, R4 File, Tab H.
7. On March 1, 1991, the Contracting Officer told FMS to
recover the lower amount (R4 File, Tab I). Thereafter, on
March 4, 1991, the Contracting Officer issued GPO Contract
Modification No. 1 reflecting the change and sent it to the
Appellant (R4 File, Tab J).8
II. QUESTIONS PRESENTED
1. Was the default action defective because the
Contracting Officer failed to provide the Appellant with an
opportunity to "cure" the delinquency before terminating
the contract?
2. Is the Appellant's reason for not meeting the delivery
schedule, namely that it lacked the funds to buy supplies
until its bank completed a merger with another financial
institution, such an excuse as would forgive its failure to
perform?
3. Has the Government proved its entitlement to recover
excess reprocurement costs in the amount of $4,201.00?
III. POSITIONS OF THE PARTIES
The Appellant does not dispute that it failed to deliver the
pamphlets to the COE by the contract "due date." Instead, the
Contractor maintains that the default termination was
procedurally defective because it was entitled to a "Cure
Notice" to correct the delivery problem, and the Contracting
Officer neglected to provide one. See, RPTC, pp. 5-6.
Furthermore, the Appellant believes that the delivery delay
was excused by the fact that during the time set for
performance its bank was the subject of a takeover by another
financial institution,9 and it had no access to the money in
its account because the account was frozen.10 RPTC, p. 6.
Consequently, until the bank reorganization was completed, the
Appellant was without the wherewithal to order supplies. See,
Appellant's Brief on Order Requiring Dismissal of Motion to
Dismiss, dated October 12, 1992, p. 2. The Contractor asserts
that if the shipping date had been extended 10 days by the
issuance of a proper "Cure Notice", it could have produced and
delivered the pamphlets because the funding problem would have
been resolved. RPTC, p. 6. Finally, at the presubmission
conference on January 26, 1993, the Appellant stated that it
would accept the Contracting Officer's lower figure regarding
its excess reprocurement cost liability, as reflected in
Contract Modification No. 1, if the Board determined that the
contract was properly terminated. Id.
The Respondent, on the other hand, contends that a "Cure
Notice" was not required prior to the termination of the
contract for default in this case, because the Appellant had
failed to deliver the pamphlets within the time specified in
the contract. See, Res. Brf., pp. 5-6; RPTC, p. 6. As for
the issue of excess reprocurement costs, GPO submits that the
Contracting Officer repurchased the defaulted pamphlets in
accordance with accepted legal precepts so that the Appellant
is liable for the Government's extra costs in the amount of
$4,201.00.11 Res. Brf., p. 7. First, the Respondent notes
that Hiller's reprocurement contract was for the identical
supplies, and contained the same terms and conditions as the
Appellant's original contract. Res. Brf., pp. 8-10 (citing, B
& M Construction, Inc., AGBCA No. 90-165-1, 93-1 BCA ¶ 25,431;
Old Dominion Security, Inc., GSBCA No. 9126, 90-2 BCA ¶
22,745; Luis Martinez, AGBCA Nos. 86-1-148-1, 86-270-1, 87-3
BCA ¶ 20,219; Marmac Industries, Inc., ASBCA No. 12158, 72-1
BCA ¶ 9,249). Second, GPO argues that the Contracting Officer
reprocured the terminated items within a reasonable time
following the default. Res. Brf., pp. 10-11 (citing, John L.
Hartsoe, AGBCA No. 88-116-1, 93-2 BCA ¶ 25,614; Birken
Manufacturing Company, ASBCA No. 32590, 90-2 BCA ¶ 22,845;
Sequal, Inc., ASBCA No. 30838, 88-1 BCA ¶ 20,382; Disan
Corporation, ASBCA Nos. 21297, 22221, 79-1 BCA ¶ 16,677).
Third, the Respondent claims that it used the most efficient
method of reprocurement under the circumstances and acted
reasonably to minimize the excess costs. Res. Brf., pp.
11-13 (citing, Ketchikan Pulp Company v. United States, 20
Cl.Ct. 164 (1990); Puroflow Corporation, ASBCA No. 36058, 93-3
BCA ¶ 26,191; Barrett Refining Corporation, ASBCA Nos. 36590,
37093, 91-1 BCA ¶ 23,566; Mid-America Painters, Inc., ENG BCA
No. 5703, 91-1 BCA ¶ 23.367; American Photographic Industries,
Inc., ASBCA Nos. 29272, 29832, 90-1 BCA ¶ 22,491). Finally,
the Government states that it has presented evidence of
Hiller's final payment so that the Appellant's excess
reprocurement cost liability is based upon a sum certain.
Res. Brf., pp. 13-14 (citing, Sterling Printing, Inc., GPO BCA
20-89 (March 28, 1994); Patty Armfield, AGBCA Nos. 91-185-1,
92-141-1, 92-143-1, 93-1 BCA ¶ 25,235; Pyramid Packing, Inc.,
AGBCA No. 86-128-1, 92-2 BCA ¶ 24,831). Accordingly, the
Respondent urges the Board to uphold the default termination,
and allow the excess reprocurement cost assessment against the
Contractor.12 Res. Brf., p. 14.
IV. CONCLUSIONS13
Fundamentally, this appeal asks the Board to decide whether or
not the Appellant's contract was erroneously defaulted, and if
the termination was proper, is the Contractor nonetheless
excused from liability for excess reprocurement costs?
Therefore, it is worthwhile to repeat the applicable legal
principles at the outset.
First, GPO's "Default" clause provides that a contracting
officer may, upon written notice of default to the contractor,
terminate a contract, in whole or in part, if the contractor
fails to: (1) deliver the supplies or perform the required
services within the time specified or any extension which may
have been granted; (2) make progress on the work, so as to
endanger performance of the contract; or (3) perform any of
the other provisions of the contract. See, GPO Contract
Terms, Solicitation Provisions, Supplemental Specifications,
and Contract Clauses, GPO Publication 310.2, Effective
December 1, 1987 (Rev. 9-88), Contract Clauses, ¶ 20(a)(1)(i),
(ii),(iii) (Default) (hereinafter GPO Contract Terms).
Further, where a contract is terminated for default and the
work must be reprocured, the contractor will be held
responsible for excess procurement costs and possible
liquidated damages. GPO Contract Terms, Contract Clauses, ¶¶
20(b), 22(d). However, the contractor is excused from paying
such reprocurement costs or damages if the failure to perform
or to deliver on time results from causes beyond the control
and without the fault or negligence of the contractor.14 GPO
Contract Terms, Contract Clauses, ¶¶ 20(c), 22(e), 23. Such
causes include, but are not limited to, acts of God or of the
public enemy, acts of the Government in either its sovereign
or contractual capacity, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, and unusually severe
weather-but in each case, the failure to perform must be
beyond the control and without the fault or negligence of the
contractor. GPO Contract Terms, Contract Clauses, ¶ 20(c).
See, Printing Unlimited, GPO BCA No. 21-90 (November 30,
1993), Sl. op. at 16; Shepard Printing, GPO BCA 23-92 (April
23, 1993) Sl. op. at 11; Chavis and Chavis Printing, GPO BCA
20-90 (February 6, 1991), Sl. op. at 11. Where the failure to
perform is caused by the default of a supplier or
subcontractor, the cause of the default must be beyond the
control of both the contractor and subcontractor, and without
the fault or negligence of either, in order for the contractor
not to be liable for any excess costs for failure to perform,
unless the subcontracted supplies or services could have been
secured from other sources in sufficient time to meet the
required delivery schedule. GPO Contract Terms, Contract
Clauses, ¶ 20.(d). See, Chavis and Chavis Printing, supra,
Sl. op. at 11.
Second, because a default termination is a drastic action
which may only be taken for good cause and on the basis of
solid evidence,15 see, Shepard Printing, supra, Sl. op. at
10-11; R.C. Swanson Printing and Typesetting Company, GPO BCA
31-90 (February 6, 1992), Sl. op. at 25, aff'd, Richard C.
Swanson, T/A R.C. Swanson Printing and Typesetting Company,
No. 92-128C (U.S. Claims Court, October 2, 1992);16
Stephenson, Inc., GPO BCA 02-88 (December 20, 1991), Sl. op.
at 20 (citing, Mary Rogers Manley d/b/a Mary Rogers Real
Estate, HUDBCA No. 76-27, 78-2 BCA ¶ 13,519; Decatur Realty
Sales, HUDBCA No. 75-26, 77-2 BCA ¶ 12,567), the Government
has the burden of proving the basis for the default, while the
contractor has the burden of showing that its failure to
perform was excusable, see, Shepard Printing, supra, Sl. op.
at 11; R.C. Swanson Printing and Typesetting Company, supra,
Sl. op. at 28; Chavis and Chavis Printing, supra, Sl. op. at
11. Accord, Lisbon Contractors v. United States, 828 F.2d 759
(Fed. Cir. 1987)); Switlik Parachute Company v. United States,
216 Ct.Cl. 362 (1978); J.F. Whalen and Company, AGBCA Nos.
83-160-1, 83-281-1, 88-3 BCA ¶ 21,066; B. M. Harrison
Electrosonics, Inc., ASBCA No. 7684, 1963 BCA ¶ 3,736. If the
Government fails to meet its burden of proof, then the
termination is converted into one of convenience and the
contractor is allowed to recover for the work performed. See,
GPO Contract Terms, Contract Clauses, ¶ 20(g). Cf.,
Stephenson, Inc., supra, Sl. op. at 17-18; Chavis and Chavis
Printing, supra, Sl. op. at 9.
Third, where, as here, the default termination is based on
untimely performance, the contractor's burden of proof is
four-fold: (1) to prove affirmatively that the delay was
caused by or arose out of a situation which was beyond the
contractor's control and it was not at fault or negligent; (2)
to show that performance would have been timely but for the
occurrence of the event which is claimed to excuse the delay;
(3) to show that it took every reasonable precaution to avoid
foreseeable causes for delay and to minimize their effect; and
(4) to establish a precise period of time that performance was
delayed by the causes alleged. See, Chavis and Chavis
Printing, supra, Sl. op. at 12 (and cases cited therein).
This burden must be carried by substantial evidence-
unsupported reasons by way of explanation are not enough-and
the contractor must also show that the delay in contract
performance was due to unforeseeable causes beyond its control
and without any contributory negligence on its part. See,
Chavis and Chavis Printing, supra, Sl. op. at 12-13 (and cases
cited therein).
Finally, a default termination is a discretionary act which
can be challenged on an abuse of discretion standard. See,
Graphics Image, Inc., GPO BCA 13-92 (August 31, 1992), Sl. op.
at 24-28; Shepard Printing, supra, Sl. op. at 12. Accord,
Darwin Construction Company, Inc. v. United States, 811 F.2d
593 (Fed. Cir. 1987); Quality Environment Systems v. United
States, 7 Cl.Ct. 428 (1985); Schlesinger v. United States, 390
F.2d 702 (Ct. Cl. 1968); Executive Elevator Service, Inc.,
VABCA No. 2152, 87-2 BCA ¶ 19,849, mot. for reconsider.
denied, 87-3 BCA ¶ 20,083. The burden is on the contractor to
prove abuse of discretion. See, Shepard Printing, supra, Sl.
op. at 12. Accord, Kit Pack Company, Inc., ASBCA No. 33135,
89-3 BCA ¶ 22,151; Lafayette Coal Company, ASBCA No. 32174,
89-3 BCA ¶ 21,963; Quality Environment Systems, Inc., ASBCA
No. 22178, 87-3 BCA ¶ 20,060.
Applying these principles to the facts in the record, the
Board reaches the following conclusions:
A. The Contracting Officer was not required to
issue a "Cure Notice" before terminating the
Appellant's contract for default.
1. It could not be clearer that the Appellant's contract
was defaulted by the Contracting Officer for a failure to
"[d]eliver the supplies or to perform the services within
the time specified or any extension, thereof;. . .". GPO
Contract Terms, Contract Clauses, ¶ 20(a)(1)(i).17 Indeed,
the Contracting Officer's termination letter said as much
(R4 File, Tab D ("You are notified that your contract . . .
is hereby terminated for default because of your failure to
meet our specification (schedule).") The Appellant does
not dispute the Contracting Officer's finding in that
regard. Rather, the Contractor contends that the
Contracting Officer's termination action was procedurally
defective because he failed to issue a "Cure Notice"
affording it an opportunity to correct the delivery problem
before the contract was defaulted. See, RPTC, pp. 5-6.
2. The Appellant is mistaken. As a general rule, no
"cure notice" is required where a contract is to be
terminated because of the contractor's failure to timely
deliver or perform. See, B. P. Printing and Office
Supplies, GPO BCA 22-91 (February 5, 1993), Sl. op. at 12;
Shepard Printing, supra, Sl. op. at 13; Stephenson, Inc.,
supra, Sl. op. at 19-20. Accord, Chambers-Thompson Moving
and Storage, Inc., ASBCA No. 43260, 93-3 BCA ¶ 26,033, at
129,408; Sonico, Inc., ASBCA Nos. 31110, 34269, 89-2 BCA ¶
21,611. The law does provide a limited exception to this
principle when a contractor has timely shipped
nonconforming goods which deviate from the specifications
in only minor respects, see, Radiation Technology, Inc. v.
United States, 177 Ct.Cl. 227, 366 F.2d 1003 (1966), but
such is not this case.18 In light of the Appellant's
admission that it did not meet the contract delivery date
in this case, the Board concludes that the Contracting
Officer did not commit procedural error by failing to issue
a "Cure Notice" to the Appellant before terminating the
contract for default, and therefore, the Appellant's
contentions to the contrary are without merit.19 See, B.
P. Printing and Office Supplies, supra, Sl. op. at 15;
Chavis and Chavis Printing, supra, Sl. op. at 13.
B. The Appellant's reason for not meeting the
delivery schedule, namely that it lacked the funds
to buy supplies until its bank completed a merger
with another financial institution, is not such an
excuse as would forgive its failure to perform.
1. As indicated above, under the "Disputes" clauses a
defaulting contractor is excused from the consequences of
its failure to perform or make timely deliveries in
accordance with the contract terms, if it can demonstrate
that its delinquency results from causes beyond its control
and without its fault or negligence. GPO Contract Terms,
Contract Clauses, ¶¶ 20(c), 22(e), 23. In this case, the
Appellant offers as an excuse for its failure to deliver
the pamphlets, the fact that it was without the funds to
order supplies during the time set for performance because
its bank was merging with another financial institution and
its account was frozen. RPTC, p. 6. This excuse is
without legal merit.
2. It is "black letter" law that a contractor is
responsible for having the labor, plant, equipment,
material and finances adequate for contract performance
prior to making a contract commitment with the Government.
See, Chavis and Chavis Printing, supra, Sl. op. at 14-15.
The reason for this rule is simple-implicit in a
contractor's promise to perform is its assurance that it
has the ability to perform. Id., Sl. op. at 14.
3. The basic rule with regard to contractor finances was
stated in a recent decision by the Armed Services Board of
Contract Appeals (ASBCA). In Dependable Metal Products,
Inc., ASBCA Nos. 41446, 41449, 94-3 BCA ¶ 26,963, the
contractor's failure to provide evidence from its bank that
the bank's negative financing decision was based on
Government action or inaction, as contended by the
contractor, resulted in the ASBCA's rejection of the
contractor's attempt to excuse its default based on its
financial problems. As the ASBCA observed:
While we hear appellant argue that repudiation was
compelled, in part, by a decision of a lender not to
provide additional financing, the general rule is
that a contractor assumes the risk of assuring
adequate financing to perform the work. Southeastern
Airways Corporation v. United States [29 CCF ¶
82,261], 673 F.2d 368 (Ct.Cl. 1982); International
Equipment Services, Inc., ASBCA Nos. 21104, 23170,
83-2 BCA ¶ 16,675. There is an exception where the
contractor can show that financing was denied because
of Government wrongdoing. TGC Contracting
Corporation v. United States [32 CCF ¶ 73,655], 736
F.2d 1512 (Fed. Cir. 1984).
Dependable Metal Products, Inc., supra, 94-3 BCA ¶ 26,963, at
134,264. Compare, Litchfield Manufacturing Corporation v. United
States, 338 F.2d 94 (Ct.Cl. 1964) (bank vice president testified
that bank declined financing because of the Government's failure
to timely deliver necessary tooling). Similarly, as another
contract appeals board noted:
It is fundamental that the contractor assumes the
risk of providing funds to perform the contract.
Consequently, neither undercapitalization nor
insolvency (actual or impending) will excuse a
failure to perform. Consolidated Airborne Systems,
Inc. v. United States [10 CCF ¶ 73,125], 172 Ct.Cl.
588, 597, 348 F.2d 941, 946 (1965); Willems
Industries, Inc. v. United States [8 CCF ¶ 71,693],
155 Ct.Cl. 360, 295 F.2d 822 (1961); International
Equipment Services, Inc., ASBCA Nos. 21104, 23170.
83-2 BCA ¶ 16,675; Medical Fabrics Company, ASBCA No.
1148, 66-2 BCA ¶ 5,887.
See, El Greco Painting Company, ENG BCA No. 5693, 92-1 BCA ¶
24,522, at 122,379. See also, Sierra Tahoe Manufacturing, Inc.,
GSBCA No. 12679, 94-2 BCA ¶ 26,771; Centennial Leasing, GSBCA No.
12037, 94-1 BCA ¶ 26,398; Swiss Products, Inc., ASBCA No. 40031,
93-3 BCA ¶ 26,163; Local Contractors, Inc., ASBCA No. 37108, 92-1
BCA ¶ 24,491; Ralcon, Inc., ASBCA Nos. 38059, 38191, 40398,
41376, 92-2 BCA ¶ 24,971.
4. In the Board's view, the general rule is dispositive
of this case. It was the Appellant's obligation to have
proper and adequate financial resources to perform the
contract. See, Ralcon, Inc., supra, 92-2 BCA ¶ 24,971, at
124,435. The Contractor's inability to acquire sufficient
funds for performance is not such an excuse "beyond its
control and without its fault or negligence" within the
meaning of the "Disputes" clause, unless it could show that
its financial incapacity was Government caused. See, Local
Contractors, Inc., supra, 92-1 BCA ¶ 24,491, at 122,235-36
(and cases cited therein). Financial problems not caused
by wrongful Government action do not form the basis to
excuse a failure to deliver. Midwest Satellite Equipment,
Inc., ASBCA No. 40713, 91-2 BCA ¶ 23,907, at 119,759;
Unimach Manufacturing, ASBCA No. 39883, 90-3 BCA ¶ 22,968,
at 115,348. The Appellant has not shown any improper
conduct on the part of the Government affecting its ability
to acquire sufficient funds. While it is unfortunate that
the Appellant was denied access to its bank account at the
time it was expected to produce and deliver the pamphlets,
there is not a scintilla of proof that the Government was
responsible for freezing the account, nor has the
Contractor even suggested such a thing. Furthermore,
despite the Board's direction to the Appellant at the
presubmission telephone conference that it obtain a letter
from its bank corroborating the fact that it had no access
to its bank account during the contract performance period,
see, RPTC, pp. 7-8, the Contractor has failed to provide
any evidence from its bank whatsoever to support its
contention that its account was frozen. See, Dependable
Metal Products, Inc., supra, 94-3 BCA ¶ 26,963, at 134,264.
Accordingly, the Appellant has not met its burden of proof
with respect to excusing its failure to make a timely
shipment of the pamphlets under Purchase Order 54958, and
the Contracting Officer was justified in terminating the
contract for default. See, Chavis and Chavis Printing,
supra, Sl. op. at 15. Accord, Midwest Satellite Equipment
, Inc., supra, 91-2 BCA ¶ 23,907, at 119,759.
C. The Respondent has sustained is burden of proof
with regard to the Appellant's liability for
excess reprocurement costs.
1. The assessment of excess reprocurement costs is
considered a Government claim. See, Sterling Printing,
Inc., supra, Sl. op. at 50-51 (and cases cited therein).
Consequently, the Government has the burden of
demonstrating the propriety of the repurchase and proving
its entitlement to the amount of excess costs it claims.
Id., Sl. op. at 51 (and cases cited therein). In doing so,
the Government must satisfy five criteria to establish an
entitlement to recovery against a defaulting contractor,
namely, it must show that: (a) the reprocurement contract
was performed under substantially the same terms and
conditions as the original contract; (b) it acted within a
reasonable time following default to repurchase the
supplies; (c) it employed a reprocurement method which
would maximize competition under the circumstances; (d) it
obtained the lowest reasonable price; and (e) the work has
been completed and final payment made so that the excess
costs assessment is based upon liability for a sum
certain.20 Id., Sl. op. at 52-53 (and cases cited
therein). Furthermore, the Government claim must be
supported by evidence in the record as to each element of
the claim. Id., Sl. op. at 53 (and cases cited therein).
Failure to satisfy even one criterion may result in a
reduction of the excess costs claimed. Id., Sl. op. at
53-54 (and cases cited therein). Measuring the repurchase
action in this case against the above standards, the Board
concludes that the Respondent has satisfied all of the
elements necessary to sustain an entitlement to excess
reprocurement costs.
2. First, the Board's own comparison of the original and
reprocurement contracts leaves no question but that the
reprocurement contractor, Hiller, was asked to produce and
deliver the identical pamphlets, under essentially the same
terms and conditions, as those in the Appellant's original
contract. Compare, R4 File, Tabs A and L. The Appellant
does not allege otherwise. Both contracts procure
pamphlets with the same functional purpose and use, and
there is no significant difference between their terms and
conditions. Indeed, the only observable difference between
the two contracts was the assignment of three new Jacket
numbers to the repurchase contract. Accordingly, the Board
concludes that the Respondent has met the first condition
for excess reprocurement costs, namely, that the
reprocurement contract purchased the same or similar items,
and was performed under substantially the same terms and
conditions as the original contract. See, Sterling
Printing, Inc., supra, Sl. op. at 62-63. Accord, B & M
Construction, Inc., supra, 93-1 BCA ¶ 25,431; Zan Machine
Company, ASBCA No. 39462, 91-3 BCA ¶ 24,085; Boston
Pneumatics, Inc., ASBCA Nos. 26188, 26190, 26825, 26984,
27605, 27606, 87-1 BCA ¶ 19,395.
3. Second, the Board has no trouble in concluding that
the reprocurement was accomplished in a timely fashion.
See, Sterling Printing, Inc., supra, Sl. op. at 63. The
record in this case shows that the Appellant's contract was
terminated for default on December 18, 1990 (R4 File, Tab
D). The reprocurement contract was awarded to Hiller 21
days later, on January 8, 1991 (R4 File, Tabs D-1 and K).
Accordingly, considering that this time frame included both
the Christmas and New Year's holidays, on this record the
Board finds that the Respondent acted with reasonable
dispatch and without undue delay to reprocure the three
defaulted pamphlets, and thus it has satisfied its
evidentiary burden. See, Sterling Printing, Inc., supra,
Sl. op. at 64-65. Accord, Astro-Space Laboratories, Inc.
v. United States, 200 Ct.Cl. 282, 470 F.2d 1003 (1972);
Puroflow Corporation, supra, 93-3 BCA ¶ 26,191; John L.
Hartsoe, supra, 93-2 BCA ¶ 25,614; Sequal, Inc., supra,
88-1 BCA ¶ 20,382; Disan Corporation, supra, 79-1 BCA ¶
16,677.
4. Third, it also seems clear that in reprocuring the
defaulted contract, the Respondent chose a method which was
designed to maximized competition and obtain the best or
lowest reasonable price for the Government under the
circumstances. See, e.g., Scalf Engineering Co. and Pike
County Construction Co., A Joint Venture, IBCA No. 2328,
89-3 BCA ¶ 21,950, at 110,425 (citing, Techcraft Systems,
VABCA Nos. 1894, 2027, 86-3 BCA ¶ 19,320); Sequal, Inc.,
supra, 88-1 BCA ¶ 20,382, at 103,067. The test used in
determining the adequacy of a repurchase solicitation is
one of reasonableness, and "the principal criterion is that
a sufficient number of potential contractors are contacted
in the reprocurement solicitation to assure competitive
prices in order to discharge the Government's obligation to
mitigate the excess costs of the defaulted contractor."
See, Century Tool Company, GSBCA No. 4007, 78-1 BCA ¶
13,050, at 63,735, mot. for reconsid. denied, 78-2 BCA ¶
13,345. The burden is on the Government to prove that the
reprocurement method it selected was conducive to obtaining
full and open competition, and that it acted reasonably to
mitigate or minimize excess costs.21 Cf., Sam's Electric
Company, GSBCA Nos. 9359, 10044, 90-3 BCA ¶ 12,128; Fancy
Industries, Inc., ASBCA No. 26578, 83-2 BCA ¶ 16,659. In
most cases, the Government satisfies this burden by showing
that it used sealed bid advertising to repurchase defaulted
supplies and services.22 See, e.g., H & H Manufacturing
Company v. United States, 168 Ct.Cl. 873 (1964); Lester
Brothers, Inc. v. United States, 151 Ct.Cl. 536 (1960);
Star Food Processing, Inc., ASBCA Nos. 34161, 34163, 34164,
34165, 35544, 35545, 35546, 35547, 90-1 BCA ¶ 22,390; Fancy
Industries, Inc., supra, 83-2 BCA ¶ 16,659, at 82,842;
Erickson Enterprises, AGBCA 77-168, 79-1 BCA ¶ 13,628.
Furthermore, it is not uncommon for the Government to
solicit those firms which bid on the original
procurement.23 See, e.g., American Marine Upholstery
Company v. United States, 170 Ct.Cl. 564, 345 F,2d 577
(1965); Mid-America Painters, Inc., supra, 91-1 BCA ¶
23,367. Indeed, such a mitigation step is considered
presumptively reasonable, even if the reprocurement price
itself seems unreasonable. See, e.g., Mid-America
Painters, Inc., supra, 91-1 BCA ¶ 23,367 (the Government
acted reasonably in taking the second low bid in the
original solicitation despite the fact that the
reprocurement price was 174 percent above the original
contract). The record with respect to the mechanics of the
reprocurement in this case contains the following: (a) a
copy of the Government's post-default estimates, dated
January 7, 1991, for printing the three pamphlets (R4 File,
Tab L); (b) a copy of the abstract of bids for the
reprocured work showing that the Respondent solicited six
potential contractors, including West Shore Printing, the
third lowest bidder on the original contract, and received
two bids, of which Hiller's was the lowest (R4 File, Tab
D-1); (c) a copy of the reprocurement purchase order (R4
File, Tabs D-1 and K); and (d) a computer printout showing
that the Government paid Hiller for completing the job (R4
File, Tab M). On the evidence before it, the Board is
satisfied that the reprocurement method chosen by the
Respondent was reasonable in that a sufficient number of
potential contractors were contacted to assure competitive
prices, see, Century Tool Company, supra, 78-1 BCA ¶
13,050, at 63,735, and that further solicitation of other
firms would not have resulted in lower prices and therefore
would have been unnecessary, cf., Sterling Printing, Inc.,
supra, Sl. op. at 73. Accordingly, the Board believes that
the Respondent has met its burden with respect to the third
criterion necessary to establish an entitlement to recovery
of excess reprocurement costs against a defaulting
contractor. Cf., Sterling Printing, Inc., supra, Sl. op.
at 73.
5. Fourth, mitigation of damages also requires the
Government to show that it obtained the lowest reasonable
reprocurement price.24 See, e.g., Sequal, Inc., supra,
88-1 BCA ¶ 20,382; Fancy Industries, Inc., supra, 83-2 BCA
¶ 16,659. However, the mere fact that there is a
significant price increase in the reprocurement does not
render it unreasonable in the face of Government due care
and diligence.25 See, Foster Refrigerator Corporation,
ASBCA No. 34021, 89-2 BCA ¶ 21,591; Boston Pneumatics,
Inc., supra, 87-1 BCA ¶ 19,395; Fancy Industries, Inc.,
supra, 83-2 BCA ¶ 16,659. Thus, while it is true in this
case that Hiller's successful reprocurement bid
($18,764.00) was more than three times the Appellant's
original offer ($5,124.00), it was still lower than West
Shore Printing's bid of $19,255.00 (R4 File, Tabs A and
D-1). Besides, the Contracting Officer's obligation was to
obtain the best or lowest reasonable price for the
Government under circumstances, see, e.g., Scalf
Engineering Co. and Pike County Construction Co., A Joint
Venture, supra, IBCA No. 2328, 89-3 BCA ¶ 21,950, at
110,425; Sequal, Inc., supra, 88-1 BCA ¶ 20,382, at
103,067, not the defaulted Contractor.26 See, Barrett
Refining Corporation, supra, 91-1 BCA ¶ 23,566, at 118,145.
On the other hand, basing the Appellant's excess cost
liability solely on Hiller's reprocurement offer would have
created a problem for the Board in this appeal because the
law is also clear that the mere selection of the low bid,
either on a reprocurement or the original contract, in and
of itself, does not establish a reasonable price for the
purposes of the mitigation rule. See, Marine Engine
Specialties Corporation, ASBCA No. 20521, 76-1 BCA ¶
11,891. That is, a contracting officer cannot "blindly
accept" a reprocurement contractor's price and be said to
have acted in a reasonable and prudent manner; some inquiry
by the contracting officer is required. See, Sterling
Printing, Inc., supra, Sl. op. at 76-77. Accord, B & M
Construction, Inc., supra, 93-1 BCA ¶ 25,431, at 126,669
(citing, Wise Instrumentation and Control, Inc., NASA BCA
Nos. 1072-12, 673-7, 75-2 BCA ¶ 11,478, mot. for reconsid.
denied, 76-1 BCA ¶ 11,641); Marine Engine Specialties
Corporation, supra, 76-1 BCA ¶ 11,891. In this case, such
an inquiry was made by the Contracting Officer following
the Contractor's appeal to the Board. As a result of his
review of the reprocurement file, the Contracting Officer
reduced the Appellant's excess reprocurement cost liability
from $13,640.00 to $4,201.00, based on the $9,325.00 bid of
K.S. Press, the fourth lowest bidder on the original
contract, but next lowest responsible offeror, and issued a
Contract Modification to that effect (R4 File, Tabs G and
J). Furthermore, the Contracting Officer promptly notified
FMS that his earlier request to recover additional costs of
$13,640.00 from the Appellant was rescinded, and the lower
amount should be recovered instead (R4 File, Tabs E and I).
The Board is fully satisfied that the Contracting Officer,
by conducting a post-appeal examination of the contract
file and deciding to lower the Appellant's obligation for
excess costs based on K.S. Press's bid on the original
contract, was acting in a reasonable and prudent manner and
fully met his responsibility "on behalf of the original
contractor . . . [to] not unnecessarily do or not do things
which result in an increased cost to the defaulted
contractor." See, William A. Hulett, supra, 93-1 BCA ¶
25,389, at 126,459. Moreover, the Board believes that the
revised excess reprocurement cost figure represents the
lowest reasonable reprocurement price, and warrants the
conclusion that the Government has met its responsibility
to mitigate its damages. See, Sterling Printing, Inc.,
supra, Sl. op. at 84-85 (". . . the most common method used
for recalculating excess costs is simply to take the
difference between the original contract price and the
second low bid on the original contract."). Accord, Mid-
America Painters, Inc., supra, 91-1 BCA ¶ 23,367; Birken
Manufacturing Company, supra, 90-2 BCA ¶ 22,845; Sequal,
Inc., supra, 88-1 BCA ¶ 20,382; Fancy Industries, Inc.,
supra, 83-2 BCA ¶ 16,659; Zero-Temp, Inc., ASBCA No. 215,
78-1 BCA ¶ 13,212. Accordingly, the Board finds that the
Respondent has carried its burden of proof of showing that
the excess reprocurement costs assessed reasonably
minimized the liability of the Appellant. Cf., Sterling
Printing, Inc., supra, Sl. op. at 77.
6. Finally, in order to establish a right to excess
reprocurement costs, the Government must demonstrate that
the repurchased work has been completed, and final payment
made to the reprocurement contractor so that the excess
costs assessment is based upon liability for a sum certain.
Whitlock Corporation v. United States, 141 Ct.Cl. 758, 159
F.Supp. 602 (1958), cert. denied, 358 U.S. 815 (1958). See
also, e.g., John L. Hartsoe, supra, 93-2 BCA ¶ 25,614;
Lafayette Coal Company, ASBCA Nos. 32174, 33311, 87-3 BCA ¶
20,116. Where the Government fails to offer evidence that
a reprocurement contract was awarded, performed, or paid
for, the assessment of excess costs against a defaulted
contractor will be denied. See, Sterling Printing, Inc.,
supra, Sl. op. at 85. Accord, Patty Armfield, supra, 93-1
BCA ¶ 25,235; Pyramid Packing, Inc., supra, 92-2 BCA ¶
24,831; Scalf Engineering Co. and Pike County Construction
Co., A Joint Venture, supra, 89-3 BCA ¶ 21,950. Here, the
relevant documentation presented by the Respondent consists
of the reprocurement contract and a computer printout of
the payment history for the three Jacket numbers concerned
(R4 File, Tabs D-1, K and M). In the Board's view, this
evidence is sufficient to prove that Hiller was awarded the
contract, produced and delivered the pamphlets, and
received final payment for the work. Accordingly, the
Board finds that the Respondent has carried its burden of
proof with respect to the last element necessary to
establish its entitlement to excess reprocurement costs.
Cf., Sterling Printing, Inc., supra, Sl. op. at 83. Also
cf., Patty Armfield, supra, 93-1 BCA ¶ 25,235; Pyramid
Packing, Inc., supra, 92-2 BCA ¶ 24,831; Scalf Engineering
Co. and Pike County Construction Co., A Joint Venture,
supra, 89-3 BCA ¶ 21,950.
ORDER
Considering the record as a whole, the Board finds and
concludes that: (1) no "Cure Notice" was required before the
Appellant's contract could be terminated for default; (2) the
Appellant's lack of funds because of the merger of its bank
with another financial institution is not such a reason as
would excuse its failure to deliver the pamphlets by the
contract due date; and (3) the Respondent has sustained is
burden of proof with regard to the Appellant's liability for
excess reprocurement costs. THEREFORE, the Contracting
Officer's decisions terminating the Appellant's contract for
default and assessing excess reprocurement costs, as set forth
in Contract Modification No. 1, are hereby AFFIRMED, and the
appeal is DENIED.
It is so Ordered.
February 22, 1995 STUART M. FOSS
Administrative Judge
_______________
1 The Contracting Officer's appeal file, assembled pursuant
to Rule 4 of the Board's Rules of Practice and Procedure,
was delivered to the Board on March 19, 1991. GPO
Instruction 110.12, Subject: Board of Contract Appeals Rules
of Practice and Procedure, dated September 17, 1984 (Board
Rules), Rule 4(a). It will be referred to hereafter as the
R4 File, with an appropriate Tab letter also indicated. As
originally submitted, the R4 File consisted of thirteen (13)
documents identified as Tabs A through J, and Tabs D-1, E-1
and E-2. However, before the record was settled Counsel for
GPO sought leave to add three (3) additional documents to
the R4 File on the issue of excess reprocurement costs
namely: (1) the reprocurement contract; (2) the Government's
estimates for printing and binding; and (3) a Declaration
from Robert D. Colvin, with a computer printout showing
payment to the reprocurement contractor. See, Respondent's
Second Motion for Enlargement of Time to File Additional
Documentation Relating to the Issue of Excess Reprocurement,
dated September 23, 1994; Notice of Filing, dated October
13, 1994. The Respondent's request was granted by the
Board. See, K.C. Printing Company, GPO BCA 02-91, Order
Granting Respondent's Second Motion for Enlargement of Time
to File Additional Documentation and Establishing a Revised
Briefing Schedule, dated November 25, 1994 (Order Granting
Respondent's Second Motion). The three (3) added documents
appear in the R4 File, as Tabs K, L and M, respectively.
2 As indicated in the Board's Order of November 25, 1994,
the Board was tempted to exercise its authority under Rule
31, sua sponte, to dismiss the appeal for failure to
prosecute because its efforts to contact the Appellant by
mail and telephone since April 13, 1993, have been
unsuccessful, nor has the Contractor communicated with the
Board in that time, and thus it seems clear that the appeal
has been abandoned. Board Rules, Rule 31. See, Order
Granting Respondent's Second Motion, at 4, fn. 3. In the
past, the Board, on its own initiative, has exercised its
discretion to dismiss appeals for want of prosecution. See,
e.g, Rosemark, GPO BCA 30-90 (April 22, 1994); Bedrock
Printing Company, GPO BCA 05-91 (April 10, 1992). Accord,
The Work Force Reforestration, Inc., AGBCA No. 88-215-1,
89-1 BCA ¶ 21,373. However, the Board also noted that since
the crucial issue in this case involves a Government claim,
which is still outstanding, namely one for the recovery of
excess reprocurement costs against the Appellant, and in its
opinion the Respondent was entitled to a ruling on the
merits of its claim. Hence, the Board did not exercise its
Rule 31 authority in this case. See, Order Granting
Respondent's Second Motion, at 4, fn. 3.
3 Each pamphlet was covered by a separate GPO Jacket number,
namely, 278-448, 278-449 and 278-450, respectively (R4 File,
Tab A).
4 The work was reprocured under three new Jacket numbers,
namely, 286-863, 286-864 and 286-865 (R4 File, Tabs D-1 and
L). It should be noted that the Government's total estimate
for all three jobs was $21,424.00 (the estimates for Jacket
Nos. 286-863, 286-864 and 286-865 were $10,778.00,
$5,823.00, and $5,823.00, respectively) (R4 File, Tab L).
5 In that regard, the actual costs of Jacket Nos. 286-863,
286-864 and 286-865 turned out to be $4,073.60, $9,393.60,
and $4,358.60, respectively (R4 File, Tab M).
6 The appeal was docketed by the Board on February 15, 1991.
Board Rules, Rule 3.
7 At the presubmission telephone conference conducted by the
Board on January 26, 1993, Counsel for GPO stated that the
reduced excess reprocurement cost amount was $4,111.00.
See, Report of Presubmission Telephone Conference, dated
April 30, 1993, p. 4 (hereinafter RPTC). In her brief to
the Board on November 18, 1994, Counsel for GPO used both
$4,201.00 and $4,111.00 as excess reprocurement cost
figures. See, Respondent's Brief, November 18, 1994, pp. 7,
14 (hereinafter Res. Brf.). The Board's own calculations
confirm that $4,201.00 is the correct amount of excess
reprocurement costs in this case. In any event, the
difference between the two figures-$90.00-is de minimis.
8 Although the Contract Modification stated that it would
become effective when signed by both parties, the R4 File
file copy only bears the Contracting Officer's signature.
Moreover, during the preliminary stages of this appeal, the
Appellant expressly denied that the Contracting Officer had
furnished it with a copy of the Contract Modification. See,
Order Requiring Dismissal of Default, dated July 30, 1991,
p. 2. Accordingly, during the presubmission telephone
conference on January 26, 1993, the Board directed the
Respondent to furnish a copy of the Contract Modification
signed by both parties. See, Report of Presubmission
Telephone Conference, dated April 30, 1993, p. 7 (RPTC).
The Respondent was unable to locate such a copy in its
files. Consequently, from an evidentiary standpoint, the
Board is essentially dealing with a unilateral modification.
9 The Board takes judicial notice of the fact that the banks
in question, the Banco de Ponce and the Banco Popular, were
located in Puerto Rico.
10 At the presubmission telephone conference held on January
26, 1993, the Appellant was asked to furnish the Board with
a letter from its bank corroborating that the Contractor had
no access to its bank account during the contract
performance period. RPTC, pp. 7-8. However, the Appellant
never complied with the Board's request.
11 See, note 7 supra.
12 Both at the presubmission conference and in her brief,
Counsel for GPO maintained that the Contracting Officer's
decision to reduce the amount of excess reprocurement costs
after the appeal was filed, mooted the issues raised in the
appeal. See, RPTC, pp. 5, 7; Res. Brf., p. 6. In light of
its decision in this case, the Board finds it unnecessary to
address the Government's "mootness" argument.
13 The record on which the Board's decision is based
consists of: (a) the Appellant's letter, dated January 28,
1991, noting an appeal from the Contracting Officer's
decision; (b) the document submitted by the Contractor,
dated July 30, 1991, entitled "Order Requiring Dismissal of
Default", dated July 30, 1991, which the Board deemed to
meet the requirements of a Complaint, see, Order Requiring
Respondent to File [an] Answer, dated November 4, 1991; (c)
the R4 File, Tabs A-M; (d) the Respondent's Answer, dated
November 14, 1991; (d) the document submitted by the
Appellant, dated October 12, 1992, entitled "Appellant's
Brief on Order Requiring Dismissal of Motion to Dismiss";
(e) the Report of Presubmission Telephone Conference, dated
April 30, 1993; and (f) the Respondent's Brief, dated
November 18, 1994.
14 While the excusable events listed in the "Default"
clause, all of which must be beyond the control and without
the fault or negligence of the contractor, are set forth in
the context of relieving the contractor from responsibility
for excess reprocurement costs, it is well-settled that the
same occurrences extend the time available for performance
and make termination prior to that time improper. See,
e.g., FKC Engineering Company, ASBCA No. 14856, 70-1 BCA ¶
8,312.
15 Default terminations-as a species of forfeiture-are
strictly construed. See, D. Joseph DeVito v. United States,
188 Ct.Cl. 979, 413 F.2d 1147, 1153 (1969). See also,
Murphy, et al. v. United States, 164 Ct.Cl. 332 (1964); J.
D. Hedin Construction Co. v. United States, 187 Ct.Cl. 45,
408 F.2d 424 (1969).
16 On October 29, 1992, certain provisions of the Federal
Courts Administration Act of 1992, Pub. L. No. 102-572, 106
Stat. 4506 (1992), became effective. Pursuant to Title IX,
the United States Claims Court was renamed the United States
Court of Federal Claims.
17 Such clauses have uniformly been held to apply not only
to late deliveries of the contracted goods, Stephenson,
Inc., supra, Sl. op. at 19 (citing, Chavis and Chavis
Printing, supra, Sl. op. at 12-15; Jomar Enterprises, Inc.,
GPO BCA 13-86 (May 25, 1989), Sl. op. at 3-5), but also to
the timely delivery of nonconforming supplies. Id. (citing,
KOPA Kopier Produckte, ASBCA No. 29,471, 85-3 BCA ¶ 18,367; Meyer
Labs, Inc., ASBCA No. 18,347, 77-1 BCA ¶ 12,539). See also,
Delta Industries, Inc., DOT BCA No. 2601, 94-1 BCA ¶ 26, 318;
Industrial Data Link Corporation, ASBCA No. 315, 91-1 BCA ¶
23,382; Air, Inc., GSBCA No. 8847, 91-1 BCA ¶ 23,352. The
rationale for this dual application of the default clause is
simple. As explained in a leading text on the subject of public
contracts: "While these clauses explicitly make untimely
performance the basis for the default action, it is important to
recognize that nearly every Government contract spells out the
contractor's required performance in terms of the nature of the
product or service which is to be delivered or performed as well
as the time by which these performance efforts are to be
completed. Thus, in order for the contractor to render `timely
performance,' two basic requirements must be satisfied. The
product, service or construction work must conform to the
required design/performance characteristics, and the product must
be delivered or the work completed by the specified due date."
[Emphasis added.] John Cibinic, Jr. & Ralph C. Nash, Jr.,
Administration of Government Contracts 2d ed., (The George
Washington University, 1986), p. 677.
18 Under this so-called "substantial compliance" rule, a
defaulting contractor is afforded an opportunity to correct
minor defects in shipments to the Government. Cf., B. P.
Printing and Office Supplies, supra, Sl. op. at 12;
Stephenson, Inc., supra, Sl. op. at 24, 48-54. Also cf.,
Air, Inc., supra, 91-1 BCA ¶ 23,352, at 117,112.
19 It should be noted that GPO's printing procurement
regulation, like the procurement rules of other Federal
agencies, recommends the issuance of a show cause letter,
"where practicable," prior to the default termination of a
contract for failure to make timely deliveries or perform
services within the time required by the contract. GPO
Printing Procurement Regulation, GPO Publication 305.3 (Rev.
10-90), Ch. XIV, Sec. 1, ¶ 3(c)(1) (PPR). Accord, Lewis B.
Udis v. United States, 7 Cl. Ct. 379, 385-86 (1985). The
Contracting Officer did not issue a show cause letter prior
to terminating the contract in this case. It seems to the
Board that he simply made the determination that it was
impracticable to issue such a show cause letter under the
circumstances herein. That decision was within his
discretion. Since the Appellant has not objected to absence
of a show cause letter in this case, the Board will not
disturb the Contracting Officer's judgment. Cf., Stabbe
Senter Press, GPO BCA 13-85 and 19-85 (May 12, 1989), Sl.
op. at 53. In any event, the omission of a "show cause
notice" by the Government is not generally a procedural
defect to a termination based on the contractor's failure to
make timely deliveries or perform timely services.
Stephenson, Inc., supra, Sl. op. at 20, fn. 22. See also,
Kit Pack Company, Inc., supra, 89-3 BCA ¶ 22,151, at
111,486-87 (citing, H. N. Bailey & Associates, ASBCA No.
21,300, 77-2 BCA ¶ 12,681, at 61,553).
20 Whether the Government's repurchase was improper, and if
so, what is the amount of reasonable excess costs under the
circumstances, are questions of fact. See, Sterling
Printing, Inc., supra, Sl. op. at 50 (citing, Cable Systems
and Assembly Company, ASBCA No. 17844, 73-2 BCA ¶ 10,172, at
47,892).
21 However, it should be noted that despite the general
rule, the law allows a contracting officer to limit
competition for the repurchase if the situation demands it-
e.g., the Government's need to assure a quick award to a
firm which could begin work almost immediately-since a
reprocurement is technically a purchase for the defaulted
contractor's account. See, e.g., William A. Hulett, AGBCA
Nos. 91-230-3, 92-133-3, 92-196-3, 93-1 BCA ¶ 25,389, at
126,459; Old Dominion Security, Inc., supra, 90-2 BCA ¶
22,745, at 114,165 (citing, Camrex Reliance Paint Company,
GSBCA No. 6870, 85-3 BCA ¶ 18,376; Century Tool Company,
GSBCA No. 3999, 76-1 BCA ¶ 11,850); Sequal, Inc., supra,
88-1 BCA ¶ 20,382, at 103,067. Thus, appeals boards usually
apply a "reasonable person" standard when confronted with a
challenge to a contracting officer's reprocurement of a
defaulted contract. In other words, "[t]he duty the
Government owes the defaulted contractor in reprocuring for
its account is not one of perfection, but one of
reasonableness and prudence under the circumstances." See,
Barrett Refining Corporation, supra, 91-1 BCA ¶ 23,566, at
118,145. See also, Mid-America Painters, Inc., supra, 91-1
BCA ¶ 23,367, at 117,232. This duty is to be carried out
within the confines of Federal procurement statutes,
regulations, policies and directives, and in pursuit of the
Government's own best interests, whether or not that results
in a lower price for a defaulted contractor. See, Barrett
Refining Corporation, supra, 91-1 BCA ¶ 23,566, at 118,145.
22 GPO procedures are consistent with this general practice
in Government reprocurements. See, PPR, Chap. XIV, Sec. 1,
¶ 3.f.(2). However, the printing procurement regulation
also provides that if the Contracting Officer is
repurchasing a quantity of items not in excess of the
undelivered quantity terminated for default, he does not
have to advertise; i.e., the reprocurement can be
accomplished through negotiation. Id. That may have been
the case here.
23 In fact, if the Government fails to make a reasonable
effort at contacting the original bidders, the result may
result in a denial or reduction of the excess cost
assessment. See, e.g., Associated Cleaning, Inc., supra,
91-1 BCA ¶ 23,360; Old Dominion Security, Inc., supra, 90-2
BCA ¶ 22,745; Barrett Chemical Company, Inc., supra, 77-2
BCA ¶ 12,625.
24 In fulfilling the obligation to secure the best price for
the Government, a contracting officer must follow the same
standard of reasonableness and prudence under the
circumstances which he/she exercised in the timing and
selecting of the method of reprocurement. See, William A.
Hulett, supra, 93-1 BCA ¶ 25,389; Barrett Refining
Corporation, supra, 91-1 BCA ¶ 23,566; Mid-America Painters,
Inc., supra, 91-1 BCA ¶ 23,367.
25 On the other hand, in the absence of negotiations or some
other explanation for the increase in the price of
repurchased supplies, most appeals boards will reduce the
amount of recoverable excess costs. See, e.g., Puroflow
Corporation, supra, 93-3 BCA ¶ 26,191; Sequal, Inc., supra,
88-1 BCA ¶ 20,382; Solar Laboratories, Inc., ASBCA No.
19957, 76-2 BCA ¶ 12,115, at 58,195.
26 See, note 21 supra.