Appeal of Bay Ridge Press
Filed: July 22, 1983
Decision: September 15, 1983
Panel 4-82



Preliminary Statement

On January 12, 1983, this panel of the U.S. Government Printing
Office (GPO) Board of Contract Appeals issued a decision in favor
of an appeal submitted by Bay Ridge Press (hereafter the
contractor).  The contract to produce printed material which the
contractor had with the GPO had been terminated for default
because of the contractor's alleged poor performance and its
alleged refusal to accept work under the contract.  The default
was appealed and this panel ruled that the contractor had cured
its failure to make progress.  As there were no other grounds for
finding the contractor in default, the panel found that the
termination was improper.  The default termination was then
converted to a termination for convenience and remanded to the
Contracting Officer to take appropriate action in accordance with
the contract procedures set out in Articles 2-17 and 2-18(e) of
Contract Terms No. 1, GPO Publication 310.2, revised October 1,
1980.  Exhibit 2 of the Appeal File.  This document was
incorporated by reference into the Specifications of the contract
and remains binding on this panel for purposes of this action.
Exhibit 1.  The specifications were incorporated by reference
into the Purchase Order for this contract.  Exhibit 4.


   The substance of the instant dispute arises because of the
   failure of the contractor and the Contracting Officer to agree
   to the compensation that is due to the contractor under the
   termination for convenience clause of the contract.  On July
   22, 1983, the contractor filed this appeal with the panel,
   alleging that the Contracting Officer's rejection of a claim
   for $75,000, that the contractor had described as a "margin of
   profit had [the] contract been completed" was improper.  After
   receipt of this appeal, the panel requested both parties
   supply it with any documentation or written argument relating
   to the contractor's claim.  Both parties took the opportunity
   to respond.

   The record indicates that this $75,000 claim relates solely to
   the contractor's demand to be paid for profits lost because
   the Government terminated the contract.  A contractor's
   recovery under a termination for convenience is based upon its
   incurred costs; those costs being the unreimbursed costs of
   performance.  G.L.Christian & Associates v. United States, 160
   Ct.Cl. 1, 11, 15-17 (1963), cert. denied. 375 U.S. 954 (1963).
   This right to recovery only for work actually performed is set
   out in Article 2-17 of the Contract Terms No. 1, supra; the
   applicable portion of which reads as follows:

(d) If the contractor and the Contracting Officer fail to agree
as provided in paragraph (c) upon the whole amount to be paid to
the contractor by reason of the termination of work pursuant to
this article, the Contracting Officer shall, subject to any
review required by the GPO's regulations in effect as of the date
of execution of the contract, determine the amount, if any, due
to the contractor by reason of the termination and shall pay to
the contractor the amounts determined as follows:
(1) For completed articles accepted by the Government . . . and
not previously paid for, a sum equivalent to the aggregate price
for such articles computed in accordance with the price(s)
specified in the contract, appropriately adjusted for any saving
of freight or other charges;
(2) The total of -
(i) The costs incurred in the performance of the work
(ii) The cost of settling and paying claims arising out of the
termination of work under subcontracts or orders as provided in
(b)(5) of this article, which are properly chargeable to the
terminated portion of the contract . . .; and
(iii)A sum, as profit on (i) above, determined by the
Contracting Officer to be fair and reasonable:  Provided,
however, That if it appears that the contractor would have
sustained a loss on the entire contract had it been completed, no
profit shall be included or allowed under this subparagraph (iii)
and an appropriate adjustment shall be made reducing the amount
of the settlement to reflect the indicated rate of loss.
(Emphasis added.)

This formula for recovery must be used in cases where the
contractor was defaulted for termination and later that
termination was converted to a termination for convenience.  See
Article 2-18(e).  Since we are dealing with such a conversion,
the contractor can only be compensated for work actually
performed and any profit that can be ascribed to that work.
Profit anticipated over the term of the contract and now lost
because of the shortened term is not recoverable.  Therefore, the
contractor's appeal on its claim for its anticipated profits is
denied in its entirety. 1/


1/ The contractor has submitted a document identified as Claim
Form With Detailed Explanations.  This document presents a claim
for compensation different from the claim involved in this
appeal.  As it is necessary for a Contracting Officer to
determine the validity of any claim before the filing of an
appeal before the Board of Contract Appeals, this panel does not
intend to address the contents of this document.  See Article
2-17, supra.