BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401


In the Matter of           )
                           )
the Appeal of              )
                           )
PRINTGRAPHICS              )      Docket No. GPOBCA 04-97
Jacket No. 794-074         )
Purchase Order R-8232      )

For the Appellant:  Printgraphics, Vandalia, Ohio, by Steve
Kistler, pro se.

For the Government:  Kerry L. Miller, Esq., Associate General
Counsel, U.S. Government Printing Office.

Before BERGER, Ad Hoc Chairman.

DECISION AND ORDER1

   Printgraphics (Appellant), 1170 Industrial Park Drive,
   Vandalia, Ohio, appeals the assessment of excess reprocurement
   costs following the termination for default of its contract
   identified as Jacket 794-074, Purchase Order R-8232.  For the
   reasons that follow, the appeal is GRANTED.

I. BACKGROUND

   1.   On September 10, 1996 the contract, for the production of
   46,000 sets of a "Pay Advice Mailer," was awarded to the
   Appellant at a price of $1,931.54.  Rule 4 File, Tab E.2
   2.   On December 10, the contract was terminated for default
   after the Appellant twice was unable to produce an acceptable
   product.  Rule 4 File, Tab I.
   3.   The Contracting Officer conducted a reprocurement by
   soliciting quotations from potential vendors, with delivery
   required by December 16.  Two responses were received.  Moore
   Business Forms, the only other competitor on the original
   competition, submitted a quotation for the same
   price-$2,195.58-it had quoted originally.  However, it offered
   a delivery date of December 27.  The other vendor, Specialized
   Printed Forms, Inc., quoted a price of $4,997.  Rule 4 File,
   Tab M.  That vendor, during preaward conversations with GPO,
   subsequently informed GPO that it could deliver only a portion
   of the items by December 16, and would need until December 23
   to deliver the rest.  When Moore Business Forms, in response
   to a GPO inquiry, indicated that it could not deliver a
   partial quantity by December 16, GPO contacted the customer
   agency to determine if its needs warranted paying the higher
   price for a partial delivery by December 16.  The agency
   responded that it was almost out of the mailers and would need
   the partial delivery to meet a December 20 pay day.
   Declaration of GPO Contracting Officer Michael J. Atkins
   (hereafter Atkins Declaration).  A purchase order was then
   issued to Specialized Printed Forms, Inc., calling for
   delivery of four cartons by December 16 and the remainder by
   December 23.  Rule 4 File, Tab N.
   4.   Excess reprocurement costs in the amount of $3,065.46,
   representing the difference between the original contract
   price and the reprocurement purchase order price of $4,997,
   were then assessed against the Appellant.  Rule 4 File, Tab O.

II. DISCUSSION

   The Appellant does not challenge the termination of its
   contract for default; it seeks relief only for what it views
   as "excessive charges" for the reprocurement.
   The "Default" clause of the contract, GPO Contract Terms,
   Solicitation Provisions, Supplemental Specifications, and
   Contract Clauses, Contract Clauses,  20, GPO Pub. 310.2,
   effective December 1, 1987 (Rev. 9-88), provides that the
   Government, upon terminating a contract for default, "may
   acquire, under the terms and in the manner the Contracting
   Officer considers appropriate, supplies or services similar to
   those terminated, and the contractor will be liable to the
   Government for any excess costs for those supplies or
   services."  The Government has a duty to mitigate the
   defaulted contractor's liability, however, and it is therefore
   the Government's burden to demonstrate the propriety of the
   repurchase and its entitlement to the amount claimed as excess
   reprocurement costs.  K.C. Printing Co., GPOBCA 2-91 (February
   22, 1995), slip op. at 18, 1995 WL 488531.  To meet this
   burden, the Government 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 reprocure; (c) it
   employed a reprocurement method that 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 cost assessment is
   based upon liability for a sum certain.  Gold Country Litho,
   GPOBCA 22-93 (September 30, 1996), slip op. at 26, 1996 WL
   812956 (quoting from K.C. Printing Co., supra, at 18-19),
   aff'd in part and vacated in part, GPOBCA 22-93 (March 17,
   1997), slip op., 1997 WL 742506; Univex International, GPOBCA
   23-90 (July 5, 1996), slip op. at 4, 1996 WL 812959; Asa L.
   Shipman's Sons, Ltd., GPOBCA 06-95 (August 29, 1995), slip op.
   at 28, 1995 WL 818784;  Sterling Printing, Inc., GPOBCA 20-89
   (March 28, 1994), slip op. at 52-53, 1994 WL 275104, recon.
   denied, GPOBCA 20-89 (July 5, 1994), slip op., 1994 WL 377592.
   There is no question at all on this record with respect to the
   Respondent's satisfying criteria (b), (c), and (e).  The
   record establishes that the reprocurement was conducted
   virtually simultaneously with the default3 and on a
   competitive basis, with the requirement publicly advertised
   and the reprocurement solicitation sent by fax to four
   printers believed to be able to perform the work and meet the
   delivery schedule, including Moore Business Forms, the only
   other responding vendor on the initial procurement.  Atkins
   Declaration.  There is also no question that the reprocurement
   contractor delivered the forms and was paid a specific sum, as
   set forth in a Declaration of Philip L. Jones, GPO's Chief,
   Examination and Billing Branch, Procurement Accounting
   Division, Office of the Comptroller.

   As for criterion (a), the original and reprocurement contracts
   are virtually identical.  The only difference is in the
   required delivery time.  The original contract imposed a 15-
   day4 delivery requirement.  Rule 4 File, Tab E.  The
   reprocurement contract, as advertised, imposed a 10-day
   delivery requirement, Rule 4 File, Tab M, although as awarded
   four cartons were to be delivered within 7 days with the
   balance of the mailers to be delivered within 14 days.  Rule 4
   File, Tab N.  Although an expedited delivery schedule can
   result in a higher price, such a delivery schedule may become
   necessary as a result of the defaulted contractor's
   delinquencies.  Mattatuck Mfg. Co., GSBCA 4847, 80-1 BCA 
   14,349; Roger James, ASBCA 18605, 75-1 BCA  11,054.  Because
   both the original mailers and reprinted ones furnished by the
   Appellant on December 2 were defective,  the customer agency
   found itself without sufficient forms for its December 20 pay
   date; thus, there was a need for delivery of satisfactory
   forms before that date, and that need was the direct result of
   the Appellant's inability to deliver such forms despite its
   two attempts to do so.  Under such circumstances, the shorter
   delivery requirement in the reprocurement contract was
   reasonable and not a material deviation from the original
   contract that would defeat the Government's right to the
   excess costs of reprocurement.  United States v. Warsaw
   Elevator Corp., 213 F.2d 517 (2d Cir. 1954); Mattatuck Mfg.
   Co., supra; Roger James, supra.
   The Respondent's excess cost assessment founders, however, on
   the remaining factor, the reasonableness of the reprocurement
   price.  Although the reprocurement contract was awarded at a
   price in excess of 2-1/2 times the defaulted contract price,
   the record is devoid of any indication that the Contracting
   officer made a reasonable effort to determine the
   reasonableness of the reprocurement price offered by
   Specialized Printed Forms.
   The Board is well aware that a reprocurement price
   significantly higher than the original contract price does not
   automatically render the reprocurement price unreasonable.
   The Government's obligation is to act prudently to obtain the
   lowest reasonable price for the Government under the
   circumstances, and where it does so, exercising due care and
   diligence, a substantially higher reprocurement price may be
   considered reasonable.  See Gold Country Litho, at 33-34; KC
   Printing Co., supra, at 23; Sterling Printing, Inc., supra, at
   74.   For example, where the next low bidder or offeror on a
   procurement is awarded a reprocurement contract at its
   original price, in most cases a simple showing of that fact
   will satisfy the Government's obligation since the Government
   will have acted prudently in accepting such an offer.  See,
   e.g., Gold Country Litho, supra (reprocurement price 35
   percent more than defaulted contract price); Asa L. Shipman's
   Sons, Ltd., supra (reprocurement price 39 percent higher than
   defaulted contract price).
   On the other hand, in other circumstances the Contracting
   Officer is expected to make an appropriate effort, typically
   through price analysis or negotiation techniques, to determine
   if a  reprocurement price, whether obtained through
   competition or on a sole source basis, is reasonable.   See
   Solar Labs., Inc., ASBCA 19957, 76-2 BCA  12,115; Wise
   Instrumentation & Control, Inc., NASABCA 1072-12, 75-2 BCA 
   11,478, recon. denied, 76-1 BCA  11,641 (rejecting Government
   rationale that reprocurement price was reasonable because
   unless it paid that price it was faced with not being able to
   obtain needed supplies in absence of give-and-take
   negotiations or price analysis).  Thus, although reprocurement
   on a competitive basis typically will produce a reasonable
   price, the low bid or offer is not presumptively reasonable,
   and the contracting officer is not free to blindly accept the
   low offer--some inquiry must be made to establish that the
   offered price is in fact reasonable.  T.M. Indus., ASBCA
   21026, 77-1 BCA  12,451, recon. denied, 77-2 BCA  12,756
   ("The special obligation of respondent to mitigate costs ...
   mandates a more thorough consideration of the reasonableness
   of bid prices than the easy assumption that the minimal
   'competition' between two bidders with widely disparate bid
   prices assures a reasonable price."); K.C. Printing Co.,
   supra, at 24; Sterling Printing, Inc., supra, at 76-77.  In
   the absence of such an inquiry, the assessment of excess costs
   cannot stand.  See Sterling Printing, Inc., supra (appeal of
   assessment of excess costs granted where, among other things,
   contracting officer accepted low bid on competition for
   reprocurement without making any inquiry as to its
   reasonableness); K.C. Printing, supra (appeal of excess cost
   assessment denied where contracting officer accepted low bid
   on reprocurement competition but, in response to appeal,
   rescinded  assessment of $13,640 based on that bid and changed
   it to $4,201, the difference between the defaulted contract
   price and the price of the next acceptable bid under the
   original procurement).
   Here, although Moore Business Forms, the runner-up on the
   original procurement, offered its same price on the
   reprocurement, the Contracting Officer did not issue a
   purchase order to that company because Moore could not meet
   the delivery requirements.  Instead, the Contracting Officer
   issued a purchase order to the only other company that
   responded to the reprocurement solicitation at a price that
   was not only more than 2-1/2 times the defaulted contract
   price but also more than twice the price offered by Moore.
   The record does not show, however, that the Contracting
   Officer attempted to determine the basis for Specialized
   Printed Form's significantly higher price, or, despite
   discussing that company's intended delivery schedule,
   attempted to even discuss its price or negotiate for a lower
   price.  The record establishes only that the Contracting
   Officer sought guidance from the customer agency as to its
   delivery needs and willingness to pay the higher price.  As
   indicated above, the Contracting Officer was not free to rely
   on the fact that he conducted a competition or that a refusal
   to pay Specialized Printed Forms its quoted price could mean
   he would not be able to obtain the mailers when needed.  Wise
   Instrumentation & Control, Inc., supra; T.M. Indus., supra.
   For purposes of the mitigation rule, he was required to make
   some sort of inquiry to ensure that the reprocurement price
   was a reasonable one under the circumstances.  Not only did he
   fail to do so, but that failure is particularly troublesome in
   light of the fact that the reprocurement contractor, while
   submitting a quotation that on its face met GPO's delivery
   requirements, backed away from those delivery terms and as a
   result received a purchase order that, except for four cartons
   of mailers, allowed the contractor a longer delivery period
   without any change in the price quoted.  The Respondent offers
   no explanation as to why it considered the quoted price based
   on a specified delivery requirement to be reasonable for
   modified delivery terms that overall were less stringent than
   the specified requirement.5
   The Board notes that on the abstract of quotations for the
   reprocurement, Rule 4 File, Tab M,  someone has written "price
   fair & reasonable, based on prev. unit rate of $.10/set."  The
   Respondent has provided no information regarding such a
   previous procurement.  Thus, the Board is unable to determine
   when the prior procurement took place, what quantity of forms
   was involved, what the delivery terms were, and whether other
   terms and conditions were identical or similar to or
   significantly different from those in the reprocurement
   contract.  In short, this vague reference to a prior
   procurement falls far short of establishing the reasonableness
   of the reprocurement price.
   Accordingly, the Board concludes that the Respondent has not
   met its burden of showing that it obtained the lowest
   reasonable reprocurement price, and the Respondent's excess
   cost assessment must be rejected for that reason.  There is no
   question, however, that the Respondent incurred excess
   reprocurement costs.  In cases such as this, where the
   Respondent fails in its burden to establish that the
   reprocurement contract price represents a proper basis for
   assessing costs against the defaulted contractor, the Board
   has taken the position that the appropriate course of action
   is to reduce the assessment, rather than eliminate it
   entirely, if the record provides a fair basis for calculating
   what the assessment should be.  See Sterling Printing, Inc.,
   supra, at 84.  As the Board said in the cited case, "[w]here
   ... there is not enough evidence to determine if the winning
   reprocurement bid was reasonable, 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."  Id. at 84.  That method is
   appropriate here.  Accordingly, the Respondent is entitled to
   recover excess costs in the amount of $264.04, representing
   the difference between the Appellant's contract price and the
   price offered by Moore Business Forms both on the original
   procurement and the reprocurement.

III. ORDER

   The appeal is GRANTED.  The matter is remanded to the
   Contracting Officer for revision of the assessment of the
   excess costs of reprocurement from $3,065.46 to $264.04.
It is so Ordered.

November 12, 1998                  Ronald Berger
                           Ad Hoc Chairman
                           GPO Board of Contract Appeals

_______________

1    The Appellant has elected to have its appeal decided
pursuant to the Small Claims Procedure provided for by Rule 12.1
of the Board's Rules of Practice and Procedure.  Under this
procedure decisions are to be "brief," with "summary findings of
facts and conclusions" and "shall have no value as precedent and,
in the absence of fraud, shall be final and conclusive and may
not be appealed or set aside."  See VATEX America, GPOBCA 08-96
(October 14, 1998), slip op. at 1 n.1, 1998 WL 750866; Daniels
Press, Inc., GPOBCA 18-95 (September 23, 1998), slip op. at 3
n.3, 1998 WL 750875; Kennedy Graphics, GPOBCA 15-98 (August 21,
1998), slip op. at 1 n. 1, 1998 WL 640419.
2    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 May 19, 1997.  It is referred to as the
Rule 4 File, with an appropriate Tab letter also indicated.  The
Rule 4 File consists of 16 tabs identified as Tab A through Tab
P.
3    The Contracting Officer acted very expeditiously in
initiating and conducting the reprocurement after the decision
was made to terminate for default, soliciting quotations for the
reprocurement (on December 6, 1996) and issuing a purchase order
to the reprocurement contractor (on December 9) even before
formally issuing the terminating for default notice (on December
10).  The Board has previously recognized the propriety of such a
time sequence.  See Rose Printing, Inc., GPOBCA 32-95 (December
16, 1996), slip op. at 39-42, 1996 WL 812880.
4    For both the original and the reprocurement contracts the
Board computes the delivery times as running from the specified
date that Government material was to be furnished to the
contractor to the date delivery at destination was required.
5    There is also no evidence that the Contracting Officer
considered the possibility of awarding two reprocurement
contracts, one to satisfy its most urgent needs for the customer
agency's upcoming pay date and another for the remaining
quantity.  In this regard, the delivery date offered by Moore
Business Forms was only a few days later than the date the
Respondent agreed to for the total quantity other than the four
cartons to be delivered on December 16, which suggests the
possibility that the customer agency's overall needs could have
been satisfied with one delivery from Specialized Printed Forms
for a relatively small quantity to satisfy its immediate needs
and another delivery a short time later from Moore Business Forms
for the remainder of the quantity for which the Respondent
originally contracted.  While the Board is in no position to
state that Specialized Printed Forms would have agreed to deliver
only a relatively small quantity or that if it did so its price
would not have increased, the point is that the Contracting
Officer, as part of his obligation to mitigate reprocurement
costs, should have explored the possibility that splitting the
reprocurement quantity into two contracts would have been a less
costly approach.  Although the Respondent may not routinely make
multiple awards for partial quantities of a one-time fixed
quantity requirement (as opposed to repetitive but less specific
requirements for which term contracts are awarded, see, e.g.,
Swanson Printing Co., GPOBCA 27-94, 27-94A (November 18, 1996),
slip op., 1996 WL 812958), the Respondent is not precluded from
doing so, particularly where, as here, it utilizes small purchase
procedures.