BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
ASA L. SHIPMAN'S SONS, LTD. ) Docket No. GPO BCA 06-95
Jacket No. 384-764 )
Purchase Order 99362 )
DECISION AND ORDER
This appeal, timely filed by Asa L. Shipman's Sons, Ltd.
(Appellant or Contractor), 800 East 91st Street, Brooklyn, New
York 11236, 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 26, 1995,
terminating the Appellant's contract identified as Jacket No.
384-764, Purchase Order 99362, for default because of the
Appellant's inability to meet the delivery schedule (R4 File,
Tab K).1 For the following reasons, the Contracting Officer's
decision is hereby AFFIRMED.
I. FINDINGS OF FACT2
1. On December 8, 1994, the U.S. Air Force (USAF or
customer-agency) sent a requisition to GPO for the procurement
of 130,000 copies of file folders entitled "Unit Personnel
Record Group, Form Number: AF 10 (Mar 81)" (hereinafter AF
Folders) (R4 File, Tab D). The Invitation for Bids (IFB) for
these AF Folders was issued by the Respondent on December 16,
1994 (R4 File, Tab A, p. 1). The product being procured was a
three-leaf, cloth-reinforced, expansion-type file folder,
equipped with two single (one on the inside front cover leaf
and one on the inside back cover leaf) and one dual
permanently-affixed metal fastener (R4 File, Tab A, p. 1).
Apart from the usual design, performance and quality assurance
specifications,3 the IFB also provided, in pertinent part:
Any contract which results from this Invitation for Bid
will be subject to the applicable articles of GPO
Contract Terms (GPO Pub. 310.2, effective December 1,
1987 (Rev.9-88)) [hereinafter GPO Contract Terms]; and
Quality Assurance Through Attributes Program (GPO Pub.
310.1, effective May 1979 (revised 12-92)).
* * * * * * * * * *
CONSTRUCTION: File folder with one inner leaf, bound on
outside with a cloth strip approximately 64 mm (2-1/2")
wide on the 298 mm (11-3/4") dimension to allow a total
expansion of approximately 38 mm (1-1/2") (two equal
expansions of approximately 19 mm (3/4") each). This
cloth strip must wrap around the ends, not cut flush.
Inner leaf to have a 44 mm (1-3/4") cloth strip on each
side of the 198 mm (11-3/4") dimension; these strips to
be the same kind and color material as the outside strip
and to be cut flush. See furnished sample.
* * * * * * * * * *
SCHEDULE: Furnished material will be available for pick
up at The U.S. Government Printing Office, 27 G Street,
NW., Washington, DC 20401, on December 27, 1994.
Ship complete to arrive at destination on or before
January 20, 1995.
* * * * * * * * * *
See R4 File, Tab A, pp. 1, 2, 4. [Emphasis added.] As indicated
above, GPO Contract Terms was incorporated by reference in the
contract. The "Default" clause of GPO Contract Terms provides,
in pertinent part:
20. Default
(a) (1) The Government may, subject to paragraphs (c)
and (d) below, by written notice of default to the
contractor, terminate in whole or in part if the
contractor fails to-
(i) Deliver the supplies or to perform the services
within the time specified or any extension thereof;
(ii) Make progress, so as to endanger performance
(but see subparagraph (a) (2) below); or
(iii) Perform any of the other provisions.
(2) The Government's right to terminate under
subdivision (1) (ii) and (iii) above, may be
exercised if the Contractor does not cure such
failure within 10 days (or such other period as the
Contracting Officer may determine to be reasonable
and authorize in writing) after receipt of the
notice from the Contracting Officer specifying the
failure.
(b) If the Government terminates in whole or in part, it
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. However, the contractor
shall continue the work not terminated.
(c) Except for defaults of the subcontractors, at any
tier, the contractor shall not be liable for any excess
costs if the failure to perform arises from causes
beyond the control and without the fault or negligence
of the contractor. Examples of such causes include 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. In
each instance, the failure to perform must be beyond the
control and without the fault or negligence of the
contractor.
(d) If the failure to perform is caused by the default
of a subcontractor at any tier, and if the cause of the
default is beyond the control of both the contractor and
subcontractor, and without the fault or negligence of
either, the contractor shall not be liable for any
excess costs for failure to perform unless the
subcontracted supplies or services were obtainable from
other sources in sufficient time for the contractor to
meet the required delivery schedule.
* * * * * * * * * *
(g) If, after termination, it is determined that the
Contractor was not in default, or that the default was
excusable, the rights and obligations of the parties
shall be the same as if the termination had been issued
for the convenience of the Government.
* * * * * * * * * *
See GPO Contract Terms, Contract Clauses, ¶ 20 (Default).
[Emphasis added.]
2. The Respondent sent copies of the IFB to 15 potential
contractors, but only received two responsive offers, one from
Bluff Springs ($104,000.00) and the other from the Appellant
($74,100.00) (R4 File, Tabs B, C and G). On December 27,
1994, after confirming the Appellant's low bid, GPO issued
Purchase Order 99362 awarding it the contract (R4 File, Tabs
E, F and H).4
3. It is undisputed that the Appellant did not produce and
deliver the AF Folders by the contract completion date of
January 20, 1995.
4. On or about January 24, 1995, an employee from GPO's
Contract Compliance Section (CCS) telephoned the Appellant's
facility to inquire about the status of the order (R4 File,
Tab I, p. 1).5 The Contractor's President, Richard de
Marigny, informed the Respondent's representative that as of
the previous day, January 23, 1995, the AF Folders had not
been shipped (R4 File, Tab I, p. 1). However, de Marigny also
said that he expected to receive the necessary paper stock by
February 10, 1995, and that the order should be shipped by end
of February (R4 File, Tabs I, p. 1, and J).6 Furthermore,
according to de Marigny, it was during this conversation that
he first told GPO that the principle reason for nonperformance
was a flu epidemic in New York City during the performance
period. See Appellant's Letter, dated March 15, 1995,
annotated attachment (R4 File, Tab I, p. 1); App. Exh. Nos. 1,
2 and 3.7 Indeed, the Appellant's evidence indicates that the
firm's three key officers, Richard de Marigny, Gerard de
Marigny, and Angela de Marigny, were disabled by the flu from
on or about December 23, 1994, to January 20, 1995. See App.
Exh. Nos. 4, 5 and 6.8
5. After the above conversation, the Respondent telephoned
the USAF to see if it would accept delivery of the AF Forms on
February 28, 1995 (R4 File, Tab I, p. 2). When the customer-
agency refused, GPO made the decision to default the contract
(R4 File, Tab I, p. 2).9
6. On January 25, 1995, the Contracting Officer sought the
concurrence of the Respondent's Contract Review Board (CRB) to
terminate the contract for default (R4 File, Tab J).10
Termination was requested "due to the contractor's inability
to perform the requirements of the contract"(R4 File, Tab J).
The Contracting Officer also noted that he had considered the
relevant factors in the PPR before seeking approval to default
the contract (R4 File, Tab J).11 The Contracting Officer
received the CRB's approval on January 26, 1995 (R4 File, Tab
R).
7. Accordingly, by letter dated January 26, 1995, expressly
titled "Notice of Termination-Complete" (Notice), the
Contracting Officer terminated the Appellant's contract for
default because of its inability to comply with the "Schedule"
specification; i.e., ship the order to the USAF on or before
January 20, 1995 (R4 File, Tab K). The Notice also informed
the Appellant that it was potentially liable for any excess
reprocurement costs (R4 File, Tab K). That same day, the
Contracting Officer sent a memorandum to the FMS asking it to
recover the amount of excess costs upon reprocurement of the
order.12 See Res. Brf., Attachment 1-E.
8. The Respondent took immediate steps to reprocure the
work. The record shows that rather than issuing a repurchase
solicitation, the Contracting Officer contacted Bluff Springs,
the only other responsive offeror on the initial IFB, and on
February 1, 1995, less than a week after the default, awarded
it the reprocurement contract (Jacket No. 390-419, Purchase
Order 99517) at its original bid price of $104,000.00. See
Res. Brf., Attachments 1-F and 1-H. The terms and conditions
of the repurchase were essentially identical to that the
terminated contract. The only change noted from the original
IFB was in the "Schedule" clause, where, as would be expected,
new "material pick up" and "ship complete" dates-February 1,
1995, and February 27, 1995, respectively-were necessary. See
Res. Brf., Attachment 1-I. Also on February 1, 1995, the
Contracting Officer sent another memorandum to the FMS
informing it that the defaulted contract had been reprocured,
the Appellant had been so notified, and directing it to
recover excess costs from the Contractor. See Res. Brf.,
Attachment 1-G. Bluff Springs completed the work and received
final payment by electronic funds transfer on March 20, 1995.
See Res. Brf., Attachments 1-A and 1-C. As for the excess
reprocurement costs of $29,900.00,13 the record discloses that
the FMS recovered those funds from payments due the Appellant
on five other contracts between February 8, 1995, and April 3,
1995.14 See Res. Brf., Attachment 1-B. See also RPTC, p. 7,
fn. 3 (citing PPR, Chap. VIII, Sec. 3, ¶ 4).
9. By letter dated February 2, 1995, the Appellant timely
appealed the Contracting Officer's default decision (R4 File,
Tab L).
II. ISSUES PRESENTED
At the close of the presubmission conference, the Board
identified two questions as being presented by the facts in
this case, namely:
1. Has the Appellant shown that its failure to perform
was due to the effects of a flu epidemic in New York
City at the time set for contract performance? Stated
otherwise, was the flu epidemic, an event arising from
causes beyond the control and without the fault or
negligence of the Contractor, the principal cause of its
nonperformance?
2. Is the Appellant liable for the excess
reprocurement costs incurred by the Government under the
circumstances of this case, and if so, to what extent?
See RPTC, pp. 7-8.
III. POSITIONS OF THE PARTIES
The Appellant concedes its nonperformance in this case. See
App. Brf., p. 1; RPTC, pp. 5, 7. However, it believes that
its failure to produce and deliver the 130,000 copies of the
AF Folders was a direct result of a flu epidemic in New York
during the time set for performance, which incapacitated the
five employees comprising its entire administrative,
managerial, and supervisory staff, and shut down production
from December 30, 1994, to January 20, 1995.15 See App. Brf.,
p. 1; RPTC, p. 5, 6. The Appellant observes that the
contract's "Default" clause specifically identifies this type
of medical emergency as a cause "beyond the control and
without the fault or negligence" of the Contractor, which
would provide a defense to the default action. See App. Brf.,
p. 1; RPTC, pp. 5, 6 (citing, GPO Contract Terms, Contract
Clauses, ¶ 20(c)). Accordingly, the Contractor submits that
the Contracting Officer's default decision is in error, and it
is entitled to reimbursement of the excess reprocurement costs
already deducted from its account.16 See App. Brf., p. 2;
RPTC, p. 7. The Respondent, on the other hand, maintains
that the contract was properly terminated for default because
of the Appellant's failure to meet the prescribed delivery
schedule. See Res. Brf., pp. 2-3; RPTC, p. 5. Since the
Contractor admits that it did not deliver the AF Forms on
January 20, 1995, as specified in the contract, GPO says that
it had an immediate right to default the Contractor once the
delivery date passed. See Res. Brf., p. 2 (citing, Riggs
Engineering Co., ASBCA No. 26509, 82-2 BCA ¶ 15,955; M.H.
Colvin & Co., GSBCA No. 5209, 79-2 BCA ¶ 13,981; National Farm
Equipment Co., GSBCA No. 4921, 78-1 BCA ¶ 13,195). With
regard to the Appellant's contention that its nonperformance
was excused by the flu epidemic, the Government, relying on
our opinion in R.C. Swanson Printing and Typesetting Co., GPO
BCA 31-90 (February 6, 1992), Slip op. at 25, 1992 WL 487874,
aff'd, Civil Action No. 92-128C (U.S. Claims Court, October 2,
1992),17 where the Board enunciated the standard of proof
required of contractors seeking to excuse a default based on
untimely performance,18 argues that such a defense does not
lie in this case. See Res. Brf., 3-7; RPTC, p. 5. First, the
Respondent says that the Appellant's proffered excuse is not
believable because the only medical evidence submitted by the
Contractor relates to the three members of the de Marigny
family, not all five key employees claimed to have been
incapacitated by the flu, and besides GPO's records show that
Richard de Marigny was actively conducting business for his
firm during the time of claimed incapacitation. See Res.
Brf., p. 4; Attachments 2, 3; R4 File, Tabs E and I;
Complaint, p. 2. Second, GPO states that the Contractor
cannot prove that nonperformance was attributable to the flu
epidemic because the record shows that it still did not have
the paper stock necessary to produce the AF Forms by the
contract delivery date. See Res. Brf., p. 5 (citing, Lee K.
Geiger Construction Co., GSBCA Nos. 2152, 2164, 67-1 BCA ¶
6189; American Construction Co., Inc., GSBCA No. 1055, 65-1
BCA ¶ 4581, reconsid. denied, 65-2 BCA ¶ 4964). Third, the
Government asserts that there is no evidence from the
Appellant showing that it took reasonable precautions to avoid
the foreseeable impact of the flu and minimize its effect;
i.e., the record is silent regarding the number of production
workers, if any, who were incapacitated, or whether the
Contractor sought temporary replacements to avoid a shutdown,
or if it attempted to notify GPO that production was
jeopardized by the flu epidemic. See Res. Brf., pp. 5-6
(citing, Ace Electronics Associates, Inc., ASBCA Nos. 11496,
11781, 67-2 BCA ¶ 6456). To the contrary, the record shows
that on December 27, 1994, when he was supposedly debilitated
by the flu, Richard de Marigny reviewed and confirmed the
Appellant's bid (R4 File, Tab E). Finally, the Respondent
states that the Contractor has not established a precise
period of time that the flu allegedly impeded performance.
See Res. Brf., pp. 6-7. Indeed, GPO questions the veracity of
the Appellant's claim that an outbreak of the flu caused a
cessation of production at its plant from December 30, 1994,
to January 20, 1995, see App. Brf., p. 1; Complaint, p. 3,
because it directly conflicts with a "Show Cause" response,
dated May 2, 1995, from the Contractor to the Respondent's
Atlanta Regional Printing Procurement Office (ARPPO),
explaining that its delay in shipping the product on time was
because the flu epidemic which "inmobilized [sic] our plant
from mid-January 1995 for a period of five weeks." See Res.
Brf., p. 7; Attachment 4 .19 [Emphasis added.] Accordingly,
the Government asserts that the default decision was not in
error, and the Contracting Officer's action should be
affirmed. See Res. Brf., p. 7; RPTC, p. 6.
IV. DISCUSSION
This appeal asks the Board to decide whether or not the
Appellant has shown sufficient grounds to excuse its admitted
failure to perform the contract, and if not, what is the
extent of its liability for excess reprocurement costs, if
any? At the outset, therefore, it is worthwhile to repeat
some of the legal principles which apply to these issues.
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, inter alia, to "deliver the supplies or perform the
required services within the time specified or any extension
which may have been granted." See GPO Contract Terms,
Contract Clauses, ¶ 20(a)(1)(i). Further, where defaulted
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 its control
and without its fault or negligence.20 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 Univex
International, supra, Slip op. 17; K.C. Printing Co., GPO BCA
02-91 (February 22, 1995), Slip op. at 9; Printing Unlimited,
GPO BCA No. 21-90 (November 30, 1993), Slip op. at 16, 1993 WL
516844; Chavis and Chavis Printing, GPO BCA 20-90 (February 6,
1991), Slip. op. at 11, 1991 WL 439270. 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 Univex International, supra, Slip op.
17; K.C. Printing Co., supra, Slip op. at 10; Chavis and
Chavis Printing, supra, Slip op. at 11.
Second, a default termination is a drastic action which may
only be taken for good cause and on the basis of solid
evidence.21 See Univex International, supra, Slip op. 17;
K.C. Printing Co., supra, Slip op. at 10; Shepard Printing,
supra, Slip op. at 10-11; R.C. Swanson Printing and
Typesetting Co., supra, Slip op. at 25; Stephenson, Inc.,
supra, Slip 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).
Consequently, 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 Univex
International, supra, Slip op. 18; K.C. Printing Co., supra,
Slip op. at 10; Shepard Printing, supra, Slip op. at 11; R.C.
Swanson Printing and Typesetting Co., supra, Slip op. at 28;
Chavis and Chavis Printing, supra, Slip op. at 11. Accord,
Lisbon Contractors v. United States, 828 F.2d 759 (Fed. Cir.
1987)); Switlik Parachute Co. v. United States, 216 Ct. Cl.
362 (1978); J.F. Whalen and Co., 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. GPO Contract
Terms, Contract Clauses, ¶ 20(g). Cf. Univex International,
supra, Slip op. 18; K.C. Printing Co., supra, Slip op. at 11;
Stephenson, Inc., supra, Slip op. at 17-18; Chavis and Chavis
Printing, supra, Slip op. at 9.
Third, where the default termination is based on untimely
performance, as in this case, 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 that 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 Univex International, supra, Slip op. 18-19; K.C. Printing
Co., supra, Slip op. at 11; R.C. Swanson Printing and
Typesetting Co., supra, Slip op. at 28-29; Chavis and Chavis
Printing, supra, Slip op. at 12. This burden must be carried
by substantial evidence22-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 K.C. Printing Co.,
supra, Slip op. at 11; Chavis and Chavis Printing, supra, Slip
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
Univex International, supra, Slip op. 19; K.C. Printing Co.,
supra, Slip op. at 12; Graphics Image, Inc., supra, Slip op.
at 24-28; Shepard Printing, supra, Slip op. at 12. Accord,
Darwin Construction Co., Inc. v. United States, 811 F.2d 593
(Fed. Cir. 1987); Quality Environment Systems v. United
States, 7 Cl. Ct. 428 (1985); Jamco Constructors, Inc., VABCA
Nos. 3271, 3516T, 94-1 BCA ¶ 26,405, reconsid. denied, 94-2
BCA ¶ 26,792; Walsky Construction Co., ASBCA No. 41541, 94-1
BCA ¶ 26.264, reconsid. denied, 94-2 BCA ¶ 26,698. The
contractor has the burden of proving abuse of discretion. See
K.C. Printing Co., supra, Slip op. at 12; Shepard Printing,
supra, Slip op. at 12. Accord, Kit Pack Co., Inc., ASBCA No.
33135, 89-3 BCA ¶ 22,151; Lafayette Coal Co., ASBCA No. 32174,
89-3 BCA ¶ 21,963.
Applying these principles to the facts in the record, the
Board reaches the following conclusions:
A. The Appellant has not shown that the principal cause
of its failure to perform was the effects of a flu
epidemic in New York City at the time set for contract
performance.
1. The Appellant admits that it did not produce and deliver
the Government's order of 130,000 copies of the AF Folders by
January 20, 1995. The Contractor's failure to deliver the AF
Folders when due gave the Respondent the right to terminate
the contract for default under paragraph (a)(1)(i) of the
"Default" clause. See GPO Contract Terms, Contract Clauses, ¶
20(a)(1)(i). Accordingly, unless the Appellant can establish
by a preponderance of the evidence that its failure to deliver
was excusable, GPO properly terminated the contract for
default. See Univex International, supra, Slip op. 18; K.C.
Printing Co., supra, Slip op. at 10; Chavis and Chavis
Printing, supra, Slip op. at 11. In that regard, the
Contractor contends that the delivery delay was excused
because of a flu epidemic which incapacitated its key staff,
and resulted in no production from December 30, 1994, to
January 20, 1995. The Board disagrees.
2. Although listed in the "Default" clause as one of several
causes of excusable delay, such enumeration does not make the
occurrence of an epidemic an excusable cause per se. See
Crawford Development and Manufacturing Co., ASBCA No. 17565,
74-2 BCA ¶ 10,600, at 50,624; Ace Electronics Associates,
Inc., supra, 67-2 BCA at 29,955. In Ace Electronics, which
appears to be the lead case for the rule regarding epidemics
as an excuse for nonperformance, the Armed Services Board
Contract Appeals (ASBCA) stated, in pertinent part:
Illness occasioned by the onset of a flu epidemic is in
general an excusable cause for delay provided that it
can be shown that performance was in fact delayed by
reason of such epidemic. It is incumbent upon appellant
to establish not only the existence of an excusable
cause for delay but also that such cause actually
contributed materially to such delay as well as the
actual extent of the delay so caused. [Citations
omitted.]
See, 67-2 BCA at 29,955. [Emphasis added.] See also The Tommy
Nobis Center, Inc., GSBCA Nos. 8988-TD, 9420-TD, 89-3 BCA ¶
22,112, at 111,225 (no showing that the flu epidemic was of long
duration, or that it had an adverse effect on the volume of
production); Crawford Development and Manufacturing Co., supra,
74-2 BCA at 50,624 (no showing that a flu epidemic involved a
sufficient number of the contractor's employees to cause
delay).23 The essence of the "Ace Electronics" test is the
requirement that a defaulted contractor prove that an epidemic
was the sole cause, not merely a contributing cause, of the
performance delay. See John Cibinic, Jr. & Ralph C. Nash, Jr.,
Administration of Government Contracts 3d ed., (The George
Washington University, 1995), p. 567 (hereinafter Cibinic &
Nash).
3. In this case, the Appellant has demonstrated that there
was a flu epidemic in the New York City area during the time
established for performance of the contract. However, the
Contractor has not satisfied the second part of the "Ace
Electronics" test, namely, showing that the flu epidemic was a
materially contributing cause of the nonperformance, as well
as the actual extent of the delay in performance caused by the
epidemic. Although the Appellant claims that the flu epidemic
forced a shut down of the company's production from December
30, 1994, to January 20, 1995, it has presented no evidence,
as required in the lead case, which would show, inter alia:
(a) the precise duration of the epidemic; (b) what personnel,
apart from the three members of the de Marigny family, were
affected by the flu and the periods during which they were
absent because of the disease; (c) whether such absences in
fact caused the delay in performance and if so the extent of
such delay; and (d) what efforts were made during such
absences by the use of overtime or other measures to keep the
work going. See Ace Electronics Associates, Inc., supra, 67-2
BCA at 29,955. Because the Contractor has not supplied any
factual details to support its contention that the production
of the AF Folders was delayed by the flu epidemic, relief on
that basis must be denied for failure of proof.
4. The only position advanced by the Appellant based on the
flu epidemic was that no work could be performed on the
contract because its entire administrative, managerial, and
supervisory staff, consisting of the three de Marigny's and
two other key employees, were disabled from about December 23,
1994, to January 20, 1995. This so-called "key personnel"
argument fails as a matter of law for two reasons. First, the
Contractor is a corporation,24 and it is a "black letter"
principle that where, as here, a contract has been awarded to
a corporate entity, the illness of a key person within the
organization does not excuse the corporation's failure to
perform its obligations, even though the corporation may be a
small business. See e.g., Brill Brothers, Inc., ASBCA No.
42573, 94-1 BCA ¶ 26,352; M.W. Microwave Corp., supra; Press
Automation Systems, Inc., ASBCA Nos. 29902, 30357, 88-1 BCA ¶
20,273; Marmac Industries, Inc., ASBCA Nos. 23590,24029,
24502, 24503, 84-1 BCA ¶ 17,098; Electro-Magnetics, Inc.,
ASBCA No. 19830, 75-2 BCA ¶ 11,503; Universal Steel Strapping
Co., GSBCA No. 3049, 70-1 BCA ¶ 8190. The rule's rationale
was explained by the ASBCA in M.W. Microwave Corp.:
. . . [W]e have held that where the contract is awarded
to a corporate entity, the illness of a key person
within the organization does not excuse the
corporation's failure to perform its obligations, even
though the corporation may be a small business. E.g.,
Press Automation Systems, Inc., ASBCA Nos. 29902, 30357,
88-1 BCA ¶ 20,273; Yankee Telecommunication
Laboratories, Inc., ASBCA Nos. 25240, 25534, 26308, 85-1
BCA ¶ 17, 786; Electro-Magnetics, Inc., ASBCA No. 19830,
75-2 BCA ¶ 11,503. In this context, the Government's
expectation is that the corporation, as opposed to any
particular individual, is responsible for performing the
work. The corporation assumes the responsibility for
insuring that there is adequate manpower available. As
part of this responsibility, the corporation also
assumes the risk of non-performance due to the illness
of a key employee. In other words, because of its
responsibility for insuring adequate manpower, the
illness of the key employee is generally not said to be
"beyond the control and without the fault or negligence"
of the contractor.
See 93-3 BCA at 129,377-78.25 The principle reflects one of the
distinguishing features between a corporation and some other form
of business organization, such as a sole proprietorship or a
partnership. A corporation is viewed as having a continuing
life; thus the loss of key personnel does not necessarily cause
the corporation to cease, but rather, in most cases, it continues
to carry on its business. See Electro-Magnetics, Inc., supra,
75-2 BCA at 54,891. Second, insofar as the Appellant's "key
personnel" argument is concerned, nothing in the contract
specifically designated any of the five employees named by the
Appellant for the performance of any production tasks, much less
assigned them personal responsibility for overall performance of
the contract. See e.g., Jonatech, Inc., ASBCA No. 46088, 94-3
BCA ¶ 27,248; M.W. Microwave Corp., supra; Ace Electronics
Associates, Inc., supra. Accordingly, there is no merit
whatsoever to the Contractor's "key personnel" excuse.
5. Moreover, the Appellant cannot escape the consequences of
its admission that even without the flu epidemic during the
performance period, the AF Folders could not have been
delivered by January 20, 1995, because it did not have the
necessary paper on hand to manufacture the product. See
Complaint, pp. 5, 6; Notice of Appeal, pp. 3, 4. In that
regard, the Contractor's own evidence tells us that the
required paper stock was not expected to arrive at its plant
until approximately February 10, 1995-some three weeks after
the contract due date and two weeks after the contract was
terminated. See Appellant's Letter, dated March 15, 1995, p.
2, annotated attachment (R4 File, Tab I, p. 1) Notice of
Appeal, p. 5. Although the Contractor says that it ordered
the paper stock in a timely manner, it also flatly states that
"[t]he
resulting difficulties in our receiving the paper shipment can be
attributed solely to the paper mill, regardless of the flu
epidemic." See Complaint, p. 6, Notice of Appeal, p. 4.
6. As previously indicated, where, as here, a contractor
seeks refuge in the performance failure of its supplier or
subcontractor to excuse its own lack of performance, it must
show that the cause of the default was beyond the control of
both the contractor and subcontractor, and without the fault
or negligence of either of them. GPO Contract Terms, Contract
Clauses, ¶ 20(d). See Univex International, supra, Slip op.
17; K.C. Printing Co., supra, Slip op. at 10; Chavis and
Chavis Printing, supra, Slip op. at 11. Stated otherwise, the
failure of a supplier to deliver the supplies to the
contractor on time is not an excuse for the contractor's
default unless the supplier's failure was beyond the
supplier's control and without its fault or negligence. See
Yankee Telecommunication Laboratories, Inc., supra; Marmac
Industries, Inc., supra; Crawford Development and
Manufacturing Co., supra. See also Hogan Mechanical, Inc.,
ASBCA No. 21612, 78-1 BCA ¶ 13,164. In this case, the
Appellant has made no attempt to show that the cause of its
paper mill's delay was also a flu epidemic or some other
legitimate excuse within the meaning of the "Default" cause.
Thus, the record is devoid of any evidence that the reason for
the supplier's failure to deliver the paper stock to the
Contractor in time for performance was beyond the mill's
control and without its fault or negligence. All that appears
in the record is the Appellant's bald assertion that the paper
supply problem "can be attributed solely to the paper mill."
However, as the Board has said on numerous occasions, such
unverified assertions-which amount to little more than
argument-standing alone, cannot substitute for proof, see
Univex International, supra, Slip op. at 31 (citing, Reese
Manufacturing, Inc., ASBCA No. 35144, 88-1 BCA ¶ 20,358), or
form the basis for recovery, see B & B Reproductions, supra,
Slip op. at 39; Hurt's Printing Co., Inc., supra, Slip op. at
29; Printing Unlimited, supra, Slip op. at 12; Stephenson,
Inc., supra, Slip op. at 57. Accord Singleton Contracting
Corp., GSBCA No. 8548, 90-2 BCA ¶ 22,748; Tri-State Services
of Texas, Inc., ASBCA No. 38019, 89-3 BCA ¶ 22,064)); Gemini
Services, Inc., ASBCA No. 30247, 86-1 BCA ¶ 18,736.
7. In many respects, this appeal is similar to the situation
in Crawford Development and Manufacturing Co. In that case,
the ASBCA affirmed the default of a contract for the
production of fuse parts because the contractor failed to
deliver a first article on time and to make scheduled
deliveries, and in the process dismissed the contractor's
allegations, inter alia, that its performance delay was caused
by subcontractor's poor machining and a flu epidemic. In so
ruling, the ASBCA held that the subcontractor's failure did
not constitute an excuse for the delay because the absence of
fault or negligence on the part of the subcontractor was not
shown, and moreover, the defaulted contractor also failed to
prove that the flu epidemic caused the delays, especially in
light of the fact that the flu coincided with the
subcontractor problems. See Crawford Development and
Manufacturing Co., supra, 74-2 BCA at 50,622-24. The ASBCA's
reasoning is particularly persuasive when measured against the
facts of this case:
The appellant's first contention that it was excused by
reason of its supplier's failure to deliver satisfactory
broaches misconstrues the applicable rule.26 Proper
application of the rule requires the appellant to
establish that the performance failure of its supplier
resulted from causes beyond the control, and without the
fault or negligence of both the appellant and its first-
tier subcontractor, a fact patently absent from the
record. See Thurmont Construction Co., Inc., ASBCA No.
13473, 69-1 BCA ¶ 7604.
Appellant's second ground for relief is based upon the
occurrence of a flu epidemic which allegedly affected
its key employees. Although listed in the Default
clause as one of several causes of excusable delay, such
enumeration does not make the occurrence of an epidemic
an excusable cause per se. It was incumbent upon the
appellant to establish not only the existence of this
excusable cause of delay but also that it actually
contributed materially to the performance delay.
Significant with respect to this alleged delay is the
fact that the flu-caused absence of key employees
occurred during the same period of time that the
appellant was unable to produce assemblies because it
has not received satisfactory broaches from its
supplier. It also is worthy of note that with the
exception of one week and two employees the illness of
the several key employees did not overlap. The average
absence per employee was approximately 2-3 days. The
four week delay attributed to this cause hardly explains
the appellant's failure to perform during the period 6
February though 10 May 1972. We are not convinced that
the flu epidemic contributed materially to the
appellant's performance delay. See Ace Electronics
Associates, Inc., ASBCA Nos. 11496, 11781, 67-2 BCA ¶
6456.
See Crawford Development and Manufacturing Co., supra, 74-2 BCA
at 50,624. [Emphasis added.] See also Yankee Telecommunication
Laboratories, Inc., supra, 85-1 BCA at 88,873 ("Furthermore,
appellant was at fault in not having obtained binding commitments
from its suppliers of essential components . . . and therefore
cannot eschew responsibility for the lack of those components
when needed." Citing B & H Construction Co., Inc., ASBCA Nos.
24558, 24578, 80-2 BCA ¶ 14,568,).27
8. Considering the record as a whole, the Board concludes
that the Appellant has not met its burden of proof with
respect to excusing its failure to deliver the AF Folders in
accordance with the terms of the contract. See Univex
International, supra, Slip op. 31; K.C. Printing Co., supra,
Slip op. at 18; Hurt's Printing Co., Inc., supra, Slip op. at
19; Chavis and Chavis Printing, supra, Slip op. at 11.
Therefore, the Board also concludes that under the
circumstances of this case, the Contracting Officer's
termination of the contract for default was not in error, and
his decision is affirmed.
B. The Respondent has sustained is burden of proof with
regard to the Appellant's liability for excess
reprocurement costs.
1. The last issue concerns the scope of the Appellant's
liability, if any, for excess reprocurement costs.28 In that
regard, the legal principles governing questions concerning
excess reprocurement costs can be summarized as follows:
The assessment of excess reprocurement costs is
considered a Government claim. See Sterling Printing,
Inc., supra, [Slip 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., [Slip 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. [Footnote omitted.] Id., [Slip 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., [Slip op.] at 53 (and
cases cited therein). Failure to satisfy even one
criterion may result in a reduction of the excess costs
claimed. Id., [Slip op.] at 53-54 (and cases cited
therein).
See Univex International, supra, Slip op. at 32-33; K.C.
Printing, Co., supra, Slip op. at 18-19. [Original emphasis.]
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 Univex International, supra, Slip op.
at 33; K.C. Printing Co., supra, Slip op. at 19, fn. 20; Sterling
Printing, Inc., supra, Slip op. at 50 (citing, Cable Systems and
Assembly Co., ASBCA No. 17844, 73-2 BCA ¶ 10,172, at 47,892).
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, Bluff Springs, was asked to produce
and deliver the identical AF Folders, in the same quantity and
under essentially the same terms and conditions, as those in
the Appellant's original contract-the only change, as would be
expected, was in the "Schedule" clause where new "material
pick up" and "ship complete" dates were established. Compare
R4 File, Tab A with Res. Brf., Attachments 1-I. The Appellant
does not allege otherwise. Accordingly, the Board concludes
that the Respondent has met the first condition entitling it
to 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 K.C. Printing, Co., supra, Slip
op. at 19; Sterling Printing, Inc., supra, Slip op. at 62-63.
Accord Futura Systems, Inc., ENG BCA Nos. 6037, 6057, 6099,
95-2 BCA ¶ 27,654; B & M Construction, Inc., AGBCA No.
90-165-1, 93-1 BCA ¶ 25,431; Zan Machine Co., 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 K.C.
Printing, Co., supra, Slip op. at 20; Sterling Printing, Inc.,
supra, Slip op. at 63. The Appellant's contract was
terminated for default on January 26, 1995 (R4 File, Tab K).
The reprocurement contract was awarded to Bluff Springs on
February 1, 1995, less than a week after the default. See
Res. Brf., Attachments 1-F and 1-H. Accordingly, the record
clearly shows that the Respondent acted with reasonable
dispatch and without undue delay to reprocure the AF Folders,
and thus it has satisfied its evidentiary burden. See K.C.
Printing, Co., supra, Slip op. at 20; Sterling Printing, Inc.,
supra, Slip op. at 64-65. Accord Astro-Space Laboratories,
Inc. v. United States, 200 Ct.Cl. 282, 470 F.2d 1003 (1972);
Puroflow Corp., ASBCA No. 36058, 93-3 BCA ¶ 26,191; John L.
Hartsoe, AGBCA No. 88-116-1, 93-2 BCA ¶ 25,614; Sequal, Inc.,
ASBCA No. 30838, 88-1 BCA ¶ 20,382; Disan Corp., ASBCA Nos.
21297, 22221, 79-1 BCA ¶ 16,677.
4. Third, the Board believes that the Contracting Officer
chose a reasonable method to repurchase the AF Folders. See
K.C. Printing, Co., supra, Slip op. at 20-23. Cf. Sterling
Printing, Inc., supra, Slip op. at 73. As a rule, a
contracting officer has very broad discretionary powers in
reprocuring items on a defaulted contract, and the choice of
which procurement method to use is one of them. See Sterling
Printing, Inc., supra, Slip op. at 17, fn. 25 (citing, Astro-
Space Laboratories, Inc. v. United States, supra; Old Dominion
Security, Inc., GSBCA No. 9126, 90-2 BCA ¶ 22,745; Columbia
Loose Leaf Corp., GSBCA Nos. 5805(5067)-REIN, 5806(5230)-REIN,
82-1 BCA ¶ 15,464). See also e.g., Venice Maid Co., Inc. v.
United States, 639 F.2d 690 (Ct.Cl. 1980); Zan Machine Co.,
supra. Although, in reprocuring a defaulted contract, the
Government has an obligation to mitigate the defaulted
contractor's excess cost liability by selecting a method that
will maximize competition and obtain the best or lowest
reasonable price 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)
(hereinafter Scalf Engineering Co.); Sequal, Inc., supra, 88-1
BCA ¶ 20,382, at 103,067; Century Tool Co., GSBCA No. 4007,
78-1 BCA ¶ 13,050, reconsid. denied, 78-2 BCA ¶ 13,345, the
law also 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 Sterling Printing, Inc., supra, Slip op. at 67. Accord
e.g., William A. Hulett, AGBCA Nos. 91-230-3, 92-133-3,
92-196-3, 93-1 BCA ¶ 25,389; Old Dominion Security, Inc.,
GSBCA No. 9126, 90-2 BCA ¶ 22,745; Century Tool Co., GSBCA No.
3999, 76-1 BCA ¶ 11,850; Sequal, Inc., supra, 88-1 BCA ¶
20,382.29 The test used in determining the adequacy of a
repurchase solicitation is one of reasonableness, and the
burden is on the Government to prove that it acted reasonably
in selecting the reprocurement method and in mitigating excess
costs.30 See K.C. Printing, Co., supra, Slip op. at 21
(citing Sam's Electric Co., GSBCA Nos. 9359, 10044, 90-3 BCA ¶
12,128; Fancy Industries, Inc., ASBCA No. 26578, 83-2 BCA ¶
16,659). See also Sterling Printing, Inc., supra, Slip op. at
67. However, the Government's obligation to mitigate costs
"is not one of perfection, but one of reasonableness and
prudence under the circumstances." See Barrett Refining
Corp., ASBCA Nos. 36590, 37093, 91-1 BCA ¶ 23,566, at 118,145.
See also Mid-America Painters, Inc., ENG BCA No. 5703, 91-1
BCA ¶ 23,367, at 117,232 ("On the other hand, the Corps is not
required to make extraordinary efforts to ferret out the
single best situation which will absolutely minimize the
[defaulting] party' damages. All that is required is that the
[Corps] act reasonably and promptly given the circumstances.'"
Citing Ketchikan Pulp Co. v. United States, 20 Cl. Ct. 164
(1990)).31 Soliciting the firms which bid on the original
procurement is one commonly used reprocurement method.32 See
K.C. Printing, Co., supra, Slip op. at 22 (citing American
Marine Upholstery Co. v. United States, 170 Ct.Cl. 564, 345
F,2d 577 (1965); Mid-America Painters, Inc., supra). See also
Sterling Printing, Inc., supra, Slip op. at 69. Furthermore,
while the contracting officer is not required to contact
second low bidder on the original procurement when attempting
to repurchase the defaulted supplies,33 nonetheless such a
mitigation step is considered presumptively reasonable, even
if the reprocurement price itself seems unreasonable. See
K.C. Printing, Co., supra, Slip op. at 22 (citing Mid-America
Painters, Inc., supra); Sterling Printing, Inc., supra, Slip
op. at 69-70 (citing Zoda v. United States, 148 Ct. Cl. 49,
180 F.Supp. 419 (1960); United Microwave Co., ASBCA No. 7947,
1963 BCA ¶ 3,701). Cf. American Photographic Industries,
Inc., ASBCA Nos. 29272, 29832, 90-1 BCA ¶ 22,491, reconsid.
denied, 90-2 BCA ¶ 22,728 (the Government failed to mitigate
damages because it did not contact the second low bidder on
the original contract). That is precisely the reprocurement
method chosen by the Contracting Officer in this case. Here,
where the Respondent's solicitation of 15 potential
contractors only resulted in two responsive offers, the
Appellant's and Bluff Springs', see R4 File, Tabs B, C and G,
the Contracting Officer elected to award the reprocurement
contract to Bluff Springs at its original bid price of
$104,000.00, see Res. Brf., Attachments 1-F and 1-H. By
repurchasing the AF Folders from the second lowest bidder at
its original offer, the Contracting Officer was acting
consistent with established GPO policy which has been found
reasonable in other cases. See Business Forms Service, Inc.,
GPOCAB 9-81 (October 20, 1981), Slip op. at 9, 1991 WL 95444;
ATC Decal Company, GPOCAB 3-81 (July 14, 1981), Slip op. at
8-9; Technical Publishing Services, Inc., GPOCAB 1-81 (January
20, 1982), Slip op. at 6, 1982 WL 122519.34 See also K.C.
Printing, Co., supra, Slip op. at 4 (although the defaulted
contractor's excess reprocurement liability was based on the
price of the fourth lowest bidder on the original contract, it
was the next lowest responsible offeror); Valley Forms, Inc.,
GPO BCA 1-84 (January 15, 1986), Slip op. at 13, 1986 WL
181464 (even though the Government's excess cost claim was
denied on other grounds, the Board stated that ordinarily the
proper measure of such costs would be the difference between
the price the Government would have paid the first bidder if
it had been able to perform and the price the Government
actually paid to the bidder next receiving the procurement
award). Since only two companies had provided responsive bids
on the original contract, the Board has no reason to believe
that further solicitation of other firms would have resulted
in lower prices in this case. See ATC Decal Company, supra,
Slip op. at 8-9 (citing San Antonio Construction Co., Inc.,
ASBCA No. 8110, 1964 BCA ¶ 4479). Therefore, given the nature
of this contract and the necessity of obtaining the AF Folders
without further delay, in the Board's opinion readvertising
was not required. See Business Forms Service, Inc., supra,
Slip op. at 9; Technical Publishing Services, Inc., supra,
Slip op. at 6. Consequently, even though the repurchase was
made at a price approximately 39 percent higher than the
original contract, the Board is satisfied that the
reprocurement method chosen by the Respondent in this case was
reasonable and appropriate under the circumstances.35 See
K.C. Printing, Co., supra, Slip op. at 22-23; Business Forms
Service, Inc., supra, Slip op. at 9; ATC Decal Company, supra,
Slip op. at 9; Technical Publishing Services, Inc., supra,
Slip op. at 6. See also Futura Systems, Inc., supra (the
Government's reprocurement award to the second low original
bidder at its original bid price, which was 39 percent higher
than the original contract price, was reasonable because the
defaulted contractor had intentionally underbid the contract);
Mid-America Painters, Inc., supra (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). 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. See K.C. Printing, Co., supra, Slip
op. at 23. Cf. Sterling Printing, Inc., supra, Slip op. at
73.
5. Fourth, mitigation of damages also requires the
Government to show that it obtained the lowest reasonable
reprocurement price.36 See, e.g., Sequal, Inc., supra; Fancy
Industries, Inc., supra. 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.37 See, Foster Refrigerator Corp., ASBCA No. 34021,
89-2 BCA ¶ 21,591; Boston Pneumatics, Inc., supra; Fancy
Industries, Inc., supra. Thus, while it is true that Bluff
Springs reprocurement bid price of $104,000.00 was
approximately 39 percent more than the Appellant's original
offer of $74,100.00, in light of the fact the Respondent, by
promptly awarding the repurchase to the next low bidder on the
original contract at the bidder's original price, used a
reasonable and appropriate reprocurement method, this
"mathematical discrepancy, standing alone, does not compromise
the adequacy of the Respondent's reprocurement efforts." See
Futura Systems, Inc., supra, 95-2 BCA at 137,873. 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., supra;
Sequal, Inc., supra, not the defaulted Contractor, see,
Barrett Refining Corp., supra. The Board is fully satisfied
that the Contracting Officer secured the lowest reasonable
reprocurement price in this case, and that the Government has
met its responsibility to mitigate its damages. See K.C.
Printing, Co., supra, Slip op. at 25; Sterling Printing, Inc.,
supra, Slip op. at 84-85. Accord, Mid-America Painters, Inc.,
supra; Birken Manufacturing Company, supra; Sequal, Inc.,
supra; Fancy Industries, Inc., supra; 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. See K.C. Printing, Co.,
supra, Slip op. at 25. Cf. Sterling Printing, Inc., supra,
Slip 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. See
Whitlock Corp. 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; 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, Slip op. at 85. Accord, 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; Scalf
Engineering Co., supra. Here, the relevant documentation
presented by the Respondent consists of the reprocurement
specifications (Res. Brf., Attachment 1-I), the reprocurement
purchase order (Res Brf., Attachment 1-H), a memorandum to the
FMS directing it to recover excess reprocurement costs from
the Contractor (Res. Brf., Attachment 1-G), an affidavit from
the Assistant Comptroller, FMS, stating that excess
reprocurement costs were assessed against the Appellant (Res.
Brf., Attachment I-A), and a computer printout showing that
Bluff Springs received final payment for the completed work by
electronic funds transfer on March 20, 1995 (Res. Brf.,
Attachment 1-C). 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. See K.C. Printing, Co., supra, Slip op.
at 26. Cf. Sterling Printing, Inc., supra, Slip op. at 83.
Also cf. Patty Armfield, supra; Pyramid Packing, Inc., supra;
Scalf Engineering Co., supra.
ORDER
Considering the record as a whole, the Board finds and
concludes that: (1) the Appellant has not shown that the flu
epidemic in New York City during the time set for contract
performance was the principal cause of its failure to perform;
and (2) 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 are hereby AFFIRMED, and the appeal
is DENIED.
It is so Ordered.
August 29, 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 9, 1995. 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. The R4 File has 12
documents identified as Tabs A through L.
2 The record on which this decision is based consists of: (a)
the Appellant's Notice of Appeal, dated February 2, 1995; (b)
the R4 File; (c) the Appellant's Complaint, dated February
24, 1995; (d) the attachments to the Complaint submitted in
accordance with Rule 4(b) of the Board Rules,, namely, a
transcript of a television news broadcast from Channel 12 on
February 2, 1995, a transcript of a television news broadcast
from Channel NY1 on February 2, 1995, a transcript of a radio
news broadcast from WCBS-AM on January 25, 1995, and three
medical excuse notes, all dated January 27, 1995, from Victor
Weinstein, M.D. for Richard de Marigny, Gerard de Marigny,
and Angela de Marigny (hereinafter App. Exh. Nos. 1 through
6, respectively); (e) a letter from the Appellant, dated
March 15, 1995, enclosing copies of R4 File, Tabs I and J
with the Contractor's annotations; (f) the Respondent's
"General Denial" to the Complaint, dated March 31, 1995; (g)
the Report of Presubmission Telephone Conference, dated July
7, 1995 (RPTC); (h) the Appellant's Brief, dated May 11, 1995
(hereinafter App. Brf.); and (i) the Respondent's Brief,
dated June 16, 1995 ((hereinafter Res. Brf.), with four
attachments, namely (1) a multi-page attachment pertaining to
the reprocurement process used in this case (Attachment 1,
which consists of a declaration from Robert D, Colvin,
Assistant Comptroller, Procurement Accounting Division,
Financial Management Service (FMS) (hereinafter Attachment 1-
A); a handwritten sheet containing the excess reprocurement
cost computations and indicating the contracts and the dates
from which the costs were recovered from the Appellant
(hereinafter Attachment 1-B); a computerized payment history
of the reprocurement contract (hereinafter Attachment 1-C); a
computerized billing history of the original contract
(hereinafter Attachment 1-D); a memorandum, dated January 26,
1995, from the Contracting Officer to the FMS asking it to
recover the amount of excess costs upon reprocurement of the
order (hereinafter Attachment 1-E); a copy of Purchase Order
99517 (the reprocurement purchase order), dated February 1,
1995, awarding the repurchase to Bluff Springs Paper Co.,
Ltd./Thompson (Bluff Springs) (hereinafter Attachment 1-F); a
memorandum, dated February 1, 1995, from the Contracting
Officer to the FMS informing it that the defaulted contract
had been reprocured and directing it to recover excess costs
from the Appellant (hereinafter Attachment 1-G); the bid
abstract for the reprocurement (Jacket No. 390-419)
(hereinafter Attachment 1-H); and a copy of the repurchase
specifications (hereinafter Attachment 1-I); (2) a bid sheet
from the Appellant on a contract for the U.S. Marine Corps
(Jacket No. 634-764, dated January 9, 1995 (Attachment 2);
(3) an offer from the Contractor on a contract for 15,000
folders (Jacket No. 610-750), dated January 9, 1995
(Attachment 3); and (4) a letter, dated May 2, 1995, from the
Appellant to GPO's Atlanta Regional Printing Procurement
Office (ARPPO), answering a "Show Cause Notice" on Jacket No.
634-764, and explaining that the delay in shipment was due to
an influenza (flu) epidemic in New York City (Attachment 4).
See Board Rules, Rule 13(a). The facts, which are
essentially undisputed, are recited here only to the extent
necessary for this decision.
3 The record indicates that this was a Quality Level III job
(R4 File, Tab A, p. 3).
4 The record discloses that the Appellant was the previous
contractor for the AF Forms (R4 File, Tab G).
5 The Respondent's telephone record identifies the employee
in question as Jerry Nash, but the Appellant claims it was
someone named "Angela." See R4 File, Tabs I and J;
Appellant's Letter, dated March 15, 1995, annotated
attachment (Tab I). The GPO Telephone Directory shows that
Jerry Nash is a Printing Specialist in the CCS, and an Angela
Haythe also works there as a Procurement Clerk. See GPO
Telephone Directory, GPO Publication 865.2 (Effective August
1994), p. 55.
6 The Contractor denies the Respondent's version of this
conversation insofar as GPO assumed that there was an implied
commitment concerning dates for receipt of the paper and
shipment of the final product. See Appellant's Letter, dated
March 15, 1995, annotated attachment (Tab I, p. 1). The
Appellant says that at most it merely promised to call its
paper supplier and confirm the delivery date for the paper,
which was done on January 25, 1995, Id. Furthermore, the
Contractor states that it did not give GPO a date certain for
the shipment of the complete order because no such date could
be given until the paper delivery date was ascertained. Id.
7 App. Exh. Nos. 1, 2 and 3 are broadcast transcripts of news
reports from television channels 12 and NY1 on February 2,
1995, and radio station WCBS-AM on January 25, 1995. The
substance of these reports concerns the adverse impact the
flu epidemic was having on New York City's blood supply
during the Christmas holiday season. However, the radio
report notes that because of the flu "[a]bsenteeism in the
corporate sector is very high, . . .". See App. Exh. No. 3.
See also RPTC, p. 6.
8 App. Exh. Nos. 4, 5 and 6 are medical excuse notes, dated
January 27, 1995, from Victor Weinstein, M.D. App. Exh. No.
4 says that Richard de Marigny was under the doctor's care
for the flu and complications from December 23, 1994, to
January 20, 1995. App. Exh. Nos. 5 and 6 state that Gerard
de Marigny, and Angela de Marigny, respectively, were also
under his care for the flu from December 26, 1994, to January
20, 1995. See also RPTC, p. 6.
9 The Contractor's notes regarding the R4 File, Tab I, page 2
are essentially the same as its editorial comments with
respect to the R4 File, Tab I, page 1. See note 6 supra.
Furthermore, the Appellant also summarized its version of the
relevant events on a copy of the R4 File, Tab J. See
Appellant's Letter, dated March 15, 1995, annotated
attachment (Tab J). The Contractor wrote: "Mr. Richard de
Marigny never spoke to Mr. Jerry Nash (Compliance) with
reference to the subject contract. On [January 24, 1995] a
girl named `Angela' talked with Mr. de Marigny. Mr. de
Marigny explained on this phone call that due to an outbreak
of the flu (epidemic) Shipman's had not yet performed on
[the] subject contract. In addition, Mr. de Marigny
explained that Shipman's paper supplier tried to contact him
while Shipman's was closed due to the flu affecting all key
personnel. Mr. de Marigny specifically said that he would
not be able to give a definative [sic] shipping date until he
contacted the supplier to find out the extent of the problem.
Mr. de Marigny tried to contact Mr. Charles Washington 4
times with the definative [sic] shipping dates, but Mr.
Washington was unavailable. Also, Mr. de Marigny NEVER gave
February 28, 1995 as a shipping date to anybody, therefore
this request and subsequent concurrence to terminate was
based on FALSE information. [Original emphasis.]"
10 Under the Respondent's printing procurement regulation,
the Contracting Officer must submit a proposal to terminate a
contract for default to the CRB for its review and
concurrence. See, Printing Procurement Regulation, GPO
Publication 305.3 (September 1, 1988), Chap. I, Sec. 10, ¶
4.b.(i) (PPR). See also, Univex International, GPO BCA 23-90
(July 31, 1995), Slip op. at 9, fn. 12; Hurt's Printing Co.,
Inc., GPO BCA 27-91 (January 24, 1994), Slip op. at 7, fn.
10, 1994 WL 275098; Graphics Image, Inc., GPO BCA 13-92
(August 31, 1992), Slip. op. at 9, fn. 10, 1992 WL 487875.
11 In that regard, the PPR lists eight factors which "[t]he
Contracting Officer shall consider" in determining whether to
terminate a contract for default: (i) the provisions of the
contract and applicable laws and regulations; (ii) the
specific failure of the contractor and the excuses, if any,
made by the contractor for such failure; (iii) the
availability of the supplies or services from other sources;
(iv) the urgency of the need for the supplies or services and
the period of time which would be required to obtain sources
as compared with the time in which delivery could be obtained
from the delinquent contractor; (v) the effect of a
termination for default upon the contractor's capability as a
supplier under other contracts; (vi) the effect of a
termination for default on the ability of the contractor to
liquidate progress payments; (vii) the availability of funds
to finance repurchase costs which may prove uncollectible
from the defaulted contractor, and the availability of funds
to finance termination costs if the default is determined to
be excusable; and (viii) any other pertinent facts and
circumstances. See PPR, Chap. XIV, Sec. 1, ¶ 3.c.(3). See
also Univex International, supra, Slip op. at 10, fn. 14;
Shepard Printing, GPO BCA 23-92 (April 29, 1993), Slip op. at
26, fn. 31, 1993 WL 526848; Graphics Image, Inc., supra,
Slip. op. at 26, fn. 31. The PPR essential repeats the
requirements contained in the Federal Acquisition Regulation
(FAR). See FAR § 49.402-3(f)(1)-(7).
12 The Respondent's procedure for recovering of excess
reprocurement costs is set forth in the PPR, which states:
"If repurchase is effected at a price in excess of the
supplies terminated, the Contracting Officer shall: (i)
advise the Financial Management Service, Voucher Examination
Branch (Stop FMCE) that such a repurchase has been made; (ii)
provide the jacket number, the purchase order number and the
contractor's name for both the terminated and new contracts;
and, (iii) request that excess costs be computed and the
Contracting Officer advised. When advised by the Voucher
Examination Branch, the Contracting Officer shall make a
written demand (with a copy to the Voucher Examination
Branch) on the defaulted contractor for the total amount of
such excess including increases or decreases in other costs
such as transportation and discounts. If the contractor
fails to make payment, the Voucher Examination Branch shall
take appropriate action to collect the amount due." See PPR,
Chap. XIV, Sec. 1, ¶ 3.f.(3). See also, Univex
International, supra, Slip op. at 34, fn. 32.
13 The Appellant and the Respondent disagree as to the actual
amount of excess reprocurement costs assessed. The
Contractor maintains that it has been charged with $29,900.00
in excess costs, see App. Brf., p. 2; Complaint, p. 7, while
the Government states that such costs amounted to $29,100.00,
see Res. Brf., p. 2, RPTC, p. 6. Since the difference
between the parties' figures is only $800.00, or less than 3
percent of the amount of excess costs cited by each of them,
their disagreement is basically de minimis. Although the
Board notes that the Assistant Comptroller, FMS, asserts that
the amount of excess reprocurement costs were $29,900.00,
which raises an internal conflict in the Respondent's
position, see Res. Brf., Attachment I-A, ¶ 3, it finds it
unnecessary to resolve this dispute in the context of this
decision, see B & B Reproductions, GPO BCA 09-89 (June 30,
1995), Slip op. at 16, fn. 18.
14 Specifically, the record reveals the following recovery
schedule: (a) $6,236.00 from Purchase Order F-8974, Jacket
No. 539-206 on February 8, 1995; (b) $13,953.00 from Purchase
Order C-1196, Jacket No. 610-750 on February 9, 1995; (c)
$6,167.60 from Purchase Order 99176, Jacket No. 382-298 on
March 23, 1995; (d) $2,715.00 from Purchase Order F-0528,
Jacket No. 634-764; and (e) $819.40 from Purchase Order
99176. Jacket No. 382-298 on April 3, 1995 (second voucher).
See Res. Brf., Attachment 1-B.
15 Apart from Richard de Marigny, Gerard de Marigny, and
Angela de Marigny, the Appellant claims that the flu epidemic
also resulted in the temporary loss of Venerio Rigolini, Vice
President of Engineering, and Artis Myers, Supervisor, to the
firm. See Complaint, p. 3. No doctor's notes were submitted
for Rigolini and Myers, although the Contractor states they
are available upon request. Id.
16 At various times in this proceeding, the Appellant also
asserted that: (a) the default action was somehow
procedurally defective because the Contracting Officer failed
to issue a "Show Cause Notice," affording the Contractor an
opportunity to explain the reason for its failure to perform,
before terminating the contract; and (b) the real reason for
the default was the Contracting Officer's desire to "teach
the Appellant a lesson," which amounts to an allegation of
bad faith and an abuse of discretion. See Complaint, p. 4;
Appellant's Letter, dated March 15, 1995, p. 4; RPTC, pp. 5,
6-7. The Contractor's contention that a "Show Cause Notice"
was required prior to default was rejected by the Board at
the presubmission conference. See RPTC, p. 7. As the Board
noted, since the default was based on the failure to deliver
the AF Folders within the time specified in the contract,
neither a "Show Cause Notice" or "Cure Notice" was required
to be sent to the Contractor prior to termination. Id. See
Univex International, supra, Slip op. at 21; K.C. Printing
Co., GPO BCA 02-91 (February 22, 1995), Slip op. at 13;
Shepard Printing, GPO BCA 23-92 (April 29, 1993), Slip op. at
13, 1993 WL 526848; B.P. Printing and Office Supplies, GPO
BCA 22-91 (February 5, 1993), Slip op. at 12, 1993 WL 311371;
Stephenson, Inc., GPO BCA 2-88 (December 20, 1991, Slip op,
at 19-20, 1991 WL 439274. With respect to a "Show Cause
Notice," in particular, while 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, see PPR,
Chap. XIV, Sec. 1, ¶ 3(c)(1); cf. Lewis B. Udis v. United
States, 7 Cl. Ct. 379, 385-86 (1985), 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, see Univex
International, supra, Slip op. at 24, fn. 25; Shepard
Printing, supra, Slip op. at 14, fn. 20; Stephenson, Inc.,
supra, Slip op. at 20, fn. 22. The Appellant's assertion
that the termination stemmed from the Contracting Officer's
desire to "teach the Appellant a lesson" appears to rest on a
statement allegedly made by Charles Washington, a Printing
Specialist in the Contracts Branch of GPO's Purchase
Division, who apparently was assigned to work with the
Contractor in winding up matters on the contract after it was
defaulted. See GPO Telephone Directory, p. 57. Such a
statement, even if made, is hearsay, which is defined as "a
statement made by the out-of-court declarant which is offered
into evidence to prove the truth of the matter asserted."
See Taylor Air Systems, Inc., ASBCA No. 25526, 84-1 BCA ¶
17,141, at 85,396. See also FED. R. EVID. 801. As a rule,
credible hearsay is admissible in administrative proceedings,
including those of this Board. See, Vanier Graphics, GPO BCA
12-92 (May 17, 1994), Slip op. at 36, fn. 29, 1994 WL 275102
(hearsay evidence is admissible in administrative proceedings
provided it is relevant and material, and otherwise reliable,
adequate, probative, and fundamentally fair. [Citations
omitted.]). Accord, Southwest Marine, Inc., DOTBCA No. 1661,
93-3 BCA ¶ 26,168; Rocky Mountain Trading Co., GSBCA No.
8671-P, 87-1 BCA ¶ 19,406; Johnson & Son Erector Co., ASBCA
No. 23689, 86-2 BCA ¶ 18,931; Hof Construction, Inc., GSBCA
No. 7012, 84-1 BCA ¶ 17,009. However, the statement
proffered by the Appellant in this case is the "rankest sort
of hearsay," more in the nature of speculation, and is
entitled to no credence whatsoever. See Amdahl Corp. v.
Department of Health and Human Services, GSBCA No. 11998-P,
93-2 BCA ¶ 25,612, at 127,488. More importantly, the Board
has never made a finding of bad faith on such skimpy
evidence. In that regard, the Board has held on many
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., Professional
Printing of Kansas, Inc., GPO BCA 02-93 (May 19, 1995), Slip
op. at 43, fn. 58; Universal Printing Co., GPO BCA 09-90
(June 22, 1994), Slip op. at 24, fn. 24, 1994 WL 377586;
Sterling Printing, Inc., GPO BCA 20-89 (March 28, 1994), Slip
op. at 34-35, fn. 46, 1994 WL 275104; B. P. Printing and
Office Supplies, GPO BCA 14-91 (August 10, 1992), Slip op. at
16, 1992 WL 382917; The Standard Register Co., GPO BCA 4-86
(October 28, 1987), Slip op. at 12-13, 1987 WL 228972.
Accord, Brill Brothers, Inc., ASBCA No. 42573, 94-1 BCA ¶
26,352; 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 Corp. v. United States, 543
F.2d 1298, 1302 (Ct. Cl. 1976), cert. denied, 434 U.S. 830
(1977). See, Stephenson, Inc., supra, Slip op. at 54. In
the Board's view, no such "irrefragable" proof of bad faith
exists in this record.
17 The United States Claims Court was renamed the United
States Court of Federal Claims on October 29, 1992, pursuant
to Title IX of the Federal Courts Administration Act of 1992,
Pub. L. No. 102-572, 106 Stat. 4506 (1992).
18 In R.C. Swanson, the Board adopted a four-part test
against which to measure the evidence presented by a
contractor attempting to excuse a default for untimely
performance. In that regard, the contractor had to prove:
(a) that the nonperformance was due to a situation which was
beyond its control and it was not at fault or negligent; (b)
that performance would have been timely but for the
occurrence of the event which is claimed to excuse the
nonperformance; (c) that it took every reasonable precaution
to avoid foreseeable causes for nonperformance and to
minimize their effect; and (d) that a precise period of time
of nonperformance because of the causes alleged. See R.C.
Swanson Printing & Typesetting Co., supra, Slip op. 28-29.
19 As indicated in note 2 supra, three attachments to the
Respondent's brief relate to different contracts than the one
which is the subject of this appeal; i.e., Attachments 2 and
4 concern a contract identified as Jacket No. 634-764, while
Attachment 3 deals with a contract awarded as Jacket No.
610-750. GPO's clear intent in seeking to make these
documents part of the record is to impeach the Appellant's
assertion that it ceased production from December 30, 1994,
to January 20, 1995. Indeed, the Contractor's statement to
the ARPPO on May 2, 1995 (Attachment 4), that its plant was
not operating from the middle of January to nearly the end of
February, would, if introduced at hearing, make the
Appellant's position in this case vulnerable to attack as a
prior inconsistent statement. See Skip Kirchdorfer, Inc.,
ASBCA Nos. 32637, 35074, 91-1 BCA ¶ 23,380. However, the
Board's narrow jurisdictional mandate prevents it from
considering matters outside the scope of the disputed
contract. See, Universal Printing Co., supra, Slip op. at
26, fn. 27, Shepard Printing, supra, Slip op. at 7, fn. 11;
B.P. Printing and Office Supplies, supra, Slip op. at 14-15.
Accordingly, the Board has not considered Attachments 2, 3,
and 4 to the Respondent's brief in the context of this case.
20 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 Co., ASBCA No. 14856, 70-1 BCA ¶ 8,312.
21 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
Foremost Mechanical Systems, Inc., GSBCA Nos. 12335, 12384,
95-1 BCA ¶ 27,382; J. D. Hedin Construction Co. v. United
States, 187 Ct. Cl. 45, 408 F.2d 424 (1969); Murphy, et al.
v. United States, 164 Ct. Cl. 332 (1964).
22 The standard of proof in these cases is a "preponderance
of the evidence." See M.W. Microwave Corp., ASBCA No. 45084,
93-3 BCA ¶ 26,627, at 129,377.
23 The cases tell us that essentially the same rule applies
to contractor delays caused by illness, see e.g., Jerome
Bailey, PSBCA No. 3638, 95-1 BCA ¶ 27,447; C. Howdy Smith,
AGBCA No. 90-154-1, 92-2 BCA ¶ 24,884, injury, see e.g.,
Lewis Evans, AGBCA No. 85-498-1, 86-3 BCA ¶ 19,328, or death,
see e.g., Stanley Jewell, GSBCA No. 10348, 90-3 BCA ¶ 23,283.
24 On August 18, 1995, the Board telephoned the State of New
York's Department of State, Corporation Division, and was
informed by Ms. Donna Rapisarda, Senior Clerk, Corporation
Research, that the Appellant was incorporated under the laws
of New York on December 11, 1974, and that according to her
records, it is currently a business in good standing. Since
the Contractor's corporate status is "capable of accurate and
ready determination by resort to sources whose accuracy
cannot be questioned," the Board takes judicial notice of
that fact for the purposes of this decision. FED. R. EVID.
201(b)(2).
25 The ASBCA also observed that: "It is not, however, whether
the contracting party is incorporated or not that is decisive
insofar as excusability is concerned, as the Government seems
to suggest. Rather, it is whether the parties intended to
have the particular individual do the work, although this
expectation may be remote whenever a corporation is involved.
See, e.g., John F. Lehnertz, AGBCA No. 77-132, 78-1 BCA ¶
12,895 (owner's disabling illness did not justify failure to
perform a tree trimming contract because the contract was
`for nonpersonal services and there was no basis for
concluding that the parties intended to have the [owner] do
the work'). On the other hand, when the Government contracts
with a sole proprietor, the expectation may be that the owner
will personally perform the services requested. Delay due to
the illness of that individual may be excusable. Herman
White, ENG BCA No. 5109, 85-1 BCA ¶ 17,897. See also Plus
Technology, ASBCA No. 45353, 93-2 BCA ¶ 25,854, 10 March 1993
(owner's terminal illness was beyond his control and without
his fault or negligence, but no showing illness delayed
performance). The answer must depend on the individual
circumstances involved." See M.W. Microwave Corp., supra,
93-3 BCA at 129,378.
26 In this context, a "broach" is a tapered bit on a metal-
cutting machine tool that is pulled or pushed through a hole
to enlarge or shape the hole. WEBSTER'S NEW WORLD DICTIONARY
176 (3rd coll. ed. 1988). See Crawford Development and
Manufacturing Co., supra, 74-2 BCA at 50,622.
27 This rule is nothing more than the "black letter"
principle which requires a contractor to either have on hand
or made arrangements for all the necessary ingredients-labor,
plant, equipment, material and finances-adequate for contract
performance prior to making a contract commitment with the
Government. See, K.C. Printing, supra, Slip op. at 15; R.C.
Swanson Printing and Typesetting Co., supra, Slip. op. at 33;
Chavis and Chavis Printing, supra, Slip op. at 14-15. See
also Yankee Telecommunication Laboratories, Inc., supra, 85-1
BCA at 88,873. The reason for the rule is simple-implicit in
a contractor's promise to perform is its assurance that it
has the ability to perform. See, K.C. Printing, supra, Slip
op. at 15; R.C. Swanson Printing and Typesetting Co., supra,
Slip. op. at 34; Chavis and Chavis Printing, supra, Slip op.
at 14.
28 When a defaulted contractor appeals a contracting
officer's termination decision, the usual practice is for the
Board to look at the excess reprocurement cost issue as well,
provided that question is ripe for consideration; i.e., such
costs have been assessed. See Univex International, supra,
Slip op. at 33-34; Sterling Printing, Inc., supra, Slip op.
at 48.
29 As the Board has observed in past cases, GPO reprocurement
procedures are consistent with the general practice in
Government reprocurements. See PPR, Chap. XIV, Sec. 1, ¶
3.f.(2). See K.C. Printing, Co., supra, Slip op. at 21, fn.
22; Sterling Printing, Inc., supra, Slip op. at 17, fn. 25,
at 68, fn. 65.
30 In most cases, the Government satisfies this burden by
showing that it used sealed bid advertising to repurchase
defaulted supplies and services. See e.g., H & H
Manufacturing Co. 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;
Erickson Enterprises, AGBCA 77-168, 79-1 BCA ¶ 13,628. See
generally Cibinic & Nash, pp. 1020-23.
31 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 Corp., supra,
91-1 BCA ¶ 23,566, at 118,145.
32 If the Government fails to make a reasonable effort at
contacting the original bidders, the result may be a denial
or reduction excess costs. See K.C. Printing, Co., supra,
Slip op. at 22, fn. 23 (citing Associated Cleaning, Inc.,
GSBCA No. 8320, 91-1 BCA ¶ 23,360; Old Dominion Security,
Inc., supra; Barrett Chemical Co., Inc., GSBCA No. 4544, 77-2
BCA ¶ 12,625). Basically, the law creates a rebuttable
presumption that the repurchase could have been completed at
the price previously quoted by a lower bidder if an effort
had been made to do so. See Dillon Total Maintenance, Inc.
v. United States, 218 Ct. Cl. 732 (1978); AAA Janitorial
Services, ASBCA No. 9603, 67-1 BCA ¶ 6,091.
33 Where the Government fails, without adequate explanation,
to solicit the second lowest bidder on the defaulted
contract, that bid will set the limit of recovery for excess
reprocurement costs. See, Birken Manufacturing Co., ASBCA
No. 32590, 90-2 BCA ¶ 22,845; Prestex, Inc., ASBCA Nos.
21284, 21372, 21453, 21467, 23184, 81-1 BCA ¶ 14,882, aff'd,
81-2 BCA ¶ 15,397; Environmental Tectonics Corp., ASBCA No.
21204, 78-1 BCA ¶ 12,986; Solar Laboratories, Inc., ASBCA No.
19957, 76-2 BCA ¶ 12,115.
34 Business Forms Service, Inc., ATC Decal Company, and
Technical Publishing Services, Inc. were decided by ad hoc
contract appeals panels which considered appeals from final
decisions of GPO Contracting Officers prior to the
establishment of the Board in 1984. GPO Instruction 110.10C,
Subject: Establishment of the Board of Contract Appeals,
dated September 17, 1984. Decisions of these ad hoc panels
are cited by the Board in its decisions as "GPOCAB." While
the Board is not bound by the decisions of the ad hoc panels,
its policy is to follow their rulings where applicable and
appropriate. See, Univex International, supra, Slip op. at
23, fn. 24; Universal Printing Co., supra, Slip op. at 11,
fn. 9; Shepard Printing, supra, Slip op. at 14, fn. 19;
Stephenson, Inc., supra, Slip op. at 18, fn. 20; Chavis and
Chavis Printing, supra, Slip op. at 9, fn. 9.
35 The Board might have reached a different conclusion if
there had been more than two bidders on the original
contract. See, Marine Engine Specialties Corp., ASBCA No.
20521, 76-1 BCA ¶ 11,891 (the Government failed to mitigate
its excess costs by awarding the reprocurement contract to
the second low bidder on the original solicitation without
making an effort to contract three other contractors who had
submitted offers on the defaulted contract, where the
repurchase unit price was 25 percent greater than that of the
original contract).
36 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; Barrett Refining Corp., supra; Mid-America
Painters, Inc., supra.
37 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 Puroflow Corp.,
supra; Sequal, Inc., supra. See also Solar Laboratories,
Inc., supra, 76-2 BCA at 58,195.