U.S. Government Printing Office
Contract Appeals Board

Appeal of Allegheny Plastics, Inc.
February 12, 1976

Vincent T. McCarthy, Chairman
Robert M. Diamond, Member
Essie A. Ablove, Member
Panel 7-75

This is an appeal filed on July 29, 1975, by Allegheny Plastics,
Inc. hereinafter also referred to as "Contractor", pursuant to
the disputes clause, Article 29, United States Government
Printing Office, Contract Terms No. 1.

Findings of Fact

1. This case arises out of a fixed price contract, entered into
by the contractor, Allegheny Plastics, Inc., and the U.S.
Government Printing Office, hereinafter also referred to as
"GPO'', for the manufacture of 421,950 (3-piece built-up
construction type) slide calculators (fastened with grommets),
designated as GPO Jacket No. 553-699, Purchase Order 32513.

Delivery was to be f.o.b. Contractor's city with Contractor to
receive material and purchase order on or before September 3,
1974, to ship on or before January 31, 1975.  (Exhibit 1)

2. On October 7, 1974, Contractor wrote GPO requesting an
extension to May 15, 1975, because of difficulties encountered
with their vinyl supplier.  (Exhibit 6)

3. On October 15, 1974, Contractor wrote GPO pointing out several
discrepancies in the art submitted.  (Exhibit 7) As a result copy
was returned to GPO.  (Exhibit 8)

4. On November 13, 1974, in connection with Contractor's request
for an extension, GPO wrote Contractor requesting documentation
of the initial obligation of the supplier as of the time of the
award.  Contractor was further advised to contact GPO upon return
of the copy of the automatic adjusted shipping date which would
result from the Government's delay.  (Exhibit 9)

5. On December 17, 1974, new copy was sent to Contractor, who was
advised to inform GPO of the revised shipping date after receipt
of O.K. to print.  (Exhibits 11, 12)

6. The contract was extended by 74 days to allow for the new
camera copy (from September 3, 1974 to December 19, 1974),
thereby extending the shipping date from January 31, 1975 to l!ay
15, 1975, the date originally requested by Contractor in his
October 7, 1974 letter.  (Exhibits 13, 6)

7. On March 19, 1975, Contractor requested an additional
extension of the final shipping date to August 25, 1975, because
of numerous problems they had encountered along the way.
Contractor advised that they would ''start making partial
shipments in May 1975 and each month thereafter until the
contract is completed in August 1975." (Exhibit 15)

8. On April 7, 1975, Change Order No. 76592-P was issued, "to the
extent that the shipping date is extended from January 31, 1975
to ship 50,000 copies on or before May 23, 1975; ship complete by
July 25, 1975." The Change Order specifically provided as
follows:

"This change is authorized under the provisions of the Special
Terms and Conditions supplement to Contract Terms No. 1 providing
for adjustments in schedules following a delay by the Government
in furnishing copy.'' (Exhibit 16)

9. On July 11, 1975, Contractor wrote GPO advising that "due to
extreme manufacturing problems, we will be unable to meet the
required shipment date of July 25, 1975." Contractor advised that
the "dies . . . used for preproduction samples . . . at that time
proved satisfactory, however, after approval was received and
full production started, they did not last.'' Subsequently they
had to be completely rebuilt, resulting in 4 weeks lost
production time.  "To increase the problem, the eyelet machines
have not functioned properly'' but replacement parts were not
available.  Contractor stated he had increased his staff and was
working 24 hours a day, 6 days a week, but even then could not
make up the production time that had been lost.

He further requested additional bills of lading in order to make
partial shipments.  (Exhibit 17)

10. On July 17, 1975, GPO wrote Contractor advising that the
"circumstances outlined in [his] letter [of July 11, 1975,] fail
to establish a basis for an extension of the shipping schedule.''
(Exhibit 19)

11. On July 22, 1975, Contractor wrote GPO providing more
specific data on the causes for the delays.  (Exhibit 20)
On July 24, 1975, a meeting was held at GPO with Contractor's
representative, Mr. Shalansky; GPO's Superintendent, Central
Office Printing Procurement Division, Mr. Goltz; and GPO Printing
Specialist, Mr. Grupe.  At this time Contractor submitted his
July 22, 1975 letter together with supporting documentation.
Contractor was informed that this data would be taken into
account in making the final determination on an extension of the
schedule.  (Exhibit 20A)

12. On July 30, 1975, GPO issued its Final Decision of the
Contracting Officer, denying relief from liquidated damages on
Jacket 553-699 by granting the requested extension of the
shipping schedule beyond that already granted.  Contractor was
advised that he had failed to provide any information upon which
such relief could be granted; that the information provided did
not fall within the scope of Article 17 of Contract Terms No. 1,
or state grounds upon which relief could be granted.  (Exhibit
21)

13. On July 29, 1975, Contractor appealed to the Public Printer
under Article 29 of GPO Contract Terms No. 1.  (Exhibit 22)

Discussion

At the outset it is noted that in his appeal Contractor makes
reference to ''Federal Procurement Regulation Public Law 85-807,
Section 8," which he quotes as saying that "the Government in no
way can/or should intentionally put a contractor into a financial
burden. . .'' P.L. 85-807 (72 Stat. 975, August 28, 1958) is an
act amending the laws granting education and training benefits to
certain voters, which has no reference to procurement.  If
Contractor intended to cite P.L. 85-804, the National Defense Act
of 1958 (72 Stat. 972, August 28, 1958), it also is not for
application in this matter.  That Act refers only to certain
national security related procurements and situations and is not
for application in the instant procurement which, although for
the Department of the Army, was not for such security articles,
but was made in the normal course of business.  It is further
pointed out that the Government is not proceeding intentionally
to impose a burden on a contractor, but is seeking only to
enforce the terms of the contract entered into by Contractor and
GPO, the merits of which will be discussed below.

GPO Form 2459D incorporated by reference into the contract
provides in pertinent part as follows with respect to liquidated
damages:

"LIQUIDATED DAMAGES:  Should the contractor default on shipping
schedules stated in the specifications, the contractor will be
assessed liquidated damages against that part or parts of an
order which have not been shipped to the specified destination on
the specified date.  Damages will not be assessed against that
part or parts of an order which have been shipped on schedule.
The amount of damages will be computed at the rate of one percent
(1%) of the contract price of the quantity not shipped in
accordance with specifications for each working day the
contractor is in default of the shipping schedule(s):  Provided,
That the minimum amount of liquidated damages shall not be less
than $5.00 for the entire order and not more than $500 per day on
the entire order, except the total damages assessed against the
contractor shall in no case exceed fifty percent (50%) of the
total value of the entire order.  Liquidated damages will not be
assessed if the contractor has shipped at least ninety percent
(90%) of the quantity ordered for shipment to a specified
destination on or before the scheduled date.

* * *

"In the event an adjustment of schedule has been requested by the
contractor and is approved by the Government Printing Office and
ordering agency, the contractor will be required to meet the
adjusted shipping date and will be considered to be delinquent if
he fails to do so.  In such instances no relief from liquidated
damages will be allowed."

The appeal in this case arose from the application of the
liquidated damages clause of the contract which resulted from
delayed performance (not yet completed as of December 31, 1975).

The initial delay in this matter was two-fold.  Contractor had
difficulty with its vinyl supplier, and simultaneously there were
Government caused delays resulting from discrepancies in the
camera copy furnished.  As a result of its supplier problems,
Contractor, on October 12, 1974, requested an extension from
January 31, 1975 to May 31, 1975.  The problems with the copy
furnished by the Government were discovered on October 15, 1974,
and the copy was subsequently returned to GPO.  It was finally
corrected and returned to Contractor December 19, 1974.

Initially, because of the Government caused delays the
determination was made to extend the new shipping date to May 15,
1975, the date originally requested by Contractor.  However,
following Contractor's March 19, 1975, request for an additional
extension because ''of the numerous problems," and following
additional conversations with both Contractor and the Department
(Army), a change was approved authorizing 50,000 to be shipped on
or before May 23, 1975, with complete shipment to be made on or
before July 25, 1975.  This extension amounted to an increase in
production time of from 5 days for the first 50,000 to 48 days
for the balance over and above the 103 production days originally
allowed for the entire job.

Subsequently Contractor wrote GPO advising that the dies used for
manufactur-ing the pre-production samples, which at that time
proved satisfactory, were no longer functioning properly, that
they did not last.  In addition, Contractor stated, the eyelet
machines were not functioning properly, its supplier was on
vacation, and it would not be able to get replacement parts for
several weeks.  Because of all these difficulties Contractor
requested an additional extension of time be granted.

Article 17 of Contract Terms No. 1 provides in pertinent part as
follows:

''Penalties and/or damages shall not be applied against the
contractor for delays in delivery occasioned by unforeseeable
causes beyond the control and without the fault or negligence of
the contractor, including, but not restricted to, acts of God, or
the public enemy, acts of the Government, fires, floods,
epidemics, quarantine restrictions, strikes, freight embargoes,
unusually severe weather, and delays of a subcontractor due to
such causes. . .''

It is well settled that a contractor who claims that its late
performance and delivery is excusable has the burden of proving
the same under the terms of the contract.  It must prove
affirmatively that the failure to achieve timely performance was
caused by or arose out of a situation beyond its control and
without its fault or negligence.  In addition it must show that
it could have performed on time save for the occurrence of the
event it claims as an excusable delay.  Lee K. Geiger
Construction Company, GSBCA 67-1 BCA  6189; American
Construction Company, Inc., GSBCA 65-2 BCA  4964.

In a similar case, the Department of Interior Board of Contract
Appeals held that the unexplained breakdown of machinery in the
contractor's plant was not a basis for an excusable delay under
the default clause of the contract (which is substantially the
same as Article 17 of GPO Contract Terms No. 1)

The Board, in supporting the decision of the Contracting Officer,
cited with approval the holding in Carnegie Steel Company v.
United States, 240 U.S. 156 (1916), as follows:

"'It will be observed that the point in the case is a short one.
It is whether the causes of delay alleged in the petition were
unavoidable, or were of the character described in the contract;
that is, 'such as fires, storms, labor strikes, action of the
United States, etc.' The contention that the alleged causes can
be assigned to such category creates some surprise.  It would
seem that the very essence of the promise of a contract to
deliver articles is ability to procure or make them. . . .

'''But even if this cannot be asserted, the case falls within The
Harriman, supra, where it is said that 'the principle deducible
from the authorities is that if what is agreed to be done is
possible and lawful, it must be done.  Difficulty or
improbability of accomplishing the undertaking will not avail the
defendant.  It must be shown that the thing cannot by any means
be affected.  Nothing short of this will excuse nonperformance.'

"'And it was held in Sun Printing and Pub. Asso. v. Moore, (sic)
183 U.S. 642, 46 L. ed.  366, 22 Sup. Ct. Rep. 240, that 'it was
a well-settled rule of law that if a party by his contract
charges himself with an obligation possible to performed, he must
make it good, unless its performance is rendered impossible by
the act of God, the law, or the other party.  UNFORESEEN
DIFFICULTIES, HOWEVER GREAT, WILL NOT EXCUSE HIM.'. . .

'''ABILITY TO PERFORM A CONTRACT IS OF ITS VERY ESSENCE.  It
would have no sense or incentive, no assurance of fulfillment,
otherwise; and a delay resulting from the absence of such ability
is not of the same kind enumerated in the contract--is not a
cause extraneous to it and independent of the engagements and
exertions of the parties.' (Emphasis supplied.)

"The unexplained breakdown of machinery is not excusable per se
since it is well settled that difficulty attending the
performance of a contract is not an excusable cause of delay.

"In KRAUSS v. GREENBERG, the Court stated explicitly:

"'It seems clear in the light of these decisions that if a
government contractor asked for an extension of time due to a
breakdown of his machinery, not attributable to the causes
specified or anything similar thereto, he could not obtain it
because part of the ability to perform, which is the contractor's
undertaking, is to have available machinery and replacement parts
so that performance will not be delayed due to machinery
breakdown.  That is the very thing he undertakes to do when he
agrees to perform within a given time.'

"Hence, the appeal is denied." Vereinigte Osterreichische Eisen
Und Stahlwerke Aktiengesellschaft, 1962 BCA  3503

Although not exactly on the same facts, the IBCA also held in
Fulton Shipyard. 71-1 BCA  8616, that the time required to
prepare machinery equipment and time lost when the equipment
broke down did not constitute excusable delay.  In that case the
Board stated that

"[i]t is a general rule that equipment breakdowns are not an
excusable cause of delay. . . The reason for this rule is that it
is the contractor's responsibility to have labor, plant,
equipment, finances and material adequate for contract
performance."

The Board further held that the inclusion of a liquidated damages
clause in a contract was proper and an assessment of liquidated
damages could be made for delayed performance even in the absence
of actual damages.  It is well settled that the presence of
actual damages is not a prerequisite to the assessment of
liquidated damages.  It was reasonable to assume under the
circumstances that damages would result from delayed performance.

Conclusion

Based on the foregoing we are constrained to hold that the cause
of the delay was not unforeseeable or without fault as negligence
of Contractor.  It was its responsibility to have the necessary
dies and equipment and to ensure that both the dies and equipment
would function sufficiently to perform the terms of the contract.

Accordingly, it is held that Contractor is not entitled to an
extension of time to relieve it from the imposition of liquidated
damages for its delay in performing the contract.  On the basis
of the facts found, the Board concludes that liquidated damages
were properly assessed for delayed performance not found to be
excusable delay.

In view of the foregoing, the appeal is denied.