UNITED STATES GOVERNMENT PRINTING OFFICE
CONTRACT APPEALS BOARD

Appeal of the Churchill Business Forms Company
Decision dated March 28, 1980

Panel 21-79
Thomas O. Magnetti, Chairman
Louis E. DeNoya, Member
Richard A. Morrison, Member

Preliminary Statement

This is the decision on a timely appeal entered by the appellant,
Churchill Business Forms Company (hereafter referred to as the
contractor).  This appeal disputes the final decision of the
Contracting Officer assessing liquidated damages against the
contractor.  The appeal was taken pursuant to Article 29 (the
"Disputes" clause) of the Government Printing Office Contract
Terms No. 1 as incorporated by reference into the Bid and
Acceptance of this contract (Jacket No.  274-898).  See Exhibit 4
of the Appeal File. 1/

The contract required this contractor to provide marginally
punched continuous forms for the Department of Health, Education,
and Welfare.  Because of late delivery of some of these ordered
forms, the Government assessed liquidated damages in a total
amount of $7,281.41.  The contractor appealed this assessment by
letter dated September 14,
1979.  The contractor contended that it was not responsible for
the late delivery as the delinquent deliveries were caused by the
contractor's paper supplier (Exhibit 14).

In accordance with a request of the contractor for an informal
hearing before a panel of members of the Contract Appeals Board,
a hearing was held on February 29, 1980.  At that hearing the
contractor was ably represented by its designee, Mr. Sean O.
Lane, and the Government was ably represented by Mr. James C.
Lane, Jr., Esquire.

The decision of this Board is based solely upon the record as
evidenced by the documents and exhibits that constitute the
Appeal File and the testimony taken at the hearing.  This
procedure is in accordance with GPO Instruction 110.10 titled
"Board of Contract Appeals Rules of Practice and Procedure",
dated June 6, 1979.

Statement of Facts

On October 19, 1978, in accordance with Government Printing
Office (hereafter GPO) contract award procedures, a purchase
order for Jacket No. 274-898 was issued by the GPO to the
contractor for the printing of 6,147,000 marginally punched
continuous forms with a shipping date of on or before January 19,
1979.  These forms were to be in four
parts, with each part a different color stock.  The contractor
received the notice of award on October 23, 1978, and the
Purchase Order 70485 on October 25, 1978.  Paper in the four
colors, green, white, salmon and goldenrod, was ordered by the
contractor from Fraser Paper Co. and delivered to the contractor
in November of 1978.

In December 1978 the contractor began to use the paper and had
run through two-thirds of it before discovering that a portion of
the goldenrod segment of the paper stock was unable to be used.
2/  However, because of an alleged severe paper shortage
experienced by the paper industry during the winter season, the
contractor did not receive any replacement paper from its
supplier until late January and early February.  As a consequence
of this delay, the contractor was unable to meet the shipment
schedule for some of its shipments.  Exhibit 8 provides a
breakdown of those quantities that were shipped late (just under
2,100,000 forms) and the number of days each order was. shipped
late.  All amounts were finally shipped to their various
destinations by February 23, 1979.

The Government assessed liquidated damages for the amount of time
each shipment was late.  The total amount assessed was $7,281.41
(Exhibit 8).  The formula for assessing these damages can be
found in GPO Form 1026, "Contract For Marginally Punched
Continuous Forms", Sec. 2.19, pg. 6.  This document was effective
from June 1, 1978 through November 30, 1978 and was incorporated
by reference into the Specifications for this contract. (Exhibit
2). 3/  The Government's final payment reflected this deduction
for the liquidated damages. 4/

By letter dated July 30, 1979, the contractor asked the GPO to
review and remove the levy of liquidated damages on the
contractor or grant a retroactive extension on the shipment
dates. This request was based upon the claim that the delay in
shipments was not due to any negligence on the part of the
contractor.  On August 2, 1979, the Contracting Officer wrote to
the contractor that the rejection of paper was no reason to
authorize the extension of a shipping schedule.  The contractor,
again by letter, dated August 17, 1979, requested the Contracting
Officer to review his decision.  In accordance with the
"Disputes" clause of GPO Contract Terms No. 1, the GPO denied
this request for relief in a letter


As requested by letter dated October 15, 1979, a hearing was held
on February 29, 1980, where the representative of the contractor
explained the contractor's position, using various documents in
the Appeal File for support.  At the end of that hearing the
Chairman asked whether and further evidence was to be tendered to
supplement the record.  Since neither party wished to submit
further evidence, the Chairman closed the record.

The issue to be decided by this Panel is whether the GPO properly
assessed liquidated damages against the contractor.

Discussion

It is the decision of the Contract Appeals Board Panel that
liquidated damages were properly assessed in accordance with the
procedures set forth in the contract and the documents
incorporated by reference thereto.  The contractor's appeal from
the Contracting Officer's decision to assess these damages is
denied.

Liquidated damage provisions, such as used in the instant case,
are regarded as enforceable and not a penalty when the
anticipated loss caused by a contractor's failure to fulfill the
terms of his obligation under the contract are uncertain in
amount or difficult to predict at the inception of the contract,
and the amount stipulated is a fair and reasonable forecast of,
and not disproportionate to, the presumable loss or injury.
Bayou Culvert MFG., Inc., AGBCA No. 400, April 6, 1976, 76-1 BCA
 11,796; Rex Trailer Co. v. United States, 350 U.S. 148 (1956).
The validity of the liquidated damage clause depends on the
reasonable anticipation of potential losses that a delay in
delivery might cause. 5/  There is no need for the Government to
suffer actual damages for this clause to be invoked as long as at
the time the contract is awarded, the Government may reasonably
expect to suffer damage if performance is delayed and the dollar
amount of the damage is difficult to ascertain.  Industrial &
Commercial Construction, Inc., FAACAP No.  66-5, August 24, 1965,
65-2 BCA  5060.

The contractor claimed, however, that the Government should, in
this case, grant an extension in the shipment schedule or remove
the assessment of liquidated damages.  This might be justified on
the grounds that the delay in delivery was excusable.  The
contractor contends that the cause of its delay was the lateness
of its paper supplier in delivering the necessary material.  The
supplier had originally provided the paper, but sometime before
the paper was to be used it was ruined.  Immediately after this
discovery the contractor reordered the paper.  Due to the season,
conforming paper could not be delivered in time to make timely
delivery. 6/

Article 17 of GPO Contract Terms No. 1 envisions such excusable
delays, stating in relevant part that:

"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, . . ., and delays of a subcontractor due to such
causes . . .: Provided, That the contractor shall, within 10
calendar days from the beginning of such delay, notify the
contracting officer in writing of the cause of the delay:
Provided further, That such notice to the contracting officer
shall contain the justification for such delay."

Therefore, if the contractor could show that the causes of the
late delivery were unforeseeable and were beyond its control or
of its subcontractor, then these delays could possibly be deemed
excusable.  Newport Shipyard, Inc., DCAB No. NOAA 6-77, November
16, 1979, 79-2 BCA  14,182.

The burden of proof is on the contractor to establish the actual
cause of the delay and that it was excusable within the meaning
of the "Liquidated Damages" clause.  AERO Precision Industries,
Inc., ASBCA No. 17098, January 11, 1973, 73-1 BCA  9880.
However, in the absence of a preponderance of evidence tending to
refute the findings of the Contracting Officer, those findings
will not be disturbed.  Bannock Steel Corp., IBCA No. 452-8-64,
April 22, 1965, 65-1 BCA  4804.  A mere showing of diligence of
the contractor is not sufficient to excuse it from liability for
failing to perform the contract within the time specified.
Bracewell Construction Co.,  GSBCA No. 1353, November 30, 1964,
65-1 BCA  4556.

In the instant case, while the contractor failed in meeting its
delivery dates because of its paper supplier's inability to
obtain paper during a period of shortage, the reason why it was
necessary for the contractor to reorder the paper from its
supplier was because the originally ordered paper had been ruined
by moisture.  The contractor cannot now claim the paper shortage
as the cause of the delay since it was the ruined paper that was
the actual cause.  Moreover, it is clear from the evidence that
the paper was ruined while in control of either the supplier or
the contractor.  This being the case, the contractor has failed
to establish that the cause of late receipt of the paper (i.e.
the ruined paper) was beyond the control of either the contractor
or the paper supplier.  E.F.  Blankenship Co., IBCA No. 516-9-65,
May 27, 1966, 66-1 BCA  5594.  By way of proof, the record
contains only the documents submitted by the contractor.  These
documents demonstrate only that its supplier could not readily
obtain the necessary supplies because of an alleged paper
shortage.  Since this alleged shortage was not the actual cause
of the delay in performance, the cause and effect relationship
necessary for the delay tc be considered excusable has not been
established.  Maverick Diversified, Inc., ASBCA No. 19454,
February 12, 1975, 75-1 BCA  11,114.

As the contractor has not shown that the late delivery arose from
a cause beyond its control or its paper supplier's control, the
delay is inexcusable and did not operate to relieve its
responsibility to perform in a timely manner.  Therefore,
liquidated damages were properly assessed.  George Mason
Construction Co., Inc., GSBCA No. 3863,  September 19, 1973, 73-2
BCA  10,258.

Even if this Panel were to find that the delay was excusable, it
would have difficulty in reducing the liquidated damages award
since the contractor, by its own admittance at the hearing, did
not comply with the contractual obligation to notify the
Contracting Officer in writing within 10 calendar days of
discovering the nature of any such delay.  See Article 17 of GPO
Contract Terms No. 1, supra.  In cases of excusable delay, the
contractor cannot prevail if there has not been this proper
notification.  Emlyn T. Linkous, GSBCA No. 3832, February 4,
1974, 74-1 BCA  10,473; Volta Electric Company, Inc.., NASA BCA
No. 39, October 16, 1963, 1963 BCA  3871.

While this Panel appreciates that the contractor has served the
Government for 19 years and acted in this case, with a certain
amount of diligence in delivering the delinquent paper shipments
as quickly as possible, the Panel lacks jurisdiction to reform
the contract in order to grant the contractor any equitable
relief from its contractual obligations.  Newark Construction
Company, ASBCA No. 4292, Air Force Appeals Panel, September 20,
1957, 57-2 BCA  1459.

Conclusion

Based upon the above reasoning, the contractor's appeal for
extension of the shipment dates or the removal of the assessment
of liquidated damages is denied in its entirety.

_______________


1/ Hereafter, unless otherwise noted, every citation to an
exhibit is from the Appeal File.

2/ The contractor has alleged that the paper was ruined by
moisture that affected the paper sometime prior to it being sent
to press.  There was no evidence provided as to how or when the
paper was in fact damaged.  The paper was, however, so
substandard that it, according to the contractor, was suitable
only for scrap.  See Exhibit 9.

3/ The Specifications were incorporated by reference into the Bid
and Acceptance document signed by the President of the
contracting company (Exhibit 3).  The amount of liquidated
damages is computed by a set formula the rate of one percent of
the contract price for each working day the contractor has not
shipped any part of the contract in accordance with the shipping
dates.  See GPO Form 1026, supra.dated August 27, 1979 (Exhibit
12).  This final decision of the
Contracting Officer was then appealed on September 14, 1979.  In
this letter, the contractor alleged that its delay was due to the
paper supplier's inability to replace the spoiled paper in time
to ship a finished product in a timely fashion, and that this was
an "unforeseeable . cause beyond the control and without the
fault or negligence of the contractor . . .." Further, the
contractor stated that it had performed to the best of its
ability and should not be penalized for supplying a quality
product, albeit late.  It had "acted in the Government's best
interests to provide a quality product to the customer agency"
(See Exhibit 14).

4/ Although the contract was invoiced on March 6, 1979, payment
was not made by the GPO until July 15, 1979, over 100 days later.

5/ Since the validity of the operation of the "Liquidated
Damages" clause has not been challenged by the contractor, this
Board does not have to address the possibility that the use of
this provision in this particular contract was not suitable or
that the amount assessed bears no rational relationship to the
probable damages the Government thought it would suffer during
the negotiation of the contract.

6/ At  the hearing, the contractor alleged that it had made
reasonable efforts to obtain paper from alternative sources but
apparently to no avail.