BOARD OF CONTRACT APPEALS U.S. GOVERNMENT PRINTING OFFICE WASHINGTON, DC 20401 In the Matter of ) ) the Appeal of ) ) GRAPHICDATA, INC. ) Docket No. GPO BCA 35-94 Program D306-S ) Purchase Order 94586 ) DECISION AND ORDER ACCEPTING APPEAL AND DENYING MOTION TO DISMISS On January 3, 1995, the Board conducted a hearing pursuant to Rule 5 of its rules of practice and procedure for the purpose of receiving the parties' arguments on the question of whether it had jurisdiction to decide the claim of Graphicdata, Inc. (Appellant or Contractor) because the Contracting Officer had failed to render a final decision within a "reasonable time", or, on the other hand, was the appeal premature? See, Decision and Order Scheduling a Hearing, dated December 21, 1994, at 6-7 (Hearing Decision); GPO Instruction 110.12, Subject: Board of Contract Appeals Rules of Practice and Procedure, dated September 17, 1984, Rule 5 (Board Rules). The issue was raised when the Respondent filed a "Motion to Dismiss" (Motion) on November 4, 1994, contending that the Contracting Officer, Richard Weiss, had not had a reasonable amount of time to resolve the claim, and thus the Contractor's appeal of October 21, 1994, should be dismissed as premature.1 See, Hearing Decision, at 2. At the hearing, both parties were represented by counsel who presented oral argument concerning their respective positions.2 In addition, the Appellant offered testimony with regard to the question being heard. The parties waived the filing of post-hearing briefs in this matter (Tr.: 72-73).3 Board Rules, Rule 23. Based on the testimony and arguments at the presented at the hearing, the Board has concluded that the appeal should be ACCEPTED and the Motion should be DENIED. Board Rules, Rule 1(c).4 A. STATEMENT OF FACTS The facts pertaining to the jurisdictional question are essentially undisputed and are set forth here only to the extent necessary for this decision. 1. Program D306-S involves the printing and distribution of U.S. patents (Tr.:26).5 Under the contract, the Appellant is required to perform approximately 2 million printing impressions each week, and make daily deliveries (Tr.: 26-27). 2. The contract was for nine months, divided into two production periods-one of two months (eight issues) and the other of seven months (31 one issues)-totalling 39 weeks of performance (Tr.: 27-28). Although the contract is scheduled to end on February 28, 1995 (Tr.:11), it is so structured that there is an overlap period which will require the Appellant to produce work until the end of April 1995 (Tr.: 49).6 3. The work under the contract was originally estimated to be approximately 2 million impressions for the first production period only, with a lower production rate of approximately 1 million impressions for the second period (Tr.: 28). This estimated reduction in output was based on the U.S. Patent Office's (Patent Office) intent to submit patents electronically in the second production period, instead of in hard copy (Tr.: 28). However, the Patent Office changed its mind and decided to continue provide patents for reproduction in hard copy, so the lower impression rate for the second production period never materialized; i.e., the Appellant continues to produce approximately 2 million impressions a week (Tr.: 29).7 4. Because of this change, the Appellant was asked to submit its proposal for an equitable adjustment in the contract price. On August 22, 1994, the Contractor sent its equitable adjustment claim to the Respondent (Tr.: 33; App. Exh. No. 1). Thereafter, on September 20, 1994, in response to a telephone call from the Contracting Officer, the Appellant certified its claim (Tr.: 34; App. Exh. No. 1). The next day, September 21, 1994, the Contracting Officer sent a memorandum to GPO's Office of the Inspector General (OIG) requesting an audit of the claim (Tr.: 9). The Contracting Officer believed an audit was necessary because the claim contained a number of line items and issues and was complex (Tr.:59). 5. Between October 4, 1994, and October 7, 1994, the Contracting Officer and the Appellant were in touch with each other daily, exchanging proposals in an effort to find an appropriate equitable adjustment figure and avoid a Government audit (Tr.: 43-47: App. Exh. No. 1). When their efforts proved unsuccessful, the Contracting Officer told the OIG to proceed with the audit of the claim (Tr.: 47; App. Exh. No. 1).8 6. On October 12, 1994, Edwin L. Hawse, an OIG Supervisory Auditor, telephoned the Contractor and said that a Ms. Anna Sud had been assigned to inspect the claim, and that while Ms. Sud would begin the audit as soon as possible, he could not give the Appellant a definite date when it would be performed (Tr.: 48; App. Exh. No. 1). Thereafter, on December 21, 1994, the OIG sent a letter to the Appellant informing it that the audit would be conducted at its New Jersey offices on January 9, 1995 (Tr.: 7, 8, 53).9 7. The OIG auditors promised to have a final audit report in the Contracting Officer's hands by the end of January 1995, and he has committed to issue a final decision on the claim two weeks after that (Tr.: 7, 71).10 8. In the interim, when the Contracting Officer failed to issue a final decision on the claim by October 14, 1994, as demanded by its attorney (App. Exh. No. 1), the Appellant, on October 21, 1994, filed its appeal with the Board. B. QUESTION PRESENTED The only issue in this proceeding is whether the Board has jurisdiction over the Appellant's claim because the Contracting Officer has had a "reasonable time" to render a final decision, or should the appeal be dismissed because it is premature? C. CONCLUSIONS From the parties' oral argument and the testimony of the Appellant's witness at the hearing, the Board draws the following conclusions: 1. Rule 1 of the Board Rules parallels section 605 of the Contract Disputes Act (CDA), 41 U.S.C. § 605, to the extent that a contracting officer is allowed 60 days to issue a final decision for claims of $50,000 or less, or a "reasonable time" for claims in excess of $50,000. Compare, Board Rules, Rules 1(b) and 1(c) with 41 U.S.C. §§ 605(c)(1),(3). 2. What constitutes a "reasonable time" under the CDA is determined by taking into account such factors as the size and complexity of the claim and the adequacy in support of the claim provided by the contractor. 41 U.S.C. § 605(c)(3). See, Universal Contracting, DOT CAB Nos. 1565, 1600, 1601, 85-3 BCA ¶ 18,326. However, the Board's reading of the CDA cases tells it that whatever constitutes a "reasonable time", it will most likely be more than 60 days.11 See, Roebbelen Engineering, Inc., DOT BCA No. 1814, 87-1 BCA ¶ 98,628; 3. There is no comparable definition of "reasonable time" in the Board Rules, although the similarity between those regulations and the CDA with respect to other relevant language, as well as their shared procedural philosophy, warrants the conclusion that the CDA's definition is implied in the Board Rules. See, Banta Company, GPO BCA 03-91 (November 15, 1993), Sl. op. at 34. 4. By any definition, the claim in question clearly meets the standard of a complex claim. Moreover, under GPO's procurement regulations, as well as the terms of the contract, given the size and scope of the claim it was not unreasonable under the circumstances for the Contracting Officer to ask the OIG to audit the claim before issuing a final decision. See, PPR, Chap. X, ¶ 4.a.; GPO Contract Terms, Solicitation Provisions, Supplemental Specifications, and Contract Clauses, GPO Publication 310.2, Effective December 1, 1987 (Rev. 9-88), Contract Clauses, ¶ 40. Therefore, the Board concludes that when the Appellant filed its appeal with the Board on October 21, 1994, at the expiration of 60 days, it was acting prematurely. See, Executive Elevator Service, Inc., VABCA No. 2741, 88-3 BCA ¶ 20,964. 5. However, it is well settled that prematurity is not always fatal to the justiciability of an appeal. See, Briggs Engineering and Testing Company, Inc. v. United States, 230 Ct.Cl. 828 (1982); So-Pak-Company, Inc., ASBCA No. 38906, 93-3 BCA ¶ 26,215; Rice King, ASBCA No. 43352, 92-2 BCA ¶ 24,805; Emerson Electric Company, ASBCA No. 31184, 86-2 BCA ¶ 18,979.20. For example, under the CDA the filing of a premature appeal does not relieve a contracting officer from rendering a final decision on a claim in excess of $50,000 within the 60-day period prescribed by the statute. Atherton Construction, Inc., ASBCA No. 41414, 91-1 BCA ¶ 23,635; ACS Construction Company, ASBCA No. 36535, 89-1 BCA ¶ 21,406. 6. It is also settled that an audit alone will not shield a contracting officer from his responsibility to issue a decision. See, Robert Augustine & Sons, Inc., supra, 90-1 BCA ¶ 22,506. In conducting the audit in this case, the OIG auditors are acting as the representative of the Contracting Officer and their obligations are no less than his. See, Computer Systems & Resources, Inc., GSBCA No. 8434-TD, 86-3 BCA ¶ 19,017. 7. What bothers the Board about the audit in this case is the delay involved. As it observed during the hearing, from the time the Contracting Officer requested the OIG audit of the claim (September 21, 1994) to the date it began (January 9, 1995), three and one-half months had elapsed (Tr.: 8-9). Looked at another way, between the date the claim was filed with the Contracting Officer (August 22, 1994) and the date of the OIG audit 131 days had disappeared from the calendar. 8. The OIG auditors promised the Contracting Officer that they would complete their examination by end of January 1995, and he in turn has made a commitment to issue a final decision within two weeks after he receives their report. Taking the OIG at its word, the audit report should be in the Contracting Officer's hands any day now. Therefore, while the Board is not pleased with the dilatory and casual manner in which the OIG handled the arrangements for the audit, it seems that the appropriate remedy at this stage is to give both OIG and the Contracting Officer a reasonable period of time in which to complete review of the Appellant's claim and to issue a decision. See, Computer Systems & Resources, Inc., supra, 86-3 BCA ¶ 19,017. See also, James Reeves Contractor, Inc., ASBCA Nos. 35280-281, 35281-282, 87-3 BCA ¶ 20,173. That is exactly what the Board will do here. As the Board indicated during the hearing, it believes that dismissal of the appeal at this time, followed by the taking of a new appeal, and then redocketing, would here appear to be inefficient and an elevation of form over substance (Tr.: 23). See, Cessna Aircraft Company, ASBCA No. 43196, 92-1 BCA ¶ 24,425, at 121,909. See also, So-Pak-Company, Inc., supra, 93-3 BCA ¶ 26,215. 9. THEREFORE, the Board DENIES the Respondent's Motion and ACCEPTS the Contractor's appeal. Board Rules, Rules 1(c), 2 and c. FURTHERMORE, pursuant to Rule 1(d) of the Board Rules, the Contracting Officer is hereby directed to issue a final decision on the Appellant's claim which was submitted to him on August 22, 1994, within two weeks after receiving the OIG's audit report, but in no event later than February 28, 1995, and furnish a copy of such decision to the Board. Board Rules, Rule 1(d). ACCORDINGLY, further proceedings in this matter are STAYED until such time as the Contracting Officer issues his final decision in accordance with this Decision and Order. Id. See, EPCo Associates, GPO BCA 26-93 (November 18, 1993). Accord, Improved Petroleum Recovery, EBCA Nos. 348-1-86, 349-1-86, 87-1 BCA ¶ 19,431 (1987).12 It is so Ordered. January 31, 1995 STUART M. FOSS Administrative Judge _____________ 1 When the Board scheduled the jurisdictional hearing in this matter, it understood that the Appellant's claim amounted to $532,092.74. See, Hearing Decision, at 1, fn. 1. On January 20, 1995, after the close of the hearing, Counsel for the U.S. Government Printing Office (Respondent or GPO or Government) furnished the Board with a copy of a letter from the Appellant's President, Kenneth Margulies, to the Contracting Officer, dated January 17, 1995, contending that the correspondence showed that during the audit process, the Appellant revised its claim upward without certifying it as required by the Respondent's regulations governing the procurement of printing, see, Printing Procurement Regulation, GPO Publication 305.3 (Rev. 10-90) Chap. X, Section, ¶ 3 (PPR), and thus the Contracting Officer could not be expected to issue a final decision. See, Notice of Filing, dated January 20, 1995, p. 1 (Notice of Filing). On January 23, 1995, Counsel for the Appellant responded with a document entitled "Motion to Strike GPO Notice of Filing Dated January 20, 1995 and Motion for Sanctions Pursuant to Rule 31" (Motion to Strike), which, among other things, flatly denied that the Contractor was increasing its claim, but rather was supplying the auditors with more detailed information, and moreover, the $532,092.74 claim it submitted was properly certified. Motion to Strike, at 2-3. The Board has read the letter from Mr. Margulies to the Contracting Officer and sees nothing to alter its belief that it is dealing with a $532,092.74 claim. However, there is nothing in the Board's procedural rules which contemplate a Motion to Strike, nor has the Appellant established any basis for such a motion at this preliminary stage of the appeal under the Federal rules. FED. R. CIV. P. 12(f). In the Board's view, the Respondent's Notice of Filing is mere argument supplementing the position it took at the hearing, and is not a defensive pleading. Furthermore, nothing in the Notice of Filing warrants the conclusion that the Respondent is attempting to interfere with "the orderly prosecution or defense of an appeal" so as to justify the imposition of sanctions under Rule 31. Board Rules, Rule 31. Accordingly, the Motion to Strike is DENIED. 2 References to the official transcript will be cited as "Tr." followed by a full colon (:), with an appropriate page number thereafter. 3 However, the Counsel for the Appellant did submit a copy of the written statement which he had prepared for the hearing (Tr.: 72). 4 Rule 1(c) of the Board's procedural regulations provides: "Where the contractor has submitted a claim in excess of $50,000 and has requested a final decision from the contracting officer and the contracting officer has failed to issue a decision within a reasonable time, the contractor may file a notice of appeal as provided in subparagraph (a) above, citing the failure to issue such decision." Board Rules, Rule 1(c). 5 The record does not contain the Contracting Officer's appeal file. Board Rules, Rule 4(a). However, for the purposes of background, the Board accepts the testimony of the Appellant's witness, Mr. Margulies, describing the scope of the agreement. The Contractor also submitted a contemporaneously written memorandum to the file from Mr. Margulies, recording his recollection of events from October 4, 1994 to October 12, 1994, as Appellant's Exhibit No. 1 (hereinafter App. Exh. No. 1) (Tr.: 35-39). 6 Consequently, at the time of the hearing the Contractor had been performing under the contract for only five months (Tr.: 49). 7 The Contracting Officer informed the Appellant of the Patent Office's decision on or about July 11, 1994, approximately two or three weeks before the commencement of the second production period (Tr.: 29-30, 31). Thereafter, on July 21, 1994, the Contracting Officer provided the Contractor with a letter stating that ". . . there would be no reduction in print volumes, and `present print volumes will continue until further notice. These projected volumes were faxed to you on July 13, 1994.'" See, App. Exh. No. 1. 8 Among other things, the record shows that the Appellant submitted a revised settlement proposal to the Contracting Officer on October 6, 1994, which increased the rate on line item I.(a)(3) for the second production period from $3.00 to $4.21 (Tr.: 45; App. Exh. No. 1). The Contracting Officer countered by offering to pay a rate of $3.65 for the same line item (Tr.: 45: App. Exh. No. 1). The Contractor did not accept the Contracting Officer's proposal, but offered to split the difference between $4.21 and $3.65 to settle the matter (Tr.: 46; App. Exh. No. 1). However, the Contracting Officer rejected this second offer and told the Appellant that he would have the claim audited by the OIG (Tr.: 47-48; App. Exh. No. 1). In reply, the Contractor requested the issuance of a contract modification increasing the rate on line item I.(a)(3) in the second production period from $3.00 to $3.65-the rate proposed by the Contracting Officer-which would have provided a partial settlement of the dispute and narrowed the scope of the audit to the .56 rate difference between the Government and the Appellant, but the Contracting Officer refused to do so (Tr.: 48; App. Exh. No. 1). 9 At the hearing, Mr. Margulies testified that he had not received the letter and was thus unaware that the audit was to begin the following week (Tr.: 53). The Board was not surprised because the letter was mailed during the U.S. Postal Service's peak season-Christmas-and was sent by regular mail. 10 However, as Counsel for GPO pointed out at the hearing, the OIG's ability to keep its promise may only be as good as current funding and staff levels, which are generally low throughout the agency (Tr.: 7-8). 11 For certified claims in excess of $50,000, the only CDA requirement imposed on a contracting officer who fails to issue a decision within 60 days is to notify the contractor of the time within which a decision will be issued. 41 U.S.C. § 605(c)(2)(B). See, John C. Grimberg Company, Inc., ASBCA No. 42695, 91-3 BCA ¶ 24,074; Robert Augustine & Sons, Inc., VABCA No. 3079, 90-1 BCA ¶ 22,506. The Board Rules do not contain a comparable provision. See, Hearing Decision, at 6, fn. 8. 12 Shortly after the close of the jurisdictional hearing, the Appellant submitted a motion asking the Board to order the Contracting Officer to issue a contract modification increasing the price of line item I.(a)(3) of the contract from $3.00 to $3.65 as the undisputed portion of the claim, because the "undisputed testimony" indicated that the Contracting Officer agreed with the increase. See, Motion to Order Contracting Officer to Pay Undisputed Portion of Claim Immediately," dated January 3, 1995, at 1 (Motion to Pay). The Respondent opposes the Motion to Pay on the ground that Appellant has mischaracterized the evidence which shows that the parties never had a meeting of the minds regarding the amount due the Contractor as an equitable adjustment. See, Respondent's Opposition to Appellant's Motion to Order Contracting Officer to Pay Undisputed Portion of Claim Immediately, January 11, 1995, at 1-2. GPO's printing procurement regulation provides, in pertinent part: "In the event of an appeal, the amount, if any, determined to be payable in the decision of the Contracting Officer, less any portion previously paid, should be paid in advance of any decision by the board without prejudice to the rights of either party or the appeal." PPR, Chap. X, Sec. 1, ¶ 5.g. [Emphasis added.] The plain meaning of the regulation tells us that the sine qua non of a contractor's right to be paid the undisputed amount of a claim while its appeal is pending is the issuance of a final decision from the Contracting Officer establishing that amount. THEREFORE, regardless of any testimony at the hearing, the Appellant's Motion to Pay is premature and is hereby DENIED. Once a final decision is rendered on the claim, the Appellant may renew its demand for payment of the undisputed amount (whatever that may be), but the matter should first be presented to the Contracting Officer.