U. S. Government Printing Office
Contract Appeals Board

Vincent T. McCarthy, Chairman
Samuel Soopper, Member
Jay E. Eisen, Member

Appeal of Wickersham Printing Company
C. A. - 78-5; 78-6
November 27, 1978

Introduction

Appellant, Wickersham Printing Company, has appealed from the
contracting officer's decisions to assess liquidated damages for
delay on shipments under Jackets 231-544 and 239-705/6.  Because
the circumstances surrounding the delays for both jackets are the
same, these appeals have been consolidated and are being decided
at the same time.

Both the Government and appellant have moved for summary
judgment. 1  For the reasons given below, we deny the appellant's
motion and grant the Government's, and thus deny the appeals.

Findings of Fact

Both contracts involved the production of casebound books.  On
Jacket 231-544, the award was made to appellant on April 29,
1977. (Govt. Ex. 7)  As a result of extensions granted for causes
not relevant to this appeal, the final shipment deadline was
September 22, 1977.  The actual shipment occurred on November 7,
1977. (Govt. Ex. 10; Govt. Ex. 11)  As a result of this delay,
liquidated damages of $15,000, the maximum permissible, were
assessed.  (Govt. Ex. 11). 2

Award for Jackets 239-705/6 was made to appellant on July 27,
1977 (Govt. Ex. 5). 3  For reasons not material to this appeal,
the final shipping dates were extended to August 31, 1977 and
September 7, 1977.  (Govt. Ex. 7)  The orders were actually
shipped on September 13, 14 and November 28, 1977. (Govt. Exs.
12-14)

Consequently, the contracting officer assessed liquidated damages
on these jackets as well. 4

On September 6, 1977, appellant had filed a Chapter XI petition
in the Bankruptcy Court of the United States District Court for
the Eastern District of Pennsylvania. (App. Ex. 1)  By order of
the Court, in accordance with Chapter XI of the Bankruptcy Act,
appellant was permitted to continue operation of its business as
a Debtor-in-Possession. (App.  Supp. Ex. 6)

Under both contracts, appellant had arranged for the binding to
be done by Optic Bindery (hereafter referred to as to Optic), a
subcontractor. 5  After appellant filed with the Bankruptcy
Court, Optic balked at continuing performance without assurance
of payment.  Specifically, Optic refused to return volumes it had
bound to the appellant so that they could be shipped timely to
the Government Printing Office.  Negotiations followed, and by
November 17, 1977, an arrangement had been reached under which
Optic would complete the jobs in question. (App. Ex. 9; see
generally  App. Exs. 2-9)

Discussion

The standards for whether a contractor's delay is excusable is
found in United States Government Printing Office Contract Terms
No. 1, Article 17 (1970):

"Delay in deliveries.- 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 unless the contracting officer
shall determine that the services, materials, or supplies to be
furnished under the subcontract were obtainable from other
sources in sufficient time to permit the contractor to meet the
required delivery schedule: 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."

It is, of course, axiomatic that a contractor must show that both
it and its subcontractors are without fault or negligence to come
within the provisions of this article.  See, e.g., Bromion, Inc.,
ASBCA No. 12075, 67-2 BCA  6543 (1967), aff'd 188 Ct. Cl. 31,
411 F.2d 1020 (1969).

Appellant argues that the shipping delays experienced under these
contracts are excused by the terms of this clause. It views all
of the delays after September 6, 1977, the date of the Bankruptcy
Petition, as being caused by the failure of Optic, the
subcontractor, to turn over the books on which it had worked.
This decision was without Optic's fault or negligence, concludes
appellant, since Optic had no assurance that it would be paid for
its work until November 29, 1977, when an agreement was reached
between the parties on this issue. Brief of Appellant Supporting
Appellant's Motion for Summary Judgment at 5-6.

We find appellant's argument faulty on a number of counts.  We
are far from certain that Optic's withholding of the books can be
isolated as the proximate cause of the delays in question. 6
However, even accepting appellant's perspective as to proximate
cause, the argument must fail.

We have no doubt that Optic behaved in an eminently sensible
manner from a business point of view.  It may also be true that
Optic's decision to cease deliveries until it had been assured of
payment was legally permissible. 7  However, these are not the
standards of Article 17.  It can hardly be denied that an act
intentionally done is not "beyond the control" of the actor.  Nor
can such an act be termed "unforeseeable".  See Marmac
Industries, Inc., ASBCA No. 11861, 69-2 BCA  8067 (1969) at
37,522.

More importantly, such an act by a subcontractor does not excuse
the contractor from the consequences of the resulting delays.  As
the Armed Services Board of Contract Appeals stated in construing
the Standard Default Clause, which couches excuse in the same
language as the clause in question:

"[T]his Board has consistently held that the contractor's failure
to obtain the materials necessary for contract performance
because of its unwillingness or inability to meet the payment
terms or price of its supplier does not excuse default.  Tectron
Corporation, ASBCA No. 12901, 12938, 13750, 73-1 BCA  9786;
Marmac Industries, Inc., [supra ]; Harvill Corporation, [ASBCA
Nos. 12448, 12623, 68-1 BCA  6771 (1967)]."

Mil-Craft Manufacturing, Inc., ASBCA No. 19305, 74-2 BCA  10,840
(1974) at 51,583.  See also Sleep-Well Products, Inc., GSBCA No.
1980, 66-1 BCA  5645 (1966).

Appellant must therefore be held responsible for Optic's acts and
cannot be excused under Article 17.

At any rate, as we noted previously, it would be a far from
strained reading of these facts to hold that the delays were
proximately caused by the insolvency of the appellant.  It is, of
course, well established that bankruptcy or insolvency cannot be
considered causes for delay or non-performance beyond the control
and without the fault or negligence of the contractor.  See, e.g.
Consolidated Airborne Systems Inc. v.  United States, 172 Ct. Cl.
588, 348 F.2d 941, 946 (1965). 8

Appellant's final argument is essentially based on its continued
good faith and strenuous efforts to complete these contracts on
time.  Appellant concludes that "the circumstances of this case
do not justify the present assessment of damages, which represent
the maximum possible assessment," and that a nominal amount of
damages should be substituted.  Brief of Appellant at 6-7. 9

While we agree with appellant's characterization of its efforts
we know of no legal authority, and appellant cites none, that
would give us the power to change the amount of the assessment.
Our authority in this case is limited to ascertaining the legal
propriety of the damages.  As appellant has not contested the
amount assessed on this basis, we are unable to do more.

Conclusion

Appellant has argued vigorously and with imagination.  However
since even accepting all of appellant's factual contentions could
not lead it to prevail, we grant the Government's Motion for
Summary Judgment and deny the appeals.

_______________

1  Board of Contract Appeals grant motions for summary judgment
only in situations where "regardless of how the Board decides
facts which have been placed in issue by the pleadings, one part
or the other is entitled to judgment as a matter of law."
Engineering Physics Co., NASA BCA No. 59, 65-1 BCA  4601 (1964)
at 21,987; See also St. Regis Paper Co., AGBCA No. 76-201, 78-1
BCA 12,964 (1978).

The Board has reached its decision in this case based only on the
written record.  Informal, unrecorded argument of counsel for
both parties was heard.

2  The computation of the amount of liquidated damages has not
been put in issue by appellant.

3  Jackets 239-705/6 have their own exhibit numbers.

4  The amount of damages taken on Jackets 239-705/6 is not at all
clear from the record, so we make no findings on this point.  See
note 2, supra.

5  There is no contention by the Government that the
subcontracting was not permissible.

6  We are unable to understand, for example, why the shipments
occurred prior to November 29, 1977, when appellant and Optic
allegedly did not agree on payment until that date.

7  Appellant's original submission to the Board characterized
Optic's actions as "wrongful" and "illegal".  See  Brief of
Appellant at 4.  This view of the case was subsequently
abandoned, apparently on a fresh reading of Article 17 inspired
by the Government's motion for Summary Judgment.  As far as we
can tell, Optic's ceasing of performance seems to have been
legal.  See  UCC  2-702(1).  However, our view of the case does
not depend on the legality or illegality of Optic's acts under
state law.

8  Bankruptcy or insolvency of a contractor is only considered
unforeseeable in the rarest circumstances, usually when the
Government's acts have contributed to the situation.  See,
National Eastern Corporation v. United States, 477 F.2d 1347,
1356 (Ct. Cl. 1973) (citing numerous cases).

9  Appellant also argues that the Government was notified of the
delay in compliance with the terms of Article 17.  We agree that
the notification was sufficient.