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.