UNITED STATES GOVERNMENT PRINTING OFFICE OFFICE OF THE GENERAL COUNSEL CONTRACT APPEALS BOARD Appeal of the Elcee Printing Company Date of decision: March 4, 1980 Panel 79-5 THOMAS O. MAGNETTI, Chairman GEORGE SIMMS, Member EMANUEL FONTANA , Member Preliminary Statement This is a timely appeal entered by the appellant, Elcee Printing Company (hereafter referred to as the contractor), and taken pursuant to Article 18 (the "Default" clause) and Article 29 (the "Disputes" clause) of the United States Government Printing Office Contract Terms No. 1 as incorporated by reference into the Specifications and the Bid and Acceptance of Program 1540-S (Exhibits A and D of the Appeal File 1/). Program 1540-S, a requirements-type contract, required the contractor to provide for printing of research papers, research notes and lists of publications for the U.S. Department of Agriculture. Following the termination for default of this contract by the Contracting Office, this appeal was filed with the Government Printing Office (GPO) by letter dated March 29, 1979. The appeal centers around the contractor's performance under the contract. The Government maintained that because of the contractor's late shipments and poor quality of the product, the contractor was rightfully terminated for default. The contractor contended in its appeal letter that any poor quality in the product was due to the infrequency of orders and any delinquent shipments were the result of a severe paper shortage in the Great Lakes region (Exhibit M). The decision of this Board which follows is based solely upon the record as evidenced by the documents and exhibits submitted by both parties which constitutes the Appeal File. This procedure is in accordance with GPO Instruction 110.10 titled "Board of Contract Appeals Rules of Practice and Procedure" and dated June 6, 1979. Statement of Facts In May of 1978, the GPO sought bids on a contract to provide offset book printing for the Department of Agriculture. In accordance with the accepted GPO bidding and contracting procedures, this contractor was awarded Program 1540-S which had a duration of 1 year. The use of a requirements-type contract was necessary because no guarantee could be made as to the frequency of the number of orders that would be placed (Exhibit A, pg. 3). Although most orders would not exceed 5,000 copies or 24 pages, no specific number of pages or copies per order could be guaranteed. An occasional order could, however, exceed these anticipated amounts. The contract included saddle-stitched pamphlets with self- or separate cover requiring negatives, imposition, plates, printing, binding, packing and delivery. The contractor was obliged to furnish all paper requirements and all other materials and services necessary for the complete manufacture and shipment of the product.2/ Moreover, the Specifications stated that it was of the utmost importance that the contractor pay strict adherence to the maintenance of the performance schedule established therein and set forth the following special notice of caution that reads as follows: "If the contractor refuses or fails to make shipments of an order within the time specified . . ., the Government may by written notice terminate the right of the contractor to proceed with shipments . . .." See Exhibit A, pg. 2. Throughout the course of the contract the Government experienced difficulty in receiving the ordered shipments from the contractor as scheduled. In addition, several orders were rejected by the Government because the quality of those shipments was substandard. By letter dated July 10, 1978, the GPO informed the contractor that the Print Orders 1, 2 and 3, scheduled for shipment in June, had each arrived 1 day late. On July 12, 1978, the GPO informed the contractor that Print Orders 1 through 7 were deficient in their quality. The contractor was notified by letter dated August 31, 1978, that the printing and binding quality on Orders 9 through 13 was not acceptable. This letter was sent in response to a complaint from the Department of Agriculture that the orders had "poor halftone filmwork, off-center saddle stitching, an excessive amount of extraneous marks and hickeys, setoff, poor opaquing, nonuniform ink coverage, missing copy in some areas, poor trimming, missing pages and poor ink coverage in the solid areas." See Exhibit H. The Government, however, accepted these print orders with the exception of Print Order 9 which had to be rejected on the grounds that the order had to be reprinted in its entirety, remaking all the halftone films. On September 29, 1978, the contractor was notified that Print Order 15 had to be reprinted because of poor quality in the opaquing. In November and December the GPO sent letters to the contractor indicating that Print Orders 23-25 and 27-29 were shipped late (Exhibits J and K). In all of the above notices, the contractor was repeatedly cautioned that it must take immediate steps to ensure timely shipment of each order as per the contract requirements. Additionally, the letter sent to the contractor dated September 29, 1978, warned that if performance did not improve on future orders by the shipment of conforming goods, the Government would "consider termination of the contract pursuant to Article 18, 'Default,' U.S. Government Printing Office Contract Terms No. 1." (Exhibit I) On February 28, 1979, the Contracting Officer terminated Program 1540-S for default "because of poor quality and delinquent shipments" (Exhibit L). Print Order 33 was rejected in its entirety due to poor quality and deficient packing. Government dissatisfaction with the contractor's performance was further documented by letter dated April 5, 1979, the contents of which elaborated on the lateness of Orders 33 through 50, with the number of days for each of the delinquent shipments varying from 8 days to 31 days (Exhibit O). The contractor appealed the decision of the Contracting Officer by letter dated March 29, 1979 (Exhibit M). The submitted notice of appeal specified its disagreement with the Contracting Officer's decision. While not disputing the Government's claim that poor quality work was produced, the contractor stated that "poor quality" was a value judgment that should be determined by some impartial judge. It was further alleged that because of the small number of orders placed with the contractor by the Government, the contractor was "unable to hire adequate personnel to do the job properly, routinely and profitably." The delinquent shipments were justified by the contractor on the grounds that there was supposedly a severe paper shortage in the Upper Great Lakes region which made procurement of the paper supplies very difficult. The contractor related this inadequacy of supply also to the infrequency of the orders. The contractor stated in his appeal letter that "the problem would have been lessened if we had had a greater amount of orders, and therefore, greater allotments, and also greater buying power." Discussion The issue presented by this appeal for resolution is whether the Government properly terminated this contract for default in accordance with the terms of the contract. It is the decision of this Appeals Board that this contract (Program 1540-S) was properly terminated in accordance with the procedures set forth in the contract and the documents incorporated by reference thereto. Therefore, the contractor's appeal from the GPO's termination for default is dismissed in its entirety. The Government justified its termination for default on the grounds that some of the deliveries were delinquent and that some of the shipments were of poor quality. The Government reserved the right within the contractual documents to reject any orders that were substandard. 3/, and to terminate the unperformed portion of the contract for any late deliveries. (Exhibit A, pg. 2.) While the Government did accept many late deliveries of orders, there was no waiver of the right to terminate or no bar to the Government's insistence of strict compliance with the delivery dates for later shipments. P. J. Hydraulics; Inc. ,ASBCA No. 16310, June 13, 1972, 72-2 BCA ¶ 9524. Each delivery was a separable obligation, the delinquent shipment of which allowed the Government to terminate on each occasion of delinquency. LAPP Insulator Company; Inc., ASBCA No. 13303, March 26, 1970, 70-1 BCA ¶ 8219. In its letter of appeal, the contractor contended that if poor quality work had been produced, infrequency of orders was responsible. While the Specifications anticipated that approximately 102 orders would be placed on an intermittent basis during the term of the contract, only 50 orders were actually placed. Therefore, because the Government could make no guarantee as to the frequency of the number of orders that would be placed, a requirements contract was used (Exhibit A). A requirements contract binds the Government to order only that quantity which, in good faith, it requires. The contract is measured not by estimated amounts but by the Government's actual needs. In Shader Contractors, Inc. v. United States, 276 F. 2d 1 (Ct. Cl. 1960) the court said at pg. 7 that: "Based upon the nature of the services to be supplied as well as the plain language of the contract, we are convinced that Shader and the Army intended that this be a contract the performance of which was to be measured by the requirements of the defendant [the Government]. "The figures given as estimates were that and nothing more. They were not guarantees of quantity, but figures which the bidders might reasonably employ as to make realistic quotations." In the instant case, since the Government had purchased all its necessary services from the contractor, the Government had fully performed its part of the contract and its actions cannot be used to excuse nonperformance by the contractor. As for the contractor's assertion that it was prevented from timely performance on the contract by material procurement problems which were a result of a paper shortage within its geographic region, the contractor should have had a solid commitment from a paper supplier prior to making a bid on Program 1540-S. 4/ In Betsy Ross Flag Co., Inc., ASBCA No. 12124, October 31, 1967, 67-2 BCA ¶ 6688, the Board held that: ''[m]arket shortage is not an excusable cause for non-performance. The fact that supplies cannot be obtained except at a cost in excess of the contract price is no excuse. Unwillingness to perform, although at some loss, does not relieve an appellant [the contractor] from his contract obligations." (pg. 31,025) Contractors always have the obligation to determine the availability, prices and delivery dates of materials needed for prompt performance of the contract. Federal Roofing and Painting, Inc., Eng. BCA No. PCC-9, February 28, 1968, 68-1 BCA ¶ 6912. Based upon the above reasoning the contractor's appeal for relief from the Contracting Officer's decision to terminate Program 1540-S for default is hereby denied. _______________ 1/ Hereafter every citation to an exhibit is from the Appeal File unless otherwise noted. 2/ The camera-ready copy was provided to the contractor by the Government. 3/ In response to the contractor's letter of appeal that the quality of the shipments should be judged by an impartial judge, the Board determines that under the terms of the contract the Contracting Officer (as the representative of the Public Printer) could rightfully reject any goods tendered by this contractor which were nonconforming. In the Bid of Acceptance document, signed by both parties, it is stated that "[t]he Public Printer reserves the right . . . to reject all or any portion of consignments which are not in accordance with specifications or equal to standard sample.'' (Exhibit D.) The Specifications (Exhibit A) reiterated. this requirement, stating on page 1 that ''[t]he Public Printer reserves the right to be sole judge as to the quality of workmanship in any article or product delivered under these specifications." 4/ The contractor has offered no substantive proof that the paper shortage did provide an excuse for nonperformance. The only evidence provided by the contractor is the assertion of a paper shortage within the appeal letter. This sort of allegation and speculation is insufficient as proof of the contractor's claim. The Kay C. Co., Inc., ASBCA No. 10621, June 16, 1965, 65-2 BCA ¶ 4914.