BOARD OF CONTRACT APPEALS U.S. GOVERNMENT PRINTING OFFICE WASHINGTON, DC 20401 In the Matter of ) ) the Appeal of ) NIMBUS MANUFACTURING, INC. ) Docket No. GPOBCA 21-96 Program C642-S ) Purchase Order 93124 ) Print Order 40003 ) For the Appellant: Nimbus Manufacturing, Inc., Silver Spring, Maryland, by Frederic G. Antoun, Jr., Attorney at Law, Chambersburg, Pennsylvania. For the Government: Thomas Kelly, Esq., Assistant General Counsel, U.S. Government Printing Office. Before BERGER, Ad Hoc Chairman. DECISION ON MOTION AND CROSS-MOTION FOR SUMMARY JUDGMENT AND ORDER Nimbus Manufacturing, Inc. (Appellant), 1523 Hugo Circle, Silver Spring, Maryland, timely appealed the July 23, 1996, final decision of Contracting Officer Jack Scott of the U.S. Government Printing Office (Respondent or GPO), partially terminating the Appellant's contract (Program C642-S, Purchase Order 93124) for default. Both parties have moved for summary judgment. For the reasons discussed below, the Respondent's motion is GRANTED and the Appellant's motion is DENIED. I. BACKGROUND 1. On or about March 27, 1996, Nimbus was awarded a term contract encompassing the production and delivery of Compact Discs-Read Only Memory (CD-ROMs), with accompanying self-mailers, for the Air Force. The specifications required delivery within 5 workdays of notification to the contractor of the availability of a print order and associated Government-furnished material. Rule 4 File, Tab A.1 2. On June 19, Print Order 40003, for a quantity in excess of 22,500 CD-ROMs was issued. The Print Order specified a shipping date of June 28. Rule 4 File, Tab I. 3. The Appellant did not ship by that date because of difficulties associated with receiving the mailers. Rule 4 File, Tab S. 4. On July 1, 3, and 8, a Nimbus representative talked with an Air Force official regarding the delay. In the July 1 conversation the Nimbus representative informed the Air Force of the delay but promised a partial shipment to arrive on that date. In the July 3 conversation, initiated by the Air Force to see why the promised shipment had not arrived, Nimbus referred to shipping problems associated with the mailers, but said it thought it would be able to deliver on July 8; the Air Force official reminded Nimbus of the 5-day turn-around requirement, explaining that time-sensitive material was involved. In the July 8 conversation, the Nimbus representative said that the mailers had been lost in shipment, and that Nimbus would deliver as soon as it received the mailers. The Air Force official stated that the shipment was "long overdue" and that the Air Force "was not happy with this late shipment." In a subsequent conversation on that date, the Nimbus representative advised that the mailers had been located and that the CD-ROMs would be delivered to the Air Force on July 10. The Air Force official replied that the product "was really of no value ... because of the time sensitive material on the disk ... that the August issue was soon to be released," and that the order would be coming in "to[o] late to mail to the field." Rule 4 File, Tab S. 5. On July 8, GPO was informed for the first time that the Appellant had not met the contract delivery schedule. GPO was also advised by the Appellant on that date that it expected to be able to deliver on July 10. GPO then issued a Show Cause notice to the Appellant, advising that it was considering terminating the contract for default and giving the Appellant 5 days to present any facts bearing on the question of whether the failure to perform arose from causes beyond the Appellant's control and without Appellant's fault or negligence. The notice specified that it was not the intention of the Government to condone any delinquency or to waive any rights under the contract. Rule 4 File, Tab K. 6. Some time on July 10, the Air Force informed GPO that the CD-ROMs still had not been delivered. The Contracting Officer then directed the Air Force not to accept delivery. Delivery was attempted on that date (the parties disagree as to whether that was before or after the Contracting Officer's directive was received), but the Air Force refused to accept it.2 Shortly thereafter, the Respondent telephonically informed the Appellant that the Print Order was "canceled." 7. On July 12, the Air Force sent to GPO the 25 CD-ROMs that were "inadvertently accepted" at the Air Force Electronic Publishing Library. In an accompanying letter, the Air Force, explaining why the other 22,025 had been rejected, stated that the product is "extremely time sensitive and becomes outdated if not received on the scheduled delivery date and that because of the late shipment the CD-ROMs were of "no value" to the Air Force and would have been destroyed if accepted. Rule 4 File, Tab N. 8. By letter of July 18, the Appellant responded to the Show Cause notice, describing the problems it had encountered with its mailer contractor and with shipping delays and explaining the steps it had taken to deal with the situation. Rule 4 File, Tab O. 9. On July 19, the Contracting Officer sought concurrence from the Respondent's Contract Review Board to terminate for default the Air Force's quantity of 22,050 CD-ROMs under Print Order 40003. Concurrence was granted on July 22. Rule 4 File, Tab P. A "Notice of Termination-Partial" was sent to the Appellant the next day. Rule 4 File, Tab Q. II. DISCUSSION Time is of the essence in all Government supply contracts.3 Simmonds Precision Products, Inc. v. United States, 546 F.2d 886 (Ct.Cl. 1976). The "Default" clause of the contract, GPO Contract Terms, Solicitation Provisions, Supplemental Specifications, and Contract Clauses, GPO Pub. 310.2, effective December 1, 1987 (Rev. 9-88), Contract Clauses, ¶ 20, therefore permits the contracting officer, by written notice to the contractor, to immediately terminate a contract for default if the contractor fails to deliver the supplies or perform the services within the time specified or any extension thereof. While the Government has the right to terminate a contract immediately for failure to make timely delivery, the Government typically is more interested in production than in litigation, Devito v. United States, 413 F.2d 1147 (Ct.Cl. 1969); thus, "[a]s a practical matter ... the Government rarely terminates contracts for slight delays, much less immediately," and instead may take a reasonable period of time to determine the course of action that would be in the Government's best interests. Stephenson, Inc., supra, at 21-22. However, if a contract is not terminated for default within a reasonable time after the due date has passed, an inference is created that time is no longer of the essence and, in the absence of a new delivery date, the Government may be held to have waived, or to be estopped from exercising, its right to terminate. De Vito v. United States, supra. The necessary elements for such a holding are (1) a failure to terminate within a reasonable time after default under circumstances indicating forbearance, and (2) reliance by the contractor on that failure to terminate by continuation of performance, with the Government's knowledge and implied or express consent. In other words, if the Government acts in such a way as to indicate an election to continue performance after the original delivery date and the contractor then relies on those actions in continuing performance, the Government will have waived its right to terminate because of the contractor's failure to meet that original delivery date. See Questar Printing, Inc., supra, at 46-47; Stephenson, Inc., supra, at 26-27. Accordingly, "the rule is that once a delivery date has passed, and the ordering agency has had a reasonable opportunity to determine that the contractor has not complied with the delivery date, a contracting officer should either issue a termination for default or establish a new delivery date-failure to do either will forfeit the Government's right to terminate ...." Questar Printing, Inc., supra, at 49-50. The Appellant asserts that the Government's actions in this case, which it describes as "work[ing] with the contractor to get the job completed and delivered as quickly as possible" and as including discussions toward that end between "the contracting officer's representative" and the Appellant as late as 12 days after the original delivery date, along with the Appellant's continued performance and effort to deliver, constitute a waiver of the right to terminate for failure to meet the original June 28 delivery date. The Appellant further asserts that no new delivery date was established or, alternatively, that a new delivery date of July 10 was established which it met. The Respondent's position is simply that it first learned of the default situation on July 8, immediately issued a show cause notice indicating the possibility of termination, and took no other action inconsistent with an intention to terminate. As the Respondent sees it, any view that the Appellant had regarding the Government's acquiescence in a July 10 delivery came from its dealings with an Air Force official or GPO's contract administrator, neither of whom was authorized to change the delivery terms of the contract. A review of the cases in this area indicates that there is no hard and fast rule dictating at exactly what point a Government delay in terminating a contract for default will constitute a waiver of the right to terminate. (For example, a delay of 78 days was found in Stephenson, Inc., supra, to be a reasonable period of forbearance, while in another case a delay of 57 days was held to reflect an intention to allow contract performance to continue. See Westinghouse Elec. Corp., ASBCA 20306, 76-1 BCA ¶ 11,883.) Because the contracting officer is allowed a reasonable time to investigate the facts and determine the best course of action, Precision Dynamics, Inc., ASBCA 42955, 97-1 BCA ¶ 28,846; Eraklis Eraklidis, ASBCA 40110, 91-3 BCA ¶ 24,188, whether a period of delay is considered to be a reasonable period of forbearance as opposed to an election to permit the contract to proceed depends upon the facts and circumstances of each case. H.N. Bailey & Assocs. v. United States, 449 F.2d 387 (Ct.Cl. 1971); Precision Dynamics, Inc., ASBCA 41360, 97-1 BCA ¶ 28,722. Where the facts and circumstances indicate that the Government, through its actions, words, or inaction, led the contractor to believe that the Government had elected to have the contract continue, a waiver will be found; where the circumstances fall short of indicating that the Government made such an election, the Government's right to terminate will survive the delay. See John Cibinic, Jr. and Ralph C. Nash, Jr., Administration of Government Contracts (Third Ed. 1995) 968-69 and cases collected therein. The facts in this case, when viewed most favorably to the Appellant, do not permit the conclusion that the Government waived its right to terminate for the failure to deliver on June 28. First, none of the conversations between Nimbus and the Air Force involved an affirmative statement by the Air Force official to the effect that Nimbus should continue with performance. On July 1 Nimbus stated its intention to make a partial delivery that day; on July 3 Nimbus spoke of delivery on July 8; on July 8 Nimbus reported an additional delay and then in a subsequent conversation indicated it would deliver on July 10. Nothing in the record suggests that the Air Force encouraged or agreed to these later deliveries. Rather, the Air Force made it clear on July 3 that the 5-day contract delivery period was important to the Air Force because time-sensitive material was involved, and on July 8 indicated in the initial conversation its unhappiness with the contractor's tardiness and then later stated that delivery on July 10 would be of no value to the Air Force. While the Air Force official never told Nimbus not to bother attempting delivery and apparently was willing to accept the shipments promised for July 1 and July 8 if delivery actually took place on the promised dates, the facts of record clearly reflect that the Air Force, rather than affirmatively inducing that continued performance, was essentially doing no more than reacting to the Appellant's "optimistic projections." See H.N. Bailey & Assocs. v. United States, supra. Moreover, even if it could be said that the Air Force had agreed to an extended delivery date, that date was not later than July 8. When Nimbus failed to deliver by July 8 and subsequently told the Air Force it would deliver on July 10, the Air Force told Nimbus that it was not adhering to its contract and that CD-ROMs delivered on July 10 would be of no value to the Air Force. This is hardly consistent with the notion that the Air Force considered July 10 to be a new, acceptable delivery date. Second, and in any event, the Air Force's conversations with Nimbus are irrelevant. While Nimbus's contract was a "direct deal" contract, pursuant to which the Air Force could issue print orders directly to the Appellant and certain direct contact between Nimbus and the Air Force was authorized, the Air Force had no authority to change the terms of the contract; that authority remained with the GPO contracting officer. Fry Communications, Inc., GPOBCA 30-94 (March 30, 1998), slip op. at 6, 1998 WL ______; Swanson Printing Co., GPOBCA 27-94 and 27-94A (November 18, 1996), slip op. at 4, n.9, 34, 1996 WL 812958; Printing Procurement Regulation, GPO Pub. 305.3 (Rev. 10-90) (hereafter PPR), Chap. XII, Sec. 1, ¶ 2. Nimbus was specifically informed of that fact in the Contracting Officer's contract award letter of March 27, 1996.4 Thus, Nimbus knew that no one in the Air Force had the authority to change the contract delivery date. It therefore could not reasonably believe, on the basis of its conversations with the Air Force, that there had been any extension of the delivery date. See General Prods.Corp., ASBCA 16658, 72-2 BCA ¶ 9,629 (contractor knew that administrative contracting officer was not authorized to accept proposed delivery schedule revision); Stephenson, Inc., supra at 34 ("for detrimental reliance to occur ... there must be ... conduct by a contracting officer which the contractor reasonably believes constitutes encouragement to proceed ... after the delivery date has passed ...." [emphasis added]). The Respondent's actions during this time period do not remotely suggest any undue delay or encouragement or inducement to the Appellant to continue performance. The Respondent first learned of the failure to deliver by the contract deadline on July 8 when the Air Force had the matter brought to the attention of the contract administrator. Shortly thereafter, the contract administrator had a telephone conversation with the Appellant's representative in which the representative stated that he anticipated being able to deliver on July 10. The contract administrator, who also did not have authority to change the delivery date, did not advise Nimbus not to ship on that date, but there is no allegation that she in any way requested, encouraged, or induced delivery on that date. Later that day, the Contracting Officer issued his show cause notice, stating that he was considering terminating the contract for default and inviting the Appellant to explain why it had not delivered by the contract deadline of June 28. The Appellant received the show cause notice on July 12. Rule 4 File, Tab O. Thus, the only contact between GPO and the Appellant prior to the attempted delivery on July 10 was the telephone conversation on July 8. (The Appellant states that it made another call to GPO later on July 8 to confirm the July 10 delivery.) The Appellant, while not asserting that the contract administrator said anything to encourage the July 10 delivery, asserts that GPO "acquiesced" in the July 10 delivery date because the contract administrator did not direct it not to deliver on that date or advise it to expect a termination for default notice. This argument fails for several reasons. First, mere silence, without more, normally will not constitute an election to permit continued performance. ISC/Phonplex Corp. Instruments Sys. Corp., ASBCA 16668, 73-2 BCA ¶ 10,361. Second, as stated above, only the Contracting Officer had the authority to change the contract delivery date. The contract administrator had no such authority. Thus, she could not, on behalf of the Government, "acquiesce" in a July 10 or any other extended delivery date. All the Appellant could reasonably expect from her, as GPO's designated point of contact (so identified in the March 27 award letter from the Contracting Officer) for this contract, was that she would inform the Contracting Officer promptly of the situation, something she appears to have done, as the Contracting Officer issued his show cause notice later that same day. Third, also as indicated above, the Contracting Officer, upon learning of the situation, was entitled to a reasonable period of time to determine the appropriate course of action, subject to the need to act expeditiously as the Appellant was presumably continuing to incur costs in its efforts to effect delivery by July 10. ISC/Phonplex Corp. Instruments Sys. Corp., supra. Here, the facts of record indicate that the Contracting Officer (1) immediately upon learning of the Appellant's failure to deliver on June 28 issued a show cause notice5 seeking information as to whether that failure might be excusable, (2) upon learning on July 10 that the customer agency could no longer use the CD-ROMs because of the time-sensitive material involved, concluded that a default termination (subject to the Appellant's response to the show cause letter) was appropriate and took the most immediate, direct action possible consistent with that conclusion, directing the Air Force not to accept delivery 6 and having the Appellant notified that the print order was "canceled," and (3) after allowing time for the Appellant to respond to the show cause notice,7 terminated the contract for default on July 23 after requesting concurrence for such action on July 19 from GPO's Contract Review Board8 and obtaining it on July 22. The Board sees nothing in these facts that would permit the conclusion that GPO failed to act expeditiously or within a reasonable period after learning of the Appellant's failure to timely deliver, or that GPO induced or encouraged the Appellant to continue with its plans to attempt delivery on July 10. The fact that the attempted delivery preceded the Appellant's receipt of notice that the print order was "canceled" or that the contract was terminated for default is of no consequence-once the Appellant failed to deliver on time, the Government had the right to terminate. Nuclear Research Assocs., Inc., ASBCA 13563, 70-1 BCA ¶ 8,237. In summary judgment proceedings the parties are expected to go beyond the basic pleadings, typically by relying on affidavits or other evidence in the record. Artisan Printing Inc., GPOBCA 15-93 (February 6, 1998), slip op. at 16, 1998 WL 149001. Neither the Appellant nor the Respondent has furnished affidavits in this case-they both rely essentially on the Rule 4 File. Despite this unusual posture, however, the Board is satisfied that the undisputed facts of record permit the conclusion that the Appellant was in default for failure to deliver by the contractually required date of June 28, 1996, and that the Respondent did not waive that delivery date by doing anything that reasonably could be regarded as electing to continue contract performance. Accordingly, the Board concludes that as a matter of law the Appellant is not entitled to summary judgment and that as a matter of law the Respondent is so entitled. Therefore, the Appellant's motion is DENIED and the Respondent's Cross-Motion is GRANTED. It is so Ordered. July 9, 1998 Ronald Berger Ad Hoc Chairman GPO Board of Contract Appeals _______________ 1 The Contracting Officer's appeal file, assembled pursuant to Rule 4 of the Board's Rules of Practice and Procedure, was delivered to the Board on November 20, 1996. It will be referred to as the Rule 4 File, with an appropriate tab letter also indicated. The Rule 4 File consists of 20 Tabs, denominated as Tab A through Tab T. 2 The refused shipment was for a quantity of 22,025 sent to the Air Force Publishing Distribution Center in Baltimore. According to the Appellant, the much smaller quantities delivered to depository libraries and the Air Force Publishing Office were accepted. Complaint, ¶ 11. 3 GPO printing contracts are considered supply contracts. Questar Printing, Inc., GPOBCA 19-94 (June 12, 1997), slip op. at 43, n.59, 1997 WL 742508; Stephenson, Inc., GPOBCA 02-88 (December 20, 1991), slip op. at 25, n.28, 1991 WL 439274. 4 The letter stated that "[r]epresentatives of the ordering agency do not have authority to alter or change the specifications, contract terms, or the print orders, once issued." Respondent's Reply to Appellant's Motion for Summary Judgment and Respondent's Cross-Motion for Summary Judgment, Attachment A. 5Apparently, given the Appellant's receipt date of July 12, the show cause notice was sent only by mail. Under the circumstances, it would have been prudent for the Contracting Officer to have sent the Appellant a copy of the notice by facsimile transmission. (The Appellant's facsimile number was provided in its bid and appears on its letterhead, copies of which were in the contract file. Rule 4 File, Tabs D and E.) Had he done so, the Appellant might have had a clearer understanding of the Government's position before delivery was attempted. His failure to do so, however, does not change the result, as the Contracting Officer was not required to issue the show cause notice at all (it is recommended for issuance "where practicable," PPR, Chap. XIV, Sec.1, ¶ 3.c.(1)), and had he not done so he still would have been entitled to a reasonable period from July 8 to determine whether termination for default was in the Government's best interests. 6Acceptance of supplies delivered after the contract due date has been construed as a waiver of the due date. See, e.g., Patten Co., Inc., ASBCA 35319, 89-3 BCA ¶ 21,957; Aargus Poly Bag, GSBCA 4314, 76-2 BCA ¶ 11,927. 7 In the Appellant's Memorandum in Support of Motion for Summary Judgment, the Appellant states that "the contracting officer issued a Show Cause notice on July 8, 1996, allowing the contractor 5 days to cure the stated default ...." The Appellant misconstrues the show cause letter. It did not give the Appellant 5 days to cure the default; it gave the Appellant 5 days to explain why the default occurred. For a discussion of the different purposes of a cure notice and a show cause letter, see Questar, Inc., supra, at 51-53. 8 The Contracting Officer is required to seek Contract Review Board concurrence prior to terminating a contract for default. PPR, Chap. I, Sec.10, ¶ 4.