Appeal of Kaufman DeDell Printing, Inc.
Program Nos. 65-S & 77-S
Appeal dated December 8, 1978
Hearing held on June 17, 1980
Decision dated September 5, 1980

Panel 79-12
Thomas O. Magnetti, Chairman
Louis A. Lopez, Member
Paul L. Hollenbach, Member

Preliminary Statement

This is a decision on a timely appeal entered by Kaufman DeDell
Printing, Inc., 1715 Teall Avenue, Syracuse, New York
(hereinafter referred to as the contractor).  The appeal disputes
the decision of the Contracting Officer to terminate Purchase
Order 51468 (Program 77-S) and Purchase Order 52039 (Program 65-
S) for default.  The appeal was taken pursuant to Article 29
("Disputes'' clause) of Government Printing Office (hereinafter
the GPO) Contract Terms No. 1 as incorporated by reference into
the Bid and Acceptance document of this contract (Exhibits 3 and
12 of the Appeal File). 1/

The contracts required the contractor to print and bind two
pamphlets.  The first was titled "Translog" and was ordered by
the Department of the Army.  The other pamphlet was for the
Department of Justice and titled ."Immigration and Naturalization
Operations Instructions and Regulations''.  The decision of the
Contracting Office to terminate for default was based upon a
determination that further performance was jeopardized by the
seizure of the contractor's plant by the Internal Revenue Service
(IRS).  Following this termination, Program 77-S was readvertised
and awarded to another contractor with a cost increase over
$3,000.  The total amount of the excess costs for this
reprocurement was apparently recovered from the contractor.

In accordance with a request of the contractor dated December 8,
1978, an informal hearing before a panel of members of the
Contract Appeals Board was held on June 17, 1980.  The contractor
did not appear at this hearing and did not provide a suitable
excuse for its absence.  The hearing was convened and the
Government rested its case upon the Appeal File.  Therefore, the
decision of this Panel is based solely upon the record as
evidenced by the documents and exhibits that constitute that
Appeal File.  This procedure is duly authorized by GPO
Instruction 110.10 titled "Board of Contract Appeals Rules of
Practice and Procedure", dated June 16, 1979.

Statement of Facts

In accordance with GPO contract award procedures, purchase orders
for Jackets 260-827 (Program 77-S) and 261-001 (Program 65-S)
were issued to the contractor on December 13, 1977 and January 6,
1978, respectively.  Under Program 77-S (Purchase Order 51468)
the contractor was required to produce saddle-stitched pamphlets
with a separate cover.  Composition, negative making, printing,
binding and packing for mailing and delivery were also required.
Although no specific quantity could be guaranteed, anticipated
requirements indicated that approximately 13,500 copies per issue
would be ordered on a monthly basis over the term of the contract
January 1, 1978 through December 1, 1978 (Exhibit 2).  Program
65-S (Purchase Order 52039) required the contractor to supply
looseleaf, self-covered pamphlets, using the offset printing
process.  The contract included binding, packing, mailing and
shipment.  While no specific quantity or number of pages was
guaranteed, it was estimated that there would be approximately 24
orders of between 7,000 to 8,500 copies per order requested
during the contract period (Exhibit 11).

On November 9, 1978, the Contracting Officer, Paul Barlow,
received a letter from the IRS stating that on October 31, 1978,
the IRS had seized the contractor's premises on which the main
office and printing shop were located.  This action was motivated
by the failure of the contractor to make the proper payment of
payroll taxes.  The GPO was further notified in this letter of
the intention of the IRS to conduct an auction sale and dispose
of the seized personal property to satisfy the overdue taxes
(Exhibit 17).  Responding to this, the GPO sent a cure notice to
the contractor dated November 21, 1978, cautioning the contractor
that the seizure of the plant caused such a condition that.
further performance on the two contracts seemed endangered.  The
contractor was warned that if the condition was not suitably
cured within ten days the GPO would terminate the contracts for
default pursuant to Article 18 of US GPO Contract Terms No. 1
(Exhibit 19).

The response to this cure notice proffered by the contractor was
considered by the Contracting Officer to be insufficient as an
explanation (See Exhibits 20 and 22).  Therefore, the Contracting
Officer terminated the contracts on December 1, 1978, stating

"You are notified that your contracts, identified as (1) Purchase
Order 51468, Program 77-S, Jacket 260-827, Print Order 10 and
print orders for the balance of the term; and (2) Purchase Order
52039, Program 65-S, Jacket 261-001, Print Orders 14, 15, and 16
and print orders for the balance of the term, are hereby
terminated for default because of the seizure of your plant by
the Internal Revenue Service, your failure to ship or furnish
documentation of shipment of the four print orders mentioned
above, and your failure to substantiate your claim of continued

This decision was appealed by the contractor in a letter dated
December 8, 1978, on the grounds that it was allegedly able to
supply the work as required by the contracts.  Subsequently on
January 16, 1979, the GPO notified the contractor that this
appeal was to be handled in accordance with the "Disputes" claim,
Article 29, Contract Terms No. 1.

On August 3, 1979, the contractor requested an informal hearing
which was then scheduled for June 17, 1980.  The contractor was
notified of this hearing date by letters from the GPO Special
Projects Office and the Chairman of the GPO Contract Appeals
Panel dated May 5 and 6, 1980, respectively.  The contractor
acquiesced to that date.  The hearing was convened at 10:00 a.m.
on June 17, 1980, however, neither the contractor nor any of its
representative were present, with no excuse forthcoming
explaining the absence.  As in any case of the unexcused absence
of one of the parties, the Panel proceeded with the hearing and
the contractor's case was considered to be submitted on the
written record.  This procedure is in accordance with Paragraph
13(d) of the aforementioned GPO Instruction 110.10.  The
contractor was duly notified of this by letter dated June 18,

On June 23, 1980, the GPO received a letter from the contractor
dated June 13, 1980 and postmarked June 19, 1980, referring to an
earlier request of May 22, 1980, for a continuance in the hearing
date.  There was, however, no evidence of such a request in
either the Panel's file or in the file kept in the GPO Special
Projects Office.  The Chairman of the Panel, by letter dated June
24, 1980, asked for evidence proving the existence of this
request for a continuance.  The contractor was told to respond
within 10 days after receipt of the letter (which would have been
by July 7, 1980).  As no response from the contractor was
forthcoming, the Chairman informed the contractor by letter dated
July 11, 1980, that the Panel would decide the appeal based
solely upon the written record as submitted pursuant to GPO
Instruction 110.10  12, 13 (d) and 16.  In accordance with
these regulations, the record was closed on August 1, 1980, the
contractor refusing a further opportunity to supplement the
record with either documents or exhibits which would have been
relevant or material.


The issue on appeal is whether the Government was correct in
terminating this contractor for default because its premises had
been seized by the IRS.  In its decision to terminate, the
Contracting Officer cited Article 18, the default clause of GPO
Contract Terms No. 1.  This article allows the Government to
default a contractor:

"(i) If the contractor fails to make delivery of the supplies or
to perform the services within the time specified herein or any
extension thereof; or

(ii) If the contractor fails to perform any of the other
provisions of this contract, or so fails to make progress as to
endanger performance of this contract in accordance with its
terms, and in either of these two circumstances does not cure
such failure within a period of 10 days (or such longer period as
the contracting officer may authorize in writing) after receipt
of notice from the contracting officer specifying such failure.''
Article 18(a).

In the case at bar, the Contracting Officer determined that the
seizure of the plant and attachment of the personal property on
the premises by the IRS so endangered the contractor's continued
performance of the contract that he felt justified in requiring
the contractor to cure the situation within a specified amount of
time.  2/ The contractor did not provide the necessary assurances
as required by the Contracting Officer as the contractor's
response did not document ownership or lease of appropriate
printing press equipment (Exhibit 24).  The Contracting Officer
had no recourse but to terminate the contractor for default.

Given the above circumstances, the Contracting Officer was
justified in regarding the evidence provided to him as
establishing the possibility of the contractor not being able to
continue performance on these two contracts.  The contractor
claimed that further performance would continue due to the
availability of production facilities at locations other than the
seized premises (Exhibits 18 and 22).  Although the contractor
alleged that production would not be interrupted, it has failed
to support these allegations with any substantial proof. 3/

Such allegations do not constitute a basis for acceptance of a
claim.  American Cleaners, ASBCA No. 18139, January 14, 1974,
74-1 BCA  10, 441.


Even though the contract's performance period had not expired,
these two contracts were properly terminated for default because
the contractor's severe financial difficulties justified a
determination that it would not be able to complete performance.
Therefore, this appeal is denied in its entirety.

1/ Hereinafter, unless otherwise noted, every citation is to an
exhibit in the Appeal File.

2/  It should be noted here that this was not a case where
performance could be excused since the condition that endangered
performance was well within the responsibility of the contractor.
If the contractor's payroll taxes had been paid on time, the IRS
would never have seized the contractor's premises.  Therefore,
the financial difficulties encountered by the contractor do not
constitute a cause or excuse for performance which might be
considered beyond the contractor's control or without its fault.

3/  Exhibit 20, the contractor's response to the GPO's cure
notice, alludes to certain extensions in the delivery date of
certain of the print orders.  While the GPO was not obliged to
grant this request and did not do so, it does give some
indication that the contractor was experiencing difficulty in
performing the contracts after the seizure of its plant.