United States Government Printing Office Board of Contract Appeals Appeal of Duplex Products Incorporated Date of decision January 11, 1980 Neal,Fine, Chairman Louis Lopez,.Member Charles Ray, Member Panel 79-6 I. This decision concerns an appeal filed on June 22, 1979 by Duplex Products Incorporated, 33050 Western Avenue, Union City, California 94587, hereafter referred to as the contractor, under the disputes clause of the contract, Article 29, United States Government Printing Office Contract Terms Number 1, dated July 1, 1943 revised July 15, 1970. II. Issue Presented. The issue presented is whether the United States Government Printing Office, hereafter referred to as GPO, properly assessed liquidated damages in the amount of $6,371.32 against the contractor for failure to comply with the terms of the contract. III. Findings of Fact. 1. On September 22, 1978, Duplex Products was awarded the contract for the production of 23,737,000 marginally punched continuous forms for high speed computer printers, joined with a temporary fastening and interleaved with carbon. The total cost of the contract was $480,650.00. 1/ 2. The contract was awarded in accordance with GPO Contract Terms Number 1 and the provisions of GPO Form 1026 for the period of June 1, 1978 to November 30, 1978. 3. The contract provided for the manufacture and shipment of forms to McClellan Air Force Base, California, in four (4) equal quantities of each item on November 15, 1978, February 15, 1979, May 15, 1979 and August 15, 1979. The shipping schedule on page four of the contract provides, "It is of the utmost importance that strict adherence to this performance schedule be maintained." Article 2 of Contract Terms Number 1 specifically provides that no provision of the contract may be changed except on written authorization of the GPO Contracting Officer. 4. The contractor, in a letter dated December 15, 1978 to GPO, stated that the first delivery as specified by the contract had been made but that future deliveries would be a problem due to labor strikes in paper mills in Oregon and Washington. 2/ The GPO Contracting Officer in a later review of vouchers submitted by Duplex determined that the first shipment was not completed by the specified date of November 15, 1978. 3/ The labor strikes started in the paper mills on or about July 6, 1978. 5. The December 15, 1978 letter also indicated that the contractor intended to allocate its paper supply among its other customers and requested the opportunity to meet the needs of McClellan Air Force Base and still provide material for use by other agencies. The GPO in a letter dated December 20, 1978 specifically informed the contractor that no adjustment of the contract could be considered unless a basis was 1 found in GPO Form 1026. 4/ 6. The contractor in a letter dated January 5, 1979, informed GPO that it would not be able to complete all items on the delivery as scheduled, because the labor strike had put their paper supply in critical status. 5 / 7. The GPO notified the contractor on January 16, 1979, that the mere indication that a sufficient amount of paper is unavailable due to a strike did not relieve him of his responsibilities under the contract. 6/ The contractor was informed that it must produce documentation to show that supplies were not available from other sources in sufficient time to meet the schedule established by the contract. 8. The contractor notified the GPO by letter of March 20, 1979, that the second quarterly shipment to McClellan AFB had been completed in the following manner: 1. part shipped complete Jan. 18 - 2,112,000 2. part shipped partial Mar. 12 - 112,000 " " " Mar. 13 - 672,000 balance complete Mar. 15 - 532,000 Total Delivered - 1,316,000 3. part shipped complete Feb. 8 - 960,000 4. part shipped partial Mar. 13 - 56,000 " " " Mar. 14 - 364,000 balance complete Mar. 15 - 406,000 Total Delivered 826,000 5. part shipped 90% Mar. 13 - 154,700 6. part shipped partial Mar. 12 - 440,000 " " " Mar. 13 - 87,000 Shipped 90% total 527,000 9. At a meeting with the contractor in March 1979, the GPO contracting officer informed Mr. Ellsburg, Branch Manager of Duplex, that he could not provide relief from damages without documentation which at that point had not been provided. 7/ 10. Neither in its appeal to the GPO nor at any previous time has the contractor supplied substantive documentation to the GPO in accordance with GPO Form 26, section 2.19, which would serve as a basis for consideration of its claims of inability to procure supplies necessary to perform the contract. IV. Findings of Law and Conclusions. The matter at hand concerns a contract entered into between Duplex Products and the United States Government Printing Office. The term "contract" has been defined in many ways by legal scholars and in judicial opinions over a long period of time. The most popular description of a contract is a promise or set of promises which the law will enforce. The specific mark of a contract is the creation of a right, not to a thing, but to another man's conduct in the future.8/ This definition aptly fits the facts and circumstances raised by this appeal. Duplex Products agreed on September 22, 1978, to perform certain acts in a specified manner and at specified dates. In consideration for this promise the GPO agreed to pay Duplex $480,650.00. The terms of the contract, however, provided, "should the contractor default on shipping schedules agreed to and specified in the purchase order, the contractor will be assessed liquidated damages against that part or parts of an order which have not been shipped to the specified destination on the specified date." 9/ The facts presented to this Board clearly and irrefutably show that the contractor did not perform in accordance with the terms of the contract. The course of conduct which the contractor agreed to was not fulfilled. The contractor has raised as his defense the contention that he could not perform as promised because labor strikes at paper mills in Oregon and Washington affected his supplies. The facts and the law, however, mitigate against this argument. It has been held that a contractor impliedly represents when he makes his bid that he can accomplish what he sets out to do within the time upon which there was an agreement. Woodhull Construction Company, ASBCA, 57-1 BCA ¶ 1260. It is a well settled principle of contract law that a contractor who claims that its late performance and delivery is excusable has the burden of proving the same under the terms of the contract. It must prove affirmatively that the failure to achieve timely performance was caused by or caused out of a situation beyond its control and without its fault or negligence. Lee K. Geiger Construction Company, GSBCA, 67-1 BCA ¶ 6189. In the case of Federal Roofing and Painting Inc., Eng. BCA, 68-1 BCA ¶ 6912, the Board held that the appellant had an obligation to determine the availability, prices and delivery dates of materials needed for the contract. In the matter at hand the strike at the paper mills in Oregon and Washington started on or about July 6, 1978, while the contract was not awarded until September 22, 1978. 10/ Indeed the strike and the possibility of a shortage of paper supplies was the motivating factor for the GPO's determination to make the procurement. 11/ Thus, the contractor was on notice before the contract was awarded that his usual sources of paper supply might not be available. While the strike might have been of longer duration than normal, if there is such a thing as a normal strike, the fact remains that the problem in paper supply was not unforeseeable. In the correspondence between the contractor and GPO from December 15, 1978 to March 20, 1979, the GPO Contracting Officer repeatedly informed the contractor that it could not change the established delivery schedule unless the contractor provided documentation as required by section 2.19 of GPO Form 1026 which was part of the contract. Perusal of the evidence presented to this Board indicates that the only documentation provided was newspaper articles about the strike. These articles do not constitute the documentation mandated by the contract as a basis for relief from damages. In this regard, it has been held that if the contractor could prove that his delay was justified, his delay in performance might be excused. Transatlantic Financing Corporation v. United States, 363 F. 2d 312, 315 (C.A.D.C. 1966) In either an impossibility of performance claim or a commercial impracticability claim, the burden of proof is clearly on the contractor, this is because only the contractor is in the position to know such facts as would show that its performance was made impossible by supervening unforeseen circumstances or to know of conditions precedent to the contractor's duty to perform when such conditions had not occurred and were peculiarly within the knowledge of the contractor. Corbin on Contracts, §§ 749 and 751, Vol. 3A, pgs. 467 and 475 (1960 Edition). In regard to Government contracts, it was held in the decision Federal Contractors, Inc., ASBCA No. 14336, 71-1 BCA ¶ 18724 at 40, 516 that: " . . . the appellant [the defaulted contractor] has the burden of proving that its default arose out of courses beyond its control and without its fault or negligence." Further in the matter of Empire State Tree Service, VACAB No. 949, 71-1 BCA ¶ 8716, pg. 40,498, the Board held ". . . mere statements in claim letters, unsupported by corroborative evidence of probative value, are not sufficient proof of essential facts which are in dispute." (Pg. 40,500) In its review and examination of the evidence, the Board finds the contractor's failure to perform was not caused by conditions beyond his control. Rather, the Board finds that the contractor, by his own admission, 12/ had paper supplies on hand but chose to allocate its supplies among its customers. Further, the evidence shows that the contractor was able to obtain paper supplies from other than his usual suppliers. 13/ Thus, it is clearly evident to this Board that the contractor willfully chose not to honor its contractual obligations to the GPO. The second issue raised by the contractor, concerns GPO's imposition of liquidated damages. The contractor contends that it should not suffer any loss from the imposition of liquidated damages because the Government, in this case McClellan Air Force Base, suffered no harm by its delays in shipping. The contractor notes in its letters of June 22, 1979 and November 19, 1979 that McClellan Air Force Base was never out of any business forms. Further, the contractor notes that it incurred additional expenses to ship certain forms to McClellan ahead of schedule in order to insure that it would always have supplies. While this Board has given careful consideration to the evidence and contentions of the contractor, it is without authority to reduce in any manner the amount of damages provided for in the contract. 14/ The question of the amount of, if any, damages suffered by McClellan Air Force Base is not before this Board. Both the courts and contract appeal boards have held that actual damages need not be shown in circumstances where, judged at the time of contracting, (i) the damages likely to result from delayed performance are uncertain in amount or are difficult to ascertain and (ii) the amount of liquidated damages provided for in the contract has been established in a fair and reasonable attempt to fix just compensation for anticipated loss covered by breach of contract. (Zinsco Electrical Products, 66-1 BCA ¶ 5526; Priebe and Sons v. United States, 332 U.S. 407; Wise v. United States , 249 U.S. 361). Further review of the case law on the issue of liquidated damages indicates that the reasonableness of a liquidated-damages provision must be judged as of the time the parties entered into the contract, rather than at the time of the breach (Federal Roofing and Painting, Inc., Eng. BCA, 68-1 BCA ¶ 6912). Liquidated damages are properly imposed, however, even where the Government has failed to show actual damages by the delay; nor does the fact that the liquidated damages imposed resulted in a hardship to the contractor in any way impugn the validity of the assessment (Sunset Construction, Inc., IBCA BCA, 65-2 BCA ¶ 5188). Accordingly, in view of the facts and evidence presented by the parties, it is the decision of this Board to deny the appeal of Duplex Products Incorporated. _______________ 1/ Exhibit A. 2/ Exhibit C. 3/ Exhibit I. 4/ Exhibit D. 5/ Exhibit F. 6/ Exhibit G. 7/ Exhibit I. 8/ Wald's Pollock, Contracts (3d Ed.) pp. 1,2. 9/ GPO Form 1026, section 2.19. 10/ Bids for the contract went out on August 16, 1978. 11/ Exhibit D. 12/ Exhibit C. 13/ Exhibit J. 14/ Corbin on Contracts § 1061, p. 53, Vol. 5 (1964).