B-176110, JUL 24, 1972

B-176110, JUL 24, 1972

CONTRACTS - ADJUSTMENT - FAILURE OF U.S. TO PERFORM AS REQUIRED CONCERNING THE CLAIM OF GEORGE BANTA CO., FOR IDLE PRESS TIME RESULTING FROM A RESCHEDULING OF ITS PRESSES DUE TO THE GOVERNMENT'S FAILURE TO DELIVER REPRODUCTION PROOFS PRIOR TO THE DATES SPECIFIED FOR SUCH DELIVERIES IN CONTRACTS FOR PRODUCTION OF LARGE QUANTITIES OF MULTI-PAGE MATERIAL FOR THE INTERNAL REVENUE SERVICE, WITH LIMITED PRODUCTION TIME. SINCE EACH OF THE RESPECTIVE CONTRACTS INVOLVED PROVIDED FOR A MUTUALLY AGREED UPON ADJUSTMENT OF THE CONTRACT PRICE FOR CHANGES IN THE SPECIFICATIONS, OF WHICH THE DELIVERY DATE FOR REPRODUCTION PROOFS WAS ONE, GAO WILL NOT OBJECT TO SUCH AN ADJUSTMENT BY GPO.

TO MR. H. J. HUMPHREY:

THIS IS IN REPLY TO YOUR LETTER OF MAY 25, 1972, FORWARDING FOR OUR DETERMINATION THE CLAIM OF GEORGE BANTA CO., UNDER GOVERNMENT PRINTING OFFICE (GPO) JACKETS 418-012 AND 422-595. THE CLAIM WAS FORWARDED HERE PURSUANT TO THE CONTRACT PROVISION IN ARTICLE 24, GPO CONTRACT TERMS NO. 1 (GPO FORM NO. 198) AND THE AUTHORITY OF THIS OFFICE UNDER 31 U.S.C. 71 TO SETTLE AND ADJUST ALL CLAIMS AND DEMANDS BY OR AGAINST THE GOVERNMENT.

THE CONTRACTS WERE FOR THE PRODUCTION OF LARGE QUANTITIES OF MULTI PAGE MATERIAL FOR THE INTERNAL REVENUE SERVICE (IRS), WITH LIMITED PRODUCTION TIME. THE CONTRACTOR HAS REQUESTED PAYMENT FOR IDLE PRESS TIME RESULTING FROM A RESCHEDULING OF ITS PRESSES DUE TO THE GOVERNMENT'S FAILURE TO DELIVER THE IRS REPRODUCTION PROOFS PRIOR TO THE DATES SPECIFIED FOR SUCH DELIVERIES IN THE CONTRACTS. THE CONTRACTOR ASSERTS THAT BECAUSE OF THE LARGE QUANTITIES REQUIRED AND THE SHORT PRODUCTION PERIODS PROVIDED IN THE CONTRACTS, IT WAS ESSENTIAL TO BLOCK OUT AND RESERVE NECESSARY PRODUCTION TIME FOR THE JOBS. THE CONTRACTOR CLAIMS IT WAS ABLE TO FILL ALL BUT A THIRD OF THE RESERVED PRESS TIME FOR THE PERIOD THE REPRODUCTION COPY WAS NOT AVAILABLE AFTER THE DELIVERY DATES CALLED FOR IN THE CONTRACT SPECIFICATIONS. THE REMAINING IDLE PRESS TIME IS 105 HOURS FOR JACKET 418 -012 AND 45 HOURS FOR JACKET 422-595. COMPENSATION IS REQUESTED AT THE RATE OF $77.50 PER IDLE PRESS HOUR, WHICH THE CONTRACTOR ASSERTS IS AN ALL INCLUSIVE RUNNING RATE FOR THE PRESSES INVOLVED REPRESENTING ONLY DIRECT MANUFACTURING COSTS. NO OVERHEAD OR ADMINISTRATIVE COSTS ARE REQUESTED. YOU STATE THAT THE REASONABLENESS OF THE $77.50 RATE CAN NOT BE ESTABLISHED WITHOUT FURTHER INFORMATION OR AUDIT AND YOU ASK THAT THE MATTER BE RETURNED TO YOUR OFFICE FOR A DETERMINATION AS TO THE DEGREE OF ENTITLEMENT IF WE DECIDE THAT THE CONTRACTOR MAY BE REIMBURSED.

IN YOUR SUBMISSION YOU REQUEST ADVICE AS TO WHETHER OR NOT THE CONTRACT BY ITS TERMS PERMITS AN ADMINISTRATIVE REMEDY TO PROVIDE FOR THE COST OCCASIONED THE CONTRACTOR BY THE GOVERNMENT'S ADMITTED FAILURE TO FURNISH REPRODUCTION COPY WITHIN THE TIME STATED IN THE CONTRACTS OR WHETHER THE CONTRACTOR'S RECOURSE IS A SUIT FOR BREACH OF CONTRACT.

YOUR SUBMISSION ARISES OUT OF SEVERAL CONSIDERATIONS. FIRST YOU NOTE THAT THESE CONTRACTS INCORPORATED GPO FORM 2459D WHICH, IN PART, PROVIDES FOR AN EXTENSION OF THE DELIVERY SCHEDULE IN THE EVENT THE GOVERNMENT DOES NOT FURNISH COPY OR MATERIAL AS SCHEDULED SO AS TO RELIEVE THE CONTRACTOR FROM THE COST OF LIQUIDATED DAMAGES. YOU ALSO NOTE THE PROVISION IN CONTRACT ARTICLE 24 ENTITLED "ADDITIONAL CHARGES AND CLAIMS," WHICH PROVIDES IN PART THAT CHANGE ORDERS WILL BE ISSUED ONLY WHEN THE AMOUNT INVOLVED HAS BEEN AGREED UPON PRIOR TO PERFORMANCE OF THE WORK. YOU QUESTION WHETHER THE FAILURE TO DETERMINE THE DOLLAR AMOUNT FOR THE CHANGE PRIOR TO PERFORMANCE OF THE WORK WOULD NOW PRECLUDE AN ADMINISTRATIVE REMEDY SINCE THE "CHANGES" CLAUSE ITSELF (ARTICLE 2. MODIFICATION OF PURCHASE ORDER) DOES NOT PROHIBIT THE ISSUANCE OF A CHANGE ORDER MERELY BECAUSE MUTUAL AGREEMENT AS TO PRICE IMPACT HAD NOT BEEN OBTAINED. MOREOVER, YOU NOTE THAT THE CONTRACTING OFFICER IS AUTHORIZED UNDER THAT CLAUSE TO MAKE CHANGES IN THE SPECIFICATIONS AT ANY TIME BY WRITTEN ORDER, AND THE TERM "SPECIFICATIONS," AS USED IN THE CONTRACT, INCLUDES SUCH ITEMS AS THE DELIVERY PROVISIONS FOR GOVERNMENT-FURNISHED PROPERTY. YOUR CONCLUSION THAT THE DATES FOR FURNISHING REPRODUCTION COPY ARE "SPECIFICATIONS" IS SUPPORTED BY THE FACT THAT SUCH DATES WERE ACTUALLY STATED IN DOCUMENTS DESIGNATED AS THE SPECIFICATIONS FOR THESE CONTRACTS. YOU EXPRESS THE VIEW THAT THE CONTRACTING PARTIES COULD HAVE CHANGED THE DELIVERY DATES FOR THE PRODUCT AND FOR THE GOVERNMENT-FURNISHED COPY, AND MODIFIED THE CONTRACT PRICE ON THAT BASIS, BUT NEITHER GPO NOR THE CONTRACTOR KNEW IN ADVANCE THE DATES WHEN THE COPY WOULD FINALLY BE AVAILABLE FROM IRS. YOU THEREFORE SUBMIT THAT, UNLESS WE FIND THAT THE PROVISIONS IN GPO FORM 2459D FOR EXTENDING THE DELIVERY SCHEDULE IS AN EXCLUSIVE REMEDY OR THAT UNILATERAL CHANGE ORDERS ARE PROHIBITED BY THE CONTRACT TERMS, THE MERE FAILURE TO ISSUE A FORMAL CHANGE ORDER WOULD NOT BAR A SUBSEQUENT PRICE ADJUSTMENT.

THE PARTIES TO THE SUBJECT CONTRACTS CONTEMPLATED THAT THE SCHEDULES MIGHT NOT BE MET SINCE UNDER THE PROVISION OF GPO FORM 2459D ENTITLED "NOTICE OF COMPLIANCE WITH SCHEDULES" POSTCARDS WERE TO BE PROVIDED THE CONTRACTOR FOR USE IN NOTIFYING GPO THAT IRS REPRODUCTION COPY WAS NOT FURNISHED ON THE DATE ESTABLISHED IN THE "SPECIFICATIONS." THIS PROVISION, TOGETHER WITH THE CONTRACT DOCUMENTS ("SPECIFICATIONS") THEMSELVES, ESTABLISH THAT THE DATES FOR DELIVERY OF IRS COPY WERE SPECIFICATIONS TO WHICH THE GOVERNMENT HAD OBLIGATED ITSELF TO CONFORM. SPECIALTY ASSEMBLING & PACKING CO. V. UNITED STATES, 355 F.2D 554, 558 (1966). ARTICLE 2 OF GPO FORM NO. 198 PERMITS THE CONTRACTING OFFICER TO CHANGE THE SPECIFICATIONS UNILATERALLY AT ANY TIME AND TO INCREASE OR DECREASE THE COST "AS MUTUALLY AGREED UPON" AS WELL AS THE TIME FOR PERFORMANCE AND SUCH "OTHER TERMS AS MAY BE NECESSARY." SINCE EACH OF THE RESPECTIVE CONTRACTS INVOLVED PROVIDED FOR A MUTUALLY AGREED UPON ADJUSTMENT OF THE CONTRACT PRICE FOR CHANGES IN THE SPECIFICATIONS, OF WHICH THE DELIVERY DATE FOR REPRODUCTION PROOFS WAS ONE, THIS OFFICE WILL NOT OBJECT TO SUCH AN ADJUSTMENT BY YOUR OFFICE.

WE DO NOT BELIEVE THAT THE FAILURE TO ISSUE THE CHANGE ORDER PRECLUDES THE ABOVE ACTION AT THIS TIME SINCE, UNDER THE PRINCIPLE OF CONSTRUCTIVE CHANGES, THERE MAY BE CONSIDERED TO HAVE BEEN A DUTY TO ISSUE THE CHANGE ORDER UNDER ARTICLE 2 WHEN THE ACTUAL DELIVERY DATES WERE ESTABLISHED AND THE RELIEF COULD HAVE BEEN INCLUDED THEREIN. SEE JOHNSON & SONS V. UNITED STATES, 180 CT. CL. 969, 985 (1967), AND CASES CITED THEREIN. LIKEWISE, WE DO NOT BELIEVE ARTICLE 24 IS REQUIRED TO BE VIEWED AS PRECLUDING A PRICE ADJUSTMENT AT THIS TIME UNDER ARTICLE 2 SINCE ARTICLE 24 SPECIFICALLY REFERS TO "ADDITIONAL" CHANGES AND CLAIMS, AND WOULD NOT SEEM TO HAVE APPLICATION TO THOSE CLAIMS COVERED UNDER OTHER ARTICLES OF THE CONTRACT PROVISIONS.

THE FILE FOWARDED WITH YOUR LETTER OF MAY 25 IS RETURNED.