______________________________ DENIED: August 21, 1992 ______________________________ GSBCA 9535 AIR INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Kenneth K. Takahashi of Takahashi & Associates, Washington, DC, counsel for Appellant. John E. Cornell and Wendy Nevett Bazil, Office of General Counsel, Personal Property Division, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges LaBELLA, HENDLEY, and VERGILIO. VERGILIO, Board Judge. On June 24, 1988, the Board received a notice of appeal from Air Inc. Contractor had failed to deliver (timely or otherwise) an order placed under an indefinite delivery contract with respondent, the General Services Administration. The agency terminated for default that purchase order (not the entire contract). Contractor's failure to deliver the items by the due date was the underlying cause, but not the sole factor, considered by the agency in reaching the decision to terminate for default. The other factors contributing to that determination were contractor's failure to timely deliver another order under the same contract, the impact of the default on the agency, and the lack of an excusable delay. Moreover, only the given purchase order was terminated, not the entire contract. Contractor has failed to establish an excusable delay which would preclude the default termination. Contractor's failure to deliver constitutes a breach of contract. Despite contractor's assertions, the determination to terminate for default does not reflect an abuse of discretion. The appeal is denied. Findings of Fact 1. With an effective date of May 6, 1987, the agency awarded an indefinite delivery contract for the period through January 31, 1989, for Air Inc. to provide a given item at a fixed unit price. Appeal File, Exhibit 1. 2. The default clause of the contract provides that the agency may default terminate the contract, in whole or in part, if the contractor fails to deliver the supplies within the time specified in the contract or any extension. Appeal File, Exhibit 1 at 36 (GSA Form 3507 at 11 ( 51) (48 CFR 52.249-8, Default, Fixed-Price Supply and Services (Apr. 1984)). The agency's ability to terminate for default expressly is subject to the following three paragraphs: (c) Except for defaults of subcontractors at any tier, the Contractor shall not be liable for any excess costs if the failure to perform the contract arises from causes beyond the control and without the fault or negligence of the Contractor. Examples of such causes include (1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe weather. In each instance the failure to perform must be beyond the control and without the fault or negligence of the Contractor. (d) If the failure to perform is caused by the default of a subcontractor at any tier, and if the cause of the default is beyond the control of both the Contractor and subcontractor, and without the fault or negligence of either, the Contractor shall not be liable for any excess costs for failure to perform, unless the subcontracted supplies or services were obtainable from other sources in sufficient time for the Contractor to meet the required delivery schedule. . . . . (g) If, after termination, it is determined that the Contractor was not in default, or that the default was excusable, the rights and obligations of the parties shall be the same as if the termination had been issued for the convenience of the Government. Id. 3. The contract's source inspection clause dictates that supplies will be inspected at source by the Government prior to shipment from the manufacturing plant or other facility designated by the contractor. Further, "The Contractor shall notify, or arrange for his subcontractor to notify, that office at least 10 calendar days prior to the date when supplies will be ready for inspection." Appeal File, Exhibit 1 at 29 (48 CFR 552.246-73 (Dec. 1984)). 4. The contract requires that delivery to destination occur no later than 150 calendar days after receipt of an order. Moreover, "If the Contractor fails to make delivery to destination as required . . . the Contractor shall be deemed to have failed to make delivery within the purview of [the default clause]." Appeal File, Exhibit 1 at 31. 5. A "waiver of delivery schedule" clause is also included in the contract: (a) None of the following shall be regarded as an extension, waiver, or abandonment of the delivery schedule or a waiver of the Government's right to terminate for default: (i) delay by the Government in terminating for default; (ii) acceptance of delinquent deliveries . . . . (b) Any assistance rendered to the Contractor on this contract or acceptance by the Government of delinquent goods or services hereunder, will be solely for the purpose of mitigating damages, and is not to be construed as an intention on the part of the Government to condone any delinquency, or as a waiver of any rights the Government may have under subject contract. Appeal File, Exhibit 1 at 31. 6. The agency issued a purchase order to contractor for 592 items, with delivery due by March 8, 1988. Appeal File, Exhibit 5. Contractor did not deliver the items by March 8. Id., Exhibit 13 ( 4). 7. In a letter dated March 8, 1988, contractor references conversations of that day and of the preceding day with the administrative contracting officer, and informs the agency that the purchase order would not be ready by the delivery date. Further, the letter states: We experienced a delay in receipt of the Motor Housing Casting from our sub- contractor. We expect receipt of this casting by 3/9/88. We therefore ask, that the delivery date be modified as shown below [a proposed delivery date of March 24, 1988]. We again apologize for any inconvenience that this may cause. We will offer a consideration for this modification of $622.00. Appeal File, Exhibit 6. 8. By letter dated March 9, 1988, the administrative contracting officer informed the contractor: A recent review of your firm's delivery performance on this contract uncovered your firm failed to meet the delivery due dates for the following purchase orders: [Two orders, different from that here in dispute, are identified, with original delivery dates specified as January 21 and 27, 1988. One is a delivery order placed under the contract and for the same item here in dispute.] These failures are evidenced by the fact that your firm requested delivery extensions on January 28, 1988 and February 1, 1988. Although we recognize that delivery extensions were negotiated for the above purchase orders, the intent of the Government was not to renegotiate the delivery requirements of [the time of delivery clause, see finding 4]. The existence of the above noted condition is endangering the Government's right to successful performance of [the contract]. Therefore, you are hereby required to take the necessary steps to cure this unacceptable condition. Failure to make progress to cure this condition may be taken as a basis to terminate your right to proceed with the performance of this contract. Appeal File, Exhibit 7. The letter does not reference the purchase order here in dispute or the letter dated March 8; rather, it references the contract as a whole. Id. Contractor's response references only the two identified purchase orders, not that here in dispute. Id., Exhibit 8. 9. By letter dated March 25, 1988, the agency terminated for default the subject purchase order. The letter contains the following rationale for the action: A review of your contract has revealed a record of unsatisfactory delivery performance. Specifically, our records indicate that on February 1, 1988, your firm requested an extension of the delivery date for [a purchase order noted in finding 8] due January 27, 1988. You claimed that the delay was due to your supplier experiencing delays. Modification No. AS05, with an effective date of February 4, 1988, established a new delivery of February 15, 1988. Your firm was unable to meet the new delivery date. The certificate of shipment submitted by your firm indicates a late delivery was made on February 22, 1988. You have demonstrated by your continuous actions an inability to meet the delivery commitments required by your contract and delivery extension mutually agreed upon with this office and your firm. Your firm has failed to perform its contractual obligations. Appeal File, Exhibit 9. 10. On June 24, 1988, the Board received contractor's notice of appeal of the default termination. Appeal File, Exhibit 11. 11. In its answer dated January 25, 1989, to an agency request for admissions, contractor attributes its failure to deliver by March 8 to causes beyond the control of its motor housing vendor. Failure of the motor housing vendor to deliver this componen[t] was due to circumstances beyond his control and without his fault or negligence. These components were unavoidably delayed beyond their anticipated due date because of porosities encountered in the castings which caused excessive machining time. Parts were however, completed to be included with another lot of parts for this same tool being shipped by the freight forwarder. The other lot was received less the motor housings, in time to meet the March 8, delivery. On realizing this omission, a reshipment was made of the motor housings, which arrived in time to assemble the tools by March 10. Appeal File, Exhibit 13 ( 7). 12. Contractor contends that it received the motor housings on March 9 (rather than March 7, as anticipated), and that the entire order was completed on March 10. Transcript at 19, 21. However, the contractor did not immediately notify the agency that the items were ready for inspection. Only when, as contractor maintains, it learned on approximately March 16 during a conversation with the administrative contracting officer of the agency intent to default terminate the order, did the contractor suggest that the items were ready for inspection. Transcript at 23, 66-67, 86-87. Contractor did not establish a date for inspection. Id. at 89. Contractor never delivered the items under the particular order. 13. Contractor did not observe the casting process (which occurred in Taiwan) of the allegedly delayed motor housings. However, contractor's president testified that he spoke with the supplier in November 1988, and learned that porosity problems with the metal castings led to the delay in shipment. Transcript at 27, 30-31; Finding 11. Contractor's president further testified that in March 1991, he informed the supplier both that the porosity basis for delay may be an inadequate explanation, and that he was interested in learning if any act of God or like action may have led to the difficulties. Transcript at 35, 45- 46. In what contractor's president represents to be a response to the inquiry from the supplier dated March 18, 1991, the supplier alludes to a storm which caused a power outage which adversely affected casting. Contractor's Exhibit 1; Transcript at 35, 45-46, 63. No credible evidence in the record supports the statements in the letter. 14. Based upon the record developed in this appeal, the Board finds that both contractor-asserted bases of delay in delivery (porosity problems and a storm-caused power outage) are wholly unsupported in the record. Factually, the Board cannot conclude that the causes of delays were attributable to other than the contractor or its suppliers. 15. During the hearing on the merits, the administrative contracting officer testified that she considered paragraphs (c) and (d) of the termination for default clause before making the decision to terminate the given purchase order. In addition to obtaining a concurrence from the procuring office prior to taking action, her determination involved particular factors: contractor's non-delivery by the due date; untimely delivery of another purchase order under same contract; the impact of the default on the agency (there was a sufficient supply of the item to withstand delays due to a default of the purchase order); and the lack of excusable delay. Transcript at 104-07, 110-12, 120- 23, 126-32, 140-48, 177. Discussion Contractor contests the validity of the default termination. Initially, this dispute focused solely upon contractor's assertion that the default was improper because contractor's failure to deliver was caused by circumstances beyond its control and without its fault or negligence. Air, Inc., GSBCA 9535, 91-1 BCA 23,601 (agency motion for summary relief denied). Contractor has also timely asserted that the agency failed to consider factors mitigating against a default, with the result that the default termination reflects an abuse of discretion. Amendment to Complaint (May 26, 1989) and Clarification (Nov. 6, 1989). The record does not establish that any delays in delivery of the given order were due to causes beyond the control of the contractor or subcontractor. Findings 13, 14. The record more strongly suggests the fabrication, rather than the reality, of assertions that porosities occurred or that storms led to delays. Even if the allegedly delayed motor housing castings arrived on March 7, contractor had not provided the agency with the required advance notice to schedule an inspection. Under that scenario, the immediate cause of delay would have been solely attributable to contractor's failure to schedule an inspection--such is not an excusable delay. Contractor failed to comply with the delivery date of its purchase order. Further, contractor did not give the agency ten days notice to permit inspection, a prerequisite to delivery. By disregarding these two time-sensitive provisions of the contract, contractor breached its contract. A valid basis arose to support a termination for default. Findings 4, 6, 12. Contractor maintains that, in deciding upon the default termination, the agency failed to consider all factors set out in the default clause and the Federal Acquisition Regulations (FAR), 48 CFR 49.402 (1988). In particular, contractor contends that: (1) counsel was not consulted prior to the default termination, thereby violating FAR 49.402-3(a); (2) the agency failed to notify contractor of the possible termination for default, although such notice was practicable, thereby violating FAR 402- 3(e); (3) the agency had waived the delivery date without establishing a new date, such that the default violated FAR 49.402-3(c) and (e); (4) the agency failed to consider the seven factors enunciated in the default clause, finding 2 ( (c)) and FAR 49.402-3(f). Assuming that counsel was not consulted prior to the termination for default, contractor has failed to establish a basis to overturn the default. During the development of this record, if not earlier, agency counsel reviewed the determination; the agency has not wavered from the default determination. Contractor has put forward no cogent reason to upset the default determination under this scenario; contractor has not been harmed by the alleged inactions of the contracting officer. Contractor relies upon language in the regulations regarding notification of a possible default termination: If termination for default appears appropriate, the contracting officer should, if practicable, notify the contractor in writing of the possibility of the termination. This notice shall call the contractor's attention to the contractual liabilities if the contract is terminated for default, and request the contractor to show cause why the contract should not be terminated for default. The notice may further state that failure of the contractor to present an explanation may be taken as an admission that no valid explanation exists. FAR 49.402-3(e)(1). However, the regulation also states, regarding defaults for failure to make delivery within the time specified, that "no notice of failure or the possibility of termination for default is required to be sent to the contractor before the actual notice of termination (but see paragraph (e) . . . )." FAR 49.402-3(c). In this situation, where contractor failed to deliver within the time specified, the regulation does not mandate advance notification by the agency to the contract. Moreover, contractor has not demonstrated any harm that may have accrued to it that may have resulted from a lack of written notification--contractor maintains that on March 16 the agency verbally informed it of the ensuing default. Findings 9, 12. In short, even if it were practicable for the agency to provide written notice, contractor has not established a basis to nullify the default determination. Contractor has failed to establish the factual predicate to its assertion that the agency waived the delivery date without establishing a new date. Contractor requested, but did not receive, an extension to the delivery date for the purchase order in question. The contract expressly provides that contractor's failure to timely deliver constitutes a basis for default and that the agency's failure to terminate immediately is not to be construed as a waiver of the agency's ability to default terminate. Findings 4, 5. Contractor has established no agency actions which could reasonably be construed to be an extension of the delivery date. The agency considered its position with respect to its requirements and contractor's actions under the contract, and with reasonable speed rejected contractor's proffered consideration for an extended delivery date. Contractor also maintains that the agency failed to consider the seven factors enunciated in the regulations as guidance in administering the default clause, FAR 49.402-3(f). The record demonstrates just the opposite of what contractor maintains. The administrative contracting officer expressly considered (1) the terms of the contract and applicable laws and regulations; (2) contractor's specific failure and its excuses; (3) the availability of supplies from other sources (here the agency's existing and projected supply and usage of the items); (4) the urgency of the need for supplies and time required to obtain them; and (7) other pertinent facts and circumstances--namely, contractor's untimely delivery under another purchase order under the same contract, and the nature of the contract (indefinite delivery) and scope of the default (restricted to the given purchase order, while a show cause notice was outstanding on the overall contract). Findings 8, 9, 15. Implicitly, in considering items (3) and (7) and determining to default less than the entire contract, the agency considered (5) the degree of essentiality of the contractor in the Government acquisition program and the effect of the default upon the contractor's capability as a supplier under other contracts (and purchase orders). Contractor has not suggested that item (6), the effect of default on contractor's ability to liquidate guaranteed loans, progress payments, or advance payments, has any applicability to its situation, or that a consideration of that factor would have compelled a different agency determination. Contractor fails to appreciate the actions of the agency. The termination of only the purchase order did not otherwise hinder contractor's ability to satisfy other orders under the contract; in fact, with the terminated items on hand, contractor was in a position to effectuate expeditious delivery of future orders. The default determination clearly placed contractor on notice of the agency's intent to enforce the bargained-for delivery requirements of the contract. The separate cure notice and the termination for default were consistent means to encourage contractor to fulfill its contractual obligations. Contractor should not have expected to be able consistently to effectuate late delivery for reduced payment--such an agreement, with a longer period for delivery, was not competed and was not what the actual contract required. Further, contractor maintains that terminating the given purchase order because of contractor's late delivery on a different purchase order under the same contract constitutes a breach: Purchase orders issued under the same contract have different delivery dates. The events and circumstances affecting their performance are separate and distinct. Performance on one cannot form the basis of terminating an unrelated order. To do so is a breach of contract. Contractor Brief at 10. Contractor misunderstands the actions and determinations of the agency. Contractor's failure to deliver the given purchase order formed the basis for default under the terms of the contract. The agency's consideration of late deliveries under other purchase orders was fully in keeping with the factors to be considered in making a default determination. Decision The Board DENIES the appeal. The agency has established a sufficient basis upholding the termination for default of the particular purchase order in dispute; the contractor has failed to demonstrate any factor which would mitigate against the termination for default. ____________________________ JOSEPH A. VERGILIO Board Judge We concur: _____________________________ _____________________________ VINCENT A. LaBELLA JAMES W. HENDLEY Board Judge Board Judge