In Appeal of Demusz Manufacturing Company, Inc, the Armed Services Board of Contract Appeals (“ASBCA”) awarded the government summary judgment, thereby affirming the government’s termination of a contract for default. In this case, the contractor was awarded a contract by the government for the manufacture and delivery of steel mating rings for aircraft engines. As part of the contract, the contractor was obligated to provide the steel necessary to produce the rings from any of three steel forgers. At the time of award, however, one of the forgers had declared bankruptcy and ceased operations, and the two remaining forgers were acquired by a third, unspecified steel forger. When the contractor failed to meet adjusted delivery dates primarily due to the non-availability of steel from the government’s specified source, the government terminated the contract for default, and the contractor appealed.

On appeal, the ASBCA rejected the contractor’s argument that by specifying the only acceptable sources of supply, the government warranted the performance of those sources. Relying on its prior decisions, the ASBCA concluded that the government’s specification of limited or sale sources amounts only to a representation by the government that the contract requirements can be met by use of the item or items from such specific sources, but did not excuse the contractor’s obligations to ensure its and its subcontractor’s and supplier’s timely or otherwise proper performance.

The ASBCA also rejected the contractor’s secondary argument on appeal that the validity of the metals market made timely performance impossible. In rejecting this argument, the ASBCA found that the contractor had failed to establish that the untimely delivery was not attributable to the fault or negligence of the contractor or its subcontractor, the government’s specified source. In fact, the ASBCA noted that the contractor, in its briefing papers, asserted that its supplier’s “nonperformance,” “misfeasance” and “nonfeasance” were the causes of its inability to timely perform. This was fatal to the contractor’s impossibility argument, and the government was awarded summary judgment affirming its termination for default. ASBCA No. 55311, 2006 WL 3844164 (ASBCA Dec. 18, 2006).