GPO BCA 1-85
September 12, 1986
MICHAEL F. DiMARIO, Administrative Law Judge


   This appeal timely filed by Nor Cal Trade School of Offset
   Printing, 25100 Mission Boulevard, Hayward, CA 94544
   (hereinafter Appellant) is from the final decision of John J.
   O'Connor, Contracting Officer, San Francisco Regional Printing
   Procurement Office (hereinafter RPPO), U.S. Government
   Printing Office (hereinafter GPO or Respondent), dated
   December 6, 1984, advising Appellant that "Your contract
   identified as Jacket 587-657 is hereby terminated for Default
   because of your stated refusal to produce this order in
   accordance with the specifications of this contract." (Rule 4
   File, hereinafter R4 File, Tab I) The appeal arises under the
   "Disputes" provisions of "U.S. Government Printing Office
   Contract Terms No. 1" (GPO Publication 310.2 - Revised October
   1, 1980) which said terms were made a part of the said
   contract by reference therein.  (R4 File, Tab B) The appeal
   has been decided upon the written record, no formal hearing
   having been requested.  Upon consideration of that record, the
   Board affirms the decision of the Contracting Officer for the
   reasons set forth hereinbelow and denies the appeal.


   On an undisclosed date in October 1984, Respondent issued a
   competitive solicitation for bids pursuant to the requisition
   of the Department of Energy for the production of some 12,000
   +/- 4%, 24-page, self-covered, saddle stitched, "Computer
   Security Guidelines" books of trim size 5 1/2 x 8 inches to be
   printed upon white, lithographic coated book stock equal to
   JCP Code A-180, Basis-500 sheets, size 25 x 38, weight 70
   pursuant to certain specifications set forth in the
   solicitation with certain materials to be furnished by the
   Government.  (R4 File, Tab B)

   Appellant's October 29, 1984, written bid in the amount of
   $3,825 was, upon opening of bids on November 6, 1984, deemed
   to be the lowest responsive bid.  Respondent, however, had no
   experience of dealing with Appellant during the preceding 12-
   month period.  (R4 File, Tab A)  Accordingly, the Contracting
   Officer on November 7, 1984, requested that a preaward survey
   be conducted.  (R4 File, Tab A) The survey conducted that same
   date by Mr. Tom Phillips, GPO, RPPO San Francisco, showed all
   elements surveyed to be satisfactory with the following
   additional notations: "Facilities and equipment are adequate.
   Ability to produce Level III work on duplicating type
   equipment may be borderline.  Recommend press sheet inspection
   when running solids, especially the cover." (R4 File, Tab D)
   (The Contracting Officer in his memorandum to this Board dated
   February 28, 1985, in conjunction with this appeal stated that
   "[d]uring the survey Mr. Phillips discussed the specifications
   and reviewed the furnished material with the Manager/Owner,
   Mr. Lane Thomsen and Nor Cal's production manager who
   indicated their understanding of the requirements.  Mr.
   Thomsen expressed confidence that his company could
   successfully produce this order.") (R4 File, Tab A)  Complete
   award was thereafter recommended and approved. (R4 File, Tab
   D)  Award was made by the San Francisco RPPO , Purchase Order
   No. P-5415 that same date "[i]n strict accordance with your
   written bid and the specifications." (R4 File, Tab E)

   Thereafter, by transmittal letter of November 16, 1984,
   Appellant furnished required page proofs to Respondent
   advising that:

     We found that there was [sic] eight small halftones and
     reverses.  Also there was [sic] 2 large halftones and
     reverses that we did not see in the quote.

     We also found that the art (camera ready) was not done
     correctly; i.e., there was line copy included in reverse
     areas, there also was type on the artwork that did not
     appear in the dummy.  We did what we felt was correct.

     We will await a [sic] answer before proceeding with the job.

R4 File, Tab F.

   The Respondent in its letter of February 28, 1985, supra, (R4
   File, Tab A) advised this Board that:

     In investigating these comments the contracting officer
     found that the specifications clearly indicate the presence
     of the halftones.  Under "GPO WILL FURNISH" it states
     "prescreened photo & knockout mask that reproduces on 2
     pages same size and 8 pages 1/3 size".  The requirement for
     reverses is also cited.  Under "FORMAT" "Covers 1 & 4 print
     full reverse - - - - - -."  The contracting officer along
     with two printing specialists reviewed the artwork to find
     out what part "- - - - was not done correctly", but we could
     find nothing wrong with the furnished material.  With regard
     to the "dummy book" that was furnished; it was obviously
     supplied as a guide and not as an exact replica of the
     finished product.  The type which the contractor says did
     not appear in the dummy was on the artwork and was accounted
     for in the specifications.  The fact that the letter was
     even written, was surprising since the copy and
     specifications had been reviewed by the contractor prior to
     the award.

     On Monday, November 19, the customer rejected the proof
     because it did not show all of the elements composited into
     position.  On November 20 a "cure notice" was given to Nor
     Cal Trade School.

R4 File, Tab A.

   The Cure Notice dated November 19, 1984, a copy of which was
   furnished this Board as part of the appeal file, advised
   Appellant that:

You are notified that the Government Printing Office considers
your failure to submit a complete and acceptable proof with all
elements in position on Purchase Order P-5415, Jacket 587-657, a
condition that is endangering performance of the contract in
accordance with its terms.  Therefore, unless such condition is
cured within 5 days after receipt hereof the Government may
terminate subject contract for default pursuant to the Article
entitled "Default", United States Government Printing Office
Contract Terms No. 1.

R4 File, Tab G.

   The letter was annotated in handwriting "[p]roof returned to
   contractor for correction and completion 11/20/84 12:00 Noon."

     Elaborating on the events of November 19, 1984, the
     Contracting Officer's memorandum of February 28, 1985,
     states that:

That same day Mr. George Earnshaw, Printing Specialist, and the
Contracting Officer met with Nor Cal's production manager who
restated his belief that the artwork was not camera ready.  The
discussion ended with neither of us agreeing with or even
understanding the point he was trying to make.

R4 File, Tab A.

   The Contracting Officer's memorandum of November 29, 1984, to
   the GPO Contract Review Board states that:

[T]he proofs were rejected . . . because they did not show all of
the elements stripped or composited in position.  On November
20th the contractor picked up the rejected proof.  At the same
time they were given a 5-day "Cure Notice".

     In order to expedite [sic] production the contractor was
     authorized to take a revised proof directly to the customer
     on November 21st.  While the contractor waited the proof was
     rejected again for the same deficiencies.  The contractor
     left all of the original Government furnished material with
     the customer and departed.  After several phone
     conversations during the week of November 26th, the
     contractor finally indicated on November 28th that they
     would not submit the proof to G.P.O. for review nor would
     they proceed with the order.

The consequences of a default action were explained to Mr.
Thomsen, owner of Nor Cal Trade School, by Mr. Earnshaw of this
office.  Nevertheless, Mr. Thomsen refused to proceed with
production.  Consequently, the contractor is considered to have
abandoned the contract.

The contracting officer intends to terminate Jacket 587-657 for
default.  C.R.B.  Concurrence [sic] is requested.

R4 File, Tab H.

In turn, unanimous C.R.B. concurrence was granted.

   There followed Respondent's "final decision" letter of
   December 6, 1984, supra, which among other things advised:

[T]hat the same or similar items terminated may be reprocured
against your firm's account, on such terms and in such manner as
the Contracting Officer deems appropriate.  In that event, your
firm shall be held liable to the Government for any excess cost.
The Government reserves all rights and remedies provided by law
and under the contract, in addition to charging excess cost.

R4 File, Tab I.

   By certified letter addressed to the Public Printer and
   received in the San Francisco RPPO on December 13, 1984, the
   Appellant appealed the decision of the Contracting Officer
   stating in pertinent part that:

     We received a job that was described and put out for bid and
     quoted as "Camera Ready," which it was not, and we attempted
     to point that out on many occasions.

     We also made several trips to the city to attempt to get a
     [sic] acceptable proof okay on this job and was not
     successful.  We took a proof out to Rad Lab where they
     refused the corrected proof and confiscated the original art
     work [sic].  We were informed directly by the customer that
     we could not do the job for them and that they were unhappy
     with the workings of G.P.O.

      We were then called and asked to supply another proof (way
      after the delivery date) and we refused with what we felt
      was good cause.

     We hereby appeal this determination on the above basis as we
     feel we did everything possible to please Rad Lab and with
     there [sic] attitude we decided that they would never be
     pleased with anything we provided them in the form of a
     proof and this lead us to believe that they also would not
     be happy with the completed printed job.

We feel we did everything to please the customer and they
withdrew the job, so we don't feel we should be held in default.

R4 File, Tab J.

   The appeal was docketed by the Board on January 7, 1985, with
   appropriate acknowledgment and procedural instructions to
   Appellant and Respondent by letter of the Board dated January
   16, 1985.  The appeal file was appropriately filed with the
   Board and Appellant on March 4, 1985.  On March 11, 1985, the
   time having expired for the filing of a formal Complaint, the
   Board notified Respondent that the appeal nevertheless met the
   requirements of such a Complaint.  No response was received
   from the Government.  Accordingly, the Board pursuant to GPO
   Instruction 110.12 entered a general denial in the record on
   behalf of the Government and by letter of April 23, 1985, so
   notified the Appellant.  The matter is before the Board for
   decision in this format.


   There are no factual disputes between the parties respecting
   the stated events although there is disagreement as to the
   quality of the materials furnished Appellant by Respondent.
   In short the facts show that: (1) Appellant's contract was
   terminated by Respondent's Contracting Officer "because of
   your stated refusal to produce this order in accordance with
   the specifications of this contract"; (2) Appellant admitted
   the refusal albeit its contention that such refusal was for
   "what we felt was good cause"; and (3) The appeal is from the
   Contracting Officer's final decision to terminate for default.
   Thus, the only question presented by this appeal is whether or
   not the Contracting Officer had a legal right to terminate the

   Turning to the contract itself for analysis on this point,
   this Board notes that Articles 2-3 and Articles 4-1 of U.S.
   Government Printing Office Contract Terms No 1, supra, address
   the circumstances of this case.  Article 2-3 in pertinent part

2-3. Disputes
  (a) Except as otherwise provided in the contract, any dispute
  concerning a question of fact related to the contract which is
  not disposed of by agreement shall be decided by the
  Contracting Officer, who shall make his/her decision in writing
  and mail or otherwise furnish a copy thereof to the contractor.
  The decision of the Contracting Officer shall be final and
  conclusive unless, within 90 days from the date of receipt of
  such copy, the contractor mails or otherwise furnishes to the
  Contracting Officer a written appeal addressed to the Public
  Printer.  The decision of the Public Printer, or a duly
  authorized representative for the determination of such
  appeals, shall be final  and conclusive unless determined by a
  court of competent jurisdiction to nave been fraudulent, or
  capricious, or arbitrary, or grossly erroneous as necessarily
  to imply bad faith, or not supported by substantial evidence.
  In connection with any appeal under this article, the
  contractor shall be afforded an opportunity to be heard and to
  other evidence in support of his/her appeal.  Pending final
  decision of a dispute hereunder, the contractor shall proceed
  diligently with the performance of the contract and in
  accordance with the Contracting Officer's decision.  (Emphasis

   Article 4-1 in pertinent part states:

4-1. Government Furnished Material.  The contractor will be
required to examine the furnished material immediately upon
receipt.  If at that time there is disagreement with the
description or the requirements as presented in the specification
(or print order), and prior to the performance of any work, the
contractor shall contact the U.S. Government Printing Office,
Central Office Printing Procurement Division, Washington, D.C.
20401, or the originating Regional Printing Procurement Office,
and protest the description.  The Contracting Officer will then
investigate and make a determination, which will be final.  If
the decision is reached that the original description is proper,
the contractor will be required to proceed with the work under
the terms of the contract.  If the decision is reached that the
description is erroneous, the Contracting Officer will proceed in
one of the following manners:

(a) In the case of a one-time bid, either an equitable adjustment
will be negotiated with the contractor, or the order will be
terminated.  (Emphasis added)

   It is the Board's opinion that these provisions when read
   together required the contractor to continue performance
   during dispute resolution, not withstanding the merits, if
   any, of its claim concerning the furnished materials.
   Appellant by refusing to perform was clearly in default of the
   contract.  Thus, the Board sustains the termination action by
   the Contracting Officer, approves the concomitant allocation
   to Appellant of excess reprocurement costs, if any, and denies
   the appeal.