NOR CAL TRADE SCHOOL OF OFFSET PRINTING GPO BCA 1-85 September 12, 1986 MICHAEL F. DiMARIO, Administrative Law Judge OPINION 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. BACKGROUND 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. DECISION 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 contract. 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 states: 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 added) 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.