U.S. Government Printing Office
Board of Contract Appeals

Panel 2-79

Drew Spalding, Chairman
Robert Armentrout, Member
Raymond J. Garvey, Member

Appeal of Custom Printing Company
December 19, 1979

This decision results from a timely appeal filed by Custom
Printing Company (appellant), 920 Maple Street, Owensville,
Missouri 65066.  The appeal was taken pursuant to Article 29
(Disputes clause) of U.S. Government Printing Office Contract
Terms No. 1, approved July 1, 1943, revised July 15, 1970, which
was integrated as part of the original contract.  The decision of
the U.S. Government Printing Office Board of Contract Appeals
(the Board) is rendered in accordance with the procedures
provided in Government Printing Office (GPO) Instruction 110.10,
dated June 6, 1979.

Findings of Facts

On June 20, 1977, Print Order 6465 was issued by GPO to the
appellant under Program 414-M, for the printing and binding of
24,100 copies of an 8 1/2" x 11" book entitled  Mental
Retardation: Past and Present for delivery to the Department of
Health, Education and Welfare (HEW).  The print order indicated a
"must" shipping date of July 30, 1979, See Appeal File (AF),
Exhibit 4).  The contract was valued at $15,579 (AF, Exh. 2).

Program 414-M was a multiple award term contract for the printing
and binding of books and pamphlets on an "accelerated schedule
basis" in the Washington, D.C., area during the period February
1, 1977 through January 31, 1978.  Under this program contractors
were permitted to bid on four separate
categories of work relating to the size of the orders which would
be placed thereunder.  In this instance the appellant had bid on
Category 4, amounting to orders of 5,000 or more copies (of the
book, pamphlet, etc.) with over 96 text pages per copy (AF, Exh.
1; para. 1.17).  Two other contractors had bid in this category
and had lower aggregate abstracted prices for Print Order 6465.
They were telephonically offered the contract by the Contracting
Officer's representative; however, these firms were unable to
meet the shipping date and declined the offer (Contracting
Officer's Statement, dated October 17, 1977).  Thereafter, the
appellant was offered and accepted the contract on June 20, 1977.

Despite the fact that the appellant was required to undergo an
illustration position proof inspection on June 26, 1977, which
was not required by the program specifications, the appellant
printed and bound the books and met the shipping date.  Shortly
thereafter, on July 20, 1977, the Acting Chief of the Printing
Section of HEW, in a memorandum to GPO, indicated that HEW would
not accept the work produced by the appellant.  The reasons given
for their rejection were:

1.  Uneven ink coverage and smearing.

2.  Halftone production was very poor including the loss of
detail and picking.

3.  The paper used in the book did not meet the standards
required by the contract.

4.  A number of pages were creased.  (AF, Exh. 5).

As a result of this memo, the Quality Control Division of GPO
conducted a test regarding the opacity of the paper used.  The
specifications required an opacity of 91 percent (para.
2.10-1(a)).  The test results showed the paper used 88 percent
opacity rating or a difference of -3 percent from the contract
requirement (AF, Exh. 6).  In addition, the Superintendent of the
Typography and Design Division of GPO indicated in a memorandum
dated August 5, 1977, that a sample of the books produced by the
appellant had been inspected and showed:

". . . substandard printing quality and film reproduction.

"There is a considerable loss of detail in the illustrations, and
the poor inking make [sic] the book difficult to read."

Uneven ink coverage, dirty halftone illustrations, insufficient
blanket printing pressures, ink scumming and lint picking, and
lack of detail in halftones were also cited by the Superintendent
of Typography and Design as deficiencies in the product.  (AF,
Exh. 7).

The president of the appellant company, Mr. Elbert (Gene) E.
Clark, was apprised of the HEW complaint, and recommendation that
the work be rejected, by telephone during the week of August 8,
1977.  He requested a meeting with the Contracting Officer and
this was held on August 25, 1977.  At this meeting additional
books from the appellant's production run were examined along
with the proofs and photographs used to produce the
illustrations.  According to the Contracting Officer, Mr. Clark
agreed that there were quality problems with the printing and he
offered to accept a 20 percent reduction in the purchase price,
however, he refused the request of the Contracting Officer to
reprint the order.  HEW, in turn, declined the offer of the 20
percent discount and on September 7, 1977, the Contracting
Officer issued a final termination notice (AF, Exh. 10).  This
notice, after advising the appellant that the default was taken
in accordance with Articles 13 and 18 of the GPO Contract Terms
No. 1, states further:

"The Government may procure, upon such terms and in such manner
as the Contracting Officer may deem appropriate, supplies and
services similar to those so terminated, and your firm shall be
liable to the Government for excess costs for such similar
supplies."  (AF, Exh. 10)

Prior to the termination notice, on August 30, 1977, Mr. Clark
had written to the GPO asking that certain facts be considered
before the rejection of appellant's work was finalized.  In
summary, the appellant made the following contentions:

1.  The print order had a very short period of time before
delivery was required [total of 10 days from June 20 through June
30, 1977].

2.  Only after reviewing the print order which accompanied the
camera-ready copy did appellant realize that there were 90
halftones that had to be printed.  1

3.  Only after actual production was begun did the appellant
discover that the imposition required bleeds on the nongutter
side of the book.

4.  It was working under severe time pressure and that any
problem the agency might have had with a lack of contrast in the
halftones and the grayness in printing was due in part to the
appellant's emphasis on speed, in lieu of quality, and because
some of the halftones were of poor quality in and of themselves.

The appellant also contended that the job of printing and binding
of this book should have been listed as a "display" job and
appellant should have been given about "10 days to complete the
job after the proofs had been approved."  Further, if the job had
been described accurately and produced under proper conditions,
the price of the book would have been considerably higher (AF,
Exh. 9).

In response to the appellant's letter of August 30, 1977, the
Contracting Officer wrote on September 9, 1977, and reiterated
his conclusion that the quality was not adequate, adding that his
determination to terminate was required by the "poor reproduction
of the illustrations, hickies, uneven ink coverage and scumming.
. ." (AF, Exh. 11).

The Contracting Officer did, however, agree with the appellant
that a "small" number of photographs was supplied to it which
were difficult to reproduce and the lack of quality was not the
appellant's fault.  He also stated that the order was placed with
Program 414-M as a result of the short schedule for delivery,
concluding that except for the proof inspection, which could be
covered by a change order, the job fell within the program
specifications (AF, Exh. 11).

The bids of 20 printers were solicited for the reprocurement
contract.  Only one of these, Port City Press, Inc., had bid on
the original Program 414-M specifications.  Five of these 20
printers responded quoting prices ranging from $24,751 (Phillips
Brothers) to $41,000 (Pearl Pressman Liberty)  (AF, Contracting
Officer's Memorandum, November 29, 1977).

The reprocurement contract was awarded to Phillips Brothers on
September 29, 1977, with a final ship date of October 26, 1977.
2

On September 29, 1977, the appellant appealed the decision to
terminate Print Order 6465.

By letter dated September 30, 1977, the Contracting Officer
informed appellant of the reprocurement of Print Order 6465 and
indicated that excess costs would be deducted from appellant's
account  (AF, Exh. 13).  3

Additional findings of fact relevant to the decision are
discussed in the discussion portion below.

Discussion

Neither the appellant nor the Contracting Officer has been
represented by counsel during this proceeding.  As a result, the
Board has had to rely solely upon its own judgment in determining
the factual and legal issues which were presented in the written
submissions contained in the appeal file.  No oral hearing was
had before the Board and no other evidence was relied upon in
arriving at our decision.

A.  Was Print Order No. 6465 properly within the scope of the
Program 414-M specifications?

In a letter dated November 21, 1977, responding to a Board
request for further argument or evidence regarding its appeal,
the appellant briefly stated certain "points" which it wished the
Board to take into consideration before making its decision.
These points, in summary, are as follows:

1.   Program 414-M was an accelerated contract.

2.  Work offered previously to the appellant under this program
had been mostly line copy with an occasional small halftone, but
no full size halftones bleeding on the top, bottom and right
side.  The previous work closely coincided with the description
of the work given in the specifications on page 13 para. 2.11(b).
4

3.  No mention is made of bleed pages in the specifications,
which generally requires an added charge because of the necessity
to use a wider roll of paper than if there are no bleeds.

4.  Since the offered contract had bleed pages, it forced
appellant to use 35 1/2 inch vellum finish 120 pound offset paper
which it happened to have in stock.  This paper was not correct
for quality halftone work because it creates paper dust on the
blankets.  This can be removed adequate time is allowed in which
to remedy the situation and still make the delivery date.

5.  The reprocurement cost of $24,751 indicated in the
Contracting Officer's letter of September 30, 1977, was a
"realistic price" for this job.

6.  This contract should not have been procured under Program
414-M, but separately as a "display" job.

While the appellant has not said so explicitly, we construe this
language to be a claim that the product called for by Print Order
6465 was not within the program specifications.

The only statement from the Contracting Officer regarding this
issue is contained in his letter to appellant dated September 9,
1977.  There he states:

"This order was placed on Program 414-M because of the short
schedule.  That requirement along with all other aspects of the
order fall in line with the program specifications except for the
proofs which could be covered by change order." (AF, Exh. 11)

In no other materials in the Appeal File does the Contracting
Officer offer any justification, based on the contract language,
supporting this broad conclusion.

After our review of the specifications, we are convinced that
Program 414-M was not primarily intended for the type of book
which was procured under Print Order 6465.  5

10

However, the specifications did require printing and binding of
books and pamphlets within certain broad constraints.  Aside from
this, there was no guarantee in any of the provisions as to
exactly how much work, of what kind and with how many required
operations would be contained in the print orders offered
thereunder.  While there were estimates in the specifications
(see Footnote 5), these were not guaranteed as minimums nor can
they be taken to exclude reasonable amounts of certain types and
kinds of work.  We do not find that the amount of halftones or
that bleeds were present in the halftones were outside the scope
of the Program specifications.

B.  Was the Contracting Officer warranted in terminating Print
Order 6465?

The specifications, paragraph 1.8(a), require that:

"The workmanship in connection with the article or product
manufactured under these specifications must be first class in
every respect."

Paragraph 2.11, entitled "Presswork", requires:

"(a) clear, sharp, offset printing . . . . "

Our review of the facts leads us to conclude that there really is
no dispute between the parties regarding the quality.of the books
supplied by appellant.  In its letter dated November 21, 1977,
appellant acknowledges that paper dust accumulated on the offset
blankets.  Also, in a letter dated June 19, 1978, it states "We
do not believe that Custom Printing Company was completely
blameless in this matter, nor do we believe that the Government
Printing Office was without fault.  A sharing of the blame and
financial loss would also be in order." Moreover, there seems to
be no substantial
dispute by the appellant of the findings of the Acting Chief at
HEW (AF, Exh. 5), the GPO Quality Control and Technical
Department that the opacity of the paper was not up to contract
requirements (AF, Exh. 6), or of the Superintendent of the GPO
Typography and Design Division (AF, Exh. 7).  There is also no
contradiction by the appellant of the statement in the memorandum
from the Contracting Officer to the GPO Contract Review Board
dated September 2, 1977, which claims "[h]e [Mr. Clark] admitted
that the printing wasn't the best, however, the schedule and
furnished material dictated the poor quality" (AF, Exh. 8).  6

Article 13 of GPO Contract Terms No. 1, entitled "Inspection and
Tests", provides for the rejection of material which is not in
conformity with the specifications.  With exceptions which are
not relevant here, See Radiation Technology, Inc. v. United
States, 177 Ct. Cl. 227, 366 F.2d 1003 (1966), the Government may
require strict compliance with its contract specifications or may
reject the offered product and default the contractor.  See
American Electric Contracting Corp. v. United States,  579 F.2d
602, 608 (Ct. Cl., 1978), Branz Mechanical Contractors, Inc.,
VACAB No. 1105, 74-2 BCA  10,854 (1974), and cases cited therein
at footnote 9 at p. 51,630.

Based upon the facts as recited above and the requirements of the
contract, we conclude that the Contracting Officer acted properly
in terminating the appellant on Print Order 6465 for failure to
meet the quality requirements of the specifications.

C.  Is the excess cost determination properly before the Board?

Despite our holding that the contract was properly terminated,
there are other issues which we feel must be treated in the
context of this appeal.  One of these concerns the assessment of
excess costs.  However, before we can reach the substantive
questions that surround the reprocurement, we first address the
issue of whether this matter is properly before us.

As noted above, the appellant was not represented by counsel.
Presumably, had the appellant sought legal advice, the
presentation of the facts and the definition of the issues would
have been made with greater clarity.  Be that as it may, in
reviewing the communications between the Contracting Officer and
the appellant attendant to this appeal, and for the reasons
stated below, we conclude that this Board can properly address
the Contracting Officer's decision on the reprocurement.

To begin our analysis we quote from the sections of GPO Contract
Terms No. 1, which were cited by the Contracting Officer in his
termination letter dated September 7. 1977.  Article 13 reads in
relevant part:

"In case any article is found to be defective in material or
workmanship or not in conformity with the requirements of the
specifications, the Government shall have the right to reject
such articles, or require their correction.  If the contractor
fails to proceed properly with a replacement or correction
thereof, the Government may,  by contract or otherwise replace or
correct such articles and charge to the contractor the excess
cost occasioned the Government thereby, or the Government may
terminate the right of the contractor to proceed as provided in
the contract and charge the contractor the excess cost occasioned
thereby." (Emphasis added.)

Article 18, entitled "Default", reads in relevant part:

"In the event the Government terminates this contract . . ., the
Government may procure, upon such terms and in such manner as the
contracting officer may deem appropriate, supplies or services
similar  to those so terminated, and the contractor shall be
liable to the Government for any excess cost for such similar
supplies or services. . ." (Emphasis added.)

The Contracting Officer in his termination letter, also
specifically advised the appellant that it would be liable for
excess costs (AF, Exh. 10).

The appellant's letter of appeal dated September 29, 1977, makes
no reference to excess costs.  On the other hand, the appellant
in another communication does make specific reference to the
excess costs assessed alleging that the reprocurement cost was,
in fact, closer to the actual value of the contract than was
originally offered by the Government (see letter, dated November
21, 1977, para. 6).  In another letter dated November 14, 1977,
directed to the Board, the appellant requested a copy of the book
that was printed under the reprocurement contract and a list of
all the firms that were invited to bid on the reprocurement.
While the appellant does not say so directly, we find this
language to indicate an intent to appeal the assessment of excess
costs.

The Contracting Officer disagrees with this position.  In
response to a specific request of the Board for additional
information or a position statement on the question of whether
the excess cost were properly before the Board, he responded in
full as follows:

"The Contracting Officer views the assessment of excess costs
separate from his decision to terminate the contract for Print
Order 6465, Program 414-M for default.  The Contractor has not
furnished timely or written objection to the Contracting Officer
to that assessment.

"Therefore, the Contracting Officer believes the assessment of
excess costs should not be before the Board."  (Memorandum, dated
June 19, 1978.)

While there is no extended explanation (as can be seen from the
above) of the Contracting Officer's position, we presume that it
is based primarily on the failure of the appellant to separately
enter his appeal and dispute the assessment of excess costs
levied in the letter dated September 30, 1977 (AF, Exh. 13).  7

We believe that this fact situation falls in line with that of
Conncor, Inc., GSBCA No. 4654, 77-1 BCA  12255.  There the
appellant unsuccessfully appealed the default termination, and it
had not timely filed a subsequent appeal to the assessment of
excess costs.  Disregarding this, the Board concluded that the
subject was properly before it for adjudication.  Also, see El-
Tronics, Inc.,  ASBCA No. 5457, 61-1 BCA  2961 (1961); Si Lite,
Inc., GSBCA No. 2442, 68-1 BCA  7032.  In accord with this line
of so-called reverse "Fulford doctrine" cases, see Fulford
Manufacturing Company,  ASBCA Nos. 2143, 2144, 6 CCF  61,815
(1955), Pantronics, Inc., ASBCA No. 20982, 78-2 BCA  13,285, at
p. 64,984 (appeal of excess costs assessment "opens-up" questions
of validity of default termination), we hold that the matter of
excess costs has also been appealed here and is properly before
us for a decision on the propriety of the assessment.

D.  Were the excess costs proper?

The Contracting Officer drafted an entirely new set of
specifications to accomplish the reprocurement (AF, Exh. 12).  We
note initially that the amount of time between the date of
receipt of production material by the contractor to the final
ship date has been increased to 21 days, or more than double the
amount of time under the original contract.  Secondly, these
specifications detail precisely the amount of line film, square
finish halftones (and in what sizes) and how many strips and
composites the contractor will receive from the GPO.  Thirdly, in
the Presswork section of the new contract, the contractor is
informed of exactly how many bleeds and on what pages the
contractor will have to produce.  The contractor is also required
to prepare two sets of blue line proofs for inspection by a
representative of the Government who will look for "quality
conformance" (AF, Exh. 12, p. 4, para.  6).  Finally, and perhaps
most significantly, the contract specifies that "A-1 quality
workmanship [is] required throughout."

The "Default" clause, Article 18 of GPO Contract Terms No. 1,
requires that "supplies or services similar  to those so
terminated" may be procured by the Government and the excess
costs shall be charged to the contractor under the defaulted
contract.  (Emphasis added.)  While we are not unaware that a
contracting officer had some flexibility in reprocuring the
defaulted items, see Astro-Space Labs, Inc. v. United States, 200
Ct. Cl 282, 308, 470 F.2d 1003, 1017 (1972), the reprocurement
contract must be essentially the same as the original, and
without any material variation.  In Moe Rosenberg v. United
States, 76 Ct. Cl. 662 (1933), the Court said:

"It has long since been held that where the Government by reason
of a claimed default in performance of a contract elects under
its terms to relet the contract and charge the increased cost, if
any, to the defaulting contractor, such charge may not be
sustained if in the reletting there is a material or substantial
departure from the original contract terms."  [Citations
omitted.]  76 Ct. Cl. at 679.

The solicitation of 20 bidders for the reprocurement contract
tends to support the conclusion that the contracting officer
attempted to mitigate the damages assessable against the
appellant.  See Office Equipment Co., ASBCA No. 5040, 59-2 BCA 
2302.  Nevertheless, the price increase for these purportedly
"similar" services of approximately 60 percent (from $15,579 to
$24,751), we regard as fully supportive of our basic conclusion
that the reprocurement contract was, in fact, materially
different from Print Order 6465.  8

As a result, we now hold that the reprocurement price cannot form
the basis for measuring the reasonable excess costs and therefore
we sustain this portion of appeal.  See G. O'Connor,  AGBCA No.
75-154, 78-1 BCA  12,981.

DECISION

Upon our review of the written record, based on our findings of
fact and for the reasons stated above, we accordingly:

1.  Deny the appeal from the termination for default.

2.  Sustain the appeal as to excess costs and order the
Contracting Officer to remit to appellant the amount of excess
costs assessed.

_______________

1   While the appellant's letter does not speak to the issue
directly, presumably the telephonic offer from GPO did not
include information about the number of halftones contained in
the book.  There is no other information contained in the
submissions of the Contracting Officer which would support a
contrary finding.

2  The original ship date on the reprocurement contract was
October 18, 1977.  This date was changed to October 26, 1977, by
an amendment dated September 16, 1977 (AF, Exh. 12).  No
explanation for this enlargement of time is contained in the
appeal file.

3  While the appeal file does not indicate that any change order
was ever issued for the proof inspection conducted at the
appellant's plant, we assume that the excess costs assessed
approximate the difference between the price the contractor would
have received had the job been accepted, $15,579, and the
reprocurement price, $24,751.  This.amount is approximately
$9,200.

4  Paragraph 2.11(b) provides as follows:
"While it is anticipated that most of the jobs ordered under
these specifications will consist of typed pages and line
illustrations, some jobs will also contain halftones.  Solid
reverse printing on covers may also be ordered.  Full ink
coverage must be maintained.  All lengthwise backstrip titles
must read down, unless otherwise specified on print order."

5  The provisions of the specifications which strongly suggest
the type of work which would be procured thereunder are contained
in paragraphs 1.8(b), entitled "Workmanship", 2.11 entitled
"Presswork", subparagraph (b) (quoted above in Footnote 4) and
Section 3, entitled "Basis of Award".

In the Basis of Award section, the contractor is advised of the
approximate number of operations that the Government estimates it
could anticipate being required to perform during one month's
production.  For Category 4 orders the contract estimates that it
would have to produce six (6) square finish halftones in Format
"B" (which included the trim size of 8-1/2" x 11", or the same as
Print Order 6465) (See paras. 2.4(b)(2) and 3.1, page 25,
Category 4, IV (c)(2) and para. 4.1 entitled "Schedule of
Prices", Category 4, IV (c)(2) at page 34).  While 6 halftones
per month is only an estimate and not a guarantee of the amount
of work which would be ordered under the program contract (See
para. 3.1(c)), it is wholly out of line with the 90 halftones
which the appellant found once he received Print Order 6465.
Further, we find no provisions mentioning bleeds which the
contractor might encounter.

Despite this, since the contract does indicate that halftones may
be present in the work to be procured, and since the appellant
(by its own admission) acknowledges that a bleed of a halftone
requires a larger size of paper, we believe it was incumbent upon
it to have the proper paper available at the time that it
received the print order, or, in the alternative, to have
investigated the possibility that there would be bleeds in some
of the work offered and to be prepared with the appropriate
paper.  See Oakland Industries, ASBCA No. 5813, 61-1 BCA  2900
(1960).

6 The Board was supplied a copy of the book produced by the
appellant and a copy produced by the reprocurement contractor.
Assuming, without deciding, that these books are representative
of the work that was produced by both of these printers, we
observe that the quality of the reprocurement contractor's
product is clearly superior to that of the appellant.

7  The Contracting Officer's letter simply indicates that excess
costs will be deducted from appellant's account based upon a
reprocurement cost of $24,751.  It does not state a specific
dollar figure, and importantly, it does indicate that this was a
final decision of the Contracting Officer to which the appellant
could appeal.

8   The Contracting Officer does not indicate his reasons for not
awarding the contract to the next higher contractor (who could
meet the new shipping date) as determined by the abstract of
prices on Program 414-M (see AF, Exh. 2).  Except for the
inadequacies in the Program specifications, we fail to see why
one of these contractors could not have been the most obvious
source to produce the reprocured books.  This fact also
contributes to our conclusion that the reprocurement contract was
materially different from the original.