U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, D.C. 20401
In the Matter of )
)
The Appeal of )
)
MCDONALD & EUDY PRINTERS, INC. ) Docket No. GPO BCA 06-91
Program 814-M )
Purchase Order 73022 )
Print Order 20336 )
DECISION AND ORDER
By letter dated October 9, 1990, McDonald & Eudy Printers,
Inc. (Appellant or Contractor), 4509 Beech Road, Temple Hills,
Maryland 20748, filed a timely appeal from the September 12,
1990, final decision of Contracting Officer James R. White, of
the U.S. Government Printing Office's (Respondent or GPO or
Government) Printing Procurement Department, Washington, DC
20401, rejecting the publications delivered under its contract
identified as Program 814-M, Purchase Order 73022, Print Order
20336, because they did not meet the standards for a Quality
Level III job (R4 File, Tab L).1 Remarking in his final
decision that even if the products had been accepted
initially, the Government would have asked for a reprinting of
the cover and two text pages, in order to correct a mistake in
the specified ink color for the cover and an error in the
Government-furnished material, the Contracting Officer offered
to pay the Contractor $1,823.93 for that work (R4 File, Tab
L). For the reasons which follow, the decision of the
Contracting Officer is hereby AFFIRMED, and the claim is
ALLOWED to the extent of $1,823.93. In all other respects,
the appeal is DENIED.2
I. FINDINGS OF FACT
1. On December 5, 1989, the Respondent solicited bids for a
multiple-award "requirements" contract, covering the period
from February 1, 1990 through January 31, 1991, to produce and
distribute three categories of various self and separate cover
books and pamphlets, as requisitioned from GPO by other
Government departments and agencies (R4 File, Tab A, pp. 1,
7).
2. Among other specifications, the Invitation for Bids (IFB)
contained the following provisions, in pertinent part:
SECTION 1-GENERAL TERMS AND CONDITIONS
Any contract which results from this [IFB] will be subject
to the applicable articles of GPO Contract Terms (Pub.
310.2, effective December 1, 1987, Revised 9-88)
[hereinafter GPO Contract Terms], and Quality Assurance
Through Attributes Program, Revised September 1986 (GPO
Pub. 310.1) [hereinafter QATAP].
* * * * * * * * * *
QUALITY ASSURANCE LEVELS AND STANDARDS: The following
levels and standards shall apply to these specifications:
Approx. Approx. Product Quality 45%
Total 55% Total
Levels: Orders Orders
(a) Printing
(Page Related)
Attributes Level III Level IV
(b) Finishing
Attributes Level III Level IV
Inspection Levels
(from MIL-STD-105):
(a) Non-destructive Tests-General
Inspection Level I.
(b) Destructive Tests-Special
Inspection Level S-2.
* * * * * * * * * *
ORDERING: Items to be furnished under this contract shall
be ordered by the issuance of print orders by the
Government. . . . All print orders issued hereunder are
subject to the terms and conditions of this contract. This
contract shall control in the event of conflict with any
print order.
* * * * * * * * * *
SECTION 2-SPECIFICATIONS
SCOPE: These specifications cover the production of various
self and separate cover books and pamphlets requiring such
operations as film making, printing, binding, packing, and
distribution.
* * * * * * * * * *
TRIM SIZES:
Various trim sizes will be ordered and paid for in their
respective "Format" classification as follows:
Format "A" will include any trim size up to an including
5-1/2" x 8-1/2" (including album style) or a maximum unit
size of 46.75 square inches.
Format "B" will include any trim size over 5-1/2" x 8-1/2
up to and including 8-1/4 x 10-3/4" (including album style)
or a maximum unit size of 89 square inches.
Format "C" will include any trim size over 8-1/4 x 10-3/4"
up to and including 8-1/2 x 11" (including album style) or
a maximum unit size of 94 square inches.
* * * * * * * * * *
PRINTING:
The major portion of the work ordered under this contract
will print in black ink. However, an occasional order may
require printing in color or colors other than, or in
addition to black, on text, covers, and/or fold-ins.
Process printing will not be required.
An occasional order may require coating (after printing)
the entire surface of cover pages 1 and 4 or all four
covers with varnish or lacquer to prevent scratching or
smearing.
Match Pantone number as indicated on the print order.
* * * * * * * * * *
DEPARTMENTAL RANDOM COPIES (BLUE LABEL): All orders must be
divided into equal sublots in accordance with the chart
below. A random sample must be selected from each sublot.
Do not choose copies from the same general area in each
sublot. . . . . These randomly selected samples must be
packed separately and must be identified by a special [G]
overnment-furnished blue label, which is to be affixed to
each affected container. . . . The random inspection
samples constitute part of the total quantity ordered, and
no additional charge will be allowed.
Books
Quantity Number of
Ordered Sublots
500-3,200 13
3,201-10,000 20
10,001-35,000 32
35,001 and over 50
These randomly selected copies must be packed separately
and identified by a special government-furnished blue label
affixed to each affected container. The container and its
contents shall be recorded separately on all shipping
documents and sent in accordance with the distribution
list.
* * * * * * * * * *
QUALITY ASSURANCE RANDOM COPIES: In addition to the
Departmental Random Copies (Blue Label), the contractor may
be required to submit quality assurance random copies to
test for compliance against the specifications. The print
order will indicate the number of samples required, if any.
When ordered, the contractor must divide the entire order
lot into equal sublots and select a copy from a different
general area of each sublot. The contractor will be
required to execute a statement furnished by GPO certifying
that copies were selected as directed. Copies will be paid
for at the running rate quoted in the contractor's bid and
their cost will not be a consideration for award.
See, R4 File, Tab A, pp. 2, 4, 7, 8, 11, 14, and 15.
3. The Appellant submitted an offer of $200,000.00, and was
determined to be one of the successful low bidders.
Thereafter, on February 1, 1990, the Respondent issued
Purchase Order 73022 to the Contractor entitling it to receive
work under this multiple-award "requirements" contract (R4
File, Tab B).
4. On May 18, 1990, GPO, on its own behalf, issued Print Order
20336, dated May 11, 1990, to the Appellant for the production
of 7,550 copies of QATAP (R4 File, Tab C). Among other
things, the Print Order specified that QATAP was a 76-page
publication, with a Format "C" trim size; i.e., 8-1/2" x 11"
(R4 File, Tab C). The Appellant was expected to produce a
QATAP meeting Quality Level III standards, and deliver it to
GPO by June 1, 1990. As for the printing instructions, the
Contractor was told:
Cover 1 Prints Reverse of PMS 4 Cool Gray Bleeding 3 Sides
Plus PMS 285 Blue. Close Registration. Cover 4 Prints
100% Solid PMS 4 Cool Gray. Dull Varnish Covers 1 & 4
After Printing. [Original emphasis.]
5. Thereafter, on May 21, 1990, the Respondent gave the
Appellant an amended Print Order 20336, dated May 11, 1990 (R4
File, Tab D). The only change was in the number of copies
ordered; i.e., GPO increased its order by 10,000 copies, so
that now a total of 17,550 copies of QATAP was to be delivered
by the Contractor (R4 File, Tab D). However, GPO still wanted
the initial quantity (7,550 copies) delivered by June 1, 1990,
although the additional copies could be shipped by June 15,
1990 (R4 File, Tab E).
6. The Appellant shipped 7,550 copies of QATAP in accordance
with the contract schedule. However, when GPO inspected 20
random samples from that first shipment on June 6, 1990, it
discovered that the publication itself did not conform to
QATAP standards (R4 File, Tab F).3 Specifically, the samples
tested disclosed finishing attribute problems with respect to
trim size (F-1) and missing pages (F-12) (R4 File, Tab F).
Based this examination of the samples, GPO assessed 20 major
defects-one (1) major defect for each sample copy-under QATAP
for the trim size problem, and 3 critical defects for the
missing pages (R4 File, Tab F).
7. By letter dated June 7, 1990, the Respondent informed the
Appellant of the inspection results, and told the Contractor
that the order was being rejected because of the two quality
assurance problems (R4 File, Tab G). Furthermore, the
Appellant was instructed to reprint the order "at no
additional cost to the Government in strict accordance with
the specifications." (R4 File, Tab G). However, the Appellant
was asked to make the following changes, which were unrelated
to the defects found, in reprinting the publication:
The product will be printed in PMS-8 Cool Gray instead of
PMS-4 Cool Gray. Page 3, Table of Contents, last line
(Appendix C-Problem Index) will be corrected to read page
51 instead of 50.4
(R4 File, Tab G).
8. Following receipt of the Respondent's instructions, the
Appellant made the required changes and delivered the
reprinted publication (R4 File, Tab I). Thereafter, by letter
dated June 27, 1990, the Appellant formally objected to GPO's
rejection of the initial shipment, stating in pertinent part:
. . . [W]ith regard to the above print order which revealed
defects under the following attributes:
F-1: Trim Size
F-12: Missing Pages
1. F-1: Trim size is the fault of Bindery Personnel at
McDonald & Eudy who failed to maintain 8-1/2 x 11 trim size
per specifications.
2. F-12: Missing pages is the fault of Bindery Personnel at
McDonald & Eudy who failed in the loss of a 4-page
signature while gathering and stitching.
Extenuating circumstances which McDonald & Eudy feels
should be taken into consideration by G.P.O. are:
1. Quality Control Samples were taken from the original
order for 7,550, and not from the entire 17,500 which were
requested at a later date. . . .
2. All copies of the product were retrieved by McDonald &
Eudy in order for Quality Control Personnel to examine for
[the] defects listed above. Examination and random
sampling of the entire quantity by Quality Control
Personnel at McDonald & Eudy resulted in the following
determinations:
A. (F-1: Trim Size): All books appear to be under-
trimmed 1/8" under specifications.
B. (F-12: Missing Pages): All books examined did not
reflect missing pages.5
3. McDonald & Eudy strongly feels that the order should not
be determined rejectionable, and is a usable product.
Further, McDonald & Eudy feels the GUIDE FOR EQUITABLE
REDUCTIONS should be taken into consideration and is
willing to negotiate a fair and equitable reduction.
4. Regarding reprinting the product with changes to the
original specifications . . . McDonald & Eudy feels that
these changes made
by G.P.O. are determining factors which resulted in the
rejection and reprinting of the entire product.6
R4 File, Tab H, pp. 1-2. [Emphasis added.]
9. The record also discloses that the Appellant telephoned
the Respondent about this matter before reprinting QATAP (R4
File, Tab I). Apparently, the main purpose for the
Contractor's call was to register its complaint that the 20
samples inspected were not randomly selected, and were only
drawn from the first shipment of 7,550 copies (R4 File, Tab
I). Therefore, on July 27, 1990, the Appellant selected
another random sample of 32 copies and sent them to GPO for
examination (R4 File, Tab I).7 Of those 32 samples, 20 were
found to be under-trimmed by more than 1/8" and rejectable (R4
File, Tabs I and J).8 Consequently, GPO once again assessed
20 major defects for the trim size problem (R4 File, Tab J).
10. On August 30, 1990, the Contracting Officer telephoned the
Appellant and informed it of the results of the second
inspection (R4 File, Tab K). He also instructed the
Contractor to destroy the rejected publications (R4 File, Tab
K). During this telephone conversation, the Appellant again
stated that it had shipped a usable product (R4 File, Tab K).
While the Contracting Officer did not agree, he offered to
settle the matter by paying the Contractor $1,823.93 for
reprinting the cover and two text pages of the rejected order
(R4 File, Tab K). The Appellant rejected this settlement
proposal (R4 File, Tab K).
11. Accordingly, at the request of the Appellant, the
Contracting Officer issued a final decision on September 11,
1990, affirming his rejection of the first delivery of QATAPs
because of the trim size problem, disallowing the claim for
reimbursement, and renewing his offer to settle the dispute
for $1,823.93 (R4 File, Tab L). Addressing the Appellant's
belief that rejection was not warranted because the
publications were still usable, the Contracting Officer
stated, in pertinent part:
An examination of thirty-two (32) samples randomly selected
by your company from the total order quantity of 17,550
pamphlets revealed that twenty (20) copies did not meet the
specified dimensions including all allowable tolerances for
Acceptable Quality Level III. In the aforementioned
letter, you stated that an independent examination of
samples by employees of your firm confirmed this finding.
Since the products did not meet the minimum dimension
requirements, your exception to the rejection is denied.
All rejected copies may be disposed of at your discretion.
See, R4 File, Tab L, p. 1.
12. Thereafter, by Notice of Appeal dated October 9, 1990, the
Contractor appealed the Contracting Officer's final decision
to the Board.
II. ISSUES PRESENTED
This appeal presents two issues for the Board's consideration:
1. Did the Government erroneously reject the first printing
of QATAPs because of defects it discovered during its
inspection of random samples of the publication, thus
entitling the Appellant to payment for that delivery? Or,
stated otherwise did the Contractor deliver a usable
product which substantially complied with the trim
specifications for QATAP so that the Contracting Officer's
rejection of the shipment amounted to an abuse of his
discretion?
2. Did the Contracting Officer act in bad faith when he
rejected the first shipment of QATAPs and insisted on a
reprinting of the entire publication, rather than negotiate
an appropriate reduced price with the Appellant and accept
the delivery?
III. POSITIONS OF THE PARTIES9
Although the Appellant made the changes required by the
Respondent and delivered an acceptable reprinted publication,
it takes exception to the rejection of the initial shipment on
the ground that those copies of QATAP "substantially
conformed" to the original contract specifications. RPC, pp.
3, 5. The Appellant contends that the trim size of the
rejected books "appear to be" within tolerances for Quality
Level III work, but even so any difference with the required
trim size is only slightly greater than the allowable
deviation. Complaint, ¶¶ 6, 7; RPC, p. 5. In the
Contractor's view, the discrepancy is so minor that total
rejection of the original shipment was unjustified. Id.
Moreover, the Appellant says that despite this defect, the
publication was still "usable" and should have been accepted
by GPO, at a suitable discount. RPC, pp. 3, 5. Indeed, the
Contractor asserts that any other agency but GPO would have
accepted the publication under those conditions. RPC, p. 5.
Finally, the Appellant believes that the real reason the
Respondent rejected the initial shipment was its wish to avoid
additional costs for correcting the color and text errors in
the original specifications, and not because of the minor
defects found by GPO when samples of the QATAPs were
inspected. Complaint, ¶¶ 8, 9; RPC, pp. 3-4. Accordingly,
the Contractor asks the Board to allow its claim for
$11,137.98 for the rejected publications. Complaint, Prayer
for Relief; RPC, p. 4.
The Respondent, on the other hand, argues that the defects
disclosed by the inspection of the initial shipment of QATAPs
entitled the Contracting Officer to reject publications and
have the entire order reprinted. RPC, p. 4 (citing, GPO
Contract Terms, Contract Clauses, ¶ 14(f) (Inspections and
Tests)). Consequently, contrary to the Appellant, GPO
contends that the Government cannot be compelled to pay for
and accept the rejected QATAPs under any circumstances. RPC,
pp. 4-5; R. Brf., p. 3. The Respondent relies on the "black
letter" principle of public contract law which states that the
Government is entitled to enforce strict compliance with its
specifications.10 R.Brf., p. 3 (citing, Jefferson
Construction Company v. United States, 151 Ct.Cl. 75 (1960);
Red Circle Corporation v. United States, 185 Ct.Cl. 1, 8
(1968); American Electric Contracting Corporation v. United
States, 579 F.2d 602 (Ct.Cl. 1978); Dependable Printing, Inc.,
GPO BCA 5-84 (1985)). As the Respondent notes, the "strict
compliance" doctrine has been applied in numerous cases by the
Board and its predecessor ad hoc panels.11 R.Brf., p. 4
(citing, Copigraph, Inc., GPO BCA 20-86; Fry Communications,
Inc., GPO BCA 1-87; Vogard Printing Corporation, GPOCAB
7-84). Under this rule, the procuring agency has complete
discretion to reject nonconforming supplies or accept them at
a discount. Id. (citing, Famous Model Company, Inc., ASBCA
No. 12525, 68-1 BCA ¶ 6,902). This means that the agency
cannot be compelled to accept nonconforming supplies at a
discount, even if the discrepancies are relatively minor or
the defective articles perform as specified. Id. (citing,
Herley Industries, Inc., ASBCA Nos. 15378, 15840, 72-2 BCA ¶
9,749, mot. for reconsid. denied, 73-1 BCA ¶ 9,922; Cherry
Meat Packers, Inc., ASBCA No. 8974, 1963 BCA ¶ 3,937; Arrow
Lacquer Corporation, ASBCA No. 4667, 58-2 BCA ¶ 2003). The
Respondent believes that not only was the Contracting Officer
allowed to reject the nonconforming QATAPs in this case, but
since the book in question is the "bible" of GPO's quality
assurance program, he was right to do so because a less than
perfect Quality Level III job would have proved embarrassing
to the agency. R. Brf., pp. 4-5.
Finally, the Respondent argues that the Appellant's assertion
that GPO rejected the first delivery of QATAPs in order to
make corrections at no cost to the Government, really accuses
the Contracting Officer of acting in bad faith. R. Brf., p.
5. GPO observes that in order to support this allegation, the
Appellant must prove that the Contracting Officer specifically
intended to injure the Contractor. Id. (citing, American
General Leasing v. United States, 218 Ct.Cl. 367, 374-75, 587
F.2d 54, 59 (1979); Kalvar Corporation, Inc. v. United States,
211 Ct.Cl. 192, 199, 543 F.2d 1298, 1302 (1976); Librach v.
United States, 147 Ct.Cl. 605, 612-14 (1959)). In that
regard, the law presumes that public officials act
conscientiously and in good faith in the discharge of their
duties.12 Id. (citing, Contract Custom Drapery Service v.
United States, 6 Cl.Ct. 811,817 (1984)). It takes "well-nigh
irrefragable" proof of bad faith to overcome that
presumption.13 Id. (citing, Union Pacific Railroad Company v.
United States, 847 F.2d 1567, 1571 (Fed. Cir. 1988); Sanders
v. United States, 801 F.2d 1328, 1331 (Fed. Cir. 1986);
American General Leasing v. United States, supra, 218 Ct.Cl.
at 374). The Respondent contends that no such evidence exists
in this case. R. Brf., pp. 5-6. Accordingly, for all of
these reasons, the Respondent urges the Board to affirm the
final decision. R. Brf., p. 6.
IV. CONCLUSIONS14
The two questions presented in this appeal are not unique or
novel in the annals of the Board. The Board and the former ad
hoc panels have considered the same or similar issues in
numerous cases in the past; indeed, QATAP questions are among
the most common issues presented to the Board for resolution.
As a consequence, the principal issue in this case could be
decided on the basis of GPO precedent alone. Having
thoroughly examined those prior decisions, and consistent with
them, the Board makes the following findings of fact and
conclusions of law:
A. The Respondent wanted and ordered copies of QATAP with a
specified trim size. The Appellant admits that all of the
books in the initial shipment were under-trimmed by 1/8".
Therefore, the Respondent had a contract right to reject
the first printing of QATAP, and have the publication
reprinted at no cost to the Government. Whether or not the
initial product was usable because the under-trim was
minor, as contended by the Contractor, is irrelevant.
The first issue presented by this appeal is whether or not the
Appellant ought to bear the costs of reprinting and redelivery
of a printed product produced by it after rejection of the
original product for failure to meet specifications because it
was under-trimmed.15 Cf., French/Bray, Inc., GPO BCA 18-85
(October 23, 1986), Sl. op. at 10. The answer to that
question can be found in the relevant provisions of GPO
Contract Terms and QATAP, or in other words, in the very terms
and conditions of the contract itself. First, GPO Contract
Terms provides, in pertinent part:
14. Inspection and Tests.
* * * * * * * * * *
(b) The contractor shall provide and maintain an inspection
system acceptable to the GPO covering supplies under the
contract and shall tender to the Government for acceptance
only supplies that have been inspected in accordance with
the inspection system and have been found by the contractor
to be in conformity with contract requirements. . . .16
(c) The Government has the right to inspect and test all
supplies called for, to the extent practicable, at all
places and times, including the period of manufacture, and
in any event before acceptance. The Government shall
perform inspections and tests in a manner that will not
unduly delay performance and assumes no contractual
obligation to perform any inspection and test for the
benefit of the contractor unless specifically set forth
elsewhere.
* * * * * * * * * *
(f) The Government has the right either to reject or to
require correction of nonconforming supplies. Supplies are
nonconforming when they are defective in material or
workmanship or are otherwise not in conformity with
requirements. The Government may reject nonconforming
supplies with or without disposition instructions.
* * * * * * * * * *
(j) The Government shall accept or reject supplies as
promptly as practicable after delivery, unless otherwise
provided. Government failure to inspect and accept or
reject the supplies shall not relieve the contractor from
responsibility, nor impose liability on the Government, for
nonconforming supplies.
(k) Inspections and tests by the Government do not relieve
the contractor of responsibility for defects or other
failures to meet requirements before acceptance.
GPO Contract Terms, Contract Clauses, ¶ 14 (Inspection and
Tests). [Emphasis added.] For all intents and purposes, the
above-quoted language forms part of the standard inspection
clause found in most Government contracts. Cf., Mid-American
Business Forms Corporation, GPO BCA 8-87 (December 30, 1988),
Sl. op. at 18. As the Board has indicated on numerous occasions,
such clauses are premised on the fundamental rule that the
Government is entitled to strictly enforce compliance with its
specifications. See, e.g., Shepard (1993), supra, Sl. Op. at
19-20 (citing, Mega Construction Company, Inc. v. United States,
25 Cl.Ct. 735, 741 (1992); Wholesale Tire and Supply Company,
Ltd., ASBCA No. 42502, 92-2 BCA ¶ 24,960); Stephenson, Inc.,
supra, Sl. op. at 20-21 (citing, Rose Printing Company, GPO BCA
2-87 (June 9, 1989), Sl. op. at 6; Fry Communications, Inc.,
supra, Sl. op. at 5; Mid-American Business Forms Corporation,
supra, Sl. op. at 18-19); Copigraph, Inc., supra, Sl. op. at 2
(citing, S.S. Silberblatt, Inc. v. United States, 193 Ct.Cl. 269,
433 F.2d 1314 (1970)); Land & Land Printers, Inc., GPO BCA 5-86
(July 22, 1988), Sl. op. at 7.
The principles of law which apply in this case, enunciated by
the Board, in detail, in Automated Datatron, where it said, in
pertinent part:
1. The Government is generally entitled to require strict
compliance with its contract specifications, including
those of fixed-price supply contracts, Jefferson
Construction Co. v. United States, 151 Ct.Cl. 75 (1960);
Red Circle Corporation v. United States, 185 Ct.Cl. 1, 8
(1968); American Electric Contracting Corp. v. United
States, 579 F.2d 602, 608 (Ct.Cl. 1978); Dependable
Printing Company, Inc., GPO BCA 5-84 (1985), and can
enforce this right at any time prior to final acceptance,
Maizel Laboratories, Inc., ASBCA [No.] 8597, 1963 BCA ¶
3898, stated at 19,351. Strict compliance is especially
appropriate where the specifications are clear,
unambiguous, and objectively ascertainable by the
contractor, Herley Industries, Inc., [ASBCA Nos. 15378,
15840], 72-2 BCA ¶ 9,749, mot. for reconsid. denied, 73-1
BCA ¶ 9,922; Arrow Lacquer Corporation, [ASBCA No. 4667],
58-2 BCA ¶ 2,002. . . .
Specifications are designed to elicit and define the
essential qualities necessary in the procurement of a
product. Strict compliance or conformance with
specifications or contract requirements means that the
Government has a right to get exactly what it asked for in
the solicitation for contractual performance. Nichols &
Co. v. United States, 156 Ct.Cl. 358 (1962), cert denied,
371 U.S. 959 (1963); Rohr Industries, Inc., [ENGBCA No.
4058], 82-1 BCA ¶ 15,732. Thus, a contractor must comply
with the Government's requirements and cannot substitute
its views for those of the Government, Maxwell Dynomometer
Co. v. United States, 386 F.2d 855 (Ct.Cl. 1967), even if
the substitution would result in a superior product.
Nichols & Co. v. United States, supra. Likewise, a
contractor's view that a particular specification's high
tolerance was not needed is irrelevant, even if the view is
proven correct and the specification in question is found
to add nothing to the value of the product involved.
Gramercy Machine Corp. v. United States, 228 Ct.Cl. 825
(1981), [affirming] 74-1 BCA ¶ 10,611.
2. Inspection is the Government's primary means of ensuring
that it receives what it bargained for. 2 B. Nash & J.
Cibinic, Federal Procurement Law, 1552 (1980). However,
inspection is not meant to replace the contractor's
required quality controls. [Footnote omitted.] The right
to inspect is clearly for the benefit of the Government and
creates no Government duty to inspect. Kaminer
Construction Corp. v. United States, 488 F.2d 980 (Ct.Cl.
1973); Penguin Industries, Inc. v. United States, 530 F.2d
934 (Ct.Cl. 1976). [Footnote omitted.] . . .
3. Strict compliance can be enforced either by rejecting
the defective product or, if for reasons of economy or
urgency acceptance [it] is in the Government's best
interest, by requiring a price reduction for nonconforming
work. The Government is not required to accept
nonconforming supplies, and the right to refuse the product
is the prerogative of the procuring agency. Famous Model
Co., ASBCA No. 12526, 68-1 BCA ¶ 6,902. Therefore, a
contractor has no contractual right to force the Government
to accept defective products at a reduced price, even if
the defects are relatively minor, Cherry Meat Packers,
Inc., ASBCA No. 8974, 1963 BCA ¶ 3,937, notwithstanding the
fact that on occasion a Board of Contract Appeals might
hold, as a matter of its delegated administrative
discretion was too minor to warrant spending significant
additional funds by the Government for its correction.
Bruce-Anderson Co., Inc., [ASBCA Nos. 28125, 28126, 28127,
83-2 BCA ¶ [16,892] at 84,057. See also John McShain, Inc.
v. United States, 412 F.2d 1281 (Ct.Cl. 1969).
Automated Datatron, Inc., supra, Sl. op. at 2-5.
The sine qua non of "strict compliance" is a finding by, the
Contracting Officer that the delivered product does not
conform to the specifications.17 See, Dependable Printing
Company, supra, Sl. op. at 24; Excell Products, GPOCAB 8-81
(November 3, 1982), Sl. op. at 7-8; Gem Business Forms, Inc.,
GPOCAB 5-81 (August 29, 1981), Sl. op. at 4-5; Stevens
Graphic, Inc., GPOCAB 4-81 (March 22, 1982), Sl. op. at 7.
Indeed, the Contracting Officer's discretion to decide whether
a product is conforming or nonconforming is inherent in
his/her administration of the contract. Vogard Printing
Corporation, supra, Sl. op. at 6 (citing, Thomas W. Yoder
Company, Inc., VACAB No. 997, 74-1 BCA ¶ 10,424 (1974));
Excell Products, supra, Sl. op. at 7-8; Gem Business Forms,
Inc., supra, Sl. op. at 4-5. In the absence of any claim by a
contractor that the contract is ambiguous or imprecise, or
that the Contracting Officer acted arbitrarily or
capriciously, the Board will not disturb the finding that the
delivered supplies failed to conform to contract
specifications.18 See, Mid-American Business Forms
Corporation, supra, Sl. op. at 19; The Standard Register
Company, GPO BCA 4-86 (October 28, 1987), Sl. op. at 15;
Product of Information Systems, GPO BCA 7-85 (November 25,
1986),
Sl. op. at 8-9: Excell Products, supra, Sl. op. at 8. In this
case, there is no claim or evidence that the contract terms were
ambiguous or imprecise. See, Dependable Printing Company, supra,
Sl. op. at 24. Instead, as discussed infra, the Appellant seems
to be implying that somehow the Contracting Officer's insistence
on strict adherence to the contract was arbitrary or capricious.
Cf., Excell Products, supra, Sl. op. at 7-8, Gem Business Forms,
Inc., supra, Sl. op. at 4-5.
Generally, where the Government insists on strict compliance,
it bears the initial "burden of persuasion" to show that the
work it rejects does, in fact, deviate from the
specifications. See, e.g., International Lithographing, GPO
BCA 1-88 (December 29, 1989), Sl. op. at 20 (citing, Fillip
Metal Cabinet Company, GSBCA No. 7,695, 87-2 BCA ¶ 19,822
(1987); Ramar Company, ASBCA No. 16060, 72-2 BCA ¶ 9644; Pams
Products, Inc., ASBCA No. 15,847, 72-1 BCA ¶ 9,401 (1972);
Hardeman-Monier-Hutcherson, ASBCA No. 11785, 67-1 BCA ¶ 6210);
Mid-American Business Forms Corporation, supra, Sl. op. at
18-19; Stabbe Senter Press, supra, Sl. op. at 48-49. See
also, ABM/Ansley Business Materials, GSBCA No. 9367, 93-1 BCA
¶ 25,246, at 127,747 (citing, Mutual Maintenance Company,
GSBCA 7496, 85-2 BCA ¶ 18,098). The Government usually meets
this burden by advising the contractor of the results of the
inspection it has conducted. The burden then shifts to the
contractor to prove that the Government's findings are invalid
for one reason or another. See, e.g., International
Lithographing, supra, Sl. op. at 21 (citing, Universal Steel
Stripping Co., ASBCA No. 13,686, 69-2 BCA ¶ 7,799 (1969); C.
W. Roen Construction Co., DOTCAB Nos. 75-43, 75-43A, 76-2 BCA
¶ 12,215 (1976); Continental Chemical Corp., GSBCA No. 4483,
76-2 BCA ¶ 11,948 (1976)). See also, Riverport Industries,
Inc., ASBCA Nos. 28089, 28090, 28091, 29577, 86-2 BCA ¶
18,835, at 94,920, mot. for reconsid. denied, 86-3 BCA ¶
19,050.
Under the QATAP, finishing attributes, such as trim size, are
measured by inspecting individual copies of publications, and
classifying each deviation from specifications as either a
critical defect or major defect, in accordance with the
tolerance table for that attribute.19 See, QATAP, p. 3
(Finishing Attributes). In that regard, QATAP tells us that a
major defect must be assessed on a Quality Level III job if
the trim size deviation is "greater than 1/8["] (3.2 mm)."
Id., p. 28 (F-1. Trim Size). The Respondent's evidence, which
includes copies of the two relevant inspection reports, shows
that the trim deviation in the samples it inspected was more
than 1/8", or greater than the allowable tolerance (R4 File,
Tabs I and J). Consequently, it was incumbent on the
Appellant to present evidence that the Government's findings
were erroneous. See, e.g., International Lithographing,
supra, Sl. op. at 21. However, the Contractor's merely says
that its own inspection of the rejected books disclosed that
they were "under-trimmed 1/8" under specifications[.]"
(Complaint, ¶ 4; R4 File, Tab H; RPC, p. 5). Although the
implication in this response is that the under-trimming was
not greater than 1/8", there is no documentation to support
it. Therefore, on this record, the Appellant's case that the
under-trimmed books were still within allowable tolerances is
essentially an unverified assertion. Argumentation alone will
not sustain the Contractor's burden of proof.20 Cf., Hurt's
Printing Company, Inc., supra, Sl. op. at 29 (citing, Reese
Manufacturing, Inc., ASBCA No. 35144, 88-1 BCA ¶ 20,358). It
is well settled that unsubstantiated assertions are not
sufficient proof to permit recovery. Cf., Banta Company,
supra, Sl. op. at 52; Fry Communications, Inc./InfoConversion
Joint Venture, GPO BCA No. 9-85, Decision on Remand (August 5,
1991), Sl. op. at 33, fn. 31, (citing, Fry Communications,
Inc./InfoConversion Joint Venture v. United States, 22 Cl.Ct.
497, 510 (1991)); Stephenson, Inc., supra, Sl. op. at 57.
See also, Singleton Contracting Corporation, GSBCA No. 8548,
90-2 BCA ¶ 22,748; Tri-State Services of Texas, Inc., ASBCA
No. 38019, 89-3 BCA ¶ 22,064)); Gemini Services, Inc., ASBCA
No. 30247, 86-1 BCA ¶ 18,736.
The Appellant offers two reasons why it is still entitled to
payment despite the failure of its initial shipment to pass an
acceptance inspection; i.e., (1) the product it delivered
"substantially conformed" to the contract specifications (RPC,
p. 5), and (2) even though the first QATAPs were under-
trimmed, they were still usable (Complaint, ¶ 7; R4 File, Tab
H, p. 2, ¶ 3).21 The Board has carefully considered both of
these contentions, and believes they are without merit.
The "substantial compliance" or "substantial conformity" rule
is a limited exception, created by law, to the doctrine which
entitles the Government to strict compliance with its
specifications. See, Sterling Printing, Inc., supra, Sl. op.
35-36, fn. 48; Hurt's Printing Company, Inc., supra, Sl. op.
at 17; Shepard (1993), supra, Sl. Op. at 20. The rule, which
is confined to situations where a contractor has timely
shipped nonconforming goods which deviate from the
specifications in only minor respects, affords defaulting
contractors an opportunity to correct such defects. See,
Radiation Technology, Inc. v. United States, supra, 366 F.2d
1005-06. In order for the doctrine to apply to a particular
shipment of nonconforming goods, the contractor must show
that: (1) a timely delivery of goods was made; (2) he/she
reasonably believed, in good faith, that the supplies
conformed to the contract when shipped and that they would be
acceptable; (3) the defects are minor in nature; and (4) they
are capable of correction within a reasonable period of
time.22 Id., 366 F.2d at 1006. See also, Industrial Data
Link Corporation, ASBCA No. 31570, 91-1 BCA ¶ 23,382, AT
117,340; Accutherm, Inc., ASBCA No. 24140, 80-2 BCA ¶ 14,748;
Kessel Kitchen Equipment Company, Inc., ASBCA No. 21080, 77-2
BCA ¶ 12,565. The Radiation Technology rule only protects
contractors who can satisfy all elements of the test. See,
Sterling Printing, Inc., supra, Sl. op. 35-36, fn. 48; Hurt's
Printing Company, Inc., supra, Sl. op. at 17. See generally,
Cibinic and Nash, pp. 680-84.
In the Board's view, the Appellant's reliance on the
"substantial compliance" rule in the context of this case, is
clearly misplaced for two reasons. First, the doctrine is
generally found as a defense in, and is usually confined to,
default termination cases. See, e.g., Franklin E. Penny Co.
v. United States, 524 F.2d 668, 677 (Ct.Cl. 1975) (". . . the
purpose of the substantial performance doctrine is to avoid
the harshness of a forfeiture, . . .").23 See also, Sterling
Printing, Inc., supra, Sl. op. 35-36, fn. 48; Hurt's Printing
Company, Inc., supra, Sl. op. at 17; Shepard (1993), supra,
Sl. op. at 19-24; Stephenson, Inc., supra, Sl. op. at 48-54;
Timsco, Inc., GPOCAB 10-78 (July 24, 1979), Sl. op. at 10.
However, this matter was appealed to the Board because the
Contracting Officer disallowed the Appellant's monetary claim
for reimbursement for the rejected QATAPs, which makes this
case an equitable adjustment dispute. The Appellant's
contract was not defaulted; indeed, with the Government's
acceptance of the reprinted publications, it has been fully
performed. Consequently, the condition precedent for the
application of the rule is simply not present in this case.
Second, even in cases where the "substantial conformity"
doctrine is applied, it does no more than afford defaulting
contractors an opportunity to correct minor deviations from
the contract specifications. Cf., Radiation Technology, Inc.
v. United States, supra, 366 F.2d 1005-06; Hurt's Printing
Company, Inc., supra, Sl. op. at 17; Shepard (1993), supra,
Sl. op. at 20; B. P. Printing and Office Supplies, GPO BCA
22-91 (February 5, 1993), Sl. op. at 12; ATC Decal Company,
GPOCAB 3-81 (July 14, 1981), Sl. op. at 7. Offering the
defaulting contractor a chance to cure the defects by
reprinting the publication will satisfy the requirements of
the rule. Cf., Sterling Printing, Inc., supra, Sl. op. 35,
fn. 47; Shepard (1993), supra, Sl. op. at 14; Mid-American
Business Forms Corporation, supra, Sl. op. at 20; ATC Decal
Company, supra, Sl. op. at 7. Thus, the Appellant has already
received the remedy which it would have gotten by force of
law, and there is no basis for invoking the doctrine in this
case. Cf., Shepard (1993), supra, Sl. op. at 14, 23 (citing,
Electro-Neutronics, Inc., ASBCA No. 12947, 71-2 BCA ¶ 8,961).
Of more weight is the Appellant's argument that even though
the first QATAPs were under-trimmed, they were still usable,
and the Contractor should be paid for them. As a factual
matter, it must be noted that the Contracting Officer
instructed the Contractor to destroy all defective copies of
the publication, so the Respondent never actually used them
(R4 File, Tabs K and L). Cf., International Lithographing,
supra, Sl. op. at 25. Also cf., Process Technology
International, Inc., ASBCA No. 41650, 93-3 BCA ¶ 25,962; G.
Scofield and Sons (Rural) Pty., Ltd., ASBCA No. 24290, 85-1
BCA ¶ 17,843; Marshall Construction Corporation of South
Carolina, ASBCA Nos. 26948, 27103, 84-1 BCA ¶ 17,031, at
84,815; Service Management Corporation, EBCA No. 289-5-83
(OTA), 84-2 BCA ¶ 17,319; Kipco Machine Tool, Inc., ASBCA No.
26448, 83-2 BCA ¶ 16,661. However, the Appellant believes
that while the books were not the correct size, the trimming
was nonetheless within QATAP tolerances, and it was error for
the Contracting Officer to reject the shipment altogether;
i.e., he should have accepted the publications at a discount.
See, R4 File, Tab H, p. 2, ¶ 3; RPC, p. 5. In effect, the
Appellant's argument amounts to a claim that the Contracting
Officer abused his discretion in his application of QATAP
under the facts of this case. The Board disagrees.
Under the inspection clause of GPO Contract Terms and QATAP,
both of which are incorporated by reference in the disputed
contract, three options are available to GPO when, as here,
nonconforming publications are delivered: (1) have the
defective publications corrected; (2) have them reprinted or
otherwise replaced; or (3) accept the publications with an
equitable reduction in the contract price.24 See, QATAP, p.
2 (Determining Acceptability); GPO Contract Terms, Contract
Clauses, ¶ 14(f) (Inspection and Tests). Which course of
action should be chosen under the circumstances is the
prerogative of the Contracting Officer, and no one else's.
Automated Datatron, Inc., supra, Sl. op. at 4-5 (citing,
Famous Model Co., supra, 68-1 BCA ¶ 6,902; Cherry Meat
Packers, Inc., supra, 1963 BCA ¶ 3,937); Media Press
Lithographers, [No Panel Number] Jacket Nos. 667-095, 667-097,
667-098, 667-099. 667-100 (December 30, 1979), Sl. op. at 6-7
(citing, Farwell Company v. United States, 148 F.Supp. 947,
137 Ct.Cl. 831, 832 (1957); Ideal Restaurant Supply, Inc.,
supra, 67-1 BCA ¶ 6237); Henry C. Beck Company, VACAB No. 523,
66-1 BCA ¶ 5323.
Despite the broad powers given GPO Contracting Officers, the
Board has the authority to review their administration of
QATAP, and overrule those discretionary actions which are
clearly erroneous. See, e.g., Shepard (1993), supra, Sl. op.
at 18-19; Total Reproductions, Inc., GPO BCA 16-88 (February
2, 1990), Sl. op. at 17-19. See also, D. G. Machinery and
Gage Company, NASA BCA No. 92, 65-1 BCA ¶ 4,771. However, it
is also well established that the findings and determinations
of contracting officers are considered prima facie correct,
and the contractor bears the burden of proof on appeal to show
wherein the decision is in error. Remco Business Systems,
Inc., [No Panel Number] Jacket No. 237-286 (October 5, 1977),
Sl. op. at 2-3 (citing, Norm Evans Construction Company, AGBCA
No. 341, 75-1 BCA ¶ 11,229; D. G. Machinery and Gauge Company,
supra, 65-1 BCA ¶ 4,771). If the record, on its face, is
neither unbelievable nor erroneous, the Board must accept it
as being correct. Id., Sl. op. at 3. In this case, the
Appellant has not shown, nor does the record contain, any
evidence which would support a finding that the Contracting
Officer's exercise of discretion was unreasonable, arbitrary,
capricious, or so grossly erroneous, as to be suspect. See,
McDonald & Eudy Printers, Inc., GPO BCA 9-88 (March 8, 1990),
Sl. op. at 11-12 (Respondent's Answer adopted by the Board,
and cases cited therein); Remco Business Systems, Inc., supra,
Sl. op. at 3.
What this case boils down to is the Respondent wanted the
copies of QATAP to be a specific trim size, and the Appellant,
by its own admission, delivered a publication which was under-
trimmed. Since the publication was not what GPO had asked for,
the Government did not have to accept it. See, e.g., Shepard
(1993), supra, Sl. Op. at 19-20; Stephenson, Inc., supra, Sl.
op. at 20-21 Rose Printing Company, supra, Sl. op. at 6;
Automated Datatron, Inc., supra, Sl. op. at 2; Mid-American
Business Forms Corporation, supra, Sl. op. at 18-19);
Copigraph, Inc., supra, Sl. op. at 2.
The Appellant does not claim that the contract's trim requirement
could not be met; indeed, the reprinted QATAPs satisfied the
specifications. Instead, the Contractor contends that a 1/8"
variance did not affect the usability of the first copies it
delivered. However, the fact that the defective QATAPs may have
been usable does not excuse the Contractor's failure to meet
achievable contract requirements. See, H. Hertzberg & Son, Inc.,
GSBCA No. 4144, 76-2 BCA ¶ 12,011. See also, Union Chemical
Company, GSBCA No. 7392, 85-3 BCA ¶ 18,489; Newark Boneless Meat
Products, Inc., ASBCA No. 22132, 78-2 BCA ¶ 13,229.
The Government was not obligated to grant deviations from
contract requirements, and the decision of whether or not to
grant such an exception was within the sound discretion of the
Contracting Officer. See, Kurz-Kasch, Inc., ASBCA No. 32486,
88-3 BCA ¶ 21,053. Furthermore, under the terms of the
contract, the Respondent was entitled to obtain replacement of
nonconforming supplies. QATAP, p. 2 (Determining
Acceptability); GPO Contract Terms, Contract Clauses, ¶ 14(f)
(Inspection and Tests). Cf., Andrews, Large & Whidden, Inc.,
and Farmville Manufacturing Co., ASBCA No. 30060, 88-2 BCA ¶
20,542 (citing, Corporate Diesel, Inc., ASBCA No. 17134, 74-1
BCA ¶ 10,612; Sovereign Construction Co., Ltd., GSBCA No. 913,
1964 BCA ¶ 4,468). If GPO elects to allow a contractor to
correct the product, either by reprinting it or otherwise, the
contractor is required to correct the defects and complete
delivery. In such cases, the contractor is not entitled to
additional compensation because the work it was directed to do
was clearly part of the contract requirements. See, Queens
Lithographing Corporation, GPOCAB 9-77 (March 30, 1979), Sl.
op. at 10 (citing, Montgomery Ross Fischer, Inc., GSBCA No.
2849, 70-1 BCA ¶ 8,127; W. M. Schlosser Company, Inc., GSBCA
No. 2009, 66-1 BCA ¶ 5,796). Accordingly, the Board finds and
concludes that under the circumstances of this case, the
Respondent was entitled to enforce strict compliance with its
trim specifications for QATAP. See, e.g., Stephenson, Inc.,
supra, Sl. op. at 20-21; Fry Communications, Inc., supra, Sl.
op. at 5; Rose Printing Company, supra, Sl. op. at 6; Mid-
American Business Forms Corporation, supra, Sl. op. at 18-19);
Copigraph, Inc., supra, Sl. op. at 2. Thus, the Appellant's
contention that the first printing of QATAPs, which it admits
was under-trimmed, was nonetheless usable because the defect
was minor, is irrelevant. Therefore, the Contracting Officer
did not commit error when he rejected the first printing, and
had the publication reprinted at no cost to the Government.
B. The Contracting Officer did not act in bad faith when he
rejected the first shipment of QATAPs and insisted on a
reprinting of the entire publication, rather than negotiate
an appropriate reduced price with the Appellant and accept
the delivery.
Relying on the fact that the Contracting Officer's direction
to reprint the publication was accompanied by instructions to
make certain changes in the color of the cover ink and correct
an error in the text, the Appellant also alleges that those
alterations, and not the defects found in the first shipment,
is the real reason GPO rejected the QATAPs and asked for a
reprint (R4 File, Tabs G, H and K). The Contractor believes
that by refusing to negotiate a suitable price reduction in
lieu of requiring a reprint, the Contracting Officer:
10. . . . did not display impartiality but rather was still
working in the best interest of the Government, using the
trim size discrepancy as the only criteria for rejection
and not giving any consideration to negotiate a settlement
that would have been in the best interest of all parties.
11. A contracting officer is required to make an unbiased
and impartial judgment on the merits of the claim when
issuing a final decision. This was not done in this case
because it was in the best interest of the Government to
reject this job-not because of the variance in the time
size, but rather because of the wrong ink color on the
cover and the typographical error on the [Table of
Contents].
Complaint, ¶¶ 10, 11. In effect, the Contractor is asserting
that the rejection of the first QATAPs under these circumstances
was a "sham," and thus the Contracting Officer was acting in bad
faith when he directed the Appellant to reprint the publication.
In Sterling Printing, Inc., the Board recently addressed
nearly the same complaint. There, the contractor stated that
the primary reason GPO defaulted the contract was that the
Department of Interior needed to make certain changes in the
contract specifications because it wanted a different looking
book.25 In rejecting the contractor's allegation, the Board
reasoned:
The Contractor's argument is, in effect, an allegation that
the Respondent's decision to cancel the contract was made
in bad faith so that Interior could make cosmetic changes
to the National Survey. However, the Board has held on
numerous occasions that because of the strong presumption
that Government officials properly and honestly carry out
their functions, an allegation of bad faith must be
established by "well-nigh irrefragable" proof. See, e.g.,
Hurt's Printing Company, Inc., GPO BCA 27-92 (January 21,
1994), Sl. op. at 11, fn. 15; Shepard Printing, GPO BCA
23-92 (April 23, 1993), Sl. op. at 7-8, fn. 11 . . . ; B.
P. Printing and Office Supplies, GPO BCA 14-91 (August 10,
1992), Sl. op. at 16; Stephenson, Inc., GPO BCA 02-88
(December 19, 1991), Sl. op. at 55; The Standard Register
Company, GPO BCA 4-86 (October 28, 1987); Sl. op. at 12-13.
Also see, Karpak Data and Design, IBCA 2944 et al., 93-1
BCA ¶ 25,360; Local Contractors, Inc., ASBCA 37108, 92-1
BCA ¶ 24,491. The key to such evidence is that there must
be a showing of a specific intent on the part of the
Government to injure the contractor. Kalvar Corporation v.
United States, 543 F.2d 1298, 1302 (Ct.Cl. 1976), cert.
denied, 434 U.S. 830 (1977); Stephenson, Inc., supra, Sl.
op. at 54. In the Board's view, no such "irrefragable"
proof of the Respondent's bad faith exists in this record.
Certainly, there is absolutely nothing in the record which
would show that the employees of two separate Government
entities-GPO and Interior-set out to harm the Appellant or
that they acted in concert to achieve that specific result.
Id., Sl. op. at 57.
Sterling Printing, Inc., supra, Sl. op. at 23, fn. 35. [Emphasis
added.] See also, Spiffy Enterprises, ASBCA No. 35827, 90-1 BCA
¶ 22,385; Arnold V. Hedberg, ASBCA No. 31747, 90-1 BCA ¶ 22,577;
WB & A, Inc., ASBCA No. 32524, 89-2 BCA ¶ 21,736; Le-Gals,
Incorporated, NASABCA No. 1285-15, 88-2 BCA ¶ 20,703.
Allegations of bad faith are easy to make but difficult to
prove, because animus cannot be established by evidence of
Government mistake or error; i.e., proof of specific intent to
harm the contractor is needed.26 Sterling Printing, Inc.,
supra, Sl. op. at 23, fn. 35; Stephenson, Inc., supra, Sl. op.
at 54. See also, Anderson/Donald, Inc., ASBCA No. 31213, 86-3
BCA ¶ 19,036, at 96,146. Here, there is absolutely nothing in
the record which would show that the Contracting Officer set
out to harm the Appellant in this case, or that his direction
to reprint QATAP was designed to achieve that specific result.
See, Sterling Printing, Inc., supra, Sl. op. at 23, fn. 35;
Stephenson, Inc., supra, Sl. op. at 57. In the Board's
opinion, the Appellant's reliance on the Respondent's
direction to make two changes in the publication, is more than
offset by the fact that the copies it supplied to GPO were
defective, as the Contractor admits, and this was the reason
given by the Contracting Officer for requiring a reprint (R4
File, Tabs G, H, I and L). Id., Sl. op. at 55.
Therefore, on the basis of the evidence, the Appellant's
allegation of bad faith is merely an unsupported assertion
which is insufficient to meet its required burden of proof.
See, e.g., Fry Communications, Inc./InfoConversion Joint
Venture, supra, Sl. op. at 33, n. 31; The Standard Register
Company, supra, Sl. op. at 12-13. See also, Singleton
Contracting Corporation, supra, 90-2 BCA ¶ 22,748; Tri-State
Services of Texas, Inc., supra, 89-3 BCA ¶ 22,064; Gemini
Services, Inc., supra, 86-1 BCA ¶ 18,736. Accordingly, the
Board also finds no merit in the Appellant's claim that the
Contracting Officer acted in bad faith when he directed a
reprinting of the rejected copies of QATAP.
ORDER
Considering the record as a whole, the Board finds and
concludes that the Appellant has not proved that the
Government erroneously rejected the initial printing of QATAP.
Rather, because of the admitted defects in the first shipment,
the Contracting Officer properly exercised his discretion
under the contract in directing a reprint of the entire
publication, at no cost to the Government. Furthermore, the
Contractor has failed show by "irrefragable" proof, or any
evidence whatsoever, that the Contracting Officer acted in bad
faith when he rejected the first shipment of QATAPs and
insisted on a reprinting, instead of accepting the delivery at
a discounted price. THEREFORE, the decision of the
Contracting officer disallowing the Appellant's claim for
$11,137.98-the contract price of the rejected publication-is
AFFIRMED, and the appeal seeking that amount as reimbursement
for the rejected QATAPs is DENIED.27
On the other hand, the Board believes that the Contractor is
entitled to some compensation for reprinting the corrected
covers and two text pages of QATAP, as instructed by the
Contracting Officer (R4 File, Tabs G). GPO Contract Terms,
Contract Clauses, ¶ 4(b) (Changes). In the absence of any
evidence from the Appellant, the Board finds that the amount
offered by the Contracting Officer for the cost of the
work-$1,823.93-is fair and reasonable under the circumstances
(R4 File, Tabs K and L). Cf., R.C. Swanson Printing and
Typesetting Company, Decision on Motion for Reconsideration
and Order, GPO BCA 15-90 (December 20, 1993), Sl. op. at 14;
Banta Company, supra, Sl. op. at 61. The Contracting Officer
reaffirmed that figure in his final decision of September 11,
1990 (R4 File, Tab L). The Respondent has never withdrawn its
offer. See, R. Brf., p. 3. Accordingly, the Government's
offer is properly before the Board for disposition. Board
Rules, Preface to Rules, ¶ I (Jurisdiction for Considering
Appeals); GPO Contract Terms, Contract Clauses, ¶ 5(b)
(Disputes). THEREFORE, the Board REMANDS the case to the
Contracting Officer with instructions to pay the Contractor in
accordance with this opinion. R.C. Swanson Printing and
Typesetting Company, supra, Sl. op. at 15; Banta Company,
supra, Sl. op. at 62; RD Printing Associates, Inc., GPO BCA
02-92 (December 16, 1992), Sl. op. at 37; General Business
Forms, Inc., GPO BCA 2-84 (December 3, 1985), Sl. op. at 23.
It is so Ordered.
May 6, 1994 STUART M. FOSS
Administrative Judge
_______________
1 The Contracting Officer's appeal file, assembled pursuant
to Rule 4 of the Board's Rules of Practice and Procedure, was
delivered to the Board on April 10, 1991. GPO Instruction
110.12, Subject: Board of Contract Appeals Rules of Practice
and Procedure, dated September 17, 1984, Rule 4(a) (Board
Rules). It will be referred to hereinafter as R4 File, with
an appropriate Tab letter also indicated. The R4 File
consists of twelve (12) documents identified as Tabs A
through L.
2 By letter dated March 29, 1991, the Appellant advised the
Board that it had selected the optional Accelerated Procedure
to process its appeal. Board Rules, Rules 12.1(b) and 12.3.
However, this seems to have been a "star-crossed" case from
the beginning. For example, the Contractor's Notice of
Appeal was dated October 9, 1990, and was mailed to the Board
well within 90 days of the Contracting Officer's decision, as
required by the Board Rules. Board Rules, Rule 1(a).
However, the appeal letter, which was received and signed for
by one of the Respondent's employees on October 11, 1990, was
misdirected by the mail room to another GPO office and never
arrived at the Board. The Board only became aware of the
lost Notice of Appeal when the Contractor subsequently
telephoned the Board's office to inquire about the status of
the case. Consequently, the appeal was not docketed by the
Board until March 14, 1991, after it had received another
copy of the Notice of Appeal and satisfactory proof of
mailing from the Appellant, or more than six (6) months after
the issuance of the final decision. See, e.g., Micrographic
Technology, Inc., ASBCA No. 25577, 81-2 BCA ¶ 15,357; Astro
Industries, Inc., ASBCA No. 19082, 74-2 BCA ¶ 10,921; C & B
Construction Company, ENGBCA No. 3317, 73-2 BCA ¶ 10,163.
Thereafter, because of other inadvertent delays the record in
this case was not closed until March 1, 1993. Accordingly,
notwithstanding the Appellant's election of the optional
Accelerated Procedure, for all practical purposes this matter
has been processed under the Board's regular procedure for
handling cases submitted on the record without a hearing.
Board Rules, Rule 11.
3 Under the terms of the contract, 20 random copies was the
proper number of "blue label" samples for a shipment of 7,550
publications (R4 File, Tab A, p. 14). Therefore, it seems to
the Board that the "lot size" figure-17,550-shown on the
"Inspection Report" (GPO Form 916) of June 6, 1990, is in
error (R4 File, Tab F). That figure represents the entire
ordered quantity, not the first delivery of 7,550 copies.
Following discussions between the parties, on August 6, 1990,
the Respondent conducted a second inspection of 32 QATAPs-the
appropriate number of samples for an order of 17,550 copies-
which had been randomly selected by the Appellant (R4 File,
Tabs I and J). See, note 7 infra.
4 The changes were necessary to correct a mistake in the
color of the ink for the covers and a typographical error in
the text (R4 File, Tab L). In that regard, the standard GPO
"Changes" clause provides, in pertinent part: "(a) The
Contracting Officer may at any time, by written order, . . .
, make changes within the general scope of this contract in .
. . (1) Drawings, designs, or specifications when the
supplies to be furnished are to be specially manufactured for
the Government in accordance with the drawings, designs, or
specifications. . . .(b) If any such change causes an
increase or decrease in the cost of, or the time required
for, performance of any part of the work, whether or not
changed by the order, the Contracting Officer shall make an
equitable adjustment in the contract price, the delivery
schedule, or both, and shall modify the contract." GPO
Contract Terms, Contract Clauses, ¶¶ 4(a),(b) (Changes).
5 According to the appeal record, the Contracting Officer
admits that the "missing page" defect was an isolated
problem, and it clearly does not have any significance in the
context of this case (R4 File, Tab I). See also, Report of
Presubmission Conference, dated February 17, 1993, pp. 5-6
(hereinafter cited as RPC).
6 Accordingly, the Contractor denied accountability, and
submitted a claim for additional costs amounting to a total
of $657.00, for making the page change and for the press
inspection on the reprinted cover (R4 File, Tab H).
Furthermore, the Appellant also filed a claim with GPO for
$11,137.98, seeking reimbursement for the first printing of
QATAP which was rejected by the Respondent. Complaint, p. 2
(Prayer for Relief). See also, RPC, p. 4.
7 Under the terms of the contract, the proper number of "blue
label" samples for the entire order of 17,550 QATAPs was 32
randomly selected copies (R4 File, Tab A, p. 14).
8 In addition, the record shows that even though the 12
remaining samples were not rejected, they also were under-
trimmed by almost an 1/8" below specifications (R4 File, Tab
I).
9 Only the Respondent submitted a written brief in this
appeal. See, Respondent's Brief, dated March 1, 1993
(hereinafter R. Brf.). The Board's understanding of the
positions of the parties is based on the Appellant's
Complaint, dated October 9, 1990, the Respondent's Answer,
dated May 22, 1991, the discussions at the presubmission
conference on December 8, 1992, as reflected in the Report of
Presubmission Conference, and the Respondent's brief.
10 As indicated by the Respondent, a principle purpose of the
"strict compliance" rule is to ensure that the integrity of
the competitive bidding system will not be compromised. R.
Brf., p. 3 (citing, Ideal Restaurant Supply Company, VACAB
No. 570, 67-1 BCA ¶ 6,237). Furthermore, the Board has said
that the use of QATAP is the primary means by which GPO
protects "the Government's interest by assuring that it
received the quality product it specified." See, Stabbe
Senter Press, GPO BCA 13-85 and 19-85 (May 12, 1989), Sl. op.
52; Automated Datatron, GPO BCA 25-87 and 26-87 (April 12,
1989), Sl. op. at 3.
11 The Board was created by the Public Printer in 1984. GPO
Instruction 110.10C, Subject: Establishment of the Board of
Contract Appeals, dated September 17, 1984 (hereinafter GPO
Instruction 110.10C). Prior to that time, appeals from
decisions of GPO Contracting Officers were considered by ad
hoc panels of its predecessor, the GPO Contract Appeals Board
(GPOCAB). The Board has consistently taken the position that
it is a different entity from the GPOCAB. See, e.g.,
Sterling Printing, Inc., GPO BCA 20-89 (March 28, 1994), Sl.
op. 29, fn. 40; Shepard Printing, GPO BCA 37-92 (January 28,
1994), Sl. op. at 11, fn. 10; The Wessel Company, Inc., GPO
BCA 8-90 (February 28, 1992), Sl. op. at 25, fn. 25.
Nonetheless, it has also been the Board's policy to follow
the holdings of the ad hoc panels where applicable and
appropriate, but the Board differentiates between its
decisions and the opinions of those panels by citing the
latter as GPOCAB. See, e.g., Stephenson, Inc., GPO BCA 02-88
(December 20, 1991), Sl. op. at 18, fn. 20; Chavis and Chavis
Printing, GPO BCA 20-90 (February 6, 1991), Sl. op. at 9, fn.
9.
12 The presumption that Government officials will "deal in
good faith," is separate and distinguishable from another
assumption, namely, that Government acts are presumed to be
regular and authorized. See, United States v. Roses, Inc.,
706 F.2d 1563, 1567 (Fed. Cir. 1983).
13 "Irrefragable" proof simply means evidence which is
incapable of being refuted; i.e., indisputable evidence.
Webster's New World Dictionary (1988), p. 714. See,
Stephenson, Inc., supra, Sl. op. at 55.
14 The record on which the Board's decision is based consists
of: (1) the Appellant's Notice of Appeal/Complaint, dated
October 9, 1990; (2) the R4 File (Tabs A through L); (3) the
Respondent's Answer, dated May 22, 1991; (4) the Report of
Presubmission Conference, dated February 17, 1993, pp. 5-6;
and (5) the written brief submitted by the Respondent on
March 1, 1993.
15 Since the Contractor is asking the Board to allow its
claim for $11,137.98 for the rejected publications, see, note
6 supra, the remedy sought in this case is essentially an
equitable adjustment. Consequently, the Appellant has the
affirmative burden of proving its claim by a preponderance of
the evidence. See, Banta Company, GPO BCA 03-91 (November
15, 1993), Sl. op. at 50, fn. 62 (citing, Lawrence D. Krause,
AGBCA No. 76-118-4, 82-2 BCA ¶ 16,129; Onetta Boat Works,
Inc., ENGBCA No. 3733, 81-2 BCA ¶ 15,279; Globe Construction
Co., ASBCA No. 21069, 78-2 BCA ¶ 13,337); Pikes Peak
Lithographing Company, GPOCAB 7-77 (October 6, 1978), Sl. op.
at 11 (citing, Mann Construction Company, Inc., AGBCA No.
444, 76-1 BCA ¶ 11,710; EG & G, Inc., ASBCA 14051, 71-1 BCA ¶
8867, at 41,219). See also, John Cibinic, Jr. & Ralph C.
Nash, Jr., Administration of Government Contracts 2d ed.,
(The George Washington University, 1986), p. 504 (hereinafter
Cibinic and Nash).
16 In this regard, it should be remembered that an essential
element of the so-called "substantial compliance" rule is
that the contractor must reasonably believe, in good faith,
that the delivered supplies conformed to the contract when
shipped and that they would be acceptable. See, e.g.,
Sterling Printing, Inc., supra, Sl. op. 35, fn. 48 (citing,
Radiation Technology, Inc. v. United States, 177 Ct.Cl. 227,
232, 366 F.2d 1003, 1006 (1966)); Hurt's Printing Company,
Inc., GPO BCA 27-92 (January 21, 1994), Sl. op. at 17;
Shepard Printing, GPO BCA 23-92 (April 29, 1993), Sl. op. at
19-20 (hereinafter Shepard (1993)).
17 The Respondent's Printing Procurement Regulation,
expressly states that the only person authorized to make
final determinations on whether products shipped by a
contractor conform to contract specifications is the
Contracting Officer. See, Printing Procurement Regulation,
GPO Publication 305.3 (September 1, 1988), Chap. XIII, Sec.
1, ¶ 4.f. See also, Sterling Printing, Inc., supra, Sl. op.
at 34-35, fn. 46; Hurt's Printing Company, Inc., supra, Sl.
op. at 10, fn. 13.
18 In French/Bray, Inc., supra, the Board considered
essentially the same QATAP and contract provisions involved
in this appeal, and found "as a matter of contract
interpretation, and thus of law," inter alia, that "the
determination of whether or not such burden has been met lies
solely with the [Government], provided that the [Government]
does not render its determination arbitrarily or capriciously
but rather does so objectively by adhering to the testing and
sampling standards of QATAP. . . . Thus, if the [Government]
shows that it has adhered to the contractual standards for
testing, inspection, and determination of product quality,
its determination must be upheld." French/Bray, Inc., supra,
Sl. op. at 17 [Original emphasis.] See also, Geographics,
Inc., GPO BCA 8-85 (January 8, 1987).
19 The QATAP defines a "major defect" as ". . . a deviation
from specifications which is less serious than a critical
defect." QATAP, p. 1, ¶ 1-4. Simply stated, a major defect
is a deviation which normally would be noticed by the
customer; e.g., excessively low type density. Id., p. ix
(Definition of Defects). See, Shepard (1993), Sl. op. at 15,
fn. 21. On the other hand, a "critical defect" is ". . . a
serious deviation from specifications." Id., p. 1, ¶ 1-3.
20 The Appellant's statement about its own findings when it
inspected the rejected books, is clearly an admission that
the first printing did not meet the contract specifications.
Cf., Stephenson, Inc., supra, Sl. op. at 20-21, fn. 24;
Chavis and Chavis Printing, supra, Sl. op. at 9, 13; Eastwood
Printing, GPO BCA 3-88 (March 8, 1990), Sl. op. at 1-2.
However, in light of its vague nature, the Board cannot say
with equal certainty that the Contractor's statement also
amounts to an admission that the under-trimming exceeded the
QATAP tolerances; indeed, the Appellant is contending just
the opposite. Therefore, the Appellant's concession that the
first books it delivered were nonconforming, is not enough,
standing alone, to dispose of the issue. Cf., Cascade
Pacific International v. United States [33 CCF ¶ 73,958], 773
F.2d 287, 292-94 (Fed. Cir. 1985); UB Corporation, GSBCA Nos.
7701-COM, 7908-COM, 7909-COM, 86-2 BCA ¶ 18,831, at 94,894.
21 A third reason-that the Respondent wanted to change the
ink color on the cover of the publication and correct a
typographical error in the Table of Contents-questions the
motive of the Contracting Officer, and is discussed infra.
See, Complaint, ¶ 8; R4 File, Tab H, p. 2, ¶ 4.
22 The Radiation Technology doctrine is clearly an
encroachment on the Government's right to terminate.
However, it is also apparent that the rule merely stays for a
reasonable period the Government's right to terminate, and
not its right to insist on 100 percent conforming goods;
i.e., the doctrine concerns time, not the supplies
themselves. See, Hurt's Printing Company, Inc., supra, Sl.
op. at 18, fn. 22; Pikes Peak Lithographing Company, supra,
Sl. op. at 13. Furthermore, the "substantial compliance"
rule is used to prevent surprise rejections by the buyer
after a contractor's timely shipment in situations where
performance departs in only minor respects from that which
has been promised. See, Stephenson, Inc., supra, Sl. op. at
50-51, fn. 54 (citing, Environmental Tectonics Corporation,
ASBCA No. 20340, 76-2 BCA ¶ 12,134).
23 It should be noted that the Claims Court also emphasized
that the "substantial compliance" doctrine ". . . should not
be carried to the point where the nondefaulting party is
compelled to accept a measure of performance fundamentally
less than had been bargained for." Franklin E. Penny Co. v.
United States, supra, 524 F.2d at 677.
24 The last option is meant to be exercised only in a limited
number of cases, where circumstances do not allow reprinting
and use "as is" in necessary. See, QATAP, p. xi
(Acceptability or Rejection of the Lot). Under QATAP, if a
random sample of 32 copies discloses 20 major defects, as
here, the Government discount for accepting the publications
would be 10 percent. Id., p. 47 (Appendix B-Discount Table
for Major Defects).
25 The contractor in Sterling Printing, Inc. was saying, in
effect, that the contract had really been terminated for the
convenience of the Government. However, the rule is clear
that an otherwise justified default termination is not
rendered invalid because the Government no longer has a need
for the item being purchased, even where lack of need is part
of the motivation for the termination. H & R Machinists
Company, ASBCA No. 39655, 90-3 BCA ¶ 22,948.
26 The theory of recovery for the contractor where the
evidence is sufficient to support a finding of bad faith on
the part of a contracting officer, is that the Government has
breached its implied duty of good faith and fair dealing in
contract performance and enforcement. See, United States v.
Roses, Inc., supra, 706 F.2d at 1566; Systems Technology
Associates, Inc. v. United States, 699 F.2d 1383, 1387 (Fed.
Cir. 1983). See also, All-American Poly Corporation (Park
Poly Bag Corporation), GSBCA No. 7104, 84-3 BCA ¶ 17,682;
Nash Janitorial Service, Inc., GSBCA No. 6390, 84-1 BCA ¶
17,135, mot. for reconsid. denied, 84-2 BCA ¶ 17,355; 6800
Corporation, GSBCA No. 5880, 83-2 BCA ¶ 16,581; Restatement
(Second) of Contracts, § 205 (1979). The essence of the
breach is an improper motive. See, Mutual Maintenance Co.,
Inc., GSBCA No. 7492, 85-2 BCA ¶ 17,944; Drain-A-Way Systems,
GSBCA No. 7022, 84-1 BCA ¶ 16,929.
27 See, note 6 supra.