Industrial Printing Company Contract Appeals Board Panel 7-83 Thomas O. Magnetti, Chairman Dennis R. Chastain, James A. Meadows, Members Preliminary Statement Industrial Printing Company (hereinafter the contractor) has appealed the decision of the Contracting Officer. That decision rejected the unused portion of a contract for marginally punched continuous forms which had been awarded the contractor. The Contracting Officer made this decision because, according to the Government, the forms did not burst mechanically as required by the contract. The contractor appealed the rejection of the forms in a timely fashion and in accordance with the "Disputes" clause of the contract. See Paragraph 2.23, Contract For Marginally Punched Continuous Forms, Government Printing Office (hereinafter the GPO) Form 1026, Rev. 6-1-81. Exhibit 3 of the Appeal File. Upon the request of the contractor, a hearing was held on June 6, 1984. Pursuant to the contract and GPO Instruction 110.10B, entitled "Board of Contract Appeals Rules of Practice and Procedure," the GPO Board of Contract Appeals Board has jurisdiction over the matters raised in this appeal. The decision of the Board is based solely on the appeal record which consists of the 19 exhibits accepted into the record and the transcript of the testimony of the witnesses taken at the hearing. Findings of Fact 1. By Purchase Order No. GP 52979a, Delivery Order No. DAHC31-82-F-0133, dated April 20, 1982, the contractor was awarded a contract by the Department of the Army to produce marginally punched continuous 6-part forms identified as DD Form 1348-1A (Brown). Exhibit 2. The contract was administered through the Government Printing Office's Program 1026 for continuous marginally punched forms. Exhibit 3. 2. The specifications for this contract required the contractor to produce forms which were perforated horizontally and would burst mechanically in various bursters. Exhibit 2, p. 3. 3. According to the Paragraph 2.22 of the contract, all material produced under the contract was subject to inspection. If any form was found to be defective in material or workmanship or not in conformity with the requirements of the specifications, the Government had the right to reject the forms or require their correction. If the contractor then failed to proceed with replacement or correction, the Government had the right to replace or correct the forms at the contractor's expense or the Government had the right to terminate the right of the contractor to proceed and charge the contractor any excess costs resulting from that termination. Final inspection was to be made after delivery and was to be conclusive except as regards latent defects, fraud, or such gross mistakes as amounted to fraud. Exhibit 3. 4. The forms were delivered by the contractor on July 18, 1982, and final acceptance was made at that time. Exhibit 8, Transcript, pp. 114-115, (hereinafter Tr. at 114-115). A total of 1,378,865 forms were shipped by the contractor at a cost of $42,660.31. Exhibits 2 and 13. 5. On November 22, 1982, Nancy V. Kambic, Chief, Freight Planning Section, Transportation Division, New Cumberland Army Depot, Department of the Army, who had operated forms bursting equipment since 1980, obtained brown marginally punched continuous forms from boxes which were labeled as produced by Industrial Printing Company. 1/ Tr. at 33, 35, 45 and 49. Assisted by Rosanne A. Crankfield, Shipment Assistant, Transportation Division, Ms. Kambic attempted to process the forms through the Standard Register 1530 Forms Burster. Ms. Kambic found that the forms would not tear at the horizontal perforation because the tearline was too strong to tear. Tr. at 35-36, 79-80, 85-86 and 88. As a result of the failure of the perforations to burst, the forms would either slide through the burster or the top sheet of the 6-part form would tear. Tr. at 38. See also, Exhibit 15. 6. According to the testimony of Ms. Kambic, the perforation line on the forms was so strong that the forms had to be torn by hand or by scissors. Tr. at 35-36 and 79-81. Because of the need to use this brown form, 40,000 forms were used until the form could be obtained from another source. Tr. at 72-74. Ms. Kambic further testified that she took forms from several boxes labeled Industrial Printing Company but none of the forms would burst properly. Tr. at 64 and 76. Unless separated by hand, because of this problem with the perforation, the forms were unusable. Tr. at 91. 7. Because Ms. Kambic ran other colored (red and blue) forms through the Standard Register 1530 forms burster on that day and encountered no problems with the other forms bursting along their perforations, she concluded that it was not a problem caused by the burster. Tr. at 57-58 and 81. Representatives of the manufacturer of the Standard Register 1530 Forms Burster determined that the problem was in the tearline of the brown forms produced by the contractor and not in the Standard Register 1530 Forms Burster. Exhibits 5 and 6, Tr. at 81. 8. By letter dated December 2, 1982, Buford Vogel, the Contracting Officer informed the contractor of the problem with the horizontal perforation on the contractor's forms. Exhibit 4. 9. On December 27, 1982, the contractor was invited to witness an attempt to burst the forms mechanically. The contractor declined. In April 1983, the contractor's representative was also asked to witness such a demonstration. Exhibits 9, 11 and 13. 2/ There is nothing in the record to indicate that the contractor's representative accepted this invitation. In fact, in its appeal the contractor stated that it declined to attend any tests because of the travel expense. Exhibit 1. The contractor had ample opportunity either to attend the tests run by the Government or to conduct tests prior to the hearing where the test results could have been introduced and appropriate witnesses cross examined. In light of the inherent dangers of accepting this document into evidence and the lack of its probative value, the Board does not admit this material into the record. In a letter dated January 20, 1984, the contractor alleged that it had scheduled a test on the 1530 Forms Burster and would present the results of the test at the hearing. No such test results were presented at the hearing. 10. It.was the determination of the Contracting Officer that the forms were defective in that they would not burst mechanically and were, therefore, not in conformance with the contract's specifications. Exhibits 7 and 8. By letter dated July 14, 1983, the Contracting Officer notified the contractor of the specific problem with the forms and informed it that the Army was rejecting the unused portion of the contract (1,156,000 forms). Exhibit 9. The contractor was directed to replace the forms within 30 days or be responsible for the cost to the Government of replacing the forms from another source. 11. The contractor responded by letter dated August 11, 1983, in which it did not acknowledge any problem with the forms and referred the matter to the GPO. Exhibit 10. The forms were not replaced. 12. By letter dated August 26, 1983, Edwina Mercer, Contracting Officer for the Army, provided the contractor with a final decision that the forms produced under Order DAHC31-82-F-0133 were rejected because they were not in conformance with the specifications as those specifications related to bursting mechanically. Exhibit 12. 13. Prior to the Contracting Officer's final decision the Army completed additional testing using the forms supplied by the contractor on a new burster, the Standard Register 2500 and on other equipment. Exhibits 11, 13, 14 and 15; Tr. at 40, 42, 82-84, 86-87, 90 and 96. 14. By letter dated September 16, 1983, the contractor appealed the Contracting Officer's final decision alleging that the forms were perforated properly and were not defective. The contractor asserted that the problem was in the Army's forms burster. DECISION The contract specifications required the contractor to produce marginally punched continuous forms which would burst mechanically. In the instant case, the Government has the burden of proof of proving that the forms did not conform to the contract specifications. Hardeman-Monier-Hutchinson, ASBCA 11785, 9 G.C. ¶ 94. The overwhelming weight of the evidence, unrebutted by the contractor, demonstrated that the forms supplied by the contractor would not burst mechanically. According to the credible testimony of Ms. Kambic, the horizontal tearline perforation was too strong to burst in the Standard Forms 1530 Forms Burster. The forms when placed in the forms burster either tore or slid through without bursting. As a result the forms had to be separated manually. There was no indication in the record that the bursting problem was due to the equipment used. On the contrary, the evidence indicates that the Army's burster was examined and determined to be running properly and to be adequate for the job. Exhibit 5. No evidence was introduced that indicated that either the procedures or the equipment used by the Army were inappropriate or were the cause of the problem. Moreover, there was no evidence in the record to demonstrate that the specifications relating to the forms burster were too imprecise or inadequate. 3/ Although final acceptance had been made and the forms purchased in July 1982, under the contract the Government had the right to reject forms after this had occurred in cases where latent defect wasdiscovered. The testimony of the Government's witnesses indicated that the forms had no observable defect and that the defect which caused the forms not to burst in the forms burster was not visible to the naked eye. See Tr. at 114-118; Exhibits 16 and 17. Furthermore, the Government was not obligated to test the forms when they were delivered to ascertain.that they would burst mechanically. Given the nature of the defect, i.e.,that the perforation was visible in.the form but would not burst by mechanical means, the Board rules that the defect is latent. Therefore, the Government had legitimate grounds to reject the forms and require their replacement. As this was a latent defect and the Government gave the contractor ample notice and opportunity to replace the defective forms, it was appropriate for the Contracting Officer to reject the unused forms in accordance with the contract. Based upon the evidence of record, the Board rules that the forms provided by the contractor were defective. The contractor was obliged to replace the defective forms or bear any additional cost of their replacement. The contractor having failed to do so, the Government had the contractual right to reject the forms and require their replacement. Accordingly, the contractor's appeal of the Contracting Officer's decision to reject the forms is denied in its entirety. September 16, 1986 _______________ 1/ At the hearing, the contractor's representative questioned Ms. Kambic concerning her assertion that the forms in the various boxes which were used or tested were produced by the contractor. Ms. Kambic's testimony regarding the producer (Industrial Printing Company) of the forms was credible. The contractor failed to submit any evidence which would have indicated that the forms were not produced by the contractor. Based upon the evidence in the record, the Board rules that the forms as introduced into the hearing record were produced by the contractor. Exhibits 16 and 17. 2/ In July 1984, the contractor submitted a letter dated July 24, 1984, regarding a test of 6-ply carbon forms which were mechanically burst on a Standard Register 2500 Forms Burster. This document which was submitted after the hearing does not identify the forms that were burst or demonstrate that the test was conducted with forms identical to those supplied to the Army under this contract. Moreover, there is no indication that the test took place in the presence of representatives of the Contracting Officer or that they were invited to observe. 3/ As Exhibit 19, the contractor introduced into the record a document entitled "Policies, Ethics, Customs and Practices in the Business Forms Industry" and published on October 10, 1983. As the provisions of the contract at issue were clear on their face and this document was published after the specifications for the contract were drafted, this document has little probative weight. Therefore, it is unnecessary to rely on Exhibit 19 in arriving at a decision on this appeal.