Docket No. GPO BCA 7-87
June 16, 1989

Administrative Law Judge


This appeal, timely filed by Federal Envelope Company, 5000
Kingston Street, Denver, CO  80239 (Appellant), is from the
December 23, 1986, final decision of Raymond MacDonald,
Contracting Officer (CO), United States Government Printing
Office, Denver Regional Printing and Procurement Office, Denver,
CO  80225-0347 (Respondent), terminating the contract identified
as Purchase Order M-0515, Jacket No. 673-267, for default
pursuant to the Article entitled "Default," "U.S. Government
Printing Office Contract Terms No. 1" 1/  for "failure to furnish
envelopes in exact accordance with specifications."  The appeal
is denied and the decision of the CO affirmed for the reasons set
forth hereinbelow.

1/  Article 2-18 of "U.S. Government Printing Office Contract
Terms No. 1," GPO Publication 310.2 - Revised October 1, 1980,
was incorporated into the contract by reference thereto under the
caption "Notice" on page 1 of the specifications. (R4 File, Tab


Appellant was awarded the above-cited contract on October 22,
1986, in the amount of $9,121.50 in strict accordance with its
quotation of October 10, 1986, and Respondent's undated
specifications.  (Rule 4 File, hereinafter "R4 File," Tab 2.)
The specifications called for the production of 45,000 +/- 10
percent, 10 x 13" self-sealing envelopes.  The flaps were to be
3" in depth with a 2-3/4" adhesive strip and a 3" release liner.
The throat depth was to be 3/8".  The specifications further
provided that "GPO WILL FURNISH f.o.b. contractor's plant --
Sample envelope, contractor to typeset approximately 6 type lines
and one horizontal rule."  Further instructions under the caption
"PRESSWORK" stated:  "Margins:  Follow sample:  Adequate
gripper."  (R4 File, Tab 2.)  No other instructions pertinent to
this appeal were given in the specifications.  Delivery was to be
made to Respondent's Public Documents Distribution Center (PDDC)
by November 25, 1986.

Upon delivery of the completed products to Respondent's PDDC and
a determination that the envelope flaps were only 2" in depth (R4
File, Tab 4), the CO, by letter dated December 10, 1986, directed
Appellant to correct the order by January 7, 1987, at no
additional cost to the Government, with the further advice to
Appellant that the defective product would be destroyed by the
Government upon receipt of the reprint.  (R4 File, Tab 5.)

By telephone call of December 11, 1986, Appellant asserted that
it had ordered 3" flap envelopes from its subcontractor.

Appellant was told that notwithstanding such fact, it was
responsible for meeting the specifications and could either
reprint the order as requested or the Government would terminate
the contract for default with Appellant then being liable for any
excess costs of reprocurement.  At that point, Appellant asked if
the Government would accept the defective order at a reduced
price.  Appellant was told that the Government could not do that
since 3 lower bidders than Appellant had been found nonresponsive
because they had qualified their bids in a similar way respecting
the size of the flap they could provide; thus, it would now be
prejudicial to these bidders if the Government were to accept
Appellant's defective product.  (R4 File, Tab 6.)

The following day, December 12, 1986, Appellant was sent a "cure
notice" because of its indication during the phone conversation
that it might be unable or unwilling to reprint the order.
Appellant was thereby afforded the opportunity to present in
writing within 7 days from receipt of the notice, a statement of
its intentions regarding the reprinting of the order with the
further demand that unless it committed to reprint within a
reasonable time or could present facts to show that the original
decision of the Government to reject the product was incorrect,
the Government might terminate the contract for default pursuant
to the "Default" Article of "U.S. Government Printing Office
Contract Terms No. 1."  (R4 File, Tab 7.)

In an undated response, Appellant asserted in pertinent part

Upon receipt of . . . order #673-267 on 10/18/86, we immediately
placed this order with one of our tyvek manufacturing companies
that we deal with.  When this job was quoted, it was quoted per
your specificaitons [sic] exactly.  The sample provided by you
was a 2"flap which was previously used by the Pueblo Documents
Distribution Center.  We indicated your requests for a 3" flap
and forwarded your sample to our supplier.  At this point we were
confident that what we had ordered was exactly what you had

On November 10, 1986, we were notified by this manufacturing
plant that this order was delayed . . . .  We . . . notified . .
. your office as to . . . the approximate shipping date.  Again
confident that what we had ordered for you was exact.

Upon rejection of this order . . . we immediately notified the
manufacturer and were advised that they were unable to
manufacture a 3" flap, a 2-3/4" adhesive strip, a 3" release
liner and a throat depth of 3/8".

We were advised by your office that specifications were stringent
with absolutely no manuverability [sic] . . . .  We then
contacted three different manufacturers . . . and each one
declined to produce this envelope . . . noting the specifications
were beyond their machine capabilities.

R4 File, Tab 8.

Appellant further stated that it too was unable to reprint the
product due to the specifications and "therefore must default on
this order."  (R4 File, Tab 8.)

The notice of termination followed on December 23, 1986.
Thereafter, by letter dated March 20, 1987, Appellant gave notice
of its intent to appeal enclosing a copy of its undated response
letter to Respondent's December 12, 1986, "cure notice," supra,
and asserting that its "main concern is that the exact product
could not and has not been supplied."  (Official File, Tab 1.)  A
notice of docketing was sent to the Appellant by letter dated
March 24, 1987, together with a copy of the U.S. Government
Printing Office Instruction 110.12 entitled "Board of Contract
Appeals Rules of Practice and Procedure" dated September 17,
1984.  No formal complaint or other information was received from
Appellant.  On June 18, 1987,  Appellant was advised by the Board
that Government counsel denied Appellant's allegation of facts in
their entirety and that as a result, the Board was entering a
general denial in its docket on behalf of the Government pursuant
to Rule 6.(b) of the Board's Rules, supra.  (Official File, Tab

Subsequently, the Board has determined, through its own inquiry,
that Respondent reprocured the exact product from Golden West
Envelope Company (Golden West) of San Francisco, CA by Purchase
Order M8780, Jacket No. 774-175 dated December 31, 1986, with the
job to be delivered complete by February 27, 1987.  (See
Attachment 1.)  Golden West was paid $9,855.30 on March 4, 1987,
by Respondent for its work.  (See Attachment 2.)  However,
because "[a]n inspection of samples supplied from this order
reveal[ed] that the product failed to meet the specifications in
the following areas:  Adhesive strip was too narrow, approx. 2"
wide when 2-3/4" required.", Contract Modification 567-87 was
issued on April 29, 1987, decreasing Appellant's invoiced price
by 15 percent, an amount of reduction agreed to by Golden West.
(See Attachment 3.)

Accordingly, Respondent issued a debit voucher in the amount of
$1,478.30 on July 25, 1987, and received payment for the same
as recovery for the debit on August 4, 1987.  (See Attachment 4.)

The matter is before the Board for decision upon the written
record in this form, no request for a hearing having been


The Board, for its "Findings of Fact and Conclusions of Law,"
finds that there is no basis for Appellant's claim inasmuch as
Appellant:  (1) Offers no evidence that its contractor relied
upon the sample as being in implied conformity with the
specifications.  Moreover, even if it had, it appears to the
Board that the sample was furnished for the limited purposes
expressed in the specifications; and (2) Admits in its undated
letter of response to the CO's December 12, 1986, "cure notice,"
upon which it relies in its "Notice of Appeal," that its
subcontractor was negligent in that:

(A) Appellant based its bid upon the 3" flap requirement and
expressly noted such requirement to the subcontractor when it
furnished the Government sample.

(2) The subcontractor intentionally manufactured the envelope
with a 2" flap because it was "unable to manufacture a 3" flap, a
2-3/4" adhesive strip, a 3" release liner and a throat depth of

In this regard, Article 2-18(c) of GPO Contract Terms No. 1,
supra, provides:

(c) Except with respect to defaults of subcontractors, the
contractor shall not be liable for any excess costs if the
failure to perform the contract arises out of causes beyond the
control and without the fault or negligence of the contractor.  .
. . .  If the failure to perform is caused by the default of a
subcontractor, and if such default arises out of causes beyond
the control of both the contractor and subcontractor, and without
the fault or negligence of either of them, the contractor shall
not be liable for any excess costs for failure to perform, unless
the supplies or services to be furnished by the subcontractor
were obtainable from other sources in sufficient time to permit
the contractor to meet the required delivery schedule.

Moreover, the Board finds the facts presented, including the
information respecting the 3 disqualified bidders and the 3
contractors purportedly checked by Appellant, to be insufficient
probative evidence to support a factual conclusion of commercial
impracticability respecting the 3" flap.  This finding is
buttressed by the additional fact that the product was reprocured
with the same 3" flap requirement, albeit a discount was
ultimately taken for the defect in adhesive strip size.

Accordingly, the appeal is denied and the decision of the CO