U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS

The Appeal of McDONALD & EUDY PRINTERS, INC.
Docket No. GPO BCA 9-88
March 8, 1990

MICHAEL F. DiMARIO
Administrative Law Judge

SUMMARY OPINION

   The appeal of McDonald & Eudy Printers, Inc., 4509 Beech Road,
   Temple Hills, MD  20748 (hereinafter "Appellant"), from the
   April 5, 1988, final decision of Katherine M. Phillips,
   Contracting Officer, U.S. Government Printing Office (GPO),
   Washington, DC 20401 (hereinafter "Respondent"), is hereby
   formally denied for the reasons set forth in Respondent's
   ANSWER, which such reasons the Board adopts in the entirety as
   its own, Appellant having offered no evidence whatsoever to
   support its contentions that the reduction taken was
   unreasonable.

Accordingly, the decision of the Contracting Officer is affirmed.

   It is so Ordered.

U.S. Government Printing Office
Office of the General Counsel

Respondent's Answer
In the Matter of: McDonald & Eudy Printers, Inc.
GPO BCA Docket 9-88

MARGARET LEE BASKETTE, Assistant General Counsel
August 1, 1988

Issue Presented for Review:
Whether the Contracting Officer's Discretionary Decision of
Discounting the Contract Price by 25% was Reasonable in the
Particular Circumstances of This Case?
A. Discretionary Authority Given to the Contracting Officer by
the Contract Terms
B. Facts Considered by the Contracting Officer in Determining the
Amount of the Reduction in the Contract Terms
C. Amount of Reduction in the Contract Price was not an
Unenforceable Liquidated Damage Provision

STATEMENT OF THE CASE

   After the contractor delivered nonconforming goods, the
   Contracting Officer issued a final decision to retain the
   nonconforming products and reduce the contract price.  On
   April 13, 1988, McDonald & Eudy Printers, Inc. (McDonald &
   Eudy) appealed the Contracting Officer's final decision to the
   U.S. Government Printing Office Board of Contract Appeals
   (Board) under the "Disputes" clause of the contract.

   On June 3, 1988, the U.S. Government Printing Office (GPO)
   filed a Motion for a More Definite Statement or in the
   Alternative a Motion to Dismiss.  The Board issued an order,
   dated July 18, 1988, denying GPO's motion concluding that the
   appellant had stated ". . . a justiciable cause of action,
   i.e., whether or not the imposition of 25% discount is fair or
   acceptable under the facts and circumstances."  GPO contends
   that the discount imposed by the Government was proper,
   because it was both fair and reasonable under the
   circumstances.  Thus, the decision of the Contracting Officer
   should be affirmed.

STATEMENT OF FACTS

   On September 8, 1986, the GPO issued the Invitation for Bids
   (IFB) for the binding and printing of Schizophrenia Bulletin
   for use by the Department of Health and Human Services, Public
   Health Service (PHS).  The specifications required the
   contractor to produce perfect- bound books with separate
   wraparound covers. (Exhibit A) 1  The Schizophrenia Bulletin
   is a quarterly publication; consequently, four print orders
   would be issued during the term of the contract.  The term of
   the contract was from November 1, 1986, to October 31,1987.

   McDonald & Eudy was the successful bidder on the contract.  On
   August 18, 1987, the GPO issued Print Order 60003. (Exhibit B)
   The estimated cost of the print order was $18,844.33.  Under
   the terms of the print order, the contractor agreed to produce
   6,281 copies of the Schizophrenia Bulletin, Vol. 13, No. 4.
   The ship/delivery date was November 13, 1987; a contract
   modification postponed the due date to December 18, 1987.
   Nonetheless, the contractor did not ship/deliver the goods
   until December 21, 1987.

   A few weeks after the ship/delivery date of the bulletins, GPO
   officials received a complaint from the agency customer
   concerning the Schizophrenia Bulletin, Vol. 13, No. 4.  The
   departmental notice of quality defects, dated January 7, 1988,
   listed three types of finishing defects: (1) folding position
   or skewness; (2) wrinkles; and (3) edges-
   feathered/ragged/burred. (Exhibit C) Although the product did
   not meet the specifications, the agency indicated to GPO that
   the bulletins "can/must be utilized." Id.

   Responding to GPO's request, PHS officials forwarded the 20
   unopened "blue label" samples 2 to GPO on January 11, 1988.
   (Exhibit M)  On February 4, 1988, the GPO Quality Assurance
   Inspector, Cassandra Lomax, inspected the twenty blue label
   copies. (Exhibit C)  Ms. Lomax found major defects for damaged
   edges and damaged covers.  A major defect is defined as "a
   deviation from the specifications which is less serious than a
   critical defect." (See Appendix, Tab 2, Contract Terms,
   Quality Assurance Through Attributes Program (QATAP), Rev.
   June 1981 (GPO Publication 310.1, p. 1)  According to the
   QATAP program, examples of damaged edges are untrimmed
   signatures and edges which are feathered, ragged, or burred.
   Id. at pp. 35, 36.  A major defect labeled as a damaged cover
   may consist of wrinkles, bubbles, cuts, or scratches on the
   cover.  Id. at pp. 37, 38.

   Specifically, Ms. Lomax found 20 major defects under the
   category of damaged edges and 14 major defects under the
   category of damaged covers, for a total of 34 major defects. 3
   (Exhibit D)  The QATAP tables provide that a 25% deduction in
   the contract price may be taken when a sample of twenty
   samples contains 34 major defects.  Ms. Lomax forwarded her
   recommendation that GPO accept
the product at a 25% reduction to the Contracting Officer.

   In a letter dated February 8, 1988, the Contracting Officer,
   Ms. Katherine Phillips, informed McDonald & Eudy of the
   defects in its product and pointed out that the order was
   rejectable.  The Contracting Officer pointed out that the
   Government could decrease the amount paid to the contractor by
   up to 25% of invoice billing price.  In closing, the
   Contracting Officer requested a written explanation of why the
   defects occurred and the steps taken to assure that this
   problem would not happen again.

   By letter of February 16, 1988, McDonald & Eudy conceded that
   the defects in the bulletin were the fault of its bindery
   personnel who failed to maintain proper gluing and margins.
   (Exhibit I) According to the contractor, the individuals
   responsible were admonished for their oversight and instructed
   to be more diligent in the future.

   In reference to the proposed reduction in the contract price,
   the contractor "felt" that a 25% decrease in the contract
   price ($4,584.86) was unfair.  Mr. David McDonald, Vice-
   President of McDonald & Eudy, stated in his letter that
   "Bindery Quality Control personnel feel that there may have
   been a small poriton [sic] of the total copies bound that
   reveal the defects and that not all copies bound should be
   defective."  The contractor asserted that the defects were
   only in a small number of copies; yet, it offered no records
   or documentation to support this statement. Id.

   Although the contractor offered to pick up the copies, inspect
   them for defects, and rebind the defective books to meet
   quality control specifications, the Contracting Officer had
   the authority to make the decision on what remedy to elect
   when the contractor delivers nonconforming goods.  In making
   the decision to retain the goods and impose a discount on the
   contract price, Ms. Phillips considered the request of the
   ordering agency as well as the cost and delay of replacement
   and repair.  The ordering department had informed GPO that it
   needed to utilize the bulletins.  In fact, many of the
   bulletins were already in use in libraries and other health
   facilities around the country. 4  If the Contracting Officer
   had consented to the contractor's offer to replace or repair
   the defective books, McDonald & Eudy would have borne costs
   associated with replacement or repair as well as all
   transportation costs in picking up and redelivering the new
   publications.  Undoubtedly, these costs would have exceeded
   the 25% reduction in contract price.  In view of all these
   facts, the Contracting Officer decided to retain the materials
   and seek a reduction in the contract price.

   Not only did the Contracting Officer make a logical and
   pragmatic decision concerning the election of remedy in this
   case,  she also deliberated on the appropriate amount of the
   reduction.  Realizing that the QATAP tables are to be used as
   a guideline in determining the amount of discount, the
   Contracting Officer focused on the particular facts of the
   case.  Further, the Contracting Officer considered all the
   relevant factors and gave the contractor every opportunity to
   submit evidence to assist her in the final decision.
   (Appendix, Tab 3)  On February 25, 1988, Ms. Phillips issued a
   contract modification for print order 60003, reducing the
   contract price by 25%. (Exhibit H)

   Thereafter, McDonald & Eudy wrote the Contracting Officer on
   March 24, 1988.  (Exhibit G)  In this letter, the company
   repeated its assertion that only a small portion of the job
   was defective, but offered no proof.  Although the contractor
   stated that the cost of typesetting the product ($6,601.48)
   should not be included in the reduction, it did not articulate
   a rationale for this argument.

   During a telephone conversation on April 1, 1988, Mr. David
   McDonald requested the Contracting Officer to reconsider the
   decision of the contract reduction.  (Exhibit J)  Throughout
   their negotiations, the Contracting Officer requested some
   evidence from the contractor to substantiate its claim that
   only a small portion of the bulletins was defective.  McDonald
   & Eudy admitted that it had no records on the inspection and
   quality control of the goods.  In view of the severity and
   frequency of the defects; the importance of the publication;
   the significance of the cover in the overall appearance of the
   bulletin; the possibility that the defective covers could
   further deteriorate over time and with use; the costs
   associated with the replacement or repair of the books; and
   the fact that the contractor failed to submit any records in
   support of its position, the Contracting Officer refused to
   alter her decision to take a 25% discount from the contract
   price.

   The Contracting Officer made a final decision on the reduction
   on April 5, 1988.  (Exhibit K)  The contractor appealed this
   decision to the Board.  (Exhibit L)

ISSUE PRESENTED FOR REVIEW

   Whether the Contracting Officer's discretionary decision of
   discounting the contract price by 25% was reasonable in the
   particular circumstances of this case?

   In order to ascertain if the Contracting Officer's exercise of
   judgment was reasonable under the circumstances, it is first
   necessary to examine the relevant parts of the contract. 5  A
   review of the contract terms reveals that the Contracting
   Officer is given the discretionary authority to determine the
   equitable amount of a reduction in the contract price.  Prior
   to assessing the discount, the Contracting Officer negotiated
   with the contractor and considered all the relevant facts of
   the case.  Since the decision of the Contracting Officer was
   reasonable and was not arbitrary or capricious, the Board
   should affirm the decision.

   The Government also asserts that the reduction in the contact
   price should not be construed as a liquidated damages clause
   because it was not a pre-determined penalty nor was it
   confiscatory in nature.  Rather, as the evidence shows, the
   Contracting Officer reached her decision only after
   considering all the facts of the case.

A. Discretionary Authority Given to the Contracting Officer by
the Contract Terms

   Pursuant to the IFB, the contract was subject to all the terms
   and conditions of U.S. Government Printing Office Contract
   Terms No. 1, Rev. October 1980 (GPO Publication 310.2) and the
   Contract Terms, Quality Assurance Through Attributes Program
   (QATAP), Rev. June 1981 (GPO Publication 310.1).  (See
   Appendix, Tabs 1 and 2)

The contract includes the following warranty clause:

2-13.  Warranty
(a)  Notwithstanding inspection and acceptance by the Government,
implied at law payment or any provision of the contract regarding
the conclusiveness thereof, the contractor warrants for a period
of 120 days from the date of the  check tendered as final payment
that:

(i)  all supplies furnished under the contract are free from
defect in material and workmanship and conform to the
specifications and all other requirements of the contract; . . .

(c)  The Government, at its option, may either:

(i)  require the contractor to promptly correct or replace all or
any part of the supplies (including preservation, packaging,
packing, and marking) without correction or replacement in which
event the contract price shall be reduced by the amount which is
specified by the contract or, if not specified, by an amount
which is equitable under the circumstances.  In the event the
con- tract has been completed and payment made, the contractor
shall promptly refund the amount so determined.  (Emphasis
added.)

*  *  *

(f)  The rights and remedies of the Government provided in  this
article are in addition to and do not limit any rights afforded
to the Government by any other provision of the  contract.

(g)  Failure to agree on any of the determinations made by the
Contracting Officer pursuant to this article, shall be  a dispute
concerning a question of fact within the meaning of the
"Disputes" article of the contract.

   Thus, under the warranty provisions, the Contracting Officer
   may elect to retain the nonconforming goods and seek a
   reduction in the contract price.  The reduction amount may be
   specified under the contract; if not specified, the reduction
   must be equitable under the circumstances.  The warranty
   provision also makes it clear that these remedies are in
   addition to any rights afforded to the Government by the
   contract, and do not limit the rights of the Government.
   Finally, a dispute under this article will be considered a
   question of fact by the Board.

   The primary function of the QATAP is to describe quality in
   terms of definable and measurable attributes.  The QATAP
   allows for quality requirements to be quantitatively stated in
   specifications and for products to be assessed as defective or
   nondefective based on objective measurements.  In turn, these
   measurements form the basis for acceptance or rejection of the
   product and for determining the applicable discount to be
   taken from the contract price should the customer agency
   decide to use the defective items.  (See Printing Procurement
   Regulation, Quality Assurance, Chapter XI, Section 1, (3) (a),
   1980.)

   The Contract Terms of QATAP regarding the acceptability of a
   product state in pertinent part:

If the defects exceed either or both the AQL's (acceptable
quality level), the Government will have the option of having the
lot or batch replaced, having the defects corrected, or accepting
the lot or batch with an equitable reduction in the contract
price.  The discount tables contained in Appendices A & B will be
used as a guide by the Contracting Officer to determine
reductions.

Likewise, the preface to Appendices A & B states that the tables
will be utilized as a guide by the Contracting Officer in
determining an equitable reduction in the contract price.

   By the very terms of the contract, if nonconforming goods are
   retained and a reduction in the contract price is sought, the
   Contracting Officer is given the authority to make a
   discretionary decision on the amount of the reduction of the
   contract price. (Appendix, Tab, 1)  Therefore, the Board is
   reviewing a contractually-provided judgmental decision of the
   Contracting Officer.  Monarch Enterprises, Inc., ASBCA No.
   31375, 86-3 BCA  19,227;  Thomas W. Yoder Company, Inc.,
   VACAB No. 997, 74-1 BCA  10,424.

   Unlike other cases, the Board may not substitute its judgment
   for that of the Contracting Officer.  John T. Brady & Company,
   VACAB No. 1300, 84-1 BCA  16,925; Henry C. Beck Company,
   VACAB No. 523, 66-1 BCA  5323.  The amount of the reduction
   taken by the Contracting Officer is a question of fact, and
   the Board will presume the subjectivity of such judgment.  Fry
   Communications, Inc., GPO BCA 22-84, at page 19.

   Nevertheless, this does not mean that the Contracting
   Officer's decision is unquestionable.  Where contract
   provisions allow the Contracting Officer the right to make
   discretionary judgments, it is  implied that these judgments
   must not be unreasonable or capricious.  John T. Brady &
   Company, VACAB No. 1300, 84-1 BCA  16925; Cleveland Electric
   Company of South Carolina, VACAB No. 556, 67-1 BCA  6293.  A
   party vested with contractual discretion must exercise his
   discretion reasonably and may not do so arbitrarily.  Squirrel
   Creek Associates v. United States, 11 Ct. Cl. 212, 217 (1986).

 Thus, the Board needs to decide, based upon the evidence
 presented, whether the decision arrived at by the Contracting
 Officer was within proper limits of her discretionary judgment
 or whether it was so unreasonable, arbitrary, or capricious as
 to be invalid.  In absence of gross error, a discretionary
 decision by the Contracting Officer should not be overruled.
 Corbetta Construction Company of Illinois, Inc., 55 Comp. Gen.
 972 (1976).

B.  Facts Considered by the Contracting Officer in Determining
the Amount of the Reduction in the Contract Price

   Generally, if the Government elects to take a reduction in the
   contract price, the appropriate reduction is the difference
   between the contract price and the value of the goods.  Auto-
   Skate Company, Inc., ASBCA No. 14716, 72-1 BCA  9,201.  See
   also, J. White and  R. Summers, Handbook of the Law Under the
   Uniform Commercial Code,  10-2 (2d ed. 1980).  The value of
   the nonconforming supplies are to be determined from the
   viewpoint of the buyer.  McGrath and Company, ASBCA No. 1949,
   58-1 BCA  1,599.  Understandably, the views of the injured
   party concerning the value of the product may differ from the
   views of the seller, or indeed, the general public.

   Where the fact of damages has been clearly established, lack
   of certainty and precision as to amount of damages is not
   fatal and will not preclude recovery, provided there is a
   reasonable basis for computation of damages.  Jackson v.
   United States, 12 Cl. Ct. 363 (1987); G. M. Shupe, Inc. v.
   United States, 5 Cl. Ct. 662 (1984).  A reasonable certainty
   of the damages will suffice.  See, J. Calamari and J. Perillo,
   The Law of Contracts  14-8, (2nd. ed. 1977).

   In this case, it may not be possible to precisely calculate
   the amount of damages sustained by the Government; however, it
   is clear that the Contracting Officer had a reasonable basis
   in determining the amount of the reduction  in the contract
   price.  A review of the facts and the considerations taken
   into account by the Contracting Officer illustrate the
   reasonable basis in assessing the 25% reduction in contract
   price.  (Appendix, Tab 3.)

   First, the fact that the defects were located on the cover of
   the publication was significant.  As in all published work,
   the cover is an integral and significant part of the book - a
   key selling point.  According to the inspection report, the
   books had defects with the cover and edges.  The ragged edges,
   the wrinkled covers, the cuts on the front cover, and the
   scratches on the surface of the covers severely affected the
   aesthetic value of the bulletin.

   Second, through her discussions with agency personnel, the
   Contracting Officer was aware of the prestige and the
   importance the agency attached to this publication.  It is a
   quarterly publication that is read by thousands of medical
   professionals throughout the country.  The high level of
   quality the agency expected is evident from their choice of
   Quality Level II for the cover of the bulletin. The importance
   of a product and the scrutiny it may be subject to by the
   buyer is a valid and appropriate consideration by the
   Contracting Officer.  Thomas W. Yoder Company, Inc., VACAB No.
   997, 74-1 BCA  10,424.  Therefore, it was proper of the
   Contracting Officer to take into account the prestige of the
   Schizophrenia Bulletin and the fact that medical professionals
   throughout the country would be reading the booklet.

   Third, the Contracting Officer thought the defects could
   worsen over time.  Unlike newspapers or other disposable
   reading materials, this bulletin is a reference material that
   would be used by the reader over a number of years.  In
   reaching the decision to take the 25% discount, the
   Contracting Officer believed the cuts, wrinkles, scratches,
   and ragged edges could cause the covers to further deteriorate
   with time and use.  See, Graphic Litho, GPO BCA 21-84.

   Fourth, the Contracting Officer considered the cost of repair
   or replacement as well as the transportation cost in her
   decision to take the 25% discount.  Obviously, the Government
   would mitigate the amount of costs incurred by electing to
   retain the product and take a reduction.  It would have been
   an impractical and extremely expensive proposition for the
   contractor to repair or replace the publication.

   Fifth, in the course of their negotiations, the Contracting
   Officer did consider the suggestion to deduct the cost of the
   typesetting from the contract price before applying the
   discount.  However, it was very difficult to separate the cost
   of the cover and the printing when the defects severely
   affected the entire booklet.  These defects range from ragged
   edges to cuts and tears in the cover to wrinkles, bubbles, and
   scratches on the cover and back bone of the booklet.  In
   addition, the Contracting Officer knew that, in a sample of 20
   bulletins, there were 34 defects; this is 1.7 defects per
   book.  The acceptable quality level (AQL) for this publication
   was 6.5  6 Utilizing the AQL formula, in a sample of 100
   Schizophrenia Bulletins, there would be 170 defects. 7
   Taking the AQL formula one step further, out of 6,281 booklets
   in the print order, there could be as many a 10,677 defects
   (plus or minus 2-1/2 %).  Because this order was replete with
   defects, the Contracting Officer rejected the suggestion to
   omit the cost of the typesetting from the contract price.

   Finally, Ms. Phillips gave the contractor every opportunity to
   submit any reports or records during the negotiation process.
   McDonald & Eudy failed to provide any documents or records in
   support of the company's assertion that the defects were only
   in a small portion of the copies.  To accept the contractor's
   opinion about the frequency of the defects, without any
   evidence, would have been arbitrary and capricious.

   The burden is on the appellant in a case of this kind to show
   that the Contracting Officer abused his discretion.  Solis
   Enterprises, Inc., VACAB No. 1576, 84-3 BCA  17,606.  The
   Government, unlike private parties, is always assumed to act
   in good faith, subject to only an extremely difficult showing
   by the plaintiff to the contrary.  Torncello v. United States,
   681 F. 2d 756, 770 (1982).  In reviewing the evidence
   proffered by the appellant, it is obvious that the contractor
   has not met its burden.  There is not a shred of evidence to
   support its position that the defects are only in a few
   bulletins.  On the other hand, the Contracting Officer, in
   good faith, reviewed the inspection reports from GPO, as well
   as the notice from ordering agency, describing the type and
   frequency of the defects. Thus, she considered all the
   pertinent facts.

C.  Amount of Reduction in the Contract Price was not an
Unenforceable Liquidated Damage Provision

   An enforceable liquidated damage provision must be a genuine
   pre-estimate of the injuries that will be caused by a future
   breach of the contract.  5 Corbin on Contracts,  1059 (1964);
   See also, Priebe & Sons v. United States, 332 U.S. 407, 411,
   68 S. Ct. 123, 126 (1947).  In deciding if liquidated damage
   provision is valid, the court will determine whether the
   damages are difficult to ascertain and whether the liquidated
   damages bear a fair and reasonable relationship to anticipated
   damages caused by the breach.  Cegars v. United States, 7 Cl.
   Ct. 615 (1985)

   In the present case, there was not a pre-determination of the
   damages or probable loss.  Although the Contracting Officer
   utilized the QATAP tables in reaching her decision on the
   amount of the reduction, the tables were only a guide.  The
   Government agrees that if the QATAP tables had been applied by
   the Contracting Officer in a mechanical fashion, the amount of
   the reduction would have been equivalent to an unenforceable
   liquidated damage provision. Here, the Contracting Officer's
   final decision on the discount was not reached until
   negotiations had been conducted and all the facts of the case
   reviewed.

   In Fry Communications, GPO BCA 22-84, the contractor delivered
   a guidebook for the Department of Commerce which was deemed
   nonconforming; the inspection results showed that the paper
   was not equal to the color specifications in the IFB.
   Specifically, the inspection by GPO officials revealed that
   there were 36 demerits in each publication.  As a consequence,
   the Contracting Officer, using the QATAP tables, decreased the
   contract price by 18.9%.  The contractor appealed to the
   Board.

   In its analysis of the case, the Board pointed out that the
   JCP Paper Specification Standards required the Contracting
   Officer to make a judgment weighing the extent of the defects
   present in the product against the intended use of the
   product.  The Board held that neither the documentation nor
   the testimony in the record established that this legal
   requirement was met.  Although the guidebook for the
   Department had an apparent color deviation, the Board believed
   that the Contracting Officer applied the QATAP tables in a
   mechanical fashion.  This amounted to a penalty against the
   contractor.

   It is clear that the QATAP tables must be utilized on a case-
   by-case basis.  Edward & Broughton, Co., GPO BCA 6-84.  In
   determining that McDonald & Eudy should be assessed 25% of the
   contract price, the Contracting Officer painstakingly
   considered all the factors in the case.  She only used the
   table as a guideline.  Similar to the actions of the
   Contracting Officer in Graphic Litho, GPO BCA 21-84, the
   Contracting Officer considered the severity and the frequency
   of the defects.  Thus, the amount of the reduction was
   equitable and cannot be construed as an unenforceable
   liquidated damage clause.

CONCLUSION

   The reduction in the contract price assessed against the
   contractor was reasonable under the particular circumstances
   of this case.  Therefore, the decision of the Contracting
   Officer should be affirmed.

_______________

1   All exhibits referred to in the answer are located in the
Rule 4 File.

2  Blue label samples are copies of the Publication randomly
selected in accordance with the instructions in the
specifications.  This process allows the Government an
opportunity to inspect a statistically valid sample when they
receive a customer complaint.

3  Significantly, Ms.  Lomax suspended her inspection of the
samples after she discovered 34 major defects.  The Purpose of
the inspection is to determine if the Publication is acceptable
or rejectable, not to find every defect in the Publication.
Additionally, it is the Prime responsibility of the contractor,
not the Government, to ensure that the Product meets the
requirements of the contract.  (See Contract Terms No. 1,  2-12,
Inspection and Tests)

4  The specifications required the contractor to Produce 6,281
copies of the bulletin.  Of the 6,281 copies, 190 were mailed by
the contractor using Government furnished labels.  The contractor
also delivered 5,000 copies to the GPO Public Documents
Warehouse; these copies were then mailed to subscribers.
Consequently, a majority of the bulletins were already mailed to
readers by the time the GPO received the complaint.

5 There is no dispute that the contractor delivered nonconforming
goods.  McDonald & Eudy conceded numerous times that the defects
were the fault of its Bindery Department.

6  This means that, out of 100 samples, the Government will allow
6.5 defects and still accept the publication.

7  The statistical basis for this formula has a 95% confidence.
As such, there is a 2-1/2% chance that out of 100 bulletins there
may be as many as 238 defects.  Similarly, there is a 2-1/2%
chance that in the sample of 100 copies, there may be as few as
118 defects.