Custom Printing Company

GPO BCA 10-87
May 10, 1988
Michael F. DiMario
Administrative Law Judge

Opinion

     This appeal timely filed by Custom Printing Company, 1005
     Commercial Drive, Owensville, MO  65066 (hereinafter
     "Appellant") is from the March 31, 1987 "final decision"
     letter of William E. Flood, Contracting Officer (hereinafter
     "CO"), U.S. Government Printing Office (hereinafter
     "GPO/Respondent") holding that Appellant must reprint
     certain United States Postal Service "Zip + 4 State
     Directories" at no additional cost to the Government,
     because the Appellant was solely responsible for errors in
     the original printing. The decision of the CO is affirmed
     for the reasons set forth hereinbelow.

Background

     Respondent by Purchase Order 64164 dated October 16, 1986,
     competitively awarded Appellant a contract in the amount of
     $135,834 to produce 5 different U.S. Postal Service "Zip + 4
     State Directories" (Pennsylvania (PA) Volume I, Pennsylvania
     (PA) Volume II, Wisconsin (WI), Missouri (MO), and
     Washington (WA)). Two of the directories, PA I and PA II,
     were assigned a single GPO Jacket No. (156-372). The other
     three directories, WI, MO, and WA, were assigned GPO Jacket
     Nos. 156-386, 156-390, and 156-401, respectively. The basic
     dimensions and materials for all the directories were the
     same. However, the cover, the text material, and number of
     pages and quantity ordered were different directory to
     directory. In addition, each directory was to be produced in
     two separate versions identified as Pub. 66 and Pub. 66A,
     respectively, the only difference in versions being the
     cover used. The Government was to furnish camera copy for
     the text from which Appellant was to make all required
     reproducibles. Proofs of the reproducibles were not required
     to be submitted for Respondent's approval but were to be
     retained by the contractor for 30 days after delivery of the
     finished product. The contract also specified that the
     completed products had to meet certain quality assurance
     levels and standards for printing and finishing. Toward this
     end, the contract provided for press sheet inspections by
     Respondent at Appellant's plant; inspection of quality
     assurance samples by Respondent; and the furnishing of
     randomly selected departmental "quality" copies. Completed
     products were to be shipped by the Appellant to designated
     Postal Service facilities throughout the country. (Rule 4
     File, hereinafter "R4 File," Tab B).

     Upon receipt of completed PA Volume I, the Postal Service
     advised the CO that the publication erroneously contained WA
     state zip code pages 59-63 rather than the respective PA
     Volume I pages as ordered.

     An inquiry initiated by the CO on January 28, 1987,
     established that the problem existed only in the PA Volume I
     directory but failed to pinpoint its cause. The Appellant
     denied responsibility for the mistake alleging that it was
     virtually impossible for it to be at fault since its
     procedure developed over time in producing some 50 previous
     "Zip + 4" state directories was to handle only one set of
     furnished camera copy at a time. On the other hand, the CO
     could not establish with certainty that the Government's
     employees had furnished the correct camera copy for all
     pages. Moreover, the Appellant contended that the Government
     ought to bear the burden for the error since its press sheet
     inspector, John Becker, of its St. Louis Regional Printing &
     Procurement Office had negligently signed off on the
     signature which contained both correct and incorrect pages.

     In a further attempt to resolve the matter, a meeting was
     held at the GPO Washington, DC offices. Appellant was
     represented by William Jackson. Respondent was represented
     by the CO, Quality Assurance Section Chief Darwin Hughes,
     and Quality Inspection Technician Reggie Peebles. At the
     conclusion of the meeting the parties reached a tentative
     agreement for the directory to be reprinted at Respondent's
     expense because of the press sheet "O.K." by Becker.
     Subsequently, in another discussion, this was modified to a
     tentative agreement for 50% cost sharing with Appellant
     being requested to furnish its estimate of such cost
     together with its proposed production schedule for the
     reprint.

     Thereafter, by internal memorandum of March 13, 1987, the CO
     sought the concurrence of Respondent's Contract Review Board
     for issuance of a contract modification reflecting the
     tentative agreement. The memorandum stated that the
     Government  "must take part of the responsibility for the
     error" because Inspector Becker had signed only his name and
     date with no further description of what he was signing for,
     i.e., "OK for color, OK for quality." The memorandum also
     stated that Contract Compliance personnel had advised the CO
     that because Becker had signed his name in that fashion, the
     Government should be held to the same standards of
     accountability normally expected for similar approvals in
     the commercial printing industry, i.e., "batters, folios,
     and running heads."

     The Contract Review Board unanimously disagreed with the
     CO's position. Instead, they believed that if there was any
     uncertainty as to the correctness of the camera copy
     supplied by the Government, the burden was upon the
     Appellant to prove that the camera copy it received was
     incorrect. Moreover, they believed that since the
     contractually stated purpose of the press sheet inspection
     was to assure the quality of the printing itself, the scope
     of such inspection did not encompass review of text for
     correctness, and therefore, the Respondent should not be
     liable for failing to note the instant error. One board
     member suggested that an additional check be made with the
     requesting agency to see if the camera copy had been
     returned by the Appellant in the proper sequence. Such a
     check determined that the copy was paginated correctly, and
     consisted only of "PA pages with data base date and time
     frame on the top of each page." (R4 File, Tab I.) Based upon
     this further result and the Contract Review Board's
     nonconcurrence, both the Contract Compliance Section and the
     CO reversed their positions. Thus, the CO, by letter of
     March 18, 1987, advised Appellant that the product was
     rejectable and that reprinting would have to be accomplished
     at no additional cost to the Government by April 17, 1987.
     (R4 File, Tab J.)

     In turn, the Appellant, by letter of March 25, 1987, advised
     that it was in disagreement with the CO's findings, "would
     appreciate a final decision on this matter," but was
     nevertheless proceeding with the reprint pursuant to U.S.
     Government Printing Office Contract Terms No. 1 Article 2-3
     entitled "Disputes." (R4 File, Tab K.)

     In response, the CO issued his final decision letter dated
     March 31, 1987, wherein he advised Appellant that:

   The determination of this office is that your firm is solely
   responsible for four incorrect pages being printed in the
   above referenced jacket. The correct camera copy was furnished
   to your firm and the same correct camera copy was returned to
   the government. Therefore, it is my opinion that the incorrect
   four pages were printed in the book due to an error within
   your organization and that the reprinting should be done by
   your firm at no additional cost to the government.

R4 File, Tab L.

     Thereafter, by letter of April 21, 1987, to this Board,
     Appellant noted its appeal. The appeal was subsequently
     perfected by letter of May 29, 1987. The letter in pertinent
     part stated:

   It is our contention that the copy was furnished to us with
   the four incorrect pages included in the package. Our internal
   procedure in our Prep Department is that only one package
   containing the copy would be opened at a time. We followed
   this procedure throughout the production of these books
   virtually eliminating the possibility of mixing the copy.

   The specified standard for this order was the furnished camera
   copy. A duly authorized representative of the Contracting
   Officer okayed the press signature on October 31, 1986. (see
   enclosure) The fact that the incorrect pages were in the
   signature verified that the copy was this way during the
   inspection, or that this was missed by representative. The
   book was printed exactly as the OK press sheet.

Official File, Tab 5.

      On August 4, 1987, an entry of "general denial" was noted
      in the case docket on behalf of the Respondent pursuant to
      Rule 6.(b) of the Board's Rules of Procedure, (GPO
      Instruction 110.12 dated September 17, 1984). A prehearing
      conference followed on October 22, 1987.

     At the conference Government counsel requested that the R4
     File be supplemented to include a copy of the PA I zip code
     containing the WA state pages, as first printed (Exhibit N);
     pages 58 through 63 of PA Vol. I, EPD generated camera copy,
     pages 58 and 63 being the original returned pages and 59
     through 62 being photocopies as described in declaration of
     Reginald L. Peebles, infra, (Exhibit O); a signed
     declaration from Charlie F. Jernigan, Senior Printing
     Contract Specialist, U.S. Postal Service (Exhibit Q); and a
     signed declaration from Reginald L. Peebles, Quality
     Assurance Department, GPO (Exhibit P).

     Jernigan, under penalty of perjury, declared:

   1. I am employed as a Senior Printing Contract Specialist for
   the United States Postal Service.

   2. Pursuant to the specifications for Jacket 156-372, Custom
   Printing Company, Owensville, Missouri, returned the furnished
   camera copy to the United States Postal Service. After
   receiving the box containing the camera copy, I opened it.

   3. Realizing that there was an error in the Pennsylvania Zip +
   4 Directory, Volume I, I scanned through the materials to
   verify whether there were any Washington pages. I did not see
   any Washington pages. Furthermore, I did not remove any
   materials from this box.

   4. After resealing this box, I sent the box to the United
   States Government Printing Office to the attention of Reginald
   L. Peebles, Inspector for Quality Assuance [sic].

R4 File, Tab Q.

     Peebles, under penalty of perjury, declared:

   1. I am employed as an Inspector in the Quality Assurance
   Department of the United States Government Printing Office.

   2. On behalf of the Quality Assurance Department, I requested
   the original camera copy furnished to Custom Printing Company
   for jacket 156-372.

   3. During the week of February 16th, 1987, I received a box
   from the United States Postal Service. This box contained the
   camera copy for Jacket 156-372. It appeared the box had been
   opened and retaped.

   4. After opening the box, I checked pages 59-62 of the
   Pennsylvania Zip +4 State Directory, Volume I. These four
   pages contained Pennsylvania zip codes, not Washington zip
   codes. I reported my findings to my supervisor, Darwin Hughes.

   5. In order to correctly reprint the directory, the contractor
   requested pages 59-62. Consequently, I made photocopies of
   these pages and sent the original pages to the contractor.

R4 File, Tab P.

     Thereafter, Government counsel, noting that the camera copy
     (Exhibit O) was created by the GPO Electronic
     Photocomposition Division (EPD), called attention to the
     data line at the top of the copy. The line reads: "S-155203
     0065(20)(03-JUN-86-09:18:46) F3944 3/19/86."  Counsel
     explained that the "S" number represented the internal GPO
     jacket number for the typesetting job. The number following
     the "S" number 00065 represented the particular frame
     containing the typeset page and the specific day and time
     the frame was completed. The "F3944 3/19/86" entry
     represented the specific format programs for all the Zip + 4
     directories and the date the format program was created.
     Counsel next pointed out that if one examines the pages in
     Exhibit O, page by page, it is apparent that the "S" number,
     frame date, format number and format date remain constant
     while the frame time and number change. Counsel asserted
     that the conclusion to be drawn from this is that pages
     58-63 were typeset sequentially on 6/3/86 between "9:18:46
     a.m." and "9:20:86 a.m." Counsel then asserted as a truism
     that since the Washington state zip code directory was
     produced without errors, Appellant must have received the
     correct Washington state camera copy from Respondent.
     Counsel opined that from these facts it is clear that
     Appellant was furnished the correct copy for both
     directories and that this being the case, Appellant must
     necessarily have caused the mix-up during its processing.
     Counsel followed this by arguing that the inspector, in
     adhering to the portion of the contract which reads: "Press
     Sheet Inspection: Press sheets will be inspected at the
     contractor's plant for quality conformance," was merely
     looking for "readability" of the type and thus was not
     required to make editorial comments. Counsel concluded from
     this that the inspector's signature on the camera copy did
     not relieve the contractor from meeting the full
     requirements of the contract.

     In response, Appellant's representative, referencing
     Respondent's data line argument, pointed out that there is
     always some manual intervention after the copy is created.
     Thus, in his opinion, Respondent's offer of the data line as
     proof that correct copy was furnished is inconclusive. He
     then claimed that when the book went to prepress, no other
     boxes of camera copy were opened by Appellant's employees
     until the PA I job had been cleared from the press. The job
     was done as a 32-page sig on the Harris web press with 4
     plates, 8 pages on a plate, and folded into a 32-page sig.
     The four incorrect pages in question are pages 59-62, with
     the first page of the sig being page 55. Once the job
     cleared prepress, the camera copy was stored until ready to
     be returned to the agency. He stated that Appellant had no
     problems running the job as indicated by their production
     records and offered to make their production records a part
     of the appeal record but did not have the records with him.

     Next, referring back to GPO's contention that the inspector
     was not looking for content, he called the Board's attention
     to the "Press Sheet Inspection" portion of the
     specifications, page 3 of 9, supra, and to page 5 of 9 of
     the specifications which mentions P-7, a printing attribute
     for type quality and uniformity, found in the publication
     entitled "Quality Assurance Through Attributes Program"
     (QATAP) which is incorporated in the contract by reference
     in the specifications. He stated that in order to verify
     compliance with the P-7 attribute, the inspector must make
     sure he has the correct camera copy in front of him to check
     against the press sheet. He argued that while the inspector
     is not looking for content, he is looking for deviations in
     type dimensions, broken type, etc., and therefore should be
     certain he is looking at the correct page. Therefore, in his
     judgment the mention of "quality conformance" in the press
     sheet inspection clause includes the P-7 attribute. He
     concluded by stating that it is Appellant's contention that
     the four Washington state zip code camera copy pages were in
     front of Mr. Becker when he inspected the press sheet and
     that is why he did not pick up the error in the PA I book.

     At the close of the prehearing conference, the parties were
     advised that the record would be settled on November 7,
     1987, and that any further documentation should be furnished
     to the Board by that date.Subsequently, Appellant by letter
     of November 2, 1987, received November 9, 1987, requested
     that the record be supplemented by the inclusion of the
     original press sheet bearing Mr. Becker's signature.
     Although the document was not timely filed, it was not
     objected to by Government counsel. This being the case and
     since the document was relevant to the other evidence in the
     record, the Board waived the November 7th date and accepted
     the document. The record was thus settled on November 9,
     1987.

     The matter is now before the Board in this form for
     decision.

Issue

     The issue presented is whether Appellant is liable in any
     way for reprint costs.

Discussion

     Article 2-12 of GPO Contract Terms No. 1 requires a
     contractor to correct defective supplies if so directed by
     GPO. Article 2-3 permits the contractor to appeal such
     decision if it is based upon disputed facts. In such case
     the contractor is to proceed with performance in accordance
     with the Contracting Officer's directions pending the
     outcome of the appeal. It is in accordance with such
     provisions that the dispute is before the Board.

     The single disputed fact in the case is whether or not
     Appellant was furnished the correct camera copy for the
     original printing. Appellant argues that it must have
     received defective copy from Appellant, because its own
     procedures for handling copy were so exacting it could not
     have caused the error. We are not persuaded by this
     argument.

     First, Appellant has offered virtually no evidence in
     support of this bald assertion. Second, Appellant had an
     affirmative duty to inspect the furnished copy for patent
     defects under the provisions of Article 4-1 of "Part IV
     Supplemental Terms and Conditions for Composition, Camera
     Copy and/or Reproduction Proofs," GPO Contract Terms No. 1,
     entitled "Government Furnished Material," which in pertinent
     part provides:

   The contractor will be required to examine the furnished
   material immediately upon receipt. If at that time there is
   disagreement with the description or the requirements as
   presented in the specification (or print order), and prior to
   the performance of any work, the contractor shall contact the
   U.S. Government Printing Office, Central Office Printing
   Procurement Division, Washington, D.C. 20401, or the
   originating Regional Printing Procurement Office, and protest
   the description.

Third, Respondent has presented substantial documentary evidence
supported by declarations signed under penalty of perjury that
the PA Vol. I camera copy returned by Appellant was in fact
correct in all its particulars, including sequential data line
numbering, while concomitantly, no concurrent errors were evident
in the Washington state directory.

     The only logical conclusion to be drawn from these facts is
     that correct camera copy was furnished Appellant for both
     the PA Vol. I directory and the Washington state directory.
     The Board, therefore, holds that the Appellant is liable for
     the errors, unless it can prevail on its assertion that the
     Government bears some liability because its inspector acted
     negligently in his failure to detect the error during his
     press sheet inspection.

     In order for Respondent to be liable for the inspector's
     negligence, the Board must find that the inspection was
     conducted for Appellant's benefit and that Respondent
     thereby owed Appellant a duty to detect errors of the sort
     encountered here; that through the purported negligence
     there was a breach of the duty; and that foreseeable injury
     to Appellant resulted therefrom.

     In order to determine if such a duty is created, we must
     examine the contract itself. In doing so, we find that the
     provision for press sheet inspection is set out on page 3 of
     9 as a subcaptioned matter under the block letter caption
     "PRINTING." The other subcaptions under the block caption
     are "Format" and "Coating." Reading all of the text under
     the block and subcaptions together make it abundantly clear
     that they relate solely to the technical aspects of printing
     and not to the substantive content of textual matter. Based
     upon this reading, it is the Board's opinion that as a
     matter of contract law, the press sheet inspection at the
     contractor's plant was solely for the purpose of determining
     technical quality conformance. In holding this, we find no
     substantial disagreement by Respondent with Appellant's
     claim that the QATAP P-7 attributes are important measures
     of that conformance. Accepting this argument, we can
     nevertheless find nothing in the QATAP or contract
     provisions which create a duty to be carried out by
     Respondent for the benefit of the Appellant. Indeed, it
     seems clear to the Board that these provisions are for the
     exclusive benefit of the Government. See Red Circle Corp. v.
     United States, 185 Ct.Cl. 1, 398 F.2d 836 (1968), where the
     court at 8-9 stated:  "The clauses pertaining to
     verification inspection in the instant contract must be
     considered for the benefit of the government, and the
     plaintiff's responsibility was not affected by the failure
     of the government to fully exercise its contract rights."
     Buttressing this finding are numerous cases which hold that
     in general, the Government's right to reject faulty products
     after delivery is not impaired by the conduct of its own on-
     site inspection even where its inspector failed to object to
     faulty work. Penn Construction Co., ASBCA 10780, 66-2 BCA 
     5800 (1966), or conditionally approved defective work,
     Wilkins Co., FAACAP 66-13, 65-2 BCA  5242 (1965).

     Thus, it is the conclusion of the Board that no contractual
     duty was owed to Appellant irrespective of whether or not
     the defect was patent as it is here. Since there was no duty
     owed to Appellant by virtue of the inspection respecting
     discovery of the defect, there is no liability on the part
     of the Respondent. Therefore, the Appellant is fully liable
     for all costs of reprinting the defective publication.

     Accordingly, the appeal is denied and the decision of the
     Contracting Officer is affirmed.