UNITED STATES GOVERNMENT PRINTING OFFICE CONTRACT APPEALS BOARD Sales Aids, Incorporated Appeal dated November 18, 1980 Decision dated July 31, 1981 Panel 14-80 THOMAS O. MAGNETTI, Chairman DENNIS R. CHASTAIN, Member JAMES A. MEADOWS, Member PRELIMINARY STATEMENT This is a decision on a timely appeal entered by Sales Aids, Inc. (hereafter referred to as the contractor). The appeal disputes the final decision of the Contracting Officer terminating the contractor for default. The appeal is taken pursuant to Article 3 (the "Disputes" clause) of the GPO Contract Terms No. 1, GPO Publication 310.2, August 1, 1979. This document was incorporated by reference into the Specifications and the Contractor's bid on this contract. Exhibits 3 and 5, respectively of the Appeal File (hereafter A.F.). The contract required the contractor to produce sets of tabbed dividers for the Department of Commerce to be used in export regulation manuals. The final decision of the Contracting Office held that the contractor failed to perform in accordance with the terms of the contract. In accordance with GPO Instruction 110.10A, titled "Board of Contract Appeals Rules of Practice and Procedure," the decision of this panel is based solely upon the record which contains the documents and exhibits constituting the Appeal File. STATEMENT OF FACTS On March 29, 1980, in accordance with the standard GPO contract award procedures, Purchase Order No. 12910 for the procurement of white divider cards was awarded to the contractor. Exhibit 7, A.F. Under this contract, the contractor was required to print up 10,519 sets of tabbed divider index sheets. Exhibit 3, A.F. Each of these sets consisted of 28 tabbed dividers for a total of 294,532 tabbed dividers. These dividers were to be made from white index paper with dimensions of 25-1/2 x 30-1/2 inches. According to these specifications, the paper stock was supposed to weigh 220 lbs per 1,000 sheets and correspond to the performance standards established for that category of index paper in the "Government Paper Specification Standards, No. 8," JCP K10, November 30, 1977. Under this category, this type of paper had to have an average thickness of 0.0090 inches. A tolerance of plus or minus 0.0005 inch in this thickness was allowed for paper weighing 220 pounds. Additionally, a tolerance of 10% was allowed in the basic weight of the paper allowing a contractor to deliver paper weighing anywhere from 242 lbs. to 198 lbs. per 1,000 sheets. The product was to be produced in strict accordance with the specifications, and was to be shipped on or before May 21, 1980. On May 30, 1980, the Department of Commerce notified the GPO that the contractor had delivered goods which failed to comply with the paper weight specifications. Exhibit 8, A.F. Since this non-conformance apparently rendered the dividers useless for the purpose intended, the Department informed the GPO that it did not want to accept the job. Based upon this complaint, on June 4, 1980, the forms were tested by a GPO Quality Assurance Specialist. Exhibit 9, A.F. The test revealed that the weight per 1,000 of these divider sheets was 171.4 pounds. This was more than 26 pounds less than the most tolerant weight permitted by the specifications (198 lbs.). Moreover, the test for the caliper (thickness) of the paper indicated that the paper was only 0.00751". This was appreciably thinner than the specifications would have allowed (the caliper tolerance range was 0.00945" to 0.00855"). Based on the complaint and the test results, in June the GPO rejected the sets of dividers delivered by the contractor and informed the contractor that it would have to replace these defective goods with dividers that conformed to the specifications. To accommodate the requirement to reprint, the Contracting Officer extended the date of delivery to July 9, 1980. Exhibit 10, A.F. As delivery had not been accomplished by August 5, 1980, the GPO notified the contractor that, due to its failure to perform within the allotted schedule, the Government was considering terminating the contract for default. Exhibit 11, A.F. The contractor was given 5 days to respond to this notice. On August 6, 1980, the contractor telephonically informed the GPO that it would reproduce the job. Exhibit 13, A.F. Sometime afterward (around August 14, 1980), the contractor notified the GPO by an undated letter that it would not receive the correct paper stock until September 8, 1980, and that it would take 3 to 4 weeks longer to reproduce the job. Exhibit 12, A.F. It also stated that the reason it delayed in reproducing the job was that it had been led to believe by Mr. Richard Isadore, an employee of the Department of Commerce, that the original shipment would be accepted by the GPO at a 20% discount. Rejecting the contractor's reason for delay and its offer to produce a conforming product by October, the GPO terminated the contractor for default on August 21, 1980. The justification for this action was the failure of the contractor to produce an acceptable product in a reasonable time. Exhibit 14, A.F. The right to default contractors in cases such as these is derived from the Article 12(b), titled "Inspection and Test" and Article 17, titled "Default." See, GPO Contract Terms No. 1, supra. Article 12(b) reads in part as follows: In case any supplies or lots of supplies are defective in materials or manufacture or otherwise not in conformity with the requirements of the contract, the GPO shall have the right either to reject them (with or without instructions as to their disposition) or to require their correction . . . . If the contractor fails to promptly remove such supplies or lots of supplies which are required to be removed, or promptly to replace or correct such supplies or lots of supplies, the GPO either (i) may by contract or otherwise replace or correct such supplies and charge to the contractor the cost occasioned the Government thereby, or (ii) may terminate the contract for default as provided in the article entitled "Default" of these contractual terms. (Emphasis added.) Article 17, the Default clause reads in part as follows: (a) The Government may, subject to the provisions of paragraph (c) of this article, by written notice to the contractor, terminate the whole or any part of the contract in any one of the following circumstances: If the contractor fails to make delivery of the supplies . . . within the time specified herein or any extension thereof; . . . . (Emphasis added.) The contractor's appeal of this decision, dated November 18, 1980, challenged the Contracting Officer's final decision to default the contractor. Exhibit 1, A.F. The contractor contended that it had a legitimate reason for the delay in producing a conforming product. It indicated that the delay was caused because it had relied on the alleged representations of Mr. Richard Isadore that the non-conforming goods would be accepted by the GPO at a 20% discount in the contract price. Further, the contractor complained that it was not given a reasonable period of time to reproduce goods that would conform to the contract specifications. DISCUSSION The language of the inspection clause gives the GPO the broad right to reject goods which do not conform to the contract specifications and/or order the contractor to correct these defects discovered during the inspection process. If the contractor fails to correct these defects within the delivery schedule or within a reasonable period afterwards, the Government can terminate the contractor for default. See Articles 12(b) and 17(a), supra.. The Government is entitled to enforce strict compliance with the specifications found in its contracts. H.L.C. & Associates Construction Co. v. United States, 176 Ct. Cl. 285, 367 F.2d 586, 589 (1966); Decatur Realty Sales, HUD BCA No. 75-26, 77-2 BCA ¶ 12,567. The determination of whether a product conforms with the contract specifications must rest with the Contracting Officer as this determination is within his/her discretion in administering the contract, Thomas W. Yoder Co., VACAB 997, 74-1 BCA ¶ 10,424 (1974). Where the specifications contain an imprecise statement of the contract requirements, the standard for rejection of the contractor's work becomes more subjective. However, no claim has been raised by this appeal that the specifications were ambiguous or imprecise as not to indicate what the contractor had to do in order to produce a conforming divider. Rather the specifications set out clearly what the contractor's responsibilities were in order to comply with the contract. In the instant case, the evidence clearly demonstrated that the product as delivered by the contractor did not conform with the specifications of the contract. Proof of this defect was illustrated not only by the complaint lodged by the Department of Commerce of May 30, 1980, but more specifically by the quality assurance test run by the GPO on June 4, 1980. Exhibits 8 and 9, respectively, A.F. This test revealed that the dividers did not correspond to the weight and thickness requirements set forth in the specifications and the Government Paper Specifications Standards, supra. The contractor, itself, did not dispute this evidence. Therefore, the Board holds that the contractor tendered a product which did not comply with the specifications within the time allotted by the contract and the Contracting Officer was well within his discretionary powers to reject the non-conforming goods. As stated above, Articles 12 and 17 of Contract Terms No. 1 permits the Government to default a contractor who has supplied defective goods and does not replace them promptly. Accord, Kan-Du Tool & Instrument Corp., ASBCA No. 23466, 79-2 BCA ¶ 13,907. The Government did so in the case at bar. It believed this termination was warranted on the grounds that the contractor failed to deliver conforming dividers promptly after it was informed that the work as delivered was rejected. In cases of default, the Government has the initial burden of proving that the contractor had defaulted in its performance of the contract. Caskel Forge, Inc., ASBCA No. 6205, 61-1 BCA ¶ 2,891; National Aviation Electronics, Inc., ASBCA No. 18256, 74-2 BCA ¶ 10,677. Default terminations as a species of forfeiture are to be strictly construed. J.D. Hedin v. United States, 187 Ct. Cl. 45 (1969). However, once the default has been established, the contractor then has the burden of showing that the default was excusable. B.M. Harrison, ASBCA No. 7684, 1963 BCA ¶ 3,736; Hy-Cal Engineering Corp., NASA Nos. 871-18 and 772-7, 75-2 BCA ¶ 11,399. In the instant case, the burden of proof placed upon the Government to demonstrate that the contractor had defaulted on the contract is easily met. The contractor failed to submit dividers that complied with the contract specifications in a timely fashion. Exhibits 9 and 14, A.F. Despite the Government's forbearance of the contractor's difficulties as evidenced by the delivery extension it granted to the contractor in June, the contractor failed to promptly deliver a conforming product. The record, therefore, makes out a prima facie case of a failure to perform. General Equipment Company, ASBCA No. 6415, 1964 BCA ¶ 4,166. Faced with the probability that the tabbed dividers would not be delivered until sometime in October, it was within the discretion of the Contracting Officer to terminate the contract. The Contracting Officer moved to terminate the contract based upon the contractor's failure to deliver dividers which conformed to the contract specifications within the time allotted in the delivery schedule. Exhibit 14, A.F. See, Simplex Manufacturing Corp., ASBCA Nos. 13897 and 14380, 71-1 BCA ¶ 8,814; Associated Graphics, GPO BCA No. 76-12, January 12, 1981. Having established that the Government possessed the right to terminate the contract for non-delivery of conforming goods and exercised that right in the proper manner, the burden shifts to the contractor to prove that the delay was excusable. The contractor seeks to excuse its actions by alleging that any delay was justified because it relied on certain representations supposedly made by Mr. Richard Isadore of the Department of Commerce that the GPO would accept the defective goods and reduce the contract price. Other than this bald assertion, it does not provide any evidence that Mr. Isadore had made such representations. However, the Appeal File contains a memorandum from Mr. Isadore that addresses the nature of his communication with the contractor. This memo did not indicate that any promises were made that the GPO would accept the defective dividers at a discount. Exhibit 21, A.F. Moreover, there is other evidence to indicate that the GPO was notified by Mr. Isadore that the contractor was trying to pressure the Commerce Department to accept the defective work. The GPO informed the contractor of its responsibility to deal with the GPO as its contract was with the GPO and not the Commerce Department. Exhibit 20, A.F. Because Exhibits 20 and 21 which document the above communications date from December 1980, they lack the unqualified probative ability to disprove the contractor's contention that it was misled by representations made by Mr. Isadore and that it had the right to rely on these representations. However, when one balances this circumstantial evidence against the lack of proof offered by the contractor on this issue, this Board determines that the contractor had no right to delay its performance on reliance on any verbal communication with Mr. Isadore. Moreover, there is documentation that indicates that the contractor attempted to obtain acceptance of the defective work with a discount in early June after it was notified that it would have to replace the job. These offers were refused. Exhibit 19, A.F. If the contractor took a risk between June and August of 1980 to wait and see if the GPO would accept the defective goods and delayed in reproducing the job until the last possible moment, as apparently it did, it cannot now try to escape the consequences of its action. Assuming arguendo that Mr. Isadore did make the alleged representations and the contractor did feel that it could reasonably rely on them, this still could not be used as an excuse for the contractor's delay. Mr. Isadore had no authority to make these representations as this contract was with the GPO and the contractor should have dealt directly with the Contracting Officer. It is well established that the Government is not bound by the acts of unauthorized agents with only apparent authority. Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380 (1947); General Electric Co., ASBCA No. 11990, 67-1 BCA ¶ 6,377. Authority to bind the Government must either be express or implied actual authority. Since Mr. Isadore had neither, he could not bind the Government by his actions in any way. The contractor was informed of this when it was told it had to deal exclusively with the Government. Exhibit 20, A.F. On page 2 of its letter of appeal, the contractor acknowledged that Mr. Isadore had no more than apparent authority. Exhibit 1, A.F. The contractor further contends that it was not afforded a reasonable time to produce an acceptable product. Ordinarily, when the Government elects to reject defective goods, it must give the contractor the opportunity to correct the defect. Radiation Technology, Inc. v. United States, 177 Ct. Cl. 277, 366 F.2d 1003 (1966). Here the opportunity to correct the defects by reprinting the order was provided to the contractor. By letter dated June 12, 1980, the GPO notified the contractor that the work was unacceptable and would have to be reprinted. Exhibit 10, A.F. In this letter, the delivery date was extended to July 9, 1980, but the contractor was cautioned that the replacement would have to be in strict accordance with the contract specifications. When the contractor had not delivered by August 5, 1980, the GPO sent it a show cause notice. Exhibit 11, A.F. The contractor responded that it could tender a conforming product by October, and based on this unsatisfactory response, the Government terminated the contract for default. Radiation Technology stands for the proposition that a contractor should be provided a reasonable period of time to cure minor defects. The length of this period should vary according to the nature of the deficiency and the urgency of the Government's needs. Case law has not established what a reasonable cure period should be. Nor has there been established a right to a specific amount of time. Each case must be decided on its own facts. Given the time period envisioned for performance in the contract specifications (approximately one month), the amount of time estimated to reprint the job (expected delivery date sometime in October) requested by this contractor in its August 14 letter, hardly seems reasonable. This is especially true when the facts demonstrate, as they do here, that the contractor deliberately delayed in reproducing the job in a vain attempt to get the Commerce Department to accept the originally tendered goods. The Board also holds that the Contracting Officer followed the proper procedures when he issued the show cause notice on August 5, 1980. This action did not provide an additional extension for the contractor. In Aargus Poly Bag, GSBCA No. 4314, 76-2 BCA ¶ 11,927, the General Services Board discussed the effect of such a show cause order when issued after the delivery date has passed. The Default clause permits the Government to immediately terminate the whole or any part of a contract where the contractor fails to deliver the supplies within the time specified in the contract. However, it is to the mutual benefit of the parties for the Government to forbear where the contractor appears capable of performance and the Government might be willing to accept late deliveries. Thus, in the administration of supply contracts, it has become an almost routine practice for the Government to issue a show-cause notice prior to termination; not so much, in our opinion, to determine excusability, but rather, to gain information relative to the contractor's performance capability. . . . Thus, we conclude that the Government, whatever its motive, may see fit, at any time, to terminate and permit the Appellant [the contractor] to show excusability at a later date under 11(e) of the Default Clause [Article 17(c) of GPO Contract Terms No. 1]. As can be seen from the above facts, the contractor was provided plenty of time to provide a conforming product and its claim that it was not is now rejected. It is apparent that these defects were so serious that they could not be corrected within any reasonable period of time and, therefore, as the defective work was obviously due to the contractor's own actions, the Contracting Officer was justified in terminating the contract. Radiation Technology, supra. DECISION Based upon the above reasoning, the decision of the Contracting Officer to terminate the contractor for default is upheld. Accordingly, the contractor's appeal is hereby denied in its entirety.