BOARD OF CONTRACT APPEALS U.S. GOVERNMENT PRINTING OFFICE WASHINGTON, DC 20401 In the Matter of ) ) the Appeal of ) ) WINTECH INTERNATIONAL, INC. ) Docket No. GPOBCA 15-95 Jacket No. 378-416 ) Purchase Order 97169 ) For the Appellant: Wintech International, Inc., Chantilly, Virginia, by Richard O. Narum, pro se. For the Government: Kerry L. Miller, Esq. Associate General Counsel, U.S. Government Printing Office. Before BERGER, Ad Hoc Chairman. DECISION AND ORDER Wintech International, Inc. (Appellant), 14231 Willard Road, Chantilly, Virginia, appeals the March 23, 1995, final decision of U.S. Government Printing Office (GPO or Respondent) Contracting Officer James Leonard, terminating for default the Appellant's contract (Jacket 378-416, Purchase Order 97169) for approximately 1 million scannable forms entitled Enlisted Promotion Testing Answer Sheet. The contract was terminated after the forms, subsequent to delivery to and distribution within the Air Force, did not scan properly. For the reasons that follow, the Contracting Officer's decision is AFFIRMED IN PART and REVERSED IN PART, and the appeal therefore is DENIED IN PART and SUSTAINED IN PART. . I. BACKGROUND 1. The contract was awarded to the Appellant, the low bidder, on August 9, 1994. 2. The contract specifications required the forms to "be suitable for scanning on a Scantron 9000/48 Chan. Scanner." They further provided that "[t]he forms produced under these specifications must be guaranteed to function properly when processed through the machine indicated. Forms require precision spacing, printing, and trimming." The contractor was also required to "put into effect and maintain throughout the run, a quality control program that will guarantee that all quality standards will be met." Rule 4 File, Tab A.1 3. After receiving pre-production sample approval, Rule 4 File, Tab H, the Appellant produced the forms and shipped them to the Air Force Publishing Distribution Center in Baltimore in mid- November. 4. In early February 1995, the Air Force sent to GPO a Notice of Quality Defects which stated that the Air Force, upon starting promotion testing in January, found that "50 % of the forms did not scan correctly." The Air Force requested a reprint of the entire job. Rule 4 File, Tab I. 5. On February 16 GPO tested and examined the forms at the Air Force Military Personnel Center, Randolph Air Force Base, Texas in the presence of Air Force and Scantron Corporation officials. (The Appellant declined to have a representative attend. Rule 4 File, Tab K.) The Scantron representative verified that the scanning machine at that location was set to specifications and then attempted to run previously unreadable forms through the machine. They again did not scan. The package of blue label samples (copies randomly selected by the contractor, as required by the contract, and also originally shipped to Baltimore) was then opened and examined. The forms were found to be not trimmed properly and "beyond tolerances." In addition, "the image was spreading to the right and not in alignment with response areas."2 The GPO representative concluded that the "blue label samples indicate that the entire order is rejectable." Rule 4 File, Tab J. 6. Subsequently, the Contracting Officer had several telephone conversations with the Appellant regarding the problem encountered with the forms. On March 20, the Contracting Officer, in a letter captioned "CURE NOTICE," advised the Appellant's president that telephonic attempts on February 28 and March 3, 7, and 13 "to notify your firm of the rejection of the product due to the quality defects noted and the need to establish a reprint date had not resulted "in any satisfactory response from your firm." The letter then "afforded [the Appellant] the opportunity to present, in writing, within three (3) days ..., the measures adopted which will cure such condition." It stated further that "[u]nless we can establish a reprint date, the Government may terminate the contract for default ...." Rule 4 File, Tab L 7. The Appellant's president responded by letter of March 22, stating that the forms were "run identically" to the pre- production forms that had been approved, that notification of the defective forms 3 1/2 months after delivery was "beyond the scope of a 'reasonable' time frame," and that GPO had refused to send a box of forms to the Appellant so that the Appellant could do its own testing. The letter concluded that therefore the company should not be held responsible for the situation. Rule 4 File, Tab M. 8. On March 23 the contract was terminated for default. Rule 4 File, Tab O. A reprocurement contract was awarded on April 6, with the excess cost of reprocurement totaling $3,104.06. Declaration of Philip L. Jones, Chief, Examination & Billing Branch, Procurement Accounting Division, Office of the Comptroller, GPO.3 Neither this amount nor the $11,298.50 paid to the Appellant has been recovered by GPO. II. DISCUSSION The primary issue presented by this case is straightforward enough: did the Respondent properly terminate the Appellant's contract for default? The Respondent argues that the termination was proper for either of two reasons: first, the Appellant furnished a defective product which the Government had a right to reject, and second, the Appellant failed to follow the Contracting Officer's direction to reprint the forms. A default termination is a drastic action which may be taken only for good cause and on the basis of solid evidence, with the contracting agency having the burden of proving the basis for default. Venture, Ltd., GPOBCA 01-96 (September 26, 1997), slip op. at 13-14, 1997 WL 742427. Here GPO has met its burden by providing documentary evidence establishing that testing, visual inspection of the blue label random samples, and attempted use of the forms furnished by the Appellant showed the forms to be defective. At that point the burden shifted to the Appellant to show that these results were in error or otherwise unreliable. C.W. Roen Constr. Co., DOTCAB 75-43, 76-2 BCA ¶ 12,215; McDonald & Eudy Printers, Inc., GPOBCA 06-91 (May 6, 1994), slip op. at 24, 1994 WL 377581. The Appellant, despite being afforded the opportunity to impeach the testing, has not done so--it has offered no evidence at all on the matter. Thus, on this record the Board concludes that the Respondent properly determined that the forms were defective and were rejectable for that reason. Professional Printing of Kansas, Inc., GPOBCA 02-93 (May 19, 1995), slip op. at 67, 1995 WL 488488. That does not end the Board's inquiry, however, as the Board must also determine whether the termination for default itself was consistent with the Government's rights under the contract. The "Default" clause of the contract, GPO Contract Terms, Solicitation Provisions, Supplemental Specifications, and Contract Clauses (hereafter GPO Contract Terms), GPO Pub. 310.2, effective December 1, 1987 (Rev. 9-88), Contract Clauses, ¶ 20, permits the Government to terminate the contract for default if the contractor fails to 1) make timely delivery of conforming supplies, 2) make progress, thereby endangering performance, or 3) perform any other provision. The Standard Register Co., Inc., GPOBCA 25-94 (March 23, 1998), slip op. at 7-8, 1998 WL 350448; Artisan Printing Inc., GPOBCA 15-93 (February 6, 1998), slip op. at 7, 1998 WL 149001. Once delivery is made, however, the Government's right to terminate the contract for default does not survive indefinitely; the general rule is that a contract cannot be terminated for default after the Government has accepted the contractor's tendered goods. The Standard Register Co., Inc., supra, at 8. Thus, the Government's contractual right to terminate a contract for default generally exists only where acceptance has not yet occurred. Even where acceptance has occurred, however, the Government retains certain rights. Automated Datatron, Inc., GPOBCA 25-87 & 26-87 (April 12, 1989), slip op. at 11, 1989 WL 384974. Under GPO's "Inspection and Tests" clause, GPO Contract Terms, Contract Clauses, ¶ 14, acceptance is not conclusive in cases of latent defects, fraud, and gross mistakes amounting to fraud. In such cases, the Respondent may revoke acceptance and ultimately terminate the contract for default. The Standard Register Co., Inc., supra, at 8. Under GPO's "Warranty" clause, GPO Contract Terms, Contract Clauses, ¶ 15, the Respondent may "avoid the conclusiveness of acceptance and ... avail itself of certain remedies after acceptance when furnished goods are found to be defective." French Bray, Inc., GPOBCA 16-96 (August 21, 1998), slip op. at 3, 1998 WL ______. Whether those remedies include termination for default is something the Board has never squarely decided. Accordingly, what the Board must determine is whether GPO terminated the contract for default before or after acceptance and, if the latter is the case, whether GPO's actions were consistent with its post-acceptance rights. When supplies are tendered to the Government pursuant to a contract, the Government ultimately must accept or reject those supplies. Acceptance of the supplies, which may be explicit or implied, is understood to mean that title to the supplies has transferred to the Government and that the Government, except as noted above, may no longer reject them. John Cibinic, Jr. and Ralph C. Nash, Jr., Administration of Government Contracts 833 (George Washington University 1995). The Executive Branch provides regulatory guidance on this subject, specifying that acceptance normally will follow "quality assurance actions" and "shall ordinarily be evidenced by execution of an acceptance certificate on an inspection or receiving report form ...." Federal Acquisition Regulation (FAR) § 46.501. GPO's Printing Procurement Regulation (PPR), GPO Pub. 305.3 (Rev. 10-90), is silent, however, as to how and when acceptance takes place. The only GPO guidance appears in its "Warranty" clause, where the term is defined for purposes of that clause as "the act of an authorized representative of the Government by which the Government assumes ... ownership of existing supplies ...."4 Notwithstanding the absence of GPO regulatory provisions dealing explicitly with acceptance, it is nonetheless clear from the PPR and from GPO contract provisions that (1) quality assurance actions are expected to precede acceptance under GPO's contracting process also, and (2) payment to the contractor may also precede acceptance. In this regard, the PPR, which describes GPO's quality assurance program, see PPR, Chap. XIII, and GPO's standard contract provisions, which include the "Inspection and Tests" clause and incorporate GPO's Quality Assurance Through Attributes Program, GPO Contract Terms, Quality Assurance Through Attributes Program, GPO Pub. 310.1, effective May 1979 (rev. April 1996), see Rule 4 File, Tab A, impose quality assurance requirements and procedures to ensure compliance with contract specifications. Under this program, GPO is expected to determine, before acceptance, whether delivered printed products are defective and, if so, whether they should be rejected or whether the contract price should be discounted. Fry Communications, Inc., GPOBCA 30-94 (March 30, 1998), slip op. at 10, 1998 WL 350492. Moreover, under its "Payments on Purchase Order" clause, GPO Contract Terms, Contract Clauses, ¶ 24, GPO pays its contractors upon receipt of contractor vouchers, which may precede quality assurance inspection, and which has led GPO on more than one occasion to assert that payment alone is not an indicator of acceptance. See French Bray, Inc., supra, at 5; Vanier Graphics, Inc., GPOBCA 12-92 (May 17, 1994), slip op. at 25 n.18, 1994 WL 275102. While GPO obviously is entitled to some appropriate time to test and inspect supplies delivered under its contracts, and while under GPO contracts payment may not be an indicator of acceptance, acceptance cannot be delayed indefinitely. The Respondent is required to notify its contractors "promptly" if, under the "Inspection and Tests" clause, a product is to be rejected. PPR, Chap. XIII, Sec. 1, ¶ 4.g.(2)(v). If that notice is not provided, after some reasonable period of time acceptance may be deemed to have occurred as a matter of law. See, e.g., Snowbird Indus., Inc., ASBCA 31368, 88-2 BCA ¶ 20,618; Tranco Indus., Inc., ASBCA 26305, 83-1 BCA ¶ 16,414, recon. denied, 83-2 BCA ¶ 16,679. What is a reasonable time will vary with the circumstances. For example, a seven-month delay in rejecting water purification tablets was regarded as reasonable and not giving rise to implied acceptance where it took that long to complete necessary testing of the tablets, see Mann Chemical Labs, Inc. v. United States, 182 F. Supp. 40 (D.Mass. 1960), while a three-hour delay in rejecting pork roasts was held to be unreasonable and therefore to have resulted in acceptance. See Max Bauer Meat Packer, Inc. v. United States, 458 F.2d 88 (Ct. Cl. 1972). In addition, regardless of the time involved, acceptance may result where the Government acts in a way that is inconsistent with the contractor's ownership of the delivered supplies, most typically by retaining and using the supplies. John C. Kohler Co. v. United States, 498 F.2d 1360 (Ct. Cl. 1974). Here, the forms were shipped in mid-November 1994. Insofar as the record shows, no inspection or testing of the forms was done at that time. The forms were, however, distributed to more than 100 user activities around the world and then used by more than 30,000 individuals to record their promotion testing answers for the Air Force's January 1995 promotion testing cycle. Rule 4 File, Tab J. It was not until the Air Force attempted to scan those forms that the problems with the forms were noted. Under these circumstances, the Board considers that acceptance occurred prior to the Air Force's notifying GPO of a problem with the forms. First, more than two months elapsed from delivery to the Air Force to the time the forms were placed in use. This should have been ample time for inspection and any necessary testing of the forms, especially since a visual inspection would have shown defects with respect to paper size and "misalignment of timing marks." Rule 4 File, Tab I. The Respondent offers no explanation or reason for the Air Force's failure to at least visually inspect the forms upon delivery and identify a possible problem. Second, it is not disputed that the Air Force took possession of the forms, shipped them to user activities around the world, and utilized them for a promotion testing cycle. This use by the Air Force is hardly consistent with the Appellant's ownership of the forms. See Professional Printing of Kansas, Inc., GPOBCA 28-93 (September 16, 1997), slip op. at 53, 1997 WL 742498. Moreover, that acceptance occurred here is tacitly conceded by the Respondent when it points out, in response to the Appellant's concern that too much time had passed since delivery for the Appellant to be held responsible for the problems with the forms, that the contract contained a "special warranty clause [that] allows the Government 1 calendar year to make any warranty claims."5 Respondent's Brief at 4 n.5. See French Bray, Inc., supra, at 5-6. The Board must now determine whether the Respondent's actions were consistent with its post-acceptance rights under the "Warranty" clause.6 To prevail on a warranty claim, the Respondent must show that it gave timely notice to the contractor, that the defect was the responsibility of the contractor, and that the Respondent did not contribute to the defect. Midwest Bank Note Compnay, GPOBCA 13-95 (June 22, 1998), slip op. at 15, 1998 WL 350489; Vanier Graphics, Inc., supra, at 41-42. These conditions are satisfied here--GPO placed the Appellant on notice of a problem with the forms well within the one-year warranty period, the defects have been identified as those that would occur in the contractor's production process, and GPO established that the scanning machinery on which it ultimately tested the forms was operating properly. That leaves the question of the remedy selected by GPO. The "Warranty" clause provides that the Contracting Officer, within a reasonable time after providing notice of a breach of warranty claim, may either require "the prompt correction or replacement" of nonconforming supplies or retain the supplies and reduce the contract price by an equitable amount. Unlike the "Inspection and Tests" clause, which provides that the Government, upon a contractor's failure to remove, replace, or correct rejected supplies, may terminate the contract for default or take the necessary action itself and charge the cost to the contractor, the "Warranty" clause makes no mention of termination for default and is, in fact, completely silent as to what the Government may do if the contractor fails to follow the Contracting Officer's direction to correct or replace defective supplies.7 Although the Board has issued decisions in cases involving the "Warranty" clause where GPO had terminated a contract for default, see French Bray, Inc., supra (contract terminated for default after kits were found to be defective); Vanier Graphics, Inc., supra (contract partially terminated for default after contractor failed to comply with an order to replace defective items), the Board has never held that termination for default is an available remedy under the "Warranty" clause.8 On the contrary, the Board and its predecessor panels9 have recognized that the "Default" clause remedy does not apply to "Warranty" clause situations because the former deals only with contracts where some measure of performance is still expected from the contractor, see Vanier Graphics, Inc., supra, at 24 n.17, that is, where there is an "executory or unfinished portion of a contract." Industrionics, Inc., GPOCAB 5-82 (October 21, 1982), slip op. at 6, 1982 WL 122516. In the latter case, the panel, pointing out that the contract items had been accepted by the Government, overturned a termination for default and remanded the matter to the contracting officer "to pursue whatever remedy the Government might possess under the warranty clause."10 Id. at 6. As the Board recently noted in The Standard Register Co., Inc., supra, at 8, the courts and other boards of contract appeals, when considering the post-acceptance rights of the Government, have had no difficulty in permitting termination for default when the equivalent of the "Inspection and Tests" clause properly can be invoked, since under such clauses acceptance is not conclusive in cases of latent defects, fraud, and gross mistakes, and termination for default is a specified remedy of such clauses. See, e.g., Jo-Bar Mfg. Corp., ASBCA 17774, 73-2 BCA ¶ 10,311; Makoor Prods. Mfg. Co., GSBCA 5982, 81-1 BCA ¶ 15,135; Triad Inc., ENGBCA 5882, 95-1 BCA ¶ 27,290; see also Garrett v. General Electric Co., 987 F.2d 747 (Fed. Cir. 1993), and Spandome Corp. v. United States, 32 Fed. Cl. 626 (1995). That is not the case, however, when a warranty clause is involved. Warranty clauses are strictly construed, and contracting parties are limited to those rights set forth in the clauses. Dreadnought Marine, Inc., ASBCA 45055, 95-2 BCA ¶ 27,656. This means that the remedies for breach of warranty are limited to those post-acceptance remedies found in the warranty clause of the contract. McGrath & Co., ASBCA 1949, 58-1 BCA ¶ 1,599; see Market Equipment, Ltd., ASBCA 9639, 65-1 BCA ¶ 4,821 (default clause applies to pre-acceptance situations, while warranty clause provides its own remedies for breach of warranty). Accordingly, under supply contract warranty clauses which identify the same limited remedies--correction or replacement, or a reduction in price--as those contained in the GPO "Warranty" clause, a termination for default has been regarded as an improper remedy, see Astubeco, Inc., ASBCA 8727, 1963 BCA ¶ 3,941, even where the contractor failed to correct or replace defective items as directed by the contracting officer. See Ganary Bros., ASBCA 7779, 1963 BCA ¶ 3,721, recon. denied, 1963 BCA ¶ 3,875; see also Kenneth A. Kopf, Warranties and Commercial Supply Contracts: A Need for Definitive Rules, 17 Pub. Cont. L. J. 534, 542 (1988). As one board of contract appeals said in stunningly summary fashion, a termination for default "decision was erroneous in that all supplies had been delivered and accepted. The Government's remedies for any deficiencies in the accepted supplies are ... limited to those available in the warranty provisions of the contract." Auto- Skate Co., GSBCA 7644, 1985 WL 17321. The Board is aware that Professors Nash and Cibinic, while noting that the "[e]arly cases found default termination to be an improper remedy for breach of warranty," state that more recent cases "have found termination to be a proper remedy in certain circumstances." John Cibinic, Jr. and Ralph C. Nash, Jr., Administration of Government Contracts, 894 (Third ed. 1995). The circumstances of the three cases cited in support of that statement are all distinguishable, however, from the typical warranty case and from the situation in this case. In Cross Aero Corp., ASBCA 15092, 71-2 BCA ¶ 9,076, the board allowed a default termination for breach of warranty where the defects were latent and thus acceptance was not final under the "Inspection" clause.11 In M-Pax, Inc., HUDBCA 80-529-C11, 81-2 BCA ¶ 15,410, a termination for default was viewed as proper under broad language in a Warranty of Construction clause allowing the Government the right to "otherwise remedy the failure, defect, or damage, at the contractor's expense." Finally, in Sentell Bros., Inc., DOTBCA 1824, 89-3 BCA ¶ 21,904, recon. denied, 89-3 BCA ¶ 22,219, the board stated that termination is an appropriate post- acceptance remedy "where the Government has a right to recover for defective work under another contract provision." However, as support for that statement, the board simply cited Cross Aero Corp., supra, and M-Pax, Inc., supra; in the Sentell Bros., Inc. case itself, there was no warranty clause and the board concluded that since there also was no latent defect, the default termination was improper. In the Board's view, the logic of the early cases is compelling and has not been vitiated by the cited more recent, easily distinguishable decisions. Accordingly, the Board holds that when GPO seeks a post-acceptance remedy for defective or nonconforming supplies and does so under the "Warranty" clause rather than the "Inspection and Tests" clause, it is limited to the remedies GPO has specified therein, i.e., requiring the prompt correction or replacement of nonconforming goods, or retaining those goods and imposing an equitable contract price reduction; terminating the contract for default is not a permissible option. Moreover, if the contracting officer elects to require correction or replacement and the contractor fails to comply with that requirement, the appropriate course of action for the contracting officer at that point is not a termination for default, but a contract price reduction, which in the proper circumstances may be a reduction to permit recapture of the purchase price. Standard Blackboard and School Supply Co., GSBCA 7255, 86-1 BCA ¶ 18,712; Ganary Bros., supra; Platt Mfg. Co., supra; Dunrite Tool & Die, Ltd., ASBCA 19146, 75-1 BCA ¶ 11,072. Here, the Contracting Officer attempted, telephonically, to establish a reprint date with the Appellant, and finally advised the Appellant in the March 20, 1995 written "Cure Notice" that the "ordering agency [had] requested a reprint of the entire product" and unless a reprint date could be established, the contract might be terminated for default. Two days later the Appellant responded, disclaiming responsibility "for any further cost or action." Rule 4 File,Tab M. Although the Contracting Officer's letter falls somewhat short of an explicit order to reprint, the letter makes it clear that a reprint was being required and that only a reprint date had to be established. The Board considers this a sufficient directive to the contractor to reprint. The Appellant's response, challenging GPO's assessment that the forms were defective, stating that "contacting this firm with a discrepancy claim 3.5 months later is beyond the scope of a 'reasonable' time frame," concluding that the company should not "be held responsible for any further cost or action with regard to this situation," and not offering a reprint date or even suggesting that it was contemplating one, clearly manifests the Appellant's intention not to reprint the forms. Moreover, in its appeal the Appellant does not assert otherwise. Accordingly, the Board finds that the Contracting Officer had an appropriate basis for concluding that the Appellant would not honor its obligations under the "Warranty" clause and reprint the defective forms.12 Under such circumstances, the Contracting Officer was entitled not to terminate the contract for default, but to equitably reduce the contract price to enable the Government to recapture the purchase price.13 Thus, although the termination for default was improper, the Government is entitled to the $11,298.50 paid to the Appellant and sought to be recaptured through the default termination, and to this extent the appeal is denied. See, e.g., Henry B. Katz Indus., Inc., supra. However, the Respondent is not entitled to reimbursement of $3,104.06, the excess costs of reprocurement, as that is a remedy available only when there has been a proper termination for default. See Ganary Bros., supra; Market Equipment, Ltd., supra; Henry B. Katz Indus., Inc., supra. The appeal is sustained to this extent. III. ORDER The decision of the Contracting Officer to recover the purchase price paid to the Appellant in the amount of $11,298.50 is AFFIRMED and the appeal is DENIED with respect to that amount. The decision to assess excess reprocurement costs in the amount of $3,104.06 is REVERSED and the appeal to this extent is SUSTAINED. It is so Ordered. September 15, 1998 Ronald Berger Ad Hoc Chairman Board of Contract Appeals _______________ 1 The Contracting Officer's appeal file, assembled pursuant to Rule 4 of the Board's Rules of Practice and Procedure, was delivered to the Board on June 22, 1995. It is referred to as the Rule 4 File, with an appropriate Tab letter also indicated. The Rule 4 File consists of 19 tabs identified as Tab A through Tab S. 2 The blue label forms were not run through the scanner because dummy forms would not process correctly and it was not feasible to use actual personnel data. Rule 4 File, Tab J. 3 This document was furnished by the Respondent, along with certain others pertaining to the reprocurement action, at the Board's request made during a prehearing telephone conference held on July 15, 1997. At the conference the Board (1) observed that a hearing probably would not be necessary, (2) in light of the Appellant's concern about the February 1995 test and inspection results, provided time for the parties to engage in discovery in connection with further testing of the blue label forms, (3) pointed out the need for GPO to establish its entitlement to excess reprocurement costs, and (4) established deadlines for the submission of (i) any new testing results and (ii) briefs. Neither party filed anything further concerning testing, and only the Respondent submitted a brief. 4 Similar language is found at FAR § 46.101. 5 GPO's standard "Warranty" clause gives the Government 120 days from the date of final payment to assert a warranty claim. The Appellant's contract contained a modified clause that extended the 120-day period to one calendar year. Rule 4 File, Tab A. 6 While, as indicated above, the "Inspection and Tests" clause also provides post-acceptance rights in the event of latent defects, fraud, or gross mistakes tantamount to fraud, there is no suggestion in the record that this clause has application here or that the Government asserted any post-acceptance rights under this clause. 7 Warranty clauses used by the Executive Branch typically do provide a remedy for such circumstances. The "Warranty of Supplies of a Noncomplex Nature" clause, FAR § 52.246-17, permits the contracting officer, by contract or otherwise, to correct or replace nonconforming supplies and charge the cost to the contractor if the contractor fails to correct or replace when directed to do so. See, e.g., Platt Mfg. Co., ASBCA 19,907, 76-2 BCA ¶ 12,016. 8 In both Vanier Graphics, Inc. and French Bray, Inc., the Board was called upon to rule on motions for summary judgment, with counsel for the appellant challenging the timing and/or adequacy of the Government's breach of warranty notice. In neither case did counsel challenge the availability of termination for default as a remedy under the "Warranty' clause. 9 Prior to the creation of the Board in 1984, ad hoc panels heard and decided disputes between GPO and its contractors. The Board cites the decisions of these panels as GPOCAB. While the Board does not consider itself bound by the decisions of the ad hoc panels, its policy is to follow the rulings where applicable and appropriate. See The Standard Register Co., Inc., supra, at 18 n.10; Rose Printing, Inc., GPOBCA 32-95 (December 16, 1996), slip op. at 27 n.28, 1996 WL 812880. 10 An earlier panel seemed to view termination for default as an appropriate remedy after the contractor refused to reprint an order found to be defective. The panel, however, read the "Inspection and Tests" clause and the contract warranty clause together to give the Respondent the right to inspect and reject under the former clause for the period provided by the latter clause. The panel does not appear to have considered whether acceptance occurred prior to the rejection. See Brenner Printing Co., GPOCAB 3-80 (August 25, 1980), slip op., 1980 WL 81266. 11 The Armed Services Board of Contract Appeals (ASBCA) did state that while termination for default was proper under the "Inspection" clause, the termination also was "justified because of appellant's breach of its one-year warranty." In so holding, however, the ASBCA focused on the provision of the warranty clause that entitled the contracting officer to demand repayment of the entire contract price. A careful reading of the decision suggests that the ASBCA, in finding the default termination to have been proper under the warranty clause, meant only that the Government was entitled to recover the purchase price, rather than to all the remedies, such as assessment of excess reprocurement costs, available under the standard default clause. Such a holding would be consistent with earlier ASBCA decisions that technically upheld terminations for default under a warranty clause but only to permit recovery of the purchase price. Excess costs of reprocurement were specifically disallowed as unrecoverable under a warranty clause. See Market Equipment, Ltd., supra; Henry B. Katz Indus., Inc., ASBCA 10026, 66-1 BCA ¶ 5,629. 12 When a contracting officer, exercising his rights under a contract, directs the contractor to take certain action, that direction must be "clear"; a subsequent termination for default because the contractor refuses to comply with that direction will be sustained only if that refusal was positive, unconditional, and unequivocal. Vanier Graphics, Inc., supra, at 52; Sterling Printing, Inc., GPOBCA 20-89 (March 28, 1994), slip op. at 39, 1994 WL 275104. This stringent rule reflects the fact that a default termination in such circumstances is based on the contractor's repudiation or abandonment of the contract. Sterling Printing, Inc., supra, at 37. Here, however, in light of the Board's holding that termination for default is not a proper remedy, the Board sees no need to apply such a strict rule. The concept of abandonment or repudiation of the contract simply is not applicable here--in the post-acceptance posture of this case, the contract has already been performed. Thus, just as there is no contract to terminate for default, there is no contract that can be repudiated and then defaulted because of that repudiation. Moreover, imposition of a price reduction following the contractor's failure to replace or correct is nowhere as prejudicial to the contractor as is a termination for default, as the contracting officer, in his sole discretion, could have imposed the price reduction initially. Cross Aero Corp., supra. Accordingly, for purposes of the "Warranty" clause, the Board considers any reasonable, unambiguous direction to the contractor to correct or replace nonconforming products to be a legally sufficient exercise of the Respondent's warranty rights, and considers any reasonably clear manifestation on the part of the contractor of an ultimate intention not to comply with that direction to be sufficient for the contracting officer to impose an appropriate price reduction. 13 Although the Government generally may recapture the purchase price when the defective supplies are worthless, when the Government retains the supplies the contractor is entitled to the scrap value, if any, of those supplies. ABM/Ansley Business Materials v. General Services Administration, GSBCA 9367, 93-1 BCA ¶ 25,246; Atlantic Hardware & Supply Corp., ASBCA 10450, 66-1 BCA ¶ 5,378. The record is silent here as to any scrap value for the rejected forms.