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.