U.S. GOVERNMENT PRINTING OFFICE BOARD OF CONTRACT APPEALS Appeal of COLORGRAPHICS CORPORATION ) Docket No. GPO BCA 16-87 March 31, 1989 MICHAEL F. DiMARIO Administrative Law Judge OPINION This appeal, timely filed by Colorgraphics Corporation, 4500 South Garnett Road, Tulsa, OK 74146 (Appellant), is from the June 11, 1987, final decision of William E. Flood, Contracting Officer (CO), U.S. Government Printing Office (Respondent), rejecting Jacket No. 152-343, Purchase Order 62920, and requiring the reprinting of the product at no additional cost to the Government. The decision of the CO is denied. BACKGROUND Respondent, by Purchase Order 62920 of May 2, 1986, awarded a GPO contract Jacket No. 152-343 to Appellant in the amount of $36,320 to print, bind, and ship by June 30, 1986, a certain 4-color, 32-page pamphlet entitled "Career for Scientist and Engineers," and three related forms for the Department of the Navy pursuant to its Requisition No. 6-20191. The Purchase Order was made in strict accordance with Appellant's competitive bid dated April 24, 1986, and Respondent's specifications (Rule 4 File, hereinafter "R4 File," Tab D) dated April 10, 1986, as amended by Amendment No. 1 dated April 14, 1986, and Amendment No. 2 dated April 22, 1986. (R4 File, Tab B.) Subsequent Contract Modifications No. 2291 and 2420 made during the course of Appellant's performance brought the ultimate contract price to $42,170. (R4 File, Tab E.) The specifications in pertinent part called for the Government to furnish Appellant camera copy mounted on art boards together with necessary transparencies (R4 File, Tab B, page 3) from which Appellant, supplying all other materials and operations, was then to manufacture the ordered products. The pamphlet itself was to be produced in 15,165 copies, of which 15,000 (R4 File, Tab B, page 4) were to be shipped f.o.b. destination to the Naval Surface Weapons Center (NSWC), Silver Spring, MD. The finished pamphlet was to be 8 1/2" x 11" in size with a wraparound cover. (R4 File, Tab B, page 3.) The paper stocks for the cover and text were to be selected by the Appellant from any one of certain specified stocks (R4 File, Tab B, page 6), samples of which were to be approved by Respondent prior to the commencement of production. (R4 File, Tab B, page 5.) After printing, the cover stock (covers 1-4) was to have its entire surface coated with a gloss varnish or lacquer to prevent scratching and smearing. (R4 File, Tab B, page 7.) In addition, the contractor was to "Die-cut, fold and glue extension on cover 4 to the inside of cover 3 to form a 3" pocket." The cover was to be saddle-wire stitched to the pamphlet text materials in 2 places (R4 File, Tab B, page 7) with the contractor having the option of first putting a stitch in the text before gathering the text with the cover. (R4 File, Tab B, page 2.) A copy of each of the 3 related forms was to be inserted in the pocket. (R4 File, tab B, page 7.) Two of the forms (items 2 & 3) were first to be folded "from 8 1/2 x 11" to 3 11/16 x 8 1/2" with 2 parallel wraparound folds." The other form, item 4, was to be 8 x 10 1/2" in size and inserted unfolded. (R4 File, Tab B, pages 3 and 7.) Two fully completed advance sample copies of the pamphlet were to be furnished to Respondent for "final approval" prior to Appellant's binding of the entire production quantity. (R4 File, Tab b, page 7.) (The Product Quality for both printing and finishing attributes was to be equal to the Level I standards for such attributes as set forth in the GPO Quality Assurance Through Attributes Program (QATAP, GPO Pub. 310.1 revised June 1981)). The QATAP itself was made a part of the contract by reference thereto in the first paragraph of the specifications. (R4 File, Tab B, page 1.) During the course of performance, Appellant furnished Respondent the required advance of binding samples. These were in turn inspected on August 4, 1986, by NSWC's Bob Coleman and Wanda J. Ohm, who found that the cover fold was askew from the text and needed to be corrected, but that subject to the correction of the cover, the product was "O.K.". (R4 File, Tab E.) In recognition of this finding, the CO made a notation on his official job schedule that it was "OK to bind" and that the corrections were "minor" "AA's," i.e., author's alterations rather than contractor's errors. He also noted that the contractor's representative "Lorrie" was notified 8/5 at 8:30 a.m., and that the samples were express mailed to Appellant on 8/5/86. (R4 File, Tab E.) At this time, the "ship complete" date was automatically adjusted to August 12, 1986, pursuant to the contract terms because of these and other delays. (R4 File, Tab E, page 10.) However, on August 7th, the CO apparently agreed to a further adjustment to August 28, 1986, because the delays had forced the Appellant to miss its schedule for die- cutting and binding. This change was accomplished by Contract Modification 2420 dated August 11, 1986. (R4 File, Tab E, page 14.) Thereafter, by letter dated August 28, 1986, the CO requested that Appellant "show cause" why the completed product had not been shipped. In response the Appellant, by letter of September 5, 1986, indicated the ship date had been extended by NSWC through September 5, 1986, due to modifications which were still being initiated at the time of the show cause letter. Appellant further stated that the product would be shipped that date, as it in fact was. (R4 File, Tab E, page 16.) Contract Modification 2443 of September 4, 1986, effectuating this last change in pertinent part reflects that: [T]he trim size is changed from 8 1/2 x ll" to 8 1/2 x l0-15/16" with the intent to create the appearance of a more square image on the covers. This change is made after the printing of the text and covers. . . . . This change, as agreed, shall result in no additional cost to the government. (R4 File, Tab E, page 15.) On September 12, 1986, Judith Walter, Printing Specialist, Naval Printing and Publications Service, Naval District of Washington (NPPSO-NDW), advised Respondent that shipment had been received by NSWC and that the 13 copies of the pamphlet which she enclosed, selected randomly, one from each of 13 boxes, represented an unsatisfactory Level I printing job. Accordingly, the NSWC was rejecting the job for the following reasons: a. When the brochure is closed, the cover is larger than the text pages by 1/32" to 3/32" on the vertical edge. b. The bottom of the back cover is not flush with the bottom edge of the other pages; the bottom edge is approximately 1/16" off. c. Many covers are marred; the gray ink did not dry before packing or the covers were scuffed in packing. d. The spot varnishing of some of the text photographs is out of register. R4 File, Tab F. Walter further advised that notwithstanding the errors, NSWC would keep and pay for 1,000 copies of the pamphlet in order to get through the initial stages of their recruiting season which had already begun. She requested a reprint of the remainder of the order "except for the items stuffed in the back pocket, these can be used for the reprinted job." (R4 File, Tab F, supra).An examination of the samples completed by Christine C. Ridge, Quality Inspection Technician, Quality Assurance Section, GPO, on September 10, 1986, confirmed 10 major defects in attribute P-2 because of extraneous marks (scratches). Ridge recommended rejection and reprinting of the product. (R4 File, Tab G.) On her inspection report Ridge noted the lot size as 15,165, random sample size as 32, but that only 13 samples had been received. Thereafter, by letter dated October 15, 1986, the CO advised the Appellant of the rejection because of the P-2 defect, and that approximately 500 copies of the order would require reprinting at no additional cost to the Government. (R4 File, Tab H.) Appellant picked up and examined the entire order, corrected the noted defects, and redelivered the pamphlets by October 20, as directed. However, on October 27, 1986, Walter again sent a "Notice of Quality Defects" to Respondent. This time the Notice advised that the brochures had the following defects: "Trim: wrong size/not flush/not square; Excess glue; Damaged cover - cuts/scratches," and that "[s]ome brochures are water damaged; in some, the pages are stuck together; and some have been unsatisfactority [sic] stapled, i.e., stapes [sic] are broken or not completely closed." She further stated that "[q]uality does not meet specifications and the material can not be utilized. It is requested that the entire order be reprinted or corrected." (R4 File, Tab I.) Appellant's Billing and Contracts coordinator, Melinda L. Peck, telephonically contacted by Ridge on October 31, 1986, and told of the Navy Department complaint. Peck purportedly said that she was afraid that the Navy would say something about the staples but could not understand the claim of water damage since Appellant's plant had not been affected by a recent flood in their area which apparently was widely publicized. Ridge acknowledged in her notes of the conversation that she, herself, saw no water damage in the samples but only "some wrinkles due to the shrink wrap being to [sic] tight." (R4 File, Tab J, Notes 10/31/86.) An extensive inquiry, including checks with the transportation company and personal inspection by Ridge resulted in an entry by Ridge in her notes dated December 16, 1986, that in her opinion there was no "water damage at all. What they thought was water damage are some wrinkles in the text caused by the shrink wrap . . . ." (R4 File, Tab J.) Ridge informed Darwin Hughes, Respondent's Chief of Quality Control, of her findings. Hughes and Ridge then telephonically spoke to NSWC's Ohm. Ridge reported in her notes that: Wanda mentioned that after the shipment went back to the contractor she heard on the news that Tulsa, OK was flooded and thought about her books being there in the flood. The gentleman that was with Wanda mentioned that this is not what he considers to be quality level I printing by comm'l standards and pointed out that the staples look bad because the contractor did not staple through the same holes in the text, when the new covers were put on. He also pointed out what they were talking about "[V]arnish out of register." I told them that the varnish is off a little but not enough for a Q.L.I. per the QTAP. Wanda said that she is more upset over the covers not being even with the text than the other things and that they don't feel that they got a good Q.L.I. product for the $36,000.00 they paid for this job. R4 File, Tab J, Notes 12/16/86. As a result of the conversation, Hughes directed Ridge to pull an additional sample of 125 pamphlets. According to Ridge's notes of that conversation, an examination of "some" of these additional samples by Quality Control's Jerry Flemion that afternoon (12-17-86) revealed that "the halftones, Register [sic] and printing are all good and are acceptable to the government but the text is 1/8" different in size from the cover." (R4 File, Tab J, Notes 12/17/86.) Ridge next noted that she "got opinion of three professional bookbinders, Robert Denisac, Tim Gallagher, and Ray McCrae, they feel that this job would be hard to do any better." (R4 File, Tab J, Notes 12/18/86.) On December 19th, Ridge and Hughes spoke to two more of Respondent's bookbinding experts, Frank Grimes and John Crawford. Ridge's notes of those conversations paraphrase Grimes as saying: 1. Not a Q.L.I. job due to overhanging cover. 2. but he's got a decent looking job 3. would rather have it overcut than undercut. and Crawford as saying: 1. not a Q.L.I job 2. could have done a little better job 3. Text is under cut 4. Pocket creates a problem 5. Hard cover to do with squars [sic]. 6. "Bastard of a cover. That same day, the following information was given to the Navy Department by Respondent's representative: 1. job is rejectable. 2. some overhang of covers due to text under cut. 3. There are problems with using this type of cover, if reprinted there should be a slight improvement but don't expect more than that. 4. We advise a discount. 5. . . . . R4 File, Tab J, Notes 12/19/86 There followed various conversations between Respondent's and Navy's personnel respecting the recommended discount. On January 8, 1987, the Navy advised that it would accept a 25 percent discount. (R4 File, Tab J, Notes 1/8/87.) However, the following day it put this decision on hold. (R4 File, Tab J, Notes 1/9/87.) Subsequently, on January 12, 1987, it rescinded the discount decision and asked for a complete reprint. (R4 File, Tab J, Notes 1/12/87.) As a result of Navy's changed position, GPO procurement personnel held a meeting among themselves on January 13, 1987. Ridge's notes of that meeting reflect that Hughes opined that humidity and not water caused the purported "water damage"; that the uneven cover was the result of a poor design, and that "anyone who would design a cover like this is an idiot. There are no printing problems with the cover. The cover has to be put on separately after the text is printed. The printing inside is OK. . . . . No one can do a better job." The notes also reflect that Flood, the CO, said that the pamphlet is a usable product and that the people with whom the procurement personnel were dealing obviously didn't know anything about printing, and that it is was up to the procurement personnel to persuade the Navy to take a discount. Daniel Clurman, Chief, Contract Management Branch, then opined that the Navy Department "has the last word, . . . if they want a reprint that's what they should get." Hughes then said that if Respondent "made the contractor reprint the third time there's no guaranty they'll get any better of a product, this design makes it difficult for any QLI contractor to do a better job." Clurman then said that Respondent should give Appellant written notice of the problems which had been found. (R4 File, Tab J, Notes 1/13/87.) Accordingly, the following letter was sent to Appellant by Hughes that same day: A quality evaluation was made of this product you corrected and delivered on October 16, 1986. From the first inspection the product was found to have scratches on some of the covers of which you corrected 500 copies out of 14,165 and delivered on October 16, 1986. Our second inspection revealed defects under the following attributes: Contract Terms No. 1, 2-10 Quality (stitching) P-2: Extraneous Marks P-7: Type Quality and Uniformity F-1: Trim Size (text undertrimmed) F-7: Excess Glue F-8: Damaged Pages This is to inform you of these defects, notifying you that this product is rejectable. We are currently negotiating with the agency to resolve this matter, you will be notified as soon as a decision is reached. R4 File, Tab J. Ridge next noted in her file that a meeting was held with the Navy on January 20, 1987. In the meeting Hughes reportedly reaffirmed his belief that "it was not water damage and that the varnish is not off register far enough to be concerned about, but the glue problem will be corrected. There will be problems in reprinting the cover because the cover must be prepared separterly [sic] and the cover has to be a little oversize with some skewness due to the pocket on the back." Clurman said that Respondent went to its bindery department and discussed the product with them, and that "our chances of this job coming out any better is slight." (R4 File, Tab J, Notes 1/20/87.) Flood then told the Navy personnel that "we want you to take the 25% discount because the average lay man will not notice anything wrong with the folder." Navy personnel Coleman and Ohm responded by saying that while they were conducting their inspection at Appellant's plant (GPO's) "John Bassett said that the overall printing was not good." Flood responded by saying "[T]hat's funny John Bassett told [me] that the [contractor] did a fantastic job." Coleman and Ohm then alleged that "this job started out wrong because they ordered wrong inferior grade of paper." Nevertheless, after some further discussion, a decision was reached to ask Appellant to reprint the job a second time. (R4 File, Tab J, Notes 1/20/87.) Accordingly, on January 27, 1987, Ridge called Peck and explained the defects. Peck agreed to reprint but was unsure of scheduling because of the need to obtain the required paper. (R4 File, Tab J, Notes 1/27/87.) The following day, January 28, 1987, Peck advised Ridge that she was "sending Ridge a letter with a xerox copy of a note signed by Coleman and Wanda Ohm." She explained that "a pamphlet with a pocket normally has about 8 pages, this one has 32 pages and when the cover is closed with the pocket on the cover lookes [sic] skewed due to the amount of pages in the pamplet [sic] & the pocket." (R4 File, Tab J, Notes 1/28/87.) By letter dated January 29, 1987, Peck transmitted a copy of Coleman's and Adams' August 4, 1986, note, supra, at 10. The transmittal letter in pertinent part stated: As per our phone conversation, enclosed is a copy of the inside cover of a book returned back to us in August 1986, which had been an advance copy sent to the agency for approval. It states cover fold was askew from text, but the cover was not the problem. The pocket makes the cover thicker at the lower right which causes the text at the bottem [sic] to push out more than the top of the book. You can see the text sticks out beyond the cover by about 1/8 on [sic] an inch. In order for us to repair it, we had to trim the face l/8" under size in order to comply with the instructions of Bob Coleman and Wanda Ohm without redesigning the cover. This was the only way to correct the problem and the note said after correcting it was okay to process. Reprinting this job at 8 1/2" would not provide a different result unless the pocket was redesigned to be further away from the spine. Without a design change the text will again push out into an over hang position on the face. I hope this clarifies the note written. ColorGraphics proceeded only after press checks, binding sample okays, and followed the instructions of the end user, we feel reprint without design changes would not alter the results. Kindly advise us of your thoughts. R4 File, Tab J. On January 30, 1987, Peck advised Ridge that Appellant would "fight not to reprint." On February 2, 1987, the CO issued the following letter to Appellant: An examination of samples of the product your firm produced for Department of the Navy has revealed defects under the following attributes: Contract Terms No. 1, 2-10 Quality (stitching) P-2: Extraneous Marks P-7: Type Quality and Uniformity F-1: Trim Size (text undertrimmed) F-7: Excess Glue F-8: Damaged Pages Based on the results of this inspection, the order has been determined rejectable, and will require reprinting. The reprinting will be accomplished at no additional cost to the Government in strict accordance with the specifications. As agreed, the rejected copies will be picked up on February 3, 1987. As mutually agreed upon in our telephone conversation of February 2, 1987, the reprinting and delivery of this product will be accomplished by March 25, 1987. R4 File, Tab K. On February 12, 1987, during production of the second reprint, Peck asked Ridge to advise her as to "what size exactly" were "the text and the cover to be." Later that day Hughes, at Ridge's request, informed Peck that the text was "to be 8 1/2 x 10 15/16 and the cover to be flush with the text at 8 1/2 x 10 15/16 but if the cover needs to be changed due to walking, that the cover size can be changed but the text and cover still must be flush . . . the job must be cut and folded on a bias. Cover over 1/32-text not under." Hughes also suggested to Peck that she check with Appellant's "pros in the bindry [sic] to see what they will need to do to get what we want . . . maybe they could change the design of the pocket, like not having a fold over to be glued close to the bind . . ." Hughes asked Peck for Appellant's suggestions on how to redesign the cover because Peck "kept saying that to get what the agency wants the cover needs to be redesigned." (R4 File, Tab L, Notes 2/12/87.) Various telephone conversations between Appellant's personnel, including its President, Robert Diehl, and Respondent's personnel followed. Ridge's notes of conversations between Hughes, Diehl, and herself for February 19, 1987, reflect that they told Diehl "that he must maintain text 1/32" from the cover; that Respondent had had a meeting with the Navy and addressed the defects . . . we even ask [sic] for a discount. We got their complaints all out in the open but we are dealing with an impossible artist and designer. The art display is extremely difficult. . . . . Used glue tape instead of glue. [Diehl] suggested that the pocket be made smaller 8 1/8 x 3 instead of 8 3/8 x 3 to get the pocket out of the gutter . . ." (R4 File, Tab L, Notes 2/19/87.) When the Navy Department was contacted for its approval of these changes, it would not concur with the change in the size of the pocket. (R4 File, Tab L, Notes of 2/24/87.) By letter of the CO dated March 5, 1987, Diehl was informed of Navy's response. Diehl was also advised of the following pertinent prerequisites respecting the second reprint: 5) Maintain cover and text preferably flush but undercut text acceptable no more than 1/32" for face trim, and no more than 1/64" top and bottom trim. Revert back to the original trim size of 8-1/2 x 11 and disregard the supplemental agreement dated September 4, 1986, Modification #2443. 6) Use glue strip tape for pocket on cover 3 7) Apply a dry varnish instead of a wet varnish on cover 1 & 4 8) Try to retain a humidity level sufficient to prevent any warpage 9) Watch type quality (doubling) within text . . . . R4 File, Tab L, page 11. On March 9, 1987, Diehl contacted the CO advising that Appellant was going to press that week. Diehl renewed his request to reduce the pocket size ("even 1/8" will help"). This time the Navy gave its approval making the pocket size 8 1/4 x 3 instead of 8 3/8 x 3 inches. (R4 File, Tab L, page 14.) The job then went into production. In this phase, during the bindery inspection, Respondent's representative telephonically told Navy's representative (Coleman) that "most of the job is right on the edge (flush) but some are off a hair over the cover down at the bottom besides the pocket." Coleman told Respondent's representative "to go ahead with the job, they [Navy] will take it." Subsequently, Contract Modification 818 dated March 24, 1987, was issued by the CO on April 8, 1987, and agreed to by Diehl on April 10, 1987. The agreement incorporating various aspects of the previous negotiations of the parties reported, supra, in pertinent part stated: Covers (Item 1): Coat (after printing) the entire surface of covers 1-4 with a dry gloss varnish or lacquer to prevent scratching and smearing. Additionally, (page 5 of 8, paragraph 6) are amended to read: "Binding: (Item l) Cover: Die-cut, fold and glue using a glue strip tape extension on cover 4 to the inside of cover 3 to form a pocket 8-1/4 x 3". Saddle-wire stitch cover and text in 2 places. The contractor is to maintain cover and text preferably flush but undercut text acceptable no more than 1/32" for face trim, and no more than 1/64" top and bottom trim. Revert back to the original trim size of 8-1/2 x 11" and disregard the supplemental agreement dated September 4, 1986, Modification #2443. These changes shall result with no increase to the contract price. R4 File, Tab L, page 16. By letter dated May 29, 1987, Appellant advised the CO that it had completed the second reprint pursuant to Respondent's instructions, that the Appellant incurred costs in excess of $30,000 in order to comply with the instruction, that the reprint was unjustified in Appellant's opinion, and placed an undue hardship under Appellant, and that a contract modification therefore should be issued authorizing Appellant to be paid for the reprint. Appellant requested the CO's decision on this request pursuant to the disputes article, Part 2, Article 2-3 of U.S. Government Printing Office Contract Terms No. 1. (R4 File, Tab M.) In response, the CO, by letter dated June 11, 1987, styled a "final decision," denied the appeal. (R4 File, Tab N.) Appellant then filed its Notice of Appeal with this Board (R4 File, Tab O), followed by its Complaint which in pertinent part, as its claim for relief, states: 11. Colorgraphics attempted in good faith to perform its obligations under the GPO Purchase Order and the GPO Contract Terms. When the order was first shipped and Colorgraphics was advised of extraneous marks on the Pamphlet covers, Colorgraphics accepted the return of the Pamphlets and replaced those which had been scratched at its own cost including the cost of the return shipment to Tulsa and reshipment to the Purchasing Agency. Colorgraphics was not advised of any deficiencies or defects in the text of the Pamphlet during that period. 12. The erroneous report by the Purchasing Agency to GPO and to Colorgraphics that the order had suffered "water damage" during the October, 1986 reshipment caused extensive delay, confusion and cost to Colorgraphics in making its good faith effort to determine the cause and extent of the reported "water damage." Only after the "water damage" report was found to be in error was Colorgraphics advised by letter dated January 13, 1987, of defects found in a "second inspection". 13. None of the defects referred to in the GPO letter dated January 13, 1987 pertaining to stitching, extraneous marks, type quality and uniformity, excess glue and damaged pages were sufficient to justify the rejection of the work nor were they of a nature to prevent the use of the Pamphlets for their intended purpose. 14. The problems with the trim size of the cover and the skewing of the text were caused by the design of the Pamphlet produced by the Purchasing Agency. The job specifications required that the cover fold for the inside pocket be 8-3/8" wide, which forced the inside edge of the pocket into the gutter of the cover thereby distorting the squareness of the cover. The 32 pages of text could not be inserted and bound over the thickness and width of the pocket without skewing the text and causing the difficulties in meeting the specifications for face, top and bottom trim. The specification that the pocket on the inside of the back cover be 8-3/8 x 3" was not necessary for the pocket to function as intended. The GPO staff acknowledged in their review of the product that the design of the cover was the cause of the trim and skewing problems. The Purchasing Agency and the GPO acknowledged the difficulties in production caused by the design of the cover and the thickness of the text and finally approved a reduction of 1/8" in the width of the pocket and modifications in the face, top and bottom trim specifications as set forth in the March 24, 1987 Contract Modification by the Contracting Officer. 15. The rejection of the job by the Purchasing Agency was unreasonable and without due regard to the opinions and evaluations provided by the professional printers and binders on the GPO staff. 16. An equitable reduction in the contract price would have adequately protected the interests of the GPO and the Purchasing Agency and would have avoided the harshness of the economic penalty imposed upon Colorgraphics by the rejection of the entire order and the requirement for reprinting. Official File, Tab 5. Appellant's prayer for relief is for the issuance of a contract modification in the amount of $35,596.46 as the actual and direct costs incurred by Appellant in reprinting and reshipping the pamphlets. A general denial of Appellant's allegations was entered in the record on behalf of the Respondent pursuant to Rule 6.(b) of The Rules of Practice and Procedure of this Board, GPO Instruction 110.12 dated September 17, 1984. Appellant elected a formal hearing pursuant to Rule 8. Accordingly, a prehearing telephone conference was held on February 22, 1988, to discuss preliminary matters. At that time Appellant's counsel requested documentation of the factual basis underlying the Contracting Officer's rejection letter of February 2, 1987. (R4 File, Tab K.) Respondent's representative stated that he could not then locate the documentation but would attempt to locate it after the conference and if found, furnish it to the Board and Appellant. With that agreed to, Appellant's counsel advised that no further hearing would be necessary and the matter could be decided upon the written record, provided it could be determined that certain GPO employees identified, supra, were accurately quoted in the R4 File. Respondent's representatives agreed to this arrangement. The parties also requested that they be allowed to file cross and reply briefs on the issues presented. The Board agreed. As a result of the Prehearing Conference held February 22, 1988, Respondent supplemented the record on February 23, 1988, with an inspection report by Ridge dated December 16, 1986, as the underlying documentation for the CO's February 2, 1987, rejection letter. The report in pertinent part stated: Defect Breakdown by Attributes Defect Class _______________________________ Major Critical Contract Terms No. 1, 2-10 Quality 19 (Stitching) P-2 Extraneous Marks (scratches on cover) 2 P-7 Type Quality and Uniformity (Doubling) 12 F-1 Trim size (text undertrimmed) 102 F-7 Excess Glue 15 F-8 Damaged Pages (Humidity) 2 TOTALS 152 Number of Defects/100 Items AQL (No. Majors + No. Criticals divided by Sample Size) 100 6.5 Number of Critical Defects/100 Items (No. Criticals divided by Sample Size) 100 1 Accept x Accept with Discount 25 % Reject and Reprint ___ R4 File, Tab P. Subsequently, by Joint Stipulations received by the Board on April 12, 1988, the parties indicated that Messrs. Clurman, Crawford, Denisac, Flood, Gallagher, Grimes, Hughes, and McCrae had reviewed the comments respectively attributed to each of them in the notes contained in Tab J (See page 13, supra.), and that each agreed he was accurately quoted. Additionally, Respondent agreed to stipulate that Jerry Flemion, a former employee, would testify to the accuracy of the quote that "the text is 1/8" different in size 20 from the cover." attributed to him as "Jerry F." in Ridge's notes of December 4, 1986. Cross and reply briefs were duly filed with the Board and the record thereafter settled on June 6, 1988. The appeal now comes to the Board in this form for decision. ISSUE The issue presented by this appeal is whether or not Appellant under a theory of implied Government warranty of the adequacy of the specifications is entitled to a modification of the contract price for the actual and direct costs incurred by it in printing and reshipping the pamphlets. The resolve of this issue turns upon: (1) Whether there was such a warranty respecting the pamphlet's design; (2) Whether Appellant followed the design to the letter; (3) Whether the skewness of the pamphlet cover was caused by the defect; and if so, (4) Whether the defects other than trim size reflected in the inspection report of December 16, 1986, can be relied upon by Appellant to support the rejection; and if so, (5) Whether rejection was in fact based upon such other defects. FINDINGS OF FACT AND CONCLUSION OF LAW Examining the stated issue and questions in light of the record and applicable Government contract law, the Board finds that: (1) There was an implied warranty of the accuracy of the specifications with respect to the design of the pamphlet, including its pocket. In Consolidated Diesel Electric Corp., ASBCA 10486, 67-2 BCA ¶ 6669 (1967) at 30,951-52, the Armed Services Board of Contract Appeals stated: The Government's implied warranty of the adequacy of its specifications is based on its responsibility for the specifications rather than any presumed 'superior knowledge' in the sense of greater expertise. When one of the parties to a contract undertakes to prepare the specifications, that party is responsible for the correctness, adequacy and feasibility of the specifications, and the other party is under no obligation to check and verify the work product of the party who assumed responsibility for the preparation of the specifications, even though he may be as much or more of an expert than the party who prepared the specifications. Courts have held many times that a bidder need not verify the correctness and adequacy of Government specifications prior to bidding. Ithaca Gun Co. v. United States, 176 Ct.Cl. 477 (1966), Harvey-Whipple, Inc. v. United States, 169 Ct. Cl. 689 (1965.) However, before applying the implied warranty of specifications it must be determined whether the problem encountered is caused by an improper Government design. In this regard, the boards and courts often refer to the specifications as design specifications when the Government has dictated the details of performance and as performance specifications when the details are left to the contractor's discretion. In Monitor Plastics Co., ASBCA 14447, 72-2 BCA ¶ 9626 (1972) the Armed Services Board at 44,970-71 stated: DESIGN specifications which set forth precise measurements, tolerances, materials, in process and finished product tests, quality control, inspection requirements, and other specific information. Under this type specification, the Government is responsible for design and related omissions, errors, and deficiencies in the specifications and drawings. PERFORMANCE specifications set forth operational characteristics desired for the item. In such specifications design, measurements and other specific details are not stated or considered important so long as the performance requirement is met. Where an item is purchased by a performance specification, the contractor accepts general responsibility for design, engineering, and achievement of the stated performance requirements. The contractor has general discretion and election as to detail but the work is subject to the Government's reserved right of final inspection and approval or rejection. Turning to the specifications in the instant case, we find that they detail the exact papers to be used for cover text and related forms; the size, location, and method of construction of the inside pocket; the folding and the insertion of the forms; and the pocket and binding options available to Appellant with respect to gathering and stitching the text and affixing the cover thereto. We conclude from this that the specifications, by their nature, are "design" specifications rather than "performance" specifications, thus our finding of warranty. (2) Appellant executed its production of the pamphlet in strict accordance with Respondent's design. Appellant has affirmatively asserted that it followed the specifications of the pamphlet to the letter and there is no evidence in the record to the contrary. On the other hand, there are substantial admissions against interest by Respondent's technical personnel, including its Chief of Quality Control, to the effect that a better job could not be done, from which we impute accuracy to Appellant's assertion. (3) The skewness of the pamphlet cover (trim size defect) was caused by Respondent's design. This conclusion is supported by the numerous admissions against interest by Respondent's technical personnel, supra. Moreover, the pamphlets were satisfactorily manufactured upon the Government's agreement to modify the specifications in accordance with Appellant's advice. (4) Other defects in Ridge's inspection report cannot be relied upon to support rejection in this case given the particulars of the Appeal Record cited by Appellant in its "Reply Brief," which such particulars the Board has examined and found to be sufficiently contradictory to the inspection report findings to make them of doubtful accuracy. (5) There is substantial evidence supporting a conclusion that the sole underlying basis for the rejection was the desire of GPO procurement personnel to mollify their customer agency, and that defects other than trim size were not the direct cause of rejection. Accordingly, it is the decision of this Board that the appeal be granted and the matter remanded back to the CO for a determination of the quantum of money to which Appellant is entitled as actual and direct costs incurred by it in printing and reshipping the pamphlets. Such determination is to be made in accordance with standard cost determination procedures, including audit, if necessary. REVERSED AND REMANDED.