U.S. Government Printing Office Contract Appeals Board Appeal of Central Data Processing, Inc. January 7, 1975 Jay E. Eisen, Member Panel 74-14 Re: Contract No. 1749, Conversion Services by Optical Character Recognition The appellant, Central Data Processing Incorporated, hereinafter also designated as CDP, took a timely appeal under the disputes clause of the contract, appealing the contracting officer's decision, dated September 6, 1974, denying its request of April 10, 1974, for contract modification and claim for additional payment. CDP notified the Public Printer by letter, dated October 1, 1974, of its appeal of the decision of the contracting officer. CDP requested an extension of time for the submission of documentary material up to and including December 17, 1974. No written supporting evidence has been received by this office as of December 30, 1974. Consequently, an opinion and conclusions have been formulated on the basis of the material available in the file. The contract, beginning September 20, 1973, and covering the period through March 15, 1974, provided that the contractor will furnish the following service: "Section B - Description/Specification 1. General. The Contractor shall convert mailing list information by Optical Character Recognition (OCR) to computer compatible magnetic tape in 800 BPI 9 - track EBCDI Code 80 - column card image unblocked. The tape shall be provided to the contractor by the Government. The Contractor shall: a. Pick up typed sheets (source documents) from Government Printing Office. The quantity to be processed will approximate 1600 pages per week. b. Scan the sheets which have been typed on an IBM Selectric Typewriter with an OCR-4 type element. c. Correct rejected sheets while maintaining batch integrity. d. Produce a 9-track 800 BPI-IBM System 360 compatible magnetic type, containing the converted data. e. Deliver processed source documents and magnetic tape output to the Government Printing Office." The following further appears in "Section C - Requirements" of the contract: "1. This is a requirements contract for the services specified in the Schedule, and for the period set forth therein. Performance of services shall be made only as authorized by orders issued in accordance with the clause entitled 'ordering.' The quantities or services specified herein are estimates only, and are not purchased hereby. Except as may be otherwise provided herein, in the event the Government's requirements of services set forth in the Schedule do not result in orders in the amounts or quantities described as 'estimated' or "maximum' in the Schedule, such event shall not constitute the basis for an equitable price adjustment under this contract." (Emphasis added.) Similarly, Solicitation No. 10414, Page 5, incorporated into the contract provides in pertinent part the following provision: "4. FIXED PRICE REQUIREMENTS TYPE CONTRACT This solicitation will result in a requirements type contract. The quantities specified are estimated amounts only. The Government's obligation under this contract is limited to the requirements that it will purchase all of the services of the type set forth in the schedule of the contract awarded which it requires during the contract period." (Emphasis added.) The GPO Purchase Order No. 1749 reads "Data Conversion of Mailing Lists by Optical Character Recognition (OCR), $4,761.00 beginning September 20, 1973, through March 15, 1974. In accordance with your offer dated September 17, 1973." The offer (Schedule A - Services of Solicitation) lists four types of services with the price stated in the amount of $.70 per 100 input records for the separate services. In its complaint of April 10, 1974, CDP, asserts in pertinent part that: 1. GPO has never met the volume levels estimated on either a weekly basis or in overall total. 2. The contract award was for $4,761.00. At the time the contract period expired, CDP's billing was approximately $1,300 or 27% of the award. . . . 4. The program which CDP wrote and tested has never been utilized. CDP's program is approximately 75% faster than GPO's; therefore, CDP is using 75% more machine time than projected. 5. The program cost of $1,740 counting salaries and machine test time was meant to be absorbed over approximately $7,500 worth of scanning . . ." Appellant, therefore, requests and claims the following: "1. A $40.00 minimum charge per pickup be applied to present and completed work. 2. An additional charge of $3/M records be applied to all work scanned under GPO's old program in order to compensate for the 75% additional machine time. 3. (a) Either an additional payment of $1,740.00 be awarded. This represents 73% of the $1,740.00 programming expense which is unabsorbed (100 - 27% = 73%). (b) Or an add-on award plus additional awards be made until a total of approximately $1,070,000 lines are scanned . . . ." Opinion The issue is whether under this contract, the Government Printing Office obligated itself to call upon the contractor for the estimated quantity of 1600 pages per week or whether GPO's obligation was to call for performance of its actual requirements generated in good faith during the contract period. The appellant's assertions for its claim assumes that the contract is not a requirements contract. A requirement contract is simply one in which the first party promises to supply all the specific goods or services which the second party may need during a certain period at an agreed price. The second party implicitly promises that he will obtain his required goods or services from the first party exclusively (Metro Industrial Painting Corporation, ASBCA No. 6328, 1962 BCA ¶ 3343. The contract is clearly a requirements contract under the definition quoted above, Section C, paragraph 1: ". . . the quantities or services specified herein are estimates only, and are not purchases hereby . . ." Section C, paragraph 2, of the contract provides: "2. Except as otherwise provided in the contract, the Government shall order from the Contractor all the services set forth in the Schedule which are required to be purchased by the Government Printing Office." The tenor of the solicitation, specification, and aforesaid clauses, all provide in effect that the GPO's requirements for services from the contractor will be whatever is required and ordered in good faith. There is no provision in the contract which obligates GPO to place any orders with CDP, except that which is required (42 Comp. Gen. 272). There is nothing in the appeal letter, correspondence, or the contract that points to a lack of good faith on the part of the GPO in ordering only its actual requirements from CDP during the contract period. Since the contract is one for services in which the GPO called for, received, and paid for all of its apparent requirements, CDP's claims lack merit. Further, Section C, paragraph 1 of the contract does not provide grounds for equitable adjustment, and thus, the failure of the Government Printing Office to order the quantity of service as estimated does not constitute a ground for equitable adjustment under this contract. This appeal is denied.