U. S. Government Printing Office
Office of General Counsel
Contract Appeals Board

Appeal of Maryland Composition
October 9, 1974

Vincent T. McCarthy, Chairman
Alan S. Zuckerman, Member
Essie A. Ablove, Member
Panel 74-4

I. Discussion - General

This is an appeal concerning several contracts for composition
services, involving deductions taken by the Government for
asserted excess charges for measured composition set by the
contractor (ems), and charges for author's alterations (AA's),
plus a demand for type storage payments which the Government
denies is due the contractor.

The contractor filed its appeal through his Counsel, John C.
Armor, on
February 4 and April 17, 1974.  On May 7, 1974, the appeal was
acknowledged and Counsel was advised that

"prior to a consideration of the merits of your appeal, you may
offer such additional evidence in support of your appeal which
you deem adequate to sustain your burden of proof.  Written
submission is preferred, supported by such documentation,
affidavits and the like, which you deem adequate.  In addition
you may, if you desire, submit a brief in support of the legal
position which forms the basis of the contractual relief which
you have requested."

No additional evidence, affidavits or briefs were filed in
response to the foregoing.  However, a letter from Counsel dated
May 9, 1974 was received, which stated in pertinent part that:

"Invoices, detailing all of the work done on all of the disputed
jobs, and describing in full the services rendered under various
contracts, have already been submitted on all the disputed jobs.
. . . By this letter I incorporate by reference all of that
material on behalf of my client, to be considered in the appeal."

Thus the record consists of (1) the invoices submitted by the
contractor which are the subject of the appeal, (2) various
proofs of the jobs in question which are in the possession of the
Government and which show the markings requiring corrections or
alterations in the printed copy, (3) the contracts and other GPO
contract administration records, and (4) the unsworn statements
of the parties offered at the informal hearing detailed below.

The major controversy, leaving aside the question of entitlement
for storage charges demanded, centers around what the contractor
asserts are arbitrary cuts in contractor billings for author's
alterations.  Some of the contracts involved payment for author's
alterations on the basis of time, and others on a per line or per
column line basis.  Involved in the controversy concerning AA's
would be a definition of the term itself, the intent of the
parties and an interpretation of the language of the contracts
(including amendments).

An informal hearing was held on January 21, 1975.  In attendance
were Alan S. Zuckerman, presiding; Calvin A. Cox, President,
Maryland Composition; John C. Armor, Counsel representing
Maryland Composition; and Jack Isemann, and Robert B. Holstein,
GPO, Office of Audits.  During the course of the hearing, the GPO
Superintendent of Composition, Leslie Cox; GPO Manager, Printing
Procurement, G. S. Young; and Supervisor, Examination and
Certification Division, GPO Financial Management Service, George
Wormley were questioned.

Mr. Armor recommended that the review of galleys and other proofs
to be made during the course of the hearing be made on a random
basis for various contracts.  In view of the thousands of pages
of material involved, it was agreed that the hearing would be
held on that basis.

The following claims (primarily deductions for em count) as
indicated on the summary sheet prepared by the GPO and furnished
the contractor were orally withdrawn at the hearing as being not
in dispute.  Accordingly, the following claims are dismissed with
prejudice:

GPO Jacket Number   Amount
397-529   $4,868.00
397-529   772.20
447-708   145.90
465-238   244.72
465-238   35.10
470-631   1,510.60
476-450   196.19
476-450   35.00
723-414   146.60
773-414   30.00
445-125   59.50
461-096   241.31
468-191   421.17

All of the disputed matters involving time charges for author's
alterations involve the subjective judgments of the parties.  The
contractor admits he has no time records to substantiate the time
charges made, and that such charges are "estimated" with
allocations made to printers' errors (contractor responsibility)
and author's alterations (Government responsibility).  In
addition, the contractor has stated he knows "how GPO works" and
allows for the ''additional cost of doing business with the
Government.'' Presumably, some of the additional cost could be
involved with the "Estimating" necessary for billing purposes in
the absence of actual records of time spent.

The contracts in controversy incorporate GPO Form 2834 (Rev.
4/1/68),  entitled "General Specifications for Composition,
Photoengraving and Platemaking."

Form 2834 contains several provisions which are relevant to the
present dispute.

The provision entitled "Payment" states in pertinent part that:

"Payment will be made on the basis of actual numbers of units of
work of each classification as described in the specifications
and the prices quoted. . . . The contractor's voucher must be
supported by an itemized statement showing a breakdown, by item
number, of all operations performed. . . ."

Form 2834 also contains a section entitled "General Definitions
and Instructions, with the following appropriate provisions:

"Item 3. Measurement of Text Matter - The Text matter defined
herein will be measured on the basis of the point size of the
base ordered or specified in width, and line count in depth. . .
. Measurement will be on the basis of made up pages and will
include the running head, paragraph spacing, and folio for depth
measurement, but not including space for illustrations."

In addition, measurement of tabular matter is similarly specified
in Item 4.  Items No. 7 and 13, entitled "Authors Alterations and
Timework,"defines authors alterations and contain a provision
reserving to the Government the final right to decide the amount
of time to be allowed for all time charges.

As part of the voucher certification procedures, invoices for
composition are first reviewed by the staff of the GPO Financial
Management Service, to determine the correctness of prices for
various contract items, and then submitted to printing
technicians, for composition measurement and a determination of
the reasonableness of the hourly charges included in any invoice
for the various items subject to such charges.  It is at this
point that a determination of any excess charges is made, and any
deductions from the contractor's invoices recommended.

In the instant case, deductions which were questioned by the
contractor, were again reviewed by printing technicians in the
Financial Management Service, and after the dispute arose, an
independent review by the GPO Internal Auditing staff was made.
We take notice of the fact that the Internal Auditor is
organizationally independent of the Financial Management Service
and the Printing Procurement Department.

Mr. Isemann, the staff auditor at the time of the review, himself
a journeyman compositor, reviewed all proofs submitted to support
the author's alteration charges made by the contractor, without
reference to the contractor's invoices, for the purpose of
determining the amount of time which would be reasonable to make
the changes
required by the markings on the various proofs.  In addition the
em count was actually measured.  Only after such data had been
collected was there any reference made to the contractor's
billing units.

There is no indication of the lack of good faith of the auditor's
review or the lack of expertise of the reviewing auditor, nor has
the contractor made any allegations to that effect.

Findings

Based upon the unrebutted statements made by the GPO Auditor, Mr.
Isemann, the GPO records and other statements of the parties, we
find as follows:

1. Contrary to the assertion in Counsel's correspondence, Mr. Cox
has been afforded the opportunity to review all material
requested to the extent he desired, and on November 15, 1973, Mr.
Cox reviewed such material as he desired.  No requests for review
of proofs were denied by the Government.

2. Complete proofs were available and were reviewed by Mr.
Isemann for 6 of the 13 jobs in question.

3. All jobs in question were reviewed and measured for em count.

4. Six of the 13 jobs in question were completely reviewed for
author's alterations, and the remaining 7 jobs partially reviewed
on the basis of the proofs then available.

5. In order to ascertain the validity of any adjustments made for
author's alterations, complete sets of proofs are necessary.  The
determinations of reasonableness of any hourly charges are based
upon judgment of the reviewers who were themselves compositors
using the time it should take to perform any given alterations by
an experienced compositor.

Likewise, based upon the undisputed statements of Mr. Cox, we
find that:

1. Billings for hourly charges for author's alterations are not
based upon time actually spent.  Time is estimated on the basis
of a review of the corrected and marked up proofs.

2. There is no actual count of printer's errors vis-a-vis
author's alterations.  Determination is based upon "judgment and
experience."

3. Composition measurement is a "give and take affair" in that
composition can be measured "tight or loose."  GPO is reasonable
on measurement.

II.  Claim I

Group 1, Jacket Numbers 356-532, 397-529, 424-224, 470-631,
476-450, 723-414, 461-096.  (Not all proofs available.)

Group 2, Jacket Numbers 425-763, 447-708, 445-125, 468-191,
458-936.  (All proofs available.)

The purchase of certain composition service by formal
advertising, unlike the purchase of manufactured items which can
be identified and objectively measured, is a difficult task,
particularly when contracts are purportedly awarded on a firm
fixed price basis.

A review of the various contracts, and the general provisions
contained in GPO Form 2834, shows that contracts for composition
services are awarded on the basis of estimated units of
production, including estimated hours necessary for the
accomplishment of certain items such as author's alterations.

Some units of production are objectively determinable, such as
numbers of proofs, numbers of pages made up, numbers of rules
inserted.  The extent of the composition performed (ems) is
itself measurable with a reasonable degree of objectivity.
However, the payment for services supposedly rendered on the
basis of time, absent any supporting accounting data, creates a
wholly different situation.  The contracts contained no
requirement that the contractor support charges for time expended
with any.data other than proofs themselves which would show the
services required and rendered.

Although it is presumed that a prudent contractor would maintain
such records for his own purposes in billing the Government, the
contractor maintains that no such records exist and that charges
were made on the basis of estimates only.  In any event, absent a
contract provision requiring reimbursement on the basis of actual
hours spent, payment would of necessity be required on another
basis.

Consequently, the estimates used in awarding the contract,
particularly in areas which are not themselves objective, must be
based upon a reasonable estimate of the time normally required in
jobs of a similar nature, even though it has been stated that no
two composition jobs are alike.

Likewise, after such services have been performed under
circumstances as set forth above, some standard of reasonableness
must be applied by the parties when attempting to determine the
sums due the contractor for such services.

The Government has attempted to protect itself to the extent
possible from potential contractor overcharges by requiring that
proofs be submitted to support the amount involved in making
author's alterations, and reserving to itself the right to be the
sole judge of the amount of time to be allowed for all time
charges.  However, such judgments must be viewed against some
standard.  Because of the nature of the contracts, the methods of
award, and the lack of any accounting data, the only standard
upon which this case can be determined would be the time required
for a reasonably proficient contractor to perform the services
necessary.

Decision - Claim I

We have carefully examined the material before us, together with
the records and the varying statements of the parties, and
conclude that the only method of decision available to us is the
jury verdict approach often used by contract appeals boards and
the Court of Claims in adjudicating claims for equitable
adjustments for what has been labeled "constructive changes."
Johnson, Drake, and Piper, Inc., ASBCA 9824 and 10199, 65-2 BCA 
4868 (1965).  Such a standard leads us to the following
conclusions:

We are not persuaded that the contractor's claims for time for
making author's alterations represents either a close
approximation of the time actually expended for the services
performed by the contractor or the time required to perform the
services as measured against the standard set forth above, e.g.,
that of a reasonably proficient contractor.  When considering the
general review process, and the final review in these cases by
the auditor versed in the trade and independent of the contract
decision process, we must give great weight to his findings,
unless such findings can be shown to be arbitrary.  In those
instances where the auditor has shown that he has reviewed all of
the proofs in the various stages of composition, we accept his
finding that the contractor has been properly compensated for the
services required.  Such is not the case where the auditor did
not have all of the proofs available to him.

Consequently with regard to Group 2, where all proofs were
available and were reviewed, the appeal is denied.  However, the
appeal is sustained with regard to Group 1 to the extent of
$3,956.00 (those claims for which all proofs were not available
for review), and the contractor is found to be entitled to
payment of $3,956, for deductions taken for author's alteration
charges by the Government to be prorated on Jackets 356-532,
397-529, 424-224, 470-631, 476-450, 461-096.

II.  Claim II - Jacket 465-238

Claim II is a claim for $4,436.20 additional payment for author's
alterations for Jacket 465-238.

The charges claimed in this case are not based upon the
traditional hourly charge for services performed as contemplated
by the General Specifications, but rather on the basis of a "per
column line" charge for author's alterations.  The question in
dispute therefore is whether the services for which the
contractor claims payment are author's alterations as
contemplated by the contract, or something else as understood by
the parties prior to the dispute.  The contract itself is
deficient in regard to defining the applicability of the extent
of the "per column line'' charge.

Discussion

GPO contract for Jacket 465-238 was for composition services for
a publication entitled "Physical and Thermodynamic Properties of
Aliphatic Alcohols''.  The work consisted of text and tabular
matter.  The contract consisted of 17 priced component items
keyed to the definitions and descriptions set forth in the
General Specifications for composition, GPO Form 2834.  The
pricing of concern in this claim are Items 7 an 13 (author's
alterations and timework).

Charges for making author's alterations (Item 7) were based on a
"per line" for text and "per column line" for tabular matter.
Each change in a column of a table would require payment of $.50.
In the 7-column tables in controversy a change in one line of
each column would require payment of $3.50.  Pricing for Item 13
remained as an hourly charge.

Each page of tables measures to approximately 5,200 ems, so that
at the contract prices, tables could be totally set at about $30
per page.

This contract was one of the first contracts which were
restructured to avoid the subjective judgments inherent in
charging for author's alterations on a time basis.  Obviously a
per line charge can be objectively determined by merely counting
the lines where changes were made.

The contract defines author's alterations both in the
specifications and in the general specifications (GPO Form 2834)
as consisting of "all marks made by the author at variance with
the original manuscript as submitted to the contractor." The work
required of the typesetter to modify the material set in type as
a result of the author's marks was the chargeable item.

The general specifications of the contract to which the pricing
schedule was keyed, contemplate author's alterations charges on
the traditional time basis (Item 7 and Item 13), and those
provisions were not revised to take into consideration the
revised per line basis of charging.  Both definitions (Item 7 and
13) are entitled "Author's alterations and timework" (Emphasis
added.) Both also state that the time charge is applicable "where
work performed cannot be properly  classified under any
measurable item.'' (Emphasis added.)

Under the time charge concept contained in the General
Specifications, it was not necessary to segregate or limit the
charges for author's alterations to the actual "change" indicated
by the author from other work performed by the contractor on a
time charge basis.  Consequently, the effect  of an author's mark
on a made-up page or galley was not material since the contractor
would be reimbursed for the time necessary to effectuate the
total change, e.g., the deletion or modification of a line
requiring the movement of type, remake of the page on page
proofs, the addition or removal of leading, or any other efforts
necessary to accommodate the change, were considered in the time
charge - but not on a per line charge without further definition.
In other words, it is clear that a charge for a changed line
could be objectively considered under the per column line basis
of charging when only that line was affected by the change.  It
is questionable that the per line charge was intended or
contemplated to cover the effects on other lines or pages
resulting from given author's alterations, absent further
definition in the contract.

With regard to tabular matter, the contract specification
required that "vertical rules must be indicated on all galley
proofs and must show on all page proofs''.  The general
specifications (GPO Form 2834) state that for galley proofs
"tables must have box heads placed in proper position and shall
be ruled out sufficiently to show columnar arrangement."  The
contractor totally ruled galley proofs even to the extent of
placing the bottom rule on each table.  In effect, he
accomplished page make-up in the galley proof stage which made
any modification to the tables difficult, time consuming and
costly.  If no change were made in the tables, the contractor
would save himself that additional step in the production
process, and would save himself the cost associated with that
work.  This was a business judgment we do not question at this
time.

The galley proofs of the tabular matter thus completed, the
galleys for the text were delivered to the Government for review
as required by the contract.

The records show that galley proofs as returned by the Department
required extensive revisions and deletions of tabular material,
resulting in (among other things) remake, rerule and refolio.  To
accomplish the requirement, a ''change order" authorizing 25
hours of hand time was issued on October 31, 1972.  The change
order states that:

"Change is hereby made in Purchase Order 67944 to the effect that
you are authorized to perform 25 hours of hand time caused by the
many deletions of tabular lines which required remake, rerule and
to refolio."

Such work required the removal and movement of type and leading
because of the space created by the deletion of material,
reruling and remaking of pages required because the galleys were
in page form, and refolioing (numbering) as a result.  The
parties considered the requirement as properly under the
provisions of Item No. 13, General specifications (Author's
alterations and time work (hand)).

The records also show that the revised galleys were thus
delivered to the department for review.  The department made
additional corrections, and using the revised galleys furnished,
made up page dummies for the contractor to follow in preparing
page proofs.

The dummy prepared by the department did not take into account
deletions in the tables they made in the revised galley proofs,
so that by following the dummy, a blank page was created at the
end of the tables appearing in the front of the publication.  The
foregoing necessitated an expansion of the aforementioned tables
to accommodate the blank page, so that lines of type set in
columns and fully ruled had to be shifted, sometimes from page to
page.  Seventeen pages of tables were affected in what was in
effect a "remake'' job.  In addition, pages 40 - 420 (380 pages)
required the switching of running heads (Page captions) and folio
(Page) numbers as a result of following the page dummy.

By letter dated February 15, 1973, the contractor requested a
change order "for changes that cannot be billed under the regular
author's alterations in the contract." He stated further that
"there were several pages [the 17 pages of tables] that had to be
disassembled and reruled.  It was also necessary to untie all
pages from page 40 to 420 to switch running heads and change
folios [Page numbers] because a whole page was added.  These
changes took 37-3/4 hours at $15.00 per hour." (Item 13 of the
contract.)

After investigation GPO Change Order 67944 dated April 3, 1973,
was issued authorizing the time as requested.  An independent GPO
estimate of the time required to remake the 17 tabular pages and
the work on pages 40 - 420, was 38.10 hours.  The estimate was
made on March 28, 1973.

The contractor, however, billed for the value of the change
order, plus $.50 per column line for the movement of type and
removal of necessary space to remake the tabular pages.  1

The contractor admitted at the hearing that the result of his
interpretation is not equitable, but insisted that he is entitled
to payment nonetheless because of the pricing schedule in the
contract.  We do not agree.

From our examination of the facts and circumstances surrounding
the making of the contract, we do not believe that Item 7 of the
pricing schedule (Author's Alterations) can reasonably be
interpreted to cover all of the items of "timework" included in
the combined definition for Item 7 in the

   1 We take note of the fact that the revised galleys used for
   the dummy were already essentially made up into pages, a fact
   which is consistent with the contractor's practice in the
   original galley proof state, and a fact which raises the
   question of how much actual page make-up work the contractor
   performed in following the dummy.

General Specifications (GPO Form 2834).  Nor do we believe that
the actions of the parties are evidence of a contrary conclusion.
The contractor's request of February 15, 1975, including the time
requested, are sufficient evidence of the parties understanding
of the language of the contract, when both the November and April
change orders were issued that the time charges under Item 13
were considered applicable to the required work.  Moreover, such
an interpretation is reasonable and consistent with the facts as
they existed.

Decision - Claim II

The appeal is therefore denied as to Claim II (Jacket 465-238).

Claim III, Jacket 475-763

Jacket 475-763 was a contract for composition services for the
Department of the Army.

Bids were evaluated for the purpose of determining the low bidder
on the basis of the estimated requirements for the publication in
question, although offers were requested on all items shown on
GPO Form 2831, even though there was no anticipated requirement
for 13 of the 27 items listed.  As a consequence, the effect of
the prices offered for which no evaluation factors were listed
were not considered when determining the low bidder for the
purposes of award as there was no anticipated need for those
requirements.

Among the unevaluated prices requested were those for type
storage, e.g., Items 17, 18.

Maryland Composition submitted a bid containing prices for Item
17 as follows:

"17. Holding type (Per month):
(a)  Type in galley form per square inch .08.
(b)  Type in page form (40 square inches or less) - per page .28.
(c)  Type in page form (over 40 square inches) - per page .35."

Prices bid by other contractors for the same service during the
same time period ranged from a low of .0035 per square inch per
month to a high of .02 per square inch per month for an average
of .00755 per square inch per month (excluding the .08 bid of
Maryland Composition).  GPO subsequently established a price of
.002 per square inch per month as the reasonable cost of storage.
Maryland Composition therefore included a price
in excess of 1000% per cent higher than the average price
established in other contracts by bid, and more than 40 times the
price subsequently allowed by the GPO for such services.

Notwithstanding the bidder's failure to submit a signed bid, and
contrary to the instructions contained on the face of the bidding
form, Purchase Order No. 55711 dated July 2, 1971, was
erroneously issued to Maryland Composition, Inc.

The contractor, when later confronted with the fact that his
offer was unsigned, reduced his storage price from .08 to .01 per
square inch per month (Item 17a) which was confirmed by a letter
from the contractor dated January 26, 1972.  The contractor now
disputes the offered price reduction and seeks an additional
$8,534.40 based on the original .08 price, claiming that the
reduction was not supported by consideration.

An unsigned bid, unaccompanied by any extrinsic evidence of an
intention to be bound, is not an offer and affords no basis upon
which a contract can be awarded under the formal advertising
procedures.  46 Comp. Gen. 648.

The issuance of the purchase order or "award" document therefore
created no obligation on the part of the contractor or the
Government and can best be characterized as an "offer'' by the
Government, with acceptance by the offeree occurring by
performance.

Although as a consequence there is a question as to the items
included in the contract because of the nature of the offer,
i.e., whether or not the contract included those items (such as
type storage) for which no need was expressed or anticipated in
the solicitation, or what agreement, if any, existed prior to the
contractors offer of .01 per square inch per month for type
storage, it is not necessary to reach that question.  Similarly,
we need not decide the question of consideration to determine
this portion of the appeal.

Decision - Claim III

We find that the .08 price for storage, being more than 1000%
higher than an average price for the same service during the same
period, and more than 40 times the price subsequently determined
to be reasonable by the Government and accepted by all
composition contractors (included the claimant) without
objection, to be unconscionable within the rule set forth in Hume
v. United States, 132 U.S. 406 (1889), and therefore, not
enforceable.  We accept the contractor's subsequent offer of .01
as more akin to the market
value of the services in question and we will therefore, not
disturb the order authorizing payment at .01 per square inch per
month.

The appeal is therefore denied as to Claim III (Jacket 475-763).