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

Appeal of Sturgis Newport Business Forms
Panel 76-11
April 27, 1977

Vincent T. McCarthy, Chairman
Barbara J. Faulkner, Member
Jay E. Eisen, Member

This is an appeal filed on October 4, 1976, by Sturgis Newport
Business Forms, hereinafter referred to as Contractor or
appellant, pursuant to the disputes clause of the contract, GPO
Form 1026, Rev. 12/1/75, Contract for Marginally Punched
Continuous Forms, paragraph 2.27, for the 6-month period,
December 1,1975, through May 31, 1976.  The General Counsel has
been designated to determine appeals under the disputes clause.

Findings of Fact

(a) This case arises out of a contract entered into by the
appellant and the U.S. Government Printing Office, hereinafter
referred to as the GPO, for the production of 1,258,000 five-part
sets of marginally punched continuous forms.

(b) The contract, designated as GPO Jacket Number 202-696,
Purchase Order 55677 (File Exhibit 5), awarded on April 5, 1976,
at a cost of $30,984.54, is a fixed price agreement for the
procurement of teletypewriter paper.

(c) The specifications required the contractor to "punch parts in
the right and left margins with 5/32" diameter round holes spaced
vertically 1/2" center to center the full length of the form and
identically located on all parts of all sets."(File Exhibit 1, p.
3.) The specifications further required that all holes be clean
cut, and that the forms be suitable for use on Model TT558-GHSP
(High Speed Printer) teletypewriters and other similar equipment.
Paragraph 3.8(f) of the contract limited any variation from these
marginal punching specifications "to the tolerance of the
equipment specified for use."

(d) Shipment was completed to the ordering agency, NSA, Fort
Meade, Maryland,on April 30, 1976.  On June 23, 1976, the GPO
Central Office Printing Procurement Division received
notification from NSA that the paper caused severe jams in the
printer for which it was designed, and attributed the problem to
a misalignment of the marginal sprocket holes.  (File Exhibit 7.)

(e) On June 23, 1976, the Contractor was notified by GPO that the
paper did not conform to the requirements specified by the
contract.  Subsequent to this time, a series of inspections and
test runs were scheduled as follows:

(1) On June 29, 1976, representatives of the Contractor and the
GPO inspected the forms in storage at NSA's Fort Meade warehouse
facility, and compared them with forms produced by other
manufacturers.  (File Exhibit 9.)  Acting upon the contractor's
representatives' suggestion, the consignee agency refolded
thousands of sets of the forms in an effort to correct the
deficiencies.  However, tests performed utilizing the refolded
material again resulted in jamming the high speed printer for
which it was made.  (File Exhibit 10.)

(2) On August 25, 1976, representatives of the GPO and the
Contractor met at NSA, Fort Meade, Maryland, to observe a test
run in which the performance of the Contractor's marginally
punched continuous forms was again compared to that of another
manufacturer's.  It was demonstrated that under normal operating
conditions of the Model TT558-GHSP, the forms produced by the
contractor would jam intermittently while the forms produced by
another manufacturer processed without difficulty.  (File Exhibit
12.)

(f) On September 7, 1976, the final decision of the contracting
officer was made to reject the shipment of marginally punched
continuous forms and demand a replacement shipment at no
additional cost to the Government.  The Contractor was informed
that an amount equal to the contract price for Order No. 55677
would be withheld from its account until a product in accordance
with specifications was received.  (File Exhibit 13.)

(g) The Contractor filed its formal notice of appeal by letter
dated October 1, 1976; and a hearing was scheduled before the
Board of Contract Appeals on January 1, 1977.

The main question presented is whether or not a reasonable test
was performed under a contract which specified no particular
testing method but required the variations from specifications to
be limited to the tolerance of the equipment for which it was
made.  (Contract paragraph 3.8(f).)

Opinion

The standard by which to determine whether the specifications of
the contract have been successfully met is set forth in the
contract, paragraph 3.8(f), which stipulates:

"Any variation from these marginal punching and perforating
specifications shall be limited to the tolerance of the equipment
specified for run by the ordering agency."

It follows, therefore, that the appropriate measure for testing
the product's conformance to specifications is its ability to be
successfully processed through the specified equipment, the Model
TT558-G high speed printer.  In an analogous case, the NASA Board
of Contracts Appeals held that in a contract which specified
certain minimum performance standards, the failure of the product
to meet specifications in a test under anticipated normal
operating conditions constituted default.  Waltham Electronics
Corp., NASA, 1962 BCA  3378.

The Contractor, without offering any supporting evidence, asserts
that the high speed printers have been modified.  (File Exhibit
11.) It is the Government's position that neither the machinery
nor the feeding mechanisms have been subjected to modification.
(File Exhibit 12.) In its attempt to avoid its.obligation under
the contract, the Contractor has attributed the failure of the
forms to feed properly to various causes, including shrinkage
(File Exhibit 13), improper folding and alleged "instability" of
the Nashua Sub 28 Chemical Transfer paper permitted as an option
under the contract per amendment No. 1, dated March 15, 1976.
(File Exhibits 9, 10 and 15.) Whatever the reason, the fact that
the product fails to properly process through the specified
equipment is the responsibility of the Contractor.

The Contractor admits in its formal notice of appeal that the
marginally punched continuous forms fail to meet the
specifications of the contract under normal working conditions,
i.e., when advancing at high speed.  (File Exhibit 15.)  It
contends that "with proper set-up and adjustment, these forms
would feed properly."  (File Exhibit 14.)  However, as the Model
TT558-G high speed printer utilizes only one, uniform type of
form, the GPO contends that any adjustment of the equipment could
jeopardize the performance of the forms which are now working
without difficulty.  In addition, the adjustments suggested by
the contractor would not be of a simple nature.  (File Exhibit
12.)

The Contractor, in its letter of appeal dated December 8, 1976,
lays the blame for the failure of the forms to process at the
feet of the GPO.  It contends that amendment No. 1, dated March
15, 1976, permitted the Contractor to bid on an unstable, lighter
than normal weight of paper which was not tested for suitability
for use on the high speed printer in question.  However, in fact,
the Nashua paper has been found suitable for processing on the
Model TT558-GHSP in the past, as proved by another recent job
order, JN 201-526, delivery date April 20, 1976, by Sturgis
Newport.  No problems were experienced with the Nashua paper in
that job order when processed through the Model TT558-G high
speed printers.

During the hearing of January 17, 1977, before the Contract
Appeal Board, in which the Contractor was represented by Mr.
Gregory Roos, Mr. Bob F. Reda, Ms. Alice H. Munday and Ms. Delsie
P. Hughes, the appeal was suspended pending the appellant's
negotiations with Roman E. Goltz, Superintendent, Central Office
of Printing Procurement Division, regarding the possibility of
crimping the forms on both sides, to aid in bringing the forms
within the tolerance of the equipment.  By letters dated January
20, 1977, and February 16, 1977, the Contractor requested 6
cartons of forms be sent to it in order to accomplish the
additional crimping.  However, by letter dated February 28, 1977,
this request was denied for the following reasons:

"The ordering agency has advised the Government Printing Office
that acceptance of the corrected forms would cause serious
production slow downs during two operations:  (1) additional
monitoring of the teletypewriter machines would be performed
because of the registration defect of the marginally punched
holes; and (2) the proposed crimping would necessitate additional
manual separation of the forms.  Therefore, your request is
denied."

The evidence in the record demonstrates the Government's
continuing efforts to cooperate with the Contractor in order to
salvage the marginally punched continuous forms.  Although
crimping the forms on both sides could conceivably aid the forms
in processing through the machines more easily, to permit the
Contractor to salvage the forms in this manner would result in
unacceptable production slowdowns.  In addition, the fact that
the marginally punched holes are incorrectly aligned and roughly
cut clearly places the product out of conformance with the
specifications.

The Government is entitled to a product which has been
manufactured in conformance with the specifications.  Inasmuch as
the product delivered by the Contractor has failed to meet the
specifications, the supplies furnished were properly rejected.

For the foregoing reasons, the appeal is denied.