U.S. Government Printing Office
Contract Appeals Board

Appeal of Timsco, Inc.
Contract No. B-1829, Jacket No. 707-168
C.A. 78-10
July 24, 1979

Vincent T. McCarthy, Chairman
Jay E. Eisen, Member
Lawrence W. Kennelly, Member

This matter was brought before the Contract Appeals Board as a
result of an appeal dated August 15, 1978, by Timsco, Inc.,
hereinafter called the Company or Appellant.  The Company
appealed of a termination of contract it had with the United
States Government Printing Office (GPO) for the printing of
230,000 + 1% Marine Camouflage Bumper Stickers.

I. Facts

The GPO invited bids for bumper stickers that were entitled
Marine Camouflage Bumper Stickers.  Invitations for bids were
sent out by the procuring activity, U.S. Government Printing
Office Regional Printing Procurement Office, Philadelphia,
Pennsylvania (RPPO, Phila.), to 20 firms including the Company.

Bids were received from 7 companies and the Appellant was the
lowest bidder.  An award was made to the Company by the issuance
of Purchase Order No. B-1829 dated October 17, 1977, with a
required shipping date of December 13, 1977.

Shipment of the product was made, and when it was received by the
Department of the Navy, it was rejected by that Department for
the following reasons:

a. Serious misregistration of inks throughout run.

b. Image size was reduced from supplied negative image size.

c. Trim size was reduced from specified size.

d. Cartons were not properly packed.  Approximately two-thirds of
the inside of each carton was not filled.

The Department of the Navy requested that the Appellant be
required to reprint the entire job in accordance with the
original specifications and ship on or before April 4, 1978.

The Contracting Officer and other RPPO, Phila. personnel
inspected the samples and material furnished and confirmed the
findings of the Department of the Navy.

A meeting was held in Philadelphia on March 9, 1978, with the
Contracting Officer, the President of Timsco, and the Director,
Printing Procurement Division, Department of the Navy.  As a
result of this conference, the President of Timsco, Mr. Walter
Prichard, wrote a letter to the Contracting Officer dated March
10, 1978, in which he confirmed a proposal made on March 9, 1978,
that he would be willing to reduce the cost 50 percent, from
$17,900 to $8,900, in order to compensate for the discrepancies
in the "Marine" Bumper Stickers.

In a letter dated March 14, 1978, from the Department of the Navy
to the Contracting Officer, the price reduction was rejected.

On March 20, 1989, the Appellant sent a letter to the Contracting
Officer giving three arguments that should be considered in
attempting to negotiate a reasonable settlement:

"1.  The workmanship on the Bumper Stickers is of good quality.
Although some stickers do not exactly meet the Contract
Specifications, the margin of error is so small that rejection of
the entire lot is arbitrary, capricious, and unreasonable.  By
any reasonable A.Q.L. Standard, the shipment should be
acceptable.

"2.  The stickers that do not meet Specifications are certainly
fit for the intended purpose.  Consider that a bumper sticker
used to encourage enlistment in the Marines is not going to be
examined under a microscope by a prospective enlistee to
determine whether or not he should enlist.  At any distance, the
error is not detectable.

"3.  We have substantially performed under the terms of the
contract. To continue 'nit-picking' at our product is extremely
non- productive and costly for both of us.  We are not going to
relent and accept the entire shipment as a reject."

On March 29, 1978, the Contracting Officer sent a letter to the
Appellant in which he confirmed a telephone conversation that
took place on March 28, 1978, between him and Mr. Prichard.  In
this telephone conversation, Mr. Prichard was informed that the
entire order of Bumper Stickers were rejected.  The following
reasons for rejection were stated in the letter:

a.  Serious misregistration of inks throughout the entire order.

b.  Image size was reduced from supplied negatives.

c.  Trim size was smaller than specified size.

The March 29, 1978 letter went on to say that the Company is
required to reprint the entire order in accordance with the
contract specifications and to ship no later than April 28, 1978.

On June 29, 1978, the Director of the Printing Procurement
Department, NPPSO 4ND, Philadelphia, Pennsylvania, wrote to the
Manager of the Regional Printing Procurement Office , GPO, in
Philadelphia, Pennsylvania, and reported:

1.  Timsco picked up the subject material for reprinting.

2.  It was redelivered with no improvement in quality.

3.  The shipment totalled 151,000 copies and was approximately
78,000 copies short.

The June 29, 1978 memo, requested the GPO to ascertain if the
company did in fact reprint as directed.

The fact is that there had been no reprinting, but a sorting was
done by the Appellant and the stickers that were not up to
standard as far as the Appellant was concerned were discarded and
the balance of 151,000 were reshipped to the Department of the
Navy.

A meeting was held in the Washington Office of the GPO on June
28, 1978, between representatives of the Department of the Navy
and GPO officials to discuss the proposal of the Appellant for a
50 percent discount.  The Department of the Navy representatives
agreed to weigh all of the facts and render a final decision.
The Department of the Navy officials decided to continue to
reject the stickers.  The Contracting Officer recommended to the
Contract Review Board that the Company be defaulted and the order
readvertised.

On July 20, 1978, a letter was sent to the Appellant in which it
was notified the contract was terminated for default because the
product furnished did not meet the "Workmanship" clause
requirements to the contract.  The Appellant was also informed
that the item could be reprocured against the Appellant's
account.  The Appellant was advised of the right to appeal within
30 days.

On August 15, 1978, a letter of appeal was addressed to the
Public Printer by the President of Timsco, Inc., saying:

"This appeal is based on our belief that the 'Marine' bumper
stickers supplied by us under this contract do meet the
'Workmanship' clause requirements of the contract and further are
in substantial compliance with the quality provisions of the
purchase order and the furnished proofs.

"The workmanship on the bumper stickers is of good quality and
they are certainly fit for their intended purpose.  Where error
does exists, it is so small, that to reject the entire lot
appears arbitrary and unreasonable."

The hearing convened on November 28, November 29, 1978, March 20
and 21, 1979.

II. Arguments of Appellant

A.
1.  The Company argued that the Government's subjective standards
were applied in an arbitrary and capricious manner and that it
was impossible for a competent printer doing a quality production
job to achieve the level of precision required by the Government.

2.  The Company argued that the basic difficulty in this case has
arisen because the Government has insisted, without advance
warning to bidders, on a higher standard of quality than is
economically feasible on a low cost mass production printing on
flexible vinyl material.

On the basis of these two arguments, the Company claims
performance under the contract was impossible.

B.  The Company claims that the bumper stickers meet the lawful
requirements of the contract.

1. The argument set forth was, while the specifications called
for "appropriate registration" in this context, it really meant
"suitable" registration.

The Company argued when the stickers were read at a distance
there would be no notice of the misregistration.

2. The Company states that the image size was approved.  Before
production was begun, the Company supplied samples of the reduced
image size and they were approved.  Thus, any reduction was with
the express approval of the Government.

3. Trim size - The Company argues that in some instances the
bumper stickers it supplied were about 1/4" narrower or shorter
than the specifications demanded.  However, this had no effect on
the usefulness of the bumper stickers and should not be grounds
for rejection.  The Company states that the Government should not
require exact perfection on a run of 230,000 bumper stickers
costing about 8 cents each.

C. The Appellant argues that it substantially performed its
contract.

1. It delivered 151,000 stickers that were clearly acceptable and
the other one-third could have been reprinted if the first two-
thirds had been accepted.

To combat the Government's argument that there is no substantial
performance doctrine in Government supply contracts, the
Appellant cites Radiation Technology v. U. S., 177 Ct. Cl. 227,
in which the Court held that a contractor [which] had delivered
goods in substantial compliance with contract specifications was
entitled to a reasonable time in which to cure nonconformities.

D. The Appellant argues that the Government assessment of excess
costs was improper.

1.  The Government was required to mitigate damages, and when it
refused to accept the 151,000 bumper stickers that were reshipped
to the agency, it was not doing so.

2.  The Government failed to prove payment of excess costs and
performance by the reprocurement contractor.  The Government had
not furnished a payment voucher or copy of payment check.

III. Arguments of GPO

The Government argued that the Appellant has presented no
credible evidence to warrant overturning the termination for
default and the resultant assessment of excess costs.

1. Substantial Performance

The Government states that the doctrine of substantial
performance ordinarily is invoked in construction contracts and
has no applicability to other types of contracts.  It should not
be carried to the point where a nondefaulting party is compelled
to accept a measure of performance less than had been bargained
for.  The Government cites Franklin E. Perry Co. v. United
States, 524 F.2d 668 (1975).

In addition, the Appellee states that, even if the doctrine was
applicable, the Appellant's refusal to replace about one-third of
admitted "bad" bumper stickers falls far short of substantial
compliance with the contract requirements.

2. The Appellee answered the argument of the Company - that in
other instances, the Government waived the standards of
performance.  The Government states that argument does not
constitute proof and there was no proof of waiver.  In addition,
even if the Government had granted a waiver to other contractors,
this did not free the Appellant from its obligation to perform
under the terms of the contract.  The Government cites Security
Parachute Co., ASBCA No. 20334, 76-1 BCA  11,722.

The Government states that there was no showing that in recording
the deficiencies, the department representatives applied a
stricter or different standard than other representatives who
were assigned to inspect similar work.  In addition, the
Contracting Officer and his assistant personally observed the
deficiencies.

It is argued by the Appellee that the Government is entitled to
performance in strict compliance with the specifications, and in
this case had the right to insist upon the quality of performance
called for.  In this case the specifications called for bumper
stickers free from errors.  Noncompliance with these requirements
would subject the contractor to the sanction of default
termination.

In answer to the Appellant's argument that the bumper stickers
were suitable for the intended use and, therefore, should have
been accepted by the Government, the Appellee states:

"The Government has a right to insist upon strict compliance of
supplies with contract specifications.  It does not have to
accept supplies that are 'slightly' defective or in substantial
compliance with the specifications because that would permit a
contractor to, in effect, modify the specifications unilaterally.
Farwell Co. v. U.S., 137 Ct. Cl. 831 (1957); General Mills, Inc.,
ASBCA 9045, 1964 BCA  4064; Cherry Meat Packers, Inc., ASBCA
8974, 1963 BCA  9506. . . "

The Government distinguishes the two cases cited by Appellant,
Newark Fire Proofing Sash & Door Co. v. U.S., 107 Ct. Cl. 606
(1947); Precision Products, Inc., ASBCA 14,284, 70-2- BCA  8447,
on the basis that these cases applied to a method of testing a
product which is not an issue in this case.

The Government also makes the point that under the "Default"
clause of the contract, a default termination is excusable if the
contractor can establish that his failure to complete his
contract on time was due to causes beyond his control and without
his fault or negligence.  The Appellee argues that the contractor
has failed in this appeal to carry the burden of establishing
excusable causes for his failure to perform that the record
indicates that failure to perform arose out of causes wholly
within the control of the contractor.

IV. Discussion

We have a case before us of a contract made with the GPO for the
printing o 230,000 +1% "Marine" Bumper Stickers.  The
specifications for the contract are clear as to what was to be
performed.  The date for delivery was specific.  Invitations went
out to the 20 firms including the Appellant, and it was the
successful bidder.  There is no question that the contract was
not complied with.  The 230,000 stickers were delivered 8 weeks
late.  When they were delivered, they were rejected because they
did not meet the specifications.  Under the terms of the
contract, the Government had the right to request the job be
reprinted to meet the specifications.  The Appellant did not do
this.  It sorted out about two-thirds of the stickers and sent
them back to the Government where they were again rejected.
There was no evidence the Appellant was ever going to reprint the
stickers, on the contrary, there is evidence that the Appellant
had no intention to do so.  Mr. Prichard testified to this when
he was asked:

Q.  What was the purpose then of inspecting these?

A.  To reinspect them to select those that were acceptable, or
would be acceptable under the contract.

Q.  What about the differences?

A.  We would negotiate that.

Q.  So it is fair to say that you never had any intention of
reprinting this?

A.  Correct.

Q.  Did you make that intention known to the Contracting Officer
in any way?

A.  Not in writing, and I haven't talked to him since - no.  (Tr.
1-103.)

It was the intention of the Appellant to have the Government
accept two-thirds of the amount the contract called for and to
negotiate with the Government over the balance.  Mr. Prichard so
testified when asked:

Q.  What about the difference?

A.  We would negotiate that.  (Tr. 1-103.)

It is clear, therefore, from the testimony that it would be
necessary for the Government to obtain the additional stickers
from another source, even if the two-thirds were acceptable.

The Government said that they were not and did not meet the
specifications.

It is clear from the testimony that Mr. Prichard himself was
aware that the 151,000 that were reshipped were not up to the
specifications:

Q.  So taking the other side of the coin for a moment, then it is
your testimony that they are not in technical compliance?  What
would you use to describe what I understand is your testimony,
that you recognize that they don't really meet the specs?

A.  All of the 151,000 or 230,000 do not meet the exact
specifications because they all don't measure 3-1/2 x 12.  There
is some off registration and that's why I can't say that they
precisely meet the specifications.  (Tr. 1-90, 91).

Mr. Joseph Natoli, Vice President of Timsco, testified that the
Company had no intention to run the job again:

". . .   Timsco was in dire financial straits.  It had lost
$53,000 the year before because of a man we had that had since
been released and . . .  (cannot understand), and indicated that
we had probably suffered a $4,000 or $5,000 loss on the initial
job that we wouldn't run again because . . .  (cannot understand)
and to run it again would just simply be folly I think on our
part."  (Tr. 11-70.)

The Appellant alleges that the Government had insisted without
advance warning to bidders on a higher standard of quality than
is economically feasible on a low cost mass production printing
on flexible vinyl material, evidence of other printings indicate
that the Government had previously accepted production having
much greater misprints than those of Timsco.

There was no proof submitted that showed the Government accepted
a lesser quality production than the specifications called for.
In this particular case, the invitations went out to the various
contractors and they were clear and unambiguous.  If the
Appellant was not capable of living up to them it should not have
bid on the job.  When the bid was made and accepted, then the
only excuse for a delay in time would be for causes beyond the
control of the contractor.  In this instance, the failure to
produce the product on time and up to specifications, were within
the control of the Appellant.

The Appellant also alleges that the word in the specifications
"appropriate" means "suitable for the particular commodity and
use to which the commodity is put."  This is not so when a sample
is submitted as was required and one in this case (see Tr.
105-106).  The Uniform Commercial Code (which is not applicable
here), states the principle rather clearly:

"Any sample or model which is made part of the basis of the
bargain create an express warranty that the whole of the goods
shall conform to the sample or model."  (U.C.C. 2-313(1)(c).)

When the Appellant had the sample to work with, the end product
had to conform to the sample.

The Appellant also alleges that the Government failed to mitigate
damages.  It is apparent what the Appellant expected the
Government to do is to use the 151,000 stickers that had been
returned and reprint the other one-third.  This would have
reduced the damages substantially.  What this would have required
was an acceptance of a product that did not meet the
specifications and this is not what the Government had contracted
for.  Therefore, this argument on mitigation must fail.

In Franklin E. Perry v. U.S., 524 F.2d 668 at 677 it states:

"While the purpose of the substantial performance doctrine is to
avoid the harshness of a forfeiture, the doctrine should not be
carried to the point where the nondefaulting party is compelled
to accept a measure of performance fundamentally less than had
been bargained for.

"Substantial performance is never properly invoked unless the
promisee had obtained to all intents and purposes all benefits
which he reasonably anticipated receiving under the Contract.  In
re Kenney Aluminum Co., 78 F.Supp. 565 at 568."

In Farwell Company, Inc. v. U.S., 137 Ct. Cl. 832, we had a case
in which the Government specified copper pipe and the contractor
used tubing.  The court said:

"The Government may have had many reasons for requiring pipe
instead of tubing, but in any event, the specifications called
for pipe and the Government had a right to expect that pipe would
be used.  In other words, why have a contract if either party
could change the terms to suit his particular whim . . . .

"This is just what contracts are meant to prevent and an added
reason why they should be construed according to their terms as
this court did in its decision on the cross-motions for summary
judgment."

We think that we have a similar situation in this case where the
specifications were clear, and they were not lived up to.  The
Government had a right to obtain what it contracted for and it
did not receive it.

V. Reprocurement

The Appellant contends that the Government's assessment of excess
costs were improper.

a.  The Government had a duty to mitigate damages by reprocuring
in a reasonable manner.

b.  The Government failed to prove payment of excess costs and
performance by the reprocurement contractor.

We must reject the arguments of the Appellant on these two
subjects.  When it was determined that the Appellant was in
default, the Contracting Officer again sent out invitations to
contractors to bid.  The successful bidder was M & M Displays
(Government Ex. 15).  The contract was for 230,000 bumper
stickers at the cost of $21,300.  The difference was $3,400
between the Timsco contract and this.  This was all testified to
by the
Contracting Officer who was called to the stand by the Appellant.
The Appellant alleged that the Government should have used the
151,000 that had already been rejected.  We do not think this was
required.  Mr. Stewart McKendry was called from Philadelphia to
testify, and he did on the question of the acceptance of the
reprocurement of M & M Displays.

We we consider the question of payment, we have the testimony of
Mr. Mario Bernazzoli, the Contracting Officer, that the
reprocurement contractor was paid (Tr. 3-37).  We also have
Government Ex. 16, the purchase order that was required by the
Contracting Officer and forwarded to the disbursing office for
payment.  Mr. Bernazzoli testified that he certified the billings
for payment on November 29, 1978 (Tr. 3-73).

Government Ex. 17 indicates that the excess costs were $3,400.

VI. Conclusion

In reviewing all of the evidence that has been presented and
after considering all of the arguments, the Board finds:

1.  The default termination was proper.

2.  The cost of $3,400 is upheld.

The appeal is denied.