U. S. GOVERNMENT PRINTING OFFICE BOARD OF CONTRACT APPEALS Appeal of Gugler Lithographic Co. Date: ? [assigned date June 1, 1980] GPO CAB No. 80-1 JAY E. EISEN, Chairman PAUL L. HOLLENBACH, Member JOSEPH W. KENDALL, Member This decision concerns an appeal filed on September 25, 1979, by the Gugler Lithograph Company, 5100 W. Brown Deer Road, Milwaukee, Wisconsin 53223, hereafter referred to as the contractor, under the disputes clause of the contract, Article 29, United States Government Printing Office (GPO), Contract Terms No. 1, GPO Publication approved July 9, 1943, Rev. July 15, 1970. Issue Presented The issue presented is whether the contractor failed to comply with the requirements of the contract as related to supplying pallets of the dimensions stated therein, and if so whether the U.S. Government Printing Office properly assessed damages against the contractor in the amount of $3,528.00. Findings of Fact 1. The Gugler Lithographic Company was awarded a requirement type, multiple award contract, Program 1532-M, covering the period beginning May 1, 1979, and ending April 30, 1980. Print orders for each job, when issued, will indicate the quantity to be produced and any other information pertinent to the particular issue. (Exhibit 2.) 2. The contract was awarded by U.S. Government Printing Office, Regional Printing Procurement Office, 610 S. Canal Street, Chicago, IL 60607, in accordance with the terms of GPO Contract Terms No. 1, incorporated by reference. 3. The contract, jacket 650-019, provided for the manufacture and shipment of recruiting billboard posters and transit cards for the Department of the Army (3710 U.S. Army Recruiting Command, Fort Sheridan, Illinois). 4. Five (5) print orders, numbered in sequence as follows: 2001, 2002, 2003, 2004, and 2005, each at an estimated cost of $16,000 were issued to the contractor on May 9, 1989, for the production of 2,000 posters, trim size 259" x 115" per print order for delivery on June 29, 1979, to the U.S. Army AG Publication Center, 1655 Woodson Road, St. Louis, Missouri 63114. (Exhibit 6.) 5. The contract provided in part as to palletizing the following: "PALLETIZING: Contractor will be required to furnish pallets complete with caps and fastened with straps over edge protectors. Packed pallets must be wrapped in such a manner as to protect contents against the elements, and to insure acceptance and safe delivery by common carrier. Refer to 'Palletizing' on page 2. . . . "PALLETIZING. When so indicated in the specifications, the contractor will be required to furnish pallets for bulk shipments in shipping containers (when the containers fill 2 layers or more on the pallet) for Army, Navy, Air Force, GSA, and quantities ordered for delivery to the U.S. Government Printing Office and its warehouses and distribution centers. . . . Pallets must conform with Federal Specifications NN-P-71c dated September 10, 1973, and any amendments thereto as follows: Type III (4-way (partial), flush, assembled, nonreversible) Size 2 (L 40 x W 48). Full entry must be on the 48" dimension. Group 2 (medium density wood) or Group 3 (high density wood), at contractor's option." "Note: Single copies of Federal Specifications are available to bidders on this contract free of charge at the Business Service Centers of the General Services Administration Regional Offices in Boston, Mass., New York, N.Y., Philadelphia, Pa., Atlanta, Ga., Chicago, Ill., . . ." (Exhibit 2, p. 2.) 6. The U.S. Army AG Publication Center, 1655 Woodson Road, St. Louis, Missouri, reported on or about July 16, 1979, to the Headquarters U.S. Army Recruiting Command, Fort Sheridan, Illinois 60037, that Jacket 650-019, Print Orders 2001, 2002, 2003, 2004, 2005 were delivered by the contractor on non- regulation pallets; they were received on pallets 48" x 40"; the stock had to be repalletized before warehousing. The report indicated that the cost of repalletizing by the Operations Division at the U.S. Army Publication Center amounted to $44.10 per pallet; that 16 pallets were used for each print order at a total cost of $705.60. (See Exhibit 1.) 7. The Contracting Officer on August 23, 1979, formally notified the contractor of the deficiency as to the dimensions of the furnished pallets; that they were 48" x 40" instead of 40" by 48" as required by the specifications and because of the deficiency, the Department of the Army was required to repalletize all print orders before they could be placed in storage at their St. Louis, Missouri warehouse. The cost for repalletizing each order amounted to $44.10 per pallet for labor and material ($705.60 per print order for 16 pallets). The Contracting Officer asserted that the total cost of repalletizing the five print orders will be deducted from a subsequent invoice to be submitted by the contractor. (Exhibit 3.) 8. The U.S. GPO issued a change order to the contractor on August 29, 1979, effecting a change in Purchase Order G2051, Print Orders 2001, 2002, 2003, 2004, and 2005; it provided that a reduction in the amount of $44.10 per pallet for 80 pallets is being taken to cover the cost to the Government to repalletize the manufactured recruiting posters. (Exhibit 4.) 9. The contractor filed a notice of appeal on September 25, 1979, under the "Disputes" clause of the contract. The contractor reiterated that the size pallet furnished is a standard specification size, and has a very easy four-way entry; that the said pallet has been furnished and used on many other U.S. Government orders without complaint. (Exhibit A.) 10. On November 1, 1979, the contractor was notified by a letter and also furnished a copy of GPO Instruction 110.10 which prescribes in part the procedure that the appellant may elect to pursue. The contractor did not make an election and, therefore, we have treated his appeal as one upon submission of the written record. The contractor submitted a letter to GPO, dated November 29, 1979, wherein he asserted in part that: "The said pallets is specification size (40" L x 48" W) with a easy four-way entry, which makes them very easy to pick up from any side to stack or put up on racks. As we said in our appeal, all orders were properly palletized and said complaint and deductions should not be filed against us." (Exhibit B.) 11. Reference is made to NN-P-71c, September 10, 1973, Federal Specifications, Pallets in page 2 of the specifications and that the required pallets Type III (4 way partial), flush, assembled, non-reversible, must conform with Federal specifications. The inspection procedure under classification of defects list assembled pallets of improper size as a major defect. Contention of the Parties The appellant contends: That the pallets used for Program 1532-M is a standard specification size and has a four-way entry. The said pallets are specification size L 40" x W 48". That all orders were properly palletized and said complaint and deductions should not have been filed against the appellant. The Government contends: That shipment was received on non-regulation pallets. That the shipment was received on pallets L 48" x W 40" instead of required L 40" x W 48". The shipment did not meet the specifications. Decision The issue relates to a contract entered into between the Gugler Lithographic Company and the U.S. Government Printing Office. A contract has been defined as a promise or set of promises which the law will enforce. The specific mark of a contract is the creation of a right, not to a thing, but to another man's conduct in the future (Wald's Pollock, Contracts, 3d Ed., pgs. 1 and 2). This definition aptly fits the facts and circumstances raised by this appeal. Gugler Lithographic agreed to perform certain acts in a specified manner. In consideration for this promise, the GPO agreed to pay the appellant $16,000 each per print order. Five print orders were awarded the contractor. The terms of the contract required the contractor to furnish pallets of a specific type and size #2 (L 40" x W 48") with full entry to be made on the 48" dimension. The contract provides in part in the default clause that "rights and remedies of the Government provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this contract." (Art. 18(f) GPO Contract Terms No. 1). The statement of the parties are conflicting, but the appellant wants us to accept its self serving statement in its letter of November 28, 1979, as being worthy of belief that the furnished pallets met the requirements of the specifications. However, the facts mitigate against this assertion, with the U.S. Army Publication Center, St. Louis, Missouri, reporting that the shipment was received on pallets that did not conform to the specifications; that they had to repalletize the stock before warehousing at a cost for 16 pallets at $44.10 per pallet for a total cost of $705.60 per print order. To determine the final position of the parties, we must decide whether GPO, which deducted the sum of $44.10 per pallet for 80 pallets ($3208) by a change in Purchase Order G2051 (Exhibit 4), on August 29, 1979, has a justified claim for the total sum of $3208.00, pursuant to article 20, U.S. GPO Contract Terms #1 which provides in part the following: "Also, the contractor will be charged, as actual damages, for all expenses caused the Government occasioned by delivery of materials, supplies, and equipment not conforming to specifications whenever the defect is patent or latent." We think that the contract provisions in the default clause tells us that "[t]he rights and remedies of the Government provided shall not be exclusive and in addition to any rights and remedies provided by or under this contract" reserved to the Government any common law remedies which it may have had, recognized the right by the Government to assert claims for actual damages sustained by the Government occasioned by the contractor supplying materials not conforming to the specifications. Rumley v. United States, 152 Ct. Cl. 166; Houston-Fearless Corp. , ASBCA No. 9160, 1964 BCA ¶ 4159. The Government, in determining damages submitted the U.S. Army statement on Standard Form 364, Report of Item Discrepancy, that the cost to repalletize amounted to a uniform quoted price of $44.10 per pallet, without evidence of the U.S. Army's actual cost. We think that the appellant is entitled to information, how much the actual cost of replacement of the pallets totaled as the result of the contractors failure to furnish the required type item in accordance with the specifications. Accordingly, in view of the facts and evidence presented by the parties, it is the decision of this Board to deny the appeal of Gugler Lithographic Company as to the merits, and to remand the matter to the contracting officer for negotiation and determination of a proper deduction as actual damages, based on the principles herein indicated.