GPO BCA 14-85
August 7, 1987
Michael F. DiMario, Administrative Law Judge


     This appeal, timely filed by Ascot Tag & Label Company,
     Inc., 130 JFK Drive, Bloomfield, NJ 07003 (hereinafter
     "Appellant"), is from the final decision of George W.
     Watson, Contracting Officer, U.S. Government Printing Office
     (hereinafter "Respondent"), dated August 26, 1985,
     completely terminating the contract between the parties
     known as Purchase Order 52462, Jacket 465-107, "for default
     because of . . . failure to deliver a product per
     specifications within the time required and failure to
     correct quality deficiencies from the first rejection." The
     decision of the Contracting Officer is affirmed and the
     appeal denied for the reasons set forth hereinbelow.


     By Purchase Order 52462, Jacket No. 465-107, dated January
     31, 1985, Respondent competitively awarded Appellant a
     contract upon the requisition of the United States Postal
     Service (hereinafter "USPS") to produce some 13,658,000 +
     not to exceed 25,000, plus one set of film negatives of
     certain parcel post delivery tags in strict accordance with
     Appellant's January 17, 1985, bid quotation of $158,675, 2
     percent discount - 20 days, and Respondent's specifications
     of January 4, 1985, as amended by mail-o-gram amendment No.
     1 dated January 8, 1985. In pertinent part the contract
     called for six different 6 1/4 x 3 1/8" colored tags
     corresponding to each day of the week, except Sunday, to be
     produced in equal quantities of 2,049,000, except blue tags,
     of which some 3,408,000 were to be produced. Shipping date
     was to be F.O.B. destination by March 15, 1985, to multiple
     locations throughout the United States for each such form in
     accordance with specified "Distribution and Quantity List."
     (Rule 4 File, hereinafter "R4 File," Tab B.) The contract
     also required the Appellant to furnish product inspection
     samples and set certain specified Quality Assurance Levels
     and standards to be met; namely:

     Product Quality Levels:
      (a) Printing Attributes - Level IV.
      (b) Finishing Attributes - Level IV.

   Inspection Levels (from MIL-STD-105):
      (a) Non-destructive Tests - General Inspection
          Level I.
      (b) Destructive Tests - Special Inspection
          Level S-2.

   Specified Standards: The specified standards for the
   attributes requiring them shall be:

   Attribute                    Specified Standard

   P-7. Type Quality and        OK Proofs

R4 File, Tab A, Page 3 of 6.

     In addition, shortly after the award of the contract, i.e.,
     February 5, 1985, Respondent's Contracting Officer, Jack G.
     Marken, wrote to Appellant's Charles DeFranza stating:

      Although we are awarding your firm the contract for the
      referenced jacket, please understand that we do not condone
      your firm's poor shipping/delivery performance record. Our
      Contract Compliance Officer has previously written to you
      regarding this performance.

      Through award of this contract we are affording you an
      opportunity to demonstrate affirmatively your ability to
      meet all of the contract requirements. Your performance on
      this contract will be closely monitored. Our resources are
      committed to insure contract compliance so that we can
      provide our customer agencies with the services and
      products as ordered.

      Your understanding of our responsibilities in these matters
      is greatly appreciated.

Id. at Tab C.

     That same date the Appellant received from the Government
     the reprint copy which was to serve as manuscript copy for
     the job. This, however, was some 7 business days after such
     copy was originally due to be received. As a result, the
     shipment date was adjusted to March 29, 1985. Following
     receipt of the copy Appellant proceeded to produce required
     proofs furnishing these without copy to Respondent on March
     11, 1985. These were rejected by Respondent on March 18,
     1985, due to printer's errors (PE's). Appellant made the
     necessary corrections, furnished revised proofs to
     Respondent on March 20, (Id. at Tab D), and received
     Respondent's "OK to Print" on March 25, 1985 (Id. at Tab F &
     G). The job or a portion thereof was then run and shipped by
     Appellant. One hundred and four cartons were received by the
     Postal Service, Eastern Area Supply Center, on April 1,
     1985. The Postal Service, however, found that the product
     was not in conformance with the specifications inasmuch as
     "[f]orm numbers were not on tags and printing on backs was
     smeared" and so notified Respondent. (Id. at Tab H.) The
     following day, April 2, 1985, Respondent notified
     Appellant's Ed Smilowitz of this discrepancy at which time
     Smilowitz advised that "no other bad tags have gone out"; he
     "will call when he finds out schedule for pick-up,
     correction and redelivery." (Id. at Tab J.) A U.S. Postal
     Service routing slip from one Larry Fallon to Darwin Hughes,
     identified elsewhere in the file as Darwin Hughes, Chief,
     Quality Assurance Section, Printing Procurement Department,
     GPO, shows:

      This order is for 13 million tags. Contractor shipped 104
      cartons to Eastern Area Supply Center. Random samples
      enclosed. Job is unacceptable.

      Stop all shipments until GPO checks contractor's
      capability, per D. Steele. This job has a nation wide [sic]
      distribution therefore immediate action necessary. Notify
      Pete or me.

Id. at Tab K.

A notation in the file dated April 3, 1985, then shows that
Respondent's Contract Compliance Section recommended that
corrective action be taken immediately. Thereafter, on April 4,
1985, the Postal Service furnished samples to Respondent and
advised that its Western Region had also received some "1.4 mil.
tags, all bad, 4 out of 6 did not have form nos." Smilowitz was
again notified by Respondent. (Id. at Tab J.) A further Tab J
notation shows "Darwin [Hughes] looking into." That same date the
Postal Service sent Respondent 16 random samples for inspection
together with a "Notice of Quality Defects" which reflected the
following quality defects for printing:  "Hickies or spots,"
"extraneous marks," "image skewness," "type quality - not
uniform," "type quality - broken characters." The Notice also
reflected as additional remarks that "[r]einforced patches
falling off, not drilled correctly. Inferior printing job, No Tag
#. These sample [sic] are from Base Shipment Only, WASC samples
to follow if needed." The Notice form was further marked under
"Action Requested" to show "[q]uality does not meet
specifications and the material can not [sic] be utilized. It is
requested that the entire order be reprinted or corrected." with
an additional handwritten note stating: "Stop all shipments at
once." (Id. at Tab M.)

     On April 9, 1985, upon inspection of materials returned to
     Appellant's plant, Respondent's representative Mr. Ambrosino

   [A] lot of bad one [sic] with dirt marks, double impression,
   but [none] . . . where patch was off.

      Contractor has one machine running job, and said he is
      running three shift (and he does not no [sic] which shift
      produce [sic] bad ones) Contractor has informed me that he
      is going to put a 2nd & 3rd machine on this order.

(Id. at Tab N.)

The contractor was then given the opportunity to correct the
problem and apparently pulled and corrected 50% of the products,
the remainder being acceptable, in its judgment, as first
printed. (Id. at Tab FF.)

     At that time Ambrosino apparently informed Hughes that the
     quality had improved and would send in samples for Hughes'
     verification. Notwithstanding this improvement, the
     following day, April 10, 1985, the Contracting Officer
     telegraphically sent Appellant a "Show Cause" notice
     advising Appellant that "since you have failed to perform
     the schedule requirements [of the contract] the government
     is considering terminating the . . . contract [for]
     'default' . . . ." The letter went on to request that
     Appellant present to the Contracting Officer in writing
     within 5 days of receipt of the said notice "any facts
     bearing on the question." (Id. at Tab N.)

     Meanwhile, by transmittal of April 16, 1985, Appellant sent
     Hughes additional samples which it hoped would meet with
     approval. These were in turn sent to Fallon of USPS on April
     19 for his review. Additionally, by letter of April 18th,
     Appellant answered the show cause notice stating:

      As you already know, Ascot Tag & Label Co. Inc. has been
      delayed approx. 3 weeks because of proof sumittals [sic] on
      your jacket #465-107. Upon receiving the purchase order
      #52462 we did not see any copy or instructions on original
      specifications noting a form number was required on these
      tags. All we received were previous tags with a faintly
      penciled form # in an irregular manner which we took to be
      an indentifying [sic] number for the aforementioned tags,
      as our enclosed proof. Ascot Tag & Label was told to hold
      up and submit proofs, which we did, three times, causing
      approx. 15 working days delay in production of the order.

         An extenuating factor in further slowing production of
         this order was the fact that Ascot Tag & Label had
         purchased a press to facilitate speedy production. This
         press was supposed to be delivered Feb. 1, 1985. We did
         not receive this press until April 11, causing a
         tremendous overload on our existing presses.

         Ascot was also told to hold up production as of April 4,
         1985 due to a quality inspection initiated by GPO. We
         are presently conducting that inspection under the
         supervision of Sal Ambrosino from GPO N.Y.C.

         Ascot Tag & Label would like to add the fact that we
         have already purchased $70,000 worth of material and are
         responsible for $30,000 more. This tag material was
         bought contractually and slit to press sized rolls. We
         would consider it a great hardship to have to assume
         cost of this tag material with no financial return.

         A further cause for delay has been constant stopping for
         inspection and inspection and samples being sent to
         Washington periodically. We are in constant contact with
         Darwin Hughes on a daily basis and he is well aware of
         these delays.

Id. at Tab R.

     When Appellant's letter of the 18th, supra, was received,
     one of Respondent's representatives telephonically contacted
     Smilowitz who advised that he did not expect to ship until
     May 15, 1985 (Id. at Tabs R & S). A further notation (Id. at
     Tab P) of conversations with "Ed, Ascot & Tag and Label
     [sic]" dated April 18 shows "more samples complete 2 weeks."
     On April 22, 1985, the Contract Compliance Section again
     recommended corrective action be taken. Accordingly, the
     Contracting Officer decided to send another cure notice and
     to follow-up on any answer received. The record does not
     show whether such letter was in fact sent. Be that as it
     may, the file next reflects that "[a]ll defective tags were
     replaced by the contractor the week of May 21." (Id. at Tab
     SS, letter from Rucker to Spates, USPS, dated August 2,
     1985.) Following this, an additional shipment of tags was
     received by USPS San Francisco Bulk Mail Center June 3,
     1985. Spot checks showed severe shortages in product count
     and nonconformance with certain USPS configuration
     requirements in that some 3,000 of the tags were "wire-wrap"
     tags, i.e., designed to be secured to Postal sacks by
     wrapping the wire onto the bags, instead of elongated slot
     tags for insertion of strings (Id. at Tab Y) as specified in
     the contract. (Id. at Tab A, page 2 of 6 under caption
     "Binding.") There followed a second "Notice of Quality
     Defects" from the USPS to Respondent dated June 26, 1985,
     which in pertinent part reflected:


   Incorrect Packaging

   . . . .

   Quantity delivered short

   . . . .

   Additional Remarks

   Eleven field sites (BMC) have not received any shipment of
   tags. All other sites and supply centers report shortages of
   approx 600 tags in each box of 2000. This equates to 1/3 to
   50% shortage. Do not pay contractor until verified.


   . . . .

   Quality does not meet specifications and the material can not
   [sic] be utilized. It is requested that the entire order be
   reprinted or corrected.


Id. at Tab V.

     Chronologically, the file then shows another report dated
     June 27, 1985, concerning a shipment received at the USPS
     Los Angeles Bulk Mail Center showing that "[t]he cartons are
     clearly marked to contain 2000 tags, however, they average
     1350 per carton." (Id. at Tab Y.) This is followed by a
     "Complaint Status Sheet" dated July 3 which reflects:

   Container labels indicate quantity of 2,000 actual quantity is
   1,250 to 1,500 per container. Tags have reinforced slots, but
   some have been shipped with reinforced (round) holes instead
   (unacceptable). 11 bulk mail centers (BMC's) haven't received
   any. Formal complaint to follow 7-3 PM.

Id. at Tab W.

     Elsewhere in the file a USPS letter shows that "[o]n July 18
     . . . [Hq., USPS] received additional defective tag samples
     from field destinations and submitted samples to GPO for
     inspection. The GPO advised . . . [Hq., USPS] us on July 24
     that the contractor was willing to reprint 20 percent of the
     contract quantity to make up shortages. [Hq., USPS] rejected
     the offer based on the Supply Center findings of a 35
     percent shortage and significant quality defects. (Id. at
     Tab SS, letter from Rucker to Spates, USPS, dated August 2,

     Thereafter, by letter of July 26, 1985, Mr. C. D. Steele, of
     the Printing Division Hqs., USPS, directed to Hughes,
     Contract Compliance, GPO, requested immediate default action
     "due to the continuing problems and delays" caused by the
     contractor. He also requested that the tags be reprocured
     "from a responsible source of supply." In so doing he went
     on to state that:

      Due to the continuing problems and delays caused by the
      contractor, we are requesting immediate action to default
      Ascot Tag & Label Co., and to reprocure item from a
      responsible source of supply.

      This sack tag is an essential part of an intense effort to
      improve the movement of Parcel Post mail. This effort has,
      in effect, been stopped due to the inability of Ascot to
      produce in a responsible manner. This is causing a
      financial hardship and embarassment [sic] to the Postal
      Service, which cannot and will not be tolerated any longer.

      In addition to poor quality, incorrect printing, minor
      shortages in each carton, incorrect quantities listed on
      B/L's, 8 BMC's still reporting no shipments received and
      other problems, we have now been advised by our Traffic
      Branch that invoices are now coming in requesting payment
      of shipping charges. Amendment #1, dated January 10, 1984,
      should be 1985, specifies FOB Destination on all shipments.

   . . . .

Id. at Tab AA.

     Following receipt of this letter, Mr. Gary Lauffer, Printing
     Specialist, GPO Quality Control Division, upon contact by
     Mr. George Watson, GPO Printing Procurement Department,
     advised that he would support a default since he had
     inspected 70 percent of the order, found it 28 percent
     short, and with 42 defects, the product being rejectable for
     22 or more defects. .(Id. at Tab BB.) Lauffer had conducted
     "formal acceptance samplings" on July 30 and 31, 1985, at
     warehouses in New Jersey and Kansas.

     The file contains Lauffer's undated, handwritten report
     showing details of shortages and defects identified at that
     time. (Id. at Tab Z.)

     The file also contains a GPO Form 914 dated August 5
     reflecting a telephone conversation between a GPO employee,
     initials "JGM" (presumably, Jack G. Marken, supra) with one
     "Mervis" of "P.S." (presumably Postal Service) which states:
     "This is the 2nd delivery lst complaint April. Hickey's
     Print Quality No form #'s K [contractor] did not correct
     previous problems." (Id. at Tab CC.)

     This is followed by another GPO Form 914 by the same JGM
     dated the same date showing a telephone conversation with
     one "Frances", Ascot Tag & Label, which shows:

         K has offered to send 2-3 people to NJ and has to repack
         all cartons in uniform cartons of 1500. Any shortage
         made up in 3-4 weeks. Will take Blue label back to
         inspect and redue [sic].

      I advised K that acceptance of a rejectable job is a 25
      percent price reduction.

Id. at Tab DD.

     A third GPO Form 914 by JGM dated August 9 shows another
     conversation with "Frances" of Ascot Tag & Label as follows:

      April unusable tags were replaced with better tags even
      though they were not perfect.

      K claims he did not agree to the 7-22 make up date for the

      2,700,000 approx. replaced in April of 6,000,000 returned.
      4-5 MM on hand on several million to complete.

      He started to make up the shortage and had produce [sic]
      500,000 tags when he stopped production to join Gary in the

Id. at Tab EE.

     On August 15, 1985, Marken, by memorandum to Respondent's
     Contract Review Board (CRB) requested concurrence with a
     default action on the entire order due to Appellant's
     failure to deliver a product per specifications within the
     time required. The memorandum reflects a chronology of
     events including Appellant's then pending offer to make up
     shortages, repack in uniform quantities of 1,500 per carton,
     with delivery in 3 to 4 weeks at a 25 percent reduction.
     Such offer was rejected by the Postal Service which instead
     requested default on the complete contract because of
     failure to correct quality deficiencies from the first
     rejection. At the time of the memorandum Appellant had
     already been paid $101,862.09. (Id. at Tab FF.)

     Unanimous concurrence was granted by the CRB on August 21,
     1985. This was followed by notice from the Contracting
     Office, George M. Watson, to Smilowitz of complete
     termination for default dated August 26, 1985, with possible
     excess costs to be borne by Appellant for reprocurement of
     the product. (Id. at Tab HH.)

     Reprocurement of the contract was in fact made by Purchase
     Order 61415, Jacket No. 484-657, to Dennison Manufacturing
     Co., Framington, MA. (Id. at Tab LL.) Mr. Smilowitz was then
     advised by letter of September 23, 1985, of this action and
     that the excess costs would be deducted from Appellant's
     account. (Id. at Tab MM.)

     Thereafter, by letter dated September 12, 1985, Appellant
     filed its notice of appeal which was itself perfected by
     submission of a formal complaint dated October 24, 1985,
     which in pertinent part recited:

   Pursuant to Rule 6.(a), we are filing an orginal [sic] and two
   copies of a complaint containing the data described in that
   Rule, but we ask that our prior correspondence also be deemed
   part of our appeal.

      1. Ascot Tag & Label Co., has performed about twenty
      contracts for THE GENERAL POST OFFICE (GPO) [sic] over the
      past few years. Ten of them were direct contracts and
      another ten, approximately were indirect as subcontractors.

      2. All of these contracts so far as Ascot Tag & Label Co.
      (Ascot) is aware were satisfactorily performed and accepted
      by the GPO.

      3. Under the circumstances, it is the position of Ascot
      that they were completely qualified to handle the
      particular order in the above caption of this letter.

      4. Several problems developed which Ascot could not have
      anticipated with respect to instant contract, but which
      were certainly not Ascot's fault.

      5. Ascot sent proofs as requested to the GPO and did
      everything possible to accommodate the contracting officer
      with respect to his desires.

      6. Ascot was required to submit, and did submit, three
      different proofs at various times which caused a loss of
      valuable time to Ascot.

      7. Once approval was granted by the contracting officer of
      the GPO, production time of 45 days, actually 28 working
      days, was reduced to two weeks.

      8. Ascot had crews of employees working day and night to
      expedite this order. After approximately 4 to 6 million
      tags were shipped, a halt to production was ordered by the
      GPO. A question of printing quality had arisen according to
      the GPO.

      9. At its own expense, Ascot picked up all of the tags in
      question, and hand-inspected them. Upon inspection, some
      tags were deficient, but the majority of the 4 to 6 million
      tags were found to be in good order and in acceptable form.

      10. After reinspection by Ascot, these tags were repacked
      and this created another unanticipated problem because of
      the fact that Ascot was anxious to expedite the reshipment
      of these tags, and unfortunately some of the workers did
      not have a method of accurate counting.

      11. This was an honest and unintentional mistake on the
      part of Ascot. This is proven out by the fact that
      different quantities of tags were found in all of the
      boxes. The boxes that were used had been bought especially
      for this particular order and; [sic] if packed properly,
      should have contained 2,000 tags per box. The boxes
      appeared to have been fully packed.

      12. Ascot submits that total rejection by the GPO is
      completely unfair and ruinous to Ascot.

      13. There are millions of tags that are perfectly
      acceptable which the GPO is now rejecting completely.

      14. This total rejection is causing great financial
      hardship to Ascot which is a minority employer, and layoffs
      have already resulted as a direct result of this action on
      the part of the contracting officer.

      15. Many individuals and their families have suffered

         16. Another indirect financial burden that had been
         placed upon Ascot resulted from the fact that Ascot
         purchased additional machinery to accomendate [sic] the
         size of this order and inexpectations [sic] of future
         orders that would be forth coming [sic]. This
         constituted an extreme expense to Ascot.

      17. Charles DeFranza, the principal of Ascot went with a
      GPO agent to Somerville, New Jersey and Pauline, Kansas to
      inspect tags regarding shortages. While at these locations
      samples were taken at random. Only one lot (the blue lot)
      in Somerville, New Jersey was thought to be unexceptable

      18. All of the other lots were considered usable and/or
      exceptable [sic] by the agent who remarked that if all the
      lots were like the yellow lot, there would be no problem at

      19. In Pauline, Kansas, all the tags, the agent said,
      looked much better than the tags in Somerville and were in
      exceptable [sic] condition.

      20. After inspections were made, a figure of 25% shortage
      was determined by the GPO.

      21. All of this time howver [sic] Ascot was still in
      production and was instructed by the contracting officer to
      make up the shortages and was being urged to expedite the

      22. Unfortunately a number of different GPO personnel had
      contacted Ascot and in some instances gave conflicting
      instructions. This caused a certain amount of hesitation,
      confusion, and bewilderment as to the status of the order.

      23. For example, Ascot at one point was told to halt
      production which was done. About three weeks later, Mr.
      George Watson, the contracting officer, reprimanded Ascot
      and told them that they should not have stopped. Ascot was
      told to make up the 25% shortage and proceeded to make up
      more than a million tags but did not get a chance to ship
      any of these made up tags.

      24. Ascot was suddenly informed that the GPO considered
      them indefault [sic].

      25. Under the circumstances we submit that the GPO
      contracting officer has been unreasonable and unduly harsh
      in respect to this contract.

      26. Ascot, a minority employer, has done everything
      possible to satisfy the GPO and has a history of having
      performed satisfactorily in the past. There was no
      intention whatsoever to short the count in any of the boxes
      which was solely the result of taking the tags back for
      reinspection and then having them repacked, unfortunately
      by workers who had no method of accurately counting. If the
      boxes had been packed fully, the count would have been
      accurate. Ascot has shown a complete willingness to
      ameliorate any complaints of the GPO and spent a great deal
      of money and time in trying to do anything possible to
      satisfy the GPO. The large majority of the tags, we submit,
      are in acceptable condition.

      27. The total cancellation of this order will in all
      likelihood destroy the business of Ascot and put many
      people out of work. This would adversely affect their
      families and the merchants in the community as well.

      28. Ascot is ready, willing, and able to do anything
      reasonable to rectify this situation but submits that a
      declaration of total default is unwarranted. Most of the
      tags are in clearly acceptable condition and Ascot has
      demonstrated not only from its past performance, but its
      response in the instant case as well, that it wishes to do
      everything possible to please to [sic] GPO and we believe
      has indeed gone out of its way to do so.

      We ask for a reversal of the decision below and acceptance
      of the shipment less 25% which will be rectified.

Official Record, Tab 6.

     The complaint was answered on November 29, 1985, in
     pertinent part as follows:

      1. Respondent has insufficient information upon which to
      base a response to paragraph 1.

      2. Respondent has insufficient information upon which to
      admit or deny paragraph 2; however, it is GPO's contention
      that each contract must stand or fall on its own merits.

      3. Paragraph 3 is admitted.

      4. Respondent has insufficient information upon which to
      base a response to paragraph 4.

      5. The part of the sentence in paragraph 5 that says "Ascot
      sent proofs as requested" is admitted; however, the
      remainder of the paragraph is denied. The specifications
      required the submission of two sets of color key proofs
      before the printing of the tags. The proofs were to be of
      each item with all elements in position and the margins
      indicated thereon. What we received on March 6, 1985, were
      photo prints, not color keys and all elements were not in
      place and margins were not indicated. Consequently, the
      proofs were rejected because they were not in accordance
      with the specifications. On March 11, 1985, the second set
      of proofs was received and was rejected on March 18, 1985.
      The third and final set was received on March 20, 1985 and
      was OK'd for print on March 25, 1985. None of the above
      submissions were held over the allotted time as indicated
      in the specifications, therefore, no additional time could
      be allotted contractually. Page two of the specifications
      forewarns the contractor that printing is not to take place
      until an "OK to print" proof is received.

      6. Paragraph 6 is denied. The specifications require only
      one submission of two sets of proofs of each item. The
      submission of additional proofs was due solely to the
      negligence of Ascot. Had the proofs been submitted
      correctly the first time, additional proofs would not have
      been required. The valuable time lost is attributable to
      the nonconformance by Ascot.

      Contract Terms No. 1, which is incorporated by reference in
      this contract, in paragraph 2-11, provides that if the
      Government causes a delay in the ship date because of its
      action the shipping schedule will be extended
      automatically. At that time the contractor may request
      additional time. However in this case, the Government did
      not contribute to the delay. The sole responsibility lies
      with Ascot for not adhering to the specifications when
      proofs were submitted the first time.

      7. Paragraph 7 is denied. We are not quite sure what is
      meant by "[o]nce approval was granted by the Contracting
      Officer . . . ." The schedule was extended to March 29,
      1985 due to late copy. The proofs were OK'd on March 25,
      1985 which left four days to produce the job. We do not
      know where their day count is coming from.

         8. Paragraph 8 is denied. Mr. Darwin Hughes, of our
         Quality Assurance Division, called the appellant on
         April 4, 1985 and informed him that the product was not
         acceptable. At that time the appellant was informed of
         the quality problems. However, when the inspector from
         the New York Office went to Ascot, they had one press
         running. See AF, Exh. N.

      9. In paragraph 9, the fact that the appellant picked up
      the rejected tags for inspection and replacement of
      defective tags is admitted; however, the remainder of the
      paragraph cannot be verified because GPO personnel were not
      present while Ascot inspected the tags.

      10. Paragraph 10 is denied. The contractor alleges that the
      repacking after reinspection "created another unanticipated
      problem . . . ." It does not seem logical that all the
      cartons were short when only "some" of the workers did not
      have a method of accurate counting. Statistically, the
      cartons were 28% short on the entire order. Mr. Gary
      Lauffer, a Printing Specialist in the Quality Control
      Division, verified, through inspection, that the boxes were
      fully packed and could not have held 2,000 tags.

      11. Respondent has insufficient information upon which to
      respond to the first sentence in paragraph 11. The
      remainder of the paragraph is denied. Mr. Lauffer
      personally weight-counted 106 cartons at the Somerville,
      New Jersey warehouse and 80 cartons at the Pauline, Kansas
      warehouse. The individual carton quantities ranged from
      1,176 to 1,740. He did not discover any carton packed with
      2,000 or more forms in it. Each carton appeared to be fully
      packed. It is Mr. Lauffer's opinion that 2,000 tags could
      not be packed into the cartons used.

      12. Paragraph 12 is denied. In accordance with the quality
      attributes portion of the contract, the tags are
      rejectable. See AF, Exh. Z.

         13. Paragraph 13 is denied. The Quality Assurance
         Through Attributes Program, incorporated by reference in
         this contract, provides that the acceptable quality
         level (AQL) for this job is 1.0 critical defects per 100
         items and/or 6.5 total defects per 100 items. The
         sampling and inspection results show that this [sic] AQL
         (6.5/100) items was [sic] greatly exceeded; i.e., the
         job contains more defects than what is acceptable to the
         Government; therefore, the entire job is rejectable. If
         there were acceptable tags in the shipment they could
         have been segregated by Ascot and used along with the
         correction of the defective ones.

         14. In paragraph 14, we regret any hardship on the
         appellant; however, the Contracting Officer cannot
         accept a product that is not equal to specifications.

         15. The answer to paragraph 15 is the same as in
         paragraph 14 above.

         16. Paragraph 16 is denied. In paragraph 3 of their
         complaint, Ascot asserts they were completely qualified
         to handle this order. In this paragraph they indicate
         that they have a financial burden because they purchased
         additional machinery to accommodate the size of this
         order. As far as the Government is concerned they were
         qualified to do this order. We are not responsible for
         the purchasing of new equipment; this is a managerial

         17. The first and second sentences in paragraph 17 are
         admitted. The remainder of the paragraph is denied.
         Shortages were found in all cartons counted. Mr. Lauffer
         remembers stating that the blue forms appeared to be the
         worst in quality. He made no statements to the effect
         that the other five lots were acceptable.

         18. Paragraph 18 is denied. Mr. Lauffer remembers
         telling Mr. DeFranza that he did not believe the minimum
         quality requirements of the contract were attained;
         however, he also stated that he could not make any
         official statements before performing the formal
         acceptance sampling/inspection procedures.

      19. Paragraph 19 is denied. According to Mr. Lauffer, he
      did not tell Mr. DeFranza that the tags in the Pauline,
      Kansas warehouse were acceptable as to quality or the
      number of tags packed in each carton.

         20. Paragraph 20 is denied. The inspection report
         indicates that the cartons at the New Jersey and Kansas
         warehouses were packed on the average of 28% short, not
         25% short as stated in the complaint. It is to be noted
         that most of the boxes were short more than 28%.

         21. Respondent has insufficient information upon which
         to respond to paragraph 21 because we do not know what
         time period is being referred to.

         22. Paragraph 22 is denied.

         23. Paragraph 23 is denied.

         24. Paragraph 24 is denied. Ascot was given the
         opportunity, over a long period of time, to correct the
         discrepancies found in the tags. Default proceedings
         were instituted only as a last resort.

         25. Paragraph 25 is denied. To the contrary, we believe
         the Contracting Officer acted reasonably and did what
         had to be done under the circumstances. Ascot was given
         every opportunity to correct the deficiencies.

         26. Respondent has insufficient information upon which
         to admit or deny the first sentence in paragraph 26. The
         second sentence is denied. It is the contractor's
         responsibility to mark the label with the amount packed
         in the respective carton. If the contractor had run the
         full quantity there should have been more cartons used.

      The third sentence is denied. From Mr. Lauffer's personal
      experience of weight-counting the cartons, he does not
      believe that the cartons, as manufactured, could be packed
      with 2,000 tags. We believe this discounts the theory that
      if the boxes had been fully packed the count would be
      accurate. The inspection report indicates the boxes were in
      fact fully packed. See AF, Exh. Z. Respondent has
      insufficient information upon which to admit or deny the
      fourth sentence. The fifth sentence is denied. Again, the
      quality inspection results show that the acceptable quality
      level of 6.5 total defects per 100 items was exceeded.
      Therefore, statistically the entire order is rejectable. In
      summation of this paragraph, it is inconceivable that the
      shortage is solely a result of repacking when the entire
      order was not repacked. The inspection report clearly
      indicates an average of 28% short on the entire order, not
      just the reshipped portion. The appellant must agree with
      the overall shortage because he is willing to make up, or
      "rectify" as he puts it, a 25% shortage as is stated in
      paragraph 28 of the complaint.

      27. With regard to paragraph 27, please refer to our
      comment in paragraph 14.

      28. Paragraph 28 is denied. The quality inspection results
      show that the acceptable quality level of 6.5 total defects
      per 100 items was grossly exceeded. The defects, as found,
      total 42. See AF, Exh. Z. To reiterate, the entire order
      was statistically sampled in accordance with the attributes
      program and the total defects found far exceeded the
      allowable, therefore, the order was rejected. At Exhibit EE
      of the appeal file are notes taken by Mr. Marken,
      Contracting Officer, while talking to Mr. DeFranza of
      Ascot. By appellant's own admission, they replaced
      defective tags with not so perfect tags. It is clear that
      the Contractor did not have a quality control system in
      effect that would prevent the Government from receiving
      additional defective tags.

      Wherefore, the Board is requested to deny the appeal in its

Official File, Tab 11.

     The answer was forwarded to Appellant by letter of the
     Administrative Assistant to the Board dated December 3,
     1985. A careful review of the file discloses that no
     affirmative request for a hearing as required by GPO Rule 8
     was ever made by Appellant. As a result this matter has lain
     dormant in the files of this Board. Accordingly, this Board
     on its own motion has deemed it appropriate to decide the
     appeal on the record in accordance with the provision of GPO
     Rule 11. The matter is thus before the Board in this form
     for decision.


     The contract in this case arose upon issuance of Purchase
     Order 52462 dated January 31, 1985. That purchase order, as
     stated above, was made "[i]n strict accordance with"
     Respondent's specifications. Those specifications in
     addition to the provisions identified, supra, in pertinent
     part state: "Any contract which results from this Invitation
     for Bid will be subject to all terms and conditions of U.S.
     Government Printing Office Contract Terms No. 1, Rev. Oct.
     1, 1980 (GPO Pub. 310.2)."

     Among those terms and conditions are the following pertinent

   2-11.(c) Extension of schedules.

      (1) In the event a delay is caused by any action of the
      Government, including failure to furnish purchase/print
      order, copy and/or materials as scheduled, the shipping
      schedule will be extended automatically by the total number
      of workdays that work was delayed PLUS 1 workday for each
      day of delay; such period of grace not to exceed 3
      workdays. . . . .

      (2) If, as a result of Government-caused delay, additional
      time is required beyond that provided for in paragraph (c)
      (1) of this Article 2-11, the contractor shall mail or
      otherwise furnish a written request to the Contracting
      Officer within 10 calendar days from the end of the
      Government-caused delay. If, in the opinion of the
      Contracting Officer, additional time beyond the 10 calendar
      days for submitting such written request is warranted, it
      may be granted. If time does not permit written
      notification, telephone or telegraphic notification can be
      made. In those cases, written confirmation must be promptly

      (3) In the event no adjustment of schedule has been
      requested, the contractor will be considered to be
      delinquent if shipment has not been made by the date
      established by the automatic extension.

      (4) In the event an adjustment of schedule has been
      requested by the contractor and is approved by the
      Contracting Officer, the contractor will be required to
      meet the adjusted shipping date and will be considered to
      be delinquent if it is not met.

   Article 2-18. Default.

      (a) The Government may, subject to the provisions of
      paragraph (c) of this article, by written notice of default
      to the contractor, terminate the whole or any part of the
      contract in any one of the following circumstances:

      (1) If the contractor fails to make delivery of the
      supplies or to perform the services within the time
      specified herein or any extension thereof; or

   (2) If the contractor fails to perform any of the other
   provisions of the contract, or so fails to make progress as to
   endanger performance of the contract in accordance with its
   terms, and in either of these two circumstances does not cure
   such failure within a period of 10 days (or such other period
   as the Contracting Officer may determine to be reasonable and
   authorize in writing) after receipt of notice from the
   Contracting Officer specifying such failure.

      . . . .

      (c) Except with respect to defaults of subcontractors, the
      contractor shall not be liable for any excess costs if the
      failure to perform the contract arises out of causes beyond
      the control and without the fault or negligence of the

     Examining the evidence in light of these provisions, this
     Board holds as a finding of fact that Appellant was in
     default of the contract, that such default did not arise out
     of causes beyond the control and without the fault or
     negligence of the Appellant, and that Respondent did not
     cause or materially contribute to the delay. To begin with,
     Appellant was given the prescribed contractual remedy for
     the Government caused delay in furnishing materials.
     Secondly, the Government was entitled to the specified
     periods of time for its proof reviews. Moreover, the delay
     in approval was caused by printer's errors (Appellant's
     errors) and not those of the Government. The Government gave
     its timely O.K. to print immediately upon receipt of
     satisfactory proofs as provided for in the contract. In
     addition, the Government attempted to work with Appellant to
     remedy all of the problems it was encountering.
     Nevertheless, the Government properly continued to put the
     Appellant on notice of its potential default and the
     reprocurement which could result therefrom.

     While this Board recognizes that Appellant was working
     diligently to overcome its problems, it nevertheless finds
     that it had not in fact overcome them to the satisfaction of
     the customer agency or Respondent within the limitations of
     the contract terms. It was thus wholly within the discretion
     of the Contracting Officer to terminate the contract for
     default, to reprocure the product from another vendor, to
     charge the excess costs back to Appellant, and to recover
     any payments previously made, notwithstanding any hardships
     which might be caused to Appellant, its employees, or their
     families as alleged by Appellant.

     Thus, this Board, which derives its powers solely from the
     "Default" clause of the contract itself and cannot rightly
     enlarge or vary its terms, affirms the decision of the
     Contracting Officer and denies the appeal.