Docket No. GPO BCA 16-87
March 31, 1989

Administrative Law Judge


     This appeal, timely filed by Colorgraphics Corporation, 4500
     South Garnett Road, Tulsa, OK  74146 (Appellant), is from
     the June 11, 1987, final decision of William E. Flood,
     Contracting Officer (CO), U.S. Government Printing Office
     (Respondent), rejecting Jacket No. 152-343, Purchase Order
     62920, and requiring the reprinting of the product at no
     additional cost to the Government.  The decision of the CO
     is denied.


     Respondent, by Purchase Order 62920 of May 2, 1986, awarded
     a GPO contract Jacket No. 152-343 to Appellant in the amount
     of $36,320 to print, bind, and ship by June 30, 1986, a
     certain 4-color, 32-page pamphlet entitled "Career for
     Scientist and Engineers," and three related forms for the
     Department of the Navy pursuant to its Requisition No.
     6-20191.  The Purchase Order was made in strict accordance
     with Appellant's competitive bid dated April 24, 1986, and
     Respondent's specifications (Rule 4 File, hereinafter "R4
     File," Tab D) dated April 10, 1986, as amended by Amendment
     No. 1 dated April 14, 1986, and Amendment No. 2 dated April
     22, 1986.  (R4 File, Tab B.)  Subsequent Contract
     Modifications No. 2291 and 2420 made during the course of
     Appellant's performance brought the ultimate contract price
     to $42,170.  (R4 File, Tab E.)

     The specifications in pertinent part called for the
     Government to furnish Appellant camera copy mounted on art
     boards together with necessary transparencies (R4 File, Tab
     B, page 3) from which Appellant, supplying all other
     materials and operations, was then to manufacture the
     ordered products.  The pamphlet itself was to be produced in
     15,165 copies, of which 15,000 (R4 File, Tab B, page 4) were
     to be shipped f.o.b. destination to the Naval Surface
     Weapons Center (NSWC), Silver Spring, MD.

      The finished pamphlet was to be 8 1/2" x 11" in size with a
      wraparound cover.  (R4 File, Tab B, page 3.)  The paper
      stocks for the cover and text were to be selected by the
      Appellant from any one of certain specified stocks (R4
      File, Tab B, page 6), samples of which were to be approved
      by Respondent prior to the commencement of production.  (R4
      File, Tab B, page 5.)   After printing, the cover stock
      (covers 1-4) was to have its entire surface coated with a
      gloss varnish or lacquer to prevent scratching and
      smearing.  (R4 File, Tab B, page 7.)  In addition, the
      contractor was to "Die-cut, fold and glue extension on
      cover 4 to the inside of cover 3 to form a 3" pocket."  The
      cover was to be saddle-wire stitched to the pamphlet text
      materials in 2 places (R4 File, Tab B, page 7) with the
      contractor having the option of first putting a stitch in
      the text before gathering the text with the cover.  (R4
      File, Tab B, page 2.)  A copy of each of the 3 related
      forms was to be inserted in the pocket.  (R4 File, tab B,
      page 7.)  Two of the forms (items 2 & 3) were first to be
      folded "from 8 1/2 x 11" to 3 11/16 x 8 1/2" with 2
      parallel wraparound folds."  The other form, item 4, was to
      be 8 x 10 1/2" in size and inserted unfolded.  (R4 File,
      Tab B, pages 3 and 7.)  Two fully completed advance sample
      copies of the pamphlet were to be furnished to Respondent
      for "final approval" prior to Appellant's binding of the
      entire production quantity.  (R4 File, Tab b, page 7.)
      (The Product Quality for both printing and finishing
      attributes was to be equal to the Level I standards for
      such attributes as set forth in the GPO Quality Assurance
      Through Attributes Program (QATAP, GPO Pub. 310.1 revised
      June 1981)).  The QATAP itself was made a part of the
      contract by reference thereto in the first paragraph of the
      specifications.  (R4 File, Tab B, page 1.)

     During the course of performance, Appellant furnished
     Respondent the required advance of binding samples.  These
     were in turn inspected on August 4, 1986, by NSWC's Bob
     Coleman and Wanda J. Ohm, who found that the cover fold was
     askew from the text and needed to be corrected, but that
     subject to the correction of the cover, the product was
     "O.K.".  (R4 File, Tab E.)  In recognition of this finding,
     the CO made a notation on his official job schedule that it
     was "OK to bind" and that the corrections were "minor"
     "AA's," i.e., author's alterations rather than contractor's
     errors.  He also noted that the contractor's representative
     "Lorrie" was notified 8/5 at 8:30 a.m., and that the samples
     were express mailed to Appellant on 8/5/86.  (R4 File, Tab

     At this time, the "ship complete" date was automatically
     adjusted to August 12, 1986, pursuant to the contract terms
     because of these and other delays.  (R4 File, Tab E, page
     10.)  However, on August 7th, the CO apparently agreed to a
     further adjustment to August 28, 1986, because the delays
     had forced the Appellant to miss its schedule for die-
     cutting and binding.  This change was accomplished by
     Contract Modification 2420 dated August 11, 1986.  (R4 File,
     Tab E, page 14.)  Thereafter, by letter dated August 28,
     1986, the CO requested that Appellant "show cause" why the
     completed product had not been shipped.  In response the
     Appellant, by letter of September 5, 1986, indicated the
     ship date had been extended by NSWC through September 5,
     1986, due to modifications which were still being initiated
     at the time of the show cause letter.  Appellant further
     stated that the product would be shipped that date, as it in
     fact was.  (R4 File, Tab E, page 16.)

     Contract Modification 2443 of September 4, 1986,
     effectuating this last change in pertinent part reflects

[T]he trim size is changed from 8 1/2 x ll" to 8 1/2 x l0-15/16"
with the intent to create the appearance of a more square image
on the covers.  This change is made after the printing of the
text and covers.

             . . . .

     This change, as agreed, shall result in no additional cost
     to the government.

(R4 File, Tab E, page 15.)

     On September 12, 1986, Judith Walter, Printing Specialist,
     Naval Printing and Publications Service, Naval District of
     Washington (NPPSO-NDW), advised Respondent that shipment had
     been received by NSWC and that the 13 copies of the pamphlet
     which she enclosed, selected randomly, one from each of 13
     boxes,  represented an unsatisfactory Level I printing job.
     Accordingly, the NSWC was rejecting the job for the
     following reasons:

     a. When the brochure is closed, the cover is larger than the
     text pages by 1/32" to 3/32" on the vertical edge.

     b. The bottom of the back cover is not flush with the bottom
     edge of the other pages; the bottom edge is approximately
     1/16" off.

     c. Many covers are marred; the gray ink did not dry before
     packing or the covers were scuffed in packing.

     d. The spot varnishing of some of the text photographs is
     out of register.

R4 File, Tab F.

     Walter further advised that notwithstanding the errors, NSWC
     would keep and pay for 1,000 copies of the pamphlet in order
     to get through the initial stages of their recruiting season
     which had already begun.  She requested a reprint of the
     remainder of the order "except for the items stuffed in the
     back pocket, these can be used for the reprinted job."  (R4
     File, Tab F, supra).An examination of the samples completed
     by Christine C. Ridge, Quality Inspection Technician,
     Quality Assurance Section, GPO, on September 10, 1986,
     confirmed 10 major defects in attribute P-2 because of
     extraneous marks (scratches).  Ridge recommended rejection
     and reprinting of the product.  (R4 File, Tab G.)  On her
     inspection report Ridge noted the lot size as 15,165, random
     sample size as 32, but that only 13 samples had been

     Thereafter, by letter dated October 15, 1986, the CO advised
     the Appellant of the rejection because of the P-2 defect,
     and that approximately 500 copies of the order would require
     reprinting at no additional cost to the Government.  (R4
     File, Tab H.)  Appellant picked up and examined the entire
     order, corrected the noted defects, and redelivered the
     pamphlets by October 20, as directed.

     However, on October 27, 1986, Walter again sent a "Notice of
     Quality Defects" to Respondent.  This time the Notice
     advised that the brochures had the following defects:
     "Trim:  wrong size/not flush/not square; Excess glue;
     Damaged cover - cuts/scratches," and that  "[s]ome brochures
     are water damaged; in some, the pages are stuck together;
     and some have been unsatisfactority [sic] stapled, i.e.,
     stapes [sic] are broken or not completely closed."  She
     further stated that "[q]uality does not meet specifications
     and the material can not be utilized.  It
is requested that the entire order be reprinted or corrected."
(R4 File, Tab I.)

     Appellant's Billing and Contracts coordinator, Melinda L.
     Peck, telephonically contacted by Ridge on October 31, 1986,
     and told of the Navy Department complaint.  Peck purportedly
     said that she was afraid that the Navy would say something
     about the staples but could not understand the claim of
     water damage since Appellant's plant had not been affected
     by a recent flood in their area which apparently was widely
     publicized.  Ridge acknowledged in her notes of the
     conversation that she, herself, saw no water damage in the
     samples but only "some wrinkles due to the shrink wrap being
     to [sic] tight."  (R4 File, Tab J, Notes 10/31/86.)

     An extensive inquiry, including checks with the
     transportation company and personal inspection by Ridge
     resulted in an entry by Ridge in her notes dated December
     16, 1986, that in her opinion there was no "water damage at
     all.  What they thought was water damage are some wrinkles
     in the text caused by the shrink wrap . . . ."  (R4 File,
     Tab J.)

     Ridge informed Darwin Hughes, Respondent's Chief of Quality
     Control, of her findings.  Hughes and Ridge then
     telephonically spoke to NSWC's Ohm.  Ridge reported in her
     notes that:

     Wanda mentioned that after the shipment went back to the
     contractor she heard on the news that Tulsa, OK was flooded
     and thought about her books being there in the flood.  The
     gentleman that was with Wanda mentioned that this is not
     what he considers to be quality level I printing
by comm'l standards and pointed out that the staples look bad
because the contractor did not staple through the same holes in
the text, when the new covers were put on.  He also pointed out
what they were talking about "[V]arnish out of register."  I told
them that the varnish is off a little but not enough for a Q.L.I.
per the QTAP.  Wanda said that she is more upset over the covers
not being even with the text than the other things and that they
don't feel that they got a good Q.L.I. product for the $36,000.00
they paid for this job.

R4 File, Tab J, Notes 12/16/86.

     As a result of the conversation, Hughes directed Ridge to
     pull an additional sample of 125 pamphlets.  According to
     Ridge's notes of that conversation, an examination of "some"
     of these additional samples by Quality Control's Jerry
     Flemion that afternoon (12-17-86) revealed that "the
     halftones, Register [sic] and printing are all good and are
     acceptable to the government but the text is 1/8" different
     in size from the cover."  (R4 File, Tab J, Notes 12/17/86.)

     Ridge next noted that she "got opinion of three professional
     bookbinders, Robert Denisac, Tim Gallagher, and Ray McCrae,
     they feel that this job would be hard to do any better."
     (R4 File, Tab J, Notes 12/18/86.)

     On December 19th, Ridge and Hughes spoke to two more of
     Respondent's bookbinding experts, Frank Grimes and John
     Crawford.  Ridge's notes of those conversations paraphrase
     Grimes as saying:

1. Not a Q.L.I. job due to overhanging cover.
2. but he's got a decent looking job
3. would rather have it overcut than undercut.

and Crawford as saying:

1. not a Q.L.I job
2. could have done a little better job
3. Text is under cut
4. Pocket creates a problem
5. Hard cover to do with squars [sic].
6. "Bastard of a cover.

     That same day, the following information was given to the
     Navy Department by Respondent's representative:

1. job is rejectable.
2. some overhang of covers due to text under cut.
3. There are problems with using this type of cover, if reprinted
there should be a slight improvement but don't expect more than
4. We advise a discount.
5. . . . .

R4 File, Tab J, Notes 12/19/86

     There followed various conversations between Respondent's
     and Navy's personnel respecting the recommended discount.
     On January 8, 1987, the Navy advised that it would accept a
     25 percent discount.  (R4 File, Tab J, Notes 1/8/87.)
     However, the following day it put this decision on hold.
     (R4 File, Tab J, Notes 1/9/87.)  Subsequently, on January
     12, 1987, it rescinded the discount decision and asked for a
     complete reprint.  (R4 File, Tab J, Notes 1/12/87.)

     As a result of Navy's changed position, GPO procurement
     personnel held a meeting among themselves on January 13,
     1987.  Ridge's notes of that meeting reflect that Hughes
     opined that humidity and not water caused the purported
     "water damage"; that the uneven cover was the result of a
     poor design, and that "anyone who would design a cover like
     this is an idiot.  There
are no printing problems with the cover.  The cover has to be put
on separately after the text is printed.  The printing inside is
OK.  . . . .  No one can do a better job."  The notes also
reflect that Flood, the CO, said that the pamphlet is a usable
product and that the people with whom the procurement personnel
were dealing obviously didn't know anything about printing, and
that it is was up to the procurement personnel to persuade the
Navy to take a discount.  Daniel Clurman, Chief, Contract
Management Branch, then opined that the Navy Department "has the
last word, . . . if they want a reprint that's what they should
get."  Hughes then said that if Respondent "made the contractor
reprint the third time there's no guaranty they'll get any better
of a product, this design makes it difficult for any QLI
contractor to do a better job."  Clurman then said that
Respondent should give Appellant written notice of the problems
which had been found.  (R4 File, Tab J, Notes 1/13/87.)

     Accordingly, the following letter was sent to Appellant by
     Hughes that same day:

     A quality evaluation was made of this product you corrected
     and delivered on October 16, 1986.

     From the first inspection the product was found to have
     scratches on some of the covers of which you corrected 500
     copies out of 14,165 and delivered on October 16, 1986.

     Our second inspection revealed defects under the following

     Contract Terms No. 1, 2-10 Quality (stitching)
     P-2:  Extraneous Marks
     P-7:  Type Quality and Uniformity
     F-1:  Trim Size (text undertrimmed)
     F-7:  Excess Glue
     F-8:  Damaged Pages

     This is to inform you of these defects, notifying you that
     this product is rejectable.  We are currently negotiating
     with the agency to resolve this matter, you will be notified
     as soon as a decision is reached.

R4 File, Tab J.

     Ridge next noted in her file that a meeting was held with
     the Navy on January 20, 1987.  In the meeting Hughes
     reportedly reaffirmed his belief that "it was not water
     damage and that the varnish is not off register far enough
     to be concerned about, but the glue problem will be
     corrected.  There will be problems in reprinting the cover
     because the cover must be prepared separterly [sic] and the
     cover has to be a little oversize with some skewness due to
     the pocket on the back."  Clurman said that Respondent went
     to its bindery department and discussed the product with
     them, and that "our chances of this job coming out any
     better is slight."  (R4 File, Tab J, Notes 1/20/87.)

     Flood then told the Navy personnel that "we want you to take
     the 25% discount because the average lay man will not notice
     anything wrong with the folder."  Navy personnel Coleman and
     Ohm responded by saying that while they were conducting
     their inspection at Appellant's plant (GPO's) "John Bassett
     said that the overall printing was not good."  Flood
     responded by saying "[T]hat's funny John Bassett told [me]
     that the [contractor] did

a fantastic job."  Coleman and Ohm then alleged that "this job
started out wrong because they ordered wrong inferior grade of
paper."  Nevertheless, after some further discussion, a decision
was reached to ask Appellant to reprint the job a second time.
(R4 File, Tab J, Notes 1/20/87.)

     Accordingly, on January 27, 1987, Ridge called Peck and
     explained the defects.  Peck agreed to reprint but was
     unsure of scheduling because of the need to obtain the
     required paper.  (R4 File, Tab J, Notes 1/27/87.)  The
     following day, January 28, 1987, Peck advised Ridge that she
     was "sending Ridge a letter with a xerox copy of a note
     signed by Coleman and Wanda Ohm."  She explained that "a
     pamphlet with a pocket normally has about 8 pages, this one
     has 32 pages and when the cover is closed with the pocket on
     the cover lookes [sic] skewed due to the amount of pages in
     the pamplet [sic] & the pocket."  (R4 File, Tab J, Notes

     By letter dated January 29, 1987, Peck transmitted a copy of
     Coleman's and Adams' August 4, 1986, note, supra, at 10.
     The transmittal letter in pertinent part stated:

     As per our phone conversation, enclosed is a copy of the
     inside cover of a book returned back to us in August 1986,
     which had been an advance copy sent to the agency for

     It states cover fold was askew from text, but the cover was
     not the problem.  The pocket makes the cover thicker at the
     lower right which causes the text at the bottem [sic] to
     push out more than the top of the book.  You can see the
     text sticks out beyond the cover by about 1/8 on [sic] an
     inch.  In order for us to repair it, we had to trim the face
     l/8" under size in order to comply with the instructions of
     Bob Coleman and Wanda Ohm without redesigning the cover.

     This was the only way to correct the problem and the note
     said after correcting it was okay to process.

     Reprinting this job at 8 1/2" would not provide a different
     result unless the pocket was redesigned to be further away
     from the spine.  Without a design change the text will again
     push out into an over hang position on the face.  I hope
     this clarifies the note written.

     ColorGraphics proceeded only after press checks, binding
     sample okays, and followed the instructions of the end user,
     we feel reprint without design changes would not alter the

     Kindly advise us of your thoughts.

R4 File, Tab J.

     On January 30, 1987, Peck advised Ridge that Appellant would
     "fight not to reprint."

     On February 2, 1987, the CO issued the following letter to

     An examination of samples of the product your firm produced
     for Department of the Navy has revealed defects under the
     following attributes:

     Contract Terms No. 1, 2-10 Quality (stitching)
     P-2:  Extraneous Marks
     P-7:  Type Quality and Uniformity
     F-1:  Trim Size (text undertrimmed)
     F-7:  Excess Glue
     F-8:  Damaged Pages

     Based on the results of this inspection, the order has been
     determined rejectable, and will require reprinting.  The
     reprinting will be accomplished at no additional cost to the
     Government in strict accordance with the specifications.

     As agreed, the rejected copies will be picked up on February
     3, 1987.

     As mutually agreed upon in our telephone conversation of
     February 2, 1987, the reprinting and delivery of this
     product will be accomplished by March 25, 1987.

R4 File, Tab K.

     On February 12, 1987, during production of the second
     reprint, Peck asked Ridge to advise her as to "what size
     exactly" were "the text and the cover to be."  Later that
     day Hughes, at Ridge's request, informed Peck that the text
     was "to be 8 1/2 x 10 15/16 and the cover to be flush with
     the text at 8 1/2 x 10 15/16 but if the cover needs to be
     changed due to walking, that the cover size can be changed
     but the text and cover still must be flush . . . the job
     must be cut and folded on a bias.  Cover over 1/32-text not
     under."  Hughes also suggested to Peck that she check with
     Appellant's "pros in the bindry [sic] to see what they will
     need to do to get what we want . . . maybe they could change
     the design of the pocket, like not having a fold over to be
     glued close to the bind . . ."  Hughes asked Peck for
     Appellant's suggestions on how to redesign the cover because
     Peck "kept saying that to get what the agency wants the
     cover needs to be redesigned."  (R4 File, Tab L, Notes

     Various telephone conversations between Appellant's
     personnel, including its President, Robert Diehl, and
     Respondent's personnel followed.  Ridge's notes of
     conversations between Hughes, Diehl, and herself for
     February 19, 1987, reflect that they told Diehl "that he
     must maintain text 1/32" from the cover; that Respondent had
     had a meeting with the Navy and addressed the defects . . .
     we even ask [sic] for a discount.  We
got their complaints all out in the open but we are dealing with
an impossible artist and designer.  The art display is extremely
difficult. . . . .  Used glue tape instead of glue.  [Diehl]
suggested that the pocket be made smaller 8 1/8 x 3 instead of 8
3/8 x 3 to get the pocket out of the gutter . . ."  (R4 File, Tab
L, Notes 2/19/87.)

     When the Navy Department was contacted for its approval of
     these changes, it would not concur with the change in the
     size of the pocket.  (R4 File, Tab L, Notes of 2/24/87.)

     By letter of the CO dated March 5, 1987, Diehl was informed
     of Navy's response.  Diehl was also advised of the following
     pertinent prerequisites respecting the second reprint:

     5) Maintain cover and text preferably flush but undercut
     text acceptable no more than 1/32" for face trim, and no
     more than 1/64" top and bottom trim.  Revert back to the
     original trim size of 8-1/2 x 11 and disregard the
     supplemental agreement dated September 4, 1986, Modification

     6) Use glue strip tape for pocket on cover 3

     7) Apply a dry varnish instead of a wet varnish on cover 1 &

     8) Try to retain a humidity level sufficient to prevent any

     9) Watch type quality (doubling) within text

        . . . .

R4 File, Tab L, page 11.

     On March 9, 1987, Diehl contacted the CO advising that

Appellant was going to press that week.  Diehl renewed his
request to reduce the pocket size ("even 1/8" will help").  This
time the Navy gave its approval making the pocket size 8 1/4 x 3
instead of 8 3/8 x 3 inches.  (R4 File, Tab L, page 14.)

     The job then went into production.  In this phase, during
     the bindery inspection, Respondent's representative
     telephonically told Navy's representative (Coleman) that
     "most of the job is right on the edge (flush) but some are
     off a hair over the cover down at the bottom besides the
     pocket."  Coleman told Respondent's representative "to go
     ahead with the job, they [Navy] will take it."

     Subsequently, Contract Modification 818 dated March 24,
     1987, was issued by the CO on April 8, 1987, and agreed to
     by Diehl on April 10, 1987.  The agreement incorporating
     various aspects of the previous negotiations of the parties
     reported, supra, in pertinent part stated:

     Covers (Item 1):  Coat (after printing) the entire surface
     of covers 1-4 with a dry gloss varnish or lacquer to prevent
     scratching and smearing.  Additionally, (page 5 of 8,
     paragraph 6) are amended to read:  "Binding:  (Item l)
     Cover:  Die-cut, fold and glue using a glue strip tape
     extension on cover 4 to the inside of cover 3 to form a
     pocket 8-1/4 x 3".  Saddle-wire stitch cover and text in 2

     The contractor is to maintain cover and text preferably
     flush but undercut text acceptable no more than 1/32" for
     face trim, and no more than 1/64" top and bottom trim.
     Revert back to the original trim size of 8-1/2 x 11" and
     disregard the supplemental agreement dated September 4,
     1986, Modification #2443.

     These changes shall result with no increase to the contract

R4 File, Tab L, page 16.

     By letter dated May 29, 1987, Appellant advised the CO that
     it had completed the second reprint pursuant to Respondent's
     instructions, that the Appellant incurred costs in excess of
     $30,000 in order to comply with the instruction, that the
     reprint was unjustified in Appellant's opinion, and placed
     an undue hardship under Appellant, and that a contract
     modification therefore should be issued authorizing
     Appellant to be paid for the reprint.  Appellant requested
     the CO's decision on this request pursuant to the disputes
     article, Part 2, Article 2-3 of U.S. Government Printing
     Office Contract Terms No. 1.  (R4 File, Tab M.)

     In response, the CO, by letter dated June 11, 1987, styled a
     "final decision," denied the appeal.  (R4 File, Tab N.)
     Appellant then filed its Notice of Appeal with this Board
     (R4 File, Tab O), followed by its Complaint which in
     pertinent part, as its claim for relief, states:

     11.  Colorgraphics attempted in good faith to perform its
     obligations under the GPO Purchase Order and the GPO
     Contract Terms.  When the order was first shipped and
     Colorgraphics was advised of extraneous marks on the
     Pamphlet covers, Colorgraphics accepted the return of the
     Pamphlets and replaced those which had been scratched at its
     own cost including the cost of the return shipment to Tulsa
     and reshipment to the Purchasing Agency.  Colorgraphics was
     not advised of any deficiencies or defects in the text of
     the Pamphlet during that period.

     12.  The erroneous report by the Purchasing Agency to GPO
     and to Colorgraphics that the order had suffered "water
     damage" during the October, 1986 reshipment caused extensive
     delay, confusion and cost to Colorgraphics in making its
     good faith effort to determine the cause and extent of the
     reported "water damage."
Only after the "water damage" report was found to be in error was
Colorgraphics advised by letter dated January 13, 1987, of
defects found in a "second inspection".

     13.  None of the defects referred to in the GPO letter dated
     January 13, 1987 pertaining to stitching, extraneous marks,
     type quality and uniformity, excess glue and damaged pages
     were sufficient to justify the rejection of the work nor
     were they of a nature to prevent the use of the Pamphlets
     for their intended purpose.

     14.  The problems with the trim size of the cover and the
     skewing of the text were caused by the design of the
     Pamphlet produced by the Purchasing Agency.  The job
     specifications required that the cover fold for the inside
     pocket be 8-3/8" wide, which forced the inside edge of the
     pocket into the gutter of the cover thereby distorting the
     squareness of the cover.  The 32 pages of text could not be
     inserted and bound over the thickness and width of the
     pocket without skewing the text and causing the difficulties
     in meeting the specifications for face, top and bottom trim.
     The specification that the pocket on the inside of the back
     cover be 8-3/8 x 3" was not necessary for the pocket to
     function as intended.  The GPO staff acknowledged in their
     review of the product that the design of the cover was the
     cause of the trim and skewing problems.  The Purchasing
     Agency and the GPO acknowledged the difficulties in
     production caused by the design of the cover and the
     thickness of the text and finally approved a reduction of
     1/8" in the width of the pocket and modifications in the
     face, top and bottom trim specifications as set forth in the
     March 24, 1987 Contract Modification by the Contracting

     15.  The rejection of the job by the Purchasing Agency was
     unreasonable and without due regard to the opinions and
     evaluations provided by the professional printers and
     binders on the GPO staff.

     16.  An equitable reduction in the contract price would have
     adequately protected the interests of the GPO and the
     Purchasing Agency and would have avoided the harshness of
     the economic penalty imposed upon Colorgraphics by the
     rejection of the entire order and the requirement for

Official File, Tab 5.

     Appellant's prayer for relief is for the issuance of a
     contract modification in the amount of $35,596.46 as the
     actual and direct costs incurred by Appellant in reprinting
     and reshipping the pamphlets.

     A general denial of Appellant's allegations was entered in
     the record on behalf of the Respondent pursuant to Rule
     6.(b) of The Rules of Practice and Procedure of this Board,
     GPO Instruction 110.12 dated September 17, 1984.

     Appellant elected a formal hearing pursuant to Rule 8.
     Accordingly, a prehearing telephone conference was held on
     February 22, 1988, to discuss preliminary matters.  At that
     time Appellant's counsel requested documentation of the
     factual basis underlying the Contracting Officer's rejection
     letter of February 2, 1987.  (R4 File, Tab K.)  Respondent's
     representative stated that he could not then locate the
     documentation but would attempt to locate it after the
     conference and if found, furnish it to the Board and
     Appellant.  With that agreed to, Appellant's counsel advised
     that no further hearing would be necessary and the matter
     could be decided upon the written record, provided it could
     be determined that certain GPO employees identified, supra,
     were accurately quoted in the R4 File.  Respondent's
     representatives agreed to this arrangement.  The parties
     also requested that they be allowed to file cross and reply
     briefs on the issues presented.  The Board agreed.

     As a result of the Prehearing Conference held February 22,
     1988, Respondent supplemented the record on February 23,

with an inspection report by Ridge dated December 16, 1986, as
the underlying documentation for the CO's February 2, 1987,
rejection letter.  The report in pertinent part stated:

Defect Breakdown by Attributes
Defect Class
_______________________________     Major      Critical
Contract Terms No. 1, 2-10 Quality                      19
P-2 Extraneous Marks (scratches on cover)                 2
P-7 Type Quality and Uniformity (Doubling)               12
F-1 Trim size (text undertrimmed)                       102
F-7 Excess Glue                                          15
F-8 Damaged Pages (Humidity)                              2

                                            TOTALS      152

     Number of Defects/100 Items
     (No. Majors + No. Criticals divided by Sample Size) 100

     Number of Critical Defects/100 Items
     (No. Criticals divided by Sample Size) 100

Accept     x         Accept with Discount  25 %     Reject and
Reprint ___

R4 File, Tab P.

     Subsequently, by Joint Stipulations received by the Board on
     April 12, 1988, the parties indicated that Messrs. Clurman,
     Crawford, Denisac, Flood, Gallagher, Grimes, Hughes, and
     McCrae had reviewed the comments respectively attributed to
     each of them in the notes contained in Tab J (See page 13,
     supra.), and that each agreed he was accurately quoted.
     Additionally, Respondent agreed to stipulate that Jerry
     Flemion, a former employee, would testify to the accuracy of
     the quote that "the text is 1/8"
different in size 20 from the cover." attributed to him as "Jerry
F." in Ridge's notes of December 4, 1986.

     Cross and reply briefs were duly filed with the Board and
     the record thereafter settled on June 6, 1988.

     The appeal now comes to the Board in this form for decision.


     The issue presented by this appeal is whether or not
     Appellant under a theory of implied Government warranty of
     the adequacy of the specifications is entitled to a
     modification of the contract price for the actual and direct
     costs incurred by it in printing and reshipping the
     pamphlets.  The resolve of this issue turns upon:

(1)  Whether there was such a warranty respecting the pamphlet's
(2)  Whether Appellant followed the design to the letter;
(3)  Whether the skewness of the pamphlet cover was caused by the
defect; and if so,
(4)  Whether the defects other than trim size reflected in the
inspection report of December 16, 1986, can be relied upon by
Appellant to support the rejection; and if so,
(5)  Whether rejection was in fact based upon such other defects.


     Examining the stated issue and questions in light of the
     record and applicable Government contract law, the Board
     finds that:

(1)  There was an implied warranty of the accuracy of the
specifications with respect to the design of the pamphlet,
including its pocket.  In Consolidated Diesel Electric Corp.,
ASBCA 10486, 67-2 BCA  6669 (1967) at 30,951-52, the Armed
Services Board of Contract Appeals stated:

     The Government's implied warranty of the adequacy of its
     specifications is based on its responsibility for the
     specifications rather than any presumed 'superior knowledge'
     in the sense of greater expertise.  When one of the parties
     to a contract undertakes to prepare the specifications, that
     party is responsible for the correctness, adequacy and
     feasibility of the specifications, and the other party is
     under no obligation to check and verify the work product of
     the party who assumed responsibility for the preparation of
     the specifications, even though he may be as much or more of
     an expert than the party who prepared the specifications.
     Courts have held many times that a bidder need not verify
     the correctness and adequacy of Government specifications
     prior to bidding.  Ithaca Gun Co. v. United States, 176
     Ct.Cl. 477 (1966), Harvey-Whipple, Inc. v. United States,
     169 Ct. Cl. 689 (1965.)

     However, before applying the implied warranty of
     specifications it must be determined whether the problem
     encountered is caused by an improper Government design.  In
     this regard, the boards and courts often refer to the
     specifications as design specifications when the Government
     has dictated the details of performance and as performance
     specifications when the details are left to the contractor's
     discretion.  In Monitor
Plastics Co., ASBCA 14447, 72-2 BCA  9626 (1972) the Armed
Services Board at 44,970-71 stated:

DESIGN specifications which set forth precise measurements,
tolerances, materials, in process and finished product tests,
quality control, inspection requirements, and other specific
information.  Under this type specification, the Government is
responsible for design and related omissions, errors, and
deficiencies in the specifications and drawings.  PERFORMANCE
specifications set forth operational characteristics desired for
the item.  In such specifications design, measurements and other
specific details are not stated or considered important so long
as the performance requirement is met.  Where an item is
purchased by a performance specification, the contractor accepts
general responsibility for design, engineering, and achievement
of the stated performance requirements.  The contractor has
general discretion and election as to detail but the work is
subject to the Government's reserved right of final inspection
and approval or rejection.

     Turning to the specifications in the instant case, we find
     that they detail the exact papers to be used for cover text
     and related forms; the size, location, and method of
     construction of the inside pocket; the folding and the
     insertion of the forms; and the pocket and binding options
     available to Appellant with respect to gathering and
     stitching the text and affixing the cover thereto.  We
     conclude from this that the specifications, by their nature,
     are "design" specifications rather than "performance"
     specifications, thus our finding of warranty.

     (2)  Appellant executed its production of the pamphlet in
     strict accordance with Respondent's design.  Appellant has
     affirmatively asserted that it followed the specifications
     of the pamphlet to the letter and there is no evidence in
     the record to
the contrary.  On the other hand, there are substantial
admissions against interest by Respondent's technical personnel,
including its Chief of Quality Control, to the effect that a
better job could not be done, from which we impute accuracy to
Appellant's assertion.

     (3)  The skewness of the pamphlet cover (trim size defect)
     was caused by Respondent's design.  This conclusion is
     supported by the numerous admissions against interest by
     Respondent's technical personnel, supra.  Moreover, the
     pamphlets were satisfactorily manufactured upon the
     Government's agreement to modify the specifications in
     accordance with Appellant's advice.

     (4)  Other defects in Ridge's inspection report cannot be
     relied upon to support rejection in this case given the
     particulars of the Appeal Record cited by Appellant in its
     "Reply Brief," which such particulars the Board has examined
     and found to be sufficiently contradictory to the inspection
     report findings to make them of doubtful accuracy.

     (5)  There is substantial evidence supporting a conclusion
     that the sole underlying basis for the rejection was the
     desire of GPO procurement personnel to mollify their
     customer agency, and that defects other than trim size were
     not the direct cause of rejection.

      Accordingly, it is the decision of this Board that the
      appeal be granted and the matter remanded back to the CO
      for a determination of the quantum of money to which
      Appellant is entitled as actual and direct costs incurred
      by it in printing and reshipping the pamphlets.  Such
      determination is to be made in accordance with standard
      cost determination procedures, including audit, if