Fry Communications, Inc.

GPO BCA 22-84
February 20, 1986
Michael F. DiMario, Administrative Law Judge


   This appeal, timely filed by Fry Communications, Inc., 800 W.
   Church Road, Mechanicsburg, PA 17055 (hereinafter "Fry" or
   "Appellant"), arises under the disputes clause of the U.S.
   Government Printing Office Contract Terms No. 1, (GPO Pub.
   310.2) dated October 1, 1980, which was incorporated in and
   .made a part of a certain contract identified as Purchase
   Order No. 05899, Jacket No. 438-615, dated April 6, 1984,
   between Appellant and the U.S. Government Printing Office
   (hereinafter "GPO" or "Respondent"). The contract in the
   amount of $8,019 was for the production of 12,000 size 8 1/2 x
   11", 144-page Export Trading Companies Guidebooks for the
   Department of Commerce. The appeal is from the final decision
   of James L. Leonard, Contracting Officer, GPO, of July 10,
   1984, affirming his earlier decision to accept the product at
   a 18.9 percent discount in price because
"[t]est results showed that the paper was not equal to
specifications in color." (Appeal File, hereinafter "R4 file",
Tab 8) The appeal is remanded back to the contracting officer for
reconsideration for the reasons set forth hereinbelow.

Statement of Facts

   The contract specifications (R4 file, Tab 1) required that the
   contractor furnish the following in producing the required

PAPER - COLOR AND KIND (must be of a uniform shade in each copy)
Contractor will furnish

    JCP   Basis - 500 Sheets
   Code No.*   (Size)   (Weight)
      Inches    Pounds
Text - White Offset Book   A60   25 x 38   50
Cover - White Litho Coated    L1O   20 x 26   80

*Must be in accordance with JCP Paper Specification Standards, in
effect on date of this order.

. . . .

   Moreover, the specifications state that: "Quality Assurance
   Through Attributes (GPO Pub. 310.1) in effect on date of this
   order, applies. Level 3." (R4 file, Tab 1)

   One-thousand copies were to be delivered to the Department of
   Commerce by April 9, 1984, and apparently were so delivered.
   However, on April 14, 1984, G. F. Flemion, Printing
   Specialist, Quality Assurance Section, Printing Procurement
   Department, GPO, inspected the product in accordance with the
   contract terms and found from a sample of some 32 books that
   there was an apparent color deviation in the paper; and that
   the defect was major (32 demerits). He recommended having the
   paper tested and, if his judgment of deficiency was correct,
   accepting the product at an 18.9 percent reduction in price
   (R4 file, Tab 2) pursuant to.the Quality Assurance Through.
   Attributes Program ("QATAP") discount guidelines (GPO Pub.
   310.1, supra).

   On April 30, 1984, Sylvia S. Y. Subt, Chief, Paper and
   Physical Testing Division, Quality Control and Technical
   Department, GPO, issued a report stating that the products
   tested for "[c]olor, finish, formation, and cleanliness [did
   not] match . . ." the "Standard Sample . . ." for "JCP A60,
   50-pound . . ." offset paper in that the color was "[e]
   xcessively dark and red. DE (FMC-II) = 8.7 (36 demerits)." The
   products were thus "[n]ot equal to specifications. Wrong color
   of text paper. Each publication (for text only) is assessed 36
   demerits." (R4 file, Tab 3)

   By letter dated May 2, 1984, Appellant was notified of the
   finding and the proposed decrease of "up to 18.9% of the
   invoice billing price." (R4 file, Tab 4) On May 17, 1984, a
   contract modification reflecting this change and the reason
   therefore was issued to Appellant (R4 file, Tab 5).

   Appellant apparently sent letters on May 15, May 17, and July
   3, 1984, attempting to perfect an appeal by taking exception
   with the test results "[p]ursuant to the disputes clause in
   contract terms No. 1. . ." [based] upon belief that the paper
   used] "is equal to the terms in the
contract." [and] "was of uniform shade and therefore not subject
to . . ." the proposed price reduction (R4 file, Tab 6).

   The contracting officer, Mr. Leonard, contacted Appellant's
   Mr. Ron Wentz by telephone on July 10, 1984, and made a
   handwritten memorandum of the conversation. The memorandum
   reflects that Mr. Wentz apparently said that he believed the
   discount should be 3 to 4% but was told the price reduction
   would stand, and that it was much better to accept this than
   to have the entire job rejected subject to reprinting (R4
   file, Tab 7). The contracting officer's final decision letter
   followed (R4 file, Tab 8).

   By letter of July 24, 1984, Appellant wrote to the Public
   Printer, GPO, perfecting the appeal in accordance with the
   terms of the disputes clause, supra. The letter stated in
   pertinent part that:

The test results did not state which standard applies to this
test. We also take exception because the standard sample sent to
us does not meet the cromaticity standard. In this we ask that
contract modification 0203 be dropped as we met all standards
that we had control over in the printing of this job. The text
stock passed all the tests that were asked for and was all of one
shade per contract"

R4 file, Tab 9.

   The contracting officer apparently believed that this "letter
   did not address the final decision of the contracting officer
   . . ." and would thus not be accepted as a letter of appeal
   (R4 file, Tab 10).

   The Appellant sent another letter of July 31, 1984,
   specifically referencing the "final decision by the
   contracting officer" (R4 File, Tab 11)..

This letter apparently satisfied the contracting officer's
requirement for specificity, since Appellant was notified of
receipt of the appeal and that it was being forwarded to the
Board of Contract Appeals for decision.

   By letter of October 1, 1984, Appellant requested an informal
   hearing and added the following points to its written record:

(A) The text stock used in this publication closely matches the
standard sample for color. We will bring our sample at the time
of the hearing and show the board what we mean.

(B) The test for the color attribute is subjective. Thus a
contractor cannot know in advance of performance if his paper is
going to be judged in conformance. Nor can he tell from job to
job how it will be judged because the paper may be judged by
different inspectors or by the same inspector in a different
mood. Nor can he be sure he is on an equal footing with other
contractors. Nor can he convey to his paper suppliers the paper
standard which is required.

(C) Compounding the subjectivity of the test for paper color
conformance is the fact that standard viewing conditions are not
described in the QATAP book. The degree of color conformance
varies by the way it is viewed as we will demonstrate at the

Official File, Tab 5.

   Thereafter, a procedural change occurred in the Board of
   Contract Appeals structure causing Appellant to renew its
   request for an informal hearing and to restate points A, B,
   and C, supra (Official file, Tab 7).

   Subsequently, a prehearing conference was held wherein
   Appellant was represented by Mr. Henry Fry, its President. The
   prehearing conference report (Official file, Tab 11) reflects
   that upon convening the hearing the undersigned presiding
   hereat briefly stated the facts in the appeal asdescribed
   above and then asked Mr. Fry if they were substantially
correct. Mr. Fry advised that they were but stated that he was
withdrawing his earlier position that the standard sample did not
itself meet the chromaticity standard. Thereafter, the report in
pertinent part reflected:

   Mr. Fry went on to say he did not understand the DE (FMC II) =
   8.7 coordinates (referring to the specification). The
   undersigned explained that the DE reference is to the
   mathematical calculations that the testing personnel use in
   computing the test results. Mr. Fry had additional questions
   concerning how the standard relates to the QATAP; how it
   relates to mismatched shades; how many points may a product be
   off from the standard before demerits are assessed. At this
   point the undersigned gave Mr. Fry a copy of page 21 from the
   QATAP to review; specifically, the section that refers to
   "Demerit Table."

. . . .

   After some discussion between the parties, it was agreed that
   . . . Mr. [John A.] Tanner, [Quality Control & Technical
   Department] QT&TD, [be made] available for questioning. Upon .
   . . arrival Mr. Tanner was called as a witness by the
   undersigned and asked the following:

Q. Explain the testing process used in this instance.

A. The testing was done by machine, an abridgespectrophotometer.

Q. Does the person using the machine need any special

A. No. The machine makes the judgment; it is not subjective.

Q. Does the machine calculate the demerits?

A. No. The numbers do not indicate demerits but the total color
deficiency. The demerits assigned for this relative deficiency
come from another source document and were determined after a 5-
year study of gathering responses from various individuals. GPO
presented these figures to the Joint Committee on Printing
("JCP") and the JCP adopted these numbers.

Q. How often is the machine calibrated?

A. The machine is calibrated daily.

Q. (Mr. Fry) Can the "white tiles" go bad?

A. Not likely . . . they are made to last a lifetime.

Q. (Undersigned) Would it be helpful to see how the machine
actually works?

A. It takes at least 30 minutes to prepare the machine. Mr. Fry
did not think this would be helpful to him.

. . . .

   Mr. Fry went on to say that he was totally unaware of any
   [requirement for quantitative] testing of paper only
   subjective testing in comparing sample to standard.

   Mr. Tanner added that the 5-year study was for white paper.
   There are no published standards as of yet for color paper.

Mr. Fry said he would like to see the paper showing the adopted
standard used by the testing personnel in making their

   There was a brief recess.

   After the recess, Mr. Fry was handed a copy of the "Report by
   GPO Paper Specification Committee" to the JCP. Mr. Fry asked
   if this document had been referenced in the specification.
   However, no one could answer that question on the spot. The
   undersigned pointed out that on the specification it refers to
   JCP A-60 with an asterisk which reads, "[m]ust be in
   accordance with JCP Paper Specification Standards in effect on
   the date of this order." Also referenced on the specification
   is Publication 310.1, "QATAP", which was later determined to
   still be in effect.

   The undersigned added that it had not been determined that the
   GPO Paper Report had been mentioned or referenced in the
   specification. However, the basic specification adopts the
   entire JCP standard. It was apparent to the undersigned that
   GPO's testing people had based their results in this matter on
   the GPO Paper Study Report.

   Mr. Fry assumed that color was classified [in the QATAP] under
   judgment characteristics, but according to the "GPO Paper
   Study Report", color deficiency is not a judgment
   characteristic. Mr. Fry asked on what QATAP grounds he had
   been assessed demerits.

Q. (Undersigned) Mr. Tanner, with respect to the analysis of
paper and color (white), what QATAP portion use to assess

A. I am not sure off the top of my head. Mr. Tanner went on to
say that he referred to the numbers published in the "GPO Paper
Study Report."

   Mr. Fry replied that they were not the same numbers. Mr. Fry
   contends that the area he was found defective in is not
   included in the QATAP. He felt the testing was subjective at
   one time and was [therefore] never included in the present

   Government counsel felt Mr. Fry's argument was "just a smoke
   screen," but would need additional time to respond. [He] said
   he would have the sample product available at the hearing to
   compare to the finished product. He felt the difference in
   color of paper would be obvious to see by all.

   Mr. Fry then added the comparison of products could be done at
   this time. In fact, he added, "I came prepared today to make
   that comparison." Mr. Fry contends that there is not an
   obvious difference.

   The undersigned, for clarification purposes, asked Mr. Fry if
   he wanted him to make that determination now on his own
   without any technical results. Mr. Fry responded yes. (Prior
   to making the visual comparison, the undersigned asked if
   samples (standard sample and finished product) could be tested
   one against the other by the GPO testing equipment, but the
   response was that the standard sample had not been put
   through. the equipment.)

   The undersigned compared the record standard sample (only one
   sheet of paper) with the finished product. (A sheet of white
   paper was placed behind each piece of paper being reviewed.)
   It was clear to the undersigned that there was a difference in
   color. He inquired about the testing conditions at GPO and was
   informed that a standard booth is used.

   Mr. Fry felt there was an "OK" deviation. The undersigned went
   on to say that often physical evidence is used and the ruling
   authorities' subjective judgment often applies.

   From his visual observation, the undersigned then ruled that
   the paper submitted by Fry did not match the standard sample.
   He informed the parties that he would confirm his decision in

   The appeal comes before the Board for final written decision
   in this form.


   Issue 1 - Whether a product printed upon white paper which by
   visual comparison and technical testing does not match in
   color a contractually indicated standard sample is rejectable
   under the terms of the contract.

   Issue 2 - If found rejectable, is the discounted price at
   which the Government indicates its willingness to accept the
   defective product reasonable?


   Despite the undersigned's oral ruling upon his visual
   comparison of the contested product and standard sample that
   the colors of the two products are distinguishable one from
   another, the determination of issue number one is still
   necessary since pursuant to the contract certain defective
   paper products are acceptable within limits. Moreover, other
   paper products which fall outside such limits, if deemed
   rejectable, may be accepted at the discretion of the
   contracting officer at a discounted price.

   The first issue raises a question of law and as such, any
   decision by an administrative Board on such issue is
   reviewable by the Federal Courts (Wunderlich Act, 41 U.S.C. 
   321 and 322). The second issue raises a question of fact
   pursuant to a contractual provision, infra.

   The examination of issue number one must necessarily start
   with the contract. The key provisions are set forth in part in
   each of the contract documents; i.e., the purchase order,
   Contract Terms No. 1, QATAP, and U.S. Government Paper
   Specification Standards (hereinafter "JCP Paper Specification
   Standards"). Accordingly, it will be helpful to examine those
   provisions for comparison purposes to aid our analysis.


   (1) The contract purchase order incorporating the paper
   specification specifies that the required 25 x 38" 50 lb.
   Offset Book paper, JCP Code. A-60, "[m]ust be in accordance
   with JCP Paper Specification.Standards, in effect on date of
   this order."

   (2) The purchase order also specifies that "Quality Assurance
   Through Attributes Program (GPO Pub. 310.1) in effect on date
   of this order, applies. Level 3 [and that] U.S. Government
   Contract Terms No. 1 (GPO Pub. 310.1), in effect on date of
   this order, applies."

   Level III is not defined in the QATAP Contract Terms but
   within separate guidance given all contractors on such terms.
   Such guidance in pertinent part states:

Level III: (Good Quality)

   Level III conformance is typically required for products which
   contain illustrations used for identification or which must
   transmit precise information even though minute detail is not

   These products typically involve above average quality
   workmanship, materials, composition, typography, reproducibles
   and production methods. Products in this level typically
   require clean, sharp printing of single- or multi-color work
   (general process work) and halftone reproductions up to 150
   line screen. Finishing must be held to above average standards
   of accuracy, durability and appearance.

   (3) The order also required that two copies of the finished
   product be mailed "to GPO Quality Assurance Section Marked:
   Inspection Sample".

   (4) Article 2-12(a) of U.S. Government Printing Office
   Contract Terms No. 1, revised October 1, 1980, provides that:

   (a) All supplies (which term, throughout this. article,
   includes without limitation, raw materials, components,
   intermediate assemblies, and end products) shall be subject to
   inspection and test by the Government, to the extent
   practicable at all times and places including the period of
   manufacture, and in any event prior to acceptance.

   (b) In case any supplies or lots of supplies are defective in
   materials or manufacture or otherwise not in conformity with
   the requirements of the contract, the GPO shall have the right
   either to reject them (with or without instructions as to
   their disposition) or to require their correction. . . . If
   the contractor fails . . . to promptly replace or correct such
   supplies or lots of supplies, the GPO either (i) may by
   contract or otherwise replace or correct such supplies and
   charge to the contractor the cost occasioned the Government
   thereby, or (ii) may terminate the contract for default as
   provided in the article entitled "Default" of these contract
   terms. Unless the contractor corrects or replaces such
   supplies within the established delivery schedule, the
   Contracting Officer may require the delivery of such supplies
   at a reduction in price which is equitable under the
   circumstances. Failure to agree to such reduction of price
   shall be a dispute concerning a question of fact within the
   meaning of the article entitled "Disputes" of these contract

   (5) The JCP Paper Specification Standards of December 1, 1981,
   for JCP A-60 printing paper require that in its color "[p]aper
   shall conform to the standard sample(s) as adopted by the
   Joint Committee on Printing.. (For information only, the
   chromaticity coordinates and luminance value for the standard
   adopted by the Joint Committee on Printing are: x=0.316, y=
   0.326, and Y=83.0 pct.) "Sampling and testing shall be
   conducted in accordance with standards in Part 2, Paper
   Specification Standards."

   (6) Part 2 of the JCP Paper Specification Standards captioned
   "Testing Standards and Definitions" provides for testing "[c]
   olor by visual comparison" and by "spectral reflectivity" and
   under the caption "General Information" specifies that "[t]he
   methods given in this Part of the Standards are required to be
   used in measuring the characteristics of papers that are
   specified in Part 1, Specifications."

   Paper suppliers are required to make such tests as may be
   necessary, to ensure the delivery of finished paper fully
   complying with the applicable specifications and standard
   samples. . . . All paper, including paper in the manufacturing
   process, shall be subject to inspection as authorized or
   required by the Committee.

   Following the subcaption "[c]olor by visual comparison", part
   2 specifies:

   Use method T-508, with a qualified observer. A qualified
   observer is a person with considerable experience in paper
   color matching, who is able to attain a score of at least 75
   in the ISCC Color Aptitude Test (obtainable through the
   Federation of Societies for Paint Technology, 121 South Broad
   Street, Philadelphia, Pa. 19103).

   Following the subcaption "[c]olor by spectral reflectivity"
   part 2 specifies: "Use method E-308 of ASTM." Under the
   subcaption "[g]eneral information", supra, ASTM is identified
   as the American Society of Testing and Materials, followed by
   its address.

   (7) Part 4 of the specification standards captioned
   "Acceptance Criteria", specifies:

   Paper that does not meet all specification values shall be
   accepted with no discount providing that the minimum
   acceptable Product Quality Index (PQI) of 70 is met.

   The PQI for a specific paper is determined by assigning
   demerits to each deficient quality characteristic based on
   test results. The demerits assigned will vary with the
   category of deficiency. A minor defect shall be assigned 4
   demerits, a major defect 12 demerits, and a critical defect 36

. . . .


   Minor Defect: Any deficiency from specified values which does
   not materially reduce the usability of the paper for its
   intended purpose; or require special procedures for printing
   or processing.

   Major Defect: Any deficiency from specified values, other than
   critical, that could result in failure, or materially reduce
   the usability of the paper for its intended purpose; or may
   require special procedures for printing or processing, or is a
   significant deviation from specifications, established
   standards, or average process capability, or may materially
   affect the appearance of the product.

   Critical Defect: Any deficiency from specified requirement
   that judgment and experience indicate would result in the
   paper being unusable for its intended purpose; or is a serious
   departure from specifications, established standards, or
   average process capability.

   There follows a mathematical equation for computing the PQI;
   namely, that: "Product Quality Index is equal to 100 minus the
   sum of the assessed demerits [which] [e]xpressed
   mathematically [is]

PQI=100 --   i=N
                     \    \Ci
                     /      /

   Thereafter, part 4 states that "[p]aper having a PQI of 70 or
   better shall be accepted at the contracted price as meeting
   the intent and requirement of the specification. That having a
   PQI below 70 shall be considered as critically defective,
   subject to outright rejection."

   There follows "[c]riteria for establishing the category of
   defect and demerits . . .", however, no specific criteria are
   set for "color" but such characteristic would necessarily have
   to fall either in No. 23, "All Other Measurable
   Characteristics" or No. 24, "Judgment Characteristics." If
   held to come under the former characteristics, the category =
allocation would be:

Category   Demerits
Minor   4
Major   24
Critical   36

While if found to be under the latter characteristic it would be:

Category   Demerits
Minor   2
Major   14
Critical   36

   (8) The Quality Assurance Through Attributes Program (GPO Pub.
   310.1) as revised 6/1/81 in pertinent part provides that:

1-1. Quality Attribute - A quality attribute is a property of a
printed product which affects its quality. Examples are trim
size, image position, type quality, and paper.

. . . .

1-3. Critical Defect - A critical defect is a serious deviation
from specifications. Critical defects are designated in the
tolerance tables for finishing attributes and the paper

1-4. Major Defect - A major defect is a deviation from
specifications which is less serious than a critical defect.
Major defects are designated in the tolerance tables for printing
attributes, finishing attributes, and the paper attribute.

   1-5. Total Defects - Total defects are the sum of all critical
   and all major defects (e.g., 3 critical defects + 2 major
   defects = 5 total defects).

   1-6. Acceptable Quality Levels (AQL's) - The AQL's are the
   maximum number of defects per 100 copies that the Government
   will accept at the contract price. Unless otherwise specified,
   the AQL's are 1.0 for critical defects and 6.5 for total

. . . .

   1-11. Standard Viewing Conditions Standard viewing conditions
   are those defined in "ANSI PH2.32-1972 American National
   Standard Viewing Conditions for the Appraisal of Color Quality
   and Color Uniformity in the Graphic Arts, Part 1, 'Viewing
   Conditions for the Appraisal of Color Quality in the Graphic


   a. QATAP establishes attributes for quality and it defines
   tolerances for those attributes for five quality levels of
   printing. When attributes deviate from the allowable
   tolerances, the deviations will be classified as either major
   or critical defects pursuant to the applicable tolerance

. . . .

   3. DETERMINING ACCEPTABILITY - Because.inspection of all
   copies of a publication is usually impractical, the Government
   will utilize statistical sampling to determine quality. When
   the Government determines that both the number of critical
   defects and the number of total defects in the lot or batch do
   not exceed their respective AQL's, the lot or batch will be
   accepted at the contract price. MIL-STD-105D will be used to
   make this determination.

   If the defects exceed both AQL's, the Government will have the
   option of having the lot or batch replaced, having the defects
   corrected, or accepting the lot or batch with an equitable
   reduction in the contract price. The discount tables contained
   in Appendices A & B will be used as a guide by the Contracting
   Officer to determine reductions. Failure to agree to such
   reduction of price shall be a dispute concerning a question of
   fact within the meaning of the article entitled "Disputes" of
   Contract Terms No. 1. In all cases it is the intent of the
   Government that the products meet the quality required in the

   4. CATEGORIES OF ATTRIBUTES - Quality attributes are divided
   into three categories which consist of printing attributes,
   finishing attributes, and the paper attribute.

   (9) The "Paper Attributes" on page 39, et seq., of the QATAP
   cover acidity, alpha cellulose, basis weight, bursting
   strength, etc., but have no express standards for "color".
   They do, however, in item 22 cover "all other measurable
   characteristics" and in item 23 "judgment characteristics".
   The same is almost identically true of the "Acceptance
   Criteria", part 4, of the JCP Paper Specification Standards.
   The two criteria listings differ only in respect to the
   characterization of the category of deficiency. In the QATAP,
   items 22 and 23 define such deficiencies as insignificant,
   significant, and excessive, while the JCP Paper Specification
   Standards refer to these as minor, major, and critical,
   clearly referring back to the definitional statement for such
   terms set forth in paragraph (7) herein above.


   Analyzing the above provisions, it becomes clear that "color"
   falls under either a judgment characteristic or measurable
   characteristic under both the QATAP and the JCP Paper
   Specification Standards. It is also clear that if it is deemed
   to be a judgment characteristic, then such judgment must be
   made by a person meeting certain established
qualifications and be undertaken under certain prescribed viewing
conditions. The judgment, however, is subjective and visually
made by comparison with the standard sample. The person making
such judgment is to then characterize the compared product
according to such judgment as having no defects, minor defects,
major defects, or critical defects and allocate demerits
according to a table correlated with such characterization; i.e.,
critical defect = 36 demerits. Demerits are then used within the
prescribed formula to determine Product Quality Level (PQL) and
if above 70 the product must be accepted, but if below 70 the
product must be rejected. If rejected or more accurately,
rejectable, the product may be accepted by the contracting
officer at a discount, such being determined under the discount
tables appearing on pages 42 through 46 of the QATAP.

   The same process is generally carried out if color is deemed a
   "measurable" characteristic with testing by spectral
   reflectivity except that in such instance there is a
   requirement that the testing procedure follow certain
   technical standards. No technical standard for product color
   variations itself has been adopted. The standard to be met is
   still the match of the product with the standard sample using
   the same acceptance criteria based upon the same system of
   demerits and PQL formulation. Despite precise measurements,
   the allocation of demerits still requires a subjective
   characterization of any defective product as one with no
   defects, or minor, major, or critical defects, etc. It is this
   very subjectivity to which the Appellant is objecting. The
   contract provisions, however, seem to allow for this
   subjectivity while at the same time recognizing that they may
   not always result in a proper judgment being made. Thus, there
provisions allowing the matter of rejection or discount amount to
be appealable under the "Disputes" article of Contract Terms No.
1. With respect to any such appeal, the amount of discount is
deemed to be a question of fact rather than question of law in
recognition, we presume, of the subjectivity of such judgment.

   Thus far from our analysis it would appear that the Respondent
   followed precisely the provisions of the contract and afforded
   the Appellant the requisite rights to which it was entitled.
   The product was being judged in accordance with what appeared
   to those making the judgment to be all of the requirements of
   the contract. Both inspectors' (Mr. Flemion and Mr. Tanner)
   assessments of demerits to the product were based upon "color"
   being a judgment characteristic, and that the product was
   defective in a major (32 demerits) or critical (36 demerits)
   way based upon their assessment of the defects. Moreover, Mr.
   Tanner's judgment was buttressed by an additional supposition
   that differences in "color" could be measured scientifically
   by calibrated equipment and that demerits could be allocated
   pursuant to standards arrived at from study results compiled
   over a 5-year period of time although unpublished. In either
   case, once demerits were determined, the discount was arrived
   at by reference to the discount table for critical defects
   appearing on pages 42 and 43 of the QATAP.

   The problem with judgments so made is not their qualified
   subjectivity which after all are the same kinds of judgments
   which physicians, judges, and other professionals must
   regularly make. The problem is that they overlook an important
   element of the characterization requirements.set forth in the
   definitional section of the JCP Paper Specification
Standards, supra, for minor, major, and critical defects. That
is, to look at the defects with respect to whether or not they
"materially reduce the usability of the paper for its intended
purpose," or they "result in the paper being unusable for its
intended purpose" (in this case, as a guidebook for the
Department of Commerce). This examination requirement is set
forth in standards adopted by the JCP pursuant to law and
therefore has the force and effect of law. Thus, there is a legal
requirement to make a.judgment of the defective product against
its intended use. It does not appear in any of the documentation
or testimony that such judgment was made. If such judgment were
to be made, however, it does seem that mere acceptance of the
product at any discount whatsoever militates against it being
deemed "unusable for its intended purpose" and thus "critically"
defective as it has been characterized. Moreover, if such
judgment were that the usability of the product has been
materially reduced by the color defect, the question which must
still be addressed is the rational extent of such reduction. Is
18.9% as the contracting officer has determined by mechanical
application of the QATAP reasonable? This is the very question
raised by our statement of the second issue in this appeal. It
seems to this Board that the use of the QATAP discount table
provision in this manner is tantamount to having a liquidated
damage provision which is confiscatory and penalizing and thus,
against public policy as we have held in the appeal of Edwards &
Broughton, Co., GPO BCA 6-84, wherein at page 5 we said:

This Board has ruled that this method of adjusting.the contract
price using the QATAP operates as a liquidated
damage clause. Appeal of Edward Brothers, Inc., GPO CAB 3-83, May
3, 1984. In order to have an enforceable liquidated damage
clause, the clause must fix damages that are reasonable
compensation for the harm caused by the contractor's failure to
perform. Priebe & Sons v. United States, 332 U.S. 407 (1947). As
the Board stated in Edward Brothers, the discount tables cannot
be applied mechanically. Rather, they must be utilized on a case-
by-case basis. Although liquidated damage clauses are used where
damages are difficult to estimate at the time the contract is
awarded, the liquidated damages assessed must bear some rational
relation to the actual damages suffered by the Government.
Graybar Electric Company, Inc., ICBA No. 773-4-69, 70-1 BCA 


   The case is remanded back to the contracting officer for
   reconsideration of his final decision in light of this
   opinion. If after reconsideration the contracting officer
   finds that his prior judgment is still supported, he is
   directed to submit documentation of such support back to the
   Board through counsel with appropriate copy to Appellant. The
   Board will retain jurisdiction to determine the
   appropriateness of such contracting officer's judgment as part
   of this appeal.