Docket No. VABCA-7207GPO

Department of Veterans Affairs Board of Contract Appeals

2005-1 B.C.A. (CCH) P32,828; 2004 VA BCA LEXIS 3

December 15, 2004


Robert Gacek, President, Horizon Graphics, Eden Prairie, Minnesota,
for the Appellant.

Roy E. Potter, Esq., Trial Attorney, Washington, D.C., for the U.S.
Government Printing Office.



This appeal was originally docketed by the Government Printing Office
Board of Contract Appeals (GPOBCA 01-03) on May 28, 2003. The Public
Printer subsequently decided to discontinue the GPOBCA and, by
Interagency Agreement, dated June 7, 2004, designated this Board to
hear appeals of final decisions by GPO Contracting Officers and the
Board docketed this appeal as VABCA-7207GPO on July 29, 2004. The
Appellant, Horizon Graphics, hereinafter "Appellant" or "Horizon" is
seeking $ 115.48 for guillotining the original booklets and $ 2,348.50
for reprinting the booklets. GPO is seeking $ 103.91 for the cost of
shipping the original booklets back to Horizon to be corrected.


On September 18, 2002, the Department of Interior, Fish and Wildlife
Service (Fish and Wildlife), submitted Standard Form 1 (SF1), Printing
and Binding Requisition to the Public Printer for booklets (The
Sacramento Environmental Program Guide) composed of 3 leaves of paper,
each copied on two sides and folded in a graduated sequence for a
total of 12 text pages, saddle stitched to match sample. The paper was
to be Bright White 70 # Book, smooth finish. The request included a
statement that "Accurate folding and binding of pages is paramount for
this project." Ten copies were to be sent to Glenda M. Franich at Fish
and Wildlife, Portland, Oregon, and the remainder to the Sacramento
National Wildlife Refuge. (R4, tab,1)

To meet the request, Purchase Order R8884, Jacket 792-440 (PO) was
issued to Horizon on October 2, 2002, by the GPO Seattle Regional
Printing Procurement Office (SRPPO) for 3,500 copies at a cost of $
2,348.50. The trim size was 8 1/2 x 6 15/16 finished size, quality
level was 3, as defined by the GPO Quality Assurance Through
Attributes Program (QTAP)(GPO PUB 310.1) and shingle style binding was
required. Digital media for copy was furnished and a sample book was
given as a construction guide. Proofs were required. The delivery date
was October 21, 2002. The designated contract administrator was
Michael Dunn. (R4, tab 2)

Contract Modification 1 was issued on October 8, 2002, authorizing
Appellant to color correct one photo, make type corrections, and
provide a digital proof that was to be shipped to Fish and Wildlife.
The quantity was reduced by 165 copies to offset the cost of making
the required modifications. No additional performance time was given.
(R4, tab 3)

By letter dated October 30, 2002, to Mr. Dunn, Ms. Franich of Fish and
Wildlife, notified GPO that the copies had been received and that: 1)
the paper quality was less than desired; 2) the quality of printing
was inferior because the registration of page headings was off in some
areas as marked for attention on the color proofs; 3) trimming was not
correct; and, 4) the samples were not properly shipped. Fish and
Wildlife questioned whether QTAP Level II or level III should have
been ordered due to the tight registration of type and wildlife
images. According to the letter, Ms. Franich had discussed the
problems with Appellant and was told Horizon had not received the
sample booklet shown to be provided with the PO. According to Ms.
Franich, Appellant told her that the problems were the result of
ordering only a Level III print job and the specifications for a
saddle stitched job did not require trimming on three sides and
staggered page design was very difficult. The letter enclosed 25
random samples and a few that had been hand trimmed by Ms. Franich.
(R4, tab 4)

The Record does not show whether Ms. Franich's letter had been
received by GPO when it paid Horizon the full contract price on
November 13, 2002. According to Calvin Anderson, Chief, Commercial
Examination Section, Procurement Accounting Division, Office of the
Controller, GPO, the payment was $ 2,301.53 ( $ 2,348.50 minus $
46.97, prompt payment discount allowed by the Contract). Under its
PAYMENTS ON PURCHASE ORDER clause, GPO Contract Terms, Contract
Clauses, 24, GPO pays its contractors upon receipt of contractor
vouchers, which may precede quality assurance inspection.

On November 19, 2002, Ms. Franich returned the booklets to Horizon to
be trimmed. (R4, tab 13) According to the Final Decision, after
receiving the returned booklets, Mr. Gacek, President of Appellant,
spoke to Dale Hammargren, an employee in Contracting Officer (CO)
Atkins' office, and agreed to do the trimming but only if GPO paid for
the shipping. Mr. Hammargren refused to pay the shipping. Mr.
Hammargren's title and position are not identified in the Record other
than as a member of the procurement office. (R4, tab 19)

By fax dated November 21, 2002, Mr. Gacek, requested a "final written
decision" for a modification to guillotine cut the booklets and re-
shrink wrap and box the booklets at a cost of $ 215.15 (later reduced
to $ 115.48). In its brief, Horizon states "The booklets showed up on
our dock without prior notice. We contacted GPO prior to this faxed
document and asked them what we were supposed to do with them. GPO
said to trim the head and foot or trim head or foot alone to remedy
the concern of the customer." Mr. Gacek also asked the Contracting
Officer (no name used) to advise the customer that the booklets were
ready to be picked up. (R4, tab 5) The record contains no explanation
as to why Horizon did not ship the trimmed booklets at this time.

The next day, CO, David Goldberg forwarded samples to GPO in
Washington, D.C., for evaluation as a QTAP quality Level III item and
cited trim size as the only complaint. (R4, tab 6) Inspector Christine
Ridge inspected the samples and found the paper attribute did not
"equal" the specifications and there were problems with cover position
and text overlay, assigning 20 major defects to each and recommended
the booklets be rejected and reprinted. (R4, tab 7)

On December 13, 2002, the GPO Quality Control and Technical Department
(QCTD) advised Ms. Ridge that the paper was not equal to the
Specification "No. 1 Offset, Smooth-Finish, JCP A61, 105 gsm (70lb)"
and assigned 40 demerits. QCTD also advised that the paper had
excessively low burst strength, but was equal for finish and assessed
no demerits for smoothness or caliper.

By letter dated January 3, 2003, to Mr. Gacek, CO Goldberg confirmed
an earlier telephone conversation (actual date unknown) rejecting the
booklets because the paper did not meet the specifications and the
cover position and text overlays. (R4, tab 9) According to the Final
Decision, Mr. Gacek had called Dale Hammargren and offered a 25%
discount. Mr. Hammargren rejected the offer because the "order was
unacceptable." (R4, tab 19). Mr. Gacek then faxed the Contracting
Officer (no name used) asking for the film work because he had already
returned it to Fish and Wildlife.  (R4, tab 10)

Also on January 3, Mr. Gacek asked the GPOBCA for an expedited appeal
of the rejection stating that prior to November 21, 2002, Horizon had
advised the Seattle office of GPO that three sided trimming was not
practical, and the Contract did not require trimming after gathering
and stitching. Mr. Gacek also stated Fish and Wildlife had returned
the booklets, that Horizon had guillotined them and asked for a
contract modification to pay for that effort. He also asked for an
extension of time while he asked Weyerhaeuser to test the burst
strength. Finally, he stated the booklets had now been trimmed and
since the paper was a major defect not a critical one, he would reduce
the price based on the testing. In a separate letter, Mr. Gacek asked
Ms. Ridge to reconsider her recommendation to reject and reprint. (R4,
tab 12)

Weyerhaeuser Technical Service representative, Kirk Frisinger,
responded to Appellant on January 6, 2003. The burst strength averaged
23.1 pounds per square inch. In a separate fax to Mr. Gacek, Mr.
Frisinger stated the results were "not good." He pointed out that
burst strength did not relate to print quality but was more relevant
to filled items such as milk cartons, etc. (R4, tab 15)
On January 8, 2003, Ms. Franich returned the filmwork to Horizon. In
her letter, Ms. Franich confirmed that she returned the original order
to Horizon on November 19, 2002. She stated that if the trimming had
been done, the booklets had not yet been shipped back by Horizon. She
stated there was a desperate need for the booklets at a national
workshop on January 13, 2003, and requested a substantial supply be
received by January 12. (R4, tab 13)

A hand written note, author unknown, dated January 13, 2003, states
that "Michelle (Horizon Graphics) will deliver 150 program guides to
Sacramento National Wildlife Refuge." There is a line across the page
under which it says "then the rest of the order will be reprinted and
delivered at a later date." Under that is "reprint shipped 1/21/03
Michelle K DH". (R4, tab 16) According to the Final Decision, the
reprinted booklets were shipped on January 21, 2003, and were
accepted. The Record does not state what booklets, if any, were
shipped for the January 13, 2003 meeting.

On May 13, 2003, Mr. Gacek sent two faxes to CO Atkins. In the first,
he stated:

1. David Goldberg told us we would have to completely reprint the
order-Not acceptable.
2. Prior to that he said to trim the books flush.
3. We received this letter stating from your customer to trim the
bottom edge which we did-and Dave Goldberg was notified that this was
done and given a price to repair as not stated on contract.

(R4, tab 18)

In the second fax, Mr. Gacek asked for a final decision. He stated he
trimmed the order based on Ms. Franich's January 8, 2003, letter but
was prevented from shipping them by CO Goldberg. Mr. Gacek asked for $
76.98 (trimming), $ 37.50 (shrink-wrapping), $ 26 (repack boxes) and $
2,348.50 for reprinting. This adds up to more than the $ 115.48
Appellant is seeking.

A comprehensive final decision denying Horizon's requests for
compensation and seeking payment of the shipping costs for returning
the booklets was issued May 21, 2003, by CO Atkins. In what appears to
be a direct conflict with the rejection of the 25% discount offer, the
Final Decision states that the CO "was expecting you to return the
corrected product to the department. Since you refused to deliver the
corrected product and asked to pickup the films in order to reprint
the product this office assumed that you preferred to  reprint the
product." Later, the Final Decision states "You were given a chance to
correct the order, had you done so in a timely manner the customer
would probably have accepted the order along with the other defects."


As we have noted on previous occasions, the fact that an appeal is
submitted on the record does not relieve the party with the burden of
proof from providing the Board with sufficient evidence to support its
claim.  D. M. Summers, Inc., VABCA No. 2750, 89-3 BCA P 22,123;
Southland Construction Co., VABCA No. 2579, 89-2 BCA P 21,704; Jen-
Beck Associates, VABCA Nos. 2107 et al., 87-2 BCA P 19,831 at
100,322-23. The parties, by electing to have this appeal decided on
the record, took upon themselves the responsibility to provide this
Board with adequate evidence upon which to make a finding in their

Appellant argues that it used a # 1 Opaque Offset Paper with a smooth
finish. Horizon states it was never made aware of Interior's statement
that accurate folding and binding of pages was paramount. Horizon
points out that other purchase orders specifically stated binding on 3
sides and another says trim flush, thus creating confusion about what
was required. Horizon states, without explanation, that there is no
request for trimming pages in the SF1. Appellant's argument here
appears misguided. Surely accurate binding would be anticipated in any
circumstance. Appellant admits that there was a misregistration of
sheets top and bottom because its contract bindery service mistakenly
said a shingled booklet should not be trimmed head and foot. Horizon
argues, however, that a lack of specific bindery instructions, errors,
and mistakes by both parties caused great expense to Horizon.
GPO argues that the CO established through the inspection process that
the booklets did not meet the Contract's quality standards. Under the
Contract, the CO can require strict compliance with the specifications
or, if in the Government's best interests, accept a price reduction
for the non-conforming items. Since this is a discretionary decision
by the CO, GPO argues this Board may not substitute its judgment for
that of the CO. Thus, Appellant has the burden to show the CO abused
his/her discretion, which GPO says Appellant has not done.
GPO cites numerous cases in its Brief, concluding with:

The GPOBCA has on numerous occasions stated:

....the general rule is that the Government is entitled to strictly
enforce compliance with its specifications,  S.S. Silverblatt, Inc. v.
United States, 433 F.2d 1314 (1970). Thus, the Government can refuse
to acquiesce to a contractor's request that it be allowed to use
substitute materials, Polyphase Contracting Corp., ASBCA 11787, 68-1,
BCA Para. 6,759 (1967), even if such materials are superior.  Nichols
& Co. v. United States, 156 Ct. Cl. 358 (1962), cert. denied, 371 U.S.
959 (1963).

Under the facts in this case, the discretion argument is not as pure
as represented by GPO. We agree that the inspection record supports
the rejection and Appellant has not persuasively refuted those
inspection results. What is not clear from the record is what
involvement, if any, GPO had in Horizon's failure to send the trimmed
booklets to Fish and Wildlife and whether any consideration was given
to whether or not it would have been in the Government's best
interests to accept a price reduction.

The order was delivered four days late on October 25, 2002. The order
was properly rejected by Fish and Wildlife on October 30, 2002. On
November 19, 2002, the order was returned to Appellant by Fish and
Wildlife, who was apparently willing to live with the other
deficiencies, asking only that the booklets be trimmed. Two days
later, Appellant advises the CO the order has been trimmed as required
and is ready for pick up. There is no explanation why Horizon did not
ship the trimmed booklets. The most probable reason, based on the
existing record, is that Appellant first wanted a Contract
modification for the trimming ( $ 215.15) and the shipping costs ( $
100) paid by GPO. However, there is no information as to what action,
if any, the CO took based on the Fish and Wildlife fax. It is clear
that GPO (at least one of its several contracting officers) knew that
Fish and Wildlife was willing to accept the trimmed order but there is
no evidence that any attempt was made to negotiate a price reduction.
During the next 6 weeks, GPO inspected and Appellant tested the paper,
etc., while Fish and Wildlife waited in vain for the trimmed order to
be returned. Finally, on January 3, 2003, GPO sent Horizon the
rejection letter and requested a reprint. Horizon issued a series of
responses discussed above. Horizon acknowledged the return of the
order to them and the request to trim, but never explained why it did
not return them to Fish and Wildlife. It is near this point in time
that Horizon made an offer to reduce the price 25%. Horizon received
the less than favorableWeyerhaeuser report on paper quality on January
6, which may have triggered the price reduction offer.

On January 8, 2003, Fish and Wildlife reinforced its desire for the
now trimmed booklets with a urgent request to Horizon to send the
booklets by January 12, 2003. Horizon still did not send the trimmed
booklets. There was no reaction from GPO.

The initial CO decision to reject and reprint was justified. However,
when a customer has expressed a desperate need and is willing to
accept product at a reduced price, giving no consideration to a
reduction in price and continuing to reject and insist on a reprint
may not be in the Government's best interests and may amount to an
abuse of discretion.

There were a number of GPO employees from the procurement office who
played roles as contracting officer in this process: Michael Dunn,
David Goldberg, Michael Atkins. However, Dale Hammargren, who rejected
the 25% reduction in price, is not identified as a contracting officer
nor is it revealed whether or when he shared news of the rejection
with anyone else at GPO. It is not known whether Mr. Hammargren
bothered to contact Fish and Wildlife or was aware of the customer's
willingness to make do with the trimmed order. The Final Decision
indicates the price reduction was rejected without discussion.

When a contractor fails to deliver a product conforming to the
printing required, the Contracting Officer may elect to discount the
Appellant's invoice price by applying the provisions of the
Respondent's Quality Assurance Through Attributes Program (QATAP), HT
97, see GPO Contract Terms, Quality Assurance Through Attributes
Program, GPO Pub. 310.1, effective May 1979 (revised April 1996)
(hereafter QATAP Manual), which were incorporated into the Contract by
reference. The QATAP is a quality assurance program that provides for
the use of objective measurements to determine whether printed
products are defective and, if so, whether they should be rejected or
whether the contract price should be discounted and by how much.
Printing Procurement Regulation, Chap. XIII, Sec. 1, P 3.a. (R4, tab
2) The GPO Board has discussed the QATAP at length, see, e.g.,  Custom
Printing Co., GPOBCA 28-94 (March 12,1997), slip op., 1997 WL 128720.
In its brief, GPO admits that when noncomforming goods are tendered,
the CO is given the authority to make a discretionary decision on
whether to require correction or take a reduction in contract price.
We agree. We are not substituting our judgment for that of the CO.
Discretion requires reasonable inquiry and business judgment. This
record contains no evidence of either having occurred in relation to
this issue.

The GPO's problems here are two fold. First, the CO failed to exercise
any discretion when the discount offer was made. Second, there is a
direct conflict in the Final Decision itself. On the one hand, the
discount offer is rejected "as the order was unacceptable" and on the
other, "This office was expecting you to return the corrected product
to the department." Later, the Final Decision states "You were given a
chance to correct the order, had you done so in a timely manner the
customer would probably have accepted the order along with the other
defects." The opportunity to correct came from Fish and Wildlife. The
Record contains no documents that indicate GPO gave Appellant any
affirmative indication that it could have corrected the order.
Both parties here share the responsibility for the fracas that led to
the reprint. This Board has previously held that where both parties
share responsibility it is "appropriate to utilize the doctrine of
comparative negligence which apportions damages according to fault."
Ultra Construction Company, VABCA No. 1873, 85-2 BCA P 18,007 at
90,290. In apportioning damages, however, we believe that the
Appellant must bear the major responsibility, particularly as it was
Appellant that delivered nonconforming goods.

Appellant is not entitled to the costs of making the goods partially
acceptable ( $ 115.48) Appellant had a window of six weeks where it
could have shipped the trimmed booklets and avoided the reprint issue.
Instead, Horizon chose the unreasonable position that it must get paid
to correct items it was responsible for before it would return the
items. On the other hand, GPO was aware that the trimmed order would
be acceptable to Fish and Wildlife but took no contract administration
action to attempt to resolve the situation. We believe the Appellant,
by submitting noncomforming goods and then refusing to ship the
trimmed but still defective order until paid for the corrections, was
the major contributor to this dispute. Appellant is entitled to 30% of
the reprint cost ( $ 2,348.50), which is $ 704.55.

Returning the order to Appellant for correction by Fish and Wildlife
was a prudent and reasonable action under the facts in this case since
the cost was occasioned by Appellant's failure to perform. We find
GPO's claim for $ 103.91 is supported by sufficient evidence and the
terms of the Contract.


For the foregoing reasons, the appeal of Respondent, Horizon Graphics,
under U.S. Government Printing Office Purchase Order No. R8884,
VABCA-7207GPO, is DENIED with respect to the GPO's claim for shipping
costs. GPO is entitled to a judgment of $ 103.91. The appeal is
SUSTAINED in part, and Horizon is entitled to a judgment of $ 704.55;
all other aspects of the appeal are DENIED.

December 15, 2004

Administrative Judge
Panel Chairman

We Concur:

Administrative Judge

Administrative judge