U.S. Government Printing Office Office of the General Counsel Contract.Appeals Board Appeal of Sturgis Newport Business Forms Panel 76-11 April 27, 1977 Vincent T. McCarthy, Chairman Barbara J. Faulkner, Member Jay E. Eisen, Member This is an appeal filed on October 4, 1976, by Sturgis Newport Business Forms, hereinafter referred to as Contractor or appellant, pursuant to the disputes clause of the contract, GPO Form 1026, Rev. 12/1/75, Contract for Marginally Punched Continuous Forms, paragraph 2.27, for the 6-month period, December 1,1975, through May 31, 1976. The General Counsel has been designated to determine appeals under the disputes clause. Findings of Fact (a) This case arises out of a contract entered into by the appellant and the U.S. Government Printing Office, hereinafter referred to as the GPO, for the production of 1,258,000 five-part sets of marginally punched continuous forms. (b) The contract, designated as GPO Jacket Number 202-696, Purchase Order 55677 (File Exhibit 5), awarded on April 5, 1976, at a cost of $30,984.54, is a fixed price agreement for the procurement of teletypewriter paper. (c) The specifications required the contractor to "punch parts in the right and left margins with 5/32" diameter round holes spaced vertically 1/2" center to center the full length of the form and identically located on all parts of all sets."(File Exhibit 1, p. 3.) The specifications further required that all holes be clean cut, and that the forms be suitable for use on Model TT558-GHSP (High Speed Printer) teletypewriters and other similar equipment. Paragraph 3.8(f) of the contract limited any variation from these marginal punching specifications "to the tolerance of the equipment specified for use." (d) Shipment was completed to the ordering agency, NSA, Fort Meade, Maryland,on April 30, 1976. On June 23, 1976, the GPO Central Office Printing Procurement Division received notification from NSA that the paper caused severe jams in the printer for which it was designed, and attributed the problem to a misalignment of the marginal sprocket holes. (File Exhibit 7.) (e) On June 23, 1976, the Contractor was notified by GPO that the paper did not conform to the requirements specified by the contract. Subsequent to this time, a series of inspections and test runs were scheduled as follows: (1) On June 29, 1976, representatives of the Contractor and the GPO inspected the forms in storage at NSA's Fort Meade warehouse facility, and compared them with forms produced by other manufacturers. (File Exhibit 9.) Acting upon the contractor's representatives' suggestion, the consignee agency refolded thousands of sets of the forms in an effort to correct the deficiencies. However, tests performed utilizing the refolded material again resulted in jamming the high speed printer for which it was made. (File Exhibit 10.) (2) On August 25, 1976, representatives of the GPO and the Contractor met at NSA, Fort Meade, Maryland, to observe a test run in which the performance of the Contractor's marginally punched continuous forms was again compared to that of another manufacturer's. It was demonstrated that under normal operating conditions of the Model TT558-GHSP, the forms produced by the contractor would jam intermittently while the forms produced by another manufacturer processed without difficulty. (File Exhibit 12.) (f) On September 7, 1976, the final decision of the contracting officer was made to reject the shipment of marginally punched continuous forms and demand a replacement shipment at no additional cost to the Government. The Contractor was informed that an amount equal to the contract price for Order No. 55677 would be withheld from its account until a product in accordance with specifications was received. (File Exhibit 13.) (g) The Contractor filed its formal notice of appeal by letter dated October 1, 1976; and a hearing was scheduled before the Board of Contract Appeals on January 1, 1977. The main question presented is whether or not a reasonable test was performed under a contract which specified no particular testing method but required the variations from specifications to be limited to the tolerance of the equipment for which it was made. (Contract paragraph 3.8(f).) Opinion The standard by which to determine whether the specifications of the contract have been successfully met is set forth in the contract, paragraph 3.8(f), which stipulates: "Any variation from these marginal punching and perforating specifications shall be limited to the tolerance of the equipment specified for run by the ordering agency." It follows, therefore, that the appropriate measure for testing the product's conformance to specifications is its ability to be successfully processed through the specified equipment, the Model TT558-G high speed printer. In an analogous case, the NASA Board of Contracts Appeals held that in a contract which specified certain minimum performance standards, the failure of the product to meet specifications in a test under anticipated normal operating conditions constituted default. Waltham Electronics Corp., NASA, 1962 BCA ¶ 3378. The Contractor, without offering any supporting evidence, asserts that the high speed printers have been modified. (File Exhibit 11.) It is the Government's position that neither the machinery nor the feeding mechanisms have been subjected to modification. (File Exhibit 12.) In its attempt to avoid its.obligation under the contract, the Contractor has attributed the failure of the forms to feed properly to various causes, including shrinkage (File Exhibit 13), improper folding and alleged "instability" of the Nashua Sub 28 Chemical Transfer paper permitted as an option under the contract per amendment No. 1, dated March 15, 1976. (File Exhibits 9, 10 and 15.) Whatever the reason, the fact that the product fails to properly process through the specified equipment is the responsibility of the Contractor. The Contractor admits in its formal notice of appeal that the marginally punched continuous forms fail to meet the specifications of the contract under normal working conditions, i.e., when advancing at high speed. (File Exhibit 15.) It contends that "with proper set-up and adjustment, these forms would feed properly." (File Exhibit 14.) However, as the Model TT558-G high speed printer utilizes only one, uniform type of form, the GPO contends that any adjustment of the equipment could jeopardize the performance of the forms which are now working without difficulty. In addition, the adjustments suggested by the contractor would not be of a simple nature. (File Exhibit 12.) The Contractor, in its letter of appeal dated December 8, 1976, lays the blame for the failure of the forms to process at the feet of the GPO. It contends that amendment No. 1, dated March 15, 1976, permitted the Contractor to bid on an unstable, lighter than normal weight of paper which was not tested for suitability for use on the high speed printer in question. However, in fact, the Nashua paper has been found suitable for processing on the Model TT558-GHSP in the past, as proved by another recent job order, JN 201-526, delivery date April 20, 1976, by Sturgis Newport. No problems were experienced with the Nashua paper in that job order when processed through the Model TT558-G high speed printers. During the hearing of January 17, 1977, before the Contract Appeal Board, in which the Contractor was represented by Mr. Gregory Roos, Mr. Bob F. Reda, Ms. Alice H. Munday and Ms. Delsie P. Hughes, the appeal was suspended pending the appellant's negotiations with Roman E. Goltz, Superintendent, Central Office of Printing Procurement Division, regarding the possibility of crimping the forms on both sides, to aid in bringing the forms within the tolerance of the equipment. By letters dated January 20, 1977, and February 16, 1977, the Contractor requested 6 cartons of forms be sent to it in order to accomplish the additional crimping. However, by letter dated February 28, 1977, this request was denied for the following reasons: "The ordering agency has advised the Government Printing Office that acceptance of the corrected forms would cause serious production slow downs during two operations: (1) additional monitoring of the teletypewriter machines would be performed because of the registration defect of the marginally punched holes; and (2) the proposed crimping would necessitate additional manual separation of the forms. Therefore, your request is denied." The evidence in the record demonstrates the Government's continuing efforts to cooperate with the Contractor in order to salvage the marginally punched continuous forms. Although crimping the forms on both sides could conceivably aid the forms in processing through the machines more easily, to permit the Contractor to salvage the forms in this manner would result in unacceptable production slowdowns. In addition, the fact that the marginally punched holes are incorrectly aligned and roughly cut clearly places the product out of conformance with the specifications. The Government is entitled to a product which has been manufactured in conformance with the specifications. Inasmuch as the product delivered by the Contractor has failed to meet the specifications, the supplies furnished were properly rejected. For the foregoing reasons, the appeal is denied.