Appeal of Urban Litho Inc.   )
                             )   CA. 80-5
Jacket No. 275-622           )

This matter was brought to the Contract Appeals Board as a result
of an Appeal dated January 21, 1980, by Urban Litho Inc.,
hereinafter called the Company or Appellant.  The Company
appealed a termination of a contract it had with the United
States Government Printing Office (GPO) for the printing of
51,830 copies of the National Audiovisual Center Medical Catalog.

1.   Facts

The GPO invited bids for the printing of books that were entitled
National Audiovisual Center Medical Catalog.  Invitations for
bids were sent out by the GPO to 10 firms including the
Appellant.  Bids were received from 6 companies and the Appellant
was the lowest bidder.  An award was made to the appellant by the
issuance of Purchase Order 74905 dated June 21, 1979, with a
required shipping date of July 13, 1979.  The Jacket Number is
275-622 dated June 22, 1979.

On July 12, 1979, the Appellant was notified by GPO that delivery
of the books should be postponed because the ordering agency
wished to see inspection proofs.

On July 24, 1979, the ordering agency, GSA, notified the GPO of
the deficiencies in the books and requested that it be reprinted.
The GPO then had an inspection made and based on the inspection
determined that the books should be reprinted.  The Appellant
made a counterproposal to the GPO and that was to accept the
order at a discount, or to reprint the pages in question and
insert them into the product.

On August 24, 1979, GSA notified the GPO that it had considered
the request of the GPO to review the decision to see if there was
any way possible for the Center to accept the books.  The
decision of GSA was that it had to decline to accept the books
because of the basic quality problems with the printing and trim.
GSA indicated that the catalog was to have been mailed to
thousands of medical professionals and they expect to receive
materials of the highest standards from the business community.
In the form the book was in, it would not only harm the image of
the Center as a whole, but would be irreparable detrimental to
the Center's activities in the medical market.

On September 4, 1979, a Show Cause Telegram was sent to the
Appellant in which it was informed the GPO is considering
terminating the Contract pursuant to the Article entitled
"Default" under United States Government Printing Office Contract
Terms No. 1.  The Appellant was given 10 days to present any
facts bearing on the question to the Contracting Officer, failure
to do so would be considered an admission that none exist.

On October 9, 1979, a notice of termination was sent to the .
Appellant, in this notice, Appellant was informed that the
Contract identified as Purchase Order 74905, Jacket 275-622 ,was
terminated fordefault because the Appellant refused to reprint
the order which was rejected under the attributes portion of the

The Appellant was further notified that the decision was made in
accordance with Article 29, "Disputes" of GPO Contract Terms No.
1 and would be final and conclusive unless a written notice of
appeal was filed within 30 days from the receipt of the decision.

On October 25, 1979, the Appellant gave written notice of an
intent to appeal.  On January 21,1980, this notice was
supplemented.  The Appellant stated in this letter in the second
and third paragraph:

"Your decision to terminate is being appealed in its entirety.
The basis of the appeal is that the decision to terminate was
capricious, arbitrary, grossly erroneous and made in bad faith.
Specifically, this job was put out for bids requiring 4 quality.
It required the printing of 51,830 booklets consisting of one
hundred and seventy eight (178) pages each not including the

The printing deficiencies alleged by GPO do not justify a
termination of this Contract.  Urban Litho offered to rectify
these alleged printing deficiencies in one of two ways:

(1)   an errata sheet would be printed to supplement the
booklets, or

(2)   new pages would be printed to be substituted for the pages
containing alleged printing deficiencies."

The hearing convened on September 9, 1980.

2.   Position of Appellant

The Appellant took the position that GPO was not justified in
rejecting the job.  It is the contention of the Appellant that-it
should have been accepted at a discount.  The remedial proposals
that were suggested should have been accepted.

The Appellant's President testified that he had been informed by
GPO on July 12, 1979, that delivery of the product should be
postponed, due to a specification being omitted from the original
bid papers, and that was that inspection proofs had not been
specified, GPO requested five samples of the book.  The President
went on to testify that a Mr. Flood from the ordering agency had
informed him that the agency had requested inspection proofs be
in the specifications and GPO had not done so.  The Appellant
contends if the press inspection, the submission of proofs and
the greater quality level would have been introduced in the
original specifications, this problem would not have existed.

The Appellant contends that United States Government Printing
Office Contract Terms No. 1 that was agreed to by the Appellant
was not negotiated, but were terms imposed on him.

The Appellant contends that under GPO Pub. 301.1, Section 19A
that provides the formula for calculating equivalent defects, a
printer could never be able to supply GPO with printed material
in which GPO could not find sufficient defects to substantially
discount the contract price, or in many cases terminate the job
completely.  In other words, a printer contracting with GPO where
this Quality Assurance Through Attributes is part of the
contract, is in a loosing game and is subject to the whim of the
Government and can be defaulted any time the GPO so desires.

The Appellant then gave an example by putting into evidence a
copy of a book that was printed by another company to replace the
one that had been rejected.  The Appellant testified that using
the formula under GPO Pub. 301.1, this book also could have been
rejected but was not.  The President for the Appellant testified
that there were numerous deficiencies and the formula would have
provided for a 50% discount on the reprocurement job or it could
have been rejected entirely.

In the rejected product there were only four pages that would
have required correction and when pasted on the product would
have been usable.  Appellant argues that the contracts of GPO are
subject to the Uniform Commercial Code.  Under the U.C.C. is a
provision that states if a contract is unconscionable then the
contract as a matter of law is unenforceable, or that portions of
it are unenforceable.  In this case the GPO with superior
bargaining power uses its power to incorporate into the contract
a provision which is oppressive to the other party.  The
discounts the GPO assesses have no relationship to the damages
sustained.  What we have is liquidated damages construed as a

Therefore, states the Appellant the contract should not have been
terminated, and the Appellant should not be burdened with
Attorney's fees, his time and $27,000 in supplies that went into
the job.  Nor the $6,000 in damages for the reprocurement.

3.   Position of GPO

The Contracting Office testified that it would have been
impossible to replace pages and make the book acceptable, he
estimated it might run 10, 50 to 75 pages.  He personally
examined the book and said:

"There were a lot of defects in the product, outside of missing
information . . . eskewed pages, I think it was awfully dirty.
There was a lot of streaking.  I also thought there was a lot of
lightening so bad in some cases you couldn't read it, and there
were other minor problems.  Also, some wrinkling, too much ink in
some places.  It was filling in. Tr. p. 78-79.

There was no doubt in my mind that it was rejectable."  Tr. p.

Counsel for the Government argued that this is a Board of
Contract Appeals, not a court that was equity power.  The Board
is limited to review the Contracting Officer's final decision
without any equitable . jurisdiction or power.  Therefore, the
unconscionability argument is not applicable.  The Quality
Assurance Program was developed after years of research and
consultation with members of the Printing Industry, with a
primary purpose of trying to set up some reasonable objective
standards for the acceptance of printed products.  It was not
established to damage contractors but to improve the quality and
to set out objective standards for accepting those products the
GPO buy.  The acceptance of some products was countenanced and
the reductions in contract price was set accordingly based on a
reasonable estimate of the actual damages that would be incurred.

The Attorney for GPO said that the product did not live up to
specifications, and there was no authority for-the Contracting
Officer to accept it.


We have a contract made between the United States Government for
a specific number of printed books.  This was granted to the
Appellant after specifications went out to a number of potential
bidder.  These specifications were clear and when the company bid
on the contract it did so with a clear understanding of what was
required.  If the contractor did not understand the
specifications, he was under an obligation to himself to find out
just what they required.

In this case, the President of the Appellant testified that he
had GPO Contract Terms No. 1, and GPO Quality Assurance Through
Attributes when he bid on the Contract.  He said he was familiar
with Contract Terms No. 1 but not with GPO Quality Assurance
Through Attributes (Tr. p. 61).  He further stated he did not
understand such terms as liquidated damages.  He said this in
addition to saying he was involved in a few hundred contracts
that included the Quality Assurance Through Attributes (Tr. p.
62).  He also said that he did not have an Attorney review the
contract terms before he made his bid.  Therefore it is apparent,
the Contractor had the specifications, he had opportunity to have
them reviewed by an Attorney but did not, and he bid on the

The law is settled that the Government is entitled to obtain what
it contracts for.

In American Electric Containery Corp. v. United States, 579 F 2d
602 (1978) @ 608 it provides:

"It is settled that the Government is entitled to obtain
precisely what. it contracts for as long as it does not mislead
the contractor.  Rixon Electronics Inc. v. United States 536 F 2d
1345, 1351 210 Ct. Cl. 309, 320 (1976); Henry Spur & Co. v.
United States, 153 F, Supp. 407 139 Ct. L. 613 (1957); Farwell
Co. v. United States, 148 F. Supp. 947, 137 Ct. Cl. 832 (1957);
Octagon Process Inc. v. United States, 141 Ct. Cl. 599, 604

Therefore, in the instant case the specifications were clear and
they were not lived up to.  The Government had a right to obtain
what it had contracted for and did not receive it.

We will now discuss the argument of the Appellant that the
Contract was unconscionable and the Government could find
sufficient defects at any time to reduce the cost, and to require
reprinting.  Therefore, under the Uniform Commercial Code this
contract would be unenforceable.

The Board of Appeals considers appeals from decisions of the
Contracting Officer under in the Disputes Section of the
Contract.  It must review the decision of the Contracting Officer
to ascertain if that Officer made his decision pursuant to the
terms of the contract.  What the Appellant is doing in this case
is to request the Contract Appeals Board to act as an Equitable
Forum to determine whether the Contract is an Equitable Document.
This Contract Appeals Board is charged with the responsibility of
finding facts, and it may give consideration to law questions in"
connection with its decision.  It is not a Court of Equity.

This Board has no authority to make an equitable decision.
However, we will touch on the question of whether the Contract is
subject to the Uniform Commercial Code.  In United States v.
Allegheny County, 322 US 174 (1944) @ 183 the Court said:

"Procurement policies so settled under federal authority may not
be defeated or limited by State law.  The purpose of the
supremacy clause was to avoid the introduction of disparities,
confusions and conflicts which would follow if the governments
general authority was subject to local controls.  The validity
and construction of contracts through which the United States is
exercising its constitutional functions, their consequences on
the rights and obligations of the parties, the titles and laws
which they create or permit all present questions of Federal law
not controlled by the law of any state."

In Clearfield Trust Co v. U.S., 318 US 363 (1943) @ 367 the Court

"In our choice of the Applicable federal rule we have
occasionally selected state law.  See, Royal Indemnity Co. v. U.
S., Supra. .But reasons which make state law at times the
appropriate federal rule are singularly inappropriate here . . .
The issuance of commercial paper by the United States is on a
vast scale and transactions in that paper from there issuance to
payment will commonly occur in several states.  The application
of state law even without the conflict of laws rules of the forum
would subject the right and duties of the United States to
exceptional uncertainty.  It would lead to great diversely in
transactions subject to the vagaries of the laws of the several

In U.S. v. Sommerville, 324 F 2d 712 (1963) @ 714 the Court said:

"Decisions of the Supreme Court, this Court and other Courts
demonstrate that Federal Law is applicable in the case at bar.
The independent federal rule of decision must be applied when a
genuine federal interest would be subject to uncertainty by
application of disparate state laws."

In Harry Thuresson Inc. v. U. S., 453 F 2d 1978 Ct. Cl. 1972,
Gardener Manufacturing Co. v. U. S., 479 F 2d 39 (9th Cir 1973)
Everett Plywood and Door Corp. v. U. S., 419 F 2d 425 (Ct. Cl.
1969) and U.S. v. Wegematic, 360 F 2d 674 the Courts have taken
the position that the Uniform Commercial Code may be looked

to for guidance; however, in no case has it ruled that the
federal government is bound by the UCC.

In Meeks Transfer Co. Inc. 68-1 BCA 7063-32644 the Board said:

"Equally erroneous is respondents contention that the Uniform
Commercial Code as adopted by a majority of the states and the
District of Columbia constitutes applicable federal law.  While
we have not considered the Uniform Commercial Code as enunciative
of Federal Common law, we may have in the past looked to this
code for guidance when there was no other federal precedent
available.  Adequate legal precedent here being available we do
not come to a consideration of the provisions of the Uniform
Commercial Code."

Therefore, the UCC may be used as guidance but as stated in many
cases there is no requirement to follow it.  The law as developed
in the federal Sector and not a Code that is adopted by each
state individually is controlling.  We would therefore not apply
the UCC argument on unconscionality in this case.  We will look
to the contract as agreed to by the parties.  This contract had
specifications that required certain standards be met.  They were
not met; therefore, the GPO had the right to request the books be
reprinted.  When the Appellant refused, the GPO was within its
contractual rights in having the reprocurement done by another.
We find that the Contracting Officer followed the contract terms
in his termination of the contract and his decision was not
capricious, arbitrary, grossly erroneous, or in bad faith.  This
Board will not rule on the reprocurment damages.  That matter was
not in the original appeal notice.


In view of the foregoing, we hold that the termination for
default was proper under the circumstance.

December 17, 1980