U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, DC 20401
STUART M. FOSS
Administrative Judge
Appeal of RD PRINTING ASSOCIATES, INC.
Docket No. GPO BCA 02-92
Jacket No. 612-032
Program 1284-S
December 16, 1992
DECISION AND ORDER
This appeal, timely filed by RD Printing Associates, Inc.,
1865 New Highway, Farmingdale, New York 11735 (hereinafter
Appellant or Contractor), is from the final decision of
Contracting Officer Frank Dillon of the U.S. Government
Printing Office's (hereinafter Respondent or GPO or
Government) New York Regional Printing and Procurement
Office (NYRPPO), 201 Varick Street, Room 709, Seventh Floor,
New York City, New York 10014, dated January 6, 1992,
rejecting the Appellant's interpretation of a pricing
provision relating to charges for collating fold-ins under
its contract identified as Jacket No. 612-032, Program 1284-
S (R4 File, Tab E). 1/ For the reasons which follow, the
decision of the Contracting Officer is hereby REVERSED. 2/
FINDINGS OF FACT 3/
1. On January 29, 1991, the NYRPPO issued an Invitation for
Bids (IFB) soliciting bids for Program 1284-S, a contract
covering the production of fold-ins for the Department of
the Navy (Navy), in Brooklyn, New York (R4 File, Tab A, p.
1). 4/ The successful bidder was to receive a "Single
Award" term contract, for the period beginning February
1991 (the date of the award) to January 31, 1992 (R4 File,
Tab A, p. 1).
2. The work covered by Program 1284-S was ". . . the
production of fold-ins requiring such operations as copy
pickup, film making, printing, binding, packing, labeling
and distribution" (R4 File, Tab A, p. 10). The following
IFB specifications are particularly pertinent to this
appeal:
REQUIREMENTS: This is a requirements contract for the items and
for the period specified herein. Shipment/delivery of items or
performance of work shall be made only as authorized by orders
issued in accordance with the clause entitled "Ordering." The
quantities of items specified herein are estimates only, and are
not purchased hereby. Except as may be otherwise provided in this
contract, if the Government's requirements for the items set
forth herein do not result in orders in the amounts or quantities
described as "estimated", it shall not constitute the basis for
an equitable price adjustment under this contract (R4 File, Tab
A, p. 6). [Emphasis added.]
* * * * * * * * * *
FREQUENCY OF ORDERS: (Based on last [years'] contract)
approximately 83 orders per year (R4 File, Tab A, p. 10).
NUMBER OF FOLD-INS PER ORDER: Approximately 1 to 134 fold-ins per
order (R4 File, Tab A, p. 10).
QUANTITY: Approximately 35 to 600 copies of each fold-in, with an
average of 170 copies per fold-in per order (R4 File, Tab A, p.
10).
TRIM SIZES: 11" x various lengths up to 58" (R4 File, Tab A, p.
10).
* * * * * * * * * *
PRINTING: Print face only or face and back in black ink (R4 File,
Tab A, p. 10).
MARGINS: Margins will be as indicated on the print order or
furnished copy. Blank apron of 8 1/2 x 11" required on bind side
of all foldouts unless waived in the print order (R4 File, Tab A,
p. 10).
BINDING: Fold to 8 1/2 x 11" with parallel folds, unless
otherwise specified folio numbers must be visible after folding.
Band each fold-in leaf/page in suitable units with a strip of
heavy kraft paper, not less than 3" in width, around the short
dimension or shrink-film wrap,
if specified.
Collating into sets will be required 25% of the time-pagination
sheet will be provided (R4 File, Tab A, p. 11).
* * * * * * * * * *
SECTION 3.-DETERMINATION OF AWARD
The Government will determine the lowest bid by applying the
prices offered in the "Schedule of Prices" to the following units
of production which are the estimated requirements to produce 12
months orders under this contract. . . . (R4 File, Tab A, p. 13).
[Emphasis added.]
The following item designations correspond to those listed in the
"Schedule of Prices".
* * * * * * * * * *
(1) (2)
I. a. 4,022 5,942
b. 0 0
II. a. 0
b. 5,942
III. a. 2,011
b. 0
IV. a. 0
b. 3,955
c. 5,942
d. 629
e. 1
(R4 File, Tab A, p. 13).
* * * * * * * * * *
SECTION 4.-SCHEDULE OF PRICES
* * * * * * * * * *
I. COMPLETE PRODUCT: Prices quoted shall include the cost of all
required materials and operations (except Item II. "PAPER", Item
III.
"FILMS," Item IV. "ADDITIONAL OPERATIONS", and Item V.
"CLASSIFIED UPCHARGE") necessary for the complete production and
distribution of the product listed in accordance with these
specifications.
Makeready Running Per
and/or setup 100 copies
(a) Printing in a single
color on one side only,
including binding
per fold-in unit...............$__________ $__________
(b) Printing in a single
color on two sides,
including binding
per fold-in unit...............$__________ $__________
II. PAPER: Payment for all paper supplied by the contractor under
the terms of these specifications, as ordered on the individual
print orders, will be based on the net number of leaves furnished
for the product(s) ordered. . . .
Computation of the net number of leaves will be based on the
following: Fold-ins-One page-size leaf will be allowed for each
"fold-in unit". The number of units in a particular fold-in will
be determined by dividing its trim size (expressed in square
inches) by 94 square inches, with any fractional remainder being
counted as a whole.
Per 100 leaves
(a) White Offset Book (50-lb.)..........$_____________
(b) White Offset Book (60-lb.)..........$_____________
(R4 File, Tab A, p 16). [Emphasis added.]
* * * * * * * * * *
IV. ADDITIONAL OPERATIONS: The bids for each of the following
operations must include the cost of all required materials and
operations.
(a) Wrapping or Shrink-film packaging each package $_________
6
(b) Banding with draft paper bands per band......$___________
(c) Drilling (each run).per 100 leaves...........$___________
Four holes will be the maximum for any
one run. When drilling each ply of a
fold-in will be counted as a single leaf.
(d) Collating fold-ins......per 100 leaves.......$___________
(R4 File, Tab A, p. 17). 5/ [Emphasis added.]
3. The Appellant, a former contractor on Program 1284-S,
submitted a bid in response to the IFB and was awarded the
contract for 1991-1992 (R4 File, Tab A, Appendix).
4. Program 1284-S print orders were issued by the Navy. 6/
After the Appellant completed the work, under the terms of
the contract it submitted its vouchers for payment to the
Respondent's Central Office Financial Management Service
(FMS) (R4 File, Tab A, p. 6). During December 1991, the
FMS' Voucher Examination
Section reviewed two of the Appellant's invoices, and determined
that the Contractor's billing method for collating under the
contract- specifically Section 4, Part IV, ¶ (d)-was erroneous
(R4 File, Tab B). The comparison between the Appellant's billing
method and the one used by the FMS shows the following:
Quantity Cost Quantity Cost
Print Order Billed Billed Per FMS Per FMS
40145 17,220 $688.80 3,690 $147.60
40146 12,555 $502.20 2,835 $113.40
Accordingly, on December 6, 1991, the FMS notified the Appellant
of the corrections it was making to the vouchers, and told the
Contractor that the appropriate reductions would be taken from
its invoices; i.e., $541.20 from Print Order 40145 and $388.80
from Print Order 40146 (R4 File, Tab B).
5. On December 9, 1991, the Appellant wrote to the FMS
objecting to the deductions in the vouchers, arguing instead
that in calculating its bill for collating it had applied
Section 4, Part IV, ¶ (d) correctly (R4 File, Tab B). The
Contractor's position was based on its view that "[t]he item
in question is determined by the number of [f]oldout units
or [l]eafs [sic] . . . times the quantity . . . times [$]
4.00 per hundred leafs [sic]" (R4 File, Tab B).7/ According
to the Appellant's arithmetic,
collating under Print Order 40145 was properly billed as
$688.80-42 (units) times 410 (run) equals 17,200 (quantity) times
$4.00 (per hundred leaves) (R4 File, Tab B). Similarly, Print
Order 40146 was properly figured at $502.20-31 (units) times 405
(run) equals 12,555 (quantity) times $4.00 (per hundred leaves)
(R4 File, Tab B). Therefore, the Appellant asked the FMS to make
the necessary adjustments and pay the invoices in full (R4 File,
Tab B).
6. It seems that the Appellant also telephoned the
Contracting Officer about this billing dispute at the same
time that it wrote to the FMS. 8/ R.Brf., Dillon
Declaration, ¶ 4. The Appellant followed this initial
contact with a letter, dated December 18, 1991, in which it
reaffirmed its position that billing for collating under
Program 1284-S is properly based on the "leaf/page" method
of calculation (R4 File, Tab C).
7. In support of its position, the Appellant expressly
referred to Section 4, Part II of the specifications, which
tells the Contractor that the payment for all paper supplied
under the
contract will be based on the net number of leaves furnished for
the product(s) ordered (R4 File, Tab A, p. 16). The Appellant
specifically relied on the second paragraph of Part II, which
computes the net number of leaves for fold-ins on the basis of
one page-size leaf for each "fold-in unit," and determines the
number of units in a particular fold-in by dividing its trim size
(expressed in square inches) by 94 square inches (R4 File, Tab A,
p. 16). 9/ As interpreted by the Appellant, that contract
provision meant that "[w]hen determining the number of units or
leaves to be collated, or for that matter, stock used, running
time, etc., you would take the number of leaves, (units) times
the quantity or run and then multiply that number by the dollar
charge per 100 leaves" (R4 File, Tab C). 10/ Finally, the
Appellant informed the Contracting Officer that, as suggested by
him, the Contractor had contacted the Navy and was told by
Michael O. Blanks, Assistant Director of the Navy's Publishing
and Printing Service Detachment Office, that the customer-agency
agreed with this interpretation
(R4 File, Tab C). See also, Complaint, ¶ 11. 11/
8. In response to the Contractor's arguments concerning the
payment reductions to its vouchers, the Contracting Officer
reviewed the two disputed invoices, compared them to random
billings from the Program 1284-S contractor for the previous
year-Braceland Brothers-and concluded that the Appellant's
billing method was incorrect (R4 File, Tab D).
9. On January 6, 1992, the Contracting Officer wrote a
letter to the Appellant rejecting its claim with respect to
the two disputed invoices as inconsistent with the contract
specification for billing fold-ins (R4 File, Tab E). The
Contracting Officer distinguished the examples given by the
Appellant as relating to the definition of fold-in units
when calculating the prices for other production processes
and materials-e.g., printing, film, paper, etc.-not
collating (R4 File, Tab E). 12/ As explained in his letter,
the Contracting Officer believed that with respect to
collating:
The contract calls for collation of [fold-ins-not [fold-in]
units. And it calls for a price per 100 leaves. A reasonable
interpretation of [fold-ins] per 100 leaves would be the actual
[fold-in], regardless of size, being one leave [sic] for the
purpose of collation. This interpretation is consistent with all
of the GPO contracts and must be used in the billing procedure.
. . . Estimates of the cost of doing collation, using your
interpretation, show a marked increase in the cost to the
Government for collation over and above what would be considered
a reasonable cost. 13/
(R4 File, Tab E).
10. Although not expressly so designated, the Contracting
Officer's letter of January 6, 1992, was clearly his "final
decision" in the matter, since the Appellant was informed of
its appeal rights under GPO Contract Terms (R4 File, Tab E).
GPO
Contract Terms, Contract Clauses, ¶ 5 (Disputes). Therefore, by
letter dated January 10, 1992, the Appellant filed its appeal in
this dispute with the Board. 14/
ISSUES PRESENTED
1. Do the terms of the Program 1284-S contract in dispute, taken
as a whole, support the Contracting Officer's interpretation that
the Appellant is only entitled to be paid for collating fold-ins
on the basis of the total number of fold-ins, not fold-in units?
2. Even if the Contracting Officer is correct in asserting that
the price for collating is to be based on the total number of
fold-ins, not fold-in units, does the Appellant's interpretation
of the contract also fall within the "zone of reasonableness" so
that, in effect, the contract language is ambiguous?
3. Assuming the Contracting Officer's interpretation of the
contract is the only correct one, is the Respondent nonetheless
estopped from recovering the overpayments made to the Appellant
for collating fold-ins because it had paid the Contractor on the
basis of fold-in units under an identical pricing specification
contained in the 1988-89 Program 1284-S contract?
CONCLUSIONS 15/
This case is before the Board because the parties have drawn
different meanings from the terms of the Program 1284-S
contract. The Board's task, therefore, is simple-it must
determine which of the two conflicting interpretations is
correct, or whether both readings may be reasonably derived
from the contract specifications; i.e., whether the contract
is ambiguous? RPTC, p. 3. The issue of whether or not the
provision of the contract relating to charges for collating
is ambiguous is a question of law, General Business Forms,
Inc., GPO BCA 2-84 (December 3, 1985), Sl. op. at 16
(citing, John C. Grimberg Company v. United States, 7 Ct.Cl.
452 (1985)), and thus any decision by this Board concerning
such a matter is reviewable by the Courts under the
Wunderlich Act, 41 U.S.C. §§ 321, 322. Fry Communications,
Inc./
InfoConversion Joint Venture v. United States, 22 Cl.Ct. 497,
501, fn. 6 (1991); General Business Forms, Inc., supra, Sl. op.
at 16. Accordingly, since the focus of inquiry in this case is
confined to the contract itself, certain legal principles should
be kept in mind at the outset.
When the parties confront the Board with two different
interpretations of the same contract language they raise the
possibility that the specifications may be ambiguous. R.C.
Swanson Printing and Typesetting Company, supra, Sl. op. at
41. Contractual language is ambiguous if it will sustain
more than one reasonable interpretation. 16/ Fry
Communications, Inc./ InfoConversion Joint Venture, GPO BCA
9-85 (August 5, 1991), Sl. op. at 9 (Decision on Remand);
General Business Forms, Inc., supra, Sl. op. at 16. See
also, Fry Communications, Inc./InfoConversion Joint Venture
v. United States, 22 Cl.Ct. 497, 503 (1991) (citing, Edward
R. Marden Corporation v. United States, 803 F.2d 701, 705
(Fed. Cir. 1986); Sun Shipbuilding & Drydock Co. v. United
States, 183 Ct.Cl. 358, 372 (1968)). In analyzing disputed
contract language, the courts and contract appeals boards
place themselves in the shoes of a reasonably prudent
contractor; i.e., the language of the contract must be given
that meaning which a reasonably intelligent contractor
acquainted with the circumstances
surrounding the contract would derive. General Business Forms,
Inc., supra, Sl. op. at 18 (citing, Salem Engineering and
Construction Corporation v. United States, 2 Cl.Ct. 803, 806
(1983)). See also, Norcoast Constructors, Inc. v. United States,
448 F.2d 1400, 1404, 196 Ct.Cl. 1, 9 (1971); Firestone Tire and
Rubber Company v. United States, 444 F.2d 547, 551, 195 Ct.Cl.
21, 30 (1971).
A dispute over contract language is not resolved simply by a
decision that an ambiguity exists-it is also necessary to
determine whether the ambiguity is latent or patent. Courts
will find a latent ambiguity where the disputed language,
without more, admits of two different reasonable
interpretations. Fry Communications, Inc./InfoConversion
Joint Venture v. United States, supra, 22 Cl.Ct. at 503
(citing, Edward R. Marden Corporation v. United States,
supra, 803 F.2d at 705); R.C. Swanson Printing and
Typesetting Company, supra, Sl. op. at 41, fn. 22. In such
cases, the doctrine of contra proferentem applies and the
dispute language will be construed against the drafter, Fry
Communications, Inc./InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 503 (citing, William F.
Klingensmith, Inc. v. United States, 205 Ct.Cl. 651, 657
(1974)); R.C. Swanson Printing and Typesetting Company,
supra, Sl. op. at 41, fn. 22, if the non-drafter can show
that he/she relied on the alternative reasonable
interpretation in submitting his/her bid. 17/ Fry
Communications, Inc./InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 510 (citing, Fruin-Colon Corporation
v. United States, 912 F.2d 1426, 1430 (Fed. Cir. 1990)); Lear
Siegler Management Services v. United States, 867 F.2d 600, 603
(Fed. Cir. 1989).
On the other hand, a patent ambiguity would exist if the
contract language contained a gross discrepancy, an obvious
error in drafting, or a glaring gap, as seen through the
eyes of a "reasonable man" on an ad hoc basis. Fry
Communications, Inc./InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 504 (citing, Max Drill, Inc. v.
United States, 192 Ct.Cl. 608, 626 (1970); WPC Enterprises,
Inc. v. United States, 163 Ct.Cl. 1, 6 (1963)); General
Business Forms, Inc., supra, Sl. op. at 17 (citing, Enrico
Roman, Inc. v. United States, 2 Cl.Ct. 104, 106 (1983)).
Where there are such discrepancies, errors, or gaps, the
contractor has an affirmative obligation to ask the
contracting officer to clarify the true meaning of the
contract language before submitting its bid. Fry
Communications, Inc./InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 504 (citing, Newsom v. United
States, 230 Ct.Cl. 301, 303 (1982)); Enrico Roman, Inc. v.
United States, supra, 2 Cl.Ct. at 106; S.O.G. of Arkansas v.
United States, 546 F.2d 367, 212 Ct.Cl. 125 (1976); Beacon
Construction v. United States, 314 F.2d 501 (Ct.Cl. 1963). The
patent ambiguity doctrine is aimed at avoiding costly post-award
litigation, as well as protecting the integrity of the bidding
process by ensuring that all offerors bid on the same
specifications. Fry Communications, Inc./InfoConversion Joint
Venture v. United States, supra, 22 Cl.Ct. at 504 (citing, S.O.G.
of Arkansas v. United States, supra, 212 Ct.Cl. at 125; Newsom v.
United States, supra, 230 Ct.Cl. at 303); General Business Forms,
Inc., supra, Sl. op. at 17 (citing, Enrico Roman, Inc. v. United
States, supra, 2 Cl.Ct. at 107).
The rules concerning ambiguous contract language come into
play only if the meaning of the disputed terms are not
susceptible to interpretation through the usual rules of
contract construction. R.C. Swanson Printing and Typesetting
Company, supra, Sl. op. at 42. The most basic principle of
contract construction is that the document should be
interpreted as a whole. 18/ Hol-Gar Manufacturing
Corporation v. United States, 351 F.2d 972, 975, 169 Ct.Cl.
384, 388 (1965); General Business Forms, Inc., supra, Sl.
op. at 16; Restatement (Second) Contracts, § 202(2) (1981).
Hence, all
provisions of a contract should be given effect and no provision
is to be rendered meaningless. Fortec Constructors v. United
States, 760 F.2d 1288, 1292 (Fed. Cir. 1985); Jamsar, Inc. v.
United States, 442 F.2d 930 (Ct.Cl. 1971); Grace Industries,
Inc., ASBCA No. 33553, 87-3 BCA ¶ 20,171; General Business Forms,
Inc., supra, Sl. op. at 16 (citing, Raytheon Company v. United
States, 2 Cl.Ct. 763 (1983)). In other words, a contract should
be interpreted in a manner which gives meaning to all of its
parts and in such a fashion that the provisions do not conflict
with each other, if this is reasonably possible. B. D. Click
Company v. United States, 614 F.2d 748 (Ct.Cl. 1980).
It is unnecessary to set forth in detail the rules of
contract construction which apply when interpreting an
agreement. 19/ One rule of construction, however, may have
some particular relevance to this dispute. In that regard,
it is well-accepted that a prior course of dealing between
the parties in earlier contracts can beused to show the
meaning of the current contract. 20/ Gresham &
Company, Inc. v. United States, 470 F.2d 542, 200 Ct.Cl. 97
(1972); L.W. Foster Sportswear Company v. United States, 405 F.2d
1285, 186 Ct.Cl. 499 (1969); Coastal States Petroleum Company,
ASBCA No. 31059, 88-1 BCA ¶ 20,468.
Applying these principles to the facts in the record, the
Board reaches the following conclusions:
A. Although the Contracting Officer's interpretation of the
Program 1284-S contract is reasonable, nothing in the provisions
at issue support the Respondent's position that the only basis
for paying the Appellant for collating fold-ins is the total
number of fold-ins, not fold-in units.
1. The essence of this appeal is a conflict between the
Appellant's insistence that it is entitled to be paid for
collating on the basis each 8 1/2 x 11 inch unit within each
fold-in, and the Respondent's view that collating is to be
billed on the basis of the total number of fold-ins, and not
on the number of page units within the fold-ins being
collated (R4 File, Tab E). 21/ Both parties integrate
several provisions of the contract in dispute
to support different interpretations concerning payment for
collating fold-ins. As indicated above, the Appellant looks to
Section 4, Parts II and IV, ¶ (d) of the IFB to support its view
that it is entitled to payment for collating on the basis of each
8 1/2 x 11 inch unit or leaf within each fold-in. Meanwhile, the
Respondent sees the third paragraph of the "Binding" clause of
Section 2 (Specifications) of the IFB, which informs potential
bidders that collating will be required 25 percent of the time,
and the Section 3 (Determination of Award) estimates of work
under the contract, as the foundation for its interpretation that
collating is to be billed and paid for on the basis of the total
number of fold-ins.
2. The first task facing the Board in resolving this
controversy is to look at the contract to see if the usual
rules of contract construction will fix a single meaning of
the disputed terms -"fold-in," "fold-in unit" and "leaf."
Cf., R.C. Swanson Printing and Typesetting Company, supra,
Sl. op. at 42. In doing so, the Board must look to the
contract as a whole, harmonizing and giving meaning to all
of its parts, if reasonably possible. Hol-Gar Manufacturing
Corporation v. United States, supra, 352 F.2d
972; B. D. Click Company v. United States, supra, 614 F.2d 748;
Fortec Constructors v. United States, supra, 760 F.2d at 1292;
General Business Forms, Inc., supra, Sl. op. at 16.
3. The contract in dispute covers the production of fold-
ins (R4 File, Tab A, p. 1). However, the Board is unable to
find a precise or consistent definition or application of
the terms "fold-in," "fold-in unit" and "leaf" within the
contract itself. With respect to the word "leaf"-the
critical term in this dispute-an examination of the contract
discloses only two places where it is specifically defined,
and in each instance the meaning is different. In that
regard, the second paragraph of Section 4, Part II tells us
that a page-size leaf is equal to a "fold-in unit" and the
number of such units is derived from a calculation based on
the trim size of a particular fold-in (R4 File, Tab A, p.
16). In short, as contended by the Appellant, the second
paragraph of Section 4, Part II makes the word "leaf"
synonymous with the term "fold-in unit." On the other hand,
Section 4, Part IV, ¶ (c) of the contract, which concerns
prices for drilling "per 100 leaves," has an explanatory
note which tells a potential bidder that for the purpose of
counting the number of leaves ". . . each ply of a fold-in
will be counted as a single leaf" (R4 File, Tab A, p. 17).
22/
[Emphasis added.]
4. The Respondent may reasonably feel that the Appellant's
reliance on the Section 4, Part II definition of fold-in
units for collating under Part IV, ¶ (d), is misplaced
because that definition limits itself to prices for printing
operations and paper, whereas collating is a binding
operation. 23/ Similarly, the Respondent might also believe
that the Part IV, ¶ (c) "leaf/ply" definition of leaves for
computing prices for drilling-another binding operation-
indicates an intention to treat such work differently for
pricing purposes from printing operations and paper.
However, the Board is constrained to note that another
provision of the IFB relating to binding operations, namely
the "Binding" clause in Section 2, employs essentially the
same "leaf/page" and "fold-in unit" terminology used in the
second paragraph of Section 4, Part II, when it tells
potential bidders that banding will be required for ". . .
each fold-in leaf/page in suitable units . . ." (R4 File,
Tab A, p. 11). [Emphasis added.] Thus, it is clear to the
Board that in the contract under review, the term "leaf" may
reasonably be defined to have one meaning in one place, and
another meaning in another place, depending on the purpose
of the section in which it appears. Cf., Abbot
Laboratories v. Young, 920 F.2d 984 (D.C. Cir. 1990). Also cf.,
Vanscoter v. Sullivan, 920 F.2d 1441 (9th Cir. 1990) (Even
identical words appearing more than once in the same section may
be construed differently if it appears they were used in
different places with a different intent.).
5. It is obvious to the Board that the drafter of the IFB
went out of his/her way to give special meanings to the word
"leaf" in those places where it was deemed important; i.e.,
Section 4, Part II, and Part IV, ¶ (c). Hence, it seems to
the Board that if the Respondent had wished the word "leaf"
to be synonymous with a "fold-in" for the purpose of
calculating the charges for collating under Section 4, Part
IV, ¶ (d), the drafter could have made that clear by adding
a phrase such as "per 100 leaves (or plies) of fold-ins of
any size," or something equally appropriate. In a like
vein, the drafter could have added an explanatory note
defining the term "leaf" for collating under Section 4, Part
IV, ¶ (d) similar to the one in Section 4, Part IV, ¶ (c),
which defines "leaf" for the purpose of pricing the drilling
of fold-ins, since both line items refer to binding
operations and ask for price quotations "per 100 leaves."
24/ In either case, if the drafter of the IFB had taken
these steps it would have been clear that a "leaf" for the
purpose of Section 4, Part IV, ¶ (d) meant something other than a
"fold-in unit." That the drafter failed to do so is not without
some significance. Consequently, the Board concludes that the
use of the word "leaf," as applied to binding operations under
the contract, including collating, is not so precise as to
support only the meaning ascribed to it by the Respondent.
6. The Respondent's belief that only the total number of
fold-ins should be counted when billing and paying for
collating is derived from an arithmetic computation applied
to the Government's estimate in the IFB of the number of
collating operations to be performed over the life of the
contract multiplied by 100 and divided by 25 percent. 25/
On review and analysis of the contract,the Board cannot say
that the Respondent's interpretation is
outside the "zone of reasonableness." Fry Communications,
Inc./InfoConversion Joint Venture v. United States, supra, 22
Cl.Ct. at 506 (citing, WPC Enterprises, Inc. v. United States,
supra, 163 Ct.Cl. at 6). In the Board's view, the portions of
the contract relied on by the Respondent-the third paragraph of
the "Binding" clause of Section 2 (Specifications) of the IFB and
the Section 3 (Determination of Award) estimates-permit the
inferences it draws, which are rational and consistent with the
contract language, id. (citing, Sun Shipbuilding & Drydock Co. v.
United States, supra, 183 Ct.Cl. at 372), and do not rest on any
obvious errors, gross discrepancies, or glaring gaps. Id.
(citing, WPC Enterprises, supra, 163 Ct.Cl. at 6).
7. However, to recognize that the Respondent's
interpretation of the contract falls within "zone of
reasonableness," is not the same as saying that the
Contracting Officer's position is the only basis for paying
the Appellant for collating fold-ins. That is, the Board
sees nothing in the contract specifications themselves which
would lead to a finding, as urged by the Respondent, that
the only basis for paying the Appellant for collating fold-
ins is the total number of fold-ins themselves.
8. Finally, it seems to the Board that the Respondent's
position in this appeal relies, in part, on " . . . the
unstated premise that a party bidding on a [G]overnment
contract is charged with knowing the principle of contract
interpretation; i.e., that an interpretation giving meaning
and effect to all portions of an instrument is preferred to
an interpretation that leaves any portion meaningless." Fry
Communications, Inc./InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 508. For the reasons expressed
by the Court in Fry Communications, this Board rejects that
position. While the Board should interpret contracts with
that principle in mind, the operative inquiry here,
discussed below, is simply whether the interpretation
advanced by the Appellant-ostensibly staffed by laymen-is
reasonable. Id.
B. The Appellant's interpretation of the contract relying on
fold-in units as the basis for payment for collating, also falls
within the "zone of reasonableness." Thus, the contract language
is ambiguous. Furthermore, the ambiguity is latent, so the
doctrine of contra proferentem applies.
1. Although the Board recognizes the validity of the
Respondent's interpretation, the real issue in this appeal
is whether or not the meaning given to the disputed contract
provisions by the Appellant also falls within the "zone of
reasonableness?" The Respondent cannot prevail simply by
showing that its interpretation of the IFB is somehow
"better" than the Appellant's, Fry Communications,
Inc./InfoConversion Joint Venture v. United States, supra,
22 Cl.Ct. at 505-06, or that the
Appellant's interpretation, even if reasonable, is not the "most"
reasonable. General Business Forms, Inc., supra, Sl. op. at 23.
Since the Board has already found that the Respondent's
interpretation lies within the "zone of reasonableness," a
similar finding with respect to the Appellant's interpretation
means, ipso facto, that the specifications are ambiguous. R.C.
Swanson Printing and Typesetting Company, supra, Sl. op. at 41;
Fry Communications, Inc./InfoConversion Joint Venture, supra, Sl.
op. at 9 (Decision on Remand).
2. The Appellant interprets the word "leaf" in Section 4,
Part IV, ¶ (d) as meaning the same as "fold-in unit," as
defined in Section 4, Part II, notwithstanding that the
former applies to collating and the latter is related to
paper and printing operations. The question for the Board,
therefore, is whether it was reasonable under the
circumstances for the Appellant to extend the Part II
definition of "leaf" to Part IV, ¶ (d), for the purpose of
calculating the number of leaves for pricing collating under
Part IV? To test the reasonableness of the Appellant's
interpretation in this case, the Board must ask whether an
ordinary contractor, looking at the contract specifications
in question, could have reasonably concluded that the price
for collating fold-ins "per 100 leaves" was to be computed
on the basis of "fold-in units," as defined in Section 4,
Part II, because "leaves" and "fold-in units" meant
essentially the same thing. Cf., General Business Forms,
Inc., supra, Sl. op. at 18. An ordinary
contractor under these circumstances is not expected to be a mind
reader in ascertaining the intent of the drafter of the contract.
Cf., Fry Communications, Inc./InfoConversion Joint Venture v.
United States, supra, 22 Cl.Ct. at 508; General Business Forms,
Inc., supra, Sl. op. at 22 ("A contractor . . . cannot . . . be
held to a standard of clairvoyance even where some ambiguity
exits . . .".).
3. The Board believes that the Appellant's interpretation,
when measured against the above standard, clearly falls
within the "zone of reasonableness." The Board has reached
this conclusion for two basic reasons. First, as indicated
above, the contract itself was imprecise and inconsistent in
defining and/or applying the critical terms "fold-in,"
"fold-in unit" and "leaf." This was particularly true
insofar as the IFB's treatment of pricing and billing for
binding operations under the contract; e.g., the prices "per
100 leaves" for drilling and collating in Section 4, Part
IV, can be computed differently because the special
instructions which count each ply of a fold-in as a single
leaf for drilling are not repeated for, and do not apply to
collating. Hence, the Board has concluded that the term
"leaf" in the disputed contract may reasonably be defined to
have different meanings depending on the purpose of the
section in which it appears. Cf., Abbot Laboratories v.
Young, supra, 920 F.2d 984; Vanscoter v. Sullivan, supra,
920 F.2d 1441. Second, it was not unreasonable under the
circumstances for the Contractor to take the Respondent's
failure to challenge its interpretation of the identical
language in its
1988-1989 contract as confirming the correctness of its method
for calculating charges for collating under the 1991-1992
contract. 26/ Accordingly, the Board also concludes that the
portions of the contract relied on by the Appellant-the second
paragraph of Section 4, Part II and Part IV, ¶ (d)-support the
inferences it draws, which are rational and consistent with the
contract language. Fry Communications, Inc./InfoConversion Joint
Venture v. United States, supra, 22 Cl.Ct. at 506 (citing, Sun
Shipbuilding & Drydock Co. v. United States, supra, 183 Ct.Cl. at
372).
4. Since both the Appellant and the Respondent offer
interpretations of the contract which fall within the "zone
of reasonableness," the Board is constrained to conclude
that the contract is ambiguous because it is " . . .
susceptible of two different interpretations, each of which
is found to be consistent with the contract's language." 27/
Fry Communications, Inc./InfoConversion Joint Venture v.
United States, supra, 22 Cl.Ct. at 506 (citing, Sun
Shipbuilding & Drydock Co. v. United States, supra, 183
Ct.Cl. at 372); General Business Forms, Inc.,
supra, Sl. op. at 16. Therefore, the next step in the Board's
analysis is to determine if that ambiguity is latent or patent,
and if latent, whether the Contractor relied on its
interpretation at the time it prepared its bid.
5. While the Respondent contends that the contract in
dispute is unambiguous, it argues in any case that if an
ambiguity exists, it would be patent. R.Brf., p. 7, n. 2.
Since the Respondent is attempting to pass the
responsibility for its own failings-its failure to produce
an accurate, unambiguous contract-onto the shoulders of the
Appellant, it has the burden to show the existence of
special circumstances before the financial burden flowing
from the Government's fault will be shifted. 28/ B.L.I.
Construction, Inc., supra, 91-1 BCA ¶ 23,316, at 116,923.
6. The IFB was patently ambiguous if it contained a gross
discrepancy, an obvious error in drafting, or a glaring gap.
29/ See, e.g., Fry Communications, Inc./InfoConversion
Joint Venture v. United States, supra, 22 Cl.Ct. at 509
(citing, WPC Enterprises, Inc. v. United States, supra, 163
Ct.Cl. at 6). Whether an
ambiguity is patent or not is determined by an objective test;
i.e., what would a reasonable man find to be patent and glaring?
Fry Communications, Inc./InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 509 (citing, Max Drill, Inc. v.
United States, supra, 192 Ct.Cl. at 626). This is so, because a
potential contractor ". . . is not normally required (absent a
clear warning in the contract) to seek clarification of any and
all ambiguities, doubts, or possible differences of
interpretation." WPC Enterprises, Inc. v. United States, supra,
163 Ct.Cl. at 6. For the Board to find a patent ambiguity here,
its examination of the contract, through the eyes of a reasonable
man, must disclose such gross discrepancies, obvious errors, or
glaring gaps; otherwise, it can only conclude that the ambiguity
is not patent. Id. On the other hand, if the Board finds that
the ambiguity is patent, then its inquiry is at an end, since it
is clear that the Appellant failed to seek clarification of the
IFB prior to bidding. Id. (citing, Newsom v. United States,
supra, 230 Ct.Cl. at 303).
7. In the Board's view, nothing on the face of the contract
amounts to the sort of gross discrepancy, obvious error in
drafting, or a glaring gap, which would trigger the
Appellant's legal duty to seek an interpretation from the
Contracting Officer concerning the meaning of the term
"leaf" in Section 4, Part IV, ¶(d) before establishing its
bid price for collating "per 100 leaves." Cf., Fry
Communications, Inc./InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 506 (citing, WPC
Enterprises, supra, 163 Ct.Cl. at 6); General Business Forms,
Inc., supra, Sl. op. at 21. The facts in this case support the
conclusion that the Appellant did not become aware of the
Respondent's contrary view of the contract language until its
bills for collating were disputed and rejected by GPO.
Furthermore, there is no evidence that any other bidder
responding to the IFB questioned the meaning of the term "per 100
leaves" in Section 4, Part IV, ¶ (d) or that the Respondent
thought the pricing provision for collating to be anything but
clear on its face. Moreover, even if the Board agreed with the
Respondent that the Appellant should have seen that its
interpretation of the term "per 100 leaves" for the purpose of
collating conflicted with the Government's contractual estimates
for that particular binding operation, it cannot say that the
Contractor also would have recognized that the ambiguity which
existed was so "gross," "glaring" or "obvious" that it had a duty
to ask the Contracting Officer to resolve it. 30/ Accordingly,
the Board concludes that the ambiguity in this case is latent,
not patent. Consequently, the Appellant's failure to contact the
Contracting Officer about the "anomaly" between its
interpretation and the Government's estimates for collating is
not fatal under these circumstances, because the law does not
require a potential contractor to seek a clarification of any and
all ambiguities, doubts, or possible differences in
interpretation. WPC Enterprises, Inc. v. United States, supra,
163 Ct.Cl. at 6.
8. The Board has found that the ambiguity here is latent.
Thus, under accepted principles it must apply the doctrine of
contra proferentem if the Appellant relied on its
interpretation when it prepared its bid. 31/ Fry
Communications, Inc./ InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 510. The Appellant has the
burden of proof on the "reliance" issue. Id.
9. The record in this case does not contain any worksheets,
notes or other materials which might shed some light on how
the Appellant arrived at its low bid. Id. See also, Fry
Communications, Inc./InfoConversion Joint Venture, supra,
GPO BCA 9-85, Sl. op. at 35-36 (Decision on Remand).
However, the Appellant clearly raises the "reliance" issue
in its Complaint, and the relevant facts are essentially
admitted by the Respondent. 32/ Complaint, ¶¶ 9, 10;
Answer, ¶¶ 9, 10. Thus, it is basically undisputed that:
(a) the Appellant's 1988-1989 contract contained a pricing
provision which allowed a contractor to charge for collating
fold-ins on the basis of "per 100 leaves;" (b) in preparing
its bid for the 1988-1989 agreement, the Appellant
interpreted the word "leaves" in that pricing provision to
mean "fold-in units," and calculated its bid price for
collating accordingly; (c) the Contractor's charges for
collating under the 1988-1989 contract were based on its
interpretation of that pricing provision, and the bills it
submitted to the Respondent for that task were paid in full;
(d) at no time during the Appellant's performance of the
1988-1989 contract did the Respondent challenge the
Contractor's method of computing its charges for collating;
(e) the IFB for the 1991-1992 contract-the contract at issue
here -contained a pricing provision for collating fold-ins
which was identical to the one in the 1988-1989 agreement;
(f) in responding to the IFB the Appellant gave the phrase
"per 100 leaves" the same meaning it had in 1988-1989, and
submitted a bid for the 1991-1992 agreement based on its
understanding that a "leaf" for collating purposes was
synonymous with a "fold-in unit;" and (g) the charges
submitted by the Appellant for collating fold-ins under the
1991-1992 contract were calculated by the same method which
the Contractor had used in 1988-1989. On balance, the Board
believes that these undisputed facts support a resolution of
the "reliance" issue in favor of the Appellant. In the
Board's opinion, when the Appellant saw that the pricing
provision for collating in the 1991-1992 IFB was identical
to the one in its previous 1988-1989 contract, it simply
applied the same interpretation to the key words that it had
used two years earlier. Since its interpretation under the
1988-1989 contract had not been challenged by the
Respondent, and its bills for collating based on that
interpretation had been paid in full, it would have been
strange indeed if the Appellant had looked at those words
afresh and given them a new meaning. Instead, the Appellant
merely assumed that its earlier interpretation was correct
and prepared its bid for collating under the 1991-1992
contract with that understanding in mind. Certainly, under
these circumstances it was not unreasonable for the
Appellant to rely its unchallenged interpretation of an
identical pricing provision for collating in its earlier
contract at the time it prepared its bid in response to the
1991-1992 IFB. 33/
10. In summary, the Board finds that the pricing provision
for collating fold-ins in the 1991-1992 contract is latently
ambiguous, and that the Appellant relied on its
interpretation of the disputed language when it prepared its
bid. Accordingly, under well-accepted principles the Board
will apply the doctrine of contra proferentem to the facts
before it, and shift the risk of the ambiguity in this case
to the Respondent, who drafted the contract language in
dispute. To rule otherwise would be for this Board to
sanction the sort of "hidden trap" for contractors doing
business with the Government which the courts have long
sought to protect them against. Cf., Fry Communications,
Inc./ InfoConversion Joint Venture v. United States, supra,
22 Cl.Ct. at 503 (citing, Sturm v. United States, supra, 190
Ct.Cl. at 697). 34/
DECISION
In light of the foregoing analysis, the Board finds and
concludes that: (a) both the Appellant and the Respondent
have advanced interpretations of the pricing provision for
collating fold-ins in the 1991-1992 contract which fall
within the "zone of reasonableness," thus the contract
language is ambiguous; (b) the ambiguity is latent; and (c)
when the Appellant prepared its bid in response to the IFB,
it relied on its interpretation of the disputed terms.
THEREFORE, the decision of the Contracting Officer rejecting
the Appellant's interpretation of the contract and denying
its claim to be compensated for collating fold-ins on the
basis of "fold-in units" is REVERSED, and the appeal is
allowed. FURTHERMORE, the matter is REMANDED to the
Contracting Officer with instructions to compute the amount
due the Appellant under this Decision, and to make the
appropriate arrangements for payment accordingly. General
Business Forms, Inc., supra, Sl. op. at 23.
It is so Ordered.
_______________
1. The Contracting Officer's appeal file, assembled pursuant to
Rule 4 of the Board's Rules of Practice and Procedure, was
delivered to the Board on March 13, 1992. GPO Instruction
110.12, Subject: Board of Contract Appeals Rules of Practice and
Procedure, dated September 17, 1984 (Board Rules), Rule 4(a). It
will be referred to hereafter as the R4 File, with an appropriate
Tab letter (and a page number for Tab A) also indicated. The R4
File consists of five documents identified as Tab A through Tab
E.
2. In this case, the Appellant elected to have its appeal
processed under the Board's optional Accelerated Procedure. Board
Rules, Rules 12.1(b) and 12.3. See, Appellant's Complaint, dated
March 12, 1992. Furthermore, by letter dated April 20, 1992, the
Appellant advised the Board that it desired to have its appeal
decided on the record without a hearing. Board Rules, Rule 8.
3. Accelerated Procedure decisions are normally brief and
contain only summary findings of fact and conclusions. Board
Rules, Rule 12.3(b). In this case, however, the Board believes
that the nature of the controversy entitles the parties to a
fuller explanation of the facts, issues, and reasons for the
Board's decision than would be found in a typical Accelerated
Procedure case. The Board also notes that this decision, unlike
its opinions under the Small Claims (Expedited) Procedure, may be
cited as precedent in future appeals. Cf., Graphics Image, Inc.,
GPO BCA 13-92 (August 31, 1992), Sl. op. at 2, fn. 3; Board
Rules, Rule 12.2(d).
4. According to the record, Program 1284-S has been issued by
the NYRPPO since December 1988, for four separate annual terms.
Respondent's Brief, dated August 10, 1992, Declaration of
Contracting Officer Francis Dillon, ¶ 3 (R. Brf.). The Appellant
was the successful contractor on the first contract, which ran
from December 1988 through December 1989. From January 1990 to
January 1991, Program 1284-S was awarded to Braceland Brothers of
Stubenville, Ohio. Id. For the contract at issue here-covering
the period February 1991 to January 31, 1992-the Appellant was
again the successful bidder. Id. For the period beginning
February 1992, Program 1284-S was awarded to Technical
Publications. Id.
5. Program 1284-S was also governed by the applicable articles
of GPO Contract Terms, GPO Publication 310.2, effective December
1, 1987 (Rev. 9-88) (GPO Contract Terms), and GPO's Quality
Assurance Through Attributes Program, GPO Publication 310.1
(Revised November 1989) (R4 File, Tab A, p. 2).
6. The contract in question was a "direct-deal term contract."
As explained in the GPO Agency Procedural Handbook, GPO
Publication 305.1, dated March 1987 (GPO Handbook): "[d]irect-
deal term contracts allow the customer agency to place print
orders (GPO Form 2511) directly with contractors rather than
routing them through the GPO for placement." GPO Handbook,
Section IV, ¶ 1, at 8. The purpose of this method of contract
administration is " . . . to ensure that agency printing needs
are met in the most effective and efficient manner possible."
Id. It should be noted, however, that agency direct-deal
authority ". . . extends only to the placement of print orders
and to the transmission of copy and proofs. . . . All other
authority rests with GPO's Contracting Officers." GPO Handbook,
Section IV, ¶ 2, at 9. See, R.C. Swanson Printing and
Typesetting Company, GPO BCA 31-90 (February 6, 1992), Sl. op. at
6, fn. 4.
7. The Appellant's interpretation was consistent with its
understanding of an identical pricing provision in its 1988-89
Program 1284-S contract. Appellant's Complaint, dated March 12,
1992, ¶ 9; Exhibit A (Complaint). See, note 4 supra. According
to the Appellant, its successful bid on the earlier contract was
based on the same interpretation of that identical language, and
its invoices were paid in full by the Respondent without
challenge. Complaint, ¶¶9, 10.
8. Contracting officers do not normally receive and review
vouchers submitted for payment by contractors. However, if there
is a dispute, or if there is a question regarding the contract
specifications, the contracting officer is contacted to resolve
any questions concerning the interpretation of the contract.
R.Brf., Declaration of Contracting Officer Francis Dillon, ¶ 4
(Dillon Declaration).
9. The Appellant also relied on specifications concerning
payment for fold-ins in other contracts awarded by the
Respondent, including Programs 1268-S and 1262-M issued by the
NYRPPO (R4 File, Tab C). However, the Board has indicated on
several occasions in the past that it has no jurisdiction over
matters pertaining to other contracts unrelated to the one under
review in the case before it, and will not consider them. See,
e.g., B. P. Printing and Office Supplies, GPO BCA 14-91 (August
10, 1992), Sl. op. at 15.
10. Hence, the Appellant contends that as expressed in Section
4, Part II, the terms "leaf" and "fold-in unit" are synonymous,
with the latter being a derivative of a fold-in's trim size.
Appellant's Reply Brief, dated August 21, 1992, p. 2.
Consequently, it believes that it correctly interpreted the terms
of the contract and properly submitted a bid for collating based
on 100 leaves within the fold-ins, i.e., fold-in units.
11. Blanks confirmed his opinion in a memorandum to the
Appellant, dated March 5, 1991, which is attached as Exhibit B to
the Complaint. Since the memorandum refers to the Appellant's
letter of February 27, 1992, it is clear that the date of 1991 is
a typographical error. However, while the Appellant may find
comfort in the fact that the customer-agency supports its
position, Blanks' opinion carries little weight in this
proceeding. By GPO regulation, the Navy's "direct deal"
authority was expressly limited to the placement of print orders;
all other responsibility for the contract, including the
authority to interpret it, was retained by the Contracting
Officer. See, GPO Handbook, note 6 supra, Section IV, ¶ 2, at p.
9; R.Brf., Dillon Declaration, ¶ 8.
12. In short, the Respondent believes that the Section 4, Part
II, definition for fold-in units applies solely to the
Appellant's prices for both makeready and running rates for
printing, and the amount the Contractor will charge for the paper
it supplies. R.Brf., p. 7. In that regard, the Government
estimates in the IFB advised the Appellant that it was expected
to do 4,022 makereadys, and to print 594,200 units or pages
(5,942 times 100) (R4 File, Tab A, p. 13, ¶I.a.(2)). Hence, the
Contractor would need paper to print that many page size units.
R.Brf., p. 7.
13. Relying on the "Determination of Award" provisions of the
IFB, the Respondent contends that the Contractor would have to
collate 62,900 "leaves" (R4 File, Tab A, p. 17). R.Brf., p. 7.
This figure is arrived at by multiplying 629 separate collating
operations by 100 leaves (R4 File, Tab A, p. 13, ¶ IV.d). The
IFB told potential bidders that "[c]ollating into sets will be
required 25% of the time . . ." (R4 File, Tab A, p. 11).
Therefore, the Respondent rejected the Appellant's interpretation
as unreasonable because it allows the Contractor to be paid for
collating on the basis of 25% of the estimated number of page
size leaves ("fold-in units"), which would be 148,550 (594,200 x
.25 = 148,440), or more than double the Government's estimate.
R.Brf., p. 7. In the Respondent's opinion, the Appellant's
position with respect to collating can only be sustained if the
IFB estimates of the number of collating operations to be
performed over the life of the contract are completely ignored
(R4 File, Tab A, p. 13, ¶ IV.d). R.Brf., p. 7.
14. The Appellant's notice of appeal was mistakenly addressed
and mailed to Mr. Paul Barlowe, an employee in the Regional
Operations Office of GPO's Printing Procurement Department, who
delivered it to the Board. Board Rules, Rule 1(a), 2. Even
though both the "Disputes" clause and the Board's rules require a
notice of appeal to be sent directly to the Board, GPO Contract
Terms, Contract Clauses, ¶ 5(b), Board Rules, Rule 1(a), under
the liberal interpretation followed by most contract appeals
boards, including this one, a timely appeal may be served on any
other appropriate officer of the agency; e.g., a contracting
officer, Government counsel, etc. See, e.g., Marcy Printing
Inc., GPO BCA 20-91, Order Dismissing Appeal, dated September 23,
1992, p. 1, fn. 1. See also, e.g., Birken Manufacturing Company,
ASBCA No. 37064, 89-1 BCA ¶ 21,248; Brunner Bau GmbH, ASBCA No.
35678, 89-1 BCA ¶ 21,315. But see, Doris Bookout, AGBCA No.
89-147-1, 89-1 BCA ¶ 21,570 (for Department of Agriculture
appeals, only notices sent directly to that agency's board of
contract appeals are deemed properly filed).
15. The record on which the Board's decision is based consists
of: (1) the Notice of Appeal, dated January 10, 1992; (2) the R4
File (Tabs A-E); (3) the Complaint, dated March 12, 1992; (4) the
Answer, dated April 13, 1992; (5) the Report of Presubmission
Telephone Conference, dated July 14, 1992 (RPTC); (6) the
Respondent's Brief, dated August 10, 1992; (7) the Appellant's
Reply Brief, dated August 21, 1992. As previously indicated,
attached to the Complaint, and incorporated by reference therein,
were three Exhibits-the pricing provision for collating fold-ins
from the Appellant's 1988-89 Program 1284-S contract (Exhibit A),
see note 7 supra; a memorandum from Navy employee Blanks
confirming his agreement with the Appellant's method of pricing
collating fold-ins (Exhibit B), see note 11 supra; and the
revised specification for pricing collating fold-ins from the
Program 1284-S contract for 1993 (Exhibit C). Exhibit C is
clearly intended to imply that the changed specification amounts
to an admission by the Respondent that the language in the
Appellant's contract is ambiguous, and that the Government is
uncertain of its interpretation. Complaint, ¶ 12. However, it
is a well-settled principle of Government contract law that
language revisions in a subsequent contract will not justify a
finding that the prior contract was ambiguous, or that the
Government's interpretation of the former agreement was
erroneous. See, e.g., Icono v. United States, 6 Cl.Ct. 149, 156,
n. 8 (1983); Martin Lane Co. v. United States, 432 F.2d 1013,
1021, 193 Ct.Cl. 203, 218 (1970). See also, Bay Decking Company,
ASBCA No. 33868, 89-2 BCA ¶ 21,834; T.L. James & Company, ENGBCA
No. 5328, 89-2 BCA ¶ 21,643; Emerald Maintenance, Inc., ASBCA No.
29540, 86-3 BCA ¶ 19,044; Coastal Dry Dock & Repair Corp., ASBCA
No. 31894, 87-1 BCA ¶ 19,618. Therefore, Exhibit C of the
Complaint has not been considered by the Board in the context of
this decision.
16. The United States Claims Court has observed that: "[a] mere
dispute over the terms does not constitute an ambiguity, and an
interpretation which is merely possible is not necessarily
reasonable." Ceccanti, Inc. v. United States, 6 Cl.Ct. 526, 528
(1984). An ambiguity must have two or more reasonable
interpretations and the intent of the parties must not be
determinable by the normal rules of interpretation. R.C. Swanson
Printing and Typesetting Company, supra, Sl. op. at 42.
17. The importance of the doctrine of contra proferentem,
according to the Court in Fry Communications, is that it properly
". . . puts the risk of [latent] ambiguity, lack of clarity, and
absence of proper warning on the drafting party which could have
forestalled the controversy; it pushes the drafters toward
improving contractual forms[,] and it saves contractors from
hidden traps not of their own making." Fry Communications,
Inc./InfoConversion Joint Venture v. United States, supra, 22
Cl.Ct. at 503 (citing, Sturm v. United States, 421 F.2d 723, 190
Ct.Cl. 691, 697 (1970)).
18. The purpose of any rule of contract interpretation is to
carry out the intent of the parties. Hegeman-Harris and Company,
440 F.2d 1009 (Ct.Cl. 1979). The test for ascertaining intent is
an objective one; i.e., the question is what would a reasonable
contractor have understood, not what did the drafter subjectively
intend. Corbetta Construction Company v. United States, 461 F.2d
1330, 198 Ct.Cl. 712 (1972). See also, Salem Engineering and
Construction Corporation v. United States, supra, 2 Cl.Ct. at
806. The provisions of the contract itself should provide the
evidence of the objective intent of the parties.
19. For example, within the contract itself, ordinary terms are
given their plain and ordinary meaning in defining the rights and
obligations of the parties. Elden v. United States, 617 F.2d 254,
223 Ct.Cl. 239 (1980). Similarly, technical terms are given
their technical meaning. Industrial Finishers, Inc., ASBCA No.
6537, 61-1 BCA ¶ 3,091; Coastal Drydock and Repair Corporation,
supra, 87-1 BCA ¶ 19,618. Likewise, terms special to Government
contracts will be given their technical meanings. General
Builders Supply Company v. United States, 409 F.2d 246, 187 Ct.
Cl. 477 (1969) (meaning of "equitable adjustment"). As for
extrinsic evidence of the intent of the parties, the rules of
construction allow, among other things, custom and trade usage to
explain or define terms. W. G. Cornell Company v. United States,
376 F.2d 199, 179 Ct. Cl. 651 (1967); Harold Bailey Painting
Company, ASBCA No. 27064, 87-1 BCA ¶ 19,601 (used to define "spot
painting"). However, custom and trade usage may not contradict
clear or unambiguous terms. WRB Corporation v. United States,
183 Ct.Cl. 409, 436 (1968).
20. However, a party must be aware of the prior course of
dealings. Snowbird Industries, ASBCA No. 33027, 89-3 BCA ¶
22,065; Wheatley Associates, ASBCA No. 24760, 83-2 BCA ¶ 16,760.
21. In reaching his conclusion that a "leaf" was synonymous with
a "fold-in" for the purpose of pricing collating under the
contract, the Contracting Officer relied on a comparison of the
Appellant's invoices with random billings from Braceland
Brothers, the Program 1284-S contractor for the previous year (R4
File, Tab D). From that examination, the Contracting Officer
concluded that his interpretation was consistent with "all of the
GPO contracts" and must be used in the billing procedure (R4
File, Tab E). However, as previously noted, the Board is limited
to considering matters pertaining to the contract under review in
the case before it. See, note 9 supra. Similarly, the Board
cannot use specifications in a subsequent contract to support a
finding that the prior contract was ambiguous, or that the
Government's interpretation of the former agreement was
erroneous. See, note 15 supra. Therefore, for essentially the
same reason that it has disregarded Exhibit C of the Complaint,
note 15 supra, the Board believes that the Program 1284-S
contract performed by Braceland Brothers is irrelevant to this
dispute, and the Contracting Officer's reliance on it is
misplaced.
22. In the Board's view, the Respondent's position that the
total number of fold-ins forms the basis for billing and paying
for collating seems analogous to the drilling definition of fold-
in leaves. Indeed, the Board sees no appreciable difference
between the explanatory note for drilling which says that in
counting the number of leaves ". . . each ply of a fold-in will
be counted as a single leaf" (R4 File, Tab A, p. 17, ¶ (c)), and
the Contracting Officer's statement to the Appellant the in final
decision letter that: "[a] reasonable interpretation of [fold-
ins] per 100 leaves would be the actual [fold-in], regardless of
size, being one leave [sic] for the purpose of collation. . . ."
(R4 File, Tab E). [Emphasis added.]
23. Among other things, binding operations include scoring,
folding, gathering or collating, stitching, trimming and
drilling. POCKET PAL, 146, 152-53 (International Paper Company,
14th ed., 1989).
24. The question may arise whether the special definition of the
word "leaf" in Section 4, Part IV, ¶ (c), or something like it,
can be implied in Section 4, Part IV, ¶ (d), merely because both
drilling and collating are "binding" operations. However, since
it is presumed that the drafter of a document acts intentionally,
the rule is clear that where a term is carefully employed in one
place and excluded in another, it should not be implied where
excluded. Cf., Rusello v. United States, 464 U.S. 16 (1983);
United States v. Espinoza-Leon, 873 F.2d 743 (4th Cir. 1989),
cert. denied 109 S.Ct. 3257 (1989); Marshall v. Western Union
Telegraph Company, 621 F.2d 1246 (3rd Cir. 1980). This maxim of
construction, called "inclusio unius est exclusio alterius,"
simply means that the inclusion of one thing is the exclusion of
another. BLACK'S LAW DICTIONARY 906 (4th ed. 1968). Therefore,
without some other indication in the contract that potential
bidders were expected to quote prices for collating by the same
or similar method that they were to use to calculate prices for
drilling, there is no basis for the Board to assume that the
drafter of the IFB intended such a result. Instead, taking the
contract as it finds it, the Board sees that the method of
counting each ply of a fold-in as a single leaf is limited to the
drilling operation only.
25. On the other hand, as previously indicated, the Respondent
seeks to dismiss the Appellant's position concerning counting
"leaves" for collating by arguing that the Contractor's
interpretation would allow payments for collating at more than
double the rate estimated by the Government, and can only be
sustained if those estimates are completely ignored. See, note
13 supra. R.Brf., p. 7. However, as the "Determination of Award"
provisions of the contract relied on by the Respondent state, in
pertinent part: ". . . the following units of production . . .
are the estimated requirements to produce 12 months of orders
under this contract. These units do not constitute, nor are they
to be construed as, a guarantee of the volume of work which may
be ordered for a like period of time." (R4 File, Tab A, p. 13).
[Emphasis added.] Furthermore, the "Requirements" clause tells a
contractor that: "[t]he Government shall not be required to
purchase from the contractor, requirements in excess of the limit
on total orders under this contract, if any" (R4 File, Tab A, p.
6). [Emphasis added.] Consequently, even though the estimates in
the contract are based on a good faith review of the previous
year's activity, the clear import of this language is to tell
potential bidders that the actual volume of work, including
collating, is not fixed but may be more or less than the
Government's "best guess." Hence, there is nothing in the
Government's estimates themselves which would have put the
Appellant on notice that its larger figures for collating based
on computing "fold-in units" instead of "fold-ins," were not in
harmony with the forecast of work under the contract.
26. The Board wishes to emphasize that it is not saying that the
earlier acquiescence of the Government amounts to a waiver or
that the Respondent is estopped from asserting a contrary
viewpoint now. See notes 33 and 34 infra. Rather, the Board is
merely stating that for the limited purpose of testing the
reasonableness of the Appellant's interpretation, the Contractor
was entitled to place some reliance on the fact that its present
interpretation was consistent with the meaning it placed on the
identical language in its earlier contract, which the Respondent
had not disputed at the time.
27. Because the Board has concluded that both parties have
advanced reasonable interpretations of the contract, it applies
the rulings of the Court in Fry Communications to this case and
rejects the Appellant's primary position, namely that the
specifications in question are clear and unambiguous. Fry
Communications, Inc./InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 509, fn. 10.
28. As stated by the Department of Transportation Board of
Contract Appeals (DOTBCA): "The situation is somewhat analogous
to the last clear chance doctrine in tort law, where one will be
absolved of the consequences of his/her negligence if the person
injured should have observed the results of that negligence and
in the exercise of reasonable care avoided the injury." B.L.I.
Construction, Inc., DOTBCA No. 2147, 91-1 BCA ¶ 23,316, at
116,923, fn. 9.
29. The DOTBCA has defined a "glaring gap" for the purpose of
revealing a patent ambiguity as one which ". . . leap[s] from the
page at the viewer, assaulting the viewer's senses, vision, and
mind to such an extent that a reasonable person cannot avoid
observing it." B.L.I. Construction, Inc., supra, 91-1 BCA ¶
23,316, at 116,924.
30. As the Board has previously observed, those estimates are
merely the Government's good faith "best guess" of the volume of
such work, and nothing in the estimates themselves would have
warned the Appellant that its larger figures for collating based
on computing "fold-in units" instead of "fold-ins," were in
conflict with the Respondent's forecast of work under the
contract. See note 25 supra.
31. As explained by the Court in Fry Communications: "This rule
is aimed at preventing contractors from recovering additional
compensation under a contract based on a mere afterthought, i.e.,
based on an interpretation of the contract not contemplated by
the contractor at the bidding stage. Put another way, the
actual-reliance rule forces the contractor to prove that it has
actually been injured as a result of the [G]overnment's inclusion
of a latently ambiguous provision in the contract. If the
contractor did not actually rely on its interpretation when
formulating its bid, it cannot later claim that it will lose
money if its post-bid interpretation is not adopted." Fry
Communications, Inc. / InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 510. [Original emphasis.]
32. On the other hand, the record on the "reliance" issue before
the Court in Fry Communications consisted of allegations and
self-serving statements made by the contractor after the dispute
arose, which were neither admitted nor denied by the Government.
Fry Communications, Inc./InfoConversion Joint Venture v. United
States, supra, 22 Cl.Ct. at 510.
33. In so holding, the Board is not saying that there was an
established course of dealing between the parties which shows the
meaning of the current contract and amounts to a waiver of an
express contract requirement. Cf., Gresham & Company, Inc. v.
United States, supra, 470 F.2d 542; L.W. Foster Sportswear
Company v. United States, supra, 405 F.2d 1285; Coastal States
Petroleum Company, supra, 87-1 BCA ¶ 19,618. See also, Laborers'
International Union of North America, LBCA No. 83-BCA-11, 84-3
BCA ¶ 17,658. In that regard, the Board is well aware that the
doctrine of course of dealing ". . . is not a tool for
sanctifying a party's unallowable conduct upon a showing that the
party got by with it several times before." Mission Van and
Storage Company, Inc., GSBCA No. 7386-R, 85-2 BCA ¶ 18,032, at
90,493. Indeed, a single prior contract is generally
insufficient to support a finding that there was an understood
course of dealing between the parties. Longmire Coal
Corporation, ASBCA No. 31569, 86-3 BCA ¶ 19,110. Compare,
Western Avionics, Inc., ASBCA No. 33158, 88-2 BCA ¶ 20,662 (the
contractor could reasonably rely on a practice established under
50 prior contracts over a 16-year period which deviated from the
precise contract language). Rather, the Board is merely stating
here that the 1991-1992 IFB was ambiguous, and there was nothing
in the Respondent's administration of the prior 1988-1989
agreement which would have alerted the Appellant, at the time it
prepared its bid, to the fact that the Government had a different
opinion as to the meaning of the disputed language.
34. In light of the Board's decision on the "ambiguity" issue,
it is unnecessary to address the remaining question in this
appeal, namely, whether or not the Respondent would be estopped
from recovering the overpayments made to the Appellant for
collating fold-ins simply because it had paid the Contractor on
the basis of "fold-in units" under an identical pricing
specification in the 1988-89 contract? However, the Board does
note its agreement with the Respondent that, as a general rule,
the Government is not estopped from rectifying an earlier error
in contract administration and may recover funds erroneously
paid. United States v. Ulvedale, 372 F.2d 31, 35 (8th Cir.
1967). See also, Assignees for the Benefit of Creditors of A.
Hoen & Co., Inc., GPO CAB Panel 9-82 (October 21, 1983), Sl. op.
at 4-5, where the Board's predecessor contract appeals panel
stated that: " . . . it has long been recognized that the
Government has a right, unlike those of other creditors, to set-
off the amounts due it against any funds due the contractor by
the Government. [Citations omitted.] This right has been held
to be an inherent right in the United States. [Citation
omitted.]".