ASCOT TAG & LABEL COMPANY, INC. GPO BCA 14-85 August 7, 1987 Michael F. DiMario, Administrative Law Judge Opinion This appeal, timely filed by Ascot Tag & Label Company, Inc., 130 JFK Drive, Bloomfield, NJ 07003 (hereinafter "Appellant"), is from the final decision of George W. Watson, Contracting Officer, U.S. Government Printing Office (hereinafter "Respondent"), dated August 26, 1985, completely terminating the contract between the parties known as Purchase Order 52462, Jacket 465-107, "for default because of . . . failure to deliver a product per specifications within the time required and failure to correct quality deficiencies from the first rejection." The decision of the Contracting Officer is affirmed and the appeal denied for the reasons set forth hereinbelow. Background By Purchase Order 52462, Jacket No. 465-107, dated January 31, 1985, Respondent competitively awarded Appellant a contract upon the requisition of the United States Postal Service (hereinafter "USPS") to produce some 13,658,000 + not to exceed 25,000, plus one set of film negatives of certain parcel post delivery tags in strict accordance with Appellant's January 17, 1985, bid quotation of $158,675, 2 percent discount - 20 days, and Respondent's specifications of January 4, 1985, as amended by mail-o-gram amendment No. 1 dated January 8, 1985. In pertinent part the contract called for six different 6 1/4 x 3 1/8" colored tags corresponding to each day of the week, except Sunday, to be produced in equal quantities of 2,049,000, except blue tags, of which some 3,408,000 were to be produced. Shipping date was to be F.O.B. destination by March 15, 1985, to multiple locations throughout the United States for each such form in accordance with specified "Distribution and Quantity List." (Rule 4 File, hereinafter "R4 File," Tab B.) The contract also required the Appellant to furnish product inspection samples and set certain specified Quality Assurance Levels and standards to be met; namely: Product Quality Levels: (a) Printing Attributes - Level IV. (b) Finishing Attributes - Level IV. Inspection Levels (from MIL-STD-105): (a) Non-destructive Tests - General Inspection Level I. (b) Destructive Tests - Special Inspection Level S-2. Specified Standards: The specified standards for the attributes requiring them shall be: Attribute Specified Standard P-7. Type Quality and OK Proofs Uniformity R4 File, Tab A, Page 3 of 6. In addition, shortly after the award of the contract, i.e., February 5, 1985, Respondent's Contracting Officer, Jack G. Marken, wrote to Appellant's Charles DeFranza stating: Although we are awarding your firm the contract for the referenced jacket, please understand that we do not condone your firm's poor shipping/delivery performance record. Our Contract Compliance Officer has previously written to you regarding this performance. Through award of this contract we are affording you an opportunity to demonstrate affirmatively your ability to meet all of the contract requirements. Your performance on this contract will be closely monitored. Our resources are committed to insure contract compliance so that we can provide our customer agencies with the services and products as ordered. Your understanding of our responsibilities in these matters is greatly appreciated. Id. at Tab C. That same date the Appellant received from the Government the reprint copy which was to serve as manuscript copy for the job. This, however, was some 7 business days after such copy was originally due to be received. As a result, the shipment date was adjusted to March 29, 1985. Following receipt of the copy Appellant proceeded to produce required proofs furnishing these without copy to Respondent on March 11, 1985. These were rejected by Respondent on March 18, 1985, due to printer's errors (PE's). Appellant made the necessary corrections, furnished revised proofs to Respondent on March 20, (Id. at Tab D), and received Respondent's "OK to Print" on March 25, 1985 (Id. at Tab F & G). The job or a portion thereof was then run and shipped by Appellant. One hundred and four cartons were received by the Postal Service, Eastern Area Supply Center, on April 1, 1985. The Postal Service, however, found that the product was not in conformance with the specifications inasmuch as "[f]orm numbers were not on tags and printing on backs was smeared" and so notified Respondent. (Id. at Tab H.) The following day, April 2, 1985, Respondent notified Appellant's Ed Smilowitz of this discrepancy at which time Smilowitz advised that "no other bad tags have gone out"; he "will call when he finds out schedule for pick-up, correction and redelivery." (Id. at Tab J.) A U.S. Postal Service routing slip from one Larry Fallon to Darwin Hughes, identified elsewhere in the file as Darwin Hughes, Chief, Quality Assurance Section, Printing Procurement Department, GPO, shows: This order is for 13 million tags. Contractor shipped 104 cartons to Eastern Area Supply Center. Random samples enclosed. Job is unacceptable. Stop all shipments until GPO checks contractor's capability, per D. Steele. This job has a nation wide [sic] distribution therefore immediate action necessary. Notify Pete or me. Id. at Tab K. A notation in the file dated April 3, 1985, then shows that Respondent's Contract Compliance Section recommended that corrective action be taken immediately. Thereafter, on April 4, 1985, the Postal Service furnished samples to Respondent and advised that its Western Region had also received some "1.4 mil. tags, all bad, 4 out of 6 did not have form nos." Smilowitz was again notified by Respondent. (Id. at Tab J.) A further Tab J notation shows "Darwin [Hughes] looking into." That same date the Postal Service sent Respondent 16 random samples for inspection together with a "Notice of Quality Defects" which reflected the following quality defects for printing: "Hickies or spots," "extraneous marks," "image skewness," "type quality - not uniform," "type quality - broken characters." The Notice also reflected as additional remarks that "[r]einforced patches falling off, not drilled correctly. Inferior printing job, No Tag #. These sample [sic] are from Base Shipment Only, WASC samples to follow if needed." The Notice form was further marked under "Action Requested" to show "[q]uality does not meet specifications and the material can not [sic] be utilized. It is requested that the entire order be reprinted or corrected." with an additional handwritten note stating: "Stop all shipments at once." (Id. at Tab M.) On April 9, 1985, upon inspection of materials returned to Appellant's plant, Respondent's representative Mr. Ambrosino found: [A] lot of bad one [sic] with dirt marks, double impression, but [none] . . . where patch was off. Contractor has one machine running job, and said he is running three shift (and he does not no [sic] which shift produce [sic] bad ones) Contractor has informed me that he is going to put a 2nd & 3rd machine on this order. (Id. at Tab N.) The contractor was then given the opportunity to correct the problem and apparently pulled and corrected 50% of the products, the remainder being acceptable, in its judgment, as first printed. (Id. at Tab FF.) At that time Ambrosino apparently informed Hughes that the quality had improved and would send in samples for Hughes' verification. Notwithstanding this improvement, the following day, April 10, 1985, the Contracting Officer telegraphically sent Appellant a "Show Cause" notice advising Appellant that "since you have failed to perform the schedule requirements [of the contract] the government is considering terminating the . . . contract [for] 'default' . . . ." The letter went on to request that Appellant present to the Contracting Officer in writing within 5 days of receipt of the said notice "any facts bearing on the question." (Id. at Tab N.) Meanwhile, by transmittal of April 16, 1985, Appellant sent Hughes additional samples which it hoped would meet with approval. These were in turn sent to Fallon of USPS on April 19 for his review. Additionally, by letter of April 18th, Appellant answered the show cause notice stating: As you already know, Ascot Tag & Label Co. Inc. has been delayed approx. 3 weeks because of proof sumittals [sic] on your jacket #465-107. Upon receiving the purchase order #52462 we did not see any copy or instructions on original specifications noting a form number was required on these tags. All we received were previous tags with a faintly penciled form # in an irregular manner which we took to be an indentifying [sic] number for the aforementioned tags, as our enclosed proof. Ascot Tag & Label was told to hold up and submit proofs, which we did, three times, causing approx. 15 working days delay in production of the order. An extenuating factor in further slowing production of this order was the fact that Ascot Tag & Label had purchased a press to facilitate speedy production. This press was supposed to be delivered Feb. 1, 1985. We did not receive this press until April 11, causing a tremendous overload on our existing presses. Ascot was also told to hold up production as of April 4, 1985 due to a quality inspection initiated by GPO. We are presently conducting that inspection under the supervision of Sal Ambrosino from GPO N.Y.C. Ascot Tag & Label would like to add the fact that we have already purchased $70,000 worth of material and are responsible for $30,000 more. This tag material was bought contractually and slit to press sized rolls. We would consider it a great hardship to have to assume cost of this tag material with no financial return. A further cause for delay has been constant stopping for inspection and inspection and samples being sent to Washington periodically. We are in constant contact with Darwin Hughes on a daily basis and he is well aware of these delays. Id. at Tab R. When Appellant's letter of the 18th, supra, was received, one of Respondent's representatives telephonically contacted Smilowitz who advised that he did not expect to ship until May 15, 1985 (Id. at Tabs R & S). A further notation (Id. at Tab P) of conversations with "Ed, Ascot & Tag and Label [sic]" dated April 18 shows "more samples complete 2 weeks." On April 22, 1985, the Contract Compliance Section again recommended corrective action be taken. Accordingly, the Contracting Officer decided to send another cure notice and to follow-up on any answer received. The record does not show whether such letter was in fact sent. Be that as it may, the file next reflects that "[a]ll defective tags were replaced by the contractor the week of May 21." (Id. at Tab SS, letter from Rucker to Spates, USPS, dated August 2, 1985.) Following this, an additional shipment of tags was received by USPS San Francisco Bulk Mail Center June 3, 1985. Spot checks showed severe shortages in product count and nonconformance with certain USPS configuration requirements in that some 3,000 of the tags were "wire-wrap" tags, i.e., designed to be secured to Postal sacks by wrapping the wire onto the bags, instead of elongated slot tags for insertion of strings (Id. at Tab Y) as specified in the contract. (Id. at Tab A, page 2 of 6 under caption "Binding.") There followed a second "Notice of Quality Defects" from the USPS to Respondent dated June 26, 1985, which in pertinent part reflected: OTHER Incorrect Packaging . . . . Quantity delivered short . . . . Additional Remarks Eleven field sites (BMC) have not received any shipment of tags. All other sites and supply centers report shortages of approx 600 tags in each box of 2000. This equates to 1/3 to 50% shortage. Do not pay contractor until verified. ACTION REQUESTED . . . . Quality does not meet specifications and the material can not [sic] be utilized. It is requested that the entire order be reprinted or corrected. Other: Id. at Tab V. Chronologically, the file then shows another report dated June 27, 1985, concerning a shipment received at the USPS Los Angeles Bulk Mail Center showing that "[t]he cartons are clearly marked to contain 2000 tags, however, they average 1350 per carton." (Id. at Tab Y.) This is followed by a "Complaint Status Sheet" dated July 3 which reflects: Container labels indicate quantity of 2,000 actual quantity is 1,250 to 1,500 per container. Tags have reinforced slots, but some have been shipped with reinforced (round) holes instead (unacceptable). 11 bulk mail centers (BMC's) haven't received any. Formal complaint to follow 7-3 PM. Id. at Tab W. Elsewhere in the file a USPS letter shows that "[o]n July 18 . . . [Hq., USPS] received additional defective tag samples from field destinations and submitted samples to GPO for inspection. The GPO advised . . . [Hq., USPS] us on July 24 that the contractor was willing to reprint 20 percent of the contract quantity to make up shortages. [Hq., USPS] rejected the offer based on the Supply Center findings of a 35 percent shortage and significant quality defects. (Id. at Tab SS, letter from Rucker to Spates, USPS, dated August 2, 1985.) Thereafter, by letter of July 26, 1985, Mr. C. D. Steele, of the Printing Division Hqs., USPS, directed to Hughes, Contract Compliance, GPO, requested immediate default action "due to the continuing problems and delays" caused by the contractor. He also requested that the tags be reprocured "from a responsible source of supply." In so doing he went on to state that: Due to the continuing problems and delays caused by the contractor, we are requesting immediate action to default Ascot Tag & Label Co., and to reprocure item from a responsible source of supply. This sack tag is an essential part of an intense effort to improve the movement of Parcel Post mail. This effort has, in effect, been stopped due to the inability of Ascot to produce in a responsible manner. This is causing a financial hardship and embarassment [sic] to the Postal Service, which cannot and will not be tolerated any longer. In addition to poor quality, incorrect printing, minor shortages in each carton, incorrect quantities listed on B/L's, 8 BMC's still reporting no shipments received and other problems, we have now been advised by our Traffic Branch that invoices are now coming in requesting payment of shipping charges. Amendment #1, dated January 10, 1984, should be 1985, specifies FOB Destination on all shipments. . . . . Id. at Tab AA. Following receipt of this letter, Mr. Gary Lauffer, Printing Specialist, GPO Quality Control Division, upon contact by Mr. George Watson, GPO Printing Procurement Department, advised that he would support a default since he had inspected 70 percent of the order, found it 28 percent short, and with 42 defects, the product being rejectable for 22 or more defects. .(Id. at Tab BB.) Lauffer had conducted "formal acceptance samplings" on July 30 and 31, 1985, at warehouses in New Jersey and Kansas. The file contains Lauffer's undated, handwritten report showing details of shortages and defects identified at that time. (Id. at Tab Z.) The file also contains a GPO Form 914 dated August 5 reflecting a telephone conversation between a GPO employee, initials "JGM" (presumably, Jack G. Marken, supra) with one "Mervis" of "P.S." (presumably Postal Service) which states: "This is the 2nd delivery lst complaint April. Hickey's Print Quality No form #'s K [contractor] did not correct previous problems." (Id. at Tab CC.) This is followed by another GPO Form 914 by the same JGM dated the same date showing a telephone conversation with one "Frances", Ascot Tag & Label, which shows: K has offered to send 2-3 people to NJ and has to repack all cartons in uniform cartons of 1500. Any shortage made up in 3-4 weeks. Will take Blue label back to inspect and redue [sic]. I advised K that acceptance of a rejectable job is a 25 percent price reduction. Id. at Tab DD. A third GPO Form 914 by JGM dated August 9 shows another conversation with "Frances" of Ascot Tag & Label as follows: April unusable tags were replaced with better tags even though they were not perfect. K claims he did not agree to the 7-22 make up date for the shortage. 2,700,000 approx. replaced in April of 6,000,000 returned. 4-5 MM on hand on several million to complete. He started to make up the shortage and had produce [sic] 500,000 tags when he stopped production to join Gary in the inspection. Id. at Tab EE. On August 15, 1985, Marken, by memorandum to Respondent's Contract Review Board (CRB) requested concurrence with a default action on the entire order due to Appellant's failure to deliver a product per specifications within the time required. The memorandum reflects a chronology of events including Appellant's then pending offer to make up shortages, repack in uniform quantities of 1,500 per carton, with delivery in 3 to 4 weeks at a 25 percent reduction. Such offer was rejected by the Postal Service which instead requested default on the complete contract because of failure to correct quality deficiencies from the first rejection. At the time of the memorandum Appellant had already been paid $101,862.09. (Id. at Tab FF.) Unanimous concurrence was granted by the CRB on August 21, 1985. This was followed by notice from the Contracting Office, George M. Watson, to Smilowitz of complete termination for default dated August 26, 1985, with possible excess costs to be borne by Appellant for reprocurement of the product. (Id. at Tab HH.) Reprocurement of the contract was in fact made by Purchase Order 61415, Jacket No. 484-657, to Dennison Manufacturing Co., Framington, MA. (Id. at Tab LL.) Mr. Smilowitz was then advised by letter of September 23, 1985, of this action and that the excess costs would be deducted from Appellant's account. (Id. at Tab MM.) Thereafter, by letter dated September 12, 1985, Appellant filed its notice of appeal which was itself perfected by submission of a formal complaint dated October 24, 1985, which in pertinent part recited: Pursuant to Rule 6.(a), we are filing an orginal [sic] and two copies of a complaint containing the data described in that Rule, but we ask that our prior correspondence also be deemed part of our appeal. 1. Ascot Tag & Label Co., has performed about twenty contracts for THE GENERAL POST OFFICE (GPO) [sic] over the past few years. Ten of them were direct contracts and another ten, approximately were indirect as subcontractors. 2. All of these contracts so far as Ascot Tag & Label Co. (Ascot) is aware were satisfactorily performed and accepted by the GPO. 3. Under the circumstances, it is the position of Ascot that they were completely qualified to handle the particular order in the above caption of this letter. 4. Several problems developed which Ascot could not have anticipated with respect to instant contract, but which were certainly not Ascot's fault. 5. Ascot sent proofs as requested to the GPO and did everything possible to accommodate the contracting officer with respect to his desires. 6. Ascot was required to submit, and did submit, three different proofs at various times which caused a loss of valuable time to Ascot. 7. Once approval was granted by the contracting officer of the GPO, production time of 45 days, actually 28 working days, was reduced to two weeks. 8. Ascot had crews of employees working day and night to expedite this order. After approximately 4 to 6 million tags were shipped, a halt to production was ordered by the GPO. A question of printing quality had arisen according to the GPO. 9. At its own expense, Ascot picked up all of the tags in question, and hand-inspected them. Upon inspection, some tags were deficient, but the majority of the 4 to 6 million tags were found to be in good order and in acceptable form. 10. After reinspection by Ascot, these tags were repacked and this created another unanticipated problem because of the fact that Ascot was anxious to expedite the reshipment of these tags, and unfortunately some of the workers did not have a method of accurate counting. 11. This was an honest and unintentional mistake on the part of Ascot. This is proven out by the fact that different quantities of tags were found in all of the boxes. The boxes that were used had been bought especially for this particular order and; [sic] if packed properly, should have contained 2,000 tags per box. The boxes appeared to have been fully packed. 12. Ascot submits that total rejection by the GPO is completely unfair and ruinous to Ascot. 13. There are millions of tags that are perfectly acceptable which the GPO is now rejecting completely. 14. This total rejection is causing great financial hardship to Ascot which is a minority employer, and layoffs have already resulted as a direct result of this action on the part of the contracting officer. 15. Many individuals and their families have suffered substantially. 16. Another indirect financial burden that had been placed upon Ascot resulted from the fact that Ascot purchased additional machinery to accomendate [sic] the size of this order and inexpectations [sic] of future orders that would be forth coming [sic]. This constituted an extreme expense to Ascot. 17. Charles DeFranza, the principal of Ascot went with a GPO agent to Somerville, New Jersey and Pauline, Kansas to inspect tags regarding shortages. While at these locations samples were taken at random. Only one lot (the blue lot) in Somerville, New Jersey was thought to be unexceptable [sic]. 18. All of the other lots were considered usable and/or exceptable [sic] by the agent who remarked that if all the lots were like the yellow lot, there would be no problem at all. 19. In Pauline, Kansas, all the tags, the agent said, looked much better than the tags in Somerville and were in exceptable [sic] condition. 20. After inspections were made, a figure of 25% shortage was determined by the GPO. 21. All of this time howver [sic] Ascot was still in production and was instructed by the contracting officer to make up the shortages and was being urged to expedite the delivery. 22. Unfortunately a number of different GPO personnel had contacted Ascot and in some instances gave conflicting instructions. This caused a certain amount of hesitation, confusion, and bewilderment as to the status of the order. 23. For example, Ascot at one point was told to halt production which was done. About three weeks later, Mr. George Watson, the contracting officer, reprimanded Ascot and told them that they should not have stopped. Ascot was told to make up the 25% shortage and proceeded to make up more than a million tags but did not get a chance to ship any of these made up tags. 24. Ascot was suddenly informed that the GPO considered them indefault [sic]. 25. Under the circumstances we submit that the GPO contracting officer has been unreasonable and unduly harsh in respect to this contract. 26. Ascot, a minority employer, has done everything possible to satisfy the GPO and has a history of having performed satisfactorily in the past. There was no intention whatsoever to short the count in any of the boxes which was solely the result of taking the tags back for reinspection and then having them repacked, unfortunately by workers who had no method of accurately counting. If the boxes had been packed fully, the count would have been accurate. Ascot has shown a complete willingness to ameliorate any complaints of the GPO and spent a great deal of money and time in trying to do anything possible to satisfy the GPO. The large majority of the tags, we submit, are in acceptable condition. 27. The total cancellation of this order will in all likelihood destroy the business of Ascot and put many people out of work. This would adversely affect their families and the merchants in the community as well. 28. Ascot is ready, willing, and able to do anything reasonable to rectify this situation but submits that a declaration of total default is unwarranted. Most of the tags are in clearly acceptable condition and Ascot has demonstrated not only from its past performance, but its response in the instant case as well, that it wishes to do everything possible to please to [sic] GPO and we believe has indeed gone out of its way to do so. We ask for a reversal of the decision below and acceptance of the shipment less 25% which will be rectified. Official Record, Tab 6. The complaint was answered on November 29, 1985, in pertinent part as follows: 1. Respondent has insufficient information upon which to base a response to paragraph 1. 2. Respondent has insufficient information upon which to admit or deny paragraph 2; however, it is GPO's contention that each contract must stand or fall on its own merits. 3. Paragraph 3 is admitted. 4. Respondent has insufficient information upon which to base a response to paragraph 4. 5. The part of the sentence in paragraph 5 that says "Ascot sent proofs as requested" is admitted; however, the remainder of the paragraph is denied. The specifications required the submission of two sets of color key proofs before the printing of the tags. The proofs were to be of each item with all elements in position and the margins indicated thereon. What we received on March 6, 1985, were photo prints, not color keys and all elements were not in place and margins were not indicated. Consequently, the proofs were rejected because they were not in accordance with the specifications. On March 11, 1985, the second set of proofs was received and was rejected on March 18, 1985. The third and final set was received on March 20, 1985 and was OK'd for print on March 25, 1985. None of the above submissions were held over the allotted time as indicated in the specifications, therefore, no additional time could be allotted contractually. Page two of the specifications forewarns the contractor that printing is not to take place until an "OK to print" proof is received. 6. Paragraph 6 is denied. The specifications require only one submission of two sets of proofs of each item. The submission of additional proofs was due solely to the negligence of Ascot. Had the proofs been submitted correctly the first time, additional proofs would not have been required. The valuable time lost is attributable to the nonconformance by Ascot. Contract Terms No. 1, which is incorporated by reference in this contract, in paragraph 2-11, provides that if the Government causes a delay in the ship date because of its action the shipping schedule will be extended automatically. At that time the contractor may request additional time. However in this case, the Government did not contribute to the delay. The sole responsibility lies with Ascot for not adhering to the specifications when proofs were submitted the first time. 7. Paragraph 7 is denied. We are not quite sure what is meant by "[o]nce approval was granted by the Contracting Officer . . . ." The schedule was extended to March 29, 1985 due to late copy. The proofs were OK'd on March 25, 1985 which left four days to produce the job. We do not know where their day count is coming from. 8. Paragraph 8 is denied. Mr. Darwin Hughes, of our Quality Assurance Division, called the appellant on April 4, 1985 and informed him that the product was not acceptable. At that time the appellant was informed of the quality problems. However, when the inspector from the New York Office went to Ascot, they had one press running. See AF, Exh. N. 9. In paragraph 9, the fact that the appellant picked up the rejected tags for inspection and replacement of defective tags is admitted; however, the remainder of the paragraph cannot be verified because GPO personnel were not present while Ascot inspected the tags. 10. Paragraph 10 is denied. The contractor alleges that the repacking after reinspection "created another unanticipated problem . . . ." It does not seem logical that all the cartons were short when only "some" of the workers did not have a method of accurate counting. Statistically, the cartons were 28% short on the entire order. Mr. Gary Lauffer, a Printing Specialist in the Quality Control Division, verified, through inspection, that the boxes were fully packed and could not have held 2,000 tags. 11. Respondent has insufficient information upon which to respond to the first sentence in paragraph 11. The remainder of the paragraph is denied. Mr. Lauffer personally weight-counted 106 cartons at the Somerville, New Jersey warehouse and 80 cartons at the Pauline, Kansas warehouse. The individual carton quantities ranged from 1,176 to 1,740. He did not discover any carton packed with 2,000 or more forms in it. Each carton appeared to be fully packed. It is Mr. Lauffer's opinion that 2,000 tags could not be packed into the cartons used. 12. Paragraph 12 is denied. In accordance with the quality attributes portion of the contract, the tags are rejectable. See AF, Exh. Z. 13. Paragraph 13 is denied. The Quality Assurance Through Attributes Program, incorporated by reference in this contract, provides that the acceptable quality level (AQL) for this job is 1.0 critical defects per 100 items and/or 6.5 total defects per 100 items. The sampling and inspection results show that this [sic] AQL (6.5/100) items was [sic] greatly exceeded; i.e., the job contains more defects than what is acceptable to the Government; therefore, the entire job is rejectable. If there were acceptable tags in the shipment they could have been segregated by Ascot and used along with the correction of the defective ones. 14. In paragraph 14, we regret any hardship on the appellant; however, the Contracting Officer cannot accept a product that is not equal to specifications. 15. The answer to paragraph 15 is the same as in paragraph 14 above. 16. Paragraph 16 is denied. In paragraph 3 of their complaint, Ascot asserts they were completely qualified to handle this order. In this paragraph they indicate that they have a financial burden because they purchased additional machinery to accommodate the size of this order. As far as the Government is concerned they were qualified to do this order. We are not responsible for the purchasing of new equipment; this is a managerial decision. 17. The first and second sentences in paragraph 17 are admitted. The remainder of the paragraph is denied. Shortages were found in all cartons counted. Mr. Lauffer remembers stating that the blue forms appeared to be the worst in quality. He made no statements to the effect that the other five lots were acceptable. 18. Paragraph 18 is denied. Mr. Lauffer remembers telling Mr. DeFranza that he did not believe the minimum quality requirements of the contract were attained; however, he also stated that he could not make any official statements before performing the formal acceptance sampling/inspection procedures. 19. Paragraph 19 is denied. According to Mr. Lauffer, he did not tell Mr. DeFranza that the tags in the Pauline, Kansas warehouse were acceptable as to quality or the number of tags packed in each carton. 20. Paragraph 20 is denied. The inspection report indicates that the cartons at the New Jersey and Kansas warehouses were packed on the average of 28% short, not 25% short as stated in the complaint. It is to be noted that most of the boxes were short more than 28%. 21. Respondent has insufficient information upon which to respond to paragraph 21 because we do not know what time period is being referred to. 22. Paragraph 22 is denied. 23. Paragraph 23 is denied. 24. Paragraph 24 is denied. Ascot was given the opportunity, over a long period of time, to correct the discrepancies found in the tags. Default proceedings were instituted only as a last resort. 25. Paragraph 25 is denied. To the contrary, we believe the Contracting Officer acted reasonably and did what had to be done under the circumstances. Ascot was given every opportunity to correct the deficiencies. 26. Respondent has insufficient information upon which to admit or deny the first sentence in paragraph 26. The second sentence is denied. It is the contractor's responsibility to mark the label with the amount packed in the respective carton. If the contractor had run the full quantity there should have been more cartons used. The third sentence is denied. From Mr. Lauffer's personal experience of weight-counting the cartons, he does not believe that the cartons, as manufactured, could be packed with 2,000 tags. We believe this discounts the theory that if the boxes had been fully packed the count would be accurate. The inspection report indicates the boxes were in fact fully packed. See AF, Exh. Z. Respondent has insufficient information upon which to admit or deny the fourth sentence. The fifth sentence is denied. Again, the quality inspection results show that the acceptable quality level of 6.5 total defects per 100 items was exceeded. Therefore, statistically the entire order is rejectable. In summation of this paragraph, it is inconceivable that the shortage is solely a result of repacking when the entire order was not repacked. The inspection report clearly indicates an average of 28% short on the entire order, not just the reshipped portion. The appellant must agree with the overall shortage because he is willing to make up, or "rectify" as he puts it, a 25% shortage as is stated in paragraph 28 of the complaint. 27. With regard to paragraph 27, please refer to our comment in paragraph 14. 28. Paragraph 28 is denied. The quality inspection results show that the acceptable quality level of 6.5 total defects per 100 items was grossly exceeded. The defects, as found, total 42. See AF, Exh. Z. To reiterate, the entire order was statistically sampled in accordance with the attributes program and the total defects found far exceeded the allowable, therefore, the order was rejected. At Exhibit EE of the appeal file are notes taken by Mr. Marken, Contracting Officer, while talking to Mr. DeFranza of Ascot. By appellant's own admission, they replaced defective tags with not so perfect tags. It is clear that the Contractor did not have a quality control system in effect that would prevent the Government from receiving additional defective tags. Wherefore, the Board is requested to deny the appeal in its entirety. Official File, Tab 11. The answer was forwarded to Appellant by letter of the Administrative Assistant to the Board dated December 3, 1985. A careful review of the file discloses that no affirmative request for a hearing as required by GPO Rule 8 was ever made by Appellant. As a result this matter has lain dormant in the files of this Board. Accordingly, this Board on its own motion has deemed it appropriate to decide the appeal on the record in accordance with the provision of GPO Rule 11. The matter is thus before the Board in this form for decision. Discussion The contract in this case arose upon issuance of Purchase Order 52462 dated January 31, 1985. That purchase order, as stated above, was made "[i]n strict accordance with" Respondent's specifications. Those specifications in addition to the provisions identified, supra, in pertinent part state: "Any contract which results from this Invitation for Bid will be subject to all terms and conditions of U.S. Government Printing Office Contract Terms No. 1, Rev. Oct. 1, 1980 (GPO Pub. 310.2)." Among those terms and conditions are the following pertinent provisions: 2-11.(c) Extension of schedules. (1) In the event a delay is caused by any action of the Government, including failure to furnish purchase/print order, copy and/or materials as scheduled, the shipping schedule will be extended automatically by the total number of workdays that work was delayed PLUS 1 workday for each day of delay; such period of grace not to exceed 3 workdays. . . . . (2) If, as a result of Government-caused delay, additional time is required beyond that provided for in paragraph (c) (1) of this Article 2-11, the contractor shall mail or otherwise furnish a written request to the Contracting Officer within 10 calendar days from the end of the Government-caused delay. If, in the opinion of the Contracting Officer, additional time beyond the 10 calendar days for submitting such written request is warranted, it may be granted. If time does not permit written notification, telephone or telegraphic notification can be made. In those cases, written confirmation must be promptly provided. (3) In the event no adjustment of schedule has been requested, the contractor will be considered to be delinquent if shipment has not been made by the date established by the automatic extension. (4) In the event an adjustment of schedule has been requested by the contractor and is approved by the Contracting Officer, the contractor will be required to meet the adjusted shipping date and will be considered to be delinquent if it is not met. Article 2-18. Default. (a) The Government may, subject to the provisions of paragraph (c) of this article, by written notice of default to the contractor, terminate the whole or any part of the contract in any one of the following circumstances: (1) If the contractor fails to make delivery of the supplies or to perform the services within the time specified herein or any extension thereof; or (2) If the contractor fails to perform any of the other provisions of the contract, or so fails to make progress as to endanger performance of the contract in accordance with its terms, and in either of these two circumstances does not cure such failure within a period of 10 days (or such other period as the Contracting Officer may determine to be reasonable and authorize in writing) after receipt of notice from the Contracting Officer specifying such failure. . . . . (c) Except with respect to defaults of subcontractors, the contractor shall not be liable for any excess costs if the failure to perform the contract arises out of causes beyond the control and without the fault or negligence of the contractor. Examining the evidence in light of these provisions, this Board holds as a finding of fact that Appellant was in default of the contract, that such default did not arise out of causes beyond the control and without the fault or negligence of the Appellant, and that Respondent did not cause or materially contribute to the delay. To begin with, Appellant was given the prescribed contractual remedy for the Government caused delay in furnishing materials. Secondly, the Government was entitled to the specified periods of time for its proof reviews. Moreover, the delay in approval was caused by printer's errors (Appellant's errors) and not those of the Government. The Government gave its timely O.K. to print immediately upon receipt of satisfactory proofs as provided for in the contract. In addition, the Government attempted to work with Appellant to remedy all of the problems it was encountering. Nevertheless, the Government properly continued to put the Appellant on notice of its potential default and the reprocurement which could result therefrom. While this Board recognizes that Appellant was working diligently to overcome its problems, it nevertheless finds that it had not in fact overcome them to the satisfaction of the customer agency or Respondent within the limitations of the contract terms. It was thus wholly within the discretion of the Contracting Officer to terminate the contract for default, to reprocure the product from another vendor, to charge the excess costs back to Appellant, and to recover any payments previously made, notwithstanding any hardships which might be caused to Appellant, its employees, or their families as alleged by Appellant. Thus, this Board, which derives its powers solely from the "Default" clause of the contract itself and cannot rightly enlarge or vary its terms, affirms the decision of the Contracting Officer and denies the appeal.