NOR CAL TRADE SCHOOL OF OFFSET PRINTING
GPO BCA 1-85
September 12, 1986
MICHAEL F. DiMARIO, Administrative Law Judge
OPINION
This appeal timely filed by Nor Cal Trade School of Offset
Printing, 25100 Mission Boulevard, Hayward, CA 94544
(hereinafter Appellant) is from the final decision of John J.
O'Connor, Contracting Officer, San Francisco Regional Printing
Procurement Office (hereinafter RPPO), U.S. Government
Printing Office (hereinafter GPO or Respondent), dated
December 6, 1984, advising Appellant that "Your contract
identified as Jacket 587-657 is hereby terminated for Default
because of your stated refusal to produce this order in
accordance with the specifications of this contract." (Rule 4
File, hereinafter R4 File, Tab I) The appeal arises under the
"Disputes" provisions of "U.S. Government Printing Office
Contract Terms No. 1" (GPO Publication 310.2 - Revised October
1, 1980) which said terms were made a part of the said
contract by reference therein. (R4 File, Tab B) The appeal
has been decided upon the written record, no formal hearing
having been requested. Upon consideration of that record, the
Board affirms the decision of the Contracting Officer for the
reasons set forth hereinbelow and denies the appeal.
BACKGROUND
On an undisclosed date in October 1984, Respondent issued a
competitive solicitation for bids pursuant to the requisition
of the Department of Energy for the production of some 12,000
+/- 4%, 24-page, self-covered, saddle stitched, "Computer
Security Guidelines" books of trim size 5 1/2 x 8 inches to be
printed upon white, lithographic coated book stock equal to
JCP Code A-180, Basis-500 sheets, size 25 x 38, weight 70
pursuant to certain specifications set forth in the
solicitation with certain materials to be furnished by the
Government. (R4 File, Tab B)
Appellant's October 29, 1984, written bid in the amount of
$3,825 was, upon opening of bids on November 6, 1984, deemed
to be the lowest responsive bid. Respondent, however, had no
experience of dealing with Appellant during the preceding 12-
month period. (R4 File, Tab A) Accordingly, the Contracting
Officer on November 7, 1984, requested that a preaward survey
be conducted. (R4 File, Tab A) The survey conducted that same
date by Mr. Tom Phillips, GPO, RPPO San Francisco, showed all
elements surveyed to be satisfactory with the following
additional notations: "Facilities and equipment are adequate.
Ability to produce Level III work on duplicating type
equipment may be borderline. Recommend press sheet inspection
when running solids, especially the cover." (R4 File, Tab D)
(The Contracting Officer in his memorandum to this Board dated
February 28, 1985, in conjunction with this appeal stated that
"[d]uring the survey Mr. Phillips discussed the specifications
and reviewed the furnished material with the Manager/Owner,
Mr. Lane Thomsen and Nor Cal's production manager who
indicated their understanding of the requirements. Mr.
Thomsen expressed confidence that his company could
successfully produce this order.") (R4 File, Tab A) Complete
award was thereafter recommended and approved. (R4 File, Tab
D) Award was made by the San Francisco RPPO , Purchase Order
No. P-5415 that same date "[i]n strict accordance with your
written bid and the specifications." (R4 File, Tab E)
Thereafter, by transmittal letter of November 16, 1984,
Appellant furnished required page proofs to Respondent
advising that:
We found that there was [sic] eight small halftones and
reverses. Also there was [sic] 2 large halftones and
reverses that we did not see in the quote.
We also found that the art (camera ready) was not done
correctly; i.e., there was line copy included in reverse
areas, there also was type on the artwork that did not
appear in the dummy. We did what we felt was correct.
We will await a [sic] answer before proceeding with the job.
R4 File, Tab F.
The Respondent in its letter of February 28, 1985, supra, (R4
File, Tab A) advised this Board that:
In investigating these comments the contracting officer
found that the specifications clearly indicate the presence
of the halftones. Under "GPO WILL FURNISH" it states
"prescreened photo & knockout mask that reproduces on 2
pages same size and 8 pages 1/3 size". The requirement for
reverses is also cited. Under "FORMAT" "Covers 1 & 4 print
full reverse - - - - - -." The contracting officer along
with two printing specialists reviewed the artwork to find
out what part "- - - - was not done correctly", but we could
find nothing wrong with the furnished material. With regard
to the "dummy book" that was furnished; it was obviously
supplied as a guide and not as an exact replica of the
finished product. The type which the contractor says did
not appear in the dummy was on the artwork and was accounted
for in the specifications. The fact that the letter was
even written, was surprising since the copy and
specifications had been reviewed by the contractor prior to
the award.
On Monday, November 19, the customer rejected the proof
because it did not show all of the elements composited into
position. On November 20 a "cure notice" was given to Nor
Cal Trade School.
R4 File, Tab A.
The Cure Notice dated November 19, 1984, a copy of which was
furnished this Board as part of the appeal file, advised
Appellant that:
You are notified that the Government Printing Office considers
your failure to submit a complete and acceptable proof with all
elements in position on Purchase Order P-5415, Jacket 587-657, a
condition that is endangering performance of the contract in
accordance with its terms. Therefore, unless such condition is
cured within 5 days after receipt hereof the Government may
terminate subject contract for default pursuant to the Article
entitled "Default", United States Government Printing Office
Contract Terms No. 1.
R4 File, Tab G.
The letter was annotated in handwriting "[p]roof returned to
contractor for correction and completion 11/20/84 12:00 Noon."
Elaborating on the events of November 19, 1984, the
Contracting Officer's memorandum of February 28, 1985,
states that:
That same day Mr. George Earnshaw, Printing Specialist, and the
Contracting Officer met with Nor Cal's production manager who
restated his belief that the artwork was not camera ready. The
discussion ended with neither of us agreeing with or even
understanding the point he was trying to make.
R4 File, Tab A.
The Contracting Officer's memorandum of November 29, 1984, to
the GPO Contract Review Board states that:
[T]he proofs were rejected . . . because they did not show all of
the elements stripped or composited in position. On November
20th the contractor picked up the rejected proof. At the same
time they were given a 5-day "Cure Notice".
In order to expedite [sic] production the contractor was
authorized to take a revised proof directly to the customer
on November 21st. While the contractor waited the proof was
rejected again for the same deficiencies. The contractor
left all of the original Government furnished material with
the customer and departed. After several phone
conversations during the week of November 26th, the
contractor finally indicated on November 28th that they
would not submit the proof to G.P.O. for review nor would
they proceed with the order.
The consequences of a default action were explained to Mr.
Thomsen, owner of Nor Cal Trade School, by Mr. Earnshaw of this
office. Nevertheless, Mr. Thomsen refused to proceed with
production. Consequently, the contractor is considered to have
abandoned the contract.
The contracting officer intends to terminate Jacket 587-657 for
default. C.R.B. Concurrence [sic] is requested.
R4 File, Tab H.
In turn, unanimous C.R.B. concurrence was granted.
There followed Respondent's "final decision" letter of
December 6, 1984, supra, which among other things advised:
[T]hat the same or similar items terminated may be reprocured
against your firm's account, on such terms and in such manner as
the Contracting Officer deems appropriate. In that event, your
firm shall be held liable to the Government for any excess cost.
The Government reserves all rights and remedies provided by law
and under the contract, in addition to charging excess cost.
R4 File, Tab I.
By certified letter addressed to the Public Printer and
received in the San Francisco RPPO on December 13, 1984, the
Appellant appealed the decision of the Contracting Officer
stating in pertinent part that:
We received a job that was described and put out for bid and
quoted as "Camera Ready," which it was not, and we attempted
to point that out on many occasions.
We also made several trips to the city to attempt to get a
[sic] acceptable proof okay on this job and was not
successful. We took a proof out to Rad Lab where they
refused the corrected proof and confiscated the original art
work [sic]. We were informed directly by the customer that
we could not do the job for them and that they were unhappy
with the workings of G.P.O.
We were then called and asked to supply another proof (way
after the delivery date) and we refused with what we felt
was good cause.
We hereby appeal this determination on the above basis as we
feel we did everything possible to please Rad Lab and with
there [sic] attitude we decided that they would never be
pleased with anything we provided them in the form of a
proof and this lead us to believe that they also would not
be happy with the completed printed job.
We feel we did everything to please the customer and they
withdrew the job, so we don't feel we should be held in default.
R4 File, Tab J.
The appeal was docketed by the Board on January 7, 1985, with
appropriate acknowledgment and procedural instructions to
Appellant and Respondent by letter of the Board dated January
16, 1985. The appeal file was appropriately filed with the
Board and Appellant on March 4, 1985. On March 11, 1985, the
time having expired for the filing of a formal Complaint, the
Board notified Respondent that the appeal nevertheless met the
requirements of such a Complaint. No response was received
from the Government. Accordingly, the Board pursuant to GPO
Instruction 110.12 entered a general denial in the record on
behalf of the Government and by letter of April 23, 1985, so
notified the Appellant. The matter is before the Board for
decision in this format.
DECISION
There are no factual disputes between the parties respecting
the stated events although there is disagreement as to the
quality of the materials furnished Appellant by Respondent.
In short the facts show that: (1) Appellant's contract was
terminated by Respondent's Contracting Officer "because of
your stated refusal to produce this order in accordance with
the specifications of this contract"; (2) Appellant admitted
the refusal albeit its contention that such refusal was for
"what we felt was good cause"; and (3) The appeal is from the
Contracting Officer's final decision to terminate for default.
Thus, the only question presented by this appeal is whether or
not the Contracting Officer had a legal right to terminate the
contract.
Turning to the contract itself for analysis on this point,
this Board notes that Articles 2-3 and Articles 4-1 of U.S.
Government Printing Office Contract Terms No 1, supra, address
the circumstances of this case. Article 2-3 in pertinent part
states:
2-3. Disputes
(a) Except as otherwise provided in the contract, any dispute
concerning a question of fact related to the contract which is
not disposed of by agreement shall be decided by the
Contracting Officer, who shall make his/her decision in writing
and mail or otherwise furnish a copy thereof to the contractor.
The decision of the Contracting Officer shall be final and
conclusive unless, within 90 days from the date of receipt of
such copy, the contractor mails or otherwise furnishes to the
Contracting Officer a written appeal addressed to the Public
Printer. The decision of the Public Printer, or a duly
authorized representative for the determination of such
appeals, shall be final and conclusive unless determined by a
court of competent jurisdiction to nave been fraudulent, or
capricious, or arbitrary, or grossly erroneous as necessarily
to imply bad faith, or not supported by substantial evidence.
In connection with any appeal under this article, the
contractor shall be afforded an opportunity to be heard and to
other evidence in support of his/her appeal. Pending final
decision of a dispute hereunder, the contractor shall proceed
diligently with the performance of the contract and in
accordance with the Contracting Officer's decision. (Emphasis
added)
Article 4-1 in pertinent part states:
4-1. Government Furnished Material. The contractor will be
required to examine the furnished material immediately upon
receipt. If at that time there is disagreement with the
description or the requirements as presented in the specification
(or print order), and prior to the performance of any work, the
contractor shall contact the U.S. Government Printing Office,
Central Office Printing Procurement Division, Washington, D.C.
20401, or the originating Regional Printing Procurement Office,
and protest the description. The Contracting Officer will then
investigate and make a determination, which will be final. If
the decision is reached that the original description is proper,
the contractor will be required to proceed with the work under
the terms of the contract. If the decision is reached that the
description is erroneous, the Contracting Officer will proceed in
one of the following manners:
(a) In the case of a one-time bid, either an equitable adjustment
will be negotiated with the contractor, or the order will be
terminated. (Emphasis added)
It is the Board's opinion that these provisions when read
together required the contractor to continue performance
during dispute resolution, not withstanding the merits, if
any, of its claim concerning the furnished materials.
Appellant by refusing to perform was clearly in default of the
contract. Thus, the Board sustains the termination action by
the Contracting Officer, approves the concomitant allocation
to Appellant of excess reprocurement costs, if any, and denies
the appeal.