U.S. GOVERNMENT PRINTING OFFICE BOARD OF CONTRACT APPEALS WASHINGTON, DC 20401 Lawrence W. Kennelly, Chairman Robert Beckett, Member William Costigan, Member Panel 2-81 American Drafting and Laminating Co. Jacket 342-660, Program 390-S July 31, 1981 Decision of Board of Contract Appeals This matter is brought to the Contract Appeals Board as the result of a timely appeal dated January 14, 1981, by American Drafting and Laminating Company, hereinafter called the Company or Appellant. The Company appealed the termination for default of Purchase Order 13331, (Program 8-390-S, Print Order No. 9 and all Print Orders subsequent to Print Order No. 12, Jacket 341-660) for the printing of Area Handbooks for the Department of the Army. Facts Invitations to Bid were sent to contractors on March 21, 1980. The specifications covered the composition for Area Handbooks as required from the U.S. Government Printing Office, (GPO), by the Department of the Army. The award to be made under the solicitation would be for a period beginning May 1, 1980, and ending April 30, 1981. The General Terms and Conditions provided that any contract resulting from the Bidders Offer would be subject to all terms and conditions of U.S. Government Printing Office Contract Terms No. 1, Revised August 1979, (GPO Publication 310.2). Under the specifications, it was provided that there would be no guarantee as to the frequency or number of orders which would be placed during the term of the contract. It was anticipated that approximately 7 new and 12 reprint orders would be placed during the term of the contract. The specifications also provided that it was of the utmost importance that strict adherence to the performance schedule be maintained. There were 45 No Bids and 18 responses to the Invitation to Bid. The Appellant was low bidder and was awarded the contract on May 20, 1980, and Purchase Order No. 13331 was issued. On July 11, 1980, a "show cause" telegram was sent to the Appellant for failure to perform the schedule requirements of Purchase Order 13331, Print Order No. 1. On July 17, 1980, the Appellant replied and stated the reason for failure to live up to schedule was that the subcontractor, "Compugraphic Corporation", failed to deliver a proper width card for the phototypesetting equipment. The GPO responded and said it would withhold default proceedings provided page proofs were delivered in accordance with specifications by July 22, 1980. On July 23, 1980, the page proofs were rejected because they were not proofread and corrected before delivery as required by the contract. The Appellant was given until July 30, 1980, to make necessary corrections and deliver those sets of page proofs that were in conformity with the manuscript copy. On October 1, 1980, a "show cause" letter was sent to the Appellant. This outlined the failure of the Appellant to proofread the copy and a list of discrepancies was given. One of the problems was the failure to use "en dashes" and in their place hyphens were used. The Appellant was told to see GPO Style Manual for further instructions in this regard. In addition to the problems with Print Order No. 1, there were problems with Print Order No. 7. On October 9, 1980, the Appellant responded to the show cause letter of GPO and basically it denied it was not living up to the specifications. 1. Page Proofs were not delivered late, but in accordance with a modified delivery schedule; 2. The specifications did not require the Contractor to return manuscript copy with proof copies; 3. The specifications did not specify when and how proofreading would be performed. There were nine other replies. On October 20, 1980, the GPO responded to the reply of the Appellant and explained why each and every paragraph replied to by the Appellant was disagreed with. The Appellant was given until October 28, 1980, to inform the Contracting Officer whether or not it would be able to meet the requirements of the contract and to remedy the problems mentioned in the correspondence. On October 28, the Appellant replied by telegram, again taking issue with the position of the Contracting Officer, except for paragraph two where it admitted it would return manuscript with the proof copy. The telegram ended by saying: "We are able and willing to meet the requirements of the contract but feel that the contract provisions should be logically and consistently applied . . ." In addition to Print Order No. 1, there were eight additional Print Orders requested and Print Orders 2 through 8 were reprints involving a few pages of composition. Print Order No. 1 and Print Order No. 9 were complete volumes and required 636 and 532 pages respectively. In addition to the problems in Print Order No. 1, there were numerous problems with Print Order No. 9. On November 6, 1980, the Contracting Officer sent a show cause telegram to the Appellant saying that the GPO was notifying the Appellant that it failed to perform the schedule requirements for Print Order No. 9 in accordance with the terms of the Contract and that GPO was considering terminating the contract for Print Order No. 9 and for all subsequent orders that would have been placed on Program 390-S. On November 17, 1980, the Appellant replied and said that reason for delay was due to Army not giving contractor material on time. On November 19, 1980, and December 3, 1980, the Army wrote to GPO on the unsatisfactory performance of the Appellant on both Print Order No. 1 and Print Order No. 9. The Army requested that GPO take immediate action to resolve the problems and provide a reliable source for this work. On January 9, 1981, the Appellant was notified that Purchase Order 13331 (Program B-390-S), Print Order No. 9, and all subsequent print orders subsequent to Print Order No. 12, Jacket 341-660, were thereby terminated for default because of continued failure to furnish proofs that were in conformity with the manuscript and the requirements of the contract. GPO then listed seven discrepancies in the most recent proofs furnished by the Appellant. On January 7, the Contracting Officer notified the Appellant that Print Order No. 9, and all products ordered on the program subsequent to Print Order No. 12, would be procured from the second low bidder on the contract at his originally quoted prices. This would represent an estimated cost difference of $3,034.98. In a series of letters with the Director of General Services, the Appellant said it did not desire a hearing in person but would rest its appeal on the record. The Appellant requested that the Board render a summary decision changing the termination for default to a termination for convenience of the Government. On February 25, the Panel was selected by the Director of General Services to hear the Appeal and Lawrence W. Kennelly was selected as chairman. Position of Appellant and Contracting Officer's Response The Contracting Officer responded to the request of the Appellant to render a summary decision changing the termination for default to a termination for the convenience of the Government. This was requested because the GPO had breached the contract by not returning the reader's proofs by December 2, 1980, as required by the original production schedule set forth in Print Order No. 9. The Contracting Officer said proofs for Print Order No. 9 were examined and many of the deficiencies found in Print Order No. 1 were still prevalent. Because of these, the Department of the Army requested the GPO default the Appellant. The proofs were held in order to investigate and make a decision as to whether grounds for default existed. If the Appellant had performed properly, there would not have been a need to retain the proofs and they would have been returned on schedule. The first point made by the Contracting Officer addresses the statement of the Appellant that the schedule paragraph 2.15(c) does not require the Contractor to return the manuscript copy with the reader's proofs since the schedule specifically states the Department will take 20 days to have proofs checked and indexed and furnish manuscript of approximately 30 index pages with reader's proofs to the Contractor. The Contracting Officer responds that paragraph 2.8 requires the contractor to return all material with the reader's proofs. The Appellant was advised of this and he so admitted in his wire dated October 28, 1980 (Ex. 24). Proofs that have not been proofread and corrected are useless for purposes of indexing. Also, to check proofs for the proper location of heads, illustrations, etc., it is necessary to have the manuscript on hand. Also, it is impossible to determine if there are serious errors when the manuscript is not available in order to make a determination if revised proofs are necessary. The second point made by the Contractor was that the "original production schedule" for Print Order No. 9 was October 20, 1980 through December 8, 1980, and paragraph 2.12(c) suggests that a second proofreading occur during this period. The Contracting Officer stated that the second proofreading is suggested only if the Contractor feels the first one may not be adequate, but both proofreadings are to be accomplished before the proofs are delivered. The third point made by the Appellant is that paragraph 2.11(c) specifically states "The Contractor will be solely responsible for the typographic accuracy of the finished product". The "Finished Product" being the reproduction proofs and not the reader's proofs. The Contracting Officer answers this by saying that the Appellant mention 2.12(c) which refers to the typographic accuracy of the finished product, but he overlooks paragraph 2.12(a) which says the proofs must be in conformity with the copy. The fourth point made by the Appellant is paragraph 2.12(c), which clearly states, "The Department will not proofread the reader's proofs but will have them indexed and checked for proper location of illustration, heads, etc., only." The Department failed to return the proofs in accordance with the production schedule for Print Order No. 9. The response of the Contracting Officer is: The contract does state that the Department will not proofread the job, but when glaring errors are found, the Department does have the right to read the proofs to determine their suitability for indexing. They were not returned because of the Department's request for a "Default Action". The fifth point the Appellant made was paragraph 2.8, which states, "Return all material furnished". This means upon completion of the finished product. The Contracting Officer responds that paragraph 2.8 specifically states that the material furnished (manuscript copy in this case) is to be returned with the reader's proofs and this should not be construed to be limited to the time when the finished product is delivered. The sixth point the Appellant makes is that the discrepancies listed in Ex. 39 are no different than some made in the sample guides. The Contracting Officer states that the seriousness of the discrepancies in the proofs speak for themselves and reference should not be made to any other publication. The proofs must be judged in the light of the requirements of Contract Terms No. 1 and the GPO Style Manual. The seventh point made by the Appellant concerns accents drawn by hand. The Contracting Officer's response to this is, proofs have to be in conformity with copy. If the accents were had drawn or not put in at all they would be a printer's error. The Appellant's eighth point is that a set of reproduction proofs for Print Order No. 9 was submitted to verify that discrepancies were corrected. The Contracting Officer's answer to this was, "The Contractor made corrections to Print Order No. 9 after delivering the proof, and not before as required by paragraph 2.12-1(a) of the contract." The ninth point made by the Appellant is that all Print Orders through No. 12 were accepted except for Print Order No. 9 and only this should be considered and the exhibits that pertain to it. The response of the Contracting Officer is that this is a decision the Appeals board will have to make; however, the GPO is of the opinion that the overall performance must be considered since this would determine whether the Appellant's performance was endangering the balance of the contract. The Contracting Officer submitted Xerox copies of repros that were submitted by the Contractor as the final product. There were numerous errors that the GPO corrected because of the urgent need for the product. The 10th point made by the Appellant was although the schedule paragraph 2.15(b) states there will be approximately 12 reprint orders placed over the term of the contract, the schedule did not specify time allowed to deliver reprint orders. In item number 11 the Appellant states the Government acknowledged this by changing the specifications in the next solicitation. The Contracting Officer responded to points 10 and 11 by saying, the schedule in paragraph 2.15 is for all books including reprints. The Contractor has 6 workdays in which to deliver proofs for up to 400 pages of manuscript copy. The language of the new solicitation has no bearing on the one to which he was obligated. The 12th point made by the Appellant concerned the books furnished the Contractor for a guide as to format and style, which books contained examples of poor printing that was accepted by GPO. The Contracting Officer responds that the Contractor was furnished these books as a general guide for style, however, he was told the style in those samples would be superseded by any special instructions on the manuscript. The poor printing in these samples had no bearing on his requirements in this contract. The requirements were set forth in Contract Term No. 1 and the GPO Style Manual, both of which are an integral part of the contract. Discussion It is apparent to this Board that we must make a decision on the question of whether the position of the Appellant or the Contracting Officer is correct on the right of the GPO to default the Appellant on the facts that were presented. If the Government was justified under the contract terms in taking the action it took, then the request of the Appellant to convert it to a Termination for Convenience of the Government is moot. Article 17, Default of Contract Terms No. 1, provides: "(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; (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 authorized in writing) after receipt of notice from the Contracting Officer specifying such failure." Article 3, Disputes - Under this Article the Contracting Officer is charged with the responsibility of making decisions and they are final and binding unless a written appeal is made to the Public Printer. Thus, the decision of the Public Printer or a duly authorized representative for the determination of Appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith or not supported by substantial evidence. The Board must decide if the Contracting Officer was within his rights under the terms of the contract when he terminated the contract for the reasons given in the Notice of Termination dated January 6, 1981. (Ex. 39) These were: 1. Failure to proofread carefully as evidenced by an excessive number of printer's errors; 2. Omission of words and phrases; 3. Failure to follow instructions to sink the first page of some of the chapters; 4. Setting about 28 pages in the wrong point size; 5. Accents were frequently omitted from words requiring them and where accents were inserted they were drawn in by hand and were poorly done; 6. Improper word division; the following are just a few examples: po-pulation, mun-icipal, traini-ng; Indian-s, etc.; 7. Excessive spacing between words. The Appellant answers this by saying the Schedule does not require (paragraph 2.15(c)) the Contractor to return the manuscript copy with reader's proofs and paragraph 2.12(c) suggests that a second proofreading will be accomplished by the Contractor within the original production schedule. The Board does not agree with the Appellant. We agree with the Contracting Officer when he quotes paragraph 2.8 that provides all material furnished must be returned with the reader's proofs. We also agree that in order for the Government to know if revised proofs are required it must have the manuscript on hand. The Appellant made much of the failure to the Government to return the reader's proofs and the manuscript index pages to the Contractor by December 2, 1980, as required by the original production schedule set forth in Print Order No. 9. (Ex. 23A) The Contracting Officer responded to this by saying the second proofreading is suggested only if the Contractor feels the first one may not be adequate but both proofreadings are to be accomplished before the proofs are delivered. The reason the proofs were not returned was because of all the previous problems with Print Order No. 1 and the Contracting Officer wanted to investigate to determine if grounds for default were present. The Contracting Officer said if the Contractor had performed responsibly, the proofs would have been returned on schedule. The Board agrees with the Contracting Officer. The problems that arose with Print Order No. 9 were similar to the ones encountered with Print Order No. 1. It was necessary to sent out a Cure Notice (Ex. 9) on that purchase order. The Default was withheld in that instance. (Ex. 14) The Contracting Officer notified the Appellant that the delay in Default Proceedings was not a waiver. On October 1, 1980, a Show Cause Notice was sent to the Appellant (Ex. 17) in which all of the discrepancies were noted. The Appellant responded giving its reasons for disagreeing with the Contracting Officer. On October 20, 1980, the Contracting Officer wrote (Ex. 23) and set forth the position of the GPO and requested a response that outlined specific steps that were going to be taken to remedy the situation. On November 6, 1980, another Show Cause Notice was sent to the Appellant regarding Print Order No. 9. The result of all of this was the Termination Notice on January 6, 1981. (Ex. 39) The Appellant has requested the Board only consider the exhibits that pertain to Print Order No. 9 because the Government approved and accepted Print Orders No. 1-8 and 10-12. It is the Board's position that we cannot isolate one particular purchase order and the problems that were associated with it. We agree with the Contracting Officer that the overall performance must be considered since this will determine whether the performance was endangering the balance of the contract. This is provided for in Article 17, Default, Contract Terms No. 1, in (a) (2) where it states: "If the Contractor fails to perform any of the provisions of the contract, or so fails to make progress as to endanger performance of the contract in accordance with its terms. . . ." The Appellant stated that it was provided with published publications to be used as a guide and these were not in conformity with the specifications. The Contracting Officer's response was these "guides" may have been examples of the Government accepting poor printing, however, the Appellant entered into a contract with the knowledge that standards of good typography were required as described in Contract Terms No. 1 and the GPO Style Manual. We agree with the Contracting Officer. In Associated Foods Services, Inc., 1962 ASBCA Nos. 6883 and 7638, 1961 BCA 3443, the Board held: "The Government has a right to insist on quality of performance called for under a reasonable interpretation of the terms of the contract even though it may under previous contracts have accepted a lower level of quality than that to which it was entitled." There are many decisions of Boards of Contract Appeals that uphold the right of the Contracting Officer to terminate for failure to live up to the specifications. See (1) X Inc. (1968) POD BCA No. 272, 68-2 BCA 7211; (2) Computer Technologies, Inc. (1970) ASBCA No. 14066, 70-1 BCA 8147. This case is of interest because in it we saw that a contract for printing directories was properly terminated for default when the Contractor had made three submissions that were rejected as not meeting the contract specifications. Whether the Contractor might have corrected his errors was irrelevant because the Government was not required to allow him to continue performance. (3) International Aerial Mapping Co. (1962) ASBCA No. 7701, 1962 BCA 3626. (4) Chicago Roll Forming Co. (1969) GSBCA No. 2342, 69-1 BCA 7610. In this case the Board held the contract was properly terminated for default because the pre-production samples furnished by the Contractor failed to meet the contract requirements. (See Carb Mfg. Co. (1962), ASBCA No. 6553, 1962 BCA 3466) The specifications were clearly drawn and Contract Terms No. 1 specifically provided that failure on the part of the Contractor to perform any of the provisions of the contract, or to make progress as to endanger the performance of the contract with its terms, if not cured after notice by the Contracting Officer, would be grounds for default. This clearly occurred in the case, and the seven reasons given in the Notice of Termination (Ex. 29) were clearly spelled out. The Appellant did not prove that the failure to perform was beyond the control of the Contractor and without fault or negligence. The Appellant had the burden of proving this. The burden was to show among others: 1. Failure was because of Acts of God or the Public Enemy; 2. Acts of the Government in its sovereign or contractual capacity; 3. Fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes and unusually severe weather. None of the above or comparable reasons were proven for the failure of compliance. See: Bergman Knitting Mills, Inc. (1951) ASBCA No. 12162, 68 BCA 6859; Bannercraft Clothing Co., Inc. (1963) ASBCA Nos. 6247, 6685, 1963 BCA 3995; Acushnet Carpet Mills, Inc. (1955) ASBCA No. 2435, 6 CCF 61908; Eastern Realty & Construction Co. (1963) ASBCA No. 8066, 1963 BCA 3636; Hirsch a/b/a United Engineering Co. (1960), ASBCA No. 5652, 60-2 BCA 2758. Decision We therefore find that the Termination for Default was proper and deny the request to convert it to one that was for the convenience of the Government. The Contracting Officer was within his rights in accordance with Article 17(b) to reprocure and hold the Appellant liable for any excess costs.