U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
MOZIP SIGN COMPANY ) Docket No. GPOBCA 03-97
Jacket No. 739-190 )
Print Order F-3227 )
For the Appellant: Mozip Sign Company, Kingston, Pennsylvania by
John T. Moses, pro se.
For the Respondent: Kerry L. Miller, Esq., Associate General
Counsel, U.S. Government Printing Office.
Before BERGER, Ad Hoc Chairman.
DECISION AND ORDER
Mozip Sign Company (Appellant), 41-43 Gates Avenue, Kingston,
Pennsylvania, appeals the final decision of U.S. Government
Printing Office (GPO or Respondent) Contracting Officer Gary C.
Bush rejecting as unacceptable the 425,000 pocket calendar cards
Mozip produced under Jacket 739-190, Purchase Order F-3227 and
requiring Mozip to take appropriate corrective action. For the
reasons that follow, the Board finds that the rejection was
proper but that the Appellant is entitled to be paid for a
portion of the quantity it reprinted in response to the
Contracting Officer's decision. Accordingly, the appeal is
DENIED IN PART AND GRANTED IN PART.
I. BACKGROUND
1. The contract was awarded to Mozip on September 24, 1996 at a
price of $13,812. The contract required delivery by October 15
of varying quantities totaling 422,000 to a using activity in
each of the 50 states, plus a quantity of 3,000 to the Army
National Guard at Fort Rucker, Alabama. Rule 4 File, Tab B.1
2. On November 12 the customer agency informed GPO that the
calendars contained several defects-including hickies or spots,
improper registration, and non-matching color-and could not be
used. A reprint was requested. Rule 4 File, Tab C.
3. On November 25 the Contracting Officer telephonically advised
the Appellant of the need for a reprint. The Appellant asked to
see samples of the defective calendars. Rule 4 File, Tab D.
4. On November 26 a GPO procurement technician forwarded the
requested samples to the Appellant, advising that "spots of blue
and red are found throughout," "[c]olors are not registered on
many of the cards and images are not consistent from card to
card," and "[i]mages are bleeding off the edge of some cards."
Rule 4 File, Tab E. These defects were reflected on a GPO
inspection report also dated November 26. Rule 4 File, Tab F.
5. The Appellant, upon review of the samples furnished to it,
did not agree that the calendars were defective, but when advised
of the possibility of a termination for default agreed to reprint
the calendars and then appeal. Rule 4 File, Tab G. The
Contracting Officer's final decision, noting that the calendars
were "delivered with spots, images bleeding and register
problems" and directing
delivery of the agreed-upon reprint by January 8, 1997, was
issued on December 17. Rule 4 File, Tab H. The Appellant
reprinted the calendars and then filed this appeal.
II. DISCUSSION
The basic dispute involved in this appeal is whether the original
quantity of calendar cards was properly rejectable. The
Appellant asserts that the calendars met the quality standards
specified for this contract, while the Respondent's position is
that they did not. Although no hearing was held in this case,
the Board has been furnished both the samples examined by GPO and
"random samples" from the Appellant. Not surprisingly, the
samples furnished by the Appellant, while not perfect, look
better than many of the samples examined and furnished by GPO.
The contract incorporated by reference GPO's Quality Assurance
Through Attributes Program, GPO Pub. 310.1, effective May 1979
(rev. April 1996). The QATAP is a GPO quality assurance program
that provides for the use of objective measurements to determine
whether printed products are defective. Printing Procurement
Regulation, GPO Pub. 305.3 (rev. 10-90), Chap. XIII, Sec. 1, ¶
3.a; Fry Communications, Inc., GPOBCA 30-94 (March 30, 1998),
slip op. at 10, 1998 WL 350492. The QATAP, based on the use of
30 measurable properties which are referred to as quality
attributes, provides for the assessment of a specified number of
demerits when deficiencies are found and for categorization of
the defects as either major or critical. This will vary
depending upon the Product Quality Level (PQL) required for the
contract.2 Whether a lot is acceptable or rejectable depends
upon whether the major and critical defects identified through
this process exceed the Acceptable Quality Level (AQL). The AQL
is 1 critical defect per 100 items and 6.5 total defects.
Products that exceed the AQL are not considered acceptable.
QATAP manual at xi, 1.
The Government is entitled to strictly enforce its contracts, but
when it does so it bears the initial burden of pursuasion to show
that the rejected work deviated from the specifications. When
the Government meets that burden the contractor must then prove
that the Government's testing or inspection results are
incorrect. International Lithographing, GPOBCA 1-88 (December
29, 1989), slip op. at 20-21, 1989 WL 384986. If the contractor
introduces sufficient evidence to call into question the
Government's test or inspection results, the Government must then
go forward with additional evidence or the issue of conformity
with the specifications will be decided against it. Professional
Printing of Kansas, Inc., GPOBCA 02-93 (May 19, 1995), slip op.
at 79-80, 1995 WL 488488.
The Respondent met its initial burden here by furnishing both its
inspection report, which indicates that a sample of 100 cards was
examined and that 630 major defects and 15 critical defects were
assessed, Rule 4 File, Tab F, and the cards that made up the
inspected sample. The Appellant, referring to its own inspection
of "random samples pulled during production at our plant and a
random sampling of the pieces returned," responds that the
defects it observed were within the QATAP tolerance levels for
Product Quality Level IV. It also furnished a small number of
the samples it inspected.
The GPO inspection report is confusing. It identifies 490 major
defects for Printing Attribute P-1, Hickies and Spots, and 140
major defects for Printing Attribute P-4, Register. There is no
indication, however, of how these numbers were derived, and on
their face they appear to be inconsistent with the QATAP manual.
Under the QATAP, demerits are assigned for the printing
attributes if specified tolerances are exceeded. If the average
demerit level exceeds 4.0, a major defect for the item is
assessed, although when the average demerit level does not exceed
4.0 a single major defect may be assessed for "a conspicuous
single page defect." QATAP manual at xiii. For Printing
Attribute P-1, the QATAP manual provides for an assessment of
either 4 or 20 demerits for Level IV work depending upon the size
and number of the hickies and spots. For Printing Attribute P-4,
the manual provides for an assessment of 4, 20, or 100 demerits
depending upon the misregister dimensions. The record is silent
as to what the inspecting official found with respect to the size
and number of hickies and spots and the misregister dimensions,
as well as to the number of demerits assessed, and thus provides
no foundation for the numbers in the inspection report.
Moreover, the maximum number of major defects per printing
attribute cannot exceed the number of items being inspected.
Since there were 100 calendar cards in the sample, there could
not be more than 100 major defects for each printing attribute.
See Shephard Printing, GPOBCA 23-92 (April 29, 1993), slip op. at
17-18, 1993 WL 526848.
Nonetheless, the Board is satisfied from the Respondent's
submissions that the calendar cards were rejectable. The
inspection report assesses 15 critical defects for Finishing
Attribute F-17, Loss of Information. Loss of information is "any
omission of or damage to the printed image which impairs the
transmission of the intended information," and is a critical,
rather than major, defect. QATAP manual at 44. Loss of
information encompasses both missing words and missing color
images. Fry Communications, Inc., supra, at 10-11. While the
record does not establish the basis for the assessment of 15
defects for this attribute, it is clear from the Respondent's
samples that more than one card contained this defect. For
example, one side of one card is missing all the blue ink (the
cards were printed in blue and red) printing, with the result
that the months and year are not identified and a design image
does not appear, while another card has the red ink printing
reversed on one side so that the card, on that side, is not
readily readable. Another card has an incomplete line of text.
Since the AQL is 1 critical defect per hundred items and that AQL
is exceeded here, the Board finds that, notwithstanding the
questionable numbers in the inspection report, GPO could properly
conclude from the inspection sample that the calendar cards were
rejectable. See Shepard Printing, supra, at 19 et seq.
This result is not called into question by anything submitted by
the Appellant. Although the small sample furnished by the
Appellant contains only cards that have far fewer spots than the
cards in the Respondent's sample, and no cards that appear to
suffer from loss of information or register problems, that in no
way vitiates the result of GPO's inspection of the 100-card
sample it utilized. So long as an appropriate sample is chosen
for Government inspection and/or testing-and there is no
challenge here to the legitimacy of the GPO sample-the Government
is entitled to base its decision as to the acceptability of the
tendered items on the results produced by that sample, regardless
of what some other sample might show. See Mid-American Business
Forms Corp., GPOBCA 8-87 (December 30, 1988), slip op. at 19,
1988 WL 363330. Accordingly, the Board concludes that the
Appellant has not overcome the Respondent's evidence and that the
Respondent has satisfied its burden to establish the
rejectability of the calendar cards.
That does not mean, however, that under the circumstances of this
case the Appellant is not entitled to any additional
compensation. Although GPO agreed with the customer agency that
the entire lot of calendar cards was unacceptable, all the cards
were not returned to the Appellant, even though the Contracting
Officer's final decision stated that the "unacceptable order is
available for pick up at the delivery point" and the Appellant
attempted pick-up at each delivery location.3 According to the
Appellant, only 48,500 of the 425,000 cards shipped were
returned. The rest, according to the Appellant, were distributed
and used for their intended purpose. The Appellant bases that
statement on information it claims to have received by "calling
random locations"; it also has provided the names of the
individuals at six locations and set forth what they supposedly
stated regarding their distributing and using the cards.
Notwithstanding the rejectability of an entire quantity tendered
and the propriety of a reprint requirement, when the Government
retains and uses a quantity of items from the initial printing,
the contractor is entitled to be paid for that quantity, although
at a discounted price to reflect the defects in those items.
Sterling Printing, Inc., GPOBCA 20-89 (March 28, 1994), slip op.
at 45, 1994 WL 275104, recon. denied, July 5, 1994, 1994 WL
377592; International Lithographing, supra, at 25; see Daniels
Press, Inc., GPOBCA 18-95 (September 23, 1998), slip op. at 7,
1998 WL ______ (Government reduced contract price for quantity of
defective items it rejected but not for quantity of those items
that were distributed and used); Vanier Graphics, Inc., GPOBCA
12-92 (May 17, 1994), slip op. at 19, 1994 WL 275102 (Government
used a quantity of defective items and ordered a reprint only of
the unused quantity); ABM/Ansley Business Materials v. General
Services Administration, GSBCA 9367, 93-1 BCA ¶ 25, 246
(Government could not assert warranty claim for products used for
their intended purpose). The Respondent here does not challenge
the Appellant's statement as to the number of cards returned,
although it does not concede the point, either. While the Board
has no reason to doubt what the Appellant says, its unsworn
submissions and notations of what it learned from six delivery
locations fall short of sufficient evidence to allow the Board to
conclude that in fact the Government retained and used the total
quantity of cards that the Appellant says were not returned.
Therefore, the Board will remand the matter to the Contracting
Officer with instructions to attempt to resolve the matter and to
negotiate an equitable adjustment representing an appropriately
discounted amount for whatever quantity of cards-as determined by
any information that is available to the Contracting Officer or
as agreed to by the parties-were retained and used by the
Government.
III. ORDER
For the foregoing reasons, the Contracting Officer's decision is
AFFIRMED and the appeal is DENIED with respect to the
rejectability of the initial printing of the calendar cards. The
appeal is GRANTED with respect to the Appellant's entitlement to
an equitable adjustment for the quantity of calendar cards from
the initial printing that were retained and used by the
Government. The matter is REMANDED to the Contracting Officer to
determine, to the extent possible, the number of cards that were
retained and used by the Government and to negotiate an equitable
adjustment representing an appropriately discounted amount for
the cards so retained and used.
It is so Ordered.
October 20, 1998 Ronald Berger
Ad Hoc Chairman
GPO Board of Contract Appeals
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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 5, 1997. It is referred to as
the Rule 4 File, with an appropriate Tab letter also indicated.
The Rule 4 File consists of eight tabs identified as Tab A
through Tab H.
2 The QATAP identifies five PQLs, which are based on the intended
use of the product and range from best quality (Level I) to
functional quality (Level V). The quality level for each job is
selected by the customer agency and "is chosen based on the
fidelity of reproduction required, the desired aesthetic
appearance, and the intended durability of the final product."
QATAP manual at vii. This contract was assigned PQL IV.
3 The Appellant states that it issued United Parcel Service call
tags for each delivery point and has furnished copies of those
tags.