PUBLISHERS CHOICE BOOK MFG. CO.
GPO BCA 4-84
August 18, 1986
Michael F. DiMario
ADMINISTRATIVE LAW JUDGE
OPINION
This appeal, timely filed by Publishers Choice Book
Manufacturing Company, Mars Industrial Park, P.O. Box 709,
Mars, PA 16046 (hereinafter Appellant or "PCBMC"), arises
under the standard "Disputes" clause of Government Printing
Office Contract Terms No. 1, which by reference was
incorporated into and made a part of two identical,
sequential, multiple award, definite term, requirements
contracts between Appellant and the United States Government
Printing Office (hereinafter Respondent or GPO), identified as
Program B365-M. One contract was for the period beginning
August 1, 1983, and ending July 31, 1984, while the other
contract was for the period beginning August 1, 1984, and
ending July 31, 1985. The appeal is from the Final Decision
dated October 16, 1984, of Respondent's Contracting Officer,
Alice S. Jennings, wherein Appellant was advised that it had
been erroneously paid for certain invoiced work, that such
invoices would be adjusted, and that future invoices if found
to be incorrect would likewise be adjusted. The case is
remanded back to the Contracting Officer for negotiation of
quantum in accordance with the decision rendered hereinbelow
holding "no contract" but recognizing quantum meruit
entitlement.
BACKGROUND
Respondent, pursuant to a requisition of the Department of
Agriculture, issued an Invitation for Bids (hereinafter "IFB")
for procurement of the printing of such Soil Survey Maps as
might be required from time to time during the term August 1,
1983, through July 31, 1984. The contract was to be awarded
on a multiple basis; i.e., to more than one qualified bidder,
in lowest bid rank order; such ranking to be used to place
work during the contract term. The IFBs were sent to some 35
potential bidders. Eleven bids and 2 "no bids" were
thereafter received by Respondent. The bids were abstracted
for comparison purposes. Appellant was the second lowest
bidder (Rule 4 File, hereinafter "R4 File", Tab 4), its bid
having been made on June 23, 1983, in the amount of
$487,357.00. This bid was in contrast to the lowest bid at
$485,190.20 and the next higher bid of $563,277.97, which was
followed by 4 bids ranging from $633,120.80 to $691,961.00,
another bid at $777,793.52, and the remaining 3 bids from just
below 2 million dollars upward to 2.7 million dollars. The
contract in being for Program B365-M at that time was for
$508,373.84. (R4 File, Tab 4).
Thereafter, by letter of July 12, 1983 (R4 File, Tab 3), David
A. Charnock, Appellant's Comptroller, assured Respondent's
Printing Specialist, Stuart B. Friedman, of Appellant's
capability to perform the work required under Program B365-M.
There is no indication of what prompted the letter. However,
on July 14, 1983, Alice Jennings, Contracting Officer, ordered
a preaward survey to determine Appellant's capability to
produce the required product. The survey was satisfactory
except for Appellant's record of meeting delivery schedules
under other GPO contracts. On July 19, 1983, Stuart Friedman
telephoned Appellant and spoke to Michael D. Cheteyan,
President, PCBMC, concerning its bid and "why some prices for
one color are higher than 2 color." Cheteyan purportedly told
him that "the prices are correct as bid" and that Appellant
had "analyzed and bid the job as a complete package . . . this
is a printing only job" and "they need work." Friedman
purportedly also "cautioned" Cheteyan "that bids which are
inconsistent or unrealistic in regard to others in the same
offer could be rejected by the contracting officer." He also
asked Cheteyan "about late orders on Program 198 and voluntary
defaults on other orders." Friedman's notes show no response
by Cheteyan but instead reflect a return telephone call from
one Mike Biggerstaff explaining that Appellant "had problems
with new equipment and personnel leaving without notice but
they are working hard to get all the work out . . . ."
Thereafter, Friedman and Jennings summarized the bids on a
lowest bidder sequential basis as outlined above in a
memorandum to the GPO Contract Review Board (CRB). The
memorandum stated that "prices are fair and reasonable based
on competitive bids. Propose award in the above sequence with
no award beyond the number three contractor without prior
approval of the CRB." The CRB concurred in this proposal and
award was subsequently made to the 3 lowest bidders; the award
to Appellant being by Purchase Order No. 30364, dated July 22,
1983. No work was placed with Appellant, however, until
January 23, 1984, when Print Orders 3030, 3031, and 3032 were
issued to it. Two days later on January 25, 1984, Respondent,
"via a letter from Alice Jennings invoked the 'Exception
Clause' on this program, stating her reason being that P.C.
had had difficulty with compliance with schedules on other GPO
programs." (R4 File, Tab 17) The Exception Clause of Section
3, page 11 of 15 (R4 File, Tab 2) states that:
Noncompliance with the shipping and/or delivery schedule, or any
other term, condition or specification of this contract will be
cause, and the GPO reserves the right, to withhold further offers
until the contractor is judged by the Government to have
established adequate procedures to fulfill the requirements.
Thereafter, Appellant completed its work and vouchered Print
Orders 3030 and 3032 to Respondent on March 29, 1984, in the
respective amounts of $8,078.84 and $6,824.00. Print Order 3031
was not vouchered by Appellant until April 30, 1984, due to a
departmental error requiring a print order modification. (R4
File, Tab 7) At that time it was vouchered in the amount of
$7,097.55. These vouchers, after application of the 5% prompt
payment discount, were paid on May 22, May 4, and September 6,
1984, in the amounts of $7,681.19, $6,824.00, and $7,027.95,
respectively. (R4 File, Tab 17)
In mid-April, Appellant was reinstated on the contract. (R4
File, Tab 16). Thereafter, Appellant received 16 additional
print orders from May 14, 1984, through July 30, 1984. (R4
File, Tab 7) Appellant submitted vouchers to Respondent for
this additional work at various times between July 27, 1984
and August 14, 1984, except for Print Orders 3072 and 3073
which were not vouchered until October 18, 1984, and September
30, 1984, respectively. Thereafter, Appellant received
payments for some of its vouchered work with other vouchers
pending. (R4 File, Tab 8).
Subsequently, by IFB of June 5, 1984 (R4 File, Tab 9),
Appellant was invited to bid on the same Program B365-M to
produce Soil Maps for the term beginning August 1, 1984, and
ending July 31, 1985. This time 36 contractors were invited
to bid. Nine "no bids" were received. In addition, Gateway
Press, Inc., and Qualigraphics, Inc., the third and fourth low
bidders on the previous Program B365-M contract, were declared
to have nonresponsive bids "for failure to acknowledge
amendment No. 1." Two other bidders, Graphic Litho Corp. and
Studio Printing, were declared to be "nonresponsible bidders".
The remaining 2 bidders were the Appellant with the lowest bid
at $540,117.00 - 5% - $513.111.15 and Techna-Graphics (the low
bidder under the previous contract) with a bid of $797,574.80
- 2% - $781,623.30.
Jennings, by memo of July 26, 1984, recommended award to
Publishers Choice and Techna-Graphics, declaring the prices to
be "fair and reasonable based on bids received and comparison
with current contract prices" noting also that Appellant "has
the capacity to perform the majority and possibly all of this
contract." (R4 File, Tab 11) A notation on this memo states,
"[w]hile Techna-Graphics prices are high in comparison to
Publishers Choice, a better comparison would be with Gateway's
prices, who for a number of years produced this contract as
the low bidder. Publishers Choice has reviewed and confirmed
their prices - Biggerstaff to ASJ, 7/27/84." The memorandum
was reviewed by one Barbara Chapman and concurred in by the
Contract Review Board. (R4 File, Tab 11) Award was thereafter
made to Appellant by Purchase Order No. 33385 dated August 3,
1984. Commencing on August 28, 1984, Appellant was issued 6
Print Orders numbered 10001 through 10006 under the contract;
the last one being dated September 6, 1984. Later "during the
month of September, payment was received in full on Print
Orders . . ., 3054, 3057, and 3064."
About this time.GPO's Financial Management Service, in
examining another batch of Appellant's vouchers which it had
previously submitted, discovered what they believed to be a
billing error. They notified Friedman that Appellant had
apparently billed double the amount they believed Appellant to
be entitled to bill for map sheets printed two sides to a
sheet under the Schedule of Prices provisions of the contract.
In turn Friedman, on September 26, 1984, telephoned Appellant
and spoke to Charnock, to ascertain the reason for such
billing. Charnock told Friedman that in bidding and billing
it had interpreted the words "map sheet" on the Schedule of
Prices language to be virtually synonymous with the word "map"
and therefore based its bid on a per map basis, and thus was
entitled to bill map sheets printed on two sides on a per map
basis. Friedman told Charnock that he would speak to Jennings
about the matter and then get back to him.
Two days later Friedman called Charnock and specifically
informed him that Appellant's interpretation of the contract
provision was incorrect. Charnock then asked for a conference
with Jennings. Such conference was held on October 4, 1984,
without reconciliation of the differences between the parties.
Appellant then wrote to Paul Barlow, GPO Contract Specialist,
restating its position regarding the contract. Barlow
forwarded the letter to Jennings who by Final Decision letter
of October 16, 1984, responded as follows:
You have interpreted the descriptive words, "single map
sheet", to mean that you must be reimbursed [sic] double the
prices quoted for sheets printed two sides, [sic] This
interpretation is not correct.
The language on which you base your assertion simply
describes the trim size which allows the variation in the
product price for differing sizes of single sheets.
Further, this interpretation disregards the language "Sheets
Printed Two Sides". Your argument that this phrase
describes the method of printing and not the method of
billing is without merit. Methods of production are
described under "Section 2 - Specifications", while the
language under the "Schedule of Prices [sic] pertains to
completed products.
Therefore, adjustments must be made to incorrectly paid
invoices and future invoices if found incorrect.
Rule 4 File, Tab 18
Appellant then appealed to this Board. Subsequent thereto a
prehearing conference was held on September 24, 1985, followed
by a hearing on October 28, 1985, and submission of briefs
thereafter. At the prehearing conference Respondent made a
Motion for Summary Judgment in its favor based upon its
contention from the pleadings of the parties that there is no
genuine dispute as to the facts; and that Respondent is
entitled to judgment in its favor as a matter of law. Such
motion was renewed by Respondent at the time of the hearing.
Appellant in turn has argued that the contract language was
drafted by Respondent, was reasonably interpreted by Appellant
based upon its experience with a companion program, the 198
Program, wherein it was required to take maps manufactured
under Program B365-M, fold the maps, and bind the same with
text material into book format; that such maps had printed on
each side of each sheet the word "sheet" followed by
sequential page numbering so that, for example, the words
"SHEET NUMBER 1" appeared on one side of a sheet while on the
reverse side of the same sheet appeared the words "SHEET
NUMBER 2"; and that such familiarity and wording gave rise to
Appellant reasonably interpreting the words "map sheet" in the
caption "Single Map Sheet Trim Size" on page 13, 14, and 15 of
the "Schedule of Prices" of the first contract IFB and pages
15, 16, and 17 of 18 on the second contract IFB, to be
synonymous with the word "map" in light of the fact that
neither contract defines the words "map" or "map sheets".
Appellant further argues that it applied this reasonable
interpretation consistently; and that such interpretation must
be construed against the Respondent's drafters' construction.
In the alternative Appellant argues that should the Board find
that there was "no contract" on the basis that there was no
requisite "meeting of the minds" to contract formation,
Appellant should be entitled to be compensated for its costs
and a reasonably expected profit on the basis of quantum
meruit. Moreover, Appellant asserts that the doctrine of
equitable estoppel should also be applied against the
Government's set-off action because the Government had notice
of Appellant's interpretation of the contract upon Appellant's
submission of its first vouchers and thus had ample
opportunity after such notice to have raised the issue before
Appellant acted at its financial jeopardy with respect to
performing under subsequent print orders.
The case is before the Board for decision in this form.
ISSUE
The issue is whether or not there was a contract between the
parties. If there was a contract, what were its terms with
respect to defining production units for bidding and billing
purposes when "maps" were to be printed on both the face and
reverse sides of a press sheet? If such units were as
contended by the Respondent, should it nevertheless be
equitably estopped from recovery of overpayments? If no
contract, does Appellant have a right to compensation on the
basis of quantum meruit? If so, in what amount?
DISCUSSION
At the outset of this discussion, suffice it to say that the
Board finds that there are no factual disagreements between
the parties. Accordingly, the Board finds that the record and
testimony in this case supports Appellant's uncontroverted
claim that at the time it first bid for the B365-M Program and
at all pertinent times thereafter, Appellant did indeed
construe the term "map sheet" to be synonymous with the term
"map" based upon its familiarity with the 198 Program. The
Board's conclusion in this regard is further influenced by the
fact that at the time of this initial bid, Respondent's
employee, Mr. Friedman, sensed a possible mistake in bid,
appropriately pointed to what he believed were
inconsistencies, and asked Appellant to review and confirm in
that light. Appellant, given its interpretation of the
disputed language, believed its bid to be correct, and thus
confirmed it.
We conclude from this that Appellant clearly intended the bid
that it made and thus did not assert a post-award mistake in
its bid as Respondent anticipated it would, but rather
asserted that based upon the prior course of dealing in
Program 198 it reasonably interpreted the Program B365-M IFB
language and bid accordingly..
Respondent, while accepting without argument the truthfulness
of Appellant's assertion, denies that it was reasonable
claiming instead that Appellant, in reading the language as it
has, made a mistake in judgment for which it should not be
compensated. Thus, Respondent has consistently objected to
the relevancy of admitting Program 198 materials into
evidence. (Respondent's Exhibit 29.) This Board admitted such
material for whatever probative value it might have.
On the question of the weight to be given a course of prior
dealings, Professors Nash and Cibinic in examining the
principal case of L. W. Foster Sportswear, Co. v. United
States, 186 Ct.Cl. 499, 405 F.2d 1,285 (1969), tell us that in
Government contract law "[w]here the parties to an
interpretation dispute have interpreted, either expressly or
by their actions, the provisions of a similar, previously
performed contract in a certain manner, they will be presumed
to have intended the same meaning for those provisions in the
disputed contract. This presumption is rebuttable by clear
evidence that the parties have changed their intent or are in
disagreement at the time they enter into the disputed
contract. See, e.g., Lockeed Aircraft Corp. v. United States,
192 Ct.Cl. 36, 426 F.2d (1970)." Ralph C. Nash, Jr. and John
Cibinic, Jr., Federal Procurement Law, Third Edition, The
George Washington University, 1980, at 969 n.l (emphasis
added).
They further tell us in footnote 2 that "[w]hen the contract
language is clear and precise, the court or board will
normally give lesser weight to a prior course of dealing. [T]
he governing factor in such cases is the degree of clarity or
exactness with which the disputed term or clause is written,
Robert McMullan & Sons, Inc., ASBCA 21455, 77-1 BCA ¶ 12, 456
(1977) . . . however, superficially exact language may not
correctly express the parties agreement. Generally more
convincing evidence of a course of prior dealing will be
required to controvert contract language which is stated
precisely. Cf. Doyle Shirt Manufacturing Corp. v. United
States, 199 Ct. Cl. 150, 462 F.2d 1150 (1972)." Id. at 970,
n.3.
In addition, they tell us that "[t]he parties may be bound by
their interpretation of prior contracts even though the
language of the disputed contract has been altered." Id. at
971, n.3.
Lastly, they tell us that "[t]he reasoning underlying the
prior course of dealing rule requires that both parties have
had actual knowledge of the prior course of dealing and of its
significance to the contract. Clearly, it would be
unreasonable to find that a party had agreed to a term which
he was not aware." Id. at 972, n.5 (emphasis added).
In addition, the United States Claims Court in Opalack v.
United States, 5 Cl.Ct. 349 (1984), at 359, tells us that:
[6-8] Ordinarily, when interpreting a contract, the plain meaning
of the contract is binding upon the court unless the contract by
its very terms is inherently ambiguous.19 A contract is ambiguous
if it is subject to more than one reasonable interpretation.20
But it is not appropriate to strain the language of the contract
to create an ambiguity.21 (citations omitted) (emphasis added)
This Board believes that the meaning of language is best
derived by applying Professor Williston's "standard of
reasonable expectation" which we recently applied in the case
of Fry Communications, Inc.-InfoConversion Joint Venture,
Jacket No. 421-710 (878-85-067). As stated therein at page 9
and 10, that standard holds that contract language should be
given "the meaning that the party making the manifestation
should reasonably expect the other party to give it." John D.
Calamari and Joseph M. Perillo, The Law of Contracts, West
Publishing Co., St. Paul, MI (1977), § 310, at 118.
As we further cited in Fry, supra, Professors Calamari and
Perillo in footnote 18, at 118, tell us:
This test is somewhat similar to, but not exactly the same as,
the test of the reasonable man in the position of the party other
than the one making the manifestation, a standard of reasonable
understanding. See Sect. 2-2 supra. The standard of reasonable
understanding takes into account what the other party knows or
should know, whereas the standard chosen by Williston would take
this into account only where the party making the manifestation
knew or should know of the knowledge of the other party. A
compromise between the two tests is employed by Corbin. See test
at note 35 infra. Sometimes the test is stated in terms of what
a reasonable person in the position of the parties would have
concluded. James v. Goldberg, 256 Md. 520, 261 A.2d 753 (1970).
Turning to the IFBs, respecting their clarity and precision,
the Board, taking into account the course of prior dealings in
light of the legal principles enunciated herein, finds that
there is no ambiguity in the language given its plain ordinary
meaning derived from the context in which it appears. The
term "sheets" clearly represents the concept of a piece of
paper or a "sheet" having both a "face" and a "back", either
or both of which may be printed upon. The vertical references
to "sheets" clearly and precisely convey the same thought.
Moreover, this concept of "sheet" is conveyed throughout the
contract document. The fact that the word "sheet" is coupled
with the word "map" in the horizontal captions does not
transform the concept of a "2-sided" piece of paper into a
"map", a concept generally conveying the thought of a one-
sided, flat representation of a geographic area. As such, the
Board rules that the language is susceptible to being given
only one reasonable meaning; that being the interpretation
given the language by Respondent.
We turn next to whether or not there was in fact a contract.
Having accepted the truthfulness of Appellant's claim as to
its construction of the Schedule of Prices language and having
found the meaning of such language to be unambiguous and as
contended by Respondent, the Board necessarily finds that
there was no contract since there was no mutuality of assent
to the quantum of consideration. This being the case, the
Board further rules that the Appellant is entitled to be
compensated for its work on the basis of quantum meruit, since
to do otherwise would result in unjust enrichment to the
Government. In furtherance of settlement of this issue, the
Board directs the parties to enter into negotiations,
respecting the proper quantum to be paid to Appellant subject
to the following guidelines. Appellant is to be paid on a
reasonable cost basis, which shall include a reasonable profit
for work actually performed; all such reasonable costs and
profit to be subject to audit by Respondent's Office of
Inspector General; provided, however, that the payments to
Appellant on each of its two respective claims shall not be
less than the next lower bid price or contract then in being,
nor more than the next higher bid price, as applicable.
Having ruled that there was no contract and that entitlement
to compensation is upon the equitable principle of quantum
meruit, this Board further rules that there is no basis for
Appellant's assertion of equitable estoppel.
The case is remanded back to the Contracting Officer for
processing in accordance with this decision.