U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
Appeal of DEPENDABLE PRINTING COMPANY, INC.
GPO BCA 5-84
September 12, 1985
Michael F. DiMario, Administrative Law Judge
Opinion
This appeal timely filed under the "Disputes" clause of "GPO Contract Terms No. 1" by Dependable
Printing Company, Inc. (hereinafter "DPC" or "Appellant"), 1211 Heyward Street, P.O. Box 2385,
Columbia, SC 28202, is from the final decision of Emery A. Dilda, Contracting Officer, Atlanta
Regional Printing Procurement Office (hereinafter "ARPPO"), United States Government Printing
Office (hereinafter "GPO" or "Respondent"), dated July 12, 1984, terminating the contract,
Purchase Order F0458, Jacket 748-163, for default for "failure to print on the paper stock per
specifications." The decision of the Contracting Officer is affirmed for the reasons herein set
forth.
FINDINGS OF FACTS
The facts here and after recited are set forth in substantial detail because of the
discrepancies between the factual claims of both parties in interest concerning the Respondent's
rejection of nonconforming paper stock.
The Nashville District, U.S. Army Corps of Engineers (hereinafter "DOA") by requisition No.
4-00008 of December 6, 1983, to the ARPPO, GPO, ordered the printing of some 100,000 4-color
process maps of the Tennessee Cumberland Rivers Navigation System to be produced on paper stock
described as "JCP-040 Basis 140 per 500 sheets" with a requested delivery date of January 23,
1984 (R4, Tab 1). 1/ The ARPPO in turn issued a bid solicitation for the contractual production
of 100,354 copies of the map, including 354 additional copies for the Federal Depository Library
Program. The specifications included with the solicitation contained a requirement that the
contractor furnish the paper stock described as "white latex saturated surface coated, equal to
JCP Code-040, Basis-500 sheets, size 25 x 38, weight 140." (R4, Tab 3) The equal to JCP Code-040
was marked with an asterisk. The asterisk identified a subnote under the "paper" caption of the
specification stating "[r]efer to Government Paper Specification Standard, No. 8 dated April
1977." Elsewhere in the specification was a notice that "[c]olor of paper furnished shall be of
a uniform shade and good match by visual
inspection of JCP color samples. Slight variations in shade are permitted. The Public Printer
reserves the right to reject shipments of any orders printed on paper the color of which, in his
opinion, materially differs from that of the JCP color sample(s)." In addition, the specifications
contained provisions that:
Press inspection may be required at time of going to press . . .
. . . .
Inspection samples are to be furnished (prepaid) at no additional cost to the government. Mail the
first 2 copies completed and one set of these GPO specifications to: U.S. Government Printing
Office, R.B. Russell FOB, Rm. 788, 75 Spring St. SW, Atlanta, Georgia 30303 Attn: Inspection
Samples.
These copies will be considered as sample copies and cannot be deducted from the total quantity
ordered. (Refer to the article entitled "Inspection and Tests," in GPO Pub. 310.2.)
. . . .
The contractor must comply with the delivery schedule regardless of this requirement for inspection
samples. The contractor will be notified of the test results only if there are deficiencies.
Under the caption "Quality Assurance Through Attributes," the specifications contained a
provision that:
The bidder agrees that any contract resulting from bidder's offer under these specifications shall
be subject to the terms and conditions (as applicable to the products ordered) of GPO Pub. 310.1
"Quality Assurance Through Attributes - Contract Terms" and MIL-STD-105 "Sampling Procedures and
Table for Inspection by Attributes" in effect on the date of the issuance of the invitation-for-
bid.
Under the following subcaptions of the "Quality Assurance Through Attributes" paragraph of the
specifications it was further stated that:
(1) STATISTICAL DETERMINATION OF PRODUCT QUALITY.
(a) The Government reserves the right to verify product quality by using the applicable
procedures contained in GPO Pub. 310.1 and MIL-STD-105.
(b) Any quality characteristics of the products provided under these specifications which are
not explicitly described by quality attributes will be evaluated in accordance with the
article entitled "Quality" in U.S. Government Printing Office Contract Terms No. 1.
. . . .
REJECTION. - Items which fail to meet the quality requirements of these specifications shall be
processed pursuant to paragraph 3, "Determining Acceptability of GPO," Pub. 310.1.
The specifications identified the Printing Attributes and Finishing Attributes as Level II and
had a specified standard for "[p]rocess color match" as "OK proofs, press inspection."
Twenty potential bidders were sent solicitations. In addition, The Invitation for Bids was
posted in the ARPPO (R4, Tab 4). Bids opened January 3, 1984, with "six responsive" and three
"no bids" received (R4, Tab 4). The low bidder was Mercury Printing Co., Memphis, Tennessee at
$26,900, net (R4, Tab 4 and 5). The bid was significantly lower than the next low bidder, DPC,
whose bid was $32,824, 2% 20 days, and the other bids which ranged upward to $56,864, 1% 20 days
(R4, Tab 4 and 9) causing the Contracting Officer to suspect a possible error in bid (R4, Tab
9). This prompted the Contracting Officer to request Mercury Printing Company to review and
confirm its bid price
(R4, Tab 9) in accordance with the suspected "Mistake in Bid" provision of Section 6, paragraph
3a(5) of Chapter IV, "Certification and Award," Printing Procurement Regulations (GPO Pub. P-305.3,
as revised).
On January 4, 1984, in response to this request, Mr. Raymond Kirkley, Mercury Printing Company,
telephonically advised the ARPPO that he had made an error on paper pricing by using the wrong
basis weight, and would like to have his bid withdrawn (R4, Tab 9). Following this, Mr. C.
Kenneth Rhodes, Jr., Secretary-Treasurer, DPC, was advised that his company "may be in line for
contract award on Jacket 748-163." Accordingly, he was requested to review and confirm DPC's bid
(R4, Tab 7).
On January 9, 1984, the ARPPO received the affidavit of Mr. Kirkley of Mercury Printing, supra,
which in pertinent part stated:
1) Price figured with wrong paper stock price.
2) Error was committed due to lack of attention to area concerning paper weight.
3) I interpreted paper weight to be "140 M," or 70 lbs. per 500 sheets (a common paper weight).
4) My bid on Jacket 748-163 is in error and I respectfully request that same be withdrawn from
consideration.
(R4, Tab 8)
That same day Howard A. Harrison, Manager, ARPPO, wrote a memorandum to the Chairman, GPO
Contract Review Board, outlining the above information concerning the agency requisition, the
bid solicitation and bid responses, the review and confirm notification to Mercury, Mercury's
claim of error, and the receipt of Mr. Kirkley's affidavit.
The memorandum stated that "[a]fter careful analysis of the contractor['s] affidavit and
worksheet there is sufficient documentation to substantiate that an error actually occurred and
that Mercury Printing Corp. [sic] be allowed to withdraw his [sic] bid." A handwritten entry on
the memorandum states, "OK Jack Wolfe to HH 1/17/84" apparently reflecting the concurrence of
the Chairman, Contract Review Board, in the bid withdrawal action (R4, Tab 9).
On January 9, the ARPPO received a letter dated January 6, 1984, from C..Kenneth Rhodes, Jr.,
Secretary-Treasurer, DPC, advising that "I have reviewed my quotation and confirm it on Jacket
No. 748-163." (R4, Tab 10) This letter was on DPC letterhead stationery. In addition, on
January 13, the ARPPO received back from Mr. Rhodes the signed "review and confirm" form
furnished DPC on January 4, 1984. On this form, in response to advice from the ARPPO that DPC
might be in line for contract award on Jacket 748-163; and a request "that you carefully read
the conditions listed below, signify your acceptance and return to" the ARPPO; Mr. Rhodes, for
DPC, states that:
1. I have reviewed the specifications and confirm my bid.
2. My bid is effective for 60 days.
3. I understand the shipping schedule will be advanced in accordance with the terms and conditions
of Contract Terms No. 1.
(R4, Tab 7)
Subsequently, on January 17, 1984, the contract was awarded to DPC by Purchase Order F0458 "[i]n
strict accordance with your Quotation No. 15255, dated 12-17-83 and our specifications." (R4,
Tab 11) The purchase and materials to be furnished by the Government were received by DPC on
January 19, 1984 (R4, Tab 12). First proofs were sent by the ARPPO to the customer agency (DOA)
on February 27, 1984 (R4, Tabs 14 and 15). Included with the proofs was a "proof-out" sheet
received by the ARPPO from DPC. This proof-out sheet contains the following statements:
Here is a proof-press proof of your printing order, furnished to show style and type set-up only.
Quality of paper, color of ink, etc., will be as per your order.
[_]OK
Please read carefully [_]OK as corrected.
and mark [_]Change as marked and send new proof. (Changes that are variations from your
original copy necessitate resetting and are therefore subject to additional charge.)
ALL ORIGINAL COPY AND PROOFS MUST BE RETURNED TO US BEFORE WORK CAN PROCEED.
Remarks___________
_________________
By________________
(R4, Tab 15)
The form was subsequently filled out and signed by Janis S. Clark with the "[c]hange as marked
and send new proof" block checked and the remarks "[s]end new color key for map side and circled
area on info side." (R4, Tab 15)
The proofs and "proof-out" sheet were thereafter sent back to DPC by certified mail and received
by DPC on February 29, 1984 (R4, Tab 17).
By cover letter dated March 16, 1984, Mr. Rhodes furnished the ARPPO a new set of proofs stating
in the letter that "[t]he enclosed proof on our Job #12880 is ready for approval. It is your
Job Jacket #748-163, Order No. F-0458. There were additional charges of $380.00 incurred for
customer alterations. Please accept this as our request for Contract Modification for the above
amount."
Apparently, the ARPPO sent this second set of proofs to the customer agency on March 21, 1984
(R4, Tab 19), with a new "proof-out" sheet received from DPC (R4, Tab 20) and a GPO proof letter
with instructions to the customer agency to return within 5 days giving proof status (R4, Tab
21).
The GPO proof letter form was marked "OK as is" signed by Janis S. Clark dated March 30, 1984,
with the additional notation "[p]lease return color-key."
This second set of proofs was sent by the ARPPO, certified mail, to DPC on April 4, 1984 (R4,
Tab 22), and received by DPC on April 6, 1984 (R4, Tab 23).
On May 4, 1984, the ARPPO contacted DPC to check on the status of the job since it had not been
received and was advised by Mr. Rhodes that the job would ship May 11, 1984.
On May 30, 1984, a "show cause" letter was sent to DPC notifying it:
[T]hat since you have failed to perform Purchase Order F0458, Jacket 748-163, within the time
required by the terms thereof, the Government Printing Office is considering terminating said
contract pursuant to the articles entitled, "Default," United States Government Printing Office
Contract Terms No. 1.
Pending a final decision in this matter, it will be necessary to determine whether your
failure to perform arose out of causes beyond your control and without fault or negligence on
your part. Accordingly, you are hereby afforded the opportunity to present, in writing, any
facts bearing on the question to the Contracting Officer within 5 days after receipt of this
notice. Your failure to present any facts within this time may be considered as an admission
that none exist.
(R4, Tab 25)
By letter dated June 6, 1984, Mr. Rhodes of DPC responded to the ARPPO "Show Cause" letter
requesting its withdrawal "because we have not failed to perform . . . ." In addition the letter
stated that "[b]ecause of delays and alterations by the Government which are documented in your
files, the verbally agreed to delivery date on this job is June 11, 1984, and it will be met.
This date was given to us the latter part of April 1984 by your office."
By letter dated June 13, 1984, Cathy D. Kelley, Assistant Printing Control Officer, DOA,
Nashville District, COE, advised the ARPPO of receipt of the product from the contractor on June
12, 1984. She further stated that upon examination, it was detected that the product was not
printed on the JCP-040, Basis 140 paper stock, as requested, that the color on the map side is
"flat and dead . . . . Black has been screened and does not stand out . . . . Ink coverage is
not consistent . . . . Colors are bright and not screened. The Nashville District feels that
this job should be reprinted at no expense to the Government." She also stated that she was
sending several randomly selected samples to the ARPPO (R4, Tab 27). In turn on June 20, 1984,
the ARPPO sent the paper samples to the GPO, Washington, DC for testing (R4, Tab 28).
That same day, telephone discussion was had between the ARPPO and the agency concerning
rejection and possible discounting of the rejected product by 25% (R4, Tab 28). A letter
outlining the possible actions without reference to a specific percentage of possible reduction
was sent to DPC on June 21, 1984 (R4, Tab 29).
By letter dated June 26, 1984, Mr. Rhodes, DPC, furnished the ARPPO samples of the job which it
claimed "were taken in an acceptable fashion to GPO." Mr. Rhodes stated that:
I find no basis for complaint on quality. There is a consistent and acceptable coverage of
ink. The ordering agency in requesting the type of paper used and the ARPPO with its vast
experience with the printing of latex impregnated or surface coated stocks, should realize
that "dot etch" quality is impossible to achieve because of the natural qualities manufactured
into stock.
I further demonstrate the ordering agency's acceptance and fore-knowledge of the type and
weight of paper (Textoprint) to be used by the attached proof-out sheet.
I do not recognize the basis of complaint since I have done everything legally and morally
possible to provide the Government a quality product.
(R4, Tab 30)
The proof-out sheet addressed to the USGPO, 75 Spring St. SW., Room 788, Atlanta, Georgia 30303
was blank as to any entry of "OK," "OK as corrected," or "[c]hange as marked and send new
proof." Moreover, it contained no "Remarks" or signature on the "By" line. It did however
contain a typed entry immediately under the typed address as follows: "*Please note sample of
paper to be used on this job, noting specifically texture (Textoprint) and weight (sub 70).
Your 'OK' will be accepted as your authorization." This typed entry is followed by preprinted
double lines which in turn is followed by the following unmarked preprinted wording: "Here is a
proof-press proof of your printing order, furnished to show style and type set-up only. Quality
of paper, color of ink, etc., will be as per your order." (R4, Tab 31)
The proof-out form was apparently photocopied over another piece of paper which appears to be
identical with the bottom of the GPO proof letter R4, Tab 21) which was sent to the contractor
by GPO on April 4, 1984, supra, since the partially reproduced scribble on the bottom of the
exhibit matches precisely the scribble on the bottom of the exhibit marked R4-21. There is no
indication on the proof-out sheet that it was in fact sent or received.
On June 27, 1984, CK (apparently Cathy D. Kelley, COE-Nashville) advised JE (apparently John
Edridge, ARPPO), that her agency would not accept the product at a discount but was rejecting
the order because of poor printing and wrong paper. Additionally, she indicated that they had
only received "25 boxes of maps (approximately 16,000)" and wanted to know where the balance was
(R4, Tab 28).
Mr. Rhodes was telephonically contacted the same day and indicated he shipped the first 25 boxes
by Spartan Express and the balance by Frederickson Freight Lines (R4, Tab 28).
The following day Mr. Pearson of GPO, Washington, DC, advised the ARPPO that the samples tested
were being assessed 120 demerits under the "Quality Assurance Through Attributes Program" and
that the product was thereby rejectable (R4, Tab 28).
By letter of June 27, 1984, a second "Show Cause" notice was sent to DPC. The letter was worded
identically to the "Show Cause" letter quoted, supra.
On June 28, 1984, Cathy Kelley was apparently recontacted by the ARPPO. Once again she advised
that the product would not be accepted regardless of the percentage of discount (R4, Tab 28).
On June 28, Mr. Rhodes was telephonically advised by the ARPPO that the order was being rejected
and that the agency would like it to be corrected by reprinting. Mr. Rhodes disagreed with the
rejection and claimed that GPO was not clear about the paper stock, that the paper was as good
as could be expected from the copy, and that the agency "OK'd" the proofs. He inquired about a
negotiated reduction in price (R4, Tab 28). The ARPPO again checked with Kelley. She again
stated that the agency would not accept the job and that she did not want to negotiate a price
reduction. She stated that she had requested 140 lb stock and Level II printing but did not get
either of .these in the completed product (R4, Tab 28).
On June 29, Mr. Rhodes was telephonically contacted and told the product was being rejected and
that the agency would accept only a complete reprint in conformance with the specifications. He
advised that he would check with his partners and have their answer by July 3, 1984 (R4, Tabs 28
and 36).
On July 2, 1984, the ARPPO received the written test results from the Quality Control and
Technical Department, GPO, Washington, DC, confirming that the paper was not equal to the
specifications and that it had been assessed 120 demerits (R4, Tab 33).
That same date the ARPPO also received the written rejection of the Corps of Engineers (R4, Tab
34).
On July 3, 1984, Mr. Rhodes was notified by telephone and in writing of the rejection. The
writing being a third "Show Cause" letter. This letter advised that "you have failed to perform
Purchase Order F0458, Jacket 748-163, in strict accordance with the specifications thereof" and
that GPO was "considering terminating said contract pursuant" to the "Default" article of GPO
Contract Terms No. 1, and that DPC had "3 days" to in effect show cause why the Default should
not be taken (R4, Tab 35).
That same day the facts of the case were presented in memorandum format by the Acting Manager,
ARPPO, to the Chairman, GPO Contract Review Board, outlining the above information requesting
concurrence to a "Termination to Default." The Board unanimously concurred in the termination
although one member, Mr. D. R. MacBride, penned in a note saying "I would ordinarily recommend
that the Government accept this product at a significant reduction. Although it is not Level II
and is printed on wrong stock. The nature of the job seems to dictate acceptance. However, the
customer agency is standing firm regarding rejection." (R4, Tab 36)
On July 5, 1984, a letter was received from Mr. Rhodes regarding the "Show Cause" letter of June
27, 1984, which he claims receipt of on July 2, 1984. He advised that remaining Product was
shipped "in accordance with verbal instructions from ARPPO on June 11, 1984." He requested that
his firm not be found in "Default" for the failure to ship and attached Bills of Lading from
Spartan Express, Inc., and Frederickson Motor Express Corp. both dated June 11, 1984 to support
his contention (R4, Tab 37).
On July 6, 1984, a letter from Mr. Rhodes dated July 5, 1984, was received by the ARPPO in
response to the "Show Cause" letter of July 3, 1984, wherein he asserts that DPC's performance
"was done in strict adherence to all verbal and written instructions and authorizations of
ARPPO" and that DPC "did everything possible to insure that the job order was filled to
specifications." (R4, Tab 39)
By letter of July 12, 1984, Mr. Rhodes was given "Notice of the Termination" of the contract
"for default because of your failure to print on the paper stock per specifications." (R4, Tab
40) The product was reprocured from another vendor by the ARPPO after the default. However, no
excess reprocurement costs were incurred (R4, Tab 44).
By letter of October 12, 1984, DPC appealed the "Default" to the Public Printer (R4, Tab 46).
In that letter DPC claims that it:
[W]as contacted by ARPPO concerning this job before it was awarded to him because he was the
second-low bidder and the low-bidder withdrew because of an error concerning the stock to be used
on this job. The Contractor explained verbally the type of paper and the weight of the paper he had
quoted using and was instructed by ARPPO to send a sample of what he was going to use along with
the color key proofs required in the specification and the agency could accept or reject it. This,
the Contractor did, and the "OK" he received is attached here to [sic].
Further, the Contractor believes the press-proof inspection, which was waived by ARPPO, would have
given the Government a second opportunity to recognize any discrepancy in the paper stock quoted
and intended to be used.
The Contractor in the final analysis acted in good faith and sound judgement in providing every
opportunity possible for the Government to inspect the paper stock before any printing had been
done and therefore requests that this Notice of Termination be revised and the agency be required
to accept the job as a usable product.
The attached "OK" which the DPC letter referred to and transmitted is a photocopy of the GPO
proof letter (R4, Tab 21) identified on page 8 hereinabove. The "OK as is" notation on such
form refers back to the antecedent clause "give proof status" and as pointed out on page 8,
supra, was transmitted to the DOA by the Contractor prepared "proof-out" form with the
preprinted notation, "[h]ere is a proof-press of your printing order, furnished to show style
and type set-up only. Quality of paper, color of ink, etc., will be as per your order." (R4,
Tab 20)
The "proof-out" sheet which the letter also transmitted bears the identical wording of the
"proof-out" sheet quoted in the second paragraph of page 10, supra. It does not, however, bear
the obscure scribbling at the bottom as does the R4. Tab 31 copy. Again, there is no indication
on the "proof-out" sheet that it
was in fact sent or received.
Exhibit R4, Tab 47, is a GPO, ARPPO log of a telephone conversation of 11/27/84 between Ken
Rhodes and E. Dilda wherein, in handwriting which is extraordinarily difficult to read, it is
indicated that:
Contr return call of 11-26-84
Contr claim that bid was requested to review & confirm by Jim Wainscott prior to award. Jim
alleged [sic] told that was going to use 70 lb stock because was confused by 500 vs 1000 sheet
basis & that could get 70 lb. Also alleged [sic] that was told to send samples & GPO would review.
Further stated that samples sent with 3rd proof. K.R.
We have no record discussing or seeing a sample of the stock you proposed. E.A.L.
Contractor stated that has too much money at stake to continue appeal. (Original /s/ E. Dilda)
The exhibit is backed up by a clarifying memorandum (R4, Tab 48). The above quotation is from
the copy of the original document but omits obvious deletions made by the note taken at the time
of transcription.
Exhibit R4, Tab 49 is again a photocopy of a handwritten log of a conference between E. Dilda
and Jim Wainscott, identified as a GPO Printing Specialist in the ARPPO, on 11/27 (presumably
84). The log recites:
-Informed Jim that was told by Ken Rhodes that he (Jim) discussed alternate stock was
requesting review and confirm; admittedly back in January but try to recall.
Jim responded that he had absolutely no recollection of ever at any point being involved in
job.
(NOTE: This conversation after discussion w/ Ken Rhodes.) (Original /s/ E. Dilda)
Again this memorandum was backed up by a clarifying memo (R4, Tab 50) but is quoted above as it
appears in the original notes.
R4, Tab 51 is an undated "Memo for the record" by Emery A. Dilda wherein he claims that:
Following receipt of the appeal . . . I found nothing in the job jacket suggesting use of a
stock other than that specified. [and that he had]
[H]ad conversations with Mr. Howard Harrison (Manager of Atlanta RPPO at the time of placent
[sic] of the order), Mr. Doug Faour (Compliance Specialist in Atlanta RPPO at the time of
placement of the order), Mr. John Edridge (Printing Specialist at the time who certified the
bid), Mr. Ron Ergle (current Compliance Specialist since April, 1984), Mr. Jim Wainscott
(Printing Specialist), and Ms. Cathy Kelley of the Corps of Engineers, Nashville, regarding
knowledge of use of a stock other than specified.
He then goes on to claim that "[n]one of the above has any recollection of discussion of an
alternate stock or requesting or seeing the proposed stock." (R4, Tab 51)
Exhibit R4, Tab 52 is again a log of a telephone conversation between Emery Dilda and Kenneth
Rhodes, DPC. This log is dated "P.M. 12/19/84" and is quoted verbatim as follows:
Info to fill in gaps in response to appeal
EAD 1) Department only rec'd 25 cartons/approx 18,000 cys, where is balance
KR after receiving complaint and telephone after receipt of 1st shipment of 25 cartons sent be
[sic] means for quick delivery the balance was recalled rather than taking chance of having
shipment refused as received & then picked up for return shipment was in transit (think in
Charlotte) when requested to be returned. Sealed boxes are in storage in warehouse.
EAD 2) During our last conversation you mentioned a 3rd proof with which paper samples were
allegedly sent. GPO only has record of 2 sets of proofs.
KR I still think that their [sic] was a 3rd proof but may be confused w/another job. Will
check our job file and call or write letter with information.
Under the caption "Conclusion, Action Taken, or Required," the log shows "[c]ontractor still
contends that has to pursue appeal because too important not to due to amount of money
involved."
Exhibit R4, Tab 53 is a log by Emery Dilda of a telephone conversation of 12/21/84 between
himself and Cathy Kelley, COE, Nashville. The log shows "- rec'd copies sent of Dependable's
(alleged) proof sheet w/note & GPO proof memo of 3-21-84" apparently reporting Kelley's receipt
of the form from the ARPPO which the ARPPO had itself received from Mr. Rhodes as "proof" of the
agency's "OK" of the paper stock, supra.
The log goes on to show "- acknowledge that Janice [sic] Clark signed GPO proof memo but xxx
never before had seen this proof sheet w/note; Janice [sic] Clark xxx xxxx had not seen either."
(Xs denote deletions in original.)
Under caption "CONCLUSION, ACTION TAKEN, OR REQUIRED:," the log continues, "[w]e will both make
sworn statements if necessary." (Original /s/ E. Dilda)
Exhibit R4. Tab 54 is a signed statement of John M. Edridge, Assistant Manager, ARPPO, date
12/21/84, wherein "[t]o the best of my recollection" he describes what happened after bid
opening on 1/3/84 with respect to both Mercury Printing and DPC.
With respect to DPC the memorandum states, "1-4-84 called Dependable Printing Mr. Rhodes asking
him to confirm his bid price. He replied it was correct and would send a letter of
confirmation. In turn said I would send him a letter to sign for price confirmation & also
price would be good for 60 days."
The final Exhibit R4, Tab 55 is a log dated 12/28/84 signed by Mr. Dilda of a telephone
conversation with Mr. Rhodes as follows:
-What do your records show about 3rd proof you were going to check on? EAD/KR
-We only show 2 proofs after checking with our separators. I don't know what happened about
that proof-out sheet with the note except we may have inadvertently made up 2 sheets here and
it never got sent or got stuck in a package. I agree our case doesn't look too good. KR/EAD
(NOTE: [I]nformed Mr. Rhodes that we had in our file originals of 2 proof-out sheets and both
were distinctly different from the one with the note.)
CONCLUSION, ACTION TAKEN, OR REQUIRED: In answer to my question "Do you want to continue
appeal?", Ken Rhodes stated he would have to check with his legal counsel to see if its worth
continuing. Will get back Wed. or Thurs.. (Original /s/ E. Dilda)
A formal Complaint as required by BCA Rule 6(a) was not filed by the appellant as requested in
the Board's letter of November 30, 1984. Accordingly, the Respondent was advised to proceed in
accordance with GPO Instruction 110.12, Rule 6(b).
Thereafter, the Respondent filed its Answer responding to the averments set forth in Appellant's
"Notice of Appeal" dated October 12, 1984, denying point by point the claims of fact with
respect to purported oral authority to use no conforming paper stock. The appeal comes to the
Board in this form.
ISSUE
The issue presented by this appeal is whether or not given all the facts and circumstances, the
Appellant was required as a matter of contract law to use the paper stock described in the
specifications.
DECISION
It is the opinion of the Board that the Appellant was required to use the paper specified in the
bid solicitation and that its failure to do so was of such a nature as to justify the
Contracting Officer, acting in his discretion, to terminate the contract for default. This
opinion is based upon the finding of facts that:
1. The requesting agency had specified expressly the paper stock it desired for the product;
2. The Government bid solicitation to potential bidders specified such stock;
3. Six of 20 contractors solicited made responsive bids upon such specifications;
4. The Government permitted the lowest bidder to withdraw its bid after suspecting a possible
mistake in bid only after a "review and confirm" resulted in the bidder's discovery that it had
based its bid upon use of the wrong paper stock;
5. That same day the Appellant was notified it was in line for possible award because the low
bidder had made a mistake;
6. The Appellant reviewed and confirmed its bid in writing without mention of the use of any
other paper stock;
7. Award was made to Appellant "in strict accordance with your Quotation No. 15255 dated
12-27-83 and our specifications."
It is the opinion of the Board that at this point in the sequence of events, a valid binding
contract between the parties came into being upon all the terms and conditions of: (1) The bid
solicitation, including the specifications; (2) the bid made by the Appellant; (3) the review
and confirmation solicitation by the Respondent; (4) the certification of review and
confirmation by Appellant; (5) the purchase order itself; and (6) upon all other written
documents, such as the Government Paper Specifications; Mil-Specs; Quality Assurance Through
Attributes Program ("QATAP"), and Government Printing Office Contract Terms No. 1, which were
incorporated in the other documentation by reference therein. The totality of these documents
constitutes the "integrated contract" between the parties. Corbin on Contracts, Secs. 31, 588;
Restatement (Second) of Contracts, Sec. 213 (1981). See also, U.C.C. Sec. 2-202 (1977).
Once a contract is so formed, parol or oral evidence of contemporaneous or prior oral agreements
is not admissible for the purpose of varying or contradicting the terms of the written contract.
Corbin on Contracts, supra, Sec. 573. See also, Restatement (Second) of Contracts, Sec. 235,
illustration 2 (1981). Once the contract was duly entered into it is clear that the Government,
as a matter of law, was entitled to enforce strict compliance with the
specifications. Jefferson Construction Co. v. United States, 151 Ct. Cl. 75 (1960); Red Circle
Corp. v. United States, 185 Ct. Cl. 1, 8 (1968); American Electric Contracting Corp. v. United
States, 579 F.2d 602, 608 (1978); Renaissance Exchange, Inc., ASBCA No. 26,514, 82-2 BCA ¶ 16,108;
Unicom Systems, Inc., ASBCA No. 29,468, 84-3 BCA ¶ 17,675. The determination of whether a product
conforms with the contract specifications must rest with the Contracting Officer, as this
determination is within his/her discretion in administering a contract. Where the specifications
contain an imprecise statement of the contract requirements, the standard for rejection of the
contractor's work becomes more subjective. However, this appeal has raised no claim that the
specifications were ambiguous or imprecise so as not to indicate what the Appellant had to do in
order to produce conforming maps. Rather, the contract specifications set out what the Appellant
had to do to be in compliance with the contract.
In the instant case, the evidence clearly demonstrated that the paper used by the Appellant did
not conform with the contract specifications. The specifications required that the Appellant
produce maps on "white latex saturated surface coated [paper] equal to JCP Code-040, size 25 x
38, weight 140." (R4, Tab 3)
The paper was tested and the test determined that the paper supplied by the Appellant was not
equal to specifications thereby receiving 120 demerits (R4, Tab 33). The Appellant, in its
appeal letter, did not dispute this evidence. The Appellant instead alleged that its
representative orally had advised Mr. Wainscott,
the ARPPO Contract Specialist, of the type and weight paper it intended to use. Mr. Wainscott,
however, had no recollection of any such contact. Assuming arguendo for the moment that there was
such a verbal communication on the part of the Appellant, such fact in and of itself would not have
negated Appellant's duty under the integrated written contract to use the paper specified. First
of all, Mr. Wainscott was not the Contracting Officer for this contract, nor is there any evidence
that he had been delegated any authority by the Contracting Officer. At best, it could be claimed,
but has not been, that he had apparent authority. Even in such case, he would have lacked legal
capacity to bind the Government. Federal Crop Insurance Corp v. Merrill, 332 U.S. 380 (1947).
Moreover, even if Wainscott had the power of the Contracting Officer on this contract, there is no
evidence that Wainscott "accepted" the change in paper stock. Rather, appellant alleges that
Wainscott informed DPC that if it sent samples of the stock it intended to use, he would ascertain
if such stock were acceptable to the customer agency. Both the customer agency and the ARPPO deny
receiving such stock, but Appellant relies on its own written record of an "OK" of proofs by the
customer to allege acceptance of the paper stock. Again, assuming arguendo that such stock was
sent and that such "OK" was given both as to the proof and as to the paper stock, it would have
been made by Janis S. Clark, the representative of the customer agency, and not by Emery Dilda, the
Contracting Officer, and thus also would be without legal force and effect to bind the Government.
Federal Crop Insurance Corp. v. Merrill, supra. Moreover, even if such "OK" to use nonconforming
paper had been given by the Contracting Officer, it would not have legally bound the
Government once the integration of the contract had occurred, since he too would have been bound by
the specifications and such "OK" would have been an ultra vires act. This is the case even though
subsequent to performance, assuming no prior knowledge of defect on his part, he in his discretion
as Contracting Officer, could have accepted the nonconforming product under the QATAP's discount
provisions. It is well established in Federal contract law that a Contracting Officer may not
accept the production of a product different than that which was already legally bargained for
without there being some additional exchange of adequate legal consideration by the parties.
Bausch & Lomb Optical Co. v. United States, 78 Ct. Cl. 584 (1934). See also, Joseph H. Jaeger,
Jr., ASBCA No. 11,413, 66-2 BCA ¶ 5757 (1966). No such exchange in consideration has been shown by
the evidence in this case. On the other hand, where the use of nonconforming materials is
presented to the Contracting Officer after performance without allegation of an "OK" for its use,
the exchange in consideration becomes affected by acceptance of the "discounted price" for the
nonconforming product. Such acceptance, however, lies solely in the sound discretion of the
Contracting Officer who in this case, upon advice from the customer agency, declined such
discounted acceptance.
With respect to the allegation that the Government had waived its right under the contract to a
press inspection which "would have given the Government a second opportunity to recognize any
discrepancy in the paper stock quoted and intended to be used" (R4, Tab 46) suffice it to say
such waiver was within the rights of the Government under provisions of the contract and did not
in any way
alter the obligation of the appellant to use paper which met the specification. This is so, since
it has been held that inspections by Government inspectors at contractors' plants are not
acceptance and do not preclude rejection after the supplies are shipped. Mack Equipment & Machine
Co., ASBCA No. 12,532, 68-2 BCA, ¶ 7140; Washington Technological Associates, Inc., ASBCA Nos.
10,048 & 10,349, 65-2 BCA ¶ 4892. Although contractors on occasion have been allowed to rely on
the instructions and guidance of inspectors who have been dispatched by Contracting Officers to
inspect prior to or during a contractor's production (Centre Manufacturing Co., Inc., v. United
States, 392 F.2d 229 (Ct. CI. 1968); Max Drill, Inc., v. United States, 427 F.2d 1233 (Ct.
Cl.1970)), the risk of noncompliance does not shift to the Government when it inspects a
contractor's plant. W. L. Spruill & Co., Inc., ASBCA No. 14,390, 71-2 BCA ¶ 8930. See also,
Felton Construction Co., AGBCA No. 406-9, 81-1 BCA ¶ 14,932.
The decision of the Contracting Officer is affirmed.
_______________
1/ R4 designates the file required to be submitted to the Board and Appellant by Respondent
pursuant to Rule 4, BCA Rules and Procedures, GPO Publication 810.12 dated September 17, 1984.