Mid-American Business Forms Corporation
GPO BCA 8-87
December 30, 1988
Michael F. DiMario, Administrative Law Judge
Opinion
This appeal, timely filed by Mid-American Business Forms
Corp., 171 Douglas Avenue, Elgin, IL 60120 (Appellant), is
from the March 12, 1987, final decision letter of Douglas M.
Faour, Contracting Officer (CO), Atlanta Regional Printing
Procurement Office (ARPPO), United States Government
Printing Office (GPO/Appellant), terminating ARPPO contract
Jacket 732-117, Purchase Order F2921 dated January 30, 1987,
because of Appellant's "failure to deliver an acceptable
product in accordance with the specifications." The appeal
is denied for the reasons set forth hereinbelow.
Background
On January 30, 1986, the Respondent, pursuant to Requisition
No. 7-00223 of the Centers for Disease Control (CDC), Public
Health Service, U.S. Department of Health & Human Services,
Atlanta, GA, awarded Appellant a negotiated contract, supra,
in the amount of $1,181.40 to produce some 15,000 (+ 10%) 3-
part carbonless chemical transfer, paper form sets entitled
"AIDS Confidential Case Report." The contract expressly
required that "All Parts Must Register.", i.e., multiple
printing images must be in exact alignment with one another.
See Pocket Pal, 13th ed. p.203, International Paper Company,
New York, NY (1983).
In other pertinent part, the contract provided that the
Government was to furnish the contractor a sample and
necessary photographic negatives by February 2, 1987, with
the contractor to ship the completed product, f.o.b.
destination, by February 12, 1987. Destination was specified
as CDC Warehouse, 1670 NE Expressway Access Road South,
Suite D, Atlanta, GA 30329. (Rule 4 File, hereinafter "R4
File," Tab A.) This facility, although bearing an Atlanta
postal address, is located in Norcross, GA, an Atlanta
suburb.
The sample and films were timely delivered to Appellant.
Thereafter, Appellant, noting a minor discrepancy between
the materials and specifications, requested a Contract
Modification necessitating a $15 increase in price. (R4
File, Tab C.) The Modification, No. 87-533, was issued
February 10, 1987. (R4 File, Tab D.) The other terms of the
contract remained unchanged. The Appellant presumably then
entered into production of the product with shipment to
follow.
On February 18, 1987, however, CDC's Carl Vining, a Contract
Specialist, notified the ARPPO's Patricia Price, that CDC
had not yet received the anticipated shipment. (R4 File, Tab
E.) That same day, Price contacted Appellant's office to
find out the
status of the job. (R4 File, Tab E.) Price spoke to an employee
named "Liz." (Official File, Tab 11, Respondent's Brief, page 2.)
Liz advised that the entire order had been shipped on February
12, 1987, via Roadway, Inc. (a common carrier), and that the
shipment was expected in Nashville, TN about midnight that night
with delivery in Norcross, GA anticipated the following day, the
19th. (R4 File, Tab E.) Price so advised CDC. (R4 File, Tab E.)
Subsequently, on February 23rd, Vining called Price to say
that the order had been received but contained only 3,000
forms and that a random sample check showed the forms to be
out of register. Therefore, CDC would reject the order.
Samples would be sent to the ARPPO. (R4 File, Tab F.) This
was accomplished by letter to David Robb, the ARPPO Contract
Compliance Officer, dated February 25, 1987. (R4 File, Tab
G.)
Robb alleges he telephoned Liz that same day and advised her
of the shortage, the registration defects, and CDC's
intention to reject. (R4 File, Tab M.) In response, Liz
purportedly said that the samples were "OK" and that the
missing forms had been mistransported by Roadway to
Norcross, VA. (R4 File, Tab H.)
Robb also claims he telephoned Liz on February 27th to
advise her that as soon as he received the samples from CDC
and confirmed the defects, he would send the samples to
Appellant together with a rejection letter. (R4 File, Tab
H.) Appellant, however, denies that the call took place on
the 27th. Instead, relying upon wording in Respondent's
rejection letter referring
to a "conversation on this date," Appellant's Edwards claims the
call took place on March 2nd, the date of the letter. The date is
apparently considered by the parties to be important to the
question of whether or not Appellant was given adequate time to
correct the defect after such option was chosen by Respondent.
The letter in pertinent part directed Appellant to correct
the "order at no additional cost to the Government by
reprinting the defective forms and delivering the entire
quantity to arrive at the original destination on or before
March 7, 1987." The letter also advised that "any defective
forms remaining at the destination upon delivery of the
reprinted/corrected forms will be destroyed unless you
direct us otherwise." Further, it requested a "written
explanation of this defect and the quality control measures
implemented to guard against future occurrence . . ." within
5 days of its receipt. A notation at the bottom of the
letter reflects "cc: Compliance Report." (R4 File, Tab I.)
Robb claims the letter was received by Appellant on March
3rd. Edwards claims it was received March 5th. (R4 File, Tab
S.) Respondent offers as its proof a U.S. Postal Service
"Express Mail" return receipt No. B04562702 for delivery of
an "Article" addressed to "Mid American Business Forms Rej.
Jacket 732-117 ATTN: Tom Edwards." The receipt was signed by
one Paula McCall with delivery date shown as March 3, 1987.
(R4 File, Tab W.) Appellant offers no proof of its claim.
Robb asserts that on March 6, 1987, following delivery of
the letter, he received a telephone call from Edwards
respecting whether CDC "would accept some forms at
discount." Edwards was told "No;" that the CDC was "very
picky [sic]"; and that, therefore, the ARPPO "must have (the
forms) reprinted." Edwards purportedly said he would check
with his production people and call back. (R4 File, Tab J.)
Edwards, in a note on a copy of Exhibit R4 File, Tab J
accompanying Appellant's Complaint, states: "My records show
this conversation on March 4th."
On March 11, 1987, the Contracting Officer thermofaxed a
letter to Respondent's Contract Review Board requesting
concurrence to terminate the contract for default. The
concurrence was granted that same day. (R4 File, Tab K.)
On March 12, 1987, the CO received a telephone call from
CDC's Charles Yancey advising that CDC "must have 2,000
copies of the requisitioned forms as soon as possible."
Yancey was asked if he could send a new requisition but
declined to do so on the basis that CDC had no use for
additional forms beyond the amount covered in the original
requisition. Yancey was then told by the CO that "[i]f forms
from Mid America come in please call me immediately." He
agreed. (R4 File, Tab L.) Later that day, the CO issued the
Notice of Termination (R4 File, Tab M) and a reprocurement
purchase order. (R4 File, Tab N.) The notice advised the
Appellant that effective that date its "right to proceed
with performance . . . [was] terminated pursuant to the
article entitled 'Default,' U.S. Government Printing Office
Contract Terms No. 1.," and that the product might be
reprocured
from another vendor against its account in which event the
Appellant would be held liable for any excess costs incurred. (R4
File, Tab M.) The referenced Contract Terms were incorporated
into the contract by reference thereto in the purchase order. (R4
File, Tab A.) The reprocurement was negotiated with "Foto Labs,"
7319 Graham Rd., Fairburn, GA 30213, in the amount of $1,837
with the contractor to receive Government furnished materials by
March 13, 1987, 2,000 sets to be shipped f.o.b. destination on or
before March 17, 1987, with "ship complete" date for the
remainder set at March 20, 1987. All other terms remained the
same as in the original contract. (R4 File, Tab N.)
Next, by letter of March 13, 1987, Yancey confirmed the
rejection, request for reprinting, and need for 2,000 copies
"at CDC no later than March 17, 1987." (R4 File, Tab O.)
On March 16, 1987, Edwards called the CO, advised that he
had received the default letter and demanded that it be
rescinded because he purportedly had shipped the entire job
on March 12, 1987. (R4 File, Tab P.) The CO then called
CDC's Yancey to ask if the forms had been received and was
told they had not been. The CO then asked Yancey if he could
wait a couple of days so that he could "T for C [terminate
for the convenience of the Government] on reprint in an
effort to prevent forms going to waste." Yancey reportedly
replied "[n]o can't take chance. Must have . . ." (R4 File,
Tab P), thus indicating an urgent need by CDC.
At this point, the CO allegedly gave this information to
Robb to check and on March 17 Robb reported back that he had
contacted Edwards and again told him that the contract was
in default and that CDC could not use the reprinted forms.
Later that same day, Yancey called the CO and advised that
the reprocured forms had arrived from Foto Labs and all were
in register. Again, Yancey was asked if he could use the
reprinted forms from Appellant. Yancey said "[n]o we will
not accept." (R4 File, Tab Q.) At this point the CO asked
Respondent's Paul Barlow whether the Government would have
to accept the reprinted forms if they were in fact shipped
on February 12th as claimed by Edwards, since the shipping
would have been commenced before Appellant received the CO's
Termination for Default notice. Barlow advised him that they
need not be accepted. (R4 File, Tab Q.)
On March 18th the CO received a letter from Edwards dated
March 16, 1987. The letter stated that it was in response to
the Notice of Termination dated March 12, 1987, and advised
that Appellant had "reprinted the whole job (16,000 sets)
and reshipped the forms 3-12-87." (R4 File, Tab R.) The CO
asked Robb to call Yancey who reportedly advised that "[a]
ttempted delivery was refused this a.m." i.e., March 18,
1987. (R4 File, Tab R.) Robb then called Appellant to talk
to "Edwards to inform him that we are standing by our
default action." Edwards wasn't there but Robb left a
message to have him return the call. The call was returned
later that day by one "Twila Edwards" who was informed of
the ARPPO's intentions. (R4 File, Tab S, sheet 1.)
On the morning of March 19, 1987, Edwards himself called
Robb. Robb then personally told him of the termination and
reprocurement. Edwards immediately asked for "the
reprocurement jacket opening date, etc." Robb was unable to
furnish the data at that time, so he advised Edwards he
would obtain it and call him back. When Robb called with the
information, Edwards allegedly asserted that at some earlier
point in time he had informed Robb of his intention to make
the reprint shipment which CDC subsequently refused to
accept. Robb denied the veracity of Edwards' statement and
told him so, but before Robb could refer to his notes
concerning the conversation, Edwards said "[y]ou better
check your files PAL cause you have a letter." He then
demanded to talk to Robb's supervisor. The call was thus
transferred to the CO. (R4 File, Tab S, sheet 4.)
During the ensuing conversation, Edwards demanded that the
CO check the ARPPO's records because they would purportedly
show that Appellant was not at fault, because "the contract
terms" required that "ten days be given to correct the
situation . . . and the time required to reprint was
unreasonable on Jacket 732-117 Aids Confidential Report."
Edwards reportedly went on to say: "Your people dropped the
ball on this one. Letter of rejection received on 3-5 dated
3-2 telling me to deliver in hand on 3-7-87. I didn't have
paper on the floor and if I did[,] was unreasonable to
expect delivery on 3-7." The CO allegedly then told Edwards
that "yes[,] I signed the letter that the March 7, 1987 date
was a [t]ypo and should have been March 9, 1987. Even
at that[,] no one from your company bothered to say that the date
couldn't be met. On March 6, 1987[,] you told D.R. [David Robb]
that you would check with your production people to determine
when replacement could be made and you would call back. You did
not call back." (R4 File, Tab S, sheet 5). The CO agreed to
review the records and advised Edwards of his decision by return
telephone call. (R4 File, Tab S, sheet 5.)
As part of the review, Price, the ARPPO Procurement
Assistant, contacted Roadway on March 19, 1987, to confirm
the information given to her by Liz on 2-18-87. Price's
report follows:
Spoke with Larry, told him that I needed to verify the date on
which the shipment was ORIGINALLY picked up by Roadway at K.
Gave Larry the pro #318427809 which was given to me on 2-18-87
by Liz of K. He told me to call Norcorss [sic] as they had
copies of all of their own paper work. Spoke with Walt at
Roadway in Norcorss [sic]. Walt said that 4 PIECES were picked
up in IL and delivered to Norcross, GA. on 2-17-87. 4 pieces
delivered on 2-20-87 to CDC Warehouse. A Fristray [sic] ["Free
Astray" shipping document] was issued for 15 ctns. on 2-27-87
for delivery on that date. Walt said it appeared that 15 cts
were separated from original shipment and the Fristray [sic]
was a supplimential [sic] shipment of the remaining cartons.
Del. receipts are aquired [sic] from Akron, Oh.
Abby, Roadway, Akron, OH said that job was picked up on
2-17-87. She will send complete delivery receipts with
information on the fristray.
R4 File, Tab Y.
The CO then telephonically consulted with Respondent's
Barlow. The notes of such conversation in pertinent part
states:
"Letter on rejection was received on 3-3 which K [contractor]
said he received 3-5. K agreed to 3-9 via telephone[,] therefore
it is my opinion that the delivery date was extended to 3-9." (R4
File, Tab S, sheet 6.)
Immediately after the call to Barlow, the CO called Edwards
and told him that having completed the review, he saw no
reason to reverse the decision. Edwards indicated he would
appeal. (R4 File, Tab S, sheet 7.) The CO then wrote to
Edwards advising him that the excess reprocurement costs
were $1,951.85 and that such amount must be immediately
reimbursed. (R4 File, Tab T, sheet 1.) He also wrote to
Respondent's Financial Management Office advising them of
the default and reprocurement under Jacket 733-021, Purchase
Order F3003 at a cost of $1,837. The latter communication
stated that of the sum to be recovered, $640.60 represented
reprocurement costs while $1,211.25 was the amount already
paid to Appellant on the original contract. (R4 File, Tab
U.)
Thereafter, the Appellant sent an appeal letter dated March
20, 1987, to the Public Printer. The letter was subsequently
forwarded to this Board where it was received and docketed
on March 30, 1987. The letter in pertinent part claims that:
The original shipment scheduled 2/12/87 shipped on time as the
copy of the signed Bill of Lading indicates.
On 3/3/87 we received a letter from Doug Faour dated 3/2/87
saying they had a registration problem with 3000 forms and had
not received the balance. (Letter
enclosed)
In a phone conversation on 3/2/87 we had traced the shipment
which had been received on 2/27/87 by the agency. Atlanta had
no knowledge of this fact until our office traced the forms
(see note and letter).
My position at this point was and stated to David Robb in
Atlanta, the contract was for + or - 10% and they had
indicated a problem with only 3000 forms out of 15,000 ordered
and 16,500 shipped, that we would accept a contract reduction
equal to the price of the 3000 bad forms.
The day we received the letter, I was told the entire shipment
was bad and that they needed a reprint per David Robb.
With no time to inspect the forms or even get paper in, I told
David Robb a 3/7/87 at destination was impossible and that I
would ship the job out 3/12/87, which we did (see letter). I
also informed him that our samples revealed good registration
(sample enclosed) and to check each box to use the original
forms until the new ones were received. Shipment refused
3/18/87!
On 3/16/87 we received a termination letter from Doug Faour. I
called Mr. Faour and told him the job shipped 3/12/87 and
should be delivered the 1st. part of the week. Asked how I
could have a contract termination without notice.
Doug said he would review the situation and get back to me. He
called 3/17 when I was out of town and told Twyla the
termination stands and that I had refused to reprint the job.
The forms were attempted to be delivered and refused on
3/18/87. We produced and shipped the entire order within 10
days without inspection or pick up of the originals or without
any knowledge of termination proceeding until the order was
well in transit.
I was told on 3/19/87 by David Robb, the order was reprocured
with a 3/12 opening date, with a partial of 2000 to be
delivered 3/17 and the balance delivered 3/20 on a new Jacket
# 733-021 yet refused our shipment.
I want this heard in front of the Appeal Board as soon as
possible with the Atlanta Office responsible for payment
of both shipments, the freight on the refused shipment, as well
as the airfare and lodging on the date the case is heard.
Official File, Tab 1.
The Board in turn notified Appellant and the Government of
the receipt and docketing of the appeal. The Government then
furnished its Rule 4 file to the Board and Appellant.
Subsequently, Edwards, by letter of April 29, 1987,
responded to both communications by furnishing the Board
another copy of the Complaint together with rebuttal
documentation to Respondent's Rule 4 file.
Appellant's documentation includes Edwards' handwritten
notations which he has made upon certain photocopies of
Respondent's Rule 4 documents which purport to show the
documents to be "extremely contradictory." (Edwards'
transmittal letter dated April 29, 1987.) Among these
documents are Robb's notes of his 3/19 conversation with
Edwards, supra, upon which Edwards has encircled the date,
and underscored and placed in parentheticals Robb's notation
that Edwards had not told him that he was going to ship the
reprint as Edwards alleged. Edwards had also encircled the
words "a letter" following Edwards' retort, "[y]ou better
check your files PAL."
Additionally, Edwards requested supplementation of the Rule
4 File with a letter he purportedly sent to Robb on March 4,
1987. The letter in pertinent part states:
Our samples indicate no registration problem so they all can
not [sic] be bad. As we discussed by phone yesterday, use the
forms there until the new shipment arrives the week of the
15th of March. I have enclosed samples of the job showing good
registration.
We will ship the new forms by 3-12-87 and would like the
opportunity to pick-up and inspect all the forms presently at
the locations.
As we discussed I am not in favor of reprinting a job before
an onsight [sic] or Plant inspcetion [sic] so please let me
know if I can get reimbursed for the forms we pick-up after
the delvery [sic] of the new ones.
R4 File, Appellant's Exhibit App. F.
Edwards' other documentation and notes include:
(1) Printed "Bill of Lading Acknowledgement Memorandum" form
reflecting shipment of 1 pallet and 3 ctns, weighing 789 lbs. on
February 12th by Roadway;
(2) a preprinted form captioned "Governmental Communication
Sheet" initialed "P.M." reflecting a purported telephone
conversation with Respondent's Price on February 18, 1987,
wherein Price was advised that the order was shipped on February
12, 1987, through Roadway, Pro No. 318427809;
(3) another Governmental Communication Sheet reflecting a claimed
telephone conversation on March 2, 1987, wherein "P.M."
purportedly advised Robb that "P.M." had "talked to George Lions
(Roadway)" and that he advised that 15 cartons were delivered on
February 27th signed for by Ronnie Adams. At that time, Robb
allegedly said that the forms were 1/16" out of register and that
he would send Appellant the "bad forms as soon as he checks the
rest of the shipment.";
(4) a copy of the CO's rejection letter of March 2, 1987, with
handwritten notation "Received 3/3/87." The letter has
underscored the words "has not been received as of this date"
respecting a reference to the "balance of the order" and "within
5 days after receipt of this notice." respecting a reference to a
demand for a written explanation from Appellant of defects and
quality control measures implemented to prevent recurrence. The
date March 7, 1987, is circled respecting the date by which
delivery of reprinted forms was mandated;
(5) a copy of Roadway Express, Inc. delivery receipt from one
Barbara Cover of Roadway's Customer Service Department by
transmittal dated March 6, 1986. The delivery receipt reflects
the date February 17, 1987, in the upper left hand corner with a
signed delivery certification by one Willie F. Browne dated
February 20, 1987 reflecting delivery of 4 pcs. to the CDC
Atlanta warehouse on that date;
(6) two unsigned handwritten notes reflecting (a) a purported
conversation with one George Loin phone number 404-449-5020 who
advised that "pro for the job is 318 427 809" and that Appellant
"should be receiving some bad forms in mail."; and (b) a
purported conversation with David Robb wherein Robb was advised
that the order was shipped on December 12th. Robb reportedly said
that the forms were out of register and that only 4 cartons were
received. The caller purportedly told Robb that the other 15
cartons had been located in a warehouse, and that they would
deliver them quickly;
(7) a printed "Bill of Lading Acknowledgement Memorandum" form
reflecting delivery of reprint to a carrier identified as C.W.
The form is marked "Hot Tail Gate Rush." and is signed for by one
"S. Kelly" on March 12, 1987, but bears additional notations
"Delivery 3/17/87" and "Ed Rich notify [sic] of [d]elivery 8:15
AM TE.";
(8) a C.W. Transport, Inc. "General Office Delivery" receipt with
a bill date of March 12, 1987, reflecting refused delivery of "l
plt and 3 ctns" by the CDC Warehouse on March 18, 1987, l0 a.m.;
(9) a copy of the CO's March 12th Notice of Termination marked
"Recieved [sic] 3/16/87";
(10) a letter of March 16, 1987, addressed to the CO reflecting
that it is in response to the Notice of Termination and stating
that "[w]e reprinted the whole job (16,500 sets) and reshipped
the forms on 3-12-87. Please update your files.";
(11) a copy of the CO's letter dated March 19, 1987, with
handwritten notation "[r]ec'd 3/23/87" and "[t]his letter typed
one day after the shipment was refused!";
(12) a letter from the CO dated April 20, 1987, referencing the
March 19th letter and correcting the amount due the Government to
be $1,951.85 of which $645.60 were reprocurement costs and
$1,311.25 was the amount paid Appellant on original printing;
(13) a copy of the ordered forms purportedly from both the
original and 2nd printings showing acceptable registration for
each;
(14) a copy of Respondent's Rule 4 file with:
(a) Notation on Robbs' 3/6 Notes reflecting Edwards' comments,
supra;
(b) notation on the CO's telephone Notes of 3/12/87 reflecting
the comment "[t]hey knew the forms shipped per letter dated
3/4/87.";
(c) a copy of the CO's telephone notes of 3/17 with the phrases
"[n]o we will not accept - CY to dmf" and "T and D notice"
circled; and
(d) a copy of the CO's telephone Notes of 3/19/87 with
contractor "agreed to 3-9 via telephone" and "no later than
3-17" circled with notation "[w]hy didn't they tell me this? I
would have airmailed."
No other relevant documentation was provided the Board.
Pursuant to agreement by the parties, a prehearing telephone
conference was held on November 9, 1987, at which time
Margaret Baskette, counsel for the Government, objected to
Appellant's April 29, 1987, letter, requesting
supplementation of the Rule 4 file, supra, at 12, on the
grounds that the March 4th letter sought by Edwards to be
included in the file had never been received by anyone in
GPO's Atlanta office. Baskette stated that she was prepared
to prove such nonreceipt by oral testimony upon the
convening of a hearing. At that point Edwards was asked if
he had sent the letter by certified mail. He stated that he
could not recall but agreed to check this matter with his
office
staff and to furnish the certified mail receipt to the Board, if
available. Edwards then asserted that the CO's notation of March
12, 1987, supra, at 14, was proof that the CO had received his
March 4th letter before terminating the contract and entering
into the reprocurement of the product from another vendor.
Baskette immediately objected to this reiterating Respondent's
position that the letter had never been received. After brief
discussion, it was clear that this was a factual question to be
determined by the Board.
Baskette then requested that the Rule 4 file be
supplemented with 4 exhibits labeled W - Z. Exhibit W is a
copy of a return receipt from Appellant dated March 3, 1987.
Exhibit X is a GPO memo concerning the shipment of forms by
Appellant. Exhibit Y is a GPO memo dated March 19, 1987,
concerning Roadway's delivery of MA's shipment. Exhibit Z is
a GPO memo dated November 9, 1987, concerning the
termination for default. Baskette advised that she had
furnished copies of the exhibits to Edwards by mail. Edwards
did not object, although he indicated that he had not yet
received them.
The remainder of the conference was devoted to the parties
outlining their arguments. Concensus was reached that the
dispute centered on factual questions to be resolved by the
Board from the record without further hearing and from
briefs to be filed by each party before settlement of the
record.
Appellant's & Respondent's brief was received by the Board
on December 15, 1987. The record was thus settled on that
date.
The case comes to the Board in this form for decision.
Discussion
The first issue which must be addressed is whether or not
the CO properly rejected the original printing. To answer
this question, we must examine the facts in the light of the
contract between the parties and controlling case law. As
noted above, the contract expressly provided that "[a]ll
parts must register." It also provided that "U.S. GPO
Contract Terms No. 1 (GPO Pub. 310.2) in effect on date of
this order, applies." Turning to such provisions we find the
following pertinent requirements.
2-10. Quality. Where printing is involved, careful imposition;
competent makeready; careful press running; clear, sharp
printing, careful binding, and good quality in every respect are
required. These requirements are an essential part of the
contract. The requirements indicated in the specifications
represent the minimum acceptable for all printing, binding, and
related services specified under the contract.
2-12. Inspection and Tests
(a) All supplies (which term, throughout this article, includes
without limitation, raw materials, components, intermediate
assemblies, and end products) shall be subject to inspection
and test by the Government, to the extent practicable at all
times and places including the period of manufacture, and in
any event prior to acceptance.
(b) In case any supplies or lots of supplies are defective in
materials or manufacture or otherwise not in conformity with
the requirements of the contract, the GPO shall have the right
either to reject them (with or without instructions as to their
disposition) or to require their correction. Supplies or lots
of supplies which have been rejected or required to be
corrected shall be removed--or corrected in place if permitted
or
required by the Contracting Officer--by and at the expense of the
contractor promptly after notice, and shall not thereafter be
tendered for acceptance unless the former rejection or
requirement of correction is disclosed. If the contractor fails
to promptly remove such supplies or lots of supplies which are
required to be removed, or to promptly replace or correct such
supplies or lots of supplies, the GPO either (i) may by contract
or otherwise replace or correct such supplies and charge to the
contractor the cost occasioned the Government thereby, or (ii)
may terminate the contract for default as provided in the article
entitled "default" of these contract terms. Unless the contractor
corrects or replaces such supplies within the established
delivery schedule, the Contracting Officer may require the
delivery of such supplies at a reduction in price which is
equitable under the circumstances. Failure to agree to such
reduction of price shall be a dispute concerning a question of
fact within the meaning of the article entitled "Disputes" of
these contract terms.
Taken together, these provisions give the Government the
unilateral right to inspect and test product samples and to
make concomitant judgments concerning whether the product is
of "good quality in every respect" and meets the specific
requirements of the specification that "[a]ll parts must
register." They also give the Government the right to reject
products which it deems to be defective or to order their
prompt correction and, if such correction is to be beyond
the time of the original contract, to impose a price
reduction if the Government so desires.
Article 2-12 is for all intents and purposes, the standard
inspection clause found in most Government contracts. Such
clauses are premised on the fundamental rule that the
Government is entitled to strictly enforce compliance with
its specifications. S.S. Silberblatt, Inc. v. United States,
433 F.2d 1314 (Ct.Cl. 1970). However, as pointed out by
Respondent
in its brief, the Government in doing so bears the initial
"burden of persuasion" for establishing that the work it rejects
does not meet the specifications. Fillip Metal Cabinet Company,
GSBCA No. 7695, 87-2 BCA ¶ 19,822 (1987); Hardeman-Monier-
Hutcherson, ASBCA 11785, 67-1 BCA ¶ 6,210 (1967); Ramar Co.,
ASBCA 16060, 72-2 BCA ¶ 9,644 (1972); Pams Products, Inc., ASBCA
15847, 72-1 BCA ¶ 9,401 (1972). Most frequently the Government
meets this burden by providing the results of tests it has
conducted thus shifting the burden to the contractor to then show
by a preponderance of the evidence that the results of such test
were invalid. Universal Steel Stripping Co., ASBCA No. 13686,
69-2 BCA ¶ 7,799 (1969); C.W. Roen Construction Co., DOTCAB
75-43, 76-2 BCA ¶ 12,215 (1976); Continental Chemical Corp.,
GSBCA 4483, 76-2 BCA ¶ 11,948 (1976).
It is the Board's considered opinion that Respondent fairly
met its burden by documenting that a random sample of the
initial partial shipment was found by both the ordering
agency and itself to be out of register, thus shifting the
burden to Appellant to disprove these findings. An
examination of the record fails to disclose any probative
evidence which would support a conclusion that Appellant has
carried this burden. In fact, other than claim that its own
retained sample is in register, Appellant offers no proof of
any sort whatsoever to disprove Respondent's findings.
Rather, Appellant relies solely upon its argument that even
if all 3,000 form sets in the initial partial shipment were
defective, there were still adequate quantities of form sets
in the remainder of the first shipment to meet the
contract's
quantity requirements given the stated quantity variants. The
Board believes such argument to beg the question, since the
contract by its terms required all forms shipped by Appellant to
be in register, notwithstanding their number. Accordingly, the
Board will not disturb the CO's decision respecting rejection and
reprinting.
Turning to the second issue of whether the agency's
rejection of the delivery of the reprinted order was proper,
we note at the outset that on March 2, 1987, the date upon
which the CO issued his original rejection letter, the
contractual "ship complete" date of February 12, 1987, had
already passed. In such case, Article 2-12(b) of GPO
Publication 310.2, supra, gave Respondent the right to
require "prompt replacement." Under this contractually
incorporated provision, Respondent had an implied right to
unilaterally set the terms of the replacement schedule, so
long as it gave Appellant a reasonable period of time to
perform the corrective work without regard to the original
contract schedule. Consolidated Machine Corp., ASBCA 7028,
1962 BCA ¶ 3,291 (1962); Trio-Tech Inc., VACAB 598, 68-1 BCA
¶ 6,828 (1968); Baifield Industries, Div. of A-T-O, Inc.,
ASBCA 14582, 72-2 BCA ¶ 9,676 (1972).
Looking to the record in this regard, the Board finds that
the CO's March 2nd letter did not give Appellant a
reasonable time for performance, since the letter was not
received by the Appellant at its plant in Elgin, IL until
March 3rd but directed completed delivery of the reprinted
product in Atlanta, GA no
later than Friday, March 7th. Such abbreviated schedule, while
making clear that time was of the essence, gave no consideration
to any logistical problems which Appellant might reasonably incur
respecting the acquisition of necessary paper and materials, or
in the arrangement of appropriate transportation. Furthermore,
Respondent's claim that it intended the delivery date to be no
later than March 9th does nothing to alter this conclusion, since
the record shows that Respondent's intentions were not
communicated to Appellant until after Edwards' telephone
conversation with Robb.
Be this as it may, the Board nevertheless believes
Respondent's rejection of the reprinted order to be proper,
since Appellant, by its own admission, did not take its
action upon the force of the CO's letter but rather upon the
alleged oral agreement with Robb. Given that such agreement
is disputed, the burden falls clearly upon Appellant to
prove his contentions by substantial evidence. In this
regard, Appellant has undoubtedly failed, since it offers as
its proof only the mere allegation of Edwards coupled with
Edwards' letter purporting to memorialize the agreement,
without any evidence whatsoever that the letter was ever
mailed, let alone received or agreed to by Respondent. Such
proferred "evidence" has no probative value in support of
Appellant's claim. It is, therefore, this Boards' finding
that when Appellant reprinted the product and attempted
delivery on
March 18th, it did so under its own initiative and at its own
risk.
Accordingly, the appeal is denied in its entirety and the
decision of the Contracting Officer is affirmed.
It is so ordered.