U.S. Government Printing Office
Board of Contract Appeals
The Appeals of STABBE SENTER PRESS
Docket Nos. GPO BCA 13-85 & 19-85
May 12, 1989
MICHAEL F. DiMARIO
Administrative Law Judge
OPINION
These consolidated appeals timely filed by Stabbe Senter Press,
94 Wheatley Road, Old Westbury, NY 11568 (hereinafter
"Appellant"), are from the June 13, 1985 and September 13, 1985,
final decision letters of Jack G. Marken, Contracting Officer,
U.S. Government Printing Office, Washington, DC 20401
(hereinafter "Respondent/GPO"). The first letter (Rule 4 File,
hereinafter "R4 File," Tab LL, GPO BCA 13-85) advised Appellant
that the Navy Department portion of GPO contract Purchase Order
50228, Jacket 445-793, dated July 16, 1984, was being terminated
for default because of Appellant's "failure to perform under the
provisions of the contract, . . ., within the time specified, . .
. [or] in conformance with the provisions of the Quality
Assurance Through Attributes Program (QATAP)." The second letter
(Id. at Tab R-18, GPO BCA 19-85) advised Appellant that the Air
Force and Superintendent of Documents (GPO sales copies) portions
of the said contract were being terminated for default for
failure to conform to provisions of the QATAP finishing
attributes F-12 & F-16 within the time specified.
The decisions of the Contracting Officer are affirmed for the
reasons set forth hereinbelow.
BACKGROUND
Respondent, by Purchase Order 50228, Jacket No. 445-793, dated
July 16, 1984, awarded Appellant a contract in the amount of
$277,900 for the production and delivery of 40,819 sets, plus one
complete set of film negatives of a certain publication titled
"Ch 1 to Armed Forces Recipe Service - NAVSUP Pub 7 / Army TM
10-412 / Air Force 146-12 / Marine Corps NAVMC 2778" but more
usually referred to as "recipe cards." The contract was made upon
primary requisition of the Department of the Navy (10,000 sets),
and secondary requisitions of the Marine Corps (625 sets), Army
(26,400 sets), Air Force (2,300 sets), and the Superintendent of
Documents, GPO (177 Depository, 1,300 sales, and 17 file sets).
Each such set was to be comprised of 436 cards (17,797,084 total
cards) which were to be produced in varying specified colors and
paper stock in accordance with the specifications; some to be
printed face and back, others one side only. The cards were to
be in ring folio format (numbered face and back, 1 through 872),
gathered in sequence, and shrink-film wrapped in units of 1 set.
(Id. at Tab B, GPO BCA 13-85.)
The contract was "subject to all terms and conditions of U.S.
Government Printing Office Contract Terms No. 1, Rev. Oct. 1980
(GPO Pub. 310.2) and Quality Assurance Through Attributes
Program, Rev. June 1981 (GPO Pub. 310.1)," as well as being made
in strict accordance with the terms in the Invitation for Bids
(hereinafter "IFB") specifications with the IFB/specifications to
govern in the case of conflicting terms.
Minimally, the delivered final product was to meet the following
"Quality Assurance Levels And Standards":
Product Quality Levels:
(a) Printing Attributes -- Level III.
(b) Finishing Attributes -- Level III.
Inspection Levels (from MIL-STD-105):
(a) Non-destructive Tests - General Inspection
Level I.
(b) Destructive Tests - Special Inspection
Level S-2.
Specified Standards: The specified standards for the attributes
requiring them shall be:
Attribute
Specified Standard
P-7. Type Quality and Uniformity Camera Copy
P-10 Process Color Match Furnished
Photoprints
Id. at Tab B, page 3 of 5, GPO BCA 13-85.
Inspection or Quality Assurance samples were to be furnished as
directed by GPO. Shipping was to be F.O.B. destination to
various locales by August 14, 1984, which date was adjusted to
August 20, 1984, due to late receipt of copy by Appellant.
On August 25, 1984, Respondent, by way of an "exception report"
was made aware that the product had not yet been shipped by
Appellant. Upon inquiry, Appellant's Stewart Senter advised that
his firm's premises had been burglarized over the weekend causing
damage to his equipment and to the product. A notation on the
exception report documenting Mr. Senter's claim states that the
job was overdue before the burglary took place.
As a consequence of this delinquency, a "show cause" notice was
sent by telegram on August 30, 1984, notifying Appellant "that
since [it had] failed to perform the scheduled requirements of
[the contract] . . ., in accordance with the terms thereof, the
Government [was] considering terminating . . . pursuant to the
Article entitled, 'Default,' United States Government Printing
Office Contract Terms No. 1." (Id. at Tab E, sheet 1, GPO BCA
13-85.) The notice further requested that the Appellant present
to the Contracting Officer in writing any facts bearing on the
question within 5 days after receipt of the notice. It also
invited Appellant's attention to the "rights of the contractor
and the Government under Contract Terms No. 1 and the liabilities
that may be incurred if [the] contract [were to be] terminated
for default." (Id. at Tab E, sheet 1, GPO BCA 13-85.)
By letter dated September 5, 1984, Senter, on behalf of
Appellant, wrote to the Contracting Officer advising him, among
other things, that a supplier's late delivery of paper for
another GPO contract (Jacket 445-330) had caused Appellant to be
late on the recipe cards since the same equipment was being used
for both jobs and the equipment was thus "tied up." In addition,
Senter described the results of the burglary which took place on
the weekend of August 25th and the resultant necessity to
reconstruct and repair the plant during the week of August 27th.
He also alleged that "[s]everal skids of the Recipe job, in the
process of being collated, had to be reprinted." (Id. at Tab F,
sheet 1, GPO BCA 13-85.) Senter requested an unspecified
extension of time due to the extenuating circumstances described.
By letter of September 10, 1984, Respondent's L. E. McHugh,
Contracting Officer, Contract Compliance Section, advised Senter
that "Contract Terms No. 1, Article 2-11 and 2-21, . . . ,
defines the conditions under which extensions of schedules may be
authorized. The fact that your paper supplier did not meet their
commitment is not a basis upon which an extension of the shipping
schedule can be allowed." (Id. at Tab G, GPO BCA 13-85.)
On September 13, 1984, Respondent's Contract Compliance Section
generated another "exception report" for failure to ship on time.
(The report reflected the previously adjusted shipping date of
August 20, 1984, and a so-called "promised" shipping date of
September 13, 1984.) At that time Respondent's Contract
Compliance Section again recommended corrective action.
Appellant was also contacted to find out when he would be able to
ship. As a result, a new "promised" date of September 21, 1984,
was given by Senter. (Id. at Tab H, GPO BCA 13-85.)
While some products shipped on September 21st, complete shipment
did not occur. Thus, on October 1 1984, Respondent's
representative telephonically discussed the matter with Senter
who advised that the balance would be shipped October 3, 1984.
(Id. at Tab J, GPO BCA 13-85.)
On October 3rd Senter telephonically advised the Contracting
Officer that 12 skids were being sent to a local bindery and
would be "complete by Fri. night [10/10/84] for sure." Based upon
that information, the Contracting Officer again directed that a
"show cause" notice be issued to Appellant. (Id. at Tab K, GPO
BCA 13-85.) Accordingly, a second telegraphic "show cause" notice
was sent to Appellant on October 3, 1984, again advising that the
Government was considering default and requesting Appellant to
respond in writing with any new facts bearing on the question
within 5 days after receipt of the notice. (Id. at Tab I, GPO
BCA 13-85.)
The product was apparently completed and shipped thereafter,
since the R4 File next contains a letter of October 12, 1984,
from F.L. Clark, Director, Command Publications Division, Naval
Supply Systems Command, to the head of the Procurement
Department, Defense Printing Service (hereinafter "DPS"),
advising that the recipe cards as received from the contractor
were not acceptable because of the following errors:
a. Inferior shrink wrapping of individual sets which promotes:
(1) Loss of pages while distribution is being made, and
(2) Inability to stock complete sets in warehouses of the stock
points without separation.
b. Image position halfway off card of Recipe No. D.60(1) in
several sets,
c. Fading/Smearing of ink and image rub off on Recipe Cards D.G.
7-5(2), E.9, and I.4,
d. All recipe cards in "H" sections were collated incorrectly,
e. Reverse pages of Recipe Cards J.29 and K.18 were printed head
to head vice head to foot as requested by the specifications,
f. Reverse page of No. K.18 should be blank, but the contractor
has incorrectly printed the reverse page of No. K.O on the back
of K.18,
g. Reverse page of No. K.9 was incorrectly printed with the
reverse page of No. K.O,
h. The colors of sections J, K, and L are mismatched, indicating
a printing delay for remixing, supplying of ink, and
i. Recipe card No. P.14 has reverse page of No. R16 incorrectly
printed on it, and No. P.16 has the reverse page of P.14
incorrectly printed on it.
j. Thirteen to 35 missing cards were found in enclosure (2). .
. . .
k. Duplicated cards of enclosure (2) are indicated below: . . .
. [List of duplicated cards omitted because of length.]
Id. at Tab L, GPO BCA 13-85.
Clark went on to say:
3. Subject publication is not acceptable as is, therefore, Navy
has notified the other services and prohibited distribution of
copies. It is requested that the contractor correct, reprint and
distribute the entire publication free of charge. The original
camera ready copy supplied to the contractor was properly
folioed, and running sheets and complete specifications were also
included in the package. The contractor did not follow
instructions and the printing is inaccurate.
Id. at Tab L, GPO BCA 13-85.
Clark's letter was apparently sent to the Respondent by the head
of the Procurement Department, DPS, and received October 16,
1984. The following day, October 17th, Respondent received a
Notice of Quality Defects from DPS. Attached to the notice was
another memorandum dated October 31, 1984, from Clark, which
furnished camera copy, negatives, and 20 random samples of
printed publications. The memorandum indicated that:
Ninety pages of the Camera Copy were not returned by the
contractor (Stabbe-Senter Press, Inc.). The missing camera-oopy
pages are represented in restructuring the entire pub by actual
cards printed by the contractor. Clearly, the contractor
initially used the now missing camera-copy pages and still
possess them.
Id. at Tab M-l, GPO BCA 19-85.
The Notice of Quality Defects states: "[q]uality does not meet
specifications; however, the material can be utilized. It is
requested that appropriate action be taken to prevent
recurrence." (Id. at Tab M, GPO BCA 13-85.)
The R4 File also contains an undated letter from the Commanding
General, Marine Corps Logistics Base, Albany, GA, addressed to
Respondent's Central Office, Printing Procurement Division. The
letter requests the reprinting of Chapter 1 to NAVMC 2778, which
is the Marine Corps designation for the recipe cards as cited
above. Enclosure 1 to that letter is entitled "List of Pages
Missing and Printed in Error From Corrected Copy (2nd Attempt by
Stabbe-Senter Press)." (Id. at Tab M-l, sheet 3.)
The R4 File further contains an inspection report by Norman
Campbell dated November 19, 1984 (using Plan L, lot size
17,797,084, sample size 20), stating that a Navy product sample
had been inspected and had received the following ratings:
Defect Breakdown by Attributes Defect Class
Major Critical
F-12 (Missing Pages)
20
F-16 (wrong pagination)
20
P-9 (solid color match) 20
P-7 (type quality) 20
(Dup pages) 20
TOTALS 60
40
The report is marked "reject and reprint." (Id. at Tab N, GPO
BCA 13-85.)
References F-12 etc., and Defect Class etc., are to the Quality
Assurance Through Attributes Program (QATAP). The QATAP in
pertinent part provides:
1-3. Critical Defect - A critical defect is a serious deviation
from specifications. Critical defects are designated in the
tolerance tables for finishing attributes and the paper
attribute.
1-4. Major Defect - A major defect is a deviation from
specifications which is less serious than a critical defect.
Major defects are designated in the tolerance tables for printing
attributes, finishing attributes, and the paper attribute.
. . . .
1-6. Acceptable Quality Levels (AQL's) - The AQL's are the
maximum number of defects per 100 copies that the Government will
accept at the contract price. Unless otherwise specified, the
AQL's are 1.0 critical defects and 6.5 for total defects.
. . . .
2. DETERMINATION OF PRODUCT QUALITY
a. QATAP establishes attributes for quality and it defines
tolerances for those attributes for five quality levels of
printing. When attributes deviate from the allowable tolerances,
the deviations will be classified as either major or critical
defects pursuant to the applicable tolerance table.
b. Attributes which are not identified as quality attributes
under QATAP (e.g., stitching position) will be evaluated in
accordance with the article entitled "Quality" in U.S.
Government Printing Office Contract Terms No. 1.
3. DETERMINING ACCEPTABILITY - Because inspection of all copies
of a publication is usually impractical, the Government will
utilize statistical sampling to determine quality. When the
Government determines that both the number of critical defects
and the number of total defects in the lot or batch do not exceed
their respective AQL's, the lot or batch will be accepted at the
contract price. MIL-STD-105D will be used to make this
determination.
If the defects exceed either or both AQL's, the Government will
have the option of having the lot or batch replaced, having the
defects corrected, or accepting the lot or batch with an
equitable reduction in the contract price. The discount tables
contained in Appendices A & B will be used as a guide by the
Contracting Officer to determine reductions. 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
Contract Terms No. 1. In all cases it is the intent of the
Government that the products meet the quality required in the
specifications.
Thereafter, by letter dated November 24, 1984, Respondent's
Darwin Hughes, Chief, Contract Compliance Section, advised
Appellant that:
An examination of samples of the product your firm produced for
the Department of the Navy has revealed defects under the
following attributes:
P-9: Solid Color Match on Cards J, K, and L. F-12: Missing
Pages
F-16: Wrong Pagination
Based on the results of this inspection, the order has been
determined rejectable, and will require reprinting. The
reprinting will be accomplished at no additional cost to the
Government in strict accordance with the specifications.
As agreed, the rejected copies at the Naval Publications and Form
Center in Philadelphia will be picked up on November 26, 1984,
and the copies at the Commander, Naval Supply Systems will be
mailed back.
As mutually agreed upon in our telephone conversation of November
21, 1984, the reprinting and delivery of this product will be
accomplished by December 12, 1984.
Id. at Tab P, GPO BCA 13-85.
While this action was pending on the Navy product, Campbell
completed inspection reports on Army and Marine Corps product
samples. The Army report dated December 3, 1984 (using Plan L,
lot size 17, 797,084, sample size 20), reflects the following
ratings:
Defect Breakdown by Attributes Defect Class
Major Critical
P-9 Solid Color Match on Cards 20
J, K, & L
F-12 Missing Pages
20
F-16 Wrong Pagination
20
Dup pages
TOTALS 20
40
The report is marked "reject and reprint." (Id. at Tab R, GPO
BCA 13-85.)
The Marine Corps report dated December 12, 1984, reflects:
Defect Breakdown by Attributes Defect Class
Major Critical
(P-7 Type Quality & Uniformity) 20
F-12 Missing Pages
20
P-9 Solid Color Match 20
F-16 Wrong Pagination 20
Dup Pages 20
TOTALS 60
40
The report was also marked "reject and reprint." (Id. at Tab S,
GPO BCA 13-85.)
At this juncture, Appellant attempted correction of the Navy
publications which had been shipped to the Navy's Philadelphia
facility. However, by letter of February 13, 1985, to the DPS,
one V. J. Montgomery advised that the corrected copies of the
Navy products remained in error because pages were still missing
and errors were found in the corrected copies.
At the same time, the Army, upon being informed of the Navy's
continuing problems, decided that since the product it received
appeared to need correction of only 8 cards, such could be
achieved by shipping a packet of corrected cards as an attachment
to each set. The GPO was in agreement with this decision and
authorized Army to contact Appellant directly to discuss the
matter. Appellant's Senter was contacted on February 19, 1985,
but was reluctant to agree to the Army's plan because he did not
believe the Army's inspection of the product was accurate. He
did agree, however, to go to St. Louis to see for himself. His
visit was made on March 4, 1985, following a visit to the Navy's
Philadelphia facility on March lst. Upon verifying the Army's
inspection result, Senter made arrangements for the pick up and
correction of the product which, at a subsequent date several
weeks later, was received, inspected, and accepted by the Army.
(Id. at Tab VV, GPO BCA 13-85. Attachment 1 to letter of John A.
Beida, Printing Specialist, U.S. Army Publications Center, St.
Louis, MO.)
By memorandum of March 7, 1985, one L.J. Simon advised DPS that
the conference between the Naval Publications and Forms Center
personnel and Appellant's representatives held in Philadelphia on
March 1, 1985, compiled a list of errors found in 10 sets of
recipe cards submitted to the Navy for its review. The letter
went on to state:
2. Because of the extensive errors found in each of the sets, it
is requested that GPO complaint (Form 1815) dated 13 Feb 1985 be
voided and replaced by this memo and accompanying enclosures.
Based on the results of the review, it is evident that each set
printed and collated by the contractor is not suitable for use
within the Armed Forces Dining Facilities of the Department of
Defense (Navy, Army, Air Force, and Marine Corps). Publication
shipments, supposedly corrected by the. contractor, should be
removed from all warehouses immediately, as they cannot
officially be released for distribution. All publications
received by the Naval Publications and Forms Center are available
for pick-up [sic] by the contractor as soon as possible. If
Stabbe-Center Press has made shipments to any of the warehouses
of the other services, it is requested that these shipments be
picked up also.
3. It is further requested that the original specifications and
folio listings initially submitted to Stabbe-Center Press be used
in correctly reprinting the entire publication. If the above can
be accomplished by the Contractor, subject publication can be
officially accepted by all services.
Id. at Tab U, GPO BCA 13-85.
On March 13, 1985, Appellant's Senter wrote to Respondent's
Hughes referencing the March lst meeting. Senter stated that
"[o]n that day we random sampled 2 sets of recipe cards and found
none of the defects as previously noted." Senter further stated
that he was desirous of resolving the problem. He proposed the
following:
The envelope will contain an index of each card with instructions
that as they place the card in it's [sic] respective location in
the master set to check off each one.
If any card is missing or in any way defective, the person
working with the set can check off on a postal reply card and our
company will provide that card or cards directly at our expense.
Id. at Tab V, GPO BCA 13-85.
On March 22, 1985, Clark, having apparently received Senter's
proposal through Respondent, submitted the proposal for
consideration and approval or disapproval of the Army, Navy, Air
Force, and Marine Corps. (Id. at Tab W, sheet 4, GPO BCA 13-85.)
Thereafter, by memorandum of March 27, 1985, Clark advised DPS
that Senter's proposal was unacceptable to the Navy or other
services and requested that the job be redone or reworked fro|m
the original specifications. (Id. at Tab W, GPO BCA 13-85.)
On April 11, 1985, a series of telephone conversations took place
between GPO's Contract Compliance representatives and Appellant's
representatives concerning setting up inspection schedules which
apparently had been asked for previously and were due by April
10, 1985. As a result of those conversations and the
difficulties encountered concerning printing quality, Contract
Compliance advised the contractor's representatives that it would
again recommend the issuance of a "show cause" notice. An on-
site inspection date was discussed for April 18, 1985, with an
anticipated shipping date established for April 29, 1985. (Id.
at Tab X, GPO BCA 13-85.) However, because of concerns over
reprinting an errata sheet, no dates were agreed to at that time.
Subsequently, in a telephone conversation of April 15, 1985,
Senter agreed to a contract modification. 1/ (Tab Z, GPO BCA
13-85.) The modification No. 0802 issued that same date in
pertinent part states:
We will withhold default proceedings provided you: (1) Pick up
(as necessary) and correct the quality defects and also (2)
Redeliver, in it's [sic] entirety, an acceptable product on or
before May 15, 1985.
The government will provide an inspector for quality compliance
in three (3) instances: at one forth [sic]; at one-half and
before completion.
The contractor must notify the GPO of the date and time to
request each of these inspections.
(Id. at Tab AA, GPO BCA 13-85.)
Despite the modification, Appellant was apparently still remiss
in its dealings with Respondent since a third telegraphic "cure
notice" was sent to Appellant on May 9, 1985, for "failure to
notify the Government of time for inspection for quality
compliance . . . a condition that is endangering performance of
the contract in accordance with its terms." (Id. at Tab CC, GPO
BCA 13-85.) Appellant was again given 5 days to respond.
On May 14, 1985, a quality assurance inspection conducted by
Norman Campbell and Gary Lauffer was held at Hand Assembly &
Packing, Inc., the Appellant's subcontractor's plant. The
product was again found to be unacceptable. The contractor was
contacted and agreed to make corrections by May 15th so that his
product could be reinspected for shipment on that date. (Id. at
Tab CC & DD, GPO BCA 13-85.) This was apparently done since the
product was shipped on that date. However, on May 31, 1985, the
DPS again rejected the order as redelivered due to uncorrected
defects. (Id. at Tab GG, GPO BCA 13-85.)
In response to the DPS rejections, GPO contract Compliance
Inspectors Gary Lauffer and Norman Campbell conducted a "formal
acceptance sampling. on June 4, 1985. However, because of the
number of defects found, the inspection was stopped before
completion, the inspectors having concluded "that the correction
was not thorough" enough given the number of critical defects
(20) they found in 3 sets of cards. (Id. at Tab II, GPO BCA
13-85.)
While action was pending on the Navy rejection of its portion of
the product, it was determined that the Marine Corps' copies of
the.publication had been distributed and accepted as delivered.
It was also determined by the GPO that it would not be necessary
to correct "File" or "Depository" copies for the Superintendent
of Documents. (Id. at Tab JJ, page 2, GPO BCA 13-85.) However,
Air Force and Superintendent of Documents' sales copies would
have to be corrected. This information was apparently conveyed
to Senter by telephone conversation on June 3, 1985, and
confirmed by issuance of Contract Modification 0955 on June 4,
1985. The modification in pertinent part stated:
We will withhold default proceedings provided you: (1) Pick up
and correct the quality defects on the 1300 sets marked "Sales
Copies, Req. 4-02852" from Laurel, MD, also the 2300 sets marked
"Req. 4-01310AF" from Bengies, MD. (2) Redeliver, in it's [sic]
entirety these sets as an acceptable product on or before June
28, 1985.
If required, the government will provide an inspector for quality
compliance.
Notify the GPO of the date and time to request the inspection.
Id. at Tab HH, GPO BCA 13-85.
Thereafter, by memorandum of June 10, 1985, the Contracting
Officer again took up the issue of the deficiency in the Navy
portion of the contract by requesting the concurrence of the GPO
CRB for the termination of that portion of the contract (10,000
sets) due to Appellant's failure to perform within the time
specified or to provide a product in conformance with the Quality
provisions of the Quality Assurance Through Attributes Program.
CRB concurrence was unanimously given on June 11 and 12, 1985.
On June 13, 1985, the contractor was telephonically notified of
the partial termination and that the rejected sets were available
for pick up from the Government. (Id. at Tab KK, GPO BCA
13-85.) That same date a written notice of such action was sent
to the contractor. (Id. at Tab LL, GPO BCA 13-85.) The notice
advised "that the same or similar items terminated may be
reprocured against your firm's account, on such terms and in such
manner as the Contracting Officer deems appropriate. In that
event, your firm shall be held liable to the Government for any
excess costs. The Government reserves all rights and remedies
provided by law and under the contract, in addition to charging
excess costs." The notice also advised Appellant of its right to
appeal the decision under the "Disputes" Article of GPO Contract
Terms No. 1.
Subsequently, on June 18th, Senter telephonically asked
Respondent to convene a meeting with himself and Navy Department
representatives to discuss possible solutions. A memorandum of
the conversation states that:
[Senter] offered to provide a system where users could send a
notice to him when they found missing cards, put money in escrow,
or provide Navy extra sets to replace any defective [ones].
[Marken] told [Senter GPO] had discussed options with Navy and
they do not wants [sic] anything except correct sets.
Id. at Tab PP, GPO BCA 13-85.
The Navy Department representatives apparently had no desire to
meet with Appellant. Nevertheless, that same day Respondent's
own representatives met with Senter at Senter's request to
discuss the partial default. A memorandum memorializing the
meeting states that:
[Senter] explained all that he had done to correct the problems.
He felt that Darwin's [Hughes] last inspection in his plant and
his [Hughes] approval to ship was acceptance by the Government
and [GPO] could not reject it at a later time.2 Gary Lauffer,
reminded [Senter] that he [Lauffer] had made it clear during the
inspection that their [GPO] approval to ship was not to be
construded [sic] as final acceptance. [Senter] also felt he may
not have received all the copies back for correction [since]
according to his own sales records they were 2,000 short.
Campbell told [Senter that] Navy had assured him that the last
sampling was being taken from the redelivered stock just
received.
(Id. at Tab QQ, GPO BCA 13-85.)
Respondent then reprocured the defaulted Navy portion of the
contract from Cato Show Printing of Cato, NY on Jacket 479-050,
Purchase Order 60788 at a cost of $78,217, terms 5%, 30 days.
(Id. at Tab RR, GPO BCA 13-85.)
By letter of July 11, 1985, Appellant was advised of the
reprocurement and that the amount of excess costs would be
deducted from its account, together with an undetermined expense
accrued by Respondent to verify missing and uncollated returned
negatives. (Id. at Tab SS, GPO BCA 13-85.) Such costs and
verified expenses were stated by GPO to be $74,306.15, including
$67,400.19 which had been previously paid to Appellant for the
work it performed, and $6,905.96 excess costs covering the
difference between Appellant's bid price for 10,000 sets and the
reprocurement price for such sets. (Id. at Tab TT, GPO BCA
13-85.) Having been so notified of the termination and recovery
of overpayment and excess costs, Appellant, by letter of
September 4, 1985, gave notice of its intention to appeal the
decision of the Contracting Officer in its entirety for the
following reasons:
1. Any alleged failure to perform within the time specified was
waived;
2. Any alleged failure to perform within the time specified was
excused by the Government Printing Office's breaches of its duty
to cooperate with the Contractor;
3. No cure notice was sent the Contractor;
4. The Contractor had substantially performed;
5. Any alleged defects in performance were within the
specification tolerances;
6. Purported "default proceedings" were withheld on June 4, 1985
pursuant to agreement of the parties confirmed in a contract
modification and the contract was partially terminated on June
13, 1985 without prior notice; and
7. The excess reprocurement demand was improperly calculated by
approximately $70,000.00 because the default termination article
permits the recovery of excess reprocurement costs only.
Id. at Tab UU, GPO BCA 13-85.
The appeal was given GPO BCA Docket No. 13-85
Meanwhile, Appellant apparently continued work on the Air Force
and Superintendent of Documents' sales portions of the contract
in accordance with Contract Modification 0955, supra, since a
telephone memorandum of July 17, 1985, reflects that the work was
shipped on June 28, 1985, the date called for in the
modification. (R4 File, Tab G-7, GPO, BCA 19-85.) However, both
shipments were found to be rejectable because of missing cards
based upon Respondent's random inspection of Superintendent of
Documents' sales copy samples on July 19, 1985, and two Air Force
samples on July 22, 1985. As a result of these random findings,
Respondent's Contract Compliance Section directed that a more
complete inspection of the products received be conducted. The
results were again negative (R4 File, Tab I-9, GPO BCA 19-85.)
Accordingly, Respondent on August 5, 1985, telephonically
notified Appellant that the Air Force and Superintendent of
Documents' products were rejected and were to be picked up,
corrected, and redelivered. The following day Senter called and
demanded written notification of Respondent's action. (R4 File,
Tab J-10, GPO BCA 19-85.) Such written notification was given by
letter dated August 7, 1985. (R4 File, Tab K-11, GPO BCA 19-85.)
On August 26, 1985, Respondent received telephonic notification
that the Appellant's firm had been sold but that the acquiring
company was not assuming responsibility for work on Jacket
445-793.
The next day, August 27, 1985, Appellant was sent another
telegraphic "cure notice" advising that Respondent considered
Appellant's failure to respond to its notification of rejection
of 3,600 sets (Air Force and Superintendent of Documents' sales
copies) and its request that they be picked up, corrected, and
redelivered to be a condition that was endangering performance of
the contract in accordance with its terms. The notice afforded
Appellant the opportunity to comply by September 6, 1985, and
also to give written notice within 5 days of receipt of the
telegram of any measures adopted by it to cure such condition.
The notice also advised Appellant of the Government's right to
terminate for "default" if such cure was not timely affected.
(R4 File, Tab M-13, GPO BCA 19-85.)
By telephone conversation of August 29, 1985, Senter advised that
he did not want to correct the Air Force and Superintendent of
Documents' copies because the "job is out of warranty," claiming
that the job was accepted in NY by Lauffer and could not be
rejected later. (Id. at Tab N-14, GPO BCA 19-85.)
On September 9, 1985, the Contracting Officer again sought
concurrence of the GPO CRB for partial termination of the
contract (2,300 Air Force copies and 1,300 Superintendent of
Documents' sales copies). Concurrence was given unanimously (Id.
at Tab Q-17, GPO BCA 19-85) and Appellant was notified of the
termination by letter dated September 13, 1985. (Id. at Tab
R-18, GPO BCA 19-85.)
A contract for reprocurement in the amount of $47,887 was awarded
to Peake Printers by Purchase Order 61567, Jacket 486-290, for
some 2,896 sets rather than 3,600 sets. Appellant was so
notified of this action and the docketing of its account by
letter of October 11, 1985 (Id. at Tab T-20, GPO BCA 19-85.) The
notice advised Appellant of his right to appeal the decision
within 90 days of receipt of the termination notice.
About the same time, Appellant asked for an extension of time to
file its Complaint in GPO BCA 13-85, supra, which extension was
granted until November 18, 1985. (Id. at Tab VV, GPO BCA 19-85.)
The Complaint dated November 14, 1985, was in fact received by
the Board on November 19, 1985, although it may well have been
received in GPO before such date. A copy of the Complaint was
furnished by the Board to Respondent for its Answer.
The substantive portions of the Complaint allege:
1. NO CURE NOTICE WAS SENT TO CONTRACTOR:
On June 13, without any prior notice, a letter of default was
sent to Stabbe Senter Press (Government's exhibit LL). The
notice of default terminated our right to perform as of the date
of June 13. In accordance with Contract Terms No. 1, part 2-18,
a ten day cure notice should have been given. Additionally, it
is obvious that Stabbe Senter Press attempted in good faith to
satisfy the requests of the Government Printing Office at
substantial expenditures in amounts in excess of $100,000.
Stabbe Senter Press was both accomodative [sic] and cooperative
in all instances. The Government Printing Office was aware of
all remedial attempts on the part of Stabbe Senter Press.
Default with no cure notice was an unfair and improper act.
2. TEST PROCEDURES WERE IMPROPER:
It is the position of Stabbe Senter Press when we bid the job and
produced the job that the job consisted of 17,797,084 total
cards. We were familiar with the AQL and assumed the AQL test
criteria was based on the 17,797,084 cards being produced. I
refer your attention to Government exhibit N - the first
inspection report prepared by Mr. Norman Campbell. Specific
attention is drawn to the lot size of 17,797,084. It should be
noted that if this lot size is used consistently, all testing
would have revealed an acceptable product. However, the
Government decided to change the evaluation of the lot size in
mid-stream which affected the acceptability of a sampling lot.
It is my further contention that denoting a missing card as a
critical defect is further incorrect. According to GPO
publication 310.1 "Quality Assurance through Attributes Program"
the Government apparently is applying the critical defect of
missing page in a bound publication rule. This is incorrect in
the instances of this project as the product under evaluation
here is a number of recipe cards supplemental to a master file
and non-dependent on one another for continuity and not bound
togethe [sic] in any fashion. The loss of one card, although a
major defect, is certainly not critical as all the other cards
can still be utilized. Likewise, the positioning or pagination
of the cards purely facilitates the insertion of the cards into
the master file but does not pose a critical defect if one card
is out of a desired pagination. The intent in publication 310.1
is obvious, a lost page in a bound book, where there is
continuity of information, is certainly critical. In the case of
different recipe cards it is not. There are no instances of any
recipe going over to a second card. Each card contains no more
than one recipe. My position is reinforced by a review again of
Government exhibit N, where missing pages and improper pagination
were first considered major defects but then changed over to
critical defects.
3. ACCEPTANCE AND THEN REJECTION:
Item 2 above should have rendered the project acceptable.
However, Stabbe Senter Press cooperated with the Government in
removing the job from the Philadelphia warehouse of the Navy and
bringing it to a subcontractor to inspect and repair. In fact,
after repairs were performed the first time and then we were
advised that further testing revealed certain deficiencies,
Stewart Senter and Terence Hewitt visited the naval facility on
Friday, March 1, 1985. The arrangements for this visit were made
through Mr. Darwin Hughes' office and Mr. Hughes was supposed to
have someone present at the visit. Trish McGrail received us at
the guard house at 5801 Taber Avenue. She took us to building
#26 and introduced us to Ms. Susan Lamparter, her superior. We
were brought into the warehouse to a location where the recipe
job was sitting on the floor. It should be noted that we
observed several skids opened, several cartons opened and other
projects commingled amongst the skids. Ms. Lamparter and Ms.
McGrail took two samples from different skids. We brought these
samples into Lt. Commander Paul Wilson's office and right on Lt.
Commander Wilson's desk we found the two samples to be totally
correct. However, we were subsequently notified by telephone
that further testing revealed deficiencies. It was at that point
that I wrote the letter, Government exhibit V, to Mr. Darwin
Hughes suggesting a remedy for any problem with the project.
Subsequently I was advised that my proposal was unacceptable and
that I must pick up the job and repair it satisfactorily. At
that point, I entered into a verbal agreement with Mr. Darwin
Hughes that I would pick this job up again and go through it
again on condition that the Government provide inspection at my
subcontractors plant and give approval of the job prior to its
shipment back to Philadelphia. On May 14, 1985, as evidenced by
Government exhibit EE, Gary Lauffer and Norman Campbell conducted
a random sampling of the recipe cards. The test results, after
taking a sample from 13 different skids or a sample size of 5,668
cards revealed 5 cards missing. Mr. Lauffer determined this
unacceptable which although incorrect, is not the essence of this
portion of the complaint. It was a unilateral suggestion that a
work crew of about 40 women would work through the night and
reinspect. Mr. Lauffer agreed to return with Mr. Campbell the
following afternoon. He did so and performed his random sampling
again. He found his samplings perfect and approved and accepted
the job. The current position of the Government that Mr.
Lauffer did not provide final acceptance is both unfair and
contradictory to our agreement. It is obvious that additional
testing would hold the job to a higher standard than is
customary. This certainly is the case here as the Government
contends that a reinspection in Philadelphia revealed
unacceptable results. It is both inaccurate and unfair to
perform any further testing after a proper sampling produced the
job acceptable. Further testing would totally change and tighten
test criterias thereby making the project a totally different
one.
4. SUBSTANTIAL PERFORMANCE AND ALTERNATIVE SUGGESTIONS TO CURE:
It is obvious that substantial performance on the part of Stabbe
Senter Press took place. It is further obvious that Stabbe
Senter Press at great expense and time attempted to satisfy the
wishes and demands of the Government Printing Office although
those demands were both unfair and incorrect. It is noted that
the Department of the Army in St. Louis, Missouri received some
9,000,000 cards. A remedy was arrived at and agreed to and I
invite your [sic] review Government exhibit WW, specifically to
the last paragraph of Mr. Bieda's synopsis. The project was
distributed with no complaints from the field. Stabbe Senter
Press offered the same remedy for the Philadelphia portion of the
job. In addition, Stabbe Senter Press offered to provide an
index with a postage paid card and an agreement that we would
provide free of charge any cards that were missing or in any
manner defective. Stabbe Senter Press offered to provide
additional complete sets so that the Navy could fulfill any
request for additional or replaced cards. Stabbe Senter Press
offered to post funds in escrow to guarantee and insure
performance of all suggestions. The Government Printing Office
refused to accept any of the proposals and incorrectly and
unfairly defaulted Stabbe Senter Press.
5. DEFAULT OF ENTIRE JOB WAS INAPPROPRIATE AND UNFAIR:
I bring your attention to Government exhibit Y, an internal
memorandum written by Mr. J.G. Marken, specifically under remarks
Mr. Marken writes "I directed his attention to terms #1
inspection and test and advised him that if I did not get an
acceptable date I would contract to have it fixed and charge the
cost to him." Mr. Marken recognized that if deemed unacceptable,
the cards could have been corrected less expensively than the
drastic measure of total re-procurement. However, the Government
did not execute this more reasonable option.
6. OFFSETTING OF FUNDS WAS INCORRECT, UNFAIR, IN VIOLATION OF
LAW AND IN NON-CONFORMANCE WITH THE CONTRACT:
The Government declared Stabbe Senter Press in default and offset
the re-procurement costs (before actually incurred) against funds
owed Stabbe Senter Press. The contract specifically provides
that the severest measure on default is to hold the contractor
responsible for the differential in cost of the project.
7. RECAP AND SUMMATION:
Stabbe Senter Press, a dedicated and competent Government
printing contractor produced a large but relatively simple recipe
card job. During the production of same, as evidenced by
Government exhibit F, Stabbe Senter Press incurred problems of a
public enemy with a plant breakin and serious vandalism. One of
the intruders was successfully aprehended [sic] and prosecuted.
The project under consideration here was in various stages of
completion and required some repairs due to the public enemy.
Careful testing revealed that all repairs had been performed.
However, it became apparent that perhaps some defects were not
corrected. Although Stabbe Senter Press strived to perform an
absolutely perfect job, even the defects which were subsequently
discovered were well within the tolerances of AQL 6.5. The
Government Printing Office elected to assign more stringent test
standards and determined that the job required repairs. Stabbe
Senter Press attempted to satisfy and respond in ever manner
asked. Stabbe Senter Press offered numerous methods to insure
perfection and use of the project. The Government Printing
Office excessively and improperly tested the product and after
the expenditure of well in excess of $100,000 on the part of the
contractor deemed Stabbe Senter Press in default without any
further allowances to correct. The Government reprocured the
entire portion of the disputed job and took the re-procurement
costs from funds due Stabbe Senter Press on subsequent, unrelated
and accepted projects. The combined total of monies taken from
Stabbe Senter Press and monies expended by Stabbe Senter Press
were in excess of $200,000. This incident was a contributing
factor to the closing of Stabbe Senter Press which at this
writing is no longer functioning after 45 years of business. The
assets of Stabbe Senter Press have been sold and the lives of
more than 35 people have been displaced. Judgment is asked in
favor of Stabbe Senter Press in the sum of $200,000 as a partial
compensation to reverse a total injustice.
Official Record, GPO BCA 13-85, Tab 7.
Upon receipt of the Complaint, Respondent asked for an extension
of time to respond until January 20, 1986, which such extension
was granted.
Meanwhile, on December 19, 1985, Appellant's notice of appeal
dated December 6, 1985, from the September 13, 1985, final
decision letter of the contracting officer respecting the Air
Force and Superintendent of Documents' sales copies was received
by the Board and was given GPO BCA Docket No. 19-85. The notice
contended that the Contracting Officer's decision was erroneous
for the following reasons:
(1) The statute of limitations as set forth in "U.S. Government
Printing Office Contract Terms No. 1" has expired;
(2) Any alleged failure to perform within the time specified was
waived;
(3) Any alleged failure to perform within the time specified was
excused by the Government Printing Office's. breaches of its
duty to cooperate with the Contractor:
(4) No cure notice was sent to the Contractor;
(5) The Contractor had substantially performed;
(6) Any alleged defects in performance were within the
specification tolerances;
(7) The excess reprocurement demand was improperly calculated
because the default termination article permits the recovery of
excess reprocurement costs only;
Official Record 19-85, Tab 1.
On January 16, 1986, Respondent filed its Answer to Appellant's
November 14, 1985 GPO BCA 13-85 Complaint (page 21, supra) as
follows:
1. The first sentence in paragraph 1 is denied. lt should be
noted that the default was partial and applied only to 10,000
sets of the recipe cards for the Navy and prior notice was given
in the Cure Notice of May 9, 1985. The second sentence is
admitted, but only with respect to the Navy sets. The third
sentence is denied. Pursuant to the Default clause contained in
paragraph 2-18 of Contract Terms No. 1, incorporated by reference
in the contract, a cure notice is required only if the contractor
fails to perform provisions of the contract other than timely
delivery, or fails to make progress as to endanger performance of
the contract in accordance with its terms. AF Exh. B. Here, the
ship date of May 15, 1985 had already passed; thus, a cure notice
was not required. We have no information upon which to base a
response to the fourth sentence. The fifth and sixth sentences
are admitted. The seventh sentence is denied.
2. We have no basis upon which to base a response to the first
and second sentences in paragraph 2; however, the specifications
set forth a quantity of 40,819 sets (17,797,084 total cards).
AF, Exh. B. In sentences three and four, the fact that the
inspection report shows a lot size of 17,797,084 is admitted;
however, the sample size of 20 was based on 10,000 sets. AF,
Exh. N. If the inspection had been based on 17,797,084 rather
than 10,000 the sample size would have been 50 rather than 20.
The fifth and sixth sentences are denied. The lot size of 10,000
sets was used consistently by the inspector. The report shows 40
critical defects and 60 major defects. The accept/reject rules,
as contained in MIL-STD-105D (multiple sampling plan "J"), permit
acceptance only if there are no major defects, and require
rejection if 5 or more major defects are identified. The rules
also require rejection of the entire job if two or more critical
defects are identifed. As can readily be seen, use of the
Quality Assurance Through Attributes Program (QATAP) rendered the
entire job rejectable. The seventh, eighth, ninth, tenth,
eleventh, twelfth, and thirteenth sentences are denied. There
are 436 different recipe cards in a set--some printed head to
head and some head to foot--some with wrong information printed
on the back. It can readily be seen that if cards are missing,
it could render the set useless. On page 38 of QATAP, a missing
page is always classified as a critical defect. A critical
defect is defined on page one of the document as "a serious
deviation from specifications." A missing card in a collated set
is precisely that--a serious deviation from specifications.
Although the cards do not have continuity, they are needed on an
individual basis. The product becomes useless if the particular
card needed is missing. In this case, it was not just one card
missing in the sets. It was a number of different cards and
other problems throughout the sets that rendered the product
rejectable. The fourteenth sentence is denied. The fifteenth
sentence is admitted. The sixteenth sentence is denied. The
change from major to critical merely complies with QATAP which is
part of the contract.
3. The first sentence in paragraph 3 is denied. The second
through seventh sentences are admitted. The eighth sentence is
denied. In a sworn statement, dated December 2, 1985, Lt.
Commander P. A. Wilson, Ms. Patricia McGrail, and Ms. Susan
Lamparter state that although some skids and boxes had previously
been opened and randomly sampled, no other jobs had been
commingled with this job. Exhibit 1. The ninth sentence is
admitted. The tenth sentence is admitted; however, it should be
noted that this was not a true quality assurance inspection of
the two sets. They were checked only for those faults found in
the previous sample inspection. The eleventh, twelfth, and
thirteenth sentences are admitted. The fourteenth sentence is
admitted as to our having two inspectors at the subcontractor's
plant; however, it was made clear to Mr. Senter that the
inspection was not one for final acceptance. The fifteenth and
sixteenth sentences are admitted. Sentence 21 is denied. As Mr.
Lauffer states in his report, no critical defects were found;
however, a formal acceptance inspection was not performed and the
contractor was so informed. AF, Exh. EE. Sentence 22 is denied.
The Government agreed to inspect the progress at the one quarter
and one half points, and before completion of the job, the dates
to be furnished by the contractor. These inspections were to be
similar to process control inspections during manufacture and not
formal acceptance sampling inspection. AF, Exh. W. Sentences
23, 24, 25, and 26 are denied.
4. The first and second sentences in paragraph 4 are denied.
Sentences three through nine are admitted. Sentence 10 is
denied.
5. Paragraph 5 is denied. To begin with, the appellant was not
defaulted on the "entire job." The termination notice, dated June
13, 1985, makes it clear that this is a partial termination of
10,000 sets for the Navy. AF, Exh. LL. After numerous attempts
by the Quality Assurance Section to establish a second date for
correction or replacement of the Navy sets, Mr. Jack Marken
pointed out to the contractor that although he had not decided
that it was the best approach to take at this time, one of the
options the Government has under the Inspection and Test clause
of the contract is for the Government itself to correct the
product by contracting it out to another contractor and charging
the cost back to appellant. AF, Exh. Y. The decision to
terminate the Navy portion of the contract was made two months
later, and then only after a second attempt at correction of the
defects had failed.
6. Paragraph 6 is denied. Only the Navy portion (10,000 sets)
is involved in this appeal. It is true that the contractor is
liable only for the excess costs involved in the reprocurement of
the 10,000 sets; however, in this case, since the contractor had
already been paid for the job, action had to be taken to recoup
these monies in addition to the excess costs.
7. The first sentence in paragraph 7 is generally admitted;
however, the rejections and attempts to correct the product
obviously brings into question the dedication and competency of
the contractor. The second sentence is admitted; however, the
vandalism does not relieve the contractor from delivering a
product in accordance with the specifications. We have
insufficient information upon which to base a response to
sentences three and four. The fifth sentence is denied. A final
acceptance sampling revealed quality defects in excess of that
permissible under the AQL. The sixth sentence is admitted.
Sentences seven and eight are denied. Sentences nine and ten are
admitted. Sentence 11 is denied. Sentence 12 is admitted. We
have insufficient information upon which to base a response to
sentences 13, 14, and 15. Sentence 16 is denied.
Wherefore, the Board is requested to deny the appeal in its
entirety.
Official Record, GPO BCA 13-85, Tab 11.
On February 4, 1986, the Board received Appellant's Complaint in
GPO BCA 19-85. The Complaint alleges:
1. MATERIALS WERE OUT OF WARRANTEE [sic] PERIOD -
On June 3, 1985 Stewart Senter of Stabbe Senter Press received a
telephone call from Mr. George Watson regarding the sets of
recipe cards under evaluation here. I submit that this telephone
call was the first communication regarding the Laurel, Md. and
Beniges [sic], Md. shipments. I respectfully direct your
attention to Contract Terms No. 1, GPO Publication 310.2, page
10, 2-12 Warrantee [sic], specifically "The Contracting Officer
Shall Give Written Notice of Any Breach of Warrantees [sic]
Within 120 days from the Check Tendered as Final Payment". [sic]
The item under evaluation was clearly out of the warrantee [sic]
period and notification during same was never received verbally
or in written form. In an attempt to accomodate [sic] the GPO,
Stabbe Senter Press agreed to pick up the items in Laurel, Md.
and Beniges [sic], Md. and inspect those items. Mr. Watson
provided Stewart Senter with a list of names and phone numbers to
speak to to arrange the pick up of these sets. Upon calling, Mr.
Senter found that in several instances sets had been distributed
and used. Some sets were available for pick up and were picked
up by Stabbe Senter Press.
2. INSPECTION REVEALED ACCEPTABLE SETS IN ACCORDANCE WITH AQL
TEST CRITERIAS -
Stabbe Senter Press inspected all the sets and repacked same,
reshipping them to their respective locations. Stabbe Senter
Press inspection found the sets correct and fully in compliance
with AQL test criterias. Government exhibit I 9, an alleged
testing was both inaccurately performed and incorrect. It is
found confusing as to when the tests were performed, what the
sampling size was, and a proper evaluation report based on test
criterias. I further submit that it is apparent that the first
and only testing of the items under consideration here was
performed on and after the date of July 19, 1985. The government
performed no testing prior to July 19, 1985 and this is both
unfair and improper. A contract modification should not have
been written without proper testing.
3. RECAP AND SUMMATION -
The item being appealed is the printing of recipe cards which
were produced and distributed to several locations. After the
production and distribution of the project, Stabbe Senter Press
was notified that testing revealed deficiencies with the shipment
made to the Department of the Navy in Philadelphia, Pa. Proper
notification was given by Mr. Darwin Hughes regarding the
Philadelphia shipment. Mr. Hughes and Stewart Senter engaged in
several telephone conversations as to the future course of the
project. Mr. Hughes advised Mr. Senter subsequent to the
initial notification regarding Philadelphia that a portion of the
project shipped to the Department of the Army in St. Louis had
also been determined to have deficiencies. Stewart Senter and
Stabbe Senter Press cooperated fully with the GPO in an attempt
to satisfy and obtain acceptance of the project. A successful
remedy and repair was performed for the Army portion.
Several attempts to repair and correct the Navy portion were
performed. Finally the Government accepted and subsequently
rejected the Navy portion of the shipment. That rejection is the
essence of an appeal previously. taken by this contractor and in
various stages of resolve. I submit to the Board that each and
every allegation of that appeal pertains to this appeal and
further that the telephone call received by Stewart Senter on
June 3, 1985 asking to pick up these items was apparently a
device to harm this contractor. I ask this Board to consider the
question why the Government would wait near seven months of
attempting and performing successful remedial work on the exact
same project to advise the contractor that there are still more
items they wish modified. That advise [sic] came without
previous inspection and after portions had already been field
distributed.
The Government's actions on defaulting the contractor and
offsetting funds owed on other acceptable work was both improper
and illegal. Judgement is asked against the Government and in
favor of Stabbe Senter Press for all sums witheld [sic] and
offset and an additional amount in the sum of $25,000 as a
reimbursement for expenses associated with this portion of the
project.
Official Record, GPO BCA 19-85, Tab 4.
On April 4, 1986, Respondent filed its Answer in GPO BCA 19-85:
1. The first sentence in paragraph 1 is admitted. Sentence No.
2 is denied. According to a memorandum from the Superintendent
of Documents ("SupDocs"), copy attached as Exhibit 1, their
copies were picked up on May 23, 1985. This is ten days prior to
the date appellant alleges he was first contacted about Laurel
and Bengies. We believe that appellant was aware of the problems
with all of the recipe cards, not just the Navy and Army
portions. This is evidenced by exhibits N and Q of BCA 13-85.
Exhibit N is the inspection report and contained thereon are the
Words "Air Force." Exhibit Q contains notes pertaining to the
problems. One can see that the GPO was in contact with the
contractor about the problems and the contractor makes a
statement ". . . to make a plan of how to handle this problem."
Also there is a statement that Navy copies in Philadelphia will
be corrected first. This leads us to believe that the contractor
was aware of problems as far back as November of 1984. According
to a memo from Mr. Darwin Hughes, copy attached as Exhibit 2,
appellant was informed of other destination problems but was told
to "worry first about Navy." Although appellant was told to
"worry about Navy first," this does not relieve him of the
responsibility of correcting the product for the other
destinations. The reason for the delay in time is that the
contractor kept trying to correct the Navy copies and failed.
The modification (0802) dated April 15, 1985 was to reestablish
ship dates for correcting the defects. However, the time lapse
was due to the ongoing problems with trying to correct the Navy
portion first, which the contractor was unable to do even after
having been given a second chance. Once large lots such as for
the Navy and Army are found to be defective, the Government can
request inspection of all lots if the product was printed and
finished at the same time or in the same production run. There
is no evidence that the production of this product run was
carried out in more than one run.
The third sentence is informative only and requires no answer.
The fourth sentence is denied. As indicated in our answer to
sentence No. 2 above, we believe appellant was well aware of the
problems. However, through the process of trying to correct the
Navy copies, time progressed and in order to get the contract
back on track, a modification was written to establish a new ship
date. Once a new date was established and agreed to by
appellant, we had a bilateral agreement between the two parties.
Therefore, all of the articles of the contract were in effect.
CT-l, paragraph 2-B(e), incorporated by reference in this
contract, provides that any supplies corrected or replaced are
subject to all provisions the same as the initial supplies. In
other words, the product was not out of warranty as alleged by
the appellant. It was through the contractor's own
nonconformance to the specifications and the fact that he did not
correct the product, when given a chance, that created the
default.
The fifth and six sentences are admitted.
We have insufficient information upon which to base a response to
the seventh sentence.
The eighth sentence is admitted as to the SupDocs portion. The
recipe card sets were delivered to Laurel warehouse on October
11, 1984. A total of 129 sets were sold before SupDocs was
notified that the copies were not printed correctly. This is the
reason the full count was not at the warehouse when picked up.
According to SupDocs a total of 1171 sets were picked up and
redelivered. The 129 sets will be adjusted.
2. We have insufficient information upon which to base a
response to whether the sets were in fact inspected or not as
asserted in the first sentence in paragraph 2; however, an end
product inspection revealed the product was rejectable.
The second sentence is denied. Because no one from the
Government was present during the alleged inspection and
correction it is impossible for us to determine whether this work
was in fact carried out. The evidence, however, shows that we
have a rejectable product on the redelivered portion. Further,
appellant states that his corrected sets were fully in compliance
with the AQL. We suggest that all of the contractor's test
records and procedures be presented to the Board to ascertain
whether his inspection was in accordance with GPO Pub. 310.1 and
in compliance with the AQL. CT-l, under Inspection and Test
Article, 2-12(e), requires the contractor to have records of all
inspections and we believe these records are relevant to this
case.
The third sentence is denied. The inspections performed were
random, and when enough sets were inspected to make the lot
rejectable, the inspection was terminated. Appellant asserts
that GPO's testing was inaccurately and incorrectly performed.
To the contrary, we believe the inspection was performed
correctly within the terms of the contract.
The fourth sentence is denied. The inspections were taken from
the lots, as found, at each destination and although the exhibits
are not on formal inspection forms, the results are the same.
The product is rejectable. The inspections were carried out on
July 19 and 22, 1985. (AF, Exh. I)
Sentence No. 5 is admitted; however, this inspection was based on
the premise that the sets were picked up, corrected and returned
to the respective destinations.
Sentence No. 6 is denied. Numerous inspections were conducted on
other lots that turned up many defects. If the appellant
actually believes that inspections were unfair and improper, then
why did he agree with the modification of April 15, 1985 (0802)?
See Exhibit (AA) BCA 13-85. The bilateral agreement was signed
by Mr. Hewitt, appellant's representative, and dated April 19,
1985. If what the contractor alleges is true, he should not have
agreed to the modification as written. We do not believe it is
unfair to persist in efforts to obtain a product that is in
accordance with the specifications. Further, we believe the
default is in fact proper.
Sentence No. 7 is denied. As outlined in our response to
sentence 6 above, numerous inspections were conducted. Appellant
was to pick up the "entire" order, correct and reship it. The
April modification reestablished new ship dates for correcting
the product.
3. The first sentence in paragraph 3 is admitted.
Sentences Nos. 2 thru 10 are denied, however, these sentences
pertain to the Navy portion (BCA 13-85) and will not be
elaborated upon here.
Sentence No. 11 is denied. To begin with, each and every
allegation of the two appeals, BCA 13-85 and 19-85 are not
exactly alike. Some of the circumstances are different. The
comment that appellant makes about "to harm this contractor" is
strictly without merit. The Government is in no way out to harm
this or any other contractor. However, we do expect that when a
contract is entered into, the product received will be in
accordance with the specifications. If it is not, we will
request a correction or replacement. We believe that the GPO
went out of its way to help this contractor. This can be
evidenced by the issuance of two modifications extending the
correction date. See BCA 13-85, Exhibits AA and HH. We
sympathize with the contractor; however, this is not the issue at
stake. The main issue, as we see it, is whether the Government
received the product for which it contracted. The answer of
course, is no.
Sentence No. 12 is denied. As stated above, we believe that the
contractor was well aware of the defects. Because of the ongoing
problems with the Navy portion, time progressed. See our
responses to the second and third sentences in paragraph 1 above.
Sentence No. 13 is denied. Again, we believe the contractor was
cognizant of the defects in the product long before the
Modifications were written.
Sentence No. 14 is denied. The offsetting of funds is covered in
the answer to the complaint on BCA 13-85, paragraph 6.
Sentence No. 15 is denied.
The Government should receive a product that conforms to the
specification, and, if additional costs are incurred to correct
it, the costs should be borne by the contractor. After all, the
Government should get what it has paid for. It is obvious that
the contractor is trying to make himself whole when the facts
show that it was through his own negligence that the product was
rejected. One should look at the rejection as a whole and the
numerous chances appellant was given to correct. Much of the
time consumed can also be attributed to the fact that appellant
had to pick up the Navy portion of the job more than once to
correct it and still returned an unsatisfactory product. The
Government had no choice but to default appellant and procure the
recipe cards elsewhere in order to fill the needs of the
Government.
Official Record, GPO BCA 19-85, Tab 9.
The two appeals were joined at Appellant's written request of
February 14, 1986. Thereafter, a prehearing conference was held
on May 20, 1986.
At the conference it became apparent that Appellant's principal
assertion respecting the Navy portion of the product was that at
the time he was informed that the Navy would not accept the
remedial proposal in his March 13, 1985, letter, supra, but
insisted that he must pick up and correct the job instead, he and
Hughes entered into an oral agreement that he, Senter, would pick
up and go through the job again on the condition that GPO would
provide inspection at Appellant's subcontractor's plant (HAPI)
and give approval of the job prior to shipping it back to the
Navy's Philadelphia facility. He asserted that in conjunction
with this agreement Lauffer and Campbell inspected the job on May
14, 1985, and again found that some recipe cards were missing.
However, they agreed, after first getting the approval of Mr.
George Watson, Chief, Contracts Branch, Purchase Division,
Printing Procurement Division, GPO, that Appellant, pursuant to
Contract Modification 0802, supra, had until May 15, 1985, to
produce an acceptable job and that they would return the
following day to inspect the product, thus allowing Appellant
time to correct the problems. Upon reinspection of random
samples, Respondent's Lauffer purportedly approved and "accepted"
the job which was then shipped to Philadelphia where it was
subsequently reinspected by Navy and rejected. (Prehearing
Conference report, Tab 18, page 5, GPO BCA 13-85.)
Testimony was then taken from Lauffer, Hughes, Campbell, and
Contracting Officer Marken in that order. Pertinent excerpts of
the Prehearing Conference report reflecting their testimony
follows:
When asked if he in fact had told Mr. Senter on the second day
of sampling that the job was OK to ship, Mr. Lauffer responded in
the affirmative. The sampling consisted of pulling 13 sets,
doing a 100 percent inspection on 7 sets, and the remaining 6
sets were double checked to see if missing cards had been
replaced. Mr. Lauffer indicated that the 100 percent inspection
was looking for all defects. Mr. Lauffer could not recall
(when asked by the undersigned) if he had told Mr. Senter the
product was acceptable, or if he had discussed with Mr. Senter
his authority to accept or reject the product.
. . . [A]sked . . . if Army's solution could have worked for
Navy. . . . Hughes indicated Navy was not agreeable to any
solution other than reprinting the job. Mr. Hughes recounted
Mr. Lauffer's and Mr. Campbell's inspection at SSP's
subcontractor's plant. He said they were asked to inspect
samples on the floor and report their results to the contractor.
When asked . . . if Mr. Senter had been told this would be an
acceptance inspection, . . . Hughes responded in the negative
saying that an acceptance inspection is performed at destination
by the user. . . . Hughes said Senter was familiar
with GPO's sampling procedures. . . .
. . . .
. . . Senter asked . . . Hughes if he recalled their conversation
wherein they discussed GPO employees going to HAPI to perform
inspection for acceptance of the job. Mr. Hughes said that
acceptance cannot be done with random sampling of this type. The
undersigned asked if the same sets could be tested more than
once. Mr. Hughes pointed out that the Navy portion was tested at
least two times after the first correction. Mr. Senter added
that when the job was picked up to correct, he did not get all
10,000 sets from Navy. He then asked if it could be possible
that the testing was performed on the missing sets, but Mr.
Hughes could not answer. When asked by the undersigned to
describe in his own words the method used to correct the job in
St. Louis, Mr. Hughes indicated that Mr. Senter and the Army
representative had decided on a solution whereby they would
reprint the necessary cards, add those cards to the first bundle
with an errata sheet. Mr. Senter asked Mr. Hughes to review his
letter to him dated March 13, 1985, where he proposes a solution
to the Navy job. Mr. Hughes acknowledged receiving the letter
and when asked by Mr. Senter if he had responded to it, Mr.
Hughes said he did not believe so. Mr. Hughes indicated he had
presented this proposal to Navy but they would only accept a
reprint of the job, and Mr. Hughes had informed Mr. Senter of
same.
Mr. Hughes indicated (when asked by undersigned) that Mr. Marken
is the Contracting Officer on this job but that Mr. Marken had
delegated responsibility to him as the Contracting Officer. Mr.
Senter asked Mr. Hughes to explain the test criteria used. Mr.
Hughes indicated there are 18 finishing attributes and 11
printing attributes. The particular standards are set by the
person doing the press sheet inspection. Mr. Senter referred to
R4 file, Tab N, Mr. Campbell's inspection report, and was
concerned that for F-12 and [F-16] attributes, both times 20
major defects had been crossed out and put in the critical
column. Mr. Hughes said that missing cards constitutes a loss of
information and that is a critical defect.
Mr. Norman Campbell, Quality Inspector, Quality Assurance
Section, GPO, was called by Respondent to testify. Mr. Campbell
was referred to Tab N, his inspection report of the Navy portion
of the job, and asked to explain why in two instances 20 major
defects were crossed out and put in the critical defect column.
Mr. Campbell said he had given 20 major defects to both missing
pages (F-12) and wrong pagination (F-16) when in fact they should
have been critical defects. He does not know who crossed them
out and made the change. Mr. Senter had questioned the "20"
under sample size versus the lot size of 17,797,084, which was
the entire job. Mr. Campbell assured everyone that the testing
was done on the Navy portion (10,000 copies) and he had hoped to
indicate that in the "Title" portion of the report by putting
Navy in parenthesis. On the test inspection done December 12,
1984 (R4 File, Tab S), out of a sample size of 20, F-12 (missing
pages) was given 20 critical demerits. Mr. Campbell felt that
according to the QATAP, a set would be ranked the same as book;
therefore, a missing page would render the set useless and
warrant a critical defect. Of the inspection in Brooklyn, his
account was somewhat different from Mr. Lauffer's. He could not
recall looking at 7 sets in their entirety. Neither could he
recall looking just for missing pages.
Respondent called Mr. Jack Marken, Contracting Officer, Purchase
Division, Printing Procurement Department, GPO, who was the
Contracting Officer on this job. When Mr. Lane asked Mr. Marken
if he had delegated authority to Mr. Hughes with respect to final
acceptance on this job, Mr. Marken answered in the affirmative.
Mr. Lane then asked the question again placing emphasis on the
words "final acceptance," in which case Mr. Marken responded in
the negative. Mr. Marken stated that he had given authority to
Mr. Hughes with respect to in-process inspections. When asked to
explain why Mr. Lauffer and Mr. Campbell had been sent to
Brooklyn to inspect the Navy job, Mr. Marken indicated it was to
look at the product to be corrected and see if the product
complied with specifications before shipping to Navy. The
undersigned asked Mr. Marken that if the inspectors had said the
job was acceptable and to ship, did this constitute acceptance,
and Mr. Marken responded in the negative. He indicated it would
only mean that the job was OK to release to Navy. Mr. Marken
stated he had not outlined the inspector's duties to Mr. Hughes
prior to their departure. When Mr. Senter asked Mr. Marken if
inspectors, after testing product, had the authority to accept
the product, Mr. Marken responded in the negative adding that
they were to test the product and report back with their
findings. According to Mr. Marken, acceptance is when the job is
received complete and in order. Mr. Marken was excused.
This Board then directed that the Government "brief the question
of when, in the opinion of the Government, 'acceptance' of the
final product was in fact intended to occur under the terms of
the contract." The additional question was asked as to:
[W]hether the Contracting Officer has the requisite powers of
discretion to reject a product as being defective without a
substantial showing of additional consequential defects, if his
agents have inspected such product at his behest and found it to
be "acceptable," and have notified the contractor of the same and
authorized his shipment of the "acceptable product" to final
destination.
Official File, GPO BCA 13-85, Tab 15.
In addition, the Board gave the option to the Government and the
Appellant at their individual elections after distribution of the
mandated Brief on the question of "acceptance," to brief the
issues and arguments which had been presented in the case up
through the close of the prehearing conference.
The Government by its Post-Prehearing Brief dated June 16, 1986,
in pertinent part argued that the language in paragraph (c) of
Article 2-12, Contract Terms No. 1, supra, providing that
"acceptance or rejection of supplies shall be made as promptly as
practicable after delivery. (Emphasis added.)" is dispositive of
the question of when acceptance was in fact intended to occur
under the terms of the contract. In support of such argument the
Government cited case law of various boards of contract appeal
which hold in interpreting paragraph (c) of the Standard Form 32
clause of executive agency supply contracts, that "inspection by
Government inspectors at the contractor's plant is not acceptance
and does not preclude rejection after the supplies have been
shipped." The standard Form 32 clause reads "acceptance or
rejection of the supplies shall be made as promptly as
practicable after delivery." Additionally, it was argued that
Messrs.
Lauffer and Campbell's authority was limited to inspection of.
previously discovered defects and that as such, they had no
authority to.alter any terms or conditions of the contract or to
accept the end product. Various cases were cited respecting the
rule that apparent authority of agents is not a basis upon which
the Government may be bound.
The Brief also discussed the doctrine of equitable estoppel which
the Respondent believed to be the essence of the second issue
raised by the Board. After surveying the pertinent law, the
Brief argued that the four elements necessary to establish
equitable estoppel were absent from this case; namely:
(1) A false representation or concealment of a material fact or
facts;
(2) Knowledge on part of the defendant of the true fact or facts;
(3) Lack of knowledge and an absence of means of securing
knowledge of the true facts, on the plaintiffs [sic] part;
(4) An intent on the part of the defendant that the
representation or concealment be acted upon by the plaintiff; and
(5) Actual reliance by the plaintiff on the representation or
concealment. [See cases cited therein.]
United States for Use and Benefit of Fogle v. Hal B. Hayes &
Associates, Inc., 221 F. Supp. 260, (N.D.Cal. 1963), and
Respondent's Brief, Tab 16, page 10, GPO BCA 13-85.
Moreover, it was pointed out that even if the elements of
equitable estoppel are present, equitable estoppel may be found
against the Government only if "(1) the Government is acting in
its proprietary rather than sovereign capacity, and (2) its
representative has been acting within the
42
scope of his authority. United States v. Fox Lake State Bank,
225 F. Supp. 723, 724 (N.D.Ill. 1963) aff'd and rev'd 366 F.2d
962 (7th Cir. 1966)." (Id. at Tab 16.)
By letter of July 7, 1986, Appellant's Senter requested the
minutes of the prehearing conference indicating that after
reviewing same, he would prepare a Brief and advise if he wanted
a formal hearing. (Id. at Tab 17, GPO BCA 13-85.) The minutes
were furnished by letter of July 14, 1986.
On August 1, 1986, Senter wrote "I am trying to do some research
to write a brief. I should have it done within a month." (Id. at
Tab 19, GPO BCA 13-85.)
On February 12, 1987, an Order Denying Submission of Post-
Prehearing Conference Supplemental Brief for Failure to Timely
File Same was issued by the Board advising Appellant that failure
to respond within 10 days of receipt would result in the case
being decided on the written record.
A letter of February 25, 1987 from Senter, with an enclosure
dated October 6, 1986, was received by the Board on March 3,
1987. The letter indicated that the Order from the Board came as
a total surprise to Senter, since he thought he had in fact
timely mailed the October 6th letter and Brief to the Board. He
asked that this omission be excused and that the Brief be
considered in the Board's final determination. (Id. at Tab 21,
GPO BCA 13-85.) The Board contacted Respondent's counsel who
interposed no objection to such consideration.
Appellant's Brief in pertinent part states:
1. It is the position of Stabbe Senter Press that the Government
did not take proper test procedures and, furthermore, were
unreasonable and arbitrary in their decisions to reject the job
and take the cost of reprocurement from funds validly owed Stabbe
Senter Press. Not withstanding [sic] the above it should be
further noted as follows:
1. Default on Docket #19-85 was totally improper as no
notification during the prescribed warrantee [sic] period had
ever been given the contractor. The allegation by Mr. Darwin
Hughes that a discussion to "deal later" with the Maryland
portion of the job is both untrue and improper. The question
should be asked why the contractor directed repairs to 95% of the
job and not the other 5%. Furthermore, the Government's action
of reprocurement as separate projects caused the unit price to
more than triple on the smaller Maryland portion of the job.
This constitutes further evidence that no notice or discussions
had been made on the Maryland portion. It is, therefore,
requested that the Board of Contract Appeals #19-85 be favorably
decided for Stabbe Senter Press on the basis of improper
compliance by the Government Printing Office.
2. In regard to Docket #13-85, the question of acceptance
becomes the primary issue. It was documented during the
prehearing conference that Mr. Marken had delegated contracting
officer responsibilities to Mr. Darwin Hughes. In fact, Mr.
Hughes represented himself as the contracting officer in
correspondence to the contractor. Having made these
acknowledgements and representations, it should be clear that
agreements and representations made by Mr. Hughes were binding
and valid as the contracting officer. Mr. Hughes and Mr. Senter
arrived at an agreement. Although this agreement and
understanding was not in writing, but verbal, it should be
determined valid and proper. Mr. Hughes Mr. Senter agreed that
if the Philadelphia portion of the project were picked up for a
second time, that an acceptance inspection would be performed
prior to reshipment. This was agreed upon because of the high
cost of reshipping the job. The inspection performed by Messrs.
Campbell and Lauffer was an acceptance inspection and not an "in
plant production inspection". Government's position that Lauffer
and Campbell were not authorized to provide final acceptance is
also not valid. Messrs. Lauffer and Campbell were working as
assistants to Darwin Hughes. Darwin Hughes was contracting
officer and agreed to provide a final acceptance inspection and
did so with his immediate assistants Lauffer and Campbell.
To further strengthen the position of Stabbe Senter Press, I
submit that at no point during the production of this job or, for
that matter, any other job performed by Stabbe Senter were "plant
inspections" of this nature ever performed. Stabbe Senter had
been a vendor to the United States Printing Office for some ten
ten [sic] years. It should be clear that the inspection that we
are referring to was, in fact, a final acceptance determination.
Messrs. Campbell and Lauffer used criterias of final acceptance
in performing their tests on a totally completed project. Not
withstanding [sic] all the other points that have previously been
made regarding the improper and unfair handling of this project
by the Government Printing Office, the default should be reversed
purely by the fact that acceptance took place on May 15, 1985 in
Brooklyn, New York by the determinations of Mr. Hughes'
(contracting officer) representatives Messrs. Campbell and
Lauffer. . . .
Official File, GPO BCA 13-85 & 19-85, Tabs 21 & 18, respectively.
The matter is before the Board for consideration in this format.
ISSUES
The issues presented are: (1) Whether, under all the facts and
circumstances hereinabove described, the CO acted within the
proper scope of his discretion under the terms of the contract,
in partially terminating the contract's Navy, Air Force, and/or
Superintendent of Documents Sales Program requirements; and if
so, (2) Whether the Respondent was thereby entitled to recover,
by administrative offset or otherwise, any sum of money other
than the excess reprocurement costs specified in GPO Publication
310.2, Contract Terms No. 1, Article 2-18 "Default," supra, which
may have been paid to Appellant under the contract prior to such
partial terminations. The proper resolve of the issues depends
upon the Board's answers to the following factual and legal
questions raised by Appellant:
1. Whether the Government had accepted the Navy portion of the
contract through Lauffer's and Campbell's inspection of May 15,
1985; and if not,
2. Whether the Government failed to comply with Article 2-18 of
Contract Terms No. 1, supra, or any other contractually. mandated
requirement, to issue an additional Cure Notice to Appellant
prior to its June 13, 1985, partial termination.
3. Whether the Government's June 13, 1985, partial termination
was erroneous because: (a) The inspection samples used as the
basis for rejection were inconsistent in number with the
requirements of MIL-STD-105D; and/or (b) The defects were
improperly classified under the QATAP.
4. Whether the Government, at any time, waived its entitlement
to enforce the scheduling requirements of the contract either
expressly, or impliedly, through breach of a duty to cooperate
with the contractor or otherwise.
5. Whether or not the 120-day warranty period of Article 2-13 of
Contract Terms No. 1, supra, was exceeded at the time of the
September 13, 1985, partial termination, thus precluding recovery
by the Government of moneys previously paid to Appellant.
6. Whether Article 2-18 of Contract Terms No. 1, supra, limits
Respondent's right of recovery to excess reprocurement costs
only.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
The Board, for its findings of fact and conclusions of law, finds
that:
1. The evidence does not support Appellant's bald assertion
that he had orally entered into an agreement with Hughes for
acceptance of the Navy's shipment at the time of the May 14 and
15, 1985, inspection by Lauffer and Campbell for the following
reasons: (a) Article 2-12 "Inspection and Tests," of Contract
Terms No. 1 in pertinent part states that "[a]cceptance or
rejection of supplies shall be made as promptly as practicable
after delivery, except as otherwise provided in the contract .
. . . The inspection and test by the Government of any supplies
or lots thereof does not relieve the contractor from any
responsibility regarding defects or other failures to meet the
contract requirements which may be discovered prior to
acceptance."; (b) The contract specifications make no
exception to the delivery before acceptance provision of
Contract Terms No. 1; (c) Mr. Hughes denied making any oral
agreement or having any authority to make such an agreement
with Mr. Senter respecting Senter's contention that Hughes had
orally agreed that Lauffer and Campbell's inspection would
constitute an acceptance, notwithstanding the terms of Article
2-12; (d) Lauffer and Campbell each denied having been
delegated contractual authority to "accept" the tendered
products, notwithstanding the fact that Lauffer may have
referred to the inspection at one time or another as "formal
inspection sampling"; (e) The Contracting Officer denied that
he had given Hughes authority to waive the terms of Article
2-12 or to otherwise accept the product; (f) The contract
modification which memorializes the agreement between the
Government and the Appellant respecting the inspection refers
to providing "an inspector for quality compliance in three (3)
instances: at one forth [sic]; at one-half and before
completion." which such language makes clear that it
contemplates a segmented production inspection for quality
compliance and not an agreement for "final acceptance" before
shipment as alleged by Mr. Senter (underscoring added for
emphasis); and (g) A telegram "cure notice" was given to
Appellant for failure to notify Respondent of the time for
"Quality Compliance Inspection." (Emphasis added.) (R4 File,
Tab CC, GPO BCA 13-85.)
2. (a) Respondent, by telegraph "cure" notice of May 9, 1985,
fully complied with the provisions of Article 2-18, Contract
Terms No. 1 respecting the June 13, 1985, partial termination.
In so finding, the Board notes the extent to which Appellant had
already been put on notice of the Government's right to terminate
for default: (1) The "ship complete" date for the final product
was August 30, 1984; (2) Two earlier "show cause" letters had
been issued because Appellant had "failed to perform the schedule
requirements" of the contract; (3) Contract Modification 0029 of
September 30, 1984, issued after Appellant's response to the
first such letter per its terms, was "not to be construed as an
extension of the original ship date" nor was "[t]he delay in
default proceedings [to be] a waiver of the Government's rights
and remedies provided by law under the contract."; (4) A second
Contract Modification, 0802 of April 15, 1985, notified Appellant
of Respondent's withholding of default proceedings on the
condition that certain defects be corrected and an acceptable
product delivered on or before May 15, 1985; and (5) A telegram
"cure notice" was given to Appellant for failure to notify
Respondent of the time for "quality compliance inspection" on May
9, 1985. (R4 File, Tab CC, GPO BCA 13-85.)
The clear thrust of all these documents was to warn Appellant of
the imminent possibility of termination for default, if the
product was not acceptable in accordance with the contract terms.
The Board also notes the Appellant was obligated by the
provisions of Article 2-12, Contract Terms No. 1, captioned
"Inspection and Tests" to correct the rejected product at its own
expense and if it failed to promptly do so, the Government could,
as here, terminate the contract for default.
(b) The Appellant was given ample notice prior to the September
13, 1985, partial termination that the Air Force and
Superintendent of Documents Sales Program portions of the
contract were defective and needed to be cured, in that Appellant
was so notified by (1) the telephone conversation of June 3, 1985
(Id. at Tab A-l, GPO BCA 19-85); (2) Contract Modification 0955
of June 4, 1985, which confirms the June 3rd conversation and
directs the correction of the "quality defects" by June 28, 1985
(Tab A-l, supra); (3) the telephone notification of August 5,
1985, to pick up, correct, and redeliver the products; (4) the
letter of August 7th reiterating the direction of the August 5,
1985, telephone conversation and identifying the defects as F-12
missing pages and F-16 wrong pagination (Id. at Tab K-ll, GPO BCA
19-85); and (5) the telegram "cure notice" of August 27, 1985,
advising Appellant that its failure to respond to the direction
to pick up, correct, and redeliver the products was a condition
endangering the performance of the contract.
3. The Government's June 13 and September 13, 1985, partial
terminations were each supported by the proper application of
MIL-STD-105D with respect to the number of samples required and
Section F-12 of the QATAP with respect to the classification of
defects for the following reasons:
(a) Under Government contract law, the Government has a right to
strictly enforce compliance with its specifications. H. L. C. &
Associates Construction Co. v. United States, 367 F.2d 586, 598
(Ct.Cl. 1966). Maxwell Dynamometer Co. v. United States, 386
F.2d 855, 868 (Ct.Cl. 1967). The Government, however, must show
that the work does not meet the requirements of the
specifications, Hardeman-Monier-Hutcherson, ASBCA 11785, 67-1 BCA
� 6210 (1967); Ramar Co., ASBCA 16060, 72-2 BCA � 9644 (1972);
Pams Products, Inc., ASBCA 15847, 72-1 BCA � 9401 (1972).
Generally, this is accomplished, as here, by submitting test
results. The burden then shifts to the contractor to show that
the tests were wrong for some cogent reason. C.W. Roen
Construction Co., DOTCAB 75-43, 76-2 BCA � 12,215 (1976).
This is precisely what the Appellant is attempting to do in his
Complaint. Our analysis, however, shows that Appellant's
argument has failed to meet that burden since the contract
provides that:
(1) "The inspection levels are the means used to determine the
relationship between the lot or batch size and the minimum sample
size. Inspection Levels will be specified in accordance with
page 9 of 'Military Standard Sampling Procedures and Tables for
Inspection by Attributes' (MIL-STD-105D)." (Page 1 of the QATAP.)
(Emphasis added.)
(2) Inspection levels are specified as (a) Non-destructive tests
- General Inspection Level I and (b) Destruction Tests - Special
Inspection Level S-2. (Page 3 of 5 of the specifications.)
(3) The term lot or batch size means "inspection lot" or
"inspection batch"; i.e., a collection of units of product from
which a sample is to be drawn and inspected to determine
conformance with the acceptability criteria, and may differ from
a collection of units designated as a lot or batch for other
purposes (e.g., production, shipment, etc.). (Paragraph 5.1 of
MIL-STD-105D, page 3.)
(4) On page 9 of MIL-STD-105D is a table which is used to
determine sample size code letters. The left hand column
reflects variable lot or batch size quantities. The next four
columns reflect code letters for special inspection levels S-l
through S-4. The last three columns show code letters for
general Inspection Levels I, II, and III. The sample size code
letter for general Inspection Level I for a lot or batch size of
3,201 to 10,000 is "J"; for 35,001 to 150,000 is "L"; and for
500,001 and over is
(5) The sample size code letter together with the designated AQL
(Acceptance Quality Level) is used for indexing the various
sampling plans in MIL-STD-105D. The AQL is defined as the
maximum percent defective (or the maximum number of defects per
hundred units) that for purposes of sampling inspection, can be
considered satisfactory as a process average.
(6) The specifications are silent as to AQL's. The QATAP,
however, provides that "[u]nless otherwise specified, the AQL's
are 1.0 for critical defects and 6.5 for total defects."
(Paragraph 1.6 - Definition of QATAP, page 1.)
(7) The MIL-STD-105D paragraph 6.1 states that the acceptability
of a lot or batch will be determined by the use of a sampling
plan or plans associated with the designated AQL or AQL's.
(8) Paragraph 8.1 of the MIL-STD-105D states that "[n]ormal
inspection will be used at the start of the inspection unless
otherwise directed by responsible authority. There are 3 such
normal plans: Single normal, double normal and multiple normal."
However, paragraph 9.5 of the standard states that "when several
types of plans are available for a given AQL and code letter, any
one may be used."
(9) Table IV-A multiple sampling plans for normal inspection
(master table) shows a sample size of 20 for an AQL of 6.5 and
sample size code letter J.
Since it is clear that the number 17,797,084 represents the total
number of cards which Appellant was to produce, and since the
product being inspected was the shipment of 10,000 cards, it is
reasonable to accept Campbell's testimony that the inspection lot
was 10,000 rather than the 17,797,084 entered on the inspection
report. Moreover, it is obvious from the above examination of
the MIL-STD-105D that Campbell also erroneously entered Plan L on
the inspection report when, in fact, he correctly used Plan J
which called for a sample of 20. What is unclear from the report
or the Board's examination of the documents is why he chose to
use the multiple normal sampling plan rather than the single
normal sampling plan for his inspection. Be that as it may,
paragraph 9.5 of MIL-STD-105D makes it clear that the choice of
which "normal" plan to use was his alone to make and he, as
asserted in Respondent's Answer, chose the multiple plan.
(b) Appellant's next contention, i.e., the inappropriateness of
classifying missing recipe cards as "missing pages" for QATAP
purposes, raises a question of contract interpretation and not of
fact. Turning to Webster's New Collegiate Dictionary, G. & C.
Merriam Co., Springfield, Mass., 1977, as our first guide, we
find the word "missing" to have but a single meaning; i.e.,
"absent." The word "page" on the other hand has multiple
meanings, only the first of which fits contextually with our
issue; i.e., "one of the leaves of a book, magazine, letter, or
manuscript; also a single side of one of these leaves." From
these definitions, we can conclude preliminarily that the term
"missing pages" need not be given the narrow interpretation
suggested by Appellant.
Turning next to the QATAP for whatever guidance we can discern,
we find the only mention of the term "missing pages" in the
"Tolerance Tables for Miscellaneous Finishing Attributes" where
it stands first in a list of other defects all of which are
characterized as "critical"; i.e., "Upside Down Cover, Upside
Down Pages, Blank Pages - Other Than Specified, Wrong Pagination
and a Loss of Information," the only additional guidance is the
definition in the Table of "loss of information" as "any omission
of or damage to the printed image which impairs the transmission
of the intended information." (Page 38 of the QATAP.)
Looking to the list and this definition, it seems clear that the
drafter's intention was to treat loss or impairment of intended
information as a critical defect. Indeed, it seems facially that
the inspector could have characterized the missing cards as "loss
of information" with the same result as characterizing them as
"missing pages." Moreover, since the QATAP was specifically made
a part of the contract and since no exclusions were made as to
the application of any of its provisions as to product types, it
must be assumed that all product types were to be evaluated by
applicable QATAP provisions to protect the Government's interest
by assuring that it received the quality product it specified.
Paragraph 4-2 of the QATAP entitled "Finishing Attributes"
specifies that: "The Government will evaluate finishing
attributes by inspecting individual copies of publications. When
each copy is inspected, each applicable finishing attribute that
deviates from specifications will be classified as either a
critical or major defect in accordance with the tolerance table
for that attribute." The finishing attribute that deviated from
the specifications was a missing card. The deviation could have
been characterized as a loss of information or a missing page.
The inspector in his discretion chose the latter. The Board will
not disturb such judgment.
4. There has been no evidence whatsoever presented to the Board
supportive of Appellant's bald assertion that the Government
waived its entitlement either through a breach of its duty to
cooperate with the contractor or otherwise. This finding is
supported by our discussion respecting whether there was a need
for a further "cure notice," paragraph 3, supra. Accordingly, no
analysis of the contractual or factual background is necessary to
support a conclusion that the allegation is wholly without merit.
5. Appellant's assertion that finality due to the 120-day
warranty period precluded the September 13, 1985, partial
termination is without merit for the reasons expressed in
paragraph 2(b), page 48, supra, and Respondent's answer and
brief, which reasons this Board adopts as its own. There was but
a single contract between the parties, albeit that there were
segmented distributions to various Government entities, two of
which chose to accept defective products notwithstanding the
Government's right to reject. In such circumstance, the various
ongoing activities associated with the Government's good faith
attempt to allow Appellant to provide an acceptable product with
respect to the Navy, Army, and Marine Corps' portions cannot now
be allowed to act as a limitation on the Government's right to
terminate the Air Force and Superintendent of Documents Sales
Program portion of the contract which were produced by Appellant
as part of the very same production schedule especially where, as
here, it is abundantly clear that Appellant was fully aware that
these portions of the contract were potentially as defective as
the portions it was attempting to correct.
6. Article 2-18(b) of Contract Terms No. 1, supra, creates a
contractual right in the Government to recover excess
reprocurement costs. However, Article 2-18(f) states that "[t]he
rights and remedies of the Government provided in this article
shall not be exclusive and are in addition to any other rights
and remedies provided by law or under the contract." Accordingly,
Article 2-18 does not act as a limitation upon the Government's
right to collect other debts due and owing to it. Government, to
the extent that it made an erroneous payment to Appellant, is
entitled to recover such payment under the authority of the
Claims Collection Act, 31 U.S.C. � 3716. The appropriateness of
such action by the Government is not cognizable by this Board
under the jurisdictional authority granted by GPO Instruction
110.12, "Board of Contract Appeals Rules of Practice and
Procedure."
DECISION
Based upon the foregoing discussion, it is the conclusion of this
Board that the CO acted within the proper scope of his discretion
in partially terminating the contract's Navy, Air Force, and
Superintendent of Documents Sales Program requirements; and that
Article 2-18 of Contract Terms No. 1 does not limit the
Government's right to recover by administrative offset, or
otherwise, erroneous payments previously made by it to Appellant.
Accordingly, the appeal is denied and the decision of the CO is
affirmed. IT IS SO ORDERED. 3/
_______________
1/ The notes in the R4 File, although unsigned, reflect a
conversation with its writer, who from observation of signed
notes elsewhere in the file, appears to be George Watson.
2/ The reference to "Hughes'" last inspection in Senter's plant
and Hughes' approval to ship is an apparent reference to the May
14 and 15, 1985, inspection by Lauffer and Campbell acting on
Hughes' behalf.
3/ The long-term delay in the issuance of this opinion has been
caused by the administrative oversight of the Board, itself.