BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
MIDWEST BANK NOTE COMPANY ) Docket No. GPOBCA 13-95
Program D381-S )
Purchase Order 60004 )
Print Order 92708 )
For the Appellant: Midwest Bank Note Company, Plymouth,
Michigan, by Frederic G. Antoun, Jr., Attorney at Law,
Chambersburg, Pennsylvania.
For the Government: Thomas Kelly, Esq., Assistant General
Counsel, U.S. Government Printing Office.
Before BERGER, Ad Hoc Chairman.
DECISION AND ORDER
Midwest Bank Note Company (Appellant), 46001 Five Mile
Road, Plymouth, Michigan, appeals the decision of U.S.
Government Printing Office (GPO or Respondent)
Contracting Officer Jack Marken1 affirming the
reduction of its contract price to reflect the
rejection of a quantity of Social Security cards
produced under the contract. The cards were rejected
because of a perforation problem that prevented them
from separating, or "bursting," properly. Hearing
Transcript (HT) 25-26.2 The Appellant asserts that
GPO's action was improper because GPO did not timely
exercise its rights under the contract warranty clause
and did not otherwise have a proper or "adequate" basis
for rejecting the cards. For the following reasons,
the Board AFFIRMS the Contracting Officer's decision
and DENIES the appeal.
I. BACKGROUND
1. On April 24, 1992, the Appellant was awarded the Program
D381-S contract for the production of Social Security cards for
the period of April 24, 1992 to January 31, 1994. Rule 4 File,
Tab 4.3 Print Order No. 60004, issued on October 8, 1993, called
for a quantity of 15 million cards. Rule 4 File, Tab 5. The
Appellant made six deliveries through May 10, 1994.4
2. In early April 1994 the Social Security Administration (SSA)
complained to GPO that some of the cards delivered by the
Appellant would not burst properly, and the Appellant was so
notified by telephone. Rule 4 File, Tab 6. GPO subsequently
inspected the cards and concluded that 34 cartons, all from the
Appellant's December 22, 1993 shipment, were rejectable. Rule 4
File, Tab 7.
3. The Appellant then arranged for an inspection of SSA's
bursting equipment; the equipment was found to be operating
properly. HT 33-34; Rule 4 File, Tab 10.
4. The Contracting Officer, by letter dated August 30, 1994,
notified the Appellant that the defective cards were worthless
and that the Appellant would be liable for the cost of the
unusable cards and any damages suffered by the Government. Rule
4 File, Tab 25. A contract modification reducing the contract
price by $11,320.85 was issued on October 31, 1994. Rule 4 File,
Tab 29. Another modification, assessing damages in the amount of
$1,932, was issued on November 29. Rule 4 File, Tab 31. After
the Appellant disputed these modifications, the Contracting
Officer issued a final decision affirming them on April 10, 1995.
Rule 4 File, Tab 33. The Appellant then filed this appeal.
II. DISCUSSION5
The central issue in this appeal is the proper interpretation of
the "Warranty" clause of the contract, GPO Contract Terms,
Solicitation Provisions, Supplemental Specifications, and
Contract Clauses, GPO Pub. 310.2, effective December 1, 1987
(Rev. 9-88) (hereafter GPO Contract Terms), Contract Clauses, ¶
15, as it is under that clause that the contract price was
reduced. That clause defines "acceptance" as the assumption of
ownership of supplies or services tendered as partial or complete
performance and, as relevant here, provides:
(a) Contractor's obligations. (1) Notwithstanding inspection and
acceptance by the Government of supplies furnished ... the
contractor warrants that for 120 days from the date of the check
tendered as final payment--
(i) All supplies furnished will be free from defects in
material or workmanship and will conform to all requirements ....
....
(b) Remedies available to the Government. (1) The Contracting
Officer or his/her authorized representative shall give written
notice to the contractor of any breach of warranties in paragraph
(a)(1) above within 120 days, unless otherwise specified, from
the date of the check tendered as final payment. (2) Within a
reasonable time after the notice, the Contracting Officer may
either--
(i) Require, by written notice, the prompt correction or
replacement of any supplies or parts thereof ... that do not
conform within the meaning of paragraph (a)(1) above; or
(ii) Retain such supplies and reduce the contract price by an
amount equitable under the circumstances.
The Respondent primarily relies on the August 30 letter as the
written notice to the contractor of the breach of warranty6 and
considers that notice to be timely because final payment under
the contract was made on May 9. The Appellant, while not
conceding that the letter constituted the written notice
contemplated by the clause, asserts that even if it did the
notice was untimely because final payment for the December 22
shipment was made on January 3, 1994. Thus, the issue presented,
as the Appellant characterizes it, is whether under the
"Warranty" clause "the check tendered as final payment" is "the
last check the contractor receives on the contract, or the check
tendered in payment of the invoice for the shipment which
contained the allegedly defective products." App.Brf. at 4.
The issue is essentially one of first impression. The Board has
not previously faced the issue directly, and the issue does not
arise under warranty clauses used by the Executive Branch because
those clauses tie the notice requirement not to the final payment
but typically to time of delivery or time of discovery of the
defect. See Federal Acquisition Regulation (FAR) § 52.246-17.
The Respondent, citing cases involving "final payment" for
purposes of claims filed under the "Changes" clause, argues that
final payment occurs when deliveries have been completed and the
contract has been performed. Resp.Brf. at 6. The Appellant
asserts that the cases on which GPO relies have "no precedential
value" for GPO's "Warranty" clause and are inconsistent with
another GPO clause, "Payments on Purchase Order," GPO Contract
Terms, Contract Clauses, ¶ 24, which states that "Checks tendered
by GPO in payment of any invoice submitted by the contractor ...
are tendered as final payment." App.R.Brf. at 2.
The term "final payment" appears in a multitude of federal
government contract clauses. Among them are the clauses entitled
"Changes" (GPO Contract Terms, Contract Clauses, ¶ 4; FAR §
52.243-1); "Government Delay of Work" (FAR § 52.242-17);
"Examination of Records" (GPO Contract Terms, Contract Clauses, ¶
39; see also FAR ¶ 52.212-5(d)); "Audit--Sealed Bidding"/"Audit
and Records--Sealed Bidding" (GPO Contract Terms, Contract
Clauses, ¶ 40; FAR § 52.214-26); and "Audit--Negotiation"/"Audit
and Records--Negotiation" (GPO Contract Terms, Contract Clauses,
¶ 42; FAR § 52.215-2). These provisions all impose a time
limitation tied to final payment--the "Changes" and "Government
Delay of Work" clauses bar contractor claims related to changes
and delays not filed before final payment, while the other
clauses permit Government officials to audit and have access to
relevant contractor records for a period of three years after
final payment. The term "final payment" is generally understood
to refer to the payment made "upon completion and acceptance of
all work required under a contract, after the contractor presents
a properly executed and duly certified voucher or invoice ...
showing the amount agreed upon, less any amounts previously
paid." John Cibinic, Jr. and Ralph C. Nash, Jr., Administration
of Government Contracts (Third ed. 1995) (hereafter Cibinic &
Nash, Administration) 1210. As the Court of Claims put it, the
"common sense view [is] that after all deliveries are complete
and a payment is then made of the contract balance, such payment
is considered final as the term is used in the Changes clause."
Gulf & Western Inds., Inc. v. United States, 639 F.2d 732, 735
(Ct. Cl. 1980).
Obviously, under this well-established understanding of what
"final payment" means, the Respondent must prevail. However, the
same language in different contracts can have different meanings,
Pennzoil Co. v. Federal Energy Regulatory Commission, 645 F.2d
360 (5th Cir. 1981), and so can the same language appearing in
different provisions of the same contract. See, e.g., Hegeman-
Harris & Co. v. United States, 440 F.2d 1009 (Ct. Cl. 1971); MPE
Business Forms, Inc., GPOBCA 10-95 (August 16, 1996), slip op. at
52, 1996 WL 812877. Thus, it does not automatically follow that
"final payment" in the "Warranty" clause means the same thing as
"final payment" in the "Changes" and other clauses. On the other
hand, where the same words are used in different parts of a
contract, the words should be given the same meaning in the
absence of clear reasons to not do so. Bunge Corp., AGBCA
86-253-1, 91-2 BCA ¶ 24,022.
The commonly understood meaning of "final payment" in the
"Changes"7 (and "Government Delay of Work") clauses stems from
the obvious purpose of the portion of the clauses in which the
term appears-as the Appellant points out, that purpose is to
assure that claims arising under those clauses will be presented,
before they become stale, during the normal administration of the
contract. App.R.Brf. at 2; see Coastal Inds., Inc. v. United
States, 32 Fed. Cl. 368 (1994); Jo-Bar Mfg. Corp.v. United
States, 535 F.2d 62 (Ct. Cl. 1976); McLamb Upholstery, Inc.,
ASBCA 42112, 91-3 BCA ¶ 24,081; Historical Services, Inc.,
DOTCAB 72-8, 72-8a, 72-2 BCA ¶ 9,592. Thus, it is the last
payment under the contract, rather than any earlier payments,
that logically establishes the outer limit for presentation of
claims. Similarly, the examination of records and auditing
clauses reflect the Government's intention to have access to
contractor records for a three-year period following the
completion of the contract, see Bowsher v. Merck & Co., 460 U.S.
824 (1983); SCM Corp. v. United States, 645 F.2d 893 (Ct. Cl.
1981); McCotter Motors, Inc., B-209986, August 2, 1983, 83-2 CPD
¶ 156, and thus the period is tied to the last payment made
under the contract.
On the other hand, the "Payments on Purchase Order" clause
referred to by the Appellant uses the term "final payment" for a
very different purpose. Subsection (b) of that clause, after
denominating checks tendered by GPO in payment of contractor
vouchers as "final payment" regardless of whether the checks are
equal to or less than the invoice amount, specifies that
acceptance of the checks "shall operate as a bar to the assertion
of any exceptions by the contractor to the amount paid by GPO
unless the contractor notifies the Contracting Officer in writing
within 60 calendar days of the date of such check." GPO's
purpose with this language obviously is to establish each payment
it makes on any contractor invoice as one that a contractor can
dispute only within a limited period of 60 days. See
GraphicData, Inc.--Quantum Meruit Relief, B-262251, July 15,
1996, 96-2 CPD ¶ 14. Thus, the time limitation established is
intended to run from each payment rather than only from the last
payment made under a contract; each payment is described as a
"final payment" for this reason.
GPO's purpose with the "final payment" language of the "Warranty"
clause is not so apparent. The clause itself, which imposes
post-acceptance liabilities on the contractor and provides the
Government with post-acceptance remedies for a specified period,
does not mandate or suggest any particular reading of the term
"final payment" as it is used in that clause, as the warranty
period could just as logically run from when specific delivered
products are paid for as from when the last contract payment is
made. The briefs submitted by the parties also are not
particularly helpful-neither the Appellant nor the Respondent
offers any information or argument concerning the history of
GPO's "Warranty" clause, why it differs from Executive Branch
warranty clauses, or why the term "final payment" in that clause
was or was not intended to have any particular meaning. The
Respondent simply relies on the meaning ascribed to the term
under other clauses while the Appellant is content to point out
that fact, note that logically, given the definition of
"acceptance" in the "Warranty" clause, "final payment" could
refer to complete payment for either partial or complete
performance, and point to the meaning explicitly given "final
payment" in GPO's "Payments on Purchase Order" clause.
The Respondent's position is not a compelling one, since, as
noted above, the fact that a term has been interpreted in a
particular way under other contracts or in other contract
provisions does not automatically warrant adoption of the same
interpretation when that term is used in a different contract or
different clause. The Appellant's position also is not
compelling, since (1) "final payment" under the "Warranty" clause
is not precluded from having the same meaning as it does under
the "Changes" clause simply because prior interpretations have
involved only the "Changes" clause, (2) the fact that the
"Warranty" clause recognizes that the Government may accept
partial deliveries does not mandate the conclusion that the term
"final payment" in that clause refers to payment for the partial
deliveries, and (3) the meaning of "final payment" in the
"Payments on
Purchase Order" clause is clearly set forth in that clause and
serves a specific policy embodied in that clause concerning the
timing of challenges to payments rendered.
Nonetheless, the Board must resolve this issue, and it seems to
the Board that there are two possibilities here--the term means
either what the Respondent or the Appellant says it means, or it
is reasonably susceptible to either interpretation, i.e., is
ambiguous. Under either possibility, the Board concludes that
the Respondent must prevail.
The term "final payment" has long been understood to refer to the
last payment made on a contract, Cibinic & Nash, Administration
1210, a payment that typically has "far-reaching legal effects
upon each party's ability to pursue claims against the other."
Id. at 1211; see, e.g., 4 Comp. Gen. 404 (1924). The Board is
therefore loath to ascribe a different meaning to that term
unless there is a clear indication that a different meaning was
intended. Cf. Bunge Corp., supra. The Board is aware of no such
indication. The Board is aware, however, of another situation
in which the parties had no difficulty in reading the "Warranty"
clause as GPO urges. In that situation, the contractor made
several deliveries. After the last delivery, GPO paid the
contractor with two separate checks dated nine days apart.
Subsequently, GPO notified the contractor of a problem and
eventually rejected, pursuant to the "Warranty" clause, a major
portion of what had been delivered. The problem notification
letter, sent 122 days after the first check was dated, "was
admittedly sent within the warranty period," which the Board
stated expired on the date that was 120 days after the second
check was dated. See Vanier Graphics, Inc., supra, at 24 and 24
n.15.
The only Government contract clause of which the Board is aware
that uses other than the traditional meaning for the term "final
payment," GPO's "Payments on Purchase Order" clause, itself
clearly sets forth what is intended by the term. The "Warranty"
clause does not set forth any particular meaning for the term.
The most that can be said is that the relevant language of the
"Warranty" clause ("... for 120 days from the date of the check
tendered as final payment ...") and the "Payments on Purchase
Order" clause ("Checks tendered by GPO ... are tendered as final
payment.") is similar. Notwithstanding this similarity, in the
absence of anything in the record suggesting that the "Warranty"
clause language was intended to be read in conjunction with the
"Payments on Purchase Order" clause or was intended to have a
meaning other than the traditional one, the Board considers the
only reasonable interpretation of the term "final payment" in the
"Warranty" clause to be that given it under the "Changes" clause
and the various other clauses in which it appears. Thus, the
Board holds that "final payment" in the "Warranty" clause refers
to the last payment made and not to any interim or partial
payment.
Moreover, even if the Board viewed the term as ambiguous and the
Appellant's interpretation as a reasonable one, the Appellant's
cause would not be helped. Although, under the contract
interpretation rule known as contra proferentem, ambiguous
contract terms are resolved against the drafter, RD Printing
Assocs., Inc., GPOBCA 02-92 (December 16, 1992), slip op., 1992
WL 516088, the rule is applied only if the contractor shows that
it relied upon its own reasonable interpretation of the ambiguous
language in preparing its offer. Randolph Eng'g Co. v. United
States, 367 F.2d 425 (Ct. Cl. 1966); Fry Communications,
Inc./InfoConversion Joint Venture v. United States, 22 Cl. Ct.
497 (1991); RD Printing Associates, Inc., supra. The Appellant
has made no such showing--it did not raise the matter at the
hearing and its briefs are silent on the point. Thus, any
ambiguity here would not be resolved in the Appellant's favor.
See Cibinic & Nash, Administration 227-228 and cases cited
therein.
Accordingly, the Board concludes that the Respondent's August 30
letter was timely for purposes of the "Warranty" clause.
The Appellant further argues that even if the letter is timely,
it does not constitute proper written notice of a breach of
warranty because there is no statement in the letter that the
problems described constitute a breach or a failure to comply
with the specifications. App.Brf. at 4. The Board does not
agree.
The letter is a response to one from the Appellant that followed
the efforts of the parties to deal with the bursting problem
identified in April. The letter recited the efforts that had
been made, stated that cards that failed to burst "are worthless
and must be shredded," and concluded that "[i]f more stoppages
occur ... these bad cards will be put aside as they have in the
past. The cost of these unusable cards will then be deducted
from the price invoiced ... [and] actual damages suffered by the
Government may also be charged back to the contractor." Rule 4
File, Tab 25.
This letter falls considerably short of what an ideal notice of
breach of warranty should be, as it neither uses the term
"notice" nor explicitly references a breach of warranty.
Nonetheless, the "Warranty" clause does not require any
particular form or content for the notice, and it is generally
recognized that a notice of breach of warranty need simply be
sufficient to inform the seller that a claimed breach is involved
so that the seller can try to cure the defect or otherwise
minimize its damages. Standard Alliance Inds., Inc. v. Black
Clawson Co., 587 F.2d 813 (6th Cir.), cert. denied, 441 U.S. 923
(1978); U.C.C. ¶ 2-607 (1989) (Official Comment). Given the
circumstances here, where the Appellant was well aware of the
bursting problem and had made efforts to identify the source of
the problem, the Board considers the August 30 letter discussing
the problem and pointing out the Government's intention to deduct
the cost of the unusable cards from the Appellant's invoice price
as sufficient notice that the Government was treating the matter
as a breach of warranty.8 Moreover, since the Appellant was
familiar with the problem and had been attempting to resolve it,
the Appellant was not prejudiced by the lack of any specificity
in the letter or deprived of an opportunity to minimize its
damages.
The Appellant also asserts that the Contracting Officer did not
properly impose the price reductions because he did not do so
within a reasonable time, as required by the "Warranty" clause.
The Appellant asserts that the October/November contract
modifications came too late because the Contracting Officer knew
in April what the extent of the problem was. As indicated by the
Respondent's August 30 letter, however, the full extent of the
problem was not known in April and wasn't known on August 30.
The Board sees nothing unreasonable with the timing of the price
reduction actions taken by the Contracting Officer in October and
November.
The Appellant next argues that GPO has failed to establish that
the rejected cards did not meet specifications because there were
no enforceable standards in the specifications. The
specifications stated that "[a]ll elements of manufacture of
these continuous forms, such as printing, punching, perforation,
registration, etc. shall be of such precision as will [e]nsure
perfect continuous operation" on certain specified equipment
(including bursting equipment). Rule 4 File, Tab 1. The
Contracting Officer testified that despite this language the
Appellant was not held to a "perfect" standard, HT 39, which
leads the Appellant to query to what standard it was held.
The concern raised by the Appellant reflects the rule that before
the Government may reject a contractor's product, it must first
establish specific criteria indicating the level of quality the
product is expected to meet. See The Standard Register Co.,
Inc., GPOBCA 25-94 (March 26, 1998), slip op. at 20, 1998 WL
______. This rule has led the Board to overturn the rejection
of an entire contract quantity of forms because some of the forms
jammed on the printer during high-volume production runs, The
Standard Register Co., Inc., supra (contract contained no
standards concerning nature and extent of production runs and
degree of tolerable jamming) and the rejection of an entire
quantity of prescription forms because the word "void" did not
always appear on electrostatically reproduced copies of the
forms. Professional Printing of Kansas, Inc., GPOBCA 02-93 (May
19, 1995), slip op., 1995 WL 488488 (no contract standards, e.g.,
failure rate or identity of machines to be used, for determining
acceptability of forms with respect to the "void" requirement).
One of the predecessor panels to this Board9 reached a similar
result, overturning the rejection of an entire shipment (540
cartons) of forms because of a problem found with a few cartons
of the forms. Elgin Business Forms, Inc., GPOCAB 10-84 (October
19, 1984), slip op., 1984 WL 148108 (no performance levels
indicated in contract). In each of these cases the Board and its
predecessor panel were concerned with the absence of any standard
or criterion that would permit the rejection of entire contract
quantities of forms (and either a termination for default or an
order to reprint) because of a problem with some of the forms.
Here, however, GPO has not rejected the 15 million cards called
for by Print Order 60004; it has rejected only the specific boxes
of forms that were found to be defective. The cards in these
boxes did not burst on SSA's equipment as they were required to
do by the contract specifications.10 Thus, this case does not
involve the question of whether the contract contained sufficient
standards to permit rejection of entire shipments. It involves
only the rejection of specific deliverables that were found not
to meet clear specification requirements for perforations
("Perforate a tearline ... to permit easy separation of forms")
and operation on SSA's specified equipment. Products that do not
meet specification requirements are rejectable, as the Government
has the right to insist on strict compliance with contract
specifications. Big Red Enterprises, GPOBCA 07-93 (August 30,
1996), slip op. at 21, 1996 WL 812960; Automated Datatron, Inc.,
GPOBCA 25-87 and 26-87 (April 12, 1989), slip op. at 2-5, 1989 WL
384974.
The Appellant further challenges the rejection by asserting that
"there was no testimony ... to support the naked inspection
report" and that "the testing was not random sampling as required
by Quality Assurance Through Attributes Program."11 App.Brf. at
6.
The inspection report, Rule 4 File, Tab 7, states that the 34
cartons with which SSA found a problem were rejectable because of
"bad perforations causing cards to tear." Although there was no
direct testimony at the hearing from the inspector, the record
clearly establishes that the cards in these 34 boxes had a
perforation problem. First, there are the notes of the
Contracting Officer and his contract administrator reflecting
what they had been told by SSA about the bursting problem. Rule
4 File, Tabs 6 and 7. Second, there is the report of the
inspection of SSA's equipment conducted at the behest of the
Appellant; this report notes that there was a card perforation
problem, not an equipment problem. Rule 4 File, Tab 10. Third,
there is the report of the attempt to process the cards with the
equipment the Appellant shipped to SSA; again, a perforation
problem with the cards was noted. Rule 4 File, Tabs 12 and 14.
Fourth, there is a report by an SSA employee of an August 24
visit to SSA by the Appellant's chairman, along with a GPO
representative, which states that an effort to run a carton of
cards that had been previously identified as having perforation
problems was unsuccessful because the cards "began to tear at the
perforations and jam the equipment." Rule 4 File, Tab 20.
Fifth, there is testimony from Contracting Officer Marken that
the inspector was a GPO quality assurance technician "trained to
do this type of testing." HT 15. In short, on this record the
Board has no difficulty in concluding that GPO has shown by a
preponderance of the evidence that the cards in these 34 boxes
were defective with respect to the perforations.
As for random sampling, that plays a prominent role in GPO's
quality assurance program, QATAP Manual x; PPR, Chap. XIII, Sec.
1, ¶ 3.b.(6); B.P. Printing and Office Supplies, GPOBCA 22-91
(February 5, 1993), slip op. at 18-19, 1993 WL 311371, but is
used to determine the acceptability of an entire batch or lot.
QATAP Technical Manual, GPO Pub. 355.1 (March 1989), at 4. It is
not relevant here, where there was a "100% inspection" of the 34
boxes of forms that SSA
had tried to use and found to be unusable, Rule 4 File, Tab 7,
and rejection was limited to those 34 boxes.
When the Government asserts a warranty claim against a
contractor, the Government must show, by a preponderance of the
evidence, that 1) it gave timely notice to the contractor; 2)
the defect was the responsibility of the contractor; and 3) it
did not cause or contribute to the defect. Vanier Graphics,
Inc., supra, at 41-42; ABM/Ansley Business Materials v. General
Services Administration, GSBCA 9367, 93-1 BCA ¶ 25,246; Cibinic &
Nash, Contract Administration at 890. The Respondent has done
that here. Accordingly, the Board holds that the Respondent
properly asserted its rights under the "Warranty" clause of the
contract.
There is one final point remaining. The Appellant challenges the
validity of the $1,932 price reduction for damages to the
Government. That amount was based on a memo from SSA to GPO
which set forth "[a]n estimate of operational expenses associated
with the processing" of the defectively perforated cards. Rule 4
File, Tab 30. The estimated expenses were listed as follows:
print operator costs $ 276
maintenance costs of printer 40
bursting machine operator costs 276
maintenance costs of burster 40
supervisory and analytical time
spent troubleshooting 900
storage costs for bad cards 200
shipping of bad cards for destruction 100
actual destruction 100
$193212
The Appellant argues that GPO "submitted no evidence'" in support
of its claim of $1,932 of actual damages, noting that at the
hearing the Contracting Officer stated that he relied on the
numbers furnished by SSA. App.Brf. at 6.
The Board notes that while the "Warranty" clause has no explicit
provision for the assessment of the type of damages involved
here, the clause does provide that the Government's rights and
remedies under the clause "are in addition to, and do not limit,
any rights afforded to the Government by any other clause."
Another clause, "Actual Damages," GPO Contract Terms, Contract
Clauses, ¶ 21, provides that "the contractor will be charged, as
actual damages, for all expenses caused the Government occasioned
by delivery of materials, supplies, and equipment not conforming
to specifications." Thus, under the contract the Respondent is
empowered to assess damages resulting from the delivery of
nonconforming supplies. Cf. Norfolk Shipbuilding & Drydock Corp.,
ASBCA 21560, 80-2 BCA ¶ 14,613, recon. denied, 81-1 BCA ¶ 15,056.
Such an assessment must be logically related to the actual
damages suffered. Hartwig Transit, Inc., PSBCA 1087, 83-2 BCA ¶
16,709.
This matter-involving the Government's unilateral price
reduction-is actually a Government claim against the contractor
for the amount in question. B.P. Printing and Office Supplies,
GPOBCA 14-91 (August 10, 1992), slip op. at 24; P.X. Eng'g Co.,
ASBCA 38215, 89-2 BCA ¶ 21,859. The Respondent therefore has the
burden to prove, by a preponderance of the evidence, that it was
entitled to take the price reduction and that the amounts
involved were accurate. B.P. Printing and Office Supplies,
GPOBCA 14-91, supra, at 25. The Respondent has furnished no
evidence or testimony in support of the reduction, and has not
even bothered to respond, in its reply brief, to the Appellant's
challenge. That leaves the Board with only the SSA memo before
it. That memo, however, does not purport to reflect actual costs
incurred; it merely describes the itemized expenses as an
"estimate." Moreover, there is little or no information in the
memo which reasonably supports the amounts claimed. While the
Board has no doubt that some level of expense for labor, storage,
shipping and destruction was incurred, the Government has not met
its burden to establish the accuracy of the amounts claimed. The
matter will be remanded to the Contracting Officerr with
instructions to restore the amount of $1,932 to the contract.
III. ORDER
The Contracting Officer's final decision is AFFIRMED and the
appeal is DENIED except that with respect to contract
Modification No. 9 dated November 29, 1994, the matter is
REMANDED to the Contracting Officer with instructions to restore
the sum of $1,932 to the contract.
It is so ordered.
June 22, 1998 Ronald Berger
Ad Hoc Chairman
Board of Contract Appeals
_______________
1 lthough Mr. Marken issued the final decision that led to this
appeal, he was the second GPO Contracting Officer for this
contract. The original Contracting Officer, Richard Weiss, was
involved in all essential actions preceding the final decision.
References in this decision to the Contracting Officer therefore
will most often be references to Mr. Weiss.
2 hearing was held in this matter on September 21, 1995. The
transcript of the hearing will be referred to as HT with
appropriate page citations.
3 The Contracting Officer's appeal file, assembled pursuant to
Rule 4 of the Board's Rules of Practice and Procedure, was
delivered to the Board on May 24, 1995. It is referred to as the
Rule 4 File, with an appropriate Tab number also indicated. The
Rule 4 File consists of 33 numbered tabs.
4 Other claims filed by the Appellant under this Print Order were
the subject of this Board's decision in Midwest Bank Note Co.,
GPOBCA 05-95 (May 27, 1998), slip op., 1998 WL ______.
5 The Board's decision is based on the Rule 4 File, the Hearing
Transcript, the Appellant's Complaint, the Respondent's Answer,
Appellant's Brief (App.Brf.), Respondent's Brief (Resp.Brf.),
Appellant's Reply Brief (App.R.Brf.), and Respondent's Reply
Brief (Resp.R.Brf.).
6 The Respondent suggests that the telephonic notification given
the Appellant in early April was also sufficient to satisfy the
notice requirement of the "Warranty" clause. Resp.Brf. at 6-7.
The Board has previously decided that point contrary to the
Respondent's position, stating that because the clause
requirement for written notice is "unmistakable and unambiguous,
an oral notification to the contractor is insufficient to trigger
the Government's rights" under the clause. Vanier Graphics,
Inc., GPOBCA 12-92 (May 17, 1994), slip op. at 27, n.20, 1994 WL
275102.
7 GPO's "Changes" clause is identical to that used by the
Executive Branch and is given the same interpretation.
GraphicData, Inc., GPOBCA 35-94 (June 14, 1996), slip op. at 99,
1996 WL 812875.
8 The Appellant argues that the letter only related past problems
and suggested that the Government would impose a price reduction
only if there were more work stoppages. While the letter could
be read that way, it also can be read as indicating that any
other cards found to be unusable would be added to those already
found to be so and that the total number of unusable cards would
be the basis for the price reduction.
9 Prior to the creation of this Board in 1984, ad hoc panels
heard and decided disputes between GPO and its contractors. The
Board cites the decisions of these panels as GPOCAB. See Rose
Printing, Inc., GPOBCA 32-95 (December 16, 1996), slip op. at 27
n.28, 1996 WL 812880.
10 They also didn't burst on the Appellant's equipment, which the
Appellant shipped to SSA after the problem was discovered. Rule
4 File, Tab 12.
11 The Quality Assurance Through Attributes Program (QATAP), GPO
Pub. 310.1 (rev. April 1996), is GPO's quality assurance program.
Printing Procurement Regulation (PPR), GPO Pub. 305.3 (rev.
10-90), Chap. XIII, Sec. 1, ¶ 3.a; Fry Communications, Inc.,
GPOBCA 30-94 (March 30, 1998), slip op. at 10, 1998 WL ______.
12 The expenses listed in the memo included $2,695 for the cost
of cards and therefore totaled $4,627, but GPO determined that
these costs were included in the October 31 price reduction.
Rule 4 File, Tab 30.