BOARD OF CONTRACT APPEALS U.S. GOVERNMENT PRINTING OFFICE WASHINGTON, DC 20401 In the Matter of ) ) the Appeal of ) ) FRENCH BRAY, INC. ) Docket No. GPOBCA 16-96 Jacket Nos. 394-726, 394-727, ) and 394-728 ) Purchase Order 100092 ) For the Appellant: French Bray, Inc., Glen Burnie, Maryland, by Frederic G. Antoun, Jr., Attorney at Law, Chambersburg, Pennsylvania.. For the Government: Kerry L. Miller, Esq., Associate General Counsel, U.S. Government Printing Office. Before BERGER, Ad Hoc Chairman. DECISION ON MOTION FOR SUMMARY JUDGMENT AND ORDER French Bray, Inc. (Appellant), 6731 Baymeadow Drive, Glen Burnie, Maryland, requests summary judgment on its appeal of the final decision of Contracting Officer James L. Leonard of the U.S. Government Printing Office (GPO or Respondent) partially terminating for default French Bray's contract for the production of Indoor Air Quality Tools for Schools Action Kits for the Environmental Protection Agency (EPA). For the reasons which follow, the motion for summary judgment is GRANTED IN PART AND DENIED IN PART. I. BACKGROUND 1. On June 1, 1995, GPO awarded the contract (Purchase Order 100092) to French Bray after competitive bidding. The contract encompassed three different GPO-assigned jacket numbers, corresponding to three related requisitions received from EPA. Jacket 394-726 was for expansion folders; jacket 394-727 was for problem solving wheels to be placed in the kits and for an additional quantity to be packaged separately; and jacket 394-728 was for index tabs and other items to be inserted into the folders. Rule 4 File, Tabs 2, 3, and 6.1 2. The contract as awarded required shipment by July 14, 1995. French Bray, however, failed to furnish acceptable proofs for jacket 394-726 and was unable to meet that date. By contract modification dated September 11, 1995, GPO extended the shipping date to September 22. Rule 4 File, Tab 13. French Bray also failed to meet that date, and on September 27 its "contract, identified as purchase order 100092, jacket 394-726," was terminated for default. Rule 4 File, Tab 16. That termination was withdrawn on October 24 and a new delivery completion date of October 31 was established. Rule 4 File, Tab 19. Deliveries were then made (although some shipments had to be retrieved for correction of defects) and GPO, based on proof of shipment, paid the Appellant. Final payment was made on December 27. 3. Subsequently, GPO, in response to EPA complaints that the kits had numerous defects, inspected the kits and found them to be rejectable. Rule 4 File, Tab 24. By letter dated March 6, 1996, GPO notified French Bray that "a complaint had been received regarding your performance on Jacket 394-276 Purchase Order 00092."2 The letter stated that "[t]his notice is in conformance with" the "Warranty" clause of the contract. Rule 4 File, Tab 40. On May 1, the contract was partially terminated for default. Rule 4 File, Tab 29. (The contract was only partially terminated for default because EPA used some of the kits.) On June 10 the default was modified to increase the number of kits and problem solving wheels covered by the default. Rule 4 File, Tab 32. II. DISCUSSION 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), Contract Clauses, ¶ 15, provided that "[n] otwithstanding inspection and acceptance by the Government of supplies furnished or any condition concerning the conclusiveness thereof, the contractor warrants that for 120 days from the date of the check tendered as final payment ... [a]ll supplies furnished will be free from defects in material or workmanship and will conform to all requirements ...." This clause, as do comparable warranty clauses found in Executive Branch contracts, permits the Government to avoid the conclusiveness of acceptance and to avail itself of certain remedies after acceptance when furnished goods are found to be defective. Vanier Graphics, Inc., GPOBCA 12-92 (May 17, 1994), slip op. at 40, 1994 WL 275102; ABM/Ansley Business Materials v. General Services Administration, GSBCA 9367, 93-1 BCA ¶ 25,246; John Cibinic, Jr., and Ralph C. Nash, Jr., Administration of Government Contracts 897-8 (Third ed. 1995). When the Government seeks a remedy under a warranty clause, it bears the burden of establishing a breach of warranty, Philadelphia Biologics Center, ASBCA 32622 et al., 88-4 BCA ¶ 21,147, and must show that (1) the defect in the furnished items was the responsibility of the contractor; (2) the required notice was given to the contractor in a timely fashion; and (3) it did not cause or contribute to the defect. Vanier Graphics, Inc., supra, at 40-42 (quoting from ABM/Ansley Business Materials v. General Services Administration, supra); Joseph Penner, GSBCA 4647, 80-2 BCA ¶ 14,604. Therefore, to prevail on its motion for summary judgment,3 the Appellant must prove the negative of one of these elements. Vanier Graphics, Inc., supra, at 42. The Appellant bases its motion on the second element. It asserts that the required timely notice was not given because GPO's letter of March 6, 1996 was too vague to constitute the required notice. It further asserts that the letter by its own terms applied only to jacket 394-726 and that therefore no notice applicable to the other two jackets was ever given within the 120-day period specified by the "Warranty" clause. In Vanier Graphics, Inc., supra, the Board considered a motion for summary judgment that also was based on the alleged insufficiency of a breach of warranty notice. The Board stated that "it was incumbent on the Appellant [as the moving party] ... to offer evidence ... which would show that the [contract deliverables] had been accepted by the Government ... and that the acceptance was conclusive because the Respondent failed to assert its rights under the "Warranty" clause in time." Id. at 42-43. (Emphasis in original.) To establish acceptance, the appellant in that case relied on Government admissions that the appellant said established timely delivery, receipt and retention by the Government, and tender of final payment. GPO argued that acceptance was not automatically indicated by those facts because under its contracts payment is evidence of delivery, not acceptance. The Board, noting that "acceptance of supplies cannot always be imputed from the simple act of paying for them," id. at 43, held that the appellant's evidence was insufficient to establish acceptance. Here, French Bray, relying on various exhibits in the Rule 4 File, states that "GPO clearly accepted the products ... by accepting delivery ... paying the contract price after inspection ... and then using a large percentage of the product ... after a subsequent inspection ...." Memorandum in Support of Motion for Summary Judgment (hereafter Memorandum) at 3. GPO again disputes the validity of that conclusion based on the facts cited by the Appellant, stating that "[u]nlike most Government agencies ... the GPO pays a contractor prior to inspection, simply upon proof of delivery.... Therefore, no conclusion regarding ... acceptance ... can be drawn from the mere fact of payment." Respondent's Opposition to Appellant's Motion for Summary Judgment (hereafter Resp. Op.)4 at 5, n.4. The Respondent goes further, however, stating that "given the presence of the Warranty clause and the remedies contained therein, it is not necessary to reach the question of whether GPO formally accepted the product." Id. The Board interprets that statement to mean that with respect to the Appellant's motion, the Respondent, notwithstanding its position concerning the effect of making payment to the Appellant, does not contest acceptance here. Indeed, the Respondent's use of the "Warranty" clause suggests that the Respondent believed that acceptance had occurred, and the Respondent appears to concede as much when it states that "Appellant makes two arguments designed to attack the validity of the Contracting Officer's evocation of the Warranty clause to overcome the Government's acceptance of the product." Resp. Op. at 3 (Emphasis added.) Thus, unlike in Vanier Graphics, Inc., supra, the Board does not consider the question of acceptance here to be in dispute. The ultimate question for resolution, therefore, is whether acceptance was revoked by GPO's March 6, 1996, letter to the Appellant or whether that letter was insufficient to invoke the Government's rights under the "Warranty" clause. The Appellant asserts that the letter must fail as effective notice of a breach of warranty because it advised only that a complaint had been received but failed to advise of any particular defect that would represent a breach of warranty. The Appellant states that "[w] hile ... in some circumstances the full details regarding the alleged or potential breach of warranty are not fully known, there is always some basis for a complaint ...." Memorandum at 5. The Appellant points out when GPO sent the March 6 letter it was aware of specific defects because EPA had provided GPO with the basis of its complaint and GPO quality assurance personnel had verified the existence of various defects. The Respondent argues that the required notice need not be detailed and specific, but must simply be sufficient to put the contractor on notice of a breach of warranty. The Respondent states that the letter "served the purpose of placing Appellant on notice of a defect 'in material or workmanship' or noncompliance with contract requirements." Resp. Op. at 7. The law is reasonably clear on this issue-while the "Warranty" clause requires notice to the breaching party within the time established by the clause, the clause imposes no particular form or content for the notice, which "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." Midwest Bank Note Company, GPOBCA 13-95 (June 22, 1998), slip op. at 11, 1998 WL ______. In this regard, the relatively few cases in this area indicate that the notice does not have to identify any specific defects of the furnished product that give rise to the breach claim or even specifically state that a breach of warranty claim is being made. For example, in Midwest Bank Note Company, supra, the contractor was informed that certain cards that it had produced were "worthless and must be shredded" and that "[i]f more stoppages occur ... these bad cards will be put aside .... 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." Id. at 11. The Board held that this was sufficient to notify the contractor that the government was treating the matter as a breach of warranty. In Oswald Schicker Mfg. Co., ASBCA 16836, 72-2 BCA ¶ 9,614, the contracting officer sent a letter to the contractor advising that there were defects in excess of the acceptable quality level and that the Government was invoking the warranty clause. No specific defects were identified. The Armed Services Board of Contract Appeals held that there was no requirement to specify particular defects in the breach notice, and that the general reference to defects in excess of the acceptable quality level was sufficient. These cases are consistent with the rule applied in commercial contracting. The authors of the Uniform Commercial Code (U.C.C.) tell us that "[t]he content of the notification need merely be sufficient to let the seller know that the transaction is still troublesome and must be watched. There is no reason to require that the notification ... include a clear statement of all the objections that will be relied on by the buyer .... The notification ... need only be such as informs the seller that the transaction is claimed to involve a breach." U.C.C. ¶ 2-607 (1989) (Official Comment). Accordingly, as a matter of law, the Board sees no merit to the Appellant's position. The March 6 letter specifically referenced the contract warranty clause, which clearly placed the Appellant on notice that the Government was exercising its rights under that clause. Moreover, although the letter provided no information as to any specific defects, the reference to a complaint necessarily alerted the Appellant to the existence of one or more problems with what it had furnished. In this respect, the Board sees little difference between the notice in this case and the notice in Oswald Schicker Mfg. Co., supra- neither identifies a specific defect, but both inform the contractor that there is something about what has been furnished that does not meet requirements and that the Government is asserting its breach of warranty rights. Thus, the Board views the March 6 letter as containing sufficient information to satisfy the breach of warranty notice requirement. That leaves for consideration the question of whether the notice is sufficient to encompass jackets 394-727 and 394-728 as well as jacket 394-726. The Appellant rests its argument solely on the fact that the March 6 letter referenced only jacket 394-726. The Respondent relies on the fact that there was only one contract so that "it was not necessary that the Contracting Officer separately identify each of the strapped jackets in order to invoke the Government's contractual rights under the Warranty clause." Resp. Op. at 4. In resolving this issue, the Board is not inclined to adopt a rigid, formalistic approach. Thus, the Board does not believe that the failure of the March 6 letter to explicitly identify two of the three jackets encompassed by the contract automatically negates the effectiveness of the notice with respect to those two jackets. Neither does the Board believe that the notice was effective for all three jackets simply because there was one contract and one of the jacket numbers encompassed by the contract was identified. As stated above, the "Warranty" clause does not require any specific form of notice; it requires only that written notice of a breach of warranty claim be furnished to the contractor. Accordingly, what the Board must determine is whether under the circumstances the notice that was provided by GPO in the March 6 letter reasonably should have placed the Appellant on notice of the breach of warranty claim with regard to jackets 394-727 and 394-728. GPO uses the term "jacket" to refer to the identifying number assigned to printing requisitions received from other Government agencies. Leonard Declaration, ¶ 3. Normally, when requisitioned work is placed with the private sector, each requisition/jacket results in a separate contract, and the contract is usually identified by jacket number. Leonard Declaration, ¶¶ 3, 4. On occasion, however, agency requisitions are grouped, or "strapped," and multiple jackets "will be purchased on one contract." Leonard Declaration, ¶ 4. In this case, separate EPA requisitions pertaining to the kits were given individual jacket numbers which were then strapped and made the subject of a single contract. As the Contracting Officer stated, it is not unusual for a single contract to encompass more than one jacket. See, e.g., Custom Printing Co., GPOBCA 28-94 (March 12, 1997), slip op., 1997 WL 128720 (two different pamphlets); Web Business Forms, Inc., GPOBCA 16-89 (September 30, 1994), slip op., 1994 WL 837423 (several different forms); Chavis and Chavis Printing, GPOBCA 20-90 (February 6, 1991), slip op., 1991 WL 439270 (two different books). Since the different jackets call for different albeit related work, it is obviously important for the contracting officer, if dissatisfied with a portion of the contractor's work and expecting the contractor to remedy the defect or bear the consequences, to specify the particular contract work that has been found wanting. This can be by jacket number, see Chavis & Chavis Printing, supra, but can also be by some other appropriate means (e.g., identification of the particular book, form, or other product found to be deficient). Just as obviously, if the work required by all the jackets encompassed by a single contract is viewed as deficient, that too must be effectively communicated to the contractor. Here the breach of warranty notice identifies the purchase order and one jacket, 394-726. The notice contains no other information regarding the product or portion of the contract to which it applies-it states only that a complaint has been received and that GPO was "in the process of inspecting the product." Rule 4 File, Tab 40. Thus, literally this notice on its face applies only to jacket 394-726. Notwithstanding that fact, if the parties understood a reference to jacket 394-726, the lowest numbered jacket under the purchase order, as pertaining to the entire contract, i.e., to jackets 394-727 and 394-728 as well as to jacket 394-726, the Board would have no difficulty in concluding that the notice was effective with respect to all three jackets. The undisputed facts of record, however, do not establish any such understanding. On the contrary, they show that the parties, and GPO in particular, segmented, identified and dealt with earlier problems under this contract by specific jacket number. On September 11, 1995, after the Appellant encountered problems with the folders called for by jacket 394-726, GPO issued a contract modification identifying jacket "394-726/7/8" as the contract to which it applied, extending the shipping date from July 14 to September 22, 1995 for "Jackets 394-727/728," and stating that "[w]e will withhold default proceedings on Jacket 394-726 provided you deliver complete on or before September 22, 1995." Rule 4 File, Tab 13. This was followed on September 18 with a cure notice regarding a failure to provide revised proofs on "Jacket 394-726." Rule 4 File, Tab 14. On September 25, the Contracting Officer wrote a memorandum to GPO's Contract Review Board requesting concurrence "to partially default the contractor on jacket 394-726." The memorandum advised that jacket 394-726 had been strapped with two other jackets, that proofs had been "ok'd" on the other two jackets but that proofs on jacket 394-726 twice had been rejected and that as of that date revised proofs had not been received. Concurrence was provided and French Bray was informed that "your contract identified as purchase order 100092, jacket 394-726" was terminated for default. Rule 4 File, Tab 16. The Appellant continued its efforts to produce the folders notwithstanding the default and on October 24 GPO issued a contract modification, again applicable to "Jacket No. 394-726/7/8," withdrawing the September 27 default termination "on jacket 394-726." Rule 4 File, Tab 19. The Appellant eventually delivered the kits, but they were found to be defective in several respects involving all three jackets. Rule 4 File, Tab 24. The Contracting Officer, by Memorandum dated February 27, 1996, again requested Contract Review Board concurrence in a termination for default. This time, however, the memorandum requested concurrence to terminate "Jackets 394-726/7/8," stating that "the Quality Assurance Section determined that the jackets were rejectable," Rule 4 File, Tab 25 (emphasis added), and the termination for default notice sent to the Appellant on May 1 identified the terminated contract as "purchase order 100092, jackets no. 394-726/7/8." Rule 4 File, Tab 29. It is eminently clear from these documents that in administering this contract and communicating with the Appellant GPO did not use the first jacket number to refer to the entire contract. All three jacket numbers were used when the entire contract was referenced, while individual jacket numbers were used when references were made to work related to a specific jacket. Thus, when GPO extended the original delivery date it specified that it was doing so for jackets 394-727 and 394-728; it further identified jacket 394-726 as subject to default if delivery were not made by the new delivery date, and, when it subsequently issued a termination for default, it specified that the termination covered jacket 394-726. (That the reference to jacket 394-726 in this termination notice involved only that jacket and not the entire contract is made clear by the Contracting Officer's memorandum to the Contract Review Board and by the subsequent termination for default notice which explicitly identified all three jackets as being terminated.) Thus, under GPO's own course of conduct in dealing with the Appellant prior to issuance of the March 6, 1996 letter, a reference to jacket 394-726 was a reference to the work encompassed by that jacket only and not to the work encompassed by the entire contract. The Respondent states that the Appellant, prior to receipt of the breach of warranty notice, was aware of the nature of the defects because it had had previous quality problems and because it had been orally notified of EPA's complaints. Resp. Op. at 9. In this regard, the Contracting Officer states that his Printing Specialist advised the Appellant in December 1995 that GPO had received a complaint from EPA, that the complaint involved "the same quality problems that Appellant had experienced earlier on the contract and that the EPA Problem Solving wheels purchased under the contract were incorrect." Leonard Declaration, ¶ 5. The Board recognizes that under some circumstances a breach of warranty notice that "falls considerably short of what an ideal notice ... should be" may be considered sufficient where the contractor, prior to receipt of the notice, has been made aware of the problem or problems encountered with its product. See Midwest Bank Note Co., supra, at 11. In the cited case, the contractor received the breach of warranty notice after GPO had identified a problem, advised the contractor of the problem, and worked with the contractor to resolve the problem. The Board held that since the contractor was well aware of the problem the notice, despite its shortcomings, was sufficient to advise the contractor that GPO was invoking the breach of warranty clause in connection with that problem. Here, however, prior to and up to the time the breach of warranty notice was received the Appellant had never been advised that GPO had identified any particular problem. The most that the Contracting Officer's declaration establishes is that more than two months before the breach notice was received the Appellant was orally advised by the contract specialist that EPA had certain complaints, including complaints about the problem solving wheels. Only the GPO contracting officer has the authority, however, to determine that a contractor-furnished product is defective, Big Red Enterprises, GPOBCA 07-93 (August 30, 1996), slip op. at 27-88, 1996 WL 812960, and customer agency complaints do not always result in a GPO determination that a product is defective. See Vanier Graphics, Inc., supra at 15-16. Thus, the Appellant was not on notice of any defect for which it was responsible under the contract merely from the prior contact with the contract specialist. Accordingly, in light of the Respondent's prior course of dealing with the Appellant, when the Respondent, in its breach of warranty notice, referenced jacket 394-726 and the contract's "Warranty" clause, stated that a complaint had been received, and advised that it was "in the process of inspecting the product," it did no more than inform the Appellant that, subject to the results of its on-going inspection, it was invoking its breach of warranty rights with respect to the specified jacket. Accordingly, under the circumstances of this case, the Board considers the breach of warranty notice to apply only to jacket 394-726 and not to the remainder of the contract. Therefore, the Board holds that the Respondent failed to provide timely notice of breach of warranty with respect to jackets 394-727 and 394-728 and therefore was not entitled to exercise its breach of warranty rights against the Appellant with respect to those jackets. III. ORDER The motion for summary judgment is GRANTED with respect to jackets 394-727 and 394-728. The motion is DENIED with respect to jacket 394-726. It is so Ordered. August 21, 1998 Ronald Berger Ad Hoc Chairman Board of Contract Appeals _______________ 1The 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 September 11, 1996. It will be referred to as the Rule 4 File, with appropriate tab letters also indicated to reflect the various exhibits making up the file. The Rule 4 File originally consisted of 39 exhibits. At the Board's request another exhibit (which will be referred to as Tab 40) was added on January 13, 1997. 2The reference to jacket 394-276 instead of to jacket 394-726 is an obvious typographical error. 3The party moving for summary judgment has the burden of demonstrating that there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law. 4 This document was accompanied by a Declaration from Contracting Officer Leonard, which will be referred to hereafter as Leonard Declaration.