U.S. GOVERNMENT PRINTING OFFICE BOARD OF CONTRACT APPEALS Panel No. 17-84 DREW SPALDING, Chairman RICHARD R. HEROUX, Member Appeal of THE AMERICAN PRESS, INC. Jacket 760-516 September 4, 1991 OPINION This appeal, timely filed by The American Press, Inc. (appellant), is from the April 23, 1984, final decision of Robert G. Seibert, Contracting Officer, Columbus Regional Printing Procurement Office, U.S. Government Printing Office (respondent). Respondent terminated the contract for default after appellant failed to comply with the contracting officer's order to reprint the product following a quality rejection. The appeal is DENIED. Background Respondent, by Purchase Order H-4185, of January 30, 1984, awarded a U.S. Government Printing Office (GPO) contract, Jacket No. 760-516, to appellant in the amount of $7,250.00. Appeal File, Exhibit B. Appellant was required by the terms of the contract to print, bind, and ship f.o.b destination a wire-bound book entitled "OHIO RIVER NAVIGATION CHARTS, 1984" for the U.S. Army Corps of Engineers. The specifications called for appellant to print 1,500 copies, each consisting of 172 pages plus a 2-piece cover trimmed to 14 in. x 8 in. Appeal File, Exhibit A. According to the schedule established in the contract, the copy and Government-furnished negatives were to be picked up by appellant by April 20, 1984. In addition, 750 finished copies were required to be delivered to the Huntington District Corps of engineers, Huntington, West Virginia, on or before April 30, 1984, with the balance to arrive by May 8, 1984. Id. The contract award was made "in strict accordance with" appellant's competitive bid, dated January 19, 1984, and respondent's specifications. Appeal File, Exhibit B. In addition, contract modification No. COL-84-288, dated February 21, 1984, increased the contract price by $252.00 to cover the cost of additional performance required of appellant that was not included in the original specifications. Appeal File, Exhibit C. The specifications, in pertinent part, called for the Government to furnish appellant camera copy, plus one black and white glossy photograph for cover #1, two negatives for cover #2 and #3, text negatives (133 negatives for black printing, 81 negatives for red printing, and 81 negatives for blue printing), pagination sheets, and a construction dummy. Appellant was required to use ink colors Black, Process Blue, and 185 Red. The specifications also stated "Note: Register marks 1 must print on all pages, all colors." Appeal File, Exhibit A. The product quality level for both printing and finishing attributes was to be equal to the level III standards for such attributes as set forth in the GPO Quality Assurance Through Attributes Program (QATAP), GPO 1 "Register marks" are defined as "[c]rosses or other devices applied to original copy prior to photography. Used for positioning negatives in register, or for register of two or more colors in process printing." "Register" is defined as the "fitting of two or more printing images on the same paper in exact alignment with each other." POCKET PAL - A GRAPHIC ARTS PRODUCTION HANDBOOK 203 (13th ed. 1988). Publication 310.1, revised June 1981. The QATAP itself was made a part of the contract by reference. Appeal File, Exhibit A, pages 1, 2. After appellant delivered the completed product to the Army Corps of Engineers, it was discovered that some of the navigation charts contained in the book were incorrectly printed. Each navigation chart contained a red line printed over a map of a portion of the Ohio River. The red line was to represent the channel line which was to be used by boaters to navigate the river. Because of incorrect registration of the red ink, the channel line was incorrectly placed on certain of the charts, thus presenting an inaccurate channel line for navigation purposes. The defects were initially brought to the attention of the Columbus RPPO by Jackie D. Pullin, Army Corps of Engineers, on March 15, 1984. Appeal File, Exhibit H. By letter dated March 15, 1984, the contracting officer placed appellant on notice that the printed product was "suspect of not being acceptable." The letter advised that the situation was being further investigated and that appellant would be advised when the contracting officer arrived at a determination as to acceptability. In a handwritten addition to the letter was the comment: "Note: Poor Registration." Appeal File, Exhibit D. The GPO requested that appellant return the Government- furnished negatives. On March 22, 1984, appellant returned the materials mounted on flats. 2 It was discovered that appellant had placed masking sheets over the registration marks on the negatives, thus preventing the marks from 2 A "flat" is defined as "the assembled composite of negatives or positives, mostly on goldenrod paper, ready for platemaking." POCKET PAL - A GRAPHIC ARTS PRODUCTION HANDBOOK 193 (13th ed. 1988). being printed. 3 The Army Corp of Engineers made a positive print of one of the flats and found that none of the pages lined up in proper registration. Appeal File, Exhibit H. By letter dated April 2, 1984, Colonel John W. Devens, District Engineer, Huntington District, Corps of Engineers, Department of the Army, formally advised the contracting officer that the navigational charts printed by appellant had been inspected by the Corps of Engineers, and that "numerous errors were discovered. The errors were due to faulty printing." Colonel Devens further noted: Because of the legal exposure the Corps of Engineers could incur if the charts were distributed in their present condition, the Huntington District will not be able to use them. Accidents could occur should vessel navigators rely upon the erroneously placed sailing line in the charts, since their vessels would be off-course in unsafe waters. Appeal File, Exhibit E. The Corps of Engineers returned the charts to the contracting officer and requested that they be corrected and returned as soon as possible. Appeal File, Exhibit E. Enclosed with the letters was a summary of the Corps of Engineers' inspection results. The summary indicated that 8 books were inspected and defects were found on pages 110 through 119. The inspection summary was signed by Jackie D. Pullen, Acting Chief, Reprographics Branch, and Laddie D. Meadows, Chief, OAS. Appeal File, Exhibit E. Upon receipt of the inspection results from the Corps of Engineers, the contracting officer wrote to appellant. The letter, dated April 4, 1984, informed appellant that "[t]he books are rejected because the printing does not meet the specifications. Specifically, the color registration does not 3 The specifications required that the registration marks be printed. Appeal File, Exhibit A. meet the QATAP LEVEL III assigned to the printing specifications . . ." The contracting officer explained that: The negatives furnished with [the] original order had "pin bar register holes, register marks on left side of page and negative identification written on masking tape placed on each negative." However, when the negatives were returned to this office March 22, 1984 on flats (5 up), the register holes and the identification markings had been cut off a large percentage of the negatives. Your attention is directed to Contract Terms No. 1, dated October 1, 1980, Page 7, paragraph 2-7 "Risk or [sic] Lost." The Government had to make a complete new set of negatives with two Pin bar register holes plus having register marks on left/binding side for registration and checking purposes. A new set of negatives are being returned hereunder for reprinting the complete job at no cost to the Government because register marks for the black, red, and blue were not printed, making it difficult to assess registration without checking the negatives. However, register marks are vital guides in maintaining control of registration of the three colors, you are authorized to print all three color registration marks. The image printing on left hand pages in "Black Ink" only should be centered all sides. This will afford your firm the opportunity to instantly recognize any deviation of registration during press run. Further furnish three complete books to us for approval prior to binding. The books must be reprinted, per specifications, and must arrive at destination by April 27, 1984. Let us know after review of the enclosed printed samples and the negatives whether or not your firm feels it can reprint the product per LEVEL III specifications. Further, let us know by April 9, 1984 whether you will make arrangements to pick up the rejected books or whether the Government may dispose of the materials at its discretion. Enclosed with the letter were two copies of the rejected books, negatives for reprinting, and a previously printed sample. Appeal File, Exhibit F. Appellant replied to the contracting officer's letter with a letter dated April 6, 1984. Appellant stated: The printing was registered as close as possible by us with the negatives that were furnished to us. At no time on this order, or any order for that matter, did we cut any pin bar register holes from any negatives. No printer in his right mind would ever consider that. I would like to bring to your attention that we have printed several Ohio River Charts and have never been furnished with negatives that have been "pin bar register punched." A few scattered negatives have been punched but never adequately enough to be utilized. Had you not requested the negatives rush, as they were, on flats, on March 21, 1984, they would have been returned in their proper envelopes, identified with tape as before. In my telephone conversation with [Columbus Regional Printing Procurement Office Manager Joseph] Oberst on March 30, 1984, he stated that he did not think the job could ever register with the current negatives in question. I would like to make note that on the previously printed sample furnished us, there are no register marks printed, and there are numerous pages "off register." Had we been allowed to print the register marks on the finished sheet, as you are now requesting, we believe that any "misregister" would have been within government standards. I would like to make note that under Item 3-7, Contract Terms No. 1, register marks "must not print on the finished product." As you are aware, the book had other wrong printing not of our doing, that makes it undesirable; and I do not feel we should be required to re-print the job at no expense to the government, when we performed as well as the material furnished to us would allow. Please advise. We have printed several Level III color jobs for your office during the past several months and see no reason we cannot continue to meet these standards when provided with proper material. Please note this paragraph: We opened the negatives that you sent us for use in the re-print, proofing three at random. You will note that the cross hair registration marks are lined up but there are still some areas (noted) that do not fit. Appeal File, Exhibit G. In a telephone conversation with the contracting officer on April 11, 1984, Mr. Robert E. Stevenson of The American Press, Inc., stated to the contracting officer that his firm would not be able to complete the job as directed. Appeal File, Exhibit H. By memorandum dated April 12, 1984, the Assistant Manager of the Columbus Regional Printing Procurement Office requested the concurrence of the GPO's Contract Review Board in terminating the contract for default. The memorandum recites the factual basis for the request: Suspect letter sent to contractor on March 15, 1984 after phone complaint from Department. On March 15, 1984, Mr. Jackie D. Pullin, Army Corps of Engineers, called Mrs. Karen Day, Columbus RPPO to complain that the "channel line was printed off register" and he was sending 26 random samples and a letter. Copy of letter dated April 2, 1984 attached. Samples received March 20, 1984. Initial review of the samples were inconclusive without having the Government furnished negatives to make a judgment. Negatives were received March 22, 1984 in the Columbus RPPO mounted on flats. The following was noted: 1. Most of the negatives had the pin registration holes and identification information cut off. 2. Masking sheets were not cut out in areas of the negatives where the registration tick marks were so they could not be printed. 3. Department made a set, one each red, black, and blue, of positions of one flat with five pages on the flat. None of the pages line-up and register. By certified mail on April 4, 1984, the contractor was sent a complete new set of negatives and a letter instructing him to reprint the entire order because the first printing was rejected for failure to meet QATAP Level III quality. Copy attached. Contractor received letter and GFM [Government furnished material] on April 6, 1984 as per certified receipt. A letter from the contractor dated April 6, 1984 was received in the Columbus RPPO on April 9, 1984. Copy attached. Attempts to reach Mr. Stephenson by phone on April 10, 1984 were unsuccessful. Requests for him to return my calls were made without success. On April 11, 1984, I talked with Mr. Stephenson to ascertain if he was going to reprint this order. He indicated that the new negatives would not register as per the proofs he sent to our office. A review of the proofs indicated the red negative was twisted. I informed Mr. Stephenson of this and informed him he was to reprint the order using the new set of negatives. Mr. Stephenson then stated that he could not obtain paper until April 17, 1984 and that his bindery sub-contractor could not bind the books until the week of May 7. Mr. Pullen, Army, was asked if the Army would accept this delay. He informed me he had to have 750 books minimum by April 30, 1984 and that the balance on May 8, 1984 would be alright. Mr. Stephenson said he could not deliver the partial quantity by April 30, 1984. I told Mr. Stephenson to return all GFM to my attention ASAP. Material received at Columbus RPPO April 12, 1984. Because the American Press did not produce in accordance with QATAP Level III and refuses to reprint as per GPO Pub. 3101, request concurrence to Terminate for Default and requirements be procured in the most economical and expeditious manner. The Contract Review Board concurred with the proposed default action. Appeal File, Exhibit H. By letter dated April 23, 1984, the contracting officer issued a Notice of Termination to appellant, terminating the contract for default, "because you refused to reprint the order in accordance with the specifications." The letter noted that it was the final decision of the contracting officer, and advised appellant of its right to file an appeal. Appeal File, Exhibit L. Thereafter the contracting officer reprocured the OHIO RIVER NAVIGATION CHARTS by placing the requirement for competitive bid. Appeal File, Exhibit L. A contract was awarded to Hicks Printing, Inc., by Purchase Order H-4361, dated April 19, 1984. The contract price was $9,490.00. 4 Appeal File, Exhibit M. Appellant then filed a letter of appeal, addressed to the Public Printer, dated April 25, 1984. Appellant claimed that the findings of the contracting officer were inaccurate and alleged that we registered the work to the negatives furnished to us. . . . The finished job (jacket 760-516) was of comparable quality to the previously printed sample furnished us. . . . We believe part of the decision to hold us at fault originated because the book had other unwanted features, not of our doing. . . . Your claim that we refused to reprint the book is only valid when you consider the response we gave you-furnished negatives still unsatisfactory, proofs were sent to you. Appeal File, Exhibit K. Appellant's appeal letter was docketed by the Board of Contract Appeals pursuant to GPO Instruction 110.10B, and Panel No. 17-84 was constituted, upon receipt from the contracting officer of the Appeal File. That file consisted of Exhibits A through Q. By letter dated June 5, 1984, appellant was notified of the docketing of the appeal, and the contents of the official appeal file and was given the opportunity to examine that file. Appellant was given 30 calendar days from the receipt of the letter to submit additional materials for the record. Appellant was also advised of its right to have the appeal decided, either on the record or after an informal hearing. In a response, dated July 6, 1984, appellant elected to have the case decided on the written record and noted: 4 The contract price was subsequently increased by the amount of $455.00 by contract modification No. COL 84-439. The modification states in part "[y]ou are authorized to reprint 1500 copies of "Chart No. 128" in 3 colors: black, red, and blue ink as per original specs, and to reprint the reverse side in black ink only. A new black negative is furnished for the reprinting of the black plate. This reprint is required because the printing is unacceptable due to the quality of negative furnished by the Government." Appeal File, Exhibit N. 2. Our appeal notice letter and the letter to Mr. Seibert dated April 6, (copy enclosed) fully states our case. 3. However we would like to note: The question is, did American Press print from materials furnished to them, by the government as good as this material would allow? This is a question at hand, not numerous other "chronologies" that the Columbus G.P.O. has entered into the appeal record to cover the real problem at hand. 4. During the past year, the American Press has printed some 63 different orders for the U.S. Government-all acceptable. Since this complaint we have been denied two orders that we were low bidder on and cut completely off from receiving any bid specifications from the Columbus Office. We failed to see why after establishing this work record we have been treated as such. In my personal phone conversations with Oberst and Hammitt, concerning this matter (jacket 760-516) we were treated rudely and certainly not to the standards that I think government officials should hold themselves to. Please consider the above information as part of our appeal file. If there are any other questions, please feel to call. Thereafter the record was closed. The appeal now comes to the Board in this form for decision. 5 Analysis In cases of termination for default, the Government has the initial burden of showing that the contractor has defaulted in its performance of 5 The Record consists of the Appeal File, Exhibits A to Q, and Chronology of Jacket 760-516 dated May 11, 1984; a Memorandum to the Board of Contract Appeals from the Assistant Manager, Columbus RPPO, dated May 23, 1984; a letter from The American Press to R.J. Garvey, dated July 6, 1984. the contract. Caskel Forge Inc., ASBCA No. 6205, 61-1 BCA ¶ 2,891; National Aviation Electronics, Inc., ASBCA No. 18256, 74-2 BCA ¶ 10,677. Once the default has been established, the contractor then has the burden of demonstrating that the default was excusable. B.M. Harrison Electrosonics, Inc., ASBCA No. 7684, 1963 BCA ¶ 3,736; Hy-Cal Engineering Corp., NASA BCA Nos. 871-18 and 772-7, 75-2 BCA ¶ 11,399; see also, Article 2-18, supra. In the instant case, the burden of proof placed upon the Government to demonstrate that appellant had defaulted on the contract is easily met through the submission of correspondence and inspection results which indicate that the product produced by appellant was defective. The inspection report from the Army Corps of Engineers shows that the final printed product produced by appellant contained numerous printing errors caused by appellant's misregistration of the Government furnished negatives. See Appeal File, Exhibit E. In contrast to the Government's showing, appellant has produced no evidence that the product met specifications. Instead, appellant argues that the Government-furnished negatives were defective, and that the product it produced was no worse than the Government-furnished negatives. However, appellant has failed to provide any proof to support that allegation. Indeed, the only evidence in the record shows that when the flats provided by appellant were examined, it was found that appellant had misregistered the Government furnished negatives and had blocked out the register marks. Appeal File, Tabs F, H. The Government, as a matter of contract law, is generally entitled to require strict compliance with its contract specifications, including those of fixed-price supply contracts. American Electric Contracting Corp. v. United States, 579 F.2d 602, 608 (1978); Red Circle Corp. v. United States, 185 Ct. Cl. 1, 8 (1968); Jefferson Construction Co. v. United States, 151 Ct. Cl. 75 (1960); Dependable Printing Company, Inc., GPO BCA 5-84 (1985). The determination of whether a product conforms with the contract specifications must rest with the contracting officer, as this determination is within his discretion in administering a contract. Thomas W. Yoder Co., Inc., VACAB 997, 74-1 BCA ¶ 10,424. One of the purposes of the strict compliance rule is to ensure that the integrity of the bidding system will not be compromised. Ideal Restaurant Supply Co., VACAB 570, 67-1 BCA ¶ 6237 (1967). This strict compliance can be enforced either by rejecting the defective product or, if for reasons of economy or urgency, acceptance is in the Government's best interest, by requiring a price reduction for nonconforming work. However, the Government is not required to accept nonconforming supplies, and the discretion to refuse such acceptance is the prerogative of the procuring agency. Famous Model Co., Inc., ASBCA No. 12526, 68-1 BCA ¶ 6902 (1968). A contractor has no contractual right to force the Government to accept defective products at a reduced price, even if the defects are relatively minor. Cherry Meat Packers, Inc., ASBCA No. 8974, 1963 BCA ¶ 3937 (1973). In this case, the contracting officer acted reasonably in rejecting and requiring reprinting. 6 The defects in the product were not merely cosmetic, but were ones that jeopardized the safety of boaters relying on the charts' depiction of the Ohio River channel line. In addition to the misregistration 6 Although appellant claims that the contracting officer terminated the contract for default because "the book had other wrong printing not of our doing" (Appeal File, Exhibit G) appellant has failed to identify the "other wrong printing." Accordingly, the Board cannot consider this argument. defects, appellant totally failed to follow the specifications by omitting registration marks. The printing of these registration marks would have allowed appellant and subsequent users to easily determine whether the channel line was properly placed on the maps. Appellant contends that it did not print the registration marks because GPO Contract Terms No. 1, incorporated by reference into Jacket 760-516, prohibits the printing of registration marks. This is correct, however, the purchase order/specifications for Jacket 760-516 specifically required the printing of registration marks. The specifications also contained the following order of precedence clause: NOTICE: The bidder agrees that any contract resulting from the bidder's offer shall be subject to all terms and conditions of U.S. Government Printing Office Contract Terms No. 1. (GPO Pub. 310.2) . . . In case of conflict the provisions of this specification will prevail. Appeal File, Exhibit A. Thus, appellant was contractually obligated to print the register marks. Appellant was placed on notice of the defects by the contracting officer's letter of April 4, 1984. Appellant was informed that the products submitted by appellant were rejected, and appellant was ordered to reprint the books and deliver to destination by April 27, 1984. Appellant did not reprint the books as directed by the contracting officer. In a telephone conversation with the contracting officer on April 11, 1984, Mr. Robert E. Stevenson of The American Press, Inc., stated to the contracting officer that his firm would not be able to complete the job as directed. The contracting officer then terminated the contract for default based on appellant's failure to reprint as directed. Appellant does not dispute that it failed to reprint the order. However, appellant argues that the negatives it was furnished by the Government to be used to reprint were "unsatisfactory." Appeal File, Exhibit K. Appellant's explanation of its refusal to reprint is not persuasive. The record shows that the same negatives which appellant claimed were "unsatisfactory" were used by the reprocurement contractor to successfully reprint the channel maps. 7 Memorandum of May 23, 1984. It is well established that a contractor is obligated to perform in accordance with the direction of the contracting officer and to seek relief in the form of additional compensation under an appropriate contract provision. Brenner Metal Products Corporation, 82-1 BCA ¶ 15,462. The underlying merits of the controversy have no effect on the requirement that the contractor continue performance while a dispute is pending. Eriez Construction, Inc., 78-2 BCA ¶ 13,547. The disputes clause, contained in Contract Terms No. 1, which is incorporated by reference into this contract, also requires the contractor to perform pending final decision of a dispute. Appellant has produced no evidence indicating that the request of the contracting officer to reprint was in any way an improper direction or otherwise impossible to comply with. 7 Although the record shows that the negatives for Chart 128 had to be replaced to enable the reprocurement contractor to print (Appeal File, Exhibit N) this was not one of the charts which was found to be defective in appellant's printing. See, Appeal File, Exhibit E; note 4 supra. Decision Examining the issues in this case, in light of the record and applicable Government contract law, it is the decision of this Board that the appeal is DENIED.