U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, D.C. 20401
STUART M. FOSS
Administrative Judge
The Appeal of SHEPARD PRINTING
Docket No. GPO BCA 23-92
Jacket No. 633-625
Purchase Order F-6728
April 29, 1993
DECISION AND ORDER
By letter dated June 30, 1992, Shepard Printing, 620-G East
Diamond Avenue, Gaithersburg, Maryland 20877 (Appellant or
Contractor), filed a timely appeal from the April 14, 1992,
final decision of Contracting Officer Douglas M. Faour, of
the U.S. Government Printing Office's (Respondent or GPO or
Government) Regional Printing Procurement Office, Atlanta,
Georgia (ARPPO), terminating the Appellant's contract
identified as Jacket No. 633-625, Purchase Order F-6728, for
default for failure to "fulfill the requirements of the
contract" and the Contractor's "stated inability to correct
the product" (R4 File, Tab F). 1/ For the reasons which
follow, the decision of the Contracting Officer is hereby
AFFIRMED, and the appeal is DENIED. 2/
SUMMARY FINDINGS OF FACT 3/
1. On February 18, 1992, the Respondent issued Purchase Order
F-6728 (Jacket No. 633-625) to the Appellant for the
production of 2,500 copies of a spiral bound publication of
30 pages, entitled "Wonder" (R4 File, Tab A). "Wonder" had
been requisitioned by the customer agency-the Centers for
Disease Control (CDC), Public Health Service, Department of
Health and Human Services (R4 File, Tab A). The Purchase
Order indicates that the publication was to be printed in
black and purple ink (PMS 526), and had to meet the quality
standards for Quality Level III (R4 File, Tab A). 4/
2. Under the terms of the contract, the Contractor was to
pickup the Government-furnished material (GFM) on February
18, 1992, and was to provide proofs by February 21, 1992 (R4
File, Tab A). The Purchase Order shows that delivery of the
publication was to be completed by March 2, 1992, with
shipment of the 2,500 copies to the CDC warehouse located at
4998 South Royal Drive, Tucker, Georgia 30084 (R4 File, Tab
A). The contract price for this work was $7,410.00 (R4 File,
Tab A).
3. The Appellant was unable to complete the work and ship the
publication by the original contract due date. Consequently,
the record shows that the parties mutually agreed to two
extensions of the delivery date-first to March 24, 1992, and
then to March 27, 1992, for reductions in the contract price
of 5 percent and 10 percent, respectively (R4 File, Tabs B
and C). The Appellant delivered the printed product to the
CDC on March 27, 1992.
4. When the shipment was received, CDC personnel inspected
random samples of the book and discovered several quality
defects (R4 File, Tab D). Specifically, their inspection
revealed problems with the printing of the publication-
improper registration, non-uniform type quality, and
mismatched color (R4 File, Tab D). The CDC inspectors also
observed that the product was printed in black and purple ink
(PMS 526), instead of the black and blue ink (PMS 256)
requested by the customer agency. 5/ CDC notified the ARPPO
of these problems on March 30, 1992, and requested that the
product be reprinted (R4 File, Tab D).
5. On April 13, 1992, the ARPPO's Compliance Officer, Gary
Bush, examined 15 randomly selected copies of "Wonder" and
confirmed the color match defect disclosed by the CDC
inspection (R4 File, Tab H). Measuring the printed product
against Quality Level III, Bush found that the samples
contained "1,020 major defects," far exceeding the
contractually established Acceptable Quality Level (AQL) of
6.5 defects for this job (R4 File, Tab J). 6/
6. Between March 30, 1992, and April 14, 1992, the date the
contract was defaulted, Bush had several conversations with
CDC personnel concerning whether the customer agency would be
willing to accept the job at a discount, instead of requiring
a reprint (R4 File, Tab J).7/ However, the CDC was not
interested in accepting the delivered product because the
appearance was so poor (R4 File, Tab J). Accordingly, Bush
called the Appellant's President, Daniel Campbell, on April
13, 1992, and informed him that the customer agency would not
accept the job at a discount, and asked the Contractor to
reprint the order and deliver it within three weeks (R4 File,
Tabs I and J). Campbell told Bush that he could not perform
the reprint within that time, and did not suggest any
alternate delivery date (R4 File,
Tab J). 8/
7. Since the Appellant was unable to meet the CDC's needs, on
April 13, 1992, the Contracting Officer sought the approval
of the CRB to terminate the contract for complete default (R4
File, Tab I). Termination was requested because of
inconsistent ink coverage and register problems throughout
the publication (R4 File, Tab I). 9/ CRB concurrence was
obtained that same day (R4 File, Tab I).
8. On April 14, 1992, the Contracting Officer issued a Notice
of Termination-Complete (Notice of Termination) to the
Appellant informing it that the contract had been terminated
for complete default for failure to "fulfill the requirements
of the contract" and because of the Contractor's "stated
inability to correct the product" (R4 File, Tab F).
Specifically, the contract was canceled because the "order
was delivered with inconsistent ink coverage for the PMS 526
purple and register problems were found throughout the order"
(R4 File, Tab F). 10/
9. After the contract was defaulted, the ARPPO took steps to
reprocure the job. However, for some reason not indicated in
the record, the request for bids to reprocure the work was
not issued until early July 1992, and potential bidders had
until July 14, 1992, to submit their quotations. See,
Complaint, Attachment No. 5 (Jacket No. 636-479). While the
Government had talked about reprocuring the order at Quality
Level II, the bid request shows that the job remained a
Quality Level III procurement. Nothing in the record shows
that the Appellant submitted a bid for the reprocured work
although it was not prevented from doing so.
ISSUES PRESENTED
1. Was the Appellant entitled to an opportunity to cure the
defects found in the publication it supplied before the
Contracting Officer could terminate the contract for default?
2. Is the Compliance Officer's QATAP Inspection Report a
reliable basis on which to base a decision to terminate the
Appellant's contract for default?
3. If the Inspection Report is inaccurate and is disregard,
does the record support the Appellant's contention that the
product it delivered was in substantial compliance with the
contract specifications and thus it was entitled to an
opportunity to correct the defects by operation of law ?
4. Did the Contracting Officer abuse his discretion by not
considering the time critical nature of this procurement in
making his decision to terminate the Appellant's contract?
POSITIONS OF THE PARTIES
The Appellant does not challenge the Respondent's conclusion
that the publication it supplied to the CDC contained color
match and registration defects. The Contractor argues,
however, that these defects were relatively minor, and that
the contract was really terminated for the convenience of the
Government. 11/ See, Meeting Report, at pp. 2-3; App.Brf.,
at p. 2. In essence, the Appellant advances six major
contentions: (1) an examination of 15 books which discloses
1,020 major defects is clearly erroneous since the
QATAP standard for solid or screen tints color match (P-9) allows
only one major defect per book, thus the maximum number of
assessable major defects is 15 not 1,020; (2) apart from the fact
that the random sample box is checked on the Inspection Report,
there is nothing to indicate that the sample itself was properly
selected by the customer agency; (3) the rule that the Government
is entitled to strict compliance with the contract is not
applicable in this case because the Respondent had waived it in
two instances by allowing extensions of the delivery date; (4)
once the Respondent decided to reprocure the publication as a
Quality Level III job, instead of Quality Level II, the
Contractor was entitled to an opportunity to correct the defects
found by Government by reprinting the order, especially since the
CDC had requested reprinting; (5) in the alternative, since the
original shipment had some use, the Respondent should have been
accepted the books at the Contractor's offer of a 50 percent
reduction in price; and (6) the Contracting Officer abused his
discretion by defaulting the contract without considering the
time critical nature of the procurement. See, Meeting Report, at
pp. 2-4; App.Brf., at p. 2; App.R.Brf., at p. 1.
The Respondent, on the other hand, contends that the
Appellant's contract was properly terminated for default
because of numerous major defects in the quality of the
printed product, especially a "pervasive" mismatching of the
color and register problems throughout the publication. See,
Meeting Report, at p. 3. Also see, R.Brf., at p. 4. The
Respondent believes that the Appellant's 50 percent discount
offer if the Government accept the original shipment is
tantamount to an admission that the quality defects were, in
fact, major discrepancies. R.Brf., at p. 3. Furthermore,
the Respondent denies the Appellant's claim that it was not
given an opportunity to cure the defects, stating instead
that the
Contractor was, in fact, asked to reprint a corrected
publication, but that it declined to do so. 12/ See, Meeting
Report, at p. 3. Also see, R.Brf., at pp. 2, 5. As for the
central question in this appeal-whether or not the Appellant's
contract was properly terminated for default because of an
inability to produce a publication conforming to the contract
specifications-the Respondent asserts that "black letter" public
contract law entitles the Government to strict compliance with
its specifications. R.Brf., at p. 4 (citing, Jefferson
Construction Company v. United States, 151 Ct.Cl. 75 (1960); Red
Circle Corporation v. United States, 185 Ct.Cl. 1, 8 (1968);
American Electric Contracting Corporation v. United States, 579
F.2d 602 (Ct.Cl. 1978); Dependable Printing, Inc., GPO BCA 5-84
(September 12, 1985)). Thus, the Respondent states that the
"strict compliance" doctrine affords the procuring agency
complete discretion to accept or reject nonconforming supplies;
i.e., the Government cannot be compelled to accept them at a
discount even if the discrepancies are relatively minor. R.Brf.,
at p. 4 (citing, Famous Model Company, Inc., ASCBCA No. 12525,
68-1 BCA ¶ 6,902; Cherry Meat Packers, Inc., ASBCA No. 8974, 1963
BCA ¶ 3,937). Finally, the Respondent notes that if the
Appellant had delivered a publication which conformed to the
contract specifications in the first
place, it would have been accepted without regard to whether it
was usable or not (R4 File, Tab J). 13/ See, Meeting Report, at
p. 5.
SUMMARY CONCLUSIONS 14/
Since the ultimate question which the Board must decide is
whether or not the Appellant's contract was erroneously
terminated for default, certain legal principles should be
kept in mind at the outset. First, a default termination is
a drastic action which may only be taken for good cause and
on the basis of solid evidence. 15/ See, R.C. Swanson
Printing and Typesetting Company, GPO BCA 31-90 (February 6,
1992), Sl. op. at 25, aff'd, Richard C. Swanson, T/A R.C.
Swanson Printing and Typesetting Company, No. 92-128C (U.S.
Claims Court, October 2, 1992); 16/ Stephenson, Inc., supra,
Sl. op. at 20 (citing, Mary Rogers Manley d/b/a Mary Rogers
Real Estate, HUDBCA No. 76-27, 78-2 BCA ¶ 13,519; Decatur
Realty Sales, HUDBCA No. 75-26, 77-2 BCA ¶ 12,567).
Second, the burden of proving the basis for the default is on
the Government, Lisbon Contractors v. United States, 828 F.2d
759 (Fed. Cir. 1987); Chavis and Chavis Printing, GPO BCA
20-90 (February 6, 1991), Sl. op. at 11 (and cases cited
therein); R.C. Swanson Printing and Typesetting Company,
supra, Sl. op. at 28, whereas the contractor has the burden
of proving excusability. Switlik Parachute Company v. United
States, 216 Ct.Cl. 362 (1978); Davis v. United States, 180
Ct.Cl. 20 (1967); J.F. Whalen and Company, AGBCA Nos.
83-160-1, 83-281-1, 88-3 BCA ¶ 21,066; B. M. Harrison
Electrosonics, Inc., ASBCA No. 7684, 1963 BCA ¶ 3,736; Hy-Cal
Engineering Corporation, NASA BCA Nos. 871-18 and 772-7, 75-2
BCA ¶11,399; Chavis and Chavis Printing, supra, Sl. op. at
11-12 (and cases cited therein); R.C. Swanson Printing and
Typesetting Company, supra, Sl. op. at 28. If the Government
fails to meet its burden of proof, then the termination is
converted into one of convenience and the contractor is
allowed to recover for the work performed. See, GPO Contract
Terms, Default, ¶ 20(g). Cf., Stephenson, Inc., supra, Sl.
op. at 17-18; Chavis and Chavis Printing, supra, Sl. op. at
9.
Third, the standard "Default" clause identifies several
grounds which will excuse defaulting conduct by contractors,
including acts of the Government in either its sovereign or
contractual capacity. 17/ See, GPO Contract Terms, Default,
¶ 20(c). Government acts which may extinguish a contractor's
duty to perform include defective
specifications, Robert E. Moore Construction, AGBCA No. 85-262-1,
90-2 BCA ¶ 22,803, and defective Government-furnished equipment
or material. Boque Electric Manufacturing Company, ASBCA No.
25184, 86-2 BCA ¶ 18,925. The burden of proving Government
defects is on the contractor, who must also show that those
defects were the cause of the problems in question. Editors
Press Incorporated, GPO BCA 03-90 (September 4, 1991) Sl. op. at
12-13; Fry Communications, Inc., GPO BCA 1-87 (June 1, 1989), Sl.
op. at 5 (citing, Bailfield Industries, Division A-T-O, Inc.,
ASBCA No. 18057, 77-1 BCA ¶ 12,348).
Finally, a default termination is a discretionary act which
can be challenged on an abuse of discretion standard. Darwin
Construction Company, Inc. v. United States, 811 F.2d 593
(Fed. Cir. 1987); Quality Environment Systems v. United
States, 7 Cl.Ct. 428 (1985); Schlesinger v. United States,
390 F.2d 702 (Ct. Cl. 1968); Executive Elevator Service,
Inc., VABCA No. 2152, 87-2 BCA ¶ 19,849, mot. for reconsider.
denied, 87-3 BCA ¶ 20,083. The burden is on the contractor
to prove abuse of discretion. Cf., Kit Pack Company, Inc.,
ASBCA No. 33135, 89-3 BCA ¶ 22,151; Lafayette Coal Company,
ASBCA No. 32174, 89-3 BCA ¶21,963; Quality Environment
Systems, Inc., ASBCA No. 22178, 87-3 BCA ¶ 20,060.
Applying these principles to the facts in the record, the
Board reaches the following conclusions:
A. As a general rule, no "cure notice" would have been
required in this case because the Appellant's contract was
terminated for its failure to deliver a conforming
publication. However, the Contracting Officer did, in fact,
offer the Contractor an opportunity to cure the defects
before defaulting the contract.
1. It is clear that the Contracting Officer's decision to
default the Appellant for failure to "fulfill the
requirements of the contract" is a termination based on the
Contractor's failure to "[d]eliver the supplies or to perform
the services within the time specified or any extension,
thereof;. . .". GPO Contract Terms, Default, ¶ 20.(a)(1)(i).
Such clauses have uniformly been held to apply not only to
late deliveries of the contracted goods, Stephenson, Inc.,
supra, Sl. op. at 19 (citing, Chavis and Chavis Printing,
supra, Sl. op. at 12-15; Jomar Enterprises, Inc., GPO BCA
13-86 (May 25, 1989), Sl. op. at 3-5), but also to the timely
delivery of nonconforming supplies. 18/ Id. (citing, KOPA
Kopier Produckte, ASBCA No. 29,471, 85-3 BCA ¶ 18,367; Meyer
Labs, Inc., ASBCA No. 18,347, 77-1 BCA ¶ 12,539.
2. As a general rule, no "cure notice" is required where a
contract is to be terminated because of the contractor's
failure to timely deliver or perform. Stephenson, Inc.,
supra, Sl. op. at 19-20 (citing, Kit Pack Company, Inc.,
supra, 89-3 BCA ¶ 22,151; Norm Hodges and Associates, Inc.,
GPOCAB 2-82, Sl. op. at 3 (1982); Sales Aids, Inc., GPOCAB
14-80, Sl. op. at 6 (1981)). 19/ Despite this general rule,
the record clearly shows that in this case the Appellant was
offered an opportunity to cure the defects and reprint the
order, but it declined to do so (R4 File, Tab I and J). See,
Meeting Report, at p. 3.
3. The Contractor argues that it refused to reprint the job
because it mistakenly thought that the CDC wanted a Quality
Level II publication, not a Quality Level III one, and it was
not capable of producing the higher Quality Level II work.
See, Meeting Report, at p. 3. Since the job was, in fact,
reprocured at Quality Level III, the Appellant now claims
that the Government should have allowed it to correct the
defects and reprint the order at that level first. See,
Meeting Report, at p. 4. The Board disagrees. While the
Respondent certainly had the discretion to provide the
Contractor with a second opportunity to correct the defects
in question, it was under no legal obligation to do so,
particularly since it had already initiated steps to
reprocure the work. Cf., Electro-Neutronics, Inc., ASBCA No.
12947, 71-2 BCA ¶ 8,961. Accordingly, the Board concludes
that under the circumstances of this case, the Respondent
satisfied all necessary procedural steps prior to terminating
the contract for default, and the Appellant's contentions to
the contrary are without merit. 20/
B. The Compliance Officer's QATAP Inspection Report contains
conflicting and confusing information, and standing alone, is
an unreliable and inadequate foundation on which to base a
decision to terminate the Appellant's contract for default.
1. The Appellant challenges the Respondent's reliance on its
inspection of 15 sample books as the basis for its decision
to reject the entire shipment and cancel the contract on two
grounds: (a) the Compliance Officer's finding of 1,020 "major
defects" is clearly erroneous because the maximum number of
such defects which could be assessed under QATAP for
mismatching color is one per book, or 15 major defects for a
sample of 15 books; 21/ and (b) nothing in the record tells
us that GPO instructed the agency how to select the "random"
samples, and thus the evidence is insufficient to show that
the sample examined was representative of the lot.
App.R.Brf., p. 1 (citing, QATAP, p. 2, ¶¶ 4-1.b.(ii) and
(iii)). See, QATAP Technical Manual, GPO Publication 355.1,
March 1989, Principles of Sampling, p. 4 (hereinafter QATAP
Manual). As the Board understands the Appellant's position,
however, it is not challenging the Respondent's conclusion
that the books it delivered contained color match and
registration defects. Rather, it is claiming that they were
relatively minor.
2. The Appellant's contention that one major defect per book
is the maximum number of such defects which can be assessed
for mismatching color is based on its interpretation of
¶¶4-1.b.(ii) and (iii)) of QATAP, which state in pertinent
part:
4-1. Printing Attributes-For each copy that is inspected, the
Government will evaluate each applicable printing attribute by
separately inspecting:
* * * * * * * * * *
b. text (i.e., pages and covers 2 & 3) ADL's will be determined
as follows: 22/
* * * * * * * * * *
(ii) The text will be evaluated by inspecting pages (each page is
an individual unit), cover 2, and cover 3 as individual units.
Each unit will be assessed demerits (i.e., 4, 20, 100) pursuant
to the demerit table for each printing attribute that deviates
from specifications. The demerits which are assessed will be
summed, and each sum will be divided by the number of individual
units that were inspected for that printing attribute. The
quotient constitutes the ADL for text for that printing attribute
for that copy.
(iii) In each copy the ADL's for each printing attribute will be
classified as follows:
Tolerance Table for Printing Attributes
ADL's
Classification
of Defect
4 or less for both
outside covers and text..................................None
More than 4 for either or
both outside covers and text...........................Major.
Conspicuous Single Page Defects-When one or more pages have been
assessed demerits for a printing attribute but the ADL does not
exceed 4, a single major defect will be assessed for that
printing attribute if one or more pages is so conspicuously
defective that it significantly impairs the quality of the entire
copy. . . .
QATAP, pp. 2-3. [Emphasis added.]
3. In this case, the Compliance Officer found 1,020 "major
defects" from his color match examination of 15 selected
sample copies of "Wonder". Since each copy of the book
consisted of 30 pages, the maximum number of inspection units
was 450 (each page is an individual unit). The examination
of these 15 sample copies was conducted pursuant to printing
attribute P-9 (Solid or Screen Tints Color Match), which,
among other things, provides for: (a) three categories of
demerits-4, 20, and 100; (b) the assessment of demerits for
each inspection unit; and (c) the automatic assessment of 20
demerits for each page when a visible density shift occurs
within or between, solids or tints in a Quality Level III
inspection. QATAP, p. 22. The record does not disclose how
the Compliance Officer calculated 1,020 "major defects" from
a sample of 450 units. However, assuming that he examined
each page of each sample copy, then the total number of
possible demerits which could have been assessed at each of
the demerit levels would be 1,800 (4 x 450), 9,000 (20 x
450), or 45,000 (100 x 450). Of these figures only the
latter two would result in a classification of a major defect
for this attribute. 23/ In either case, however, the maximum
number of major defects for each page would be one (1), and
the total number of major defects for the complete sample
would be 450. Moreover, even under QATAP's "Conspicuous
Single Page Defects" concept, an assessment of 4 demerits or
less per page could only have resulted in one (1) major
defect per book for that printing attribute, or a possible
total of 15 major defects.
4. The record fails to tell us whether the Compliance Officer
examined all pages of the sample copies, or indeed, what
exactly was the scope of his inspection. The Board has no
doubt that he believed that there was a significant color
match problem-the only attribute being measured-and that the
AQL had been exceeded (R4 File, Tab J). However, the problem
for the Board here is that his recorded findings on the
Inspection Report are both conflicting and confusing (R4
File, Tab H). Therefore, the Board believes that he
misapplied the QATAP requirements in this case. As the Board
understands QATAP, it is simply not possible for 15 copies of
a 30-page publication to have 1,020 "major defects," where,
as here, only one printing attribute is being measured, even
if every one of the 450 sampling units was assessed the
maximum number of demerits. Thus, it seems to the Board that
the 1,020 "major defects" are, instead, the Compliance
Officer's evaluation of the total number of demerits assigned
to the publication by his inspection.
5. The Board's conclusion that the Inspection Report is
confusing and conflicting is reenforced by the calculation of
6,800 total defects per 100 items-a major inconsistency in
that document. As defined in QATAP, the total number of
defects are the sum of all critical and all major defects.
QATAP, p. 1, ¶ 1-5. Since the Compliance Officer was only
testing the publication's color match here-a single printing
attribute-the total number of defects and the number of major
defects should have been the same because critical defects
are only assessed for serious deviations in finishing
attributes. Id.,, ¶¶ 1-3, 1-4. Thus, the Board would have
expected the number 1,020 for both major defects and total
defects in the Inspection Report, instead of 1,020 "major
defects" and 6,800 "total defects". The record does not
explain why there is a 5,780 count difference between these
defect categories, and no logical reason comes to mind for a
situation where, as here, only one printing attribute is
involved. Therefore, the Board agrees with the Appellant
that the Inspection Report is not an accurate indicator of
the number of major defects found for the printing attribute
measured. Accordingly, the Board concludes that the
Inspection Report, standing alone, will not support the
Respondent's decision, made in partial reliance thereon, to
default the Appellant's contract. 24/
C. Notwithstanding the inaccuracy of the Inspection Report,
the product delivered by the Appellant was still not in
substantial compliance with the contract specifications, and
thus it was not entitled to an opportunity to correct the
defects by operation of law.
1. The Respondent correctly states the general rule that the
Government is entitled to strict compliance with its
specifications. See, e.g., Rose Printing Company, GPO BCA
2-87 (June 9, 1989), Sl. op. at 6 (and cases cited therein);
Fry Communications, Inc., GPO BCA 1-87 (June 1, 1989), Sl.
op. at 5; Mid-America Business Forms Corporation, GPO BCA
8-87 (December 30, 1988), Sl. op. at 18-19. See also, Mega
Construction Company, Inc. v. United States, 25 Cl.Ct. 735,
741 (1992); Wholesale Tire and Supply Company, Ltd., ASBCA
No. 42502, 92-2 BCA ¶ 24,960. Indeed, this rule has always
been considered absolute in supply contracts. See, e.g.,
Melrose Packaging Corporation, ASBCA No. 9045, 1964 BCA ¶
3,769; Cherry Meat Packers, Inc., supra, 1963 BCA ¶ 3,937).
However, in 1966 the Court of Claims created a limited
exception to the "strict compliance" principle for situations
where a contractor has timely shipped nonconforming goods
which deviate from the specifications in only minor respects.
This so-called "substantial compliance" rule affords
defaulting contractors an opportunity to correct minor
defects in shipments to the Government. See, Radiation
Technology, Inc. v. United States, 177 Ct.Cl. 227, 366 F.2d
1003, 1005-06 (1966) (". . . contractor is entitled to a
reasonable period in which to cure a nonconformity provided
that the supplies shipped are in substantial conformity with
the contract specifications.").
2. As the Board understands the thrust of the Appellant's
challenge to the termination action, it argues that the
"substantial compliance" rule should have been applied in
this case. In order for the "substantial compliance" doctrine
to apply to a particular shipment of nonconforming goods, the
contractor must show that: (a) a timely delivery of goods was
made; (b) he/she reasonably believed, in good faith, that the
supplies conformed to the contract when shipped and that they
would be acceptable; and (c) the defects are minor in nature
and capable of correction within a reasonable period of time.
366 F.2d at 1006. 25/ A contractor who ships nonconforming
goods is only protected by the Radiation Technology rule to
the extent that he/she can satisfy all elements of the test.
26/ In the Board's opinion, notwithstanding the Compliance
Officer's miscalculation of the number of "major defects" in
the publication under QATAP, when the record is considered as
a whole, the "substantial compliance" doctrine does not apply
to the circumstances of this case because the admitted
defects in the aggregate, are not minor for the purposes of
the "substantial compliance" rule.
3. Under the Radiation Technology doctrine, whether a defect
is minor is a question of fact, based upon a consideration
of: (a) whether the items are usable; (b) the nature of the
product; (c) the urgency of the Government's needs; and (d)
the extent of repair and adjustment necessary to produce a
fully conforming product. 27/ In that regard, it is
established under the rule that numerous minor defects, when
considered together, can constitute a major nonconformity.
Astro Science Corporation v. United States, 200 Ct.Cl. 354,
471 F.2d 624 (1973); Environmental Tectonics Corporation,
supra, 76-2 BCA ¶ 12,134; Kain Cattle Company, ASBCA No.
17124, 73-1 BCA ¶ 9,999. Similarly, if the minor defect is
not readily correctable the "substantial compliance" doctrine
will not apply. Inforex, Inc., GSBCA No. 3859, 76-1 BCA ¶
11,679; Levelator Corporation, VACAB No. 1069, 74-2 BCA ¶
10,763; Nuclear Equipment Corporation, NASABCA No. 1170-18,
73-1 BCA ¶ 9,815. Both of these principles defeat the
Appellant's claim to the protection of Radiation Technology
in this case.
4. The facts here clearly show that in addition to the color
match problem, the customer agency also complained that the
publication had a quality defect concerning improper
registration (R4 File, Tab D). However, because the
Appellant had not returned the GFM, the Compliance Officer
could only test the color match (R4 File, Tab H). On the
other hand, the Appellant does not dispute that its
publication contained registration problems. Therefore, the
Board believes that when the registration defects are
considered in conjunction with the color match problem, a
major nonconformity existed with the publication delivered by
the Appellant. Astro Science Corporation v. United States,
supra, 471 F.2d 624 (1973); Environmental Tectonics
Corporation, supra, 76-2 BCA ¶ 12,134; Kain Cattle Company,
supra, 73-1 BCA ¶ 9,999.
5. Furthermore, assuming for the sake of argument that the
defects were only minor, the facts still warrant the
conclusion that they were not readily correctable. In that
regard, the Board believes that the Appellant's reply to the
Government's request giving it three weeks to reprint the job
and deliver a corrected product is highly significant. When
the Board considers that the job, as initially ordered, had
to be completed in nine days, and that the Contractor would
have to reconstruct the GFM before it could reprint the
publication because it had lost the original camera copy, it
is persuaded that three weeks was a reasonable timeframe for
the Appellant to correct the defects. Consequently, even if
the defects were minor in this case, the Appellant's response
that it could not give the Government what it wanted within
that time period warrants the conclusion that they were not
readily correctable. Inforex, Inc., supra, 76-1 BCA ¶
11,679; Levelator Corporation, supra, 74-2 BCA ¶ 10,763;
Nuclear Equipment Corporation, supra, 73-1 BCA ¶ 9,815. Also
see, Echo Science Corporation, NASABCA No. 671-9, 72-2 BCA ¶
9,755. Accordingly, for these reasons the Board also
concludes that the Radiation Technology doctrine does not
apply here; i.e., the defects were not minor for the purpose
of that rule, and moreover, they could not be corrected to
conform to the specifications within three weeks-a reasonable
period of time. Cf., Stephenson, Inc., supra, Sl. op. at
52-53 (citing, Environmental Tectonics Corporation, ASBCA No.
29947, 87-1 BCA ¶ 19,382; KOPA Kopier Produckte, ASBCA No.
29471, 85-3 BCA ¶ 18,367; Renwin Metal Products, Inc., ASBCA
No. 15413, 72-1 BCA ¶ 9,233, mot. for reconsideration denied,
72-1 BCA ¶ 9,329).
6. In the final analysis, the Appellant cannot escape the
consequences of its own refusal to reprint the job at the
Respondent's request. In that regard, it is established that
despite an entitlement to a reasonable cure period under the
Radiation Technology rule, the contractor itself may defeat
the doctrine by failing to correct the defects or even
expressing a willingness to do so. Cf., Frequency
Electronics, Inc., ASBCA No. 17917, 74-2 BCA ¶ 10,792; Kain
Cattle Company, supra, 73-1 BCA ¶ 9,999. As indicated above,
where, as here, a contractor has already been afforded a
reasonable opportunity to correct the defects in its product,
it may not later be heard to say that the "substantial
compliance" rule entitles it to a second chance. Cf.,
Electro-Neutronics, Inc., supra, 71-2 BCA ¶ 8,961.
Furthermore, the Board rejects the Appellant's claim that its
decision not to reprint the job was based on an erroneous
belief, based on discussions with the Contracting Officer,
that the CDC wanted a Quality Level II publication. 28/ See,
Meeting Report, p. 3. The Board believes that the Appellant,
as an experience contractor knew, or should have known that
any reprint request from the Respondent was on the same terms
and conditions as the original purchase order-any
modification of the Quality Level would have been, by
definition, a cardinal change to the contract. Accordingly,
for these reasons the Board also concludes that even if the
Radiation Technology rule applied in this case, when the
Appellant declined to reprint the publication because it may
have been mistaken about what the Government wanted, the
Respondent was relieved of any further responsibility under
the "substantial compliance" doctrine. Cf., Frequency
Electronics, Inc., supra, 74-2 BCA ¶ 10,792; Kain Cattle
Company, supra, 73-1 BCA ¶ 9,999.
D. The Appellant's allegation that the Contracting
Officer's failure to consider the time critical nature of
this procurement in making his decision to terminate the
contract amounted to an abuse of discretion, is without
merit.
1. It is well settled that while a contracting officer has
the discretionary authority to terminate a contract for
default, the exercise of that discretion must be fair and
equitable. Lewis B. Udis v. United States, supra, 7 Cl. Ct.
at 387 (citing, Everett Plywood Corporation v. United States,
512 F.2d 1082, 1090 (Ct.Cl. 1975)). Where a board of
contract appeals finds that a contracting officer's default
termination decision is arbitrary and capricious, it has the
authority to set the decision aside. 29/ Darwin Construction
Company, Inc. v. United States, supra, 811 F.2d at 596. 30/
See also, Schlesinger v. United States, supra, 390 F.2d at
709; Executive Elevator Service, Inc., supra, 87-2 BCA ¶
19,849, at 100,438. The burden of proof is on the contractor
alleging an abuse of discretion. Cf., Kit Pack Company,
Inc., supra, 89-3 BCA ¶22,151; Lafayette Coal Company, supra,
89-3 BCA ¶ 21,963; Quality Environment Systems, Inc., supra,
87-3 BCA ¶ 20,060.
2. Recent CDA cases on the "abuse of discretion" issue seem
increasingly to involve whether the contracting officer
considered the eight factors set out in FAR 49.402-3 before
terminating a contract for default. See, e.g., S.T. Research
Corporation, ASBCA No. 39600, 92-2 BCA ¶ 24,838; Stanley
Machining and Tool Company, Inc., ASBCA No. 44177, 92-3 BCA ¶
25,195. The requirements of FAR 49.402-3 have been adopted
by GPO and are found in the agency's printing procurement
regulations. 31/ PPR, Chap. XIV, Sec. 1, ¶ 3.c.(3)
(i)-(viii). The Appellant relies on one of those factors-the
urgency of the need for the supplies or services and the
period of time which would be required to obtain sources as
compared with the time in which delivery could be obtained
from the delinquent contractor-for its position that the
Contracting Officer abused his discretion in this case. Id.,
¶ 3.c.(3)(iv).
3. The law is clear that the failure to comply with these
regulations is a factor to be considered in determining
whether a contracting officer committed an abuse of
discretion in taking an action which has the most serious
consequences for a contractor; i.e., termination for default.
Darwin Construction Company, Inc. v. United States, supra,
811 F.2d at 598; Executive Elevator Service, Inc., supra,
87-2 BCA ¶ 19,849, at 100,438. However, it is also clear
that the contracting officer's omission is not "an automatic
admission ticket to a termination for convenience."
Lafayette Coal Company, supra, 89-3 BCA ¶ 21,963, at 110,482.
Also see, e.g., Air, Inc., GSBCA No. 9535, 93-1 BCA ¶ 25,429;
Danrenke Corporation, VABCA No. 3601, 93-1 BCA ¶ 25,365.
Rather, the contractor is required to show that the
contracting officer's failure was prejudicial; i.e.,
constituted harmful error. 32/ Cf., Darwin Construction
Company, Inc., GSBCA No. 10193, 91-1 BCA ¶ 23,419; Danrenke
Corporation, supra, 93-1 BCA ¶ 25,365. The Appellant has not
made such a showing here.
4. The Contracting Officer did not expressly address the
eight factors in his memo to the CRB. Nonetheless from the
record it is clear that his decision to default the contract
was based on his consideration of at least three of those
requirements: (a) the provisions of the contract and
applicable laws and regulations; (b) the specific performance
failure of the Appellant and the Contractor's excuses for
nonperformance; and (c) the availability of other sources to
produce the publication in question. PPR, Chap. XIV, Sec. 1,
¶ 3.c.(3)(i)-(iii). Furthermore, contrary to the Appellant's
position, the Board believes that the Contracting Officer
did, at one point, consider the CDC's urgent need for the
books and how long it would take to obtain the publication
from other sources as compared with the Appellant's ability
to deliver them, otherwise the Respondent's invitation to the
Contractor allowing it three weeks to reprint corrected books
makes no sense. 33/ Id., ¶ 3.c.(3)(iv). Indeed, regardless
of the Contracting Officer's thoughts about reprocuring the
work at a higher QATAP Quality Level, it is clear that the
Appellant's rejection of the reprint request left the
Government no choice but to reprocure the job. Therefore,
based on the entire record, the Board concludes that the
Appellant has failed to sustain its burden of showing
prejudicial error or an abuse of discretion.
DECISION
In light of the foregoing analysis, the Board finds and
concludes that: (a) the Appellant was offered an opportunity
to cure the defects before the contract was defaulted; (b)
the QATAP Inspection Report prepared by the Compliance
Officer is conflicting and confusing, and standing alone does
not support the decision to terminate the Appellant's
contract for default; (c) despite the inaccuracy of the
Inspection Report, because of other factors the Contracting
Officer's decision to default the contract was not erroneous;
and (d) the Appellant's allegation that the Contracting
Officer's termination decision amounted to an abuse of
discretion, is without merit. Accordingly, the Board also
finds and concludes that the Respondent's termination of the
Appellant's contract for default under the circumstances
herein was an appropriate exercise of discretion in this
case. Chavis and Chavis Printing, supra, Sl. op. at 16-19
(and cases cited therein). THEREFORE, considering the record
as a whole, the Board AFFIRMS the Contracting Officer's
decision and DENIES the appeal.
It is so Ordered.
_______________
1/ 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 September 4, 1992. GPO Instruction
110.12, Subject: Board of Contract Appeals Rules of Practice and
Procedure, dated September 17, 1984, Rule 4(a) (Board Rules). It
will be referred to hereinafter as the R4 File, with an
appropriate Tab letter also indicated. The R4 File, as
originally submitted, consisted of seven documents identified as
Tab A through Tab G. However, during the informal meeting in
this appeal conducted by the Board on October 9, 1992, it became
apparent that certain relevant evidence was not included in the
R4 File. Specifically, the Board asked the Respondent to provide:
(a) a copy of the Inspection Report; (b) a copy of the
Contracting Officer's memorandum to GPO's Contract Review Board
(CRB) seeking approval to terminate the contract for default; and
(c) a Declaration from Gary Bush, the ARPPO's Compliance Officer
for the contract, who inspected the publication shipped by the
Appellant and rejected it. See, Report Of An Informal Meeting
Under the Small Claims (Expedited) Procedure (November 13, 1992),
at pp. 5-6 (hereinafter Meeting Report). The Respondent complied
with the Board's request on December 7, 1992, and those documents
are hereinafter referred to as Tab H (Inspection Report), Tab I
(CRB Memorandum), and Tab J (Declaration of Gary Bush),
respectively.
2/ By letter dated August 18, 1992, the Appellant advised the
Board that it had selected the optional Small Claims (Expedited)
Procedure to process its appeal. Board Rules, Rules 12.1(a) and
12.2.
3/ In accordance with the Board Rules concerning the Small Claims
(Expedited) Procedure, the Board's decision and order here
contains only summary findings of fact and conclusions. Board
Rules, Rule 12.2(c). Furthermore, the decision and order in this
case shall have no value as precedent in future appeals
considered by the Board. Board Rules, Rule 12.2(d). See, B. P.
Printing and Office Supplies, GPO BCA 22-91 (February 5, 1993),
Sl. op. at 2, fn. 3; Graphics Image, Inc., GPO BCA 13-92 (August
31, 1992), Sl. op. at 2, fn. 3.
4/ As indicated on the Purchase Order, apart from the
specifications pertaining to printing, binding and delivery of
the publication, Purchase Order F-6728 was also governed by
applicable articles of GPO Contract Terms, GPO Publication 310.2,
effective December 1, 1987 (Rev. 9-88) (GPO Contract Terms), and
GPO's Quality Assurance Through Attributes Program, GPO
Publication 310.1, Revised September 1986 (QATAP), which were
incorporated by reference in the Purchase Order (R4 File, Tab A).
5/ Since the CDC had expected the book to be printed in black and
blue ink (PMS 256), it is apparent that during the preparation of
the Purchase Order the PMS numbers "2," and "5" were reversed by
ARPPO personnel (R4 File, Tab I).
6/ As indicated in the Inspection Report, however, the customer
agency's complaint concerning improper registration could not be
evaluated because the Appellant had not returned the GFM (R4
File, Tab H). Bush contacted the Appellant to have the GFM
returned, but the Contractor could not find the materials or
prove that they had been returned to the CDC (R4 File, Tabs I and
J). The Contractor did propose to make new copy from the
negatives, and deliver them by April 14, 1992, but was advised by
the Respondent that the contract had been defaulted before it
could do so (R4 File, Tab E). When also told that it would be
charged $600.00 as the reconstruction cost for replacement GFM,
the Appellant agreed with that decision at that time (R4 File,
Tabs E and I). On appeal, however, the Contractor now asks the
Board to set aside the termination for default, and seeks as a
remedy an award of the original contract price plus the $600.00
charged for reproducing camera copy. See, Appellant's Brief
Regarding Termination for Default (undated but received by the
Board on December 7, 1992), at p. 2 (hereinafter App.Brf.);
Appellant's Reply Brief Regarding Termination for Default
(undated but received by the Board on December 21, 1992), at p.
2 (hereinafter App.R.Brf.).
7/ Apparently, it was during this two week period that the
Appellant first made its offer to discount the contract price 50
percent if the CDC would accept the job as delivered. See,
Meeting Report, at p. 2; App.R.Brf., at p. 1.
8/ The CRB Memorandum contains a note which says that Joseph
Nadler, the Appellant's Technical Advisor, had called the ARPPO
and stated, in effect, that termination for default was
inappropriate because the Contractor could provide the reprinted
publication (R4 File, Tab I). This is contrary to Campbell's
statement that the Appellant could not reprint and deliver a
corrected version of the book within three weeks, as requested
(R4 File, Tabs I and J). The Board interprets these separate
conversations to mean that the Appellant could have produced
corrected books but not under the schedule needed by the CDC.
9/ The Contracting Officer's memorandum also informed the CRB
that the QATAP specifications in the Appellant's contract were
wrong and that the job should have been procured at Quality Level
II instead of Quality Level III "because of close registration"
(R4 File, Tab I). During a subsequent telephone conversation
with Campbell concerning the Appellant's offer to accept a
discount for the work, the Contracting Officer apparently told
him the same thing; i.e., that the job should have been
advertised at Quality Level II rather than Quality Level III.
See, Appellant's Complaint, dated August 18, 1992, p. 1
(hereinafter Complaint). The Contracting Officer also told
Campbell that, in his opinion, the Appellant was not capable of
producing Quality Level II work. Id.
10/ Apart from the $600.00 charge for reconstruction costs for
new GFM, note 6 supra, the Notice of Termination also informed
the Appellant that it would not be charged for excess
reprocurement costs (R4 File, Tab F). The reason for not holding
the Contractor responsible for excess costs was that at the time
of the default, the Government intended to modify the
specifications-i.e., change the QATAP Quality Level from III to
II-a cardinal change for the reprocurement contract (R4 File, Tab
I).
11/ The Appellant's contention that the contract was really
terminated for the convenience of the Government and that the
default termination was a "sham," is based on the scope of the
changes made to the contract specifications when the publication
was reprocured. See, Meeting Report, at p. 3; App.Brf., at p. 1.
The Board rejects this argument for two reasons. First, the
argument is, in effect, an allegation that the Respondent's
decision to cancel the contract was made in bad faith so that the
CDC could escape a bad bargain; i.e., one in which the GPO had
ordered a product which was inconsistent with the customer
agency's printing requisition. See, Meeting Report, at p. 5.
Also see, Respondent's Brief, dated December 7, 1992, at pp. 5-6
(hereinafter R.Brf.). However, the Board has held on numerous
occasions that because of the strong presumption that Government
officials properly and honestly carry out their functions, an
allegation of bad faith must be established by "well-nigh
irrefragable" proof. See, e.g., B. P. Printing and Office
Supplies, GPO BCA 14-91 (August 10, 1992), Sl. op. at 16;
Stephenson, Inc., GPO BCA 02-88 (December 19, 1991), Sl. op. at
55; The Standard Register Company, GPO BCA 4-86 (October 28,
1987); Sl. op. at 12-13. Also see, Karpak Data and Design, IBCA
2944 et al., 93-1 BCA ¶ 25,360; Local Contractors, Inc., ASBCA
37108, 92-1 BCA ¶ 24,491. The key to such evidence is a showing
of a specific intent on the part of the Government to injure the
contractor. Kalvar Corporation v. United States, 543 F.2d 1298,
1302 (Ct.Cl. 1976), cert. denied, 434 U.S. 830 (1977);
Stephenson, Inc., supra, Sl. op. at 54. In the Board's view, no
such "irrefragable" proof of the Respondent's bad faith exists in
this record. Certainly, there is absolutely nothing in the
record which would show that the employees of two separate
Government entities-GPO and the CDC-set out to harm the Appellant
or that they acted in concert to achieve that specific result.
Id., Sl. op. at 57. Second, insofar as the Appellant's claim
relies on the changes in the contract specifications in the
reprocurement contract, the Board's narrow jurisdictional mandate
prevents it from considering matters pertaining to other
contracts unrelated to the one under review in this case. See,
e.g., B. P. Printing and Office Supplies, supra, Sl. op. at 15.
The Board has frequently stated that its authority is purely
derivative and contractual, and is limited to deciding disputes
within the parameters of the contract before it. See, e.g., The
Wessel Company, GPO BCA 8-90 (February 28, 1992), Sl. op. at
32-33; Bay Printing, Inc., GPO BCA 16-85 (January 30, 1987), Sl.
op. at 9; Peake Printers, Inc., GPO BCA 12-85 (November 12,
1986), Sl. op. at 6. Indeed, the Board has expressly noted that
the Public Printer has not delegated to it the authority to
consider legal questions existing outside the contract itself.
Automated Datatron, Inc., GPO BCA 20-87 (March 31, 1989), Sl. op.
at 4-5. In this case, since no excess costs were assessed
against the Appellant, the reason for not considering the
reprocurement contract is even stronger.
12/ The Respondent claims that the Appellant's refusal to reprint
the product, in effect, amounts to an "anticipatory repudiation"
of the contract, and thus no formal cure notice was required.
R.Brf., at p. 5 (citing, Bendix Corporation, 77-2 BCA ¶ 12,656;
Fairfield Scientific Corporation, 78-1 BCA ¶ 13,082, mot. for
reconsid. denied, 78-2 BCA ¶13,429, aff'd, 228 Ct.Cl. 264, 655
F.2d 1062 (1981); De-Luxe Vans, Inc., 81-2 BCA ¶ 15,421). As the
Armed Services Board of Contract Appeals stated in Fairfield
Scientific Corporation: "The hallmark of anticipatory repudiation
is that there must be a 'definite and unequivocal manifestation
of intention on the part of the repudiator that he will not
render the promised performance when the time fixed for it in the
contract arrives.' Corbin on Contracts § 973. Therefore, to
constitute an anticipatory repudiation the alleged repudiator's
words or conduct must manifest 'a positive, unconditional, and
unequivocal declaration of fixed purpose not to perform the
contract in any event or at any time.' Dingley v. Oler, 117 U.S.
490, 503 (1886)." Fairfield Scientific Corporation, supra, 78-1
BCA ¶ 13,082, at 63,908. [Emphasis added.] See also, Beeston,
Inc., ASBCA No. 38969, 91-3 BCA ¶ 24,241. It is not clear from
the appeal record whether the Contractor's refusal to reprint the
product was based on its understanding that CDC was looking for a
Quality Level II job or that it simply could not meet the
Government's time target for the delivery of the reprint (three
weeks). Hence, the Board cannot say here that the Appellant made
such an "unequivocal declaration of fixed purpose not to perform
the contract in any event or at any time." See, Meeting Report,
at pp. 3-4; R.Brf., at p. 2.
13/ See, Stephenson, Inc., GPO BCA 02-88 (December 20, 1991), Sl.
op. at 55-56 ("Clearly, if the Appellant had delivered conforming
books to the [United States Postal Service] on the contract due
date, the agency would have been contractually bound to accept
them; . . .").
14/ The record on which the Board's decision is based consists
of: (1) the Notice of Appeal, dated June 30, 1992; (2) the R4
File (Tabs A-J); (3) the Appellant's Complaint, dated August 18,
1992; (4) the Respondent's "General Denial", dated September 11,
1992; (5) the Report of An Informal Meeting Under the Small
Claims (Expedited) Procedure, dated November 13, 1992; (6) the
Appellant's Brief (undated); (7) the Respondent's Brief, dated
December 7, 1992; and (8) the Appellant's Reply Brief (undated).
15/ Default terminations-as a species of forfeiture-are strictly
construed. See, D. Joseph DeVito v. United States, 188 Ct.Cl.
979, 413 F.2d 1147, 1153 (1969). See also, Murphy, et al. v.
United States, 164 Ct.Cl. 332 (1964); J. D. Hedin Construction
Co. v. United States, 187 Ct.Cl. 45, 408 F.2d 424 (1969).
16/ On October 29, 1992, certain provisions of the Federal Courts
Administration Act of 1992, Pub. L. No. 102-572, 106 Stat. 4506
(1992), became effective. Pursuant to Title IX, the United
States Claims Court was renamed the United States Court of
Federal Claims.
17/ While the excusable events listed in the "Default" clause,
all of which must be beyond the control and without the fault or
negligence of the contractor, are set forth in the context of
relieving the contractor from responsibility for excess
reprocurement costs, it is well-settled that the same occurrences
extend the time available for performance and make termination
prior to that time improper. See, e.g., FKC Engineering Company,
ASBCA No. 14856, 70-1 BCA ¶ 8,312.
18/ The rationale for this dual application of the default clause
is simple. As explained in a leading text on the subject of
public contracts: "While these clauses explicitly make untimely
performance the basis for the default action, it is important to
recognize that nearly every Government contract spells out the
contractor's required performance in terms of the nature of the
product or service which is to be delivered or performed as well
as the time by which these performance efforts are to be
completed. Thus, in order for the contractor to render 'timely
performance,' two basic requirements must be satisfied. The
product, service or construction work must conform to the
required design / performance characteristics, and the product
must be delivered or the work completed by the specified due
date." [Emphasis added.] John Cibinic, Jr. & Ralph C. Nash, Jr.,
Administration of Government Contracts 2d ed., (The George
Washington University, 1986), p. 677 (hereinafter Cibinic and
Nash).
19/ Sales Aids, Inc., was decided by one of the ad hoc contract
appeals boards which considered appeals from decisions of GPO
Contracting Officers prior to the establishment of the Board in
1984. GPO Instruction 110.10C, Subject: Establishment of the
Board of Contract Appeals, dated September 17, 1984. Decisions
of these ad hoc boards are hereinafter cited as GPOCAB. While
the Board is not bound by their decisions, it is the Board's
policy to follow the rulings of these ad hoc boards where
applicable and appropriate.
20/ It should be noted that GPO's printing procurement
regulation, like the procurement rules of other Federal agencies,
recommends the issuance of a show cause letter, "where
practicable," prior to the default termination of a contract for
failure to make timely deliveries or perform services within the
time required by the contract. GPO Printing Procurement
Regulation, GPO P-305.3 (September 1, 1988), Ch. XIV., § 1, ¶
3(c)(1) (PPR). Cf., Lewis B. Udis v. United States, 7 Cl. Ct.
379, 385-86 (1985). The Contracting Officer did not issue a show
cause letter prior to terminating the contract in this case. It
seems to the Board that he simply made the determination that it
was impracticable to issue such a show cause letter under the
circumstances herein. That decision was within his discretion.
Since the Appellant has not objected to absence of a show cause
letter in this case, the Board will not disturb the Contracting
Officer's judgment. Cf., Stabbe Senter Press, GPO BCA 13-85 and
19-85 (May 12, 1989), Sl. op. at 53. In any event, the omission
of a "show cause notice" by the Government is not generally a
procedural defect to a termination based on the contractor's
failure to make timely deliveries or perform timely services.
Stephenson, Inc., supra, Sl. op. at 20, fn. 22. See also, Kit
Pack Company, Inc., supra, 89-3 BCA ¶ 22,151, at 111,486-87
(citing, H. N. Bailey & Associates, ASBCA No. 21,300, 77-2 BCA ¶
12,681, at 61,553).
21/ The QATAP defines a "major defect" as " . . . a deviation
from specifications which is less serious than a critical
defect." QATAP, p. 1, ¶ 1-4. Simply stated, a major defect is a
deviation which normally would be noticed by the customer; e.g.,
excessively low type density. Id., p. ix (Definition of
Defects).
22/ ADL is the acronym for Average Demerit Levels, which is
simply defined in QATAP as ". . . one of the means used to
classify defects for printing attributes." QATAP, p. 1, ¶ 1-10.
23/ Since the color match problem involved a visible density
shift, the most likely assessment for this defect was 20 demerits
a page.
24/ In light of the Board's decision with respect to the "major
defect" issue, it is unnecessary to address and resolve the
Appellant's second contention regarding the inspection performed
by the Respondent in this case, namely, that the record is devoid
of evidence to show that the sample was randomly selected, and
thus representative of the lot.
25/ See generally, Cibinic and Nash, note 18 supra, pp. 680-84.
The Radiation Technology doctrine is clearly an encroachment on
the Government's right to terminate. However, it is also
apparent that the rule merely stays for a reasonable period the
Government's right to terminate, and not its right to insist on
100 percent conforming goods; i.e., the doctrine concerns time,
not the supplies themselves. Furthermore, the "substantial
compliance" rule is used to prevent surprise rejections by the
buyer after a contractor's timely shipment in situations where
performance departs in only minor respects from that which has
been promised. See, Stephenson, Inc., supra, Sl. op. at 50-51,
fn. 54 (citing, Environmental Tectonics Corporation, ASBCA No.
20340, 76-2 BCA ¶ 12,134).
26/ In most cases involving the "substantial compliance" rule,
the timeliness of the contractor's shipment is generally not an
issue. Rather, the dispute usually involves the resolution of
questions of "reasonable belief" and the seriousness of the
defects. Absent such a "reasonable belief" by the contractor and
proof that only minor defects are involved, the supplier is not
entitled to the protection of the "substantial compliance"
principle. See, Stephenson, Inc., supra, Sl. op. at 51, fn. 55
(citing, Introl Corporation, ASBCA No. 27,610, 85-2 BCA ¶ 18,044
at 90,578; Norwood Precision Products, Textron, Inc., ASBCA Nos.
38095, 38196, 90-3 BCA ¶ 23,200; Environmental Tectonics
Corporation, supra, 76-2 BCA ¶ 12,134).
27/ See, Cibinic and Nash, note 18 supra, p. 683.
28/ Although the chronology of events is not entirely clear, in
light of the fact that GPO's inspection of the sample copies did
not take place until April 13, 1992, and the contract was
canceled the next day, the Board concludes that the Appellant's
discussions with the Contracting Officer occurred after the
contract had already been terminated, but before the request for
bids reprocuring the work had been issued; i.e., between April
14, 1992, and July 1992.
29/ The cases speak in terms of a board's "statutory" authority
to set aside the arbitrary and capricious default decisions of
contracting officers. Darwin Construction Company, Inc. v.
United States, supra, 811 F.2d at 596; Executive Elevator
Service, Inc., supra, 87-2 BCA ¶ 19,849, at 100,438. The
authorities are referring, of course, to boards of contract
appeals established pursuant to the Contract Disputes Act of
1978, Pub. L. 95-563 (November 1, 1978), 92 Stat. 2383, 41 U.S.C.
§ 601 et seq. (CDA). The Board is not a creature of statute, but
rather its authority is purely derivative and contractual. The
Wessel Company, Inc., supra, Sl. op. at 32-33 (citing, Peake
Printers, Inc., supra, Sl. op. at 6). See also, Automated
Datatron, Inc., GPO BCA 20-87 (March 31, 1989), Sl. op. at 4-5;
Bay Printing, Inc., supra, Sl. op. at 9. For GPO, the statutory
authority to enter and administer contracts is vested in the
Public Printer of the United States. See, 44 U.S.C. §§ 301, 309,
501, 502 (1982). GPO Instruction 110.10C, Subject: Establishment
of the Board of Contract Appeals, dated September 17, 1984, ¶ 3.
The Public Printer, however, has delegated his authority to
decide contract appeals to the Board, which can act as fully and
finally as might the Public Printer. Id., ¶ 5. See also, Board
Rules, Preface to Rules, ¶ I (Jurisdiction for Considering
Appeals). Therefore, because the Board is acting on behalf of
the Public Printer in these appeals, its authority to set aside
arbitrary and capricious default decisions also has a "statutory"
foundation.
30/ In Darwin the Court specifically rejected the following
statement by the Armed Services Board of Contract Appeals in the
underlying decision [Darwin Construction Company, Inc., ASBCA No.
29340, 86-2 BCA ¶ 18,959 at 95,733]: "[O]nce the right to
termination is acquired by the Government and if that right is
not lost by the Government because of its conduct, the Board will
uphold the termination for default without any inquiry by the
Board into the 'motives' or judgment of the contracting officer
leading to the decision to terminate [relying on Nuclear Research
Associates, Inc., ASBCA No. 13563, 70-1 BCA ¶ 8,237]." The Court
stated, in pertinent part: "If we correctly understand the
purport and effect of that decision, we cannot agree with it,
because we think it is in conflict with the decisions of the
Court of Claims, as well as the decisions of the Claims Court . .
. . Also, it is our opinion that it imposes an erroneous
limitation on the statutory authority of boards of contract
appeals to set aside default decisions of contracting officers in
cases where the boards find that such decisions are arbitrary or
capricious." Darwin Construction Company, Inc. v. United States,
supra, 811 F.2d at 599.
31/ PPR, Chap. XIV, Sec. 1, ¶ 3.c.(3) lists eight factors which
"[t]he Contracting Officer shall consider" in determining whether
to terminate a contract for default: (i) the provisions of the
contract and applicable laws and regulations; (ii) the specific
failure of the contractor and the excuses, if any, made by the
contractor for such failure; (iii) the availability of the
supplies or services from other sources; (iv) the urgency of the
need for the supplies or services and the period of time which
would be required to obtain sources as compared with the time in
which delivery could be obtained from the delinquent contractor;
(v) the effect of a termination for default upon the contractor's
capability as a supplier under other contracts; (vi) the effect
of a termination for default on the ability of the contractor to
liquidate progress payments; (vii) the availability of funds to
finance repurchase costs which may prove uncollectible from the
defaulted contractor, and the availability of funds to finance
termination costs if the default is determined to be excusable;
and (viii) any other pertinent facts and circumstances.
32/ "Harmful error" is defined in these cases as nonconsideration
of the factors in circumstances where compliance with those
requirements might have led the contracting officer not to
terminate the contract for default. Darwin Construction Company,
Inc., supra, 91-1 BCA ¶ 23,419, at 117,487.
33/ In light of the fact that four months subsequently elapsed
between the termination date of the Appellant's contract and the
request for bids on reprocuring the work, the CDC's need for the
publication in question may not have been as urgent as it
appeared at first blush.