MERRICK BUSINESS FORMS, INC.

Appeal dated March 24, 1981
Hearing held on June 11, 1981
Decision dated June 30, 1981

PANEL 81-6
THOMAS O. MAGNETTI, Chairman
ROBERT G. COX, Member
JEFFREY L. BOWMAN, Member

PRELIMINARY STATEMENT

   This is a decision on a timely appeal filed by Merrick
   Business Forms Inc. (hereafter referred to as the contractor).
   The appeal disputes the final decision of the Contracting
   Office [sic] to recover an overpayment made to the contractor.
   The appeal is taken pursuant to Article 3 (the "Disputes"
   clause) of the Government Printing Office (hereafter the GPO)
   Contract Terms No. 1, as incorporated by reference into the
   specifications of this contract.  Exhibit 1 of the Appeal File
   (hereafter the A.F.).

   The contract required the contractor to produce forms of
   various sizes for the GPO as requested by the Department of
   Army.  Sometime afterwards the contractor submitted its
   voucher for work done under Print Order 39 and was
   subsequently paid.  Six months later the GPO discovered that
   the contractor had billed incorrectly and acted to recover the
   amount which it had overpayed.  The overpayment was recovered
   when the GPO subtracted the incorrect amount from subsequent
   billings.  The contractor claims that it is entitled to this
   amount on the grounds that the procedure it used to determine
   billing was more reasonable than the method used by the GPO.
   The determination of the appropriate billing procedure affects
   not only this print order but subsequent print orders since
   the contractor submitted these later vouchers using the
   Government's method of computing its charges instead of the
   method it used for billing for Print Order 39.

   In accordance with the request of the contractor dated March
   24, 1981, an informal hearing before a panel of members of the
   GPO Contract Appeals Board was held on June 11, 1981.  The
   decision of this Board is based solely upon the record as
   evidenced by the documents and exhibits that constitute the
   Appeal File and the testimony given at this hearing.  This
   procedure is in accordance with GPO Instruction 110.10A,
   titled "Board of Contract Appeals Rules of Practice and
   Procedure," dated September 17, 1980.

STATEMENT OF FACTS

   On March 7, 1980, in accordance with standard GPO contract
   award procedures, a multiple award term contract (Program
   1625-M) for the production of forms of various trim sizes was
   awarded to the contractor for the period of April 1, 1980 to
   March 31, 1981.  In the production of these various sized
   forms the contractor was required to perform such operations
   as negative making, offset printing, cutting, drilling,
   packing and shipping.

   A Purchase Order (J3569) was issued to the contractor covering
   this term contract.  According to this order the work was to
   be performed in strict accordance with the contractor's price
   quotation and the specifications.  Exhibit 2, A.F.  This
   Purchase Order was supplemented by print orders for each
   separate job placed with the contractor over the term of the
   contract.  As the contractor performed the work on each print
   order or series of print orders, it submitted a voucher
   billing the GPO according to the type of work performed and
   the number of forms produced.

   Because this contract required the production of forms of
   various sizes, the specifications set out the various trim
   sizes, measured by inches, that these forms should take (e.g.,
   8" x 12-1/2" to 10-1/2" x 12", 10-1/4" x 15-1/4" to 8-1/2" x
   22", etc.).  Exhibit 1, A.F.  As the form progressed in size,
   the cost of the form as set out in the schedule of prices
   increased.  The contractor was cautioned, however, that if
   there were a form required with a trim size not listed within
   one of the specific size categories listed in the schedule of
   prices, the item was to be charged under the applicable square
   inch group (e.g., 126 sq. in., 187 sq. in., etc.).  The
   warning read as follows:

"In case there is a requirement for a form with a trim size not
listed, it is to be charged under the applicable square inch
group."

Page 11, Schedule of Prices, Id.  See also  similar language on
pgs. 6 and 12, Id.  The contract established two methods for
computing the costs of varying trim sizes; by length and width of
the form, and if the form was irregular and did not fall within
these enumerated sizes, then by the total square inch size of the
individual form.

   The contractor prepared a voucher for billing on Print Orders
   37, 39, 48, 86 and 96 on June 6, 1980 and submitted it to the
   GPO for payment.  Exhibit 4, A.F.  Payment for this work was
   tendered for the full amount charged.  Approximately six
   months later, the GPO discovered that the billing for Print
   Order 39 was in error as it was computed using incorrect trim
   size calculation.  Whereas, the original billing for this
   Print Order was for $70,603, the correct billing according to
   the GPO should have been $52,603, a difference of $18,000.
   Exhibit 5, A.F.  The contractor, when faced with a large
   number of irregular forms that did not fit into any of the
   enumerated categories set forth within the Schedule of Prices,
   had billed not by using the square inch category but by using
   the next larger category of trim size by length and width.
   Exhibit 6, A.F.  The contracting officer notified the
   contractor by letter dated January 21, 1981 of this error and
   of the necessity to recover the amount overpaid. Id.
   Following this notification, the contractor challenged the
   action on the grounds that the Government's price schedule was
   not fair and that since the GPO had accepted the product and
   paid for the Print Order, it should be barred from recovering
   the amount.  Exhibit 4, A.F.

   By letter dated March 20, 1981, the contracting officer
   informed the contractor of his final decision to recover the
   money involved in the overpayment of this Print Order.
   Exhibit 9, A.F.  The contractor appealed this decision by
   letter to the Public Printer dated March 24, 1981.  In this
   letter, the contractor requested an informal hearing.  See
   also, contractor's letter of April 16, 1981, which reiterated
   this request for a hearing and referred to a particular
   provision of Contract Terms No. 1 as having some bearing on
   this appeal.  This provision dealt with the necessity for
   contractors to assert claims concerning the payment for work
   within a certain amount of time following the tender of
   payment by the Government.  The contractor asserted that the
   Government should also be required to assert any claim dealing
   with payments to contractors within a similar amount of time.

   Pursuant to this request a hearing was held on June 11, 1981,
   before a three member panel of the GPO Contract Appeals Board.
   At this hearing, the representative of the contractor
   explained that the contract as written was unfair, arbitrary
   and capricious.  The contractor presented evidence that this
   contract was inconsistent with current GPO procurement
   practices in that the billing structure used by the Government
   and the source of this claim is no longer used by the GPO.
   Exhibit 7, A.F.  At the end of this hearing, the Chairman
   asked whether any further relevant or internal evidence was to
   be rendered to supplement the record.  As no additional
   evidence was offered, the record was closed.  It should be
   noted that the contractor did submit supplemental evidence on
   June 2, 1981.  At the hearing, the Chairman reserved the right
   to rule on the admissibility of this evidence.  It is the
   ruling of this Panel that the evidence as submitted on that
   date by the contractor is relevant to the issues involved in
   this appeal and is accepted into the Appeal File as Exhibit
   11.

DISCUSSION

   This Board determines from the facts before it that the
   contractor misinterpreted the contract when it billed for
   Print Order 39 on June 6, 1980.  The contract language
   governing the billing by trim sizes is not ambiguous.  The
   contract set up two separate means to charge for work
   depending on the size of the form.  In three separate areas in
   the specifications, the prospective bidders were alerted that
   irregular shaped forms not listed within the delineated trim
   sizes were to be charged under the applicable square inch
   group.  Given the nature of this type of contract, one for
   printing of forms of various sizes, the possibility that an
   irregular form may have been ordered from the contractor was
   treated in the schedule of prices and throughout the
   specifications.  The contract clearly allocated the risk of
   this occurrence to the contractor.  And this risk should have
   been taken into account when the contractor prepared its bid.

   However, it was the contractor's contention that the contract
   could only be read reasonably and fairly by disregarding the
   provision dealing with irregular forms and bill as it did when
   it originally billed for Print Order 39.  Instead of using the
   applicable square inch group, the contractor charged the
   irregular forms under the next larger trim size category.  To
   accept this logic would make the language alluded to earlier
   in this decision, and found on pages 6, 11 and 12 of the
   specifications meaningless.  An interpretation that leaves any
   portion of contract language useless, inexplicable or
   inoperative should be rejected.  Blake Construction Company v.
   United States, 202 Ct. Cl. 794 (1973).  Moreover, in order to
   read the contract as a whole, the provisions must be
   interpreted so as to be in harmony with each other.  Unicon
   Management Corp. v. United States, 179 Ct. Cl. 534 (1967).  To
   accept the contractor's interpretation would create a conflict
   between these trim size provisions in the schedules of prices
   and therefore should be rejected.  The only reasonable way to
   interpret these provisions is the way the Government did when
   it sought to recover the overpaid amount.  The contractor
   should have charged for the irregular forms produced under
   this Print Order by using the applicable square inch category
   and not by using the set trim size category.  Furthermore, at
   the hearing, the contractor's representative admitted that the
   language of the contract clearly provided that irregularly
   sized forms were to be billed by the applicable square inch
   category.

   As for the argument that to hold the contractor to this
   interpretation would be manifestly unfair, the contractor was
   well aware or should have been aware that these separate
   methods of billing for forms were present in the
   specifications prior to its bidding on the contract.  Freeman
   Electric Construction Co., DOTCAB No. 74-23, 75-1 BCA ¶ 11,184
   (1975).  The language of the contract clearly put the risk of
   producing irregular sized forms on the contractor.  Since the
   bid was presented, it is assumed that the contractor accepted
   this risk.  If the contractor had any misgivings about how to
   calculate the trim size charges, it should have brought these
   misgivings to the attention of the contracting officer prior
   to the submission of its bid.  It should also be noted that
   there was no persuasive evidence presented by the contractor
   indicating that the contractor actually suffered any loss
   because it was required to use the square inch option instead
   of by the trim size.  Mere allegations can not be used as a
   basis for granting relief.  EG & G, Inc., ASBCA No. 14051,
   71-1 BCA ¶ 8,867.

   As for the contention that this particular contract language
   is inconsistent with current GPO procurement practices and
   therefore unfair in its application to this contractor, any
   such inconsistency is irrelevant to the issues at hand.  This
   contract language was unambiguous as to what was required for
   the computation of charges.  When a contract is clear on its
   face as to what is required, there is no need to rely on
   language of subsequent contracts as guidance for contract
   interpretation.  Additionally, the contractor presented no
   convincing evidence as to why these practices have been
   changed.

   The contractor also argued that the Government was not
   entitled to the amount in question because the Government's
   acceptance of the goods produced under Print Order 39 and its
   tender of a check in payment for this Print Order bars any
   recovery of the amount.  In support of this, contractor cited
   Article 22 of Contract Terms No. 1, "Payments on Purchase
   Order."  This provision reads in part as follows:

"(a)  Payment will be made to the contractor upon submission of a
proper voucher. . . .

(b)  Checks tendered by the GPO in payment of any invoice
submitted by the contractor, whether equal to or less than the
amount invoiced are tendered as final payment.  Acceptance and
payment of any check so tendered shall operate as a bar to the
assertion of any exceptions by the contractor to the amount paid
by [the] GPO, unless the contractor notifies the contracting
officer in writing within 60 calendar days of the date of such a
check. . . ."

   Although this provision does not specifically bar the
   Government from asserting any exceptions to money paid to a
   contractor, the contractor has argued that this provision must
   be interpreted to place a reciprocal bar on the Government to
   assert any claim after 60 calendar days have elapsed.
   According to this logic, because the Government discovered the
   overpayment six months after payment, it should be barred from
   recovering the money.  This reasoning is defective.  This
   provision does not bind the Government in any way, as it only
   applies to the contractor.  It can not be assumed that just
   because a provision obligates one party to perform a
   particular action that there is an unstated reciprocal
   obligation for the other party to perform in the same manner.
   Furthermore, since the contract was still in force when the
   Government discovered the error, there was no finality of
   acceptance here as a matter of law.

   The Government can recover funds which its agents have
   wrongfully, erroneously or illegally paid.  United States v.
   Wurts, 303 U.S. 414 (1938).  Although this case dealt with an
   erroneously made income tax refund, this rule has been applied
   to cases involving payments made under procurement contracts.
   See, Burnett Electronics Laboratory, Inc., ASBCA No. 23938,
   80-2 BCA ¶ 14,619.  In the instant case, the contracting
   officer lacked the contractual authority to make this
   overpayment because under the terms of the contract a smaller
   amount should have been paid for the goods produced under this
   Print Order.  Since the June payment for Print Order 39 was
   clearly erroneous, it was recoverable.  Space Age Engineering,
   Inc., ASBCA No. 22981, 80-2 BCA ¶ 14,701.  Moreover, those
   receiving overpayments are bound to refund them just as the
   Government has an obligation to recover them.  DiSilvestro v.
   United States, 405 F.2d 150 (2d Cir. 1968); A Padilla
   Lighterage, Inc., ASBCA No. 17288, 75-1 BCA ¶ 11,406; Foreman
   Industries, Inc., ASBCA No. 23948, 80-2 BCA ¶ 14,501.  In the
   instant case, the contractor was bound ex aequo et bono  to
   pay the Government back for the incorrect billing.  Not to do
   so would have been unjust enrichment.

DECISION

   In light of the above, the Board upholds the recovery of the
   overpayment made to this contractor in payment for Print Order
   39 and hereby denies the contractor's appeal in its entirety.