U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
UNITED COMPUTER SUPPLIES, ) Docket No. GPOBCA 26-94
JOINT VENTURE )
Program C384-S )
Print Orders 80163 and 80164 )
For the Appellant: United Computer Supplies, Joint Venture, Elk
Grove Village, Illinois, by Frederic G. Antoun, Jr., Attorney at
Law, Chambersburg, Pennsylvania.
For the Respondent: Kerry L. Miller, Esq., Associate General
Counsel, U.S. Government Printing Office.
Before BERGER, Ad Hoc Chairman.
DECISION AND ORDER
By Notice of Appeal filed on July 21, 1994, United Computer
Supplies, Joint Venture (hereinafter Appellant, Contractor, or
UCSJV), 2800 Carl Street, Elk Grove Village, Illinois, timely
appealed the May 13, 1994, final decision of Contracting Officer
Jack Scott of the U.S. Government Printing Office (hereinafter
Respondent or GPO) finding that Appellant was overpaid in the
amount of $80,132.75 on Print Order 80163, Program C384-S, and in
the amount of $34,415.39 on Print Order 80164, Program C384-S,
and directing that those amounts be recovered from Appellant.
See Rule 4 File, Tabs J and K.1 For the reasons which follow,
the Contracting Officer's final decision is AFFIRMED and the
appeal is DENIED.2
I. BACKGROUND
1. On or about December 3, 1992, Respondent, after competitive
bidding, awarded Appellant a requirements contract for Program
C384-S which called for the production of "multiple-part sets
(carbonless paper)" as requisitioned by the National Institutes
of Health (NIH) during the period December 1, 1992 to November
30, 1993. Rule 4 File, Tabs A and C.
2. The scope of the contract was described as "the production
of multiple-part carbonless paper sets, fan apart or equal,
and/or pads requiring such operations as film making,
composition, printing, cutting, drilling, perforating, numbering,
padding, packing, and delivery." The paper sets were to be
collated, trimmed to size, and joined into sets by "edge
bonding." Two "trim size" formats were identified for pricing
purposes: format A included 3" x 5" up to 4" x 6", while format
B encompassed larger than 4" x 6" up to 8-1/2" x 11". Rule 4
File, Tab A at 4, 6.
3. Under this contract, "direct contact" between Appellant and
NIH was authorized, with NIH empowered to issue print orders
directly to Appellant.3 NIH could not, however, change the
specifications, contract terms, or a print order once issued.
Rule 4 File, Tab D.
4. On September 22, 1993, NIH issued Print Orders 80163 and
80164 to Appellant under Program C384-S. The print orders called
for the production of 120,000 and 60,000, respectively, 6-part
marginally punched continuous forms. The specifications attached
to the print orders required marginal perforations 1/2" from the
left and right margins. The specifications also described an
"overall" size of 9-1/2" x 11"; the print orders set forth a
"trim size" of 8-1/2" x 11". Rule 4 File, Tabs E and F.
5. Appellant produced and delivered the forms called for by the
print orders and subsequently billed GPO in accordance with the
pricing set forth in its Program C384-S contract. For Print
Order 80163, Appellant billed $93,230.80, which included charges
of $70,092.00 for 2,376,000 perforations. Rule 4 File, Tab E.
For Print Order 80164, Appellant billed $41,890.90, of which
$35,046.00 was for 1,188,000 perforations. Rule 4 File, Tab F.
GPO, after taking a 5 percent prompt payment discount, paid
Appellant $88,569.26 and $39,796.35 for its work on the two print
orders. Rule 4 File, Tabs E and F.
6. NIH, upon being charged the cost of the two print orders by
the Respondent, advised GPO that the cost was too high and far in
excess of what it had paid previously and what it had expected to
pay. HT 174-5, 237. The GPO Contracting Officer reviewed the
matter and concluded that the work ordered by NIH was outside the
scope of the Program C384-S contract4 and that NIH was not
authorized to issue print orders to the Program C384-S contractor
for marginally punched continuous forms. HT 237-41. The
Contracting Officer then determined that the work could have been
ordered (by GPO, but not by NIH directly) from United Computer
Supplies under the A1026-M program, which covers the procurement
of marginally punched continuous forms and for which United
Computer Supplies was one of several contractors, for a cost of
$8,436.51 for the work covered by Print Order 80163 and $5,380.96
for the work encompassed by Print Order 80164. Rule 4 File, Tab
G. Determining that these amounts represented the fair market
value of what Appellant had delivered to the Government, the
Contracting Officer decided that the Contractor was entitled,
under a quantum meruit theory, only to those amounts. HT 241 et
seq. The Contracting Officer directed that the difference
between the sum of those amounts and what GPO had paid,
$114,548.14, be recovered. Rule 4 File, Tab K. That recovery
subsequently was effected. App. Brf. at 13. The Appellant seeks
repayment of that amount.
II. POSITIONS OF THE PARTIES
A. The Appellant
The Appellant asserts that it is entitled to what it was
originally paid for the two print orders because the work called
for was within the scope of its Program C384-S contract.
According to the Appellant, its contract is for "Multiple Part
Sets (carbonless paper) and "[n]o one has disputed that the
products ordered and produced under Print Orders 80163 and 80164
are multiple part carbonless paper sets." App. Brf. at 5.
Further, the Appellant states that during the term of its
contract, and during the terms of prior C384-S program contracts
where United Computer Supplies was the contractor, several orders
for marginally punched continuous forms had been placed and
processed under those contracts. Complaint at 1. Among those
orders were ones in 1992 for the same forms (NIH Forms 2555 and
2556) that were the subject of Print Orders 80163 and 80164.
App. Brf. at 2; Rule 4 File, Tabs L and M. GPO approved and paid
for the work performed pursuant to those orders, agreeing that
payment should be based on the line item pricing in the Program
C384-S contract. App. Brf. at 2. Accordingly, the Appellant
argues that Print Orders 80163 and 80164 fall within the scope of
its C384-S program contract, and that if there is any ambiguity
about the scope of that contract it must be resolved against the
Respondent. App. Brf. at 5-7. The Appellant further argues
that, regardless of the proper interpretation of the contract as
written, the "course of dealing" between Appellant and Respondent
involving the placement of orders under the requirements contract
for products exceeding 8-1/2" x 11" and for continuous forms
establishes that Appellant was entitled to process the print
orders under the contract. App. Brf., 7-10. Finally, the
Appellant asserts that the Respondent, under equitable estoppel
principles, is estopped from refusing to pay in accordance with
the contract pricing because the Respondent knew but concealed
from the Appellant how it interpreted the "trim size" requirement
of the contract and under what circumstances it would pay for
perforations in accordance with contract line item pricing. App.
Brf. at 11-12.
B. The Respondent
The Respondent insists that the Appellant was not authorized to
produce the NIH forms under the C384-S program contract because
that work was outside the scope of the contract and NIH therefore
acted outside the scope of its authority in issuing the print
orders. Respondent asserts that marginally punched continuous
forms, as called for by the print orders, are fundamentally
different from the carbonless paper sets encompassed by the C384-
S program. According to the Respondent, the carbonless paper
sets consist of "multiple page forms, trimmed on all four sides
to size, and fastened together at the top with fan apart type
adhesive," while marginally punched continuous forms are
"manufactured from a continuous roll of paper that is not cut
into units or sets" and that have "small holes punched into the
margins of the paper which are used to propel the continuous
forms through an automatic feed computer printer." Resp. Brf. at
5-6. The Respondent asserts that there are both "physical and
functional dissimilarities" between the two and notes that: (1)
GPO considers the production of multi-form sets and the
production of marginally punched continuous forms to be different
manufacturing specialties, and (2) the two types of products have
different Standard Industrial Classification codes. Resp. Brf.
at 5 and Attachments A and B. The Respondent also asserts that
the specified trim size of the NIH forms "exceeded the trim size
parameters" of the C384-S contract and that the method of joining
used, "crimping in the right and left margins," is inconsistent
with the contract requirement for joining by "special edge
binding adhesive." Resp. Brf. at 6.
The Respondent also disputes the Appellant's assertions regarding
course of dealing and equitable estoppel. The Respondent argues
that there is no course of dealing between the Appellant and the
Respondent because the prior contracts were awarded to United
Computer Supplies while the Appellant is a joint venture, of
which United Computer Supplies is one of three members,
performing its first Program C384-S contract. The Respondent
further states that United Computer Supplies itself "performed no
actual production" in connection with Print Orders 80163 and
80164. As for equitable estoppel, the Respondent, argues that
the Government cannot be estopped because of the unauthorized
acts of a Government employee. The Respondent asserts that the
GPO Contracting Officer had no knowledge of and did not approve
any waiver of specifications or issuance of print orders outside
the scope of the contract.
III. ISSUES PRESENTED
1. Was the work called for by Print Orders 80163 and 80164
within the scope of the Appellant's Program C384-S contract as
written? If not, was there a course of dealing between the
parties that require the contract to be interpreted as
encompassing that work?
2. Is the Respondent equitably estopped from refusing to pay
the Appellant in accordance with the Program C384-S pricing for
the work done under Print Orders 80163 and 80164.
3. If the Respondent is not required to pay the Appellant in
accordance with the Program C384-S contract pricing, did the
Respondent properly determine the amount to which Appellant is
entitled?
IV. DISCUSSION
At the outset, there are two points that should be noted. The
first is that the Appellant does not challenge the Government's
inherent and well-established right to recover payments that were
made illegally or erroneously. See B & B Reproductions, supra,
and cases cited therein. Rather, the Appellant's position is
that there was nothing illegal or erroneous about the payments
for Print Orders 80163 and 80164 and therefore the Respondent
erred in recovering the $114,548.14. The second is that the
Respondent's recovery of that amount represents a recoupment,
which means that
the Respondent has the burden of proving that it was entitled to
a refund of the money it says was improperly paid to the
contractor. B & B Reproductions, supra.
A. Scope of Contract
The Respondent's position is that NIH had no authority to issue
Print Orders 80163 and 80164 because the marginally punched
continuous forms called for by those print orders are not
encompassed by the Program C384-S contract, while the Appellant's
point is that it has a requirements contract for multiple part
carbonless paper sets, "the products ordered and produced under
Print Orders 80163 and 80164 are multiple part carbonless paper
sets," App. Brf. at 5, and therefore the print orders are within
the scope of its C384-S contract.
The Appellant is literally correct with respect to the first two
elements of its position-it has a requirements contract for
multiple part carbonless paper sets, and on this record it is not
disputed that the marginally punched forms produced pursuant to
the print orders are multiple part carbonless sets. It is also
true that even if the C384-S contract was not primarily intended
for marginally punched continuous forms-a conclusion buttressed
by the existence of the A1026-M program, which is intended for
that type of product, HT 246; Resp. Brf. at 4; see Elgin Business
Forms, Inc., GPOCAB 10-84 (October 19, 1984), slip. op., 1984 WL
148108; Industrial Printing Co., GPOCAB 07-83 (September 16,
1986), slip. op., 1986 WL 1815005-that would not mean that the
forms could not be encompassed by the language of the contract
itself. See Custom Printing Co., GPOCAB 2-79 (December 19,
1979), slip. op. at 9-10, 1979 WL 28895. The Board finds,
however, that when Appellant's C384-S contract is read as a
whole, it cannot be reasonably interpreted as encompassing the
work called for by Print Orders 80163 and 80164.
It is clear from the record that marginally punched continuous
forms, and in particular the forms that were the subject of the
print orders, while producible as multiple part carbonless paper
sets, are very different from the type of forms covered by the
C384 program. The specifications for that program describe paper
sets that are "fan apart or equal," with the paper being joined
into sets by means of "edge bonding" at the "edge" specified on
individual print orders. There are also requirements for
drilling ("It is anticipated that either 1/4" or 3/8" round holes
will be required on top or left of some forms 1/4.
Approximately 24% of the orders will drill.") and perforations
(There will be an occasional order with either vertical and/or
horizontal perforation."). Rule 4 File, Tab A at 4, 6, 7. The
estimated requirement for perforations ("per 100 perfs"), used in
the evaluation of bids leading to the award of the contract, was
listed as "1." Rule 4 File, Tab A at 9. All of these
requirements are inconsistent or incompatible with the ordered
marginally punched continuous forms.
First, the term "fan apart" refers to a method of joining
carbonless paper with an adhesive made for that purpose. HT 306,
312-13; The Business Forms Handbook 564 (4th ed. 1990)(published
by the National Business Forms Association) (fan apart glue is
"special glue used in edge padding carbonless paper. Since this
glue does not adhere to uncoated surfaces, individual sets can
simply be 'fanned' apart."). The print orders did not call for
fan apart joining or edge bonding with adhesive; they called for
"crimping." Rule 4 File, Tabs E and F. Crimping is a very
different method of joining6 that does not involve the use of any
adhesive whatsoever and is the most commonly used temporary
fastening method for continuous forms. The Business Forms
Handbook, supra, at 149. (It is the only suitable method under
the A1026-M contract. Gov. Exh. 2 at 12; see also GPO Form
1026b, Specifications for Marginally Punched Continuous Forms,
Rule 4 File, Tab I.) The Appellant's C384-S contract makes no
mention of crimping. In addition, the print orders require
crimping on both the left and right margins; the C384-S contract
refers to a single "edge" that is to be joined. Although the
Appellant argues that the forms could have been glued instead of
crimped without changing the product and that the failure to glue
might simply justify a price reduction or reprint order, App.
Brf. at 6, the contract's mandatory edge bonding requirement for
all products produced under that contract and provision for
single edge joining are simply inconsistent with a contract scope
that would encompass marginally punched continuous forms for
which crimping is the most common method of joining and which
under these print orders were to be joined on two edges, not one.
Second, by definition marginally punched continuous forms require
holes punched, or drilled, in the margins, HT 310; The Business
Forms Handbook, supra, at 389 et seq., and the print orders so
required. The C384-S specifications anticipate holes on either
the top or left, but not on both left and right. It is difficult
to imagine why, if the C384-S contract were intended to encompass
marginally punched continuous forms, it would not provide for
left and right margin hole punching.
Third, the C384-S contract anticipates an occasional order for
perforating, and contains an estimate of one "100-perf"
requirement for the entire term of the contract. While that
estimate is not binding on either party to the contract and would
not preclude orders that go beyond it, see Shepard Printing,
GPOBCA 37-92 (January 28, 1994), slip. op., 1994 WL 275077, the
Government is required to develop good faith, reasonable
estimates based on all available information. Hero, Inc., 63
Comp. Gen. 117 (1983), 83-2 CPD ¶ 687; Shepard Printing, supra.
Moreover, it is illegal to evaluate bids and award a contract on
the basis of quantities other than what are anticipated to be
ordered under the contract. Tennessee Valley Service Co.,
B-188771, July 20, 1977, 77-2 CPD ¶ 40. Although the Appellant's
contract administrator testified that there had been "several
jobs that required perforations in the past," HT 123, there has
been no showing that those jobs required a high number of
perforations or that the perforating estimate in the C384-S
contract otherwise was not a reasonable estimate of what was
anticipated for that contract. Accordingly, the Board believes
that this estimate provides a strong indication that marginally
punched continuous forms, which typically will be ordered with
vertical perforations running the length of the form on both
sides of the form as well as with a horizontal perforation to
separate each form set, were not meant to be encompassed by the
multiple part carbonless paper set contract.
Based on the above alone, the Board has no difficulty in
determining that the terms of the C384-S contract do not
encompass the production of marginally punched continuous forms
and concluding that Print Orders 80163 and 80164 are therefore
outside the scope of that contract. That conclusion is further
supported by resolution of the trim size issue. The Appellant's
C384-S contract encompassed forms up to a maximum trim size of
8-1/2" x 11"; the print orders set forth a trim size of 8-1/2" x
11", but their attached specifications identified an "overall"
size of 9-1/2" x 11". It is not disputed that the specifications
refer to the size of the forms with the left and right,
marginally punched, perforated stubs attached, and that with the
removal of those 1/2" stubs the forms become 8-1/2" x 11". What
is disputed is whether the maximum trim size set forth in the
C384-S contract refers to the overall size of the forms or to the
size of the forms after the stubs are detached. The Appellant
says it "defined the 'trim size'1/4 as the detached size of the
form, after removing the stubs," App. Brf. at 7, and refers to
various continuous forms and "snap sets" that were produced under
the contract with a measurement of 8-1/2" x 11" after removal of
the stubs. The Respondent takes the opposite position, having
elicited at the hearing testimony of the Contracting Officer and
of Spurgeon Johnson, a GPO employee who qualified as an expert
witness, to the effect that they consider the contract trim size
to refer to the end product before removal of the stubs. HT
240-41, 266, 307, 309, 316-17.
The C384-S contract does not define trim size. In the absence of
such a definition or any evidence that something other than the
term's ordinary meaning was intended, it is appropriate to view
the term in accordance with its plain and ordinary meaning.
Restatement (Second), Contracts § 202(3); George Hyman Constr.
Co. v. United States, 832 F.2d 574 (Fed. Cir. 1987). The
dictionary defines the term as "the actual size of something (as
a magazine or book page) after excess material required in
production has been cut off." Webster's Third New International
Dictionary (1971). In other words, after excess paper required
in production is trimmed off, the size of what has been produced
is its trim size.7
When single sheet forms are ordered, what is produced in response
as the end product to be delivered are the forms themselves.
However, when forms are ordered as snap sets or as continuous
forms with drilled and perforated left and right margins for use
in continuous feed printers, the end products to be produced and
delivered to meet the ordering agency's functional requirements
are more than the basic forms-they are the forms along with the
removable tabs or stubs that enable the agency to use the forms
as intended. Thus, it is the entire snap set or continuous feed
paper sets with perforated side strips, not just the forms, that
constitute the end or final product. Any doubt as to whether the
stubs are a part of the end product to be delivered under GPO
contracts is easily assuaged by reference to GPO's specifications
(which describe and prescribe what the delivered product shall
be) and to contract actions taken to ensure compliance with those
specifications. See, e.g., GPO Contract Terms, Solicitation
Provisions, Supplemental Specifications, and Contract Clauses,
GPO Publication 310.2 (Rev. 9-88), Supplemental Specifications, ¶
13 ("Stub perforations must be such as to guarantee easy
separation of all parts in one operation, but sufficient strength
must be retained to prevent disengagement of any part under
normal handling 1/4"); The Standard Register Co., GPOBCA 4-86
(October 28, 1987), slip. op., 1987 WL 228972 (continuous forms
not fastened on the stub properly); Elgin Business Forms, Inc.,
supra (marginally punched forms not working properly on intended
printer); Sturgis Newport Business Forms, GPOCAB 76-11 (April 27,
1977), slip. op., 1977 WL 25618 (misalignment of sprocket holes
causing high speed printer jams). Obviously then, when
marginally punched continuous forms are ordered, the delivered
end product for which the contractor is responsible is the
complete form with stubs attached, and it is to this complete
form that the specified trim size applies. The Board therefore
concludes that the Respondent's definition of trim size is
correct and that the Appellant's definition, which appears to be
based solely on previous print orders issued under the C384-S
contract,8 is unreasonable.
In interpreting a contract, the Board must give effect to the
intention of the contracting parties at the time the contract was
made, Hegeman-Harris & Co. v. United States, 440 F.2d 1009 (Ct.
Cl. 1971); General Elec.Co., ASBCA 24913, 83-1 BCA ¶ 16,130, and
to interpret the contract as a reasonably intelligent person
would. Pacificorp Capital, Inc. v. United States, 25 Cl. Ct. 707
(1992), aff'd without op., 988 F.2d 130 (Fed. Cir. 1993); MPE
Business Forms, Inc., supra; B & B Reproductions, supra. If the
contract language is susceptible of more than one reasonable
interpretation, the language is ambiguous. B & B Reproductions,
supra, and cases cited therein. In such a case, under the rule
of contra proferentum, the language will be construed against the
drafter if the ambiguity is a latent one. Fry Comms.
Inc./InfoConversion Joint Venture v. United States, 22 Cl. Ct.
497 (1991). The fact that the parties disagree as to the meaning
of a contract does not mean, however, that the contract is
ambiguous. International Business Investments, Inc. v. United
States, 17 Cl. Ct. 122 (1989), aff'd without op., 895 F.2d 1421
(Fed. Cir. 1990). Such a disagreement simply requires that this
Board examine the contract language and derive its own
interpretation. MPE Business Forms, supra, at 36. Reading the
C384-S contract as a whole and giving effect to all its
provisions, and in light of the above comparison between the
terms of the contract and the nature of marginally punched
continuous forms as well as the specific requirements of Print
Orders 80163 and 80164, the Board concludes that the contract is
not ambiguous as to its scope, and that the only reasonable
interpretation of this contract for multiple part carbonless
paper sets as it was advertised, bid on, and executed is that the
contract's scope did not extend to the forms that NIH ordered
under those print orders.
The Board is not persuaded otherwise by the Appellant's argument
that its interpretation of the contract was reasonable in light
of the prior course of dealing between United Computer Supplies
and the Government. A prior course of dealing between the
parties9 may establish the meaning of ambiguous contract
language. Cresswell v. United States, 173 F. Supp. 805 (Ct. Cl.
1959); Dynaport Elecs., Inc., ASBCA 17895, 73-2 BCA ¶ 10,324.
For example, where a contract is silent as to a particular
matter, the prior course of dealing of the parties with respect
to that matter can be used to establish the intention of the
parties (unless a contrary intention had been manifested).
Benning Aviation Corp., ASBCA 19850, 75-2 BCA ¶ 11, 355. In the
present case, however, the Board finds no ambiguity as to the
scope of the C384-S contract. The contract as written is neither
silent nor otherwise ambiguous regarding its scope-as discussed
above, its provisions are not compatible with the requirements of
marginally punched continuous forms production and are
inconsistent with the specification requirements of the print
orders. Stated another way, the contract is not reasonably
susceptible to an interpretation that brings within its scope the
production of the marginally punched continuous forms ordered by
Print Orders 80163 and 80164.
In addition, the Appellant's argument must fail because it has
not shown that the course of dealing was with GPO, the
contracting agency. As stated by Professors Nash and Cibinic,
"[t]he reasoning underlying the prior course of dealing rule
requires that both parties have had actual knowledge of the prior
course of dealing and of its significance to the contract.
Clearly, it would be unreasonable to find that a party had agreed
to a term of which it was not aware." John Cibinic, Jr. and
Ralph C. Nash, Jr., Administration of Government Contracts 202
(Third ed. 1995). All authority to administer the C384-S
contract, including interpreting its provisions and issuing
modifications, was vested in GPO contracting officers. Rule 4
File, Tab D; HT 169; GPO Agency Procedure Handbook, GPO
Publication 305.1, dated March 1987, Section IV, ¶ 2 (Gov. Exh.
1). Thus, any prior course of dealing relied on for contract
interpretation purposes necessarily had to involve a GPO
contracting officer or someone with authority to act on behalf of
the contracting officer. Almost all of the elements of the prior
course of dealing here, however, involved the placement of print
orders with the Appellant by NIH. HT 53-57, 136-37; GPO
contracting personnel were neither involved in nor aware of the
placement of the orders and played no role in authorizing payment
to the contractor.10 HT 235-36.
B. Equitable Estoppel
The Appellant argues that the Respondent is estopped under
equitable estoppel principles from refusing to pay for
perforations under Print Orders 80163 and 80164. The Appellant
says the Respondent should be estopped because it "knew [that]
trim size meant overall product size (as opposed to detached
size) and that the pricing line item for perforations would apply
only to horizontal perfs on snap sets" but "concealed" this
knowledge "until long after" production of the forms in question.
App. Brf. at 11.
The Board dealt at length with the concept of equitable estoppel
in B & B Reproductions, supra. We said there that equitable
estoppel is a doctrine "invoked to avoid injustice in particular
cases," and pointed out that estoppel arises when the following
four conditions are met: (a) the Government knows or has reason
to know the facts; (b) the Government either intends that its
conduct or statements be acted upon or acts in such a manner as
to give the contractor that impression; (c) the contractor must
not have knowledge of the true facts known by the Government; and
(d) the contractor detrimentally relies on the Government's
conduct or statements." B & B Reproductions at 32 (citations
omitted). We further pointed out the firmly established rule
that before estoppel can come into play the contractor must show
that the Government representative whose actions or statements
form the basis for the estoppel must be shown to have acted
within the scope of his or her authority, id. at 33, because "an
estoppel against the Government cannot be based on the
unauthorized actions of misrepresentations of its agents, or acts
beyond the scope of their authority." Id. at 34 (citations
omitted).
The estoppel argument fails here. First, it is based on the
same prior course of dealing discussed above, i.e., the prior
ordering of forms greater than 8-12" x 11" and the payment for
perforations under Print Orders 60159 and 60188. App. Brf. at
11-12. The Appellant, whose burden of proof in an estoppel case
is "substantial," B & B Reproductions, supra, at 34, has not
shown that anyone with contracting officer authority at GPO
ordered those forms or knew of the ordering of such forms or
authorized payment for the forms with any specific knowledge of
exactly what forms were being produced. Moreover, even if it had
been shown that Mr. Sebold's involvement in securing payment for
perforation work on two earlier print orders for "snap-out" forms
was binding on GPO such that it could give rise to an estoppel,
in the Board's view the estoppel would not reach the marginally
punched continuous forms ordered under Print Orders 80163 and
80164 because there has been absolutely no showing that Mr.
Sebold intended his actions to be relied upon by the Contractor
with regard to continuous forms or acted in such a manner as to
give that impression. The testimony proffered by the Appellant
establishes no more than some sort of intervention by Mr.
Sebold with GPO's Financial Management Office that helped United
Computer Supplies get paid for producing "snap out" forms that
contained perforations. This is not sufficient to establish the
estoppel argued for by the Appellant.
C. Quantum Meruit/Quantum Valebant
Since the Board agrees with the Respondent that the work called
for by Print Orders 80163 and 80164 are not within the scope of
the C384-S contract, the Board further agrees that the issuance
of the print orders was beyond the scope of authority of the NIH
employee who issued them and therefore did not give rise to a
valid contract. Jascourt v. United States, 521 F.2d 1406 (Ct.
Cl.), cert. denied, 423 U.S. 1032 (1975); Maintenance Serv. &
Sales Corp., 70 Comp. Gen. 664 (1991). Since the Respondent
therefore was not obligated to pay the Appellant pursuant to the
C384-S contract pricing, the remaining question is whether the
Respondent properly determined that the Appellant should be
reimbursed at its A1026-M contract rates.11
When delivery of goods or services to the Government is not
supported by a valid contract, the supplier may be paid
nonetheless to avoid the obvious unfairness that would result if
the Government keeps and makes use of the delivered goods or
services without making payment for them. Acumenics Research &
Tech., Inc.-Quantum Meruit payments, 67 Comp. Gen. 507 (1988),
88-2 CPD ¶ 15; Publishers Choice Book Mfg. Co., GPOBCA 04-84
(August 18, 1986), slip. op., 1986 WL 181457. Payment in such
circumstances, on a quantum meruit/quantum valebant basis, may
be made if the goods or services could have been the subject of a
proper procurement, if the Government received a benefit, and if
the supplier acted in good faith. 40 Comp. Gen. 447 (1961). When
a supplier is paid on a quantum meruit/quantum valebant basis,
the supplier is entitled to the reasonable value of the benefit
provided rather than to the price it would have charged if the
parties had entered into a valid contract. Cities Serv. Gas Co.
v. United States, 500 F.2d 448 (Ct. Cl. 1974); 40 Comp. Gen. 447,
supra.
The Respondent agrees that the criteria for quantum
meruit/quantum valebant payment are satisfied here, and asserts
that the appropriate basis for determining the reasonable value
of the forms delivered under the print orders is the Appellant's
A1026-M contract, under which the work ordered by the print
orders could have been performed. The Board finds no basis in the
record to disagree. The Board notes that in New South Press &
Assocs., GPOBCA 14-92 (January 31, 1996), slip. op., 1996 WL
112555, also involving an NIH "direct deal" requirements
contract, the Board was unwilling to limit a contractor's
termination for convenience settlement recovery for the cost of
stripping and bluelines to the average costs for those items
found in a general usage program (A814-M). In that case,
however, the contractor's contention that the general usage
program contemplated a high volume of work and therefore provided
pricing that was artificially low for the work required by the
terminated contract was not refuted. Moreover, there was no
proof that the contractor was one of the at least 38 contractors
on that program. The Board also noted that there were
substantial differences between the type of work under the
general usage program and the work under the terminated contract.
Id. at 53 n.65. Here, the circumstances are very different: (1)
the Appellant makes no assertion in its brief or other filings
about the reasonableness of the Respondent's use of the A1026-M
program;12 (2) the Appellant was a concurrent A1026-M program
contractor and the Respondent utilized the Appellant's pricing,
rather than an average of all contractor pricing found on that
program; and (3) there is no difference between the work
performed by the Appellant under the print orders and the work
encompassed by the A1026-M program. Accordingly, in the absence
of any evidence in the record calling into question the
Respondent's reliance on the A1026-M pricing, the Board concludes
that the Respondent properly determined that $8,436.51 for Print
Order 80163 and $5,380.96 for Print Order 80164 represented the
reasonable value of what was furnished to the Government under
those orders.
ORDER
The Board finds and concludes, after careful
consideration of the record, that the Appellant's C384-
S contract, when read in its entirety, is not ambiguous
as to its scope, that marginally punched continuous
forms are not encompassed by that scope, that the
Appellant has not sustained its burden of proof with
regard to estoppel, and that the Respondent has met its
burden to establish its entitlement to recoup
$114,548.30 from the Appellant. Therefore, the final
decision of the Contracting Officer is AFFIRMED and the
appeal is DENIED.
It is so Ordered.
January 23, 1998 Ronald Berger
Ad Hoc Chairman
GPO Board of Contract Appeals
_______________
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 August 24, 1994. It will be referred
to hereafter as the Rule 4 File, with an appropriate Tab letter
also indicated. The Rule 4 File originally consisted of 11
documents identified as Tab A through Tab K; Tabs L through V,
documents furnished by Appellant, were added at the Appellant's
request at a prehearing conference held on December 13, 1994.
Report of Prehearing Conference, dated February 13, 1995, at 5
n.3. These Tabs were consolidated into Tabs L through T at the
hearing held in this matter on February 14, 1995. Hearing
Transcript 344-5. Exhibits entered into evidence at the hearing
will be referred to as App. Exh. No. and Gov. Exh. No.,
respectively, followed by an appropriate number.
2 The Board's decision is based on: (a) Appellant's undated
Notice of Appeal; (b) the Rule 4 File; (c) the Appellant's
undated Complaint received by the Board on August 30, 1994; (d)
the Respondent's Answer dated September 27, 1994; (e) Report of
Prehearing Conference dated February 13, 1995; (f) the undated
Appellant's Brief filed on March 27, 1995 (hereinafter App.
Brf).; (g) Respondent's Brief dated March 31, 1995 (hereinafter
Resp. Brf.); (h) Appellant's Reply Memorandum filed on April 18,
1995 (hereinafter App. R. Mem.); (i) Respondent's Reply Brief
dated April 14, 1995 (hereinafter R.R. Brf.); (j) Hearing
Transcript of the hearing held on February 14, 1995 (hereinafter
HT).
3 See Swanson Printing Co., GPOBCA 27-94 and 27A-94 (November
18, 1996), slip. op. at 4, n.9, 1996 WL 81295 , and B & B
Reproductions, GPOBCA 09-89 (June 30, 1995), slip. op. at 3, n.5,
1995 WL 488447, for a further description of this type of
arrangement.
4 In so determining, the Contracting Officer referred to the
print order specification sheet requirements for 9-1/2" x 11"
marginally punched continuous forms that would be "crimp joined,
file punched and perforated 1/2" left and right, with a
horizontal tearline perforation every 11"." He concluded in his
final decision that "[a]ll of these items were clearly out of the
scope of the contract specifications." Rule 4 File, Tab J.
5 Prior to the creation of this Board in 1984, ad hoc panels
heard and decided disputes between GPO and its contractors. The
Board cites the decisions of these ad hoc panels as GPOCAB. See
Rose Printing, Inc., GPOBCA 32-95 (December 16, 1996), slip. op.
at 27, n.28, 1996 WL 812880
6 Crimping involves the cutting of small paper prongs or fingers
in the margin of the form, which hold the paper together during
processing and allow easy separation. The Business Forms
Handbook, supra, at 107, 149.
7 Although the Board does not rely on the descriptions and
definitions of trim size found in forms industry publications,
since the Board has taken the position that such references are
irrelevant to the intended meaning of a contract term when the
contract does not incorporate those publications, MPE Business
Forms, Inc., GPOBCA 10-95 (August 16, 1996), slip. op. at 49
n.45, 1996 WL 812877, those descriptions and definitions are
consistent with the dictionary definition. For example, as one
publication describes it, "[m]ost press runs use paper slightly
larger that the finished piece or print several items on one
large sheet. Waste must be cut away and items cut apart from
each other?. Job specifications should include trim size as
exact measurements of the final products?." Mark Beach, Steve
Shepro, and Ken Russon, Getting it Printed 150 (1986). In
another publication, produced in collaboration with the Graphic
Communications Association, Affiliate of Printing Industries of
America, Inc., "trim size" is defined as an alternate term for
"finished size", which in turn is defined as the "[s]ize of
product after production is complete?." Mark Beach, Graphically
Speaking 98, 253 (1992).
8 While there is little doubt from this record that forms
measuring greater than 8-1/2" x 11" before stub removal were
produced under the C384-S contract, that does not establish that
forms of that size were properly ordered under the contract. In
this regard, there is no evidence that a GPO contracting officer
was aware that orders for such work were placed by NIH under this
"direct contact" contract or in some way acquiesced in the
Appellant's interpretation of the trim size specification. See
infra p. 16.
9 The Respondent argues that there can be no prior course of
dealing here because the Contractor is a joint venture and thus
is not the party with which any prior dealings took place. One
who is not a party to a prior course of dealing cannot always
rely on that prior dealing as support for its interpretation of
disputed contract provisions. See, e.g., Southwest Welding &
Mfg. Co., 513 F.2d 639 (Ct. Cl. 1975); Atlas Fabricators, Inc.,
ASBCA 17556, 75-2 BCA ¶ 11, 350. This is not an absolute rule,
however. See Hamilton Enters., ASBCA 21951, 78-2 BCA ¶ 13,242,
where a contractor's reliance on an agency's course of dealing
with a prior contractor was held to justify the current
contractor's interpretation of contract terms, and Wheatley
Assocs., ASBCA 24760, 83-2 BCA ¶ 16,760, recognizing that
subcontractors could rely on a course of dealing between the
prime contractor and the Government. Here the alleged course of
dealing on which the Appellant, UCSJV, relies involved United
Computer Supplies, the joint venture's "lead contractor,
responsible for all dealings with the Government, all contract
administration, and ?directing other joint venture[r]s regarding
the production of the work." App. R. Memo (with joint venture
agreement attached). In light of the prominent role of United
Computer Supplies in the joint venture operation, particularly
its exclusive dealings with the Government on behalf on the joint
venture, the Board does not agree that the Appellant should be
precluded from raising this argument.
10 On one occasion United Computer Supplies did contact GPO
because the GPO Office of Financial Management had refused to pay
certain charges on two print orders (60159 and 60188) issued
under the C384-S contract. These charges were primarily for
perforations. App. Exh. 10 and 11. According to United Computer
Supplies' contracts administrator, Thomas Edwards, he called
Michael Sebold, whom he identified as GPO's contract
administrator for the C384-S contract (Mr. Sebold is listed in
the contract as the person to call "information of a technical
nature." Rule 4 File, Tab A), and asked why he wasn't getting
paid for the perforations. HT 68. According to Mr. Edwards, Mr.
Sebold called "Finance" and then advised him to fax information
about the two print orders to the Finance Office. Mr. Edwards
did so and was subsequently paid the amounts in question. HT
69-70. This occurred in December 1992 (Mr. Edwards' fax is dated
December 18).
This limited involvement of GPO personnel is insufficient to
establish a prior course of dealing between GPO and the Appellant
upon which the Appellant could rely. First, there is no evidence
in the record concerning Mr. Sebold's authority to act on behalf
of the contracting officer. Second, the two print orders were
for "snap-out" forms, not for marginally punched continuous
forms. Third, it appears that the payment problem originated not
because GPO was questioning whether the ordered forms or the
perforation work came within the scope of the contract, but
because the print orders did not explicitly call for
perforations. App. Exh. 10 and 11. (In his fax, Mr. Edwards
explained why perforations were necessary. App. Exh. 9.)
Fourth, this occurred after the Appellant was awarded the C384-S
contract for 1992-93, under which the print orders involved in
this appeal were issued. In these circumstances, the Board
cannot view Mr. Sebold's actions as establishing a prior course
of dealing regarding the scope of the C384-S contract.
11 Although the Board determined this to be an issue in this
appeal, Report of Prehearing Conference at 6, the Appellant did
not address it in its brief, choosing instead to argue
exclusively that it is entitled to be paid in accordance with its
C384-S contract pricing.
12 Mr. Edwards testified that the A1026-M contract is "a
very large volume contract" (albeit one that did not require
him to accept any particular print order), but did not refer
to the relationship between the pricing on the two contracts.
HT 99-101.