APPEAL OF EVOLUTION IMPRESSIONS Docket No. VABCA-7212GPO Department of Veterans Affairs Board of Contract Appeals 2005 VA BCA LEXIS 3 March 28, 2005 APPEARANCES Donald W. O'Brien, Jr., Esq., Woods, Oviatt, Gilman, LLP, Rochester, New York, for the Appellant, Evolution Impressions, Inc. Roy Potter, Esq., Washington, D.C., for Respondent, the United States Government Printing Office. OPINION BY ADMINISTRATIVE JUDGE WALTERS BACKGROUND This appeal, filed by the Appellant, Evolution Impressions, Inc. (EII), on April 7, 2004, originally was docketed by the Government Printing Office Board of Contract Appeals (GPOBCA) as GPOBCA No. 04-04. The Public Printer subsequently decided to discontinue the GPOBCA and, by Interagency Agreement dated June 7, 2004, designated this Board, the Department of Veterans Affairs Board of Contract Appeals (VABCA), to hear appeals of final decisions by United States Government Printing Office (GPO) Contracting Officers (COs). The GPOBCA, by letter dated June 30, 2004, notified the EII that the appeal was transferred to the VABCA. The VABCA, in turn, issued a Notice of Docketing for the appeal on July 29, 2004. The VABCA assigned the appeal Docket No. VABCA-7212GPO. INTRODUCTION The instant appeal involves a claim for additional work under Purchase Order P3670 issued by the GPO to EII for printing services for the National Aeronautics and Space Administration (NASA). Initially, by letter to the Board dated August 16, 2004, EII opted to have the appeal processed on an expedited basis under the VABCA Rule 12.3, Accelerated Procedure. By Order dated August 26, 2004, the Board established a schedule consistent with its Rule 12.3. Subsequently, however, EII sought to extend the schedule and confirmed the withdrawal of its Rule 12.3 election. Both parties agreed that the appeal would be decided on the record and without a hearing, pursuant to VABCA Rule 11. The parties also agreed that no discovery would be conducted. The record consists of EII's Complaint, the GPO's Answer, and an Appeal File submitted by the GPO pursuant to VABCA Rule 4 (the individual documents within the Appeal File to be cited herein as "R4, tab "). EII elected not to submit a supplement to the Appeal File. The parties, by agreement and pursuant to the Board's revised schedule, were each to submit simultaneous main and reply briefs. Main briefs were submitted by both parties. Only the GPO chose to file a reply brief. FINDINGS OF FACT Purchase Order P3670, Jacket 785-198 (the "Purchase Order") was issued to EII, a printing company based in Rochester, New York, by the GPO San Francisco Regional Printing Procurement Office, Benicia, California, on September 10, 2002 in the amount of $ 6,290.00. The Purchase Order called for the printing of 1,670 copies of a book for NASA, a customer agency of the GPO. The book, entitled "MEMOIRS OF AN AERONAUTICAL ENGINEER," consisted of 178 pages and a cover. The Purchase Order indicated that Government-furnished materials, including inter alia a CD-R disc, would be available for contractor pickup as of September 10, 2002, and that the completed books were to be delivered to several specified destinations on a distribution list by October 15, 2002. (R4, tab 2) The Purchase Order specified the submission of proofs in advance of final delivery of books. Proofs were to be furnished to NASA at the NASA/AMES Research Center at Moffett Field, CA by September 17, 2002. The Purchase Order allowed for one of two types of production - either "film and plates" or CTP ("computer-to-plate"). (R4, tab 2, page 2; Answer, P7) For CTP production, the Purchase Order required the submission of "one set of booked digital page proofs SHOWING HALFTONE DOTS (Kodak Approval, Polaroid PoloProof, Screen TrueRite, or equal) . . . ." (R4, tab 2, page 2) Proofs were to be "withheld not more than 3 workday(s) from receipt by the Government to notice of availability for pickup by the contractor or by the contractor's agent using a self-addressed airbill furnished by the contractor." In this regard, the Purchase Order states: "Contractor must not print prior to receipt of 'OK to Print.'" (R4, tab 2, page 2) Apparently, NASA - to whom proofs were to be submitted - was to have 3 workdays to examine the proofs and was to provide EII with a written approval ("OK to Print") before EII was permitted to proceed with printing. In terms of quality of printing, the Purchase Order specified a Quality Level II per the GPO standard entitled "Quality Assurance Through Attributes" as set forth in GPO PUB 310.1 that was in effect on the date of the Purchase Order. R4, tab 2, page 2. The GPO standard for Quality Level II is stated as follows: Level II Descriptive Terms - Better quality, prestige quality, library quality. Fidelity of Reproduction - Close fidelity to furnished reproducibles is required. Quality of Materials and Workmanship - These products typically involve high quality materials, reproducibles, production methods, and workmanship. Typical Physical Description - Overall appearance is of primary importance. Products in this level generally have singlecolor or multicolor subject matter. Finishing must be held to high standards of accuracy, durability, and appearance. Examples of Tolerances - One row of dots for multicolor halftone registration (see attribute P-4); one broken character per page for type quality (see P-7); and three-thirtyseconds of an inch for trim size (see F-1). See note regarding tolerance examples in Level I. Examples - Yearbooks, recruiting materials, and illustrated professional papers. (Complaint, P6 and Exhibit C; Answer P6) The Purchase Order incorporated standard GPO Contract Terms (GPO Pub. 310.2), as were in effect on the date of the Purchase Order. (R4, tab 2, page 2) The GPO Contract Terms included the following two provisions, the pertinent portions of which are set out below: 1. Contractual Responsibility. Awards by GPO for printing, binding, and related services are the sole responsibility of GPO and not of its customer agencies. Modifications shall have no force or effect unless addressed before the fact to and subsequently confirmed in writing by the Contracting Officer. Failure to comply with this clause may be cause for nonpayment of additional costs incurred or rejection of the order. 4. Changes. (a) The Contracting Officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in any one or more of the following: (1) Drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the Government in accordance with the drawings, designs, or specifications. (2) Method of shipment or packing. (3) Place of delivery. (b) If any such change causes an increase or decrease in the cost of, or the time required for, performance of any part of the work, whether or not changed by the order, the Contracting Officer shall make an equitable adjustment in the contract price, the delivery schedule, or both, and shall modify the contract. (c) The contractor must submit any "proposal for adjustment" (hereafter referred to as proposal) under the clause within 30 days from the date of receipt of the written order. However, if the Contracting Officer decides that the facts justify it, the Contracting Officer may receive and act upon a proposal submitted anytime before final payment. (d) * * * (e) * * * (R4, tab 7) EII made timely delivery of the specified proofs to NASA, i.e., on or before September 17, 2002. (Complaint and Answer, P8) By letter dated September 23, 2002, Richard Anderson, a Printing Specialist with NASA, advised EII that NASA had made certain alterations to its book. First, it advised, it corrected "editorial errors" on two pages, the "inside front cover and page 8." For those two pages, the letter directs: "Use initial CD returned herewith to output new (updated) film and show second proof for these pages." (Complaint, Exhibit F; R4, tab 4 (emphasis in original)) Second, the letter indicates, NASA had noted that "photos on most of the text pages appear to be reproducing too dark." To deal with this issue, the letter states, "we have selected 9 of the most troublesome pages for a test; we have re-worked the photos on these pages and have included our proofs." With respect to these 9 re-worked pages, NASA, in the letter directs: "Use new (second) CD furnished herewith to supply a second set of proofs for these pages only: pp. 28, 32, 57, 65, 66, 76, 80, 83 and 105." (R4, tab 4 (emphasis in original)) It appears that, at some point between its receipt of the September 23, 2002 letter and October 4, 2002, EII ran a second set of proofs for the 11 pages addressed by the NASA September 23, 2002 letter and submitted them to NASA for approval. In this regard, a letter to EII from NASA's Mr. Anderson, dated October 4, 2002, states: Returned herewith as OK are second proofs you supplied for the following pages: inside front cover, 8, 28, 32, 57, 65, 66, 76, 80, 83 and 105. (Complaint, Exhibit D; R4, tab 6) That letter goes on to relate that NASA in the interim had "re-worked" the photographs on 121 more pages of the book: We have re-worked photos (which appeared too dark on proofs) for these pages: outside front cover, iii, 1, 3, 7, 9, 10, 12, 14, 15, 16, 19, 21, 23, 24, 26, 29, 34, 37, 39, 40, 50, 51, 52, 53, 54, 55, 56, 58, 59, 60, 61, 62, 63, 64, 67, 68, 69, 70, 71, 72, 73, 74, 75, 77, 78, 79, 81, 82, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 131, 132, 133, 134, 135, 136, 137, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 149, 150, 151, 152, 153, 154 and 155. (Complaint, Exhibit D; R4, tab 6) The letter then directs EII as to how it was to proceed with completion of its work, indicating that further submission of proofs would not be needed by NASA prior to EII commencing with printing: Use CD's furnished herewith to output new (updated) film for these 121 pages only. Then proceed to print and bind. (We will not need to see any additional proofs before printing.) (Complaint, Exhibit D; R4, tab 6 (emphasis in original)) The record is not clear as to precisely what was done by EII to complete its performance and when. Nevertheless, by letter to the GPO dated February 4, 2003, EII submitted a proposal for a modification to the Purchase Order in the total amount of $ 4,934.50, to cover the additional costs allegedly incurred by EII as a result of the above- described alterations made by NASA. In that letter, EII also requested a "new 'at destination date' of November 7, 2002." (Complaint, Exhibit E) Although the GPO, in its Answer, does not comment on when EII actually delivered the finished products under the Purchase Order, the Answer, referring to the February 4, 2003 letter, states that the letter "is the best evidence of its contents" and does not contend that delivery had not been made as of November 7, 2002, or in any way assert whether or not delivery was timely. (Answer, P11) EII's February 4, 2003 letter, apparently for the first time, indicated to the GPO that EII, in addition to complying with NASA's directions, had elected to run a new set of proofs for the 121 pages within the book that NASA had re-worked to correct for darkened photos and that were described in NASA's letter to EII of October 4, 2002 (R4, tab 6). More specifically, among the cost items enumerated in EII's February 4, 2003 letter, and constituting $ 2,895.00 of the $ 4,934.50 total being proposed, were the following two cost items: 7) Run 31 new Approval proofs @ $ 75.00 $ 2,325.00 8) QC new Approval proofs 6.0 hrs $ 570.00 (Complaint, Exhibit E) The Appeal File contains a GPO Form 714 (3-78) purporting to record a series of telephone contacts regarding the Ell February 4, 2003 letter and modification proposal. The individual creating that document (whose initials appear to be "RCL") presumably was GPO's Richard C. Lee, to whom the EII February 4, 2003 letter had been addressed and to whom subsequent EII correspondence relating to the Purchase Order was addressed. The document indicated that Mr. Lee engaged in at least one three-way conversation on February 7, 2003, a conversation among himself, Sue Cudgel, EII's Customer Service Manager who appears to have authored the EII February 4, 2003 letter, and NASA's "Dick Anderson" (presumably the same Richard Anderson who had authored the September 23, 2002 and October 4, 2002 letters from NASA to EII). The GPO Form relates, as to that three-way conversation: 2/7 Dick says that they [NASA] did not request any add'l proofs beyond the 11 pages cited in NASA's 10/4/02 memo. (Note the specific parenthetical reference/instruction at the end of 10/4 memo as written confirmation of NASA's intent.) Dick says he has no record of having received the proofs (31 pages worth) charged in [the] 2/4/03 reimbursement request from the contractor, nor does he recall any phone conversations that would alter NASA's stated intent expressed in the 10/4 memo. (R4, tab 8) Subsequently, the GPO Contracting Officer, John O'Connor, on March 11, 2003, issued Modification No. SF-117-03 to the Purchase Order (the "Modification"), calling for the contractor to "make Author's Alterations and submit new proofs, as requested by the Government." The Modification increased the contract price of the Purchase Order by a total $ 2,039.50, allowing EII to recover for all items at the amounts EII proposed, but excluding recovery of the $ 2,895.00 claimed for the new proofs associated with the 121 additional re-worked pages. (R4, tab 9; Complaint, Exhibit F) On March 21, 2003, EII's President/CEO, Thomas A. Gruber, executed the Modification with the handwritten note "without prejudice and with all rights reserved." R4, tab 9; Complaint, Exhibit F. In this regard, Mr. Gruber sent a letter dated March 21, 2003 to the GPO's Mr. Lee, taking exception to the GPO's failure to recognize and pay for the additional proofs EII had run for the 121 re-worked pages. Although Mr. Gruber, in that letter, acknowledges that NASA had specifically stated that it did not need to "see any additional proofs before printing," he argues that NASA, in that letter, did not "state that proofs are not to be made, or that the customer accepts responsibility for the lack of proofs as an integral part of our quality control program . . . [or that EII was to] run the job 'blind' and [that NASA would] be responsible for the outcome." Mr. Gruber further stresses that the running of new proofs for the "121 changed pages" was "necessary . . . for press side density guidance and overall quality control" and was "reasonable, prudent, and necessary to produce a Quality Level II order." According to Mr. Gruber's letter, he had "never, in my 30 plus year career working with the GPO, experienced a situation like this." The letter goes on to state: I am baffled as to exactly how you and/or your customer envisioned how our pressmen were to understand what the "reworked" photographs should have looked like during printing operations to ensure a match to the newly furnished files. How were we to know what other changes may have been made in the files by your customer? What should the press sheet have been compared to for accuracy and quality control during printing operations? The letter seeks GPO reconsideration and concludes: It seems to me that it would be reasonable, prudent, customary, and fair, to pay for the proofs that we remade to ensure that your customer received exactly what they expected. (R4, tab 12; Complaint, Exhibit G (emphasis in original)) It appears that, having received no GPO response to that March 21, 2003 letter, Mr. Gruber, by letter dated May 2, 2003, inquired of Mr. Lee as to why the EII "charges of $ 2,895.00 for production of 31 second-round Kodak Approval proofs was not included with GPO Contract Modification SF-117-03." R4, tab 12, EII Letter of May 2, 2003. In an undated letter, the GPO's Mr. Lee provided the following explanation as to why the GPO was not recognizing liability for the $ 2,895.00 in additional charges: Upon evaluation of the first-round proofs, and previous to Evolution Impressions subsequent production of these unsolicited 31 second-round proofs, Mr. Richard Anderson specifically states in his 10/4/02 memo to Mr. Jim McGirr of Evolutions [sic] Impressions: "We will not need to see any additional proofs before printing.) [Underscores are part of the original quote.] The charge for these extra proofs was not included in the contract modification because this additional performance was neither required by the contract specifications nor requested by the Government. (R4, tab 12; Complaint, Exhibit G, Undated Letter from "Richard C. Lee, Printing Specialist, U.S. Government Printing Office") The Board surmises from EII's February 4, 2003 proposal letter and the Modification that up to 4 text pages may be fit onto a single proof page. In this regard, EII had proposed 3 proof pages for the 11 initially re-worked pages of text and 31 proof pages for the 121 subsequently re-worked pages. (Complaint, Exhibit E; R4, tab 9) By letter to the GPO Contracting Officer, Mr. O'Connor, dated December 23, 2003, EII's Mr. Gruber noted that he was in the process of examining a series of "unresolved issues" pertaining to the GPO and, in this regard, inquired as to the proofs issue under the instant Purchase Order, forwarded certain correspondence purportedly related to the issue, and stated that he was seeking a "final determination" on the issue from the Contracting Officer: I would ask that you review the appended correspondence. I cannot fathom how Mr. Lee expected us to produce 121 . . . brand new pages without a proof. Please refer to my letter of March 21, 2003. The original procurement stipulated contract quality proofing to ensure a quality level 2 product was provided. There were no directions, written, or verbal, that amended or in any way changed those requirements. I am asking that you review the appended material and issue a final determination. * * * (R4, tab 10 (emphasis in the original)) By letter to EII dated February 24, 2004, the GPO Contracting Officer, Mr. O'Connor, provided Ell with a Contracting Officer's final decision, denying EII's claim for $ 2,895.00 in additional costs. In this regard, Mr. O'Connor maintained that proofs, under the terms of the Purchase Order, were required not for manufacturing purposes, but rather for review by the customer, and that EII's production of proofs in this instance was not a contract requirement, but rather something done solely at EII's "option": The specifications make no mention that the proofs are for manufacturing purposes. They are clearly required for review by the customer. After the first round of proofs you had fulfilled your obligation under the original contract. Anything beyond that point was a change to the contract and had to be negotiated separately. The contract terms of Jacket 785-198 did not require you to produce any new proofs unless specifically ordered and confirmed under a contract modification. You acknowledge the customer's memo of 10/4/02 which indicated that no additional proofs were being ordered by the Government when it stated "(We will not need to see any additional proofs before printing.)" This makes it clear that the production of the proofs was your option not a Government requirement. (R4, tab 11) Mr. O'Connor went on to explain why, in his view, dispensing with yet additional proofs was reasonable under the circumstances: This waiver of any additional proofing may have seemed unusual to you but when considered in the context of all the events I think it is reasonable. When the first complete set of proofs were furnished, the customer in a memo to your company on 9/23/02, stated "Overall, photos on most of the text pages appear to be reproducing too dark. We have selected 9 of the most troublesome pages for a test; we have re-worked the photos on these pages and included our proofs." ". . . supply a second set of proofs for these pages only . . . ." When you furnished a second set of proofs on the re-worked photos they were approved by the agency. The agency then proceeded to re-work photos on 121 pages in the same manner as they had on the 9 test pages. At that point they obviously felt confident that they would obtain a quality product from the furnished files. There were no other issues such as registration or color fidelity because the job printed in black ink. There were no additional illustrations furnished and the files had been re-worked only to prevent them from being too dark. Your fear that you company would somehow have automatically been blamed if the job printed incorrectly is unfounded. In conclusion, I believe that there was no requirement under the contract terms for you to produce this additional set of proofs and your request for payment for these proofs is hereby denied. (R4, tab 11) DISCUSSION To recover an equitable adjustment under the Changes clause, a claimant must prove that a Government representative, having requisite authority to alter the terms of the contract, directed the performance of additional work, that the contractor performed such work and did not do so voluntarily, and that, as a result, the contractor incurred additional costs and/or time. Caddell Construction Co., VABCA No. 5608, 03-2 BCA P32,257, citing John R. Hundley, Inc., VABCA No. 3494, et al., 95-1 BCA P27,494 at 137,025. Here, EII has failed to demonstrate, through evidence in the record, that its production of an additional set of proofs for the 121 re- worked pages at issue came about as a result of a request or direction of an authorized representative of the Government. To the contrary, even if, for the sake of argument and notwithstanding the wording of the contract restricting such authority to the GPO Contracting Officer (see GPO Contract Terms, P1, Contractual Responsibility, quoted in the Findings of Fact above), Mr. Anderson, the NASA Printing Specialist and GPO customer, were to be deemed as having had the requisite authority to bind the Government contractually, the direction he issued specifically called for EII not to provide NASA with additional proofs for the 121 re-worked pages. Thus, EII cannot establish entitlement to compensation under the contract's Changes clause. Caddell Construction Co., VABCA No. 5608, 03-2 BCA P32,257 Likewise, there is nothing in the record that would support a finding that either NASA or the GPO was aware of and thus consciously accepted the benefits of the additional work EII elected to perform. Accordingly, EII cannot avail itself of a theory of breach of an implied-in-fact contract in order to establish entitlement to recovery in this case. See B&B Reproductions, GPOBCA 9-89, 1995 WL 488447 (June 30, 1995) ("The Appellant would have to prove that the Government received a benefit, and that the unauthorized goods or services were expressly or impliedly ratified by the Contracting Officer or some other authorized contracting official."); See also Schoenfeld Associates, Inc., VABCA No. 2184, 87-1 BCA P 19,648, citing Russell Corporation v. United States, 210 Ct. Cl. 596, 537 F.2d 474 (1976). Furthermore, although EII may well be correct in its assertions regarding what is "customary" in the printing industry regarding proofs and its need for such proofs in this case to assure the achievement of the specified Level II quality, it provided no evidence in the record to support these assertions, by way of affidavit or otherwise. See Qualitype, Inc., GPOBCA 21-95, 1998 WL 350484 (April 21, 1998) (no evidence introduced in support of allegation of prior course of dealing). As this Board has observed, the decision by a claimant to submit its case pursuant to Board Rule 11 does not in any way lessen its burden of proving the necessary facts to support its request for an equitable adjustment. Taylor & Partners, Inc., VABCA No. 4898, 97-1 BCA P28,970. Finally, the Board must reject the notion advanced by EII that "fairness" dictates that EII be compensated for its additional costs associated with the proofs in question. The spectre of "fairness" being raised by EII appears to present an equity-based argument of some sort. Without going into whether a federal Board of Contract Appeals has equity jurisdiction, see Urban Litho, Inc., GPOCAB 5-80, 1980 WL 119662 (December 17, 1980) (Board has no authority to make an "equitable decision"), it is axiomatic that, for a party to invoke equity, its own hands must be "clean." Promac, Inc., VABCA No. 5345, 98-2 BCA P30,068, citing General Electric Company, ASBCA No. 4865, 61-1 BCA P2953, et al. Here, EII, cannot pretend to be blameless. Rather than seeking clarification from the GPO Contracting Officer, EII admittedly "elected" to proceed without such clarification and, in the process, to adhere only to a portion of what was being directed - effectively "picking and choosing" among the NASA directives. Where the additional costs being sought constituted more than three-quarters of the original contract price (a total claim of $ 4,934.50, in comparison with an original contract price of $ 6,290.00), one would well expect some prior notification from the contractor before proceeding with the additional work. Under these circumstances, the GPO's ratification of the NASA directive and its agreement to compensate EII for that portion of the work NASA had actually requested seems more than fair. EII thus has been unable to sustain its burden of proof of entitlement under any possible theory of recovery. DECISION For the foregoing reasons, the appeal hereby is DENIED. March 28, 2005 RICHARD C. WALTERS Administrative Judge Panel Chair We Concur: RICHARD W. KREMPASKY Administrative Judge PATRICIA J. SHERIDAN Administrative Judge