BEFORE THE U. S. GOVERNMENT PRINTING OFFICE CONTRACT APPEALS BOARD . Appeal of Urban Litho Inc. ) ) CA. 80-5 Jacket No. 275-622 ) This matter was brought to the Contract Appeals Board as a result of an Appeal dated January 21, 1980, by Urban Litho Inc., hereinafter called the Company or Appellant. The Company appealed a termination of a contract it had with the United States Government Printing Office (GPO) for the printing of 51,830 copies of the National Audiovisual Center Medical Catalog. 1. Facts The GPO invited bids for the printing of books that were entitled National Audiovisual Center Medical Catalog. Invitations for bids were sent out by the GPO to 10 firms including the Appellant. Bids were received from 6 companies and the Appellant was the lowest bidder. An award was made to the appellant by the issuance of Purchase Order 74905 dated June 21, 1979, with a required shipping date of July 13, 1979. The Jacket Number is 275-622 dated June 22, 1979. On July 12, 1979, the Appellant was notified by GPO that delivery of the books should be postponed because the ordering agency wished to see inspection proofs. On July 24, 1979, the ordering agency, GSA, notified the GPO of the deficiencies in the books and requested that it be reprinted. The GPO then had an inspection made and based on the inspection determined that the books should be reprinted. The Appellant made a counterproposal to the GPO and that was to accept the order at a discount, or to reprint the pages in question and insert them into the product. On August 24, 1979, GSA notified the GPO that it had considered the request of the GPO to review the decision to see if there was any way possible for the Center to accept the books. The decision of GSA was that it had to decline to accept the books because of the basic quality problems with the printing and trim. GSA indicated that the catalog was to have been mailed to thousands of medical professionals and they expect to receive materials of the highest standards from the business community. In the form the book was in, it would not only harm the image of the Center as a whole, but would be irreparable detrimental to the Center's activities in the medical market. On September 4, 1979, a Show Cause Telegram was sent to the Appellant in which it was informed the GPO is considering terminating the Contract pursuant to the Article entitled "Default" under United States Government Printing Office Contract Terms No. 1. The Appellant was given 10 days to present any facts bearing on the question to the Contracting Officer, failure to do so would be considered an admission that none exist. On October 9, 1979, a notice of termination was sent to the . Appellant, in this notice, Appellant was informed that the Contract identified as Purchase Order 74905, Jacket 275-622 ,was terminated fordefault because the Appellant refused to reprint the order which was rejected under the attributes portion of the Contract. The Appellant was further notified that the decision was made in accordance with Article 29, "Disputes" of GPO Contract Terms No. 1 and would be final and conclusive unless a written notice of appeal was filed within 30 days from the receipt of the decision. On October 25, 1979, the Appellant gave written notice of an intent to appeal. On January 21,1980, this notice was supplemented. The Appellant stated in this letter in the second and third paragraph: "Your decision to terminate is being appealed in its entirety. The basis of the appeal is that the decision to terminate was capricious, arbitrary, grossly erroneous and made in bad faith. Specifically, this job was put out for bids requiring 4 quality. It required the printing of 51,830 booklets consisting of one hundred and seventy eight (178) pages each not including the cover. The printing deficiencies alleged by GPO do not justify a termination of this Contract. Urban Litho offered to rectify these alleged printing deficiencies in one of two ways: (1) an errata sheet would be printed to supplement the booklets, or (2) new pages would be printed to be substituted for the pages containing alleged printing deficiencies." The hearing convened on September 9, 1980. 2. Position of Appellant The Appellant took the position that GPO was not justified in rejecting the job. It is the contention of the Appellant that-it should have been accepted at a discount. The remedial proposals that were suggested should have been accepted. The Appellant's President testified that he had been informed by GPO on July 12, 1979, that delivery of the product should be postponed, due to a specification being omitted from the original bid papers, and that was that inspection proofs had not been specified, GPO requested five samples of the book. The President went on to testify that a Mr. Flood from the ordering agency had informed him that the agency had requested inspection proofs be in the specifications and GPO had not done so. The Appellant contends if the press inspection, the submission of proofs and the greater quality level would have been introduced in the original specifications, this problem would not have existed. The Appellant contends that United States Government Printing Office Contract Terms No. 1 that was agreed to by the Appellant was not negotiated, but were terms imposed on him. The Appellant contends that under GPO Pub. 301.1, Section 19A that provides the formula for calculating equivalent defects, a printer could never be able to supply GPO with printed material in which GPO could not find sufficient defects to substantially discount the contract price, or in many cases terminate the job completely. In other words, a printer contracting with GPO where this Quality Assurance Through Attributes is part of the contract, is in a loosing game and is subject to the whim of the Government and can be defaulted any time the GPO so desires. The Appellant then gave an example by putting into evidence a copy of a book that was printed by another company to replace the one that had been rejected. The Appellant testified that using the formula under GPO Pub. 301.1, this book also could have been rejected but was not. The President for the Appellant testified that there were numerous deficiencies and the formula would have provided for a 50% discount on the reprocurement job or it could have been rejected entirely. In the rejected product there were only four pages that would have required correction and when pasted on the product would have been usable. Appellant argues that the contracts of GPO are subject to the Uniform Commercial Code. Under the U.C.C. is a provision that states if a contract is unconscionable then the contract as a matter of law is unenforceable, or that portions of it are unenforceable. In this case the GPO with superior bargaining power uses its power to incorporate into the contract a provision which is oppressive to the other party. The discounts the GPO assesses have no relationship to the damages sustained. What we have is liquidated damages construed as a penalty. Therefore, states the Appellant the contract should not have been terminated, and the Appellant should not be burdened with Attorney's fees, his time and $27,000 in supplies that went into the job. Nor the $6,000 in damages for the reprocurement. 3. Position of GPO The Contracting Office testified that it would have been impossible to replace pages and make the book acceptable, he estimated it might run 10, 50 to 75 pages. He personally examined the book and said: "There were a lot of defects in the product, outside of missing information . . . eskewed pages, I think it was awfully dirty. There was a lot of streaking. I also thought there was a lot of lightening so bad in some cases you couldn't read it, and there were other minor problems. Also, some wrinkling, too much ink in some places. It was filling in. Tr. p. 78-79. There was no doubt in my mind that it was rejectable." Tr. p. 79. Counsel for the Government argued that this is a Board of Contract Appeals, not a court that was equity power. The Board is limited to review the Contracting Officer's final decision without any equitable . jurisdiction or power. Therefore, the unconscionability argument is not applicable. The Quality Assurance Program was developed after years of research and consultation with members of the Printing Industry, with a primary purpose of trying to set up some reasonable objective standards for the acceptance of printed products. It was not established to damage contractors but to improve the quality and to set out objective standards for accepting those products the GPO buy. The acceptance of some products was countenanced and the reductions in contract price was set accordingly based on a reasonable estimate of the actual damages that would be incurred. The Attorney for GPO said that the product did not live up to specifications, and there was no authority for-the Contracting Officer to accept it. Discussion We have a contract made between the United States Government for a specific number of printed books. This was granted to the Appellant after specifications went out to a number of potential bidder. These specifications were clear and when the company bid on the contract it did so with a clear understanding of what was required. If the contractor did not understand the specifications, he was under an obligation to himself to find out just what they required. In this case, the President of the Appellant testified that he had GPO Contract Terms No. 1, and GPO Quality Assurance Through Attributes when he bid on the Contract. He said he was familiar with Contract Terms No. 1 but not with GPO Quality Assurance Through Attributes (Tr. p. 61). He further stated he did not understand such terms as liquidated damages. He said this in addition to saying he was involved in a few hundred contracts that included the Quality Assurance Through Attributes (Tr. p. 62). He also said that he did not have an Attorney review the contract terms before he made his bid. Therefore it is apparent, the Contractor had the specifications, he had opportunity to have them reviewed by an Attorney but did not, and he bid on the Contract. The law is settled that the Government is entitled to obtain what it contracts for. In American Electric Containery Corp. v. United States, 579 F 2d 602 (1978) @ 608 it provides: "It is settled that the Government is entitled to obtain precisely what. it contracts for as long as it does not mislead the contractor. Rixon Electronics Inc. v. United States 536 F 2d 1345, 1351 210 Ct. Cl. 309, 320 (1976); Henry Spur & Co. v. United States, 153 F, Supp. 407 139 Ct. L. 613 (1957); Farwell Co. v. United States, 148 F. Supp. 947, 137 Ct. Cl. 832 (1957); Octagon Process Inc. v. United States, 141 Ct. Cl. 599, 604 (1958)." Therefore, in the instant case the specifications were clear and they were not lived up to. The Government had a right to obtain what it had contracted for and did not receive it. We will now discuss the argument of the Appellant that the Contract was unconscionable and the Government could find sufficient defects at any time to reduce the cost, and to require reprinting. Therefore, under the Uniform Commercial Code this contract would be unenforceable. The Board of Appeals considers appeals from decisions of the Contracting Officer under in the Disputes Section of the Contract. It must review the decision of the Contracting Officer to ascertain if that Officer made his decision pursuant to the terms of the contract. What the Appellant is doing in this case is to request the Contract Appeals Board to act as an Equitable Forum to determine whether the Contract is an Equitable Document. This Contract Appeals Board is charged with the responsibility of finding facts, and it may give consideration to law questions in" connection with its decision. It is not a Court of Equity. This Board has no authority to make an equitable decision. However, we will touch on the question of whether the Contract is subject to the Uniform Commercial Code. In United States v. Allegheny County, 322 US 174 (1944) @ 183 the Court said: "Procurement policies so settled under federal authority may not be defeated or limited by State law. The purpose of the supremacy clause was to avoid the introduction of disparities, confusions and conflicts which would follow if the governments general authority was subject to local controls. The validity and construction of contracts through which the United States is exercising its constitutional functions, their consequences on the rights and obligations of the parties, the titles and laws which they create or permit all present questions of Federal law not controlled by the law of any state." In Clearfield Trust Co v. U.S., 318 US 363 (1943) @ 367 the Court said: "In our choice of the Applicable federal rule we have occasionally selected state law. See, Royal Indemnity Co. v. U. S., Supra. .But reasons which make state law at times the appropriate federal rule are singularly inappropriate here . . . The issuance of commercial paper by the United States is on a vast scale and transactions in that paper from there issuance to payment will commonly occur in several states. The application of state law even without the conflict of laws rules of the forum would subject the right and duties of the United States to exceptional uncertainty. It would lead to great diversely in transactions subject to the vagaries of the laws of the several states." In U.S. v. Sommerville, 324 F 2d 712 (1963) @ 714 the Court said: "Decisions of the Supreme Court, this Court and other Courts demonstrate that Federal Law is applicable in the case at bar. The independent federal rule of decision must be applied when a genuine federal interest would be subject to uncertainty by application of disparate state laws." In Harry Thuresson Inc. v. U. S., 453 F 2d 1978 Ct. Cl. 1972, Gardener Manufacturing Co. v. U. S., 479 F 2d 39 (9th Cir 1973) Everett Plywood and Door Corp. v. U. S., 419 F 2d 425 (Ct. Cl. 1969) and U.S. v. Wegematic, 360 F 2d 674 the Courts have taken the position that the Uniform Commercial Code may be looked to for guidance; however, in no case has it ruled that the federal government is bound by the UCC. In Meeks Transfer Co. Inc. 68-1 BCA 7063-32644 the Board said: "Equally erroneous is respondents contention that the Uniform Commercial Code as adopted by a majority of the states and the District of Columbia constitutes applicable federal law. While we have not considered the Uniform Commercial Code as enunciative of Federal Common law, we may have in the past looked to this code for guidance when there was no other federal precedent available. Adequate legal precedent here being available we do not come to a consideration of the provisions of the Uniform Commercial Code." Therefore, the UCC may be used as guidance but as stated in many cases there is no requirement to follow it. The law as developed in the federal Sector and not a Code that is adopted by each state individually is controlling. We would therefore not apply the UCC argument on unconscionality in this case. We will look to the contract as agreed to by the parties. This contract had specifications that required certain standards be met. They were not met; therefore, the GPO had the right to request the books be reprinted. When the Appellant refused, the GPO was within its contractual rights in having the reprocurement done by another. We find that the Contracting Officer followed the contract terms in his termination of the contract and his decision was not capricious, arbitrary, grossly erroneous, or in bad faith. This Board will not rule on the reprocurment damages. That matter was not in the original appeal notice. Decision In view of the foregoing, we hold that the termination for default was proper under the circumstance. December 17, 1980 LAWRENCE W. KENNELLY, CHAIRMAN CONTRACT APPEALS BOARD R. W. ARMENTROUT, MEMBER LOUIS E. DeNOYA, MEMBER