BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
IPI GRAPHICS ) Docket No. GPOBCA 04-96
Jacket No. 734-357 )
Purchase Order F-0899 )
For the Appellant: IPI Graphics, Upper Marlboro, MD, 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
IPI Graphics (Appellant), 7943 Penn Randall Place, Upper
Marlboro, Maryland, timely appealed the January 31, 1996, final
decision of Contracting Officer Gary C. Bush of the U.S.
Government Printing Office (Respondent or GPO) requiring the
Appellant "to take whatever measures are necessary to fulfill
this contract so that it is in strict accordance with the
contract specifications," Rule 4 File, Tab G,1 which resulted in
the Appellant's reprinting of 40,010 pamphlets. The Appellant
seeks reimbursement for having to print the pamphlets a second
time. For the reasons which follow, the Contracting Officer's
decision is AFFIRMED and the appeal is DENIED.
I. BACKGROUND
1. On December 18, 1995, the Appellant was awarded a contract
(Purchase Order F-0899, Jacket 734-357) by the Respondent's
Atlanta Regional Printing Procurement Office to produce the
Spanish language version of a Centers for Disease Control (CDC)
pamphlet entitled "Voluntary HIV Counseling and Testing." The
Appellant was to deliver 40,010 copies of the pamphlet plus
another 100 copies for use as camera copy. The contract price
was $12,630. Rule 4 File, Tabs A and B.
2. The contract required the Respondent to furnish copy for the
publication in the form of electronic media on a Syquest
cartridge and also to furnish laser-output in book form (known in
the industry as a "dummy.") Stipulation of Facts �� 2, 3.2
3. The "Proofs" clause of the contract required the Appellant to
furnish proofs in the form of "[o]ne set of bookblues" and
specified that the "[c]ontractor must not print prior to
receiving an 'OK' to print." The Government was to hold the
proofs no more than one workday.
4. The Appellant, upon entering into performance, produced the
required set of proofs based on what was contained on the Syquest
cartridge, and sent it to CDC as required. CDC found that the
graphics that were to appear on page 9 of the pamphlet were
missing. CDC, using a form (referred to as a proof report)
furnished by the Respondent, notified the Respondent that the
proofs had been received, that the contractor was to "[r]evise as
indicated and proceed" with the revision "due to [c]ontractor's
[e]rrors," that the problem was the missing graphics, and to "see
dummy for graphics." The form also contained the following
handwritten statement: "please fax a copy of page 9, for proofing
only with graphics." A fax number was provided. Rule 4 File,
Tab C.
5. The Respondent, upon receipt of this form, added the
following: "Please fax a copy of page 9 with graphics for
proofing only to U.S. Government Printing Office Att:
Compliance." A fax number was provided, along with a request
that a specific individual be notified of the pending fax. Rule
4 File, Tab C. The form was then sent to the Appellant.
6. The Appellant, using the graphics on the dummy, corrected
page 9 and, on January 15, 1996, faxed a copy of the corrected
page to both CDC and the Respondent. Stipulation of Facts � 10;
Rule 4 File, Tab D.
7. On January 23, the Appellant began to print, and delivered
the pamphlets on January 26. 8. On the afternoon of January
26, CDC notified the Respondent by fax that it wanted the lines
making up the page 9 graphics to be vertical instead of in the
horizontal format that appeared on the dummy. Rule 4 File, Tab
E.
9. The Contracting Officer informed the Appellant that it would
have to correct the graph, and, following the Appellant's
disagreement with the Contracting Officer regarding the
Appellant's responsibility for the error, issued a contract
modification and final decision directing the Appellant to take
the necessary corrective measures. Stipulation of Facts �� 15,
16. The Appellant, after determining that the most economical
way to proceed was to reprint the pamphlets, did so. HT 41,
55-60. The reprinted pamphlets were accepted by the Respondent.
Stipulation of Facts � 21.
II. DISCUSSION
Although the parties devote some time to the question of whether
CDC's wanting the graphs to appear with vertical lines was
reasonable, the Contracting Officer, upon learning that what the
Appellant delivered did not meet CDC's page 9 graph requirements,
directed the Appellant to take corrective action because he
considered the Appellant to have printed the pamphlets prior to
receiving the contractually required "OK to print." HT 91; Rule
4 File, Tab G. Thus, the primary issue presented by this appeal
is not whether CDC's graphics requirements were reasonable, but
whether the Appellant prematurely printed the pamphlets before it
was authorized to do so or whether the Appellant could rely on
the instructions it was given to "[r]evise as indicated and
proceed" as constituting that authorization.
The positions of the parties are simple. The Appellant maintains
that it considers the words "revise . . . and proceed" to mean
just that-revise in accordance with instructions received after
customer review of the proofs and then proceed with the print
job. HT 18, 26, 68-69, 77; App.Brf. at 4. It points out that if
the customer agency wanted to further review proofs after the
Appellant's revision of page 9, it should not have checked the
line on the GPO form that states "[r]evise as indicated and
proceed." Instead, it should have checked an alternative line on
the form that says "[r]evise as indicated and submit a 2nd set of
proofs." HT 26, 68-69. In this regard, the Appellant asserts
that it did not consider the request for faxing a copy of the
revised page 9 to be a requirement for an additional proof
submission because in its experience and under the contract a fax
is not a proof. HT 31-33; App.Brf. at 4. The Respondent, on the
other hand, maintains that the word "proceed" cannot be viewed as
an overall "OK to print" in light of the request for a fax "for
proofing only with graphics." In this regard, the Contracting
Officer testified that on many occasions a second set of proofs
is requested for only a portion of the entire publication and
that requests "for a proof to be faxed" are made "quite
frequently." HT 82-83. Relying on principles of contract
interpretation, the Respondent argues that the Appellant's
position must fail because it focuses solely on the word
"proceed" and ignores the requirement for faxing the revised page
9. The Respondent states that when all the words involved are
read together, they constitute an instruction to the Appellant to
proceed with production except for page 9, which required a
further round of proofing. HT 104-105; Resp.Brf. at 6.
There is no dispute about the requirement for an "OK to print" as
a condition precedent to the Appellant's right to proceed with
the work. As the Board has previously observed, the Respondent's
contract language in this regard is very clear-a contractor is
not authorized to print until told to do so by receipt of an "OK
to print." McDonald & Eudy Printers, Inc., GPOBCA 25-92 (April
11, 1994), slip op. at 22-23, 1994 WL 275093; see The George Marr
Co., GPOBCA 31-94 (April 23, 1996), slip op. at 48-52, 1996 WL
273662. The Respondent imposes this strict requirement because
it reserves the right to make changes to its requirements after
it receives proofs, The George Marr Co., supra, at 48-51;
McDonald & Eudy Printers, Inc., supra, at 23, and because it uses
the "OK to print" on a proof as a quality assurance device to
"set 'the standard by which the quality of performance will be
measured.'" Fry Communications, Inc., GPOBCA 30-94 (March 30,
1998), slip op. at 5, 1998 WL ______ (quoting The George Marr
Co., supra, at 45). Accordingly, the Board and its predecessor
panels3 have consistently held that the contractor which prints
in advance of receiving the required "OK to print" must bear the
consequences of so proceeding. Fry Communications, Inc., supra,
at 9; Swanson Printing Co., GPOBCA 27-94, 27A-94 (November 18,
1996), slip op. at 25, 1996 WL 812958; The George Marr Co.,
supra, at 54; McDonald & Eudy Printers, Inc., supra, at 21-22;
Serigraphic Arts, Inc., GPOCAB 22-79 (May 8, 1980), slip op. at
7-8, 1980 WL 81264. This is so even where the Government's
unwillingness to accept the final product is due not to any
production error of the contractor's but to the Government's own
initial error or change of mind. See McDonald & Eudy Printers,
Inc., supra (incorrect camera copy furnished to contractor);
Serigraphic Arts, Inc., supra (agency changed its color
requirements after it received proofs from the contractor); see
also The George Marr Co., supra (Government failed to return
proofs to contractor in timely fashion because it was going to
make changes/author alterations to the original requirements).
In light of the crucial role played by the "OK to print"
authorization in the performance of contracts for printing
services, the Board has not readily agreed with contractor
assertions that the Respondent in effect waived its right to
issue an "OK to print" or issued such an authorization before it
had seen all required proofs. In The George Marr Co., supra, the
contractor argued that it had the right to proceed when the
Respondent took longer than the contractually-specified time to
review and return proofs; the Board rejected that argument as
contrary to the clear meaning of the contract. In Fry
Communications, Inc., supra, the contractor, in response to a
requirement for both bluelines and a cromalin or equal proof,
furnished bluelines and a match print that the customer agency
denied receiving. The agency approved the bluelines and the
contractor, regarding the approval as encompassing the match
print as well, proceeded to print and deliver. The Board held
that the approval received did not free the contractor to print
because the match print that allegedly was furnished could not
reasonably be considered the equivalent of the required cromalin
or equal proof and therefore the contractor, since it had never
furnished one of the required proofs, could not consider approval
of the bluelines to be an "OK to print" authorization. See also
Swanson Printing Co., supra, where proofs were approved but the
contractor was asked to wait a few days for an "OK to print" and
apparently printed prior to receipt of that authorization.
Here, as in Fry Communications, Inc., supra, the Board is called
upon to determine that the Respondent authorized printing despite
the fact that it had yet to see a proof showing what the final
product would look like. Once again, however, the Board finds
that the circumstances do not permit that conclusion.
The Board recognizes that the pre-printed portion of the
Respondent's proof report form, with its three choices ("OK as
is. Proceed."; "Revise as indicated and proceed."; "Revise as
indicated and submit a 2nd set of proofs."), authorizes the
contractor, when the second choice is checked, to proceed with
printing even though the Respondent will not have seen a proof of
the requested revision. The Board agrees with the Respondent,
however, that the pre-printed language cannot be read in a
vacuum, but must be read together with the words that were added
to the form by both DOE and the Respondent. See generally John
Cibinic, Jr., and Ralph C. Nash, Jr., Administration of
Government Contracts 156 (Third ed. 1995) (all parts of a writing
should be read and interpreted together); The George Marr Co.,
supra, at 43. These words request the Appellant to fax a copy of
the revised page 9 "for proofing." There is nothing unclear or
ambiguous about this phrase-the Respondent wanted a faxed copy of
the revised page 9 so that it could proof it, i.e., examine it
with the graphics added. The Appellant's witnesses have not
offered a contrary interpretation for the phrase-when asked why
he thought CDC wanted a copy of page 9 faxed to it, the
Appellant's first witness said: "To take a look at it, I guess.
I don't know why." HT 27. He also stated that he thought CDC
wanted the fax for "whatever their purposes are," but concurred
with the statement that "proofs are used for proofing purposes."
HT 50. The Appellant's other witness testified that he was not
confused about the instructions he had received and had no
questions about them, HT 68-69, but offered no explanation for
what he thought the words "for proofing" meant. In the Board's
view, when the form is read in its entirety, including the words
added by CDC and the Respondent, it can only be read as
authorizing the Appellant to proceed in general but subject to a
requirement for submitting a further proof of page 9, by fax,
after its revision to include the graphics initially omitted, and
obtaining approval. See Queens Lithographing Corp., GPOCAB
(March 30, 1979), slip op., 1979 WL 28897 (purpose of submitting
proofs is to obtain approval for printing), quoted in Digimatics,
Inc., GPOBCA 07-96 (September 18, 1997), slip op. at 17, 1997 WL
742504.
In its brief, the Appellant argues that the form should not be
read this way for two reasons: (1) "GPO's own actions indicate
that no second proofing cycle was contemplated," and (2) a fax
cannot, under this contract, be a proof. App.Brf. at 4. The
Board is not persuaded by these arguments.
The Appellant's first argument is based on the "failure of GPO or
CDC to make any response to IPI regarding the fax of Page 9 sent
. . . on January 15, 1996" prior to receipt of the finished
printed product on January 26 and the failure of those agencies
to ever furnish a proof report in response to the fax. App.Brf.
at 4. The unexplained failure of these two agencies to react
more expeditiously to the January 15 fax is certainly not an
inspiring example of how the contract administration process
should work, particularly here where the contract provided for
holding proofs for a maximum of one workday and the fact that a
copy of the revised page was to be sent by fax suggested at least
the possibility that there was a certain urgency about the
matter.4 See Brazos Roofing, Inc., B-275113, Jan. 23, 1997, 97-1
CPD � 43. Nonetheless, the clear requirement for a fax "for
proofing" cannot be defeated by the agencies' delay in reacting
to the fax. As the Board held in The George Marr Co., supra,
the Respondent's right to review a proof and issue or withhold an
"OK to print" is not extinguished by the Respondent's failure to
react to a proof within the time frame specified by the contract.
The delay entitles the contractor to an automatic extension of
the contract delivery date under the "Notice of Compliance With
Schedules" clause, GPO Contract Terms, Solicitation Provisions,
Supplemental Specifications, and Contract Clauses, GPO Pub. 310-2
(Rev. 9-88), Contract Clauses, � 12; The George Marr Co., supra,
at 52, and perhaps an equitable adjustment, The George Marr Co.,
supra, at 47 n.37, but does not have the effect of eliminating
the requirement itself.5 Thus, the fact that CDC/GPO did not
respond until after the Appellant had gone ahead with printing
and delivering the pamphlets does not indicate that the fax
requirement was not a proof requirement.
With respect to the proof report, the Appellant points out that
when CDC and GPO finally reacted on January 26, they did not
furnish the normal proof report, relying instead on telephone
calls and an "informal fax" to point out the problem with the
graphics and to request, again by fax, a corrected page 9. Rule
4 File, Tab E. The Appellant contrasts this with what happened
next: the Appellant treated the fax request as one for a proof
and when faxing the again-corrected page 9 to GPO requested GPO
to "proof this page and fax back with OK a.s.a.p." In response,
it received back a proof report checked "OK as is. Proceed."
Rule 4 File, Tab L. The Appellant asserts that the existence of
this "proofing cycle" for the first set of proofs and for the
final revision but not for the January 15 revision shows that the
Respondent did not consider the January 15 fax to be a proof.
This argument, based on the assumption that any time a proof is
submitted a proof report in the format that was used initially
must be used and that if such a form is not used what was
submitted must not have been a proof, is not convincing. First,
whether "proof" is described simply as "a copy . . . made for
examination or correction," Merriam Webster's Collegiate
Dictionary (10th ed. 1996), or more elaborately as "[a]ny early
copy of to-be-reproduced material produced as a means of checking
for typos or other similar errors, as well as positional errors,
layout problems, and color aspects, The GATF Encyclopedia of
Graphic Communications 649 (Graphic Arts Technical Foundation
1998), it is clear that something is a proof if it is a copy of
something that is to be checked or examined to determine if there
is a need for correction. That function cannot be vitiated by
the format of the response-all that is required of the response
is that approval or the need for correction be communicated back.
Second, the Board is unaware of any GPO requirement that the
proof report used to respond to the Appellant's submission of
"bookblues" be used in all cases as the vehicle for issuing an
"OK to print." The Respondent's Printing Procurement Regulation,
GPO Pub. 305.3 (Rev. 10-90), which includes dozens of forms,
contains no proof report form and no requirement that any
particular proof report form be used. Moreover, in other
circumstances the Respondent has made it clear that it does
indeed use various other vehicles for approving proofs and
issuing an "OK to print." See Fry Communications, Inc., supra,
at 3 (contract advised that the "OK to print" normally would be
"a notation on the proofs returned"; the Respondent in fact gave
proof approval on a form furnished by the contractor). While
the Contracting Officer testified that the form used initially in
this case is a "standard" form, HT 84, and is a "GPO-wide form,"
HT 138, he did not say that it is used in all instances. He
testified, with respect to the revised page 9 faxed to CDC on
January 15, only that GPO, upon receiving an "answer" from CDC as
to whether page 9 was correct or needed modification, would
"pass" CDC's response to the contractor. HT 88. The only
"standard practice" he identified is that the response would be
in writing. HT 94. That written response ultimately was
provided in the form of what the Appellant describes as the
"informal fax." Third, the Board is not willing to ascribe
particular significance to the Respondent's use of the proof
report form to respond to the final page 9 revision since in
light of what had just transpired between the Respondent and the
Appellant it is not surprising that the Respondent reverted to
the use of that form. The fact that it did not use that form to
respond to the January 15 fax simply does not establish that the
January 15 fax was not or was not considered by the Respondent to
be a proof.
Finally, the Appellant asserts that a fax cannot be a proof
because the contract calls only for "bookblues" as proofs. This
assertion, of course, is inconsistent with the Appellant's
position that the copy of the final revision to page 9 that it
faxed to the Respondent was a proof for which it wanted an "okay"
by return fax. It also ignores what a fax (facsimile) actually
is-"an exact copy." Merriam Webster's Collegiate Dictionary,
supra. In other words, a faxed proof is not a distinct, separate
kind of proof (as is a cromalin, Dylux, etc.), but merely an
exact copy of something that is a proof. While a faxed proof
obviously could not satisfy all proof requirements (such as where
various aspects of color printing are to be examined, see Fry
Communications, Inc., supra), the Board is aware of no reason why
a faxed copy of the kind of proof required in this case could not
satisfy the purpose for which the proof was intended. With the
development and growth of facsimile technology the use of
facsimile copies of all kinds of documents has become widely
accepted. As one court stated, facsimile transmission is
"overwhelmingly the method of choice for the transmission of
documents in today's world." Calabrese v. Springer Personnel of
New York, 534 N.Y.S. 2d 83 (N.Y. Civ. Ct. 1988). In the
Government contracting arena, the Executive Branch's Federal
Acquisition Regulation (FAR) recognizes its utility and
authorizes contracting officers to provide for its use, see FAR
�� 2.101 (definition of facsimile), 14.202-7, 15.203(d), and the
Comptroller General has observed that "in federal government
contracting, facsimile documents are recognized as legitimate
methods of communication and notice." American Medequip-Recon.,
B-259474.3, Feb. 2, 1995, 96-1 CPD � 173; see also Cessna
Aircraft Co., ASBCA 43196, 96-1 BCA � 27,966 at 139,697. It is
also clear from the record that both the Contracting Officer and
the Appellant often rely on faxing. See, e.g., HT 83-84; Rule 4
File, Tab K. In short, the Board considers a faxed proof under
the circumstances here-where a color proof was not required and
the parties were not geographically close (the Appellant is
located in Maryland while CDC and the Contracting Officer are in
Georgia)-to be consistent with modern business practice and, in
the absence of a contract provision or regulation prohibiting its
use, consistent with the terms of the contract.
The Appellant makes an additional argument-that the Contracting
Officer improperly rejected the first printing without
determining that the product was rejectable simply because the
Appellant did not wait for the "OK to print." The Appellant
states that GPO in effect "punished" the Appellant for so doing
even though nothing authorizes GPO to treat a contractor's
proceeding without an "OK to print" as "punishable by rejection
of the product." App.Brf. at 6. According to the Appellant, the
rule here should be the same as it is where an agency makes
material changes on a proof but the contractor fails to
incorporate them into the final product-rejection is appropriate,
the Appellant states, only if the final product deviated
sufficiently from the revised requirements to warrant rejection.
The Appellant states that what is missing here is a determination
by the Contracting Officer of the extent to which the pamphlets
as originally printed materially deviated from what CDC wanted.
The Appellant sees no material difference.
The Board again is not persuaded by the Appellant's argument .
This is not a case where a contractor delivered a product meeting
all specification requirements but is being "punished" because it
printed prematurely, before receiving the "OK" to do so.
Inherent in the Contracting Officer's final decision here is his
determination that the prematurely-printed product delivered by
the Appellant was not in compliance with the specifications and
did not meet the requirements of the customer agency. See Big
Red Enterprises, GPOBCA 07-93 (August 30, 1996), slip op. at 28,
1996 WL 812960. Thus, the Contracting Officer was not
"punishing" the Appellant for printing prior to receipt of an "OK
to print" authorization; he was reacting to the Appellant's
failure to furnish a conforming product to the customer agency.
The customer agency requirements, as ultimately specified,
included the use of vertical rather than horizontal lines in the
graphics display on page 9 of the pamphlets. What the Appellant
initially furnished did not comply with this requirement.
Despite the Appellant's suggestion that there is no logical
difference in what is displayed by the graphics regardless of the
direction of the lines used, it is not disputed that CDC believed
the graphs should have vertical lines6 and wanted the graphs in
its pamphlets to so appear. This is a matter solely within the
prerogative of the Government-it is not for a contractor to
determine that a Government agency's requirement is something
different from what the agency specifies. See, e.g., 53 Comp.
Gen. 270 (1973). Although CDC made the vertical lines
requirement known rather belatedly, under the contract it had the
right to do so at any time prior to the contractor's receiving
the "OK to print," and once it did so the contractor's obligation
was to print in accordance with that requirement. While the
Respondent has the discretion to accept a deviating product with
a discount to the contract price, see Fry Communications, Inc.,
supra; GPO Contract Terms, Quality Assurance Through Attributes
Program, GPO Pub. 310.1, effective May 1979 (rev. December 1992),
the Respondent also is entitled to require strict compliance with
contract specification requirements, Shepard Printing, GPOBCA
23-92 (April 29, 1993), slip op. at 19, 1993 WL 526848, and cases
cited therein, and therefore, upon receipt of a nonconforming
product, may either default the contractor (if the defect is
major), see B.P. Printing and Office Supplies, GPOBCA 22-91
(February 5, 1993), slip op., 1993 WL 311371, or require
correction (through reprinting, if necessary) of the deviating
product, see, e.g., Digimatics, Inc., supra; McDonald & Eudy
Printers, Inc., supra; Shepard Printing, supra, and default the
contractor if timely correction does not then occur. See, e.g.,
Big Red Enterprises, supra; Shepard Printing, supra; Univex
International,
GPOBCA 23-90 (July 31, 1995), slip op., 1995 WL 488438; Sterling
Printing, Inc., GPOBCA 20-89 (March 28, 1994), slip op., 1994 WL
275104.
The Board also notes that the Appellant's argument would shift
the risk that the contract as written places on the Appellant.
As discussed in this decision, one of the reasons for the "do not
print without an OK" requirement in the Respondent's contracts is
to allow the Government to correct its own errors or change its
mind about what it wants before final printing takes place so
that it does not have to pay for printing more than once. This
requirement, while also benefiting the contractor by protecting
it from increased costs that result when the Government makes
changes to its original printing requirements after it receives
and reviews proofs, McDonald & Eudy Printers, Inc., supra, at 23,
places the risk of premature printing on the contractor. The
Appellant's argument would shift that risk to the Government, at
least in some circumstances, by effectively stripping the
Government of its contractual right to change what it wants in
the way of a final printed product without having to pay for a
reprinting. In other words, to accept the Appellant's argument
would involve rewriting the contract. As the Board has stated
before, it is not empowered to rewrite the Respondent's
contracts. McDonald & Eudy Printers, Inc., supra at 23; Olympic
Graphic Systems, GPOBCA 01-92 (September 13, 1996), slip op. at
36-37, 1996 WL 812957.
Finally, the Appellant asserts that it is entitled to be paid for
the first printing (at the contract price less certain savings
realized during the second printing) because the Respondent did
not give the Appellant the opportunity to remove the first
printing from CDC's warehouse before the pamphlets were
destroyed. The Appellant states that the pamphlets as printed,
even though of no value to the Government, had value to it
because they could have been distributed or sold to other
companies or state governments with an interest in the subject
matter of the pamphlets. According to a declaration in the
record from an employee of CDC's National AIDS Clearinghouse
contractor,
the first printing of the pamphlets was inadvertently sent for
recycling in February 1996 after the Appellant delivered the
second printing.
The Government's rejection and temporary custody of supplies
furnished under a contract may give rise to a bailment, which,
under common law principles, obligates the Government, while it
is a bailee, to exercise reasonable and ordinary care with
respect to those supplies. Noodles by Leonardo, Inc, AGBCA
85-226-3, 85-3 BCA � 18,488; see Manufactured Housing Services,
Inc., ASBCA 41269 et al., 92-3 BCA � 25,159, aff'd as modified,
93-2 BCA � 25,578. Where, however, the contract establishes the
rights, duties, and obligations of the parties with respect to
the rejected items, the contract is controlling. Wyodak
Enterprises, Inc., VABCA 3678, 3740, and 3808, 95-1 BCA � 27,493;
H.N. Bailey & Assocs., ASBCA 29298, 87-2 BCA � 19,763; FMC Corp.,
ASBCA 23135, 80-2 BCA � 14,634
The "Inspection and Tests" clause of the contract, GPO Contract
Terms, Solicitation Provisions, Supplemental Specifications, and
Contract Clauses, Contract Clauses, � 14, GPO Pub. 310.2,
effective December 1, 1987 (rev. 9-88), provides that the
Government "may reject nonconforming supplies with or without
disposition instructions" (subparagraph (f)), that the
contractor "shall, promptly after notice, remove supplies
rejected or required to be corrected" (subparagraph (g)), and
that if the contractor "fails to promptly remove, replace, or
correct rejected supplies that are required to be removed or to
be replaced or corrected," the Government may either remove,
replace or correct the items and charge the cost to the
contractor, or terminate the contract for default (subparagraph
(h)).
The Respondent, upon rejecting the first printing, did not
explicitly direct the Appellant to remove the defective product
or advise it that the pamphlets would be destroyed unless it
directed otherwise, as it has done in some cases. See, e.g.,
Buse Printing & Advertising, Inc., GPOBCA 6-89 (April 5, 1990),
slip op. at 5, 1990 WL 454984; Mid-American Business Forms Corp.,
GPOBCA 8-87 (December 30, 1988), slip op. at 4, 1988 WL 363330;
see also Paper Corp. of United States, GSBCA 4871, 77-2 BCA �
12,855 (Government rejected shipment of paper and requested
shipping instructions). The Contracting Officer here directed
the Appellant to "take whatever measures are necessary to fulfill
this contract so that it is in strict accordance with the
contract specifications," to correct page 9 "as indicated by the
returned proof," and to make delivery of the corrected product by
February 14, 1996. The Appellant asserts that under these
circumstances the Government had no right to remove the pamphlets
because the required "Notice" was not first given to the
Appellant.
The Appellant misconstrues the notice requirement of the
"Inspection and Tests" clause. Subparagraph (f) of the clause
gives the Respondent the right to reject or require correction of
nonconforming supplies, and to reject such supplies "with or
without disposition instructions." Subparagraph (g) then provides
that the contractor shall, "promptly after notice, remove
supplies rejected or required to be corrected." When these
subparagraphs are read together, it is clear that the "notice"
pertains to rejection of the supplies and not to the requirement
to remove them. First, it is imperative that the Respondent give
notice to the contractor whenever it rejects supplies as
nonconforming-the Government's right to reject nonconforming
supplies is meaningless unless it notifies the contractor of the
rejection, and the Government's remedies normally available upon
rejection may be lost if that notice is not provided in a timely
fashion. See John Cosgrove McBride and Thomas J. Touhey,
Government Contracts, � 27.80 (Rev. 1998) and cases discussed
therein. Second, as set forth in subparagraph (f), disposition
instructions are not required to be a part of or to accompany
rejection. Thus, while rejection requires notice, removal does
not. Rather, under the clause, the removal requirement is
automatic-if the contractor is notified that the supplies are
rejected, the contractor is to remove them. Similarly, if the
contractor is notified that it is to correct the supplies, the
contractor is to remove them (unless the Respondent authorizes
"correction in place" pursuant to other language in subparagraph
(g)). The "promptly after notice" phrase in subparagraph (g)
does not impose a separate requirement for a notification to
remove-when read in conjunction with the rest of the clause, it
simply establishes the framework for measuring whether the
contractor acts promptly to remove, replace, or correct
nonconforming supplies and therefore whether the Respondent,
under subparagraph (h), can itself remove, replace, or correct
and charge the contractor for the cost of doing so.
Accordingly, once the Appellant received notice of the rejection
and required correction, it was required by the "Inspection and
Tests" clause to promptly remove the pamphlets and correct them.
Although the Appellant decided that the appropriate way to
correct the pamphlets was to reprint them and then proceeded to
do so, it did nothing to effect removal of the defective
pamphlets either at the time it received the notice or when it
delivered the reprinted pamphlets on February 14. In fact,
insofar as the record shows, it was not until May 29 that the
Appellant, through its counsel, corresponded with the Respondent
to "confirm" that the first printing was being stored and to
advise that the Appellant "remains ready, willing and able to
pick up the rejected first printing and store it pending
disposition of the appeal." App.Brf., Ex. A.
In brief, it was the Appellant's responsibility to arrange for
removal of the rejected items. While the Respondent was obliged
to exercise ordinary care while it was in possession of the
items, it was not required to retain possession indefinitely.
See Total Printing Services, GPOCAB 6-83 (November 4, 1983), slip
op., 1983 WL 135373 (Government disposed of defective books when
contractor had not picked up the books three weeks after
rejection). Under the contract, it had the right to remove the
pamphlets if the Appellant did not act promptly to remove them.
Although the destruction of the pamphlets was accidental rather
than intentional in this case, it occurred more than two weeks
after the pamphlets had been rejected and after the Appellant
delivered reprinted pamphlets without making any arrangements for
picking up the defective shipment. Moreover, the Appellant,
although unaware of the inadvertent destruction, made no effort
to remove the pamphlets in the ensuing months. Under the
circumstances, the Board views the Appellant as having been
remiss in its contractual duty to promptly remove the pamphlets
from the CDC facility; that being so, the Respondent had a proper
basis under the contract for effecting removal itself, and its
actions do not entitle the Appellant to payment for the first
printing of the pamphlet.7
III. ORDER
For the foregoing reasons, the Contracting Officer's decision is
AFFIRMED and the appeal is DENIED.
It is so Ordered.
April 9, 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 April 1, 1996. It will be referred to
as the Rule 4 File, with an appropriate Tab letter also
indicated. The Rule 4 File originally consisted of 12 tabs
identified as Tabs A through L. At the Appellant's request, Tab
M was added at a prehearing conference held on October 25, 1996.
Summary Report of Prehearing Conference dated January 27, 1997,
at 2 n.1.
2 The record in this case, in addition to the Rule 4 File,
consists of the Complaint, Answer, a Stipulation of Facts,
Respondent's Brief (hereafter Resp.Brf.), Appellant's Brief
(hereafter App.Brf.), Appellant's Reply Memorandum, and the
Hearing Transcript (hereafter HT) of the hearing held in this
matter on January 28, 1997.
3 Prior to the creation of the 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.
4The Contracting Officer testified that once he knew that the
fax was in the hands of CDC, it was GPO's job to "wait on an
answer from CDC as to whether or not page 9 was correct or
needed to be modified." HT 88. He stated that agencies
sometimes "hold proofs for days beyond the hold time" and "it
wasn't something out of the norm for CDC to overhold the
proof," HT 142, but did not explain why it was reasonable in
this case for GPO to wait several days for a CDC response,
stating only that he didn't know "the atmosphere at CDC, the
person who was responsible for reviewing this proof," who
"could have very well been off." HT 119. There is no
explanation for the delay from CDC.
5 In other contexts Government delay or inaction can result in a
constructive change. See, e.g., Altman Carpentry, Inc., HUDBCA
77-217-C16, 81-2 BCA � 15, 414 (failure to respond to contractor
notice that site was not as it was supposed to be).
6 The Respondent suggests that the direction of the lines is
important and offers an explanation as to how the graphs could be
misleading with horizontal rather than vertical lines. Resp.Brf.
at 12-13.
7 The Board notes that even if it had resolved this issue in the
Appellant's favor the Appellant's entitlement to any particular
payment has not been established on this record as the Appellant
offered no evidence to support its assertions regarding the
marketability and value of the rejected pamphlets.