BOARD OF CONTRACT APPEALS
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON, DC 20401
In the Matter of )
)
the Appeal of )
)
FRENCH BRAY, INC. ) Docket No. GPOBCA 16-96
Jacket Nos. 394-726, 394-727, )
and 394-728 )
Purchase Order 100092 )
For the Appellant: French Bray, Inc., Glen Burnie, Maryland, by
Frederic G. Antoun, Jr., Attorney at Law, Chambersburg,
Pennsylvania..
For the Government: Kerry L. Miller, Esq., Associate General
Counsel, U.S. Government Printing Office.
Before BERGER, Ad Hoc Chairman.
DECISION ON MOTION FOR SUMMARY JUDGMENT AND ORDER
French Bray, Inc. (Appellant), 6731 Baymeadow Drive, Glen Burnie,
Maryland, requests summary judgment on its appeal of the final
decision of Contracting Officer James L. Leonard of the U.S.
Government Printing Office (GPO or Respondent) partially
terminating for default French Bray's contract for the production
of Indoor Air Quality Tools for Schools Action Kits for the
Environmental Protection Agency (EPA). For the reasons which
follow, the motion for summary judgment is GRANTED IN PART AND
DENIED IN PART.
I. BACKGROUND
1. On June 1, 1995, GPO awarded the contract (Purchase Order
100092) to French Bray after competitive bidding. The contract
encompassed three different GPO-assigned jacket numbers,
corresponding to three related requisitions received from EPA.
Jacket 394-726 was for expansion folders; jacket 394-727 was for
problem solving wheels to be placed in the kits and for an
additional quantity to be packaged separately; and jacket 394-728
was for index tabs and other items to be inserted into the
folders. Rule 4 File, Tabs 2, 3, and 6.1
2. The contract as awarded required shipment by July 14, 1995.
French Bray, however, failed to furnish acceptable proofs for
jacket 394-726 and was unable to meet that date. By contract
modification dated September 11, 1995, GPO extended the shipping
date to September 22. Rule 4 File, Tab 13. French Bray also
failed to meet that date, and on September 27 its "contract,
identified as purchase order 100092, jacket 394-726," was
terminated for default. Rule 4 File, Tab 16. That termination
was withdrawn on October 24 and a new delivery completion date of
October 31 was established. Rule 4 File, Tab 19. Deliveries
were then made (although some shipments had to be retrieved for
correction of defects) and GPO, based on proof of shipment, paid
the Appellant. Final payment was made on December 27.
3. Subsequently, GPO, in response to EPA complaints that the
kits had numerous defects, inspected the kits and found them to
be rejectable. Rule 4 File, Tab 24. By letter dated March 6,
1996, GPO notified French Bray that "a complaint had been
received regarding your performance on Jacket 394-276 Purchase
Order 00092."2 The letter stated that "[t]his notice is in
conformance with" the "Warranty" clause of the contract. Rule 4
File, Tab 40. On May 1, the contract was partially terminated
for default. Rule 4 File, Tab 29. (The contract was only
partially terminated for default because EPA used some of the
kits.) On June 10 the default was modified to increase the
number of kits and problem solving wheels covered by the default.
Rule 4 File, Tab 32.
II. DISCUSSION
The "Warranty" clause of the contract, GPO Contract Terms,
Solicitation Provisions, Supplemental Specifications, and
Contract Clauses, GPO Pub. 310.2, effective December 1, 1987
(Rev. 9-88), Contract Clauses, � 15, provided that "[n]
otwithstanding inspection and acceptance by the Government of
supplies furnished or any condition concerning the conclusiveness
thereof, the contractor warrants that for 120 days from the date
of the check tendered as final payment ... [a]ll supplies
furnished will be free from defects in material or workmanship
and will conform to all requirements ...." This clause, as do
comparable warranty clauses found in Executive Branch contracts,
permits the Government to avoid the conclusiveness of acceptance
and to avail itself of certain remedies after acceptance when
furnished goods are found to be defective. Vanier Graphics,
Inc., GPOBCA 12-92 (May 17, 1994), slip op. at 40, 1994 WL
275102; ABM/Ansley Business Materials v. General Services
Administration, GSBCA 9367, 93-1 BCA � 25,246; John Cibinic, Jr.,
and Ralph C. Nash, Jr., Administration of Government Contracts
897-8 (Third ed. 1995).
When the Government seeks a remedy under a warranty clause, it
bears the burden of establishing a breach of warranty,
Philadelphia Biologics Center, ASBCA 32622 et al., 88-4 BCA �
21,147, and must show that (1) the defect in the furnished items
was the responsibility of the contractor; (2) the required notice
was given to the contractor in a timely fashion; and (3) it did
not cause or contribute to the defect. Vanier Graphics, Inc.,
supra, at 40-42 (quoting from ABM/Ansley Business Materials v.
General Services Administration, supra); Joseph Penner, GSBCA
4647, 80-2 BCA � 14,604. Therefore, to prevail on its motion for
summary judgment,3 the Appellant must prove the negative of one
of these elements. Vanier Graphics, Inc., supra, at 42.
The Appellant bases its motion on the second element. It asserts
that the required timely notice was not given because GPO's
letter of March 6, 1996 was too vague to constitute the required
notice. It further asserts that the letter by its own terms
applied only to jacket 394-726 and that therefore no notice
applicable to the other two jackets was ever given within the
120-day period specified by the "Warranty" clause.
In Vanier Graphics, Inc., supra, the Board considered a motion
for summary judgment that also was based on the alleged
insufficiency of a breach of warranty notice. The Board stated
that "it was incumbent on the Appellant [as the moving party] ...
to offer evidence ... which would show that the [contract
deliverables] had been accepted by the Government ... and that
the acceptance was conclusive because the Respondent failed to
assert its rights under the "Warranty" clause in time." Id. at
42-43. (Emphasis in original.) To establish acceptance, the
appellant in that case relied on Government admissions that the
appellant said established timely delivery, receipt and
retention by the Government, and tender of final payment. GPO
argued that acceptance was not automatically indicated by those
facts because under its contracts payment is evidence of
delivery, not acceptance. The Board, noting that "acceptance of
supplies cannot always be imputed from the simple act of paying
for them," id. at 43, held that the appellant's evidence was
insufficient to establish acceptance.
Here, French Bray, relying on various exhibits in the Rule 4
File, states that "GPO clearly accepted the products ... by
accepting delivery ... paying the contract price after inspection
... and then using a large percentage of the product ... after a
subsequent inspection ...." Memorandum in Support of Motion for
Summary Judgment (hereafter Memorandum) at 3. GPO again disputes
the validity of that conclusion based on the facts cited by the
Appellant, stating that "[u]nlike most Government agencies ...
the GPO pays a contractor prior to inspection, simply upon proof
of delivery.... Therefore, no conclusion regarding ...
acceptance ... can be drawn from the mere fact of payment."
Respondent's Opposition to Appellant's Motion for Summary
Judgment (hereafter Resp. Op.)4 at 5, n.4. The Respondent goes
further, however, stating that "given the presence of the
Warranty clause and the remedies contained therein, it is not
necessary to reach the question of whether GPO formally accepted
the product." Id. The Board interprets that statement to mean
that with respect to the Appellant's motion, the Respondent,
notwithstanding its position concerning the effect of making
payment to the Appellant, does not contest acceptance here.
Indeed, the Respondent's use of the "Warranty" clause suggests
that the Respondent believed that acceptance had occurred, and
the Respondent appears to concede as much when it states that
"Appellant makes two arguments designed to attack the validity of
the Contracting Officer's evocation of the Warranty clause to
overcome the Government's acceptance of the product." Resp. Op.
at 3 (Emphasis added.) Thus, unlike in Vanier Graphics, Inc.,
supra, the Board does not consider the question of acceptance
here to be in dispute.
The ultimate question for resolution, therefore, is whether
acceptance was revoked by GPO's March 6, 1996, letter to the
Appellant or whether that letter was insufficient to invoke the
Government's rights under the "Warranty" clause. The Appellant
asserts that the letter must fail as effective notice of a breach
of warranty because it advised only that a complaint had been
received but failed to advise of any particular defect that would
represent a breach of warranty. The Appellant states that "[w]
hile ... in some circumstances the full details regarding the
alleged or potential breach of warranty are not fully known,
there is always some basis for a complaint ...." Memorandum at
5. The Appellant points out when GPO sent the March 6 letter it
was aware of specific defects because EPA had provided GPO with
the basis of its complaint and GPO quality assurance personnel
had verified the existence of various defects. The Respondent
argues that the required notice need not be detailed and
specific, but must simply be sufficient to put the contractor on
notice of a breach of warranty. The Respondent states that the
letter "served the purpose of placing Appellant on notice of a
defect 'in material or workmanship' or noncompliance with
contract requirements." Resp. Op. at 7.
The law is reasonably clear on this issue-while the "Warranty"
clause requires notice to the breaching party within the time
established by the clause, the clause imposes no particular form
or content for the notice, which "need simply be sufficient to
inform the seller that a claimed breach is involved so that the
seller can try to cure the defect or otherwise minimize its
damages." Midwest Bank Note Company, GPOBCA 13-95 (June 22,
1998), slip op. at 11, 1998 WL ______. In this regard, the
relatively few cases in this area indicate that the notice does
not have to identify any specific defects of the furnished
product that give rise to the breach claim or even specifically
state that a breach of warranty claim is being made. For
example, in Midwest Bank Note Company, supra, the contractor was
informed that certain cards that it had produced were "worthless
and must be shredded" and that "[i]f more stoppages occur ...
these bad cards will be put aside .... The cost of these unusable
cards will then be deducted from the price invoiced ... [and]
actual damages suffered by the Government may also be charged
back to the contractor." Id. at 11. The Board held that this was
sufficient to notify the contractor that the government was
treating the matter as a breach of warranty. In Oswald Schicker
Mfg. Co., ASBCA 16836, 72-2 BCA � 9,614, the contracting officer
sent a letter to the contractor advising that there were defects
in excess of the acceptable quality level and that the Government
was invoking the warranty clause. No specific defects were
identified. The Armed Services Board of Contract Appeals held
that there was no requirement to specify particular defects in
the breach notice, and that the general reference to defects in
excess of the acceptable quality level was sufficient.
These cases are consistent with the rule applied in commercial
contracting. The authors of the Uniform Commercial Code (U.C.C.)
tell us that "[t]he content of the notification need merely be
sufficient to let the seller know that the transaction is still
troublesome and must be watched. There is no reason to require
that the notification ... include a clear statement of all the
objections that will be relied on by the buyer .... The
notification ... need only be such as informs the seller that the
transaction is claimed to involve a breach." U.C.C. � 2-607
(1989) (Official Comment).
Accordingly, as a matter of law, the Board sees no merit to the
Appellant's position. The March 6 letter specifically referenced
the contract warranty clause, which clearly placed the Appellant
on notice that the Government was exercising its rights under
that clause. Moreover, although the letter provided no
information as to any specific defects, the reference to a
complaint necessarily alerted the Appellant to the existence of
one or more problems with what it had furnished. In this
respect, the Board sees little difference between the notice in
this case and the notice in Oswald Schicker Mfg. Co., supra-
neither identifies a specific defect, but both inform the
contractor that there is something about what has been furnished
that does not meet requirements and that the Government is
asserting its breach of warranty rights. Thus, the Board views
the March 6 letter as containing sufficient information to
satisfy the breach of warranty notice requirement.
That leaves for consideration the question of whether the notice
is sufficient to encompass jackets 394-727 and 394-728 as well as
jacket 394-726. The Appellant rests its argument solely on the
fact that the March 6 letter referenced only jacket 394-726. The
Respondent relies on the fact that there was only one contract so
that "it was not necessary that the Contracting Officer
separately identify each of the strapped jackets in order to
invoke the Government's contractual rights under the Warranty
clause." Resp. Op. at 4.
In resolving this issue, the Board is not inclined to adopt a
rigid, formalistic approach. Thus, the Board does not believe
that the failure of the March 6 letter to explicitly identify two
of the three jackets encompassed by the contract automatically
negates the effectiveness of the notice with respect to those two
jackets. Neither does the Board believe that the notice was
effective for all three jackets simply because there was one
contract and one of the jacket numbers encompassed by the
contract was identified. As stated above, the "Warranty" clause
does not require any specific form of notice; it requires only
that written notice of a breach of warranty claim be furnished to
the contractor. Accordingly, what the Board must determine is
whether under the circumstances the notice that was provided by
GPO in the March 6 letter reasonably should have placed the
Appellant on notice of the breach of warranty claim with regard
to jackets 394-727 and 394-728.
GPO uses the term "jacket" to refer to the identifying number
assigned to printing requisitions received from other Government
agencies. Leonard Declaration, � 3. Normally, when
requisitioned work is placed with the private sector, each
requisition/jacket results in a separate contract, and the
contract is usually identified by jacket number. Leonard
Declaration, �� 3, 4. On occasion, however, agency requisitions
are grouped, or "strapped," and multiple jackets "will be
purchased on one contract." Leonard Declaration, � 4. In this
case, separate EPA requisitions pertaining to the kits were given
individual jacket numbers which were then strapped and made the
subject of a single contract.
As the Contracting Officer stated, it is not unusual for a single
contract to encompass more than one jacket. See, e.g., Custom
Printing Co., GPOBCA 28-94 (March 12, 1997), slip op., 1997 WL
128720 (two different pamphlets); Web Business Forms, Inc.,
GPOBCA 16-89 (September 30, 1994), slip op., 1994 WL 837423
(several different forms); Chavis and Chavis Printing, GPOBCA
20-90 (February 6, 1991), slip op., 1991 WL 439270 (two different
books). Since the different jackets call for different albeit
related work, it is obviously important for the contracting
officer, if dissatisfied with a portion of the contractor's work
and expecting the contractor to remedy the defect or bear the
consequences, to specify the particular contract work that has
been found wanting. This can be by jacket number, see Chavis &
Chavis Printing, supra, but can also be by some other appropriate
means (e.g., identification of the particular book, form, or
other product found to be deficient). Just as obviously, if the
work required by all the jackets encompassed by a single contract
is viewed as deficient, that too must be effectively communicated
to the contractor.
Here the breach of warranty notice identifies the purchase order
and one jacket, 394-726. The notice contains no other
information regarding the product or portion of the contract to
which it applies-it states only that a complaint has been
received and that GPO was "in the process of inspecting the
product." Rule 4 File, Tab 40. Thus, literally this notice on
its face applies only to jacket 394-726. Notwithstanding that
fact, if the parties understood a reference to jacket 394-726,
the lowest numbered jacket under the purchase order, as
pertaining to the entire contract, i.e., to jackets 394-727 and
394-728 as well as to jacket 394-726, the Board would have no
difficulty in concluding that the notice was effective with
respect to all three jackets.
The undisputed facts of record, however, do not establish any
such understanding. On the contrary, they show that the parties,
and GPO in particular, segmented, identified and dealt with
earlier problems under this contract by specific jacket number.
On September 11, 1995, after the Appellant encountered problems
with the folders called for by jacket 394-726, GPO issued a
contract modification identifying jacket "394-726/7/8" as the
contract to which it applied, extending the shipping date from
July 14 to September 22, 1995 for "Jackets 394-727/728," and
stating that "[w]e will withhold default proceedings on Jacket
394-726 provided you deliver complete on or before September 22,
1995." Rule 4 File, Tab 13. This was followed on September 18
with a cure notice regarding a failure to provide revised proofs
on "Jacket 394-726." Rule 4 File, Tab 14. On September 25, the
Contracting Officer wrote a memorandum to GPO's Contract Review
Board requesting concurrence "to partially default the contractor
on jacket 394-726." The memorandum advised that jacket 394-726
had been strapped with two other jackets, that proofs had been
"ok'd" on the other two jackets but that proofs on jacket 394-726
twice had been rejected and that as of that date revised proofs
had not been received. Concurrence was provided and French Bray
was informed that "your contract identified as purchase order
100092, jacket 394-726" was terminated for default. Rule 4 File,
Tab 16. The Appellant continued its efforts to produce the
folders notwithstanding the default and on October 24 GPO issued
a contract modification, again applicable to "Jacket No.
394-726/7/8," withdrawing the September 27 default termination
"on jacket 394-726." Rule 4 File, Tab 19.
The Appellant eventually delivered the kits, but they were found
to be defective in several respects involving all three jackets.
Rule 4 File, Tab 24. The Contracting Officer, by Memorandum
dated February 27, 1996, again requested Contract Review Board
concurrence in a termination for default. This time, however,
the memorandum requested concurrence to terminate "Jackets
394-726/7/8," stating that "the Quality Assurance Section
determined that the jackets were rejectable," Rule 4 File, Tab 25
(emphasis added), and the termination for default notice sent to
the Appellant on May 1 identified the terminated contract as
"purchase order 100092, jackets no. 394-726/7/8." Rule 4 File,
Tab 29.
It is eminently clear from these documents that in administering
this contract and communicating with the Appellant GPO did not
use the first jacket number to refer to the entire contract. All
three jacket numbers were used when the entire contract was
referenced, while individual jacket numbers were used when
references were made to work related to a specific jacket. Thus,
when GPO extended the original delivery date it specified that it
was doing so for jackets 394-727 and 394-728; it further
identified jacket 394-726 as subject to default if delivery were
not made by the new delivery date, and, when it subsequently
issued a termination for default, it specified that the
termination covered jacket 394-726. (That the reference to
jacket 394-726 in this termination notice involved only that
jacket and not the entire contract is made clear by the
Contracting Officer's memorandum to the Contract Review Board and
by the subsequent termination for default notice which explicitly
identified all three jackets as being terminated.) Thus, under
GPO's own course of conduct in dealing with the Appellant prior
to issuance of the March 6, 1996 letter, a reference to jacket
394-726 was a reference to the work encompassed by that jacket
only and not to the work encompassed by the entire contract.
The Respondent states that the Appellant, prior to receipt of the
breach of warranty notice, was aware of the nature of the defects
because it had had previous quality problems and because it had
been orally notified of EPA's complaints. Resp. Op. at 9. In
this regard, the Contracting Officer states that his Printing
Specialist advised the Appellant in December 1995 that GPO had
received a complaint from EPA, that the complaint involved "the
same quality problems that Appellant had experienced earlier on
the contract and that the EPA Problem Solving wheels purchased
under the contract were incorrect." Leonard Declaration, � 5.
The Board recognizes that under some circumstances a breach of
warranty notice that "falls considerably short of what an ideal
notice ... should be" may be considered sufficient where the
contractor, prior to receipt of the notice, has been made aware
of the problem or problems encountered with its product. See
Midwest Bank Note Co., supra, at 11. In the cited case, the
contractor received the breach of warranty notice after GPO had
identified a problem, advised the contractor of the problem, and
worked with the contractor to resolve the problem. The Board
held that since the contractor was well aware of the problem the
notice, despite its shortcomings, was sufficient to advise the
contractor that GPO was invoking the breach of warranty clause in
connection with that problem. Here, however, prior to and up to
the time the breach of warranty notice was received the Appellant
had never been advised that GPO had identified any particular
problem. The most that the Contracting Officer's declaration
establishes is that more than two months before the breach notice
was received the Appellant was orally advised by the contract
specialist that EPA had certain complaints, including complaints
about the problem solving wheels. Only the GPO contracting
officer has the authority, however, to determine that a
contractor-furnished product is defective, Big Red Enterprises,
GPOBCA 07-93 (August 30, 1996), slip op. at 27-88, 1996 WL
812960, and customer agency complaints do not always result in a
GPO determination that a product is defective. See Vanier
Graphics, Inc., supra at 15-16. Thus, the Appellant was not on
notice of any defect for which it was responsible under the
contract merely from the prior contact with the contract
specialist. Accordingly, in light of the Respondent's prior
course of dealing with the Appellant, when the Respondent, in its
breach of warranty notice, referenced jacket 394-726 and the
contract's "Warranty" clause, stated that a complaint had been
received, and advised that it was "in the process of inspecting
the product," it did no more than inform the Appellant that,
subject to the results of its on-going inspection, it was
invoking its breach of warranty rights with respect to the
specified jacket.
Accordingly, under the circumstances of this case, the Board
considers the breach of warranty notice to apply only to jacket
394-726 and not to the remainder of the contract. Therefore, the
Board holds that the Respondent failed to provide timely notice
of breach of warranty with respect to jackets 394-727 and 394-728
and therefore was not entitled to exercise its breach of warranty
rights against the Appellant with respect to those jackets.
III. ORDER
The motion for summary judgment is GRANTED with respect to
jackets 394-727 and 394-728. The motion is DENIED with respect
to jacket 394-726.
It is so Ordered.
August 21, 1998 Ronald Berger
Ad Hoc Chairman
Board of Contract Appeals
_______________
1The 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 September 11, 1996. It will be
referred to as the Rule 4 File, with appropriate tab letters also
indicated to reflect the various exhibits making up the file.
The Rule 4 File originally consisted of 39 exhibits. At the
Board's request another exhibit (which will be referred to as Tab
40) was added on January 13, 1997.
2The reference to jacket 394-276 instead of to jacket 394-726 is
an obvious typographical error.
3The party moving for summary judgment has the burden of
demonstrating that there is no genuine issue as to any material
fact and that it is entitled to judgment as a matter of law.
4 This document was accompanied by a Declaration from Contracting
Officer Leonard, which will be referred to hereafter as Leonard
Declaration.