U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
Appeal of GRAPHIC LITHO
Jacket No. 681-153
GPO BCA 21-84
February 4, 1985
MICHAEL F. DiMARIO, Administrative Law Judge
OPINION
DECISION
This appeal on the record, timely filed by Graphic Litho (GL),
a printing firm under contract with the United States
Government.Printing Office (GPO), arises under the "Disputes"
clause of the contract. The appeal is to the rejection of
GL's final product as not being in conformance with certain
specifications and the subsequent 25 percent reduction in
purchase price taken by GPO pursuant to a contract option for
acceptance of nonconforming products. The Board, after due
consideration of the contract terms and facts available to it
in the record, denies the appeal.
FINDINGS OF FACT
Appellant, Graphic Litho (GL), Lawrence, Massachusetts, was
awarded a contract, Purchase Order M5084, Jacket No. 681-153,
by Respondent, United States Government Printing Office's
(GPO) Denver, Colorado Regional Printing & Procurement Office
(DRPPO), on December 21, 1983, in the amount of $11,947
(Exhibit 1-4). The contract, which by reference incorporated
the specifications accompanying the Invitation for Bids, the
telephone bid, and written certification thereof, "GPO
Contract Terms No. 1 (GPO Pub. 310.2), GPO Quality Assurance
Through Attributes Contract Terms" (GPO Pub. 310.1, May 1979,
revised 6/1/81), MIL-STD-105, and "Government Paper
Specification Standard, No. 9" dated Dec. 1981, called for the
appellant to produce some 28,000 maps for the U.S. Department
of Interior, Bureau of Land Management (BLM), Oregon State
Office, Portland, Oregon pursuant to the requisition of BLM's
Denver Service Center (Requisition No. 3-16819I-LM) (Exhibits
1-1, 2, 3, & 4). All the maps were to be on paper furnished
by the contractor in accordance with the following paper
specification:
"White Offset map, lithographic finish equal to JCP Code E-30,
BASIS - 500 sheets, size 25 x 38, Weight - 60."
Equal to JCP Code E-30 is by asterisk referenced in the
specifications to "Government Paper Specification Standard,
No. 9 dated Dec. 1981." (Exhibit 1-1, page 1.)
Nineteen thousand of the maps - four thousand 1:500,000 scale
and fifteen thousand 1:1,000,000 scale - were to be folded to
approximately 8 1/2 x 11 inches "with . . . a suitable number
of vertical accordion folds and angle folds." The remaining
9,000 maps were to be rolled in units of not more than 100 and
placed in mailing tubes (Exhibit 1-1, page 1).
The finished products so produced were to be delivered
complete F.O.B. destination on or before January 30, 1984
(Exhibit 1-1, page 1). In addition, the first six maps of
each item completed and one set of the contract specifications
were to be considered inspection samples and were to be
furnished DRPPO for inspection and testing in accordance with
GPO Pub. 310.2 (GPO Contract Terms No. 1). (Exhibit 1-1, page
4.)
The contract was made expressly subject to "the terms and
conditions (as applicable to the products ordered) of GPO Pub.
310.1, (Exhibit 1-1, page 1) . "Quality Assurance Through
Attributes - Contract Terms," and MIL-STD-105, "Sampling
Procedures and Tables for Inspection by Attributes," in effect
on the date of issuance of the invitation for bid (Exhibit
1-1, page 3). Moreover, the Government reserved the right to
verify product quality by using the applicable procedures
contained in GPO Pub. 310.1 and MIL-STD-105 (Exhibit 1-1, page
3).
The specifications referenced Pub. 310.1 for Acceptable
Quality Level (AQL) (Exhibit 1-1, page 3):
Pub. 310.1, paragraph 1-6. Acceptable Quality Levels (AQLs) -
The AQLs are the maximum number of defects per 100 copies that
the Government will accept at the contract price. Unless
otherwise specified, the AQLs are 1.0 for critical defects and
6.5 for total defects.
"Items which fail to meet the quality requirements of these
specifications shall be processed pursuant to paragraph four,
"Rejection" of GPO Pub. 310.1."
Apparently, the job was delivered by the contractor to the
DRPPO in conformance with the established Inspection and
Testing delivery schedule, since the DRPPO Quality Assurance
Printing Specialist by transmittal of February 6, 1984,
requested the Superintendent, GPO Regional.Printing
Procurement Department, Washington, DC to:
"Please have attached maps tested for compliance to
specifications for WHITE, OFFSET MAP, LITHOGRAPHIC FINISH basis
25 x 38 sub 60, equal to JCP E-30." (Exhibit 1-5, page 1.)
On February 8, 1984, the Superintendent RPPD requested that
the GPO Quality Control & Technical Department test the paper
for conformance with the contract specifications which he
forwarded together with the samples (Exhibit 1-5, page 2).
GPO Pub. 310.1, paragraph 4-3 states:
"4-3. Paper Attribute - The Government will evaluate the paper
attribute by inspecting and testing paper characteristics in
individual copies of publications. The paper characteristics
will be tested in accordance with the current edition of
"Government Paper Specification Standards, Part 2 - 'Testing
Standards'", which is published by the Joint Committee on
Printing. When each copy is inspected, each applicable paper
characteristic that deviates from specifications will be assessed
demerits in accordance with the demerit table for that
characteristic. For each individual copy, the sum of demerits
for all applicable paper characteristics will be classified as
follows:
Tolerance Table for the Paper Attribute
Sum of Demerits Classification of Defect
Less than 31 None
31 to 72 Major
More than 72 Critical"
On February 13, 1984, the Paper and Physical Testing Division,
Quality Control & Technical Department, GPO, issued its
inspection report to the RPPD (Exhibit 1-6). The paper was
found not to be equal to specifications in that it failed the
requisite tests for fold, smoothness, and general appearance
as follows:
SUPPLIER, SAMPLE SPECIFICATIONS TEST RESULTS DIFFERENCE
OR BIDDER NUMBER, ETC
Items 1 & 2 JCP E-30, 60#
Item 1
- Fold 35 each direction cross = 24 -31.4% (36)
wire felt wire felt
- Smoothness 140 - 80 Sheffield 180 170 +28.6%
+21.4%(36)
- General Appearance Match Std. Sample Color is fair-FMC II
DE =3.2(12)1/
Item 2
cross machine cross machine
- Fold 35 each direction 7 18 -80%
-48.6% (36)
wire felt wire felt
- Smoothness 140 - 80 Sheffield 235 230 +67.9%
+64.3% (36)
- General Appearance Match Std. Sample Color is fair-
FMC II DE =4.6(12)1/
INTERPRETATION
EQUAL TO SPECIFICATIONS. Jacket NOT EQUAL TO SPECIFICATIONS.
See above for dtails. PQI = 16 on each item. 2/
The numbers in parenthesis in the right hand column are
demerits assessed.in accordance with the demerit table for
paper attributes.
GPO 310.1 (page 39 et seq.) is set forth in pertinent part as
follows:
1/ FMC II is a symbol used by the testing laboratory to indicate
the mathematical formula used in computing DE or Delta E which is
the color difference between the standard sample and sample
provided by the contractor.
2/ PQI is a symbol used by the laboratory to indicate Product
Quality Index, as required by Part IV of the Government Paper
Specification Standards, supra. It is derived by subtracting the
total number of demerits (in this case 84) from 100; thus, the
PQI of 16.)
"QUALITY ASSURANCE THROUGH ATTRIBUTES PROGRAM
PAPER ATTRIBUTE
4. Bursting Strength:
Deficiency: Demerit Table
Less than 10 pct 4
10-25 pct 12
More than 25 pct 36
Example: Spec (30) x 25 pct=7.5; 30-7.5=22.5; Less than
22.5
Bursting Strength=36 demerits.
7. Finish (Smoothness):
a. "Precision Requirements" all stocks when so designated.
Deficiency: Demerit Table
Less than 5 pct 4
5-10 pct 12
More than 10 pct 36
b. "Regular Requirements" all stock when so designated or if
no designation in solicitation.
Deficiency: Same as 4 above.
Example: Spec (50-125) x 25 pct; 50 x 25 pct=12.5; 125 x 25 pct=
31.25; 50-12.5=37.5; 125+31.25=156.25. Less than 37.5 or more
than 156.25=36 demerits.
8. Folding Endurance--Same as 4 above."
Thus, each item tested had a total of 84 demerits. As a
result of the tests the paper used by the contractor was
deemed to be critically defective by the DRPPO (Exhibit 1-7).
A "critical defect" is defined in paragraph 1-3, GPO 310.1 as:
" . . . a serious deviation from specifications. Critical
defects are designated in the tolerance tables for . . . paper
attribute [sic]."
On March 14, 1984, the contractor was telephonically notified
of the extent of the deficiency and the 25 percent reduction .
He voiced his objection to the extent of the reduction
(Exhibit 1-7). On March 15 the contracting officer confirmed
the telephone notification in writing stating the 25 percent
reduction of the adjusted purchase order price as $3,090.75,
and formally advised the contractor of his right to protest
the action pursuant to GPO Publication 310.2, Section 2-3,
"U.S.:Government Printing Office Contract Terms No. 1." The
contracting officer, as enclosures to the letter, furnished
the contractor GPO Form 913-M, contract modification,
decreasing Purchase Order M5084 by the above stated dollar
amount and setting forth the Government's willingness to
accept the defective maps at the stated 25 percent discount.
Also enclosed were a copy of the paper test results and GPO
Publication 310.1 and 310.2 (Exhibit 1-8).
By letter dated March 16, 1984, the BLM Printing Specialist
set forth the specification for the paper required by its
requisition, supra and requested that a paper test of the
product, apparently not having been informed that such test
had already been conducted (Exhibit 1-10). The letter had
enclosed with it a BLM undated memorandum from the Chief,
Branch of Cartometrics D-417 to the BLM Printing Specialist
wherein it cites the JCP Code E-30 or equal specification and
states:
"This specific paper has folding endurance and contains long
grain wood fibers to prevent cracking at the folds. With the
excessive handling and refolding of these maps in the various
offices, this quality is a must. The surface is relatively
smooth which promotes better ink holdout during printing with the
4-color mechanical process plus a brown color."
By letter to the Public Printer, U.S. Government Printing
Office, Washington, DC, dated May 21, 1984, and sent to the
DRPPO in accordance with GPO regulations, appellant appealed
the contracting officer's decision setting forth the following
relevant points:
1. "... special emphasis should have been made in the bid jacket
specification pertaining to the particular kind of paper (E30)
requested due to its general unavailability, scarceness and
stringent requirements for manufacture.
2. "As printers we do not have the testing facilities at our
disposal to evaluate paper to such requirements . . . neither do
the paper merchants and in some cases neither do the paper
manufacturers . . . mills I contacted could not test for folding
endurance but only for tear strength.
3. "As printers we can only evaluate paper by its general visual
characteristics such as color, opacity, thickness, etc.
4. "The stock we used . . . we have used for general commercial
map work without problems.
5. "The job was press inspected and no question was raised
concerning the paper.
6. "It was brought to my attention that it did not meet your E30
specifications after the job was delivered. .
7. "Since that time I have attempted to locate a source for this
kind of paper without success . . . I have submitted numerous
samples of various manufacturers to your Washington testing
office and so far all have failed. Tests are still ongoing. As
further evidence of the general scarcity of this kind of paper I
intend to furnish you with names of kinds of stock and test
results in the near future. As of this writing I still do not
know where paper to meet your E30 specifications can be obtained.
8. " . . . the jacket specification is negligent [sic] in not
alerting the prospective bidder sufficiently of the stringent
stock requirements . . . and the likely difficulty in obtaining
it.
9. "Had we been alerted by the specifications of the special
nature of this paper we would never have been able to locate the
stock in time for bid opening . . . ."
The letter then states that "the $3,090.75 deducted . . . was
unduly severe and unreasonable . . . ." (Exhibit 1-12.)
By letter July 19, 1984, the Chief, Branch of Office Services,
Denver Service Center BLM, in response to a request from DRPPO
to restate its paper requirement justification states:
"The Bureau of Land Management requested that this entire order
be printed on White Offset Map, Lithographic Finish, 60 lb.,
equal to JCP Paper Standard E-30. Test results furnished by GPO
(per BLM's request) indicated that the order was printed on White
Offset Book paper. The stock that was requested by BLM provides
for high quality multicolor printing (level 111 attributes was
required) and superior folding endurance. The maps are used
extensively in the field by Government Agencies and the general
public and require frequent unfolding and folding. The White
Offset Book paper will not stand up to this type of usage without
eventually separating at the folds. This imposes extreme
hardships on the user in having to obtain replacement maps which
may not be [readily] available and additional costs which would
have to be borne by the user in obtaining any replacement maps."
(Exhibit 1-15.)
By letter dated August 22, 1984, the appellant elected that
this appeal be "by submission of written documentation only"
and submitted the following additional relevant explanation
and material:
" . . . a form letter (Ex. A) was sent by our firm to some 19
paper manufacturers to determine the availability of stock
meeting GPO Spec. JCP E30. This was done after . . .
notification . . . that the stock . . . used did not meet
specifications.
"Responses . . . indicated that five of these companies
manufactured a sheet equal to JCP E30 . . . one company . . .
required a 20,000 lb minimum order which effectively eliminated
their sheet . . . for this procurement. Another company . . .
did make it but were not sure the shade of white would meet
specifications . . . . This.left three companies out of nineteen
who answered affirmatively and were able to submit samples . . .
to be tested and approved.
"This whole process, from the date of . . . our letter to the
date of approval by GPO, took approximately six weeks. . . . a
positive response of only 15.7 percent of the companies polled .
. . . However, . . . our inquiries [that] took place prior to the
above survey . . . indicated that no dealer or merchant knew of
any paper that met the GPO Spec. JCP E30. Approximately 12
dealers were contacted by phone . . . . This negative response
led to our subsequently sending . . . letters to manufacturers."
The letter goes on to restate in substance the same relevant
points set forth in appellant's letter of May 21, 1984. In
further support of appellant's contention and recommendation
that: "[s]uch stock is not readily available and a cautionary
note to this effect should be included as a part of the paper
requirement description on the Jacket IFB . . .," the
appellant enclosed an IFB issued by the U.S. Geological Survey
which appellant asserts:
" . . . provided for possible difficulty . . . in obtaining stock
by:
1. listing . . . possible sources
2. requesting samples to be submitted with bid to be tested
3. allowing bidder to submit further samples if the first samples
failed." (Exhibit 3.)
By letter of November 16, 1984, to this Board, the appellant
further set forth its complaint as follows:
Complaint
"Our complaint and argument is set forth in my letters of May 21
and August 22. The basis of my complaint is the following:
1. The paper specified by GPO for J681-153 was not available
under ordinary commercial circumstances and the Jacket
specifications should have alerted the printer to this fact.
2. The penalty was too severe and arbitrary. The value of the
product which was accepted and used by the Government was not
diminished by 25% ($3090.00) due to failure to use stock which
met (JCP E30).
The difference in cost between JCP E30 and the stock used would
have been 5c per pound at most which would amount to a net
difference in cost of $300.00 for the approximately 6000 lb. of
paper involved.
3. The job including the paper it was printed on was approved by
an agency representative at our premises on January 26 and 27.
(see attachment Ex. F & G).
We believe the agency representative should have verified the
stock specifications at that time. If he had identified the
problem then, our exposure to damage by running the job on the
wrong paper would have been eliminated. At least the paper could
then have been used for another job." (Exhibit 6.)
The appeal comes to the Board in this form.
ISSUES PRESENTED
1) Whether a successful bidder whose final work product has
been rejected as being nonconforming to a critical express
contract specification may in mitigation of the rejection
object to the specification because it did not include a
statement warning of the limited extent of commercial
availability of supply, when by the bidder's own admission, it
made no inquiry or investigation of such availability prior to
its bid or subsequent performance.
2) To what extent, if any, is the Government, as a consequence
of its "OK to print" after press sheet inspection, bound to
accept a nonconforming paper product supplied by a vendor
performing printing services.
3) Was the Government's imposition of a 25 percent purchase
price reduction for the nonconforming product justifiable
under the facts of the case and the terms of the contract.
DISCUSSION
The specification for paper required to be supplied by the
appellant was detailed and clear in its terms to the extent
that it called for a particular type, basis size and weight,
color, and need to be equal to a certain Government paper
specification standard identified cryptically as "Equal to JCP
Code E-30" with additional reference to the publication
detailing the specification. (The referenced specification
was established in 1977. The publication containing it was
published in 1981.) It is the belief of the Board that such
specification, especially in its encryption, was more than
adequate to put any reasonably prudent prospective bidder on
notice that the needs of the Government could only be met by
supplying conforming paper. Such needs were not arbitrarily
or capriciously arrived at by the Government. Rather, they
were set forth because the resulting paper had a particular
fiber makeup and surface texture. These characteristics were
required because of the need to have a high quality, durable
folded map product which would withstand frequent unfolding
and refolding over long periods of time by both Governmental
and general public users.
As to the question of commercial availability of the specified
paper stock, we believe the inquiries made by the appellant of
distributors and manufacturers after the rejection of its
final product are inquiries it should have made before it
submitted its bid. Even a merely cursory inquiry by appellant
would have revealed the extent to which appellant's usual
suppliers could meet this need and at what cost, a necessary
bit of information in formulating a responsive and responsible
bid. Indeed, appellant could have inquired of respondent in
an attempt to ascertain the names of potential vendors of the
required stock had it chosen.to do so.
The appellant's letter of May 21, 1984, however, shows that
such undertaking was never contemplated by the appellant,
wherein it states that "as printers we can only evaluate paper
by its general visual characteristics such as color, opacity,
thickness, etc. The stock we used on this particular jacket
we have used for general commercial map work without
problems."
The question of commercial availability was discussed by the
Armed Services Board of Contract Appeals in the appeal of
Kepner Plastics Fabricators, Inc., ASBCA, No. 23857, May 7,
1982, 82-1 BCA � 15,792. In that case the contract had an
express "standard product" clause, which stated:
"Except where modified herein, it is intended that the equipment
and its component parts shall be a regular commercial product of
the manufacturer or his suppliers" (Page 78,223).
Part of the specification was for barrier material to be
"constructed of a nonporous,- flexible material with a
breaking strength not less than 450 lb. per inch of width."
The barrier material was subject to being tested under express
testing procedures. The contractor wrote to its fabric
supplier to notify it that the contractor was the low bidder
on the solicitation and requested a 30-day delivery on 400
yards of fabric to be used for the first test. Subsequently,
the supplier notified the contractor that there was no
commercially available fabric on the market meeting the
specifications. After checking another supplier with similar
results, the contractor notified the Government engineering
representative of the situation. The representative stated
that he was aware of the problem and referred the contractor
to another level Government engineering representative. After
also being apprised of the difficulties the latter
representative told the contractor he would get back to him.
Some time later, not having heard from the engineering
representative, the contractor wrote to the Government setting
forth the problem and its efforts of prior notification. To
avoid further delay it asked the Government to modify the
specification for testing and also to extend the time of
performance because of the inherent delays. After writing the
letter the contractor contacted 10 other fabric suppliers
again with negative results. Moreover, this was the first
time the Government had used the specification in question.
Also, there was evidence that in an earlier contract with
another contractor similar problems had been encountered with
part of the specifications. In that instance the Government
waived part of the requirements.
With these facts now known to the Government, the contractor
furnished the Government officer in charge of contracts
certain literature from one of the suppliers it had contacted
recommending that the test procedures be changed. The
Government then reviewed test results of 11 fabrics and
concluded that the specifications in question were impossible
to meet with commercially available fabrics. The Government
then proceeded to grant appellants' earlier request for test
modifications and time extension, the latter being given
without monetary consideration from the appellant because of
the extensive amount of time it took to resolve the
contractor's request. The contractor signed the modifications
to the specifications but in so doing insisted they be
"without prejudice to any future equitable adjustments to the
contract or for additional time resulting from (the
contractors) efforts to comply with the test specification."
The Government objected to this provision, and as a result,
the contractor deleted the provision, but in so doing made it
clear that it " . . . expects that it will not be foreclosed
from pursuing whatever rights it might have under the amended
contract." Other actions followed, including discussion of
the fabric test specification at a convention of fabric
manufacturers which the Government attended. The result
of.all this was that another revision of the test
specification was established by the Government but it was not
applied to the contract at hand.
Subsequent to the completion of the contract, the contractor
filed a claim for equitable adjustment which the Government
denied on the basis of the contractors " . . . failure to
obtain a fabric that complied with the contract specifications
. . . ." The contractor appealed to the ASBCA. The Government
in its answer averred that the contractor had failed to meet
its affirmative burden of proof to establish that the fabric
was not commercially available when the contract award was
made.
Moreover, it alleged that the modified specification agreed to
by the contractor was an accord and satisfaction. The ASBCA
agreed with the Government with respect to the burden upon the
contractor but ruled that it had indeed been met and that
there was no accord and satisfaction had through the
modification.
The facts in Kepner are clearly distinguishable from the facts
we are considering although they touch upon all the same
elements, since the contractor's efforts, while put forth
after it had bid, were nevertheless before it had attempted
performance.
For this reason we believe the facts we are considering
comport more with Continental Heller Corporation, ASBCA No.
23551, 80-1 BCA � 14,334 (Mar. 11, 1980). There the Armed
Services Board of Contract Appeals in considering an analogous
argument by an appellant who did not adequately explore the
marketplace before performance in pertinent part at page
70,718 et seq stated:
"It is clear that the specification was a composite type. That
is, it had the attributes of both a performance and a design
specification. It was, however, predominantly a performance
specification. It called for a package type vacuum evaporator
capable of accomplishing certain results. It was up to appellant
to find such an apparatus and it was free to choose any make or
model which would do what the Government wanted it to do. The
fact that only a simple rectangle was used on the drawing is of
no significance. No reasonable bidder could have believed that
the Government was only calling for a rectangle. The drawing was
scaled and it is clear that the designer was showing the
approximate width and length of a vacuum evaporator by using the
rectangle.
"Morrill may not have been able to locate a package unit vacuum
evaporator but the record shows that it made only the most meager
effort to do so before bidding. As we said before, it relied
upon others to do its work for it and that proved in this
instance, to have been an unwise decision. The fact is that
package type vacuum evaporators meeting the performance
requirements of the contract were available in the marketplace
before, during and after the bid period. Locating them took some
doing which the Government did for Morrill. Their was no
promise, expressed or implied, in the contract documents that
suppliers of the needed equipment would be available locally.
Morrill did not perform an adequate investigation before it bid.
"We have had occasion to discuss the effect of such a failure.
In Jim O'Connor, Inc., ASBCA No. 22165, 78-1 BCA � 13,160 at p.
64,303 we said:
'Appellant had the responsibility to investigate sources of
supply and delivery terms prior to submitting its bid. This was
not done. The delay experienced was of appellant's own making
and there is no legal basis upon which the consequences of faulty
planning and inadequate investigation can be shifted to the
Government.' (See also Brinegar & Fuller, Inc., ASBCA No. 22110,
80-1 BCA � 14,334 (28 Feb 80)).
"Morrill also argues that it was misled by the specification and
drawings into believing that some very simply inexpensive item
was being sought and that it was readily available. Morrill may
have been misled but that is not determinative. Morrill's
subjective problems are of no import. The question is whether a
reasonable bidder conversant with the surrounding circumstances
would have been misled. We are not persuaded that such would
have been the case. Since we have found that the specifications
and drawings were not defective and that nothing in the use of
the term 'package type vacuum evaporator' could reasonably have
led a reasonable bidder to believe that an inexpensive evaporator
unit was readily available, there was nothing of a misleading
nature involved. The fact is, there were package type vacuum
evaporators available in the marketplace and they were certainly
readily available although they may have had to be
fabricated/assembled after placement of an order. Inexpensive is
a relative term. Wastesaver touted its product as being
inexpensive. When Morrill thought it could get an evaporator for
$5,000 and had to pay about $22,000 for one it is easily seen why
it would not believe the Wastesaver was inexpensive. But, of
course, that sort of comparison is not determinative. There was
nothing in the specifications and drawings which said anything
about the cost of the evaporator. The cost would depend upon
what make and model were chosen to meet the contract
requirements."
The appellant next seems to argue that somehow a statement in
the specifications of the extent of commercial availability of
the specified stock would have caused it to be more careful in
its bid preparation. In support of this contention it relies
upon the fact that another Government agency, Geological
Survey, in a subsequent bid solicitation requiring the use of
the same encoded paper stock, contained such statement.
We fail to see the relevancy of such argument in light of the
fact that the use of an encrypted designation at once alerts
an unfamiliar party to the need to be at least as careful to
ascertain its meaning as does a statement of commercial
availability. Moreover, such tightly drafted specification
flies in the face of using "stock . . . we have used for
general commercial map work without problems."
While the legal doctrine of impossibility has been modified in
recent times to a more enlightened commercially obtainable
standard (U.C.C. Sect. 2-615(a) ), the appellant is wont to
rely upon such doctrine in the case at hand, since the fact
remains that upon reasonable inquiry the required paper was
available albeit from a limited range of suppliers.
As a final note on this issue, the appellant argues that the
respondent was in someway "negligent" in not informing him of
the limited extent of commercial availability of the stock.
Negligence is liability in tort while warranty is generally
associated with contract liability. Italia Societa Per Azioni
di Navigazione v. Oregon Stevedoring Co., 310 F.2d 481 (9th
Cir. 1962), rev. 376 U.S. 315, 845 Ct. 748, on remand 336 F.2d
124, cert. denied 379 U.S. 973, 855 Ct. 668. The purported
nonfeasance upon which the claim of negligence is founded
arose, if at all, at the time of the sending of the bid
solicitation to appellant. As such, it is not a matter of
contract, per se, but is a matter relating to the contract
over which this BOARD has jurisdiction under the "Disputes
Clause." Therefore, an analysis of the question is in order.
The four basic elements of a traditional negligence action
are:
1) Duty, that is, appellant must be protected under some rule of
law against respondent's conduct.
2) Breach, that is, respondent's conduct must have violated its
duty.
3) Causal relationship, that is, appellant's injury must be the
result of respondent's conduct.
4) Damage, that is, appellant must have suffered a loss.
Ward v. Hobart Mfg. Co., 450 F.2d 1176 (5th Cir. 1971).
Spurlin v. General Motors Corp., 528 F.2d 612 (5th Cir. 1976).
Certainly, it can be argued that in the instant case there was
a duty upon the part of respondent which it owed to the
appellant as a potential bidder to describe fully the product
for which it was then soliciting bids in order that the
necessary mutuality of assent or so-called "meeting of minds"
inherent in contracts could be had. The respondent complied
with such duty in its exacting paper specification.
But was there such a duty to provide information as to
commercial availability? There may well have been if, in
fact, the commercial availability was extremely limited and if
in fact respondent had knowledge of that limitation at the
time of its solicitation. The burden of proving both of these
contentions is placed upon the party seeking relief. Even
after there is a showing of such facts and knowledge, to
establish a duty it would have to be shown that respondent
also had knowledge that the defendant could not obtain the
information of nonavailability from any other reasonable
source before a duty would arise on the part of the
respondent.
None of the proofs necessary to carrying the burden with
respect to the question of whether there was a duty has been
shown. Absent the establishment of a duty, there cannot be a
breach, and without a breach no causation can be shown, and
without causation there can be no resultant injury to be
compensated.
Ignoring that point for the moment, let's assume for the sake
of argument that such duty were in fact established and that
by not including the information in the solicitation there was
indeed a breach of the duty. The appellant would next have to
prove that the purported nonfeasance (i.e., the failure to
provide information that the commercial availability was
extremely limited) was in fact the proximate cause of the
injury of which appellant complains. The burden of proof is
again upon the appellant. Again, we believe that the record
supports a conclusion that the burden has not been met.
Indeed, it appears that the proximate cause of the injury to
appellant is its failure to adhere to the express
specifications for paper as we believe a reasonably prudent
person in like circumstance would ordinarily be expected to
do. Finding difficulties in meeting such specifications, we
believe a reasonably prudent person would have at least raised
questions concerning the consequences of proceeding further.
The appellant did none of these things; thus, we do not
believe the appellant has proven its claim of negligence.
The next issue raised by this appeal is not a novel issue in
Government contracts law. The thrust of appellant's argument
is that it relied upon the respondent's agent who conducted a
press sheet inspection, found things to be to his
satisfaction, gave an "OK to print" upon which appellant
relied to its detriment, and therefore the respondent should
now be estopped to deny that approval since it had an
opportunity through that inspection to reject the paper stock
before it was run through the press. While not expressly
stating so, the appellant's argument is founded upon the
general legal doctrine of apparent authority; i.e., that it
was entitled to rely upon the inspector's authority to approve
press sheets as, subsuming in its scope, apparent authority to
approve paper stock.
But such authority is not available to bind the respondent.
It is well established Federal procurement law that in order
to bind the Government, employees who act as its agents must
have actual authority. Jackson v. United States, 216 Ct. Cl.
25, 41, N. 2, 573 F2d 1189, 1197, N. 2, (1978), and proof or
acknowledgment of that authority is necessary to a claim.
Robert P. Lewis, Sr. v. United States, 231 Ct. Cl. 799 (1982).
Moreover, the appellant must show that the Government employee
upon whom it relied had actual authority to bind the
Government in the specific regard in question. Alabama Rural
Fire Insurance Company v. United States, 215 Ct. Cl. 442,
458-59; 572 F.2d 727, 736 (1978). No such proof,
acknowledgment, or showing has been proffered by the
appellant.
Moreover, a careful reading of the contract makes it clear
that the press sheet inspector had no actual authority with
respect to acceptance of the paper nor can it be implied from
his functional duties. With respect to press sheet
inspections, the contract in pertinent part states only that:
"To maintain the required quality of the work, a representative
of the Government may inspect, at the contractor's plant, press
sheets when the job is going to press . . . ."
This inspection is for all intents and purposes merely visual,
and therefore plainly incompetent to ascertain strict
conformance to the detailed specifications of the contract.
Accordingly, the Government does not rely solely upon this
inspection to assure the quality of the product for which it
has contracted. Rather, it includes a provision in the
contract to require that "the first 6 maps ea. item completed
and one set of these 'GPO specifications' be mailed to it
'attn: 'Inspection Samples' making reference to the article
entitled 'Inspection and Tests in GPO Pub 310.2'."
Additionally, the contract provides that:
"The Government reserves the right to verify product quality by
using the applicable procedures contained in GPO Pub 310.2."
The procedures in the two publications taken together reserve
the right in the Government to test the final product after
its final delivery and to reject any such product found to be
nonconforming. The inclusion in the contract of such
provisions must be read to severely limit the actual or
implied authority had by its press sheet inspector.
As to appellant's last argument, the 25 percent reduction was
of purely mechanical application once the testing laboratory
ascertained the number of critical defects . Facially, the
"Discount Tables for Critical Defects" (GPO Publication 310.1,
Appendix A) provides for a 25 percent discount for 72 or more
critical defects. Thus, respondent, having found appellant's
product to have 84 such defects, was entitled under the terms
of the contract to reject the product in its entirety or, at
its option, to assess the requisite discount and accept the
nonconforming product. But appellant argues that, given what
he believes to be an appropriate cost differential between the
specified and nonconforming stock, the imposition of such a
reduction is unwarranted. Such argument begs the question.
The loss to the Government in not getting what it bargained
for is not the difference in price between the two papers not
yet printed upon. Rather, it is the unknown cost inherent in
the possibility that it may, at some future time have to go
back to press in order to get the use it first intended in
requiring the specific paper stock to be used by appellant.
These future costs cannot be ascertained until actually
incurred. Surely in such circumstances, the imposition of the
25 percent reduction is being applied in much the same way as
a liquidated damages provision and cannot, in our view, be
deemed to be excessive.
CONCLUSION
The appeal is denied for the aforesaid reasons.