U.S. GOVERNMENT PRINTING OFFICE
BOARD OF CONTRACT APPEALS
WASHINGTON, DC 20401
STUART M. FOSS
Administrative Judge
The Appeal of B. P. PRINTING AND OFFICE SUPPLIES
Docket No. GPO BCA 22-91
Jacket No. 535-394
Purchase Order F-7121
February 5, 1993
DECISION AND ORDER
By letter dated November 12, 1991, B. P. Printing and Office
Supplies, 5050 Jimmy Carter Boulevard, Norcross, Georgia
30093 (Appellant or Contractor), filed a timely appeal from
the August 13, 1991, final decision of Contracting Officer
John M. Edridge, of the U.S. Government Printing Office's
(Respondent or GPO or Government) Regional Printing
Procurement Office, Atlanta, Georgia 30318-2542 (ARPPO),
terminating the Appellant's contract identified as Jacket
No. 535-394, Purchase Order F-7121, for default for failure
to "fulfill the requirements of the contract;" i.e., produce
a product which met the contract specifications (R4 File,
Tab F). 1/ For the reasons which follow, the decision of
the Contracting Officer is hereby AFFIRMED, and the appeal
is DENIED.2/
SUMMARY FINDINGS OF FACT 3/
1. On July 2, 1991, the Respondent issued Purchase Order
F-7121 to the Appellant for the production of 42,000
labels/name tags (R4 File, Tab A). 4/ The name tags had
been requisitioned by the customer agency-the Department of
the Air Force (Air Force)-for use in the Air Force's Reserve
Officers Training Program (AFROTC) (R4 File, Tab C). The
Purchase Order indicates that the labels were to be shipped
to the Air Force's Field Printing Plant located at
Gunter Air Force Base, Alabama 36114-5597, by July 29, 1991 (R4
File, Tab A). The contract price for this work was $950.00 (R4
File, Tab A).
2. The labels were to be made from Government-furnished
material which the Contractor was to pick up on July 3, 1991
(R4 File, Tab A). As stated in the Purchase Order, the
labels were also to be trimmed 4" x 2_" and had to conform
to the following specification:
Form printing type & line matter in Blue ink. Pressure sensitive,
removable adhesive, suitable backer, easy removable feature.
Labels will be used on clothing and must not leave any residue
when removed therefrom (R4 File, Tab A).
3. The specifications also required the Contractor to
produce the labels on 50-60 pound White Litho Coated label
paper (R4 File, Tab A). 5/
4. The Appellant completed the contract on time and shipped
the labels to the Air Force in four boxes (R4 File, Tab B).
However, on August 1, 1991, Air Force personnel inspected
samples from each of the four boxes and discovered that the
labels had several quality defects (R4 File, Tab B).
Specifically, the Air Force inspection revealed problems
with the trimming of some labels, smeared or two-tone ink on
others, and an illegible ROTC emblem on still other labels
(R4 File, Tab B).
5. On August 6, 1991, Charles H. Wallace, Chief, Production
Control, Air University Field Printing Plant, furnished 750
random samples of defective labels to the ARPPO with the
comment: "This is as bad as any I have ever seen. Request
complete rerun." (R4 File, Tab C).
6. An examination of these samples by the Contracting
Officer at the time, Gary C. Bush, led to his decision that
the Appellant's performance was unacceptable. 6/ Therefore,
on August 13, 1991, Bush obtained the approval of GPO's
Contract Review Board (CRB) to terminate the contract (R4
File, Tabs D and E).
7. After the CRB approved the proposed termination action,
on the same date-August 13, 1991-a Notice of Termination-
Complete
(Notice of Termination), signed by Contracting Officer Edridge,
who replaced Bush, was issued to the Appellant informing it that
its contract had been terminated for complete default because it
had failed to fulfill the requirements of the contract (R4 File,
Tab F). The reasons given in the Notice of Termination for the
default termination were:
The order was trimmed 3 sizes (4 x 2-1/2", 4 x 2-3/8", and 4 x
2-5/16"). A loss of information is found throughout (printing
running off the edges of the labels). Ink coverage is not
consistent. Offset and extraneous marks are found throughout the
order. The backers are not easily removed (R4 File, Tab F.) 7/
ISSUES PRESENTED
The Board must consider three issues in this case, namely:
1. Was the Appellant entitled to an opportunity to cure its
failure to provide conforming labels before the Contracting
Officer could terminate the contract for default?
2. Did the Contracting Officer follow appropriate inspection
techniques when he used his examination of 750 labels
supplied by the Air Force as the basis for his decision to
terminate the contract for default?
3. Was the Contracting Officer in error in terminating the
Appellant's contract identified as Jacket No. 535-394,
Purchase Order F-7121, for default under the circumstances
of this case? 8/
POSITIONS OF THE PARTIES
The Appellant does not challenge the Respondent's judgment
that the labels it supplied to the Air Force were of poor
quality. However, the Contractor argues that the termination
of its contract for default was unjustified because: (1) the
Government-furnished sample used to "guide production," was
not consistent with the contract specifications; 9/ (2) an
examination of 750 defective labels was too small a sample
on which to base rejection of the entire supply of 42,000
labels; (3) the sample itself was improperly selected; and
(4) it was entitled to an opportunity tocorrect the defects
found by the Government before the contract
was terminated by reprinting the order. RPTC, at pp. 4-5. See
also, A.Brf., at pp. 2-3; A.R.Brf., at pp. 1-2.
The Respondent, on the other hand, believes that the
Appellant's contract was properly terminated for default
because of serious quality defects, including defective
adhesive paper backing, noncompliance with specified trim
size and poor printing running off the edges of the labels.
RPTC, at pp. 4, 6. See also, R.Brf., at pp. 2-3. The
Respondent also contends that while the paper used by the
Appellant had suitable adhesive, the paper backer was not
"split" and could not be easily removed as required by the
contract specifications. 10/ RPTC, at p. 6. See also,
R.Brf., at p. 4. Moreover, the Respondent argues that the
Government-furnished sample was not intended to "guide
production," as contended by the Appellant, but rather was
given to the Contractor merely to show the "margins" on the
labels. 11/ RPTC, at p. 6. See also, R.Brf., at p. 3.
Hence, relying on "black letter" public contract law that
the Government is entitled to strict compliance with its
specifications, the Respondent submits it was justified in
terminating the Appellant's contract for default in this
case. R.Brf., at p. 3-4 (citing, Cascade Pacific
International v. United States, 773 F.2d 287 (Fed.Cir.
1987); American Electric Contracting Corporation v. United
States, 579 F.2d 602 (Ct.Cl. 1978); Dependable Printing,
Inc., GPO BCA 5-84 (September 12, 1985)).
SUMMARY CONCLUSIONS 12/
Since the ultimate question which the Board must decide is
whether or not the Appellant's contract was erroneously
terminated for default under the circumstances of this case,
certain legal principles should be kept in mind at the
outset. First, a default termination is a drastic action
which may only be taken for good cause and on the basis of
solid evidence. 13/ See, e.g., R.C. Swanson Printing and
Typesetting Company, GPO BCA 31-90 (February 6, 1992), Sl.
op. at 25, aff'd, Richard C. Swanson, T/A R.C. Swanson
Printing and Typesetting Company, No. 92-128C (U.S. Claims
Court, October 2, 1992); 14/ Stephenson, Inc., GPO BCA 02-88
(December 20, 1991), Sl. op. at 20 (citing, Mary Rogers Manley
d/b/a Mary Rogers Real Estate, HUDBCA No. 76-27, 78-2 BCA �
13,519; Decatur Realty Sales, HUDBCA No. 75-26, 77-2 BCA �
12,567).
Second, the burden of proving the basis for the default is
on the Government, Lisbon Contractors v. United States, 828
F.2d 759 (Fed. Cir. 1987); Chavis and Chavis Printing, GPO
BCA 20-90 (February 6, 1991), Sl. op. at 11 (and cases cited
therein); R.C. Swanson Printing and Typesetting Company,
supra, Sl. op. at 28, whereas the contractor has the burden
of proving excusability. Switlik Parachute Company v. United
States, 216 Ct.Cl. 362 (1978); Davis v. United States, 180
Ct.Cl. 20 (1967); J.F. Whalen and Company, AGBCA Nos.
83-160-1, 83-281-1, 88-3 BCA � 21,066; B. M. Harrison
Electrosonics, Inc., ASBCA No. 7684, 1963 BCA � 3,736; Hy-
Cal Engineering Corporation, NASA BCA Nos. 871-18 and 772-7,
75-2 BCA � 11,399; Chavis and Chavis Printing, supra, Sl.
op. at 11-12 (and cases cited therein); R.C. Swanson
Printing and Typesetting Company, supra, Sl. op. at 28. If
the Government fails to meet its burden of proof, then the
termination is converted into one of convenience and the
contractor is allowed to recover for the work performed.
See, GPO Contract Terms, Default, � 20(g). Cf., Stephenson,
Inc., supra, Sl. op. at 17-18; Chavis and Chavis Printing,
supra, Sl. op. at 9.
Third, the standard "Default" clause identifies several
grounds which have the effect of excusing defaulting conduct
by Government contractors, including acts of the Government
in either its sovereign or contractual capacity. 15/ See,
GPO Contract Terms, Default, � 20(c). Government acts which
may extinguish a contractor's performance obligations
include defective specifications, Robert E. Moore
Construction, AGBCA No. 85-262-1, 90-2 BCA � 22,803, and
defective Government-furnished equipment or material. Boque
Electric Manufacturing Company, ASBCA No. 25184, 86-2 BCA �
18,925. However, the burden of proving Government defects
falls on the contractor, who must also show that such
defects were the cause of the problems in question. Editors
Press Incorporated, GPO BCA 03-90 (September 4, 1991) Sl.
op. at 12-13; Fry Communications, Inc., GPO BCA 1-87 (June
1, 1989), Sl. op. at 5 (citing, Bailfield Industries,
Division A-T-O, Inc., ASBCA No. 18057, 77-1 BCA � 12,348).
Applying these principles to the facts in the record, the
Board reaches the following conclusions:
A. Under the circumstances here, the Contracting Officer's
failure to provide the Appellant with an opportunity to provide
conforming labels before terminating the contract for default,
was not a fatal procedural error.
1. It is clear that the Contracting Officer's decision to
default the Appellant for failure "to fulfill the
requirements of the contract" is a termination based on the
Contractor's failure to "[d]eliver the supplies or to
perform the services within the time specified or any
extension, thereof;. . .". GPO Contract Terms, Default, �
20.(a)(1)(i). Such clauses have uniformly been held to
apply not only to late deliveries of the contracted goods,
Stephenson, Inc., supra, Sl. op. at 19 (citing, Chavis and
Chavis Printing, supra, Sl. op. at 12-15; Jomar Enterprises,
Inc., GPO BCA 13-86 (May 25, 1989), Sl. op. at 3-5), but
also to the timely delivery of nonconforming supplies. 16/
Id. (citing, KOPA Kopier Produckte, ASBCA No. 29,471, 85-3
BCA � 18,367; Meyer Labs, Inc., ASBCA No. 18,347, 77-1 BCA �
12,539.
2. As a general rule, no "cure notice" is required where a
contract is to be terminated because of the contractor's
failure to timely deliver or perform. Stephenson, Inc.,
supra, Sl. op. at 19-20 (citing, Kit Pack Company, Inc.,
supra, 89-3 BCA � 22,151; Norm Hodges and Associates, Inc.,
GPOCAB 2-82, Sl. op. at 3 (1982); Sales Aids, Inc., GPOCAB
14-80, Sl. op. at 6 (1981)). 17/ However, the law provides
a limited exception to this principle when it appears that a
contractor has timely shipped nonconforming goods which
deviate from the specifications in only minor respects.
This so-called "substantial compliance" rule affords
defaulting contractors an opportunity to correct minor
defects in shipments to the Government. See, Radiation
Technology, Inc. v. United States, 177 Ct.Cl. 227, 366 F.2d
1003 (1966).
3. In the lead case on this question, Radiation Technology,
Inc., the Court held that a ". . . contractor is entitled to
a reasonable period in which to cure a nonconformity
provided that the supplies shipped are in substantial
conformity with the contract specifications." 366 F.2d at
1005-06. [Emphasis added.] As enunciated by the Court, in
order for the "substantial compliance" doctrine to apply to
a particular shipment of nonconforming goods, the contractor
must show that: (1) a timely delivery of goods was made; (2)
he/she reasonably believed, in good faith, that the supplies
conformed to the contract when shipped and that they would
be acceptable; and (3) the defects are minor in nature and
capable of correction within a reasonable period of time.
366 F.2d at 1006. 18/ A contractor who ships nonconforming
goods is only protected by the Radiation Technology rule to
the extent he/she can satisfy all elements of the test.19/
4. In the Board's opinion, the "substantial compliance"
doctrine is inapplicable to the circumstances of this case.
The Appellant has clearly satisfied the first element of the
rule; i.e., there is no question but that a timely shipment
of the labels was made. Similarly, the Board finds that
when the labels were delivered, the Appellant reasonably
believed, in good faith, that they conformed to the contract
specifications and that they would be accepted. However,
the Board has examined the samples of the labels included in
the appeal file, and has concluded, in
agreement with the Respondent, that the defects in this case are
not minor in nature (R4 File, Tab I).
5. As indicated previously, the quality assurance
specification in the Appellant's contract provides that:
"[p]rinting and binding shall be held to a high standard of
imposition; makeready, press running; clear, sharp printing;
and good quality in every respect." 20/ GPO Contract Terms,
Supplemental Specifications, � 1(b)(1). In the Board's
judgment, the deviations found-inconsistent trim size, loss
of information, offset and extraneous marks, smeared ink,
faded or too light ink application-are "major" or "critical"
defects. 21/ Furthermore, the nature, variety and extent of
the problems with the samples it examined, persuades the
Board that the defects were not susceptible to correction
within a reasonable period of time. Therefore, the Board
concludes that the "substantial compliance" doctrine of
Radiation Technology is unavailable to the Appellant; i.e.,
the labels which were delivered did not substantially comply
with the contract specifications and the defects could not
be corrected to conform to those requirements within a
reasonable period of time. Cf., Stephenson, Inc., supra, Sl.
op. at 52-53 (citing, Environmental Tectonics Corporation,
supra, 87-1 BCA � 19,382; KOPA Kopier Produckte, supra, 85-3
BCA � 18,367; Renwin Metal
Products, Inc., ASBCA No. 15413, 72-1 BCA � 9,233, mot. for
reconsideration denied, 72-1 BCA � 9,329).
6. A "cure notice" is ordinarily not required when a
contract is terminated for a contractor's failure to timely
deliver or perform. Because the Board has concluded that
the "substantial compliance" doctrine-which would authorize
such a "cure" period by operation of law-does not apply
here, the Appellant's contention that it was entitled to
correct the defective labels by reprinting the order before
the contract was defaulted, is without merit. In the
circumstances in this case, the Respondent was under no
legal obligation to provide the Contractor with an
opportunity to correct the defects in question.
Accordingly, the Respondent's failure to allow the Appellant
a chance to supply labels which conformed to the
specifications prior to terminating the contract for
default, was not a fatal procedural error.
7. On the other hand, GPO's printing procurement regulation,
like the procurement rules of other Federal agencies,
recommends the issuance of a show cause letter, "where
practicable," prior to the default termination of a contract
for failure to make timely deliveries or perform services
within the time required by the contract. GPO Printing
Procurement Regulation, GPO P-305.3 (September 1, 1988), Ch.
XIV., � 1, � 3(c)(1) (PPR). Cf., Lewis B. Udis v. United
States, 7 Cl. Ct. 379, 385-86 (1985). An examination of the
appeal record discloses that the Respondent
did not issue a show cause letter in this case. However,
considering the fact that the contract due date had already
passed by the time the Contracting Officer sought CRB concurrence
to terminate the contract, and his opinion that the Appellant
could not successfully reprint the rejected labels (R4 File, Tab
E), it seems to the Board that the Contracting Officer simply
made the determination that it was impracticable to issue such a
show cause letter under the circumstances herein. That decision
was within the discretion of the Contracting Officer. Since the
Appellant has not objected to absence of a show cause letter in
this case (insisting instead that it had a right to reprint the
order and cure the defective shipment of labels), the Board will
not disturb the Contracting Officer's judgment. 22/ Cf., Stabbe
Senter Press, GPO BCA 13-85 and 19-85 (May 12, 1989), Sl. op. at
53.
B. The inspection sample used by the Contracting Officer as the
basis for his decision to terminate on the contract was neither
too small nor improperly selected.
1. The Appellant also challenges the Respondent's reliance
on its inspection of 750 labels sent to it by the Air Force
as the basis for its decision to reject the entire shipment
and cancel
the contract. In the Appellant's view, the sample in question
was too small to justify the rejection of an order of 42,000
labels, and moreover, was improperly selected. The Board
disagrees.
2. Under the Respondent's printing regulation, inspection
and testing of procured products is accomplished in
accordance with the "Inspection and Tests" article of GPO
Contract Terms. PPR, Ch. XIII., � 1, � 4(g). See, GPO
Contract Terms, Inspection and Tests, � 14. This article
provides, in pertinent part:
(c) The Government has the right to inspect and test all supplies
called for, to the extent practicable, at all places and times,
including the period of manufacture, and in any event before
acceptance. The Government shall perform inspections and tests
in a manner that will not unduly delay performance and assumes no
contractual obligation to perform any inspection and test for the
benefit of the contractor unless specifically set forth
elsewhere. 23/
* * * * * * * * * *
(f) The Government has the right either to reject or require
correction of nonconforming supplies. Supplies are nonconforming
when they are defective in material or workmanship or are
otherwise not in conformity with requirements. The Government may
reject nonconforming supplies with or without disposition
instructions.
GPO Contract Terms, Inspection and Tests, �� 14(c), (f).
3. With respect to the gathering of inspection samples, the
Respondent's printing regulation merely states that: "[t]he
various methods by which samples may be obtained and
specifics as to how they are to be drawn are contained in
the QATAP Technical Manual." PPR, Ch. XIII., � 1, � 4(g)(1).
In that regard, the QATAP Technical Manual provides, in
pertinent part:
The purpose of sampling inspection is to use the results of the
inspection of the sample to estimate the quality of the lot.
* * * * * * * * * *
In order to accomplish the above purpose, the sample must be
representative of the lot. The fundamental rule in sampling for
GPO acceptance inspection is that the sample items must be
selected at random without regard to their quality. [Emphasis
added.]
QATAP Technical Manual, GPO Publication 355.1, March 1989,
Principles of Sampling, p. 4 (hereinafter QATAP Manual). As
amplified in GPO Technical Report No. 27, July 1, 1988, Subject:
Acceptance Sampling (Report No. 27):
Acceptance sampling . . . involves the use of statistics, applied
to the results of the inspection of a sample of items from the
lot to determine whether the entire lot conforms to quality
specifications.
GPO Technical Report No. 27, July 1, 1988, Acceptance Sampling,
p. 3 (hereinafter Report No. 27). Consequently, the method for
selecting the sample to insure that it is as representative as
possible of the lot, and the size of the sample itself are key to
the proper functioning of the Respondent's quality assurance
system. 24/ Id.
4. The method favored by GPO for insuring that a sample is
representative of the entire lot is to select the sample
items in such a manner that each item of the lot has an
equal likelihood of being chosen; i.e., a random sample.
Report No. 27, supra, Insuring that the Sample is
Representative of the Lot, p. 3. However, the Appellant
contends in this case that the sample of 750 labels which
the Air Force sent to the Contracting Officer for inspection
was not a random sample as envisioned by the QATAP Manual
and Report No. 27. Rather, according to the Contractor, the
Air Force only "selected" defective labels for its sample
and included some discarded name tags used to fill the
package in the shipment. 25/ A.Brf., at pp. 3-4; A.R.Brf.,
at pp. 1-2.
5. One acceptable method for randomizing mentioned in the
QATAP Manual is to select a number of items from each carton
of a multi-carton shipment. QATAP Manual, supra, p. 6. It
is clear that the sample labels in this case were selected
by the Air Force using the "per carton" method (R4 File, Tab
B). 26/ Consequently, the Board is satisfied that an
appropriate method for randomizing was used in this case;
that the sample was properly selected by the Government; and
that the sample is representative of the lot. 27/
6. As for the Appellant's contention that 750 labels was too
small a sample to justify the rejection of an order of
42,000 labels, the Board simply observes that the QATAP
Manual gives examples of the proper number of samples for
lots of 50,000 which are considerably less than 750-i.e.,
200-a fact which is also recognized by the Appellant. QATAP
Manual, supra, pp. 5, 6. See,
A.R.Brf., at pp. 1-2. Accordingly, the Board concludes that the
size of the sample in this case-750 labels-was statistically
valid, and large enough for the Government to rely on the results
of its inspection to estimate the overall quality of the
shipment. The Appellant's alternative suggestion that the entire
shipment of 42,000 labels should have been inspected in this case
is patently without merit. 28/ RPTC, at p. 5.
C. The Contracting Officer's termination of the Appellant's
contract for default under the circumstances of this case, was
not in error.
1. As a general rule, the Government is entitled to strict
compliance with its specifications. See, e.g, Rose Printing
Company, GPO BCA 2-87 (June 9, 1989), Sl. op. at 6 (and
cases cited therein); Fry Communications, Inc., GPO BCA 1-87
(June 1, 1989), Sl. op. at 5; Mid-America Business Forms
Corporation, GPO BCA 8-87 (December 30, 1988), Sl. op. at
18-19. See also, Mega Construction Company, Inc. v. United
States, 25 Cl.Ct. 735, 741 (1992); Wholesale Tire and Supply
Company, Ltd., ASBCA No. 42502, 92-2 BCA � 24,960. Relying
on this principle, the Respondent believes that the
Contracting Officer was justified in terminating the
Appellant's contract for default in this case. R.Brf., at p.
3-4.
2. Where, as here, a default termination is based on the
contractor's failure to supply conforming goods, the
Government must show initially that the work it rejects
does, in fact, deviate from the specifications in order to
avail itself of the "strict compliance" doctrine. See,
e.g., International Lithographing, GPO BCA 1-88 (December
29, 1989), Sl. op. at 20 (citing, Fillip Metal Cabinet
Company, GSBCA No. 7,695, 87-2 BCA � 19,822 (1987);
Hardeman-Monier-Hutcherson, ASBCA No. 11,785, 67-1 BCA �
6,210 (1967); Ramar Co., ASBCA No. 9,644, 72-2 BCA � 9,644
(1972); Pams Products, Inc., ASBCA No. 15,847, 72-1 BCA �
9,401 (1972)). The Government usually meets this burden by
advising the contractor of the results of the inspection it
has conducted. The burden then shifts to the contractor to
prove that the Government's findings are invalid for one
reason or another. Id., Sl. op. at 21 (citing, Universal
Steel Stripping Co., ASBCA No. 13,686, 69-2 BCA � 7,799
(1969); C. W. Roen Construction Co., DOTCAB Nos. 75-43,
75-43A, 76-2 BCA � 12,215 (1976); Continental Chemical
Corp., GSBCA No. 4,483, 76-2 BCA � 11,948 (1976)). The
Respondent's need to provide such proof in this case is
obviated by the Appellant's concession that the labels it
supplied to the Air Force were of poor quality. A.R.Brf.,
at p. 1. See, e.g., Chavis and Chavis Printing, supra, Sl.
op. at 9, 13.
3. Nonetheless, the Appellant challenges the termination
action with one final arrow from its quiver, namely, its
argument that the default decision was erroneous because the
Government-furnished sample used to "guide production" was
not consistent with the contract specifications. RPTC, at
pp. 4-5. See also, A.Brf., at pp. 2-3; A.R.Brf., at pp.
1-2. Cf., DCX, Inc., ASBCA No. 37669, 92-2 BCA � 25,125;
International Foods Retort Company, ASBCA No. 34954, 92-2
BCA � 24,994; Boque Electric Manufacturing Company, supra,
86-2 BCA � 18,925. As indicated above, however, the burden
of proving Government defects falls on the contractor, who
must also show that such defects were the cause of the
problems in question. Editors Press Incorporated, supra,
Sl. op. at 12-13; Fry Communications, Inc., supra, Sl. op.
at 5. In the Board's view, the Appellant has not met its
burden of proof in this case. That is, other than a
difference in the weight of the paper, the Appellant has not
shown in what respect, if any, the Government-furnished
sample deviated from the contract specifications, and there
is no other evidence in the record which would support a
finding that the sample did not generally conform to the
specifications. 29/ Furthermore, assuming arguendo, that
the Government-furnished sample was not in accord with the
specifications, the Appellant has not presented any evidence
that would show a causal relationship between a
nonconforming sample and the wide range of defects in the
labels shipped to the Air Force. In the absence of such
evidence, the Appellant's contention that the Government-
furnished sample was inconsistent with the contract
specifications is merely an unsupported assertion which is
insufficient to meet its required burden of proof. See,
e.g., Fry Communications, Inc./InfoConversion Joint Venture,
GPO BCA No. 9-85 (decision on remand) (August 5, 1991), Sl.
op. at 33, n. 31 (citing, Tri-State Services of Texas, Inc.,
ASBCA No. 38019, 89-3 BCA � 22,064)); Stephenson, Inc.,
supra, Sl. op. at 57. See also, Singleton Contracting
Corporation, GSBCA No. 8548, 90-2 BCA �22,748; Gemini
Services, Inc., ASBCA No. 30247, 86-1 BCA � 18,736.
4. In summary, the Board finds that the contract in this
case was terminated for default because of serious quality
defects in the labels produced and shipped by the Appellant,
including defective adhesive paper backing, noncompliance
with specified trim size, inconsistent ink coverage, and
poor printing running off the edges of the labels (R4 File,
Tab F1). Furthermore, in the Board's judgment, the nature
and extent of the defects found justified the action taken
by the Respondent here. Accordingly, the Board concludes
that the Appellant was in default when its contract was
terminated by the Respondent, and hence, the Contracting
Officer's action was not in error, but rather was an
appropriate exercise of discretion in this case. Chavis and
Chavis Printing, supra, Sl. op. at 16-19 (and cases cited
therein).
DECISION
In light of the foregoing analysis, the Board finds and
concludes that: (a) the Contracting Officer's failure to
provide the Appellant with a cure period in which to supply
conforming labels before terminating the contract for
default, was not a fatal procedural error; (b) the
inspection sample on which the decision to terminate on the
contract was based was neither too small nor improperly
selected; and (c) the Contracting Officer's termination of
the Appellant's contract for default under the circumstances
of this case, was not in error. THEREFORE, considering the
record as a whole, the Board AFFIRMS the Contracting
Officer's decision and DENIES the appeal.
It is so Ordered.
_______________
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 January 27, 1992. GPO Instruction
110.12, Subject: Board of Contract Appeals Rules of Practice and
Procedure, dated September 17, 1984, Rule 4(a) (Board Rules). It
will be referred to hereinafter as R4 File, with an appropriate
Tab letter also indicated. The R4 File consists of nine
documents identified as Tab A through Tab I.
2/ During the presubmission telephone conference on this appeal
on April 21, 1992, the Appellant orally elected to utilize the
Board's optional Small Claims (Expedited) Procedure. Board
Rules, Rules 12.1(a) and 12.2. See, Report of Presubmission
Telephone Conference (May 20, 1992), p. 2 (RPTC). The Board
instructed the Appellant to confirm its election in writing, in
accordance with Rule 12.1(c). Id. Board Rules, Rule 12.1(c).
The Appellant's written notice of election was received by the
Board on June 24, 1992.
3/ In accordance with the Board Rules concerning the Small Claims
(Expedited) Procedure, the Board's decision and order here
contains only summary findings of fact and conclusions. Board
Rules, Rule 12.2(c). Furthermore, the decision and order in this
case shall have no value as precedent in future appeals
considered by the Board. Board Rules, Rule 12.2(d). See,
Graphics Image, Inc., GPO BCA 13-92 (August 31, 1992), Sl. op. at
2, fn. 3.
4/ The R4 File identifies the Appellant throughout as "B. P.
International," located at 5050 Jimmy Carter Boulevard, Norcross,
Georgia 30093. However, in its letter of November 12, 1991,
appealing the Contracting Officer's final decision, the Appellant
identified itself as "B. P. Printing and Office Supplies," at the
same Norcross, Georgia address. The Board docketed the case
using the name given by the Contractor in its notice of appeal,
and thereafter all documents, orders, and the briefs filed by the
parties have identified the Appellant as "B. P. Printing and
Office Supplies." While "B. P. International" seems to be a
different legal entity than "B. P. Printing and Office Supplies,"
the Board deems it unnecessary to change the official caption of
this case to conform to the Purchase Order at this late date
since it is clear that both enterprises share a common ownership
and management. See, Report of Presubmission Telephone
Conference dated May 20, 1992, at p. 2 (hereinafter RPTC). Also
see, Board Rules, Preface to Rules, � VI.B.2. ("Appellant" means
the contractor who appeals[.]). Cf., Killgore Excavating Inc.,
AGBCA No. 87-397-3, 88-2 BCA �20,523 at 103,749-50 (On facts
which showed that the original contractor, a sole proprietorship,
had incorporated after execution of the contract, the agency
board of contract appeals ruled that the corporate successor-in-
interest had standing to pursue the appeal, notwithstanding the
absence of a formal novation agreement, because the contracting
officer was still dealing with the same parties in interest as
had executed and performed the contract.).
5/ Apart from these specifications, Purchase Order F-7121 was
also governed by applicable articles of GPO Contract Terms, GPO
Publication 310.2, effective December 1, 1987 (Rev. 9-88) (GPO
Contract Terms), which was incorporated by reference in the
Purchase Order (R4 File), Tab A). Although it seems that GPO's
Quality Assurance Through Attributes Program, GPO Publication
310.1, Revised September 1986 (QATAP), was not made part of the
Appellant's contract (since the QATAP box on the Purchase Order
is not checked), this does not mean that no quality controls
whatsoever were placed on the Contractor. As the Respondent
correctly notes, the supplemental specifications in GPO Contract
Terms, provide, inter alia, that: "[p]rinting and binding shall
be held to a high standard of imposition; makeready, press
running; clear, sharp printing; and good quality in every
respect." GPO Contract Terms, Supplemental Specifications, �
1(b)(1). See, Respondent's Brief, dated July 27, 1992, at p. 3
(hereinafter R.Brf.).
6/ Tab I of the R4 File consists of samples of the labels showing
the defects in printing and trimming. However, there is no
indication in the record whether the samples in Tab I were taken
from the 750 random samples of defective labels sent to the ARPPO
by the Air Force.
7/ The Notice of Termination-Complete also informed the Appellant
that the order might be reprocured against its account (R4 File,
Tab F). However, as the actual cost of reprocurement was less
than $950.00, no excess costs were assessed against the
Contractor (R4 File, Tabs G and H).
8/ The Appellant also sought to challenge the Respondent's
termination action in this case on the ground that it was based
on the ARPPO's "mismanagement," "bias" and/or "discrimination"
against the Contractor, and not because of any poor performance
on its part. See, RPTC, at pp. 5-6. See also, Appellant's
Brief, dated July 28, 1992, at pp. 1, 3 (hereinafter A.Brf.). As
a consequence, the Appellant asked the Board to award it punitive
damages in the amount of $3,000.00. See, Appellant's Reply
Brief, dated August 15, 1992, at p. 3 (hereinafter A.R.Brf.).
However, the Board has already held in a previous decision
involving the same parties, that the Appellant's allegations of
"discrimination" and "mismanagement" by the Respondent are beyond
the Board's jurisdiction to decide. See, B. P. Printing and
Office Supplies, GPO BCA 14-91 (August 10, 1992), Sl. op. at
13-17. Furthermore, the Board has no authority to award the
punitive damages requested by the Appellant. Cf., R. C. Swanson
Printing and Typesetting Company, GPO BCA 15-90 (March 6, 1992),
Sl. op. at 41; The Wessel Company, GPO BCA 8-90 (February 28,
1992), Sl. op. at 46.
9/ Among other things, the sample label provided by the
Government was on 80-pound paper, not the 50-60 pound paper
called for in the specifications. RPTC, at p. 5. See also,
A.Brf., at p. 2. However, the record is also clear that the
"paper weight issue" played no part in the Contracting Officer's
decision to terminate the contract; i.e., even though the 80-
pound paper used by the Contractor did not meet the contract
specifications, it was nonetheless acceptable to the Respondent.
RPTC, at p. 7, fn. 3. See also, R.Brf., at p. 3.
10/ The Appellant's answer is that its use of 80-pound paper made
the need for a split backer unnecessary. RPTC, at p. 6. See
also, A.Brf., at p. 2.
11/ During the prehearing telephone conference on April 21, 1992,
the Appellant asserted that the Contracting Officer told it to
"follow the sample completely," i.e., use it as a production
sample, as was customary. RPTC, at pp. 6-7. The Contracting
Officer denied advising the Contractor to follow the sample in
all aspects, and insisted that the sample was provided for
"margins" only. RPTC, at p. 7, fn. 3. The Board finds it
unnecessary in the context of this appeal to resolve the
conflicting positions between the parties concerning the purpose
of the Government-furnished sample.
12/ The record on which the Board's decision is based consists
of: (1) the Notice of Appeal, dated November 12, 1991; (2) the R4
File (Tabs A-I); (3) the Appellant's Complaint, dated February 3,
1992; (4) the Respondent's Answer, dated March 6, 1992; (5) the
Report of Presubmission Telephone Conference, dated May 20, 1992;
(6) the Appellant's Brief, dated July 28, 1992; (7) the
Respondent's Brief, dated July 27, 1992; and (8) the Appellant's
Reply Brief, dated August 15, 1992. In addition, during the
presubmission telephone conference, the Board directed the
Appellant to submit to the Board the original sample label in its
possession. RPTC, at p. 8. Likewise, the Board instructed the
Respondent to furnish the negatives of the sample. Id. The
Respondent complied with the Board's directions on May 29, 1992,
and the Appellant supplied the material requested on June 30,
1992. The negatives and sample labels furnished to the Board by
the parties have also been made part of the appeal record.
13/ Default terminations-as a species of forfeiture-are strictly
construed. See, D. Joseph DeVito v. United States, 188 Ct.Cl.
979, 413 F.2d 1147, 1153 (1969). See also, Murphy, et al. v.
United States, 164 Ct.Cl. 332 (1964); J. D. Hedin Construction
Co. v. United States, 187 Ct.Cl. 45, 408 F.2d 424 (1969).
14/ On October 29, 1992, certain provisions of the Federal Courts
Administration Act of 1992, Pub. L. No. 102-572, 106 Stat. 4506
(1992), became effective. Pursuant to Title IX, the United
States Claims Court was renamed the United States Court of
Federal Claims.
15/ While the excusable events listed in the "Default" clause,
all of which must be beyond the control and without the fault or
negligence of the contractor, are set forth in the context of
relieving the contractor from responsibility for excess
reprocurement costs, it is well-settled that the same occurrences
extend the time available for performance and make termination
prior to that time improper. See, e.g., FKC Engineering Company,
ASBCA No. 14856, 70-1 BCA � 8,312.
16/ The rationale for this dual application of the default clause
is simple. As explained in a leading text on the subject of
public contracts: "While these clauses explicitly make untimely
performance the basis for the default action, it is important to
recognize that nearly every Government contract spells out the
contractor's required performance in terms of the nature of the
product or service which is to be delivered or performed as well
as the time by which these performance efforts are to be
completed. Thus, in order for the contractor to render 'timely
performance,' two basic requirements must be satisfied. The
product, service or construction work must conform to the
required design/performance characteristics, and the product must
be delivered or the work completed by the specified due date."
[Emphasis added.] John Cibinic, Jr. & Ralph C. Nash, Jr.,
Administration of Government Contracts 2d ed., (The George
Washington University, 1986), p. 677 (hereinafter Cibinic and
Nash).
17/ Sales Aids, Inc., was decided by one of the ad hoc Contract
Appeals Boards which considered appeals from decisions of GPO
Contracting Officers prior to the establishment of the Board in
1984. GPO Instruction 110.10C, Subject: Establishment of the
Board of Contract Appeals, dated September 17, 1984. Decisions of
these ad hoc boards are hereinafter cited as GPOCAB. While the
Board is not bound by the decisions of these ad hoc boards, it is
the Board's policy to follow them where applicable and
appropriate.
18/ See generally, Cibinic and Nash, note 16 supra, pp. 680-84.
The Radiation Technology doctrine is clearly an encroachment on
the Government's right to terminate. However, it is also
apparent that the rule merely stays for a reasonable period the
Government's right to terminate, and not its right to insist on
100 percent conforming goods; i.e., the doctrine concerns time,
not the supplies themselves. Furthermore, the "substantial
compliance" rule, which is most often applied to supply
contracts, is used to prevent surprise rejections by the buyer
after a contractor's timely shipment in situations where
performance departs in only minor respects from that which has
been promised. See, Stephenson, Inc., supra, Sl. op. at 50-51,
fn. 54 (citing, Environmental Tectonics Corporation, ASBCA No.
20340, 76-2 BCA � 12,134.
19/ In most cases involving the "substantial compliance" rule,
the timeliness of the contractor's shipment is generally not an
issue. Rather, the dispute usually involves the resolution of
questions of "reasonable belief" and the seriousness of the
defects. Absent such a "reasonable belief" by the contractor and
proof that only minor defects are involved, the supplier is not
entitled to the protection of the "substantial compliance"
principle. See, Stephenson, Inc., supra, Sl. op. at 51, fn. 55
(citing, Introl Corporation, ASBCA No. 27,610, 85-2 BCA � 18,044
at 90,578; Norwood Precision Products, Textron, Inc., ASBCA Nos.
38095, 38196, 90-3 BCA � 23,200; Environmental Tectonics
Corporation, supra, 76-2 BCA � 12,134.
20/ Note 5 supra.
21/ Indeed, if the Appellant's contract was subject to QATAP,
such a finding would be obvious and inescapable. QATAP, pp. 6,
15, 22, 23, 27, 44.
22/ In any event, the omission of a "show cause notice" by the
Government is not generally a procedural defect to a termination
based on the contractor's failure to make timely deliveries or
perform timely services. Stephenson, Inc., supra, Sl. op. at 20,
fn. 22. See also, Kit Pack Company, Inc., supra, 89-3 BCA �
22,151, at 111,486-87 (citing, H. N. Bailey & Associates, ASBCA
No. 21,300, 77-2 BCA � 12,681, at 61,553).
23/ Cf., Custom Printing Company, GPO BCA 10-87 (May 10, 1988),
Sl. op. at 14 (citing, Red Circle Corporation v. United States,
185 Ct.Cl. 1, 398 F.2d 836 (1968)). (The rule is that inspection
provisions are for the exclusive benefit of the Government.) See
generally, Cibinic and Nash, note 16 supra, pp. 568-83.
24/ The Board notes that both the QATAP Manual and Report No. 27
provide that sampling is not required, and the lot can be
rejected without sampling, in cases where it is obvious from the
nature of a defect that it extends throughout the lot. QATAP
Manual, supra, p. 7; Report No. 27, supra, Sampling Not Required,
p. 6. Some examples of this are: imposition errors, wrong paper,
wrong inks, wrong color, wrong information, and an upside down
page.
25/ It seems to the Board that Appellant's claim that the Air
Force only "selected" defective labels for the samples it sent to
the Respondent, comes close to an accusation that the Government
was acting in bad faith. The Appellant's contention is not
supported by the record in this case. Cf., Stephenson, Inc.,
supra, Sl. op. at 54-57 (citing, The Standard Register Company,
GPO BCA No. 4-86 (October 28, 1987). In order to prove bad
faith, the Appellant would have to present evidence showing a
specific intent to injure the Appellant in order for it to be
considered by this Board or a court of law, since there is an
inherent presumption that public officials act in good faith.
Furthermore, the Contractor in this case would have to prove that
employees of each of the two separate agencies of Government-the
Air Force and GPO-acted in concert to achieve such a specific
result. See, The Standard Register Company, supra, Sl. op. at
12-13 (and cases cited therein). Moreover, to support a finding
of bad faith, the evidence would have to amount to "well-nigh
irrefragable" proof. Stephenson, Inc., supra, Sl. op. at 55
(citing, Cotyvan Company, ASBCA No. 24,599, 89-3 BCA � 22,129, at
11,356; Bruce Anderson Company, Inc., ASBCA Nos. 29,412, 32,247,
89-2 BCA � 21,872, at 110,027). "Irrefragable" proof simply
means evidence which is incapable of being refuted; i.e.,
indisputable evidence. Webster's New World Dictionary (1988), p.
714. In this appeal, no such "irrefragable" proof of the
Respondent's bad faith has been given or exists in the record.
Indeed, no proof has been given at all.
26/ The Appellant shipped the labels produced under Purchase
Order F-7121 to the Air Force in four cartons. As indicated in
Tab B, the defective labels were pulled from each of the four
boxes received by the Air Force.
27/ The Appellant argues that the sample labels in this case
should have been selected by means of the so-called "blue label"
method. A.R.Brf., at p. 1. See, QATAP Manual, supra, p. 10
(Departmental Quality Copies). The use of departmental quality
copies requires commercial contractors to select random samples
during production runs, which are wrapped separately and shipped
in blue labeled packages or cartons with the balance of the
order. The contractor is instructed to furnish a separate
receipt in order to confirm delivery of the blue labeled
material. Id. However, such "blue label" inspections are
provided for by a contract specification which has been in effect
since July 1988. See, QATAP Manual, supra, p. 11. As the
Respondent correctly observes, that specification was not
included in the Appellant's small purchases contract in this
case. R.Brf., at p. 5.
28/ As indicated in Report No. 27, an examination of 100 percent
of a shipment is not favored as an inspection technique. See,
Report No. 27, supra, Acceptance Sampling, p. 2 (100 Percent
Inspection). Among the disadvantages inherent in a 100 percent
inspection of products are: (1) the prohibitive cost incurred,
since each item must be inspected individually; (2) the fact that
only certain characteristics of each item will be inspected,
rather than the examination being a complete and thorough one of
every item; and (3) the inspection simply separates the defective
items from the good ones, and relieves the contractor of its
responsibility for supplying products which meet the quality
specifications under the contract. Id.
29/ As indicated previously, the only deviation shown in the
record between the sample label provided by the Government and
the specifications was in the weight of the paper; i.e., the
sample was printed on 80-pound paper, not the 50-60 pound paper
called for in the specifications. However, it is clear that the
"paper weight issue" played no part in the Contracting Officer's
decision to terminate the contract; i.e., the 80-pound paper used
by the Contractor was acceptable to the Respondent. See, note 9
supra.