B-162361, SEP. 18, 1967

B-162361, SEP. 18, 1967

CONTRACTS - DELIVERIES - INFERIOR DECISION TO GPO CONCERNING PROPRIETY OF EQUITABLE ADJUSTMENT DUE TO REJECTION OF INFERIOR PORTION OF ORDER FOR PRINTING OF PAMPHLET FOR NAVY DEPT. PRINTING CONTRACTOR WHO, AFTER COMPLAINT FOR INFERIOR DELIVERIES HAD BEEN WITHDRAWN, REFUSES TO REPRINT INFERIOR PORTION MAY NOT BE LEGALLY OBLIGATED TO REPRINT MATERIAL AT HIS EXPENSE SINCE CONTRACTING AGENCY BY ADVISING CONTRACTOR THAT MATERIAL WAS ACCEPTABLE AFTER FIRST REJECTION HAS WAIVED DEVIATION FROM SPECIFICATIONS AND SUBSEQUENT REJECTION IS IMPROPER.

TO MR. HARRISON:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 24, 1967, REQUESTING A DECISION REGARDING THE LEGAL LIABILITY OF A CONTRACTOR IN THE CIRCUMSTANCES OUTLINED IN YOUR LETTER.

YOU STATE THAT ON JUNE 27, 1966, YOUR OFFICE, ACTING ON BEHALF OF THE DEPARTMENT OF THE NAVY, AWARDED A CONTRACT TO THE WEB OFFSET PUBLICATION CORPORATION TO PRINT 200,648 COPIES OF A PAMPHLET FOR USE AS A RECRUITING AID. THE CONTRACT SPECIFICATIONS CALLED FOR PRINTING "OF THE HIGHEST QUALITY, REGISTER MUST BE EXACT, THE COLORS OF INK MUST BE A GOOD MATCH OF THE COLORS INDICATED AND THE INK COVERAGE MUST BE FULL AND UNIFORM THROUGHOUT THE ENTIRE PRESS RUN. PRINTED COPIES RECEIVED WHICH VARY ONE FROM ANOTHER IN MATCHING OF COLORS, HAVE POOR REGISTRATION OF THE COLORS, HAVE DIRTY SPOTS DUE TO PAPER LINT, DUST, OR TRASH, OR ARE OTHER THAN TOP QUALITY IN ALL RESPECTS WILL BE SUBJECT TO REJECTION.'

BY LETTER DATED AUGUST 5, 1966, NAVY ADVISED YOUR OFFICE THAT THE PRINTED PAMPHLETS DELIVERED WERE UNSATISFACTORY BECAUSE OF POOR WORKMANSHIP, CONTAINING, AMONG OTHER THINGS, INK SMUDGES AND POOR REGISTRATION. LATER THE NAVY ADVISED THAT 96,395 COPIES WERE UNACCEPTABLE AND REQUESTED THAT THE DEFECTIVE COPIES BE REPLACED. IN LETTER DATED SEPTEMBER 8, 1966, YOUR OFFICE ADVISED THE CONTRACTOR OF THE COMPLAINT AND STATED THAT 25 PERCENT OF THE AMOUNT OF THE CONTRACTOR'S INVOICE WOULD BE WITHHELD. THEREAFTER, THE NAVY VERBALLY WITHDREW ITS COMPLAINT AND YOUR OFFICE BY LETTER DATED SEPTEMBER 28, 1966, ADVISED THE CONTRACTOR OF THIS FACT AND MADE PAYMENT TO THE CONTRACTOR OF THE AMOUNT PREVIOUSLY WITHHELD.

ON OCTOBER 12, 1966, THE NAVY REOPENED ITS COMPLAINT WITH A REQUEST THAT THE 96,395 DEFECTIVE COPIES OF THE PAMPHLET BE REPLACED. THE CONTRACTOR CONTENDS THAT ONCE A COMPLAINT HAS BEEN REGISTERED AND THEREAFTER WITHDRAWN AND AN ORDER ACCEPTED, THE ORDERING AGENCY HAS NO RIGHT AFTER APPROXIMATELY 3 MONTHS HAVE ELAPSED, TO REINSTATE ITS ORIGINAL COMPLAINT AND REJECT THE ORDER. YOU STATE THAT THE NAVY HAS REFUSED TO ACCEPT THE PAMPHLETS AT A REDUCTION IN PRICE OFFERED BY THE CONTRACTOR AND IS INSISTING THAT THE REJECTED PORTION OF THE PAMPHLETS BE REPRINTED AT NO COST TO THE NAVY.

IN ORDER TO ASSIST YOU IN MAKING AN EQUITABLE ADJUSTMENT IN THE MATTER YOU REQUEST OUR DECISION AS TO WHETHER THE CONTRACTOR IS RELIEVED FROM LEGAL LIABILITY TO REPRINT THE ORDER AT ITS EXPENSE INASMUCH AS THE GOVERNMENT REINSTATED THE COMPLAINT AFTER IT HAD BEEN WITHDRAWN AND THE CONTRACTOR WAS PAID IN FULL.

UNDER THE TERMS OF ARTICLE 13 OF CONTRACT TERMS NO. 1, MADE A PART OF THE CONTRACT, THE INSPECTION AND FINAL ACCEPTANCE OF SUPPLIES ARE CONCLUSIVE EXCEPT AS REGARDS LATENT DEFECTS, FRAUD, OR SUCH GROSS MISTAKES AS AMOUNT TO FRAUD. THE POOR WORKMANSHIP OF WHICH THE NAVY COMPLAINS IS OBVIOUSLY NOT A LATENT DEFECT. IN VIEW THEREOF AND CONSIDERING THAT YOUR OFFICE, THE CONTRACTING AGENCY, ADVISED THE CONTRACTOR ON SEPTEMBER 28, 1966, THAT THE PAMPHLETS WERE ACCEPTABLE TO THE GOVERNMENT WE THINK IT MUST BE CONCLUDED THAT THE GOVERNMENT WAIVED THE DEVIATIONS FROM THE SPECIFICATIONS. CONSEQUENTLY, THE SUBSEQUENT ATTEMPTED REJECTION OF THE PAMPHLETS WOULD APPEAR TO BE IMPROPER. SEE 36 COMP. GEN. 5. CF. 37 COMP. GEN. 412. ACCORDINGLY, IT IS OUR VIEW THAT THE CONTRACTOR IS NOT LEGALLY OBLIGATED TO REPRINT THE ORDER AT ITS EXPENSE.

IT WOULD, OF COURSE, BE PROPER TO OBTAIN AN APPROPRIATE PRICE ADJUSTMENT FOR ACCEPTANCE OF THOSE PAMPHLETS WHICH WERE NOT STRICTLY IN ACCORD WITH THE CONTRACT SPECIFICATIONS.