B-171616, JAN 29, 1971, 50 COMP GEN 534

B-171616: Jan 29, 1971

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NOTWITHSTANDING THE WORD "BOUNDARY" WAS MISSPELLED AS "BOUNDRY. " ESTOPS THE AGENCY FROM DENYING PAYMENT TO THE CONTRACTOR ON THE BASIS THE BAGS WERE DEFECTIVE WITHIN THE CONTEMPLATION OF PARAGRAPH 5(D) OF STANDARD FORM 32. THE GOVERNMENT'S ACCEPTANCE WAS NOT CONCLUSIVE. SINCE THE INSPECTION AND APPROVAL OF THE PRESS PROOFS OF THE ARTWORK WAS SEPARATE FROM THE INSPECTION AND ACCEPTANCE INTENDED UNDER PARAGRAPH 5(D) CONCERNED WITH A LATENT DEFECT THAT CANNOT BE DISCOVERED BY INSPECTION. WHETHER OR NOT THE OFFER OF THE CONTRACTOR TO FURNISH LABELS WITH THE WORD "BOUNDARY" CORRECTLY SPELLED FOR ATTACHMENT TO THE BAGS IS ACCEPTED DOES NOT AFFECT THE AGENCY'S OBLIGATION FOR THE CONTRACT PRICE.

B-171616, JAN 29, 1971, 50 COMP GEN 534

CONTRACTS - DELIVERIES - DEFECTIVE SUPPLIES, ETC. - GOVERNMENT INSPECTION PRIOR TO DELIVERY THE APPROVAL BY THE CONTRACTING AGENCY OF A PRESS PROOF OF THE ARTWORK FOR PLASTIC LITTER BAGS SUBMITTED BY THE CONTRACTOR IN ACCORDANCE WITH THE SPECIFICATION REQUIREMENTS, NOTWITHSTANDING THE WORD "BOUNDARY" WAS MISSPELLED AS "BOUNDRY," ESTOPS THE AGENCY FROM DENYING PAYMENT TO THE CONTRACTOR ON THE BASIS THE BAGS WERE DEFECTIVE WITHIN THE CONTEMPLATION OF PARAGRAPH 5(D) OF STANDARD FORM 32; AND, THEREFORE, THE GOVERNMENT'S ACCEPTANCE WAS NOT CONCLUSIVE, SINCE THE INSPECTION AND APPROVAL OF THE PRESS PROOFS OF THE ARTWORK WAS SEPARATE FROM THE INSPECTION AND ACCEPTANCE INTENDED UNDER PARAGRAPH 5(D) CONCERNED WITH A LATENT DEFECT THAT CANNOT BE DISCOVERED BY INSPECTION. WHETHER OR NOT THE OFFER OF THE CONTRACTOR TO FURNISH LABELS WITH THE WORD "BOUNDARY" CORRECTLY SPELLED FOR ATTACHMENT TO THE BAGS IS ACCEPTED DOES NOT AFFECT THE AGENCY'S OBLIGATION FOR THE CONTRACT PRICE. APPROPRIATIONS - AVAILABILITY - EXPENSES INCIDENT TO SPECIFIC PURPOSES - NECESSARY EXPENSES THE PROPRIETY OF THE FOREST SERVICE OF THE DEPARTMENT OF AGRICULTURE TO USE THE APPROPRIATION ENTITLED "FOREST PROTECTION AND UTILIZATION" FOR THE PAYMENT OF PLASTIC LITTER BAGS IS FOR DETERMINATION ON THE BASIS OF WHETHER THE CONTRACT INVOLVED IS REASONABLY NECESSARY OR INCIDENT TO THE EXECUTION OF THE PROGRAM OR ACTIVITY AUTHORIZED BY THE APPROPRIATION. NO OTHER APPROPRIATION PROVIDES MORE SPECIFICALLY FOR ITEMS SUCH AS LITTER BAGS, THE APPROPRIATION MAY BE USED TO SATISFY THE CONTRACT.

TO GEORGE W. WEBSTER, DEPARTMENT OF AGRICULTURE, JANUARY 29, 1971:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 16, 1970, REPLY NO. 6540, REQUESTING AN ADVANCE DECISION CONCERNING THE PROPRIETY OF A POSSIBLE PAYMENT PURSUANT TO FOREST SERVICE CONTRACT NO. 09-1066.

THE CONTRACT WAS CONSUMMATED WITH THE BEMIS COMPANY, INC., ON JANUARY 19, 1970, IN THE AMOUNT OF $2,000 FOR THE SUPPLY OF 50,000 PLASTIC LITTER BAGS TO THE SUPERIOR NATIONAL FOREST, DULUTH, MINNESOTA. THE CONTRACTING OFFICER CONTENDS THAT BEMIS SHOULD BE REFUSED PAYMENT FOR DELIVERING BAGS WHICH WERE DEFECTIVE IN THAT THE ARTWORK EMBODIED A MISSPELLED WORD (BOUNDRY INSTEAD OF BOUNDARY) ON ONE SIDE OF THE BAGS.

INCLUDED IN THE SOLICITATION WAS A SHEET OF SUPPLEMENTAL INSTRUCTIONS AND CONDITIONS TO SF-33A WHICH REQUIRED:

3. PROOF

BEFORE FINAL PRINTING IT IS REQUIRED THAT A PRESS PROOF BE SENT AND APPROVAL RECEIVED TO PROCEED WITH FINAL PRINTING.

THIS SAME CLAUSE WAS REPEATED IN PART B, TECHNICAL SPECIFICATIONS, ON A SPECIFICATION SHEET WHICH WAS APPENDED TO THE CONTRACT.

PURSUANT TO THESE REQUIREMENTS, A MR. MANION OF THE BEMIS COMPANY SUBMITTED THE FINAL ARTWORK LAYOUTS ON FEBRUARY 2; AND THEY WERE INSPECTED, APPROVED, AND ACCEPTED BY ROBERT H. MCHUGH, AS EVIDENCED BY HIS LETTER OF FEBRUARY 3, 1970.

RELYING UPON THIS APPROVAL OF THE PHOTOGRAPHIC PLATES OF THE ARTWORK, BEMIS PRINTED AND DELIVERED THE BAGS ON FEBRUARY 25, 1970, WHICH, FOREST SERVICE ADMITS, MET SPECIFICATIONS IN ALL RESPECTS EXCEPT FOR THE MISSPELLED WORD.

ON MARCH 6, BEMIS WAS INFORMED THAT THE BAGS WERE UNACCEPTABLE DUE TO SAID ERROR, AFTER WHICH THE GOVERNMENT ENCUMBERED ITSELF IN THE AMOUNT OF $2,000 BY PLACING A SEPARATE ORDER FOR 50,000 LITTER BAGS WITH THE CORRECTED PRINTING.

ATTENTION IS DIRECTED TO STANDARD FORM 32 OF THE GENERAL SERVICES ADMINISTRATION, WHICH WAS INCLUDED IN THE CONTRACT. PARAGRAPH 5(D), UNDER THE SECTION ENTITLED "INSPECTION" PROVIDES:

THE INSPECTION AND TEST BY THE GOVERNMENT OF ANY SUPPLIES OR LOTS THEREOF DOES NOT RELIEVE THE CONTRACTOR FROM ANY RESPONSIBILITY REGARDING DEFECTS OR OTHER FAILURES TO MEET THE CONTRACT REQUIREMENTS WHICH MAY BE DISCOVERED PRIOR TO ACCEPTANCE. EXCEPT AS OTHERWISE PROVIDED IN THIS CONTRACT, ACCEPTANCE SHALL BE CONCLUSIVE EXCEPT AS REGARDS LATENT DEFECTS, FRAUD, OR SUCH GROSS MISTAKES AS AMOUNT TO FRAUD.

IN CONSTRUING PARAGRAPH 5(D), OUR OFFICE HAS CONSISTENTLY DECLARED THAT IN THE ABSENCE OF AN ALLEGATION OF FRAUD, ACCEPTANCE BY THE GOVERNMENT IS CONCLUSIVE UNLESS THE DEFECT MAY BE PROPERLY DESCRIBED AS LATENT. LATENT DEFECT IS ONE WHICH COULD NOT HAVE BEEN DISCOVERED BY INSPECTION. WASHBURN STORAGE CO. V GENERAL MOTORS CORP., 83 S.E. 2D 26, 29." 146714, APRIL 3, 1962.

INCLUDED IN THE INSTANT SOLICITATION WERE FACSIMILES OF THE ARTWORK TO BE PERFORMED ON EACH SIDE OF THE LITTER BAGS. THE WORD "BOUNDARY," WHICH WAS MISSPELLED ON THE APPROVED PHOTOGRAPHIC PLATES, APPEARS IN LARGE CAPITAL LETTERS SQUARELY IN THE CENTER OF THE LAYOUT IN SUCH A SALIENT FASHION THAT THE ERROR SHOULD BE READILY APPARENT. AS SUCH, THERE REMAINS NO BASIS WHATSOEVER FOR DOUBT THAT THIS WAS ANY BUT THE MOST PATENT OF DEFECTS. WHILE PARAGRAPH 5(D) IS GENERALLY CONSTRUED TO RELATE TO INSPECTION AND ACCEPTANCE OF THE END ITEMS DELIVERED UNDER THE CONTRACT, IT IS OUR OPINION THAT WHERE, AS IN THE INSTANT CASE, ARTWORK IS TO BE INCORPORATED INTO THE END ITEM AND THE CONTRACT REQUIRES THE CONTRACTOR TO SUBMIT PRESS PROOFS FOR INSPECTION AND APPROVAL PRIOR TO PROCEEDING WITH MANUFACTURE AND DELIVERY OF THE END ITEMS, SUCH INSPECTION AND APPROVAL MUST BE VIEWED AS A SEPARATE INSPECTION AND ACCEPTANCE OF THE ARTWORK UNDER PARAGRAPH 5(D). IT FOLLOWS THAT INSPECTION AND APPROVAL OF THE PRESS PROOFS OPERATED AS ACCEPTANCE OF THE PATENT ERROR CONTAINED THEREIN, AND THE GOVERNMENT IS NOW ESTOPPED TO RENOUNCE SUCH ACCEPTANCE. IN THIS CONNECTION, SEE 36 COMP. GEN. 5, 7 (1956), WHERE WE CONCLUDED:

*** THERE SEEMS NO DOUBT THAT THE MANUFACTURER MATERIALLY CHANGED ITS POSITION TO ITS DISADVANTAGE WHEN THE FIRST LOTS OF HOOKS AND AXES WERE INSPECTED, ACCEPTED AND RELEASED FOR SHIPMENT.

IN THE CIRCUMSTANCES, AND CONSIDERING THE FURTHER FACT THAT THE REPORTED DEFECTS WERE NOT LATENT DEFECTS, WE ARE OF THE OPINION THAT THE GOVERNMENT HAS NO VALID CLAIM *** .

WHILE NOT LEGALLY LIABLE TO THE GOVERNMENT FOR THE DEFECT, THE RECORD INDICATES THAT BEMIS NEVERTHELESS MANIFESTED GOOD FAITH IN OBLIGATING ITSELF IN THE ADDITIONAL AMOUNT OF $490 BY MANUFACTURING 50,000 PRESSURE- SENSITIVE LABELS WITH THE WORD "BOUNDARY" CORRECTLY SPELLED, AND NOW OFFERS TO SUPPLY SUCH LABELS TO THE FOREST SERVICE AT NO ADDITIONAL COST. WHETHER THE FOREST SERVICE SHOULD ACCEPT DELIVERY OF THE BAGS AND CORRECTIVE LABELS IS A MATTER FOR ADMINISTRATIVE DETERMINATION. HOWEVER, IRRESPECTIVE OF WHETHER DELIVERY IS ACCEPTED OR DECLINED, BASED UPON THE PRESENT RECORD IT IS OUR OPINION THE FOREST SERVICE IS OBLIGATED TO BEMIS FOR THE CONTRACT PRICE OF $2,000.

YOU HAVE ALSO REQUESTED OUR OPINION CONCERNING THE PROPRIETY OF USING THE APPROPRIATION ENTITLED "FOREST PROTECTION AND UTILIZATION" FOR SUCH A PAYMENT.

THE TEST WHICH OUR OFFICE HAS APPLIED IS WHETHER THE CONTRACT INVOLVED IS REASONABLY NECESSARY OR INCIDENT TO THE EXECUTION OF THE PROGRAM OR ACTIVITY AUTHORIZED BY THE APPROPRIATION. 29 COMP. GEN. 419 (1950). THE LANGUAGE OF THE APPROPRIATION ACT PROVIDES THAT THE ENTITLED APPROPRIATION'S PURPOSE IS:

FOR NECESSARY EXPENSES OF THE FOREST SERVICE, NOT OTHERWISE PROVIDED FOR INCLUDING THE ADMINISTRATION, IMPROVEMENT, DEVELOPMENT AND MANAGEMENT OF LANDS UNDER FOREST SERVICE ADMINISTRATION, FIGHTING AND PREVENTING FOREST FIRES ON OR THREATENING SUCH LANDS *** . P.L. 91 98, 91ST CONG. H.R. 12781, OCTOBER 29, 1969.

IF THERE IS NO OTHER APPROPRIATION PROVIDING MORE SPECIFICALLY FOR ITEMS SUCH AS LITTER BAGS, OUR OFFICE WILL NOT OBJECT TO THE USE OF THIS APPROPRIATION TO SATISFY THE CONTRACT, SINCE THE LITTER BAGS WOULD APPEAR TO BE REASONABLY NECESSARY OR INCIDENT TO THE ACTIVITIES DESCRIBED ABOVE.