B-133617, OCTOBER 14, 1957, 37 COMP. GEN. 239

B-133617: Oct 14, 1957

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WHICH WERE SUBSEQUENTLY RELAXED TO PERMIT ACCEPTANCE OF THE MODEL IS ULTIMATELY OFFERED. IS NOT ENTITLED ON THE BASIS OF THE ALLEGED IMPOSSIBILITY OF MEETING THE ORIGINAL WEIGHT LIMITATION TO AN AMOUNT GREATER THAN THE FIXED PRICE. WHERE BOTH PARTIES TO A FIXED-PRICE CONTRACT WERE AWARE. THAT A CONSIDERABLE AMOUNT OF EXPERIMENTAL WORK WAS NECESSARY IN ORDER TO PERFECT A MODEL COMPLYING WITH THE MINIMUM REQUIREMENT OF THE SPECIFICATIONS. 1957: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 23. REQUESTING REVIEW OF THE CLAIM WHICH WAS DISALLOWED BY US ON MARCH 14. ONE OF THE PRINCIPAL CONDITIONS OF THE CONTRACT WAS THAT THE SEAT WOULD NOT EXCEED 50 POUNDS IN WEIGHT. THE CONSIDERATION STIPULATED FOR THE ABOVE SERVICES WAS $19.

B-133617, OCTOBER 14, 1957, 37 COMP. GEN. 239

CONTRACTS - EXPERIMENT AND DEVELOPMENT WORK - FIXED PRICE - INCREASED COSTS A CONTRACTOR WHO, PURSUANT TO AN EXPERIMENTAL AND DEVELOPMENT UNDERTAKING, EXECUTED A NEGOTIATED FIXED-PRICE CONTRACT RATHER THAN A COST -REIMBURSABLE TYPE CONTRACT AFTER ASSURING THE CONTRACTING AGENCY THAT HE COULD MEET THE SPECIFICATION WEIGHT REQUIREMENTS, WHICH WERE SUBSEQUENTLY RELAXED TO PERMIT ACCEPTANCE OF THE MODEL IS ULTIMATELY OFFERED, IS NOT ENTITLED ON THE BASIS OF THE ALLEGED IMPOSSIBILITY OF MEETING THE ORIGINAL WEIGHT LIMITATION TO AN AMOUNT GREATER THAN THE FIXED PRICE. WHERE BOTH PARTIES TO A FIXED-PRICE CONTRACT WERE AWARE, PRIOR TO AWARD, THAT A CONSIDERABLE AMOUNT OF EXPERIMENTAL WORK WAS NECESSARY IN ORDER TO PERFECT A MODEL COMPLYING WITH THE MINIMUM REQUIREMENT OF THE SPECIFICATIONS, THE FACT THAT THE WEIGHT LIMITATION HAD TO BE SUBSEQUENTLY RELAXED TO PERMIT ACCEPTANCE OF THE MODEL ULTIMATELY OFFERED MAY NOT BE REGARDED AS MUTUAL MISTAKE OR MISAPPREHENSION OF FACT TO ENTITLE THE CONTRACTOR TO AN AMOUNT GREATER THAN THE PRICE.

TO WALTER F. PETTIT, OCTOBER 14, 1957:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 23, 1957, TRANSMITTING A SUPPLEMENTAL BRIEF IN SUPPORT OF THE CLAIM OF YOUR CLIENT, CENTURY ENGINEERS, INC., FOR $61,902.24, PLUS 10 PERCENT PROFIT, REPRESENTING EXTRA OR ADDITIONAL COSTS INCURRED IN THE PERFORMANCE OF CONTRACT NOAS 53- 012-F, DATED O*CTOBER 23, 1952, AND REQUESTING REVIEW OF THE CLAIM WHICH WAS DISALLOWED BY US ON MARCH 14, 1957.

CONTRACT NOAS 53-012-F PROVIDED FOR THE DESIGN, DEVELOPMENT, MANUFACTURE, TEST AND FURNISHING OF TWO EXPERIMENTAL MODEL LONG-RANGE PILOT SEATS, AND FOR THE MANUFACTURE AND DELIVERY BY THE CONTRACTOR OF TWO PREPRODUCTION MODELS OF SUCH SEATS. BY ITS TERMS, CENTURY ENGINEERS, INC., FURTHER AGREED TO FURNISH THE GOVERNMENT WITH CERTAIN PERTINENT ENGINEERING REPORTS, ALONG WITH A COMPLETE SET OF VANDYKE MANUFACTURING DRAWINGS FOR THE PREPRODUCTION SEATS, TO BE MADE, WITH CERTAIN NOTED MODIFICATIONS, IN ACCORDANCE WITH BUREAU OF AERONAUTICS EXPERIMENTAL AND DEVELOPMENT SPECIFICATION XAE-69, ISSUED 21 AUGUST 1951. ONE OF THE PRINCIPAL CONDITIONS OF THE CONTRACT WAS THAT THE SEAT WOULD NOT EXCEED 50 POUNDS IN WEIGHT. THE CONSIDERATION STIPULATED FOR THE ABOVE SERVICES WAS $19,866.90, WHICH AMOUNT SUBSEQUENTLY WAS REVISED TO COVER AUTHORIZED CHANGES IN THE SCOPE OF THE CONTRACT WORK.

THE CONTRACTOR, YOUR CLIENT, FAILED TO MEET THE 50-POUND WEIGHT LIMITATION ESTABLISHED BY THE CONTRACT, ITS NEAREST APPROACH THERETO BEING AN EXPERIMENTAL SEAT WEIGHING 64 1/2 POUNDS, WHICH EVENTUALLY WAS APPROVED BY THE BUREAU OF AERONAUTICS, DEPARTMENT OF THE NAVY, ON MARCH 29, 1954. AFTER THE CONTINUANCE OF STILL FURTHER TESTS, THE BUREAU OF AERONAUTICS ON FEBRUARY 17, 1955, DETERMINED THAT THE CONTRACTOR THEN HAD ACHIEVED HIS "OPTIMUM POINT" IN THE DESIGN OF THIS SEAT, AND THEREUPON AUTHORIZED HIM TO FABRICATE THE TWO PREPRODUCTION MODELS.

ON MARCH 17, 1955, THE CONTRACTOR FORMALLY REQUESTED AN AMENDMENT TO THE CONTRACT TO PROVIDE FOR THE PAYMENT TO HIM OF ADDITIONAL PERFORMANCE COSTS, THEN ESTIMATED AT $56,388.88. THE PRINCIPAL BASIS FOR ITS REQUEST WAS THAT IT WAS "IMPOSSIBLE TO DEVELOP SUCH A SEAT WITHIN THE PERFORMANCE SPECIFICATION AND CONFIGURATIONS REQUIRED BY THE CONTRACT.' THESE CLAIMED EXTRA COSTS SUBSEQUENTLY WERE REDUCED BY HIM TO $49,778.86.

THEREAFTER THE BUREAU OF AERONAUTICS MADE A COST ANALYSIS OF THE JOB WHICH INDICATED THAT A CLAIM FOR $40,000 ADDITIONAL MIGHT BE JUSTIFIED AS THE BASIS FOR A POSSIBLE AMENDMENT TO THE CONTRACT UNDER TITLE II OF THE FIRST WAR POWERS ACT, 50 U.S.C. 611, AND, ACCORDINGLY, A PROPOSED AMENDMENT FOR $40,000 WAS CLEARED WITH THE CONTRACTOR, AND THEN SUBMITTED TO THE CONTRACTING OFFICER FOR FINAL EXECUTION. THIS OFFICIAL, HOWEVER, REFUSED TO SIGN THE PROPOSED AMENDMENT ON THE GROUNDS THAT (1) THE NATIONAL DEFENSE WOULD NOT BE FACILITATED BY ALLOWING THE INSTANT CLAIM, (2) THERE WAS NO SCARCITY OF THE TYPE OF SERVICES COVERED BY THIS CONTRACT, AND (3) THE FEDERAL PROCUREMENT PROGRAM WOULD NOT BE EXPEDITED OWING TO THE FACT THAT THE PILOT SEAT DEVELOPED BY OUR CLIENT WOULD NOT BE PLACED IN PRODUCTION.

IT IS YOUR CONTENTION, IN SUBSTANCE, THAT (1) THE 50-POUND WEIGHT LIMITATION ESTABLISHED BY THE CONTRACT AND SPECIFICATIONS FOR THE TYPE OF LONG-RANGE PILOT SEAT REQUIRED WAS IMPOSSIBLE FOR ACCOMPLISHMENT; (2) THE SPECIFICATIONS, ALLEGEDLY BEING UNWORKABLE, ARE THEREFORE DEFECTIVE, AND (3) THE PRESENT CONTRACT WAS ENTERED INTO UNDER A MUTUAL MISTAKE OF FACT, BOTH PARTIES BELIEVING THAT A PILOT SEAT OF THIS KIND COULD BE MANUFACTURED WITHIN THE WEIGHT LIMITATION SPECIFIED. AS INDICATIVE OF THE GOVERNMENT'S ALLEGED ERROR IN PREPARING THE PERTINENT SPECIFICATIONS, YOU REFER TO CERTAIN AUTHORIZED AMENDMENTS THERETO AFFECTING THE GENERAL DESIGN AND MANUFACTURING PLANS FOR THE SEAT, AND POINT OUT THAT A PILOT SEAT WEIGHING 64 1/2 POUNDS EVENTUALLY WAS ACCEPTED BY THE GOVERNMENT AS COMPLYING WITH THE PRINCIPAL REQUIREMENTS OF THE SPECIFICATIONS.

CONCERNING YOUR CONTENTIONS, GENERALLY, OUR RECORDS SHOW THAT UNDER DATE OF SEPTEMBER 12, 1951, THE BUREAU OF AERONAUTICS SOLICITED FIXED PRICED BIDS FROM 13 DIFFERENT SOURCES ON THE DEVELOPMENT OF A PILOT'S SEAT TO BE MADE IN ACCORDANCE WITH THE BUREAU'S " EXPERIMENTAL AND DEVELOPMENTAL" SPECIFICATION XAE-69, WHICH FIXED A MAXIMUM WEIGHT LIMITATION OF 50 POUNDS. ON OCTOBER 12, 1951, YOUR CLIENT, CENTURY ENGINEERS, INC., SUBMITTED A PROPOSAL OF $21,887.90, THE FIFTH HIGHEST AMONG EIGHT BIDDERS, WHICH WAS ACCOMPANIED BY A LETTER OF THAT DATE STATING,"FROM OUR EXPERIENCE IN THE DESIGN OF PILOT SEATS WE ARE CONFIDENT THAT THE WEIGHT REQUIREMENT OF FIFTY POUNDS CAN BE MET.' ( ITALICS SUPPLIED.) THE TECHNICAL SECTION OF THE BUREAU OF AERONAUTICS, AT THE TIME, RECOMMENDED ACCEPTANCE OF CENTURY'S BID FOR THE REASON THAT ITS ENGINEERING PROPOSAL WAS CONSIDERED THE MOST PROMISING OF THE EIGHT RECEIVED. DURING AUGUST 1952 YOUR CLIENT SUBMITTED A NEW BID PRICE OF $27,980.55 FOR THE JOB. DURING THE COURSE OF SUBSEQUENT NEOGITATIONS, CENTURY WAS OFFERED A COST- REIMBURSEMENT TYPE OF CONTRACT, OBVIOUSLY TO PROTECT IT IN AN EXPERIMENTAL UNDERTAKING OF THIS CHARACTER, WHICH IT FLATLY REJECTED. THEREAFTER, NEGOTIATED FIXED PRICE CONTRACT NOAS 53-012-F, FOR $19,866.90, WAS ENTERED INTO WITH THE COMPANY ON OCTOBER 23, 1952, CALLING FOR THE DESIGN, DEVELOPMENT, MANUFACTURE AND TEST OF THE PILOT SEAT DESCRIBED.

FROM THE FOREGOING, IT IS PLAINLY EVIDENT THAT THE CONTRACTOR WAS FULLY AWARE OF THE EXPERIMENTAL NATURE OF THE WORK COVERED BY THE CONTRACT AND SPECIFICATIONS, AND THAT MANY MONTHS PRIOR TO THE FINAL AWARD MADE ON OCTOBER 23, 1952, YOUR CLIENT WAS GIVEN FULL OPPORTUNITY TO ACQUAINT AND FAMILIARIZE ITSELF WITH THE SPECIFICATION REQUIREMENTS FOR THIS SEAT WHICH WERE ESSENTIALLY PERFORMANCE SPECIFICATIONS, WHICH LEFT THE DETAILS OF DESIGN, CONSTRUCTION, AND MATERIALS LARGELY TO THE CONTRACTOR. DESPITE THE ALLEGED IMPOSSIBILITY OF COMPLYING WITH THE SPECIFICATION REQUIREMENT AS TO WEIGHT, THE RECORD CONTAINS INCONTROVERTIBLE PROOF THAT THE CONTRACTOR WILLINGLY ASSUMED ITS CONTRACTUAL OBLIGATIONS ON A FIXED-PRICE BASIS, AFTER ASSURING THE CONTRACTING AGENCY THAT IT WAS "CONFIDENT" IT COULD MEET THE WEIGHT REQUIREMENT SPECIFIED. IN THE CIRCUMSTANCES, SINCE CENTURY UNQUALIFIEDLY REJECTED A COST-REIMBURSEMENT TYPE OF CONTRACT WHICH HAD PREVIOUSLY BEEN OFFERED IT--- AND WHICH WOULD HAVE BEEN MORE APPROPRIATE--- FOR THIS CONCEDEDLY EXPERIMENTAL UNDERTAKING, AND SINCE THE WEIGHT REQUIREMENT WAS RELAXED TO PERMIT THE ACCEPTANCE OF THE SEAT AS ULTIMATELY OFFERED AND PAYMENT THEREFOR WAS MADE AT THE CONTRACT PRICE, THE ALLEGED IMPOSSIBILITY OF MEETING THE ORIGINAL WEIGHT LIMITATION APPEARS TO FURNISH NO SOUND BASIS FOR ALLOWANCE OF A GREATER PRICE.

FURTHERMORE, THE RECORD SHOWS THAT BOTH PARTIES TO THIS CONTRACT WERE FULLY AWARE, PRIOR TO THE AWARD, THAT A CONSIDERABLE AMOUNT OF EXPERIMENTAL WORK WOULD BE REQUIRED IN ORDER TO PERFECT A SATISFACTORY PILOT SEAT COMPLYING IN ALL MATERIAL RESPECTS WITH THE MINIMUM REQUIREMENTS OF THE SPECIFICATIONS. HENCE, IT CANNOT PROPERLY BE SAID THAT THE PARTIES WERE LABORING UNDER A MUTUAL MISTAKE OR MISAPPREHENSION OF FACT AT THE TIME THE INSTANT CONTRACT WAS AWARDED BY ASSUMING THAT A PILOT SEAT COMPLYING WITH THE SPECIFICATIONS COULD BE MANUFACTURED WITHIN THE WEIGHT LIMITATION SPECIFIED. THIS OBVIOUSLY WAS AN EXPERIMENTAL UNDERTAKING, HOWEVER DIFFICULT, WHICH THE CONTRACTOR VOLUNTARILY AND READILY ASSUMED, AT A FIXED PRICE WHICH, AT THE CONCLUSION OF ITS EFFORTS, WAS CONSIDERED AS EARNED EVEN THOUGH THE ORIGINAL OBJECTIVE WAS NOT FULLY ACHIEVED.

UNLIKE THE COURT AND OFFICE DECISIONS CITED IN YOUR BRIEFS, THE PRESENT SPECIFICATIONS DESCRIBED WORK OR SERVICES WHICH WERE PLAINLY DESCRIBED AS " EXPERIMENTAL AND DEVELOPMENTAL" IN CHARACTER. SO, EVEN CONCEDING THAT PREVIOUS DESIGN AND MANUFACTURING PROCESSES HAD FAILED TO PRODUCE A LONG- RANGE PILOT SEAT AS SPECIFIED, WEIGHING ONLY 50 POUNDS OR LESS THIS WAS A FACT WITHIN THE KNOWLEDGE OF THE PARTIES AND WAS ONE OF THE CONSIDERATIONS LEADING TO THE EXECUTION OF THE CONTRACT BY SUBMISSION OF PROPOSALS IN RESPONSE TO THE GOVERNMENT'S INVITATIONS FOR THIS PRODUCT, CENTURY OFFERED TO PRODUCE, AND ALSO, TO SATISFACTORILY TEST A PILOT SEAT WHICH WOULD MEET THE PERFORMANCE REQUIREMENTS SET OUT IN SPECIFICATIONS, AND WOULD WEIGH NOT MORE THAN FIFTY POUNDS. THE TERMS AND NATURE OF THE GOVERNMENT'S REQUEST FOR PROPOSALS CLEARLY NEGATIVE ANY REPRESENTATIONS BY IT THAT THE DESIRED OBJECTIVE COULD CERTAINLY BE MET, AND ALL RISK OF IMPOSSIBILITY WAS, WE BELIEVE, ASSUMED BY THE CONTRACTOR. WHERE, AS IN THIS CASE, THE RECORD UNEQUIVOCALLY SHOWS THE PROMISOR VOLUNTARILY ASSUMED THE RISK OF IMPOSSIBILITY OF PERFORMANCE, THERE WOULD BE SUBSTANTIAL GROUNDS TO HOLD THAT NO PAYMENT HAD BEEN EARNED; WHERE FULL PAYMENT HAS BEEN MADE ON THE BASIS OF MODIFICATION OF THE REQUIREMENTS TO CONFORM TO THE RESULT ACTUALLY ACHIEVED, WE CAN SEE NO PROPER GROUND FOR PAYMENT OF A GREATER AMOUNT BECAUSE THE DIFFICULTIES ENCOUNTERED WERE GREATER THAN ANTICIPATED.