B-145670, JUN. 13, 1961

B-145670: Jun 13, 1961

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THE FACTS PERTINENT TO THE MATTER REPORTED HERE MAY BE SUMMARIZED AS FOLLOWS: INVITATION FOR BIDS NO. 451-58-146 WAS ISSUED ON DECEMBER 26. THESE CABLES ARE SUBJECTED TO RATHER SEVERE TEMPERATURE AND MOISTURE CONDITIONS. THEIR USEFUL LIFE WAS CONSIDERED TOO SHORT. A BETTER PRODUCT WAS DESIRED AND IT WAS UNDERSTOOD BY ENGINEERS AT THE HANFORD OPERATIONS OFFICE THAT NEW SILICONE RUBBERS EXCELLED WHEN SUBJECTED TO HEAT AND WATER. RIGID TEST REQUIREMENT AT VARIOUS STAGES OF THE CABLE MANUFACTURING PROCESS WERE SET FORTH. THE CUSTOMER'S REQUIREMENTS ARE SO STRINGENT THAT COMMERCIAL CABLE OF THE DESIRED CHARACTERISTICS IS NOT AVAILABLE. "ACCELERATED TESTS WILL BE PERFORMED BY THE CUSTOMER ON THE FIRST 3 PERCENT OF THE ORDER AND HE WILL DETERMINE IF THE ORDER IS TO BE COMPLETED.

B-145670, JUN. 13, 1961

TO MR. REX L. RAY, AUTHORIZED CERTIFYING OFFICER, ATOMIC ENERGY COMMISSION:

YOUR LETTER OF APRIL 7, 1961 (REF. F:RLR), REQUESTS A DECISION ON THE PROPRIETY OF PAYMENT OF A VOUCHER IN THE AMOUNT OF $13,088.77 WITHHELD FROM SETTLEMENT OF CONTRACT NO. AT (45-1/-1080 WITH ROCKBESTOS PRODUCTS CORPORATION, PARTIALLY CANCELLED FOR DEFAULT.

THE FACTS PERTINENT TO THE MATTER REPORTED HERE MAY BE SUMMARIZED AS FOLLOWS:

INVITATION FOR BIDS NO. 451-58-146 WAS ISSUED ON DECEMBER 26, 1957, BY THE ATOMIC ENERGY COMMISSION, HANFORD OPERATIONS OFFICE, RICHLAND, WASHINGTON. THE INVITATION CALLED FOR 700,000 FEET OF RESISTANCE TEMPERATURE LEAD CABLE IN ACCORDANCE WITH SPECIFICATION HWS-6244, REV. 1, DECEMBER 9, 1957, PURSUANT TO A NEED WHICH AROSE DURING 1957 WHEN IT BECAME NECESSARY TO REPLACE RESISTANCE TEMPERATURE DETECTOR LEAD CABLES IN THE 100-AREA REACTORS. THESE CABLES ARE SUBJECTED TO RATHER SEVERE TEMPERATURE AND MOISTURE CONDITIONS, AND THEIR USEFUL LIFE WAS CONSIDERED TOO SHORT. A BETTER PRODUCT WAS DESIRED AND IT WAS UNDERSTOOD BY ENGINEERS AT THE HANFORD OPERATIONS OFFICE THAT NEW SILICONE RUBBERS EXCELLED WHEN SUBJECTED TO HEAT AND WATER. AS A RESULT, THE GENERAL ELECTRIC COMPANY, HANFORD ATOMIC PRODUCTS OPERATION (GE, HAPO) PREPARED SPECIFICATION HWS-6244, REV. 1,"RESISTANCE TEMPERATURE DETECTOR LEAD CABLE," DATED DECEMBER 9, 1957, TO BE USED FOR THE PROCUREMENT. THE SPECIFICATION PERMITTED THE USE OF EITHER DOW-CORNING SILASTIC 916 OR GE SILICONE SE555 AS MATERIAL INSULATING THE CABLE. RIGID TEST REQUIREMENT AT VARIOUS STAGES OF THE CABLE MANUFACTURING PROCESS WERE SET FORTH. THIS RESPECT THE SPECIFICATIONS STATED THAT---

"TEST CONDITIONS

"NORMALLY, TESTS WOULD BE MADE OF COMMERCIALLY AVAILABLE CABLE. HOWEVER, THE CUSTOMER'S REQUIREMENTS ARE SO STRINGENT THAT COMMERCIAL CABLE OF THE DESIRED CHARACTERISTICS IS NOT AVAILABLE.

"ACCELERATED TESTS WILL BE PERFORMED BY THE CUSTOMER ON THE FIRST 3 PERCENT OF THE ORDER AND HE WILL DETERMINE IF THE ORDER IS TO BE COMPLETED. THE ACCELERATED TESTS WILL INCLUDE:"

BIDS WERE OPENED ON JANUARY 13, 1958, AND THE LOW BID AS TO PRICE WAS SUBMITTED BY GENERAL ELECTRIC COMPANY AT $0.16 PER FOOT, FOR A TOTAL OF $112,000. HOWEVER, THAT BID WAS CONSIDERED NONRESPONSIVE BECAUSE THE BID WAS QUALIFIED BY THE STATEMENT THAT THE BIDDER WOULD NOT GUARANTEE ITS CABLE TO BE FREE ON PIN-HOLES, CRACKS, OR THE FINAL FILM TO BE ROUGH AND UNBROKEN. AS REQUIRED BY THE SPECIFICATIONS. THE SECOND LOW BID WAS SUBMITTED BY COLLYER INSULATED WIRE COMPANY AT $0.19 PER FOOT (TOTAL OF $133,000) BUT THAT BID WAS CONSIDERED NONRESPONSIVE BECAUSE COLLYER OFFERED A FINAL DELIVERY ABOUT 12 WEEKS BEYOND THE DELIVERY TIME REQUIRED BY THE INVITATION. THE INVITATION SPECIFIED 10,000 FEET OF WIRE FOR TEST PURPOSES BY FEBRUARY 20, 1958, THEN DELIVERY AS FOLLOWS:

"100,00 FEET WITHIN 1 WEEK AFTER AUTHORIZATION TO PROCEED WITH FINAL MANUFACTURE AND 100,000 FEET EACH WEEK THEREAFTER UNTIL 400,000 FEET HAS BEEN DELIVERED AND THE BALANCE OF ORDER TO BE DELIVERED WITHIN THE NEXT 45 DAYS.'

ROCKBESTOS PRODUCTS CORPORATION WAS THIRD LOW BIDDER ON A BID OF $0.206 PER FOOT, OR A TOTAL OF $144,200. ITS BID WAS CONSIDERED TO BE RESPONSIVE AND, ON JANUARY 20, 1958, IT RECEIVED AWARD OF CONTRACT NO. AT (45-1/- 1080, FOR 700,000 FEET OF CABLE, AS SPECIFIED, AT A PRICE OF $144,200.

ON JANUARY 31, 1958, AN ENGINEER FROM GE, HAPO (THE CUSTOMER) VISITED THE CONTRACTOR'S PLANT FOR PURPOSES OF DISCUSSING THE SPECIFICATION REQUIREMENTS, AND ON FEBRUARY 3, 1958, DISCUSSIONS WERE HELD BETWEEN THE PARTIES AS TO METHODS OF INSPECTING THE CABLE. AS A RESULT OF THE FEBRUARY 3 DISCUSSIONS, A "GUIDE FOR INSPECTION FOR RESISTANCE TEMPERATURE DETECTOR LEAD CABLE" DATED FEBRUARY 17, 1958, WAS ISSUED. THE GUIDE, COMPRISING THREE PAGES, SPECIFIED REQUIREMENTS FOR FABRICATING AND TESTING OF THE CABLE. A TELETYPE OF FEBRUARY 17, 1958, FROM AEC, HANFORD FOR ROCKBESTOS REQUESTED THAT THE 10,000 FEET OF CABLE FOR SHIPMENT BY FEBRUARY 20, 1958, WERE TO CONSIST OF 5,000 FEET OF CABLE INSULATED WITH GE SILICONE SE555 AND 5,000 FEET INSULATED WITH DOW CORNING SILASTIC 916, RATHER THAN 10,000 FEET OF EITHER. AN INSPECTOR'S REPORT (HAPO) DATED FEBRUARY 20 INDICATES THAT ROCKBESTOS WAS HAVING DIFFICULTY IN FABRICATING THE CABLE BUT IT WAS EXPECTED THAT THE CONTRACTOR WOULD HAVE SOME CABLE READY FOR INSPECTION BY FEBRUARY 25. A REPORT ISSUED BY HAPO DATED FEBRUARY 28 STATES THAT ON EXAMINATION OF 100 FEET OF INSULATED CONDUCTOR PROVIDED BY ROCKBESTOS ON FEBRUARY 24, IT WAS FOUND THAT THE SAMPLE WAS UNSATISFACTORY.

BECAUSE OF EXPERIENCE SO FAR GAINED, IT WAS AGREED TO ISSUE A REVISED GUIDE FOR INSPECTION, DATED MARCH 6, 1958, WHICH SUPERSEDED THE GUIDE OF FEBRUARY 17. THIS LATER GUIDE CHANGED THE METHODS OF INSPECTION IN SEVERAL RESPECTS. IT WAS THEN EXPECTED THAT THE CONTRACTOR WOULD HAVE CABLE READY FOR SHIPMENT IN A FEW DAYS. ON MARCH 13, 1958, APPROXIMATELY 650 FEET OF GE SE555 CABLE WAS RECEIVED AT HANFORD FOR TESTING. ON MARCH 20, 1958, HAPO NOTIFIED ROCKBESTOS THAT THE GE SE555 CABLE HAD FAILED TESTING. BY TELEGRAM RECEIVED AT THE HANFORD OPERATIONS OFFICE ON MARCH 27, 1958, THE CONTRACTOR STATED THAT IT HAD ENCOUNTERED DIFFICULTIES IN MANUFACTURING WHICH COULD NOT BE CONTEMPLATED BEFOREHAND UNDER THE SPECIFICATIONS, AND IT REQUESTED IMMEDIATE AUTHORIZATION TO PROCEED TO USE DOW CORNING 916 SILICONE RUBBER AND GE 3R 32 SILICONE RESIN FOR THE CABLES. IT STATED THAT A SATISFACTORY PRODUCT REQUIRED CHANGES IN MANUFACTURING PROCESS WHICH WOULD LENGTHEN THE MANUFACTURING CYCLE. THE TELEGRAM PROPOSED A NEW SHIPMENT SCHEDULE UNDER WHICH AEC ESTIMATED THAT FINAL SHIPMENT WOULD OCCUR ABOUT THE MIDDLE OF AUGUST 1958.

ON MARCH 28, 1958, MR. D. J. O-NEIL, DIRECTOR OF HANDORD'S OPERATIONS OFFICE- DIVISION OF CONSTRUCTION ENGINEERING AND SUPPLY, REPLIED TO ROCKBESTOS' TELETYPE OF MARCH 27, AS FOLLOWS:

"RE YOUR TELETYPE DATED 3-27-58 REGARDING PURCHASE ORDER HA-58-88 1755 SETTING FORTH YOUR PROPOSED DELIVERY SCHEDULE FOR THIS ORDER. THIS SCHEDULE DOES NOT AGREE WITH THE TERMS OF OUR CONTRACT AND IS NOT COMPATIBLE WITH OUR OPERATING REQUIREMENTS AND THEREFORE IS NOT ACCEPTABLE. IT IS IMPERATIVE TO THESE REQUIREMENTS THAT THE PROPOSED SCHEDULE BE IMPROVED. WE ARE APPRECIATIVE OF THE PROBLEMS INVOLVED IN THE PRODUCTION OF WIRE MEETING OUR SPECIFICATIONS, HOWEVER WE MUST RELY UPON OUR SUPPLIERS TO EVALUATE THESE PROBLEMS PRIOR TO ENTERING INTO A CONTRACT BINDING THEM TO MEET CONTRACTUAL REQUIREMENTS. YOUR PROPOSED SCHEDULE WILL PLACE YOU IN DEFAULT IN ACCORDANCE WITH PARAGRAPH 11 ENTITLED "DEFAULT" OF THE GENERAL PROVISIONS STANDARD FORM 32 OF OUR CONTRACT. ACCORDANCE WITH SUBPARA. (A) (II) OF THIS CLAUSE YOU ARE REQUESTED TO IMPROVE DELIVERY OF THIS MATERIAL TO MEET THE CONTRACT REQUIREMENTS WITHIN A PERIOD OF TEN DAYS. IF THIS REQUIREMENT CANNOT BE MET WITHIN THIS PERIOD THE CONTRACTING OFFICER MAY TERMINATE THIS CONTRACT FOR DEFAULT AND PURCHASE THIS MATERIAL ELSEWHERE AND YOU WILL BE RESPONSIBLE FOR ANY ADDITIONAL COSTS TO THE GOVERNMENT. NATURALLY OUR PRIMARY CONCERN IS OBTAINING THE MATERIAL AND SUGGEST THAT EVERY EFFORT BE EXTENDED THROUGH THE USE OF OVERTIME, SUBCONTRACTING, ETC. TO MEET YOUR DELIVERY REQUIREMENTS. ADVISE AS SOON AS POSSIBLE BUT NOT LATER THAN APRIL 8, 1958 REGARDING THE ABOVE. PER EPR CLN RRE--- "

ON MARCH 31, 1958, AEC AUTHORIZED ROCKBESTOS TO COMMENCE PRODUCTION OF THE TOTAL ORDER USING DOW-CORNING 916.

ON APRIL 8, 1958, THE CONTRACTOR FURNISHED A NEW SCHEDULE OF PRODUCTION. HOWEVER, BY TELETYPE OF APRIL 10, 1958, AEC NOTIFIED ROCKBESTOS THAT THE NEW SCHEDULE WAS NOT SATISFACTORY, AND THAT IT DID NOT REMOVE ROCKBESTOS FROM A DEFAULT POSITION.

IT APPEARS FROM INSPECTION REPORTS CONDUCTED DURING APRIL 1958 AT THE CONTRACTOR'S PLANT THAT IT CONTINUED TO EXPERIENCE DIFFICULTY IN THE MANUFACTURING PROCESS, IN PARTICULAR WITH THE LACQUERING, WHICH THE CONTRACTOR ATTRIBUTED TO THE STRINGENT REQUIREMENTS OF THE SPECIFICATIONS. REPORTS OF APRIL 17 AND APRIL 21 INDICATE THAT ROCKBESTOS WAS HAVING TROUBLE MEETING RESISTANCE TOLERANCE. A REPORT OF APRIL 24 PREPARED BY A GE HAPO INSPECTOR PREDICATED THAT ACCEPTABLE CABLE WOULD START FLOWING INTO FINAL INSPECTION BY MAY 3, 1958. HOWEVER, A SUBSEQUENT REPORT OF MAY 7, 1958, FROM THE GE HAPO INSPECTOR, INDICATES THAT ROCKBESTOS HAD AGAIN FAILED THE RESISTANCE TEST ON THE CABLE PRODUCED.

PURSUANT TO A REQUEST FROM THE CONTRACTOR, ON MAY 27, 1958, CHANGE ORDER NO. 1 TO THE CONTRACT WAS EXECUTED BY BOTH PARTIES. THE CHANGE ORDER REVISED THE ORIGINAL SPECIFICATIONS TO ALLOW 340,000 FEET OF CABLE TO BE SHIPPED AND ACCEPTED WITH RESISTANCE REQUIREMENTS OF 14.8 OHMS PLUS 5 PERCENT PER 1,000 FEET INSTEAD OF 15.5 OHMS AS ORIGINALLY REQUIRED. CONSIDERATION FOR THE CHANGE, THE UNIT PRICE OF THE 340,000 FEET OF CABLE WAS REDUCED FROM $0.206 PER FOOT TO $0.18394118 PER FOOT, OR A TOTAL OF $7,500. AS OF THAT DATE IT IS REPORTED THAT THE CONTRACTOR HAD DELIVERED APPROXIMATELY 25,000 FEET OF ACCEPTABLE CABLE.

CORRESPONDENCE DURING THE MONTH OF JUNE 1958 INDICATES THAT THE CONTRACTOR REQUESTED AEC APPROVAL TO SHIP CABLE TO THE FABRICATOR OF THE CABLE HARNESS (LEWIS ENGINEERING COMPANY) IN LESS THAN THE MINIMUM LENGTH SHOWN IN THE CONTRACT. SUCH APPROVAL WAS OBTAINED, AS IS INDICATED IN A LETTER OF JUNE 26, 1958, FROM THE CONTRACTOR TO AEC. THE LETTER OF JUNE 26 CONCLUDES AS FOLLOWS:

"WE APPRECIATE YOUR HELP IN WORKING OUT THIS ARRANGEMENT WITH LEWIS ENGINEERING WHICH WILL PERMIT A GREATER AMOUNT OF THE TOTAL PRODUCED EACH WEEK TO BE ACTUALLY SHIPPED.'

AS A RESULT OF SEVERAL VISITS BY A GE HAPO INSPECTOR TO THE CONTRACTOR'S PLANT DURING THE PERIOD JUNE 3, 1958, THROUGH JUNE 14, 1958, A "SUMMARY OF DISCUSSIONS CONCERNING RTD CABLE AT ROCKBESTOS, JUNE 3 THROUGH JUNE 14, 1958," DATED JULY 9, 1958, WAS PREPARED. THE SUMMARY PROVIDED INFORMATION ON CABLE DIAMETER TESTS, RUBBER EXUDATION, BRAID FAULTS, CONDUCTOR RESISTANCE, SAMPLING FREQUENCY, AND POST CURE SCHEDULES.

AN OFFICE MEMO, DATED JUNE 19, 1958, INDICATES THAT DISCUSSIONS WERE HELD DURING JUNE 1958, BETWEEN MR. EDWARDS, CHIEF, PROCUREMENT BRANCH, HANFORD OPERATIONS OFFICE, AND THE CONTRACTOR, RELATIVE TO ROCKBESTOS' ANNUAL VACATION SHUTDOWN. IT WAS MR. EDWARDS POSITION THAT THE VACATION SHOULD BE POSTPONED UNTIL AFTER COMPLETION OF THIS ORDER. MR. BAMFORD, ROCKBESTOS' SALES MANAGER, STATED THAT THE COMPANY HAD LABOR AGREEMENTS TO CONSIDER AND FEARED LABOR DISTURBANCES IF THE VACATION WERE TO BE POSTPONED. HE ALSO STATED THAT MAINTENANCE WORK IN THE PLANT WHICH COULD NOT BE POSTPONED, WOULD BE DONE WHILE THE PRODUCTION PERSONNEL WERE ON VACATION. ON JULY 3, 1958, THE CONTRACTOR SHUT DOWN ITS PLANT DUE TO ANNUAL VACATION FOR A PERIOD OF THREE WEEKS. PROGRESS REPORTS RECEIVED THROUGH JULY 3, 1958, SHOW ACCEPTABLE CABLE SHIPPED AS FOLLOWS:

TABLE

"APRIL 25, 1958 315 FEET

MAY 2, 1958 215 FEET

MAY 9, 1958 4,841 FEET

MAY 16, 1958 4,841 FEET

MAY 23, 1958 8,568 FEET

MAY 29, 1958 23,353 FEET

JUNE 6, 1958 25,887 FEET

JUNE 13, 1958 80,709 FEET

JUNE 20, 1958 108,139 FEET

JUNE 27, 1958 111,502 FEET

JULY 3, 1958 171,363 FEET"

ON JULY 9, 1958, AEC-HANFORD NOTIFIED ROCKBESTOS BY TELETYPE, THAT IN ACCORD WITH THE TELETYPES OF MARCH 28, 1958, AND APRIL 10, 1958, THE AEC CONSIDERED THE CONTRACTOR IN DEFAULT AND THAT 300,000 FEET OF THE CONTRACT WAS CANCELLED. ROCKBESTOS WAS FURTHER INFORMED THAT THE CANCELLED PORTION OF THE CONTRACT WAS TO BE PURCHASED FROM ELECTRIC AUTO LITE COMPANY AT A HIGHER PRICE AND ROCKBESTOS INFORMED THE AEC THAT IT WOULD MANUFACTURE APPROXIMATELY 400,000 FEET UNDER A DELIVERY SCHEDULE TO BE SUPPLIED BY JULY 31, 1958. UNDER DATE OF JULY 29, 1958, AEC HANFORD, ACKNOWLEDGED RECEIPT OF THE JULY 28 TELETYPE, AND ROCKBESTOS WAS TOLD THAT AEC WOULD ACCEPT ANY PORTION OF THE CANCELLED 300,000 FEET IF IT COULD BE SUPPLIED BEFORE THE ELECTRIC AUTO LITE DELIVERIES. ON AUGUST 1, 1958, ROCKBESTOS REPLIED TO THIS REQUEST AS FOLLOWS:

"WE CANNOT ACCEPT OPEN ENDED QUANTITY BASIS ON THE BALANCE OF THIS ORDER. THIS MATERIAL IS ENTIRELY SPECIAL. CONTINUAL PRODUCTION BEYOND APPROXIMATELY 400,000 FEET WILL REQUIRE OUR COMMITMENT TO SUPPLIERS FOR MATERIAL AND COMMITMENT TO PRODUCTION OF SINGLE CONDUCTORS WHICH CANNOT BE CANCELLED WITHOUT OUR LOSS WHEN ADJUSTMENT OF QUANTITIES IS MADE BETWEEN ROCKBESTOS AND AUTO LITE ORDERS.' ON OCTOBER 8, AEC INFORMED ROCKBESTOS THAT IF AUTO LITE COULD NOT DELIVER BY OCTOBER 10, ROCKBESTOS COULD QUOTE PRICES ON 150,000 FEET OF CABLE. ROCKBESTOS DECLINED THE ORDER.

BY NOVEMBER 11, 1958, ROCKBESTOS MADE THE FINAL DELIVERY OF CABLE UNDER THE UNTERMINATED PORTION OF THE CONTRACT IN THE TOTAL AMOUNT OF 409,142 FEET. FINAL PAYMENT WAS MADE ON MARCH 5, 1959, FOR $66,133.65, AFTER $13,088.71 WAS DEDUCTED AS THE AMOUNT OF EXCESS COSTS INCURRED IN REPURCHASING CABLE FROM ELECTRIC AUTO LITE (ON THE BASIS OF THE DIFFERENCE IN UNIT PRICE BETWEEN THE ELECTRIC AUTO LITE AND ROCKBESTOS CONTRACTS.)

WITH REGARD TO THE ELECTRIC AUTO LITE CONTRACT, IT IS REPORTED THAT ON JUNE 30, 1958, THE AEC ISSUED A REQUEST FOR QUOTATIONS FOR FURNISHING APPROXIMATELY 300,000 FEET OF RTD LEAD CABLE IN ACCORDANCE WITH SPECIFICATION NO. HWS-6244, REV. 1, AND A REVISION DATED JUNE 27, 1958. THE REVISION OF JUNE 27, DEALS WITH MATTERS COVERED BY THE INSPECTION GUIDES ISSUED UNDER THE ROCKBESTOS CONTRACT. PURSUANT TO A BID OPENING HELD ON JULY 9, 1958, CONTRACT NO. AT (45-1/-1303, DATED JULY 14, 1958, WAS AWARDED TO ELECTRIC AUTO LITE CALLING FOR NOT LESS THAT 50,000 FEET WITH AN OPTION ON 250,000 ADDITIONAL FEET, WITH 10,000 FEET TO BE DELIVERED BY JULY 31, 1958, AND AFTER APPROVAL, (ANTICIPATED WITHIN 15 DAYS) 50,000 FEET PER WEEK. APPROVAL TO COMMENCE PRODUCTION ON THE CABLE WAS GIVEN TO AUTO LITE ON AUGUST 18, BUT IT EXPERIENCED DIFFICULTY IN PRODUCTION AND FINAL DELIVERY WAS NOT ACCOMPLISHED UNTIL DECEMBER 19, 1958, WHEN 301,594 FEET HAD BEEN DELIVERED. FINAL PAYMENT TO THAT FIRM WAS MADE ON JANUARY 14, 1959, IN THE AMOUNT OF $75,398.

ON DECEMBER 1, 1958, AFTER ROCKBESTOS HAD MADE FINAL DELIVERY, AN OFFICIAL OF THAT COMPANY SPOKE TO AEC-HANFORD OFFICIALS ON THE PROPRIETY OF THE PARTIAL TERMINATION FOR DEFAULT AND ITS LIABILITY FOR EXCESS COSTS. THE OFFICIAL SAID THAT A SUCCESSION OF "INSPECTION GUIDES" SHOWS THAT THE SPECIFICATIONS WERE INSUFFICIENT AND THAT THE EFFECT OF THE INSPECTIONS GUIDES WAS TO SUBJECT THE CONTRACTOR TO METHODS AND STANDARDS OF INSPECTION FAR MORE STRINGENT THAN THE ORIGINAL SPECIFICATIONS IMPLIED. ROCKBESTOS BELIEVED THAT IT CAME WITHIN THE EXCULPATORY LANGUAGE OF THE DEFAULT ARTICLE BECAUSE THE CAUSES OF THE FAILURE TO DELIVER ON TIME WERE BEYOND ITS CONTROL AND WITHOUT ITS FAULT OR NEGLIGENCE. THE AEC STATED ITS VIEW THAT THE PARTIAL TERMINATION WAS PROPER.

IT APPEARS THAT FROM THE TIME OF FINAL PAYMENT ON MARCH 5, 1959, UNTIL RECEIPT OF A LETTER PROTESTING THE SETTLEMENT FROM ALEXANDER AND GREEN, DATED MARCH 18, 1960, ON BEHALF OF THE CONTRACTOR SUCCESSOR IN INTEREST, (CERRO DE PASCO CORPORATION), NO PROTEST WAS RAISED.

THE GE, HAPO INSPECTORS REPORT THAT SPECIFICATIONS APPLIED TO ROCKBESTOS AND TO ELECTRIC AUTO LITE WERE IDENTICAL AND WERE APPLIED IN EXACTLY THE SAME WAY AS FAR AS POSSIBLE. THE GE, HAPO SUPERVISOR STATES THAT THE EFFECT OF THE CLARIFYING REPORTS ISSUED ON THE ORIGINAL SPECIFICATIONS WAS TO RELAX THE BURDEN OF PERFORMANCE WITHOUT AFFECTING THE QUALITY OF THE PRODUCT.

YOU INFORM US THAT A SETTLEMENT HAS BEEN OFFERED ON BEHALF OF CERRO DE PASCO ON THE BASIS OF A REFUND BY AEC OF THE $13,088.77 WITHHELD FROM FINAL PAYMENT, IN CONSIDERATION OF A RELEASE BY THE CLAIMANT OF THE GOVERNMENT FROM ANY AND ALL CLAIMS UNDER THE CONTRACT OR BY REASON OF ITS ALLEGED WRONGFUL TERMINATION. YOU REQUEST OUR DECISION AS TO WHETHER THE SETTLEMENT OFFER SHOULD BE ACCEPTED.

THE CONTRACT IN QUESTION INCORPORATED THE PROVISIONS OF STANDARD FORM 32 (NOVEMBER 1949 EDITION) ENTITLED GENERAL PROVISIONS (SUPPLY CONTRACT) WHICH PROVIDES IN CLAUSE 11, IN PART AS FOLLOWS:

"11. DEFAULT

"/A) THE GOVERNMENT MAY, SUBJECT TO THE PROVISIONS OF PARAGRAPH (B) BELOW, BY WRITTEN NOTICE OF DEFAULT TO THE CONTRACTOR TERMINATE THE WHOLE OR ANY PART OF THIS CONTRACT IN ANY ONE OF THE FOLLOWING CIRCUMSTANCES:

"/I) IF THE CONTRACTOR FAILS TO MAKE DELIVERY OF THE SUPPLIES OR TO PERFORM THE SERVICES WITHIN THE TIME SPECIFIED HEREIN OR ANY EXTENSION THEREOF; OR

"/II) IF THE CONTRACTOR FAILS TO PERFORM ANY OF THE OTHER PROVISIONS OF THIS CONTRACT, OR SO FAILS TO MAKE PROGRESS AS TO ENDANGER PERFORMANCE OF THIS CONTRACT IN ACCORDANCE WITH ITS TERMS, AND IN EITHER OF THESE TWO CIRCUMSTANCES DOES NOT CURE SUCH FAILURE WITHIN A PERIOD OF 10 DAYS (OR SUCH LONGER PERIOD AS THE CONTRACTING OFFICER MAY AUTHORIZE IN WRITING) AFTER RECEIPT OF NOTICE FROM THE CONTRACTING OFFICER SPECIFYING SUCH FAILURE.

"/B) THE CONTRACTOR SHALL NOT BE LIABLE FOR ANY EXCESS COSTS IF ANY FAILURE TO PERFORM THE CONTRACT ARISES OUT OF CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR. SUCH CAUSES INCLUDE, BUT ARE NOT RESTRICTED TO, ACTS OF GOD OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, UNUSUALLY SEVERE WEATHER, AND DEFAULTS OF SUBCONTRACTORS DUE TO ANY OF SUCH CAUSES UNLESS THE CONTRACTING OFFICER SHALL DETERMINE THAT THE SUPPLIES OR SERVICES TO BE FURNISHED BY THE SUBCONTRACTOR WERE OBTAINABLE FROM OTHER SOURCES IN SUFFICIENT TIME TO PERMIT THE CONTRACTOR TO MEET THE REQUIRED DELIVERY SCHEDULE.

"/C) IN THE EVENT THE GOVERNMENT TERMINATES THIS CONTRACT IN WHOLE OR IN PART AS PROVIDED IN PARAGRAPH (A) OF THIS CLAUSE, THE GOVERNMENT MAY PROCURE, UPON SUCH TERMS AND IN SUCH MANNER AS THE CONTRACTING OFFICER MAY DEEM APPROPRIATE, SUPPLIES OR SERVICES SIMILAR TO THOSE SO TERMINATED, AND THE CONTRACTOR SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COSTS FOR SUCH SIMILAR SUPPLIES OR SERVICES, PROVIDED, THAT THE CONTRACTOR SHALL CONTINUE THE PERFORMANCE OF THIS CONTRACT TO THE EXTENT NOT TERMINATED UNDER THE PROVISIONS OF THIS CLAUSE.'

THE CONTRACTING OFFICER CITED AS A BASIS FOR TERMINATION THE CONTRACTOR'S FAILURE TO MEET THE CONTRACT CONDITIONS. REFERENCE WAS MADE IN THE NOTICE OF TERMINATION TO THE CONTRACTING OFFICER'S TELEGRAM OF MARCH 28, 1958, WHERE THE CONTRACTOR WAS INFORMED OF HIS FAILURE TO MEET THE CONTRACT DELIVERY SCHEDULE AND OF THE POSSIBILITY OF TERMINATION IN ACCORDANCE WITH SUBPARAGRAPH (A) (11) OF CLAUSE 11. DURING THE PERIOD FROM MARCH 1958 TO JULY 1958, THE GOVERNMENT CONTINUED TO INSIST UPON COMPLIANCE WITH THE ORIGINAL CONTRACT DELIVERY TERMS. HOWEVER, THE CONTRACTOR WAS ALLOWED TO CONTINUE PERFORMANCE AND MAKE DELIVERIES AT A RATE CONSIDERABLY LESS THAN THE CONTRACT REQUIRED. ALSO, THE PARTIES ENTERED INTO A CONTRACT MODIFICATION DURING MAY 1958 (CHANGE ORDER NO. 1). UNDER THESE CIRCUMSTANCES WE THINK THAT THE CONTRACTOR SHOULD HAVE BEEN GIVEN SPECIFIC NOTICE THAT PERFORMANCE MUST BE MADE WITHIN A SPECIFIED REASONABLE TIME BEFORE THE CONTRACT WAS TERMINATED FOR DEFAULT. SEE PLYMOUTH VILLAGE FIRE DISTRICT V. NEW AMSTERDAM CASUALTY CO., 130 F. SUPP. 798; 3 A CORBIN, CONTRACTS 722 (1960). IT IS STATED THAT SUCH NOTICE WAS CONSIDERED UNNECESSARY IN THIS CASE BECAUSE THE CONTRACTOR'S PLANT WAS CLOSED AT THE TIME OF TERMINATION, BUT WE ARE NOT PREPARED TO SAY WHAT EFFECT A SPECIFIC NOTICE WOULD HAVE HAD ON THE CONTRACTOR.

ON THE BASIS OF THE PRESENT RECORD WE THINK THAT THE GOVERNMENT SHOULD NOT ATTEMPT TO ENFORCE A CLAIM AGAINST THE CONTRACTOR FOR EXCESS COSTS IN THIS INSTANCE.

ACCORDINGLY, WE WOULD HAVE NO OBJECTION IF THE VOUCHER IN QUESTION, REPRESENTING AN AMOUNT DEDUCTED AS EXCESS COSTS OVER THE CONTRACT PRICE, IS CERTIFIED FOR PAYMENT UNDER THE CONDITIONS YOU SPECIFY.