B-149793, MAY 29, 1963

B-149793, MAY 29, 1963

TO THE SECRETARY OF THE AIR FORCE:

BY SETTLEMENT DATED DECEMBER 12, 1962, OUR OFFICE DISALLOWED A CLAIM OF DAYTON ELECTRONIC PRODUCTS COMPANY, INC., DAYTON, OHIO, FOR $12,913.02, BASED UPON THREE ALLEGED CHANGES ORDERED BY THE AIR FORCE PROJECT DIRECTOR IN CONNECTION WITH THE DESIGN AND CONSTRUCTION OF EQUIPMENT REQUIRED UNDER CALL NO. 9 OF CONTRACT NO. AF 33 (600/-39358, DATED APRIL 15, 1959, EXECUTED ON BEHALF OF THE GOVERNMENT BY A PROCUREMENT OFFICIAL AT THE WRIGHT-PATTERSON AIR FORCE BASE, OHIO.

THE CLAIM WAS DISALLOWED ON THE BASIS THAT NO CHANGES WERE ORDERED IN WRITING AND THE CONTRACTOR FAILED TO PRESENT ANY CLAIM FOR AN EQUITABLE PRICE ADJUSTMENT UNTIL MOST OF THE WORK REQUIRED TO BE PERFORMED UNDER CALL NO. 9 HAD BEEN ACCOMPLISHED. THE CONTRACTOR HAS APPEALED FROM THE DISALLOWANCE, CONTENDING THAT THE CLAIM SHOULD BE CONSIDERED ON ITS MERITS BECAUSE THE WORK UNDER CALL NO. 9 WAS OF AN EXPERIMENTAL NATURE AND THERE WERE NO APPLICABLE DRAWINGS OR SPECIFICATIONS, EXCEPTING THE ENGINEERING PROPOSAL SUBMITTED BY THE CONTRACTOR PRIOR TO THE ISSUANCE OF CALL NO. 9.

WE HAD REQUESTED AN ADMINISTRATIVE REPORT ON THE CLAIM FROM THE AIR FORCE ACCOUNTING AND FINANCE CENTER WHICH WAS SUBMITTED BY LETTER DATED JUNE 20, 1962, FILE REFERENCE AJF. THE REPORT RECOMMENDED THAT THE CLAIM BE DISAPPROVED IN ITS ENTIRETY AND THIS RECOMMENDATION WAS BASED PRINCIPALLY UPON INFORMATION CONTAINED IN A LETTER DATED JUNE 15, 1962, FROM HEADQUARTERS AIR FORCE LOGISTICS COMMAND, WRIGHT-PATTERSON AIR FORCE BASE. IT WAS CONSIDERED IN THE JUNE 15, 1962, LETTER THAT THE CLAIM SHOULD BE DISALLOWED ON TECHNICAL GROUNDS AND THAT THE FACTS OF THE CASE DID NOT OTHERWISE INDICATE THAT A VERY SUBSTANTIAL AMOUNT COULD BE PAID FOR THE ALLEGED EXTRA WORK UNDER CALL NO. 9 OF THE CONTRACT.

AN AUDIT OF THE CONTRACTOR'S ACCOUNTING RECORDS RELATING TO OPERATIONS UNDER CALL NO. 9 HAD BEEN PERFORMED BY THE DAYTON BRANCH OFFICE, UNITED STATES AIR FORCE, AUDITOR-GENERAL. ANALYSIS OF THE AUDIT REPORT AND INFORMATION RECEIVED FROM HEADQUARTERS FOREIGN TECHNOLOGY DIVISION, AIR FORCE SYSTEMS COMMAND, LED TO A CONCLUSION THAT INCREASED COST OF CONTRACT PERFORMANCE RESULTING FROM THE ALLEGED CHANGES COULD NOT BE ESTABLISHED EXCEPT POSSIBLY FOR ABOUT 10 TO 20 HOURS OF ADDITIONAL ENGINEERING TIME AND ABOUT 32 HOURS OF ADDITIONAL TIME FOR PREPARATION OF DRAWINGS. THOSE ESTIMATES WERE USED IN CONNECTION WITH A FINDING THAT A CHANGE OF POWER REQUIREMENTS WAS REQUESTED EARLY IN THE DESIGN OF THE EQUIPMENT.

THE CONTRACTOR HAD ALLEGED THAT THE PROJECT DIRECTOR ORDERED TWO OTHER CHANGES, ONE INVOLVING A CHANGE FROM AIRBORNE TO GROUND TYPE OF EQUIPMENT AND ANOTHER INVOLVING AN EXTENSION OF THE RF COAXIAL CABLE FROM 20 TO 40 FEET. IT WAS DENIED THAT ANY ORDER WAS GIVEN TO CHANGE THE TYPE OF EQUIPMENT BUT CONSIDERED THAT THIS MIGHT HAVE BEEN INFERRED FROM THE POWER SUPPLY FREQUENCY CHANGE. WITH RESPECT TO THE CABLE EXTENSION, THE OPINION WAS EXPRESSED THAT SUCH CHANGE SHOULD NOT HAVE CAUSED ANY INCREASED ENGINEERING COSTS, AND IT APPEARS THAT THE FULL COST OF THE CABLE WAS REIMBURSED TO THE CONTRACTOR SINCE THE MATERIAL COST FIGURE FOR CALL NO. 9 WAS MERELY AN ESTIMATE AND NOT A FIXED AMOUNT AS WAS THE SITUATION IN REGARD TO THE SUM OF $16,268.75, AGREED UPON AS THE AMOUNT PAYABLE FOR ALL LABOR TO BE PERFORMED.

THE ADMINISTRATIVE CONTRACTING OFFICER WAS IN FAVOR OF CONSIDERING THE CLAIM ON ITS MERITS UNDER THE CHANGES CLAUSE OF THE CONTRACT AND IT APPEARS TO US THAT THE MATTER PROPERLY MAY NOW BE TREATED AS REQUIRING FINAL ADMINISTRATIVE ACTION UNDER THE CHANGES AND DISPUTES CLAUSES OF THE CONTRACT. SEE APPEAL OF AERODEX, INCORPORATED, ASBCA NO. 7121, DECIDED SEPTEMBER 11, 1962, BY THE ARMED SERVICES BOARD OF CONTRACT APPEALS.

CONSISTENT WITH THIS CONCLUSION, THE PREVIOUS SETTLEMENT ACTION BY OUR OFFICE SHOULD BE CONSIDERED CANCELED AND THE CLAIM SHOULD BE GIVEN FURTHER CONSIDERATION BY THE CONTRACTING OFFICER SO THAT THE CONTRACTOR WILL BE AFFORDED AN OPPORTUNITY TO EXHAUST ITS ADMINISTRATIVE REMEDIES UNDER THE DISPUTES CLAUSE OF THE CONTRACT IF THE PARTIES SHOULD BE UNABLE TO REACH AN AGREEMENT ON THE MATTER IN CONTROVERSY. IN THE EVENT THAT AN EQUITABLE PRICE ADJUSTMENT CANNOT BE EFFECTED BY MUTUAL AGREEMENT AS CONTEMPLATED UNDER THE PROVISIONS OF THE CHANGES CLAUSE, THE CONTRACTING OFFICER SHOULD REDUCE HIS DECISION TO WRITING AND MAIL A COPY OF THE DECISION TO THE CONTRACTOR WITH APPROPRIATE NOTICE AS TO THE FINAL EFFECT OF THE DECISION UNLESS, WITHIN 30 DAYS FROM THE DATE OF RECEIPT OF SUCH COPY, THE CONTRACTOR MAKES OR OTHERWISE FURNISHES TO THE CONTRACTING OFFICER A WRITTEN APPEAL ADDRESSED TO YOU.

A COPY OF OUR LETTER OF TODAY TO THE CONTRACTOR, SHOWING THE ACTION WHICH WE ARE TAKING ON THE CLAIM, IS ENCLOSED.