B-154078, DEC. 13, 1965

B-154078, DEC. 13, 1965

TO THE G. C. DEWEY CORPORATION:

REFERENCE IS MADE TO YOUR LETTERS OF APRIL 20, 1964, AND SEPTEMBER 9, 1965, REQUESTING REVIEW OF THE SETTLEMENT DATED FEBRUARY 17, 1964, WHICH DISALLOWED YOUR CLAIM FOR $21,000, REPRESENTING ADDITIONAL COSTS ALLEGED TO HAVE BEEN INCURRED FOR SERVICES RENDERED THE DEPARTMENT OF THE ARMY, UNITED STATES ARMY ELECTRONICS MATERIEL AGENCY, FORT MONMOUTH, NEW JERSEY, PURSUANT TO CONTRACT NO. DA-36-039 SC-90697.

THE RECORD SHOWS THAT THE SUBJECT CONTRACT WAS AWARDED APRIL 19, 1962, IN THE AMOUNT OF $55,864, FOR THE PURPOSE OF SUPPLYING PROGRAMS AND MANUALS WHICH WOULD COMPRISE A DIAGNOSTIC SYSTEM FOR LOCATING ERRORS WITHIN THE MOBIDIC "A" COMPUTER. YOUR CLAIM IN THE AMOUNT OF $21,000 FOR ADDITIONAL COSTS ALLEGEDLY INCURRED DUE TO NONPERFORMANCE ON THE PART OF THE GOVERNMENT DURING THE PERIOD JULY 28, 1962, TO FEBRUARY 13, 1963, RELATES TO THE CONTRACT PROVISION AT NOTE 6, CLAUSE V, OF THE CONTRACT WHICH STATES AS FOLLOWS:

"USE OF MOBIDIC A COMPUTER, UTILITY PROGRAMS, PERIPHERAL EQUIPMENT AND ASSISTANCE FROM ON-SITE MAINTENANCE PERSONNEL WILL BE MADE AVAILABLE AT FORT MONMOUTH, DURING THE PREPARATION OF THESE PROGRAM PACKAGES AND THEIR TESTING. A MAXIMUM OF 100 HOURS COMPUTER TIME WILL BE MADE AVAILABLE.'

THE BASIS OF YOUR CLAIM IS THAT DURING THE PERIOD STATED, THE MOBIDIC "A" COMPUTER WAS NOT AVAILABLE FOR YOUR USE. YOU ALSO CLAIM THAT CORPORATE MANPOWER ALLOCATIONS PRECLUDED REASSIGNMENT OF PROJECT PERSONNEL AND THAT FUNDS WERE EXPENDED ALTHOUGH WORK DID NOT PROCEED AS PLANNED. THE CONTRACT, AS ORIGINALLY AWARDED, SPECIFIED DELIVERY OF THE LAST ITEM ON OR BEFORE JANUARY 23, 1963. ACTUAL FINAL DELIVERY WAS ON JUNE 7, 1963. THE CONTRACTING OFFICER'S REPORT CONCERNING YOUR CLAIM STATES IN PERTINENT PART AS FOLLOWS:

"2. IT IS CONCEDED THAT THE CONTRACTOR WAS DELAYED DURING THE PERIODS SPECIFIED IN THE CONTRACTOR'S CLAIM BECAUSE OF MALFUNCTION OF THE MOBIDIC A COMPUTER. THE CONTRACTING OFFICER MODIFIED THE CONTRACT BY ISSUANCE OF SUPPLEMENTAL AGREEMENT, MODIFICATION NO. 2 ON 14 MAY 1963, TO EXTEND THE DELIVERY TIME IN ORDER TO PERMIT COMPLETION OF THE CONTRACT AND IN ORDER TO PROVIDE THE ONLY RELIEF POSSIBLE TO THE CONTRACTOR UNDER THE TERMS OF THE CONTRACT. UPON EXECUTION OF THIS MODIFICATION, OFFICIALS OF THE CONTRACTOR DID PLACE GOVERNMENT PERSONNEL ON NOTICE OF THEIR INTENT TO FILE A CLAIM AGAINST THE GOVERNMENT FOR EXCESS COSTS INCURRED BY THEM BECAUSE OF THE DELAYS ENCOUNTERED. THE STATEMENT MADE BY THE CONTRACTOR IN PARAGRAPH 7 OF HIS CLAIM TO THE EFFECT THAT THE CONTRACTING OFFICER FELT "THIS CLAIM IS JUSTIFIABLE" HAS BEEN DISCUSSED WITH LT. COL. VALENTI WHO WAS THE CONTRACTING OFFICER AT THAT TIME AND HE DENIES THAT HE MADE SUCH A STATEMENT.

"6. A COMPARISON OF THE ORIGINAL PRICE ANALYSIS AND THE TOTAL ACTUAL COSTS INCURRED IN THE CONTRACT PERFORMANCE ARE PRESENTED BELOW:

TABLE

ORIGINAL TOTAL EXCESS OF

COST ACTUAL COSTS COSTS OVER

ESTIMATE INCURRED COST ESTIMATE DIRECT LABOR

$25,932.00 $29,597.39 $ 3,665.39 (A) DIRECT MATERIALS - 2,864.83 2,864.83 (B) DIRECT TRAVEL- 986.92 986.92 (B) OVERHEAD25,932.00 37,261.24 11,329.24 (C)

TOTAL $51,864.00 $70,710.38 $18,846.38 G AND A EXPENSE

- 7,694.84 7,694.84 (C)

------------ ----------- ----------- TOTAL COSTS

$51,864.00 $78,405.22 $26,541.22 (D) PROFIT 4,000.00

------------ TOTAL CONTRACT PRICE $55,864.00 55,864.00

------------ ----------- EXCESS OF COSTS OVER

CONTRACT PRICE $22,541.22

"/A.) THE CONTRACTOR'S COST ESTIMATE PROVIDED FOR 5244 HOURS AT AN ESTIMATED TOTAL COST OF $25,932.00 OR AN AVERAGE OF $4.95 PER HOUR. WE DO NOT HAVE THE AVERAGE HOURLY RATE FOR THE TOTAL LABOR COST ACTUALLY INCURRED. HOWEVER, THE AVERAGE IS SIGNIFICANTLY ABOVE THE RATE ORIGINALLY ESTIMATED. THE DETAILS OF THE CLAIM SHOWN ABOVE, LISTS A TOTAL OF 1,055 HOURS AT A TOTAL CLAIMED COSTS OF $8,291.00 DOLLARS, OR AN AVERAGE OF $7.86 PER HOUR. ALSO INCLUDED IN THE ACTUAL COST PERFORMANCE ARE 288 HOURS OF AN EMPLOYEE AT $17.31 PER HOUR, 397 HOURS OF TIME OF AN EMPLOYEE, AT $12.01 PER HOUR AND 42 HOURS OF THE TIME OF ANOTHER EMPLOYEE AT $10.00 PER HOUR. THE CONTRACTOR'S ORIGINAL PROPOSAL DID NOT CONTEMPLATE THE UTILIZATION OF HIGHER PRICED PERSONNEL. IT CAN BE CONCLUDED THAT PRACTICALLY ALL OF THE EXCESS OF ACTUAL LABOR COSTS OVER THE COSTS ESTIMATES IS DUE TO THE UTILIZATION OF HIGHER PRICED LABOR THAN ORIGINALLY CONTEMPLATED.

"/B.) THE ORIGINAL COST PROPOSAL DID NOT INCLUDE ANY PROVISION FOR DIRECT MATERIALS OR DIRECT TRAVEL. IT WAS KNOWN THAT MATERIALS AND TRAVEL WOULD BE NECESSARY FOR CONTRACT PERFORMANCE, THEREFORE, IT APPEARS THAT THE CONTRACTOR INTENDED CHARGING THEM TO OVERHEAD. THERE IS NO REASON AT THIS TIME TO ACCEPT THESE COSTS ON AN OVERRUN BASIS AFTER THE FACT.

"/C.) THE ORIGINAL COST ESTIMATE WAS PREDICATED ON A SINGLE OVERHEAD RATE OF 100 PERCENT. THIS WAS CONSISTENT WITH THE CONTRACTOR'S ACCOUNTING PROCEDURE AT THE TIME OF CONTRACT NEGOTIATIONS, WHICH PROVIDED FOR ALLOCATING ALL OVERHEAD COSTS ON THE BASIS OF DIRECT LABOR. THE ACTUAL OVERHEAD RATE FOR THE YEAR ENDED 30 JUNE 1962 WAS 111.9 PERCENT. COMMENCING IN THE LATTER PART OF 1962 THE CONTRACTOR REVISED ITS ACCOUNTING PROCEDURE AND NOW DISTRIBUTES INDIRECT COSTS AS BETWEEN OVERHEAD AND G AND A EXPENSES. THE RATES UTILIZED IN THIS COMPUTATION WERE THE RECORDED UNAUDITED RATES FOR THE YEAR ENDED 30 JUNE 1963 * * *"

THE PRIMARY QUESTION INVOLVED IS WHETHER THE ALLEGED NONPERFORMANCE UNDER THE CONTRACT BY THE GOVERNMENT CONSTITUTES A BREACH OF THE CONTRACT. THIS, OF COURSE, MUST BE DETERMINED FROM THE PROVISIONS OF THE CONTRACT. PARTICULARLY PERTINENT FOR CONSIDERATION IS THE INTERPRETATION TO BE GIVEN TO THE ABOVE-QUOTED PROVISION OF NOTE 6, CLAUSE V, OF THE CONTRACT. THE ABSENCE OF SPECIFIC LANGUAGE IN THE CONTRACT CLARIFYING THE MEANING AND INTENT OF THE CLAUSE THE STANDARDS OF THE ACCEPTED PRACTICE OF THE INDUSTRY WOULD APPEAR TO GOVERN. CONSEQUENTLY, WE THINK THAT YOUR INTERPRETATION OF THE CLAUSE AS SET FORTH IN YOUR LETTER OF FEBRUARY 19, 1963, TO OUR OFFICE MAY BE ACCEPTED AS A REASONABLE STANDARD. IN THAT LETTER YOU STATE THAT:

"* * * IN CONFORMANCE WITH ACCEPTED PRACTICE, THESE 100 HOURS MUST BE DISTRIBUTED THROUGH THE PROJECT; USE OF THE COMPUTER IS DISCONTINUOUS,AND IS REQUIRED IN A LARGE NUMBER OF SMALL INCREMENTS, USUALLY CONCENTRATED IN THE LAST HALF OF THE PROJECT. * * *"

WE THINK IT WOULD BE ILLOGICAL TO ASSUME THAT THE CONTRACT OBLIGATED THE GOVERNMENT TO MAKE THE COMPUTER AVAILABLE TO YOU AT ANY TIME YOU CHOSE TO ASK FOR IT. RATHER, IT APPEARS THAT IT WOULD BE MORE REASONABLE TO ASSUME THAT THE USE OF THE COMPUTER BY YOU WOULD BE PREDICATED ON GENERALLY SCHEDULED NEEDS, WITH THE PERFORMANCE BY THE GOVERNMENT BEING REQUIRED WITHIN A REASONABLE TIME. SEE SOCIETE ANONYME DES ATELIERS V. UNITED STATES, 160 CT.CL. 192.

SINCE THE COMPUTER WAS TO BE USED BY YOU AND WAS LOCATED SOME DISTANCE FROM YOUR WORK SITE WE THINK THAT IT WAS INCUMBENT UPON YOU TO MAKE ARRANGEMENTS IN ADVANCE OF THE TIME THE COMPUTER WOULD BE NEEDED SO THAT THE COMPUTER COULD BE MADE READY AND THE REQUIRED GOVERNMENT PERSONNEL PRESENT. THE RECORD CONTAINS NO EVIDENCE THAT YOU MADE A REQUEST FOR PERFORMANCE EACH TIME THE COMPUTER WAS NEEDED NOR IS THERE ANY EVIDENCE THAT THE GOVERNMENT PERFORMANCE WAS NOT CARRIED OUT IN A REASONABLE TIME AND IN GOOD FAITH. YOUR FAILURE TO REQUEST PERFORMANCE BY THE GOVERNMENT AS THE NEED FOR THE COMPUTER AROSE DOES NOT SHOW NONPERFORMANCE NOR CONSTITUTE A BREACH OF THE CONTRACT BY THE GOVERNMENT. CONTINENTAL CONTRACTING COMPANY, A CORPORATION V. UNITED STATES, 94 CT.CL. 244.

FURTHER, IF IT BE ASSUMED THAT THERE WAS A GOVERNMENT-INCURRED DELAY, WE HAVE HELD THAT DAMAGES MAY ONLY BE RECOVERED FOR UNREASONABLE DELAYS. THE RECORD IN THE INSTANT CASE DOES NOT CLEARLY ESTABLISH THAT THE GOVERNMENT BREACHED THE CONTRACT NOR HAS THE AMOUNT OF DAMAGES, IF ANY, BEEN CLEARLY ESTABLISHED.

SINCE IT IS THE PRACTICE OF OUR OFFICE TO SETTLE ONLY THOSE CLAIMS WHERE THERE IS NO DOUBT REGARDING THE LIABILITY OF THE GOVERNMENT AND THE AMOUNT OF DAMAGES CAN BE DETERMINED WITH REASONABLE ACCURACY WE ARE UNABLE TO ALLOW ANY PART OF YOUR CLAIM.