B-160270, FEB. 7, 1967

B-160270: Feb 7, 1967

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TO KILOVOLT CORPORATION: FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 17. WHICH WAS AWARDED TO KILOVOLT CORPORATION ON OCTOBER 14. WHICH IS A COST-PLUS-A-FIXED-FEE CONTRACT FOR THE OPERATION OF CERTAIN ATOMIC ENERGY COMMISSION INSTALLATIONS. YOU SAY THAT THE DISPUTE CENTERS UPON WHETHER THE SUBJECT PURCHASE ORDER WAS PLACED WITH YOU AFTER A FULL DISCLOSURE OF THE CIRCUMSTANCES UNDER WHICH THE EQUIPMENT WOULD BE OPERATED. YOU CONTEND THAT THESE CIRCUMSTANCES WERE NOT FAIRLY PRESENTED AND. YOU DISCOVERED THAT YOU WERE UNWITTINGLY INVOLVED IN A DEVELOPMENT APPLICATION. ALSO INVOLVED IS THE QUESTION AS TO WHETHER A PROMPT PAYMENT DISCOUNT TAKEN ON BEHALF OF THE GOVERNMENT WAS IN FACT EARNED.

B-160270, FEB. 7, 1967

TO KILOVOLT CORPORATION:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 17, 1966, WITH ENCLOSURES, CLAIMING ADDITIONAL COMPENSATION FOR A HIGH VOLTAGE POWER SUPPLY FURNISHED THE ATOMIC ENERGY COMMISSION (AEC) UNDER PURCHASE ORDER NO. 63Y-91960, WHICH WAS AWARDED TO KILOVOLT CORPORATION ON OCTOBER 14, 1964, BY THE UNION CARBIDE CORPORATION, NUCLEAR DIVISION (CARBIDE), ACTING UNDER PRIME CONTRACT NO. W-7405-ENG-26, WHICH IS A COST-PLUS-A-FIXED-FEE CONTRACT FOR THE OPERATION OF CERTAIN ATOMIC ENERGY COMMISSION INSTALLATIONS.

YOU SAY THAT THE DISPUTE CENTERS UPON WHETHER THE SUBJECT PURCHASE ORDER WAS PLACED WITH YOU AFTER A FULL DISCLOSURE OF THE CIRCUMSTANCES UNDER WHICH THE EQUIPMENT WOULD BE OPERATED. YOU CONTEND THAT THESE CIRCUMSTANCES WERE NOT FAIRLY PRESENTED AND, AS A RESULT, YOU DISCOVERED THAT YOU WERE UNWITTINGLY INVOLVED IN A DEVELOPMENT APPLICATION, WITH SUBSEQUENT SERIOUS FINANCIAL LOSS. ALSO INVOLVED IS THE QUESTION AS TO WHETHER A PROMPT PAYMENT DISCOUNT TAKEN ON BEHALF OF THE GOVERNMENT WAS IN FACT EARNED.

THE PURCHASE ORDER IN QUESTION AMONG OTHER PROVISIONS CONTAINS A "CHANGES" CLAUSE AND A ,DISPUTES" CLAUSE. THE FORMER (ARTICLE 4 OF THE PURCHASE ORDER TERMS AND CONDITIONS) PROVIDES FOR EQUITABLE ADJUSTMENT OF THE CONTRACT PRICE IN THE EVENT CHANGES REQUIRED BY THE GOVERNMENT AFFECT THE COST OF PERFORMANCE. ARTICLE 13 ENTITLED "DISPUTES" READS AS FOLLOWS:

"A. EXCEPT AS OTHERWISE PROVIDED IN THIS ORDER, ANY DISPUTE CONCERNING A QUESTION OF FACT ARISING UNDER THIS ORDER WHICH IS NOT DISPOSED OF BY AGREEMENT SHALL BE DECIDED BY THE CONTRACTING OFFICER OF THE COMPANY'S CONTRACT NO. W-7405-ENG-26 WITH THE GOVERNMENT, WHO SHALL REDUCE HIS DECISION TO WRITING AND MAIL OR OTHERWISE FURNISH A COPY THEREOF, TOGETHER WITH SPECIFIC FINDINGS OF FACT AND A COPY OF THE COMMISSION'S "RULES OF PROCEDURE IN CONTRACT APPEALS" (CODE OF FEDERAL REGULATIONS, TITLE 10, CHAPTER 1, PART 3) TO THE COMPANY AND THE SELLER. THE DECISION OF THE CONTRACTING OFFICER SHALL BE FINAL AND CONCLUSIVE UNLESS, WITHIN THIRTY DAYS FROM THE DATE OF RECEIPT OF SUCH COPIES, THE SELLER MAILS OR OTHERWISE FURNISHES TO THE CONTRACTING OFFICER A WRITTEN APPEAL ADDRESSED TO THE COMMISSION. THE DECISION OF THE COMMISSION SHALL BE FINAL AND CONCLUSIVE UNLESS DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE BEEN FRAUDULENT, OR CAPRICIOUS, OR ARBITRARY, OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR NOT SUPPORTED BY SUBSTANTIAL EVIDENCE. IN CONNECTION WITH ANY APPEAL PROCEEDING UNDER THIS ARTICLE, THE SELLER SHALL BE AFFORDED AN OPPORTUNITY TO BE HEARD AND TO OFFER EVIDENCE IN SUPPORT OF ITS APPEAL. PENDING FINAL DECISION OF A DISPUTE HEREUNDER AND, IF PERFORMANCE HAS NOT BEEN COMPLETED, THE SELLER SHALL PROCEED DILIGENTLY WITH THE PERFORMANCE OF THE ORDER AND IN ACCORDANCE WITH THE COMPANY'S INSTRUCTIONS.

"B. THIS "DISPUTES" ARTICLE DOES NOT PRECLUDE CONSIDERATION OF LAW QUESTIONS IN CONNECTION WITH DECISIONS PROVIDED FOR IN PARAGRAPH (A) ABOVE; PROVIDED THAT NOTHING IN THIS ORDER SHALL BE CONSTRUED AS MAKING FINAL THE DECISION OF ANY ADMINISTRATIVE OFFICIAL, REPRESENTATIVE, OR BOARD ON A QUESTION OF LAW.

"C. IN ANY DISPUTE COVERED BY THIS ARTICLE, THE PROCEDURES, PRINCIPLES, AND LAW APPLICABLE TO THE RESOLUTION OF DISPUTES UNDER CONTRACTS ENTERED INTO BY THE COMMISSION SHALL APPLY.

"D. THE TERM "CONTRACTING OFFICER" AS USED IN THIS ARTICLE MEANS THE PERSON EXECUTING ON BEHALF OF THE GOVERNMENT THE COMPANY'S CONTRACT HEREINBEFORE REFERRED TO AND INCLUDES HIS SUCCESSORS OR ANY DULY AUTHORIZED REPRESENTATIVE OF SUCH PERSON.'

IT APPEARS THAT THE DIFFERENCES BETWEEN YOU AND THE CONTRACTING OFFICIALS OF CARBIDE AS TO WHETHER YOU ARE ENTITLED TO THE ADDITIONAL COMPENSATION CLAIMED ARE ESSENTIALLY FACTUAL IN NATURE AND HAVE NOT BEEN RESOLVED BY THE AEC CONTRACTING OFFICER FOR THE PRIME CONTRACT. UNDER THE ,CHANGES" AND "DISPUTES" CLAUSES OF THE PURCHASE ORDER ALL QUESTIONS OF FACT INVOLVED (INCLUDING FAILURE TO AGREE UPON AN ADJUSTMENT FOR A CHANGE) ARE FOR HIS DETERMINATION, SUBJECT TO APPEAL BY YOU TO THE AEC.

WHILE THIS OFFICE DOES HAVE JURISDICTION TO SETTLE AND ADJUST ALL CLAIMS AGAINST THE UNITED STATES, WE HAVE NO PROCEDURES FOR INDEPENDENT DETERMINATION OF DISPUTED FACTS BY FORMAL HEARINGS AND EXAMINATION OF WITNESSES, BUT BASE OUR ACTIONS UPON THE ADMINISTRATIVE RECORDS OF THE AGENCY INVOLVED AND SUCH WRITTEN RECORDS AND SUPPLEMENTAL PRESENTATION AS MAY BE PRESENTED BY THE CLAIMANT. WHERE, AS IN THIS CASE, A CLAIM ARISES UNDER A CONTRACT WHICH CONTAINS A STIPULATION REQUIRING DISPUTED FACTS TO BE DETERMINED BY A DESIGNATED OFFICIAL OR AGENCY WE CANNOT ACT THEREON UNTIL THE FACTS HAVE BEEN SO DETERMINED.

IT IS SUGGESTED THAT IF YOU DESIRE TO PROCEED FURTHER WITH YOUR CLAIM YOU INITIATE THE CONTRACTUAL DISPUTES PROCEDURE BY REQUESTING THE AEC CONTRACTING OFFICER AT OAK RIDGE TO CONSIDER AND MAKE FINDINGS THEREON IN ACCORDANCE WITH THE QUOTED PROVISIONS. IN THIS WAY YOU MAY BE ABLE TO DEVELOP AND OFFER SUPPORT FOR YOUR CONTENTIONS MORE FULLY THAN IF WE WERE TO REFER YOUR CLAIM TO THE AEC WITH A REQUEST FOR FINDINGS.

IF UPON CONCLUSION OF THE DISPUTES CLAUSE PROCEDURE YOU BELIEVE THAT THE FACTUAL FINDINGS ARE FRAUDULENT OR CAPRICIOUS OR ARBITRARY OR SO GROSSLY ERRONEOUS AS NECESSARILY TO IMPLY BAD FAITH, OR ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE, OR THAT THE CONCLUSIONS REACHED ARE LEGALLY ERRONEOUS, YOU MAY RESUBMIT THE MATTER TO OUR OFFICE.