B-134307, APR. 10, 1958

B-134307, APR. 10, 1958

TO QUERRY, HARROW, GULANICK AND KENNEDY:

WE HAVE YOUR LETTER OF MARCH 27, 1958, RELATIVE TO THE SUBJECT CLAIM, WITH WHICH YOU ENCLOSED A COPY OF A LETTER FROM YOUR ACCOUNTANT.

THE RECORD TRANSMITTED TO US BY THE ATOMIC ENERGY COMMISSION INDICATES THAT, DURING THE COURSE OF NEGOTIATIONS ON THIS CLAIM, YOU HAVE BEEN SUPPLIED WITH COPIES OF THE ORIGINAL CONTRACT, OF MODIFICATION NO. 6, WHICH COVERED THE 10 REPLACEMENT PANELS, AND OF ALL OTHER RELEVANT MATERIAL. THE RECORD ALSO SHOWS THAT THE MANAGER OF THE PORTSMOUTH AREA PROJECT ADVISED YOU, BY LETTERS OF JANUARY 25, 1956, AND JULY 13, 1956, THAT THE REPLACEMENT COST OF THE DESTROYED PANELS DID NOT INCLUDE EXPEDITING COSTS OR SPECIAL DAMAGES. ACCORDING TO AN EXPLANATION FURNISHED TO PETER KIEWIT SONS' COMPANY BY THE MONITOR CONTROLLER COMPANY, THE PRICE QUOTED FOR REPLACEMENT OF THE 10 PANELS, $35,288, WAS BASED UPON KNOWN, NOT ESTIMATED, COSTS. THE INCREASE CAME ABOUT BECAUSE THERE HAD BEEN SEVERAL SUBSTANTIAL INCREASES IN THE COST OF THE RAW MATERIAL SINCE MANUFACTURE OF THE 190 PANELS CALLED FOR IN THE SUBCONTRACT, LABOR COSTS WERE HIGHER DUE TO CONCESSIONS MADE UPON RENEWAL OF THE LABOR CONTRACT, AND APPORTIONMENT OF THE PUNCH, DIE, AND BRAKE SET-UP TIME AMOUNT 10, RATHER THAN 190, PANELS INCREASED THE UNIT COST OF SHOP FABRICATION. THE COST SUMMARY PER UNIT WAS GIVEN AS FOLLOWS:

CHART

MATERIALS $2,040.34

DIRECT LABOR 304.46

OVERHEAD 426.24

TOTAL $2,779.04

GAA COMMISSION AND PROFIT 25 PERCENT 749.76

TOTAL $3,528.79 (SIC)

ACCORDINGLY, AS WE ADVISED YOU IN OUR LETTER OF FEBRUARY 14, 1958, THE RECORD AND THE LAW GOVERNING THE CASE REQUIRE THAT WE CONTINUE TO ASSERT LIABILITY IN THE AMOUNT OF THE REPLACEMENT COST TO THE GOVERNMENT. UNLESS THAT AMOUNT, $35,288, IS RECEIVED HERE PRIOR TO MAY 1, 1958, THE MATTER WILL BE REFERRED TO THE ATTORNEY GENERAL OF THE UNITED STATES FOR APPROPRIATE ACTION.