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CONTRACTS - GOVERNMENT PROPERTY - UNAUTHORIZED USE - PRODUCTION OVERRUN THE EXCESS PRODUCTION OVERRUN OF SHIRTS MANUFACTURED FROM THE QUANTITY OF GOVERNMENT-FURNISHED MATERIAL REQUESTED BY THE CONTRACTOR IS THE PROPERTY OF THE GOVERNMENT AND NO COMPENSATION OR MATERIAL CREDIT MAY BE ALLOWED THE CONTRACTOR FOR THE UNAUTHORIZED USE OF THE GOVERNMENT'S MATERIAL UNDER THE BAILMENT. " EVEN THOUGH THE OVERRUN MAY HAVE BEEN OCCASIONED BY SUBCONTRACTING THE WORK TO ACCELERATE DELIVERIES. - THE QUANTITY VARIATION PROVISIONS OF THE CONTRACT ARE FOR ENFORCEMENT THUS ENABLING THE GOVERNMENT TO CONTROL THE FLOW OF END ITEMS. 1967: REFERENCE IS MADE TO YOUR LETTER OF MAY 11. YOU WERE REQUIRED TO MANUFACTURE FROM GOVERNMENT MATERIAL SUPPLIED TO YOU UNDER A BAILMENT A BASIC QUANTITY OF 100.

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B-161559, AUGUST 10, 1967, 47 COMP. GEN. 111

CONTRACTS - GOVERNMENT PROPERTY - UNAUTHORIZED USE - PRODUCTION OVERRUN THE EXCESS PRODUCTION OVERRUN OF SHIRTS MANUFACTURED FROM THE QUANTITY OF GOVERNMENT-FURNISHED MATERIAL REQUESTED BY THE CONTRACTOR IS THE PROPERTY OF THE GOVERNMENT AND NO COMPENSATION OR MATERIAL CREDIT MAY BE ALLOWED THE CONTRACTOR FOR THE UNAUTHORIZED USE OF THE GOVERNMENT'S MATERIAL UNDER THE BAILMENT, NOR MAY THE SHIRTS BE RETAINED AND PAID FOR AS "SECONDS," EVEN THOUGH THE OVERRUN MAY HAVE BEEN OCCASIONED BY SUBCONTRACTING THE WORK TO ACCELERATE DELIVERIES, THE SUBCONTRACTING HAVING BEEN APPROVED ON THE BASIS OF "NO ADDITIONAL COST TO THE GOVERNMENT," AND THE ONE-HALF OF 1 PERCENT QUANTITY VARIATION FURNISHING THE CONTRACTOR THE REASONABLE PROTECTION PRESCRIBED BY PARAGRAPH 1-325.1 OF THE ARMED SERVICES PROCUREMENT REGULATION--- WHICH ALSO PRECLUDES THE ESTABLISHMENT OF A STANDARD OR UNUSUAL PERCENTAGE QUANTITY VARIATION AND REQUIRES THAT AN OVERRUN OR UNDERRUN BE BASED ON NORMAL COMMERCIAL PRACTICES--- THE QUANTITY VARIATION PROVISIONS OF THE CONTRACT ARE FOR ENFORCEMENT THUS ENABLING THE GOVERNMENT TO CONTROL THE FLOW OF END ITEMS.

TO THE PHILLIPS-VAN HEUSEN CORPORATION, AUGUST 10, 1967:

REFERENCE IS MADE TO YOUR LETTER OF MAY 11, 1967, AND ENCLOSURES, RELATIVE TO YOUR CLAIM INVOLVING AN EXCESS PRODUCTION OVERRUN OF MEN'S SHIRTS UNDER CONTRACT NO. DSA-100-3894, DATED JUNE 1, 1966, WITH THE DEFENSE PERSONNEL SUPPORT CENTER, DEFENSE SUPPLY AGENCY (DSA), PHILADELPHIA, PENNSYLVANIA.

UNDER THE TERMS OF THE CONTRACT, YOU WERE REQUIRED TO MANUFACTURE FROM GOVERNMENT MATERIAL SUPPLIED TO YOU UNDER A BAILMENT A BASIC QUANTITY OF 100,000 COTTON KHAKI SHIRTS, AT A BASE PRICE OF $3.785 EACH, LESS THE VALUE OF THE GOVERNMENT FURNISHED MATERIAL AS FIXED BY THE CONTRACT. QUANTITY VARIATION PROVISIONS PERMITTED A VARIATION OF 1/2 OF ONE PERCENT OF THE BASIC QUANTITY, OR 500 UNITS, PLUS OR MINUS, UPON APPROVAL BY DSA. PARAGRAPH 106.8 OF THE CONTRACT PROVIDED THAT "ANY QUANTITIES OF ITEMS MANUFACTURED AND DELIVERED UNDER THIS CONTRACT IN EXCESS OF THE QUANTITIES SPECIFIED HEREIN, AFTER TAKING INTO ACCOUNT OVERAGES PERMITTED UNDER THE VARIATION IN QUANTITY CLAUSE, ARE THE SOLE PROPERTY OF THE GOVERNMENT AND NO COMPENSATION OR MATERIAL CREDIT SHALL BE ALLOWED THE CONTRACTOR THEREFOR.'

RESPONSIBILITY FOR DETERMINING THE QUANTITY OF GOVERNMENT MATERIAL REQUIRED FOR PERFORMANCE OF THE CONTRACT RESTED SOLELY WITH YOU. FOR THE MATERIAL FURNISHED, A CHARGE OF $0.86 A YARD WAS TO BE MADE BY THE GOVERNMENT AGAINST YOUR ACCOUNT, AND A CREDIT AT THE SAME PRICE WAS TO BE ALLOWED TO YOU FOR ANY UNUSED MATERIAL, IN THE FORM OF FULL PIECES AND SHORT PIECES, WHICH WAS RETURNED TO THE GOVERNMENT IN UNDAMAGED CONDITION. UPON DELIVERY OF END ITEMS, THE GOVERNMENT WAS TO DEDUCT FROM THE CONTRACT PRICE THE AMOUNT OF $1.34 PER UNIT FOR THE ESTIMATED VALUE OF THE GOVERNMENT MATERIAL USED, SUBJECT TO ADJUSTMENT PRIOR TO FINAL PAYMENT ON THE BASIS OF THE ACTUAL QUANTITY OF GOVERNMENT MATERIAL USED BY YOU. ANY UNUSED GOVERNMENT MATERIAL, OTHER THAN SCRAPS AND ENDS AND IRREPARABLE REJECTS, WHICH YOU AGREED TO PURCHASE FROM THE GOVERNMENT AT A PRICE OF $1.34 PER UNIT, WAS REQUIRED TO BE RETURNED TO THE GOVERNMENT AT YOUR EXPENSE UNLESS THE CONTRACTING OFFICER DIRECTED OTHER DISPOSITION OF SUCH MATERIAL.

THE DELIVERY SCHEDULE CALLED FOR SHIPMENTS TO COMMENCE IN JULY 1966 AND TO BE COMPLETED BY OCTOBER 29, 1966, WITH ACCELERATION BEING PERMISSIBLE ONLY AT NO ADDITIONAL COST TO THE GOVERNMENT.

A NOTATION ON PAGE 2 OF YOUR BID SHOWS THAT CUTTING WAS TO BE PERFORMED AT YOUR PLANT IN POTTSVILLE, PENNSYLVANIA, WHILE INSPECTION AND SHIPPING WERE TO BE EFFECTED AT YOUR PLANT IN COALDALE, PENNSYLVANIA.

YOU STATE THAT IN YOUR DESIRE TO SPEED DELIVERY, AFTER VARIOUS DISCUSSIONS WITH OFFICIALS OF THE UNITED STATES DEPARTMENT OF COMMERCE,YOU PLACED THE PRODUCTION IN MORE THAN ONE OF YOUR PLANTS WITH THE RESULT THAT 1,667 SHIRTS WERE PRODUCED IN EXCESS OF THE BASIC QUANTITY OF 100,000 UNITS AND PERMISSIBLE OVERRUN OF 500 UNITS; THAT YOU OFFERED THE EXCESS SHIRTS TO DSA AT A UNIT PRICE OF $2.75; AND THAT DSA DECLINED YOUR OFFER AND DIRECTED YOU TO RETURN THE SHIRTS TO THE GOVERNMENT WITHOUT CREDIT FOR PIECE GOODS OR LABOR. YOU FURTHER STATE THAT YOU DO NOT UNDERSTAND THE GOVERNMENT'S REFUSAL TO ACCEPT THE SHIRTS IN VIEW OF THE FACT THAT SUBSEQUENT CONTRACTS HAVE BEEN AWARDED FOR THE SAME ITEM, AND YOU CONTEND THAT THE 1/2 OF ONE PERCENT QUANTITY VARIATION IN YOUR CONTRACT WAS IN ERROR SINCE THE SUBSEQUENT CONTRACTS HAVE INCLUDED A TWO-PERCENT ALLOWANCE. IN ADDITION, YOU POINT OUT THAT HAD THE SHIRTS BEEN "SECONDS," YOU WOULD HAVE BEEN PERMITTED TO PAY THE GOVERNMENT FOR THE MATERIAL AND TO RETAIN THE SHIRTS. ACCORDINGLY, AND ON THE BASIS THAT YOU HAVE ALREADY PAID THE GOVERNMENT FOR THE MATERIAL USED IN THE EXCESS SHIRTS, YOU REQUEST EITHER PAYMENT THEREFOR AT COST OR PERMISSION TO RETAIN THE SHIRTS.

THE RECORD MADE AVAILABLE TO OUR OFFICE DISCLOSES THAT ON JULY 28 AND SEPTEMBER 20, 1966, YOU SUBMITTED REQUESTS TO DSA FOR PERMISSION TO SUBCONTRACT 24,000 UNITS AND 8,200 UNITS, RESPECTIVELY, TO BERWICK SHIRT CO., BERWICK, PENNSYLVANIA, AND APPROVAL WAS GRANTED IN EACH CASE. HOWEVER, THE CONTRACT MODIFICATIONS AUTHORIZING THE SUBCONTRACTS, MODIFICATIONS NO. 1 DATED SEPTEMBER 7, 1966, AND NO. 2, DATED OCTOBER 21, 1966, BOTH STIPULATED THAT ANY ADDITIONAL COSTS TO THE GOVERNMENT AND ANY INCREASED COSTS OF PERFORMANCE TO YOU INCIDENT TO SUCH CHANGES WOULD BE BORNE BY YOU.

IN A STATEMENT DATED JUNE 27, 1967, THE CONTRACTING OFFICER REPORTS THAT YOUR CONTRACT WAS ONE OF 16 CONTRACTS WHICH WERE LET FOR THE SAME ITEM AT THE SAME TIME TO MEET THE GOVERNMENT'S NEEDS; THAT ONLY THROUGH THE ASSISTANCE OF THE DEPARTMENT OF COMMERCE WAS THE GOVERNMENT ABLE TO PLACE THE CONTRACTS FOR THE REQUIRED QUANTITY; AND THAT ONCE THE CONTRACTS WERE AWARDED, THE FUNCTION OF THE DEPARTMENT OF COMMERCE WAS COMPLETED. THE CONTRACTING OFFICER FURTHER REPORTS THAT AVAILABLE INFORMATION INDICATES THAT YOUR SUBCONTRACTOR MANUFACTURED AND DELIVERED ONLY THE 32,200 UNITS COVERED BY ITS SUBCONTRACTS, WHICH INCLUDED NO PROVISION FOR QUANTITY VARIATIONS, AND THAT YOU MANUFACTURED 70,224 UNITS, INCLUDING 257 IRREPARABLE REJECTS, OR SECONDS, FOR A TOTAL PRODUCTION OF 102,424 UNITS. IN THIS CONNECTION, THE CONTRACTING OFFICER POINTS OUT THAT SINCE ALL THE CUTTING WAS PERFORMED BY YOU AT ONE PLANT, YOU COULD HAVE AVOIDED AN EXCESS OVERRUN BY CUTTING ONLY THE BASIC QUANTITY OF 100,000 UNITS OR, AT THE MOST, THE BASIC QUANTITY PLUS THE MAXIMUM PERMISSIBLE OVERRUN OF 500 UNITS. THEREFORE, IT IS THE CONTRACTING OFFICER'S POSITION THAT THE PRODUCTION OF 2,424 UNITS IN EXCESS OF THE BASIC QUANTITY, OR 1,924 UNITS IN EXCESS OF THE 100,500 UNITS ACCEPTED BY DSA, WAS OCCASIONED BY THE EXCESS CUTTING PERFORMED BY YOU.

WITH RESPECT TO THE UNIT PRICE OF $2.75 F.O.B. ORIGIN (TRANSPORTATION AT GOVERNMENT EXPENSE) FOR WHICH YOU OFFER THE 1,667 FIRST-QUALITY EXCESS UNITS TO THE GOVERNMENT, THE CONTRACTING OFFICER STATES THAT MORE RECENT AWARDS FOR THE SAME ITEM HAVE BEEN MADE AT PRICES RANGING FROM $2.287 TO $2.341 F.O.B. DESTINATION (TRANSPORTATION AT CONTRACTOR'S EXPENSE) NOTWITHSTANDING THE VALUE OF THE GOVERNMENT MATERIAL HAS INCREASED FROM $0.86 TO $1.00 PER YARD. FURTHER, IT IS STATED THAT YOUR CONTRACT PRICE WAS THE HIGHEST UNDER THE 16 CONTRACTS AWARDED FOR THE ITEM IN QUESTION AT THE SAME TIME, THE PRICES OF WHICH RANGED FROM $2.70 TO $3.785 PER UNIT F.O.B. ORIGIN.

IN THE LIGHT OF THE REPORTED FACTS, AND ON THE BASIS THAT UNLESS CONTRACTORS ARE REQUIRED TO ADHERE TO THE STRICT REQUIREMENTS OF THEIR CONTRACTS THERE WILL BE A TENDENCY TO HAVE OVERRUNS WHEN PRICES ARE FAVORABLE AND UNDERRUNS WHEN PRICES ARE UNFAVORABLE, THE CONTRACTING OFFICER URGES THAT YOUR CLAIM BE DENIED AND CITES OUR UNPUBLISHED DECISION B-146401, JANUARY 11, 1963, IN SUPPORT OF SUCH VIEW.

HEADQUARTERS, DSA, CITES ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1- 325.1 FOR THE PREMISE THAT THE QUANTITY VARIATION PERMISSIBLE UNDER A GIVEN CONTRACT DIFFERS WITH THE CIRCUMSTANCES OF THE PARTICULAR PROCUREMENT AND POINTS TO THE FACT THAT THE CONTRACTING OFFICER DETERMINED THAT A VARIATION OF 1/2 OF ONE PERCENT WAS SUFFICIENT TO AFFORD YOU REASONABLE PROTECTION UNDER YOUR CONTRACT. FURTHER, IT IS STATED THAT WHILE THE SAME QUANTITY VARIATION WAS INCLUDED IN ALL OF THE CONTRACTS WHICH WERE AWARDED AT THE SAME TIME AS YOUR CONTRACT, IN THE MAJORITY OF CASES SUCH VARIATION WAS NOT EXCEEDED BY THE CONTRACTORS. ACCORDINGLY, AND FOR THE ADDITIONAL REASON THAT YOU SUBCONTRACTED FOR A SUBSTANTIAL QUANTITY OF THE SHIRTS WITHOUT PERMITTING OR RECEIVING ANY VARIATION IN QUANTITY FROM YOUR SUBCONTRACTOR, IT IS THE POSITION OF HEADQUARTERS, DSA, THAT THE 1/2 OF ONE PERCENT QUANTITY VARIATION PROVISION IN YOUR CONTRACT WAS NOT UNREASONABLE OR IMPROPER AND THEREFORE YOUR CLAIM SHOULD BE DENIED.

ASPR 1-325.1 PROVIDES THAT THERE SHOULD BE NO STANDARD OR USUAL PERCENTAGE OF CONTRACT QUANTITY VARIATIONS; THAT THE PERMISSIBLE OVERRUN OR UNDERRUN IN EACH PROCUREMENT SHOULD BE BASED ON NORMAL COMMERCIAL PRACTICES OF THE PARTICULAR INDUSTRY INVOLVED IN THE PRODUCTION OF THE PARTICULAR ITEMS; AND THAT THE PERCENTAGE OF VARIATION ALLOWED SHOULD BE NO LARGER THAN NECESSARY TO AFFORD THE CONTRACTOR REASONABLE PROTECTION.

IN B-146401, SUPRA, WE HAD OCCASION TO CONSIDER THE CLAIM OF A DSA CONTRACTOR FOR PAYMENT FOR 2,460 SHIRTS MANUFACTURED IN EXCESS OF A BASIC CONTRACT REQUIREMENT OF 250,000 UNITS, PLUS AN APPROVED OVERRUN OF 2,500 UNITS, UNDER SIMILAR CONTRACT PROVISIONS GOVERNING BOTH QUANTITY VARIATIONS AND RETURN TO THE GOVERNMENT OF EXCESS OVERRUNS OTHER THAN IRREPARABLE REJECTS, OR SECONDS. POINTING TO THE FACT THAT THE GOVERNMENT SUPPLIED MATERIAL HAD BEEN HELD BY THE CONTRACTOR AS A BAILEE AND THEREFORE COULD BE USED ONLY AS AUTHORIZED, THAT IS, FOR THE BASIC QUANTITY AND THE MAXIMUM APPROVED OVERRUN, WE STATED THAT THE EFFECT OF THE PROVISIONS REQUIRING RETURN TO THE GOVERNMENT OF ANY EXCESS OVERRUN, WITHOUT ANY ALLOWANCE TO THE CONTRACTOR OF COMPENSATION OR MATERIAL CREDIT, WAS TO LIQUIDATE THE CONTRACTOR'S LIABILITY TO THE GOVERNMENT FOR THE UNAUTHORIZED USE OF THE GOVERNMENT'S MATERIAL. FURTHER, WE QUOTED FROM A STATEMENT BY THE DEFENSE CLOTHING AND TEXTILE SUPPLY CENTER, AS FOLLOWS:

"* * * WITHOUT CONTROLS THE GOVERNMENT WOULD NEVER BE IN A POSITION TO KNOW DEFINITELY, PRIOR TO THE AWARD OF THE END ITEM CONTRACT, WHETHER OR NOT SUFFICIENT GOVERNMENT PROPERTY WAS ON HAND AND AVAILABLE FOR ISSUE TO THE END ITEM MANUFACTURER. IN THE ABSENCE OF CONTROLS, THE GOVERNMENT WOULD HAVE TO OVER BUY THE BASIC CLOTH IN ORDER TO INSURE THAT THEIR END ITEM REQUIREMENTS WOULD BE MET. SINCE THE REQUIRED END ITEMS ARE PURCHASED OVER SOME TEN TO TWELVE MONTHS AFTER THE BASIC CLOTH HAS BEEN PROCURED, IT IS QUITE CLEAR THAT THERE MUST BE CONTROLS ESTABLISHED WHICH WILL PREVENT AN INDIVIDUAL CONTRACTOR OR CONTRACTORS FROM DISRUPTING THE REQUIRED FLOW OF END ITEMS TO THE MILITARY FORCES IN THE DESIRED QUANTITIES AND SIZES.

"THE PRESENT POLICY WHICH REQUIRES THE CONTRACTOR TO RETURN TO THE GOVERNMENT HIS EXCESS PRODUCTION DOES NOT IMPROVE THE GOVERNMENT'S ABILITY TO MEET THE REQUIRED NEEDS OF THE MILITARY FORCES. YOU CANNOT ISSUE A SMALL SIZED OVERCOAT TO A LARGE SOLDIER AND IF THE PRODUCTION OF THE SMALL GARMENT PREVENTED THE PROCUREMENT OF THE LARGE GARMENT, THEN OF NECESSITY THE LARGE SOLDIER MUST GET ALONG WITHOUT AN OVERCOAT. SIMILARLY IF THE CONTRACTOR OVERPRODUCED COATS, YOU CANNOT SUBSTITUTE THEM FOR TROUSERS OR SOME OTHER ARTICLES OF CLOTHING. THE GFP VARIATION IN QUANTITY CLAUSE IS NOT INTENDED TO SECURE MERCHANDISE FOR THE GOVERNMENT AT NO COST. ITS SOLE PURPOSE IS TO PREVENT SHORTAGES IN SUPPLY CAUSED BY THE CONTRACTOR. TECHNICIANS IN THE CLOTHING FIELD ARE UNITED IN THEIR OPINIONS THAT THE VARIATION PERMITTED BY THE GOVERNMENT IN ITS CONTRACTS PERMITS ALL CONTRACTORS TO MEET THE REQUIREMENTS OF THE CONTRACT AND AT THE SAME TIME NOT GENERATE OVERRUNS. THE MANUFACTURING PROCESSES ARE SUCH THAT ANY MANUFACTURER MAINTAINING REASONABLE CONTROL OVER HIS CUTTING OPERATIONS CAN AND DOES FALL WITHIN THE PERMISSIBLE VARIATION. OVERRUNS, ACCORDING TO THE EXPERTS, WOULD ONLY ARISE WHERE THE CONTRACTOR IS NEGLIGENT IN HIS CUTTING OPERATION OR INTENTIONALLY OR WILLFULLY OVERCUTS. A REASONABLE, PRUDENT MANUFACTURER IS ABLE TO CONTROL HIS CUTTING OPERATION TO SUCH AN EXTENT THAT HE FALLS WITHIN THE PLUS OR MINUS VARIATION PROVIDED IN THE CONTRACT. ILLUSTRATIVE OF THIS FACT IS THAT IN FISCAL YEAR 1961, THERE WERE ONLY FOUR INSTANCES OUT OF 310 CONTRACTS WHERE THE CONTRACTOR EXCEEDED THE PERMISSIBLE VARIATION.'

AFTER MOST CAREFUL CONSIDERATION, WE CONCLUDED THAT IN THE CIRCUMSTANCES THE VARIATION IN QUANTITY PROVISIONS OF THE CONTRACT SHOULD BE ENFORCED, AND WE THEREFORE HELD THAT THE CONTRACTOR'S CLAIM SHOULD BE DISALLOWED. THAT DECISION APPEARS TO REQUIRE THE SAME CONCLUSION IN THIS CASE.

NOTWITHSTANDING THAT SUBSEQUENT DSA CONTRACTS FOR THE SAME ITEM MAY HAVE ALLOWED HIGHER PERCENTAGES OF QUANTITY VARIATION, THE RECORD SHOWS THAT THE PERCENTAGE ALLOWED IN YOUR CONTRACT AND IN ALL OF THE OTHER CONTRACTS LET AT THE SAME TIME WAS NOT EXCEEDED BY MOST OF THE CONTRACTORS. ACCORDINGLY, WE MUST CONCUR WITH THE VIEW OF HEADQUARTERS, DSA, THAT THERE WAS COMPLIANCE WITH ASPR 1-325.1 AND THAT THE PERCENTAGE WAS NEITHER UNREASONABLE NOR IMPROPER.

WHILE YOU MAY BE SINCERE IN YOUR BELIEF THAT IT WAS THE PLACING OF THE PRODUCTION IN MORE THAN ONE PLANT, IN YOUR ZEAL TO ASSIST THE GOVERNMENT TO FULFILL ITS NEEDS WITHOUT DELAY, THAT ACCOUNTED FOR THE EXCESS OVERRUN, THE RECORD DOES NOT APPEAR TO SUPPORT THAT CONTENTION. SINCE YOUR SUBCONTRACTOR PRODUCED ONLY THE NUMBER OF UNITS REQUIRED BY THE SUBCONTRACTS, THE EXCESS PRODUCTION CANNOT BE ATTRIBUTED TO THE USE OF A SUBCONTRACTOR. FURTHER, SINCE ALL OF THE CUTTING WAS PERFORMED IN ONE OF YOUR PLANTS, THERE IS SUPPORT FOR THE THEORY ADVANCED BY THE CONTRACTING OFFICER THAT IT WAS THE ABSENCE OF CONTROL OVER THE CUTTING, NOT THE USE OF MORE THAN ONE PLANT FOR THE MANUFACTURING, WHICH OCCASIONED THE PRODUCTION OVERRUN. THERE IS ALSO FOR NOTING, HOWEVER, THAT THE EXCESS CUTTING APPEARS TO BE ATTRIBUTABLE TO SOME EXTENT TO THE REQUISITIONING BY YOU OF EXCESS MATERIAL FROM THE GOVERNMENT, A SITUATION WHICH MIGHT HAVE BEEN AVOIDED HAD THERE BEEN A PROPER DISCHARGE OF YOUR RESPONSIBILITY UNDER THE CONTRACT TO ESTIMATE WITH REASONABLE CERTAINTY THE QUANTITY OF GOVERNMENT MATERIAL ACTUALLY NEEDED TO PERFORM THE CONTRACT AND TO BASE YOUR REQUISITIONS ON SUCH ESTIMATE AND THEREBY AVOID ANY EXCESS PRODUCTION. IN ANY EVENT, YOU WERE ON NOTICE THAT ACCELERATION OF DELIVERIES WAS TO BE AT NO ADDITIONAL EXPENSE TO THE GOVERNMENT AND THAT NO ADDITIONAL AMOUNTS WOULD BE PAYABLE BY THE GOVERNMENT INCIDENT TO YOUR USE OF A SUBCONTRACTOR, AND THE SPECIFIC PROVISIONS OF THE CONTRACT PRECLUDING ANY PAYMENT OR CREDIT FOR EXCESS OVERRUNS CONTAIN NO EXCEPTIONS REGARDLESS OF THE CAUSE OF SUCH OVERRUNS.

FINALLY, WHILE YOU URGE THAT YOU WOULD HAVE BEEN PERMITTED TO RETAIN THE 1,667 UNITS IN QUESTION HAD THEY BEEN SECONDS, THE FACT REMAINS THAT THE UNITS ARE FIRST QUALITY AND THEREFORE COME UNDER THE EXPRESS PROVISIONS IN THE CONTRACT REQUIRING THE RETURN TO THE GOVERNMENT OF QUANTITIES PRODUCED IN EXCESS OF THE BASIC QUANTITY AND THE APPROVED OVERRUN, WHICH WAS LIMITED TO 500 UNITS. AT THIS POINT, IT MAY BE STATED THAT THE FACT THAT THE GOVERNMENT MAY HAVE PROCURED ADDITIONAL QUANTITIES OF THE SAME ITEM UNDER SUBSEQUENT CONTRACTS DOES NOT OPERATE TO NULLIFY THE TERMS OF YOUR CONTRACT, THE RIGHTS AND LIABILITIES OF THE PARTIES TO A CONTRACT BEING FOR DETERMINATION UNDER THE PARTICULAR CONTRACT INVOLVED. MOREOVER, THERE CANNOT BE OVERLOOKED THE FACT THAT THE CONTRACT PROVISIONS RELATING TO IRREPARABLE REJECTS, OR SECONDS, HAVE BEEN INVOKED TO YOUR BENEFIT THEREBY PERMITTING YOU TO RETAIN AT A UNIT PRICE OF $1.34 THE 257 IRREPARABLE REJECTS WHICH YOU PRODUCED IN ADDITION TO THE 1,667 EXCESS UNITS IN QUESTION.

IN LINE WITH THE FOREGOING, WE MUST CONCLUDE THAT THE CONTRACT VARIATION OF QUANTITY PROVISIONS ARE FOR ENFORCEMENT, AND, THEREFORE, YOUR REQUEST FOR ADDITIONAL PAYMENT UNDER YOUR CONTRACT OR PERMISSION TO RETAIN THE 1,667 UNITS IS DENIED.

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