Contract performance

Army Lawyer, Jan, 2005 by Steven Patoir, Andrew Kanter, Michael Benjamin, James Dorn

The manager of the Fort Bragg laboratory, in essence, successfully persuaded the Fort Drum and Hunter AAF managers to refuse employment with NTC. (1427) The managers, in turn, persuaded most of the other current employees to refuse to join NTC. These actions were taken with the explicit intent to thwart NTC's successful performance. (1428) In addition, LOGSA refused to provide NTC with a list of names of currently certified evaluators. (1429)

NTC could not obtain a sufficient number of certified evaluators at any of the three locations. The respective contracting officers terminated each contract for cause. (1430) The board found that failure to provide an adequate number of qualified personnel was a valid ground for terminating the contracts. (1431) The board also found, however, that the particular labor situation NTC faced was beyond NTC's reasonable control and did not result from NTC's fault or negligence. (1432) The board found that a labor situation will only excuse performance "in the most unusual circumstances" or "where abnormal circumstances exist which could not have been anticipated." (1433) The board viewed the combination of the incumbent chief's conspiracy, the LOGSA requirements, and the LOGSA refusal to share names as just such an abnormal circumstance. (1434)

Lieutenant Colonel Michael Benjamin.

Terminations for Convenience

Extraordinary, but not so Extraordinary You Get Profit on a Subcontractor's Efforts in your Cost Plus Fixed Fee Contract

In Lockheed Martin Corp., Naval Electronics and Surveillance Systems-Surface Systems, (1435) Lockheed Martin was the "lead contractor" in a contract with the Naval Sea Systems Command (NAVSEA) to qualify Unisys Corp. (Unisys) and Westinghouse Electric Corp. (Westinghouse) as second source producers of key components of the AEGIS Weapon System's AN/SPY-1 Radar System. (1436) The prime contract was a cost plus fixed fee (CPFF) effort between NAVSEA and Lockheed Martin. (1437) Lockheed Martin, in turn, contracted with Unisys for antenna work and with Raytheon for transmitter work. (1438) When NAVSEA terminated the prime contract for the government's convenience, Lockheed sought to include as part of its termination settlement a fee on its subcontractor's efforts. (1439)

NAVSEA contracted with Lockheed Martin under the provisions of FAR subpart 17.4, Leader Company Contracting. (1440) This subpart authorizes "an extraordinary acquisition technique" to direct a "developer or sole producer of a product or system" to be the "leader company" of one or more designated "follower companies, so that the" follower companies can become "source[s] of supply." (1441) The prime contract divided the effort into two phases. Each phase included submission of various plans and other data as set forth in a "Contract Data Requirements List" (CDRL). (1442) According to Lockheed Martin's subcontracts, the subcontractors had to submit data pursuant to a Subcontractor Data Requirements List (SDRL). (1443)

When NAVSEA terminated the prime contract, Phase I had been completed. (1444) Phase II was ten to fifteen percent completed, (1445) and the required CDRLs and SDRLs had been delivered. (1446) In determining a settlement amount, NAVSEA and Lockheed differed in only one main respect: "whether Lockheed Martin [was] entitled to a fee based on subcontractor efforts." (1447) Lockheed Martin asserted "'costs incurred for services rendered to the date of termination by the first-tier subcontractors are fee/profit-bearing costs,' and that it was entitled to fee on its costs for services rendered to the date of termination, including such costs from its first and second tier subcontractors." (1448) The government's position was the FAR did not entitle a prime contractor to fee or profit on subcontractor work. (1449)