Reference no: EM131405726

DELAY CLAIMS

Review this case carefully and answer the questions at the end of the case in detail.

You are the contracting officer in charge of administration of a contract for the manufacture of aircraft jet engines. The contract was entered into on August 18, 19X0, for a firm-fixed-price and contains the normal general provisions. The delivery schedule on this contract must be adhered to since the engines are to be furnished to aircraft manufacturers as government-furnished property.

During the performance of this contract the following delays occur:

1. September 10 to October 18, 19X0 - on September 10, the contractor informed you that the specifications for the jet engine contained a number of requirements which could not be met if the delivery schedule was to be met. Your review of the specific requirements pointed out by the contractor indicates that they are primarily items that were added to the specification after the last procurement by your technical division. Your technical people review the items and agree that most of them can be changed back to the previous requirements in order to facilitate meeting the schedule. Your change order accomplishing this reaches the contractor on October 18. In the interim, the contractor has been working on the manufacturing engineering aspect of the contract but has been unable to order long lead time components. He claims 30 days delay.

2. October 12-26, 19X0 - a strike of the machinists in the contractor's plant closes the plant completely.

3. November 3 to December 21, 19X0 - on November 3, your technical division informs you that a major change to the rotor section of the engine must be processed since defects have been reported in the field. You order the contractor to conduct an immediate expedited study of this problem under his continuing engineering contract (a separate contract) and to submit a proposed design change in three weeks. Because of the urgency of this redesign your technical people spend the three weeks at the contractor's plant and are able to process the change in 10 days after it is submitted by the contractor. You issue the change on December 7, and the contractor takes two additional weeks to process the change through manufacturing engineering into his plant. He stopped work on the rotor assemblies on November 3, when he found out about the change and therefore claims a delay of the entire 48 days.

4. January 5 to February 7, 19X1 - on January 5, the Excello Company informed the contractor that they were unable to deliver the subcontracted fuel pump for the engine because they cannot hold the precise tolerances required to manufacture the pump. In previous contracts the contractor had bought these pumps from the Ace Pump Company with no difficulty. However, on this procurement, following the clause in the contract requiring competition in subcontracting to the maximum practical degree, the contractor had awarded the job to Excello on the basis of their low competitive bid. The contractor immediately awarded another contract to Ace with orders to expedite delivery to the maximum. He claims a delay of 33 days.

Facing a delivery schedule calling for initial deliveries on April 15, 19X1, and knowing that the government would not allow schedule slippage, the contractor began working overtime on December 1, 19X0. As further slippages occurred, he added extra shifts and took all possible steps to expedite progress on the contract. However, it was apparent that he was in trouble and on January 25, 19X1, the head of your agency called a meeting with the contractor to determine what could be done. At this meeting the head of your agency told the contractor that the contract must be performed on schedule and suggested that he take further steps to assure timely delivery. The contractor worked Saturdays and Sundays from that time on and was able to deliver the initial group of engines at the end of April 19X1 (two weeks late).

He now claims compensation for the overtime, shift premium, loss of efficiency in expediting, subcontractor expediting costs, etc.

QUESTIONS:

How would you handle such a claim? Discuss each of the claimed delays and claim for additional compensation.