Free Proposed Findings of Uncontroverted Fact - District Court of Federal Claims - federal

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 1 of 30

2

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 2 of 30

John W. Farris

3O

1 2 3

government counsel has referred to it as unfortunate Exhibit Number 8 -- I'm glad to have it, personally. Would you look around over there and see if you've got Exhibit Number 8 in your pile? Here it is. Got it. In Exhibit Number 8, I believe that the lower e-mail is written by you; is that correct? Uh-huh, yes. And in here the AMC/AMSC is 3N? Yes. What does that mean? It is a code that is assigned by the technical review as a result of a technical review of a Technical Data Packet to determine whether or not it is -- it has all the data needed to produce the part by anybody. And a 3N is a restricted code, meaning there is some reason why you cannot release this TDP for a full and open competitive action. And N specifically means there is special test equipment, involved. Do you know when the technical review that you're referring to may have taken place? Here's what happened in this case. We went through the norma! technical review. It was assigned a G

4
5 6
7

8
9

i0
Ii 12 13 14

15
16 17

18
19 20 21 22 23

Huntsville Reporting, Inc. (256) 533-9399

474

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 3 of 30

John ~. Farris

31

1 2 3 4 5

code, meaning that it was fully competitive potentially. That was probably a mistake. Someone didn't catch the -- those page three and page ten of the mylar being unreadable. So, it went through the acquisition center to be solicited. Okay. When these intercept actions started coming in, that's when we noticed that it required special test equipment in the testing spec, and that's when we recommended that it be restricted to Raytheon based on that reasoning. And then I prepared a document to file a 3N code restricting this procurement to Raytheon. Okay. And that was -It was after it went out on the street ~forthe solicitation. But it was sometime in the 2000 time frame, 1999-2000-2001 time frame? I can't confirm exactly when it happened. Would you have in your records something that could " tel! us the date that that was prepared? Yes. Is that something you would be willing to provide to counsel to provide to us?

6
7

8
9

i0
Ii 12 13 ~. ,14

15
16 17

18
19 20 21 22 23

Huntsville Reporting, Inc. (256) 533-9399

475

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 4 of 30

John W. Farris

32

1 2 3 4

Yes. It's not classified confidential -NO.

-- or whatever? MR. RIGGS:

Okay. Joan, we would request that record.

5 6
7

I understand discovery ends at the end of this week. And if need be, I can ask for a short extension to get that document, but I hope that wouldn't be necessary. MS. STENTIFORD: I'll have to look at the document. I mean I'l! agree to look at it, and if it's producible, I'll produce it. MR. RIGGS: Thank you. I appreciate that courtesy. THE WITNESS: Can I confer with Joan for a minute? BY MR. RIGGS: Q. You certainly may. out here? (Discussion off the record.) BY MR. RIGGS: Q. Let me understand in early 2000 your office became aware of the problems with the PROM data and the Why don't you guys use the office

8
9

i0
ii 12 13 .14

15
16 17

18
19

20
21 22 23

Huntsville Reporting, Inc.

(256)

533-9399

476

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 5 of 30

John W. Farris

33

1 2
3
no

stable base stuff with respect to these intercepts. Did I misunderstand your testimony? No. The intercepts never addressed the stable base. The intercepts addressed -- there was no -- these intercepts never addressed stable base issues. Okay. But as a result of the information that you acquired in that time frame, you initiated a document which you are going to provide to counsel to restrict the procurement to Raytheon? correct. And at least prior to the award the contracts office was aware of your office's recommendation not to award this to SDC, but restrict it to Raytheon? The response went back to-the acquisition center. Whose responsibility, in the great scheme of things from an engineering perspective, would it have been to determine the adequacy of the stable base drawings? This is going to sound very confusing. I'll work at it. My office is responsible for the tech lead. I don't know if you have ever heard of a tech lead. It is a business process where when a requirement is

4 5

6
7

8 9

10
II 12 13 14

15
16 17

18
19 20 21 22 23

Huntsville Reporting, Inc. (256) 533-9399

477

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 6 of 30

John ~. Farris

34

1 2
3

identified by the auto manager for something that's needed for supply, then it initiates a business process and a request goes to several organizations. We have the technical data division that looks at our configuration management status. It comes to my group, which is the -- does an engineering producibility review. Then it goes to quality assurance and they.do a quality review. Then it goes to our drawing repository, and they develop -- now they do a CD. I think back then they were doing hard copy drawings. All that's done in preparation of a solicitation going out on the street. And through that review we determine whether or not a spares part can be competed or not. And during that review, if we find that it can't be competed for any reason, there's something missing, then we go to the project office that has the authority over that part, that weapons system, and then it is their responsibility to tel! to us to restrict that item to whomever source that's been approyed. In the case of Hawk, it's usually Raytheon. And that's how the process works. Now, say my office does that engineering

4

5 6
7

8
9 i0 ii 12 13 14

15
16 17

18
19

2O
21 22 23

Huntsville Reporting, Inc. (256) 533-9399~

478

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 7 of 30

John ~. Farris

35

1 2 3 4 5 6 7

producibility review, and during that review they should have caught that that stable base drawing had a couple pages that were blurred and could not be used for producibility to make that part. That did not happen. So, it went out. And I say my office. I didn't see that because that's not my job at the time. It is now, but at that time I wasn't doing that. That was another part of my office. At that time I was supporting SAM-D to resolve these kind of issues. When intercept actions pre-award issues popped up, our post-award actions popped up, I would intervene and try to answer them without having to get SAM-D involved. I got them involved if I needed to. So, I didn't see anything before it went out on the street for solicitation, but other people in my office did, and they should have caught that that stable base had some bad images. If they had, it would have been restricted at that time to Raytheon based on illegible drawings. But it didn't happen. Okay. Were you involved in any of the discussions or issues over the programmable parts and programmable

8

9
I0 II 12 13 14

15
16 17 18 19

2O
21 22 23

Huntsville Reporting, Inc. (256) 533-9399

479

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 8 of 30

3

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 9 of 30

............... 480 ............." ........ SDC 1319

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 10 of 30

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 11 of 30

Jerry W. Hill

8

1 2
3

letter, it was because I was the supervisor of the contracting officer as a checks and balance type deal. So, you know -And you did attend some meetings with respect to that again as a supervisory contracts officer? Right. Do you recall attending a meeting in my office in this building in August of 2003 concerning what we call mylar stable base drawings? Yes, I think I remember the Occasion. Do you remember the mylar drawings that we showed you on that occasion as well as the other MICOM representatives -- excuse me -- AMCOM representatives? I know the mylars was talked about during that meeting, but I was not the technical representative. I'm not that familiar with the quality of drawings and stuff like that. Do you recall Mr. Tignor or any of the other technical people indicating that the mylars that we Presented were not sufficient to manufacture from? Not specifically. I can't remember him stating that specifically.

4
5 6
7

8
9

I0
ii 12 13 14

15
16 17

18
19

2O
21 22 23

Huntsville Reporting, Inc. (256) 533-9399

481

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 12 of 30

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 13 of 30

.)
) ¯ . Watson, Irene
From: Hill, Jerry WACQ Sent: Thursday, September 04, 2003 4:09 PM ~mith, Wes G LEGAL; Page, Pail] WACQ.;. Watson, Irene M ACQ To: Bowerso×, VVill~ur G ACQ Co: Subject: FW:'NSNs 5999-01-297-.1851, 5998~1-383-9443, ahd 5998-01-319-~313 ¯

"'.Original Message~ ¯From: T/gnor, Jerald F SAND Sent: Thursday, September 04, 2003 3:56 To: Hill, Jerry W ACQ ¯ Cc: Farrls, .lohn W Subject: RE: NSNs 5999-01-297-1851, 5998-0~t-38"3-.9,H3~ and 5998-01-319-'~313 Mr Hill, . ,.

Contract DAAH01-00-C'007TPart Number 1323.5072, NSN 5995-0-1-31§-4313. (enclosure 1) Digital to Analog ~ and Analog to D~gitat (DAAD} Circuit Card Raytheon has said they will not help on the DAAD card, or provide a better Mylar drawing, or Gerber files. We paid them for Level I1! documentation and they provided something much less. SDC Contract DAAHO1-01-D-0013 Part Number 13234917, NSN 5999-01-297-1851. Squelch .AmPlifier- still say there is no reason why i~can't be built.. SDC Contmct.DAAH01-00-P-O7410 Part Number 13385560, NS'N 5998-0'1-15~-3697, not sure still what SDC's problem Is. " Jerald F. 'Tignor (Jerry} Missile ¯Systems Management Braach,.SAMD Bulld.fng 7612, Room 226, Phone (256).313-6952 F~x 66~2 Red.stone A.rsenal, AL 35761 --:-Original Nessage---,. From: Hil!, .lerry W AO~ .. Sent: Tuesday, Augus~ 26, 200:~/~0:00 To: Tlgnor, .lerald F SAND. Cc: Page, Pa.~ W ACOj Watson, ~rene N AO:~," ' Bowerso~i W~lbur G:A¢O~ Smith, Wes G LEGAL S~bjecl:: PW: NSN.s ~999-01-297-J.851, 5998-0/..-383-.9~H3~ and.Sgg8-01-319~313 Gerald, You ~vere golng~to, let u~ k~5~ if you can ~]e.t the' ne~e~s~y tl0cumend~tion fi-om.Raytheon that '~vould allow for SDC to perform on the cSntracts. We'need your answer (A_'SAP). " ---.Original t4essage---From: Page~ Pa..ffi W' ACQ "" ." ¯ . ¯Sent= Tuesd.ay~ August 26~ 2003 10:3~ ~,t4 .... To: Watson, Ztene FI ACQ Cc~ Bowe~so>t, Wilbur G A~O.; Hill, .lerry W ACQ . . ~;uDjec~,.FW:'~" NSNs 5999-01-297~1.8St1 5998-01-383-9,H3, and"E998 - O~ -. ~19.4. 3 13

482

SDC 1301

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 14 of 30

From= Sin. ith, Wes G LEGAL Sent; Tuesday, August 26, 2003:1(~:21 AM To: Page, Pa~ W ACQ Subject; RE; NSNs 5999-01-297-:1851, 5998-01-383-9,H3, and 5998-01-319-4313 . John says in his message below that the 0741 part should 9n;Y be p.mcured from Raytheon, I guess regar~liess of whether the drawings are good or not, since we know we don't have good electronic data.. I jus.t wanted him t5 find out'whether the drawings we gave 8DC are good for purpos:es of h. andling the SDC claim that t expect any day now. But, have we given up on Tignor being ~ble to rectify the TOP problems on the two circuit card assemblies by obba~ntng further drawings and dab? Has anyone heard from Tignor? .... Original Message--From: Page, Patti W ACQ Senl:: Tuesday, August 26, 2003" :10::11 AM To: Smll:h, Wes G LEGAL Subject.' RE: NSNs 5.999-01-297-i851, 5998-01-383-9443, .and 5998-.01-319-43!3 Does this mean that again, the info below Is not necessarily hi~e? It specifically addresses each contract separately. I just stopped an award for the same NSN as 0741 based on this and now I have to go_rebieve the package until ~ve get yet another Verification tha. t what we. say IS what we sayll Can you tell I'm a little touchy on .this-su.bject?
Oh well, such ~s life.

Patti .... Original Message--From: Stall:h, Wes G LEGAL Senl~: Tuesday, Augu~ 26, 2003 9~43 AM .Tot Page, Pat:/W ACQ; Wa/son, ~rene H ACQ . S. ub]ecl:." FW; NSNs 5999-01-297-1851, 5998-01-383-9,H3~ and 5998-O!-319-4313 I asked John Fa~s to go and take a look at the drawings for 0741, To my knowledge, they haven't been verified as be~n.g like the ones for 0077, or good drawi.ngs.. He sald he'd by to do it today. ¯ ¯

Wes Smith AttomeylAdWsor AMCOM L~gaI.Office 84~L0537
. =--Odglnal Message--" . ; .. From; Farrfs, 3ohn.W" " Senti Tuesday, August 26, 2003 8:10 AN. To: Watson, Irene H ACQ . Cc: Tlgho.r, 3e~ld F SAND; Sml~h, Wes G .LEGAL;. Rodr~guez, Rosalio "LEO" Subjecf:: P~: NSNs 5999-01-297:1851,.5998-0~-383-9443, and Eg98-O1-31g~313

Thoc6ndiffon'ofthe TDPs for the sutiject NSNs'ai~ as fc~llow~: 483 SDC 1302

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 15 of 30

NSN 5999-01-297-1851, PN i3234917, Electronic Component: TDP is valid, stable base drawings are in good condition; all documentation is .avaihble. AMC/AMSC Code is 1G, fulIy competitive.

NSN 5998-01-319..4313, PN 13235072, Circuit C'ard Assembly: TDP has missing data (Computer Progra~ digital data.). AMC(~M copy of stable.base drawhags are inadequate, requires : special test equipment.. TDP is restricted to Rayth.eon, AMC/AMSC is 3N. Part is only proeurable from Prhne at this time. NSN 5998-01,383-9~143, PN 13385560, Ckeuit Card Ass.embly: TDP h~s missing .data (Computer Program digital data), requires speeiaI test equipment. TDP will. be restricted to Raytheon, AMC/AMSC will be 3N. Part is o~ty procurable from Prime a.t this time.

John Farris
Industrial Operations Div . AMSAM-RD-SE-IO-TL Enghieering Dk.eotorate 876-7254, DSN 746-7254
' ----'-Original Hessage~From= Watson, Irene M ACQ Sent: Honday~ August 25s 2003 9:56 AN "T6: Tlgn0r~ Jemld F SAMD; Wert~z~ Robert L SAMD; i~arrfs, John W; S~nlth, Wes G cc: Bowe.rsox~ Wilbur G A¢03 HilI~ .lerry W ,5(03 Page, Patti w AC:Q Subject= NSNs S999-0:1-297-1851~.5998-01-383-9443, and 59.98-01-319-43/.3 :importance: High
IMMC has verified fi3. at subJe& NSNs are FM~ Case customer buys. This office still URGENTLY' needs t6 know .the vafid![y of the TOP due to pending ac~fofis. Request you provide a spe .clfic answer for each NSN. ' irene Wa.~o~ AC-LS-M 6-4293

SDC

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 16 of 30

)Fror~: Sent: 1"o: Subject:

Page, Patti W ACQ .Thursday, August28, 2003 4:09 PM Hill, Jerry W ACQ; Watson, Irene M ACQ FW: RE: NSNs 5999-01-297-1~51, 5998-01-383-9443, and 5998-01-319-4313

co:

Bowersox, Wilbur G ACQ

Patti
--.-Odg|nal Nessage----~ From: ~ Fa~s, .~ohn W ~u~ay~ ~g~ 28, 2003 4:06 PN Sen~ Sml~, W~ G ~L; Pag~ Pa~ W A~ Tot Sub]e~ . RE: NS~ 5999-01-297-18S1, 5998-0 ~-383-9~3~ and 5998-01-319~3 ~ 3

Wes and Patti-

,Sorry, I a.lmost forgot to send this oqt. The stal~le .b~ses for NSN 5998-01-383-9.443 ¯ are in good condition and usable for mai~uf~c~urin~l ~urposes. However, we still don't have the computer programs indicated in the Tech Data p.ackage.

The condition ofthe T~)Psfor thesubject NSNs are as follows: NSN 5999-01-297-1851, PN 13234917, E~lectron[c Component: TDP is valid, stable base drawings are in good condition, all documentation is ~vailable. AMC/AMSO Code is 1G, fully competitive. NSN 5998-01-31§-~313, PN 13235072, Circuit Chrd A~sembly: ¯ TDP has missing data .(Computer P.rogram'digit~l data). AMCOM copy o.f sta.ble base drawings are inadequate, requires. spec.ial test equipment. TDP is restricted to Raytheon, AMC/AMSC is 3N. Part is only procurable from Prime at this time. ' ... NSN 5998-01-383-9443, PN 133.8556"0, Circuit Card Assembly: TOP has mis~data iComputer-Prog~ain digital data), requires special test z485 SDC 1304

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 17 of 30

Watson, Irene M ACQ
Sent: '" To: Page, Pa[li WACQ; Watson, lre,~e M ACQ; Bowerso×, Wilb.ur G ACQ; Smith, Was G L. EGAL Cc:. Subject; FW: NSNs 5999-01-297-1851, ~998-01-383-9443, and 5998-01-319-4313 Gerald, You were go!ng to let Os know ify~u can get the necessary' documendation Prom Ra .ytheon that would allow for 8DC to perform on the contracts. We need your answer (ASAP). --Origin~! Hessage .... " From," Page~ Pa~ WACQ Sent'= Tuesday', August 26~ ~003 10:31 AN To; Wal:sdn, :irene N .Cc,' Bowersox, Wilbur G ACO~ H[ll~ .]err,/W A=Q Sub:~ectt ~ NSNs 5999-01-297-18.51~ 5998-01-383-9,H3, and 5998-01-319-~313 P(I ~Orlglnai Nessage '---¯ From= Smll:h~ Was G LEGAL ...... Senb Tuesday/Augusl: 26/2003.1.0:21 AN To; Page~ PaUd W AL"q ¯ Subject= RE: NSNs 5999-01-297-1851, 5998-01-383-9~H3~ ahd $998-01-3:t9-4313 John says in his message below that the'0741 part should only be procured from Raytheon, I guess ~egardless'of" ¯ whether the drawings are good orJ~ot, sl~ce we know we don't have ~ood electro, m'c data.. I just wanted him to find out whether th.e dmv~ngs we gave SDC are good for purposes of handling the SDC claim that !. expect any day.now. B.ut, have we given up on Ngnor being ahle to rectify the TD.P p.robtems on the.two circuit card assemblies by' obtaining further drawings and data? Has anyone heard from ~gnor? ~ ---Original 'Message~ From,' Page, Pal~i W AC.Q Sentl. Tuesday~ Adgust 26~ 2003 10:II AM To; Smith/Wes G LEGAL. Subject= RE: NSNs 5999-01.-297-185!~ 5998-01-383-9ad13," and 5998-01-319~313 Hill, JerryWACQ Tuesday, August 26, 2003 11:0~ AM. Ngnor, Jeralc~ F SAMD

Does this rriean that again, the Info belov~ is not necessarily true? it specifically addresses each conbaot ¯ separate~,. I just slopped an award for thesame NSN as O741 based on this and now ! have to go re,eve ~e pacl~age until we get ye~ another vedfi~tidn that what we say IS what we sayll Can you tell I'm a little . ¯ ." ¯ touchy on this subject? '

-L-Original Hessage---.. From= Sml~, Was G.LEGAL Sent= Tuesday~ Augus~ 26/2003 ~1:43 AH Toi .Page, PaPJ WACQ; Watson, Zrene H ACQ Subject; FW: NSNs 5999-01.-P-'97.-18~1/Sg98-0Z-383-9~3, and 5998-01-3:L~-~313 asked John Fa~s to go and take a Ioo~ at the-d~awings for 0741. To my knowledge, thSy haven't

486

SDC 1306

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 18 of 30

been veclrled as be;ng iike the ones for 00i7, er good'dra~,ing~. He sa~d he'd (ry to do k today.

Wee Smith At'torney/Advisor~. AMCOM Legal Office 842-0537 ----Original Message---From= Fan'Is, John W Seht; Tuesday, A. ugust 26~ 2003 i]:10 AN. To~ Watson, Irene H Wes G lEGAL; Rodrlguez, Rosalie "lEO'" " Cc. Tlgnor, 3eralcl F'~AND; Smith, ACQ . . Subject= RE: NSNs 5999-01-2~7-1851~ 5~98-01-383-9q43~ anti 5998-01-3J.g-~313

condition, of the. TDPs. for the-subject.

. NS!q's are:. e3. .folio ,ws:.

NSN 5999-01-297-1851, PN 13234917,'Electronic Compongnt: '~P ~ v~i~ s~blo b~e'~a~gs ~e ~ good condition, all ~9oumenta~on av~lable. ~

~c/~sc Code is Id, ~II~ competi~w.

NSN 5998-01-31 ~-431~, PN iJ235072; Cirouit Card Assbmbly:... TDP h~ missing data (Computer Progr.am digdtal data)..AMCOM copy o~' stable base drawhags are inadequate, requitals "siOeeia! test equipment. " ' " ¯ .. TDP is.restrioted to Rayt/ieon, AMC/AMSC is 3/~. Part is only procurable froha Pr'nhe at this time. NSN 5998-01-383-9443, PN 133"85560, C!reuit Card Assem. bly: TDP has m~ssing data (Co~puter Program digital data), requires special test equipment. TDP will be restricted to.Ra.yth~oz~, AM~/AMSC ~vill b.~ 3N. Par~ ~s only proeurabls fi'om Prime at this time.

., ~rolm.Farris
Industrial Ope~tions'Div Engineering Directorate ¯ 8.76-7254, DSN 9~d-7254 ¯
¯ ----Original Message-L~.. Fm~= Watson, Irene M ACQ Sent. Monday~ .~ugust.25, 2003. 9:56 ~ "ro=.Tlgnor/3emld F SAND; Wertz,.Robert L SAND; Far~, 3ohn W; Smith, Wes G LEGAL

10/3/2003

.487

SDC 1307

Case 1:06-cv-00232-LMB
oo

Document 41-19

Filed 10/29/2007

Page 19 of 30

~;c= Bowersox~.Wilbu~ G ACQ; Hill~ 3arty .W ACQ; ~?age~ PabJ ~V ACQ ~;ubjecl:; NSNs .~999-01-297-:t851r 5998-0:1.-383-9,H3, and 5998-0:t-319-4313 Zmpor'r.ance: High

IMMC has verified that subject NSNs are FMS Case customer buys. This office stlll URGENTLY needs to know the val[cli~y of the TDP clue to pending actions. Request you pr6vlcfe.a spec'ific answer for each NSN. Irene Watson AO-LS-M 6-4293

488

SDO 1308 .

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 20 of 30

6

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 21 of 30

489

November. 12, 2004

DCMA Atlanta ATTN: DCMAE-GATC/P. Slemons 2300 Lake Park Drive, Suite 300 Smyrna, GA 30080-4091 Dear Mr. Slemons: . Unfortunately after disoussigns withour subcontractor, they ar~ '~mwilling to accept the inventory in. order to reduce their claim. As a good faith attempt to settle, we offer to discount the subconlractor costs, SDC costs, other than settlement costs, and profit at 20%. The proposal therefore is as follows: Settlements with 8uboontractor Other Cost Profit ' Settlement Expense .

$313,530 (80% X $391,913) 15,442 (80% x $. 19,303) 238,000 (80% x $297,500)" .. 31,353 (80% x 39,191). 19,316

We understand that this amount is in excess of contract value bfit it should be note~l that .the excess-costs are due to delays aud disruption caused by the Government and.therefore should be. e'onsidered as an.equitable adjustment to the original contract.' This will partially reimburse SDC for the excess costs incurred res.u.lting.ffofia .the Government actions. Ou~ sub~ontraetor TBE has provided the following aualy'sis'to substantiate their entitlement to payment for the inventory:

"GOVERNMENT OBLIGATIONS ON SDC HAWK I CONTRACT

I. SUMIHARY. In May 2000, AMCOM awarded Contract No. DAAH01-00-C-0077 ('.°dae Contract") to SDC for supply of Hawk circuit'card units. The Contract w~ aw~ded as a build-toprint, production contract with a Level 3 Teehuical Data Pael~age ("TDP"). The TDP provided by the Government contains defects mad deficiencies t~t preclude performing ¯ the Contract on a build-to-pr[ut, production basis. The Government has not corrected
225 Spraglns Street, Sul~ G Huntsville, AL 35801 Phone: (256) 382-4600

- 162-

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 22 of 30

490

and/or resolved defects and dbficiencies of the TDP to allow production on a build-toprint basis. The delivery schedule specified in the Contract was: (i) for two first articles - 8 August 2000; and, (ii) for the first twenty-two 22 production units with first article - 2/3 February 2'001..After the above specified delivery schedules passed, the Government fulled to terminate the Contract orreestablish a new delivery sehedule for the Contrhet. Consequently, the G~vernment has'waived the delivery schedule for the COntract, and ~6 delivery schedule currently exists. To uu~aterally reestablish a new delivery schedul, e, the Govemmehtmust take the ~ontractor (SDC) as the Government finds SDC. That means without correcting .the.TDP to allow production on a build-to-print basis, and providing SDC the information/equipment it nee.ds,.the Government oatmot unilaterally reestablish a new delivery.schedule. C. DmSng negotiations for'the Contract, the parties understood and ~greed ~t SDC's pricing. was based on SDC acquiring all material requiredfor contract performance on a one-time buy, .including material ffecessary for option quantities, Accordingly, the Contract authorized SDC to procure all mater~al quantities neeessar~ for contract performance, including unexer~ised option quantifies, prior to first m~dcl~ approval. Pursuant to such contract authority, oh 6 .lune 2000, SDC awarded Pur~imse Order SDCO06 ("the Subcontract") to .TBE to. aeq .~e material for parts req.ulred by the Contract. TBE did acquire all the material required by the Subcontract with SDC, whichparts are ready for delivery. The Government cmmot now refuse to accept 'mad pay for material aequ~red/contraet.ed for prior to first a~'ele approval.
FACTS.

The Basic Contract ¯ 1. The Govermnent and SDC exeduted the Contract in May .2000.' The Contract is abuild'-to-print, production Contract for 2 first articles aud 22 production units, with remaining possible units priced in range quantities as options (up to a total of 129 units). Contract, Section B. 3. The Contract's delivery schedules are listed as -a. for two first articles - 8 Aiagust 2000 (Cbntract CLIN 0001AA); b..for the first twenty-two 22 production units with fi~st article - 2/3 February 2001 (Contract CLIN 000lAD). 5. SDC's Offer was incorporated in t~e Contract. Contrac~ SF26, Block 18.
225 Spraglns S~reet, Su~te G Huntsville, AL 35801 Phone: (256) 3824600

- 163-

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 23 of 30

491

6. At Contract provision 1-65, the Contract contains the First Article" Clause at FAR 52.209-4, ¯ without Alternate L The "eladse without. Alternate I puts the risk of purchase of production quantifies prior to first ardele approval on ~h9 contractor. Th6 clause with Alternate I permits the contractor to purchase production quantifies prior to first artMe with the aplSrovil of the contracting o~eer. The Contract contained the standard contract provisions for fixed-price supply contracts, inclu~g the FAR 52.249-2 TERMINATION FOR CONVENIENCE OF THE GOVF2,NMENT (T!XED-PPJCE) clause. Contract clause 1-43.

SDC's .Offer
ta SDC's PIoposa! Revision B (da~t I3 March 2000), submitted to AMCOM's Geraldine Williams, sDc's proposed prices were based on buying material for the entire quantity of 129 Boards, which includes first articles and production units. (incldding ¯ option quan.tities), a~ an u~fr0nt, one-time buy. ..
| =

Ia a 31 March '2000 Memo to AMCOM's Geraldine Williams, DCMC Indust~al Specialist Charles Kireh noted that:. a. he ~ performed a material cost review of SDC's proposal at.A!VICOM request;

¯

b..he approved of SDC's pricing concept of a one-time, up-~ont material buy (but questioned some of SDC;s cost and pricing dati forthe material);. any other m~terial pricing methodology would mean ttmt sDC's option year pricing would have to be v.ery high; e, the economic incentives of.a one- ".~ae, up-~bnt buy was obvious; and

f the material bould be a separate contract JJne item.

10. In SDC's Proposal Revision C (dated 4 April 2000), submitted to AMCOM's Gera!din~ Wil/iams, SDC- .
a. noted thatit continued its proposal prieiag based on the concept era one-dine, up~ont material buy for the entire quantity of 129 Boards" (which includes first ardcles and production units (ineluding opt~0n quantities), as an up-front, one-time buy), and b. re~sed its pricing based on Mr. Kirsh's comments.
225'Spraglns Street, Suite G Huntsville, AL 35801 Phone: (256) 382.4600 Fax:: (256J 3'82-4601

- 164-

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 24 of 30

492

Revision C, Att~hment B pricing basic contract qU.matifies (24) aud option rauge quantities (105), total 129 is b~sed on the one-time, up-£ront.buy of.material for !29. boards. 11, In a 2 May 2000 letter, SDC's Ms. Gilehrist a. accepted AMCOM's counter offer for a fixed quantity of 2 first article ~ud 22 production units ~ud option year prie'ing as reflected in SDC's Revision C proposal; mad reiterated unit prices, to iuelude prices for option year ranges in Attachment A to that letter, which, fo.r opdon years: ~ are the same as reflected in Revision C, Attachment B, and (ii) do not include costs for materials for ~ption years. Unit priceS," ~neluding option unit p.ricea, as reiterated '.m Attaehment Ato .Ms. C~christ'~.9..May letter mad as stated in the Contract, were clearly based on the onetime, up-front material .buy communicated.to AMCOM by SDC ahd DCMC.. 13. Costs.of a one-time, up-front material buy: (i) were. priced into Contract quantifies, (ii) were the basis of the award price; and, (ih') AMCOM was, .or should have bee.n, aware of such pricing. The Subcofltraet 14. After award of the Contract, SDC took timely action to make a one-time, up-front material, buy as the p.arties taad envisioned.for material quaufities required for Contract performance. Namely," on 6 June 2000, SDC awarded TBE the Subcontract (SDC Purchase Order SDC006) in the .amouut of $397,771:58 to acquire material for parts required for SDC Contract l~efformanee. 15. By !(evision 2 to the Subcontract, dated 11 July 2000, the total Subcontract purchase price for delivery of material to fabricate, assemble, anddeliver 129 Hawk circuit cards, including Idtting and delivery to SDC, was increased to $403,297.58 to cover costs for receiving, inspeetio.n, and ldtting. 16.. TBE did timely acquire Con.tract eonformi_ug parts re.qu~edby the Subcontract with SDC, which parts are ready for delivery. 17. TBE has completed all Subcontract requirements and awaits only delivery instructions mad payment for final Subcontract close-out.

226 Spraglns Street, Suite G Huntsville, N' 35801 " Phone: (256) 382-4600

- 165

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 25 of 30

493

The TOP,

18. The specifications and TDP purport to be Level HI, ready for build-to-print, mass production: 19. The specifications and TDP were not ready for build-to-print, mass production. Generally, the TDP appears to be a package that was developed in the 1960's Or 1970's and accepted as .a Level Ill package, while, in fact, several key pieces of data aud procedures had not been procured from the developer by the govemm6nt. These items. include: (1) electronic programmable parts da~ (2) electronic raw board fabrication and test data (i.e., ICT and Gerber files), and (3) a clear and unequivocal set of functional test procedures that can be used for test, debug and acceptance of the finished product. It also appekrs that these packages have not been checked or updated to reflect what technical data js actually available from the development effort, and it fa~ to include newer regulations bymilitary audnon-military government agencies ¯ (e.g. EPA) and updated MIL-Spccs and MISs. 20. Specific data defects and d~iciencies include, but are not limiled.to, the ~oll0wing. Th~ TDP references program co~le in electronic format for Programmable Parts that has not b~en made a~ailable by the Govermfient as provided in the TDP. The data is not available to SDC, and the Government has indicated that it will not make the req~ed ~ta available to SDC. Such data is requir~d for bYrd-to-print production of the Hawk circuit cards.
bJ

Them are no dearly-defined "gotno-go" test procedures for acceptance that can be perfonved by production techt~cians that. document resull~ showing the boards are acceptable to the government. Ambiguity in the MIS or performance spee, such as MIS-41341, appears to require that all the boards (not only First Articles) meet all the contenis of the performance spec, even though the government said it was not a~.tually ~Iesired that the production boards be subjected to life-draining environmental tests. The exact set of tests required for acceptance testing should be cIe .arly defmed in the RFP and contract.

Th~ TDP aud referenced MISs (performance specs), list old, obsolete mud expensive test equipment for use in testing the boards, equipmeht and procedures more appropriate for a developmental, not a produetion: effort. The specs and drawings call for use of Ozone Depleting Chemicals during cleau~, g and preparation of the PWBAs. However, current 13PA regulatio.ns discourage or prohibit use of such materials in modem-day board processing and assembly.
225 Spragins Street, Shlte G Huntsville, AL 35801 Phone: (256) 382.4600 Fax'. 1256J 382.-4601

- 166-

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 26 of 30

"494

21. While the parties have been discussing alternatives in an attempt to overcome specification and TDP defects/deficiencies so that SDC might complete the Contract, AMCOM has been unable to supply the necessary data and procedures that will allow SDC to perform the Contract on a build-to-print, production basis.
IIL ANALYSIS.

The Defective Spec.,ificafions Provided by the Government Constitute a Constructive Chahge~ Entiflin~ SDC to an Equitable Adjustment.. The law is very dear that the Government warrants the adequacyof specifications it provides, and that a contractor is entitled to an equitable adjustment under the C]mnge's elanse if the .'Government provides defective specifications. The basis for this legal premise may be best set ' forth ha GreenbfierIndus~es, ASBCA 22121, 81-1 BCA ~[15,057, where the Board noted at 74,135: Since each appears to be an ".innocent i~arty, the law of .warranty permits the [eontrabtor] to have recourse against the Government as author of the ¯ specifications, the root eanse of the ... pr.oduetion problems: .The Government's failure t~ provide ~DC program, code-in electronic format for Programmable Parts as ~?equired by .the TDP (FACTS 20a)can be considered either asa Government constructive ehang.e under the doctrine of implied warranty of speeif!, cations or as a constructive change for failure to provide required property under the Government provided property clause. The result is the same. The Government is legally responsible for all costs that SDC has and will in.cur due to t~t failure. If the Government is insistent that SDC develop those code.s, than th.e .Government would be responsible for all developmental and production' costs associated therewith, The Government is also liable for increased costs of'performanceif the specification prescribes. procedures and tests.(or ~ails to provide such proe.edures and tests) that make performance at the c~ntemplat.ed level of.prodtm.tion impossible. See e.g., La Crosse Garment Man~aeturin~ Co. v. United States, 432 F.2d 1377 (Ct. C1. 1970). The lack ~f dearly-defined "go/no-go" test procedures for acceptance, the ambiguities in perfoi-manee specifications, and Be specificationlisted old and obsolete test equipment and procedures (FACTS 20b-d) dearly prohibit production of.the Hawk circuit boards on a. build-to-print, mass production basis. These defects fall Within the types noted in La Crosse, where the Board explained at 180-81: "Mass production" is a variable; there are countless degrees betweefl laborious production of units, one at a time, and there rapid flow on a production line. "

225 Spraglns Street, Suite G Huntsville, AL" 35801

- 167-

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 27 of 30

495

Performance may. become unsatisfactory and costs may increase in varying degrees. By reason 'of [specification defects] which may ..cause dLf~culfies, inte=uptions, slowdowns and delays which fnterfcm w~th mass production without m~g it ~mpossible, The measure for dete~:m~ation of damages is therefore the degree of interference with satisfactory production.

Here, SDC's damages as a result of these interferences may also rise to the level of commercial knpmcticality due to the anticipated very high additional cost of perform .auce bemuse of the defects and deficiencies. The 'specs and drawings which call for use of Ozone Depleting Chemicals during a~.d preparation of the PWBA~ ran afoul of current BPA regulations. FACTS 20e. This also makes the specifications defective. See, e.g., C..asfl~ .Construction Company, ASBCA 28509, 84-1 BCA ¶17,045. Given that AMCOM has waived the delivery schedde and must take SDCas AMCOM curt.early finds SDC (see section IIIB below), specification, defects and deficiencies must be coireeted, 'wi~ attendant costs, so as to allow SDC to perf6rm before AMCOM may unilater~y reestablish a new delivery sehedu!e.
AMCOM has Waived the Delivery Schedule and Must Take sDc as it Finds SDC in order to Unilateraliy Reestablish a.New D~livery Schedule.. .... ¯

The delivery sehe.dule specified'in the Contract is 8 August 2000 for two first articles, and 2/3 February2001 for the first 22 production uifits with first'hrticle. FACTS 3. W'e are now in 2003, and SDC has not delivered (and cannot with current specification defects and defieieneies deliver) units called for by the schedule. We are way'beyond dny re~sonable period of forbearance, and the Government has clearly waived the delivery schedule. E.g., ..Joseph De Vito v. United States, 413 F2d 1147 (Ct. C1. 1969). ..Any AMCOM uuilaterMly reestablished delivery date must be reasonable based on the performance capabilities of SDC at the time the schedule is tmj'laterally.reestablished. See e.g., .S.pasors Electronics Corp.,ASBCA 12877, 70-1 .BCA ~8119..Without curing the speeifidation defects and deficiencigs, SDC will be unable to perform. AMCOM must first correct the specification defects and deficiencies before AMCOM can unilaterally reestablish a delivery schedule. The Contract must come to some end. Since AMCOM has indicated that it cannot or will not .correct the. specification, performance completion according to the Contract is not a viable option, nor is atermination for default as AMCOM has waisted the delivery schedule. It appears the only viable alterative for the parties is a termination for convenience.

225 Spraglns Street, Suite G Huntsville, AL 35801 Phone: {256) 382-4600

- 168-

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 28 of 30

496

C. In any Convenience Termination, SDC is Entitled to Recover All its Ma'terial Costs. L The Contract Authorized an Up-Front Material.Buy of Material for 129 Boards. The Contract inco~orated SDC's offer (FACTS 5), which included a on'e-time, up-front buy of material for 129 boards. FACTS 8-11. Contract pricing was based on a one-time, up-front .buy of material for 129 boards. FACTS 12, 13. The Contract contained the First Article Clause at FAR 52.209-4, ~without Alternate I, This would normally put. the risk of purchase of production quanfitie~ prior to ~FLrst ar~cle approval on the contractor. However, that is not the case here because of the incorporation of SDC's offer into the Contract, and the Government's clear kffluence on aud acoeptahce of Contract pricing --- prloing wtfich included a erie-time, up-front buy of m~terial for all quautifies, ¯ including option quantities, required by the Contract. The Government would be obligated'to reimburse SDC for SDC's entire up-front buy "of material' quantities if the Contract were terminated for convenience. This outcome is dictated, not only be the Contract itself, but also by well recognized legal principles of Mistake in Integration, Interpreting Ambiguities, and Estoppel. With respect.to a Mistake hi Integration While itappears that there is more of a conflict between provisions (incorporation of'SDC's offer' versus incorporation of FAR 52.209-4 without Alternate. I), the. Contract must be reformed to reflect the parties intent. That intent is evid.enced.by the FACTS 8-.13, which show the incorporation 6f SDC:s offer into the Contract and the Government's influence on and acceptance of SDC pricing. Both of these factors show that t~e parties intent ~ to authorize SDC to make a one-.time, up-front buy .of ~ material quantities neeessary to .del!~eer, whether first article or production (inSluding option q6antities).

With respect to AmbiguiWWhere two Contract provisions appear to conflict, the oven~ding principl.e of contract interpretation is to interpret a contract as whole so as to avoid.rendering terms meaningless, to a~eoid co.nflict, and to fulfill the principal purp6se of parties. Here those principles dictate that'the hacorporafion of SDC~s offer means that the Contract must be read to mean that FAK 52.209-4 with Alternate 1 applies. The contract dearly incorporated SDC offer, which included a one-time, .up-front buy of material for 129 bo.ards. The p.rineipal purpose of the one-time, up-front buy of material for 129 boards, which was refleet.ed ha Contract pricing, was to save money for the Government. The Government participated ha and. accepted this prleing strategy. Reading the Government's acceptance of the incorporated offer as au agreement to reimburse SDCfor the
225 Spmgins Street, Suite G

Huntsville, AL 35801'
Phone: (256) 3B24600 Fax: 1256~ 382.4601

--

169 -

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 29 of 30

497

one-time, up-front buy of material for 129 boards is the only way to: (i)'avoid rendering SDC's incorporated offer meaningless, (ii) avoid conflict between 8DC's offer and Contract pfeing, and (iii) fulfill the parties' principal purpose of saving the Government money. .With respect to Estoppel (See, e.g.; American Electronics Laboratories v. Uiaited States, 774 F.2d 1110,1113 (1985) All the elements ofestoppel are met. 1. The Government knew that SDC's offer and pricing were based on the one-time, up-front buy of material for 129 boards. 2 The G~vernment, in accepting SDC:s offer, In'tended for SDC'to make a one-time, up-front buy of material for 129 boards, and/or SDC had a right to so believe. 3 SDC was not aware that tl~e Government did not intend for SDC to m~ike a onetime, up-front buy of material for 129 boards.

4 8D~ relied on the Government's conduct by making the one-time, up-front buy of material for 129 boards. ¯C0nsequently,. the Govemme.nt is stopped from denying that the Contract authorizes a onetime, up-front buy 9fmatefial for 129 boards. D. Impact on TBE o'f a termination for convenience. In the event that AMCOM terminates the Cot~tract for convenience, there would be no impact on TBE. Under stmidard termination.for convenience procedures, the Government'is 6bligated to reimburse SDC its allowable costs, including material "costs ~ud costs of setflemen~ with subcontractors, e.g,, TBE. Under 2~BE's Subcontract, TBE is eiatitled to be ~eimbursed at .the Subcontract price ..with respect to deliverable Subcontract items ready for delivery at the time of any SDC convenience termination. Since all item's required by the Subeontrhet have been completed, TBE is entitled to be paid the full Subcontract price of $403,297.58. See FAR 49.108-3(a), 49.205(a). SDC is nt~fled to he reimbursed these costs. If SDC or the Government re~luir~s TBE to lake action other Nan delivery (e.g., to take special action with respect to invgntories, prepare justifications), such costs eotd.d be categorized as termination settlement expenses. In addition to the Subcontract pride, TBE would be entitled to be reimbursed any such costs. A separate aeeo~mt should be opened to accumulate such costs. These possible additional TBE costs ire al!owable costs to SDC in the event AMCOM terminates the Contract for convenience.
225 Spragins Street, Suite G Huntsville, AL 35801 Phons: (256) 382-4~;00 Fax: (256) 382-461:)1

- 170-

Case 1:06-cv-00232-LMB

Document 41-19

Filed 10/29/2007

Page 30 of 30

498

TBE. would de.liver all Subcontract material to' SDC, who would in turn. provide them to the GoVernment. Sinco the subcontracted material is conforming, the Government oould provide th~ termination inventory to any replacement Hawk circ~iit card contractor as G6vemment ¯ fin'nished mater~al. V. Condusion. "It appears that the onl~ viable option £or all par~ies isto terminate "the Contract for convenience because, inter alia, the Contract specification is defective, .the Contract delivery schedul..e has been waived, and there appears to be no other way to end the Contract. Since SDC's offer incorporated in the Contract and the Contract's pricing included the on&time, upfront buy of material for 129 boards, the Government is obligated to re'.n'nburse .SDC the costs o£ that material. TBE is entitled to be r~imbursed in accordance with standard termimtion .ao~0unting. The Government is entifle.d to Contract inventories, which in tm'n can supply to other contractors as Government furnished material."

SDC be.~eves that the TBEposition is t~e correct .legal position. In orde~ to reachsettlement SDC'has proposed the above counter offer.
We hope to resolve this. matter as soon as possible. Sincerely,

'Virginia P. Oilchrist President VPG/eds

225 Spraglns Street, Suite G Huntsville, AL 35801 Phone: (256) 382-4600

- 171