Question
Several weeks after award of a fixed price contract for forty items of an electrical equipmentto the Lenny Company, Paul lenny, the cognizant engineer in
Several weeks after award of a fixed price contract for forty items of an electrical equipmentto the Lenny Company, Paul lenny, the cognizant engineer in the initiating technical section,received a letter from the contractor requesting clarification of a requirement in the contractspecifications. Lenny asked whether testing of a power supply at "125 percent overload" (as required by the specification) meant testing at "25 percent in excess of the normal load." A week later, after conferring with other cognizant technical personnel, Mr. lenny decided that the correct interpretation of the requirement was 125 percent in excess of normal load. It had been the consensus that a test at 25 percent in excess of normal load would be inadequate forthe extreme operating conditions to which the electrical units might be subjected. Although testingat 60 to 80 percent in excess of normal load would probably ensure prerequisite performance of theequipments, tests at 125 percent were considered more desirable. Mr. lenny forwarded hisdetermination to Lenny, explaining that cognizant NASA technical people agreed completely thatthe intention of the specification was "testing of the power supply at 125 percent in excess ofnormal load." Four months later, after the field center had accepted eight equipments under the contract,Lenny submitted a formal request to the cognizant negotiator for a $50,000 increase in the contractprice as compensation for having to manufacture a power supply that would perform satisfactorilyat a capacity of 125 percent in excess of normal load. The request, which cited Mr. lennysletter, stated that (i) the directive that necessitated manufacture of a power unit testing at 125 percentin excess of normal load was an addition to the contractual requirements; and (ii) the directive would increase the company's costs of production by the $50,000 claimed as a price adjustment. A cost breakdown was included to substantiate the request for the increase 1. Assuming that the increased costs will be incurred as alleged, do you feel that there is any contractual merit to Lenby x's claim? 2. If NASA refuses to consider the claim, has Lenny a further course of action? 3. What actions, if any, might Mr. Lenny have taken in this case to forestall a claim by the contractor?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started