Soon after award of a CPFF contract to the Western Airframe Corporation for development of a reentry cone for high-altitude weather research, Dan Wilson was named the NASA resident project engineer for technical administration of the contract. His scope of authority was outlined in the following contractual provisions: ARTICLE VII DUTIES AND AUTHORITY OF RESIDENT PROJECT ENGINEER (1) The Resident Project Engineer may issue directions (which include, but are not limited to, redirecting Contractor's effort, shifting of emphasis on work areas and suspending work of a research and development type) to the Contractor without the necessity of submitting these directions through the Contracting Officer if such directions are within the overall scope of work and rate of effort and within the funds provided for in the contract. (2) Assist the Contractor in interpreting technical phases of contract drawings, specifications, or other purchase description. (3) Assist the Contractor in obtaining such technical data as may be needed by the Contractor and which may be made available to the Contractor by or through the Contracting Officer or the Stage Engine Contractor. (4) Review the technical reports submitted by the Contractor in accordance with contract terms and notify the Contracting Officer of acceptance or nonacceptance when approval is required. (5) Perform technical acceptance of all specifications, and modifications to specifications, including top assembly drawings, as prepared by the Contractor pursuant to contract terms. (6) Initiate requests for preliminary engineering data necessary to keep the Government and/or the associated contractors currently informed of the development status and problem areas, prior to the issuance by the Contractor of formal information. (7) Direct the Contractor to deliver any prototype and/or research and development hardware items in the state of completion existing at the time delivery is specified in the directions. ARTICLE VIII TECHNICAL SUPERVISION The parties hereto agree that the maximum benefits obtainable from the work to be performed hereunder will be realized only by the Contractor's pursuing a program which is flexible and capable of adaption to changing conditions, and by providing for an extensive exchange of information between the Contractor and the Government as a basis for periodic revisions of the program through changes in approach to the problem. The work to be conducted under this contract shall be under the technical direction of the Resident Project Engineer assigned by the National Aeronautics and Space Administration, whose duties and authority are delineated in ARTICLE VII. The Contractor shall permit representatives of the Resident Project Engineer and Contracting Officer to inspect the work at any time and place during working hours. The Contractor may communicate directly with the Resident Project Engineer on technical aspects of the work being performed. Projects, and project approach aspects within the scope of this contract, will be authorized directly by the Resident Project Engineer to the Contractor in accordance with ARTICLE VII. The Resident Project Engineer does not have the authority to authorize projects or project approaches which would entail additional funds or any changes in the scope of work under this contract. Resident Project Engineer's Instructions hereunder may be either written or ratified by him in writing. Several months after the contract started, it was discovered that the necessary heat-resistant properties specified for the material to be used were beyond the capacity of anything yet developed. Mr. Wilson held a conference with Western engineers to discuss the problem, and, after several hours, they reached a decision to conduct additional research in the area of heat resistance to determine whether or not the specification could be met. Since the decision was purely a technical one, Mr. Wilson authorized Western to proceed. The companys engineers ran into difficulties almost immediately, but, after several attempts, were able to develop an alloyed material that would withstand the specified temperature. A few weeks later, Western submitted a $138,000 voucher for the work, most of which was attributable to the highly skilled labor that had been used in developing the new, more heat-resistant material. When compared to the overall work completed on the contract, this voucher made a cost overrun of some $125,000 imminent. After reviewing the history of the contract with Western, the NASA contracting officer said he believed that Mr. Wilson had overstepped his authority when he told the company to conduct original research. He stated that he did not feel that the NASA was obligated to pay for the research.

QUESTIONS: 1. Comment on this procurement. Did Mr. Wilson have the authority to make the decision he did?

2. Is the contractor entitled to an equitable adjustment? Why or why not?