The contract requires delivery of the Munitions & Armaments Deterrent (MAD) kits for the All Terrain Personnel Transport Vehicles (ATPTV) currently being used for joint operations worldwide. The MAD kits are designed as vehicular armor, making the outfitted vehicles bullet/projectile safe for personnel from the chassis up. The MAD kits are to be capable of being completely installed on the ATPTV by two personnel with standard issue gear in less than 30 minutes. Because of the unique requirements, these kits are non-commercial items.
A competitive award was made to the Armadillo Company (a local large business). Due to a new space age material proposed, their kits were one third the size of conventional armor plating, less expensive, and had more stopping power than conventional armor. The Armadillo Company is an original manufacturer of all-terrain vehicles.
Competitive negotiations resulted in a FPI-F contract with a base year target price of $42 million for the first 1500 kits with 2 option years for 750 kits per year which were separately priced. For the base year, the kits are to be delivered in 4 lots of 375 with the first delivery 4 months after contract award and remaining lots to be delivered every 2 months until the entire quantity has been received. There is also a 10% random sampling requirement to field test the kits before acceptance of the subject lot; no more than a .01% failure rate would be acceptable.
The contract contained minimum standards for protection and weight restrictions and the government is to provide all munitions to be used for testing of the kits. The contract includes incentives for performance that exceeds the minimum standards and weight restrictions and loss of incentives for performance that fails to meet the minimums.
Your office has retained all contract administration functions for the subject contract. Further, the program office for the ATPTV also insists that you continue to maintain complete oversight of the procurement from a contracting perspective due to the tight delivery schedule, visibility of the project, and the complexity of the negotiations which lead to award.
SITUATION: The first delivery lot failed to meet the established standard with a failure rate of .02%. When the contractor was asked to remedy the failure, the contractor indicated that the government representative had required a more stringent test than required by the contract (twice the amount of munitions required for the chassis integrity test); and requested that you as the Contracting Officer intercede.
Further, the contractor said that until this is resolved, the tests would be delayed as the decision would impact the production of kits for all remaining lots. Because the team of engineers that assist you on technical issues is not available for another two weeks, you are very uncomfortable making a final decision about testing requirements.
In reviewing the contract you note that FAR 52.242-17 Government Delay of Work, FAR 52.242-15 Stop-Work Order, FAR 52.243-1 Changes-Fixed Price, and FAR 52.246-2 Inspection of Supplies-Fixed Price, Alt I are included in the contract.
ASSIGNMENT: Identify, discuss, and explain relevant issues and viable resolutions strategy or strategies. Your answer should include (but is not limited to) a thorough discussion of these issues:
1. If the Government actually required more stringent testing, explain what might be the potential impacts of the Government directed change.
2. Explain the contractor’s obligations under the contract and whether they were met.
3. Explain what your next step would be.
4. Explain how FAR 52.242-17, 52.242-15 or 52.243-1 may be helpful in resolving this situation.
5. What recourse(s) do you have available at this point in the acquisition?
6. What potential recourse does the contractor have available?
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