ASBCA 56584

ARMED SERVICES BOARD OF CONTRACT APPEALS Appeal of-- ) ) Hanley Industries, Inc. ) ASBCA No. 56584 ) Under Contract No. W52P1J-05-C-0076 ) APPEARANCE FOR THE APPELLANT: Ryan K. Manger, Esq. Manger Law, LLC St. Louis, MO APPEARANCES FOR THE GOVERNMENT: Raymond M. Saunders, Esq. Army Chief Trial Attorney Brian E. Bentley, Esq. CPT Tudo N. Pham, JA Trial Attorneys OPINION BY ADMINISTRATIVE JUDGE PAUL This is a timely appeal of a contracting officer's (CO's) decision terminating appellant Hanley Industries, Inc.'s (Hanley's) supply contract for default. The Contract Disputes Act of 1978, 41 U.S.C. §§ 7101-7109 is applicable. In a decision promulgated on 29 November 2012, the Board denied the government's motion for summary judgment. 13 BCA ii 35,195. Familiarity with that decision is presumed. Subsequently, a five-day hearing was held in St. Louis, Missouri. FINDINGS OF FACT 1. On 29 September 2005, the U.S. Army Sustainment Command (Army) issued Contract No. W52P1J-05-C-0076 to Hanley to supply 37,718 MK45-1 Electric Primers (R4, tab 1 at 1-3). The MK45 primer initiates the propelling charge for shells fired from U.S. Naval warships (compl. and answer ii 2). 13 BCA ii 35,195 at 172,685. The firm-fixed-price contract had a total contract amount of $1,870,812.80 with a unit price of $49.60 for each of the primers. The negotiated contract included four option years with unit prices as follows: FY06, $49.63; FY07 $51.30; FY08 $53.04; and FY09, $54.84. (R4, tab 1 at 1-3) 2. The contract incorporated standard FAR and DF ARS clauses by reference, including FAR 52.249-8, DEFAULT (FIXED-PRICE SUPPLY AND SERVICE) (APR 1984) (R4, tab 1 at 36). The contract specifically provided that FAR and DFARS clauses which were incorporated by reference, "the full text of which will be made available upon request, [have] ... the same force and effect as if set forth in full text" (id. at 15). 3. The contract included, in full text, the Local 52.246-4506, STATEMENT OF WORK FOR STATISTICAL PROCESS CONTROL (FEB 1999) clause, also known as SPC. That clause described in great detail Hanley's responsibilities including its "commitment to continuous process improvement." Various subsections of the clause set forth requirements for, inter alia, "SPC Training," "Manufacturing Controls," "Determination of SPC Use," "Process Stability and Capability," "Control Chart Policy," "Vendor/Subcontractor Purchase Controls," "SPC Audit System," "SPC Records," and "Control of Process/Operation Parameters or Characteristics" (id. at 8-10). 4. Also included in the contract was the Local 52.209-4511, FIRST ARTICLE TEST (GOVERNMENT TESTING) (MAY 1994) clause, which provided: a. The first article shall consist of: ONE HUNDRED THIRTY MK 45 MOD 1 PRIMERS AND 5 EACH OF EVERY COMPONENTS PART AND SUBASSEMBLY (LESS EXPLOSIVE COMPONENTS) PER MIL-P-18714 REV D, AMENDMENT 1 AND ADL 10001-2434755K; which shall be examined and tested in accordance with contract requirements, the item specification(s), the Quality Assurance Provisions (QAPS) and drawings listed in the Technical Data Package. b. The first article shall be delivered to: SEVENTY-FOUR COMPLETE MK 45 MOD 1 PRIMERS TO: NAVAL SURFACE WARFARE CENTER, DAHLGREN DIVISION, 17320 DAHLGREN ROAD, DAHLGREN, VA 22446-5100/FITY [sic ]-SIX COMPLETE PRIMERS AND FIVE EACH OF EVERY COMPONENT PARTS AND SUBASSEMBLY (LESS EXPLOSIVE COMPONENTS) TO: NAVAL SURF ACE WARF ARE CENTER, IDIAN [sic] HEAD DIVISION, 101 STRAUSS A VENUE, INDIAN HEAD, MD 20640. The first article shall be delivered by the Contractor Free on Board (FOB) destination except when transportation protective service or transportation security is required by other provision of this contract. If such is the case, the first article shall be delivered FOB origin and shipped on Government Bill of Lading. 2  c. The first article shall be representative of items to be manufactured using the same processes and procedures as contract production.