Commercial Item T of C Clause Entitled Contractor To Payment for Work in Progress
The government terminated TriRAD’s commercial item contract for delivery of 10 simulators after the delivery of its first rejected simulator. TriRAD cited FAR 52.212-4 that provides for two prongs for recovery under terminations of commercial item contracts, arguing the first prong entitled it to be paid according to a percentage of completion of each of the 10 simulators, multiplied by the contract price and the second prong entitled it to other unavoidable costs resulting from the termination less any amounts paid upon delivery of the first simulator where costs would be documented using its “standard record keeping system” rather than complying with CAS or FAR cost principles. The Air Force argued since TriRAD had delivered only one simulator, which was rejected, it was not entitled to anything under the first prong and since its standard record keeping was minimal to nonexistent is had failed to demonstrate an amount for reasonable charges. The Board ruled in favor of TriRAD stating that when an item is manufactured on a production line items will be in various percentages of completion at termination where the percentage required under the first prong is both the items delivered and accepted and the items remaining in the production line. The Board stated the only reasonable interpretation of a “percentage of contract price reflecting the percentage of work performed prior to termination” is that it applies to all work performed including partially completed items on the production line. As for the second prong the Board rejected the Air Force’s argument that TriRAD must produce the type of data required in FAR Part 49 which “the termination clause specifically states is not required” (TriRAD Techs Inc., ASBCA No. 58855).
