Propellex held a fixed price Army contract to produce primers for artillery shells.  During production the Army found the black powder used in the shells contained excessive moisture and Propellex conducted extensive tests on the shells but did not separately record or otherwise segregate the testing costs from its general production costs.  Ultimately Propellex determined and the Army agreed that the government was at fault and Propellex filed a claim for the testing costs.  Since it did not segregate the excess costs of the testing it used a modified cost method to compute its entitlement that identified total production costs, subtracted non-government caused extra costs and payments with the remainder representing the test costs.  Citing Servidone Const. Corp. v U.S. (a modified total cost method must prove it was impractical to segregate its costs related to government caused extra costs) the Court denied the claim, asserting Propellex could not use the modified total cost method because it was unable to establish it was impractical to segregate the costs.  The facts it was able to segregate non-government caused costs and efforts (though not costs) for the testing were identifiable made it clear that is was not impractical to keep proper records of the testing costs (Propellex Corp., v Brownlee, 2003 WL 22076597).

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