CONTRACT(Sanitized)

• Document Type: CREST
• Collection: NGA Records (Formerly NIMA)
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78B04770A000600030016-7
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 3
• Document Creation Date: December 28, 2016
• Document Release Date: September 26, 2005
• Sequence Number: 16
• Publication Date: July 28, 1966
• Content Type: MF

Approved For Release 2005/11/21 : CIA-RDP78BO4770AV 0600030016-7
NPIC/P&DS/D/6-1492
28 July 1966
MEMORANDUM FOR: Chief, Development Branch, P&DS
THROUGH: Chief, Interpretation Systems Section, DB
REFERENCES: (a)etter, Dated 19 April 1966
(b) Proposed Modification to the
Development of Prototype Modulated-Light
Film Viewing Tables Dated 30 September
1965
In reference (a), =claims that both the technical monitor
and the Contracting Officer, by their failure to stop the program,
have implied that the contractor was permitted to overrun the
authorized expenditure of the contract. The following discussion
should rebut these accusations.
1. On 23 September 1965, the contractor first notified the
technical monitor verbally that there would be an overrun on this
contract which was expected to be about II The contractor
agreed to submit the necessary documentation as soon as possible.
The expenditures as of 26 September 1965 (report received on
23 October 1965) were which was 64 of the allocated
funds.
2. On 1 October, a meeting was held at NPIC to discuss
reference (b). The contractor was specifically told that Tasks 1,
2, and 3 should not be incorporated within the scope of this
contract, because these items were interpreted as company initiated,
unauthorized changes in scope, but Tasks 4, 5, and 6 which had been
discussed since the beginning of this effort would be included.
Specifically, Tasks 4 and 5 were interpreted as overruns and Task 6
was a change in scope. This was a compromise on our part and was
considered by us and to be a negotiated settlement.
Q was asked to prepare an analysis as to the cost required to
incorporate these items into the contract either as a change-in-
scope and/or as an overrun.
3. I Ireplied to this request in their letter dated 14
October 17-5 Date received unknown7. They stated that
would probably be required for these three tasks and tha
would require authorization by 12 November 1965 because all of
the previously authorized funding would be expended by that date.
Approved For Release 2,005/11/21 : CIA-RDP78BO477OA000600030016-7 ceded tam ubmtik
i.1woog situ
NF1DFNTI I __
CONFIDENTIAL
25X1
25X1
25X1
 CONFIDENTIAL
Approved For Rase 2005/11/21 : CIA-RDP78B04770b0600030016-7
4. Negotiations began after the letter of 14 October was
received and as a result 0 re-submitted their request for
additional funding in a letter, dated 28 October 1966, received
by the technical monitor on 6 November 1966. In this request, the
contractor stated that II would be required to incorporate the
three mentioned tasks within the contract. This letter implied
and bore out the verbal assurances received at our meeting with
I Ion 1 October 1966 that this additional funding
was all that would be necessary to complete the program.
5.. The monthly progress report for November 1965, which was
dated 17 December and received by the technical monitor on 4 January
1966, indicated that had been expended, but gave no
indication as to any expectation for additional compensation above
and beyond the 0 contract price plus the previously requested
uested
(which was later reduced to II a total of II
exclusive of fee).
6. Recommendation for approval for additional funding--the
-was made in the P&DS memorandum 420-65 dated 2 December
1966 and was approved by the Director, NPIC on the same date.
Written approval to proceed was given in the Contracting Officer's
letter to the contractor dated 10 January 1966.
7. In neither of the monthly reports, December 1965 (received
8. February 1966), nor January 1966 (which was received on 28 February
1966), was the expectation of additional funding indicated, although
indications were given that these costs were being incurred. At
no point prior to a meeting held at the contractor's facility on
8 February 1966 was any request, verbal or otherwise, made by the
contractor for additional funding.
8. During the 8 February meeting, the technical monitor was
advised that the contractor expected compensation for an extensive
overrun. The contractor was told that this was not in line with
our understanding of the situation; however, they were instructed
to prepare a detailed analysis of the overrun and that it would
be considered by the technical monitor relative to the desirability
of completing the effort. At no time was any authorization either
by verbal agreement or lack of authorization (omission) made that
could be implied as authorization to proceed. The contract
specifically calls for written authorization from the Contracting
Officer prior to proceeding.
9. On 1 March 1966, (almost one month later) the contractor
submitted a cost and performance analysis to complete the program.
Because of the incompleteness and lack of definition of the performance
specifications a visit was made to the contractor's facility on
7 March 1966 to determine the status of the program and if it would
be beneficial to complete the effort for the elevated cost. The
contractor was told that his specifications were vague and that a
25X1
Approved For Release 20 QOt(~i V T17 O4770A000600030016-7
 CO 11 DEN ! IAL
Approved For Release 2005/11/21 : CIA-RDP78BO477OW00600030016-7
more complete set of specifications would have to be prepared.
10. On 16 March 1966, a meeting was held at NPIC to discuss
the specifications that would have to be agreed on before NPIC
could justify any additional expenditure. These specifications
were outlined in P&DS/D/6-846 dated 16 March 1966 and thoroughly
discussed with the contractor at this meeting. =was requested
to re-submit a proposal citing those specifications that would be
applicable to the acceptance of this instrument.
11. The contractor failed to prepare this proposal and
maintained in their telephone conversation on 22 March 1966 with
that they would only agree to the specifications
their letter dated 1 March 1966.
12. "was then notified in the Contracting Officer's
letter dated 25 March 1966 that they were not authorized to expend
any funds above the authorized limit of the contract. The Assistant
for Plans and Development concurred in this letter based upon
verbal assurances from that this task could be settled
for the contract price.
13. Reference (a) claims that =will not settle for the
contract price, but insists that the omissions of authorization
to expend funds above the contract limitation were an implied
authorization to proceed. Although the technical monitor has
given proper notification of the additional costs incurred in
the inspection reports dated 11 January and 9 March 1966, it was
assumed that any written or verbal authorization to the contractor
must be given by the Contracting Officer, whose office has been
sufficiently notified as to the financial conditions of this
contract.
Development Branch, P&DS
Distribution:
Original and 1 - Addressee
2 - P&DS/DB
25X1
25X1
25X1
Approved For Release 2JN?1D N~I7fB04770A000600030016-7