Mil-Spec Contractors, Inc. (Mil-Spec)

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The government awarded Mil-Spec Contractors, Inc. (Mil-Spec) for the building insulation on North Air Force Base in California. The Air force budget for this contract was $622,000 and actual contract price was $581,247 plus $6,000 to 7,000 contingency fund for any modification. After completion of project, Mil-Spec sent government several claims for additional work and cost which exceeded original contract amount. Late August to early September 1983, initial conversation was taken between Mr. Hooppaw, contracting officer, and Mr. Barnes, Mil-Spec principal officer, over the phone. During the conversation, government informed Mil-Spec that due to expiration of fund including contingency fund for the project, it is impossible for the government to pay additional cost over contingency amount of up to $7,000, and such contingency fund will also expire after September 30, 1983. Three days before funds expired, Mil-Spec and government negotiator, Mr. Barker, had phone conversation and orally agreed on the settlement as Mil-Spec to drop its cost increase amount proposal to $6,367 from $70,956, extension of project by 87 days, and the cost of $6,367 to be paid right upon the settlement, these are subject to contract officer’s approval. The contract officer Mr. Hooppaw prepared standard form 30, contract modification, signed and mailed to Mil-Spec for counter sign. However, Mil-Spec called the government, and informed that Mil-Spec would not sign the modification form. The reason behind of this was because IRS at Mil-Spec informed Mr. Barnes before he signed the form that he could claim more funds than what government proposed in the modification. Even though Mil-Spec did not sign the modification form which government issued, the government issued a check for $6,367 to Mil-Spec because of a previously filed tax lien. Mil-Spec then filed claim for additional costs.

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