You have a firm fixed price contract to deliver 10,000 aluminum foil hats to Age

Question

You have a firm fixed price contract to deliver 10,000 aluminum foil hats to Agent Mulder at the FBI. The contract is silent on the method of testing but requires the contractor to present a test and acceptance plan for approval. When you meet to present your test and acceptance plan, Agent Mulder tells you that every single hat must be tested in a microwave oven. Your understanding of accepted industry practice is that testing a one percent sample of the hats is sufficient. After discussions, Agent Mulder is still adamant that every hat must be tested. If you do this it will double your costs and delay deliveries.

What should your next step be, assuming that Agent Mulder is the program manager and not the contracting officer? After talking to Contracting Officer Scully, it appears that she agrees with Program Manager Mulder. Now what should you do? What steps might occur going forward assuming the problem is not resolved?

Explanation / Answer

This is a very common issue in which the contracting officer and the management of the client organization are not in sync initially and the organization has to experience issues. In this case the program manager wants to have that all the hats are tested which was not mentioned in the contract and the industry practice states that testing of 1% of the sample is acceptable. Testing all the hats will increase the cost of production and the organization may incur loss and even the contracting officer is now at same grounds with the program manager. If the problem is not resolved by discussion internally among the stakeholders then a lawsuit can be filed and based on the verdict the organizations can act. in business contracts the expectations and requirements of the stakeholders need to be defined in order to avoid such issues which was not done in this case and led to discrepancies. Discussions are the best option to resolve such issues by negotiating terms which is expected in a business but if any of the stakeholders believe that they are being deprived or it is unfair for them, then they can go for legal actions.

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