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Contractor Responsibility for Damage to Government Property

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RIR ? Well after sorting this through I would only pursue inclusion of the re-performance costs in the fee calculation if-

1) There is other contract provision(s) that holds the contractor liable ? As noted in the thread such provisions might relate to an inspection clause or other term and condition of the contract that addresses workmanship.

2) Risk is covered by insurance or otherwise reimbursed ? No indication has been made by you that such insurance/reimbursement exists. It might be wise to ask the contractor if they have some type of coverage that would cover the matter. Remember you might not have asked for insurance but the contractor might have it anyway. Likewise if a subcontractor was involved in the work that resulted in the damage you might want to see the terms of that subcontract in case it covers such instances where the sub is insured or the prime is otherwise reimbursed by the sub.

3) Damage caused by managerial personnel ? This is a strong matter to prove as the 52.245-1(h) clause as supported by case law defines the ?managerial personnel? to be those at the top of the organizational structure. A reference here is ASBCA No. 14387, November 30, 1971 (sorry I could not find a link to on the web to this decision).

4) The CO has revoked the Governments assumption of risk. While the 52-245-1 clause references paragraph (g) where such a revocation determination is made my read of the clause suggests that paragraph (B) and paragraph(f)(vi) come into play as well but only if the Government has done due diligence in administering these provisions of the clause per reference FAR 45.105 (see paragraph (B)(1) specifically).

I realize that I have basically stated the obvious above as the four ?ifs? are taken directly from the 52-245-1 clause at paragraph (h). I have voiced my view in this manner as I am not in 100% agreement with the posts by Vern and Don that determination of liability revolves around whether the turbine(s) is Government Furnished Property (GFP) or not.

As you have noted the turbine(s )in the context and definition of both FAR Part 45 and clause 52.245-1 as ?property? is ?Government Property? . However, as it was not ?provided? or otherwise described as GFP in the contract it is not GFP in my view. As the turbine(s) is ?Government Property? it is therefore covered by the 52.245-1 clause and FAR Part 45 (see FAR 45.000). In my close read of the 52.245-1 clause I believe it makes specific and intentional distinction in use of the words like ?Government Property? and ?GFP? inclusive of the (h) paragraph where the word ?furnished? is used in lieu of ?provided?. My conclusion therefore is that (h) covers ALL ?Government Property? and not just GFP. The simple view might be that it is after all the ?Government Property? clause.

Hope these additional thoughts help.

Thank you Carl. I believe that, since the repair of the turbines was authorized work, the damage and resulting repair to the bearings is "re-performance", as Vern has stated. That effort is an allowable cost under the contract and the contractor can repair the damage without any specific approval from the government. The contractor is not "held liable" for that cost, it is a CPIF contract - they will be paid for it. To not count the cost of re-performance when calculating the incentive fee would be to ignore the repairs as part of the work - an overrun insurance policy if you will. I also believe that the intent of including the ship and its equipment under para (h) is to cover the contractor for damage to property that they weren't already authorized to repair, i.e. not part of the effort that is being measured in the shareline. I very much appreciate all of your time and effort.

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