I recently encountered a situation on which I would like to get the views of this forum. Consider the following hypo:
The government awards a contract to contractor X to install government provided kits into government vehicles. Toward the end of the first contract, the government issues a solicitation to install kits into more government vehicles. Based on X's knowledge of the number of vehicles in the government inventory, X recognizes that the number of vehicles covered by the second contract is substantially overstated.
The follow on contract is to be a FFP contract priced on a lump sum basis. In other words, the contractor is not paid based upon the number of kits installed. Instead, the contractor will be paid the FFP regardless of the number of kits installed.
Based on this set of facts, what, if any, obligation does X have to bring this error to the government's attention? If X does have an obligation to tell the government of the error, what is the source of the obligation, e.g., a FAR provision?