MINUTES OF THE AGENCY CONTRACT REVIEW BOARD 26 JANUARY 1972

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP74B00535R000100200003-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 19, 2016
• Document Release Date: November 21, 2005
• Sequence Number: 3
• Publication Date: January 26, 1972
• Content Type: MIN

Minutes of the Agency Contract Review Board
26 January 1972
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-1. - The-meeting of the Contract Review Board was called to order at 1015 hours
on 26 January 1972 in the Procurement Management Staff, 1226 Ames Building, by
Deputy Director of Logistics.
- -2-. The Board convened to review and make recommendations to the Director
of Logistics on the following cases:
overrun in a timely manner.
b. The contractor has fulfilled the requirements of the Limitation of
Cost Clause in the contract, in that he advised the Agency of the anticipated
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The case was presented by the Contracting Officer,
Board was advised of the following facts:
a. The contractor has asked for an increase in the estimated cost of the
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Minutes of the ACRB - 26 January 1972
c. The technical office is in accord with the contractor's request.
d. As a separate action the technical office plans to change the scope
of the contract and increase the estimated cost proportionately.
4. The Contracting Officer recommends the Board approve the overrun funding.
The Board unanimously agreed to recommend that the Director of Logistics approve
the execution of an amendment to the existing contract to increase the estimated cost
to cover the overrun.
5.
for introductory remarks on the Agency's
historical policy regarding the recognition of overruns resulting from adjustments
in overhead rates. The significant points of remarks were:
a. At one time the general practice of all Government agencies including
CIA was to pay contractor claims when they resulted solely from the adjustment
in overhead rates.
b. The Government philosophy changed and we adopted, with other agencies,
---the precedent set by the ASBCA decision in 1968 in the United Shoe Machinery
case.
c. The new philosophy and policy was based an the fact that the Contracting
Officer is not contractually obligated to pay contractor's claims for additional
costs, exceeding the contract price, when the contractor violates the Limitation
of Cost Clause.
d. The Limitation of Cost Clause, which is in all our cost type contracts.
states that the contractor must report to the Contracting Officer if he has reason
to believe that the total cast to the Government, exclusive of fee, will be greater
or less than the estimated, cost as stated in the contract.
e. When the Government is given timely notice of a pending overrun there
are three alternatives available to the Government: (1) cancel the work, t2)
reduce the scope of work, and (3) fund the additional costs.
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Minutes of the ACRB - 26 January 1972
f. Procurement Note No. 40 dated 1 July 1970 was issued instructing
Contracting Officers to advise all contractors that the Agency intended to
enforce the Limitation of Cost Clause and the sample letter attached contained
information to be transmitted to all contractors.
6. At the conclusion of briefing, presented the 25X1
facts concerning the case at hand. The facts are summarized as follows:
a. There are five contracts in the group with overruns totaling
b. Contractors claim is dated 10 August 1970.
c. The Contractor has based his claim on the fact that its costs were not
known until after DCAA had negotiated final overhead rates.
d. The fiscal years concerned are 1968, 1969, and 1970.
e. The contractor saw no reason to handle this submission differently from
those of the past as CIA had always honored overrun claims based on overhead
rate adjustments.
f. The 10 August 1970 submission was the contractor's first claim to
-additional costs even though some of the contract completion dates preceeded
the submission by as much as 18 months.
g. Contracting Officer recommends denial of all claims in total.
h. The Contractor has informally suggested a settlement figure of
i. The Contractor has indicated his intent to take the case to the ASBCA
in case of denial.
After a general discussion of the facts mentioned above the Board agreed that the
Contractor's claim should be denied.
7. advised the members that this case was brought before the
Board at his request. The contracting officer was in a position to settle the case for
a sum below the minimum requirements of the Board. The purpose of the presentation
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is to review the decisions of various contracting officers, interpretations of policy
guides and directives and the influence that past actions may have on our decision to
__deny the Contractor's claim, was asked to continue his briefing on the
Agency policy and how it relates to this case.
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~a. The case before the Board represents four claims out of a group of
thirteen cases collectively submitted by Telcon at the same time.
b. The total claim was submitted to the Procurement Division under
tasks against basic agreement 4705.
of which the largest amount paid on one task was
settled without question and the overruns paid in full. This totaled
c. All the completed tasks held in the Procurement Division have been
d. The Procurement Division/OL interpretation of various directives,
Procurement Note No. 4Q the sample letter for al.l contractors, and the DD/S
memorandum dated 15 May 1970, was that the Agency was establishing a ci::w
policy which would apply to all Agency contractors after the policy was announced..
e. Contracts with completion dates subsequent to the mailing date of the
warning letter would be paid in accordance with the policy and custom in effect
at the time.
f.. It is obvious that there exists inconsistencies between contracting
officers.
9. The inconsistency was discussed at length by the members. Serious con-
cern was expressed. The Boax-d concluded the case with a recommendation to ti7e
f7irector of Logistics that the Contractor`s request for overrun funding be denied us
proposed by the Contracting Officer. It was observed, however, that after due
:tese.arch of the films there niay be legal issues or ;: igating circumstances which,
can influence the degree of denial and the final position of the Agency.
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10. The DD/S representative was of the opinion that technical personnel in the
several Directorates should be advised again of the Agency policy on denial of overhead
overruns. advised against the members taking any formal action
within their Directorates. He stated that the responsibility lay with the Contracting
Officers who would be advised of the ACRB decision through the Procurement Policy
Panel meetings and directly where applicable.
11. The meeting concluded at 1130 hours.
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