The Armed Services Board of Contract Appeals (ASBCA) held that a contractor was entitled to an equitable adjustment because the US Navy used a contractually unauthorized method for placing delivery orders under an indefinite delivery, indefinite quantity contract to supply digital modular radios. General Dynamics C4 Systems, Inc., ASBCA No. 54988, May 8, 2009. The Navy issued the delivery orders in question by e-mail. The contract, however, did not authorize such a method of delivery order placement. While the contract’s Ordering clause provided that orders could be issued by electronic commerce methods “only if authorized in the Schedule,” the contract’s Schedule did not authorize issuance of orders by e-mail. Likening the placement of orders to the exercise of options, the ASBCA determined that, for an order to be effective, the Government must exercise it in strict compliance with the contract’s terms and, when the Government does not do so but requires the contractor to perform, the contractor has the right to recover the costs it incurred in performing the work, plus a reasonable profit. In that regard, it should be noted that the contractor alleged that the e-mailed delivery orders contained “unconscionable prices” in light of then-extent circumstances, and it sought the difference between the prices paid and its actual performance costs, plus profit.
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