Failure to Supply Quality Data Justified Termination

A claim seeking to convert a no-cost termination of delivery orders for electrical control boxes into a convenience termination was denied by the Armed Services Board of Contract Appeals because the government properly rejected the boxes as nonconforming items. The electrical boxes were to be used in armament systems and were designated as "critical application items," which are defined in FAR 46.203(c) as items "in which the failure of the item could injure personnel or jeopardize a vital agency mission." In order to ensure the electrical boxes were built from "highest grade" quality and reliability parts that had been subjected to rigorous testing, the contract required the boxes to be assembled from component parts on a Qualified Products List. The parts were to be obtained from authorized QPL distributors, and any rebranded products were required to be accompanied by evidence of traceability to the original manufacturer to ensure the availability of inspection and test records. The contract was priced at a premium to account for the additional testing required for QPL products, and the contractor was required to secure statements of quality from the QPL manufacturers. The government cancelled the delivery orders after it inquired about connectors used in the electrical boxes and the contractor failed to produce the required QPL documentation.

Construing the cancellation as a constructive termination for default, the board of contract appeals found the termination was within the government's rights under the contract. The record showed the connectors used in the contractor's electrical boxes were commercial surplus items that lacked the required traceability, inspection and testing data. The supplier the contractor used to obtain the connectors was not a QPL manufacturer or authorized distributor, and the supplier was unable to provide the required test, inspection and quality data from an authorized QPL source. When the contractor was given the opportunity to obtain acceptable documentation or to tender new items with acceptable documentation, but failed to do so, the government was entitled to reject the supplies pursuant to the contract's Inspection clause (FAR 52.246-2(b)). The contractor failed to show it was powerless to prevent the cancellation or that the termination was otherwise excused, and its attempts to vitiate the default on procedural and equitable grounds were unfounded. (DCX-CHOL Enterprises, Inc., ASBCA, ¶92,323)