Case name and citation

Appeal of the Ensign-Bickford Company. ASBCA. No 6214, 60-2. BCA 217. October 31, 1960.

Key Facts

The case revolves around a contract dispute between the government and the armament manufacturer Ensign-Bickford. After contracting with Ensign-Bickford to produce a specific type of weapon, the government later ordered an acceleration in production. As is customary, the government agreed to pay Ensign-Bickford a specific amount to compensate the company for the additional revenue this would require in terms of securing materials and worker overtime. However, the government had contracted with another entity for a similar product, which demanded a far smaller sum in acceleration costs. Thus, the government justified its demand that the award be far smaller than originally agreed upon. The government's offering of $19, 636.96, while smaller than the $41, 651.63, was still greater than the $16, 500 paid to the other contractor.

Legal Issue(s) Presented before Court

Both parties recognized that the legal issue in question was the extent to which an equitable adjustment was needed in the amount originally demanded by Ensign-Bickford....

Both Ensign-Bickford and the government agreed that an adjustment was warranted, given the increase in the appellant's costs.
Holding of the Court

The appeal was sustained.

Court's Rationale or Reasoning for its Decision

The court agreed that the appellant was reasonable in using a forward pricing system to determine its likely costs. Ensign-Bickford went to its existing subcontractors to determine the fee, an action which also seemed reasonable. When the original cost was submitted to the government, the government did not protest. It was only after successfully negotiating a much smaller sum with another company for a similar order that the government began to question the original figure. The government did not protest that the costs seemed unreasonably high, nor was any evidence presented by the government that the sum was unreasonable. While alternate subcontractors could have been found, given that the request was for an acceleration and time was pressing, once again the appellant's behavior seemed reasonable. Given that Ensign-Bickford's actions seemed in good faith and keeping with sound business practices, the court found in favor of…