Fuel Systems Maintenance-Mathers AFB

Mathers Air Force Base, California

Owner: US Air Force

Client Name: WR Henderson Construction, Inc

Engagement Scope

The Sutor Group was requested by Henderson to review and evaluate a "Termination for Convenience" settlement proposal that had been previously prepared and submitted to the owner. This entailed a review of proposal submittals from 12 subcontractors and suppliers, as well as W.R. Henderson's proposal costs. The Sutor Group was also requested to review and evaluate two audit reports issued by the Defense Contract Audit Agency with respect to the prime contractor and mechanical contractor proposals. Our work was performed in compliance with guidelines outlined in Part 49 and 31 of the Federal Acquisition Regulations. Combined revised settlement proposal after our adjustments total $953,400. We assisted in drafting the Corps of Engineers Negotiating Memorandum to document the procurement change.

Project description

The work entailed construction of a 17,600 square foot, structural steel frame, metal building with continuous footings, slab ongrade, insulated standing beam metal roof system, and fire protection system. Site work included landscape, parking area, oil/water separator and utility connections. This project was a lump sum, fixed price bid.

Entitlement issues

Interpretation of a preliminary stop work order as a work suspension or constructive termination. Issue of treatment of the termination as a "partial" or "complete" termination in view of owner-directed work after date of termination.

Type of impacts

In accordance with pricing outlined in Park 49 of the Federal Acquisition Regulations relating to termination for convenience, the contractor's and supplier's costs were segregated into performance costs, preparatory costs, and settlement expenses. There termination for convenience was priced out under the "total cost" approach as opposed to the "inventory method" as outlined in Part 49. The prime contractor profit on subcontractor work was based on a percentage of completion method using performance costs. Prime contractor profit was based on anticipated profit rates based on actual performance. Prime contractor profit rates were computed using a weighted guideline average system.