Appeal of Technical Ordnance, Inc.

Technical Ordnance, Inc. (Technical) (plaintiff) entered into a fixed-price, first-article contract with the Department of the Navy (Navy) (defendant) to produce explosive bolts for the MK46 missile. The first-article clause stated that the Navy’s contracting officer could terminate Technical’s contract for default if the first-article, or prototype, explosive bolts Technical provided failed the Navy’s firing test. The contract incorporated the Navy’s MK46 explosive bolt testing requirements by reference, which specified that the bolts must have a maximum bolt-separation time of 15 milliseconds. The contract also included detailed specifications about exactly how the Navy would conduct the firing test, including the use of a camera and an oscilloscope. Technical submitted 50 first-article bolts for testing. The Navy failed two of the 50 bolts for exceeding the 15-millisecond maximum bolt separation time. However, in conducting the testing, the Navy failed to comply with the contractually specified testing requirements, as follows: (1) it did not use a camera; (2) it added a Navy-built pulse generator to the testing procedure; and (3) it used a counter instead of an oscilloscope. The Navy terminated Technical’s contract for default. Technical appealed to the Armed Services Board of Contract Appeals (Board), seeking to convert the termination for default into a termination for the convenience of the government, which would entitle Technical to collect breach-of-contract damages.