## Facts

- Technical Ordnance, Inc. (Technical) entered into a fixed-price supply contract with the Department of the Navy (Navy) to produce explosive bolts for the MK46 missile.
- The contract was a first-article (prototype) contract: Technical had to submit first-article bolts for Navy firing tests before full production would be accepted.
- The contract incorporated the Navy’s MK46 explosive-bolt test requirements by reference.
- Those requirements included a performance limit that bolt-separation time could not exceed 15 milliseconds.
- The contract also specified the firing-test method and equipment the Navy would use to measure separation time, including use of a camera and an oscilloscope.
- Technical submitted 50 first-article bolts for testing.
- The Navy reported that 2 of the 50 bolts exceeded the 15-millisecond maximum separation time and therefore failed the first-article test.
- During testing, the Navy did not follow the contract’s stated test method in several material respects:
  - it did not use a camera,
  - it added a Navy-built pulse generator to the procedure, and
  - it used a counter instead of an oscilloscope.
- Relying on the reported failures, the contracting officer terminated the contract for default under the first-article clause.
- Technical appealed to the Armed Services Board of Contract Appeals (Board), seeking to have the default termination treated as a termination for the convenience of the government.

## Issues

1. Whether the Navy could support a termination for default based on first-article test failures when the Navy’s testing departed from the contract-specified test method and equipment.
2. If the Navy could not rely on the nonconforming test results to prove first-article failure, whether the default termination should be converted to a termination for convenience.

## Decision

- The Board sustained Technical’s appeal.
- The Board found the default termination improper because the Navy did not conduct the first-article firing test in the manner required by the contract.
- The Board treated the termination as one for the convenience of the government rather than for default.

## Legal Principles

- In a default termination dispute, the government bears the burden to prove that the contractor failed to meet a material contract requirement.
- When a contract prescribes a specific acceptance or first-article test method (including required equipment), the government’s proof of nonconformance depends on testing that matches the contract’s method in material respects.
- Material departures from a contract’s stated test method can prevent the government from using test results as reliable evidence of nonconformance.
- When the government fails to justify a termination for default, the usual remedy is conversion to a termination for convenience, with recovery determined under the convenience-termination framework rather than default remedies.

## Conclusion

Because the Navy’s first-article firing tests materially differed from the test method and equipment incorporated into the contract, the Navy could not rely on those results to prove first-article nonconformance; the Board therefore set aside the default termination and converted it to a termination for the convenience of the government.


Appeal of Technical Ordnance, Inc., 1989 WL 48024 (1989)