# Petition for Writ of Certiorari — Dobkin v. District of Columbia > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_0432%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1965 - **Citation:** 380 U.S. 962 ## Text Clee ROR 5. 55 on in iene a cece ntuanendssendeesnss IIR, 5d dN nas sens ces dane navass ananamneus Cisentes pOUNeNNN.... . . 2... - - 5s no ct ininss tenn ee- INE So a band ceeae dened anacueedenstansenauedes Reasese for pronting the wiit......~...-...-.-..s26505 PRINS a caeet awed ey xedndihnws wena apace DOI a. ois eis 5 Season sees sien cdwdwanetaenaanswe CITATIONS Cases: Carnegie Steel Co. v. United eer 240 U.S. 156-__--- Day v. United States, 245 US. 15. ......--..----.-- Dillon v. United States, 140 Ct. re ES ae sie a a Globe Refining Co. v. Landa Cotton Oil Co., 190 US. Hearne v. Marine Insurance Co., 20 Wall. 488 Pains Hedges v. Dizon County, 150 U.S. 182__------------ Diet ©, EB ee Bini no oo oh Krvedisxas Manufacturers’ Finance Co. v. MeKey, 294 U.S, 442-- Maryland Casualty Co. v. United States, 169 3°. 2d 102- Moffett, Hodgkins and Clarke Co. v. Rochester, 178 U.S. ae als and dig alana ema morn ee Sm Rock-Ola Mfg. Corp. v. Filben Mfg. Co., 168 F. 2d 919- Russell v. Shell Petroleum Corp., 66 F. 2d 864-_------- Statutes and regulations: Re er Eg os es i eae nae e waenee 32 C.F.R. (1954 ed., sub-part D) 3.400--3.411_._.---- Miscellaneous: 3 Corbin, Contracts (1960): a a ea Hearings before the Committee on Appropriations of the House of Representatives, 88th Cong., Ist Sess - Restatement of Contracts, § 504, comments (b) and (c)- 5 Williston on Contracts (Rev. ed. 1938), §§ 1548, 1549- 763-324—65——-1 wy Yn the Supreme Court of the Bnited States OcToBER TERM, 1964 No. —— Unrrep States OF AMERICA, PETITIONER v. Nationa Preeto Inpustrigs, INc. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF CLAIMS The Solicitor General, on behalf of the United States, petitions for a writ of eertiorari to review the judgment of the United States Court of Claims en- tered in this case on October 16, 1964. OPINION BELOW The fmdings of fact by the Court of Claims (App. 35) ‘ are as yet unreported. The opinion of the Court of Claims (App. 15) is reported at 338 F. 2d 99. JURISDICTION The judgment of the Court of Claims was entered on October 16, 1964 (App. 15). By order dated Jan- uary 14, 1965, the Chief Justice extended the time for 1“App.” references are to the Appendix to this Petition, which sets forth the opinion of the Court of Claims and its findings of fact and conclusions. (1) 2 filing a petition for a writ of certiorari to and inelud- ing February 13, 1965. The jurisdiction of this Court is invoked under 28 U.S.C. 1255(1). QUESTION PRESENTED Whether a eovernment contract setting a fixed price for a supply of goods can be reformed so as to raise that price at the suit of a contractor alleging a mutual mistake as to the extent of the difficulties and expense of performance. STATEMENT 1. Toward the end of the Korean War, respondent, an experienced artillery shell manufacturer, entered into discussions with the Army looking toward a con- tract for the production of 105 mm. shells by a new method called the hot-cup, eold-draw (HC-CD) proc ess. The HC-CD process, which had been demon- strated successfully on a pilot-plant seale but had not been used on a full-production-line basis at that time (App. 42-43), constituted a significant innovation resulting in a substantial saving in the steel require- ments of a shell factory (App. 43). As a result of the discussions, the Army and respondent entered into tentative letter agreements providing that respondent would designate the production equipment it deemed necessary for the utilization of the HC-CD process at its Eau Claire plant, that the government would pay the cost of the equipment agreed upon,” and that 2 After the completion of the contract, the equipment was to be stored for the government, remaining available for future contracts. The government would say respondent to keep the equipment “moth-balled.” 3 the shells would be paid for at a fixed price (App. 43-44). After its engineers had visited the pilot plant and studied the new process at length, respondent sub- mitted a proposed fixed price per shell and a com- plete schedule of the equipment which it felt would be needed to establish a production line using the HuU-CD process (App. 44, 47-50). Respondent de- signed a significant portion of the equipment sched- uled, making several substantial modifications of the equipment in use in the pilot plant (App. 44). Among the types of equipment orginally scheduled by respondent were plunge grinders, devices used for the removal of surface imperfections from the steel shells. The Army contracting officer objected that the HC- CD process should result in no such imperfections and that therefore the grinders were unnecessary.” Respondent acquiesced in this position and submitted a new equipment schedule, omitting the plunge grinders. Along with this new schedule, 1:espondent submitted a new fixed-price proposal (App. 16-17, 21, 46-50). Two contracts were then signed. One provided for the setting up of a HC-CD process production line at respondent’s Eau Claire plant, on a cost-reimbursable basis, with the facilities and equipment proposed by respondent (App. 51-57). The second was a fixed- price procurement contract for shells. Ordnance District on Tuesday, November 10th, in connection with our Schedule “A” on the above captioned co: ‘tract. The Chicago Ordnance District was represented by Colonel Robert K. Haskell; Mr. J. H. Pratt, his assistant; and Mr. A. H. Sundfor, Project ineer. National Presto Industries, Inc., was represented by Mr. L. E. Philli President; S. A. Halpern, his assistant; C. O. Dahl, Vice President in Charge of Manufacturing; and Vern Soper, hy a Manager. t the above meeting we presented to the Chic: go Ordnance District our Schedule “A” dated November 6, 1953, which included an item in the sum of $321,600.00 for 24 Plunge Grinders which we felt necessary for successful operation of the subject line. These Plunge Mr. Halpern is an attorney by profession. 47 Grinders, Item 14A in our November Sth Schedule “A”, were to be used on Operation 145 in che subject roduc- tion. After considerable discussion Colonei Haskell, of the Chicago Ordnance District, advised us that they would not permit us to include this item and that it be deleted from our Schedule “A”. Colonel Haskell understood that there might be some element of — in so doing and assured us that the Chicago ance District wou'd assume the ibility -tor omitting the chee Grinders and would see that we would be furnished these Plunge Grinders at some later date if experience dictated the necessity for them. In the meantime, Colonel Haskell agreed to include in our Definitive Contract a provision authorizing us a steel escalation in the event the particular type of steel we had chosen for the job was not adequate, by virtue of the fact that we are eliminating the operation normally performed by Plunge Grinders. The rest of Schedule “A” was discussed and, while there was some question raised as to the quantity of saws we were requesting, Chicago Ordnance District advised that they would go along wii: our quantity until suci: time as we actually started to purchase this subject item. The pu of this memorandum is merely to make a record of eshove mentioned meeting. Plaintiff has not borne its burden of proving that Colonel Haskell said, at the meeting of November 10th, that Ord- nance would assume the responsibility for the omission of plunge grinders or the consequences of that omission. At the meeting of November 10th, both parties took their positions in good faith. 21. On November 14, 1953, the plaintiff, by Mr. Halpern, assistant to the president, submitted a detailed written pro- posal to COD for the establishment: of facilities for the pro- duction of 105-mm. shells on the basis of a combination hot forge and cold draw process. Attached to this proposal was a Schedule “A” listing in detai: the description of each op- eration and of equipment required to accomplish it together with the cost of machines as well as the cost of their installa- tion, freight and tooling costs. This proposal except for the ~ Schedule “A” reads as follows: 7163-324— 65-4 oo AMR: PNA NORE LE TED IOUS SLED LE CBRE LER RLLE LEE RELL VN ELLE LDC a citi 48 Subject: Letter Contracts DA-11-022-ORD-1316 and DA-11-022-ORD-1317, Covering Establish- ment of Facilities for Produciion of Mi and M60 105MM Shells. Gentlemen : Reference is made to our proposal of February 5, 1953, under which we proposed to establish a facility cxpable of producing 360,000 Mi 105MM Shells per month on the basis of utilizing one-third of the overall capacity of the facility. This , which contemplated the use of the convention (al ot forge method of manufac- ture, culminated in your issuance to us on June 4, 1953 of ers Contracts DA-11-022-ORD-1316 and DA- 11-022-ORD-1317. Based on subsequent discussions with your installation as well as with the Ordnance Ammunition Center and the Office of the Chief of Ordnance, it was determined that we should make plans for ucing the subject 105MM Shell on the basis of a ination hot forge and cold draw process. Accordingly, we are enclosing, in triplicate, our new Schedule “A” covering the uc- tion under the new process and we are herewith submit- ing our unit price, based on that process. appears on the enclosed Schedule “A”, our facili- ties costs for establishing the subject 105MM Shell line are estimated at a total of $12,820,865.00. it should be noted here that equipment contained in the subject Schedule “A” is capable of producing the 110MM Shell with the understanding, however, that for us to produce 110MM Shells on this facility, we will require tooling and some equipment over and above that contained in this schedule. At your request, we have also included certain facilities necessary to enable one-third of the fa- cility to manufacture M60 105MM chemical shells except for the production of adapters which we contemplate Pp ing from outside sources. This latter addition, in the estimated sum of $373,976.00, accounts for the en- tire estimated facilities total of $13,194,841.00, as indi- cated in the enclosed Schedule “A”. In our February 5th proposal, based on the manufac- ture of approximately 2,000,000 of the subject shells on the conventional hot forge method, we made the follow- ing proposal : A. Price per unit. $4.963 B. Production costs. 125,000.90 The Letter Contract (DA-11-022-ORD-1316) issued pursuant to our February 5th pre 90sa! called for only 1,000,000 units at a total cost of »5,085,000.00 broken down as follows: ARNT SSE EP LM oa 49 A. Price per 1,000,000 units (at price of $4.963 per unit) $4,963,000.00 B. Preproduction costs. 125,000.00 5, 088, 000. 00 On the assumption that there will be a enough requirement of shells for us to commence and continue production on the entire facilities for a period of one year, and using the new hot forge and cold draw process, we will produce the subject item at a rate of 1,080,000 per month on a three eight-hour shift per day, five days per week operation on the following basis: A. Price per 1,000,000 units {at average price of $4.30 per uait) $4,300,000.00 B. Preproduction costs. 125,000.00 4,425,000.00 Using the new hot forge and cold draw process, on a one-third capacity basis, we will produce the subject item at a rate of 360,000 per month on a three eight-hour shift day, five days per week operation on the fo}lowing S: A. Price per 1,000,000 units (at average price of $4.60 per unit) $4,600,000.00 B. Preproduction costs. 125,000.00 4, 725, 000. 00 We now understand that we are to produce the sub- ject item on the basis of operating only the first one- third of the plant at a production iate of 120,000 shells r month based on a one eight-hour shift per day, five ay per week operation. On this latter basis we are —— an average price of $4.925 per shell, based on a eclining price per unit as follows: Units PRICE TOTALS First 250,000 $5.25 $1, 312, 500. 00 Second 250,000. 500 1,250, 000. 00 Third 250,000 --- 4.80 1,200,000. 00 Fourth 250,000 4.65 1,162, 500. 00 4, $25, 000. 00 Preproduction Costs_ 125, 000. 00 Total 5, 050, 000. 00 Our r pengeg-= calling for an average price of $4.60 r shell on a 360,000 per month delivery schedule and 925 per shel on a 120,000 per month delivery schedule are both based on (1) our using commercial shell qual- ity steel at a cost delivered to our plant in Eau Claire, A, OES OEP ONE IT Oe SaaS ee Wisconsin of $.05617 per pound, and (2) on the assump- tion that we will have 3% or less in way of scrap due to or resulting from defective raw material. The ifications of steel which we are presently plan- ning to use are as follows: C-1018 Shell lity killed Steel—Fine Grain— _inch roun cornered square—t4 inch corner us. To the extent that we run over 3% scrap due to or result- ing from defective raw material and hence need a high- er quality steel than that set forth above at r price than that quoted above, we understand that will be an upward revision in our definitive contract to cover the increased cost of higher quality One further point should be noted here. You have time for the acquisition of raw materials and components any purchasing increment, the Contractor will require four months lead time for the acquisition of ray” mate- rials and components. On the basis of the above furnished information and the enclosed Schedule “A”, we understand that you will genes Ss ene Oe Neuen a or execution by both the Ordnance Department and ourselves. Since our present letter orders expire on De- cember 4, 1953, it is imperative that every effort be made to expedite preparation and execution of the subject definitive contracts. Toward that end, we pledge you our complete cooperation. If you have any questions on any of the matter in con- nection with the subject. project, p coatact the writer rich y thanks fo ticipated fine man r your ant‘ci ra- tion and ki personal sagadh, I ain — 22, It is to be observed that nc reference was made in the proposal quoted in the preceding finding to the matter of plunge grinders or other stock removal equipment, such as lathes, at the point in the shell line prior to the cold draw operation. Mr. Halpern explained in his testimony that the reason no reference was made to plunge grinders was due 51 to Haskeli’s firm refusal at the November 10th discussion to approve their inclusion. 23. On November 19, 1953, the District Chief, COD, ad- vised the Commanding General, Ordnance Ammunition Center, Joliet, Illinois, that the list of facilities (contained in plaintiff's Schedule “A” submitted with the November 14th proposal) had been reviewed by the Engineering Branch, COD, and the facilities were suitable and adequate to produce 105-mm. cold-drawn shells at the rate of 360,000 shells per month on a one-shift, 8-hour day, 5-day week basis. The list of facilities was recommended from 2a technical standpoint by the Chicago Ordnance District. ‘A. Prior to November 14, 1953, the plaintiff’s engineering representatives had engaged in extensive discussions ex- tending over a period of many months, though not contin- uously, with representatives of machinery manufacturers as to what equipment would be required to produce 105-mm. shells by the hot forge-cold draw process. The Schedule “A” which was submitted on that date was the result of engineer- ing work done by both the plaintiff and the machinery man- ufacturers. No representative of the latter was called as ® witness in this case. 25. On September 24, 1953, the defendant issued, sepa- rately as to each contract, a Supplemental Agreement No. 1, granting an extension of time as to both the Facilities Con- tract, No. 1317, and the Supply Contract, No. 1316, from October 1, 1953, to December 4, 1953. Each was accepted by the plaintiff on September 30, 1953. é; 26. The definitive and formal contracts were executed as of December 4, 1953. Supplemental Agreement No. 2, Con- tract DA-11-022-ORD-1317, is the facilities contract and will hereinafter be referred to as Facilities Contract 1317. Supplemental Agreement No. 2, Contract DA-11-022-ORD- 1316, is the supply contract and wil! hereinafter be referred to as Supply or Production Contract 1316. The contracts by their terms are ciearly interrelated. One supplies the facil- ities with which the shells are to be manufactured under the other. 27. The pertinent parts of Facilities Contract 1317 are as follows: ScHEDULE Wuereas, the Government and Contractor entered into Supply Contract No. DA-11-022—-ORD-1316 pur- suant to whi terms Contractor agreed to furnish and deliver to the Government a quantity of Shell, HE, 105MM, Mi for 105MM Howitzer by the use of a hot forge and cold draw process; and wEREAS, in the negotiations of the aforesaid Supply Contract, the Parties hereto recognize that Contractor will require Government facilities for the manufacture of said end item of supply; and Wuenreass, the Government and Contractor did under date of 4 June 1953 enter into Letter Contract known and — as Letter Contract No. DA-11-022- ORD-1317 providing for Contractor to acquire and in- stall the facilities listed on Schedules “A” and “B” an- nexed hereto and made a part hereof; and Wueneas, it is desired at this time to formalize the — Letter Contract by this more definitive instrument ; an Wuzrzas, the Government desires to provide the property listed in Schedules “A” and “B” to the Con- tractor for use in the production of 105MM, M1 Shell a eye hot. a. cold oe ner rate 0 per month on a one- i t-hour alg es to sources, and with the addition of all necessary special tooling) on one-third of the facility at a rate of 120,000 AcquistTion on MANUFACTURE OF Factii7ies Article 1-A. Procurement of Facilities 1. The Contractor shall, in the shortest possible time, coquire for resale to the Government or manufacture for sale to the Government, the machinery, equipment, or other industrial facilities hersinafter referred to as “fa- cilities” listed in ule “A” attached hereto and ay hereof. Such facilities shall be installed by Contrac‘or in its plant at Eau Claire, Wis- actin lt tet tin — EO eeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEeEyEeeEEeEeEeyEeEyEyEEeEeEeEeEeEeEeEGc_uv_ 53 Officer, in its other plants, or for temporary use in the plants of first tier subcontractors. 2. The Contractor may, with the written approval of the Coniracting Officer, substitute facilities similar to those in Schedule “A”, or may add additional facilities thereto from time to time as required during the course of the work, in which event Schedule “A” will be modi- fied according yy. Fin. J of all approved revis*:ns or changes of sai ule “A” shall k_ furnished the a Officer so that, at all times, his copy of Schedule “A” -vill be current and include all approved modifications. A final revised Schedule “A” contain- ing all modifications shall be incorporated in the con- tract by supplemental agreement hereto, upon completion of the work under Title I. 3. Title to all property purchased by the Contractor, for resale to the Government, for the cost of which the Contractor is entitled to be reimbursed as a direct item of cost under this contract, shall ass to and vest in the Government upon delivery of such property by the vendor. Title to all property manufactured by the Con- tractor, for sale to the Government, for the cost of which the Contractor is entitled to be reimbursed as a direct item of cost under this contract, or for which the Con- tractor is entitled to payment in ce with Para- 1c of Article ITT—A hereof, shall pass to and vest in the Government upon delivery of such property by the Contractor. * * * ® * * * * 6. Notwithstandi the provisions contained in Article VI-J entitled “Subcontracts”, any purchase erder in excess of $25,000.00 shall be subject to prior approval of the Contracting Officer. * * * Article I-B. Diwersion of Schedule “A” Facilities. The Contracting Officer may direct the diversion of any item of ule “A” soap ee the Government or to any person t t tracting Officer when such items shal! have bean uired or its manu- facture shall have been com .* * * Upon di- version, such item will be elim ‘nated from Schedule “A”, and an equitable adjustment shall be made in the de- livery or performance dates, or price, or both, and in any other contractual condition of the related supply con- tracts. Article I-C. Elimination from Schedule “A”. 1. The Contracting Officer may determine at any time prior to installation of any item of Schedule “A” facili- : i ; | ] It is estimated that the total cost of the Coatractor’s under Title I of this contract will be ap- 841.00) exclusive of the cost of -fur nished . It is expressly understood, however, tees the correctness of these estimates. The Terms Ano ConDITIONS Governine THE Use or FActnitres Article IV-A. Use of Facilities. Subject to the terms and conditions hereinafter set Governmen 55 Schedule “A” or Schedule “P” facilities in the form of depreciation or amortization has been or will be included in the rice of the end items under the contracts for which “A” or Schedule “B” facilities have been authorized for use. * * * 2 * * ~ < Article IV-D. Withdrawal of Schedule “A” and “B” 5 tk Ay Items of Schedule “A” and “B” facilities shall remain in the possession of the Contractor or its first tier sub- coatractors as provided for in Article IV-A of Title IV cr such period of time as is ired for the per- shall be made in the deiivery or performance dates, or price, or both, and in any other contractual condition of the related supply contracts affected he:wby. * * * * « + * * Article 1V-F. Termination of Right To Use. 1. The right of the Contractor to use the facilities under this contract may be terminated by the Govern- ment in accordance with this article, in whole or in part, whenever the Contracting Officer shall determine such termination is in the best interest of the Govern: ‘ent. Any such termination shall be effected by delivsvy to the Contractor of a written notice of termination ifying the extent to which such right to use the facilites Dispostrion oF F AcILiIrTies Article V-A. Dismantling and Removal. 1. Whenever it is determined that all or any part of Schedule “A” or “B” facilities are no longer required in the performance of the Contractor’s prime or subcon- tracts for which the facilities have been authorized foc ase or upon termination in accordance with Article IV-F of Title IV, the Contractor that such facil- ve will abe retained in accordance with Article Article V-B. Retention and Disposition. In the event a determination is made as provided in such facilities may be elsewhere by the Contractor if the Contractor requires use of the plant for production. * * * * * * * * Article V-F. Standby * * * * (b)(1) It is hereby negotiated and agreed by the Prsties bates that, at Bos time as a detetininetion is made as provided in Article V-A, that all facilities are no longer required in the ormance of Contvactor’s contracts, for which ule “A” and “B” facilities have been authorized for use, Contractor agrees to place said facilities in standby in accordance with applicable Government ifications at a price to be negotiated and, subject to the availablity of funds, to maintain all said facilities “in place standby” in accordance with the terms of OCTI 450-53, Section XII, except that only sufficient power shall be available to permit activating mechanical parts of equipment one piece at a time at a rate of once _ month for each piece of equipment, for the sum of One Huncred Eighty-one Thousand Three Hundred Sixty Dollars ($181,360.00) per annum for a period of Ten (10) years. _ (2) The Parties hereto further agree that, at such time as the installation of all the facilities unde. this contract are substantially completed, the Contractor shall maintain the two-thirds of the facilities, not needed in the performance of Supply Contract No. DAI 1-022- ORD-1316 as presently in effect, “in place standby” w A 57 under terms and conditions to be negotiated by the Parties hereto; provided, however, that such negotiated cost of espera” shall not exceed two-thirds of the total facilities standby of One Hundred Eighty-one Thousand Three Hun Sixty Dollars ($181,360.00). In the event that any other portion of facilities is placed in standby, then the negotiated cost of such standby shall not exceed the proportionate amount of One Hun- dred Eighty-one Thousand Three Hundred Sixty Dol- lars ($181,360.00) as the percentage of thé dollar amout of facilities being placed in standby bears to the total dollar valus of the Facilities under this contract. * « * * ® Trrte VI GENERAL PROVISIONS * * * * * Article VI-W. Modification of Letter Contract. This ——— agreement shall supersede . the aforesaid Letter Contract. In the event that this sup- plemental agreement contains provisions which may construed to be inconsistent in any particular with the provisions of the aforesaid Letter Contract, then the provisions of this supplement shall be deemed to state the complete a ent and intent of the Parties here- to, and any rights, duties and/or obligations created by the provisions of the aforesaid Letter Contract shall be merged within the terms of this supplemental agree- ment. 28. The Schedule “A” referred to and attached to Facili- ties Contract 1317 did not include plunge grinders or any turning equipment and was identical with the schedule sub- mitted with plaintiff’s proposal of November 14, 1953. 29. The pertinent, parts of Supply Contract 1316 are as follows: ScHEDULE Wueneas, the Parties hereto entered into Letter Con- tract No. DA-11-022-ORD-1316 dated 4 June 1953, the expiration date of which has heen extended to 4 Decomber 1953 by Suppleraental Agreement No. 1, for the ——* of Shel , 105MM, M!; and Whereas, the Parties now des're to supplement said Letter Contract by this definitive contract ; and Now, THkREFORE, the Parties hereto do mutually agree as follows: ee tee eee ee or SL RR PRLOPD EERIE CRORE QT Ree PT an sl 58 Articie 1. Scope of this Contract. (a) The Con- tractor shal! furnish and deliver: ITEM DescrirP..oN Quan- | Ur | Un AMOUNT TITY PRick ia | Shell, HE, 105MM, M1 for | 250,000| each | $5.375 | $1,343, 750.00 b onal HE, 105MM, M1 for 000 |} escs =| 5.125| 1,281, 250.00 1 105MM ’ - ml 250, esta 1c | Shell, HE, 105MM. M1 for| 250,000) each | 4825/ 1,231,250.00 105MM Howitzer. ld | Shell, HE, 105MM, M1 for| 280,000} each | 4775/ 1, 193,750.00 105MM Howitzer. for the total stated consideration of Five Million Fifty Thousand Dollars ($5,050,000.00). The above contract — is predicated on the use of C-1018 Shell Quality Killed Steel, Fine Grain—314” Round Cernered Squa ’’ Cornered Radius at a rice of $.05617 per pound f.o.b. Contractor’s plant at u Claire, Wisconsin. The Parties hereto agree that in the event that such steel results in a — incidence in excess of 3% due to the — of the , thus requir- ing the use of steel of a different type or with diffe. -nt specifications, or in the event the “tovernmen. directs use of other t or specifications of steel, an equitable adjustment ] be made in the contract price hereunder in the same msnner as a ne under the tinge pl rovision of the said contract, which eee will be imited solely to the difference between the price of such other types or specifications of steel and that upon which the aforementioned price is based. ) Specifications. Contractor agrees to manufacture and deliver Items — 1b, 1c and 1d above, by the use of combination hot and cold draw processes, in accordance with ifications contained in Basis of Procurement BP. poy 2) dated 9 December 1952, Amendment 3, 14 April 1953, brought up to “ yh nd Del Inspecti c) Inspection, Acceptance a elivery. ion aa acceptance of supplies to be furnished hereunder shall be made at Contractor’s plant, with delivery f.o.b. Contractor’s plant, Eau Claire, Wisconsin, or nearest railroad siding as — the Transportation Of- ficer of the Chics zo istrict, as follows: MONTH AND Ys.3 QUANTITY July, 1054 —— . Pilot lot August, 1954 . 5,000 September, 1954. ———— October, 1954. - 50,000 November, 1954. 80, 000 December, 1964 thru May, 1955 (per month) ..... 120, 000 BORE, Fie enscsanncseedes consucceseceaseussnees 125, 000 59 (a) Pilot Lot. The Contractor is required to furnish the Pilot Lot Laboratory at Jefferson Proving Grounds, a Pilot Lot isting of Five (5) unpaintei and un- banded and Twenty-five (25) banded and unpainted Shells; Ten (10) complete Shells, for approval prior to initiating quantity production hereunder. This Pilot Lot must be manufactured with So same equip- ment, processes and procedures as will used in regular roduction, and all parts and materials must be obtained rom the sources of supply that will be use! for regular production. The required Pilot Lot is not to be con- strued as an additional quantity but is taken into consid- eration in the total amount of the contract. The Pilot Lot will be inspected by the Ordnance inspector prior to submission to the Pilot Lot Laboratory. In event additional lines are used by Contractor in the manufac- ture of above ey: a complete Pilot Lot from each of such lines will be furnished. * * * * = 4. Production increments ard lead time periods may be varied, as circumstances require, by mutual agree- ment of the Parties, ar.d embodied in a supplemental ent to this contrr.ct. (2) Use of Govern ent-furnisied Property. In the rformance of the services required hereunder, Con- tractor is hereby authorized the use of facilities and tooling acquired under Contract No. DA~1 1-022-ORD- 1317. * * * * * (i) Modification of Letter Contract. This supple- mental agreement shall supersede the aforesaid Letter Contract. In the event that this my geomrane agree- ment contains provisions which may be construed to be inconsistent in any particular with the provisions of the aforesaid. Letter Contract, then the provisions of this supplement shall be deemed to state the complete agree- ment and intent of the Parties hereto, and any rights, duties and/or obligations created by the provisions of the aforesaid Letter Contract shall be merged within the terms of this supplemental agreement. * * * “ * 30. Upon the execution of the two contracts, plaintiff set up a ~~ocedure for screening the equipment that was to be acquire. pursuant to the facilities contract. Before orders could be placed for the equipment, it was necessary to com- plete an engineering study of each operation and determine 6U what equipment was best suited to do the job. The engineer- ing studies revealed that in most instances the required equip- ment ‘did not exist, and special designs had to be prepared for the equipment. Quotations were then obtained from equipment vendors. After the bids were evaluated by plain- tiff’s engineering and personnel staffs, a recommendation was prepared by Soper, the project manager; and this recom- mendation together with the bids received, was reviewed by an “executive board” set up within the plaintiff organi- zation. The facilities contract required that all purchase orders in excess of $25,000 were subject to the prior approval of the contracting officer. After plaintiff’s executive board »eached a decision, its recommendation, along with a justi- fication for its selection, was sent to the Chicago Ordnance District. Upon receipt of approval from the contracting officer, the equipment was ordered from the vendor. Since practically all of the equipment was of large size, all of it had to be approved by the contracting officer. During the time that the equipment was being selected, plaintiff's plant was being placed in readiness for its installe- tion. Railroad sidings were installed; a stee! yard was constructed ; alterations were made in the walls and floors; and a power station was installed. In addition, considerable experimental work was conducted at the Menomonie piant. 31. On March 17, 1954, the Chicago Ordnance District wrote plaintiff that the requirements for 105-mm. shells would be drastically curtailed nationally, effective May 1, 1954, and that all producers of such shells would be ter- minated as of April 30, 1954. The letter stated that this would result in the termination of all unproduced quanti- ties then under contract with producers uot selected to con- tinue the program. Plaintiff was invited to submit a firm proposal for the continuity of production after May 1, 1954, based on the lowest rate of production, but ir. no event exceeding 60,000 shells per month. At this time plaintiff was producing shells by the conven- tional process at its Menomonie plant under Supply Con- tract 918,*° and was in the process of completing its engi- * This was a separate preduction contract by conventional process. 61 neering studies and placing orders for equipment for the Eau Claire plant. By telegram dated March 19, 1954, plaintiff was directed to terminate all shell production scheduled for delivery sub- sequent to May 1, 1954, under Supply Contract 1316. This was confirmed by letter dated April 6, 1954. A similar notice of termination was receive with respect to production at Menomonie under Suppiy Contract 918. 32. Following further negotiations with the Chicago Ord- nance District, plantiff submitted a revised proposal on April 28,1954. In this propose plaintiff offered to produce 1,100,- 000 105-mm. shells at a fixed price of $5.2499 per shell, de- livery to be at the rate of 40,000 snelis per month for 6 months, commencing May 1, 1954, and at the rate of 60,000 shells per month thereafter. The letter stated that plaintiff understood that Supply Contract 918 (the Menomunie Sup- ply Contract) would be terminated effective April 30, 1954, and that Supply Contract 1316 ,the Eau Claire Supply Contract) would be reinstated and amended so as to increase the quantity of shells from 1,000,000 to 1,100,000 and the average price per shell from $5.05 to $5.2499. The letter further set forth the agreement of the parties that plaintiff would be permitted to manufacture the shells with the equip- ment provided under Facilities Contract 917 (the Menom- onie Facilities Contract) or Facilities Contract 1317 (the Eau Claire Facilities Contract) and to make delivery ot the shells from either the Menomonie plant or the Eau Claire plant. This proposal was made in the light of the then state of the installation at Eau Claire. Plaintiff understood that the Ordnance Department was very much interested in proving out, the shell lines at Eau Claire and agreed to start produc- ing there as soon as possible. 33. On April 30, 1954, the Notice of Termination of March 18, 1954, was rescinded by the Chicago Ordnance District. The rescission agreement recited in relevant part as follows: Subject: Rescission of Notice of Termination, Contract No. DA-11-022-ORD--1316 . nal * i * Pursuant to instructions received from higher head- quarters and in accordance with negotiations between 62 your company and the Government, it is hereby avreed, upon your acceptance hereof, that the above contract is a valid and subsisting document and shal] continue in full force and effect in accordance with its terms except as hereinafter modified. Pursuant to the negotiations with your company and/ or to the revised “Changes” article of subject contract, you are hereby authorized to proceed with the manufac- ture of the formerly terminated and now reinstated quantity of one million 105MM Shell, HE Mi MPTS on a fixed price basis not to exceed $5.2499 per unit and to deliver such supplies at the rate of forty thousand per month beginning 1 May 1954 through 31 December 1954 and sixty thousand per month beginning 1 January 1955 through 31 January 1956. The said price of $5.2499 shall be a fixed price not subject to any price redetermina- tion for escalation articles which may appear in said con- tract. Deliveries may be made either f.0.b. your plants, [Menomonie], Wisconsin or Eau Claire, Wisconsin, at your option. You are authorized to use Government- owned facilities at either or both of the said plants in the manufacture of the items of supply at the delivery rates specified above. 34. A formal supplemental agreement (Supplemental Agreement No. 3 to Supply Contract 1316) was entered into as of June 30, 1954. It recited in pertinent part as follows: Wuenreas, the eer hereto entered into Contract No. DA-11-022-ORD-1316 providing for the furnishing of Shell H-E 105MM, M-1 for 105MM Howitzer; and Wuenreas, prior to the execution of the foresaid con- tract the parties hereto had entered into contract [DA]- 11-022-ORD-918 for the furnishing of the identical item of supply; and Wuenrsas, under date of 7 April 1954, Contract No. DA-11-022-ORD-918 was terminated pursuant to “Terminacion For Convenience of the Government” clause of the said contract and under date of 6 April 1954 contract number DA~11-022-ORD-1316 was termi:.ated in accordance with the terms of “Termina- tions For Con,¢1ience of the Government” clause of said contract, both terminations effective as of 1 May 1954; and ; Wuereas, as a result of subsequent negotiations the parties hereto did to re-instate a combined quan- tity of 1,100,000 shell H-E 105MM at a fixed price of $5.2499; and Wuenreas, for the administrative convenience of the government it was determined that contract DA-11-022- 63 ORD-918 remain terminated ard that the complete re- instated quantity be procured under contract DA-11- 022-ORD-1316; and Wuereas, to facilitate contract administration as aforesaid, it has been agreed that Notice of Termination of Contract DA-11-022-ORD-1316 be rescinded and be — null and void and of no effect whatsoever ; an Whereas, the parties hereto that the unit price of $5.2499 shall be on a fixed price basis not subject to any price redetermination or escalation articles which may appear in the said contract, except for the clause presently contained in paragraph (a) of Article 1 of said contract pertaining to type of steel upon which price is predicated ; and * ae * * * Now, THEREFORE, the parties hereto do mutually agree as follows: 1. That paragraph (a) of Article 1 of said contract, as amended, be deleted in its entirety and the following inserted in lieu thereof: Article 1. Scope of this Contract. (a) The Contrac- tor hereby agrees to furnish and deliver to the Govern- ment the following supplies: Item Description Quantity Unit Total Price Price mw Shell H-E, 105MM, M-1 for 105MM S WRQWOMNGE, BEE 2 Ons icsicnnsacese~ 1, 100,000 | $5.2499 | $5, 774, 890.00 for the total stated consideration »f Five Million, Seven Hundred Seventy-Four Thousand Eight Hundred Ninety Dollars ($5,774,890). * * * _ 2. That a (b) “Specifications” be deleted in its entirety and the following inserted in lieu thereof: (b) Specifications. Contractor agrees to manufac- ture and deliver Item 1 above under the conventional method of manufacture at the Menomonie Plant and by the use of combination hot forge and cold draw processes at the Eau Claire Plant in accordance with specifica- tions contained in Basis of Procurement BP-S—94 (Rev. 5) 25 March 1954 brought up to date 25 May 1954. 3. That pa ph (c) of said Article 1 be deleted in its entirety and the following inserted in lieu thereof: (c) Inspection Acceptance and Delivery. Inspection and acceptance of supplies to be furnished hereunder shall be made at contractor’s plants Menomonie, Wis- consin, or Eau Claire, Wisconsin, at the Contractor’s 760-22: -65-——5 64 option, with delivery f.o.b. contractor’s plant at Menomonie, Wisconsin and/or contractor’s plant at Eau Claire, Wisconsin or nearest railroad siding as specified by the Transportation Officer, Chicago Ordnance Dis- trict as follows: Month ond year Quantity May 1954 through December 1954.__..- 40,000 ‘per month January 1955 through January 1956__---- 60,000 per month 4. That the following sentence be added at the be- inning of paragraph (d) of Arvicle 1 of said contract {oilot ot): The pilot lot requirements as specified hereunder shall apply to manufacture at the Eau Claire, Wis- consin Plant, only. 5. That paragraph (g) of Article 1 of the said con- tract be deleted and the following inserted in lieu thereof : (gz) In the performance of the services required here- under, Contractor is hereby authorized the use of facili- ties and tooling acquired under Contracts DA-11-022- ORD-917 and DA-11-022-ORD-1317. Toolins, if any, amortized in the unit prices of contract DA-11- 022-ORD-918 shall be treated and held in accordance with the terms and conditions of the Special Tooling clause of said contract DA-11-022-ORD-918, except that action thereon pursuant to the provisions of said clause shall be deferred until termination or completion of this contract DA-11-022-ORD-1316 as amended herein. * * * * * 35. As of the cime the agreements of April 30, 1954, and June 30, 1954, were executed, it was the understanding of the parties that the shells to be shipped irom Menomonie would be made with the facilities acquired under the Menomonie Facilities Contract (917) and that the shells to be shipped from Eau Claire would be made with the facili- ties acquired under Facilities Contract 1317. As of those dates, no equipment had as yet been installed at Eau Claire and, of course, no shel's had as yet been made there. 36. Although the original formal contract called for pro- duction to begin in July 1954, plaintiff was not able to assemble sufficient equipment to begin preliminary opera- tions until the summer of 1955. In the meantime, shells were beirg produced under Supplemental Agreement No. 3 65 to Supply Contract 1316 by the conventional process at Menomonie. By August 31, 1955, 801,264 shells had been shipped from Menomonie. At this rate, it appeared that the entire 1,100,000 shells called for by the contract would be delivered before the hot cup-cold draw line at Eau Claire would even be tested. The concern of the Chicago Ordnance District at this prospect resulted in a conference between officials of the plaintiff and the District on September 1, 1955, at which it was agreed that the rate of production at. Menomonie would be reduced from 50,000 to 40,000 shells per month, starting September 1, and a directive to that effect was sent to plaintiff on September 2. It was also understood that production at Menomonie should be phased out by November 30, leaving about 180,000 shells to be produced at Eau Claire. On September 9, 1955, plaintiff acknowledged receipt of the September 2 directive and stated, in part, as follows: As a result of this directive, you are hereby advised that production operations at our Menomonie, Wisconsin facility will cease as of 30 November 1955. Based on the cessation of work at Menomonie on the date hereinbe- fore indicated we wish to further advise that the deliv- ery schedule for the balance of the contract will be re- vised and adhere to by this organization as follows: DELIVERY FroM DELIVERY FROM MONTH Eau CLAIRE MZNOMONIB TIE Bioiinita ee edie yas 1, 000 40, 000 oS ae eee 5, 000 40, 000 I I haiigdicintceccacigmieantsisdninss 10, 000 40, 000 December 1955. een January 1966. ot re February 1956. ‘ Te March 1956 ee. deen 37. By October 10, 1955, the plaintiff had produced zi .ov+ 3,006 shells, some of which constituted the pilot lot for sst- ing by the defendant. On that day, Mr. L. G. Soper, who had advanced within the plaintiff’s organization to the po- sition of vice president and director of engineering, reai a paper before the American Ordnance Association discussing the process of making shells at the plaintiff’s Eau Claire plant under the contracts in suit. Because that paper repre- sents a clear exposition of the details of the process and dis- cussed contemporaneously some of the problems then fac- ing the plaintiff, it is quoted, in full, as follows: 66 HO-CO Process or SHELL MANUFACTURE {Hor Cur-Cotp Draw Process] N.P.I. at the present time is éstablishing facilities at Eau Claire, Wisconsin for the production of approxi- mately 1,000,000 shell per month on a three shift, five day production basis. This procuction, and equipment for production, as well as the building, has been planned so as to have six straight lines for the production of this uantity of shell. These lines, including the ry acilities for the steel bars, are approximately 1, feet long and are all housed under one roof, being so planned that the steel enters at one end of the build- ing and the finished shell are completed at the opposite end of the building. With this brief description of the lant, I will proceed with something which apparent- y will be of greater interest to you: that is, the de- — or process by which the shell are manufac- tured. The steel contemplate? for use in the manufacture of the shell is C-1018, and is purchased in 314” round cornered square bars. Other specifications are similar to those now specified for the manufacture of conven- tional Hot Forged shell. However, for experimental urposes, we ars currently using C-1025 , with the ighest residual content obtainable in commercial qual- The p is begun by b h 1 e process is begun ringing the material into the building with quand amend distributing it to a series of high speed band saws. This distribution takes place after the parts have passed over a conveyor provided with gas heating for the elimination of snow and ice from the material during cold weather months. After delivery to these saws, the bars are placed in an automatic cycle and cut to a length of approximately 8’’. These automatic saws run with high speed steel blades having a — cycle of less than one minute per cut and are run entirely automatically, with the excep- tion of the initial feeding of the bar into the saw and the — of the last part. The sawed parts are then picked up by a conveyor and carried to a combination washer-dryer, in which the parts are washed clean of the cutting fluids used in sawing. In addition, this machine, by its washing and drying action, removes the frost from the inside of the bars. Upon completion of this operation, the parts are automatically dumped into a continuous barrel type abrasive cleaning machine which removes all scale and rust and deburrs. Thus, at 67 this point we have a slug of steel 314’’ square, 8’’ lo and weighing approximately 1 pound above the finish weight of the shell. These slugs are then fed into an induction heating device on two different cycle frequen- cies, the first of which is a 60 cycle induction coil, where the slugs are brought up to a temperature of approxi- mately 1300°. They then continue on to a 960 cycle coil which brings the parts up to approximately 2100 to 2150 degress temperature. This is a pusher type machine in which the parts are pushed through the in- duction coils, the heat is checked at the discharge end, and parts not ang brought up to heat are auto- matically discharged. The hot slugs are then automat.- cally fed into a 3-station 1700 Bliss transfer press. This ress is mechanical in action, with the center or the cab- ring station containing a hydraulic overloaaing device. The first — accomplished in this press is the siz- ing of the billet. In this operation, the billet is simply pushed down into the die, forming the boat tail and squaring the billet out to fill the pot properly. It is then transferred to the second or center position in which a cabbaging punch engages into the shell for a distance of approximately 3”’, filling the part out to a uniform cabbaged part. Finally, it is transferred within the same press to the third station, where the part is pierced to a length of approximately 11’’. All three stages of the aforementioned press contain guided dies. By that we mean the piercing punches of the dies are guided directly through bush?< gs into the bottom section of the dies, the purpose, of course, to aid in maintaining con- centricity. Cencniniaiae requirements at this station are held to a .030 total indicator reading. Parts, as they emerge from this forging press, are quite clean and free of scale, the time cycle having been approximately 8 minutes from the time they started thru the induction heating device until they cleared thru the last stage of the forging operation. It has been determined that this lack of scale is infinitely important where a concentric forged part must be maintained. After this forging is complete, the parts which are now at a temperature of approximately 1850° are placed into a retard cooling furnace, wherein they are cooled from the 1850° tem- perature to a temperature of approximately 100°. This gradual cooling cycle is extended over a time period of approximately 1 hour, 50 min., after which the parts are removed and placed in a continuous skew roll abrasive cleaning machine, in which shot is thrust against the exterior and the interior of the part, removing all scale, discoloration and, in general, cleaning and stress peen- ing ths part for the following operation. Parts are cheek-ud tt this point for surface Tenequiacitien, either internal or external and, of course, they are also checked dimensionally and for concentricity. The next operation is that in which the parts are sent thru a series of tanks in which they are washed, pickled, hosphate coated, soap coated and dryed in preparation or cold ras This latter operation is accomplished on a horizontal hydraulic press ard produces a part which has been extended from the ~——e to a casing approximately 1514’” long. The part is drawn to the finished cavity size and to the finished body diameter. The next operation, trimming, is performed on a Bar- dons and Oliver machine, similir to a machine used in the cutting of pipe stock for nipples, and is merely an operation where tools cut off the excessive iength and amfer the inside and outside of the open end of the shell. The shell is now a trimmed —- the physi- cals developed in the sidewall, with the of the shell, however, still in an undeveloped state. Therefore, the part is taken into a coining operation, = on a 1500 ton horizontal mechanical press, having a three station dial. Parts are loaded into the press in the first station of the dial. In the second station, or work sta- tion, the parts are coined and the open ends upset, and in the third station they are unloaded. Through usin this medium, we are, of course, able to secure a very hig productive rate, inasmuch as a finished part is produced with each stroke of the press, while the automatic load- ing and unloading cycle permits the press to be run automatically and continuously. The work performed in this operation is intended to expand both bourrelet diameters to the given size, to coin out the base and to bring the physical properties in the base area up to uirements. In addition to this, the open end of the sheli is upset. This upsetting gathers a greater amount of stock for threading at the open end of the shel!, which is required to give us enough thread depth. Previous attempts to obtain this added material were carried out by bottle-necking the cold draw punch and, thus, when the part was stripped from the punch, the material re- mained in the bottle-neck section and was simply ex- —_ to the outside. It was stripped over the larger iameter at the base of the punch, which proved un- satisfactory from two standpoints: one, that it was extremely difficult on the tooling and two, that it created ion in the material diameter, thus, crea“ ° a crecking condition at the open end of the shell. 69 Following the coining, the parts are lubricated for nosing and are entered into a nosing press. The nosing press, again, is a horizontal press, mechanical, 500 ton capacity, three station dial, the first station being the loading station, the second station being the work, or the nosing station, and the third station being the un- loading station. Again, with this type of machine, we are, of course, able to maintain a hig uction rate. This is a simple operation, similar to that used in the conventional process, with the exception that we are nosing the part directly to size. In the bottom section of the die, are collets, which, upon the application of pressure by the die, are brought into action to restrict the body diameter from flowing out or bulging out be- yond the tolerance limitations. ee the shell are put through a stress relief furnace. ri- mental parts have been pu! thru these furnaces from temperatures ranging from 700 to 1000°, and we are currently using a temperature slightly over 900° F. The parts are placed onto a continuous conveyor belt in a vertical position with the nose down. In the first stages of the machine, the parts are washed and the compounds that have been placed there for the nosing and the coining as are removed. Secondly, a gas heated chamber brings the parts up to temperature, and the stresses which have been placed into the part, through cold working, are celioved, After going through this chamber, the parts are cooled in cooling chambers and then, upon discharge they are placed in a horizontal broach in which the bourrelet diameters are broached tosize. Work has been done in this stage using drawing rings, but we are currently changing to cot ae aye rings. It was found that, due to the spring back in this ma- terial, it is difficult to contro] the exact size of the bour- relet thru this drawing operation, and it is contemplated that broaching will be a more successful and Jess trouble- som3 type of operation. After the broaching operation, one of the few other machining operations is accomplished. This is per- formed on a single spindle automatic lathe, the opera- tion of which is such that the parts are automatically fed into and ejected from the lathes. The parts are held in a chuck on the boat tail and by a steady rest over the ogive. Tools operating from both the front and the rear slides then turn the band a ons a reamer comes in from what would normally be the tail rest posi- tion, reams the ogive hold to diameter, and faces and chamfers the open end of the shell. A specially de- signed machine then chamfers the boat tail and mills 70 in the staking notches on the its end. The boat teih att Ghasn dail snaak be cheuaieeel an Gebasenl, ia asmuch as the knock out in the coining die causes a a material around the edge of the boat tail. After this operation, knurls are made in the band groove by means of a marking machine. rage conventional tapping operation where the ogive is tapp~d to the given dimension is omar ed in a double spindle tapping machine. At this point the parts are ne ae by the use of manual and pneumatic gages. Upon acce ce of —_ they are then placed in a machine which subjects them to a series of tanks, wherein they are again washed, chemically cleaned and dryed, and are forwarded to welding ma- chines. The welding machines ars horizontal machines in which, in the first stage, the base plate is pre-tacked into position, thus eliminating any possibility of mislo- cating the base plate. The parts then are seam welded and annealed in the second stage. Following this oper- ation, the parts are forwarded to the banding machines, which actually are horizontal hydraulic presses. The shell go into the press, bands are fed from a magazine above and are pressed on in a manner quite simi’1r to that used with | ano presses, the only difference be- ing the fact that the presses have an ejection cylirder working from the opposite end, and the parts are auto- matically ejected from the die and from the machine. The copper band is next turned on a band turning machine, which, being a conventional operation, needs no further description. The bands are then checked for tightness, and the parts are again inspected, after which they go through the marking machine and then, in turn, thru the cleaning and phosphatizing machines, and finally into the paint machine for painting. The equipment used in this operation is similar to that used for conventional methods. One greater difficulty has been encountered here though. Due to the very smooth shell, there has been some difficulty getting a thickness or coatirg of paint heavy enough to withscand salt spray requireraents. After the painting, of course, the parts are placed on pallets, as in the conventional process, and, thus, the processing of this Hot Forged, Cold Drawn Shell is concluded. It might be worthy to note that, in this process, ¥™ have in no place turned material from the shell, with the exception of the band groove and the boring and facing of the ogive. With no removal of stock, naturally we are permitted to start with a greatly reduced amount of material. However, we had to develop a process on 71 which the forging was extremely accurate nd in which the ey produced would have a bef surface finish. To d y inspected, ate, with 3000 forgings care we can say we haven’t had problems of poor surface conditions and should similar resylts continue, we would not use any metkvd for removal of stock from the O.D. of the forgings. Further, it should be noted that there are no heat treating operations, and the part is brought up to heat but twice—for the forging operation | stress relief. The forging is worked to the fullest d ible in this forging operation and then worked the balance of the way thru cold working, to bring the desired physi- cals into the shell. A great deal of experimentation and engineering has been necessary, of course, to perfect this type of forging operation. It must be noted that this forging is a very important factor in this type of opera- tion and too much care cannot be emphasized on this phase of the operation. An improperly forged part can- not be salvaged in this process, as the initial stock from which we start the operation does not allow material to be turned and still end up with the proper weight of the finished shell. Yes, die design all the wy down the line is the im- rtant factor. It must be coordinated in all phases to ring out a finished shell within tolerances, and further, it must be carefully coordinated with a metallurgist, in order to bring out the proper physical characteristics which are required in the shell. We feel that this proc- ess has great possibilities. It has possibilities, we think, of making shell with a steel of the same quality used in the conventional Hot Forge Process and, of course, using a great deal smaller quantity of that steel. Finally, it eliminates many costly operations, such as heat treating, rough turning, finish turning, all of which, undoubtedly, count for a great deal of expense in the conventional manufacturing methods. 38. In producing the 3,000 shells referred to in the pre- ceding finding, only the first of the six production lines was utilized and the tempo of production was markedly less chan under the conditions of full mass production. 39. The 1,700-ton Bliss 3-stage presses which were utilized in effecting the hot forging were delayed in delivery from the manufacturer to the plaintiff's Eau Claire plant. Six were delivered, the first two in February 1955. One of these was installed in Line No. 1 in Apri! 1955, and the other five were 72 installed in September 1955. Thereafter, it was necessary for the Bliss erection crews to make certain corrections to the presses. The entire job was, according to the plaintiff's vice president, delayed y two and one-half months for which he, on behalf of the plaintiff, claimed $110,000 from the Bliss firm. The disposition of that claim is not shown in the record. 40. The facilities contract called for reimbursement to the plaintiff of the costs of installation of the machinery it purchased for inclusion in the line. The plaintiff was paid for these costs. Asan indication of delays encountered, how- ever, there is quoted below a paragraph of a letter from the plaintiff to COD, dated August 3, 1955: It would be pointed vut at this time that, notwith- standing the fact that estimated costs of installation have been increased by $301,652.48, the test share of this increase can be attributed to the fact that this or- ganization has been instructed by the Ordnance Depart- ment to purchase numerous items of equipment over which we bad no control. Repeated delays in deliveries have been experienced on these numerous items with the net result that this organization has expended over $500, 000.00 which was net originally contemplated as a result of having to hire additional erection crews for accelerated delivery, committed by the machine tool vendors and, due to delivery failures agait.st the committed schedule it was necessary to cut br. x erection crews and again rehire. You are no doubt izant that such measures are extremely costly especially in that it has meant an expenditure on the part of this organization of several hundred thousand dollars. 41. Ny December 15, 1955, the plaintiff had produced a total ef about 13,000 105-mm. shells at its Eau Claire plant. When plaintiff stepped up its production rate after com- pletion of the pilot lots, it began to experience serious diffi- culty with the concentricity of the shells. With de- fendant’s acquiescence and approval plaintiff attempted, over a period of tims, to overcome this problem without using turning equipment. 42. Even after the line at Eau Claire had finally been installed, plaintiff experienced many difficulties with the equipment. It was found that the induction heating process was defective, necessitating changing the raiis in the unit 73 to a special alloy. The ejector mechanism of the forging press failed to work properly. There was also a problem with the tensile properties of the shell. Ordnance required an elongation or stretching factor of 15 percent. Tests showed subnormal yield strengths and elongation of less than 15 percent. This was due to the failure to ixstall a proper quenching apparatus which, by rapidly eooling the hot billet, gives it the desired tensile strength. It was not until February 1956 that a cold water quenching conveyor was installed which solved the problem of elongation. The coining and nosing presses were “down” as late as May 1956. Defects in the die designs, which affected the concentricity of the shells, required constant changes. There were delays in the handling and conveyor systems. 43. As late as early November 1955, it had not yet been determined that turning equipment would be required in the shell line at Eau Claire. Plaiatiff’s exhibit No. 79, which is in evidence, is a trip report of Mr. A. H. Sundfor, chief of the Facilities Branch, COD, reporting on a conference he attended at plaintiff's plant with plaintiff's officials, in- cluding Mr. Soper and Mr. Halpern, reads in part as follows: 3. Relative to the necessity for turning or grinding the hot-forgee forgi rior to cold working, representatives of CHOD and Nat'onal Presto recommend that this de- cision be deferred for at least 60 days in view of the ex- perience that will be gained in that period from future production. National Presto’s work on pilot lots indi- cates that excellent possibilities exist that this turning operation will not be necessary, but it is of course too early to make a statement at this time. In a subsequent meeting in CHOD on 4 November 1955, Mr. Grazioso of OAC, stated that he did not concur with chis recom- mendation and would recommend that Government sur- plus turning equipment be installed and tooled at Presto immediately for at least one line. In this 4 November meetir;s Mr. Harold Babcock of Frankford Arsenal fur- ther * cussed surface quality and pointed out that his recent experimental work at ACF wherein finished un- turned hot cup-cold draw shells were Macro-etched, .uowed surface defects. CHOD will attempt to have ten finished Presto shells shipped to Frankford Arsenal to be studied for surface prone 44. By April 26, 1956, it was definitely determined by plaintiff and by Qrdnance that additional equipment was 74 needad for stock removal after the hot forging, in order to insure concentricity of the shells. Ordnance agreed that such equipment was “absolutely escantial” to the accomplish- ment of efficient and economical production of the shells under the hot cup-cold draw process. The plaintiff began to obtain quotations as to cost and delivery possibilities of such equipment. at that time. 45. From November 1955 to April 1956, plaintiff con- tinued, with defendant’s acquiescence and approval, a process of trial-and-error to determine whether effective producticn could be obtained without turning equipment. The de- termination concerning the need for turning equipment was the result of the plaintiffs decision, with the consent of Ordnance, to bring over one lathe from the Monom- onie line (after operations had ceased there) in February 1956. This was located in the tool room at Eau Claire as an experiment. This, in turn, required that longer billets be used which, in turn, required the redesigniug and manufac- ture of new dies for the hot forge press. Success with the use of this lathe was demonstrated, and it, as well as three additional lathes from Menomonie, was placed in Line No. 1 at Eau Claire where a space had been provided in the original layout of machinery. 46. Between February 29, 1956, and September 28, 1956, 181,205 finished shells were produced at Eau Claire using the Menomonie lathes. This production, by month, is shown below : MosTH QUANTITY OGG Biri os acsinenens ites VES March_- oem e 3, 984 April__-_- —— 19, 962 May--.--. = ceed an 31, 962 June. oe ae 35, 894 PSs preieen Scans aeons 19, 939 August__ 23, 923 September 37, 573 47, From July 1 through July 15, 1956, in keeping with its usual policy, the plaintiff’s factory operations at Kau Claire closed down in order that its employees might have an annua] 2-week vacation. 48, The plaintiff, after authority to do so was given by the contracting officer, placed its order for 24 automatic 75 lathes for ultimate inclusion in the shell line (4 tu each of the 6 lines). Ut was known at the time they were ordered that they could not be received in time for use i producing shells for the production contract (No. 1316). ‘The plaintiff was directed to receive the lathes upon delivery but not to install them in the line, but rather to have them. available when the line was placed in the standby condition at the end of the production contract. Th‘s wasdone. The cost c* the lathes was a little over $1,200,000. 48. The total cost of machinery and its installation under the facilities contract, all of which was reimbursed to the plaintiff by the defendant, was, in round figures, $15,500,000. 50. The Trial Commissioner, at the request of the parties and in the company of representatives of and counsel for the parties, made an inspection trip in October 1961 to the plain- tiff’s plant prior to the trial of this case. The six shell lines were in a standby condition at that time. 51. On the basis of the experience gained at plaintiff's plant on the contracts here involved, all new shell lines that have been set up, including 8-inch shell lines at plaintiff's plant and at American Car and Foundry, are set up and will be set up on the hot cup-cold draw process. All of them have turning equipment in the form of lathes. On the basis of this and other evidence, it is found that this new process requires turning equipment (7.c., lathes or comparable de- vices) for efficient and economical production on a mass basis. 52. Although inclusion of plunge grinders in the shell line was requested and desired by the plaintiff at the incep- tion of the facilities contract, when the decision to include turning equipment was finally made, no one suggested the addition of plunge grinders. It seemed to be clear to every- one concerned at that time that automatic lathes were required. 53. At the time of the negotiations and the execution of the contracts in 1953 both parties were mistaken (excusably and in good faith) as to the actual need for turning equip- ment (z.e., lathes or comparable machines) in the efficient and economical manufacture of these shells by the hot cup- cold draw process on a mass production basis. Both parties thought that such equipment would not be needed and both were excusably ignorant (in good faith) of the process of 76 trial and error, and the period of time, necessary to determine whether such turning equipment was or was not necessary. The parties were not satisfied as to the need for such equip- ment until the end of April 1956. 54. The plaintiff and the defendant, in October 1956, entered into another contract for the purpose of proving out Line No. 2 of the six lines installed under the facilities con- tract in suit. This “prove out” contract was for 235,000 shells at $7.6C per shell. These shells were produced using the Menomonie lathes. 55. Four of the six lines installed under the facilities con- tract have never been proved out. 56. 918,795 of the shells called for by the production con- tract in suit, as modified, were produced at the Menomonie plant of the plaintiff by the conventional process. The plain- tiff’s experience there shows a leas of $74,274.32, which is converted to a “black” figure when sales of scrap steel of $185,852.54 are taken into account resulting in a profit of $111,578.22 in producing the 918,795 sheiis. 57. In producing the 181,205 shells at its Eau Claire plant, the plaintiff sustained a loss of $755,804.01, computed as follows: Production Costs: NN i kc i dt ath a reac coals coeds $521, 814. 65 asic lado dicihan cna va eas asdaepaitin cia bcinenaed 101, 510. 29 Overhead 950, 340. 81 General and Administrative_ 165, 383. 21 ONO cists vate ai geese cs sass cis pa aig hah atalile i, 739, 048. 96 EE OPO ati cdaesieediannesaauucindnw amie 983, 244. 95 Loss $755, 804. 01 58. No items of cost incurred prior to November 1, 1955, are included in the above computation, except for a small amount of overhead incurred in October amounting to ap- proximately $5,000. Costs incurred in previous months were not included. 59. The price of steel which the plaintinf purchased after January 1, 1956, for production of shells under the contracts in suit, was increased by 2 total of $24,237.10. 60. Sales of scrap at Eau Claire in producing the 181,205 shells amounted to $13,088.86. TT CONCLUSION OF LAW Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of Jaw that plaintiff is entitled to recover in accordance with the opinion, and judgment is entered to that effect. The ainount of recovery will be determined pursuant.io Rule 47 (c) (2). U.S. GOVERNMENT PRINTING OFFICE: 1968 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_0432%3A2. Public record. Not legal advice.