SUPERVISOR OF SHIPBUILDING, CONVERSION AND REPAIR, USN IN REPLY REFER TO CVAN68/4330 20 August 1974 Mr. John P. Diesel President and Chief Executive Officer Newport News Shipbuilding and Dry Dock Company Newport News, Virginia Subject: 23607 Modification No AE15 (HMR 331) for Main Coolant Stop Valves 1. On July 16, 1974, Mr. F. H. Creech responded to my predecessor's July 8, 1974 letter to you regarding Modification AE15 (HMR 331) for main coolant stop valves under the contract for construction of CVAN68, CVAN69 and CVN70. Mr. Creech signed two letters dated July 16 on this matter, one concerning Modification AE15 itself and the other addressing the general problem of delay in delivery of CVAN68 and CVAN69. The purpose of this letter is to reply to the former. In addition, Mr. Creech's letter of 15 August 1974 has been recently received. This will be the subject of separate correspondence. 2. With respect to Modification AE15, Mr. Creech's letter states that Newport News is proceeding with preparation of a proposal with regard to Modification AE15 separate from the general problem of responsibility for delay of the CVAN68 and CVAN69. His letter requests a reconsideration of the Navy's previous position that these two matters should be handled separately. Further, Mr. Creech's letter requested "expeditious acknowledgment that to the extent transfer of personnel from preexisting work on either the NIMITZ or the EISENHOWER delays or disrupts performance of said preexisting work, that such delay and disruption will be the Government's responsibility, as well as is the delay and disruption incident to the performance of Modification Na AE15 itself." I have reviewed this matter and herewith reaffirm the Navy's position expressed in my predecessor's July 8, 1974 letter for the reasons stated therein. 3. Mr. Creech's letter also states that "the Government has adopted procedures so that any claim for such cost must meet noncontractual standards of proof that are extremely difficult to attain and may be interpreted as devised to preclude equitable settlement." I am not aware of the basis for this allegation. The Government is entitled to receive documentation supporting pricing of change orders and claims proposed by the contractor. If you will provide me with details regarding those procedures which you believe are "non-contractual", I will review them and meet with you to seek resolution of our differences. CVAN68/4330 4. In summary, it is the Navy's position that Modification AE15 must be treated separately from the matter of overall delay in delivery of CVAN 68. It is also the Navy's intent to compensate you fairly and properly for the work performed under Modification AE15 consistent with your obligation to minimize the cost to the Government of performing the change. 5. I would appreciate your advising me by 30 August 1974 of the date by which your proposal for Modification AE15 will be complete. Subject: Contract N00024-67-C-0325 for Construction CVAN68/69 Reference: (a) (b) Enclosures: (1) NNSB (F. H. Creech) letter 594/C102-C letter dated NAVSEA letter Ser 08 CVAN68 c/9020/2, Ser 08J-C594 Underlying Conditions Controlling Acceleration of (2) List of Changes Nuclear (8/30/74) Dear Captain Eustace: In reference (a) the Company advised that, subject to all the indicated constraints, we would work to a delivery date on CVAN68 NIMITZ of May 10, 1975. Subsequent to reference (a) there have been numerous discussions between the Company and representatives of the Nuclear Power Directorate regarding the possibility of achieving an even earlier delivery date. This is to advise that if there can be prompt and satisfactory resolution of the matters indicated in enclosures (1) and |