CONTRACT ADMINISTRATION PROBLEM Review this case carefully and answer the questions in detail. You are the contracting officer in charge of the negotiation of a final redetermination of a fixed price incentive contract. The amended target cost and profit of the contract are $4,500,000 and $450,000 respectively. The ceiling is 125% of target cost and the share formula is 75/25 (that is, the Governments 75% of cost increases, but also benefits in 75% of cost decreases, both from target cost). The contractors proposal for the final redetermination has been audited and the auditor has set out the following costs for your consideration in the final redetermination: $5,000 for advertising $20,000 for interest $75,000 reserve for possible rework costs based upon the contractors obligations under the Guaranty clause of the contract In your negotiation, you try to get the contractor to accept a price with these cost items excluded. The contractor is adamant and refuses to go along. QUESTIONS: 1. Is there any alternative to your unilaterally determining the price and making a final decision under the Disputes clause of the contract? 2. Can any of the cost items be allowed? 3. Is there any alternative remedy? The contractor says that if the items noted above are not included in the contract, he will submit claims on four changes which occurred a year ago but which were never proposed. It appears that one of the changes was for a substantial amount and the contractor had planned to submit a proposal for it but was talked out of it by the Governments project manager. The contracting officers notice which had directed the contractor to proceed with the change had contained the following statement: This change shall be accomplished at no increase in the target cost, target profit, or price of the contract. QUESTIONS: 4. Is there any reason to be concerned over the possibility of the contractor recovering under the change