**Quillstone Communications**
100 Innovation Drive, Suite 400
Arlington, VA 22209

**Date:** September 15, 2023

**To:** Contracting Officer
National Relay Service
[Address]

**Re:** Termination of Contract No. [Contract Number] – Tower Modernization Project
**Termination Notice:** August 15, 2023
**Subject:** Settlement Proposal for Conversion to Termination for Convenience

Dear Contracting Officer:

Quillstone Communications (Quillstone) submits this proposal in response to the National Relay Service’s (NRS) notice of termination for default dated August 15, 2023. While Quillstone acknowledges that it missed the June 30 milestone by 39 days, Quillstone contends that the Default Termination is improper under governing contract rules due to government-caused access delays and excusable weather conditions affecting the critical path.

Accordingly, Quillstone proposes a negotiated settlement converting this matter to a **Termination for Convenience**. This proposal resolves the contractor’s settlement entitlement, waives NRS’s claims for excess reprocurement costs, and preserves rights regarding specific idle labor claims pending production of necessary government records.

### I. Statement of Delay and Default Defense

Quillstone maintains its candor regarding performance but contests the classification of the termination as "default" based on the complexity of concurrent delays. Quillstone’s internal critical-path analysis identifies three distinct delay categories contributing to the 39-day overrun:

1.  **Contractor-Caused Delay (19 Days):** Quillstone concedes that 19 days were attributable to its own failure in radio supplier selection following a credit review failure. We do not contest that these specific delays are unexcusable under applicable rules.
2.  **Government-Caused Access Delay (12 Days):** During the critical period, NRS denied access to mountain sites due to wildfire operations conducted by a separate agency. Quillstone provided contemporaneous email notice of this denial. However, without NRS’s site-access gate logs or internal schedules, we cannot currently prove these days were on the critical path or did not overlap with our supplier delay. Under governing rules, government-caused delay excuses performance to the extent it affected the critical path; absent the records to prove concurrency, a Default determination is premature.
3.  **Excusable Weather Delay (8 Days):** Severe weather impacted site work for 8 days. Quillstone’s daily site records are complete and support this claim.

**Position on Conversion:** Even accounting for the 19 days of unexcusable contractor delay, the existence of government access restrictions prevents a definitive finding that *solely* Quillstone caused the failure to meet the milestone. As NRS has not produced the records necessary to rule out excusable or government-caused delays from the critical path, and because Rule 3 provides for conversion where Default is improper, we propose settlement under Termination for Convenience terms. This avoids litigation over causation and allows both parties to mitigate costs immediately.

### II. Settlement Computation (Termination for Convenience)

Based on Quillstone’s certified cost schedule, accepted NRS records regarding prior payments, and the applicable profit rate of 7% for allowable performance costs, the settlement value is calculated as follows:

**A. Allowable Performance Costs Incurred Before Termination**
$6,800,000
*(NRS has not alleged these figures are inaccurate)*

**B. Reasonable Profit (7% of Allowable Performance Costs)**
+$476,000
*($6,800,000 × 0.07)*

**C. Reasonable Settlement Expenses**
+$220,000
*(Incl. administrative closeout costs)*

**D. Subtotal: Total Allowable Value**
$7,496,000

**E. Less: Disposal Credit for Reusable Materials**
-$300,000

**F. Net Contract Price Settlement Value**
$7,196,000

**G. Less: Prior Progress Payments Made**
-$5,400,000

**H. TOTAL AMOUNT DUE TO QUILLSTONE**
**$1,796,000**

### III. Reservation of Specific Idle Labor Claim

Quillstone reserves a separate claim for **$420,000 in idle labor costs** tied specifically to the alleged government access denial.

*   **Status:** This amount is **not included** in the $1,796,000 settlement total above.
*   **Condition:** Because this claim relies on establishing that specific crews were prevented from working solely due to NRS gate closures, it requires NRS’s production of site-access logs and wildfire directives which are currently unavailable.
*   **Proposal:** Quillstone agrees to hold this claim in abeyance during the record-exchange period (see Section IV). If NRS produces records confirming the access denial prevented work during non-concurrent periods, we will submit a formal revision for the idle labor cost under the convenience termination settlement rules.

### IV. Demand for Government Records

Pursuant to Rule 8, Quillstone requires specific records to evaluate and finalize any claim regarding the $420,000 idle labor reserve and to validate the critical path defense. We request production of the following by **October 30, 2023**:

1.  Site-access gate logs for the relevant mountain sites between June 15–August 15.
2.  Internal NRS or Agency directives regarding wildfire work closures during that period.
3.  The Government’s internal baseline schedule and update logs to determine concurrency of delays.

### V. Mitigation and Post-Termination Compliance

Quillstone confirms compliance with Rule 7 requirements:
*   **Stop Work:** Operations ceased immediately upon notice (August 15).
*   **Property Protection:** All government equipment has been secured and inventoried.
*   **Subcontracts:** Subcontractors have been notified; settlement negotiations for closeout are underway.
*   **Inventory:** A full inventory of materials is available for audit; disposal credits for reusable items ($300,000) reflect fair market value.
*   **Certification:** Quillstone certifies that the cost data provided herein are accurate and complete to the best of its knowledge.

### VI. Terms of Resolution

Quillstone proposes the following terms upon acceptance of this proposal:

1.  **Conversion:** The termination is formally converted from Default to Termination for Convenience via a bilateral modification.
2.  **Payment:** NRS will pay Quillstone **$1,796,000** within thirty (30) days of execution.
3.  **Mutual Release:** Upon payment, both parties mutually release all claims arising under the contract, including any NRS claim for excess reprocurement costs (Rule 9).
4.  **Idle Labor Claim:** The $420,000 idle labor claim remains reserved. If NRS fails to produce the requested records by October 30, Quillstone reserves the right to pursue this claim through formal dispute resolution. If produced and validated, it will be settled within the existing convenience framework without further profit markup.

### VII. Conclusion

Quillstone has stopped work and acted in good faith despite the uncertainty of the termination notice. Acknowledging our own contribution to 19 days of delay demonstrates our commitment to a fair resolution. However, the unavailability of Government records precludes a definitive Default finding regarding the critical path. We request NRS accept this proposal to close the financial liability for both parties immediately while maintaining access for record exchange regarding reserved claims.

We look forward to your prompt agreement.

Sincerely,

*Legal Counsel / Authorized Representative*
Quillstone Communications

**Enclosure:** Certified Cost Schedule and Supporting Documentation