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On January 13, 1986, Ms. Branda was given authorization to reject
the pending $750,000 settlement offer and to make a counteroffer
of $2.5 million.
On January 14, 1986, Talley, Stencel, and the Navy
Department executed an interim agreement under which the Navy
Department agreed to end Stencel's suspension and Stencel agreed,
in turn, to pay the Navy Department $600,000 and to continue
negotiating in good faith to settle the potential liability.
By late January 1986, Talley, Stencel, and the Government
had agreed to assume, solely for purposes of settlement
discussions, that Stencel's labor mischarging had occurred in
each of the years 1979 through 1984 at a constant rate in
relation to Stencel's direct labor charges for such years. They
further agreed that the Navy Department's total losses of the
type described in the Asheville damages schedule for 1979 through
1984 were $1,560,000.
By letter dated January 31, 1986, Mr. Kilberg made a new
offer to settle the Government's claims against Talley and
Stencel for $2 million (with an offset of the $600,000 that
Stencel had paid earlier). Mr. Kilberg's letter stated in
pertinent part:
Stencel has offered the United States a total of
two million dollars, inclusive of the $600,000
previously paid pursuant to agreement with the
Department of the Navy. This sum shall be compensation
for any and all restitution and damages that may be
owing by Stencel to the United States for any possible
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