DENIED: January 27, 1993 GSBCA 11469 UNIVERSAL DEVELOPMENT CORPORATION, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Kenneth K. Takahashi of Takahashi & Associates, P.C., Washington, DC, counsel for Appellant. Gerald L. Schrader, Real Property Division, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), LaBELLA, and HYATT. DANIELS, Board Judge. Universal Development Corporation (UDC), the lessor of a building to the General Services Administration (GSA), seeks an equitable adjustment to compensate it for costs allegedly incurred in providing constant humidity and temperature to a computer room and vault on an around-the-clock basis, rather than during eight-hour business days. We find that the lease mandates the continuous provision of these services, and consequently deny the appeal. Findings of Fact 1. This case involves a lease for 67,000 net usable square feet of office and related space at a building constructed by UDC in Homewood, Alabama. The term of the lease is January 10, 1977, through January 9, 1997. Appeal File, GSBCA 11470,[foot #] 1 Exhibit 8. 2. This building is, and has always been, occupied entirely by a disbursing center of the Department of the Treasury. Appeal File, GSBCA 11470, Exhibit 1, Attachment to Schedule A at 10; Transcript at 40. The building includes a 4800 square foot computer room and a concrete vault of approximately equal size. Transcript at 8. The vault contains blank checks that are facsimile signed by the Secretary of the Treasury. Id. 3. The lease requires that UDC generally provide various services, including "air conditioning for personnel," "daily during normal eight-hour workdays, except Saturdays, Sundays, and Federal Holidays." Appeal File, GSBCA 11470, Exhibit 1, Schedule C at 1. UDC is responsible for maintaining the system that provides this air conditioning. Id. at 2. With further reference to this system, the lease states, "During the cooling season, the setting on room and zone thermostats shall be held at 78 degrees - 80 degrees F during working hours and [is] permitted to go higher during nonworking hours." Id., Schedule B, Part V at 18; see also id., Part III at 12. Air conditioning for personnel was to be started early enough, on appropriate days, that the prescribed temperature "will be established prior to start of official Government working hours." Id., Schedule C at 1. 4. The lease also contains an independent requirement for air conditioning with a different purpose. The pertinent clause includes these provisions: Vault area and Computer Complex (EDP) Requirements: Provide three (3) completely separate airconditioning [sic] units. . . . Each unit shall be capable of handling one-half of the entire cooling load for the Vault Area and Computer Complex (EDP). Two of the units shall operate together with the third unit as a standby. . . . Provide two (2) 24 hour 7 day electrically controlled combination temperature and humidity recorders. One recorder to be located in the Computer Complex (EDP) and the other located in the Vault Area. Provide an alarm system (visual and audio) to signal extremes in temperature and humidity ----------- FOOTNOTE BEGINS --------- [foot #] 1 Exhibits 1-20 in GSBCA 11470, a case involving the same contract but an entirely separate issue, are a part of the record in the instant appeal. Transcript at 39. ----------- FOOTNOTE ENDS ----------- of the return air to the air handling units. Set point shall be adjustable with rangers [sic] of approximately 65 degrees F to 80 degrees F temperature and 35% to 60% relative humidity. . . . . The design conditions are as follows: Humidity - 50% + 5% (inside design) Temperature - 72o F. 2o F. (Inside design) regardless of outside temperature. . . . . The system components shall be sized to adequately control temperature and humidity in the space regardless of whether computers are on or off; or whether lighting is on or off; or the normal contingent of personnel is present or not. Appeal File, GSBCA 11470, Exhibit 1, Attachment to Schedule A at 12-13. 5. At UDC's request, GSA accepted five environmental control system units manufactured by Liebert Corporation (one of which operates as a standby unit) in lieu of the three units required by this clause of the contract. Transcript at 7, 40. The Liebert units are far more sophisticated than most air conditioners. Id. at 10. Whereas most air conditioners simply discharge air at a temperature intended to keep people cool, the environmental control units regulate humidity as well as temperature, and they do so within narrow ranges. Id. at 66, 78- 79. 6. UDC was aware from the time of lease negotiation that control of the humidity and temperature in the computer room is essential to the operation of the disbursing center's computers, which in turn are essential to the facility's mission. Transcript at 9-10, 31-32, 41, 62. The Liebert units are designed to operate in computer rooms twenty-four hours a day, seven days a week; a Liebert representative, who appeared at hearing as a witness called by UDC, testified that in five years of working with these units, he has never seen one that operated on a lesser schedule. Id. at 84-85. 7. On the first day that the Government occupied the building, a GSA representative specifically informed UDC that the Liebert units would have to be run twenty-four hours a day, seven days a week. Transcript at 12. UDC voiced no objection. Id. at 59-60. The lessor has been providing this service throughout the length of the lease. Id. at 13. 8. Thirteen and one-half years after the lease term began, UDC for the first time complained that it was due additional payments for maintenance, repair, and replacement reserve relating to the Liebert units. By letter dated August 8, 1990, the lessor's president told a GSA contracting officer that the "building has always been in a negative cash flow condition." The president said, "It would be helpful to me, if some of these cost[s] could be passed, if the lease provides for this condition." Appeal File, Exhibit 1; Appellant's Posthearing Brief at 3. 9. During the next year, agency contracting officers expressed a willingness to provide some additional compensation, but insisted on seeing actual maintenance and repair cost records for the equipment in question. Appeal File, Exhibits 2, 10, 12. In response, UDC provided estimates on the basis of which it asked GSA for first $226,041.48 and later $476,258.73. Id., Exhibits 3, 4, 14. UDC's president maintained at hearing that his firm's relevant business records had been destroyed when the earth beneath a warehouse had collapsed, in October 1985. Transcript at 16-18; Appellant's Exhibits 1, 2. No actual records -- not even records from after October 1985 -- were ever produced, however. 10. On May 8, 1991, UDC submitted a certified claim in the amount of $476,258.73. Appeal File, Exhibit 15. The contracting officer denied the claim for lack of supporting documentation. Id., Exhibit 16. UDC appealed this decision on September 26, 1991. Id., Exhibit 17. In its posthearing brief, UDC has reduced the amount of its claim to $284,241.27; the difference between this sum and the one certified is allegedly due to application of a different discount rate to the estimated cost of maintenance. Appellant's Posthearing Brief at 14. Discussion For more than thirteen years of a twenty-year lease, UDC continuously operated environmental control system units for the computer room and vault of the building in question, and never voiced an objection about the subject. Finding 7. Then the lessor, which said it was losing money on the lease, asked GSA contracting officers whether the contract might be interpreted to permit the Government to make additional payments for costs related to those units. In particular, UDC was interested in being reimbursed for costs that were greater than the costs the lessor would have incurred if the units had been operating only during the standard workweek. Finding 8. The contracting officers indicated that such a reading might be possible, but that payment could be made only if supporting documentation could be provided. Finding 9. Because UDC never gave GSA such documentation, the claim was denied. Finding 10. Government counsel now suggests that the contracting officer's decision was correct, but for an entirely different reason: The only reasonable construction of the lease mandates around-the-clock operation of the units; appellant is not entitled to additional compensation for providing a service that it was always required to provide. We adopt this reason for denying the appeal. The lease contains two separate requirements for air conditioning in the building. One is for "air conditioning for personnel." This cooling need only be provided "daily during normal eight-hour workdays," to a temperature of between 78 and 80 degrees Fahrenheit; the lease specifically states that the ambient temperature is "permitted to go higher during nonworking hours." Finding 3. This requirement is independent of the mandate for controlling the environment in the vault area and computer complex. There, the humidity and temperature must both be maintained within stringent limits, "regardless of whether computers are on or off; or whether lighting is on or off; or the normal contingent of personnel is present or not." Finding 4. In other words, the environment must be controlled within the prescribed limits at all times. Lest there be any doubt about whether a time might exist when the computers or lights are neither on nor off, or personnel are neither present nor absent, the lease imposes on UDC the duty of monitoring the temperature and humidity in the vault and computer room at all times. The lessor must provide two "24 hour 7 day electrically controlled combination temperature and humidity recorders" and a visual and audio alarm system "to signal extremes in temperature and humidity" for the locations at issue. Finding 4. These devices would be unnecessary if the Government had permitted the ambient temperature "to go higher during nonworking hours," as it did for "air conditioning and personnel." Clearly, GSA intended in the lease to keep the climate in the vault and computer areas -- each of which contained very valuable merchandise -- strictly controlled at all times. See Finding 2. We find that UDC understood this, too. It asked the agency for permission to install -- and it did install -- environmental control system units which are designed to operate in computer rooms on a twenty-four hour a day, seven days a week basis. Findings 5, 6. Further, it maintained these units for more than thirteen years without ever suggesting that it was due more money for its efforts. Finding 7. UDC's late suggestion that Government has been getting something for nothing all these years rings hollow. Insofar as the operation of the units is concerned, both parties have been receiving just what they bargained for. Decision The appeal is DENIED. _________________________ STEPHEN M. DANIELS Board Judge We concur: _________________________ _________________________ VINCENT A. LaBELLA CATHERINE B. HYATT Board Judge Board Judge