__________________________________________ GRANTED IN PART AND DISMISSED FOR LACK OF JURISDICTION IN PART: February 2, 1994 __________________________________________ GSBCA 11909 ADELAIDE BLOMFIELD MANAGEMENT COMPANY, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Darryl L. Thompson, Anchorage, AK, counsel for Appellant. Marie N. Adamson, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), HENDLEY, and BORWICK (presiding). DANIELS, Board Judge. This case involves two separate claims by a lessor for services rendered to the Government at a building in Anchorage, Alaska. The lessor, Adelaide Blomfield Management Company (ABM), contends that the lessee, the General Services Administration (GSA), owes it $1,056,680 because ABM provided heating and cooling to a computer room outside normal working hours over the period of time from January 1, 1986, to January 24, 1992. (In its posthearing brief, ABM maintained that the amount increased each day beyond January 24, 1992, to be $1,498,800 by August 30, 1993.) ABM also maintains that GSA owes it $25,875 for providing electricity to operate large computers housed in the same room during overtime hours from May 1, 1985, to August 30, 1993. We agree with the presiding judge that the second claim must be dismissed for lack of jurisdiction because it was never presented to the contracting officer for decision. To the extent that ABM's claim document mentions the cost of computer use at all, it expressly removes that subject from the request that was made to the contracting officer. We adopt Judge Borwick's findings and analysis as to this claim. We also accept as correct all the facts found by the presiding judge -- with exceptions described in footnotes 2 and 4. The fact which is critical to the disposition of the larger claim is absent from Judge Borwick's findings, however. We find additionally that ABM has not proved that it owned the computer room air conditioning equipment, the operation of which constituted the provision of services for which ABM seeks payment. We hold that ABM is entitled to recovery only for the provision of electricity to the air conditioning equipment. The amount GSA must pay for the electricity is not governed by any contract provision; we consequently order payment equal to the actual cost incurred. Findings of Fact The following numbered findings of fact were written by the presiding judge, Judge Borwick. Our exceptions are stated in the footnotes to Findings 7 and 19. 1. Pursuant to lease no. GS-10B-05213, dated February 15, 1985, appellant leased to the Government 24,651 net usable square feet of office and related-use space comprising the entire three story building plus twenty-eight assigned off street motor vehicle parking spaces located nearby for the use of the United States Forest Service (Forest Service). Appeal File, Exhibit 3. 2. The period of the lease was from May 1, 1985, through April 30, 1990 at an annual rental of $517,671 (as adjusted by operation of the Operating Cost Escalator clause). Appeal File, Exhibit 3. The lease may be renewed at the option of the Government for one additional five year term. Id. 3. On January 30, 1990, the Government renewed the lease for the period of May 1, 1990, through April 30, 1995. Appeal File, Exhibit 4. 4. Before the award of the lease to appellant, the Government conducted an appraisal to determine the fair and reasonable rental rate for the proposed lease property. Transcript at 110-11. The appraisal was completed after substantive negotiations, but prior to the changes in paragraph 15 of the lease. Id. at 114-15. The appraiser calculated an annual rental rate for basic office space and added an amount for special requirements generally not found in basic office space. Id. at 112. The appraiser included twenty-four hour computer operation and computer utility charges in his appraisal. Respondent's Exhibit 1. The appraiser's calculations indicated that the computer room and associated utility costs were considered part of the base rate. However, a copy of the appraisal was never provided to appellant. Transcript at 281. 5. The negotiator for ABM testified that when he filled out GSA Form 1217, he did not calculate into the annual estimated electrical costs a computer or cooling unit running on a twenty- four hour basis. Transcript at 68. There was nothing in the solicitation for offers (SFO) that would have informed ABM that twenty-four hour a day utility service for a computer room and twenty-four hour a day air conditioning was to be included in the base rent. Id. at 155. 6. During the pre-lease negotiations, GSA proposed a version of paragraph 15 which would pay appellant $30 per hour for overtime utility services for the entire building. Transcript at 26. Appellant sought the advice of counsel regarding the terms of the lease. Appellant's counsel informed appellant that the computer in the computer room could run twenty-four hours a day. Id. at 27; Appellant's Exhibit 7. Counsel for appellant determined that paragraph 15 needed to be changed to provide that if the Government was to use part of the building, the appellant would be compensated for overtime usage for that part of the building -- e.g., the computer room, first floor conference room, or special lab. Appellant's Exhibit 2; Transcript at 34, 59-60. On the advice of counsel, ABM proposed amending the lease language to provide a $30 per hour rate for overtime usage of all or any part of the building. Transcript at 28; Appellant's Exhibit 2. The amended paragraph 15 was accepted by the Government and incorporated into the final version of the lease. Appeal File, Exhibit 3. An expert leasing consultant testified that the rate of $30 per hour was on the low side of what GSA pays for overtime rates. Telephonic Hearing Transcript at 27.1 7. The $30 per hour figure was suggested by appellant's representative. He testified that the rate was based on the actual electrical charge for the building in 1983, when it was fully occupied by the state of Alaska, multiplied by 1.3, to reflect the rate increase for 1984 predicted by the Alaska utility company. He thus derived a figure of $46,000 for 1984 utility costs. Transcript at 67. Appellant's representative testified he did not believe Alaska ran computers twenty-four hours a day when it occupied the building. Id. He then divided the $46,000 by 52 weeks and 40 hours per week, estimated the maintenance costs, doubled the maintenance costs, and inserted a small margin for overhead and profit. Id. at 75-76. In short, the figure of $30 per hour was based primarily on actual costs for electricity.2 ____________________ 1 On June 14, 1993, the Board convened a telephonic hearing in Washington to hear appellant's expert cost witnesses who were not able to testify in the merits hearing held the previous May in Anchorage, Alaska. 2 We take exception to this Finding. The clause at issue, paragraph 15, makes the overtime rate $30 per hour. Finding 11. According to Judge Borwick, this figure "was based (continued...) 8. The contracting officer testified at one point that he recalled telling ABM representatives that the electricity for the computer room was included in the base rent; but his memory was vague as the conversation took place eight years before he testified. Transcript at 120-21. The contracting officer admitted that the contact record of lease negotiations did not reflect discussions about the utility cost for the computer room being included in the base rent. Id. at 153. The contracting officer admitted that he could not recall discussing with ABM's lease negotiators the corollary question of whether the computer room would be used twenty-four hours per day; all he could recall was that he discussed the requirements for the computer room in "a general manner." Id. at 156. 9. ABM's lease negotiators deny that they were informed by the Government that the cost of the computer room would be included in the base rent. Transcript at 74. The testimony of these negotiators is credible and consistent. The contracting officer's testimony that he told ABM's lease negotiators that computer utilities were included in the base rent is inconsistent with ABM's pre-lease negotiation conduct in negotiating the application of paragraph 15, and changing that paragraph to read "all or any part" of the building. The contracting officer's testimony is also inconsistent with his testimony on the ____________________ 2(...continued) primarily on actual costs for electricity." He reaches this conclusion from the testimony of an ABM representative that annual utility costs for the building as a whole were expected to be $46,000 divided by 2080 hours (or $22.12 per hour). Neither of the numbers involved in this calculation -- $46,000 or 2080 hours -- helps us to understand whether the rate of $30 per hour for overtime heating and cooling bears any relation to actual costs. The figure of $46,000 is estimated to be the total annual cost of electrical use in the entire building, not for heating and cooling alone. Because a building's operations and tenants consume electricity for many purposes other than climate control, the number cited is likely to be considerably more than the cost of electricity for just heating and cooling. The figure of 2080 hours is supposed to be the number of hours worked by the previous tenant of the building. Although this may be a fair number for hours worked by any particular employee of the tenant, the total number of hours the building was in operation during that tenancy is likely to have been somewhat greater. For example, GSA required that ABM maintain the building in operation for nearly 2800 hours per year. Furthermore, maintenance of a building during off-hours also consumes some electricity. Thus, the cost of electricity for heating and cooling must have been far less than $22.12 per hour, making extremely dubious the proposition that the $30 per hour figure was based primarily on actual costs for electricity. corollary question of whether the computer room would operate twenty-four hours per day.3 10. The lease, at clause 86, stated that: The Government shall have access to the leased space at all times, including the use of elevators, . . . and small business machines without additional payment. If heating or cooling is required on an overtime basis, they will be requested by GSA to be reimbursed, at the rate negotiated prior to award. Upon receipt of a certified invoice, costs for personal services shall only be included as authorized by GSA. Appeal File, Exhibit 3. 11. Paragraph 15 of the lease stated that "[the o]vertime rate (Paragraph No. 86 Solicitation for Offers No. 10 PEL-85-51) is agreed to be as follows: $30.00 per hour for all or any part of the building. This rate applies during the first year of the lease. It will be negotiated annually thereafter." Appeal File, Exhibit 3. 12. The lease, at clause 32, stated, "Beginning with the second year of the lease and each year after, GSA shall pay adjusted rent for changes in costs for cleaning services, supplies, materials, maintenance, trash removal, landscaping, water, sewer charges, heating, electricity, and certain administrative expenses." Appeal File, Exhibit 3. 13. The lease, at clause 75, stated that, "[n]o cooling is to be provided during nonworking hours." Appeal File, Exhibit 3. 14. The lease, at clause 85, stated that, "[s]ervices, utilities, and maintenance will be provided daily, extending 7:00 a.m. to 6:00 p.m. except Saturdays, Sundays, and federal holidays." Appeal File, Exhibit 3. The contracting officer testified that paragraph was the only place in the lease that defined "working hours." Transcript at 154. The term "working hours" was used interchangeably by the parties with the term "normal hours," as hours from 7:00 a.m. to 6:00 p.m.. Id. at 157. 15. The requirements for the computer room were set forth in the Special Requirements - Block B section of the lease. Appeal File, Exhibit 3. The computer room has an area of 600 ____________________ 3 One would have expected the contracting officer to have explained that since the computer room would be operating twenty- four hours per day as a special requirement, the cost of utilities necessary for operation of the computer room was included in the base rent. square feet. The walls and ceiling, doors, floor, windows, air conditioning, power, and fire protection requirements were listed in Block B. Id. The air conditioning requirement stated that "[s]eparately zoned HVAC for this room is required. Temperatures must be maintained between 68 - 78 [degrees], humidity 40-60 percent during working hours. The room will contain equipment generating approximately 40,000 BTU's heat per hour." Id. The computers need the specified temperature and humidity to function properly. Transcript at 212. 16. The computer room was environmentally sealed from the building's heating system. There are no heat vents within the computer room. Final Joint Stipulations 27 at 8 (Apr. 20, 1993). The computer room door had a security lock which, without the combination or escort by agency personnel, prevented access to the room. Id. 34 at 10. For purposes of the lease, the contracting officer naturally considered the computer room part of the leased building. Transcript at 160. 17. The separately air conditioned computer room contained a cooling system that was thermostatically set to activate when the room temperature goes above the set temperature on the control. Final Joint Stipulations 27 at 8 (Apr. 20, 1993). During the entire occupancy, the cooling unit in the computer room ran continuously twenty-four hours a day with the unit's controls cycling on and off based upon the temperature setting, heatload, and season. Id. 30 at 9. The power conditioner measured seven feet tall, four feet wide, and four feet long. The air conditioning equipment in the computer room consisted of a Data Aire model and a Bohn Dry Cooler model. The use of the cooling unit in the computer room during the hours of 6:00 p.m. to 7:00 a.m. Monday through Friday and twenty-four hours a day during weekends and federal holidays used approximately $5,334.66 in electricity per year from the date of installation to date. Id. 35 at 11. The HVAC system and computers were not separately metered; electricity to run the equipment was supplied by the lessor. Transcript at 177-78. 18. The computer in the computer room ran continuously twenty-four hours a day and had done so since the date it was installed. Final Joint Stipulations 32 at 10 (Apr. 20, 1993). The computer consisted of two central processing units (CPUs) and an uninterruptible power source (UPS). The two CPUs each measured four feet wide, five feet tall, and eight feet long. Transcript at 210-11, 220. The UPS measured two feet wide by three feet long by three feet tall. Id. at 220. The CPUs ran at a constant temperature, twenty-four hours a day, emanating heat that raises the temperature of the computer room. Final Joint Stipulations 25 at 8 (Apr. 20, 1993). The CPUs are the repository for the daily information of the Forest Service. Transcript at 213. The supervisory computer specialist of the United States Forest Service, the agency which occupied the building under the GSA lease, testified that the computers probably are not "small business machines." Id. at 222. Based on the size of the machines, the uses to which they are put, and the testimony of the employee of the Forest Service, we find that the computers are not "small business machines." Therefore, the computers are subject to the provisions of paragraph 15 of the lease. 19. The computer room HVAC system was used on an overtime basis 5986 hours per year, or 498.83 hours per month. Affidavit of Craig Thompson, Consulting Engineer (Thompson Affidavit) (May 29, 1993). This averages to 16.4 hours of overtime use per day. Appellant's claim letter of January 24, 1992, establishes the claim period from January 1, 1986, to that date. This amounts to 2215 days or 36,326 hours based upon the average overtime usage of 16.4 hours per day.4 20. ABM claimed that it became suspicious that the cooling unit in the second floor computer room ran twenty-four hours a day in the spring of 1991, when the cooling unit required repairs. Transcript at 70. One of ABM's lease negotiators testified that it was understood that the computer and cooling unit in the computer room would be operating only during normal hours. Id. at 232. ABM knew that the CPUs could run 24 hours a day, but did not know that the Government would be running the CPUs twenty-four hours a day. Id. at 33. ABM's vice president testified that he suspected that the Government was operating the air conditioning for the computers twenty-four hours a day in the spring of 1991, but he found out for certain only when the Government stipulated in the litigation to that fact. Id. at 70- 71. We find that ABM did not have notice that the computer room cooling units and computers would run twenty-four hours a day during the negotiations for the lease and did not suspect that the utilities for the computer room were operating twenty-four hours a day until the spring of 1991. 21. GSA never tendered a written or oral request for cooling on an overtime basis in the leased building, as provided in lease clause 86, Overtime Usage. Final Joint Stipulations 28 at 8 (Apr. 20, 1993). The lease did not state that the computer equipment or the cooling system would be operational twenty-four hours a day; to the contrary, the temperature and humidity in the computer room had to be controlled only during working hours. See Finding 15. ____________________ 4 In determining the number of overtime hours in a year, Judge Borwick's Finding relies on an affidavit supplied by a consulting engineer. The engineer assumed a 52-week year, which, multiplying 52 by seven days per week, includes only 364 days. Reference to a calendar makes apparent that the engineer's assumption was wrong. For instance, the year 1992, which is important in calculating the amount of payment to which ABM is entitled, contained 366 days -- 52 weeks plus two weekdays. The number of overtime hours in that year was consequently 6012. 22. The lease at clause 86 stated that the overtime rate was to be negotiated annually. Finding 11. Neither appellant nor respondent attempted to renegotiate the rate throughout the period of the lease. Appellant explained that the rate was never renegotiated because it thought that the Government was not using the building or its equipment on an overtime basis. Therefore, there was no need to renegotiate. Transcript at 35-36. Respondent's contracting officer's supervisor and a supervisory realty specialist testified that it was not significant that the rate was not renegotiated. Id. at 266. The supervisory realty specialist testified further that "these kinds of rates lie in leases and are not renegotiated because they're not used. In many leases they're never used." Id. at 266-67. 23. The contracting officer, in a price negotiation memorandum, described the modification of paragraph 15 as one of "a number of minor changes and clarifications" made to the lease. Transcript at 116; Respondent's Exhibit 2. The contracting officer's supervisor testified about the application of the language of paragraph 15, which said "for all or any of the building." He indicated that the language of paragraph 15 was "just verbiage itself." Transcript at 275. The contracting officer's supervisor testified that the reason paragraph 15 of the lease was not applicable to the computer room was because the computer room was a special requirement, and as such, the operating costs of the computer room were included as an increment of base rent for the building. Id. at 276. 24. The contracting officer's supervisor then explained that the special requirements "take precedence over the boiler[plate]" portions of the lease, and that "it [the contract] does say that." However, after careful examination of the lease, the contracting officer's supervisor could not find a clause in the lease that provided that the special requirements section superseded any other provision of the lease. Transcript at 277- 78. The lease did not inform vendors that heating and cooling the computer room, as a special requirement, was included in the base rent, and thus, not subject to paragraph 15. As the above Findings make clear, the building in question contained at least two heating, ventilating, and air conditioning systems -- one for the building as a whole and another for the computer room used by the United States Forest Service. The second system was entirely separate from the first. The record reveals confusion and uncertainty as to the ownership of the computer room HVAC system. We supplement the presiding judge's Findings with the following, which relate to the question of that ownership. On October 2, 1991, the man who appears to have functioned as ABM's building manager, John Blomfield, wrote to an aide to United States Senator Frank Murkowski of Alaska, complaining that GSA had refused to pay the cost of utilities consumed during overtime hours at the building. The letter contains these statements: Normally, the landlord has complete control of the heating, ventilating and cooling of a building. It is important to remember that GSA has special cooling and ventilating devices installed in the computer room at their expense and under their control. . . . It is important to note that GSA pays a separate maintenance company to service and control this ventilating and cooling system and that the landlord has NO CONTROL of said system. . . . The Government . . . stated that it is their responsibility to fix and maintain that system. Appeal File, Exhibit 11. A year and half later, however, when two ABM representatives testified before the Board, they had a different view of the situation. Adelaide Blomfield, the owner of the company, testified as follows: Q [by Government counsel] . . . Do you own the air conditioning unit in the computer room? A . . . I'm not absolutely certain who owns the air conditioning unit in the computer room. I'm not certain. . . . [N]obody seems to know who owns it. Q Okay. You were required under the lease to provide it, weren't you? A . . . I think I was required under the terms of the lease to provide adequate electricity for any use. . . . [T]he ventilation, the electrical, I certainly have to meet all Code requirements on that. Transcript at 41-42. Ms. Blomfield's son John also testified on the subject: Q [by Government counsel] Do you own the air conditioning in the computer room? A Frankly, I don't know, ma'am. JUDGE BORWICK: Well, did you pay for it? THE WITNESS: We've been discussing this, Your Honor, and -- JUDGE BORWICK: Someone must have bought it. Who bought it? THE WITNESS: I've asked my contractor. I don't know. I wish I had a better answer for you, but that's -- I just don't know. I went back to look even when I purchased the one for another room they required in the building. You know, this is eight years ago or I couldn't find that. I tried to find -- I said, well maybe if I could find the one I put for the conference room, then maybe I would be able to find this one. I wasn't able to. You know, they're just old records. I'm sorry, sir. Transcript at 92-93. Evidence provided by the Government is also not dispositive of the question of ownership of the computer room HVAC system. On February 27, 1992, after GSA evidently asked the Forest Service to provide information for use in responding to ABM's claim, the latter agency stated that its "computer room[,] on the second floor of the building, does have an agency-owned air conditioning unit installed." The Forest Service supplied documents which show that it was responsible for maintaining the system. The agency's memorandum was signed by Alice M. Brook, on behalf of the Chugach National Forest Supervisor. Respondent's Exhibit 7. The contracting officer's decision on ABM's claim, dated April 29, 1992, relies in part on this memo and its attachments. The decision asserts, "Information available to me states that the lessor never installed any separately controlled HVAC of his own in the computer room." The contracting officer refers to the "agency owned, free standing unit in the Forest Service computer room," and says that the Forest Service "purchase[d] and pa[id] for installation of" the unit. According to the contracting officer, ABM's only involvement with the computer room HVAC system was installing it and supplying it with electricity. Appeal File, Exhibit 19 at 4, 6. When Ms. Brook, the source of this information, was asked at hearing about her memorandum, she gave this testimony: Q [by appellant's counsel] [A]pparently this document made a mistake, is that correct, when you indicated that it has an agency number on the air conditioning unit in the second floor computer room? A Well, agency could be either GSA or Forest Service. At the time, we were still hoping to resolve ownership. Q Okay. So, it was a mistake, is that fair to say? You don't know who owns it, right? A That's correct. I don't know for sure who owns it. I know that the Forest Service does not. Transcript at 204-05. Discussion The presiding judge's analysis of the lease is correct to this extent: The contract required ABM to maintain the Forest Service computer room at temperatures and humidity within specified ranges during working hours, which were from 7 a.m. to 6 p.m. on all days except Saturdays, Sundays, and federal holidays. The contract also required GSA to pay $30 per hour5 for heating and cooling the computer room, or any other part of the building, when such service was requested for other hours. This may not have been a particularly sensible arrangement for the Government to enter into -- indeed, it appears very foolish given the apparent intent to run the computer room HVAC system continually and the gross disparity between $30 per hour and the actual cost of operation of the system. Nonetheless, this is the plain meaning of the contract clauses in question. On the basis of the record in this case, however, we are unable to find that ABM actually provided any heating or cooling to the computer room during overtime hours, however -- or during any other hours, for that matter. The climate control was the result of operation of a separate HVAC system, but the ownership of that system is uncertain. ABM is clearly concerned about this weak link in its argument; in its reply brief, at 20, 30-31, it contends repeatedly that the evidence makes "more likely than not" a conclusion that the lessor supplied the unit. We disagree. At one point, ABM made a definitive statement admitting that the system belonged to the Government. Under oath before the Board, ABM witnesses disavowed that conclusion but were unable to say that it was false. Our reading of the testimony is that it demonstrates precisely the opposite of the conclusion ABM would have us reach -- the evidence makes it more likely than not that the lessor did not supply the unit. Ms. Blomfield understood the lease only to require, as to the matter in dispute, that the lessor provide electricity to the HVAC unit ____________________ 5 This rate was to apply only during the first year of the lease. It was to be negotiated annually thereafter, but no negotiations ever took place. Findings 11, 22. and ensure that the system met building codes. Her son testified that he could find documents showing ownership of other HVAC units, but not this one. The parties agree that the Government, not ABM, paid for the maintenance of the unit. A Forest Service employee's testimony that her agency did not own the unit, even if true, is hardly proof that ABM did own it. Because the claim at issue was presented by ABM, that party bears the burden of proving the elements of the claim which are necessary to establish recovery. Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 767-68 (Fed. Cir. 1987); Willems Industries, Inc. v. United States, 295 F.2d 822, 831 (Ct. Cl. 1961), cert. denied, 370 U.S. 903 (1962). ABM has failed to meet that burden. Thus, it may not recover under the contract provision calling for GSA to pay $30 per hour for overtime heating and cooling. It is undisputed that ABM did provide GSA something other than heating and cooling during overtime hours, however: it supplied the electricity that the computer room HVAC system used.6 The contract says that ABM is to pay for this electricity only if the system unit is a "small business machine." The unit clearly does not fall into this category; thus, GSA is obligated to pay the reasonable market value of the overtime electricity the unit consumed. Urban Data Systems, Inc. v. United States, 699 F.2d 1147, 1154-55 (Fed. Cir. 1983); Cities Service Gas Co. v. United States, 500 F.2d 448, 457 (Ct. Cl. 1974). The parties have stipulated that the cost of this extra electricity was $5,334.66 per year. We order payment calculated in accordance with this rate. The claim is for payment from January 1, 1986, through January 24, 1992. We consequently direct GSA to pay ABM six times the stipulated annual amount for the years 1986 through 1991 -- $32,007.96. For the portion of the claim period which falls in 1992, we direct GSA to pay ABM at the rate of the stipulated annual amount divided by the number of overtime hours in that year, 6012 -- 88.73 cents per hour. The number of such hours from January 1 to 24 is 400, so the payment for 1992 is $354.92. Thus, the total payment owed to ABM is $32,362.88. Decision ____________________ 6 The dissent is premised in part on the theory that supplying electricity to a HVAC unit is the same as supplying heating and cooling to a building. This makes no more sense than an argument that providing gasoline is providing automobile transportation, since a car will not move without gas. The fuel is essential to the result, but that does not make it the result -- any more than a bracket holding a HVAC unit in place provides air conditioning, even if the unit will not function unless it is securely fastened. The appeal is GRANTED IN PART AND DISMISSED FOR LACK OF JURISDICTION IN PART. GSA shall pay to ABM $32,362.88, plus interest, as calculated in accordance with the Contract Disputes Act of 1978, 41 U.S.C. 611 (1988), from the date on which GSA received ABM's certified claim (February 14, 1992) until the date of payment. _________________________ STEPHEN M. DANIELS Board Judge HENDLEY, Board Judge, concurring. I concur in the opinion of Judge Daniels in that I also conclude that the appellant's recovery should be limited to its increased expenses in the amount of $32,362.88. However, although I agree with his findings and reasoning as to ownership of the air conditioning equipment, I do not conclude that the lack of proof of that ownership is wholly determinative of the result he reaches. There is a dreamlike quality to the appellant's position. The Government leases 24,651 square feet of office space in Anchorage, Alaska at an annual rent of $517,671. Within the leased area is a 600 square foot hermetically sealed computer room, which is only about one-fortieth of the leased space. The appellant would have us interpret the lease as requiring a payment of an additional $179,580 per year [an amount that is slightly more than a third of the annual rent] for the period of the lease for "overtime" utility services because the computer room's automatic air conditioning system continued to run from 6:00 pm until 7:00 am during Alaskan nights, weekends and holidays at $30 an hour for overtime charges. I can not interpret the lease provisions to reach such a ridiculous result. I conclude that the only rational reason the provisions of the lease read as they do is because the parties' scriveners simply never thought about or considered the fact that computers are rarely turned off and computer rooms must always be kept within certain heat and humidity limits. Although the appellant thought of it, it did so only near the conclusion of the lease. The appellant never sought to renegotiate the overtime rate, as provided for in the lease, for the obvious reason that it did not believe there was any overtime involved. No overtime had been requested by the respondent and the appellant never provided any. During the course of the lease, the appellant must have also interpreted the lease to the effect that no overtime was then involved. Under the appellant's interpretation of the lease, overtime costs would, of necessity, commence on the first day of the lease and continue thereafter at an "overtime" cost of $179,580 per year to cover what the parties agree was only $5,334.66 per year in additional electrical costs. However, such an interpretation renders the overtime provisions of the lease a nullity. For example, the notice requirements for requests of overtime would be rendered moot under the appellant's interpretation. Under the appellant's interpretation, once the computer was turned on at the start of the lease, there would never be another overtime request because the computer was on, would remain on, and no one was going to ruin it by turning off the air conditioner or the dehumidifier which would automatically continue to perform. When the parties negotiated the lease they attempted to cover the costs necessarily involved in providing overtime utility services. This is what sensible people do. They were obviously not concerned with the electrical consumption of the computer room. Had they been concerned with the electrical consumption used by the computer room, nothing could have been simpler than to just put that room on a separate meter and have the respondent pay it either directly or reimburse the appellant. But they didn't. They didn't because they must not have considered the electrical usage of that one room as either significant or as constituting an overtime utility service. For these reasons, I would limit the appellant's recovery to the $5,334.66 per annum, calculated in accordance with Judge Daniels' total, which the parties agree was the appellant's actual cost of providing air conditioning in the computer room during overtime hours. _________________________ JAMES W. HENDLEY Board Judge BORWICK, Board Judge (presiding), concurring in part and dissenting in part. I concur in the grant of the appeal, but dissent from the majority's separate opinions which steadfastly refuse to hold the Government to the terms of a clear and unambiguous lease in determining quantum for the first year of the lease according to the provisions of the overtime rate clause. The majority reads that clause out of the lease because it was an improvident bargain for the Government to have made. Judge Hendley candidly states that the overtime rate clause read according to its plain meaning leads to a result he considers "ridiculous." Supra p. 13. Judge Daniels uses the lessor's alleged lack of performance in supplying equipment as an excuse to dispense with the Government's obligations under the overtime rate clause. The majority correctly rejects the Government's position that overtime utilities for the computer room were included in the base rent. The requirements for the computer room were set forth in the Special Requirements - Block B section of the lease. The air conditioning requirement for the computer room stated that "[s]eparately zoned HVAC for this room is required." The lease stated that no cooling was to be provided by appellant during nonworking hours. Furthermore, the temperature and humidity specifications for the computer room were to be maintained only during "working hours," i.e. 7:00 a.m. to 6:00 p.m., except Saturdays, Sundays and federal holidays. Findings 13, 15. However, the Government ran the cooling unit in the computer room continuously twenty-four hours a day since the installation of the computer. The cooling unit cycled on and off based upon temperature setting, heat load, and season. Finding 18. The overtime rate established by the overtime rate clause (paragraph 15 of the lease) applied when the Government used all or any part of the building on an overtime basis under clause 86, the overtime usage clause. The computer room was part of the building. The lease did not inform the vendors that the computer room, as a special requirement, was exempt from either clause 86 or paragraph 15 and the overtime rate of $30 per hour. See Findings 13-15. The Government's position is premised upon the existence of a supersession clause in the lease providing that the special requirements which vary from the boilerplate supersede the boilerplate. Finding 24. The lease did not contain a clause that indicated the special requirements portion of the lease superseded the overtime provisions of the lease. The lease did not state that overtime costs associated with the computer room's heating and cooling usage beyond normal working hours were included in the base rent. Therefore, I would conclude that the costs associated with heating and cooling usage beyond normal working hours were not included in the base rent. The majority evidently agrees with this view, as it awards appellant $32,362.88 for providing heating and cooling for the computer room based on the actual cost of the electricity for the claim period. If the majority thought that these utilities were included in the base rent, it would have denied the appeal in its entirety.7 The remaining question is the amount to which appellant is entitled for the overtime use. Paragraph 15, the overtime rate clause, provides the answer: $30 per hour for the first year. As noted above, the lease stated that paragraph 15 applied to "all or any part of the building." The meaning is as plain as words can make it. The computer room was part of the building. The phrase "all or any part of the building" was added by appellant's lease negotiators to account for possible overtime use of special purpose rooms. Finding 6. Incredibly, the Government's lease negotiators, real estate experts whose job it is to be particularly attentive to proposed changes in terms and conditions of leases, dismissed the amendment as "just verbiage," and thus incorporated the amendment into the lease without further thought. Findings 6, 23. This was an astonishing blunder, as the amendment bound the Government to pay thirty dollars an hour for each hour of overtime heating and cooling of the computer room during the first year of the lease. ____________________ 7 Respondent argues that our decision in Universal _________ Development Corp. v. General Services Administration, GSBCA ----------- FOOTNOTE BEGINS --------- 11469, 93-2 BCA 25,736, controls in this case, so that appellant gets no award. In Universal Development, the lease _____________________ provided that the HVAC components were to maintain the specified temperature and humidity in the space "regardless of whether the computers were on or off," or whether the normal complement of people were in the room or whether the lights were on or off, all of which we construed as meaning twenty-four hour per day operation of the computer room. 93-2 BCA at 128,030-31. In this case, in contrast, the lease provided that the computer room was to be kept at the specified temperature and humidity "during working hours." Finding 15. Another paragraph of the lease specifically said that no cooling "is to be provided during non- working hours." Finding 13. In Universal Development, the lessor was aware of twenty- _____________________ four hour usage of the HVAC in its computer room from the first day of occupancy and claimed additional costs associated with maintenance, repair, and replacement of HVAC units thirteen years after the beginning of the lease. We held that because that lease reasonably mandated around-the-clock operation of HVAC, there was no entitlement for additional compensation for providing additional payment for maintenance, repair, and replacement relating to the air conditioning units. In this case, (1) appellant's representatives were unaware that the Government was using the HVAC on an overtime basis until at the earliest the spring of 1991 (Findings 9, 20); (2) the issues involved application of an overtime clause to the HVAC usage, not maintenance, repair, and replacement of the units; and (3) the lease in this case expressly provided that overtime HVAC usage would be compensated at a rate of $30 per hour. ----------- FOOTNOTE ENDS ----------- Nevertheless, we must enforce the lease according to its terms. Madigan v. Hobin Lumber Co., 986 F.2d 1401, 1403 (Fed. Cir. 1993). The majority has not convinced me that under the plain terms of the lease, the overtime rate clause does not apply to the computer room. I will not strain the words "all or any part of the building" to exclude the computer room, which is part of the building. To extract the Government from its predicament, Judge Daniels finds that appellant did not prove that it had owned the cooling equipment and that consequently, it did not provide heating or cooling. Supra p. 11. That approach is without merit. The lease required appellant to provide a utility; that is, to keep the computer room at the specified temperature and humidity. Finding 15. By providing the electricity to run the cooling and heating units, appellant provided the heating and cooling required. That appellant may not have fully satisfied its part of the bargain is no justification for the majority to reform the contract by reading the overtime rate clause out of the lease.8 To justify reformation, Judge Hendley says the parties never considered overtime use of the computer room and its relationship to the overtime rate clause. He is wrong. Appellant submitted its amendment to the overtime rate clause to cover the contingency that the computer room might be used twenty-four hours per day. Finding 6. It was the Government that never thought about the problem, because it mistakenly assumed the existence of a supersession clause in the lease. In this case, the Government subjectively intended that the computer room would not be covered by the overtime services and rate clauses. The subjective intent of one of the parties, however, if contrary to the unambiguous and reasonable text of the written contract, is not a basis for reforming the contract. City of Oxnard v. United States, 851 F.2d 344, 347 (Fed. Cir. 1988). "Reformation is appropriate where the writing fails to express the parties' agreement 'because of a mistake of both parties as to the contents or effect of the writing.'" A-1 Garbage Disposal & Trash Service, ASBCA 30623, 89-1 BCA 21,323, ____________________ 8 I am not as confident as the majority that the appellant failed to supply the equipment. The contracting officer testified that appellant must have supplied the equipment during the initial renovation of the space for the Government. Transcript at 142. Nevertheless, even accepting the majority's finding, the lease provided the Government a remedy for lessor's alleged failure to perform any utility, maintenance and repair. The Government could have provided the service and made appropriate deduction from the rent. Appeal File, Exhibit 3, General Clause 15, 552.270-8, FAILURE IN PERFORMANCE. The record does not indicate the Government sought any deduction for the alleged failure to perform. at 107,526 (citing Restatement (Second) of Contracts 155 (1979)). "To grant reformation, we must be convinced that the bargain sought through reformation is one to which the non-moving party would have clearly agreed." Id. (citing Fraas Surgical Mfg. Co. v. United States, 571 F.2d 34, 37 (Ct. Cl. 1978)). This is not the case here. The language in question was not the result of a mistake by both parties as to the contents or effect of the writing because appellant knew of the effect when the language was amended. A-1 Garbage Disposal & Trash Service. It is clear, based upon the amended language and the reasoning behind the amended language, that appellant, as the non-moving party, would not have agreed to the reformation the majority reaches. Fraas Surgical. Therefore, we should not reform the lease. Id. Judge Hendley also rests on the lack of an explicit request for services by the Government. If there is no request, says Judge Hendley, the overtime usage clause does not apply. This reasoning was rejected by our appellate authority in L.S.S. Leasing v. United States, 695 F.2d 1359 (Fed. Cir. 1982). There, the Court considered the relationship of the overtime usage clause to overtime use of a computer room. The Government in L.S.S. Leasing argued that the "requested by" language of the overtime clause barred the contractor's ability to acquire payments for overtime computer room usage because the Government never requested overtime services. The Court held that: the Government placed undue reliance on the words "requested by" [in the overtime provision]. We cannot agree that the Government may use that provision as a shield to deny liability for services that it not only received, but actually desired. Indeed, the reasonable construction of that provision is (a) to protect the Government from frivolous claims, e.g., a single employee staying a few minutes late, or claims for services rendered that it did not want, and (b) to protect the lessor from facing liability for breach of contract for failure to provide services without requisite notice. Id. at 1365. The Court indicated that although there was no request made for the overtime services, the Government's deliberate use of the desired overtime services constituted a constructive request for those services. Id. Here, respondent chose to operate the computer twenty-four hours a day. For the computers to function, the computer rooms needed the specified environment which in turn required an operational HVAC system. Finding 15.9 I concur with the majority's grant of the stipulated actual costs beyond the first year. Paragraph 15 stated that the $30 per hour rate applied during the first year of the lease and was to be negotiated annually thereafter. Finding 11. Neither appellant nor respondent attempted to renegotiate the rate throughout the period of the lease. Finding 22. Appellant felt it did not need to renegotiate because it did not know the Government was using the overtime utilities. The Government's realty specialist testified that it was not significant the rate was not renegotiated. I disagree. The lease clearly stated that the $30 rate applied for the first year of the lease. In view of the failure of the parties to renegotiate the rate, use of the ____________________ 9 The Government relies upon Wainwright Realty Co. v. __________________________ United States, 28 Fed. Cl. 425 (1993), as a convincing ______________ distinction of L.S.S. Leasing. This reliance is misplaced. The ______________ holding as to the overtime services clause in Wainwright is __________ dicta. Furthermore, the dicta is inapplicable to this case and, _____ _____ even if it were applicable, I believe the dicta is based on a _____ doubtful proposition at best. In Wainwright, the court dismissed __________ the case for lack of jurisdiction because the plaintiff pleaded unjust enrichment, an implied-in-law contract doctrine not within the court's jurisdiction. Id. at 426. In dicta, the court ___ _____ interpreted the overtime clause in determining whether it would grant plaintiff's motion to amend its complaint to plead breach of contract. Id. at 426-29. The court denied the motion to ___ amend because the plaintiff's amended claim would have failed on summary judgment. Id. at 426. The court considered the ___ Government's argument that the "upon request of the Government" language of the overtime clause should bar the contractor's recovery of overtime payments. The court distinguished L.S.S. ______ Leasing, stating, "[B]ecause the contract indicates that the _______ government anticipated that overtime work potentially could be accomplished without employees utilizing the compensable overtime services, i.e., heating and air conditioning, no similar conclusion is possible that defendant 'not only received, but actually desired' the services." Id. at 428. ___ Unlike the court's conclusions in Wainwright, respondent __________ could not accomplish overtime work (use of the computers in the computer room) without utilizing the overtime HVAC to operate the computers. Therefore, respondent not only received, but also actually desired the overtime HVAC services. Thus, the Wainwright interpretation of the overtime clause does not apply. __________ Furthermore, I think the Wainwright court's distinction of L.S.S. __________ ______ Leasing is based upon the dubious proposition that the Government _______ expects its employees to work overtime without heating or air conditioning service; even in these days of tight budgets, the Federal Government would not be so callous an employer. $30 per hour figure beyond the first year of the lease is not appropriate. Since the parties failed to negotiate a new rate beyond the first year of the lease, we are left with a missing term as to what the rate should be for subsequent years. Where a lease "is otherwise sufficiently specific to be enforceable, it is up to the court to supply the missing term." David Nassif Associates v. United States, 557 F.2d 249, 258 (Ct. Cl. 1977). The Nassif Court stated that "fairness is now the only real guideline for such an after-the-fact judgement . . . ." 557 F.2d 249, 263. This standard echoes Comment d of the Restatement of Contracts, Second: where there is no agreement on the terms to be supplied, "the court should supply a term which comports with community standards of fairness and policy, rather than analyze a hypothetical model of the bargaining process." Restatement (Second) of Contracts, 204 cmt. d (1981). The ideal, of course, is to "establish by reference to facts that were, or could have been, known to the [parties] at the time of their negotiations." Nassif, 557 F.2d at 263. The actual cost of the electricity to maintain the computer room at the specified environment is the fair measure of compensation. Lack of Jurisdiction as to Computer Room Utility Overtime Respondent argues that appellant's claim for the costs of electricity to run the computer is a new claim never presented to the contracting officer. A decision by the contracting officer is "the very linchpin and necessary prerequisite for the board's jurisdiction." McDonnell Douglas Corp. v. United States, 754 F.2d 365, 370 (1985) (citing Paragon Energy Corp. v. United States, 645 F.2d 966 (Ct. Cl. 1981)). In appellant's January 24, 1992, certified claim, appellant's counsel stated: Without question, the use of the computers during non-working hours is an overtime utility use for which my client is entitled to be compensated for at the contract rate of $30.00 per hour. . . . . However, . . . my client does not intend to request payment of overtime utilities for the same "hours" twice. My client is not seeking recovery of the overtime computer use hours and a recovery of the cooling system overtime use hours because the cooling system's use in these computer rooms was used on an overtime basis during the same time that the computers themselves were being used "overtime." Appeal File, Exhibit 12 at 2-3. Appellant withdrew from its claim the cost of the electricity to run the computers in the computer room. That cost is separate from the cost of running the HVAC. Since that issue was removed from the contracting officer's consideration, he did not address it in his decision. Without a contracting officer's decision, we have no jurisdiction to decide the issue. McDonnell Douglas Corp., 754 F.2d at 370. _________________________ ANTHONY S. BORWICK Board Judge