______________________________________________ GRANTED IN PART: May 18, 1994 _____________________________________________ GSBCA 11702, 11999, 12035 P. J. DICK INCORPORATED, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. John T. Flynn of Smith, Currie & Hancock, Atlanta, GA, counsel for Appellant. Sharon A. Roach, Gerald L. Schrader, Martin A. Hom, Robert C. Smith, and M. Leah Wright, Real Property Division, Office of General Counsel, General Services Administration, Washington, DC. Before Board Judges DANIELS (Chairman), BORWICK, and NEILL. BORWICK, Board Judge. Background These appeals involve a contract for the renovation of certain floors of the United States Court House and Post Office, Pittsburgh, PA, a thirteen story building. The contractor and appellant is P. J. Dick Incorporated (P.J. Dick). The respondent is the General Services Administration (GSA). Heat, water, toilet and waste risers ran vertically from the basement through to the upper stories. During the renovation, which included installation of new risers from the basement through the ceiling of the fourth floor level, the contract required the upper floors to remain in operation. The location of these new risers did not match the location of the existent risers descending from the upper floors, so horizontal tie-ins to join the old and new risers were a necessity. P.J. Dick originally planned to make permanent tie-ins on the ceiling of the fourth floor level while the floor was occupied by the tenant agency, the Department of Housing and Urban Development (HUD), and to concentrate its initial renovation work on the third floor. The contract contemplated HUD's move from the fourth to the third floor. HUD, however, refused access to the fourth floor, making necessary fourth floor core drilling and subsequent permanent tie-ins at the ceiling of the fourth floor level impossible. GSA rephased the project, ordering P.J. Dick to concentrate on the basement, first, and second floors so GSA could move HUD to the first floor when the renovation on that floor was completed. Subsequently, GSA issued Request for Proposal (RFP) 88, a unilateral modification, directing P.J. Dick to place temporary tie-ins on the third floor, which would allow completion of the renovation of lower floors and HUD's move to the first floor. Then the contracting officer entered into negotiations with P.J. Dick for the pricing of RFP 88 and agreed on a price of $198,507 for the performance of the work. That amount was paid through progress payments. The agreement, however, was not memorialized in a bilateral modification signed by both parties; instead, the contracting officer issued a unilateral modification in an amount not to exceed $198,507. A dispute arose between the parties whether the cost of removal of temporary tie-ins was included in what P.J. Dick believed was a settlement of RFP 88. P.J. Dick filed a claim with the contracting officer, asserting that the cost of the removal of the temporary tie-ins was not included in the scope of RFP 88. In response to the claim, the contracting officer withdrew RFP 88, maintaining that installation of temporary tie- ins on the ceiling of the third floor level was part of the base contract work. The contracting officer assessed a credit of $198,507 in favor of the Government. An appeal followed, docketed as GSBCA 11999. As to this appeal, P.J. Dick maintains that GSA settled the claim for $198,507, and GSA is barred from taking a credit by the doctrine of accord and satisfaction. The contracting officer issued a supplemental decision denying the claim for the cost of removal of temporary tie-ins and subsequent repatching of the holes left in the drywall. He concluded that removal of the temporary tie-ins and subsequent patching was included in the base contract work. The appeal of that decision was docketed as GSBCA 11702. GSA also issued RFP 137, which included supplemental work not included in RFP 88, but which related to installation of temporary tie-ins in the third floor ceiling. P.J. Dick filed a claim for the cost of the supplemental work. The contracting officer did not issue a decision, and an appeal from the "deemed denial" followed; it was docketed as GSBCA 12035. We grant the appeals in GSBCA 11702 and 11999 in their entirety as to entitlement. We conclude that: (1) installation of temporary tie-ins was not included in the base contract; (2) the contract contemplated permanent tie-ins in the ceiling of the fourth floor level; (3) P.J. Dick had intended to install permanent tie-ins in the ceiling of the fourth floor level; and (4) the actions of the parties before the dispute arose establish that the rephasing and RFP 88 were regarded as changes in the contract work. As to quantum, we do not agree with appellant that there was an accord and satisfaction. While there were negotiations and an oral agreement as to the price of the work, the negotiations were not memorialized in a bilateral modification as required by the Federal Acquisition Regulation (FAR) then (and now) in force. We hold that appellant is entitled to compensation under the equitable adjustment clause in the contract, GSAR 552.243-71. We reopen the record to conduct further proceedings as to quantum. As to GSBCA 12035, we conclude that the work directed by RFP 137 was not included in the base contract. We grant the appeal as to entitlement. The Government did not contest P.J. Dick's quantum request. We grant quantum in the amount of $8,627.28. Findings of Fact The Contract 1. On September 17, 1988, GSA awarded a fixed-price contract-- for $13,466,000--to P.J. Dick for renovation of certain space in the United States Post Office and Courthouse, Pittsburgh, Pennsylvania. Appeal File, GSBCA 11645 & 11646, Exhibit 1 at 2. The contract completion date was six hundred eighty days after receipt of the notice to proceed. Id. 2. The contract required P.J. Dick to "renovate existing vacant space," estimated at 280,000 square feet, "on the first through fourth floors" of the building. P.J. Dick was to convert the existing basement, estimated at 80,000 square feet, for parking use. Appeal File, GSBCA 11645 & 11646, Exhibit 1 at SCOPE OF WORK. The work included a new electrical system; complete electrical and heating, ventilation and air conditioning (HVAC) renovation; new plumbing and toilet facilities; new sprinkler and fire alarm system; new perimeter baseboard heating; elevator upgrade; and fully finished newly constructed office area for the first through fourth floors. During construction, the existing court facilities on the fifth through tenth floors were to be operational. Id. 3. The post office and courthouse is thirteen stories high, with a basement level consisting of the basement, sub-basement, and track level (for accommodating railway cars which were used to deliver mail). Transcript, Vol. 1, at 30-31.[foot #] 1 ----------- FOOTNOTE BEGINS --------- [foot #] 1 The hearings were held in two sessions, one in March of 1993 and one in May of 1993. We cite the March transcript as "Transcript, Vol. 1, at ___." We cite the May transcript as "Transcript, Vol. 2, at ___." All dockets were consolidated for hearing and decision. ----------- FOOTNOTE ENDS ----------- 4. At the time of contract award, the sub-basement through the third floors were unoccupied. Transcript, Vol. 1, at 32, 35. The fourth through tenth floors were occupied. The fourth floor was occupied by HUD, with one hundred and thirty employees, and also by the United States Attorney's Office (computer room) and one judge's chambers. Id. at 731, 733, 738-39. 5. As the fifth through tenth floors were to be operational during construction, the contract contemplated P.J. Dick's full cooperation with GSA to minimize conflicts and to facilitate Government usage. Appeal File, GSBCA 11645 & 11646, Exhibit 1, 01010, 1.04 at 01010-6. 6. To coordinate the fourth floor work and the needs of the occupants of that floor, the contract provided: Scheduling of Level Completion for Occupancy during construction is as follows: Occupants on the fourth floor shall move to level 3 and vacate level 4 except Judges Chambers in southwest corner and existing U.S. Attorney's Computer Room located between Columns Q & S, 3/4. Appeal File, GSBCA 11645 & 11646, Exhibit 1, 01310, B.1 at 01310-2. 7. The contract required selective demolition as indicated on drawings provided to P.J. Dick. Appeal File, GSBCA 11645 & 11646, Exhibit 1, 02070, 1.02 at 02070-1. The selective demolition included relocation of pipes, conduits, ducts and other mechanical work as specified by the respective trades. Id., 0270, 1.02 D.2 at 0270-2. The contract required P.J. Dick to submit a selective demolition schedule for GSA's review prior to commencement of the work. The schedule was to provide a detailed sequence of demolition and removal work to ensure uninterrupted progress of the Government's on-site operations and coordination of the Government's continuing occupation of portions of the existing building with the Government's occupancy of completed new work. Id., 0270, 1.03 at 0270-2. 8. The contract contained a Temporary Facilities clause which required P.J. Dick to "establish and initiate use of each temporary facility at [the] time first reasonably required for proper performance of the work." Appeal File, GSBCA 11645 & 11646, Exhibit 1, 01505, 1.02 A at 01505-1. The clause covered water, sewerage, and water distribution and drainage. Id., 01505, 2.01A, 2.02A at 01505-2. The Piping System and Contract Requirements for Renovation 9. Before renovation, the building had risers for supply and return perimeter radiated heat, and waste and rain-water, running vertically from the basement level feeding the fifth floor and above. Appellant's Hearing Exhibit 2, Diagram 1.5; Transcript, Vol. 1, at 41, 176. Two toilet risers served the demolition area for a total of 178 risers. Transcript, Vol. 1, at 50-51. 10. The perimeter risers were two inches in diameter and the toilet risers were six inches in diameter. Transcript, Vol. 1, at 50. After the renovation, these risers could not be used on the floors because their locations conflicted with the new layout. Id. at 42. Therefore, the contract required P.J. Dick to install new risers from the basement level through the renovated floors to the floors above. Id. at 41-42; Finding 7. Two tie-ins per riser were necessary, one at the basement level, and one on an upper floor to serve floors five and above. Id. at 42. Contract drawing 9M26 had the following note: "Phasing of construction will require the main return loop and all return risers on the fourth floor to be installed while the fourth floor is occupied. . . . Fourth floor work will be completed after the first and third floors are completed and occupied." Contract Drawing 9M26. This note referred to the perimeter heat risers. Transcript, Vol. 1, at 1176. 11. The joint venture of H2L2/Roach Walfish Lettrich (H2L2/RWL) served as GSA's consulting architect and engineer.[foot #] 2 Transcript, Vol. 1 at 747, 749. GSA's resident engineer, an employee of H2L2/RWL, testified credibly that GSA personnel administering this contract understood from the inception of the project that access to the fourth floor would be required to make permanent tie-ins. Id. at 134.[foot #] 3 He also testified that it would be possible to make permanent tie-ins in the ceiling of the fourth floor level without vacating the floor by tying-in one to five risers at a time and phasing the work across the floor. Id. at 168. P.J. Dick's Demolition Plan 12. On November 15, 1988, P.J. Dick submitted its proposed demolition plan to GSA. Appeal File, GSBCA 11702 & 11703, Exhibit 320. P.J. Dick proposed demolition in the following floor sequence: (1) third floor, (2) second floor, (3) first floor, (4) track level, (5) basement, (6) sub-basement and (7) fourth floor. Id. P.J. Dick contemplated performing fourth floor demolition in two phases: phase 1, to be performed concurrently with third floor demolition, included fourth floor penetrations for HVAC, plumbing and sprinkler piping, which was to be done while the fourth floor was occupied. This work was to make the new utility systems operational. P.J. Dick also stated ----------- FOOTNOTE BEGINS --------- [foot #] 2 H2L2/RWL also designed the renovation. [foot #] 3 In August of 1990, the contracting officer terminated the resident engineer without explanation. Transcript, Vol. 1, at 124-35. ----------- FOOTNOTE ENDS ----------- that "other demolition work on the fourth floor, essential to making the third floor completely operational, will also be performed during phase 1." P.J. Dick twice emphasized that the work would require careful coordination with GSA as the fourth floor would not be vacant, the second time stating that "core drilling (floor penetrations) required to make service connections on the fourth floor, is a demolition work item which must be completed while the area is occupied and which will require careful coordination by those affected." Id. Phase 2, and the majority of the fourth floor demolition work, would be performed after substantial completion of the third floor. Id. 13. As part of phase 1, P.J. Dick intended to maintain storm and sanitary service to the fourth floor by making temporary tie- ins in the ceiling of the third floor level. Appeal File, GSBCA 11702 & 11703, Exhibit 320. P.J. Dick's first project coordinator explained that temporary tie-ins at the ceiling of the third floor level in the demolition plan referred to the two toilet bowls sitting on the fourth floor slabs, to avoid the fourth floor toilets being useless during the build-out of the third floor. Transcript, Vol. 1, at 39. P.J. Dick's plumbing foreman confirms that P.J. Dick anticipated only a minor amount of temporary tie-ins in that ceiling as part of phase 1. Deposition of Richard Bilski (Bilski Deposition) at 9, 15-16 (Feb. 1, 1993). 14. There is a dispute of fact as to whether P.J. Dick intended from the beginning to install major temporary tie-ins at the ceiling of the third floor level as part of the base contract work. GSA maintains that P.J. Dick's mechanical subcontractor, Sherry & O'Leary, priced materials for temporary tie-ins on February 14, 1989, Finding 25, which shows that P.J. Dick intended to install major temporary tie-ins there as part of the original contract work. We find as fact that P.J. Dick originally intended to place permanent tie-ins in the ceiling of the fourth floor level. That intention is confirmed by the contract terms, P.J. Dick's plan, and the testimony of witnesses at the hearing. The date of the Sherry & O'Leary material quotation proves nothing about P.J. Dick's intention, much less about Sherry & O'Leary's intention. There is no proof that Sherry & O'Leary had purchased temporary tie-in materials in February of 1989 or intended then to install such tie-ins on the ceiling of the third floor level. 15. The GSA resident engineer questioned the sequence of the demolition plan. On February 7, 1989, in response, P.J. Dick advised GSA that floor penetrations for the fourth floor had to be done while the floor was occupied, but promised to coordinate locations with GSA. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 5. On March 10, 1989, P.J. Dick advised H2L2/RWL that pipe runs had to be made through the ceiling of the fourth floor level while the floor was occupied to tie new fire stand- pipes into the existing system above the fourth floor. H2L2/RWL requested specific information from P.J. Dick as to the extent of the work. Appeal File, GSBCA 11702 & 11703, Exhibit 7. On April 4, P.J. Dick informed GSA's resident engineer that demolition during occupancy could only be detailed after the Government provided P.J. Dick with information on the operation of the floor. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 11. HUD Complaints 16. On April 13, 1989, P.J. Dick was informed by GSA that HUD did not want demolition to take place on the fourth floor during normal working hours. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 14. On April 26, 1989, HUD officials complained about noise, air quality and noxious odors resulting from work on the third floor. HUD officials requested that all work that must be done in HUD space be performed either after normal working hours or on weekends. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 15. Modifications Moving Fourth Floor Work 17. On June 5, 1989, GSA issued RFP 21, which directed P.J. Dick to "add valves and unions to the hot water supply and return radiation piping in the ceiling of the third floor" in order to minimize physical disruption of the occupied areas. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 19. On June 7, 1989, GSA directed P.J. Dick to add valves in the ceiling of the third floor allowing new sprinkler risers to be filed with water and the sprinkler system placed in service without obtaining access to the fourth floor. Appeal File, GSBCA 11645 & 11646, Exhibit 18; Appeal File, GSBCA 11676, Exhibit 18; Transcript, Vol. 1, at 60. Rephasing of Project 18. On August 7, 1989, P.J. Dick advised GSA that there was a substantial amount of work that had to be performed on the fourth floor. P.J. Dick was receptive to performing work during the evening but could not guarantee that such work would not disrupt tenant operations. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 24. The Federal Bureau of Investigation (FBI) was scheduled to move into part of the third floor of the building. P.J. Dick had learned that the FBI would forbid work on the ceiling of the third floor when it moved into new space. P.J. Dick maintained this would be impossible unless it was able to complete ceiling work in that area before the FBI moved in. Id. P.J. Dick requested that the fourth floor tenants be relocated either to another floor outside the work area, or to another building. P.J. Dick also requested that new third floor tenants not move into the third floor until completion of all utility work on that floor. Id. 19. GSA officials met two days later on August 9, and concluded that third floor work could not be finished without relocating HUD to allow access to the fourth floor to make necessary tie-ins through to the fifth floor. GSA recognized that until these tie- ins were made, existing services at the third floor level could not be demolished and new work at the third floor level could not be installed. To make space available, GSA decided to move HUD to the empty and as yet not-laid-out first floor. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 25. 20. On August 24, GSA directed P.J. Dick to rephase the project to concentrate on the second floor, basement and first floor once the first floor HUD requirements were definitized. GSA recognized in that directive that "temporary building tie-ins may be required at the third floor ceiling" in order to allow the upper and lower floors to be operational. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 28. P.J. Dick promised to comply with the directive but warned that "the phasing change has potentially devastating effects on project cost and duration." Id., Exhibit 29. P.J. Dick noted that it and its subcontractors would have to reconstruct the approach to the performance of the work. 21. The chief of GSA's project operations branch recognized that access to the fourth floor had been restricted, that GSA had issued RFPs moving work that could be moved from the fourth to the third floor, but that access to the fourth floor was still needed for electrical connections and other work. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 33. On September 29, H2L2/RWL requested an engineering consultant to explore the possibility of making permanent tie-ins on the third, rather than fourth, floor. Id., Exhibit 34. 22. In response to P.J. Dick's complaint that it had not been given Government approval for performing work to allow it to proceed as scheduled by October 1, H2L2/RWL suggested a plan for proceeding to the contracting officer. H2L2/RWL, knowing that horizontal runs were necessary because the new risers were not vertically aligned with the fifth floor risers, proposed directing P.J. Dick to move as many of the proposed horizontal runs as possible from the fourth to the third floor. Since the third floor ceiling was crowded with under-ceiling ducts and chases, the horizontal runs would have to be done as field conditions permitted. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 36. RFP 88 23. The parties discussed the solution for temporary tie-ins at the ceiling of the third floor level at a construction meeting on December 20. GSA promised to issue of an RFP on December 29. It was not until February 2, 1990, however, that GSA issued RFP 88, which required P.J. Dick to reroute existing pipes to new risers over the new ceiling of the third floor level or, when necessary, below the third floor level ceiling, as shown on attached drawings. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 52.[foot #] 4 P.J. Dick was required to submit a proposal including the "installation, support, maintenance and removal of the noted lines." GSA succinctly described the necessity for RFP 88: The fourth floor tenant (HUD) has restricted free access to the fourth floor ceilings. If lines such as soil lines, etc. are not redirected on the third floor, they cannot be demolished at lower floors, thereby impeding the orderly progression of the work and in fact preventing completion of lower floors. Id. 24. The drawings showed temporary tie-ins (horizontal runs) in the third floor ceiling for sewer and rain water conductor (yellow) and hot and cold water (blue). Appellant's Hearing Exhibit 9; Transcript, Vol. 1, at 196-97. These tie-ins linked a multitude of drops from the fourth floor to permanent risers brought up to locations in the ceiling of the third floor level. Appellant's Hearing Exhibit 9; Transcript, Vol. 1, at 198. Pricing of RFP 88 and Post-RFP Work 25. The contracting officer issued an oral notice to proceed with RFP 88 for a price not to exceed $45,000. Appeal File, GSBCA 11702 & 11703, Exhibit 329; Transcript, Vol. 1, at 77. P.J. Dick's mechanical subcontractor, Sherry & O'Leary, relying on the scope of work depicted in the drawings, priced RFP 88 at $160,769.46. Sherry & O'Leary's material breakout to support its pricing was dated February 14, 1989. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 57; Transcript, Vol. 1, at 201. Sherry & O'Leary contemplated performing the work in three ----------- FOOTNOTE BEGINS --------- [foot #] 4 In the meantime, P.J. Dick continued with third floor demolition, having been told by GSA to continue with the contract work. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 53. P.J. Dick installed studs on 85 percent of the third floor area and drywall on 50 percent of the area. To install temporary piping, P.J. Dick advised that the work which was done would have to be demolished. The contracting officer acknowledged that the change order was late and acknowledged that he had directed P.J. Dick to continue working. Nevertheless, he denied Government responsibility for removal of finished work, on the ground that it was P.J. Dick's responsibility to coordinate the work of the subcontractors and to mitigate potential damage to either party. He then asked, curtly, "Did you attempt to coordinate the installation of drywall around the layouts that were known to your subcontractor(s) or did you just continue on thinking that GSA was one hundred percent responsible?" Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 59. ----------- FOOTNOTE ENDS ----------- phases: (1) making the tie-ins, (2) contract demolition and (3) removal of temporary tie-in piping. Appeal File, GSBCA 11702 & 11703, Exhibit 328. Based on that quotation, and the cost of work to be performed by other subcontractors, on March 12, P.J. Dick submitted a quotation of $197,833.22 for performing the work. Id. On April 6, 1990, GSA then issued modification AC95 directing P.J. Dick to proceed in a not-to-exceed amount of $150,000. Appeal File, GSBCA 11676, Exhibit 98. 26. On August 29, the contracting officer met with P.J. Dick and Sherry & O'Leary, and other subcontractors, in the words of the Sherry & O'Leary witness at the hearing, "to finalize the price of RFP 88."[foot #] 5 The contracting officer offered Sherry & O'Leary $160,000, which was accepted. Transcript, Vol. 1, at 223. It was the contracting officer's understanding that the settlement included the cost of removing temporary tie-ins. Id. at 823-24. Eventually, GSA and P.J. Dick reached a settlement price of $199,430 for RFP 88, later reduced to $198,507, which included the work of all subcontractors associated with RFP 88. Appeal File, GSBCA 11702 & 11703, Exhibit 345; Respondent's Answer, 7, GSBCA 11999. On October 25, 1990, P.J. Dick advised GSA that it considered the settlement did not include the cost of removing the temporary tie-ins, additional cost of base contract plumbing demolition due to re- sequencing of the work, and any other costs not specifically identified in the quotation for RFP 88. Appeal File, GSBCA 11702 & 11703, Exhibit 345. 27. On December 12, 1990, GSA's contracting officer issued modification ACG6 under the changes clause directing P.J. Dick to continue with work covered by RFP 88 at a "price to be determined later," but not to exceed $198,507. Appeal File, GSBCA 11676, Exhibit 162. 28. The contracting officer testified that all parties had agreed on the price of $198,507 for the work covered by RFP 88, but that he issued a "price to be determined later modification" because he believed he lacked authority to settle a change order request larger than $100,000 without submitting the request to a review board. Transcript, Vol. 1, at 816-17. The contracting officer, however, did not mention this alleged lack of authority to P.J. Dick. GSA paid this $198,507 through progress payments ----------- FOOTNOTE BEGINS --------- [foot #] 5 The delay from March to August in arriving at a price for RFP 88 was occasioned in part by an Office of Inspector General (IG) gag order to the contracting officer, in existence for 120 days, prohibiting him from negotiating the change order during a fraud investigation of P.J. Dick. Transcript, Vol. 1, at 789-90. The investigation concerned allegations that P.J. Dick had substituted an inferior grade of copper piping for the mid-level grade of piping that P.J. Dick had priced. Id. at 789. ___ The investigation was terminated without action by the IG. ----------- FOOTNOTE ENDS ----------- in January of 1991. Appellant's Hearing Exhibit 16.[foot #] 6 29. Issuance of RFP 88 enabled P.J. Dick to: (1) make temporary tie-ins at the ceiling of the third floor level, (2) demolish existing pipe, (3) build new risers from the basement to the third floor ceiling, (4) make temporary tie-ins in the third floor ceiling and (5) build out the floors below the third floor, including the first floor, to provide temporary housing for HUD. Appellant's Hearing Exhibit 2, Diagram 5.8; Transcript, Vol. 1, at 83. After HUD relocated to the first floor, P.J. Dick was then able to: (1) gain access to the fourth floor, (2) core drill the fourth floor, (3) run the new riser through the walls of the fourth level to the ceiling, (4) make permanent tie-ins to the fifth floor risers at the ceiling of the fourth floor level, (5) demolish the temporary tie-ins from the old risers and new risers at the ceiling of the third floor level and (6) demolish the remaining riser between the third and fourth floor levels. Appellant's Hearing Exhibit 2, Diagrams 6.8-7.8; Transcript, Vol. 1, at 84-85. The Claim for RFP 88 30. By letter of January 31, 1991, P.J. Dick requested additional funding for removal of the temporary tie-ins in accord with the directive of the contracting officer. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 111. P.J. Dick argued that the cost of removal of temporary tie-ins was not included because the negotiated settlement was based on actual man-hours expended through August 14, 1990, and at that time, work on removal of the tie-ins had not yet begun. P.J. Dick maintained that it had represented in October 1990 that temporary tie-ins were not included in the settlement and the Government's silence on the point was acquiescence in P.J. Dick's position. Id. On November 18, P.J. Dick noted that had GSA directed it to proceed with RFP 88, which added a substantial amount of temporary piping on the third floor. P.J. Dick maintained that RFP 88 was the result of GSA's refusal to grant it access to the fourth floor to make permanent utility tie-ins which were required by the contract. Appeal File, GSBCA 11702 & 11703, Exhibit 362. P.J. Dick claimed that RFP 88 was negotiated to settlement on August 29, 1990, for $199,430, and that the settlement specifically excluded the cost of the temporary piping added by RFP 88. Id. 31. Once the permanent tie-ins were completed, P.J. Dick claimed an additional $13,409 for the cost of removing the temporary tie- ins. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit ----------- FOOTNOTE BEGINS --------- [foot #] 6 The schedule of progress payments shows that a payment of $150,000 was made through Modification AC95 and a payment of $48,507 through Modification ACG6. Appellant's Hearing Exhibit 16. ----------- FOOTNOTE ENDS ----------- 131. The claim included $2,000 for costs incurred by Easley & Rivers, P.J. Dick's drywall subcontractor, from patching the holes created by the temporary tie-ins. Id. 32. On August 26, 1992, the contracting officer denied the claim and withdrew RFP 88. The contracting officer decided that RFP 88 should not have been issued since "temporary tie-ins were required under the base contract and P.J. Dick had intended to perform this work in their base bid, as evidenced by their demolition plan." Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 136. The contracting officer also relied on Section 01505, Temporary Facilities, in the contract as requiring P.J. Dick to provide the temporary tie-ins on the third floor. Therefore, the contracting officer assessed a credit of $198,507 in favor of the Government. On February 16, 1993, the contracting officer issued a supplemental decision denying the claim for the costs of removal of the temporary tie-ins, reasoning that removal of the temporary tie-ins and subsequent patching were required under the terms and conditions of the base contract. Appellant's Hearing Exhibit 13. An appeal was taken from that decision and docketed as GSBCA 11702. RFP 137 33. When Sherry & O'Leary began the work contemplated by RFP 88, it found that neither vent piping nor a considerable number of plumbing lines had been shown on the drawings that accompanied RFP 88. There were also conflicts between the location of risers to be tied in as shown on the drawings and column beam caps. Transcript, Vol. 1, at 204, 206-07. Thus, there was extra unanticipated work to implement RFP 88 not shown on the drawing, resulting in RFP 88 becoming an open ended RFP in terms of cost. Transcript, Vol. 1, at 223. 34. GSA issued RFP 137, dated August 14, 1990, to P.J. Dick. H2L2/RWL told P.J. Dick that RFP 137 was issued to "isolate plumbing tie-ins that might otherwise be done under the umbrella of RFP #88." GSA, through H2L2/RWL, also said that it wanted P.J. Dick to "discontinue charges to RFP #88." RFP 137 requested a proposal to remove a four inch rain water conductor not shown on drawings, remove an active eight inch rain water conductor not shown on the plumbing drawing, and tie in water risers at column D-2 to existing risers. Appellant's Supplemental Appeal File, GSBCA 11999, Exhibit 87. On September 11, 1990, GSA issued modification ACF3 establishing a price to be determined later but not to exceed $2,000. Appeal File, GSBCA 11645 & 11646, Exhibit 150. 35. On September 28, 1990, P.J. Dick submitted a claim for $8,282.21, later reduced to $8,267.28, for the work covered by RFP 137. Appeal File, GSBCA 12032-36 Exhibit 347. The contracting officer did not issue a decision on the claim, and an appeal was taken from the contracting officer's deemed denial and docketed as GSBCA 12035. See Complaint in GSBCA 12035, 8, and Answer in GSBCA 12035, Admitting 8. Discussion GSBCA 11702 and 11999 Appellant argues that installation of temporary tie-ins at the third floor level was an addition to the contract work. GSA disagrees. GSA presents six arguments in support of the contracting officer's position that temporary tie-ins were part of the original contract work. Put in a logical order, they are: (1) use of temporary tie-ins at the third floor level was consistent with the requirements of the contract; (2) the note on drawing 9M26 in the contract does not require that tie-ins be done in the fourth floor ceiling; (3) the note in any event applied not to all the risers, but only to the return lines; (4) the contractor's cost of performance was therefore not increased by the unavailability of the fourth floor; (5) if it was P.J. Dick's plan to do permanent tie-ins on the fourth floor while the space was occupied, that plan was impossible given the nature of the work and the contract requirement that the work be performed without unreasonably disturbing the operations of the tenant agencies; and (6) appellant's original plan was to do most of the temporary tie-ins on the third floor. Respondent's Post-Hearing Brief at 2. Appellant maintains that the negotiated settlement agreement of $198,507, as well as the subsequent action of the contracting officer in confirming the settlement amount and authorizing payment, constitute an accord and satisfaction. Appellant's Post-Hearing Brief at 31-32. GSA counters that there was no meeting of the minds as to what was covered by the alleged settlement and the contracting officer lacked authority to bind the Government to a modification, as there was no certificate of current cost or pricing data submitted as required by the FAR, 48 CFR 15.804-2. Respondent's Post-Hearing Brief at 2. We agree with appellant that the installation of temporary tie-ins at the third floor level was not part of the base contract work. GSA, in its contract, in drawing 9M26, whether wisely or unwisely, required P.J. Dick to install the main return loop and all return risers while the fourth floor was occupied. Finding 10. The contract called for HUD to move from the fourth floor to the third floor, Finding 6; it also provided that fourth floor work was to be completed after the third and first floors were completed and occupied, Finding 10. These conditions also direct significant work on the fourth floor before that floor was vacated. HUD could not move from the fourth to the third floor until the third floor was completed. To complete the third--and other lower--floors, P.J. Dick had to install permanent horizontal tie-ins in the fourth floor ceiling connecting the new risers installed from the basement through the fourth floor to the existing risers coming down from the upper stories through the fifth floor. Finding 10.[foot #] 7 GSA also anticipated permanent tie-ins in the fourth floor ceiling. Findings 11, 23. P.J. Dick properly anticipated putting permanent horizontal tie-ins at the ceiling of the fourth floor level during HUD's occupancy of the fourth floor.[foot #] 8 Finding 12. GSA's six contrary arguments are not persuasive. GSA argues that temporary tie-ins at the third floor level were "not inconsistent" with the contract. Consistency is not the issue; the issue is whether the contract contemplated P.J. Dick's installation of temporary tie-ins at the third floor level to avoid disruption of HUD's operation on the fourth floor. We have concluded that the contract did not contemplate such a sequence of work. The Government has an implied obligation to make the work site available to the contractor so as not to hinder the contractor's work. Elrich Construction Co., GSBCA 5241, 80-1 BCA 14,197, at 69,886, n.2. The contract in this case contemplated P.J. Dick performing substantial work on the fourth floor while HUD occupied the floor.[foot #] 9 GSA's contractual obligation is not lessened because of legitimate concerns with operational requirements of its tenant agencies. GSA should have taken such requirements into account when it drafted the contract. Finally, respondent relies on the Temporary Facilities clauses for the proposition that P.J. Dick had to place temporary tie-ins on the third floor level. The Temporary Facilities clause requires the contractor to provide those utility services "required for proper performance of the work." Finding 8. See ----------- FOOTNOTE BEGINS --------- [foot #] 7 Permanent tie-ins in the fourth floor ceiling were required because the new risers extended through the fourth floor. The existing risers could not be used on the fourth floor or below because they conflicted with the new tenant build-outs. Finding 10. Further, the contract required existing facilities on the fifth through tenth floors to be operational during construction. Finding 2. [foot #] 8 The reference in the plan to "other demolition work" plan, Finding 12, must have referred to the ceiling demolition to receive permanent tie-ins above the fourth floor ceiling. [foot #] 9 This is not a case, such as American ________ Construction Co., ASBCA ________________ 12,339, 69-1 BCA 7,739, where a contractor seeks an equitable adjustment for having to perform extra work in occupied space. The board there held that the contractor, knowing it was to work at an active site, may not be compensated for the increased costs of performance resulting from the normal operation of the facility. This case presents the converse issue--extra costs resulting from denial of access to an active site. ----------- FOOTNOTE ENDS ----------- Kora & Williams v. General Services Administration, GSBCA 9270, 92-2 BCA 24,785. It is hardly a scheduling clause. The specific provisions of the contract relating to scheduling and phasing of work control over the more general provisions for providing temporary facilities. J.S. Alberici Construction Co. v. General Services Administration, GSBCA 12386, slip op. at 6 (Mar. 1, 1994). The actions of the parties before the advent of the controversy are useful in determining how the parties themselves construed the contract. See Equitable Life Assurance Society of the United States, GSBCA 8909, 90-3 BCA 23,130, at 116,130. GSA issued a modification rephasing the project, knowing that necessary access to the fourth floor had been denied, Findings 20, 21, and subsequently issued RFP 88 to implement the rephasing. Finding 21. GSA treated the rephasing as a change to the contract work. The foregoing disposes of GSA's points one through three. We consider the remaining points. GSA maintains that the cost of performance was not increased. We disagree. GSA, by its refusal to grant access to the fourth floor, turned a planned one-step process into a three-step process. P.J. Dick was forced to install temporary tie-ins at the third floor level, install the permanent tie-ins on the fourth floor level, and then come back to the third floor and remove the temporary tie-ins. Finding 29. GSA maintains that: (1) it would have been impossible to install permanent tie-ins on the fourth floor level while it was occupied, and (2) therefore, P.J. Dick had intended all along to install temporary tie-ins on the third floor. As GSA never provided P.J. Dick access to the fourth floor while occupied, we will never know whether P.J. Dick's original plan was "impossible." The credible testimony of GSA's own resident engineer, moreover, is to the contrary. Finding 11. We have found as fact that P.J. Dick had originally planned to install permanent tie-ins on the fourth floor. Findings 12-14. The contracting officer withdrew RFP 88 for the reason that installation of temporary tie-ins on the third floor level was part of the base contract. Findings 24, 32. The withdrawal of RFP 88 cannot stand, as the contracting officer misconstrued the work included in the base contract. The appeal of GSBCA 11999 is thus granted as to entitlement. Appellant argues accord and satisfaction for quantum, relying upon the negotiations of the price of $198,507, and subsequent payment of that amount. GSA maintains there was no accord and satisfaction as there was no meeting of the minds. We agree with GSA that there was no accord and satisfaction here. In a Government contract, oral negotiations by themselves cannot serve as a basis for accord and satisfaction. In one case, the Court of Claims considered whether there was accord and satisfaction when the contracting officer negotiated a tentative settlement with the contractor that was never memorialized in a bilateral modification. Relying on the Armed Services Procurement Regulations then in effect, the court held that a settlement agreement changing the price was a contract modification requiring the execution of a bilateral modification on Standard Form 30. "Oral understandings which contemplate the finalization of the legal obligation in a written form are not contracts themselves." SCM Corp. v. United States, 219 Cl. Ct. 459, 464, 595 F.2d 595, 598 (1979). Similarly, the United States Court of Appeals for the Federal Circuit, construing the FAR, in a case where a settlement was not memorialized in a bilateral modification, held that: [T]he accord and satisfaction constituted a modification of the contract which was required to be in writing and signed by both parties. . . . . Unless and until there was a binding modification to which both [the contractor] and the contracting officer had agreed in writing, there could not be a binding modification of the contract. Mil-Spec Contractors, Inc. v. United States, 835 F.2d 865, 867 (Fed. Cir. 1987); see also Solar Turbines v. United States, 23 Cl. Ct. 142, 151-52 (1991) (proposed mutual termination modification signed by representatives of both parties, but not by contracting officer, is not the required bilateral modification which binds the Government). As in Mil-Spec, the FAR in effect during the time of this contract required a bilateral modification, that is, a modification signed by both the contractor and the contracting officer to "make negotiated equitable adjustments resulting from the issuance of a change order." 48 CFR 43.103(a)(1) (1988). In this case, the contracting officer never signed a bilateral modification; instead he issued a price to be determined later change order, Finding 27, which indicates a lack of agreement on price. 48 CFR 43.102(b) (1988).[foot #] 10 The parties argue whether the contracting officer would have been within his authority to settle the amount of the change order without first ----------- FOOTNOTE BEGINS --------- [foot #] 10 The case of Texas Instruments, Inc. v. United __________________________________ States, 922 F.2d 810 (Fed. Cir. 1990), is not to the contrary. ______ There the contract required the parties to negotiate firm fixed prices for as yet unpriced line items. The Court distinguished Mil-Spec, concluding that establishing prices for non-priced line ________ items was not a modification to the existing contract, but a fulfillment of an express contractual term and no regulation required a bilateral modification. Under those circumstances, where there were separate writings by each party approving the agreed-upon price, the agreement would be given effect. 922 F.2d at 814, 815. ----------- FOOTNOTE ENDS ----------- obtaining a certificate of cost and pricing data from P.J. Dick. It is not necessary to resolve this issue, as the contracting officer did not sign a bilateral modification which in fact settled the amount of the change. Both parties held out for their maximum positions on quantum: appellant sought $198,507--the full amount of the alleged settlement--and respondent held out for no payment at all. P.J. Dick is due the adjustment identified in the GSAR 552.243-71, i.e., direct costs of material quantities, labor, construction equipment, costs of preparation of and/or revisions to shop drawings resulting from the change, worker's compensation and public liability insurance, employment taxes under FICA and FUTA, bond costs, overhead, profit, and commission. See generally Eurostyle, Inc. v. General Services Administration, GSBCA 12084 (Apr. 4, 1994). The Board will schedule further proceedings to determine the quantum due appellant on GSBCA 11999. The claim in GSBCA 11702 involves whether removal of the temporary tie-ins came within the scope of the change order, RFP 88. Clearly removal of those tie-ins comes within the scope, as RFP 88 calls for "installation, support, maintenance and removal" of the noted lines. Finding 23. The temporary tie-ins would have to be removed to allow completion of the third-floor renovation, and was logically included in the scope of the changed work. Save for the cost to install the two temporary toilet lines, an installation which it always planned, P.J. Dick is entitled to the cost of removal of the temporary tie-ins. The entitlement includes the cost of patching the drywall installed before the change order was issued. The contracting officer directed P.J. Dick to continue with the contract work, and GSA is responsible for the consequences of the advice given. See Jordan & Nobles Construction Co., GSBCA 8349, et al., 91-1 BCA 23,569, at 118512. The equitable adjustment includes the cost of re- doing in-place work or repairing existing conditions. Cf. Atlas Contractors, Inc., ASBCA 29646, 86-2 BCA 94,431, at 94,440 (contractor due expenses of duct relocation resulting from Government addition of three extra water-wash units and relocation of other units in air distribution system.) The applicable quantum shall also be considered in further proceedings. GSBCA 12035 This appeal involves continuation of temporary work not included in RFP 88, but in a new RFP 137. The work was to remove a four inch rain water conductor not shown on drawings, remove an active eight inch rain water conductor not shown on the plumbing drawing, and tie in water risers at column D-2 to existing risers. Finding 34. P.J. Dick is entitled to its costs for the same reason it is entitled to the cost of the changes encompassed by RFP 88. The Government has not disputed the cost of the work, and we have no reason to question the accuracy of the costs. We thus grant the appeal as to entitlement and quantum. Decision The appeals in GSBCA 11702, 11999 and 12035 are GRANTED as to entitlement. Further proceedings on quantum will be scheduled for GSBCA 11702 and 11999 in accordance with this opinion. The appeal in GSBCA 12035 is GRANTED as to quantum. Appellant is awarded $8,627.28 for the cost of RFP 137, plus interest as allowed by the Contract Disputes Act of 1978. ____________________________ ANTHONY S. BORWICK Board Judge We concur: _____________________________ _____________________________ STEPHEN M. DANIELS EDWIN B. NEILL Board Judge Board Judge