_____________________________ DENIED: April 4, 1994 _____________________________ GSBCA 12084 EUROSTYLE INCORPORATED, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Lloyd Pooker, Vice President of Eurostyle Incorporated, Fenton, MO, appearing for Appellant. Richard R. Butterworth, Jr., Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges PARKER, HENDLEY, and VERGILIO. HENDLEY, Board Judge. Eurostyle Incorporated (ESI), appellant, appeals a contracting officer's decision denying in part its request for delay damages. Appellant seeks $132,494.61 in delay damages and an additional 21-day time extension to the contracting period. General Services Administration (GSA), respondent, contends that ESI has been justly compensated through various change orders which addressed many of appellant's delay allegations. The parties elected to submit the case for decision on the record. Findings of Fact 1. ESI was awarded contract number GS06P90GYC0076 for space conversion at Building 104, Federal Center, 4300 Goodfellow Boulevard, St. Louis, Missouri, on August 30, 1990. Appeal File, Exhibit 3. The total dollar value of the contract was $10,436,864. 2. The base work under the contract consisted of the conversion of 312,000 square feet of file storage space into 145,000 square feet of file storage space to accommodate a new high density file system and 167,000 square feet of general office space. The contract also contemplated demolition, asbestos removal, roof repairs, lightning protection, HVAC equipment and related electrical work, heating piping, heating equipment and associated electrical work, public address system renovation, and the removal and replacement of the elevators. The contract also included several options which the Government exercised: Option 1 - finish first floor space; Option 2 - finish second floor space; Option 3 - insulate the exterior walls on the first and second floors, construct wall furring and finishes on the interior surfaces of the first floor; Option 5 - construct demountable partitions, including all doors, door frames, hardware, and other accessories necessary for the construction of the demountable partition system in general office areas; Option 7 - maintain two new elevators installed under the contract; Option 9 - finish the second floor office space not covered under the base contract. Appeal File, Exhibit 1. 3. Notice to proceed was issued to appellant on October 22, 1990, effective October 23, 1990. Appeal File, Exhibit 4. Under the terms of the contract, appellant had 780 days to complete the contract after receipt of the Notice to Proceed. The Contract Specifications divided the total contract time into three phases of work to be completed after receipt of Notice to Proceed within 330, 660 and 780 days, respectively. Appellant acknowledged receipt of the Notice to Proceed on October 24, 1990. Consequently, the original project completion date was December 12, 1992. Appeal File, Exhibit 1. 4. A portion of the work on the building, the installation of a high density filing system, was awarded under a separate contract to Spacesaver Storage Systems, Inc. (Spacesaver). This contract was awarded on August 31, 1990. Notice to proceed was issued on October 23, 1990, and acknowledged by Spacesaver on October 25, 1990. Appeal File, Exhibit 34. The Spacesaver contract was divided between Phase I and Phase II. Phase I was to be completed in 330 days after receipt of the notice to proceed and Phase II 330 days from Phase I completion. Appeal File, Exhibit 5. 5. Specification Section 11055, "Movable Filing System," was included in appellant's contract specifications for information purposes. The scope of Spacesaver's work was identified so that appellant could understand the nature and phasing of the work under Spacesaver's contract. This information was important because appellant had responsibility under its contract with respondent to accommodate and coordinate with Spacesaver, the file system contractor. Appeal File, Exhibits 1, 6. 6. The phasing plan in Spacesaver's contract indicated that approximately 50% or 165 days of both Phase I and Phase II were for the installation of the file system. Appeal File, Exhibit 34. Appellant's schedule indicated that between 122 (early finish) and 179 (late finish) calendar days were anticipated for installation of the file system by Spacesaver. Appeal File, Exhibit 35. Consequently, appellant would not suffer any compensable delay until Spacesaver went beyond the late finish date. 7. As appellant progressed with its renovations and preparation for installation of the filing system, it encountered a greater number of concrete pads to be removed than anticipated under the contract. Appeal File, Exhibit 8, Attachments N, O, and P. After appellant completed a floor plan detailing the locations, material makeup and elevations of the concrete floor pads, on February 11, 1991, the contracting officer issued Proposal Request No. P-14 for removal of the additional pads. The affected area represented 25 percent of the entire floor area to be prepared. Appeal File, Exhibit 35. The request was priced by appellant, returned to respondent and signed by the contracting officer's representative on February 21, 1991. Appeal File, Exhibit 9. In pricing the proposal, appellant included overhead and profit, commission at 10% and bond at 1%. In addition, appellant indicated that this additional work could delay completion and reserved the right to request an extension after the work was completed and a complete evaluation of its impact could be performed. Appeal File, Exhibit 9. 8. On June 25, 1992, under Proposal Request No. P-61, appellant was granted a time extension of fifteen days for the additional work authorized under Proposal Request No. P-14. Appeal File, Exhibits 8, 15. 9. On February 19, 1991, respondent issued Proposal Request No. P-16 to establish a new finish grade for specific floor areas in the building. The proposal request and appellant's pricing of the request indicated that additional materials were needed. However, the change also deleted the need for sawcutting to accommodate the installation of the file system. Respondent did not believe any additional labor was required for this change considering the deleted, labor-intensive work. Appeal File, Exhibits 34, 35. Appellant's pricing proposal did not request any additional time for completing the work under this proposal and did not make any reservation to review any possible impact on the overall project. Appeal File, Exhibit 10. Proposal Request No. P-16 was signed by the contracting officer on March 8, 1991. 10. Respondent and appellant recognized a changed site condition through Proposal Request No. P-23, which was issued on March 12, 1991. The parties determined that the existing floor would not support the planned filing system installations. Therefore, respondent requested appellant to price the removal of the floor slab and the installation of steel decking to reinforce the floor. Appellant's proposal included commission and bond and reserved the right to determine the impact on the overall project of this additional work. Appellant signed the proposal on March 19, 1991, and respondent agreed to the proposal on March 26, 1991. Appeal File, Exhibit 11. 11. Under Proposal Request No. P-61, appellant was later granted a time extension of fifteen days to perform the work described in Proposal Request No. P-23. Appeal File, Exhibit 8. 12. Respondent issued Proposal Request No. P-33, which required an additional pour of concrete to level a section of the floor and requested appellant's pricing for this extra work. Appellant's pricing proposal included materials and labor for its subcontractor and its own commission and bond. Appellant did not request any contract extension for this work nor did it make any reservation for review of future impact. Proposal Request No. P-33 was signed by appellant on April 25, 1991, and by the Respondent's Chief of the Construction Section on April 29, 1991. Appeal File, Exhibit 12. Neither the contracting officer nor the contracting officer's representative believed the work requested in P-33 required a time extension. Appeal File, Exhibits 34, 35. 13. The parties agreed to Proposal Request No. P-38 on June 19, 1991. This request for additional work involved the construction of a temporary loading dock for use by Spacesaver during installation of the file equipment. This work did not affect appellant's critical path, and appellant did not request any additional time or reserve future consideration of this item. Appeal File, Exhibits 27, 35. 14. During the summer of 1991, the Veterans Administration requested the installation of dual controls on the filing system, for which change respondent extended Spacesaver's contract by thirty days. Appeal File, Exhibits 15, 34. 15. Appellant requested information concerning the number of filing inches to be provided; respondent responded on June 24, 1991. Appeal File, Exhibit 31. Appellant alleges that it requested this information in October 1990. However, respondent has no record of a request at that time and appellant has not supplied any documentation to support its allegation. Additionally, appellant's subcontractor did not plan to begin this work until September 23, 1991. Appeal File, Exhibit 8, Attachment X-1; Appeal File, Exhibit 34. 16. Appellant submitted further requests for updated information regarding filing directions in a construction coordination meeting on September 9, 1991, and in a memo dated September 10, 1991. Appeal File, Exhibit 8, Attachments X-l, X-2. 17. Respondent issued Proposal Request No. P-55 on September 25, 1991, for the installation of shelf dividers in the new filing system. Appellant's proposal was submitted to respondent on October 1, 1991. The parties met to negotiate the proposal on October 7, 1991. Appeal File, Exhibit 32. Respondent was unable to obtain the necessary authorization from the Veterans Administration to meet this deadline; however, on October 10, 1991, the contracting officer's representative advised appellant that its proposal was approved pending funding. Appeal File, Exhibit 35. 18. On September 30, 1991, respondent notified appellant by telefax of the final revised filing sequence. Appeal File, Exhibit 8, Attachment X-9. Respondent recognized that the revised filing sequence, a result of a design deficiency, required additional work and therefore issued Proposal Request No. P-56 on October 2, 1991. Appellant's proposal, dated October 3, 1991, included a request for a 21-day time extension and a reservation of additional time if the proposal was not agreed to by respondent by October 4, 1991. Appeal File, Exhibit 13. The respondent issued the proposal request on October 17, 1991, as a price-to-be-determined-later contract modification with no time extension granted at that time. Appeal File, Exhibit 13. As part of the review under Proposal Request No. P-61, appellant was granted a 21-day time extension for the work authorized under Proposal Request No. P-56. Appeal File, Exhibit 8, Attachment K. 19. On October 31, 1991, respondent issued Proposal Request No. P-61 to appellant to modify the planned work schedule as a result of the modification of Spacesaver's contract. Appeal File, Exhibit 8. The status of Spacesaver's work in Phase I as of October 31, 1991, was as follows: (1) the projected completion date of Phase I, October 18, 1991, had passed; (2) the installation of the filing system was approximately 90 percent complete; (3) the refiling of records by appellant was underway and was approximately 5-10 percent complete; and (4) demolition work under Phase II could not begin until a significant portion of the refiling under Phase I was completed. Installation of the filing system was actually completed on November 11, 1991. Appeal File, Exhibit 35. 20. By December 20, 1991, refiling under Phase I had reached a point where demolition could begin in the Phase II area. The delay in substantial completion from October 18, 1991, until December 2, 1991, was approximately forty-five days. Appeal File, Exhibit 35. 21. In response to Proposal Request No. P-61, appellant submitted a price proposal on November 27, 1991. Appeal File, Exhibit 8. In its proposal, appellant requested an extension of 102 calendar days to the contract and costs, including project supervision ($115.71/calendar day for 102 days), extended job site overhead ($4.39/calendar day for 102 days), and extended home office overhead ($1,281/calendar day for 102 days). 22. In reviewing this proposal, both the contracting officer and appellant recognized that the delays or extensions overlapped. Appeal File, Exhibits 34, 35. On June 25, 1992, GSA issued Unilateral Contract Modification PC85. Appeal File, Exhibit 15. This modification followed unsuccessful negotiations between GSA and ESI concerning the implementation of Proposal Request No. P-61. The modification implemented Proposal Request No. P-61 and granted ESI an 81-day time extension and $4,506.91 in monetary compensation. Appeal File, Exhibit 15. The contracting officer approved a 51-day time extension in relation to P-14, P-23, and P-56. The contracting officer also granted a 30-day time extension to appellant, which recognized the 30-day extension given Spacesaver. The contracting officer did not grant extensions in relation to P-16 and P-33. The contracting officer also did not apply the "Eichleay formula" in determining any additional overhead due the contractor above the overhead already paid under change orders. Appeal File, Exhibit 14. Appellant did not accept the terms of the proposal, which was then issued unilaterally. Appeal File, Exhibit 15. 23. On July 10, 1992, appellant filed a formal claim for $132,494.61 and for an additional 21 calendar days time extension. Appeal File, Exhibit 16. After further negotiation, appellant requested a final decision on August 31, 1992. Appeal File, Exhibit 18. The contracting officer issued her final decision on September 21, 1992. Appeal File, Exhibit 20. Appellant filed a notice of appeal with the Board on September 30, 1992. Appeal File, Exhibit 21. 24. During the time appellant was doing the construction work for the filing system installation, appellant was performing the other construction work in the building as required by the contract. Appeal File, Exhibits 34, 35. At no time did appellant experience a suspension of work or a work slow down. Appeal File, Exhibits 34, 35. In addition to the change orders described above, appellant was issued 48 change orders through November 1991 (47 involving contract work, 1 administrative) totaling $790,661.61, of which $82,407 was for overhead, profit and bond as applied against appellant's own work, and commission as applied against its subcontractors' work. Appeal File, Exhibit 34. 25. The contract contained clause GSAR 552.243-71, entitled Equitable Adjustments, which supplements the Changes clause. All of appellant's proposals for an equitable adjustment for the contract modifications were submitted and the adjustment made in accordance with that clause. The clause provides for two situations relevant here. First, for that portion of the work performed by the contractor, it recoups, in addition to its direct costs, its overhead at a negotiated rate and a 10% profit on the additional work. Second, for that portion of the work performed by other than its own forces, the contractor receives a 10% commission. In each instance, the appellant was granted an adjustment for its direct costs plus a 10% commission where the work was performed by a subcontractor, or its direct costs plus its overhead and a 10% profit when the work was performed by the appellant with its own forces. Discussion Appellant seeks to recover for alleged "unabsorbed extended home office overhead" pursuant to the Eichleay formula. It also appeals the contracting officer's decision denying its claim for a 21-day extension of the contract performance date. However, the only significance of the 21-day extension claim is that it would extend, by 21 days, the period for which the the three varieties of overhead are being claimed. It can have no other significance in this appeal inasmuch as there is no termination for default or liquidated damages involved. Appellant seeks $137,001.52 in delay damages based upon 102 calendar days of "delay," which includes an additional 21-day time extension to the time allowed for performance. The respondent contends that the appellant has been justly compensated through various change orders, which, it contends, addressed many of appellant's delay allegations. Appellant calculated its delay costs as follows: Project supervision for 102 calendar days at a rate of $115.71 per calendar day. $ 11,802.42 Extended job site overhead (job phones and toilets) for 102 calendar days at a rate of $4.39 per calendar day. $ 447.78 Extended home office overhead for 102 calendar days at $1,281/calendar day. $130,662.00 Bond cost $ 1,356.45 Less overhead already collected $ <7,267.13> $137,001.52 The total performance time of the contract was originally 780 calendar days from the date of receipt of the notice to proceed. Finding 3. The contract period was divided into three unequal sections or "phases," which are identified as "Phase I, Phase II," and, "Phase III." Id. The contract required Phase I to be completed within 330 calendar days after receipt of the notice to proceed. Id. Phase II was to be completed within 660 calendar days after the contract notice to proceed. Id. The remainder of the contract time is defined as Phase III. Id. On July 10, 1992, appellant filed a formal claim for $132,494.61 ($137,001.52 less the $4,506.91 granted in the contracting officer's unilateral modification) and for the addition of twenty-one calendar days to the time extension. Appeal File, Exhibit 16. On September 21, 1992, the contracting officer issued her final decision denying the appellant's claim for $132,494.61. Appeal File, Exhibit 20. Our appellate court has recently issued four instructive opinions regarding the recovery of unabsorbed extended home office overhead using the Eichleay[foot #] 1 formula. In Wickham Contracting Co. v. Fischer, 12 F.3d 1574 (Fed. Cir. 1994), the Court held that the Eichleay formula "is the only proper method of calculating unabsorbed home office overhead. No other formula may be used." In Wickham, the Court pointed out that contractors recover their direct costs allocable to the costs of a contract modification and their indirect costs, that every cost is either one or the other, and that unabsorbed home office overhead is an indirect cost. In the instant case, appellant seeks a total of $123,394.87 ($130,662 less $7,267.13 is overhead appellant admittedly received) in unabsorbed home office overhead. The amounts sought by the appellant as unrecouped "overhead" resulting from the additional time and work needed to perform the contract consist of three quite distinct costs, to wit: (1) The burdened labor cost of a project manager at $115.71 per calendar day; (2) "Extended job site overhead - Job phone and toilets" at $4.39 per calendar day; and (3) "Extended home office overhead expense" at $1,281 per calendar day. These three separate costs total $1401.10 per calendar day; it was this figure appellant used as an "overhead" cost. Whether or not costs (1) and (2) are more properly considered direct costs rather than some form of overhead may be subject to conjecture, but in any event, both the appellant and the respondent have treated them as other than direct costs. We will adopt their interpretation, and it makes no difference in our resolution of the case. All of the equitable adjustments for the contract modifications were made in accordance with the Equitable Adjustments clause. For that portion of the work performed by the appellant, it recovered its direct costs, its overhead at the ----------- FOOTNOTE BEGINS --------- [foot #] 1 Eichleay Corp., ASBCA 5183, 60-2 BCA 2688, ______________ aff'd on reconsid., 61-1 BCA 2894 (1960). __________________ ----------- FOOTNOTE ENDS ----------- negotiated rate and a 10% profit on the additional work. For work performed by its subcontractors, the appellant received an adjustment for its direct costs plus a 10% commission. What appellant seems to seek is some form of additional overhead for that portion of the work performed by subcontractors and for which it only received a 10% commission. It is clear from the clause that the contractor is not to receive both a 10% commission and its overhead. In C.B.C. Enterprises, Inc. v. United States, 978 F.2d 669 (Fed. Cir. 1992), the Court clearly held that the Eichleay formula is not applicable to "mere extensions of contract performance occasioned by contract modifications adding work to be performed." In C.B.C. the Court emphasized that the delay caused by the Government must be such that it reduces the "stream of direct costs in a contract" in order for the Eichleay formula to be appropriate. Such was clearly not the situation in the instant case. In Community Heating & Plumbing Company v. Kelso, 987 F.2d 1575 (Fed. Cir. 1993), the Court denied a claim for recovery under the Eichleay formula where the claim for home office costs arises out of contract performance involving continuous original and additional changes work rather than a suspension or hiatus in performance which would affect direct costs. Such are the facts in the case before us. In Interstate General Government Contractors, Inc., 12 F.3d 1053 (Fed. Cir. 1993), the Court emphasized that the delay must constitute a de facto suspension of the work which forces the contractor to stand by while unable to take on other work "when the suspension decreases the stream of direct costs against which to assess a percentage rate for reimbursement." In the instant case, the stream of direct costs not only did not decrease, it increased. Appeal File, Exhibit 8, Attachment AA. We conclude that the use of the Eichleay formula is not appropriate in this case. Appellant has been properly reimbursed for all its claims for an equitable adjustment called for by the contract modifications here involved. Appellant has not demonstrated that, under the modifications, it has not already been reimbursed for its claims relating to project supervision and extended job-site overhead (job phone and toilets). To the extent that those claims should have been presented as direct costs they are denied because they were not so presented to the contracting officer in appellant's cost proposals. Decision The appeal is DENIED. The appellant was reimbursed for work under the modifications at prices based on the costs submitted by the appellant at the time in question. The appellant has failed to demonstrate further entitlement to any of the requested costs. _____________________________ JAMES W. HENDLEY Board Judge We concur: _____________________________ _____________________________ ROBERT W. PARKER JOSEPH A. VERGILIO Board Judge Board Judge