GRANTED IN PART: July 21, 1994 GSBCA 12720 JAY P. ALTMAYER, NANCY HIRSCHLER, JANE BESKIN, AMSOUTH BANK, N.A., AS TRUSTEE UNDER THE WILL OF CLAIRE POLLOCK, AND JAY P. ALTMAYER AND AMSOUTH BANK, N.A., AS CO-TRUSTEES UNDER THE WILL OF MARVIN C. ALTMAYER, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. W. Alexander Moseley of Hand, Arendall, Bedsole, Greaves & Johnston, Mobile, AL, counsel for Appellant. Robert W. Schlattman and Max J. Brown, Office of General Counsel, General Services Administration, Washington, DC, and Diana Parks Curran, Office of Regional Counsel, General Services Administration, Atlanta, GA, counsel for Respondent. Before Board Judges DANIELS (Chairman) and NEILL. DANIELS, Board Judge. This case calls on the Board to resolve a dispute as to the amount the Government must pay for the construction of a bathroom and plumbing which were part of a building's renovation. The appellant elected to have the case considered under the Board's accelerated procedure, as a consequence of which the case is being decided by a panel of two judges. 41 U.S.C. 607(f) (1988); Rule 14. We find that the appropriate amount lies between the positions advocated by the parties. Findings of Fact 1. On January 7, 1991, the General Services Administration (GSA) solicited offers to lease to the Government for a ten-year period approximately 18,500 net usable square feet of first class office and related space in Savannah, Georgia. Appellant's Supplemental Appeal File, Exhibit 6 at 1 of Solicitation for Offers (SFO). The space was to be used for the United States Attorney's Office in Savannah. Id. at 9 of SFO. 2. Each offeror was required to include in its proposal prices for various items which might be ordered by the Government in the course of alteration of the building. Some of these prices were to be in the form of lump sum payments, and others were to be in the form of increases to the rental rate. Appellant's Supplemental Appeal File, Exhibit 6 at 7 of SFO; Appeal File, Exhibit 14. 3. Each offeror was required to provide as a part of its proposal blueprints showing accurately all architectural features of the space offered, including alterations to existing space. Appellant's Supplemental Appeal File, Exhibit 6 at 1-2 of 9 of SFO. GSA explained that "The floor plans submitted will be used by the Government to depict layout of the space under lease and returned to the successful offeror who will then have all necessary construction drawings and schematics developed for build-out of the space." Id. at 2 of 9 of SFO. 4. The space was required to include a thirty square foot "private toilet" for the U.S. Attorney (which we call a private bathroom in this opinion) and a 150 square foot employee lunch and break room (break room). Appellant's Supplemental Appeal File, Exhibit 6 at 9, 12 of 9 of SFO. Among the construction items for which prices were sought, and for which reimbursement was to be made through a cash payment, were those associated with these two areas. GSA asked for a material cost, labor cost, and total cost for each of the following: -- "cost of private toilet, total costs;" -- individual items to be contained within this room, such as a toilet, sink, and medicine cabinet; and -- individual items within "cost of cabinet area for employee lunch/break room." Among the individual items for each of the private bathroom and the break room was: All related plumbing. (Hot/Cold Water & Drains) PLF1 Appeal File, Exhibit 14 at 2d, 8th-9th unnumbered pages. 5. The property involved in this case is owned by Jay P. Altmayer, Nancy Hirschler, Jane Beskin, AmSouth Bank, N.A., as trustee under the will of Claire Pollock, and Jay P. Altmayer and ____________________ 1 "PLF" is an abbreviation for per linear foot. AmSouth Bank, N.A., as co-trustees under the will of Marvin C. Altmayer. Transcript at 15. (For convenience, we refer to these owners collectively as "Lessor" in this opinion.) Lessor's real estate agent in Savannah suggested that Lessor prepare a proposal in response to GSA's solicitation. Id. at 16. Hansen Architects was engaged to draft preliminary plans for renovation of the building, and J. T. Turner Construction Co. was hired to price out the project. Id. at 102-05. With the assistance of a plumbing subcontractor, and using Hansen's plans, Turner estimator David Parrish developed price estimates. Id. at 108; Respondent's Supplemental Appeal File, Exhibit 10. The Hansen drawings showed the private bathroom in the northwest corner of the fourth floor, the fourth floor public bathrooms on the east side of the building, and the facility's break room on the second floor. Transcript at 108-11, 116-20. 6. Mr. Parrish filled in the solicitation's pricing sheets to show, among many entries: -- a total cost of the private bathroom, $8,072.21; -- a total per linear foot price for plumbing related to the bathroom, $6,227.10; and -- a total per linear foot price for plumbing related to the break room, $2,770.56. Transcript at 110; Respondent's Supplemental Appeal File, Exhibit 1. Mr. Parrish based his private bathroom prices on the assumption that Lessor would run a single water supply line to this room from the closest public bathroom, and that hot water would be made available in the private bathroom through a small water heater installed in that room. Transcript at 111, 116-17, 120-21.2 We have measured the distance on a scaled drawing and find it to be approximately ninety feet. See Appellant's Supplemental Appeal File, Exhibit 9 at P1.4. 7. On February 28, 1991, Lessor's agent submitted an initial proposal to GSA. Transcript at 17; Appellant's Supplemental Appeal File, Exhibit 2. This proposal contains the prices noted in the first sentence of Finding 6. Transcript at 17; Appellant's Supplemental Appeal File, Exhibit 2 at 30000229- 30. The proposal also included "skeleton plans" for the building; the plan for the fourth floor does not show a private bathroom. Transcript at 26-27; Appellant's Supplemental Appeal File, Exhibit 7. ____________________ 2 Mr. Parrish acknowledged that the dollar figures he listed for piping were actually prices for all related piping, rather than per linear foot prices; later, he and the plumbing subcontractor concluded that the per linear foot prices should have been $45.61 for the private bath and $35.66 for the lunch room. Transcript at 111, 118-19. 8. GSA conducted discussions with Lessor as to the initial proposal. The Government said that some prices appeared "low for the market" and others appeared high. Among the former were prices for the private bathroom's sink and toilet. Among the latter were the prices for plumbing related to the private bathroom and the break room. Transcript at 20-21; Appellant's Supplemental Appeal File, Exhibit 5 at 30000187. The total price for the private bathroom was not addressed during the discussions. Appeal File, Exhibit 12. 9. After the discussions had been concluded, Lessor submitted a best and final offer (BAFO). The BAFO included these prices: -- total cost of private bathroom: $8,072.21 (same as in initial proposal); -- plumbing related to private bathroom: $54.74 per linear foot; and -- plumbing related to break room: $42.80 per linear foot. Appeal File, Exhibit 15; Transcript at 21-22. The prices for almost all private bathroom items other than plumbing changed from initial proposal to BAFO; as a group, these prices increased by less than $700. Compare Appellant's Supplemental Appeal File, Exhibit 2 with Appeal File, Exhibit 15. Plumbing related to the bathroom is more expensive than plumbing related to the break room because a bathroom requires larger waste pipe. Transcript at 77. GSA determined that the BAFO prices cited here were fair and reasonable. Id. at 44. 10. By letter dated December 30, 1991, GSA told Lessor, "We accept your offer." Appeal File, Exhibit 16; Appellant's Proposed Stipulation of Fact 4 (unopposed). The letter purported to enclose a lease contract "which has been prepared in accordance with your offer." Appeal File, Exhibit 16. The actual lease contract was signed in the following month. This contract does not contain Lessor's BAFO or any of the pricing sheets contained in that offer. Instead, it states that items listed on an "Exhibit D" are to be provided by Lessor and paid for by the Government by lump-sum payment. The payment is to be "based on actual quantity of each item newly provided and installed and the unit price." Of the items discussed earlier in this opinion, Exhibit D includes: -- "Private toilet (total cost), $8,072.21," and -- "All kitchen related plumbing, plf., $42.80." Appellant's Supplemental Appeal File, Exhibit 6. The annual rent for the specified space, at contract inception, was approximately $328,000. Id. at continuation page 3. 11. The contract provided that Lessor would build out the space in accordance with plans to be furnished by the Government. Appellant's Supplemental Appeal File, Exhibit 6 at 2d unnumbered page. The document also contained a Changes clause, which provided that if the contracting officer changed the facilities or space layout, and the modification increased or decreased the lessor's cost of performance, the contracting officer had to modify the lease by making an equitable adjustment in the rental rate or making a lump sum price adjustment. Id. at 17 of General Clauses. 12. The contract also provided that the Government would make payments other than rent by the later of the thirtieth day after the designated billing office has received a proper invoice from the contractor or the thirtieth day after Government acceptance of the work or service. If payment was not made by the due date, "[a]n interest penalty shall be paid automatically by the Government, without request from the Contractor." This payment was to "be compounded in 30-day increments." It was to cease accruing after one year or on such earlier date as a claim was filed under the Contract Disputes Act of 1978. Appellant's Supplemental Appeal File, Exhibit 6 at 28 of General Clauses. If such a claim was filed, simple interest was to accrue on it. Id. at 23 of General Clauses. 13. The Government gave Lessor an approved space layout for the building on June 30, 1992. Respondent's Proposed Stipulation of Fact 14 (unopposed). Lessor subsequently installed plumbing in the building in accordance with plans which had been drawn by an engineer, based on the Government's layout. Transcript at 56, 62. These plans showed the private bathroom and the fourth floor public bathrooms in precisely the same locations as shown on Hansen's preliminary plans. Transcript at 84; compare Respondent's Supplemental Appeal File, Exhibit 10 with Appellant's Supplemental File, Exhibit 9 at P1.4. They also showed three break rooms -- one on each of the second, third, and fourth floors -- and a shower room on the third floor. Appellant's Supplemental Appeal File, Exhibit 9. The solicitation had provided for the components of only one break room and no shower room. Appellant's Supplemental Appeal File, Exhibit 6 at SFO; Transcript at 45-46, 121-22.3 14. The plumbing installation included these features: A loop of hot water supply piping was placed in the ceiling of the third floor, circling the interior offices of the building. It provided water to the fourth floor's private bathroom and break ____________________ 3 Lessor built the shower room -- which the Government added as a construction requirement after contract award -- to the Government's plans. GSA paid for the work. Later, before the building was occupied, the Government directed Lessor to remove the shower room. Lessor complied with this direction and was paid for doing so. Transcript at 45-46. room, as well as the shower room and the break rooms on the second and third floors. A water heater was installed in the southeast corner of the third floor, with a circulating pump next to it; the pump's purpose was to ensure that hot water was available in all the named rooms at all times. Cold water supply pipes ran alongside the hot water pipes for much of the loop, providing water to the three break rooms and the private bathroom. Transcript at 56-62; Appellant's Supplemental Appeal File, Exhibit 9. (For ease of reference, we call the hot water loop and these cold water pipes "central supply piping.") Lessor's construction contractor testified that this piping was no more necessary for any one of the rooms than it was for any of the others; "it was part of a system that all worked together." Transcript at 72. 15. At some time during the summer of 1993, while the parties were debating the appropriate amount of reimbursement for construction of the private bathroom and the plumbing for the break rooms, Lessor and GSA representatives conducted a mutual measurement of the plumbing in the building. They concluded that the following amounts of pipe had been installed: -- private bathroom: cold water supply, 4 feet; hot water supply, 14 feet; waste, 232 feet; vent, 13 feet; -- break rooms: cold water, 28 feet; hot water, 26 feet; waste, 139 feet; unspecified, 10 feet; -- central supply piping: cold water, 169 feet; hot water loop, 298 feet. Transcript at 44-45, 70-71; Appeal File, Exhibit 5; Appellant's Supplemental Appeal File, Exhibit 13. 16. On August 26, 1993, Lessor sent GSA an invoice for the costs of plumbing work, priced in accordance with individual item prices contained in the BAFO. The total invoice amount is $51,305.30. This amount is divided among: -- non-piping items associated with the private bathroom, $2,656.70; -- piping related to the private bathroom (730 linear feet at $54.74 each), $39,960.20; and -- piping related to the break rooms (203 linear feet at $42.80 each), $8,688.40. Appeal File, Exhibit 6 at Enclosure 8. In submitting the invoice, Lessor also asked for payment of interest under the Prompt Payment Act. Appeal File, Exhibit 6 at 7. All the invoiced work was actually completed. Transcript at 76.4 Along with the invoice, Lessor wrote a letter to the contracting officer in which it contended that because the bathroom was constructed in accordance with plans provided by the Government, the lease "required unit pricing of the individual elements involved in construction of the private bathroom." Appeal File, Exhibit 6 at 6. 17. This invoice included all of the central supply piping as being related to the private bathroom. Transcript at 29.5 Lessor submitted the bill as it did because it understood that GSA considered all the piping to be related to the bathroom. Lessor believes that because this piping serves the shower room and the three break rooms, as well as the private bathroom, some of the piping should be allocated to the break rooms. Id. at 30, 71-72, 77-78. 18. The invoice was not paid. Transcript at 30. On October 31, 1993, Lessor resubmitted it to the contracting officer in the form of a certified claim. Id. at 30-31; Appellant's Exhibit 27. By letter dated December 3, 1993, the contracting officer responded to the part of the claim which pertained to the private bathroom and related piping. He determined that the Government was obligated to pay only the contract's total price for the room -- $8,072.21.6 The remainder of the claim was denied. Appeal File, Exhibit 12. GSA has never paid for any of the piping mentioned in the invoice, including the central supply hot water loop and the central supply cold water line that runs alongside some of it. Transcript at 92. ____________________ 4 There is one minor exception to this statement. Instead of wood baseboard, which was called for in the contract, Lessor installed a ceramic tile base around the perimeter of the bathroom. The invoice contains a charge for the tile base at the wood baseboard price. Transcript at 76. This price is trivial -- only $1.70 per linear foot. Appeal File, Exhibit 15 at 9th unnumbered page. 5 See also Findings 15, 16: The mutual measurement shows _________ 263 linear feet of pipe internal to and taking waste from the private bathroom, and 467 linear feet of central supply piping. The total, 730 linear feet, is the same as the length of piping ascribed in the invoice to the private bathroom. 6 The contracting officer proposed, and Lessor agreed, that the contract be modified to make payment of the undisputed portion of the claim -- $8,072.21. Appeal File,Exhibits 9, 17. 19. The shower room which the Government added to contract requirements during construction, Finding 13, involved 122 linear feet of piping internal to the room itself. GSA paid for that piping at the price specified in the contract for piping related to the break room -- $42.80 per linear foot. Transcript at 45- 48; Appellant's Exhibit 24; see also Transcript at 73-74, Appellant's Exhibit 22. GSA also agreed, in July 1993, to pay for installed piping related to each of the three break rooms on a per linear foot basis. Appellant's Exhibit 21; Transcript at 68-69; see also Transcript at 73-74; Appellant's Exhibit 22. (The latter payment has not been made, however. Finding 18.) Discussion A fundamental principle of contract interpretation is that contracts are to be viewed in their entirety and their language given the meaning that would be derived from the document by a reasonably intelligent person acquainted with the involved circumstances. E.g., Community Heating & Plumbing Co. v. Kelso, 987 F.2d 1575, 1578 (Fed. Cir. 1993); Zinger Construction Co. v. United States, 807 F.2d 979, 981 (Fed. Cir. 1986); Hol-Gar Manufacturing Corp. v. United States, 351 F.2d 972, 975 (Ct. Cl. 1965). In this case, each side has violated this principle by torturing a contract provision beyond what that provision may reasonably be construed to mean. We reject these extreme positions by giving rational readings to the provisions at issue. The contract in question here is for the lease of a building, but it also contemplates that the Government would order considerable alterations to the building and would pay for those modifications. Findings 1, 2. Among the alterations the Government might order, and for which prices were solicited, was construction of a private bathroom for the U. S. Attorney. Finding 4. Prices for the bathroom were solicited on two different bases -- one a total price and the other charges for individual items associated with the room. Id. Lessor maintains that GSA is obligated to pay for construction of the bathroom at unit prices. In so doing, it unreasonably reads the total price out of the lease.7 Lessor propounds three different theories to support its contention. We find none of them convincing. ____________________ 7 Although GSA told Lessor, "We accept your offer" and sent it a lease contract which was to have been "prepared in accordance with your offer," the contract itself makes no mention of the unit prices for the bathroom. Finding 10. Whether in this circumstance the unit prices should be considered to be part of the contract is an interesting question. The resolution is immaterial for purposes of this opinion, since we find that payment should not be made in accordance with the unit prices. First, Lessor maintains that the contract is ambiguous because its language "is susceptible of two different interpretations, each of which is found to be consistent with the contract's [other] language." Fry Communications, Inc. v. United States, 22 Cl. Ct. 497, 503-04 (1991) (quoting Sun Shipbuilding & Dry Dock Co. v. United States, 393 F.2d 807, 815-16 (Ct. Cl. 1968)); see also, on the subject of ambiguity, American Commercial Contractors v. General Services Administration, GSBCA 11713, et al., slip op. at 2-4 (May 23, 1994). We find no ambiguity here; the contract permitted GSA to order a bathroom as a package or to order individual items for the room, and the agency elected the former option. Second, Lessor urges us to reform the contract under a theory of mutual mistake. To succeed in this effort, Lessor must demonstrate: (1) the parties to the contract were mistaken in their belief regarding a fact; (2) that mistaken belief constituted a basic assumption underlying the contract; (3) the mistake had a material effect on the bargain; and (4) the contract did not put the risk of the mistake on the party seeking reformation. Management & Training Corp. v. General Services Administration, GSBCA 11182, et al., 93-2 BCA 25,814, at 128,520 (quoting Atlas Corp. v. United States, 895 F.2d 745, 750 (Fed. Cir. 1990)). Lessor's theory is that because negotiations regarding Lessor's initial proposal covered numerous individual items included in the private bathroom, but not the total price for construction of the room, the parties never really agreed on a total price -- notwithstanding the inclusion of such a price in the contract. See Findings 8, 10. Lessor does not come close to meeting the legal standard set forth. The bathroom construction was a very small feature in this contract -- the monthly lease price for the building's office space was roughly forty times the one-time charge for constructing this room. Finding 10. Even if a mistake existed, it cannot credibly be thought to have constituted a basic assumption underlying the contract, or that the mistake had a material effect on the bargain. Third, Lessor urges reformation because Lessor's offer to build a bathroom at a total price was the product of a unilateral mistake. Lessor correctly cites Wheeled Coach Industries v. General Services Administration, GSBCA 10314, 93-1 BCA 25,245 (1992), for the proposition that when a contractor demonstrates a unilateral mistake, a contract can be reformed -- only if the contractor can demonstrate two elements by clear and convincing evidence. First, the mistake involved must be either a "clear cut clerical or arithmetic error, or a misreading of the specifications." It may not be an error in business judgment. Second, the record must reflect that the Government's responsible officials knew or should have known of the probability of a mistake at the time they accepted the offer. Id. at 125,740 (citations to decisions of the Court of Claims and Court of Appeals for the Federal Circuit omitted). Lessor's argument is premised on the facts that negotiations never addressed the total price and that Lessor never changed that price from its initial proposal, although it changed its unit prices considerably. See Findings 7-9. These facts do not meet the tests set forth in Wheeled Coach. The change in the aggregate of unit prices for individual bathroom items, from initial proposal to BAFO, was less than $700. Finding 9. This change was sufficiently small, relative to the total bathroom price, that GSA could not reasonably be found to have been placed on notice that a lack of change in the total price was a mistake; a conscious business decision to reduce the package price was also a likely cause for the lack of change. Further, because the bathroom was of such insignificance in the contract as a whole, for agency officials to have focused on these prices at all would have been surprising. Thus, Lessor is entitled to be paid for the private bathroom, including all plumbing related to it, at the package price included in the contract, $8,072.21. See Finding 10. Lessor is not entitled to any additional payment, at unit prices, for any of the 263 linear feet of piping internal to and taking waste from the private bathroom. See Finding 15. Nor is Lessor entitled to any additional payment, at unit prices, for the portion of the 467 linear feet of central supply piping which can reasonably be considered to be related to the bathroom. See id. The amount of $8,072.21 has already been paid by the contracting officer. Finding 18 n.5. The Board awards no more for the bathroom itself. This is not to say, however, that the fact that the contract includes a total price for the bathroom entitles GSA to ascribe to that room all plumbing that has even tangential relation to it. After the contract was awarded, GSA directed Lessor to build three rooms which required plumbing but were not previously contemplated -- second and third break rooms, and a shower room. Finding 13. Under the terms of the contract, this direction constituted a change, such that Lessor was entitled to an equitable adjustment in compensation commensurate with its cost of performance. Finding 11. This change caused Lessor to rethink the arrangement of the plumbing system for the building insofar as it related to the private bathroom.8 ____________________ 8 The fact that at some later date, the Government directed Lessor to remove the completed shower room, Finding 13 (continued...) An engineer designed a unified plumbing system for the private bathroom, all three break rooms, and the shower room in accordance with the Government-provided space layout. Findings 13, 14. Lessor followed this plan in installing 467 linear feet of supply piping which serviced all five rooms. Findings 14, 15. GSA maintains that the entire amount of this central supply piping should be ascribed to the bathroom. Lessor suggests a complex method under which about one-fourth of the total should be so ascribed. Appellant's Posthearing Brief at 11-13. GSA's solution is completely unrealistic; it ignores the purpose of the central supply system. Our judgment is that the percentage should be less than suggested by Lessor, not only because the bathroom was just one of five rooms served by the central supply piping, but also because the complexity of that piping was dictated by the Government's change in contract requirements that added three of those rooms. Consequently, we find that the amount of central supply piping actually installed subsequent to the change and attributable to the private bathroom was about one-fifth of the 467 feet, or 93 feet -- virtually the same as the amount on which Lessor predicated its total price for the bathroom. See Finding 6. Lessor's claim was for payment for plumbing associated with the break rooms, as well as the private bathroom. Finding 16. The parties agree that the amount of piping related to the break rooms themselves was 203 linear feet. Finding 15. The amount of piping in the central supply lines -- excluding the 93 linear feet we have attributed to the private bathroom -- was 374 linear feet. Some of this plumbing should be attributed to the shower room and could well have been paid for through the contract modification covering piping internal to that room. See Finding 19. Nevertheless, because GSA has agreed that shower room piping should be paid for at the contract's price for break room piping, Finding 19, and none of the central supply pipes have been paid for, Finding 18, we appropriately treat all of the 374 linear feet as compensable at the contract price for break room plumbing. Thus, payment for a total of 577 linear feet of break room and associated central supply plumbing is in dispute. GSA advances the theory that although the contract says that all this plumbing is to be paid for on a per linear foot basis, Findings 4, 10, the proper way of pricing the pipes is to add the lengths of installed cold water supply, hot water supply, and waste piping and then divide by three before multiplying by the contract rate. Transcript at 53 (testimony of contracting officer). There is no support for this theory other than a desire to limit the Government's liability for what may have been a very bad bargain. Lessor's price was predicated on the ____________________ 8(...continued) n.3, is immaterial to this conclusion. At the time the central supply system was designed, the shower room was an integral part of the building. reasonable theory that "per linear foot" means exactly what it says. Findings 6, 7. GSA understood the language in precisely the same way on two earlier, separate occasions during contract performance -- when paying for shower room piping and when agreeing to pay for break room piping. Finding 19. GSA barely addresses this issue in its briefs. Lessor is entitled to be paid for 577 linear feet of plumbing at the contract rate for each linear foot of break room piping installed. That price is $42.80 per linear foot. Finding 10. Multiplying it by the 577 linear feet of plumbing for which Lessor has not been paid yields $24,695.60.9 Decision The appeal is GRANTED IN PART. Of the $51,305.30 claimed by Lessor, $8,072.21 has been paid, leaving $43,233.09 in dispute. Findings 15, 17. Of this amount, Lessor is entitled to $24,695.60. Interest is due on this sum, as prescribed in the contract. Finding 12. _________________________ STEPHEN M. DANIELS Board Judge I concur: _________________________ EDWIN B. NEILL Board Judge ____________________ 9 Lessor has advanced several methods of calculating the amount due. In its reply brief, GSA contends that because only one of these methods is present in the claim which was made to the contracting officer, the Board has jurisdiction to consider just that one. This is not the law; we are authorized to consider the matter raised by the claim and to resolve it ______ appropriately. Assurance Co. v. United States, 813 F.2d 1202, _______________________________ 1206 n.6 (Fed. Cir. 1987). The claim was for payment for the private bathroom, break room plumbing, and central supply plumbing. Those are the matters addressed in this decision.