________________________________ DENIED: July 27, 1994 _________________________________ GSBCA 12746 HAROLD WALTERS PROFESSIONAL ENGINEERING, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Harold Walters of Harold Walters Professional Engineering, Inc., Lee's Summit, MO, appearing for Appellant. Lee W. Crook, III, Office of Regional Counsel, General Services Administration, Fort Worth, TX, counsel for Respondent. Before Board Judges DANIELS (Chairman) and HYATT. HYATT, Board Judge. Harold Walters Professional Engineering, Inc. has appealed a contracting officer's decision denying its claim under a settlement proposal submitted after its contract was terminated for the convenience of the Government. On February 22, 1994, appellant elected to proceed under the Board's accelerated procedure, which implements section 8(f) of the Contract Disputes Act of 1978, 41 U.S.C. 607(f) (1988). Rule 14.[foot #] 1 The parties also elected to submit their cases on the record pursuant to Board Rule 11. For the reasons stated, we deny the appeal. Findings of Fact ----------- FOOTNOTE BEGINS --------- [foot #] 1 58 Fed. Reg. 69,246, 69,258 (1993) (to be codified at 48 CFR 6101.14). ----------- FOOTNOTE ENDS ----------- 1. On January 8, 1993, respondent, the General Services Administration (GSA), issued solicitation number GS-07-P-93-UUB-0025 for materials, labor, equipment, and supervision to refinish the bronze surfaces at the Federal Building/Courthouse in Baton Rouge, Louisiana. The extent of the work was described as follows: 2-001. Clean, polish, and urethane brass doors on both sides at entrance of the building. . . . Each Door has two (2) 23" bars across face of door and a handle on the exterior surface. There is a total of seven (7) doors. 2-002. Clean, polish, and urethane both sides of cast brass decorative panels on the first floor windows. There is a total of twenty (20) windows with two panels each . . . . 2-003. Clean, polish, and urethane both sides of cast brass grill work in five panels above main entrance doors . . . . Windows open behind grilles. Polish interior side of window frames. 2-004. Clean, polish, and lacquer both sides of brass grilles and directory board trim in main lobby. . . . Potential bidders were required to verify all existing conditions and notify respondent of any discrepancies prior to submitting their bids. Appeal File, Exhibit 1. 2. The solicitation, which set forth the terms of the resultant contract, required that the successful bidder protect all adjacent material and areas from possible damage. The finish on all material cleaned was to be highlighted to a satin finish and sprayed with multiple coats of clear protective coating. All work was required to be performed in accordance with the "best practices" of the trade. Appeal File, Exhibit 1. 3. The contract incorporated General Services Acquisition Regulation (GSAR) 552.212-74 - Non-Compliance with Contract Requirements (April 1984). This clause provided that: In the event the Contractor, after receiving written notice from the Contracting Officer of non-compliance with any requirement of this contract, fails to initiate promptly such action as may be appropriate to comply with the specified requirement within a reasonable period of time, the Contracting Officer shall have the right to order the Contractor to stop any or all work under the contract until the Contractor has complied or has initiated such action as may be appropriate to comply within a reasonable period of time. The Contractor will not be entitled to any extension of contract time or payment for any costs incurred as a result of being ordered to stop work for such cause. Appeal File, Exhibit 1. 4. The contract also included Federal Acquisition Regulation (FAR) 52.249-2 - Termination for Convenience of the Government (April 1984). This clause stated that the Government may terminate contract performance if the contracting officer determines that a termination is in the Government's interest. If the contractor and the contracting officer are unable to agree on a final termination settlement amount, the contracting officer must determine the amount to be paid to the contractor as follows: (1) For contract work performed before the effective date of termination, the total (without duplication of any items) of -- (i) The cost of this work; . . . (iii) A sum, as profit on (i) above, determined by the Contracting Officer under 49.202 of the Federal Acquisition Regulation, in effect on the date of this contract, to be fair and reasonable; however, if it appears that the Contractor would have sustained a loss on the entire contract had it been completed, the Contracting Officer shall allow no profit under this subdivision (iii) and shall reduce the settlement to reflect the indicated rate of loss. (2) The reasonable costs of settlement of the work terminated. . . . In determining the amount due to the contractor, the contracting officer must deduct the amount of any claims the Government has against the contractor. Appeal File, Exhibit 1. 5. In a letter dated February 11, 1993, attaching appellant's bid sheet, appellant stated that it did not foresee any problems with performing the project using machine polishers and estimated a completion time of nineteen days. Appellant also revealed that no one from the company had visited the site. Appeal File, Exhibit 4. 6. On March 3, 1993, respondent awarded the contract to appellant. The contract required that performance begin within thirty days after the contractor received the notice to proceed.[foot #] 2 Performance had to be completed not ----------- FOOTNOTE BEGINS --------- [foot #] 2 The notice to proceed is not included in the record. Further, the record does not provide any indication as to when appellant received the notice. Apparently, appellant commenced work sometime in late March 1993. See Appeal File, ___ Exhibits 6, 12, 27. ----------- FOOTNOTE ENDS ----------- later than sixty days after receipt of the notice to proceed. The total contract price was $14,546. Appeal File, Exhibit 1. 7. On April 4, 1993, appellant sent the contracting officer a letter stating that "the project was not engineered very well" and alleging that the Government had been attempting to change the scope of work. Appeal File, Exhibit 5. In a separate letter also dated April 4, appellant submitted a change order for reimbursement of expenses incurred as a result of "your [the contracting officer's] interruptions and direct orders." The change order requested reimbursement for moving scaffolding to the east side of the Federal Building, cleaning decorative windows on the east side of the building, and discussing the scope of work with the contracting officer and the contracting officer's representative (COR). Appellant requested a total of $562.25 for this work. Appeal File, Exhibit 6. In a letter dated April 5, 1993, the contracting officer denied appellant's request, stating that the claimed expenses were for work within the scope of work of the contract. Appeal File, Exhibit 7. 8. Also on April 5, 1993, respondent sent appellant a cure notice which directed appellant to stop all future work. The notice stated that appellant had not provided adequate and uniform cleaning and polishing to the exterior decorative window panels and that appellant had damaged window caulking. Appeal File, Exhibit 8. According to the contracting officer and the COR, the bronze was still black in some places and the coloring of the bronze was uneven. See Appeal File, Exhibits 27, 28. Appellant was reminded that repair of the caulking must match the existing caulking. Appellant was given twenty days to cure the deficiencies. Appeal File, Exhibit 8. 9. On April 6, 1993, appellant responded to the cure notice. Appellant stated that respondent had not provided written notice of non-compliance with the contract requirements or a reasonable length of time with which to comply. Appellant argued that respondent left most of the work on the side entrance out of the scope of work. Appellant also requested information as to the type of paint to use to repair the caulking. Appeal File, Exhibit 9. 10. In another letter dated April 6, appellant submitted a termination for convenience settlement proposal for respondent's consideration. Appeal File, Exhibit 10.[foot #] 3 In its proposal, appellant claimed that the work on the decorative window panels was ninety percent of the work on the contract and that it had completed 13.5 sets of window panels. Appellant requested the amount of $7,340.64 for this work. Appeal File, Exhibit 10. ----------- FOOTNOTE BEGINS --------- [foot #] 3 It appears that on April 2, 1993, appellant requested that the contracting officer terminate the contract for the convenience of the Government. See Appeal File, Exhibit 27 ___ at 3; Appellant's Brief, Exhibit 4. ----------- FOOTNOTE ENDS ----------- 11. On April 13, 1993, respondent sent appellant a partial payment of $4,079.71 inclusive of deductions for repairs to window caulking and to the metal in the window panels. The COR determined that the amount payable for work appellant had performed on the window panels was $5,154.71. Appeal File, Exhibit 11. The COR took the position that work on the window panels constituted seventy percent of the contract work and that appellant had completed only seventy-five percent of the work to be done on 13.5 sets of window panels. Appeal File, Exhibits 11, 23. The COR also stated that there was damage to the caulking and paint surrounding twenty-eight windows for which $300 was deducted for repairs. In addition, the COR stated that there were several areas where the metal in the window panels had been damaged by the machine polishing brush for which $775 was deducted for repairs. Appeal File, Exhibit 11. The amount deducted to repair the damage to the caulking was an estimate prepared with the use of a Government estimating guide. Appeal File, Exhibits 11, 19. There is no explanation as to how the COR arrived at the amount deducted for damage to the metal. It appears that the COR made a rough estimate of the amount because he did not know what it would cost to have the repair work done. Appeal File, Exhibit 19. 12. Also on April 13, 1993, appellant sent the contracting officer a letter expressing its desire to complete performance. In this letter, appellant asserted that another Government employee had told appellant not to coat the window panels with urethane. Appellant contended that this statement was a stop work order. Appellant also referenced a phone conversation which took place among appellant, the contracting officer, and two officials from the Small Business Administration. Apparently, during the course of this conversation, the contracting officer indicated that a metals expert would be evaluating the project and that appellant should use the recommendations made by the expert when completing performance of the contract. Appeal File, Exhibit 12; see also Appeal File, Exhibit 14. Appellant closed its letter by requesting an extension of time in which to complete the project. Appeal File, Exhibit 12. 13. On May 3, 1993, the contracting officer responded to appellant's letter of April 13, 1993. The contracting officer pointed out that, since the issuance of the cure letter, appellant had made no attempt to correct the deficiencies, but, rather, had left Baton Rouge when the cure letter was issued. The contracting officer also stated that a GSA Specialist had examined the work performed and would be issuing a report with her findings. The contracting officer agreed to extend the cure period pending those results. The letter ended with the statement that no Government employee other than the contracting officer had authority to administer or direct the contract, and that appellant had not been ordered to stop work as it contended in its April 13 letter. Appeal File, Exhibit 14. 14. On July 9, 1993, appellant was notified that its contract was being terminated for the convenience of the Government. Appellant was ordered to stop all work and requested to submit a settlement proposal promptly to the contracting officer. Appeal File, Exhibit 16. 15. On August 13, 1993, the contracting officer sent a letter to appellant requesting a settlement proposal within ten days. Appeal File, Exhibit 17. On September 10, 1993, appellant submitted its settlement proposal and requested payment of $5,037.45 in addition to the partial payment made earlier. Finding 11. Appellant arrived at this amount by asserting that the decorative window panels comprised ninety percent of the work. Appellant then asserted that 13.5 of the twenty panel sets had been completed. The proposal claims that it took sixteen man-hours to complete restoration of a window panel set. After making various adjustments, appellant contended that completion of 13.5 sets entitled it to $8,500.90. Appellant then deducted the partial payment of $4,079.71 that appellant had received from the Government on April 13, added interest at six percent for six months and added the amount of $483.60 for "lost profit." Appeal File, Exhibit 18. 16. The GSA specialist who examined the work performed by appellant did not issue her report until October 29, 1993, well after the contracting officer had notified appellant that the contract was being terminated. The report stated that there were observable wire brush swirl marks on several of the window panels. The report also stated that, in the opinion of the specialist, appellant was not qualified to perform work on historic buildings. Appeal File, Exhibit 15. 17. On November 16, 1993, appellant contacted the contracting officer to determine when the contracting officer would render a decision on its settlement proposal. Appeal File, Exhibit 22. On December 14, 1993, the contracting officer issued a decision denying appellant's settlement proposal. The contracting officer stated that the proposal was based on "an unrealistic claim of work completed and [was] wholly unacceptable." Appeal File, Exhibit 24. This appeal timely followed. 18. In support of its claim, appellant has submitted payroll sheets totaling $768 in compensation for the time its employees spent on the contract. The payroll records are for the period March 25 through April 3, 1993. Appellant has also submitted receipts totaling $1,813.16 for goods or services ostensibly purchased for this contract. Appellant's Answers to Respondent's First Set of Interrogatories. Among the goods and services purchased by appellant were painting and cleaning supplies, long distance and local telephone calls, food, hotel rooms, facsimile and photocopying services, gasoline, and personal items. There were also receipts which did not list the goods or services purchased. The receipts are dated from March 3, 1993, to May 3, 1993. The majority of the receipts, however, are dated from March 24 to April 6, which corresponds to the dates when appellant was performing the contract in Baton Rouge. Respondent's Brief, Exhibits 31, 32. Discussion The objective of a termination for convenience settlement is to provide the contractor with "fair compensation" for work accomplished prior to termination and for preparatory work done on terminated portions of the contract. 48 CFR 49.201 (1993) (FAR 49.201); Richerson Construction, Inc. v. General Services Administration, GSBCA 11161, et al., 93-1 BCA 25,239 (1992). The compensation provided to the contractor also includes a reasonable allowance for profit on work completed. FAR 49.201; Richerson Construction, Inc., 93-1 BCA at 125,704. In essence, a termination for convenience converts a fixed price contract, such as the one at issue here, into a cost reimbursement contract. See Richerson Construction, Inc., 93-1 BCA at 125,704. To effectuate this goal, the cost standards articulated in the Federal Acquisition Regulation are applied in accordance with principles of business judgment and fairness with the ultimate goal of making the contractor "whole." FAR 49.201; see Codex Corp. v. United States, 226 Ct. Cl. 693, 699 (1981); Industrial Refrigeration Service Corp., VABCA 2532, 91-3 BCA 24,039, at 120,595. The contractor has the burden of establishing entitlement to the amount proposed in its settlement proposal. FAR 49.109-7; see also Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 767 (Fed. Cir. 1987) (quoting Willems Industries, Inc. v. United States, 295 F.2d 822, 831 (Ct. Cl. 1961), cert. denied, 370 U.S. 903 (1962)) (claimant bears the burden of proving the fact of loss with certainty as well as the burden of proving the amount of loss with sufficient certainty so that the determination of the amount of damages will be more than mere speculation); Chemray Coatings Corp. v. General Services Administration, GSBCA 10700, 93-3 BCA 26,194. "In the absence of evidence that it is entitled to an adjustment greater than that allowed by the Contracting Officer, the board has no justification to award a greater amount on the mere allegation of Appellant." Building Maintenance Specialist, Inc., ENG BCA 5654, 90-3 BCA 23,032, at 115,651; see also Structural Painting Corp., ASBCA 33841, 89-3 BCA 21,969 (when the board is left with a record that largely invites speculation, rather than fact finding based on probative evidence, the claimant is not entitled to recover). In its complaint, appellant claims it is due an additional $5,125.89[foot #] 4 as compensation for the contract ----------- FOOTNOTE BEGINS --------- [foot #] 4 Appellant's request is broken down as follows: $4,421.60 for work on the contract; $483.60 for lost profit; and $221.10 for accrued interest. See Finding 15. ___ ----------- FOOTNOTE ENDS ----------- work it completed. Appellant argues that the window panels represented ninety percent of the work and that it completed all work associated with 13.5 sets of panels. Appellant also disputes the deductions respondent made in the April 13 payment. Respondent contends that appellant has already been fairly compensated for the work it performed under the contract. Respondent maintains that appellant's assumption that the window panels represented ninety percent of the contract work is incorrect and disagrees with appellant's claim that 13.5 of the twenty sets were completed at the time of termination. Respondent also argues that appellant has not met its burden of establishing it is entitled to the amount proposed. We agree. In support of its claim for compensation, appellant has submitted payroll sheets showing $768 in compensation for the time its employees spent on the contract. Appellant has also submitted receipts totaling $1,813.16 for goods or services ostensibly purchased for this contract. Among the goods and services purchased by appellant were painting and cleaning supplies, long distance and local telephone calls, food, hotel rooms, facsimile and photocopying services, gasoline, and personal items. The majority of the receipts are dated March 24 to April 6, 1993, which corresponds to the dates when appellant was performing the contract. Finding 19. Under the principles set forth in the FAR, appellant is permitted to utilize a "total cost" approach in itemizing expenses attributable to the contract. FAR 49.206-2(b)(1). This is apparently the approach selected by appellant. Here, we have examined each of the receipts submitted for the record to determine if appellant has satisfied its burden of proving that it incurred compensable costs over and above the amount which it has already been paid. Notably, some of the receipts submitted were duplicates and others were so blurry that they could not be deciphered. In addition, appellant has not offered any explanation as to how any of these costs relate to the contract or to portions of the contract work for which it has not already been paid. Our examination of the receipts submitted by appellant reveals that $1,215.77 of the amount claimed for goods and services might reasonably be related to performance of the contract. This amount includes the cost of lodging and meals incurred while appellant's employees were performing the contract, the cost of fuel apparently purchased to transport appellant's employees and its equipment to Baton Rouge, where the contract was performed, and the cost of painting and cleaning supplies. See FAR 31.205-26 (material costs); 31.205-46 (travel costs). Although appellant has not offered any explanation as to how these costs relate to performance of the contract, we assume, for the sake of argument, that these costs are allowable, allocable to the contract, and reasonable. The remaining receipts totaling $597.39 were for goods or services such as long distance phone calls to various locations around the country, men's clothing, cough medicine, and greeting cards. Absent a cogent explanation of how these costs relate to performance of this contract, we must conclude that they are not allowable. We have also examined the payroll sheets submitted by appellant. The payroll sheets reveal that appellant's engineer and laborer both worked sixty-four hours during the period from March 25 to April 3, 1993. Appellant did not submit payroll sheets which cover the period of April 3 to April 6, when appellant stopped work. Appellant listed the hourly wage of its laborer at $12 per hour.[foot #] 5 However, appellant failed to provide any salary information for its engineer. The laborer's compensation of $768 is a reimbursable cost because it presumably relates to performance of this contract. See FAR 31.205-6 (compensation for personal services). As to the engineer's compensation and any wages paid for work done between April 3 to April 6, appellant has not satisfied its burden of proving the amount of costs it incurred. Giving appellant every benefit of the doubt, we conclude that $1,983.77 of the costs appellant has documented for the record could reasonably be related to this contract. From the dates of the payroll sheets and receipts, it appears that appellant has submitted receipts which document the total costs it incurred in performing this contract. If appellant had incurred additional costs in performing the contract, it should have submitted those receipts and records as well. When all of these receipts and payroll costs are totaled, the record does not establish that appellant incurred actual costs in performing under this contract that exceed the amount which appellant has already been paid. Under the circumstances, the Board need not decide which of the costs appellant claims it incurred for performance of this contract are allowable, allocable to this contract, or reasonable. Even if we were to add the amounts requested by appellant for "lost profit" and interest[foot #] 6 to the documented costs, appellant simply has not satisfied its burden of proving entitlement to an adjustment greater than the amount it has already been paid. We recognize that another method of arriving at a settlement amount under a fixed price contract would be to calculate a payment based on the fixed price amount for the work completed and accepted at the time of the termination and add to that any costs incurred with respect to terminated portions of the contract. Although appellant asserts that it had completed 13.5 ----------- FOOTNOTE BEGINS --------- [foot #] 5 Respondent's Brief, Exhibits 31, 32. [foot #] 6 See Finding 15. It is not at all clear on this ___ record, however, that appellant is entitled to the amounts requested. ----------- FOOTNOTE ENDS ----------- window panel sets, the overall evidence of record does not support this contention. Appellant did work on 13.5 sets of window panels, but the record reflects that the Government was dissatisfied with the work done and had not accepted any of the sets as completed by appellant at the time of termination. We cannot find that this contractor has performed any work for which it has not already been adequately recompensed. Indeed, on the record before us, the amount already allowed by the contracting officer appears to be ample to effectuate the intent of the applicable regulations, which seek to achieve the payment of fair compensation to the contractor. For the first time in its brief, appellant has disputed the deductions respondent took from the April 13 payment. The Board need not decide the propriety of these deductions, however. As stated above, we have concluded that only $1,983.77 of the costs appellant documented could reasonably be deemed related to this contract. Even if we were to add the amount of the deductions from the April 13 payment to this amount, we would still not come close to what appellant has already been paid. Decision The appeal is DENIED. ______________________________ CATHERINE B. HYATT Board Judge I concur: _______________________________ STEPHEN M. DANIELS Board Judge