DENIED: April 26, 1995 GSBCA 12859 STRAND HUNT CONSTRUCTION, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Charles M. Greenberg of Triad Law Group, Edmonds, WA, counsel for Appellant. M. Leah Wright, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), PARKER, and VERGILIO. DANIELS, Board Judge. This case involves a claim for costs resulting from a delay in the start of work on a construction contract. Although the claim submitted to the contracting officer covered nearly $300,000 in costs allegedly incurred by the contractor and several of its subcontractors, the contractor has restricted this appeal to a small portion of that amount -- costs associated with one particular subcontractor, Seefirst Roof Company (Seefirst). Appellant's Letter to Board (Feb. 24, 1995). The parties have asked the Board to rule in this decision only on appellant's entitlement to recovery of costs. Board's Memoranda of Conference (Feb. 16, Apr. 7, 1995). We hold that the Government was responsible for a delay in making the job site available to the contractor, and that that delay had an impact on Seefirst -- though the impact was for a period of time shorter than appellant maintains. The contractor has failed to meet its burden of proving that Seefirst is entitled to recover because of the delay. We consequently deny the appeal. Findings of Fact 1. On May 7, 1991, the General Services Administration (GSA) awarded to Strand Incorporated[foot #] 1 a contract for phase II of the renovation of the Federal Office Building in Seattle, Washington. This phase covered work on the building's shell and core. Appeal File, Exhibit 1 at 1; Joint Stipulation of Facts 1. 2. The contract required Strand to begin work within one calendar day after receiving the Government's notice to proceed and complete the job within 420 days after receiving that notice. Appeal File, Exhibit 1 at 0800 (page 2). The contract provided that "[t]he Notice to Proceed will be issued during the month of August 1991 in order to assure proper coordination with the Phase I, Asbestos Abatement contract." Id. at Amdt. 3 (page 3). In June 1991, the contracting officer confirmed that a "complete notice to proceed . . . will be [issued] in August, 1991." Id., Exhibit 3 at 46; Joint Stipulation of Facts 5. 3. The contract contained a standard suspension of work clause, which states: If the performance of all or any part of the work is, for an unreasonable period of time, . . . delayed . . . by an act of the Contracting Officer in the administration of this contract, . . . an adjustment shall be made for any increase in the cost of performance of this contract (excluding profit) necessarily caused by the unreasonable . . . delay, . . . and the contract modified in writing accordingly. Appeal File, Exhibit 1 at page 36 of GSA form 3506. 4. On August 9, 1991, the contracting officer told Strand that because of delays in performance of the Phase I contract, "GSA is strongly considering delaying your Notice To Proceed (NTP) for contract site work for approximately 30 calendar days from the originally scheduled NTP date of August 31, 1991." He said that "[t]he rescheduled asbestos abatement effort should be completed by September 30." Appeal File, Exhibit 3 at 48; Joint Stipulation of Facts 6. 5. On August 28, the contracting officer definitively stated that "issuance of the full notice to proceed will be delayed until sometime in late September." He made two requests ----------- FOOTNOTE BEGINS --------- [foot #] 1 The contractor's name apparently changed to Strand Hunt Construction at some time during the fall of 1992. Appeal File, GSBCA 12759, Exhibit 3 at Attachments 56, 67, 116. In this opinion, we refer to the contractor as "Strand." ----------- FOOTNOTE ENDS ----------- of Strand. First, he invited the contractor "to submit a cost proposal with supporting documentation for a cost per day to be used as a basis for equitable adjustment during the delay period." Second, he asked that Strand "take all reasonable steps to minimize the incurrence of costs during the delay period." Appeal File, Exhibit 3 at 45. 6. On Friday, October 4, 1991, the contracting officer issued the notice to proceed. Appeal File, Exhibit 2. The contracting officer later acknowledged that the Government had caused a 36-day delay in commencement of contract work (from September 1 through October 6). He told Strand that "[t]he lengths of delay to be established for your subcontractors depends on their 'start dates' relative to October 7, 1991." Appeal File, Exhibit 3 at 6; Joint Stipulation of Facts 12. 7. Strand entered into a subcontract with Seefirst for performance of contract work regarding modified bituminous sheet roofing, flashing and sheet metal, and caulking and sealants. Appeal File, Exhibit 13. The subcontract incorporates the terms of the contract between GSA and Strand, but does not establish a start date for Seefirst. Id. at 2. According to Strand's project manager, "Seefirst was one of the subcontractors scheduled to start at the beginning of the Project. This is because of the nature of their work and because their work is prerequisite to other work that was to be accomplished." Affidavit of Jim Levin (Feb. 22, 1995) 5. Seefirst's president says that Seefirst originally intended to begin its efforts on September 4. Appeal File, Exhibit 3 at 107; Affidavit of Mark Leonard Reichlin (Mar. 10, 1995) (Reichlin Affidavit) 3. The subcontract was not signed until September 26, however. Appeal File, Exhibit 13 at 9; Joint Stipulation of Facts 3. 8. Strand's initial response to the contracting officer's invitation to submit a request for an equitable adjustment due to delay in issuance of the notice to proceed was dated September 20, 1991. It sought $911.20 per day for thirty days, or a total of $27,336, for Seefirst. Appeal File, Exhibit 3 at 107-09; Joint Stipulation of Facts 8, 9. By letter dated March 16, 1992, the contracting officer agreed to pay a portion of this amount. Specifically, he "support[ed] the rationale of Seefirst Roofing in allocating 15% of Project Manager costs to our project" and accepted the request for payment of $4,000 as costs of lost production due to a shift in seasonal work. He said that "[t]he number of days delay will be considered to be 36 days minus the difference in days between Seefirst's actual 'start date' and October 7, 1991." Appeal File, Exhibit 3 at 9, 11. 9. More than a year later, on March 15, 1993, Strand submitted a certified claim in the amount of $285,476 to compensate for delay in issuance of the notice to proceed. Appeal File, Exhibit 3; Joint Stipulation of Facts 13. Yet another year later, on March 18, 1994, the contracting officer rendered a decision "acknowledg[ing] the 36 day Government caused delay and entitlement based on the Suspension of Work clause in the amount of $30,145.88." Appeal File, Exhibit 12; Joint Stipulation of Facts 14. Included in this sum were $593.86 for Seefirst's key personnel (15 percent of the project manager's salary for 36 days) and $4,000 for the roofer's loss of production. The contracting officer granted none of the $12,280.70 requested for Seefirst's unabsorbed home office overhead. Appeal File, Exhibit 12 at 4; Joint Stipulation of Facts 15. 10. Strand appealed this decision on June 3, 1994. Strand has since that date reduced its total request for payment of Seefirst's damages due to the delayed notice to proceed. The amount now sought is $13,072.39 -- $761.69 for the unabsorbed portion of the salary of the firm's project manager which was allegedly incurred but was not allowed by the contracting officer, and $12,280.70 for unabsorbed home office overhead. Reichlin Affidavit 14; Appellant's Brief at 5. Discussion Where the Government warrants that a job site will be available to the contractor by a particular date, and then denies access, it is liable for costs of delay under the suspension of work clause. Singleton Contracting Corp., GSBCA 9614, et al., 90-3 BCA 23,125, at 116,106. This liability extends to the costs incurred by subcontractors, as well as contractors, as a result of the delay. Capital Electric Co. v. United States, 729 F.2d 743, 747 (Fed. Cir. 1984). In this case, GSA promised that it would give Strand a notice to proceed by August 31, 1991, and required the contractor to be prepared to begin work the day after it received this notice, but did not issue the notice until October 4. The Government is obligated to cover costs which were imposed on Strand and its subcontractors by the postponement. Strand has been able to demonstrate little impact on Seefirst, its roofing subcontractor, however. The only indication we have of any legal obligation Seefirst might have had to work on the contract is the fact that on September 26, it signed a subcontract with Strand. On that date, Strand knew that it might not receive its notice to proceed until September 30. Thus, the only delay in issuance of that notice that affected Seefirst was the four-day postponement from September 30 to October 4. It is true that prior to signing the subcontract, Seefirst maintained that it had made preparations to begin work on September 4. GSA notes that no substantiation has been provided for this statement, and contends that the assertion is not credible. Even if we accept the statement, however, it does not help Seefirst. After receiving the contracting officer's letter of August 9, Strand knew that the likelihood of receiving the notice to proceed before the end of September was small; after receiving his letter of August 28, the contractor knew that the possibility of this happening was nil. Strand has provided no indication that it engaged Seefirst prior to either of these dates. Thus, we have no cause for believing that Seefirst's putative expectation of beginning work on September 4 was reasonably based on a Government commitment. Strand seeks recovery of two types of cost allegedly incurred by Seefirst as a result of the delay -- the direct cost of a portion of the project manager's salary, and the indirect cost of the firm's unabsorbed home office overhead. The contracting officer has already granted recovery of $593.86 in salary cost. Seefirst asks for 15 percent of the manager's pay, on the basis that the firm "retrieved 85% of [the manager's] time for the [delay]." Reichlin Affidavit 11. According to Seefirst's president, the manager's salary was $769.82 per week. Id. Assuming that the manager works a five- day week, his pay was $153.96 per day, or $615.86 for the four days of delay. Fifteen percent of this amount is $92.38. Because the amount paid by the contracting officer is greater than the amount to which appellant is entitled, even if appellant can prove all its assertions about the manager's salary, the Board can afford no additional recovery on this element of the claim. Unabsorbed home office overhead resulting from a delay is recoverable only where the appellant is able to prove that (1) the Government caused a suspension, disruption, or delay in contract performance; (2) the contractor was consequently placed in a standby position, such that work was not being performed on the contract; and (3) the contractor was unable to take on other work which would have mitigated unabsorbed overhead when that overhead was incurred. Ranco Construction, Inc. & Reese Construction, Inc., a Joint Venture v. General Services Administration, GSBCA 12051(11312)-REIN, 94-2 BCA 26,946, at 134,182 (citing Interstate General Government Contractors, Inc. v. West, 12 F.3d 1053, 1056-58 (Fed. Cir. 1993), and C.B.C. Enterprises, Inc. v. United States, 978 F.2d 669, 674-75 (Fed. Cir. 1992)). We consider that Strand has demonstrated the existence of the first of these qualifications as to Seefirst for the four-day delay period. As to the second and third, Seefirst's president, in referencing the period of time from September 5 to October 7, says: [W]hen I was informed about the delayed Notice to Proceed, I scrambled and obtained additional work for Seefirst's forces to do until Seefirst was able to begin. I estimate that Seefirst was able to recapture 50% of its lost billings. Reichlin Affidavit 10. In discovery, the Government attempted to test the validity of this statement by asking Strand to -- [i]dentify the jobs or projects on which Seefirst performed work during the period of [time from] September 5, 1991 until October 7, 1991. For each such job, identify the owner, location, work performed, time periods on the job, and approximate dollar value of the work performed. Appeal File, Exhibit 14 at 6. Strand responded that it was "in the process of obhtaining [sic] information requested," and would "provide a complete response to this interrogatory within 1-2 weeks." Id., Exhibit 15 at 3. Strand has never supplied such a response, however. Respondent's Brief at 15. The affidavit of Seefirst's president does not describe with any particularity when, during the period from September 5 to October 7, his firm was able to find jobs, income from which replaced the revenue that would have been generated by work on the contract at issue. If Strand had answered the Government's interrogatory, we might have had evidence against which to assess the application of the affidavit's fifty percent figure to the delay period we have found -- the first four days in October. In the absence of any such evidence, we cannot find that appellant has met its burden of proving that it was unable to replace the revenue stream whose generation was delayed, and that it remained to some extent on standby during the delay period. Decision The appeal is DENIED. _________________________ STEPHEN M. DANIELS Board Judge We concur: _________________________ _________________________ ROBERT W. PARKER JOSEPH A. VERGILIO Board Judge Board Judge