____________________________________________________ GSBCA 13317 GRANTED IN PART; GSBCA 13321 DENIED: June 25, 1996 ____________________________________________________ GSBCA 13317, 13321 HOF CONSTRUCTION, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. William B. Hof, Vice President of Hof Construction, Inc., St. Louis, MO, appearing for Appellant. Michael T. Brincks, Office of Regional Counsel, General Services Administration, Kansas City, MO, counsel for Respondent. Before Board Judges DANIELS (Chairman), NEILL, and HYATT. HYATT, Board Judge. Hof Construction, Inc. has appealed two contracting officer's final decisions, both issued on April 6, 1995, denying claims for equitable adjustments submitted by Hof on behalf of subcontractors. The appeals arise under a contract for architectural, mechanical, and electrical remodeling of portions of the basement and first floors of the U.S. Court and Customhouse in St. Louis, Missouri. The first appeal, GSBCA 13317, concerns a dispute over the number of labor hours for which the plumbing subcontractor, Feit Plumbing Co., Inc., seeks to be paid under a modification to the contract. GSBCA 13321 presents a dispute over charges for millwork and casework items furnished by subcontractor Classic Woodworking, Inc. for the remodeling of a judge's courtroom and chambers on the seventh floor of the courthouse. Both parties elected to present these cases for decision on the basis of record submissions, and were afforded the opportunity to submit documentary evidence and briefs in support of their positions. Rule 11. The records in the appeals consist of the Rule 4 files submitted by the Government, affidavits submitted by the Government, and additional documents proffered by the parties in support of their cases. The Government also filed briefs in each appeal. Findings of Fact Background 1. Hof was awarded contract number GS06P-93-GY00309 for the conversion and renovation of portions of the basement and first floors of the U.S. Court and Customhouse in St. Louis, Missouri on April 20, 1993. The notice to proceed was issued on June 5, 1993. The basement portion of the work entailed conversion of vacant space to office space and a fitness center. The first floor work consisted of renovation of existing office space. Appeal File, Exhibit 1.[foot #] 1 GSBCA 13317 2. On June 25, 1993, respondent, the General Services Administration (GSA), issued Proposal Request P-3 eliciting a price from Hof for all material and labor necessary to install a sewage pump and related electrical and piping components in the basement level. This proposal request also contemplated deletion of some of the plumbing work under the contract. Appeal File, Exhibit 2. 3. Hof submitted a price proposal, by letter dated July 9, 1993, setting forth amounts for work to be performed by Hof and two of its subcontractors. After a period of negotiations, Hof and one of its subcontractors, Kaemmerlen Electric, reached agreement with GSA on prices for their portions of the work added by Proposal Request P-3. Agreement could not be reached with Hof's other subcontractor, Feit Plumbing. Affidavit of Gilbert R. Wayman (Wayman Affidavit)(December 14, 1995) 3. Feit proposed $27,785 for its part of the added work. On October 20, ----------- FOOTNOTE BEGINS --------- [foot #] 1 Citations to the appeal file in findings 1 through 8 are to the Rule 4 file submitted in GSBCA 13317. For the remainder of the findings, citations to the appeal file refer to the Rule 4 file submitted in GSBCA 13321. In addition, GSA submitted two affidavits, both executed by Mr. Gilbert R. Wayman, the contracting officer's representative (COR), on December 14, 1995. Accordingly, citations to the Wayman Affidavit in findings 1 through 8 refer to the affidavit submitted in connection with GSBCA 13317; citations to the Wayman Affidavit in findings 9 through 15 refer to the affidavit executed in support of GSBCA 13321. ----------- FOOTNOTE ENDS ----------- 1993, Proposal Request P-3 was issued as a unilateral change order, PC11, on a price-to-be-determined later basis not to exceed $34,387.93. The change order included bilaterally negotiated amounts of $4,402.93 for Hof Construction work and $2,200 for Kaemmerlen Electric work. The amount of $27,785 for Feit Plumbing work remained subject to negotiation. Appeal File, Exhibit 4. 4. Feit's portion of the work was completed on February 23, 1994. Eventually, Feit reduced the amount it sought from $27,785 to $19,073, and then to $18,700. Although Feit had agreed in negotiations that GSA should be able to deduct $1,063.26 for the deleted work, it did not reduce the amount of $18,700 to reflect this because of the inability of the parties to reach an agreement on the price of the added work. Wayman Affidavit 8. 5. Material costs, overhead, profit, and labor rates per hour are not in dispute. The only area of disagreement involves the number of hours worked. In support of its claim, on March 18, 1994, Feit submitted a breakdown of labor hours it states were incurred in performing the added work. The labor hours are set forth in three categories: 1) unloading and receiving materials at the shop, delivery to the site and unloading at the site (18 hours); 2) work on the job (118 hours); and 3) future adjustments and start up (7.5 hours), for a total of 143.5 hours. This list of who worked when and for how long is the only evidence Feit submitted to support its labor hour calculation. Appeal File, Exhibit 8 at 7-13. Feit has provided neither time sheets nor certified payroll information to support its claim, nor has it provided an explanation as to why such documentation might not be available. 6. The Government's records differ. GSA maintained its own Construction Engineer's Daily Diaries, reflecting progress on site, including on the work performed by Feit under Change Order PC11. Wayman Affidavit 9-10. These records have been supplied by GSA in support of its position. GSA's calculations for the amount owed Feit reflect that some 101 labor hours were incurred by Feit. Wayman Affidavit 9.[foot #] 2 ----------- FOOTNOTE BEGINS --------- [foot #] 2 Mr. Wayman, the contracting officer's representative (COR), explains in his affidavit precisely where and why GSA disagrees with the labor hours claimed by Feit. With respect to Feit's claim for 18 hours of labor for "Unload at shop - receive at shop - Load - deliver to job site - unload at job site - carry in," GSA allowed 12 hours. The COR explained, "Based on my experience of managing numerous construction projects and on the amount of materials actually involved in Feit's portion of the work, I took the position during negotiations that 18 hours was excessive and not reasonable." Wayman Affidavit 9. The affidavit then provides a detailed comparison of the on-site labor hours claimed by Feit with the (continued...) ----------- FOOTNOTE ENDS ----------- GSA's documentation was created contemporaneously and supports its position that in some instances Feit Plumbing did not have labor on-site on the days it claims. Appeal File, Exhibit 8; Wayman Affidavit 9. 7. Since a negotiated price could not be agreed upon with Feit and because justification for the proposal of $27,785 was not received, the contracting officer unilaterally determined that Feit was due $15,330.[foot #] 3 Appeal File, Exhibit 7 at 1. The contracting officer thus concluded that the firm price settlement due Hof Construction for PC11 was $23,861.23 (15,330 + 2,200 + 4,402.93 + mark-ups of 10% and 1%).[foot #] 4 Appeal File, Exhibit 7. 8. In his affidavit, the contracting officer's representative sets forth a revised calculation of the change order amount due Feit and Hof, concluding that the total payment to Feit should have been $15,353.54 rather than $15,330. As a result, Feit is owed an additional $23.54 and Hof is owed its ten percent markup, which comes to $2.35, plus the one percent markup for bond premium, for a total of $26.15. See Wayman Affidavit 10-11. GSBCA 13321 9. The Government issued Proposal Request P-20 on April 29, 1994, seeking prices for the performance of added work required for the remodeling of a judge's office space. The contemplated additional work included electrical, mechanical, plumbing, painting, and woodworking components. Classic Woodworking, Inc.'s portion of the work encompassed providing and installing cabinet work, new bookshelves, a walnut door frame, a podium table, and a judge's shelf unit. Appeal File, Exhibit 5. To minimize disruption of court business, respondent wanted the work completed by June 6, 1994. Appeal File, Exhibit 2. ----------- FOOTNOTE BEGINS --------- [foot #] 2 (...continued) hours reflected in the daily logs kept by Mr. Wayman. Finally, Mr. Wayman explains that the work was completed on February 23, 1994 and that hours claimed after that date, including charges for "future adjustments and start up," were disallowed. The total number of hours determined to be verifiable and reasonable were 101, in contrast to the 143.5 hours claimed by Feit. Wayman Affidavit 9. [foot #] 3 This included a deduction for deleted work in the amount of $1,063.26, the amount agreed to by Feit. Wayman Affidavit 8. [foot #] 4 Hof's markup for overhead and profit is 10%. An additional 1% is then added to the total for bond premium. Appeal File, Exhibit 3. ----------- FOOTNOTE ENDS ----------- 10. Because an agreement on price could not be reached in advance of performing the changed work, Change Order number PC-20 was issued on May 13, 1994, for all of the work on a price-to-be- determined later basis, with a price not to exceed $62,312.97. Appeal File, Exhibits 4, 7. This unilateral change order was issued to permit work to proceed while appellant and its subcontractors refined their price proposals. Appeal File, Exhibit 4. 11. Thereafter, negotiations were conducted between Hof Construction and GSA personnel. During the period from May 13, 1994 through April 6, 1995, the contracting officer's representative met with Hof and its subcontractors in an effort to settle on the price of this change order. With the exception of Classic, Hof and its subcontractors cooperated in providing requested documentation to support claimed costs. On March 7, 1995, the parties agreed on prices for Hof and all subcontractors except Classic. Affidavit of Gilbert R. Wayman (Wayman Affidavit) (December 14, 1995) 5. 12. Agreement could not be reached with Classic, which continued to claim the amount of $29,506 for its portion of P-20 work, plus markups for Hof of $3,276, for a total of $32,782. Wayman Affidavit 4; Appeal File, Exhibit 5 at 2 and Exhibit 8 at 10. The only documentation provided by Classic in the record is 1) an invoice addressed to Hof, dated June 6, 1994, seeking total costs of $29,506.29;[foot #] 5 2) a letter dated September 2, 1994, stating that Classic's overhead rate is 38%; and 3) a letter dated May 1, 1994 setting forth hourly fringe benefits for Classic's employees. Appeal File, Exhibit 8. ----------- FOOTNOTE BEGINS --------- [foot #] 5 This document itemizes the work as follows: INVOICE Labor to build: Vanity cabinet $ 597.00 Gallery cabinets 1,757.00 Walnut bookcases 19,598.00 Walnut door frame 275.00 Jury Rail 1,399.00 Podium Top 193.00 Judges Shelf Unit 246.00 Subtotal $24,065.00 Sales tax $ 1,588.29 __________ $25,653.29 Installation $ 3,853.00 __________ TOTAL $29,506.29 Appeal File, Exhibit 8. ----------- FOOTNOTE ENDS ----------- 13. Classic did not respond to requests for backup documentation or otherwise provide justification for its claimed costs of $29,506. After Classic failed to show up at a meeting scheduled for only GSA and Classic, the contracting officer concluded that this dispute could not be settled and unilaterally determined that the amount due for Classic's work was $20,935. That determination was based on the Government's estimate of the cost to complete the Classic portion of the work. Wayman Affidavit 6; Appeal File, Exhibit 7. This amount included applicable mark-ups for Hof. The contracting officer's decision was issued on April 6, 1995. Appeal File, Exhibit 7. 14. In its notice of appeal, Hof states that it was informed that Classic had had previous dealings with the United States District Court, which recommended that Hof Construction have Classic provide the millwork and casework for the change proposal in question. In addition, Hof notes that the project needed to be completed in a short time frame which did not permit the usual process of agreeing to a firm-fixed price in advance of performing the work. Appeal File, Exhibit 8 at 3. 15. The notice of appeal filed by Hof seeks the difference between the amount submitted by Classic in its invoice dated June 6, 1994, and the amount the GSA unilaterally determined was due Classic for this project. Additionally, Hof Construction requests its mark-up and additional bond premium. Appeal File, Exhibit 8. Discussion The issue presented by both of these appeals is the proper amount of the equitable adjustment due to the subcontractor for performance of additional work. The proper measure of an equitable adjustment in general is the actual cost impact on the contractor, so long as those costs are reasonable. See, e.g., Bruce Construction Corp. v. United States, 324 F.2d 516, 518 (Ct. Cl. 1963); Plaza Maya Limited Partnership, GSBCA 9086, 91-1 BCA 23,425, at 117,501 (1990).[foot #] 6 The contractor bears the burden of proving the amount of any upward adjustments it may be due for added or changed work; the Government bears the burden of proving the proper amount of a claimed downward adjustment. Nager Electric Co. v. United States, 442 F.2d 936, 946 (Ct. Cl. 1971). ----------- FOOTNOTE BEGINS --------- [foot #] 6 Here, Hof has essentially sponsored the claims of its two subcontractors. It has not represented or demonstrated that the amounts claimed by Feit or Classic have actually been incurred as costs by Hof. ----------- FOOTNOTE ENDS ----------- GSBCA 13317 Hof's subcontractor, Feit Plumbing, claims that the cost to it of performing the additional work in installing the sewage ejection system under change order PC11 was $18,700. The contracting officer, based on the information available, unilaterally determined that the cost to Feit was $15,330. Hof seeks to recover, in this appeal, the difference -- or $3,370 -- plus its ten percent markup and one percent bond premium, in the amount of $374, for a total of $3,744. Appellant contends that Feit Plumbing incurred a total of 143.5 labor hours under Proposal P-3. The only evidence appellant has offered to support this allegation is a one page handwritten list of the days and numbers Feit worked. Finding 5. Feit submitted this list three weeks after it had completed its work. Neither Hof nor Feit has submitted time sheets and certified payrolls to support its claim, nor has appellant or Feit offered any reason for the failure to introduce actual cost data. Finding 5. Respondent, in contrast, has submitted daily logs supporting its allegations that Feit was not working at the site on all of the days for which it alleges time was spent performing the changed work. Finding 6. These logs were created contemporaneously, in contrast to the one page summary document that Feit has submitted. The preferred method for proving a contractor's claim is through the introduction of actual cost data such as time sheets or payroll records, if available. See, e.g., Dawco Construction, Inc. v. United States, 930 F.2d 872, 882 (Fed. Cir. 1991); Cen-Vi-Ro of Texas v. United States, 210 Ct. Cl. 684, 685 (1976); Delco Electronics Corp. v. United States, 17 Cl. Ct. 302, 303, 321 (1989), aff'd, 909 F.2d 1495 (Fed. Cir. 1990); Labco Construction, Inc., AGBCA 90-115-1, 94-2 BCA 26,910, at 133,999. In the absence of an explanation for the failure or inability to produce records substantiating the actual labor hours incurred, the Government's contemporaneous records and the sworn testimony of its employee are more persuasive. Since appellant's subcontractor has submitted only a one-page summary document which is not substantiated by contemporaneous records or by detailed sworn statements of its employees, the burden to prove by a preponderance of the evidence its entitlement to the additional monies claimed has not been met. See Griffin Services, Inc., GSBCA 11171, 92-1 BCA 24,556, at 122,534 (1991). Thus, this appeal must be denied except to the extent that the Government concedes that an additional payment of $26.15 is owed to appellant. Finding 8; see Universal Development Corp. v. General Services Administration, GSBCA 11251, 93-1 BCA 25,425, at 126,640 (1992). GSBCA 13321 Hof seeks the difference between the amount submitted by Classic in its invoice dated June 6, 1994, and the amount the GSA unilaterally determined was due Classic for this project. Additionally, Hof Construction requests its mark-up of ten percent plus an additional one percent for bond premium. Neither Hof nor Classic, however, has furnished documentation to meet the minimum requirements of the contract[foot #] 7 or to otherwise satisfy a contractor's burden to demonstrate the actual cost incurred in performance of added work. Classic has provided only an "invoice" that was created before completing the work, a letter stating that Classic's overhead rate is 38%, and a letter describing employee benefits. Finding 12. Classic has failed to submit any evidence, such as payroll records, receipts for materials, or time sheets of its employees that would demonstrate the actual costs incurred in performing the work as required under the terms of the contract. Nor has it explained why such evidence might not be available. Nor has Classic provided an affidavit with detailed sworn testimony of a knowledgeable employee to support the claimed costs.[foot #] 8 ----------- FOOTNOTE BEGINS --------- [foot #] 7 Under the contract, clause 81, GSAR 552.243-71- -Equitable Adjustments (Apr 1984), prescribes that proposed changes for an equitable adjustment may be submitted by a contractor through a written statement. Appeal File, Exhibit 1, GSA Form 3506, page 31, Clause 81(a)(1). However, clause 81(a)(1)(ii) of GSA Form 3506 provides, for proposals in excess of $5,000: the claim shall be submitted in the form of a lump sum proposal supported by an itemized breakdown of all increases and decreases in the contract including at least: 1)material quantities by trade and unit costs, 2)labor breakdown by trades and unit costs, 3)construction equipment exclusively necessary for the change, 4)costs of preparation and/or revision to shop drawings resulting from the change, 5)workmen's compensation and public liability Insurance, 6)employment taxes under FICA and FUTA and 7)bond costs-when size of change warrants revision. Appeal File, Exhibit 1, GSA Form 3506 at 31. [foot #] 8 Hof provided, as part of its record submission, certificates of its own averring only that to the best of its knowledge the information contained in the claims of the subcontractors was true and correct. A similar statement is offered by Classic's president. This is not a persuasive (continued...) ----------- FOOTNOTE ENDS ----------- The claimant bears "the burden of proving the amount of loss with sufficient certainty so that the determination of damages will be more than mere speculation." Willems Industries, Inc. v. United States, 295 F.2d 822, 823, 831 (Ct. Cl. 1961), cert. denied, 370 U.S. 903 (1962). The most convincing evidence to prove costs incurred would come from contemporaneous reports routinely prepared as the effort was expended. See KRW, Inc., DOT BCA 2572, 94-1 BCA 26,435, at 131,537 (1993). Here, appellant and its subcontractor have done nothing more than allege entitlement to the estimated amount originally requested by Classic in response to Proposal Request P-20. Appellant must prove its entitlement to any amount greater than that allowed by the contracting officer. Mere unsupported allegations are insufficient to prove the amount of a claim. B.F. Carvin Construction Co. v. General Services Administration, GSBCA 12770, et al., 95-1 BCA 27,445, at 136,737; Indelsa, S.A., ENG BCA PCC-117, 95-2 BCA 137,771, at 137,775; Anchor Fabricators, Inc., ASBCA 42022, 94-2 BCA 26,659, at 132,638; Monoko, Inc., ASBCA 46283, 94-1 BCA 26,570, at 132,215 (1993). Because Hof and Classic have not provided evidence of the actual costs incurred in performing the added work, there is no basis to award any amount over and above what the contracting officer concluded was due for this work in the decision dated April 6, 1995. Decision GSBCA 13317 is GRANTED IN PART to the extent stated above; GSBCA 13321 is DENIED. _____________________________ CATHERINE B. HYATT Board Judge We concur: _____________________________ _____________________________ STEPHEN M. DANIELS EDWIN B. NEILL Board Judge Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 8 (...continued) substitute, however, for a specific affidavit executed by an employee of the subcontractor with firsthand knowledge as to the accuracy of such information.