__________________________________ MOTION FOR SUMMARY RELIEF GRANTED; APPEAL DENIED: October 16, 1997 __________________________________ GSBCA 13198 FIRE SECURITY SYSTEMS, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. John M. Frazier of Peatross, Greer & Frazier, Shreveport, LA; and Terrence M. O'Connor, Alexandria, VA, counsel for Appellant. Robert C. Smith, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges NEILL, DeGRAFF, and GOODMAN. NEILL, Board Judge. In this case, appellant, Fire Security Systems, Inc. (Fire Security), appeals the Government's refusal to consider an unsolicited termination for convenience settlement proposal. The General Services Administration (GSA) contends that under the terms of a bilateral contract modification all claims were settled between Fire Security and GSA for the contract in question. Accordingly, GSA has submitted a motion for summary relief. For the reasons set out in this decision, we grant the motion. Background Contract Award and Performance 1. On July 1, 1992, GSA awarded Fire Security a contract for the repair and renovation of the Bob Casey Federal Building in Houston, Texas. Appeal File, Exhibit 1. 2. During performance of the contract, Fire Security claimed that differing site conditions and defective contract documents rendered further performance of the contract impractical. The situation was reviewed and discussed in detail at a meeting of Fire Security and GSA officials on October 6, 1993. During that meeting, the president of Fire Security strongly recommended that the project be restructured. He also advised GSA representatives that his company wished to be released from the contract. The possibility of terminating the contract was discussed. Fire Security was asked what cost it would propose if the contract were to be terminated at this point. The president stated that Fire Security would want $1.2 million in addition to the $3.7 million it had already been paid. The meeting closed with a commitment from GSA to study the matter and report back to Fire Security. Appeal File, Exhibit 2. 3. By letter dated October 7, 1993, the contracting officer advised Fire Security that, in response to the concerns expressed at the meeting on the previous day, GSA planned to look into an equitable adjustment or possible termination of the project. Pending a decision on this matter, Fire Security was directed to order no additional materials or services relating to the contract. The contracting officer also requested a list of all materials currently on hand or ordered and not installed. The letter expressly cautioned that this was not a suspension of work order. Appeal File, Exhibit 3. Equitable Adjustment Versus Termination for Convenience 4. By letter dated October 22, 1993, Fire Security sought clarification from the contracting officer regarding her reference to "equitable adjustment" and "termination." Fire Security asked: Does this sentence mean that you are considering two (2) separate processes by which this Contract will be concluded or is the reference to "equitable adjustment" being used in connection with the termination for convenience clause? Appeal File, Exhibit 4. 5. Shortly thereafter, by letter dated October 25, 1993, Fire Security wrote the contracting officer regarding a termination for convenience. The company president advised that Fire Security proposed to use a total cost method for both its interim and its final termination for convenience proposal. The contracting officer's agreement with this approach was requested. Appeal File, Exhibit 5. 6. On October 27, 1993, at the request of Fire Security, another meeting of GSA and Fire Security officials was convened. Fire Security's president explained at the start of the meeting that he had requested it in order to discuss the work to be completed on the project. During that meeting, Fire Security's president presented GSA with what the contractor referred to as an "interim price proposal for the Termination for Convenience." The proposal included an invoice calling for payment of $2,022,483. Appeal File, Exhibits 7 at 6, 8 at 1, 11 at 2-3 (unnumbered). Two days after that meeting, Fire Security's president wrote the contracting officer. The subject of the letter was: "Termination for Convenience or Equitable Adjustment." The letter noted that during the meeting on October 27, there had been no substantive discussion of Fire Security's price proposal for termination. It then went on to state: While it is accurate to record that the parties spent the meeting discussing an equitable adjustment of the contract price to make Fire Security whole, to compensate Fire Security for the delays, disruptions, trauma, loss of productivity and other costs. It is essential to remember that Fire Security Systems has carried the cost and time of the delays, disruptions and trauma, defective specifications too long. The GSA must advance . . . a substantial payment to indicate fair dealing in either action; termination for convenience or equitable adjustment. That advance payment, which will be partial and will be followed by subsequent payments must be $600,000 or greater. Id., Exhibit 8. The letter closed with the following: Please respond within 5 days of receipt, if we do not have a response in 5 days[,] Fire Security will accept that silence as a tacit agreement and expect a payment within 14 days or receive interest under the Prompt Payment Act . . . . Id. 7. By letter dated November 1, 1993, the contracting officer provided Fire Security with a list of work said to have been discussed during the meeting on October 27 of Fire Security and GSA representatives. She rescinded her earlier instruction to stop ordering materials (Finding 3) and directed Fire Security instead to order the materials necessary to complete the work described on the list. She also formally directed Fire Security to suspend work on all areas of the project other than those affected by the work described on the list. Appeal File, Exhibit 10. On the following day, by letter dated November 2, the contracting officer added to this list an area on the ninth floor which she believed was also agreed to at the meeting on October 27 but was inadvertently omitted from the list she had provided to Fire Security with her letter of the previous day. Id., Exhibit 14. 8. By separate letter, also dated November 2, 1993, the contracting officer returned to Fire Security's president the "interim price proposal for Termination for Convenience" which he had submitted to her during the meeting on October 27. In returning it she observed: The enclosed invoice . . . is being returned to you as an improper invoice. As of the date of this letter the Contracting Officer has not issued an Official Notice of Termination of the subject contract. Appeal File, Exhibit 11. 9. Fire Security's reply to the return of this invoice was immediate. By letter of the same date, November 2, the president of Fire Security accused GSA of "trying to rewrite the contract by abandoning the Termination for Convenience." He alleged that this was contrary to prior statements and actions on the part of the contracting officer and others. He returned the "interim T[ermination]F[or]C[onvenience] proposal" for payment and recommended negotiation meetings for any day of the following week. Appeal File, Exhibit 12. 10. In a second letter, likewise dated November 2, 1993, Fire Security's president urged the contracting officer to perform an audit of the "interim proposal of the Termination for Convenience." Appeal File, Exhibit 13. Contract Modification PC57 11. On November 19, 1993, the contracting officer issued a unilateral modification to the contract, Modification PC57. The modification stated that it was issued pursuant to the contract's Changes clause. It decreased the scope of work under the contract to that which was identified in the list previously provided to Fire Security by the contracting officer with her letter of November 1 and amended slightly with her letter of November 2 (Finding 7). The modification decreased the contract price by $3,374,695.13 for a total contract value of $4,683,716.74. It established a contract completion date of January 4, 1994. The modification further provided: The equitable adjustment in this modification also includes all direct, indirect, and cumulative impact and delaly [sic] costs, if any, incurred in performing the changed and unchanged contract work affected by this modification. Appeal File, Exhibit 18. 12. In the cover letter providing Modification PC57 to Fire Security, the contracting officer advised the contractor that under the contract's Changes clause, any right to adjustment under that clause must be asserted within thirty days of receipt of the change order. In addition, the letter advised Fire Security that materials ordered prior to the contracting officer's letter of October 7 suspending ordering of materials, which would not be used for the contract, must be inventoried and would become Government property once inventoried and certified. Appeal File, Exhibit 18. 13. In a written response to the contracting officer, subject: "Termination for Convenience vs. Deductive Change Order," and bearing the date November 19, 1993, the president of Fire Security wrote that the recent direction to delete work items was a termination for convenience, not a deductive change order. He pointed out that the GSA had merely reduced the scope or quantity of work and that, under existing case precedent, a change of this magnitude constitutes a termination for convenience. He concluded his letter to the contracting officer stating: Fire Security has proposed an interim settlement price and requests an audit, a negotiation, and early payment of same under the Termination for Convenience clause. Providing the G.S.A. does not concur with Fire Security's contention, please explain the basis for selecting the Deductive Change Order equitable adjustment vs. the Termination for Convenience equitable adjustment. Appeal File, Exhibit 17. Fire Security's Pricing Proposal 14. By letter dated November 24, 1993, Fire Security submitted to the contracting officer a certified claim in the amount of $1,512,202. In a lengthy (six page) cover letter with extensive accompanying documentation, the president of Fire Security explained to the contracting officer how, over the life of the contract, defective specifications, asbestos abatement problems and various delays and disruptions had resulted in a loss of productivity, extended performance costs, and extra engineering costs. Respondent's Supplemental Appeal File, Exhibit 1. 15. Attached to this letter of November 24, 1993, from the president of Fire Security to the contracting officer is a summary sheet which reads as follows: Price Proposal 8-92 to 10-31-93 As for equitable price adjustments, we have the following: 1. LLOP[labor loss of productivity] 1.1 million @ 38% = $418,000.00 2. Extended Performance Cost/ Home Office Administrative Cost Period of 8-92 to 10-31-93 = 425 days Delay days 256 @ $1320 $337,920.00 3. Extended Performance Cost/ Site Office Administrative Cost Trucks, Cars, Phones, etc. Period of 8-92 to 10-31-93 = 425 days Delay days 256 @ $600 $153,600.00 4. Extra Management Effort Ray Hayes, Donn Harbin, Jim Robinson Pete Bratlie Payroll only 256 @ $800 $204,800.00 5. Travel, Phones, Food, Lodging $ 26,000.00 6. Consultant Fees and Attorney Fees $ 35,000.00 TFC settlement costs $ 1,175,320.00 Overhead on #1 25.8[%] $ 107,844.00 Subs Price Proposals (est) $ 200,000.00 Commission on Subs 10% $ 20,000.00 Bond $ 18,038.00 $ 1,512,202.00 The prices are restricted to the period of 8-92 to 10-31- 93[.] The prices do not relate to a Partial Termination for Convenience. The prices do not relate to a Deductive Change Order. The prices do not relate to the changes made to Termination for Convenience of the job. Only the prices stated will be resolved by payment by the GSA. Any other prices are not settled or resolved by payment of this price proposal. Respondent's Supplemental Appeal File, Exhibit 1. 16. The penultimate paragraph of the letter of November 24 from the president of Fire Security to the contracting officer submitting this price proposal stated: In our meeting, you advised a claims analyst would review this claim, and would have it finalized within (60) sixty days of today's date. You also stated that if the government's offer and ours differed, you and I would negotiate the difference and if unable to reach agreement, you would authorize payment within (17) seventeen days of the government's offer, still allowing us the right to pursue the difference, if any, through the standard procedures allowed in our contract. Respondent's Supplemental Appeal File, Exhibit 1. 17. In a letter dated December 15, 1993, the contracting officer advised the president of Fire Security that his letter of November 19 arguing that the deletion of work on the contract constituted a termination for convenience (Finding 13) was being examined by a claims consultant and that a response to Fire Security's claim (Finding 14) would be forthcoming within sixty days of November 23. Appeal File, Exhibit 23. Contract Modification PS63 18. On January 20 and 21, 1994, Fire Security and GSA officials met for purposes of negotiating a settlement on Fire Security's November 23, 1993 proposal. Respondent's Supplemental Appeal File, Exhibit 2. Agreement was eventually reached and formalized in a bilateral modification of the contract, Modification PS63. This modification provided that the total contract price was increased by $810,000 for a total contract price of $5,549,897.21. GSA agreed to arrange for immediate processing and payment of $810,000 to Fire Security "for the settlement and compromise of all claims known to date." Fire Security agreed to "execute a release of claims for all claims known to date." It was also agreed that all subcontractor claims would be settled out of the $810,000 added to the contract price. In addition, it was agreed that the substantial completion date would be February 28, 1994, and that GSA would assess no liquidated damages, it being appellant's position that none were due. Appeal File, Exhibit 24. Fire Security's Claim 19. By letter dated October 25, 1994, Fire Security submitted to the contracting officer a final Termination for Convenience Settlement Proposal seeking a net payment of $1,169,852. The letter explains that the proposal is based on the conclusion that Modification PC57 (Finding 11) was in fact a constructive termination for convenience and should, therefore, be processed as such by the Government. Appeal File, Exhibit 28. 20. Fire Security's Termination for Convenience Settlement Proposal contains no claim for material disposition. The proposal notes that, at the time of the alleged termination, Fire Security had materials stored in the Federal Building and in a bonded warehouse. GSA was billed for the materials, paid for them, and took possession of them on approximately December 15, 1993. Appeal File, Exhibit 28 at 13. 21. Among other items, the settlement proposal seeks reimbursement for consultant fees ($80,846), costs of a partnering meeting in August of 1992 ($5411), precontract proposal costs ($10,437), standby (idle) time ($27,951), and unabsorbed overhead ($136,955). Appeal File, Exhibit 28 at 7, 14-19. 22. By letter dated December 14, 1994, to the president of Fire Security, the contracting officer acknowledged receipt of appellant's "unsolicited Termination For Convenience Settlement Proposal." She advised that she would not consider the proposal since under the terms of Modification PS63 (Finding 18) "all claims were settled between your firm and the General Services Administration for the subject contract." Appeal File, Exhibit 30. 23. By letter dated December 20, 1994, Fire Security's president replied to the contracting officer, contending that negotiations would be fruitless and that an impasse had been reached. He, therefore, certified his company's October 25, 1994 proposal as a claim and asked for a contracting officer's decision on it. Appeal File, Exhibit 31. 24. In a reply to Fire Security dated January 12, 1995, the contracting officer observed that Fire Security's claim did not correspond to the definition of "claim" set out in the contract's Disputes clause. She requested clarification as to the exact nature of the dispute in question. Appeal File, Exhibit 32. 25. Fire Security's president, in a letter dated February 8 to the contracting officer, explained that the dispute was over her decision, as evidenced in her letter of December 14, 1994, to deny Fire Security's settlement proposal in its entirety. He advised that Fire Security intended to appeal that decision. Notice was, in fact, filed with the Board shortly thereafter. Appeal File, Exhibits 33-34. Discussion In bringing its motion for summary relief, the Government relies heavily upon the language contained in Modification PS63 which stated that GSA would arrange for the processing and payment of $810,000 to Fire Security "for settlement and compromise of all claims known to date" and Fire Security would "execute a release of claims for all claims known to date." The Government argues that "all claims known to date" refers to claims arising out of Fire Security's performance prior to the release and that the claims in Fire Security's termination settlement proposal consist of claims released by Fire Security in modification PS63. Memorandum in Support of Respondent's Motion for Summary Relief at 4-8. Fire Security contends that GSA's reliance on the language of the release is misplaced. It construes the release as applying only to "claims" as that term is defined in the contract's Disputes clause. The clause defines "claim" as: a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract. Appeal File, Exhibit 1 (GSA Form 3506) at 44. Under the same clause, claims for money exceeding $50,000 also required a certification. In addition, appellant contends that, pursuant to case law in effect at the time (Dawco Construction Inc. v. United States, 930 F.2d 872, 878 (Fed. Cir. 1991)), such demands also had to be in dispute to be considered claims. Using this definition of "claim," therefore, Fire Security states that neither its price proposal of November 24 nor any termination settlement proposal it might have presented at the time qualify as claims. According to Fire Security, the former, although certified, was not a termination for convenience claim but rather a proposal for equitable adjustment to the contract price due to differing site conditions, defective specifications, and an excessive number of modifications that plagued the project. As to any termination for convenience settlement proposal, although there was an interim proposal, Fire Security argues that there could be no claim for a sum certain since the determination of all cost elements and costs associated with a termination could not be determined prior to completion of the project. Memorandum in Opposition to Government's Motion for Summary Judgment at 4-5; Appellant's Statement of Genuine Issues at 2. The "release of claims for all claims known to date" which Fire Security agreed to "execute" in signing Modification PS63 is not a document separate from the modification. Rather, the parties consider that the release was simply accomplished through Fire Security's signature of the modification itself. The release language is, therefore, part of the contract itself. The proper interpretation of it is, of course, critical to the Government's motion. Because the language is part of the contract itself, however, interpretation of it is a matter of law and one which, in the final analysis, we can and should decide. Muniz v. United States, 972 F.2d 1304, 1309 (Fed. Cir. 1992); Fortec Constructors v. United States, 760 F.2d 1288, 1291 (Fed. Cir. 1985); P.J. Maffei Building Wrecking Corp. v. United States, 732 F.2d 913, 916 (Fed. Cir. 1984). The interpretation of the release language urged on us by appellant is unduly restrictive for two reasons. First, it strips the term "known" of any real purpose. If a claim can be only a written, certified, and disputed demand for payment of a sum certain or other relief, then obviously such a demand would always be known. The qualification of "claim" with the term "known" would, therefore, be meaningless. More importantly, Fire Security's interpretation of the release language is unduly restrictive not just because it renders the term "known" meaningless, but also because it strips the entire release of any real purpose or effect. In its opposition to the Government's statement of uncontested facts, appellant objects to the Government's statement that on January 20 and 21, 1994, representatives of Fire Security and GSA met for the purpose of negotiating "a settlement of Fire Security's claim." Appellant challenges the statement on the ground that there was no settlement of Fire Security's claims in the negotiations leading to Modification PS63 "because no claims had been submitted at this point." Appellant's Statement of Genuine Issues at 2. The objection, of course, is based on appellant's narrow reading of the term "claim" and it clearly evidences the inadequacy of this interpretation. If, as Fire Security alleges, there really were no claims for resolution at that point, then the release itself is rendered meaningless. It is well established that "[a] contract should be interpreted in such a way that all parts make sense." Hughes Communications Galaxy, Inc. v. United States, 998 F.2d 953, 958 (Fed. Cir. 1993); Intel Corp. v. International Trade Commission, 946 F.2d 821, 826 (Fed. Cir. 1991) ("When interpreting a contract, we must, where possible, give meaning and purpose to every term used in the contract."); United States v. Johnson Controls, Inc., 713 F.2d 1541 (Fed. Cir. 1983) ("[A]n interpretation that gives a reasonable meaning to all parts of the contract will be preferred to one that leaves portions of the contract meaningless . . . .") Because appellant's interpretation of the release language strips the release language of any real purpose or meaning, we must reject it. In contrast, we find the Government's interpretation of the release to be reasonable. In resolving a disputed interpretation of a contract, [w]ords and other conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight. Restatement (Second) of Contracts  202(1) (1979). Our appellate authority has explained that, in the case of contract interpretation, the avowed purpose and primary function of a court is the ascertainment of the intention of the parties and that this intent must be gathered from the instrument as a whole and from the perspective of "a reasonably intelligent person acquainted with the contemporary circumstances." See Alvin, Ltd. v. United States Postal Service, 816 F.2d 1562, 1565 (Fed. Cir. 1987), and cases cited therein. Bearing this guidance in mind, we turn to the language of the release at issue here. From the uncontroverted facts in this case, it is clear that, prior to the execution of Modification PS63, the parties were in disagreement as to how the changes discussed at the meeting of October 6, 1993, between GSA and Fire Security representatives would be processed. Fire Security clearly wished to have them processed under the Termination for Convenience clause with provision for an equitable adjustment included. As the situation progressed, however, it became obvious that the contracting officer preferred to proceed under the contract's Changes clause. She returned Fire Security's "interim price proposal for Termination for Convenience" pointing out that no official notice of termination had even been issued. Shortly thereafter, she issued Modification PC57 pursuant to the Changes clause. Some lingering vestige of appellant's desire to proceed under the Termination for Convenience clause can be found in its certified claim of $1,512,202 for equitable adjustment dated November 24, 1993. While the proposal purports to eschew concern with a partial termination for convenience or deductive change order, it nonetheless, in its summary sheet, labels the sum total of its claimed costs "TFC settlement costs." It is likewise uncontroverted that this price proposal of November 24, 1993, was in fact the basis for the negotiations on January 20 and 21, 1994. During these negotiations, although the original claim was for $1,512,202, agreement was eventually reached to arrange for immediate processing and payment of $810,000 to Fire Security "for settlement and compromise of all claims known to date." The obvious conclusion to be drawn from this language by "a reasonably intelligent person acquainted with the contemporary circumstances" is that in agreeing to this Modification PS63, the parties intended to put behind them, once and for all, any actual or potential claims known to date. From the circumstances, we conclude that the term "claim," as used in the release provision of the modification, should be understood as any demand for payment or other relief that the contractor was aware of, at least in general terms, for which a legal or equitable theory could serve as support. Undoubtedly, any termination for convenience claim based upon events to date, which Fire Security may have wished to pursue, may have attempted to submit, or may have eventually elected not to submit readily falls into this category of "known claim." Fire Security was aware of the theory of its termination for convenience claim, even if precise dollar amounts were subject to change. We can find no reasonable basis for concluding that the language of the release in Modification PS63 somehow constitutes a reservation of any such claim. Rather, based on the release, as it reads, and on the circumstances attendant to its execution, we conclude that, in signing the modification, Fire Security relinquished its right to pursue such a claim. Any subsequent formulation or revision of such a claim is, therefore, barred. Decision Respondent's motion for summary relief is GRANTED. This appeal is DENIED. _____________________ EDWIN B. NEILL Board Judge We concur: __________________ __________________ MARTHA H. DeGRAFF ALLAN H. GOODMAN Board Judge Board Judge