_______________________________________________ GSBCA 14093 DISMISSED; GSBCA 14370 DENIED: February 13, 1998 _______________________________________________ GSBCA 14093, 14370 PAULOS LAND COMPANY, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. James F. Paulos and Frank G. Paulos of Paulos Land Company, Traverse City, MI, appearing for Appellant. Joseph L. McCann, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges BORWICK, HYATT, and VERGILIO. BORWICK, Board Judge. In two appeals filed at the Board, appellant, Paulos Land Company, seeks reformation of its lease contract with respondent, General Services Administration (GSA), for an alleged mistake-in- bid. The GSA contracting officer had rejected the claim of mistake. Both parties submitted their appeals on the record pursuant to Board Rule 111. The appeal docketed as GSBCA 14093 is dismissed for lack of jurisdiction as it is an appeal from an uncertified contractor claim exceeding the certification threshold of $100,000 in the Contract Disputes Act of 1978 as amended. Appellant also had submitted an amended uncertified claim for $96,000 to the contracting officer. The contracting officer denied that claim and appellant took a timely appeal from the denial of the amended claim, which we docketed as GSBCA 14370. We deny that appeal. Appellant has not presented clear and convincing evidence of a compensable mistake-in-bid or clear and convincing evidence that the contracting officer should have been on notice of appellant s alleged mistake. Findings of Fact 1. On October 23, 1995, the contracting officer forwarded to appellant solicitation for offers (SFO) GS-05B-16099 for a ten- year lease of space to house the Social Security Administration (SSA) in Traverse City, Michigan. Appeal File, Exhibit 1. The Government sought a minimum of 8,300 occupiable square feet and a maximum of 9,000 occupiable square feet. Id., Exhibit 8 at 5 ( 1.1). The Government required occupancy within 120 days after approved floor plans were sent from the Government to the successful offeror. Approved plans would be furnished to the successful offeror within 100 calendar days of the date of award. Id. at 6 ( 1.7). In the cover letter forwarding the solicitation, the contracting officer stated that since the Government was seeking a fully serviced lease, the proposal should include all costs of construction, maintenance, real estate taxes, services and utilities as part of the rental consideration. Id. 2. On October 31, 1995, appellant submitted an offer to lease 10,560 net usable square feet of space for $166,320 per year ($15.75 per NUSF). Appeal File, Exhibit 2. On November 13, 1995, appellant submitted a revised offer for 9,000 net usable square feet of space for a rental consideration of $141,750 per year ($15.75 per NUSF), in a building to be newly constructed. Id., Exhibit 3. In its proposal, appellant attached copies of deeds to the site. The deeds show that appellant obtained the site in September 1962 for nominal monetary consideration. Id. Appellant did not include in either its initial offer or its revised offer alleged land acquisition costs for the building. Id., Exhibits 2, 3. The next low offer was less than fourteen percent higher than appellant s. Id., Exhibit 4. 3. The contracting officer's present value analysis demonstrated that appellant s proposed total square foot rates (net rent plus operating costs) were less than fourteen percent lower than the next low offeror's square foot rates. Appeal File, Exhibit 4. 4. The contracting officer determined that appellant had submitted the low offer, and that appellant s operating base and unit cost rates were fair and reasonable and that the offer submitted by appellant represented the greatest value to the Government. Appeal File, Exhibit 41. 5. On January 10, 1996, GSA accepted appellant s offer and the parties entered into a ten-year firm term lease for 9,000 net usable square feet of space at an annual rental of $141,750 per year. Appeal File, Exhibit 8. The square footage was subject to adjustment based on the actual number of net usable square feet delivered. Id., Attachment A at 2. The effective date for the term was July 1, 1996, or a date to be determined by supplemental lease agreement (SLA). Id., Exhibit 8 at 2 ( 11). 6. By letters dated February 29 and March 13, appellant complained that late delivery of interior floor plans by the SSA would make it difficult to meet the scheduled date -July 1. Appellant maintained that the delay in receipt of interior plans resulted in increased costs of construction to appellant. Appeal File, Exhibits 11, 12. 7. On August 12, appellant wrote the contracting officer and complained that it had been taken, as it learned that GSA was prepared to deduct from GSA's calculation of net usable square feet the space taken up by the walls forming the interior rooms. Appellant maintained that this measurement methodology was not part of the agreement. Appeal File, Exhibit 17. 8. On or about September 19, the parties executed supplemental lease agreement (SLA) one which (1) adjusted the actual net usable square footage space delivered to 9,400; (2) established the rent at $149,554 per year ($15.91 per NUSF) or $12,462.83 per month and (3) established the lease term from September 9, 1996 (the date construction of the improvements was completed) through September 8, 2006. Appeal File, Exhibit 19. 9. After completion of the construction, and in October and November, when SSA was preparing to occupy the space, issues arose between appellant and the Government as to the lease s normal working hours, appellant s responsibility to provide SSA access to the building beyond normal working hours, appellant s responsibility to provide overtime heating, ventilating and air conditioning (HVAC), and the Government s right to have a key to the thermostat of the HVAC system. Appeal File, Exhibits 20-27. The Government maintained that the lease required appellant to provide access to the building beyond normal hours without additional payment, Id., Exhibit 23, that overtime HVAC was to be provided when requested by the Government, and that the provisions of the lease provided the Government with the right to have possession of a key to the thermostat. Id., Exhibit 29. 10. On or about November 15, appellant s principal left a telephone message on the contracting officer s telephone answering machine concerning an alleged mistake-in-bid, without, according to the Government, specifying the nature of the mistake. Appeal File, Exhibit 29. On November 15, appellant wrote GSA that your requirements are to[o] stringent for us to comply with. The compensation is not adequate to an $800,000 investment. Id., Exhibit 28. The contracting officer stated his willingness to consider appellant s allegation of bid mistake and requested documentation as described in Federal Acquisition Regulation (FAR) 14.407-4. Id., Exhibit 29. FAR 14.407-4 provides in part that: The Contracting Officer shall request the contractor to support the alleged mistake by submission of written statements and pertinent evidence, such as- (i) The contractor s file copy of the bid, (ii) The contractor s original worksheets and other data used in preparing the bid, (iii) Subcontractors and suppliers quotations, if any, (iv) Published price lists, and (v) Any other evidence that will serve to establish the mistake, the manner in which the mistake occurred, and the bid actually intended. 48 CFR 14.407-4(e)(1) (1996). 11. On November 25, appellant s principal and the contracting officer met to discuss the Government s taking over the maintenance responsibilities of the building. Appeal File, Exhibit 33. Appellant provided the contracting officer with a worksheet showing the alleged mistake. Id., Exhibit 32. On January 24, 1997, appellant wrote the contracting officer: Reference is made to your communication dated January 17, 1997, relative to lease No. GS-05B-16099, which relates to the premises located at 525 Munson [Avenue], Traverse City, Michigan. When we met with you on November 25, 1996, we had substantial discussion relative to our land acquisition cost of $130,000.00 which we had erroneously neglected to project into our lease costs. At that time we provided you with figures, per the attached copy, showing what the lease cost figures should be. It was our understanding that you were going to give us an answer by Christmas, 1996. It is imperative to us that we know where we are going and our receiving your response to these land cost which inadvertently were not projected into our lease costs. If consideration for relief on this matter cannot be handled by you, please advise us who and where we may appeal to, to have this matter corrected. . . . Id., Exhibit 33. In the attached worksheet, appellant derived the additional rental due to the alleged mistake as follows. It took the ratio (.018526689) of the building s cost to the monthly rent established by SLA one. Appellant divided $130,000 by that ratio to obtain an alleged increased monthly rental due of $2,408.47 and alleged increased yearly rental due of $28,901.64, or $289,016.40 over the ten-year term of the lease. Id. The letter and its attachment did not contain the certification required by the Contract Disputes Act, 41 U.S.C.A. 605(c)(1) (West Supp. 1997). 12. On January 29, 1997, the contracting officer issued a decision which stated in pertinent part: The decision to increase a contract price after award is made in accordance with the [FAR], Section 14.407-4, Mistakes After Award. . . . On November 25, 1996, I met with you in Traverse City to discuss your claim. At this meeting, you told me that when you bid on this project, you had mistakenly assumed the value of the land was worthless, because you already owned it. Therefore, you claimed that you should have asked for more rent. You have not submitted a narrative explanation and justification of your claim. Your only submitted data is a worksheet which purportedly shows that because the land is worth $130,000, the rent should be increased from $149,554 per year to $178,45[5].64 per year, an increase over the life of the ten year contract of [$289,016.40].[foot #] 1 . . . . According to the Federal Acquisition Regulation, Section 14.407-4, Mistakes After Award, determinations to increase the contract rent because of a unilateral mistake in bid made by the offeror and discovered after award, . . . may be made only on the basis of clear and convincing evidence that a mistake in bid was made. In addition it must be clear that . . . if [the mistake was] unilaterally made by the contractor, [it was] so apparent as to have charged the contracting officer with notice of the probability of the mistake. The lessor's request to increase rent due to a mistake in bid is denied. This is the contracting officer's final decision. The documentation submitted does not support your case so clearly as to have charged the contracting officer with notice of the probability of the mistake. Appeal File, Exhibit 35. 13. In appellant s record submission to the Board of March 1997, appellant s principal attempted to explain the significance of the land cost of $130,000: ----------- FOOTNOTE BEGINS --------- [foot #] 1 The contracting officer stated the claimed new yearly rental figure as $178,453.64, a typographical error which understated the total claimed rental increase by $20. We correct the error. ----------- FOOTNOTE ENDS ----------- We did state the land had a value of $130,000. This is a price that we knew we could have obtained for the land, had we ever desired to sell the property, which is in a prime location having one of the highest traffic counts in Northern Michigan. [There] is no other property like it available in this area. The city assessor, for property tax purposes places a land value on the property of $39,403.00 which is supposed to be a [fifty percent] valuation of the property[;] doubl[ing] this amounts [sic] to $78,806. A copy of the tax notice along with a copy of the Hallmark Construction contract is enclosed. 14. Appellant filed an appeal with this Board from the contracting officer s denial, docketed as GSBCA 14093. Appellant s notice of appeal stated: This is to advise you that an appeal is being made relative to the decision of [the contracting officer] concerning GSA Lease No. GS-05B-16099 . . . , wherein a request was made that building rent be adjusted to reflect the cost of investment in land acquisition costs which was inadvertently left out of the computations in arriving at our bid on the SSA building. This request to allow the land acquisition costs in our bid was denied by [the contracting officer]. 15. On or about October 2, 1997, appellant submitted an amended uncertified claim to the contracting officer seeking correction of the alleged mistake because appellant left out the land acquisition value in the offer. Appellant s Record Submission at 88. Appellant also explained that several months after the award for the lease was received, it purchased an additional strip of land adjoining the building site for $13,000. The purpose of the purchase, explained appellant, was to obtain and retain a nicer esthetic and livable space for the SSA building. Id. In the revised claim, appellant sought an increase of $800 in the monthly rental to cover the investment in land for the lease. Id. This amounts to $96,000 over the ten year lease. 16. By letter dated October 20, the contracting officer denied the amended claim for the same reasons he denied the original uncertified claim. Appellant filed a timely appeal at this Board from the contracting officer s denial of the amended claim of mistake. That appeal was docketed as GSBCA 14370. Discussion The appeal docketed as GSBCA 14093 must be dismissed for lack of jurisdiction as it is an appeal from an uncertified contractor claim of more than $100,000. Under the Contract Disputes Act of 1978, as amended, this Board has jurisdiction over appeals from decisions of contracting officers on contractor claims of more than $100,000 only if they have been certified. 41 U.S.C.A. 605(c)(1) (West 1997); Newport News Shipbuilding & Dry Dock Co. v. Garrett, 6 F.3d 1547, 1552-53 (Fed. Cir. 1993). We consider the appeal docketed as GSBCA 14370. Appellant seeks reformation of its lease contract to correct an alleged unilateral mistake-in-bid.[foot #] 2 To be entitled to contract reformation for unilateral mistake in its offer, the contractor must show by clear and convincing evidence that (1) a mistake in fact occurred prior to contract award; (2) the mistake was a clear-cut clerical or mathematical error or a misreading of the specification and not a judgmental error; (3) prior to award, the Government knew or should have know that a mistake had been made; (4) the Government s request for bid verification was inadequate; and (5) proof of the intended bid was established. Cf. McClure Electrical Constructors v. Dalton, No. 97-1209 (Fed. Cir. Dec. 17, 1997); Liebherr Crane Corp. v. United States, 810 F.2d 1153, 1157 (Fed. Cir. 1987); Government Micro Resources Inc. v. Department of the Treasury, GSBCA 12364-TD, 94-2 BCA 26,680, at 132,718; Transco Contracting Co., ASBCA 47289, 96-1 BCA 28,090, at 140,222; 48 CFR 14.407-4, 15.1006 (1996). Appellant has not presented clear and convincing evidence of a mistake. Appellant s claim to the contracting officer was premised on the notion that appellant incurred a $130,000 land acquisition cost that it neglected to put in its offer. Finding 11. The deeds accompanying appellant s proposal, however, do not support the incurrence of those costs, since appellant acquired the land in 1962 for nominal monetary consideration. Finding 2. Appellant s proposals mention no land acquisition costs, and appellant admitted in its record submission that the alleged cost of $130,000 is the presumed selling value of the land, not its cost at all. Finding 13. ----------- FOOTNOTE BEGINS --------- [foot #] 2 In its record submission, appellant makes numerous references to its difficulties with SSA and GSA in its interpretation and administration of its lease with the Government. Appellant, however, submitted only the claims of mistake to the contracting officer for decision, and the contracting officer s decisions only considered those claims. We have jurisdiction to decide appeals from decisions of contracting officers on claims submitted by contractors. 41 U.S.C.A. 605(a), 607(d); Santa Fe Engineers, Inc. v. United States, 818 F.2d 856, 859 (Fed. Cir. 1987). These other issues are relevant for the context in which the claims of mistake arose, and we consider those issues solely for that purpose. ----------- FOOTNOTE ENDS ----------- From the timing and nature of the claim of mistake, it is evident that appellant s mistake in not including land value in its offer was merely a matter of judgment. Appellant did not present its claim until nine months after the lease award, in November 1996. Findings 5, 10. By then the Government had told appellant it was to provide access to the building beyond normal hours without additional payment; that appellant was to provide overtime utility services when requested by the Government; and that the provisions of the lease provided the Government with the right to have possession of a key to the thermostat, thereby allowing the tenant, SSA, to adjust the temperature of the premises at will. Finding 9. In response, appellant said the Government s requirements were too stringent and not adequate to an $800,000 investment. Finding 10. Appellant s claim of mistake followed, apparently in an attempt to recoup a portion of the unexpected costs appellant would have to absorb over the life of the lease. Findings 11, 15.[foot #] 3 Underbidding caused by misapprehension as to the complexity of a contract is an error in judgment and not grounds for reformation for mistake. Liebherr, 810 F.2d at 1157; Fan Inc., GSBCA 7836, et. al., 91-1 BCA 23,364, at 117,185.[foot #] 4 Appellant has not established that the percentage discrepancy of less than fourteen percent between appellant s offer and the next low offer was sufficient to put the contracting officer on notice of the alleged mistake. Transco Contracting Co., 96-1 BCA at 140,223; P.J. Valves Inc., ASBCA 39398, 91-3 BCA 24,251, at 121,254-55. Appellant has not demonstrated that other discrepancies between the offers should have put the contracting officer on notice of appellant s alleged mistake. Appellant, therefore, is not entitled to reformation for its alleged mistake in failing to include the $130,000 land value in its offer. In its amended claim, appellant submitted to the contracting officer a second expenditure -the $13,000 frontage cost it incurred after the award of the lease. Finding 15. Both appellant and the contracting officer considered this item included in the mistake claim. The incurred cost of $13,000 ----------- FOOTNOTE BEGINS --------- [foot #] 3 Despite use of the phrase "too stringent" in its correspondence with the contracting officer, appellant does not here claim that the Government's interpretation violated the terms of the lease. The record contains no claims by appellant to the contracting officer contesting the Government s interpretation of the lease. [foot #] 4 This is not a case where a contractor alleges that it misread specifications which resulted in a mistake. Appellant does not point to a specification that it misread in neglecting to put the alleged land value in its offer. ----------- FOOTNOTE ENDS ----------- arose after submission of appellant s offer, and indeed, after the award of the contract. The incurrence of that cost can hardly be classified as a mistake-in-bid. Decision The appeal docketed as GSBCA 14093 is DISMISSED. The appeal docketed as GSBCA 14370 is DENIED. ____________________________ ANTHONY S. BORWICK Board Judge We concur: ___________________________ ____________________________ JOSEPH A. VERGILIO CATHERINE B. HYATT Board Judge Board Judge