Board of Contract Appeals General Services Administration Washington, D.C. 20405 _____________________________________________ GSBCA 14178 DENIED; GSBCA 14757 GRANTED: December 30, 1999 _____________________________________________ GSBCA 14178, 14757 PROGRAM AND CONSTRUCTION MANAGEMENT GROUP, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Leonard A. White and Julia A. Novina, Bethesda, MD, counsel for Appellant. Ruth A. Kowarski, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges HYATT, DeGRAFF, and GOODMAN. HYATT, Board Judge. On December 6, 1995, the General Services Administration (GSA) awarded contract GS-11P94MKC0019 to Program and Construction Management Group, Inc. (PCMG) as a subcontractor to the Small Business Administration (SBA). Under this contract, PCMG was responsible for performing an upgrade of the heating, ventilation, and air conditioning (HVAC) system for the Department of Energy (DOE) kitchen and cafeteria in Germantown, Maryland. The contract award was for the fixed-price amount of $747,267. PCMG appeals a contracting officer's decision denying its request for an equitable adjustment to compensate it for alleged changed work and delays to the contract (GSBCA 14178). In addition, PCMG appeals a contracting officer's decision assessing a back charge for asbestos abatement (GSBCA 14757). For the reasons stated, we deny GSBCA 14178 and grant GSBCA 14757. Findings of Fact Contract number GS-11P94MKC0019, for the upgrade of the heating, ventilation and air conditioning (HVAC) system of the cafeteria, kitchen, and other facilities located at DOE's Germantown, Maryland, facility, was awarded to PCMG pursuant to the SBA's set aside program. In addition to demolition of existing equipment and installation of a new HVAC system, the contract called for asbestos abatement where necessary. Appeal File, Exhibits 1, 9. [foot #] 1 Solicitation/Contract Provisions Concerning Hours of Work Section 01010, clause 1.4, addressed Government occupancy of the building during performance of the contract work: Full Government Occupancy: The Government will occupy the site and the existing building during the entire period of construction. Cooperate fully with the Government representative during construction operations to minimize conflicts and to facilitate Government usage. Perform the work so as not to interfere with the Government operations. Section 1040, clause 1.5, set forth "Limitations for Use of Site," including the following pertinent provisions: C. Occupancy of Premises: The premises will be occupied during performance of work under the contract. . . . . . H. Unless noted otherwise, all work in Mechanical Equipment Rooms may be done during standard business hours. In Kitchen, serving line areas and dining area, all work shall be done between 2:00 pm and 5:00 am on week nights and from 2:00 pm Friday to 5 am Monday. . . . . ----------- FOOTNOTE BEGINS --------- [foot #] 1 In accordance with the Board's Rules of Procedure, both GSA and PCMG had submitted a Rule 104, or appeal, file. GSA's Rule 104 submission begins with exhibit 1; appellant's supplemental Rule 104 file begins with exhibit 101. Since there is no overlap in the numbers, all numbered exhibits are referred to as part of the appeal file. ----------- FOOTNOTE ENDS ----------- M. Existing Equipment on Site: Cover equipment that is to remain in place within the area of contract operations and protect it against damage or loss. . . . In addition, dining tables, chairs and service equipment shall be wiped clean of debris after the conclusion of every work day before 5:00 am. Appeal File, Exhibit 1. Architectural drawing 3.1A stated in a note addressing the sequencing of work that: Note: The building shall remain in operation during the work of this contract. The hours of operation allowed for the contractor's work in occupied areas is indicated in the specifications. Appeal File, Exhibit 46, Drawing 3-1A. Drawing 9-M-1, note 8, of the contract initially contained a requirement for the provision of temporary HVAC: The cafeteria, dining area, kitchen and serving line shall remain in operation during the work of this contract. Before work begins the contractor shall submit a plan to provide temporary ventilation, cooling or heating, as required to maintain indoor temperatures of 80 degrees F in the cooling season and 65 degrees F in the heating season. The kitchen cooling season indoor temperature shall be maintained at 85 degrees Fahrenheit maximum. Appeal File, Exhibit 22, Drawing 9-M-1. Pre-Award Negotiations The solicitation, number GS-11P94MKC0019SBA, was issued in early February 1994. The cost of the entire project was estimated to range between $250,000 and $500,000. Appeal File, Exhibit 24. In January 1994, this solicitation was earmarked as a section 8(a) set aside for award to a qualified small business. Appeal File, Exhibit 25. PCMG, which was founded in 1987 by its president, Dilip Sheth, became a qualified SBA section 8(a) subcontractor in late 1993. Transcript at 24. By letter dated February 4, 1994, the SBA assigned the contract to PCMG. Appeal File, Exhibit 25. PCMG, through its president and its vice president, Mehdi Mofakhami, thereafter commenced discussions with GSA concerning the performance of this contract. Transcript at 24-25. A preproposal conference was held on February 15, 1994. Appeal File, Exhibit 24. PCMG received the drawings and specifications for this contract in advance of the preproposal conference, so it was familiar with the scope of the project. Transcript at 31-33. The conference was attended by the two principals of PCMG, Messrs. Sheth and Mofakhami, as well as by several representatives of GSA, including the contracting officer designated in the solicitation, Joy Walker, the contract specialist, Shirley Washington, and GSA's design project manager, Ann Marie Sweet-Abshire. Appeal File, Exhibit 24. The preproposal conference was convened for the purpose of reviewing the general scope of the project, including the need for site passes at DOE. GSA specifically drew PCMG's attention to the hours of work specified in the solicitation and discussed the need to work in serving areas only when the cafeteria was closed, because DOE had asked during the design phase to make sure that cafeteria space would remain usable for duration of project. Transcript at 513-15.[foot #] 2 One of the topics that was discussed at the preproposal conference was the requirement to provide temporary heating and cooling while the renovation work was being performed. PCMG, noting that it made a difference whether cooling or heating would be required in terms of what would be proposed and what it would cost, asked for clarification of this requirement. Transcript at 28-30, 513-15. After considering this issue, the GSA ----------- FOOTNOTE BEGINS --------- [foot #] 2 The contracting officer prepared a brief summary of items of clarification discussed at the conference. Of relevance to matters in dispute in this appeal are several items, including item 2, which states that "[w]ork will be performed during regular work hours" and item 6, which states that a "technical amendment will be issued to delete cooling requirement from the project scope." The summary does not state that a decision had been reached to close the cafeteria. Appeal File, Exhibit 24. ----------- FOOTNOTE ENDS ----------- representatives realized that it would not be feasible to delineate which would be required because there was no way to predict when the award would be made. Transcript at 516. Accordingly, a decision was made to remove the requirement for temporary heating or cooling from the solicitation until such time as an award was made and the need for temporary HVAC could be more clearly defined.[foot #] 3 Transcript at 513- 16. The requirement was removed by deleting note 8 from drawing 9-M-1. This was accomplished in amendment one to the solicitation, issued on February 16, 1994. Appeal File, Exhibit 1. This project was designed by Donna Rubino, a mechanical engineer employed by S3E Consulting Engineers. S3E was responsible for the design of the plumbing, electrical, and mechanical work for this contract. Ms. Rubino drafted note 8 on drawing 9-M-1. After the preproposal conference was concluded, Ms. Sweet-Abshire informed Ms. Rubino that note 8 was going to be removed because the contractor was having difficulty pricing temporary HVAC. It was Ms. Rubino's understanding, based on this conversation, that the temporary HVAC would be added back into the contract by a change order after award. Transcript at 291- 96. Negotiations for this project were sporadic and spanned over a lengthy time period. Two additional amendments, revising the cost breakdown sheet in the solicitation, were issued in February 1994. On February 25, 1994, GSA received PCMG's first proposal, in the amount of $891,998. Since this significantly exceeded the Government's estimate, an audit was scheduled. In addition, GSA sent PCMG a copy of the "Guide for Contractor's Proposal Submissions." On March 16, 1994, PCMG submitted a revised proposal, in the alternative amounts of $958,540 and $877,456, depending on the brand of equipment to be installed. An audit was completed in late July 1994. Several negotiation sessions with PCMG were held in August 1994. Appeal File, Exhibit 25. ----------- FOOTNOTE BEGINS --------- [foot #] 3 There is some conflict concerning this subject in the testimony of the individuals who attended the preproposal conference. Messrs. Sheth and Mofakhami averred that Ms. Sweet- Abshire called DOE during the course of the meeting and inquired whether it would be feasible to close the cafeteria. She returned to the meeting and said that it would be possible to close the cafeteria and that DOE could serve cold sandwiches as an alternative. Transcript at 37-39, 762-69. Ms. Sweet-Abshire, who also testified, did not confirm such a conversation and attested that the focus at the preproposal conference was on removing the temporary HVAC requirement because of uncertainties with respect to pricing this item. GSA always intended in some fashion to reinstitute the requirement for temporary HVAC after award. Transcript at 517-19, 527-31. ----------- FOOTNOTE ENDS ----------- In a session held on August 30, 1994, items discussed included the proposed issuance of amendment number 4 to the solicitation, eliminating portions of the work. The amendment was issued later that day. Appeal File, Exhibit 25. Amendment 4 provided, in pertinent part, that "[f]or air handling units where the fan is internally isolated, flexible connection[s] are not required at the coils." Appeal File, Exhibit 2. PCMG submitted a revised proposal on September 16, 1994, in the amount of $898,183, which GSA still deemed to be too high. Sporadic negotiation sessions were held with PCMG over the next few months, culminating in a request for a best and final offer (BAFO) on December 29, 1994. Appeal File, Exhibit 25. Another negotiation session was convened with PCMG's vice president in early March 1995. Ms. Sweet-Abshire attended this meeting and wrote a memorandum summarizing the matters discussed. The issue of work hours at the site was one of the issues addressed in this session: [Mr. Mofakhami] raised a question regarding the work hours specified. He asserted that he had not included overtime or night differentials in his present proposal. GSA stated that [it] had accounted for that in the numbers [it] presented and [had] the understanding that PCMG had done the same. [Mr. Mofakhami] said that this was a small item if he had received the project at his original price. He feels that now GSA has negotiated him down to a "bare bones" price, he does not have enough margin to absorb these "additional" costs. [The contracting officer] stated that the specifications were clear from the beginning regarding working hours and that PCMG should have accounted for these working conditions. [Mr. Mofakhami] asked if GSA could put something in writing regarding his ability to come back later and request an additional 15% for premium/overtime in the future. The request was denied by GSA. [GSA] reiterated that the specifications stood as originally issued in this area and that GSA had negotiated with these working hours in mind. [GSA] expressed distress at the idea that PCMG had not already taken the work hours into consideration. Appeal File, Exhibit 28. Ms. Sweet-Abshire recalled that, during discussions concerning work hours, she said that the cafeteria would be open. Transcript at 527-31. At the conclusion of this negotiation session, PCMG was asked to look into a number of items in preparation for an upcoming meeting. One of these items was to "[v]erify that their labor prices are based on the hours specified." Appeal File, Exhibit 28. Contract Award Contract number GS-11P94MKC0019, in the amount of $747,267, was awarded to the SBA under the 8(a) set aside program December 5, 1995. SBA in turn awarded the subcontract under this program to PCMG on December 6, 1995. The notice to proceed was issued on December 7, and received by PCMG on December 8, 1995. The contract provided for a completion date of 180 days following receipt of the notice to proceed. Appeal File, Exhibits 9-11, 31. The contract required PCMG to "commence work under the contract within [a] calendar day after the contractor receives the notice to proceed and to complete the work within 180 days after receipt of the notice to proceed." Appeal File, Exhibit 1 at 00800-1. Section 01040 of the contract, part 1.2, entitled "Coordination and Meetings," references a preconstruction meeting only for the purpose of conducting a "preconstruction safety meeting." Appeal File, Exhibit 1. The contract contained a variety of requirements to be met by the contractor prior to commencement of work at the site. Among these was a requirement to obtain security clearance forms from DOE and submit completed applications for workers to be at the site within five days; the submittal of an accident prevention plan; the submittal of a selective demolition plan; and the submittal of the contractor's asbestos abatement procedures. The contract also provided that the contractor submit a construction progress schedule within fourteen days after receipt of the notice to proceed. The progress schedule was to include within it all work related submittals. Appeal File, Exhibit 1, 01541, 01546, 02070, 01310 PCMG had anticipated the need to prepare the contract submittals during negotiations and had done much of the preliminary work needed to generate required submittals. In addition, PCMG commenced work on submittals promptly after receipt of the notice to proceed and spent twelve days on this effort. Although it could have provided these submittals to GSA earlier, PCMG held off, because it was its practice to distribute these materials at the preconstruction meeting. Appeal File, Exhibit 38, at 6; Transcript at 780-81. The contract does not expressly require a general preconstruction meeting. Section 01040, part 1.2D, which is entitled "Preconstruction Meeting" contains only a cross- reference to section 015436, which addresses safety and health. Section 1.04A of the safety and health specification calls for a "safety meeting" to be held with specified representatives of the contractor and representatives of the contracting officer prior to the start of work under the contract. The meeting is for the purpose of reviewing the contractor's safety and health programs to determine if they are adequate given the nature of any hazardous conditions that might exist at the work site. In addition, "[i]f directed by the contracting officer, this meeting may be held in conjunction with other meetings which are scheduled to take place prior to start of the work under this contract." PCMG's principals testified that they attempted to call someone at GSA about the preconstruction meeting in December 1995, but did not identify who was called. On January 11, 1996, PCMG wrote to GSA, requesting that a preconstruction meeting be held so that PCMG could proceed with the contract work. Appeal File, Exhibit 210; Transcript at 787. A construction engineer, John Stewart, was assigned to the contract in mid-January 1996. Mr. Stewart undertook promptly to schedule a preconstruction conference, which took place on January 23, 1996. Both Mr. Stewart and PCMG's principals agreed that preconstruction meetings are usually held within seven to ten days after issuance of the notice to proceed. Transcript at 46-47, 192, 358-60, 778-79. Mr. Stewart recognized, nonetheless, that preconstruction conferences are not always necessary. It is his custom to convene a conference to provide an informal mechanism for "getting the players together," but if no meeting were held it would not usually have much effect. The holding of a preconstruction conference is not a prerequisite to a contractor's commencement of work under the contract. Transcript at 358-60. In preparation for the preconstruction meeting, Mr. Stewart reviewed the contract and prepared a written agenda. The agenda so prepared reflects Mr. Stewart's expectation, drawn from a hurried review of the contract, that the cafeteria would be closed. Mr. Stewart explained at the hearing that he was not familiar with the project prior to receiving this assignment, and did not have time to assimilate the terms of the contract as carefully as he would have liked prior to the meeting. In retrospect, he stated that he had simply misunderstood the circumstances under which amendment one was issued prior to the preconstruction meeting. Transcript at 189-90. At the preconstruction meeting, the statement in the agenda that the cafeteria would be closed drew considerable commentary from DOE, the cafeteria contractors, and the architect design professional who had prepared the drawings and drafted note 8 providing for temporary HVAC to be supplied by the contractor. DOE had not realized that the requirement for temporary HVAC had been eliminated and wanted it put back into the contract. The cafeteria workers had no idea that the cafeteria might be closed for the duration of the project. Ms. Rubino, the design engineer, emphasized that the purpose of amendment one to the contract had been to remove the requirement for the contractor to provide temporary HVAC. She explained that it was not intended to, and did not, provide that the cafeteria would be closed. Appeal File, Exhibit 33; Transcript at 311-12. Also contained on Mr. Stewart's copy of the preconstruction conference agenda was a handwritten notation to "add 46 days. long time from NTP to precon." Mr. Stewart testified that he made this notation because PCMG had raised the issue, claiming that they were delayed in starting performance of the contract. Transcript at 365-68. Another matter addressed during the preconstruction meeting was the requirement that, in compliance with DOE regulations, PCMG obtain security clearances for workers who would be at the site. Section 01541, part 1.2B of the contract informed PCMG as to which forms were required to be obtained from DOE and submitted for each PCMG employee requiring access to the DOE building. This provision required PCMG to submit completed security clearance forms to the contracting officer within five days after contract award. Appeal File, Exhibit 1. Although PCMG called DOE in December 1995 to advise the agency that it had received the contract to upgrade the cafeteria HVAC system, it did not request security forms when it made this call. As of the date the preconstruction meeting was held, PCMG still had not submitted any of the information required to obtain the security clearances and badges required by DOE to permit the contractor's employees access to the work area. Transcript at 377, 651-52, 670. The submittals called for under the contract were not provided by PCMG at the pre-construction meeting, but instead were forwarded at various times thereafter. PCMG submitted its construction progress plan the next day, on January 24, 1996. The accident prevention plan and the demolition plan were both provided to GSA on February 8, 1996. GSA approved the accident prevention plan on February 15, 1996. The time elapsed from the issuance of the notice to proceed until the receipt and reasonable time for approval of necessary submittals totaled sixty-nine days. Appeal File, Exhibits 10, 18, 34; Transcript at 381-83. Contract Administration The Schedule PCMG submitted its construction schedule on January 24, 1996. This schedule extended contract completion by 46 days due to delay claimed to have been caused by the Government. The first two planned activities are asbestos abatement and demolition of the existing equipment. Appeal File, Exhibit 124. PCMG interpreted note 1 on drawings 3-1 and 3-1a to require asbestos removal to be completed before other work. These notes stated: The asbestos abatement work on the first floor and in the north mechanical room shall be completed during Phase 1, before any demolition work of mechanical system takes place in these areas, refer to sheet 9-M-11 and 9-M-11a for asbestos removals. The work in the south mechanical room and at the ground floor level shall begin during this phase of the work. Amendment four to the contract provided that work depicted on drawing D-1 bounded by column lines C through F and A through 1 were deleted. The deletion was explained to include all work in the area related to asbestos removal, general demolition, HVAC demolition, work in the north cafeteria mechanical equipment room, and new work in those areas. Appeal File, Exhibit 1. PCMG and GSA disagreed as to how this language should be interpreted. PCMG contended that the contract required that it proceed with asbestos abatement first -- GSA pointed out that the drawings depicted the areas deleted under amendment four. Appeal File, Exhibits 129, 135. PCMG scheduled demolition early in contract performance because in its view removal of the existing HVAC was critical to proceed to unit replacement. Transcript at 69-70. In response to PCMG's initial schedule submittal, Mr. Stewart asked PCMG to make certain revisions, noting that some of the planned activities, such as removal of ceiling tiles and asbestos abatement, would disrupt operation of the cafeteria, and pointing out that demolition could not proceed until PCMG had an approved demolition plan in accordance with specification 02070- 1.3. Appeal File, Exhibit 34. In a letter dated February 8, 1996, PCMG declined to revise its schedule with respect to asbestos abatement, contending that the contract drawings imposed this schedule and requesting that GSA issue an amendment to the contract to change the sequence of work. In addition, PCMG raised its argument that the Government's decision to "change" the contractual requirements by keeping the cafeteria open would have a significant impact on the original scheduling activities and completion time. PCMG asked GSA what it should do in lieu of removing tile and asbestos. Finally, PCMG enclosed a demolition plan with the letter. Appeal File, Exhibit 129. In a letter dated February 15, 1996, the administrative contracting officer informed PCMG that the sequence of work note on drawing 3-1 pertained to the north mechanical room and office areas only, that these areas were deleted by amendment four, and that the sequence note no longer applied. He confirmed Mr. Stewart's instruction to reschedule the ceiling removal and asbestos removal. Finally, the contracting officer stated that PCMG could proceed with the demolition work in the south mechanical room when authorized by Mr. Stewart. Appeal File, Exhibit 133. On February 20, 1996, PCMG authored two letters -- one to the contracting officer and another to the construction engineer. In corresponding with the contracting officer, PCMG repeated its disagreement with GSA's interpretation of amendment four. In the other letter, addressed to Mr. Stewart, PCMG complained that CE [change estimate] #1 had completely derailed its momentum on the job. Appeal File, Exhibits 134-35. Temporary HVAC On January 23, 1996, immediately following the preconstruction meeting, GSA issued CE #1 seeking a cost proposal from PCMG for the provision of temporary HVAC for the project. Appeal File, Exhibits 22, 35. On February 1, 1996, PCMG submitted a price quotation of $164,438. This proposal was rejected by GSA as cost prohibitive. As a result, CE #1 never evolved into a change under the contract. Instead, the construction engineer, working with both PCMG and DOE, undertook to fashion a more economical approach to the installation of temporary HVAC, which involved splitting the work into four separate projects. Appeal File, Exhibit 35; Transcript at 385- 88. Thereafter PCMG submitted several price proposals; in GSA's view, however, the prices proposed remained unacceptably high. Transcript at 390. On February 15, 1996, GSA issued CE #2, requesting a proposal to provide temporary HVAC to training rooms adjacent to the dining area. Appeal File, Exhibit 36; Transcript at 389, 399. This request was issued because GSA had not realized initially that temporary HVAC would be needed in these areas, which were also served by the system undergoing replacement. DOE requested that GSA add temporary HVAC to the classrooms. A unilateral change order was issued on February 28, 1996, in the amount of $10,252 authorizing PCMG to install temporary ductwork in the lobby and in a training room. Appeal File, Exhibit 36; Transcript at 399-400. CE #3 was issued on February 29, 1996, for the provision of temporary cooling in the serving line area and the dining area. Negotiations were concluded on March 5, 1996, and PCMG commenced performance of this work effort on March 8. The work was completed on March 13. Appeal File, Exhibit 37. Eventually, in order to minimize delays to the work, GSA awarded portions of the scope of work under CE #1 to PCMG and to KCI, Incorporated, another GSA contractor. Transcript at 389-90, 399-400.[foot #] 4 In short, under Mr. Stewart's approach, temporary HVAC was split into four parts. Temporary ----------- FOOTNOTE BEGINS --------- [foot #] 4 Specifically, the portion of this work providing for cooling of the dining room was awarded to KCI, Incorporated, for the amount of $38,000, which was significantly lower than PCMG's proposed price of $58,000. Transcript at 389-92. ----------- FOOTNOTE ENDS ----------- HVAC was installed in the kitchen by the Government, using in- house resources, in late February and early March. Mr. Stewart testified that, to the best of his knowledge, the cost of providing this temporary HVAC was very low -- perhaps in the neighborhood of $500. Two areas were contracted to PCMG -- the training rooms and the serving line area. Temporary HVAC to these areas was installed by PCMG in March 1996. KCI provided HVAC to the dining room in May 1996. Transcript at 170-71. Demolition Demolition commenced on March 14, 1996. PCMG planned to accomplish this process by using torches to remove existing piping and ductwork. Transcript at 92-96. The previous day, PCMG had requested a burning permit from DOE for the period from March 14 through March 31, 1996.[foot #] 5 DOE has authority to issue and revoke permits as part of its responsibility to operate the building. Appeal File, Exhibit 39; Transcript at 422-23. The contract specifications contained various restrictions with respect to the demolition process in and around occupied areas. The demolition specification reminds the contractor that the owner "will occupy portions of the building immediately adjacent to areas of selective demolition." Depending on the means to be used to accomplish demolition, the contractor was required to provide temporary barricades and other forms of protection to seal the mechanical room and shield DOE's employees and the general public from exposure to selective demolition work. With respect to flame cutting, the contractor is instructed: Do not use cutting torches for removal until work area is cleared of flammable materials. At concealed spaces, such as interior ducts and pipe spaces, verify condition of hidden space before starting flame-cutting operations. Maintain portable fire suppression devices during flame-cutting operations. Appeal File, Exhibit 1, 02070. Of particular relevance to this dispute, if existing piping and mechanical equipment was to be removed with the use of a torch, or by flame cutting, the contract required that burning and welding fumes be vented with no penetration into the building. Appeal File, Exhibit 1, 01010-1.7.D. ----------- FOOTNOTE BEGINS --------- [foot #] 5 The contract specifies that the contractor obtain permits for welding, cutting, and burning. These permits are to be "obtained each day from the [DOE facility manager] whenever welding, cutting or any open flame work is performed." Appeal File, Exhibit 1, 01546-3.01B. ----------- FOOTNOTE ENDS ----------- The contract did not specify how the demolition of existing equipment was to be achieved by the contractor. The contractor was not required to select burning as the means to accomplish demolition. Rather, piping, ductwork and equipment could have been removed by the use of electrical or hand snips or a saw. Transcript at 202-03. PCMG elected to use burning, which it noted is a conventional demolition method, and which it considered to be the most efficient, effective way to proceed. Transcript at 92-93, 595-96. The Government's expert and the construction engineer attested that typically some cold cutting of ductwork should be anticipated, particularly when a building is occupied. To the extent that cutting and burning is viewed as the most cost-effective procedure, the contract hours and specifications should have caused the contractor to understand that the owner expected this type of demolition to occur during hours when the building is unoccupied to minimize disruption from odors, noise, and fumes. Appeal File, Exhibit 1; Transcript at 426, 1074-77. On March 14, 1996, DOE stopped demolition because PCMG had allowed "excessive and noxious fumes" to infiltrate the cafeteria during regular working hours and revised PCMG's burn permit to limit burning to the hours of 2:30 p.m. to 6:00 p.m. Appeal File, Exhibit 3; Transcript at 677. This limitation continued until May 13, 1996, when PCMG's plan, which it submitted on May 6, for venting fumes from the building was approved. Appeal File, Exhibit 39. On May 31, 1996, the permit was once again revoked due a fire caused by PCMG which required evacuation of the kitchen, cafeteria, and portions of the E-wing of the building. After this, PCMG was reminded on several occasions that it needed to develop a plan that would prevent, rather than simply diminish, smoke penetration into the building. Appeal File, Exhibits 3, 39; Transcript at 485-86, 673-76. An appropriate plan was furnished by PCMG on June 10, 1996. An unrestricted permit was then issued which permitted PCMG to conduct burning based on a weekly application for a permit. Appeal File, Exhibits 3, 39. The problem with fumes was exacerbated by the existence of high negative pressure in the kitchen. High negative pressure is a very typical condition in a kitchen, which is designed that way to control cooking odors. This means that smoke fumes or odors generated by demolition activities can be expected to be sucked into the kitchen as opposed to being blown out of it. Transcript at 424, 1077-78. Experienced HVAC contractors could be expected to realize that kitchens have negative pressure. Transcript at 424. To alleviate the fume problem, eventually PCMG put polyethelyne and duct tape over openings and introduced an exhaust system to vent fumes outside. This was not complicated - - it was accomplished in about a day once PCMG set out to do it. Transcript at 425-28. On March 19, 1996, PCMG submitted a change claim for a lost afternoon of work on March 15, 1996, which it considered was caused by the revocation of its permit to conduct burning during regular hours. The construction engineer rejected this request because PCMG, as a result of its own failure to ventilate the fumes generated by burning, caused DOE to impose restricted hours. Subsequently, PCMG submitted a delay claim seeking a thirty day time extension and $37,143 in costs allegedly attributable to a "differing site condition" and prolongation of demolition as a result of burn permit restrictions. PCMG contended that the smoke emission problem was caused by two conditions: (1) the existence of negative pressure in the kitchen; and (2) the fact that DOE kept the cafeteria in operation during performance of the project. PCMG claimed that demolition was prolonged by thirty days, and that it incurred unanticipated overtime costs and labor inefficiencies as a result of the restrictions on its use of burning in demolition. This claim was similarly rejected by the construction engineer. Appeal File, Exhibits 39, 154; Transcript at 419-28. In rejecting this claim, the construction engineer pointed out that the contract did not state that the cafeteria would be closed. In addition, the contract cautions that the work is not to disrupt operations of the building during normal working hours. Finally, the construction engineer noted that PCMG failed to provide an acceptable plan to control noxious fumes until May 6. Appeal File, Exhibit 39. Flexible Connections The contract contains a performance specification for equipment and did not require PCMG to use a particular manufacturer's air handling unit to upgrade the system at DOE. The contractor was free to select any compliant product that it wanted. At the same time, the contract did specify that with respect to the product selected, the contractor was required to adhere to the contractor's instructions for installation. Appeal File, Exhibit 1, 01040-3.1.C; Transcript at 239-40, 275.[foot #] 6 The air handling unit's manufacturer's instructions required that the coils be protected from the stress and strain created by the effects of thermal expansion and contraction. Amendment 4, issued during negotiations to clarify contract requirements for ----------- FOOTNOTE BEGINS --------- [foot #] 6 Specifically, the specifications stated: Where installations include manufactured products, comply with the manufacturer's applicable instructions and recommendations for installation to extent these are more explicit or more stringent than requirements indicated in contract documents. Appeal File, Exhibit 1, 01040-3.1.C. ----------- FOOTNOTE ENDS ----------- flexible connections, provided that "flex connections" would not be required at the coils for air handling units where the fan is internally isolated. Appeal File, Exhibit 1. Mr. Stewart did not know if the manufacturer's recommendations said to provide such connections. He did testify that there is a distinction between vibration isolation, which was the subject of amendment 4, and thermal expansion. Transcript at 431, 447. Specifically, vibration is shaking of equipment, caused by fatigue or repetitive cycle, which causes damage to the equipment. Expansion is a consequence of temperature changes. As pipe heats up it tends to elongate; as it cools it shortens. The constant cycle of heat up and cool down can cause failure by introducing stress and strain into the pull connections. Transcript at 435. Flexible connections address technical issues attributable to vibration, not thermal expansion and contraction. Transcript at 346. In a July 3 letter to PCMG, Mr. Stewart noted that the PCMG superintendent at the job site had pointed out that the York air handlers needed some kind of connections to relieve stresses and strains under the manufacturer's manual. PCMG wanted compensation for including these devices. Although Mr. Stewart agreed that stresses and strains followed by thermal expansion at the coils would be a problem under the manufacturer's guidelines, he disagreed that GSA should pay separately for these devices to be installed. In his opinion, amendment four was not germane; that amendment spoke to vibration issues arising from fan and inertia pads. Vibration is shaking which causes noise to be transmitted through ductwork and damage to equipment through fatigue or repetitive cycle. Expansion is caused by temperature changes. As pipe heats it lengthens -- as it cools, it shortens. The constant cycling of heating and cooling can also cause stress and strain to system at the connections, leading to failure. Amendment four spoke to vibration -- this situation was related to thermal expansion. In his opinion, PCMG was not relieved of any obligation to install whatever devices were needed to avoid damage from thermal expansion, particularly if needed to obtain a manufacturer's warranty. Transcript at 431-36. On August 19, 1996, PCMG submitted a cost proposal for supplying flexible connections to protect pipes and equipment from damage from "expansion, contraction, and vibration." In this letter PCMG alleges that "prior to award . . . GSA eliminated all flex connections" regardless of whether used for "expansions, contractions, or vibrations." The cost proposal did not provide a copy of the manufacturer's recommendations on coils or equipment but summarily stated entitlement. Appeal File, Exhibit 42. Duct Layout Coordination Drawings The contract does not specify use of a particular manufacturer; rather, it provides performance requirements and leaves it to the contractor to select suitable equipment. Appeal File, Exhibit 1; Transcript at 239-40, 275. Section 15890, part 1.3.B requires the contractor to furnish shop drawings for sheet metal ductwork which (1) are drawn to a scale of not less than 1/4 inch to one foot; (2) provide sheet sizes equal to contract drawings; (3) show duct sizes; (4) show fitting details; and (5) show lighting and ceiling diffusers. Part 1.3.C of this specification requires the contractor to furnish coordinated shop drawings for sheet metal work in mechanical equipment rooms and other congested areas. Similarly, the drawings are to (1) be drawn to a scale of inch to one foot; (2) provide sheet sizes that match contract drawings; (3) show duct sizes; (4) show bottom duct elevations; (5) show lighting, equipment, piping, columns, and beams, with mounting heights; (6) show construction details of all fittings; and (7) show construction details of plenums and casings. Appeal File, Exhibit 1. Coordination drawings are intended to adapt the original design drawings to the equipment actually selected by the contractor. It was PCMG's decision to install York equipment, although it could have selected smaller equipment which would have aligned more closely with the design drawings provided in the contract. Transcript at 279-81. When PCMG realized that the equipment selected did not fit the duct layout, it so advised GSA. GSA agreed that the ductwork layout would have to be reconfigured for the York equipment. Given the timing of PCMG's discovery Mr. Stewart thought it made sense to try to make the ductwork fit the space constraints, which were exacerbated by PCMG's selection. Transcript at 277-280. PCMG alleges that the previous duct layout and the duct work added to accommodate temporary heating and cooling greatly increased the work it would ordinarily have been required to do to supply coordination drawings. PCMG considered these conditions to be "beyond its control" and claimed that it practically had to redesign the duct layouts rather than simply make minor modifications to supply coordination drawings. Appeal File, Exhibit 152. In response, GSA stated that in reviewing PCMG's duct work drawings, the Architect-Engineer recommended modifications to accommodate the larger size of the air handler units selected by PCMG. Appeal File, Exhibit 155. Subsequently, when PCMG pressed its request for compensation for revising the duct work layouts, GSA responded that it was entitled to a credit for PCMG's failure to provide the full complement of drawings required by the contract specifications. Appeal File, Exhibit 199. PCMG's position is that it provided the final as-built drawings for the new pipe and duct layout. It did not provide the full complement of coordination drawings required under the contract specifications because it was almost impossible to do so as a result of the many changes. Transcript at 804-06. Light Fixtures The contract required PCMG to relocate existing light fixtures. Appeal File, Exhibit 46, Drawing 9-E-1, note 6. The construction engineer attested that, in his recollection, at the time work started at the site, the light fixtures were in working order. Transcript at 439. PCMG's principals testified that the fixtures were old and some of them could not be re-used. As a result, PCMG had to buy new fixtures; most of these were replacements for fixtures that could not be reused because, according to PCMG, they did not work.[foot #] 7 Transcript at 107-08, 728. Relocation of light fixtures is required under drawing 9-E- 1. Although relocation of light fixtures was not considered by GSA to be new or extra work, PCMG was told that should it be necessary to pull new wire to deal with concealed junction boxes, this effort would constitute new work. Appeal File, Exhibits 44, 46. In response to PCMG's assertions, the construction engineer issued CE #19, requesting a proposal for additional work associated with light fixtures. PCMG submitted a proposal in the amount of $3247 for additional work entailed in relocating light fixtures. GSA rejected this proposal, stating that there were no "concealed" junction boxes and, therefore, there was no added cost for which GSA was responsible. Appeal File, Exhibits 186- 87. Change Orders On April 22, 1996, PCMG and GSA reached agreement on a price for delay in job start up and remaining temporary HVAC work under CE #1. The remaining HVAC work was priced at $57,000. The contract completion date was extended by 28 days, and the amount of $22,204 was agreed to for compensation for extended overhead costs. The parties remained at an impasse as to entitlement to compensation for idle payroll. Appeal File, Exhibits 38, 156, 163, 171. On May 2, 1996, the construction engineer wrote to PCMG, advising that GSA's policy was to include all costs in settlement of contract modifications, including impact and delay costs. He further advised that GSA took the position that the amount agreed to included extended overhead costs and that the 28-day time extension covered lost efficiency in early demolition work. Appeal File, Exhibit 163. On June 24, 1996, PCMG agreed to a partial settlement of its claim by accepting a 28 day time extension and the amount of ----------- FOOTNOTE BEGINS --------- [foot #] 7 PCMG acknowledges that it damaged one light fixture in the process of relocating it, but it has not sought compensation for the cost of replacing that fixture. Transcript at 108-09. ----------- FOOTNOTE ENDS ----------- $22,204 for extended overhead and lost efficiency associated with CE #2 and CE #3. The portion of its claim seeking 34 alleged delay days attributable to the length of time that lapsed before GSA convened a preconstruction meeting was deemed by PCMG to have been denied. PCMG reserved its right to claim all direct, indirect, and delay costs associated with this item and with CE #1. Appeal File, Exhibit 38. On August 16, 1996, PCMG returned signed change orders AS02 and AS03 to GSA. In attached correspondence, PCMG reserved its right to claim for all direct, indirect, impact, and delay costs associated with CE #1. According to GSA, the original AS03 document, increasing the contract price by $30,500 and granting a time extension of 14 days, signed by PCMG on August 16 contained a handwritten notation, added by John Daw, the contracting officer's authorized representative, to the effect that the change order included all direct, indirect, impact and delay costs associate with the modification.[foot #] 8 On August 22, 1996, Mr. Daw signed AS02, finalizing this bilateral change to the contract. Appeal File, Exhibit 37; Transcript at 415-19. On September 2, the compensation for CE #2 was finalized in bilateral change order AS02 in the amount of $24,202 and a time extension of 28 calendar days. The amount of $22,000 compensated PCMG for the time period when it was prevented from working because of the need for temporary HVAC; $2000 was the actual cost of supplying temporary heating and cooling in the training rooms. This change order also included all direct, indirect, impact, and delay costs associated with the modification. In addition, this change order included compensation for extended overhead costs resulting from Government-caused delay associated with both CE #2 and CE #3. Appeal File, Exhibits 36, 38; Transcript at 405-06, 428-29. Cost of Preparing Temporary HVAC Proposal PCMG claims the amount of $4463, representing the direct labor costs of drafting and negotiating its temporary HVAC proposal which it submitted in response to CE #1. This is based on the number of hours devoted to this effort by the president ----------- FOOTNOTE BEGINS --------- [foot #] 8 Had the language not been modified, it would simply have covered all direct and indirect costs associated with the modification. GSA states that there can be no doubt that the document signed by PCMG included this handwritten notation because PCMG initially objected to the language, although ultimately it signed the document. Appeal File, Exhibit 38. ----------- FOOTNOTE ENDS ----------- and vice president by a "market pay rate" of $25 per hour.[foot #] 9 This amount was marked up to reflect overhead and general and administrative expenses, for the total amount of $4463. Appeal File, Exhibit 208; Transcript at 699. The original contract did not include a design for temporary HVAC to be provided to the work site. Transcript at 317-19. After GSA requested that PCMG submit a proposal to perform this work, PCMG designed a temporary HVAC solution and then drafted a proposal for the work. Transcript at 88, 794-96. PCMG's first proposal in response to CE #1 was submitted on February 1. The total proposed cost was $164,438. This proposal also requested a time extension to include the additional work and the time lost due to the late scheduling of the preconstruction conference. Appeal File, Exhibit 126. Mr. Stewart wrote to PCMG on February 7, stating that the proposal was "cost prohibitive" and informing PCMG that he was working on an alternative design that he expected to be about one-third of PCMG's proposed cost. Appeal File, Exhibit 128. Thereafter, PCMG and GSA worked together to develop an alternate design and to reduce the costs. Appeal File, Exhibit 127; Transcript at 133, 212, 421, 799-803. PCMG submitted a revised proposal on February 20, 1996. The revision contained two versions -- one with overtime pay in the event limited hours were required; one without a pay differential. Appeal File, Exhibit 134. On February 14, 1996, GSA issued CE #2 seeking a proposal to provide temporary HVAC to the training room. PCMG submitted this proposal on February 22, 1996. On February 28, 1996, the contracting officer unilaterally executed change order AC02 for the provision of temporary HVAC to the training rooms. On February 29, GSA issued CE #3 seeking a proposal to provide temporary HVAC to the serving line area. On March 3, PCMG submitted its initial proposal; on March 5, PCMG submitted two revised proposals, one of which was in the amount of $30,500. This was ultimately accepted by GSA. Appeal File, Exhibit 37. On April 15, 1996, PCMG submitted a revised proposal for CE #1, which by that time had been reduced in scope to the provision of temporary HVAC to the dining room only. Appeal File, Exhibit 35. On May 2, the construction engineer informed PCMG that GSA would not "pursue the option of having PCMG do the work under CE #1." Appeal File, Exhibit 163. ----------- FOOTNOTE BEGINS --------- [foot #] 9 The market pay rate is lower than the actual pay rates of $35 per hour for these individuals as reflected in PCMG's certified payrolls. Appeal File, Exhibit 208; Transcript at 699. ----------- FOOTNOTE ENDS ----------- PCMG objected, arguing that it had expended significant effort to do design work and prepare cost proposals, to have GSA then divide the work into four parts and award only a portion to PCMG. Appeal File, Exhibit 208. PCMG claimed recovery of $4463 as compensation for the cost of drafting its proposal for the provision of temporary HVAC. Substantial Completion Mr. Stewart inspected the work on a regular basis over the course of performance. Transcript at 262, 1012. In addition, the inspection division of GSA inspected the work on October 11, 1996, and prepared a list of items to be corrected. This list was presented to PCMG, and the items were addressed before October 17. Transcript at 1012-12. The HVAC equipment was demonstrated on October 17, 1996. Following the demonstration, DOE took possession of the system and began using the equipment to heat and ventilate the spaces covered. Transcript at 263,1006-10. This was not the final inspection or the date of final acceptance, however. It is simply the date on which the Government took beneficial occupancy of the HVAC system. In Mr. Stewart's experience, the contractor usually wants the Government to find that construction work is substantially complete as early as possible. PCMG never made such a request. Mr. Stewart decided that since DOE started to operate the equipment on October 17, 1996, that date should serve as the substantial completion date. Although he conveyed this information to PCMG verbally at around that time, no written notification was sent to PCMG until March 1997. Transcript at 271. On March 4, 1997, the contracting officer issued a letter to PCMG advising that GSA deemed substantial completion to have occurred on October 17, 1996. Appeal File, Exhibit 45. . PCMG's vice president testified that in his opinion the units were not ready to work on October 17. PCMG had full and partial crews at the site after October 17, and no written inspection report or punch list was provided until November 27, 1996. Appeal File, Exhibit 21; Transcript at 90, 735-40. On November 8, PCMG submitted an invoice for some $70,000 reflecting substantial work occurring after October 17. Appeal File, Exhibit 205. PCMG's Claims and the Contracting Officer's Decision PCMG's certified claim in the amount of $405,468 was submitted to the contracting officer on January 16, 1997. This claim sought compensation for a variety of costs incurred by PCMG which it attributed to delay or changed work imposed by the Government. The contracting officer issued a decision denying PCMG's claim on March 11, 1997. The decision was received by PCMG on March 17, 1997. Appeal File, Exhibit 199. PCMG claimed entitlement to $50,771 for Government-caused delay attributable to the late scheduling of the preconstruction conference. In particular, PCMG alleged 34 days of delay, calculated by assuming that the meeting should have been scheduled within 11 calendar days of the notice to proceed. The contracting officer rejected this claim as invalid because the contract did not require GSA to schedule a preconstruction meeting nor did it require such a meeting to be convened within a particular time frame. The contract did not prevent PCMG from proceeding with performance until such a meeting was held. The contractor could have made submittals before any preconstruction meeting that might have been held but did not do so. In essence, the contracting officer responded that the delay was caused by PCMG's failure to proceed on its own initiative. Appeal File, Exhibit 199. In addition, PCMG claimed 51 days of Government-caused delay, at an increased cost to it of $58,634, attributable to the requirement for temporary HVAC. PCMG also claimed compensation in the amount of $6248, for time and effort devoted to preparing a proposal to provide temporary HVAC to the dining room, when portions of the work were ultimately not performed by PCMG. In response to these claims, the contracting officer pointed out that the need for temporary cooling was not all that urgent in January and February and the change orders had been worked out with PCMG in March. However, PCMG was still unable to gain full access to the building in February to do other work because of its failure to comply with mandatory security requirements under the contract.[foot #] 10 PCMG received change orders (AS02 and AS03) adding 28 and 14 calendar days, respectively, and increasing the contract price by $22,204 (AS02) for delays associated with temporary HVAC. The claim for the cost of preparing a proposal for work awarded to another contractor was rejected as unallowable under applicable regulations. Appeal File, Exhibit 199. Another cost item claimed by PCMG was the impact of inefficient labor attributable to keeping the kitchen, dining and serving areas open during performance of the contract. PCMG claimed that this caused a substantial delay to the contract and ----------- FOOTNOTE BEGINS --------- [foot #] 10 PCMG submitted forms for security clearances beginning on February 6, 1996. Most of its workers were not United States citizens, creating concern given the fact that the DOE building is a highly secured area and security requirements were strict. Eventually, DOE was satisfied that, as a practical consideration, access to PCMG's workers would basically be limited to the cafeteria and mechanical room, and DOE issued badges even though security requirements were not fully satisfied. Access was granted for employees who had provided badge application information commencing February 27, three weeks after initial security information submittals. Appeal File, Exhibits 10, 18; Transcript at 379, 672-73. ----------- FOOTNOTE ENDS ----------- cost it an additional $188,314. This included additional direct labor costs, added overtime costs, added supervisory costs, and additional overhead and general and administrative (G&A) costs. The contracting officer rejected this claim as inflated and, in any event, unwarranted under the contract terms and conditions. The contract requirements to perform certain work during limited hours and not to interfere with Government operations were inconsistent with PCMG's contention that the cafeteria would be closed. Appeal File, Exhibit 199. PCMG also claimed costs associated with cancellations and restrictions on burn permits and delays it needed to perform demolition. PCMG's total claim for costs associated with the burn permit issues came to $44,468. These were rejected on the ground that these problems were caused by PCMG's failure to comply with contract requirements. Appeal File, Exhibit 199. PCMG requested compensation for costs of additional effort expended to prepare and submit coordination drawings for the duct layouts in six areas. This effort is said to have cost PCMG $3260. The contracting officer rejected this claim as being offset by the failure to supply full sets of completion drawings. PCMG also claimed additional costs of $9725 incurred in installing flexible connections. This claim was also denied by the contracting officer. Appeal File, Exhibit 199. PCMG appealed the contracting officer's decision on May 5, 1997. The appeal was docketed as GSBCA 14178. Subsequent to the filing of the appeal and just prior to the hearing, PCMG revised its certified claim to the amount of $301,384. The lion's share of the reduction in costs claimed reflects PCMG's concession to the GSA auditor's objection to the inclusion of salaries of Mr. Sheth and Mr. Mofakhami in both overhead and direct labor pools. GSBCA 14757 On October 26, 1998, the contracting officer issued a decision assessing costs of $18,615 in asbestos abatement work attributable to PCMG. Specifically, the contracting officer states that PCMG's workers were performing demolition work without proper supervision and caused the release of asbestos containing material (ACM). The contract required that a superintendent be on site at all times. According to the contracting officer, a competent supervisor would have been able to recognize ACM and deal with the situation appropriately to minimize problems. Contrary to this contract requirement, PCMG's superintendent was not present when the ACM was released. In addition, GSA claims that PCMG's employees were working on an unscheduled basis in an occupied area during normal working hours. This compounded the cost of the clean up. Had the workers been properly scheduled and on site during off hours, the superintendent or a GSA representative might have been able to avoid the disturbance of ACM. Finally, PCMG's demolition workers were, in part, removing duct work that had not been designated for removal. GSA issued a work order to KCI to accomplish the necessary abatement work. The cost of that work was $30,097.22. Of this, GSA considers PCMG to be responsible for $18,615, which represents the cost associated with the negligent spread of ACM fibers through the locker rooms, mechanical room, kitchen, and other areas. GSA deducted this amount from the balance due the contractor. PCMG filed a protective appeal of this decision, noting that this issue had previously been addressed in the contracting officer's decision dated March 11, 1997, and appealed by PCMG on May 5, 1997. PCMG's president and vice president both addressed this issue at the hearing. The asbestos in question was not identified in contract drawings or included as part of the contract demolition work. PCMG discovered it by accident and would have cleaned it up, but the Government wanted to test the material first to determine if it was asbestos. When the results of the testing came back, PCMG had left the site for the day, so GSA had another contractor on the premises clean it up and then charged PCMG the costs of clean-up. Transcript at 105-13, 816. Discussion PCMG claims that it was induced, based on amendment one to the solicitation, to propose a lower price for the contract work in the expectation that the kitchen and cafeteria would be closed, allowing the contractor unrestricted access to the area during renovations of the HVAC system. After contract award, PCMG maintains, GSA changed the contract by requiring PCMG to perform the work while the kitchen and cafeteria remained open and continued to operate. According to PCMG, the requirement to perform the work with the cafeteria and kitchen in operation, as well as other events occurring in the course of contract performance, created extra work and delayed completion of the job. PCMG also alleges that the Government took undue amounts of time to convene a preconstruction meeting and to resolve issues concerning installation of temporary heating and cooling, burn permits, and asbestos removal. PCMG asserts a variety of claims for compensation based on direct and overhead costs it incurred based on these changes and delays to its work. Finally, PCMG contests the charges assessed by GSA for asbestos removal. The Preconstruction Meeting PCMG contends that the Government should have scheduled a preconstruction meeting within a seven to ten-day time frame after issuance of the notice to proceed. PCMG's principals testified that in their experience such meetings are ordinarily held in this time frame. There is testimony from PCMG that it attempted to request such a meeting in December; PCMG eventually sent a letter to the contracting officer on January 11, 1996, formally requesting a preconstruction conference. PCMG's principals further testified that it considered the preconstruction meeting to be a prerequisite to commencement of work on site, that its practice was to wait for the preconstruction meeting to distribute submittals and similar materials, and that it was not able to commence work at the site before at least initial submittals were provided and approved. PCMG thus alleges that the failure to hold such a meeting until January 23, 1996, delayed its performance for a total of thirth- four days. The Government's response to this argument is that the contract does not obligate the Government to schedule a general preconstruction conference at all, let alone to convene such a conference within a particular time frame. The GSA construction engineer testified that in his experience some contracts are performed without holding such a meeting and work can certainly start at the job site before any meeting is held. Moreover, even if there were such a requirement, PCMG's delay claim should be denied because of concurrent delay attributable to PCMG. Similar contentions were raised by the appellant in Contour Design, Inc., GSBCA 9215, 91-1 BCA 23,346 (1990). The contract in Contour Design similarly provided that the contractor was to commence work immediately after receipt of the notice to proceed and further stated that a preconstruction meeting may be scheduled together with the safety meeting provided for in the contract. The contractor there argued that it could not begin work until after the Government held a preconstruction meeting. The preconstruction meeting was scheduled for a month after the notice to proceed. The Board rejected the contractor's claim that the delay in the preconstruction meeting prevented it from completing work on time because it could not begin work at the site and found that its delay claim was entirely unjustified. PCMG argues that the testimony in this case demonstrates that it is the industry standard to conduct a preconstruction meeting within at most two weeks of the notice to proceed. Both Mr. Sheth and Mr. Mofakhami testified that in the several Government jobs they had previously performed, the agency scheduled a preconstruction meeting shortly after issuing the notice to proceed. Although Mr. Stewart agreed that in his experience preconstruction meetings, when held, are ordinarily scheduled within a two-week time frame, he qualified this statement by noting that preconstruction meetings are not always held and are not necessary to permit the contractor to commence work. Here, in order to commence work, the contract required the submission of an accident prevention plan, a construction schedule, and completion of the paperwork necessary to obtain required security clearances so that PCMG's construction workers, most of whom were not United States citizens, could be approved for access to the site. PCMG did not submit an accident prevention plan, or its proposed schedule, for approval until February 8, 1996, more than two weeks after the preconstruction meeting was held. The contract required the security clearance paperwork to be submitted within five days after award. Although PCMG should have been fully aware of what was necessary, considering the lengthy period of time during which negotiations took place, it made no independent effort to obtain and submit the security clearance paperwork until the preconstruction meeting was held. Here, as in Contour Design, the contractor, if it was concerned about the need for a preconstruction conference, could have taken the initiative to schedule one. Nothing prevented PCMG from submitting its safety and accident prevention plans to GSA, along with a request to schedule the safety meeting, promptly after receipt of the notice to proceed. The contract is worded in a manner that would suggest that this is what was contemplated. Similarly, PCMG could have contacted the GSA contracting officer named in the specifications to initiate the security clearance process. The evidence does not establish who it was at GSA that PCMG states it spoke with in December concerning its desire to have a meeting. Nor does appellant explain why it did not simply communicate with the contracting officer who was the identified contact point within the agency at the time of contract award. PCMG finally sent a letter to the newly-appointed administrative contracting officer on January 11. Assuming that this letter was received a few days later, GSA was not unresponsive to this request -- the preconstruction conference was scheduled reasonably promptly thereafter. Regardless of whether there is an industry custom to hold a meeting shortly after issuance of the notice to proceed, as the Board stated in Contour Design, addressing very similar contract language, a preconstruction meeting is not a prerequisite to the start of work. If the contractor believes a preconstruction meeting is necessary, it should undertake to initiate the process by contacting the contracting officer or other individual designated by the agency to interface with the contractor. The lapse of time between the issuance of the notice to proceed and the convening of a preconstruction conference does not establish compensable delay to the contractor. GSA is not responsible for PCMG's erroneous impression that a preconstruction meeting was required to be scheduled by GSA before PCMG could start work at the site. Nothing prevented PCMG from initiating the process itself by promptly submitting its accident prevention plan as it was required to do under the contract. Temporary HVAC PCMG contends that, following the preconstruction meeting, it was further delayed by the need to install temporary HVAC before demolition could begin in earnest. According to PCMG, fifty-one days lapsed between the date of the preconstruction conference and the date upon which it was able to commence work at the site. During that period, PCMG maintains it was forced to be on standby and to incur idle payrolls. In order to be prepared to start as soon as temporary HVAC was installed, PCMG carried the necessary laborers on its payroll to ensure that they would be available when needed. In addition, PCMG claims extended overhead for the period by which the contract completion date was extended by the temporary HVAC delay. GSA responds with several arguments. First, it notes that regardless of the need to install temporary HVAC, PCMG was concurrently responsible for delay for a considerable period of time after the preconstruction conference was convened. First, contrary to its purported policy to distribute required submittals at the preconstruction conference, PCMG did not make these submittals until February 8. By delaying performance of its own obligations under the contract, PCMG controlled the duration of any "standby" period attributable to temporary HVAC. Even if there had been no need for temporary HVAC, PCMG could not have commenced work at the site until these submittals were approved and its employees authorized to enter the work area. DOE cleared several workers by February 27, within the time frame established in the conference for the approval process to be completed. By February 28, GSA had awarded the work effort of installing temporary HVAC in the training room. Subsequently, GSA awarded PCMG the work associated with providing temporary HVAC to the serving line and dining area. The change orders for this task compensated PCMG for all costs resulting from installation of temporary HVAC, including impact and delay, and operated to absorb overhead that might otherwise have been unabsorbed under Government-caused delay of the work.[foot #] 11 Once the order to install temporary HVAC was in place, GSA points out, PCMG in effect had "replacement" work for the demolition and other activities that were delayed by the need for temporary HVAC. Thus, GSA argues, as of this date, PCMG could no longer be deemed to be on standby or otherwise entitled to extended overtime. Melka Marine, Inc. v. United States, 187 F.3d 1370 (Fed. Cir. 1999). When a change order involving additional or modified work for which the contractor is granted additional compensation and time is issued, the delay is no longer uncertain, the contractor is no longer on stand by, and the Eichleay formula is inapplicable. See West v. All State Boiler, Inc., 146 F.3d 1368 (Fed. Cir. 1998); Interstate General Government Contractors v. West, 12 F.3d 1053, 1057; Safeco Credit v. United States, 44 Fed. Cl. 406, 416-17 (1999). Once the temporary HVAC was installed in the training room area, PCMG could proceed to perform the original contract work in that area. Thus, in light of the concurrent delay periods and the change order work, PCMG has not met its burden to ----------- FOOTNOTE BEGINS --------- [foot #] 11 We note that in its brief, PCMG insinuates for the first time that a handwritten notation on AS02, to the effect that all impact and delay costs associated with this change were covered by the bilateral agreement, was added after PCMG's president signed the modification. No testimony to this effect was provided by Mr. Sheth. In addition, written documents explaining that this is GSA's policy, as well as a letter objecting to this notation, generated by PCMG in April, long before the change order was finalized persuades us that this allegation is wholly unfounded. ----------- FOOTNOTE ENDS ----------- demonstrate additional entitlement to recover extended overhead attributable to the Government's "delay" in proceeding with temporary heating and cooling. The modifications agreed to with respect to this work fully compensated PCMG for any delay associated with this issue. No further relief is warranted. Costs Attributable to Keeping the Cafeteria Open PCMG claims that amendment one to the solicitation had the effect of closing the cafeteria and caused it to price its proposal assuming unlimited and unrestricted access to the entire work area. PCMG reasons that this amendment deleted note 8 on drawing 9-M-1 in its entirety, including the first sentence, which had advised the prospective offeror that the cafeteria would remain open, as well as the remainder of the note, which went on to inform the prospective contractor that consequently temporary heating and cooling would be required. PCMG took this to mean that the cafeteria would be closed. GSA responds that this interpretation was unreasonable under the circumstances because: (1) the preproposal discussions made clear that the requirement to provide temporary HVAC would simply be removed, and revisited after award, because of the inherent difficulty of pricing this factor prior to award; and (2) contract language concerning hours of work and occupation of the building remained unaffected by the removal of note 8. Moreover, work hours were the subject of discussion in the March 1995 negotiations, in which GSA expressly told PCMG that the work hour specifications stood as originally issued and that GSA expected these requirements had been taken into account in pricing the proposal. The primary objective of the principles of contract interpretation is to ascertain and give effect to the intent of the parties. Alvin, Ltd. v. United States Postal Service, 816 F.2d 1562, 1565 (Fed. Cir. 1987). Contracts should be interpreted in a manner that gives reasonable meaning to all parts of the agreement and does not render any portion meaningless or create a conflict with other provisions of the contract. Dalton v. Cessna Aircraft Co., 98 F.3d 1298, 1305 (Fed. Cir. 1996); Fortec Constructors v. United States, 760 F.2d 1288, 1292 (Fed. Cir. 1985); Grunley Construction Co. v. General Services Administration, 98-2 BCA 29,950, at 148,179, aff'd, 194 F.3d 1335 (Fed Cir.1999) (table); Rincon Center Associates v. General Services Administration, 96-1 BCA 28,126, at 140,409 (1995), aff'd, 108 F.3d 1393 (1997). The testimony concerning the intent of removing the provision for temporary heating and cooling is inconclusive. Although PCMG's president and vice president insist that GSA said it would close the cafeteria, none of the GSA attendees of the preproposal conference confirmed that such a statement was made, and written records of negotiations do not state any such understanding. On balance, GSA's explanation of the intent of amendment one, and the testimony of its witnesses, is more credible. Reading this contract as a whole, it is clear that the building, including the work areas, would be occupied and that the hours when the contractor could work in occupied areas would be restricted. If, as appellant maintains, the intent and effect of removing note 8 was to close the cafeteria then, presumably, the work hours would also have been adjusted to reflect that the contractor could work any hours it wished in the kitchen and dining areas. Similarly, the requirement to clean dining room tables, chairs, and serving area surfaces before 5:00 a.m. on week days would also have been superfluous. Although appellant suggests that this language is simply boilerplate, this interpretation ignores the express statement concerning work hours in the kitchen and dining areas, which was specific to this contract and had been added in a smaller type font. Given that this language was not modified in any amendment, that it visually stood out on the page, and that GSA emphasized that the restrictions on work hours would continue in effect during the negotiations that took place in March, PCMG's purported understanding, that the cafeteria would be closed and this language would not be enforced, was unreasonable. Construing the contract, including amendment 1, as a whole, we conclude that GSA did not intend to close the cafeteria for the duration of this project, and the contract did not do so. Nor can we find that GSA in any way communicated an intent to close the cafeteria. It appears to us that PCMG simply jumped to an erroneous conclusion. Moreover, even to the extent the language may be viewed as ambiguous, the discrepancies were obvious on the face of the contract, giving rise to at least some obligation on the part of the contractor to seek clarification of the Government's intent in this regard. This is particularly so given the protracted nature of negotiations and the lengthy time frame accorded the contractor to familiarize itself with the terms and specifications it would be expected to meet. GSA's contemporaneous notes of the March 1995 negotiation sessions further support its contention that PCMG's position with respect to work hours is misguided.[foot #] 12 Overall, the contractor's position is unreasonable. The contract did not state or imply that the cafeteria would be closed. This disposes of many of PCMG's contentions concerning labor inefficiencies and delays it encountered as a result of the fact that the cafeteria remained open. ----------- FOOTNOTE BEGINS --------- [foot #] 12 As we have noted in another decision involving this contractor, when "present recollections are in conflict," the "contemporaneous documentary evidence," which is probably "more reliable," may serve to resolve the matter. Program _______ Construction and Management Group, Inc. v. General Services ----------- FOOTNOTE BEGINS --------- Administration, GSBCA 14149 (Sept. 30, 1999). ______________ ----------- FOOTNOTE ENDS ----------- Demolition Delays PCMG makes a variety of claims with respect to the demolition of the existing equipment based on the confiscation of, and restrictions placed on, burn permits. Specifically, PCMG asserts entitlement to payment for direct labor costs for lost hours of work, inefficiency of labor, and for the unreasonable delay of the demolition work occasioned by reason of restrictions placed on PCMG's ability to use burning as a demolition technique. The Government responds that PCMG elected to use the burning method to perform its demolition work, but was not required or instructed to do so under the contract. The contract does not assume that any particular method will be chosen, but simply provides general guidelines for ensuring safety of workers and government employees. The contract expressly requires that the contractor vent welding and burning fumes with no penetration into the building. In addition, the contractor is expected to verify the condition of the work area and take precautions necessary to protect occupants from excessive noise and fumes before proceeding with flame cutting. PCMG's argument that the cafeteria was supposed to be closed has already been rejected -- this rationale to support its contention that the precautions should not have been required and the restrictions were improperly imposed thus fails here as well. Additionally, PCMG has not shown by a preponderance of the evidence that high negative pressure may reasonably be deemed a "differing site condition." The testimony of its principals that this condition was unusual and could not have been anticipated is offset by the testimony of the construction engineer and GSA's expert, a professional engineer and architect with many years experience in managing construction projects. Both of these individuals persuasively testified that the negative pressure encountered in the DOE kitchen was not unusual and should have been foreseen by an experienced HVAC contractor. Even viewing PCMG's case on this point generously, at best the evidence represents a draw. Since PCMG has the burden to prove its claim, GSA wins the "tie." Grumman Data Systems Corp. v. Dalton, 88 F.3d 990, 995 (Fed. Cir. 1996). Finally, the demolition delay and inefficiencies complained of by PCMG are largely attributable to its resistance to implementing the measures necessary to alleviate the conditions that DOE found to be unacceptable. The construction engineer noted that the problems were readily addressed by taping over the holes in the mechanical rooms and introducing an exhaust system to vent fumes. Had PCMG taken these measures in March, rather than in June, most, if not all, of the delay claimed as a result of permit revocation and restrictions on the hours when burning could take place, would have been avoided. Flexible Connections Here again, the parties disagree over the proper interpretation of contract language. PCMG contends that amendment four to the solicitation relieved it of the obligation to provide any flexible connections for the air handlers it installed. In the course of performance, PCMG informed the construction engineer that the manufacturer of the equipment to be installed required that coils be protected from the stress and strain of thermal expansion and contraction. According to PCMG, compliance with this instruction required the installation of flex connections. The construction engineer took the position that this was a risk assumed by PCMG, since amendment four provided only that flexible connections would not be required at the coils in air handling units where the fan is internally isolated. By its terms, this amendment addresses the need to protect coils from vibration. The manufacturer-imposed requirement alluded to by PCMG seems to address thermal expansion. Under the terms of the contract, PCMG was entitled to select the equipment to be installed and was required to comply with the manufacturer's installation directions. Once again, PCMG has not met its burden to prove entitlement. It simply asserts that this amendment relieved it of the responsibility to install flexible connections in the air handling units. The amendment is more specific than this -- the connections are not required at the coils in units where the fan is internally isolated. PCMG has complained that it was required to install flex connections, but has not established that the flex connections were installed at coils in units with an internally isolated fan. It has not provided manufacturer's literature describing the air handling units installed or the instructions pertaining to protection of the coils. Absent more conclusive evidence, PCMG has not carried its burden of proof and its claim for these costs must be denied. Coordination Drawings PCMG seeks to be reimbursed for what it views as excessive costs to prepare detailed coordination drawings to revise and correct duct layout drawings. GSA agrees that PCMG did expend additional effort in the preparation of coordination drawings with respect to CE #13. The claimed costs for this effort are $3260. At the same time, PCMG failed to provide the full complement of coordination drawings required by the contract. GSA asserts it is entitled to a credit for this uncompleted work. As of the date of the hearing, PCMG had failed to provide the full complement of drawings and had also declined to offer a credit. The contracting officer, in his decision denying PCMG's claims, states that the value of the credit more than offsets the claimed costs. PCMG concedes that it did not furnish all of the coordination drawings required by the contract but argues that it was unnecessary to do so because it ultimately furnished as-built drawings. This begs the point. It is hornbook law that the Government is generally entitled to compliance with the specifications. See, e.g., Granite Construction Co. v. United States, 962 F.2d 998 (Fed. Cir. 1992). To the extent the contractor fails to comply, while it may not be appropriate to require performance, or re-performance, a downward adjustment to the price has been deemed a proper remedy. Here, moreover, GSA points out that the costs of reconfiguring the duct work layouts are wholly attributable to PCMG's selection of equipment. This was exacerbated by the fact that PCMG failed to reconfigure the duct work in a timely fashion, prior to its submittal of the selected equipment for GSA's approval, as it was supposed to do under the contract. Under these circumstances, PCMG has not met its burden to prove entitlement to the claimed amount. GSA has properly offset this claim as a credit against the downward adjustment it is owed for failure to comply with the contract specification for a full complement of coordination drawings. Light Fixtures Here again, the testimony is inconclusive. It appears that PCMG installed the same number of lights as were in place when the work began. PCMG claims several light fixtures were unusable. The construction engineer recalls that they were all in working order at the inception of contract performance. Both parties agree that pulling wire through concealed junction boxes would entitle PCMG to compensation. The Board cannot determine if this occurred, however, and if it did, to what extent. Thus, PCMG's claim for these items must be denied for failure to meet its burden of proof. Proposal Preparation Costs PCMG asserts, without providing legal support for the proposition, that it should be compensated for the cost of preparing and revising its proposal for temporary HVAC. PCMG says it is entitled to this reimbursement because GSA used its design ideas and then awarded it only part of the work associated with the provision of temporary HVAC. The record does not support PCMG's contentions in this regard. Mr. Stewart testified that PCMG's initial proposal was cost prohibitive, inducing him to devise alternatives that would be less costly to GSA. He worked with PCMG, the building facilities staff, and the architect to achieve the necessary solution, but the "genesis of the design" was basically his own. Transcript at 167-68. GSA's expert, an engineer with considerable construction experience, noted that customarily, the cost of providing proposals to perform changed work is a cost of doing business and is not a separate item of compensation. Appeal File, Exhibit 47. The Board previously has addressed requests of this nature. As a general proposition, the Government is entitled to ask a contractor to submit a proposal for contemplated changed work; at the same time, a response to a request for an estimate is not considered to be extra work, even when the proposal is ultimately rejected. Normally, this is an item that is expected to be recovered as part of the contractor's overhead included in the overall contract price. There are some exceptions to this rule, however. Notably, such costs may be recovered when there is an element of strong Government compulsion to submit a proposal, or when the contractor has had to expend significant costs beyond that which would normally be expected for a change order effort. Fire Security Systems, Inc. v. General Services Administration, GSBCA 12267, et al., 97-2 BCA 28,992, at 114,376 (citing B.F. Carvin Construction Co. v. General Services Administration, GSBCA 12770, et al., 95-1 BCA 27,445); accord Warbonnet Electric, Inc., VABCA 3731, et al., 96-1 BCA 27,938, at 161,803; Kinetic Engineering & Construction Co., ASBCA 30726, 89-1 BCA 21,397. There is no showing in the record before us that any exception to the general rule would apply here. The Government issued a request for an estimate to perform the necessary work; PCMG voluntarily prepared a proposal. This proposal did not require a technical effort that was outside of PCMG's expertise. The construction engineer simply found PCMG's proposal to be excessively costly for the work required and designed his own approach. He consulted with DOE facilities personnel, the architect, and PCMG in devising a less expensive solution. Contrary to PCMG's assertion, the record does not reflect that the Government used PCMG's design without awarding it the work. Although PCMG was not awarded all of the temporary HVAC work, it did receive part of it. PCMG was not required to undertake any extraordinary effort in connection with CE #1. PCMG is not entitled to recover its proposal preparation costs attributable to this effort. Substantial Completion PCMG disagrees with the Government's position that substantial completion occurred on October 17, 1996, and argues that it should be able to recover compensable delay costs through late November, which it believes the Board should find is when substantial completion actually occurred. The construction engineer testified that while some work, including a final inspection and punch list-type items, remained to be completed for this project, DOE assumed beneficial ownership of the HVAC system as of October 17. That is, the system was operational and DOE was operating it. The record reflects that at that time the work was about ninety percent complete. PCMG disagrees with the Government's conclusion that the project was substantially complete as of October 17, based on the fact that it still was providing full-time work crews in the weeks following October 17. According to PCMG, substantial work effort on its part was still required to complete contract requirements and, thus, the Government's position on this point is in error. As a general proposition, a project should be considered substantially complete when it is capable of being used for its intended purpose. See Then v. United States, 765 F.2d 1110, 1115 (Fed. Cir. 1985); Hensel Phelps Construction Co., ASBCA 49270, 99-2 BCA 30,531, at 150,796; RJ Crowley, Inc., GSBCA 11080(9521)-REIN, 92-1 BCA 24,499 (1991). In Crowley, we further noted that the Board may also consider the quantity of work remaining to be done. Here, GSA's construction engineer's testimony that DOE was operating the system for its intended purpose as of October 17 is unrebutted. PCMG's argument is premised on the fact that it had a full crew at the site thereafter for several weeks, and final inspection did not occur until late November. PCMG also asserts that certain controls had not been completely installed and that in its opinion, the equipment was not fully operational. Thus, from PCMG's perspective, the contract work could not have been substantially complete. The critical issue is not how many workers were on site, or that some tasks remained to be completed. According to the construction engineer, the system was in operation and being used by DOE after October 17, although admittedly, a final inspection and final acceptance had not taken place at that point. The Government would not be permitted to assess liquidated damages after that date, and PCMG is not entitled to compensable delay damages after that date.[foot #] 13 Summary We find that PCMG is not entitled to any further compensation from GSA for added costs associated with changed work or delays encountered in the performance of this contract. Most of the delays claimed by PCMG were attributable to its faulty understanding of the contract terms or, in the case of demolition, its failure to comply with the contract's requirements. To the extent that GSA changed work, or caused delays that did not run concurrently with PCMG-caused delay, it has fully compensated PCMG under change orders to the contract. Accordingly we need not consider any further PCMG's claims for Eichleay damages and increased costs occasioned by labor inefficiencies in performing the work. GSBCA 14757 ----------- FOOTNOTE BEGINS --------- [foot #] 13 Given the fact that we conclude that GSA was not responsible for much, if any, of the delay costs claimed by PCMG in this appeal, it may well be academic when substantial completion occurred. ----------- FOOTNOTE ENDS ----------- For this claim, GSA has the burden of proving its entitlement to deduct the amount of $18,615 from the final payment owed to the contractor. As PCMG points out, although it was agreed that the two dockets would be consolidated for decision, GSA was silent as to this issue in its initial brief, and did not avail itself of the opportunity, which was extended by the Board, to submit a reply brief. In reviewing the evidence on this point, we conclude that asbestos containing material was accidentally released by one of PCMG's employees and that GSA incurred abatement costs because it hired another contractor to do the cleanup. PCMG's defense is that the contract did not clearly identify the material in question and its employee had no way to know that the asbestos would be released when he cut the pipes in question. Both of PCMG's principals testified concerning this issue. GSA did not elicit any testimony to rebut their statements. On this record, we find that GSA has not met its burden to show that the contract identified this material and that PCMG should be held liable for the cost of abatement. Accordingly, GSA was not entitled to withhold this amount from PCMG's final payment. Decision GSBCA 14178 is DENIED. GSBCA 14757 is GRANTED. _________________________________ CATHERINE B. HYATT Board Judge We concur: _________________________________ ______________________________ ___ MARTHA H. DeGRAFF ALLAN H. GOODMAN Board Judge Board Judge