Board of Contract Appeals General Services Administration Washington, D.C. 20405 GRANTED IN PART: April 29, 1999 GSBCA 14402 ROI INVESTMENTS, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Larry I. Hanson and Jon C. Manzo of Hanson & Clark, Madison, WI, counsel for Appellant. Kevin J. Rice, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), NEILL, and HYATT. DANIELS, Board Judge. This case involves a lease to the General Services Administration (GSA) of office and related space in a building owned by ROI Investments (ROI). As the lease expired, ROI filed a claim for payment of sums it believed were still due from the agency. GSA agreed to pay some of the amounts claimed, and ROI appealed from the contracting officer's decision denying the remainder. The parties have amicably resolved most of the issues posed by the appeal. The following questions remain for resolution by the Board: Does the agency owe the lessor additional money for "unit cost" adjustments stemming from the build-out of space which was added to the leased area through Supplemental Lease Agreement (SLA) 7? Does the agency owe additional money in rent for the period between May 1, 1993 (the effective date of SLA 7) and February 1, 1994 (when the Government began occupying the additional space)? Does the agency owe rent for the months of September, October, and November, 1995? Is the agency obligated to reimburse the lessor for attorney fees a state court required the partnership to pay to a party in litigation with it? We answer the first, third, and fourth of these questions in the negative. We answer the second question in the affirmative, but award to the lessor considerably less than it seeks in this regard. Findings of Fact 1. On May 15, 1986, GSA entered into a contract with Dalles Partnership to lease from the latter the building located at 6417 Normandy Lane in Madison, Wisconsin. The building contained 11,670 net usable square feet of space. The lease was to run from August 15, 1986, through August 14, 1996. Exhibit 1[foot #] 1 at 1. (The term was later changed to October 15, 1986, through October 14, 1996. Exhibit 2 at 2.) GSA was to pay rent of $8,958.67 per month in arrears. Exhibit 1 at 1. The building was leased for occupancy by the United States Geological Survey (USGS), a bureau of the Department of the Interior. Exhibit 165 at 11-12. In 1991, ROI purchased the property from Dalles Partnership, and the contract was amended to reflect ROI's ownership. Exhibits 7, 13. 2. The lease contemplated that GSA would provide a "space layout" design for the area which would require the contractor to fit out the area to meet the Government's requirements. Exhibit 1 at 8, 25-32. The parties agreed that specified "unit costs" for telephone outlets, electrical outlets, ceiling-high partitions, and interior doors would be used "for any alterations required under Paragraphs 19 and 20 of the Solicitation for Offers [SFO]."[foot #] 2 Exhibit 1 at 3 ( 11). The SFO directed prospective offerors to price their proposals on the assumption that the Government would require one telephone wall or floor outlet per 150 square feet of space provided, one wall or floor electrical outlet per 90 square feet, one linear foot of ceiling-high partitions for each 15 square feet, and one interior door for each 300 square feet. Id. at 14, 20 (SFO 47, 53, 71). ----------- FOOTNOTE BEGINS --------- [foot #] 1 All exhibits, except for four introduced by ROI at hearing and designated as "Appellant's Exhibits," are contained in the appeal file. [foot #] 2 Paragraph 19 of the SFO requires each offeror to state in its offer unit prices for various construction elements which will be used for the purpose of modifying the lease price if the Government requires more or less of those elements than the quantities on which the rent is based. Paragraph 20 says that the unit prices will be used during the first year of the lease when the Government orders alterations involving any of those elements which cost $25,000 or less. Exhibit 1 at 8. ----------- FOOTNOTE ENDS ----------- 3. The lease provided that "[u]nless the Government elects to have the space occupied in increments, the space must be delivered ready for occupancy as a complete unit. The Government reserves the right to determine when the space is ready to occupy." Exhibit 1 at 36 (general clause 10). 4. The lease also contained several provisions relating to the payment of rent. They included the following: General clause 24: "The Government shall pay rent only when the entire premises or suitable units are ready for occupancy. If the agency occupies the space in partial increments, rent will accrue or be paid on a pro rata basis." Exhibit 1 at 40. General clause 26: "The initial monthly rental payment under this contract shall become due on the first workday of the month following the month in which the lease or supplemental agreement establishing commencement of the lease term is executed, or the first workday of the month following the month in which the occupancy of space is effective, whichever is later." Id. (emphasis added). SFO 28: "If the Government fails to occupy any portion of the leased premises or vacates the premises in whole or in part prior to expiration of the firm term of the lease, the rental rate shall be reduced as follows: The rate shall be reduced by that portion of the costs per square foot of operating expenses not required to maintain the space. Said reduction shall occur after the Government gives 30 days prior notice to the lessor, and shall continue in effect until the Government occupies the premises or the lease expires or is terminated." Id. at 10. 5. One more lease provision relevant to this case is general clause 15, "Failure in Performance." It states: The covenant to pay rent and the covenant to provide any service, utility, maintenance, or repair required under this lease are dependent. In the event of failure by the Lessor to provide any of these items, the Government may by contract or otherwise perform the service, maintenance, utility, or repair, and charge to the Lessor any cost incurred by the Government that is related to the performance of such service, maintenance, etc., including any administrative costs, and deduct such cost from any rental payments. Exhibit 1 at 37. 6. At some time in 1992, USGS decided to perform more functions in Madison and hire additional employees to do the work. It needed more office space for the increased staff and laboratory facilities for the new assignments. USGS knew that ROI had recently built an addition to the Normandy Lane building and asked GSA to provide it with more space at that location. Transcript[foot #] 3 at 123; Exhibits 165 at 11-13, 167 at 10. 7. On August 19, 1992, the contracting officer sent to ROI a solicitation for an offer to lease approximately 3,197 net usable square feet of space to be used by USGS. The letter stated that GSA desired to "incorporate [the additional area] into the existing lease under the same terms and conditions and rental rate." The contracting officer informed ROI that "[t]he expansion space requires that special requirements be incorporated in the build-out." She said, "We have included a draft layout design and special requirements on which you may base your price per square foot proposal." Exhibit 15 at 1. The special requirements included fifty-nine electrical outlets and twenty-nine telephone outlets. They make no mention of the number of interior doors or linear feet of partitions which would be required, however. Id. at 4-8. On September 2, the contracting officer reiterated her request for an offer, making clear that the space would be at the Normandy Lane address as an expansion to the current USGS area. The September 2 letter also contained a draft layout design. Exhibit 17 at 5-13. GSA indicated the location of some electrical outlet boxes, some telephone outlets, some interior doors, and some interior wall partitions on the drawings. Stipulation of Fact 4. According to the GSA contract specialist who was responsible for administering this contract, the layout showed what the Government was requiring with regard to all unit cost items. Exhibit 165 at 88. 8. On December 28, 1992, ROI responded to the solicitation for offers. It offered to lease the area required as an expansion to the area currently occupied by the USGS, "under the same terms and conditions with the exception of the rental rate," and said that its offer "includes the special requirements." ROI stated: The base rental rate for the 3,197 SF is $15.98/SF. It provides for the following interior finishing allowances: -- 213 lineal feet of ceiling-high partitions. -- 11 interior solid core doors. -- 36 duplex electrical outlets. -- 21 telephone outlets. ----------- FOOTNOTE BEGINS --------- [foot #] 3 The court reporter provided the Board with two transcripts of the hearing held in this case. One transcript consists of full-size, 8-1/2 by 11 inch pages; the other is a "Multi-Page" version with four pages on each sheet of paper. The pagination of the two versions is unfortunately not the same. We cite to the full-size transcript. ----------- FOOTNOTE ENDS ----------- In the event the finished space exceeds the allowances, the additional alterations would be paid as a "Lump Sum Item" according to the schedule below: Telephone Outlet, Wall/Floor $68/180 Electrical Outlet, Wall/Floor $56/206 Ceiling-high partitions $110/lineal foot Cost per interior door $595 Exhibit 17 at 1. ROI's general partner, John R. Ammerman, wrote the offer. He derived the numbers of telephone and electrical outlets, interior doors, and lineal feet of partitions included in the price of $15.98 per square foot (per year) by applying the ratios for these items contained in the original lease to the area of 3,197 square feet. Transcript at 15, 105, 114-15. In considering the special requirements contained in the request for proposal, he "itemized what would be considered a lump sum payment and what would be considered an adjustment to rent amount." Id. at 108. 9. After GSA received ROI's offer, the parties entered into negotiations regarding the payments the agency would make for ROI's building out the space and allowing the agency to use it. Transcript at 202; Exhibit 165 at 18-19. The record does not contain evidence sufficient to make findings as to the substance of these negotiations. We do know that before they were completed, in March 1993, the parties agreed separately to SLA 6A, reducing the rent for the space already being used by USGS to $8,529.23 per month, in exchange for the Government's acceptance of responsibility for janitorial services and utilities. Exhibit 18. Apparently, ROI reduced its price for the expansion space to account for the Government's performance of these duties in that area, as well. Exhibit 20; see also Exhibit 21 at 4. What impact this action had on the parties' ultimate agreement is not clear, however. 10. In May 1993, ROI and GSA entered into SLA 7. ROI's general partner, Mr. Ammerman, initialed pages of SLA 7 on May 4, and a GSA contracting officer initialed those pages on May 11. SLA 7 has an effective date of May 1, 1993. Exhibit 22. 11. SLA 7 inserted into the lease several paragraphs, among them the following: (1) The Lessor hereby leases to the Government the following described premises: 14,867 net usable square feet of office and related space comprised of Block A (11,670 S.F.) and Block B (3,197 S.F.) located at 6417 Normandy Lane, Madison, Wisconsin 53719. (3) The Government shall pay the Lessor annual rent of $157,566.59 or $13,130.55 per month in arrears. Rent for the lesser period shall be prorated. Rent checks shall be made payable to the Lessor. (10) The rate for operating expense escalator, as escalated, is $1.06 per square foot. . . . (15) In case of failure on the part of the Lessor to complete the work for beneficial occupancy within 105 days of receipt of the executed Supplemental Lease Agreement No. 4,[foot #] 4 the Lessor shall pay the Government, as fixed and agreed[] liquidated damages pursuant to this clause, the sum of $150.00 for each and every calendar day that the delivery is delayed beyond the date specified for delivery of all the space for occupancy. (16) The Lessor has submitted the proposal for the expansion space on the approved layout which the Government attached to the Special Requirements. Should any changes be made to this layout, the adjustment for unit costs shall be made on the basis of the following rates: Telephone Outlet, Wall $68.00 Telephone Outlet, Floor 180.00 Electrical Outlet, Wall 56.00 Electrical Outlet, Floor 206.00 Ceiling-high partitions per lineal foot 110.00 Interior door 595.00 Exhibit 22 at 2-4. Paragraphs (1), (3), and (10) above replaced paragraphs in the original lease dealing with similar matters. Id. at 2. 12. When the parties entered into SLA 7, the portion of the building which included the expansion space (Block B) was unfinished. Exhibit 166 at 13. ROI did not begin work in this area, for the purpose of building it out to meet GSA's requirements, until about July 19, 1993. Exhibits 29, 166 at 53; Transcript at 73, 135. As of 105 days after receipt of the executed SLA 7, or August 24, 1993, none of the Block B space was ready for occupancy. Stipulation of Fact 6. 13. On September 3, GSA told ROI, "USGS will not move into the space and GSA will not accept the premises in intervals. The ----------- FOOTNOTE BEGINS --------- [foot #] 4 Clearly, the reference should have been to SLA 7. Two amendments labeled "SLA 4" were made to the lease. The first was dated March 1, 1990, and the second December 18, 1991. Exhibits 5, 12. The parties have stipulated that the specified date is August 24, 1993. Stipulation of Fact 3. ----------- FOOTNOTE ENDS ----------- entire expansion must be completed before the Government will perform its joint inspection." Exhibit 34 at 1. GSA was concerned that construction of remaining parts of the area would cause excessive disruption if people were occupying the office space. Transcript at 138; Exhibit 165 at 49. Completion of the new rest rooms was a particular concern; if USGS employees working in Block B had to use facilities elsewhere in the building, those facilities would be overtaxed, and because a flight of stairs was between the Block B office space and the other rest rooms, handicapped employees in Block B would find the facilities inaccessible. Transcript at 236; Exhibit 165 at 49- 50. GSA also feared that in light of ROI's past record of breaking promises, and the agency's consequent past need to prompt the lessor severely to get it to take necessary actions, if the Government were to occupy part of the space, ROI would not complete the build-out of the rest of it. Transcript at 138-39, 210-12; Exhibit 165 at 45-46; see also Exhibits 15, 34. 14. Mr. Ammerman testified that he believes the Block B office space was ready for use on or about October 10, 1993. Transcript at 37-38. For this conclusion, he relies "mostly" (or "basically") on an affidavit signed by Wayne J. Manternach. Mr. Ammerman did not have personal knowledge of when construction was complete; he merely "visited the property off and on." Id. at 74-78. Mr. Manternach acted as an advisor to Mr. Ammerman with regard to the construction, assisting him in arranging for tradesmen to perform work at the site and in negotiating prices.[foot #] 5 Exhibit 166 at 6-7, 12, 14, 20, 32- 35. The key sentence in the affidavit is, "Except for the laboratory, the USGS office space was fully available for occupancy as of October 10, 1993 when the carpeting was installed." Exhibit 136 at 6. 15. We find that contrary to Mr. Ammerman's belief and the sentence in the Manternach affidavit, on which he relies, the Block B office was not ready for occupancy on October 10 or any date shortly thereafter. The affidavit is not credible. It was prepared months later (in September 1994) by some unknown person, and Mr. Manternach signed it as a favor to Mr. Ammerman because he "basically . . . agreed with . . . it." Exhibits 136 at 5-6, 166 at 133. Mr. Manternach testified that he did not inspect the ----------- FOOTNOTE BEGINS --------- [foot #] 5 Although some of the documents in the appeal file refer to Mr. Manternach as the general contractor for the build- out, this individual's deposition testimony confirms that he did not function in that capacity. He testified that he was not the general contractor and was not even employed or under any contract for the project. Exhibit 166 at 6-7, 52, 128. Neither he nor anyone from his company was on the site at all times; the tradesmen worked essentially without supervision. Id. at 36. ___ Mr. Manternach said that he "was pretty much in and out of the project" and that he "didn't really have a closeout of my work because I didn't really have any work." Id. at 90, 150. ___ ----------- FOOTNOTE ENDS ----------- premises on October 10 and that he does not know whether it was habitable on that date. Exhibit 166 at 135, 150. Construction schedules prepared by Mr. Manternach and/or approved by Mr. Ammerman throughout October show that as late as October 26, ROI had not yet installed ceiling tile and tracks, stairway doors, rest room fixtures, partitions, mirrors, and accessories, and miscellaneous trim and finish items (in addition to having considerable work to perform in the laboratory area). Exhibits 37, 157 at 2, 166 at 1, 3 of Deposition Exhibit 11. Inspections of the space by GSA employees in December 1993 and January 1994 demonstrated that as late as January 28, construction in the Block B laboratory space was still incomplete. Transcript at 218-25; Exhibits 49, 51, 59, 62, 165 at 59. 16. On December 22, 1993, GSA sent ROI a letter alerting it to "major deficiencies noted during our [December 20] inspection of the expansion space." The letter referred to problems in both the office and laboratory spaces. GSA was particularly concerned about items affecting safety and heating and cooling. Exhibit 51; Transcript at 141-42. On January 13, 1994, GSA told the lessor that if all the space was not ready for occupancy very soon, the Government would take over construction and make deductions from future rent payments for the cost of the work. Exhibit 54; Transcript at 143. The agency reiterated this warning on January 19. Exhibit 61. On February 1, the Government moved into the Block B space.[foot #] 6 Stipulation of Fact 8. The contracting officer explained that although the laboratory was still inoperable, "We had to move in at that point in time. The agency was getting additional people, [and] had already ordered additional furniture." Transcript at 149; see also Exhibit 165 at 90-92. GSA again asked ROI to complete the laboratory. When the lessor did not do so, GSA contracted with others for performance of the necessary work, at ----------- FOOTNOTE BEGINS --------- [foot #] 6 The Government had occupied a small portion of the Block B space prior to this date. Beginning at some time after October 10, 1993, it had used one tiny room for storage of office furniture and equipment. Transcript at 57-58, 227-28; Exhibit 166 at Deposition Exhibit 1. ----------- FOOTNOTE ENDS ----------- a cost of $3,672.49.[foot #] 7 Transcript at 100-01, 150-52, 229-30; Exhibit 96. 17. ROI installed fifty-eight electrical wall outlets, twenty-nine telephone wall outlets, thirteen interior doors, and approximately 394 feet of interior wall partitions in the Block B office space. Stipulations of Fact 11-14. According to the contracting officer and the GSA employee who inspected construction progress, GSA made no changes to the layout from the drawings contained in SLA 7. Transcript at 154, 157, 257. The inspector testified specifically that she measured the partitions which were built and determined that their dimensions were the same as those in the drawings. Id. at 225-27. 18. When ROI missed the August 24, 1993, deadline for the build-out of the Block B space, GSA informed ROI that it would assess liquidated damages at the rate of $150 per day until the space was ready for occupancy. The agency reduced rent payments to reflect deductions for these damages. After a month, at ROI's request, GSA agreed to defer collection of subsequent liquidated damages until after the agency began paying rent on the space. Transcript at 136-37, 194. GSA ultimately assessed, and set off against rent payments, $24,000 in liquidated damages. Exhibit 76 at 1-2.[foot #] 8 The agency also made two other deductions from rent payments to ROI -- $3,672.49, representing the costs GSA incurred in having construction of the laboratory completed, and $770.06 "due to maintenance that you failed to complete and that GSA had to complete in your ----------- FOOTNOTE BEGINS --------- [foot #] 7 Mr. Ammerman testified that this sum actually represented the cost of making improvements to the laboratory beyond what was specified in the special requirements incorporated into SLA 7. Transcript at 45-46; see also _________ Appellant's Reply Brief at 11. The record contains no evidence in support of this theory. To the contrary, the GSA contract specialist who administered this lease testified that the agency made no changes to the plans for the laboratory, other than allowing ROI to substitute inferior quality cabinets for those specified. Exhibit 165 at 53-54, 88-89. Even Mr. Manternach could not recall GSA having ordered any laboratory equipment additional to what it originally required. Exhibit 166 at 123. [foot #] 8 The deductions for liquidated damages were taken as follows: $1,050 for August 1993 (taken on March 1, 1994), $4,500 for September 1993 (taken on November 1, 1993), $4,650 for October 1993 (taken on April 1, 1994), $4,500 for November 1993 (taken on May 2, 1994), $4,650 for December 1993 (taken on June 1, 1994), and $4,650 for January 1994 (taken on July 1, 1994). Exhibits 36, 38, 39, 43, 65, 71, 73, 76 at 3-5, 84, 87, 88, 169. ----------- FOOTNOTE ENDS ----------- absence."[foot #] 9 Transcript at 150-52; Exhibits 71, 96. 19. Exclusive of the deductions for liquidated damages, GSA paid ROI, as rent for each of the following months, the following amounts: May through September, 1993: $8,529.53 per month; October 1993: $8,547.83;[foot #] 10 November 1993 through January 1994: $8,562.53 per month. Exhibits 36, 38, 39, 42, 43, 65, 71, 73, 76 at 3-5, 84, 87, 88, 169. The total of these amounts is $76,883.07. 20. In July 1993, ROI asked GSA to have rent payments deposited by electronic funds transfer to the lessor's account with Community National Bank (CNB) of Oregon, Wisconsin. Exhibit 93; Transcript at 62-63. ROI never changed this arrangement. Transcript at 64. 21. In September 1995, GSA began to receive information regarding a bankruptcy of Mr. Ammerman, ROI, or both, and the foreclosure of a loan or loans on the building by a mortgage holder or holders. The contracting officer and her staff were confused; following the agency's usual practice when ownership of a leased facility is unclear, they stopped paying rent until they determined to whom payments should be made. ROI and CNB each contended that payment was due to it. Around the beginning of December 1995, GSA concluded that payment should be made to ROI. On December 19, 1995, it wired payment of rent for the months of September, October, and November -- a total of $39,645.96[foot #] 11 -- into ROI's account at CNB. Transcript at 154-57, 188, 246-56, 261-64, 279-83; Exhibits 93 at 3, 126, 128, 161 at 1, 162 at 5, 169. 22. CNB's monthly statement of ROI's account for December ----------- FOOTNOTE BEGINS --------- [foot #] 9 The deduction for costs of maintenance work was taken on April 1, 1994, and the deduction for costs of completing the laboratory construction was taken on April 3, 1995. Exhibits 71, 76 at 6, 96, 169. [foot #] 10 GSA increased rent for the space covered by the original lease ("Block A") by $395.97 per year, or $33.00 per month, for the period October 15, 1993, through October 14, 1994, due to escalation in costs of operating the building. Exhibit 42. This increase had a proportionate impact on rent due for October 1993. GSA did not implement the increase on time; instead of increasing the rent payment for October 1993 (paid on November 1, 1993) by $18.10, it included an extra $18.30 in the payment for November 1993 (paid on December 1, 1993). Exhibit 169. [foot #] 11 On October 14, 1994, rent was increased to $13,215.32 per month due to escalation of operating costs. Exhibit 94. ----------- FOOTNOTE ENDS ----------- 1995 shows the deposit made by GSA. It also shows a miscellaneous debit (withdrawal) of $33,423.79 and includes the notation, in the address block, "DO NOT MAIL - GIVE TO JERRY." Exhibit 161 at 1. Gerald ("Jerry") Luebke was the president of CNB. Id. at 2-3. 23. After 1995, CNB gained ownership of the Normandy Lane property as the result of a foreclosure sale, and litigation ensued among ROI and the three owners of the former mortgages on the property regarding allocation of the proceeds from the sale. A July 15, 1998, judgment by a Wisconsin circuit court awarded ROI $38,438.23 plus interest from CNB, to restore funds which had been paid by ROI pursuant to an earlier state court order. The judgment allowed CNB to keep $5,694.74 in attorney's fees which had previously been ordered to be paid by ROI. This judgment is currently before a Wisconsin appellate court. Appellant's Exhibit 3; see also materials filed with the Board by Appellant on January 25, 1999. 24. ROI submitted to the contracting officer a claim dated October 14, 1996, which includes amounts for unit cost adjustments and rent for the months May 1993 through January 1994, inclusive. Exhibit 133. The lessor revised this claim on November 27, 1996, and again on April 2, 1997. Exhibits 136, 139. The contracting officer issued her decision on this claim on August 18, 1997. Exhibit 147. 25. ROI made a claim for two additional sums -- $32,597.79 and $5,694.74 -- in the context of a February 6, 1998, amendment to the complaint filed in this case. The lessor now explains that the former amount is for rent for the months of September, October, and November of 1995, and the latter is for legal fees. Appellant's Prehearing Statement at 3; Appellant's Brief at 10. On July 10, 1998, GSA moved to dismiss this claim from the case for lack of jurisdiction, on the ground that it had never been presented to the contracting officer. At the end of October 1998, the presiding judge in this case announced his resignation from the Board and the case was reassigned to the author of this decision. The new presiding judge convened a telephonic conference with counsel, at which he asked Government counsel to present this claim to the contracting officer, so that she could issue a decision on it no later than the date of the hearing in the case (November 12, 1998), and the jurisdictional question could thereby be mooted. Government counsel complied with the request, and in the course of her testimony, the contracting officer discussed in detail her reasons for denying the claim. Transcript at 245-59. Discussion Does the agency owe the lessor additional money for "unit cost" adjustments stemming from the build-out of space which was added to the leased area through SLA 7? Both the original lease and SLA 7 required the lessor to build out its property to meet the needs of the Government. Both instruments provided that some of the necessary costs of construction would be paid by GSA at the outset of the lease period, and if the lessor wished to recoup others of those costs, it would have to do so through payments of rent at an agreed-upon rate. Each instrument included a means for allocating these costs as to telephone and electrical outlets, partitions, and interior doors: the costs would have to be recouped through payments of rent, unless the Government ordered more (or less) of any of these items than a number specified in or capable of derivation from the instrument. If the number ordered was greater than that number, the Government would compensate the lessor for the difference at an agreed cost per unit; if the number ordered was less, the lessor would similarly compensate the agency. Findings 2, 11. This sort of provision is common in GSA leases. See, e.g., Rock Creek Associates K Limited Partnership v. General Services Administration, GSBCA 11333, 93-1 BCA 25,351 (1992). The original lease and SLA 7 used different means for describing the number of telephone and electrical outlets, partitions, and interior doors whose costs were to be recouped through rent payments. The original lease used ratios of each of these items to area to be leased; SLA 7 used a list of "special requirements" and a layout drawing. At the time the original lease was entered into, the means used in SLA 7 was unavailable, since the Government had not yet prepared a layout. Findings 2, 11. When GSA asked ROI for a proposal to lease additional space in its building, the agency asked the lessor to prepare the proposal on the basis of a list of requirements and a drawing. Finding 7. ROI replied that it would meet the agency's requirements and would charge a rental rate based on installation of only as many telephone and electrical outlets, partitions, and interior doors as would have to be provided in accordance with the ratios stated in the original lease. The rental rate in the proposal was $15.98 per square foot for 3,197 square feet, or $4,257.34 per month. Under this proposal, if GSA ordered additional outlets, partitions, and doors (as the list of requirements and the drawing indicated it would do), it would have to pay for the additional items at fixed unit prices. ROI's general partner, John Ammerman, understood in making the proposal that some of the lessor's costs would be recouped through the rental rate and some through a lump sum payment based on the unit costs. Finding 8. GSA did not accept this proposal; instead, it entered into negotiations with ROI regarding it. Finding 9. The negotiations culminated in the parties' agreement to SLA 7, which increased the rent for all space leased by GSA in the building from $8,529.53 to $13,130.55 per month. Finding 11 ( 1, 3). SLA 7 also provided that the unit prices included in ROI's proposal for outlets, partitions, and doors would be imposed only if changes "[s]hould . . . be made to [the] layout" and special requirements. The layout and requirements contemplated incorporation of considerably more outlets, partitions, and doors than would have been required under the ratios on which the original lease's rental rate had been predicated. Id. ( 16). Thus, the result of the negotiations was that GSA would pay more in rent than ROI had asked (and even more than ROI's rental rate would have been, taking into consideration a reduction to compensate for the Government's assumption of maintenance responsibilities), but ROI would have to absorb the cost of including in its build-out of the additional space more outlets, partitions, and doors than it would have if its proposal had been accepted. This is the sort of trade-off which occurs commonly in the business world. Mr. Ammerman, who recognized that his proposal incorporated recoupment of costs through both rent and lump sum payments, Finding 8, surely could not have been unaware that the reallocation of responsibility for costs of outlets, partitions, and doors was included in the trade-off that was made. GSA ultimately ordered exactly the number of telephone outlets it had listed among "special requirements," and one less electrical outlet than it had listed. Finding 17. Because SLA 7 stated that ROI would be reimbursed for the cost of providing outlets only if GSA ordered more than the number specified, and the agency did not do so, the lessor is not entitled to any payment for providing outlets. The special requirements do not specify any number of partitions or doors, and we cannot discern any particular number of either of these items from the layout drawing. Finding 7. A GSA inspector testified that the dimensions of the partitions constructed are the same as those in the drawing. Finding 17. Whether this is true or not is immaterial, since the appellant has the burden of proof as to its claims, and it has produced no evidence as to any variance in partition dimensions between the drawing and actual construction. In the absence of proof, the claim fails. Similarly, we have no evidence as to any variance in number of doors between the drawing and actual construction, so the claim as to the cost of doors fails as well. ROI notes a possible problem with this analysis: the first sentence of paragraph 16 of SLA 7 says, "The Lessor has submitted the proposal for the expansion space on the approved layout which the Government attached to the Special Requirements," but the proposal actually appears to have been priced with reference to the ratios included in the original lease. Findings 8, 11. This sentence is nothing more than a characterization of an action which preceded the agreement itself. In light of the lessor's commitment in its proposal to build out the space to comply with the special requirements, Finding 8, the sentence is an accurate (if inartful) statement, notwithstanding the pricing approach taken by ROI. The following sentence, which begins, "Should any changes be made to this layout, the adjustment for unit costs shall be made on the basis of the following rates: . . ," Finding 11, is the critical enunciation of the parties' agreement as to payment for outlets, partitions, and doors on a unit cost basis. ROI's claim for $27,273.40 in unit cost adjustments is denied. Does the agency owe additional money in rent for the period between May 1, 1993 (the effective date of SLA 7) and February 1, 1994 (when the Government began occupying the additional space)? To answer this question, in all the ways it has been presented, we must consider two separate issues: first, when rent payments should have begun under SLA 7 (and how much they should have been), and second, whether the deductions made by GSA from rent payments were appropriate. A. ROI believes that because SLA 7 has an effective date of May 1, 1993, and fixed rent for the entire space leased by GSA in the building at $13,130.55 per month, Findings 10, 11 ( 1, 3), the agency owes rent at the prescribed rate beginning on May 1, regardless of when it began occupying Block B. According to the lessor, the only lease clause which limits rental payments due to a lack of occupancy is paragraph 28 of the SFO, which reads: If the Government fails to occupy any portion of the leased premises or vacates the premises in whole or in part prior to expiration of the firm term of the lease, the rental rate shall be reduced as follows: The rate shall be reduced by that portion of the costs per square foot of operating expenses not required to maintain the space. Said reduction shall occur after the Government gives 30 days prior notice to the lessor, and shall continue in effect until the Government occupies the premises or the lease expires or is terminated. Appellant's Brief at 9; see Finding 4. ROI maintains that if any deduction for lack of occupancy is permitted, it must, consistent with this clause, be calculated in this way: SLA 7 establishes an operating expenses rate of $1.06 per square foot. (See Finding 11 ( 10).) Block B consisted of 3,197 square feet. (See id. ( 1).) Thus, the operating expenses rate for Block B was $3,388.82 per year or $282.40 per month. The rent should be reduced by $282.40 for every month Block B was not occupied. Appellant's Brief at 8-9. GSA maintains that it was not obligated to pay that portion of the rent specified in SLA 7 which pertains to the Block B space -- the amount by which the SLA 7 rent exceeded the previous rent -- until it actually occupied that space. The agency relies on the lease's general clause 26, which reads: The initial monthly rental payment under this contract shall become due on the first workday of the month following the month in which the lease or supplemental agreement establishing commencement of the lease term is executed, or the first workday of the month following the month in which the occupancy of space is effective, whichever is later. Respondent's Brief at 19-20; see Finding 4. GSA maintains that Block B was not ready for occupancy even as late as February 1, 1994, but that because the Government moved into the space on that date, rent for that area should have been paid, as it was, from then. In our view, neither party's position is correct. Paragraph 28 of the SFO, which ROI sees as critical, pertains to rental payments in the event space is ready for occupancy, but the Government chooses not to occupy it. General clause 26, which GSA cites as pivotal, pertains to the initial monthly rental payment under the lease, and that was made in 1986, long before the events that concern us here. The lease provision of importance to the question of when rental payments should have begun, and how much they should have been, is general clause 24: "The Government shall pay rent only when the entire premises or suitable units are ready for occupancy. If the agency occupies the space in partial increments, rent will accrue or be paid on a pro rata basis." See Finding 4. SLA 7 replaced the original lease's provision (as adjusted by SLA 6A) setting rent for Block A's 11,670 square feet at $8,529.23 per month with a statement that the Government would pay $13,130.55 per month to rent the entire area of 14,867 square feet in both Block A and Block B. See Findings 1, 9, 11 ( 1, 3). SLA 7 does not say that any part of that rent is to be for one block or the other; it simply sets a single amount for both blocks. Because the Government was already using Block A on the effective date of SLA 7, May 1, 1993, the space there was obviously ready for occupancy on that date. Under the terms of general clause 24, after May 1, rent should have been paid for the Block A space at the SLA 7 rate, on a "pro rata basis." "Pro rata" means "proportionately; according to a certain rate, percentage, or proportion." Black's Law Dictionary 1220 (6th ed. 1990). SLA 7 does not contain any specific instruction as to how the term "pro rata" should be applied here. In the absence of any instruction, because SLA 7's only measure of proportionality between Block A and Block B is square footage, we conclude that the only reasonable application of "pro rata basis" is on a per square foot basis. GSA's theory that rent for Block A should have been paid at the rate prescribed in the original lease (with adjustments) is inconsistent with this provision, as we understand it. Since Block A contained 78.5 percent of the area, GSA should have paid 78.5 percent of the SLA 7 rent, or $10,306.96 per month, from May 1, 1993, until additional space covered by SLA 7 was ready for occupancy. B. SLA 7 provided that ROI would pay to GSA as liquidated damages $150 for every day that "delivery is delayed beyond the date specified for delivery of all the space for occupancy," which was August 24, 1993. Finding 11 ( 15). ROI maintains that GSA was not entitled to withhold rent and assess liquidated damages on the same space at the same time. Appellant's Brief at 7; Appellant's Reply Brief at 8. We are aware of no law prohibiting parties from agreeing to a lease which allows both actions, however, and such leases have been written. See, e.g., First Interstate Bank of Denver, N.A., GSBCA 9484, 89-1 BCA 21,453 (1988). ROI has not explained why the lease which is at issue here should not be read as permitting GSA to take both actions, and we are able to discern no such reason. ROI does not contend that the liquidated damages specified in SLA 7 were unreasonable in amount; to the contrary, it accepts the imposition of these damages for the time between August 24 and October 10. Appellant's Brief at 7; Transcript at 102. The two actions served different purposes -- the withholding of rent was to ensure that the Government paid only for space it occupied, whereas the liquidated damages were intended to compensate the Government for administrative costs incurred by GSA in inspecting construction progress, communicating with ROI and local building inspectors, and related activities, and costs incurred by USGS as a result of having to work in an overcrowded Block A and in revising plans for its move into the Block B space. Transcript at 134, 164; Exhibit 165 at 60-62. Just as rent in addition to $10,306.96 should have been paid from May 1, 1993, until the date on which space additional to Block A was ready for occupancy, liquidated damages were properly assessed from August 24, 1993, until that same date. ROI contends that the office space in Block B was ready for occupancy on October 10, 1993. Appellant's Brief at 7. We have found that the slim evidence supporting this theory -- a sentence in an affidavit -- is not credible, and that the office space was not completed until some time after that date. Findings 14, 15. The lease gave GSA the right to determine when space is ready to occupy. Finding 3. The agency exercised that right reasonably; it had good reason for not accepting the office space in Block B until all of that block (including the laboratory space) was built out completely. Findings 13, 15, 16. Thus, Block B was not ready for occupancy until the laboratory was completed. The laboratory was not finished even as late as February 1, 1994, Finding 16, so GSA was justified in not accepting the space until that date. We reject both of the theories ROI asserts in opposition to this conclusion. First, the lessor contends that its failure to complete the laboratory space was excusable because it resulted from problems which were beyond the lessor's control. Appellant's Brief at 7, 9, 12. The only two items which ROI cites in this regard were cabinets and an air filter. Id. at 9 (referencing Exhibit 166 at 61-83). The cabinet matter was swiftly resolved: ROI was unable to secure the product specified by GSA, so the agency allowed the substitution of an inferior product. Finding 14 n.5. The air filter did not arrive on site promptly because ROI neglected to monitor the filling of its order for the item and then did not pay the balance due on it, and ROI did not install it properly. Exhibits 63 at 9-11, 166 at 92-97 & Deposition Exhibits 8-10, 168 at 11. Neither of these difficulties can by any stretch of the imagination be considered to be beyond the lessor's control. Second, ROI maintains that rent should be paid from the time at which GSA actually occupied a portion of the Block B area, when the agency started to use a small room for storage. See Finding 16 n.6. We conclude that this minor, incidental sort of usage does not constitute occupancy, and in any event, the record does not show when the usage began. C. Pursuant to our analysis of the two matters at issue regarding rent payments from May 1, 1993, through February 1, 1994, we make the following conclusions. (1) Rent should have been paid at the rate of $10,306.96 for each of the months between these two dates. The total rent should have been $92,762.64, which is $15,879.57 more than GSA actually paid. See Finding 19. (2) GSA acted properly in deducting $24,000 in liquidated damages for the period from August 24, 1993, through February 1, 1994. See Finding 18. D. GSA made two deductions from rent payments after February 1, 1994, and for reasons other than assessment of liquidated damages. Both were for work which GSA had performed after ROI, which was contractually obligated to perform it, did not do so. One was in the amount of $770.06, for maintenance services; the other was in the amount of $3,672.49, for completion of the laboratory. Finding 18. These deductions were permissible under general clause 15 of the lease. Finding 5. ROI does not contest the first deduction. Appellant's Exhibit 2 at 2. The lessor maintains that the dispute as to the second "was settled prior to the hearing. Therefore, GSA would not be entitled to retain this rent deduction." Appellant's Brief at 10; see also Appellant's Reply Brief at 11. GSA disagrees with this position. Respondent's Brief at 26-27. The settlement agreement is not in evidence, and ROI has submitted no other documentation showing voluntary resolution of this matter. The record is clear that GSA contracted for the work in question and paid the stated amount for it, although performance of the work was ROI's responsibility. Findings 11 ( 15), 16. The contracting officer, as authorized by general clause 15 of the lease, properly charged the lessor for the work by deducting the amount from rent payments. Does the agency owe rent for the months of September, October, and November, 1995? Is the agency obligated to reimburse the lessor for attorney fees a state court required the latter to pay to a party in litigation with it? ROI maintains that of the rent due for the months of September, October, and November, 1995, it is entitled to $32,596.70. Finding 25. The lessor says that it did not receive rental payments for these months from GSA. Appellant's Reply Brief at 11-12. The last assertion is apparently based on Mr. Ammerman's testimony that ROI was not paid rent for those months. See Transcript at 89, 92. The record is clear, however, that after some indecision, GSA made full payment of rent to ROI for the three months in question. Findings 20, 21. ROI is currently engaged in litigation in Wisconsin courts with Community National Bank, an institution which held a mortgage on the property and later purchased the property at a foreclosure sale. Finding 23. The relationship between that litigation and the rent payments is obscure. At hearing, ROI's attorney explained that the state court litigation "relates to other matters, not to rent," Transcript at 93, and that statement appears to be true. Nevertheless, both before and after the hearing, ROI has intertwined discussion of the litigation with the claim for rent. For example, in its reply brief, the lessor advises, "The Board can hold the $32,596.70 in abeyance pending a ruling by the State Appellate Court." Appellant's Reply Brief at 12. Might ROI be arguing that in withdrawing from ROI's account most of the rent payment for the last three months of 1995, the bank was acting improperly? See Finding 22. Whether it is or not is immaterial to this case, since we are resolving only the disputes between ROI and GSA, and we have no doubt that GSA fulfilled its contractual obligation to pay rent for the three months in question. Similarly, we agree with the agency that the claim for recovery of attorney fees awarded by a Wisconsin court from ROI to the bank involves rights as between those two parties and does not involve GSA, so we have no license to intrude in the matter. See Respondent's Brief at 37. ROI's characterization of the claim as seeking "damages [ROI] sustained in pursuing these monies [the rent payments?]," Appellant's Reply Brief at 12, does not suffice to create any authority for the Board to address the issue. Even if it did, because we find that GSA made the rent payments long before the attorney fees were incurred, Findings 21-23, we could scarcely conclude that the fees were "damages sustained in pursuing" those payments. Decision The appeal is GRANTED IN PART. We direct GSA to pay to ROI the sum of $15,879.57 in additional rent payments for the period from May 1, 1993, through February 1, 1994. This amount shall be paid with interest from the date on which the contracting officer received ROI's claim dated October 14, 1996. 41 U.S.C. 611 (1994). In all other regards, the appeal is denied. _________________________ STEPHEN M. DANIELS Board Judge We concur: _________________________ _________________________ EDWIN B. NEILL CATHERINE B. HYATT Board Judge Board Judge