Board of Contract Appeals General Services Administration Washington, D.C. 20405 GRANTED IN PART: October 29, 1999 GSBCA 14919-COM DRC CORPORATION, Appellant, v. DEPARTMENT OF COMMERCE, Respondent. Joseph C. Staak of Smith, Currie & Hancock LLP, Atlanta, GA, counsel for Appellant. Jerry A. Walz, Amy Freeman-Pierce, and Fred Kopatich, Office of General Counsel, Department of Commerce, Washington, DC, counsel for Respondent. DANIELS, Board Judge (Chairman). The Department of Commerce's Bureau of the Census entered into a contract with DRC Corporation for the renovation of eight restrooms in two adjacent buildings at the Bureau's Jeffersonville, Indiana, facility. The contract required that the job be complete by January 1998, but work was not finished until May. DRC claims that the Bureau's imposition of a requirement that the restrooms be renovated in three distinct phases, rather than permitting work on all of the rooms at the same time, was the cause of the delay. According to the contractor, the agency's addition of this requirement was a constructive change to the contract, and Census is consequently liable for the additional supervisory labor and associated costs which were incurred between January and May. The agency maintains that "the delay in completing the project was entirely the fault of DRC, and that the Government has no liability in this case." We conclude that each side's position has some merit. The agency did constructively change the contract by requiring that the work be completed in three separate phases, but the contractor's slow performance contributed to the delay. We therefore grant the appeal in part. DRC elected to have this case considered under the small claims procedure. 41 U.S.C. 608 (1994 & Supp. III 1997); Board Rule 202 (48 CFR 6102.2 (1998)). The consequence of this election is that the Board's decision is being issued by a single judge, is not precedential, and is final and conclusive unless fraud is found to have tainted the Board's proceedings. 41 U.S.C. 608(d); Rule 202(b); Palmer v. Barram, 184 F.3d 1373 (Fed. Cir. 1999). Findings of Fact The Census Bureau set aside the restroom renovation project for performance by a contractor qualified under the program authorized in section 8(a) of the Small Business Act, 15 U.S.C. 637(a) (1994). The Small Business Administration identified DRC as such a contractor. In August 1997, at Census' invitation, DRC's president, Donald R. Chambers, met with agency employees for a pre-bid conference at the job site. At this conference, two of the agency employees, contracting specialist Clark Terrell and contracting officer's technical representative (COTR) Syd Deane, explained to Mr. Chambers that because a sufficient number of restrooms had to be available at all times to agency personnel working in the buildings,1 the contractor would not have access to some of the restrooms until work in others had been completed. Messrs. Deane and Terrell did not convey any information about specifics of the way in which the work would be phased, however, because no decision had yet been made regarding this matter. Mr. Chambers testified that this discussion did not take place: "There was never any discussion of a sequence, per se," at this conference. We base our finding on the testimony of the two agency employees, which we consider more credible.2 ____________________ 1About a thousand people were working in the two buildings at the time, and the population was planned to double (and did so) during the first three months of 1998. In addition to the eight restrooms involved in this contract, there are none in building 63 and two -- one for men and one for women -- in building 64. The restrooms in building 64 which were not being renovated by DRC are at one end of the building. Each building is more than one thousand feet long, and the two buildings are about four hundred feet from each other. 2That Mr. Chambers' memory is hazy as to matters involving phasing of construction is demonstrated in two other regards. First, Mr. Chambers did not believe that the subject was mentioned at the October 7 pre-construction meeting, either, despite his written acknowledgment at the time that it was discussed there in detail. Second, the witness testified that he was not told of any phasing of work until mid- to late-November, (continued...) Mr. Chambers paid no attention to the information conveyed by the Census Bureau employees about access to restrooms. He did not ask how many rooms would be made available to the contractor at any particular time. Nor did he mention anything about a restriction on access to his project manager, Ron Perry, who helped him devise DRC's bid and later prepared construction schedules. DRC's bid was based on the assumption that the work on the restrooms would proceed in a continual fashion, with each trade moving from one room to another as soon as it was able to do so. Mr. Chambers evidently did not mention restrictions on access to prospective subcontractors, either, because at least three subs -- those concerned with asbestos abatement, toilet stall partition installation, and electrical work -- also based their bids on the assumption that they would have access to all rooms at the same time. At the pre-bid conference, Census gave DRC a copy of the plans and specifications for this project. The contract for performance of the work, which was agreed to in late September 1997, contains within these specifications a single paragraph relating to the phasing of work. This paragraph, which is commonly used in Census Bureau contracts, reads as follows: The contractor is advised that the work under this contract shall be performed in close proximity to fully occupied and operational Government buildings, parking lots, and streets. The work shall be closely staged, phased, and coordinated with the COTR in order to avoid interruption of ongoing Government operations. On October 7, a pre-construction meeting was held at the job site. Messrs. Chambers, Terrell, Deane, and others were present. Mr. Terrell's minutes of the meeting include this paragraph: ____________________ 2(...continued) but also said his asbestos abatement subcontractor learned of phasing when it first mobilized on the job, in mid-October. Surely key information affecting the way in which a subcontractor could approach a job would affect a prime contractor as well, and would therefore be conveyed to the prime. Further, DRC project manager Ron Perry testified that he learned of restrictions on contractor access to certain restrooms in late October or early November -- earlier than Mr. Chambers said he learned of the matter -- and also stated that he received virtually all of his information about the project from Mr. Chambers. There is no evidence that Mr. Perry could have learned of this phasing requirement other than from Mr. Chambers. Indicative of the quality of Mr. Chambers' recollection about this important subject is his admission, "I don't know exactly when things were changed around. All I know is that things were changed around." On the other hand, the recollections of Messrs. Terrell and Deane as to the pre-bid meeting were precise and definite. Discussion regarding the contract's Work Statement centered on how the work was to be phased. The mens and ladies rest rooms in 64A[3] along with the [men's and ladies'] rest rooms in 63B and the ladies rest room in 63C shall be done first. When these are completely finished, work will proceed with the ladies rest room in 63E and the mens in 63F and when they are finished, the ladies rest room[] in 63F shall be done.[4] On October 13, Mr. Chambers signed a statement acknowledging that the minutes are an accurate account of what transpired during the meeting. Although Mr. Chambers testified that he has no memory of the meeting's having included any discussion of phasing of the work, we find, based on the testimony of three agency employees who were present and Mr. Chambers' signature on the statement, that this discussion did occur.5 At the pre-construction meeting, Mr. Chambers presented to COTR Deane a construction schedule dated October 5. The schedule ____________________ 3Each restroom is designated by a number and a letter. The number indicates the building in which the room is located, and the letter indicates the bay within that building. 4Census Bureau employees who were involved in this project testified that this specific phasing of construction was determined by the agency's facilities management staff, after considering input from a labor-management council, between the date of the pre-bid conference and the date of the pre- construction meeting. 5According to Mr. Deane, the pre-construction meeting was not the first time he had told Mr. Chambers that the restrooms would have to be renovated in three separate groups, with five in the first group, two in the second, and one in the third. Mr. Deane testified that in a telephone conversation within two weeks of the pre-bid conference -- thus, prior to contract award -- and in showing the job site to Mr. Chambers and prospective subcontractors prior to DRC's submission of its bid, he made specific mention that the work would have to be phased in this way. We do not find this testimony credible. It was not corroborated by any witness at our hearing; the agency presented no evidence on the matter from subcontractors who were allegedly present at these discussions; and unlike the situation regarding the provision of the message at the pre-construction meeting, the record contains no documentation about an earlier conveyance of the information. Furthermore, Mr. Deane identified DRC's asbestos abatement subcontractor as one firm to which he provided the information, yet that company (as well as other subcontractors) bid on the assumption that all eight restrooms would be made available to DRC at the same time. Three subs might have bid in this way if their information about sequencing of work had come only from Mr. Chambers, but we doubt they all would have acted as they did if they had received contrary information from the COTR. shows each activity on the job occurring sequentially, with no differentiation among restrooms. Mr. Deane rejected this schedule, noting: Re-arrange by restroom or group of RR's. 1. 64A L-M, 63B L-M -C. 2. 63E-F L-M 3. 63G [sic - F] ladies. Following the pre-construction meeting, also on October 7, the contracting officer issued to DRC a notice to proceed with the renovations. Pursuant to the contract, the work had to be completed within ninety days, or by January 6, 1998. On October 9, DRC sent a second proposed construction schedule to the COTR. This one shows activities proceeding sequentially in each of three groups of restrooms -- first, 64A men's and ladies'; second, 63B men's and ladies' and 63C ladies'; and third, 63E ladies' and 63F men's and ladies'. Under this schedule, each activity is to be completely performed in one group of restrooms before it begins in the next -- for example, demolition is to occur in the first group from October 20 to 31, in the second group from November 3 to 14, and in the third group from November 17 to 28. All work in the first group is to be done from October 20 to November 28; all work in the second group is to be done from November 3 to December 12; and all work in the third group is to be done from November 17 to December 26. As is evident from this recitation, during the period from November 17 to 28, all three groups will be under construction at the same time. Mr. Deane marked this schedule "approved as submitted" on October 15. In late October or early November, DRC project manager Perry, who was not at the job site, learned that Census would not give the contractor access to three restrooms -- the ladies' room in bay 63E and the two in 63F -- until the five under construction -- the two in 64A, the two in 63B, and the ladies' room in 63C -- were completed. On November 2, Mr. Perry submitted a new schedule showing the work being performed in two stages, with the first five restrooms being renovated from October 17 to November 21 and the last three being done from November 21 to December 24. On November 5, Mr. Deane marked this schedule, like the one dated October 9, "approved as submitted."6 Notwithstanding the COTR's approval, Census did not allow DRC to work in accordance with either the October 9 schedule or ____________________ 6Although we are aware of no additional approvals of proposed schedules, the record does contain one more document that speaks to DRC's belief as to the time necessary to complete portions of the work. In a January 12, 1998, letter to Census, Mr. Chambers said that if DRC were allowed to begin demolition of the last three restrooms (the ones contained in groups two and three) on January 10, construction would be complete by the end of January. the November 2 schedule. Instead, the agency insisted that the contractor follow the instructions it had given at the October 7 pre-construction meeting. Thus, not until DRC had completed the two rest rooms in bay 64A, the two rest rooms in 63B, and the ladies' restroom in 63C, was it given access to any other locations. And not until it finished the ladies' room in 63E and the men's room in 63F was it given access to the last location, the ladies' room in 63F.7 The first group of restrooms was made available to DRC on October 14, 1997, and put back into use on January 26,8 1998. The second group was made available on January 29 and put back into use on March 20. The third group was made available on March 20 and reopened on May 12. On June 30, 1998, DRC submitted a claim to Census' contracting officer, demanding the payment of $35,525.60 in additional supervisory costs allegedly stemming from the agency's requirement that the work be performed in phases. These expenses consist of the superintendent's burdened wages, the costs of a mobile telephone and a truck used by the superintendent, and the costs of keeping at the site a trailer which the contractor used for storage of equipment and materials. The contracting officer denied the claim. At our hearing, DRC, through Mr. Chambers' testimony, adjusted components of the claim, reducing the total amount to $29,515.45. Census did not challenge any of DRC's assertions as to the way of measuring additional supervisory costs, the support for the dollar figures presented, or the calculations made. Mr. Chambers maintained that if DRC had been allowed to complete the project in the way in which it had planned, it could have finished all eight restrooms in the time consumed in finishing the first five. Thus, according to him, ____________________ 7DRC witnesses testified that they did not understand, until Census reopened the first group of restrooms, that the last three rooms would be released in two groups, rather than one. When the agency made clear that the project would have to be performed in three stages, rather than two, is immaterial, given how we resolve the case. 8DRC told Census on January 12 that its work on this group of restrooms was substantially complete on January 6. The agency did not consider these five rooms to be usable until January 26, however. Two of the rooms had no heat and two others had pipes which had been improperly soldered and consequently leaked. These pipes disgorged onto the floors large quantities of water, which caused tiles to come loose from the underlayment. DRC may have been correct in asserting that the heat problem was easily corrected by turning on valves that released hot water to the radiators. The record contains no documentary evidence, however, to support the testimony of one of DRC's superintendents that all the problems were fixed within three or four days of the agency's having alerted the contractor to them. To the contrary, the problems of leaking pipes and popping floor tiles recurred even after these restrooms were opened, causing the rooms to be closed again for repairs. the work would have been done by January 6, rather than May 8 -- four months earlier -- but for the phasing requirement. Discussion The claim at issue here involves costs of supervision allegedly incurred over a period of time when, had the agency not insisted that work be phased, the contractor would no longer have been on the job, having completed its effort earlier. We will address this claim, and only this claim, in deciding the case. At the Board's hearing, both parties made assertions which pertain to this claim only tangentially, if at all. These assertions may be the bases for other claims, but we need not explore them to resolve this one. We will consequently mention them here, but only for the purpose of stating what we will not discuss.9 DRC has asserted that in at least four ways, the Census Bureau caused it to incur costs additional to those it should have had to incur to complete the job. These involved: -- making changes in the field to drawings provided by the agency, because renovating the restrooms in accordance with the drawings would have been impractical (for example, because the design required installation of toilet tissue dispensers where they would interfere with the opening of doors to toilet stalls); -- performing extra work on the partitions demarcating the stalls in one restroom (installing temporary partitions, and later replacing them with permanent structures, because agency employees, while cutting down partitions for another restroom, had mistakenly cut too short the partitions originally provided by the contractor for this room); -- responding to excessive and redundant punch lists prepared by agency employees; and -- subcontractors demobilizing and remobilizing extra times, and enduring inefficient working conditions (primarily stacking of trades), as a result of the phasing requirements. Similarly, Census has made many assertions about DRC's work which might be the basis for other claims, but are not relevant to the one before us now: -- The quality of the contractor's work was "poor" (contracting officer Smith), "very poor" (COTR Deane, ____________________ 9We hasten to add that in reciting these allegations, we are not commenting on their merits or suggesting that they are the ___ bases for other claims. We express no opinion here as to matters beyond the claim before us. successor COTR Parker), "inferior" (contracting specialist Terrell), or "met minimum requirements" but was "below usual standards" (inspector Hodge). -- The quality of the contractor's superintendence of the work, and of the work itself, as well as the late finish of the job, had a negative impact on agency operations in the affected buildings. -- These same factors may have been justification for terminating the contract for default (though, after having issued a cure notice as to this matter, the contracting officer did not terminate the contract). -- The agency incurred costs in cleaning up the mess (primarily layers of dust which settled on work areas, including computer and copying equipment) caused by dry- cutting of concrete blocks by DRC employees and/or subcontractors. Instead of examining these issues, we focus on the question before us: Did Census change the contract by not allowing DRC to proceed with the work in what the contractor considered the most efficient manner, and thereby cause DRC to incur additional costs of supervision? To answer this question, we begin by examining what the contract required with regard to the sequence in which work would be performed. The contract itself contains a single sentence on this subject: "The work shall be closely staged, phased, and coordinated with the COTR in order to avoid interruption of ongoing Government operations." This sentence is not clear insofar as it relates to phasing: it does not explain what that term means or state how many phases will be required for completion of the job. The contract also incorporates by reference a clause, 48 CFR 52.243-4, CHANGES (AUG 1987), which allows the contracting officer to make changes in the method or manner of performance of the work. The changes clause, as supplemented by the sentence which includes the word "phased," does nothing more than recite a standard feature of Federal Government contracts: the agency has the unilateral right to order changes to the contract (such as, here, phasing of the work) to accommodate the Government's needs and requirements. See John Cibinic, Jr. & Ralph C. Nash, Jr., Administration of Government Contracts 382 (3d ed. 1995). If we had no other evidence as to the parties' understanding on entering into the contract, we would agree with DRC that because the contract is vague as to phasing of work, any phasing directed by the agency which interferes with efficient, as-bid performance of the project must be considered a change. There is other evidence as to the parties' understanding, however. At the pre-bid conference, Census Bureau employees explained to DRC's president that because a sufficient number of restrooms had to be available at all times to agency personnel working in the buildings, the contractor would not have access to some of the restrooms until work in others had been completed. DRC maintains that the parol evidence rule dictates that this testimony be excluded from consideration because the prior oral arrangement it describes is inconsistent with the provisions of the written contract. The parol evidence rule provides that inconsistent terms of prior negotiations may not vary the terms of a binding, integrated agreement. Gilroy-Sims & Associates, GSBCA 8720, et al., 88-1 BCA 20,459, at 103,469 (1987), reconsideration denied, 88-3 BCA 21,085, aff'd, 878 F.2d 1447 (Fed. Cir. 1989) (table); Springfield Building Maintenance, Inc., GSBCA 6213, 82-2 BCA 15,918, at 78,897. The courts have also explained, however, that "meaning can usually be given to a writing only on consideration of all the circumstances, including the prior negotiations between the parties. The parol evidence rule is therefore no bar to the use of the oral statements of the parties during negotiations, in aid of the interpretation of ambiguous or uncertain clauses in written agreements." Sylvania Electric Products, Inc. v. United States, 458 F.2d 994, 1005 (Ct. Cl. 1972); see also McAbee Construction, Inc. v. United States, 97 F.3d 1431 (Fed. Cir. 1996) (confirming continuing validity of Sylvania); Pan Arctic Corp., ASBCA 20133, et al., 77-1 BCA 12,514, at 60,668. Because the contract provision at issue here is uncertain, and the arrangement made clear to the contractor at the pre-bid conference makes the provision more explicit by describing how it will be implemented, acceptance of the evidence as to that arrangement does not conflict with the parol evidence rule. We conclude, in light of that evidence, that the understanding between the parties, when the contract was signed, was that the work could not be performed in all eight bathrooms at the same time. To some degree, then, work would have to proceed in stages. This does not mean, however, that the contract provision, as amplified by the arrangement set forth at the pre-bid conference, allowed the agency to force the contractor to absorb the costs of whatever variety of phasing the agency chose. The arrangement was only that there would be some sort of phasing; the agency's specific phasing directives came later, after the contract had been entered into. At the time DRC prepared its bid, therefore, its freedom to proceed with the work as it saw fit was constrained in only the general way that some restrooms would have to be completed before others were begun. This restriction would have caused a prudent contractor to bid on the assumption that work would have to be performed in the least number of stages possible -- two. We will assess DRC's claim against this baseline. After the contract was awarded, the Census Bureau acted in inconsistent ways in delineating the way in which work was to be phased. On October 7, 1997 (at the pre-construction meeting), it directed DRC to perform the work in three separate stages, with each to begin only after the previous one was finished. On October 15, the agency's COTR approved a schedule providing for work to proceed through all eight restrooms sequentially, with all of the rooms being closed during a certain twelve-day period. On November 5, the COTR approved another schedule, providing for work to be performed in two stages. Later, the agency directed the contractor to revert to the October 7 plan. Each of these actions except the approval of the first DRC-proposed schedule constituted a departure from the contract, as that document reflected the parties' understanding at the time the document was signed.10 DRC does not allege that the making of so many modifications -- from two phases to three, putatively to none and back to two, and ultimately back to three -- in and of itself, contributed to the additional supervisory costs. Thus, we need examine the ramifications of only the net effect of all the changes -- requiring the contractor to perform the work in three stages rather than the least number possible, two. How much time would DRC have taken to renovate the restrooms, had it performed the work in two stages? The contractor was continually optimistic in its plans. In its first approved schedule (dated October 9), it showed the first five rooms being completed in fifty-four days and the last three in forty-six days. In the contractor's second approved schedule (dated November 2), it showed the first five rooms being completed in thirty-six days and the last three in thirty-four. On January 12, 1998, it asserted that it could finish the last three rooms in twenty-two days. None of these projections will serve as a baseline, however, because the evidence is that DRC actually took far more time than expected to do each phase of the ____________________ 10The agency contends that the two schedule approvals should be considered to be obviously in error. It suggests that our situation is analogous to cases in which the Government may insist on performance in accordance with contract specifications, even after it has approved contractor submittals which promise performance inconsistent with those specifications. In those cases, the submittals did not expressly request authorization to deviate from the requirements, and the approval was not granted by an official (such as a contracting officer) who had authority to modify the contract. See Ellis-Don Construction, Inc., ASBCA ___ ____________________________ 51210, 99-1 BCA 30,346; NewRic Construction Co., ASBCA 31635, _______________________ 86-3 BCA 19,035; U.S. Engineering Co., ASBCA 28835, 83-2 BCA ____________________ 16,902. These cases apply to the COTR's first approval of a DRC-proposed schedule. That schedule, which provided that all of the restrooms would be closed at the same time during some of the construction period, was inconsistent with the terms of the contract (as understood in light of the pre-bid negotiations), which said that work would not proceed in this way; and the COTR did not have authority to modify the contract. The cases are inapplicable to the second approval, however. Because the contract (as understood in light of the negotiations) said that work would be phased, but did not specify the sequence of the phasing, the proposal and approval of any particular arrangement which provided for at least two phases were permissible under the contract. job, and the contractor has not shown that any actions of the agency contributed to this delay within each phase.11 DRC actually took 106 days -- until January 26, 1998 -- to complete the first five restrooms. It began work on the second group of two rooms three days later and did not finish that group until March 20. Thus, the contractor took fifty-one days to complete these two rooms. Work on the third group -- the last restroom -- consumed fifty-three days. In fashioning a rational baseline for the time DRC would have taken to complete the renovations, had it performed the work in two stages, we look to the reality of construction progress, rather than the contractor's hopes. Because DRC did not finish the first two phases it actually performed until March 20, that is the earliest possible date we might accept as the ending day for two-stage construction. The second phase as performed included only two restrooms, rather than three, however. While there is undoubtedly some merit in DRC's assertion that a production-line approach to the work would have resulted in less time per room than was actually consumed, the slow pace of construction on each phase of this job indicates that an assumption that three rooms could have been finished in the time taken for two is, like the contractor's plans, overly optimistic. A more reasonable estimate, in light of the evidence in this case, is that if DRC had been allowed to work on the last three rooms as a single group, it would have finished the entire job two or three weeks after it completed renovations of the two rooms which were renovated in phase two -- by early to mid-April. DRC's claim for $29,515.45 in additional costs of supervision is premised on the theory that Census' directive that the work be performed in three phases caused completion of the job to be delayed by about four months. We conclude that the directive should be considered to have changed the schedule from two phases to three, and that it caused completion to be delayed from early to mid-April until May 12, or about one month. Under the changes clause, changes mandated by the Government that cause an increase in the contractor's costs are compensable. The agency has not contested any element of the monetary aspect of the contractor's claim, the support for the dollar figures presented, or the calculations made. We conclude that the delay was only about one month, not four, as the contractor maintains, and therefore award about one-fourth of the amount claimed, or $7,500. ____________________ 11DRC did make vague assertions that correcting problems shown on agency punch lists with regard to the first five restrooms, in January 1998, took only a few days, though the agency did not open the rooms until twenty days after the renovations were substantially complete. We have found, however, that the contractor did not prove that all the rooms were ready for use at any time earlier than the date on which the agency opened them. Decision The appeal is GRANTED IN PART. The agency shall pay to the contractor $7,500, plus interest from the date on which the contracting officer received the claim, in accordance with 41 U.S.C. 611 (1994). ________________________ STEPHEN M. DANIELS Board Judge