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B-121478, JUN. 11, 1957

B-121478 Jun 11, 1957
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MCKINNON: REFERENCE IS MADE TO YOUR LETTER OF MAY 14. IT APPEARS TO BE YOUR CONTENTION THAT THE DISALLOWANCE OF THE CLAIM WAS BASED UPON AN IMPLIED INTENT IN THE LETTER OF OCTOBER 28. TO THE ABOVE LETTER YOU STATE THAT IT WAS MERELY AN OFFER AND THAT IT NEVER WAS INTENDED TO INFLUENCE THE LEASE. IT WOULD HAVE BEEN SO STATED IN THE RENEWAL OPTION IN PARAGRAPH 7. REQUESTED A FIVE-YEAR RENEWAL OPTION AT A 10 PERCENT REDUCTION AND THAT AFTER A DISCUSSION IT WAS AGREED THAT THE ONLY THING THAT COULD AFFECT YOUR INCOME WOULD BE AN INCREASE IN THE COST FURNISHING THE SPECIAL SERVICES. YOU STATE FOR THIS REASON THE SPECIAL SERVICES AND FACILITIES PROVIDED FOR IN PARAGRAPH 6 OF THE LEASE WERE OMITTED FROM THE RENEWAL CLAUSE IN PARAGRAPH 7.

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B-121478, JUN. 11, 1957

TO MR. GEORGE L. MCKINNON:

REFERENCE IS MADE TO YOUR LETTER OF MAY 14, 1957, REQUESTING FURTHER CONSIDERATION OF THE CLAIM OF THE CRUM-MCKINNON BUILDING COMPANY FOR UTILITIES AND JANITOR SERVICE FURNISHED THE BUILDING OCCUPIED BY THE GOVERNMENT UNDER LEASE GS-10B-160 (FORMERLY I-3L-119), DATED OCTOBER 28, 1948, FOR THE RENEWAL TERM BEGINNING JULY 1, 1954.

IT APPEARS TO BE YOUR CONTENTION THAT THE DISALLOWANCE OF THE CLAIM WAS BASED UPON AN IMPLIED INTENT IN THE LETTER OF OCTOBER 28, 1948, PREVIOUSLY REFERRED TO, AND IN THE LEASE, WHICH INTENT YOU ASSERT DOES NOT EXIST. TO THE ABOVE LETTER YOU STATE THAT IT WAS MERELY AN OFFER AND THAT IT NEVER WAS INTENDED TO INFLUENCE THE LEASE. AS TO THE LEASE YOU ASSERT, IN EFFECT, THAT HAD THE SPECIAL SERVICES SPECIFIED IN PARAGRAPH 6 BEEN INTENDED TO BE FURNISHED AS PART OF THE RENTAL CONSIDERATION FOR THE TERM BEGINNING JULY 1, 1954, IT WOULD HAVE BEEN SO STATED IN THE RENEWAL OPTION IN PARAGRAPH 7. IN REFERRING TO THE PRELIMINARY DISCUSSIONS, YOU STATE THAT THE CONTRACTING OFFICER, FOR THE PURPOSE OF JUSTIFYING THE HIGH RENT TO BE PAID BY THE GOVERNMENT, REQUESTED A FIVE-YEAR RENEWAL OPTION AT A 10 PERCENT REDUCTION AND THAT AFTER A DISCUSSION IT WAS AGREED THAT THE ONLY THING THAT COULD AFFECT YOUR INCOME WOULD BE AN INCREASE IN THE COST FURNISHING THE SPECIAL SERVICES, UPKEEP AND TAXES. YOU STATE FOR THIS REASON THE SPECIAL SERVICES AND FACILITIES PROVIDED FOR IN PARAGRAPH 6 OF THE LEASE WERE OMITTED FROM THE RENEWAL CLAUSE IN PARAGRAPH 7.

YOUR EXPLANATION CONCERNING THE FACTORS LEADING UP TO THE INCLUSION OF THE PROVISION IN PARAGRAPH 7, PROVIDING FOR A 10 PERCENT REDUCTION IN THE RENTAL FOR THE ADDITIONAL TERM OVERLOOKS THE FACT THAT IF THE PARTIES INTENDED THAT THE GOVERNMENT, AND NOT THE LESSOR, SHOULD FURNISH THE SPECIAL SERVICES THE 10 PERCENT REDUCTION WOULD BE MEANINGLESS. ALSO, IT IS INCONSISTENT WITH THE STATEMENT IN YOUR COMPANY'S LETTER OF FEBRUARY 3, 1955, INDICATING THAT AT LEAST ONE OF THE PRIMARY MOTIVES BEHIND THE RENTAL REDUCTION FOR THE NEW TERM WAS TO INDUCE THE GOVERNMENT TO CONTINUE TO OCCUPY THE BUILDING SO THAT YOUR COMPANY WOULD NOT BE FORCED TO SEEK ANOTHER TENANT. AS TO YOUR ARGUMENT TO THE EFFECT THAT IF THE PARTIES INTENDED THAT THE SPECIAL SERVICES SPECIFIED IN PARAGRAPH 6 SHOULD BE FURNISHED AS PART OF THE RENTAL CONSIDERATION IT MAY BE STATED THAT THE SAME ARGUMENT COULD BE APPLIED TO YOUR MAINTENANCE OBLIGATION UNDER PARAGRAPH 9. NO ONE HAS EVER CONTENDED THAT YOUR COMPANY IS RELIEVED FROM THE MAINTENANCE OBLIGATION UNDER PARAGRAPH 9 FOR THE RENEWAL TERM.

NOTWITHSTANDING YOUR PRESENT STATEMENTS AS TO THE INTENTIONS OF THE PARTIES, THE LETTER OF OCTOBER 28, 1948, CLEARLY SHOWS THAT YOUR PREDECESSORS INTENDED TO FURNISH SPECIAL SERVICES FOR THE ADDITIONAL TERM AS PART OF THE RENTAL CONSIDERATION. AS WE HAVE HERETOFORE STATED, SINCE THE RENEWAL PROVISION IN PARAGRAPH 7 IS AMBIGUOUS, THE LETTER OF OCTOBER 28, 1948, WRITTEN THE DAY BEFORE THE EXECUTION OF THE LEASE MAY BE USED TO CLARIFY SUCH AMBIGUITY. WILLIAMS POCAHONTAS COAL CO. V. BERWIND LAND CO., 76 F.2D 319, CERTIORARI DENIED 296 U.S. 610. FURTHERMORE, THE RECORD SHOWS THAT THE CONTRACTING OFFICER ALSO INTENDED THAT THE LESSOR SHOULD FURNISH SPECIAL SERVICES AS A PART OF THE RENTAL CONSIDERATION FOR THE RENEWAL TERM. THIS IS CLEARLY DEMONSTRATED BY A REFERENCE TO THE SPECIFICATIONS RESULTING IN THE SUBMISSION OF THE BID BY YOUR PREDECESSORS. SUCH SPECIFICATIONS REQUIRED THE SUCCESSFUL BIDDER TO FURNISH THE SPECIAL SERVICES AND FACILITIES AS ITEMIZED THEREIN AND SPECIFIED THAT THE CONTRACT WOULD BE SUBJECT TO RENEWAL BY THE GOVERNMENT FOR ADDITIONAL YEARS. AS IS POINTED OUT IN OUR DECISION OF OCTOBER 27, 1954, B-121478, TO THE ADMINISTRATOR, GENERAL SERVICES ADMINISTRATION, WHERE, AS IN THE PRESENT CASE, A COVENANTS FOR RENEWAL IS GENERAL AND DOES NOT STATE THE TERMS OF THE RENEWAL LEASE, THE NEW LEASE IS TO BE ON THE SAME TERMS AND CONDITIONS AS THE OLD LEASE. CUMMINGS V. RYTTING, 207 P.2D 804; 32 AM.JUR., LANDLORD AND TENANT, SECTION 959.

FOR THE FOREGOING REASON WE MUST CONCLUDE THAT THE ACTION HERETOFORE TAKEN ON YOUR CLAIM WAS PROPER.

AS TO YOUR REQUEST FOR SUGGESTIONS FOR ASSISTING YOU, WE ARE NOT IN A POSITION TO ADVISE YOU FURTHER THAN TO STATE THAT OUR ACTION IS BINDING UPON THE EXECUTIVE BRANCH OF THE GOVERNMENT, BUT LEAVES YOU FREE TO SEEK RELIEF THROUGH JUDICIAL ACTION OR LEGISLATIVE PROCESSES.

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