B-161840, SEP. 18, 1967

B-161840: Sep 18, 1967

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REPAIR TO A BUILDING CONSTRUCTED AND LEASED TO THE POST OFFICE TO CORRECT A DRAINAGE DEFECT MUST BE REGARDED AS AN OBLIGATION OF THE LESSOR AND THE FACT THAT THE BUILDING WAS CONSTRUCTED IN CONFORMITY TO THE REQUIREMENTS OF THE POST OFFICE DEPARTMENT DOES NOT AFFECT THE LESSOR'S OBLIGATION TO MAINTAIN THE PROPERTY IN TENANTABLE CONDITION FOR THE TERM OF THE OCCUPANCY AND TO RESTORE IT IN CASE IT BECAME UNFIT FOR PURPOSES OF LEASE. THEREFORE DEDUCTION FROM THE RENT FOR COST OF REPAIRING DEFECTIVE DRAINAGE WAS PROPER. THERE IS NO AUTHORITY FOR THE ADMINISTRATIVE AGENCY TO SUBMIT LESSOR'S CLAIM TO ARBITRATION. TO PATERSON REALTY CORPORATION: REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 1. THAT IT WAS NOT UNTIL SOMETIME LATER THAT YOU WERE ADVISED BY THE DEPARTMENT THAT THE REAR DRAINAGE DID NOT FUNCTION PROPERLY.

B-161840, SEP. 18, 1967

LEASES - CONSTRUCTION/LEASE AGREEMENTS - REPAIR COSTS DECISION TO PATERSON REALTY CORP. CONCERNING COST OF REPAIRS TO DRAINAGE SYSTEM AT VENTNOR, N.J. POST OFFICE WITHHELD FROM RENTAL PAYMENTS. REPAIR TO A BUILDING CONSTRUCTED AND LEASED TO THE POST OFFICE TO CORRECT A DRAINAGE DEFECT MUST BE REGARDED AS AN OBLIGATION OF THE LESSOR AND THE FACT THAT THE BUILDING WAS CONSTRUCTED IN CONFORMITY TO THE REQUIREMENTS OF THE POST OFFICE DEPARTMENT DOES NOT AFFECT THE LESSOR'S OBLIGATION TO MAINTAIN THE PROPERTY IN TENANTABLE CONDITION FOR THE TERM OF THE OCCUPANCY AND TO RESTORE IT IN CASE IT BECAME UNFIT FOR PURPOSES OF LEASE. THEREFORE DEDUCTION FROM THE RENT FOR COST OF REPAIRING DEFECTIVE DRAINAGE WAS PROPER. THERE IS NO AUTHORITY FOR THE ADMINISTRATIVE AGENCY TO SUBMIT LESSOR'S CLAIM TO ARBITRATION.

TO PATERSON REALTY CORPORATION:

REFERENCE IS MADE TO YOUR LETTER DATED AUGUST 1, 1967, PROTESTING AGAINST THE ACTION OF THE POST OFFICE DEPARTMENT IN WITHHOLDING THE COST OF CERTAIN REPAIRS TO THE DRAINAGE SYSTEM AT THE VENTNOR, NEW JERSEY, BRANCH OF THE ATLANTIC CITY POST OFFICE FROM THE RENTAL PAYMENTS DUE YOU FOR THE PREMISES.

YOU STATE THAT YOU HAD A GENERAL CONTRACTOR CONSTRUCT THE VENTNOR FACILITY IN ACCORDANCE WITH GOVERNMENT PLANS AND SPECIFICATIONS; THAT IN A LETTER DATED DECEMBER 7, 1959, TO YOU, THE DEPARTMENT SIGNIFIED THAT UPON COMPLETION OF CERTAIN ITEMS INCLUDED IN A PUNCH LIST DATED SEPTEMBER 11, 1959, BASED ON A GOVERNMENT INSPECTION OF THE BUILDING AND PREMISES IN JULY 1959, WHICH MADE NO MENTION OF THE DRAINAGE SYSTEM, THE BUILDING WOULD BE ACCEPTABLE; THAT AS A RESULT, UPON COMPLETION OF THE PUNCH LIST ITEMS YOU PAID YOUR GENERAL CONTRACTOR IN FULL WITHOUT RECOURSE TO HIM; AND THAT IT WAS NOT UNTIL SOMETIME LATER THAT YOU WERE ADVISED BY THE DEPARTMENT THAT THE REAR DRAINAGE DID NOT FUNCTION PROPERLY. YOU FURTHER STATE THAT IN ANTICIPATION OF A DRAINAGE PROBLEM, YOU MADE A PRE- CONSTRUCTION REQUEST OF THE DEPARTMENT FOR PERMISSION TO INSTALL STEPS AT THE FRONT OF THE BUILDING SO THAT THERE WOULD NOT BE A LOW AREA IN THE REAR, BUT THE REQUEST WAS DENIED. ACCORDINGLY, YOU CONTEND THAT YOU SHOULD NOT BE PENALIZED FOR A DIFFICULTY WHICH YOU CLAIM WAS NEITHER A DEFECT IN THE CONSTRUCTION NOR A DEFECT WHICH HAPPENED AFTER CONSTRUCTION.

THE RECORD MADE AVAILABLE TO OUR OFFICE SHOWS THAT ON FEBRUARY 10, 1958, THE PHILADELPHIA REGIONAL OFFICE OF THE DEPARTMENT ADVERTISED FOR BIDS TO LEASE SUITABLE QUARTERS FOR THE VENTNOR BRANCH POST OFFICE, TO BE CONSTRUCTED IN ACCORDANCE WITH GENERAL PLANS AND REQUIREMENTS INCLUDED IN THE INVITATION. ON JULY 28, 1958, THE DEPARTMENT ACCEPTED YOUR PROPOSAL TO LEASE TO THE GOVERNMENT CERTAIN PROPERTY LOCATED AT VENTNOR AND PORTLAND AVENUES, VENTNOR, ON WHICH YOU AGREED TO ERECT A POSTAL FACILITY IN FULL COMPLIANCE WITH LOT AND FLOOR PLANS FURNISHED BY THE DEPARTMENT AND THE DETAILED AND GENERAL REQUIREMENTS SET FORTH IN FACILITIES HANDBOOK S-2, ENTITLED "CONSTRUCTION REQUIREMENTS FOR LEASED POST OFFICE FACILITIES," THE TERM OF THE LEASE TO BE 20 YEARS COMMENCING JULY 28, 1958, OR THE DATE OF COMPLETION OF THE BUILDING. AMONG 44 SPECIFIC ITEMS SET FORTH IN THE ADDENDUM TO THE AGREEMENT TO LEASE WERE ITEM 1 REQUIRING GRADING OF THE BUILDING SITE TO DRAIN AWAY FROM THE BUILDING AND PROVISION FOR THE PROMPT REMOVAL OF ATER; ITEM 21 REQUIRING A MAIL PLATFORM 30 INCHES ABOVE GRADE AT THE REAR OF THE BUILDING; AND ITEM 44 STIPULATING THAT THE DETAILS, SPECIFICATIONS AND NOTES ON A TENTATIVE FLOOR PLAN DATED FEBRUARY 28, 1958, WHICH HAD BEEN PREPARED BY THE ENGINEERING AND DRAFTING SECTION OF THE DEPARTMENT'S PHILADELPHIA OFFICE, WERE PART OF THE GENERAL BUILDING REQUIREMENTS, DEVIATIONS FROM WHICH COULD BE MADE ONLY WITH THE APPROVAL OF THE DEPARTMENT'S AUTHORIZED REPRESENTATIVE. THE FLOOR PLAN, WHICH CALLED FOR A 12 FOOT X 23 FOOT PLATFORM, CARRIED A NOTATION THAT THE PLATFORM AND PARKING AREA AT THE REAR OF THE BUILDING WAS TO BE GRADED, PAVED, AND PROPERLY DRAINED.

FACILITIES HANDBOOK S-2 INCLUDED THE FOLLOWING PERTINENT LANGUAGE AND PROVISIONS:

"PART I

REQUIREMENTS

"C. SPECIAL REQUIREMENTS

1. MATERIAL, WORKMANSHIP, AND ARCHITECTURAL DESIGN SHALL BE SATISFACTORY TO THE POSTAL OFFICIAL.

2. ALL CONSTRUCTION, HEATING, PLUMBING, VENTILATION, ELECTRICAL WORK, STORM AND SANITARY DRAINAGE SHALL CONFORM TO LOCAL CODES AND FIRE AND SAFETY REQUIREMENTS. IN THE ABSENCE OF SUCH CODES, NATIONAL CODES SHALL APPLY. FOR EXISTING BUILDINGS, NO CONDITION CONSIDERED A HEALTH OR SAFETY HAZARD TO EMPLOYEES, SHALL BE ALLOWED TO EXIST. RELATED REQUIREMENTS CONTAINED HEREIN SHALL BE CONSIDERED MINIMUM.

4. BIDDERS SHALL BE RESPONSIBLE FOR DETERMINING SUBSOIL CONDITIONS. THEY SHALL EXAMINE THE SITE AND ACQUAINT THEMSELVES WITH CONDITIONS. ALL BIDS SHALL REFLECT ANY CONDITIONS THAT MAY AFFECT THE WORK OR CONSTRUCTION COST.

"PART II

CONSTRUCTION

"T. MAILING PLATFORM THE MAILING PLATFORM, WHEN REQUIRED, SHALL BE OF HARDENED, SMOOTH, STEEL-TROWELED CONCRETE, AND SHALL HAVE A MINIMUM DEPTH OF 10 FEET -0 INCHES, AND SHALL GENERALLY BE 2 FEET -6 INCHES ABOVE GRADE EXCEPT THAT WHERE LARGE VEHICLES ARE ANTICIPATED THE DRIVEWAY THE GRADE MAY BE GRADUATED TO ACCOMMODATE THE LARGER VEHICLES AT THE PLATFORM. THE PLATFORM SHALL HAVE AT LEAST A 1/4 INCH PITCH PER FOOT FROM BUILDING WALL TO EDGE OF PLATFORM AND BE COVERED BY A CANOPY ROOF HAVING A MINIMUM OF 14 FEET -0 INCHES CLEARANCE OVER DRIVEWAY AND A 7 FOOT -0 INCH OVERHAND. THE LOADING EDGE OF THE PLATFORM SHALL BE PROTECTED BY A WOODEN OR RUBBER BUMPER CONFORMING TO STANDARD DETAILS. CONCRETE STEPS SHALL BE PROVIDED FROM THE TRUCKING AREA TO THE PLATFORM, LOCATED PREFERABLY AT THE END OF THE PLATFORM NEAREST TO THE BUILDING ENTRANCE. WHERE RURAL CARRIERS ARE EMPLOYED, A 4 FOOT WIDE RAMP SHALL BE SUBSTITUTED FOR THE AFOREMENTIONED STEPS IF CONDITIONS PERMIT. A PIPE RAILING SHALL BE PROVIDED AT THE STEPS. THE PLATFORM MAY BE OMITTED AT SMALL OFFICES WHERE ONLY MINOR TRUCKING OCCURS.

"PART VIII

GRADING, DRAINAGE, AND PAVING

"A. GRADING SITES SHALL BE CLEARED OF ALL STRUCTURES AND NATURAL GROWTH, EXCEPT FOR DESIRABLE SHADE TREES, AND GRADED TO DRAIN AWAY FROM THE BUILDING. WHERE POSSIBLE, SITES SHOULD BE GRADED TO SLOPE FROM THE FRONT OF THE BUILDING TO DROP 2 FEET -6 INCHES AT THE REAR OF THE BUILDING TO ELIMINATE STEPS AT THE FRONT ENTRANCE AND TO PERMIT THE 1ST FLOOR LEVEL TO BE 2 FEET -6 INCHES ABOVE THE DRIVEWAY AT THE PLATFORM.

"B. DRAINAGE PAVED AREAS SHALL BE WELL GRADED AND PROVIDED WITH CATCH BASINS, DRAINS OR SUBSURFACE DRAINS AS REQUIRED FOR THE PROMPT REMOVAL OF SURFACE WATER.'

THE LEASE, WHICH WAS EXECUTED ON AUGUST 11, 1959, EFFECTIVE AS OF JULY 1, 1959, INCLUDED THE FOLLOWING PERTINENT PROVISIONS:

"7. THE LESSOR SHALL, UNLESS HEREIN SPECIFIED TO THE CONTRARY MAINTAIN THE DEMISED PREMISES, INCLUDING THE BUILDING AND ANY AND ALL EQUIPMENT, FIXTURES, AND APPURTENANCES, WHETHER SEVERABLE OR NONSEVERABLE, FURNISHED BY THE LESSOR UNDER THIS LEASE IN GOOD REPAIR AND TENANTABLE CONDITION, EXCEPT IN CASE OF DAMAGE ARISING FROM THE ACT OR THE NEGLIGENCE OF THE GOVERNMENT'S AGENTS OR EMPLOYEES. FOR THE PURPOSE OF SO MAINTAINING SAID PREMISES AND PROPERTY, THE LESSOR MAY AT REASONABLE TIMES ENTER AND INSPECT THE SAME AND MAKE ANY NECESSARY REPAIRS THERETO.

"10 (C) IF ANY BUILDING OR ANY PART OF IT ON THE LEASED PROPERTY BECOMES UNFIT FOR USE FOR THE PURPOSES LEASED, THE LESSOR SHALL PUT THE SAME IN A SATISFACTORY CONDITION, AS DETERMINED BY THE POST OFFICE DEPARTMENT, FOR THE PURPOSES LEASED. IF THE LESSOR DOES NOT DO SO WITH REASONABLE DILIGENCE, THE POST OFFICE DEPARTMENT IN ITS DISCRETION MAY CANCEL THE LEASE. FOR ANY PERIOD SAID BUILDING OR ANY PART THEREOF IS UNFIT FOR THE PURPOSES LEASED, THE RENT SHALL BE ABATED IN PROPORTION TO THE AREA DETERMINED BY THE POST OFFICE DEPARTMENT TO HAVE BEEN RENDERED UNAVAILABLE TO THE POST OFFICE DEPARTMENT BY REASON OF SUCH CONDITION.

"14. IT IS EXPRESSLY UNDERSTOOD BETWEEN THE PARTIES HERETO THAT THE TERMS AND CONDITIONS OF THE CERTAIN AGREEMENT TO LEASE DATED APRIL 29, 1958, AND ANY AMENDMENT OR MODIFICATION THEREOF, FURNISHED BY PATERSON REALTY CORPORATION, AND ACCEPTED BY THE GOVERNMENT ON JULY 28, 1958, ARE MADE A PART OF THIS LEASE AND ARE TO BE COMPLIED WITH AS THOUGH FULLY SET FORTH HEREIN.

"15. WHENEVER THE BUILDING, OR ANY PART THEREOF, UNDER LEASE BECOMES UNFIT FOR USE AS A POST OFFICE NO RENT SHALL BE PAID UNTIL THE SAME SHALL BE PUT IN A SATISFACTORY CONDITION BY THE LESSOR THEREOF FOR OCCUPATION AS A POST OFFICE, OR THE LEASE MAY BE CANCELLED AT THE OPTION OF THE POSTMASTER GENERAL, PROVIDED, HOWEVER, THAT IN THE EVENT THE BUILDING, OR ANY PART THEREOF, BECOMES UNFIT FOR USE AS A POST OFFICE THE GOVERNMENT SHALL GIVE NOTICE THEREOF IN WRITING BY UNITED STATES FIRST CLASS MAIL TO THE LESSOR AND TO ANY MORTGAGEE WHO SHALL HAVE GIVEN NOTICE OF ITS MORTGAGE TO THE GOVERNMENT, AND IF WITHIN 30 DAYS AFTER RECEIPT OF SUCH NOTICE BY LESSOR THE LESSOR OR SAID MORTGAGEE PROCEEDS WITH REASONABLE DILIGENCE TO PLACE THE BUILDING IN A SATISFACTORY CONDITION, THERE SHALL BE NO RIGHT OF CANCELLATION OF THE LEASE AND THE LEASE SHALL REMAIN IN FULL FORCE AND EFFECT.'

THE RECORD FURTHER INDICATES THAT THE VENTNOR BRANCH POST OFFICE WAS OCCUPIED BY THE DEPARTMENT ON JULY 1, 1959, AND THAT AS EARLY AS NOVEMBER 19, 1959, YOU WERE NOTIFIED THAT AMONG VARIOUS ITEMS REQUIRING IMMEDIATE ATTENTION WAS THE DRAIN AT THE REAR OF THE BUILDING, WHICH WAS MALFUNCTIONING, THEREBY GIVING RISE TO APPREHENSION THAT THE WATER WOULD FREEZE DURING THE INCLEMENT WINTER WEATHER AND WOULD CAUSE CONSIDERABLE HAZARD INCIDENT TO THE MANEUVERING OF POST OFFICE VEHICLES IN THE AREA. CORRESPONDENCE THEREAFTER EXCHANGED BETWEEN YOU AND THE DEPARTMENT INDICATES THAT YOU ENDEAVORED TO REMEDY THE DRAINAGE DEFECT BY INSTALLATION OF A SUMP PUMP, WHICH WAS NOT EFFECTIVE; THAT YOU WERE REPEATEDLY NOTIFIED BY THE DEPARTMENT THAT AN ALTERNATE METHOD OF CORRECTING THE PROBLEM, SUCH AS THE USE OF TWO PUMPS, THE COST OF WHICH IN 1960 WAS ESTIMATED AS $1,000, SHOULD BE EMPLOYED; AND THAT NOTWITHSTANDING YOUR ATTENTION WAS DIRECTED TO THE OBLIGATION IMPOSED ON YOU BY THE AGREEMENT TO LEASE TO PROVIDE FOR PROPER DRAINAGE, YOU DECLINED TO TAKE NECESSARY ACTION TO EFFECTIVELY CORRECT THE PROBLEM ON THE BASIS THAT THE BUILDING WAS CONSTRUCTED TO GOVERNMENT SPECIFICATIONS AND THAT THE PROBLEM WOULD NOT HAVE ARISEN HAD THE DEPARTMENT ACCEPTED A CERTAIN PROPOSAL WHICH YOU HAD MADE AT THE TIME CONSTRUCTION OF THE FACILITY COMMENCED. IN THIS CONNECTION, A SEARCH OF THE DEPARTMENT'S FILES HAS DISCLOSED RECEIPT OF A LETTER DATED OCTOBER 24, 1958, IN WHICH YOU MADE THE FOLLOWING STATEMENTS: "BECAUSE OF THE CONSIDERABLE SLOPE OF THE LAND IN VENTNOR, NEW JERSEY SITE FOR THE NEW POST OFFICE, WE ARE FACED WITH A POSSIBLE DRAINAGE PROBLEM IN THE BACK OF THE LOADING PLATFORM. WE WILL BE ABLE TO PREVENT THE DRAINAGE PROBLEM BY ELIMINATING THE 30 INCH PLATFORM IN THE BACK. AS A RESULT OF OUR TEST BORINGS IN VENTNOR, WE FIND THAT WE ARE OBLIGED TO PUT IN A VERY EXPENSIVE AND COMPLICATED TYPE FOUNDATION. BECAUSE OF THIS AND OTHER COMPLICATIONS, OUR CONSTRUCTION FOR THE VENTNOR CITY POST OFFICE SHALL BE BETWEEN 14 AND 15 DOLLARS PER SQ. FT. UNLESS WE CAN ELIMINATE THE 30 INCH LOADING PLATFORM, WE WILL BE OBLIGED TO RAISE THE BUILDING SEVERAL MORE FEET, WHICH WILL INCREASE OUR ALREADY HIGH CONSTRUCTION COST TO A VERY UNFAVORABLE LEVEL. "FURTHERMORE, WE HEREBY REQUEST THAT WE BE PERMITTED TO USE CINDER BLOCKS FOR THE UNEXPOSED WALLS. WE WOULD BE VERY APPRECIATIVE IF OUR REQUEST MAY BE GIVEN CONSIDERATION.' THERE IS NO RECORD OF ANY REPLY BY THE DEPARTMENT TO THIS LETTER.

IN ADDITION, THE RECORD CONTAINS A LETTER DATED FEBRUARY 17, 1961, IN WHICH YOU STATED THAT YOU HAD BEEN COMPENSATING THE BUILDING CUSTODIAN AT THE VENTNOR FACILITY FOR OPERATING THE PUMP IN THE REAR OF THE BUILDING AND HAD ASSUMED THE PROBLEM WAS RELIEVED; THAT IN AN EFFORT TO AVOID THE PROBLEM AT THE TIME YOU STARTED TO CONSTRUCT THE BUILDING YOU HAD REQUESTED THAT THE BUILDING BE ELEVATED AND STEPS INSTALLED SO THAT THE MANEUVERING AREA WOULD BE HIGHER THAN THE STREET ELEVATION; AND THAT YOU WERE VERY MUCH "SET BACK" WHEN THE DEPARTMENT REJECTED YOUR PROPOSAL AND REQUESTED THAT YOU EXCAVATE THE REAR AREA, THEREBY CAUSING THE WATER CONDITION DUE TO THE HIGH WATER TABLE. YOU FURTHER STATED THAT IF THE DEPARTMENT COULD OFFER A SOLUTION AND A CONTRACTOR TO CORRECT THE SITUATION AT A COST WITHIN REASON, YOU WOULD GIVE A WORK ORDER THEREFOR.

IN A LETTER DATED MARCH 2, 1961, THE DEPARTMENT ADVISED YOU THAT IT HAD NEITHER THE PERSONNEL NOR FACILITIES TO DETERMINE THE REQUIRED ACTION TO RELIEVE THE FLOODING CONDITION BUT INDICATED IT WOULD SOLICIT PROPOSALS TO PERFORM THE NECESSARY WORK AND WOULD SUBMIT SUCH PROPOSALS TO YOU FOR REVIEW. IN THIS CONNECTION, THE FILE INDICATES THAT IN LINE WITH A TELEPHONE CONVERSATION OF APRIL 14, 1961, BETWEEN YOU AND THE PHILADELPHIA REGIONAL OFFICE, YOU OBTAINED FROM A CONTRACTOR AN ESTIMATE FOR THE REPAIR WORK, WHICH YOU SUBMITTED TO THE DEPARTMENT BY LETTER DATED MAY 15, 1961, READING, IN PART, AS FOLLOWS: "* * * I ENCLOSE HEREWITH A PLAN FOR THIS WORK TOGETHER WITH A WRITTEN PROPOSAL FROM L.C. ADAMS AND SON. AS YOU WILL NOTE THE COST FOR THIS WORK IS $4,627.00. "AS I MENTIONED TO YOU ON THE PHONE, I DO NOT THINK THAT IT IS FAIR FOR US TO PAY FOR THIS COST SINCE OUR ARCHITECT HAD FORESEEN THIS PROBLEM, AND WE PLEADED WITH YOUR DEPARTMENT TO ELEVATE THE BUILDING SO THAT WE WOULD NOT HAVE A HOLE IN THE REAR BECAUSE OF THE HIGH WATER TABLE. THIS PROPOSAL WAS REJECTED, AND AT THIS POINT, I AM SURE THAT THIS WAS THE WAY THE BUILDING SHOULD HAVE BEEN BUILT. "WE HAVE ALREADY INSTALLED PUMPS IN THE CENTER OF THE PARKING AREA TO RELIEVE THE SITUATION. THIS HAS HELPED TO A CERTAIN DEGREE BUT HAS NOT SOLVED THE PROBLEM 100 PERCENT. "UPON REVIEWING THIS PROPOSAL, PLEASE LET ME HEAR FROM YOU. THANK YOU FOR YOUR COOPERATION IN THIS MATTER.'

THE RECORD FURTHER SHOWS THAT THE DRAINAGE SITUATION WAS THEREAFTER REVIEWED BY A MEMBER OF THE REGIONAL OFFICE ENGINEERING STAFF WITH THE RESULT THAT THREE SOLUTIONS TO THE PROBLEM WERE PROPOSED. THE FIRST SOLUTION, ELIMINATION OF THE PLATFORM AND FILLING IN OF THE FLOODED AREA, WAS REJECTED AS IMPRACTICAL BECAUSE OF THE LOSS OF UTILITY OF THE PLATFORM. OF THE TWO OTHER SOLUTIONS, EACH OF WHICH INVOLVED PUMP INSTALLATIONS, A PROPOSAL WHICH CALLED FOR INSTALLATION OF AN ADDITIONAL PUMP WAS PREFERRED BY THE CHIEF REGIONAL ENGINEER IN A MEMORANDUM DATED JULY 28, 1961. IN A LETTER DATED DECEMBER 1, 1961, THE REGIONAL OFFICE ADVISED YOU THAT ITS ENGINEERING STAFF HAD CONCLUDED THAT WITH THE USE OF PROPER ENGINEERING TECHNIQUES, MANY OF WHICH HAD ALREADY BEEN APPLIED TO SIMILAR SITUATIONS ON THE ATLANTIC CITY ISLAND, YOU WOULD HAVE NO DIFFICULTY CORRECTING THE VENTNOR DRAINAGE PROBLEM; HOWEVER, IN THE LIGHT OF YOUR CONTENTION IN A LETTER DATED DECEMBER 11, 1961, THAT YOU UNDERSTOOD THE PROBLEM HAD BEEN RECTIFIED AS THE RESULT OF MANNING OF THE PUMP BY THE VENTNOR BUILDING CUSTODIAN, THE DEPARTMENT AGAIN SURVEYED THE FACILITY, BUT FOUND THERE WAS NO IMPROVEMENT IN THE SITUATION.

DURING THE YEARS 1962 TO 1966, THE DEPARTMENT'S REPEATED EFFORTS TO HAVE YOU CORRECT THE DRAINAGE PROBLEM WERE FRUITLESS. ACCORDINGLY, EARLY IN 1966 THE MATTER WAS REVIEWED BY THE REGIONAL OFFICE, AT THE REQUEST OF THE BUREAU OF FACILITIES IN WASHINGTON, D.C., FROM THE STANDPOINT OF THE ADEQUACY OF THE ORIGINAL PLANS FOR THE FACILITY AND THE ACTION, IF ANY, TAKEN ON THE PRE-CONSTRUCTION PROPOSAL WHICH YOU MENTIONED IN YOUR LETTER OF FEBRUARY 17, 1961. IN A STATEMENT DATED MAY 10, 1966, THE REGIONAL OFFICE ENGINEERING BRANCH REPORTED THAT NO ARCHITECT'S PLANS HAD BEEN RECEIVED FROM YOU IN THAT OFFICE, NOR WAS THERE ANY RECORD OF NEGOTIATIONS WITH YOU CONCERNING YOUR ALLEGED PROPOSAL (I.E., ELEVATION OF THE BUILDING FOUNDATION) OR OF ANY REFUSAL OF SUCH A REQUEST, AND, THEREFORE, THE BRANCH WAS UNABLE TO STATE WHETHER ARCHITECT'S PLANS HAD BEEN DEVELOPED BY YOU OR TO VERIFY WHETHER YOU HAD IN FACT REQUESTED A CHANGE IN THE PLATFORM HEIGHT FOR DRAINAGE PURPOSES; HOWEVER, THE ACTING CHIEF OF THE BRANCH EXPRESSED AN OPINION THAT THE NOTATION ON THE GOVERNMENT-PREPARED TENTATIVE PLANS DATED FEBRUARY 28, 1958, TO THE EFFECT THAT THE DRIVEWAY AND MANEUVERING AREA WERE TO BE GRADED, PAVED, AND PROPERLY DRAINED, WAS CONSIDERED SUFFICIENT INSTRUCTION TO A COMPETENT ARCHITECT TO DESIGN A DRAINAGE SYSTEM WHICH WOULD ADEQUATELY DISPOSE OF ALL SURFACE WATER. FURTHER, A CHECK WITH ONE OF THE REAL ESTATE OFFICERS WHO HAD BEEN INVOLVED IN THE FACILITY CONSTRUCTION AND ATTENDANT PROBLEMS FAILED TO DISCLOSE ANY RECORD OF REFUSAL OF PERMISSION TO YOU TO INSTALL STEPS AT THE FRONT ENTRANCE OF THE BUILDING OR ANY DIRECT NEGOTIATIONS WITH YOU CONCERNING THE DRAINAGE PROBLEM. ACCORDINGLY, YOU WERE NOTIFIED BY LETTERS DATED SEPTEMBER 27, AND NOVEMBER 3, 1966, OF THE DEPARTMENT'S INTENT TO AWARD A CONTRACT FOR THE NECESSARY REPAIR WORK AND TO DEDUCT THE COST FROM RENTALS ACCRUING ON THE PROPERTY. HOWEVER, IN THE LIGHT OF YOUR PROTEST BY LETTERS OF SEPTEMBER 29 AND NOVEMBER 4, 1966, THAT YOU HAD TAKEN ACTION TO CORRECT THE PROBLEM AND THAT THE SUMP PUMP INSTALLED AFTER COMPLETION OF THE BUILDING HAD BEEN WORKING FOR FOUR YEARS, THE DEPARTMENT AGAIN SURVEYED THE VENTNOR FACILITY AND AGAIN THE REPORTS WERE NEGATIVE. THEREFORE, PURSUANT TO AN OPINION RENDERED DECEMBER 6, 1966, BY THE DEPARTMENT'S ASSISTANT GENERAL COUNSEL, THAT YOU WERE RESPONSIBLE FOR THE REPAIR COSTS SINCE YOU HAD FAILED TO PROVIDE THE DRAINAGE REQUIRED BY YOUR CONTRACT AND SINCE THERE WAS NO DEPARTMENTAL ERROR OF DESIGN OR RECORD OF DENIAL OF ANY CHANGE SUGGESTED BY YOU, THE REPAIR CONTRACT WAS AWARDED BY THE DEPARTMENT AND RENTALS WITHHELD TO COVER THE COSTS INVOLVED.

IN A LETTER DATED MARCH 3, 1967, AS SUPPLEMENTED BY SUBSEQUENT CORRESPONDENCE ADDRESSED TO THE DEPARTMENT, YOU AGAIN CONTENDED THAT THE VENTNOR BUILDING WAS CONSTRUCTED IN ACCORDANCE WITH PLANS APPROVED BY THE DEPARTMENT'S ENGINEERING STAFF, AND YOU STATED THAT WHILE YOU LOST MONEY ON THE PROJECT, YOU SOUGHT NO FINANCIAL HELP FROM THE DEPARTMENT, AND THAT THE WITHHOLDING OF THE RENTAL PAYMENTS COULD CAUSE A MORTGAGE FORECLOSURE AND LOSS OF THE PROPERTY; ACCORDINGLY, YOU REQUESTED THAT YOUR CLAIM BE ARBITRATED AND YOU STATED THAT YOU WOULD BE WILLING TO ABIDE BY THE DECISION OF THE ARBITRATOR. IN THIS CONNECTION, THE DEPARTMENT HAS ADVISED YOU THAT IT HAS NO FORMAL ARBITRATION PROCEDURE AND THAT IT ADHERES TO ITS POSITION THAT CORRECTION OF THE DRAINAGE PROBLEM IS YOUR RESPONSIBILITY.

IT IS THE POSITION OF THE DEPARTMENT THAT UNDER THE PERFORMANCE TYPE CONTRACT INVOLVED, WHEREBY THE GOVERNMENT OUTLINED ITS NEEDS IN GENERAL TERMS AND YOU UNDERTOOK TO DESIGN AND CONSTRUCT A FACILITY TO MEET THOSE NEEDS, THE SOLUTION OF SPECIFIC PROBLEMS, SUCH AS DISPOSAL OF SURFACE WATER, WAS TO BE ACCOMPLISHED BY YOU AND YOUR ARCHITECTS AND ENGINEERS. FURTHER, THE DEPARTMENT STATES THAT IT IS FAIRLY CUSTOMARY FOR THE DEPARTMENT TO ACCEPT A FACILITY IN WHICH SOME ITEMS ARE INCOMPLETE, AS IN THIS INSTANCE, AND THAT SUCH ACCEPTANCE DID NOT CONSTITUTE A WAIVER OF ANY DEFICIENCIES IN CONSTRUCTION, AS EVIDENCED BY THE FACT THAT THE LEASE SPECIFICALLY PROVIDED IN PARAGRAPH 14 THAT THE TERMS OF THE AGREEMENT TO LEASE WERE MADE PART OF THE LEASE AND WERE TO BE COMPLIED WITH. IN THIS CONNECTION, THE DEPARTMENT DIRECTS ATTENTION TO THE FACT THAT VARIOUS OTHER ITEMS NOT INCLUDED IN ITS PUNCH LIST OF SEPTEMBER 17, 1959, BUT BROUGHT TO YOUR ATTENTION IN SUBSEQUENT CORRESPONDENCE, SUCH AS WEATHER- STRIPPING FOR THE FRONT DOORS MENTIONED IN ITS LETTER OF NOVEMBER 19, 1959, AND ASPHALT PROBLEMS CITED IN A LETTER OF DECEMBER 11, 1959, WERE CORRECTED BY YOU AS PROMISED IN YOUR LETTER OF JANUARY 21, 1960, ACTION WHICH THE DEPARTMENT CONSTRUES AS EVIDENCE THAT YOU DID NOT CONSIDER THE DEPARTMENT'S LETTER OF DECEMBER 7, 1959, AS A WAIVER OF YOUR OBLIGATIONS AS LESSOR TO COMPLY FULLY WITH THE TERMS OF THE AGREEMENT TO LEASE. MOREOVER, THE DEPARTMENT OBSERVES, IT WAS NOT UNTIL YOU HAD MADE SOME ATTEMPTS TO CORRECT THE DRAINAGE PROBLEM AND LEARNED THAT A PERMANENT AND ADEQUATE SOLUTION WOULD REQUIRE A FAIRLY LARGE EXPENDITURE THAT YOU RAISED THE ISSUE OF RESPONSIBILITY FOR THE REPAIR WORK. FURTHER, THE DEPARTMENT CONTENDS, THE DEFECT IS ONE OF DESIGN AND LAYOUT RATHER THAN ONE OF CONSTRUCTION OF THE FACILITY, BUT, IN ANY CASE, YOU WERE RESPONSIBLE FOR BOTH DESIGN AND CONSTRUCTION AND THEREFORE SHOULD BEAR THE COST OF CORRECTION OF THE PROBLEM. FINALLY, THE DEPARTMENT URGES,THE MANEUVERING AREA IN THE REAR OF THE LOADING PLATFORM IS AN INTEGRAL PART OF THE POSTAL FACILITY AND THE CONDITION OF THE AREA WAS SUCH AS TO RENDER THE POST OFFICE UNUSABLE FOR THE INTENDED PURPOSE, THEREBY BRINGING THE MATTER WITHIN THE PURVIEW OF THE REQUIREMENT IN THE LEASE THAT YOU MAINTAIN THE PREMISES IN GOOD REPAIR AND TENANTABLE CONDITION AND THE PROVISION EXCUSING PAYMENT OF THE RENT UNTIL THE BUILDING, OR ANY PART THEREOF, WHICH HAS BECOME UNFIT FOR USE AS A POST OFFICE, IS PUT IN A SATISFACTORY CONDITION BY THE LESSOR. ON THE AUTHORITY OF THE TWO CASES OF UNITED STATES POST OFFICES CORPORATION V. UNITED STATES, 79 CT. CL. 173 (1934) AND 80 ID. 785 (1935), WHICH CONCERN THE RIGHTS OF THE GOVERNMENT AS A TENANT WHEN THE LESSOR FAILS TO COMPLY WITH THE TERMS OF A LEASE REQUIRING THE LESSOR TO MAINTAIN THE LEASED PREMISES IN FIT CONDITION, THE DEPARTMENT CONCLUDES THAT IT DID NOT ACT IN AN ARBITRARY AND CAPRICIOUS MANNER AND HAD LEGAL JUSTIFICATION FOR HAVING THE WORK DONE BY A THIRD PARTY CONTRACTOR AND THE COST SET-OFF AGAINST THE RENTALS DUE UNDER THE LEASE.

IN THE UNITED STATES POST OFFICES CORPORATION CASES, SUPRA, THE BUILDINGS LEASED BY THE GOVERNMENT WERE POSTAL FACILITIES WHICH HAD BEEN CONSTRUCTED, AS IN THIS CASE, IN ACCORDANCE WITH PLANS AND SPECIFICATIONS FURNISHED BY THE GOVERNMENT. THE LEASES WHICH WERE EXECUTED BY THE OWNER- BUILDERS AND THE GOVERNMENT REQUIRED THE LESSORS,AMONG OTHER THINGS, TO FURNISH SATISFACTORY LIGHTING FIXTURES AND SATISFACTORY PLUMBING AND NECESSARY TOILET FACILITIES. LONG AFTER THE GOVERNMENT ENTERED INTO OCCUPANCY OF THE BUILDINGS, AND AS THE RESULT OF ADDITIONAL NEEDS NOT EXISTING AT THE COMMENCEMENT OF THE LEASE TERMS, THE LESSOR IN ONE CASE WAS REQUESTED BY THE GOVERNMENT TO FURNISH ADDITIONAL LIGHTING FIXTURES, AND IN THE OTHER CASE TO FURNISH ADDITIONAL TOILET FACILITIES. IN BOTH CASES THE LESSOR REFUSED TO COMPLY WITH THE GOVERNMENT'S REQUEST, ON THE GROUND THAT THE BUILDINGS HAD BEEN COMPLETED AND ACCEPTED BY THE GOVERNMENT IN FULL COMPLIANCE WITH THE ORIGINAL AGREEMENT. THE GOVERNMENT THEREFORE PROCEEDED TO HAVE THE NECESSARY EQUIPMENT INSTALLED AND DEDUCTED THE EXPENSES FROM THE RENTAL PAYMENTS DUE THE LESSORS. IN DENYING THE CLAIMS OF THE LESSORS FOR REFUND OF THE RENTAL PAYMENTS SO WITHHELD BY THE GOVERNMENT, THE COURT POINTED OUT THAT THERE WERE TWO SEPARATE CONTRACTS BETWEEN THE PARTIES, THE AGREEMENT TO LEASE AND THE LEASE ITSELF; THAT IT WAS UNDER THE SECOND CONTRACT THAT THE GOVERNMENT'S RIGHTS AROSE; AND THAT THE FIRST CONTRACT DID NOT FIX THE TERMS OF THE LEASE. IN THE EARLIER DECISION, THE COURT MADE THE FOLLOWING PERTINENT STATEMENTS:

"THE PLAINTIFF UPON THE RECORD MAY NOT RELIEVE ITSELF OF ITS ASSUMED OBLIGATIONS UNDER A TEN-YEAR LEASE BY A CONTENTION THAT THE PLANS AND SPECIFICATIONS FOR A BUILDING TO BE LEASED DETERMINE THE RELATIONSHIP OF LANDLORD AND TENANT UNDER THE SEPARATE LEASE. THE MERE FACT THAT THE PLANS AND SPECIFICATIONS DEALT EXPRESSLY WITH THE SAME SUBJECT MATTER IN SOME RESPECTS IS NOT DETERMINABLE OF THE ISSUE. IN THE FIRST INSTANCE THE LIGHTING SYSTEM WAS A CONSTRUCTIONAL DETAIL. IN THE SECOND PLACE, IT WAS A MATTER OF MEETING SATISFACTORILY THE NECESSITIES OF THE TENANT WITH RESPECT TO LIGHTING DURING THE TENANCY.

"THE PLAINTIFF WAS AWARE THAT IT WAS LEASING A COMPLETED BUILDING FOR A POST OFFICE, A BRANCH OF GOVERNMENTAL ACTIVITY THAT EXACTS ITS OWN PECULIAR ACCOMMODATIONS, SUBJECT TO ALTERATION AND CHANGE WITH THE CORRESPONDING FLUCTUATIONS IN THE PUBLIC SERVICE FURNISHED. PARAGRAPH 6 ANTICIPATED IN PART AT LEAST THE HAPPENING OF SUCH EVENTS, AND WAS MADE A PART OF THE LEASE FOR THAT ESPECIAL PURPOSE. THE LEASE WAS DULY SIGNED BY THE PLAINTIFF AND NO COMPLAINT IS NOW MADE AS TO ANY PART OF THE TRANSACTION, SAVE THAT IT WAS NOT CHARGEABLE WITH THE AMOUNT EXPENDED.'

THE SECOND DECISION, WHICH QUOTED EXCERPTS FROM THE FIRST DECISION, SPECIFICALLY POINTED OUT THAT THE LESSOR'S OBLIGATION UNDER THE LEASE TO FURNISH SATISFACTORY PLUMBING AND NECESSARY TOILET FACILITIES WAS A CONTINUING ONE THROUGHOUT THE PERIOD OF THE LEASE. ACCORDINGLY, AS IN ITS EARLIER DECISION, THE COURT UPHELD THE RIGHT OF THE GOVERNMENT TO WITHHOLD FROM THE RENTAL PAYMENTS THE EXPENSES INVOLVED IN FURNISHING ADDITIONAL FACILITIES.

WE HAVE FOLLOWED THE PRINCIPLES STATED IN THE ABOVE CASES (SEE 15 COMP. GEN. 1064 AND 45 COMP. GEN. 617) AND CAN FIND NO BASIS FOR DISTINGUISHING THE PRESENT CASE. YOUR CONSTRUCTION OF THE BUILDING IN CONFORMITY TO THE REQUIREMENTS OF THE POST OFFICE DEPARTMENT DID NOT AFFECT YOUR OBLIGATIONS UNDER THE LEASE TO MAINTAIN THE PREMISES IN TENANTABLE CONDITION, AND YOUR FAILURE TO PROVIDE ADEQUATE DRAINAGE FOR THE PARKING AREA MUST BE REGARDED AS A BREACH OF THAT OBLIGATION. SINCE THE LEASE REQUIRED YOU NOT ONLY TO MAINTAIN THE PROPERTY IN TENANTABLE CONDITION FOR THE TERM OF THE GOVERNMENT'S OCCUPANCY BUT ALSO TO RESTORE IT TO SATISFACTORY CONDITION WITH DUE DILIGENCE IN THE EVENT IT BECAME UNFIT IN WHOLE OR IN PART FOR USE FOR THE PURPOSES LEASED, WE MUST CONCUR WITH THE VIEW OF THE POST OFFICE DEPARTMENT, WHICH IS SUPPORTED BY THE COURT CASES AND DECISIONS OF OUR OFFICE CITED ABOVE, THAT YOU BORE A SEPARATE AND CONTINUING RESPONSIBILITY UNDER THE LEASE TO MAINTAIN SATISFACTORY DRAINAGE OF THE PREMISES FOR THE TERM OF THE LEASE.

FOR THE REASONS STATED YOUR COMPLAINT, WHICH IS CONSIDERED AS A CLAIM FOR THE AMOUNT OF RENT WITHHELD BY THE POST OFFICE DEPARTMENT, MUST BE DENIED. UNDER THE LAW, THIS DECISION IS BINDING UPON THE EXECUTIVE BRANCH OF THE GOVERNMENT (SEE 31 U.S.C. 71, 74), AND WE ARE NOT AWARE OF ANY AUTHORITY FOR THE ADMINISTRATIVE AGENCY TO SUBMIT THE CLAIM TO ARBITRATION, AS SUGGESTED BY YOU. 32 COMP. GEN. 333.