B-169410, JUN. 25, 1970

B-169410, JUN. 25, 1970

LEASES--LONG-TERM MAINTENANCE COSTS LESSOR'S CLAIM FOR $265,188.60, REPRESENTING EXTRA DAILY CHARGE FOR EACH EMPLOYEE IN BUILDING OVER FIGURE SPECIFIED IN SPECIFICATIONS (1700) TO COVER ADDED CLEANING, EQUIPMENT, AND SUPPLY COSTS, IS DENIED, BECAUSE INVITATION FOR BIDS CLEARLY EVIDENCES GOVERNMENT'S INTENT TO PROVIDE WORKING SPACE FOR NO FEWER THAN 1,700 EMPLOYEES AT ANY TIME, AND SPECIFICALLY PROVIDES FOR 3 SEPARATE WORK SHIFTS, AND LEASE MUST THEREFORE BE CONSTRUED AS CONTEMPLATING 3 SHIFTS WITH UP TO 1,700 EMPLOYEES EACH. FURTHER, RECORD INDICATES LESSOR'S CLAIM WAS NOT PROMPTED BY MISUNDERSTANDING OR MISTAKE AS TO BUILDING'S OCCUPANCY AT TIME ITS BID WAS SUBMITTED. LEASES--INTENTION OF PARTIES--NOTICE OF DIFFERENCES LESSOR'S CLAIM FOR $265,188.60, REPRESENTING EXTRA CHARGE FOR EACH EMPLOYEE IN BUILDING OVER FIGURE (1700) LISTED IN SPECIFICATIONS IS DENIED, BECAUSE MEANING NOT INTENDED BY PARTIES MAY NOT BE READ INTO LEASE, AND NOTHING IN INVITATION FOR BIDS OR LEASE DOCUMENTS SUPPORTS CONTENTION THAT 1700 FIGURE IN SPECIFICATIONS WAS INTENDED AS LIMITATION ON MEMBER OF EMPLOYEES WORKING IN BUILDING DURING ANY ONE DAY. FURTHER, LESSOR'S FAILURE TO TAKE EXCEPTION TO SPECIFICATIONS UNTIL GOVERNMENT HAD OCCUPIED BUILDING FOR YEAR SUPPORTS VIEW THAT CLAIM DID NOT RESULT FROM MISUNDERSTANDING OR MISTAKE AS TO OCCUPANCY AT TIME BID WAS SUBMITTED. LEASES--BUILDING CONSTRUCTION FOR LEASE TO GOVERNMENT--ALTERATIONS, ETC; ETC; COSTS--LIABILITY LESSOR'S CLAIM FOR $43,544.54 WITHHELD FROM RENT TO COVER ADJUSTMENT TO AIR CONDITIONING-HEATING SYSTEM IN BUILDING CONSTRUCTED FOR LEASE TO GOVERNMENT IS DENIED, BECAUSE GENERAL SERVICES ADMINISTRATION HAS ASSUMED EXPENSES OF CHANGES REQUIRED BY REALIGNMENT OF TRANSCRIPTION AREA, AND EXPENSES CHARGED TO LESSOR COVER ONLY DEFICIENCIES IN BASIC SYSTEM. FURTHER, EXPRESS PROVISION IN LEASE FOR MOVABLE PARTITIONS SUPPORTS PREMISE THAT REALIGNMENT WAS CONTEMPLATED BY GOVERNMENT AND LESSOR; AND LESSOR'S VIEW THAT GOVERNMENT SHOULD BEAR EXPENSE OF ADJUSTING SYSTEM TO MEET GOVERNMENT'S REQUIREMENTS AS SET FORTH IN SPECIFICATIONS, NOT CHANGED OR WAIVED PURSUANT TO AGREEMENT OF PARTIES, IS UNACCEPTABLE.

TO WALSH AND FISHER:

WE REFER TO YOUR LETTER DATED NOVEMBER 10, 1969, MAKING CLAIM ON BEHALF OF DEVELOPMENT COMPANY OF AMERICA, INC; FOR CERTAIN AMOUNTS UNDER LEASE GS -02B-7844, DATED SEPTEMBER 27, 1962. THE LEASE, WHICH WAS EXECUTED AS LESSOR BY THE PARTNERSHIP OF DEVELOPMENT COMPANY OF AMERICA, TO WHOM THE CLAIMANT IS SUCCESSOR, COVERS OCCUPANCY OF A BUILDING AT 11601 ROOSEVELT BOULEVARD, PHILADELPHIA, PENNSYLVANIA, BY THE MID-ATLANTIC REGION, INTERNAL REVENUE SERVICE (IRS).

THE CLAIM ENCOMPASSES CERTAIN SERVICES AND MAINTENANCE ON WHICH THE CLAIMANT LESSOR PLACES A VALUE OF $265,188.60 AND WHICH ARE STATED TO HAVE BEEN FURNISHED TO THE GOVERNMENT DURING THE PERIOD FEBRUARY 13, 1965, TO SEPTEMBER 27, 1969, IN EXCESS OF THE SERVICES REQUIRED BY THE INVITATION FOR BIDS (IFB) NO. NY-DOPA-224, PURSUANT TO WHICH THE LEASE WAS AWARDED, AS WELL AS REFUND OF THE AMOUNT OF $43,544.54 WHICH THE GOVERNMENT HAS WITHHELD FROM RENTAL DUE THE LESSOR TO COVER THE COST OF CERTAIN ADJUSTMENTS TO THE COMBINATION AIR CONDITIONING AND HEATING SYSTEM IN THE LEASED BUILDING. THE CLAIM ALSO INCLUDES INTEREST ON BOTH AMOUNTS.

AS DISCUSSED BELOW, THE GENERAL SERVICES ADMINISTRATION (GSA) HAS DISALLOWED THE CLAIM IN ITS ENTIRETY. FURTHER, THE GSA BOARD OF CONTRACT APPEALS, IN A DECISION DATED OCTOBER 31, 1966, GSBCA-2084, DISMISSED THE LESSOR'S APPEAL FROM DENIAL OF A CLAIM BY THE PUBLIC BUILDINGS SERVICE, GSA, FOR PAYMENT FOR EXCESS MAINTENANCE AND JANITORIAL SERVICES FOR THE CALENDAR YEAR 1965 ON THE BASIS THAT THE BOARD HAS NO AUTHORITY TO REFORM A CONTRACT AND THEREFORE HAS NO EQUITABLE JURISDICTION IN THE MATTER.

THE IFB, WHICH WAS ISSUED ON JULY 6, 1962, BY THE NEW YORK REGIONAL OFFICE, PUBLIC BUILDINGS SERVICE, GSA, SOLICITED BIDS FOR LEASING TO THE GOVERNMENT OF A NEW BUILDING TO BE CONSTRUCTED ON A SITE CHOSEN BY THE GOVERNMENT IN ACCORDANCE WITH BUILDING REQUIREMENTS RELATING TO OVERALL DIMENSIONS, INTERIOR ROOM DIMENSIONS, AND LAYOUT AS SHOWN ON A FLOOR PLAN, SCHEDULE E, AND SPECIFICATIONS SET FORTH IN OTHER SCHEDULES MADE PART OF THE IFB.

PARAGRAPH 2 OF THE SPECIAL INSTRUCTIONS TO BIDDERS, RELATING TO OCCUPANCY, STATED THAT THE BUILDING WOULD BE FOR THE SOLE OCCUPANCY OF THE GOVERNMENT WITHOUT RESERVATION AND THAT WHILE THE BUILDING WAS TO BE CONSTRUCTED FOR USE BY IRS, THE GOVERNMENT RESERVED THE RIGHT TO ASSIGN ALL OR ANY PORTION OF THE DEMISED SPACE TO ANY OTHER FEDERAL ACTIVITY WHICH GSA MIGHT DESIGNATE.

THE SPECIFICATIONS FOR THE BUILDING, AS INCORPORATED IN THE LEASE, INCLUDED THE FOLLOWING PERTINENT PROVISIONS:

"SCHEDULE A -- SPECIFICATIONS

"8. ALTERATIONS AND INSTALLATIONS

THE GOVERNMENT RESERVES THE RIGHT TO MAKE MINOR ALTERATIONS OR INSTALLATIONS, INCLUDING BUT NOT LIMITED TO PAINTING, INSTALLATION OF ELECTRICAL OUTLETS, ERECTION OR RELOCATION OF MOVABLE PARTITIONS, WITHOUT REFERENCE TO THE LESSOR.

"SCHEDULE B -- SERVICES

"2. MAINTENANCE OF BUILDING, FACILITIES AND GROUNDS:

THE LESSOR SHALL, UNLESS HEREIN SPECIFIED TO THE CONTRARY, MAINTAIN THE SAID PREMISES, INCLUDING GROUNDS, WALKS, AND ROADS PERTAINING THERETO, IN GOOD REPAIR AND TENANTABLE CONDITION DURING THE CONTINUANCE OF THIS LEASE, EXCEPT IN CASE OF DAMAGE ARISING FROM THE ACT OR THE NEGLIGENCE OF THE GOVERNMENT'S AGENTS OR EMPLOYEES. THE LESSOR SHALL MAKE ALL NECESSARY REPAIRS TO THE GROUNDS, WALKS, ROADS, BUILDING, EXTERIOR WALLS, ROOF AND PRESERVATION THEREOF, NOT CAUSED BY THE NEGLIGENCE OF THE GOVERNMENT'S AGENTS OR EMPLOYEES, AND IN ADDITION, SHALL KEEP THE BUILDING IN A WEATHER -TIGHT CONDITION AND SHALL REPLACE IN WHOLE OR IN PART ANY FACILITIES AND/OR MECHANICAL INSTALLATIONS WHICH THROUGH DETERIORATION OR FAULTY CONSTRUCTION MAKE IT IMPOSSIBLE TO PROVIDE THE SERVICES AVAILABLE OR AGREED UPON AT THE TIME OF THE GOVERNMENT'S OCCUPANCY OF THE LEASED PREMISES. ***

"3. SERVICES AND FACILITIES REQUIRED:

A) TENANT PLANS TO OPERATE THREE SHIFTS AS FOLLOWS:

SHIFT A -- 8:00 A.M. TO 4:30 P.M.

SHIFT B -- 4:00 P.M. TO 12:30 A.M.

SHIFT C -- 12:00 MIDNIGHT TO 8:30 A.M.

AS A PART OF THE RENTAL CONSIDERATION, DURING THE INITIAL TEN YEAR TERM OF THIS LEASE THE SERVICES AND FACILITIES LISTED BELOW SHALL BE PROVIDED DAILY DURING THE FOLLOWING PERIODS FROM ONE-HALF HOUR BEFORE UNTIL ONE- HALF HOUR AFTER THE SHIFT TIMES SHOWN ABOVE:

SHIFTS A AND B -- ENTIRE PREMISES -- 5 DAYS PER WEEK THROUGHOUT THE YEAR.

SHIFT C -- COMPUTER AREA AND ADJACENT OFFICES -- 5 DAYS PER WEEK THROUGHOUT THE YEAR.

ENTIRE PREMISES -- 30 WORKING DAYS TO BE DETERMINED BY THE GOVERNMENT.

SHIFT TIMES SHOWN ABOVE MAY BE CHANGED AT ANY TIME AT THE OPTION OF THE GOVERNMENT, BUT WILL BE CONFINED TO 8-1/2 HOURS PER SHIFT.

1) FACILITIES FOR FURNISHING HEAT, AIR-CONDITIONING AND HUMIDITY THROUGHOUT THE YEAR SHALL MAINTAIN SPACE CONDITIONS WITHIN THE DEMISED PREMISES AS INDICATED IN SCHEDULE 'D'.

B) CLEANING AND JANITORIAL SERVICES: THE LESSOR SHALL CONTINUOUSLY MAINTAIN EVERY PART OF THE LEASED PREMISES WITH THE EXCEPTION OF THE CAFETERIA AND CAFETERIA LOADING PLATFORM, IN A CLEAN AND SANITARY CONDITION. THIS INCLUDES SIDEWALKS AND OTHER OUTSIDE AREAS. THE VARIOUS PHASES OF CLEANING AND JANITORIAL WORK SHALL, AS A MINIMUM, BE CARRIED OUT AT THE FREQUENCIES INDICATED IN THE 'FREQUENCY SCHEDULE' LISTED BELOW, PROVIDED THAT THE CONTRACTING OFFICER MAY, AT HIS DISCRETION, GRANT EXCEPTION TO THIS REQUIREMENT WITH RESPECT TO SPACE WHICH MAY BE TEMPORARILY UNOCCUPIED. THE POLICING OF CORRIDORS, LOBBIES AND TOILET ROOMS, THE SERVICING OF TOILET ROOMS WITH SUPPLIES, OUTSIDE SWEEPING AND THE WASHING OF WINDOWS MAY BE CARRIED OUT ANY HOUR, BUT INTERFERENCE WITH GOVERNMENT PERSONNEL OR GOVERNMENT BUSINESS SHALL BE AVOIDED. OTHER WORK SHALL BE DONE AFTER TENANT WORKING HOURS. THE LESSOR SHALL PROVIDE ALL NECESSARY CLEANING AND JANITORIAL SUPPLIES AND EQUIPMENT. SUITABLE JARDINIERES SHALL BE PROVIDED AT ALL ENTRANCES AND EXITS. TOILET SUPPLIES SHALL BE OF GOOD QUALITY. WAXES USED ON FLOORS SHALL HAVE SATISFACTORY NON-SLIP CHARACTERISTICS.

"SCHEDULE C--GENERAL PROVISIONS

"1. PLANS, ENGINEERING DRAWINGS AND SPECIFICATIONS:

ATTACHED SCHEDULES ARE FURNISHED FOR SUCH USE AS THE BIDDER MAY DESIRE TO MAKE OF THEM; HOWEVER, THEY REPRESENT THE MINIMUM REQUIREMENTS OF THE GOVERNMENT. ***

"SCHEDULE D--GENERAL REQUIREMENTS

"THE REQUIREMENTS AS SET FORTH IN SCHEDULE 'A' -- SPECIFICATIONS, ATTACHED HERETO, SHALL APPLY EXCEPT AS MODIFIED BY SCHEDULE 'D' -- GENERAL REQUIREMENTS.

"DEFINITION

"FOR THE PURPOSE OF THIS LEASE, THE LESSOR SHALL CONSIDER THE FOLLOWING AS THE MINIMUM DEFINITION OF THE PHYSICAL REQUIREMENTS OF THE BUILDING:

"THE BUILDING SHALL BE AN OFFICE-TYPE ONE-STORY STRUCTURE OF CONTEMPORARY DESIGN, AND SHALL BE PLANNED AND DESIGNED FOR THE PROPER PERFORMANCE OF ADMINISTRATIVE, CLERICAL AND DATA PROCESSING DUTIES AND SHALL PROVIDE FOR THE PROPER ACCOMMODATION OF SUCH DUTIES INCLUDING MECHANICAL AND MAINTENANCE SERVICES. IT SHALL HAVE BEEN DESIGNED BY A REGISTERED ARCHITECT AND ENGINEER AND THE WORKING DRAWINGS SHALL BEAR THEIR SEAL TO INSURE THE SATISFACTION OF THE ABOVE REQUIREMENTS AND THE SPECIAL REQUIREMENTS OF THE GOVERNMENT AS LISTED HEREAFTER IN THESE SPECIFICATIONS AND ALL ATTACHMENTS. THE ARCHITECT SHALL PROVIDE ALL PROFESSIONAL SERVICES AS TO ARCHITECTURAL, STRUCTURAL, ELECTRICAL AND MECHANICAL ENGINEERING DESIGN, SITE PLANNING AND LANDSCAPE ARCHITECTURAL SERVICE, FOR THE FULFILLMENT OF THE DESIGN GOVERN.

"1. GENERAL: THESE GENERAL CONDITIONS AND BUILDING REQUIREMENTS ARE NOT TO BE CONSTRUED AS COMPLETE SPECIFICATIONS. THEY INDICATE MINIMUM IN ALL CASES, AND BIDDERS ARE ENCOURAGED TO SUBMIT ALTERNATES EMPLOYING NEW APPLICATIONS OF PROVEN MATERIALS, AS WELL AS THE DEVELOPMENT OF MATERIALS AND DESIGNS, ALL WITHIN ANY LIMITATIONS ESTABLISHED AND SUBJECT TO APPROVAL. IN THE EVENT OF DISAPPROVAL OF ALTERNATES, THESE SPECIFICATIONS SHALL APPLY.

"3. GENERAL DESCRIPTION OF BUILDING:

A. AN OFFICE TYPE BUILDING OF CONTEMPORARY DESIGN IS REQUIRED. THE BUILDING IS A ONE-STORY STRUCTURE WITH AN ADMINISTRATIVE OFFICE WING, PROCESSING AREA, COMPUTER ROOM, CAFETERIA, MECHANICAL AND ELECTRICAL ROOMS, LOADING DOCK FACILITIES, AND WAREHOUSE-TYPE SPACE. IT MUST BE SO SITUATED ON THE SITE AND DESIGNED AS TO PROVIDE FOR EASE OF EXPANSION IN THE FUTURE. THE EXPANSION OF APPROXIMATELY 40,000 SQUARE FEET IS INDICATED ON SCHEDULE 'E'.

C. THE BUILDING SHALL BE DESIGNED TO PROVIDE ARRANGEMENT OF AREAS AND WORK FLOW AS SHOWN ON ATTACHED FLOOR PLAN (SCHEDULE 'E').

E. THE DESIGN POPULATION OF THE BUILDING IS APPROXIMATELY 1,700 PEOPLE, IN THE RATIO OF APPROXIMATELY 80 PERCENT WOMEN AND 20 PERCENT MEN. THIS FIGURE IS EXPANDABLE TO 2,000 PEOPLE, IN THE SAME RATIO, WHEN THE BUILDING ITSELF IS EXPANDED. THE CAFETERIA IS TO BE DESIGNED TO ACCOMMODATE BOTH PRESENT AND EXPANDED POPULATIONS IN THREE (3) 45 MINUTE LUNCH PERIODS. SHALL BE OPERATED UNDER A SEPARATE CONTRACT TO BE ESTABLISHED BY THE GOVERNMENT.

"5. DESIGN REQUIREMENTS, ELECTRICAL & MECHANICAL:

J. THE NATIONAL PLUMBING CODE WILL GOVERN THE DESIGN OF THE PLUMBING UNLESS OTHERWISE SPECIFIED HEREIN. CAFETERIA SHALL HAVE A SEPARATE WATER METER AND BE PROVIDED WITH FLOOR DRAINS. FLOOR TO BE CONTOURED TO DRAIN.

(1) FACILITIES FOR DRINKING WATER, CHILLED TO BETWEEN 48 AND 52 DEGREES F. SHALL BE PROVIDED IN THE FORM OF DIRECT-CONNECTED FOUNTAIN TYPE DRINKING FOUNTAINS CENTRALL LOCATED IN CORRIDORS AND WORK AREAS. (RECESSED WHERE FEASIBLE). EACH FOUNTAIN SHALL HAVE A CAPACITY OF AT LEAST 6 GALLONS PER HOUR. THE FOUNTAINS WILL BE LOCATED SO THAT NO EMPLOYEE WILL HAVE TO TRAVEL MORE THAN 100 FEET TO REACH A FOUNTAIN, EXCEPT IN WAREHOUSE-TYPE SPACE. IN WAREHOUSE-TYPE SPACE, AT LEAST 3 FOUNTAINS WILL BE FURNISHED AS LOCATED BY THE GOVERNMENT. FACILITIES ARE TO BE DESIGNED ON BASIS OF 2,000 PERSONS, BUT ONLY 23 OUTLETS WILL BE INSTALLED INITIALLY. THE FACILITIES SHALL INCLUDE PROVISIONS FOR INSTALLING 4 ADDITIONAL FOUNTAINS FOR FUTURE EXPANSION IN AREA SHOWN ON SCHEDULE 'F'. DRINKING FOUNTAINS MAY BE OF THE CENTRALLY COOLED FILTERED, WATER SYSTEM TYPE, OR OF THE AUTOMATIC ELECTRIC TYPE.

K. A UNIFORM TEMPERATURE OF 78 DEGREES F; PLUS OR MINUS 2 DEGREES F; AND A RELATIVE HUMIDITY OF 45% PLUS OR MINUS 5% SHALL BE PROVIDED DURING THE COOLING SEASON, EXCEPT IN WAREHOUSE-TYPE SPACE. A UNIFORM TEMPERATURE OF 72 DEGREES F; PLUS OR MINUS 2 DEGREES F; SHALL BE PROVIDED DURING THE HEATING SEASON AND POSITIVE HUMIDIFICATION, EXCEPT IN WAREHOUSE-TYPE SPACE, SHALL BE PROVIDED TO MAINTAIN A RELATIVE HUMIDITY WHICH WILL NOT CAUSE CONDENSATION ON THE INSIDE OF EXTERIOR SURFACES. A MINIMUM OF 1.5 AIR CHANGES PER HOUR OR 15 CFM PER PERSON, WHICHEVER IS GREATER, OF OUTSIDE AIR SHALL BE SUPPLIED AT ALL TIMES. ALL AREAS ADJACENT TO THE OUTSIDE WALLS EXCEPTING THE WAREHOUSE AREA SHALL BE CONDITIONED BY FAN COIL UNITS LOCATED UNDER THE WINDOWS AND USING HOT AND CHILLED WATER FOR CONDITIONING. INTERIOR ZONE SHALL BE CONDITIONED BY MEANS OF LOW PRESSURE DIRECT DISTRIBUTION SYSTEMS USING CENTRAL STATION TYPE AIR HANDLING EQUIPMENT. THE SYSTEM SHALL BE ZONED IN ACCORDANCE WITH EXPOSURE AND INTERIOR LOADINGS DUE TO MACHINES, ETC; AND SHALL PROVIDE HEATING OR COOLING OR BOTH DEPENDING ON INDIVIDUAL ZONE REQUIREMENTS FOR TEMPERATURE AND HUMIDITY. FOR WAREHOUSE-TYPE SPACE, MECHANICAL VENTILATION SHALL BE PROVIDED FOR A MINIMUM OF FOUR AIR CHANGES PER HOUR DURING THE COOLING SEASON ONLY AND A UNIFORM TEMPERATURE OF 70 DEGREES F; PLUS OR MINUS 2 DEGREES F; SHALL BE PROVIDED DURING THE HEATING SEASON WITH CONSIDERATION GIVEN TO NORMAL INFILTRATION. THE OFFICE WING AND THE PROCESSING AREA SHALL BE ZONED INDIVIDUALLY SINCE THESE TWO AREAS WILL BE OCCUPIED OCCASIONALLY AT OTHER THAN NORMAL WORKING HOURS. THE CAFETERIA WILL HAVE A SEPARATE HEATING AND COOLING SYSTEM WITH PROVISIONS FOR REHEAT IF REQUIRED. SEE SPECIAL REQUIREMENTS FOR SEPARATE AIR CONDITIONING SYSTEM REQUIRED FOR COMPUTER AREA.

"SCHEDULE 'G'

IBM AND MISCELLANEOUS MACHINE REQUIREMENTS

POWER HEAT DISSIPATION TYPE OF EQUIPMENT WEIGHT REQUIREMENTS AND AIR FLOW

* * * * * B. TRANSCRIPTION AREA

432 CARD PUNCH 197 LBS. 2.8 AMPS EACH 820 BTU/HR EACH

MACHINES EACH 115 VOLT

288 CARD VERIFIER 204 LBS. 2.9 AMPS EACH 950 BTU/HR EACH MACHINES EACH 115 VOLT

TOTAL, 143,857 2,044.8 AMPS 627,840 BTU/HR"

TRANSCRIPTION AREA LBS.

THE FACE SHEET OF THE IFB BORE A NOTATION CAUTIONING BIDDERS THAT REQUESTS FOR ADDITIONAL INFORMATION SHOULD BE SUBMITTED TO GSA, PUBLIC BUILDINGS SERVICE, PHILADELPHIA, IN SUFFICIENT TIME FOR REPLY BEFORE THE BID SUBMISSION DATE AND STATING THAT ORAL INSTRUCTIONS WERE NOT BINDING. PARAGRAPH 2 OF THE INSTRUCTIONS TO BIDDERS WAS TO THE SAME EFFECT.

ON AUGUST 27, 1962, THE SIX BIDS RECEIVED BY GSA WERE OPENED AS SCHEDULED. THE LESSOR WAS LOWEST ON THE BASIS OF ITS BID FOR ONE FIRM TERM OF 10 YEARS WITH SERVICING AND TWO SUCCESSIVE 5-YEAR RENEWAL OPTIONS WITHOUT SERVICING AS WELL AS ON THE ALTERNATE BASIS OF A FIRM TERM OF 20 YEARS. THE GOVERNMENT ELECTED TO MAKE AWARD ON THE FIRST BASIS, ON WHICH THE FOUR LOW BIDS RANKED AS FOLLOWS:

RENEWAL RENEWAL

10 YEARS1ST 5 YEARS 2ND 5 YEARS BIDDER FIRM SERVICED NONSERVICED NONSERVICED LESSOR $425,950 $308,250 $308,250 GREEN MANOR CONSTRUCTION CO. 430,400 325,400 325,400 MCDONOUGH CONSTRUCTION CO. 454,800 341,400 341,400 THOMAS D. MCCLOSKEY 472,800 354,800 357,800

BASED ON AN AREA OF 200,000 SQUARE FEET INCLUDING GROSS INSIDE AREA PLUS PARKING AND LANDSCAPED GROUNDS, THE RATE PER SQUARE FOOT WAS COMPUTED BY GSA FOR THE FIRST 10 YEARS WITH SERVICE AS $2.129 FOR THE LESSOR; $2.15 FOR GREEN MANOR CONSTRUCTION CO.; $2.27 FOR MCDONOUGH CONSTRUCTION CO.; AND $2.364 FOR THOMAS D. MCCLOSKEY. (THE GSA NEW YORK OFFICE HAS REPORTED THAT ITS RECORDS INDICATE THAT NONE OF THE BIDDERS RAISED ANY QUESTION AT ANY TIME CONCERNING THE NUMBER OF OCCUPANTS TO BE SERVICED IN THE BUILDING.)

UNDER THE TERMS OF THE LEASE EXECUTED BY THE PARTIES ON SEPTEMBER 27, 1962, THE INITIAL 10-YEAR PERIOD WAS TO RUN FROM SEPTEMBER 15, 1963, THROUGH SEPTEMBER 14, 1973. THE SPECIFICATIONS, AS STATED ABOVE, WERE INCLUDED IN THE LEASE, SUCH ACTION BEING IN ACCORDANCE WITH THE PROVISIONS OF PARAGRAPH 1, GSA FORM 1363, GENERAL PROVISIONS (LEASE OF SPACE TO THE UNITED STATES OF AMERICA).

BY LETTER DATED FEBRUARY 1, 1965, THE LESSOR REQUESTED FROM THE GSA OFFICE IN PHILADELPHIA INFORMATION AS TO THE NUMBER OF PERSONS OCCUPYING THE LEASED BUILDING DAILY. IN THIS CONNECTION, THE LESSOR STATED THAT THE NUMBER OF PERSONNEL CURRENTLY EMPLOYED AT THE IRS CENTER HAD INCREASED AND THAT THE LESSOR THEREFORE FOUND IT NECESSARY TO CHARGE THE GOVERNMENT 23 CENTS PER DAY FOR EACH EMPLOYEE "IN THE BUILDING OVER THE FIGURE SPECIFIED IN THE SPECIFICATIONS (1700 PERSONS)." THE CHARGE, IT WAS EXPLAINED, WOULD COVER CLEANING AND ADDED USE OF EQUIPMENT AND SUPPLIES, SUCH AS SOAP, TOWELS, TOILET TISSUES, ETC.

GSA'S REPLY TO THE LESSOR BY LETTER OF FEBRUARY 2, 1965, EXPRESSED DISAGREEMENT WITH THE LESSOR'S POSITION; POINTED OUT THAT THE FIGURE OF 1,700 EMPLOYEES APPEARING IN SCHEDULE D OF THE SPECIFICATIONS REPRESENTED THE DESIGN POPULATION OF THE BUILDING, NOT A LIMIT ON THE POPULATION; AND ADVISED THE LESSOR, "AT CERTAIN TIMES OF THE YEAR THE POPULATION WILL BE IN EXCESS OF 1700, WHILE AT OTHER TIMES THE POPULATION WILL BE FAR LESS, AND UNDER THE TERMS OF THE LEASE YOU ARE EXPECTED TO PROVIDE THE SERVICES CALLED FOR IN THE LEASE, REGARDLESS OF THE NUMBER OF PEOPLE HOUSED IN THE BUILDING."

IN SUBSEQUENT CORRESPONDENCE EXCHANGED BETWEEN THE LESSOR AND GSA, THE LESSOR PURSUED ITS CLAIM ON THE BASIS THAT IT WAS OBLIGATED TO PROVIDE SERVICE FOR A TOTAL OF 1,700 EMPLOYEES PER DAY AND HAD COMPUTED ITS BID ACCORDINGLY AND THE GOVERNMENT MAINTAINING THAT THE SPECIFICATIONS PROVIDED FOR THREE SEPARATE SHIFTS AND THEREFORE LIMITATION OF THE TOTAL NUMBER OF EMPLOYEES FOR ANY ONE DAY TO THE DESIGN POPULATION OF 1,700 EMPLOYEES WAS TOTALLY UNWARRANTED. FOLLOWING DENIAL OF THE CLAIM BY THE GSA NEW YORK PUBLIC BUILDINGS SERVICE OFFICE BY LETTER OF MARCH 24, 1966, THE LESSOR FILED ITS APPEAL, BY LETTER OF APRIL 22, 1966, TO THE ADMINISTRATOR, GSA, FROM THE DECISION OF THE NEW YORK OFFICE UNDER THE DISPUTES CLAUSE IN THE LEASE.

THE TRANSCRIPT OF THE TESTIMONY GIVEN BY WITNESSES FOR THE LESSOR AND FOR THE GOVERNMENT AT THE HEARING ON JULY 14, 1966, BEFORE THE GSA BOARD OF CONTRACT APPEALS AT WASHINGTON, D. C; SHOWS THAT BOTH PARTIES PRESENTED THE ARGUMENTS WHICH THEY HAD PREVIOUSLY ADVANCED IN THE CORRESPONDENCE EXCHANGED BETWEEN THEM AS TO THE INTENT AND MEANING OF THE LEASE CONTRACT PROVISIONS WITH RESPECT TO THE TOTAL NUMBER OF EMPLOYEES WHO WOULD OCCUPY THE BUILDING PER DAY.

THE CONTRACTING OFFICER TESTIFIED, AMONG OTHER THINGS, THAT THE USE OF A DESIGN POPULATION FIGURE IN PREPARING SPECIFICATIONS FOR AN INVITATION FOR BIDS IS COMMONPLACE AND HAS AS ITS PURPOSE PLACING THE PROSPECTIVE CONTRACTOR ON NOTICE OF THE APPROXIMATE OCCUPANCY OF THE BUILDING TO ENABLE THE CONTRACTOR TO COMPLY WITH THE APPLICABLE BUILDING CODE. THIS CASE, THE CONTRACTING OFFICER EXPLAINED, THE DESIGN POPULATION GIVEN IN SUBPARAGRAPH 3(E) OF SCHEDULE D OF THE IFB WAS INTENDED PRIMARILY TO ENABLE THE CONTRACTOR TO PROVIDE PLUMBING FACILITIES REQUIRED TO SERVICE THE STATED DESIGN POPULATION AT ONE TIME. (SEE PAGE 64 OF THE TRANSCRIPT.)

THE LESSOR TESTIFIED THAT IN THE RENTAL OF $425,950 FOR THE FIRST TEN YEARS OF OCCUPANCY THE LESSOR HAD INCLUDED THE AMOUNT OF $117,700 AS THE COST OF MAINTENANCE OF THE BUILDING FACILITIES AND THAT SUCH COST HAD BEEN COMPUTED ON THE BASIS OF SERVICING NO MORE THAN 1,700 PEOPLE IN THE BUILDING OVER ANY TWENTY-FOUR HOUR PERIOD DURING THE OCCUPANCY PERIOD. FURTHER, WHILE THE LESSOR CONCEDED THAT FOR THOSE DAYS ON WHICH THE OCCUPANCY OF THE BUILDING, ACCORDING TO IRS STATISTICS FOR THE PERIOD JULY 1, 1964, THROUGH JUNE 30, 1965, WAS AS LOW AS 425, THE LESSOR SAVED ON SUPPLIES, THE LESSOR NEVERTHELESS INSISTED THAT THE MAXIMUM NUMBER OF EMPLOYEES TO BE SERVICED SHOULD BE 1,700 ON ANY ONE DAY. THE IRS STATISTICS, WHICH WERE INTRODUCED INTO EVIDENCE, SHOWED THAT THE DAILY POPULATION OF THE BUILDING WAS LESS THAN 700 EMPLOYEES THROUGH JANUARY 16, 1965; THAT FOR THE BIWEEKLY PERIOD ENDING JANUARY 30, 1965, IT WAS 1,396; AND THAT IT EXCEEDED 1,700 DURING ONLY SEVEN BIWEEKLY PERIODS RUNNING FROM JANUARY 31, 1965, THROUGH MAY 8, 1965, WHEN THREE SHIFTS WERE USED BY IRS, WITH 500 EMPLOYEES STARTING AT 7:00 A.M; FROM 1,249 TO 1,566 EMPLOYEES STARTING AT 8:00 A.M; AND 520 EMPLOYEES STARTING AT 4:00 P.M. THE THIRD SHIFT WAS NOT USED AFTER APRIL 24, 1965, AND THE HIGHEST NUMBER OF EMPLOYEES ON THE PREMISES AT ANY ONE TIME DUE TO OVERLAPPING OF THE FIRST TWO SHIFTS WAS 2,066 FOR THE PERIOD ENDING MAY 8, 1965.

IN DISMISSING THE CLAIM, AS INDICATED ABOVE, THE BOARD STATED IN ITS DECISION OF OCTOBER 31, 1966, THAT THE MATTER DID NOT COME WITHIN THE PURVIEW OF THE CHANGES CLAUSE IN THE LEASE AND THERE WAS NO OTHER PROVISION IN THE LEASE WHICH VESTED AUTHORITY IN GSA TO MAKE ADDITIONAL PAYMENTS OF SUCH TYPE TO THE LESSOR.

THE CLAIM WHICH YOU HAVE SUBMITTED TO OUR OFFICE COVERS THE PERIOD JANUARY 31, 1965, THROUGH SEPTEMBER 27, 1969, AND IS BASED ON ESTIMATED TOTAL DAILY POPULATIONS BY BIWEEKLY PERIODS WITH NO BREAKDOWN AS TO SHIFTS.

IN PRESSING THE ARGUMENTS PREVIOUSLY MADE BY THE LESSOR, YOU STRESS THAT OTHER THAN THE DESIGN POPULATION FIGURE OF 1,700 EMPLOYEES THERE WAS NO OTHER POPULATION GUIDELINE FOR USE IN PREPARING BIDS UNDER THE IFB. FURTHER, YOU ARGUE, NOTWITHSTANDING THAT THE IFB PROVIDED FOR THREE SEPARATE WORK SHIFTS, IN THE ABSENCE OF ANY SPECIFIC PROVISION IN THE IFB OR THE LEASE STATING THAT THERE WOULD BE 1,700 PERSONS ON EACH SHIFT, THE GOVERNMENT'S POSITION IS UNTENABLE. ADDITIONALLY, WHILE YOU CONCEDE THAT THE SPECIFICATIONS CALLED FOR INSTALLATION OF PLUMBING FACILITIES TO SERVICE MORE THAN 1,700 PERSONS, YOU STATE THAT THE LESSOR LOGICALLY CONCLUDED THAT THE ADDITIONAL FACILITIES WERE TO SERVE THE BUILDING AS EXPANDED IN THE FUTURE (I.E; TO 2,000 PERSONS) AND WERE NOT BASED ON THE DESIGN POPULATION ON WHICH THE LESSOR BASED ITS BID.

AS TO THE DESIGN AND CONSTRUCTION OF THE BUILDING, YOU CLAIM THAT THE GOVERNMENT MADE THE FINAL DETERMINATIONS OF THE FACILITIES, THE LESSOR'S ARCHITECTS AND ENGINEERS HAVING MERELY CONVERTED THE WRITTEN REQUIREMENTS PREPARED UNILATERALLY BY THE GOVERNMENT AS CONTEMPLATED BY THE GOVERNMENT; ACCORDINGLY, YOU ARGUE, THE LESSOR'S RESPONSIBILITIES WERE LIMITED TO CONSTRUCTION, OPERATION, MAINTENANCE, AND REPAIR.

ON THAT PORTION OF THE CLAIM WHICH RELATES TO THE AMOUNT WITHHELD BY THE GOVERNMENT FOR THE EXPENSE OF THE ALTERATIONS TO THE AIR CONDITIONING AND HEATING SYSTEM, YOU PURSUE THE ARGUMENT OF THE LESSOR THAT THE GOVERNMENT APPROVED THE DESIGN OF THE SYSTEM AND THAT THE LESSOR STOOD READY TO ADJUST THE SYSTEM AS REQUIRED AND TO CORRECT ANY DEFECT DUE TO FAULTY MATERIAL OR INCORRECT INSTALLATION. THE DIFFICULTIES ENCOUNTERED BY THE GOVERNMENT, YOU CLAIM, ARE ATTRIBUTABLE TO THE GOVERNMENT'S COMPRESSION OF THE TRANSCRIPTION AREA FROM 36,960 SQUARE FEET, AS SHOWN ON SCHEDULE E OF THE IFB, TO 19,200 SQUARE FEET. THE EFFECT OF THE GOVERNMENT'S ACTION, YOU STATE, WAS TO INCREASE THE HEAT LOAD IN THE REDUCED AREA BY 100 PERCENT WHILE REDUCING THE NUMBER OF AIR CONDITIONING ZONES SERVICING THE AREA FROM THREE TO TWO AND THE NUMBER OF DIFFUSERS FROM 81 TO 46 AND TO DEVELOP A DEFICIT OF FORTY TONS OF AIR CONDITIONING WHILE THE AREA SERVED BY THE OTHER TWO ZONES HAD AN EXCESS OF AIR CONDITIONING. FURTHER, YOU CLAIM THAT THE GOVERNMENT ACTION CONSTITUTED A DEPARTURE FROM THE GOVERNMENT'S OWN SPECIFICATIONS OF AREA USE AND BUILDING POPULATION, AND THAT IN HAVING THE ALTERATIONS TO THE AIR CONDITIONING AND VENTILATING SYSTEM MADE WITHOUT THE CONSENT OF THE LESSOR TO COMPENSATE FOR THE OVERHEATING IN THE TRANSCRIPTION AREA AND OVERCOOLING IN THE OTHER AREAS, THE GOVERNMENT ACTED ARBITRARILY.

THE EXHIBITS WHICH YOU HAVE FURNISHED IN SUPPORT OF THE CLAIM INCLUDE AN INTEROFFICE MEMORANDUM DATED SEPTEMBER 10, 1965, BEARING THE INITIALS HBB (HARVEY B. BAIR OF THE LESSOR'S FIRM), SUMMARIZING A DISCUSSION AT A MEETING ON SEPTEMBER 8, 1965, OF THE LESSOR'S REPRESENTATIVES WITH REPRESENTATIVES OF IRS AND GSA. ONE ITEM LISTED IN THE MEMORANDUM IS STATED AS FOLLOWS:

"5. HEATING PROBLEM -- TRANSCRIPTION AREA -- IT WAS AGAIN BROUGHT UP THAT THIS PROBLEM HAS NOT BEEN OFFICIALLY RECTIFIED. I EXPLAINED THAT WE WERE GOING TO PLACE RETURN AIR GRILLS IN THE CEILING AND SINCE THE AREA HAS BEEN REBALANCED THERE SHOULD BE NO FURTHER PROBLEMS."

A SECOND INTEROFFICE MEMORANDUM DATED FEBRUARY 16, 1966, RELATES TO A SIMILAR MEETING ON JANUARY 21, 1966, OF REPRESENTATIVES OF THE LESSOR AND REPRESENTATIVES OF IRS AND GSA AND INCLUDES THE COMMENT, "HIGH TEMPERATURE IN TRANSCRIPTION AREA HAS CAUSED NO PROBLEM AS YET THIS YEAR POSSIBLY BECAUSE OF THE FACT THAT THERE ARE 240 LESS MACHINES AND THAT WE INSTALLED 14 ADDITIONAL RETURN AIR GRILLS IN THE BUILDING."

IN A LETTER DATED APRIL 29, 1966, TO THE LESSOR CONCERNING THE HEATING AND AIR CONDITIONING PROBLEMS, GSA MADE THE FOLLOWING STATEMENTS:

"OUR ENGINEERS HAVE MADE A THOROUGH STUDY OF THE EXISTING AIR CONDITIONING SYSTEM AND IT HAS BEEN DETERMINED THAT 100% OF THE COILS IN THE AIR CONDITIONING UNITS ARE REQUIRED FOR MAXIMUM COOLING, WHICH FACT PRECLUDES THE POSSIBILITY OF USING PART OF THE COILS FOR HEATING. ADDITION, ONLY ONE SET OF WATER LINES EXIST TO HANDLE BOTH HEATING AND COOLING WHICH ALSO PRECLUDES THE SIMULTANEOUS HEATING AND COOLING NECESSARY TO MAINTAIN THE TEMPERATURE AND HUMIDITY REQUIREMENTS SET FORTH IN PARAGRAPH 5K OF SCHEDULE 'D' ATTACHED TO AND MADE A PART OF LEASE GS- 02B-7844. THE PROVISIONS OF SAID PARAGRAPH 5K OBLIGATE THE LESSOR TO CONDITION ALL AREAS ADJACENT TO THE OUTSIDE WALLS, EXCEPTING WAREHOUSE AREA, BY FAN COIL UNITS LOCATED UNDER THE WINDOWS USING HOT AND CHILLED WATER. IN ADDITION, THE HVAC SYSTEM IS TO BE CAPABLE OF HEATING OR COOLING OR BOTH, DEPENDING ON INDIVIDUAL ZONE REQUIREMENTS FOR TEMPERATURE AND HUMIDITY.

"IN VIEW OF THE ABOVE, IT IS REQUESTED THAT YOU TAKE IMMEDIATE ACTION, AT YOUR EXPENSE, TO FURNISH AND INSTALL A NEW HOT WATER PIPING SYSTEM FOR THE HEATING FUNCTIONS AND TO INSTALL HEATING COILS IN THE SUPPLY DUCTS. ADDITIONAL THERMOSTATS WILL ALSO BE REQUIRED TO CONTROL THE NEW HEATING COILS AND MODIFICATIONS MADE TO THE AUTOMATIC TEMPERATURE CONTROL SYSTEM TO PERMIT MANUAL OPERATION OF THE DAMPER REVERSING RELAYS ON A. C. UNITS 1 THROUGH 4.

"THE GOVERNMENT WILL ASSUME RESPONSIBILITY FOR THE WORK NECESSARY TO CORRECT THE TEMPERATURE PROBLEM IN THE TRANSCRIPTION AND ERRORS RESOLUTION AREA. THE NECESSARY WORK CONSISTS OF BREAKING A. C. 3 AND A. C. 4 SUPPLY DUCT SYSTEMS INTO TWO (2) ZONES, ONE SUPPLYING THE TRANSCRIPTION AREA WHERE THE CONTROL OF THE MAIN UNIT WOULD BE PLACED AND THE OTHER SUPPLYING THE ERRORS AND RESOLUTION AREA WHERE LOCAL REHEAT CONTROL WOULD BE SITUATED. A. C. 1 AND A. C. 2 REQUIRE HEATING COILS ONLY.

"PLEASE ADVISE IF YOU WILL AGREE TO PERFORM THE WORK REQUIRED IN THE TRANSCRIPTION AND ERRORS RESOLUTION AREA, FOR WHICH THE GOVERNMENT WILL REIMBURSE YOU, UPON RECEIPT OF AN AUTHORIZATION TO PROCEED. IT WILL BE NECESSARY FOR YOU TO SUBMIT PLANS AND SPECIFICATIONS TO THIS OFFICE FOR APPROVAL TOGETHER WITH A FIRM PRICE FROM THE CONTRACTOR PERFORMING YOUR PORTION OF THE WORK, BEFORE APPROVAL CAN BE GIVEN FOR YOU TO PROCEED."

ABSENT RECEIPT BY GSA OF A REPLY FROM THE LESSOR TO THE GSA LETTER OF APRIL 29, THE LESSOR WAS NOTIFIED BY GSA IN A LETTER DATED MAY 24, 1966, THAT UNLESS THE WORK REQUIRED FOR NECESSARY CHANGES IN THE HEATING AND AIR CONDITIONING SYSTEM WAS COMMENCED BY JUNE 1, 1966, GSA WOULD CONTRACT FOR THE WORK AND DEDUCT THE COST FROM FUTURE RENTAL PAYMENTS DUE THE LESSOR. THE LESSOR'S RESPONSE BY LETTER OF MAY 27, 1966, WAS TO THE EFFECT THAT THE EXISTING SYSTEM HAD BEEN INSTALLED EXACTLY ACCORDING TO PLANS WHICH WERE APPROVED BY GSA IN 1962. IN A LETTER DATED JUNE 14, 1966, GSA FURTHER ADVISED THE LESSOR AS FOLLOWS:

"DRAWINGS M-1 AND M-2 OF 9 SHEETS ENTITLED 'PART PLAN -- CLERICAL AREA', PREPARED BY HERBERT C. MILLKEY & ASSOCIATES, ARCHITECTS, AND REQUIREMENTS OF THE LATEST EDITION OF NATIONAL AND LOCAL BUILDING, ELECTRICAL AND ZONING CODES. IN CASES OF CONFLICT BETWEEN LOCAL AND NATIONAL CODE, THE CODE WITH THE MOST STRINGENT REQUIREMENTS SHALL OBLIGATIONS OF THIS CONTRACT. THE BUILDING SHALL ALSO MEET THE B. W. DEAN, MECHANICAL ENGINEER, SHOW ONE SET OF WATER LINES TO SUPPLY BOTH HOT WATER FOR HEATING AND CHILLED WATER FOR COOLING TO THE AIR CONDITIONING SYSTEM OTHER THAN THE PERIMETER FAN COIL UNITS. THE ONE SET OF WATER LINES PRECLUDES SIMULTANEOUS HEATING AND COOLING IN THE AREAS SERVED BY THESE UNITS AS REQUIRED BY THE PROVISIONS OF PARAGRAPH 5K OF SCHEDULE 'D' ATTACHED TO AND MADE A PART OF LEASE GS 02B-7844. THE GOVERNMENT DID NOT DESIGN THE HVAC SYSTEM. THE PLANS WERE REVIEWED AND THE GOVERNMENT'S APPROVAL WAS GIVEN ONLY AFTER YOUR ENGINEER MR. DEAN, AND YOUR MECHANICAL CONTRACTOR MR. LEWIS B. MALLORY OF MALLORY & EVANS, INC; AS WELL AS MR. SCOTT S. BAIR, ASSURED US THAT THE PROPOSED SYSTEM WOULD ACCOMPLISH THE REQUIREMENTS OF THE AFORESAID PARAGRAPH 5K OF SCHEDULE 'D'.

"SUBSEQUENT OPERATION AFTER COMPLETION OF THE WORK, DESPITE MANY ADJUSTMENTS BY YOUR ENGINEER AND OTHERS ON YOUR STAFF, SHOWS THAT THE SYSTEM DOES NOT FULFILL THE LEASE REQUIREMENTS. AS A CONSEQUENCE OF THE POOR PERFORMANCE OF THE SYSTEM, THE OPERATIONS OF IRS HAVE BEEN SERIOUSLY IMPAIRED. IT IS NOW NECESSARY TO INSTALL SEPARATE COILS FOR HEATING, TOGETHER WITH A NEW HOT WATER LINE, BASED UPON OUR ENGINEER'S ANALYSIS THAT THE EXISTING CHILLED WATER COILS, EVEN THOUGH IN TWO SECTIONS, ARE REQUIRED 100% FOR COOLING. ADDITIONAL THERMOSTATS WILL ALSO BE REQUIRED TO CONTROL THE NEW HEATING COILS AND MODIFICATIONS MADE TO THE AUTOMATIC TEMPERATURE CONTROL SYSTEMS TO PERMIT MANUAL OPERATION OF THE DAMPER REVERSING RELAYS ON A. C. UNITS 1 THROUGH 4.

"WE HAVE BROUGHT THIS MATTER TO YOUR ATTENTION AND YOU HAVE INDICATED THAT YOU DO NOT INTEND TO CORRECT THE DEFICIENCIES BY MAKING THE NECESSARY CHANGES TO THE HVAC SYSTEM TO COMPLY WITH THE PROVISIONS OF THE AFORESAID PARAGRAPH 5K. SINCE CORRECTION IS ESSENTIAL TO IRS, WE ARE PROCEEDING TO SOLICIT BIDS FOR THE REQUIRED WORK AND WILL AWARD A CONTRACT AS SOON AS POSSIBLE AND YOU WILL BE CHARGED WITH THE ACTUAL COST THEREOF."

IN ADDITION, IN A LETTER OF OCTOBER 20, 1966, GSA NOTIFIED THE LESSOR THAT A CONTRACT HAD BEEN AWARDED FOR THE REQUIRED WORK, UPON COMPLETION OF WHICH "THE COST OF THE PORTION THAT IS YOUR RESPONSIBILITY UNDER THE LEASE, PLUS DESIGN, SUPERVISION AND CONTINGENCIES, TOTALLING APPROXIMATELY $43,700.00," WOULD BE CHARGED TO THE LESSOR.

IN SUBSEQUENT CORRESPONDENCE THE LESSOR FURNISHED TO GSA A COPY OF A LETTER DATED JULY 15, 1966, ADDRESSED TO THE LESSOR BY ITS DESIGN ENGINEERS, READING AS FOLLOWS:

"IN REPLY TO YOUR LETTER QUESTIONING COMPLIANCE WITH GSA OUTLINE SPECIFICATIONS ON THE POINT OF THE STATED REQUIREMENT FOR SEPARATE HEATING AND COOLING COILS IN AC-1 THROUGH AC-4, PLEASE LET ME GIVE YOU THE FOLLOWING BACKGROUND.

"THE VARIANCE WAS MADE WITH THE CONCURRENCE OF AND, ACTUALLY, AT THE SUGGESTION OF MR. AUGUSTUS I. VEIT, THE MECHANICAL ENGINEER ASSIGNED BY GSA TO REVIEW THE CONCEPT AND PLANS.

"LET ME STATE THAT THE CONCEPT IS ENTIRELY VALID AND NO COMPROMISE IN DESIGN. SIMPLY STATED, THE PERIMETER FAN COIL UNITS ARE TO TAKE THE BASIC EXTERIOR HEATING OR COOLING LOAD, WHILE THE INTERIOR AIR HANDLING UNITS ARE TO TAKE THE INTERNAL COOLING LOAD. AT AN OUTSIDE TEMPERATURE LOW ENOUGH TO SATISFY THE INTERNAL COOLING LOAD, THE AIR HANDLING UNITS SHOULD SWITCH TO A CONTROLLED VENTILATION AIR CYCLE. FROM THAT POINT ON, HOT WATER IS AVAILABLE TO THE COILS FOR ANY HEATING REQUIREMENTS. THE SYSTEM WILL WORK AND I DO NOT FEEL THAT THE ADDITION OF HEATING COILS IN THESE UNITS CAN CORRECT ANY PROBLEMS YOU MIGHT HAVE.

"THE DESIGN CONCEPT HAS AGAIN BEEN REVIEWED BY OUR OFFICE AND MR. B. W. DEAN AND WE DO HAVE FAITH IN THE ABILITY OF ANY UNIT TO HEAT OR COOL WHEN REQUIRED.

"IN MAY OF LAST YEAR, YOU EXPERIENCED SOME TROUBLE AND AUTHORIZED US BY TELEGRAM TO SPEND CERTAIN MONIES TO THOROUGHLY CHECK OUT THE SYSTEM, INCLUDING REFRIGERATION CYCLE AND CONTROL SYSTEM. BEFORE WE COULD DISPATCH A MAN, THIS AUTHORIZATION WAS CANCELED BY TELEPHONE AFTER YOU GOT HELP LOCALLY.

"WE ARE STILL READY TO MAKE ARRANGEMENTS TO CHECK THE WHOLE SYSTEM OUT IF YOU DESIRE."

ON THE BASIS OF THE STATEMENTS IN THE ENGINEERS' LETTER, THE LESSOR DISCLAIMED ALL RESPONSIBILITY FOR ANY CHANGES TO THE HEATING AND AIR CONDITIONING SYSTEM AND SO NOTIFIED GSA BY LETTER OF AUGUST 31, 1966, AND BY TELEGRAM OF OCTOBER 24, 1966.

THE RECORD RELATING TO THE ABOVE MATTER SHOWS THAT GSA INVESTIGATED THE STATEMENTS OF THE LESSOR'S ENGINEERS THAT A GSA MECHANICAL ENGINEER HAD SUGGESTED THE DESIGN CHANGE FOR THE HEATING AND AIR CONDITIONING SYSTEM. GSA'S LETTER OF DECEMBER 12, 1966, IN THIS REGARD, INFORMED THE LESSOR THAT GSA'S DESIGN AND CONSTRUCTION DIVISION CATEGORICALLY DENIED EITHER A SUGGESTION BY GSA OR CONCURRENCE WITH THE CHANGE, AND THE LETTER ALSO STATED THAT THE "SYSTEM AS INSTALLED HAS NEVER MET THE CONDITIONS SET FORTH IN LEASE GS-02B-7844." BY LETTER DATED AUGUST 14, 1967, GSA FURTHER ADVISED THE LESSOR THAT THE WORK HAD BEEN COMPLETED AND THAT THE PORTION OF THE COST CHARGEABLE TO THE LESSOR, TO BE DEDUCTED FROM FUTURE RENTAL PAYMENTS, AMOUNTED TO $43,544.54. THE WITHHOLDING OF THE AMOUNT WAS THEREAFTER EFFECTED BY GSA, AND REQUESTS BY THE LESSOR IN LETTERS OF APRIL 5 AND MAY 7, 1968, FOR RETURN OF THE AMOUNT WERE DENIED BY GSA.

IN DISAPPROVING THE CLAIM YOU HAVE SUBMITTED, GSA ADHERES TO ITS POSITION THAT THE LANGUAGE IN THE IFB AND THE LEASE CONCERNING THE DESIGN POPULATION 221,700 PERSONS AND EXPANSION TO 2,000, TOGETHER WITH THE PROVISIONS REGARDING THE FURNISHING OF DRINKING WATER FACILITIES FOR 2,000 PERSONS, CANNOT BE REGARDED AS REPRESENTATIONS OR GUARANTEES BY THE GOVERNMENT THAT THE BUILDING POPULATION WOULD BE SO LIMITED FOR AN ENTIRE WORK DAY. CONVERSELY, GSA ASSERTS, THESE PROVISIONS WERE INTENDED TO NOTIFY BIDDERS OF, AND TO REQUIRE LESSORS TO COMPLY WITH, DESIGN AND SPACE CHARACTERISTICS BY ASSURING THAT SERVICE FACILITIES AT ALL TIMES WILL BE ADEQUATE TO ACCOMMODATE THE NEEDS OF THE SPECIFIED POPULATION OF 1,700 AT ANY TIME. ACCORDINGLY, GSA CONTENDS, A CONCLUSION THAT THE BUILDING TO BE DESIGNED FOR APPROXIMATELY 1,700 EMPLOYEES SHOULD BE POPULATED DURING ANY ONE OF THE THREE SHIFTS PROVIDED FOR IN THE LEASE WITH ONLY A FRACTION OF THE SPECIFIED DESIGN POPULATION IS UNWARRANTED.

WITH REGARD TO THE ALTERATIONS MADE TO THE AIR CONDITIONING AND HEATING SYSTEM AND THE CHARGING OF THE EXPENSE TO THE LESSOR, GSA MAINTAINS THAT ITS ACTIONS WERE JUSTIFIABLE IN LIGHT OF THE FACT THAT THE SYSTEM AS PROVIDED BY THE LESSOR DID NOT MEET THE GOVERNMENT'S NEEDS AS SPECIFIED IN THE IFB AND THE LEASE, AND IN VIEW OF THE UNEQUIVOCAL DENIAL BY GSA'S DESIGN AND CONSTRUCTION DIVISION THAT A GSA ENGINEER CONCURRED WITH AND/OR SUGGESTED TO THE LESSOR'S ENGINEERS THE USE OF A ZONING CHANGE IN PLACE OF SEPARATE CHILLED AND HOT WATER MAINS.

WHERE THERE IS A CONFLICT BETWEEN FACTS AS REPORTED BY A GOVERNMENT CONTRACTING AGENCY AND FACTS AS SET FORTH BY A CONTRACTOR IN SUPPORT OF A CLAIM PRESENTED TO OUR OFFICE FOR CONSIDERATION, IT IS THE LONG ESTABLISHED RULE OF OUR OFFICE TO ACCEPT THE ADMINISTRATIVE REPORT IN THE ABSENCE OF EVIDENCE SUFFICIENTLY CONVINCING TO OVERCOME THE PRESUMPTION OF CORRECTNESS OF THE REPORT. 37 COMP. GEN. 568 (1958). IN LINE WITH SUCH RULE, AND SINCE NO EVIDENCE HAS BEEN SUBMITTED BY THE LESSOR TO SUBSTANTIATE THE ASSERTION BY THE LESSOR'S ARCHITECTS AND ENGINEERS THAT THE GSA ENGINEERS SUGGESTED AND APPROVED THE COMBINATION AIR CONDITIONING AND HEATING SYSTEM WHICH THE GOVERNMENT CLAIMS DID NOT MEET ITS SPECIFIED NEEDS, OUR CONSIDERATION OF THE CLAIM MUST BE BASED ON THE PREMISE THAT DESIGN OF THE SYSTEM WAS ACCOMPLISHED BY THE LESSOR.

WITH RESPECT TO THE INTERPRETATION OF THE LEASE AS TO THE NUMBER OF EMPLOYEES WHO COULD BE EXPECTED TO OCCUPY THE PREMISES EACH DAY, THERE IS FOR APPLICATION THE CARDINAL PRINCIPLE THAT IN CONSTRUING LEASES, AS IN THE CASE OF CONTRACTS GENERALLY, EFFECT IS GIVEN TO THE INTENTION OF THE PARTIES AS MANIFESTED BY THE WORDS USED. A COURT IS NOT AT LIBERTY TO READ INTO A LEASE A MEANING WHICH THE PARTIES DID NOT INTEND OR WHICH THEY DID NOT EXPRESS IN THE LANGUAGE USED. 49 AM. JUR. 2D, LANDLORD AND TENANT SEC. 141. NO GREATER LIBERTY IS ACCORDED THIS OFFICE IN THE SETTLEMENT OF CLAIMS.

AS YOU HAVE POINTED OUT, THE ONLY PLACE IN THE IFB OR THE LEASE IN WHICH A POPULATION FIGURE IS GIVEN FOR THE BUILDING IS IN SUBPARAGRAPH 3.E; SCHEDULE D, GENERAL REQUIREMENTS, OF THE SPECIFICATIONS. THE STATED FIGURE, HOWEVER, IS DESCRIBED AS A "DESIGN POPULATION," AND THERE IS NOTHING IN SUBPARAGRAPH 3.E; SCHEDULE D, OR ELSEWHERE IN THE IFB OR LEASE DOCUMENTS TO SUPPORT THE CONTENTION THAT SUCH FIGURE WAS INTENDED AS A LIMITATION ON THE MAXIMUM NUMBER OF EMPLOYEES WHO WOULD WORK IN THE BUILDING DURING THE COURSE OF ANY ONE DAY. CONVERSELY, THE SPECIFICATIONS COVERING REQUIREMENTS FOR PLUMBING FACILITIES ARE BASED ON OCCUPANCY OF THE BUILDING AT ONE TIME BY MORE THAN 1,700 EMPLOYEES.

IN LIGHT OF THE CLEAR LANGUAGE OF THE IFB EVIDENCING THE GOVERNMENT'S INTENT TO PROVIDE WORKING SPACE FOR NO FEWER THAN 1,700 EMPLOYEES AT ANY TIME, AND OF THE SPECIFIC PROVISION FOR THREE SEPARATE WORK SHIFTS, THE HOURS OF WHICH WERE CHANGEABLE AT THE OPTION OF THE GOVERNMENT, IT IS OUR VIEW THAT THE LEASE MUST BE CONSTRUED AS CONTEMPLATING THE USE OF THE BUILDING TO WHICH IT WAS PUT BY IRS BEGINNING JANUARY 31, 1965; I.E; THREE SHIFTS WITH UP TO 1,700 EMPLOYEES ON EACH SHIFT. FURTHER, THE FACTS (1) THAT THE LESSOR'S LOW BID WAS IN CLOSE PROXIMITY TO THE NEXT THREE BIDS, (2) THAT NO BIDDER RAISED ANY QUESTION PRIOR TO BID OPENING REGARDING THE NUMBER OF OCCUPANTS CONTEMPLATED BY IRS, AND (3) THAT THE LESSOR TOOK NO EXCEPTION TO THE SPECIFICATIONS UNTIL IRS HAD BEEN IN OCCUPANCY OF THE BUILDING FOR MORE THAN A YEAR, SUPPORT THE VIEW THAT THE LESSOR'S CLAIM WAS NOT PROMPTED BY ANY MISUNDERSTANDING OR MISTAKE AS TO OCCUPANCY AT THE TIME THE LESSOR'S BID WAS SUBMITTED.

IN THE CIRCUMSTANCES, ABSENT ANY ESCALATION PROVISION IN THE SPECIFICATIONS OR ELSEWHERE IN THE LEASE DOCUMENTS AUTHORIZING ADJUSTMENT OF THE RENT TO COVER ANY RISE IN THE COSTS IN QUESTION, WE FIND NO LEGAL BASIS ON WHICH OUR OFFICE MAY ALLOW THE CLAIM. ACCORDINGLY, THE CLAIM IS DISALLOWED.

AS TO THE ALTERATION OF THE AIR CONDITIONING AND HEATING SYSTEM, THE RECORD INDICATES THAT GSA HAS ASSUMED THE EXPENSES OF WHATEVER CHANGES WERE REQUIRED BECAUSE OF REALIGNMENT OF THE TRANSCRIPTION AREA AND THAT THE EXPENSES WHICH WERE CHARGED TO THE LESSOR COVERED ONLY THE DEFICIENCIES IN THE BASIC AIR CONDITIONING SYSTEM AS SET FORTH IN GSA'S LETTER OF APRIL 29, 1966, QUOTED ABOVE. FURTHER, THERE IS NO PROVISION IN THE SPECIFICATIONS OR THE LEASE PRECLUDING REALIGNMENT OF THE WORKING AREAS. RATHER, THE EXPRESS PROVISION FOR MOVABLE PARTITIONS SUPPORTS THE PREMISE THAT REALIGNMENT WAS CONTEMPLATED BY THE GOVERNMENT AND THE LESSOR. WE ARE THEREFORE, UNABLE TO ACCEPT YOUR VIEW THAT THE GOVERNMENT SHOULD BEAR THE RESPONSIBILITY FOR THE EXPENSE OF ADJUSTMENT OF THE SYSTEM TO MEET THE GOVERNMENT'S REQUIREMENTS AS SET FORTH IN THE SPECIFICATIONS, NONE OF WHICH HAS BEEN WAIVED OR CHANGED PURSUANT TO AGREEMENT OF THE PARTIES. FOR THE REASONS STATED, THAT PORTION OF THE CLAIM IS ALSO DISALLOWED.

WHILE THE DISALLOWANCE OF THE CLAIM IN ITS ENTIRETY OBVIATES THE NEED OF ANY DECISION BY OUR OFFICE ON THE PROPRIETY OF THE CLAIM FOR INTEREST ON THE AMOUNTS IN QUESTION, WE DIRECT YOUR ATTENTION TO THE RULE LONG FOLLOWED BY OUR OFFICE THAT INTEREST ON CLAIMS AGAINST THE UNITED STATES MAY NOT BE PAID IN THE ABSENCE OF A CONTRACT OR STATUTE PROVIDING FOR PAYMENT THEREOF. 45 COMP. GEN. 169 (1965) AND COURT CASES THEREIN CITED.