B-181797, MAY 15, 1975

B-181797, MAY 15, 1975

REFORMATION OF LEASE IS NOT WARRANTED WHERE CONTRACTING OFFICER WAS NOT ON ACTUAL OR CONSTRUCTIVE NOTICE OF MISTAKE ALLEGED AFTER AWARD OF LEASE CONTRACT WHEN LESSOR'S BID WAS SOLE OFFER AND LEASE PROVISIONS WERE NOT AMBIGUOUS.

MARTIN W. JUSTER:

THIS DECISION INVOLVES THE CLAIM OF MARTIN W. JUSTER, THE LESSOR OF OFFICE SPACE LOCATED AT 2000 M STREET, N.W., WASHINGTON, D.C., LEASED TO THE GENERAL SERVICES ADMINISTRATION (GSA) UNDER LEASE NO. GS-03-B 5955. THE LESSOR HAS REQUESTED REFORMATION OF THE LEASE BECAUSE OF A MISTAKE IN ITS BID.

THE CLAIM AROSE WHEN THE CONTRACTING OFFICER OF GSA ADVISED THE LESSOR THAT A CREDIT OF $73,267 WAS DUE THE GOVERNMENT IN ACCORDANCE WITH THE PROVISIONS OF THE LEASE REGARDING PARTITIONING, TELEPHONE OUTLETS AND ELECTRICAL OUTLETS REQUIRED AND FURNISHED. THE CONTRACTING OFFICER'S FINAL DECISION WAS ISSUED AND AN APPEAL WAS TAKEN TO THE GSA BOARD OF CONTRACT APPEALS. THE BOARD DISMISSED THE APPEAL WITHOUT PREJUDICE SINCE THE PRINCIPAL ISSUE OF MISTAKE IN BID IS UNDER THE JURISDICTION OF THE GAO.

THE CLAIM CONCERNS CERTAIN PROVISIONS OF THE SOLICITATION - GENERAL LEASE SPECIFICATIONS AND REQUIREMENTS NO. 143 - DATED OCTOBER 15, 1971, AND THE OFFER SUBMITTED ON THAT DATE BY THE LESSOR'S AGENT. THE OFFER WAS ACCEPTED BY THE GOVERNMENT ON OCTOBER 15, 1971. IN SCHEDULE B PART II, PARAGRAPH 6, PARTITIONS AND WALLS, THE SOLICITATION REQUIRES THE OFFEROR TO STATE ON GSA FORM 1364 THE COST PER LINEAR FOOT OF PARTITIONING. PAGE 17 THE FOLLOWING STATEMENT IS FOUND:

"THE GOVERNMENT WILL MAKE A LUMP-SUM PAYMENT FOR PARTITIONING FURNISHED WHERE THE AMOUNT FURNISHED IS IN EXCESS OF THE SPECIFIED RATIO AND WILL TAKE CREDIT FROM THE RENTAL PAYMENTS FOR PARTITIONING NOT FURNISHED BY THE LESSOR WHEN THE AMOUNT FURNISHED IS LESS THAN THE SPECIFIED RATIO."

PARAGRAPH 7, ELECTRICAL AND TELEPHONE SERVICE OUTLETS, FOUND ON PAGES 26- 27 OF THE SOLICITATION, CONTAINS THE LEASE REQUIREMENTS FOR SUCH OUTLETS. THE FOLLOWING STATEMENT IS FOUND ON PAGE 27:

"IN THE EVENT THE TOTAL NUMBER OF TELEPHONE AND ELECTRICAL OUTLETS, AS CALLED FOR ABOVE, ARE NOT REQUIRED AND ARE NOT INSTALLED, THE GOVERNMENT RESERVES THE RIGHT TO ADJUST THE RENTAL TO COMPLY WITH THE ACTUAL REQUIREMENTS.

NOTE: OFFERORS ARE REQUESTED TO STATE ON GSA FORM 1364, OR ATTACHMENT THERETO, THE RATE PER UNIT FOR ADJUSTMENT FOR EACH ELECTRICAL OUTLET AND/OR TELEPHONE OUTLET IN EXCESS OR LESS THAN REQUIRED."

THE GSA FORM 1364 REFERRED TO IS THE "PROPOSAL TO LEASE SPACE TO THE UNITED STATES OF AMERICA." FORM 1364 SUBMITTED BY THE LESSOR'S AGENT CONTAINED THE FOLLOWING UNIT COSTS FOR THE ITEMS IN QUESTION:

COST FOR PARTITION ADJUSTMENT PER LINEAR FOOT $11.00

COST FOR SOUNDPROOF ADJUSTMENT PER LINEAR FOOT 20.00

ADJUSTMENT FOR PHONE OUTLETS 22.00

ADJUSTMENT FOR ELECTRICAL OUTLETS 26.00

BY LETTER OF MAY 11, 1973, THE GOVERNMENT MADE DEMAND FOR THE $73,267, AND ADVISED HOW IT COMPUTED THE AMOUNT OF CREDIT DUE THE LESSOR AND THE GOVERNMENT ACCORDING TO THE PROVISIONS OF THE LEASE AGREEMENT. WITH REGARD TO THE ITEMS IN QUESTION THE GOVERNMENT COMPUTATION INCLUDED 2,668 ELECTRICAL OUTLETS NOT REQUIRED AT $26 PER OUTLET ($69,368) AND 831 TELEPHONE OUTLETS NOT REQUIRED AT $22 PER OUTLET ($16,282).

THE LESSOR IS SEEKING REFORMATION ON THE GROUND THAT HE MADE A SUBSTANTIAL ERROR IN HIS OFFER TO LEASE THE BUILDING BY FAILING TO STATE THAT NO DEDUCTION CREDIT WOULD BE OFFERED THE GOVERNMENT. THE LESSOR ALLEGES THAT THE GOVERNMENT SHOULD HAVE KNOWN OF THE ERROR BECAUSE THE SPECIFICATIONS WERE AMBIGUOUS AND THE GOVERNMENT DID NOT GIVE HIM A REASONABLE AMOUNT OF TIME TO ANALYZE THE LEASE FORMS. IN THIS CONNECTION, IT IS STATED THAT THE UNIT COSTS ENTERED ON FORM 1364 WERE INTENDED TO APPLY TO ADD-ON-ITEMS ONLY, AND THAT THE LESSOR WAS INDUCED TO BELIEVE THAT THIS WAS WHAT WAS CALLED FOR BY THE LANGUAGE OF THE CLAUSE IN THE SOLICITATION ENTITLED "TYPE AND AMOUNT OF NET USABLE SPACE" AS FOLLOWS:

"THE SUCCESSFUL OFFEROR WILL BE REQUIRED TO SUBMIT NO LATER THAN 30 DAYS PRIOR TO THE DATE OF DELIVERY AND OCCUPANCY OF THE SPACE AND EACH YEAR THEREAFTER DURING THE TERM OF THE LEASE UNIT PRICES FOR SUCH REPETITIVE ALTERATION WORK ITEMS AS (1) INSTALLATION OF ELECTRICAL OUTLETS; (2) INSTALLATION OF TELEPHONE OUTLETS; (3) ERECTION AND/OR RELOCATION OF MOVABLE PARTITIONS ***."

IT IS ALSO CONTENDED THAT THE SHORT RESPONSE TIME FOR SUBMISSION OF OFFERS CONTRIBUTED TO THE LESSOR'S MISTAKE. IN THE ALTERNATIVE, IT IS ARGUED THAT IF THE LEASE IS NOT REFORMED TO ELIMINATE THE DEDUCTIVE CREDIT PROVISION, THE LESSOR SHOULD NOT BE COMPELLED TO CREDIT THE GOVERNMENT WITH AN AMOUNT THAT IS GREATER THAN THE ACTUAL COST SAVINGS TO THE LESSOR BY REASON OF THE REDUCED WORK. ON THIS BASIS, THE GOVERNMENT OWES THE LESSOR $19,754.13 FOR AN ADDITIONAL 1,931 LINEAR FEET OF PARTITIONING AT $10.23 PER LINEAR FOOT, AND THE GOVERNMENT SHOULD RECEIVE A CREDIT IN THE AMOUNT OF $27,911.80 FOR DELETED ITEMS - 752 LINEAR FEET OF SOUNDPROOF PARTITIONING AT $5.25 PER LINEAR FOOT ($4,000); 2,668 ELECTRICAL OUTLETS AT $7.00 EACH ($18,676); AND 831 TELEPHONE OUTLETS AT $6.30 EACH ($5,235.30). THE GOVERNMENT WOULD THEREFORE BE ENTITLED TO A NET CREDIT OF $8,157.67.

GENERALLY, REFORMATION OF A CONTRACT MAY BE PERMITTED TO CORRECT A MISSTATEMENT IN THE CONTRACT OF THE ACTUAL TERMS AGREED UPON BETWEEN THE PARTIES, OR TO PROVIDE RELIEF IN SITUATIONS WHERE IT IS APPARENT THAT THE CONTRACT, AS WRITTEN, DOES NOT EXPRESS THE ACTUAL INTENT OF THE PARTIES RELATIVE TO A PARTICULAR MATTER. B-166235, MARCH 25, 1969; B-154442, NOVEMBER 29, 1968. RELIEF MAY BE GRANTED FOR A UNILATERAL MISTAKE ALLEGED AFTER AWARD ONLY IF THE CONTRACTING OFFICER HAD EITHER ACTUAL OR CONSTRUCTIVE KNOWLEDGE OF THE MISTAKE PRIOR TO AWARD. SALIGMAN V. UNITED STATES, 57 F. SUPP. 505 (E.D. PA. 1944); WENDER PRESSES, (1966); 48 COMP. GEN. 672 (1969). INC. V. UNITED STATES, 170 CT. CL. 483 (1965); 45 COMP. GEN. 700, 706

IN THIS CASE, NEITHER CRITERIA HAS BEEN MET. IF AN ERROR WAS MADE IN THE PREPARATION OF THE BID BY FAILURE TO OMIT THE DEDUCTIVE CREDIT PROVISION IT MUST BE ATTRIBUTED TO THE CONTRACTOR'S NEGLIGENCE OR OVERSIGHT SINCE THE LANGUAGE IN SCHEDULE B OF THE SOLICITATION IS CLEAR AND UNAMBIGUOUS. MOREOVER, IT IS OUR VIEW THAT THE LANGUAGE OF THE NET USABLE SPACE CLAUSE REFERRED TO BY THE LESSOR CLEARLY REFERS TO PRICES TO BE FURNISHED BY THE CONTRACTOR AFTER AWARD AND HAS NO RELATION TO THE REQUIREMENT IN SCHEDULE B. FURTHER, SINCE ONLY ONE OFFER WAS RECEIVED, THERE WAS NO BASIS FOR COMPARISON TO OTHER OFFERS TO PLACE CONTRACTING OFFICER ON NOTICE OF THE PROBABILITY OF A MISTAKE. B 180607, APRIL 2, 1974; B-180329, OCTOBER 1, 1974; 26 COMP. GEN. 415 (1946).

FINALLY, THE LESSOR HAS ARGUED THAT REFORMATION SHOULD BE PERMITTED BECAUSE HE DID NOT HAVE SUFFICIENT TIME TO EVALUATE THE TERMS OF THE SOLICITATION PRIOR TO SUBMISSION OF HIS OFFER. IT IS TRUE THAT BECAUSE OF THE URGENCY OF THE SITUATION THE OFFEROR WAS ASKED TO SUBMIT HIS OFFER IN LESS THAN A DAY. HOWEVER, WE DO NOT VIEW THIS REASON AS A BASIS FOR THE REQUESTED RELIEF. THE LESSOR'S OFFER WAS RESPONSIVE TO THE SOLICITATION AND ACCEPTED. AS NO MISTAKE WAS ALLEGED UNTIL AFTER ACCEPTANCE BY THE GOVERNMENT AND NOTHING IN THE RECORD INDICATES THAT THE CONTRACTING OFFICER WAS ON ACTUAL OR CONSTRUCTIVE NOTICE OF THE LESSOR'S ALLEGED MISTAKE PRIOR TO ACCEPTANCE OF ITS OFFER, A BINDING LEASE CONTRACT WAS FORMED.

ACCORDINGLY, THERE IS NO LEGAL BASIS TO GRANT REFORMATION TO ELIMINATE THE DEDUCTIVE CREDIT PROVISION OR REDUCE THE AMOUNT OF THE CREDIT AS REQUESTED, AND THE LESSOR IS OBLIGATED TO PERFORM UNDER THE LEASE ACCORDING TO ITS TERMS AS AWARDED BY THE GOVERNMENT.