______________________________________________ GRANTED AS TO ENTITLEMENT: February 24, 1993 ______________________________________________ GSBCA 11029 STROH CORPORATION, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Ronald M. Kaplan, Jeffrey D. Fick, and Jeff Goodman of Shearer, Templer & Fingel, West Des Moines, IA, counsel for Appellant. Robert W. Schlattman, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges BORWICK, NEILL, and HYATT. HYATT, Board Judge. Stroh Corporation has appealed a contracting officer's decision denying its claim for an equitable adjustment under a contract for the replacement of the cooling tower, chillers, and portions of the roof at a Federal Building in Des Moines, Iowa. The dispute focuses on whether the absence of an express clause in the contract prohibiting removal of the existing cooling system during the summer months patently conflicted with a contract clause proscribing interference with the Government's continued conduct of business in the building so as to impose on Stroh a duty to seek clarification of the Government's intent prior to submitting its bid. The parties have filed cross-motions for summary relief as to entitlement, urging that the facts necessary to determine the proper interpretation of the relevant contract clauses are not in issue. We find that the material facts are not in dispute and conclude that Stroh's motion for partial summary relief should be granted. Findings of Fact 1. Appellant, Stroh Corporation, was awarded contract number GS06P90GYC0060 on May 16, 1990. The contract required appellant to replace the cooling tower, two chillers, and sections of the roof around the cooling tower at the Federal Building in Des Moines, Iowa, for the fixed price of $676,000. Appeal File, Exhibit 4. 2. The contract required the contractor to commence work immediately upon receipt of the notice to proceed, to prosecute the work diligently, and to complete the work within 240 days of receipt of the notice to proceed. Appeal File, Exhibit 1, Supplementary Conditions, 4.01. The notice to proceed was issued on June 5, 1990, and received by Stroh on June 7, 1990. Id., Exhibit 5. In its acknowledgement of receipt of the notice, Stroh proposed a contract start date of June 11, 1990. Id. 3. Also on June 7, 1990, Stroh attended a pre-construction conference with the contracting officer's representative (COR), at which Stroh announced its intention to begin work at the site within two weeks. At that time, the COR informed Stroh that the building's existing cooling system could not be taken out of service until the estimated end of the cooling season, on October 15, 1990. Appeal File, Exhibits 6, 7. In essence, the COR indicated that Stroh would not be able to commence on-site work until October 15. Id. 4. Stroh responded with a letter to the contracting officer, stating its view that the COR's order that it could not proceed with on-site work until October 15 constituted a change order entitling Stroh to an extension of time to perform and an equitable adjustment to its contract price to compensate for increased costs occasioned by reason of the delay. Appeal File, Exhibit 7. 5. The contracting officer responded to Stroh's letter concerning this issue in a letter dated July 5, 1990. That letter took the position that the 240-day period for completion of the work included four months of lead time for ordering equipment and supplies, and stated that it would "not be reasonable to shut down the cooling system during the summer months." Appeal File, Exhibit 8. 6. The contract incorporated various standard construction contract clauses, including GSAR 552.236-79, "Use of Premises." This clause provides in pertinent part that (a) If the premises are occupied, the Contractor, his subcontractors and their employees shall comply with regulations governing access to, operation of, and conduct while in or on the premises and shall perform the work required under this contract in such a manner as not to unreasonably interrupt or interfere with the conduct of Government business. Appeal File, Exhibit 1, 37. 7. Paragraph 1.3 in the summary of the work included in the contract governs contractor use of the premises: A. General: The Contractor shall limit his use of the premises to the work indicated, so as to allow for Government occupancy and use. 1. Use of the Site: Confine operations at the site to the areas permitted under the Contract. Portions of the site beyond areas on which work is indicated are not to be disturbed. Conform to site rules and regulations while engaged in project construction. 2. Contractor Use of the Existing Building: Maintain the existing building in a safe and weathertight condition throughout the construction period. Repair damage caused by construction operations. Take all precautions necessary to protect the building and its occupants during the construction period. Appeal File, Exhibit 1. 8. The summary of the work also specifies that the Government will occupy the building during the construction period: Full Government Occupancy: The Government will occupy the site and the existing building during the entire period of construction. Cooperate fully with the Government representative during construction operations to minimize conflicts and to facilitate Government usage. Perform the work so as not to interfere with the Government operations. Appeal File, Exhibit 1. The contract repeats this point in paragraph 1.5.C. of the summary of the work. Id. 9. The contract contains specific provisions requiring noise control and mandating that reasonable precautions be taken to prevent injury to occupants of the building. In addition, a specific provision states that corridors and other routes of ingress and egress used by building occupants shall not be obstructed by the contractor's activities. Appeal File, Exhibit 1, 01010, 3.4E; 01546, 3.2. 10. By letter dated August 22, 1990, Stroh submitted a formal certified claim seeking an equitable adjustment of $129,876 and an extension of 130 days to complete performance of the contract. Appeal File, Exhibit 11.[foot #] 1 11. In a letter dated November 6, 1990, the contracting officer denied Stroh's claim. Relying on the contract clauses indicating that the building would be occupied during the construction period, and on the requirement that the contractor not unreasonably interfere with the Government's conduct of business, the contracting officer concluded that Stroh should have expected that it would not be permitted to commence on-site work prior to mid-October. The letter stated: It is patently obvious that the removal of the building's total air-conditioning system during the normal air-conditioning season would unreasonably interfere with the use of the building and the conduct of Government business. Appeal File, Exhibit 13. The contracting officer then stated the view that the omission of a provision indicating whether the existing air-conditioning system could be removed during the summer months was a patent omission that charged prospective contractors with the duty to request a clarification. Id. Discussion Both parties have moved for summary relief on the issue of Stroh's entitlement to recover, arguing that the question presented is one of contract interpretation, which is a matter of law and thus often amenable to decision on summary judgment. See, e.g., Government Systems Advisors, Inc. v. United States, 847 F.2d 811, 812 n.1 (Fed. Cir. 1988) (citing P.J. Maffei Building Wrecking v. United States, 732 F.2d 913, 916 (Fed. Cir. 1984); Seaboard Lumber Co. v. United States, 19 Cl. Ct. 310, 314 (1990)). After reviewing the record and the contentions of the parties, we agree that there is no genuine issue of fact in dispute concerning the intentions of the parties to the contract soas to precluderesolving the issuepresented summarily.[foot #] 2 ----------- FOOTNOTE BEGINS --------- [foot #] 1 The monetary relief claimed by Stroh was subsequently revised to $151,734. [foot #] 2 We recognize that the mere fact that the parties have both alleged there is no genuine issue of material fact in dispute does not automatically establish that no hearing is necessary. See Favell v. United States, 16 Cl. Ct. 700, 713 ___ _______________________ (1989). In evaluating the materiality of the facts, it is only disputes concerning those facts that will affect the outcome of the case that count toward the determination of the availability of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. ________________________________ (continued...) ----------- FOOTNOTE ENDS ----------- The issue presented in this appeal is whether the absence of an explicit contract clause prohibiting removal of the cooling system during the summer months was a glaring omission that created an obligation to seek clarification from the Government prior to bidding. Both parties agree that there is no such provision in the contract. What is stated in the contract is that the building will remain occupied during the entire contract period and that the contractor may not unduly interfere with the conduct of Government business. We are thus required to resort to rules of contract interpretation to determine the effect of the provisions relied upon by respondent. The Government argues that there did not have to be an express provision. In its view, the clause prohibiting undue interference with the conduct of Government business necessarily gave rise to the understanding that the existing air conditioning system could not be removed or disrupted during the summer months. The notice to proceed was issued in June principally, according to the Government, to permit the contractor to make use of the four-month summer period as lead time for purchase of replacement equipment.[foot #] 3 The Government also urges that common sense dictates the result it supports. For example, it points to data published by the National Climatic Data Center demonstrating that the outside temperatures in Des Moines during the summer months frequently exceed eighty degrees and, on a number of days, exceed ninety degrees.[foot #] 4 According to respondent, the ----------- FOOTNOTE BEGINS --------- [foot #] 2 (...continued) 242, 248 (1986). After reviewing the record in this case, and the motions of the parties, we conclude that the facts affecting the outcome of this case are not in dispute. [foot #] 3 The Government also argues that it was obligated, once it entered into the contract, to issue the notice to proceed promptly. See Ross Engineering Co. v. United States, ___ _____________________________________ 92 Ct. Cl. 253 (1941). We are unpersuaded that respondent had no discretion whatever in this regard, however. It generally depends on the circumstances of each case as to when it becomes unreasonable to delay issuance of a notice to proceed. See, ___ e.g., Marine Construction & Dredging, Inc., ASBCA 38412, et al., ____ ____________________________________ 90-1 BCA 22,573. Here, given the Government's desire that the installed air conditioning system not be removed before October, coupled with the requirement that the work be completed within 240 days, it may have been reasonable to issue the notice to proceed at a later date. [foot #] 4 Appellant argues that the Board should not take judicial notice of the statistics offered by respondent. We do so only for purposes of deciding appellant's cross-motion, for which we are required to accept as true the facts proffered by respondent. ----------- FOOTNOTE ENDS ----------- temperatures in the building would have been "unbearable" had Stroh been permitted to remove the chillers and cooling tower prior to mid-October. Thus, activities preventing use of the air conditioning system would, in effect, unduly interrupt the conduct of Government business. As such, respondent contends that the omission of an explicit prohibition on site work during the summer months constituted a "glaring" error or omission of the type that places on the bidder a "duty to inquire" as to what is intended by the Government. For its part, Stroh maintains that at most the contract is ambiguous and subject to more than one reasonable interpretation. Stroh did not, in reviewing the contract documents, prepare its bid with the expectation that it would not be permitted to remove the existing system before October. The notice to proceed required prompt pursuit of contractual obligations and completion of the project within 240 days. It was wholly within the Government's discretion as to when to issue the notice to proceed. Moreover, Stroh regarded the prohibition on interfering with the conduct of the Government's business, read in the context of similar contract clauses, to require basically that the contractor not close off portions of the premises to Government employees, make undue noise, or create safety hazards, not as a requirement related to the temperature of the premises.[foot #] 5 The Board need not determine whether Stroh's interpretation of the contract was reasonable unless it first concludes that the absence of an express provision addressing the shut-down of the existing air-conditioning system did not create a glaring omission that rose to the level of a "patent ambiguity." The test for "[w]hat constitutes the type of omission sufficient to put [a contractor] under obligation to make inquiries cannot be defined generally, but on an ad hoc basis of looking to what a reasonable man would find to be patent and glaring." Max Drill, Inc. v. United States, 192 Ct. Cl. 608, 626, 427 F.2d 1233, 1244 ----------- FOOTNOTE BEGINS --------- [foot #] 5 We note that respondent, in making its argument, relies in part on regulations providing that temperatures in Government-occupied premises be maintained at between 76 and 80 degrees Fahrenheit during the cooling season. 41 CFR 101-20.107c)(1) (1990). Respondent suggests that appellant should be charged with knowledge of such regulations, which would impose on Stroh a duty to inquire as to the Government's intent given the absence of express instructions in the solicitation. Stroh responds that these regulations are for the purpose of energy conservation. In other words, Government buildings may not be cooled to temperatures lower than in the range specified in the regulation; the regulations do not actually require the Government to provide air-conditioning in its buildings. As such, it is not reasonable to expect Stroh to have construed these regulations in the manner suggested by the Government. ----------- FOOTNOTE ENDS ----------- (1970). The legal standard under which a prospective contractor is charged with a duty to alert the Government to a patent ambiguity is an objective one: Contractors are businessmen, and in the business of bidding on Government contracts they are usually pressed for time and are consciously seeking to underbid a number of competitors. Consequently, they estimate only on those costs which they feel the contract terms will permit the Government to insist upon in the way of performance. They are obligated to bring to the Government's attention major discrepancies or errors which they detect in the specifications or drawings, or else fail to do so at their own peril. But they are not expected to exercise clairvoyance in spotting hidden ambiguities in the bid documents, and they are protected if they innocently construe in their own favor an ambiguity equally susceptible to another construction. Blount Brothers Construction Co. v. United States, 171 Ct. Cl. 478, 496-97, 346 F.2d 962, 973 (1965). The Armed Services Board has suggested that the "most critical factor in deciding cases regarding the duty to inquire is the degree of scrutiny reasonably required of a bidder in order to perceive the discrepancy between contract provisions or omissions in the solicitation documents." Transco Contracting Co., ASBCA 25315, 82-1 BCA 15,516, at 76,974. This Board has similarly pointed out that a contractor has "only a finite time in which to prepare [its] bids and cannot be expected to note every potential problem of interpretation no matter how minor." Broyles & Broyles, Inc., GSBCA 5694, 81-1 BCA 14,969, at 74,080. The cases in which the courts and boards have charged a contractor with knowledge of a patent ambiguity usually involve rather clearcut discrepancies, obvious omissions, or drastically conflicting provisions on the face of the contract documents. The clearest case is where the contractor cannot comply with one specification without running afoul of another. For example, a patent ambiguity has been found where "[t]wo parts of the contract said very different things," i.e., the specifications called for construction on the second floor of three buildings, whereas the drawings called for construction on the second floor of only one of the buildings. Newsom v. United States, 230 Ct. Cl. 301, 676 F.2d 647 (1982). See Beacon Construction Co. v. United States, 161 Ct. Cl. 1, 314 F.2d 501 (1963) (drawings and specifications differed as to whether both doors and windows required weather stripping); Aqua-Trol Corp., GSBCA 5380, 81-1 BCA 15,136 (two "hopelessly irreconcilable" specifications, one requiring "molded construction" applicable to plastic, and the other calling for cast steel, imposed on contractor the burden of inquiry). In determining whether an ambiguity created a duty to inquire, the courts and boards have also, when appropriate, considered a variety of other factors, such as the conduct of other bidders, W.M. Schlosser Co., VABCA 1802, 83-2 BCA 16,630, the amount of recovery sought compared to the total contract price, Enrico Roman, Inc. v. United States, 2 Cl. Ct. 104 (1983), the amount of time available to review the contract documents and prepare a bid, Jordan & Nobles Construction Co., GSBCA 8349 et al., 91-1 BCA 23,659 (1990), and whether the contractor stood to gain anything of significance as a result of its interpretation, Kraus v. United States, 177 Ct. Cl. 108, 366 F.2d 975 (1966). Under the totality of the circumstances here, we cannot conclude that Stroh should have sought clarification of respondent as to whether it would be permitted to perform the necessary on-site work during the summer months. Stroh has produced affidavits from other bidders, uncontroverted by the Government, that they too had expected to commence site work upon receipt of the notice to proceed. Although the amount of recovery sought (some $151,734) is a large percentage of the contract price, this is not definitive[foot #] 6 given that the Government's interpretation of the clause precluding interference with the conduct of its business is a rather subtle one. As Stroh points out, the cooling system would not be entirely inoperative -- the fans would still be usable. In short, although the Government's interpretation has appeal with benefit of hindsight, the clause on which it relies, and the circumstances it urges imposed upon Stroh the duty to inquire, are simply not as clearcut as the Government would have us find. Having concluded that the omission was neither glaring nor patent, we now turn to the reasonableness of Stroh's interpretation. We find that its interpretation was indeed reasonable. The contract did not expressly preclude commencement of the on-site work and Stroh was entitled to proceed as it had intended. It is the obligation of the drafter of the contract, the Government, "to assure itself that it has accurately expressed its intent." Broyles & Broyles, Inc., 81-1 BCA at 74,078. Under the circumstances, Stroh, and the other bidders, had no basis to predict when the notice to proceed might issue nor could they necessarily have been expected to deduce that the Government had no alternative method of providing adequate cooling for the building. Absent explicit directions on the sequence in which work is to proceed, contractors would generally expect to be able to proceed with the work in the manner that they deem to be most efficient. It is ordinarily not the ----------- FOOTNOTE BEGINS --------- [foot #] 6 We note, moreover, that the question of whether Stroh is entitled to this amount of quantum has not yet been litigated; thus, it cannot be assumed that this in fact represents the amount of recovery the contractor would ultimately receive. ----------- FOOTNOTE ENDS ----------- Government's role, absent express language in the contract, to dictate when particular elements of the work will be performed. When, under such circumstances, the Government intrudes upon the contractor's ability to proceed as it has planned, the work is considered to have been changed. See Gary Hegler, AGBCA 89-145- 1, 92-1 BCA 24,561 (1991) (Government interfered with performance when contemplated by contractor); Hull Hazard, Inc., ASBCA 34645, 90-3 BCA 23,173 (Government directed order of work, which delayed overall completion of project); John Murphy Construction Co., AGBCA 418, 79-1 BCA 13,836 (Government prevented planned sequence of performance). The Government's order requiring Stroh to wait until October 15 to commence on- site removal of the existing equipment in effect changed the order of work under the contract, entitling Stroh to reasonable compensation and additional time for the delay. Decision Appellant's motion for summary relief is GRANTED. Respondent's motion for summary relief is DENIED. The appeal is granted as to entitlement. The parties have agreed to undertake negotiations as to the proper amount of appellant's recovery following issuance of this opinion. They are directed to inform the Board of the status of these negotiations on or before May 19, 1993. _____________________________ CATHERINE B. HYATT Board Judge We concur: ___________________________ ____________________________ ANTHONY S. BORWICK EDWIN B. NEILL Board Judge Board Judge