__________________________________ GRANTED IN PART: November 3, 1993 __________________________________ GSBCA 11970 KELLER & SONS ENTERPRISES, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Sam Zalman Gdanski, Montebello, NY, counsel for Appellant. Michele M. Feher, Assistant Regional Counsel, General Services Administration, San Francisco, CA, counsel for Respondent. Before Board Judges DANIELS (Chairman), PARKER, and DeGRAFF. DeGRAFF, Board Judge. Keller & Sons Enterprises, Inc. (Keller) contracted with the General Services Administration (GSA) to provide a variety of services at a federal building. During the course of the contract, GSA made certain deductions from Keller's monthly payments, and Keller contends that the deductions were improper. As explained below, Keller's appeal is granted in part. Findings of Fact On July 10, 1989, GSA awarded contract GS-09P-89-KSC-0099 to Keller for providing janitorial and related services at the federal building in Tucson, Arizona. Keller was required to work a normal five-day work week, and was to be paid a fixed price per month for its services. The performance period was one year, with four one-year options. Appeal File, Exhibit 4. GSA exercised three of the options. Id., Exhibits 17, 45, 58. The federal building has an outside water fountain that Keller was required to maintain. The contract provides that Keller was required to perform a daily test in order to determine the pH level and chlorine content of the water, and to add chemicals to ensure that the proper chemical balance was maintained. Keller was also required to vacuum the fountain three times per week and to drain and clean the fountain twice each year. Appeal File, Exhibit 4 at III-J-1, III-J-21. The contract provides that "Figure G-1, Criteria for Deductions" was to be used to calculate the amount that GSA would deduct from Keller's monthly payments if there were deficiencies in Keller's work, if Keller failed to perform satisfactorily, or if Keller omitted work. Appeal File, Exhibit 4 at I-G-1, I-G-3. Figure G-1 explains that if Keller "omitted or unsatisfactorily performed" a task, GSA was entitled to deduct a specified amount per hour from Keller's monthly payments, based upon the number of hours needed to perform the task. For August 1, 1989, through July 31, 1991, the amount to be deducted for water fountain maintenance was $16.20 per hour. Id., Exhibits 8, 17. For August 1, 1991, through July 31, 1992, the amount to be deducted was $16.54 per hour. Id., Exhibit 45. The contract also permits GSA to make deductions from Keller's monthly payments in the event of a suspension of work. The contract defines a suspension of work as a period of time when "the building is closed due to inclement weather, unanticipated holidays declared by the President, failure of the Congress to appropriate funds, etc." The contract provides that the deduction rate will be equal to the monthly contract price divided by twenty-one, multiplied by the number of days that services were not provided. Appeal File, Exhibit 4 at I-G-6. The contract permits GSA's contracting officer to make changes in the services performed by Keller. If a change resulted in a decrease in either Keller's cost or time of performance, the contract provides that GSA was supposed to make an equitable adjustment to the contract price and to modify the contract accordingly. Appeal File, Exhibit 4 at II-I-18. On August 14, 1990, GSA wrote to Keller concerning the fountain. This letter is signed by GSA's Tucson field office manager, on behalf of the contracting officer's representative. The letter states that the fountain had been drained and had not been used since May 1, 1990. The letter also states that GSA did not know when, if ever, it would begin using the fountain again and, as a result, water testing, vacuuming, and semi-annual cleaning (April and October) were not required. GSA estimated that daily water testing required fifteen minutes per day, thrice-weekly vacuuming required thirty minutes per day, and semi-annual cleaning required four hours for each cleaning. GSA stated that, at $16.20 per hour, this amounted to $97.20 per month for water testing, $89.10 per month for vacuuming, and $64.80 per cleaning. In the letter to Keller, GSA stated that it intended to deduct $186.30 per month, except in April and October when it intended to deduct $251.10, for the work not being performed. Appeal File, Exhibit 16. GSA's calculations are based upon water testing being performed twenty-four days per month and vacuuming being performed eleven days per month. GSA took the following deductions associated with the water fountain: Period of Service Amount of Deduction October 1-31, 1990 $251.10 December 1-31, 1990 $186.30 January 1-31, 1991 $186.30 February 1-28, 1991 $186.30 March 1-31, 1991 $186.30 April 1-30, 1991 $251.10 May 1-31, 1991 $186.30 June 1-30, 1991 $186.30 July 1-31, 1991 $186.30 November 1-30, 1991 $186.30 January 1-31, 1992 $186.30 February 1-29, 1992 $186.30 April 1-30, 1992 $251.10 May 1-31, 1992 $186.30 June 1-30, 1992 $186.30 Appeal File, Exhibit 59. There is no evidence to suggest that deductions were taken for any months other than those listed above. The total amount of these deductions is $2,988.90. On October 11, 1991, Keller submitted a claim to the contracting officer concerning deductions to its monthly payments. Keller stated that GSA had taken deductions "each month since the first part of 1991 for non-service of a[n] outside water fountain." Keller asserted that the deductions were not proper because Keller stopped servicing the fountain for the convenience of the Government. Keller requested that GSA repay all amounts that had been deducted. Appeal File, Exhibit 46. On June 10, 1992, the contracting officer denied Keller's claim. According to the contracting officer, the deductions were appropriate because a suspension of work had occurred. The contracting officer stated that the August 14, 1990 letter to Keller explained the method by which the amount of each deduction was calculated. Appeal File, Exhibit 56. This appeal was filed August 10, 1992, and in its complaint, filed March 4, 1993, Keller alleges that no deductions were appropriate. The parties agreed to submit the case on the record. In its brief, Keller asserts that GSA should not have taken any deductions concerning the water fountain, because Keller incurred costs when it repaired the water fountain in 1990. Keller also asserts that the amounts deducted by GSA are inappropriate, and requests that the amounts be recomputed based upon Keller's "more accurate" cost figures. Keller concludes its brief by stating, "The Brief [sic] dispute here really concerns whose cost figures should be computed. Premised on the legal arguments submitted with respect to the claim above, Appellant takes the position that his own cost data should be utilized." During the life of the contract, the minimum wage rate that Keller was required to pay its janitors and cleaners was $6.04 per hour. Appeal File, Exhibits 5, 17, 45, 58. During the course of performance, the parties agreed that Keller's labor costs included this hourly amount, plus approximately $2.36 per hour for health and welfare benefits costs, workers compensation benefits costs, payroll taxes costs (FICA, FUTA, SUTA), bond costs attributable to labor, and insurance costs attributable to labor. Keller calculated its profit at ten percent, and GSA accepted this profit margin during the course of the contract. Appeal File, Exhibits 33, 34, 36, 48. Adding the minimum wage rate, Keller's other labor-related costs, and Keller's profit results in a total hourly labor cost rate of approximately $9.24 per hour. Discussion After a dispute arose between the parties, Keller submitted a claim to the contracting officer and the contracting officer rendered a decision. Keller filed this appeal within ninety days after it received that decision. Therefore, the Contract Disputes Act, 41 U.S.C. 601-613 (1988), provides us with jurisdiction to consider this appeal. We reject Keller's argument that, because Keller incurred costs when repairing the fountain in 1990, GSA is not entitled to reduce Keller's monthly payments. If Keller was not compensated properly for its repair costs, Keller should have submitted a claim to the contracting officer. Whether Keller is entitled to be paid for its repair costs has no bearing upon whether GSA is entitled to reduce Keller's monthly payments. Although the contracting officer's decision states that a suspension of work occurred, this is not accurate. According to the contract, a suspension would have been the result of an event, temporary in duration, which closed the entire federal building. Directing Keller to discontinue the work related to the fountain does not amount to a suspension of work. What occurred here was a change in the work required by the contract, even though the contracting officer did not give effect to the change by issuing a contract modification. A constructive change occurred when the fountain was drained and not refilled, which effectively deleted the daily water tests, thrice-weekly vacuuming, and semi-annual cleaning required by the contract. When work is deleted in a fixed-price contract, the Government is entitled to a downward equitable adjustment to the contract price. The amount of the adjustment is the reasonable cost that the contractor would have incurred if the work had been performed. The amount of the adjustment includes direct and indirect costs plus profit. The Government has the burden of proving the amount of the adjustment that is appropriate. Nager Electric Co. v. United States, 194 Ct. Cl. 835, 442 F.2d 936 (1971); J.S. Alberici Constr. Co., GSBCA 10306, 91-2 BCA 23,846; John N. Brophy Co., GSBCA 5122, 78-2 BCA 13,506; G & M Electrical Contractors Co., GSBCA 4771, 78-2 BCA 13,452. In order to calculate the amount that it would have reasonably cost Keller to perform the work that was deleted from the contract, we must ascertain the number of hours that it would have taken Keller to perform the daily water tests, thrice-weekly vacuuming, and semi-annual cleaning, and then multiply the number of hours by Keller's cost per hour. Keller does not dispute that the daily water test could be performed in fifteen minutes per day, that the thrice-weekly vacuuming could be performed in thirty minutes per day, and that the semi-annual cleaning required four hours for each cleaning. GSA's calculation that water testing was required twenty-four days each month is erroneous, as is its calculation that vacuuming was required eleven times each month. The correct calculations for both of these tasks are set forth below. The total number of hours that Keller would have taken to perform the daily water test (fifteen minutes per test), is as follows: Period of Service Work Days Per Month[foot #] 1 Hours Per Month October 1-31, 1990 22 5.50 December 1-31, 1990 20 5.00 January 1-31, 1991 21 5.25 February 1-28, 1991 19 4.75 March 1-31, 1991 21 5.25 April 1-30, 1991 22 5.50 May 1-31, 1991 22 5.50 June 1-30, 1991 20 5.00 July 1-31, 1991 22 5.50 November 1-30, 1991 19 4.75 January 1-31, 1992 21 5.25 February 1-29, 1992 19 4.75 April 1-30, 1992 22 5.50 May 1-31, 1992 20 5.00 June 1-30, 1992 22 5.50 ----------- FOOTNOTE BEGINS --------- [foot #] 1 We arrived at the number of days by consulting a calendar. ----------- FOOTNOTE ENDS ----------- Total Hours To Perform Daily Water Test 78.00 The total number of hours that Keller would have taken to perform the thrice-weekly vacuuming (thirty minutes per vacuuming), is as follows: Period of Service Vacuumings Per Month Hours Per Month October 1-31, 1990 14 7.0 December 1-31, 1990 13 6.5 January 1-31, 1991 13 6.5 February 1-28, 1991 12 6.0 March 1-31, 1991 13 6.5 April 1-30, 1991 13 6.5 May 1-31, 1991 14 7.0 June 1-30, 1991 12 6.0 July 1-31, 1991 14 7.0 November 1-30, 1991 13 6.5 January 1-31, 1992 14 7.0 February 1-29, 1992 12 6.0 April 1-30, 1992 13 6.5 May 1-31, 1992 13 6.5 June 1-30, 1992 13 6.5 Total Hours To Perform Vacuuming 98.0 The semi-annual cleaning was to be performed each April and October. GSA reduced the contract price during October 1990, April 1991, and April 1992. Keller would have taken a total of twelve hours to perform the cleaning during these months. Adding the number of hours that Keller would have taken to perform the daily water tests (78), the number of hours that Keller would have taken to perform the thrice-weekly vacuuming (98), and the number of hours that Keller would have taken to perform the semi-annual cleaning (12), yields a total of 188 hours of work which Keller did not have to perform, due to the constructive change in the contract's requirements. We must next determine what would have been Keller's reasonable hourly cost to perform this work. There is no evidence that the $16.20 per hour figure that GSA utilized has any relationship to Keller's performance costs. This figure was to be utilized in order to calculate GSA's damages if Keller failed to perform satisfactorily. More likely than not, the $16.20 figure reflects the loss to GSA if work is not performed, rather than the cost to Keller of performing the work. Neither party offered us any assistance in estimating what Keller's costs would have been if it had performed the work that was deleted from the contract. The appeal file contains sufficient evidence to permit us to conclude that Keller's costs plus a ten percent profit would have amounted to approximately $9.24 per hour. The total amount of the downward equitable adjustment to which GSA is entitled is $1,737.12 (188 hours x $9.24 per hour). GSA deducted a total of $2,988.90. Therefore, Keller's appeal is granted in the amount of the difference between these two figures, which is $1,251.78. Decision This appeal is GRANTED IN PART. Keller is entitled to recover $1,251.78 plus interest at the rate set forth in 41 U.S.C. 612 from October 11, 1991, until paid. _____________________________ MARTHA H. DeGRAFF Board Judge We concur: _____________________________ _____________________________ STEPHEN M. DANIELS ROBERT W. PARKER Board Judge Board Judge