GRANTED IN PART: February 5, 1993 GSBCA 12128 GIANCOLA & ASSOCIATES, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Jeffrey S. Giancola, President, Giancola & Associates, Washington, DC, appearing for Appellant. Thedlus L. Thompson, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judge PARKER. PARKER, Board Judge. By notice dated October 9, 1992, Giancola & Associates, appellant, appealed the decision of the contracting officer for the General Services Administration, respondent, to award it only $425 in termination for convenience costs. At appellant's request, we have followed our small claims procedure, Rule 13(b)(1), and, accordingly, this decision has no precedential value, 41 U.S.C. 608(e) (1988). For the reasons stated below, we grant in part the appeal. Background On January 29, 1992, respondent's Procurement Management Training office requested quotations for instructors to teach a course in "Management of Defense Acquisition Contracts" (MDAC). Appeal File, Exhibit 1. On February 7, 1992, appellant sent a bid of $6,800 for a four-week course in Arlington, Virginia, id., Exhibit 2, and respondent issued Purchase Order #GS00C92ACMP324 to the firm on April 21, 1992, id., Exhibit 3. On May 11, 1992, respondent gave appellant the course materials, and appellant began reviewing them immediately. Id., Exhibit 9. On May 18, 1992, another procurement law instructor filed a protest at the General Accounting Office (GAO) concerning the award, id., Exhibit 8, and the contracting officer on May 27, 1992, told appellant by telephone that the MDAC course had been canceled, id., Exhibit 19. Respondent then issued a modification which canceled the purchase order and reduced the contract price to "$0.00." Id., Exhibit 5. On May 29, 1992, respondent asked the GAO to dismiss the bid protest as moot, on the grounds that: GSA has determined that defective evaluation criteria were used in evaluating the quotations received for instructional services for Sessions 216-5, 216-06 and 216-7, although the application of the criteria was not flawed as alleged. The scope of the problem with the criteria is being ascertained by the agency. Sessions 216-05, 216-06 and 216-07 of the Management of Defense Acquisition Contracts Course (Basic) have been canceled due to the use of defective evaluation criteria in the selection of instructors. Id., Exhibit 8. The GAO dismissed the protest on June 2, 1992. Id., Exhibit 10. On June 1, 1992, appellant filed a termination for convenience proposal with the contracting officer to recover $3,849.20, an amount based on an hourly teaching rate of $50 per hour, which appellant characterizes as the standard industry hourly rate. Appellant stated that he incurred 61 hours of preparation time. Id., Exhibit 9. Appellant also requested ten percent general and administrative (G&A) expenses, four percent profit, and reimbursement for four hours of legal work performed to prepare its termination proposal at $90 per hour. Id. After respondent did not reply, appellant asked that his proposal be converted into a claim by letter dated July 4, 1992. Id., Exhibit 11. In a final decision dated July 28, 1992, the contracting officer found appellant entitled to six hours of preparation time at a rate of $42.50 per hour, which is the $6,800 bid price divided by the 160 hour class period, for a total of $255. Id., Exhibit 12. Respondent also found appellant entitled to four hours of legal fees, again at the $42.50 hourly rate, for a total of $170. Discussion Respondent has asked us to dismiss this case for lack of jurisdiction, on the grounds that respondent's cancellation of the order before appellant could "accept" prevented a binding contract from being formed. As support, respondent cites 48 CFR 13.108(a) (1991) (Federal Acquisition Regulation (FAR) 13.108(a)), which states that a quotation from a contractor alone is not an offer, so that the Government's issuance of an order using the material from the quotation does not establish a contract. The purchase order is an offer by the Government to buy services from the supplier at "specified terms and conditions," and a contract comes into being when the supplier accepts the offer. Id. We begin by pointing out that, by deciding that appellant was entitled to termination costs of $425, respondent's contracting officer acknowledged the existence of a contract. The contracting officer was correct. Here, appellant provided the Government with a quote on February 7, 1992, and the Government converted that quote into an offer by issuing the purchase order on April 29, 1992. Next, respondent made the course materials available to appellant, and Mr. Giancola picked them up and began reading them on May 11, 1992, and continued doing so until May 27, 1992. The actions of both parties created a contract. So long as the contractor does not ask to change the terms of the contract after issuance of a purchase order, acceptance of an offer occurs once the contractor commences "substantial performance" of the order, which in turn creates a binding contract. Sunshine Cordage Corp., ASBCA 38904, 90-1 BCA 22,382, at 112,471 (1989) (citing Klass Engineering, Inc., ASBCA 22052, 78-2 BCA 13,236, at 64,716, modified and aff'd on recon., 78-2 BCA 13,463). Here, Mr. Giancola accepted the Government's offer by beginning his review of the course materials and thereby created a binding contract. See also Tefft, Kelly and Motley, Inc., GSBCA 6562, 83-1 BCA 16,177, at 80,388 (1982) (teaching contractor entitled to compensation for preparation expense incurred before Government terminated contract). Concerning quantum, we first find that appellant properly spent 61 hours preparing for the class, based on our review of the lengthy class instruction manual and the accompanying notes that appellant submitted. However, appellant claims $50 per hour for those hours, although its bid of $6,800, divided by the scheduled 160 hours of class, yields an hourly rate of $42.22. If we add the 61 hours of class preparation to the 160 class hours, the hourly rate drops to $30.77. We find that this lower rate of reimbursement is proper, since appellant won this firm- fixed-price contract by bidding $6,800, which was to include its preparation time, G&A expenses, and profit. See FAR 49.201(a) (settlement should compensate contractor fairly for both work done and preparations made, including profit, although fair compensation a matter of judgment). Thus, we award appellant $1,876.92 for class preparation. In addition, appellant, whose president is a licensed attorney, requests $90 per hour for the four hours spent preparing its termination for convenience settlement proposal. Appellant is entitled to settlement proposal preparation expenses incurred before the matter became a dispute, Richerson Construction, Inc. v. General Services Administration, GSBCA 11161, et al., slip op. at 39-40 (June 30, 1992), and we find that both the number of hours requested and the hourly rate are reasonable. Concerning interest, we find that appellant's letter of June 1, 1992, was, for attorney's fee recovery and all other purposes, a termination settlement proposal. Appellant's letter, dated July 4, 1992, however, constituted a Contract Disputes Act (CDA) claim. 41 U.S.C. 605 (Supp. IV 1992); FAR 52.223-1(c). We find significant both respondent's cutoff of communication with appellant during June 1992, after regular conversations during the preceding months, and the fact that appellant requested a final decision and referenced a sum certain in dispute in the text of the letter. Atlas Elevator Co., Inc. v. General Services Administration, GSBCA 11655, slip op. at 3 (Sept. 25, 1992) (claim must include adequate notice to contracting officer of basis and amount). Therefore, in accordance with the CDA, interest should run from the date of Government receipt of a proper CDA claim, Essex Electro Engineers, Inc. v. United States, 960 F.2d 1576, 1581 (Fed. Cir. 1992), which here is the date that respondent received appellant's claim dated July 4, 1992. Decision This appeal is GRANTED IN PART. Respondent is to pay appellant $2,236.92 in termination for convenience costs, with interest running from the day that respondent received appellant's claim, dated July 4, 1992. 41 U.S.C. 611 (1988). _____________________________ ROBERT W. PARKER Board Judge