_________________________________ GRANTED IN PART: August 23, 1995 _________________________________ GSBCA 12685 F.T.I. SYSTEMS, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Peter A. Foley, Charlotte, NC, counsel for Appellant. Sharon A. Roach and Sharon Chen, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), DEVINE, and DeGRAFF. DeGRAFF, Board Judge. This case arises out of a lease entered into between F.T.I. Systems, Inc. (FTI) and the General Services Administration (GSA). GSA decided to deduct $16,676.68 from FTI's rental payments and FTI appeals from that decision. For the reasons set forth below, the appeal is granted in part. Findings of Fact On March 11, 1991, GSA issued solicitation for offers (SFO) MNC91123, stating that it was interested in leasing approximately 19,000 net usable square feet (nusf) of office space in Charlotte, North Carolina to be occupied by the Bureau of the Census. The solicitation states in section 1.8 that, as part of their offers, offerors were required to submit plans of the area offered for lease. The solicitation does not contain a drawing of how GSA wished to lay out interior space. The solicitation states that GSA would provide the successful offeror with layout drawings. Appeal File, Exhibit 1; Transcript at 62. Section 9.1 of the solicitation provides, "See . . . Attachment II for general information . . . ." Attachment II provides, in part, "The below referenced room sizes are approximate." Attachment II then lists several types of rooms (e.g., two private offices, three coordinators' offices, mail/supplies room) and a number of square feet for each type of room. Appeal File, Exhibit 1. Section 3.1 of the solicitation reads as follows: Several paragraphs in this SFO specify means for determining quantities of materials. These are Government projections to assist the offeror in cost estimating. Actual quantities may not be determined until after the lease is awarded and the space layout completed. To enable an equitable settlement if the Government layout departs from the projection, the offeror must list a unit cost for each of these materials. GSA will use each unit cost to make a lump sum payment or rental increase if the amount of material required by the layout is more than specified or take credit from rental if the amount is less than specified. Offerors are required to state in the offer or in an attachment: The cost per linear foot of office subdividing ceiling-high partitioning. The cost per floor mounted duplex electrical outlet. The cost per wall mounted duplex electrical outlet. . . . . The cost per floor mounted telephone outlet. The cost per wall mounted telephone outlet. The cost per interior door. The cost per telepower pole. Appeal File, Exhibit 1. Section 5.10 of the solicitation provides that subdividing partitions would be provided at a ratio of one linear foot for each ten square feet of space. Section 6.8 provides that one duplex electrical outlet (floor or wall) and one telephone outlet (floor or wall) would be needed for every 100 square feet. Section 5.5 provides that interior doors would be provided at a ratio of one per 1,300 net usable square feet. Appeal File, Exhibit 1. These ratios ensured that all offers would be based upon the same quantities of materials, and this enabled GSA to compare "apples to apples" when it reviewed the offers it received. Transcript at 18. GSA Form 3517, which is appended to the solicitation, provides at General Clause 7, "When space is offered and accepted, the space will be mutually measured upon delivery. Payment will be made on the basis of actual measurement . . . ." General Clause 17 provides that changes to the lease could be made only in writing by the contracting officer. Appeal File, Exhibit 1. FTI owns a building in Charlotte, North Carolina. In early 1991, the exterior of the building, the parking lot, and the grounds were finished. The interior of the building had not yet been divided into rooms and finished. Transcript at 57-58. FTI submitted an offer to lease part of its building to GSA. With its offer, FTI submitted a drawing that shows how FTI wanted to lay out the interior space. FTI's president testified that FTI based its drawing upon the approximate room sizes listed in Attachment II to the solicitation.[foot #] 1 Transcript at 62-63, 82. When FTI calculated the amount of its offer, it did not use the ratios contained in the solicitation as the basis for estimating the amount of materials it would need. Instead, FTI used its drawing as the basis for its materials estimate and for the amount of its offer. Transcript at 62-63. A GSA realty specialist testified that, during negotiations with offerors, she always discusses the terms of section 3.1 of the solicitation. Transcript at 20. She discussed section 3.1, containing the ratios for determining quantities, with FTI after she received its offer and explained that the section is mandatory and "is how the government does business." Transcript at 20-21. Although she did not believe that FTI initially understood section 3.1, she spoke with FTI's subcontractor about the section and felt "pretty comfortable" that the subcontractor understood it. Transcript at 21. The realty specialist told FTI that its drawing could not be considered because GSA would provide a layout drawing after lease award. GSA did not take FTI's drawing into consideration when it reviewed FTI's offer. Transcript at 26, 104. In September 1991, at the request of the Bureau of the Census, FTI submitted a drawing of the area offered for lease, showing the area as it actually appeared (that is, not divided into rooms) so that the Bureau of the Census could prepare a layout drawing of the space. Appellant's Appeal File, Index and Exhibit D-2; Transcript at 66. The Bureau of the Census prepared ----------- FOOTNOTE BEGINS --------- [foot #] 1 In fact, there are several significant differences between FTI's drawing and Attachment II. Appeal File, Exhibit 1; Appellant's Appeal File, Exhibit D-1. ----------- FOOTNOTE ENDS ----------- its layout drawing and the drawing, dated February 3, 1992, was provided to FTI. Transcript at 67. When FTI realized that its layout drawing would not be used by GSA, FTI asked the GSA realty specialist if FTI could submit a new offer based upon the drawing prepared by the Bureau of the Census. The realty specialist told FTI that it could not submit a new offer because this would require GSA to resolicit. Transcript at 67-68. FTI contends that the realty specialist told FTI that GSA would "take care of it later" and would make unit cost adjustments later. Transcript at 68-69. The realty specialist testified that she never told FTI that she would take into account FTI's layout drawing and make adjustments based upon that drawing. She testified that she does not have the authority to make such a statement. Transcript at 27, 105. The GSA realty specialist was not the contracting officer. Transcript at 17; Appeal File, Exhibit 1. GSA accepted FTI's offer on April 27, 1992, and signed a lease the same day. Appellant's Appeal File, Exhibit 3; Appeal File, Exhibit 1. The terms of the lease include the provisions of the solicitation. The lease provides that FTI will lease 19,645 nusf of space to GSA from August 1, 1992, through July 31, 2002. Attached to the lease and made a part of the lease is Exhibit A, which is the layout drawing prepared by the Bureau of the Census employee.[foot #] 2 The arrangement of rooms shown in this layout drawing is completely different from the arrangement of rooms shown on the drawing that FTI submitted with its offer. The sizes of the rooms shown on the layout drawing contained in the lease are approximately the same as the sizes contained in Attachment II to the solicitation. The lease provides that GSA would pay FTI annual rent of $238,097.40 at the rate of $19,841.45 ($12.12 per nusf) per month. The lease also provides, "Rental is subject to a physical measurement and will be based on the rate, per net usable square foot (PNUSF) as noted above, and the actual total net usable square footage -- in accordance with GSAF 3517, General Clauses." Appeal File, Exhibit 1; Appellant's Appeal File, Exhibit D-1. ----------- FOOTNOTE BEGINS --------- [foot #] 2 A full-size version of Exhibit A is contained in Appellant's Appeal File as Exhibit D-5. ----------- FOOTNOTE ENDS ----------- The lease establishes the following unit costs: A. Ceiling-high partitioning $ 34.25 plf B. Floor-mounted duplex electrical outlet 206.00 ea. C. Wall-mounted duplex electrical outlet 41.00 ea. D. Floor-mounted telephone outlet 163.00 ea. E. Wall-mounted telephone outlet 32.00 ea. F. Interior door 239.00 ea. G. Telepower Pole 228.90 ea. The dollar amounts are the same as the amounts contained in FTI's offer. Appeal File, Exhibit 1. The Bureau of the Census took occupancy of the leased space on January 2, 1993. Supplemental Appeal File, Exhibit 16. On approximately February 10, 1993, GSA's building manager visited the leased space and completed a form titled "Mutual Measurement of Space." The form states that the inside gross area of the leased space is 19,859 square feet and that the toilets and lounges consume 548 square feet. The form also lists the linear feet of subdividing partitions (956), the number of non-fire rated doors (39), the number of electrical outlets (164), the number of telephone outlets (100), and the number of telepower poles (54) actually installed by FTI. The GSA building manager also determined that FTI installed 294 linear feet of non- subdividing partitions, for a total of 1250 linear feet of all types of partitions. Supplemental Appeal File, Exhibit 9. When determining the number of linear feet of subdividing partitions, the GSA building manager could not measure all of the walls because Bureau of the Census employees had already moved into the space. The GSA building manager measured some walls and found that they were the same length as the walls shown on a scale drawing of the space, and he then used the dimensions shown on the scale drawing in order to arrive at the total linear feet of subdividing partitions. The GSA building manager testified that the method he used to arrive at the total feet of partitions is the method used by every building manager and contractor with whom he has ever worked. Although GSA invited FTI to attend the mutual measurement, no one from FTI was present during the GSA building manager's visit, and FTI did not sign the form that he completed. Supplemental Appeal File, Exhibit 9; Transcript at 36-41. FTI's claim states that, according to the building permit, it installed 1271 linear feet of subdividing partitions. Appeal File, Exhibit 12. FTI's interrogatory responses state that it installed 1241.69 linear feet of subdividing partitions. Supplemental Appeal File, Exhibit 21. FTI's president testified that, sometime in 1994, he concluded that FTI installed 1244 linear feet of subdividing partitions. As for how he arrived at this conclusion, FTI's president stated that he "had the drawing and used that as a guide, measured and put the outside dimensions on those spaces of linear walls . . . ." Transcript at 97. In a letter to FTI dated March 3, 1993, GSA states that GSA is due a credit for certain materials. GSA explains that, based upon the ratios contained in the solicitation and the actual number of square feet being leased (19,311), FTI should have anticipated providing 1,931 linear feet of subdividing partitions, 193 electrical outlets, and 193 telephone outlets. Instead, FTI provided only 956 linear feet of subdividing partitions, 164 electrical outlets, and 100 telephone outlets. GSA's March 3, 1993 letter also states that it owes FTI for installing 39 doors instead of the 15 that FTI should have anticipated according to the ratios in the solicitation, and for providing 52 power poles, 73 junction boxes, nine doors with glass windows instead of standard doors, four double doors, one metal door, and one metal door instead of a standard door. GSA's letter concludes that GSA was entitled to a net credit of $12,237.78. Appeal File, Exhibit 3. On July 1, 1993, GSA sent Supplemental Lease Agreement 2 (SLA 2) to FTI. SLA 2 provides that, according to the February 10, 1993 measurement, GSA was leasing 19,311 nusf of office space and so GSA's rental payment (calculated at a rate of $12.12 pnusf) would be $234,049.32 per year or $19,504 per month. SLA 2 also provides that GSA is entitled to a net credit of $16,676.68. The net credit contained in SLA 2 is different from the net credit contained in the March 3, 1993 letter because GSA determined that it owed FTI for 53 power poles (instead of 52), for 25 junction boxes (instead of 73), and for seven doors with glass windows (instead of nine). Appeal File, Exhibit 6. FTI refused to sign SLA 2. Appeal File, Exhibits 8, 9. On August 30, 1993, the contracting officer sent a letter to FTI stating that GSA intended to take a credit for $16,676.68 by deducting this amount from FTI's rent payments. GSA arrived at this amount as follows: Quantity Actua Unit Items Ratio Per l Diff. Cost _____ Ratio Qty Total Subdividing 1:10 1931 956 (975) $ ($33,397 partitions 34.2 .18) 5 Wall Outlets 1:100 193 164 (29) 41.0 (1,189.0 0 0) Doors 1:1,30 15 39 24 0 239. 5,736.00 00 Quantity Actua Unit Items Ratio Per l Diff. Cost _____ Ratio Qty Total Power Poles 53 53 228. 12,131.7 90 0 Telephones 1:100 193 100 (93) 32.0 (2,976.0 0 0) Junction 25 Boxes 51.5 1,287.50 0 Diff. btwn std door and door w/ 7 glass window 97.9 685.30 0 Double doors 4 500. 2,000.00 00 Metal door 2 1 367. 735.00 [foot #] 3 50 Diff. btwn std door and 1 1 metal door 310. 310.00 00 Appeal File, Exhibit 11. Based upon these calculations, GSA deducted $16,676.68 from FTI's rent payments.[foot #] 4 Transcript at 58-59. FTI filed this appeal on November 30, 1993. Shortly before the March 28, 1995 hearing, the parties stipulated that the leased space consists of 19,554 net usable square feet. They also stipulated to actual quantities and unit costs (shown in parentheses) of the following items: Wall outlets ($41) 201 Doors ($239) 26 ----------- FOOTNOTE BEGINS --------- [foot #] 3 This number "1" appears to be a mistake. The contracting officer agreed to pay FTI for two metal doors. [foot #] 4 After the appeal was filed, GSA determined that the amount of the credit was incorrect. Appeal File, Exhibit 14. ----------- FOOTNOTE ENDS ----------- Power poles ($228) 53 Telephone outlets ($32) 207 Junction boxes ($51.50) 78 Doors with glass ($97.50) 8 Double doors ($500) 4 Metal doors with glass ($367.50) 2 Metal doors without glass ($310) 1 Joint Stipulation of Fact (Mar. 23, 1995). Discussion GSA contends that FTI should have used the ratios set forth in the solicitation in order to estimate the materials needed to construct the interior space, and that the ratios must be used in order to determine whether FTI or GSA is due a credit. GSA also contends that there were 956 linear feet of subdividing partitions installed. FTI contends that it was entitled to use the approximate room dimensions contained in Attachment II to the solicitation when it prepared the drawing that it submitted with its offer, and that the material estimates that it made based upon its drawing should be used in order to determine whether FTI or GSA is due a credit. FTI also contends that it installed more than 956 linear feet of subdividing partitions. We agree with GSA that FTI should have used the ratios set forth in the solicitation in order to estimate the materials needed in order to construct the interior space. The solicitation provides in section 3.1 that the ratios contained in the solicitation were government projections provided to assist offerors in estimating their costs, and that price adjustments would be made if the projections differed from the quantities of materials actually used during construction. Section 3.1 provided offerors with a common basis for estimating material costs, and this enabled GSA to evaluate all offers fairly. Although Attachment II contains approximate room sizes, Attachment II does not suggest how GSA might need to arrange rooms within the leased space and the solicitation did not contain any drawings of interior spaces. The lack of drawings is understandable, given that GSA could not have known, when it issued the solicitation, the configuration of the building it would eventually lease. Section 3.1 provided offerors with the means for estimating their material costs in the absence of drawings, and if FTI chose to estimate its costs by some other means, it did so at its own risk. Concerning the number of linear feet of subdividing partitions actually installed, GSA established that it determined that 956 linear feet of subdividing partitions were installed by measuring some walls, verifying that the walls were the same length as the walls shown on a scale drawing, and then using the dimensions shown on the scale drawing to arrive at the total number of linear feet of subdividing partitions installed. FTI's evidence concerning the linear feet of subdividing partitions it installed is inconsistent, and it is not clear how FTI made its measurements. The evidence introduced by FTI does not outweigh the evidence introduced by GSA. GSA established that FTI installed 956 linear feet of subdividing partitions. In its post-hearing brief, FTI contends that it relied upon GSA's representation that "any changes or additions would be taken care of later" and that this entitles FTI to recover the amount deducted by GSA. Appellant's Post-Hearing Brief at 2-3. Assuming that FTI means to advance an estoppel argument, the argument fails. Although the evidence establishes that GSA told FTI that its rent payments would be adjusted, the evidence does not establish that GSA told FTI that the adjustment would be based upon the drawing submitted by FTI instead of the ratios contained in the lease. In addition, the GSA realty specialist was not authorized to make changes in the terms of the lease. This authority belonged to the contracting officer. The amount that GSA should have deducted from FTI's rent payments is calculated as follows: Quantity Actua Unit Items Ratio Per l Diff. Cost _____ Ratio Qty Total Subdividing 1:10 1955 956 (999) $ ($34,215 partitions 34.2 .75) 5 Wall Outlets 1:100 196 201 5 41.0 205.00 0 Doors 1:1,30 15 26 11 0 239. 2,629.00 00 Power Poles 53 53 228. 12,084.0 00 0 Telephones 1:100 196 207 11 32.0 352.00 0 Junction 78 Boxes 51.5 4,017.00 0 Door with glass 8 window 97.5 780.00 0 Quantity Actua Unit Items Ratio Per l Diff. Cost _____ Ratio Qty Total Subdividing 1:10 1955 956 (999) $ ($34,215 partitions 34.2 .75) 5 Double doors 4 500. 2,000.00 00 Metal door with 2 glass 367. 735.00 50 Metal door without 1 glass 310. 310.00 00 Total Amount of Deduction (11,103. 75) Decision The appeal is GRANTED IN PART. GSA owes FTI $5,572.93, which is the difference between the amount deducted from FTI's rent payments ($16,676.68) and the amount that should have been deducted ($11,103.75). ____________________________ MARTHA H. DeGRAFF Board Judge We concur: _____________________________ ____________________________ STEPHEN M. DANIELS DONALD W. DEVINE Board Judge Board Judge