GRANTED: August 21, 1995 GSBCA 12973 NVT TECHNOLOGIES, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Jeffrey A. Lovitky, Washington, DC, counsel for Appellant. Lydia R. Hakken, Office of Regional Counsel, General Services Administration, National Capital Region, Washington, DC, counsel for Respondent. GOODMAN, Board Judge. Appellant, NVT Technologies, Inc. (NVT), has entered into contract number GS11P91MJC0008 (the contract) with respondent, the General Services Administration (GSA), to operate and maintain all mechanical, electrical, plumbing, and utility services at the ACF Complex in Riverdale, Maryland. NVT appeals the contracting officer's decision dated November 21, 1994, denying its claim for $10,598 for repairs to a chiller at the facility. The parties elected to submit the appeal for a decision on the written record without a hearing pursuant to Board Rule 11.1 NVT elected the small claims procedure for claims in the amount of $10,000 or less as provided by Rule 13,2 and voluntarily waived its right to recover any portion of its ____________________ 1 48 CFR 6101.11 (1994). 2 The Board's small claim threshold has increased since the filing of the appeal to $50,000. claim in excess of $10,000.3 Pursuant to Rule 13, this decision has no value as precedent, and is unappealable in the absence of fraud. Findings of Fact 1. On June 5, 1991, GSA awarded the contract to NVT to perform operations and maintenance services at the ACF Complex, in Riverdale, Maryland. Appeal File, Exhibit 3. 2. Section C of the contract reads in part: Performance Work Statement A. The Contractor shall be responsible for providing all the services outlined in this performance work statement. Contractor shall be responsible for the management, operation, maintenance, repair and engineering of the facilities listed in this contract. Appeal File, Exhibit 1 at 21. 3. Section III of the contract reads in part: Maintenance Repairs Maintenance repairs are defined as unscheduled work required to prevent a breakdown of a piece of equipment or system or put it back in service after breakdown or failure. . . . . 2. All repairs where the total cost of labor, equipment, and materials is estimated to cost in excess of $2,000, but not to exceed $25,000 . . . . The Contractor shall be responsible for, and will not be reimbursed for, the first $2,000 for repairs in this category. Appeal File, Exhibit 1 at 134. 4. Section I.G of the contract reads in part: Cause of Deduction . . . . ____________________ 3 Respondent did not object to appellant's election of the small claims procedure. Board's Conference Memorandum, April 26, 1995. Should any equipment fail or become damaged as the result of incomplete or unacceptable performance or for nonperformance of Preventative Maintenance or repairs, the Contractor shall be held responsible for such failures and deductions will be made. Calculation of Deduction . . . . Deductions may be made for the full amount of all costs incurred by the Government to correct Contractor-caused damage, to restore damaged equipment or systems to an equal operational status as before such damage was incurred. Appeal File, Exhibit 1 at 57-58. 5. The chiller which is the subject of this appeal is chiller number 2, which is model number 19DH manufactured by Carrier Corporation. Appeal File, Exhibits 1, 32. The chiller contains a refrigerant, R-11, otherwise known as freon. Id., Contracting Officer's Statement of Fact and Position (Contracting Officer's Statement) at 1. 6. The contracting officer explained the heating and cooling system at ACF Complex as follows: [T]he heating and cooling system is a two-pipe system whereby the pipes in the winter circulate hot water heated by the boiler and provide heat. . . . In the summer, these same pipes circulate chilled water cooled by the chiller and provide cool air. During the heating season, the valves4 to the chiller remain closed in order to prevent hot water from entering the chiller. At the close of the heating season, the boiler is turned off. Typically, several days are allowed to pass in order for the water in the pipes to cool, then the chiller is turned on and the chiller valves are opened. Appeal File, Contracting Officer's Statement at 1. 7. Respondent alleges that "[a]s a safeguard, a rupture disc was connected to the chiller and acted as a plug for the refrigerant within the chiller." Respondent further explains that "the rupture disc [is] designed by the manufacturer to rupture when the internal pressure in the chiller rises above 15 PSIG. Freon, when heated to temperatures above 114 [degrees] ____________________ 4 These valves are identified elsewhere in the contracting officer's statement as "butterfly" valves. Fahrenheit, has a pressure of at least 15 PSIG." Respondent's Brief at 3-4. 8. On March 18, 1994, chiller number 2 was not in operation because the cooling season, which begins on April 15, had not begun. Appeal File, Contracting Officer's Statement at 1. 9. On March 18, 1994, NVT's subcontractor, R.E. Donovan, performed preventive maintenance on chiller number 2 to prepare for the upcoming cooling season. Appeal File, Exhibit 4. According to its record of the maintenance performed, R.E. Donovan changed the oil in the chiller and replaced the oil filter, refrigerant filter, oil recovery filter, and purge strainer. Id. During this preventative maintenance, R.E. Donovan did not check the chiller for freon or the rupture disc for leaks. Respondent's Brief, Exhibit 2 (Appellant's Response to Interrogatories 21 and 23). 10. According to NVT, on March 18, 1994, the boiler was in operation and all valves to the chiller were closed. Respondent's Brief, Exhibit 2 (Appellant's Response to Interrogatory 18). 11. On or about April 13, 1994, an NVT engineer reportedly turned off the boilers in anticipation of turning on the chiller. Appeal File, Contracting Officer's Statement at 3. 12. On or about April 15, 1994, the NVT engineer attempted to start the chiller but could not. Appeal File, Exhibit 9. 13. On the same day, R.E. Donovan inspected the chiller, at the request of the NVT engineer, and discovered that the rupture disc had ruptured and the freon had been released as a result. Appeal File, Exhibit 5. The failed rupture disc has been submitted to the Board as Exhibit 1 to respondent's brief. 14. The contracting officer states: Sometime between March 18, 1994, and April 15, 1994, the rupture disc connected to chiller No. 2 ruptured. This caused the R-11 in chiller No. 2 to be released. . . . . GSA surmises that the rupture disc failed because the R-11 inside the chiller heated to an unacceptable level. There is no evidence that the disk failed due to old age. The disk at issue does not manifest any of the characteristics of old age, i.e., splitting or cracking; alternatively, the entire center of the disc is gone, with no fragments of any sort. . . . This strongly suggests that the excessive pressure of the R- 11 inside the chiller No. 2 caused the disc to rupture. Such pressure in chiller No. 2 would have existed if the R-11 was heated above 115 degrees. Rupture discs are set by manufacturers to rupture when the internal pressure rises above 15 PSIG, and R-11, when heated to temperatures above 114, has a pressure of at least 15 PSIG. Appeal File, Contracting Officer's Statement at 2. 15. While Carrier Corporation has manufactured and serviced their model number 19DH chiller for approximately twenty years, Appeal File, Exhibit 32, no evidence was submitted to the Board as to the date the rupture disc was placed in chiller number 2. Respondent alleges that chiller number 2 is approximately twenty years old. Respondent's Brief at 14. An individual employed by the manufacturer of rupture discs, in a handwritten memorandum to NVT, stated: [Y]ou have a 3" Rupture Disk which has been in service for approximately (20) years,5 and has recently imploded without explanation. Since [rupture] disks use a "plastic impregnant" which can show signs of aging over the 20 years you mentioned, it would be a good maintenance procedure to replace these disks after a shorter time span (say 10 years). Appeal File, Exhibit 28. 16. Respondent offered affidavit testimony, Appeal File, Exhibit 32, from an individual whom they later moved to qualify as an expert (respondent's expert) in the area of operation and maintenance of chillers.6 Respondent's expert has been employed by Carrier Corporation since 1981, first as a service technician, and for the past five years as a service supervisor. He states: "As a past technician I have serviced, repaired and performed preventive maintenance on hundreds of chillers." Declaration of Frank Wheatley (July 17, 1995) 5 (attached as an exhibit to Respondent's Motion to Qualify an Expert Witness). In his affidavit testimony, respondent's expert states: ____________________ 5 The author of the memorandum did not inspect the subject disc to determine the relative age of the disc or its current condition. Respondent's Brief, Exhibit 2 (Appellant's Response to Interrogatories 26 and 27). Apparently, his response was based upon NVT's assumption that the disc was as old as the chiller. 6 Appellant did not object or otherwise file a response to respondent's motion, and the Board granted the motion on August 18, 1995. I am unaware of any industry standard time table which dictates the number of years of operation after which a rupture disc should be replaced. Following the rupture of a rupture disc connected to a chiller, if the ruptured disc lacked a center and the disc evidenced neither splits nor cracks, and further, fragments of the disc's center were not evident, my conclusion would be that the disc ruptured due to pressure above 15 lb. psig inside the chiller. . . . . If a rupture disc, because of the age of the disc, was cracked and leaked as a result thereof, the chiller would fill up with air. Under such circumstances, the refrigerant inside the chiller would leak out over time. A leak detector could demonstrate whether the rupture disc was cracked and leaking refrigerant. Appeal File, Exhibit 32. 17. The contracting officer offers the following explanation as to how the pressure in the chiller reached the level which caused the rupture disc to rupture: Hot water entered chiller No. 2 and caused the R- 11 in chiller No. 2 to heat to an unacceptable pressure for the rupture disc . . . . As a result, the rupture disc ruptured sometime between March 18, 1994, and April 15, 1994. This caused the release of R-11 and necessitated repair of chiller No. 2. Appeal File, Contracting Officer's Statement at 4. 18. The contracting officer believes "there are only two possible explanations for the entrance of hot water to the chiller . . . . The butterfly valves connected to the chiller (the return and supply valves) leaked hot water to the chiller . . . [or] [t]he valves connected to the chiller No. 2 were left open while the boiler was in operation. Appeal File, Contracting Officer's Statement at 5. 19. GSA had the butterfly valves independently tested and the company who performed the test concluded that the valves did not leak. Appeal File, Contracting Officer's Statement at 5; id., Exhibits 26, 27. 20. With regard to the possibility of the butterfly valves leaking, the contracting officer alleges further that "[e]ven assuming that the butterfly valves . . . did leak, pursuant to the Contract, NVT was responsible for performing preventative maintenance to ensure the integrity of these valves." Appeal File, Contracting Officer's Statement at 5. 21. The contracting officer concludes that: The valves connected to the chiller No. 2 were left open while the boiler was in operation. . . . The butterfly valves connected to chiller No. 2 may have been left open while the boiler was still in operation, either by R.E. Donovan when they inspected the operation of the chiller on March 18, 1994, or by NVT operators. . . . Possibly, when NVT's engineer . . . turned off the boilers to switch the system . . . for the summer months, he left the butterfly valves for the boiler open. Appeal File, Contracting Officer's Statement at 5-6. 22. On April 20, 1994, NVT, at GSA's request, submitted a cost proposal to repair the chiller, at an estimated cost of $4,172.57 to replace the blown rupture disc with a Carrier purge valve, and $10,272.63 ($12,272.63 less the $2,000 maintenance repair threshold) to repair the chiller. Appeal File, Exhibit 6. 23. On April 21 and April 22, 1994, Boland Services, NVT's subcontractor, repaired the chiller. The failed rupture disc was replaced with a Carrier purge valve and the chiller was refilled with refrigerant. Appeal File, Exhibit 7. 24. On April 22, 1994, NVT's contract manager submitted to the contracting officer's representative (COR) a summary of the events and requested authorization of payment for the repairs. Appeal File, Exhibit 8. 25. On May 9, 1994, the COR denied NVT relief for repairing the chiller based on his conclusion that: [T]he failure of the Chiller #2 was due to neglect and poor operating procedures of NVT personnel and not a failure of the equipment. The rupture disc is designed to rupture when the internal pressure inside the chiller exceeds 15 PSIG. The valves were not fully closed and allowed hot water to enter the chiller correspondingly raising the pressure to the release point of the rupture disc. Appeal File, Exhibit 12. 26. On May 23, 1994, NVT requested that the contracting officer issue a decision on its claim for repair costs. NVT claimed $4,566.25 for the Carrier purge valve and $10,767.03 ($12,767.03 less the $2,000 maintenance repair threshold) for repairs to the chiller. Appeal File, Exhibit 13.7 27. On September 12, 1994, NVT appealed this matter based on the contracting officer's failure to issue a decision on their claim. Appeal File, Exhibit 14. 28. On November 21, 1994, at the Board's request, the contracting officer issued a decision. The contracting officer granted the claim in part for $4,444.23 to replace the exploded rupture disc with a Carrier purge valve. NVT's claim for $10,598.03 ($12,598.03 less the $2,000 maintenance repair threshold) incurred to repair the chiller was denied. Appeal File, Exhibit 23. Discussion Pursuant to the contract, NVT is entitled to its costs in excess of $2,000 for unscheduled repairs to put a system back in service. Finding 3. NVT submitted a request for reimbursement for costs incurred in repairing a chiller following the failure of a rupture disc which caused freon to escape and prevented the functioning of the chiller. Finding 24. GSA has denied the claim, asserting that the failure of the chiller was due to neglect and poor operating procedures of NVT personnel and not a failure of the equipment. Finding 25. Thereafter, NVT submitted a claim and requested a contracting officer's decision. Finding 26. The contracting officer denied the claim. Finding 28. Pursuant to the contract, GSA need not reimburse NVT if "[the] equipment fail[ed] or [became] damaged as the result of incomplete or unacceptable performance or for nonperformance of Preventative Maintenance or repairs." Finding 4. There is no ____________________ 7 According to NVT's May 23 claim to the contracting officer, NVT expended $12,767.60 for the chiller repair and $4,566.25 for the installation of the Carrier purge valve. NVT submitted two invoices, one for repairs performed on chiller and the other for installation of the Carrier purge valve. However, the first invoice for chiller repairs in the amount of $12,767.60 included a claim for replacement of the rupture disc with the Carrier purge valve; such work is redundant, as in the second invoice NVT also claimed costs for this work. On October 20, 1994, at the Government's request, NVT submitted two separate invoices, one for the installation of the Carrier purge valve for $4,444.23 and another for repair of the chiller in the amount of $10,598.03 ($12,598.03 less the $2,000 repair threshold). Appeal File, Exhibits 19 at 2, 20 at 3. The contracting officer considered these amounts as NVT's final statement of its claim. Id., Exhibit 23. Respondent has not objected to this amount as ___ an accurate measure of NVT's costs for repairing the chiller in the event NVT's claim is granted. dispute that NVT repaired the chiller and incurred costs. The issue in this appeal is whether respondent has met its burden of proof to support its defense that the rupture disc failed as the result of NVT's incomplete and unacceptable performance or NVT's nonperformance of preventative maintenance or repairs. GSA's position is that NVT "introduced hot water into the chiller which caused the refrigerant therein to heat to an excessive temperature and reach an unacceptable pressure. This, in turn, caused the rupture disc connected to [the] chiller to rupture and the refrigerant to escape." Respondent's Brief at 2. However, GSA has not proven when or how this happened. The contracting officer asserts that "[s]ometime between March 18, 1994, and April 15, 1994, the rupture disc connected to chiller No. 2 ruptured." Finding 14. The contracting officer apparently reaches this conclusion because NVT's subcontractor performed preventative maintenance on the chiller on March 18, Finding 9, and the chiller failed to function when NVT attempted to start the chiller on April 15, Finding 12. On that day the chiller was examined and it was determined that the rupture disc had failed and the freon had escaped. Finding 13. The record in this appeal does not support the contracting officer's conclusion that the failure occurred between March 18 and April 15, 1994. NVT's subcontractor did not check the chiller for freon or the rupture disc while performing preventative maintenance on March 18. Finding 9. GSA itself states that "[r]espondent contends that Appeal File, Exhibit No. 4, accurately documents the preventive maintenance performed by [NVT's subcontractor] on March 18, 1994." Respondent's Brief at 15. The fact that the failure was discovered on April 15 does not necessarily lead to the conclusion that the failure occurred after NVT's subcontractor serviced the chiller on March 18. There is no evidence that NVT, its subcontractor, or anyone else, including respondent, knew as of March 18, 1994, whether the rupture disc had failed by then and whether there was freon in the system on that date. Neither party has suggested any reason why the failure could not have occurred before March 18. Not only is the record inconclusive as to when the rupture disc failed, it is also inconclusive as to why the failure occurred. The contracting officer states that "GSA surmises that the rupture disc failed because the R-11 inside the chiller heated to an unacceptable level." Finding 14. This conclusion is based upon his physical examination of the disc, which leads the contracting officer to conclude that there is "no evidence that the disk failed due to old age." The contracting officer therefore asserts that "[t]his strongly suggests that the excessive pressure of the R-11 inside the chiller No. 2 caused the disc to rupture." Id. There is no evidence in the record that the contracting officer has any familiarity, experience, or expertise with regard to rupture discs, what the discs should look like as they age, or how the discs should react when they burst from excessive pressure. While respondent's expert states an opinion as to the reason why a rupture disc missing a center may have failed, Finding 16, he does not state that he examined the actual disc that ruptured in chiller number 2, nor does he inform the Board how many failed rupture discs, if any, he has actually seen in the field, despite the assertion in his qualification that he has serviced hundreds of chillers. Respondent's expert therefore presents inconclusive testimony as to the age of the rupture disc, and his purported expert opinion lacks foundation. Thus, respondent's conclusion that the rupture disc must have failed because of excessive pressure because there is no evidence of failure from old age is not supported by either the contracting officer nor its expert. There is no evidence before the Board as to the age of the disc; only a statement that the chiller itself is approximately twenty years old. There is also no credible evidence as to how the disc would act as it ages. The expert's testimony seems to suggest that it would crack and leak, Finding 16, but there is nothing to suggest that the disc could not simply fail suddenly. Respondent has not proven that the disc failed as the result of excessive pressure. GSA further argues that excessive pressure caused the rupture disc to explode when "[a]ppellant introduced hot water into the chiller which in turn caused the freon within the chiller to heat to an excessive temperature and rupture the rupture disc." Respondent's Brief at 8. Again, the contracting officer speculates, rather than offering conclusive evidence, as to how this occurred, including the possibility of leaking butterfly valves or NVT leaving the valves open during boiler operation. Findings 18, 20, 21. We need not address these possibilities, as GSA has failed to prove that the cause was excessive pressure. Respondent offers an alternative argument -- "assuming arguendo that the Board accepts Appellant's contention that the failure of the chiller was attributable to a defect in the rupture disc, Respondent contends that Appellant was responsible under preventative maintenance for assuring that the rupture disc was not defective." Respondent's Brief at 2. Respondent then discusses several preventative maintenance procedures which it alleges would have detected the fact that the disc was going to rupture, and otherwise argues that NVT was responsible for "assuring the integrity of the disc." Id. at 14-17. This argument lacks merit for several reasons. The fact that respondent has not proven that the disc failed from excessive pressure does not necessarily mean that we accept the contention that the disc must have failed as the result of a defect in the disc. GSA has simply not proven that excessive pressure caused the disc to fail. If the cause was not excessive pressure, the cause may have been the age of the disc, rather than a defect. While GSA discusses various preventative maintenance procedures which they believe should have been used, they have not convinced the Board that the performance of these procedures would have ultimately prevented the failure of the disc, if the failure was caused by age or reasons other than excessive pressure. Also, respondent's expert admits he is "unaware of any industry time table which dictates the number of years of operation after which a rupture disc should be replaced." Finding 16. The existence of the contract clause allowing the contractor to be paid for unscheduled repairs, Finding 3, indicates that the parties contemplated the possibility that repairs may be necessary when no party was at fault, and the contractor was to be compensated therefore. Under the contract, NVT is to be paid for costs in excess of $2,000 unless it caused the need for the repair. Findings 3, 4. GSA presents various speculative and inconclusive explanations as to why they believe NVT is responsible for the failure of the rupture disc, but have failed to prove that any of their explanations depict what actually occurred. The record of this appeal does not show that NVT caused the need for the repair, either by its own actions or by a failure to perform preventative maintenance, nor does it support GSA's conclusion that the disc failure occurred between March 18 and April 15, 1994. NVT is entitled under the contract to its costs in excess of $2,000 for the repair of the chiller. With regard to quantum, the contracting officer considered $10,598.03 ($12,598.03 less the $2,000 repair threshold) as NVT's final statement of its claim. GSA has not objected to this amount as an accurate measure of NVT's costs for repairing the chiller in the event NVT's claim is granted. Finding 26. NVT has voluntarily waived its claim in excess of $10,000 for purposes of electing the Board's small claims procedure, and appellant is entitled to be paid this amount. Decision The appeal is GRANTED. Respondent is to pay appellant $10,000 plus applicable interest pursuant to the Contract Disputes Act of 1978. 41 U.S.C. 611 (1988). ________________________ ALLAN H. GOODMAN Board Judge