Appeal of
NATIONAL CONSTRUCTION COMPANY
Under Lease Agreements
PSBCA Nos. 3902 & 3929

APPEARANCE FOR APPELLANT:
Wade M. Welch, Esq.

APPEARANCE FOR RESPONDENT:
Mark T. Corbly, Esq.

OPINION OF THE BOARD

            Appellant, National Construction Company, has appealed from decisions of a contracting officer denying, in part, its claims for "restoration costs" associated with two buildings it leased to Respondent, United States Postal Service.  A hearing was held in Boston, Massachusetts.  With certain exceptions, as indicated below, only entitlement is at issue in this proceeding.

PSBCA No. 3902 – Buckland Station, Manchester, CT

FINDINGS OF FACT

GENERAL

            1.  In 1963, Appellant and Respondent^[1] entered into a lease for the Buckland Station, in Manchester, Connecticut.^[2]  The lease had an initial term of ten years and four five-year options exercisable by Respondent.  Respondent exercised all of the options, and the lease expired by its own terms on June 30, 1993.  (Stipulation, paragraphs (Stip.) 2, 3, 4, 8; Appeal File for PSBCA No. 3902, Tabs (3902 AF) 6, 10, 12, 14, 16).

            2.  The lease provided that the lessor would "furnish and pay for … sewerage service" and would "furnish heating system … to maintain uniform temperature of 70 degrees .…"  The lease further provided that

"The Lessor shall … maintain the demised premises, including the building and any and all equipment, fixtures, and appurtenances, whether severable or non-severable, furnished by the Lessor under this lease in good repair and tenantable condition, except in case of damage arising from the act or the negligence of the Government's agents or employees."

Finally, the lease also provided that

"The Government shall have the right to make alterations, attach fixtures and erect additions, structures or signs in or upon the premises …; which fixtures, additions or structures so placed in, upon or attached to the said premises shall be and remain the property of the Government and may be removed or otherwise disposed of by the Government.  Prior to expiration or termination of this lease the Government shall if required by the Lessor by notice in writing sixty days in advance of such expiration or termination, restore the premises to as good condition as that existing at the time of entering upon the same under this lease, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which the Government has no control, excepted."  (3902 AF 6).

Handicapped Access

            3.  In a letter dated April 22, 1988, Respondent's Manager of Support Services in Hartford, Connecticut advised Appellant that work might be necessary at Buckland to allow accessibility by handicapped individuals.  The purpose of the letter was to determine whether Appellant might be interested in doing the work, if it was necessary.  Appellant's president, William Rizzo, indicated that Appellant might be interested, depending on the scope of the work.  In February 1989, Respondent's personnel decided instead to apply to Respondent's Architectural Barriers Compliance Program Branch for a waiver of the accessibility requirements with respect to the Buckland station, and did so that month.  Mr. Rizzo was informed of the decision not to do the work when he telephoned the Support Services office that month.  By letter dated September 7, 1989, Mr. Rizzo asked that he be informed whether a waiver had been issued.  In a response dated January 23, 1990, Appellant was informed that a waiver had been requested but that the request had not been acted on.  The requested waiver was ultimately granted on July 13, 1990.  (3902 AF 17, 27 (exhibits Z, AA, BB); Respondent's Exhibit (Resp. Exh.) 1).  As of October 1997, there was no handicapped access ramp present at the facility (Transcript page (Tr.) 172).

Underground Oil Storage Tank

            4.  By letter dated February 8, 1990, Respondent notified Appellant that a test of the underground storage tank (for heating oil) at Buckland, which had been installed when the building was first constructed, had been scheduled for March 7, 1990.  Respondent asked for and received permission to conduct the test, at its expense.  Over the next few years, Appellant's president sent letters to Respondent asking the status of the test and indicating his interest in performing the work, if Respondent determined that the tank should be removed.  By letter dated June 24, 1993, shortly before the expiration of the lease, Appellant's president indicated his belief that Respondent was responsible for removing the tank and offered to provide a quote to perform the work.  The tank was eventually removed by Appellant in or about May 1994 (after lease expiration), at a cost of $1,654.25.  (3902 AF 27 (exhibits S, T, U, V, W) Appellant's Exhibit (Appnt. Exh.) 1; Tr. 39).  Underground heating fuel storage tanks were required to be removed in accordance with regulations of the State of Connecticut (Stip. 12).

Lease Expiration – Return of Building

            5.  By letter dated March 16, 1993, Appellant reminded Respondent that the lease would expire on June 30, 1993, and stated that prior to that date Appellant would make a "study of all restoration costs" involved.  In a letter dated June 22, 1993, Appellant advised Respondent that a preliminary inspection of the facility had been made on June 17, 1993.  Appellant further advised that a final inspection would be made after Respondent vacated the building and that Respondent would be "advised accordingly."  Respondent vacated the building on or before June 30, 1993.  (3902 AF 19, 21, 23).

            6.  By letter dated July 6, 1993, Appellant's president advised the contracting officer that he had not yet received the keys to the facility, following the end of the lease.  He stated that once he received the keys, Appellant would inspect the premises, and he implied that Appellant would seek compensation for the period of time it had been denied access.  In a second letter, dated July 13, 1993, Appellant's president stated that he had still not received the keys and that Appellant was unable to get into the building.  Appellant’s president stated that he had been unable to show the building to people who were interested in it.  (3902 AF 24, 25).

            7.  The record does not indicate that Appellant ever received the correct keys from Respondent.  On August 10, 1993, Appellant had the building opened and the locks changed by a locksmith, at a cost of $74.20.  (Tr. 48; Appnt. Exh. 3).

Concrete Curbs

            8.  During the course of the lease term, five concrete curbs (bumpers) that formed the border of the maneuvering area at the rear of the post office were removed by Respondent.  The cost to replace each curb was $80.00.  Restoring the area from which the curbs were removed required some reseeding.  (3902 AF 27 (exhibits L, M, P); Tr. 22, 24). 

Rear Platform

            9.  As originally constructed, the building had a loading platform at the rear, with wooden bumpers on its face to protect it from impacts by trucks.  At the expiration of the lease the wooden bumpers showed damage.  In addition, at some time during the term of the lease, Respondent had a concrete ramp constructed adjacent to the platform, from ground level to the level of the platform.  Railings were installed on the sides of the ramp, and bollards were installed at the lower end of the ramp to protect it and the railings from vehicles.  As of shortly before the hearing (several years after expiration of Respondent's lease), the ramp and bollards remained in place.  (Supplemental Appeal File (SAF) 32 E; Resp. Exh. 3; Tr. 171-173).

Restoration Claim - Buckland

            10.  Appellant filed an uncertified claim for restoration costs by letter dated December 2, 1993 (3902 AF 27).  Appellant's claim totaled $102,815.30 and consisted of 17 individual items, as follows:^[3]

            A.  General Repairs Deducted From Rent:  This item was for refund of deductions made in 1974 from rent otherwise due because of work apparently done by Respondent at the post office, which work was asserted by Respondent to be Appellant's responsibility.  Amount claimed: $854.96.

            B.  Concrete Curbs:  Removal of an unspecified number of concrete curbs (bumpers) from around the post office truck maneuvering area.  Amount claimed: $1,310.00.

            C.  Grills on Windows:  Damage due to security grills that were attached to the building over a number of windows.  Amount claimed: $4,700.00.

            D.  Painting:  Repair and repainting of walls damaged when posters and pictures were hung and removed.  Amount claimed: $4,400.00.  (Tr. 24-26; Supplemental Appeal File Tab (SAF) 32C).

            E.  General Cleanup:  Appellant's initial claim indicated that this item was for poor housekeeping by Respondent "from time to time."  At the hearing, Appellant's president stated that this item was for cleanup when the lease expired.  Amount claimed: $1,200.00.  (Tr. 28; SAF 32C).

            F.  Counters and Partitions:  This item was for the cost of rebuilding counters and partitions included in the building as originally constructed, but allegedly removed by Respondent at the expiration of the lease.  Amount claimed:  $2,300.00.

            G.  Repairs to Platform Area Rear:  Repair of wood bumper on the edge of the loading platform and removal of a ramp and bollards added by Respondent adjacent to the platform.  Amount claimed:  $7,360.00.  (Tr. 28-30).

            H.  Oil Storage Tank:  Cost of underground fuel storage tank removal (see Finding 4).  Amount of claim:  $7,969.00.  (Tr. 32; Appnt. Exh. 1).

            I.  Architectural Barriers Compliance Program:  Cost of work that Appellant contended should have been done at the post office to provide handicapped access facilities (see Finding 3).  Amount of claim (based on the amount stated in Respondent's waiver request as the cost of performing the work):  $17,158.00.  (Tr. 42).

            J.  Turning over building on July 1, 1993:  Lost rent between June 30, 1993, when the lease expired, and August 10, 1993, and the cost of the locksmith Appellant used to gain access to the building.  Amount of claim:  $2,189.80.  (See Findings 6, 7).

            K.  Travel to Accommodate the Government:  Mileage for travel to the Buckland Station to deal with "frivolous" maintenance claims by Respondent – six trips per year on average, over a 21-year period.  Amount of claim:  $7,484.40 (24,948 miles at $0.30 per mile).  (Tr. 49).

            L.  Labor Time:  Cost of labor to do maintenance items when Respondent threatened to have the work done by third parties – six trips per year on average, over a 21-year period.  Amount claimed:  $15,120.00 (504 hours at $30 per hour).  (Tr. 50).

            M.  Freedom of Information:  Cost of repairs allegedly performed by Appellant at the Buckland Station between 1971 and 1973 for which Appellant contends Respondent was liable.  Liability of Respondent allegedly discovered by Appellant as a result of a 1975 Freedom of Information Act request.  Repairs listed included "misc. repairs" and repairs to the furnace, hot water system and roof.  Amount claimed:  $1,023.45.  (Tr. 51-52).

            N.  Time To Do Work Necessary:  Unexplained in the claim letter, except that it was somehow connected with claim items B-G, above.  Amount claimed:  $9,250.00 (185 hours at $50.00 per hour).  (Tr. 57).

            O.  Flagpole:  Damage to flagpole through "negligence or design" of Respondent.  Amount claimed:  $2,735.00.

            P.  Replace all Storm Windows and Screens and Window Blinds:  No explanation of this item in claim.  Amount claimed:  $3,500.00

            Q.  Repair Brick Wall:  Repair of hole in a wall allegedly made by Respondent in order to install an exhaust fan.  Amount claimed:  $850.00.

The individual claim items totaled $89,404.61.  To this total, Appellant added 15 percent for overhead and profit ($13,410.69), for a total claim amount, as indicated above, of $102,815.30.  (3902 AF 27).

Contracting Officer's Decision

            11.  The parties met one or more times to attempt to resolve Appellant's claims, but were unsuccessful.  By letter dated March 28, 1995, Appellant's president certified the claims as required by the Contract Disputes Act and asked that the matter be referred to this Board.  In reply, in a letter dated April 24, 1995, the Contracting Officer stated that a final decision would be forthcoming by May 15, 1995, and that the matter would thereafter be referred to this Board.  (3902 AF 28‑35).  Ultimately, the Contracting Officer issued the final decision on or about October 25, 1995, granting the claim in part and denying it in part, as follows (including the Contracting Officer's stated reasons) (3902 AF 36):

            A.  General Repairs:  Denied.  Claim for repairs 20 years old is untimely.  Claim was denied in 1974.

            B.  Concrete Curbs:  Agreed that 9 curbs (bumpers) were missing and agreed to pay $80.00 each, for a total of $720.00.

            C.  Grills on Windows:  Agreed to pay requested amount on presentation of a receipted bill or cancelled check as evidence of payment by Appellant.

            D.  Painting:  Denied.  Appellant had responsibility for maintenance under the lease.

            E.  General Cleanup:  Denied.  Inspection by Postal Service personnel at time building was vacated showed it to be "broom clean."

            F.  Counters and Partitions:  Agreed to pay up to the claimed amount upon presentation of a receipted invoice or cancelled check indicating these items have been restored.

            G.  Repairs to Platform Area:  Denied.  Wood bumper showed merely the effects of 30 years of normal wear.  Other improvements are being utilized by current tenant and, therefore, have been accepted by National.

            H.  Oil Storage Tank:  Denied.  Lease did not require Postal Service to remove the tank.

            I.  Architectural Barriers:  Denied.  Lease did not require Postal Service to perform this work.

            J.  Turn Over of Building:  Agreed to pay an additional 13 days of rent, at claimed rate of $51.60 per day, allegedly representing the time until keys were actually received by Appellant.

            K.  Travel Time:  Denied.  Reimbursement for travel time is not required by the lease.  In addition, no evidence Postal Service required presence of National's representative on-site as frequently as claimed.

            L.  Labor Time:  Denied.   Same reason as for item K.

            M.  Freedom of Information:  Denied.  Claim is untimely.  Events took place 20 to 25 years earlier, and have not been documented.

            N.  Time To Do Work Necessary:  Denied.  See responses to items B-G, above.

            O.  Flag Pole:  Item has already been settled.  Payment made in 1982.

            P.  Replace Storm Windows, Screens and Window Blinds:  Agreed to pay up to the claimed amount for storm windows and screens, but not blinds, upon receipt of evidence of actual payment.

            Q.  Repair Brick Wall:  Agreed to pay the claimed amount upon receipt of evidence of actual payment.

            12.  By letter dated November 8, 1995, Appellant indicated that it wished to appeal the contracting officer's decision.  Appellant also indicated that the claim for removing the underground storage tank had been reduced to $3,100 to reflect its actual costs.  (3902 AF 37).

DECISION -- PSBCA No. 3902 -- Buckland Station^[4]

            Respondent argues that Appellant failed to provide the 60-day notice required by the lease (Finding 2) in that Appellant did not provide timely notice of the specific restoration that would be required, or expressly provide notice that any restoration would be expected.  In reply, Appellant argues that it provided the required notice through its letters of March 16 and June 22, 1993 (Finding 5) and that, even if there was not strict compliance, there was no prejudice to Respondent.

            We agree with Appellant.  Its letter of March 16, 1993, at a minimum alerted Respondent to the fact that Appellant intended to exercise what it viewed as its right to seek "restoration costs" at the facility.  The clause in the leases does not specify the contents of the required notice, but only mandates that it be given in writing.  While the lack of specificity might arguably affect Respondent's obligation to complete restoration prior to the expiration of the lease, that is not the issue before us here.  Further, until Respondent vacated the premises, the precise amount of work could not be determined.  See, e.g., Elizabeth Smith v. United States, 96 Ct. Cl. 326, 340 (1942).  Accordingly, we do not accept Respondent's argument.

            Concrete Curbs:  Respondent has conceded liability and has paid for nine curbs at $80.00 each for a total of $720.00.  Appellant argues that it is entitled to an additional $590.00 for reseeding the area (see Finding 8).  The record before us indicates that only five curbs were removed.  Accordingly, Appellant was entitled to recover $400.00 for the curbs themselves.  Appellant provided no evidence that would suggest that the $320.00 difference between the amount paid by Respondent and the value of the curbs actually removed was insufficient to cover the cost of reseeding.  Accordingly, for failure of proof, Appellant is not entitled to a recovery in excess of the amount allowed by the contracting officer.

            Painting:  Appellant argues that Respondent damaged the walls of the facility by putting holes in them for hanging pictures and posters and by taping other items to them.  Appellant argues that this damage was in excess of ordinary wear and tear, and cites several photographs as evidence of the damage.  The photographs, however, do not show the type of damage alleged by Appellant.  Contrary to Appellant's argument, the photographs show items hung on the wooden borders of bulletin boards, rather than on the walls themselves.  The evidence in the record is inadequate to demonstrate that Respondent damaged the walls beyond what would be considered ordinary wear and tear.  Accordingly, Appellant has not satisfied its burden of  proof and may not recover for this item.

            General Cleanup:  In its claim, Appellant indicated that this item was for poor housekeeping by Respondent "from time to time."  At the hearing Appellant appeared to assert that this item was for cleanup required at the expiration of the lease and cited several photographs as evidence.  An examination of the photographs does not show the conditions complained of by Appellant.  There is no indication that trash was left on the floors or that other unusual cleanup was required.  Accordingly, Appellant has not satisfied its burden of proof and may not recover for this item.

            Repairs to Platform Area Rear:  There are three parts to this claim:  damage to the platform bumpers, removal of the concrete ramp, and removal of the bollards.  Respondent argues that damage to the bumper has not been shown to have exceeded ordinary wear and tear.  As to the ramp and bollards, Respondent argues that inasmuch as they are in use by the succeeding tenant, Appellant has suffered no damage by Respondent's failure to remove them.

            As to the bumpers, Appellant has not offered any evidence that would suggest that the bumpers have been damaged to a degree that would exceed "reasonable and ordinary wear and tear."  See Finding 2.  With respect to the ramp and bollards, Appellant has not shown that it suffered any actual damage from Respondent's failure to remove these items.  Appellant did not incur the cost of removing either of the items.  Further, Appellant has not shown that the value of the property for rental purposes was diminished by the existence of the ramp and bollards.  See, e.g., J. Leonard Spodek d/b/a Alabama Postal Holdings, PSBCA No. 3964, 97-2 BCA ¶ 28,995; KMS Development Co. v. General Services Administration, GSBCA No. 12584-R, 97-1 BCA ¶ 28,968 and cases cited therein.  For these reasons, Appellant has not satisfied its burden of proof and may not recover for these items.

            Oil Storage Tank:  Appellant argues that it installed the oil storage tank in accordance with the requirements of the Postal Service.  Appellant argues that it delivered an operational heating system to the Postal Service in 1963 and that the Postal Service was obligated to return the premises to as good a condition as that existing in 1963, excluding ordinary wear and tear and circumstances over which Respondent had no control.  Appellant contends that changes in law that led to the requirement that the tanks be removed are not circumstances over which Respondent (as part of the government) had no control.  Finally, Appellant argues that Respondent received a system that was in compliance with the law in 1963 and was required to return a system that was in compliance with the law as it existed in 1993.

            Respondent argues that there is no provision in the lease making it responsible for removing the oil tank.  Respondent argues that inasmuch as Appellant had maintenance responsibility over the facility under the lease, Appellant was liable to take whatever actions were necessary to maintain the system.  Respondent also argues the need to remove the tank did not arise out of any "act or negligence" by it.

            Having considered the arguments, we agree with Respondent and conclude that it is not liable for the cost of removing the tank.  Under the terms of the lease, Respondent's only restoration obligation was to restore the premises to as good a condition as existed at the time of entering into the lease, reasonable and ordinary wear and tear and damages by the elements or by circumstances beyond its control, excepted.  In this instance, there is no evidence of any damage to the oil storage tank at all, much less any damage that might have triggered Respondent's restoration obligation.  Further, Appellant has not shown that the restoration clause required Respondent to ensure that the premises complied with all local laws regarding fuel storage tanks when the facility was returned to Appellant at the termination of the lease.  Absent any lease language to the contrary, the lessor, as owner of the property, is liable for work mandated by local authorities. Charles and Lilly Hendlish, PSBCA No. 3661, 96-1 BCA ¶ 28,131, aff'd 113 F.3d 1255 (table).  Accordingly, Appellant may not recover the cost of removing the fuel storage tank.

            Architectural Barriers Compliance Program:  Appellant, citing Massachusetts law,^[5] argues that a purchaser of a property that should have been made handicapped accessible by the previous owner may be held responsible for making the required modifications.  Respondent argues that it was not obligated to make any such modifications, having received a waiver from the otherwise applicable requirements.

            Although the exact basis for Appellant's argument is not completely clear, it is apparently arguing that a subsequent purchaser of the property may be liable for the cost of making the required modifications and that this may reduce the price that Appellant might obtain for the property.  However, assuming without deciding the potential validity of Appellant's argument, Appellant has not identified any language in the lease that would have made Respondent responsible for making the property handicapped accessible, or offered any evidence that the waiver that Respondent secured was in violation of any statute or regulation.  Absent such evidence, there is no basis for Appellant's argument, and it may not recover the cost of making any required modifications.

            Turning over building on July 1, 1993:  Appellant argues that it is entitled to the equivalent of 41 days of rent plus the cost of rekeying the building, because the keys turned over by Respondent at the expiration of the lease did not work and because 41 days elapsed before it had a locksmith change the locks on the doors.  Respondent argues that, by itself, the failure to turn over the correct keys did not constitute a holdover by Respondent and did not entitle Appellant to recover the equivalent of rent.  Further, Respondent argues that since the actual cost of rekeying the building was $74.20, Appellant has been more than adequately compensated by the contracting officer's decision allowing $670.80 for 13 days.

            We agree with Respondent.  Although the contracting officer allowed the equivalent of 13 days of rent to compensate Appellant, there is no evidence that Appellant could not have secured the services of a locksmith almost immediately to allow it to gain access to the building upon expiration of the lease.  Although failure to vacate the premises at the termination of the lease would have constituted a violation of the lease, e.g., Prudential Insurance Co. of America v. United States, 801 F.2d 1295 (Fed. Cir. 1986); Peter Koutsos, et al., PSBCA No. 4114, 99-2 BCA ¶ 30,392; T.W. Cole, PSBCA No. 3076, 92-3 BCA ¶ 25,091, the evidence does not indicate that Respondent failed to vacate.  Further, failure to turn over keys, by itself, did not constitute continuing occupancy of the premises.  T.W. Cole, PSBCA No. 3076, 92-3 BCA ¶ 25,091.

As indicated by the evidence, the cost of the locksmith services was minimal, and seeking to avoid that expenditure did not justify waiting 41 days before gaining access or entitle Appellant to recover for that entire period.  Respondent is correct when it argues that payment for 13 days at the agreed-to daily rate adequately compensated Appellant for Respondent's failure to return the correct keys.  Appellant may not recover any additional payment under this claim.

            Travel to Accommodate the Government, Labor Time, and Time To Do Work Necessary:  All three of these claims fail for lack of proof by Appellant.  Appellant's president testified generally that the first two of these items involved travel time and labor by him and others employed by Appellant to travel to the Buckland Station in order to respond to allegedly frivolous maintenance claims by Respondent over a 21-year period.  However, Appellant offered nothing in the way of specific evidence to demonstrate that the maintenance claims were frivolous, that they were not Appellant's responsibility under the lease, and that Respondent directed that Appellant's employees, rather than local maintenance contractors, be called to the site.

            Absent such evidence with respect to these items, Appellant has failed to satisfy its burden of proof and we have no basis for awarding Appellant any recovery under these claims.

            The third of the items, "Time to Do Work Necessary," was completely unexplained in Appellant's claim letter.  This claim item listed six of the other claim items (B-G, above) and associated hours with each.  The testimony by Appellant's president regarding this item was brief and contradictory – first suggesting that the hours might be duplicative of the Labor Time and Travel to Accommodate the Government items^[6] and then, in response to leading questions from Appellant's counsel, stating that they were the president's hours "to negotiate or not negotiate" various other claim items.  Appellant provided no explanatory details that would shed any further light on the exact nature of this claim item.  Therefore, it has failed to meet its burden of proving entitlement to any recovery.

            Freedom of Information:  This claim apparently relates to deductions made from rent payments because of repairs made by Respondent on Appellant's behalf between 1970 and 1973.  Appellant's claim letter indicates that the deductions were for repairs made to the furnace, hot water system, and roof, plus an amount designated by Appellant only as "miscellaneous repairs."  As argued by Respondent, the repairs that were identified by Appellant represent repairs to items that were Appellant's responsibility under the lease, and Appellant has presented no evidence to demonstrate that the repairs were required because of damage caused by the "act or negligence" of Respondent (Finding 2).  In the absence of any such evidence, Appellant has failed to satisfy its burden of proof and may not recover under this claim.

PSBCA No. 3929 – Turnpike Station, Vernon, CT

FINDINGS OF FACT

GENERAL

            13.  In 1960, Respondent entered into an Agreement to Lease with The Wexler Family Trusts ("Wexler") under which Wexler agreed to lease a particular property in Vernon, Connecticut "upon which is or will be located a one story Cinder Block-Brick building" with specified dimensions.^[7]  The property was to be known as the Turnpike Station.  Respondent provided preliminary plans as part of the solicitation that led to the Agreement to Lease, which plans showed the final elevations (with respect to sea level) required for the building.  The preliminary plans contained no boring information or other information regarding subsurface conditions.  (3929 AF 1; Tr. 63, 64; Appnt. Exh. 4; Stip. 3).

            14.  By virtue of an assignment dated July 17, 1962, Appellant assumed Wexler's obligations under the Agreement to Lease.  Appellant drew the final construction plans for the building.  (Stip. 1, 3; 3929 AF 4 (clauses 14, 15), 68 (exhibit B, D)).

            15.  When Appellant began to excavate at the building site for a septic tank, it discovered that the water table was only about one-foot below the surface.  Anticipating that this would cause problems, especially with maintaining the septic system, Appellant's president asked Respondent if the grade for the building could be raised about 18 inches.  Respondent refused to agree to that change, since it desired to avoid having stairs at the entrance to the building.  (Tr. 65-67).

            16.  In October 1963, after the completion of construction, Appellant and Respondent executed the lease for the station.  The lease had an initial term of ten years and four five-year options exercisable by Respondent.  Respondent exercised all of the options, and the lease expired by its own terms on July 31, 1993.  (Stip. 1, 3, 5, 8; 3929 AF 4, 16, 19, 41, 60).

            17.  The lease provided that the lessor would "furnish and pay for … sewerage service" and would "furnish heating system … to maintain uniform temperature of 70 degrees .…"  The lease further provided,

"The Lessor shall … maintain the demised premises, including the building and any and all equipment, fixtures, and appurtenances, whether severable or non-severable, furnished by the Lessor under this lease in good repair and tenantable condition, except in case of damage arising from the act or the negligence of the Government's agents or employees."

Finally, the lease also provided,

"The Government shall have the right to make alterations, attach fixtures and erect additions, structures or signs in or upon the premises …; which fixtures, additions or structures so placed in, upon or attached to the said premises shall be and remain the property of the Government and may be removed or otherwise disposed of by the Government.  Prior to expiration or termination of this lease the Government shall if required by the Lessor by notice in writing sixty days in advance of such expiration or termination, restore the premises to as good condition as that existing at the time of entering upon the same under this lease, reasonable and ordinary wear and tear and damages by the elements or by circumstances over which the Government has no control, excepted."  (3929 AF 4).

Drainage Problems

            18.  Beginning shortly after construction of the building, and extending over a number of years, there were problems with drainage at the facility – both in the maneuvering area at the rear of the building and with the septic system.  The topic of drainage received a great deal of attention and generated a great deal of correspondence between the parties beginning in 1964.  The septic system problems were ultimately alleviated when the building was hooked into the town sewage system in 1974, and the exterior drainage problems were solved when the site was connected to the town storm drain system in 1985.  The latter work, including some regrading and repaving, was performed by Appellant pursuant to a supplemental agreement under which Appellant agreed to perform the work, and Respondent agreed to pay $14,728.  (Stip. 11; Tr. 75-78, 150, 153; 3929 AF 52-58, 68 (exhibits G-K, M-Y, AA-DD, FF, HH-LL, NN, OO, QQ, KKK-MMM, PPP-XXX)).

Holes in Brick Walls

            19.  During the time it occupied the building, Respondent cut holes in the outer brick wall in order to install ventilating fans.  Appellant's cost to repair those holes after Respondent vacated the building was $2,300.00.  (Tr. 93; SAF 31D).

Letters

            20.  As originally constructed, the building included letters spelling out "United States Post Office  Vernon, Connecticut" attached to a fascia board above the entrance.  At some point during the term of the lease, Respondent removed some or all of the letters to use on a different post office.  The value of the letters was $80.00 each, and at least 11 letters were removed.  The cost to repair and repaint the fascia board at the completion of the lease was $200.00.  (Tr. 96-97; SAF 31G).

Handicapped Access

            21.  In a letter dated April 22, 1988, Respondent's Manager of Support Services in Hartford, Connecticut wrote to Appellant and indicated that work might be necessary at the Turnpike Station to allow accessibility by handicapped individuals.  The purpose of the letter was to determine whether Appellant might be interested in doing the work, if it was necessary.  Appellant's president indicated that Appellant might be interested, depending on the scope of the work.  In January 1989, Respondent's personnel decided instead to apply for a waiver of the accessibility requirements with respect to the Turnpike station, and did so that month.  Mr. Rizzo was informed of the decision not to do the work when he telephoned the Support Services office in February 1989.  By letter dated September 7, 1989, Mr. Rizzo asked that he be informed whether a waiver had been issued.  In a response dated January 23, 1990, Appellant was informed that a waiver had been requested but that the request had not been acted on.  The requested waiver was ultimately granted on August 1, 1990.  (3929 AF 68 (exhibits A-6 –  A-9); Resp. Exh. 2).  As of the expiration of the lease there was no handicapped access ramp present at the facility (Tr. 184).

Underground Oil Storage Tank

            22.  When the post office was constructed, it included an underground fuel storage tank.  In approximately 1990, Respondent asked permission from Appellant to conduct a test of the tank.  In 1991, Appellant asked for the results of the test and whether any work was to be performed as a result of the test.  The record does not indicate whether Appellant received a response.  In April 1992, Appellant asked Respondent to take necessary actions to comply with Postal Service regulations, which Appellant apparently believed required Respondent to remove the tank, and offered to quote a price to do the work.  Ultimately, Appellant had the tank removed in or about May 1994 (after expiration of the lease), at a cost of $4,214.50.  (Appnt. Exh. 2, 4; 3929 AF 68 (exh. YYY, ZZZ, A-1)).  Underground heating fuel oil storage tanks were required to be removed in accordance with regulations of the State of Connecticut (Stip. 12).

Lease Expiration

            23.  By letter dated March 16, 1993, Appellant reminded Respondent that the lease would expire on July 31, 1993, and stated that prior to that date Appellant would make a "study of all restoration costs" involved.  In a letter dated June 22, 1993, Appellant advised Respondent that a preliminary inspection of the facility had been made on June 17, 1993.  Appellant further advised that a final inspection would be made after Respondent vacated the building and that Respondent would be "advised accordingly."  (3929 AF 62, 64).

Counters and Barriers

            24.  At the time Respondent vacated the post office, it removed barriers and counters that had been installed by Appellant during the original construction of the building (Tr. 183; SAF 31B; Appnt. Exh. 4 (sheet A-2)).  After expiration of the Postal Service lease, the next lessee converted the building to use as a restaurant.  In the process, all of the remaining interior walls were removed and the existing tile ceiling was replaced.  (Tr. 190, 192).

Fans

            25.  During the time it occupied the building, Respondent installed five ceiling fans.  In so doing it cut holes in approximately five ceiling tiles in order to mount the fans and run the necessary electrical wiring.  When vacating the building, Respondent removed the fans, leaving holes in the ceiling tiles and the electrical wires in place.  In order to restore the premises, Appellant had the damaged ceiling tiles replaced and the wires tied off.  (Tr. 94-96, 145-149; SAF 31F).

Restoration Claim – Vernon

            26.  By letter dated December 2, 1993, Appellant filed an uncertified claim for restoration costs (3929 AF 68).  The claim totaled $180,260.59, and consisted of 31 items, as follows: ^[8]

            A.  Drainage, Sewer and Repairs:  This claim item included 23 of the 31 items, including items such as installation of a catch basin, installation of dry wells, pumping out septic system, unspecified sewer line and lavatory repairs, furnace repairs, hot water heater, the difference between the amount paid by Respondent for grading/storm sewer hookup (Finding 18) and the actual cost of the work ($7,850), and travel time ($31,578.80) and labor time ($69,120)^[9] in connection with the drainage problems.  Amount claimed:  $117,682.34.

            B.  Removal of Counters, Barriers, etc.:  See Finding 24.  The amount claimed was Appellant's "guesstimate" of the original cost of installing the counters and barriers that were removed.  Amount claimed:  $7,300.00.  (Tr. 89).

            C.  Repainting and Repair of Interior Walls and General Cleanup:  Appellant provided no explanation of this item with its claim.  Appellant later alleged that it was necessary to repair and repaint walls that had been damaged by having had various items – e.g., pictures, posters, photographs -- hung on them.  Amount claimed:  $4,210.00.  (Tr. 90; SAF 31C).

            D.  Restore Brickwork:  See Finding 19.  Amount claimed:  $2,300.00.

            E.  Broken Light Lenses:  Appellant provided no explanation of this item.  Amount claimed:  $60.00.

            F.  Fans:  See Finding 25.  Appellant's claim included both the cost of repairing the ceiling and the cost of the fans, which Appellant claimed became its property.  Amount claimed:  $3,700.00.  (Tr. 96, 146).

            G.  Letters on Post Office:  See Finding 20.  Appellant claimed the value of 11 missing letters and the cost to repair the fascia board.  Amount claimed:  $1,080.00.

            H.  Oil Storage Tank Compliance:  See Finding 22.  Appellant claimed the estimated cost of removing the storage tank.  Amount claimed:  $8,390.00.  (Tr. 99).

            I.  Handicapped:  See Finding 21.  Appellant claimed the cost of work it contended should have been done at the building.  Amount of claim (based on the amount stated in Respondent's waiver request as the cost of performing the work):  $12,026.00.

The individual claims totaled $156,748.34.  To this total, Appellant added 15 percent overhead and profit ($23,512.25), for a total claim of $180,260.59.  (3929 AF 68).

Contracting Officer's Decision

            27.  The parties met one or more times in an attempt to settle the claims but were unsuccessful.  By letter dated March 28, 1995, Appellant's president certified the claims as required by the Contract Disputes Act and asked that the matter be referred to this Board.  In reply, the Contracting Officer advised that a final decision would be issued by May 15, 1995, and that the matter would be referred to the Board thereafter.  (3929 AF 72-75).  The Contracting Officer issued a final decision on or about November 3, 1995, granting the claims in part and denying them in part, as follows (including the Contracting Officer's stated reasons) (3929 AF 77):

            A.  Drainage, Sewer and Repairs:  All 23 of these items were denied.  The Contracting Officer cited the lease language making Appellant responsible for providing sewerage service and maintaining the building in "good repair and tenantable condition."  With respect to the travel and labor hours items, the Contracting Officer stated that there was no evidence that the Postal Service required the presence of Appellant's president at the site.

            B.  Removal of Counters, Barriers, etc.:  Denied.  After 30 years of service, these items had no remaining value.  Further, they were not needed by the next tenant, who converted the building to a restaurant.

            C.  Repainting and Repair of Interior Walls and General Cleanup:  Denied.  Appellant had responsibility for maintaining the premises, including painting, under the lease.

            D.  Restore Brickwork…:  Granted in part.  Agreed to pay $900.00.

            E.  Broken Light Lenses:  Granted.  Agreed to pay $60.00.

            F.  Fans:  Granted in part.  Agreed to pay $1,000.00 to replace ceiling tiles and cap fan wiring.

            G.  Letters on Post Office:  Granted in part.  Agreed to pay $550.00 for replacement and repair.

            H.  Oil Storage Tank Compliance:  Denied.  Respondent is not liable under the lease for removal of the tank.

            I.  Handicapped:  Denied.  Respondent is not liable under the lease for the cost of making the building accessible.

            28.  By letter dated November 21, 1995, Appellant filed a timely notice of appeal, requesting that its appeal be considered under the Contract Disputes Act of 1978 (AF 78).

DECISION -- PSBCA No. 3929 – Turnpike Station

            In this appeal, Respondent has made the same argument as in PSBCA No. 3902 with respect to Appellant's alleged failure to provide the 60-day notice required by the lease (Finding 17).  For the reasons explained in the Decision portion of PSBCA No. 3902, above, we also do not accept Respondent's argument in connection with this appeal.

            Drainage, Sewer and Repairs:  Appellant makes no specific legal arguments on the merits of this item, but appears to take the position that it is entitled to recover costs related to drainage and septic problems because of Respondent's refusal to allow it to increase the building and site elevations at the time of construction.  Respondent argues that when Appellant accepted the assignment of the Agreement to Lease from Wexler, Appellant agreed to be responsible for the site conditions, including subsurface conditions.  Respondent also argues that Appellant's obligation under the lease to provide "sewerage service" made it responsible for all the costs associated with that service.  Finally, Respondent argues that inasmuch as all of the events comprising this item occurred by 1985, Appellant's 1993 claim was barred by the six-year statute of limitations in 28 U.S.C. §2401(a).

            Contrary to Respondent's argument, the provisions of 28 U.S.C. §2401(a) do not bar this claim item.  The language of that statute specifically provides that "Except as provided by the Contract Disputes Act of 1978 …" civil actions against the United States must be brought within 6 years after the right of action first accrues.  Claims subject to the Contract Disputes Act of 1978 are governed by the provisions of that Act, which until passage of the Federal Acquisition and Streamlining Act of 1994 (FASA), P.L. 103-355, did not have any ''statute of limitations" for filing claims.  See People Management Inc., EBCA No. 390-5-87, 91-1 BCA ¶ 23,288; Sosa y Barbero Constructores, S.A. et al., ENGBCA No PCC-57, 89-2 BCA ¶ 21,754 at p.109,480 and cases cited.  Further, inasmuch as these leases were entered into prior to October 1, 1995, the six-year statute of limitations enacted by FASA does not apply.  See Motorola, Inc. v. West, 125 F.3d 1470 (Fed. Cir. 1997).

            However, we agree with Respondent that Appellant may not recover the costs it seeks.  To the extent that the claim represents problems caused by the site conditions, they remain Appellant's responsibility.  The Agreement to Lease, which formed the basis for the relationship between the parties, contains no provisions, such as a Differing Site Conditions or Changed Conditions clause, which would shift the responsibility for unexpected subsurface conditions from Appellant, as the contractor, to Respondent.  See Day v. United States, 245 U.S. 159, 38 S.Ct. 57 (1917); Simpson v. United States, 172 U.S. 372, 380 (1899).  Appellant has also not alleged any other facts or referred to any language that might have the effect of shifting the burden.  Absent such facts or language, the risk of unfavorable site conditions generally rests with the contractor. (Id.).

            At the time Appellant accepted the assignment of the Agreement to Lease from Wexler, the site location was known (see footnote 7), and Appellant was free to inspect the site before agreeing to build and lease the building.  Further, the record does not show, and Appellant has not argued, that Respondent made any representations or provided any data concerning the condition of the site that may have misled Appellant.  Appellant's sole basis for seeking to recover for these claim items appears to be that Respondent refused Appellant's request to raise the elevations of the building and site at the time construction began.  Appellant has not shown, however, that Respondent's refusal was arbitrary, inasmuch as raising the elevations apparently would have required the installation of steps at the entrance and made accessibility more difficult.  Accordingly, Appellant may not recover for those items, such as installation of dry wells, pumping out the septic system, and sewer line repairs, that may be traced back to the high ground water levels.  Because Appellant bore the risk of unfavorable site conditions and, in addition, for lack of proof,^[10] Appellant may not recover for the travel time and labor time its personnel allegedly spent dealing with the drainage problems at Vernon.

            Finally, Appellant claims entitlement to the difference between the amount it was paid by Respondent to perform certain work related to connecting to the town storm drain system and the amount the work allegedly cost Appellant.  The exact basis for this claim item is not clear, but there is no credible evidence in the record that indicates that the amount agreed to by the parties, and reflected in a supplemental agreement, was other than a voluntary agreement between the parties to perform certain work in return for a fixed payment.  Appellant has presented no evidence that would justify the Board's finding entitlement by Appellant to a greater amount.  Accordingly, Appellant may not recover on that portion of the claim.

            Removal of Counters, Barriers, etc.:  Appellant argues that the Contracting Officer, in deciding this item, applied the wrong standard – diminution of market value – rather than applying the correct standard – the cost of restoration.  Respondent argues initially that Appellant has failed to show that the counters and barriers were Appellant's property.  Second, Respondent argues that the counters and barriers would have had no value to any succeeding tenants and would have had to be removed in any event.

            We disagree with Respondent's contention that the counters and barriers were not Appellant's property.  They were installed by Appellant during the initial construction of the building and, therefore, were part of the property leased to Respondent, but owned by Appellant.  However, we agree with Respondent that Appellant has not shown that it was damaged by Respondent's removal of the counters and barriers.  The measure of damages for failure to restore is the cost of restoration or the diminution in the market value of the property, whichever is less.  J. Leonard Spodek d/b/a Alabama Postal Holdings, PSBCA No. 3964, 97-2 BCA ¶ 28,995.  As indicated above, the succeeding lessee of the building converted it to a restaurant and, in the process, removed all of the remaining interior walls -- i.e., those walls that remained after the counters and barriers were removed by Respondent.  There is no evidence that the counters and barriers that Respondent removed would have had any value to Appellant or to the succeeding tenant, or that they would not have been removed along with the balance of the interior walls.  Appellant has failed to show that Respondent's removal of the items diminished the market value of the property.  Under these circumstances, Appellant may not recover the value of these items.  See, e.g., J. Leonard Spodek d/b/a Alabama Postal Holdings, PSBCA No. 3964, 97-2 BCA ¶ 28,995; KMS Development Co. v. General Services Administration, GSBCA No. 12584-R, 97-1 BCA ¶ 28,968 and cases cited therein.

            Repainting and Repair of Interior Walls and General Cleanup:  Appellant argues that the walls were "butchered with pamphlets, photos, holes for hanging pictures and everything else and they left them that way."  In support of that testimony, Appellant cites the testimony of Appellant's president and photographs of the Turnpike Station in the record, as well as testimony by Respondent's Real Estate Specialist that the condition of the paint was poor.  Respondent argues that the photographs do not show what Appellant alleges they do and also argues that Respondent's Real Estate Specialist who viewed the building at about the time the lease expired testified that the building was in generally good shape, normal wear and tear excepted.

            From the record, it is not clear whether Appellant's president actually viewed the premises at the time the lease expired.  Further, the photographs cited by Appellant do not show the damage it alleges occurred.  While they do show items attached to the wooden borders of bulletin boards, they do not show items attached to the walls themselves or other damage to the walls.

            Appellant has not shown that Respondent damaged the walls beyond ordinary wear and tear, or that there is any factual basis for this claim item.  Accordingly, it may not recover the damages sought.

            Restore Brickwork:  Respondent has conceded liability for this item, and only quantum is at issue.  Appellant argues that the amount it sought ($2,300) represented a fair and reasonable estimate of the cost to repair the brickwork.  Respondent argues only that the evidence offered by Appellant – testimony by its president -- was inadequate, but offered no evidence of its own as to the cost of restoration.

            As indicated by Finding 19, we have accepted Appellant's evidence with respect to the cost of restoring the brickwork after removal of the ventilating fans.  Appellant's president has an extensive background as an engineer and contractor, and the estimate he offered, although not explained in detail, did not appear to be unreasonable on its face.  In the absence of any contrary evidence by Respondent, we accept Appellant's estimate as reasonable.  Accordingly, Appellant may recover $2,300 as the cost of restoring the brickwork.

            Fans:  Only quantum is at issue in this item.  Respondent has conceded liability for damage to the ceiling and the cost of capping the electrical wiring that had been left in place and allowed $1,000 of the $3,700 claimed.  On the theory that items attached to the building became the property of the building owner, Appellant's initial claim included the value of the fans as well as the cost of repairs.  In its brief, Appellant argues, for the first time, that the amount of the claim included the cost of correcting the ventilation in the building to replace the air circulation previously provided by the fans.  However, the testimony cited by Appellant in support of this argument made no mention of correcting ventilation as an element of the claim.

            Under the terms of the lease (Finding 17), fixtures attached to the building by Respondent remained Respondent's property.  Accordingly, the amount claimed by Appellant improperly included the value of the fans.  Inasmuch as Appellant did not break down its claim or provide evidence to separate out the value of the fans, it has provided no basis for determining the cost of repairing the ceiling and capping the wiring.

            Appellant has failed to meet its burden of showing that the amount allowed by the Contracting Officer did not represent an accurate estimate of the cost of repairing the ceiling and capping the wiring.  Accordingly, it may recover nothing more under this claim item.

            Letters on Post Office:  Only quantum is at issue in this item.  Appellant sought the cost of 11 letters at $80.00 each plus $200 to repair the fascia.  We have accepted Appellant's testimony that the value of the 11 missing letters was $80.00 each, for a total of $880.00, and that the cost to repair the fascia was $200.00.  Respondent argues only that Appellant's evidence was inadequate, but did not offer any evidence of its own or explain the basis for its allowance of only $550.00.

            As with the item to restore the brickwork, above, we accept Appellant's estimate of costs.  Accordingly, Appellant may recover the $1,080.00 claimed.

            Oil Storage Tank and Handicapped:  Appellant has not attempted to distinguish the situation at the Turnpike Station with respect to these two items from the situation that existed at the Buckland Station.  For the reasons stated above with respect to Buckland, Appellant may not recover under either of these items with respect to the Turnpike Station.

POSTAL SERVICE COUNTERCLAIM

            In its brief, Respondent asserts for the first time that it is entitled to an award against Appellant on the basis of alleged misrepresentations of fact in connection with Appellant's claims for the cost of removing the two oil storage tanks.  Respondent cites 41 U.S.C. §604 as authority for its demand.^[11]  The basis for Respondent's argument is that the amounts for tank removal set out in Appellant's 1993 claims (Findings 8 and 26) and certified in 1995, were in excess of the amounts Appellant had actually expended for tank removal in 1994.

            This Board, however, does not have jurisdiction to consider Respondent's claim, which is based on an alleged misrepresentation of fact under 41 U.S.C. §604. P.H. Mechanical Corp. v. General Services Administration, GSBCA No. 10567, 94-2 BCA ¶ 26,785; Hardrives, Inc., IBCA Nos. 2319 et al., 91-2 BCA ¶ 23,769; Comada Corp., ASBCA Nos. 26599, et al., 83-2 BCA ¶ 16,681; Warren Beaves d.b.a. Commercial Marine Services, DOTBCA No. 1324, 83-1 BCA ¶ 16,232.  Accordingly, we dismiss Respondent's counterclaim.

Summary

            As indicated above, the appeal under PSBCA No. 3902 is denied.  The appeal under PSBCA No. 3929 is sustained to the extent that Appellant may recover $2,300 (less $900, if actually paid) for restoring the brickwork and $1,080 (less $550, if actually paid) for the missing letters at the Turnpike Station.  In addition, Appellant may recover overhead in the amount of 10 percent, profit at 5 percent, and Contract Disputes Act interest.  PSBCA No. 3929 is otherwise denied.  Respondent's counterclaim is dismissed.

David I. Brochstein
Administrative Judge
Vice Chairman

I concur:
James A. Cohen
Administrative Judge
Chairman

I concur:
Norman D. Menegat
Administrative Judge
Board Member

[1]   Respondent was then the Post Office Department.  Pursuant to the Postal Reorganization Act, P.L. 91-375, 84 Stat. 719 (1970), all the functions, powers, and duties of the Post Office Department were transferred to the United States Postal Service and the Post Office Department was abolished.

[2]   The Post Office Department had originally entered into an "Agreement to Lease" with the Wexler Family Trusts in July 1962, under which the building was to be constructed and leased.  The Agreement to Lease was transferred to Appellant, which constructed the building and became the lessor under the resulting lease.

[3]   The item titles are those used by Appellant.

[4]  The Buckland claims designated A, C, F, O, P, and Q in Finding 10 were resolved prior to the hearing and are not at issue here.

[5]   Appellant states that it was unable to find any relevant Connecticut case law on the subject.

[6]    Time necessary to go to the site to "pacify them on frivolous claims."

[7]   The exact location of the site was changed in April 1961, by agreement between Wexler and Respondent (3929 AF 68 (exhibit A)).

[8]   The item titles are those used by Appellant.

[9]   The travel time and labor time items were calculated in a manner similar to the calculations involved in claim items K and L in the Buckland claim (Finding 10).

[10]   See Buckland claim items K, L, and N.

[11]   "If a contractor is unable to support any part of his claim and it is determined that such inability is attributable to misrepresentation of fact or fraud on the part of the contractor, he shall be liable to the Government for an amount equal to such unsupported part of the claim in addition to all costs to the Government attributable to the cost of reviewing said part of his claim.…" 41 U.S.C. §604.