Appeal of

D. L. KAUFMAN, INC.
Under Contract Nos. 052571-94-B-0016 and 059986-92-B-0019
PSBCA Nos. 4159-4164 & 4256-4263

APPEARANCE FOR APPELLANT:
Stephen B. Hurlbut, Esq.

APPEARANCE FOR RESPONDENT:
Michael Propst, Esq.

OPINION OF THE BOARD

            On July 2, 1997, Appellant, D. L. Kaufman, Inc., filed a complaint in the United States Court of Federal Claims that included fourteen claims.  On January 8, 1998, the Court transferred six of the claims to this Board.  These claims were docketed as PSBCA Nos. 4159-4164.  On July 28, 1998, Appellant filed notices of appeal with this Board with respect to eight additional claims.  These eight appeals were docketed as PSBCA Nos. 4256-4263 and were consolidated with PSBCA Nos. 4159-4164 for further proceedings before the Board.  All of the claims considered in this Opinion arose under two Indefinite Quantity Contracts (IQC) Appellant entered into with Respondent, the United States Postal Service (Contract Nos. 059986-92-B-0019 and 052571-94-B-0016).

            A hearing was held in Los Angeles, California and in Arlington, Virginia.  Prior to the hearing, by agreement and stipulation of the parties, Respondent agreed to pay Appellant’s claims in PSBCA Nos. 4159, 4162 and 4163.  (See Stipulation of Fact Nos. 42, 55, 124; Transcript pages 5, 6).  Accordingly, based on the agreement of the parties, these appeals are sustained in their entirety and will not be addressed further in this Opinion.  At the request of the parties, both entitlement and quantum are at issue in the remaining appeals.

FINDINGS OF FACT
Background

            1.  On January 30, 1992, Respondent awarded IQC Contract No. 059986-92-B-0019 (contract 0019) to Appellant for repair and alteration of postal facilities in the Van Nuys, California area (Stipulation No. (Stip.) 12).

            2.  On December 22, 1993, Respondent awarded a second IQC, Contract No. 052571-94-B-0016 (contract 0016), to Appellant, also for repair and alteration of postal facilities in the Van Nuys, California area (Stip. 13).

            3.  Each IQC contained specified unit prices for described work items.  Bidders on the contracts were required to bid a multiplier of the unit prices that would be applied to each item of work ordered under individual work orders.  Appellant bid a multiplier of .845 under Contract No. 059986-92-B-0019 and .947 on Contract No. 052571-94-B-0016.  (Respondent’s Supplemental Appeal File Tab (RSAF) 1, 2).

            4.  Both contracts contained an Inspection and Acceptance—Construction clause (Clause 11-11) (October 1987), which provided:

            “The Postal Service will inspect the work as soon as practicable after completion.  Acceptance by an authorized Postal Service representative is conclusive except in the case of latent defects, fraud, gross mistakes amounting to fraud, or Postal Service rights under any warranty or guarantee.”  (Stip. 21; RSAF 1, 2).

            5.  The contracts also included a Payment clause (Clause 11-10) (August 1988), which required the Postal Service to pay the contractor the amount due under the contract upon completion and acceptance of the work and the submission of a properly executed invoice.  In addition, both contracts included a Prompt Payment for Construction Contracts clause (Clause FB-272) (March 1989), which provided, inter alia, for payment of interest when the Postal Service failed to make payment within fourteen days after receipt of a progress payment request or thirty days after acceptance of the work (Stip. 22, 23; RSAF 1, 2).

            6.  Both contracts contained Termination for Convenience clauses (Clause B-11) (October 1987), which authorized the Postal Service to terminate the contract, in whole or in part, when the contracting officer determined that termination was in the best interest of the Postal Service.  These clauses also provided that the contractor was entitled to be paid its cost, plus profit, on all work completed before the termination (RSAF 1, 2).

            7.  Appellant performed work under both contracts under separately negotiated and awarded work orders for projects at specific locations (Stip. 14). 

            8.  Typically, preparation for issuance of a work order began when the Postal Service requested a proposal from Appellant based on a scope of work prepared by an architect and engineering firm (A&E) employed by Respondent.  At the same time, the Postal Service prepared its own estimate of the cost to perform the work delineated in the scope of work.  (Stip. 14-16; Transcript Pages (Tr.) 774, 775, 793, 878).

            9.  Once Appellant submitted a cost proposal for a work order, the parties entered into negotiations.  At these negotiations Respondent was represented by its project manager as well as by the A&E who prepared the scope of work.  (Stip. 16; Tr. 53, 772, 773, 793, 794).

            10.  During work order negotiations, adjustments were made to the estimated quantities included in Appellant’s proposed work items as well as to what proposed work items were included.  In circumstances where no individual unit pricing item properly described the work to be accomplished or reflected its true cost, unit quantities were increased or other apparently unrelated work items were substituted by agreement of the parties during the negotiation.  Thus, compromises or “give and take” took place during the negotiations of the work orders at issue.  The goal of the negotiation process was to achieve an overall price for all the work contained in the scope of work.  (Tr. 37-39, 63-67, 769-773, 794, 836).

            11.  During performance of the work order, quantities of work actually performed could and would vary from those listed in the work order’s pricing units.  In the absence of a differing site condition or change in the scope of work, the parties did not consider such variations to form the basis for a renegotiation in the price of the work order.  (Tr. 68, 785, 786).

            12.  Also during performance of a work order, the parties considered that Appellant was free to substitute other “means and methods” for accomplishing the required scope of work, notwithstanding the inclusion of any particular pricing item in a work order.  For example, “scaffolding” was a price item in some of the work orders where work was to be performed at heights above eight feet.  However, Appellant was free to substitute the use of ladders or mechanical lifts instead of scaffolds to accomplish the work.  (Tr. 69, 70, 849, 850).

            13.  During the course of Appellant’s performance of a work order, Respondent and Appellant occasionally agreed to informal “trade offs” in which some aspect of the scope of work of a particular work order was reduced or eliminated in return for Appellant’s performance of additional work at that facility or under another work order at another facility.  In the typical case, these “trade offs” were not documented.  (Tr. 133-136, 405-408, 796, 797).

            14.  At the conclusion of Appellant’s performance of each work order at issue in these appeals (with the exception of the work order for the Northridge Post Office, PSBCA Nos. 4161 & 4164), Respondent inspected the work to determine whether it complied with the prescribed scope of work and accepted it (Answer, PSBCA Nos. 4159-4164 & 4256-4263; Tr. 164, 215, 362-372, 381, 384, 404, 731; Appellant Supplemental Appeal File Tab (ASAF) 74).

            15.  Subsequent to Appellant’s completion and the Postal Service’s acceptance of all but the Northridge project, and in conjunction with a Postal Inspection Service investigation concerning other contracts between the parties, Respondent employed a contractor to review each of the subject projects.  The purpose of the review was to determine the extent to which the tasks, quantities, or equipment described in the pricing items on the various work orders were accomplished or utilized.  The individuals who accomplished this review visited each site after the work was completed and compared the work performed with the line items on the work orders for that site.  In some instances, the reviewers interviewed local postal employees concerning their observations of Appellant’s work.  However, the reviewers did not utilize the drawings and surveys that delineated the scope of work for each project to determine whether the scope of work had been performed.  Moreover, Respondent’s contracting personnel were not interviewed to determine what purpose they had for including any particular pricing item in a work order.  In conducting these reviews, no effort was made to consult with Appellant to determine whether a particular pricing item had been accomplished and, if not, why not^[1].  (Tr. 481-491, 506-514, 677, 721-724, 732, 783).

PSBCA No. 4160 - Toluca Lake

            16.  On March 30, 1995, Respondent issued work order number 7 under contract 0016, in the amount of $2,256.48, to Appellant for Architectural Barriers Compliance (ABC) repairs and alterations at the Toluca Lake facility (Stip. 25; Appeal File (AF) Vol. I, Tab 30).

            17.  Appellant performed all the work required by work order No. 7, and the work was inspected and accepted by Respondent (Tr. 139-147, 357; Answer PSBCA No. 4160).

            18.  On August 11, 1995, Appellant submitted a final payment request to Respondent, in the amount of $2,256.48, for work order No. 7 (Stip. 26).

            19.  On August 23, 1996, Appellant submitted a claim to the contracting officer for Respondent’s failure to make payment of $2,256.48, plus Prompt Payment Act interest, for work order No. 7, and on July 2, 1997, after not receiving a decision from the contracting officer, Appellant filed suit in the United States Court of Federal Claims on the deemed denial of the claim by the contracting officer (Stip. 30; ASAF 100).

PSBCA Nos. 4161 & 4164 – Northridge

            20.  On December 19, 1993, Appellant submitted a proposal to perform work order No. 29 under contract 0019, for ABC repairs and alterations at the Northridge facility.  Negotiations were held on this proposed work order on January 3, 1994.  (Stip. 57, 58).

            21.  Respondent did not award the work order at that time.  Instead, in August of 1995, Respondent revised the scope of work order No. 29 to add work not originally included.  The added work included core-drilling, demolition, asphalt saw cutting, additional backfill, an additional handicap ramp, additional plumbing, additional plastering, additional carpeting, additional drywall and a temporary sidewalk.  (Stip. 59; Appellant’s Exhibit No. (AE) 12).

            22.  On January 10, 1996, prior to formally issuing the work order,

 Respondent verbally gave Appellant notice to proceed in accordance with the revised scope of work (Tr. 261-263; ASAF 37).

            23.  At a February 29, 1996 meeting between Appellant and Respondent, Appellant was again requested to begin work on work order No. 29.  Respondent assured Appellant that it would be paid for work on this project (Tr. 109-113, 263, 264, 411, 413; ASAF 140).

            24.  Appellant commenced work on the Northridge project during the latter part of March of 1996 (Tr. 264).  However, it was not until April 23, 1996, that Respondent formally issued the originally negotiated work order in the amount of $89,638.15.  (Stip. 60; AF Vol. III, Tab 7).

            25.  During construction, Respondent directed further revisions in the scope of work.  These revisions included adding an earthquake shut-off valve for the gas supply; a revised path of travel from the front of the facility to the handicap parking stall; modifying the water lines to the restrooms; constructing a “false wall” in the men’s restroom; adding an exhaust grill in the men’s restroom; lowering the restroom ceilings; adding light fixtures to the men’s restroom; modifying a wall in the men’s restroom; modifying the men’s locker room; adding handicap kick plates to the lobby doors; additional carpeting; additional servicing of temporary toilets; modifying the handicap parking areas and obtaining necessary permits.^[2]  (Stip. 62; Tr. 269-277, 295-297, 386-388, 967, 986-991; ASAF 47, 48, 50, 52, 55).

            26.  During construction, Respondent deleted certain items from the scope of work.  The deleted items included the installation of two sinks; a portion of the bathroom wall tile work; removal and patching of a bathroom window; and a portion of sanding and painting of interior walls.  (Tr. 296, 958-964).

            27.  On June 10, 1996, Appellant requested a modification, in the net amount of $19,599.65, for the added and deleted work.  Respondent inadvertently failed to approve this modification request at the time Appellant submitted the modification request.  (Stip. 63; Tr. 294-299, 654-660; ASAF 55).

            28.  Appellant also submitted a request for a progress payment on June 10, 1996, in the amount of $35,000, for work performed on work order No. 29 (Stip. 32; ASAF 63). 

            29.  On August 8, 1996, Appellant submitted a claim for $19,599.65, plus Prompt Payment Act interest, for Respondent’s failure to make payment on the proposed modification to work order No. 29 (Stip. 64; ASAF 64).

            30.  On August 8, 1996, Appellant also submitted a second claim to the contracting officer, for $35,000, plus Prompt Payment Act interest, for Respondent’s failure to make payment on Appellant’s $35,000 progress payment request^[3] (Stip. 34, 35 ASAF 63).

            31.  On August 15, 1996, the contracting officer terminated work order No. 29 for convenience, effective August 19, 1996 (AF Vol. III, Tab 1).

            32.  Appellant completed all the work required by work order No. 29, as

modified by Respondent, prior to the termination, except for work associated with providing striping, signage and bumpers for the handicap parking areas and some asphalt patching (Tr. 300).

            33.  The value of work not performed by Appellant on work order No. 29 was $4,258.05^[4] (Tr. 302, 973-975; AE 29).  Of this amount, Appellant previously included $1,197.80 as a credit to Respondent in its proposed modification to work order No. 29, dated June 10, 1996 (ASAF 55).

            34.  On October 30, 1996, Respondent issued a work order to another IQC contractor for work at the Northridge facility, including completing the work Appellant did not complete under work order No. 29 (RSAF Vol. III, Tabs 13, 14).  However, Respondent did not perform a field review of the line items of work left unperformed by Appellant in work order No. 29 before awarding this work order to complete work at the Northridge project (Tr. 610-613).

            35. On July 2, 1997, after not receiving a decision from the contracting officer on either claim, Appellant filed suit in the United States Court of Federal Claims (Stip. 30).

PSBCA No. 4256 - Pacoima-Arleta Station

            36.  On March 30, 1995, Respondent issued work order No. 2 to Appellant under contract 0016, in the amount of $9,093.61, for ABC repairs and alterations at the Pacoima-Arleta Station.  Respondent subsequently issued a change order to work order No. 2 that increased the price to $9,793.61.  (Stip. 66; AF Vol. 4, Tab 8).

            37.  During performance of the work order, the parties agreed to an informal “trade off” in which Appellant installed concealed door closers instead of surface mounted closers in return for deleting the handicap striping, handicap access aisle and parking stall (Tr. 159, 160).

            38.  Appellant completed all the work under work order No. 2, as modified, and Respondent performed a final inspection of Appellant’s work on October 2, 1995, and accepted the project (Tr. 164; AF Vol. 4, Tab 1; Answer PSBCA No. 4256).

            39.  On September 25, 1995, Appellant submitted a final invoice, in the amount of $9,793.61, for work under work order No. 2 (Stip. 67; Tr. 164).  On October 10, 1995, the A&E that designed the project and conducted the final inspection certified the invoice for payment (Tr. 165; ASAF 74).

            40.  Respondent did not make payment on this invoice and, on May 20, 1998, Appellant filed a claim with the contracting officer for payment of $9,793.61, plus Prompt Payment Act interest, under work order No. 2.  On July 28, 1998, Appellant filed a notice of appeal of the contracting officer’s deemed denial of the May 20, 1998 claim.  (Stip. 70, 71).

PSBCA No. 4257 – Hollywood-Universal City Branch

            41.  On March 30, 1995, Respondent issued work order No. 8 to Appellant under contract 0016, in the amount of $9,020.81, for ABC repairs and alterations at the North Hollywood-Universal City Branch (Stip. 72; AF Vol. 4, Tab 14).

            42.  The original scope of work of the project required Appellant to provide handicap accessible parking stalls; construct a concrete ramp and curb from the handicap parking stalls to the existing walkway; and to modify and upgrade the existing aluminum storefront doors (Tr. 189; AE 4).

            43.  During construction, Respondent directed changes to work order No. 8 requiring Appellant to provide a handicap writing desk, install aluminum handicap kick plates on the existing aluminum store front doors and to delete the handicap parking stalls (Tr. 189, 190).  On October 9, 1995, Appellant sent a proposed modification to Respondent in the amount of $1,736.00 for the changed work (Tr. 190, 191; AF Vol. 4, Tab 11; ASAF 107).  Appellant subsequently revised the amount of the modification request downward to $779.97 (Tr. 191, 195; AE 5).

            44.  Appellant completed all the work under work order No. 8, as modified, and the work was inspected by Respondent and accepted (Tr. 192, 197, 367-369; Answer PSBCA No. 4257).

            45.  On October 30, 1995, Appellant submitted a progress payment request in the amount of $9,000.00 for work order No. 8 (Stip. 73; ASAF 106).  Respondent did not make the progress payment and, on May 20, 1998, Appellant submitted a claim for the $9,000.00 progress payment request, plus Prompt Payment Act interest (Stip. 75, 76; ASAF 106).

            46.  On July 28, 1998, Appellant filed an appeal of the deemed denial of its May 20, 1998 claim (Stip.77).

PSBCA No. 4258 – North Hollywood-Valley Plaza Station

            47.  On March 30, 1995, Respondent issued work order No. 9 to Appellant under contract 0016, in the amount of $8,748.00, for ABC repairs and alterations at the North Hollywood-Valley Station (Stip. 78; AF Vol. 4, Tab 20).

            48.  Subsequent to issuing the work order, Respondent deleted certain work items and, as a result, Appellant proposed a credit to Respondent in the amount of $3,007.90 for the deleted work (Tr. 213, 214; AF Vol. 4, Tabs 15, 18 and 19).

            49.  Appellant inadvertently failed to include in its proposal any cost for an aluminum storefront replacement required by the scope of work, but performed this work without requesting any additional compensation.  Additionally, at Respondent’s request, Appellant provided a curb ramp even though the cost of installing a curb ramp was included in Appellant’s credit of $3,007.90 for deleted parking lot work.  (Tr. 255-257).  These items and all the other work required by work order No. 9, as modified, were completed by Appellant and inspected and accepted by Respondent.  The value of work performed by Appellant was $5,740.10.  (Tr. 215, 216; ASAF 113; Answer PSBCA No. 4258).

            50.  On February 14, 1996, Appellant submitted a progress payment request in the amount of $5,740.10 for work performed under work order No. 9, and on May 20, 1998, Appellant submitted a claim for $5,740.10, plus Prompt Payment Act interest, for Respondent’s failure to make payment on this progress payment request (Stip. 79-82; ASAF 113).

            51.  On July 28, 1998, Appellant filed an appeal of the contracting officer’s deemed denial of this claim (Stip. 83).

PSBCA No. 4259 & 4260 – Glendale-Grand Central Station

            52.  On March 30, 1995, Respondent issued work order No. 17 to Appellant under contract 0016, in the amount of $53,075.70, for ABC repairs and alterations at the Glendale-Grand Central Station (Stip. 84; AF Vol. 4, Tab 33).

            53.  During Appellant’s performance, Respondent directed certain changes to the scope of work and asbestos was encountered, requiring additional work by Appellant to abate the asbestos (Tr. 221, 222; ASAF 15, 16).

            54.  On December 28, 1995, Appellant submitted a proposed modification in the amount of $4,731.69, for the differing site condition (asbestos) and changed work (Tr. 225, 230-233; AE 10).  On January 26, 1996, Appellant submitted a proposed credit to Respondent in the amount of $851.87 for deleted asphalt paving work (Tr. 227, 228; AF Vol. 4, Tab 21).  Taken together, the two proposed modifications resulted in a net increase to the work order price to $56,955.52. 

            55.  Appellant performed all the work specified by the scope of work in work order No. 17, as modified by Respondent, including the additional work caused by the differing site condition (Tr. 224-226, 230, 235, 381).  The work was inspected and accepted by Respondent (ASAF 20-22; Answer PSBCA Nos. 4259, 4260).

            56.  On December 1, 1995, Appellant submitted a progress payment request in the amount of $21,495.65 (Stip. 85; ASAF 24).  On December 20, 1995, Appellant submitted a second progress payment request in the amount of $30,580.05.  The two progress payment requests totaled $52,075.70, and were less than the amount of the original work order price prior to Appellant’s proposed modification for Postal Service ordered changes and the differing site condition (Stip. 91; ASAF 23).

            57.  Each progress payment request was based on Appellant’s estimate of work performed to the date of the request (Tr. 226, 227).  Respondent’s A&E approved the first progress payment request, in the amount of $21,495.65 on December 11, 1995 (ASAF 18).

            58.  On May 20, 1998, Appellant submitted claims to the contracting officer seeking payment of both progress payment requests, plus Prompt Payment Act interest (Stip. 88, 94; ASAF 24).

            59.  On July 28, 1998, Appellant filed an appeal of the contracting officer’s deemed denial of these claims (Stip. 89, 95).

PSBCA No. 4261 – North Hollywood-Victory Center Station

            60.  On March 30, 1995, Respondent issued work order No. 21 to Appellant under contract 0016, in the amount of $21,691.69, for ABC repairs and alterations at the North Hollywood-Victory Center Station facility (Stip. 96; AF Vol. 4, Tab 42).

            61.  Appellant completed all the work, and Respondent inspected and accepted the work (Tr. 175-180, 362-366; AF Vol. 4, Tab 36; Answer PSBCA No. 4261).

            62.  On October 30, 1995, Appellant submitted a progress payment request in the amount of $21,000.00.  This amount represented the value of the completed work, less a small amount ($691.00) for two minor punch list items that were completed at a later date (Stip. 97; Tr. 181, 182; AF Vol. 4, Tab 36; ASAF 129, 136, 139).

            63.  Respondent never made payment on this progress payment and, on May 20, 1998, Appellant submitted a claim demanding payment of the $21,000.00 progress payment request, plus Prompt Payment Act interest (Stip. 99, 100; Tr. 183, 184; ASAF 124).

            64.  On July 28, 1998, Appellant appealed the deemed denial of this claim (Stip. 101).

PSBCA No. 4262 – North Hollywood-Laurel Canyon Annex

            65.  On March 30, 1995, Respondent issued work order No. 22 to Appellant under contract 0016, in the amount of $50,069.30, for ABC repairs and alterations at the North Hollywood-Laurel Canyon Annex (Stip. 102; AF Vol. 4, Tab 49).

            66.  Subsequent to issuing the work order, Respondent directed certain additions and deletions to the scope of work.  On October 12, 1995, Appellant submitted a proposed modification to Respondent of a credit in the net amount of $1,910.99, to reflect the additions and deletions to the scope of work (Tr. 242, 243, 384; ASAF 27, 30, 32).

            67.  Respondent did not respond to this proposed credit until January of 1999, when Respondent informed Appellant that it had accepted the credit (Tr. 247, 248; ASAF 155).

            68.  On October 24, 1995, Respondent inspected the work and issued a punch list of work remaining to be completed (Tr. 243, 244; ASAF 33).  Appellant completed the punch list items and, by letter dated January 15, 1996, informed Respondent that all work on the project had been completed.  Respondent accepted the project as complete.  (Tr. 243 244, 380, 381; ASAF 139; Answer PSBCA No. 4262).

            69.  On October 30, 1995, Appellant submitted a progress payment request in the amount of $32,698.71 (Stip. 103).  Appellant had previously invoiced for and been paid $14,870.59 under work order No. 22 (ASAF 34).  Thus, the progress payment request represented the balance of the work order price, less a proposed credit of $1,910.99 and less $589.01 to cover the value of the then-incomplete punch list items (Tr. 254).

            70.  Respondent never made payment on the progress payment request and, on May 20, 1998, Appellant submitted a claim for the unpaid $32,698.71, plus Prompt Payment Act interest (Stip. 105, 106; ASAF 34).

            71.  On July 28, 1998, Appellant filed an appeal of the contracting officer’s deemed denial of this claim (Stip. 107).

PSBCA No. 4263 – Van Nuys-Panorama City Station

            72.  On March 30, 1995, Respondent issued work order No. 23 to Appellant under contract 0016, in the amount of $65,548.41, for ABC repairs and alterations at the Van Nuys-Panorama City Station (Stip. 108; ASAF 79).

            73.  During construction certain differing site conditions were encountered which led to a redesign of the work, and the handicap parking lot work was deleted (Tr. 201-202).  On October 11, 1995, Appellant requested a contract modification in the net amount of $7,357.82, to reflect these changes in the scope of work.  Respondent did not approve this modification request until February 1999.  (Tr. 205-207; AE 7).

            74.  Appellant completed all the work required by work order No. 23, as modified, and the work was inspected and accepted by Respondent (Tr. 369-372; ASAF 82; Answer PSBCA No. 4263).

            75.  On October 30, 1995, Appellant submitted a progress payment request in the amount of $45,532.12, for work completed under work order No. 23.  Appellant had previously invoiced for and been paid $19,467.00 under this work order.  (Stip. 109; ASAF 85).

            76.  Respondent never made payment on this progress payment request and, on May 20, 1998, Appellant submitted a claim for the unpaid progress payment, plus Prompt Payment Act interest (Stip. 111, 112; ASAF 85).

            77.  On July 28, 1998, Appellant filed an appeal of the contracting officer’s deemed denial of this claim (Stip. 113).

DECISION
Contentions of the Parties

            Appellant argues that, having inspected and accepted the projects at issue (except the Northridge project), Respondent could not revoke acceptance except as prescribed in the contracts’ Inspection and Acceptance clauses.  Appellant also argues that Respondent’s evidence in defense of these claims is uncorroborated hearsay and should not be considered substantial evidence.  Finally, Appellant argues that it is irrelevant whether any individual pricing item was accomplished as long as Appellant performed the defined scope of work of each work order.

            With regard to the Northridge project, Appellant argues that, with the exception of a few items of work it concedes were left undone (see Finding of Fact No. (FOF) 32), it completed the work under work order No. 29 and is entitled to be paid the amounts claimed.

            Respondent argues that Appellant failed to meet its burden of proving that all the work was accomplished on each of the work orders at issue.  Respondent argues with respect to the Northridge project that it is entitled to charge Appellant for the cost of work performed by the follow-on IQC contractor.  Finally, Respondent argues that, even if Appellant has proven it is entitled to the amounts claimed in these appeals, Respondent is entitled to set-off amounts Respondent is found to owe against amounts Respondent claims in separate False Claims Act suits Respondent has brought against Appellant regarding performance under contracts not at issue in these appeals.

PSBCA Nos. 4161 & 4164 – Northridge Facility

            Although the contracting officer terminated Appellant’s work on the Northridge facility for convenience (FOF 31), we have found that Appellant completed all the work required by work order No. 29, as modified, except for work associated with providing striping signage and bumpers for the handicap parking areas and some asphalt patching (FOF 32).  The work order was initially issued in the amount of $89,638.15 (FOF 24).  Appellant had previously been paid a $50,000.00 progress payment, but was not paid on its subsequent $35,000.00 progress payment request (FOF 28, 30).  Accordingly, Appellant is entitled to be paid this $35,000.00 progress payment request.  In addition, Appellant is to be paid $19,599.65 for its proposed modification submitted on June 10, 1996^[5] (FOF 27).  However, Respondent is entitled to receive a credit of $3,060.25^[6], representing the value of the work left incomplete by Appellant at the time of the termination (FOF 32, 33).

PSBCA Nos. 4160 and 4256-4263

            Respondent acknowledged in these appeals that it inspected and accepted the projects, and we have found that Respondent received all that they bargained for in each work order.  In accordance with each contract’s Inspection and Acceptance clause, Respondent’s acceptance of the work on each work order was conclusive, except in the case of latent defects, fraud or gross mistakes amounting to fraud.  (FOF 4, 13).

            Respondent has not even alleged, let alone attempted to prove that there were latent defects, fraud or gross mistakes on any of the projects at issue that would entitle it to revoke acceptance.  Therefore, the review it undertook after acceptance of the projects, even if accepted as credible evidence (FOF 15), would not provide a basis for challenging the amount due Appellant.  See Decker & Co. v. West, 76 F.3d 1573 (Fed. Cir., Feb. 1996).  Accordingly, Appellant is entitled to be paid the amounts it seeks in each of the claims underlying these appeals.

Respondent’s Set Off Claim

            Respondent has argued that, to the extent Appellant is found to be entitled to any recovery in these proceedings, Respondent is entitled to retain those amounts as a setoff against a possible recovery Respondent believes it will achieve in a separate False Claims Act suit it has filed against Appellant in Federal District Court.

            Respondent enjoys a common law right of set off, absent some explicit statutory or contractual provision that bars its exercise.  See United States v. Munsey Trust Co., 332 U.S. 234, 239, (1947); Massapequa Partners Limited Partnership, MPL Group, Inc., PSBCA No. 3817, 97-2 BCA ¶ 29,058.  However, in this case Respondent has asserted the right to set off as a counterclaim, but has not issued a final decision asserting this counterclaim.  In the absence of a final decision asserting the counterclaim, we lack jurisdiction to consider this issue at this time.  See JDIC, Inc., ASBCA No. 31196, 86-3 BCA ¶ 19,037 (no jurisdiction to hear government monetary claims that lack a final decision).

CONCLUSION

             Appellant is entitled to be paid the amounts it has claimed in each appeal (as listed below).  In addition, Appellant is entitled to receive interest in accordance with the contracts’ Prompt Payment for Construction Contracts clauses (see FOF 5), up until the filing of each claim with the contracting officer.  Thereafter, Appellant is entitled to receive interest in accordance with the Contract Disputes Act.

PSBCA No. 4160                 $  2,256.48
PSBCA No. 4161                 $16,539.40^[7]
PSBCA No. 4164                 $35,000.00
PSBCA No. 4256                 $  9,793.61
PSBCA No. 4257                 $  9,000.00
PSBCA No. 4258                 $  5,740.90
PSBCA No. 4259                 $21,495.65
PSBCA No. 4260                 $30,580.05
PSBCA No. 4261                 $21,000.00
PSBCA No. 4262                 $32,698.71
PSBCA No. 4263                 $45,532.12

            These appeals are sustained.

William K. Mahn
Administrative Judge
Board Member

I concur:
James A. Cohen
Administrative Judge
Chairman

I concur:
David I. Brochstein
Administrative Judge
Vice Chairman

     [1]   Neither of the individuals who conducted the reviews testified at the hearing.

     [2]   Respondent initially advised Appellant that building permits were not required, and the cost of obtaining permits was not included in the originally negotiated work order (Tr. 968; ASAF 36).

     [3]   Appellant had previously invoiced for and been paid $50,000 under this work order (ASAF 63).

     [4]   This amount includes $3,386.09, which is the total of the pricing items for the omitted handicap parking area work, as well as $580.00 for a negotiated item in work order No. 29 for grinding of parking lines which was also not performed, and $291.96, (representing the value of the omitted asphalt patching work) (Tr. 973-975). 

     [5] Although Respondent mistakenly failed to approve this modification when submitted, it has not disputed that the work was accomplished (FOF 25-27).

     [6]   The figure of $3,060.25 is obtained by subtracting $1,197.80 (which was already included by Appellant as a credit in its proposed modification to work order No. 29 (see FOF 34), from $4,258.05, which is the total price of the line items Appellant failed to perform prior to the termination (FOF 33, 34).

     [7]   This amount is obtained by subtracting $3,060.25 (the total of the line items left incomplete by Appellant and not previously credited in Appellant’s proposed modification of June 10, 1996) from $19,599.65, the total price of the proposed modification (see FOF 31, 35).