U.S. Government Printing Office
Contract Appeals Board

Appeal of Leo A. Daly, CA 74-2
July 26, 1974

Mr. Philip A. Hutchinson, Jr.
Attorney at Law
485 L'Enfant Plaza SW.
Suite 2450
Washington, D.C.  20024

Dear Mr. Hutchinson:

Reference is made to the appeal to the Public Printer from the final decision of the contracting
officer denying the Architect/Engineer (A/E additional compensation for work asserted by the A/E to
be beyond the scope of services under GPO Contract Number 5500.  Such appeal was made pursuant to
the "disputes" clause of the contract.  This is the decision of the Office of General Counsel of
the Government Printing Office, the duly authorized representative of the Public Printer for the
determination of such appeals.

The professional services contract was for the planning, designing, engineering, and construction
supervision for the improvement of the air conditioning and related services at the U.S. Government
Printing Office (GPO) facility in Washington, D.C.

For the reasons set forth herein, the appeal has been denied in part and sustained in part.


A. General

The contract was entered into on February 10, 1972, after extensive negotiations with the A/E.  The
final agreed fee was $581,277.

The records of negotiation sessions reveal that the Government's and the A/E's estimates of hours
and numbers of drawings required varied widely and that the A/E was urged to review and reduce his
costs wherever possible to comply with Government estimates.  (Record of negotiation dated

The contract which as ultimately executed set forth a detailed scope of services description which
contained many of the conclusions found in the Henry Adams Engineering Report prepared in 1968.

Prior to the execution of the contract, the contractor was provided with all relevant information
available to the Government including the Henry Adams Report and GPO drawings and was afforded and
accepted as on- site inspection to the extent desired.  Except for the allegation relating to the
uninsulated condition of the cold water piping in the various buildings, there is no allegation of
any misrepresentation or withholding of information from the A/E by the GPO.

B.  The Henry Adams Report

The Henry Adams Report was prepared in July 1968 at a cost of approximately $7,500.00.  It was by
its nature, a cursory analysis of the then existing electrical and air-conditioning systems at the
GPO with cost estimates for upgrading the systems.  It was not purported to be an in-depth
engineering study and analysis, although it did form the basis upon which GPO sought and obtained
appropriations for the upgrading of the air-conditioning and electrical systems, and for the
procurement of the necessary equipment and construction to modify the then existing electrical
substations.  In addition, it was the basis for the original GPO estimates of the cost of the
current air-conditioning project, and certain portions of the report were included verbatim in the
scope of services description of the A/E contract.  (Request For Proposal (RFP) dated 9/21/71).
One element of the scope of services contained in the original RFP required that the A/E, during
the design and Planning Phase provide a "cost analysis to justify any approved work found to exceed
$6,500,000 allocated amount."

A $6.5 million appropriation had been requested by GPO in FY 1970, but the request was subsequently
modified (for reasons not relevant here).  Considering various factors, including inflation, a
$7,650,000 construction cost estimate for the project was agreed to by the Government and the A/E,
which could "be increased to reflect changes in local construction cost indicate or scope
requirements."  (Record of negotiation dated 12/21/71.)

C.  The Negotiation

As in any firm fixed price contract, the scope of the services required in the proposed contract
dictated the cost proposals to the Government, the basis for negotiation and the contract price.
Consistent with the foregoing principle, the detailed instructions to the A/E contained among other
things the following statements:

"The fixed price for the procurement of professional service to be determined by negotiation will
be based upon the estimated costs to be incurred by the A/E in accomplishing the proposed work,
including direct costs, overhead, and profit . . . . Such costs will be based on a well defined
scope of work, descriptive of the facilities to be designed and constructed.  The fee shall not be
computed on the basis of the dollar volume of construction."

"In all cases, the estimated direct costs shall be developed by individual analysis with full
consideration given to the services required by each item in the scope of work.  All work should be
itemized in detail . . . and salary rates peculiar to each class of service computed.  The number
of . . . tentative drawings estimated to be required, . . . the estimated number of working
drawings together with man-hours required for each major classification of worker and hourly rates
therefore, should be considered. . . ."

Several months of difficult negotiation followed the initial proposal submitted by the A/E.
Basically at issue was the inability of the parties to agree on the numbers and complexity of the
working drawings which would ultimately be required for construction purposes.  The parties
analyzed the total job with respect to the numbers of drawings required for each segment of the
work, including the hours of professional and drafting time required, on a floor by floor basis,
and ultimately agreed to a contract price as follows:

Field Investigation   $ 65,026
Study and Analysis   30,414
Working Drawings   373,580
Bidding Period   3,413
Construction Period   108,844

The number of drawings actually delivered approximated the number estimated.

D.    The Contract

The contract is divided into four distinct phases, the first of which could have been a separate
procurement, unrelated to the ensuing phases.  The phases are (i) Field Investigation and Study and
Analysis, (ii) Working Drawings, (iii) Bidding Services, and (iv) Construction Period Services.

The contract contains the following general description of the services required:

"This project will consist of all the planning, designing and engineering required for the
preparation of plans, specifications, estimates. and construction services for the proposed
improvement of air conditioning and related services for the U.S. Government Printing Office,
Washington, DC, in accordance with Scope of Services included in GSA Form 1495 furnished September
21, 1971, amended December 21, 1971, and January 12, 1972, prepared by the U.S. Government Printing
Office.  The basic objectives to be attained are the general modernization, addition, and upgrading
of the heating, ventilating, and air conditioning systems."

Inasmuch as the project was basically one requiring extensive renovation of the existing facility
and equipment, the architectural and engineering approaches, of necessity, required an extensive
field investigation and design analysis of the existing structure, its existing and projected
equipment and personnel requirements, as well as the condition and design of the existing air-
conditioning, air-handling equipment, ductwork, electrical systems, etc.  Upon completion of the
foregoing field investigation and study and analysis, the A/E was required to prepare narrative
statements of various alternate approaches to achieve project results, including the "preferred
alternate," along with preliminary cost estimates of each alternative offered, "if pertinent."
Upon approval of a proposed alternate, the actual working drawing and design phase would commence.
Subsequent phases ensued upon completion of each prior phase.

The relevant portions of the schedule of completion of the various phases of the contract required:

1.  Completion of the Study and Analysis and the Field Investigation relating thereto, within
twelve weeks after commencing work (14 weeks after notice to proceed).

2.  Completion of the working drawing phase within 37 weeks after approval of the design phase.

The contract provided that the schedules in both the foregoing phases were "subject to extension by
mutual agreement by the parties hereto."

Pursuant to the foregoing, the A/E on June 19, 1973, requested that the "period of service for the
Field Investigation and Study and Analysis (be changed) from twelve (12) weeks to twenty-two (22)
weeks," and that the period of service for the working drawings be changed from 37 weeks to 27
after approval of the design concepts.

The reason given for the request was that it had been necessary to go further into detail than was
originally contemplated, "largely due to the fact that space for a tower could not be utilized at
the southwest corner of Building 3, and because of the overall production space problem through-
out the building.  "The A/E stated that "undoubtedly this was stated earlier, but the full impact
just could not by absorbed."

There was no mention in the request that the Government caused the delay, withheld information,
that the extension was required because of work which was beyond the original scope of the
contract, or that any change in the contract price was contemplated as a result.

The alternate design proposals dated July 18, 1972, were presented to the Government on July 20,
1972, along with construction cost estimates for the recommended proposal of $16,302,000.  After
consideration, the Government requested the A/E reconsider the design proposal and the construction
cost estimate with the view towards reduction.  The Government finally acquiesced to a revised
estimate of $13,900,000.  The Government did not request the A/E to further redesign or reengineer
the project to bring it within the range of the original construction costs estimates, but rather
accepted the proposed alternate and sought and obtained the additional appropriations necessary.

E.  The Dispute

On September 25, 1972, after the Government had selected the suggested alternate proposal for the
project and was aware of the estimated increase in the construction costs, the A/E advised the
Government that the scope had been increased with a request that the Government review the asserted
differences between the "original scope" of the contract and the "changed scope" resulting from the
Government's selection of the alternate proposal of the A/E to achieve the project results.  In the
interim, the contractor's fee had been increased to $688,905.47 as a result of the additional
efforts required.  The changed fee bore no relation to the present controversy.

On December 13, 1972, the contractor's request for a contract modification increasing the contract
price by $163,120 was denied, except for the minor portion relating to standby systems for the EDP
areas.  The basis for the contracting officer's decision was:

". . .[T]he contract, by its terms, provides for a deviation from that [Henry Adams Report] detail
as may be found necessary to achieve the project result.  You have not demonstrated that the
Government modified the scope of the contract by selecting those alternates recommended by you,in
accordance with contract requirements as necessary and desirable approaches to achieve the required
project result. . . ."

On January 9, 1973, the contractor filed his notice of appeal with the Public Printer pursuant to
the terms of the contract.  On January 23, 1973, the appeal was acknowledged by the Acting Public
Printer. with the advice that:

"Prior to a consideration of the merits of your appeal, you may offer the additional evidence in
support of your appeal which you have indicated you are prepared to submit.  I would prefer written
submissions, if possible, supported by such documentation, affidavits and the like which you deem
adequate to sustain your burden of proof.  In addition you may, if you so desire, submit a brief in
support of your position."

"If you intend to submit additional evidence, please advise the contracting officer in writing
within 30 days of the receipt of this letter.  If you fail to so advise, the Public Printer will
decide the question on the basis of the material presently on file."

By letter dated February 20, 1973, the contractor advised tho Public Printer that he would submit
additional material within 90 days from the date of the letter.

On June 14, 1973, the contractor advised that he had retained counsel and would submit a brief in
support of its claim of or about July 31, 1973.


The Government's position rests on its apparent theory that the "scope of services" included in the
special provisions of the contract are synonymous with the general project description set forth on
SF 252, such that any services required of the A/E to meet the ultimate project result are included
in the contract price, notwithstanding any significant variance between the complexity of the
original design and engineering approach anticipated in the contract and the design and engineering
approach ultimately selected by the Government.

The A/E on the other hand appears to take the position that the Government's responsible for all of
his unanticipated costs including those encountered in the initial phase of performance wherein the
detailed design approaches were to be determined.  Neither position is persuasive.

The contract provides that:

1.   Phase I - Field Investigation Study and Analysis

"(1) Field Investigation and Study and Analysis.  Within two (2) weeks after notice to proceed, the
Architect/Engineer shall commence work on this segment of the contract.  The Architect/Engineer
shall complete the study and analysis and the portion of the field investigation relating to the
study and analysis within twelve weeks after commencing work, provided however, that such date may
be extended by mutual agreement by the parties hereto.  (Emphasis added.)

(2) Meetings. Meetings shall be held on a monthly basis to discuss the general progress of the

(3) Reports.  Two sets of Progress Reports shall be submitted on a monthly basis, and Information
Sheets shall be furnished, as generated.  Progress Reports shall contain:

(a) General narrative discussion of progress, including background and objectives.

(b) Narrative of the pros and cons of each alternative, with a discussion of the architectural,
structural, technical, and electrical considerations.

(c) Narrative of the preferred alternative with reasons for its selection.

(d)  Cost estimate of each alternative offered, if pertinent.

(4) Blueline Prints.  Two sets of blueline prints showing architectural, structural, mechanical,
and electrical design concepts for Government approval.

(5) Cost Estimate.  (2 sets) Preliminary project cost estimate with back up calculations.

(6) CPM Schedule.  (2 sets) A critical path method schedule of the project design shall be

Recognizing that the project is essentially a major renovation and remodeling of the existing GPO
structures, including the air conditioning, air handling, electrical, structural and mechanical
equipment, the project of necessity would require detailed study and engineering analysis of those
structures and equipment, including industrial requirements, building population, etc., prior to
the time any design and engineering solution to attain the project requirements could be conceived,
and alternate design approaches recommended.  Obviously, the detailed description contained in the
contract was not intended, nor could it reasonably be so interpreted to limit the obligation of the
A/E under this phase.

In addition, the A/E in its brief states that by change order dated June 28, 1972, "the contracting
officer extended the time required for the study and analysis from 12 to 22 weeks", and that "but
for the fact:

that there were changes in scope, there would be no need.for additional time.  The same argument is
used with regard to the 15 week extension granted for the working drawing phase.

The foregoing is not reasonable.  Because of the nature of the undertaking, the contract provided
for such    extensions "by the mutual agreement of the parties hereto".  In addition, the extension
was requested by the A/E for the study and analysis phase without any assertion of a change in
scope, government fault or the like.  Moreover, the argument promises that the contractor bore no
responsibility for time extension requirement, e.g., that but for intervening factors for which the
Government is responsible, that phase of the contract would have been timely completed.  Nothing is
found in the contract or in the records of the parties negotiations which limits the contractor's
undertaking in the investigation and analysis phase of the contract in pursuit of the project
requirements, and there was no directive by the Government which changed the scope of this phase of
the contract.

Accordingly, it is found that:

{1)  The contractor by the terms of his contract was required to invest such effort as was
necessary to study and analyze the existing facility aud prepare alternative design
recommendations, construction estimates, cost, etc.,

(2)  That the contractor did no more than was required of him in the performance of the study and
analysis phase of the contract and,

(3)  The contractor has not offered evidence supportive of its contention that the scope of
services for the study and analysis phase of the contract had been changed by the Government, and

(4)  The contractor has not offered evidence showing that the extension of the performance schedule
for the study and analysis phase of the contract bore any relationship to any increase in the scope
of service performed.

Consequently, the contractor's claim for an adjustment insofar as it relates to the Field
investigation, and Study and Analysis phase of the contract is denied.

2.  Working Drawings

Renovation and remodeling, by its nature contains many variable factors which do not become evident
until the work therein is commenced.  Fixed price contracts require the parties to assume mutual
obligations on the basis of reasonably well defined requirements.  It is apparent from the contract
documents and the various records of negotiations, that the parties arrived at the contract price
for the working drawing phase on the basis of the assumed scope of services required as stated in
the contract and upon which the construction cost estimates were based.

The foregoing is particularly relevant when considering the fact that existing structures are
involved, together with existing equipment, both mechanical and electrical, some of which can be
saved, salvaged, modified or repaired and others of which can only be removed and discarded.

It is likewise clear that although not obligated to do so, the Government selected a design
alternative which varied significantly in terms of estimated construction cost.  Moreover, the
project ultimately approved and accepted by the Government, although within the general scope of
the contract is not the same as that described in the contract with appellant.

Therefore it appears that the contracting officer erred in his interpretation of the contract as
related to the working-drawing phase.  Acknowledging the proposition that construction costs are to
an extent, a reflection of design effort and complexity, it is decided that acceptance of the
design and engineering recommendations of the A/E which varied the scope of services required of
the A/E in the working-drawing phase was a change within the meaning of the changes article,
entitling the contractor to an equitable adjustment therefor.  Skidmore, Owings & Merrill, ASBCA
9914, 66-1 BCA 5460.


Since it is the purpose of an equitable adjustment to keep the contractor whole when the contract
has been modified by the Government, the measure of the adjustment must be viewed in the light of
the particular contractor's costs, unless the costs can be proved to be unreasonable.  Bruce
Construction Corporation v. United States,  163 Ct. Cl. 97 (1963).  The foregoing is for
application whether the adjustment is based upon historical costs (actual costs incurred) as in the
Bruce  case, or based upon estimated costs (forward pricing) submitted prior to the time the costs
were actually incurred (as in this case).  Under the Bruce  theory, the estimates would have to be
measured against the degree of efficiency of performance of the particular contractor, not the
standard of another contractor or organization.

We are, however, unable to determine the amount of the equitable adjustment inasmuch as (i) the
breakdown of the individual items of the claim appear to overlap with regard to those items
relating to the remote location of the air handling units (C-l, E-2, E-4, E-5), (ii) no reduction
of effort is set forth for those items which reductions were admitted (E-2, E-3, E-5). and (iii) no
consideration is apparent for hours originally included for Item F-l.

The decision is therefore limited to the question of entitlement only, and remanded to the
contracting officer for negotiation of an equitable adjustment for changes in the working drawing
portion of the contract.  Such adjustment should include the claims for standby air conditioning
for EDP areas which was previously allowed by the contracting officer but not negotiated and paid,
and should delete that work included in the claim under additional work Items 1 and 2 which was not


The appeal is denied as to any claims for the field investigation and study and analysis phase of
the contract and sustained on the question of entitlement for the working drawing phase subject to
negotiation of an equitable adjustment for changes in the working drawing portion of the contract
as outlined above.

Very truly yours,
Alan S. Zuckerman, Associate General Counsel

Essis A. Ablove, Assistant Counsel
Vincent T. McCarthy, General Counsel