DENIED: December 2, 2021

DENIED: December 2, 2021

CBCA 7091

PHOENIX MANAGEMENT, INC.,

Appellant,

v.

GENERAL SERVICES ADMINISTRATION,

Respondent.

Johnathan M. Bailey and Kristin E. Zachman of Bailey & Bailey, P.C., San Antonio,

TX, counsel for Appellant.

Alexander C. Vincent, Office of General Counsel, General Services Administration,

Washington, DC, counsel for Respondent.

Before Board Judges LESTER, RUSSELL, and SULLIVAN.

SULLIVAN, Board Judge.

Phoenix Management, Inc. (Phoenix) executed a firm-fixed-price contract with the

General Services Administration (GSA) to provide building maintenance and custodial

services at two federal buildings in Austin, Texas. In October 2020, the GSA contracting

officer notified Phoenix that GSA would withhold a portion of the monthly payment for

September 2020 because Phoenix reported staffing levels that were lower than it had

proposed. Phoenix submitted a claim seeking payment of the amounts withheld. When its

claim was denied, Phoenix timely filed its appeal with the Board.

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The parties filed cross-motions for summary judgment, seeking a decision on whether

GSA’s actions were proper. Based upon the terms of the contract, we determine that GSA

properly withheld the amounts.

Background

Pursuant to the contract executed in May 2020, Phoenix agreed to provide custodial,

grounds maintenance, and operations and maintenance services for a monthly fee. Appeal

File, Exhibit 7 at 274-75.1 The monthly price in the base year was $98,592.60. Id. at 274.

The monthly price included “pricing for services specified in the solicitation. This is a Firm

Fixed Price contract and will not be changed unless there is a change in the scope of work.”

Id. at 275.

Staffing Requirements

Phoenix was required to staff the contract in accordance with its proposal. This

requirement was stated in four different places in the contract. In section B, the contract

advised that “[s]taffing levels proposed and accepted at the time of award shall not be

reduced through the life of the contract. At the end of each contract year, and at the request

of the contractor, GSA will consider a request from the contractor for a reduction in staffing,

and [a reduction] will be based on contractor performance.” Exhibit 7 at 275. In the

statement of work (SOW), Phoenix was told to follow the staffing plan it submitted in its

proposal:

C.1.2 Personnel

The Contractor shall adhere to the submitted staffing plan and subcontractor

plan that was submitted prior to award as part of the Bid proposal. Contractor

shall submit staffing/subcontractor plan that provides sufficient numbers of

staff at the various levels of expertise to ensure all scheduled and unscheduled

services are performed and conditions are maintained to avoid any disruption

to the tenant. Any changes to the proposed staffing levels, qualifications of

proposed staff or key personnel, or the areas of expertise or disciplines of the

proposed staff shall be submitted for review and approval from the

[contracting officer] or their designee.

Id. at 280.

1

All exhibits are in the appeal file, unless otherwise indicated.

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The contract incorporated the solicitation by reference. Exhibit 7 at 276. A provision

in the instructions for offerors (Section L) stated that offerors would be bound to provide the

staffing levels set forth in the management plan worksheet that they were to complete with

their proposals:

L.5.1.2.3 Additional information regarding Management Plan Worksheet

The staffing/labor mix proposed in the Management Plan Worksheet must be

adhered to for the Base year period of performance. The offeror may request

an annual review of the labor mix 60 days prior to issuance of the first Option

Period. Any requests for changes to the Management Plan Worksheet may be

submitted and considered at that time. Any approved adjustment to the labor

mix will not result in an increase in price. However, any request to reduce

manpower may result in a lower price to be negotiated at the time of request.

Any deviation from the accepted/approved Management Plan Worksheet may

result in deductions.

Exhibit 2 at 208 (emphasis in original). In response to this solicitation requirement, Phoenix

submitted a management plan worksheet that showed that Phoenix planned to employ 15.1

full-time equivalents (FTEs) in performance of the contract. Exhibit 5 at 239-40; Exhibit 6

at 265-66.

GSA responded to several questions about the solicitation, including one about how

to propose staffing levels, given that contractors were supposed to propose the best solution

in response to the “performance based work statement.” Exhibit 3 at 219. GSA answered

that offerors were free to propose the staffing levels that they thought were appropriate to

meet the requirements, but “once a proposal is accepted, the [G]overnment expects the

contractor will provide the staffing level proposed.” Id. These responses were incorporated

into the solicitation and the resulting contract. Exhibit 7 at 276.

Performance and Qualification Requirements

The SOW was divided into three sections: general provisions, provisions regarding

maintenance services, and provisions regarding custodial services. Exhibit 7 at 279-399.

The SOW for the operations and maintenance work required that Phoenix staff the contract

with personnel qualified to perform those services. Id. at 292. The SOW for the custodial

work similarly required Phoenix to provide “training/certifications” and “ensure that their

employees are properly trained, licensed and/or certified to operate necessary building

systems or equipment.” Id. at 364. The custodial SOW also directed Phoenix to “[u]se

innovation, technology and other means and methods to develop and perform the most

efficient cleaning services for the building.” Id.

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For the custodial services to be performed, the contract emphasized that, “[a]s a

performance-based contract, the requirements are stated in terms of desired results with

associated quality standards” and that the “Contractor through innovation, technology, or

other means shall perform the work in this contract to meet the quality and performance

standards in this [s]ection.” Exhibit 7 at 364, 368. Phoenix was required to submit a quality

control plan and cleaning schedules. Id. at 394-95. With regard to cleaning schedules, the

statement of work provided that the “cleaning schedule is considered the Contractor’s

efficient approach to the work, and shall not limit the Contractor to specific levels of staffing,

means or methods.” Id. at 395.

Section H of the contract was also divided into operations and maintenance and

custodial sections. For contractor personnel performing custodial work, the contract required

that “[t]he personnel employed by the Contractor shall be capable employees, who are

trained and qualified in one or more related type service requirements.” Exhibit 7 at 426.

Provisions for Fee Deductions

As a mechanism to obtain satisfactory performance, the contract allowed GSA to

reduce the monthly payment “[i]n the event that inadequate performance or nonperformance

of a task occurs.” Exhibit 7 at 407. Clause G.7.7 contained a formula for calculating the

deduction, which was to be the man hour calculation “based on total number of personnel

proposed minus the total number of personnel provided.” Id. at 409. According to the clause

containing this formula, the “cause of the deduction” was “[f]ailure of the Contractor to have

adequate qualified personnel on-site as specified in Contractor’s accepted technical proposal

or [contracting officer] approved revision.” Id. This clause was titled “Criteria for

Deductions” and bore the heading “Criteria for Mechanical Deductions.” Id.

Deductions by GSA

After award and twenty-one days prior to the start date, Phoenix was required to

submit a “contract staffing declaration.” Exhibit 7 at 275. This form was also to be

submitted when “any modifications to the contract by GSA result in changes in staffing.”

Id. Phoenix submitted its staffing declaration in September 2020. It showed that Phoenix

employed only 13 FTEs on the contract, 2.1 FTEs fewer than it had identified on its

management plan worksheet. Exhibit 24 at 581, 584. Phoenix had fewer persons employed

in the custodial functions than it had proposed. Id.

Based upon its assertion that Phoenix was required to have 15.1 FTEs employed on

the contract, GSA calculated a deduction pursuant to the formula in clause G.7.7 for

Phoenix’s September monthly payment. Exhibit 24 at 581. Phoenix’s monthly payment was

reduced by $7818.28. Id. GSA made a similar calculation in November for the October

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monthly payment. Exhibit 28. While Phoenix disputes that the deduction was properly

taken, it does not dispute the calculation of the deduction in accordance with the terms of the

deduction provision in the contract. Joint Statement of Undisputed Facts ¶ 34.

Phoenix submitted a claim seeking payment of $11,934.98, the amounts withheld

during September and October. Exhibit 28; Joint Statement of Undisputed Facts ¶ 35. GSA

denied the claim, Exhibit 31, and Phoenix timely appealed that decision.

Discussion

The question whether GSA properly took the deduction for Phoenix’s failure to

maintain staffing at the level it proposed is a matter of contract interpretation. We begin with

a review of the plain language of the contract. LAI Services, Inc. v. Gates, 573 F.3d 1306,

1314 (Fed. Cir. 2009) (citing M.A. Mortenson Co. v. Brownlee, 363 F.3d 1203, 1206 (Fed.

Cir. 2004)). We read the contract as a whole, giving reasonable meaning to all its parts.

Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991). If the plain language of

the contract is unambiguous on its face, the inquiry ends, and the contract’s plain language

controls. Hunt Construction Group, Inc. v. United States, 281 F.3d 1369, 1373 (Fed. Cir.

2002). “An interpretation that gives meaning to all parts of the contract is to be preferred

over one that leaves a portion of the contract useless, inexplicable, void, or superfluous.”

NVT Technologies, Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004); see

Restatement (Second) of Contracts § 203(a) (1981) (contract interpretation should not leave

a part of a contract “of no effect”).

The issue presented requires us to answer two questions. One, was Phoenix required

to maintain the same number of custodial personnel as it proposed? Two, if it was required

to maintain this staffing level, did the contract permit GSA to take the deduction that it did

based upon Phoenix’s failure? We find that the answer to both questions is yes.

The contract language required Phoenix to maintain the staffing levels proposed

through the base year of the contract. In the solicitation, which was incorporated into the

contract, GSA stated the requirement in the description of the management plan and in

response to questions concerning the solicitation. In preparing the management plan,

Phoenix stated staffing levels for both the custodial and maintenance functions under the

contract.

Phoenix argues that this requirement is in conflict with the contract requirements that

Phoenix meet quality and performance standards in performing the custodial work and the

assurances that “the cleaning schedule is considered the Contractor’s efficient approach to

that work, and shall not limit the Contractor to specific levels of staffing, means or methods.”

Exhibit 7 at 395. Phoenix would have us interpret the contract to allow it to maintain

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whatever staffing levels it thought appropriate as long as it also maintains the necessary level

of performance. That interpretation renders superfluous the Management Plan and all of the

warnings in the solicitation and contract that staffing levels were not to be reduced. Further,

to the extent that Phoenix believed that the staffing levels it proposed were too high, it was

entitled to present that information to GSA and request permission to reduce staffing.

However, the contract provided that “any request to reduce manpower may result in a lower

price to be negotiated at time of request.” Exhibit 2 at 208. Again, Phoenix’s interpretation

of the contract would render that contract provision meaningless. The accepted rules of

contract interpretation do not allow us to accept Phoenix’s interpretation.

Because the requirement to maintain staffing levels was a requirement of the contract,

we also find that GSA’s use of the deduction provision to be proper. The contract warned

that failure to meet specifications and requirements of the contract, including this specific

requirement, could result in deductions. GSA was permitted to take the deductions that it

did.

Phoenix argues that GSA improperly employed the deduction provision because there

has been no showing of “inadequate performance or nonperformance of a task.” Phoenix

asserts that such a showing is a predicate for use of the deductions clause. Phoenix is reading

the clause too narrowly. The description of how the deduction is to be calculated makes it

clear that it applies to this situation: the “calculation shall be based on total number of

personnel proposed minus the total number of personnel provided.” Exhibit 7 at 409.

Phoenix failed to meet the requirement to maintain the staffing levels proposed. GSA

properly took a deduction to address that failure.

Phoenix also attaches significance to the heading “Criteria for Mechanical

Deductions” arguing that the deduction was only meant to apply to Phoenix’s failure to have

sufficient numbers of qualified maintenance and operations personnel. However, the

description of the deduction does not limit the application of the clause to the operations and

maintenance personnel. Further, to limit the application of the clause would leave GSA

without an agreed-upon mechanism for deductions described in clause L.5.1.2.3, in violation

of standard contract interpretation principles.

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Decision

Based upon the foregoing, GSA’s motion for summary judgment is GRANTED,

Phoenix’s motion for summary judgment is DENIED, and the appeal is DENIED.

Marian E. Sullivan

MARIAN E. SULLIVAN

Board Judge

We concur:

Harold D. Lester, Jr.

HAROLD D. LESTER, JR.

Board Judge

Beverly M. Russell

BEVERLY M. RUSSELL

Board Judge