DENIED: September 28, 2017

DENIED: September 28, 2017

CBCA 5696

AVALON PLAZA LLC,

Appellant,

v.

GENERAL SERVICES ADMINISTRATION,

Respondent.

Joseph Ghadir, Managing Member of Avalon Plaza LLC, Los Angeles, CA, appearing

for Appellant.

Jordan K. Baker, Office of Regional Counsel, General Services Administration, San

Francisco, CA, counsel for Respondent.

Before Board Judges SOMERS, SHERIDAN, and RUSSELL.

SHERIDAN, Board Judge.

Avalon Plaza LLC (Avalon or lessor) has appealed a contracting officer’s (CO) final

decision which was issued by the General Services Administration (GSA or lessee). Avalon

asserts that it is entitled to recover additional compensation of $43,944.98 for air

conditioning the approximately 200 square foot data communications room (DCR or

computer room) during the fifteen years of its lease with GSA.

The lease in issue required Avalon to maintain the DCR at a temperature range of

between sixty-eight and eighty degrees Fahrenheit. This is a standard GSA leasing provision

that ensures electronic components in server rooms do not overheat. The issue under

consideration in this matter is whether GSA owes Avalon additional compensation for

constantly maintaining the DCR temperature between sixty-eight and eighty degrees

Fahrenheit for the lease period. The appellant argues that the lease failed to include

CBCA 5696

2

compensation for the cost of operating the air conditioning (A/C) unit in the DCR. We find

that the plain language of the lease includes the cost of operating the A/C unit for the DCR

in the base rental consideration and no additional compensation is owed to Avalon.

The appeal was submitted for decision on the written record pursuant to Board Rule

19 (48 CFR 6101.19 (2015)). The record consists of the complaint, answer, appeal file, an

affidavit, and the briefs of the parties.

Statement of Facts

GSA and Avalon entered into lease LCA00052 on May 31, 2000, for a total of 15,710

square feet of space at 12701 Avalon Boulevard, Los Angeles, California. Exhibit 1.1 The

lease tenant was the Social Security Administration (SSA). Id. The lease had a term of ten

years firm with an option to extend for another five years.

According to Joseph Ghadir, Avalon’s managing member, Royal Cochran was the

GSA contracting officer who executed the lease and:

Mr. Cochran failed to inform [Avalon] that the lessor is allowed to charge and

to be compensated for those expenses such as the overtime (24 hours less than

the 8 normal operation hours) usage of air conditioning in the DCR room

which were not included in the monthly rental payments.

Affidavit of Joseph Ghadir (July 11, 2017) ¶ 2.

Paragraph 6 of the Standard Form 2 portion of the lease requires the lessor to furnish

“as part of the rental consideration” all “utilities . . . ‘with the sole exception that the

Government, will pay to the extent specifically identified herein as payable to the

Government.” Exhibit 1 at 0002.

Paragraph 7 of the Standard Form 2 portion of the lease incorporated “[a]ll terms,

conditions, and obligations of the Government and Lessor as set forth in SFO [solicitation

for offer] 9CA0777 (35 pages); Agency’s special requirements (15 pages), GSA Form 3517

(26 pages), GSA Form 3518 (4 pages); Sheet Nos. 1 and 2, containing Paragraphs 9 through

18, and Exhibit A, floor plan.” Exhibit 1, at 0002.

1

All exhibits referenced in this decision are found in the appeal file, unless

otherwise noted.

CBCA 5696

3

GSA was responsible for the cost of overtime utilities pursuant to paragraph 15 of the

Standard Form 2 portion of the lease, which read:

Pursuant to Paragraph 7.3, “Overtime Usage”, upon request by the GSA Field

Office Manager, the Lessor shall provide heating, ventilation, and air

conditioning (HVAC) at any time beyond normal service hours (7:00 a.m. –

6:00 p.m., Monday through Friday, except federal holidays) at an hourly rate

of $20.00 per hour. The Lessor must submit a properly authorized and

certified invoice quarterly to the GSA Field Office Manager.

Exhibit 1 at 0003.2

Paragraph 6.7 of the SFO portion of the lease, “Heating and Air Conditioning (JAN

1997)”, established the basic obligations with regard to heating, ventilation, and air

conditioning (HVAC) of the leased space as a whole:

(a) Temperatures shall conform to local commercial equivalent temperature

levels and operating practices in order to maximize tenant satisfaction. These

temperatures must be maintained throughout the leased premises and service

areas, regardless of outside temperatures, during the hours of operating

specified in the lease.

(b) During non-working hours, heating temperatures shall be set no higher

than 55N F[arenheit] and air conditioning will not be provided except as

necessary to return space temperatures to a suitable level for the beginning of

working hours.

Exhibit 1 at 0032.

Paragraph 7 addresses “SERVICES, UTILITIES, MAINTENANCE,” and in pertinent

part provides:

2

Paragraph 15 was later amended by Supplemental Lease Agreement 6,

increasing the overtime rate to $31.00 per hour. Exhibit 1 at 0093.

CBCA 5696

7.1

SERVICES, UTILITIES, MAINTENANCE

Services, utilities , and maintenance shall be provided by the Lessor as part of

the rental consideration. . . .

7.2

NORMAL HOURS

Services, utilities, and maintenance will be provided daily, extending from

7:00 a.m. to 6:00 p.m. except Saturdays, Sundays, and Federal Holidays.”

7.3

OVERTIME USAGE (JAN 1997)

(a) The Government shall have access to the leased space at all times without

additional payment, including the use, during other than normal hours, of the

necessary services and utilities such as elevator, toilets, lights, and electric

power.

(b) If heating or cooling is required on an overtime basis, such services will

be ordered orally or in writing by the Contracting Officer or Buildings

Manager. When ordered, services shall be provided at the hourly rate

established in the contract . . . .

....

7.4

UTILITIES

The Lessor shall ensure that utilities necessary for operation are provided and

all associated costs are included as part of the established rental rate.

7.5

UTILITIES: SEPARATE FROM RENTAL (JAN 1997)

(a) The Offeror must specify which utilities, if any, are excluded from the

rental consideration. If any such utilities are excluded, the Offeror must obtain

a statement from a registered professional engineer stating that all heating,

ventilation, air conditioning, plumbing, and other energy intensive building

systems can operate under the control conditions stated in this SFO . . . .

(b) The Lessor shall provide separate meters for utilities to be paid for by the

Government. The Lessor shall furnish in writing to the Contracting Officer,

prior to occupancy by the Government, a record of the meter numbers and

verification that the meters measure Government usage only . . . .

Exhibit 1 at 0035.

4

CBCA 5696

5

Paragraph 16(B), under the “SOCIAL SECURITY ADMINISTRATION SPECIAL

SPACE REQUIREMENTS” portion of the lease, provided special requirements related to

the DCR, including the room’s HVAC:

16. DATA COMMUNICATIONS ROOM (DCR)

An approximate 200 square foot DCR (...minimum of 200 square feet) with

painted ceiling-high walls and vinyl tile on the floor must be provided. The

entry door should be of solid wood core or metal sheathed with hinges inside

the room . . . .

....

B. Heating, Ventilating, and Air-conditioning system (HVAC) Requirements

HVAC must be maintained at a temperature range of between 68 and 80

degrees Fahrenheit. The HVAC system must be capable of maintaining plus

or minus 2 degrees of the thermostat setting. Relative humidity will be

maintained between 10 and 90 percent. The room shall be separately zoned

and have its own separate thermostatic control inside the room. The HVAC

system shall be designed to supply, on the average, 6 complete air changes per

hour with a minimum of 20 percent fresh air. The air conditioning unit for the

DCR is to be maintained/serviced at no cost to SSA.

Exhibit 1 at 0047.

The lease contained no provisions providing for an hourly utility rate specific to the

DCR. Avalon provided HVAC for the DCR without incident from January 11, 2001, to

shortly before September 2014, when it first raised the electrical bill with Debra Williams,

a GSA lease administration specialist and contracting officer’s technical representative

(COTR) who Mr. Ghadir describes as being “in charge of maintenance” for the leased space.

According to Mr. Ghadir, COTR Williams told him that the cost of running the air

conditioning in the DCR was normally not included in the rental amount of the lease. Ghadir

Affidavit ¶ 4.

In September 2014, Mr. Ghadir began corresponding with Clara Lee, GSA’s lease

contracting officer (LCO), via email messages about the concern Mr. Ghadir had regarding

the high HVAC costs for the DCR. Mr. Ghadir and LCO Lee discussed amending the lease

to add the following clause:

CBCA 5696

6

24-HOUR HVAC REQUIREMENT (APR 2011)

The hourly overtime HVAC rate specified above shall not apply to any portion

of the Premises that is required to have heating and cooling 24 hours per day.

If 24-hour HVAC is required by the Government for any designated rooms or

areas of the Premises, such services shall be provided by the Lessor at an

annual rate of $X.XX per ABOA [American National Standards

Institute/Building Owners and Managers Association (ANSI/BOMA) Office

Area] [square feet] of the area receiving the 24-hour HVAC. Notwithstanding

the foregoing, Lessor shall provide this service at no additional cost to the

Government if the Lessor provides this service to other tenants in the Building

at no additional charge.

Exhibit 3. LCO Lee asked Mr. Ghadir to send Avalon’s offered rate and the supporting

documents that it used to calculate the rate. Exhibit 4.

On September 5, 2014, Mr. Ghadir provided LCO Lee with a rate of $164.41 per

month, together with Avalon’s method of calculating the rate. Exhibit 6. Using Avalon’s

methodology, GSA owed it $26,963.24, based on a lease start of February 2001 (164 months

x $164.41 = $26,963.24). Id. Another calculation Avalon provided stated: “[B]ased on

overtime consumption of 16 hours per day, the cost of electricity should be: 16 hours x

$.0226KWH = $2.6652/day x 365 days = $972.77 per year.” Id.

Another LCO, Veronica Gonzalez, informed Mr. Ghadir on September 30, 2014, that

GSA was still reviewing Avalon’s proposal for reasonableness. Exhibit 7. LCO Gonzalez

wrote that the proposed rate would need to be memorialized via a supplemental lease

agreement and that “since the lease did not address anything previously, [GSA] cannot pay

you retroactively. In addition, per the lease, (Paragraph 16 B of Special Requirement) last

sentence, it is the lessors [sic] responsibility to maintain/service the unit used in this space.”

Id. On November 19, 2014, LCO Gonzalez reaffirmed her position that GSA would not

retroactively pay for an increase “since it was not discussed until September 5, 2014.”

Exhibit 8.

Avalon did not pursue the proposed supplemental agreement, and the lease expired

on January 11, 2016. Around the same time, Avalon entered into a new lease with GSA,

lease LCA03420, at the same location. Exhibits 9, 17. The new lease contained a higher

utility rate of $65 per hour for the entire space and a HIGHER OVERTIME HVAC USAGE

(JUN 2012) clause that read:

CBCA 5696

7

A. If there is to be a change for heating or cooling outside of the Building’s

normal hours, such services shall be provided at the hourly rate set forth

elsewhere in the Lease. Overtime usage services may be ordered by the

Government’s authorized representative only.

B. When the cost of service is $3,000 or less, the service may be ordered

orally. An invoice shall be submitted to the official placing the order for

certification and payment. Orders for services costing more than $3,000 shall

be placed using GSA Form 300, Order for Supplies or Services, or other

approved service requisition procurement document. An invoice conforming

to the requirement of this Lease shall be submitted to the official placing the

order for certification and payment.

Exhibit 17.3

On December 5, 2016, Mr. Ghadir submitted a claim seeking $43,944.98 based on

GSA’s failure to pay for overtime utility usage for the DCR from January 11, 2001, through

January 11, 2016. Exhibit 9.

Another LCO, Brandy Ocker, issued a contracting officer’s final decision denying

Avalon’s claim on March 9, 2017. Exhibit 25. LCO Ocker wrote:

Paragraph 16(B) of the “Special Requirements” requires that the “HVAC must

be maintained at a temperature range between 68 and 80 degrees Fahrenheit.”

This is a lease requirement that is covered by the rent, and there are no special

provisions requiring the Government to provide additional compensation for

the Data Communication Room (DCR). Therefore, as stated, your claim is

denied.

Id.

Avalon timely appealed the contracting officer’s final decision to the CBCA, where

it was docketed as CBCA 5696.

3

Neither party submitted a copy of the new lease; however, correspondence

indicates that a new lease was executed.

CBCA 5696

8

Discussion

The central issue in this appeal is whether the lease terms required GSA to pay Avalon

extra compensation for HVAC in the DCR. Avalon’s argument seems to revolve around a

purported duty of the GSA contracting officer to inform Avalon that in some leases GSA

pays a separate rate for certain rooms using excessive electricity, such as computer rooms.

Avalon posits that GSA’s failure to include a right to extra compensation for HVAC in the

DCR entitles Avalon to recover the $43,944.98 it claims it would have garnered had the right

been included in the lease. Avalon also seems to aver in its notice of appeal that paragraph

16(B) of the “Special Requirements” clause does not apply to the issue before us. GSA

asserts Avalon is not entitled to extra payment because consistently maintaining the DCR

between 68 and 80 degrees was required under the base lease. GSA also argues that Avalon

failed to submit properly authorized and certified quarterly invoices for the costs it now seeks

as required under the lease and the Board lacks jurisdiction over claims that arose before

December 5, 2010.

This Board, and one of its predecessor boards, the General Services Board of Contract

Appeals (GSBCA), have grappled with issues and clauses similar to these in several other

cases. The facts and lease clauses in Rincon Center Associates v. General Services

Administration, GSBCA 11927, 96-1 BCA ¶ 28,126 (1995), aff'd sub nom. Rincon Center

Associates v. Johnson, 108 F.3d 1393 (Fed. Cir. 1997) are substantially identical to the

clauses in the appeal before us. In Rincon, the GSBCA concluded that the applicable lease

provisions, when read as a whole, clearly required the continuous cooling of the computer

room as part of the basic rental consideration. Id.

The Rincon panel found that a contract must be interpreted “as a whole in a manner

which gives reasonable meaning to all its parts and avoids conflict or surplusage of its

provisions.” 96-1 BCA at 140,408 (citing Granite Construction Co. v. United States, 962

F.2d 998, 1003 (Fed. Cir. 1992); B.D. Click Co. v. United States, 614 F. 2d 748, 753 (Ct. Cl.

1980)). Similar to the facts here, a Rincon lease provision had a specific requirement for

continuous air conditioning of the building's computer room. The HVAC provision further

stated the room should be individually zoned and maintained 24 hours a day, 7 days a week.

96-1 BCA at 140,408-09. When interpreting the meaning of the provision in light of the

general HVAC provision, the GSBCA noted:

We do not view the specific requirement for continuous cooling of the

computer room as being in conflict with the more general provisions regarding

cooling which appear in clauses 62 and 72. Rather, in an effort to harmonize

these contract provisions among themselves, we interpret the latter two clauses

as applying to the general office area while that dealing with the cooling of the

CBCA 5696

9

computer room is, on its face, limited to that area alone. As to payment

provisions covering the cost of running the cooling equipment in the computer

room, we see no reason why the provisions of paragraph six of Standard Form

2 do not apply. Under that provision, lessor is required to furnish all utilities

as part of the rental consideration.

96-1 BCA at 140,409.

Although Avalon makes several statements asserting its entitlement to extra

compensation, it provides no compelling facts or legal theory to actually support entitlement.

There is no evidence that the GSA contracting officer erred in not including a clause that

allowed Avalon to separately bill for the DCR’s HVAC. Applying the precedent articulated

in Rincon, as well as the clear terms of this lease, Avalon is responsible for providing HVAC

for the DCR 24-hours a day as part of its basic rental consideration.

In so far as GSA argues that the Board lacks jurisdiction over the part of Avalon’s

claim that arose before December 5, 2010, we noted in Systems Management and Research

Technologies Corp. v. Department of Energy, CBCA 4068, 15-1 BCA ¶ 35,976 at 175,78788, that our controlling authority, the Federal Circuit, has held that the Contract Disputes Act

(CDA), 41 U.S.C. §§ 7101-7109 (2012), does not establish a jurisdictional bar for claims that

have not been submitted within six years of claim accrual.4 Having found the claim lacks

4

The CDA provides that “[e]ach claim by a contract against the Federal

Government relating to a contract . . . shall be submitted within 6 years after the accrual of

the claim.” 41 U.S.C. § 7103(a)(4)(A); see 48 CFR 33.206(a). We concluded in Systems

Management that:

The transformation of the CDA’s six-year statute of limitations from

jurisdictional to non-jurisdictional changes how we must approach a motion

to dismiss a case for failure to meet that deadline. No longer can the

Government, through a motion to dismiss, challenge the factual allegations

that the contractor has made in its complaint and require the contractor to

prove jurisdictional facts by a preponderance of the evidence. Instead, the

CDA’s six-year statute of limitations is now an affirmative defense that the

Government must plead in its answer to the appellant’s complaint.

15-1 BCA at 175,788 (citing Sikorsky Aircraft Corp. v. United States, 773 F.3d 1315 (Fed.

Cir. 2014)).

CBCA 5696

10

merit, we need not go into an extensive analysis of whether a portion of the claim is time

barred.

Decision

CBCA 5696 is DENIED.

_________________________

PATRICIA J. SHERIDAN

Board Judge

We concur:

_________________________

JERI KAYLENE SOMERS

Board Judge

_________________________

BEVERLY M. RUSSELL

Board Judge