_______________________________ DENIED: August 20, 1992 _______________________________ GSBCA 11451 CENTENNIAL LEASING, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Peter DeVito, President of Centennial Leasing, Wall, NJ, appearing for Appellant. Edmund W. Chapman, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges LaBELLA, BORWICK, and HYATT. BORWICK, Board Judge. Background On June 18, 1991, appellant, Centennial Leasing Corporation, (Centennial) filed an appeal from the decision of the contracting officer for the General Services Administration (GSA), respon- dent, denying a claim for equitable adjustment of $19,- 142.37.[foot #] 1 The claim arose out of a purchase order for rentals of cars, trucks, and vans issued by the Naval Facilities Engineering Command (NAVFAC) against an indefinite quantities contract administered by GSA. The term of the purchase order ended on April 17, 1986. Nevertheless, NAVFAC kept the vehicles past that date and by notice dated July 10 terminated the purchase order effective on August 20. On August 30, Centennial's president signed a modifi- cation which retroactively established the ending date of the term as August 20. ----------- FOOTNOTE BEGINS --------- [foot #] 1 By amended complaint Appellant increased its claimed damages to $30,092.55. ----------- FOOTNOTE ENDS ----------- Centennial claims that it had an oral agreement with the NAVFAC contracting officer to renew the purchase order for one year past its ending date of April 17, 1986. Centennial claims that NAVFAC's violation of that agreement caused it loss of rentals and interest costs when it refinanced the vehicles with its bank in the expectation that the purchase order would be renewed for a year. Centennial also claims that NAVFAC misused the vehicles beyond normal wear and tear, and that the Government is responsible for the vehicles' repair. We held a hearing on March 16, 1992. We deny the appeal. Centennial entered into a bi-lateral modification which retroac- tively established the ending date of the purchase order as August 20, 1986. That modification was supported by consider- ation and Centennial has no right to payment beyond the consider- ation in the purchase order. Centennial has not established a right to additional damages, beyond the amount already granted by the contracting officer, for misuse of the vehicles. Findings of Fact The contract and purchase order 1. On August 31, 1984, Centennial and GSA entered into an indefinite quantity contract for the leasing of cars and trucks. The contract allowed various federal agencies to issue purchase orders to Centennial for twelve month leases of cars and trucks. The term of each purchase order was from the date of delivery of each car or truck with an option to extend the term of the purchase order for two additional twelve month periods. Appeal File, Exhibit 1, B. 2. On January 4, 1985, NAVFAC issued a purchase order against the indefinite quantity contract to Centennial for lease of two utility trucks, one panel van, eight one-ton pickup trucks, and one compact pick-up truck. Appeal File, Exhibit 3. The purchase order had a contemplated delivery date of March 1, 1985, and ending date of February 28, 1986. The purchase order was subject to the terms and conditions of the indefinite quanti- ty contract. Id. 3. The contract provided that the Government would be responsible for reconditioning the vehicles at the Government's expense, "excluding normal wear and tear as defined below." Protest File, Exhibit 1, H, RETURN OF VEHICLES, (B). Normal wear and tear was defined as: [T]hose dents, dings, paint chips, scratches, pitted, but not cracked, windshields, and interior wear such as soiled carpets and seats normally accrued to a motor vehicle over a period of 10-24 months use in both a rural and metropolitan area. Id., RETURN OF VEHICLES, (D). That paragraph also contained a limitation of liability for reconditioning vehicles damaged beyond normal wear and tear: In any event, the agency's/department's liability for reconditioning vehicles acquired as a result of this [contract] shall be limited to replacement of glass and exterior trim and repair to body damage attribut- able to collision only, and to interior damage such as cut, torn, burnt materials as well as mechanical repairs. Id. 4. By modification P00001, the parties extended the effective date of the purchase order to April 17, 1986. Appeal File, Exhibit 6. There is a dispute of fact as to whether the NAVFAC contracting officer gave Centennial's president verbal assurances that NAVFAC would renew the purchase order for another year, i.e. until April 1987. Centennial's president testified that in March 1986, he told the contracting officer that he needed to know about the renewal in order either to remove the vehicles or to refinance them for another year. He testified that the contracting officer told him that the purchase order would be renewed for a year. Transcript at 11. The contracting officer does not recollect talking to appellant's president about the contract. Respondent's Exhibit III, 8 (Declaration of Commander J.A. Rispoli, dated March 5, 1992. Centennial has presented the stronger evidence; its president recalls the conversation, while the contracting officer does not. The oral assurance explains why Centennial did not seek return of the vehicles shortly after April 17, as it would have been obliged to do under the purchase order had the parties intended that the purchase order come to an end on April 17. See Finding 6, below. 5. On April 15, 1986, NAVFAC's contracting officer, in an internal memorandum, determined that the purchase order would be extended from April 18 through August 20, 1986. Respondent's Hearing Exhibit I; Transcript at 14-15. 6. On July 10, NAVFAC issued a notice of termination for convenience of the purchase order "effective thirty days after receipt of the notice." Appeal File, Exhibit 8. The vehicles were, in fact, kept under lease until NAVFAC terminated the purchase order for convenience, effective August 20, 1986. Id., Exhibits 7, 8, 20B. 7. On August 30, 1986, Centennial's president signed a modification which retroactively changed the ending date of the contract to August 20, 1986. This modification (P00002) was countersigned by the NAVFAC contracting officer on September 29, 1986, and provided consideration of $11,233.99. Appeal File, Exhibit 7. On March 9, 1987, Centennial's president signed bi- lateral modification P00003 which increased the purchase order price by $17,536.90 for 150,000 excess miles, and damages in excess of normal wear and tear of $2,536.90. The modification stated that "Contract completion date of 20 AUG 86 remains unchanged by reason of this change." Id., Exhibit 15. On March 27, 1987, appellant's president signed bi-lateral modification P00004 increasing the contract price by another $10,000 for 100,000 excess miles. Again, the modification stated: "Contract completion date of 20 AUG 86 remains unchanged by reason of this change." Id., Exhibit 18. The claims 8. On December 16, 1986, Centennial submitted a claim for alleged excessive damage totalling $4,044.50 to vehicles with serial numbers 1GCEC24N:3FF385008, 5FF384829, 2FF385002, 0FF- 884835, and 4FF385101. Appeal File, Exhibits 12A, 12B. On December 17, 1986, Centennial submitted a claim for $5,309 for alleged excessive damage to six other vehicles. Id., Exhibits 13A, 13B. By letter of February 3, 1987, the NAVFAC contracting officer allowed $2,429 on Centennial's claim of $5,309. Id., Exhibit 14. By letter of February 27, the NAVFAC contracting officer allowed $1,354 on the claim for $4,044.50. On April 20, 1987, Centennial filed an invoice for $8,767 for excess damages for eleven vehicles. Id., Exhibit 19a. By letter of March 15, 1990, the NAVFAC contracting officer allowed $2,321.60. Id., Exhibit 23B. 9. On May 6, 1987, Centennial served notice on the con- tracting officer that it would incur a loss for the "untimely remarketing" of the vehicles, allegedly caused by the termination for convenience of the purchase order. Appeal File, Exhibit 20a. The damage claimed amounted to $19,142.36. Id., Exhibit 23B. 10. On March 15, 1990, the NAVFAC contracting officer referred the balance of Centennial's claims for damages in excess of wear and tear in the amount of $3,090 and the untimely remarketing claim of $19,142.36 to the contracting officer of the General Services Administration. Appeal File, Exhibit 23B. 11. In response to a request for additional information from the GSA contracting officer, Appeal File, Exhibit 27, Centennial's president sent a revised claim dated March 13, 1991. There, Centennial explained that the claim for $19,142.37 repre- sented interest paid by Centennial to its bank from which it secured automobile loans to finance the purchase of the automo- biles it leased to the Government. Id., Exhibit 29; Transcript at 20-21. 12. Centennial claimed it was damaged when the purchase order was terminated eight months earlier than the one year renewal term appellant expected. Appeal File, Exhibit 29. Centennial claimed that it had refinanced the residual value of the cars with another loan, expecting that the renewal would last one year. Transcript at 50-51. Centennial sent the renewal loan agreement to the bank in the early part of July and agrees that the financing was not in place until the first of August. Id. at 47-48. Centennial's president received the termination notice on July 22, but did nothing to stop the refinancing in the hope of reversing the termination. Id. at 49, 53. 13. On May 13, 1991, the General Services Administration's contracting officer denied the claim for "insufficient evidence to support the claim." Appeal File, Exhibit 30. A timely appeal followed. Discussion Centennial's president claims it had an oral agreement that the purchase order would be renewed for another year, and that it has been damaged by NAVFAC's not fulfilling the agreement. Commander Rispoli did indeed tell Centennial's president that the purchase order would be renewed for a year. Finding 4. Oral agreements are not binding. Cf. Mil-Spec Contractors v. United States, 835 F.2d 865, 868-69 (Fed. Cir. 1987) (no accord and satisfaction based on oral agreement because oral agreement not binding on Government). Respondent raises the defense of "accord and satisfaction," arguing that modification P00002 to the purchase order bars the claim. Respondent is correct as to the bar, but for a different reason. "Accord and satisfaction" is a discharge of a claim by rendering performance different from that which was claimed as due, and the acceptance of the substituted performance as satis- faction of its claim. Chesapeake & Potomac Telephone Co. v. United States, 228 Ct. Cl. 101, 654 F.2d 711 (1981); Brock & Blevins Co. v. United States, 170 Ct. Cl. 52, 343 F.2d 951 (1965). Here, the claim for increased rentals arose after the execution of the bi-lateral modification. Findings 7, 9. There was no "satisfaction" of a pre-existing claim. Centennial and respondent did, however, enter into bi- lateral purchase order modification P00002, retroactively agree- ing to a contract extension from April 17 to August 20. Finding 7. That modification was supported by consideration of $11,- 233.99, and contained no reservation of a claim. Id. In short, the parties executed a bi-lateral retroactive change to the term of the purchase order, without a reservation of Centennial's rights. Centennial's claims arising from the extension of the purchase order are thus barred. Jordan & Nobles Construction Co., GSBCA 8349, et. al., 91-1 BCA 23,659, at 118,514 (1990). Centennial's president argues that he agreed to the contract extension only to secure continued rental payments for the vehicles, and did not intend to give up any claims. The unex- pressed subjective intent of Centennial's president in signing the modification is irrelevant. Loral Corp., ASBCA 37,627, 92-1 BCA 24,661, at 123,026-27.[foot #] 2 Centennial has not shown that it is entitled to additional damages for the condition of the vehicles after their return to Centennial. Respondent is not responsible for vehicles' condi- tion resulting from normal wear and tear. Furthermore, beyond wear and tear, the Government's liability for reconditioning is limited to "replacement of glass and exterior trim and repair to body damage attributable to collision only, and to interior damage such as cut, torn, burnt materials as well as mechanical repairs." Finding 3. Centennial has not shown that the recondi- tioning costs involved either replacement of glass, or exterior trim, or body damage, which was attributable to collision when NAVFAC had possession of the vehicles, or to mechanical repairs. Decision The appeal is DENIED. ________________________________ ANTHONY S. BORWICK Board Judge We concur: ____________________________ VINCENT A. LaBELLA Board Judge ____________________________ CATHERINE B. HYATT Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 2 The claim for the cost of appellant's interest refinancing is also barred for this reason. In addition, we note that appellant's president had ample time to cancel the refinanc- ing of the vehicles after it received the termination notice for the purchase order. Finding 12. Appellant's president took the business risk of continuing with the refinancing knowing that NAVFAC planned not to renew the purchase order. Appellant's president thought he might be able to persuade NAVFAC to renew the purchase order for a year. Id. There is no reason why the __ Government should bear the financial consequences of that gamble.