GRANTED: January 14, 1993 GSBCA 11467 OGDEN ALLIED BUILDING & AIRPORT SERVICES, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. William A. Roberts, III and Brian A. Darst of Howrey & Simon, Washington, DC, counsel for Appellant. Roland Ben, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges PARKER, BORWICK, and HYATT. PARKER, Board Judge. This appeal arises out of a contract between Ogden Allied Building & Airport Service, appellant, and the General Services Administration, respondent, to maintain two federal buildings in Texas. Appellant seeks to keep state and local tax refunds, worth nearly $100,000, that two utility firms issued to it. Respondent, however, has withheld the sum of those refunds from its monthly lease payments, on the grounds that the contract's tax and pricing clause authorizes such withholding and, to the extent that the contract does not permit this, the parties made a mutual mistake of fact when entering into the agreement. We agree with appellant that the contract does not authorize respondent to recover the refunds and that reformation of the contract would be inappropriate. Thus, we grant the appeal. Findings of Fact 1. On August 2, 1988, respondent awarded appellant contract no. GS-07P-87-HTC-0260 for the maintenance and management of the Bob Casey Federal Building and the United States Customs House/Post Office in Houston, Texas. Appeal File, Exhibit 1 at 1. The contract included four one-year option periods, for a total possible performance running from September 1, 1988, through August 31, 1992. Id. 2. In a separate line item in its bid, appellant set out its offer to pay all utility costs incurred in performing this contract, estimated at $514,974 per year. Appeal File Supplement, Exhibit 10 at 2. Appellant estimated that state and local taxes would total $33,141.00 per year out of that total. Appeal File, Exhibit 1 at CL0854 and HOUC/R15. During a pre- award review, respondent noted that the parties probably could obtain an exemption from Texas utility taxes, although neither party investigated how to do so at that point. Id., Exhibit 23. 3. By letter dated January 4, 1990, respondent asked Houston Lighting and Power Company (HLPC) to exempt the two federal buildings in Houston from state and local utility tax liability, on the grounds that the incidence of the tax fell upon the Government. Appeal File, Exhibit 3. HLPC then asked appellant to apply for a sales tax exemption, Appeal File Supplement, Exhibit 16, and appellant remitted those forms soon thereafter, id., Exhibit 17. On April 3, 1990, HLPC credited appellant's electricity account for the Bob Casey building with $52,730.37, and with $15,779.56 for the Customs House. Id., Exhibits 19, 20. On October 16, 1990, respondent also sent ENTEX, the Houston natural gas supplier, exemption forms, and the firm promptly credited the Ogden account with $495.02, covering the period from November 1988 through September 1990 for both buildings. Appeal File, Exhibits 8, 9. On March 1, 1991, respondent asked appellant to prepare an amendment to reduce the utility price increase that an earlier amendment, Modification AS09, allowed. Id., Exhibit 13. 4. On March 22, 1991, appellant proposed that respondent reduce one month's payment by about $66,000, and proposed a new, lower monthly utility payment thereafter to compensate respondent for the remission of the utility tax refunds. Appeal File, Exhibit 15 at 2. After review, id., Exhibit 15 at 2-3, the parties in May 1991, reached a preliminary agreement, id., Exhibit 17 at 1-2; Exhibits 19, 20. However, by letter dated June 26, 1991, appellant asked that respondent suspend the modification on the grounds that the contract did not require refund of after-relieved state and local taxes. Id., Exhibit 22 at 2. 5. Respondent unilaterally issued Modification PA16 on June 28, 1991, which reduced the contract price by $99,013.26, Appeal File Supplement, Exhibit 23, and issued a final debt determination holding appellant liable for $99,013.26 in refunded utility taxes, id., Exhibit 24 at 2-3. On July 25, 1991, respondent deducted $102,362.32 from appellant's invoice no. 1174645, which included a setoff of the $99,013.26 referenced in the unilateral debt determination, id., Exhibits 7, 8, and appellant appealed that decision to the Board on September 26, 1991. 6. The contract included a clause entitled "Federal, State, and Local Taxes (APR 1984)," Appeal File, Exhibit 1 at 69, which defines "after-relieved taxes" to be: any amount of Federal excise tax or duty, except social security or other employment taxes, that would otherwise have been payable on the transactions or property covered by this contract, but which the Contractor is not required to pay or bear, or for which the Contractor obtains a refund or drawback, as the result of legislative, judicial, or administrative action taking effect after the contract date. 48 CFR 52.229-3(a) (1988) (FAR 52.229-3(a)) (emphasis added). The remainder of the provision read as follows: (b) The contract price includes all applicable Federal, State, and local taxes and duties. . . . . (d) The contract shall be decreased by the amount of any after-relieved Federal tax . . . . . . . . (g) The Contractor shall promptly notify the Contracting Officer of all matters relating to any Federal excise tax or duty that reasonably may be expected to result in either an increase or decrease in the contract price and shall take appropriate action as the Contracting Officer directs. (h) The Government shall, without liability, furnish evidence appropriate to establish exemption from any Federal, State, or local tax when the Contractor requests such evidence and a reasonable basis exists to sustain the exemption. FAR 52.229-3(b)-(h) (emphasis added). Discussion Appellant obviously is correct that this fixed-price contract provides for downward adjustment of the contract price only for after-relieved Federal taxes, not state and local taxes. Respondent counters that the parties were mutually mistaken as to the Texas state sales tax law when they entered into this agreement, and asks the Board to reform the contract to what the parties would have agreed to had they known the actual state of the law. Respondent, however, was not mistaken as to Texas law; it recognized before award that the parties probably could obtain an exemption. Finding 2. Neither party did anything about it, however, and they entered into this fixed-price contract without inserting language which would have provided for adjustment of the contract price in the event the taxes were found inapplicable. This was the bargain of the parties. One of our fellow boards has considered this same issue -- whether the Government may withhold contract payments to cover refunds of state taxes under a contract containing the same clause at issue here. It concluded that such withholding is improper. Northwest Piping, Inc., IBCA 2611-A, 89-2 BCA 21,794. We agree. Decision For the reasons stated above, this appeal is GRANTED. Respondent owes appellant $99,013.26 plus interest in accordance with statute. __________________________ ROBERT W. PARKER Board Judge We concur: __________________________ __________________________ ANTHONY S. BORWICK CATHERINE B. HYATT Board Judge Board Judge