GRANTED IN PART: April 4, 1994 GSBCA 11663 VEHICLE MAINTENANCE SERVICES, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Robert A. Oliver, Managing Partner of Vehicle Maintenance Services, Silver Spring, MD, appearing for Appellant. John E. Cornell and Margaret A. Dillenburg, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), HYATT, and GOODMAN. GOODMAN, Board Judge. This appeal arises from a contract awarded to appellant, Vehicle Maintenance Services (VMS), by the General Services Administration (GSA or respondent) for the performance of preventive maintenance, inspection, overhaul, and repair of government-owned vehicles at Fort Jackson, South Carolina. The contract was a one-year requirements contract for indefinite quantities with options to extend the period of performance for four consecutive one-year periods. Appellant performed the base year of the contract and respondent exercised the first option year. During performance of the first option year, by letter dated August 23, 1989, VMS submitted a certified claim pursuant to the Contract Disputes Act of 1978 (the CDA) for the period January 1, 1988, through July 31, 1989. The claim consisted of ten separate items. The quantum of six of the claim items was designated by sums certain, and the quantum of the remaining items was not stated. Respondent did not exercise the second option year and recompeted the contract. VMS did not bid on the resolicitation. On March 4, 1991, VMS supplemented its previous claim by submitting additional documentation and certification pursuant to the CDA. The supplemental claim consisted of twenty-three claim items, which included the previous ten claim items. The quantum of the twenty-three claim items each was designated in a sum certain. The total amount claimed became $1,970,544.14. The contracting officer issued a final decision dated October 10, 1991, denying appellant's claim in its entirety. On October 18, the contracting officer revised the decision and granted one of the claims in part for $75.52. On January 8, 1992, VMS filed this appeal of the contracting officer's decision. Prior to a hearing on the merits, ten claim items were settled and two claim items were dismissed by the Board in its decision dated March 11, 1993, granting in part respondent's motion for partial summary relief. Vehicle Maintenance Services v. General Services Administration, GSBCA 11663, 93-3 BCA 25,929. A hearing on the merits was held March 30-April 2, 1993, on the remaining eleven claim items. As discussed below, we grant appellant's appeal as to four claim items totalling $291,583.19. Findings of Fact Background 1. On August 20, 1987, GSA issued solicitation no. AT/TC 20014 (the solicitation) for the performance of preventive maintenance, inspection, overhaul, and repair of government-owned vehicles at Fort Jackson, South Carolina. The solicitation was for a requirements contract for indefinite quantities. The offerors, including VMS, submitted bids for nine contract line item numbers (CLINs) of supplies and services. Two additional CLINs were discounts for specific categories of parts prices. GSA included estimated annual quantity figures for each CLIN. Appeal File, Exhibit 1. 2. VMS is a partnership. Mr. Robert Oliver is the managing partner. Transcript at 11. He was the sole witness to testify for VMS at the hearing. 3. On November 20, 1987, VMS, as low bidder, was awarded contract no. GS-04F-88-ETS-0165 (the contract) for all CLINs in the solicitation. Appeal File, Exhibit 5; Transcript at 19-20. 4. After award, Mr. Oliver toured the facilities at Fort Jackson and reviewed GSA procedures. He discussed with Ms. Sandra Jones, respondent's contract specialist, his expectation of being able to administratively handle the contract by using a computer. Mr. Oliver received a GSA computer listing which contained basic information about the size of the fleet and each vehicle's GSA tag number, year, make, model, vehicle identification number, and initial mileage. Transcript at 20- 21. Mr. Oliver also had a discussion with Mr. Joseph Bell, the program manager for fleet management in GSA Region 4, which includes the Fort Jackson area. Mr. Oliver and Mr. Bell discussed the number of persons Mr. Bell expected VMS to employ in order to perform the anticipated contract work. Id. at 59; Appellant's Exhibit 117. 5. Contract performance began on January 1, 1988. Appeal File, Exhibit 5 at 1. 6. During the course of contract performance, Mr. Oliver administered the contract from his office in Silver Spring, Maryland, by use of a computer via modems to the job site at Fort Jackson. Transcript at 404-06. VMS's on-site managers also had access to the computers located at the job site and regularly entered information into the computers. Id. at 480-81. 7. During the first month of contract performance, VMS deferred performing major repairs because the Army had removed the phone system from the facilities which VMS was to use. Appellant and respondent resolved this initial delay, however, within forty-five days of the commencement of the contract. Transcript at 31-35. 8. VMS alleges that it had experienced problems during the early months of contract performance devising an invoice format acceptable to GSA, which delayed its ability to begin billing respondent until the end of January 1988. Despite this delay in billing, VMS was not delayed in performing repairs. Transcript at 35-39. 9. Appellant prepared an invoice register which lists each invoice submitted and paid by GSA and a payment register, indicating payment by GSA. Appellant's Exhibits 120, 125. Appellant generated both registers from a computer database of parts supplied and labor performed during its performance of the contract. Transcript at 51-52. 10. Mr. Oliver described the creation of VMS's computer database as follows: When a repair was delivered to us, the first thing that happened is that it was put into the computer and assigned a number. Then that number ultimately became the invoice number. So they were created as the vehicle came in and as significant things occurred when the paperwork was returned to us to get an RMCC [Regional Maintenance Control Center], to price it out, and then that information was put into the computer. We used the computer to generate what we called an RMCC worksheet that we used to communicate with RMCC. We took all of this paperwork and we filed it after the final invoice was generated. We filed all of the paperwork with the invoice. Transcript at 52. 11. Mr. Oliver also described how the claimed amounts were generated from the data collected during contract performance. He stated that for labor performed, labor records were maintained in VMS's computer system based upon the mechanic's actual performance. For parts, VMS maintained an inventory of commonly needed items, including light bulbs, batteries, tune-up parts, nuts, and bolts. However, most repairs required parts not maintained in inventory. Records were kept for all parts that were purchased. Labor time could be calculated by reviewing the records of time expended that were maintained in the computer. Parts records could be recreated from the purchase records or reviewing the records for labor that was performed. Transcript at 53-54. 12. By execution of modification PS-03 on November 21, 1988, the Government exercised the first option year and extended the term of the contract for an additional twelve-month period through December 31, 1989. Appeal File, Exhibit 9. 13. Section B-5 of the contract reads, in pertinent part, as follows. The syntax is GSA's. B-5 METHOD OF CHARGING FOR PARTS AND MATERIALS The materials or parts supplied by the Contractor and used in the repair of equipment are limited to those cited in the Motor Parts and Time Guide for specific repairs performed. Parts and material must be new or conform to the original equipment manufacturers specifications unless otherwise approved by the GSA representatives. The use of rebuilt assemblies are [sic] encouraged with prior approval of the ordering office e n [sic] such is standard industry practices and the rebuilt assemblies carries [sic] the same manufacturers [sic] warranty as a new assembly or subassembly. NON-PRICE PARTS LISTED: In cases where the parts are not cited in the Motor Parts and Time Guide such as, but not limited to, grease, nuts, bolts, etc. The Government should be billed at the parts manufactor's [sic] offered in the bid schedule. The prices charged shall be no more than that normally charged in the market place. Bidder to indicate the percent discount FROM those cited in the Motor Parts and Time Guide and Manufacture suggested retail price list for parts not cited in the Motors Parts and Time Guide. These discounts will beconsidered [sic] in the evaluation of offer. Appeal File, Exhibit 5 at 2-3. 14. On November 21, 1988, the contracting officer issued modification PS-04 as a proposed bilateral change, which sought to add, modify, or change various terms of the contract, including the contractual method of charging for parts, material, and labor. The following language was contained in the modification: B-5 METHOD OF CHARGING FOR PARTS AND MATERIAL The services, materials or parts supplied by the Contractor and used in the repair of equipment shall be those cited in the Chilton's Labor Guide and Parts Manual for specific repairs performed. If the services and/or parts are not listed in Chilton's Labor Guide and Parts Manual or a Manufactures [sic] price list, the services and/or parts shall be considered non-price listed/repair replacement (NPL/RR) items and be subject to negotiations between the Government and the Contractor. If the Government and the Contractor cannot reach an agreement on price, then the services and/or parts may be procured elsewhere. . . . . Page 7, Item Cl, Labor. Change body and fender work excluded on the second line to read: (body, fender, and glass work excluded). Appellant's Exhibit 129; Respondent's Exhibit 505. 15. By letter dated November 29, 1988, VMS rejected and refused to sign modification PS-04, stating: Contract Modification PS-04 makes material changes in the contract and in the nature of the relationship between the contracting parties that are seriously detrimental to my financial and legal interest and will dramatically affect my performance and my ability to perform under the contract. Appellant's Exhibit 130. 16. In July 1989, the Government decided, because of declining workload encountered by VMS in the performance of its contract, not to exercise its option to extend the period of performance of the contract for additional option periods beyond the option year previously exercised. Appeal File, Exhibit 25 at 1. 17. By letter dated August 23, 1989, VMS submitted a claim for various items for the period January 1, 1988, through July 31, 1989. While appellant included the certification language required by the CDA, the values of some items were expressed in specified dollar amounts and the values of others were not. The following items were submitted: 1. Labor Pricing $215,054.30 2. Parts Pricing 114,489.62 3. GSA Supplied Parts 4. GSA Diverting Work 5. GSA Withholding Approval 86,401.15 6. Operating Procedure 30,624.48 7. Deadline 23,409.42 8. Government Supplied 5,920.00 Equipment 9. GSA Required Equipment 7,500.00 10. GSA Payment Deficiencies Prompt Payment Interest 1,513.17 Invoices Not Paid 5,695.38 Invoices Short Paid 298.09 Appeal File, Exhibit 10. 18. On September 25, 1989, respondent issued solicitation AT/TC-20081 for similar work to be performed at Fort Jackson during what could have been the second option year of the VMS contract. Bid opening was conducted on October 25, 1989. Appeal File, Exhibit 13. 19. By letter dated October 4, 1989, respondent informed VMS of the decision not to exercise the second option year of VMS's contract and to recompete the contract. Appeal File, Exhibit 11. 20. By letter dated October 13, 1989, the contracting officer informed VMS that GSA could not "take action" on appellant's claim dated August 23, 1989, until appellant had submitted a proper certification.[foot #] 1 Appeal File, Exhibit 14. ----------- FOOTNOTE BEGINS --------- [foot #] 1 The previous claim did contain the requisite language for certification pursuant to the Contract Disputes Act, and the basis of the contracting officer's request for additional certification remains unclear. It is possible that the contracting officer was requiring the quantum of all claim items to be stated in sums certain. ----------- FOOTNOTE ENDS ----------- 21. By memorandum dated December 5, 1989, the contracting officer set forth additional reasons for respondent's determination not to exercise the second option year of the contract, stating that appellant's "[c]ontract performance has been less than satisfactory. Fleet manager Tom McNulty has a complete file of back-up data regarding this contractor to uphold this decision." Appeal File, Exhibit 12. Mr. McNulty was fleet manager at Fort Jackson from November 1987 through June 1990. Transcript at 733. 22. By letter dated March 4, 1991, VMS submitted a supplemental claim to the contracting officer, certified pursuant to the CDA, for various claims arising from the performance of the contract, increasing the amount of its previous claim. This supplemental claim consisted of twenty-three claim items, which included the ten claim items in the previous claim. The quantum of each of the twenty-three claim items was designated in a sum certain; the amounts totalled $1,970,544.14. Appeal File, Exhibit 17. The contracting officer received this claim on March 8, 1991. Id., Exhibit 18. 23. The contracting officer denied VMS's claim in its entirety by decision dated October 10, 1991. Appeal File, Exhibit 25. 24. On October 18, 1991, the contracting officer modified her earlier decision, which denied the claim in full, and granted appellant's Claim T for "Short Paid Invoices" in the amount of $75.52 and denied the remainder of the claim. Appeal File, Exhibit 27. 25. VMS appealed the contracting officer's decision by filing a notice of appeal dated January 8, 1992, with this Board. Appeal File, Exhibit 28. 26. After filing this appeal, the parties settled several claims, and two claims were dismissed by the Board in response to respondent's motion for partial summary relief. The following table indicates the status of the VMS certified claim before the Board conducted a hearing on the merits: Dismissed Claim Items Description Amount Claimed -------------------- -------------- Vehicle Delivery Labor $ 13,697.10 Multiyear/Level Price Contract 13,630.43 ------------- SUBTOTAL: $ 27,327.53 Settled Claim Items Description Amount Claimed -------------------- -------------- Prompt Payment $ 1,064.53 GSA Supplied Parts 9,178.59 Oil Filters 2,418.83 Wheel Balance Labor 2,785.10 Remove and Install Wheel Labor 9,321.35 Towing Service for Flat Tires 9,045.00 Telephone System Deficiency 12,766.84 Air Compressor Deficiency 9,223.64 Short Paid Invoices 231.98 Outstanding Invoices 4,104.95 -------------- SUBTOTAL: $ 60,140.81 Claim Items Remaining for Litigation Description Amount Claimed -------------------- -------------- Bad Faith Breach of Contract $ 960,106.47 Negligent Quantity Estimates 117,046.21 Labor Inefficiency 283,127.39 Diverted Work 57,150.88 Motor Listed Parts 8,360.99 Non-Motor Listed Parts 151,310.79 Motor Repair Variance Labor 21,951.96 Non-Standard Vehicle Labor 249,828.75 Ignition System Labor 6,971.50 Preventative Maintenance Labor 18,470.50 Pay for Required Equipment 9,722.30 ------------- SUBTOTAL: $1,884,047.74 Claim Summary Dismissed Items $ 27,327.53 Settled Items $ 60,140.81 Remaining Items $1,884,047.74 ------------- TOTAL: $1,971,516.08[foot #] 2 ----------- FOOTNOTE BEGINS --------- [foot #] 2 This total of the claim items differs from the total claim of $1,970,544.14 submitted by VMS on March 4, 1991, because VMS revised the quantum of several claim items after submission. The revisions are noted where applicable in this opinion. ----------- FOOTNOTE ENDS ----------- 27. The Board held a hearing on the merits March 30-April 2, 1993, and kept the record open after the hearing to allow VMS to supplement it with documentation received in response to a subpoena appellant had served on respondent immediately before the hearing commenced.[foot #] 3 We discuss the eleven remaining claim items below, with separate findings of fact and analysis for each of them. Bad Faith Claim Item 28. GSA Region 4 issued solicitations for three contracts for vehicle maintenance, including the contract which is the subject of this appeal, to be awarded in the fall of 1987.[foot #] 4 VMS submitted bids in response to all three solicitations, and Mr. Oliver attended the bid openings on VMS's behalf. In preparing its bid in response to the first solicitation (not the instant contract), VMS had assumed a fixed- cost recovery period of one year. VMS subsequently learned that its bid had been significantly higher than the low bid for that solicitation. Transcript at 13. 29. Mr. Oliver alleges that as a result of a discussion with the contracting officer, Ms. Nancy Attridge, and the program manager, Mr. Joseph Bell, he concluded that a fixed-cost recovery period of one year was inappropriate for his bid on the two remaining contracts to be awarded. He therefore used a different methodology in calculating VMS's bids for two remaining contracts, including Fort Jackson, to provide for recovery of fixed costs over the entire term of the contract, assuming that VMS would be awarded the contract and, subsequently, all option periods would be exercised. Transcript at 13.[foot #] 5 ----------- FOOTNOTE BEGINS --------- [foot #] 3 The record in this appeal consists of the Appeal File, Exhibits 1-29; Appellant's Supplement to the Appeal File, Exhibits 30-115; Appellant's Hearing Exhibits 116-258; Respondent's Hearing Exhibits 500-575; Appellant's Prehearing Brief; the transcript of the hearing on the merits; Appellant's Posthearing and Reply Briefs; Respondent's Posthearing and Reply Briefs; and Appellant's Exhibits 259-266 (the information received after the hearing in response to the subpoena submitted by appellant). [foot #] 4 The contracts were to be performed at Fort Rucker, Alabama, Ft. McClellan, Alabama, and Fort Jackson, South Carolina. [foot #] 5 Appellant's Exhibit 127, entitled "VMS Memo to Auditors, Re: Fixed Assets," indicates the components and value of the fixed assets. ----------- FOOTNOTE ENDS ----------- 30. Before bidding on the instant contract, Mr. Oliver read the solicitation provisions concerning the term of the contract and the exercise of the options and believed he was bound by them. Transcript at 253-54. He alleges, however, that, based upon pre-bid conversations with the contracting officer and the program manager, he concluded that if the firm to which the contract was awarded were to perform satisfactorily, then respondent would exercise all the option years. Id. at 254. Mr. Oliver was not specific as to who made these statements, or as to when they were made. 31. The contracting officer attended bid openings in Atlanta, Georgia, for the contracts awarded for Fort Rucker and Fort McClellan. She testified during the hearing that she believed Mr. Oliver had been present at both bid openings, but she had no present recollection of his presence at either of them. Transcript at 830. By affidavit executed on December 7, 1992 (prior to the hearing), she stated that at these bid opening meetings, she spoke with Mr. Oliver. At no time during either of these bid openings did she make any promise to Mr. Oliver that the term of the Fort Jackson contract would extend to five years. Affidavit of Nancy B. Attridge (December 2, 1992) 5-6; Respondent's Exhibit 507. She testified at the hearing that she had written the affidavit after she had reviewed her notes taken at bid opening. These notes indicated Mr. Oliver's attendance by his own signature, and that the facts stated in the affidavit were accurate. Transcript at 831. She reaffirmed that she has never prospectively promised to exercise an option. Id. at 832. 32. The program manager testified that he did not recall having any pre-bid conversations with Mr. Oliver concerning the possible exercise of options. Transcript at 679. By affidavit executed on December 9, 1992, he stated that he recalled speaking to Mr. Oliver at the bid openings for Fort Rucker and Fort McClellan, but he made no promise to Mr. Oliver that the term of the Fort Jackson contract would extend to five contract years. Affidavit of Joseph P. Bell (December 9, 1992) 5-6; Respondent's Exhibit 506. Mr. Bell affirmed his affidavit testimony during the hearing, and further emphasized that he had drafted the option clause included in the solicitation and contract for the purpose of emphasizing to offerors there were no guarantees as to the exercise of options, and that it would be foolish for him to inform an offeror to the contrary. Transcript at 690-93. 33. Part I, Section B, of the solicitation and the resulting contract set forth the period of performance of the contract: B-2 TERM OF CONTRACT: Contractor shall commence performance within thirty days after award and shall continue performance for 12 months thereafter. In accordance with the clause entitled "Option to Extend the Term of the Contract Services", the Government has the unilateral right to extend the term of this contract for four additional 12 month periods upon the same terms and conditions as are contained in this contract at the time said options are exercised. Offerors are cautioned that the exercise of the options is a Government perogative [sic], not a contractual right of the contractor. Appeal File, Exhibit 5 at 2. 34. The clause entitled "Option to Extend the Term of the Contract Services" reads as follows: I-32 OPTION TO EXTEND THE TERM OF THE CONTRACT - SERVICES (4/84) (a) The Government may extend the term of this contract by written notice to the contractor within the time specified in the Schedule; provided, that the Government shall give the Contractor a preliminary written notice of its intent to extend at least 60 days before the contract expires. The preliminary notice does not commit the Government to an extension. (b) If the Government exercises this option, the extended contract shall be considered to include this option provision. (c) The total duration of this contract, including the exercise of any options under this clause, shall not exceed five (5) years. Appeal File, Exhibit 5 at 30. 35. Mr. Thomas McNulty, respondent's fleet manager at Fort Jackson, testified that during the latter part of 1988, he began to document what he considered to be unsatisfactory performance by VMS. Transcript at 738. He drafted a memorandum dated June 27, 1989, to the Chief of the Fleet Management Branch, stating: The time for the repair contract renewal is fast approaching and due to the numerous deficiencies we've experienced with the present contractor during the past eighteen months, we recommend that GSA re-solicit the Ft. Jackson contract. The attached documents are examples of the troubles we've had with the contractor and also is [sic] evidence of his poor performance. Not only have we had numerous problems, but in some instances, the contractor has made no effort to correct unsatisfactory performance. These documents represent the contractor's unsatisfactory performance in the following categories. (See numbered attachments) 1. Failure to comply with the terms of the contract regarding required repair time (i.e., 8 hours plus book time is allowed for repairs) 2. Invoices not in accordance with the contract provisions (i.e., repair time incorrect, itemized parts not shown, combination repairs being billed separately, billing for items which were not authorized, no purchase order or purchase order not amended, charges for items that should have been billed using a fixed rate) 3. Failure to honor warranty covered items. 4. Failure to maintain proper accountability of government owned equipment. (lost, stolen, and inoperative tools) 5. Personnel problems. (i.e., unanticipated manpower losses which created excess vehicle down time, and employee complaints due to method of payment, "flat rate time") 6. Failure to comply with Ft. Jackson regulations concerning shop cleanliness. 7. Failure to bill GSA within a reasonable time frame. 8. Rebuilt parts being charged as new parts. In closing, all of the above contract deficiencies have been addressed through verbal and written correspondence. Some deficiencies have never been resolved. I contend that this contractor has a history of unsatisfactory performance, and shows a degree of reluctance to comply with contract provisions. At this time I am soliciting your concurrence in re-advertising the contract for Ft. Jackson, South Carolina. Respondent's Exhibit 520. At the hearing, Mr. McNulty could not identify the actual documentation originally attached to his memorandum. He did, however, describe the basis for his allegations that VMS's performance was unsatisfactory, with reference to documentation, some of which he believed was contained in the attachments to his memorandum. Transcript at 746, 778-95; Respondent's Exhibits 519, 535-36, 547, 549-50, 552, 555. Additionally, respondent submitted documentation with regard to alleged violations of the Fair Labor Standards Act brought to the attention of GSA by VMS employees, alleged safety violations, and allegations by subcontractors that VMS failed to pay them in a timely manner. Respondent's Exhibits 525-35. 36. After having consulted with GSA Region 4 fleet management personnel, the contracting officer determined that VMS's contract performance had been "less than satisfactory." Appeal File, Exhibit 12. She further determined that it would be in the "Government's best interest" to "issue a new procurement for these services required at Fort Jackson, SC" and by letter dated October 4, 1989, informed VMS of this decision. Id., Exhibits 11, 12. 37. Respondent issued solicitation AT/TC-20081 on September 25, 1989, for vehicle maintenance to be performed at Fort Jackson. Bid opening occurred on October 25, 1989. This solicitation contained the following language similar to that which respondent proposed in modification PS-04: B-5 METHOD OF CHARGING FOR PARTS AND MATERIALS: The materials or parts supplied by the Contractor and used in the repair of equipment shall be those cited in the Motor Parts and Time Guide for specific repairs performed. If a part is not listed in the Motor Parts and Time Guide, it shall be considered a non price listed/repair replacement (NPL/RR) part and be charged in accordance with below instructions. Parts not listed in the Motor Parts and Time Guide will be billed at the manufacturer's suggested retail price less any discount offered in the bid schedule. The contractor, at the request of the Contracting Officer, may be required to furnish copies of parts invoices at any time during the term of this contract. In cases where the manufacturer's current retail price list is nonexistent for materials such as, but not limited to, grease, nuts, bolts, etc., the Government shall be billed at the actual net cost to the contractor for such items. If the contractor must manufacture or fabricate parts, the net cost of these items will be determined by negotiations when the work is ordered. Appeal File, Exhibit 13; see Finding 13. 38. VMS seeks the sum of $960,106.47 in lost profits resulting from the Government's alleged bad faith. To arrive at its damages of $960,106.47, VMS divides in half the total profit it had realized during the first two years of contract performance to arrive at an annualized rate and multiplies this result by three, representing the three additional option years which VMS believes it should have been awarded. Appellant's Posthearing Brief at 328-29. Negligently Estimated Quantities Claim Item 39. The contract reads, in relevant part: B-1 B-FSS-10-A REQUIREMENTS CONTRACT FOR (4/84) FSC Class 7539 - Preventative Maintenance, Inspection, Overhaul and Repair of Government-Owned Vehicles - Ft. Jackson, South Carolina. . . . . B-3 B-FSS-998 - ESTIMATED REQUIREMENTS (4/84): The figures in the "Estimated Requirements" column show estimates of the number of vehicles or dollar volume of the work to be done. NO GUARANTEE IS GIVEN THAT ANY QUANTITIES OF THE SERVICES DESCRIBED IN THE SOLICITATION WILL BE NEEDED DURING THE TERM OF THE CONTRACT.[foot #] 6 . . . . I-18 I-FSS-100 SCOPE OF CONTRACT: (CONT'D) Resultant contract will be used by GSA as the primary source for the services listed herein. . . . The quantities shown herein as the Government estimated requirements are based upon information made available to the General Services Administration. Such estimates are being furnished to the bidder solely for general ----------- FOOTNOTE BEGINS --------- [foot #] 6 The underlined caveat appeared again in a clause directly under the form on which the offerors filled in their quantities next to GSA's Estimated Annual Quantities. *ESTIMATED ANNUAL QUANTITY: _________________________ The figures in this column show estimates of the anticipated quantity of work. There is no guarantee that the quantities described will be needed during the term of the contract. Appeal File, Exhibit 5 at 5. ----------- FOOTNOTE ENDS ----------- informational purposes. No guarantee is given that any quantities of the services described will be needed during the term of the contract, but bona fide needs as may arise will be obtained subject to the provisions of the contract. If during the contract period, significant changes in the estimated requirements occur, the Government will where feasible, notify the contractor of such changes; however, such notification is furnished exclusively for the Contractor's information and has no bearing on the contractual obligations of either party. Appeal File, Exhibit 5 at 2, 24. 40. The final decision of the contracting officer, dated October 10, 1991, reads, in part: Claim A: Government Contract Estimates. General Services Administration (GSA) offered the estimates listed in Paragraph B-5 of subject contract in good faith based on data available on the Ft. Knox, KY Fleet Consolidation. Ft. Knox had been in operation for approximately fourteen months at the time the Solicitation was released for Ft. Jackson, SC. Appeal File, Exhibit 25 at 1. 41. Appellant alleges that the Government failed to consider relevant information in calculating the estimates. According to appellant, one of the most significant deficiencies in respondent's calculation of the quantity estimates was "the omission of the fleet replacement schedule Fleet Management Branch committed to in its Fleet Consolidation agreement with the Army" that allegedly resulted in a reduction of twenty-seven percent of the workload in the first contract year and fifty-four percent in the second contract year. Respondent's plan was to replace thirty percent of the fleet during each of the first three years of contract performance and five percent during each of the last two years. Appellant's Posthearing Brief at 319. VMS alleges that the portion of the vehicle replacement respondent had planned to implement during the performance of its contract was accomplished, except for the replacement of buses. Id. at 316. 42. Appellant states that the result of the fleet replacement schedule applicable to Fort Jackson was that: [The contract fleet was transformed] from one with a high potential for continuing major repairs and/or over-hauls with high skilled labor content and major parts replacement or over-haul to one characterized by routine maintenance with all but unskilled labor and minor parts requirements. The contract quantity estimates were qualitatively consistent with the contract fleet; the contract quantity estimates were not at all consistent with the actual workload potential given the omitted fleet replacement schedule and individual vehicle maximum life/mileage replacement standards. Appellant's Posthearing Brief at 321. 43. GSA's quantity estimates and the actual quantities required at Fort Jackson for the base year and first option year exercised are presented below: 1988 Item Estimate Actual Actual as % of Estimate7 Labor (A) 2,125 441.10 20.76% Labor (B) 4,250 6,916.10 162.73% Labor (C) 2,125 1,915.10 90.12% Tire Service 200 1,059.00 529.50% Wheel Balance 300 521.00 173.67% Service Call 200 348.00 174.00% Battery Charge 75 160.00 213.33% Lube Chassis 450 414.00 92.00% Motor Oil 2,500 4,225.00 169.00% Transmission Fluid 200 676.00 338.00% Antifreeze 450 1,255.00 278.89% Oil Filters 450 496.00 110.22% Motor Listed Parts $100,000.00 $ 21,511.64 21.51% Non-Listed Parts $ 25,000.00 $184,949.20 739.80% 1989 Item Estimate Actual Actual as % of Estimate Labor (A) 2,125 39.00 1.84% Labor (B) 4,250 3,124.00 73.51% Labor (C) 2,125 1,875.00 88.24% Tire Service 200 811.00 405.50% Wheel Balance 300 314.00 104.67% Service Call 200 276.00 138.00% Battery Charge 75 65.00 86.67% Lube Chassis 450 516.00 114.67% Motor Oil 2,500 4,551.00 182.04% Transmission Fluid 200 277.00 138.50% Antifreeze 450 628.00 139.56% Oil Filters 450 596.00 132.44% Motor Listed Parts $100,000.00 $ 13,776.46 13.78% ____________________ 7 Appellant designated this column as "Variation." Non-Listed Parts $ 25,000.00 $151,356.52 605.43% Appellant's Exhibits 160, 161; Appellant's Posthearing Brief at 314-15. 44. VMS alleges that the items that had the greatest shortfall between estimated and actual quantities were those for which it had the greatest profit potential. Transcript at 217- 18. 45. The Government based its estimates upon limited information available from the maintenance of a similar vehicle fleet at Fort Knox. Respondent derived the quantity estimates from a calculation of an estimated maintenance cost per vehicle. Mr. Bell, the program manager, explained that he used the latest repair records from the last six months of the year at Fort Knox as a basis to estimate the repair costs per vehicle of a similar sized fleet with a similar mix of new and old vehicles, taking into account the planned fleet replacement at Fort Jackson. Transcript at 672-76. Mr. Bell did not use the Fort Knox vehicle information for the entire year, as for the first six months there the fleet contained mostly older vehicles and had not been replaced with the newer vehicles. He believed that information for the entire year would not provide an accurate estimate, so he limited his calculation to only consider the available information from the last six months. Id. at 699-701. 46. The contracting officer denied this claim item in its entirety stating that "[a]lthough the figures in the contract reflect a limited degree of accuracy, the overall results of the total sum of each of the fourteen bid areas, does [sic] reflect a dollar value equal to the estimated annual value of the contract; therefore, it is the determination of the Contracting Officer that VMS sustained no monetary loss . . . ." Appeal File, Exhibit 25 at 2. 47. VMS calculates its claim for negligently estimated quantities in a two step sequence. First, VMS derived the "non- reoccurring costs" it allegedly did not recover during its performance of the base year and first option year. VMS alleges that its total nonrecurring costs were $213,978.45. Appellant then estimated the revenue it would have received over a five- year period of performance had respondent exercised the remaining three option years and ordered the quantities estimated in the contract. It alleges it should have received revenues of $1,630,881.62. Appellant alleges that it actually received a total of $738,824.35 in revenue during its two years of performance. Both of appellant's calculations appear below: Item Estimate (5 year) Actual (2 year) Labor (A) $249,687.50 $ 11,282.35 Labor (B) 456,875.00 215,879.35 Labor (C) 217,812.50 77,713.45 Tire Service 4,250.00 7,947.50 Wheel Balance 7,125.00 3,966.23 Service Call 27,000.00 16,848.00 Battery Charge 1,218.75 731.25 Lube Chassis 14,625.00 6,045.10 Motor Oil 11,250.00 7,898.40 Transmission Fluid 850.00 810.05 Antifreeze 7,537.50 6,308.05 Oil Filters 7,650.37 3,712.80 Motor Listed Parts 500,000.00 35,288.10 Non-Listed Parts 125,000.00 336,305.72 Total $1,630,881.62 $730,736.35 Parts Billed at Cost $ 8,088.00 Total $1,630,881.62 $738,824.35 Appellant calculates its alleged unrecovered "non- reoccurring" costs of $117,046.21 by determining that based upon revenue allegedly received, 54.7% of the contract's monetary value remained to be realized at the end of the first option year. Appellant then multiplied that percentage by the total "non-reoccurring" costs of $213,978.45, yielding the unrecovered "non-reoccurring" costs. The calculation is shown below: Unrecovered Non-Reoccurring Costs: (1.00 - ($738,824.35/$1,630,881.25) ) x ($213,978.45) (1.00 - .4530) x ($213,978.45) (.547) x ($213,978.45) $117,046.218 Appellant's Posthearing Brief at 316-17. Labor Inefficiency Claim Item 48. VMS developed a system to process vehicles through the repair facility in an efficient manner in accordance with the contract. This system consisted of a nine-step process: 1) receipt of vehicle, 2) assignment to mechanic, 3) calculation of cost of repairs identified by mechanic, 4) Regional Maintenance Control Center (RMCC) authorization, 5) parts ordered, 6) repairs begun, 7) quality control test drive, 8) final processing, and 9) delivery of vehicle. Complaint at 42-43; Appellant's Posthearing Brief at 298-99. ____________________ 8 The original claim amount was $114,756.64. The increased amount results from the reduction of the amount claimed for Parts Billed at Cost, which was originally claimed as $25,547.73. Complaint at 58. 49. VMS also developed a database management system for use at Fort Jackson. The system included a database containing all GSA vehicles covered by the contract, a repair element database relevant to repair times, an inventory database, and a repair invoice database. The system generated invoices, RMCC work sheets, status reports for GSA and the Army Transportation Coordinator, vehicle repair histories, payroll accounting, and accounts receivable accounting, and automatically requested extensions in accordance with the time frame set forth in the contract. Complaint at 44; Appellant's Posthearing Brief at 299. 50. Section F-5 of the contract, DEFINITIONS, reads, in relevant part: 9. Deadline - Vehicles turned into the repair contractor for repairs requiring service. This includes any reason, even awaiting parts. . . . Although the contract spells out certain terms and time frames for repair, the deadline rate should not exceed 4 percent of the total operating fleet. Appeal File, Exhibit 5 at 12. 51. The contracting officer testified that the deadline rate of four percent was a not a "contract requirement," but a "contract guideline." Transcript at 835. 52. VMS alleges that it incurred low productivity as the result of: a) Respondent's refusal to supply replacement vehicle information. VMS says that after it had originally entered information as to vehicle composition into its database, replacement vehicle information had to be entered manually into its database with whatever information was supplied at the time the vehicle was presented for repair. VMS claims that the need for late manual entry of the replacement vehicle information severely limited the information in the database regarding, for example, gross vehicle weight, any special equipment, or model number. Complaint at 45; Appellant's Posthearing Brief at 301. b) Redesign of invoice format and content four times. Complaint at 45; Appellant's Posthearing Brief at 301. c) Significant amounts of overtime because respondent enforced the four percent deadline as a contract requirement rather than as a "goal" and coerced "VMS into hiring and maintaining additional personnel and incurring overtime costs in order to meet the 4% rate despite extremely large variations in the level of workload." Appellant's Posthearing Brief at 297; Transcript at 174-75, 208-10; Appellant's Exhibit 157.9 d) Fluctuations in workload caused "in part by things that were controllable," such as the Transportation Motor Pool inspecting vehicles for various defects and "dumping" all of this repair work on VMS at one time. Transcript at 175.10 e) Delay in receiving approval for repairs from the RMCC. Transcript at 177. VMS alleges that although the proper procedure for determining repair and service requirements is clearly established in the contract, GSA totally ignored the contract procedures. Further, VMS says, GSA changed the operating procedure at will throughout the term of this contract. These abrupt and unanticipated changes allegedly caused VMS to lose efficiency in performing repairs. Moreover, the requirement that VMS receive prior approval from RMCC for repairs in excess of $50 or changes in authorized amounts of any size is said to have caused substantial problems in practice. At the pre-bid conference, VMS was allegedly told that obtaining RMCC approval would consume approximately five to ten minutes per invoice. However, VMS alleges that this process actually consumed massive amounts of time; on numerous occasions, the RMCC approval process required more than the eight hours allocated for repair processing. Appellant's Posthearing Brief at 302-03; Transcript at 196-97. f) Deferral of repairs, only to have the repair ordered several days later. Transcript at 198-99. 53. VMS submitted visual presentations and supporting documentation entitled Productivity by Pay Period, Vehicles Repaired by Pay Period, Billed Labor Hours by Pay Period, and Production Capacity by Pay Period. Appellant's Prehearing Brief at 130-33; Appellant's Posthearing Brief at 309-12; Appellant's Exhibit 201. With regard to these summaries, Mr. Oliver stated: They are summaries of information that was compiled from the data base. The indices are productivity, the ____________________ 9 Appellant's Exhibit 157 illustrates the number of employees during the duration of the contract and the hours worked per employee per pay period. 10 Mr. Oliver testified that the fluctuations were inconsistent with the "law of large numbers," which statistically would have resulted in a steady breakdown rate for vehicles, rather than fluctuation. Transcript at 194. throughput in terms in hours, and vehicles repaired by pay period. No matter what measure you use, you see significant variability. Transcript at 190-91. 54. Mr. McNulty testified that there were "lulls in the work [for VMS to perform]." Transcript at 744. 55. A handwritten memorandum by Tim Bozard, VMS's on-site manager, dated August 21, 1989, stated in part: Mr. McNulty asked if I was going to hire any more mechanics. I told him if I saw a steady level of increased work level then I would. Appellant's Exhibit 256 at 16 (unnumbered); Transcript at 206. 56. The VMS claim for labor inefficiency calculation is as follows: Available Hours less Allowance for Personal/Rest/Delay11 less Hours Billed to GSA less Other Allocated and Unallocated Labor Claims12 Unrecovered Labor Hours 25,196.1013 VMS Hourly Unrecovered Cost Factor Wage Rate $10.53 Health/Welfare Rate .59 W/Compensation Insurance .91 Liability Insurance .11 Employer's FICA .78 Fed./State Unemployment .12 Vacation and Sick Pay .78 Uniforms .17 ____________________ 11 VMS prepared a study to determine the inefficiency factor of its employees (restroom visits, breaks, etc.) and included this information into its calculation of the monetary value of the labor inefficiency claim. VMS concluded that its labor force performed with an inefficiency factor of 12.3%. Transcript at 180-82. 12 The hours deducted at this stage of the calculation included hours for the Non-Standard Vehicle Labor claim item. 13 The number of hours for personal rest/delay, hours billed to GSA, and the labor claims are set forth monthly from January 1988 through December 1989 in Table I. Appellant's Exhibit 157. The derivation of the hours in these categories is set forth in Tables II-IV. Id. ___ Total Unrecovered Cost Factor $13.9914 Total Unrecovered Cost Factor x Unrecovered Labor Hours = Gross Unrecovered Labor Claim $13.99 x 25,196.10 = $352,493.44 Gross Unrecovered Labor Claim $352,493.44 Less Unallocated Labor Claims15 - Tire Service Billing (9,321.35) - Preventative Maintenance (18,470.50) - Facility Deficiency Telephone (8,931.26) Air Compressor (9,223.64) - Vehicle Delivery (13,697.10) - Emissions Testing (9,722.30) Net Claim for Labor Inefficiency $283,127.3916 Appellant's Exhibit 219; Appellant's Posthearing Brief at 303-04. 57. Mr. Oliver summarized the calculation of the claim as "simply an attempt to define unrecovered hours, and then apply the hourly cost factor. That generates the net claimed for labor inefficiency." Transcript at 184. ____________________ 14 This calculation appears to be an average for all classes of employees of VMS, as it is based on one wage rate of $10.53 per hour. 15 These amounts are quantum of claim items that are labor related and the causes of which have been specifically identified. Some of these amounts are for items that have been dismissed or settled. See Finding 26. ___ 16 Appellant originally claimed $278,003.99 for this item. Appeal File, Exhibit 17 at 7, 59; Appellant's Exhibit 219. Appellant has apparently adjusted the claim as the result of the settlement of the Remove and Install Wheel Labor claim item, Finding 26, which it designates Tire Service Billing in the above calculation in the amount of $9,321.35. Diverted Work Claim Item 58. The contract was a requirements contract for any vehicle maintenance service needs of the GSA fleet at Fort Jackson, South Carolina. Except for urgent needs, exigencies, and security clearance reasons, the Government was required to order all services of the kind contracted for from VMS. The contract reads, in pertinent part: I-18 I-FSS-100 SCOPE OF CONTRACT: (CONT'D) Resultant contract will be used by GSA as the primary source for the services listed herein. This contract is therefore, mandatory in the geographical area designated herein. Services will be ordered from time to time in such quantities as may be needed to fill any requirements determined in accordance with currently applicable procurement regulations and supply procedures. Except as otherwise provided in this contract, the contractor is obligated to furnish all such services as may be ordered from time to time. . . . The contractor whose offer is accepted will be obligated to furnish all services of the kinds contracted for that may be ordered during the contract term EXCEPT: (1) URGENT REQUIREMENTS . . . . (2) EXIGENCIES . . . . (3) SECURITY . . . . Appeal File, Exhibit 5 at 24. 59. VMS obtained certified copies of invoices for work that outside vendors had performed at the direction of respondent, but for which VMS maintained that respondent was contractually obligated to have VMS perform. Appellant's Exhibits 242-43. 60. Respondent does not contest that this work was performed by outside vendors. Transcript at 641-42. 61. Section F-2 of the contract reads, in pertinent part: TIME FOR REPAIRS (a) After receipt of the vehicles by the contractor, the Government requires the vehicles be repaired within 8 (eight) working hours following the time authorized for repair in the flat rate manual. (b) If, after repair order is written, the time required for repairs or services is longer than that on which the award is based because of the unavailability of required parts, or the like, the contractor must request of the ordering office and obtain an authorized extension of time. However, the ordering office has the right to have the work done elsewhere in lieu of authorizing an extension of time. Appeal File, Exhibit 5 at 10. 62. VMS utilized a computer program to automatically request an extension for every vehicle that would require an extension and delivered these requests to the on-site inspector on a daily basis. Appellant's Exhibit 159; Appellant's Posthearing Brief at 175-76, 271. 63. Section C of the contract, DESCRIPTION/SPECIFICATIONS/WORK STATEMENT, reads, in part: C-1 LABOR: General Vehicle Service - Such as Inspection, maintenance and mechanical repairs, including motor, chassis, (body and fender work excluded) . . . . Appeal File, Exhibit 5 at 7. 64. The total value of the diverted work is $121,300.55, of which $65,903.31 represents parts and $55,397.24 represents labor. Appellant's Exhibit 128; Appellant's Posthearing Brief at 268. 65. The alleged loss to VMS from this diverted work consists of what VMS characterizes as lost contribution to profits and overhead as calculated below: Diverted Parts $65,903.31 Less VMS Parts Discount of 22% $14,498.73 Gross Profit on Parts17 $51,404.58 Less Cost of Goods Sold $31,639.52 Lost Contribution to Profits and Overhead $19,765.06 Diverted Labor $55,397.24 Less VMS Direct Labor and Labor Driven Costs Wage Determination @ $10.53/hour $13,556.85 Federal Insurance Contribution Act @ $.78/hour $ 1,004.21 ____________________ 17 This category appears to be revenue from parts rather than gross profit as designated by VMS. Fed. & State Unemployment @ $.12/hour $ 154.49 Health & Welfare Benefits @ $.59/hour $ 759.60 Vacation & Sick Pay @ $.78/hour $ 1,004.21 Workers' Compensation @ $.91/hour $ 1,171.58 Garage Keepers Insurance @ $.11/hour $ 141.62 Uniforms @ $.17/hour $ 218.87 Total Labor and Labor Driven Costs $ 18,011.43 Lost Contribution to Profits and Overhead $ 37,385.81 Total Lost Contribution to Profits and $ 57,150.8818 Overhead From Diverted Work VMS based its calculation of 1,287.45 estimated labor hours on the Motor Parts and Time Guide. Appellant's Exhibits 128, 131- 32, 213, 242-43. 66. GSA offered testimony by Mr. O'Leary Leon Sanders, Senior Auditor, Office of the Inspector General, General Services Administration, Atlanta, Georgia, to rebut VMS's calculation of its damages for this claim item. Transcript at 537-43. Mr. Sanders brought with him to the hearing four large boxes of work papers generated during the Inspector General's audit of VMS's claim, in which he participated, which resulted in an audit report dated October 1, 1992. Respondent's Hearing Exhibit 502. GSA had refused to produce these work papers to appellant during prehearing discovery, and the Board had sustained appellant's prehearing objection to inclusion of any of the audits work papers in respondent's hearing exhibits. Memorandum of Conference (Mar. 29, 1993). During the hearing, Mr. Sanders requested that he be allowed to refer to the work papers to refresh his recollection. The Board sustained appellant's objection to his referring to the work papers, as to allow reference to the work papers which had been withheld until the hearing would have been prejudicial to appellant. Transcript at 530-35; 632-39. Mr. Sanders therefore testified without reference to the work papers. The Board deemed the audit report to be an unsupported summary of the work papers. Id. at 639. The Board did not find Mr. Sanders to be a credible witness. ____________________ 18 The original amount of this claim was $58,458.70. Appeal File, Exhibit 17 at 5, 59; Appellant's Exhibit 213. The difference indicates appellant's reduction for repairs performed as a result of vehicular breakdowns which occurred outside the Ft. Jackson area, which appellant concedes should have been performed where the breakdown occurred. Motor Listed Parts Claim Item 67. The Motor Parts and Time Guide (hereinafter "Motor Guide") is published annually. It contains information on specific cars and trucks. It provides detailed parts information on passenger cars only. The Motor Guide does not contain parts information for domestic medium, light-medium, or heavy duty trucks. Use of the Motor Guide allows one to make reasonable estimates of what it would cost to repair a covered vehicle, as it provides manufacturer's suggested retail prices for parts listed. Both appellant and respondent agree that by the time the manual is printed, the parts prices may have changed and that the Motor Guide does not necessarily contain current prices. Transcript at 42-43, 802-05. 68. Parts listed in the Motor Guide are categorized as "illustrated" (shown by drawings in the Guide) and "non- illustrated." Parts are identified by the name of the part (cylinder block, piston, etc.), part number (the manufacturer's part number at the time of publication), and price. The Motor Guide does not list every part for the cars included in the Guide, nor does it include every type of vehicle to be serviced under the contract. Appellant's Exhibit 136; Respondent's Exhibits 574-75. 69. After-market parts are manufactured by various companies and may also meet the original equipment manufacturer's standards. These manufacturers' part numbers may differ from the part numbers listed in the Motor Guide, even though the parts themselves meet the original equipment manufacturers' specifications. Transcript at 151-52. 70. VMS interpreted the contract such that if the type of part was listed in the Motor Guide, an after-market part that meets the original equipment manufacturer's specifications, Finding 68, was a part "cited in the Motor Parts and Time Guide" as referenced in Section B-5 of the contract. See Finding 13; Transcript at 454-56. 71. Respondent's witnesses testified to their understanding that a part listed in the Motor Guide had to be supplied by a dealer. Transcript at 661. Additionally, respondent maintained that an after-market part was not a part that was "listed in the Motor's Parts and Time Guide," and that use of after-market parts had to be pre-approved by GSA. Id. at 663-64, 757. 72. The bid schedule contained eleven items. The last two pertained to the pricing of parts: Item Number 10 Parts discount FROM prices list cited in the Motors Parts and Time Guide. $100,000 PERCENT 22% Item Number 11 Parts discount FROM manufacturers suggested retail price for all other. $25,000 PERCENT 22% Appeal File, Exhibit 5 at 5. 73. The contract also contained the following provisions: B-7 . . . . (b) The materials or parts supplied by the contract and used in the repair of equipment are limited to those cited in the Flat Rate Manual for the specific repair performed. Parts and materials must be new and conform to the original equipment manufacturer's specifications unless otherwise approved by the Contracting Officer or his appointed representative. Rebuilt assemblies may be used in the repair of equipment with prior approval of the ordering office when such is standard industry practice and the rebuilt assembly or subassembly carries the same manufacturer's warranty as a new assembly or subassembly. . . . . C-2 PARTS: Parts and material, other than Item 9 - Supplies, on page 5, will be billed indicating the percentage discount for Motors Parts and Time Guide or Manufacturers list price current as the date such part(s) is furnished. Appeal File, Exhibit 5 at 6-7. 74. During the first month of contract performance, GSA rejected various invoices alleging improper charges. Transcript at 40-41. Respondent's rejection of invoices was the result of a dispute between VMS and the GSA fleet manager at Fort Jackson, Mr. Thomas P. McNulty, as to when the contract permitted appellant to use the Motor Guide in calculating the price of repairs. Id. at 41. 75. Following conversations between appellant and respondent concerning respondent's rejection of the invoices and the lack of negotiation, VMS gave written notice to respondent that it disputed GSA's interpretation of the contract with regard to the pricing for work performed in relation to the Motor Guide. VMS delivered a letter to Mr. McNulty dated February 4, 1988, which reads, in its entirety: It is obvious that GSA and Vehicle Maintenance Services do not agree on how the contract is to be applied to pricing the work done under the contract. I think the contract is straightforward and I am, hereby, informing GSA that I reserve all of my rights under the contract. We have many unresolved issues but the needs of the Army are paramount at the moment. I accept your assurance that our experience will parallel Ft. Knox and our differences will be resolved in due course. Appellant's Exhibit 121; Transcript at 110-11, 125-26; Appellant's Response to Respondent's Posthearing Brief at 22. 76. When shown appellant's letter dated February 4, 1988, during the hearing of this appeal, Mr. McNulty testified as follows: Q: [Government Counsel]: Mr. McNulty, I would like to show you Appellant's Exhibit Number 121, and ask you when was the first time you've ever seen this document? A: The first time I saw this document was, I believe, Tuesday afternoon of this week. Q: Of this week. Did you see that document prior to Tuesday at all? A: No, I have no recollection of seeing this document. Transcript at 749. 77. Appellant calculates its claim for Motor listed parts by computing the difference between the dollar amount offered by GSA for what appellant considers Motor listed parts and the price indicated in the Motor Guide. Appellant identifies this difference for every invoice. In some instances, the difference is positive; in some instances, it is negative. VMS's claim in the amount of $8,360.99 represents the sum of these differences. Appellant's Exhibit 207. Non-Motor Listed Parts Claim Item 78. The Government reserved to itself the following right to supply parts to the contractor: B-7 OPTION FOR ADDITIONAL ITEMS/SERVICES (CONT'D) . . . . MATERIALS AND PARTS (a) The Government reserves the right to furnish without cost to the contractor, any repair parts, accessories, or supplies required in the repair of Government-owned vehicles. Appeal File, Exhibit 5 at 6. 79. On numerous occasions, rather than have GSA supply parts to VMS, VMS acceded to and charged less than the price it had originally intended to charge for parts not listed in the Motor Guide. Transcript at 158. 80. Appellant calculated its claim for non-Motor listed parts as follows: Margin = (Sales Revenue - Cost of Goods Sold)/(Sales Revenue) .519919 = (Sales Revenue - $298,789.31)/(Sales Revenue) (.5199) x (Sales Revenue) = (Sales Revenue) - $298,789.31 (-Sales Revenue) + .5199 Sales Revenue = -$298,789.31 -.4801 Sales Revenue = -$298,789.31 Sales Revenue = -$298,789.31/-.4801 Required Sales Revenue = $622,348.07 Revenue Required for Margin $622,348.07 - GSA Contract Discount (22%) ($136,916.58) Net Revenue after Discount $485,431.49 - Revenue from Contract Parts ($334,120.70) Lost Contribution to Profits and Overhead $151,310.79 Complaint at 23. Motor Labor Variances Claim Item 81. The contract reads, in pertinent part: B-4 METHOD OF CHARGES FOR LABOR: The Motors Labor Manual will be used to determine repair time. The contractor shall charge for labor an amount equal to the contract hourly rate multiplied by the number of hours shown in the applicable published flat rate manual for such repairs. Appeal File, Exhibit 5 at 2. 82. The Motor Guide reads, in pertinent part: ____________________ 19 Appellant says that by "[u]sing the fleet characteristics supplied by GSA, VMS simulated various repair mixes and calculated an expected parts margin of 51.99% given existing industry fleet discount programs." Appellant's Prehearing Brief at 91. OPERATION TIME SECTION Operation times reported herein are compiled from available manufacture and shop data and are published only as an estimating guide. The times shown apply only to standard stock models and do not apply to vehicles with equipment other than that supplied by the manufacturer as standard production options. If other equipment is used, the time may be adjusted for the variables. Also additional time may be encountered when difficulties arise due to corrosion, rust, carbon build-up, varnish broken studs, etc. Respondent's Exhibit 575 at inside front cover. 83. According to VMS, GSA refused to pay for labor time spent to diagnose the need for necessary repairs. VMS maintained records of additional repair time actually incurred, but did not designate the reason for the additional time. This additional time is either for diagnosing the need for necessary repairs or additional repairs required by the varying conditions of the motor. GSA did not recognize any variances and only paid the times allowed in the manual, without recognition of the variances allowed by the explicit language of the manual. Transcript at 126-31. 84. Appellant calculated the quantum for this claim by taking the actual repair time for which GSA allegedly refused to pay, and which was accumulated contemporaneously with the repair work, and multiplying this time by the applicable labor rates in the contract. Time that was excluded by GSA is listed by the individual invoices. VMS took the repair times that it had accumulated in its database, and multiplied these repair times by the applicable labor rate, arriving at a total amount of $21,951.96. Appellant's Exhibit 205; Transcript at 128-32. Non-Standard Vehicle Labor Claim Item 85. Various vehicles in the Fort Jackson fleet, such as buses, were not listed in the Motor Guide. There were approximately forty buses in the Fort Jackson fleet. Repairs on those vehicles not listed in the Motor Guide accounted for almost fifty percent of the total labor hours expended during contract performance, even though such vehicles were only ten to twelve percent of the fleet. Most of the buses were 1976 vintage, and the mileage on each of them exceeded 100,000 miles. Transcript at 108-09, 113. 86. The contract provides labor rates for repairs not listed in the Motor Guide as follows: B-5 METHOD OF CHARGING FOR PARTS AND MATERIALS (CONT'D) BID SCHEDULE ESTIMATED ITEM ANNUAL HOURLY NUMBER SERVICE/SUPPLIES QUANTITY UNIT RATE 1. Hourly labor rate based on Motor Parts and Time Guide or agreed time on jobs not listed. For a highly skilled man - wherever precision measuring tools are needed, such as a micrometer or dial indicator. This man should be able to perform any lower graded skill operation as well. 2125 Hours $23.50 2. Hourly labor rate based on Motor Parts and Time Guide or agreed time on jobs not listed. For a man with limited skills - wherever simpler measuring tools are needed such as a pressure gauge or dwell-tach. 4250 Hours $21.50 3. Hourly labor rate based on Motor Parts and Time Guide or agreed time on jobs not listed. For a man with basic knowledge, replacing parts where an adjustment is generally not needed, lubrication, shocks, etc. 2125 Hours $20.50 Appeal File, Exhibit 5 at 4 (emphasis added). 87. VMS asserts that it was not able to reach an agreement with respondent as to the amounts to be charged for labor performed on vehicles not listed in the Motor Guide. Instead of negotiating "agreed time" for repair of such vehicles, appellant alleges that GSA unilaterally determined repair times based on the repair times listed in the Motor Guide for International Harvester Corporation trucks, which respondent erroneously considered similar to the repaired vehicles. Therefore, VMS claims that the Government did not fulfill its obligation to charge "agreed time" for such vehicles. VMS alleges that GSA's practice was to refuse an invoice for labor hours expended that was not in accordance with the labor estimate contained in the Motor Guide. This refusal encompassed three repairs to radiators, engines, and transmissions of vehicles not listed in the Motor Guide. Transcript at 106-09; Appellant's Posthearing Brief at 277-78. 88. This claim arose in early 1988. VMS gave notice of its claim by its letter dated February 4, 1988. Appellant's Exhibit 121; Transcript at 110-11. 89. Contemporaneous with performing the repair, VMS maintained a record of the total time spent in performing the repair. Transcript at 110. 90. VMS seeks $249,828.75 for time expended on 1,928 invoices. This sum represents the difference between VMS's valuation of the time expended on repairs to vehicles not listed in the Motor Guide and the amount which GSA has paid. VMS calculated by each invoice the dollar value of labor it performed on vehicles not listed in the Motor Guide for which it was not paid by GSA. Appellant's Exhibit 204; Transcript at 104-26. 91. VMS included in its quantum calculation for this claim item only buses and ambulances. It retrieved from its database the time accumulated in performing non-standard vehicle labor, by invoice, and translated the time into a dollar amount. VMS indicated the vehicle number to identify the vehicle. Appellant's Exhibit 137. VMS then calculated the total amount of additional time GSA allowed for nonstandard vehicles, which amounted to 64.5 hours, and subtracted this amount from its total claim for this item. Appellant's Exhibit 139; Transcript at 113. 92. VMS compared the labor rates paid by GSA to outside vendors for diverted work for similar repairs in order to demonstrate the reasonableness of the rates VMS applies in this claim, and to illustrate GSA paid rates in excess of those in the Motor Guide for repairs to vehicles not listed in the Motor Guide. Transcript at 119; Appellant's Exhibits 143, 242-43. VMS applied its own contractually specified rates in calculating the time value of this claim item. Transcript at 120. Most of the repairs were calculated using labor category B -- $21.50 per hour. Id. Ignition System Labor Claim Item 93. The Motor Guide had two specific categories of labor with regard to ignition systems -- ignition system analysis and ignition system tune-up. The difference between the two is that analysis determines the present state of the system and the tune- up adjusts the system. The tune-up also may include renewing and replacing parts, such as points, condensers, the distributor cap, a rotor, plug wires, or associated ignition parts. Appellant's Exhibit 133; Transcript at 91-93. 94. According to VMS, GSA paid in an arbitrary fashion for the repair of ignition systems. In some instances, GSA would not pay for an ignition system analysis. In other instances, GSA would pay for a tune-up, but not to renew and replace parts. Respondent also determined at various times to pay for an ignition system analysis and the necessary labor to replace parts, but not to pay for the tune-up. Transcript at 93. VMS contends that this claim arose early in contract performance, and that its letter dated February 4, 1988, Finding 75, to respondent was notice of this claim. Appellant's Reply Brief at 19. 95. VMS's invoices clearly reflected the work that had been performed on the ignition systems and the work for which VMS had received payment. Appellant's Exhibits 134-35; Transcript at 103-04. 96. VMS seeks $6,971.50 for the ignition system labor costs for which it contends GSA refused to pay. In calculating its claim, VMS reviewed all the invoices that contained ignition systems work. VMS's claim item for ignition system work represents the time value for the ignition work pursuant to the Motor Guide, and the difference between this amount and the amount paid by GSA. Appellant's Exhibit 206. 97. The contracting officer's final decision states with regard to this claim item: GSA, at no time during the contract, refused to pay for parts or services rendered as authorized by GSA and reflected in the Motors Parts and Time Guide. Paragraph F-4 (14) would permit Fleet Management Branch to define the scope of any repair so as to avoid redundant operations. Appeal File, Exhibit 25 at 2-3. 98. Respondent's witnesses offered no rebuttal testimony at the hearing as to this claim. Preventative Maintenance Claim Item 99. The contract reads, in relevant part: F-4 OPERATING INSTRUCTIONS GENERAL REPAIRS/PREVENTATIVE MAINTENANCE 1. When requiring maintenance services or a scheduled PM [Preventative Maintenance] inspection, the vehicle operator will complete a GSA Form 2834 [Motor Vehicle Operator Complaint Form] in duplicate. The operator will complete the form indicating etag [sic] number, mileage, parking space (the operator will park the vehicle in the designated maintenance parking area), date, operator's name, time turned in for service, and a brief description of the deficiencies noted in the appropriate places. . . . . 14. If there is a dispute over any repairs, whether they should or should not be performed, the extent of the repairs, etc., GSA will make the final decision. Appeal File, Exhibit 5 at 10, 12. 100. VMS received a computer-generated form - GSA Form 3478 (REV. 6-86), MOTOR VEHICLE SERVICE AUTHORIZATION, for each repair. This form contained a block "7. TAG NO." and a block "11. MILEAGE." Using this information, appellant's mechanics could specifically identify a particular inspection schedule number and a particular inspection number assigned to any vehicle being repaired within the requirements of the contract. Respondent's Exhibit 511. 101. GSA Form 3478 (REV. 6-86), MOTOR VEHICLE SERVICE AUTHORIZATION, contained the following language: INSTRUCTIONS TO OPERATOR-(1) Preventative maintenance is due for your GSA Interagency Fleet Management System Vehicle. The tag number and the mileage and date by which service should be performed are listed below. (2) Have the vehicle serviced in accordance with procedures established by the Fleet Management Center. (3) If you have been instructed to take the vehicle to a commercial vendor, the MAINTENANCE CONTROL CENTER COPY of this form must be presented to the vendor as authorization to perform the required work. When all work is completed, sign this copy, write in the mileage and date when the inspection was performed, and return it in the attached Business Reply Envelope. (4) If the job will exceed the repair limitation shown below, or additional work is required, the vendor must call the Maintenance Control Center for Instructions. Respondent's Exhibit 511. 102. The preventative maintenance schedule consists of a computer printout of all of the inspections (identified by "inspection numbers") that are to be performed on a particular vehicle, based on that vehicle's "inspection schedule number." This computer printout is prepared as part of the "General Services Administration, Interagency Fleet Management System, Inspection Schedule Library." Respondent's Exhibits 556-59. 103. The link between an inspection schedule number (and its accompanying inspection numbers) and GSA Form 3748 is found in block "8. INSP. SCHEDULE," and in block "10. INSP. NO." The entry to be included in block "8. INSP. SCHEDULE" was that of the appropriate preventative maintenance schedule for the vehicle in question. The entry to be included in block "10. INSP. NO." was the particular inspection number listed on the preventative maintenance schedule for the vehicle in question. Respondent's Exhibit 511. 104. Mr. Bell testified for GSA that GSA always checks to see if any of the preventative maintenance had been previously performed in conjunction with other repairs so as to make the preventative maintenance unnecessary. The mere passage of time would, therefore, not require performance of preventative maintenance. Transcript at 654-57. 105. VMS claims that all work listed on the preventative maintenance schedule was mandatory and performed by VMS. However, VMS asserts that GSA did not pay for services which VMS had rendered as required by the preventative maintenance schedule, except for "topping off fluids." Transcript at 141-42. 106. VMS has claimed compensation in the amount of $18,470.50 for preventative maintenances performed. VMS did not maintain records of the actual work performed. Appellant calculates its quantum for this claim by estimating the amount of repair work that it theoretically would have performed based upon the age of each individual vehicle, rather than based upon the mileage each vehicle had been driven. Transcript at 140-41. Preventative maintenance was to be performed every three months or 3,000 miles, whichever occurred first. Id.; Appellant's Exhibit 149. Appellant certified the work performed on each GSA form. Transcript at 141. Pay for Required Equipment Claim Item 107. The contract, in Section M-2, MECHANICS AND EQUIPMENT, states: Contractor must have available suitable up-to-date diagnostic and repair equipment necessary for the diagnosis, repair, and adjustment of automotive systems to meet the Federal Standards for air quality and safety. . . . Necessary equipment includes, but is not limited to, such diagnostic equipment as an oscilloscope or computer diagnostic machine, infrared analyzer, and cylinder balance tester as may be appropriate. Appeal File, Exhibit 5 at 44. 108. Appellant provided all contract-required equipment, including an engine diagnostic machine with an oscilloscope and emissions analysis capabilities. The emissions analysis equipment was "rented" from GSA by a contract modification and, subsequently, the payment of rental was subsumed in another modification by which appellant agreed to perform vehicle delivery services in exchange for use of the equipment. Transcript at 164, 167. 109. Appellant alleges that: (a) despite the fact that the contract required VMS to have the equipment, GSA refused to pay for it even in situations where the use of the equipment would have facilitated repair of a vehicle, (b) GSA maintained it would only pay for the use of such equipment in states that had an emissions inspection program, and (c) South Carolina had no such program. Transcript at 164, 168. 110. Mr. Oliver testified that appellant used the equipment in certain instances to perform repairs. Transcript at 164. 111. Appellant seeks $9,722.30 as compensation for this under-utilized equipment. In calculating this claim item, appellant imposed a mid-Atlantic state emissions control testing requirement on the fleet of vehicles under the contract. Appellant's claimed amount allegedly represented the net amount it would have realized had the equipment been used to perform this testing requirement. Transcript at 168, 173. Discussion Bad Faith Claim Item During the course of these proceedings, appellant has characterized almost every infraction allegedly committed by respondent as having been motivated by bad faith, even when the alleged misconduct served as a basis for separate claim items. For example, to the extent that VMS has sought damages for breach of contract for diversion of work and failure to pay in accordance with the terms of the contract, these items have been addressed separately.20 The remaining bases of appellant's bad faith portion of the claim are allegations that respondent acted in bad faith by failing to exercise its option for the last three contract option years because: 1) respondent violated a promise that all options would be exercised unless VMS failed to satisfactorily perform, 2) VMS performed satisfactorily despite erroneous allegations to ____________________ 20 See portions of this opinion as to appellant's claim ___ items for Diverted Work, Ignition System Labor, Non-Standard Vehicle Labor, Motor Repair Variances Labor, Motor Listed Parts, and Non-Motor Listed Parts. Another instance of respondent's alleged bad faith, which was revisited at the hearing, respondent's failure to provide appellant with a working telephone system promptly, Finding 7, was also the subject of a separate claim item and was settled prior to the hearing. Finding 26. the contrary, 3) respondent incorrectly determined that VMS's workload was declining, and 4) the Government failed to exercise the options because VMS refused to accept modification PS-04 and, therefore, refused to perform work for less than the contract price. 1. Alleged Breach of Agreement to Exercise Option Based Upon Contract Performance VMS first alleges that respondent acted in bad faith in failing to exercise the second through fourth option years of the contract, in violation of an alleged promise to exercise these options if VMS satisfactorily performed. According to Mr. Oliver, Government representatives had informed him before he submitted the bid on the instant contract that if the contractor performed satisfactorily, the respondent would exercise the options. Finding 30. Mr. Oliver alleges that he had conversations with the program manager and the contracting officer at a pre-bid conference for a prior solicitation for a vehicle maintenance contract to be performed at Fort Rucker. Finding 30. Mr. Oliver alleges that as a result of these conversations, VMS based its bid on a five-year recovery of fixed costs, rather than on a one- year recovery of fixed costs. Finding 29. VMS alleges that its contract performance was satisfactory and, therefore, respondent's decision not to exercise the second through fourth option years because of alleged faulty performance was erroneous and constituted bad faith. VMS seeks recovery of lost profits for the three option years which it did not perform. We must first review the scope of the contract term and the option clause in the VMS contract. The term of the contract was set forth in Part I, Section B, of the contract, which specified that contract performance was to commence thirty days after award and continue for twelve months thereafter. This clause referred to another clause entitled "Option to Extend the Term of the Contract Services," and expressly stated that "the Government has the unilateral right to extend the term of this contract for four additional 12 month periods upon the same terms and conditions as are contained in this contract at the time said options are exercised." The clause further "cautioned that the exercise of the options is a Government perogative [sic], not a contractual right of the contractor." Finding 33. The clause entitled "Option to Extend the Term of the Contract Services" states, in relevant part: The Government may extend the term of this contract by written notice to the contractor within the time specified in the Schedule; provided, that the Government shall give the Contractor a preliminary written notice of its intent to extend at least 60 days before the contract expires. . . . . The total duration of this contract, including the exercise of any options under this clause, shall not exceed five (5) years. Finding 34. Neither of the clauses discussed above guaranteed the contractor a five-year performance period, nor did they promise that respondent would exercise any of the option periods, even if respondent determined that the contractor's performance had been satisfactory. The solicitation and the contract clearly state that the exercise of an option is a unilateral right of the Government, a Government prerogative and not a contractual right of the contractor. In Trans-Atlantic Industries, Inc., GSBCA 10803, et al., 91- 3 BCA 24,320, the Board addressed the scope of a similar option clause. As in this case, the Trans-Atlantic contract stated that the option of extending the period of performance beyond the initial year was "unilateral" to the Government, and cautioned bidders that "the exercise of the options is a Government prerogative, not a contractual right on the part of the contractor." Id. at 121,529. The Board emphasized the clarity and lack of ambiguity of this contract language. We quoted a holding of the United States Court of Appeals for the Federal Circuit: [R]enewal of the contract was within the complete discretion of the government. An option is normally an option, and nothing in [this clause] limited the circumstances under which the government could decline to exercise that bargained-for right. Id. (quoting Government Systems Advisors, Inc. v. United States, 847 F.2d 811, 813 (Fed. Cir. 1988)). VMS attempts to limit the Government's rights under the option clause by alleging that it relied upon and that respondent breached an oral promise that the Government could refuse to exercise the option only if VMS had failed to perform satisfactorily. We find that such promises were not made. In so doing, we rely on the credible testimony of Mr. Bell, the program manager for fleet management, and the contracting officer, Ms. Attridge. Findings 31-32. Mr. Oliver himself admits that prior to bidding, he had read the contract provisions concerning the period of performance and the exercise of the options and believed he was bound by them. Finding 30. Accordingly, VMS's bad faith claim as premised upon the Government's alleged pre-bid promise has no merit. The Government had a unilateral right not to exercise the last three option periods of the contract. It did not condition its exercise of that right. Regardless of whether VMS's performance was insufficient to justify a default termination, as alleged by VMS, even satisfactory performance by the contractor would not have prevented the Government from refusing to exercise any of the four option years of the contract. VMS assumed any financial risks resulting from its financial planning based on the assumption that it would be awarded all option periods under the contract. We have held that a contractor assumes the risk of its financial planning based upon its assumption that an option will be renewed. In Centennial Leasing v. General Services Administration, GSBCA 11409, 93-2 BCA 25,609 (1992), aff'd, No. 93-1264 (Fed. Cir. Jan. 13, 1994), a contractor similarly claimed that the Government must compensate it for financial losses incurred because the Government failed to exercise an option. The contractor refinanced vehicles for a period after the expiration of the current delivery orders and then found itself without an income stream to pay the loan when the Government failed to exercise the option. We held that the contractor took the risk of incurring financial obligations based upon its assumption that the option periods would be exercised. In the instant case, respondent properly utilized its unilateral right not to exercise the option periods in the contract. We find no evidence that the option clause was orally amended by the Government by a preaward promise to the contractor that exercise of the options would be conditioned solely on contractor performance. Any financial risks taken by VMS in reliance upon an assumption that all four option years would be exercised were incurred solely at the risk of VMS. 2. Allegations of Unsatisfactory Performance Despite the Government's unilateral right to exercise any or all of the option years under the contract, VMS alleges that the decision not to exercise the second option year and to resolicit the contract was motivated by bad faith, as that decision was based upon erroneous allegations of unsatisfactory contract performance and declining workload. The contracting officer based her conclusion that VMS's contract performance was unsatisfactory upon a memorandum drafted by Mr. Thomas McNulty, the on-site fleet manager at Fort Jackson, and attachments which contained various allegations of unsatisfactory performance in eight different categories. Finding 36. At the hearing, Mr. McNulty could not identify the actual documentation originally attached to his memorandum, as apparently all of the attachments to his memorandum had not been included in the appeal file. He did present sworn testimony as to the basis for his allegations that VMS's performance was not satisfactory, with reference to documentation, some of which he believed had been attachments to his memorandum. Additionally, respondent produced documentation concerning alleged violations of the Fair Labor Standards Act brought to the attention of GSA by VMS employees, alleged safety violations by appellant, and allegations by subcontractors that VMS failed to pay them in a timely manner. Finding 35. VMS attempts to rebut the allegations of its unsatisfactory performance by noting that many of respondent's exhibits to which Mr. McNulty referred were dated after his memorandum of June 27, 1989, so that these documents could not have been attachments to his previous memorandum. VMS also emphasizes that documents supporting some, but not all, of the allegations were offered into evidence. Appellant's Posthearing Brief at 368-69. Mr. Oliver was the only VMS witness, and no other witnesses testified on behalf of appellant, even though Mr. Oliver was not on site on a daily basis and, therefore, could have no personal knowledge of the day-to-day interaction between his personnel and the Government. Finding 6. However, VMS argues that the Government's conclusions as to appellant's unsatisfactory performance were erroneous and amounted to an erroneous default termination of the contract without notice. Appellant's Posthearing Reply Brief at 120. VMS attempts to impose the standards of improper default termination as a measure of the propriety of respondent's refusing to exercise the second and subsequent option years. VMS confuses the applicable legal vehicle exercised by the contracting officer. A termination is the cessation of the contractor's performance prior to the expiration of the current period to which the contractor is entitled to perform. As stated previously, the exercise of an option is solely the respondent's prerogative. Until such time as the option is exercised, the contractor has no right to perform the work in that option period. In refusing to exercise an option, respondent did not terminate the contractor's performance; rather, it refused to extend the period of performance. One who claims that an agency has breached a discretionary right in bad faith, such as invocation of an option, has an extremely difficult burden of proof, as the contractor "must present 'well-nigh irrefragable proof' to overcome the presumption that Government officials act in good faith in the exercise of their powers and responsibilities." Trans-Atlantic Industries, Inc., GSBCA 10803, 91-1 BCA 23,412 (1990) (citing Kalvar Corp. v. United States, 543 F.2d 1298, 1301-02 (Ct. Cl. 1976), cert. denied, 434 U.S. 830 (1977)). The necessary "irrefragable proof" has been equated with evidence that the respondent had specific intent to injure the appellant. Kalvar, 543 F.2d at 1302. We do not find that respondent's allegations of unsatisfactory performance were motivated by a specific intent to injure VMS. The allegations of unsatisfactory performance clearly arose from Mr. McNulty's concern as to the violations alleged, as the result of his own personal oversight of the VMS contract. The subject matter of several of the allegations was supported in the record by documentation in respondent's exhibits (safety violations, alleged labor violations), and others were also the subject of disputes between respondent and the contractor during performance. Whether the facts justify a default termination is not the standard to be applied in determining bad faith. We do not attempt to make such findings, nor are we required to do so. We find Mr. McNulty a credible witness who expressed legitimate concerns as to appellant's performance. While appellant may have taken issue with these allegations, respondent's making of such allegations and the contracting officer's subsequent reliance upon the allegations as a partial basis for her decision not to exercise additional option years do not demonstrate a specific intent to injure VMS, or bad faith. 3. Allegations of Declining Workload VMS argues that respondent erroneously based its decision not to exercise the second option year on a determination that VMS's workload was declining, and that such action was motivated by respondent's bad faith. However, VMS's own information as to actual quantities ordered demonstrates a decline in workload from the base year through the first option year. Finding 43. We find no evidence of bad faith as to the allegation of declining workload. 4. Alleged Decision Not to Exercise Option as a Result of VMS's Refusal to Enter Into Contract Modification PS-04 VMS also argues that the Government failed to exercise the last three option years of the contract because VMS had refused to accept modification PS-04, which VMS alleges would have required it to perform work for less than the contract price. Appellant states that "the apparent basis for refusing to renew the final three years of work was the fact that VMS refused to perform the work at a price less than that set out in the contract as demanded by GSA and the fact that VMS refused to accept Contract Modification PS-04." Appellant's Posthearing Brief at 327, 358. Appellant has noted that the resolicitation of the contract for the second option year contained language which respondent attempted to have included in the VMS contract by modification PS-04. The portion of the VMS contract entitled "METHOD OF CHARGING FOR PARTS AND MATERIALS" which the Government sought to amend by modification PS-04 was also amended in the resolicitation to allow the Government to charge the manufacturer's listed retail price for a part not listed in the Motor Guide, apparently based upon respondent's perceived need to correct an ambiguity in the VMS contract not attributable to appellant. Finding 37. Under such circumstances, the Government's decision to resolicit with revised contract requirements rather than exercise an option to renew an existing contract has been found not to constitute bad faith, even if the revisions were minor and could have been resolved by contract modification. Monarch Enterprises, Inc., ASBCA 31375, 86-3 BCA 19,227. Appellant alleges that other similar existing contracts for vehicle maintenance were renewed when the contractors accepted modifications similar to PS-04. Appellant's Posthearing Brief at 350. We do not find such allegations relevant. The fact that other contracts may have been modified with the mutual assent of the contracting parties is not relevant to this appeal, and certainly does not limit the Government's right under the option clause not to exercise the option. See, e.g., Trans-Atlantic Industries, Inc., 91-3 BCA 24,320. Appellant has presented no evidence to support its allegation that respondent decided not to exercise the last three option years of the contract because of VMS's refusal to execute modification PS-04. Appellant has failed to provide "irrefragable proof" of any intent by respondent to injure appellant. As discussed above, the Government had a contractual, unilateral right to decide not to exercise the options for the years in question, and exercised that right. Appellant's claim is denied. Negligently Estimated Quantities Claim Item VMS seeks damages of $117,046.21 in unrecovered "non- reoccurring" costs as the result of respondent's alleged negligence in calculating the fourteen estimated quantities contained in the solicitation. Appellant argues that the Government did not take into account the fact that GSA was contemplating a systematic replacement of a certain portion of the vehicle fleet at Fort Jackson, which would have resulted in the estimated quantities substantially differing from those included in the contract. Finding 41. As a result, VMS alleges that it was damaged over the course of its contract performance because the actual quantities ordered varied greatly from the estimated quantities in the contract, Finding 43, and that the contract items for which VMS had the greatest profit potential had the greatest shortfall, Finding 44. VMS has submitted calculations attempting to demonstrate that GSA negligently prepared the estimates, by comparing estimated quantities and fleet make-up in other contracts to the Fort Jackson contract, and asserting that GSA failed to use all information at its disposal in calculating the estimated quantities in this contract. Appellant's Posthearing Brief at 323. We must first determine if the Government was negligent in estimating the quantities included in the solicitation. It is well settled that a bidder on a Government contract is entitled to rely on Government estimates set forth in a contract as representing honest and informed conclusions. Womack v. United States, 389 F.2d 739 (Ct. Cl. 1968). Because contractors rely on the proffered estimates in formulating their bids, the Government must use reasonable care and good faith in computing its estimated needs; it is not free to carelessly guess at its needs. Medart, Inc. v. Austin, 967 F.2d 579 (Fed. Cir. 1992). The actual quantities ordered during the two years VMS performed the contract varied significantly from the estimated quantities in the contract. Finding 43. The contracting officer's decision denying VMS's claim on this issue notes that "the figures [of estimated quantities] in the contract reflect a limited degree of accuracy." Finding 46. However, what occurred here is not that the Government ordered less work than contained in all the contract estimates, resulting in less total revenue than expected. According to VMS's calculations, of the fourteen contract items, the actual quantities for the first contract year exceeded the contract estimates for ten items (ranging from an overrun of more than 10% to more than 600%), failed to equal the contract estimates but were within 10% for two items, and had shortfalls of approximately 80% for two items. For the second contract year, the actual quantities exceeded contract estimates for nine items (ranging from an overrun of more than 10% to more than 500%), failed to meet the contract estimates but were within 20% for two items, were within 30% for one item, and had shortfalls of 87% and 98% in two items. Finding 43. The greatest shortfall for both years was in the Labor (A) category, allegedly VMS's most profitable contract item. Findings 43, 44. The existence of a significant variance between the estimates of work set forth in the contract and the actual work encountered in performance does not necessarily prove negligence or give rise to liability on the part of the Government for inaccurate estimates. The appellant has the burden of persuasion to prove, by a preponderance of the evidence, that inaccurate estimates were the result of negligent action by Government personnel or a lack of due care by preparation of the estimates. Medart; Crown Laundry and Dry Cleaners, Inc. v. United States, 29 Fed. Cl. 506 (1993). VMS first attempts to prove respondent's negligence by comparing estimated quantities contained in other contracts for vehicle maintenance to be performed at Fort McClellan, Fort Rucker, and Fort Benning with those quantities contained in its contract, analyzing the estimated quantities in relation to the types of vehicles contained in those other fleets. VMS asserts that "GSA had significant amounts of historical cost data for each of these military consolidation contracts which would have enabled GSA to make reasonable quantity estimates for these solicitations." Appellant's Posthearing Brief at 323-24. VMS compares the types of vehicles in these other fleets with the types of vehicles in the Fort Jackson fleet. VMS then theorizes that because of the dissimilarity in the vehicle mix of the Fort Jackson fleet as compared to the similarities in the proportions of quantity estimates in these other contracts, the estimates in its contract were negligently prepared. In Medart, plaintiff argued that merely using the information from the previous year was inadequate and an unreasonable procedure, and suggested, as VMS does in this appeal, statistical formulas which might have improved the accuracy of the Government estimates. The Court held that while each of the suggested approaches, and many other approaches, "might have improved the accuracy of the government estimates, . . . their mere existence does not mean that the approach selected was not reasonable." 967 F.2d at 581-82. VMS has gone to considerable effort to gather and analyze information from other installations from similar contracts.21 However, the mere existence of this information does not mean that GSA's approach in this instance was unreasonable. We are not persuaded that the information which VMS alleges should have been utilized by respondent was in fact useful information. On the one hand, VMS alleges that even the estimates in these other contracts have "no relation to reality." Appellant's Prehearing Brief at 142. In making such an assertion, VMS offers no evidence as to the actual quantities ordered by the Government during the performance of these contracts, nor any evidence that the contractors performing these contracts alleged that the estimates included in their contracts were inaccurate. On the other hand, VMS argues that this information should have been reviewed by GSA to arrive at the quantities in the Fort Jackson solicitation. We find VMS's analysis as to this information contradictory, unpersuasive, and irrelevant to the determination as to whether respondent was negligent in estimating the quantities in the Fort Jackson solicitation. Respondent did not derive the estimates contained in VMS's contract from information received from these other locations. Rather, the Government based its calculations exclusively upon data taken from a previous vehicle maintenance contract at Fort Knox. Finding 45. Mr. Bell testified that the Government prepared its estimates using limited information available from the maintenance of a similar fleet at Fort Knox, and that he derived the quantity estimates calculating an estimated maintenance cost per vehicle. Mr. Bell explained that he received information from Fort Knox to extrapolate the estimates in the contract. He used the latest repair records from the last six months of the year as a basis for estimating the repair costs per vehicle of a similar sized fleet with a similar mix of new and old vehicles, taking into account the planned fleet replacement at Fort Jackson. He did not use the information for the entire year, as for the first six months the fleet contained mostly older vehicles. He testified that incorporating information for the entire year would not have provided an accurate estimate, so he ____________________ 21 Respondent failed to fully comply with a subpoena to produce this information before the hearing. We held the record open after the hearing on the merits in order for respondent to respond to the subpoena. limited his calculation to consider only the information from the last six months. Finding 45. Appellant's information indicates that the fleet compositions at the two locations were in fact similar. Appellant's Posthearing Brief at 321-23. In rebuttal, VMS argues that "[i]t is not possible to derive quantity estimates expressed in terms of hours of labor, dollars of parts, numbers of tire services, wheel balances, service calls, battery charges, chassis lubes, oil filters and quantities of oil, transmission fluid and antifreeze from total repair cost information." Appellant's Posthearing Brief at 324. Having made this contention, VMS offers no evidence to support it. We find that appellant has failed to prove by a preponderance of the evidence that the Government either failed to use due care or lacked good faith in preparing the quantity estimates in the solicitation. VMS's arguments that respondent failed to use other relevant information in calculating the estimated quantities are unpersuasive. The Government reasonably based its estimates on available information from another location where the fleet mix was comparable to that at Fort Jackson, calculated the anticipated repair cost per vehicle, and from these costs extrapolated the estimated quantities. While VMS may contest the ability to extrapolate the estimated quantities from the information which the Government possessed, it failed to offer evidence or argument as to why this could not be done. Accordingly, we find that respondent has not breached its duty of reasonable care or good faith in the preparation of the estimated quantities. We deny appellant's claim item for negligently estimated quantities. Labor Inefficiency Claim Item VMS alleges it incurred substantial labor inefficiencies for which it is entitled to compensation, and bases this claim item on various alleged delays and disruptions. VMS created a system and a database to aid it in processing repairs performed under the contract. Findings 48, 49. VMS alleges labor inefficiency as the result of respondent's refusal to supply replacement vehicle information. VMS says that after it had originally entered information as to vehicle composition into its database, replacement vehicle information had to be entered manually into its database with whatever information was supplied at the time the vehicle was presented for repair. VMS claims that the need for late manual entry of the replacement vehicle information severely limited the value of the information in the database regarding, for example, gross vehicle weight, any special equipment, or model number. Finding 52. VMS also maintains that respondent required VMS to redesign the invoice format and content four times before it would accept them, which caused the relational database computer system to be delayed by approximately four weeks. Finding 52. Another basis of VMS's labor inefficiency claim is respondent's interpretation of Section F-5 of the contract, which specifies that "the deadline rate should not exceed 4 percent of the total operating fleet." Deadlined vehicles are those "turned into the repair contractor for repairs requiring service." Finding 50. According to VMS, if this four percent requirement had been treated by respondent as a goal rather than a contract requirement, VMS could have leveled out the workload and in- creased productivity. However, VMS claims that respondent treated this provision as a requirement and coerced VMS into hiring and maintaining additional personnel and incurring overtime costs in order to meet the four percent rate, despite extremely large variations in the level of workload. Finding 52. VMS alleges further that although the proper procedure for determining repair and service requirements is clearly established in the contract, GSA totally ignored the contract procedures. Thus, VMS concludes that these abrupt and unanticipated changes caused it to lose efficiency in performing repairs. Finding 52. In evaluating appellant's numerous causes of alleged delays and disruptions, we find that VMS has merely heaped allegation upon allegation without meeting its burden of proof. Except for the delay in approving the invoice format, VMS has failed to prove the existence of any alleged delays or disruptions. VMS has failed to prove legal or actual injury incurred as the result of any alleged delays and has not attempted to allocate the alleged impact of the various delays to any portion of the damages alleged. With regard to its allegations of interference by GSA as to the finalization of invoice formatting, VMS admits that this problem was resolved in the first month of contract performance, and while billing was delayed, no repairs were delayed. Finding 8. Respondent's refusal to provide information to VMS as to replacement vehicles, except as the vehicles were offered for repair, is not a breach of contract as there is no requirement in the contract for such information to be supplied during the initial time frame of the contract. Accordingly, any time spent in manually entering the data as the vehicles were presented for repair does not amount to legal harm. With regard to overtime incurred as the result of the enforcement of the four percent deadline, VMS offered proof as to the number of employees it had on the job site and the number of hours worked. Finding 52. However, VMS has not submitted proof as to the reason for any of the overtime, as VMS asserts that all overtime was the result of the alleged delays. While the contracting officer testified that the deadline rate of four percent was not a "contract requirement," but a "contract guideline," Finding 51, there has been no showing that any of the overtime worked was as the result of the enforcement of this provision. With regard to the allegation of "coercion to hire additional employees," VMS has offered no support for this allegation other than a memorandum which mentions an inquiry by Mr. McNulty as to VMS's intent to hire additional employees. Finding 55. This one incident hardly amounts to coercion, and there is no causal connection shown as to the reason for the overtime incurred. While there were fluctuations in workload, as illustrated by VMS's information, Finding 53, and admitted by respondent, Finding 54, there is no proof that any of the alleged delays caused the fluctuations or that the fluctuations were aberrational. We are not persuaded by appellant's arguments that the size of the fleet to be repaired was such a large sample that statistically "according to the law of large numbers" the workload should not have fluctuated. Finding 52. As to the alleged violation that GSA ignored contract procedures for determining repair and service requirements, VMS offers no indication as to the number of incidents nor the impact of these alleged violations, other than a broad allegation that "GSA totally ignored the contract procedures." Finding 52. We deny appellant's claim for labor inefficiency. VMS has not only failed to prove the existence of the alleged delays, but also made no attempt to allocate any of the alleged causes of delay and disruption to any portion of the damages alleged. Its alleged damages are calculated by reducing total available labor hours by what VMS considers legitimate reductions caused by its own inefficiency (work performed and other claims) and has characterized the remaining hours as "labor inefficiency," which it claims must have been caused by the collective impact of the alleged, unproven delays. This total cost approach to calculating damages is appropriate only in extreme cases, where no more satisfactory method is available. Wunderlich Contracting Co. v. United States, 351 F.2d 956 (Ct. Cl. 1966); F.H. McGraw & Co. v. United States, 130 F. Supp. 394 (Ct. Cl. 1955); Youngdale & Sons Construction Co. v. United States, 27 Fed. Cl. 516 (1993). Even in extreme cases, where such a method of calculating damages is allowed, the contractor is not relieved of its essential burden of establishing the fundamental facts of liability, causation, and resultant injury. Wunderlich Contracting Co. Appellant has failed in its burden of proof. Broad generalities and inferences to the effect that the respondent must have caused some delay and damage because of extended efforts on the part of the contractor are not by themselves sufficient. Commerce International Co. v. United States, 338 F.2d 81 (Ct. Cl. 1964). Appellant's claim for labor inefficiency is denied. Diverted Work Claim Item This contract is a requirements contract for any service needs of the GSA fleet at Fort Jackson, South Carolina. Except for urgent needs, exigencies, and security clearance reasons, the Government was required to order all services of the kind contracted for from VMS. Finding 58. VMS obtained certified copies of invoices for work that it alleges respondent diverted to outside vendors during the performance period of this contract. Finding 59. Respondent does not contest that it directed some work to be performed by outside vendors. Finding 60. Respondent justified its decision to have the work performed by outside vendors on the ground that the contractually specified time for some of the repairs had been exceeded, some repairs were beyond the scope of the contract (e.g., those for glass work), and the remainder of the repairs were to vehicles that had broken down outside the Fort Jackson area.22 Respondent's Post-hearing Brief at 5. Respondent did not quantify the amount of diverted work that would fall into any of these categories. With regard to respondent's argument that it diverted some work because the contractually specified time for repair had been exceeded, Section F-2(a) of the contract states that "vehicles be repaired within 8 (eight) working hours following the time authorized for repair in the flat rate manual." Section F-2(b) specifies that "[i]f, after repair order is written, the time required for repairs or services is longer than that on which the award is based because of the unavailability of required parts, or the like, the contractor must request of the ordering office and obtain an authorized extension of time," and further, "the ordering office has the right to have the work done elsewhere in lieu of authorizing an extension of time." Finding 61. Thus, respondent had a right to divert work only after VMS failed to repair the vehicle within the contractually specified time. No evidence was offered by respondent indicating that any diverted work had been work which was originally offered to VMS and for which a request for a time extension had been denied. Respondent argues that "[t]here is a virtual dearth of documentation to support the VMS position that work sent to other vendors actually was work for which VMS was given time extensions." Respondent's Post-hearing Brief at 5. Respondent's statement implies that the work sent to others was work which respondent originally requested VMS to perform and for which time extensions had been denied. Respondent appears to have misinterpreted appellant's argument -- with regard to the ____________________ 22 VMS stated at the hearing that it had reviewed its original claim and reduced its amount by the value of those repairs performed on vehicles that broke down outside the Fort Jackson area. VMS's claim for diverted work excludes these invoices. Transcript at 67-68. diverted work, there is no evidence that such work was ever originally offered to VMS to perform, so there would be no evidence of time extensions requested, granted, or denied. GSA has not justified its diversion of work to outside vendors on the basis of its alleged discretion to divert work rather than issue a time extension, as it has not shown that such work was originally offered to VMS and was the subject of a request for a time extension before respondent diverted the work to an outside vendor. Thus, the diversion of work by GSA based on the allegation that VMS failed to make repairs in a timely manner was a breach of contract. With regard to respondent's defense that some of the diverted work was beyond the scope of the contract, such work was allegedly glass work that GSA contends was excluded from the contract. However, the only work excluded by the contract is "body and fender." Finding 63. Contract modification PS-04, which VMS refused to sign, would have specifically added glass work as a category of excluded work, together with body and fender work. Finding 14. VMS refused to execute this modification. Finding 15. GSA's attempt to put glass work in the category of excluded work by contract modification clearly indicates that GSA believed that the contract as written did not exclude glass work. We find that glass work was not excluded from the contract. Accordingly, any diversion of glass work to an outside vendor was a breach of contract. The Government may not agree to purchase its requirements from one contractor and then, with impunity, satisfy them elsewhere. S&W Tire Services, Inc., GSBCA 6376, 82-2 BCA 16,048. In S&W Tire Services, Inc., the Government similarly breached a requirements contract by failing to order from the contractor work which it was obligated to order under the contract. We held that "[g]iven that the Government has committed a breach of appellant's contract, we have no need to search the contract for the source of appellant's right to recover. The existence of the breach establishes the Government's liability." Id. at 79,618. Accordingly, in the instant appeal, we find that respondent's diversion of work to outside vendors was a breach of contract. In S&W Tire Services, Inc., we held that when the Government breaches a requirements contract by diverting work to outside sources, the proper measure of appellant's damages is its lost profits, as permitted by common law. Lost profit is defined as the loss in the value of performance caused by the other party's breach, less any cost or other loss that is avoided by not having to perform the diverted work. Restatement (Second) of Contracts 347 (1981). In the instant appeal, VMS has documented its loss as the result of diversion of work of parts and labor which it would have supplied and performed, but for GSA's other vendors doing the work. The total value of the diverted work is $121,300.55, of which $65,903.31 represents the cost of parts and $55,397.24 represents the cost of labor. Finding 64. VMS characterizes its loss from this diverted work as "lost contribution to profits and overhead"23 of the parts and labor that were provided by outside contractors, in the total amount of $57,150.88. Finding 65. In calculating lost profit on the parts supplied by other vendors, VMS has reduced the sale price of the parts by its contractual discount and the costs of the parts which it would have incurred. Similarly, in calculating lost profit on the labor supplied by other vendors, it has deducted from the value of the labor its labor and "labor driven costs." These deducted amounts are properly deducted, as they are costs that have been avoided by not having to perform the work. VMS adequately supports the cost items in its calculation by invoices obtained from GSA evidencing the cost of parts and the nature of labor rendered, and estimates the labor hours expended based upon industry standards contained in the Motor Guide -- the method prescribed in the contract. Finding 65. GSA offered insufficient evidence to rebut VMS's calculation of damages. Finding 66. We grant the claim item for diverted work in the amount of $57,150.88. Motor Listed Parts Claim Item VMS's claim for "Motor Listed Parts" alleges that respondent breached the contract by not complying with the pricing provisions with regard to parts cited in the Motor Guide. This dispute arises from the parties' conflicting interpretation of the contract language which provides for the pricing of parts "cited in the Motor Parts and Time Guide" supplied by the contractor during performance of contract work. See Finding 13. The Motor Guide is published annually. It contains information on specific cars and trucks. It provides detailed parts information on passenger cars only. The Motor Guide does not contain parts information for domestic medium, light-medium, or heavy duty trucks. Use of the Motor Guide allows one to make reasonable estimates of what it would cost to repair a covered vehicle, as it provides manufacturer's suggested retail prices for parts listed. Both appellant and respondent agree that by the time the manual is printed, the parts prices may have changed ____________________ 23 While VMS refers to its loss for this claim item as "contribution to profit and overhead," VMS calculates its loss as the loss in the value of performance caused by GSA's breach, less any cost or other loss that was avoided by not having to perform the diverted work. This is the common law calculation for lost profits. Restatement (Second) of Contracts 347 (1981). and, therefore, the Motor Guide does not necessarily contain current prices. Finding 67. According to VMS, the parts information contained in the Motor Guide is intended as a quick reference for estimating purposes only. Parts information is only supplied for passenger cars, and not for light, medium, or heavy duty trucks. Part numbers may be changed by the manufacturer after publication. VMS alleges that it uses the parts information contained in the Motor Guide to quickly approximate the cost of parts required in a given repair, and that it interpreted the contract as requiring the use of the parts prices from the Motor Guide for computational purposes if the parts were identified in the Guide. VMS, therefore, considers a part "cited in the Motor Parts and Time Guide" in Section B-5 of the contract to refer to the type of part only. According to VMS, if the type of part is listed in the Motor Guide, an after-market part that meets the original equipment manufacturer's specifications is a part "cited in the Motor Parts and Time Guide." Findings 69-70. It is VMS's position that the price it would be allowed to charge for the after-market part would be the price listed in the Motor Guide, regardless of whether the actual price paid by VMS to the vendor was more or less. For example, under appellant's interpretation, a cylinder block for a 1989 Ford Taurus is listed in the Motor Guide by part number and price. VMS purchases a cylinder block for a 1989 Ford Taurus, but that block does not contain the same part number as contained in the Motor Guide because it is an after-market part which meets the original manufacturer's specifications. VMS maintains that it would be entitled to be paid the price as listed in the Motor Guide, even if it had purchased the part at a lower price as an after-market part rather than from the original equipment manufacturer. According to respondent, VMS should not prevail for several reasons. Respondent contends that a part "cited in the Motor Parts and Time Guide" is not merely the same part by type, but must bear the identical part number. Therefore, the part must be a manufacturer's recommended part, purchased from a dealer, and not an after-market equivalent. Respondent took the position that it must approve any after-market part used by VMS. Finding 71. If VMS did not supply the part from a dealer with the same part number as listed in the Motor Guide, it was only entitled to be paid the manufacturer's suggested retail price. Respondent also contends that VMS failed to reserve its rights to additional payment for the invoices, as appellant has no record of having sent the letter, nor does Mr. McNulty have a recollection of receiving the letter. Finally, respondent argues that there has been an accord and satisfaction by appellant having billed for its actual costs and having accepted payment for the invoices. We first address the defense of accord and satisfaction. According to VMS, this claim item arose early during contract performance when GSA insisted on paying only the cost VMS actually paid for the parts. Findings 74, 75. VMS alleges it reserved its rights by letter dated February 4, 1988. Finding 75.24 It therefore accepted payment from GSA based upon GSA's interpretation of the contract and intended to submit its claim thereafter. We do not find accord and satisfaction. An "accord" is an agreement by one party to give or perform and by the other to accept, in settlement or satisfaction of an existing or matured claim, something other than what is claimed to be due. "Satisfaction" is the execution or performance of the agreement, or the actual giving and taking of the agreed thing. Chesapeake & Potomac Telephone Co. v. United States, 654 F.2d 711 (Ct. Cl. 1981). In this instance, by supplying after-market parts, believing them to satisfy the contractual requirements of "parts cited in the Motor Guide," VMS did not agree to perform anything other than what it claimed was its duty under the contract. Respondent did not consider receipt of such after- market parts less than what it believed it was entitled to receive. The sole dispute was the price to be paid, not the acceptability of the part. Appellant provided notice of its claim, Finding 75, and thereafter appellant invoiced respondent only for those amounts for which appellant had been informed respondent would pay. Such invoices were, therefore, disputed amounts, and respondent was aware that payment of such amounts would not satisfy appellant's claim. Even had there been an accord (i.e., an understanding of substitute performance), there also needed to be an accompanying expression by respondent clearly indicating its intention that the cashing of the check was to operate as a settlement in full. Chesapeake & Potomac Telephone Co., 654 F.2d at 716. No such expression of "satisfaction" was made. Having disposed of the defense of accord and satisfaction, we must resolve the issue of contract interpretation. We find that the language of the contract drafted by respondent is unclear and at times ungrammatical, bordering on unintelligible. ____________________ 24 Mr. McNulty does not expressly deny having received appellant's letter, but merely asserts that, five years after the time in question, he has no recollection of the letter. Finding 76. Respondent has not rebutted Mr. Oliver's sworn testimony that the letter was delivered to respondent. Finding 75. The majority of the types of parts used by VMS in the performance of the contract are not cited in the Motor Guide, as the Motor Guide does not contain listings for the type of vehicles that make up the majority of the fleet to be serviced under the contract. VMS therefore reasonably interpreted the phrase "cited in the Motor Parts and Time Guide" as referring only to the part by type, i.e., those listed for the types of vehicles covered in the Motor Guide. In contrast, respondent's interpretation is based on arguments not supported by any reasonable interpretation of the contract language. The contract contains no requirement that respondent approve the use of after-market parts, as alleged by both Mr. McNulty and Mr. Bell. The prior approval required by the contract is for "use of rebuilt assemblies." After-market parts are not rebuilt parts -- they are new parts. There is also no contractual requirement that parts "cited in the Motor Parts and Time Guide" come from dealers, as respondent alleges. The contract states "parts and materials must be new or conform to the original equipment manufacturer's specifications unless otherwise approved by GSA representatives." Some after-market parts meet the original equipment manufacturer's standards and do not need prior approval. Finding 69. There was no allegation by respondent that any specific part supplied by VMS was not new or failed to meet the original manufacturer's standards. By interpreting the contract using unstated requirements, respondent has demonstrated the ambiguity of its own contract language. Respondent attempted to clarify its ambiguous contract by requesting VMS to enter into modification PS-04, which contained language requiring negotiation of parts prices. Finding 14. This attempt to modify the contract is an additional indication that the Government found the existing pricing language ambiguous. Accordingly, we find appellant's interpretation that parts "cited in the Motor Parts and Time Guide" were those referenced by type for the make and model of vehicle was reasonable, and that the Government's insistence that it pay only the actual price paid by VMS, rather than the price listed in the Motor Guide, to be a breach of contract. Appellant's appeal as to its claim for Motor listed parts is granted. VMS has documented its claim by employing the contractually specified method and identifying the appropriate price of each relevant part listed in the Motor Guide. In some instances, the price contained in the Motor Guide is greater than that which respondent paid, and in some instances it is less. The claim is the cumulative sum of these amounts -- the additional parts revenue less the twenty-two percent discount totalling $8,360.99. Finding 77. Accordingly, we grant appellant's appeal on this issue in the amount of $8,360.99. Non-Motor Listed Parts Claim Item Appellant seeks $151,310.79 for the "lost contribution to profits and overhead" that it allegedly would have earned under the contract by supplying parts to respondent that were not listed in the Motor Guide. Appellant argues that respondent "refused to pay for high margin and/or high volume repair parts at the contract price" and constantly threatened to supply parts and did, in fact, supply parts to VMS. The contractor maintains that the effect of the GSA's practice was to force VMS to accept less than the contract specified price determination for many parts, so "VMS sustained the lost contribution to profits and overhead of the parts revenue reduction that was necessary to comply with GSA's demand for lower parts prices." Appellant's Prehearing Brief at 91-92. Respondent contends that appellant should not prevail because: (1) respondent had an express right to provide parts to appellant under the contract, and this right necessarily implied that respondent would decide when to provide such parts, (2) appellant is barred by the legal doctrine of accord and satisfaction from undoing its previous legally binding business decisions made between itself and respondent, and (3) the express terms of the contract provided respondent with the right to furnish parts to appellant and these terms were not legally void. Respondent first argues that its express contractual right set forth in Part I, Section B-7(a), to provide parts to appellant under the contract necessarily implied that it would decide when to provide appellant with such parts. Finding 78; Respondent's Post-Hearing Brief at 33. Respondent further contends that because of the strength of the technical and marketplace knowledge of its on-site personnel, appellant "was faced with the option of either allowing GSA to supply the part or obtain the part from another, cheaper parts supplier." Id. at 34. Second, respondent argues that appellant is barred by the legal doctrine of accord and satisfaction from undoing its previous legally binding business decisions. Respondent reasons that: VMS obviously underestimated the strong position that the Contract terms put GSA in with respect to the prevention of price gouging by parts suppliers. Once aware that GSA would, in fact, make use of these contract provisions, VMS made the business decision to "accede" to GSA's demands for fair prices and either accept parts supplied by GSA, or seek to obtain parts from suppliers with reasonable M.S.R.P. [manufacturer's suggested retail] prices upon which to bill GSA. The non-Motor listed parts supplied by VMS in accordance with these terms [were] paid for by GSA and there exist no unpaid and outstanding invoices for these services. Respondent's Post-Hearing Brief at 35. Respondent also argues that appellant having "acceded" to the choice of either accepting the parts that respondent provided it with or obtaining parts from suppliers at prices less than those obtained by respondent met the four criteria for a proper accord and satisfaction: (1) proper subject matter, (2) competent parties, (3) a meeting of the minds of the parties, and (4) consideration. Respondent's Post-Hearing Brief at 35. We agree with respondent. In interpreting a contract, one is to give words their plain meaning. Davister, Inc. v. General Services Administration, GSBCA 11662, 93-3 BCA 25,987. We find that Section B-7(a) of the contract was clear and unambiguous in delineating respondent's right to supply appellant with parts under circumstances respondent deemed appropriate. Neither Section B-7(a) nor any other section of the contract provided appellant with the right to question or appeal the judgment of respondent in electing to supply appellant with parts that were not listed in the Motor Guide. Further, what occurred was an accord and satisfaction, i.e., a discharge by rendering performance and the acceptance of such substituted performance by the claimant as full satisfaction of its claim. Chesapeake & Potomac Telephone Co. v. United States, 654 F.2d 711 (Ct. Cl. 1981). In this instance, VMS offered a price lower than what it believed to be due in consideration of GSA's forbearing from exercising its contractual right to supply the part. VMS could have just as easily allowed GSA to supply the part and would have had no claim for its doing so. We therefore have all the elements of accord and satisfaction: proper subject matter, competent parties, meeting of the minds, and consideration. GSA had a right to supply the parts, and VMS chose to offer a reduced price in exchange for GSA's forbearing from exercising its right. This was a bargained-for exchange between the parties. The fact that VMS would have made more profit had it not occurred does not entitle VMS to relief. Accordingly, we deny appellant's claim for non-Motor listed parts. Motor Labor Variances Claim Item The contract designates the use of the Motor Guide to "determine repair time." Additionally, "[t]he contractor shall charge for labor an amount equal to the contract hourly rate multiplied by the number of hours shown in the applicable published flat rate manual for such repairs." Finding 81. The Motor Guide states that additional time may be encountered when difficulties arise from corrosion, rust, carbon build-up, varnish, broken studs, etc. Finding 82. According to VMS, the repair times stated in the Motor Guide therefore do not take into account that diagnostic work will be performed in addition to the labor itself. According to VMS, GSA refused to pay for diagnostic time. VMS maintained a record of additional repair time incurred, but did not designate the reason for the additional time. This additional time is allegedly either for performing diagnosis or additional repairs required by the varying conditions of the motor, which the Motor Guide acknowledges may be necessary. GSA did not recognize any variances and only paid the times allowed in the manual, without recognition of the variances allowed by the explicit language of the manual. Finding 83. Respondent argues that even if one assumes appellant incurred the additional time, there has been no showing that this additional time was the result of the condition of the motor or the level of diagnostic difficulty. Respondent's Post-hearing Brief at 17. Mr. Oliver did not personally supervise the repairs, but administered the contract from his office in Silver Spring, Maryland. Finding 6. Appellant offered no testimony from anyone with personal knowledge as to the alleged condition of the vehicles and the reasons for the additional time. We agree with appellant that the contract language clearly does recognize variances in labor rates for unusual circumstances. We agree with respondent, however, that appellant has failed to prove the cause for the additional time claimed. We do not question that VMS accumulated a record of the additional hours concurrently with its performance of the repairs, but we are not persuaded by the mere allegation that the additional times were due either to the condition of the engine or diagnostics required. There is no indication of contemporaneous notation as to the reason for the additional repair times, and the reasons provided by appellant are mere assumptions. We deny appellant's claim item for motor labor variances. Non-Standard Vehicle Labor Claim Item This dispute arises from an interpretation of the contract language contained in Section B-5 concerning the repair of vehicles not listed in the Motor Guide. This section requires the parties to negotiate a price for repairs and respondent to pay "agreed time." Finding 86. VMS argues that because the Motor Guide did not provide such an all-inclusive listing of standardized times (either for all possible vehicles or for all possible repair operations), the contract contemplated that appellant and respondent would need to negotiate the labor hours required by appellant to perform "non- standard" repairs. Appellant contends that in many instances where either the vehicle or the category of work was not included in the Motor Guide, respondent unilaterally determined the number of hours for which it would pay appellant without negotiating this amount with appellant as required by Section B-5 of the contract. VMS seeks $249,828.75, which allegedly represents the unreimbursed dollar value of the actual labor hours that it allegedly expended in repairing those vehicles whose repair times are not listed in the Motor Guide. With regard to appellant's repair of buses, respondent unilaterally determined the number of labor hours on which it would base its payment to appellant. VMS asserts that because the Motor Guide did not contain any standardized repair times for buses, respondent unilaterally used as a proxy the repair times contained in the Motor Guide for International Harvester Corporation trucks. Respondent utilized those repair times, as it considered those trucks to be similar to the buses in the Fort Jackson fleet. Findings 85, 87. Respondent reasons that appellant is seeking to have the Board undo the quantum of work that both appellant and respondent had "agreed to" in appellant's performing various repairs on non- standard vehicles. Respondent argues that appellant did in fact "agree" to perform the repair work in dispute for the non- standard vehicles. Respondent alleges that this is true, even though appellant may have believed that the "agreed" price was artificially low. Respondent notes that an artificially low price for non-standard repair work could have been caused by the possibility that if appellant and respondent were not able to reach an agreement on an adequate price for the non-standard vehicle labor hours, that respondent could (and, in fact, would) "divert" such work to any one of a number of competing vendors, as "GSA was free to find another vendor that would do the work." Respondent's Post-hearing Brief at 13. Respondent alleges that VMS knew "that GSA had other vendors available and willing to perform the work when agreements couldn't be reached with VMS. Thus, VMS seems to have known that the Contract required them to negotiate payment for this work with GSA." Id. at 14. We find respondent's argument both revealing and damning. Although it had expressly reserved its right to supply parts to appellant, GSA did not reserve to itself the right to substitute another vendor with respect to the repair of non-standard vehicles. The fact that VMS knew that there were other vendors available to perform the work did not confer upon GSA the right to divert such work to them, nor did such knowledge by appellant vest GSA with a "strong negotiating position" to threaten to do so, unless appellant acceded to GSA's suggested price, as GSA suggests. See Respondent's Post-hearing Brief at 14. If this threat to divert work to outside vendors, in violation of the contract, was the basis of the alleged "agreements," as GSA suggests, it is clear that no negotiation took place, and that the rates were thus unilaterally determined by GSA rather than negotiated as required by the contract.25 We find that GSA failed to negotiate non-standard vehicle repairs as required by the contract, and that this failure was a breach of contract. Appellant seeks reimbursement for the uncompensated time expended on the non-standard vehicle repairs, and in support submits actual repair times as indicated on 1,928 invoices submitted for non-standard vehicle repair. The total claim amount of $249,828.75 for this claim item is the difference between the dollar amount VMS was paid by respondent for the repair of those vehicles for which standardized repair times or repair operations were not listed in the Motor Guide and its alleged actual labor costs incurred for the repair of these vehicles. Finding 90. In calculating quantum, VMS used its contractually specified labor rates. In order to demonstrate the reasonableness of the rates used in calculating this claim, VMS compared the labor rates paid by GSA to outside vendors for diverted work for similar repairs. Finding 92. ____________________ 25 Respondent also poses the same accord and satisfaction defense as with previous claims, i.e., a tender of substitute performance at an "agreed price" with acceptance of payment. As is the case with the claim for Motor listed parts, this claim arose early during contract performance. VMS alleges that it reserved its rights by letter dated February 4, 1988, Finding 88, and that it, therefore, accepted payment from GSA based upon GSA's interpretation of the contract and intended to submit its claim thereafter. We find no accord and satisfaction in this instance. There was no agreed upon substitute performance, as the performance rendered was that required by the contract. As we have found that no negotiation actually occurred, as required by the contract, any argument by the Government as to there having been an acceptance of such "agreed price" must fail. VMS maintained records of its actual repair times expended as the work was being performed. Findings 10, 11. Appellant has presented prima facie reasonable and credible documentation in support of quantum. Respondent has not rebutted the accuracy of the time records.26 We find that appellant has met its burden of proof with contemporaneous and accurate records of the work performed. Additionally, we find that VMS has demonstrated its contractually specified labor rates are reasonable in comparison to the rates paid by GSA to outside vendors. The contract required the parties to negotiate "agreed time" for non-standard vehicle repair labor and GSA would pay the contractually specified labor rates for this "agreed time." Appellant seeks the difference between the value of its total expended time and the amount it has been paid for these repairs. VMS's quantum calculation therefore assumes that GSA would have always agreed to pay for the actual time expended in making a repair. This is speculative and we cannot calculate quantum on this basis. However, it is clear that appellant was damaged by respondent's breach. When the fact of damages is established, it is proper for the Board to enter a jury verdict when there is uncertainty as to the extent or amount of the damage. H.K. Enterprises, GSBCA 10166, 91-2 BCA 23,697. This relaxation of the requirement that the injured party support its claim with definite and specific proof is allowed when such proof is not reasonably available to the injured party. Joseph Pickard's Sons Co. v. United States, 532 F.2d 739 (Ct. Cl. 1976). In this instance, the reason that extent of the damage is not exact is the result of respondent's failure to negotiate according to the terms of the contract, rather than a failure on the part of appellant. While we do not know what "agreed time" may have been for each repair, we believe that a jury verdict is appropriate because the evidence is sufficient to make a fair and reasonable approximation of damages. In Dawco Construction, Inc. v. United States, 930 F.2d 872 (Fed. Cir. 1991), the Court required that three factors be present before adopting a jury verdict: (1) that clear proof of injury exists, (2) that there is not a more reliable method for computing damages, and (3) that the evidence is sufficient for a court to make a fair and reasonable approximation of the damages. See also Marty's Maid and Janitorial Service v. General Services Administration, GSBCA ____________________ 26 Respondent has challenged the VMS cost database because appellant had "almost sole control" over it, and it was prepared by Mr. Oliver, the "only person who stands to gain from any recovery in this appeal." Respondent's Post-hearing Brief at 16. Respondent does not indicate who else should have had control over appellant's database so as to make it more credible. Typically, the appellant does stand to gain from recovery in an appeal. We find respondent's arguments unpersuasive on this issue. 10614, 93-1 BCA 25,284. We believe that these three factors are present, and a jury verdict is therefore appropriate. In presenting evidence to support another claim item, appellant noted that its labor force performed with what it characterized as a "personal rest/delay" inefficiency factor of 12.3%. Finding 56. We believe that by reducing the quantum of this claim item by appellant's admitted unproductive time, the result would yield a fair price for the uncompensated labor costs for non-standard vehicles. Accordingly, we grant the claim item in the amount of $219,099.82. Ignition System Labor Claim Item The contract requires the Government to pay for labor, including ignition system work, according to the Motor Guide. Finding 81. The Motor Guide had two specific categories of labor with regard to ignition systems -- ignition system analysis and ignition system tune-up. The difference between the two is that analysis determines the present state of the system and the tune- up adjusts the system. The tune-up also may include renewing and replacing parts, such as points, condensers, the distributor cap, a rotor, plug wires, or associated ignition parts. Finding 93. According to VMS, GSA's payment procedures were often inconsistent, with respondent sometimes paying for certain services and sometimes not. Finding 94. In defense, respondent poses the same accord and satisfaction defense as with previous claims, i.e., a tender of substitute performance at an "agreed price" with acceptance of payment. Similar to the claim for Motor listed parts, VMS's claim for ignition system labor arose early during contract performance. VMS alleges it gave notice of its claim by letter dated February 4, 1988, Finding 94, and, therefore, accepted payment from GSA based upon GSA's interpretation of the contract and intended to submit its claim thereafter. We find no accord and satisfaction in this instance. There was no agreed substitute performance, as the performance rendered was that required by the contract. VMS's invoices clearly reflected the work that had been performed on the ignition system and the work for which VMS had received payment. Finding 95. Respondent attempts to rebut appellant's claim by arguing that the labor charges were calculated "after the fact." Respondent's Post-hearing Brief at 10. However, the original invoices contained a description of all work that was performed, including parts installed, and therefore contained all information necessary to calculate the amount for which VMS claims compensation. We find this adequate proof of services rendered and the rates used in calculating this claim item were those contained in the Motor Guide, as prescribed by the contract. The contracting officer's final decision states that "GSA, at no time during the contract, refused to pay for parts or services rendered as authorized by GSA and reflected in the Motors Parts and Time Guide. Paragraph F-4 (14) would permit Fleet Management Branch to define the scope of any repair so as to avoid redundant operations. Therefore, the contractor would not be entitled to compensation." Finding 97. No explanation was offered at the hearing as to any alleged redundant operations or the exercise of discretion by GSA in limiting repairs. Respondent's witnesses offered no rebuttal testimony at the hearing as to this claim. Accordingly, no explanation was forthcoming by respondent as to its refusal to pay for ignition systems work in accordance with the terms of the contract. We grant this claim item for ignition systems work. Appellant's monetary claim was calculated from each invoice for which appellant had performed ignition work. Appellant identified work that it had performed and for which it was entitled to payment in accordance with the Motor Guide and the terms of the contract, but for which GSA had refused to pay. VMS's claim for ignition system work is the time value for the ignition work pursuant to the Motor Guide for which GSA did not pay. Finding 96. As VMS has calculated its claim item as prescribed by the contract, we find the amount claimed reasonable. We grant appellant's claim item for ignition system labor in the amount of $6,971.50. Preventative Maintenance Claim Item Appellant asserts that respondent failed to pay for all of the preventative maintenance work that VMS performed. The preventative maintenance to be performed was specified by a computer generated form that was attached to the standard GSA repair order and given to VMS when a vehicle was turned in for service. Finding 100. Appellant argues that, based on respondent's preventative maintenance schedules, the GSA Form 3478 mandated that VMS perform certain repairs on respondent's vehicles. Appellant alleges that it did make all of the repairs listed on each one of these forms for all of respondent's vehicles detailed in the contract requirements. Appellant further contends that it submitted invoices to respondent for all of this repair work. Appellant subsequently alleges that respondent "refused to accept an invoice with any PM item beyond top-off fluids" and that its claim was "for services rendered in response to GSA requests but not paid by GSA." Finding 105; Appellant's Prehearing Brief at 77. Appellant has submitted no evidence as to the work that it actually performed for preventative labor for which it now seeks compensation. Instead, it calculates its claim on the assumption that such work had to have been performed as a mandatory requirement, based upon the time frame during which preventative maintenance is required, and yet admits that it did not maintain a record of the work as it was being performed. Findings 105, 106. Respondent rebuts appellant's contention that the preventative maintenance tasks as listed on the preventative maintenance schedule were required to have been performed during the timeframe alleged by VMS. Mr. Bell testified that GSA would always check to see if any of the preventative maintenance had been previously performed in conjunction with other repairs so as to make that preventative maintenance unnecessary. The mere passage of time would, therefore, not require that appellant perform preventative maintenance. Thus, respondent had a procedure to avoid duplication of preventative maintenance in the event such work had been performed in conjunction with prior repair operations or tasks. Finding 104. Additionally, the plain language of the contract, Section F- 4, OPERATING INSTRUCTIONS GENERAL REPAIRS/PREVENTATIVE MAINTENANCE, clause 14, Finding 99, supports GSA's position that respondent possessed the final authority to determine which repairs were to be made, including those made for preventative maintenance. The contract read as a whole does not support appellant's argument that the performance of each task and operation in the preventative maintenance was mandatory during the timeframe alleged by VMS. VMS's assumption that preventative maintenance had to have been performed during specific time intervals is clearly erroneous. Appellant has presented no evidence other than an assumption based upon its erroneous legal interpretation of the contract requirement that the work was in fact performed during the timeframe alleged. We deny appellant's claim item for preventative maintenance labor. Pay for Required Equipment Claim Item Appellant claims $9,722.30 for emissions control equipment required by the contract that appellant allegedly underutilized during performance of the contract. The equipment was supplied by GSA and at first was "rented" by appellant from GSA via a contract modification. Subsequently, the payment for rental of the equipment was subsumed in another modification by which appellant agreed to perform vehicle delivery services. Finding 108. Appellant claims that the primary purpose of the equipment was for emissions control testing, and that respondent knew that this equipment would not be used for such a purpose in any real sense, as there was no requirement in South Carolina for emissions control testing. Appellant admits it did use the equipment to perform certain repairs. Finding 110. Appellant's claim is one for lost opportunity costs. VMS believes that because it was required to have the equipment, and the equipment's major purpose was to perform emissions control testing, respondent should compensate it for the profit it would have earned had it tested a reasonable number of respondent's vehicles for emissions control. In calculating its claim, appellant imposed a mid-Atlantic state emissions control testing requirement on the fleet of vehicles under the contract. The claimed amount was allegedly the net amount it would have realized had the equipment been used to perform this testing. Finding 111. Appellant admits that it did utilize the equipment for certain repairs, and yet seeks additional compensation for amounts it would have made had there been a South Carolina requirement for emissions control testing in the contract. There was clearly no requirement for such testing stated in the contract. We fail to see why appellant should be compensated for work neither required by the contract nor actually performed by appellant. Appellant's claim that it is owed the amount of profit it would have received for use of equipment it did not own, had there been a requirement for emissions control testing in the contract, is speculative and has no legal basis. We deny this claim item. Decision The appeal is GRANTED IN PART and DENIED IN PART as follows: Claim Item Amount Bad Faith Denied Negligent Quantity Estimates Denied Labor Inefficiency Denied Diverted Work Granted $57,150.88 Motor Listed Parts Granted 8,360.99 Non-Motor Listed Parts Denied Motor Repair Variance Labor Denied Non-Standard Vehicle Labor Granted 219,099.82 Ignition System Labor Granted 6,971.50 Preventative Maintenance Labor Denied Pay for Required Equipment Denied Total Granted: $291,583.19 Of the four items granted, the claim items were either in an unstated sum (Diverted Work) or not clearly identified in VMS's first claim submitted on August 23, 1991 by the same category or amount (Motor Listed Parts, Non-Standard Vehicle Labor, Ignition System Labor). Therefore, the total granted in this decision, in the amount of $291,583.19, is to bear interest pursuant to the Contract Disputes Act of 1978 from March 8, 1991, the date the contracting officer received the supplemental claim. 41 U.S.C. 611 (1988). ________________________ ALLAN H. GOODMAN Board Judge We concur: _____________________ ________________________ STEPHEN M. DANIELS CATHERINE B. HYATT Board Judge Board Judge