______________________________________________ DENIED : September 8, 1994 _____________________________________________ GSBCA 11783 P. J. DICK INCORPORATED, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. John T. Flynn and Thomas J. Kelleher, Jr., of Smith, Currie & Hancock, Atlanta, GA, counsel for Appellant. Sharon A. Roach, Gerald L. Schrader, Martin A. Hom, Robert C. Smith, and M. Leah Wright, Office of General Counsel, General Services Administration, Washington, DC, counsel for Respondent. Before Board Judges DANIELS (Chairman), BORWICK, and NEILL. BORWICK, Board Judge. Background This appeal involves a contract for the renovation of certain floors of the United States Courthouse and Post Office, in Pittsburgh, Pennsylvania, a thirteen-story building. The contractor and appellant is P. J. Dick, Incorporated (P. J. Dick). The respondent is the General Services Administration (GSA). The renovation included installation of an interior sprinkler system, to suppress fires. The sprinkler system was to be tied into the City of Pittsburgh water main at Grant Street, which bordered the building. Grant Street is paved with brick, and has granite curbs as well as Venetian terrazzo pavement. The city, however, refused to allow P. J. Dick to tie into the sprinkler system at Grant Street. Rather, the city granted permission for the tie-in at Seventh Avenue, which was around the corner. The city's actions caused GSA to issue RFPs 23 and 23A, which deleted the tie-in on Grant Street and added the tie-in on Seventh Avenue. The parties dispute the quantum for both the cost of the deductive change in eliminating the work on Grant Street and the added cost of the work on Seventh Avenue. GSA's estimate for the deductive change is more reliable than P. J. Dick's estimate for that change. For the cost of performing the Seventh Avenue tie- in, P. J. Dick has not proven its quantum with the actual costs of the work. P. J. Dick did not demonstrate that its estimates were more reliable than GSA's for the cost of the work. Consequently, we deny the appeal. Findings of Fact Contract work deleted and added 1. Grant Street is constructed with 20 X 10 foot traffic slabs, nine inches thick, topped with a 3/4 inch asphalt bed and 3 inches of brick pavers. Appeal File, GSBCA 11783, Exhibit 334. P. J. Dick originally contemplated connecting the fire sprinkler system of the building to city water on the Grant Street side of the building. Transcript, Vol. 1 at 991. 2. To make the connection on the Grant Street side, the City of Pittsburgh would have required a ten-step process: (1) removal and replacement of two slabs of rustic Venetian terrazzo pavement; (2) removal and replacement of 32 linear feet of 12 inch X 12 inch X 3 inch granite blocks on concrete pad; (3) removal and replacement of 32 linear feet of granite curb; (4) removal and replacement of 30 x 12 foot x .75 inch brick pavers with 3/4 inch mastic setting bed; (5) removal and replacement of 30 x 12 foot x .75 inch brick pavement; (6) protection of existing 6 inch diameter pavement under drain; (7) protection of existing 4 inch diameter plastic conduit containing 1 inch diameter plastic irrigation system line; (8) protection of 3 inch diameter plastic conduit containing traffic interchange connection; (9) protection of a 1-1/4 inch diameter plastic conduit containing 3 number six cables; and (10) protection of high voltage oil-filled ductile orange pipe. Appeal File, GSBCA 11783, Exhibit 337; Transcript, Vol. 1 at 676-77. At the hearing on the merits, a City of Pittsburgh official testified that if the City had allowed P. J. Dick to open Grant Street, it would have required P. J. Dick to replace fully the 30 x 12 foot concrete slabs supporting the brick pavers. Transcript, Vol. 1 at 677. 3. In its original bid, Sherry & O'Leary, P. J. Dick's mechanical subcontractor, estimated the cost of the demolition of Grant Street at $44,168, taking into account the removal of the brick and terrazzo pavement on the street. Respondent's Hearing Exhibit 21; Transcript, Vol.2 1 at 1205. Sherry & O'Leary reduced that estimate by $25,000 during last minute bargaining, after P. J. Dick's vice president told Sherry & O'Leary that its base bid of about $946,000 for all of Sherry & O'Leary's contemplated subcontract work was "not going to get you the job." Transcript, Vol. 1 at 637. The reduction by $25,000 was based on the premise that "ninety percent of the street openings in the Pittsburgh area [could] be done from between $15,000 to $20,000." Id. 4. The City of Pittsburgh, however, refused to let P. J. Dick open Grant Street. Appellant's Supplemental Appeal File, GSBCA 11783, Exhibits 4, 5; Transcript, Vol. 1 at 639-40. The city was willing to allow the tie-in at Seventh Avenue. Appellant's Supplemental Appeal File, GSBCA 11783, Exhibit 17. GSA was informed of this on March 7, 1989. Id. RFPs 23 and 23A 5. Consequently, GSA issued RFP 23, which called for (1) relocation of the fire sprinkler tie-in from Grant Street to Seventh Avenue; (2) the redesign of the layout of the sprinkler system; and (3) relocation of the pump room in the basement. Appellant's Supplemental Appeal File, GSBCA 11783, Exhibit 42. On September 11, 1989, GSA issued RFP 23A, which contained further re-design of the sprinkler system. Appeal File, GSBCA 11676, Exhibit 26. On September 29, GSA issued a directive to proceed with items one through six (including the Seventh Avenue tie-in) at a price to be determined later not to exceed $33,000. Appellant's Supplemental Appeal File, GSBCA 11783, Exhibit 56. Parties' cost estimates for the changes 6. In October of 1991, GSA's resident engineer estimated the cost of making the Grant Street tie-in. Appellant's Supplemental Appeal File, GSBCA 11783, Exhibit 110. The resident engineer estimated a total of $12,044.98 for the labor and material cost to perform the ten steps. He then used Sherry & O'Leary's total estimate of $18,236.40 for peripheral surface work (such as removal of street plates and lights, excavation and core drilling, material and sales taxes for the work) to arrive at $30,281.84. Bond cost, overhead and profit resulted in a total estimate of $37,172.32 to perform the work. Id.; Transcript, Vol. 1 at 998-1000. He then added a City of Pittsburgh business privilege tax and P. J. Dick's commission and arrived at $42,044.75. He estimated that it would cost Sherry & O'Leary $24,552.58 to open up Seventh Avenue to perform the tie-in; the estimate was based on Sherry & O'Leary's backups to one of its early estimates. Appellant's Supplemental Appeal File, GSBCA 11783, Exhibit 110; Transcript, Vol. 1, at 1004. Therefore, he determined that the Government was owed a credit of $17,492.17. Appellant's Supplemental Appeal File, GSBCA 11783, Exhibit 110. 7. Sherry & O'Leary estimated that it would cost $3,562.36 to change the tie-in from Grant Street to Seventh Avenue and to perform the changed tie-in as stated in RFP 23. This figure included an estimate of $28,182.58 to open up Seventh Avenue and a credit to the Government of $24,620.22 for the deletion of the Grant Street tie-in. Appellant's Supplemental Appeal File, GSBCA 11783, Exhibit 63. The labor and material costs associated with the tie-in to Grant Street merely referenced saw cutting street and sidewalks, and removal of plates and lights. There was no mention of removing brick, terrazzo, and underlying concrete. Appellant's Hearing Exhibit 29. Consequently, we find that figure for deletion of the Grant Street tie-in was premised on labor and material costs for a standard macadam street and did not take into account the special construction of Grant Street. Id. 8. After the issuance of RFP 23A, Sherry & O'Leary revised its estimate to $15,832.53 for the total of the cost to perform the tie-in at Seventh Avenue minus the cost of the deduction of the work at Grant Street. RFP 23A specified changes in pipe runs, which Sherry & O'Leary estimated would cost $12,270.17. The estimate of the cost of the redesigned portions, added to the $3,562.36 estimated for performing RFP 23, amounted to $15,832.53. Appellant's Hearing Exhibit 33; Transcript, Vol. 1 at 659-662. The estimates were not based on the actual cost of the work performed. Transcript, Vol. 1 at 666. 9. On January 18, 1992, P. J. Dick submitted a revised quotation and claim for $253,364 for the costs of performing RFP 23A. Notice of Appeal, Exhibit A. The contracting officer did not render a decision within sixty days, and did not advise P. J. Dick when a decision would be issued. See 41 U.S.C. 605(c)(2),(3) (1988). An appeal was thus filed from the deemed denial. See id. 605(c)(5). Discussion RFPs 23 and 23A deducted the sprinkler system's tie-in work at Grant Street and added a tie-in at Seventh Avenue. This appeal involves two quantum issues: (1) the amount of the deduction of contract price for the elimination of the tie-in on Grant Street and; (2) the amount of the credit due P. J. Dick for the work performed on Seventh Avenue. The deductive change The Government "has the burden of proving how much of a downward equitable adjustment in price should be made on account of the deletion of the [original contract work]." Nager Electric Co. v. United States, 194 Ct. Cl. 835, 853, 442 F.2d 936, 946 (1971); Singleton Contracting Corp., GSBCA 8546, 90-2 BCA 22,879, at 114,910. The proper measure of a deductive change order is the reasonable cost to the appellant if it had performed the deleted work. G & M Electric Contractors Co., GSBCA 4711, 78-2 BCA 13,452, at 65,733 (citations omitted). See generally, Dawson Construction Co., VABCA 3558, 94-1 BCA 26,362. The Government's estimate of $37,172.32 is based on an accurate assessment of the work necessary to open up Grant Street, as described by an official of the City of Pittsburgh. Findings 2, 6. P. J. Dick's claimed credit of $24,620.22, in contrast, was based on the work necessary to open a standard macadam street. Findings 3, 7. The trouble with that approach is that Grant Street was not a standard macadam street; it was constructed of paved brick, with a granite curb, and Venetian terrazzo, i.e., constructed with special architectural details. Findings 1, 2. The opening of Grant Street would have required extensive work. Finding 2. P. J. Dick also argues in its brief that published City of Pittsburgh guidelines for opening a brick-paved street only require a trench of the necessary width to be dug, with a contractor only required to go back one foot on either side of the trench. P. J. Dick's Brief at 5-6. The suggestion, therefore, is that the work would not be as extensive as predicted by GSA. P. J. Dick's suggestion is belied by the testimony of the City of Pittsburgh's official, who testified credibly as to the extent of the work to be done, including the requirement for complete replacement of the pavers underlying the brick. Finding 2. The cost of the tie-in at Seventh Avenue P. J. Dick has the burden of proving the amount of equitable adjustment due under the Changes clause for the tie-in at Seventh Avenue. Nager Electric, 194 Ct. Cl. at 853, 442 F.2d at 946 (1971). Recently, our appellate authority showed a preference for "reasonable computation [of damages] from actual figures," Dawco Construction, Inc. v. United States, 930 F.2d 872, 880 (Fed. Cir. 1991), and held: The issuance of a change order request should signal to the prudent contractor that it must maintain records detailing any additional work, just as should the encountering of differing site conditions. The Claims Court has not identified, nor has Dawco presented us with, any justification why such precision, or something sufficiently close, could not have been accomplished as to Dawco's other costs, including any additional overhead. Therefore, Dawco's inability to substantiate the existence, to any degree of certainty, of costs beyond those incurred by [a subcontractor], precludes resort to the "jury verdict method." . . . . Clearly, the "actual cost method" is preferred because it provides the court, or contracting officer, with documented underlying expenses, ensuring that the final amount of the equitable adjustment will be just that-- equitable--and not a windfall for either the government or the contractor. Id. at 881-82. In reaction to Dawco, one board of contract appeals refused to allow a contractor to prove the cost of a change through estimates, without a satisfactory explanation of its inability to produce actual cost records: The only reason given by appellant for failing to produce evidence of its actual costs was that when the work was being performed, [appellant's employee] did not concern herself with the cost of the change as she was then concerned with making sure the work was performed correctly. Tr. 284. While [appellant's employee] was properly concerned with contract performance, that does not excuse appellant from producing evidence of the actual costs of the changed work. The types of costs being claimed are not based upon any complicated account- ing data. They could have been proved by subcontractor payroll records, transportation tickets and lodging receipts, daily reports of contract activity and other such evidence. Consequently, appellant's excuse is not the type of "justifiable inability" to produce evidence of actual costs that would warrant the use of the jury verdict approach. Production Corp., DOT BCA 2424, 92-2 BCA 24,796, at 123,695. P. J. Dick used estimates, not actual costs, to prove the cost of the tie-in on Seventh Avenue. Finding 8. Here, P. J. Dick argues that Sherry & O'Leary's claim relating to the work at Seventh Street was part of a larger claim, and that absent a change order accounting clause such as FAR 52.243-6, there was no obligation for P. J. Dick or Sherry & O'Leary to maintain separate accounts for each change order or series of related changes. P. J. Dick's Reply Brief at 5. Award of quantum, however, does not turn on the obligation to maintain separate accounts; it turns on the method of acceptable proof. Regardless of how a contractor maintains accounts, P. J. Dick was obligated to prove its (and its subcontractor's) actual costs, or explain the justifiable inability to substantiate the amount of injury with specific and direct proof. If it is to use estimates, it must explain the reasonableness of the estimates. Production Corp. P. J. Dick has done none of these things and has not met its burden of proof. Neither has appellant persuaded us that the Government's own estimates, Finding 6, are unreasonable. Those calculations, therefore, remain. Decision The appeal is DENIED. ________________________ ANTHONY S. BORWICK Board Judge We concur: ____________________ ____________________ STEPHEN M. DANIELS EDWIN B. NEILL Board Judge Board Judge