______________________________________________ GRANTED IN PART: April 19, 1995 _____________________________________________ GSBCA 12134 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, Real Property Division, 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, Pittsburgh PA, a thirteen-story building. The contractor and appellant is P. J. Dick Incorporated (P. J. Dick). The respondent is the General Services Administration (GSA). GSA accelerated the completion of the Federal Bureau of Investigation (FBI) space on the third floor; GSA directed P. J. Dick s electrical subcontractor, Ferry Electric Co. (Ferry Electric), to install a new fire alarm system at a time other than during normal working hours. P. J. Dick (for Ferry Electric) seeks an equitable adjustment of $1,333 for the cost of the premium time Ferry Electric spent in installing the new fire alarm system. This appeal was submitted on the record. We grant the appeal in part. We conclude that the GSA directive to work overtime was a compensable change; the work was not to maintain the existing fire alarm system, as GSA contends; the work involved installing the new fire alarm system. We find, however, that P. J. Dick has overstated the quantum of the claim. The proven quantum, based on the hourly rates in Ferry Electric s payroll records, is $1,062.79. Findings of Fact 1. For the fire alarm system, the contract provided in pertinent part: 1.2.1 This section of the specification includes the furnishing and installation of a complete fire alarm system as described herein and on the drawings. The fire alarm system includes a voice communication system, emergency telephone system, sprinkler supervision, smoke control panel, and fire pump supervision. 1.2.2 The system shall include all wiring, raceways, pull boxes, terminal cabinets, outlet and mounting boxes, alarm initiating devices, alarm indicating devices, and control equipment, and all other accessories and miscellaneous items required for an operating system even though each item is not specifically mentioned or described. 1.2.3 Existing fire alarm equipment is to remain fully operational until the new equipment has been tested and accepted by the Government. 1.2.4 Existing fire alarm equipment shall remain in operation and shall provide coverage for the Post Office s first floor, the fifth floor and all floors above. Existing system shall report to [the] new system for the purpose of initiating alarm to the City of Pittsburgh. Appeal File, GSBCA 11676, 16723 at 16723-2. 2. The Government and P. J. Dick accelerated the contract work to enable the FBI to occupy its space on the third floor by May 25, 1991. P. J. Dick Inc. v. General Services Administration, GSBCA 11678, 95-1 BCA 27,355 at Findings 4-6, 8. 3. Safety considerations required an operational fire alarm system to permit the FBI to move into its third floor space. Installation of the new fire alarm system, however, was not complete on the fourth floor. Appeal File, Exhibit 2, Tab C. To avoid misleading trouble signals after partial installation, GSA decided to deactivate the fire alarm zone serving the fourth floor and to delay the installation of speakers on the third floor and track level. Id. 4. All work was to be performed during the customary working hours of the trades involved, unless otherwise specified in the contract. Appeal File, GSBCA 11676, Exhibit 1, Construction Contract Clauses (Fixed Price) at 14, 37. According to Ferry Electric s project manager: After the new alarm went on-line, [Ferry Electric] was directed by GSA Building Management not to shut down the system for continued installation work during normal working hours at the project site. Instead, [Ferry Electric] was directed to perform work during normal working hours that would not involve shutting down the system. All other work was to be accomplished at a time other than during normal working hours. Appellant s Supplemental Appeal File, Exhibit 2, 5 (Affidavit of Timothy J. Enright, Project Manager for Ferry Electric). 5. By letter of May 30, 1991, Ferry Electric wrote P. J. Dick and advised: Since GSA Building Management has directed us to work premium time hours for future fire alarm work, we feel you are required to contact the contracting officer for adequate funding of the additional costs which we will incur as a result of this direction. Appellant s Supplemental Appeal File, Exhibit 2, Tab D. On June 3, in turn, P. J. Dick advised GSA s resident engineer that "no premium time will be performed without written authorization from your office." Id. 6. Having heard nothing for three weeks from either GSA or P. J. Dick, Ferry Electric recited the short history of its request for funding to P. J. Dick s project manager and asked: More work remains to be performed on the fire alarm system. Please give us direction. Do we cease all fire alarm work pending the contracting officer s decision, or do we continue working the premium hours at your authorization? Appellant s Supplemental Appeal File, Exhibit 2, Tab F. Ferry Electric s letter produced a response from the contracting officer: This is the notice to proceed that [Ferry Electric] requested in their letter to you dated 6/24/91 to perform work on the fire alarm system after normal working hours[.] The resulting cost for premium time differential will be paid for as an equitable adjustment. Id., Tab G. 7. P. J. Dick and Ferry Electric tracked overtime work performed on the fire alarm system, pursuant to GSA s directive. Appellant s Supplemental Appeal File, Exhibit 2, 7 and Tab E. The work tracked was for "premium time work on fire alarm system as required by GSA building management s direction to do all shutdowns outside customary working hours." Id., Tab E.[foot #] 1 8. In completing installation of the new fire alarm system, Ferry Electric invoiced P. J. Dick for direct labor of $555.92; the invoice was for the cost of premium time work. Appellant s Supplemental Appeal File, Exhibit 2, Tab I. The invoice was based on 6.5 hours spent by a foreman at $34 per hour during the period January to June of 1991, 6.5 hours spent by another foreman at $34.73 per hour for the period July to December of 1991, and 3.5 hours for a second foreman at $31.19 per hour for the latter period. Id. Ferry Electric invoiced P. J. Dick for $330 "material" cost. The "material" invoiced were premium time costs incurred by Ferry Electric for services of a technician employed by Ferry Electric s supplier (United) in working on a fire alarm panel. Id., Exhibit 2, 13. The technician helped Ferry Electric in programming the fire alarm panel and provided technical assistance on the installation of the system. Id. 9. Ferry Electric s invoice included overhead of 20.4% which had been approved by GSA, Ferry Electric s profit of 10%, business and occupation tax of .6%, and bond of 1 %, for an invoiced amount of $1,189. Appellant s Supplemental Appeal File, Exhibit 2, Tab J. 10. P. J. Dick adopted Ferry Electric s figure in its claim to GSA. Appellant s Supplemental Appeal File, Exhibit 1 at 3. Markups of 10% for P. J. Dick s commission and 1.92% for the insurance bond and business and occupation tax resulted in a total claim of $1,333.01. Id., at 3, 13. 11. Daily cost records show that on installation of the new fire alarm system, Ferry Electric s foreman, Mr. Staudt, and another electrician, Mr. Ergler, worked overtime as follows: ----------- FOOTNOTE BEGINS --------- [foot #] 1 The costs were tracked pursuant to GSA s "fair and equitable adjustment process," designed to assure quick payment for additional work and to minimize administrative delays associated with the traditional request for proposal (RFP)/contract modification process. Appellant s Supplemental Appeal File, Exhibit 1, 3 (Affidavit of Dale R. Lostetter, Vice President of Operations, P. J. Dick). ----------- FOOTNOTE ENDS ----------- Date Hours Staudt 04-June-91 8.50 Staudt 08-June-91 1.00 Staudt 11-June-91 3.50 Staudt 12-Aug-91 3.00 Staudt 05-Sept-91 3.50 Staudt 09-Sept-91 .50 Staudt 23-Oct-91 5.50 Ergler 26-Nov-91 7.00 Appellant s Supplemental Appeal File, Exhibit 2, Tab J. 12. Ferry Electric s Project Manager stated that Ferry Electric employees worked for thirty-three hours of premium time to accomplish the GSA directive. Appellant s Supplemental Appeal File, Exhibit 2, 12. Respondent disputes that figure; it maintains it can locate only thirteen hours that coincide with the dates and individuals that Ferry Electric tracked as extras for the fire alarm. Respondent s Post-Hearing Reply Brief at 4. Ferry Electric s employees, when filling out daily cost records, recorded overtime hours worked and regular hours that were exactly double the overtime hours. For example, for June 4, 1991, Mr. Staudt records that he worked 4.25 hours overtime, or 8.5 hours straight time. Exhibit 2, Attachment J, Daily Cost Record. Which figure, 4.25 or 8.5, reflects the overtime hours actually worked? Ferry Electric s payrolls, submitted by respondent in its post-hearing brief, show overtime hours worked as follows: Staudt 04-June-91 8.50 Staudt 08-June-91 9.00[foot #] 2 Staudt 11-June-91 3.50 Staudt 12-Aug-91 No certified payroll provided by respondent Staudt 05-Sept-91 3.50 Staudt 09-Sept-91 3.50 Staudt 23-Oct-91 5.50 Ergler 26-Nov-91 7.00[foot #] 3 Respondent s Post-Hearing Reply Brief, Exhibit 1. Thus, for six of the eight days recorded, the larger figure on the daily cost record matches the overtime hours recorded on the certified ----------- FOOTNOTE BEGINS --------- [foot #] 2 The nine-hour figure includes the one hour of overtime worked on the fire alarm system, and other overtime on other aspects of the project. [foot #] 3 The certified payroll shows Mr. Ergler working seven hours of overtime on November 27, not November 26 as recorded in the daily cost records. Compare Appellant s _______ Supplemental Appeal File, Exhibit 2, Tab J with Respondent s ____ Post-Hearing Reply Brief, Exhibit 1. ----------- FOOTNOTE ENDS ----------- payrolls. Where verified by the certified payrolls, we accept the larger figure as the number of overtime hours worked on the fire alarm system. We accept that on August 12, Mr. Staudt worked three overtime hours on the fire alarm system, as there is no contrary payroll to disprove that number. For September 9, 1991, the payrolls differ from the daily cost record; the daily cost record shows one hour of overtime worked, while the payroll shows hour of overtime worked; we accept the smaller number as the number of overtime hours worked that day on the fire alarm system. Respondent s Post-Hearing Reply Brief, Exhibit 1; Appellant s Supplemental Appeal File, Exhibit 2, Tab J. We find as fact that Ferry Electric s employees worked 32.5 overtime hours installing the new fire alarm system. 13. Ferry Electric s Project Manager states that Ferry Electric calculates its overtime premium by "taking one-half of the hours actually worked times the regular time hourly rate." Appellant s Supplemental Appeal File, Exhibit 2, 12. Ferry Electric s certified payrolls show that in June and August of 1991, Mr. Staudt was paid at a rate of $23.65 an hour for straight time, and $35.48 (time and one half) an hour for overtime. Respondent s Post-Hearing Reply Brief, Exhibit 1. In September of 1991, according to the payrolls, Mr. Staudt was paid at a rate of $24.15 an hour for straight time, and $36.23 (time and one half) an hour for overtime. Id. In November of 1991, Mr. Ergler was paid at a rate of $20.15 per hour regular time and $32.10 (time and one half) per hour for overtime. Id.[foot #] 4 14. The calculation of one half the overtime hours actually worked times the regular time hourly rates[foot #] 5 shown on the payrolls results in the following premium amount applicable to the overtime work: ----------- FOOTNOTE BEGINS --------- [foot #] 4 Ferry Electric s project manager assumed a regular hourly rate of $34 and a premium rate increase of $17. Appellant s Supplemental Appeal File, Exhibit 2, 12. This rate is not explained and varies from the hourly rate, for those employees who worked overtime installing the new fire alarm system, shown on Ferry Electric s payrolls. We use the rate shown on the payrolls. [foot #] 5 One can calculate the amount of the premium differential by either: (1) taking the difference between the overtime and straight-time rates and multiplying that difference by the overtime hours worked; or (2) multiplying half the overtime hours worked by the straight-time hourly rate. Mathematically, the calculations work out the same. Ferry Electric used the latter method, and so do we. ----------- FOOTNOTE ENDS ----------- Employee Date One HalfLabor Total of Rate Per Premium OvertimeHour at Differen- Hours Regular tial Per Worked Time Employee Staudt 04-Jun-91 4.25 $23.65 $100.51 Staudt 08-Jun-91 0.50 $23.65 $11.83 Staudt 11-Jun-91 1.75 $23.65 $41.39 Staudt 12-Aug-91 1.50 $23.65 $35.48 Staudt 05-Sep-91 1.75 $24.15 $42.26 Staudt 09-Sep-91 0.25 $24.15 $6.04 Staudt 23-Sep-91 2.75 $24.15 $66.41 Ergler 26-Nov-91 3.50 $20.15 $70.53 Total 16.25 $374.45 15. On January 9, 1992, P. J. Dick submitted a claim for $1,333 to the contracting officer for premium time incurred by Ferry Electric in completing the installation of the new fire alarm system. Appeal File, Exhibit 323. The contracting officer did not decide the claim, and P. J. Dick filed the appeal as one from a deemed denial. Complaint 7; Answer 7. Discussion Entitlement Respondent argues that the overtime work was not a compensable change because P. J. Dick had the preexisting contractual duty to maintain the existing fire alarm system; to fulfill that duty, respondent argues that P. J. Dick was obliged to do what was necessary, including working overtime. The contract, however, defined the scope of the requirement to maintain the existing system: i.e., to: "provide coverage for the Post Office s first floor, the fifth floor and all floors above." Finding 1. The accelerated installation of the new fire alarm system on other floors was not part of P. J. Dick s preexisting duty. This is evident from documents contemporaneous with contract performance. GSA spoke of deactivation of the fire alarm system on the fourth floor, and delay of the installation on the third floor and track level, areas covered by the new system. Finding 3. Ferry Electric spoke of installation, on an overtime basis, of the future fire alarm. Finding 5. Finally, the contracting officer agreed that GSA should pay a premium differential as an equitable adjustment. Finding 6. Quantum The contract required P. J. Dick to furnish and install a complete fire alarm system on the renovated floors. Finding 1. An agency s directive to perform work overtime, rather than during normal working hours, is compensable as a change under the equitable adjustment clause. National Roofing and Painting Corp., ASBCA 27471, 83-2 BCA 16,621, at 82,667. Respondent, however, is only liable for the premium portion of the overtime work. This is so because absent the acceleration, P. J. Dick would have installed the new fire alarm system during normal working hours, and would have incurred "straight-time" labor costs. Those straight time costs, of course, were included in the original contract price. Cf. J.W. Hicks, Jr., GSBCA 7292, 85-3 BCA 18,176, at 91,272-73 (sustaining contracting officer s decision that appellant owed only premium time portion of overtime worked). GSA disputes the quantum. It maintains that the "premium time differential" agreed to by the contracting officer is not the overtime premium, but a "night shift differential" of 9.5% that Ferry Electric supposedly charged for another change order. Respondent s Post-Hearing Reply Brief at 5. Respondent cites Appeal File, GSBCA 11676, Exhibit 331, which is a quotation for evening shift work occasioned by plumbing core drilling. GSA has not persuaded us that the 9.5% night shift differential is applicable here. First, it is not clear that even for the changes caused by the plumbing core drilling, Ferry Electric limited itself to a "night shift" differential; Ferry Electric charged either a "shift or premium time" differential for the hours worked in the evening shift. Id. Second, the payrolls establish that for the overtime work in this appeal, Ferry Electric paid its workers the overtime premium, not a night shift differential. Findings 12, 13. GSA argues that some work on the fire alarm system was in response to a defects and omissions report of May 1991, not to the directive. We are not persuaded. Ferry Electric, using the "fair and equitable adjustment process," was careful to track the premium to work resulting from the directive. Finding 7. In any case, the issue is not whether the work s scope was compensable as a change; the issue is whether the overtime cost of the work is compensable as a change. The record shows that GSA s directive to install the new fire alarm system after normal working hours caused the overtime work. In the words of Ferry Electric s project manager: "All other work was to be accomplished at a time other than during normal working hours." Finding 4. Our analysis is also applicable to the work performed by United and listed in Ferry Electric s invoice to P. J. Dick as "material." That represented the premium time of a second-tier subcontractor, United, in working to install the new fire alarm system. Finding 8. Ferry Electric spent a total of $704.45[foot #] 6 for the premium time. We add markups, Findings 9 and 10, as follows: Ferry Electric premium time $704.45 Ferry Electric overhead 20.40% $143.71 $848.16 Ferry Electric profit 10.00% $84.82 $932.98 Ferry Electric BPT 0.60% $5.60 $938.58 Ferry Electric Bond 1.00% $9.39 $947.97 P. J. Dick Commission 10.00% $94.80 $1,042.77 P. J. Dick B & O Tax 1.92% $20.02 $1,062.79 Decision The appeal is GRANTED IN PART. GSA owes P. J. Dick $1,062.79 plus interest as allowed by the Contract Disputes Act of 1978. _________________________ ANTHONY S. BORWICK Board Judge We concur: _________________________ _________________________ STEPHEN M. DANIELS EDWIN B. NEILL Board Judge Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 6 The sum of $374.45 for Ferry Electric s labor and $330 for United s labor.