CBCA 6669

THIS OPINION WAS INITIALLY ISSUED UNDER PROTECTIVE ORDER AND IS BEING RELEASED TO THE PUBLIC IN ITS ENTIRETY ON JULY 20, 2020 DENIED: July 16, 2020 CBCA 6669 HAMSTRA CHICO LLC, Appellant, v. DEPARTMENT OF VETERANS AFFAIRS, Respondent. Paul F. Khoury, Richard B. O’Keeffe, Jr., and Lindy C. Bathurst of Wiley Rein LLP, Washington, DC, counsel for Appellant. Stephen J. Kelleher and Alicia M. Harrington, Office of General Counsel, Department of Veterans Affairs, Washington, DC, counsel Department of Veterans Affairs. Before Board Judges SOMERS (Chair), VERGILIO, and DRUMMOND. VERGILIO, Board Judge. The Department of Veterans Affairs (agency) has a contract with Hamstra Chico LLC (contractor) (as the assignee after award of the contract, this opinion makes no distinction between the initial awardee and this contractor) that required the construction of a building and subsequent lease for a fifteen-year firm term with the annual rent to include all utilities and other operating costs. The contractor seeks contract reformation on the basis that the agency conducted improper negotiations by failing to notify it that its proposed electricity CBCA 6669 2 costs were a deficiency or significant weakness; the agency did not so categorize that pricing. The contractor contends that it failed to price electricity as a contractor obligation, but faults the agency for not identifying this during negotiations. The reformation sought is to rewrite the contract to place the obligation on the agency to pay all electrical costs for the duration of the lease while reimbursing the contractor for electricity amounts it has paid. The agency moves for summary judgment, contending that the contractor is not entitled to the remedies sought, such that the claim must be denied. The contractor opposes the motion. We do not read the regulations and case law as permitting reformation for the allegedly improper negotiations in this circumstance. The contractor does not allege a mistake on its part (regulation details how to resolve a “mistake in proposal” allegation). The contractor offered an overall contract price, with various components, that the agency accepted. As acknowledged by the contractor, an amendment explicitly shifted electricity costs to the contractor. The agency would not have awarded to the contractor the contract it now seeks, with terms and conditions contrary to those used in the competition and agreed upon by the parties. The reformation sought to correct improper negotiations is not substantiated or appropriate. The Board denies the appeal. Background This background is taken from the undisputed facts recognized by the parties, the solicitation, the contract, and other documents in the record. To resolve the motion, we utilize facts in the contractor’s favor if the contractor alleges a dispute as to a material fact. In 2015, the agency issued a solicitation to obtain proposals for the construction and subsequent lease of a building. Exhibit 1 (all exhibits are in the appeal file). As issued, the solicitation states in a section on operating costs: “The base for the operating cost adjustments will be established during negotiations based upon the Offeror’s Final Cost Proposal, Line 27, of GSA Form 1217, Lessor’s Annual Cost Statement. Note that the cost of electricity, gas, and water will be paid directly by the VA.” Exhibit 1 at 43. On that form, electrical is one component of the services and utilities that are summed for the final cost in line 27. Current for light and power (including elevators) is one subcomponent–the electricity subcomponent. Exhibit 11 at 4. However, section 8.1 (utilities) of the solicitation states, in part: “The cost of all utilities shall be included as part of the rental consideration.” Exhibit 1 at 207. The contractor submitted an initial proposal with a price for the electricity subcomponent. The agency did not identify the electricity subcomponent or the total line 27 price as a deficiency or significant weakness. Thereafter, by solicitation amendment, the CBCA 6669 3 agency eliminated the language that specified that the cost of electricity, gas, and water will be paid directly by the agency; the costs of electricity were to be borne directly by the contractor.