CBCA 6606

DISMISSED FOR LACK OF JURISDICTION: March 2, 2020 CBCA 6606 U.S. OVERSEAS HOUSING, LLC, Appellant, v. DEPARTMENT OF STATE, Respondent. Paul F. Khoury and Lindy C. Bathurst of Wiley Rein LLP, Washington, DC, counsel for Appellant. Kevin M. Gleeson and Erin M. Kriynovich, Office of the Legal Adviser, Buildings and Acquisitions, Department of State, Arlington, VA, counsel for Respondent. Before Board Judges KULLBERG, SULLIVAN, and LESTER. SULLIVAN, Board Judge. U.S. Overseas Housing, LLC (USOH) appealed a decision of the contracting officer for the Department of State (DOS) in which the contracting officer found that USOH was in default of its obligations on a construction lease contract. DOS has moved to dismiss USOH’s appeal for lack of jurisdiction under the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109 (2012), because the dispute centers upon the purchase of real property, to CBCA 6606 2 which the CDA does not apply. We find that the Board does not have jurisdiction to resolve the dispute.1 Background I. Build-To-Lease Agreement and its Relevant Terms In October 2013, USOH and DOS entered into a contract for the construction and lease of residential housing for embassy personnel in the Dominican Republic, referred to by the parties as a Build-To-Lease agreement (BTL agreement). Exhibit 1 at 1.2 Pursuant to the BTL agreement, USOH would construct at its sole cost and expense the premises in accordance with specifications and drawings attached to the agreement, and DOS, upon completion of construction, would lease the premises for eleven years with options to extend. Exhibit 1 at 3. DOS could request changes to the agreed-upon plans and specifications, and those changes would be documented in change orders. The contract defines change order as “a document signed by Landlord and Tenant pursuant to an express provision of [Exhibit B to the BTL agreement] which outlines (i) any Change in the Plans and Specifications agreed to by Landlord and Tenant, and (ii) the increase or decrease in Budgeted Construction Costs which are the result of such a change.” Exhibit 1 at 29. The total cost of these tenant- requested changes could not exceed $750,000, and the cost of these changes would then be amortized over five years at a 7% per annum interest rate and “the impact on the Rent and Option to Purchase shall be as set forth on Exhibit D-3 and Exhibit H-2.” Exhibit 1 at 5. Exhibit D-3, titled “Modified Rent Due to Tenant Requested Changes,” provided that: Landlord has set aside $750,000 to cover the cost of Tenant requested changes. If such changes are made the Landlord and Tenant shall agree on the amount the rent is to be increased in accordance with the provisions of paragraph 4(c) of the BTL Agreement. 1 DOS also moved to dismiss USOH’s claim for equitable estoppel, arguing that USOH’s claim is one for promissory estoppel, over which the Board lacks jurisdiction. Because we lack jurisdiction over the entire appeal, we do not reach this aspect of DOS’s motion. 2 All exhibits are found in the appeal file, unless otherwise noted. The version of the BTL agreement in the appeal file (Exhibit 1) is not consecutively paginated. Instead, it is numbered in two parts, pages 1-75 and pages 1-30. The Board refers to the second set of page numbers as Exhibit 1a in this decision. CBCA 6606 3 Exhibit 1a at 9. Exhibit H-2 to the BTL agreement was titled “Modified Option-To-Purchase Price Due To Tenant Requested Changes.” It stated that the price was “[t]o be determined in the event of tenant-directed changes.”3 Id. at 23. Paragraph 25 of the BTL agreement gave DOS the option to purchase the property, in accordance with the terms of Exhibit H-1. Exhibit 1 at 16.4 Exhibit H-1, titled “Option to Purchase,” provides that DOS could notify USOH that it wanted to purchase the property, and USOH was required, within 120 days, to “execute and deliver to [DOS] a sale and purchase agreement strictly compliant with the then applicable provisions of Dominican law, conveying good title in and to the Premises.” Exhibit 1a at 18.5 DOS paid $100 as consideration for the option to purchase.