OPINION OF THE BOARD

Appellant, J. Leonard Spodek d/b/a Nationwide Postal Management, has appealed two final decisions of the contracting officer assessing against Appellant the costs of performing a roof survey and a structural investigation on the Linn, Missouri Post Office. The appeals were consolidated for proceedings before the Board, as well as for decision. The parties elected to have the appeals processed on the record, pursuant to 39 C.F.R. §955.12. Only entitlement is at issue.

FINDINGS OF FACT

1. On August 14, 1991, Respondent, United States Postal Service, entered into a ten-year lease with Appellant’s predecessor-in-interest for the Linn, Missouri Main Post Office. On July 19, 1996, Appellant purchased the facility and assumed the lessor’s responsibilities under the lease. (Appeal File (AF4158/4185) Tabs 1, 3).

2. The lease contained a Maintenance Rider (February 1991), under which the Postal Service assumed responsibility for ordinary repairs to, and maintenance of the facility, except for those repairs that were specifically made the responsibility of the lessor. In accordance with Paragraph d. of the Maintenance Rider, the lessor was responsible for all repairs to structural elements and all parts of the roof system. Paragraph e. of the Maintenance Rider further provided that if the lessor failed to carry out repairs that were the lessor’s responsibility, the Postal Service could proceed with the work and withhold the costs of the repairs from rental payments due under the lease, after giving the lessor written notice of the need for the repairs as well as specifying a deadline in which to complete the work. (Id.).

3. By letter dated April 8, 1997, the Linn Postmaster notified Appellant of the need for repairs to the roof of the facility and the need to replace ceiling tiles that had become stained by the roof leaks. The postmaster also informed Appellant that the floor was separating from the walls and that there were large cracks in the walls. The postmaster asked that the work be done “as soon as possible.” (Declaration of Dave Christ; AF4158/4185, Tab 4).

4. Appellant did not respond to this letter from the postmaster. On October 23, 1997, the contracting officer notified Appellant of the need to repair the roof and gave Appellant until October 31, 1997, to begin repairs before the Postal Service had the work done. The contracting officer also notified Appellant that the building contained structural damage and gave Appellant 45 days from the date of the letter to begin structural repairs before the Postal Service had this work performed as well and charged Appellant with its costs. (Declaration of Marcus Nielsen; AF4158/4185, Tab 5).

5. On November 3, 1997, after contacting the Linn Postmaster and learning that Appellant had not begun roof repairs, a project manager for Respondent arranged to have a Postal Service Indefinite Quantity Construction (IQC) contractor visit the facility and take photographs of the roof. (Exhibit A to Declaration of Kent Holbrook).

6. On November 4, 1997, Appellant responded to the contracting officer’s October 23 letter, and stated that he intended to fulfill his obligations under the lease and had solicited contractors to perform the work. By letter dated November 5, 1997 (sent to Appellant by “fax”), the contracting officer granted Appellant until the close of business on that day to provide the contracting officer with the names of the contractors that had been contacted so that the Postal Service could verify the truthfulness of Appellant’s statement that he would fulfill his obligation under the lease[1]. With regard to the roof, however, Appellant was informed that because he had failed to meet the October 31 deadline, the Postal Service would proceed with the repair effort by third party contract. (AF4158, Tabs 6, 7).

7. During the week of November 9, 1997, at Appellant’s request, a roofing contractor visited the post office on two occasions and informed the postmaster that it expected to receive a contract from Appellant to perform the roof repairs. (Exhibit A to Declaration of Kent Holbrook; AF4158/4185, Tab 6).

8. On November 13, 1997, after a second request by the Postal Service’s project manager, and at the same time that the project manager became aware that Appellant’s roofing contractor had already visited the facility, the IQC roofing contractor performed an inspection and took photographs of the Linn Post Office roof. Respondent paid $474.00 for this effort. (Declaration of Marcus Nielsen and Exhibit A to Declaration of Kent Holbrook; AF4158, Tab 9).

9. On November 18, 1997, Appellant entered into a contract with a roofing contractor to have the roof replaced on the Linn Post Office. Appellant informed the contracting officer on the following day that he had hired a contractor to replace the roof. (Declaration of Marcus Nielsen; AF4158, Tabs 10-12).

10. On December 11, 1997, Appellant’s roofing contractor completed replacing the roof on the Linn Post Office (Exhibit 3 to Declaration of J. Leonard Spodek).

11. Thereafter, by final decision dated December 12, 1997, the contracting officer assessed Appellant the costs of the November 13, 1997 roof inspection performed at the request of Respondent’s project manager, plus administrative costs, as well as interest on the unpaid balance. The contracting officer calculated the administrative costs by estimating the salary costs of the time spent by himself and the project manager on having Appellant perform the roof repairs. (Declaration of Marcus Nielsen; AF4158, Tab 9). Appellant filed a timely appeal of this final decision, which appeal was docketed as PSBCA No. 4158.

12. Appellant did not perform any structural repairs to the facility. On December 23, 1997, the contracting officer awarded a work order under a competitively awarded Indefinite Quantity Architect/Engineer contract, to have a structural investigation conducted on the walls and floor of the Linn Post Office. The investigation was completed by January 15, 1998, and concluded that the building was structurally sound and in no danger of collapsing. The Architect/Engineer contractor recommended that, with the exception of cosmetic repairs, nothing be done to correct the floor settlement condition. (Declaration of Marcus Nielsen; AF4185, Tabs 11, 12).

13. By final decision dated February 13, 1998, the contracting officer assessed Appellant the cost of the structural investigation, plus administrative costs and interest on the unpaid balance. (Declaration of Marcus Nielsen; AF4185, Tab 10). Appellant filed a timely appeal of this final decision, which was docketed as PSBCA No. 4185.

DECISION

PSBCA No. 4158

Respondent argues that the roof inspection was a necessary predicate to having the roof repaired by a third party contractor and that, having given Appellant ample opportunity to perform needed roof repairs himself, Respondent acted properly in beginning those repair efforts. Appellant responds by arguing that the roof inspection was not necessary to repair the roof. Appellant notes that he has repaired many roofs of facilities he leased to Respondent and that a roof survey was never necessary before repairing the roof. Appellant further argues that, having notified Respondent that Appellant would repair the roof, Respondent should not have taken any action.

On November 4, 1997, Appellant notified Respondent that he intended to fulfill his obligation to repair the roof. Further, during the next week, Appellant’s roofing contractor visited the post office twice and informed the postmaster that it expected a contract with Appellant to perform the work. (FOF 6, 7). At this point in time, Respondent had not yet incurred any costs associated with repairing the roof (FOF 8).

Regardless of the contracting officer’s prior experience with Appellant, Respondent has not shown an urgent need that required it to proceed with roof repairs in the face of Appellant’s professed intent to fulfill his obligations. This is especially so since Appellant’s representations were supported by further indications of Appellant’s intent to perform the work, i.e., the visits of Appellant’s contractor to the post office. In these circumstances, it was unreasonable for Respondent to go forward and begin the roof repairs on its own. This appeal is sustained.

PSBCA No. 4185

Respondent argues that the costs it incurred in obtaining the structural investigation may be charged to Appellant as “administrative and architectural costs,” citing M.R. Kaplan, PSBCA No. 1147, et al., 88-3 BCA ¶ 20,827; accord Real Properties MLP Limited Partnership, PSBCA No. 3453, 95-2 BCA ¶ 27,829. To the extent structural repairs to the facility were necessary, we would agree with Respondent that the lessor was responsible for costs associated with completing those repairs. However, as we noted in M. R. Kaplan, to be allowable, administrative costs must be a part of the direct costs resulting from the breach, i.e., the structural investigation costs must be shown to be a valid part of a necessary repair effort. Id. In this case, there has been no breach of the lessor’s obligation under the lease; i.e. no structural repairs were necessary. Therefore, Appellant is not liable for the structural investigation undertaken by Respondent. Accordingly, this appeal is sustained as well.

In conclusion, PSBCA Nos. 4158 and 4185 are both sustained.

William K. Mahn

Administrative Judge

Board Member

I concur:

James A. Cohen

Administrative Judge

Chairman

I concur:

Norman D. Menegat

Administrative Judge

Acting Vice Chairman

[1] The contracting officer believed he could not rely on Appellant’s assurances, based on six years of prior experience dealing with Appellant in regard to other leased facilities where Appellant had failed to take action to complete needed repairs, even after assuring the contracting officer that he would do so (Declaration of Marcus Nielsen).