OPINION OF THE BOARD

Appellant, J. Leonard Spodek d/b/a Nationwide Postal Management, filed a timely appeal of a final decision of the contracting officer assessing against Appellant the costs of replacing a water heater and repairing an air conditioner at the Calhoun Falls, South Carolina Post Office. The parties elected to have the appeal processed on the record, pursuant to 39 C.F.R. §955.12. Only entitlement is at issue.

FINDINGS OF FACT

1. Appellant purchased the Calhoun Falls Post Office building and property in 1992 and entered into a successor lease for the facility with Respondent, the United States Postal Service, beginning July 1, 1995 (Appeal File Tabs (AF) 7, 8).

2. Under the Maintenance Rider to the lease, Appellant was responsible for furnishing and properly maintaining the air conditioning equipment and hot water heater in the facility. The lease further required Appellant to provide a list of local contractors who could be reached for emergency situations in the event that Appellant or his agent could not be contacted within a reasonable time. (AF 8).

3. The lease further provided that when the lessor failed to perform maintenance or repairs that were the lessor’s responsibility after receiving written notice of the need for the repairs and a reasonable time in which to complete the repairs, Respondent had the right to perform the work by third party contract or otherwise, and withhold the costs of repairs from rental payments (AF 8).

4. The water heater, which was originally installed when the building was constructed in 1965, began leaking in August of 1998. By letter dated August 17, 1998, the postmaster notified Appellant that the water heater was leaking. At the same time, the postmaster also asked that Appellant identify his designated emergency repair personnel, as required by the lease[1]. (Declaration of Glen Lunz; AF 5).

5. Appellant telephoned the postmaster on August 21, 1998, and stated that he would arrange to have the water heater replaced (Declaration of Glen Lunz).

6. Appellant did not replace the water heater and, on October 27, 1998, the postmaster personally purchased a water heater of the same size, type and quality as the one being replaced, and at the lowest price locally obtainable ($169.00). Had Appellant furnished a list of designated repair personnel for the facility, the postmaster would have utilized Appellant’s designated plumber to install the water heater. However, lacking this information, the postmaster contracted for installation of the water heater with the lower of the two bids he solicited from local plumbers, at a cost of $105.00. Replacement of the water heater was necessary, and the cost of purchase and installation was reasonable. (Declarations of Glen Lunz and Marcus Nielsen; AF 4).

7. The air conditioner at the post office first broke on September 5, 1998. On the next business day (September 8, 1998), the postmaster attempted to notify Appellant and inform him that the air conditioner was not working and request that he repair it. After failing to reach Appellant, the postmaster arranged with Home Service Company to make the necessary repairs to the air conditioner, which were accomplished on the same day. When Appellant called the postmaster later in the day on September 8, he acknowledged the lessor’s responsibility for repairing the air conditioner, approved the choice of Home Service Company to do the repairs, and asked that the repair bill be forwarded to him. (Declaration of Glen Lunz; AF 4).

8. The repair of the air conditioner by Home Service Company included a second repair on September 9, 1998, which was also approved by Appellant. The postmaster thereafter arranged to have the repair bill, in the amount of $205.00, sent to Appellant. Appellant, however, did not pay the bill. As a consequence, on October 27, 1998, the postmaster paid Home Service Company $205.00 for the air conditioning repair. The $205.00 cost of repairing the air conditioner was reasonable. (Declarations of Glen Lunz and Marcus Nielsen; AF 6).

9. By final decision dated November 9, 1998, the contracting officer assessed Appellant $679.00, representing the costs of the water heater replacement ($274.00), air-conditioning repair ($205.00), plus $200.00 in administrative costs[2]. The contracting officer advised Appellant that an additional $100.00 in administrative costs plus interest would be withheld from rents otherwise due if a check was not received by November 20, 1998. Appellant filed a timely appeal of this final decision. (AF 1, 2).

DECISION

Respondent argues that it is undisputed that the water heater needed to be replaced and the air conditioner repaired, and that it was Appellant’s responsibility under the lease to perform these maintenance items. Respondent further argues that when Appellant failed to perform these maintenance items (after acknowledging that they were the lessor’s responsibility), Respondent acted properly in having them accomplished at a reasonable cost and assessing Appellant for the costs incurred. Appellant, while agreeing that both appliances needed to be repaired, argues that the water heater and necessary air conditioning parts could have been repaired instead of replaced. Appellant also challenges Respondent’s right to assess the administrative costs. Appellant did not submit any evidence in support of its arguments.

Respondent has shown that the repairs it performed were needed; that Appellant breached the lease by failing to perform the repairs himself; and that the costs Respondent incurred in performing the repairs were reasonable. See Real Properties MLP Limited Partnership, PSBCA No. 3453, 95-2 BCA ¶ 27,829.

Appellant was notified of the fact that the water heater was leaking and was given two months to correct the problem (Finding of Fact Nos. (FOF) 4-6). When Appellant failed to act, the postmaster acted properly in purchasing the least expensive water heater of the same size, type and quality, and having it installed by a competitively solicited plumber (FOF 6). Although Appellant argues that the water heater should have been repaired instead of replaced, he offered no evidence to demonstrate that repair of the 33-year-old water heater was possible, or that this option would have been cheaper than replacing it.

Similarly, the postmaster acted properly in arranging with Home Service Company to repair the air conditioner, an arrangement Appellant personally approved (FOF 7, 8). Although Appellant argues that the malfunctioning part of the air conditioning unit could have been repaired at a lesser cost than by replacing certain parts, he has offered no evidence to support this contention.

Having performed repairs that were the responsibility of Appellant, Respondent was well within its right in assessing Appellant the reasonable administrative costs it incurred in performing those repairs. See J. Leonard Spodek d/b/a Nationwide Postal Management, PSBCA No. 4207, 00-1 BCA ¶ 30,593. However, Respondent has not shown entitlement to recover administrative costs associated with implementing rental deductions. J. Leonard Spodek, Nationwide Postal Management, PSBCA Nos. 4206, 4217, 4310, 2000 PSBCA Lexis 14, May 31, 2000; J. Leonard Spodek, Nationwide Postal Management, PSBCA No. 4207, 00-1 BCA ¶ 30,593.

Accordingly, the appeal is sustained as to the administrative costs claimed by Respondent for implementing rental deductions and is otherwise denied.

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] Appellant had designated a heating and air conditioning company, but the designated company had previously informed Respondent’s postmaster that it did not do work in the Calhoun Falls area (AF 4).

[2] The administrative costs of $200.00 represent the salary cost of the time spent by the postmaster, as well as the contracting officer, in arranging for each of the repairs that were Appellant’s responsibility (Declaration of Marcus Nielsen).