GRANTED IN PART: July 15, 2020
CBCA 6093
HPI/GSA-4C, L.P.,
Appellant,
v.
GENERAL SERVICES ADMINISTRATION,
Respondent.
Maureen C. McDonald, Scott M. Heimberg, and Elise A. Farrell of Akin Gump
Strauss Hauer & Feld, LLP, Washington, DC, counsel for Appellant.
Alexander C. Vincent, Office of General Counsel, General Services Administration,
Washington, DC, counsel for Respondent.
Before Judges VERGILIO, KULLBERG, and RUSSELL.
RUSSELL, Board Judge.
Appellant, HPI/GSA-4C, L.P. (HPI), appealed the contracting officer’s decision
denying its claim for unpaid rent under a lease agreement between appellant and respondent,
the General Services Administration (GSA or agency). HPI claimed that GSA did not
provide proper notice to terminate the lease agreement and seeks rental payment for the
period of August 20, 2016, through March 6, 2017, and other costs. The parties filed cross-
motions for summary judgment. By decision dated March 31, 2020, the Board granted HPI’s
motion on entitlement. Based upon the plain language of the lease, we found that GSA failed


CBCA 6093 2
to provide proper notice as required under the termination provision of the lease and
remained obligated to pay rent for the disputed period. HPI/GSA-4C, L.P. v. General
Services Administration, CBCA 6093, 20-1 BCA ¶ 37,567.
The parties subsequently submitted a joint report on damages addressing three issues:
(1) mitigation—specifically, whether the sale price of the leased property in a condemnation
action included an amount covering the damages at issue in this appeal such that HPI has
already been fully compensated for the loss of rental income from GSA; (2) calculation of
damages and interest under the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109
(2018); and (3) HPI’s entitlement to interest under the Prompt Payment Act, 31 U.S.C.
§§ 3901- 3907. Each of these issues is addressed in turn.
Mitigation
This appeal relates to a property that HPI leased to GSA and that was the subject of
a condemnation action filed by California in October 2015. GSA and California
subsequently entered into a stipulation in February 2016 pursuant to GSA’s decision not to
oppose California’s use of the property. HPI opposed the condemnation action separately
and did not sign the stipulation. GSA’s tenant agency, the Internal Revenue Service, vacated
the property on August 19, 2016. GSA stopped making rental payments after that date. HPI,
its lender, the owner of the land on which the property sat, and the owner’s lender entered
into a separate settlement agreement with California, and the state took possession of the
property on March 7, 2017.
In April 2018, HPI appealed to the Board GSA’s denial of its claim for rent for the
period August 20, 2016, through March 6, 2017. As indicated above, we found that GSA
failed to provide proper notice that it was terminating the lease as required by the terms of
the lease and, thus, remained obligated to pay the rent for this period.
Although GSA does not dispute that HPI received nothing from the sale proceeds, the
agency nevertheless wants the Board to infer that HPI received a benefit because California
considered various factors, including future rental income stream, in settling the
condemnation action based on the state’s assessment of the property’s value. However, GSA
was not a party to that action and did not alter its contract with HPI to change its contractual
obligations.
While the above permits the Board to conclude that GSA remained obligated to pay
rent, further arguments by GSA are unavailing. GSA has offered no evidence that a purpose
of the settlement agreement and California’s payment under the agreement was to
compensate HPI for its loss of rental income under the lease at issue in this appeal, or to

CBCA 6093 3
extinguish GSA’s obligation to pay HPI amounts due under the lease. Indeed, California’s
representative in the action provided deposition testimony that, with an unsegregated offer,
the state leaves it up to the landlord and tenant to resolve matters of amounts due under a
lease, between themselves or with the assistance of a court. HPI’s vice-president and
secretary provided deposition testimony that “[a]t no time did HPI believe or agree that the
$10.9 million payment to HPI’s lender included any rent that GSA owed HPI, or would come
to owe HPI, . . .[the] outstanding rent was not suffered by reason of California’s acquisition
of the [p]roperty but was caused by GSA’s breach of the [l]ease.” He added that the parties
to the mediation pursuant to which the condemnation action was resolved did not discuss
back rent owed by GSA at all. GSA has produced no evidence rebutting or conflicting with
this testimony, or otherwise raising a triable issue on mitigation, notwithstanding the
opportunity for discovery prior to the parties’ filings on summary judgment. GSA relies on
Kansas City Power & Light Co. v. United States, 143 Fed. Cl. 134 (2019), in which the court
held that the contractor was not entitled to recover damages from the agency after receiving
an insurance payment covering the same costs for which it sought damages. However, in that
case, the contractor indisputably received a specific payment amount from the insurer, and
the court found that the contractor was not entitled to a double recovery. Id. at 147. Here,
GSA has not produced similar evidence. The agency has not shown that a purpose of the
settlement agreement was to cover GSA’s rental obligations under its lease with HPI, nor has
it shown that HPI received a portion of the settlement proceeds for this purpose.
Damages and CDA Interest
The parties do not dispute the calculation of damages. The parties agree that the
principal amount of HPI’s losses in this case is $825,464.68, comprising $799,882.26 for rent
for the period from August 20, 2016, through May 6, 2017, and a real estate tax adjustment
of $25,582.42. The parties also agree that $27,662, the amount that HPI saved in operating
costs, should be deducted from the principal amount of its losses. The deduction results in
an adjusted loss amount of $797,802.68.
Consistent with 41 U.S.C. § 7109(a), the parties also agree that HPI is entitled to
simple interest under the CDA from the date that GSA received HPI’s certified claim on
October 18, 2017, through the date on which GSA pays any amount that is adjudged and
stipulated to be owed. Accordingly, given that the amount of HPI’s losses is undisputed, we
find that HPI is entitled to $797,802.68 plus interest under the CDA.

CBCA 6093 4
Prompt Payment Interest
The parties dispute whether HPI is entitled to payment of interest under the Prompt
Payment Act. GSA contends that HPI is not entitled to such interest because there was a
dispute between the parties as to the amount owed and compliance with the lease, and the
Prompt Payment Act does not provide for payment of interest in the case of such disputes.
In support of its position, GSA relies on General Services Administration Regulation
(GSAR) clause 552.232-75 - PROMPT PAYMENT (SEP 1999), which was incorporated
into the lease:
Interest penalties are not required on payment delays due to disagreement
between the Government and Contractor over the payment amount or other
issues involving contract compliance or on amounts temporarily withheld or
retained in accordance with the terms of the contract. Claims involving
disputes, and any interest that may be payable, will be resolved in accordance
with the clause at 52.233-1, Disputes.
We agree with GSA that HPI is not entitled to Prompt Payment interest. The GSAR
clause restates the rule in the Prompt Payment Act not requiring “an interest penalty on a
payment that is not made because of a dispute between the head of an agency and a business
concern over the amount of payment or compliance with the contract.” 31 U.S.C. § 3907(c).
“Although both the [Prompt Payment Act] and CDA call for interest to be paid by the
government, the statutes apply in differing circumstances. When there is no disagreement
over a payment to be made under a contract, the [Prompt Payment Act] applies.”Bay
County, Florida v. United States, 114 Fed. Cl. 755, 758 (2014). However, “[i]f there is a
dispute over a contract claim,” as here, “the CDA is the appropriate statutory authority and
its interest provisions are applicable to [the] claim.”Id.; see also 1441 L Associates, LLC v.
General Services Administration, CBCA 3860, 17-1 BCA ¶ 36,673 (finding that, given that
the dispute was over payment, the lessor had not articulated a basis to recover interest under
the Prompt Payment Act); Inversa, S.A. v. United States , 73 Fed. Cl. 245, 247 (2006)
(“[Prompt Payment Act] interest is available only when Government payments are
inadvertently late, and not when the Government refuses to pay or questions its underlying
liability”). Here, only the CDA’s interest provisions apply. Accordingly, HPI is not entitled
to interest under the Prompt Payment Act.

CBCA 6093 5
Decision
The claim is GRANTED IN PART. The Board grants HPI’s claim for damages of
$797,802.68, plus interest under the CDA, and denies HPI’s claim for Prompt Payment
interest.
Beverly M. Russell
BEVERLY M. RUSSELL
Board Judge
We concur:
Joseph A. Vergilio H. Chuck Kullberg
JOSEPH A. VERGILIO H. CHUCK KULLBERG
Board Judge Board Judge