GRANTED IN PART : February 11, 2016
CBCA 3628
PJB JACKSON-AMERICAN, LLC,
Appellant,
v.
GENERAL SERVICES ADMINISTRATION,
Respondent.
Robert C. MacKichan, Jr. of Holland & Knight LLP, Washington D.C.; and Jacob W.
Scott of Vedder Price P.C., Washington, DC, counsel for Appellant.
Catherine Crow, Office of General Counsel, General Services Administration,
Washington, DC, counsel for Respondent.
Before Board Judges SOMERS, VERGILIO, and POLLACK.
POLLACK, Board Judge.
The appeal arises out of the cancellation of a lease between the General Services
Administration (GSA) and PJB Jackson-American, LLC (PJB) to house the United States
Forest Service (FS) in a building in Jackson, Mississippi.  For purposes of this decision, we
will generally use the term cancellation when referring to the agency’s actions that (a)
prohibited PJB from attaining a build-out to enable tenant occupancy and (b) ultimately
repudiated the lease.  Appellant claims a total of $2,967,636.90, of which $2,800,000 is for
the cancellation of the lease.  The remainder is for damages after award that were associated
with maintaining the property (carrying costs), as well as costs associated with the
Government’s changes to the lease. 


CBCA 3628 2
Appellant claims a nineteen-month delay or nineteen months of additional carrying
costs, which it fully attributes to actions of GSA.  Appellant bases its claim for cancellation
damages on a diminution of value theory, while GSA asserts that recovery must be
calculated on an expectancy basis.  A hearing was held in Washington, D.C. on November 12
and 13, 2014.
At the time of the hearing, appellant added to its claimed damages $236,156.51, which
it characterized as un-reimbursed out-of-pocket costs.  GSA objected, contending that the
Board lacked jurisdiction to hear this claim because appellant had not previously presented
the costs or the subject matter to the contracting officer (CO) for final decision.  The Board
allowed testimony on this matter at the hearing, but reserved the issue of jurisdiction for later
determination.
The lease in issue called for a fifteen-year term, starting at the date of occupancy. 
However, the lease gave the Government the right to cancel after ten years, subject to
providing the lessor with 120-days’ notice.  The lease was awarded on March 8, 2011.  GSA
formally directed appellant to stop work preparing the space for occupancy by letter of
December 21, 2012, prior to the lessee taking occupancy.  GSA had earlier, on or about
December 5, 2012, directed appellant to stop all work, anticipating the formal notice.  In the
period between award of the lease and cancellation, PJB performed significant design and
other work in preparation for occupancy, including design, as well as extensive efforts in
costing the warm lit shell and tenant improvements (TIs) necessary for occupancy.  At the
time of cancellation, no physical work on either the TIs or warm lit shell had been performed. 
GSA concedes that appellant is owed some compensation due to the cancellation of
the lease, money for added architectural/engineering (A/E) work, plus a small amount of
added carrying costs during part of 2012, which GSA acknowledged was attributable to the
extended time of performance.  In his final decision of August 28, 2013, the CO recognized
entitlement to costs due to added carrying time caused by delays or stretch out in the design
segment of the lease, added design costs, and costs directly attributable to the cancellation. 
By the time of the hearing, however, GSA changed the numbers significantly; it now denies
entitlement to the vast majority of the earlier-recognized claimed carrying costs.  The parties
do not agree on the calculation of damages resulting from the cancellation of the lease.  At
the time of the final decision, appellant had not yet entered into a mitigating lease. 
Therefore, that was not reflected in the final decision calculation.  Both parties agree that a
reduction for mitigation is appropriate, although they disagree as to the amount.  To date,
GSA has paid nothing on any segment of the claim.

CBCA 3628 3
Findings of Fact
Nicholas Properties, LLC (Nicholas) entered into a lease with GSA on March 8, 2011. 
The lease was for in excess of 28,000 rentable square feet of office area and related space in
an existing building located in Ridgeland, Mississippi.  The facility was to be used by the FS. 
A substantial portion of the existing building was a warehouse, with the remainder being
offices.  The initial lease provided for occupancy to begin on July 2, 2011, and to continue
through June 30, 2026, subject to termination and renewal rights as otherwise set forth in the
lease.  
The solicitation for offers provided at paragraph 1.3, “The lease term is for fifteen
(15), ten years firm years.  GSA may terminate this lease in whole or part after (10) years on
120 days written notice to the Lessor.”  Paragraph 6 of the lease provided that the
Government would develop space plans subsequent to award and that all tenant alterations
were to be completed by the lease effective date identified under paragraph 2.  The lease
further provided, “Lease term to be effective on the date of occupancy, if different from the
date identified in Paragraph 2.”  Paragraph 2 indicated a July 2011 occupancy date.
Prior to the FS taking occupancy, appellant had to complete the design and then
construct the warm lit shell (which included lobbies, common areas, and core areas of the
building, as well as complete TIs called for by GSA to meet specific needs of the FS.  The
cost for warm lit shell improvements was to be borne by the lessor.  The TIs were items
specific to the area being rented by the agency and ultimately were to be recovered through
the rent being paid to the lessor.  Payment of rent was not to commence until the work on the
warm lit shell and TIs was completed.  At that time, the building would be deemed to be
ready for occupancy. 
On or about April 25, 2011, PJB purchased the property from Nicholas for
$1,800,000.  Thereafter, PJB and GSA entered into a novation agreement, dated
May 17, 2011, with PJB taking over the lease.  Nothing in the novation agreement or original
lease addressed lost value as a damage, should the lease end prematurely.  There was no
termination for convenience clause.  Mr. Bruce Ash, one of the principals of PJB, testified
that PJB’s primary focus has been properties with federal tenants, leased through GSA.  
The March 2011 lease was supplemented through Supplemental Lease Agreement
(SLA) 2.  SLA 2 provided that it was effective April 27, 2011.  However, SLA 2 was not
signed until June 24, 2011.  SLA 2 amended various provisions of the original lease and
specifically increased the rentable square feet and rent.  The SLA eliminated an earlier
reference to the occupancy and rent starting in July 2011, and substituted language which
provided that rent was estimated to begin December 8, 2011, and run through 2021.  In its

CBCA 3628 4
brief and in the certified claim, counsel for PJB has stated that SLA 2 established an
occupancy date for the premises of December 8, 2011.  The Board finds that December 8 was
an estimated, not firm, occupancy date.  Curiously, SLA 2 was signed by Nicholas rather than
PJB, even though PJB was the lessor by June.  Neither party has raised that as a material
matter.
The building shell rental rates included in the lease were full service rates and
included property financing (exclusive of TIs), insurance, real estate taxes, management fees,
profit, and other costs.  The required TI costs for the FS were estimated by GSA and the FS
to be $826,255, and that cost was to be recovered over time through the rent.  No number was
set out in the lease or preliminarily identified for costs of preparing the warm lit shell.  That
was because the warm lit shell costs were to be fully absorbed by the lessor.  As to the TI
costs, if the costs to appellant for the TIs exceeded the amount estimated by GSA and the FS,
then the balance due the lessor was to be paid by rental adjustments or a lump sum to be
determined by the Government.  If the entire TI allowance was not used, then the lease
provided that the Government could adjust the rental rate downward to offset the difference. 
Under SLA 2, operating costs were set at $126,725.05 per year.  Those operating costs were
subject to change based upon the consumer price index (CPI) and were to be paid by the
lessor.  SLA 2 also called for the lessor to pay GSA $144,726.65 in broker commission
credit, with fifty percent due after award and the remainder at occupancy.  The lease
identified the nature of the shell requirements in sections 1.12 and 5-8 of the lease.
The lease called for the TIs to be based on the lowest of three bids to the lessor.  The
specific language read, “The Lessor understands in lieu of Cost and Pricing Data, his
contractor or each of his subcontractors shall solicit three (3) bids for work completed as part
of the initial tenant alterations; e.g. for electrical, plumbing, etc.  The lowest responsive bid
will be accepted.  This does not apply to the shell build out.”  In defending the claim as to
the stretch out of the design phase, GSA asserts appellant often failed to meet the three-bid
specification and contends that after February 2012, it was that failure which was largely
responsible for much of the delay to the project.  In his testimony, Mr. Ryan Johnson, the
CO, confirmed that the lack of adequate price competition was a problem, but also stated that
the more significant issue was arriving at agreed pricing and allocation between the TIs and
warm lit shell. 
While the costing for the shell and TIs were separate, from a practical standpoint, the
costs to complete the two were intertwined.  A contractor or subcontractor bidding work to
PJB or its prime, such as a price for heating, ventilating, and air conditioning (HVAC) or
ceilings, would not break out or allocate pricing between what was going to be needed for
the warm lit shell and what was needed as part of the TIs.  The appellant generally got a
single price for the work and it then was up to the appellant and GSA to allocate the costs. 

CBCA 3628 5
The record shows that the lessor anticipated spending significantly less to improve the shell
than what was perceived by GSA.  The FS number for the TIs was understated through most
of the process.  Both elements contributed to the difficulty in reaching a final number and to
the start of construction, a prerequisite for occupancy.
The improvements as to both the warm lit shell and TIs were to be based on a design
concept provided to the lessor by the Government.  From that concept, appellant was
expected to produce design intent drawings (DIDs) and, thereafter, produce construction
drawings (CDs).  Construction and the follow-on occupancy could not proceed until the
costing for TIs was agreed to (allocating costs between TIs and the warm lit shell).  Because
rent payments would not start until the physical work was completed and the FS took
occupancy, it was important for the parties to settle on a design and to negotiate the
allocation as to the shell and TIs.
Although lease payments were not to begin until occupancy, the award of the lease
started appellant’s performance obligations.  The obligations and time for completion of
various tasks were set out in section 5.12 of the lease.  The lease provided that within thirty
days of award, the lessor was required to provide DIDs showing the planned TIs.  The DIDs
were to be based upon the final design requirements provided by the Government.  The
Government then was to review the DIDs within ten days of receipt, and if necessary,
pursuant to section 5.12(B)(2), the lessor was to be provided five days to cure any defects in
the DIDs.  Once DIDs were approved, the lessor was required to produce CDs, within twenty
days.  The Government had ten days to review the CDs and appellant had five days to cure
any GSA concerns. Within ten days of Government approval of CDs, the lessor was to
submit a proposal detailing the cost to complete the TIs.  Those costs were to be absorbed
by the Government.  Once the price of the TIs was negotiated, the Government was to issue
a notice to proceed (NTP) for the start of construction.  TIs were to be completed within
ninety days of receipt of that NTP.  At the close of the ninety days, the space was to be ready
for acceptance and inspection, with the Government having five days to do that.
The pre-construction design tasks identified in the lease (starting from award) were
to consume ninety days.  Thereafter, the parties needed to complete price negotiation and
allocation of costs between the TIs and the warm lit shell, and thereafter proceed with ninety
days for construction.  While the lease did not specify a time to be allotted for final
negotiation of the TIs and warm lit shell pricing, or allocate time for issuing a NTP with
construction, appellant in its certified claim allocated ten days to NTP and further
acknowledged that a commercially reasonable time would have been anticipated for
negotiation.  GSA has provided no alternative time frames for the above.

CBCA 3628 6
The parties disagree as to the start date for counting performance for carrying cost
purposes.  Appellant measures its delays and carrying time by using a start date of March 11,
2011, which pre-dates PJB’s involvement in the lease.  GSA uses May 19, 2011.  We find
GSA’s date to be the appropriate start date.  We note that PJB took over from Nicholas on
May 17, 2011, and all costs are those of PJB.  Using May 17th as the start, if we allocate thirty
days for negotiation of price (including the NTP), add on the time for design in the SLA and
the ninety days for construction, the total time that appellant should have been anticipated
for its efforts was 210 days.  If we measure 210 days from mid-May 2011, that puts us into
mid-December 2011.
Through much of the time leading up to December 2011, issues arose as to the FS
having sufficient funds to complete what it wanted for TIs, as to costs to be allocated to the
warm lit shell versus TIs, and as to changes in criteria.  Negotiations were in part driven by
pressure to lower the TI costs to meet the FS budget and in part by disagreements over how
much went into the shell and how much was to be attributed to TIs.  It is undisputed that until
the design parameters were set and the pricing negotiated, appellant could not start
construction.  Moreover, until the property was ready for occupancy, rent payments could not
begin.  Nevertheless, for the period prior to occupancy, the appellant was incurring carrying
costs for the property as well as design costs.  The negotiations as to the TIs and the shell
appeared to move with fits and starts.
For purposes of this decision, we need not go into detail as to all issues argued by the
parties as to who is responsible for the carrying time.  Rather, we focus on several limited
milestones.  The most significant are in August and December 2011, February 2012, and then
the cancellation by GSA in December 2012.  The parties agree that once appellant was
initially able to proceed with design, it was not until August 2011 that the Government
approved the final schematic design.  Appellant could not prepare the initial DIDs until that
was done.  Work then proceeded.  However, on or about December 11, 2011, GSA told
appellant to stop the process, as the FS was significantly re-working the design parameters. 
The FS was going from a plan with offices to a more open environment.  Much of the work
done to that date by PJB was nullified and appellant could not proceed with the preparation
of CDs (the step after approval of DIDs) and of course not proceed with construction until
GSA and the FS gave it the criteria needed.
It was not until February 28, 2012, that the FS and GSA completed a re-review of the
revised DIDs and worked out an alternate DID layout.  That essentially reset the clock for
the project.  There is no evidence showing that actions of PJB unreasonably delayed the DID
progress after GSA issued the December 2011 stop order.  Moreover, once the DIDs were
approved, that reset the start of the preparation of CDs.  The change in DIDs and CDs, in
turn, caused PJB to redo pricing and other work, and required it to engage architects a second

CBCA 3628 7
time to rework the CDs.  GSA, as noted later in these findings, has agreed that appellant is
due $48,269 for architectural work that was properly attributed to the redesign. None of that
amount has been paid.
Starting February 29, 2012 (the day after approval), appellant was free to move
forward.  The schedule shows that after the approval of DIDs (forty-five days), the lease
contemplated that appellant had 125 days (thirty-five remaining for design and ninety for
construction) to complete the property for occupancy.  In addition, as noted above, appellant
has conceded that ten days should be allocated to issuing the notice to proceed (for start of
construction) and (although no time was set for negotiation of the TIs) thirty days would be
reasonable for negotiation.  That totals 145 days and reflects the amount of time that was
indicated in the initial lease for completing the tasks remaining, once DIDs were approved. 
It is clear that a continuing issue in 2012 was the determination and allocation of
pricing for the TIs versus the warm lit shell.  The parties identified and allocated costs for
the TIs through the submission by appellant of TIC1 sheets, which were documents formatted
by GSA that were structured to show a cost breakdown between TI and warm lit shell for a
number of general construction categories, such as HVAC, electrical, finishes, other trades,
and administrative costs.  The TIC sheets first appeared to be used in May 2012, and they
continued to be submitted through the fall and into December 2012. 
Typically, the costs for construction line items, such as HVAC and finishes, were
allocated between warm lit shell and TIs.  Therefore, when the dollars attributed for a
particular line item to the warm lit shell increased, there was typically a decrease for the TI
dollars under that category.  Accordingly, it benefited the Government when a greater
proportion of an item was allocated to shell, as that generally triggered an equal decrease in
TI costs for that category.
In its initial TIC sheet, which appears to have been submitted in May 2012, appellant
priced the warm lit shell at $80,000.  Appellant has conceded that the amount was not
reasonable.  In appellant’s next submitted TIC sheet (A-4), it showed the warm lit shell costs
as $356,495.36.  Prior to the final submission in December 2012, submissions for costs for
the warm lit shell ranged from a low of $352,712.65 to a high of $392,076.14. TIC sheet A-6
showed $392,076.14 for the warm lit shell and TIs at $1,680,210.52.  The TIC sheet just
prior to the final submission, A-7, showed $356,495.36 for the warm lit shell.  The costs for
TIs on the various TIC sheets ranged from $1,070,109 to $1,721,447.  In the final TIC sheet,
1  Although not addressed in the record, the initials “TIC” stand for tenant improvement
costs.

CBCA 3628 8
submitted on December 4, 2012, PJB costed the warm lit shell at $490,463 and TIs at
$1,396,784.  
Not all TIC sheets included costs for all categories.  For example, as pointed out by
GSA, A-7 lacked a cost for doors and windows for the warm lit shell, even though the prior
submitted TIC sheet, A-6, showed a cost for those items at $92,076 for the warm lit shell.  
In its brief, GSA cites a statement from Mr. Bruce Ash, president of PJB, in which he
stated that he was elated at the $490,463 number.  While Mr. Ash did at the time express
satisfaction, he clarified and qualified the matter at the hearing.  He testified that he and PJB
were not particularly happy with the number at the time and stated that the figure was
proposed to GSA on the basis that it would free up the start of the lease.  He stated that
appellant had been carrying the property for almost eighteen months and was anxious to get
it to a rent payment stage.  He stated that the real number that appellant expected to pay for
the warm lit shell was significantly lower than the December offer.  He said that had the lease
gone forward to completion, appellant would have been obligated to provide the items set
for the warm lit shell, but could not be denied the benefit of doing the work for less cost. 
The record contains no written agreement as to acceptance of the $490,463. GSA took no
steps in reliance upon it, and appellant had the opportunity to do the warm lit shell work
cheaper, if it could.  While Mr. John Culbertson, the GSA valuation expert, stated in
supporting the reasonableness of the $490,463 that it met the “laugh test,” he was neither a
contractor nor an estimator.
Appellant contends that from February 28, 2012, until the date of cancellation, it was
still not able to complete obligations as planned, asserting that GSA thwarted appellant’s
attempts to move ahead.  GSA in contrast says that any delays were due in large part to
appellant not providing competitive bids and not giving GSA adequate pricing on TIs and
the warm lit shell.  There is substantial correspondence in which the parties take competing
positions as to what should be warm lit shell and what should be TIs.  The correspondence
is not conclusive as to which party is correct.  Both GSA and appellant relied on outside
firms to provide costing support.  GSA had contracted with U.S. Costs to assist it during the
project in negotiating and estimating the costs for warm lit shell and TIs.  PJB used Mr. Don
Parks of Parks Contracting and Consulting for setting pricing and making allocations.  PJB
also appeared to rely on its architect, and GSA relied to some degree on Mr. David Culp, an
architect with the FS.  None of these individuals was produced as a witness.  Rather, GSA
attempted to rely in part on Mr. Culbertson, and PJB essentially relied on the documents in
the record and on Mr. Johnny Nelson, a Mississippi architect.  The later had some but not full
information on GSA lease requirements. 
Exhibit A-29 of the appeal file contains most of the documents dealing with the
competing positions.  The exhibit contains over 300 pages, composed of letters, meeting

CBCA 3628 9
minutes, e-mail messages, and invoices.  The documents paint a picture of ongoing problems
as to a number of items.  From the spring of 2012 forward, appellant could not get
competitive bids on security as specified in the lease agreement, because only one firm in the
area could meet GSA requirements due to unique scope and warranty requirements.  Finally,
in late fall, the security work was removed from the project.  There were issues as to what
was included and how to allocate work on the HVAC system.  PJB pointed to a letter of
November 6, 2012, where GSA said the cost allocation for HVAC was fair at 50/50 due to
the conversion of warehouse space into office space.  Prior to that time, the FS and GSA had
resisted such an allocation.  Further, in a letter dated November 15, 2012, appellant’s
architect addressed an issue regarding handicapped parking.  He said the work being
identified as warm lit shell was added for additional FS flexibility and access and that the
work would not have been required but for FS choices.  He identified the work as a TI cost
and suggested it be removed from the project.  He also disputed some doors and windows
that were designated shell, but he thought should be TI.  His rationale, however, was not
detailed.  These items contributed to the stretch out of appellant’s work into December 2012. 
Documents in September 2012 from U.S. Costs focused on four items that it identified
as not yet reasonably priced by appellant, those being HVAC, security, painting, and
sprinkler work.  The sprinkler work had been an issue since May 2012, and the security
specification, as noted above, had been an ongoing issue and was ultimately removed.  In
correspondence in October 2012, Mr. Culp of the FS concurred that the lessor’s price was
fair and reasonable, except for certain items, identifying those as access control, security, and
certain elements of finishes.  He questioned some of the allocation as to TI and shell, relying
on U.S. Costs.  He then made the following recommendations, which implicitly indicate that
the FS was still attempting to reduce scope so as to reduce costs.  He recommended the
removal of the access and control security system at $104,000, removal of telecom and
wiring at $48,000, and re-alignment of the sprinkler system.  The first and third items had
been at issue for some time.  Another item identified by GSA was delay attributed to
appellant not obtaining sufficient bidding competition so as to allow GSA and the FS to
evaluate TI costs.  While Mr. Eugene Wright, the GSA leasing specialist, identified that some
of the delay after February 2012 was due to appellant providing inadequate price
competition, he noted that probably the biggest issue was insuring that the costs were
properly allocated among TIs and the shell.
On October 8, 2012, PJB’s Mr. Ash sent a letter to the CO, Mr. Johnson, referencing
delays that he claimed PJB had experienced since December 15, 2011, and specifically the
stop work order at that time.  Mr. Ash noted that on February 14, 2012, PJB participated with
the FS and GSA to develop a new revised scope.  He said that while PJB and its
representatives were able to reduce costs of construction by $649,860, the tenant added
features which increased construction costs by $282,004.  He noted that PJB had recently

CBCA 3628 10
completed reconsideration and calculation of all TI costs and had completed its review.  Mr.
Ash advised that PJB had incurred what he characterized as delay costs through September
30, 2012, of $162,548.79.  He identified the following classes of costs: interest expenses
from the lending bank, landscaping expenses, owner’s association maintenance contribution,
real estate taxes, return on investment, and utilities and other payments to local providers.
GSA identified December 12, 2012, as the date that the FS issued a notice to cancel
the need for the space.  The notice advised that the FS was no longer interested in the space. 
Appellant took that as a repudiation of the lease.  GSA then requested that the lessor provide
an offer to buy out the lease.  GSA says the lessor stated it would start assembling
documentation.  However, according to GSA, before GSA could determine whether to offer
a lump sum buyout or hold the property and begin to pay its rental obligation month to month
(which GSA says was its usual practice), the lessor retook possession of the property and
entered into a replacement lease with the State of Mississippi (State).  The replacement lease
was agreed to on August 20, 2013.  Appellant says that on January 7, 2013, GSA confirmed
the repudiation, when GSA sought to have appellant agree to release GSA from the contract. 
Appellant filed its certified claim on April 26, 2013.  At the time it had not entered
into a mitigating lease.  In the claim, appellant sought both what it called delay damages and
costs for breach of the lease.  It identified claimed delay dates running from March to August
2011, and then from December 16, 2011, to December 21, 2012.  It contended it was entitled
to be paid for a total of 256 work days or 372 calendar days.  At that time, PJB did not claim
costs from August 24 to December 15, 2011.  While appellant designated the claim as delay,
as we have addressed earlier in this decision, the costs were generally carrying costs caused
by the actions of the FS in stretching out or delaying appellant’s ability to provide the CDs
and move on with construction.  Until construction was completed, the FS could not take
occupancy and rent payment was contingent on occupancy.  There also are several costs
claimed, specifically the architect and legal costs, which are more in the nature of change
claims.
Appellant broke down its delay costs into several categories: carrying costs, contract
administration costs, and legal costs, for a total of $27,791.  The legal costs were incurred
from January to October 2012.  Appellant described the legal and administrative costs as
needed to assist in negotiations of a price adjustment, caused by the GSA delay and redesign. 
Appellant provided redacted legal bills for the time period.  The redacted bills do not reflect
interaction by counsel with GSA officials or specific reference to negotiations.  Appellant
claimed additional architectural fees of $48,269.  These costs were incurred as a result of the
Government’s decision to start the job anew in 2012.  

CBCA 3628 11
In presenting its claim, appellant provided monthly and/or daily costs for March 2011
into December 2012.  The presentation broke costs into categories, most of which were
categories that GSA did not challenge. Although GSA challenged appellant’s attribution of
delay and stretch out time; GSA did not provide counter numbers to those of PJB or
challenge the accuracy of the PJB daily or monthly rates.
The CO issued a decision on August 28, 2013, allowing $1,635,194.34 as
compensation for both cancellation of the lease and delay.  Of that amount, $114,815.44 was
attributable to delay and the remainder to the cancellation.  Of the amount identified for
delay, $48,269 was allowed for added architectural costs and the remainder was attributed
to categories such as real estate and management.  At the time of the final decision, GSA was
unaware that appellant had secured a mitigating tenant.  Therefore, the CO decision does not
reflect any reduction or mitigation against the repudiation number.  Both parties agree that
mitigation is proper and the net proceeds from the replacement lease must be deducted to
reach a final amount.  In reaching the proper compensation for repudiation, GSA calculated
payment on an expectancy basis.  That has remained its position.  Appellant had submitted
its claim on repudiation as a claim for breach and sought recovery on a diminution of value
basis.  Both parties provided experts to discuss valuation, which is detailed below. 
In his final decision, the CO asserted that DIDs were to be completed by
May 19, 2011, based on an agreement at the initial programing meeting, held on
April 7, 2011, where both the Government and lessor agreed that DIDs would be due thirty
working days later.  Appellant has provided no evidence to challenge that GSA statement. 
The CO also stated in the decision that as of December 4, 2012, the TIs from PJB were fully
compliant with the lease.  GSA accepts that it was liable for delay, as of December 5 to the
date of the stop order on December 21, 2012.  The lease never resumed.  GSA also accepted
responsibility for an additional ten days associated with a May 9, 2012, submission, and an
additional two days on or about May 23, 2012, attributed to GSA not reviewing submittals
within the specified period.  GSA allowed some relief for the following categories of
carrying costs claimed by appellant: real estate taxes, management fees, landscape fees,
utilities, power, and insurance.  It also separately allowed contract administration costs of
$32,705.97 and architectural fees of $48,269.  The contract administration costs included
$27,791.99 for attorney fees, running from January to October 2012, and $4913.98 for
additional architectural fees identified as needed for negotiations.  
The GSA position has changed since the CO decision, as to what items are payable
and as to dollars that are owed.  The $48,269 in architectural fees accepted in the final
decision is not one of the contested items. 
On August 20, 2013, just a few days prior to the CO decision, PJB executed a lease
with the State of Mississippi (State) for a term of fifty-nine months.  The lease was later

CBCA 3628 12
changed to cover sixty months.  The lease was to begin November 1, 2013, and obligated the
State to pay monthly rent of $27,447.92 for 26,350 square feet of office space, to be used by
the Department of Health, Statistics and Vital Records (DHSVR).  The lease contained the
provision that in the event space were to become available to the lessee in any State-owned
building, the lease shall be terminated within thirty days from and after the date of written
notice.  The lease was being used as swing space by DHSVR while its permanent facilities
were being renovated.  It was a certainty that at some point the State would move out when
renovations were finished.  GSA has asserted, and statements from state officials support,
that it was likely the State would stay the sixty-month term and possibly longer.  Having said
the above, the lease did not have an option as to any time beyond the first sixty months. 
From the time of the CO’s decision until the time of the hearing, GSA’s position
changed substantially as to both delay liability and the amount it owed appellant for
cancellation of the lease.  As to the delay segment, the current GSA position is that appellant
is entitled to no more than $64,817.16.  Of that, $48,269 is attributable to architectural fees. 
The remainder is real estate taxes of $7763.60, management fees of $3126.81, landscaping
of $2604.64, utilities (water and sewage) of $275.60, utilities (power) of $154.33, and
insurance of $2623.18.  It appears that GSA allowed time for days that were identified by the
CO during the period starting after December 2011.  The CO disallowed any costs associated
with claimed delays between March 2011 and December 2011.  In its pre-trial brief, GSA
provided no allowance for contract administration costs (which were identified by appellant
as being composed of legal fees, running from January to October 2012), or for additional
architectural fees of $4913.98 incurred in May and June 2012.  Appellant says the legal and
architectural costs were incurred to negotiate a price adjustment required as a result of the
delay and redesign of the project.  GSA objects to that payment, asserting that there is no
authority to obligate the Government to pay for appellant’s consultations with its counsel or
architect to understand what the lease stated. 
After the final decision, and leading up to the hearing, the parties exchanged expert
reports.  At the hearing, GSA relied primarily on the November 3, 2014, report of Mr. John
Culbertson, a senior real estate specialist with GSA.  Appellant relied upon the
October 29 and November 10, 2014, reports of Mr. Robert E. Dietrich, Senior Real Estate
Director for Collier International.  Mr. Dietrich had extensive experience in commercial real
estate appraisals.  Both experts produced submissions on valuations.  Both parties prepared
spreadsheets which, while not identical (but similar in format), attempted to capture the net
proceeds to be expected from the GSA lease, minus what should reasonably be credited as
mitigation due to the current follow-on lease with the State and a likely follow-on with some
other tenant.  Mr. Culbertson’s calculation, used during the hearing, showed appellant would
have netted $2,112,256 in rent from the GSA lease.  His sheet showed two scenarios for what

CBCA 3628 13
the mitigation leases or leases might yield, those being $1,055.805 and $1,112,845
respectively.
At the close of the hearing, appellant’s expert was given the opportunity to file
additional information, in order to respond to unexpected testimony from a state official. 
GSA’s expert was given the right to file a response to appellant’s expert’s filing.  Appellant
then moved to strike the GSA expert’s report of November 26th for going beyond the scope
of a permissible response.  By order of December 16, 2014, the Board limited some aspects
of the filing and allowed GSA to re-file.  The spreadsheet of December 24, 2014, was
submitted as that refiling.  To the extent the matters involved in the motion to strike and GSA
filings are still relevant to our decision, they will be addressed in the discussion.  
At the hearing, appellant identified additional costs it now seeks to recover which it
contends arise out of the same operative facts as before us in this claim.  Those costs had not
previously been presented to GSA and essentially are costs associated with the purchase of
the building by PJB.  In its brief, counsel for PJB asserts that significant expenses were
incurred by the lessor after the execution of the lease and before the breach.  It claims
$236,156.51 for various expenses associated with acquiring ownership.  Mr. Ash said that
if there had been no cancellation of the lease, PJB would not be asking for the costs.  The
Board allowed testimony, but said it would take it as a proffer and later decide if it had
jurisdiction to consider the costs being sought. 
The costs involved in the proffer were $41,213.05 in closing costs that PJB incurred
to obtain financing to construct the TIs and $70,006.46 in broker fees paid to Jones Lang
LaSalle.  Other costs were $2167 in personal reimbursements, $4025.62 in accounting fees,
$32,392.01 in loan interest, $1666.66 in landscaping fees, and $7980 in insurance fees. 
There is also an additional $76,705.25, which PJB attributes to architectural fees.  The
architectural fee amount is the difference between $122,254.25, which is architectural fees
related to GSA lease, and the $48,269 in added A/E costs.  The later, which were
acknowledged in the CO decision are not being challenged by GSA in this proceeding, and
have been included in our award, relating to delay and carrying costs.  Additionally, in its
brief, appellant conceded that closing costs totaling $41,213.05 should not have been
included in this part of the claim, thereby leaving $194,943.46 in issue. 
In its briefing, GSA presented arguments as to a lack of a critical path analysis by
appellant and asserted that any delay could only be measured starting in December 2011. 
Also, GSA argued that any delays in processing of CDs and other items after February 2012
were to be attributed to appellant.  GSA, for example, contended that there was a thirty-day
delay in providing a working set of CDs after appellant was given the go-ahead on
February 28, 2012.  It says PJB should have taken twenty working days from February 29 to

CBCA 3628 14
March 27, 2012, to provide a working set of CDs but a working set was not produced until
May 8, 2012, equating that to a thirty-day lessor delay.  GSA charges that on June 5, 2012,
the TI bid it received from appellant was not compliant with the lease and from that date until
August 23, 2012, any delay is due to the appellant. 
Calculation of Damages for Termination of the Lease
Both parties provided expert reports and testimony to establish the amount due
appellant because of the cancellation of the lease.  Throughout the dispute, both parties
presented several spreadsheets to support their valuations.  Appellant took the position that
compensation should be measured on the basis of diminution of value.  GSA’s expert
contended that valuation must be based on an expectancy calculation and described
expectancy as measuring and being based upon the loss of income.  He identified expectancy
as the method regularly used by GSA, when measuring damages for leases that are
prematurely ended.  Diminution, as presented by appellant, measures loss of value to the
property due to the breach of the lease, comparing the value of the property to a purchaser,
with and without the GSA lease in place.  Nothing in the lease addressed a guarantee of value
of the property, be that at the start, the middle, or the end of the lease.  The lease covered
what the Government would pay for the use of the space. 
Mr. Dietrich, appellant’s expert, testified that expectancy is not a common method of
valuation; instead, the common commercial valuation method is diminution of value.  He
provided some back-up for how he arrived at his damage number of $3,030,000, but the
back-up was not detailed.  Essentially, he set out $5,230,000 as the fair value of the property
with the GSA lease in place, deducted expenses for the warm lit shell and TIs, and set the
adjusted value at $4,205,540.  He then deducted from that what he designated as the fair
market value of the building with the State lease.  He set that fair market value at $1,730,000,
and after deducting TIs, he arrived at a value of $1,181,000.  His written and verbal
explanations, as to his valuations and as to why it was superior to or more accurate than the
GSA approach, was largely conclusory and lacking detail.  It also was largely based upon
property valuation, a speculative element.  In contrast, the valuation regarding the use of
expectancy, albeit also using estimates, was better developed.  Although there was
conflicting testimony from Mr. Dietrich and Mr. Culbertson as to the use of expectancy and
assignment of dollars to the mitigation leases, one could use their testimony to come to a
damage figure that appeared both fair and reasonable and which relied less on speculation
than the diminution approach.  
The calculations of the parties as to expectancy were similar in many respects as to
format and content.  However, they differed on some key points.  In general, the spreadsheets
as to expectancy took the calculated income from the lease if performed, deducted from that

CBCA 3628 15
the expenses that were anticipated to be incurred in order to earn the rent, and then deducted
the income from the State lease as mitigation.  Some figures were hard numbers, while others
were estimates.
Mr. Culbertson, GSA’s expert, provided five different spreadsheets (those of
November 26 and December 24, 2014, being very similar), each coming up with different
totals.  Each of Mr. Culbertson’s calculations used an expectancy approach.  Both experts
calculated their final numbers for present value (PV).  PV adjusts dollars to account for the
fact that PJB will receive payment now for money and expenses it would have been paid or
incurred over a several-year period.  Both experts made it clear that coming up with the
present value was an art, not a science, and part of arriving at a number included estimates
and questions of risk assessment.  The results, when adjusted for PV, ranged from damages
for the cancellation of $800,000 to $1,101,000. 
Mr. Culbertson’s spreadsheets used a ten-year period for calculations, which was
based on the fact that GSA only agreed to a ten-year period.  Anything beyond that was
deemed to be at appellant’s risk.  Mr. Dietrich used a fifteen-year period (with some
adjustment), contending that historically, there is at least a 90% chance that GSA completes
a lease, and therefore, fifteen years was more reflective of what was to be expected.  The use
of fifteen years (by Mr. Dietrich) results in significant dollar difference from the ten-year
term.
The Culbertson spreadsheet, ultimately relied on by GSA, was prepared in
December 2014.  It followed the same format as the prior Culbertson spreadsheets and was
generally consistent with the format used by Mr. Dietrich.  It accumulated the fixed lease
payments on the GSA lease, less expenses, and then deducted from that a mitigation figure
for the State lease.  The parties appear to agree as to the basic framework of deducting
expenses and agree on a number of the costs associated with establishing what would have
been netted had the FS lease run its course.  Two major differences are the expense to
provide GSA with a warm lit shell and the cost for TIs on a replacement lease, should the
State vacate prior to ten years.  
To determine what is owed appellant, we use the format of the December 2014 sheet
prepared by Mr. Culbertson.  We identify where his and Mr. Dietrich’s numbers line up. 
There is no material disagreement as to yearly rent.  Since we find that ten years is the correct
basis for calculations, the rate is multiplied by ten.  On his spreadsheet, Mr. Culbertson
calculated ten years of lease payment at $548,207 per year, for a total of $5,482,070.  For
purposes of our calculations, we do not separately adjust for PV, but rather use the numbers
as set out on the source documents.

CBCA 3628 16
Mr. Culbertson deducted expenses for each year of rental.  Most of the expenses he
identified either conformed on a yearly basis with those of Mr. Dietrich or were close.  A
primary exception is the cost for the warm lit shell work, which GSA priced at $490,463.61. 
GSA used that figure primarily because appellant proposed that figure in its TIC sheet of
December 4, 2012.  Appellant showed TI costs of $1,396,784 on that same sheet.  According
to Mr. Culbertson, $490,463.61 passed the “laugh test,” implying that the cost provided was
low.  GSA also claimed that in answers in a November 26, 2012, letter regarding the warm
lit shell costs, appellant expressed no material disagreement, thereby confirming that it and
GSA were on the same page as to warm lit shell costing.  GSA also contended that all TIC
sheets provided by appellant prior to December 4 sheet omitted key items.  A compilation
of alleged missing items was prepared by Mr. Culbertson and provided in his post-hearing
submission of November 26, 2014.  While the numbers he cited in his filing were in the
record, his commentary moved the matter beyond a simple compilation.  We agree with
appellant that the late submission deprived appellant of a fair opportunity to cross-examine,
clarify, or provide rebuttal.  Accordingly, we have given no weight to his commentary on this
item.
Several calculations, used by both parties, established the value of the GSA lease, the
State lease, and any follow-on to the State lease.  For purposes of this decision, we have
selected as our starting point the December 24, 2014 spreadsheet calculations presented by
Mr. Culbertson, which are generally consistent with the earlier calculations of both
Mr. Culbertson and Mr. Dietrich.  We also chose the December format because it contained
more of the accepted (agreed to) dollars than did other sheets. That allowed for our changes
and calculations to be easier and more readily followed. 
We now turn to our calculation of what is owed appellant due to the cancellation.  We
start with the rent of $548,207 per year for each year of the ten-year period that totals
$5,482,070.  For purposes of determining what appellant would net after expenses,
Mr. Culbertson set out the following numbers.  He deducted for year one of the lease the cost
of warm lit shell at $490,463; the estimated cost of TIs at $826,255; twice the first year of
broker commission of $72,363, or $144,723; operating costs of $126,725; real estate taxes
of $32,960; and other costs, such as reserves and insurance, at $31,152.  He then applied a
first year negative net rent figure of $1,104,074.  The first year rent is not subject to
adjustment for PV.  Adjustments are applied for years two through ten.  Mr. Culbertson then 
addressed each of the following nine years, starting with each year’s rent at $548,207 and
then deducting for each year, yearly operating expenses at an even $126,725 per year, taxes
at $32,960 and reserves at $31,152.  That yielded, for each of years two through ten, a net
rent to lessor of $357,370 per year for a total of $3,216,330.  That total was then combined
with the negative rent for year one, leaving the net rent after expenses at  $2,112,256.  

CBCA 3628 17
To achieve a final total, Mr. Culbertson applied a PV calculation at 4.25 % for each
year.  For purposes of this decision (because we change many numbers) we will not calculate
PV on each year, but will leave that to the parties.  Ultimately, in order to come up with the
final recovery due to the breach, a PV calculation for each year must be made.  By
performing a PV calculation, the total dollar recovery for each year is decreased, to reflect
the present value of being paid now for income that would have occurred in the future (that
is, the later year dollars).  Mr. Culbertson’s total, using that PV, was $1,523,078 before
taking into account the State lease mitigation. 
Mr. Culbertson then calculated a mitigation amount for the State lease based on the
assumption that the State would leave after five years and there would be a six-month
vacancy before appellant secured a replacement lease.  He used an estimated market rate of
$14.71 per square foot (psf) for the time after the State left.  His calculation additionally
escalated the rent for each replacement year (years six through ten) by 2.5% per year (noting
that such was consistent with Mr. Dietrich’s appraisal in October 29, 2014).  The Dietrich
appraisal he cited, however, used a number of different parameters and is not fully
comparable.  The Culbertson calculation provided for rent from the State of $361,000 for the
first year and $329,375 for years two through five.  Appellant has not challenged the amount
allotted for the actual State lease.  Thereafter, for the remaining years (the time after the State
lease would potentially expire), Mr. Culbertson estimated the follow-on lease at a rate of
$14.71 psf, with that being escalated by 2.5% each year.  His total for gross rent mitigation
before deductions and the application of PV was $3,852,428.  To account for the six-month
vacancy in his calculation, Mr. Culbertson choose to show half of a year’s rent as an expense,
rather than reduce the rent directly. 
As was the case with the GSA lease, appellant would have incurred expenses in order
to secure the mitigating rent.  Mr. Culbertson made deductions to the State lease and follow-
on that were consistent with the GSA lease deductions.  Certain costs in his calculation were
deducted for year one and do not carry over to follow-on years.  Year one shows a full
service rent of $361,000.  From that he deducted operating costs of $168,957, tenant
improvements for the State of $460,000, and a broker commission of $80,000, leaving a
negative net rent for year one of $347,957.  Because year six was to be a transition year and
the year where there would be a six month vacancy (for bringing on a new tenant), he made
several adjusted deductions at year six.  Those were deductions of $139,907 for operating
costs; $206,792 for the six-month loss of rent, $280,000 for re-tenanting improvements and
concessions, and $124,000 in broker commission.  Those deductions yielded a negative rent
of $229,435 for year six, as expenses exceeded income and positive rent for the remaining
time.  We choose not to go into further detail, but note that the end result was a gross of
$3,852,428, less deductions of $2,954,188, for a net of $898,240 to be deducted as
mitigation.  That final figure does not reflect PV, which is separately applied to each year. 

CBCA 3628 18
Had the GSA lease been performed, Mr. Culbertson calculated that the result would
have been a net rent to the lessor of $2,112,256 for the GSA lease and a net rent for the
mitigating lease or leases of $898,240.  PV calculations would have to be applied to the raw
numbers.  GSA has sought to add an additional $40,000 deduction to account for saved
janitorial costs.  The record shows that the lease payments began in November 2013 and that
as of May 2014, the State had not moved in.  Accordingly, we see saved costs for seven
months which at a rate of $2500 a month, for a total of $17,500.
A number of the figures used by Mr. Culbertson in his mitigation calculation bear
comment.  He assumed operating expenses would increase 2% annually for any follow-on
tenant.  That position was not presented by GSA until Mr. Culbertson submitted his post-
hearing response.  It introduced a new element that went beyond what was to be covered in
his response.  There was no evidence addressing the basis on which escalation of operating
expenses was assumed.  While the lease would have permitted an increase, GSA provided
no evidence to show operating costs would escalate in the Jackson market.  While there was
a time, years ago, when increases for both would have been almost certain, and therefore
assumed, we take judicial notice that such is not the case in recent years.
Mr. Culbertson also assumed that the rental rate for the follow-on lease would be
greater than that of the lease with the State.  He justified using a higher rent for the follow-on
tenant on the basis that the State was likely to renew another five years, and if it did so, then
appellant could get a favorable rate from the State.  He acknowledged that there was no
escalation clause for rent in the State lease and provided no evidence to support his
prediction of a higher rate. 
In addition to using a higher rent, Mr. Culbertson proposed using a 2.5% escalation
to be applied to rent.  He cited as his basis the fact that Mr. Dietrich had used a 2.5%
escalation in one of Mr. Dietrich’s earlier calculations.  The Dietrich calculation, however,
had different numbers and different durations.  Mr. Culbertson did not use an escalation for
rent in any of his spreadsheets prior to December 2014.  
In his December 24 spreadsheet, Mr. Culbertson assumed a vacancy period of six
months between the State lease and start of a new tenant.  In another calculation, he had used
eighteen months.  In a third, he showed the State renewing. 
A final issue was janitorial costs.  In answers to interrogatories, appellant identified
the janitorial costs as $30,000 a year.  Per answer to an interrogatories, appellant did not
incur janitorial costs for the State lease until at least May 2014.   Rent was to start in
November 2013.  Therefore, there were no janitorial expenses for the first seven months of
the State lease. 

CBCA 3628 19
Because GSA was insisting that expectancy was the basis for measuring payment to
PJB, Mr. Dietrich, at the request of PJB counsel, initially provided a ten-year analysis based
on expectancy.  Later, however, he provided a fifteen-year calculation.  He acknowledged
that GSA had a right to terminate after the tenth year of an otherwise fifteen-year term, but
pointed out that GSA has historically not terminated earlier than the expiration of the full
term in the vast majority of cases.  GSA did not contest that point, as to history, but relied
upon the lease clause giving it the right to end the lease at ten years.  Based on past history
Mr. Dietrich calculated that there was a 90% likelihood that GSA would remain for the full
fifteen years.  He weighed the percentage possibility in his valuation as to PV.  By running
his calculation over fifteen years, he increased the amount due to the lessor under the
calculations for the total recovery. 
The parties differed as to the cost for making improvements for a follow-on tenant to
the State (assuming the State left after five years).  It was agreed that if the State left, added
costs would be needed to prepare the space for a new tenant.  Mr. Dietrich identified
$592,858 as the costs to make those improvements.  It was not clear if his costs were based
on past experience or on client information and there was minimal detail.  Mr. Culbertson
contended that Mr. Dietrich used an exorbitant figure for improvements on a second
replacement lease and supported that point by noting that the building had already been
converted from warehouse to office space and the TIs from the State lease would only be five
years old.  He noted that the total spent on construction for State was about $392,000 (PJB
actually spent $466,171.96 to secure the State lease and prepare for occupancy; however, of
that $392,000 was for construction).  Mr. Culbertson used $280,000 as an estimated cost. 
His costs were not detailed and the source of his information was not clear.
Both parties adjusted the lease calculations for PV.  Present value involves
discounting future dollars to reach a sum which reflects what later-paid money would have
been worth at an earlier time.  Much of reaching a rate is market and risk driven.  The process
of coming up with a discount rate for present value is part science and part art.  In Mr.
Culbertson’s final filing, he applied 4.25% to the GSA lease and 8% to the State lease. 
Those are the same numbers he used in his earlier November 3, 2014, report and spreadsheet. 
Mr. Dietrich used a slightly higher rate of 4.75% for the GSA lease in his fifteen-year
calculation, and he used 6.79% in his final calculation as to the State lease and follow-on. 
The higher the PV rate the lower the value of the dollars. 

CBCA 3628 20
Discussion
We do not fully adopt either party’s position as to what is owed for what the parties
have identified as additional days that were required (beyond those contemplated in the lease)
to perform the pre-occupancy design and costing tasks called for in the lease.  For purposes
of this decision, we refer to the additional days as delay.  Both parties have attempted to
segregate out delays to work during both 2011 and 2012, and then have calculated and
applied dollars to those segments of delay.  Appellant in its briefing asserts that it is entitled
to compensation based upon a nineteen-month delay, which essentially runs from award in
March 2011 until the cancellation in December 2012.  In its final decision, GSA accepts
limited responsibility for some time segments in 2011 and in 2012.  However, in its final
presentation to the Board and in briefing, GSA has significantly reduced what it accepts as
responsibility for the stretch out costs and concludes that, at best, the total due appellant is
$64,817. 
We find the identification as to delay to be less complex than how it has been framed
by the parties.  Accordingly, we will not analyze the approaches that have been presented,
but instead will identify where we find the delay or liability and why.  Where appellant is due
compensation, we address how the dollars are to be calculated.
Extra carrying charges covered two distinct periods.  The first was from the agreed
planned approval date for DIDs to the actual date of approval of the revised DIDs in
February 2012 by GSA.  GSA has conceded that the approval for DIDs was not given until
February 28, 2012, because of the change in design.  GSA acknowledges that such date
effectively was a restart for the project.  Because appellant should have been able to complete
the DID process and proceed with CDs considerably earlier, but could not do so until
February 28, 2012, we find appellant is entitled to compensation for costs due to the
Government-caused delay through February 28, 2012.  It was only at that point that GSA
approval of the DIDs allowed for appellant to proceed with CDs.  
The only remaining issue as to this period is to determine from what date we measure
the delay.  PJB should have expected to incur carrying charges for the period prior to
occupancy, as it needed to perform design and construction.  The time allotted for that (as
well as adjustment for notice to proceed and negotiations) is 210 days.  GSA asserts that if
there was a delay, the delay could not start until at least May 19, 2011, based on an
agreement by the parties that moved the initial date for providing DIDs to May 19th.  Both
the Government and appellant agreed at an initial program meeting in April 2011 that DIDs
would be due on May 19, 2011.  We find no evidence to suggest that this was not voluntary
or that appellant raised objections.  The date also coincides closely with when PJB took over
the contract.  

CBCA 3628 21
May 19, 2011, was the due date for the lessor to provide GSA with DIDs.  Thereafter,
the lease schedule allowed for ten days for GSA to approve the DIDs after receiving them
from the lessor.  Since the February 28th date was the approval date for DIDs, we have to
account for the 10 day review period and therefore add ten days to May 19th.  That results in
measuring any delay as to carrying costs from May 29, 2011.  There are 276 days from May
29, 2011, to February 28, 2012.  While we recognize that there was some work being done
in 2011, and there were interim delays in that work during 2011, any interim delays are not
material to our decision, as the DIDs were not approved until February 28, 2012, and the start
of CDs could not proceed until that approval.
Starting on February 29, 2012, the project progressed, albeit sometimes in fits and
starts, until the cancellation on December 21, 2012.  There are 297 calendar days in the
period of February 29 to December 21, 2012.  Appellant seeks daily or monthly costs for that
entire period.  That is not reasonable.  First, under any analysis, a substantial segment of the
297 days was required to do the work.  Since appellant is seeking compensation to recover
what it would have earned had the lease been completed, the 297 days must be reduced to
reflect the time needed for it to do base work required for occupancy.  That base time
included designated design tasks, negotiation of the TIs and warm lit shell costs, and actual
construction.  As set out in our findings of fact, we have added together the time to
accomplish the various activities in the lease, including time for negotiation and notice to
proceed.  We calculated that total to be 210 days.  Had the lease not been canceled, that time
would have had to have been expended by appellant in order for the appellant to have earned
the rent.  The appellant cannot be paid extra for those days. 
For purposes of assessing appellant’s claim, we note that the lease provides thirty days
for submission of the DIDs and ten days for approval.  Those forty days were in fact
completed as of February 28th.  Accordingly, we deduct those forty days from the 210 needed
to complete the work.  Counting from February 28th, that leaves 170 days needed for work
completion.  When we deduct those 170 days from the 297 days identified above, we are left
with 127 days that are not accounted for.  Those are the remaining days in dispute during
what we designate the second period.  
Appellant, in its claim, has identified various GSA actions that impeded its ability to
proceed.  The principal items identified were HVAC, sprinkler, security, and handicapped
access to parking.  GSA similarly identified items that it claims were caused by appellant not
complying with the contract or not providing GSA with required information.  Among issues
identified by GSA were the pricing of the warm lit shell, lack of competition, the scope of
responsibility for HVAC, and the pricing of finishes.  In its briefing, GSA asserts that its
actions caused no added stretch out or delay from February 28th forward. 

CBCA 3628 22
We find neither party to be entirely correct in allocating the remaining 127 days in
dispute.  In the CO decision, GSA conceded responsibility for a delay of sixteen days, from
December 5 to December 21, 2012, while GSA was deciding on the stop work order. 
Appellant has not provided a basis for rejecting that figure.  We therefore allot sixteen days. 
In addition, the final decision identified a three-day and a separate six-day period as
compensable, noting that GSA reviews took longer than set out in the lease.  Neither party
provided testimony to support this as a delay, and we simply do not find that a few day delay
in a review, even if caused by GSA, automatically qualifies for reimbursement.  The record
does not demonstrate that the lessor’s progress was materially impeded by those short periods
or that it should have expected perfect turn-around.  Accordingly, we do not add in those
days, which leaves 111 days unaccounted for.  Those are the potential delay days remaining
in dispute for the period of February 29 and December 21, 2012.
For the remaining 111 days of delay, each party has identified contested issues, but
neither has conclusively established who was to blame.  Documentary evidence revealed a
substantial shared responsibility as to delays after February 29, 2012.  Witnesses were
generally not helpful in sorting out or refining a shared liability.  On the whole, the record
does not demonstrate which party is responsible for any particular period of delay or
demonstrate liability for a given issue. 
Still, there are several items that can be attributed to one or the other party.  We find
that GSA was responsible for some delays attributable to the HVAC, security specifications,
handicapped access, sprinklers, and unrealistic TI costs.  Similarly, there were items
attributable to appellant.  For example, appellant at times failed to approach the warm lit shell
costs in a reasonable manner, did not fully comply with securing competitive pricing, and
was partially responsible for some of the HVAC and finish issues.  
The claim for time and money in this matter is appellant’s claim.  Therefore, it carries
the burden of proof.  Taking that into account, we find on a jury verdict basis that of the
remaining 111 days in dispute, the record establishes that GSA is responsible for 30% of the
time and the remainder either falls on appellant or is not attributable to either party.  That
calculates to an additional thirty-three days of delay, or thirty-three days of additional
carrying costs. 
We find appellant had to carry the property beyond what was reasonable for 325 days.
That is composed of 276 days up to February 28, 2012; sixteen days from December 5 to
December 21, 2012; and thirty-three days for the remainder.  Counting 325 days back on the
calendar from December 21, 2012 (the date of cancellation) puts us into January 2012.  We
find that appellant should have been able to proceed with occupancy no later than some point

CBCA 3628 23
in January 2012, but instead was held up on the project, without any compensation for
carrying costs, until December 2012.
Appellant has provided dollars in its certified claim for almost the full time period
during 2011 and 2012.  We find that we can calculate either a monthly or daily figure from
appellant’s submission.  GSA has not provided competing calculations.  Accordingly, we use
appellant’s dollars as a basis.  Appellant has identified the following categories of time-
related costs: real estate taxes, management fees, landscaping fees, utilities, and insurance. 
The CO, in the final decision, accepted each of these categories of costs as compensable.  To
calculate compensation for time-related costs, we take the rate used in appellant’s certified
claim for the period running from January 2012 forward, and then multiply that rate by the
days of delay.  The calculations are as follows: 
Real estate taxes $80.21 x 325 days $26,068
Management fee $32.26 x 325 days $10,485
Insurance $  9,309
Landscaping $26.87 x 325 days $  8,733
Utilities Water $  1,985
Sewer $  4,356
The above totals $60,836.
In addition to the time-related costs noted above, appellant claims $27,791.99 in legal
fees and $4913.98 for architectural costs, the latter incurred in May and June 2012 for what
appellant contends was to assist in negotiating a price adjustment.  The two items total
$32,705.97.  GSA allowed both in the final decision but now says neither is payable,
characterizing them as administrative costs that are to be borne by a contractor.  Appellant
put on minimal evidence to connect the legal costs to negotiations or to show that such costs
were outside the realm of general legal costs that would normally be included in overhead. 
Similarly, there was no specific evidence, but for billing, to support the additional $4913.98
sought for added architectural fees to assist in negotiations.  Appellant has the burden of
recovering the fees.  That the CO allowed the costs is not relevant, as the Board considers
the claim de novo.  Based on a lack of evidence, we deny these claims.
Having found entitlement as noted above, we briefly comment on defenses raised by
GSA asserting defects in appellant’s proof as to delays.  We find no merit in GSA’s
contention that, because there is no critical path analysis, we cannot determine delay.  First,
the contract does not call for appellant to provide any critical path analysis.  Second, the bulk
of the delay is at the front end and is obvious.  As to the delay in 2012, we agree it is not tied
into specific dates and therefore benchmarks would have been helpful.  However, lack of the

CBCA 3628 24
benchmarks is not fatal if delay is clear.  In this case, we have assessed the time after
February 28, 2012, and have allocated delay based upon the record.  Because the burden of
proving delay was appellant’s, we gave GSA the benefit of the doubt in our calculation of
compensable carrying time.  Costs associated with added architectural work are independent
of the number of delay days.   
In summary we find $60,796 due for the delay and added carrying time as well as
$48,269 for the architectural fees that have been acknowledged in the CO decision and not
challenged in this proceeding. 
Expectancy Versus Diminution and Length of Term
The initial question before we calculate dollars for the cancellation is whether to use
the expectancy approach, as presented by GSA, or the diminution in value theory, as
presented by appellant.  
Appellant’s diminution theory is predicated on measuring damages based on the loss
of value of the property for a future sale.  It arrives at its number by comparing the value of
the property at the time of breach with the GSA lease in place and the value of the property
on that same date with a lesser tenant in place.  It contends that its approach is commonly
used in commercial practices and asserts that measuring damages in that manner was
foreseeable.
GSA seeks to pay on the basis of expectancy.  There, it takes the full value of the
lease, as if performed, which involves deducting from the gross rent, the expenses that were
needed to perform the lease.  GSA then mitigates those costs by what appellant will recover
through the current State lease and an anticipated follow-on lease.  The result puts appellant
in the same position it would have been had the lease been completed.  It does not take into
account how, if at all, the cancellation of the lease affected the sale value of the property at
some future date.  GSA says appellant should not be placed in a better position dollar-wise
than if GSA had completed the lease.  GSA points out that it entered into an agreement with
appellant to pay rent and not to guarantee the value of the sale value of property.
We have considered the evidence of the respective parties and find that the expectancy
approach is appropriate.  We find the presentation on diminution to lack detail, specifically
as to its application to the property at hand.  Moreover, the expectancy approach is in our
view less speculative, more subject to analysis, and we find that it allows us to determine a
fair result.  Further, while diminution may be the standard in the commercial market between
private parties, it is not the standard as to GSA leases.  GSA uniformly applies an expectancy

CBCA 3628 25
approach when valuing uncompleted lease damages.  Appellant purported a familiarity with
GSA leases.  Therefore, any expectation of another valuation method was not warranted.
The second matter to resolve before we calculate damages is determining the
appropriate term for the lease.  The evidence is clear that ten years is the appropriate term. 
The contract clearly gives GSA the right to end the lease after ten years.  While appellant
asserts that such a walk-away from the lease was unlikely, that does not change the fact that
the lease clearly gave GSA that option.  For us to use fifteen years would ignore the lease
provisions. 
Having determined that we will use expectancy over a ten-year period, we now turn
to calculating the recovery.  The parties presented a number of expectancy scenarios to the
Board.  In some, the dollars were similar.  However, there was significant disagreement as
to some figures.  We point out that each expert acknowledged that valuation is not an exact
science.  We are dealing with educated estimates and assumptions.  We do not chastise the
experts for the multiple choices, but instead, simply recognize that they were attempting to
fashion what they consider a fair remedy.  
In calculating the proper expectancy damages, we use the spreadsheet of
December 24, 2014, for format and as a starting point.  We find that neither party provided
us a calculation which we could accept in full.  Therefore, at times, we modify various cost
elements to conform with what we find to be fair and to be consistent with the evidence.  The
primary adjustments are for:  (1) the cost for appellant to complete the warm lit shell, and (2)
the mitigation value of the State and potential follow-on lease.  To the extent we find other
issues material, those are separately addressed.
Both parties agree that the cost for preparing the warm lit shell was to be deducted
from whatever gross rental the appellant would have received.  GSA contends the warm lit
shell should be valued at $490,463, relying on the fact that appellant proposed the number
to GSA in December 2012.  It also relies on the opinion of Mr. Culbertson, who described
it as passing the laugh test.  GSA also cites in support a statement by Mr. Ash as to his being
pleased with the number.  Appellant, in contrast, states it could have completed the warm lit
shell work for $198,000.  It, however, provides very limited support for that figure. Appellant
mostly relies on testimony from the architect that PJB used for work on the State lease.  We
found the architect’s testimony to be unconvincing.  He did not appear to have full
knowledge of what was actually required for the warm lit shell in the GSA lease.  We find
that $198,000 understates the cost.
We find also, however, that $490,463 overstates the amount reasonably needed to
prepare the warm lit shell.  We conclude from the testimony of Mr. Ash that the proposed

CBCA 3628 26
$490,463 was not an arms-length offer or proposal.  His testimony convinces us that
appellant offered the $490,463 because appellant needed to get the job moving.  At the time,
it had been carrying the project for well over a year-and-a half with no compensation, but
was nevertheless incurring carrying costs on a daily basis.  Absent getting GSA to agree to
a price to be allocated to the warm lit shell and TI price (the two working in tandem), no
occupancy date was in sight.  Appellant proposed the figure under those terms.  Further,
appellant was not locked into that number.  It was entitled to do the work cheaper, if it could. 
We find the most likely cost for the warm lit shell to be $392,071, which is the cost
submitted by appellant on TIC sheet A-6.  There is no evidence that A-6 was not an arm’s-
length proposal.  While A-6 was not submitted immediately prior to the proposal for
$490,463 (A-7, at $369,051, being the last sheet submitted), we find A-6 (which is higher)
to be more accurate.  A-6 more fully includes costs for doors, windows, and some other items
that were not reflected in A-7.  Accordingly we use $392,071 for the warm lit shell costs. 
Once we substitute $392,071 for the warm lit shell number used by Mr. Culbertson,
we adopt the remainder of his December spreadsheet as to the expenses necessary for
appellant to complete the GSA lease.  The gross rent total of $5,482,070 for the ten-year
period is not contested and there are no disputes as to the TI allowance, commissions,
operating expenses, and real estate taxes, nor as to the monthly figure of $31,152 designated
for other items.  The net rent, after expenses, was shown by Mr. Culbertson as $2,112,256. 
His total, however, reflected $490,463 for the warm lit shell expense.  When we change the
warm lit shell cost to $392,07 (our adjusted figure), the net rent to be recovered is
$2,013,864.  That figure is before adjusting for PV, which is discussed separately below. 
The parties agree that PJB’s income from the State lease and any follow-on lease must
be deducted as mitigation. The parties disagree as to the values to be placed on those leases. 
Mr. Culbertson provided several alternative calculations for valuing the State lease
and follow-on lease.  The alternatives were set out on five separate spreadsheets, ranging in
dates from August 29, 2014, through the final spreadsheet of December 24, 2014.  Among
the alternatives he listed were the State renewing and staying for ten years; the State leaving
after five years and then being followed six months later by a follow-on tenant; and finally,
the State leaving after five years but the vacancy lasting eighteen months.  Each spreadsheet
used somewhat different figures for the rent per month and for operating expenses.  
Clearly, there is no certainty as to whether the State will stay or leave, or certainty as
to how difficult it would be to find a new tenant and at what rate.  We, however, must come
up with a selection, based on our best judgment, without being overly optimistic or

CBCA 3628 27
pessimistic.  Our best judgment is to adopt the Culbertson scenario that would have the State
leave after five years, with a six-month vacancy.  
The calculation that follows incorporates the above adjustments.  However, before
finalizing, we need to address several other items.  An agreed element in the follow-on lease
(assuming that State leaves after five years) would be the cost of improvements for a follow-
on tenant.  Appellant uses $520,000 as the anticipated cost and GSA uses $280,000.  Neither
presented testimony on its estimated figure from a construction professional, but instead
provided at best layman opinion and observation.  We find neither number to be properly
supported and find there is other evidence in the record that leads us to a different result. 
Prior to the State taking occupancy, the appellant paid $392,228.20 in tenant improvements
beyond the warm lit shell, to satisfy the State.  While a follow-on tenant to the State would
likely require different improvements from those provided to the State, we find it would be
unlikely that the costs for a new tenant would exceed those that appellant expended for the
State.  In part, that is because we expect that some of the initial tenant improvements for the
State would be useful to a follow-on tenant.  Therefore, we set $392,000 (what appellant
spent on the State) as a ceiling.  Because the needs of a follow-on tenant may differ from that
of the State, any number we choose will be judgmental.  Predicting, as best we can, we take
a jury verdict approach and allow $336,000 for follow-on tenant improvements.  That is the
average between the $280,000 proposed by GSA and the ceiling figure we set of $392,000
(paid for the State improvements).
The parties disagree as to the rental rate to use for years five through ten of the
extended State or follow-on lease.  Mr. Culbertson calculated at least three scenarios.  One
used the State rental rate for ten years, assuming that the State renewed.  Two calculations
used higher rates for the five-year follow-on, one being $13.25 per sq. ft. and the other (in
December 2014) using $14.71 per sq ft.  We recognize that each calculation is coupled with
different vacancy combinations.  However, it is clear that Mr. Culbertson saw the potential
of multiple choices.  No convincing testimony was provided to pick one number over the
other or to support the contention that rents would increase.  Rental increase is not automatic
and has not been so for several years.  Accordingly, the use of multiple rates by Mr.
Culbertson gives us pause.  Of the numbers provided, the only non-estimate number is that
paid by the State.  All others are predictions.  In selecting the rate, we choose to rely on an
actual number, rather than speculate with unexplained estimates.  We therefore apply the
State rental rate for the entire mitigation period.  In our result, we are comfortable taking
judicial notice of the fact that rents in many markets have remained flat for a number of
years. While that may change, we find that fairness dictates that we not assume a higher rent
will be paid, when there is no evidence to support it.  

CBCA 3628 28
GSA proposes escalating rent by 2.5% per year and escalating expenses by 2% a year. 
The proposal to include the escalation for rent was first presented by GSA in the December
2014 spreadsheet and thus was absent on the prior four.  The escalation of operating expenses
was noted at the hearing and is part of the contract when dictated by a CPI change. 
Regardless, we find no evidence to show that rent or expenses would likely increase.  We
decline to use escalation when no evidence supports it.
Finally, we adopt Mr. Culbertson’s use of a six-month vacancy before a follow-on
tenant.  Again, we are dealing with a prediction.  On one sheet, Mr. Culbertson had the State
staying for ten years, in another he had a six-month vacancy and in another an eighteen-
month vacancy.  He identified the six-month vacancy as most likely.  While the State might
extend beyond the initial lease, it has no such obligation.  Just as we gave weight to GSA’s
right to opt out, we equally recognize the State’s.
With the above parameters set, the mitigation calculations are as follows.  We start
with the full ten-year rent at the State’s rate of $3,325,375.  To account for a six-month
vacancy, we deduct $164,687 in year six, which is half of the rental ($329,375) for year six.
With that deduction, we have a gross rent of $3,160,688.  We then deduct expenses.  Ten
years of operating expenses, at a level rate, is $1,689,570.  On his spreadsheets,
Mr. Culbertson deducted 50% of expenses for a six-month vacancy.  We deduct those costs
to account for that six months, adjusting the operating expenses to $1,605,100.  We then
deduct tenant improvements actually spent on the State lease of $460,000, an additional
$336,000 for estimated improvements to satisfy a follow-on tenant, and $204,000 in broker
commissions.  As to the janitorial costs, we find savings of $17,500.
The numbers set out above are net numbers and are not subject to a PV calculation. 
We recognize that the application of PV is applied to each year (but for year one) and uses
a formula based upon the PV rate to be applied.  For purposes of this decision, we have
provided net numbers and have set the rates to be used.  We leave the application of and
calculation for PV to the parties. 
The last three Culbertson spreadsheets showed a consistent PV of 4.25% for the GSA
lease and an 8% for the State lease.  However, in its brief, GSA argues that the best appellant
should get is 4.75% and 6.75%, citing that those figures were used by Mr. Dietrich in his
calculations in exhibit A-12.  In his revised calculations submitted in A-12, Mr. Dietrich used
4.77% for the GSA lease discount rate (PV) and 6.49% for the State lease.  That, however,
was based on fifteen years.  When Mr. Dietrich performed a ten-year calculation, he used
12% rate to calculate PV.  Both parties agreed that PV is a function of variables.  The final
PV value we use must be based on our best judgement.  We have assessed the information

CBCA 3628 29
presented and find that a factor of 8% is to be applied to the State and follow-on leases and
4.25% to the canceled GSA lease. 
Other Costs, Certification Issue
Appellant claimed additional costs at the hearing.  While the costs arise out of the
same operative facts, the cancellation of the lease, appellant has offered an entirely new set
of numbers for a different cost category.  The central test for deciding if a claim is separate
and thus needs certification is whether the CO’s right to adjudicate is undermined by
circumventing the CO statutory role to receive and pass judgment on claims.  This is not a
case where an the appellant is adding a theory to sustain the same recovery that has been
sought.  Rather, these are new dollars involving a different facet of the costing.  It opens an
entirely new legal analysis. Accordingly, the claim can only move forward after certification. 
Absent that, we do not have jurisdiction over this item.
Decision
The appeal is GRANTED IN PART.  Appellant is granted $109,105 associated with
the delay and extra design work. Appellant is entitled to recovery for the cancellation of the
lease in accordance with the guidance set out in this decision.  Interest is to run from the date
on which the contracting officer received the certified claim. 
HOWARD A. POLLACK
Board Judge
We concur:
JERI KAYLENE SOMERS JOSEPH A. VERGILIO
Board Judge Board Judge