Appeals of
DERRICK VAN GREENE

PSBCA No. 5093 and PSBCA No. 5215
Under Contract Nos. HCR 76030 and HCR 76042
APPERANCE FOR APPELLANT:
Derrick Van Greene

APPEARANCE FOR RESPONDENT:
Kimberly C. Blanton, Esq.

OPINION OF THE BOARD

            Appellant, Derrick Van Greene, held at least three mail transportation contracts with Respondent, United States Postal Service.  Respondent terminated two of the contracts for default, and Appellant filed these appeals.

            A hearing was held in Fort Worth, Texas, and the parties submitted briefs.  Entitlement only is at issue (Transcript of Hearing, pp. (“Tr.”) 7-8).

FINDINGS OF FACT

            1.  On June 23, 2002, Respondent renewed Appellant’s contract HCR 76042 to transport mail between the Fort Worth, Texas Processing and Distribution Center (“Fort Worth P&DC”) and postal facilities in the nearby towns of Crowley, Burleson, Joshua, Cleburne, and Rio Vista.  The contract specified that Appellant was to provide, at a minimum, two trucks for the service and to have “readily available sufficient stand-by equipment . . . to permit vehicle maintenance, and to prevent delays in emergencies such as mechanical failures.”  Appellant was required to perform ten trips daily, all originating (odd-numbered trips) or ending (even-numbered trips) at the Fort Worth P&DC.  Fewer trips were required on Sundays and holidays.  (Appeal File for PSBCA No. 5215, Tab (“5215AF”) 1, Contract Clauses B.1 and B.2; Tr. 28, 126, 272).

            2.  The term of renewed contract HCR 76042 was from July 1, 2002, through June 30, 2006, at an annual rate of $152,297.17 (5215AF 1; Stipulation (“Stip.”) Section III, item 1 (“III-1”)).

            3.  On June 25, 2002, Respondent renewed Appellant’s contract HCR 76030 to transport mail between the Fort Worth P&DC and postal facilities in the nearby towns of Burleson, Alvarado, Grandview, and Itasca.  This contract also called for a minimum of two trucks and, as described above, available backup equipment to permit maintenance of the vehicles and for emergencies such as mechanical failures.  Appellant was required to perform six trips daily, all originating (odd-numbered trips) or ending (even-numbered trips) at the Fort Worth P&DC.  Fewer trips were required on Sundays and holidays.  (Appeal File for PSBCA No. 5093, Tab (“5093AF”) 1, Contract Clauses B.1 and B.2; Tr. 24-26, 28, 52, 272).

            4.  The term of renewed contract HCR 76030 was from July 1, 2002, through June 30, 2006, at an annual rate of $92,709.46 (5093AF 1; Stip. I-1).

            5.  Both contracts required that Appellant “carry all mail tendered for transportation under this contract . . . in accordance with the operating schedule and between the points fixed in the schedule” (5093AF 1 and 5215AF 1, Contract Clause B.3.a).

            6.  The contract schedules established the time each trip was required to leave or return to the Fort Worth P&DC as well as the time each was to arrive at and leave the other post offices on the route (5093AF 1 and 5215AF 1, Contract Clause B.1.4, Work Requirements, subsections a and g).

            7.  Appellant’s contracts required that he comply with all federal, state and local laws and regulations and that he obtain and pay for all permits required to perform the contracts (5093AF 1 and 5215AF 1 (Contract Clause B.6, SAFETY REQUIREMENTS), 2 (Contract Clauses H.12, PERMITS AND RESPONSIBILITIES (SERVICES) (Clause B-30) (January 1997), and H.19, LAWS AND REGULATIONS APPLICABLE (Clause B-80) (January 1997))).

            8.  The contracts’ Termination for Default provisions were identical and authorized Respondent to terminate the contracts for default if Appellant failed to “[c]omplete the requirements of this contract within the time specified in the contract.”  Included among the specific events identified as defaults was Appellant’s “[f]ailure to follow the instructions of the contracting officer.”  (5093AF 2 and 5215AF 2, Contract Clauses H.4, TERMINATION FOR DEFAULT (Clause B-13) (January 1997) (Modified), subsection a.(1)(a), and H.5, EVENTS OF DEFAULT (Clause B-69) (January 1997)).

            9.  The Termination for Default clauses provided that if after Respondent terminated the contract for default it was determined that Appellant was not in default, “the rights and obligations of the parties will be the same as if the termination had been issued for convenience.”  (Id., Subsection H.4.g).

            10.  The contracts’ Termination for Convenience clauses provided that in the event of a termination for convenience, Appellant, as his sole relief, would be entitled to be paid as liquidated damages the sum set forth in the contracts’ Changes clauses (5093AF 2 and 5215AF 2, Contract Clauses H.3, TERMINATION FOR CONVENIENCE (TRANSPORTATION) (Clause B-71) (January 1997), and H.8, CHANGES (TRANSPORTATION) (Clause B-67) (January 1997), subsection e.(2)).

            11.  Throughout the duration of both contracts, Respondent issued and mailed to Appellant Contract Route Irregularity Reports, PS Form 5500, when notifying him of service deficiencies.  The printed Form 5500 noted that late service of fifteen minutes or less was reported for “information only.”  Provision was made, in Section 2 of the forms, for Appellant to respond and explain the irregularities, but throughout performance of these two contracts, Appellant never responded to any of the Forms 5500 he received from Respondent.  (Tr. 22-23, 26-27, 36, 42, 55, 114-115, 130, 273-274, 277-278, 315, 317; see, e.g., 5093AF 6).

            12.  The post offices served by the two contract routes were reasonably close to one another.  In fact, there was some overlap of the lines of travel, and both routes served the Burleson Post Office.  Four different trips, Trips 3 and 5 on HCR 76030 and Trips 5 and 7 on HCR 76042, were scheduled to depart the Fort Worth P&DC on weekdays at 5:00 a.m.  (5093AF 2 and 5215AF 2, Contract Clause B.1, SCHEDULE, FREQUENCY, AND SERVICE REQUIREMENTS).

            13.  In August and early September 2002, on a number of occasions Appellant combined mail for two scheduled trips on a single truck.  Doing this resulted in some mail being delivered to the post offices late or picked up and returned to the Fort Worth P&DC late.  Three of the incidents of combined mail occurred when mechanical problems prevented use of one of Appellant’s trucks.  Respondent wanted Appellant to use a separate truck for each trip listed in the schedule and issued Appellant Forms 5500 reflecting its dissatisfaction with his practice of combining mail from separate trips.  (5093AF 6, 9, 10; Stip. I-2, I-3).^[1]

            14.  On September 11, 2002, the Administrative Official (the Network Specialist at the Fort Worth P&DC), who was responsible for the day-to-day administration of Appellant’s contracts (5093AF 2 and 5215AF 2, Contract Clause G.1, DEFINITIONS (Clause B-1) (January 1997) (Modified); Tr. 249), met with Appellant and advised Appellant that he was concerned about the number of irregularity reports reflecting equipment breakdowns on both routes and also about Appellant combining mail for two trips on one truck.  Appellant responded that he saw nothing wrong with combining the mail, especially on holidays, so long as he delivered the mail to the post offices and they did not complain.  The Administrative Official directed Appellant to run the routes as stated in the contract schedules using one truck for each trip.  (5093AF 10, 12; 5215AF 3, 5; Stip. I-6, III-3; Tr. 27-32, 50-54, 179-181).

            15.  Although officials at the post offices on Appellant’s routes did not issue Appellant Forms 5500 regarding his late arrivals, their managers often called the Administrative Official and his manager at the Fort Worth P&DC complaining when their mail was delivered later than scheduled.  The post offices process the incoming mail long before they open to the public, and the managers schedule their own employees to work the mail according to its scheduled arrival.  When Appellant delivered the mail to the post offices later than scheduled or returned to the Fort Worth P&DC with mail from the post offices later than scheduled, mail processing was delayed and Respondent’s ability to meet its service standards was jeopardized.  In discussions with Appellant, the Administrative Official explained these consequences and emphasized the need for Appellant to comply exactly with the schedules in the contracts.  (Tr.  40-41, 53-54, 56, 66, 126-127, 129, 158, 168-169).

            16.  On September 16, 2002, one of Appellant’s trucks broke down.  As a result, Trip 3 on HCR 76030 was omitted, and its mail was combined on one of Appellant’s other trucks (5093AF 9 (p. 131)).  Mail was also combined and a trip omitted on October 14, 2002 (5215AF 6).

            17.  On November 7, 2002, the Administrative Official met with Appellant at the Fort Worth P&DC and again told him to run each trip according to the schedules for the two contracts, using a separate truck for each trip.  Appellant responded that he was doing his job even if he combined mail because he did not leave any mail behind and delivered mail to the offices before they opened to the public.  (Tr. 55; 5215AF 8).

            18.  On November 11, 2002, a holiday, Appellant combined mail from the two routes on one truck, although he did make deliveries to all post offices on both routes (5215AF 7, 8; Appellant’s Exhibit Packet C, pages (“App. Exh.”) C 88-89).  Respondent deducted from Appellant’s pay the cost of running one truck for route HCR 76042.  In the contracting officer’s December 3, 2002 letter advising Appellant of the deduction, he specifically noted, “It is not the responsibility of the Postal Service to secure backup service for your route.  You . . . should provide backup for both vehicle and driver.”  (5215AF  8, 9, 10, 11; App. Exh. C 87-90; See App. Exh. C 86).

            19.  On January 20, 2003, a holiday, Appellant combined mail for Trips 3 and 4 on HCR 76030 on his other trucks and did not supply a separate truck to provide service for those trips (5093AF 16).

            20.  On February 4, 2003, the Administrative Official and his superior, the Transportation Manager at the Fort Worth P&DC, held a formal conference with Appellant to address Respondent’s concerns about Appellant’s performance on HCR 76030.  The issue of combining mail was raised.  Appellant repeated his view that combining mail was not a problem, especially on holidays, so long as he did not leave mail behind and got it to the post offices before they opened.  The Transportation Manager instructed Appellant to run the contracts according to the schedules, carrying mail for only one trip on each truck.  (Appellant’s Stipulation (“App. Stip.”) 9; Stip. I-13; Tr. 36-43, 87-89, 156-157, 261-262, 267-268; 5093AF 17, 18, 19).

            21.  On March 10, 2003, Appellant’s driver arrived at the Fort Worth P&DC late for loading causing a 35-minute delay in the departure of HCR 76030 Trip 1 from the Fort Worth P&DC (5093AF 21).

            22.  On May 26, 2003, Appellant omitted Trip 5 on HCR 76042, combining the mail on other trucks (5215AF 18 (p. 3)).  Again on June 14, 15, and 30, he omitted one trip on HCR 76042 by combining mail (5215AF 19).

            23.  On June 15, 2003, Appellant omitted Trip 8 of HCR 76030.  On June 21, one of Appellant’s trucks was unavailable due to mechanical problems, and Trip 3 on HCR 76030 was omitted, with the mail combined on other trucks.  On June 23, Appellant again omitted Trip 3.  On this occasion, Appellant did not combine the mail on his remaining trucks, and Respondent contracted on an emergency basis with another company to make the trip.  Respondent charged Appellant for the difference in cost.  On June 24, Appellant omitted Trip 5 on HCR 76030 and combined the mail on his other trucks.  (5093AF 23, 24 (p. 179); Stip. I-19).

            24.  By letter to Appellant dated June 24, 2003, the Administrative Official identified instances of deficient performance on HCR 76030, including two instances of combining mail, and directed Appellant to take steps to restore and maintain satisfactory service within 7 days.  He advised that if Appellant did not do so, the matter would be referred to the contracting officer for possible termination of the contract.  (5093AF 25; App. Stip. 10; Stip. I-23; Tr. 43).

            25.  On July 1, 2003, Appellant omitted Trip 4 of HCR 76030 and collected the mail with another of his trucks (5093AF 26).

            26.  On July 18, 2003, the Administrative Official sent the HCR 76030 file to the contracting officer, identifying all contract irregularities from August 13, 2002, to the date of referral.  The Administrative Official specifically pointed out his concern about Appellant’s failure to follow instructions and his modification of the schedules and equipment requirements by combining mail, especially on holidays.  The referral asked the contracting officer to terminate the contract.  (Tr. 45-46; 5093AF 28).

            27.  On August 10, 2003, Appellant’s driver overslept and delayed Trip 1 on HCR 76030 by 1 hour and 20 minutes.  Trips 2 and 3 were also delayed as a result.  On August 27, Appellant omitted one trip on HCR 76030 due to a truck breakdown, and mail was combined on his other trucks.  One HCR 76030 trip on August 28, one on August 30, one on September 2 and two on September 3 were omitted and mail combined on Appellant’s other trucks.  (Tr. 48-50; 5093AF 29, 32).

            28.  By letter to Appellant dated September 17, 2003, the contracting officer identified service deficiencies and gave Appellant final warning that contract HCR 76030 could be terminated unless satisfactory service were restored within three days and maintained for the rest of the contract term.  The listed deficiencies of concern to the contracting officer included five instances where Appellant combined mail and failed to run trips separately, five no-shows, and two trips completed more than 30 minutes late between March 10 and September 4, 2003.  Appellant received the notice on September 18.  (5093AF 33).

            29.  On September 17, 18, and 23, Appellant omitted one HCR 76030 trip each day and combined the mail on his other trucks (5093AF 34, 39; 5215AF 21).

            30.  On September 22, 2003, one of Respondent’s employees noted that the required State of Texas inspection stickers on two of Appellant’s trucks and the license on one of the trucks had expired in March 2003.  Forms 5500 were issued to Appellant regarding the deficiencies.  Appellant had been notified before of these deficiencies, and on September 23 the Supervisor of Transportation at the Fort Worth P&DC called Appellant and, reaching Appellant’s answering machine, left a message that Appellant would not be permitted to use those vehicles on his mail routes until he obtained the proper inspections.  (Tr. 181-184; 5093AF 34 (pp. 214, 215), 39; 5215AF 21 (pp. 2-4)).

            31.  Believing that he could not have the vehicles inspected in time for the morning trips scheduled for September 24 and intending not to perform them, on September 23 Appellant had his driver turn in the HCR 76030 scanning wand, a hand-held device used by the drivers to register each time a collection box was emptied, to the Fort Worth P&DC.  However, Appellant did not call Respondent or otherwise explain why he was turning in the scanner, and without explanation or advance notice to Respondent, Appellant failed to show up for all four early morning HCR 76030 trips on September 24.  Respondent’s officials called Appellant at least twice that morning, leaving messages on his answering machine, but Appellant did not return their calls.  Respondent provided the service using its own trucks.  (Tr. 305-306; 5093AF 39; App. Exh. C 80-83).

            32.  By final decision dated September 24, 2003, the contracting officer terminated HCR 76030 for default, citing what he believed to be Appellant’s abandonment of the route as the grounds (5093AF 36; App. Stip. 12; Stip. I-40; Tr. 190, 230-231).

            33.  Appellant’s appeal of the termination (5093AF 39) was docketed as PSBCA No. 5093.

            34.  On September 24, 2003, the driver for Trip 1 of HCR 76042 overslept, and the trip (scheduled to leave at 1:50 a.m.) departed the Fort Worth P&DC 35 minutes late (5215AF 21).

            35.  On October 3, 2003, Appellant, without notice, did not show up for Trip 1 of HCR 76042, omitting that trip and the return Trip 2.  Respondent deducted their cost from Appellant’s pay.  Appellant also skipped the last stop on Trip 5.  (5215AF 22, 23).

            36.  On January 20, 2004, one of Appellant’s trucks on the route broke down, and Respondent performed one of his trips (Tr. 59-60; 5215AF 27, 30).

            37.  Trip 6, as listed in contract HCR 76042, was to be run daily except for Sundays and certain holidays and required Appellant to pick up mail from a collection box in front of the Joshua Post Office in addition to picking up the post office’s outbound mail from the post office.  The schedule for Trip 6 allowed five minutes for performing both tasks, with the driver scheduled to arrive at Joshua at 3:50 p.m. and depart at 3:55 p.m.  Box collection was required at two other post offices on that trip, but at those offices post office personnel emptied the collection boxes and put that mail with the post office’s outbound mail.  (Tr. 57-59, 84, 92, 159, 204-205; 5215AF 1, 33 (p. 6)).

            38.  From the beginning of the contract, Appellant had not picked up mail from the Joshua collection box on Trip 6.  A dispute arose between him and the Joshua Postmaster in January 2004, and he was issued Forms 5500 on January 20, 23, and February 12, 2004, for failing to empty the collection box.  (Tr. 58-59, 159-160, 292; 5215AF 27, 29, 33). 

            39.  On March 3, 2004, the Administrative Official held a telephone conference with Appellant to discuss performance on HCR 76042.  Appellant advised that Trip 6 was often late because he had been assigned a daily Priority Mail extra trip immediately before Trip 6, using the truck and driver for Trip 6.  That fact plus afternoon traffic on the return to the Fort Worth P&DC made Trip 6, as well as the other afternoon trips, often late.  The Administrative Official again directed Appellant to run the route exactly according to the schedule.  (Stip. III-26; Tr. 57, 75-77; 5215AF 30).

            40.  Appellant did not pick up the mail from the Joshua collection box the afternoon of March 3 and was 20 minutes late returning to the Fort Worth P&DC.  Respondent issued Appellant two 5500s, one for not clearing the collection box and one for completing the trip late.  (5215AF 31, 34).

            41.  On March 4, 2004, a Transportation Contract Specialist from the contracting officer’s office spoke to Appellant and instructed him to collect the mail from the collection box in Joshua on Trip 6.  He assured Appellant that Respondent would not issue Irregularity Reports (PS Form 5500s) for Appellant being late on that trip and that the route would be surveyed to determine whether the contract schedule allowed sufficient time for the timely completion of Trip 6.  He instructed Appellant to keep a record of the time taken to perform this trip.  Thereafter, Appellant collected from the Joshua collection box on Trip 6 every day and returned to the Fort Worth P&DC at least 30 minutes late almost every day.  The driver and truck completing Trip 6 then ran outbound Trip 11, scheduled to begin 15 minutes after completion of Trip 6, and its return leg, Trip 8.  Trip 11 started late and Trip 8 regularly finished at least 20 to 30 minutes late after Appellant began collecting from the Joshua collection box.  (Stip. III-27; Tr. 200-201, 214-215, 277, 290-292, 313-314; App. Exh. E 98, 100-110; 5215AF 32, 33).

            42.  On March 9, 2004, the Administrative Official conducted a survey of Trip 6 and the daily Priority Mail extra trip just before it to determine if the schedule should be adjusted.  The survey confirmed that five minutes was not enough time for Appellant to clear the collection box and pick up the mail at the Joshua Post Office on Trip 6, and that the time allowed in the schedule for transferring mail at the last stop, Crowley, and returning from Crowley to Fort Worth was insufficient.  On the date of the survey, Trip 6 was completed 30 minutes late.  (App. Stip. 3; Tr. 96-100, 187-188; 5215AF 35).

            43.  On March 15, 2004, Respondent issued Appellant a Form 5500 for being 50 minutes late completing Trip 6 (5215AF 34 (p. 5)).  On March 17, Appellant’s truck on Trip 8 broke down and did not finish the Trip.  The truck running Trip 10 detoured to retrieve the mail, causing Trip 10 to finish one hour and 15 minutes late.  Without notice to Respondent, Appellant did not show up to perform the early morning Trips 1 and 2 on March 18.  Those trips were not run.  Appellant also did not perform Trip 5, and Respondent obtained emergency service from another contractor who was available to run the trip as scheduled.  (5215AF 34 (pp. 6-10); App. Exh. E 103).

            44.  On March 22, 2004, the Administrative Official sent Appellant a Final Request for Service Improvement.  In it, he recounted the service deficiencies occurring since his March 3 telephone conference (Finding 39) and told Appellant to take action necessary to restore satisfactory service within 7 days.  If not, the Administrative Official said he would send the file to the contracting officer for action, which could include termination of the contract.  (App. Stip. 4; Stip. III-29; Tr. 61-62; 5215AF 36; App. Exh. E 132-133).

            45.  Based on the survey of the route (Finding 42) and a review of the operational requirements of the affected post offices, the Fort Worth networks office proposed changes to the route and schedule.  The changes included adjusting the schedule to allow more time (15 additional minutes for a total of 20 minutes) to empty the collection box and pick up the mail at Joshua on Trip 6, deleting the stop at Burleson, increasing slightly the overall time allowed for the modified Trip 6, and adjusting the schedule for the other afternoon inbound trips.  The contracting officer sent the new proposed route schedule to Appellant on April 21, 2004, advising that it would not go into effect until the parties negotiated a price adjustment and inviting Appellant to submit his expected costs of complying with the new schedule.  Appellant did not respond to the proposal.  (Tr. 186-189, 212-214, 216-219, 293-294, 316; 5215AF 42; App. Exh. E 148-151).

            46.  On April 30, 2004, Appellant omitted Trip 7 (scheduled to leave the Fort Worth P&DC at 5:00 a.m.) after his truck broke down returning from Cleburne on Trip 4, which was due back at the P&DC at 3:50 a.m.  Respondent obtained service through an emergency contract with another contractor and charged Appellant the difference in price for the service.  Also on that date, Appellant was 30 minutes late finishing Trip 8.  (5215AF 38).

            47.  On May 6, 2004, the Administrative Official referred the file, including all Forms 5500 issued since the formal conference held with Appellant on March 3, 2004, to the contracting officer for action.  The Administrative Official recommended termination of Appellant’s contract for, among other reasons, Appellant’s combining of mail to avoid supplying the proper number of trucks for the route.  The following deficiencies were noted in the referral to the contracting officer:

3/3       Failed to empty collection box at Joshua on Trip 6 (5215AF 34 (p. 1))
3/3       Trip 6 completed 20 minutes late, arrived at 5:20 p.m. (5215AF 34 (p. 2))
3/3       Trip 8 arrived at 7:45 p.m., 15 minutes late (5215AF 34 (p. 3))
3/12    Trip 10 arrived at 7:45, 15 minutes late (5215AF 34 (p. 4))
3/15    Trip 6 completed 50 minutes late (5215AF 34 (p. 5))
3/17    Truck on Trip 8 broke down and did not finish trip (5215AF 34 (p. 6); App. Exh. E 103)
3/17    Trip 10 was completed 1 hour 15 minutes late after detour to retrieve mail from broken down truck on Trip 8 (5215AF 34 (p. 6))
3/18    Appellant failed to perform Trips 1 and 2 (5215AF 34 (p. 10))
3/18    Appellant omitted Trip 5, and Respondent engaged an emergency contractor to perform the trip (5215AF 34 (pp. 7-9))
3/30    Trip 6 completed 1 hour late
3/30    Trip 8 completed 50 minutes late (5215AF 34 (p. 11))
4/3       Driver overslept.  Trip 1 departure delayed by 30 minutes (5215AF 38 (p. 1))
4/30    Trip 8 completed 30 minutes late (5215AF 38 (p. 3))
4/30    No show for Trip 7.  Respondent obtained emergency service (5215AF 38 (pp. 4-7))
4/30    Combined Priority and Express extra runs
5/1       Appellant sent his scanner in with another driver (5215AF 39 (p. 1))

(Stip. III-33; Tr. 123-125; 5215AF 40).

            48.  By letter dated May 10, 2004, the contracting officer sent Appellant a Final Warning letter directing him to restore satisfactory service on the route within 7 days.  He noted that Appellant had received 7 Forms 5500 since issuance of the March 22, 2004 Final Request for Service Improvement by the Administrative Official (Finding 44) and advised that unless satisfactory service were restored and maintained for the remaining term of the contract Respondent could terminate the contract for Appellant’s failure to perform.  (App. Stip. 5; Tr. 232-234; 5215AF 41; App. Exh. E 131).

            49.  On May 12, 2004, Appellant’s driver overslept and was 30 minutes late beginning Trip 1.  On May 27, 2004, due to a mechanical problem, Appellant’s trucks running the early morning Trips 2 and 4 returned to Fort Worth over an hour and 20 minutes late, and as a result, Trip 7 began 30 minutes late and Trip 5 began 35 minutes late.  (5215AF 43).

            50.  The May 12 and 27 deficiencies (Finding 49) were brought to the attention of the contracting officer (Tr. 129, 135; 5215AF 44), and, by final decision dated May 28, 2004, he terminated HCR 76042 for default.  The reasons for the termination were that Appellant combined mail to run fewer than the required number of trucks, failed to collect the mail from the Joshua collection box on Trip 6, and for other irregularities.  The contracting officer suspended all pay under the contract.  (Stip. III-37; 5215AF 45; Tr. 233-234).  Appellant filed a timely appeal (5215AF 46), which the Board docketed as PSBCA No. 5215 (Stip. III-38; Tr. 245).

            51.  Respondent had established internal procedures for addressing performance deficiencies under highway contracts.  These procedures were set out in a one-page document from Respondent’s Supply Management Office and in a section of Respondent’s Handbook PO-513.  Neither document was expressly incorporated into Appellant’s contracts.  The procedures provided for informal consultation between the contract’s administrative official and the contractor to obtain improvement followed by a formal conference if performance did not improve.  If performance still did not improve, the administrative official was to send the contractor a formal Final Request for Service Improvement.  If this did not produce satisfactory performance, the matter was to be referred to the contracting officer for action.  The procedures contemplated that the contracting officer would give a final warning and then terminate the contract if the final warning did not produce satisfactory performance.  The written procedures included sample letters to be used in this process.  A number of the sample letters were identified by the word “mandatory” in their caption.  (Tr. 21-22, 43-45, 103-104, 155, 177-179, 208, 228, 249-250; App. Exh. C 67-77).

            52.  Both contracts required Appellant to buy fuel from a supplier authorized by Respondent.  Appellant was to obtain a fuel funding card from the supplier “and be responsible for making payments to the card provider.”  (Tr. 234, 238; 5093AF 1 (p. 10) and 5215AF 1 (p. 25), Amendment 3, Fuel Cost Management).

            53.  On a number of occasions under both of the contracts, Appellant failed to make the required payments to the supplier.  Respondent effected payment on Appellant’s behalf by withholding the amount of Appellant’s fuel charges from amounts he earned under the contracts and would have otherwise been paid plus, on some occasions, a “bookkeeping” fee to cover Respondent’s costs of doing so.  The last deduction for unpaid fuel obligations occurred on October 27, 2003, and covered fuel invoices from June 13 to September 26, 2003.  (Tr. 234-240; Stip. I-5, I-16, I-25, III-14, III-17, III-21; 5093AF 22, 27, 38; 5215AF 17, 20, 24).

DECISION

            Appellant challenges the contracting officer’s default terminations of two mail transportation contracts.  Respondent contends both terminations were proper.

            A default termination is a drastic sanction that should be sustained only when based on reasonable grounds and solid evidence, and it is Respondent’s burden to demonstrate by a preponderance of the evidence that the default termination[s] of Appellant's contract[s] [were] justified.

Charles West, PSBCA No. 3655, 96-1 BCA ¶ 28,211, citing Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987).

PSBCA No. 5093, Contract HCR 76030

            Respondent argues that the termination of HCR 76030 was justified by Appellant’s unsatisfactory performance and his refusal to follow instructions of the Fort Worth P&DC transportation officials and the contracting officer that he perform each trip under his contract with a separate truck.

            Appellant argues that he was performing the service required by the contracts in the best interests of the Postal Service.  Appellant believed he was meeting his obligations under the contracts as long as he got the mail to the post offices and left no mail behind.  He argues that his efforts to ensure delivery of the mail by combining trips despite problems with his vehicles excuse any technical failures to comply exactly with the contract schedule.  Appellant also argues that the termination should be set aside for Respondent’s failure to follow its own pre-termination procedures.

            When Appellant combined mail for separately scheduled trips on one truck, he did not meet the schedules set forth in the contracts, and the resulting late deliveries and late returns to the Fort Worth P&DC adversely affected Respondent’s operations (Findings 12, 13, 15).  That Appellant was able to deliver the mail before the post offices opened in the morning and that he did not leave mail behind do not excuse his failure to deliver and pick up mail according to the contract schedules.  Respondent is entitled to strict performance of its contract requirements.  See Charles E. Blanton, PSBCA No. 1381, 86-1 BCA ¶ 18,723 at 94,187, citing Maxwell Dynamometer Co. v. United States, 181 Ct. Cl. 607, 628, 386 F.2d 855, 868 (1951). 

            Additionally, there were instances where Appellant failed to perform the contract service at all, most notably on September 24, 2003 (Findings 23, 30, 31).  It was Appellant’s obligation to have trucks that met state inspection requirements (Finding 7) and to have sufficient backup equipment to run the routes as scheduled in the event of mechanical failure or other unavailability of his prime vehicles (Findings 1, 3, 18).  Omitting the trips on September 24, 2003, without advance notice and without explanation to Respondent was not excusable.

            Notwithstanding Respondent’s repeated instruction that he stop combining mail for separate trips, Appellant continued to do so (Findings 13, 14, 16-20, 22-25, 27, 28).  Immediately after receiving the contracting officer’s final warning Appellant omitted trips by combining mail (Findings 28, 29).  This history of refusing to follow Respondent’s instructions regarding combining mail, the omitted trips of June 15 and 23 (Finding 23), followed by Appellant’s failure to perform four trips the morning of September 24, 2003, without notice to Respondent or explanation (Finding 31), justified the termination of HCR 76030.  See Irving Stumer, PSBCA No. 1256, 1985 PSBCA LEXIS 82, February 6, 1985, reaffirmed on recon., 1985 PSBCA LEXIS 74, April 8, 1985.  Appellant has not shown that these performance deficiencies were excusable, see Pamela J. Sutton, PSBCA No. 1622, 88-3 BCA ¶ 21,031 at 106,237, or that the termination was an abuse of the contracting officer's discretion, see Jesse A. Farmer, PSBCA No. 2702, 91-3 BCA ¶ 24,181 at 120,941; Patricia J. Stevens, PSBCA No. 3272, 94-1 BCA ¶ 26,419.

            That the contracting officer gave abandonment of the contract as the grounds for termination in his final decision is of no moment.  As Appellant did not give notice or explanation for turning in his scanner and omitting the morning trips on September 24, the contracting officer’s conclusion that Appellant had abandoned the route was reasonable.  Moreover, Appellant’s refusal to follow Respondent’s directions and his performance deficiencies justified the termination of HCR 76030, even if the contracting officer did not directly rely on them in terminating the contract.  See Kelso v. Kirk Brothers Mechanical Contractors, Inc., 16 F.3d 1173, 1175 (Fed. Cir. 1994); Arthur Napier, PSBCA Nos. 3044, 3140, 94-2 BCA ¶ 26,695.

            Notwithstanding the performance deficiencies, Appellant contends that the termination of HCR 76030 should be set aside because Respondent failed to follow its own instructions for progressive discipline preceding termination of a mail transportation contractor for poor performance (Finding 51).  However, the Supply Management procedures and the Postal Service Handbook setting forth steps to be followed before a contract is terminated are instructions to Postal Service officials.  The guidelines have not been shown to be for the benefit of contractors and thus confer no procedural rights upon Appellant.  See Shorthaul Trucking Co., PSBCA No. 1046, 1985 PSBCA LEXIS 64, June 18, 1985; Bowman’s Transport Co., PSBCA Nos. 1088, 1089 and 1092, 84-1 BCA ¶ 17,217; B & E Mail Transport, Inc., PSBCA No. 947, 82-2 BCA ¶ 15,912 at 78,870.

            Additionally, any variances from the procedures did not prejudice Appellant.  He had ample warning of what Respondent expected in the way of contract performance—that he run all trips on separate trucks without combining mail and that he meet the schedules exactly as set forth in the contracts.  He had been advised of the consequences should he fail to comply with those requirements, and he had ample opportunity to correct his performance.  See B & E Mail Transport, Inc., PSBCA No. 947, 82-2 BCA ¶ 15,912 at 78,870.

            In its brief, Respondent addressed the assessment of reprocurement costs.  However, there has been no appeal of such an assessment, and, accordingly, we have no jurisdiction to address reprocurement costs.  See 41 U.S.C. §605(a); Sharman Co. v. United States, 2 F.3d 1564, 1568-69 (Fed. Cir. 1993); Larry J. Miller, PSBCA No. 3632, 95-1 BCA ¶ 27,448.

PSBCA No. 5215, Contract HCR 76042

            Respondent argues that Appellant’s performance under HCR 76042 failed to meet the requirements of the contract and justified the termination.  Appellant argues that the termination of HCR 76042 was not justified because much of what Respondent based the termination on—late performance on Trip 6 and Appellant’s refusal to clear the collection box at the Joshua Post Office—resulted from a faulty schedule for the route.  According to Appellant, Respondent acknowledged the schedule provided inadequate time for performance of some of the trips by proposing the service change.

            The record reflects a number of instances of Appellant’s failure to comply with the requirements of contract HCR 76042 as written.  Those from March 3, 2004, and later were identified in the Administrative Official’s May 6, 2004 referral to the contracting officer (Finding 47), and the irregularities listed in that referral prompted the contracting officer’s further action (Findings 48, 50).  On its face, the list appears to include contract irregularities sufficient in number and gravity to warrant termination, but a closer examination of the irregularities reveals that many of them should not have been considered by Respondent as grounds for termination of the contract.

            The parties recognized that the contract schedule as written did not include sufficient time for performance of Trip 6 (Findings 42, 45).  After Appellant began picking up the mail from the Joshua collection box on Trip 6, as he was instructed to do, that trip and the following Trips 11/8 were late almost every day (Finding 41).  However, as the parties had never established an adjusted schedule that Appellant could be expected to perform, Appellant’s late performance on Trips 6 and the following Trips 11/8 would not be grounds for terminating the contract.  See H.L. Clemons Trucking, PSBCA No. 569, 1980 PSBCA LEXIS 31, February 29, 1980; William Roach, PSBCA No. 3335, 97-1 BCA ¶ 28,735.  Moreover, the Transportation Contract Specialist had instructed Appellant to clear the Joshua collection box on Trip 6 and specifically assured Appellant that he would not be written up for being late (Finding 41), yet Respondent’s officials at the Fort Worth P&DC continued to issue 5500s regarding Trip 6.

            Additionally, two of the listed late finishes of Trips 8 and 10 were for a 15-minute late return, even though the Form 5500 identifies lateness of 15 minutes or less as being “for information only” (Findings 11, 47).  These should not have been listed as chargeable irregularities supporting the termination of Appellant’s contract.  See Lorah’s Hauling, PSBCA No. 4778, 04-1 BCA ¶ 32,502, n. 3; Steinmann Transportation, Inc., PSBCA No. 3302, 94-3 BCA ¶ 27,212.

            Finally, Respondent claims Appellant’s practice of combining mail and his refusal to empty the Joshua collection box on Trip 6 justified the termination.  However, for the most part Appellant’s practice of combining mail on HCR 76042 had ended with the termination of HCR 76030 in September of 2003, seven months earlier.  The only instance of combining mail included in the Administrative Official’s referral to the contracting officer involved combining mail from an extra Priority Mail trip under this contract with an Express Mail run under a separate contract (Finding 47).  In any event, combining mail was not shown to be a problem during the months leading up to the termination.  Likewise, while Appellant’s refusal to pick up the mail from the Joshua collection box had been a violation of the requirements of the contract that might have justified termination in early March 2004, that issue had been resolved by the Transportation Contract Specialist’s telephone call of March 4 and Appellant’s uniform compliance with the contract requirement thereafter (Finding 41).

            Appellant’s performance was not perfect.  The omitted trips of March 17-18 and April 30, 2004, and the late performance of May 12 and 27, 2004, were serious performance deficiencies and each was technically a default under the contract’s Termination for Default clause (Finding 8).  However, after reviewing the totality of the circumstances and considering the relatively few deficiencies of significance compared to the number of trips required under the contract (ten trips per day (Finding 1)), we are not persuaded that Respondent has shown the termination to be justified.  Respondent has not met its burden of demonstrating that the chargeable irregularities under this contract for the relevant period of time were so numerous that it could be said that there was a substantial failure of performance, a showing necessary to sustain termination of a services contract such as this.  See The Swanson Group, Inc., ASBCA No. 44664, 98-2 BCA ¶ 29,896; Suburban Industrial Maintenance Co., ASBCA Nos. 23750, 25154, 85-2 BCA ¶ 18,148 at 91,096; Reliable Maintenance Serv., ASBCA No. 10487, 66-1 BCA ¶ 5331 at 25,044, recon. denied, 67-1 BCA ¶ 6194.  Accordingly, Respondent has not shown that, on the record of this appeal, Appellant’s performance of HCR 76042 warranted the harsh sanction of default termination.  See The Swanson Group, ASBCA No. 44664, 98-2 BCA ¶ 29,896 at 147,994-995; Douglas Cremer, PSBCA No. 3108, 93-2 BCA ¶ 25,565.

            Alternatively, Respondent argues that Appellant’s failure to pay his invoices under the Fuel Program (Findings 52, 53) was a breach that independently justified the termination.  However, Respondent was able to collect payment for the fuel invoices from Appellant’s pay, and there was no showing that Appellant’s failure to pay such invoices had any effect on his performance of the contract services or that because of its frequency or otherwise it was unduly disruptive of Respondent’s administration of the contract.  Moreover, the last incident of unpaid fuel invoices occurred seven months before the termination (Finding 53) and was never raised thereafter by Respondent as a ground for termination.  Under these circumstances, Appellant’s failure to pay fuel invoices seven months earlier did not justify the May 28, 2004 termination of the contract.  See Talano Transportation, PSBCA No. 3812, 97-1 BCA ¶ 28,898; Carla Martin, PSBCA No. 4157, 00-1 BCA ¶ 30,592; Douglas Cremer, PSBCA No. 3108, 93-2 BCA ¶ 25,565.

Conclusion

            The appeal of PSBCA No. 5093 is denied.  The appeal of PSBCA No. 5215 is granted.  The default termination of HCR 76042 is converted to one for the convenience of the Postal Service (Finding 9), and Appellant is entitled to the liquidated damages provided by the contract’s Changes clause (Finding 10), plus Contract Disputes Act interest.

Norman D. Menegat
Administrative Judge
Board Member

I concur:                                                                     I concur:
William A. Campbell                                                    David I. Brochstein
Administrative Judge                                                 Administrative Judge
Chairman                                                                   Vice Chairman

[1]  Throughout this Opinion, reference to a trip being omitted and the mail combined means that the trip listed in the schedule was not run with a separate truck and the mail to be delivered or picked up on that trip was carried on one or more of Appellant’s trucks running other trips under these contracts.