PSBCA No. 6159 and PSBCA No. 6169
February 26, 2009
Appeals of
JANET L. FOX and TODD FOX
PSBCA No. 6159 and
PSBCA No. 6169
Under Contract Nos. HCR 299A9 and HCR 299B3
APPEARANCE FOR APPELLANT: David P. Hendel, Esq.
Sarah M. Graves, Esq.
Akerman Senterfitt Wickwire Gavin
APPEARANCE FOR RESPONDENT:
Shoshana O. Epstein, Esq.
Office of the General Counsel
United States Postal Service
OPINION OF THE BOARD[1]
Appellants, Janet Fox and Todd Fox, appealed from contracting officer's decisions terminating for default their contracts with Respondent, United States Postal Service, for the delivery of mail on two routes originating at the Beaufort, South Carolina, Post Office. These appeals are being decided under the Board's Accelerated Procedure, 39 C.F.R. §955.13, and the only issue before the Board in this proceeding is the propriety of the default terminations. A hearing was held in Savannah, Georgia.
FINDINGS OF FACT
1. Renewal Contract HCR 299A9 (A9) was awarded to Appellant Janet Fox for the period of April 1, 2006, through March 31, 2010 (Stipulation, paragraphs (Stip.) 2, 5; PSBCA No. 6159 Appeal File Tab (6159AF)[2] 9).
2. Renewal Contract HCR 299B3 (B3) was awarded to Appellant Todd Fox for the period of July 1, 2007 through June 30, 2008 (Stip. 22, 25; 6169AF 1).[3]
3. Each contract required the contractor to provide, as a minimum, one vehicle with minimum cargo capacity of 40 cubic feet (Stip. 7, 29).
4. The contracts covered the delivery of mail to customers in two separate areas of Lady’s Island, South Carolina, and both routes originated at the Beaufort, South Carolina, Post Office. Contract A9 served approximately 550 boxes and contract B3 served approximately 460 boxes. (Tr. 2:6, 3:88-91; Stip. 6, 28; AF 35).
5. Both contracts contained Termination for Default clauses, which provided in relevant part, “[T]he Postal Service may terminate this contract … for default by the supplier, or if the supplier fails to provide the Postal Service, upon request, with adequate assurances of future performance.” Further, under those clauses, if a default termination were later deemed improper, the termination would be deemed to be a termination for convenience. (6159AF 9, p. 64 (para. 2.3.1.m); 6169AF 2, p. 90 (para. 2.3.1.m)).
6. The contracts both contained schedules that specified when the contractor was to begin casing (sorting) mail at the post office, when the contractor was to depart the Beaufort Post Office to begin making deliveries, and when the contractor was to complete deliveries and return to the post office. For contract A9, the schedule provided that the contractor would depart the Beaufort Post Office by 11:40 a.m. and would return to the post office by 4:35 p.m. For contract B3, the schedule provided that the contractor would depart Beaufort by 12:30 p.m. and would return by 3:20 p.m. (6159AF 9, p. 35; 6169AF 1, p. 24).
7. Both contracts required the supplier to perform additional trips pursuant to the Changes clause, and directed the supplier to “perform any extra trips ordered by the contracting officer or authorized representative.” (6159AF 9, pp. 40, 66; 6169AF 1, p. 29; 6169AF 2, p. 92).
8. A “dispatch” truck was scheduled to stop at Beaufort each day to pick up outgoing mail, including mail picked up from customers by delivery contractors such as Appellants. The truck was scheduled to depart from Beaufort after the return times for both contractors. If a contractor did not return to the post office until after the dispatch truck was supposed to leave, Respondent’s personnel could hold the truck for a limited period. By doing so, Respondent could incur additional costs in the form of overtime pay for its clerks at the post office. If a contractor did not return until after the dispatch truck had left, the outgoing mail brought in by that contractor would be delayed. (Tr. 1:167, 168, 185)
9. Respondent’s personnel used PS Form 5500, “Contract Route Irregularity Report,” to record and report deficiencies in contract performance, including late or omitted service. It was the practice of Respondent’s customer service supervisor[4] at the Beaufort Post Office as of the time of the default terminations not to issue a Form 5500 even if a contractor returned to the post office after the time set out in the contract schedule as long as the contractor returned in time to meet the “dispatch” truck. It was also the practice to allow a contractor to depart the post office to begin deliveries in advance of the time set in the schedule if the contractor had received all of his or her mail and had finished casing. Further, if a contractor finished deliveries and returned to the post office before the time set out in the schedule, the contractor was not required to remain at the post office. (Tr. 2:98-100, 253-257).
10. As of September or October 2007, Appellants had separate personnel – a sorter and a driver – on each contract. Because of a security violation, the contracting officer issued a letter in October 2007 barring from access to the mails the person driving for contract B3, thereby preventing him from driving. At that time, Mr. Fox, who had been driving contract A9, took over the driving duties on contract B3 as well.[5] (Tr. 2:261)
11. Shortly thereafter, Appellant was able to hire a driver for contract A9 and Appellants again had separate drivers on the two contracts – i.e., the new driver on contract A9 and Mr. Fox on contract B3. However, in November 2007, the customer service supervisor at Beaufort complained to Appellant that his two employees on contract A9 were having personality conflicts and demanded that one of them be removed. After his request that the removal be deferred until after the holiday season was denied, Appellant elected to terminate the driver, inasmuch as the sorter was much more experienced. As a result, Appellant again took over the driving duties on both routes. From that point until December 10, 2007, Appellant was the sole driver on both routes. No later than December 10, 2007, Appellant was able to hire another driver for contract B3 and had received temporary clearance from the customer services manager to allow her to drive. Appellant began training the new driver on that date. (Tr. 2:114, 267-269; Tr. 3:23, 24, 25-26).
12. Part of the responsibility of a contractor is to perform a delivery scan of mail for which delivery confirmation service has been purchased by the mailer. This requires the contractor to take an electronic scanner along when delivering mail and to scan each applicable piece of mail upon delivery. The scanner records both the identification number and the time of delivery. Upon return to the post office, the contractor places the scanner in a cradle that retrieves the data and enters it into the Postal Service computer system. In cases where a scanner fails to record the relevant data, there is a procedure allowing the contractor to manually enter the data upon return to the post office. On three separate occasions (October 1, November 28 and November 30, 2007) when he was driving both routes, Appellant failed to take his scanner with him when he left the Beaufort Post Office to make deliveries. Rather than return to the post office to retrieve his scanner, Appellant elected to manually record the identification numbers and times of delivery of each piece of relevant mail and manually enter all the data when he returned to the post office. Using the manual system has the potential for causing some delay in the availability of the data to customers accessing the Postal Service system. (AF 25, pp. 97-98, 102-106, 125-127; AF 21, pp. 308-309, 311-312, 328-329; Tr. 2:22, 28, 86, 88, 119; Tr. 3:36, 37, 39).
13. On December 3, 2007, the customer service supervisor issued Forms 5500 on both contracts, informing Appellants that the use of a single driver on both contracts was unacceptable due to adverse effects on delivery, and directing Appellants to have dedicated drivers on both contracts by the next day, December 4 (AF 21, p. 306; AF 25, p. 92).
14. On five occasions in November and December, 2007, (November 17; December 1, 7, 8, and 10), Appellant, who was then driving both routes each day, returned to the post office too late to meet the dispatch truck. Respondent’s personnel issued Forms 5500 to Appellants on both contracts on each occasion. (AF 25, pp. 107, 93, 86, 84, 82; AF 21, pp. 313, 307, 304, 302, 298).
15. On a number of occasions during the 2007 holiday season, Appellant was directed to deliver mail on contract A9 in an amount significantly greater than could be carried in the 40 cubic-foot volume identified as the minimum capacity to be provided under that contract (see Finding 3). It was Appellant’s practice under those circumstances to “curtail” – i.e., delay until a later time - the delivery of the excess mail; at times without first consulting Respondent’s personnel at Beaufort. (AF 262, 263; Tr. 1:196; 2:309, 311, 314, 324).
16. By a separate December 7, 2007 “Show Cause Notice” for each contract, the contracting officer directed Appellants to submit written explanations by December 14, 2007, as to why the contracts should not be terminated for default, pursuant to paragraph 2.3.1.m of each contract (see Finding 5). In each letter, the contracting officer referred to the December 3, 2007 direction from the customer service supervisor that the contractor have dedicated drivers by December 4 and noted that this had not been accomplished. With respect to the A9 contract, the contracting officer noted that he had been informed that a new employee had picked up a security clearance package for driving but that “no mention was made as to when this person would start working.” Appellants were invited to “present in writing any fact or evidence bearing on your failure to perform service ….” (6159AF 6; 6169AF 3).
17. In a final decision dated December 11, 2007, the contracting officer terminated contract A9 for default, effective as of the close of business on December 14. In his letter, the contracting officer acknowledged that he had given the contractor, Appellant Janet Fox, until December 14, 2007, to respond to the show-cause letter, but stated that because of the “severity of your recent actions” he had decided to “expedite the termination process.” The contracting officer stated that the Beaufort Post Office had received complaints from customers of delivery of mail late in the day and of misdeliveries. The contracting officer also reported that he had received a telephone call from the customer services manager at Beaufort who stated that, as of December 10, 2007, the contractor had still not designated a person to case and deliver the route and that Appellant had curtailed the delivery of mail without authorization. The contracting officer also stated his understanding that Appellants were continuing to use only one driver on both routes. Finally, the contracting officer alleged generally that the contractor had failed to provide satisfactory service on the route and had failed to provide a “satisfactory plan explaining how you intend to remedy the performance issues on this route.” (6159AF 5; AF 265).
18. By letter dated December 12, 2007, and received by the contracting officer on December 14, 2007, Appellant Janet Fox responded to the show-cause letter with respect to contract A9. In relevant part, Ms. Fox stated that when she was directed, on December 3, to have a driver on her contract by the next day, she had explained that Mr. Fox was the driver on her contract, and that she was looking for another driver. She also referred to the fact that she had been directed by the customer services supervisor to let one of her employees go (Finding 11) and explained that that was the reason that Mr. Fox was driving both routes. Finally she noted that Appellants had submitted paperwork for another driver and were awaiting clearance. In addition, Ms. Fox complained that her contract was “overburdened” in that there were considerably more boxes to be served than were set out in the contract. (6159AF 4).
19. By letter also dated December 12, 2007, and received by the contracting officer on December 14, Appellant Todd Fox responded to the show-cause letter with respect to contract B3. In his letter, Mr. Fox indicated that he had been driving contract B3 since the dismissal of his permanent driver in October (Finding 10), and had informed the customer services supervisor that he would be substituting on contract A9 until they found another driver. He also advised that he had found a replacement driver for his contract and had been training her since December 10. (6169AF 4).
20. By letter dated December 18, 2007, the contracting officer terminated contract B3 for default, effective as of the close of business on December 24, 2007. In his letter, the contracting officer concluded that Appellant had not provided reliable service and that the response to the show-cause letter did not excuse his behavior or explain his failure to provide the service required by his contract. The contracting officer did not acknowledge or address the fact that Appellant had hired a new driver. (6169AF 5).
21. Appellants filed timely appeals of both default terminations.
DECISION
Respondent, which has the burden of proof in these default termination appeals, see Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987); Charli Selsa Schiver d/b/a NGX-Schiver, PSBCA No. 4545, 02-2 BCA ¶ 31,937; Douglas Cremer, PSBCA No. 3108, 93-2 BCA ¶ 25,565, argues that they should be denied for a number of reasons. The primary reason cited by Respondent is what it terms Appellants’ “refusal” to provide separate drivers for each route – referring to those periods during which Appellant Todd Fox was the sole driver on contracts A9 and B3. Respondent argues that using a single driver on both routes constituted a breach of the contract requirements, and also led to other performance problems such as failure to deliver mail in accordance with the contract schedules, misdeliveries of mail, and other service deficiencies. Respondent also argues that the use of a single driver left the contractors unable to perform additional trips in order to respond to unusually high volumes of mail. Respondent also cites Appellant Todd Fox’s failure, on a number of occasions, to perform a delivery “scan” on all or some of the parcels that were to be delivered on both routes – thereby preventing Respondent from acquiring the data necessary for customer inquiries.
Appellants argue, first, that using a single driver on both contracts was not a contract violation. Appellants also contend that their service deficiencies, to the extent they existed, were largely caused by the fact that contract A9 was “overburdened” – i.e., that the contractor was asked to deliver mail beyond the contractually specified volume. Moreover, Appellants allege that Respondent’s personnel refused to authorize extra trips during the 2007 holiday season – trips that would have alleviated the difficulties caused by the excess mail volume. In addition, Appellants argue that the service deficiencies represented by the Forms 5500, even if not deemed excusable, do not rise to the level of seriousness that would justify termination – i.e., that the deficiencies are not such that it can be said that there was a substantial failure of performance. Finally, Appellants argue that, at the time he terminated contract A9, the contracting officer was unaware that Appellants had hired a new driver and thus did have a dedicated driver for each contract. Therefore, Appellants argue, the contracting officer did not properly exercise his discretion in terminating the contracts.
We disagree with Respondent’s contention that the contracts specifically required Appellants to provide separate drivers. Respondent contracted with Appellant Todd Fox to provide specified services on one route and with Appellant Janet Fox to provide specified services on another route. Each contract stands on its own and neither contract contained language requiring that the contractor provide a driver dedicated only to that contract or language prohibiting a driver on one contract from also driving on the other. If each contractor provided the services required by his or her contract, we see no per se contract violation merely because those services were provided by use of the same driver. Thus Appellants’ failure, during some periods, to have dedicated drivers on each route did not, by itself, represent a breach of their contracts.
With regard to Respondent’s argument that use of a single driver would have prevented Appellants from running extra trips in order to deal with the large amount of mail, we note that the contracts did not require Appellants to run extra trips unless they were “ordered” by the contracting officer or other authorized representative. Thus, Appellants were not obligated to run extra trips on their own, and the record before us does not demonstrate that Appellants were directed to run extra trips that they were unable to perform, or any extra trips at all. Therefore, under these facts, we do not accept Respondent’s argument that Appellants’ inability to run extra trips – if, in fact, they could not do so – provides support for the default terminations.
Respondent also argues that Appellant’s failure to scan packages supports the default terminations (see Finding 12). Respondent argues that Appellant “refused” to scan packages, despite being aware that he was required to do so, and that such refusal provides justification for upholding the terminations. The evidence, however, does not support Respondent’s allegation that Appellant “refused” to scan packages. We note that there were three occasions on which Appellant failed to take his scanner from the Beaufort Post Office and, therefore, failed to scan any of the packages that he had taken out for delivery. While the three instances represent performance failures, they represented only a small number of the days on which Appellants performed their contracts. Further, the evidence indicates that the harm done was likely minor – involving some delay in the availability of the delivery data while Appellant manually entered the information, but no loss of such data. These three instances do not represent performance failures sufficiently serious to justify default terminations.
With regard to service under the contracts, we view the principal deficiency evident from the record as Appellants’ failure, on a number of occasions, to complete deliveries within the time specified in the contracts. As noted above (Finding 14), on five occasions in November and December 2007, Appellant, who was then driving both routes, was sufficiently late returning from the routes that he missed the dispatch truck. As a result, the mail picked up from the customers on Appellants’ routes would have been delayed and Respondent would have incurred additional overtime costs (Finding 8). Appellants’ failure to meet dispatch on the three successive delivery days ending on December 10, 2007, combined with the earlier failures, was sufficient to represent a substantial failure of performance and justified the terminations,[6] unless Appellants can show that their performance failures were excusable or that the contracting officer’s decisions to terminate represented an abuse of discretion. See, e.g., Derrick Van Greene, PSBCA No. 5093, 07-1 BCA ¶ 33,471, recon. denied, 2007 WL 5442324 (P.S.B.C.A.); Patricia J. Stevens, PSBCA No. 3272, 94-1 BCA ¶ 26,419 at 131,429, recon. denied, 94-2 BCA ¶ 26,951; Pamela J. Sutton, PSBCA No. 1622, 88-3 BCA ¶ 21,031 at 106,237.
Contract 299A9 – PSBCA No. 6159
As noted above, Appellants allege that any such failures were caused by the fact that contract A9, in particular, was overburdened and that they were required to process more mail than mandated by their contracts. As we have found, Appellants were directed on a number of occasions to deliver more mail on contract A9 than was contemplated by the contract. However, we have also found that Appellant curtailed a large volume of mail on his own, rather than sorting and carrying all the mail presented to him for processing. Appellants have not persuaded us that, as Appellant suggests (Tr. 2:370), he actually carried more than the 40 cubic feet per route required by Appellants’ contracts on those days on which he missed dispatch. Therefore, we do not accept Appellants’ argument that their failures to return in time to meet the dispatch truck should be excused on this basis.
Appellants argue that as of the date of the termination of contract A9 on December 11, another driver had been hired and cleared, but that since the contracting officer was not aware of this fact when he terminated he did not properly exercise his discretion in deciding to terminate. As of December 10, 2007, the record indicates that Appellants had hired a driver, that she had received a temporary clearance to drive, and that she had begun training (Finding 11). The record does not demonstrate, however, that the new driver had, in fact, begun driving and, from the fact that Appellants missed dispatch that day, it is apparent that hiring the driver had not yet solved Appellants’ performance problems. With respect to the contracting officer’s decision to terminate contract A9, we conclude that the contracting officer, following three successive days of performance failures after the contractor had been warned that such performance was unsatisfactory, did not abuse his discretion in deciding to terminate at that time.
Appellant Janet Fox has failed to demonstrate either that her performance deficiencies were excusable or that the contracting officer’s decision to terminate the contract was an abuse of discretion. Accordingly, the appeal in PSBCA No. 6159 is denied.
Contract 299B3 – PSBCA No. 6169
With regard to the termination of contract B3 on December 18, 2007, however, the situation was different. By that date, the new driver had been in place for a week and the contracting officer had been advised of that fact by Appellants’ responses to the show-cause letters. Moreover, no Forms 5500 had been issued for late performance during that period. Finally, after December 14, which was the effective date of the termination of contract A9, the contracting officer should have known that the problem that caused Appellants to miss dispatch – i.e., having a single driver serving both routes – had been eliminated, inasmuch as there was only one route left to serve. That a contractor has corrected the cause of past performance problems should be considered in making a decision whether to terminate or not. However, there is no indication that the contracting officer considered this circumstance in reaching his decision to terminate contract B3 for default. Based on these facts, we conclude that the termination of contract B3 constituted a failure on the part of the contracting officer to properly exercise his discretion. See, e.g., Jamco Constructors, Inc., VABCA Nos. 3271, 3516T, 94-1 BCA ¶ 26,405; Jaehee Yoshimoto, PSBCA Nos. 2315, 2749, 92-1 BCA ¶ 24,504; see also Monaco Enterprises v. United States, 907 F.2d 159 (Fed. Cir. 1990) [Unpublished].
Accordingly, the appeal of the termination in PSBCA No. 6169 is sustained and the termination is converted to one for Respondent’s convenience.[7]
David I. Brochstein
Administrative Judge
Vice Chairman
I concur:
William A. Campbell
Administrative Judge
Chairman
[1] Administrative Judge Gary E. Shapiro took no part in the Board’s consideration of these appeals.
[2] Documents in the individual Appeal Files for PSBCA Nos. 6159 and 6169 are cited with the prefixes “6159AF” or “6169AF,” as applicable. Documents with the prefix “AF” are supplemental documents offered by the parties, with those numbered from AF 10 - 35 offered by Respondent and those numbered AF-201 and above offered by Appellants.
[3] Although Janet Fox was the nominal contractor under HCR 299A9, Todd Fox was her representative under the contract. Mr. Fox was the person actually performing all the contractor's management responsibilities under both contracts. (Transcript, Day 3, page (Tr. 3:) 11-13). Unless otherwise stated, the term "Appellant," used in the singular, will refer to Mr. Fox with respect to both contracts.
[4] Each contract stated that the Administrative Official for the contract was located at Beaufort, but did not identify any particular person. From the record it appears that two people, one identified as a supervisor of customer services and one identified as a manager of customer services, performed the role of Administrative Official at various times in the period leading up to the contract terminations. For the purposes of this decision, it is not necessary to distinguish between the two, and the titles have been used interchangeably.
[5] The record is not completely clear with regard to the exact timing of these events. It is possible that the security violation had taken place in September, that the driver was then barred by officials at the Beaufort Post Office prior to referral to the contracting officer, and that Appellant had been driving both routes since that time (see AF 257, 259; AF 21, pp. 328-329; AF 25, pp. 125-127). However we need not resolve this question in order to decide these appeals.
[6] While we note that the record does not indicate that Appellants ever completely omitted service on the routes, the fact that they were late enough to miss the dispatch truck had a material impact on Respondent’s operations and on its service to its customers. (Finding 8).
[7] We have also considered other performance deficiencies alleged by Respondent – such as occasional misdeliveries, failure to take small numbers of mail pieces out for delivery, etc., which occurred sporadically over the term of the contracts. While, if proven, these failures would represent deficiencies in contract performance, under the facts of these appeals Respondent has not shown that, even in the aggregate, they represent a sufficiently serious failure of service to support a default termination.