JERRY R. BLANTON and LINDA BLANTON

Under Contract Nos. HCR 42510 and HCR 40730

PSBCA No. 6319 and PSBCA No. 6320

APPEARANCES FOR APPELLANTS
Jerry R. Blanton and Linda Blanton

APPEARANCE FOR RESPONDENT
Michael A. Lewis, Esq.

OPINION OF THE BOARD

            Appellants, Jerry R. Blanton and Linda Blanton, appeal two decisions by Respondent, United States Postal Service, denying their claims for liquidated damages they assert are due for Respondent’s termination for convenience of their mail transportation contracts.  We rule for Respondent.  

FINDINGS OF FACT

            1.         In May 2007, Jerry R. Blanton and Respondent entered Renewal Contract No. HCR 42510, effective July 1, 2007, through June 30, 2011 (Appeal File in PSBCA No. 6319 Tab (6319 AF) 12)[1].  In May 2007, Linda Blanton and Respondent entered Renewal Contract No. HCR 40730, also effective July 1, 2007, through June 30, 2011 (Appeal File in PSBCA No. 6320 Tab (6320 AF) 13).  Jerry R. Blanton provided mail transportation under HCR 42510 since 2003, and Linda Blanton provided mail transportation under HCR 40730 since 1986 (6319 AF 6; 6320 AF 6).

            2.         Both contracts required mail transportation between London, Kentucky and Somerset, Kentucky, at specified schedules and rates.  As both were transportation contracts, delivery of mail to individual customers was not included in Appellants’ contract responsibilities.  (6319 AF 12; 6320 AF 13; Declaration of R. Ledbetter (Ledbetter Decl.), ¶ 4; Declaration of J. Pulliam (Pulliam Decl.), ¶ 5).

            3.         The Renewal Contracts included the following provision:

            Section 2.3.3b, Termination for the Postal Service’s Convenience for Transportation Routes, of the Highway Contract Route (HCR) Terms and Conditions Issue 4, dated April 1, 2007, applies to this contract.

            (6319 AF 12 at 77; 6320 AF 13 at 77).  The same language was included in the “comments” section of the signature page of the renewal contract (6319 AF 12 at 62; 6320 AF 13 at 62).

            4.         Section 2.3.2 of both contracts, captioned Changes (Transportation) (Clause B-67) (March 2006) (Modified), provided, in subsection (d):  “Liquidated Damages:  See Section 2.3.3.”  However, the referenced sections 2.3.3 in both contracts did not provide for or mention liquidated damages.  (6319 AF 12 at 166-67; 6320 AF 13 at 134-35). 

            5.         Section 2.3.3 of both contracts, Termination of Contracts, generally reserved Respondent’s right to terminate the contracts for convenience, without mention of liquidated damages (6319 AF 12 at 167; 6320 AF 13 at 135).  Section 2.3.3b of both contracts, Termination for the Postal Service’s Convenience, provided, in pertinent part:

            The Postal Service reserves the right to terminate a regular contract, or any part thereof, for its sole convenience. . . .  After termination, the supplier may submit to the contracting officer a termination claim in the form and with the certification prescribed by the contracting officer. . . .    The supplier will not be required to comply with the cost accounting standards and principles for this purpose.  The supplier will not be paid for any work performed or costs incurred which reasonably could have been avoided.

            Section 2.3.3b of both contracts also included a statement that “Section e of Clause B-67 does not apply to transportation routes.”  Neither contract included a subsection (e) within section 2.3.2, also identified (see Finding 4) as Clause B-67.  (6319 AF 12 at 166-67; 6320 AF 13 at 134-35).

            6.         In 2009, Respondent analyzed its Kentucky mail processing operations seeking efficiencies.  This analysis resulted in operational changes including processing mail in Lexington which formerly was processed in London.  (Pulliam Decl., ¶¶ 7-8).  Respondent’s need for the transportation services Appellants provided for London was reduced, and the remaining mail transportation services could be provided under another existing contract.  Accordingly, Respondent no longer needed Appellants’ contracts.  (Pulliam Decl., ¶¶ 7-10; Ledbetter Decl., ¶¶ 6-8).

            7.         On December 7, 2009, Respondent’s contracting officer issued separate notices to Appellants, styled as contracting officer final decisions, terminating their contracts for convenience, although without specifically identifying the clause under which he was doing so.  The termination notices recited that service under the contracts would cease as of December 7, 2009, however the contracts would end on January 5, 2010, with the intervening trips cancelled.  The notices stated that Appellants would be paid a portion (25%) of the contract rates for those cancelled trips as provided by the contracts.  Appellants were so paid.  (6319 AF 3, 7; 6320 AF 3, 7; Ledbetter Decl., ¶¶ 11-12).

            8.         On December 17, 2009, Appellants submitted separate monetary claims to the contracting officer in response to the termination notices.  Both claims sought liquidated damages based upon contract clause B-67e.  Both claims attached a version of clauses B-67, which included subsection (e), providing for liquidated damages, and B-71, which also provided for liquidated damages in the event of a termination for convenience.  The version of clause B-67 attached to the claims apparently was printed from Respondent’s internet web site, according to legends on those attachments.  (6319 AF 6; 6320 AF 6; see Ledbetter Decl., ¶ 10).  Neither clause appeared in the contracts at issue.

            9.         Jerry R. Blanton’s claim sought $5,411.54 and Linda Blanton’s claim sought $8,063.32 in liquidated damages under clause B-67e.  Neither claim requested termination for convenience costs as allowed by section 2.3.3b.  (6319 AF 6; 6320 AF 6).

            10.       On February 25, 2010, Respondent’s contracting officer issued final decisions denying both claims because, without the inclusion of clause B-67e, the contracts did not provide for recovery of liquidated damages.[2]  (6319 AF 2; 6320 AF 2; Ledbetter Decl. ¶ 14).  On March 31, 2010, Appellants separately appealed the final decisions in notices of appeal sent directly to the Board.

            11.       Based upon the parties’ joint election,[3] the Board ordered these appeals consolidated and submitted on the record without an oral hearing, pursuant to 39 CFR § 955.12 (July 22, 2010 Order).  Based upon Appellants’ prior elections, these appeals have been processed under the Board’s accelerated procedures, pursuant to 39 CFR § 955.13 (June 23, 2010 Order).  Respondent submitted sworn witness declarations and filed a legal brief.  Appellants did not submit any evidence and did not submit a brief.

DECISION

            As Appellants did not submit evidence or a brief, we discern their arguments from their claims and notices of appeal.  Appellants have not argued that the terminations for convenience of their respective contracts were improper.  Rather, Appellants seek liquidated damages resulting from those terminations.[4] 

            Respondent argues that the contracts did not include liquidated damages provisions, precluding recovery therefor.  We agree with Respondent.

            At the direction of the Board, Respondent submitted what it represented to constitute complete copies of the contracts at issue (see Notices of Filing of Supplemental Appeal File, July 20, 2010; June 23, 2010 Order; 6319 AF 12; 6320 AF 13).  Appellant has not argued that the submitted contracts in the record are inaccurate or incomplete. 

            The contracts in the record are somewhat unclear in that they each include a reference to a liquidated damages subsection that is not otherwise included in those contracts (Finding 4).  Further, the publicly available contract provisions include a similar clause which does include a liquidated damages provision (see Finding 8).  Nonetheless, based on the record evidence, we conclude that these contracts did not include liquidated damages provisions (Findings 3-5).

            As we recently explained in Elton T. Colvin, Jr., PSBCA No. 6220, 09-2 BCA ¶ 34,310 at 169,486, “when a termination for convenience clause is exercised, Respondent must compensate the terminated contractor fairly and to make it whole for the costs incurred in connection with the terminated portion of the work, within the limits of the clause.”  In these appeals, such compensation must be based on section 2.3.3b of the contract, as the liquidated damages provision of clause B-67e was not included in the contracts.  In the absence of a liquidated damages provision, compensation thereunder is not recoverable.

Both appeals are denied.

Gary E. Shapiro
Administrative Judge
Board Member

I concur
William A. Campbell
Administrative Judge
Chairman

[1] Tab 12 in PSBCA No. 6319 and Tab 13 in PSBCA No. 6320 appear in Supplemental Appeal Files.

[2] The final decisions did not advise Appellants that recovery under section 2.3.3b may be available instead.  Respondent’s legal brief informed us that Appellants submitted termination for convenience claims in June 2010, for which its contracting officer issued final decisions on dates not specified (Respondent’s brief at 7, fn. 2; see also Status Report and Respondent’s Request for Extension of Time, July 13, 2010, at 1).  These claims are not in the record and are not before us for decision.  There is no evidence of appeals of the contracting officer’s final decisions responding to Appellants’ termination for convenience claims under section 2.3.3b.

[3] This joint election was executed only by counsel for Respondent, who represented that it reflected agreement between the parties.  The parties’ agreement was memorialized in the Board’s Order of July 22, 2010, to which Appellants have not objected.

[4] Payments for termination for convenience costs, under section 2.3.3b, are not before us in these appeals.  See fn. 2.  Further, while Appellants complained about a lack of notice, they have not submitted monetary claims to the contracting officer regarding damages for insufficient notice, and no such appeals are before us.