Appeals of

ODESSA R. BROWN

PSBCA Nos. 5362, 6142 and 6115

Under Contract No. HCR 786L5

APPEARANCE FOR APPELLANT:
Odessa Brown

APPEARANCE FOR RESPONDENT:
Lori J. Dym, Esq.
Office of the General Counsel
United States Postal Service

OPINION OF THE BOARD

            Appellant, Odessa R. Brown, has appealed a contracting officer’s final decision terminating for default her mail transportation contract with Respondent, United States Postal Service.  She has also appealed two additional contracting officer’s final decisions assessing (1) excess fuel costs[1] and (2) excess reprocurement costs.  At the parties’ election, these appeals are being heard on the record in accordance with 39 C.F.R. §955.12.  The parties were provided an opportunity to submit briefs in support of their positions.  Respondent submitted a brief.  Appellant did not.

FINDINGS OF FACT

            1.  On March 1, 2005, Respondent awarded Appellant contract no. HCR 786L5 for the transportation of mail between the Austin, Texas Processing and Distribution Center (Austin P&DC), the Chevron Contract Postal Unit, and the Wimberley, Dripping Springs, Driftwood, Blanco and Fischer, Texas Post Offices.  Service under the contract was to begin on March 1, 2005, and continue through June 30, 2008, at an annual rate of $170,690.22.  (Appeal File,[2] Tab (AF) A).

            2.  The contract required Appellant to have at a minimum two 24-foot straight body trucks available to perform the contract in accordance with the schedule.  The vehicles were to be maintained in “mechanically sound condition” with “readily available sufficient standby equipment of the [same] type…to perform extra trips, to permit vehicle maintenance, and to prevent delays in emergencies such as mechanical failure and poor weather conditions.”  (AF A, pp. 54, 60).

            3.  The contract required Appellant to make at least eight trips per day, six days per week during which she was required to transport mail tendered to her by Respondent.  Appellant was also required to pick up mail from six collection boxes along the line of travel on two of the scheduled trips.  (AF A, pp. 51-53).

            4.  The contract permitted the Postal Service to terminate the contract for default if the contractor failed to perform according to the terms of the contract and to assess against Appellant the excess costs associated with reprocuring the service required under the contract (AF A, pp. 30, 31).

            5.  A Postal Service Form 5500 (5500) is a pre-printed paper form issued by Respondent to mail transportation contractors alerting them to deficiencies in their contract performance.  With respect to the contract with Appellant, information to be included on the 5500s was prepared and/or collected by a person familiar with a particular instance of deficient performance.  This information was then forwarded to the Manager, Transportation Networks at the Austin P&DC, who was the Administrative Official.[3]  The Administrative Official would then review the submissions and decide if the identified performance of Appellant was, indeed, deficient.  If so, the Administrative Official issued the 5500 to Appellant.  Each 5500 contained a section wherein a contractor could respond to the notification of deficient performance.  (Forby Decl. ¶ 3)

            6.  When Appellant left late from scheduled departure locations and/or arrived late at scheduled arrival locations along the route or entirely missed scheduled trips, postal operations personnel had to arrange alternate means of transporting and/or collecting mail.  These service deficiencies by Appellant usually occurred with little or no prior notice and the alternate means of transportation was accomplished at considerable added expense.  These service deficiencies disrupted the processing and distribution of mail and led to complaints from Postal Service operations managers.  (Forby Decl. ¶¶ 10, 13).

            7.  Between the March 1, 2005 performance commencement date and the end of November of 2005, Appellant had five instances of deficient performance.[4]  The performance deficiencies included such deficiencies as completely omitted or late mail transportation service and failure to provide scanning services.  Although 5500s addressing each of these deficiencies were issued to Appellant, the Administrative Official did not consider these infrequent occurrences to require further administrative corrective measures.  (Forby Decl. ¶ 7).

            8.  Between December 2005 and April 19, 2006, Appellant experienced 16 instances of deficient performance.  One deficiency resulted from Appellant’s failure to properly scan designated locations along her route and another resulted from Appellant’s failure to properly deliver a bag of registered mail.  The other 14 deficiencies resulted from Appellant either leaving or arriving late at specified points along the route or failing to perform certain trip segments in their entirety. [5]  Appellant’s comments in the response sections of the 5500s either attributed the deficiencies to mechanical problems associated with her transportation equipment or problems with her hired drivers.  In some instances she offered no excuse.  Appellant was initially counseled informally by the Administrative Official several times and advised that she needed to improve service.  However, after Appellant was more than two and one half hours late beginning one trip, and failed to run three other subsequent trips in March 2006, the Administrative Official held a formal conference by telephone with Appellant on April 19, 2006, to discuss her deficient performance.  Appellant was advised that her frequent service failures would not be tolerated.  She was advised that she had two weeks in which to effect significant improvement in her contract performance or face damage assessments and possible default termination.  Appellant assured the Administrative Official she was taking steps to correct her performance problems.  (Forby Decl. ¶ 9; AF F, pp. 16-25, 29-30, 32-33, 36-38, 41, 48-50, 55-61).

            9.  By letter dated March 27, 2006, Appellant complained that adverse road conditions along the route and the distance between stops along the route (as compared to the estimated distances in the contract) required that the time allotted for some trips be extended to permit her to meet schedule requirements.  By letter dated April 15, 2006, the contracting officer advised Appellant that a survey of the route had been conducted approximately two weeks earlier, and it had been determined that for all but two trips, the travel time, mileage, and road conditions were “more than adequate to accommodate the schedule” stated in the contract.  The contracting officer further advised that a survey was not performed for the other two trips because Respondent’s survey personnel were unable to observe Appellant’s drivers for those trips as they failed to provide the required service on the day the survey was performed.  (Forby Decl. ¶ 14; AF C, pp. 79, 80, 82-85).

            10.  Between April 19, 2006, and July 10, 2006, the Administrative Official issued eight additional 5500s against Appellant.  Five of the 5500s were issued because Appellant failed to transport mail in accordance with the scheduled times or failed entirely to provide mail transportation services.  The other three 5500s were issued because of defects in the transportation equipment used by Appellant that posed safety risks.  Many of Appellant’s comments in the 5500 response section either attributed the deficiencies to mechanical problems caused by vandalism or problems with her hired drivers.  In some instances she offered no excuse.  (AF F, pp. 48-50, 55-61, 63-66).

            11.  By letter to the contracting officer dated June 26, 2006, Appellant advised that her mail transport vehicles had sustained vandalism damage on numerous occasions because she had no safe place to park them and that her vehicles had sustained damage from colliding with low hanging branches along the route.  Appellant also reiterated her complaint that the contract did not provide enough travel time to permit Appellant to meet the contract trip schedules.  Finally, Appellant stated that she would like to be released from her contract obligations because of the difficulties she had been experiencing performing the route.  (AF C, p. 34).

            12.  By letter dated July 14, 2006, the Administrative Official sent Appellant a “Final Request for Improvement of Service” wherein Appellant was requested to “take whatever action is necessary to restore and maintain satisfactory service within 3 days” of receiving the letter.  Appellant was further advised that further performance failures could result in her file being referred to the contracting officer and could lead to default termination and the assessment of Respondent’s additional cost of obtaining replacement service.  (AF F, pp. 63-64).

            13.  By letter dated July 21, 2006, the contracting officer replied to Appellant’s June 26, 2006 letter and advised Appellant that while he regretted the “misfortunes” she was experiencing, he would not release her from her obligation to perform the contract.  He further advised her to contact either state or local authorities about the matter of low hanging branches.  Finally, he advised Appellant that obtaining secure parking spaces for her vehicles was her responsibility.  (AF C, p. 33).

            14.  Between July 14, 2006, and August 8, 2006, the Administrative Official issued thirteen 5500s for either late arrival or departure for specific trips on Appellant’s route or for the complete omission of specific trips.  Appellant also received one 5500 for defects in the transport vehicle that “jeopardize[d] the integrity of the mail.”  Appellant’s comments in the 5500 response section offered no excuse for the deficient performance.  As a result, on August 8, 2006, the Administrative Official forwarded the file to the contracting officer for appropriate action.  (AF F, pp. 67, 69, 71-76, 87, 95-100, 102, 103, 106-108, 110; AF C , pp. 21-25; Forby Decl. ¶ 11).

            15.  On August 21, 2006, the Administrative Official and a contract specialist telephoned Appellant and advised her of the necessity of operating according to the contract schedule (Forby Decl. ¶ 11).  By letter to Appellant dated August 21, 2006, the contracting officer also instructed Appellant to restore service in accordance with the contract terms within 24 hours and thereafter maintain 100% on-time service for the balance of the contract term, or face termination and liability for damages associated with obtaining replacement services (AF C, p. 14).

            16.  Between August 9, 2006, and September 6, 2006, Respondent issued Appellant 13 5500s for either late departure or arrivals after the trip times scheduled in the contract or for failure to perform scheduled mail transport services.  Appellant’s comments in the 5500 response section offered no excuse for the deficient performance.  Four of the 5500s were issued after the August 21, 2006 telephone conference between Appellant and Respondent’s representatives.  (AF F,  pp. 111-115, 117-123, 125).

            17.  By letter to Appellant dated September 6, 2006, the contracting officer issued a final decision terminating the contract for default effective that date and suspending any pay earned by Appellant up to the date of termination (AF C, pp. 3-5).

            18.  By letter to the Board dated September 26, 2006, Appellant filed a timely appeal from the final decision which was docketed as PSBCA No. 5362.

Reprocurement

            19.  At the time of termination, Appellant’s annual contract rate was $137,372.26 (AF C, p. 13).  Following the termination of Appellant’s contract Respondent contacted five potential mail transportation suppliers to provide replacement service and received offers from two.  The low offer was $316,680.97 and the contract was awarded to the low offeror.  The record contains neither a copy of the replacement contract nor evidence of the replacement contractor’s obligations under the contract.  (AF H, pp. 2-4, 9).

            20.  In a final decision dated March 2, 2007, the contracting officer assessed excess reprocurement costs against Appellant in the amount of $41,568.27.  The final decision stated that the amount of the excess costs was calculated using an amount for the replacement contract of $268,141.88[6] – an amount less than the $316,680,97 amount of the replacement contract, but still representing an increase over Appellant’s contract amount of more than 95 percent.  (AF H, pp. 2-4).

            21. By letter dated March 9, 2007, Appellant filed a timely appeal of the final decision which was docketed as PSBCA No. 6142 (AF H, p. 1). 

DECISION

Termination for Default

            Respondent has the burden of proving that its default termination of Appellant’s contract was justified.  Lisbon Contractors, Inc. v. United States, 828 F.2d 759 (Fed. Cir. 1987); Charli Selsa Schiver d/b/a NGX-Schiver, PSBCA No. 4545, 02-2 BCA ¶ 31,937; Arthur L. Johnson, PSBCA No. 3894, 97-1 BCA ¶ 28,773.  Respondent argues that Appellant’s numerous and continued performance deficiencies justify the termination of her contract for default.  Upon consideration of the evidence in this appeal, we agree and conclude that Respondent has met its burden of proving that Appellant’s deficient performance justified terminating her contract for default. 

            During the first nine months of the contract, Appellant, while having some performance deficiencies, performed in a manner that did not require significant administrative attention beyond the issuance of a few 5500s.  During the next four and one half months, however, Appellant’s performance began to deteriorate to such an extent that it was having a significant adverse effect on Respondent’s mail processing activities that depended upon timely performance by Appellant (Findings 6, 8).  Notwithstanding three separate warnings by the Administrative Official and a final warning by the contracting officer over the next five months that her continued deficient performance would not be tolerated, the rate of Appellant’s performance deficiencies increased (Findings 10, 12, 14, 15, 16).  This level of deficient performance amounted to a material failure to comply with the terms of the contract and deprived Respondent of the regular and reliable service for which it contracted and was entitled to receive.  Charli Selsa Schiver d/b/a NGX-Schiver, PSBCA No. 4545, 02-2 BCA ¶ 31,937; Larry A. Stiles, PSBCA No. 5304, 10-1 BCA ¶ 34,358. 

            Respondent having demonstrated that Appellant failed to perform in accordance with the terms of the contract, the burden shifts to Appellant to present evidence that her performance deficiencies were excusable, Charli Selsa Schiver d/b/a NGX-Schiver, PSBCA No. 4545, 02-2 BCA ¶ 31,937; Larry A. Stiles, PSBCA No. 5304, 10-1 BCA ¶ 34,358, or to show that the termination was an abuse of discretion, Arthur L. Johnson, PSBCA No. 3894, 97-1 BCA ¶ 28,773.  In her responses to the 5500s issued by Respondent that are relied upon in this decision, Appellant did not deny that the complained of performance deficiencies occurred.  Rather, in response to most of the 5500s issued for service deficiencies, Appellant blamed her performance deficiencies on mechanical problems associated with her transport equipment or problems with her hired drivers, neither of which excuses her deficient performance.  Arizona Barnes, PSBCA No. 945, 1981 WL 7672, May 27, 1981; Shorthaul Trucking Company, PSBCA No. 1046, 1985 WL 16706, June 18, 1985.  Additionally, Appellant has not alleged that the contracting officer abused his discretion by terminating her contract for default, and the record does not support such a determination.

Excess Reprocurement Costs

           Respondent claims entitlement to excess reprocurement costs in the amount of $41,569.27, which it allegedly incurred as a result of Appellant’s default termination.

           For Respondent to recover excess costs associated with its reprocurement efforts, it must demonstrate, inter alia, that the services it reprocured were the same as, or similar to, those provided under the terminated contract.  Andrew M. Johnson, PSBCA Nos. 5210, 5242, 07-1 BCA ¶ 33,464, recon. den., 07-1 BCA ¶ 33,582; Christine Bell, PSBCA No. 5037, 04-2 BCA ¶ 32,756.  Respondent did not submit into the record a copy of the replacement contract or any other evidence which could establish the type, frequency or timing of the service required by the replacement contract.  This deficiency in Respondent’s evidence is particularly significant where, as here, the replacement contract represented a substantial (at least 95 percent) increase over Appellant’s contract amount (Findings 19, 20).  Thus, we are not able to conclude that the service provided by the replacement contractor was the same as, or similar to that provided by Appellant, and Respondent has not met its burden of proof.  As such, Respondent may not recover its claimed reprocurement costs.    

CONCLUSION

           Appeal of PSBCA No. 5362, the contracting officer’s decision to terminate Appellant’s contract for default, is denied.  Appeal of PSBCA No. 6142, Respondent’s claim for excess reprocurement costs is granted.  Any unpaid compensation previously withheld from Appellant as a result of the termination should be paid to her unless otherwise withheld for reasons unrelated to these appeals.  Appeal of PSBCA No. 6115, Respondent’s claim for excess fuel costs, is granted (see n. 1). 

                                                                        William A. Campbell
                                                                        Administrative Judge                                                                       
                                                                        Chairman

I concur:                                                          I concur:
David I. Brochstein                                        Norman D. Menegat
Administrative Judge                                     Administrative Judge
Vice Chairman                                               Board Member

[1] In footnote 1 to its brief, Respondent states that it “expressly waives its claim against Appellant arising from the Fuel Management Program” – i.e., PSBCA No. 6115 – and consents to the dismissal of its claim with prejudice.  Based on the statement and the fact that Respondent did not further address the excess fuel claim in its brief, we conclude that Respondent has abandoned its defense to the appeal in PSBCA No. 6115 and, for that reason, that the appeal should be granted.  Accordingly, we do not address the facts underlying PSBCA No. 6115 in this Opinion.

[2] The record contains two Appeal Files, one filed in PSBCA No. 5362 and one filed in PSBCA No. 6115.  All references are to the Appeal File in PSBCA No. 5362.

[3] The Administrative Official was responsible for day to day supervision of Appellant’s performance (AF A, pp. 21-25; Declaration of B. Forby (Forby Decl.) ¶ 6).

[4] There were four additional 5500s issued during this time period.  However, we did not consider them to reflect deficient performance because Appellant’s explanation of the incidents contained on the 5500s raised doubt as to whether her performance was actually deficient (AF F, pp. 11-14).

[5] There was one additional 5500 issued during this time period.  However, we did not consider it to reflect deficient performance because Appellant’s explanation of the incident raised doubt as to whether her performance was actually deficient (AF F, p. 26).

[6] Respondent arrived at this amount by subtracting the amount included in the replacement contractor’s offer that was attributable to fuel (AF H, p. 4)