January 19, 2016

VEER RIGHT MANAGEMENT GROUP, INC. v. UNITED STATES POSTAL SERVICE

PSBCA No. 6605

APPEARANCE FOR APPELLANT:
Glenn L. Smith, Esq.
Wheeler Upham, P.C.

APPEARANCE FOR RESPONDENT:
Richard Y. Rho, Esq.
United States Postal Service Law Department 

OPINION OF THE BOARD

Veer Right Management Group, Inc. appeals the United States Postal Service’s decision that Veer Right is liable for $17,987.15 under a contract for trade show management services.  Veer Right elected to proceed under the Board’s Small Claims (Expedited) procedures.  39 C.F.R. § 955.13.  The parties presented the case on the written record without an oral hearing.  The appeal is denied.

SUMMARY FINDINGS OF FACT

Under Contract No. 2BTCON-10-B-0020, Veer Right served as the Postal Service’s full service events marketing supplier until the contract expired on September 30, 2013 (AF Tabs 1-2; Declaration of J. Castellano ¶¶ 2-3; Declaration of B. Corley ¶ 6).  The contract required Veer Right to secure booth space for the Postal Service’s participation in trade shows in exchange for a fixed-fee per show (AF Tab 2 at 27; AF Tab 4 at 163-66).  “For [trade] shows [requiring advance payments], the USPS will provide advance payment to the supplier to cover the required deposit for the booth spaces. . . . Advanced payment will not be provided for any other requirement.”  (AF Tab 2 at 26).  Regarding other trade show payments, the contract provided: The supplier is also responsible for providing funding to the applicable show management to secure USPS space for these shows and all associated activities.  Invoices will be submitted by the supplier to USPS after completion of the event. (AF Tab 2 at 27).  The contract also placed responsibility on Veer Right to “[c]oordinate payment on behalf of USPS of exhibit space costs, . . . [f]ollow-up on outstanding payments to subcontractors, [and a]udit final subcontractor billings.”  (AF Tab 2 at 32).  Contract clause 4-1(g) provided, in part, that “[t]he supplier’s invoices must be submitted before payment can be made” and provided details about the required contents for an invoice (AF Tab 1 at 20).

On May 29, 2012, with the Postal Service’s authorization, Veer Right entered into a contract with the Reverse Logistics Association (Reverse Logistics) for the Postal Service’s participation in its Las Vegas trade show from February 12-14, 2013.  The Postal Service participated in that trade show.  (AF Tab 9; Corley Decl. ¶ 7: Declaration of T. Miller ¶ 16). 

Reverse Logistics required an advance payment.  On August 22, 2012, Veer Right sent the Postal Service a $29,446.85 invoice, attaching Reverse Logistics’ invoice for the advance payment (AF Tab 7 at 208-09; Corley Decl. ¶ 8; Miller Decl. ¶ 20).  The Postal Service promptly paid the invoiced amount (AF Tab 7; Corley Decl. ¶ 9; Miller Decl. ¶ 20).  On February 18, 2013 (four days after the trade show), Veer Right sent another invoice to the Postal Service for its management fee and reimbursement of costs.  The Postal Service promptly paid that invoice also.  (AF Tab 7 at 211; Corley Decl. ¶¶ 10-11).

Reverse Logistics sent Veer Right another invoice dated March 4, 2013 seeking an additional $4,995 payment (excluding finance charges) for the Postal Service’s participation in the trade show.  Reverse Logistics re-sent its invoice to Veer Right several times thereafter seeking payment.  (AF Tabs 6, 10 at 206-07, 11 at 227-248; Miller Decl. ¶ 21). 

Although Veer Right discussed the demand with Reverse Logistics, it did not submit the $4,995 March 4, 2013 invoice to the Postal Service nor notify the contracting officer or her representatives that Reverse Logistics sought additional payment (AF Tabs 9 at 212-14; 10 at 223; Corley Decl. ¶¶ 12-14; Corley Suppl. Decl. ¶ 10; Castellano Decl. ¶ 8). 

More than a year later, on August 26, 2014, Reverse Logistics sent an invoice to Veer Right seeking a $22,982.15 payment for the Postal Service’s participation in the trade show.  The following day – August 27, 2014 – Reverse Logistics sent that $22,982.15 invoice directly to the Postal Service.  (AF Tab 9, 13 at 222; Corley Decl. ¶ 13).  This was the first notice received by the Postal Service’s contracting officer or her representatives that any additional payment for the trade show might be owed (AF Tab 10 at 223; Castellano Decl. ¶¶ 6, 8; Corley Decl. ¶¶ 12-14, 17; Corley Supp. Decl. ¶ 10).

On August 28, 2014, Reverse Logistics informed the Postal Service that if its prior $4,995 invoice had been paid, it would not have sought the higher payment.  However, due to the passage of time, Reverse Logistics no longer was willing to compromise the amount it believed was due.  (AF Tab 10 at 223; Miller Decl. ¶¶ 21, 25).

After Reverse Logistics threatened both parties with collection action, on April 22, 2015, the Postal Service’s contracting officer issued a final decision in which she decided to pay Veer Right $22,982.15, with the requirement that Veer Right would forward the entire payment to Reverse Logistics to satisfy its demands.  The final decision also determined that Veer Right owed the Postal Service $17,987.15 from that payment, which is at issue in this case.  The Postal Service does not seek the remaining $4,995.  The Postal Service then paid $22,982.15 to Veer Right.  (AF Tabs 6, 16, 19 at 282; Corley Decl. ¶ 22; Castellano Decl. ¶ 9; Miller Decl. ¶ 27).  Veer Right passed $4,995 of that payment on to Reverse Logistics but, without further explanation  in the record, withheld the remaining $17,987.15 pending resolution of this dispute (AF Tabs 20-21 at 285-87; Miller Decl. ¶ 29).  Veer Right timely appealed the final decision.

DECISION

The Postal Service promptly paid Veer Right for Reverse Logistics’ invoiced advance billing and the invoice sent shortly after the trade show.  Thereafter, Reverse Logistics initially sought an additional $4,995 from Veer Right based on a provision in the contract between them.  Veer Right did not present the March 4, 2013 invoice to the  Postal Service as a pass-through cost.  Sixteen or more months later, Reverse Logistics sought $22,982.15 based on the terms of its contract with Veer Right.  Reverse Logistics then sent an invoice in this amount directly to the Postal Service.

The contract entitled the Postal Service to rely on Veer Right to coordinate, follow-up on, and audit payments to its subcontractor, Reverse Logistics, and did not provide for payment by the Postal Service until Veer Right submitted an invoice to the Postal Service “after completion of the event.”  Veer Right did not follow these terms of its contract with the Postal Service.  The Postal Service learned of Reverse Logistics’ demand for additional trade show costs when Reverse Logistics sent the $22,982.15 invoice directly to the Postal Service.

The specific timing of Veer’s Right’s obligation to submit invoices to the Postal Service is not further defined in the contract.  However, where a government contract requires a party to act within a nonspecific time (here, submit invoices “after completion of the event”), the law imposes a reasonableness standard determined by the circumstances.  See Essex Electro Eng’rs, Inc. v. Danzig, 224 F.3d 1283, 1291 (Fed. Cir. 2000), see also Restatement (Second) of Contracts § 204 cmt. d.

Under these circumstances, Veer Right’s substantial delay, from March 2013 to August 2014 (after its contract had expired) in even beginning to try to coordinate payment to Reverse Logistics breached Veer Right’s contract with the Postal Service.

Had Veer Right taken the simple step of timely invoicing the Postal Service (or perhaps just forwarding Reverse Logistics’ email and invoice to the contracting officer or her representatives), thef subsequent demand for an additional $17,987.15 would not have occurred.  Veer Right’s unexplained inaction caused the liability at issue in this case.¹

CONCLUSION AND ORDER

Veer Right’s appeal is denied.  It owes the Postal Service $17,987.15.

Gary E. Shapiro
Administrative Judge
Chairman

¹ Veer Right’s argument that the Postal Service conceded liability in its final decision is not persuasive.  The final decision is reviewed de novo.  See Assurance Co., v. United States, 813 F.2d 1202 (Fed. Cir. 1987).