Appeal of
KENNETH E. HIVELY

Under Contract No. HCR 74472
PSBCA No. 2856

APPEARANCE FOR APPELLANT
Rex Earl Starr, Esq.

APPEARANCE FOR RESPONDENT
L. Donnell Blanchard, Esq.

OPINION OF THE BOARD

This appeal is taken from a Contracting Officer's decision terminating Appellant's highway transportation contract for default.  At the request of the parties a hearing was held.

FINDINGS OF FACT

1.  Solicitation No. TMC5-138-90, seeking bids for highway transportation services between Park Hill, Oklahoma and Cookson, Oklahoma for a duration of four years (July 1, 1990 - June 30, 1994), was issued on April 16, 1990.  Appellant, Kenneth E. Hively, submitted the low bid on May 12, 1990, in the amount of $13,506.95 per annum (Respondent's Appeal File, Tab A (RAF-A)). 

2.  Appellant's bid was accepted by the Contracting Officer executing Contract No. 74472 on May 29, 1990, for the required transportation services (RAF-A).  The contract award was made without the Contracting Officer first obtaining from Appellant a completed PS Form 2025 "Contract Personnel Questionnaire," which pertains to the background and qualifications of a prospective contractor.  The Contracting Officer's failure to obtain the form was contrary to established Postal Service procedures (RAF-A; Transcript (Tr.)-13, 18).

3.  Appellant thereafter was sent PS Form 2025, provided the information requested on the form, and returned it on June 4, 1990.  In answer to a question pertaining to a prior criminal record Appellant wrote on the form that in February 1989 he had been convicted of "Misd. Poss." in California and was on general probation (RAF-C).  Further inquiry by Respondent by contacting a records department in California revealed that Appellant was on three years probation effective May 10, 1989, for misdemeanor possession of a controlled substance (RAF-C; Tr. 14).

4.  The General Provisions of Appellant's contract, PS Form 7407T, March 1989, contained the following provision regarding contract for default:

  16.  TERMINATION BY THE POSTAL SERVICE FOR DEFAULT.

         (a) The Contracting Officer may terminate this contract for default:

        (7) If the Contractor or a partner, if the Contractor is a partnership, or a principle operating officer or owner, if the Contractor is a corporation, (a) has been or is, during the term of the contract, convicted of a crime of moral turpitude affecting his reliability or trustworthiness as a mail transportation contractor, such as any form of theft, fraud, embezzlement or assault, or (b) associates with know criminals, or (c) is not reliable, trustworthy or of good character.

        (c)  If, after notice of termination of this contract under the provisions of this Clause, it is determined for any reason that the Contractor was not in default under the provisions of this Clause, or that the default was excusable, the rights and obligations of the parties shall be the same as if the notice of termination has been issued pursuant to Clause 17 [entitled "Termination For Convenience"].

The Termination For Convenience clause in turn stated that a highway transportation contractor whose contract is terminated for convenience shall be allowed an indemnity pursuant to clause 12 of the General Provisions entitled "Changes."  The letter provision allowed the contractor one-third of the annual contract rate as liquidated damages for termination if the contract was terminated for convenience during the first two years (RAF-A).

5.  On June 15, 1990, the Contracting Officer by final decision terminated Appellant's contract for default under clause 16(a) (7) of the General Provisions.  The Contracting Officer based his decision on Appellant's conviction for possession of a controlled substance, which he viewed as a crime of moral turpitude (RAF-C; Tr. 15, 23).  However, the Contracting Officer did not consider Appellant to be unreliable or untrustworthy (Tr. 23-25).  Appellant timely filed an appeal from the June 15, 1990, final decision.

DECISION

Appellant argues that the termination was improper and that he should be awarded special damages for costs incurred and for lost earnings, both resulting from the award and the subsequent termination.  We agree only with his first contention that the default termination was improper.

The Contracting Officer neglected to follow established procedure and obtain a Form 2025 from Appellant prior to contract award.  When Appellant provided the form to the Contracting Officer he was straightforward and candid in fully revealing his misdemeanor conviction.  Nevertheless, shortly thereafter, the Contracting Officer terminated the contract for default, for Appellant's conviction of a crime of moral turpitude.

In fact it has generally been held that a misdemeanor conviction for possession of a controlled substance is not a crime involving moral turpitude.  Matter of Marquardt, 778 P.2d 241 (Ariz. 1989); State v. Ball, 354 S.E.2d 906 (S.C. 1987); In re Chase, 702 P.2d 1082 (Or. 1985); Pearl v. Fla. Bd. of Real Estate, 394 So.2d 189 (Fla. 1981); but see Matter of Thomas, 472 N.E...2d 609 (Ind. 1985).  Respondent has not shown that a different rule should be applied in this case.  Moreover, the facts pertaining to the conviction could have been readily obtained by the Contracting Officer prior to award had he followed established procedure.  While these facts might have been utilized in connection with a preaward responsibility determination they do not serve as a basis for terminating the contract for default.  Accordingly, the default termination is converted to one for the convenience of the Postal Service.

Appellant's argument that he should be awarded certain special damages such as the cost of a truck he purchased in anticipation of contract award and loss of anticipated earnings from a different endeavor he could have pursued has no merit.  The contract specifically provided that in the event of a termination for convenience Appellant would be reimbursed one-third of the annual contract rate as liquidated damages.  The remedy is exclusive.  The termination for convenience clause does not provide for payment of special damages.  See Paul A. Mason, PSBCA No. 1187, 84-3 BCA ¶ 17,572.  Appellant is entitled to payment of $4,502.32 (13,506.95 times one-third) as compensation for the termination for convenience of his contract.  The appeal is sustained to that extent.

James D. Finn, Jr.
Administrative Judge
Vice Chairman


I concur
James A. Cohen
Administrative Judge
Chairman

I concur
David I. Brochstein
Administrative Judge
Board Member