Appeal of
HARTWIG TRANSIT, INC.
Under Contract No. HCR 54990
PSBCA No. 3464

APPEARANCE FOR APPELLANT:
Thomas L. Ruth, Jr., Esq.

APPEARANCE FOR RESPONDENT:
Maria R. Fuhrman, Esq.

OPINION OF THE BOARD

            Appellant, Hartwig Transit, Inc., has appealed the termination of mail transportation service it performed for the United States Postal Service, Respondent.  Respondent contends that the services were performed without benefit of a formal contract between the parties and that the services could therefore be terminated without liability.

            Only entitlement is in issue.

FINDINGS OF FACT

            1.  Since at least 1976, Appellant provided mail transportation service under contract HCR 54990 between Oshkosh, Wisconsin, and St. Paul, Minnesota (Transcript page ("Tr.") 37; Appeal File Tab ("AF") A).

            2.  Appellant had also, since about 1980, provided service on an as-needed basis between a mailer's plant at Neenah, Wisconsin, and the Chicago Bulk Mail Center for a fixed fee per trip (Tr. 38; AF D).  Appellant picked up loaded trailers from the Neenah plant and delivered them to the Chicago Bulk Mail Center (Tr. 91).  Appellant did not bring empty trailers to the plant for loading.

            3.  The Neenah service was established and the rate set (and adjusted over time) through execution by Appellant and the contracting officer of a series of written amendments to Appellant's Oshkosh-St. Paul contract.  The latest such amendment in the record was executed in 1989 and pertained to Appellant's Oshkosh-St. Paul contract for the term July 1, 1988, through June 30, 1992.  (AF D).

            4.  Before the June 30, 1992 expiration of Appellant's contract, Appellant's representative met with two of Respondent's transportation officials to negotiate a renewal of the contract.  The contracting officer was not present at the negotiations, and neither of Respondent's representatives had contracting authority.  The parties understood that after conclusion of the negotiations a written contract would be prepared and would be signed by both the contracting officer and Appellant's authorized representative.  (Tr. 29, 46, 49, 51, 52; AF D, G).

            5.  Acceptable rates for the Oshkosh-St. Paul service were negotiated.  During the negotiations Respondent's representative asked whether Appellant would continue to perform the Neenah service for the same rate then in force, and Appellant's representative stated that it would (Tr. 50).  The renewal contract for the Oshkosh-St. Paul service for the period July 1, 1992, through June 30, 1996, does not mention the as-needed service to Neenah, and no written amendment for that service was ever executed (Tr. 44; AF A).

            6.  Appellant continued to perform the Neenah service after June 30, 1992, when requested by Respondent's mail operations personnel (Tr. 27, 40, 71, 93-94), and the administrative official under the renewal contract, the Oshkosh Postmaster,[1] directly authorized payment by the Postal Data Center (Tr. 93-94; AX 1, 2).  Payments were not processed through the contracting officer (Tr. 79).  Appellant was paid at the rate per trip prevailing before the June 1992 renewal of its Oshkosh-St. Paul contract for all service to Neenah it performed after July 1, 1992 (Tr. 41, 50, 54-55, 93-94; AX 1, 2).

            7.  In May, 1993, the contracting officer discovered that service to the mailer's plant in Neenah was specifically covered in the contract of another transportation contractor, Sheehy Mail Contractors, Inc. ("Sheehy").  Under its contract for the period from July 1, 1990, through June 30, 1994, Sheehy was to serve a number of mailers' plants, including that in Neenah, and Sheehy had been hauling in empty trailers to the Neenah plant under its contract, but had not been hauling out the trailers containing the mail (Tr. 66-68, 82, 85, 87; AF H).  Both Sheehy and Appellant were performing service to Neenah during the same period, including occasions when both contractors made trips to Neenah on the same day, Appellant hauling out loaded trailers and Sheehy hauling in empty trailers (Tr. 73, 76-77, 87-88; AX 1, 2).

            8.  The contracting officer determined that the total number of trips to Neenah and Respondent's total cost for the service could be reduced by having one contractor perform both functions (Tr. 73, 85-86, 90-91; AF H).

            9.  Upon review of Appellant's contract, the contracting officer concluded that it did not provide for the Neenah service as no amendment had been executed for the 1992-96 term (Tr. 68-69).  In a May 10, 1993 letter, designated a final decision and containing the standard appeal language, the contracting officer directed Appellant to stop performing the Neenah service (AF E).  Appellant has appealed that determination.

DECISION

            Appellant argues that at the time its basic contract was renewed in 1992, the Neenah service amendment was renewed as well, even though the record contains no written amendment.  It argues that over the course of its dealings with Respondent, it was not unusual for an executed contract document representing the parties' agreement to be delayed weeks or months after agreement was reached and after service had begun under the terms of the new agreement.  Finally, Appellant argues that Respondent's use of its services for almost a year and payment for such service establishes the existence of an amendment.  Appellant argues that Respondent breached the terms of the amendment by failing to provide Appellant sufficient advance notice of the termination and that Appellant therefore is entitled to damages or reinstatement.

            Respondent argues that Appellant has not shown the existence of an express or implied-in-fact contract or amendment for service to Neenah after the June, 1992 renewal.  Respondent's primary argument is that no postal official with contracting authority made any express agreement regarding the Neenah service, and the contracting officer took no actions, relied upon by Appellant, which could be the basis for finding that an implied-in-fact contract for the Neenah service was created.  Alternatively, Respondent argues that any amendment for the Neenah service would include special termination provisions that allow termination without liability by either party, provisions that it contends were common to the Neenah service amendments preceding the 1992 renewal of Appellant's contract.  According to Respondent, therefore, the termination would have been without liability even if Appellant had a contractual right to perform the Neenah service.

            Respondent is not bound by agreements or representations made by an official lacking proper authority, Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380,  384 (1947); Edward R. Ester and Lorraine Ester, PSBCA No. 3051, 93-3 BCA ¶ 25,960; John S. Vayanos Contracting Co., PSBCA No. 2360, 93-2 BCA ¶ 25,600; Henry Burge and Alvin White, PSBCA No. 2431, 89-3 BCA ¶ 21,910, and it is Appellant's burden to show that the officials with whom it contends it agreed to the Neenah amendment had the requisite contracting authority, see City of El Centro v. United States, 922 F.2d 816, 820-821 (Fed. Cir. 1990); Housing Corp. of America v. United States, 468 F.2d 922, 925 (Ct. Cl. 1972).

            Appellant has not shown or alleged that Respondent's negotiators had contracting authority, and the contracting officer was not a participant in the negotiations.  Appellant, through its long experience with Respondent, knew that any contract resulting from the negotiations would be signed by Respondent's contracting officer.  Furthermore, aside from the failure to show it dealt with any representative of Respondent that had contracting authority, Appellant has shown at most that it offered to continue the Neenah service at the existing rate. It has not offered any evidence that Respondent's agent accepted that offer during the negotiations.  Appellant has failed to demonstrate that the parties entered into an express contract or express amendment for the Neenah service.  See Edward R. Ester and Lorraine Ester, PSBCA No. 3051, 93-3 BCA ¶ 25,960

            Appellant has also failed to meet its burden to prove the existence of an implied-in-fact contract, see H.F. Allen Orchards v. United States, 749 F.2d 1571, 1575 (Fed. Cir. 1984); OAO Corp. v. United States, 17 Cl. Ct. 91, 98 (1989), because the absence of contracting authority in Respondent's negotiators precludes a finding of an implied-in-fact contract, see New America Shipbuilders, Inc. v. United States, 871 F.2d 1077, 1080-81 (Fed. Cir. 1989); H.F. Allen Orchards v. United States, 749 F.2d at 1575; OAO Corp. v. United States, 17 Cl. Ct. at 100.

            Appellant argues that Respondent's use of and payment for Appellant's Neenah service for a period of almost one year after renewal of the Oshkosh-St. Paul contract demonstrates that there was an amendment for the Neenah service.  However, although the actions of Respondent's officials may have been sufficient to create an agreement to pay for the service they ordered and Appellant actually performed, Appellant has not shown that any further obligation was created.  Appellant has not shown the existence of a commitment by Respondent or an expectation of Appellant that the "as needed" service would continue at any particular level or for any fixed term.  Therefore, Appellant is not entitled to recover for Respondent's discontinuation of that service.

            The appeal is denied.

Norman D. Menegat
Administrative Judge
Board Member

I concur:
James A. Cohen
Administrative Judge
Chairman

I concur:
James D. Finn, Jr.
Administrative Judge
Vice Chairman

[1]  There is no evidence that the employees authorizing the trips to Neenah or the Oshkosh Postmaster who authorized payment for the trips had contracting authority (AF A; Appellant's Exhibit ("AX") 1).