Appeal of
BETTY and EDDIE JACKSON
Under Contract No. HCR 707AD
PSBCA No. 3624

APPEARANCE FOR APPELLANT:
Eddie D. Jackson

APPEARANCE FOR RESPONDENT:
Richard S. Kessler, Esq.

OPINION OF THE BOARD

            Respondent, United States Postal Service, awarded Appellants, Betty and Eddie Jackson, a contract for the highway transportation of mail in Baton Rouge, Louisiana.  During the term of the contract, Respondent required Appellants to perform additional transportation services, and Appellants’ annual contract compensation was increased.  However, Appellants claim they were entitled to an increase larger than that reflected in amendments to the contract.  Appellants also claim indemnity, as provided in the contract, for Respondent’s later elimination of a few of the scheduled trips.  Respondent disputes only the amount of indemnity, not Appellants’ entitlement.  Additionally, Appellants claim compensation for extra trips, and, again, Respondent only disputes the amount, not entitlement.  Finally, Appellants claim entitlement to damages because Respondent had another contractor run some extra trips that Appellants contend they should have been allowed to perform.  The contracting officer denied Appellants’ claims, and they have appealed.

            A hearing was held, and the parties have filed briefs.  Both entitlement and quantum are to be decided.

FINDINGS OF FACT

            1.  In July 1991, Respondent renewed Appellants’ mail transportation contract for the term from July 1, 1991, to June 30, 1995, at the annual “contract rate” of $102,367.  The contract required Appellants to shuttle mail by truck between the Baton Rouge General Mail Facility (“GMF”) and the Baton Rouge Airport, with the number of trips per day varying by day of the week and on holidays.  The total annual miles under the contract were approximately 58,000, resulting in a “rate per mile,” as stated in the contract, of $1.76422.  (Transcript of Hearing, pages (“Tr.”) 27-28, 204, 397; Appeal File, Tab (“AF”) 17, 17A, 17B).

            2.  The Changes clause of the contract provided,

“Service changes other than insignificant minor service changes [those under $1000] may be made if the terms of the change, including increases or decreases in compensation, are agreed to by the Contracting Officer and the Contractor.  Such changes shall be executed on Form 7406, Amendment to Transportation Services Contract.”  (AF 17A, Basic Surface Transportation Services Contract General Provisions, General Provision 12(a)(2); see Tr. 204-205, 218).

            3.  The Payment clause provided, in part,

“Compensation at the specified contract rate shall be paid to the Contractor in installments at the close of each four-week accounting period . . . . “ (AF 17A, General Provision 10).

            4.  The contract authorized the contracting officer to terminate or curtail the service under the contract for the convenience of the Postal Service.  For such terminations within the first two years of the contract term, Appellants, under the Changes clause of the contract, had agreed to accept, “as liquidated damages for termination, a sum equal to . . . [o]ne-third of the annual rate . . . .”  If the contract were curtailed, i.e., the service under the contract reduced, within the first two years, the indemnity “sum shall be [one-third of] the dollar amount of the contract rate reduction.” (AF 17A, General Provisions 12(d), 17).

            5.  Respondent built a new GMF in Baton Rouge and expected that, as of January 17, 1993, Appellants’ service would be needed between the airport and the new GMF.  The round trip distance between the new GMF and the airport was 32.2 miles compared to 15.2 miles between the old GMF and the airport.  As a result, had the number of trips remained the same, the move would have added about 69,000 miles annually to the route.  (Tr. 41, 91, 205, 209, 249, 316, 429; AF 14, 16; Respondent’s Exhibit (“RX”) 1).

            6.  By letter dated December 30, 1992, the contracting officer notified Appellants of the impending service change and provided them with the schedule for service to the new GMF and a PS Form 7463-A, Negotiated Cost Statement -- Highway Transportation Contracts (“Cost Statement”), which detailed Appellants’ costs of performing the service before the change and what Respondent calculated would be Appellants’ costs of performing the service to the new GMF.  The contracting officer proposed a $29,650 increase to Appellants’ annual compensation, raising the annual contract rate to $137,174, and included a proposed PS Form 7406, Amendment to Transportation Services Contract, that showed the proposed adjustment.  The Cost Statement identified the total mileage of the new service as 131,015.  The letter to Appellants provided:

“The Transportation Management Service Center has completed Column II of Form 7463-A indicating the increased costs we believe you will incur as a result of the change in service.  Only costs attributed to the increase have been considered.  (Adjustments in the rate of compensation to effect economic increases or correct bid error are not allowable.)  Accordingly, we are offering you an increase of $29,650.00.

If you agree with the proposed increased amount as shown on the enclosed form for the service change, please sign the enclosed Forms 7406 and 7463-A. Your signature on the Form 7406 must be witnessed.

If you do not agree with the compensation recommended by the [Transportation Office], we have included a blank Form 7463-A.  Please complete Column II showing your proposed costs.  Only those costs directly attributable to this service change should be included.  We will consider your counter-offer and schedule a negotiation session if necessary.”  (RX 1).

            On January 5, 1993, Appellants signed the Form 7406, Amendment to Transportation Services Contract, and Cost Statement for the increase of $29,650 per year and returned the documents to Respondent.  (Tr. 34, 35, 62, 208-209, 248-250, 253, 255-257, 303, 316-318; AF 16, pp. 1-4; RX 1).

            7.  The $29,650 increase and the December 30, 1992 service schedule never went into effect.  Before the service switched to the new GMF, the contracting officer, by letters dated January 12 and 13, 1993, notified Appellants that four of their trips (two round trips) were being eliminated and sent Appellants another schedule for the contract service slated to begin January 17 which reflected the elimination of the four trips.  The contracting officer included another PS Form 7406, Amendment to Transportation Services Contract, proposing a contract rate increase of $8,371 and a Cost Statement prepared by Respondent that showed what Respondent calculated to be Appellants’ costs of performing the service to the new GMF without the four eliminated trips.  The Cost Statement showed the new total annual mileage to be 109,334, an increase of about 47,000 miles over the service to the old GMF.  The new contract rate was $115,895, resulting in a “rate per mile” of $1.06, down from the $1.73 rate per mile in effect for service to the old GMF.  This Cost Statement used as its base the miles under the contract to serve the old GMF and was written as if the earlier $29,650 amendment had no effect on the contract.  (Tr. 101, 258, 321, 345; AF 16, pp. 5-10; RX 3)

            8.  Using substantially the same language as the December 30 letter quoted above (Finding 6), the January 13, 1993 letter offered Appellants the opportunity to counter-offer with their own proposed adjustment and Cost Statement.  The letter specifically noted that, as a result of the change, Appellants’ annual miles under the contract would be increased by 47,412 and the annual compensable hours would be decreased by 720.^[1]  Appellants executed the contract amendment and signed the Cost Statement and returned both to the contracting officer.  (Tr. 31, 32, 34, 115, 147, 201, 224, 228, 232-234, 240, 251, 257, 261-263, 321; AF 16, pp. 5-10).  Had the contracting officer been unable to negotiate an agreement with Appellants to perform the changed service, he would have terminated the contract for convenience (Tr. 303, 396-397).

            9.  At the hearing and in its briefs, Respondent has conceded that the effect of the two amendments was to increase the contract rate by $29,650 and then to curtail the service by eliminating the four trips, even though Appellants never performed the service called for by the January 5 amendment.  Respondent concedes that Appellants are entitled to an indemnity of $7,093 under General Provision 12(d) of the contract, calculated as follows: one/third (the agreed upon indemnity rate for the second year of the contract under General Provision 12(d)) times $21,279 (the difference between $29,650 (the original increase before elimination of the trips from the proposed schedule) and $8,371 (the increase due to serving the new GMF after elimination of the trips)) plus Contract Disputes Act interest.  (Tr. 57-58, 302-303, 306-311, 324-325, 327-328, 350-351, 359-361; Respondent’s Post-Hearing Brief, pp. 24-25).

            10.  By letter dated April 29, 1993, Appellants advised Respondent that they were having difficulty meeting the schedule and asked that Respondent conduct a survey of the route.  Additionally, Appellants pointed out that as of February 13, 1993, the Baton Rouge Post Office had added a trip to the service without increasing Appellants’ compensation.  (Tr. 336-337, 401; AF 13; AX 7).

            11.  A contract transportation specialist arranged for a survey of the route and completely reviewed the contract schedule and the time necessary to perform it.  She confirmed that a trip had been added and that Appellants needed more time in the schedule.  As a result of her analysis, Respondent offered Appellants an adjustment that added time to the schedule, reflected the additional trip and increased the annual contract rate by $7,824, raising the annual compensation to $123,719, retroactive to February 13, 1993.  Respondent’s proposal included the contract transportation specialist’s detailed spreadsheet analysis of the trips and time necessary to perform them, fully demonstrating through the spreadsheet and the Cost Statement how Respondent calculated the total compensation Appellants were entitled to for performing the contract after February 13, 1993.  (Tr. 36-37, 120-122, 334, 337, 347, 367-370, 374-375, 381, 390-392, 394, 401; AF 11, 16 p. 13-15).

            12.  On May 29, 1993, Appellants executed the PS Form 7406, Amendment to Transportation Services Contract, increasing the annual contract rate by $7,824 retroactive to February 13, 1993, and on June 1, 1993, Appellants executed the Cost Statement that addressed all of Appellants’ costs of performing the contract as of that date and which showed the total compensation based on those costs to be $123,719 per year (AF 11).  Respondent’s officials did not coerce or threaten Appellants with termination of their contract if they refused to sign this or any other of the amendments at issue in this appeal (Tr. 236, 332, 371-372, 399, 426-428).

            13.  In May, 1993, Appellants requested a cost-of-living adjustment as provided under the contract.  Respondent prepared a Cost Statement and Amendment that increased the annual compensation from $123,719 to $128,681.  Appellants accepted the increase without complaint.  (Tr. 361-363; RX 3, 5).

            14.  The contract authorized the contracting officer to direct Appellants to perform extra trips when needed.  The price for the extra trips was to be negotiated in advance of performance when appropriate, but the contracting officer could order Appellants to perform extra service at the per mile rate in the contract, allowing them to claim their additional costs later.  (Tr. 383; AF 17, Section 14; AF 17A, General Provision 12(b)).

            15.  In July 1993, Appellants initiated discussions regarding the rate of compensation for extra trips they anticipated during the 1993 Christmas season, proposing a rate of $3.00 per mile.  When asked by the contracting officer, Appellants submitted financial information in an attempt to justify the rate, but the contracting officer concluded $3.00 per mile was too high.  (Tr. 13, 15-20, 24, 127-129, 133, 135-137, 159-162; AF 5-9).  In telephone negotiations on December 16, 1992, the contracting officer offered $1.50 per mile which Mr. Jackson eventually said he would accept (Tr. 15, 161-162, 187-189, 195, 199-200, 264-265, 267, 295-297, 365, 406; RX 2; contra Tr. 21-22, 26, 130-132; AF 4).  An amendment reflecting the $1.50 per mile rate was promptly sent to Appellants (twice), but they did not sign.  Because Appellants did not sign the formal amendment, Respondent did not pay them for the extra trips.  (Tr. 20, 25, 130-131, 166, 291-293, 423-426; AF 3).

            16.  Appellants performed 933.8 miles of extra trips during Christmas 1993.  Respondent concedes Appellants are entitled to be paid at $1.50 per mile for those trips, resulting in Appellants’ entitlement to $1,400.70.  (Tr. 25, 126, 133, 163-164, 293-294, 366; RX 2; Respondent’s Brief, p. 31).

            17.  During the Christmas 1993 season, a few trips between the new GMF and the airport were run by another contractor.  The other contractor, engaged on very short notice late at night, was paid in excess of $3.00 per mile for such trips.  Obtaining such emergency service at the last minute generally results in payment of a premium for the service compared to rates that are negotiated in advance.  (Tr. 125-126, 381-382, 407-415; RX 6).

                        18.  In a January 12, 1994 claim, Appellants requested that they receive payment at $1.73 per mile for all miles driven under the contract and raised the issue of payment for the extra trips they performed during the Christmas season (AF 2).

            19.  In a final decision dated February 17, 1994, the contracting officer denied additional compensation, pointing out that Appellants had agreed to the adjustments for the changes in service.  Additionally, he denied Appellants’ request to be compensated at the rate of $3.00 per mile for extra trips.  This appeal followed.

DECISION

1993 Service Changes

            Appellants argue that the amendments to the contract to reflect the changed service in early 1993 did not adequately compensate them for the additional service to the new GMF and that they signed them only because Respondent threatened to take the contract away from them and put it up for bid if they refused.  They assert that they are entitled to be paid for all miles driven on the route, as modified, at $1.73 per mile, which is the rate per mile in effect immediately before the service changed.  They also argue that they understood the second amendment, adding $8,371 to the annual contract rate, to be in addition to the January 5 amendment which increased the annual contract rate by $29,650.  Finally, they argue that they are entitled to an indemnity for Respondent’s elimination of four trips from the contract at the time of the move to the new GMF.  They calculate the amount of the indemnity under the contract to be $33,781, one-third of the annual contract rate immediately before service was switched to the new GMF.

            Respondent argues that Appellants’ recovery is barred by accord and satisfaction because Appellants agreed to the amendments effecting the switch of the service to the new GMF and accepted the Cost Statements supporting each amendment as reflecting Appellants’ costs of performing the changed service.  Respondent contends that it did not coerce Appellants into agreeing to the amendments.  It disputes Appellants’ claim to $1.73 per mile, arguing that the contract did not guarantee Appellants a certain “rate per mile.”  Although Respondent previously resisted Appellants’ claim for indemnity due to the elimination of the four trips from the route, Respondent now concedes entitlement, but argues that Appellants are due only $7,093, one-third of the amount by which the contract price was reduced due to the elimination of the trips.

            Respondent’s issuance of the January 13 proposed amendment immediately after Appellants accepted Respondent’s December 31 offer of a $29,650 amendment (Findings 6-8) was somewhat confusing.  However, the Cost Statement and correspondence supporting the second amendment identified how the proposed adjustment affected the total miles and total annual compensation (Findings 7, 8).  Thus, upon careful reading of the documents it would have been apparent that the adjustments were not cumulative, but rather that the second amendment was in lieu of the first and reflected the changed service less the four eliminated trips.

            Moreover, by the time of the third amendment (Findings 10, 11), following the route survey performed at Appellants’ request, Appellants must have been fully aware of the compensation they were receiving under the contract and of Respondent’s view that only the second amendment, increasing the contract by $8,371, was in effect.  In preparing the proposed third amendment in response to Appellants’ complaint that they could not meet the schedule and that an additional trip had been required by the Baton Rouge Post Office, Respondent surveyed the route and made adjustments to the schedule and compensation under the contract.  Respondent explained fully what steps had been taken, provided a spreadsheet analysis of the trips showing in detail the hours Respondent considered necessary to operate the route and provided a Cost Statement that detailed all costs Respondent considered attributable to performance of the route.  If those documents were inaccurate or the amount of compensation inadequate, Appellants should have complained.  Instead, without complaint, they executed the third amendment that increased their annual compensation by $7,824. 

            Also, Appellants accepted without reservation a subsequent adjustment for cost-of-living increases which used as its base the mileage and annual compensation agreed to in the third amendment (Finding 13), confirming Appellants’ acquiescence in the earlier amendment’s accurate accounting for their costs of performing under the contract.  Appellants’ agreement to the four amendments constituted an accord and satisfaction as to the proper compensation due to the relocation of the GMF, elimination of four trips and the subsequent schedule adjustment and restoration of one trip.  Appellants agreed to each of the amendments, and they cannot now reopen these matters that were laid to rest by their agreements.  See Joe Garrett, Inc., PSBCA Nos. 3476, 3667, 95-1 BCA ¶ 27,357; The Swain Co., PSBCA No. 2726, 91-1 BCA ¶ 23,446; Paul A. Mason, PSBCA No. 1449, 86-3 BCA ¶ 19,144.

            Appellants presented no evidence that they were coerced into signing the amendments.  Mr. Jackson testified that he understood that such threats had been made, but he presented no evidence of them.  Through the credible testimony of its officials, Respondent demonstrated that Appellants were not coerced or threatened.  Additionally, in the letters proposing the first two amendments, Respondent unmistakably offered Appellants the opportunity to counteroffer if they did not find Respondent’s proposed amendments and Cost Statements acceptable.  Appellants have not demonstrated coercion or duress.  See Liebherr Crane Corp. v. United States, 810 F.2d 1153 (Fed. Cir. 1987); Paul A. Mason, PSBCA No. 1449, 86-3 BCA ¶ 19,144.^[2]

            The absence of evidence to support Appellants’ entitlement to compensation greater than that provided in the amendments is an additional ground for denial of Appellants’ claim.  As both entitlement and quantum are to be decided in this appeal, it is Appellants’ burden to demonstrate by a preponderance of the evidence their entitlement to an adjustment, John A. Darcy and Pamela A. Darcy, PSBCA No. 2810, 91-2 BCA ¶ 23,977; Geneva C. Stone, PSBCA No. 3104, 93-1 BCA ¶ 25,453, as well as the amount of any adjustment they are entitled to receive, David Sahagian, PSBCA Nos. 3385, 3416, 94-2 BCA ¶ 26,688; Paul A. Mason, PSBCA No. 1570, 87-1 BCA ¶ 19,654 recon. denied 87-3 BCA ¶ 19,982; Newell Clothing Co., ASBCA No. 28306, 86-3 BCA ¶ 19,093.  Appellants have failed to present evidence of their costs that would support an adjustment in any amount greater than that allowed by Respondent in the amendments addressed in this appeal.  The only evidence of Appellants’ costs in the record is that on the Cost Statements, and that evidence supports adjustments in the amounts granted by the contracting officer and agreed to by Appellants.  Therefore, there is no basis for awarding any additional compensation for the service changes.

Indemnity

            Respondent has conceded that Appellants are entitled to curtailment indemnity in the amount of $7,093 due to the first two amendments considered in this decision.  Respondent correctly calculated its figure by multiplying by one-third the amount of the reduction in the contract price due to the elimination of the four trips in January 1993.  That difference is reasonably calculated by subtracting the amount of the contract increase calculated after elimination of the four trips from the amount of the intended amendment before the trips were eliminated.  The full contract price is used as the base for an indemnity payment only when the entire contract is terminated for convenience.  (Findings 4, 9).

Christmas Trips

            Appellants seek $3.00 per mile for all extra trips performed during the 1993 Christmas season.  Respondent argues that the parties reached a binding agreement that Appellants would perform those extra trips at $1.50 per mile, but Appellants contend they did not agree, pointing out that they did not sign the written amendment sent by the contracting officer reflecting the $1.50 per mile rate.  Appellants do not contend that Respondent agreed to pay $3.00 per mile.

            We need not resolve whether a binding agreement was reached as to the rate of pay for the extra trips.  Respondent does not dispute Appellants’ entitlement to be compensated at $1.50 per mile for the extra trips (Finding 16), and Appellants have failed to demonstrate by a preponderance of the evidence their entitlement to any higher rate.  The bills and invoices Appellants submitted to the contracting officer (Finding 15) are in the record, but Appellants did not show how, if at all, those bills support their claim for $3.00 per mile. 

            Appellants argued that Respondent’s payment of more than $3.00 per mile to another mail transportation contractor to perform a few Christmas trips demonstrates that they should be paid at least $3.00.  However, negotiations for the other contractor to perform extra trips were conducted shortly before the trips were to be run in the middle of the night, and under those circumstances it was not unusual for Respondent to pay a premium for the emergency service (Finding 17).  Therefore, as the circumstances differ, the rate paid to the other contractor does not support Appellants’ claim to $3.00 per mile for the extra trips they made.

            Appellants are entitled to recover for the extra miles they performed, 933.8, at the rate of $1.50 per mile for a total of $1,400.70.  Appellants have not shown that the mileage driven on extra trips was anything other than 933.8 as conceded by Respondent and supported by evidence in the record.

            Finally, Appellants urge that Respondent’s use of the other trucking company to perform extra trips on Appellants’ route during the 1993 Christmas season violated their contract and that Appellants should be compensated for those trips because they were not allowed to perform them.  There was disputed evidence regarding the reasons why Respondent engaged another contractor to perform some extra trips, but we need not resolve this dispute because Appellants’ contract did not give them a right to perform all extra trips.  While Respondent could direct Appellants to perform extra trips, there is nothing in the contract that would preclude Respondent from contracting with others to perform extra trips that could have been assigned to Appellants.  This was not a requirements contract, and there is no basis for awarding Appellants compensation based on performance of extra trips by another contractor.

            Appellants suggest that Respondent might have paid the other company more and favored it with trips that Appellants otherwise might have performed because the other company was a non-minority firm and Appellants’ is a minority-owned business.  Appellants presented no evidence to support this suggestion, and it is rejected.

Interest

            Respondent concedes that Appellants are entitled to Contract Disputes Act interest on the indemnity payment of $7,093 due Appellants under the Changes clause of the contract (Finding 9).  However, Respondent contends that Appellants are not entitled to interest on their recovery of $1,400.70 for the 933.8 miles of extra trips because Respondent was prepared to pay in a timely fashion $1.50 per mile, but was prevented from doing so by Appellants’ failure to sign the proposed modification (Finding 15).

            Respondent has not demonstrated that it could not have paid Appellants for the trips performed at the $1.50 rate Respondent thought had been the subject of an agreement and which Respondent has conceded was reasonable.  Additionally, the Contract Disputes Act establishes a bright line test for entitlement to interest, and it is that interest commences from the date the claim is filed.  See Servidone Constr. Corp. v. United States, 931 F.2d 860, 862 (Fed. Cir. 1991).  Respondent has pointed to no basis for adding a requirement that interest does not run because Appellants had not executed documents necessary under Respondent’s internal procedures to facilitate issuance of a check. Therefore,  Appellants are entitled to interest on the full amount of their recovery from the date of their claim until the date the award is paid.

Conclusion

            The appeal is sustained in part.  Appellants are entitled to recover a total of $8,493.70 ($7,093 for the curtailment indemnity and $1,400.70 for the extra trips) plus Contract Disputes Act interest until paid.  The appeal is otherwise 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]  A decrease of total annual hours notwithstanding the addition of 47,000 miles to the annual mileage resulted from the reworking of the schedule to provide the service needed by the new GMF which eliminated compensated layover hours from the former schedule (Tr. 346-350).

^[2]  There is nothing in the contract that requires that Appellants continue to receive the rate per mile stated in the original contract notwithstanding changes in service and compensation.  The contractor’s compensation under the contract’s Payment clause is based on the contract rate, not the rate per mile (Finding 3).  Furthermore, in all of the negotiations during 1993, the parties addressed the contract rate, and the rate per mile fluctuated.  At the time they negotiated the four amendments discussed above, the parties did not interpret the contract to require a fixed rate per mile, and their interpretation at that time is given great weight.  See Julius Goldman’s Egg City v. United States, 697 F.2d 1051, 1058 (Fed. Cir. 1983) cert. denied 464 U.S. 814; Morningside Investments, PSBCA No. 3124, 93-1 BCA ¶ 25,492; Maynard L. Kressin, PSBCA No. 1588, 87-3 BCA ¶ 20,080.