Appeal of

CHARLI SELSA SCHIVER d/b/a NGX-SCHIVER

Under Contract No. HCR 54013
PSBCA No. 4545

APPEARANCE FOR APPELLANT:
Godson E. Anyanwu, Esq.

APPEARANCE FOR RESPONDENT:
Wendy Wiedemann Hudson, Esq.

OPINION OF THE BOARD

            Appellant, Charli Selsa Schiver, has appealed the termination for default of his highway transportation contract with Respondent, United States Postal Service.  A hearing was held in St. Louis, Missouri, and the parties submitted post-hearing briefs in support of their positions.

FINDINGS OF FACT

            1.  On June 12, 1997, Respondent renewed Appellant’s contract No. HCR 54013 for transportation of mail between Respondent’s St. Paul, Minnesota Processing and Distribution Center (“P&DC”) and the Green Bay, Wisconsin P&DC, with stops at Postal Service facilities in Hudson, Eau Claire and Wausau, Wisconsin.  The term of the renewed contract was from July 1, 1997, to June 30, 2001.  (Hearing Transcript, Page (“Tr.”) 55; Appeal File, Tab (“AF”) 2; Stipulation of Non-Contested Facts, Issues of Fact and Issues of Law (“Stip.”) ¶1).

            2.  The contract required Appellant, using two vans, to run one trip in each direction each night.  Trip 1 was scheduled to leave St. Paul at 9:20 p.m. and arrive at Green Bay at 4:10 a.m.  Trip 2 left Green Bay at 10:45 p.m. and arrived at St. Paul at 6:00 a.m.  The total annual mileage was estimated to be 201,252.8, and the annual rate was $186,693.36.  (AF 2).  The contract required Appellant to transport all mail tendered “in accordance with the operating schedule” set forth in the contract, which established the arrival and departure times for each stop.  (AF 2, BASIC SURFACE TRANSPORTATION SERVICES CONTRACT - GENERAL PROVISIONS, PS Form 7407, July 1992 (“General Provision”) 4, SERVICE REQUIREMENTS AND PROHIBITIONS).

            3.  By a bilateral modification to the contract on October 18, 1997, Respondent deleted the Hudson stop, added stops at Minneapolis, slightly adjusted the schedule and added two daily trips: trip 3, Minneapolis to Green Bay leaving the Minneapolis Priority Mail Annex at 7:30 a.m., and trip 4, Green Bay to St. Paul, leaving the Green Bay P&DC at 9:30 a.m.  The change increased Appellant’s annual rate of compensation to $369,834.53.  (Tr. 83-84, 126-127; AF 3).

            4.  The contract authorized Respondent to terminate the contract for default for Appellant’s failure to perform according to the terms of the contract and for Appellant’s disobedience of the instructions of the contracting officer (AF 2, General Provision 16, TERMINATION BY THE POSTAL SERVICE FOR DEFAULT, subsections (a)(1) and (a)(3)).

            5.  Appellant remained responsible for the faithful performance of the contract even if he had entrusted the performance to others and was specifically responsible for the acts and omissions of his employees (AF 2, General Provision 8, ACCOUNTABILITY OF THE CONTRACTOR).

            6.  In a May 4, 1999 letter, Respondent’s Networks Specialist in St. Paul, who oversaw the day-to-day administration of the contract, notified Appellant of service irregularities (deficiencies) and advised that a formal conference was required.  The deficiencies that had occurred were a 20-minute late arrival at Minneapolis on April 3, a one-and-one-half hour late arrival at Minneapolis on April 6, an hour late arrival at Green Bay on April 26 and a 20-minute late departure from Minneapolis on May 1.^[1]  (Tr. 57-58; AF 4, 5; Stip. ¶2).

            7.  At the May 14, 1999 formal conference, the Networks Specialist advised Appellant that late arrivals and departures on the route would not be tolerated.  Appellant explained the reasons for each incident and promised that service would improve.  The Networks Specialist advised Appellant that if service did not improve and was not maintained at a satisfactory level, the contracting officer would be informed and assessment of damages or contract termination could result.  (Tr. 59, 91, 155; AF 5 (p. 1); Stip. ¶3).

            8.  Other irregularities followed, and Respondent issued Appellant additional Forms 5500:

                        a.  On June 13, 1999, Appellant arrived early to drive trip 2 out of Green Bay.  He noticed a bad tire on his truck and went to have it fixed, leaving a note at the dock that he would return.  He was not back by the 11:15 p.m. departure time set forth in the schedule (as adjusted in October 1997 (Finding 3)), and Respondent arranged for another contractor to carry the mail.  Appellant did not perform this trip.  (AF 6 (pp. 3-6)).

                        b.  On July 18, 1999, Appellant inadvertently locked the keys in his truck.  He arranged for a locksmith to open it, but as a result trip 4 started 50 minutes late from Green Bay.  (Tr. 59; AF 6 (p. 8).

                        c.  On July 21, 1999, the driver overslept, and trip 2 left Green Bay 35 minutes late (AF 6 (p. 9)).

            9.  On July 28, 1999, Respondent’s Networks Specialist issued Appellant a written warning that if on-time service was not accomplished within ten days, he intended to recommend that a fine be levied or that the contract be terminated.  The letter was based on the deficiencies mentioned in Finding 8.^[2]  (Tr. 60; AF 6 (pp. 1-2); Stip. ¶4).

            10.  Further irregularities occurred thereafter, and Respondent issued Appellant Forms 5500 reporting the instances:

            11.  On September 23, the Networks Specialist sent the file reflecting the above deficiencies to the contracting officer for further action and stated his intention to send any further 5500s to the contracting officer on a daily basis (Tr. 60, 62; AF 7; Stip. ¶5).

            12.  In an October 26 letter of warning, the contracting officer listed the deficiencies (including in addition to those listed in Finding 10, above, a 2-hour late arrival at Wausau on September 22, and late departures from the trip origination office of 92 minutes (September 23), 93 minutes (September 24) and 60 minutes (October 13)).  The contracting officer warned Appellant that the irregularities were serious failures by Appellant to fulfill his contractual obligations and advised, “THIS IS A FINAL WARNING that the Postal Service may terminate your contract for default unless satisfactory service is restored immediately upon receipt of this letter, and maintained for the remaining term of the contract.”  Appellant received the letter on November 15, 1999.  (Tr. 62, 110; AF 8; Stip. ¶6).

            13.  Appellant continued to perform late.  Although not listed in the contracting officer’s October 26 letter of warning, Appellant had been 20 minutes late arriving with mail at Wausau on October 16.  Appellant was 30 minutes late in starting trip 2 on November 2 and was 1 hour 35 minutes late in completing trip 2 on November 5.  Also on November 5, Appellant arrived at the originating office an hour after the scheduled departure time for trip 3 and actually began the trip 1 hour and 7 minutes late.  On the next day, November 6, Appellant again arrived after his scheduled departure time and was 30 minutes late starting trip 3.  On November 9, Appellant was 1 hour and 20 minutes late finishing trip 2, and was 40 minutes late with the mail for the first stop on trip 3 on November 11.  (AF 10 (pp. 3-8)).

            14.  Late performance occurred after Appellant received the contracting officer’s final warning.

            15.  Maintenance of the contract schedule is very important to Respondent’s operations.  Mail carried by Appellant was required to be at the specified stops at the scheduled times to make connections with other mail transportation routes and to go through certain scheduled processing operations at the facilities.  Failure to meet these schedules would likely result in delayed mail.  (Tr. 115).

            16.  On the night or early morning of December 18-19, 1999, Respondent’s officials at Wausau were advised by the Highway Patrol that Appellant did not have a valid Commercial Driver’s License.  The advice from the police was, as it turned out a few days later, incorrect, but based on that advice the Wausau plant supervisor would not let Appellant drive and directed him to leave the facility at about 2:30 a.m. in very cold weather.  Appellant had to walk approximately a mile to a motel.  The 5500 noting Appellant’s failure to complete trip 2 due to questions about his driver’s license (AF 9 (pp. 7, 10)) was not prepared by the Wausau plant supervisor, and he did not prepare any of the 5500s at issue in this appeal.  (Tr. 18, 33, 166-174; AF 9 (pp. 7, 8, 10), 11, 12 (p. 15)).

            17.  On the night of December 30-31, 1999, Appellant was a passenger on trip 2 from Green Bay to St. Paul.  At Wausau, Appellant stayed in the truck.  He told his driver that the plant supervisor had better not approach his truck or give him any more problems because if he did, Appellant would kill him with his bare hands.  Appellant’s employee believed the threat was serious and promptly reported it to Respondent.  As a result of this incident, Appellant was barred from personally coming onto Postal Service property and, therefore, could no longer drive the route.  (Tr. 23-28, 50-52, 180; AF 12).

            18.  By final decision dated February 11, 2000, the contracting officer terminated Appellant’s contract for default for Appellant’s “failure to perform service according to the terms of the contract” as authorized by General Provision 16 (a)(1) of the contract.  Before deciding to terminate the contract, the contracting officer reviewed the file, including all of the 5500s and a Postal Inspection Service investigative memorandum describing the December 30-31 threat.  The contracting officer assured himself that the appropriate procedural steps had been followed and that Appellant had been warned that late performance, if uncorrected, could result in termination of the contract.  Based on his investigation, he concluded that the late and omitted trips after his October 26 final warning warranted termination for default.  He also considered Appellant’s threat an additional reason, but he would have terminated the contract for default anyway just based on the performance deficiencies.  (Tr. 110-113, 118-122; AF 1; Stip. ¶7).

            19.  Appellant filed a timely appeal of the final decision (Stip. ¶8).

            20.  Respondent engaged another mail transportation contractor on an emergency basis to perform the route after the termination, and that contractor used the same-size vehicles, hired the same drivers Appellant had used, and performed the route without problems (Tr. 67, 97-99, 136, 205-206).  The permanent contract, which followed the temporary, emergency contract after several months, required the contractor to provide the service using tractors and trailers, although during the first several months of the contract they were being loaded only to one-half capacity (Tr. 125-128, 211).

            21.  Appellant holds two other contracts with Respondent for transportation of mail (Tr. 143-144).  After terminating the contract at issue here, HCR 54013, the same contracting officer renewed one of Appellant’s other routes.  As of the date of the hearing, Appellant was performing that route satisfactorily.  (Tr. 135, 144).

DECISION

            Respondent argues that Appellant’s failure to perform according to the terms of the contract justified the contracting officer’s decision to terminate the contract for default, and that Appellant’s threat to kill a Postal Service employee is further grounds for the termination.

            Appellant argues that Respondent’s employees’ hostility toward him and his drivers due to racial animus led to the termination.  He contends that Respondent’s employees undermined his performance by refusing to give his drivers late slips when Respondent delayed them, by reporting Appellant to the police and by overloading his trucks.  Appellant argues that the instances of late performance were excused by bad weather and road construction along the route that delayed his drivers.

            The Postal Service has the burden of proving that the termination was justified, but once Respondent shows that Appellant failed to perform in accordance with the contract, the burden shifts to Appellant to present evidence of excusable causes,  Pamela J. Sutton, PSBCA No. 1622, 88-3 BCA ¶ 21,031 at 106,237, or to show the termination was an abuse of the contracting officer's discretion, Jesse A. Farmer, PSBCA No. 2702, 91-3 BCA ¶ 24,181 at 120,941;  Patricia J. Stevens, PSBCA No. 3272, 94-1 BCA ¶ 26,419.

            The repeated instances of late arrival and departure, continuing after several explicit warnings to Appellant, justified the default termination of Appellant’s contract.  The contracting officer cited as a basis for his decision Appellant's failure to perform his contractual duties after the October 26, 1999 final warning letter (Finding 18).  However, in determining whether the termination was proper, all deficient performance during the contract term may properly be considered by the Board, whether or not specifically referenced in the final decision.  See John Michael Hall, PSBCA No. 1311, 1985 PSBCA LEXIS 68, May 15, 1985; F.W.H. Motor Transit, Inc., PSBCA No. 1317, 1985 PSBCA LEXIS 60, July 30, 1985, recon. denied, 1985 PSBCA LEXIS 47, November 22, 1985.  Appellant’s repeated failure to provide service according to the contract schedule (Findings 6, 8, 10, 12, 13, 14), despite clear warnings that his contract was at risk should he not improve performance (Findings 7, 9, 12), was a breach of a material requirement of the contract (Finding 15).

            Respondent demonstrated that late delivery of the mail along the route had an adverse effect on Respondent’s operations and timely delivery of mail (Finding 15), but did not specifically show that departing late from the origination point of the trip has a similar effect.  While a few such instances might be assumed to have no adverse effect warranting termination, the cumulative effect of repeated instances of late departure when considered with the many other schedule irregularities deprived Respondent of the reliable, regular service it was entitled to under the contract.  See John Michael Hall, PSBCA No. 1311, 1985 PSBCA LEXIS 68, May 15, 1985; F.W.H. Motor Transit, Inc., PSBCA No. 1317, 1985 PSBCA LEXIS 60, July 30, 1985, recon. denied, 1985 PSBCA LEXIS 47, November 22, 1985.  Additionally, the contracting officer’s final warning listing late departures as irregularities informed Appellant that late departures were unacceptable and could be considered as a basis for termination.  Under these circumstances, Appellant’s disregard of the contracting officer’s warning and breach of his duty to maintain the contract schedule justified the termination for default.

            Appellant has alleged that the termination was motivated by racial animus, especially among Respondent’s employees at the Wausau facility.  However, Appellant’s suspicions regarding the reasons behind his termination are not sufficient to establish that the termination stemmed from bad faith or bias.  See Patricia J. Stevens, PSBCA No. 3272, 94-1 BCA ¶ 26,419.  The irregularities were not recorded just at Wausau, but late arrivals and departures occurred at St. Paul, Green Bay and Minneapolis as well.  For the PS Form 5500s from Wausau, Appellant has also not shown that the plant supervisor, who Appellant contends was most hostile to him, was behind their issuance (Finding 16).  Additionally, most of the irregularities stemmed from mechanical problems or driver failure (e.g., oversleeping), as reported by Appellant’s drivers or by Appellant himself in responding to the 5500s (Findings 8, 10, 13, 14).

            Appellant argues that circumstantial evidence requires a finding of racial hostility towards him and his drivers.  He alleges that he performed this route under this contract and its predecessor since 1994 without significant performance problems, and then in April 1999 problems with Respondent’s employees at Wausau started and worsened quickly until the contract was terminated.  Appellant attributes this alleged change in attitude by Respondent’s employees to Appellant’s discharge in October of 1998 of a driver who, according to Appellant, was well liked by Postal Service employees.  Appellant took over that employee’s driving duties, and he asserts that the hostility toward Appellant and his drivers and the subsequent increase in recorded performance deficiencies resulted from this change in personnel.

            As testified by the contracting officer and argued by Respondent, a sudden decline in performance may stem from aging or unrepaired equipment, change in drivers, or many other reasons.  Appellant has not demonstrated by a preponderance of the evidence that the increase in reports of performance deficiencies resulted from hostility by Respondent’s employees.  Moreover, the removal of the well-liked employee occurred in October 1998, more than five months before problems on the route began.

            Further, the emergency contractor’s use of the same drivers without similar performance problems (Finding 20) suggests otherwise.  Finally, that Appellant’s other Minnesota mail transportation contract was renewed after the termination of this contract (Finding 21) further undermines Appellant’s arguments that Respondent’s actions regarding HCR 54013 were motivated by racial animus or hostility toward Appellant or his drivers.  See Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1241 (Fed. Cir. 2002).

            Appellant also argues that Respondent’s employees improperly refused to give his drivers late slips for Respondent’s delays, which would have excused late arrivals at subsequent stops on the route.  He also contends Respondent overloaded his trucks, causing his drivers to take back roads, which were much slower, in order to avoid official weigh stations, and that Respondent’s officials reported him to local police.  Appellant testified that he told the Networks Specialist about late slips and overloading, but the Networks Specialist testified that he was not aware of such occurrences and that Appellant did not raise these issues during performance of the contract.  Appellant did not raise either of these grounds contemporaneously in response to any of the 5500s issued for late performance or in his Complaint, and many of the 5500s specifically note that the reason for the delay was a mechanical problem or driver failure.  Additionally, Appellant did not demonstrate that Respondent’s officials reported him to the police without cause.  On this record, Appellant has not carried his burden of demonstrating that his vehicles were overloaded, that his drivers were routinely denied late slips, or that Respondent caused the police to interfere with Appellant’s performance.

            Further, Appellant has not demonstrated that any of the late arrivals or departures were excused by construction on the route or bad weather.  Neither ground was raised contemporaneously as an excuse for any particular late arrival or departure, except for one trip on July 30, 1999 where rain was cited as a reason for lateness (Finding 10), and Appellant did not present evidence that any specific trips were delayed by these causes.  As a result, Appellant has failed to demonstrate that any of the late performance cited herein was excused by construction on the route or bad weather.

            Appellant argues that Respondent wanted to replace the trucks on the route with larger trucks and that termination of his contract for default was only a pretext to allow Respondent to avoid paying Appellant the contractual indemnity required if his contract were terminated for convenience.  Appellant has not proved this.  First, the emergency contract that covered performance immediately after Appellant’s termination used the same-size vehicles (Finding 20).  While the permanent follow-on contract did call for larger vehicles (Finding 20), there was no showing that a desire to increase the size of the vehicles was the reason Respondent terminated Appellant’s contract.  Even if such a desire had been a factor in the decision to terminate, the termination for default would not be invalid because, as we have found, the performance irregularities justified terminating the contract for default.  See Rowe Inc. v. General Services Administration, GSBCA No. 14211, 01-2 BCA ¶ 31,630 at 156,277; Jerry W. Ikard d/b/a Ikard Mfg. Co., ASBCA No. 37405 et al., 96-2 BCA ¶ 28,577 at 142,644-45.

            Finally, Appellant argues that the termination must be set aside because the contracting officer abused his discretion by not conducting an adequate investigation before terminating.  He argues that the sudden increase in reports of performance irregularities should have caused the contracting officer to investigate and ultimately discover that Appellant’s efforts to perform the contract were being hampered by Respondent’s employees.  As discussed above, that circumstantial evidence is not sufficient to demonstrate that Respondent was causing the difficulties, and, therefore, the contracting officer did not abuse his discretion in limiting his pre-termination investigation to a review of the recorded performance history and the investigative report addressing Appellant’s threat against the Wausau plant supervisor. 

            The appeal is denied.^[4]

Norman D. Menegat
Administrative Judge
Board Member

I concur:
James A. Cohen
Administrative Judge
Chairman

I concur:
David I. Brochstein
Administrative Judge
Vice Chairman

[1] These instances of deficient performance were recorded on PS Form 5500, Contract Route Irregularity Report, as were all of the instances of lateness discussed in this decision.  The PS Form 5500 is a multi-copy form, prepared by local Postal Service employees at the site of any contract irregularity.  For example, the expeditor on the dock at the Minneapolis Post Office prepared the PS Form 5500 for the late arrival on April 3, recording Appellant’s scheduled arrival time as listed in the contract and his actual arrival time.  Two copies of each 5500 were sent to Appellant (Tr. 65, 188), and the form included space for him to explain any reasons for the deficiency and return a copy to Respondent.  Appellant replied to many but not all of the 5500s sent to him over the course of this contract.  (Tr. 154, 189; AF 5, 6, 7, 9, 10).

[2] The Networks Specialist also listed as deficiencies fifteen-minute late departures on July 16 and 22, 1999.  However, the printed text on the Forms 5500 on which they were recorded requires that delays of fifteen minutes or less be reported for information purposes only.  (AF 6 (pp. 2, 7, 10)).  We have not considered any reported delays of fifteen minutes or less in our review of the termination.

[3] Instead of having one driver complete each of trips 1 and 2, Appellant’s practice was for one driver to drive from St. Paul to Wausau on trip 1 and meet the driver coming from Green Bay on trip 2 at Wausau.  There the drivers traded trucks and returned to their starting points.  As a result, if the driver on one of the trips was late, likely both of the related trips would be late as the other driver would have to wait in Wausau for the late truck to arrive.  (Tr. 24, 31, 36-39, 159; AF 9 (p. 12)).

[4] Because we find Appellant’s performance irregularities sufficient grounds for the termination for default, we do not address the threat against the plant supervisor at Wausau.