Appeals of

EROL A. GUVENOZ

Under Contract No. HCR 856KT

PSBCA Nos. 5150-5155, 5163-5165

APPEARANCE FOR APPELLANT:
Erol A. Guvenoz

APPEARANCE FOR RESPONDENT:
Robert E. O'Connell, Esq.
San Francisco Law Office
United States Postal Service

OPINION OF THE BOARD[1]

            Appellant, Erol A. Guvenoz, has appealed from contracting officer’s decisions denying, in whole or in part, claims by Appellant in connection with his contract with Respondent, United States Postal Service, for the transportation and delivery of mail on routes originating in Benson, Arizona.

            At the parties’ election, these appeals are being decided on the record, without an oral hearing.  39 C.F.R. §955.12.  Only entitlement is at issue (Order and Memorandum of Telephone Conference, dated May 16, 2005).

FINDINGS OF FACT

            1.  On June 23, 2003, Appellant was awarded emergency contract 856GV for the transportation and delivery of mail along routes originating at the Benson, Arizona post office, at an annual rate of $54,500.  Service on the routes had been provided since at least July 2002 under other emergency contracts with other contractors, most recently at an annual rate of $47,740.94.  (Appellant’s submittal of June 8, 2005 (Amendment No. 2 and Route Service Order No. 8 to contract 856HV); Respondent’s Discovery Documents filed by Appellant on April 22, 2005 (“Discovery Docs”) (Contract 856HU, beginning June 14, 2003; Letter from contractor “relinquishing” contract, dated June 23, 2003); Appellant’s submittal of January 14, 2005 (Office of Inspector General Report of Interview (partially redacted), dated April 12, 2004); Appeal File Tab (AF) 16 (Appellant’s email message to Office of Inspector General, dated April 2, 2004)).[2]

            2.  Appellant began service under contract 856GV on June 24, 2003.  On June 25, 2003, Appellant advised the contracting office that after one day of performing the service he realized that he could not operate the contract for $54,500.  The contracting officer then decided to solicit new offers to run the same routes.  (Office of Inspector General Report of Interview (partially redacted), dated April 12, 2004; Appellant’s email to Office of Inspector General, dated April 2, 2004).  The new solicitation reflected that the route served 374 boxes, had an estimated annual mileage of 29,708.7 miles, and had estimated annual hours of 2,353.  The solicitation required any offer to “include all elements of cost the supplier expects to incur in performing this service.”  In addition, the solicitation informed offerors that the “estimated annual miles and per trip miles are given only as information.  Prior to submitting a proposal, the supplier should determine the actual miles.”  The solicitation warned:

“The estimated annual hours are approximately the number of hours needed to operate the trips as they are shown in the schedule….  Prior to submitting a proposal, the supplier must determine the actual hours.”

The Instructions to Bidders included in the solicitation also provided,

“NOTE 3:  The estimated annual hours shown … include (i) the approximate number of hours needed to operate the trips as they are shown on the schedule, plus (ii) the approximate number of hours needed for loading and unloading.  These estimates also are given only as information.  Prior to submitting a proposal for a route, offerors should make their own estimate of the hours that will be required.

NOTE 4:  Any additional hours that may result from (i) your differing estimate of hours or from (ii) your unique operations, should be included in your offered price.” 

(AF 1).

            3.  The solicitation also provided that the administrative official, in this case located at the Benson post office, would provide “the successful supplier” with route training – in the form of three hours of training per day over two days – and that the supplier would be compensated for that time.  (AF 1).

            4.  On June 26, 2003, in response to the solicitation, Appellant submitted an offer to perform the new emergency contract, designated 856KT, at an annual rate of $59,800.  Appellant’s offer was accepted on that date and he continued service, although a formal, written acceptance did not take place until July 7, 2003.  (AF 1; Declaration of Robert J. Saxton, dated June 24, 2005, ¶¶ 4, 6, 7, 8; Office of Inspector General Report of Interview (partially redacted), dated April 12, 2004).

            5.  The period of performance in Appellant’s new contract was stated to be June 26 through December 26, 2003.  The contract also stated that it could be terminated by the Postal Service “upon notice of not less than 24 hours,” and by the contractor on notice of not less than 15 days.  Such terminations were to be “without the allowance of any indemnity or extra pay in lieu of indemnity to the supplier.”  The contract also included General Clauses H.3 (Termination for Convenience) and H.8 (Changes), under which the contracting officer had the right to terminate the contract on 30 days’ notice if such termination was in the interest of the Postal Service.  In the event of such a termination, Appellant would be entitled to the payment of liquidated damages in an amount set out in the Changes clause.  (AF 1).

            6.  The contractor was required by the contract to provide, as a minimum, one passenger car or pickup truck with shell, having a minimum of 80 cubic feet of usable load space (AF 1).

            7.  Appellant’s contract consisted of three parts.  Part A involved a single, daily (except for Sundays and holidays) round trip between the Benson and Pomerene, Arizona post offices – a total distance of 10.8 miles.  Following the completion of Part A, Appellant was to perform either Part B or Part C of the contract.  Part C, performed on Tuesdays, Thursdays, and Saturdays (except for holidays) was a box delivery route described in the contract as 42.8 miles long.  Part B, performed on Mondays, Wednesdays, and Fridays (except for holidays), was identical to Part C, except that part way through the route an additional section, approximately 90 miles in length, was added, bringing the total length of the route on those days to 133 miles.  The contract schedule provided that after casing (sorting) the mail, the contractor would leave the Benson post office at 10:00 a.m. to run Part B or C.  Part B was scheduled to be completed by 4 p.m., and Part C was scheduled to be completed by 12:30 p.m.  (AF 1).

            8.  In operating the contract, Appellant personally performed Part A and the 90-mile added portion of Part B on Monday, Wednesday, and Friday.  Because of the condition of the roads in that section, he found it necessary to use a four-wheel-drive vehicle.  He employed others to perform the remaining portion of Part B on Monday, Wednesday, and Friday; and Parts A and C on Tuesday, Thursday, and Saturday.  The employees/subcontractors Appellant hired had performed the same services for the two prior contractors and had the only complete knowledge of the route, since there were no complete maps, rosters or lists of the route available for Appellant to use.[3]  Appellant continued to pay his employees/subcontractors until his contract was terminated.  (AF 16 (Appellant’s emails to Office of Inspector General, dated March 31, 2004 (3:25 a.m.) and April 2, 2004; Appellant’s letter dated January 19, 2004 to the contracting officer submitting records concerning Claim #1)).

            9.  Effective August 9, 2003, the number of boxes on Appellant’s contract was increased to 391, the annual rate was increased by $839 to $60,639, and the estimated annual hours were increased to 2,414.  The estimated annual mileage remained unchanged at 29,708.7.  (AF 3, 8).

            10.  In October 2003, the Postal Service, apparently having decided to split Appellant’s contract into two separate routes, issued solicitations inviting proposals to operate the new routes.  On one of the routes, which essentially consisted of only the 90-mile “additional section” (Finding 7), the minimum vehicle requirement was changed from the “passenger car or pickup truck with shell” required by Appellant’s contract to a “4-wheel drive vehicle.”  On or about October 21, 2003, Appellant filed formal protests regarding both solicitations with the Postal Service General Counsel, who had jurisdiction to adjudicate such matters.  (AF 16 (Announcements of Solicitations 948-33-04 and 948-3404; Appellant’s letters dated October 21 and 22, 2003)).

            11.  Through a Route Service Order and a contract amendment dated November 26, 2003, while the protests were pending, the parties changed the end date of Appellant’s contract to June 18, 2004.  The amendment provided that, except for the changes made in the amendment, “all terms and conditions of the contract … remain unchanged and in full force and effect.”  In a letter of the same date, the contracting officer advised Appellant of the contract extension, and also advised,

“The termination (expiration) date is incorporated into this contract for the sole purpose of administration and review, and in no way is to be construed as a commitment to a term of service by either party.  The contract may be terminated by the USPS upon 24 hour notice and by the contractor upon notice of not less than 15 days written notice.”

(AF 4, 9).

            12.  On or about December 16, 2003, Appellant submitted three claims to the contracting officer.  The first claim (Claim #1) demanded the payment of $5,875.74 for 234 hours of service, as of December 20, 2003.  The stated basis for the claim was that the contract operator could not run the contract within the times set out in the schedule and remain within the speed limits.  Appellant contended that the numbers shown in the contract, which was then 2,414 annual hours and one vehicle, should actually be 2,882 annual hours and two vehicles.  (AF 17).

            13.  In Appellant’s second claim (Claim #2), he stated that the contracting officer intentionally misrepresented contract 856KT and failed to verify that training and manuals had been provided, as prescribed in Postal Service Handbook P-5 (“Highway Contract Routes, Box Delivery Service”).  In addition, Appellant claimed that the Postal Service did not act in good faith in that it failed to “acknowledge relevant schedule irregularity.”  Appellant claimed $3,500 for “lost hours” at his job as a loan officer.  (5151AF 2).

            14.  In Appellant’s third claim (Claim #3), he again cited the contracting officer’s alleged misrepresentation of the contract and claimed that the Benson post office had failed to act in good faith by failing to “acknowledge or provide relevant training, manuals & maps.”  Appellant claimed $3,500 for “lost production” at his loan officer’s job.  (5152AF 2).[4]

            15.  In a December 22, 2003 letter to Appellant, the contracting officer advised him that the Benson Post Office was making arrangements to perform a route survey of his route and that if the results indicated a need to adjust the contract, the contracting officer would attempt to negotiate a change with him.  If negotiations were unsuccessful, the contracting officer indicated that the emergency contract would be terminated, and the route would be resolicited.  The contracting officer also stated that he had spoken to personnel at Benson and that they were attempting to get the route map and roster in order.  Finally, the contracting officer urged Appellant to cooperate with the administrative official at the post office and stated that any outbursts of anger directed toward that official or any disruptions on the workroom floor would result in termination of the contract.  (AF 11).

            16.  On December 29 and 31, 2003, the officer-in-charge (OIC) of the Benson post office (who was the administrative official for the contract) issued two Forms 5500 “Contract Route Irregularity Report” related to Appellant’s contract.  In the Forms 5500, the OIC recounted discussions with Appellant and (via speakerphone) a representative of the contracting officer’s office regarding Appellant’s repeated requests for route surveys of his and other routes.  The OIC stated that Appellant had become upset and irate and had yelled during and following the discussions.  (AF 16).

            17.  By a letter to Appellant and a route service order, both dated December 31, 2003, the contracting officer, citing the 24-hour termination provision (Finding 5), terminated Appellant’s contract effective as of the close of business on January 3, 2004 (AF 5, 13).

            18.  On January 5, 2004, Respondent conducted a route survey of Part B of the route involved in these contracts.  In addition, on that date Respondent issued a solicitation for another emergency contract to take the place of Appellant’s contract.  The new contract, designated 856LT, with a performance period beginning January 7, 2004, was awarded to another contractor.  The contract rate was $41,500 per annum.  The estimate of annual hours in the contract was increased by 79, to 2,493, while the annual mileage estimate was reduced by 791.1 miles, to 28,917.6 miles.  The minimum vehicle requirement for the contract was changed from a passenger vehicle or pickup truck to a four-wheel-drive vehicle.  (AF 16 (January 5, 2004 route survey); Discovery Docs (contract 856LT)).

            19.  In a final decision dated January 5, 2004, the contracting officer denied Appellant’s two $3,500 claims (Findings 13, 14) in their entirety.  In his final decision, the contracting officer stated that Appellant had been provided relevant training in the form of assistance by two Postal clerks with casing and delivering the mail for the first two days of the contract.  (5151AF 3; 5152AF 3).  In April 2004, Appellant filed timely appeals of the final decision for each claim, which appeals were docketed as PSBCA Nos. 5151 and 5152.  In those notices of appeal, Appellant demanded the payment of treble damages in the amount of $10,500 for each claim.

            20.  By letter dated January 12, 2004, the contracting officer acknowledged receipt of Appellant’s $5,875.74 claim (Claim #1, Finding 12), stating that it had been received on December 22, 2003.  The contracting officer requested that Appellant provide data supporting his claim, such as driver pay records and vehicle leases.  By letter dated January 19, 2004, Appellant provided an explanation of the payments he had made to his drivers, information regarding how the contract was operated, and information regarding what he alleged were costs of “excessive wear & tear” on his vehicle.  (AF 16).

            21.  In a final decision dated February 10, 2004, the contracting officer allowed Appellant’s $5,875.74 claim (Claim #1) in part, approving the payment of $935.57 but denying the balance.  Although the details of the contracting officer’s calculation are not clear, it appears that he first estimated what Appellant’s annual contract rate would have been had it been based on the modified hours and miles contained in the January 7, 2004 replacement contract (Finding 18), and then awarded Appellant the difference between Appellant’s initial contract rate and the adjusted rate (prorated to represent the fraction of the year that Appellant had actually performed).  (AF 18).  Appellant filed a timely appeal of the final decision, which was docketed as PSBCA No. 5150.

            22.  By separate letters dated April 5, 2004, Appellant filed three additional claims with the contracting officer, as follows:

            a.  (Claim #4):  In this claim, Appellant demanded compensation because Respondent’s personnel had “intentionally withheld Official Survey Results [of Appellant’s contract] in an attempt to create a disruption in my established service pattern.”  Appellant then contended that this action by Respondent led to the use by the contracting officer of the 24-hour termination provision to terminate his contract.  He also contended that the termination provision was intended for use in situations such as if the route had been split into two separate contracts.  By implication, Appellant contended that the use of the provision in his case had been improper.  Appellant demanded the payment of $36,320 “Treble Damages, in the form of 1/3 the most recent Award Amount as a result of this Wrongful Termination.”  (5153AF 2).

            b.  (Claim #5):  In this claim, Appellant contended that the contracting officer, after requesting that Appellant supply certain data in connection with his earlier claim (Claim #1), failed to use that information in evaluating the claim.  Appellant also contended that the contracting officer improperly failed to consider other data that allegedly supported his claim – e.g., the solicitations issued in connection with the effort to split his contract into two routes (Finding 10), a route survey in connection with one of those solicitations, Global Positioning System data he had collected, and topographical maps he had developed.  Appellant demanded the payment of “$10,500 as a result of these false requests & inappropriate actions.”  (5154AF 2).

            c.  (Claim #6):  In this claim, as in Claim #4, Appellant cited the allegedly improper withholding of route surveys, and alleged that the “late arrival of those surveys cost me my most recent contract award, which was subsequently awarded without my knowledge.”  Appellant demanded the payment of $10,500 “as a result of the intentional refusal to provide Surveys, I was entitled [to].”  (5155AF 2).

            23.  Through final decisions dated May 12, 2004, the contracting officer denied Appellant’s Claims #4-#6 in their entirety.  Appellant filed timely appeals of those denials, which appeals were docketed as PSBCA Nos. 5163-5165.[5] (5153-5155AF3).

DECISION

            Appellant argues that certain of Respondent’s actions constituted breaches of his contract, entitling him to compensation.  Appellant contends that the solicitation contained inaccurate information regarding the line of travel, schedule, vehicle requirements and box count, all of which caused him to underbid the contract.  Appellant also contends that Respondent failed to comply with the provisions of Respondent’s Handbook P-5 with regard to conducting route surveys and maintaining the customer list and route map.

            Appellant also argues that the contracting officer’s adjudication of Claim #1 was based on inaccurate data used to establish the schedule for the replacement contract 856LT and that he ignored accurate data presented by Appellant.

            Finally, Appellant argues that his termination was based on unsubstantiated claims that he had created repeated disturbances during discussions regarding his attempts to have Respondent comply with the provisions of its own directives.  He contends that he was not given any opportunity to respond to the allegations and was terminated as a result.

            Respondent argues that under the provisions of the solicitation to which he responded, Appellant was responsible for determining the actual miles and hours needed to operate the contract and was not entitled to rely on the estimates in the solicitation in developing his offer.  Further, Respondent argues, Appellant had actually operated the route before making his offer and, therefore, had actual knowledge of what was required in terms of actual hours and mileage.  Therefore, Respondent contends that Appellant was not entitled to any more than the amount the contracting officer awarded him under Claim #1.

            With respect to the remaining claims, Respondent argues that Appellant was on notice of the 24-hour termination provision which provided for termination without the payment of any indemnity or extra pay, and that Respondent had the right to exercise that provision in terminating the contract.  Respondent also contends that the claimed damages based on Appellant’s loss of hours at his other job were too remote and speculative to be recoverable.  Finally, Respondent argues that there is no provision under the Contract Disputes Act for the award of treble damages.

            Appellant, as the party seeking recovery, has the burden of establishing his entitlement to the amounts claimed.  E.g., Jereld Michael, PSBCA No. 4779, 04-1 BCA ¶ 32,497.  In these appeals, he has not met that burden.

            Regarding Appellant’s argument that Respondent’s estimates of annual hours and mileage were understated, we note first that the solicitation repeatedly put Appellant on notice that those figures in the solicitation were only estimates and that offerors should determine the actual miles and hours before submitting offers (Finding 2).  In addition, we find it particularly significant that Appellant actually operated the route under his first contract, albeit for only one or two days, before electing to submit an offer in response to the solicitation for the contract at issue here, contract 856KT.  Thus, when he submitted his offer Appellant knew or should have known whether a current roster and route map were available (see Claims #2 and #3), and he knew or should have known the speed limits of the roads traversed by the route and the poor condition of the roads that he claims made it necessary to use a four-wheel-drive vehicle over part of the route.  We note, also, that under the solicitation, Appellant’s offer was required to “include all elements of cost the supplier expects to incur in performing this service.”  Therefore, Appellant has not shown entitlement to recover costs in excess of the contract amount.  See Stephen W. Sommer, PSBCA Nos. 4990, 5056, 05-1 BCA ¶ 32,821; Barbara Schweiss, PSBCA Nos. 4818, 4819, 02-2 BCA ¶ 31,938; Betty C. Tweet, PSBCA No. 4081, 98-1 BCA ¶ 29,353, recon. den., 98-1 BCA ¶ 29,624, 98-2 BCA ¶ 29,773; Pamela J. Sutton, PSBCA No. 1622, 88-2 BCA ¶ 20,680; Carla Jane Miller, PSBCA No. 2150, 88-2 BCA ¶ 20,634.

            Nevertheless, as noted above, the contracting officer allowed a partial recovery of the amount demanded in Claim #1.  Appellant claims the amount allowed was calculated improperly, using inaccurate data.  Appellant also claims (Claim #5) that in calculating the amount granted, the contracting officer ignored accurate data that Appellant had supplied at the contracting officer’s request.  Because we have found no basis for an award of increased costs based on the solicitation’s alleged understatement of contract requirements, we need not address the method used by the contracting officer in calculating the amount he granted Appellant.

            Appellant claims that he was not given the training required by the contract (see Claims #2 and #3), but he concedes in his brief that Respondent paid for two of its employees to assist him for two days at the beginning of the contract term.  Appellant’s claims are grounded on alleged deficiencies in the available route information, and Appellant has not demonstrated that any lack of training affected his ability to operate the route.  We note that Appellant employed the only two people who had a complete knowledge of the route to aid him (Finding 8), and there is no indication that receiving training from the administrative official would have improved Appellant’s ability to operate the route.  In addition, apart from the question of whether the damages sought by Appellant may be too remote and speculative to be recoverable, see, e.g., Olin Jones Sand Co., 225 Ct. Cl. 741, 742 (1980); Ramsey v. United States, 121 Ct. Cl. 426, 433, 101 F. Supp. 353, 357 (1951), a question we do not decide here, Appellant has not established any causal connection between the alleged lack of training and the loss of hours or productivity at his loan officer’s job, which is the basis for the damages sought in these two claims.

            Appellant’s arguments with respect to Respondent’s alleged failure to conduct timely route surveys or to provide route surveys to Appellant during the course of contract performance (see Claim #4 and #6) also do not support a recovery by Appellant under this contract.  Appellant relies on provisions of Handbook P-5, but he has not shown that the handbook exists for the benefit of Respondent's contractors.  See Annuity Investment Properties, Inc., PSBCA No. 5045, 05-2

BCA ¶ 33,045; James Hovanec, PSBCA No. 4767, 04-2 BCA ¶ 32,805; AFV Enterprises, Inc., PSBCA Nos. 2691, 3316, 01-1 BCA ¶ 31,388 at 155,023,

recon. den. 02-1 BCA ¶ 31,764.  Accordingly, Appellant does not have a contractually enforceable right against Respondent for any failure of Respondent's officials to comply with the Handbook directions regarding preparation and availability of surveys.  See Freightliner Corp. v. Caldera, 225 F.3d 1361, 1365 (Fed. Cir. 2000); AFV Enterprises, Inc., PSBCA Nos. 2691, 3316, supra; TPI International Airways, Inc., ASBCA No. 46462, 96-2 BCA ¶ 28,602, aff’d, 135 F.3d 776 (Fed. Cir. 1998)(Table).  Further, whether Appellant’s allegations with respect to the surveys are accurate or not, Appellant has not shown that any of these matters affected his ability to determine the actual conditions present on the route before he submitted his offer, and he has not shown that Respondent’s withholding of the route surveys interfered with his performance of the contract or caused him damages.  Accordingly, these matters do not provide any basis for recovery under the contract.

            We do not accept Appellant’s argument that his contract was wrongfully terminated (Claim #4) and that he is entitled to payment under the Termination for Convenience clause.  While the contract provides for both types of terminations – i.e., termination on 24 hours’ notice without indemnity to Appellant and termination for convenience (Finding 5) – Appellant has not shown that the contracting officer was obligated to use only the Termination for Convenience provision to terminate the contract.  Further, there is no doubt that the contracting officer expressly elected the former provision (Finding 17).  The 24-hour termination provision does not state any limits on its applicability.  Under this type of provision, the contracting officer had broad discretion and the termination will be upheld unless it is shown that the contracting officer's decision was made in bad faith or constituted an abuse of discretion.  See, e.g., AJ Custodial Service, PSBCA No. 5220, 05-2 BCA ¶ 33,087; Daniel M. Miley, Jr., PSBCA Nos. 4494, 4495, 00-2 BCA ¶ 31,108; Package Plus of S.W. FL Inc., PSBCA No. 3674, 95-2 BCA ¶ 27,762; Tom Kime, PSBCA No. 3480, 95-1 BCA ¶ 27,490, recon. den., 95-2 BCA ¶ 27,673.  In the record before us, Appellant has not offered evidence sufficient to challenge the termination on that basis.  See Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1239 (Fed. Cir. 2002).

            Finally, in Claim #6, Appellant alleges that the “late arrival” of route surveys cost him his “most recent contract award.”  Appellant has not addressed this claim in his brief, and has provided neither an explanation of the claim nor evidence supporting his allegation.  Therefore, we do not address it further.[6]

            Accordingly, the appeals in PSBCA Nos. 5153-55 are dismissed for lack of jurisdiction (see footnote 5), and the remaining appeals (PSBCA Nos. 5150-52 and 5163-65) are denied.

David I. Brochstein
Administrative Judge
Vice Chairman

I concur:
Norman D. Menegat
Administrative Judge
Board Member

[1]   Administrative Judge William A. Campbell took no part in the Board’s consideration of these appeals.

[2]   Unless otherwise indicated, all Appeal File references are to the Appeal File in PSBCA No. 5150.

[3]  The solicitation/contract contained street-by-street directions for the routes, e.g.,

“1         EAST ON OCOTILLO STREET FROM POST OFFICE PARKING LOT
2          NORTH TO E FOURTH STREET
3          EAST TO AIRPORT ROAD
4          SOUTH AND EAST TO NBU AND RETRACE TO POMERENE ROAD
5          NORTH TO 1320 NORTH POMERENE ROAD.…”

It did not, however, contain lists showing the sequence of the addresses that would be encountered on the route or other information, such as names, associated with those addresses.  (AF 1).

[4]   It is not clear from the record whether the “lost production” in this claim and the “lost hours” in Claim #2 represent the same alleged loss.

[5]   Appellant had filed Claims #4-#6 with the Board at the same time he had filed them with the contracting officer.  The Board had initially docketed the claims as PSBCA Nos. 5153-5155, but redocketed the appeals as 5163-5165 upon receipt of Appellant’s appeals from the May 12, 2004 contracting officer’s decisions.

[6]   Appellant also argues that Respondent used emergency contracts for too long a period and awarded one of the earlier contracts to an ineligible contractor.  These arguments, although made in Appellant’s brief, do not appear to form the basis for any of the claims he filed in connection with these appeals and, therefore, we do not address them in this Opinion.