April 01, 2011
ROGER W. HOLCOMBE
PSBCA Nos. 5365 and 6120
Under Contract No. HCR 89561
APPEARANCE FOR APPELLANT:
Roger W. Holcombe
APPEARANCE FOR RESPONDENT:
Melissa Mortimer, Esq.
Office of the General Counsel
United States Postal Service
OPINION OF THE BOARD
Appellant, Roger W. Holcombe, has filed timely appeals from two contracting officer’s final decisions, the first of which terminated for default his mail delivery contract with the United States Postal Service (Respondent). The second final decision assessed excess reprocurement costs against Appellant. Respondent based the termination of Appellant’s contract upon his alleged poor performance, failure to follow instructions, and belligerent attitude while on postal premises.
Respondent asserted in a Motion for Summary Judgment that the termination was also independently supported by Appellant’s unreliability, untrustworthiness, and by his not being a person of good character.
Both entitlement and quantum are before the Board (Transcript Volume 1, Page (Tr.) 5).
FINDINGS OF FACT
1. On November 5, 2005, Appellant responded to Solicitation No. 948-19-06 issued by Respondent for the sortation, transportation, and delivery of mail tendered by Respondent to approximately 330 customer mail boxes along a specified roundtrip route between the Wellington, NV Post Office and Lazy S Ranch, NV. The roundtrip distance for the route was approximately 89 miles, and the contract required the successful offeror to perform daily, except Sundays and Federal holidays. Appellant proposed to accomplish the required tasks at an annual rate of $36,000. (Appeal File, Tab (AF) 1).
2. Clause B.5 of the solicitation required that Appellant submit for Respondent’s review a completed PS Form 2025 for each individual expected to perform services pursuant to the contract. The form requested specific information about the individual’s education, prior employment, criminal history, and other matters. (AF 1, p. 13; Tr. 176, 178).
3. The preamble of PS Form 2025 states in pertinent part that the information provided pursuant thereto “will be used to . . . determine your fitness and suitability for contractual service to the U.S. Postal Service” and that “[a] false answer to any question on this form is punishable by law.” PS Form 2025 further advised that “[c]ompletion of the form is voluntary, however, if the [requested] information is not provided you may be denied… participation under a USPS contract.” By executing the form, the signatory certifies that all statements contained therein are true, complete, and correct to the best of his knowledge. (Respondent’s Additional Exhibits, Tab (RAE) 2, pp. 677, 678).
4. Prior to December 2, 2005, Appellant submitted to Respondent a PS Form 2025 dated November 17, 2005, containing information about him. In block 16 of the form Appellant was directed to “[l]ist ALL periods of employment for the past five years starting with your present employment” and the reason for leaving each listed position. The only employment Appellant listed was a position as a mechanic in the Nevada Army National Guard from 1985 to 2003. Appellant listed “retirement” as his reason for leaving this position. (Stipulations of Fact (SOF) ¶ 1; RAE 2, pp. 677, 678).
5. Notwithstanding the sole employment listing on his PS Form 2025, Appellant was also employed as a corrections official with the Nevada Department of Corrections (DOC) from September 1, 1991, to the date of his termination, August 28, 2003 (RAE 13, p. 845; RAE 14, p. 854). By letter dated August 22, 2003, the DOC advised Appellant that he would be terminated effective August 28, 2003, on the grounds that he had “participated in a conspiracy to commit forgery, forgery, uttering a forged document, forging the signature of a public officer, and stealing, altering, or defacing records, documents, or instruments.” (RAE 13). The record does not indicate that Appellant filed an appeal or took any further action with respect to this matter (see RAE 12-15).
6. On December 2, 2005, Respondent accepted Appellant’s offer (Finding 1) and awarded him contract no. HCR 89561 (contract). The term of the contract began on December 3, 2005, and was to have concluded on June 30, 2009. At the time of award the contract annual rate was $36,000. (AF 1).
7. Clause 4-1, General Terms and Conditions (December 2003) (Modified), (m) Termination for Default authorized Respondent to terminate the contract:
for default by the supplier . . .. In the event of termination for default . . . the supplier will be liable to the Postal Service for any and all rights and remedies provided by law.
8. The contract at section 2.3.1.s(8) incorporated by reference clause B-69, Events of Default (January 1997), which provided that the contract could be terminated for default for reasons which included (1) “[t]he supplier’s failure to perform service according to the terms of the contract”, and (2) if the supplier “is not reliable, trustworthy, or of good character.” (AF 1, p. 44).
9. The contract required that Appellant perform box delivery services to customers and “carry all mail tendered for transportation under this contract, whatever may be its size and weight, with certainty, celerity, and security, in accordance with the operating schedule and between the points fixed in the schedule . . .” (Contract Clauses B.1.4.f and B.3.a; AF 1, pp. 8, 9).
10. At the beginning of contract performance Appellant was specifically directed via live instruction given by the Administrative Official and written materials prepared by the Administrative Official that only undeliverable bulk business mail (UBBM) was to be placed in what was called a UBBM bin on a daily basis. UBBM is mail other than first class mail or periodicals for which delivery information could not be ascertained by a review of the mail-piece. Mail deposited in the UBBM bin is considered to be trash. (Tr. 16, 17, 110).
11. A Postal Service Form 5500 (5500) is a pre-printed paper form issued by Respondent to contractors alerting them to deficiencies in their contract performance. For this contract, the 5500s issued to Appellant were prepared by the Administrative Official. (Tr. 19, 20; RAE 10, p. 729).
12. During the early weeks of contract performance Respondent did not prepare 5500s even though Appellant often improperly placed mail pieces in the UBBM bin and misdelivered mail to customers along the specified route (Tr. 18-20).
13. By February 24, 2006, Respondent began to issue 5500s to Appellant for various contract performance deficiencies (Tr. 19, 111). Between February 24, 2006, and April 25, 2006, Appellant had at least three instances of failing to deliver the mail properly and at least three instances of improperly placing mail in the UBBM bin. Each of these deficiencies was the subject of a 5500 issued to Appellant. (RAE 10, pp. 737, 738, 740-43, 746, 747, 749, 750).
14. Before leaving the post office to deliver his route, Appellant sorted the mail in his case in the order of deliveries along the route. At the beginning of contract performance there were some discrepancies between the order of the addresses on Appellant’s case and the order of deliveries required by the contract. The discrepancies were left over from the previous contractor. No later than mid-April 2006, Appellant had resolved the discrepancies. (Tr. 13; Tr. II 4, 5; AF 9).
15. On April 27, 2006, the Administrative Official and a postmaster from another post office met with Appellant to discuss his performance deficiencies, including improperly placing deliverable mail in the UBBM bin. Appellant was advised that “at no time was he ever to put first class mail or periodicals in the UBBM tubs.” (RAE 1, p. 603; RAE 5, p. 690).
16. Between April 28, 2006 and August 1, 2006, Appellant had at least three instances of mishandled mail and at least eleven instances of improperly placing mail in the UBBM bin which were evidenced by 5500s issued to Appellant by Respondent. (Tr. 20, 21; RAE 10, pp. 751-65, 768, 769, 771, 772, 775-82).
17. On the afternoon of July 6, 2006, Appellant confronted the Administrative Official in her office about a 5500 she had issued to him earlier in the day. Appellant spoke to the Administrative Official in a loud voice and when she stated that Appellant’s performance had, indeed, been deficient, he threw the 5500 in her direction. The postmaster felt threatened by Appellant’s behavior (AF 14, p. 210; RAE 10, p. 769). The following morning when Appellant reported for work the postmaster advised him that because of his conduct the prior afternoon he was no longer permitted access to the Wellington Post Office. On July 10, 2006, the contracting officer also advised Appellant that he would no longer have access to the Wellington Post Office. However, the contracting officer advised that Appellant was still responsible for performing the contract. Appellant’s wife initially continued performance of the contract by herself. Appellant was later permitted to assist his wife with the delivery portion of contract performance as long as he did not come to the Wellington Post Office. (AF 7, pp. 111, 120; Tr. 22, 23, 68-71; RAE 10, p. 769)
18. By final decision issued to Appellant dated August 30, 2006, the contracting officer terminated the contract based upon Appellant’s “poor performance, failure to follow instructions, and belligerent attitude while on postal premises”. At the time of termination the annual contract rate was $36,885.14. (AF 6, pp. 104-105; Tr. 151; RAE 1, pp. 555, 556).
19. Once the contracting officer decided to terminate Appellant’s contract, he initiated the process to procure replacement service on an emergency basis. Respondent solicited possible interested parties by telephone in an effort to award a contract for the same service required under Appellant’s contract. At least three parties were contacted and two of those submitted offers to perform the requested service. One offeror submitted an offer of $53,000 per year to perform the emergency service. The record does not indicate the price submitted by the other offeror, or whether the amount of the second offer was lower than that submitted by the first offeror. Respondent reviewed the offers and awarded a contract to the emergency replacement contractor at $53,000 per year. Contract performance began on August 31, 2006, to continue through February 23, 2007. (Tr. 152, 153, 183, 184; RAE 18, p. 1022; RAE 19, p. 1023; RAE 21, p. 1037; RAE 22, p. 1043).
20. By letter to the contracting officer dated October 11, 2006, Appellant timely appealed the default termination of the contract (AF 3, p. 100).
21. In December 2006, Respondent issued a written solicitation for a permanent replacement mail transportation contractor to provide the same service as that which had been provided by Appellant. Respondent also encouraged postal representatives in the proposed contract service area to let potential suppliers know of Respondent’s desire to contract for the mail delivery services formerly provided by Appellant. At least six potential offerors received solicitation packages. As a result, Respondent received two offers. On February 21, 2007, Respondent awarded a replacement contract at the offered annual rate of $55,363.39 to the supplier that submitted the lower price. Contract performance was to commence on February 24, 2007, and continue through June 30, 2010. (Tr. 153, 183; RAE 20, pp. 1027-1038).
22. By final decision to Appellant dated March 13, 2007, the contracting officer assessed against Appellant $59,808.35 for additional costs he claimed Respondent incurred as a result of the default termination of Appellant’s contract. Respondent’s breakdown of its claimed additional costs was as follows:
a. Emergency Replacement Contract
Respondent claimed entitlement to additional costs in the amount of $7,415.16. A daily excess cost rate of $41.89 was established by subtracting the $36,885.14 annual rate of the defaulted contact from the $52,176.29 annual rate of the emergency replacement contract and dividing the $15,291.15 difference by 365. The amount of claimed damages was determined by multiplying the 177 calendar day duration of the emergency contract by the $41.89 daily excess cost rate.
b. Replacement Contract
Respondent claimed entitlement to additional costs in the amount of $51,131.60. Respondent calculated a daily excess cost rate of $50.63 by subtracting the $36,885.14 annual rate of the defaulted contact from the $55,363.39 annual rate of the replacement contract and dividing the $18,478.25 difference by 365. Respondent determined the amount of damages by multiplying the daily excess cost rate by 1,010 days for a total of $51,131.60. 
c. Additional Administrative Costs
Respondent claims entitlement to additional administrative costs incurred during the effort to award the replacement contract in the amount of $1,261.59. Specifically, Respondent claimed entitlement to costs in the amount of $1,123.24 which was incurred to provide for additional time spent on administrative tasks by the contracting officer, a secretary, and employee resources characterized as CTS which accomplished tasks associated with preparing and distributing solicitation packages to vendors, reviewing offers, and preparing replacement contract award documents. Respondent also spent $6.50 to purchase a credit report and $89.50 to print solicitation packages for potential offerors. The total of these expenses was $1,219.24 and we find expenditures in these amounts to be reasonable. Respondent also claimed to have incurred $42.35 in additional costs for mailing 5 packages at $3.85 each. (RAE 22, pp. 1041-1043).
23. Appellant received the March 13, 2007 final decision on March 26, 2007. In a letter to the Board mailed on June 26, 2007, Appellant stated, “Request to appeal final decision to terminate contract number HCR 89561.” The letter was mailed to the Board 92 days after Appellant received the contracting officer’s final decision. (Respondent’s Motion to Dismiss for Lack of Jurisdiction, dated July 19, 2007).
Termination for Default
Respondent asserts that its termination of Appellant’s contract for default was justified on a number of grounds. First, Respondent contends that Appellant’s contract was properly terminated for default pursuant to the Events of Default clause (Finding 8) because Appellant is not “reliable, trustworthy or of good character.” Respondent argues that notwithstanding Appellant’s pre-award submission of his Form 2025, which contained a certification that the information contained therein was complete to the best of his knowledge, Appellant intentionally omitted a negative employment history. Respondent asserts that this intentional omission was Appellant’s attempt to insure that Respondent would not become aware of the circumstances of his employment and subsequent dismissal from the Nevada DOC when it determined his fitness and suitability for contractual service with the Postal Service.
We are satisfied that Appellant intentionally omitted his employment with DOC from the pre-award submission of his completed Form 2025. Given the fact that he formally challenged the disciplinary action in an administrative proceeding before the Nevada State Personnel Commission which resulted in a finding that Appellant had engaged in “dishonest” conduct, and given DOC’s subsequent finding that Appellant had committed “theft” and “forgery” which resulted in his termination (Finding 5), it is highly unlikely that Appellant simply forgot to list his prior employment with the Nevada DOC. Rather, we conclude that Appellant’s failure to reference his Nevada DOC employment on his Form 2025 was intentional. This omission was material as it prevented Respondent from fully taking into account Appellant’s pertinent employment history when Appellant was being considered for award of the contract. Appellant’s intentional submission of such incomplete and misleading information on a form designed to assist in determining Appellant’s suitability to perform services under the contract constituted a serious ethical breach and clearly supports the default termination on the basis that Appellant was not “reliable, trustworthy, or of good character.” Contract Master Services, Inc. v. United States, 225 Ct. Cl. 735 (1980); Spread Information Sciences, Inc., ASBCA No. 48438, 96-1 BCA ¶27,996; Contract Master Services, Inc., PSBCA No. 273, 1978 WL 2523; Leo Swanson, PSBCA No. 2641, 91-1 BCA ¶ 23,632. Appellant has offered no evidence that would suggest otherwise and we find none in the record.
That Appellant’s misleading submission was not discovered until after the contracting officer issued a final decision terminating his contract on other grounds does not prevent Respondent from asserting it as basis for sustaining the termination. Kelso v. Kirk Bros. Mechanical Contractors, Inc., 16 F.3d 1173, 1175 (Fed. Cir. 1994); Webco Transportation Corp, PSBCA No. 5276, 09-1 BCA ¶ 34,042; Derrick Van Greene, PSBCA Nos. 5093 and 5215, 07-1 BCA ¶ 33,471, aff’d on motion for recon., 2007 WL 5442324; Arthur Napier, PSBCA Nos. 3044, 3140, 94-2 BCA ¶ 26,695; American Photographic Industries, Inc., ASBCA Nos. 29272, 29832, 90-1 BCA ¶ 22,491, aff’d on motion for recon., 90-2 BCA ¶ 22,728.
Respondent also argues that Appellant’s termination was independently justified because of his poor performance and his aggressive behavior. Additionally, Respondent argues that Appellant is collaterally estopped from pursuing this appeal because a decision in a case filed by Appellant before the Equal Employment Opportunity Commission allegedly decided the identical issues presented here. As we have determined that the termination for default is justified by the fact that Appellant was untrustworthy, unreliable, and not a person of good character, we do not address these other arguments posed by Respondent.
Appellant argues that he was not in default because any performance deficiencies on his part that were the subject of the 5500s issued by Respondent and ultimately the subject of the final decision terminating the contract for default were not so numerous or serious as to warrant terminating his contract for default. Appellant further argues that any deficient performance on his part was the result of the postmaster interfering with his performance. As we have determined that the termination for default is justified by the fact that Appellant was untrustworthy, unreliable, and not a person of good character, we do not address these arguments addressing the quality of performance posed by Appellant.
Finally, Appellant argues that the default termination is not justified because the postmaster acted in bad faith by lying about Appellant’s performance, issuing vaguely worded 5500s for non-serious deficiencies, and otherwise interfering with his performance of the contract. In order to demonstrate that the default termination of his contract was the product of bad faith, Appellant must show by clear and convincing evidence that the contracting officer or other postal officials acted with malice or specific intent to harm him. Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1240 (Fed. Cir. 2002); Joseph J. Fanucchi, M.D. Employment Contract, PSBCA No. 5356, 2010 WL 5394986 (Dec. 30, 2010); Michelle R. P’Pool, PSBCA No. 5294, 08-1 BCA ¶ 33,824. Appellant has not met this burden. Not only has Appellant failed to demonstrate that the referenced actions were undertaken with malice or to cause harm to Appellant, he has failed to establish that the actions were even undertaken. Specifically, Appellant has not demonstrated that the postmaster lied about the existence or extent of his performance deficiencies. He has not demonstrated that the 5500s were issued for any reason other than to alert Appellant to his performance deficiencies, and he has not shown that actions of the postmaster adversely affected his contract performance.
Respondent argues that we lack jurisdiction to address the issue of excess reprocurement costs because Appellant did not file an appeal of the contracting officer’s final decision assessing those costs within the 90 day time limit established by the Contract Disputes Act. We disagree. As we stated in Arthur L. Johnson, PSBCA No. 3894, 97-1 BCA ¶ 28,773, “having timely appealed the contracting officer’s final decision to terminate his contract for default, Appellant need not file an appeal of the subsequent final decision in order to challenge, in this proceeding, the assessment of reprocurement costs.” See also, Nova Express, PSBCA Nos. 5091, 5207, 5213 and 5267, 07-1 BCA ¶ 33,564, recon. den., 07-2 BCA ¶ 33,660 and Tom Warr, IBCA No. 2360, 88-1 BCA ¶ 20,231.
To recover reprocurement costs, Respondent has the burden of proving that (1) the reprocured services are the same or similar to those specified in the terminated contract; (2) the Postal Service actually incurred the additional costs; and (3) the Postal Service acted reasonably to mitigate the excess costs. Andrew M. Johnson, PSBCA Nos. 5175, 5210, 5242, 07-1 BCA ¶ 33,464, recon. den., 07-1 BCA ¶ 33,582; Linda Copman, PSBCA Nos. 4889, 4903, 03-2 BCA ¶ 32,342; Arthur L. Johnson, PSBCA No. 3894, 97-1 BCA ¶ 28,773.
Emergency Replacement Contract
Regarding the emergency contract, while the record contains cost information relating to the cost of the emergency contract that was awarded, there is no evidence regarding the amount of the second offer that was received. Without that information, we cannot determine that Respondent acted reasonably to mitigate the excess costs incurred in connection with the emergency contract. Accordingly, Respondent is not entitled to recover its claimed $7,415.16 of additional costs associated with the emergency replacement contract.
Respondent has demonstrated that the services that were obtained were the same as those specified in Appellant’s terminated contract. Respondent has also demonstrated that it acted reasonably to mitigate the costs associated with the reprocurement by soliciting contractors to submit offers to perform the replacement service and awarding the contract to the contractor that submitted the lowest offer (Finding 21).
Regarding the computation of excess costs, the annual rate of the replacement contract was $18,478.25 higher than the annual rate of Appellant’s contract at the time of termination, resulting in an increased daily rate of $50.63. Respondent has claimed entitlement to the daily excess costs for a period of 1,010 days. As of the time of the hearing, however, Respondent had not demonstrated that it had actually incurred the excess cost claimed in the final decision for the performance of the replacement contract since the contract was still being performed. In circumstances such as these, where Respondent has demonstrated that it has reprocured the same services and mitigated the costs associated with the reprocurement, we have concluded that a supplier is liable for the costs associated with the replacement contract and allowed the Postal Service a “contingent recovery” based upon a showing that replacement performance has been accomplished and the appropriate payment has been tendered. Arthur L. Johnson, PSBCA No. 3894, 97-1 BCA ¶ 28,773; Bowman’s Transport Company, PSBCA Nos. 1088, 1089, 1092, 84-1 BCA ¶ 17,217. We find that such a contingent recovery is appropriate in this instance.
Accordingly, Appellant’s liability for these costs is contingent on Respondent’s submission of evidence that these conditions have been met. In this regard, Respondent is only entitled to receive excess reprocurement costs incurred from date performance began under the replacement contract through the specified contract period of the terminated contract. Ross & McDonald Contracting, GmbH, ASBCA Nos. 38,154, et al., 94-1 BCA ¶ 26,316; Lewis Management & Service Co., ASBCA Nos. 24802, et al., 85-3 BCA ¶ 18,416; Service Master Industries, Inc., ASBCA Nos. 22634, 24592, 81-2 BCA ¶ 15,452. In this instance that is a period of 857 days rather than the 1,010 days claimed by Respondent. Accordingly, subject to the satisfaction of the conditions stated above, we conclude that Respondent is entitled to its daily incurred excess costs associated with the replacement contract during the referenced 857 day period.
Respondent has claimed entitlement to $1,261.59 for administrative costs associated with awarding the replacement contract. Respondent explained in the attachment to its final decision assessing excess reprocurement costs how the administrative costs were calculated. As stated in Finding 22, we do not find that Respondent has accurately stated its mailing costs. Rather than the $42.35 Respondent claims it incurred, we find that Respondent’s mailing expenses were $19.25. We find the balance of Respondent’s claimed administrative costs to be reasonable and, therefore, we find it reasonable for Respondent to have incurred $1,238.49 in additional administrative costs associated with the replacement contract.
The appeal in PSBCA No. 5365 is denied.
The appeal in PSBCA No. 6120 is granted to extent that Respondent may not recover its claimed $7,415.16 additional direct costs associated with the emergency replacement contract. The appeal in PSBCA No. 6120 is denied to the extent that Respondent may recover $1,238.49 of additional administrative costs associated with the reprocurement of the replacement service. Respondent may also recover its additional daily costs associated with the replacement contract for an 857 day period subject to a showing that performance under the replacement contract was accomplished and that additional costs were incurred.
William A. Campbell
I concur: I concur:
David I. Brochstein Norman D. Menegat
Administrative Judge Administrative Judge
Vice Chairman Board Member
 Decision on the Motion for Summary Judgment was deferred and will be addressed in this Opinion. Respondent also asserted in a separate Motion to Dismiss for Lack of Jurisdiction that the Board had no jurisdiction to hear the issue of Respondent’s assessment of additional costs because Appellant failed to timely appeal the contracting officer’s final decision assessing those costs. Decision on the Motion to Dismiss was also deferred and will likewise be addressed in this Opinion. Finally, in a Renewed Motion for Summary Judgment, Respondent asserted that the appeal of the termination should be dismissed because Appellant was collaterally estopped from proceeding since the matters at issue in this appeal had been the subject of a decision in a prior proceeding before the Equal Employment Opportunity Commission. This issue was also deferred.
 Transcript page references with the preface (“Tr.”) refer to the transcript for the first day of the hearing. Page references preceded by “Tr. II” are to the transcript for the second day of the hearing.
 By decision issued at the conclusion of a pre-disciplinary hearing, Appellant was advised that he would be terminated from his position at the DOC on January 18, 2002. Appellant appealed the termination to the Nevada State Personnel Commission (Commission). By decision dated February 21, 2003, the Commission concluded that Appellant had engaged in “discourteous, disgraceful, and dishonest conduct” but found that he had not been provided required progressive discipline and reversed the termination. The matter was remanded to the DOC for the “imposition of discipline consistent with the principles of progressive discipline”. (RAE 12-15).
 The omission of Appellant’s employment history with the Nevada DOC came to light during a discovery deposition of Appellant conducted by counsel for Respondent during the preparation of these appeals for hearing (Respondent’s Motion to Amend Answer, ¶ 2). Although Respondent raised this issue and presented evidence of Appellant’s DOC employment and termination in its Motion for Summary Judgment well before the hearing, Appellant offered no evidence at the hearing to contradict the above findings.
 The Administrative Official supervises the day to day performance of the contract. For this contract, the Wellington Postmaster was designated as the Administrative Official. (AF 1, pp. 5, 36; AF 13, p. 144).
 The record does not indicate how the 1,010 day period was derived. From the start of contract performance under the replacement contract to the originally scheduled June 30, 2009 end date of Appellant’s contract is 857 calendar days.