November 19, 2021

PSBCA Nos. 6784 and 6813

WEBER TRUCKING, LLC, v. UNITED STATES POSTAL SERVICE

APPEARANCE FOR APPELLANT: David P. Hendel, Esq., Culhane Meadows PLLC

APPEARANCE FOR RESPONDENT: Richard Y. Rho, Esq., United States Postal Service Law Department            

OPINION OF THE BOARD

Weber Trucking, LLC had a contract to deliver mail for the Postal Service on four routes near Las Vegas, Nevada.  Weber Trucking filed a claim seeking $92,861.47 and an unspecified additional amount because the contract included defective specifications.  Weber Trucking then submitted a certified claim for $117,678.96, which the contracting officer denied.  We dismiss the first claim for lack of jurisdiction and largely grant Weber Trucking’s second claim.

FINDINGS OF FACT

Weber Trucking

1. Weber Trucking is owned and operated by Randy Weber, who has been operating mail delivery contracts for more than 40 years.  He has held 15 contracts with the Postal Service over the years.  Currently, his company operates contracts covering 24 routes.  (RAF 26 at 227; Tr. 35, 490).¹
2. Three postmasters, with whom Mr. Weber has worked over the years, commended his work ethic, work quality, and customer service (AAF 6 at 69).
3. Weber Trucking is a two-time winner of the Postal Service’s Eagle Spirit Award.  The first award was in 1996, and the most recent award was in 2017.  It is the highest award given by the Postal Service to its exceptional contractors.  (Tr. 35-36).
4. Over the years, Mr. Weber has bid on at least 50 different Postal Service contracts and is familiar with the risks (Tr. 42-43).
   The Solicitation, Offer, Contract Award, and Performance Begins
5. On June 15, 2016, the Postal Service’s Western Transportation Contract Management Team (TCMT or contracting office) issued Solicitation Number 980-345-16 for Highway Contract Route (HCR) 890A9.  The contract was scheduled to begin on July 16, 2016, and end on March 31, 2022.  (RAF 4 at 30; Tr. 49).
6. HCR 890A9 was a fixed-price mail delivery contract servicing the Westridge Station area, which is in Las Vegas, Nevada.  The contract included four routes (or lines of travel), which are identified as Part A (also called H-305), Part B (also called H-311), Part C (also called H-312), and Part D (also called H-324).  (RAF 4 at 38-43, 71; RAF 28 at 473; Tr. 55-56).
7. The solicitation was based on historical information in the Postal Service’s possession, but much of that information was not disclosed to prospective bidders.  For example, for each of the four routes, the Postal Service had a PS Form 6889, Route Summary Report, which summarized the mail volume and type of mail.  The bottom of each page provides:  “I certify that this information is verified and correct.”  There are signature lines for the carrier, postmaster/manager, and the manager of post office operations – commodity strategies manager.  The four forms are unsigned by any of the three people listed.  (RAF 1 at 1-4).
8. The Postal Service did not identify the volume of letters or parcels that were historically delivered in the solicitation, even though it had that information available (RAF 1 at 1-4).  The Postal Service included the estimated hours to complete the work and the miles in the solicitation.  (RAF 4; Tr. 179-82, 188, 193, 273).
9. The record includes a PS Form 5406, Contract Delivery Route Survey, for Route H-312 dated February 6, 2016.  It was signed by the Administrative Official (the Postal Service employee who completed the form) on February 6, 2016.  The contractor performing the route at the time of the survey provided specific comments for the survey form.  In Block L, Supplier’s Comment’s on Proposed Changes, the supplier commented:  “Route overburden[ed] due to parcel[s;] Requesting Split[.]”  The Administrative Official in Block M, Administrative Official’s Comments on Proposed Changes, wrote:  “Requesting split.”  (RAF 1 at 7-8).  Neither this form nor the comments were provided to the competing contractors in June 2016.
10. The record includes two PS Form 5408X, Box Delivery Contract Route Survey forms for Route 312 (Route C) showing the line by line route driven by the contractor.  The forms are not dated or signed.  The mileage and routes in these two forms match the mileage and routes in the solicitation for Routes C (H-312) and D (H-324).  Based on this information, the Postal Service split Route 312 into two routes in the solicitation.  (RAF 1 at 5-6).
11. Form 5406, Contract Delivery Route Survey, and Form 5408X, Route Delivery Contract Route Survey, for Routes A and B predating the solicitation were not included in the record (RAF 1).²
12. Weber Trucking prepared a bid based on the estimated hours (with required departure and return times), miles, and other information provided by the Postal Service in the solicitation.  It used the same process to estimate costs that it had used on numerous other bids.  (Tr. 38, 177-95).
13. The solicitation provided two qualifiers regarding the estimates:
    *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 estimated annual hours are approximately the number of hours needed to operate the trips as they are shown in the schedule.  Also included in the total estimated annual hours are the number of hours needed for casing, loading/unloading and mail mark-up.  Prior to submitting a proposal, the supplier must determine the actual hours.
    (RAF 4 at 43-44).
14. The Postal Service initially awarded the contract to the low bidder, which was not Weber Trucking.  The day before the contract began, the awardee came into the post office and told the supervisor that he had looked at the routes and could not perform the contract.  He then walked out the door.  (Tr. 48-49).
15. On July 15, 2016, the contracting officer, Howard Bruner, contacted Mr. Weber to offer him the contract.  Mr. Bruner asked if Weber Trucking could begin work the next day.  When accepting the award, Mr. Weber did not know why the prior awardee had given up the contract.  (Tr. 45-46, 48-49, 532-33).
16. Weber Trucking commenced delivering mail on the four routes on July 16, 2016 (Tr. 49).
17. During the first week of contract performance, Mr. Weber began to understand that the routes could not be completed within the required departure and return times.  He requested that the Postal Service conduct a route survey to confirm the distance, number of boxes, and mail volume (a measurement of each type of mail such as First Class, Marketing Mail, and parcels) for each route.  (Tr. 71-74, 86; AAF 1; RAF 28).
18. Mr. Weber regularly repeated his request for a route survey throughout the performance of the contract over the next year and a half (Tr. 71, 74, 86; AAF 1; RAF 28 at 484, 487-88, 492, 494).
    The Written Contract
19. Weber Trucking began performing on July 16, 2016, even though the parties had not executed a written contract.  The Postal Service made clear to Mr. Weber that it would not pay any invoices until he signed the contract documents, thereby depriving Mr. Weber of the opportunity to fully and fairly assess possible performance problems.  (Tr. 125, 332-33; RAF 3).  The Postal Service did not provide Mr. Weber with a written contract until August 22, 2016, which he signed on that date.  The contracting officer signed the contract on August 25.  (RAF 4 at 28, 30).
20. The contract required Weber Trucking to deliver mail on the routes identified as Routes A, B, C, and D at a rate of $187,427.40 per year.  The total combined mileage was 22,821.2 miles a year.  (RAF 2 at 16; RAF 4 at 28-32; RAF 9 at 113-19; Tr. 193, 261-62).
21. Each of the four routes (A, B, C, and D) had a specified line of travel identifying the route to be driven while delivering the mail as well as required departure and return times.  (RAF 1 at 5-6; AAF 4 at 29-34; Tr. 376-78).  The contract also specified the number of boxes on each route (RAF 1).
22. The contract required Weber Trucking’s employees to report to the Westridge Station at 8:00 a.m. each day to sort mail and load it into Weber Trucking’s vehicles.  The contract also provided that the employees would depart the Westridge Station at 10:00 a.m. for Routes A and B, 11:02 a.m. for Route C, and 11:06 a.m. for Route D.  (RAF 28 at 581).
23. The contract also specified the return time for Weber Trucking’s employees to return from each route:  Route A was 2:18 p.m.; Route B was 12:53 p.m.; Route C was 1:38 p.m.; and Route D was 1:22 p.m.  (RAF 4; RAF 28 at 581).
24. The contract’s Termination with Notice clause provided:  “The contracting officer or the supplier, on 60 days written notice, may terminate this contract or the right to perform under it, in whole or in part, without cost to either party. . . .”  (RAF 4 at 85).
25. A Postal Service employee at Westridge Station, Nevada, was to serve as the contract’s administrative official.  The contract provides that an administrative official “is appointed by the Contracting Officer and is responsible for the day to day supervision of the contract.”  The contract also provides:  “All extra service must be approved by the administrative official prior to performing.”  (RAF 3 at 26).
26. The contract does not identify by name who the administrative official is.  Rather, it says “Administrative Official:  Westridge Station.”  Moreover, there is no appointment letter signed by the contracting officer, email from the contracting officer appointing the administrative official, or even a memorandum of phone call summarizing the appointment of the administrative official.  The contracting officer never appointed one either in writing or orally.  At trial, the Postal Service’s senior TCMT contracting officer, Douglas Veatch (hereinafter the Senior Contracting Officer), explained that the administrative official usually would be the postmaster (or senior postal official) at Westridge Station.  He explained that Shannon Lopez-Perez performed the day to day supervision so she would be the Administrative Official.  In short, the Senior Contracting Officer believed that Ms. Lopez-Perez was the Administrative Official and treated her as such.  (Tr. 65, 613, 627-28).
27. In contrast, Ms. Lopez-Perez testified that she was the “supervisor of contract routes” but was never the administrative official.  If there was a complaint or problem, she was the one to address it.  She would also complete all of the HCR contract mail counts and complete any service contract route changes.  (Tr. 351-52).  She also testified that Transportation Specialist Jim Marshall was the administrative official for the Weber Trucking contract and that she definitely was not the administrative official.  Mr. Marshall did not work at Westridge Station.  She also testified that Station Manager Deon Ashley was not the administrative official.  In her words, “He didn’t even deal with the contractors . . . .”  Ms. Lopez-Perez’s tone at trial showed frustration bordering on hostility towards Weber Trucking.  The frustration was misdirected towards Weber Trucking.  Because she completed the work normally associated with the administrative official and the TCMT Senior Contracting Officer believed she was the administrative official, we identify her as the Administrative Official.  (Tr. 65-66, 352-53, 446-47, 455).
28. Mr. Weber believed that Mr. Ashley was the administrative official because he was the senior Postal Service employee at Westridge Station even though he did not sign the forms, conduct a route survey, or complete the mail count for the HCR contractors.  The confusion between who was actually the assigned administrative official as perceived by the Senior Contracting Officer, Ms. Lopez-Perez, and Weber Trucking caused Weber Trucking to expend substantially more time managing the contract.  (Tr. 64-66, 495-96).
29. The contract description of Route D did not include an entire housing development consisting of 29 homes.  It also was not included in the line of travel.  (AAF 4 at 29).
30. The contract included an adjustment formula:
    Estimated Annual Contract Hours:  The estimated contract hours in the contract will be established as follows:
    

    OFFICE [time]:

    A. A volume factor is established based on the average rural volume factor for the District.

    B. The number of boxes is multiplied by the District volume factor based on a week.

    C. 5 minutes per day is added for miscellaneous office functions (e.g., preparing the scanners).

    D. 5 minutes per day is added for withdrawal.

    STREET [time]:

    E. 2 minutes per day is added for each mile.

    F. 1 minute per week is added for each centralized box.

    G. 2 minutes per week is added for each non-centralized box, such as a curb.

    H. 4 minutes per day is added for every 100 boxes for other street functions (includes mail collection time (1 minute), and parcel delivery time (1 minute), and scanning time (2 minutes).

    Adjustment Factors: Adjustments for additional boxes and miles are based on items E through H above only. Adjustments for additional boxes and office time are based on items A and B only.  C and D will be adjusted, if needed, based on annual volume count.  Adjustments for compensation will be made by the Manager, Transportation Contracts.
    (RAF 4 at 53-54).
31. The contract also included a changes clause, which provided: (1)Minor Service Changes.  The contracting officer may, at any time, without consulting the supplier, issue orders directing an extension, curtailment, change in the line of travel, revisions of route, or increase or decrease in the frequency of service or number of trips and fixing an adjustment in the supplier’s compensation which increases or decreases the supplier’s rate of pay by no more than $5,000 for Transportation Contracts and no more than $2,500 for Contract Delivery Service Contracts. . . .  The supplier will proceed diligently in accordance with minor service changes ordered unilaterally by the contracting officer. . . . (2) Other Service Changes.  Service changes other than minor service changes, including increases or decreases in compensation, may be made by mutual agreement of the contracting officer and the supplier.  Such changes will be memorialized by formal amendment to the contract.  Upon execution of the bilateral amendment to the contract, the supplier waives all rights to further claims relating to the facts and events that gave rise to the service change.
    (RAF 4 at 75).
32. Neither the solicitation nor the resulting contract identified the rural volume factor for the District.  Furthermore, it did not provide information as to whether the agreement with Amazon.com, Inc. (Amazon) affected the rural volume factor.  Finally, the formula presumes it is physically possible to complete the contract within the departure and return times.  (RAF 4).
    Contract Performance and Administration
33. Weber Trucking incurred additional costs completing the contract for several reasons.  First, the unexpectedly high mail volume and incorrect route lengths made it impossible to deliver all the mail and return to the Post Office by the contract’s specified return time.  (Tr. 53-54, 106, 110-11, 170, 197, 463-65).
34. Second, the Postal Service regularly kept Weber Trucking from departing on time because the Amazon truck had not yet arrived.  Amazon’s parcels required same day delivery with a money back guarantee if the parcel was not delivered on time.  Holding back Weber Trucking increased the performance time on all four routes.  (Tr. 64, 103-06, 170, 410, 435, 437-39, 452-56, 476-77, 479-80).
35. Third, the Postal Service maintained a delivery edit book (informally called the “Redbook”) as part of the Address Management System which identifies the addresses and their status on each route.³   When Weber Trucking took over the contract, the Redbook had not been updated for more than two years and contained incorrect addresses and box information.  In other words, Weber Trucking began the contract by trying to deliver mail using an outdated delivery book.  Weber Trucking updated the Redbook.  (Tr. 57-60; RAF 28 at 524).
36. Fourth, the Postal Service required Weber Trucking’s carriers to return to the Post Office on schedule even if they had not completed their route.  If they still had mail, the Postal Service would require the carriers to go back out and deliver the mail.  (Tr. 80-81, 108, 423-30).
37. Fifth, the Postal Service directed Weber Trucking to deliver mail to an entire housing subdivision, with 29 additional addresses, which was not on Route D’s line of travel, identified in the solicitation, or in the prebid information.  While the total box count did not materially change, having to deliver mail to more single-family homes (instead of cluster boxes) took more time.  (AAF 4 at 29-30).⁴
38. Sixth, the route mileage in the solicitation and awarded contract was inaccurate (Tr. 55-56, 266-67).
39. Seventh, the Postal Service refused to complete a route survey (an otherwise normal practice) for fifteen months after Weber Trucking first requested one which should have corrected many of these problems (Tr. 71, 413-14, 512-15).
40. The Administrative Official started administering contracts in September 2016, more than a month after Weber Trucking commenced the work.  She had never been an administrative official before.  (Tr. 350-51).
41. In order to meet the schedule, Mr. Weber broke Route A into two separate routes which is similar to the way the Postal Service broke Route C into two routes.  The Contracting Officer, the Contract Specialist working directly for the Contracting Officer, and the Administrative Official working at Westridge Station, all knew that Mr. Weber had broken Route A into two routes and did not tell him to stop because the mail was being timely delivered.  (RAF 7 at 103, 105).
42. Mr. Weber advised the contracting officer and contract specialist in writing that Weber Trucking had split Route A (H-305) into two parts.  In response, the contract specialist wrote:  “do what [is] necessary to get the job done.”  (AAF 1 at 2).
43. Later, the Administrative Official began a route survey in December 2016, but she did not complete it because she found two of Weber Trucking’s employees out of position.  The route survey was not undertaken again for another whole year.  (Tr. 73-74, 78, 148, 434-35, 437; RAF 28).
44. The Administrative Official attributed the inability to complete the four routes on time to Weber Trucking’s employee inefficiency.  Each vehicle is equipped with a Postal Service issued GPS tracking system which can generate a report showing precisely where each vehicle is while the contract is being performed.  The Postal Service’s software can generate a report (informally called a “breadcrumb report”) showing where each vehicle is located, its line of travel, and time of travel between points.  The Administrative Official never reviewed these reports to provide support for her conclusion.⁵   (Tr. 365-68, 434, 450-52).
    Weber Trucking’s First Termination Notice
45. By letter dated December 20, 2016, Weber Trucking provided its first 60-day notice that it was terminating the contract pursuant to the Termination with Notice clause.  Mr. Weber explained that Weber Trucking was losing money because the route could not be completed as specified in the contract.  (AAF 1 at 3; RAF 4 at 85; Tr. 85-86).
46. On January 31, 2017, the contract specialist working directly for the contracting officer asked Mr. Marshall about Weber Trucking’s schedule (RAF 7 at 101).
47. Mr. Marshall noted that “[t]he [route] surveys look like they were not done correctly.”  In other words, the Postal Service knew in January 2017 that the specifications were still based on incorrect route surveys.  (RAF 7 at 101).
48. On February 7, 2017, (shortly before the end of the 60-day period) Denise N. Jacot, a contract specialist working for the contracting officer, contacted Mr. Weber and asked him to keep the contract and assured him that the line of travel and schedule would be corrected.  The contracting officer was aware of the conversation.  Weber Trucking then withdrew the Notice and continued to perform with the understanding the schedule and other problems would be “straightened out.”  (Tr. 86-87, 91; RAF 28 at 478; AAF 1 at 5).
    Continued Administration Issues
49. On May 2, 2017, Mr. Weber sent another letter to the contracting officer recounting his problems and the assurances that he received in February 2017 from Ms. Jacot (AAF 1 at 5).
50. In June 2017, the Senior Contracting Officer contacted Mr. Weber to remind him to work to the terms of the contract.  He specifically instructed Weber Trucking not to leave the Westridge Station until 10:00 or 11:00 a.m. as the contract specified.  He also told Mr. Weber to have his employees return to the Post Office at the time specified in the contract even if the route had not been completed.  (Tr. 80, 681, 683, 729; RAF 28 at 479).  The Senior Contracting Officer specifically told Mr. Weber that Weber Trucking should submit Form 5397, Contract Route Extra Trip Authorization, each day, to provide Weber Trucking with additional compensation if the drivers had to go back out and complete the route (RAF 39 at 612).
51. In compliance with the Senior Contracting Officer’s directive, Weber Trucking submitted more than 220 Forms 5397 showing the extra time needed to complete the four routes.  The Administrative Official signed 180 of the 220 forms in the “Authorized By” block which approved them for payment.  (RAF 26 at 235-457).⁶   Even though each Weber Trucking employee had a GPS system that automatically showed where each vehicle was located and when deliveries were made, no one from the Postal Service audited the forms by verifying them against the GPS tracking data.  (Tr. 365, 735).
52. The Senior Contracting Officer told Mr. Weber to submit the forms because the program officials would not do their job.  He believed that the forms would compel the program officials to do their job and fix the inaccurate specifications.  The Senior Contracting Officer told the Administrative Official to authorize the extra trip forms.  (Tr. 80-81, 428-30, 681-83, 729-32; RAF 28 at 479).
53. Even though Weber Trucking followed the Senior Contracting Officer’s directive, the Postal Service never paid Weber Trucking additional money based on the PS Forms 5397 (Tr. 84-85, 205-06, 483-84).
54. The contracting officer issued a unilateral modification (Route Order 15) on August 15, 2017, which provided a total retroactive price increase of $685.01 for the increased mileage.  The Postal Service paid Weber Trucking the $685.01.  (RAF 10 at 162; RAF 45 at 932).
55. None of the three contracting officers involved in awarding and administering this contract have traveled the four routes or watched them being performed.  They relied on the Administrative Official for their contract performance information.  (Tr. 589).
56. The contracting officer who initially awarded the oral and written contracts worked out of the Postal Service’s Tacoma, Washington, contracting office.  The Postal Service reorganized its contracting offices starting in September 2016, and moved the administration of this contract to the Postal Service’s contracting office in Aurora, Colorado.  The transition was completed by February 2017.  Also during this time, one of the contracting officers administering the contract retired.  The void left by his departure was not timely filled.  During this time, Mr. Weber had difficulty getting any response from a contracting officer or contract specialist.  (Tr. 69-71, 93, 130, 198, 545-46; RAF 28 at 484).
57. The contracting officer also worked with the District Transportation Manager who is responsible for CDS contracts in the Las Vegas area.  In an email, the District CDS Manager wrote:  “I am aware of the issue[s] and currently involved in more pressing duties and cannot devote the time needed.  The AO [Administrative Official] is new, and needs training in managing contracts.”  (RAF 28 at 479).
58. The Senior Contracting Officer in Aurora, Colorado, thought this email was “concerning,” but did not otherwise follow-up (Tr. 684, RAF 28 at 479).
59. On a different concern, Mr. Weber contacted the contracting officer about statements made by the Administrative Official to Weber Trucking’s employees.  She suggested to Weber Trucking’s employees that they should compete for the contract independent of Weber Trucking.  She also showed the employees Weber Trucking’s proprietary pricing information.  Mr. Weber was concerned about the Administrative Official illegally releasing proprietary pricing information.  The record includes a letter from the person who received the proprietary pricing information.  In mid-December 2016, “[Ms. Lopez Perez] pulled out his [Randy Weber] contract and showed me the [pricing] numbers and explained how the breakdown was.”  (Tr. 444, 484-87; RAF 39 at 615; see also RAF 39 at 612-14).
60. The contracting officer never responded to Mr. Weber about his concerns and simply ignored the complaint that the Administrative Official was illegally releasing Weber Trucking’s proprietary pricing information (Tr. 485, 624-29).
    Weber Trucking’s Second Termination Notice
61. Weber Trucking filed a second Notice of Termination on November 17, 2017.  This time, the contracting officer allowed the contract to end on January 18, 2018.  (RAF 13 at 194; RAF 30 at 584-85; RAF 33 at 593; Tr. 99-100).
62. On December 5 through 8, 2017, the Postal Service completed a route survey of each of the routes.  The Postal Service’s actual survey results showed that 3 hours and 52 minutes should be added to the contract for performing the four routes.  In comparison, Mr. Weber conducted his own route surveys.  He then systematically addressed each of the four route surveys done by the Postal Service and explained why he was entitled to 4 hours and 41 minutes.  (RAF 17 at 199-206; RAF 34 at 596; RAF 37 at 602; RAF 39 at 609-11; Tr. 422, 512, 534-35).
63. We have reviewed the surveys completed by both parties and conclude that the better measure falls between the two amounts.  Regarding Route A (H-305), we conclude that 1 hour and 23 minutes (i.e., 1.38 hours) should be added (Tr. 101, RAF 24).  Regarding Route B (H-311), we adopt Mr. Weber’s survey that 37 minutes (.61 hours) should be added (RAF 20 at 210).  Regarding Route C (H-312), we adopt part of Mr. Weber’s survey results concluding that Weber Trucking is entitled to an additional 1 hour and 22 minutes (i.e., 1.37 hours), not 1 hour and 50 minutes because of an error in his calculations (RAF 20 at 209-10; RAF 17 at 201; RAF 4 at 38).  Regarding Route D (H-324), Mr. Weber shows that Weber Trucking is entitled to an additional 45 minutes (.75 hours).  We find his calculation to be more reliable (RAF 20 at 210).⁷
64. In summary, the total amount of time added to the four routes is 4 hours and 7 minutes (i.e., 4.12 hours per day).  The performance period for the contract was 455 days.  When Weber Trucking submitted its offer, it provided a pricing sheet which identified the fully loaded labor cost as $161,522.85.  When divided by the Postal Service’s hours of 6,723 it yields a rate of $24.02541 per hour.  When signing the contract, the contracting officer identified the $24.02541 as the late slip rate.  Using this rate, the total adjustment would be 4.12 hours x 455 days x $24.02541 per hour yielding $45,038.03.  (RAF 4 at 28-29, 32; Tr. 249).
65. Notwithstanding the Postal Service’s survey results showing that 3 hours and 52 minutes should be added, the Administrative Official believed that these results should not be followed and convinced the contracting officer that only 1 hour and 23 minutes should retroactively be added to the Weber Trucking contract.  She did not support her conclusion with data from the breadcrumb report or other more specific information.  The amount paid based on the 1 hour and 23 minutes reduces the $45,038.03.  (RAF 17 at 199-206; RAF 34 at 596; RAF 37 at 602; RAF 39 at 609-11; Tr. 422, 512, 534-35).
66. After the contract ended and notwithstanding the Postal Service’s actual route survey results, on February 16, 2018, the contracting officer issued another unilateral modification (Route Order 21) which retroactively increased the compensated time by 1 hour and 23 minutes each day and increased the price by $15,086.98 (RAF 24 at 225-26).
67. The Postal Service based its modification on the formula in the contract’s adjustment clause.  The Postal Service has complete control over the variables in the formula such as the volume factor and number of boxes.  The variables are not independently published, and their calculation method is not subject to review.  Weber Trucking did not know the variables when it began performance on July 16, 2016, or signed the contract at the end of August 2016.  (See Finding 30 citing RAF 4 at 53-54).
68. During the hearing, Mr. Weber credibly testified that he spent more time managing this contract than any other he ever had with the Postal Service.  Both he and his bookkeeper explained that he spent an average of an extra hour each of the 455 days of performance dealing with the defective specifications.⁸   He also explained that his rate for this type of work would be $30 per hour.  The total for the additional management time would be $13,650.  (Tr. 249, 307-10).
69. The Postal Service hired a replacement contractor at a rate of $222,650 a year, which was $35,222.60 higher than Weber Trucking’s yearly contract rate.  Shortly before the Postal Service did a route survey in December 2017, Amazon stopped shipping parcels through the Postal Service on these four routes.  Amazon brought the work in-house, which reduced the volume of mail being delivered.  The new annual rate was based on the December 2017 route surveys.  (RAF 4 at 28; RAF 41 at 629-32; RAF 44 at 871). 
70. Weber Trucking submitted a request for equitable adjustment (REA) dated February 28, 2019, to the contracting officer seeking $89,194 (RAF 25 at 227-30; RAF 42).
71. Weber Trucking sought $76,549.80 for additional labor costs; $7,654.98 for profit on the labor cost, and attorney costs of $4,989.22 associated with administering the contract (RAF 25 at 229-30).
72. The contracting officer did not respond to Weber Trucking’s REA (RAF 42; Tr. 527-28, 541, 606).
    Weber Trucking’s Claim
73. On May 16, 2019, Weber Trucking filed a claim for $92,861.47.  It sought $76,549.86 for additional labor costs, 10% profit on labor (i.e., $7,654.99), and $8,656.62 for legal costs associated with submitting the claim.  (RAF 26 at 231-34).⁹
74. The contracting officer did not issue a final decision within 60 days and Weber Trucking filed a notice of appeal based on the deemed denial of its claim.  (Tr. 527, 687-88).
75. We docketed the new appeal as PSBCA No. 6784.
76. Inadvertently, the Postal Service paid Weber Trucking $7,738.86 after it ceased contract performance.  The parties agree that Weber Trucking is not entitled to compensation from January 19, 2018, to January 31, 2018, because it did not deliver mail during that period.  (RAF 23 at 217; RAF 24 at 225-26; RAF 45 at 932; Tr. 320-21, 326).
    New Claim
77. During his opening statement at trial, Weber Trucking’s counsel revised the amount sought because of labor impact costs, the costs for an additional vehicle, and the cost of money, and profit rate.  These costs were not included in the REA, claim, or complaint.  He said that the claim had already been presented and that it was simply an adjustment of the amount.  (Tr. 13-15).
78. When asked what the new total was, Weber Trucking’s counsel responded:  “We have a rough total . . . but I don’t want to say it just now.”  (Tr. 14).  After the hearing and briefing by the parties, the Board raised the issue of jurisdiction because the amount sought was over $100,000 and the claim had not been certified.  See 41 U.S.C. § 7103.
79. After the hearing, Weber Trucking submitted a new certified claim dated February 4, 2020, to the contracting officer for final decision (Joint Status Report, Exhibit 1).
80. Weber Trucking sought the following:
    1. Additional hired labor costs                         $  60,780.68
    2. Additional supervisory labor costs               $  13,650.00
    3. Vehicle Costs                                             $    8,904.72
    4. REA and counsel costs to draft REA            $    8,656.62
    5. Cost of money                                            $  11,499.00
    6. Profit at 15% on 1, 2, 4, and 5                     $  14,187.94
       Total                                                          $117,678.96
       (Joint Status Report, Exhibit 1).¹⁰
81. Weber Trucking traditionally used a profit rate between 10% and 12% of the total costs for each contract it bid.  The profit amount would be added to all of the costs even though the initial bid pricing sheet may not show a separate line item for profit.  In other words, profit would not be broken out on a separate line item.  (Tr. 284-87).
82. By final decision dated March 27, 2020, the contracting officer denied the claim (Joint Status Report, Exhibit 2).
83. Weber Trucking appealed and we docketed the new appeal as PSBCA No. 6813 (Joint Status Report, Exhibit 3; Notice of Docketing).
84. The parties jointly asked the Board to use all of the prior documents and testimony to decide PSBCA No. 6813.

DECISION

Jurisdiction
We receive our jurisdiction to hear this case from the Contract Disputes Act.  41 U.S.C. §§ 7101-09.  For us to have jurisdiction, a claim must be presented to the contracting officer and a final decision rendered by the contracting officer.  41 U.S.C. § 7103; Oswald Ferro, PSBCA No. 6485, 14-1 BCA ¶ 35,613.  If a decision is not rendered by the contracting officer, a contractor may file an appeal based on a deemed denial.  41 U.S.C. § 7103(f)(5).
Weber Trucking filed a claim seeking $92,861.47 from the Postal Service alleging the solicitation and subsequent contract included defective specifications and the Postal Service constructively changed the terms of the contract as it was being performed.  The contracting officer failed to render a final decision, and Weber Trucking filed a timely appeal of the deemed denial.  We docketed an appeal from this claim as PSBCA No. 6784.
As part of its opening argument at trial, Weber Trucking tried to increase the $92,861.47 by an additional unspecified amount.  Later during the trial and in post-hearing briefs, Weber Trucking identified this amount as an additional $34,053.72, bringing the total amount of the claim to $126,915.19.  The evidence produced by Weber Trucking at trial shows, however, that the information for the additional costs was readily available to, and solely within, Weber Trucking’s possession and had been since January 2018 when the contract ended.
The Postal Service moved to dismiss the $34,053.72 portion of Weber Trucking’s case for lack of jurisdiction because it included separate and distinct elements of the claim, which were not presented to the contracting officer for final decision as required by the Contract Disputes Act and seemed to take the total above $100,000, which would require certification.  41 U.S.C. § 7103.  However, after the hearing, Weber Trucking submitted a certified claim for $117,678.96 for the entire amount to the contracting officer, which was denied.  Weber Trucking submitted a timely appeal which we docketed as PSBCA No. 6813 and consolidated the appeals.
Weber Trucking’s initial claim of $92,861.47 did not require certification when it was initially filed.  And under the right circumstances Weber Trucking would have been allowed to increase that amount at trial, even in the absence of a certification.  Tecom, Inc. v. United States, 732 F.2d 935, 937 (Fed. Cir. 1984).  Here, however, the increased amount of the claim was based on information readily available to Weber Trucking when it filed the initial claim.  In that situation, the claim suffers from a lack of certification, and therefore PSBCA No. 6784 is dismissed for lack of jurisdiction.  Tecom, 732 F.2d at 938 n. 2; Wheeler Logging, Inc. v. Dept. of Agriculture, CBCA No. 97, 08-2 BCA ¶ 33,984 n. 5 (discussing how the boards of contract appeals and courts have treated this issue after Tecom).
We now turn to PSBCA No. 6813, over which we do have jurisdiction.

Introduction
Weber Trucking argues that it is entitled to $117,678.96 because the Postal Service:  (1) provided defective specifications, and (2) failed to disclose its superior knowledge.¹¹   In short, Weber Trucking argues that it is entitled to compensation beyond that provided by the Postal Service when it issued two modifications (Route Orders 15 and 21).
The Postal Service responds that to the extent the specifications were defective or it had superior knowledge, the adjustment clause provides complete relief for the additional costs, and Weber Trucking is not entitled to any additional compensation beyond Route Orders 15 and 21.
Do the defective specifications entitle Weber Trucking to additional compensation?
The Postal Service drafted the specifications in the contract.  Government contracts generally have performance specifications, design specifications, or a combination of the two.  See generally John Cibinic, Jr., James F. Nagle, and Ralph C. Nash, Jr., Administration of Government Contracts, 254-63 (5th ed. 2016).
Performance specifications dictate an ultimate result that a contractor must achieve, leaving the contractor with the discretion to determine the means to achieve that result.  On the other hand, design specifications set forth in detail the materials that a contractor must use and the manner in which the contractor is to employ the materials under a particular government contract.  The contractor has virtually no discretion to deviate from these details and must follow them like a “road map.”
Kiewit Const. Co. v. United States, 56 Fed. Cl. 414, 421 (2003)(citations omitted, emphasis added); see also P.R. Burke Corp. v. United States, 277 F.3d 1346, 1357 (Fed. Cir. 2002). 
In Kiewit, the court used the phrase “follow them like a ‘road map’” which was used by the court in J.L. Simmons Co. v. United States, 412 F.2d 1360, 1362 (Ct. Cl. 1969)(the government wrote the specifications and the contractor “was required to follow them as one would a road map.”).  To put the specification types into perspective, the line of travel in the present contract is specified in a turn-by-turn route on a road map.  Weber Trucking was not allowed to deviate from the route on the road map.
Weber Trucking alleges that it is entitled to additional compensation because the specifications are defective.  “When the government provides a contractor with defective specifications, the government is deemed to have breached the implied warranty that satisfactory performance will result from adherence to the specifications, and the contractor is entitled to recover all of the costs proximately flowing from the breach.”  Essex Electro Eng’rs, Inc. v. Danzig, 224 F.3d 1283, 1289 (Fed. Cir. 2000).  A contractor is entitled to additional compensation for the increased cost of performance caused by defective specifications.  Santa Fe Eng’rs, Inc., PSBCA No. 902, 84-2 BCA ¶ 17,377; Johnson & Son Erectors, ASBCA No. 24564, 81-1 BCA ¶ 15,082; Magnus Pac. Corp. v. United States, 133 Fed. Cl. 640, 677 (2017)(citing Hol-Gar Mfg. Corp. v. United States, 360 F.2d 634, 638 (Ct. Cl. 1966).
The requirements for a contractor's recovery for defective government specifications are well settled:  where the government has specified the manner in which work is to be done, it warrants the outcome.  American Ordnance LLC, ASBCA No. 54718, 10-1 BCA ¶ 34,386.  Once the contractor has established it substantially complied with the government’s plans and specifications, but that unsatisfactory performance resulted, the burden shifts to the government to prove that the contractor performed improperly, or that there were other causes absolving the government of liability.  SPS Mechanical Co., Inc., ASBCA No. 48643, 01-1 BCA ¶ 31,318 at 154,692 (citing C.L. Fairley Constr. Co. Inc., ASBCA No. 32581, 90-2 BCA ¶ 22,665, aff'd on recon., 90-3 BCA ¶ 23,005, and R.C. Hedreen Co., ASBCA No. 20599, 77-1 BCA ¶ 12,328.);  M.A. Mortenson Co., ASBCA No. 53063 et al., 01-2 BCA ¶ 31,573 at 155,906.
Generally, the defective specifications doctrine does not apply to a performance based specification.  See, e.g., Dewey Elec. Corp. v. United States, 803 F.2d 650, 658 (Fed. Cir. 1986).  But when the government prescribes “the [precise] manner in which the work . . .  [is] to be performed” it warrants the specification.  J.L. Simmons Co., 412 F.2d at 1362; Franklin Pavkov Const. Co. v. Roche, 279 F.3d 989, 994-95 (Fed. Cir. 2002)(citing Spearin v. United States, 248 U.S. 132 (1918)).  Under the Spearin doctrine, when the government provides a contractor with defective specifications, the government is deemed to have breached the implied warranty that satisfactory contract performance will result from adherence to the specifications and the contractor is entitled to recover costs proximately flowing from the breach.  Id.
In the present contract, the Postal Service prescribed Weber Trucking’s method of completing this contract (i.e., one vehicle per route, a preapproved driver, the line of travel, method of delivering mail, departure time, return time, sorting method, and so on).¹²   Weber Trucking did not have discretion in how it would perform the contract.
We have also held that a mail delivery contractor may be entitled to additional compensation when the contract could not be performed as drafted.  See Paul A. Mason, PSBCA No. 1335, 86-1 BCA ¶ 18,722 (when the contract specified the vehicle’s capacity, the contractor was entitled to additional compensation when the Postal Service provided mail which exceeded the capacity)(citing Hol-Gar, 351 F.2d 972).  To place our previous ruling into context, in Mason (a mail transportation contract) we relied on Hol-Gar (a defective design specifications case).  In the present case, the specifications were so bad that Weber Trucking had to split a route.
The Postal Service does not dispute that the specifications were defective as to the number of boxes and mileage.  The Postal Service unilaterally modified the contract to increase the compensation by $685.01 for the incorrect mileage and issued Route Order 15.
The Postal Service also conceded that the mail volume and mail mix (letters, parcels, and flat mail such as magazines) would affect the number of estimated hours needed to complete each route.  The Postal Service, therefore, issued Route Order 21 which added $15,086.98.
This amount was calculated using the route survey which the Administrative Official thought would add 1 hour and 23 minutes each day to Route A.  The problem is that the Administrative Official ignored the surveys for Routes B, C, and D.  The route surveys completed on December 5 through 8, 2017 (after Amazon substantially reduced using the Postal Service) showed an extra 3 hours and 52 minutes to complete all four routes.  But, Mr. Weber showed that even these surveys were done incorrectly.  Having reviewed the calculations provided by both parties, I conclude that the correct measure for extra time to perform all four routes is 4 hours and 7 minutes, which includes the 1 hour and 23 minutes agreed to by the parties for Route A.  See Finding 63.
The issue before this Board is whether Weber Trucking is entitled to additional compensation beyond the $15,086.98 because the estimated hours were so wrong that the contract could not be performed as written.  The Administrative Official did not provide credible testimony supporting her conclusion not to adopt the route surveys for Routes B, C, and D, and she did not understand the specific circumstances of this contract.  Additionally, none of the contracting officers, who were based out of Aurora, Colorado, had direct personal knowledge of the problems on the routes.  In contrast, Mr. Weber provided credible testimony based on his direct, personal knowledge and years of experience. 
The contract generally allocates risk to the contractor for damages incurred because of a defective estimate in the number of hours to complete the contract.  The Postal Service argues Weber Trucking voluntarily accepted all risks associated with bad estimates.  But it would have been impossible to drive the routes and gain an understanding of the amount of time required to complete the routes.  Additionally, the Postal Service failed to provide any information about the volume and mix of mail.  The Postal Service did not provide information about the splitting of Route 312 into Routes 312 (Route C) and Route 324 (Route D) in the solicitation, which may have alerted Weber Trucking to the problems on the other routes.  Again, it was impossible for Weber Trucking to confirm the number of hours required to perform the contract.  The Postal Service had this information, but did not make it available.  Furthermore, the Postal Service knew that the initial awardee opted not to continue with the contract shortly before commencing the work, and it failed to provide this information to Weber Trucking.
This problem with defective specifications in a postal contract is not a new one.  In Freund v. United States, 260 U.S. 60, 61 (1922), the Post Office Department, had a contract with Eugene A. Freund and Alfred F. Roemmich, business partners, to transport mail in St. Louis.  The contract was firm, fixed price and provided: 
It is hereby stipulated and agreed by said contractors . . . that the Postmaster General may change the schedule, vary, increase or decrease the trips on this route, or extend the trips to any new location of the post offices, railroad stations, steamboat landings, mail stations, or [other] points of exchange . . . .  [F]or any increase or decrease in the service authorized . . . the pay of the contractors shall be increased or decreased . . . at the rate per mile . . . under this contract . . . . 
Id. at 64.  In essence, Messrs. Freund and Roemmich accepted that the schedule, route mileage, and mail volume was an estimate which the Post Office Department could change at will.  The change in mileage would be covered by an agreed upon rate.  Id.
In Freund, the Post Office Department changed the route from what was solicited and increased the mileage.  The Department also changed the service from light service requiring six automobiles to heavy service requiring 18 wagons.  Id. at 63.  Messrs. Freund and Roemmich sought $43,726.89, but the Department only allowed $24,289.62 because it used the same mileage rate in the initial award and added a prorated amount.  The Court of Claims then added $7,346.66 to the amount awarded by the Department.  56 Ct. Cl. 15 (1920).  Messrs. Freund and Roemmich appealed to the Supreme Court.
The Supreme Court recognized that a contract may make provisions for “changes in the service, within the four corners of the contract, and thus avoid the presentation of unreasonable claims for extras.”  Freund, 260 U.S. at 62.  But, the Supreme Court stated that further analysis is required when warranted by the facts.
But sometimes such contract provisions have been interpreted and enforced by [an] executive official as if they enabled those officers to remold the contract at will.  The temptation of the [Post Office] bureau to adopt such clauses arises out of the fact that they avoid the necessity of labor, foresight, and care in definitely drafting the contract, and reserve power in the bureau.  This does not make for justice . . . .
Freund, 260 U.S. at 62-63. 
The Court recognized that prorating the additional mileage amount and applying it may not justly compensate the contractor, particularly since “[t]he larger bulk of mail required proportionately more time . . . .”  Id. at 64.  Chief Justice Taft, writing for the Court, noted:  “We think that there was no acceptance of the new route under the circumstances which would bar recovery for what the services were reasonably worth.”  Id. at 69.  The Court concluded:  “We think that the contractors are entitled to recover the reasonable value of their services for the 16 months, including a fair profit.”  Id. at 70.
To place the ruling in perspective, the Freund decision came just four years after Spearin.  The Supreme Court did not limit its Freund ruling to saying that its prior ruling in Spearin only applied to design specifications for material products.  The Court specifically ruled for the contractor in a postal contract with contract clauses similar to those at issue in the present case.
The Court then reversed the Court of Claims, ruled in favor of Messrs. Freund and Roemmich, and remanded to the “Court of Claims, with directions to find the value of the services rendered by appellants on the substituted or restated route, including a fair profit, and to enter judgment for the balance found due.”  Id.  I recognize that the Court’s decision is almost 100 years old, but it is still binding precedent.
Because of the substantial passage of time, I need to look at more recent decisions.  In prior decisions, this Board has upheld the allocation of risk to the contractors when there have been flawed estimates.  The Postal Service relies on four of our prior decisions to support its argument that risk was allocated to Weber Trucking.  While I still believe those decisions were correctly decided, the facts in this case allow me to distinguish them.
In both Erol A. Guvenoz, PSBCA No. 5150, 06-02 BCA ¶ 33,423 and Barbara Schweiss, PSBCA No. 4819, 02-2 BCA ¶ 31,938, we held that a contractor’s actual knowledge of the contract as the incumbent cannot shift the responsibility on a fixed price contract to the Postal Service under a defective specifications theory.  In contrast, Weber Trucking did not have actual knowledge before submitting its offer and beginning contract performance.
In Tony G. Ledbetter, PSBCA No. 4335, 00-1 BCA ¶ 30,856, the Postal Service successfully argued that the points on a delivery route remained the same while the mileage was incorrect.  The solicitation contained the route (i.e., line of travel).  Based on the information in the solicitation, Mr. Ledbetter could have determined the actual mileage.  Moreover, the volume of mail and number of parcels which affect the number of hours were not at issue.  In contrast, in the present case, the Postal Service did not provide the volume of mail, rather it assured the bidders that the routes could be completed within the hours listed.
In Betty C. Tweet, PSBCA No. 4081, 98-1 BCA ¶ 29,353, Ms. Tweet failed to show that the performance took longer than the time set out in the schedule; thus, we ruled against her because she did not meet her burden of proof.  In the present case, the Administrative Official signed 180 Forms 5397 showing that the contract could not be performed in the allotted time.  Additionally, Mr. Weber provided credible testimony explaining that the routes could not be performed within the scheduled hours given the volume and mix of mail.
Today, we are faced with a situation which is factually closer to Freund than our recent decisions.  While the Postal Service adjusted Weber Trucking’s contract based on an adjustment clause, it did not adequately consider the changes in route, the incorrect mail volume requiring additional hours, and administrative delay.
The Postal Service argues that the terms and conditions of the contract should be used to fully resolve the dispute.  First, it argues that the adjustments clause agreed to by Weber Trucking provides the full remedy.  Second, it argues that the contract did not allow for additional compensation based on the changes clause.
With regard to the first argument, the Postal Service’s reliance on the adjustments clause is unfounded.  The Postal Service did not release the volume rates or how they were determined.  The Postal Service also did not explain how the Amazon deliveries affected the hours to complete the contract.  Even at trial, the Postal Service failed to prove how the volume rates were established.  The Postal Service controlled the volume data and calculation.  Without prior disclosure, Weber Trucking could not meaningfully agree to such a limit.  While the clause could have been effective for minor changes, it was wholly ineffective when a route was so poorly crafted that it needed to be split into two separate routes in order to have it completed each day.  In Freund, the Post Office Department argued that the Mr. Freund accepted the clause and demonstrated the acceptance by continuing the work even with assurances from the postmaster that “the department would take care of the situation.”  Freund, 260 U.S. at 74.  Similar to Freund, the Postal Service made representations to Mr. Weber.  But, the adjustment clause in the present case was totally inadequate for Weber Trucking’s performance.  Under similar circumstances, the Court wrote:  “[w]e think that there was no acceptance of the new route under the circumstances which would bar recovery for what the services were reasonably worth.”  Id. at 69.
Additionally, the Postal Service argues that Mr. Weber should have known about the errors by the time he signed the contract after a month of performance.  By making this argument the Postal Service attributes to Weber Trucking the knowledge of an incumbent contractor at the time he bid the contract.  This argument is not persuasive because Mr. Weber had already asked for a route survey (putting the Postal Service on notice that the specifications were flawed) and the Postal Service would not pay him until he signed the contract.  In Freund, the Court held “[w]e cannot ignore the suggestion of duress there was in this situation, or the questionable fairness of the conduct of the government, aside from the illegality of the construction of the contract insisted on, and have no difficulty, therefore, in distinguishing this case from the [Court’s other mail cases].”  Id. at 70.
Regarding the changes clause, the Postal Service argues that the “minor changes” portion of the clause limits Weber Trucking to $2,500 and the “other service changes” part of the clause requires a formal bilateral modification before a higher amount may be paid.
This argument is fundamentally flawed because it presumes that the Postal Service will act in good faith and not demand excessive additional work.  The Senior Contracting Officer told Mr. Weber to complete the Forms 5397 and that he would be compensated based on the forms.  The contracting officer did not tell Mr. Weber that he would only receive a maximum of $2,500.  At a minimum, Mr. Weber reasonably believed that Weber Trucking would be compensated based on the forms.  A contracting specialist also told Mr. Weber to do what was necessary to deliver the mail.  Mr. Weber relied on these assurances.  Instead, at trial, the Senior Contracting Officer initially asserted that there could be fraud because the forms were completed by Mr. Weber instead of a Postal Service employee and he could have falsified them.  The Senior Contracting Officer then backtracked from his testimony when asked why the Postal Service didn’t verify the forms with the GPS data in the breadcrumb reports.
The Senior Contracting Officer’s assurances of additional payment were empty.  Instead of fulfilling these assurances, he failed to respond to Mr. Weber’s legitimate concerns about how the contract was being managed, including his complaint that his proprietary data was being disclosed by the Administrative Official and his request for equitable adjustment.  Finally, he even failed to render a final decision on the first claim as required by the Contract Disputes Act.  41 U.S.C. § 7103(f).
None of the three contracting officers who administered this contract personally observed performance of the work, thereby undercutting their credibility on factual matters.  These failures were further compounded when the Postal Service refused to follow the actual data provided by its December 2017 route survey, which found that Weber Trucking was entitled to an additional 3 hours and 52 minutes.  The Administrative Official thought this number was incorrect.  Her judgment is suspect.  As the Postal Service’s area transportation manager wrote, “I am aware of the issue[s] and currently involved in more pressing duties and cannot devote the time needed.  The AO [Administrative Official] is new, and needs training in managing contracts.”  In addition, it became clear that the Administrative Official held animus against Mr. Weber, even going as far as to encourage his employees to quit Weber Trucking and personally bid on the contract.  She even disclosed Weber Trucking’s proprietary pricing to the employees.  She had worked for the Postal Service for less than three years, and never worked as an Administrative Official.  She signed 180 Forms 5397 for additional compensation and had the opportunity to verify these forms with the GPS data (which only the Postal Service had), but opted not to do so.
In contrast, Mr. Weber with more than 40 years of experience, numerous Postal Service contracts, and two Postal Service Eagle Spirit Awards, explained the flaws in the route and why 1 hour and 23 minutes was inadequate to complete the work.  His independent estimate before the Postal Service did its route survey in December 2017 (which showed that 3 hours and 52 minutes should be added) was that at least 4 hours and 41 minutes should be added to the contract.
Against this backdrop, Weber Trucking’s explanation that the specifications were defective beyond the level conceded by the Postal Service is more compelling.  Thus, Freund applies.  In summary, the Court in Freund did not abide by the Post Office Department’s arguments, and in the present case nor do I.  Accordingly, Weber Trucking has proven that it is entitled to additional compensation under a defective specifications theory.

Is Weber Trucking entitled to additional compensation under a superior knowledge theory?
To be entitled to additional compensation under a superior knowledge theory, Weber Trucking must prove:  (1) the contractor undertook performance without vital knowledge of a fact that affects the performance costs or duration; (2) the government was aware the contractor had no knowledge of the vital information and no reason to obtain such information; (3) the contract specification misled the contractor or did not put it on notice to inquire; and (4) the government failed to provide relevant information.  Hercules, Inc. v. United States, 24 F.3d 188, 196 (Fed. Cir. 1994); see also C.M. Moore Div., K.S.H., Inc., PSBCA No. 1131, 85-2 BCA ¶ 18,110, 1985 WL 17160, recon. denied, aff’d 818 F.2d 847 (Fed. Cir. 1987) (liability may be based upon the Postal Service’s superior knowledge, violation of the contract’s limited representations, and duty to disclose information affecting contract performance); Helene Curtis Indus., Inc. v. United States, 312 F.2d 774, 778 (Ct. Cl. 1963).
First, Weber Trucking attempted to perform without knowing that the estimated hours were woefully incorrect.  Second, the Postal Service was aware that Weber Trucking did not have this information; Weber Trucking was not the incumbent.  The Postal Service knew from its February 2016 route survey that Route 312 needed to be split because of the number of parcels, but didn’t check the other routes.  The record does not include route surveys for the other routes before the solicitation was released.  Third, the Postal Service misled Weber Trucking by representing that the contract could be performed within the hours identified.  Weber Trucking was unable to know that the contract could not be performed within these hours.  Finally, the Postal Service failed to provide Weber Trucking with the correct number of hours needed to perform the contract.
The Postal Service seeks to avoid liability by arguing that Weber Trucking accepted all of the risk.  Under the facts of this case, Weber Trucking could not have knowingly accepted the risk.  J.A. Jones Const. Co. v. United States, 390 F.2d 886, 888 (Ct. Cl. 1968); C.M. Moore, 85-2 BCA ¶ 18,110 (the Postal Service “is not shielded from liability for nondisclosure . . . by either the ‘as is’ clause or Appellant’s inspection” if the contractor could not have inspected the item before bidding); see generally Performance-Based Contracting:  A Fail Safe Panacea? 18 No. 2 Nash & Cibinic Rep. 16 (2004).
I therefore conclude that the Postal Service had superior knowledge that it withheld from Weber Trucking.  Accordingly, Weber Trucking has also demonstrated that it is also entitled to additional compensation under a superior knowledge theory in addition to the defective specifications theory.

Was there an agreement on the settlement methodology?
My fellow board members concur in the findings of fact, concur that Weber Trucking is entitled to additional compensation, concur in the compensation calculations, and the Board’s order.  But they reach their conclusion on entitlement to additional compensation using different legal analysis.
They conclude that there was an oral agreement (i.e., an agreement to agree) between the parties as to a compensation method for Weber Trucking which goes beyond the written terms of the contract.  Their conclusion is based on a series of oral discussions culminating with an oral agreement made during a meeting on November 29, 2017.  I appreciate their reasoning but believe it’s a stretch to reach that legal conclusion.
The final decision issued by the contracting officer limit reimbursement to that allowed by the contract and the two unilateral modifications (Route Orders 15 and 21).  Senior Contracting Officer Veatch, who apparently made the oral agreement, reviewed these written modifications prior to their issuance.  He did not reference a binding oral agreement.  He has been a contracting officer for a long time and knows how to complete a written bilateral contract modification.  He didn’t do one here.  Furthermore, from the outset of this litigation, the Postal Service consistently maintained its legal position that Weber Trucking is only entitled to compensation provided by the contract and written modifications.  This position is inconsistent with concluding that there was another oral agreement.
Additionally, Weber Trucking was represented in this litigation by experienced government contracts counsel who argued that Weber Trucking was entitled to additional compensation based on the theories of defective specifications, superior knowledge, negligent estimates, and constructive change.  Weber Trucking’s counsel didn’t argue that there was an oral agreement.
Against this backdrop, I’m not inclined to find an agreement for additional compensation which goes beyond the written documents.  Accordingly, I rely on the defective specifications and superior knowledge theories to conclude that Weber Trucking is entitled to additional compensation.

How much additional compensation does the Postal Service owe?
Weber Trucking argues that it is entitled to compensation using a total cost method (TCM).  See Wunderlich Contracting Co. v. United States, 351 F.2d 956 (Ct. Cl. 1965)(a claim using TCM is calculated by taking the total cost to perform minus the bid price).
A TCM claim is allowable when the nature of a particular cost makes it impossible to a reasonable degree of certainty to track the costs.  See WRB Corp. v United States, 183 Ct. Cl. 409, 426 (1968).  The TCM method is also appropriate when the contractor lacked responsibility for adding to the costs.  See Servidone Constr. Corp. v. United States, 931 F.2d 860, 861 (Fed. Cir. 1991).  In the present case, Weber Trucking did have problems with inefficient drivers at the outset of the contract and various times during performance (Tr. 75-76, 149-51, 160-63, 165-66).  Based on these problems, TCM is not the best method for calculating the proper amount of the equitable adjustment.
Instead of using TCM, we address each category of cost.  “Once a contractor has proved the government’s liability for the costs of added or changed contract work, the actual costs incurred by the contractor will provide the measure of equitable adjustment to the contract price, if those incurred costs are reasonable.”  George Sollitt Constr. Co. v. United States, 64 Fed. Cl. 229, 245 (2005).  Courts have realized that “the ascertainment of damages, or of an equitable adjustment, is not an exact science, and where responsibility for damage is clear, it is not essential that the amount thereof be ascertainable with absolute exactness or mathematical precision.”  Delhur Indus., Inc., v. United States, 95 Fed. Cl. 446, 454 (2010) (quoting CEMS, Inc. v. United States, 59 Fed. Cl. 168, 227 (2003)(quoting Elec. & Missile Facilities, Inc. v. United States, 416 F.2d 1345, 1358 (Ct. Cl. 1969))).  “A plaintiff will meet its burden of proving damages if it ‘furnishes the court with a reasonable basis for computation, even though the result is only approximate.’”  Id.

Weber Trucking seeks the following costs:

1. Additional hired labor costs                         $  60,780.68
2. Additional supervisory labor costs               $  13,650.00
3. Vehicle Costs                                             $    8,904.72
4. REA and counsel costs to draft REA            $    8,656.62
5. Cost of money                                            $  11,499.00
6. Profit at 15% on 1, 2, 4, and 5                     $  14,187.94

Total                                                     $117,678.96

Additional Hired Labor Costs
Weber Trucking’s claim uses TCM to calculate $60,780.68 for additional hired labor.  However, there is a long and consistent agreement between the parties that the Postal Service would pay Weber Trucking for the additional labor costs (Tr. 80-81).  Because we are not convinced that its employees were always efficient, we use an alternative method called out by the pricing provided by Weber Trucking in its offer.  The route was surveyed by the Postal Service and Mr. Weber.  In reviewing their findings, we conclude that the four routes needed an additional 4 hours and 7 minutes a day to complete them over the 455 days of contract performance.  Each additional hour was worth $24.02541.  The total claimed for additional labor was $60,780.68 of which we allow $45,038.03.

Supervisory Labor
With regard to the $13,650 in supervisory costs, these are attributed to the additional supervision provided by Mr. Weber.  Mr. Weber explained that his management time had been included in the profit rate, but in this case he spent an average of an extra hour each day to manage this contract, which was far beyond what he had ever needed in the past.  We agree and conclude that $13,650 is allowed.
Additional Vehicle Cost
Weber Trucking added a fifth vehicle to provide service to this contract after splitting Route 305 into two routes.  Weber identified the costs for this vehicle as $8,904.72.  Weber Trucking has used the same bookkeeper for years to track its costs.  She provided credible testimony about this cost.  The Postal Service objects because costs for additional miles driven, gallons of gas, oil, and maintenance were based on a fleet average.  We are not persuaded that this would make a material change in the total or fully cover the additional costs caused by the defective specifications.  We conclude that the $8,904.72 cost is reasonable.

REA and Counsel Cost
Weber Trucking seeks the $8,656.62 for the costs of preparing its REA and presenting it.  These costs have been tracked using the law firm’s time keeping system. Furthermore, Weber Trucking paid the law firm.
The preferred method for establishing the amount of the adjustment is using actual cost data for the additional work.  See, Lilley-Ames Co. v. United States, 293 F.2d 630, 633 (Cl. Ct. 1961); A.O.K. Bldrs., Inc., PSBCA 2389, 89-3 BCA ¶ 22,076; American Line Bldrs., Inc. v. United States, 26 Cl. Ct. 1155, 1193 (1992).  Actual costs using a contractor’s standard record keeping system are generally sufficient to prove a cost.  See First Division Design, LLC, ASBCA No. 60049, 18-1 BCA ¶ 37,201.
The Postal Service argues that Weber Trucking is not entitled to these costs because the contract lacks a unilateral changes clause for an amount over $2,500.  We have already addressed this argument and find it unpersuasive.
The Postal Service also appears to argue that the full amount is not allowable because it represents a litigation cost.  We disagree with this argument.  REA costs may include the cost of contract administration, but not litigation costs.  See Tip Top Const., Inc. v. Donahoe, 695 F.3d 1276, 1281-82 (Fed. Cir. 2012); Phoenix Data Solutions LLC, F/K/A Aetna Govt. Health Plans, ASBCA 60207, 18-1 BCA ¶ 37,164.  Consultant and attorney costs incurred to draft and present the REA are contract administration costs.  Id.  It was clear that Mr. Weber wanted to discuss a settlement, not litigate, with the Postal Service, but the Postal Service ignored his REA by never responding.  Furthermore, Weber Trucking. in the spirit of trying to negotiate a settlement, offered to accept $4,989.22 for legal fees incurred up to December 31, 2018.  This offer to compromise his incurred costs further shows that he wanted to reach a settlement and not go to litigation.
The May 16, 2019 claim included a footnote which explained the accumulation of costs.  It provides:  “Our February 28, 2019 request for equitable adjustment calculated attorney fees only through December 31, 2018.  This claim now calculates fees through March 31, 2019, but does not include the fees incurred in updating the request and producing this claim letter.”  Having reviewed the time keeping records (RAF 26, Attachment D), we agree with this representation that the REA does not include claim costs.
The $8,656.62 cost of pursuing the REA is allowed.¹³

Cost of Money
Sovereign immunity generally shields the government from paying interest costs on borrowed money unless the immunity is waived.  Systems Fuels, Inc. v. United States, 666 F.3d 1306, 1310-11 (Fed. Cir. 2012) (applying the “no interest rule” to the cost of borrowed money).  Therefore, in the absence of a clear waiver, interest on borrowed money is not recoverable.  Bell v. United States, 404 F.2d 975, 984 (Ct. Cl. 1968).  The Bell court, however, explained that a contract’s changes clause can be interpreted to be such a waiver.  Id.  We have followed Bell and allowed recovery of the cost of money.  See Automation Fabricators & Eng'g Co., PSBCA No. 2701, 90-3 BCA ¶ 22,943 (reimbursing contractor for interest it paid as part of its equitable adjustment of the contract for the Postal Service ordered changes). 
Turning to the merits of the claim now before us, Weber Trucking has proved that the Postal Service is liable for contract damages.  The Senior Contracting Officer instructed Weber Trucking to complete additional work, which Weber Trucking performed, but the Postal Service delayed paying for.  Wickham Contracting Co. v. Fisher, 12 F.3d 1574, 1582-83 (Fed. Cir. 1994) (financing related costs “as part of an equitable adjustment under a fixed-price contract [are allowable] if the contractor has actually paid interest because of the government’s delay in payment . . . .”).  But these general capitalization (i.e., equity capital) costs are only recoverable if they are attributable to a specific contract.  Id. at 1538.  The issue thus remains in this case whether Weber Trucking can make such a showing.
Weber Trucking’s bookkeeper testified to these costs.  Her testimony, however, lacked sufficient specificity.  Most importantly, she was not able to allocate the cost of borrowed money between this contract and the other Postal Service contracts Weber Trucking had at the same time.  (Tr. 243).  Mr. Weber himself also failed to provide any evidence on this issue.  He could only generally say that the borrowed money was “used for the business,” but not for this specific contract.  (Tr. 95).  And the bank records Weber Trucking submitted do not allocate any of the interest amounts to this or any other contracts.  Thus, while it is probable that at least some of the borrowed money was used to support this contract, the record is not sufficiently clear to allow us to award these costs.  First Div. Design, LLC, ASBCA No. 60049, 18-1 BCA ¶ 37,201 (vague estimates do not support a claim for incurred costs); Nab Lord Assoc., PSBCA No. 415, 80-2 BCA ¶ 14,645 (vague documentary evidence is insufficient to support a contractor’s claim).  This part of the claim is therefore denied.

Profit
Weber Trucking seeks to apply a 15% profit rate.  Mr. Weber and Weber Trucking’s bookkeeper testified that Weber Trucking historically included between 10% and 12% profit when bidding its contracts.  The Postal Service objects that profits should not be added to the cost to complete the REA because profit was not specifically identified in Weber Trucking’s bid pricing sheet.  We disagree with the Postal Service’s argument.  Even though it was not separately listed, profit was included in the other line items.
The testimony established that historically Weber Trucking used a 10% to 12% profit rate in its bids, with 10% being the floor.  Having considered the testimony, we conclude that 10% is a reasonable amount given that we have allowed for additional supervisory labor costs as discussed above.  In bidding the contract, Mr. Weber based the profit rate on the total cost to perform the contract.  We believe that such an accounting practice should continue here.  Weber Trucking is therefore entitled to 10% profit on all of the costs allowed above except vehicle costs.  Vehicle costs already included profit.

Interest
Weber Trucking is entitled to Contract Disputes Act interest on its certified claim.  See 41 U.S.C. § 7109.

Offsets
Inadvertently, the Postal Service continued to pay Weber Trucking beyond the end of performance.  The parties agreed that Weber Trucking was not entitled to that compensation.  The Postal Service is credited with $7,738.86.  The Postal Service is also credited for the amounts calculated under Route Orders 15 ($685.01) and 21 ($15,086.98), to the extent those amounts have already been paid.

ORDER

The appeal is granted.  Damages are awarded in large part.
Weber Trucking is entitled to the following: (1) additional hired labor costs, $45,038.03; (2) additional supervisory labor costs, $13,650; (3) additional vehicle costs, $8,904.72; (4) REA and counsel costs, $8,656.62; (5) profit at 10% on hired labor, supervisory labor, REA and counsel costs; and (6) Contract Disputes Act interest.
The Postal Service is credited with payments it made pursuant to Route Orders 15 and 21.  In addition, it is credited with $7,738.86 it advertently paid to Weber Trucking after it ceased performance.  We remand to the parties for calculation of the net amount due and Contract Disputes Act interest starting from the submission date of Weber Trucking’s certified claim.  41 U.S.C. § 7109.

Peter F. Pontzer
Administrative Judge
Board Member

CONCURRING OPINION
We concur in the result, but we believe the defective specification and superior knowledge analysis is not necessary to reach this result.
There was a long and consistent agreement between the parties to amend the contract if, in fact, the routes took longer to perform than the times set out in the contract.  By December 2016, the Postal Service acknowledged that an extra vehicle was required and told Mr. Weber to do what was necessary to get the contract completed.  In June 2017, the Postal Service agreed to pay for more than 220 trips that Weber performed between the end of June and late October 2017.  The approval for the extra payments was given by a contracting officer, Doug Veatch.  (Tr. 80–81).  For reasons unexplained, however, the Postal Service never processed these payment requests.  The Postal Service also unilaterally modified the contract by Route Order 15 in August 2017 to increase the annual mileage by 575.8 miles and provide a retroactive lump sum payment of $685.01 (RAF 10). 
This series of agreements culminated in a meeting on November 29, 2017, after Weber Trucking had given its second termination notice.  The Postal Service believed that Weber Trucking’s problems were caused by its own inefficiencies.  Nonetheless, the Postal Service did agree to perform a route survey, and depending on the results, pay Weber Trucking for any errors in the contract schedule as part of the termination proces6s.  As of that date, the Postal Service had already agreed to add 1 hour and 23 minutes to the schedule for Route A at the contract wage rate.  (RAF 23 at 222–23; Tr. 393–94).  The contracting officer also testified that he approved Route Order 21 based on the route survey, further supporting the idea that the Postal Service approved a price increase if any change were warranted by the December 2017 route surveys (Tr. 513).
These actions and agreements of the parties, standing alone, are sufficient to support a finding of entitlement for Weber Trucking.  Therefore, the defective specifications and superior knowledge analysis is unnecessary.

I concur: Alan R. Caramella, Administrative Judge, Chairman
I concur: Diane M. Mego, Administrative Judge, Board Member

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