May 8, 1986

 

APPEAL OF

LAWRENCE D. BANE

 

UNDER CONTRACT NO. HCR 47233

 

PSBCA NOS. 1440, 1491

 

APPEARANCE FOR APPELLANT:

Lawrence D. Bane

 

APPEARANCE FOR RESPONDENT:

Maria R. Fuhrmann, Esq.

 

OPINION OF THE BOARD

 

            These appeals arise from the contracting officer’s final decisions  terminating a highway transportation contract for default and assessing excess reprocurement costs of $8,084.94.  Appellant elected to proceed under the Board’s accelerated procedure (39 C.F.R. §955.36(d)).  In accordance with 39 C.F.R. §955.12, the parties elected to have the appeal decided on the record without a hearing.

Findings of Fact

            On June 23, 1983, Lawrence D. Bane (Appellant) and the United States Postal Service (Respondent) entered into a contract for the transportation of mail between Columbus and Hanover, Indiana, with intermediate stops, for a term of four years beginning July 1, 1983 (Appeal File (AF) Tab A, at pp. 1, 5).

            The contract included standard highway transportation General Provisions (PS Form 7407, Oct. 1981).  Subclause 16(a)(1) of those provisions authorizes the contracting officer to terminate the contract “…for the contractor’s failure to perform service according to the terms of the contract” (AF Tab A, at p. 21).  By Subclause 16(c) the termination will be converted into a termination for convenience, with the payment of liquidated damages to the contractor, if it is determined the contractor was not in default or the default is “excusable” (id., at p. 22).  The contractor may be assessed damages pursuant to Clause 13 (id., at p. 20) and Subclause 16(b) (id. at p. 22), if he does not meet his contract obligations.  Under clause 9, an assignment or subletting of the contract must be approved in accordance with the provisions of the Postal Contracting Manual (id., at 19).  Clause 2, “Claims and Disputes,” requires the contractor to submit claims in writing to the contracting officer and to proceed with performance pending the resolution of disputes.  Clause 15, “Release of the Contractor,” authorizes a release under certain conditions if the contractor becomes physically disabled (id., at p. 21).

            In October 1983 Appellant became concerned about the safety of loading heavy mail bags on his truck at the Columbus, Indiana, Post Office from those loading docks where the end of the truck was not flush with the floor of the dock (Complaint, Exhibit 1).  A chiropractor advised him that lifting heavy mail bags more than 10 inches contributed to pain in appellant’s lower back and legs (Complaint, Exhibit 3).  Appellant switched too other docks at the Columbus Post Office in February 1984 (Complaint, Exhibit 1).

            On March 16, 1985, Appellant hurt his leg at the North Vernon, Indiana Post Office (Complaint, Exhibit 1).  Appellant blames a hazardous working condition – an unsecured loading dock plate – for his injury (Complaint, Exhibit 1; Appellant’s supplement to the Record, March 7, 1986).

            On June 9, 1985, Appellant told Larry Weekly, another Postal Service contractor, that he would be unable to continue his contract route due to additional expenses for drivers because of his injured leg unless he received additional compensation (Larry Weekly Affidavit, March 21, 1986).  Appellant asked Mr. Weekly if he would take over the route if Respondent refused to provide the additional compensation (id.).  Mr. Weekly expressed interest in the route (id.).  although Appellant informed Respondent on June 10, 1985, of Mr. Weekly’s interest, he never sought approval of an assignment or subcontract to him (id.; Complaint).  He had been furnished with copies of instructions and documents necessary for a transfer (Lawrence D. Bane, Statement filed March 24, 1986).

            On June 10, 1985, Appellant orally asked Dale Collins, the contracting officer’s representative (C.O.R.), for a none-time payment of $8,000 and an annual price increase of $14,000.  At that time Appellant did not inform the C.O.R. extra help had to be hired because of Appellant’s injured leg (Bane Statement, Dale Collins Affidavit, March 6, 1986).  Because there was no supporting data, the C.O.R. denied Appellant’s request, but with the approval of the contracting officer, he offered Appellant an increase of $1,460 per year based on changes in the Consumer Price Index relating to operational costs and personnel wages (id.).  appellant refused this offer and stated he would stop service on the route that afternoon because of his financial inability to continue (id.). He stopped performance after his final trip on June 10 (Complaint, Exhibit 1).  Appellant probably informed the C.O.R. and the contracting officer of his injury prior to June 10 and orally discussed an increase in compensation, but there is no evidence Appellant ever submitted a written request with supporting data.

            On June 13, 1985, a service order was issued (USPS Form 7440) terminating Appellant’s contract for default, effective at the close of business on June 10 (AF Tab B, at p. 54).  The contracting officer awarded an emergency service contract beginning June 11, 1985, to Mr. Weekly, ho had submitted the lowest bid for the contract of four prospective contractors solicited by Postal representatives (Collins Affidavit; AF Tab d, at pp. 74, 75).  Respondent has made final payment for the completed emergency service contract (Collins Affidavit).  To perform that contract, Mr. Weekly used Appellant’s drivers for the entire term and Appellant’s vehicles for 5 days (Weekly Affidavit).

            On June 20, 1985, the contracting officer issued his final decision confirming the default termination of Appellant’s contract, citing Appellant’s June 10 announcement of his intention to abandon the contract and his cessation of service at the close of business that day (AF Tab C, at p. 55).  Appellant timely appealed that decision to this Board (PSBCA No. 1440), asking for a conversation of the default termination to a termination for convenience and payment of liquidated damages.

            On November 25, 1985, the contracting officer issued a final decision assessing excess reprocurement costs of $8,084.94 for a 60-day period of the emergency service contract, June 11 through August 9, 1985, although the emergency contract continued to September 27, 1985 (AF Tab D, at 82).  The assessment was based on the difference between Appellant’s annual rate for the contract then ($65,165.00) and the emergency contract annual rate ($118,689.53) converted to a daily rate by dividing each amount by 365 days and multiplying that figure by 60 and subtracting the difference ($19,510.61 minus $10,712.05 = $8,798.56).  The contracting officer set off $713.62 compensation due Appellant from the $8,798.56 additional costs for the emergency contract, leaving an assessed amount of $8,084.94 for the additional Postal Service expenses.

            Appellant timely appealed this assessment decision (PSBCA No. 1491).  The two appeals have been consolidated for decision purposes.

DECISION

            Respondent contends the termination and the assessment of excess reprocurement costs for the emergency contract should be sustained.  It argues Appellant’s threat to cease performance unless he received the requested pay increase constituted an anticipatory breach of the contract justifying termination of the contract for default.  Respondent asserts Appellant was obligated to continue performance pending resolution of the dispute over a price increase.  Respondent also suggests Appellant should have applied for a release from the contract because of a physical disability, as provided in Clause 15 of the General Provisions of the contract, rather than stop performance.

            Appellant does not deny he threatened to discontinue service if he did not receive the contract price adjustments he requested, nor that he stopped service on June 10, 1985.  However, he denies he breached the contract.  He asserts he arranged for the service to be performed by another contractor and, therefore, service continued uninterrupted and he was not in default.  Appellant did advise Respondent of Mr. Weekly’s interest in taking over the contract and Mr. Weekly was awarded the emergency contract and used Appellant’s equipment and drivers.  These facts, however, do not lessen the effect of Appellant’s refusal to perform the contract without a pay adjustment.  The contract was not assigned or sublet to Mr. Weekly.  Appellant remained responsible under the contract.  His stated refusal to perform constituted an anticipatory breach of Clause 16(a)(1) of the contract justifying termination.  See B & E Mail Transport, Inc., PSBCA Nos. 971, 973, 974, 82-2 BCA ¶15,965; James E. White, PSBCA No. 1022, 82-2 BCA ¶15,896, recon. denied, 82-2 BCA ¶16,069.

            The remaining determinative issue on the contract termination is whether Appellant’s default, the anticipatory breach, was excusable, as Appellant asserts.  In this regard, Appellant argues Respondent breached the contract, which forced him to the brink of bankruptcy and left him no alternative other than stopping service.  The alleged breaches of Respondent were: (1) violating federal and state safety regulations by directing Appellant to load mail sacks from hazardous docks, rather than the docks he expected to load from when he bid for the contract; (2) adding two additional trips per day and eliminating an allowance for mileage; and (3) failing to examine his accounting records and provide funds to cover his increased operating expenses resulting from the leg  injury allegedly caused by a hazardous dock plate.

            We conclude Appellant failed to prove his default was excusable.  The alleged safety violations topped in February 1984, nearly a year and a half before Appellant refused to perform.  Thus, the alleged safety hazards could not be a cause for his later refusal to perform.

            None of the alleged breaches by Respondent are acceptable excuses for Appellant’s unilateral repudiation of the contract.  His reason for refusing to perform was his alleged financial inability to continue.  In essence, Appellant is raising an impossibility of performance excuse because of his financial problems, which he blames on Respondent.  However, Appellant has failed to show that his financial problems are attributable to Respondent here.  He has vaguely referred to prior requests for increased compensation, but he has not shown that he filed a written claim or claims for increased compensation because of the alleged breaches.  See Air-speed, Inc., PSBCA No. 96, 75-1 BCA 11,113; see also Southeastern Airways Corp. v. United States, 230 Ct. Cl. 47, 673 F.2d 368 (1982).  Under the Claims and Dispute clause, Appellant was obligated to continue performance pending resolution of any claim or compensation dispute and his failure to do so justified the default termination.  James E. White, supra.  See also Irving Stumer, PSBCA No. 1256 (February 6, 1985), reaffirmed on recon. (April 8, 1985.

            As the default termination was justified, the Postal Service had a right to assess reasonable excess reprocurement costs.  Bowman’s Transport Co., PSBCA No. 1088, 1089 and 1092, 84-1 BCA ¶ 17,217.  With the following adjustment, the costs are reasonable here.  In computing the amount of damages, Respondent used Appellant’s last adjusted annual rate of pay ($65,165.00).  However, because Respondent has acknowledged it would have increased that amount by an additional $1,460 based on Consumer Price Index increased, that amount should have been added to Appellant’s annual rate for computing the damages.  Using the same appropriate method used by the contracting officer stated in the findings, we have recomputed the damages to be $7,844.94, after subtracting the setoff.  Respondent mitigated Appellant’s damages by requesting bids from four other contractors and awarding the emergency contract to the lowest bidder.  The record shows that Respondent made final payment for completed services.  See F.W.H. Motor Transit, Inc., PSBCA No. 1317 (July 30, 1985), recon. denied (November 22, 1985).  appellant ha snot challenged the amount of the excess reprocurement costs, or the mitigation efforts.  Accordingly, we hold that Respondent is entitled to $7,844.94 for excess reprocurement costs.

            With the exception of the above adjustment as to the assessed amount of the excess reprocurement costs, these appeals are denied.

 

 

Joan B. Thompson

Administrative Judge

Board Member

 

I concur:

James A. Cohen

Administrative Judge

Chairman