August 31, 1987

Appeal of

KENNETH D. SOLOMON

Under Contract No. HCR 32032

PSBCA No. 1677

APPEARANCE FOR APPELLANT:

Kenneth D. Solomon

APPEARANCE FOR RESPONDENT:

Travis T. Lynch, Esq.

OPINION OF THE BOARD

Appellant has appealed from a decision of the Contracting Officer which terminated for default Appellant’s highway transportation contract. The appeal is being processed under the Board’s Accelerated Procedure (39 C.F.R. §955.36). A hearing was held at Appellant’s request.

Findings of Fact

1. Contract No. HCR 32032 was entered into between the Postal Service and Appellant on October 20, 1986. It provided that Appellant would perform certain mail transportation services on a route covering Jacksonville, Daytona Beach and Port Orange, Florida, for the period from November 22, 1986, to June 30, 1990. The contract rate was $175,802.38 per annum (Appeal File (AF)-1).

2. The contract contained the following clause as part of its General Provisions:

16. Termination by the Postal Service For Default. – (a) Upon the determination by the Contracting Officer that the public interest requires such action as a result of any of the following, the Contracting Officer may terminate the Contractor’s right to continue performance under the contract, and call upon the sureties, if any, to perform, or to pay damages:

(1) for Contractor’s failure to perform service according to the terms of the contract. (AF-1)

3. Soon after Appellant commenced performing his contract he began receiving Forms 5500, the form used to report irregularities on highway contract routes, from Postal Service officials responsible for administering his contract. Appellant’s irregularities consisted primarily of late departures from origin or late arrivals at destination and failures to make scheduled trips (Transcript (Tr.) 10-11; Respondent’s Exhibit (RX)-2 and 3).

4. During Postal Service accounting period three, which ended on December 19, 1986, Appellant received eleven 5500s. Four of the irregularities (November 25, trip 8; November 28, trip 5; November 29; December 11) either should not have been issued or were excusable (RX-3; Tr. 180, 183).

5. The Administrative Manual for Postmasters, Southern Region, states that a highway contractor’s performance is deemed satisfactory when the contractor’s efficiency level is 98% (RX-2; Tr. 105). Appellant’s efficiency level for accounting period three was 96.7% (207 satisfactory trips divided by the total of 214 trips). A letter of warning pertaining to Appellant’s less than satisfactory performance was sent to Appellant from Respondent on December 4, 1986. Appellant was advised of the possibility of contract termination unless his performance improved (AF-3).

6. On December 30, 1986, a meeting was held between Appellant and Postal Service officials to discuss Appellant’s contract performance record. Appellant was advised that the meeting constituted an official consultation for unsatisfactory service (AF-4; Tr. 110).

7. On January 9, 1987, a letter of warning was issued to Appellant for his “continued failure to perform according to the terms of [his] contract.” The letter warned Appellant that unless his performance was restored to a satisfactory level within three days termination action would be considered. The letter was prompted by Appellant’s failure to make four scheduled trips on January 7 and 8 (AF-6; Tr. 16, 17, 126).

8. Appellant’s level of performance did not improve as five 5500s were issued during the following week, one of which was for Appellant’s failure to make a scheduled trip (RX-4; Tr. 18, 126).

9. During the accounting period which ended January 16, 1987, accounting period four, Appellant was charged with 25 contract irregularities. Eight of the deficiencies were issued for Appellant’s failure to make a scheduled trip. Only one of the irregularities, the December 26, trip 3 was excusable (RX-4; Tr. 181, 184-89). Appellant’s efficiency level for accounting period four was 88.5% (184 satisfactory trips divided by the total of 208 trips).

10. As a result of these deficiencies the Supervisor for Transportation, Jacksonville Transportation Management Center, recommended to the Contracting Officer that Appellant’s contract be terminated for default (Tr. 20). A decision to terminate the contract was made by the Contracting Officer, and by letter dated January 21, 1987, Appellant’s contract was formally terminated for unsatisfactory performance (Tr. 127; AF-7). The termination was subsequently appealed (AF-10).

11. The Contracting Officer advised the Postal Data Center on January 9 and January 21, 1987, to withhold all payments on Appellant’s contract for services already performed. The amount withheld was $15,894.46 for payment of emergency service costs incurred by the Postal Service in excess of Appellant’s contract rate (Appellant’s Exhibit (AX)-1; AF-7, 9; Tr. 144-47). The propriety of the duration of withholding and the proper amount, if any, of the withholding were not the subject of the hearing in this matter. These issues, as well as the possibility of assessment of excess reprocurement costs, will be covered by a Contracting Officer’s future decision.

Decision

The termination action was properly taken. The record clearly establishes that Appellant’s performance was less than satisfactory during most of his contract period and especially during accounting period four, which ended on January 16, 1987.

Appellant testified extensively on his own behalf at the hearing, contending most of the citations of irregularity which he received either should not have been issued or were excusable. His testimony was persuasive as to four of the eleven 5500s which he received in accounting period three (Finding of Fact No. 4). These irregularities should not have been considered in calculating his efficiency level for that period. However, even disregarding those four 5500s, his efficiency was less than the 98% satisfactory level.

Appellant’s performance during the next accounting period, period four, deteriorated substantially. His testimony as to the cited irregularities was considered and each 5500 was examined. In only one instance could an irregularity be excused (Finding of Fact No. 9). The remaining 24 were unexcusable. Such a large number of irregularities constitutes sufficient unexcused failures to meet the schedule to warrant termination action. Donald Vedder, PSBCA No. 1354, 86-2 BCA ¶ 18,892.

In reaching our decision we have also considered that Appellant was given ample opportunity to correct his performance problems and failed to do so. A personal consultation was held with Appellant on December 30, 1986, and two letters of warning were issued, one before and one subsequent to the consultation. None of these actions prompted Appellant to improve his performance. In fact the week following the last warning, which was given on January 9, 1987, Appellant was cited for five deficiencies in service. We thus find no procedural irregularities in the default termination process and hold that Appellant’s record of poor performance warranted the termination. Brooks E. Cook, PSBCA No. 1350, 86-1 BCA ¶ 18,724; Riley E. Thompson, PSBCA No. 1410, 86-2 BCA ¶ 19,001.

In regard to the propriety of the withholding of contract funds otherwise due Appellant, we have previously stated that Respondent has authority to withhold compensation to offset expected damages. Donald Vedder, supra. However, we further stated that Respondent should issue a decision assessing damages to support the withholding within a reasonable time or else release the withheld money. In the present appeal the unresolved issues of the proper duration of withholding and amount withheld should be addressed expeditiously, either through final decision and subsequent appeal or by settlement.

The appeal is otherwise denied.

James D. Finn, Jr.

Administrative Judge

Vice Chairman

I concur:

James A. Cohen

Administrative Judge

Chairman