April 23, 1991
Appeal of
MARY E. ST. CLAIR
Under Contract No. HCR 97575
PSBCA No. 2883
APPEARANCE FOR APPELLANT
Mary E. St. Clair
APPEARANCE FOR RESPONDENT
Elena V. Alejandre, Esq.
OPINION OF THE BOARD
This appeal is taken from a Contracting Officer's decision terminating Appellant's highway transportation contract for default. Appellant has elected to have the appeal decided under the Board's Accelerated Procedure. Both parties have elected to have the appeal submitted on the record without a hearing.
FINDINGS OF FACT
1. Contract No. 97575 was awarded to Appellant, Mary E. St. Clair, on June 19, 1989, for highway transportation service between Shady Grove and Paradise Trailer Court, Oregon, for the period July 1, 1989, to June 30, 1993. The annual contract amount was $11,447.73 (Appeal File (AF)-1, 1A).
2. The contract's specifications contained a requirement that Appellant carry insurance coverage for bodily injury in the amount of $100,000 for each person and $300,000 for each accident. Property damage in the amount of $50,000 for each accident also was required (AF-1C). The "Insurance Requirements" clause of the contract's General Provisions (PS Form 7407T, March 1989) stated that:
"The Contractor shall furnish to the Contracting Officer, prior to commencement of service under this contract and thereafter, as required by the Contracting Officer, proof of the insurance coverage . . . . In addition to providing proof of insurance, the contractor must provide a current copy of the applicable insurance policy or policies." (AF-1B)
3. Clause 16 of the General Provisions was entitled "Termination By The Postal Service for Default." It stated in pertinent part:
"(a) The Contracting Officer may terminate this contract for default:
(1) For Contractor's failure to perform service according to the terms of the contract.
* * * *
(13) If the Contractor fails to establish and maintain continuously in effect insurance as required by Clause 6 ['Insurance Requirements'] or fails to provide proof of insurance prior to commencement of service and thereafter as required by the Contracting Officer." (AF-1B)
4. On September 4, 1990, Respondent received from an insurance company a copy of an insurance cancellation notice for non-payment of premium of policy no. CA 0444348, a policy Appellant had obtained for another highway transportation contract (HCR 97531((AF-33).
5. On September 6, 1990, Respondent's Contracting Officer wrote Appellant, directing Appellant to obtain the necessary insurance under both contracts HCR 97531 and HCR 97575 or face contract termination. The letter stated "[p]lease have your insurance agent complete the enclosed Form 5420, Certificate of Insurance, and return it to this office within five (5) days." The letter was received by Appellant on September 10, 1990 (AF-33).
6. Appellant did not respond to Respondent's September 6, 1990, letter and on October 5, 1990, the Contracting Officer by final decision terminated Appellant's contract for default. The bases for the termination were (1) Appellant's failure to perform service according to the terms of the contract (GP 16(a)(1)), and (2) Appellant's failure to provide proof of insurance (GP 16(a)(13)) (AF-42). A timely appeal followed.
DECISION
Appellant contends the termination action was unwarranted as contract performance was always satisfactory and there was continuous insurance coverage during the term of the contract. Appellant's contention pertaining to satisfactory contract performance need not be considered, as Respondent had the right to terminate the contract for Appellant's failure to provide proof of insurance to Respondent.
Where insurance is a contract
requirement and a contractor, after being given a reasonable opportunity to do
so, fails to provide proof of insurance coverage a default termination is
proper. Jerry Mackey, PSBCA No.
1736, 88-3 ¶ 21,070; Christina
Corp., PSBCA No. 762 (Dec. 24, 1980).
Here, the contract required Appellant to obtain certain insurance
coverage for bodily injury and property damage. The Contracting Officer received a letter from an insurance
company on September 4, 1990, stating that insurance under a different highway
transportation contract was being cancelled for non-payment. The Contracting Officer thus was prompted to
inquire as to whether Appellant's insurance under the instant contract was in
jeopardy for non-payment and requested proof of such insurance. No proof of insurance was thereafter
provided by Appellant. As a defense for
her inaction Appellant contends she had previously provided the Contracting
Officer with a certificate of insurance on August 10, 1990. There is no evidence in the record to
corroborate her contention and by affidavit the Contracting Officer states that
he has no recollection of receiving an insurance certificate.
In any event, the Contracting Officer gave Appellant an adequate
opportunity to supply evidence of insurance in his September 6, 1990, letter
and a reasonable time to do so, as evidenced by his forbearance in termination
until October 5, 1990. Appellant's
failure to provide proof of coverage to Respondent, as specifically requested
by the Contracting Officer, justifies the termination action. Accordingly, the termination for default is
upheld. The appeal is denied.
James D. Finn, Jr.
Administrative
Judge
Vice Chairman
I concur
James A. Cohen
Administrative Judge
Chairman