February 24, 1992

Appeal of

MELVIN R. KESSLER

Under Contract No. HCR 25871

PSBCA Nos. 2820, 2972

 

APPEARANCE FOR APPELLANT:

Melvin R. Kessler

 

APPEARANCE FOR RESPONDENT:

Deborah A. Davis, Esq.

 

OPINION OF THE BOARD

            These appeals are from Contracting Officer decisions denying Appellant’s claims of $62,000 for an alleged breach of contract resulting from the improper termination for convenience of his contract, and $5,254.88 for attorney fees, lost wages and unsafe working conditions prior to termination.  Only issues relating to entitlement are before the Board for decision.

FINDINGS OF FACT

            1.  On June 30, 1988, Respondent, United States Postal Service, renewed Appellant’s Contract No. 25871 for a term from July 1, 1988, to June 30, 1992, at the rate of $29,111.25 per year (Appeal File Tab (AF) 10).

            2.  Incorporated into the contract was PS Form 7407, Basic Surface Transportation Services Contract General Provisions, Oct. 1986, (GP) which included a Claims and Disputes Clause.  Clause 17, Termination for Convenience, allowed the Postal Service to terminate the contract, or the right to perform under it, in whole or in part “when it is in the best interest of the Postal Service” (AF 10).  The Clause further provided that when so terminated the contractor would be allowed as liquidated damages an indemnity as provided in Clause 12 (id.).

            3.  Under Clause 4, Service Requirements and Prohibitions, the contractor was required to carry all mail tendered for transportation under the contract “with certainty, celerity, and security, in accordance with the operating schedule and between points fixed in the solicitation, as modified from time to time pursuant to Clause 12” (AF 10).

            4.  The contract contained Amendment No. 1, effective December 5, 1987, which amended GP Clause 12 (a) to read as follows:

            “12   Changes in Service

(a)       Service Changes

(1)    Insignificant Minor Service Changes.  -

            The Contracting Officer may, at any time, without consulting the Contractor, issue orders directing an extension, curtailment, change in line of travel, revisions [sic] of route, or increase or decrease in frequency of service or number of trips and fixing an adjustment in the contractor’s compensation which increases the Contractor’s rate of pay by no more than 10% or $1,000, whichever is less.  If the Contractor believes the increased cost of providing the service required by the order exceeds the increase made in compensation, he may request an adjustment of compensation for the service change.

 

(2)     Other service changes.

 

Service changes other than insignificant minor service changes may be made if the terms of the change, including increases or decreases in compensation, are agreed to by the Contracting Officer and the Contractor.  Such changes shall be executed on Form 7406, Amendment to transportation Contract.”

 

5.  Appellant was required under the schedule specified in the contract to deliver mail daily between 9:00 A.M. and 4:15 P.M. along a route that covered approximately 49.7 miles and involved approximately 150 boxes with stops at the Ghent, Odd, Josephine, and Princewick Post Offices, all in West Virginia (AF 10).

6.  In February 1990 the Administrative Postmaster at Ghent, WV, requested a service change to Appellant’s contract to eliminate excessive time in Appellant’s schedule (AF 28).  This recommendation was made following a complaint the Administrative Postmaster had received from the Princewick Postmaster to the effect that Appellant was spending an excessive amount of time in the Princewick Post Office during which he was harassing the Postmaster and making unwanted advances toward her (AF 30; Transcript page (Tr) 136-37).

            7.  Commencing in 1984 the Princewick Postmaster dealt with Appellant’s presence in the Princewick Post Office and occasional personal confrontations, which were usually followed by apologies by Appellant (Tr 142-43, 144-46).  Beginning in early 1989 Appellant’s more frequently exhibited inappropriate conduct towards the Postmaster, and the Postmaster for the first time made complaints to her supervisor concerning Appellant’s conduct (Tr 144-46).  During 1989 and the early part of 1990 Appellant, while on his route, would remain in the Princewick Office for periods of approximately two hours daily, sometimes returning for additional stays (Tr 137, 143-44, 155).  While at the Princewick Post Office Appellant harassed and made unwanted advances toward the Princewick Postmaster (Tr. 137, 142-43, 146, 152-53).  The Princewick Postmaster was disturbed and felt threatened by the violent nature of Appellant’s conduct (id.; Tr 163).

            8.  A February 1990 survey performed on Appellant’s route demonstrated that the mail could be delivered in two hours less than the time specified in the contract (AF 29; Tr 27).

            9.  Recommendations to eliminate time from Appellant’s schedule by making a service change were forwarded to the Contracting Officer (Tr 19-21).  Based on the recommendations made by his staff along with reports and communications from the field (including letters from Appellant), the Contracting Officer became convinced that the route should be restructured to eliminate the excess time from the contract schedule.  This, he believed, would lessen or eliminate the problems at the Princewick Post Office, and would also improve service to the customers, while at the same time reducing the cost to the Postal Service.  (Tr 25, 27-28, 31, 51-52, 64-66).  Cost savings resulting from the restructuring, however, was a secondary consideration and Respondent was prepared to relinquish its request for a cost reduction had Appellant agreed to the time reduction (Tr 49-50, 92, 216; App. Exh. 2).

            10.  Respondent sent to Appellant a planned service change dated

March 2, 1990, which would decrease the required service time by one hour, 45 minutes daily, and reduce compensation (AF 24).  Appellant was on vacation when the planned service change was proposed and his substitute driver made the required deliveries and service in accordance with the revised schedule (see AF 6; Tr 82).  When Appellant returned on or about March 11, 1990, he also performed the route with the shortened time schedule (Tr 115-16).

     11.  Appellant in a letter to the Contracting Officer dated March 11, 1990, objected to the proposed contract changes (AF 9, 22).  The parties thereafter met on March 20, 1990, and agreed to continue with the original contract schedule until an agreement could be reached on the proposed changes (see AF 8, 16).  At that meeting Appellant offered to reduce the hours by one hour per day and decrease his compensation by $200 annually (AF 16).

            12.  Respondent, after considering Appellant’s offer, rejected it, stating to Appellant in a letter dated April 3, 1990, that a reduction of one hour, 45 minutes per day was justified along with a reduction in compensation of $2,243 per annum (AF 14, 15, 19).

            13.  Appellant in a letter to the Contracting Officer dated April 16, 1990, stated that Respondent’s proposal was unacceptable (AF 13).

            14.  After further correspondence, on May 30, 1990, Appellant’s attorney again indicated that Respondent’s proposal of April 3 was unacceptable.  Appellant reiterated his offer of a one hour per day reduction in service time and a $200 per annum decrease in compensation.  Appellant would not agree to any other changes to his schedule (AF 12; Supplemental Appeal File (SAF) 1, 2).

            15.  Faced with the options of having the problems, which were disruptive of Postal Service operations, continue until expiration of Appellant’s contract in mid-1992, or terminating the contract for convenience, the Contracting Officer decided on termination.  The Contracting Officer’s reasons for terminating the contract for convenience were essentially the same as his reasons for deciding that the route had to be restructured (see Finding 8), coupled with Appellant’s refusal to consent to Respondent’s proposed reduction in the hours.  (Tr. 25, 27-28, 29, 31-32, 41-43, 49-50, 51-52, 88-90, 207, 209-10).

            16.  The Contracting Officer notified Appellant by a notice dated June 8, 1990, that the contract would be terminated for convenience effective July 13, 1990.  Appellant was paid as liquidated damages an indemnity of $5,220.30.  (SAF 3, 4).  Appellant has not disputed the correctness of the amount as computed under the contract.

            17.  In a letter dated May 3, 1990, Appellant submitted a claim to the Contracting Officer in the amount of $5,254.88 (AF 7).  The claim was said to be based on actions taken by agents of the Contracting Officer in reducing Appellant’s schedule on March 10, 1990, without Appellant’s consent (id.).  Because of what Appellant characterized as a violation of his contract, he incurred attorney expenses of $214.88 and lost wages of $40, said to have been incurred when Appellant attended a meeting with Respondent’s representatives and used a substitute driver for his route (id.).  According to Appellant the remaining $5,000 he was claiming was for the changed schedule which subjected him “to unsafe working conditions and for your blatant violation of the contract causing me much stress” (id.).

            18.  Appellant’s claim of $5,254.88 was denied in its entirety by the Contracting Officer in a final decision dated June 21, 1990 (AF 6).  An appeal from that decision was docketed as PSBCA No. 2820.

            19.  An attempt by Appellant to amend his claim by increasing the amount an additional $62,000 for breach of contract damages was rejected by the Board for failure of certification.  Melvin R. Kessler, PSBCA No. 2820, 91-1 BCA ¶ 23,511; on recon., 91-2 BCA ¶ 23,698.  Appellant thereafter filed a properly certified claim dated November 3, 1990, in the amount of $62,000 for breach of contract claimed to have arisen from the Contracting Officer’s improper termination for convenience of the contract (AF 36).

            20.  In a final decision dated January 16, 1991, the Contracting Officer denied the certified claim.  An appeal from that decision was docketed as PSBCA No. 2972 (AF 33).

            21.  Subsequent to the termination of Appellant’s contract, a successor contractor performed the same service on the same route with a two hour and 25 minute reduction in the daily schedule (Tr 102, 178).

DECISION

            In this appeal Appellant contends that in terminating his contract for convenience the Contracting Officer and his staff exercised bad faith which constituted a material breach of contract entitling Appellant to damages.  Appellant also argues that he was denied due process by the Contracting Officer who terminated the contract based on reports from Postal Service employees without first affording Appellant the opportunity for a hearing.

            Respondent argues that the Contracting Officer acted within his discretion and in the best interest of the Postal Service in terminating the contract for convenience.  Further, Respondent argues that Appellant has failed to establish the type of evidence that would support his allegation that the Contracting Officer acted in bad faith in terminating the contract.  Respondent also contends there are no bases in the record for Appellant’s claims for attorney fees, lost wages, and unsafe working conditions.

            Both parties agree that, because of the language of Amendment 1 of Clause 12(a) of the contract specifying the requirements and procedures for minor and other service changes (see Finding 4), the Contracting Officer was precluded from unilaterally issuing a change in Appellant’s schedule of the magnitude that would reduce the daily time by one hour and 45 minutes.  The interpretation that such change would be more than an “insignificant minor change” appears reasonable and the Board will accept it.  Cf.  Irving Stumer, PSBCA No. 1256 (Slip Opn. Feb. 6, 1985), aff’d on recon.  (Slip Opn. Apr. 8, 1985).  Thus, because of Amendment 1, the contemplated reduction in the number of hours in Appellant’s daily schedule, which the Contracting Officer believed was essential to the interest of the Postal Service, could not be achieved without the agreement of Appellant.  When Appellant refused to agree to a reduction in the schedule, the Contracting Officer issued the termination for convenience and granted Appellant as termination costs the liquidated damages specified in the contract.

            Reasons for the termination action were stated fully and forthrightly by the Contracting Officer.  Problems resulting from Appellant’s conduct towards the Princewick Postmaster were disruptive to Postal Service operations.  Because the existing schedule in Appellant’s contract allowed for long lay-over periods at the Princewick Post Office, the Contracting Officer reasonably concluded that elimination of that excessive time was required.  He concluded that reduction of excess time in the contract would not only tend to ameliorate the difficulties between Appellant and the Princewick Postmaster, but would improve service to Postal Service patrons on the route, who would receive their mail earlier in the day.

            As set forth in the contract the Termination for Convenience clause authorizes the Contracting Officer to terminate the contract when the termination is in the best interest of the Postal Service.  That phrase encompasses a broad reach of variable and unspecified situations that would allow the Postal Service to terminate the contract.  Under such a clause Respondent has the right to terminate in its best interest and “in the absence of bad faith or a clear abuse of discretion the contracting Officer’s election to terminate is conclusive.”  John Reiner & Co. v. United States, 325 F.2d 438, 442 (Ct. Cl. 1963), cert. denied 377 U.S. 931 (1964); accord Salsbury Industries v. United States, 905 F.2d 1518, 1521 (Fed. Cir. 1990).

            Appellant’s allegations of bad faith on the part of the Contracting Officer in terminating the contract find no support in the record.  As indicated in the findings, the Contracting Officer, confronted with a difficult situation at the Princewick Post Office, sought, in good faith, to resolve the problem.  The evidence is consistent with the presumption “that public officials act ‘conscientiously in the discharge of their duties.’”  Kalvar Corp. v. United States, 543 F.2d 1298, 1301-02 (Ct. Cl. 1976), cert. denied 434 U.S. 830 (1977) (quoting Librach v. United States, 147 Ct. Cl. 605, 612 (1959)).  In this appeal we conclude that the Contracting Officer properly exercised his discretion in terminating the contract. 

            Appellant’s contention that it was improper for the Contracting Officer and his staff to issue the termination without first affording him a hearing is without merit.  A contracting officer is under no obligation to hold a hearing before issuing a termination.  Appellant has been afforded all his contractual and statutory protections against arbitrary action by the Contracting Officer through the procedure available on appeal to this Board.  Shorthaul Trucking Co., PSBCA No. 1046 (Slip Opn. June 18, 1985).  With respect to Appellant’s complaints concerning involvement of the Contracting Officer’s staff and other Postal Service employees in the process, it is well settled that a contracting officer may rely on reports and investigations of his staff and others in making termination decisions.  Cf.  Nuclear Research Corp. v. United States, 814 F.2d 647, 649-50 (Fed. Cir. 1987); Pacific Architects and Engineers Inc. v. United States, 491 F. 2d 734, 744 (Ct. Cl. 1974).

            Having found no procedural deficiencies, bad faith, or abuse of discretion, we conclude that the termination for convenience was properly issued.  That being the case, Appellant’s recovery is limited to the liquidated damages set forth in the contract.  Paul A. Mason, PSBCA No. 1187, 84-3 BCA ¶ 17, 572, recon. denied, 85-1 BCA ¶ 17,735.  Accordingly, the appeal from the denial of Appellant’s breach of contract claim (PSBCA No. 2972) is denied.

            There is similarly no basis for Appellant’s claim for lost wages, expenses for unsafe working conditions, or attorney fees in PSBCA No. 2820.  Those costs were claimed by Appellant in connection with Respondent’s proposal to reduce the travel time for Appellant’s route (see Findings 10, 11).   During a period of approximately 17 days in March 1990, Appellant (and his substitute driver) followed the shortened schedule.  There is no evidence that would support Appellant’s claim of unsafe conditions.  Rather, the record reflects that the contract could be safely and more efficiently operated with schedule reductions that were in excess of that utilized during the March 1990 period.

            There is no contract provision or other principle of law that would authorize paying Appellant for lost wages when he attended a meeting with Respondent’s representatives, or for the claimed attorney fees.

            Accordingly, Appellant’s appeals are denied.

James E. Lemert

Administrative Judge

Board Member

 

I concur:

James A. Cohen

Administrative Judge

Chairman

 

I concur:

James D. Finn, Jr.

Administrative Judge

Vice Chairman