September 30, 1994

Appeal Of

STEINMANN TRANSPORTATION, INC.

Under Contract No. HCR 05041

PSBCA No. 3302

APPEARANCE FOR APPELLANT:

Tiffany Steinmann

APPEARANCE FOR RESPONDENT:

Margaret E. Harper, Esq.

OPINION OF THE BOARD

Appellant has timely appealed a Contracting Officer's decision terminating its highway transportation contract for default. At Appellant's request a hearing was held.

FINDINGS OF FACT

1. On July 11, 1988, the United States Postal Service, (Respondent), awarded Steinmann Transportation, Inc., (Appellant), Contract No. HCR 05041, under which Appellant was to provide mail transportation service between Bennington, VT, and White River Junction, VT. The term of the contract was from July 30, 1988, to June 30, 1989, and, as awarded, specified an annual rate of $190,500.77 (Stipulation of the Parties ("Stip.") No. 1).

2. The contract was renewed on May 10, 1989 for the term July 1, 1989 to June 30, 1993, at the new annual rate of $191,755.29. The renewal contract required Appellant to provide transportation services daily between Bennington and White River Junction, VT with intermediate stops on several trips. Services between Bennington and No. Pownal, VT were also covered by the contract (Stip. No. 2; Appeal File (AF)-2).

3. Incorporated into the contract was PS Form 7407, July 1992, "Basic Surface Transportation Services Contract - General Provisions," which included the following:

"4. SERVICE REQUIREMENTS AND PROHIBITIONS.- (a) The Contractor shall carry all mail tendered for transportation under this contract, whatever may be its size and weight, with certainty, celerity, and security, in accordance with the operation schedule and between the points fixed in the solicitation, ...

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16. TERMINATION BY THE POSTAL SERVICE FOR DEFAULT.

(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;

(2) If the Contractor is the subject of administratively determined violations of the Postal laws and regulations and other laws related to the performance of the service;

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(10) If the Contractor's transportation equipment is insufficient, inadequate, or otherwise inappropriate for the service; ..." (Stip. No. 3).

4. The Contract General Provisions also provided in GP-16 that if after notice of termination it is determined the default was excusable the termination shall be treated as a termination for convenience under GP-17 (AF-1).

5. Under the terms of the contract Appellant was required to furnish two van type trucks 22-feet in length with full-width roll-up doors. Each vehicle was required to have an electric hydraulic (tuk-a-way) lift-gate with platform (AF-2).

6. On May 9, 1991, Respondent's Logistics Coordinator, White River Junction, VT, had a meeting with Appellant's President, regarding irregularities that had occurred in the prior month on the route. The irregularities consisted primarily of breakdowns of equipment and a driver not maintaining the schedule. Appellant stated that corrective action would be taken to resolve irregularities (Stip. No. 4; AF-4).

7. From December 31, 1991 to April 21, 1992, sixteen Contract Irregularity Reports (PS Form 5500) were issued to Appellant. Irregularities charged in these reports included eleven charges of lateness (one of which charged that the driver was 15 minutes late)[1], three charges of improper equipment, two of which stated the hydraulic lift-gate was not operable, one pick up missed completely, and one safety violation. Two of the reports charged two irregularities. In response to the charges in the 5500s, Appellant stated that the late departures did not delay the mail, that the safety violation never occurred, and that while the contract required that the truck have a lift-gate, it did not require a working lift-gate, nor did it require that the driver use the lift-gate. Appellant therefore took the position that nine of the sixteen irregularities were either not accurate or not chargeable (Stip. No. 5).

8. The PS Forms 5500 utilized by Respondent state that late operations of 15 minutes or less should be reported for information only. A late operation of 15 minutes or less therefore should not be a chargeable violation. The record supports the accuracy and validity of the violations shown on the other fifteen irregularity reports (AF-6; Transcript (Tr.) 11, 12, 14, 28-30, 32, 35, 38). Late departures disrupt Respondent's operations regardless of whether ultimate destinations are reached on time (Tr. 33, 35-36).

9. By letter dated April 28, 1992, the MSC Manager/Postmaster, White River Junction, VT, admonished Appellant for the contract irregularities. Appellant was warned that if on-time operation was not accomplished within three days of the date of receipt of the letter, the contract file would be forwarded to the Contracting Officer with recommended disciplinary action, including contract termination (AF-6).

10. From June 6, 1992 to July 2, 1992, ten additional Contract Irregularity Reports were issued to Appellant. Three involved safety violations or improper equipment (one of which pertained to an inoperative hydraulic lift-gate). The other seven charged late arrivals or departures[2] (two of the seven showed late departures of less than 15 minutes). Appellant responded to the reports to the effect that the late arrivals and departures did not delay the mail, that a working lift gate was not required and that the safety violations did not occur. According to Appellant five of the ten irregularities either did not occur or are not chargeable (Stip. No. 7; AF-7).

11. Except for the two irregularities pertaining to late arrival and departure of less than 15 minutes the record establishes the occurrence of the additional violations shown on the other eight irregularity reports (AF-7; Tr. 39-44).

12. In regard to the hydraulic lift-gates, Appellant's trucks had operable lift-gates only during the first year of the contract. For the most part the lift-gates were inoperable from April 1989 to July 1992 (Tr. 158-59).

13. By letter dated July 8, 1992, the Acting Contracting Officer notified Appellant that the contract file had been forwarded to him since service under Appellant's contract had deteriorated again. The letter referred to the ten irregularity reports issued from June 6 to July 2. The letter stated that if service did not improve to an acceptable level immediately and remain at that level, the contract would be terminated (Stip. No. 8; AF-7).

14. On July 29, 1992, two irregularity reports were issued to Appellant. The first pertained to Appellant's trip No. 2 that day. The irregularity was described as "Truck stopped and held by state police/brake problem - Did not deliver mails to Arlington, Manchester, and Manchester Ctr. on Trip #2." Appellant's response stated that "Did not delay the mail. We delivered Manchester and Manchester Ctr.," and that the Arlington Postmaster sent postal personnel to the truck to get the Arlington mail. The other irregularity report pertained to Appellant's trip No. 8 that day - a late arrival of one hour due to mechanical problems (AF-10).

15. By final decision dated August 4, 1992, the Contracting Officer terminated Appellant's contract pursuant to Clause 16(A)(1) of the General Provisions for failure to provide service according to the terms of the contract (AF-10). A timely Appeal was taken by Appellant.

16. According to Respondent's records Appellant's overall efficiency and on time efficiency for the period December 31, 1991 to date of termination ranged from 96% to 100% per accounting period. However there are no Postal Service handbooks or guidelines defining an acceptable level of service. Instead Respondent considers the severity and frequency of irregularities, rather than percentages, in determining acceptable on-time service (Appellant's Exhibits 1 and 2; Tr. 101-105).

DECISION

Appellant's position in this appeal is that the Contracting Officer abused his discretion by terminating Appellant's contract for default. In support of its position Appellant contends that issuance of many of the irregularity reports was not justified. In this regard Appellant contends late departures or arrivals did not delay the mail, that the contractually required lift-gate created a safety hazard, and that irregularity reports showing delays of less than 15 minutes were invalid. Appellant argues that termination was not justified as its performance level was never less than 96%.

Respondent argues that in view of all the performance deficiencies on the route, the termination of the contract for default was not an abuse of the Contracting Officer's discretion. William Cimpi, PSBCA No. 2695, 91-1 BCA ¶  23,390.

In early 1991 Appellant encountered some performance problems, and thus in May of 1991 a meeting was held between the parties regarding irregularities (primarily breakdowns of equipment and service delays) which had occurred the prior month. Service thereafter apparently improved until December 1991. However, from December 1991 through April 1992, fifteen accurate and chargeable irregularity reports were issued to Appellant. Appellant was warned in writing to improve service or termination would be considered. Thereafter from June 6 to July 2, 1992, eight chargeable irregularity reports were issued to Appellant. On July 8, 1992, the Contracting Officer warned Appellant in writing that unless service improved immediately the contract would be terminated for default. Finally, after being made aware of Appellant's performance problems of July 29, 1992, the Contracting Officer terminated the contract for default.

Based on the record before us it cannot be said that the Contracting Officer abused his discretion in terminating Appellant's contract. Numerous irregularities occurred in 1992 and Appellant apparently was unable to rectify its performance problems. Adequate warnings in writing were given to Appellant, but the irregularities continued. In fact, the number of chargeable irregularities increased significantly the month preceding the termination action.

Appellant's arguments in its defense are to no avail. With the exception of those irregularity reports issued for late arrival or departure of less than 15 minutes all others issued were chargeable. Late departures are disruptive of Respondent's operations regardless of whether the ultimate destination is reached on time. The contract required Appellant's trucks to have lift-gates (operable ones). For the most part of the period from April 1989 to July 1992, the lift-gates were inoperable. No credible or substantiated evidence was presented that the lift-gates created a safety problem. In regard to Appellant's overall efficiency and on-time efficiency (96% plus), Respondent considers severity and frequency of irregularities, and gives little weight to percentages, in determining acceptability of performance.[3]

We conclude that the evidence amply establishes that Appellant failed to perform service according to the terms of the contract and failed to provide adequate equipment for the service. Thus, the Contracting Officer properly exercised his discretion in terminating Appellant's contract for default. The Appeal is denied.

James D. Finn, Jr.

Administrative Judge

Vice Chairman

I concur:

James A. Cohen

Administrative Judge

Chairman

I concur:

David I. Brochstein

Administrative Judge

Board Member

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[1]Appellant was late in excess of one hour four times, in excess of two hours once and in excess of thirty minutes five times.

[2]Appellant was late almost two hours once and approximately one hour twice. Two other trips were 30 minutes or more late.

[3]Compare Del Transport, Inc., PSBCA No. 1279 (Sept. 3, 1985) in which performance percentages were a determinative factor. However in Del the Postal Service Region had adopted written performance percentage figures. No such regulation or guideline applicable to Appellant's contract exists.