March 2, 1995
Appeal of
DELFOUR, INC.
Under Contract No. 249986-92-B-0019
PSBCA Nos. 3333 & 3731
APPEARANCE FOR APPELLANT:
Gaetano J. DeLuca, Esq.
APPEARANCE FOR RESPONDENT:
Albert W. Sullivan, Esq.
OPINION OF THE BOARD
Appellant, Delfour, Inc., has appealed from the deemed denial of its claim for lost profits in connection with the performance of an indefinite quantity contract awarded it for general repair and alteration work at facilities leased or owned by Respondent, United States Postal Service. Appellant claims that it was improperly cut off from assignments under the contract and, therefore, lost the opportunity to earn the profits it now seeks.[1] At the election of the parties, this appeal is being decided on the record without a hearing in accordance with 39 C.F.R. §955.12
FINDINGS OF FACT
1. Contract No. 249986-92-B-0019 was awarded to Appellant on December 18, 1991, for a two-year term. The contract was denominated an indefinite quantity contract for general repair and alteration work at Postal Service facilities in five counties in the eastern part of Massachusetts. The solicitation and contract documents contained, among other parts, a multi-page "unit price schedule" consisting of preprinted unit prices for various detailed items of work. Under this solicitation, the offeror's bid consisted only of a "multiplier," which was a percentage figure to be applied to the list of preprinted unit prices. The preprinted unit prices, as adjusted by the contractor's multiplier, were to be used in establishing the prices of work orders issued pursuant to the contract. (Respondent's Appeal File Tab (RAF) 1).
2. The signature page of the contract stated "Initial contract value is $1,000,000.00. Reference Paragraph B.4...." Paragraph B.4 read, in relevant part:
"B.4 QUANTITY OF WORK
a. The initial contract value is $1,000,000.00 where the total quantity of work during the term of this contract will not be less than $10,000 nor more than one million dollars ($1,000,000). The Postal Service reserves the option to increase the potential value of the contract in increments of $100,000.00 not to exceed $1,000,000....
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d. The Postal Service reserves the right to undertake, by Postal Service sources or others, the same type of work or similar work as contracted for in this contract, in the area covered by this contract, while this contract is in force."
In addition, the solicitation and resulting contract contained the following provisions relevant to this dispute:
"A.1 REQUIRED BOND AMOUNTS...
Proposal Guarantee: None Required
Performance Bond: 100,000.00
Payment Bond: 100,000.00 ...."
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"Section K - Solicitation Notices and Provisions
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K.7 Type of Contract:
The Postal Service plans to award a firm fixed price type of contract under this solicitation, and all proposals must be submitted on this basis...." (Id.).
3. Paragraph 11.5.1.j of the Postal Service Procurement Manual defines firm fixed price contracts to include,
"Unit-price contracts in which a unit price is paid for a specified quantity of work completed, such as cubic yards of earth or concrete or square yards of pavement;" (Exhibit 2 to Respondent's Reply Memorandum of Law).
4. During the period from contract award until about April 1, 1992, Appellant was awarded work orders totaling approximately $170,000. After April 1, 1992, Appellant received no further work orders under the contract. (Complaint; Answer). During the same period, there were other contractors with contracts similar or identical to Appellant's. Several of those contractors were also awarded work orders in roughly the same amounts -- i.e., totaling between $107,000 and $270,000. (Affidavit of Joseph Serrecchia, December 29, 1993.)
5. During the first few months of the contract, disagreements developed between Appellant's managers and Respondent's contracting and facilities specialists with respect to the administration of the contract on both sides. On May 1, 1992, the parties held a meeting in an effort to "clear the air" and resolve the disagreements that had arisen. During the course of that meeting, the question of additional work for Appellant came up. The Contracting Officer indicated that Appellant would continue to receive a share of the work, but warned that since Appellant had been awarded more than $10,000 in work, he was not contractually obligated to award Appellant any further work orders. He then directed a subordinate to make sure that Appellant was given a portion of the upcoming jobs to "scope" -- i.e., that Appellant be given the opportunity to submit proposed work orders for those jobs. Appellant was asked to "scope" a number of these jobs, but was not ultimately awarded any of the resulting work. (Affidavit of Gaetano P. DeLuca, December 27, 1993; Affidavit of Dale Bierstecker, January 21, 1994; Affidavit of Anthony Tomaselli, January 21, 1994; Affidavit of Robert Bernardinelli, January 26, 1994).
6. At about the same time, there was a Postal Inspection Service audit of the use of indefinite quantity contracts for repair and alteration work. That audit concluded that overuse of such contracts caused a breakdown of internal USPS controls, putting the Postal Service at risk of losing significant amounts of money through fraud or abuse of the system. As a result, use of these contracts, both Appellant's and those of other term contractors, nearly ceased as of April or May of 1992. Only five work orders were awarded by this contracting office to all term contractors between April 1992 and December 1993. Appellant was not advised of this policy change at the time it occurred. (Serrecchia affidavit, December 29, 1993; DeLuca affidavit, December 27, 1993; Bierstecker affidavit, January 21, 1994).
7. In October 1992, Appellant filed a notice of appeal to this Board from the Contracting Officer's failure to render a decision on a number of claims filed by Appellant.[2]
DECISION
Appellant's primary argument, from which its other arguments flow, is that the contract between the parties was not an indefinite quantity contract that Respondent could satisfy by awarding Appellant $10,000 in work. Instead, Appellant argues, the contract language guaranteed it the full $1,000,000 in work assignments. Appellant bases its position on a number of factors. First, Appellant argues that the contract signature page contains no reference to a $10,000 minimum, but contains only the language setting an "initial contract value" of $1,000,000. Appellant contends that the "initial ... value" language is inconsistent with the $10,000 minimum language found elsewhere in the contract and that this inconsistency must be interpreted to guarantee it the $1,000,000 in work. Appellant takes the position that the $10,000 minimum language has "no real meaning" in view of the "initial value" language. Appellant cites Neil A. Goldwasser v. United States, 325 F.2d 722, 163 Ct. Cl. 450 (1963) in support of this position.
Second, Appellant argues that the contract contains no language specifically stating that Respondent's obligations under the contract could be discharged by awarding Appellant the minimum amount of $10,000.
Third, Appellant relies on the provisions requiring it to furnish performance and payment bonds in the amount of $100,000 each as demonstrating that Respondent contemplated awarding it more than just $10,000 in work.
Fourth, Appellant argues that its principal manager, Gaetano P. DeLuca, "understood" at the time of award that the contract would bring Appellant the full $1,000,000 in work. Appellant contends that companies awarded these contracts had traditionally received the maximum amount of work.
Finally, Appellant argues that because of statements made by the Contracting Officer during the May 1, 1992 meeting, Respondent is estopped to deny that it was obligated to award Appellant the full $1,000,000 in work.
Respondent argues that the contract between the parties was an indefinite quantity contract that was drafted as required by the USPS Procurement Manual and obligated Respondent to order only $10,000 in work from Appellant. Respondent cites Alta Construction Company, PSBCA 1395, 87-2 BCA ¶ 19,720 and Golden West Builders, PSBCA No. 3378, 93-3 BCA ¶ 26,195, in support of its position. Respondent also argues that Goldwasser, relied on by Appellant, is distinguishable on its facts from the situation before us.
Respondent also argues that the evidence does not demonstrate that Appellant believed it had a contract that guaranteed it $1,000,000 in work.
Having carefully considered the arguments of the parties, we conclude that Appellant may not recover the anticipated profits it seeks. The Board's opinion in Golden West, cited by Respondent, addresses the key issue raised by Appellant in this instance. In that case, the contract contained the same "initial contract value" language largely relied on by Appellant here, i.e.:
"The initial contract value is $250,000 where the total quantity of work ordered during the term of this contract will not be less than $10,000 nor more than one million dollars ($1,000,000)."
Further, the contractor in Golden West was also required to purchase bonds in amounts that were greatly in excess of the minimum work required to be ordered.[3] The Board concluded that the contractor in that case was entitled to only the stated minimum of $10,000 in work and, because it had been awarded no work under the contract, concluded that it could recover the profit it would have earned for only that amount of work. The language in the contract before us here differs only in that the initial contract value was $1,000,000, the same as the maximum amount of work that could be ordered. We see no legal significance to that difference and see no basis for reaching a conclusion different from that reached by the Board in Golden West. We also see no legal significance to the fact that the "initial ... value" language on the signature page of the contract did not also contain language referring to the $10,000 minimum, since that language was accompanied by a direct reference to the contract provision that expressly stated that "not less than" $10,000 in work would be awarded.
Appellant cites Neil A. Goldwasser v. United States, 325 F.2d 722, 163 Ct. Cl. 450 (1963) in support of its position that the contract before us is not an indefinite quantity contract. In that case, the court examined the language in a contract for the printing of a weekly newspaper and concluded that it contained quantity-of-work clauses that could not be reconciled. As a result, the court looked to the commercial setting of the contract and concluded that the provision setting a minimum amount of $100 would give way to other language providing for larger amounts of printing. In the case before us, we do not have the situation of irreconcilable language within the contract. Therefore, we have no occasion to go outside the language of the contract to determine its meaning.
Appellant's assertions that its principal manager "understood" that Appellant would receive the full $1,000,000 in work and that companies awarded these contracts "traditionally" received the maximum amount of work are unsupported by any specific evidence beyond these general assertions. In particular, Appellant has provided no evidence that might establish that its understanding with respect to the amount of work was based on representations made to it at the time of contracting. Appellant's "understanding" with respect to the amount it would receive or the amount of work "traditionally" received by companies in its position provides no basis for ignoring the plain language of the contract.
Finally, even if Appellant had proven that the Contracting Officer promised it more work at the May 1, 1992 meeting, there would be no basis for sustaining Appellant's claim. Appellant has not shown that there existed consideration for such a promise -- a promise that would have constituted an amendment to the contract language. Without consideration, such a promise is unenforceable.
Accordingly, the appeals are denied.
David I. Brochstein
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
James D. Finn, Jr.
Administrative Judge
Vice Chairman
[1] Additional claims, originally included in PSBCA No. 3333 appeal, have been settled by the parties.
[2] That appeal was docketed as PSBCA No. 3333. Appellant's Complaint demanded payment of a number of specific claims related to work performed under the contract. In addition, the Complaint demanded payment of lost profits, the demand at issue here. After discovery, the parties were able to reach a settlement of all items except lost profits. The parties agreed to submit this issue to the Board on the record, without a hearing. After the parties had supplemented the record and submitted briefs and the Board had begun consideration of the appeal, the Board noted that it did not appear that the claim for lost profits had ever been submitted to the Contracting Officer for a decision. The parties confirmed that that was the case. Accordingly, in November 1994 Appellant formally submitted to the Contracting Officer a certified claim in the amount of $124,148.00 for lost profits. By letter dated December 28, 1994, the Contracting Officer denied the claim and Appellant filed a timely notice of appeal, which was docketed as PSBCA No. 3731. By agreement of the parties, the record in PSBCA No. 3333 was incorporated by reference as the record of PSBCA No. 3731.