February 15, 1995
Appeal of
JIM LOVETT
Under Contract Nos. HCR 74460 and 74468
PSBCA Nos. 3633 & 3634
APPEARANCE FOR APPELLANT:
Russell L. Mulinix, Esq.
APPEARANCE FOR RESPONDENT:
Patrice R. Dickey, Esq.
OPINION OF THE BOARD
Appellant, Jim Lovett, has appealed from two decisions of a Contracting Officer assessing him excess reprocurement costs as the result of the termination for default of two highway transportation contracts. The appeals have been submitted on the record without a hearing at the election of the parties pursuant to 39 C.F.R. §955.12.
FINDINGS OF FACT
1. Appellant was awarded renewal transportation services contract no. 74460 on May 19, 1990, to provide transportation services between Checotah, OK and Pierce, OK for the period July 1, 1990, through June 30, 1994. The annual contract rate was $24,570 (Appeal File, PSBCA No. 3633, Tab F ("3633-F")).
2. On May 14, 1990, Appellant was awarded renewal transportation services contract no. 74468 to provide box delivery services in Checotah, OK for the period July 1, 1990 through June 30, 1994. The annual contract rate was $22,826 (Appeal File, PSBCA No. 3634, Tab F ("3634-F")).
3. Both contracts contained a clause numbered 16 in the contracts' General Provisions (PS Form 7407T, March 1989) entitled "Termination by the Postal Service for Default." Paragraph 16(b) of the termination clause stated:
"(b) Termination of the right to perform under this contract or of this contract under this Clause 16, shall not impair the right of the Postal Service to damages from the contractor, and such damages may be assessed and liquidated for the purpose of setoff or counterclaim in the settlement of any claim of the contractor against the Postal Service arising under this contract." (3633-F; 3634-F).
4. On November 6, 1992, the Contracting Officer suspended Appellant's right to continue performance of both contracts based upon Appellant's actions in rifling the mail and purloining a parcel (3633-C; 3634-C). Rural carriers performed Appellant's contract routes on November 6, 1992 (Declaration of A. T. Mills).
5. On November 7, 1992, Emergency Contract No. 774CU was awarded to Homer G. Morse, the only bidder responding to a telephonic solicitation. The emergency contract required Mr. Morse to perform the services covered by Appellant's suspended contract no. 74460. Mr. Morse's contract rate was $176 per day. Since the Contracting Officer considered Mr. Morse's bid price too high for long-term operation of the route, another round of bids was sought by telephonic solicitation on November 27, 1992. Five bids were received in response to the second solicitation and award of contract no. 744EU was made to the low responsive bidder, John Neumeyer, for operation of the route commencing November 30, 1992, at a rate of $85.00 per day (3633-C; Declaration of A. T. Mills).
6. Telephonic bids likewise were sought for performance of the services covered by Appellant's suspended contract no. 74468. Three bids were received, and award of contract no. 744DU was made to the low bidder, Ron Lindsey, in the amount of $85.00 per day for performance of the required services commencing November 7, 1992. Three boxes were added to the route in December 1992, and Mr. Lindsey's daily rate was increased to $85.73, effective December 12, 1992 (3634-C, F; Declaration of A. T. Mills).
7. Both routes were operated by the emergency contractors until June 30, 1993 (3633-F; 3634-F).
8. On December 4, 1992, both of Appellant's contracts were terminated for default by final decision of the Contracting Officer based upon Appellant rifling the mail and purloining the parcel (3633-C; 3634-C). Appellant did not appeal either final decision.
9. By final decisions dated February 23, 1994, the Contracting Officer assessed Appellant excess reprocurement costs incurred by Respondent as the result of the termination actions. Under contract No. 74460 Appellant was advised that "[t]he Postal Service has determined the amount of damages owed by you through February 7, 1993, as a result of your failure to perform service equals $2,447.00." Against this amount Appellant was credited $2,249.90 in funds transferred back to Respondent (See Findings of Fact Nos. 12 and 15, infra). Thus, demand was made upon Appellant for the difference between the two amounts, or $197.10 (3633-A).
10. In regard to contract no. 74468 Appellant was advised that "[t]he Postal Service has determined the amount of damages owed by you through February 7, 1993, as a result of your failure to perform service equals $1,919.00." Against this amount Appellant was credited $1,890.04 in funds transferred back to Respondent (See Findings of Fact Nos. 13 and 15, infra.). Thus demand was made upon Appellant for the difference between the two amounts, or $28.96 (3634-A).
11. There is no explanation in the Contracting Officer's final decisions or any supporting affidavits or declarations explaining how the $2,447.00 and $1,919.00 amounts were calculated. Appellant has appealed both final decisions.
12. In a declaration submitted as a supplement to the record in the appeal the Contracting Officer calculated the costs incurred by the Postal Service as the result of the suspension and termination of Appellant's contract no. 74460 for a period of 90 days subsequent to the suspension and termination in the following manner:
"Checotah, Oklahoma rural carriers operated both routes on 11-06-92. Homer Morse operated this route 11-07-92 through 11-28-92, 17 delivery days. 17 x $176.00 per day = $2,992.00.
John Neumeyer operated this route 11-30-92 through 2-06-93, 57 delivery days. 57 x $85.00 = $4,845.00
$2,992.00
+4,845.00
300.00 Administrative Costs
+ 163.36 Combined costs of Checotah rural carriers running 74460 & 74468 on 11-06-92.
$8,300.36 Total emergency costs for the 90 day period.
$7,231.81 Lovett's costs for same 90 day period.
$1,068.55 Add'l. cost to procure emergency service.
$2,249.90 Funds on 74460 transferred back to USPS.
-1,068.55 Add'l. cost for emergency service
$1,181.35 Excess funds withheld" (Declaration of A. T. Mills)
13. The excess costs incurred by the Postal Service as calculated by the Contracting Officer in his declaration as the result of the suspension and termination of Appellant's contract no. 74468 for the 90-day period were:
"A. Checotah, OK rural carriers operated both routes on 11-06-92. Total cost for rural carrier delivery is assigned to HCR 74460 cost due to no breakdown of costs allocated separately to each route available.
B. Ron Lindsey operated 74468 as 744DU for the total 90 day period, 11-07-92 through 2-07-93, with one extension request processed effective 12-12-92. Mr. Lindsey operated 11-07-92 through 12-11-92, 28 delivery days, at $85.00 per day and 12-12-92 through 2-06-93, 46 delivery days at $85.73 per day.
28 x $85.00 = $2,380.00
46 x $85.73 = $3,943.58
$6,323.58
+ 300.00 Administrative costs
$6,623.58
$6,075.12 Lovett's cost for operation of HCR 74468 same 90 day period.
$6,623.58 Lindsey's Cost
- 6,075.12 Lovett's cost.
$548.46 Additional cost to procure emergency service.
$1,890.04 Funds on 74468 transferred back to USPS.
548.46
$1,341.58 Excess funds withheld." (Id.)
14. Administrative costs of $300 were the same for each reprocurement. They were calculated as follows:
"Contract Transportation Specialist $125.00
5 Hrs. @ $25. Hr.
Transportation/Contracting Officer $ 40.00
1 Hr. & 15 Min.
Secretary $ 30.00
2 Hrs. @ $15.
Checotah, OK OIC/Postmaster $ 75.00
3 Hrs.
Manager, Transportation Networks (Tulsa, Okla.) $ 30.00
1 Hr. 15 Min.
$300.00" (Id.)
15. The line item "Funds ... transferred back to USPS" in Findings of Fact Nos. 12 and 13, above, represent amounts due Appellant for services previously performed under each contract. The line item "Excess funds withheld" in the same Findings constitute amounts otherwise due Appellant reduced by the excess costs incurred by Respondent for the period of 90 days subsequent to the suspension and termination of the contracts (Declaration of A. T. Mills; 3633-A, C; 3634-A, C).
DECISION
Appellant's appeals do not challenge the default termination actions. However, Appellant challenges the two February 23, 1994 final decisions which offset funds owed Appellant by Respondent as a credit against excess reprocurement costs and assessed Appellant an additional amount of $226.06 ($197.10 plus $28.96). It is Appellant's contention that he has been provided no information, and in fact that none has been presented by Respondent, to support the offset of funds and assessment of the $226.06 balance contained in the February 23, 1994 final decisions. Appellant has not challenged the Contracting Officer's calculations supporting excess costs in a lower amount incurred by Respondent for the 90-day period subsequent to the suspensions and terminations of his contracts as set forth in the declaration of the Contracting Officer (Findings of Fact Nos. 12, 13, 14), and on the record presented we see no basis for questioning the propriety and accuracy of that aspect of the total excess cost assessment.
However, the evidence does not support any additional assessment. As stated by the court in Cascade Pacific International v. United States, 773 F.2d 287, 293-94 (Fed. Cir. 1985):
"[E]xcess reprocurement costs may be imposed only when the Government meets its burden of persuasion that the following conditions ... are met: (1) the reprocured supplies are the same or similar to those involved in the termination; (2) the Government actually incurred excess costs; (3) the Government acted reasonably to minimize the excess costs resulting from the default .... The second condition requires the Government to show what is spent in reprocurement."
See also, Etex Company, VABCA Nos. 3415, 3427-29, 93-3 BCA ¶ 26,116; Auto Skate Company, Inc., GSBCA No. 10510, 91-3 BCA ¶ 24,260; Birken Manufacturing Company, ASBCA No. 32590, 90-2 BCA ¶ 22,845.
There is no persuasive evidence in the records of these appeals to support the assessments against Appellant reflected in the Contracting Officer's final decisions of February 23, 1994. The final decisions themselves are sorely deficient as they do not explain the calculation of the assessments. Respondent has failed to show with any credible evidence that it is entitled to the costs assessed against Appellant in the two February 23, 1994 final decisions. However, Respondent has shown that it is entitled to the offsets and costs as calculated in the Contracting Officer's declaration (See Findings of Fact Nos. 12-15). On the basis of those calculations Appellant is entitled to recover those costs withheld from it in the total amount of $2,522.93 ($1,181.35 + $1,341.58) amounts otherwise due Appellant as reduced by Respondent's excess costs to operate the routes for 90 days. Appellant also is entitled to recover Contract Disputes Act interest.
CONCLUSION
The combined excess cost assessment of $226.06 contained in the February 23, 1994 final decisions is set aside and the appeals are granted. The matter is remanded to the Contracting Officer for calculation of the amount due Appellant inclusive of Contract Disputes Act interest.
James D. Finn, Jr.
Administrative Judge
Vice Chairman
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur
Norman D. Menegat
Administrative Judge
Board Member