July 6, 1995
Appeal of
PACKAGE PLUS OF S.W. FL INC.
Under Contract No. 118925-91-P-0787
PSBCA No. 3674
APPEARANCE FOR APPELLANT:
Robert A. Lutz, President
APPEARANCE FOR RESPONDENT:
Mark E. Dennett, Esq.
OPINION OF THE BOARD
Appellant, Package Plus of S.W. FL Inc., has appealed from the decision of the contracting officer denying its claim based on the termination of its contract with Respondent, United States Postal Service, to operate a contract postal unit. At the election of the parties, the appeal has been submitted on the record without an oral hearing. 39 C.F.R. §955.12.
FINDINGS OF FACT
1. On June 28, 1991, Respondent awarded Appellant contract 118925-91-P-0787 to operate a contract station at the Weaver’s Corner Shopping Center in Fort Myers, Florida. Appellant’s station was about 1.3 miles north of the North Fort Myers Post Office. Contract performance began July 1, 1991, and the annual rate paid Appellant was $19,840. (Appeal File Tabs (“AF”) 9, 11, 16).
2. The contract was for an indefinite term, subject to the following termination rights:
“Termination. This contract may be terminated by either the Postal Service contracting officer or the contractor upon 60 days’ written notice. The contracting officer may terminate the contract upon one day’s written notice if necessary to protect the Postal Service’s interest.” (AF 16, Section C.1.b.).
3. In March, 1993, Respondent was notified that the road on which the North Fort Myers Post Office was situated was to be widened. The project would bring the road to within six feet of the entrance door, leaving only limited and hazardous use of the entrance, and would eliminate several parking spaces. The lessor of the building was contacted and indicated he was not interested in continuing the lease, which was due to expire May 31, 1994. (AF 17, 21 (Declaration of David Barr dated January 17, 1995) ¶ 2).
4. Respondent decided to locate new space for the North Fort Myers Post Office. On June 18, 1993, Respondent’s Atlanta Facilities Service Office issued a Solicitation for Proposals of space that could be leased to house the post office. (AF 17, 18, 21 ¶¶ 3, 4).
5. At least four offers were submitted, including one by the owner of the Weaver’s Corner Shopping Center. Respondent selected the offer made by Appellant’s landlord for space in the Weaver’s Corner Shopping Center, very near Appellant’s premises. (AF 19, 21 ¶ 4).
6. Shortly after selection of the Weaver’s Corner Shopping Center site for the North Fort Myers Post Office, Respondent notified Appellant that its contract postal unit would be terminated when the post office began operating in its new space because Respondent would not need a contract station in the same shopping center as the post office (AF 21 ¶¶ 5, 6).
7. By letter dated June 1, 1994, the contracting officer notified Appellant that its contract was terminated effective August 5, 1994. The termination was based on Respondent’s determination that it would no longer need the services of the contract station once the post office opened. (AF 12, 21 ¶ 7, 22 (Declaration of Judy Doyle dated January 18, 1995) ¶ 4, 23 (Declaration of Lynn Sartain dated January 18, 1995) ¶ 4).
8. By letter of June 6, 1994, Appellant submitted a proposal to Respondent to move its contract station to a new location, 4.5 miles north of the new North Fort Myers Post Office (AF 11).
9. The contracting officer rejected Appellant’s proposal to move the station, noting that the postmaster had not determined a need for a station at the proposed location and stating that if the Postal Service did decide to locate a new contract station in the area of the site Appellant proposed, it would likely conduct a competitive procurement to identify the operator (AF 10).
10. On July 15, 1995, Appellant filed a certified claim with the contracting officer in the amount of $50,880. The claim consisted of what Appellant calculated to be the contract station’s portion of Appellant’s rent and utilities through December 31, 1998, and an amount for lost revenue Appellant expected to result from the loss of the contract station through December 31, 1998. Appellant’s original lease term was from January 2, 1993 through December 31, 1995, with Appellant having an option to renew for an additional three years. (AF 9; Lease Agreement).
11. On July 19, 1994, the contracting officer denied Appellant’s claim, relying on the contract provision allowing either party to terminate the contract on sixty-days’ written notice (AF 6).
12. Appellant’s contract station was closed on or about July 28, 1994 (AF 2).
13. On August 3, 1994, Appellant appealed the contracting officer’s denial of its claim for damages.
DECISION
Appellant does not deny that the contract allowed Respondent to terminate the contract on sixty-days’ written notice, but it argues that it understood the termination provision to apply to situations, none of which were present in this case, where the contract station was not being operated effectively, where mail or Postal Service funds or property were not properly safeguarded and where the contract station was not generating revenues sufficient to offset its cost. Appellant argues that the authority to terminate is not implicated when Respondent, for its own purposes, obviates the need for the contract station by relocating a post office adjacent to the contract station. Appellant urges that because the actions of the contracting officer were inconsistent with Appellant’s understanding of the termination clause and failed to take into account the impact of the post office relocation on Appellant’s business, they were done in bad faith and constituted an abuse of discretion. Appellant argues that, therefore, it is entitled to recover the damages it incurred and will continue to incur because of the closing of the contract station.
Respondent argues that it properly exercised its right to terminate the contract by giving the sixty-days’ written notice and that the contracting officer had sound reasons for terminating Appellant’s station. Respondent contends there is no evidence of bad faith or abuse of discretion.
The termination provision of Appellant’s contract does not state any limits on its applicability. Appellant’s president has alleged that he understood the clause to allow Respondent to terminate the contract only in cases of performance deficiencies by the contractor or insufficient revenue, but Appellant has not provided evidence of how or when this understanding was reached or on what it was based. Appellant’s interpretation of the termination provision is contrary to the plain language of the clause and is unreasonable. The clause unmistakably authorized either party to terminate the contract by giving the other sixty-days’ written notice. Therefore, when entering the contract and making business commitments in support of its performance of the contract, Appellant was aware that Respondent could terminate the contract on sixty-days’ notice (as could Appellant).
The contracting officer had broad discretion under the clause, and the termination will be upheld unless it is shown that the contracting officer’s decision was made in bad faith or constituted an abuse of discretion. Michael J. Earl, PSBCA No. 3332, 93-3 BCA ¶ 26,234; see E. Gerald Hanes, PSBCA No. 3082, 92-3 BCA ¶ 25,127 recon. denied 1992 WL 205700, August 14, 1992, and 93-1 BCA ¶ 25,553. Such has not been shown in this appeal. Respondent’s need to find new quarters for the North Fort Myers Post Office was not of its own making, and its method of identifying a new site through an advertised procurement administered by its Atlanta Facilities Service Office was reasonable. It was unfortunate for Appellant’s business that its landlord chose to offer space in the Weaver’s Corner Shopping Center for the post office, but Respondent’s selection of that location has not been shown to have been for other than sound business reasons. There has been no showing of an abuse of discretion or bad faith.
As Respondent acted reasonably and within its rights under the contract, Appellant is not entitled to damages for the termination. The appeal is denied.
Norman D. Menegat
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
James D. Finn, Jr.
Administrative Judge
Vice Chairman