February 9, 1996
Appeal of
CHARLES WEST
Under Contract No. HCR 06039
PSBCA No. 3655
APPEARANCE FOR APPELLANT:
James P. Nolan, Jr., Esq.
APPEARANCE FOR RESPONDENT:
Ruth L. Gottlieb, Esq.
OPINION OF THE BOARD
Appellant, Charles West, has appealed from the default termination of his contract with Respondent, United States Postal Service, for the transportation of mail between Hartford and Sharon, Connecticut. At the parties' request a hearing was held in Stamford, Connecticut.
FINDINGS OF FACT
1. Contract HCR 06039 was awarded to Charles West on July 10, 1990, and covered the transportation of mail between Hartford and Sharon, Connecticut. The term of the contract was to be from July 28, 1990, through June 30, 1994. Under the original contract Appellant was to run eight trips each weekday, four trips on Saturday, and two trips (between Hartford and Winsted, Connecticut) on Sunday. A contract modification, effective May 29, 1993, added two additional Sunday trips, between Hartford and Sharon (Appeal File Tab (AF) 1).
2. Incorporated into the contract was PS Form 7407T (March 1989), "Basic Surface Transportation Services Contract General Provisions." Clause 4 of the General Provisions, "Service Requirements and Prohibitions," required Appellant to "carry all mail tendered for transportation under this contract ... with certainty, celerity, and security, in accordance with the operating schedule...." Clause 16, "Termination by the Postal Service for Default," provided that the Contracting Officer could terminate the contract for default, "(1) For Contractor's failure to perform service according to the terms of the contract; ...." (Id.).
3. Respondent ordinarily recorded Appellant's performance irregularities on PS Form 5500 ("Contract Route Irregularity Report"). The Form 5500 contained a heading containing information identifying the route, the driver, and the person making the report. In addition, there were three numbered sections: Section 1, in which the expediter described the nature of the irregularity and any explanation received from the driver; Section 2, which contained any reply received from a contractor concerning the irregularity;[1] and Section 3, which contained Postal Service comments, including the final determination by the Administrative Official as to whether the irregularity was to be classified as "chargeable" or "non-chargeable."[2] 4. During 1992 and 1993, Appellant received a number of Forms 5500 issued by Postal Service personnel in Hartford. In November 1993, Appellant was called to a formal conference in Hartford with the Manager, Transportation and Networks, to discuss a group of seven 5500s involving mechanical problems, unexplained late arrivals, and driver oversleeping, all of which had occurred between September 23, 1993, and November 4, 1993. At the conference, Appellant acknowledged the deficiencies and stated that he would take steps to prevent their recurrence. (AF 7, 8; Respondent's Exhibit 7; Tr. 162-165).
5. Following the conference, six chargeable irregularities were issued between November 26, 1993, and January 19, 1994. By letter dated January 27, 1994, from the Manager, Transportation and Networks, Appellant was advised that service had not improved and was asked to take whatever action was necessary to bring service to acceptable levels within three days. Appellant was warned that if service did not improve, the file would be referred to the Contracting Officer for "appropriate attention," including possible assessment of damages or termination of the contract. (AF 6, 9).
6. Thereafter, Forms 5500 recording chargeable irregularities were issued to Appellant on January 31, February 15 and 16, and on March 1, 1994, for late operation or failure to operate. On or about February 22, 1994, the Manager, Transportation and Networks, forwarded the file to the Contracting Officer with the recommendation that the contract be terminated. By letter dated March 2, 1994, the Contracting Officer sent Appellant a final warning letter, citing Appellant's failure to operate two trips on February 15, 1994, and warning Appellant that the contract might be terminated unless satisfactory service was restored immediately and maintained for the balance of the contract term. (AF 4, 5, 9).
7. On March 10, 1994, Appellant's truck that was running Trip 2 (an inbound, return trip from Sharon to Hartford) arrived at Hartford 3 hours and 45 minutes late.[3] On the earlier outbound trip that morning from Hartford to Sharon, the driver had encountered snow, ice, and freezing rain. When he was about to depart Sharon on the return trip (Trip 2), he discovered that he had lost braking on the truck. The driver waited at the post office in Sharon until Postal Service personnel arrived for work and then called the Hartford Post Office to inform personnel there of his problem, which he believed at that time to be frozen brakes. That telephone call was made around 5:30 or 6:00 a.m. After waiting until daylight so that he could examine the brakes, the driver discovered that one of the air brake lines had ruptured. The driver theorized that ice had built up on the line and pulled it from its supports, and that the line might have been hit or have rubbed against something, causing it to rupture. He was able to make temporary repairs and proceed to a garage (at which Appellant had an account) to have permanent repairs made, consisting of replacing the line. The driver returned to Hartford at 10:30 a.m. (Tr. 65, 136-142; Appellant's Exhibit 1 (Repair invoice dated March 10, 1994)).
8. Upon arrival at Hartford, the driver found that a Form 5500 had been filled out because of the delay. The expediter who filled out the Form 5500 began work at 7:30 a.m. and, therefore, was not on duty at the time Appellant's driver called in from Sharon, but was on duty at both the truck's scheduled arrival time and the actual arrival time. The expediter noted the length of the delay and entered "Brakes froze" in Section 1. On March 11, 1994, the Administrative Official made a preliminary determination that the irregularity was chargeable, based on his view that frozen brakes represented a mechanical problem caused by failure to drain water from the brake lines. (Tr. 15, 85-86, 93). The Form 5500 was then forwarded to the Contracting Officer.
9. Upon receipt of the Form 5500 for March 10 from the Administrative Official, the Contracting Officer decided that the mechanical failure described therein (i.e., frozen brakes) warranted terminating the contract. Thereafter, on March 15, 1994, and before receiving comments from Appellant, the Contracting Officer issued a letter terminating the contract for default, effective March 18, 1994. (AF 3).
10. Appellant received his copies of the March 10 Form 5500 on March 13. He filled in the reply portion of the form as follows:
"Freezing rain and fog on mountainous roadway created very slippery conditions -- a large piece of ice or rock caused a puncture in air brake line. Brake[s] were not frozen. However air brakes were [losing] air pressure."
Appellant mailed the form back on March 15, 1994 -- i.e., within 10 days of its receipt. (Tr. 152; Appnt Exh 3).
11. Had the Contracting Officer been aware that Appellant's driver had called in to report the brake problem and had he been aware that the brakes were not frozen but had failed because of a puncture due to ice, he most likely would not have considered the irregularity to be chargeable (Tr. 126-27; but cf. Tr. 129). Had there been no further chargeable irregularities following the March 2, 1994 final warning letter, the Contracting Officer would not have terminated the contract for default.[4] (Tr. 134).
12. Appellant filed a timely appeal of the default termination.
DECISION
Respondent argues that Appellant's performance deficiencies justified the Contracting Officer's decision to terminate the contract. Respondent argues that the pattern of omitted service and late arrivals, which constituted the most serious types of service irregularities, represented the bulk of the irregularities charged against Appellant. Respondent also argues that it followed all the steps which were a prerequisite to termination -- including a formal conference in November 1993, the three-day warning letter, and a final warning letter. Finally, Respondent argues that the March 10, 1994 irregularity, although the final "straw" from a procedural standpoint, was not the reason for contract termination. Rather, Respondent contends the reason was the accumulation of significant performance irregularities over a period of time.
In challenging the default termination, Appellant argues only that the Contracting Officer's decision to terminate the contract was made prematurely and was, therefore, based on incomplete or erroneous information. Appellant relies heavily on the fact that the Contracting Officer acted to terminate the contract without allowing Appellant ten days to reply to the Form 5500 issued for the March 10, 1994 delay. Appellant argues that the Contracting Officer conceded that he would not have terminated the contract if the March 10 irregularity had been determined non-chargeable, and that he possibly would have considered that irregularity non-chargeable had he been informed that the cause of the brake problems was a brake line cut by something along his route (rather than frozen brakes).
A default termination is a drastic sanction that should be sustained only when based on reasonable grounds and solid evidence, and it is Respondent’s burden to demonstrate by a preponderance of the evidence that the default termination of Appellant’s contract was justified. See Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987); J.D. Hedin Constr. Co. v. United States, 408 F.2d 424, 431 (Ct. Cl. 1969); Banks Trucking, PSBCA No. 3528, 96-_ BCA _____ (January 2, 1996); Patricia J. Stevens, PSBCA No. 3272, 94-1 BCA ¶ 26,419 recon. denied, 94-2 BCA ¶ 26,951; Douglas Cremer, PSBCA No. 3108, 93-2 BCA ¶ 25,565. Respondent has not met that burden.
By issuing the final warning letter, the Contracting Officer made the possibility of a termination for default contingent upon, at a minimum, the occurrence of a subsequent chargeable irregularity. That is, under the facts of this case, absent a chargeable irregularity following the issuance of the final warning letter the Contracting Officer could not have, cf. Robert E. Davis, PSBCA No. 3400, 94‑3 BCA ¶ 27,164, (and would not have (Finding 11)) terminated the contract for default. Further, absent such a chargeable irregularity we need not decide whether, prior to the issuance of the March 2 final warning letter, the record considered by the Contracting Officer reflected a sufficient accumulation of significant performance irregularities to support a termination for default of Appellant's contract.[5]
In this instance, had the Contracting Officer known that the brake failure was not simply "frozen brakes" but was instead a ruptured brake line likely caused by external ice, he would most likely have considered the March 10 delay a non-chargeable irregularity and, therefore, would have had no basis for terminating the contract for default. We are also not persuaded by the record in this appeal that the March 10 delay represented a chargeable irregularity. Respondent has, therefore, not met its burden of demonstrating the occurrence of a chargeable irregularity after the final warning that would justify the termination for default.
The appeal is sustained and the termination for default is converted to a termination for the convenience of the Postal Service.
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] Form 5500 is a multi-copy form. Two copies were sent to the contractor for comment and two copies were retained in the Postal Service file. Section 2 of Form 5500 instructed the contractor to return any comments to the Administrative Official within 10 days of receipt and warned that failure to reply would be taken as an admission that the facts stated in Section 1 were correct. (AF 9; Hearing transcript page (Tr.) 35). During the course of the contract, Appellant only occasionally replied to the Forms 5500 he received. (AF 9; Respondent's Exhibit 7)
[2] Irregularities (e.g., late operation, missed trips, etc.) were classified as "non-chargeable" when caused by such things as unusually heavy traffic due to construction or accidents, or by weather. Otherwise, irregularities were classified as "chargeable." Irregularities caused by mechanical problems, including flat tires and mechanical problems caused by weather (e.g., frozen brakes), were always considered chargeable by Respondent's Network Specialist, the person initially responsible for determining the proper category. (Tr. 60)
[3] The truck was scheduled to leave Sharon at 5:35 a.m. and arrive at Hartford at 7:45 a.m.
[4] It was also the Contracting Officer's understanding that he could not have terminated the contract absent a chargeable irregularity following the final warning letter (Tr. 134).
[5] This should not be interpreted as holding that a Contracting Officer may automatically terminate a contract upon the occurrence of any chargeable irregularity after a final warning letter. Rather, upon proof of such a chargeable irregularity, we would then consider the relevant portions of the contractor's entire record to determine whether a termination was proper.