November 18, 1996

Appeal of

WESTSTATES TRANSPORTATION, INC.

Under Contract No. HCR 902RK

PSBCA No. 3764

 

APPEARANCE FOR APPELLANT:

John Farrell

 

APPEARANCE FOR RESPONDENT:

Robyn M. A. Sembenini, Esq.

 

                                                   OPINION OF THE BOARD

Appellant, Weststates Transportation, Inc.[1], has filed a timely appeal from a final decision of a contracting officer terminating Appellant’s highway route contract for default.  At the joint request of the parties, the appeal is being decided on the record in accordance with 39 C.F.R. §955.12.

FINDINGS OF FACT

1.  On January 11, 1994, Appellant was awarded contract no. HCR 902RK for the transportation of mail between the R.R. Donnelly Facility in Torrance, CA and the United States Postal Service Processing and Distribution Center in Phoenix, AZ  (AF Tab 3).  Service under the contract was to begin on February 5, 1994 and continue through June 30, 1997.  (Id.)

2.  Under the terms of the contract, Appellant was to be compensated at a per “trip rate” of $528.13 for each one way trip (AF Tab 3).  The number of trips was based solely on the “need” of the United States Postal Service (Respondent).  The estimated one-way mileage for each trip was stated to be 400 miles and the annual one-way mileage was stated to be 20,872 miles.  (AF Tab 1).

3.  The solicitation, which was incorporated into the contract at the time of the award, included paragraph 18.G, which states:

“In order to be awarded a contract, a bidder may not be rated unsatisfactory or conditional by the Department of Transportation at the time of bid closing.  Bidders who have not been rated by the DOT and are awarded a contract must obtain a satisfactory rating within one (1) year of contract award.  Failure to obtain a satisfactory rating will result in termination of the contract for default.”  (AF Tab 1).

4.  The contract included the standard Postal Service “Basic Surface Transportation Services Contract - General Provisions” (PS Form 7407, July 1992), which, in clause 16, Termination by the Postal Service for Default, permitted the Postal Service to terminate the contract for default if the contractor failed to perform according to the terms of the contract (AF Tab 2).

5.  On August 24, 1994, approximately eight months after contract award, the Contracting Officer wrote Appellant and requested a copy of its DOT rating (AF Tab 6).  As an attachment to that letter, the Contracting Officer included the address of the United States Department of Transportation in San Francisco as well as a list of approved private firms that could provide Appellant with an interim safety rating.  The Contracting Officer informed Appellant it was required to provide the Postal Service with a copy of a satisfactory safety rating by December 5, 1994, or Respondent would resolicit for the service and terminate the contract for default effective close of business February 4, 1995.  (Id.)

6.  On December 2, 1994, the Contracting Officer received a copy of a letter addressed to Appellant from the officer-in-charge of the Carson City, NV DOT office responding to a December 1, 1994 inquiry from Appellant (AF Tab 10).  In this letter, DOT indicated it would set an appointment to rate Appellant’s operation at an unspecified future date.  The DOT representative added that the private third party firms listed in the attachment to the Contracting Officer’s August 24, 1994 letter would be able to provide a valid safety rating satisfying Respondent’s requirements until DOT was able to inspect Appellant’s vehicles.  (Id.)

7.  As of January 20, 1995, Appellant had not obtained a satisfactory safety rating from either DOT or a third party firm.  On that date the Contracting Officer issued a final decision terminating the contract for default effective close of business February 4, 1995 (AF Tab 11).  The default termination was based on Appellant’s failure to satisfy the terms of the contract which required a valid DOT rating within one year of the date of contract award.  (Id.)

8.  Appellant responded to the Contracting Officer’s final decision on January 30, 1995, five days before the effective date of the termination action (AF Tab 12).  In its reply, Appellant explained that it had been informed by DOT officials in the Carson City, NV and Los Angeles, CA offices that they did not have the staff to perform the rating at that time.  Appellant also stated that it felt that the average charge of $2,500 by the private third party firms for an interim rating was excessive.   In conclusion, Appellant argued that it believed the termination was improper because the Postal Service was requiring a rating which DOT could not provide.  As a result, Appellant requested that the contract termination be set aside until DOT was capable of inspecting its vehicles.  (Id.)

9.  The Contracting Officer treated Appellant’s January 30, 1995 letter as a notice of appeal and on February 8, 1995, forwarded the letter to the Board for docketing (AF Tab 13). 

DECISION

Appellant contends that its failure to obtain a DOT safety rating or an interim rating by a third party within the time required by the contract was excusable and that its contract should not have been terminated before it could obtain the necessary rating.  As a result, Appellant requests that its contract be reinstated until it is able to obtain the required rating from DOT.  Respondent asserts that the Board lacks jurisdiction to reinstate the contract and, therefore, the claim for reinstatement should be dismissed.  Respondent argues in addition that Appellant’s failure to obtain a DOT safety rating was not excusable and that the Contracting Officer properly terminated the contract for default.

As Respondent contends, the Board lacks authority to order the reinstatement of a terminated contract.  Triple B. Trucking, PSBCA No. 2939, 92-1 BCA ¶24,506; Rent-A-Tainment, Inc./Mail N’ Things, PSBCA No. 2772, 90-3 BCA ¶23,187; Stanley Myrie, PSBCA No. 1674, 88-1 BCA ¶20,239.  However, the Board may consider the propriety of the termination of Appellant’s contract, Malone v. United States, 849 F.2d 1441 (Fed. Cir. 1988); Roger Dean Barrett, PSBCA No. 2490, 89-3 BCA ¶22,220, an issue clearly raised by Appellant in its notice of appeal.  Accordingly, the Board will consider this issue.

The record establishes that Appellant was required by the contract to obtain a DOT safety rating within one year of contract award and that it had not obtained such a rating within the specified time (FOF 3, 5-7).  Thus, Respondent could properly terminate the contract for default unless Appellant’s failure of performance was excusable (FOF 3, 4).  Appellant contends that its failure was excusable because of DOT’s inability to schedule the required safety inspection.  However, Appellant has not shown that it was either impossible[2] or impracticable[3] to comply with the contract’s safety rating requirement and, therefore, that its failure of performance was excusable.  Appellant entered into the contract fully aware that it was required to obtain the DOT safety rating within one year of contract award and without any guarantee that the requirement could be met without some cost.  Despite this knowledge, Appellant waited almost 11 months before contacting DOT to schedule a safety inspection (FOF 6).  Under the circumstances, Appellant bore the risk that because of its delay in seeking the rating, DOT would be unable to perform the safety inspection in time for Appellant to receive the required rating by the contractually specified date.  Thus, the unavailability of a rating from DOT does not excuse Appellant’s failure to comply with the terms of the contract.

Moreover, an acceptable rating could have been obtained from a private, third-party firm (FOF 5, 6).  Appellant elected not to pursue such a rating because of the cost involved (FOF 8).  However, the additional cost of the interim rating did not make performance commercially impracticable[4] as it represented only approximately 10% of the estimated annual compensation Appellant was to receive for performance of the contract.  Therefore, Appellant’s failure of performance is not excused for this reason.

Conclusion

The contract was properly terminated for default.  Accordingly, Appellant’s appeal is denied.

James A. Cohen

Administrative Judge

Chairman

 

I concur:

David I. Brochstein

Administrative Judge

Vice Chairman

 

I concur:

Norman D. Menegat

Administrative Judge

Board Member


[1]After award, Appellant changed its name from Weststates Transportation to Weststates Transportation, Inc. (Appeal File (AF) Tab 7).

[2]In order for performance under a contract to be excused for impossibility, the required performance must be objectively, not just subjectively, impossible.  “It is the difference between ‘the thing cannot be done’ and ‘I cannot do it.’" Southeastern Airways Corp., PSBCA Nos. 262, 263 (1977), aff’d 230 Ct. Cl. 47, 673 F.2d 368 (1982) (citing Restatement of Contracts, §455).  See also Briefing Papers #88-7 (Martell and Meagher, “Impossibility of Performance/Edition III”).

[3]Generally, for performance to be excused for commercial impracticability, a contractor must demonstrate that an unexpected event occurred, that the risk of the event was not allocated to it, and that the event caused the cost of performance to go “beyond that which is onerous or expensive and [is] ‘positively unjust.’” Gene Peters, PSBCA No. 999, 83-2 BCA ¶16,694; see also, Transatlantic Financing Corp. v. United States, 363 F.2d 312, 315 (D.C. Cir. 1966); Fulton Hauling Corp., PSBCA No. 2778, 92-2 BCA ¶24,858. 

[4]See Transatlantic Financing Corp. v. United States, 363 F.2d 312, 319 (D.C. Cir. 1966) (stating there needs to be a substantial variation between the expected cost and the actual cost of performing for commercial impracticability);  Rapoco, Inc., ASBCA Nos. 39371 and 39501, 93-1 BCA ¶25,308 (finding a 31% increase in per room bid price not “an extreme or unreasonable expense”); Jalaprathan Cement Co., ASBCA No. 21248, 79-2 BCA ¶13,927 (holding that a total loss of less than one-third of the contract price is not commercially impracticable).