August 28, 1996
Appeal of
O. GARY BOLLSCHWEILER and ANNA MARIE BOLLSCHWEILER
Under Contracts No. HCR 98960, 98962
PSBCA Nos. 3844 & 3852
APPEARANCE FOR APPELLANTS:
Bradley A. Mellotte, Esq.
APPEARANCE FOR RESPONDENT:
Elena V. Alejandre, Esq.
OPINION OF THE BOARD
Appellants, O. Gary Bollschweiler and Anna Marie Bollschweiler, held two box delivery, highway transportation contracts with Respondent, United States Postal Service. After concluding that Mr. Bollschweiler[1] had caused the destruction of mail that should have been delivered on one of the routes, the contracting officer terminated that contract for default and denied Appellant access to the mail and postal premises, which prevented him from working on the other contract. Appellant appealed both of those actions, and the appeals were consolidated.
The appeals were submitted on the record without an oral hearing. 39 C.F.R. §955.12. Only entitlement is at issue.
FINDINGS OF FACT
PSBCA No. 3844--HCR 98960
1. On May 16, 1994, Respondent renewed Appellants’ contract HCR 98960 for the delivery of mail to 356 mail boxes (increased to 393 in September 1994) along a route (known as HC 60) originating at the Cle Elum, Washington Post Office. The term of the contract was to be from July 1, 1994, to June 30, 1998. (Appeal File, Tab (“AF”) 18, 19).
2. The contract required Appellants to carry all mail “with certainty, celerity, and security” and to “[d]eposit all mail matter received for that purpose from a post office into the appropriate mail boxes of customers placed along the line of the route.” (AF 19, PS Form 7407 (July 1992), Basic Surface Transportation Services Contract--General Provisions (“GP”) 4(a), 4(b)(1)(I); see Contract Sections 12, 13E).
3. The contract, in General Provision 16(a), authorized the contracting officer to terminate the contract for default
“(1) For Contractor’s failure to perform service according to the terms of the contract;
(2) If the Contractor is the subject of administratively determined violations of the Postal laws and regulations and other laws related to the performance of the service;
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(6) For the Contractor’s failure properly to account, deliver and pay over moneys, mail and other property pursuant to Clause 8 of this contract.” (AF 19, GP 16(a)(1), (2), (6)).
4. The contract also provided that if, after a termination for default, it were determined that the termination for default was improper, the action would be deemed to have been a termination for the convenience of the Postal Service as allowed under General Provision 17 (AF 19, GP 16(c)). In such an event, the contractor would be entitled to liquidated damages equal to one-third of the annual contract price if the termination occurred during the first two years of the contract (AF 19, GP 17, 12(d)(1)).
5. Before leaving the Cle Elum Post Office for his route each day, Appellant sorted his mail in delivery sequence into slots in his case. Appellant was to place undeliverable third class (advertising) mail (“UBBM”[2]) in what was known as the UBBM “holdout” slot of his case. From time to time, a Postal Service employee would collect the UBBM from Appellant’s case. (AF 11, 13).
6. The form of address for customers on the Cle Elum route changed in 1994. Customers had previously used highway contract (“HC") addresses, e.g. John Doe, HC 60 Box 0000, Cle Elum, WA 98922-9711. However, this form of address did not identify the location of the customer’s home, and, in order to provide more efficient emergency service, the county began a program to replace the HC addresses with street addresses in January 1994. (AF 13, 14, 16).
7. When the address system in a community changes in this manner, Respondent encourages customers to notify their correspondents promptly to use the new address, but Respondent will continue delivering mail addressed to the old HC addresses for at least one year after the change (Domestic Mail Manual (Issue 48, 01-01-95) F010 2.1, 2.3 (Attachment to Complaint); AF 11, 16).
8. In October or November of 1994, the Cle Elum Postmaster directed carriers and highway contractors, including Appellant, to begin placing a label on mail bearing HC addresses reminding the recipients to notify their correspondents of their new address. The label advised customers that after January 31, 1995, HC-addressed mail could be returned to sender. (AF 13; Complaint ¶1.2).
9. As of February 1, 1995, Appellant assumed that third class mail bearing HC addresses did not have to be delivered. He delivered some--to those customers that he thought wanted it--but began placing in the UBBM holdout some HC-addressed third class mail that could have been delivered. In early February, 1995, the postmaster became aware that the amount of mail in Appellant’s UBBM holdout slot was increasing compared to that of the other highway contractors. (AF 13, 14 (Appellant’s Statement), 16; Complaint ¶1.2).
10. Even though the new address system had officially changed on February 1, 1994, some customers did not receive their new addresses until later, and several customers called the postmaster in early 1995 voicing concerns that their HC-addressed mail would be returned. The postmaster decided that HC-addressed mail would continue to be delivered. On February 10, 1995, the postmaster gave a talk (known as a “stand-up”) to the carriers and highway contractors, including Appellant. The postmaster told them that HC-addressed mail was not to be returned and that all mail was to be delivered if the contractors or carriers knew where the addressee received mail. Appellant continued to believe that HC-addressed third class mail did not have to be delivered. (AF 11, 13, 14, 15, 16).
11. In February, the postmaster was advised by a clerk in the post office that, even after the February 10 stand-up, Appellant was placing more mail in his UBBM holdout slot than were the other contractors. The clerk also told the postmaster that Appellant had expressed the view that he did not have to deliver HC-addressed third class mail after January 31. On March 1, 1995, the postmaster examined the mail in Appellant’s UBBM holdout. Of the 125 to 150 pieces in the holdout, the postmaster pulled eighteen pieces. He found that of those eighteen pieces fourteen were deliverable, although they bore the old HC addresses. He advised the Postal Inspection Service of his finding, and on March 3, 1995, the mail then in Appellant’s UBBM holdout slot was examined by a postal inspector. Of the approximately 150 to 175 pieces of mail Appellant had placed in the holdout, eleven pieces (ten third-class and one second-class) bore HC addresses and were deliverable. (AF 13, 16).
12. On March 3, 1995, at the direction of the contracting officer, Appellant’s performance of the Cle Elum contract was suspended and Appellant was denied access to the mail and the post offices (AF 10, 15).
13. The contracting officer provided Appellant a copy of the postal inspector’s investigative memorandum relating to Appellant’s failure to deliver all HC-addressed mail and allowed him an opportunity to respond in writing. Appellant did so, explaining that he had understood the postmaster’s instructions not to apply to third class mail and that he thought it did not have to be delivered after January 31, 1995. Appellant denied throwing any mail away and pointed out that he had placed the mail in question in the UBBM which he expected Respondent would examine for any deliverable mail erroneously placed there. After considering the circumstances, including Appellant’s written response, the contracting officer terminated the Cle Elum contract for default on April 26, 1995, relying on General Provisions 16(a)(1), (2) and (6). (Finding 3; AF 7, 8, 11, 12).
PSBCA No. 3852--HCR 98962
14. On May 16, 1994, Respondent renewed Appellant’s box delivery contract HCR 98962 for a route originating in the Naches, Washington Post Office, for the term July 1, 1994, through June 30, 1998 (AF 20). Appellant’s family members performed this contract (AF 15).
15. The Naches contract required that Appellant “deny access to the mail to any employee when required by the Contracting Officer.” (AF 20, GP 4(g)).
16. By a separate April 26, 1995 final decision under contract HCR 98962, the contracting officer denied Appellant access to the mail and operational areas in postal facilities. Thus, while the Naches contract was not terminated, Appellant personally was not allowed to perform it. (AF 6).
17. Appellants appealed both of the final decisions, and the appeals were consolidated for decision.
DECISION
PSBCA No. 3844 -- Contract No. HCR 98960
Respondent asserts that the Cle Elum Postmaster made it clear in the stand-up that Appellant was to continue delivering the HC-addressed third class mail, and that Appellant’s failure to do so violated his contractual duties and justified the termination.
Appellant argues that he believed that the labels advising customers that their mail bearing the old addresses could be returned to sender after January 31, 1995 (Finding 7), reflected Respondent’s delivery policy. Furthermore, he argues, he did not understand the postmaster’s instruction not to “return” HC-addressed mail to apply to third class mail because undeliverable third class mail is generally discarded and not returned to sender. Finally, he asserts that he did not throw away mail and that his conduct does not merit termination for default.
At the stand-up talk, the postmaster told the carriers and contractors that HC-addressed mail was not to be returned and that all mail was to be delivered if the contractors or carriers knew where the customer received mail (Finding 10). However, Appellant believed even after the stand-up that he did not have to deliver third class HC-addressed mail (Finding 10). That he held such an understanding is supported by his subsequent handling of the HC-addressed mail (which is the conduct that underlay the termination). Additionally, according to Respondent, Appellant told a postal clerk sometime in February, after the stand-up, that HC-addressed third class mail did not have to be delivered. Appellant denies that this conversation took place, but accepting Respondent’s version would further support a finding that Appellant misunderstood the postmaster’s instructions.
That Appellant held his understanding of the delivery requirements in good faith is supported by his action of placing the mail with the UBBM. The UBBM slot was cleared by Respondent’s clerk, and if Appellant were intentionally violating the delivery requirements and hoped to conceal his actions from Respondent, he likely would not have returned the mail to Respondent’s custody where his actions could be (and eventually were) easily detected. Nor would he likely have expressed his understanding to Respondent’s clerk if he been disregarding what he knew to be the postmaster’s instructions.
Before the termination of the contract, Respondent was aware of Appellant’s view of the delivery requirements. Respondent knew Appellant had more UBBM than the other contractors, and the postmaster had been advised by his clerk that Appellant’s understanding of his obligations to deliver the HC-addressed mail was different from the postmaster’s. The postmaster’s March 1 discovery of deliverable HC-addressed mail in Appellant’s UBBM confirmed that Appellant was acting in accordance with his understanding.
Respondent’s delivery policy regarding HC-addressed mail had not been clearly expressed by the first part of February. The advice on the labels placed on the mail suggested delivery of such mail would not continue after January 31, 1995, and delays in full implementation of the new address system led some customers to tell the postmaster of their concerns that the post office would act in accordance with the warning on the label (Finding 10). The postmaster recognized the uncertainty and intended to clarify the delivery policy through the stand-up talk on February 10. However, the postmaster soon became aware that Appellant remained confused about the handling of HC-addressed third class mail.[3] There is no explanation why Respondent failed to take the obvious step of discussing Appellant’s delivery obligation with him and making it clear to him that he was to deliver HC-addressed third class mail. In fairness to Appellant, Respondent was required to take further steps to clarify its delivery policy.[4] Cf. Malone v. United States, 849 F.2d 1441, 1445 (Fed. Cir. 1988). Because Respondent failed to do so, termination of the contract for default was not warranted.[5] See Darwin Constr., Co. v. United States, 811 F.2d 593, 596 (Fed. Cir. 1987); Quality Environment Systems, Inc., ASBCA No. 22178, 87-3 BCA ¶ 20,060 at 101,569.
The Cle Elum contract provided that a termination for default found to be improper would be deemed to be a termination for the convenience of the Postal Service, and Appellants are entitled to recover the indemnity provided in the contract (Finding 4). As the termination occurred within the first two years of performance, Appellants are entitled to one-third of the annual contract rate in effect at the time of the termination.
PSBCA No. 3852--Contract No. HCR 98962
In PSBCA No. 3852, Appellant appeals the contracting officer’s decision barring his access to the mail. Under the Naches contract, Appellant agreed to bar an employee from access to the mail when directed by the contracting officer to do so. Putting aside whether that provision allows barring the contractor himself (as opposed to one of his employees) from access to the mail, we find that the action was unjustified when Respondent failed to advise Appellant that he was not complying with the expected delivery requirements of the post office.
CONCLUSION
PSBCA No. 3844 is granted, and Appellants are entitled to the contractually-provided indemnity (Finding 4) plus interest as provided under the Contract Disputes Act. PSBCA No. 3852 is granted. The quantum of damages for both appeals is remanded to the parties for negotiation.
Norman D. Menegat
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
David I. Brochstein
Administrative Judge
Vice Chairman
[1]Mr. Bollschweiler will be referred to as “Appellant” in this decision. Even though both Bollschweilers are listed as the contractor on one of the contracts (Cle Elum), all of the dealings between the parties that have any bearing on these appeals were between Respondent’s officials and Mr. Bollschweiler. The term “Appellants” refers to O. Gary Bollschweiler and Anna Marie Bollschweiler.
[2]Undeliverable Bulk Business Mail.
[3]Respondent argues that it was Appellant’s burden to seek clarification if he was confused. However, Respondent has not shown that Appellant knew or should have known that his actions were contrary to Respondent’s delivery requirements, and, thus, he could not have been expected to seek clarification.
[4]Appellant’s delivery obligation regarding delivery of HC-addressed mail was established by instructions from the postmaster. We do not address what, if any, duty Respondent would have had to notify Appellant had he been violating an express term of the contract.
[5]We have upheld default terminations based on a contractor’s intentional disregard of clear directions as to Respondent’s delivery requirements, see, e.g., Arthur Napier, PSBCA Nos. 3044, 3140, 94-2 BCA ¶ 26,695 at 132,778; Larry J. Bunker, PSBCA No. 1067, 83-1 BCA ¶ 16,542, and for discarding mail, see Larry Miller, PSBCA No. 3632, 95-1 BCA ¶ 27,448; Francis E. Fekkers, PSBCA No. 1259, 84-3 BCA ¶ 17,557. However, it has not been shown that Appellant’s failure to deliver certain HC-addressed mail was more than the result of an honest misunderstanding of the postmaster’s instructions. Also, as Appellant points out, he did not throw away the mail. He returned it to Respondent’s custody by placing it in his UBBM holdout which was cleared by Respondent’s clerk. Respondent has not shown that action to be the equivalent of throwing the mail away.