February 20, 1998
Appeal of
PHILEMA BROTHERS
Under Contract No. HCR 78633
PSBCA No. 3962
APPEARANCE FOR APPELLANT:
Phillip Emiabata
APPEARANCE FOR RESPONDENT:
Thomas J. Blum, Esq.
OPINION OF THE BOARD
Appellant, Philema Brothers, has appealed the termination for default of its highway transportation contract with Respondent, United States Postal Service. A hearing was held in Austin, Texas.
FINDINGS OF FACT
1. Appellant was awarded Highway Transportation Contract No. HCR 78633 on June 15, 1994, in the amount of $63,732.54. The contract was for a four-year term, commencing on July 1, 1994, and ending on June 30, 1998. (Supplemental Appeal File Tab No. (SAF) 1).
2. The contract required the contractor to utilize a truck with a minimum usable load space of 1,350 cubic feet and a minimum payload weight of 11,700 pounds. The vehicle also had to have a power lift tailgate with a minimum lift capacity of 4,000 pounds from ground level. Clause 18, ADDITIONAL INFORMATION, at paragraph D, required that the contractor carry a minimum of $750,000 of insurance coverage for a vehicle of this weight. (Id.).
3. The contract included Basic Surface Transportation Services Contract General Provisions, Postal Service Form 7407, July 1992, which in clause 4(a), SERVICE REQUIREMENTS AND PROHIBITIONS, required Appellant to “carry all mail tendered for transportation under this contract, whatever may be its size and weight, with certainty, celerity and security.” (Id.)
4. In accordance with clause 16, TERMINATION BY THE POSTAL SERVICE FOR DEFAULT, Appellant’s contract was subject to being terminated for default if, among other reasons, the contractor failed to perform service according to the terms of the contract; the contractor’s transportation equipment was insufficient, inadequate, or otherwise inappropriate for the service; or, the contractor failed to establish and maintain continuously in effect insurance as required by clause 6. (Id.).
5. Appellant commenced performance on or about July 1, 1994, and performed in a satisfactory manner for over eighteen months. However, starting on January 29, 1996, problems began occurring in Appellant’s contract performance. (Transcript page (Tr.) 17, 18, 118).
6. Between January 29, 1996, and February 22, 1996, Respondent issued seven irregularity reports (Postal Service Form 5500s) to Appellant because of its failure to run some scheduled trips and for being late on other scheduled trips (SAF 16).
7. These irregularities were considered chargeable against Appellant and, on February 22, 1996, the contracting officer issued Appellant a “final warning” letter. This letter informed Appellant that Respondent was aware that Appellant’s principal had been incarcerated by the Sheriff’s Department, that Respondent believed Appellant had abandoned its route and that, unless Appellant restored and maintained satisfactory service within three days of receipt of the letter, its contract may be terminated for default. (SAF 12).
8. Between February 23, 1996, and February 29, 1996, Appellant received 18 additional irregularity reports. During this period, Appellant attempted to run the routes with a rental truck. However, the rental truck did not have the contractually specified insurance coverage, nor did it have the required lift gate. Because of these infractions, Appellant was not permitted to run the route. (Tr. 214-219; SAF 8).
9. Appellant’s insurance policy on his truck had lapsed in July of 1995. The contracting officer’s representative informed Appellant on February 23, 1996, that the contract would be terminated for default if he did not obtain the correct amount of insurance within three days. On February 26, 1996, Appellant provided proof of the correct amount of insurance. (Tr. 213-219; SAF 13; Respondent’s Exhibit No. (RX) 11).
10. On February 27, 1996, the contracting officer sent Appellant a second “final warning” letter because Appellant had not signed for and acknowledged receipt of the first “final warning” letter. In addition to referencing the previous “final warning” letter, this letter also noted that Appellant had attempted to resume operation of its route on February 23, 1996, with a truck that did not meet the requirements of the contract and that Appellant did not maintain the required insurance. (Tr. 220; SAF 10; Joint Stipulations 11, 12).
11. On February 27, 1996, in addition to sending the second “final warning” letter to Appellant, a representative of the contracting officer contacted Appellant by telephone and reiterated the requirement to restore and maintain service in accordance with the requirements of the contract[1]. (SAF 10; Joint Stipulation 11).
12. On March 26, 1996, a conference was held with Appellant and representatives of Respondent to discuss his unsatisfactory contract performance. During this meeting, Appellant’s omissions of service, late performance and failure to wand collection boxes[2] was discussed. Appellant was informed that since he had already received a final warning letter, further contract infractions “would mean termination of the contract.” (SAF 6).
13. Following the March 26, 1996 conference, between April 14 and May 11, 1996, Appellant was issued thirteen additional contract irregularity reports. Appellant was cited in these irregularity reports for late arrival, collecting mail early, failure to wand collection boxes, failure to relock collection box after mail collection, misdelivery of mail and use of improper footwear on the loading dock. (SAF 5).
14. Appellant had complained that discrimination on the part of an expediter was the reason he received so many irregularity reports. In response to these complaints, local officials of Respondent instituted a review process of each Form 5500 before it was issued to Appellant to insure its accuracy. (Tr. 63-65).
15. On May 28, 1996, the contracting officer terminated Appellant’s contract for default, effective May 31, 1996, for failure to perform service according to the terms of the contract (SAF 3).
DECISION
Respondent argues that the record of this appeal clearly demonstrates Appellant’s failure to perform the contract according to its requirements and that Appellant did not submit any evidence of excusable causes for its failure to perform.
Appellant argued in its Complaint and opening statement[3] that the numerous irregularity reports it received were the product of discrimination.
Respondent has the burden of proving that the termination was justified, but once it shows that Appellant failed to perform service according to the terms of its contract, the burden shifts to Appellant to present evidence of excusable causes or abuse of discretion. Jerome Bailey, PSBCA No. 3628, 95-1 BCA ¶ 27,477; see also Patricia J. Stevens, PSBCA No. 3272, 94-1 BCA ¶ 26,419 at 131,429 recon. denied 94-2 BCA ¶ 26,951; Pamela J. Sutton, PSBCA No. 1622, 88-3 BCA ¶ 21,031 at 106,237.
Although Appellant performed its contract satisfactorily for eighteen months, starting in January of 1996, numerous irregularities began to occur, and Appellant was never able to correct these irregularities in its performance. Adequate warnings were given to Appellant, both in person and in writing, but the irregularities continued to occur in substantial numbers.
Appellant offered no probative evidence of excusable causes for its non-performance. Although Appellant argued that it received these irregularity reports only because it was a black-owned and operated firm, it never disputed their factual accuracy or provided any objective evidence of discrimination or racism. Conversely, the record demonstrates that Respondent’s employees were concerned about the allegations of racism and took steps to insure that the irregularity reports were accurate and not the product of discrimination. (Finding of Fact No. (FOF) 14).
Based on the record of this appeal, we find that the contracting officer’s decision to terminate Appellant’s contract for default was justified, that Appellant has failed to show any excusability for its default, and that the contracting officer did not abuse his discretion in terminating the contract.
Accordingly, this appeal is denied.
William K. Mahn
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
David I. Brochstein
Administrative Judge
Vice Chairman
[1] Appellant’s receipt of the second “final warning” letter, and the telephone call on February 27, 1996, was acknowledged by joint stipulation of the parties.
[2] “Wanding” refers to using an electronic device when collecting mail to record the time when the mail was picked up (Tr. 115).
[3] Appellant did not submit a post-hearing brief or make any other arguments in this appeal.