September 10, 1999

Appeal of

 

CARLA MARTIN

 

Under Contract No. HCR 63660

PSBCA No. 4157

 

APPEARANCE FOR APPELLANT:

Carla Martin

 

APPEARANCE FOR RESPONDENT:

Cary L. Katznelson, Esq.

 

OPINION OF THE BOARD

 

            Appellant, Carla Martin, has appealed from the default termination of her contract with Respondent, United States Postal Service, and the assessment of excess reprocurement costs against her.  This appeal is being decided on the record in accordance with 39 C.F.R. §955.12.

FINDINGS OF FACT

            1.  Contract No. HCR 63660 was awarded to Appellant on July 29, 1994.  The contract covered delivery of mail to approximately 185 boxes along a route originating from the Bunker, Missouri Post Office.  The term of the contract was from October 1, 1994, through June 30, 1998, and the annual contract price was $15,000.  The Bunker Postmaster was appointed the administrative official under the contract.  (Appeal File Tab (AF) A).

2.  The solicitation and contract provided that an individual bidder or offeror was required to reside in a county traversed by the route or in an adjoining county, and must continue to do so during the term of the contract.  At the time of award, Appellant lived in Bunker, Missouri, which was within the required area.  (AF A).

3.  The contract permitted the contracting officer to terminate the contract for default "[f]or Contractor's failure to perform service according to the terms of the contract.…”  If, after a default termination, the contractor was determined not to be in default, the contract provided that the obligations of the parties were to be the same as if the contract had been terminated for the convenience of the Postal Service.  In that case, the contractor would be entitled to receive an indemnity in the amount of one-twelfth of the annual rate if the termination occurred during the fourth year of contract performance.  (AF A).

4.  Appellant hired a driver to run the route beginning in September 1995.  In November 1995, Appellant's home burned and, in August 1996, Appellant moved to another town, where her husband had found work.  The town to which she moved was not within the area in which she was required to live in order to perform the contract.  Appellant's mother lived in Bunker, and Appellant returned there one or more times a week after moving.  At times, Appellant would remain in Bunker for a period of up to a week.  (AF I, K).

5.  In September 1996, Appellant filed a change of address card at the Bunker Post Office.  The administrative official advised the contracting officer of the change of address and, in October 1996 the contracting officer wrote to Appellant asking about "the circumstances of your residency."  In response, by letter dated October 30, 1996, Appellant described the circumstances of her move and indicated that she expected to be back in Bunker within 6 months after school was out.  (Declaration of Richard Chancellor; AF K, L, M).

6.  By letter dated July 31, 1997, the contracting officer requested that Appellant supply "residency documentation" within 10 days or face possible termination of the contract.  In response, Appellant stated in an August 18, 1997 letter that, although she had intended to return to Bunker, circumstances had changed to the extent that it was no longer economically possible to make the move back.  Appellant indicated that she was still visiting Bunker, but asked whether she could be released from the contact – apparently through the vehicle of a novation agreement.  (AF I).

7.  The contracting officer concluded that allowing a novation of the contract was not in the Postal Service's best interest and, in a final decision dated September 4, 1997, terminated the contract for default and directed that funds then owed to Appellant be held.  In a second final decision, dated September 12, 1997, the contracting officer assessed Appellant $935.68 in reprocurement costs, deducted that amount from the funds being held, and released the balance of the funds to Appellant.  On September 24, 1997, the contracting officer awarded an emergency contract to Appellant's driver, to provide service on Appellant's route, effective September 13, 1997.  Appellant filed a timely appeal.  (AF D-H; Chancellor Declaration).

DECISION

Respondent argues that the contracting officer's decision to terminate the contract for default was justified by Appellant's breach of the contract requirement that she maintain her residence in a particular geographical area.  Respondent argues further that Appellant has failed to present any evidence of excusable causes for the breach, and that the termination should be upheld.

In her notice of appeal,[1] Appellant argued primarily that, notwithstanding her move, the contract had been performed – either by her driver, by one of two other available substitutes, or by her – without problem and that, considering her circumstances, she considered the termination to be unfair.

Under the facts of this appeal, Appellant's change of residence did not justify the contracting officer's decision to terminate the contract for default.  While Appellant's change of residence constituted a technical violation of the contract, not every contract violation justifies the drastic sanction of a default termination.  See, e.g., Douglas Cremer, PSBCA No. 3108, 93-2 BCA ¶ 25,565; Brandywine Prosthetic-Orthotic Serv. Ltd., VABCA No. 3441, 93-1 BCA ¶ 25,250; Precision Products, ASBCA No. 25,280, 82-2 BCA ¶ 15,981.  "A technical reason for default, even if established by the Government, does not require a default termination.  We must review the totality of the circumstances to ascertain whether the termination decision was a reasonable exercise of discretion."  Walsky Construction Co., ASBCA No. 41541, 94-1 BCA ¶ 26,264, citing Darwin Construction Co., Inc. v. United States, 811 F.2d 593 (Fed. Cir. 1987).

In this instance, Appellant's breach was not a breach of a requirement related to the accomplishment of the contract work itself, and there is no evidence in the record that Appellant's move had any effect on contract performance.  Further, there is no evidence of any deficiencies in her performance, either before or after her move, and there is no evidence that she failed to give the contract the necessary supervision.  Finally, we note that the contract had less than a year remaining in its four-year term, and Respondent has not shown that termination for default was in the interest of the Postal Service or that the contracting officer adequately considered other alternatives before deciding to terminate the contract.  Under these circumstances, the contracting officer's decision to terminate the contract was an abuse of his discretion.[2]  Accordingly, the appeal is sustained, and the termination is converted to one for the convenience of the Postal Service.[3]

Appellant may recover the indemnity specified in the contract for a convenience termination, and Respondent is to repay the amount withheld from Appellant as reprocurement costs.  Appellant is also entitled to recover Contract Disputes Act interest.

David I. Brochstein

Administrative Judge

Vice Chairman

 

I concur:

James A. Cohen

Administrative Judge

Chairman

 

I concur:

William K. Mahn

Administrative Judge

Board Member


[1]  Appellant did not file a brief.

[2]  Although under other circumstances a violation of the contract's residency requirement could support a default termination, Respondent has not presented evidence supporting the propriety of the termination in this case.

 

[3]  Respondent cites Troy E. Lewis, PODBCA No. 199, 1967 PSBCA Lexis 8 (June 2, 1967), which upheld the termination of a contract awarded to a contractor who did not meet statutory residency requirements.  See, former 39 U.S.C. §6420 (Title 39 United States Code was revised and reenacted by P.L. 91-375 (1970)).  No such statutory requirement existed with regard to the contract at issue here.