September 5, 2000
Appeal of
FAX-PHOTO-SHIPPING ETC.
Under Contract No. 056768-89-S-0107
PSBCA Nos. 3916 & 3970
APPEARANCE FOR APPELLANT:
J. Trivedi
APPEARANCE FOR RESPONDENT:
Elena V. Alejandre, Esq.
OPINION OF THE BOARD ON MOTION FOR RECONSIDERATION
Appellant, Fax-Photo-Shipping Etc., has filed a motion asking the Board to reconsider and reverse its Opinion in this appeal. Fax-Photo-Shipping Etc., PSBCA Nos. 3916, 3970, 98-2 BCA ¶ 29,998. Respondent opposes the motion.
Appellant has offered numerous arguments in support of its motion, but they revolve around three principal contentions. First, Appellant argues that Respondent breached the contract when the contracting officer denied price increases based on a regional Postal Service policy discouraging the operation of Contract Postal Units whose contract compensation exceeded approximately seven percent of revenues. Appellant argues that absent that policy he would have been entitled to an increase because he met the requirements of the Price Adjustments clause of the contract, and that any change to the standard for granting price increases should have required an amendment to the contract, negotiated by both parties.
Second, Appellant contends that actions by Retail Specialist Jim Murray, who was the contracting officer's representative (COR) during part of the contract period, taken in connection with the administration of the contract constituted bad faith and a breach of contract by Respondent. In particular, Appellant takes exception to Mr. Murray's actions in connection with establishing another CPU in a business close to Appellant's location and in advertising the new location to the exclusion of Appellant's establishment. Appellant argues that, contrary to the Board's statement in Finding 7 of the Opinion, Mr. Murray had not been contacted by several retailers before establishing the new CPU, but only by the owner of "Mail Stop," the site of the new CPU.
Third, Appellant argues that there were defects in the termination procedure that were indicative of bad faith on Respondent's part. Appellant argues that bad faith was shown by the failure of the contracting officer to consult the then-COR for a "second opinion" before terminating the contract and by relying heavily on Mr. Murray's opinion. Appellant also contends that the failure of the contracting officer to even consider Appellant's last rate increase request before termination was also an indication of bad faith on her part. Finally, Appellant argues that the "image" and "financial errors" problems did play an important part in the decision to terminate, contrary to the Board's conclusion, and that the use of outdated information regarding those factors (Opinion, page 13) represented bad faith on Respondent's part.
Respondent argues that the actions taken by Mr. Murray and the contracting officer had a rational basis, and that Appellant has not shown the existence of bad faith on the part of either person. Respondent argues that the record shows that the termination was based not on bad faith but on sound financial considerations.
All of Appellant's arguments either were or could have been made earlier. Appellant's arguments with regard to implementing the seven-percent policy were considered and rejected in the original Opinion. As we stated there, the contract does not require the contracting officer to grant an increase even if the contractor satisfies all of the factors in the Price Adjustments clause. That clause states only that satisfying the listed factors "could" justify an increase. Regardless of such factors as Appellant's costs and improvements, it remained for the Postal Service to decide how much it was willing to pay for Appellant's services, and the contracting officer's exercise of his or her discretion in deciding whether to grant an increase will not be disturbed unless that discretion is abused. As before, we are not persuaded that applying the seven-percent policy to Appellant's contract represented an abuse of the contracting officer's discretion. If Appellant was dissatisfied with the failure of the contracting officer to grant his rate increase requests, he could have exercised his own right of termination and stopped providing the CPU service.
Appellant's arguments with respect to Mr. Murray and the establishment of the Mail Stop CPU have also been considered. As we pointed out in the original Opinion, the contract did not give Appellant exclusive rights to any area. Further, the record showed that Respondent opened the Mail Stop CPU because its personnel believed that significant growth was occurring in the immediate area, which would further overcrowd the local post office in the absence of another CPU.[1] As we stated, we are not persuaded that Respondent opened the Mail Stop CPU in order to reduce the patronage at Appellant's CPU for the purpose of justifying its closure. Nothing in Appellant's arguments has caused us to come to a different conclusion.
Finally, we are not persuaded by Appellant's arguments that the decision to close his CPU was the product of bad faith on Respondent's part. As we held previously, the primary motivation in the decision to close the CPU was financial -- i.e., failure to meet the seven-percent guideline adopted by Respondent's Pacific Area. The contracting officer's decision as to whom to consult does not provide a basis for concluding that the decision was the product of bad faith. The contracting officer consulted the person most knowledgeable about CPUs in the San Bernardino area, Mr. Murray. The fact that she did not consult the then COR for a "second opinion" does not evidence bad faith. Appellant's argument that the second opinion might have given the contracting officer additional and different information to consider is mere speculation. As indicated in the original Opinion, Appellant has not persuaded us that the "image" and "financial" problems given so much emphasis at the hearing played any significant role in the decision to terminate.
Appellant has not shown the existence of any previously unavailable or newly-discovered evidence and has not shown any factual or legal errors which warrant changing our decision. See Gary W. Noble, PSBCA No. 4094, 00-1 BCA ¶ 30,602; B.C. Topps d/b/a Topps Transport, PSBCA No. 2241, 89-2 BCA ¶ 21,764. Further, Appellant's arguments were previously made and do not form the basis for reconsideration. The General Store, PSBCA No. 3951, 99-1 BCA ¶ 30,124; Patricia J. Stevens, PSBCA No. 3272, 94-2 BCA ¶ 26,951.
The motion for reconsideration is denied, and the original Opinion of the Board is affirmed.
David I. Brochstein
Administrative Judge
Vice Chairman
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
Norman D. Menegat
Administrative Judge
Board Member
[1] Appellant takes specific issue with only one factual finding made by the Board -- that Respondent established the Mail Stop CPU after Mr. Murray had been contacted by several retailers expressing interest in having such a facility in their area (Finding 7). We have reexamined Mr. Murray's testimony and conclude that it is not clear whether he was first contacted by several retailers or whether he spoke to several retailers after having first been contacted only by the owner of Mail Stop. However, Appellant has not persuaded us that the difference is legally significant. Whatever the precise sequence of events, the record supports the conclusion that Respondent opened the new CPU because, after having been contacted, its personnel concluded that there was significant growth occurring in the immediate area and that the new CPU would help alleviate overcrowding at the local post office.