April 13, 2000
Appeal of
MING C. PHUA
Under Contract No. HCR 342L0
PSBCA No. 4180
APPEARANCE FOR APPELLANT:
Ming C. Phua
APPEARANCE FOR RESPONDENT:
Larry D. Blanchard, Esq.
Appellant, Ming C. Phua, has filed a timely appeal of the decision of the contracting officer to terminate for default his mail transportation services contract with Respondent, United States Postal Service. The parties have elected to submit this appeal on the record in accordance with 39 C.F.R. §955.12.
1. On August 28, 1997, Appellant was awarded Contract No. 342LO, at an annual rate of $54,977.00, for the transportation of mail between Manasota and Fort Ogden, Florida. The contract term commenced on October 11, 1997, and was to run until June 30, 2001. (Appeal File, Tab (AF) C).
2. Clause 16, Termination by the Postal Service for Default, of the contract’s General Provisions (PS Form 7407, July 1992), provided, inter alia, that the contracting officer could terminate the contract for default for the contractor’s failure to perform service according to the terms of the contract. However, if after notice of termination for default it is determined for any reason that the contractor was not in default, or that the default was excusable, the rights and obligations of the parties shall be the same as if the termination was issued pursuant to clause 17, Termination for Convenience. (AF C).
3. Paragraph 15, Vehicle Requirements and Specifications, of the contract’s specifications required the contractor to use a truck with a cargo box with a minimum interior height and width of 90 inches and a minimum length of 25.5 feet (AF C).
4. On October 3, 1997, Appellant’s vehicle was inspected for compliance with contract requirements. A few deficiencies were noted, but they were all corrected upon reinspection on October 9, 1997. The cargo box was measured at the October 3 inspection, and the interior height was found to be 79 inches (vice the requirement for a minimum height of 90 inches)[1]. Nevertheless, Respondent did not notify Appellant at either the October 3 or October 9 inspections that the cargo box was non-conforming. (AF D, L).
5. However, by letter dated October 22, 1997, Respondent notified Appellant that his vehicle did not meet the contract’s minimum requirements for interior height.
Appellant was given fifteen days to advise Respondent on what action Appellant would take to correct the problem. (AF D).
6. Appellant did not respond until December 7, 1997. In this response, Appellant claimed that the truck he was using was satisfactory to perform the route and asked to be given until approximately the middle of February 1998, to make modifications to the truck’s interior. (AF E).
7. By letter dated December 15, 1997, the contracting officer denied Appellant’s request for an extension of time until the middle of February 1998 to have the truck modified. The contracting officer granted Appellant fifteen days from receipt of the letter to provide a vehicle that met contract requirements or face the possibility of having the contract terminated for default. (AF F).
8. On December 29, 1997, Appellant contacted Respondent’s contract specialist by telephone and requested that he be allowed until January 15, 1998, to provide a vehicle that met the contract’s requirements. After consulting with the contracting officer, the contract specialist gave Appellant an extension until January 15, 1998, to have his vehicle modified to meet contract requirements. (AF G).
9. By letter dated December 30, 1997, the contracting officer confirmed that Appellant had an extension, until January 15, 1998, to provide a vehicle that met contract requirements. Appellant was reminded in this letter that his contract might be terminated for default if he failed to meet the January 15, 1998 date. (AF H).
10. Appellant contacted Respondent’s contract specialist by telephone on January 12, 1998, to request a further extension in the time for having his vehicle modified. After consulting with the contracting officer, the contract specialist informed Appellant that the contracting officer would allow him until 8:00 a.m. on January 16, 1998, to provide an acceptable vehicle or his contract performance would be suspended without pay until he produced an acceptable vehicle. Appellant responded that the modifications to the vehicle would not be completed by that date and the contract specialist could “do what [he] had to do.” (AF I).
11. On January 15, 1998, the contracting officer suspended Appellant’s right to perform service under the contract (AF C-3).
12. Appellant did not produce a vehicle meeting contract requirements at 8:00 a.m. on January 16, 1998 (AF J, K).
13. On January 20, 1998, Appellant contacted Respondent’s contract specialist to inform him he had his truck ready for inspection and was proceeding to Manasota for the inspection. The contract specialist informed Appellant that he was too late and that he (the contract specialist) was preparing an order to terminate the contract for default. By final decision dated January 20, 1998, the contracting officer terminated the contract for default, effective close of business on January 15, 1998, because of Appellant’s failure to perform service according to the terms of the contract. (AF B, K).
Respondent argues that Appellant’s failure to utilize a vehicle that met contract requirements justified the contracting officer’s decision to terminate the contract for default. Respondent also argues that Appellant anticipatorily repudiated the contract. Appellant argues that his vehicle was inspected twice by Respondent prior to commencing performance and that he was not told at these inspections that it failed to meet contract requirements. Appellant further argues that the vehicle he used on the route was satisfactory to perform the route and that he could not take it out of service to have the interior modified because he could not rent another vehicle with a lift gate capable of lifting 4000 pounds. Finally, Appellant argues that he notified Respondent that he would have been able to provide an acceptable vehicle by January 20, 1998, but that Respondent terminated the contract on January 15, 1998.
“A default termination is a drastic sanction that should be sustained only when based on reasonable grounds and solid evidence, and it is Respondent’s burden to demonstrate by a preponderance of evidence that the default termination was justified.” Charles West, PSBCA No. 3655, 96-1 BCA ¶ 28,211, citing Lisbon Contractors, Inc. v. United States, 828 F.2d 759, 765 (Fed. Cir. 1987); Banks Trucking, PSBCA No. 3528, 96-1 BCA ¶ 28,132; Douglas Cremer, PSBCA No. 3108, 93-2 BCA ¶ 25,565. Respondent has not met that burden.
There is no dispute that the contract required the contractor to perform the route using a vehicle with a minimum interior height of 90 inches (Finding of Fact No. (FOF) 3), and a failure to do so would support a termination of the contract for default. However, although Respondent first informed Appellant on October 22, 1997(FOF 5), that his vehicle did not meet this contract requirement and would have to be modified, the contracting officer first granted Appellant until December 30, 1997, to correct the deficiency in his vehicle, and then extended the deadline twice, to January 15 and then January 16, 1998 (FOF 7, 9 10). In the last extension, rather than warning Appellant that his contract would be terminated for failure to provide a satisfactory vehicle, the contracting officer informed Appellant that if he did not provide a satisfactory vehicle by January 16, his contract would be suspended until he provided a contractually compliant vehicle. Thereafter, on January 20, 1998 (the first business day after the weekend and a Monday holiday following January 16), in apparent reliance on Respondent’s suspension of the contract instead of termination, Appellant was enroute to present a vehicle for inspection (FOF 10).
In these circumstances, the contracting officer effectively waived his right to terminate the contract for default for failure to provide a satisfactory vehicle until a new deadline for providing a satisfactory vehicle was imposed by the contracting officer. See Devito v. United States, 413 F.2d 1147, 1154 (Ct. Cl. 1969); Robert E. Davis, PSBCA No. 3400, 94-3 BCA ¶ 27,164; Gary A. Boyd, PSBCA No. 2182, 88-3 BCA ¶ 21,010.
We are also unable to conclude that Appellant’s conversation with the contract transportation specialist on January 12, 1998 constituted an anticipatory breach of the contract (FOF 10). The evidence shows that Appellant’s comment was only in response to the possible suspension and was not "a positive, unconditional, and unequivocal declaration of fixed purpose not to perform the contract in any event or at any time . . . . " Alta Construction Co., PSBCA No. 1463, 90-1 BCA ¶ 22,527, citing Fairfield Scientific Corp., ASBCA No. 21151, 78-1 BCA ¶ 13,082, aff’d on reconsideration, 78-2 BCA ¶ 31,429. Therefore, Respondent cannot justify the default on this basis.
Accordingly, the appeal is sustained and the termination for default is converted to a termination for convenience[2] (see FOF 2).
William K. Mahn
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
[1] The second inspection of Appellant’s vehicle, performed on October 9, 1997, did not include a measurement of the vehicle’s interior dimensions (AF L).
[2] The Board lacks the authority to grant non-monetary relief such as reinstating the contract, as was requested by Appellant. See Lacie McFadden, PSBCA No. 4063, 98-2 BCA ¶ 29,838, recon. denied 98-2 BCA ¶30,015.