February 13, 2001
Appeal of
D & C BUILDING MAINTENANCE, INC.
Under Contract Nos. 475630-98-P-0316 and 475630-98-P-0440
PSBCA No. 4459
APPEARANCE FOR APPELLANT:
David Heidenthaler
APPEARANCE FOR RESPONDENT:
Mark E. Dennett, Esq.
OPINION OF THE BOARD
Appellant, D & C Building Maintenance, Inc., appealed the decision of the contracting officer denying its claim for lost profits resulting from the alleged wrongful termination, on thirty days’ notice, of two cleaning services contracts Appellant had with Respondent, the United States Postal Service. A hearing was held in Orlando, Florida. Only entitlement is at issue.
1. On January 21, 1998, Respondent awarded Contract No. 475630-98-P-0316, in the amount of $14,040.00 per year, to Appellant for cleaning services at the Aloma Carrier Annex in Winter Park, Florida. The term of the contract was from January 17, 1998, to January 14, 2000. (Appeal File Tab (AF) A).
2. On March 4, 1998, Respondent awarded Contract No. 475630-98-P-0440, in the amount of $12,729.60 per year, to Appellant for cleaning services at the Aloma Branch Postal Store in Winter Park, Florida. The term of the contract was from February 28, 1998, to February 25, 2000. (AF A).
3. Both contracts contained the following relevant provisions:
E.2 INSPECTION OF WORK (Clause OB-579) (June 1988)
The contracting officer’s representative (COR) will be responsible for inspecting the cleaning service being performed to ensure that it is in accordance with contract requirements. The COR will immediately bring to the attention of the contractor all unsatisfactory service. If the contractor continues to perform unsatisfactorily, the contracting officer will formally notify the contractor in writing of the deficiencies. Continued unsatisfactory performance may be cause for termination of the contract.
G.7 TERMINATION ON NOTICE (Clause OB-581) (June 1988)
This contract may be terminated, in whole or in part, by either party upon 30 days written notice. In the event of such termination, neither party will be liable for any costs, except for payment in accordance with the payment provisions of the contract for the actual services rendered prior to the effective date of the termination. When, in the contracting officer’s judgment, the interests of the Postal Service require such action, the contract may be terminated by the contracting officer, giving the contractor one day’s notice in writing. (AF A).
4. The Winter Park Postmaster was the COR for both facilities. While he was on detail to another area, the Officer in Charge (OIC), served as the COR for both facilities. The OIC did not consider Appellant’s performance satisfactory. The OIC arrived at work at 7:00 a.m. and, in some instances, would find that Appellant had not properly cleaned the facility. The OIC would then have Appellant called back to clean areas that were not considered to have been cleaned in a satisfactory manner. In addition, there were occasional differences of opinion and acrimonious arguments between Appellant’s and Respondent’s employees. (Transcript pages (Tr.) 30-32, 57-59; AF C).
5. On February 24, 1999, the OIC requested that the contracting officer terminate both of the contracts because of unsatisfactory service. The OIC made this request because of her dissatisfaction with Appellant’s performance at both facilities. (AF C).
6. On March 2, 1999, the contracting officer terminated both contracts on thirty days’ notice. The contracting officer terminated the contracts based on the request of the OIC, and believed termination on thirty days’ notice to be in the best interest of the Postal Service. (Tr. 71, 72, 76, 77; AF E).
7. Prior to terminating the contracts on thirty days’ notice, the contracting officer did not give Appellant notice that its performance was considered unsatisfactory (Tr. 76).
8. Subsequently, on April 21, 1999, Appellant filed a claim in the amount of $22,010.40 for lost profits allegedly resulting from the wrongful termination of its contracts. By final decision dated May 11, 1999, the contracting officer denied this claim. (AF G, H). Appellant filed a timely appeal of this final decision[1].
Respondent argues that the contracting officer properly exercised his discretion in terminating Appellant’s contracts on thirty days’ notice after determining it was in the best interest of the Postal Service to do so. Respondent further argues that Appellant has failed to demonstrate that the decision to terminate the contracts on thirty days’ notice was an abuse of discretion or was motivated by bad faith. Appellant argues that the terminations were improper because the contracting officer failed to first give Appellant notice (in accordance with the contracts’ Inspection clause) that the contractor’s performance was considered unsatisfactory. Appellant further argues that the contracting officer’s actions were improper because they were motivated by incorrect information furnished by the OIC, as well as by the hostility of the OIC towards Appellant.
The record in this appeal is replete with contradictory evidence concerning whether Appellant was performing in accordance with the contracts’ requirements. However, for the purposes of this decision, it is not necessary to determine whether Appellant was meeting contract requirements. What is clear is that the facilities were not being cleaned to the expectations of the OIC and that there was considerable friction between Appellant and some of Respondent’s employees (Finding of Fact Nos. (FOF) 4, 5). In that circumstance, Respondent had the right under each contract’s Termination on Notice clause to terminate the contract on thirty days’ notice (FOF 3). See Swearingen Services, Inc., PSBCA No. 3718, 96-2 BCA ¶ 28,398. Moreover, before terminating the contracts on thirty days’ notice, the contracting officer did not have to first notify Appellant of unsatisfactory performance. See On Time Postal Services, Inc., PSBCA No. 2528, 90-2 BCA ¶ 22, 698, recon. denied, 90-3 BCA ¶ 23,113.
Appellant’s argument that the report of the OIC to the contracting officer was motivated by the OIC’s hostility towards Appellant does not support the conclusion that the contracting officer abused his discretion in terminating the contracts. In fact, as indicated above, terminating the contracts on thirty days’ notice because of considerable friction between a contractor and Respondent’s representatives is an appropriate exercise of the contracting officer’s discretion. See Swearingen Services, Inc., PSBCA No. 3718, supra.
Accordingly, the 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] Respondent filed a motion to dismiss that portion of Appellant’s Complaint that challenged the termination of the contracts, arguing that Appellant had not filed a timely appeal of that action. In a decision dated February 9, 2000 (D&C Building Maintenance, Inc., PSBCA No. 4459, 00-1 BCA ¶ 30,768), the Board determined that certain correspondence sent by Appellant following the termination, although never forwarded to the Board by the contracting officer, constituted a timely appeal of the decision to terminate the contracts.