December 26, 2002
Appeal of
LINDA COPMAN
Under Contract No. HCR 967A0
PSBCA Nos. 4889 and 4903
APPEARANCE FOR APPELLANT:
Kenneth A. Ross, Esq.
APPEARANCE FOR RESPONDENT:
Carole A. Hughes, Esq.
Appellant, Linda Copman, appealed the termination of her mail delivery contract with Respondent, United States Postal Service, and Respondent’s claim against her for the costs of reprocuring the service.
The appeal is being decided on the record under the Board’s accelerated procedure, 39 C.F.R. §955.13 (d). Entitlement only is at issue (Order dated August 21, 2002).
1. On June 28, 2001, Respondent renewed Appellant’s contract number HCR 967A0 for the delivery of mail to customers’ boxes along a route in Waikoloa, Hawaii. The contract term was from July 1, 2001, through June 30, 2005, and the annual rate was $24,483.50. The administrative official designated by the contracting officer to supervise and administer the contract was the Kamuela, Hawaii Postmaster. (Appeal File, Tab (“AF”) 1, Contract Paragraph 6, Contract Section G.1, DEFINITIONS (Clause B-1) (January 1997) (Modified); Appellant’s Supplemental Evidence, item (“AS”) 1 (p. 15)).
2. The contract’s termination provision authorized Respondent to terminate the contract for default if Appellant failed to perform the requirements of the contract. In the event of a default termination, the contract provided that Respondent could “acquire similar supplies or services . . . , and [Appellant] will be liable to the Postal Service for any excess costs.” Appellant would not be liable for excess costs, however, if the failure to perform the contract arose “from causes beyond the control and without [Appellant’s] fault or negligence.” (AF 1, Contract Sections H.4, TERMINATION FOR DEFAULT (Clause B-13) (January 1997) (Modified), H.5, EVENTS OF DEFAULT (Clause B-69) (January 1997) subsection a).
3. The contract permitted the contracting officer to release the contractor under certain circumstances.
“a. The contracting officer may release an individual sole-proprietor supplier from the contract for reasons of physical disability which prohibit the supplier from adequately operating the route, or which endanger the supplier’s life if operation of the route continues, if:
(1) The supplier applies to the contracting officer for a release;
(2) The contracting officer determines that a release will be in the interest of the Postal Service; and
(3) The Postal Service secures a new contract.
b. A release under this clause is not a termination for convenience, and the supplier expressly waives any claim for liquidated damages for such release.”
(AF 1, Contract Section H.14, RELEASE OF SUPPLIER (Clause B-70) (January 1997)).
4. The contract included the standard Claims and Disputes clause (AF 1, Contract Section H.2, CLAIMS AND DISPUTES (Clause B-9) (January 1997))
5. The contract required that Appellant obtain insurance for vehicles used on the route and established minimum insurance requirements (AF 1, Contract Section B.7, INSURANCE REQUIREMENTS).
6. In the course of preparing her proposal for the renewal period, Appellant obtained a quote of $2,153 per year for insurance (AS 6). She submitted a copy of the insurance quote to Respondent along with the required cost statement form showing the $2,153 annual rate on the cost statement’s insurance line item. The contract specialist who conducted the renewal negotiations advised Appellant that the insurance component on her cost statement was too high, causing her proposed annual price for the renewal contract to be unacceptable. The price for the renewal contract was eventually determined based on a new cost statement in which, at the contract specialist’s direction, Appellant’s insurance costs were entered as $700 per year. However, the contract specialist told Appellant that she would investigate comparable rates for postal routes in Appellant’s area and that there could possibly be an adjustment after the renewal contract was executed to reflect, at least in part, Appellant’s higher insurance rate. (AS 1 (pp. 25-26, 49), 11). Appellant agreed to the lower renewal rate and executed the contract (AF 5, 8; AS 1, (pp. 25-28, 54)). Appellant obtained insurance for the first year of the contract at an annual rate of $2,100 (AS 7, 8, 9).
7. In letters of September 25 and October 18, 2001, Appellant asked the contracting officer for the results of the contract specialist’s investigation and for a response to her request for a contract price adjustment based on her insurance costs (AF 5; AS 10).
8. By letter of November 9, 2001, the contracting officer rejected an adjustment based on insurance costs. He stated that the agreed-upon renewal rate should have included any and all costs of insurance.[1] (AF 7; AS 1 (p. 49)).
9. By letter of November 25, 2001, to the contracting officer, Appellant restated her request for an adjustment based on the contract specialist’s representations at the time of renewal (AF 8).
10. In a December 5, 2001 letter to the contract’s administrative official, Appellant advised that because of repairs needed for her vehicle and Respondent’s failure to grant her adjustments for an increase in the number of deliveries on her route and for her insurance costs, she would be unable to continue operating the route and would abandon performance after December 8, 2001 (AF 9).
11. On December 7, 2001, a different contract specialist called Appellant. In the discussion, Appellant agreed to continue performance based on the contract specialist’s representations that Appellant would receive retroactive compensation for the increased boxes on the route and that a further written response would be issued to Appellant’s request for consideration of a possible adjustment based on insurance costs. The contracting officer signed a lump-sum retroactive adjustment for increased boxes on the route on December 7. (AF 10, 11; AS 1 (pp. 31-35)).
12. By letter dated December 10, 2001, the contracting officer affirmed his November 9 denial of any adjustment based on insurance costs (AF 12).
13. From the beginning of contract performance, Appellant had hired a driver to deliver the route (AS 1 (pp. 21-22), 2, 3). On December 20, 2001, the driver notified Appellant that she would not drive the route any longer. Appellant had received no advance notice of the driver’s intention to quit. (AS 1 (pp. 40-41, 45)). Appellant contacted three possible backup drivers, and none could take over the route: two had taken other jobs and one had broken his hip (AS 1 (p. 41)). It would have been impossible for a new, untrained driver to take over the route on December 21 (AS 1 (p. 42)).
14. Appellant was at that time in her eighth month of pregnancy. Due to her doctor’s orders not to lift more than 25 pounds and other physical problems associated with her pregnancy, she could not lift packages routinely found in the mail and could not sit for the length of time required to perform the contract deliveries. (AF 13; AS 1 (pp. 46-47)).
15. By letter dated and delivered December 20, 2001, Appellant notified the contract’s administrative official that she had lost her driver and that as she was eight months pregnant, she was physically unable to perform the contract on December 21 and thereafter. She advised that she had contacted her backup driver but that he was unavailable for the next several months due to his finding alternate employment. Appellant faxed a copy of that notification to the contracting officer (AF 13, 14). Other than this letter, Appellant submitted no medical evidence or any request to be released from the contract based upon her physical condition (AS 1 (p. 55)).
16. On December 21, 2001, the contracting officer terminated Appellant’s contract for default for failure to perform service according to the terms of the contract. The contracting officer suspended payment of $1,495.32 that Appellant had earned before the termination. (AF 1 (p. 9, 11, 12), 14, 15).
17. Appellant filed a timely appeal of the termination, and that appeal was docketed as PSBCA No. 4889.
18. Beginning on December 21, 2001, and thereafter, Respondent accomplished performance of Appellant’s route by arrangement with Appellant’s former driver who had quit Appellant’s employ on December 20. The rate paid the former driver was $36,000 per year, an increase of at least $10,000 annually (38%) over Appellant’s final contract price. (AS 1 (pp. 43-44)).
19. On April 8, 2002, the contracting officer issued a final decision assessing against Appellant excess reprocurement costs in the amount of $5,057.21. According to an attachment to the final decision, this represented the difference between Appellant’s contract rate and what Respondent arranged to pay Appellant’s former driver for 175 days plus administrative costs totaling $257.89. After crediting against that amount the $1,495.32 that Appellant had earned before the termination, the contracting officer demanded $3,561.89 from Appellant. (AF 1 (pp. 8-10)).
20. The appeal of that final decision was docketed as PSBCA No. 4903.
It is Respondent’s burden to prove that the termination was justified by Appellant’s failure to perform in accordance with the contract, Charli Selsa Schiver, PSBCA No. 4545, 02-2 BCA ¶ 31,937, and it has done so. Appellant’s failure to perform the contract on December 20, 2001, and her letter of December 20 stating that she would not perform further (Finding 15) were ample justification for the contracting officer to terminate the contract. See Sharon Rhoades, PSBCA No. 3455, 94-2 BCA ¶ 26,250. Accordingly, the burden has shifted to Appellant to present evidence of excusable causes for her failure to perform, Pamela J. Sutton, PSBCA No. 1622, 88-3 ¶ 21,031 at 106,237, or to show that the termination was an abuse of the contracting officer’s discretion, Patricia J. Stevens, PSBCA No. 3272, 94-1 BCA ¶ 26,419, recon. denied, 94-2 BCA ¶ 26,951.
Appellant argues that her failure to perform should be excused because of the unexpected unavailability of her primary and backup drivers. However, while Appellant has demonstrated that the resignation of her primary driver was unforeseen (Finding 13), it remained her responsibility to assure performance of the route, even if she had entrusted performance to others, and maintaining available backup drivers, if needed, was also her responsibility. See Debra Lea McSheffrey, PSBCA No. 4061, 98-2 BCA ¶ 29,826, recon denied, 98-2 BCA ¶ 30,081. That she was unaware that her intended backup drivers were no longer available does not excuse her failure to perform the contract when her driver quit. Accordingly, her failure to perform on and after December 20, 2001, was not excusable.
Appellant suggests that the postmaster conspired with Appellant’s driver to cause the termination of Appellant’s contract so the driver could obtain the contract for herself. To support this theory, Appellant points to the driver’s abrupt resignation and her immediate resumption of route performance the next day through an arrangement with Respondent (Finding 18). Appellant has presented insufficient evidence of involvement of the postmaster in the driver’s actions to support a finding of collusion. Any issues raised by the driver’s conduct are between Appellant and her former driver, and are not before the Board. See James W. Fust, PSBCA No. 3483, 95-1 BCA ¶ 27,453.
Additionally, Appellant argues that she was entitled to a release from her obligations under the contract’s Release of Contractor clause (Finding 3) because she was a sole proprietor and was physically incapable of performing the contract herself. She has demonstrated that she was in fact physically unable to operate the route personally due to conditions associated with her pregnancy (Finding 14). However, granting a release under the contract is discretionary with the contracting officer (Finding 3), and it is Appellant’s burden to demonstrate that the contracting officer abused his discretion in refusing to grant a release and terminating the contract as he did. Where Appellant had not personally performed the contract at any time and the loss of her hired driver was the cause of her failure to perform, Appellant has not shown that the contracting officer abused his discretion by disregarding what she suggests was a request for a release and immediately terminating the contract for her abandonment of performance. Accordingly, the termination for default was proper.
We next consider Respondent’s claim for excess reprocurement costs. To recover its excess costs of providing service after terminating Appellant’s contract, Respondent has the burden of demonstrating that the reprocured services were the same or similar as those involved in Appellant’s contract and that Respondent acted reasonably to minimize the excess costs incurred. See Cascade Pacific International v. United States, 773 F.2d 287, 293 (Fed. Cir. 1985); Don Wasylk d/b/a Klysaw, PSBCA Nos. 4186, 4283, 00-1 BCA ¶ 30,844. Respondent presented no evidence regarding the method it used to obtain service on the route after December 20. Appellant’s former driver provided the same service she was providing before, but at a cost 38% higher than what Respondent was paying Appellant (Finding 18). It was incumbent upon Respondent to demonstrate that this increase was justified and that through competition or price comparisons or otherwise it acted reasonably to minimize the excess costs incurred. Respondent has presented no evidence from which we could determine that it acted reasonably to minimize the costs it would assess against Appellant. See Alvin P. Koetitz, PSBCA No. 1261, 1985 PSBCA LEXIS 66, June 6, 1985. Accordingly, Respondent may not recover its claimed reprocurement costs.
Appellant included in her Complaint a claim for $1,453 for increased insurance costs associated with the renewal of her contract. Respondent contends that Appellant’s insurance claim is beyond the Board’s jurisdiction because Appellant never submitted a claim for a sum certain and the contracting officer never issued a final decision. See 41 U.S.C. §605 (a); Paragon Energy Corp. v. United States, 227 Ct. Cl. 176, 645 F.2d 966, 971 (1981); Jerome Bailey, PSBCA No. 3638, 95-1 BCA ¶ 27,447.
The contract’s Claims and Disputes clause (Finding 4) defines a claim to include Appellant’s written demand “seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract.” Appellant’s letters regarding the contract specialist’s intention to investigate insurance rates and possibly adjust Appellant’s contract rate (Findings 7, 9) sought no particular amount of money as a matter of right. Rather, Appellant in those letters requested that the contract specialist follow through on her promise to survey insurance rates and possibly recommend an adjustment to Appellant’s insurance line item. Appellant plainly understood that the granting of such an adjustment was only a possibility, and she did not request a specific amount (sum certain) as a matter of right. Since a sum certain was not requested as a matter of right, Appellant’s letters do not constitute claims within the meaning of the contract. Combat Core Certification Professionals, Ltd., ASBCA No. 39682, 90-2 BCA ¶ 22,781; see Wayne R. Hilf, PSBCA No. 2800, 91-1 BCA ¶ 23,628. Absent submission of a claim to the contracting officer and a final decision by the contracting officer from which an appeal was taken, the Board lacks jurisdiction over Appellant’s request for relief for her insurance costs. See Sunshine Development, Inc., PSBCA No. 4200, 99-1 BCA ¶ 30,149.
Additionally, the Board is without jurisdiction to afford Appellant the relief she sought in her letters; namely, directing that Respondent survey insurance rates to determine whether an adjustment to Appellant’s contract could possibly be made. See Lee Ann Wyskiver, PSBCA No. 3621, 95-2 BCA ¶ 27,755; Mr. and Mrs. Edward R. Ester, PSBCA No. 1559, 87-2 BCA ¶ 19,719.
In conclusion, as the termination for default was justified, PSBCA No. 4889 is denied. Respondent having failed to prove entitlement to reprocurement costs, PSBCA No. 4903 is sustained. Appellant is entitled to payment of any earned funds credited by Respondent unilaterally against its claim for excess reprocurement costs (See Finding 16). Appellant’s claim for an insurance adjustment is dismissed for lack of jurisdiction.
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman