December 18, 2003
Appeals of
OVERFLO PUBLIC WAREHOUSE, INC.
These appeals involve a number of claims arising out of the storage by Appellant, Overflo Public Warehouse, Inc., of mail transportation equipment under a commercial warehouse contract with Respondent, United States Postal Service. Respondent exercised an option to renew the contract for a two-year period and subsequently invoked a contract right to terminate the contract effective after the first year of the renewal term. However, Respondent failed to remove all of its equipment from Appellant’s warehouses by the effective date of the termination. Respondent blamed Appellant for its inability to vacate when promised and eventually terminated the contract for default, demanded that Appellant pay extra costs Respondent claimed to have incurred, refused to pay for contract services provided by Appellant over the last several months of the contract, and demanded that Appellant repay what Respondent claimed were overpayments occurring over the entire course of the contract.
In these appeals, Appellant challenges the termination and Respondent’s claims. In addition, it appeals the contracting officer’s denial of Appellant’s claims for (1) damages for Respondent’s failure to vacate its warehouses when promised, (2) payment for all services it provided under the contract, (3) payment for minimum storage space it claims Respondent guaranteed under the contract, (4) legal fees it incurred and (5) an economic price adjustment applicable to the contract extension period.
A hearing was held, and the parties have submitted briefs. Entitlement only is at issue in these appeals (Transcript of Hearing, Page (“Tr.”) 9).
1. Appellant is a commercial warehouse company. Under a contract entered into in approximately 1990, Appellant had provided storage of Postal Service equipment at three of its warehouses in Baltimore, Maryland: Dillon Street (Warehouse #5), Patapsco Avenue (Warehouse #2) and Boston Street (Warehouse #3). (Tr. 761-763; Stipulations of Fact (“Stip.”) ¶17; see Appellant’s Supplemental Appeal File, Tabs (“SAF”) 102, 199).
2. In 1996, Respondent resolicited for the warehouse service Appellant was providing, and on October 25, 1996, Respondent awarded Appellant contract No. 363199-97-B-0114 (the “Contract”) to supply the same commercial warehouse service at Appellant’s Baltimore warehouses for a 24-month base period ending October 31, 1998 (Tr. 767, 797-798, 1031-1032; Appeal File, Tab (“AF”) A; SAF 265; Stip. ¶¶2, 3, 4). Except for the prices and minimum space requirements, the Contract was identical to its predecessor (Tr. 761-763; Stip. ¶17a; see SAF 102).
3. The Contract required Appellant to receive shipments of Postal Service mail transportation equipment such as carts, hampers, pallets, mail trays and sleeves of various types and sizes, mail sacks and mail containers. The equipment included new product from suppliers as well as equipment that had been in use at postal and mailers’ facilities. Appellant was required to inventory and store the equipment and to ship equipment to Postal Service mail processing facilities and customers as directed by Respondent. (Tr. 67, 520; AF A)
4. The Contract provided that Appellant was to be paid for its services on two bases. First, Appellant was to be paid $.32 per square foot for the total area within its warehouses taken up by Respondent’s equipment. Additionally, Appellant was to be paid $30 per hour for labor provided for Respondent’s benefit under the Contract. (AF A (Contract Section A – ITEMS AND PRICES)).
5. The Contract included different categories of labor for which Appellant could be paid, two of which are relevant to these appeals. The first category was for
loading and unloading trailers.[1] “Labor and handling charges for incoming and outgoing shipment[s] cover the unloading and loading process, placarding, quantity verification and internal movement of all product types.” (AF A (Contract Specification/Statement of Work, subsection (“SOW”) v)). The solicitation contained an estimate that 900 hours per month of this type of labor (“Equipment Movement, Incoming & Outgoing”) would be required. By long-standing agreement of the parties and as consistently applied throughout the Contract, Appellant billed and was paid for two hours of this labor category for each trailer unloaded and two hours for each trailer loaded, regardless of the actual time taken in the loading and unloading. (Tr. 118-120, 134, 141, 231, 405, 805; AF A (Contract Provision A.1, ITEMS AND PRICES (Clause OB‑89)(June 1988))).
6. The second category of labor at issue was for “Product Repackaging.” Labor for product (equipment) repackaging included labor expended organizing equipment items by types, sorting of like-type product items onto pallets, rewrapping, banding, shrink-wrapping, counting, stacking the product and entering it into the Postal Service’s Equipment Inventory Reporting System. The solicitation included an estimate of 600 hours of such work per month. (AF A (Contract Section A – ITEMS AND PRICES and SOW v.1)).
7. Throughout the Contract term, Respondent designated contracting officer’s representatives (“CORs”) who were responsible for the day-to-day
administration of the Contract and for the technical aspects of the work. The CORs were responsible for final inspection and acceptance of all reports and for receipt and certification of Appellant’s invoices for payment. However, the CORs were not authorized to make any changes that affected the Contract price, terms or conditions. (Tr. 114, 338, 577; AF A (Contract Provisions E.3, CONTRACTING OFFICER’S REPRESENTATIVE (COR) (Clause OB-21) ALTERNATE I (June 1988); E.4, DELEGATION OF INSPECTION AND ACCEPTANCE (Clause OB‑34)(June 1988); F.1, PAYMENT AND FUNDING (subsection d))). The Contract established that the CORs would provide Appellant with the standard operating procedures for handling incoming and outgoing shipments (AF A (SOW aa)).
8. The CORs under this and the predecessor contract had instructed Appellant’s employees how to perform the loading and unloading and when and how to perform repackaging. The CORs expected Appellant’s employees to apply common sense to determine what sorting, repackaging, rewrapping, etc., was needed and to do it without the need for specific instructions from the COR. (Tr. 275-284, 287, 289-290, 292, 295, 602-603, 787-788, 803, 1013, 1035, 1054; SAF 264).
9. New equipment generally arrived by trailer at Appellant’s warehouses on pallets, shrink-wrapped and placarded (labeled) (Tr. 67), so it could generally be stored expeditiously using forklifts. However, some new equipment was not properly packaged and palletized by the manufacturer, and some repackaging of new equipment was required in those circumstances. (Tr. 775-776, 795, 1070).
10. Shipments of used equipment typically contained several different types of equipment in varying quantities and often loose in the trailers (Tr. 773, 778, 803-805, 1013, 1035, 1054, 1072; AF 264D; Appellant’s Exhibit 265). Before it could be stored, inventoried and eventually shipped for use at another facility, the equipment had to be organized and repackaged (Tr. 771-776, 788, 1013).
11. Repackaging and sorting incoming used equipment was a labor-intensive process done mostly by hand (Tr. 804-805). It could take more than eight work hours to repackage equipment from one trailer. Seven or eight workers could sort and repackage equipment from four trailers per day (Tr. 281, 291, 1013, 1035). When a large number of trailers delivered equipment in a short time frame, often the trailers were unloaded and the contents put aside for sorting and repackaging later (Tr. 771-772, 793, 802-803, 1013).
12. Incoming loads of used equipment often contained broken equipment, especially pallets, and in the course of sorting the product, Appellant was required to cull and dispose of defective pallets and unusable equipment. Sorting of pallets to identify those that were defective was done manually and required two workers working together. (Tr. 287, 294, 296, 786-788; SAF 264A, 264D, 265). Respondent’s CORs under this Contract and its predecessor had instructed Appellant’s employees how to assess the condition of the equipment and how to identify and discard unusable equipment and pallets. The CORs expected Appellant’s employees to perform this disposal process on their own by applying these instructions and common sense without specific guidance from the CORs. (Tr. 276-278, 288-290, 294, 371, 574-575, 770, 779, 787-788, 801-803; SAF 264A).
13. Product stored in the warehouses was to be nested and stacked as high as safely possible (Tr. 777; AF A (SOW ab)). Shifting of stacks was common due to the irregular shape and settlement of the materials, and stacks occasionally fell, all of which required repackaging of the product (Tr. 777-778, 794, 868-870; AF 39b[2]). Repackaging involved taking down the pallets or packaged equipment from the stacks or picking it up from where it had fallen, then repackaging and shrink-wrapping by hand and restacking the equipment with a forklift. (Tr. 238-241, 282-283, 371-372, 777, 795; AF 39j, o).
14. The Contract explicitly required Appellant to notify the COR of previously stacked equipment needing repackaging or banding due to shifting of internal products and to obtain the COR’s approval before expending labor (AF A (SOW ac)). However, the practice instituted by the CORs under this and the predecessor contract was otherwise. The various CORs had instructed Appellant how to deal with previously-stacked equipment that had shifted or fallen and instructed Appellant to take necessary action to repackage and restack any such material. The CORs expected Appellant to do so without specific instruction and without notifying the COR of each such occasion. (Tr. 242, 254, 276-278, 284, 295, 326, 371, 438, 441, 597, 787, 794-795, 1014-1015).
15. Appellant supplied the labor required under this contract by using its own employees plus varying numbers of temporary employees engaged on an as-
needed basis through a temporary employment agency (Tr. 695, 786, 800).
16. The Contract did not specify and Respondent did not identify to Appellant any particular method of documenting and accounting for labor hours supplied under the Contract to support requests for payment (Tr. 147; AF A; Stip. ¶¶14, 15). Appellant’s timecards and invoices from the temporary agency did not identify the number of labor hours devoted to Respondent’s work (Tr. 816-817), but Appellant did maintain payroll records that reflected the hours each employee worked, rate of pay, warehouse to which assigned, withholdings, etc. (Tr. 1133, 1149).
17. Each of Appellant’s warehouse supervisors noted on Appellant’s weekly “Platform Receiving Report” form, which was posted on a bulletin board in each warehouse’s office, how many total man-hours were expended handling, sorting, repackaging, etc., Postal Service product each week (Tr. 815, 960, 1042, 1054).
18. The Platform Receiving Report for the Patapsco Avenue warehouse for the week ending May 8, 1999, was typical for the Patapsco and Dillon warehouses and listed, in the warehouse supervisor’s handwriting,
“5/3 Mon 4 workers x 8 hours 32
5/4 Tues 8 workers x 8 hours 64
5/5 Wed 7 workers x 8 hours 56
5/6 Thurs 8 workers x 8 hours 64
5/7 Fri 6 workers x 8 hours 48
264”
(SAF 177 (p. 016)).
19. The Platform Receiving Report for the Boston Street warehouse did not itemize by day. For example, the Boston Street Report for the week ending June 15, 1999, read, in its entirety, “2 men 40 hrs. each. Total 80 hrs.” (Tr. 1041; SAF 178 (p. 033)).
20. For its weekly invoices for each warehouse, Appellant entered the sum of hours shown on the Platform Receiving Reports multiplied by $30 on a form provided by Respondent, “Labor/Administrative Log – MTE Warehouses”, as an unitemized “Labor” entry (e.g. SAF 177 (p. 017)). Appellant also listed on the Labor/Administrative Log, by identification number, each trailer that was loaded or unloaded during the period and entered 2 labor hours for each, which it then multiplied by $30 per hour (e.g. SAF 177 (pp. 017-018)). The sum of all the labor charges was then entered on Appellant’s invoice for each warehouse (e.g. SAF 177 (p. 015)). All three forms—the Platform Receiving Report, the Labor/Administrative Log, and the invoice—along with copies of bills of lading for loaded trailers (Tr. 964-965)—were submitted to the COR each week for payment. (Tr. 357-362, 370-371, 591-595; Stip. ¶¶59-62).
21. Payment under the Contract was based on Appellant’s invoices: “Verification of monthly invoices will be made by using job tickets or other documents allowing for verification of services performed.” The Contract required that an invoice include a “description of supplies” and a “breakdown of all expenses,” and submission of an invoice for payment constituted Appellant’s certification that,
“1. Any services being billed for have been performed in accordance with the contract requirements; and
2. Any supplies for which the Postal Service is being billed have been shipped or delivered in accordance with shipping instructions . . . and that the supplies are in the quantity and of the quality designated in the contract.”
(AF A (Contract Provisions F.1, PAYMENT AND FUNDING; F.3, INVOICES (Clause B-20)(June 1988))).
22. The CORs were not at the warehouses except for occasional visits and did not confirm that the labor hours Appellant claimed on its invoices were actually expended in handling Postal Service product (Tr. 206-207, 339, 402, 577-581). However, all of the CORs throughout the Contract were familiar with and approved Appellant’s method of recording labor (Tr. 357-362, 370-371, 591-595, 813; Stip. ¶¶60, 62, 65-67). During performance of the Contract, Respondent never questioned the labor hours claimed by Appellant and never sought additional documentation to support the number of labor hours billed (Stip. ¶54)
23. The Contract required Appellant to “furnish the necessary personnel, material, equipment, services and facilities” to perform the work. It contained no provision requiring payment to Appellant for shrink wrap and other repackaging supplies used in performing Contract-required repackaging and no prices for such supplies. It also did not contain a provision requiring payment for rental of dumpsters used in the disposal of unusable equipment. (AF A (Contract Provision B.1, STATEMENT OF WORK/SPECIFICATIONS (Clause OB-7)(June 1988))). Nevertheless, throughout the Contract, Appellant billed Respondent for the cost of shrink wrap and banding supplies and for the cost of renting dumpsters. All of the invoices for labor, supplies and dumpsters were submitted to the CORs. All of the invoices plainly identified the bases for the charges, and all were approved by the CORs and, until late 1999, paid by Respondent. (Tr. 223-226, 290-291, 293, 355-357, 369-373, 574, 579, 806-807, 817, 819-821, 913, 968-970, 1072-1074; Stip. ¶¶58, 63-67; see e.g. SAF 177 (p. 004), 186 (pp. 120-127)). Respondent never questioned Appellant’s entitlement to be reimbursed for these miscellaneous expenses at any time before September 2000 (Stip. ¶58).
24. Reports summarizing Overflo’s billings and plainly reflecting inclusion of charges for wrapping materials and dumpsters under this Contract and under Respondent’s 17 other warehouse contracts were sent monthly to Respondent’s senior mail transport equipment officials (who did not have contracting officer authority), but there is no evidence the reports were provided to the contracting officer. (Tr. 561-562; SAF 128).
25. Under the predecessor contract, Appellant documented labor hours and billed for labor hours and repackaging supplies and dumpsters exactly as it did under this Contract. Each of Respondent’s CORs on the predecessor contract was aware of the methods used and reviewed and approved for payment each invoice submitted in this manner. All were paid by Respondent. (Tr. 763, 817-821; Stip. ¶¶23, 24).
26. During 1996 through December 1999, Respondent had as many as 17 warehouse contracts with other companies that included the same provisions (except for square footage and prices) as this Contract. All of the contractors under those contracts billed Respondent for expenses such as shrink wrap, steel banding, and other supplies, and Respondent paid invoices for such miscellaneous expenses. (Stip. ¶¶70, 70a).
27. The contract authorized Respondent to extend the term of the contract for four, 2-year option periods, by notifying Appellant in writing no later than 60 days prior to the expiration of the Contract. The same contract terms and conditions applied to the option periods. (AF A (Contract Provision C.2, OPTION TO EXTEND THE TERM OF THE CONTRACT, Subsection A); see AF A (Contract Provision H.7, OPTION TO EXTEND THE TERM OF THE CONTRACT (Clause 2-20)(October 1987))).
28. By bilateral Modification 003 to the Contract, dated November 10, 1998, the parties recognized Respondent’s exercise of the option to renew the Contract for the period November 1, 1998, through October 31, 2000. As it was authorized to do under the Contract’s Option clause, when exercising the option to renew, Respondent incorporated into the Contract an early termination provision that provided,
“Contract may be terminated by either party during the last three months of the first year of any option period upon 90 days written notice and 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.”
(Tr. 825, 917; AF A (Modification 03; Contract Provision C.2, OPTION TO EXTEND THE TERM OF THE CONTRACT, Subsection B); Stip. ¶25).
29. By unilateral order dated June 22, 1999, the contracting officer terminated the contract effective November 1, 1999 (Tr. 156; AF A). At the time it issued the notice of termination, Respondent’s equipment occupied 350,000 to 400,000 square feet in Appellant’s warehouses. (Tr. 529; SAF 179 (pp. 003-007); Stip. ¶¶28, 29).
30. Respondent intended to remove all of its equipment by November 1, 1999, but the removal process did not proceed as expeditiously as Respondent had hoped (Tr. 529), and Respondent’s equipment still occupied a total of 124,227 square feet in Appellant’s warehouses at the end of October 1999 (SAF 186 (pp. 002-003); Stip. ¶31).
31. On October 28 or 29, 1999, in a discussion with Appellant’s president, the contracting officer directed Appellant to load 20 trailers per day (Tr. 846, 936). By letter of November 1, 1999, the contracting officer unilaterally extended the contract through the close of business on November 12, 1999, and again ordered Appellant to provide whatever resources were necessary to load 20 trailers per day for removal of Respondent’s equipment. (Tr. 62-63, 99-100, 174, 848; AF 1; Stip. ¶33).
32. The Contract incorporated by reference the Claims and Disputes clause, which described Appellant’s right to file a claim and the appeal rights available to Appellant if it was dissatisfied with a final decision of the contracting officer. That clause required Appellant to “proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action arising under the contract, and comply with any decision of the contracting officer.” (AF A (Contract Provision H.3, CLAUSES INCORPORATED BY REFERENCE, incorporating CLAIMS AND DISPUTES (Clause B-9)(June 1988))).
33. After November 1, 1999, Appellant rarely supplied more than one forklift operator, which was the main determining factor of how many trucks could be loaded (Tr. 269, 406). Appellant often provided too few workers to load all of the trailers that were at the dock (Tr. 77-79, 285, 306-307, 311, 406-407) and diverted available workers away from handling Respondent’s equipment to serve other customers of Appellant’s warehouses (Tr. 263, 323, 409).
34. After November 1, Respondent assigned at least one employee full time to Appellant’s warehouses to oversee the removal of Respondent’s equipment, and other employees on an intermittent basis. It incurred costs (salary, benefits, travel) of these employees supervising and attempting to expedite Appellant’s loading of the trailers. (Tr. 94-96, 189-196, 273, 479-480, 498, 537-538, 552-556, 631; AF 47, 51, 52). Respondent’s employees physically loaded some trailers on their own due to the lack of workers supplied by Appellant (Tr. 617, 633, 646).
35. Additionally, in late October and through mid November, Respondent engaged one of its trucking contractors to provide tractors (8 or 9) to bring empty trailers to Appellant’s warehouses and to haul the loaded trailers away. (Tr. 82, 197-199, 404, 427, 455, 478, 492, 537-539, 616). Appellant’s employees were uncooperative with Respondent’s trucking contractor (Tr. 455, 484). There were times when Appellant would not allow Respondent to bring more trailers to the docks to be loaded even when unused docks were available (Tr. 462). Appellant refused requests from the trucking company dispatcher that the drivers be allowed to place trailers at the docks to be loaded while the trucks were hauling others away (Tr. 482-484). Whereas the trucking contractor’s drivers generally can bring a trailer, have it loaded and depart within an hour or two, and had done so on pickups from Appellant earlier in the summer of 1999 (Tr. 454, 468, 477), during the late October/early November timeframe, Appellant routinely made Respondent’s drivers wait, often for four to six hours, before Appellant’s employees would load the trailers (Tr. 454-457, 463, 480). When Respondent’s on-site supervisor was present at the dock, Appellant generally loaded the trailers reasonably promptly, but if Respondent’s employee was at a different warehouse, Appellant again made the truckers wait for long periods to be loaded (Tr. 457-458, 462, 463) As required by its contract with the trucker, Respondent paid for waiting time over one hour (Tr. 479-481, 498-499, 538, 551-555; AF 51).
36. Appellant loaded at least 20 trailers on a few occasions in early November 1999, but the number of trailers loaded declined significantly over the month. While it averaged 16-18 trailers loaded per day over the first two weeks of the month, it only averaged about 5 per day over the last two weeks and even fewer in December. Throughout November and December, Appellant on only three occasions loaded in a day the number of trailers that were available for loading. A total of, at most, 286 loads were removed between November 1 and December 23, 1999. Had Appellant loaded 20 trailers per day as ordered, Postal Service equipment would have been removed by November 19. (Tr. 983-985; AF 45, 46; SAF 134, 138, 139, 186, 187).[3]
37. Respondent’s equipment was not removed by November 12 (Stip. ¶37), and on November 15, the contracting officer wrote to Appellant, stating that Respondent was unilaterally extending the Contract through close of business on November 26, 1999, or until such time as all Postal Service property was removed. This further extension was necessary, according to the contracting officer’s letter, because of Appellant’s “failure to load the required number of trailers.” (Tr. 100-101; AF 3; Stip. ¶37).
38. Respondent delivered empty trailers to the warehouses. If Appellant did not assign a dock, the trailers were parked and left in Appellant’s yard (Tr. 80, 87, 186-187, 424-426, 431, 531; AF 39x, 45, 46). When a dock was assigned, Postal Service vehicles from a nearby postal distribution plant or other of Respondent’s trucking contractors brought the trailers to the docks for loading (Tr. 197, 265, 315, 629). Occasionally, there were delays involved in moving a trailer from the yard to the dock (Tr. 304, 649, 882).
39. The Contract required Appellant to remain open only from 8 a.m. to 4 p.m. Notwithstanding a request to the contracting officer from Respondent’s transportation managers that he direct Appellant to remain open later during November and December 1999 to facilitate loading of equipment, the contracting officer declined to do so. Thus, trucks arriving after 4:00 p.m. had to wait until the next morning to be loaded. (Tr. 142-143, 167-172, 269, 273, 285, 556-7, 847-848, 889, 1069; AF 35, 37; Stip. ¶32).
40. As provided in the Contract’s Statement of Work, it was Respondent’s practice to fax authorization codes to Appellant for each trailer to be loaded identifying the trailer and the type of equipment to be loaded on it (Tr. 374; AF A (SOW p); AF 50), and Appellant was required to load the trailer within 24 hours thereafter (AF A (SOW q)). Without those codes, a trailer could not be loaded (Tr. 148, 266, 382, 402-404, 421, 615, 947, 1062). During October through December 1999, on a few occasions—perhaps once every other day—Respondent was late in sending an authorization code for a trailer that had arrived at Appellant’s warehouse, and loading of the affected trailer was delayed until Appellant could reach Respondent and obtain an authorization code. These delays were no more than 30 to 45 minutes, and generally other trailers would have been available for loading (Finding 36). (Tr. 346, 382, 388, 418-419, 421-422, 946-949).
41. Except for three loaded trailers that were overlooked and a small amount of equipment inadvertently left at Appellant’s premises, Respondent had removed all of its equipment from Appellant’s warehouses by December 23, 1999 (Tr. 200-202, 539, 630-631, 902-903; AF 63, 64; Stip. ¶40).
Appellant's New Customer
42. On June 18, 1999, Appellant and American Global Logistics, Inc., signed a rate quotation establishing prices for storage of American Global’s product in Appellant’s warehouses. Appellant contemplated providing 150,000 square feet of commercial storage space for American Global, commencing on or about October 28, 1999 (Tr. 559, 839-842; AF 27; SAF 120). Appellant intended to buy 200,000 square feet of additional warehouse space to serve American Global. However, when it received Respondent’s notice that it would vacate the warehouses as of November 1, 1999, Appellant decided to place American Global’s product in space vacated by Respondent and did not buy the additional space (Tr. 840).
43. Appellant notified Respondent in September 1999 that if Respondent failed to vacate by October 31, 1999, Appellant would lose its new customer (Tr. 559).
44. American Global Logistics did not become a customer of Appellant’s warehouses (Tr. 841-842).
Minimum Guaranteed Area
45. The Contract’s Items and Prices section listed the services to be provided (“The contractor shall provide the following:”) and the prices therefor. The first item was “Guaranteed Storage – 2 yrs. Only. See Note #1” followed by the estimated monthly quantity of 150,000 square feet and the rate of $.32 per square foot. Note #1 provided that the guaranteed storage would be phased in over the first 6 months of the Contract. After 180 days, the “guaranteed square footage will be 150,000 for the remainder of the contract term.” Note #1 continued,
“The GUARANTEED Square footage of 150,000 sq. ft. will only be provided the USPS for the initial first two (2) years of this contract term. At each option for contract renewal, the USPS will revise its estimated duration of need and extent of warehouse square footage to be guaranteed.”
(AF A (Contract Provision A.1, ITEMS AND PRICES (Clause OB‑89)(June 1988))).
46. The second line item in the Items and Prices section was for “Additional Monthly Storage Est. See Note #2,” followed by the estimated monthly quantity of 250,000 square feet and the rate of $.32 per square foot. Note #2 provided,
“Additional monthly storage estimated at 250,000 is based on the best available information and does not constitute a guarantee. The rate must be billed only for the active floor space actually occupied by Postal Service equipment.”
(AF A (Contract Provision A.1, ITEMS AND PRICES (Clause OB‑89)(June 1988))).
47. The bilateral modification acknowledging Respondent’s option to extend the Contract (Finding 28) did not explicitly revise the estimated duration of need or extent of guaranteed square footage to be furnished (Finding 45) (Tr. 155; AF A (Mod. 03)).
48. For the first time during the course of the Contract, in October 1999 the square footage occupied by Respondent’s equipment dropped below 150,000 square feet, and it remained below that amount thereafter. Appellant’s October 1999 and later invoices reflected a charge for a minimum 150,000 square feet at $.32 per square foot. (Tr. 966-968; SAF 147 (pp. 009-010, 018-021), 148 (pp. 001-002, 009-012), 182 (pp. 039-041), 183 (pp. 023-025), 186 (pp. 001-003)).
49. By bilateral modification 01 dated February 26, 1997, the parties added 22,000 square feet of fenced outdoor space at the Patapsco Avenue warehouse at $.22 per square foot. The modification provided, “MINIMUM MONTHLY CHARGE OF $2,420.00 THROUGH DURATION OF CONTRACT EFFECTIVE 03/15/96.” (AF A, Mod. 01).
Economic Price Adjustment
50. At each option renewal, an adjustment to the Contract rate could be made to reflect Appellant’s increased costs for labor, taxes, utilities, heating or overhead. The Contract required Appellant to provide data outlining its proposed adjustment within 60 days of receiving Respondent’s notice to renew and provided that such economic price adjustment “will be negotiated no later than 60 days prior to the exercise of the option.” (AF A (Contract Sections C.2, OPTION TO EXTEND THE TERM OF THE CONTRACT, Subsection C, and C.3, OPTION EVALUATION CRITERIA)).
51. By letter dated November 12, 1998, Appellant’s president asked the contracting officer for an economic price adjustment to increase its labor rate from $30 to $33 per hour and its monthly per square foot storage rate from $.32 to $.36. The request for an increase in the labor rate was due to claimed increases in wages paid its employees. Regarding the storage rate, the request noted that Appellant’s costs for overhead, billing, operations, repairs and maintenance had increased. Appellant also noted that it had underestimated the square-foot cost in its original bid, and that was an additional reason for its request for an increase. Appellant’s president also argued that the higher price was justified because the renewal included the right to cancel after one year, making the contract, in effect, a one-year contract and that fact justified a higher price than a two-year firm agreement. (Tr. 52; AF 21; Stip. ¶26).
52. The contracting officer requested substantiation of Appellant’s claimed increased costs, and Appellant provided a list of employees and the hourly wage increases each had received in 1996 and 1997 and unaudited financial statements that showed increases in Appellant’s costs for overhead, taxes, insurance and payroll from 1996 to 1997 (AF 24). After further exchanges of correspondence, the contracting officer declined to take any action on the request, concluding that Appellant’s documentation of its cost increases was inadequate. He would have required audited financial statements. In Appellant’s March 3, 1999 final letter to the contracting officer on the subject prior to submission of its claim in February 2000, Appellant’s president conceded that Appellant did not have the type of documentation, including payroll records required by the Service Contract Act, the contracting officer was seeking and stated that Appellant would “accept whatever you decide without contest.” (Tr. 52-60, 159-164, 826-836; AF 22-27; SAF 118, 119; Stip. ¶27).
53. Appellant’s labor costs and its overhead costs increased during the first two years of the Contract (Tr. 162-164, 826-834, 1132, 1150; SAF 194b (p. 4)).
Termination for Default
54. The Contract incorporated by reference a Termination for Default clause that authorized Respondent to terminate the Contract if Appellant failed to complete the requirements of the Contract within the time specified in the Contract or failed to perform any of the other provisions of the Contract. Before terminating for the latter, Respondent was required to provide Appellant notice specifying the failure and at least ten days to cure the failure. The clause provided that if, after termination, it were determined that Appellant was not in default, the termination would be considered to be one for Respondent’s convenience. A Termination for Convenience clause was also incorporated by reference in the Contract. (AF A (Contract Provision H.3, CLAUSES INCORPORATED BY REFERENCE, listing TERMINATION FOR DEFAULT (Clause B-13) (October 1987) and TERMINATION FOR CONVENIENCE (Clause B-11) (October 1987))).
55. By final decision dated January 21, 2000, the contracting officer terminated the Contract for default effective December 23, 1999, for Appellant’s alleged failure to perform service according to the terms of the Contract. The offending conduct was identified as Appellant’s failure to load sufficient trailers to allow Respondent to vacate the premises in a timely manner. (Tr. 108-109; AF 5; Stip. ¶41). Appellant was not given a cure notice or an opportunity to cure any performance failures (Stip. ¶¶49, 50).
56. In his final decision, the contracting officer stated that Appellant would be held liable for costs incurred by Respondent due to Appellant’s inadequate cooperation in the removal of Respondent’s equipment (AF 5).
57. Respondent withheld payments due Appellant on invoices for storage and labor submitted at the end of the Contract, and the contracting officer stated the reason for the withholding was to satisfy the costs incurred by Respondent due to Appellant’s breach of its contractual duties under the Contract’s Warranty of Services clause (Tr. 205; AF 5; Stip. ¶¶42, 52).
58. Appellant filed a timely appeal of the termination, which was docketed as PSBCA No. 4531.
59. The Contract contained provisions implementing the Service Contract Act (“SCA”), which was applicable to the Contract, and established that Appellant’s failure to comply with the SCA requirements of the Contract “may be grounds for termination of the right to proceed with the contract work.” (AF A (Contract Provision H.11, SERVICE CONTRACT ACT (Clause 10-12) (April 1989), Subsections b, g, i)).
60. The Contract’s SCA provisions also provided,
“Disputes arising out of the labor standards of this contract are not subject to the Claims and Disputes clause but must be resolved in accordance with the procedures of the Department of Labor set forth in 29 CFR Parts 4, 6, and 8.”
(AF A (Contract Provision H.11, SERVICE CONTRACT ACT (Clause 10-12) (April 1989), Subsection r)).
61. After performance of the Contract, Department of Labor conducted an audit of Appellant’s labor records relating to 1998 and 1999 to determine whether violations of the SCA had occurred. Appellant and the Department reached a tentative agreement resolving alleged violations, but the agreement had not been finalized by the date of the hearing. (Tr. 209-214, 892-898).
Claims
62. On February 23, 2000, Appellant submitted a certified claim in the amount of $1,024,053, which included (1) payment due Appellant on its invoices for warehouse storage and labor at the end of the Contract ($251,500), (2) payment of the minimum guaranteed storage space (Finding 45) from January 1, 2000, through October 10, 2000 ($504,200), (3) the economic price adjustment requested at the time the option was exercised (Finding 51) ($254,227), and (4) certain legal and consulting fees incurred through February 18, 2000 ($14,126). (Tr. 903; SAF 124).
63. In an April 17, 2000 final decision, the contracting officer allowed only $22,070 on the invoices submitted for October through December 1999 (item (1) of Appellant’s claim, see Finding 62, above), contending that Appellant overbilled for labor hours (Tr. 110-113, 205, 363-4; AF 77), and rejected Appellant’s claim for the minimum guaranteed storage fee for those months (Tr. 116).[4] The contracting officer denied the remainder of the claim (items (2) – (4)). (Tr. 123-125; AF 11).
64. Appellant filed a timely appeal of the final decision, which appeal was docketed as PSBCA No. 4550.
65. Respondent reviewed the invoices and history of payments over the course of the Contract from November 1996 through October 1999, and put together its own claim. By final decision dated September 29, 2000, the contracting officer asserted a claim of $1,866,292 against Appellant. The claim included (1) $43,921 in costs allegedly incurred by Respondent due to Appellant’s failure to cooperate in the removal of Respondent’s equipment at the end of the Contract, (2) $1,724,292 for Appellant’s labor charges paid by Respondent throughout the Contract that the contracting officer contended were unsupported (Tr. 89, 227; AF 60), (3) $63,129 for the cost of shrink wrap and strapping materials invoiced by Appellant and paid by Respondent over the course of the Contract, and (4) $34,950 for dumpster fees invoiced by Appellant and paid by Respondent over the course of the Contract. (Tr. 114-115, 126-129; AF 75, 77; SAF 126).
66. Appellant filed a timely appeal of this Postal Service claim, which was docketed as PSBCA No. 4649.
Respondent contends that Appellant is not entitled to payment for the repackaging labor hours claimed on its invoices, both previously-paid and unpaid, because Appellant has failed to provide adequate documentation to demonstrate that the hours were expended in handling Postal Service equipment. Additionally, Respondent contends that Appellant was not entitled under the Contract to payment for shrink wrap and other strapping materials used to repackage Postal Service product or for dumpsters used for disposal of unusable Postal Service equipment. Respondent argues that, therefore, it was justified in refusing to pay certain of Appellant’s invoices submitted for services in late 1999 and is entitled to recover what it contends were overpayments during the entire Contract period for “undocumented” labor and for repackaging supplies and dumpster usage.
Appellant argues that all of the labor it billed Respondent for was expended in the handling of Postal Service equipment according to the Contract and that all of the wrapping supplies and dumpsters it billed for were used in repackaging and disposing of unusable Postal Service equipment. It asserts that it was authorized by Respondent’s representatives to provide such services and materials, to document them as it did and to be paid for them. It points to Respondent’s 9-year history of payment for these services and materials without complaint under this Contact and its predecessor as support for its interpretation of the Contract.
The Contract, as written, provided no instruction regarding how Appellant was to substantiate the labor hours it expended in performing the Contract (Finding 16). The CORs were authorized to approve the form of reports and invoices and to approve payments (Finding 7), and they accepted the method of justifying labor hours Appellant used over the course of the Contract and its predecessor (Findings 17, 18, 22, 25). The CORs throughout the Contract and its predecessor were aware that Appellant was performing repackaging work, had instructed Appellant how and when to do so and expected Appellant to perform it without direction or specific authorization (Findings 8, 13, 14). The CORs were aware that substantial labor was required in doing so, and were familiar with and approved Appellant’s method of recording the time devoted to this work. (Findings 8-13, 18, 22, 25). Invoices prepared and supported according to this established practice were approved each week by Respondent’s CORs, who were specifically authorized by the Contract to approve (or disapprove) Appellant’s invoices (Finding 7), and the invoices were paid by Respondent. This long course of dealings did not change a requirement of the Contract but, rather, established the standard for documenting labor hours, a standard not expressed in the Contract (Finding 16). Appellant is entitled to be paid for the labor hours documented according to the long-established practice. See Teague Brothers Transfer & Storage Co., ENG BCA Nos. 6312 & 6313, 98-1 BCA ¶ 29,333.
Whether Appellant is entitled to be paid for repackaging materials, for the cost of dumpsters and for unauthorized restacking of stacks of equipment that had shifted turns on whether through a course of conduct Respondent modified the payment provision of the Contract to allow Appellant to be compensated for such supplies and services and waived the requirement that Appellant obtain authorization for restacking. Respondent argues that no course of dealing regarding payment for supplies and dumpsters and restacking without specific authorization was demonstrated because those acquiescing in this conduct, the CORs, were without authority to change the Contract’s requirements.
The Contract did not require Respondent to pay for shrink wrap and dumpsters (Finding 23), and the CORs did not have authority under the Contract to obligate Respondent to pay for supplies and services for which payment was not required (Finding 7). See Henry Burge and Alvin White, PSBCA No. 2431, 89-3 BCA ¶ 21,910. Nevertheless, invoices plainly reflecting the nature and amount of these charges were regularly and repeatedly submitted by Appellant, approved by the CORs and paid by Respondent throughout the three years of this Contract, until October 1999, and for at least four years of the predecessor contract (Findings 23, 25). Furthermore, Respondent paid for miscellaneous repackaging supplies and dumpsters in all of its 17 other commercial warehouse contracts during the same period (Finding 26), and senior officials of Respondent’s national equipment warehousing program knew that Respondent was being charged for and paying for supplies and dumpsters under this and its other warehouse contracts (Finding 24). Additionally, in 1996, when offering to provide warehouse services under this Contract, Appellant had good reason to assume in preparing its offered prices that Respondent’s practice of the prior four years of paying for the supplies and dumpsters would continue. Given this long and universal practice of Respondent in paying these expenses and the widespread knowledge thereof among postal officials (Findings 23, 24, 25), if the contracting officer did not know of the practice, he should have, and such knowledge will be imputed to him. See Gresham & Co. v. United States, 200 Ct. Cl. 97, 120, 470 F.2d 542, 556 (1972); City Window & Constr. Co., PSBCA No. 4563, 2002-1 BCA ¶ 31,706; David Finley, PSBCA No. 3922, 98-2 BCA ¶ 29,989, recon. denied, 2000-1 BCA ¶ 30,595; Glenda R. Whitaker, PSBCA No. 3443, 94-2 BCA ¶ 26,643. Thus, by their conduct the parties modified the payment provision of the Contract to permit Appellant to receive compensation for such supplies and dumpsters.
Similarly, Respondent’s course of dealing of instructing Appellant to repackage and restack previously-stacked equipment that had shifted when Appellant deemed it necessary (Findings 13, 14) also eliminated any requirement that Appellant obtain specific authorization of the COR each time before expending labor to perform such work (Finding 14).
Accordingly, Appellant is entitled to be paid for repackaging labor costs documented as established by the parties’ long practice. It is also entitled to be paid under the Contract for repackaging materials and dumpster charges and for repackaging previously-stacked equipment that had shifted. Thus, Appellant’s claim for invoiced labor, supplies, and dumpster costs incurred during October through December 1999 and not paid by Respondent is granted as to entitlement. Negotiation of the amount of payment due Appellant is remanded to the parties. Respondent’s claim to recover amounts paid during the Contract for “undocumented” labor and miscellaneous packaging materials and dumpsters is denied.
Appellant claims that it is entitled to damages for Respondent’s failure to vacate its warehouses by October 31, 1999. It posits alternative measures for its recovery. First, it claims that Respondent’s failure to vacate by October 31, 1999, waived or revoked Respondent’s notice of termination and committed Respondent to continue its obligations to Appellant under the Contract until October 31, 2000, as established by Respondent’s November 10, 1998 exercise of the renewal option (Finding 28). Appellant cites no authority for this premise, and we find no support in the Contract for this interpretation. Further, both before and after November 1, 1999, Respondent’s urging was to accomplish the complete removal of its equipment to conclude the parties’ contractual relationship. Appellant could not reasonably have believed that the contracting officer intended to revoke the termination. Accordingly, Appellant is not entitled to recovery on its theory that the Contract extended into 2000.
Next, Appellant argues that it had arranged for another customer to rent warehouse space as of the end of October 1999 and that Respondent’s failure to vacate by November 1 caused it to lose this customer (Findings 42, 44). However, the record does not persuade us that Respondent’s failure to vacate by November 1 caused Appellant to lose its customer. First, much of the evidence regarding this customer and the reasons for its decision not to take space in Appellant’s warehouse was hearsay testimony of Appellant’s president, uncorroborated by documentary evidence or by testimony of the customer.
Additionally, the evidence Appellant provided did not demonstrate that the new customer was obligated by the rate quotation signed in June 1999 to send any product to or occupy any minimum space in Appellant’s warehouses. Any loss attributable to the customer deciding not to place product with Appellant would thus be too speculative to be recoverable under the circumstances of this Contract. See AFTT, Inc., PSBCA No. 3717, 97-2 BCA ¶ 29,057.
Furthermore, Appellant has not shown that space was not available for the new customer. Appellant contemplated needing 150,000 square feet for the new customer and had intended to buy 200,000 square feet of space to accommodate the customer’s needs (Findings 42, 44). However, Respondent had vacated at least 200,000 square feet between June and October of 1999 (Findings 29, 30), more than enough space to accommodate the new customer. Therefore, Appellant has not shown entitlement to damages for its claimed loss of a customer or any other possible damage caused by Respondent’s failure to vacate by October 31, 1999. Accordingly, Appellant’s claim for damages due to Respondent’s failure to vacate Appellant’s warehouses by November 1, 1999, is denied.
Respondent argues that the contracting officer was justified in terminating the Contract for default based on Appellant’s failure to cooperate in the expeditious removal of Respondent’s product from its warehouses. Appellant argues that (1) it was not in default during the effort to remove Respondent’s product from its warehouses, (2) that the termination was improper because Respondent did not follow the Contract and its own regulations in accomplishing the termination (namely providing Appellant notice and an opportunity to cure), and (3) that the termination was invalid coming as it did after all performance under the Contract was concluded.
At the time of the January 21, 2000 termination (and also as of the purported effective date of the termination, December 23, 1999), there was no Contract work remaining to be performed. All that remained to be done (except for the equipment inadvertently left behind (Finding 41)) was to sort out Appellant’s entitlement to payment for the services and, eventually, to address Appellant’s and Respondent’s claims. Under these circumstances, the termination for default on this ground was a nullity. As a result, the purported termination for default is not converted to a termination for convenience under the Termination for Default clause (Finding 54). See Donat Gerg Haustechnik, ASBCA Nos. 41197, et al., 97-2 BCA ¶ 29,272 at 145,641; Folk Construction Co., Inc., ENG BCA Nos. 5839, 5899, 93-3 BCA ¶ 26,094 at 129,732; Lear Siegler Inc., Management Services Division, ASBCA No. 30224, 86-3 BCA ¶ 19,155.
Respondent also argues that the termination was justified by Appellant’s failure to comply with the payroll record-keeping requirements of the Service Contract Act as established in the Contract’s Service Contract Act clause. As discussed above, Respondent’s authority to terminate the Contract for default after all performance has been completed is problematic. Additionally, on the record presented, we cannot determine whether the Labor Department has found under its established procedures that Appellant has committed a violation justifying termination of the contract. The Department of Labor conducted an SCA audit of Appellant’s records, and reached a tentative settlement with Appellant (Finding 61), but the terms of any final resolution of the Department of Labor investigation are not in the record. Accordingly, the Board cannot conclude that the contracting officer properly terminated the Contract for default on that ground. See Herman B. Taylor Constr. Co. v. Barram, 203 F.3d 808, 811-812 (Fed. Cir. 2000); National Interior Contractors, Inc., ASBCA No. 47131, 96-2 BCA ¶ 28,460.
Guaranteed Minimum Space
Appellant claims payment for a guaranteed minimum space of 150,000 square feet for the months of October, November and December 1999, when the space occupied by Postal Service equipment in the warehouses was less than 150,000 square feet (Finding 48). However, in exercising the first option, Respondent added the early termination provision authorized by the Contract (Finding 28), putting Appellant on notice that Respondent’s occupancy of the warehouses could be terminated by either party at the end of the first year of the option period. If the early termination right were exercised, the clause provided that as the space occupied by Respondent’s equipment contracted, eventually to zero,
“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.”
(Finding 28) (Emphasis added). By including the early termination provision, Respondent explicitly obligated itself to pay only for storage space it was actually using in the event the early termination provision was invoked. By eventually invoking its early termination right (Finding 29), Respondent remained obligated to pay only for the “actual services rendered;” namely, actual warehouse space occupied and actual labor and other services supplied by Appellant prior to the effective date of the termination.
This interpretation is favored as it attributes to the phrase “actual services rendered” its ordinary and common meaning, see Hills Materials Co. v. Rice, 982 F.2d 514, 516 (Fed. Cir. 1992), and avoids an interpretation that would render the clause superfluous. Additionally, in fashioning an exit strategy for the final months of the Contract, it is reasonable to assume that the parties intended to provide that as the Contract wound down Respondent’s payment obligations would take into account the inevitable diminution of its storage space requirements below any guaranteed minimum payment that might otherwise apply.
Appellant argues that because Respondent failed to revise its duration of need and extent of warehouse square footage to be guaranteed upon exercise of the renewal option (Findings 27, 45), it was bound to pay for the minimum 150,000 square feet until the last piece of Respondent’s equipment was removed. The Contract clause Appellant believes required Respondent to revise the minimum guaranteed square footage addressed specifically the minimum space “provided the USPS,” i.e. the minimum available space to be guaranteed by Appellant (Findings 45, 47). That provision does not address, or require revision of, any guarantee by Respondent to pay for minimum storage space.
Moreover, the clause in question does not specify the form Respondent’s revision of the “estimated duration of need and extent of storage space to be guaranteed” is to take. Although Modification 003 did not contain an explicit revision (Finding 46), Respondent’s inclusion of the early termination authority (Finding 28) plainly revised the duration of need and extent of warehouse square footage to be guaranteed and so notified Appellant: the need could end as soon as a year into the option period and if notice of the termination were given no warehouse square footage would be guaranteed. Thus, any requirement by Respondent to revise the extent of guaranteed minimum storage space was satisfied by inclusion of the early termination provision in the renewal when exercising the option. For these reasons, we are not persuaded that any commitment by Respondent to guarantee payment for a minimum of 150,000 square feet of storage space survived the exercise of the option.
Accordingly, Appellant’s claim for payment for minimum storage space of 150,000 square feet is denied.
Economic Price Adjustment
The Contract authorized an economic price adjustment at the time of renewal based on increases in Appellant’s costs for labor, taxes, utilities, heating or overhead (Finding 50). Appellant submitted a request for an adjustment on November 12, 1998, just after Respondent’s November 10, 1998 renewal of the Contract, which adjustment the contracting officer eventually denied (Findings 28, 51, 63).
Respondent argues that Appellant waived its claim for an economic price adjustment because it failed to negotiate the claim 60 days in advance of renewal as provided by the Contract (Finding 50). However, Respondent has not shown when it gave notice of renewal, so there is no basis for concluding that Appellant failed to comply with the requirement to submit appropriate data and for the parties to negotiate an economic price adjustment within 60 days after such notice.
Respondent also argues that Appellant waived its claim by expressing its willingness to defer to the contracting officer’s judgment regarding an adjustment (Finding 52). In its last correspondence on the subject, Appellant conceded that it did not have the type of records the contracting officer was demanding to justify the economic price adjustment and expressed its willingness to accept whatever the contracting officer decided (Finding 52). Respondent argues that thereby Appellant agreed to accept the contracting officer’s determination that no economic price adjustment was due. Even if Appellant’s concession could be considered a release, no consideration was given for it, and it does not now bar Appellant from pursuing its claim for an economic price adjustment. See P.J. Dick Contracting, Inc., PSBCA No. 992, 84-1 BCA ¶ 16,992 at 84,637; Absher Constr. Co., PSBCA No. 951, 82-1 BCA ¶ 15,657 at 77,324. Under these circumstances, Appellant has not waived its right to an adjustment.
When it submitted its claim for an economic price adjustment in 1998, Appellant did not demonstrate to the satisfaction of the contracting officer that it was entitled to an increase of a specific amount due to its claimed cost increases (Finding 52). The information presented to the contracting officer was inadequate to justify a specific increase, but Appellant has shown that it did incur some increases to its costs during 1996 and 1997. As these appeals are limited to issues of entitlement only, Appellant is not required to prove the precise amount of any economic price adjustment to which it might be entitled. See Hettich and Co. GmbH, ASBCA No. 29072, 86-3 BCA ¶ 19,043 at 96,178. By showing it incurred increased costs of performance in the areas addressed by the adjustment provisions (Finding 50), Appellant has shown entitlement to an adjustment. However, Appellant also claimed as reasons for an economic price adjustment its underestimation of its square footage costs in its original proposal and the fact that the cost of a potential one-year contract after renewal might arguably be higher than if Respondent had not invoked the early termination clause (Finding 51). These are not grounds for an economic price adjustment.
The matter is remanded to the parties for negotiation of the amount of the economic price adjustment to which Appellant is entitled.
Professional and Consulting Fees
Appellant claims entitlement to recover legal and consulting fees it allegedly incurred to assess its position regarding Respondent’s failure to vacate the warehouses by November 1, 1999, and to present its position to Respondent. Appellant submitted no direct evidence that such costs were incurred, and its only support are two letters written to the contracting officer by Appellant’s attorney in November 1999 opposing Respondent’s extension of its occupancy of the warehouses (AF 2, 4). The unstated premise is that an attorney would not have done so without payment.
Aside from whether Appellant has shown that any fees were incurred, we are not persuaded that any attorney fees incurred in the context of the above two letters were related to performance of the Contract as opposed to framing Appellant’s then-current and future claim position. Consequently, such fees are not recoverable. See Singer Co., Librascope Div. v. United States, 215 Ct. Cl. 281, 326-328, 568 F.2d 695, 720-721 (1977); Johnson Investors Limited Partnership HH Group Inc., PSBCA No. 4049, 99-1 BCA ¶ 30,173.
The two cases Appellant cited that address recovery of consultant fees, Plano Builders Corp. v. United States, 40 Fed. Cl. 635 (1998), and Bill Strong Enterprises, Inc. v. Shannon, 49 F.3d 1541 (Fed. Cir. 1995), turned on interpretations of the cost principles of the Federal Acquisition Regulations. The Federal Acquisition Regulations are not applicable to Postal Service contracts, and Respondent’s cost regulations (Postal Service Purchasing Manual, Chapter 5) do not contain provisions comparable to the Federal Acquisition Regulations language at issue in those cases.
Postal Service Damages
Respondent argues that it incurred extraordinary expenses in accomplishing removal of its product from the warehouses that were caused by Appellant’s failure to cooperate in the effort. Respondent points to the additional expenses of its own employees overseeing the move and to the waiting-time payments it made to its trucking contractor (Findings 34, 35). The Contract imposed on both parties a duty to cooperate in performance of the Contract. See John S. Vayanos Contracting Co., PSBCA No. 2317, 89-1 BCA ¶ 21,494 at 108,294, citing Malone v. United States, 849 F.2d 1441, 1446 (Fed. Cir. 1988). There is insufficient evidence in the record to determine which party was at fault for Respondent’s failure to vacate by November 1, 1999. Appellant could have done more to expedite the removal of Respondent’s equipment in the months leading up to November 1 (Findings 33, 35), but Respondent has not shown that it exerted the effort necessary to remove its equipment by November 1, 1999, or that Appellant’s conduct prevented it from vacating the warehouses by its stated Contract termination date.
However, on November 1, the contracting officer directed Appellant to load 20 trailers per day and to apply whatever resources were necessary to do so (Finding 31). Appellant argues that Respondent’s lack of cooperation caused the slow progress in removing the equipment, but although some delays were within Respondent’s control (See Findings 38, 39, 40), those delays were not shown to have been significant factors in the slow pace of removing Respondent’s equipment. Appellant demonstrated its capability of loading at least 20 trailers per day on a number of days after November 1 (Finding 36) and has not shown that continuing to do so was made impossible or substantially more difficult by Respondent’s conduct, see Lee McLaughlin, PSBCA No. 2199, 89-1 BCA ¶ 21,377 at 107,742, or that Respondent’s conduct was a material breach of its duty to cooperate, see Fowler & Butts, PSBCA No. 2545, 91-1 BCA ¶ 23,391; Brand S Roofing, ASBCA No. 24688, 82-1 BCA ¶ 15,513 at 76,958. After assessing all of the evidence presented, including observing the demeanor of those testifying for each side, we conclude that Appellant breached its duty to cooperate under the Contract by failing to provide the good faith effort that would have been needed to remove Respondent’s equipment in a timely manner. See John S. Vayanos Contracting Co., PSBCA No. 2317, 89-1 BCA ¶ 21,494 at 108,294.
Furthermore, once the contracting officer directed Appellant to load 20 trailers per day, not an impossible task, Appellant was obligated to do so and to file a claim for additional compensation if it believed loading 20 trailers per day exceeded what the Contract required or if it believed that its performance was hindered by Respondent’s conduct. See Finding 32; Sharon Rhoades, PSBCA No. 3455, 94-2 BCA ¶ 26,950; Altina Trucking, PSBCA No. 3341, 93-3 BCA ¶ 26,256.
Respondent incurred on-site costs of assigning a full time employee to the warehouses to monitor and expedite the removal of equipment, work that Appellant should have performed once it was directed to load 20 trailers per day. Accordingly, Respondent may recover reasonable, extra claimed expenses it incurred after November 1, 1999, to remove its equipment from the warehouses. See Swan Wooster Engineering, AGBCA Nos. 83-104-1, 83-124-1, 87-2 BCA ¶ 19,894 at 100,639.
Furthermore, Appellant’s delay of Respondent’s truckers during late October and early November 1999 breached its duty to cooperate. Although the Contract requires loading trailers within 24 hours of receipt of authorization (Finding 40), once the contracting officer directed the loading of 20 trailers per day, it was incumbent upon Appellant to load them within a time to meet that standard. Inferring a reasonable time for loading to meet that standard, see Franklin Pavkov Constr. Co. v. Roche, 279 F.3d 989, 997-98 (Fed. Cir. 2002); Contel Advanced Systems, Inc., ASBCA Nos. 50648, 50649, 51048, 51049, 2003-2 BCA ¶ 32,277 at 159,697; Essex Electro Engineers, Inc., ASBCA No. 49915, 2002-1 BCA ¶ 31,714 at 156,698; Elter S.A., ASBCA No. 52451, 2001-1 BCA ¶ 31,373 at 154,913-14, the delays Appellant caused Respondent’s truckers in late October through mid November (Findings 33, 35) were not shown to be justified or reasonable. Accordingly, Respondent is entitled to recover any additional trucking costs reasonably incurred as the result of the delays caused by Appellant.
Had Appellant complied with the contracting officer’s direction to load 20 trailers per day, Respondent’s equipment could have been removed by November 19, 1999 (Finding 36), and this circumstance limits certain aspects of Appellant’s claims. Although Appellant is not entitled to recover for its “guaranteed” minimum square footage claim, it is entitled to payment for the actual square footage occupied by Respondent’s equipment, but only through November 19, 1999. Likewise, payment for the guaranteed minimum 22,000 square feet of fenced outside space at the Patapsco Avenue warehouse, liability for which Respondent concedes (Findings 49, 63 (n. 4)), shall be calculated as if Respondent vacated on November 19, 1999.
Conclusion
Appellant’s appeal from the termination for default, PSBCA No. 4531, is sustained.
Appellant is entitled to be paid for services provided at the end of the Contract and billed as per established practice. However, it may recover for actual square footage charges and guaranteed minimum fenced outside area, as discussed above, as if Respondent vacated on November 19, 1999. It is entitled to an economic price adjustment for the renewal term. PSBCA No. 4550 is sustained to that extent and is otherwise denied. Negotiation of the amount of Appellant’s recovery is remanded to the parties.
Respondent may recover demonstrated, on-site costs associated with removal of its equipment incurred after November 1, 1999, and reasonable costs incurred during October and November due to Appellant’s delays of Respondent’s trucking contractor in loading trailers. To that extent, PSBCA No. 4649 is denied, but PSBCA No. 4649 is otherwise sustained. Negotiation of the amount of Respondent’s recovery is remanded to the parties.
Norman D. Menegat
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
Chairman
Opinion of Administrative Judge Brochstein, Dissenting in Part
I concur with the Opinion of the Board, except as to its holding with respect to Appellant’s “Guaranteed Minimum Space” claim. I would read the contract language (see Finding 45) as argued by Appellant – i.e., that Respondent’s failure, at the time it exercised its option to extend the Contract, to “revise” the quantity of space to be guaranteed left the guaranteed quantity “unrevised” at 150,000 square feet for the two-year option period. Further, contrary to the holding of the majority, I would read the Contract language to create binding obligations on both parties, not just on Appellant. Therefore, I would hold that Appellant was obligated to make available the guaranteed 150,000 square feet of space for Respondent’s use during the option period, and Respondent remained obligated to pay for that amount of space even if not all of it was used.[5]
Finally, I disagree with the majority’s holding with respect to the effect of the early termination language (see Finding 28). The majority holds that upon notification by Respondent that it intended to exercise the early termination right, the language requiring payment thereafter only for the “actual services rendered” made Respondent liable for payment only for the space it actually used – and not for any minimum space that may have been guaranteed. I read the language differently and would hold that the “actual services rendered” by Appellant included Appellant’s provision of the guaranteed minimum space. Thus, I would read the early termination provision simply to allow the parties’ obligations (including Appellant’s provision of the guaranteed minimum and Respondent’s payment therefor) to be terminated short of the full option period and, indeed, to be cut off at other than the
end of the month, contrary to the usual monthly billing method.[6] Further, under the early termination language, Respondent was obligated to provide 90 days’ notice of its intent to terminate the contract. The majority’s interpretation would make the notice requirement meaningless in practice, inasmuch as Respondent could give notice of its intent to terminate, move all of its property out of the warehouse immediately, and thereafter be under no obligation to make any payments. While the parties could certainly agree to such a result, I would expect that they would have used more explicit language had they intended to do so.
Accordingly, I would sustain this portion of the appeal and remand to the parties for a determination of the amount due Appellant.[7]
David I. Brochstein
Administrative Judge
Vice Chairman
[1] The witnesses referred to the vehicles loaded and unloaded variously as trailers, trucks and vans. It is not clear whether they were referring to different types of containers, but, as it makes no difference in our analysis, we will refer to them as trailers throughout this decision.
[2] The Appeal File is divided into two sections. Section A includes the contract and modifications and will be referenced as AF A. Section B contains documents 1 through 78. As there is no duplication of the numbers in section B, there is no need to preface them with B in this Opinion.
[3] The records of Respondent and Appellant are not in accord regarding the number of trailers loaded each day (compare SAF 134 and 138 with AF 45 and 46), but using either party’s numbers demonstrates that the equipment could have been removed by November 19.
[4] Respondent conceded that Appellant is entitled to the minimum payment for the guaranteed outside storage (Tr. 13, 117, 125; Finding 49).
[5] At a minimum, the language of Note #2 in the Items and Prices section of the Contract (Finding 46), which applied only to the Additional Monthly Storage item, suggests that the Guaranteed Storage item and the Additional Monthly Storage item were to be treated differently. As stated in Note #2, “Additional monthly storage estimated at 250,000 is based on the best available information and does not constitute a guarantee. The rate must be billed only for the active floor space actually occupied by Postal Service equipment.“ (Emphasis added).
[6] Clause F-1, “Payment and Funding,” provided, in part:
“b. Storage charges will be itemized in accordance with Section A and billed on a monthly basis, in arrears. Storage charges will be assessed on a ‘split month’ basis. Merchandise received on or between the first through the fifteenth of the month are billed at the full monthly rate. Merchandise received between the sixteenth through the end of the month will be billed at one half the monthly rate.
c. Payments will be made after receipt of monthly invoices and verification documents for services rendered during the previous month.…”