December 31, 2003
Appeal of
JERELD MICHAEL
Under Contract No. HCR 59137
PSBCA No. 4779
APPEARANCE FOR APPELLANT:
Jack E. Sands, Esq.
APPEARANCE FOR RESPONDENT:
Jeffrey J. Velasco, Esq.
OPINION OF THE BOARD
Appellant, Jereld Michael, has appealed from a contracting officer’s decision denying, in part, Appellant’s claim for costs allegedly attributable to a change in his mail transportation contract with Respondent, United States Postal Service. The parties agree that Respondent directed a change to the contract, but do not agree on the compensation due Appellant. A hearing was held in Billings, Montana.
FINDINGS OF FACT
1. Contract No. HCR 59137 was renewed in June 1997, for the period of July 1, 1997, through June 30, 2001. Under the contract, Appellant provided mail transportation services between Billings and Ingomar, Montana, with a small number of shorter, holiday trips to Roundup, Montana. The annual mileage to perform the contract was estimated at 71,124 miles, and the initial contract rate was $54,970 per annum. (Appeal File Tab (AF) 15).
2. The contract required Appellant to provide a single vehicle, having a cargo capacity of 400 cubic feet (AF 15).
3. In connection with the contract renewal, Appellant filled out a “Bid or Renewal Worksheet” (PS Form 7468A). On that form, Appellant listed the various costs that went into making up his contract price. Appellant made no entry in the item designated “Vehicle Cost.” Appellant listed $8,937.22 under the item for “Operational Cost.” (AF 15).
4. By letter dated July 9, 1999, the contracting officer notified Appellant that, effective July 17, 1999, the contract would be changed to require Appellant to utilize a vehicle with a cargo capacity of 800 cubic feet. There was no change in the contract schedule or route. The contracting officer included a Postal Service Form 7368A (Negotiated Cost Statement – Highway Transportation Contracts) and asked Appellant to complete it, showing his proposed costs for the change. (AF 13). The parties did not negotiate a “price” for the increased capacity in advance of placing it into effect (Tr. 12).
5. In July 1999, Appellant purchased a 1998 Ford E350 truck (an E350 cab and chassis with a 16-foot box) to meet the increased capacity requirement for the route. As part of the purchase, Appellant traded in one of the trucks that he originally used on the route – a Ford F250 pickup that he had purchased in 1997. (Tr. 57; AF 6; Appellant’s Exhibit (App Exh) F).
6. In September 1999, Appellant submitted, on PS Form 7463 (Cost Statement – Highway Transportation Contracts), his proposed costs for operating the route with the new truck. Appellant proposed to double the annual “Operational Costs” item for the truck from $8,937.22 (Finding 3) to $17,874.44. (AF 1, 9). Although Appellant also proposed an increase for his fuel costs,[1] he again made no entry for the item designated “Vehicle Costs.” Appellant’s September 1999 proposal contained no documentation in support of the claimed increase in operational costs.
7. By letter dated January 24, 2000, the contracting officer wrote back to Appellant and stated that the proposed increase in operational costs appeared excessive. The contracting officer requested that Appellant supply documentation related to the purchase or lease of the larger vehicle, along with any other documentation he had to substantiate his proposed costs. (AF 7).
8. In the Fall of 2000, Appellant resubmitted his cost proposal with a new PS Form 7463 Cost Statement. In this submittal, Appellant proposed $7,000 under the “Vehicle Cost” item and $15,090.71 under the Operational Costs item (see Finding 3). This represented a total increase of $13,153.49 over the $8,937.22 Appellant had previously allocated to truck-related costs (Finding 3). In this submittal, Appellant included a copy of the purchase agreement for the new truck and a PS Form HC 107, “Vehicle Information Sheet,” on which he listed the purchase price of the new vehicle, his estimate of its expected service life and his estimate of its expected residual value. No other supporting documentation was supplied with Appellant’s proposal. (AF 6).
9. By final decision dated January 23, 2001, the contracting officer denied Appellant’s claim for increased vehicle costs and vehicle operational costs on the basis that the increase in costs had not been substantiated (AF 3). Appellant filed a timely appeal (AF 2).
10. Appellant’s expenditures for tires during the last two years of the contract term (after the switch to the new vehicle) exceeded his expenditures for tires during the first two years of the contract by $4,976 (App Exh A, D; Tr. 18‑21).[2]
11. Appellant’s expenditures for brakes, shocks, and wheel alignments during the last two years of the contract term exceeded similar expenditures during the first two years of the contract by $3,996.54 (App Exh A, D; Tr. 22‑23).
12. During the last two years of the contract term, Appellant’s out-of-pocket expenditures for towing and truck rental (for a backup truck) exceeded similar expenditures during the first two years of the contract by $6,118.52 (App Exh A, D; Tr. 23-24).
13. Expenditures for tires, brakes, shocks, wheel alignments, towing, and truck rentals are expenditures that would typically be included in a highway contractor’s operational costs (Tr. 78; AF 15, p.7).
DECISION
Appellant, who is the party seeking recovery, has the burden of proof in this appeal. RKM Construction Co., Inc., PSBCA No. 3370, 94-3 BCA ¶ 27,137; Roger H. Elliott, PSBCA No. 3285, 1993 PSBCA LEXIS 13 (Feb. 12, 1993); F&B Realty, PSBCA No. 2529, 91-2 BCA ¶ 23,788.
Appellant’s position[3] is that he is entitled to recover what he alleges were increases in his costs caused by the need to secure a new truck in order to provide the required 800 cubic feet of space, and increases in his operational costs due to the new, larger truck.
Respondent’s position is that, based on the information provided by Appellant up to the time of the final decision, the contracting officer’s decision denying Appellant’s claim was correct. Respondent also questions some of the invoices/receipts provided by Appellant inasmuch as they do not contain information identifying the particular vehicle involved.
We conclude that Appellant may not recover on the portion of his claim based on the cost of purchasing a new vehicle. Appellant’s method of calculating his “net vehicle cost” is not clear and, at least in part, is based on erroneous information. Appellant’s calculation relies on a comparison of the amount he owed on the old truck with the amount he ended up owing on the new truck, but he has failed to explain why this is a valid basis for showing that his annual vehicle costs increased. In addition, Appellant attempted to compare the trade-in values of the two vehicles, but used data from a vehicle that was not the same as the new truck he purchased in 1999. Accordingly, we do not accept Appellant’s calculations of vehicle costs, and he has, therefore, failed to meet his burden of proof with respect to this portion of his claim.[4]
However, Appellant may recover the amounts he has claimed for increased operational costs. Whether or not Appellant provided all the relevant information to the contracting officer prior to the issuance of the final decision, the information he provided thereafter and the evidence provided during the course of this proceeding establish that his expenses of operating the new 800 cubic-foot truck during the last two years of the contract exceeded what would have been his expenses using his 400 cubic-foot vehicles by a total of $15,091.06. (See Findings 10-12).[5] As noted above (Finding 13), these types of expenses are costs typically included by highway contractors in determining operational costs. Further, Appellant’s actual costs are presumed reasonable in the absence of evidence from Respondent that they are not. Bruce Construction Corp. v. United States, 163 Ct. Cl. 97, 101, 324 F.2d 516, 519 (1963); Green’s Industrial Painting, ASBCA No. 26569, 82-1 BCA ¶ 15,786. That some of the invoices did not specifically identify the truck involved was an evidentiary deficiency cured by Appellant’s uncontroverted testimony during the course of the hearing.
Accordingly, the appeal is granted to the extent that Appellant may recover $15,091.06, plus Contract Disputes Act interest (41 U.S.C. §§601, 611), but is otherwise denied.
David I. Brochstein
Administrative Judge
Vice Chairman
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
Norman D. Menegat
Administrative Judge
Board Member
[1] Neither the proposed increase in fuel costs nor changes to the route and schedule which Appellant also proposed at that time are at issue in this proceeding.
[2] Appellant’s Exhibit A misstated this difference as $5,924 because of an error in addition.
[3] Neither party filed a post-hearing brief. Their positions have been gleaned from documents in the record, the pleadings, and the parties’ opening statements at the hearing.
[4] Respondent’s Contract Specialist also performed an analysis in which he concluded that Appellant’s vehicle costs did not increase due to the change. However, in view of our conclusion that Appellant has not met his evidentiary burden, we need not address the validity of that analysis.
[5] In the absence of any evidence to the contrary from Respondent, we accept Appellant’s evidence of his operational expenses during the first two years of the contract as a measure of what his expenses would have been during the last two years of the contract had the change not occurred.