OPINION OF THE BOARD

Appellant, Justlogistics S.A., Inc., appealed the termination of its mail transportation contract with Respondent, United States Postal Service. The appeal is being decided on the record under the Board’s accelerated procedure, 39 C.F.R. §955.13 (d).

FINDINGS OF FACT

1. On June 18, 2001, Respondent awarded Appellant contract number HCR 342L6 for the transportation of mail between the Manasota, Florida Processing and Distribution Center and Englewood, Florida. The term of the contract was from July 1, 2001, to June 30, 2004, at an annual rate of $166,020. (Appeal File, Tab (“AF”) 10 (pp. 8, 91); Stipulations of Fact dated November 22, 2002 (“Stip.”) ¶¶ 2-4).

2. The contract included an Adjustment to Compensation clause that provided,

“Contract compensation may be adjusted, from time to time, by mutual agreement of the supplier [Appellant] and the contracting officer.

a. Any such adjustments shall be made in accordance with the provisions of this clause and any USPS Management Instruction governing adjustments in effect on the date of adjustment.”

(AF 10 (p. 33), Contract Clause H.7, ADJUSTMENTS TO COMPENSATION (Clause B-65) (January 1997)).

3. The contract’s Termination for Default clause authorized Respondent to terminate the contract for Appellant’s failure to perform the service required by the contract (AF 10 (pp. 30-31), Contract Clauses H. 4, TERMINATION FOR DEFAULT (Clause B-13) (January 1997) (Modified), and H.5, EVENTS OF DEFAULT (Clause B-69) (January 1997)).

4. The route was unprofitable for Appellant, largely due to higher-than-expected costs of maintaining and repairing its equipment. Appellant also believed that other mail transportation contractors were tampering with its equipment left at Respondent’s facilities during nonuse periods. (Appellant’s letter dated June 10, 2002; Appellant’s submission dated November 25, 2002).

5. On February 27, 2002, Appellant’s president called the contracting officer, Keith Harris, Manager of Transportation Contracts at Respondent’s Southeast Area Office in Memphis, and advised him that Appellant was experiencing financial difficulties and that Appellant suspected that its equipment was being tampered with. (Appellant’s letter dated June 10, 2002; Appellant’s submission dated November 25, 2002; Stip. ¶5).

6. On Friday, March 22, 2002, Appellant faxed to contracting officer Harris notice that Appellant was losing money on the route and that it intended to cease all operations. The fax noted, “We will stop our operation within 24 hours of this letter. Our last mail run will be Saturday.” (AF 8; Stip. ¶6).

7. Mr. Harris was away from the office when the fax arrived, and contracting officer David Dilges received it. Shortly after receipt of the fax, Mr. Dilges called Appellant to confirm that Appellant had sent the fax. Appellant’s president confirmed that he sent the fax and that Appellant intended to cease operations after Saturday, March 23, 2002. Mr. Dilges advised Appellant that Respondent would solicit service to replace Appellant’s performance. (Stip. ¶¶7-9).

8. On March 22, Mr. Dilges proceeded to solicit and award an emergency replacement contract to provide service on the route after March 23. Before the end of the business day on March 22, Mr. Dilges again called Appellant to confirm that it would run the route on March 23 and notified Appellant that Respondent had awarded a replacement contract. Appellant’s president confirmed that March 23, 2002, would be the last day Appellant would perform the route. (Stip. ¶¶10-12).

9. After Mr. Dilges had left the office on March 22, Appellant’s president called his office number and left a message on Mr. Dilges’ voice mail advising that Appellant had just received a commitment for support in performing the contract and that Appellant wished to continue performing. Also after Mr. Dilges had left for the day, Appellant faxed a letter addressed to contracting officer Harris at the Southeast Area Office, notifying him that Appellant wanted to keep operating the contract: “We will keep the operation if possible after Sunday.” (AF 7; Stip. ¶13).

10. Although Mr. Harris was away from the office, and Mr. Dilges was the contracting officer responsible for addressing Appellant’s correspondence of March 22, Appellant’s president called Mr. Harris on Mr. Harris’ cell phone after being unable to reach Mr. Dilges. He told Mr. Harris that Appellant wished to retain the contract. Mr. Harris advised Appellant’s president that Mr. Dilges was the contracting officer in his absence and that Respondent could not reconsider Appellant’s abandonment since the service had already been replaced. (Stip. ¶¶14, 15).

11. Appellant did not perform any contract service after March 23, 2002 (AF 6; Stip. ¶¶16, 17).

12. By final decision dated April 2, 2002, contracting officer Harris terminated Appellant’s right to perform service on the contract based on Appellant’s March 22 repudiation of the contract. The contracting officer concluded that Appellant’s attempted rescission of the repudiation was too late, coming as it did after Respondent had contracted for replacement service. (AF 5; Stip. ¶18).

13. Appellant filed a timely appeal of the termination of its contract (Stip. ¶19).

DECISION

By its communications of March 22, 2002, Appellant unequivocally stated its intent to halt service on the route after March 23, 2002 (Findings 6, 7, 8). This Board has held that such statements are sufficient to warrant a default termination of the contract, unless there is a justifiable reason for halting service. Paul C. Popiel, PSBCA No. 3150, 93-2 BCA ¶ 25,603, citing Lawrence D. Bane, PSBCA Nos. 1440, 1491, 86-2 BCA ¶ 18,997, and B & E Mail Transport, Inc., PSBCA Nos. 971, 973, 974, 82-2 BCA ¶ 15,965.

Appellant argues that halting service after March 23 was justified because Respondent failed to increase its compensation when advised that Appellant was experiencing financial difficulties. Appellant points to the contract’s Adjustment to Compensation provision (Finding 2) as the basis for its claim. However, that provision allowed the parties, by mutual agreement, to adjust contract compensation. It did not obligate Respondent to grant a contract increase merely because Appellant was experiencing financial difficulties, and Appellant has not identified any USPS Management Instruction that requires such an adjustment.

Appellant blames Respondent for its financial problems. Appellant argues that its high equipment maintenance and repair expenses resulted, at least in part, from intentional damage to its equipment inflicted by other mail transportation contractors at the Postal Service facility where Appellant left its equipment when not in use. It argues that Respondent failed to provide adequate security for its equipment. This argument fails for two reasons. First, Appellant has pointed to no contractual or other obligation requiring Respondent to provide any particular level of security for Appellant’s equipment. Additionally, Appellant has not demonstrated that its equipment was damaged by other contractors while on Respondent’s premises. Appellant’s president has his suspicions, which he draws from what he considers unusual circumstances and patterns of the breakdowns of his tractors and trailers, but Appellant failed to present sufficient evidence to prove that other contractors damaged its equipment. As Appellant has failed to show that its financial difficulties resulted from improper actions of Respondent, its refusal to perform the contract after March 23, 2002, was not justified. See Mark L. Gabel, PSBCA Nos. 2684, 2685, 2686, 91-1 BCA ¶ 23,480; Brooks E. Cook, PSBCA No. 1350, 86-3 BCA ¶ 19,073.

Appellant argues that it should have been allowed to retract its notification of March 22 that it would not perform after March 23 because it promptly notified Respondent that it would continue performing notwithstanding its earlier notice to the contrary (Findings 9, 10, 11). However, before Appellant attempted to retract its earlier written and oral notification that March 23 would be its last day of contract performance, the contracting officer had indicated to Appellant that Respondent considered the repudiation to be final and contracted for replacement service (Findings 7, 8). Under these circumstances, Appellant’s attempt to rescind its stated intention to cease performance after March 23 came too late, and termination was justified based on Appellant’s anticipatory repudiation of the contract. See United States v. Seacoast Gas Co., 204 F.2d 709 (5th Cir.), cert. denied, 346 U.S. 866 (1953); Gerald M. Davy, PSBCA No. 3270, 94-2 BCA ¶ 26,690; Restatement (Second) of Contracts, §256 (1981).

Finally, Appellant argues that the contracting officer acted in bad faith in refusing to allow Appellant to rescind its repudiation of the contract because he was motivated by bias in favor of the contractor engaged to perform Appellant’s route after March 23, 2002. However, evidence in the record falls far short of demonstrating that Appellant’s termination stemmed from bad faith or bias. See Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1240-1241 (Fed. Cir. 2002); The Green Shack Marketplace, PSBCA No. 4557, 01-2 BCA ¶ 31,595.

Accordingly, Respondent has demonstrated that the termination for default was justified based on Appellant’s anticipatory repudiation of the contract. The appeal is denied.

Norman D. Menegat

Administrative Judge

Board Member

I concur:

James A. Cohen

Administrative Judge

Chairman