January 31, 2006
Appeals of
MAPA TRUCKING INC.
Under Contract No. HCR 920L3
PSBCA Nos. 4833 and 4923
APPEARANCE FOR APPELLANT:
Paulo R. Goulart
APPEARANCE FOR RESPONDENT:
Melvin L. Kennedy, Esq.
Appellant, Mapa Trucking Inc., has filed an appeal from the termination of its highway transportation contract with Respondent, United States Postal Service, (PSBCA No. 4833) and the assessment of excess reprocurement and administrative costs in the amount of $4,762.98 (PSBCA No. 4923). A hearing was held in San Diego, CA, at which both parties presented evidence in support of their respective positions. Thereafter, both parties filed post-hearing briefs.
1. On May 24, 2000, Appellant was awarded Contract No. HCR 920L3 for the transportation of mail between the San Diego, CA Processing and Distribution Center (P&DC) and the Campo, CA Post Office with four intermediate stops at the Jamul, Dulzura, Tecate and Potrero, CA Post Offices. Service under the contract was to begin on June 17, 2000, and continue through June 30, 2003, at an annual rate of $77,893. (Appeal File (AF) Tab A, p. 3 and Tab E; Stipulation (Stip.) ¶¶ 1, 2).
2. The contract required Appellant to perform eight separate trips. Trips 1 and 2 were run Monday through Saturday except holidays with stops at all four of the intermediate post offices. Trip 1 was scheduled to leave the San Diego P&DC at 5:45 a.m. and arrive at the Campo Post Office at 8:10 a.m. Trip 2 reversed the route, leaving the Campo Post Office at 4:15 p.m. and arriving at the P&DC at 6:40 p.m. Trips 3 and 4 were run only on holidays and trips 5 and 6 were run only on Sunday. Trips 7 and 8 were run only on Monday or the Tuesday after a Monday holiday. The schedule allowed five minutes at each intermediate stop for loading and unloading the mail on trips 1 and 2. (AF Tab A, p. 3). Appellant was responsible for loading and unloading the mail at all of the stops on the route (AF Tab A, Section B.1.4(h), p. 5).
3. The solicitation and attachments, which were incorporated into the contract at the time of award, required that Appellant provide a vehicle with a “power lift tailgate with minimum dimensions of 60 inches deep and 90 inches wide [and a] [m]inimum lift capacity…rated at 3000 pounds from ground level” (AF Tab A, Section B.2(c)(1)(b), p. 6). The contract also required that Appellant have “readily available sufficient stand-by equipment…to perform extra trips, to permit vehicle maintenance, and to prevent delays in emergencies such as mechanical failures and poor weather conditions.” (AF Tab A, Section B.2(a), p. 5). Appellant owned one vehicle and relied on rentals to serve as back-up vehicles in order to comply with these requirements (Tr. 197-99, 214). The vehicle used by Appellant at the beginning of the contract was the same vehicle used by the prior contractor to run the route (Tr. 187-88). Appellant was aware from the beginning of the contract that the lift gates on the vehicles it was using were smaller than the 60” x 90” lift gate called for in the contract (Tr. 188).
4. Under the statement of work, Appellant was required to present all equipment for inspection by the Postal Service at the location and time directed by the contracting officer or his designated representative (AF Tab A, Section B.2(b), p. 5). Neither the contracting officer nor his designated representative required an inspection of Appellant’s vehicle prior to the beginning of contract performance (Tr. 82-83, 134, 307).
5. Under the Termination for Default (Default Clause) and Events of Default clauses included in the contract, the Postal Service was authorized to terminate the contract for default if (1) the contractor failed to “[c]omplete the requirements of this contract within the time specified in the contract or any extension” thereof; (2) the contractor failed to “perform service according to the terms of the contract;” or (3) the contractor provided “insufficient, inadequate, or otherwise inappropriate” equipment. (AF Tab C, Section H.4(a)(1)(a), Termination for Default (Clause B-13)(January 1997) (Modified), p. 13 and Section H.5(a) & (j), Events of Default (Clause B-69)(January 1997), p. 14-15). In the event of a termination for default, the Default Clause also authorized the Postal Service to acquire similar supplies or services and to hold the contractor liable for any excess costs incurred (AF Tab C, Section H.4(b), p. 14).
6. Irregularities on this contract were normally reported on a PS Form 5500, Contract Route Irregularity Report (“Form 5500”), which had spaces for the Postal Service to record the route, driver, date, place and nature of the irregularity as well as the name of the preparer (Tr. 14; see, e.g., AF Tab J). The form provides for a reply by the contractor and warns the contractor that a failure to reply will be taken as an admission of the irregularity (see, e.g., AF Tab J). It was Respondent’s practice, although not always followed, to issue a late slip if a driver’s departure was delayed by the Postal Service, and the late slips were to be attached to the Form 5500 if the driver was late arriving at his final destination. If a late slip completely excused a Form 5500 for failure to observe schedule, both the Form 5500 and the late slip were discarded. If, however, a contractor’s failure to observe the schedule exceeded the amount of time excused by the late slip, the amount of the late slip would be noted on the Form 5500. (Tr. 310-13).
7. Throughout the contract, the Campo Postmaster issued approximately 43 Forms 5500 and the San Diego P&DC issued approximately 45, with approximately 21 Forms 5500 issued by the other four post offices combined (see AF Tab J).
8. Between July 26, 2000 and March 8, 2001, Appellant received approximately 61 chargeable Forms 5500 citing it for one or more contract violations, the majority of which were for schedule delays exceeding 15 minutes[1] (AF Tab J, pp. 97, 99, 101, 105-12, 114-16, 119, 121-34, 136-37, 139-43, 145-54, 156-63). Appellant was also cited three times for missing or misdelivered Registered mail (AF Tab J, pp. 114, 140, 146); twice for an undersized and unsafe lift gate (AF Tab J, pp. 101, 103); once for having an unapproved driver’s assistant (AF Tab J, p. 98); once for failing to take dispatched mail (AF Tab J, p. 100); eight times for having an unsatisfactory vehicle (AF Tab J, pp. 125, 133, 135, 144, 147, 159, 162, 163); and four times for safety violations (AF Tab J, pp. 89, 102, 104, 120).
9. Appellant did not respond to any of the Forms 5500 issued between July 26, 2000 and March 8, 2001. However, by letter dated November 9, 2000, Appellant complained to Respondent about the unfairness of the reports citing it for failure to observe schedule (AF Tab H, pp. 25-26; Stip. ¶ 4). Appellant claimed the delays were beyond its control and requested a survey of the route and an adjustment of the contract schedule (AF Tab H, pp. 25-26). Appellant also disputed several of the Forms 5500 regarding the condition of its vehicle and its treatment of Registered mail (id.).
10. On March 3, 2001, Respondent conducted a route survey of trip 1 (Tr. 119-23; Respondent’s Ex. 1). During the survey, Appellant completed the run 20 minutes late, but had a 19 minute late slip (Tr. 123-24; Respondent’s Ex. 1). Appellant took a total of 37 minutes longer than the schedule allowed to load and unload the mail because of the condition and size of its lift gate, but made up for some of the delay by running the route 28 minutes faster than the scheduled travel time provided in the contract (id.). The survey report recommended among other things that Appellant replace its lift gate with a larger and different type of gate for safety reasons and that the Postal Service increase to ten minutes the time for loading and unloading the mail at the four intermediate stops (Respondent’s Ex. 1).
11. Between March 9, 2001 and March 15, 2001, Appellant received seven additional chargeable Forms 5500 citing it for one or more contract violations (AF Tab J, pp. 89, 91-96). Appellant was written up for being late on all seven Forms 5500 (id.). In addition, Appellant was cited once for not having the proper paperwork for the Registered mail (AF Tab J, p. 94) and once for a safety violation and unsatisfactory vehicle when an all purpose container (“APC”) used to transport mail rolled off the lift gate (AF Tab J, p. 89).
12. On March 16, 2001, a formal conference was held with Appellant to discuss the deficiencies in its performance and the actions necessary to improve service (AF Tab I, pp. 14-16; Stip. ¶¶ 6, 7). During the conference, Respondent agreed to conduct a route survey on trip 2 to determine if the schedule was reasonable (AF Tab I, pp. 14-16). In addition, Respondent gave Appellant seven days from the date of the formal conference to restore service to an acceptable level (id.).
13. On March 21, 2001, Respondent performed a route survey of trip 2 (Tr. 284-90; Respondent’s Ex. 2). Appellant arrived 11 minutes late to begin the trip (Tr. 287, 291-92; Respondent’s Ex. 2). The network specialist performing the survey determined that Appellant’s lift gate was unsafe and not the right size, that these conditions substantially delayed the loading and unloading of mail and were dangerous to the driver and anyone near the rear of the vehicle. Although Appellant completed the trip 20 minutes late, the specialist did not recommend an adjustment in the contract schedule. (Tr. 284-90; Respondent’s Ex. 2).
14. Appellant received nine additional chargeable Forms 5500 between March 16, 2001 and March 31, 2001 (AF Tab J, pp. 71, 73, 80-82, 84-87). Appellant received four Forms 5500 for late arrivals (AF Tab J, pp. 73, 85-87); one for leaving earlier than scheduled (AF Tab J, p. 71); two for Registered mail irregularities (AF Tab J, pp. 73, 82-83); and two for safety violations related to the improper lift gate (AF Tab J, pp. 80, 81). Appellant was also written up for failing to take empty equipment when space was available on its truck (AF Tab J, pp. 82-84). Appellant filed replies to all but one of the issued Forms 5500 denying the irregularities (AF Tab J, pp. 74, 79, 81, 82-86).
15. On March 29, 2001, Respondent performed an inspection of Appellant’s vehicle, which confirmed that Appellant’s lift gate, which was only 40” x 72”, did not comply with the contract requirement for a 60” x 90” lift gate (AF Tab H, pp. 20-21). Other deficiencies, such as the brake lights not working, the hazard lights only working on one side, the front tires lacking the required tread depth and the vehicle having no rear license plate, were also found and noted on the inspection report (AF Tab H, pp. 20-21; Tr. 151).
16. On March 30, 2001, Respondent issued a Final Request for Service Improvement and warned Appellant that if it did not take immediate action to improve performance, its file would be forwarded to the contracting officer for appropriate action (AF Tab H, pp. 18-19; Stip. ¶ 8). The letter noted the additional Forms 5500 received by Appellant since the formal conference on March 16, 2001, and listed the problems with Appellant’s vehicle discovered during the March 29, 2001 inspection. Appellant was given three days from receipt of the letter to restore and maintain satisfactory service. (AF Tab H, pp. 18-19).
17. Appellant responded to the Final Request for Service Improvement both orally and in writing on April 6, 2001 (AF Tab H, pp. 13-15). Appellant stated its truck was in the shop to address the deficiencies identified in the March 29, 2001 Contract Vehicle Inspection Report, and that it was using a rental truck to run the route. Appellant also noted that it had responded to the recently issued Forms 5500 and reiterated the problems it was having running on time due to delays at the P&DC and the Tecate Post Office. Appellant suggested a 15 minute increase in the time for loading and unloading the mail at the Tecate and Jamul Post Offices. (Id.). Appellant also complained that the majority of the Forms 5500 had been issued by the Campo Post Office as a result of the Campo Postmaster’s personal bias toward Appellant’s owner (id.).
18. On April 23, 2001, the contracting officer issued a Letter of Warning to Appellant for failure to perform service according to the terms of the contract (AF Tab H, pp. 11-12; Stip. ¶ 9). The Letter of Warning specifically noted three of the Forms 5500 Appellant had received since the formal conference, including one on March 26, 2001 ("driver dropped APC off lift gate. Unsafe lift gate") and two on March 29, 2001 ("Campo received Jamul’s registry mail" and "late arrival at Tecate"). Furthermore, the contracting officer warned Appellant it was in specific violation of its contract due to “numerous safety non-compliance issues” and the improper lift gate noted in the March 29, 2001 Contract Vehicle Inspection Report. The contracting officer gave Appellant until May 4, 2001 to show that it had either installed a proper lift gate or obtained a conforming vehicle. Appellant was put on notice that “service was to be restored and maintained at a satisfactory level for the duration of the contract” and that its “failure to comply with those instructions may result in the immediate termination of your highway contract.” (AF Tab H, pp. 11-12).
19. Appellant responded to the Letter of Warning by letter dated May 2, 2001 (AF Tab L.3; Stip. ¶ 10). Appellant explained that it was using the same truck as the previous contractor and believed it was acceptable under the contract. Appellant noted it had asked to have the truck inspected at the beginning of the contract, but the inspection had not taken place until ten months later. Appellant also reiterated its concerns about the schedule, the repeated delays at the Tecate Post Office by trucks blocking the gate while refueling and offered other explanations for the irregularities concerning the dropped APC container and the missing Registered mail. Appellant also noted it was using a larger lift gate, which “cut the loading time 50% and... [made] the job…much easier and safer.” (AF Tab L.3).
20. The contracting officer considered the May 2, 2001 letter responsive to his concerns, but did not feel that the explanations given excused Appellant’s failure to perform in accordance with the contract (Tr. 36).
21. On May 11, 2001, Respondent performed an additional inspection of Appellant’s truck (AF Tab I, p. 3). The inspection report noted additional deficiencies along with some of the same deficiencies found during the March 29, 2001 inspection, including a lift gate which was larger, but still did not meet the contract requirements (id.).
22. Between April 23, 2001 and May 29, 2001, Appellant received approximately 22 additional chargeable Forms 5500 recording ten instances of Appellant failing to observe the schedule (AF Tab J, pp. 9, 10, 17, 18, 25, 37, 41, 52, 53, 54); nine instances of using a broken or undersized and faulty lift gate (AF Tab J, pp. 9-13, 15, 16, 52, 53); four instances of failing to follow proper procedures for Registered mail (AF Tab J, pp. 19, 22, 38, 59); two instances of causing damage to postal and private property (AF Tab J, pp. 25, 41); and two instances of failing to offload all mail (AF Tab J, pp. 40, 50).
23. On May 25, 2001, the contracting officer directed Appellant to show cause why the contract should not be terminated for default (AF Tab H, pp. 9-10; Stip. ¶ 11). The Show Cause Notice stated Appellant had not restored or maintained an acceptable level of service and that its lift gate remained in violation of the contract. The notice also referred to seven Forms 5500 issued between May 14 and 21, 2001, the safety violations discovered in the March 29, 2001 vehicle inspection report that Appellant had not corrected, and two accident claims against Appellant resulting in property damage as well as a report of reckless driving from a concerned citizen (AF Tab H, pp. 9-10).
24. Appellant responded to the Show Cause Notice by letter dated May 31, 2001 (AF Tab H, pp. 6-7; Stip. ¶ 12). Appellant claimed it had corrected the problems discussed at the March 16, 2001 conference and the deficiencies found during the vehicle inspections, including the installation of a lift gate conforming with the contract requirements. Appellant also reiterated its claim that it was being discriminated against by the Campo Postmaster, who had said Appellant’s driver was "too old for this job and promised to get rid of [him]." Appellant admitted it was responsible for one of the accidents, but denied causing the second accident. (AF Tab H, pp. 6-7). Appellant also advised that the driver accused of reckless driving had been discharged (AF Tab H, p. 7; AF Tab J, p. 69).
25. Appellant had a new lift gate installed on its vehicle sometime in May 2001, but its truck was still in the shop and unavailable to run the route as of mid-June 2001 because of the need for other repairs (Tr. 207-08, 214-16). During this period, Appellant ran the route with a rental vehicle that had a larger lift gate than it had on its own truck and which reduced the loading and unloading time (Tr. 220 & 250) and made the process safer (Tr. 220).
26. On May 29, 2001, Appellant’s driver did not report to work, and Appellant did not provide service on trip 7 (AF Tab J, p. 8).
27. On Saturday, June 2, 2001, Appellant’s rental truck broke down during the performance of trip 2, and it was 4 hours 10 minutes late arriving at the P&DC (AF Tab J, p. 4; Tr. 212-16, 244-45). Because it was unable to rent a replacement vehicle until sometime on Monday, June 4, 2001, when the rental agency opened, Appellant failed to run trips 5 and 6 on Sunday, June 3, 2001, and trips 1, 2, 7 and 8 on Monday, June 4, 2001 (AF Tab J, pp. 1, 2 and 3; Tr. 196-97).
28. By letter dated June 6, 2001, effective close of business June 15, 2001, the contracting officer terminated the contract for default for Appellant’s “failure to perform service according to the terms of your contract and failure to restore and maintain service at a satisfactory level for the duration of the contract” (AF Tab H, pp. 3-5; Stip. ¶ 13). Appellant filed a timely appeal, which was docketed as PSBCA No. 4833.
29. Following the termination, Respondent engaged another mail transportation contractor on an emergency basis to perform the route (Tr. 55). Respondent competitively solicited bids and awarded the emergency contract to the lowest offeror at a rate of $97,800 per annum (AF Tab L.2; Tr. 64-65). Payments were made to the emergency contractor for 90 days of service (Tr. 65). The schedule and route were exactly the same as Appellant’s contract (Tr. 55).
30. On June 4, 2002, the contracting officer issued a final decision assessing Appellant $4,762.98 in damages (AF Tab L.4).[2] This amount was determined by subtracting the annual rate of Appellant’s contract at the time of termination, $79,482.53, from the annual rate of the emergency contract, $97,800, and then dividing the difference by 365 to obtain a difference of $50.18 per day. This daily difference was then multiplied by 90 days of emergency service to arrive at a total of $4,516.20 in excess costs. Administrative costs of $246.78, which included the time and expense of obtaining reprocurement services, were also assessed against Appellant. The total of the excess costs and the administrative costs, $4,762.98, was deducted from Appellant’s pre-termination unpaid earnings of $6,097.29 and the remaining $1,334.31 was released to Appellant. (AF Tabs L.1 and L.2; Tr. 56, 58-59, 61-64; Stip. ¶ 14).
31. Appellant filed a timely appeal of the June 4, 2002 contracting officer’s final decision. The appeal was docketed as PSBCA No. 4923 and consolidated with PSBCA No. 4833 for further processing and decision.
Decision
On appeal, Appellant contends its contract should not have been terminated for default because it was in compliance with the contract requirements at the time of termination, it was impossible to comply with the schedule included in the contract because of delays caused by Respondent, and
Respondent caused many of the problems by failing to inspect Appellant’s truck at the onset of the contract. Appellant also claims that Respondent’s employees harassed it by improperly issuing Forms 5500 against its drivers.
Respondent contends the contracting officer properly terminated the contract for default due to Appellant’s failure to meet the contract schedule, Appellant’s use of a nonconforming vehicle, its failure to have readily available back-up equipment, its mishandling and misdelivery of Registered mail and its failure to provide service on the two days before the contract was terminated. Respondent, in addition, argues that its failure to conduct an initial inspection of Appellant’s vehicle did not relieve Appellant of its obligation to provide a vehicle conforming to the contract requirements. Finally, Respondent argues that the excess costs it incurred were the result of Appellant’s failure of performance and were properly chargeable to Appellant.
Appellant’s repeated instances of late arrivals and the failure to provide a compliant lift gate for essentially all of the contract period (see Findings 3, 8, 10, 11, 13-15, 21, 22, 25) along with its failure to provide service on May 29, 2001 (Finding 26) and June 3 and 4, 2001 (Finding 27), provided sufficient justification for the contracting officer to have concluded that Appellant was in default of its contract obligations and to exercise his discretion to terminate Appellant’s contract for default. Beginning in September 2000, Appellant was repeatedly late running trips 1 and 2 (Findings 8, 11, 14, 22). Although Appellant contends it was late because it often had to wait for the mail and because of other delays beyond its control, the evidence establishes that when Appellant was detained by the Postal Service, it was usually issued a late slip (Finding 6), but was still unable to perform consistently in accordance with the contract schedule as extended by the period covered by the late slip.
Appellant argues that the schedule did not allow sufficient time for performance and that, consequently, his late performance was excusable. However, surveys of the route, which were performed in response to Appellant’s concerns about the schedule, and Appellant’s own admission show that Appellant’s failure to provide a proper lift gate contributed greatly to the delays it encountered on the route (Findings 10, 13, 19). As a result, the Board is not persuaded that with the use of proper equipment the contract schedule could not be met.
Respondent’s failure to conduct an inspection of Appellant’s vehicle until 10 months after the start of the contract does not excuse Appellant’s failure to have a vehicle with a compliant lift gate at the beginning of the contract. See Homer J. Sappington, PSBCA No. 3162, 93-3 BCA ¶26,042; Bowman’s Transport Co., PSBCA Nos. 1088, 1089, and 1092, 84-1 BCA ¶17,217. Appellant did not provide a vehicle with a lift gate that complied with the contract specifications at the start of the contract or at any time prior to termination and its failure to do so was a breach of a material requirement of the contract (Findings 3, 25). In addition, although Appellant was required under the contract to have “sufficient stand-by equipment” to run the route when its vehicle experienced mechanical failures or was being repaired (Finding 3), it was unable to obtain back-up equipment and omitted six trips on June 3 and 4, 2001 (Finding 27).
Appellant has alleged the Campo Postmaster was biased against its owner and harassed it by issuing an excessive number of Forms 5500. Appellant’s accusations are unfounded. Essentially an equal number of Forms 5500 were issued by the Campo Post Office and the San Diego P&DC (Finding 7), and Appellant has not shown that the issued Forms 5500 were not justified or that Respondent's employees did anything other than accurately document Appellant's unsatisfactory performance.
Accordingly, the contracting officer’s decision to terminate the contract for default was not improper.
Appellant has not challenged the excess costs claimed by Respondent or the administrative costs incurred by Respondent in obtaining the replacement contractor. Respondent properly procured replacement services immediately after the termination for default and in so doing incurred administrative costs which are properly chargeable to Appellant (Findings 29, 30). Respondent solicited and awarded on an emergency basis a contract for the same route, mileage and service as provided for in Appellant's contract, and has paid for the emergency service it received (Finding 29). The only remaining issue, therefore, is whether Respondent acted reasonably to minimize the excess costs.
By obtaining the emergency service through competitively solicited offers and selecting the lowest offeror, Respondent acted reasonably to mitigate the damages it incurred (Finding 29). Additionally, at the time of the termination for default, Appellant's contract had almost two years to run (Findings 1, 28). Nevertheless, in assessing the excess costs of reprocurement against Appellant, Respondent only charged Appellant for the daily difference between the rate of Appellant's contract and the emergency service contract for a 90-day period (Finding 30). Appellant has offered no evidence to rebut the reasonableness of the amounts assessed. Thus, Respondent has shown entitlement to set off the excess reprocurement and administrative costs it incurred from the unpaid earnings it was withholding.
Appellant’s appeals are denied.
James A. Cohen
Administrative Judge
Chairman
I concur:
David I. Brochstein
Administrative Judge
Vice Chairman
I concur:
Norman D. Menegat
Administrative Judge
Board Member
[1] Although the Form 5500 states all irregularities are to be reported, late operations of fifteen minutes or less or those caused by legitimate reasons are stated to be reported for informational purposes only.
[2] The reprocurement costs were originally assessed against Appellant on February 4, 2002, but due to an administrative oversight, a final decision was not issued until June 4, 2002 (AF L.1; Tr. 57-58).