April 11, 2008

 

Appeals of                                                                    

                                                                                                                                 

FRANK BAIAMONTE                                                             

                                                                                                                                                                         

PSBCA Nos. 5297 and 5324                                                                          

                                                                                                 

Under Contract No. HCR 863C5                                           

 

APPEARANCE FOR APPELLANT:         

Frank Baiamonte

                                                                       

APPEARANCE FOR RESPONDENT:     

Gary Shapiro, Esq.

Office of the General Counsel

United States Postal Service

 

OPINION OF THE BOARD

            Respondent, United States Postal Service, terminated its contract with Appellant, Frank Baiamonte, for delivery of mail to customers’ mailboxes along a route originating in the Cottonwood, Arizona Post Office, and Appellant appealed (PSBCA No. 5297).  Appellant also appealed the contracting officer’s separate final decision demanding that Appellant pay Respondent’s costs of providing service on the route after the termination (PSBCA No. 5324).

            The appeals were consolidated and, at the election of the parties, are being decided on the record without an oral hearing in accordance with 39 C.F.R. §955.12.  Both entitlement and quantum will be addressed (Order, March 16, 2006).

 

FINDINGS OF FACT

            1.  On April 25, 2003, Respondent awarded Appellant contract HCR 863C5 for delivery of mail to customers’ mailboxes along a route originating in the Cottonwood, Arizona Post Office.  The term of the contract was from May 17, 2003, to June 30, 2006, at an annual rate of compensation of $40,531.67.  (Appeal File, Tab (“AF”) 38; Declaration of Frank Baiamonte).

            2.  The Cottonwood Postmaster (or his designee) was the administrative official for the contract and was the authorized representative of the contracting officer responsible for day-to-day contract administration (AF 38 (pp. 91, 199); Declaration of J. O’Keefe (“O’Keefe Decl.”) ¶2; Declaration of K. Devine (“Devine Decl.”) ¶3).

            3.  The contract required Appellant to deliver all mail tendered to him:

“The supplier [Appellant] shall carry all mail tendered for transportation under this contract, whatever may be its size and weight, with certainty, celerity, and security, in accordance with the operating schedule and between the points fixed in the schedule, as modified from time to time pursuant to this contract.”

 

(AF 38, Contract Clause B.3.a, Sanctity of the Mail (p. 180); see Contract Clause B.3.j (3)).

            4.  The contract included a Claims and Disputes clause describing the process for submission and resolution of claims and authorizing Appellant to appeal final decisions of the contracting officer.  The clause required that Appellant “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 38, Contract Clause H.2, CLAIMS AND DISPUTES (Clause B-9) (January 1997)).

            5.  The contract’s Termination for Default clause authorized Respondent to terminate the contract if Appellant failed to complete the requirements of the contract within the time specified in the contract or, after receiving notice and at least three days to cure, failed to perform any other provision of the contract (AF 38, Contract Clause H.4, TERMINATION FOR DEFAULT (Clause B-13) (January 1997) (Modified)).

            6.  In the Events of Default clause, the contract identified grounds that would justify termination under the Termination for Default clause.  These included Appellant’s failure to perform service according to the terms of the contract and failure to follow the instructions of the contracting officer.  (AF 38, Contract Clause H.5, EVENTS OF DEFAULT (Clause B-69) (January 1997)).

            7.  The contract authorized Respondent to acquire similar, replacement services after a termination for default, “and the supplier [Appellant] will be liable to the Postal Service for any excess costs.”  (AF 38, Contract Clause H.4, TERMINATION FOR DEFAULT (Clause B-13) (January 1997) (Modified), subsection b).

            8.  Appellant questioned the authority of the Cottonwood Post Office Customer Services Supervisor (“Supervisor”) to give him any instruction regarding performance of his route.  As early as September 25, 2004, and repeatedly thereafter, the Cottonwood Postmaster advised Appellant that the Supervisor was the postmaster’s designee as administrative official and that Appellant must follow the Supervisor’s instructions regarding delivery of the mail and operation of the route.  Appellant continued to resist or ignore instructions from the Supervisor.  (AF 35 (p. 153); Declaration of J. Rachel (“Rachel Decl.”) ¶¶3, 6 and Exhibits A, B).

            9.  In a September 28, 2004 telephone call, Appellant asked the contracting officer whether he was obliged to follow the Supervisor’s instructions if there had not been a written delegation of authority from the postmaster to the Supervisor.  The contracting officer told him that an oral announcement of the Supervisor’s authority regarding Appellant’s contract was sufficient.  (AF 28, 47; Devine Decl. ¶4).

            10.  By letter dated February 24, 2005, the postmaster notified Appellant of a mandatory formal conference to address his performance on the route.  The postmaster noted Appellant’s performance irregularities:  misdelivering mail, failing to leave his vehicle to deliver accountable mail and parcels to customers’ doors as required by his contract, disruptive confrontations with other mail delivery contractors and post office employees, and repeatedly failing to follow the instructions of the Supervisor.  (Rachel Decl. ¶8 and Exhibit D).

            11.  On March 1, Appellant faxed a letter to the contracting officer claiming that the formal conference and the alleged deficiencies that led to it were in retaliation for complaints he had made about the management of the Cottonwood Post Office (AF 22).

            12.  The postmaster convened the formal conference on March 4, 2005.  Attendees were Appellant and his wife, the postmaster, the Supervisor and a transportation specialist from the Phoenix Processing and Distribution Center, which supervised transportation services in the area.  (Declaration of J. Tucker (“Tucker Decl.”) ¶2 and Exhibit A (AF 21); AF 25).  At the meeting, Appellant was aggressive and confrontational, repeatedly yelling at Respondent’s officials (Tucker Decl. ¶3 and Exhibit A (AF 21)).  The Phoenix transportation specialist told Appellant that the Supervisor represented Respondent in regard to day-to-day contract administration and told Appellant that he must follow the Supervisor’s instructions.  The postmaster told Appellant that if he did not correct his performance deficiencies his contract could be terminated.  Appellant was defiant and refused to acknowledge the authority of Respondent’s officials.  He walked out of the meeting saying he could see why someone could “go postal.”  (Tucker Decl. ¶4 and Exhibit A (AF 21); Rachel Decl. ¶¶9, 10 and Exhibit E (AF 21); Declaration of G. Langford (“Langford Decl.”) ¶¶10-12; AF 19).

            13.  On May 9, 2005, in the morning, the Supervisor tried to discuss with Appellant a proposed extension to Appellant’s route.  Appellant refused to discuss it with him, saying he was too busy and would discuss it after he finished delivering his route.  Appellant yelled at the Supervisor.  The postmaster joined the discussion and asked Appellant to come to his office where they could discuss the matter off the workroom floor without disturbing the other contractors and employees.  Appellant loudly and defiantly refused to accompany the postmaster to his office or to discuss the route extension.  However, after being told several times, he finally accompanied the postmaster to his office, but once there Appellant would only discuss other matters that bothered him, not the route extension.  He did discuss the route extension when he returned from his route in the afternoon.  (AF 17, 35 (pp. 98-102); Declaration of B. Boudreau, Exhibit B (AF 12); Langford Decl. ¶13).

            14.  Postal Service Handbook P-5, Highway Contract Routes – Box Delivery Service, at section 134.242, instructs post offices administering box delivery contracts, such as Appellant’s, to monitor the times the contractor reports for duty, leaves the post office for his route, and returns to the post office.  The Handbook permits use of monitoring devices for this purpose.  (AF 15).

            15.  In May 2005, the Cottonwood Post Office implemented use of a time clock to record mail delivery contractors’ arrival and departure times (AF 15; Langford Decl. ¶14).  Appellant objected and, on May 16, 2005, faxed a letter to the contracting officer to complain (AF 14).

            16.  By letter dated May 27, 2005, the contracting officer responded, advising Appellant that use of a time clock to record contractor performance was authorized.  In the course of the letter, she advised Appellant that the contract’s administrative official, the Cottonwood Postmaster and his designee, acted with the contracting officer’s authority to manage the day-to-day operation of his contract.  She advised that the Cottonwood officials could not change the contract, but that in all other respects they acted as her designee.  She emphasized that Appellant was required to follow the instructions, verbal and written, issued by the administrative official:  “Failure to comply with instructions from the [administrative official] can result in termination of your contract for default.”  She advised Appellant similarly in telephone conversations up to September 2005.  (AF 13; Devine Decl. ¶3). 

            17.  On August 5, 2005, the Supervisor notified Appellant that the post office would be requesting that the contracting officer change Appellant’s route in a way that would reduce the number of stops and distance traveled (AF 25).  This was part of an overall realignment of 10-12 of the contract routes out of Cottonwood to address delivery point growth in the area and to make delivery operations more efficient (AF 1, 9, 43; O’Keefe Decl. ¶4; Langford Decl. ¶16).  The adjustment to Appellant’s route would have reduced the number of boxes from 601 to 466 (AF 10 (p. 20)).

            18.  Appellant opposed the proposed service change.  In an August 9, 2005 letter to the Manager, Transportation Contracts (the contracting officer’s superior at the Pacific Area Distribution Networks Office (“DNO”)) and the manager of transportation services at the Phoenix Processing and Distribution Center, Appellant stated his opposition to the service adjustment.  Appellant contended that the route adjustment was unnecessary.  (AF 7, 10).

            19.  Appellant called the Manager, Transportation Contracts, frequently during the period June through September 2005, complaining about matters in the Cottonwood Post Office, and stating that he did not accept the authority of the Customer Services Supervisor.  The Manager told Appellant several times that the Supervisor was the postmaster’s designee as administrative official and that Appellant must follow the Supervisor’s instructions concerning mail delivery.  (O’Keefe Decl. ¶2).

            20.  As part of the route realignment effort, the DNO prepared a solicitation dated September 1, 2005, seeking proposals to operate a box delivery contract route from the Cottonwood Post Office in the area adjacent to that served by Appellant’s route (AF 4, 40 (p. 271), 44).  In early September, the DNO sent the post office several hundred copies of a notice of the solicitation that were to be delivered to customers in the Cottonwood area to generate interest and increase competition to provide the service (O’Keefe Decl. ¶5).  The solicitation notice was a two-sided copy, without an envelope, describing the service sought on one side and on the other side bearing, “TO:  LOCAL PATRON” and an indicia reflecting that First Class Mail postage and fees had been paid under a mailing permit used for official Postal Service mail (AF 44; O’Keefe Decl. ¶5; Langford Decl. ¶¶17, 18, 21; Appellant’s Supplemental Appeal File, Exhibits (“SAF”) 1B, 1C).

            21.  On September 8, 2005, a stack of these solicitations (about 350-400) was left on Appellant’s desk for him to deliver to customers on his route (AF 40 (p. 271); SAF 1A; Rachel Decl. ¶11).

            22.  Appellant refused to deliver the solicitation notices.  At least twice the Supervisor gave Appellant direct orders to deliver them, and each time Appellant refused.  In doing so, Appellant was yelling, was argumentative and was disturbing and upsetting to a number of other contractors and employees in the post office.  The Supervisor directed Appellant to go to the postmaster’s office to discuss it away from the workroom, and Appellant loudly and defiantly refused to go.  He left to deliver his route without taking the solicitations.  (AF 3, 4; Declaration of B. Boudreau ¶2 and Exhibit A (AF 41); Declaration of L. Boudreau ¶2; Declaration of N. Duke ¶2; Declaration of C. McKinney ¶2; Rachel Decl. ¶11; Langford Decl. ¶¶ 18, 19).

            23.  After being advised of Appellant’s refusal to deliver the solicitations (AF 42), the Manager, Transportation Contracts, called Appellant.  He advised Appellant that he was required to deliver the solicitations and to follow instructions of the Cottonwood management.  Appellant told the Manager that the solicitations were part of a conspiracy against him and that he would not deliver them and that he would not follow the instructions of Cottonwood management.  The Manager explained the seriousness of the situation, and Appellant again stated that he would not deliver the solicitations.  (O’Keefe Decl. ¶¶6, 7).

            24.  The Cottonwood Postmaster had previously advised the contracting officer of Appellant’s refusal to deliver the solicitations (AF 42), and the Manager, Transportation Contracts, advised her of his conversation with Appellant and Appellant’s stated refusal to deliver the solicitation notices or to follow the Supervisor’s instructions.  Thereafter, by final decision dated September 8, 2005, the contracting officer terminated Appellant’s contract for Appellant’s failure to deliver First Class Mail and failure to follow the Supervisor’s instructions as well as for performance deficiencies and disruptive behavior.  (AF 3; Devine Decl. ¶¶6, 7, 8).  Appellant’s appeal of the termination (AF 2) was docketed as PSBCA No. 5297.

            25.  A Transportation Contract Specialist in the Pacific Area Office promptly contacted Cottonwood Post Office management for names of potential replacement contractors.  She contacted eight potential contractors and received telephonic offers from four of them to supply emergency service on Appellant’s route.  Respondent accepted the lowest offer, $55,000 per year, which was lower than an internal Postal Service estimate, and awarded a replacement contract in that amount.  The service procured was exactly the same as that provided under Appellant’s contract, except that the size of the required vehicle was reduced from 80 to 65 cubic feet, a change that had no effect on price.  (O’Keefe Decl. ¶13; Declaration of A. Arana (“Arana Decl.”) ¶¶2-7 and Exhibits A-C).

            26.  For the period September 9 through 30, Respondent calculated its daily excess transportation costs as the difference between the annual cost of the replacement contract ($55,000) and Appellant’s contract rate at the time of termination ($47,302.35) divided by 365.  For 22 days at $21.09 per day, the excess costs incurred by Respondent were $463.98 through the end of September.  (Arana Decl. ¶¶8-10 and Exhibits D, E, F).

            27.   Effective October 1, 2005, Respondent reduced the number of deliveries on Appellant’s former route, reducing the annual rate of the replacement contract to $48,846.38.  Applying the same method of calculation as discussed above, Respondent calculated the excess transportation costs for an additional three accounting periods (84 days) at $4.23 per day, or $355.32, for a total of $819.30 in excess transportation costs incurred by Respondent.  (Langford Decl. ¶26; Arana Decl. ¶¶8-10 and Exhibits D, E, F).

            28.  Respondent incurred administrative costs associated with soliciting and contracting for the replacement service.  These costs were the hourly cost for secretarial and contract specialist time (4 hours and 10.3 hours, respectively), resulting in administrative costs of $325 (O’Keefe Decl. ¶13; Arana Decl. ¶9 and Exhibit E).

            29.  On November 3, 2005, the contracting office issued a final decision assessing reprocurement costs of $1,144.30 ($819.30 in excess costs (Finding 27) plus $325 in administrative costs (Finding 28)) against Appellant.[1]  A Default Damages Worksheet was attached to the final decision describing Respondent’s calculation.  (AF 3, 39).

            30.  Appellant’s timely appeal of the November 3 final decision was docketed as PSBCA No. 5324 (Notice of Appeal dated January 27, 2006).

DECISION

Termination for Default, PSBCA No. 5297

            Respondent argues that Appellant’s refusal to follow instructions given him by the Cottonwood Post Office management and his refusal to deliver First Class Mail justify the termination for default of Appellant’s contract.  On September 8, 2005, Appellant refused to deliver First Class Mail tendered to him for delivery on his route, notwithstanding specific instructions of authorized officials of the Cottonwood Post Office that he do so, instructions that were confirmed by the Manager, Transportation Contracts (Findings 20-23).  This refusal breached a material requirement of Appellant’s contract that he deliver all mail tendered (Finding 3), and justified the default termination of the contract.  See William Roach, PSBCA No. 3335, 97-1 BCA ¶ 28,735 at 143,414; Roger Dean Barrett, PSBCA No. 2490, 89-3 BCA ¶ 22,220; Donald P. Smith, PSBCA No. 1582, 87-2 BCA ¶ 19,787.

            Appellant argues that under the contract he should have been given a cure notice and at least three days to cure any deficiencies in his performance before the termination (Finding 5).  However, Appellant’s refusal to deliver First Class Mail was a material failure to perform the requirements of the contract.  Under such circumstances, the Termination for Default clause does not require that Respondent first give Appellant an opportunity to cure (Finding 5).  See Geo-Marine, Inc. v. General Services Administration, GSBCA No. 16247, 05-2 BCA ¶ 33,048 at 163,830.

            Additionally, Appellant’s refusal to follow the instructions of the Customer Services Supervisor justified termination of the contract.  Appellant refused to acknowledge the authority of the Supervisor to administer the contract and repeatedly refused to follow the Supervisor’s instructions regarding mail delivery, often in a loud, combative and hostile manner (Findings 8, 9, 12, 13, 16, 19, 22, 23).  On many occasions the contracting officer, Respondent’s Manager, Transportation Contracts, and the postmaster specifically instructed Appellant that he must follow the Supervisor’s instructions regarding delivery (Findings 8, 9, 10, 12, 16, 19, 23), yet Appellant refused to do so.  Appellant’s refusal to follow the instructions of the contracting officer’s authorized representative and his failure to follow the specific instructions of the contracting officer that he do so justified the termination under the Events of Default clause (see Findings 5, 6).

            Appellant contends he was not given notice and an opportunity to cure as required by the contract before being terminated on this ground.  The evidence in the record is otherwise.  The contracting officer directed Appellant orally and in writing to follow the oral or written directions of the postmaster and his designee.  She provided an adequate opportunity to cure when she advised on May 27, 2005, that Appellant’s failure to “comply with instructions from the [administrative official] can result in termination of your contract for default.”  (Finding 16).  Notwithstanding this clear warning by the contracting officer, as well as many other warnings along the same line, Appellant failed to correct his performance in this regard, and his continuing refusal to follow the Supervisor’s instructions justified the termination.

            Moreover, Appellant’s unequivocal statement to the Manager, Transportation Contracts, that he would not deliver the solicitations in question and that he would not follow instructions of the Cottonwood Post Office Supervisor (Finding 23) obviated any need for a formal cure notice.  See Todd’s Letter Carriers, PSBCA Nos. 4904, et al., 05-2 BCA ¶ 33,121 at 164,135; P Star, Inc., PSBCA No. 4839, 04‑1 BCA ¶ 32,514 at 160,840.

            As Respondent has demonstrated ample grounds for terminating Appellant’s contract for default, the burden shifts to Appellant to present evidence of excusable causes for his failure to perform, Pamela J. Sutton, PSBCA No. 1622, 88‑3 BCA ¶ 21,031 at 106,237, or to show that the termination was an abuse of the contracting officer’s discretion, Patricia J. Stevens, PSBCA No. 3272, 94-1 BCA ¶ 26,419, recon. denied, 94-2 BCA ¶ 26,951.

            Appellant argues that the termination resulted from a conspiracy among Respondent’s employees and mail delivery contractors in the Cottonwood Post Office to get rid of him.  He submitted witness declarations he contends demonstrate the existence of such conspiracy.  However, Appellant’s witnesses do not address the matters at hand:  Appellant’s refusal on September 8, 2005, to deliver First Class Mail tendered to him and his refusal to follow the directions of the Supervisor.  They do not dispute or provide justification for Appellant’s refusal to follow the Supervisor’s instructions notwithstanding direct orders by Respondent’s officials that he do so.  They do not dispute that Appellant refused to deliver a substantial amount of First Class Mail tendered to him, and they do not provide any excuse for that refusal.  The Board has considered those declarations along with the other evidence in the record and concludes that Appellant has not met his burden of demonstrating that his refusals were excusable or that the contracting officer abused her discretion in terminating the contract for Appellant’s refusal to deliver First Class Mail and refusal to follow instructions of Respondent’s authorized official.

Appellant argues that the contracting officer’s failure to provide him notice of her intention to terminate his contract and an opportunity to respond denied him his rights to due process under the Constitution.  As discussed above, such notice was not required by the contract under the circumstances of Appellant’s termination.  Additionally, Appellant has had an opportunity in this proceeding to raise any excuses or explanations for his refusal to deliver First Class Mail, thus satisfying his due process rights.  See Patricia J. Stevens, PSBCA No. 3272, 94‑1 BCA ¶ 26,419, recon. denied, 94-2 BCA ¶ 26,951; Melvin R. Kessler, PSBCA Nos. 2820, 2972, 92-2 BCA ¶ 24,857 at 123,997, aff’d on recon., 92-3 BCA ¶ 25,092; Shorthaul Trucking Co., PSBCA No. 1046, 1985 WL 16706 (P.S.B.C.A.), June 18, 1985.

Bad Faith

Appellant alleges that the termination of his contract was in retaliation for his initiation of an Equal Employment Opportunity proceeding and contacting the Inspection Service regarding management of the Cottonwood Post Office.  He contends that his mistreatment by Respondent’s employees and contractors demonstrated that the termination of his contract was the product of bad faith.  The record does not support Appellant’s allegations.  While substantial friction existed between Appellant and a number of Respondent’s employees and contractors during contract performance, that does not prove bad faith on Respondent’s part.  See IMS Engineers - Architects, P.C., ASBCA No. 53471, 06-1 BCA ¶ 33,231 at 164,674, recon. granted in part and otherwise denied, 07-1 BCA ¶ 33,467.  Appellant has not shown by clear and convincing evidence that Respondent’s officials acted maliciously or with intent to harm Appellant, which showing is required to sustain a finding of bad faith.  See Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1240 (Fed. Cir. 2002).  The evidence does not demonstrate that the termination resulted from retaliation because of complaints Appellant made about the Cottonwood Post Office management or that a conspiracy against Appellant among postal employees and contractors existed that led to the termination.  Appellant’s arguments in this regard are rejected.

Other Grounds for Termination

Respondent raised other grounds as justifying the default termination:  Appellant’s alleged performance deficiencies, disruptive and threatening conduct, improperly overstating the number of deliveries on his route to inflate his pay, and misrepresentation of his and his assistant’s criminal history on contractor security screening questionnaires.  Because we have found the termination justified by Appellant’s refusal to deliver First Class Mail and refusal to follow instructions of Respondent’s authorized official, we need not address those other grounds for the termination or the arguments and facts offered by the parties regarding them.

Reprocurement Costs, PSBCA No. 5324

The contract authorized Respondent to “acquire similar supplies or services” after a default termination and provided that Appellant “will be liable to the Postal Service for any excess costs.”  (Finding 7).  Respondent has demonstrated that the services procured via the replacement contract were the same as those required by Appellant’s contract and that Respondent acted reasonably in soliciting and awarding the emergency contract (Finding 25).  Respondent incurred reasonable administrative costs associated with the reprocurement as well as excess costs of providing the service for a total of $1,144.30 (Findings 26-29).  These circumstances plus Respondent’s limit of the reprocurement costs to just 106 days of the remaining term of the contract—the contract had about nine months left to run—constitute a prima facie showing of adequate mitigation of the reprocurement costs Respondent incurred.  See Benjamin Mullins, PSBCA Nos. 5136, 5173, 05-1 BCA ¶ 32,918; Don Wasylk d/b/a Klysaw, PSBCA Nos. 4186, 4283, 00‑1 BCA ¶ 30,844; Steve Neill, PSBCA Nos. 4004, 4005, 98-2 BCA ¶ 29,837.  Appellant has not presented evidence to challenge Respondent’s mitigation of damages, its calculation of its claimed reprocurement costs, or the administrative costs charged to Appellant.  Thus, Respondent has shown entitlement to recover its excess costs of reprocurement in the amount of $1,144.30.

 

 

The appeals are denied.

 

 

 

Norman D. Menegat

Administrative Judge

Board Member

 

 

I concur:                                                                                  I concur:

William A. Campbell                                                             David I. Brochstein

Administrative Judge                                                            Administrative Judge

Chairman                                                                               Vice Chairman