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Rocky Start Leads to a Default Termination, National Star Route Mail Contractors Newsletter

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4.01.10

This cautionary story involves a Contract Delivery Service (CDS) contractor who got off to a bad start on a new contract, through no fault of his own. The contractor's performance went further downhill, ultimately leading to a default termination.

The case comes to us from the Postal Service Board of Contract Appeals (PSBCA) in the matter of Larry A. Stiles, PSBCA No. 5304, January 26, 2010. Stiles had been awarded a CDS contract to deliver mail along a route originating in Racine, West Virginia. The contract required Stiles to start out at the Racine post office, case the mail, and deliver it. Next, he was to repeat that process at three different post offices along the way. On his return back to Racine, he was required to backtrack to two of the intermediary post offices.

The contract contained a detailed time schedule for when Stiles was supposed to arrive and depart these four post offices, and an estimate of 2,940 hours per year as the time required to operate the route, including casing.

Larry Stiles had been an employee of another CDS contractor and knew how to perform CDS contracts. Before bidding on the contract, Stiles and another individual (who would become his substitute), discussed the nature of the work with a representative from the contracting officer's office. Stiles and the substitute advised the postal representative of their understanding that the then current contractor was not required to attempt delivery of large packages or any item that required a customer signature. The postal representative stated that if that was the way the route was run, then that was probably the way it would be run under the new contract.

Let me interject at this point. Relying on this type of oral statement from a postal representative is problematic. If you need to rely on an oral statement, you had better put it in writing and ask the contracting officer to confirm it. Now, back to our story.

Contrary to Stiles's conversation with the postal representative, the previous contractor had delivered large packages and accountable items to those customers who wanted them brought out. Otherwise, he would leave notices in their mailboxes so they could come to the post office to pick them up. Sure enough, two weeks after Stiles began performing the contract, he was directed by the Administrative Official to attempt delivery of large packages and accountable items.

Stiles efforts were thwarted from the very beginning of the contract. The previous contractor had placed tags on his sorting case to identify those customers who had mail forwarding or hold mail orders. Those tags were present on his last day of the contract and the morning of Stiles's first day on the route. But by the time Stiles returned to the post office, those tags were gone! Stiles asked the Postmaster for a list of those customers, but the Postmaster told him she did not know how to get such a list. Stiles did not get the list until two or three weeks later.

In addition, on Stiles first day of performance there was a large amount of mail at one of the four post offices on his route that should have been delivered by the previous contractor, but was not. Stiles and his substitute worked after hours for two weeks to get that mail sorted and delivered.

At one of the intermediary post offices along Stiles's route, it was the responsibility of the Postmaster to have the mail ready for Stiles when he arrived. Approximately 10% of the time, however, the postmaster delayed Stiles by giving him additional mail after he had already finished casing the mail and had loaded it into his vehicle.

To make matters even worse, at yet another one of the post offices along his route, Stiles was not provided the physical location of postal customers. Thus, if he were required to deliver a package or accountable item to the customer's home instead of the roadside mail box, he would not know where to go. When this happened, he would inquire at the house of whoever lived nearest the mailbox to see if that resident knew where the addressee lived. If he learned of the location of the customer, he would attempt to deliver the item. Stiles asked the Postal Service for a list of the physical addresses of these customers, but he never received one.

All in all, not a good start, and performance did not seem to recover from there. Only 11 times during 78 delivery days did Stiles return to the Racine post office within 15 minutes of the required time. On at least 29 days, he arrived sufficiently late so that he missed the truck that was scheduled to pick up any outbound mail he had picked up from customers during the day. Stiles also generally failed to arrive at the intermediary post offices within 15 minutes of his scheduled time. This resulted in complaints from postal customers about late mail delivery.

During this time, the contracting officer issued various PS Form 5500 deficiency reports for failure to meet the schedule, a "Final Letter of Warning." and ultimately a notice of default termination.

The case landed at the Postal Service Board of Contract Appeals, where Stiles represented himself during a three-day hearing. The Board agreed that Stiles had encountered various problems operating the route that were not of his own making. But the Board found that those problems did not fully account for Stiles's regular failure to meet the contract schedule. Essentially, the Board held that Stiles had not shown that the problems he faced were primarily attributable to the Postal Service's actions (and inactions). The Board also disagreed with his contention that he should not have been required to deliver packages and accountable items to customer homes. The Board minimized the problems caused by the Postal Service's actions and found inconsistencies in Stiles contentions.

What can we learn from this case? First, do not rely on oral statements about what the contract requires -- get it in writing. Second, if your performance is hindered by causes outside your control, make sure to fully document both the existence of those causes and the impact they have on your performance. Third, if performance starts off poorly, do whatever is necessary to set things right. If you can't get it right, and the Postal Service is the cause of your problems, make sure the contracting officer is notified early and in writing.

Our Postal Service Contracting practice information is available through the Postal Service Contracting page.

David P. Hendel
Husch Blackwell Sanders LLP
750 17th Street, N.W., Suite 1000
Washington, D.C. 20006

202.378.2356
fax: 202.378.2319
david.hendel huschblackwell.com