_____________________ GRANTED: May 5, 1993 _____________________ GSBCA 11303 THE EDGE, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Thomas Curran of Baker, DeOme & Tour-Sarkissian, San Francisco, CA, counsel for Appellant. Michele M. Feher, Office of Regional Counsel, General Services Administration, San Francisco, CA, counsel for Respondent. Before Board Judges LaBELLA, HENDLEY, and DeGRAFF. DeGRAFF, Board Judge. Appellant challenges respondent's decision to terminate for default appellant's right to perform a contract. The parties agree that we should decide the case based upon the record, without a hearing. Rule 11. For the reasons stated below, we grant the appeal. Findings of Fact In February 1991, the General Services Administration (GSA) decided to purchase twenty-one cellular telephones. GSA requested and received price quotations from several vendors and, on April 3, 1991, GSA issued purchase order K0991BHA264 to The Edge (Edge), which provided the lowest price quotation. The purchase order incorporates 48 CFR 52.233-1 (Disputes), 52.246-1 (Contractor Inspection Requirements), 52.249-1 (Termination for Convenience of the Government), and 52.249-8 (Default). Appeal File, Exhibits 1-5. The total contract price was $26,544.00.[foot #] 1 Appeal File, Exhibit 5. Edge purchased twenty-one telephones and installation equipment for $17,839.00. Id., Exhibit 15. The remaining amount of the contract price, $8,705.00, consists of Edge's employee and overhead costs. Id., Exhibit 17. Edge expected to realize a profit from the sale by collecting a commission of approximately $2,000.00 from the telephone company when the cellular telephones were placed in service. Id. At GSA's request, before Edge delivered the telephones, it programmed them with cellular telephone numbers provided to Edge by GSA. Edge also inspected and tested the telephones before delivery, and found that they were in proper working order. Appeal File, Exhibit 17. On April 12, 1991, Edge delivered twenty-one cellular telephones and an invoice for $26,544.00 to GSA, and GSA distributed ten of the telephones to users. Appeal File, Exhibits 6, 16. Although the users were familiar with some cellular telephones, there is no evidence in the appeal file to establish that the users were familiar with the particular make and model of the telephones supplied by Edge. Id., Exhibit 16. Soon after the ten telephones were distributed to users, the contracting officer was told that there were problems with four of the telephones. As a result, she did not distribute the remaining telephones. Id., Exhibit 16. The appeal file contains copies of five electronic mail messages sent to the contracting officer from four of the cellular telephone users, which briefly describe the problems they encountered in using the telephones. None of these mail messages is signed and none was sent to the contracting officer at the time the problems were encountered. Appeal File, Exhibit 7. One user sent the contracting officer two messages concerning her telephone problems. In the first message, she informs the contracting officer that she used her telephone for one day and was then unable to use it because its display showed "no service." She states that someone came to look at the telephone and told "Sandra" that he was unable to repair the telephone. In a second message, written two and one-half months after the first message, the same user reports that she was never able to use the telephone, and that someone came to look at the telephone when she was not available and talked to "Sandra." Appeal File, Exhibit 7. ----------- FOOTNOTE BEGINS --------- [foot #] 1 The parties expected that GSA would pay Edge $20,244.00 and provide Edge with twenty-one used cellular telephones worth $6,300.00. GSA never provided the used telephones to Edge. Appeal File, Exhibits 5, 9. ----------- FOOTNOTE ENDS ----------- A second user's mail message states that she was never able to use her telephone because she received a recording stating that her electronic signalling number did not correspond with her signal. A third user states that he repeatedly received "phantom rings" and that the spare battery did not hold a charge. A fourth user reports that reception was poor and that he was unable to adjust the volume on his telephone to his satisfaction. Appeal File, Exhibit 7. According to an affidavit signed by one of Edge's employees, the problems experienced by the GSA employees and reported to Edge are attributable to the employees' unfamiliarity with the telephones. Edge states that it promptly investigated all reported problems. According to Edge, one user complained because she was unable to use her telephone in the Sacramento area. Edge determined that this was caused by GSA's failure to activate the user's telephone number with the telephone company for use in the Sacramento area. Edge states that the complaint concerning "phantom rings" was attributable to the user not understanding all of the power-saving features of the telephone. Edge also states that a complaint related to difficulty hearing conversations was due to use of the cellular telephone in marginal signal areas and to improperly adjusting the volume. Finally, Edge notes that it received a complaint that a car cigarette lighter adapter was not working. Edge investigated the problem, found that the adapter was working properly, and concluded that there was a problem with the car's lighter socket. Appeal File, Exhibit 17. On April 24, 1991, the contracting officer was told that Edge had been informed of the problems with the telephones and had made one visit to try to resolve the problems. The contracting officer talked to an employee of Edge, and was told that the problems were "user problems." Appeal File, Exhibit 16. Sometime in late April 1991, the contracting officer orally informed Edge that GSA intended to terminate Edge's right to perform the contract, due to what GSA characterized as Edge's default.[foot #] 2 Appeal File, Exhibit 17. Apparently in response to this oral notice, in a letter dated April 26, 1991, Edge informed GSA that Edge would not accept the return of the telephones. Edge also informed GSA that it wanted payment in full. Id., Exhibit 9. Although the contracting officer and an Edge employee spoke by telephone on April 29, 1991, the parties were not able to resolve their differences. Id., Exhibit 16. On April 30, 1991, GSA returned the telephones to Edge. Edge, however, refused to accept delivery. Id., Exhibit 11. ----------- FOOTNOTE BEGINS --------- [foot #] 2 It is possible that this occurred during the April 24, 1991 telephone conversation. The record is unclear concerning this point. ----------- FOOTNOTE ENDS ----------- On May 9, 1991, the contracting officer terminated, for default, Edge's right to perform the contract. The contracting officer stated that three of the telephones were defective and that GSA had attempted to return or exchange the telephones. The contracting officer also stated that Edge had failed to comply with the contract's inspection clause, which required Edge to inspect the telephones before providing them to GSA. The contracting officer explained that, because Edge failed to deliver acceptable telephones within the time specified in the contract, she was terminating Edge's right to perform the contract. Appeal File, Exhibit 10. On May 15, 1991, GSA and an Edge employee discussed GSA's desire to return the telephones. Edge stated that it did not want the telephones returned. On May 20, 1991, GSA informed Edge that the telephones would be held for Edge by GSA until June 19, 1991, and that, after that date, GSA would sell the telephones and apply the proceeds toward storage charges. Appeal File, Exhibit 11. On June 12, 1991, Edge accepted the return of the twenty-one cellular telephones. Edge inspected them and found them to be in good working order, although some packaging was missing from some units. Appeal File, Exhibit 12. Edge sold fourteen of the telephones for a total price of $8,292. Edge could not have accurately represented to potential buyers that these telephones were new, because some had been used and all had been programmed with GSA's telephone numbers. As of September 9, 1992, Edge had not been able to sell the remaining seven telephones, which Edge attributes to the declining price of new telephones. Edge received a commission of approximately $1,050.00 from the telephone company when GSA placed the ten telephones in service. Edge returned this amount to the telephone company when GSA took the telephones out of service. Id., Exhibit 17. Edge challenged the termination for default when it timely filed its notice of appeal by mailing it to the Board on June 19, 1991. Discussion GSA has the burden of establishing, by a preponderance of the evidence, that it properly terminated for default Edge's right to perform this contract. At most, GSA has established that several of its employees believed that there were problems with a few of the telephones that Edge delivered. GSA has not established that, in fact, there were any problems with any of the telephones or that any other grounds exist which support a termination for default. For this reason, we grant the appeal. In support of its position that the telephones were defective, GSA introduced into the record unsworn, unsigned electronic mail messages that were not prepared contemporaneously with the events they describe. The persons who presumably authored these messages could not operate the telephones satisfactorily and therefore concluded that the telephones were defective. But, the fact that someone using an unfamiliar piece of equipment cannot operate it successfully does not establish that the equipment is defective. Edge has introduced into the record an affidavit that plausibly explains that problems with the service in Sacramento, the "phantom rings," the volume control, and the cigarette lighter adapter were not attributable to defects in the telephones. The affidavit also establishes that Edge tested the telephones before they were delivered to GSA and after they were returned from GSA, and that the telephones worked properly. Edge's affidavit is a more reliable form of evidence than are GSA's mail messages. In addition, Edge's explanation of the problems encountered by GSA's users is logical and convincing and has not been countered in any way by GSA. Thus, GSA has failed to establish, by a preponderance of the evidence, that any of the telephones provided by Edge were defective or that Edge failed to inspect the telephones as required by the contract. GSA argues that Edge repudiated the contract during the April 24 and 29, 1991 telephone conversations and in Edge's April 26, 1991 letter. We reject GSA's argument because there is no evidence in the record to suggest that Edge demonstrated a positive, definite, unconditional intent not to render the promised performance. To the contrary, when the conversations occurred and when the letter was written, Edge had already performed. Decision The appeal is GRANTED. The rights and obligations of the parties shall be the same as if the termination had been for the convenience of the Government. ______________________________ MARTHA H. DeGRAFF Board Judge We concur: _____________________________ ______________________________ VINCENT A. LaBELLA JAMES W. HENDLEY Board Judge Board Judge