__________________________________ GSBCA 12753 DENIED; GSBCA 12810 GRANTED IN PART: September 21, 1994 __________________________________ GSBCA 12753, 12810 FLOOR BRITE CLEANING SERVICE, INC., Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Johnny L. Johnson, President of Floor Brite Cleaning Service, Inc., Orlando, FL, appearing for Appellant. Alphonse R. Dattolo, Office of Regional Counsel, General Services Administration, Atlanta, GA, counsel for Respondent. Before Board Judges PARKER, DEVINE, and NEILL. NEILL, Board Judge. In these appeals, Floor Brite Cleaning Service, Inc. (Floor Brite) challenges the propriety of the termination of its contract for default and the partial denial of its claims for payment. The contract in question, awarded by the General Services Administration (GSA), involves janitorial services for the Federal Building-Courthouse in Orlando, Florida. The parties have elected to submit their cases on the record. Findings of Fact The Procurement 1. On May 14, 1993, GSA issued an invitation for bids to provide janitorial services for a twelve-month period beginning October 15, 1993, and ending October 14, 1994, at the George C. Young Federal Building-Courthouse in Orlando, Florida. This included janitorial services for both the building's interior and the exterior and surrounding grounds. Appeal File, GSBCA 12753, Exhibit 3. The solicitation was a total small business set- aside. Id., Exhibit 1. On July 1, 1993, Floor Brite submitted a bid of $8,900 per month. Id. GSA awarded contract no. GS-04P- 93-LCC-0010 to Floor Brite on September 15, 1993. Id., Exhibit 3. Contract Provisions 2. The contract contains the following provision regarding the notice to proceed: After award, the successful bidder will be given a written Notice To Proceed and shall provide Contractual services for a twelve month period, subject to the availability of funds (see Clause 552.232-77, Availability of Funds (July 1984), Part II, Section I), commencing on the date specified in the notice to proceed. Work under this Contract is expected to commence on or about August 1, 1993. The Notice To Proceed is expected to provide for at least 30 working days preparation time prior to commencement of work. Appeal File, GSBCA 12753, Exhibit 3 at F-32. 3. The contract contains the following provision regarding the security clearance requirements: Security Clearance Requirements (Nonclassified Contract). Unless otherwise specified, the Contractor will submit to the Contracting Officer's Representative at least five work days before the starting date of the Contract, two (2) completed Forms FD-258, Fingerprint Charts and one (1) GSA Form 176, Statement of Personal History for the Contractor and all employees who have access to the building in performance of the Contract work. Appeal File, GSBCA 12753, Exhibit 3 at H-49. 4. The contract contains the following provision for supervision: A. General. The Contractor shall arrange for satisfactory supervision of the Contract work. The Contractor or his supervisors shall be available at all times, when the majority of the Contract work is in progress, to receive notices, reports, or requests from the Contracting Officer or his representative. It is the policy of GSA that Government direction or supervision of Contractor's employees, directly or indirectly, shall not be exercised. B. On-Site Supervisors. The Contractor shall provide in writing to the Contracting Officer's Representative, at least five days prior to the Contract starting date, the names, telephone numbers, and addresses of on-site supervisor(s). The term "on-site supervisor" and "alternate on-site supervisor" means a person designated in writing by the Contractor, who has authority to act for the Contractor on a day-to-day basis at the work site, and to accept and sign for notices of deductions, inspection reports and all other correspondence on behalf of the Contractor. Appeal File, GSBCA 12753, Exhibit 3 at C-19. 5. The contract contains the following provision concerning supplies and equipment: B. Furnished by the Contractor. (1) The Contractor shall furnish all supplies, materials, equipment, and employee training necessary for the performance of the work of this Contract, unless otherwise specified herein. These supplies and materials shall be of a quality and type customarily utilized by other Contractors engaged in the profession of providing janitorial services. No later than five days prior to the Contract starting date, the Contractor shall submit a list giving the name of the manufacturer, the brand name and intended use of each of the materials that he proposes to use in the performance of the work. The Contracting Officer's Representative must approve the Contractor's list of supplies and materials prior to their use. The use of caustics (Acid based cleansers) will not be approved. Materials or supplies shall not be used in performance under this Contract (or placed or stored on Government property) until the applicable Material Safety Data Sheets for all hazardous materials (products containing CAUTION or WARNING labels) have been furnished to the Contracting Officer's Representative. The Contractor shall use recycled products to the greatest extent possible. (2) The Contractor shall not use any material which the Contracting Officer's Representative determines would be unsuitable for the purpose or harmful to the surfaces to which applied. Costs for correcting damage caused by misused materials will be borne by the Contractor. (3) All necessary cleaning equipment including power driven floor scrubbing machines, waxing, and polishing machines, industrial type vacuum cleaners, and all necessary motor trucks, etc., needed for the performance of the work of this Contract shall be furnished by the Contractor. Such equipment shall be of the size and type customarily used in work of this kind and shall meet the approval of the COR [Contracting Officer's Representative]. Defective equipment shall be repaired or replaced within 72 hours. (4) The Contractor shall require all employees, including supervisors, to wear distinctive uniform clothing for ready identification, and ensure that every employee is in uniform no later than ten working days from the date an employee first enters on duty. Employees shall wear smocks for men, and dresses, skirts and blouses, slacks or smocks, as appropriate, for women. The uniform shall have the Contractor's name, easily identifiable, affixed thereon in a permanent or semi-permanent manner, such as a badge or monogram. Any color or color combination, as appropriate, may be used for the uniforms, except green. Employees shall be required to dress neatly, commensurable with the tasks being performed. Appeal File, GSBCA 12753, Exhibit 3 at C-20-21. The contract also requires the contractor to service paper and soap dispensers in all toilet rooms twice daily. Id. at J-141. 6. The contract contains the following clause regarding the personnel qualifications: A. Qualifications of Supervisory Employees. All supervisory personnel engaged in directing the work to be accomplished under this Contract shall possess at least 2 years of recent (within the past 5 years) experience in directing cleaning type operations in a supervisory capacity for buildings of the approximate size of the building(s) to be cleaned under this Contract. The on-site supervisor is required to be fully conversant in English. A detailed resume (See Exhibit 4) containing the information specified below must be submitted through the COR, to the Contracting Officer, for approval prior to the assignment of any supervisors to the Contract. Both new and replacement supervisors must meet these qualification standards. (1) The full name of the proposed supervisor. (2) A detailed description of the previous 5 years employment history of the proposed supervisor. (3) The name(s) and address(es) of the companies for whom the proposed supervisor worked for the past 5 years, along with the name(s) and telephone number(s) of his or her immediate supervisor. Appeal File, GSBCA 12753, Exhibit 3 at C-21-22. 7. The contract contains the following provision regarding the annual schedule of daily and periodic cleaning: A. Five work days prior to the Contract starting date, . . . the Contractor shall submit for approval to the Contracting Officer's Representative an annual schedule of all daily and periodic cleaning. Both Daily and Periodic Cleaning Schedules shall include specific areas, (by floor, and room, corridor, or lobby number, etc.; specific portions of large areas must be identified on the schedule), day of week and time of day work will be provided. Daily cleaning is defined as services performed on a day to day basis. Periodic cleaning is defined as work required for performance less frequently. NOTE: See Section G, for Deduction Criteria. Appeal File, GSBCA 12753, Exhibit 3 at C-23. 8. Appellant's contract contains a default clause which provides, in part, as follows: 52.249-8 Default (Fixed-Price Supply and Service)(APR 1984) (a)(1) The Government may, subject to Paragraphs (c) and (d) below, by written notice of default to the Contractor, terminate this Contract in whole or in part if the Contractor fails to -- (i) Deliver the supplies or perform the services within the time specified in this Contract or any extension; (ii) Make progress, so as to endanger performance of this Contract (but see subparagraph (a)(2) below: or (iii) Perform any of the other provisions of this Contract (but see subparagraph (a)(2) below). (2) The Government's right to terminate this Contract under subdivisions (1)(ii) and (1)(iii) above, may be exercised if the Contractor does not cure such failure within 10 days (or more if authorized in writing by the Contracting Officer) after receipt of the notice from the Contracting Officer specifying the failure. Appeal File, GSBCA 12753, Exhibit 3 at I-99. Contract Performance 9. Notice of award and notice to proceed were given to appellant in a letter from the contracting officer dated September 15, 1993. The letter advised appellant that all requested information in the specifications must be submitted prior to the October 15, 1993, start date. Appeal File, GSBCA 12753, Exhibit 2. According to a Federal Express receipt, however, this letter was not received by Floor Brite until October 5. A handwritten note initialled by the contracting officer and appearing at the bottom of the first page of a copy of the letter dated September 15 in the record states that GSA orally notified Floor Brite of the award on September 15. Id. 10. By letter dated October 4, 1993, Floor Brite's president sent some of the requested information to the contracting specialist, including the city occupational license, a quality control program, a daily and a periodic cleaning schedule, and the names of the companies to be used for the pest control, lawn, and solid-waste disposal services. The periodic cleaning schedule submitted by Floor Brite does not provide a specific breakdown of the work by floor, room, corridor, lobby number, etc., as required by the contract. Appeal File, GSBCA 12753, Exhibit 4. 11. On October 12, 1993, prior to the October 15 start date, GSA officials met at the Tampa Field Office with appellant's president to discuss documentation called for under the contract. A GSA representative at the meeting has stated that an offer was made at that time to share copies of the various forms required. This was said to include examples of periodic cleaning schedules, quality control programs, GSA Form 64 (Periodic Building Cleaning Work Assignment and Report) and other appropriate forms. This offer was not accepted. Affidavit of Eugene J. Krajewski (June 1, 1994). 12. Contract performance began as scheduled on October 15, 1993. In a memo to the GSA Facility Support Center, however, the assistant field office manager reported numerous problems on the first day and during the first week of contract performance. Appeal File, GSBCA 12753, Exhibit 5. By letter dated November 8, 1993, the contracting officer's representative (COR) sent a letter to appellant's president listing a number of problems which had been occurring since the contract commenced.[foot #] 1 The letter listed the following deficiencies: (1) failure to submit an acceptable quality control program; (2) unsatisfactory performance by the contractor's lawn service; (3) inadequate availability of supplies; (4) failure to provide Floor Brite's employees with uniforms; (5) failure to name an alternate supervisor; (6) failure to submit a list of the supplies and materials used; (7) failure to submit the Periodic Building Cleaning Work Assignment and Report; (8) failure to respond to the assistant field office manager or the inspector for the above mentioned items; and (9) failure to provide a supervisor for the cleaning services employees as required by the contract. Id., Exhibit 6. First Cure Notice 13. By letter dated November 18, 1993, the contracting officer provided Floor Brite with its first cure notice. The notice listed various information and documentary requirements of the contract which appellant had failed to satisfy, such as: (1) the names and relevant information for the "on-site supervisors"; (2) a detailed resume of key supervisory personnel; (3) the list of the manufacturer, brand names and intended use of the supplies and materials necessary for the performance of the work on the contract; (4) applicable material safety data sheets for all hazardous materials. Appeal File, GSBCA 12753, Exhibit 9. The letter also stated that the contractor failed to provide supplies, materials, equipment, and employee training necessary for the performance of the work ----------- FOOTNOTE BEGINS --------- [foot #] 1 This letter is signed by the GSA Tampa Field Office Manager. He is the contracting officer's representative for this contract. Appeal File, GSBCA 12753, Exhibit 7. ----------- FOOTNOTE ENDS ----------- on the contract. Id. The contracting officer warned that there were ongoing performance problems and reminded appellant that the cleaning services were required to be performed in the building during the hours of 7:30 a.m. until 5:30 p.m. Id. 14. By letter also dated November 18, appellant's president responded to the COR's letter dated November 8. He stated that all supplies had been stocked in the building and that employee uniforms and name badges would be provided no later than November 26. Floor Brite's president identified himself as the alternate supervisor and stated that he had already submitted the required list of supplies and materials. He guaranteed that he would be at the building weekly to "make sure that everything is going as it should." Appeal File, GSBCA 12753, Exhibit 10. 15. By letter dated November 24, 1993, the COR replied to appellant's letter dated November 18. He noted that the availability of supplies was not adequate. He advised appellant that on October 18 and 19, there were rest rooms without toilet paper and trash can liners were not available on two occasions. He explained that if appellant's president was to serve as alternate supervisor, a detailed resume, a personal history statement, and a fingerprint card must be submitted in accordance with contract requirements. As to appellant's claim that a list of supplies and materials had already been submitted, he noted emphatically that a list had not been submitted or approved as of the date of this letter. In his letter dated November 24, the COR also noted new problems with appellant's performance. He wrote that the vacuum cleaners being used are noisy, old, worn out and are blowing dust throughout office spaces. He called for repair or replacement as necessary. He also noted that the exterior entrances are not being washed down three days per week as required because appellant has not supplied its employees with water hoses for that purpose. Appeal File, GSBCA 12753, Exhibit 11. Second Cure Notice 16. By letter dated December 1, 1993, the contracting officer sent appellant a second cure notice which restated the deficiencies enumerated in the first cure notice. Appeal File, GSBCA 12753, Exhibit 13. 17. According to an unsigned conference memorandum in the record, appellant's president met with the COR and his assistant on December 8 to discuss contract problems. The memorandum, apparently prepared either by the COR or his assistant, summarizes the meeting and also includes some subsequent entries regarding follow-up events. Appellant's president is said to have brought to the meeting a list of materials and supplies and some material safety data sheets. During the meeting, Floor Brite's president stated that the building had been stocked with supplies, a working floor buffer, three vacuum cleaners, a water hose, and other relevant materials. He also is quoted as saying that uniforms had been issued to the employees. Appellant's president also is said to have agreed to meet with the COR's assistant to tour the building with him and to discuss the problems associated with the cleaning. The requirement for security information and a resume for the alternate on-site supervisor (i.e., Floor Brite's president) was also discussed at this meeting. The conference memorandum reports that Floor Brite's president became "extremely agitated" over these requirements but eventually agreed to provide the material the following day. The memorandum of the meeting on December 8 also quotes appellant's president as stating that he was shocked at how dirty the building was and promising to be in the building "every day, supervising, for a few months until the building is up to standard." Appeal File, GSBCA 12753, Exhibit 16. 18. Following this meeting of December 8, the COR sent appellant a letter, dated December 9, 1993. The letter stated that the resume for the alternate supervisor was still missing as were the uniforms for the cleaning service employees. The contracting officer's representative set December 10, 1993, as the deadline for the resume, and December 31, 1993, as the deadline for providing the uniforms. Appeal File, GSBCA 12753, Exhibit 17. 19. Another letter from the COR to appellant, this one dated December 13, 1993, discusses the supply list provided by appellant on December 8. The letter explains that the list was compared to the supplies and materials actually on hand. It states that the list does not mention many unauthorized and unlisted solvents and chemicals which are, as a matter of fact, on hand. In addition, the letter notes that material safety data sheets covering many of the materials on hand were not submitted or available. The same letter notes the following with regard to appellant's cleaning equipment: 4. The three Clarke vacuum cleaners on hand (listed as Hoovers on the list) are in poor condition, i.e., there were holes in the dust bags, the beater brushes were worn out, and one was missing a bottom vacuum channel plate. 5. There are not enough 24-ounce wet mops and buckets on hand to appropriately clean the building, (at least one more of each is required). 6. A minimum of two more dust mops are necessary to appropriately clean the building. 7. There were no dust cloths and only one feather duster on hand for the entire building. 8. There were no utility carts available as were included on the list that Floor Brite provided. 9. One push (lobby) broom was on hand. An additional push broom is required to perform appropriate cleaning. Appeal File, GSBCA 12753, Exhibit 18. This letter closed with the reminder: Your contract requires that all supplies and materials used . . . must be approved in advance by the Building Manager, and must have the appropriate MSDS [material safety data sheet] . . . furnished prior to its use. Defective equipment must be repaired or replaced within 72 hours. Id. Appellant was required to take immediate corrective action on these items by December 17, 1993. 20. The first meeting between the assistant COR and appellant's president following the meeting on December 8 was scheduled for December 14, 1993. An unsigned GSA memo to the file states that appellant's president failed to show up for this meeting. The same memo states that the assistant COR contacted appellant's president and rescheduled the meeting for December 16, 1993. The memo goes on to state that appellant's president also failed to show up for that appointment. Appeal File, GSBCA 12753, Exhibit 16. 21. Thereafter, the COR sent appellant's president a letter, dated December 21, 1993. It requested his presence at a meeting scheduled for December 22. The COR took this occasion to point out to appellant's president that despite assurances given at the meeting on December 8, he had not physically been present in the building nor had he provided any training or supervision to his employees. His failure to keep these commitments, his failure to attend the meetings previously scheduled for December 14 and 16, and his inadequate response to the COR's letters of December 9 and 13 were said to evidence "a total lack of cooperation in resolving the problems associated with [the] cleaning contract." Appeal File, GSBCA 12753, Exhibit 19. Third Cure Notice 22. On December 28, 1993, the contracting officer sent appellant a third and final cure notice. The cure notice outlined the following deficiencies: (1) unacceptable proposed alternate on-site supervisor; (2) failure to provide appropriate uniforms; (3) failure to provide the security clearance documents required for the supervisor and alternate on-site supervisor; (4) failure to supply the list of supplies and materials which corresponded to the supplies and materials that were provided at the building; (5) unauthorized and unlisted solvents and chemicals located in the building; (6) unavailability of some of the material and safety data sheets; (7) the three vacuum cleaners in current use were in poor condition; (9) no operational floor buffer or water hose; (10) insufficient number of wet mops, buckets, dust cloths, feather dusters, utility carts, and brooms on hand; (11) no hand towels or toilet tissue in the building on two separate occasions; (12) failure to provide capable, trained and qualified employees, specifically, the on- site supervisor had not been provided any training; and (13) failure to submit a complete periodic cleaning schedule. Appeal File, GSBCA 12753, Exhibit 20. The contracting officer stated that appellant had ten days to cure the deficiencies or termination of the contract for default would be considered. Id. 23. GSA terminated appellant's contract for default, by letter dated January 26, 1994, effective at midnight on that day. Appeal File, GSBCA 12753, Exhibit 28. The contracting officer stated the following reasons for the decision to terminate appellant's contract: (1) various documentation required prior to the start-up of the contract had not been submitted; (2) deficiencies addressed in the third cure notice dated December 28, 1993, had not been corrected; and (3) severe problems with the performance of the contract. Id. On February 10, 1994, Floor Brite appealed the contracting officer's decision terminating its contract for default. The appeal was docketed as GSBCA 12753. Id., Exhibit 36. Deductions 24. Appellant's contract contains a clause regarding deductions for unsatisfactory work: 52.232-78 Adjusting Payments (MAY 1989). a. Under the Inspection of Services Clause of this Contract, payments may be adjusted if any services do not confirm [sic] with Contract requirements. The Contracting Officer or a designated representative will inform the Contractor, in writing, of the type and dollar amount of proposed deductions by the 10th workday of the month following the performance period for which the deductions are to be made. b. The Contractor may, within 10 working days of receipt of the notification of the proposed deductions, present to the Contracting Officer specific reasons why any or all of the proposed deductions are not justified. Reasons must be solidly based and must provide specific facts that justify reconsideration and/or adjustment of the amount to be deducted. Failure to respond within the 10 day period will be interpreted to mean that the Contractor accepts the deductions proposed. c. All or a portion of the final payment may be delayed or withheld until the Contracting Officer makes a final Decision on the proposed deduction. If the Contracting [Officer] determines that any or all of the proposed deductions are warranted, the Contracting Officer shall so notify the Contractor, and adjust payments under the Contract accordingly. Appeal File, GSBCA 12753, Exhibit 3 at G-36. Deductions for October 25. By letter dated November 8, 1993, the contracting officer's representative proposed deductions in the amount of $952.64 for performance deficiencies during the period of October 15 to October 31, 1993. In support of these proposed deductions, the Government provided duplicate copies of contract cleaning inspection reports signed by the on-site inspectors and previously provided to the contractor's on-site representative. Appeal File, GSBCA 12753, Exhibit 7. 26. The specific deficiencies mentioned in this letter proposing deductions for the month of October relate to such matters as failure to clean and service rest rooms, failure to clean secured areas during the day, failure to have a supervisor on-site, and failure to police ground and parking areas. The letter proposing deductions expressly advised appellant's president that he had ten working days to present the contracting officer's representative with specific reasons why any or all of the proposed deductions were not warranted. Appeal File, GSBCA 12753, Exhibit 7. There is no evidence in the record that appellant contested the deductions for these performance deficiencies within the ten working days provided by the notice. Deductions for November 27. By letter dated December 3, 1993, the contracting officer's representative proposed to deduct $1,038.37 for performance deficiencies during the period of November 1 to November 30, 1993. This letter contained the same type of supporting documentation as provided in the letter proposing deductions for the previous month. Appeal File, GSBCA 12753, Exhibit 15. 28. This letter documenting deficiencies in performance during the month of November also notes that appellant had failed to submit the required list of supplies, materials, and equipment to be used in the building, had failed to provide material safety data sheets, and had not yet provided a resume, statement of personal history, or fingerprint card for the alternate supervisor. The letter also notes that uniforms had still not been provided, that an operational floor buffer had not been available since November 5, that vacuum cleaners are defective and are blowing dust into the office environment, and that a water hose had not been provided for entrance cleaning tasks. Appeal File, GSBCA 12753, Exhibit 15. 29. The specific deficiencies mentioned in this letter proposing deductions for the month of November relate to such matters as failure to provide external wash-down of building entrances three times weekly, failure to provide daily damp mop and spray buff for all hard and resilient floors, and failure to provide periodic damp mop and spray buff of health unit, snack bar, and rest rooms. The letter proposing deductions expressly advised appellant's president that he had ten working days to present the contracting officer's representative with specific reasons why any or all of the proposed deductions were not warranted. Appeal File, GSBCA 12753, Exhibit 15. There is no evidence in the record that appellant contested the deductions for these performance deficiencies within the ten working days provided by the notice. Deductions for December 30. By letter dated January 4, 1994, the contracting officer's representative proposed to deduct $2,547.65 for performance deficiencies during the month of December. This letter contained the same type of supporting documentation as provided in the letter proposing deductions for the previous month. Appeal File, GSBCA 12753, Exhibit 24. 31. The specific deficiencies mentioned in this letter proposing deductions for the month of December relate to such matters as failure to wash ramps and front entrances, failure to mop and buff all resilient floors, rest rooms, the health unit, and the snack bar, failure to clean and supply rest rooms with toilet tissue and paper towels, failure to vacuum certain areas of the building, failure to spot clean carpets, failure to clean water fountains, and failure to remove leaves and weed flower beds on building grounds. The letter proposing deductions expressly advised appellant's president that he had ten working days to present the contracting officer's representative with specific reasons why any or all of the proposed deductions were not warranted. Appeal File, GSBCA 12753, Exhibit 24. There is no evidence in the record that appellant contested the deductions for these performance deficiencies within the ten days provided by the notice. Deductions for January 32. By letter dated February 3, 1994, the contracting officer's representative proposed to deduct $1,382.22 for performance deficiencies during the period of January 1 to January 25, 1994. This letter contained the same type of supporting documentation as provided in the letter proposing deductions for the previous month. Appeal File, GSBCA 12753, Exhibit 30. 33. The specific deficiencies mentioned in this letter proposing deductions for the month of January relate to such matters similar to those described in letters proposing deductions for prior months, such as failure to spray buff the floor in various areas of the building, failure to clean rest rooms, failure to provide required grounds maintenance, failure to provide paper products for rest rooms, and failure to spot clean carpets. This letter proposing deductions expressly advised appellant's president that he had ten working days to present the contracting officer's representative with specific reasons why any or all of the proposed deductions were not warranted. Appeal File, GSBCA 12753, Exhibit 30. There is no evidence in the record that appellant contested the deductions for performance deficiencies within the ten working days provided by the notice. Appellant's Claim for Deductions Taken 34. The deductions taken by respondent for deficient performance from October 1993 to January of the following year became the subject of a formal claim filed by Floor Brite in a letter to the contracting officer dated March 7, 1994. Appeal File, GSBCA 12810, Exhibit 31; See Finding 41. In that letter, appellant requested prompt payment of invoice number 1354, for $5,920.88, the total amount withheld for the deductions taken in October, November, December, and January. Id. Appellant also resubmitted at that time invoice number 1331, its invoice for janitorial services provided during the month of January for the amount of $8,900. Id. Confirmation of Deficiencies 35. In January 1994, a GSA inspection team evaluated custodial services in various buildings throughout the region. The team's report notes that the Federal Building-Courthouse in Orlando showed a "tremendous decline in services." The services performed for room cleaning, toilet cleaning, corridors, elevator/escalators, and grounds, sidewalks, and outside entrances were rated as "unsatisfactory; significant deficiencies." Appeal File, GSBCA 12753, Exhibit 26. 36. The record contains a copy of the cleaning complaint log for the Federal Building-Courthouse in Orlando. The log shows a total of forty-three complaints filed during the period of appellant's contract. The complaints confirm many of the deficiencies detailed in the letters proposing deductions from amounts due under the contract. Appeal File, GSBCA 12753, Exhibit 22. The record contains copies of forty-four service tickets given to appellant's on-site supervisor for corrective action during the contract period. These tickets likewise confirm the existence of these deficiencies -- particularly failure to clean the rest rooms properly and to supply them with toilet paper and towels. Id., Exhibit 23. Respondent has also supplied for the record numerous photographs which document many of these same deficiencies. Id., Exhibit 21. Withholding of Funds at Request of the Department of Labor 37. Appellant's contract contains the Service Contract Clause which states, in part, as follows: 52.222-41 Service Contract Act of 1965, as Amended (May 1989) (k) Withholding of Payments and Termination of Contract. The Contracting Officer shall withhold or cause to be withheld from the Government Prime Contractor under this or any other Government contract with the Prime Contractor such sums as an appropriate official of the Department of Labor requests or such sums as the Contracting Officer decides may be necessary to pay underpaid employees employed by the Contractor or subcontractor. In the event of failure to pay any employees subject to the Act all or part of the wages or fringe benefits due under the Act, the Contracting Officer may, after authorization or direction of the Department of Labor and written notification to the Contractor, take action to cause suspension of any further payment or advance of funds until such violations have ceased. Appeal File, GSBCA 12753, Exhibit 3 at I-126. 38. By letter dated January 31, 1994, the U.S. Department of Labor (DOL) contacted the contracting officer and requested that all funds due appellant be withheld because an investigation of Floor Brite revealed that the company had failed to make the proper payments for its payroll. Pending final decision of this matter, DOL requested that funds sufficient to pay the back wages due the employees be withheld. Appeal File, GSBCA 12810, Exhibit 24. DOL repeated this request to the contracting officer by letter dated February 24, 1994. Id., Exhibit 26. 39. The contracting officer informed appellant in a letter dated March 1, 1994, that all funds due under the contract were to be withheld in accordance with Section 3(a) of the McNamara- O'Hara Service Contract Act of 1965, as amended (SCA) and Section 104 of the Contract Work Hours and Safety Act. Appeal File, GSBCA 12810, Exhibit 27. 40. Thereafter, the contracting officer received a letter dated March 4, 1994, from the DOL wage hour investigator stating that appellant's president failed to show up at a meeting scheduled to discuss the payroll records. This letter from the DOL to the contracting officer contains a "Summary of Unpaid Wages," a standard form issued by the DOL, which shows specific amounts of unpaid wages due to certain employees of appellant for work performed during the specified time periods. This summary comes to a total of $2,002.44 and is dated March 3, 1994. The DOL letter also reported that appellant's president had agreed that most of the employees were due the amount computed, but had refused to sign an authorization for disbursement. The letter closed with the request that the contracting officer withhold the specific amount of $2,002.44 and that this amount be sent to the DOL for disbursal to the employees in question as soon as possible. Appeal File, GSBCA 12753, Exhibit 35. 41. By letter dated March 7, 1994, to the contracting officer, the appellant reduced to writing its various claims for monies allegedly due under the contract. This included invoice number 1354, for $5,920.88, which represents a demand for all deductions taken for the months of October, November, December, and January. Appellant also resubmitted at this time invoice no. 1331, for $8,900 for services rendered during the month of January. This invoice bears the stamp "Billed Jan 21 1994." Appeal File, GSBCA 12810, Exhibit 31. 42. In its claim letter dated March 7, 1994, appellant complained bitterly regarding respondent's withholding of funds at the request of the DOL. Floor Brite contended that the withholdings would not have been required in the first place had GSA paid the January invoice as originally submitted. Appeal File, GSBCA 12810, Exhibit 31. 43. In response to appellant's claim, the contracting officer released a final payment of $2,967.69 on March 24, 1994, to appellant for services rendered during the month of January. Appeal File, GSBCA 12810, Exhibit 32. The amount was calculated as follows: $8,900 current monthly payment for January, less $2,004.44 for the DOL withholding, less $2,547.65 for the December deduction, less $1,382.22 for the January deduction. Id. The contracting officer denied payment of invoice no. 1354 for the total amount withheld for deductions. Id. 44. By letter dated April 7, 1994, Floor Brite appealed the contracting officer's final decision dated March 24, 1994. Appeal File, GSBCA 12810, Exhibit 33. The appeal of the decision to deny full payment of the invoices was docketed as GSBCA 12810. Id. Subsequently, the Board consolidated the two appeals by order dated May 16, 1994. 45. The record for this case contains two summaries of unpaid wages dated March 4, 1994. Both list wages unpaid to employees of appellant. The forms differ, however, in the total amount due. One form lists six employees of appellant's while the other lists only five. The form listing six employees totals $2,002.44. This was the summary provided to GSA by the DOL as an enclosure with DOL's letter dated March 4 to the contracting officer. Appeal File, GSBCA 12753, Exhibit 35. The other summary lists only five employees and totals $1,102.44 in unpaid wages. This second summary appears to have been furnished by the DOL to appellant. When appellant appealed the contracting officer's denial of its claim for payment of the January invoice and previous deductions, this second summary was included in the documentation filed with the notice of appeal. Appeal File, GSBCA 12810, Exhibit 33. 46. In reviewing the record for this case, the Board noticed the conflict in the two DOL summaries of unpaid wages which bear the date of March 3, 1994. The Board asked the contracting officer to determine which of the two summaries is correct. The DOL has since confirmed to the contracting officer that the lower figure of $1,102.44 represents an agreement reached with appellant's president. Declaration of Contracting Officer, Pamela D. Kelley (August 2, 1994). Restoration Work 47. In a sworn affidavit, the COR states, in part: The Floor Brite supervisor was instructed by the Building Manager and the Custodial Work Inspector that cleaning was not required in the areas where construction or renovation work was in progress. At the completion of each renovation project, the Floor Brite supervisor was notified that the cleaning was to be resumed in specific area(s) involved. At no time was Floor Brite penalized nor were deductions taken for areas under construction or renovation. It should also be noted that the construction contractors were required to leave the area in a clean condition following the completion of construction work, further confirming that there was no additional cleaning burden to Floor Brite, Inc. Affidavit of James F. Bennett (June 1, 1994). Annual Daily and Periodic Cleaning Schedules 48. The COR's assistant has stated that appellant failed to submit an acceptable periodic cleaning schedule as required under the contract. The schedule which was submitted by Floor Brite was said to be incomplete in that it did not provide a specific breakdown by floor, room, corridor, lobby number, etc., as required by the contract. He further states that he made "numerous efforts" to meet with appellant's president to assist him in correcting the deficiencies in the periodic cleaning schedule but that the efforts were unsuccessful. Affidavit of George W. Post (June 1, 1994). Discussion We turn first to respondent's termination of appellant's contract for default. It is well established that in the event a contracting officer's determination to terminate a contract for default is challenged, it is incumbent on the Government to prove that the decision was justified. Lisbon Contractors, Inc. v. United States, 828 F.2d 759 (Fed. Cir. 1987). In the contracting officer's letter of January 26, 1994, terminating appellant's contract, we find a comprehensive summary of the reasons why the contract was terminated. Three basic reasons are cited by the contracting officer as support for the action taken. We consider them here in the light of documentary evidence provided by the parties for the record in this case. Failure to Submit Required Start-up Documentation The first justification offered by the contracting officer in support of the termination action is that "various documentation required prior to the start-up of the contract had not been submitted." Finding 23. The third cure notice refers to four specific groups of documents which appellant failed to submit. The first set of documents concerns the security clearance documents required for the supervisor and the alternate on-site supervisor. The contract required that at least five days prior to the starting date, the contractor provide fingerprint charts and a personal history statement for employees who are to have access to the building in performance of contract work. Finding 3. Appellant's failure to provide this and related information concerning the on-site and alternate on-site supervisor was pointed out in writing to Floor Brite's president in the COR's letters of November 8, November 24, December 3, and December 9 and in the contracting officer's first, second, and third cure notices. Findings 12, 13, 15, 16, 18, 22, 28. Appellant has offered nothing for the record to demonstrate that it was in compliance with this contract requirement. The contract likewise required that no later than five days prior to the contract start date, the contractor should submit a list giving the name of the manufacturer, the brand name, and intended use of each of the materials it proposed to use in performance of the work. Finding 5. The providing of this list was problematic from the start. The COR's letter of November 8 to appellant and the contracting officer's first cure notice note appellant's failure to provide such a list. Findings 12-13. In reply, appellant's president claimed that a list had in fact been supplied. Finding 14. The COR in his letter of November 24 to appellant emphatically denied that any such list had either been submitted or approved as of the date of his letter. Finding 15. The absence of such a list was again pointed out in the COR's letter of December 3 proposing deductions from payments for services in November. Finding 28. Appellant's previous failure to provide a list of materials and supplies was confirmed on December 8 when appellant's president met with GSA representatives and finally provided them with such a list. Finding 17. This list, however, was unsatisfactory. It was the subject of a detailed letter from the COR to appellant's president. The letter, dated December 13, pointed out to appellant that the list did not correspond to the materials and supplies actually found to be on hand at the site. The letter directed appellant to take immediate corrective action. Finding 19. Appellant has offered nothing for the record to demonstrate that the list was revised or that the materials and supplies were replaced so as to correspond to those included on the list. Floor Brite's contract also provides that materials or supplies shall not be used in performance under the contract or even placed or stored on Government property until the applicable material safety data sheets for all hazardous materials have been furnished to the contracting officer's representative. Finding 5. The absence of these safety data sheets is closely tied to the problem regarding an acceptable list of materials and supplies to be used. The absence of the sheets was pointed out to appellant in the first cure notice. Finding 13. At the meeting with GSA officials on December 8, appellant's president did provide some material safety data sheets. Finding 17. The submission was not, however, complete. In his follow-up letter of December 13 to appellant, the COR advised that material safety data sheets covering many of the materials on hand had not been submitted. Finding 19. Nothing in the record indicates that appellant ever complied fully with this contract requirement as requested. A fourth documentary requirement listed in the final cure notice concerns the need for a complete schedule of all periodic cleaning. The COR's assistant has explained that for the schedule of periodic cleaning to be acceptable, it must identify the areas to be cleaned by floor, and room, corridor, or lobby number. Finding 48. This is clearly a contract requirement. Finding 7. The periodic cleaning schedule submitted by appellant on October 4 did not meet this requirement. Finding 10. Furthermore, we find nothing in the record which indicates that this deficiency was corrected after it was called to appellant's attention by the assistant COR or identified to appellant in the third cure notice. Appellant defends its failure to meet the contract start-up documentation requirements by arguing that notice of award and notice to proceed on the contract were not provided in a timely fashion. Because of this, appellant argues that it was impossible to be in compliance with all the documentary and other start-up requirements by October 15. The contracting officer contends that oral notice of award was given on September 15. This may well be true. Appellant apparently did know of contract award prior to receipt of written notice on October 5. By letter dated October 4, Floor Brite had already sent to GSA some of the required start-up documentation. Finding 10. The record, however, does not indicate whether the earlier oral notice of award also provided appellant with notice that October 15 was the start date for contract performance. Nevertheless, even assuming that appellant did not learn of the October 15 start date until October 5, we find appellant's reliance on this fact insufficient to excuse it from compliance with these requirements. Respondent has not terminated Floor Brite's contract for non-compliance with these requirements as of October 15, but rather for failure to comply after numerous written reminders from the COR and the contracting officer. The practical benefit and need for these various requirements are obvious. From its behavior throughout the contract period, it is clear that GSA, although prepared to waive compliance by the October 15 start date, consistently insisted on the requirements being met within a reasonable time following contract start up. Given the amount of time afforded appellant to comply, we consider the continued deficiencies inexcusable and an acceptable ground for terminating Floor Brite's contract for default. Deficiencies Addressed in the Third Cure Notice Apart from the deficiencies in the start-up documentation there are several other deficiencies mentioned in the third cure notice. We consider them in turn. The first of these deficiencies concerns the failure on appellant's part to propose an acceptable alternate on-site supervisor. Finding 22. The naming and approval of this supervisor was a continuing problem throughout the period of contract performance. Appellant was expected to identify an alternate supervisor and provide documentation regarding this individual so that a decision could be made as to his or her acceptability. Findings 3, 4, 6. In his letter of November 8 to appellant, the COR pointed out that Floor Brite had failed to appoint a supervisor and an alternate on-site supervisor. Finding 12. By the time appellant answered the COR's letter, a supervisor had apparently been appointed. The post of alternate on-site supervisor, however, remained open. To remedy this problem, appellant's president, in responding to the COR's letter, advised that he himself would serve as alternate on-site supervisor. Finding 14. At that point, the COR requested security information and a resume for Floor Brite's president for the purpose of determining whether he qualified for the position and was otherwise acceptable. Finding 15. The request went unanswered despite renewed requests and at least one express promise to provide it. Findings 17-18, 28. Appellant is also said to have failed to provide appropriate uniforms. This was a contract requirement. Finding 5. Appellant was reminded more than once of the need to meet it. Findings 12, 18, 22. Nevertheless, nothing has been provided by appellant to suggest that it ever met the requirement. The third cure notice also states that appellant maintained on-site unauthorized and unlisted solvents and chemicals. The contract requires that cleaning materials be approved by the COR. Finding 5. The requirement that the contractor submit a list of materials and supplies for approval is the mechanism relied upon to ensure that the COR knows what materials are brought on-site and has the opportunity to approve or disapprove them. As we have already seen, after Floor Brite finally submitted the required list at the meeting on December 8, a comparison was made of the supplies actually on hand and those on the list. It was found that there were many unauthorized and unlisted solvents and chemicals on hand, but not on the list. In addition, material safety data sheets for many of the materials on hand were unavailable. Finding 19. Nothing in the record demonstrates that this situation was ever rectified. The third cure notice also states that the three vacuum cleaners in current use were in poor condition. The contract required COR approval of cleaning equipment. Equipment found to be defective was to be repaired or replaced within seventy-two hours. Finding 5. The condition of the vacuum cleaners was expressly addressed by the COR in his letter of December 3 to appellant's president and again in his letter of December 13. Findings 19, 28. Despite the reminder in the December 13 letter that the contract required the repair or replacement of such equipment within seventy-two hours, there is no indication that appellant ever took the corrective action as requested. The third cure notice also stated that appellant had no operational floor buffer or water hose. The contract required Floor Brite to provide all necessary cleaning equipment needed for performance of the work of the contract. Finding 5. In a letter dated December 3 which proposed deductions for the deficient performance during the month of November, the COR pointed out that appellant's floor buffer had been inoperative since November 5 and that a hose was required to ensure that entrance cleaning tasks could be performed. Finding 28. We hold that these are reasonable expectations on respondent's part and that appellant's failure to maintain this equipment was a violation of the contract requirement to provide all necessary cleaning equipment. Another deficiency noted in the third cure notice is that an insufficient number of wet mops, buckets, dust cloths, feather dusters, utility carts, and brooms were on hand. Finding 22. As noted, the contract required appellant to provide all necessary equipment used in work of the kind called for under the contract and that this equipment was to meet with the approval of the COR. Finding 5. The COR expressly addressed the inadequacy of Floor Brite's cleaning equipment in his letter of December 13 to appellant's president. Finding 19. Appellant has provided us with no evidence which convinces us that any action was ever taken to correct the deficiencies noted at that time or later in the third cure notice. The third cure notice also states that on two separate occasions, there were no hand towels or toilet tissue in the building. Finding 22. The contract required appellant to check these paper supplies in all toilet rooms twice daily. Finding 5. To say that such paper products were lacking "on two separate occasions" is a remarkable understatement. In reviewing the correspondence between the COR and appellant, as well as the complaint log for this contract, we note far more than two occasions when this requirement was not met. Finding 15, 31, 33, 36. The last and final deficiency noted in the third cure notice concerns the allegation that appellant failed to provide capable, trained, and qualified employees and that the on-site supervisor had not been provided any training. Finding 22. The contract did require the contractor to provide employee training necessary for the performance of the work of the contract. Finding 5. In her first cure notice, the contracting officer objected strongly to appellant's failure to provide the employee training necessary to perform the work of the contract. Finding 13. Likewise, the COR in his letter of December 21 to appellant's president complained that, despite assurances given at the December 8 meeting, the president had not physically been present in the building after that date as promised nor provided any training or supervision for his employees. Finding 21. Nothing in the record convinces us that appellant did meet the requirement for employee training. Indeed, the poor quality of performance, as evidenced in the deductions taken for each month of contract performance, suggests that the lack of such training was one of the principal causes of appellant's inability to meet contract requirements. Severe Problems with Contract Performance The contracting officer's letter terminating Floor Brite's contract for default lists as the third basic reason for termination "severe problems" with performance of the contract. Finding 23. Undoubtedly these problems overlap with those listed in the third cure notice and already discussed above. Nevertheless, we understand these problems to include also those described and documented in the various letters proposing deductions from amounts due for services rendered during each month of contract performance. See Findings 25-36. Based on our findings regarding these deductions and the reasons given for them, we conclude that the problems, as described and confirmed, were severe and reflected an inability or unwillingness on the contractor's part to meet contract requirements. We hold that they certainly justify the contracting officer's decision to terminate Floor Brite's contract for default. Appellant contends that many of its performance problems were attributable to the fact that during the contract period, portions of the building were under renovation and this precluded Floor Brite from doing an acceptable job. The COR has stated under oath that the building manager and the custodial work inspector instructed appellant's supervisor that cleaning was not required in areas where construction or renovation was in progress. He likewise states that no deductions or penalties were imposed for work not done in those areas. Finding 47. Appellant has submitted for the record photographs of the renovation work. These photographs, however, provide no support for the contention that the renovation interfered with successful contract performance. Given the statement of the COR plus the absence of any hard evidence in support of appellant's contention, we reject the contention that the renovations somehow relieved appellant of its contractual responsibilities. In conclusion, respondent has convinced us that there were reasonable and adequate grounds for terminating appellant's contract for default. We therefore deny Floor Brite's appeal from the contracting officer's decision to terminate the contract. Appellant's Claim for Deductions Floor Brite has also appealed from the contracting officer's decision denying its claim for amounts due for services rendered during the month of January and for deductions taken for inadequate performance during October, November, December, and January. Finding 41. We turn first to the deductions taken for deficient performance. Respondent, relying on well established precedent, argues that it has meet its burden of proof on this issue by placing in evidence the documentation used by GSA to support the original proposed deductions. In the absence of any showing from appellant that these deductions are improper, respondent contends that they should be permitted to stand. Mutual Maintenance Co., GSBCA 7637, et al., 91-1 BCA 23,287, at 116,781. We have examined each of the letters sent to appellant which propose deductions. We have also examined the supporting documentation furnished with each letter. These deductions are reasonable, well documented, and taken in accordance with the applicable contract provision. See Findings 24-33. Respondent certainly has made a satisfactory showing in this regard. Furthermore, although alleging that the deductions are improper, appellant has offered nothing but the bare allegation that it disagrees with the Government on these deductions. This is clearly insufficient. Mutual Maintenance Co., 91-1 BCA at 116,781. Respondent, however, has gone further than necessary in defending the proposed deductions. Given the record as developed in this case, the deductions would certainly stand even if they had been challenged in a timely fashion. They were not, however. The contract provision dealing with deductions states that failure to respond within ten working days of receipt of the notification of the proposed deductions will be interpreted as meaning that the contractor accepts the deductions proposed. Each letter proposing deductions reminded appellant of this provision. Appellant has not provided us with any evidence that objection was posed before the expiration of the ten day period. Findings 26, 29, 31, 33. In the absence of any showing that appellant was precluded from objecting to the proposed deductions by some unique extenuating circumstance, we see no reason why we should interfere with the normal working of this contract provision. Appellant failed to lodge a timely objection to the proposed reductions. Pursuant to the contract provision, therefore, GSA is entitled to take the deductions. In addition to its claim for a refund of all deductions proposed by GSA, appellant contends that it is entitled to $8,900 for services rendered during the month of January. Finding 41. From this amount, the contracting officer has subtracted $2,547.65 for December deductions and $1,382.22 for January deductions. For the reason stated above, we have no objection to these deductions. In her final decision on appellant's claim, the contracting officer also subtracted from the $8,900 an additional $2,004.44. This was said to represent the amount the DOL has asked GSA to withhold. Finding 43. It is true that the Summary of Unpaid Wages provided to the contracting officer by the DOL in its letter dated March 4 showed a total due of $2,002.44. The withholding sought at that time was, therefore, equal to that amount and certainly justified under the applicable contract provision. See Findings 37, 40. In this particular case, however, the amount withheld by the contracting officer in the face of appellant's claim was excessive. In filing its claim of March 7, Floor Brite submitted a DOL Summary of Unpaid Wages showing, as due, a lower total of $1,102.44. Finding 45. The conflict in the DOL summaries was apparently overlooked or simply not pursued by the contracting officer when she rendered her decision on appellant's claim and subtracted $2,004.44[foot #] 2 from the amount sought in invoice no. 1331 for January services. In subsequent discussions with the DOL, however, the contracting officer has determined that the Summary of Unpaid Wages in the amount of $1,102.44 submitted by Floor Brite with its claim was correct and ----------- FOOTNOTE BEGINS --------- [foot #] 2 We note that in her final decision, the contracting officer mistakenly increased the requested withholding by $2.00, stating it to be $2,004.44 rather than $2,002.44. Compare Finding 40 with Finding 43. _______ ____ ----------- FOOTNOTE ENDS ----------- superseded the summary provided earlier showing a total of $2,002.44. Finding 46. Accordingly we find that the deduction of the larger amount was improper and that appellant is entitled to the difference of $902.[foot #] 3 Aside from this error, however, we find no other defects in the contracting officer's ruling on appellant's claim. The appeal from that decision is granted, therefore, only in part and as indicated herein. Decision Floor Brite's appeal from the contracting officer's decision terminating its contract for default is DENIED. Floor Brite's appeal from the contracting officer's decision denying its claim for deductions taken for deficient performance and for monies due for services rendered during January 1994, is GRANTED IN PART. Appellant is found to be entitled to $902 plus interest as provided in the Contract Disputes Act of 1978. 41 U.S.C. 611 (1988). ___________________________ EDWIN B. NEILL Board Judge We concur: _____________________________ ROBERT W. PARKER Board Judge _____________________________ DONALD W. DEVINE Board Judge ----------- FOOTNOTE BEGINS --------- [foot #] 3 Counsel for respondent has already assured the Board in a letter dated August 12, that it is the intention of GSA to provide the requested $1,102.44 to the DOL and to provide appellant with the remaining balance due of $902. See Finding ___ 46.