______________________ DENIED: April 11, 1996 ______________________ GSBCA 13516 MONIQUE K. NGUYEN--AUTO WHOLESALE, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Monique K. Nguyen, Auto Wholesale, Stockton, CA, appearing for Appellant. Jerry Ann Foster, Office of Regional Counsel, General Services Administration, Fort Worth, TX, counsel for Respondent. Before Board Judges VERGILIO and DeGRAFF. VERGILIO, Board Judge. On January 11, 1996, the Board received this appeal from Monique K. Nguyen--Auto Wholesale, involving contracts with the respondent, the General Services Administration. The appellant was the successful bidder on vehicles at an agency sale. The appellant did not pay for (or remove) three vehicles within the time specified in the terms and conditions of the sale. The agency terminated the three contracts and assessed damages. The appellant here appeals the terminations and the assessment of damages, and seeks $4,500 for alleged lost profit arising from an alleged agency breach. The appellant has elected the accelerated procedure. The Board concludes that the agency properly terminated the contracts. Contrary to the contentions of the appellant, the contracts do not mandate that a cure notice be provided such that the successful purchaser be granted additional time to proffer payment. It was appropriate for the agency to assess damages under the terms and conditions of the contracts. The appellant has failed to demonstrate a breach of the contracts by the agency. Accordingly, the Board denies the appeal. Findings of Fact 1. The agency issued a notice of an offering for sale of vehicles. The notice contains express terms and conditions of the sale. Three of the express provisions state: This offering . . . is subject to the General Sale Terms and Conditions (Standard Form 114C, June 1986) and Special Sealed Bid Conditions (Standard Form 114C- 2, January 1970). Copies of these forms are available from the sales office. Payment and Removal. Property must be paid for by September 25, 1995 and removed by October 10, 1995. Property may be removed Monday through Friday, excluding holidays, between 8:30 a.m. and 3:30 p.m., as arranged with the custodian at least 48 hours in advance. Default. Bidders are cautioned to bid only on items they are prepared to pay for and remove in accordance with the terms and conditions of this sale. Failure to pay for and remove all items awarded within the specified time could result in termination of the contract. The bidder also may be subject to paying liquidated damages (see SF 114C, Condition No. 9). GSA does not grant extensions of time for payment and removal. Exhibit 1 at 9-10 (all exhibits are in the appeal file). 2. Three provisions of the referenced standard form of general terms and conditions state: 6. PAYMENT. The Purchaser agrees to pay for property awarded to him in accordance with the prices quoted in his bid. Subject to any adjustment made pursuant to other provisions of this contract, payment of the full purchase price, after applying the total bid deposit, if any, must be made within the time specified in the Invitation and prior to delivery of any of the property. If an adjustment is made requiring additional payment, such payment must be made immediately upon notice of such adjustment. In the absence of any debts owed to the selling agency, where the total sum becoming due to the Government from the Purchaser on a contract awarded to him under the Invitation is less than the total amount deposited with his bid, the difference will be promptly refunded and also, deposits accompanying bids which are not accepted will be promptly refunded to the Bidder. No refund or demands will be made for any amount less than one dollar ($1). 9. DEFAULT. If, after the award, the Purchaser breaches the contract by failure to make payment within the time allowed by the contract as required by Condition No. 6, or by failure to remove the property as required by Condition No. 8, then the Government may send the Purchaser a 15-day written notice of default (calculated from date of mailing), and upon Purchaser's failure to cure such default within that period (or such further period as the Contracting Officer may allow) the Purchaser shall lose all right, title, and interest which he might otherwise have acquired in and to such property as to which a default has occurred. The Purchaser agrees that in the event he fails to pay for the property or remove the same within the prescribed period(s) of time, the Government shall be entitled to retain (or collect) as liquidated damages a sum equal to the greater of (a) 20 percent of the purchase price of the item(s) as to which the default has occurred, or (b) $25, or the purchase price of such item(s) if the purchase price is less than $25; . . . Provided further, That the maximum sum which may be recovered by the Government as damages for failure of the Purchaser to pay for and remove the property shall be the formula amount. The Government shall specifically apprise the Purchaser, either in its original notice of default (or in separate subsequent written notice), that upon the expiration of the period prescribed for curing the default, the formula amount will be retained (or collected) by the Government as liquidated damages. However, if the property was sold on a "per lot" basis and the Purchaser removes a portion of the lot but fails to remove the balance, no portion of the purchase price will be refunded. If the Purchaser otherwise fails in the performance of his obligations, the Government may exercise such rights and may pursue such remedies as are provided by law or under the contract. 11. INTEREST. Notwithstanding any other provision of this contract, unless paid within 30 calendar days from the date of first written demand, all amounts that become payable by the Purchaser to the Government under this contract shall bear simple interest at the rate which has been established by the Secretary of the Treasury as provided in Section 12 of the Contract Disputes Act of 1978 (Public Law 95-563), from the date of first written demand until paid. Exhibit 2, Standard Form 114C (June 1986). 3. A provision of the referenced standard form of special conditions states: FAILURE TO PERFORM In the event the Purchaser fails to make payment as required by Condition No. 6, General Sale Terms and Conditions (Standard Form 114C), or fails to remove the property as required by Condition No. 8, General Sale Terms and Conditions, and fails to cure the default within the time allowed by the notice given in accordance with Condition No. 9, General Sale Terms and Conditions, the Purchaser will lose all right, title and interest which he might otherwise have acquired in and to the property as to which the default occurred and said Condition No. 9, is modified to provide that the Government shall be entitled to retain or collect as liquidated damages a sum equal to 20% of the contract price for the quantity estimated to be generated within a 30-day period. Standard Form 114C-2 (Jan. 1970 edition) ( F). 4. The appellant was the successful bidder on seven vehicles, including the three relevant to this appeal (items 100, 113, and 166). For each vehicle, the agency provided to the appellant a notice of award dated August 22, 1995. Exhibits 6, 7. Each notice specifies that the purchaser must present payment by September 25, 1995. Exhibit 7 ( 10B). 5. The appellant did not pay for any of the three vehicles on or before September 25. Exhibits 10, 12. 6. Accepting payment by specific credit cards, the regional sales office of the agency has developed a credit card payment "form" which specifies, in part: The form below must be filled in COMPLETELY and SIGNED by the SUCCESSFUL BIDDER. *****THIS FORM IS NOT VALID WITHOUT A SIGNATURE***** THE SIGNATURE MUST BE THE SUCCESSFUL BIDDER!!! Exhibit 8. 7. On September 26, the agency received by facsimile two completed credit card payment forms. Exhibit 8. These forms are completed for item 166, with payment to be made from two credit card accounts. The authorizing signature on the two forms is that of an individual not identified in the bid of the appellant, or elsewhere. However, below the hand-printed name on the form is the phrase: "dba AUTO WHOLESALE." Id. 8. The contracting officer determined that payment for item 166 could not be accepted because it was received after September 25 and because it was not signed by the only authorized signature found on the bid, Monique Nguyen. Exhibits 6, 9. 9. By letter dated September 26, 1995, the contracting officer informed the appellant of the termination of its contracts: Your Notice of Award dated August 22, 1995, stipulated that items awarded to you must be paid for . . . no later than September 25, 1995. Liquidated damages are hereby assessed in accordance with Standard Form 114C (June 1986 Edition), Paragraph 9. . . . . You have not cured your default; therefore, your contract is hereby terminated. Liquidated damages in the amount of $2,625.40 must be paid by you within 30 days of this letter. Your file has been turned over to our finance office for further collection action. If you fail to pay the amount due in the prescribed time, late charges will be assessed. Until this debt is cured, all future bids submitted by you will be rejected. Exhibit 10.[foot #] 1 The agency has assessed damages totalling $2,028.20 for the three vehicles; this amount is twenty percent of the appellant's successful bids. Exhibit 10. The sum of the differences between the appellant's bids and the second high bidders' totals $1,065. Exhibit 22. 10. The agency has assessed against the appellant amounts in addition to the principal amount of $2,028.20. The agency characterizes the charges as interest and other late charges, Exhibits 15, 16, and more particularly as interest, a penalty at 6% (presumably per year), and administrative costs of $10 per month. Exhibit 21. 11. Despite conversations with the agency on September 29, and a letter dated October 11, the appellant has not proffered payment (utilizing a credit card payment form with an authorizing signature matching that found on the bid, or through other means) ----------- FOOTNOTE BEGINS --------- [foot #] 1 The termination letter affects contracts for four vehicles. The agency has canceled the contract for the vehicle not here at issue, and has suspended collection of the related amount ($597.20) described as liquidated damages assessed under the contract. Exhibits 13, 19. ----------- FOOTNOTE ENDS ----------- for any of the three vehicles. Having not paid, the appellant has not removed the vehicles. Exhibits 9, 12, 14. 12. By letter dated October 17, 1995, the contracting officer informed the appellant that the agency was not obligated to provide notification that contracts are being defaulted. On January 11, 1996, the Board received the appeal in which the appellant contends that the agency breached the contracts because it failed to provide an opportunity to cure the defaults.[foot #] 2 Exhibit 17. Thereafter, the appellant also specifically took issue with the assessment of liquidated damages, plus interest and penalty charges, and claimed $4,500 for loss of profit caused by the alleged breach. Exhibit 20. 13. The appellant has elected the accelerated procedure for the processing of this appeal. 41 U.S.C. 607(f) (1994); Rule 14. Discussion Because the appellant did not pay for the vehicles by September 25, the agency terminated the three contracts. The agency maintains that the provisions of the contracts permitted that action, and the assessment of damages. Relying on Stoner- Caroga Corp. v. United States, 3 Cl. Ct. 92 (1983), the appellant asserts that the agency was required to provide a cure notice with a minimum fifteen-day period for cure before the agency could deem the appellant to have lost its rights to the vehicles. Because the agency did not provide the notice, the appellant contends that the agency breached the contracts, thereby entitling the appellant to recover its anticipated profits. The terminations The express provisions of the terms and conditions of sale, Finding 1, are explicit. Property must be paid for by September 25. Failure to pay for items by that date can result in termination of the contract. The bidder may be subject to paying liquidated damages. Moreover (with bolded emphasis), the agency does not grant extensions of time for payment and removal. Finding 1. These specific provisions emphasize the agency's ----------- FOOTNOTE BEGINS --------- [foot #] 2 Neither the written notices of termination and assessment of damages, nor subsequent letters, informed the appellant of its opportunity to file an appeal or submit a claim under the Contract Disputes Act of 1978, as amended. Exhibits 10, 14, 15, 16. Thus, the ninety-day period within which an appeal must be filed was not triggered by the letters. Pathman Construction Co. v. United States, 817 F.2d ----------- FOOTNOTE BEGINS --------- 1573 (Fed. Cir. 1987); P.A. Cavanagh Co. v. General Services ________________________________________ Administration, GSBCA 12661, 94-2 BCA 26,772; AMT, Inc., GSBCA ______________ _________ 8818-COM, 87-3 BCA 20,129. ----------- FOOTNOTE ENDS ----------- intent to strictly adhere to the payment and removal dates. The notion of the cure notice, found in similarly captioned paragraphs of the standard form, must give way to the specific provisions; otherwise, the express provisions lack meaning. In Stoner-Caroga Corp., the court interpreted the default clause of a standard form similar to that found in Finding 2. However, that sale did not contain the express "payment and removal" and "default" provisions applicable to this sale, Finding 1. Therefore, other factual distinctions aside, the appellant's reliance on the case is misplaced. For the appellant to suggest that it could demand a cure notice prior to a termination miscasts the terms of the sale and the obligations of the parties. By failing to pay for the vehicles by September 25, the appellant acquired no right, title or interest in or to the vehicles; the contracts do not obligate the agency to retain the vehicles for the appellant who breached the contracts. To read the contracts as the appellant suggests would enable a purchaser to delay payment until fifteen days after the agency mails a cure notice. Absent a cure notice, the purchaser could continue to delay payment. Such an interpretation fails to give meaning to the express provisions that property must be paid for by September 25, failure to pay for items within the specified time could result in a termination, and the agency does not grant extensions of time for payment. The appellant did not pay for the three vehicles by September 25. The specific provisions of the sale put the contractor on notice that failure to pay by that date could result in the termination of the contracts. The agency terminated the contracts in accordance with their provisions. Damages The agency has assessed damages. It calculates the principal amount as 20% of the appellant's bid prices, and has added to that amount charges for interest, administrative costs, and penalties. Findings 9, 10. The appellant (the high bidder on seven vehicles, which paid for and removed only three, thereby selecting those vehicles it sought to keep to the exclusion of other bidders) has not suggested that the 20% charge is contrary to public policy in its actual application. The agency has added to the principal amount charges it characterizes as interest, administrative costs, and penalties. The addition of interest is fully in keeping with the contracts, provided the rate is that described therein. Finding 2. The assessment of administrative and penalty costs, in addition to the liquidated damages at the 20% amount, is contrary to the terms of the contracts, which establish the 20% amount as the maximum the Government may recover. Findings 2, 3. Further, the record does not indicate that the administrative costs were not factored into the 20% rate or that it is appropriate for the agency to assess any amount as a penalty. The agency fails to reconcile the application of liquidated damages provisions with the law. Mike Michael v. General Services Administration, GSBCA 13117, 95-2 BCA 27,657 (although a non-precedential decision issued under small claim procedures, the analysis is here applicable and adopted). Accordingly, the agency is entitled to recover only the principal amount ($2,028.20), plus interest as permitted under the contracts and statute. Alleged breach As concluded above, the agency did not breach the contracts. By failing to pay for the vehicles within the time specified, the appellant breached the contracts. Pursuant to the terms of the contracts, the agency proceeded to terminate the contracts and assess damages. Because the contracts did not mandate the provision of a cure notice prior to termination, the failure to provide a cure notice did not constitute a breach. Decision The Board DENIES the appeal. The agency is entitled to collect $2,028.20 plus interest, as permitted under the contracts and statute, calculated from September 26, 1995. ___________________________ JOSEPH A. VERGILIO Board Judge I concur: ___________________________ MARTHA H. DeGRAFF Board Judge