_________________________ DENIED: September 9, 1994 _________________________ GSBCA 11897 IOWA-ILLINOIS CLEANING COMPANY, Appellant, v. GENERAL SERVICES ADMINISTRATION, Respondent. Michael S. Kelly, President of Iowa-Illinois Cleaning Company, Bettendorf, IA, appearing for Appellant. Lee W. Crook, III, Office of Regional Counsel, General Services Administration, Fort Worth, TX, counsel for Respondent. Before Board Judges DEVINE, BORWICK, and VERGILIO. VERGILIO, Board Judge. On June 24, 1992, the Board received a notice of appeal from Iowa-Illinois Cleaning Company disputing the termination for default of its janitorial services contract with the respondent, the General Services Administration (GSA). The parties submitted the case on the record. The evidence reveals that the contractor failed to perform the janitorial services in a satisfactory manner, thus justifying the termination for default. The Board denies the appeal. Findings of Fact The contract 1. Iowa-Illinois obtained a contract with GSA to provide custodial and related services beginning November 1, 1991. Services were to be performed at two buildings--a post office/court house and a building housing the Social Security Administration-- at fixed, monthly amounts ($2,909.95 and $380, respectively), for an initial period of twelve months, with four twelve-month option periods. Appeal File, Exhibit 1 at 5-9, Exhibits 2, 4. The contract contains a default clause, Federal Acquisition Regulation (FAR) 52.249-8 (APR 1984). Id., Exhibit 1 at 72. 2. The contract requires daily cleaning (services performed every ten work days or more frequently) and periodic cleaning (work required for performance less frequently than ten work days). Appeal File, Exhibit 1 at 17. The contract describes the requirements in terms of the cleaning to be performed and the quality to be attained. Id. at 12 ( C.3.A), 103-45 (Contract Exhibits 2A to 2G). For example, with respect to the daily cleaning of rest rooms, floors shall be clean and free of dirt, and shall present an overall appearance of cleanliness; corners shall be clean. Porcelain fixtures and metal surfaces "shall be clean and bright; there shall be no rust, green mold, encrustation, or excess moisture." Id. at 103. 3. The contractor is required to establish a complete quality control program to assure that the requirements of the contract are provided as specified. The program shall include: "An inspection system covering all the services stated in the Cleaning Requirements section of this contract. A checklist used in inspecting contract performance during regularly scheduled or unscheduled inspections. The individual(s) performing the inspection must be someone other than the individual(s) performing the work." Appeal File, Exhibit 1 at 18 ( C.8). The record contains no contractor inspection reports or statements from such inspectors. 4. The contract contains provisions which expressly entitle the agency to deduct for work improperly performed and for work scheduled but not performed. The "criteria for deduction" are broken down into six paragraphs: toilet cleaning; room cleaning; work required daily, three times weekly, weekly, or every two weeks; work scheduled for monthly or less frequent accomplishments; window washing; and all other work (miscellaneous). Appeal File, Exhibit 1 at 34-35 ( G.8). For toilet and room cleaning, the contract specifies that the contracting officer's designated representative makes the determinations as to whether or not the cleaning or policing and servicing has been performed satisfactorily. Id. ( G.8(A), (B)). The contract contains a schedule for pricing deductions. Id. at 38 (figure G-1). Performance 5. Agency inspections occurred intermittently throughout the life of the contract. Contemporaneous inspection reports identify the inspector for the agency, the report number, the building, and the date, start and completion times, of the inspection. The reports are signed by the inspector for the agency. Each report bears a signature, time, and date for "contractor's receipt"; the date of receipt is the same as the date of inspection. Further, each report bears a signature and date of review by the assistant buildings manager, who also was the contracting officer's representative (COR). The reports identify, among other items, the location and description of work inspected, and whether the work was deemed satisfactory or unsatisfactory; handwritten remarks describe the condition of the items inspected. The description of work unsatisfactorily or not performed is consistent with the contract standards; e.g., "inside rim toilet dirty, outside toilet dirty"; "floor dirty"; and "edge of stairs dusty." Appeal File, Exhibits 5, 7, 14, 26, 41, 42; Finding 4. 6. As elaborated upon in findings which follow, based on the inspection reports, Finding 5, and the deduction table found in the contract, Finding 4, the agency proposed and later took the following deductions (total and for each building) for work allegedly not performed or performed unsatisfactorily for the indicated month: DEDUCTIONS TOTAL P.O. SSA Dec 1991 $346.89 $302.38 $44.51 January 1992 252.52 205.99 46.53 February 946.04 931.00 15.04 March 665.57 605.27 60.30 April 2367.24 2253.13 114.11 May 1898.37 1711.29 187.08 Appeal File, Exhibits 5, 7, 14, 27, 41, 42, 46. 7. By letter to the contractor dated December 31, 1991, the agency proposed deducting from the January payment $346.89 for work improperly performed during December. The inspection reports for December identify various tasks as unsatisfactorily performed (noted by a check mark in the "unsatisfactory" column, and supported by written remarks). The same reports identify as satisfactorily performed other cleaning and servicing, although remarks indicate that dirt remained. The letter closes with the following paragraph: If your firm has any specific reasons why any or all of the deductions are not warranted, please submit them in writing to the Contracting Officer within 10 working days after receipt of this notification. Otherwise, these deductions will be reflected in your January payment. Appeal File, Exhibit 5. By similar letters, dated the final day of each of the first five months of 1992, the agency proposed deductions for the amounts found in Finding 5; inspection reports for each month indicate which tasks the agency had determined to be performed improperly or not at all. Id., Exhibits 7, 14, 26- 27, 41, 42. 8. The record contains no statement by either the contractor's representatives who received the inspection reports, Finding 5, or from the contractor's inspectors, Finding 3. That is, the record lacks evidence from these individuals who were on site to support the contractor's assertions regarding the cleanliness of the building, the sufficiency of the cleaning, or the overzealous nature of the inspections. As the following findings reveal, the contractor's president took issue with various actions and conclusions of the agency; although, with the exception of his visits to the buildings and first-hand observations, the record does not support his conclusions and assertions. 9. The record indicates that the contractor did not respond to the proposed December deductions. However, by letter dated January 15, 1992, the contractor gave its employee/inspector a notice of unsatisfactory performance. Appeal File, Exhibit 3. The contractor did not respond to the agency with any objections to the proposed deductions for January performance. 10. The contractor did respond to the letter proposing deductions for February performance. Appeal File, Exhibit 9. The contractor agrees with deductions for quality control inspections and spray buffing. He also states: All other deductions we disagree with. They are taking total deductions for an area when 1/2 of 1% is the part in question. Id. The letter continues: It is [our] opinion that General Services Administration and the Government itself did not intend deductions to be taken, when 95% or more of the building or area in question were clean. There is not a building in the United States or any where else that an inspector could not find something if they looked hard enough. We feel that General Service Administration and the Government intended that these inspectors would use a little common sense, which in some cases seems not to be the case. Id. The record does not indicate on what the contractor based these conclusions. 11. On March 18, 1992, the agency's assistant buildings manager, together with the contractor's president and the agency's inspector, walked through one of the buildings covered by the contract. According to a handwritten document signed and dated by the assistant buildings manager, the president indicated during the walk-through that he had not read the inspection reports which specify the unsatisfactory performance to date, Appeal File, Exhibits 5, 7, 14. Further, in one area of the walk-through, the three: found many daily cleaning deficiencies, e.g. dust on files & window sills, dirt & dust on furniture. There were many places on the resilient tile floor where wax had built up and accumulated around the bottoms & legs of the tables, file cabinets, etc. [The contractor's president] also saw and scraped off excessive wax that was splashed up on the legs of the furniture and had not been removed. After walking through [the office, the contractor's president] seemed to change his tune, in that he admitted that the deficiencies existed both daily & periodic items, and that they needed to be corrected. Id., Exhibit 11. In a letter, dated March 25, 1992, to the president of the contractor, the assistant buildings manager highlights the president's recognition during the walk-through that the contractor's performance was unsatisfactory: Now that you are more aware of the cleaning deficiencies in the subject buildings, we can all work towards resolving the existing inadequacies, and prevent any future problems from becoming too severe, or hopefully eliminate them completely. . . . . [The inspector for the agency] has informed me that a few of the deficiencies we detected during our walkthrough of the building have been corrected, however, no attempt has been made to correct most of the more noticeable and apparent items, most of which are daily cleaning requirements. For this reason, [the inspector] is continuing to suggest that deductions be taken. Id., Exhibit 12. 12. By letter dated April 8, 1992, the contracting officer informed the contractor of two major areas of concern to the agency: possible contractor violations of the Service Contract Act and the contractor's failure to perform quality control inspections on a consistent basis as reflected in the sizeable monthly deductions. Appeal File, Exhibit 16. Memoranda for the contract record signed by an agency contract administrator indicate that, during April, the agency viewed the contractor's performance to be inadequate. Id., Exhibits 18, 19, 25. 13. A videotape taken by the contractor of the Post Office on the evening of Monday, April 20, 1992, depicts some of its corridors, its entrance, an elevator, one room and the surrounding grounds. The floors observed do appear to glisten. However, the videotape fails to depict any of the areas deemed unsatisfactory in that morning's report or in the report of the next date of inspection, Wednesday, April 23. Contractor Videotape. Thus, the videotape does not contradict the conclusions in the inspection reports which identify unsatisfactory performance in specific rest rooms, stairways, basecoves and floors. Nor does it show that the main entrance glass was all cleaned. Appeal File, Exhibit 42. 14. By letter dated May 5, 1992, the contractor informed the contracting officer "that the building is clean and the things that are written up in the daily inspections are things that are not justifiable for deductions." Further, during the walk-through, the contractor maintains that the parties "found only minor cleaning discrepancies or they were things that could be taken care of in a short period of time. Again, these are things that in our opinion would not be grounds for deductions." Further, the contractor contends that the inspector imposes a cleanliness requirement in excess of the contract requirements. Appeal File, Exhibit 29. In response, by letter dated May 20, 1992, the agency takes issue with the contractor's statements. The agency maintains that it has properly taken deductions, and that during two walk-throughs, the assistant buildings manager, with the agency's inspector, pointed out to the president of the contractor deficiencies that were not minor, and which the president recognized as existing. Id., Exhibit 32. 15. In a letter dated May 5, 1992, to the contractor, the contracting officer states that the contractor has "not provided satisfactory remedial procedures to insure that the specific deficiencies will be corrected. You have also failed to institute policies which will prevent these deficiencies from occurring in the future." Appeal File, Exhibit 28. The letter further notes that deductions have been substantial and that the inspection reports reveal recurring problems in the contractor's performance. The letter details problems in the areas of rest rooms; room cleaning; stairway cleaning; entrance, lobby, and corridor cleaning; grounds maintenance; and quality requirements. The letter specifies that the contractor is to cure the deficiencies within ten day from its receipt of the letter, and that failure to sustain acceptable performance may result in the termination for default of the contract. Id. 16. In a letter to the agency dated May 18, 1992, the contractor protests all deductions proposed for performance in April. The letter states, in part: We protest the deductions because the fixtures in the bathrooms are very old and they leak badly. Therefore, they look dirty after we have cleaned them the night before. The stains on the sinks and toilets are water stains that have been embedded in the porcelain for a long time. Therefore; it is impossible to get these stains out. When it comes to spray-buffing; if we spray buff an area of 1,000 square feet and if we happen to miss a scuff mark of approximately 1/4 inch long; your inspector deducts the whole floor as not having been spr[a]y-buffed and cleaned. When it comes to the stairwell cleaning; it is the same thing. We clean the whole stairwell and if the inspector finds one speck of dust anywhere in the stairwell; he writes off the whole stairwell as not having been cleaned. We thoroughly clean the main entrance way every Friday. Appeal File, Exhibit 31. The record does not indicate when, if ever, a deduction was taken for an embedded stain on porcelain, for a single 1/4 inch scuff mark in an area of 1,000 square feet, or for a single speck of dust in a stairwell. The specifications, however, require daily (not weekly) cleaning of entrance glass and glass surrounding the doors. Id., Exhibit 1 at 113 (Contract Exhibit 2A ( 3.A.(3)), 134 (Contract Exhibit 2F ( 1.A.(6)). 17. In a memorandum dated May 27, 1992, to an agency contract administrator, the assistant buildings manager disputes the assertions quoted in Finding 16. The memorandum states that the president of the contractor removed water stains with bare hands and plain water. Further, it notes that large areas of tile floor have not been spray buffed properly, and "there is definitely more than one 1/4" scuff mark visible on the floors. Scuff marks and streaks are apparent on most floor surfaces." Also, "stairwells have not been cleaned properly, it is apparent that some areas in the stairwells have not been cleaned at all." Finally, the COR indicates that the "claims and statements regarding [the] inspection system are preposterous and outrageous. By no means is the building 95% clean." Appeal File, Exhibit 33. A letter dated May 27, 1992, from the contracting officer to the contractor responds to and, similar to the memorandum, takes issue with the contractor's letter of May 18. Id., Exhibit 34. 18. On May 26, 1992, the agency videotaped the condition of portions of the Post Office. The videotape shows a level of uncleanliness which accrued over a period of more than a single day of failure to perform satisfactorily. The condition of the rest rooms, rooms, doorways, corridors and surrounding grounds depicted supports the conclusion of inadequate contractor performance. Appeal File, Exhibit 35 (memorandum and videotape). The videotape fully supports a cleaning inspection report prepared by a COR who did not sign off on any of the inspection reports under the contract, Finding 5; that is, the COR who prepared the report is not the assistant buildings manager/COR referred to elsewhere in these findings. Rather, the inspecting COR had not visited the facilities previously; he conducted his own independent inspection. Id., Exhibit 34 at 2. 19. By letter dated May 28, 1992, to the contractor, the contracting officer terminated for default the contract. The letter states that following the contractor's receipt of the cure letter, the contractor has had twenty-three days to correct the cleaning deficiencies. As of this date, the deficiencies still exist and the contract requirements are not being met. You have not responded to the cure letter nor have you returned our telephone call from yesterday which was left with your answering service. Appeal File, Exhibit 38. 20. By letter dated June 16, 1992, to the contracting officer, the contractor protests all deductions for performance in May "on the same grounds as in the past." However, the contractor gives no details. Appeal File, Exhibit 43. 21. By letter dated June 16, 1992, the contractor filed an appeal with the Board of the termination for default. Appeal File, Exhibit 44. Discussion The agency contends that the evidence overwhelmingly supports the propriety of the termination for default. The agency points to performance deficiencies, the lack of a quality control plan, non-payment of wages to employees, the use of unauthorized subcontractors, and a failure to improve performance as well as declining performance. Under the default clause, Finding 1, the agency may, by written notice of default, terminate the contract. The agency may so terminate the contract due to the contractor's failure to perform in accordance with the provisions of the contract, if the contractor does not cure performance within the time established in a notice specifying the inadequate performance. Inspections occurred throughout the performance period. The videotape proffered by the contractor does not contradict any of the determinations of unsatisfactory performance. The videotape proffered by the agency reveals a level of uncleanliness supporting the inspection reports and other contemporaneous memoranda. The record contains no inspection reports from the contractor. Finding 3. A representative of the contractor received and signed for each agency inspection report. Finding 5. The record does not contain any indication that the receiving individual disagreed with the conclusions and remarks in the inspection reports. Finding 8. The conclusions and assertions to the contrary of the contractor's president are not persuasively supported in the record. The videotape proffered by the agency reveals a level of uncleanliness unacceptable under the terms of the contract. The inspector and assistant buildings manager signed off on inspection reports which detail specific unsatisfactory performance. The videotape fully supports the inspection report of the "independent" COR, which corroborates other inspection reports. The build-up of dirt and encrustations could not have occurred within the times specified for periodic cleaning. In light of the record, the contemporaneous agency inspection reports are credible. The record demonstrates that the contractor's performance prior to receipt of the cure notice and through to the time of default was unsatisfactory. The decision to default terminate the contract is supported by the record. In a letter dated October 1, 1993, the contractor sets forth some of its views as to why the termination for default of its contract was improper. First, the contractor asserts that the daily inspector for the agency never wrote up any of the cleaning or took deductions on the Social Security Administration buildings. Because the same people cleaned both buildings under the contract, the contractor posits that the level of cleaning in the Post Office building must also have been satisfactory. The contractor's underlying assertion is false; the agency took deductions for performance at both buildings under the contract. Finding 6. Second, the contractor asserts that the problem was with the agency inspector, not with the cleaning. The record does not demonstrate that the inspector acted improperly. Many of the reports mark performance as satisfactory, although the remark section notes that dirt remains on the "cleaned" area. Each inspection report was signed by a contractor representative and by an agency assistant buildings manager/COR. The record contains no statements from either of these individuals, which dispute the conclusions and remarks in the reports. Rather, the assistant buildings manager, who was on site, at least on occasion, supports the reports. The agency's videotape reinforces the conclusions and remarks in the reports; the contractor's videotape does nothing to contradict the same. Finally, the "independent" COR reached similar conclusions in his walk-through inspection. Third, the contractor specifies that it had requested the agency not to exercise the first option under the contract. In fact, the agency did not exercise the option; the agency terminated the contract during the base year because of unacceptable performance. Fourth, the contractor discusses the two videotapes: The videotape prepared by the contractor shows that the Federal Building was clean. If you look at their video, it shows a different picture. But if you look at the dates, it shows theirs was taken at the end. In the video they took, they did not mention that for 2 weeks or more [the agency's inspector] had been telling our employees that the work they were doing was a waste of time because GSA was going to terminate [our] contract for default. He would also mention to them that there was a good chance they would not get paid; which was not the case. Contractor Letter (Oct. 1, 1993). The latter facts are not supported in the record. However, the contractor is correct that the two videotapes do show different levels of cleanliness. The agency did not terminate the contract at the time the contractor made its videotape. That videotape does not depict the areas in which the agency deemed unsatisfactory performance to have occurred. The termination occurred in May, at a time when performance was unacceptable. The agency's videotape reveals such conditions. Decision The agency has met its burden of proof; it established a sufficient basis for the termination for default. The contractor has failed to introduce evidence which rebuts the agency's proofs. The Board DENIES the appeal. _____________________________ JOSEPH A. VERGILIO Board Judge We concur: _____________________________ _____________________________ DONALD W. DEVINE ANTHONY S. BORWICK Board Judge Board Judge