Cure Notice and Non-Complying Work

United States
Department of
File Code:
Regional Office, R5
1323 Club Drive
Vallejo, CA 94592
(707) 562-8737 Voice
(707) 562-9130 Text (TDD)
April 3, 2006
Mr. Ed Muse
Vice President, Fleet Services
Serco Management Services, Inc.
2210 Arbor Blvd, Suite 200
Dayton, OH 45439
Dear Ed:
The purpose of this letter is to communicate to you two actions that the government is taking
with regard to the referenced contract. The first action is to notify you of a “cure notice”
regarding your performance, and the second action is to tell you of the government’s decision
regarding performance of non-complying work.
Cure Notice under Clause 52.249-8 Default:
You are notified that the Government considers your performance a condition that is
endangering performance of the contract. Therefore, unless this condition is cured within 14
days after receipt of this notice, the Government may terminate for default under the terms and
conditions of the Default Clause of this contract.
Serco’s failures that have made this cure notice necessary include:
1. Serco is not meeting the performance standards identified within Sections C.5.2.1
through C.5.2.15 of our contract. By not meeting contract performance standards, Serco is
causing Forest Service personnel to delay or miss project work targets, which results in
additional costs to the government and jeopardizes the Forest Service mission.
2. Serco remains chronically behind in accomplishing numerous work orders. In many
instances, Serco was issued a work order for maintenance of a vehicle or equipment and that
apparatus remained in the shop for days and weeks beyond the contract performance
requirements without Serco commencing any work whatsoever. For many months our
Designated Government Representatives (DGRs) and Contracting Officer Representatives
(CORs) worked with Serco’s technicians and Zone Representatives to minimize equipment
downtime in the shops by providing Serco with a schedule of monthly annual service and
inspection requirements. On some occasions our personnel provided repair manuals and other
technical data to your technicians to expedite their performance. Yet, the backlog of vehicle
repairs remains unacceptably high. The Forest Service was obligated to address these delinquent
work orders by issuing non-compliance notifications. However, the issuance of non-compliance
notifications did not result in an improvement with Serco's performance.
Caring for the Land and Serving People
Printed on Recycled Paper
3. Serco has not fully implemented the Fleet Quality Control as provided in its technical
proposal. Some examples of the failure to fulfill the Plan are:
Quality Manager, Section 3.3
Corporate Support , Section 3.14.3 Fleet Quality Control/Compliance Manager
Quality Control and Safety Branch, Section 1.2
Procedures, Section 1.6
Serco’s Quality Control Statement
Serco’s failure to provide quality control has placed our employees and the public in
general in unsafe situations.
4. Serco has not put into place mechanisms that will ensure that all repair work is performed
consistent with contract requirements and industry standards.
5. Serco has failed to hire “master journeyman class technicians” as proposed in Fleet
Maintenance Mechanics, Section 3.11 (page 26).
The enclosed five-page list entitled “Summary of Defective Work” identifies forest locations,
vehicles, work orders, and comments pertaining to substandard performance. This list is not all
inclusive, but is representative.
In responding to this cure notice you are required to tell the Contracting Officer what actions you
will be taking in order to remedy your performance. Specifically, (1) how you will fully
implement your Quality Control Plan as defined in your “Technical Proposal,” (2) how “Master
Journeyman Level technicians” will be provided at each shop as defined in your “Technical
Proposal,” and (3) how you plan to bring into conformance any current work orders not meeting
contract performance standards and how you will prevent any similar reoccurrence. All of these
actions or other actions taken must be accomplished within the cure notice period established.
Failure to correct performance may result in the termination of the contract.
It must be clearly understood that the burden of correcting performance rests with Serco. It is
also your responsibility to correct your performance so as to ensure successful accomplishment
of the contract terms and conditions within the time afforded you in the cure notice.
Correction of non-complying work under clause 52.246-4 Inspection of Services:
The contracting officer believes that for the reasons stated above, and specifically in the matter
of brake repairs, Serco cannot, at this time, be relied upon to successfully perform. Paragraph (f)
of the Inspection of Services clause provides, “If the Contractor fails to promptly perform the
services again or to take the necessary action to ensure future performance in conformity with
contract requirements, the Government may:
1. By contract or otherwise, perform the services and charge to the Contractor any cost
incurred by the Government that is directly related to the performance of such services;
2. Terminate the contract for default.”
Therefore, the Forest Service shall exercise its contractual right to remove brake repair work
from Serco, and accomplish that work through a third party until such time that the Contracting
Officer believes that such work can be satisfactorily performed by Serco. The Forest Service
will secure mechanic services from third parties that charge a fair and reasonable price (or
prevailing) labor rates and hours for the task. Pursuant to the Inspection of Services clause, if the
costs of this third party performance exceed the costs Serco would have billed at its hourly bid
rate, then the Forest Service will bill Serco for the difference in price.
Should you have any questions or concerns regarding the cure notice or the correction of noncomplying work, feel free to contact me at (707) 562-8909, or Don Bandur on (707) 562-8782.
/s/ Douglas B. Lee
Director, Acquisition Management
cc: Doug Lee
Don Bandur
Bob Sutton
Ronald Hooper