Transportation is central to mail delivery, so it is no surprise that the companies who move the mail dominate the list of the Top 150 U.S. Postal Service Suppliers in Fiscal Year 2019. Seven of the Top 10 companies are involved in transportation. Federal Express tops the list, as it has since 2002, with just
Transportation companies again dominate this year’s Top 150 U.S. Postal Service Suppliers list. All told, USPS spent nearly $16 billion on purchases in FY 2018, about $900 million more than last year. Not surprisingly for an agency charged with moving the mail, six of the top ten contractors provide transportation services or equipment.
The Top 150 list has been compiled annually since 1999 by David Hendel, a partner in the firm’s Technology, Manufacturing, and Transportation group and leader of the firm’s Postal Contracting team. The list is compiled from data received in response to Freedom of Information Act requests.
The Postal Service spent $15.9 billion on all outside purchases in FY 2018, of which $9.8 billion went to the agency’s Top 150 suppliers. The Top 150 received $540 million more than last year’s Top 150 group, and $1.5 billion more than those in FY 2016.
The top 10 largest suppliers earned $4.2 billion, which is one quarter of the Postal Service’s total spend and $700 million more than last year’s Top 10. They also collected $3 billion more than the next ten largest suppliers.
Continue Reading Transportation companies dominate 2018 list of top U.S. Postal Service suppliers
Every year or so, the U.S. Postal Service changes the standard Terms and Conditions that apply to its newly awarded Highway Contract Route (HCR) and Contract Delivery Service (CDS) contacts. When this occurs, the new terms only apply to newly awarded contracts–existing contracts are unaffected and retain the same terms as when awarded.
But this year, the Postal Service has sought to apply new Terms and Conditions to existing CDS contracts as well as newly awarded ones. In an email to its CDS contractors, the Postal Service asked them to sign, without any “alterations or additions,” a contract modification that incorporated the new terms. If the contractor did not so, the Postal Service’s email threatened contract termination:
“Because of the Postal Service’s interest in maintaining consistency across its many CDS contracts, please note that a failure to respond to this correspondence … may lead the Postal Service to consider termination of the subject contract.”
After receiving this email, many contractors asked me: “Can the Postal Service really do this?” In my opinion, several legal arguments, if upheld, would make the resulting modification unenforceable. For example, the modification might fail for lack of consideration, because it gave the Postal Service what it wanted without giving anything that contractors valued in return. And it might fail for violation of the implied covenant of good faith and fair dealing, because it seeks to recapture benefits that were foreclosed at the time of contract award. But I think the best argument against its enforceability is based on the legal theory of coercion and duress. Normally, this is a difficult argument to make, but here the elements seem apparent from the Postal Service’s email itself.
Continue Reading Can you be forced to sign this contract modification?
The U.S. Postal Service spends about $3 billion per year to move the mail by truck and does so under a special type of contract called a Highway Contract Route (HCR) contract. These contracts have unique contract clauses, and even their own lingo. For example, an HCR “amendment” is what the rest of the government contracting world would call a contract “modification.”
One of the biggest differences between HCR contracts and other government contracts is the Changes clause. Under an HCR contract, the contracting officer has limited ability to direct unilateral changes. The CO may only issue a unilateral change, called a “minor service change,” if the price impact would be $5,000 or less. Under a Contract Delivery Service (CDS) contract – a subset of HCR contracts for mailbox deliveries – unilateral changes must be $2,500 or less. Even for these changes, a contractor who disagrees with the CO’s determination may file a claim for additional compensation.
In addition to these monetary thresholds, unilateral changes are further restricted to certain types of changes. The only unilateral changes a CO can direct are an extension, a curtailment, a change in line of travel, a revision of route, and an increase or decrease in frequency of service or number of trips. The CO has no authority to unilaterally direct any other change, even if the price impact would be $5,000 or less. For example, the contracting officer may not unilaterally direct a contractor to change equipment or buy new equipment.
Continue Reading The unique Changes clause in Postal Service HCR contracts
Three standard clauses used in virtually all Postal Service surface transportation contracts are now on the chopping block. In an interim ruling, the Court of Federal Claims ordered the Postal Service to show why these three clauses should not be declared unlawful and unenforceable. Tabetha Jennings v. U.S., Fed. Cl. No. 14-132C, May 29, 2016.
The case involves the default termination of a $34,000 contract to provide mail delivery between Leslie and Timbo, Arkansas. Tabetha Jennings, the sole proprietor contractor, had provided service for seven years without any issues. Then, during a heavy volume Christmas season, a postmaster accused her of using a vehicle with insufficient capacity. The postmaster was wrong, but this charge led to other accusations. Eventually, the postmaster accused Jennings of conducting herself “in an unprofessional manner” and disrupting mail processing operations. These accusations, in turn, led the contracting officer to rescind Jennings’s security clearance and her access to postal premises and the mail.
Jennings disputed the accusations against her and presented statements from a different postmaster and from another contractor that backed her up. But the contracting officer was unmoved and did not lift the suspension of her security clearance. When Jennings failed to provide a substitute carrier to continue the service she had been barred from performing herself, the contracting officer terminated her contract for default.
Continue Reading Court orders Postal Service to justify lawfulness of three standard clauses
Learn about remedies for these problems at our new seminar, “Claims and Disagreements under Postal Service HCR contracts.” Husch Blackwell partner David Hendel…
The first Board of Contract Appeals to fully enter the digital age is the Postal Service Board of Contract Appeals, which recently issued new rules on electronic filing. Although the PSBCA hears claims against the agency that provides U.S. Mail, that method of filing will no longer be allowed (absent permission). The Postal Service, however, is not a Luddite agency and has embraced modern technology in running its business.
Effective July 2, 2015, PSBCA filings must be made electronically unless permission to submit physical filings is requested and obtained. The website for electronic filing is https://uspsjoe.justware.com/JusticeWeb. Online filers must use this exact web address. Omitting the initial “https://” – or the final “justiceweb” – results in an error message. To assist users, the Board has created a PSBCA tutorial on electronic filing.
Continue Reading U.S. Postal Service board enters the digital age
Calling the Voyager fuel card program unmanageable and uneconomic, the USPS Office of Inspector General recommends that the Postal Service use another method to manage fuel under its HCR contracts. In its advisory report dated September 30, 2014, the OIG concludes that the Voyager fuel card program has cost more money that it saved and discourages fuel efficiency. The Postal Service spent $5.1 billion for 1.6 billion gallons of fuel for Highway Contract Route (HCR) contracts under the program over the last nine years.
Continue Reading Voyager card fuel program is unmanageable, says USPS OIG
Retaliating against an employee for reporting safety violations, the U.S. Postal Service asserted baseless terrorism charges against him. As a result, the employee was dismissed from his job, arrested, detained, harassed, criminally charged with committing acts of terrorism, and subjected to an extended campaign of public disparagement. That sounds like the exaggerated ranting of a would-be whistleblower seeking to cash in on a big pay day. But it’s not. These are the allegations made by the U.S. Department of Labor in a lawsuit it filed against its sister agency, the U.S. Postal Service, in an action filed in the U.S. District Court for the Eastern District of Missouri, Eastern Division, Case No. 4:14-cv-1233.
Continue Reading U.S. Postal Service plays the terrorist card against whistleblower
Federal Express Corporation was the U.S. Postal Service’s largest contractor in fiscal year 2013. The next largest USPS supplier was EnergyUnited, which provides consolidated telecommunication and energy billing services. Military air mail transportation provider Kalitta Air was third. Six of the Postal Service’s top 10 suppliers served the agency’s transportation needs. The Top 150 USPS supplier list is compiled annually by David P. Hendel, a partner in Husch Blackwell LLP’s Government Contracts practice group who focuses on Postal Service contracting matters.