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.
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Every Postal Service contractor should know the answer to certain fundamental questions: What procurement rules apply to the Postal Service and how do they differ from other agencies? What contract provisions are most likely to cause problems during performance? How do I identify and respond to changes and changed conditions? What recourse do I have when disputes arise?

That’s why our firm is presenting a full-day seminar on “Postal Service Contracting: What Every Contractor Should Know,” at the Westin Tysons Corner hotel on Thursday, November 6, 2014.

We start with the basics

We start with a primer on the creation, structure, and current management of the Postal Service. We provide vital background and statistical information that all postal contractors should know. We explore the pressing issues confronting the Postal Service today, its plans for the future, and how these issues will impact contractors. We conclude the session by setting out the 23 most important “culture pointers” encountered in the unique Postal Service contracting environment.


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Contractors are entitled to recover consultant and attorney costs reasonably incurred in preparing, pricing, and negotiating a change order under federal government contracts, including U.S. Postal Service contracts. That’s the holding in Tip Top Constr., Inc. v. Donahoe, 695 F.3d 1276 (Fed. Cir. 2012). The court overturned a Postal Service Board of Contract Appeals decision that had erroneously limited the contractor’s recovery of these costs. End result: if an agency changes your contract (whether by unilateral direction or constructive change), your request for an equitable price adjustment may include reasonable consultant and attorney costs.

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Contractors beware: the U.S. Postal Service Office of Inspector General (OIG) thinks that $1 out of every $20 spent by USPS on its contractors is fraudulent, and OIG is itching to find it. According to a July 18, 2011 OIG blog article, “conservative business estimates project up to 5 percent of contracted dollars are lost to fraud, meaning $1.45 billion of Postal Service funds are potentially at risk.” While these numbers are fanciful, there is no doubt that the OIG is taking this seriously. Read on for more details.
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