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The post office awards a $ 5 million contract to XPO, the former company of postmaster DeJoy

The company before Postmaster Louis Dejoy signed a $ 5 million highway contract with the US Postal Service last month.

Dejoy continues to own millions of dollars in XPO Logistics as of early October. The $ 5 million transaction is XPO Logistics’ first fixed-term contract for the postal route with the USPS for over a year. The last highway contract between XPO and the USPS was December, which was temporary. The previous one was signed in July 2019.

No XPO agreement has been reported to move email between Norfolk, Virginia and Evansville, Indiana for the next 18 months. The deal was negotiated in August and disclosed in mid-October as part of a quarterly update of the USPS supplier database.

The post office pays XPO $ 3.3 million annually to manage routes between two cities approximately 700 miles apart. According to the USPS database, the deal has the highest annual rate of more than 1,600 contracts launched by the postal service with external companies in the most recent quarter, the first full quarter in which DeJoy was responsible for the agency. It is one.

DeJoy was the top executive of XPO Before he left the board in 2018. He joined XPO after selling his founding company, New Breed Logistics, for $ 615 million in a 2014 transaction.

XPO pays approximately $ 2.3 million annually in rent and expenses for 220,000 square feet of office space managed by Dejoy in his home state of North Carolina. The XPO lease agreement for DeJoy’s property is valid until 2025.

Investing in XPO worth $ 75 million

Listed XPO reported last year about $ 16 billion in revenue and about 50,000 corporate customers in various logistics and supply chain services. According to DeJoy’s latest financial disclosure filed in June, DeJoy’s personal shares in the company were worth as much as $ 75 million earlier this year...

Dejoy donated $ 1.2 million to Donald Trump’s 2016 campaign Controversial person Since taking the lead at the post office in June. House Democrats held a hearing in August to grill the operational and labor changes that the new postmaster made in the first few months of employment. They claim that these changes delayed delivery and undermined USPS credibility, as millions of Americans turned to the USPS to vote on mailing election days during a pandemic. Did.

Republicans have long stated that the vast post office needs to be scaled down or privatized. However, the agency plans to generate nearly $ 5 billion in cash this year. Best performance since 2015, Primarily for parcel delivery services for Amazon.com and other growing online retailers.

Democrats also expressed concern at a hearing in August about Dejoy’s relationship with his previous company and what they call a potential conflict of interest. In early September, the New York Times discovered that XPO revenue from the post office surged $ 14 million in just 10 weeks from June.Post office Inspector General has begun an investigation About Dejoy’s personal finances and his relationship with XPO, and the changes he made while at the post office.


Possible postmaster general probe playing cards

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In a report issued Wednesday, the Inspector General said that DeJoy’s extensive service changes (almost all of which were subsequently canceled due to public criticism) were “timely and quality” for this summer’s email service. Said that it was the cause of the decline.

It was not possible to contact DeJoy for comment on the new contract, also known as HCR, on the highway contract route. Dejoy has indicated plans to sell the remaining shares of XPO and received permission from the Office of Government Ethics in early October. He was given a window for sale ending in mid-December.

An XPO spokesperson told CBS Money Watch in a statement: “According to official records, the United States Postal Service has won more than 1,600 HCR contracts through the government’s open and competitive bidding process since June 15. These official records indicate that others during this period. More than 30 HCR contracts awarded to companies in Japan are higher than XPO contracts. “

In August, during a parliamentary hearing, XPO issued a statement stating that DeJoy no longer plays a role in the company and that mail contracts make up a small portion of the company’s total revenue. According to the company, whatever the contract was, it was awarded by a “career USPS procurement officer” based on its benefits.

A USPS spokesman told CBS Money Watch that DeJoy was not involved in any transactions or contracts related to XPO. In a statement, a spokeswoman said, “We are confident that the postmaster will be able to ensure that the postmaster is in full compliance with ethical laws and regulations through a continuous review by the Directorate General of Inspection of this process.” Said.

USPS Highway Contract $ 3 Billion Patchwork

The post office is a quarterly updated website that holds spreadsheets of regular highway routes that have contracts with external shippers. David Hendel of Washington, DC partner and government contract law firm Culhane Meadows said patchwork for highway contracts accounts for about $ 3 billion of the $ 12 billion a year the post office pays to outside contractors each year. It states.


Options for returning ballots by mail

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New Breed Logistics, a company run by DeJoy and sold to XPO in 2014, has been a postal contractor for 20 years. XPO generates most of the post office’s revenue from on-demand services, including $ 2.5 million paid over the past year to deliver census forms and $ 2.3 million for pandemic-related services.

Japan Post’s highway service contracts have increased over the past few years, primarily due to the explosive growth of online retailers, observers told CBS MoneyWatch.

“We’ve talked to leadership and know that the demand for ground transportation is on the rise,” said John Shihee, head of the National Starroute Postal Contractors Association. “They have tried to size some of them to the right size, but the amount of ground transportation to contractors seems to have increased.”

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