Postal Service awards a $ 5 million contract to Postmaster DeJoy’s former company, XPO

Postmaster General Louis DeJoy’s former company signed a $ 5 million freeway shipping deal with the United States Postal Service last month.

DeJoy will continue to have a multi-million dollar stake in XPO Logistics starting early October. The $ 5 million deal is the first regular mail route contract that XPO Logistics has signed with the USPS in more than a year. XPO’s last highway deal with the USPS was in December and was temporary. The previous one was signed in July 2019.

XPO’s contract to postpone mail between Norfolk, Virginia and Evansville, Indiana for the next 18 months has not yet been reported. The contract was negotiated in August and published in mid-October as part of a quarterly update of a database of USPS suppliers.

The postal service pays $ 3.0 million annually to manage its route between the two cities, which are approximately 700 miles apart. The USPS database shows the contract has one of the highest annual rates of the 1,600+ contracts the Postal Service initiated with outside companies in its final quarter, the first full quarter that DeJoy served as head of the agency.

DeJoy was a top manager at XPO before stepping down from the company’s board of directors in 2018. He joined XPO after selling the $ 615 million logistics company he founded in 2014.

XPO is still paying DeJoy about $ 2.3 million a year in rent and costs for 220,000 square feet of office space he controls in his home state of North Carolina. The company’s leases for DeJoys Immobilien run until 2025.

The stake in XPO was $ 75 million

The publicly traded XPO generated sales of around $ 16 billion last year and around 50,000 corporate customers for its various logistics and supply chain services. DeJoy’s personal stake in the company earlier this year was $ 75 million DeJoy’s latest financial disclosure submitted in June.

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DeJoy donated $ 1.2 million to Donald Trump’s 2016 campaign a controversial figure since starting the top position at Post in June. House Democrats held a hearing in August, when they informed the new postmaster about operational and labor law changes that he had made in his first few months at work. These changes would have slowed delivery and affected the reliability of the USPS, just as millions of Americans would have turned to it to cast their election day votes during a pandemic.

Republicans have long said that the vast postal service needs to be shrunk or privatized. However, the agency is on track to generate nearly $ 5 billion in cash this year. his best performance since 2015This is in large part due to the package delivery services for and other growing online retailers.

The Democrats also raised concerns at the August hearing about DeJoy’s ties to his previous company and potential conflicts of interest. In early September, the New York Times found that XPO’s postal service revenue had increased by $ 14 million in just 10 weeks since June. The postal service Inspector General opened an investigation into DeJoy’s personal finances and his connections with XPO, as well as the changes he made while at the Post.

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The inspector-general said in a report released Wednesday that the widespread service changes DeJoy made – almost all of which were reversed following public criticism – were responsible for a decline in the “timeliness and quality” of the postal service that summer.

DeJoy could not be reached for comment on the new contract, also known as the HCR (Highway Contract Route). DeJoy has announced that he plans to sell his remaining stake in XPO and received permission from a government ethics bureau in early October. He was given a window that ends in mid-December to sell.

An XPO spokesman told CBS MoneyWatch in a statement: “Public records show that the US Postal Service has awarded more than 1,600 HCR contracts under the government’s open, competitive bidding process since June 15, and XPO has won on several of these Contracts bid and one received. According to these public records, more than three dozen HCR contracts awarded to other companies during this period are higher than XPO’s contract. “

In August, amid the Congressional hearings, XPO made a statement DeJoy no longer had a role in the company and his postal contracts make up a small fraction of the company’s total revenue. Regardless of what contracts it has, they were awarded according to Merit and by “career USPS procurement officers.”

A USPS spokesperson told CBS MoneyWatch that DeJoy was not involved in any deals or contracts related to XPO. “The Postal Service is confident that the ongoing review of this process by the Inspector General’s Office will confirm the postmaster’s full compliance with ethical laws and regulations,” the spokesman said in a statement.

$ 3 billion patchwork for USPS highway contracts

The postal service maintains a table of regular motorway routes, it has contracts with external shippers on its website, which is updated quarterly. Washington, DC, partner David Hendel, Culhane Meadows, a government law firm, says the patchwork of freeway contracts accounts for about $ 3 billion of the annual $ 12 billion that the postal service distributes to outside contractors each year.

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New Breed Logistics, the company that DeJoy ran and was bought by XPO in 2014, has been a postal operator for two decades. XPO generates most of its mail revenue from on-demand services, including $ 2.5 million paid last year to deliver Census Bureau forms and pandemic services worth $ 2.3 million -Dollar.

The postal service’s motorway contracts have grown in recent years, largely due to the explosion in online retail, observers told CBS MoneyWatch.

“I know from speaking to leadership that the demand for ground transportation has increased,” said John Sheehy, director of the National Star Route Mail Contractors Association. “They tried to justify some of it, but the volume of ground haulage to contractors seems to have increased.”

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