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Northrop Grumman Sues US Postal Service Over Automated Snail-mail Sort Contract
McGruber writes "The Federal Times is reporting that Northrup Grumman has filed suit against the US Postal Service, accusing the USPS of violating the terms of the 2007 fixed-price ($875 million) contract to produce 100 massive automatic sorting systems, each capable of handling millions of magazines, catalogs and other pieces of flat mail. The Postal Service embarked on the project just as mail volume was beginning to nosedive, cutting into anticipated efficiency gains. The sorting machines' performance has been uneven, according to a series of reports by the Postal Service's inspector general."
Northrop Grumman is so fucking bad, that I refuse to believe that anything they do is malicious. They're not competent enough to try to really screw the taxpayers. Every interaction I've had with them indicates that NG corporate is hostile to actually producing hardware and software, and desire to only create IP that NG can then charge the government to use. They are, however, so fucking incompetent that when I tried to get them to give me a proposal for a sole source, small change, that they were going to charge us 5x cost for, they failed to provide a compliant proposal before the money got pulled. You got that right. 80% profit and overhead, and they couldn't actually execute their core business function, which is extracting money from the federal government. Granted, our acquisition system is it's own disaster, but only NG could be so bad as to fail to ask when we're throwing money.
If the USPS is charging enough for media/junk mail (aka "flats"). They probably don't want to price themselves out of the market but I find it hard to believe they can deliver junk mail for what they charge.
Why not? Would any private sector business continue to do business with a partner that was suing it?
In Russia, back in the days of USSR, all letters had to be sent in special envelopes upon which you had to trace machine-readable destination code in specially provided boxes. No code - no delivery. And in the US, the supposed birthplace of computing and internet, letters still have no required machine-readable codes (at least) 30 years after the USSR had them.
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We are certainly going to be seeing more of this. The problem is businesses have contracted for services based on at least things staying the same. We have five years now of shrinkage in the economy, jobs, everything. And it is going to continue down the same road.
A big part of the problem is expectations and perceptions. What really torpedoed the housing market was a perception that things were suddenly different. It made no difference whatsoever that a house valued at a million dollars one day hadn't changed in any way but the next day people were only willing to pay a half a million for the same house because of a perception that the housing market was crashing. This, obviously, led to a crash in most of the country. Yes, there was a possibility that people might default on some loans - and then because a lot of goods and services were no longer selling as they did a lot of people lost their jobs - and once again, perception became reality and people defaulted on loans after they lost their jobs.
Of course the Postal Service is going to try to weasel out from this contract for stuff they no longer need. They might get away with it, unlike most other businesses and individuals. A lot of the time a business will purchase equipment and hire people based on a contract that isn't really cancellable and often it is difficult to get out of those. Try signing up for a lawn service for five years and cancelling after the first year - you might get sued as well.
A far bigger problem is that there will be a ripple effect here. Northrop Grumman will fire a bunch of people that were supposed to be working on this. Then will in turn stop buying as much stuff leading to further contractions spreading out through the economy. It is what happens in a shrinking economy rather than a growing one. This has happened before, but the problem is this time there is no confidence that the government is capable of fixing things in any manner other than throwing money around like a drunken sailor. And rather than just a crisis of confidence, there is actually a great deal of confidence that things are just going to get worse and worse.
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Our organization used to do a LOT of bulk mail.
The workers at the local bulk mail center became more and more rude, to the point where I started taking witnesses with me, just to document that I wasn't making this up. When they weren't being rude, they were just being impossible to work with, with management creating new rules and regulations to make it more difficult to send bulk mail.
This inspired us to push for digital communications with our customers. Even though our clientele aren't computer savvy, we've been working to educate them in the use of web sites, email, Facebook and texting. They don't get to see us at the bulk mail center nearly as often as they used to.
The U.S. Post Office's end has been coming for a while now, but they went out of their way to accelerate their own extinction.
The previous generation of flat sorting machine. The new flat sorting machine. The mechanical problems of sorting large volumes of flats of varied size and thickness with flapping loose pages have finally been solved. But it doesn't matter. Putting ads on glossy paper and shipping them to people who don't really want them much is a dying industry.
The USPS really wants to get out of the deal for the flat sorting system, because the flats business (mostly catalogs and magazines) is declining. Mail volume overall peaked in 2006, and has been in a screaming dive since then. The USPS doesn't need a new generation of flat sorting machinery. But the USPS signed a firm fixed-price contract for the gear, and they're stuck with it.
Paper mail, as a business, is tanking. "We forecast U.S. postal volumes to decrease from 177B pieces in 2009 to around 150B pieces in 2020 under business-as-usual assumptions. Notably, volumes will not revisit the high-water-mark of 213B pieces in 2006 -- on the contrary, the trajectory for the next 10 years is one of steady decline, which will not reverse even as the current recession abates. Expressing the decline in terms of pieces per delivery point highlights the challenge: we project pieces per household per day to fall from four pieces today to three in 2020 -- driven by decreasing volumes delivered to an increasing number of addresses." That's the optimistic scenario - recession over in 2012, no "Do Not Mail" bulk mail opt-out legislation. It's also from a 2010 study that didn't really consider the move to smartphones.
Paper mail, as a business, is tanking.
And yet parcel (package) mail volume is increasing.
The funny thing is that UPS makes more money than everyone else in the package business combined,
but for rural deliveries, they (and FedEx) farm out the packages to USPS because it would cost to much to deliver it themselves.
That said, the United States Postal Service isn't really in financial trouble.
Their problem mostly has to do with a bad law that forces them to devote enormous amounts of cash to prefund pension plans
[Fuck Beta]
o0t!
Excellent point.
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I'm not saying this is a good policy, but doesn't the United States government reserve the right to decline any lawsuit filed against it in the United States?
Oh, the horror! A semi-government agency is forced to prefund pension liabilities like the government requires private industry to do for those types of pension plans? How absurdly unfair to require the same standards for government-related agencies as for private industry!
Of course, aside from the ironically amusing complaints they have about this requirement, the sad fact is that the government is looting the USPS pension by taking their money and promising to guarantee it with the full faith and credit of the US government. You know, like the promises by the Federal government to repay the special issues that comprise the Social Security Trust Fund.
If the Post Office business model depends on people being willing to accept bulk advertising as an unavoidable nuisance, then their business is in trouble. If opt-out laws get passed, then it'll really put a dent in their profits. I hate spam, and I don't care if it's on paper or electronic. If I can avoid it, I will.
I'm an individual! Just like everyone else!
And yet parcel (package) mail volume is increasing.
The funny thing is that UPS makes more money than everyone else in the package business combined,
but for rural deliveries, they (and FedEx) farm out the packages to USPS because it would cost to much to deliver it themselves.
I suppose that it largely depends on how exactly you're shipping things, what you're shipping, and where you're sending it.
In certain parts of the country, FedEx is the only way to go. In rural NE and SD, for example, I know FedEx will stop/drive by 2, 3 times a day. By 'rural' I mean anything from a couple dozen people per square mile (or less) to small towns to cities of 150-200k people.
In these places, UPS is the one that's more likely to do things like leave the packages at the local gas station (also the post office), and not bother even trying to deliver it (no wonder it's cheaper). I have had FedEx drop off several packages and then pick up at the end of the day, with the same driver. You won't get anything like that with UPS. If you want to ship something big and/or heavy, FedEx is the only way to do it with any expectation that it'll be handled well (with normal bulk rate or freight rates).
In my experience, they each excel at different things.
* UPS is good at small parcel post (letters and the like). If timeliness isn't an issue and cost is the perogative, and it's not easily broken, go for it. Most likely to read "Fragile" to mean "Step On and/or Break".
* FedEx is best at big things (eg. larger than a breadbox). They handle things the best, in my experience. If you need it timely, it'll be there, but it might also cost you. I've gotten things which couldn't have been delivered faster if someone had left for the airport to travel to me with them on a commercial flight - just ridiculously fast. It's the only way I'll ship sensitive equipment.
* USPS is the cheapest and most secure way to get something from overseas, ironically. Don't do it with anything fragile. Sometimes, you wonder if they're still using the Pony Express for some legs of the delivery.
~/ssh slashdot.org ssh: connect to host slashdot.org port 22: too many beers
I don't care about the details of the lawsuit, the courts can sort it out. What I like is that the USPS had the foresight to sign a fixed-price contract with a major federal contractor. Northrup Grumman, Lockheed, General Dynamics and friends are in the business of navigating federal bureaucracy and milking it for every last over-budget dollar.
Three cheers for USPS for drawing a line in the sand.
Actually, they are forced to prepay 75 years of health pension benefit in the next 10 years. Look at the pretty charts and you'll see the massive losses only started happening after the law was passed - before that they were doing fairly well - no big profits, no big losses, basically self-sufficient.
Even worse, they're prepaying health benefits for people who haven't joined USPS yet. Imagine paying for employee pensions for those who aren't even employees yet.
By the way, if you're surprised to see an aerospace company providing mail sorting services to the USPS, you misunderstand what Northrup Grumman, Lockheed, General Dynamics, and Boeing are. They're not really aerospace companies, they're federal government contracting companies. Their primary expertise is in navigating the federal bureaucracy, attaching a money hose to it, and pumping it dry. That includes both admirable and unethical skills: they've got a ton of experience with the reams of required federal paperwork, but also cozy relationships with congress.
But they provide all kinds of non-defense services to the federal government. For instance, Lockheed operates the US Antarctic bases for the NSF.
ups revenue 53 billion
USPS annual budget 70 billion
fedex 39.3 billion
dhl 65 billion in annual sales
I believe your link/assertion re the pension plans-- I think some law makers are trying to break the back of USPS-- but I disagree with your claim re ups marketshare...
every day http://en.wikipedia.org/wiki/Special:Random
A decade or two ago I read about a guy who lived out in the boonies, and for some reason couldn't get or afford firewood one year. So he subscribed to every junk mail and catalog he could get, and used that in his wood stove. Stayed warm all winter, and helped support USPS! :D
It's easier to be a result of the past, but more fun to be a cause of the future! http://www.spacefinancegroup.com/
Handwriting has gone worse over the last five years.
I bet those post office hand sorters just love getting a piece of mail handwritten by any Doctor I've ever known.