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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?
Every post office I've been in has big signs up about how to make your addressing machine readable so it's sorted faster. It mostly boils down to using blue or black ink on a light or white background and printing in large letters.
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You should have started with "In Soviet Russia, letters send you!"
Seriously, my understanding is that the USPS relies on OCR rather than a special format to handle a lot of sorting and routing, and secondarily on humans to figure out what goes where. In the US, the zip code was invented in 1963 to get a letter at least as far as the correct post office, and the zip+4 came about in 1983 to get you within a typical city block - by that point, it's in the right carrier's bag, and can be delivered correctly fairly easily.
I am officially gone from
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.
I don't know how much is purely down to inertia and inefficiency(these certainly cannot be ruled out); but I get the impression that the US postal service has a certain cultural attachment to a slightly retro ideal of universal service going back to their original constitutional mandate. This is of pretty questionable use in their contemporary capacity as high-volume junk mail distributers with a side of certified legal mailings; but my interactions with postal personnel(especially in smaller markets) has always given me the impression that they take a certain pride in the fact that anyone can scrawl a vague reference to somewhere in Podunk on an envelope, slap on a stamp, and have it actually arrive at the correct slice of nowhere, courtesy of the postman who knows that area.
Fedex, on the other hand, you expect the barcodes and the little scanner/PDA widget.
As noted, it isn't obvious that this cultural orientation is a good fit for the position that the service finds itself in; but it has always struck me as an interesting phenomenon...
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Last I checked, machine recognition of handwritten zip codes was better than 99.5%.
That was about 5 years ago. Presumably it has improved since.
So, there is no need for special machine codes. They can read your writing as-is, or pass the rare piece of mail to a human sorter if the confidence margin is too low.
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!
Something like 99.7% of USPS mail is autosorted. There are three (IIRC on the number) centers were a few dozen human-type people view (remotely, from the regional sorting center) the 0.3% that doesn't autosort. Again IIRC those people are able to sort 99% of the remaining, usually within 10 seconds. The rest go to the dead mail office.
The pictures people have in their minds of USPS "inefficiency" are the way things were done in the 1950s; the USPS started automating in a big way in the 60s and funded a lot of research in machine vision and OCR in the 60s and 70s.
sPh
How is paper mail and/or the USSR relevant to anything in 2012?
I want to delete my account but Slashdot doesn't allow it.
Excellent point.
sPh
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?
You nailed it:
USPS cannot set service standards.
USPS cannot set prices.
USPS cannot set service areas.
USPS cannot own planes.
USPS cannot own trains.
USPS cannot own boats.
USPS cannot open or close processing plants.
USPS cannot lock out workers.
USPS is required to participate with non-competitive government benefit plans.
USPS is the just about the only entity in the entire US that has to prefund retiree health benefits (which, by the way, is a good idea, but puts them at a competitive disadvantage).
USPS is required to choose from suppliers specified by law.
USPS is forbidden from buying systems from certain international vendors that are already proven and in use by other systems.
Congress, or the Postal Regulatory Commission (setup by Congress) have their thumb on the entire system and refuse to allow them to modernize. The worst of the regulations keep them from being competitive in very profitable business lines - for example, next day deliveries. Since the USPS can't by law own air transport, they have to contract for it with a variety of carriers - most often FedEx. However, if FedEx doesn't have any capacity to sell today, the USPS is the first to be bumped, making packages late. So despite having bar none the best door-to-door delivery network in the world, they can't reliability deliver packages next day.
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
Actually, no. Commercial bulk mail gets most of its discount from pre-sorting. The POSTNET barcode has always just added an additional (and much smaller) discount to the bulk rate, but has never been required.
Starting in 2013 (though this date has been pushed back several times already) POSTNET is being phased out in favor of the "Intelligent Barcode" system, though I'm not sure if the barcode will actually become mandatory at that point or if POSTNET will just become invalid.
"People who think they know everything are very annoying to those of us who do."-Mark Twain
Even though there is no need for special machine codes for typical personal mail, they have them anyway to reduce the amount of computing that has to be done to process the mail, and continue to develop and refine their standarda.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
AFAIK private industry is not required to pre-fund pension plans. That is one of the competitive disadvantages against the USPS. (IMHO pension plans, if offered, should be pre-funded, and not 'owned' by the company so they can't be raided, and not funded by the company's own stock. But that's another topic.) See a comment higher up for the list of things that USPS is not allowed to do by Congress - including setting rates, and other things that other companies can do.
It's easier to be a result of the past, but more fun to be a cause of the future! http://www.spacefinancegroup.com/
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/
Agreed. I'd go a step further and require any pension to be defined-contribution as well - so that offers are strictly comparable.
I'm not a big fan of deferred pay in general - it is WAY too open to abuse, and I've seen firsthand the problems that arise when companies imply that workers are earning some benefit only to yank it away from them.