Judge Upholds USPS-FedEx Agreement
A U.S. Court of Federal Claims judge has upheld a $6 billion, no-bid contract between the U.S. Postal Service and FedEx Corp. challenged by Emery
A U.S. Court of Federal Claims judge has upheld a $6 billion, no-bid contract between the U.S. Postal Service and FedEx Corp. challenged by Emery.
The USPS and the company are proceeding with their plans for FedEx to provide air transport for the Postal Service's Express Mail and Priority Mail, and some of its first-class mail, beginning in August. Already, FedEx drop boxes are being installed in post office locations.
Emery Worldwide airlines, a subsidiary of CNF Inc., filed a lawsuit claiming that the USPS should have called for competitive bids for the contract. Emery's request for a temporary restraining order was denied a day before the deal was announced in January. "We consider the Postal Service's pursuit of an exclusive agreement with FedEx to be irresponsible and anti-competitive and therefore not in the best interests of consumers," Emery President Kent T. Scott said at that time. Emery is currently under a 10-year contract with the USPS and operates a $200 million per year hub-and-spoke air transportation network to handle U.S. Express Mail.
Under its rules, the Postal Service may award no-bid contracts "when obtaining adequate competition for the purchase is not feasible or appropriate." FedEx claimed that the agreement was non-exclusive and that the USPS can continue to use carriers other than FedEx. Apparently, the judge agreed.
FedEx made the announcement Wednesday that the court had ruled in its favor. The court has said it will issue a public decision after March 28.
The seven-year agreement is expected to generate approximately $7 billion for FedEx over seven years.
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