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Northrop Grumman Sues US Postal Service Over Automated Snail-mail Sort Contract 80

Posted by Unknown Lamer
from the brought-to-you-by-fedex dept.
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."
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Northrop Grumman Sues US Postal Service Over Automated Snail-mail Sort Contract

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  • Dirty Northrop (Score:5, Interesting)

    by Anonymous Coward on Saturday May 19, 2012 @03:10PM (#40053101)

    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.

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      I actually commented on this in an article a while back. 80k for them to repair a part that broke for the military, Under 5k for a military maintenance facility to. And the kicker? The military base repairs actually worked long enough to be useful, while the Grumman ones were often faulty just back from repair.)

    • 80% profit? I can believe that NG was slow to submit, but this was not a government contract. Either that, or you don't really know what you're talking about here.

  • Makes me wonder (Score:3, Insightful)

    by tomhath (637240) on Saturday May 19, 2012 @03:19PM (#40053145)
    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.
    • Re:Makes me wonder (Score:5, Informative)

      by danheskett (178529) <danheskett@NoSPAm.gmail.com> on Saturday May 19, 2012 @03:34PM (#40053233)

      They 100% aren't. The concept of discounted rate periodicals and std class mail was to use up slack capacity on slower mail days. Good concept.

      But now that the 1st class mail volume has dropped to what it was, they are not charging enough. They have attempted to raise the rates, but the Postal Regulatory Comission has come down hard on any attempt to proportionally raise the rates of perodicals, non-machinable flats, and other "low value" documents.

      • Re: (Score:3, Insightful)

        by Anonymous Coward

        That interesting.

        Meanwhile, I'm wondering why, when any of these companies completely botches a defense contract, the taxpayers eat the cost of their fuck-ups for years on end. And really, which project DON'T they fuck up?

        But when they make a bogus machine that the USPS doesn't want, they sue!

        I love how some companies get to have their cake and eat it too, on my dime.

        • by jd2112 (1535857)

          That interesting.

          Meanwhile, I'm wondering why, when any of these companies completely botches a defense contract, the taxpayers eat the cost of their fuck-ups for years on end. And really, which project DON'T they fuck up?

          But when they make a bogus machine that the USPS doesn't want, they sue!

          I love how some companies get to have their cake and eat it too, on my dime.

          Perhaps the laws should be changed so that these companies can be allowed to be defense contractors for North Korea and Iran...

      • by hairyfeet (841228)

        That doesn't change the fact that other than garbage like junk mail and a few places that still send paper bills there really isn't much use of mail by the general pop, certainly not enough to justify daily deliveries.

        Hell my parents are in their 70s and not tech heads by ANY means yet I don't think either one has sent a letter in years, why? Because with email, chat, and FB frankly there just isn't a reason to. it is easier for both of them to just pop open the laptop or sit at the desk and type than it i

        • Hi.

          I read your journal entry. Thanks for the warning.

          Remember what you said about your father and the guards that the Jews appreciated and how the big wigs left? I just saw a documentary about Buchenwald. I bet that your father was there. The documentary mentioned that the place was very disciplined and efficiently organized.

          I want to make a disclaimer, though. The video is a holocaust denial video.

          • Sorry, I meant your grand father.

            • by hairyfeet (841228)

              Glad the heads up helped, I still get the occasional spam email from someone using Firefox and having a Yahoo mail account so that bug is still out there but it isn't as easy to set off as it was during FF 9 so hopefully they are working on it.

              Hell you may be right, for the life of me I can't remember the name of the place. I was a little kid and hearing about such horrible shit noting the details about the place just wasn't something I ever thought to do. When you are a kid you think your family is gonna b

    • by CAIMLAS (41445)

      You realize that if they were to stop giving such a massive discount on flats/off-loading the cost of flats to the paying customer (the ones who buy stamps and ship packages, never mind fund them through taxes), several things would/could happen:

      * The USPS would not be bankrupt and would be a net profit center for the Federal Government. Yeah, they'd make money at it, even if they try to fail through other means.
      * Most nonsense magazines which are shipped to the house (and infrequently paid for by the recip

      • by MsWhich (2640815)
        The USPS is not taxpayer-funded. Really. You can look it up.
        • The USPS is not taxpayer-funded.

          Then who the hell is buying all those stamps?

          You should have said: "The USPS is not funded by tax dollars."

          • by MsWhich (2640815)
            You don't have to be a taxpayer to buy a stamp. USPS will sell a stamp to any-dang-body. Even furriners and Commies. "Taxpayer" implies tax-funded. That said, I suppose I could have been a bit more precise with my language. (Everyone's a critic!)
  • by george14215 (929657) on Saturday May 19, 2012 @03:20PM (#40053153)
    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.

    • Re:In Soviet Russia (Score:5, Informative)

      by dkleinsc (563838) on Saturday May 19, 2012 @03:34PM (#40053237) Homepage

      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.

    • Re:In Soviet Russia (Score:4, Interesting)

      by fuzzyfuzzyfungus (1223518) on Saturday May 19, 2012 @03:35PM (#40053245) Journal
      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...
      • Re:In Soviet Russia (Score:5, Informative)

        by sphealey (2855) on Saturday May 19, 2012 @04:28PM (#40053525)

        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

    • Well - all commercial mail DOES require a machine readable barcode.

      Collection mail that is hand addressed (i.e. not courtesy reply or business reply) is a very small fraction of all processed mail. For that mail, OCR systems + remote encoding stations can very efficently barcode the mail.

      • by MBGMorden (803437)

        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.

    • Re:In Soviet Russia (Score:4, Informative)

      by optimism (2183618) on Saturday May 19, 2012 @03:39PM (#40053269)

      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.

    • by Gothmolly (148874)

      How is paper mail and/or the USSR relevant to anything in 2012?

  • by cdrguru (88047) on Saturday May 19, 2012 @03:35PM (#40053243) Homepage

    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.

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      It's not all gloom and doom, and maybe our economy needed a little contracting, but when you have one party opposed in lock step to anything that might fix things for purely ideological and "don't let the economy get better or they'll re-elect a black guy" reasons, this is what happens.

      Some people's belief in government's ability to fix things, as opposed to abillity, is about the same as my lack of faith that corporations will ever have loyalty to their people or their country, or that CEOs will ever stop

    • It wasn't just perception that killed the housing market. The homes were objectively over valued. Things like rental value to investment cost actually matter. The change in perception involved people waking up to that.

  • by Animats (122034) on Saturday May 19, 2012 @03:42PM (#40053277) Homepage

    The previous generation of flat sorting machine. [youtube.com] The new flat sorting machine. [youtube.com] 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 [usps.com] 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. [usps.com] "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.

    • by TubeSteak (669689) on Saturday May 19, 2012 @04:10PM (#40053433) Journal

      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 [wikipedia.org]

      • by sphealey (2855)

        = = = 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 [wikipedia.org] = = =

        Excellent point.

        sPh

      • by CAIMLAS (41445)

        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 t

      • by tlhIngan (30335)

        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 pla

      • 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...

    • I get probably 5 pieces of actual mail per month (bills, statements, etc). When I moved into my new house 6 months ago, I was getting about 8 bulk mailing pieces per day. I used every available opt-out method to avoid getting this junk mail delivered, and now I get maybe 2 or 3 pieces of junk mail per week. Overall, opting out has dramatically reduced the amount of bulk mail I receive. The important part is how easy it was to opt-out. I spent maybe 2 hours on various websites filling out basic forms.
      • 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

  • 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?
    • by Rudolf (43885)

      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?

      Yes, it's called Soverign Immunity. The U.S. government waives immunity in some cases, and possibly the contract with Grumman includes a clause that allows either party to sue for breach of contract. Also, the post office is not entirely part of the government any more, so it may not even have soverign immunity.

      This Wikipedia article has more detail.

      • by Anonymous Coward

        According to that Wiki entry, under the Tucker Act, the US Government does not have immunity from suits regarding commercial contracts, so the US government is not protected from suit. NG's case will likely make it to court, and then its a coin toss.

        CAPTCHA: meddled

  • 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.

  • 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 fed

    • +1. Most folks don't realize what a PITA it is to work on a government contract. It affects every element of your business, so for most companies it is just not worth doing. This becomes an effective 'barrier to entry', so those companies that are tuned and structured to work for the government can price things in a much less competitive way. And that tuning and structuring does have a significant cost, so things are more expensive to produce.

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