USPS has to pay $91K for trucking contract it didn’t use (but forgot to cancel)

Lexology reports that the USPS is on the hook for over $91,000 for trucking services it contracted for, but never used. In 2012, the USPS closed its Greensburg, Pennsylvania Customer Service Mail Processing Center (CSMPC). Despite the closure, the USPS didn’t terminate the fixed price transportation contract it had with Olbeter Enterprises to move mail between the CSMPC and the Greensburg PO.

It wasn’t until nine months later that it dawned on someone at the USPS that they were paying for trucking services they didn’t need. The agency and the trucking company then agreed to terminate the contract in May 2013.

Two months later, in July 2013, the USPS notified the company that it wanted a refund for the nine months worth of payments, claiming that it had constructively terminated the contract by not giving Olbeter any mail to transport. When the company objected, the USPS deducted the $91K from payments due Olbeter from other contacts it had with USPS.

Not surprisingly, the company appealed the USPS decision to the Postal Service Board of Contract Appeals. The Board was not impressed by the Postal Service’s argument:

While the Postal Service did not tender any mail to Olbeter for delivery, it did continue paying Olbeter the monthly payments under the fixed-price portion of the Contract. By making those payments, and by ordering extra trips and terminating the Contract as of May 1, 2013, the Postal Service (and Olbeter) left the existing Contract in place until that later date. Having failed to terminate the Contract until May 1, 2013—and in the absence of a breach by Olbeter—the Postal Service remained obligated to make the monthly fixed-price payments even if it did not tender any mail for delivery, and Olbeter was entitled to keep the payments.

Source: Agency cannot retroactively terminate to reduce damages – Lexology