The Postal Service's Sole-Source Contract With Perot Systems Corporation

GAO discussed the Postal Service's (USPS) sole-source contract award for efficiency improvements in postal telecommunications, delivery services, revenue protection, and transportation. GAO found that the contract failed to adequately protect the government's interest, since it: (1) limited USPS ability to independently implement any portion of the proposed projects without prior approval from the awardee; (2) did not specify any limit to the awardee's share of savings from the projects; (3) did not contain a cost limit provision and limited USPS authority to terminate the contract for convenience; and (4) was awarded on a sole-source basis without adequate justification. GAO also found that although there were precedents for the shared savings concept in federal contracts, the USPS contract differed significantly, since it: (1) was a noncompetitive award; and (2) provided for reimbursement of all approved costs.