The U.S. Postal Service's president of shipping signed off on a no-bid, $4 million consulting contract to a firm partly because it employed a former associate from his days as an executive at pickle producer Vlasic Foods and lawn care giant Scotts Miracle-Gro, records show.
The decision to bar other companies from bidding on the contract was made months after postal officials warned that the nation's mail service risked running out of cash for the first time in history.
Robert F. Bernstock, the U.S. Postal Service's $232,500-per-year president of the shipping and mailing services division, endorsed the contract to Tatum LLC on May 11 to help manage a Postal Service technology project.
Records and interviews show the Postal Service gave the contract to Tatum partly because a Tatum official named Elizabeth Shuttleworth had worked with Mr. Bernstock at Vlasic and Scotts Miracle-Gro, where Mr. Bernstock held top corporate posts.
In contract documents justifying the decision against putting out the contract for open, competitive bids, postal officials cited Ms. Shuttleworth's more than 20 years of business experience. "The other unique value is that Ms. Shuttleworth has worked with the USPS Shipping and Mailing Services President, Mr. Bernstock," contract documents obtained by The Washington Times state.
The contract, reported by the Federal Times on Friday, notes that Mr. Bernstock "is confident of Ms. Shuttleworth's knowledge, value, qualifications and ability."
But Steve Ellis, vice president at the nonpartisan Taxpayers for Common Sense, said noncompetitive contracts should be used only in rare cases, and the USPS-Tatum arrangement raises serious questions about whether the cash-strapped Postal Service is getting the best deal for its money.
"Simply because you've worked with the someone in the past and liked their work product generally doesn't rise to the level of being a noncompetitive contract," Mr. Ellis said. "It shouldn't be personality-driven."
He said sealed, competitive awards with multiple contractors bidding on a project are preferable to no-bid arrangements, which he called "very risky" and usually more costly.
Tatum declined requests for comment and to interview Ms. Shuttleworth. Tatum, a consulting firm with dozens of offices nationwide, separately is temporarily engaged by the parent company of The Washington Times.
Postal Service spokesman Gerald J. McKiernan said USPS officials made sure the contract costs were fair. He also said Tatum already had been under contract on another matter in which Ms. Shuttleworth was involved.
In a written statement to The Times on Thursday, Mr. McKiernan said Tatum is one of more than a dozen companies involved in the Postal Service's "Project Phoenix," a $147 million, three-year technology project. Mr. McKiernan said the project will improve "online, call center and mobile experiences" for customers.
"The goal is to improve customer satisfaction, grow revenue, reduce costs and create a more efficient operation for transactions and inquiries," he said.
Mr. McKiernan said an ethics official in the Postal Service's office of general counsel reviewed the Tatum contract and determined that Mr. Bernstock had no ethics conflict.
He said the USPS hired Tatum because "while the Postal Service has many talented people, we did not have the kind of expertise in-house to get this done."
Still, Ms. Shuttleworth's ties to Mr. Bernstock played a role in the contract award.
Mr. McKiernan said Ms. Shuttleworth "already had some familiarity, she had the qualifications to get the job done, and Mr. Bernstock could attest to her capabilities, thereby shortening by a considerable amount of time an assessment process for a project that was already falling behind schedule."
At the time of the no-bid hiring, USPS officials were facing billions of dollars in losses and declining mail volume.
The Postal Service's board of governors met in Washington on March 12 last year - two months before Mr. Bernstock signed off on the contract - and board member Carolyn Lewis Gallagher noted that the USPS risked running out of cash for the first time in its history, according to postal records.
The USPS hired Mr. Bernstock in June 2008 to help bolster revenue in part because of his experience in the corporate sector. Postmaster John E. Potter called Mr. Bernstock a proven leader with a track record "of building businesses and delivering revenue while driving down costs."
Among other positions, he worked as chief executive officer at Vlasic and chief operating officer at Scotts Miracle-Gro. As president of mailing and shipping, Mr. Bernstock oversees a division that produces more than $70 billion in revenue.
The Times reported in January that under a special condition of his hiring, Mr. Bernstock has been able to retain paid positions on outside corporate boards that earned him more than $270,000 in cash and other compensation in fiscal 2008.
Postal officials say the arrangements do not interfere with Mr. Bernstock's postal work and that he uses his personal time to attend to business on boards for weight-loss giant Nutrisystem and Pantry Inc., which runs a chain of convenience stores.