Louis DeJoy’s Former Company New Breed Logistics May Have Overcharged Postal Service By $53 Million, Audit Found
A 2001 U.S. Postal Service Inspector General audit found that noncompetitve contracts awarded to New Breed Logistics, run by now-Postmaster General Louis DeJoy, may have cost the USPS at least $53 million more than if the contracts had been competitively awarded, NBC News reports, raising scrutiny that DeJoy may have overbilled the USPS and marking the latest in a string of damaging reports tied to the controversial postmaster general’s work in the private sector.
The IG report found that the contracts awarded to New Breed and the process of awarding noncompetitive contracts to a single vendor were “not justified according to Postal Service requirements” and “might have exposed the Postal Service to increased cost and performance risks.”
New Breed was awarded a USPS contract for a pilot mail transport equipment service center in Greensboro, North Carolina in 1992 and then for subsequent service centers in 1997, 1998 and 1999, which were the focus of the inspector general report; DeJoy was running New Breed Logistics for that entire period.
NBC reports it is “unclear” what happened after the audit, but the report “raises questions about whether New Breed knowingly overbilled the Postal Service,” and former Postal Service IG Dave Williams, who has been highly critical of DeJoy, told NBC it is “puzzling why it was not referred for investigation.”
Congressional reports from 1999 also raised concerns about New Breed’s USPS contracts, with a March report finding that $33.6 million in funding paid to New Breed was recommended to be “put to better use,” and a September report finding an additional $9.3 million could have been better spent.
DeJoy’s work at New Breed has recently come under fire amid a Washington Post report suggesting DeJoy, a prolific GOP fundraiser, may have pressured employees to donate to Republican politicians and then used company bonuses to illegally reimburse them, and the company has also come under scrutiny for its history of allegedly mistreating workers and court documents alleging DeJoy forged his brother’s signature on bank documents to oust him from the company.
XPO Logistics, which bought New Breed, is a current USPS contractor that the New York Times reports has been paid $286 million by the Postal Service since 2016, and DeJoy has at least a $30 million stake in the company.
DeJoy, through a spokesperson, told NBC that “there was no finding in the review that [New Breed] did not fulfill the terms and conditions of the contract,” and that the 2001 audit was scrutinizing Postal Service contracting rather than New Breed. The Postal Service and its management took issue at the time with aspects of the IG’s findings, claiming that New Breed’s “proposed prices were more realistic than the competitive contractors’ cost proposals,” and describing the $53 million calculation as “misleading.” Current Postal Service spokesman David Partenheimer referred NBC to a letter from the time that said the agency “generally agree[s]” with the inspector general’s findings, but the contracts may have resulted in other cost savings that the report overlooked. NBC also notes that the Postal Service inspector general at the time, Karla W. Corcoran, later retired amid accusations of abusing her authority at the agency.
DeJoy has become a target for criticism since becoming postmaster general in June, as the Trump ally implemented changes at the USPS that have resulted in nationwide mail delays and raised concerns about the November election. DeJoy’s changes and his alleged financial conflicts of interest—including his holdings in XPO Logistics—are now under review by the agency’s current inspector general, and the postmaster general’s changes also under investigation by Congress and the subject of multiple lawsuits. His alleged campaign finance violations while at New Breed are also under investigation by the House Oversight Committee. The postmaster general has defended his changes at the USPS as necessary measures to address the agency’s “dire” financial situation, and has denied allegations of improper financial conflicts of interest or that he has been in any way influenced by President Donald Trump. “I have no patterns of misconduct,” DeJoy testified to the House Oversight Committee in August.