Postal Service Shelving Part of Perot Deal : Postmaster General Says Agency Will Seek Competitive Bidding

Postmaster General Anthony M. Frank said today that his agency is shelving a major portion of its controversial contract with Texas billionaire H. Ross Perot and will seek competitive bidding.

One part of the deal to help improve postal efficiency has drawn sharp criticism because of its seemingly open-ended payment structure and the fact that it was negotiated without competitive bidding.

“We are now aware of . . . concerns and believe we can overcome them by modifying the contract,” Frank told two Senate subcommittees.

Frank said he hopes to be able to resume one part of the deal, a six-month, $500,000 agreement for Perot Systems Inc. to analyze various postal operations and recommend ways to save money.

But the second part, in which the savings would be implemented, will no longer be the sole scope of Perot, Frank said.

‘Fully Competitive’

The original contract gave Perot the exclusive right to implement its recommendations, and would have based payment on a percentage of any savings.

Under a renegotiated deal, these money-saving projects, Frank said, “would be done on a fully competitive basis, and Perot Systems would not compete for this business.”

The contract has been suspended at the recommendation of the General Services Administration Board of Contract Appeals, although the Postal Service contends that the board doesn’t have jurisdiction over it.

Once that dispute is settled, other modifications to the Perot contract can be worked out, Frank said, including its length and the ability of the government to terminate the agreement.

Frank’s testimony came at a joint hearing of the Senate Governmental Affairs subcommittees on federal services, post office and civil service and on oversight of government operations.