USPS Demands $394 Million From Northrop in Contract Lawsuit

November 5, 2012

The U.S. Postal Service is demanding almost $400 million from contractor Northrop Grumman in a legal battle over a massive automation project gone awry.

Northrop was supposed to deliver 100 machine systems to sort magazines, large envelopes and other “flats” by October 2010, according to a USPS response last week to Northrop’s lawsuit filed in May. Instead, the “flats sequencing systems” — each about the length of a football field — were not fully deployed until August 2011, costing the Postal Service about $394 million in extra labor costs, according to the filing, which accuses Northrop of breach of contract.

During the negotiations that preceded the 2007 contract award, Northrop claimed that the sequencing systems would “would further reduce the labor necessary to manually sort flats and therefore would yield greater savings to the Postal Service,” the mail carrier’s lawyers wrote in the 74-page document.

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