Opinion ID: 774858
Heading Depth: 3
Heading Rank: 3

Heading: Rational Basis for Sole-Source Award to FedEx

Text: 59 The USPS's decision to contract out its Priority, Express, and First Class mail on a sole-source basis was rational. The Justification demonstrates that the USPS considered conducting a competitive bidding process for the contract at issue. The USPS rationally recognized, based on its previous experience, that a competitive bidding process would take much longer to perform than negotiating a sole-source award and would require the USPS to expend a great amount of resources to design appropriate potential networks with each viable competitor. 60 The Justification also provides insight into the rationality of the requirements the USPS sought in choosing a sole-source contractor. Prior to awarding FedEx the contract at issue, the USPS contracted primarily with multiple dedicated air transport carriers for delivery of Priority, Express, and First Class mail. The USPS recognized that this piecemeal system suffered from a myriad of deficiencies, including cost inefficiencies relating to operating procedures and overhead. It also realized that dedicated carriers tend to be less financially stable and more reliant on the USPS for financial viability than carriers capable of providing shared-lift. Further, the USPS recognized that the commercial airlines that currently transport some First Class mail are unreliable in achieving on-time performance. Appreciating these difficulties, the USPS set forth a number of characteristics that it sought in a carrier for the sole-source award. The primary characteristic the USPS desired was a single carrier that could provide shared-lift. The USPS rationally determined that unlike a primarily-dedicated system, in a shared-lift system, the USPS could purchase incremental space on carriers based on its needs. Such a shared system allows the USPS to reduce significantly operating and overhead costs arising from economies of scale and provides the USPS the ability to piggy-back on a plane already scheduled to travel a particular route. As a necessary component of a shared lift system, the USPS also sought a carrier that was not overly dependant on the USPS for its financial livelihood. These requirements under which the USPS conducted its sole-source award decision were rational. 61 Finally, the USPS's decision to select FedEx as the sole-source awardee was rational as was its decision to exclude Emery from consideration for the contract. While the trial court determined that the USPS had the objective of awarding FedEx the contract and hired PwC to justify that decision, PwC's Analysis and the USPS's decision were nonetheless rational. Both the Justification and the PwC Analysis indicate that it was unlikely that Emery could meet the USPS's national network requirements at a cost effective price without relying on postal payments for a significant portion of its overall revenue. This adverse factor indicates that Emery could not provide a shared-lift system that would benefit the USPS. As support for eliminating Emery from consideration, the trial court pointed out that the publicly available information cited in the PwC Analysis showed that Emery does not maintain a substantial business carrying parcels other than postal mail. Based on Emery's small market share of non-postal parcel transport service, it was rational for the USPS to determine that Emery could not provide a substantial non-postal delivery system on which the USPS could largely piggy-back. Further, the PwC Analysis and Justification provide ample support, including recitation of market share of non-postal shipments, for the USPS's decision to select FedEx over Emery and companies that PwC considered more viable than Emery for this contract, such as Airborne Express and United Parcel Service. 62 None of the countless other arguments made by Emery attacking the rationality of the USPS's decision garner any weight. 63