Postal Service Must Modify Perot Contract

WASHINGTON —  The U.S. Postal Service will have to modify a no-bid contract to increase postal efficiency that it recently awarded to Texas entrepreneur H. Ross Perot, Postmaster General Anthony M. Frank said Friday.

“It is now clear we are going to have to modify this contract, and we will be discussing this in the next few days,” Frank told a meeting of the Postal Board of Governors.

The contract has come under attack from Perot’s competitors as well as from Capitol Hill, where lawmakers were irritated that it was awarded without competitive bidding.

Two Protests

“This is a sole-source contract, and it comes amid the Pentagon contracting scandal,” Frank said, acknowledging that the contract was controversial. The Pentagon is currently examining the military contracts it has awarded.

If the contract cannot be modified in a way acceptable to Perot, the Postal Service will have to cancel it, he said.

One critic of the contract is Electronic Data Systems Corp., known as EDS, a unit of General Motors Corp. EDS was founded by Perot but later acquired by GM, which paid $2.5 billion for it in 1984.

Ultimately, Perot resigned as EDS chairman, and GM bought out his interest in the firm after the Dallas billionaire had a dispute with GM Chairman Roger B. Smith.

On Thursday, after EDS and another competitor, Planning Research Corp. of McLean, Va., protested the award, the General Services Administration’s Board of Contract Appeals suspended the contract award until Aug. 22.

But the action was procedural and did not reach the merits of the protests, a board official said.

“The protesters argue that the Postal Service violated various statutes and regulations in awarding the contract. We have not yet ruled on those questions,” said the official, who said that board procedures barred the use of his name.