Saturday, November 9, 2013

FSS Contractor Defrauded USPS, Whistleblower Says

A whistleblower is claiming that his former employer, Northrop Grumman, defrauded the U.S. Postal Service by providing it false information about the Flats Sequencing System.

The ex-employee “alleges that the company violated the False Claims Act in a number of ways with respect to the FSS contract [and] alleges damage to the USPS in an amount of at least approximately $179 million annually,” Northrop Grumman stated in its recent quarterly financial report to the U.S. Securities and Exchange Commission. The ex-employee also “alleges he or she was improperly discharged in retaliation.”
Magazines accidentally ejected from an FSS machine.

Northrop Grumman was the lead contractor for the FSS – 100 football-field-sized machines designed to sort catalogs, magazines, and other flat mail. The company has sued USPS for non-payment, and the Postal Service has counter-sued with a claim that Northrop’s late and substandard work prevented the FSS from realizing its expected cost savings.

So far, the FSS has resulted in higher mail-handling costs that have outweighed the Postal Service’s decreased delivery costs. But postal officials expect productivity to rise early next year when flats mailers will be required to present mail for FSS ZIP codes in a manner that is optimized for FSS.

The Washington Post has identified the whistleblower as Beau Michaud and says his complaint charges that Northrop Grumman and a subcontractor “repeatedly made false certifications about the machines’ speed, reliability and accuracy” and that they “provided the Postal Service with a fraudulent handbook for the machines.” (Update: Michaud's complaint was posted online by Save the Post Office on Nov. 10, 2013.

An FSS machine tore the cover of this mail piece.
A LinkedIn profile indicates Michaud was a technical trainer and engineer for Northrop. Someone identifying himself as Beau Michaud has reportedly been contacting postal experts to get photographs of mail that was damaged by FSS machines.

USPS has made a number of adjustments to its procedures and to the machines themselves to minimize torn covers, “foldovers,” and other damage that resulted in employees nicknaming the billion-dollar investment the "Flats Shredding System."

Northrop “intends vigorously to pursue and defend” both the whistle-blower case and the USPS litigation, its says in the SEC filing.

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Anonymous said...

"Northrop Grumman was the lead contractor for the FSS – 100 football-sized machines designed to sort catalogs...."

I believe it's a bit bigger than a football, maybe a "football field sized" is better. ;)

peace, T

D. Eadward Tree said...

Thanks for the free editing, Anonymous. The correction has been made.

Anonymous said...

no problem, feel free to delete the comment. :)

retired carrier, T

Anonymous said...

After Northrop Grumman separated from it's Postal Automation business, USPS contracted a company named 21st century, which is comprised of former USPS FSS engineers as well as other professionals used by NG on the contract. They have been working diligently, at great cost to the USPS, to correct the issues, both hardware and software, with the FSS Machines.

Anonymous said...

Any kickback?

postal stewie said...

rural carriers who are expected to deliver the shredded, missorted hodge podge of a product at 43 per minute are baring the brunt of this faux pas

BoSacks said...

I find this on-going USPS story fascinating. In the last century, I was hired by a major printer to get to the bottom of why the covers they printed were being ripped off magazines in the postal stream, after shipment from the printer.

Was there a flaw in the manufacturing process? Was the paper to brittle? Did the folder create an unnoticed perf? After research and analysis my conclusion was that the then newly installed FSS – 100 machines that were designed to automatically sort catalogs, magazines, and other flat mail, were destroying and ripping off the covers of magazines in unacceptable numbers sent through the postal system.

The fact that we are now into the second decade of the new century and we are still having problems with the FSS – 100 is beyond my imagination.


Anonymous said...

Those of you out there that have any pictures for damaged flats. Please send them to

Anonymous said...

the real problem for carriers is the fact that they are not sorting flats on the fss100 machines what they are sorting is half flats mostly,then they are throw into a tub and sent out now some of those were in walk sequence order and could have just been dps or sent out in trays in order.
but we get them all mixed up upside down and out of order and we spend twice as much time sorting them than if they had left them alone to start with..this is how they are even getting any numbers for there machines tho they do all these half flats to rack up numbers for there precious machines tht dont the mail is so backed up because they dont work that they have no choice but to send it out as is .
the prblem is during mail counts all this mail is in dps so we cant get credit for the time to work it only the rest of the year it comes as slop to us not in dps and we are supposed to just shut up and deal with it .

Anonymous said...

Bosacks, what are you even talking about. FSS has only been in use for a few years! Are you confused with flat sorters we used to use or are you really not who you say you are?

Anonymous said...

FSS is indeed a disaster.Flats with address missing as a result of front page torn off by machines.Also,fold overs,backward flats(last page) show up instead of front page where address is located and of course misdirected flats belonging to another route be it locally and/or another town,state.
However;as bad as it is,Red Plum is one up on ALL. FSS cannot handle.Tissue paper is stronger then Red Plum's weekly mailing.Cannot believe advertisers in Red Plum have not taken a stand regarding the garbage they put in our mail boxes.

Anonymous said...

USPS officials working on FSS just had a meeting with print and paper executives and wondering why customers are going to lighter, less quality paper. Like, if we could just go to heavier paper this would help alleviate their problem with ripping up our pieces. Gee, it wouldn't have to do with the price of postage would it?? See what happens if exigent rates go through. We'd all love to be on heavier, brighter paper for our brands but with postage more than half the cost of the piece - that's a pipe dream. Way to deploy a strategy without knowing your customer

Anonymous said...

The Post Office is the place to go if you have machinery that don't even close to being as productive as advertised. In other words the Postal Service has taken many of wooden nickels over the years. Who remembers the Postal Buddy or the robot power ox.

Anonymous said...

As for the comment on the red plum product. It doesn't need to go through the FSS machines since it's a saturation pre sorted package per HH delivered mostly to the DDU level.

Anonymous said...

1 billion dollar ... I cannot imagine that money goes down to the drain because some of these unethical personnel who deceived the goverment contract by saying "it is all good" the boss shut him up by saying "mind your own business".
I am sure the postal service knew about the FSS has a problem , too, but again it was "it is all good" everything under the table , right after the FSS installed the postal see use hired all postal retiree to calibrate machine and of course they were oked about the FSS .
The employee manual of USPS states "prohibition against fraud or false statement in a government matter" .
The ICT with underpowered computer was not the only problem , I would say total negligence of the postal management about the chopped up mail in the SAMP,too.
The FSS Samp was designed to dump by robotic typed loader , once is dump mode there is no control by human can pick up the loose mail whatsoever,
All the poorly bundled flats like rubber banded or strapped by plastic except fully wrapped one often became loose and damaged on and bottom cover of flats or single one badly chopped by other mail bundle,
You can see it is coming from the prep station it goes to the AO to process it by manually.
The only survived one inducted in the FSS main it goes through ICT twice because 1 st pass and 2 nd pass (chopping twice ) .
About the runtime between the run, I would say average 2 hours if the machine is good condition,
Downtime , god knows how long?
The incompetent , unreliable postal upper management bought this shredder to eliminate the hard working carrier's job , now ending up with company who built with big ass lawsuit ,
Well, you paid for it , you need to suck it up in a hard way.
if you buy sandwiches for these hard working carrier who deliver the mail with 1 billion dollar ,
I am sure you could feed the 640000 postal employee for a long time instead of throwing money away .
I would say everyone in the postal service deserve the one except postal management who does not touch the mail .

Anonymous said...

You have to understand postal management mentality. It does not matter if the mail is walk sequence. If it can be rammed through the FSS, and comingled with the rest of the carriers sequence mail, they will do it, because it saves time in the station.

ideliverallday said...

It is the service's fault hands down. The machines never performed up to the expectations given. The P.O. could have backed out of the contract without penalty but chose to go through with it anyway probably just to try and stick it to its employees. Flat volume had been declining for years. What a waste of money...smh