Postmaster General Louis DeJoy’s old company, XPO Logistics, was awarded a temporary “Christmas” contract to help move mail during the holiday season, according to a list of U.S. Postal Service contracts obtained by CREW. The contract raises several longstanding questions about DeJoy’s financial holdings in XPO Logistics and policies he has implemented as postmaster general that have slowed the mail.
In the weeks leading up to Christmas, USPS delivery systems were overwhelmed and substantially backlogged due to the twin obstacles of the coronavirus pandemic and operational changes imposed by DeJoy. A quarterly update to the USPS list of a type of transportation contract known as highway contract routes shows that XPO Logistics received a contract for “Christmas” service to transport mail from November 30, 2020 until June 30, 2022 with a contract rate of $25,784.22. It is not clear how often this rate is paid out to XPO based on the USPS list. According to USPS spokespeople, DeJoy is not involved in contracts or decisions related to XPO Logistics.
When DeJoy entered government, he disclosed having stock in XPO Logistics worth between $30 and $75 million. He also previously served as the CEO of the company’s supply chain business and served on its board. DeJoy’s stake in the company originally drew scrutiny over the summer when CNN reported that USPS ethics officials were not requiring him to divest the stock. He later agreed to divest his interest in the company in a process that may be ongoing.
The date the “Christmas” contract was awarded is unclear, leaving an open question about how much of a stake in XPO Logistics (if any) DeJoy had when the contract was awarded. Since August, DeJoy has sold between $26.5 and $104 million of XPO stock, possibly wiping out the entirety of his interest in the company. However, because the transactions are reported in broad ranges, we do not know exactly how much DeJoy sold in that period. DeJoy was still selling XPO stock in mid-November, just a couple of weeks before XPO was to start delivering on the contract.
Additionally, DeJoy has faced significant criticism for causing or exacerbating delays in mail delivery since he became postmaster general in June 2020. Last year, the USPS inspector general found that the changes DeJoy implemented at the agency significantly delayed mail delivery over the summer. Despite rolling back some of those changes, postal workers reported that problems with delivery persisted and appear to have extended through the fall elections and holiday season, in part due to the coronavirus pandemic. Just this month, the Washington Post reported that DeJoy plans on implementing additional changes at USPS that will further slow down the delivery of first-class mail.
While the contract is relatively small, the “Christmas” contract is the second awarded to XPO Logistics under the highway contract route program since DeJoy became postmaster general and the company’s fourth active highway contract route. In October 2020, CBS News found that XPO Logistics negotiated a contract in August 2020 with an annual contract rate of $3.3 million. While USPS denies DeJoy’s involvement in contracts and decisions affecting XPO, the contract still attracted scrutiny because DeJoy maintained a significant financial stake in the company when the massive contract was negotiated. DeJoy only began to sell his XPO Logistics stock in earnest in the months after the company negotiated that multi-million dollar contract, raising the question of whether DeJoy may have benefited from a possible increase in the value of the company’s stock associated with the contract. CREW previously requested routine records to explain how DeJoy is managing his conflicts of interest and sued after USPS refused to turn them over. The litigation is ongoing.
CREW has also highlighted additional ethics issues posed by DeJoy’s connections to XPO Logistics. CREW wrote to DeJoy in August noting that some of the changes implemented at USPS after he took over directly affected companies with highway contract routes, putting him at risk of violating conflict of interest laws. In addition, DeJoy indicated in his financial disclosure report that he was going to transfer the the assets in his family partnership–which included between $5 and $25 million of XPO stock–to his adult children, which could set him up for a sham divestiture should they return the XPO stock to him after he leaves government.
Under any other postmaster general, an apparently small contract to help move mail during the holiday season might not raise eyebrows. But Louis DeJoy is not just any other postmaster general. His longstanding and possibly unresolved conflicts of interest, coupled with his apparent sabotage of the postal service for the benefit of then-President Trump’s reelection campaign, means that Congress and the public cannot give him the benefit of the doubt. To restore trust with the American people, DeJoy needs to finally answer the questions raised, once again, by the “Christmas” contract.