How USPS Contracts Can Go Wrong: A Case of Fraud and Effective Oversight
Postal Service contracts can be complex. EMCOR, a major USPS contractor, assigns service calls to subsidiaries that perform work for the agency — a good part of it maintenance and repairs at postal facilities. These subsidiaries may subcontract the work with up to a 10 percent markup, provided they disclose it. But that doesn’t always happen, and that’s where our contract fraud investigators come in.
In Hayes, VA, our special agents found an EMCOR subsidiary — a sole proprietor and employee — repeatedly inflated costs and concealed the use of subcontractors while performing work for USPS. For example, the contractor falsely stated he alone would patch up potholes at a postal parking lot, but instead subcontracted the project. He paid the subcontractor $12,500 yet billed the Postal Service more than $20,000 for the job, with the excess of about $7,500 going directly into his pocket.
For another service call, the contractor agreed to perform electrical work at a post office and billed over $9,500 for it. Only he didn’t have the proper license to perform that type of work and, again, he fraudulently subcontracted it out. On other occasions, he even billed for materials and equipment that were never used or provided.
Since 2019, the contractor worked on about 1,800 USPS job tickets EMCOR assigned, for which he was paid over $6 million. Due to the diligent work of the agents and prosecutors, a settlement agreement was reached that returned $750,000 to the Postal Service for fraudulent invoices.
What’s more: Because of this investigation, the Postal Service recommended in July 2024 EMCOR no longer use the contractor for any postal work. The contractor has done no work for USPS or EMCOR since.
This case highlights our agency’s commitment to holding contractors accountable and protecting postal revenue. If you suspect or know of contract fraud affecting the Postal Service, please report it to our Hotline.
For further reading:
Department of Justice (via uspsoig.gov), Contractor agrees to pay $750,000 to settle False Claims Act allegations