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USPS inspector general warns of financial risk in real estate contract

Feb. 21, 2014 - 02:55PM   |  
By SEAN REILLY   |   Comments

The U.S. Postal Service is clashing with its inspector general over the wisdom of allowing a real estate management firm to represent both the mail carrier and potential buyers and lessors of USPS property in the same transaction.

In a newly released “management alert,” IG Dave Williams’ office warned that the deal with CB Richard Ellis poses conflicts of interest that “could lead to financial loss to the Postal Service and decrease public trust in the Postal Service’s brand.”

But USPS officials rejected the IG’s recommendation to bar the company from representing both sides, saying the practice is common in the business world and allows the Postal Service to get more offers, according to a summary of their views included in the alert. In its response, the inspector general said it would keep an eye on the arrangement, but did not plan any other action at this point.

The Postal Service had hired Los Angeles-based Ellis, the world’s largest commercial real estate services firm, in June 2011 to handle all of its property management needs, according to the report.

USPS officials amended the contract in June 2012 to let the company represent both sides in the same deal. They also required Ellis to notify them of any conflicts of interest. So far, the company has not done so, according to Postal Service managers who added that the inspector general’s office has also not uncovered any conflicts.

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