One wouldn’t normally think ZIP code reading machines could lead to ferocious political combat, but for the past several months two Dallas area high-tech companies have locked horns over $200 million worth of contracts to build high-speed mail-sorting machines, The companies have called each other names, quietly courted the favor of congressmen, and even accused U.S. Postal Service officials of unethical conduct.
The heated contest is between Recognition Equipment Inc. of Irving and ElectroCom Automation Inc. of Arlington. Postal Service automation contracts, expected to be awarded in August, call for building 250 versatile address-reading optical scanners capable of sorting mail with either five- or nine-digit ZIP codes. The winner will also get to upgrade some 406 existing machines that only read nine-digit ZIP codes, according to Ewald E. Lang, vice-president of programs for ElectroCom.
Since 1983, the Postal Service has awarded ElectroCom and other firms $370 million in contracts for the existing nine-digit ZIP code scanners. But after Postal Service officials discovered late last year that the new ZIP+4 code was not being widely used by large businesses, they ordered a “mid-course correction” to have the existing machines modified to also read traditional ZIP codes and even letters without ZIP codes.
In the meantime, ElectroCom officials have accused REI executives of lobbying Congress behind the scenes to influence the contract award and at the same time pleading their case through staged “media events.”
“We’ve been trying to keep the public in the light of day on the whole issue,” says REI spokeswoman Jenny Barker.
REI charges ElectroCom with more serious transgressions than media hype or congressional lobbying, but Barker says Securities and Exchange Commission regulations preclude the company from discussing the competition for the contract in detail. However, in a prospectus filed with the SEC in connection with a $45 million public debenture offering last March 26, REI claims “several” congressional committees and the Postal Service are investigating ElectroCorn’s tactics in securing the original contract.
Barker also claims that neither ElectroCom nor the Postal Service has supplied REI with needed technical data to convert the 406 address scanners that read only nine-digit ZIP codes.
REI also maintains that those same investigators are probing allegations of impropriety in the awarding of the original contract to ElectroCom. The Dallas high-tech feud might have been the catalyst for the ouster last January of former Postmaster General Paul Carlin and the subsequent appointment of former American Airlines Chairman Albert V. Casey as his successor.
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