The CO may make deductions from the payment due supplier for failure to perform contractually required service, and may assess damages for delinquencies with regard to any contractual requirements as provided in the terms of the contract. The CO may also change or remit deductions and damages. Suppliers are also answerable in damages to the Postal Service for the proper care and transportation of the mail. Such damages, as determined by the CO, may be withheld by the Postal Service from compensation otherwise due the supplier. Suppliers are accountable to the Postal Service for loss or damage to the mail or any part thereof due to (1) loss, riffling, damage, wrong delivery, depredation, or other mistreatment of the mail by the supplier or any of the supplier’s officers, agents, or employees, or (2) the failure of the supplier or any of the supplier’s officers, agents, or employees to exercise due care in the custody, handling, or transportation of the mail.
When a supplier has committed a breach of the contract not sufficiently serious to warrant termination, the supplier may be assessed damages in an amount determined by the CO, in accordance with the terms of the contract.
When a supplier, or supplier’s agent or employee, permits loss or damage to the mail, the CO may withhold from the supplier’s compensation as damages the value of the mail lost or damaged plus administrative costs of handling the irregularity. When a supplier holding several contracts is subject to a fine or assessment for damages on one contract, the CO may withhold compensation due under other contract held by the supplier until such fines and damages have been recovered.
