A government agreement with a US courier company is to be ended by order of the Supreme Court over a lack of proper procurement procedure.

Chief Justice Larry Mussenden, in a ruling handed down on Wednesday, found that the decision of the Minister of the Cabinet Office to enter an arrangement with Access USA Shipping should be quashed.

He made an order restraining the minister from continuing the contract.

However, the judge stayed the order for 90 days to allow a proper procurement process to take place with the goal of minimising disruption to customers.

The Government announced in 2020 that it had launched a public-private partnership with Access USA Shipping LLC to create MyBermudaPost, through which customers could import goods purchased online.

However, Mailboxes Unlimited had sought judicial review of the decision arguing that the agreement was signed before any local companies were invited to submit bids.

In a 2023 decision, the Supreme Court found that the minister had entered the partnership unlawfully as the proper procurement process had not been followed.

While the minister appealed the decision, in November 2024 the Court of Appeal upheld the Supreme Court’s ruling.

According to the latest judgment, Samuel Brangman, the postmaster general, said in an affidavit that despite the rulings of both the Supreme Court and the Court of Appeal, the Bermuda Post Office had acted properly.

He said the Post Office Act 1990 provided support for the post office to enter into agreements with overseas providers and be competitive with the private sector.

The judgment noted: “Mr Brangman stated that in Bermuda, not everyone can afford to use private couriers to send mail and parcels, private couriers are largely unregulated, prices are not controlled and there is minimal oversight.

“He expressed his view that if Mailboxes could scupper the partnership by having the agreement quashed, then it would be a retrograde step and an overt move to damage the BPO, the Government’s ability to satisfy its international obligations and a long-term danger to the public.”

Mr Brangman also released previously undisclosed details of the agreement, stating that under the partnership there was no obligation of the Government to pay AUSA anything for the services provided to BPO customers.

He said the only obligation under the agreement was that if the total shipping weight per month fell below a certain level, the BPO would be required to pay AUSA $2,000 per month.

As such, Mr Brangman said the maximum the BPO would be required to pay AUSA was $24,000 a year, and the BPO had never been required to make any payments to the company.

He argued that it would be counterproductive to quash the agreement, noting that there were 4,643 registered customers who had benefited from the agreement by being able to bring in parcels at more affordable prices than private couriers.

However, the court heard that in an affidavit Kenneth Thomson, the president of Mailboxes Unlimited, argued that the agreement was far from a low-value procurement — noting customs declaration fees.

Mr Thomson argued that the agreement had siphoned hundreds of thousands of dollars each year to a foreign contractor, undermined the local retail sector and drawn it into an expensive, protracted dispute with a Bermudian shipping company without meaningfully reducing the BPO’s deficit.

In those circumstances, it made sense to rescind the agreement, retender the contract to a local shipping company and cut spending while improving efficiency.

Mr Justice Mussenden found that the contract was worth far more than the $24,000 suggested, noting that based on Budget estimates both the BPO and AUSA are receiving revenue in the hundreds of thousands of dollars on an annual basis.

Estimates from 2025-26 showed that the actual amount received by both BPO and AUSA in 2023-24 was $448,000.

Mr Justice Mussenden added: “In any future procurement process, the BPO would be well served to consider the evidence of the estimates and use the appropriate level procurement process.”

The judge accepted that the quashing of the agreement could cause disruption to a profitable service used by a large number of people for a period of time.

However, he noted that there was nothing provided to the court to show when the agreement would end.

Mr Justice Mussenden said: “Although the actions of the BPO resulted in achieving some of its obligations and indeed increased revenue, I do not accept that the BPO demonstrated good administration by the process it has taken to make the decision, to not disclose evidence of the agreement to this court and to the Court of Appeal at the relevant stages, and now to continue the agreement without informing the court of its duration or termination.

“Thus, in the balance, in exercising my discretion, the interests of good administration call for openness and transparency on the part of the BPO as well as following the correct procedure to arrive at a decision.

“Further, the procedure calls for fairness — both to BPO and also to the range of service providers in this area of business in Bermuda as beyond.

“That fairness calls for entities to have an equal opportunity to bid on the service.”

He said that while the ending of the agreement would impact customers, the effect could be mitigated by delaying the order for a period of 90 days.

Asked to comment, a ministry spokesman said: “The government is currently considering the Supreme Court ruling and will be reviewing its options in relation to the matter.

“It would not be appropriate to comment further at this time.”

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