A controversial decision to set up a Bermuda Post Office online shopping service in a public-private partnership deal with a US courier firm was defended by the Government yesterday.

Island-based shipping companies were furious after it was revealed that the contract was never put out to tender.

But a spokesman for the Cabinet Office said last night that a request for proposal was not issued because the value of the contract was not high enough.

The spokesman said: “At this time, it is essential to clarify that the Bermuda Post Office’s MyBermudaPost service agreement is with Access USA Shipping LLC and valued at $24,000.

“It falls below the threshold that requires procurement and Cabinet approval.”

Wayne Furbert, the Minister for the Cabinet Office, confirmed the deal last month and the service was expected to be up and running two weeks ago.

But one island courier, Mailboxes Unlimited, threatened to take legal action over the scheme, on the grounds that Bermudian companies should have been consulted before the deal was struck.

Lawyers for the firm wrote to Mr Furbert on October 15 and asked for details of the Government’s contract with Access USA inside 14 days – a deadline that expired yesterday.

They warned that if they did not get the documents on time, they were “instructed to apply to the court for leave to apply for judicial review”.

It is understood that the Government replied to the letter yesterday to ask for a seven- day extension.

The ministry spokesman said: “The ministry is aware of possible legal challenges relating to this agreement and cannot comment any further on the matter.”

The Government also announced that the Post Office would provide a free pick-up service for small businesses who needed to send merchandise abroad – and claimed it could ship overseas at a fraction of the cost of private couriers.

The spokesman said: “As Bermuda-based businesses now compete globally, government must provide them with the resources to help them thrive.

“To that end, the ministry is excited to advise the public of an add on feature that will assist small business owners with expanding their reach internationally.

“Upon agreement, small businesses wishing to ship goods or merchandise overseas can arrange for pick-up and overseas shipping by the BPO.”

He added that pick-up would be free and that the rates would be at least 40 per cent lower than the typical charge in the private sector.

The spokesman said: “The Bermuda Post Office’s current infrastructure will be used, with no increase to current operational costs.

“As such, the 40 per cent savings reflect reductions in transport, clearing, delivery, and international shipping costs to customers that do not require overnight service.”

The spokesman added that the drop-and-deliver service could also be used for on-island deliveries.

He said: “This service will further enhance those offered and allow local businesses to use the BPO to deliver products to their clients in Bermuda and overseas.”

He added that the service would enhance on-island e-commerce and give bricks-and-mortar retailers without a delivery network the option to drop off mail items and packages at the Post Office for on-island delivery inside 24 hours.

The spokesman said the Post Office could also pick up and deliver packages at reasonable cost and give “an affordable last-mile delivery and logistics service”.

He added: “This government remains committed to Bermuda and assisting local businesses with overcoming the economic challenges we now face by removing barriers that impede local and international growth.”