A report from the USPS IG says the Postal Service is losing roughly $636 million a year providing business-related services to other federal agencies for which it is not fully compensated, contributing to USPS financial difficulties.
An audit identified nine areas in which the USPS “is either uncompensated or undercompensated,” most of them related to government services for which it “does not have direct control over pricing or compensation” and further “does not have a strategy to receive additional funding.”
For example, law requires the USPS to provide services to remote locations in Alaska but is not allowed to charge a higher rate to account for the higher costs, for a five-year loss of $460 million, it said. Similarly, the USPS is bound by a post-World War II treaty to provide mailing services to certain Pacific islands, for which it is to be reimbursed by the Interior Department. However, over 2015-2019 the USPS was paid only $11 million of the $59 million in costs because its “strategy to request reimbursement from the Department of Interior has not been effective.”
The USPS also received about $1 million less than its costs in that time to compensate it for requirements that it charge less for certain other services such as mail ballots from military personnel overseas, it said.
However, the report also said that the USPS itself was responsible for a $30 million loss last year in mailings on behalf of other federal agencies related to the pandemic, for which it was not reimbursed. “The Postal Service incurred these costs because it did not appropriately plan before agreeing to produce the COVID-19 mailings and offer printing services to another federal entity,” it said.