Federal Agencies Choosing UPS, Fed Ex over USPS

UPS has received $122M in revenue since 2010; USPS $28.9M

June 11, 2013

The United States Postal Service’s (USPS) bottom line has been hit by the federal government itself as numerous agencies have increased their contracts with publicly traded companies instead of the Postal Service for their mailing and distribution services, the Washington Free Beacon has found.

The federal government spends hundreds of millions of dollars each year for these services, and the lion’s share of contracts has gone to United Parcel Service (UPS).

An analysis of records shows the government awarded contracts solely issued for mailing and distribution worth nearly four times as much to UPS as it did to USPS in the last three-and-a-half years. shows 25 federal agencies have contracted with UPS instead of the Postal Service, resulting in $122 million in revenue for UPS from 2010 to 2013 for mailing and distribution.

By comparison, the Postal Service received $29.3 million.

A review of contracts from federal agencies with UPS and another publicly traded company, Federal Express, shows that the government continues to award more contracts to them than it does USPS.

Federal Express was awarded $48.5 million in contracts for mailing and distribution from 2010 to 2013

A review of records shows that the federal government is relying on UPS more heavily. There were 358 contracts awarded to UPS by federal agencies in 2008. That number had increased to 925 contracts by 2012. Through the first six months of 2013, 635 contracts have been awarded to UPS.

The top three agencies contracting with UPS for mailing and distribution were the Department of Veterans Affairs, which had 1,086 contracts; the Department of Homeland Security, which had 953 contracts, and the Department of Justice, which had 262 contracts.

The Department of Veterans Affairs did not respond to a request for comment by the Free Beacon for its decision to use UPS instead of the Postal Service.

The Department of Homeland Security also did not return a request for comment.

The question of whether UPS or Federal Express offers better service, more efficient distribution, or a better price for mailing and distribution services compared to the Postal Service remains unanswered.

Tad DeHaven, a budget analyst at the Cato Institute who has written extensively on the Postal Service for the past five years, was asked about Federal Government agencies hiring private companies over the Postal Service.

"The primary contract concern should be, what does it mean to taxpayers," Stevens said.

"Nobody cares who the government contracts with, as long as it’s best for the taxpayer," Stevens said. "The last thing you want to do is give the Postal Service government business for the sake of business to the detriment of the taxpayer."

When contacted by the Free Beacon, one of the postal service’s unions would not comment on federal agencies using UPS instead of USPS, which is losing $25 million a day. Instead, the National Association of Letter Carriers spoke to the cause of the agency’s financial woes.

"The red ink people hear about has little to do with mail volume, the Internet, online bill-paying, or anything related to the mail. Instead, it results chiefly from the mandate by a lame-duck Congress in 2006 that the USPS pre-fund future retiree health benefits for decades into the future and pay for it all within 10 years," said Fredric Rolando, president of the NALC.

Rolando said the mandate is costing $5.5 billion a year and accounts for "80 percent of all the red ink and 90 percent of the losses so far in fiscal 2013."

A Senate Homeland Security and Governmental Affairs Committee spokesperson, when asked for comment on federal agencies using companies other than the Postal Service for mailing and distribution, sent the Free Beacon an email statement.

"While chairman [Tom] Carper [(D., Del.)] believes that the postal service should have the freedom and flexibility it needs to compete and succeed in the 21st century, he also believes it is important that the federal government use taxpayer dollars prudently and to that end he feels that federal agencies should have the flexibility to determine which shipping service best meets their needs in the most cost effective and efficient manner," the statement read.

Update: This story originally attributed the statement from Sen. Carper to a House Oversight and Government Reform Committee spokesperson.