Oversight Committee Wants USPS Explanation on Competitive Products

The House Committee on Oversight and Government Reform has demanded that the U.S. Postal Service deliver it a detailed accounting of cost allocations for its competitive products, alleging that the agency may be in violation of the Postal Accountability and Enhancement Act (PAEA) by using revenues from market dominant products to prop up its shipping business.

“Opportunities for unlawful cross-subsidization exist in a number of areas. In fact, some of the Postal Service’s actions and public statements have heightened the Committee’s concerns about cross-subsidization,” said a letter addressed to Postmaster General Megan Brennan on May 13 and signed by Committee Chairman Jason Chaffetz (R-UT) and Mark Meadows (R-NC), chairman of the subcommittee on Government Operations.

The letter singled out funding of the USPS’s expanding shipping activities as the focus of its inquiry. “Given that Postal Service ‘package delivery’ products are almost solely competitive in nature, it is important to ensure [that] a bright line separation between marketing dominant products and competitive products is maintained.”

PAEA mandated that products such as package and shipping be self-supportive to keep them on a level playing field with public sector competitors like FedEx and UPS. It also required competitive businesses to cover a 5.5% share of institutional costs incurred by the entire postal network.

To learn whether USPS is complying with these mandates, Chaffetz and Meadows made eight requests of Brennan, including an explanation of how costs would be distributed for the purchase of new delivery vehicles, an explanation of why the percentage of competitive product cost attribution has declined since PAEA was passed, and the methodology for attributing costs for Sunday delivery of Amazon packages.

Both FedEx and UPS have filed comments with the Postal Regulatory Commission (PRC) over the past year, calling attention to what they perceive as unfair advantages for the government regulated monopoly.

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