U.S. Postal Service's Administration of Highway Contract Routes

Gao ID: GGD-79-30 April 11, 1979

A review was made of complaints that the U.S. Postal Service (USPS) may be putting improper pressure on mail contractors and forcing them to carry mail at a loss. Some of the mail contractors were contacted to determine the nature of their complaints. Contractor complaints fell into three categories: (1) financial administration of the contract, including the initial solicitation of bids and the contract cost adjustment system; (2) contract performance monitoring by USPS; and (3) problems with the Departments of Transportation (DOT) and Labor.

USPS officials said that when contract problems do arise, they try to resolve them according to the Contract General Provisions and in a manner as fair as possible to both parties. The review indicated that this was generally true. USPS policies and procedures seem to provide contractors with fair compensation for their routes. Some contractors alleged inaccuracies in USPS contract solicitations for bids on a route. Most of the solicitations reviewed were correct. A few contractors complained that the USPS contract cost adjustment system did not provide them with adequate compensation. However, few contractors were defaulting on their contract because they were financially unable to provide the service required by the contract. At the facilities visited, contractors generally met USPS standards for on-time performance. With deficient contractors, USPS officials were sometimes very tolerant before instituting disciplinary procedures. Surprise inspections by DOT inspectors at two mail centers resulted in grounding significant amounts of contractor equipment because it was not in compliance with motor carrier safety regulations. Grounded equipment cannot be used again until it is properly repaired. Labor investigations of mail contractors disclosed some contractor pay violations. USPS reviewed all of these findings and concurred with them.

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