On July 28, Secretary of the Treasury Steven Mnuchin announced the USPS and the Treasury Department have reached agreement on terms of the $10 billion line of credit line authorized in March 2020 by The CARES Act.
The CARES Act included language allowing Secretary Mnuchin to negotiate terms of the loan. Conditions on the loan included in the CARES Act prohibit use of the funds to pay off current debts, and require prioritizing delivery of medical supplies.
According to information in the Washington Post, terms include the USPS providing the Treasury Department with information about contracts with private-sector contractors. Jacob Bogage of The Washington Post says, “The Postal Service, subject to confidentiality restrictions, will provide Treasury copies of its 10 largest ‘negotiated service agreements,’ or contracts with high-volume third-party shippers such as Amazon, FedEx and UPS ….’”
Though there are currently new coronavirus relief packages pending in both the House and Senate, AUSPL Director of Operations Mark Karolczyk says, “This [agreement on terms] doesn’t require additional legislation. It is the money already contemplated in the first bill[the CARES Act], and they have just agreed upon the terms if the USPS accesses the funds.”
Negotiated Service Agreements are the contracts between the USPS and private carriers for “last mile” deliveries. Because the USPS visits each address in the US daily private carriers negotiate quantity discounts for the USPS to deliver the last mile. These discounts take into consideration that much of the sorting is done by the private carriers prior to giving the packages to the USPS. There is discussion that the USPS loses money on each delivery. However, according to regulations of the Postal Regulatory Commission, which approves these negotiated service agreements, the revenue collected must cover the cost of the deliveries.
The $10 billion line of credit is significantly less than the funds asked for by the USPS Board of Governors. The CARES Act as passed by the House included $25B in borrowing authority, $25B in emergency funding, and $25B for shovel ready modernization projects. Negotiations between the House and Senate pared the funding down to the current line of credit.
The HEROES Act, another round of Coronavirus relief funding passed by the House in May 2020 and sent to the Senate includes a total package of $25B for the USPS. The Senate has prepared its own coronavirus relief HEALS Act, which does not include funding for the USPS.