May
03
2019
Report Number:
RARC-WP-19-004
Report Type:
White Papers
Category: Retail, Sales & Marketing
Assessing the Effectiveness of Domestic Competitive Negotiated Service Agreements
May 13, 2019 (RARC-WP-19-004)
- The Postal Service has significantly increased its use of package-product Negotiated Service Agreements (NSAs), which are customized contracts with individual shippers for discounted postage or special terms of service.
- Overall, NSAs are solidly profitable for the Postal Service, though profitability varies significantly across agreements.
The Postal Service uses NSAs to better meet customer needs in the highly competitive parcel shipping market. The number of NSAs has grown from several dozen in 2012 to more than 1,000 as of 2018. These agreements must be approved by the Postal Regulatory Commission (PRC). Of the more than 1,400 domestic package agreements submitted to the PRC for review since 2006, all of them have been approved. While the regulatory bar is relatively low, the process for developing, approving, and managing NSAs is complex. The OIG made two recommendations to improve the performance and oversight of NSAs.
Bryant Switzky, Ian Stanford, and Charles Crum contributed to this report.