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Audit Reports

  • Evaluation of Contract Delivery Service Valuation Cover
Aug
18
2026
Report Number:
25-136-R26
Report Type:
Audit Reports
Category: Financial Impacts

Evaluation of Contract Delivery Services

Background

Contract Delivery Service (CDS) is a contractual agreement between the U.S. Postal Service and an individual or company for the delivery and collection of mail to and from homes and businesses. CDS routes, operated by suppliers or their employees, were established to provide a cost-effective and efficient solution for the Postal Service, especially in rural areas. In fiscal year (FY) 2025, the Postal Service had more than 8,273 active CDS contracts, which cost approximately $593 million. Poor management of CDS suppliers can lead to inefficiencies, higher costs, and greater risks of mail loss, damage, or theft, and accidents and injuries due to inadequate enforcement of safety and security measures.

What We Did

Our objective was to evaluate the management, efficiency, and safety of CDS. For this audit, we reviewed CDS operations at ten delivery units nationwide. Additionally, we conducted a random confidential survey of 213 administrative officials (AO) responsible for managing CDS operations.

What We Found

We identified challenges with the management and execution of CDS impacting mail security, carrier safety, and operational efficiency. Specifically, some CDS mail carriers lacked security clearances, while others engaged in unsafe driving practices and there were no requirements for accident reporting. Further, certain carriers did not possess required English language skills to effectively communicate with Postal Service staff and customers. We also found that local management of CDS operations could be improved and identified $1.9 million in incorrect extra trip payments made annually to suppliers in FYs 2024 and 2025, which resulted from using incorrect rates. Finally, headquarters management’s limited oversight and dependence on manual processes restricted visibility into local operations and minimized performance accountability.

Recommendations and Management’s Comments

We made four recommendations to address issues regarding safety and security deficiencies. Additionally, we made six recommendations to streamline and improve oversight of CDS operations. Postal Service management agreed with all 10 recommendations. Management’s comments and our evaluation are at the end of each finding and recommendation. The U.S. Postal Service Office of Inspector General (OIG) considers management’s comments responsive to all recommendations except for recommendations 4 and 5, which we consider partially responsive. For the others, the corrective actions should resolve the issues identified in the report.

Report Recommendations

# Recommendation Status Value Initial Management Response USPS Proposed Resolution OIG Response Final Resolution
1

(1) Require administrative officials to verify all Contract Delivery Service mail carriers have active security clearances and valid badges. (2) Terminate access to Postal Service facilities for Contract Delivery Service mail carriers who were denied a security clearance. (3) Suspend access to Postal Service facilities for Contract Delivery Service mail carriers that do not submit required security clearance paperwork within 7 days.

 Open $0 Agree
2

Establish an automated process to notify administrative officials when a supplier's badge is approaching expiration and prompt administrative officials to either submit a renewal package for badge continuation or verify the badge is collected and returned after expiration.

 Open $0 Agree
3

Require administrative officials responsible for managing Contract Delivery Service operations to provide an annual certification validating their understanding of and compliance with security clearance and badging requirements including badge sharing.

 Open $0 Agree
4

Direct AOs to enforce language proficiency standards for CDS carriers by (1) Prospective Carriers: Mandating and documenting the evaluation of a carrier's ability to speak and understand English during the preliminary screening process and wherever subsequent replacement carriers are hired, and (2) Current Carriers: Establishing a formal re-evaluation process for active carriers suspected of lacking required English proficiency, and revoking facility access for any individuals who fail to meet t

 Open $0 Agree
5

Hold administrative officials accountable when they do not: (1) Complete and maintain PS Form 5399, Contract Route Performance Record. (2) Monitor contract route operations and ensure supplier compliance with contract requirements and Postal Service policies. (3) Inspect supplier vehicles according to contractual requirements and Postal Service policies.

 Open $0 Agree
6

Provide formal training to all administrative officials responsible for managing Contract Delivery Service operations on properly performing all required duties, and require all newly appointed or detailed administrative officials to complete this training before assuming their duties.

 Open $0 Agree
7

Automate the Service Change Request system to populate the special rate when submitting extra trip payments and require headquarters management to verify extra trip payment requests to ensure the correct rate was applied before approval.

 Open $3,825,642 Agree
8

Implement monitoring tools to strengthen oversight of administrative officials and enforce compliance with policies for managing Contract Delivery Service operations.

 Open $0 Agree
9

Evaluate opportunities to streamline manual administrative official processes, including through automation, and require them to be completed uniformly across all Contract Delivery Service offices.

 Open $0 Agree
10

Update policy to require administrative officials to conduct route surveys annually and when new developments occur, such as changes in the number of delivery points, mail volume, route mileage, or the scheduled time needed to complete the route due to local community growth.

 Open $0 Agree