Congress authorized the USPS to borrow $10 billion from the US Treasury Department as part of the CARES Act (the Coronavirus Aid, Relief, and Economic Security Act).
But in negotiating the terms, the Treasury Department attached some significant strings, including the following:
“Subject to confidentiality protections, USPS shall provide to Treasury copies of USPS’s top 10 market dominant Negotiated Service Agreements (NSAs) and top 10 competitive products NSAs.”
Another provision: the USPS would have to disclose to the Treasury any new or amended NSAs that would constitute USPS’s top 10 market dominant NSAs and top 10 competitive product NSAs.
Companies who enter into such agreements expect them to be kept confidential; it isn’t clear why the Treasury Department wants the information.
Louis DeJoy, who recently took over from Megan Brennan as Postmaster General, had made no mention of the specifics of terms in the press release the USPS released on Wednesday when he said:
“Access to an additional $10 billion in borrowing authority will delay the approaching liquidity crisis,” DeJoy said. “The Postal Service, however, remains on an unsustainable path and we will continue to focus on improving operational efficiency and pursuing other reforms in order to put the Postal Service on a trajectory for long-term financial stability.”
The Washington Post reported on the terms (note that the newspaper is owned by Jeff Bezos, CEO of Amazon, which has NSAs with the USPS). It pointed out that the USPS already hired outside consultants to evaluate the NSAs to make sure they are profitable and fairly priced.
The questions some are asking is why the Treasury wants the information, since Congress already authorized the loans, and what the Treasury will do with the information.
Four Congresswomen and men took issue with the terms including limits on how the USPS could use the funds (the term sheet states under Use of Funds: “Operating expenses; proceeds may not be used for debt service or capital expenses.” They published a press release on Wednesday that stated in part:
“Secretary Mnuchin and the leadership of the U.S. Postal Service appear to be exploiting this public health pandemic to hold the Postal Service to unreasonable loan terms without even consulting Congress. The term sheet we have been provided would inappropriately insert the Treasury into the internal operations of the Postal Service using onerous loan conditions.
“These terms would severely limit the Postal Service’s access to capital and could accelerate the demise of the Postal Service that all Americans, especially seniors, small businesses, veterans and those living in rural communities, rely upon every day, especially during the pandemic.”
Details of the terms are available on the House Oversight Committee website.