The Postal Service is letting a team from the Department of Government Efficiency take a closer look at its reform plans.
Postmaster General Louis DeJoy, in a letter sent to congressional leaders Thursday, said he signed an agreement last night with DOGE representatives and the General Services Administration to “assist us in identifying and achieving further efficiencies.”
DeJoy told lawmakers that USPS is heading in the right direction under his 10-year Delivering for America reform plan and that DOGE’s work is “aligned with our efforts.”
“While we have accomplished a great deal, there is much more to be done. We are happy to have others to assist us in our worthwhile cause,” DeJoy wrote.
DOGE deployed teams to many federal agencies tasked with cutting government spending. But it’s an unusual step for DOGE representatives to weigh in on the business operations of USPS, an independent agency that’s generally self-funded through its own revenue.
“The DOGE team was gracious enough to ask for the big problems they can help us with,” DeJoy wrote.
Late last year, some DOGE supporters in Congress called on Elon Musk and his associates to find additional ways for USPS to cut costs. Their recommendations include privatizing some agency operations and scrapping plans for a new fleet of electric vehicles.
DeJoy told lawmakers that the DOGE team will look at several issues, including the role of the Postal Regulatory Commission, an independent agency created by Congress.
“The Postal Regulatory Commission is an unnecessary agency that has inflicted over $50 billion in damage to the Postal Service by administering defective pricing models and decades-old bureaucratic processes that encumber the Postal Service,” DeJoy wrote.
DeJoy has repeatedly clashed with the postal regulator, and pinned much of the agency’s long-term financial challenges on the PRC.
The regulator, in a recent advisory opinion, said the next phase of USPS reforms would slow mail delivery for a “significant portion of the nation,” but wouldn’t save the agency enough money to justify the changes.
“They have an anachronistic view of the Postal Service’s current business environment, they have failed to change as the times and the postal economy has changed, and they therefore stand in the way of the timely and necessary changes required to succeed as a self-funded enterprise in a competitive environment which is what the Postal Service needs to do to survive,” DeJoy said.
DeJoy is also directing the DOGE team to take a closer look at the calculation of its retirement obligations.
USPS has repeatedly called on the Office of Personnel Management and the Treasury Department to adjust what it pays into the Civil Service Retirement System (CSRS), which covers most federal and postal employees hired before 1984.
OPM calculates what USPS must contribute every year to cover retiree benefits. USPS and its inspector general’s office both claim the agency has overpaid into the CSRS fund.
“They result in several billion dollars a year in burdensome additional charges not common in private industry,” DeJoy wrote.
DeJoy is also calling on DOGE to look into the “mismanagement” of its workers’ compensation program, which is overseen by the Labor Department, “resulting in approximately $400 million a year in excessive charges when compared to private industry practices.”
The DOGE team, DeJoy added, will also address unspecified “unfunded mandates imposed on us by legislation.”
“These well-intended laws that have been passed since we were created as a self-funding agency for the most part require the Postal Service to perform costly activities without providing any supporting funding,” he wrote.
“In the private industry context, this would be like UPS or FedEx providing services to the federal Government without charging for them. This amount is estimated to cost between $6 billion and $11 billion annually. As you know, Congress is responsible for passing legislation without appropriate funding,” DeJoy added.
DeJoy told lawmakers that DOGE will address this work, even though in many cases, it falls to Congress to make changes.
These issues, he told congressional leaders, “are in your hands,” and “have been intractable, even though they have needed to be addressed for over a decade.”
DeJoy, who is preparing to step down as postmaster general, told lawmakers that the “pace of change required to transform this organization far exceeds most normal turnaround efforts,” and that many of his leadership decisions at USPS resemble the types of DOGE is seeking at other agencies.
Under his 10-year reform plan, DeJoy said USPS cut its workforce by about 30,000 positions since fiscal 2021 — and is on track to cut another 10,000 positions through early retirement buyouts.
Early in his tenure, DeJoy also cut 20% of USPS headquarters staff — a decision he told lawmakers was “sensationally labelled ‘The Friday Night Massacre’” — saving about $200 million annually.
USPS, he added, operates with 50 million fewer work hours each year than it did three years ago — saving about $2.5 billion annually.
DeJoy also defined his legacy at USPS by transforming its massive network of facilities and how the agency transports mail and packages across the country — often with the tradeoff of slower mail delivery.
He told lawmakers that USPS is saving more than $2 billion annually through a combination of changes. Those include shifting more of its mail volume from air to ground transportation, eliminating contracts with vendors in the process, and opening mail processing megacenters across the country that have allowed the agency to cut down on leased space.
In a “2.0” version of his Delivering for America plan, DeJoy is looking to grow revenue by $5 billion, mostly by growing the agency’s package business, which competes with private-sector shippers. USPS is also looking to cut $3.5 billion in annual costs.
USPS ended the first quarter of fiscal 2025 with a net profit — a rare moment in the black that DeJoy said is evidence the agency is on the right path to overcome long-term financial challenges.
“I believe the commercial and operating viability of the Postal Service is within arm’s reach,” DeJoy told lawmakers.
USPS, however, still anticipates ending FY 2025 with a $6.9 billion net loss.
These changes, however, have run into bipartisan pushback from Congress and the Postal Regulatory Commission.
DeJoy said USPS execution of some of its recent reforms “could have been better in many areas, and I have often apologized for it.”
“While I recognize that changing the way we serve the nation has been difficult for many of you, I ask that you reflect for a moment on the magnitude of the problem that we had to attack for the good of the country, and to ask yourself how else we could fix a broken business model and whether it could be accomplished without fundamentally changing the way we conduct our business,” he said.
The Postal Regulatory Commission pushed back on DeJoy’s letter in a statement Thursday.
“The Postmaster General’s statements about the Postal Regulatory Commission’s role during the recent mismanagement of USPS are false,” the PRC wrote.
In late 2020, the regulator gave USPS the authority to set mail prices higher than the rate of inflation. The PRC, however, said the agency wasted that help, by reporting a $9.5 billion net loss in fiscal 2024, “making USPS less efficient, and collapsing service, especially for rural Americans.”
“The Postmaster General has also tried to ignore USPS’s traditional role in mail delivery while expanding the role of the government in the competitive package market, a strategy which has failed miserably to this point,” the commission wrote.
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