New Postal Bill Lets Private Post Offices Operate Without Pay, Giving PMG Discretion Over Funds

The new Postal Contracting Financial Accountability Act introduces a surprisingly complex new rule for how the U.S. Postal Service (USPS) handles contracts with its private partners. Specifically, Section 2 deals with what happens when the USPS decides to end a contract with a “Contract Postal Unit” (CPU)—that small, often privately run post office you might find inside a grocery store, a pharmacy, or a small business.

The Temporary Extension Loophole

If the USPS decides not to renew or wants to terminate a contract with one of these private operators (the “covered contractor”), and it’s not because the contractor messed up their end of the deal, the contractor gets a choice. They can opt to keep the postal unit running temporarily under the existing agreement terms. Think of this as a temporary stay of execution for your local postal counter, which is a potential win for anyone who relies on that location for stamps and shipping.

Working for Free? The New Default Rule

Here’s where things get tricky and potentially tough for those small business owners running the CPUs. If the contractor chooses to keep operating past the original termination date, the contract continues, but the bill states that the USPS is generally not required to pay the contractor anymore. Yes, you read that right: the default setting is that the private operator keeps the postal services running, but the government payments stop. For a small business, this could turn a profitable sideline into a massive, immediate loss.

The Postmaster General’s Power Play

There is a major exception to the “no payment” rule, and it centers entirely on the Postmaster General (PMG). The bill grants the PMG broad discretion to decide if it is “appropriate” for the USPS to make payments to the contractor during this extension period, and if so, to set the “exact terms and conditions” for those payments. This is a significant grant of power. It means the decision of whether a small business owner gets paid for continuing to provide essential postal services rests solely on the PMG’s judgment, with no clear standards defined in the law for what makes payment “appropriate.”

Real-World Stakes for Local Access

Why does this matter to you? CPUs are often lifelines in rural areas or busy urban neighborhoods where a full-service post office is miles away. By making the continued operation of these units dependent on the contractor choosing to operate without guaranteed pay, or hoping the PMG decides to be generous, the bill introduces huge uncertainty. If the contractor can’t afford to operate without payment—which is likely—they will simply close up shop immediately. This could lead to abrupt service closures, leaving residents or small businesses that rely on that CPU scrambling to find a new place to mail packages. The temporary extension is only good if the contractor doesn't breach the contract, doesn't terminate it themselves, or doesn't permanently close the location. Given the financial pressure of the “no payment” default, many might choose the latter two options right away.