Annual Compliance Determination (ACD)

Under legal direction the Postal Regulatory Commission (PRC) is required to produce the ACD within ninety days of the USPS published Annual Compliance Review (ACR). 

The ACD is an assessment of whether all products of the postal service cover their costs and are complying with other pertinent regulations.

The PRC found that In FY25, four of USPS’s twenty-eight Market Dominant products did not cover their costs, resulting in a combined negative contribution of $0.7 million. Overall, Market Dominant products and services generated $45.8 billion in revenue against $22.5 billion in costs. Below is high level ‘score card’ of the findings of mailing products:

Workshare Discounts

The discount that the USPS gives to mailers for performing certain functions like presorting mail or drop ship entry are supposed to be equal to the costs USPS avoids by mailers doing the work.  While the target is 100%, the Postal Service is considered compliant if the passthrough of avoided costs is within the band of 85% – 100%.

When the passthrough is over 100% it means that USPS could have done the work for less than the discount they gave mailers, so they are directed to decrease those discounts to mailers. 

When the passthrough is below 85% it means that USPS costs if they were to complete that operation would have been at least 15% more than the discount they gave mailers, so in most cases the USPS is directed to increase the workshare discount given to the mailer.   

At the end of FY25 the PRC found that of the 107 workshare discounts sixty-one were below 85%, twenty were over 100%, twenty-two were within the band of 85% – 100% and four were equal to100%.

During FY25 the PRC approved several methodological changes to the way USPS calculates and reports costs.  Those changes eliminated thirteen discounts and added twelve, putting the total Market Dominant discounts at one hundred and six.  The collapsing of AADC/3D, and simplification of Periodicals container charges are examples of work share discounts leaving, new ones would be tied to Heavy Printed Matter (HPM) and others.

These changes also altered the passthroughs, meaning fifty-five discounts will need to be decreased and twenty will need to increase.

The key discount changes impacting First-Class and Marketing Mail include:

Increasing discounts – Marketing Mail DSCF dropship discounts for Letters and Flats both under and over 4oz.  Presort 5-D Auto Letters, presort 3-D & 5-D Auto Marketing Flats, High Density Flats, and First-Class Presort AADC and 5-D Letters.

Pallet incentives to increase Marketing Mail Presort Flats, CR flats, HD, HD+, and Saturation flats on SCF pallets.  All flat sort levels on Delivery Sort pallets. 

Decreasing discounts – First-Class letters SCF pallet incentive.

Service

Of the 27 Market Dominant products/categories being measured, only 7 met their service standard while 20 failed to meet theirs. Below are the mailing categories, in FY25 in FCM only Presort Letters/Cards Two-Day and Three-Five Day exceeded or met their target.  It is notable to point out that the target for each of those was lowered by 3%-5% from FY24 to FY25. In Marketing Mail only EDDM Retail met its target, while they lowered its target by 11.6%.

Competitive Products

The USPS has greater latitude when setting prices for competitive packages, but there are some rules put in place to ensure that they do not use Market Dominant mail to subsidize the costs of handling and delivering parcels, which would be an unfair advantage to the private sector package shippers.  39 U.S.C. § 3633(a)(2) requires that the revenue for each Competitive product cover its attributable costs.  39 U.S.C. § 3633(a)(3) requires that competitive products cover an appropriate share of the institutional costs of the Postal Service.  For FY25 the PRC found that each competitive product did cover its attributable costs and contributed 23.4% to the total institutional cost, meeting all requirements.