Many Americans have stopped using the U.S. Postal Service in favor of private carriers like UPS and FedEx.  And now, it seems, so has the federal government.

In fact, despite spending $337 million last year on shipping, federal agencies only gave the financially troubled Postal Service $4.8 million in business – less than two percent.

“Although its competitors have consistently captured more than 98 percent of shipping revenue from federal agencies through GSA contracts, the Postal Service has opportunities to increase its share of this market,” said a report by the agency’s Office of Inspector General.

One of the biggest hurdles is that the USPS waited eight years before it joined a competitive-pricing program for other federal departments, the IG said.  By that point, private carriers already had agreements with many different agencies.

The General Services Administration handles many contracts and business partnerships for the federal government.  But while FedEx and UPS have partnered with the GSA since 2001, the Postal Service didn’t get involved until May 2009.

“Consequently many federal agencies have long-term relationships with competitors and are reluctant to switch to the Postal Service,” the inspector general said.

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