USPS Highway Contract Routes: How to Qualify, Bid, and Win

USPS Highway Contract Routes are private trucking contracts the Postal Service awards to carriers who move bulk mail between processing plants, distribution centers, and post offices. To win one, you register your company in SAM.gov, meet driver, insurance, and Service Contract Act requirements, then submit a priced proposal on PS Forms 7405 and 7463 through the Postal Service’s Logistics Gateway. A contracting officer evaluates the bid on both technical capability and cost before issuing a Notice of Award.

There are roughly 8,000 of these routes in operation, and federal law gives the Postal Service broad authority to “contract from any person or carrier for surface and water transportation” on whatever terms it considers appropriate.¹ That authority is what allows a private carrier with the right qualifications to bid on and operate a scheduled mail haul.

What an HCR Contractor Actually Does

An HCR is not a mail delivery job. Letter carriers deliver to addresses; HCR contractors haul bulk mail between Postal Service facilities on fixed schedules. You supply the trucks, hire the drivers, and cover fuel, maintenance, and payroll. In return, the Postal Service pays a negotiated contract price on a set schedule.

Timetables are strict. A late truck on one leg can throw off sorting downstream, so on-time performance is tracked and missed trips are penalized. If you are considering an HCR because you already own trucks and want steady federal revenue, understand up front that you are buying into a schedule you cannot renegotiate mid-run.

Who Can Qualify to Bid

The Postal Service can reject applicants who fall short on any of several thresholds.

Commercial Driver’s License. Any route requiring a vehicle or combination with a gross vehicle or combined weight rating of 26,001 pounds or more requires a CDL, and a Class A CDL is needed for tractor-trailer combinations above that threshold. Lighter routes may not require one, but commercial driving experience still counts in evaluation.²
Driver age. Federal motor carrier rules generally require interstate commercial drivers to be at least 21. Some intrastate routes allow drivers as young as 18 depending on vehicle weight and state rules.
Driver vetting. In January 2026, the Postal Service announced it will phase out non-domiciled CDL operators who have not been thoroughly vetted by the U.S. Postal Inspection Service. Expect background screening on every driver you assign.³
Driving records. Frequent violations or recent serious accidents will disqualify a driver.
Financial stability. Bidders must show they can sustain operations for the full contract term through fuel swings, repairs, and payroll.
Past performance. The Postal Service looks at quality, timeliness, business relations, and cost control on prior contracts over the most recent three years. A newly formed company with no contract history can still bid; in that case the Postal Service may evaluate the track record of the company’s key personnel on similar work.⁴

Insurance You Have to Carry

The Postal Service’s Supplying Principles and Practices manual sets minimum liability coverage at $100,000 per person and $500,000 per accident for bodily injury, plus $100,000 per accident for property damage.⁵ Individual solicitations can require higher limits based on route risk. Workers’ compensation is expected for any employed drivers. Proof of insurance must be filed before operations begin, and a lapse during the contract can trigger immediate route suspension.

Service Contract Act Wages and Fringe

This is the area where new HCR contractors get tripped up most often. The McNamara-O’Hara Service Contract Act applies to every USPS mail haul contract worth more than $2,500, which covers virtually all HCRs.⁶ Every driver and helper on the route must be paid at least the prevailing wage rate for their job classification in the locality where the trip originates, plus fringe benefits on top of the hourly wage.

You can pay by the mile, by the trip, or on some other basis. When that pay is converted to an hourly figure it must meet or exceed the wage determination rate. Fringe benefits include health and welfare, pension contributions, holidays, and vacation. As of July 2025, the prevailing health and welfare fringe rate is $5.55 per hour, or $222 per week for a full-time driver.⁷ You can satisfy fringe obligations through actual benefit plans, equivalent cash payments, or a combination.

One point that catches owner-operators off guard: the SCA does not care whether someone is classified as an independent contractor. If a person is performing the work of a service employee on an HCR, they must be compensated at the SCA rate. You also cannot shift costs like fuel and maintenance onto drivers if doing so would push their effective hourly wage below the required minimum.⁶ Travel time between post offices, pre-trip inspections, fueling, and waiting for loads to be unloaded all count as compensable hours. Payroll records must be kept for three years after the contract ends.

Preparing the Bid

Register in SAM.gov First

Before touching the bid forms, register your business in the System for Award Management at SAM.gov. Registration produces a Unique Entity Identifier the Postal Service uses to track your company through procurement.⁸ Federal law requires the registration for any entity receiving payments from a federal agency. Allow several weeks, because an incomplete SAM profile will block your bid.

The Two Forms That Make Up the Proposal

PS Form 7405, the Transportation Service Proposal and Contract, is provided to each bidder for signature and inclusion in the proposal package.⁹ It captures the equipment you plan to use, including trailer length, fuel type, and vehicle configuration.

PS Form 7463, the Cost Statement, is where the bid lives or dies. It breaks your proposed price into line items covering fuel costs, road-use taxes, labor, vehicle maintenance, and other operating expenses. The figures you enter become legally binding parts of the contract if your bid is accepted. Inaccurate labor costs or equipment specs can result in rejection or financial penalties later. The cost statement includes a specific line for fuel price per gallon and another for road-use taxes, both of which feed into the Postal Service’s later fuel adjustments.

Performance Bonds

Unlike construction contracts, HCRs only require a performance bond when the contracting officer decides bonding is essential. When required, the bond amount is set at the minimum needed to protect the Postal Service’s interest, which can be well below the full contract value.¹⁰ The solicitation package will specify whether one is required and at what level. If you need a bond, price the surety cost into your bid.

Submitting and Evaluation

The Postal Service posts HCR solicitations through its Logistics Gateway portal at logistics.usps.com. Bidders upload the completed PS Form 7405, PS Form 7463, and supporting documents before the deadline. Late submissions are disqualified; the electronic timestamp is the official record of receipt.

After the deadline, a contracting officer reviews each proposal on two tracks. The technical review looks at your equipment, driver qualifications, past performance, and ability to meet the schedule. The cost review compares your price against other bids and the Postal Service’s own internal estimates. Evaluation can run several weeks or longer depending on the number of proposals and route complexity.

If you are selected, you receive a formal Notice of Award. The notice includes the effective start date and any final conditions, such as insurance certificates or bond documentation. A transition phase follows where you coordinate initial pickup and delivery schedules with the local administrative official. The contracting officer remains your primary point of contact during startup.

How Fuel Price Adjustments Work

Diesel prices can swing enough to wreck a contractor’s margins, so the Postal Service builds fuel adjustments into its contracts. The system uses the U.S. Department of Energy’s nine regional fuel price indexes to recalculate the fuel component of your contract payment each month.¹¹ An adjustment kicks in whenever any regional index moves by $0.05 or more per gallon in a single month.

During negotiations, the Postal Service establishes a baseline fuel price per gallon that reflects the contractor’s market cost at the time of award. Monthly deviations are calculated automatically through the Transportation Contract Support System. You will not absorb a sustained spike, but you also will not pocket a windfall when prices drop. The federal excise tax on diesel is 24.4 cents per gallon,¹² and state taxes add roughly 30 to 56 cents more depending on where the route operates. These tax costs flow through the cost statement separately from the fuel price adjustment.

Performance Monitoring and Penalties

Once the contract is active, the local administrative official tracks every departure and arrival against the published schedule. A dispatch that runs late because of something the contractor did or failed to do is documented on PS Form 5500, the Contract Irregularity Report.¹³ Delays caused by the Postal Service itself, such as slow loading at a plant, are recorded on a separate form and do not count against you.

Non-chargeable events include things outside your control, like severe weather or bridge closures. Chargeable events are the contractor’s fault: late arrivals, vehicle breakdowns, safety violations, or unauthorized passengers. For a completely missed trip, the contracting officer calculates the penalty by multiplying your approved rate per mile by the number of miles on the trip.¹⁴ Under the standard forfeiture-of-compensation clause, the contractor is liable for all damages the Postal Service actually suffers from a trip failure caused by contractor fault or negligence.

Chargeable irregularities also weaken your past-performance record, making it harder to win renewals or new routes later.

Contract Length and Renewal Limits

HCR contracts historically run on a four-year base term.¹⁵ When the term approaches expiration, the Postal Service may open renewal discussions if it still needs the service, typically about six months out. The scope of work cannot change significantly during renewal; if the Postal Service’s needs have shifted, it must solicit a new contract.¹⁶

Two limits apply. A renewal term cannot exceed four years, and no contract can be renewed more than once.¹⁶ The maximum life of a single HCR contract is eight years: four base plus four renewal. Renewal pricing is renegotiated against current market conditions, so do not assume your original rate carries over.

The Postal Service can also end a contract early through termination for convenience, even if you have done nothing wrong. If that happens, you receive compensation for the percentage of work already performed, reasonable charges directly caused by the termination, and liquidated damages calculated under the contract’s Changes clause.¹⁷

Costs to Build Into Your Bid

The bid price has to cover more than fuel and driver wages. Line items that erode margins if you do not plan for them:

Annual commercial vehicle registration, which varies widely by state and vehicle weight. A heavy tractor-trailer combination can run from a few hundred dollars to over $1,000 per year.
CDL testing, licensing, and medical exam costs. State license fees alone range from under $50 to over $150.
Fuel taxes: the 24.4-cent federal diesel excise tax plus roughly 30 to 56 cents per gallon in state taxes. Some of these flow through PS Form 7463, but you need to understand how they interact with the fuel adjustment mechanism.
SCA fringe benefits. At $5.55 per hour per driver, health and welfare obligations alone add over $11,500 annually for each full-time employee. This is separate from wages and cannot be offset against other legally required benefits like workers’ compensation.
Insurance premiums high enough to meet or exceed the Postal Service’s minimums, which frequently sit above what a standard commercial auto policy provides.
Vehicle maintenance and eventual replacement. Trucks running fixed routes on tight schedules accumulate mileage fast.

Underestimating any of these is how contractors end up locked into contracts they cannot profitably perform. The Postal Service evaluates whether your bid price is sustainable, but that evaluation protects the Postal Service’s interests, not yours. If you win a route at too thin a margin, you bear the loss.

1
Office of the Law Revision Counsel. 39 USC 5005 – Mail Transportation
2
Federal Motor Carrier Safety Administration. Driver Operates Combination Vehicle With a GCWR of 26,001 Pounds or More
3
United States Postal Service. USPS Is Strengthening Requirements for Contracted Trucking Providers
4
United States Postal Service. Supplying Principles and Practices – 2-26.4 Past Performance and Supplier Capability
5
United States Postal Service. Supplying Principles and Practices – 7-3.2 Insurance
6
U.S. Department of Labor. Fact Sheet 67C – Application of the McNamara-O’Hara Service Contract Act to U.S. Postal Service Mail Haul Contracts
7
U.S. Department of Labor. All Agency Memorandum Number 250
8
System for Award Management (SAM.gov). Entity Registration
9
United States Postal Service. USPS Highway Contract Routes – Supplying Principles and Practices
10
United States Postal Service. Interim Internal Purchasing Guidelines – Bonds, Insurance, and Taxes
11
United States Postal Service Office of Inspector General. Highway Contract Route Fuel Price Index Program – Southern Transportation Category Mgmt. Team
12
U.S. Energy Information Administration. Many States Slightly Increased Their Taxes and Fees on Gasoline
13
United States Postal Service. Management Instruction PO-530-2017-1 – Highway Contract Route Exceptional Service Performance Payment Reconciliation
14
USPS Office of Inspector General. Highway Contract Route Irregularity Reporting – Jacksonville Network Distribution Center
15
United States Postal Service. Star Routes
16
United States Postal Service. Supplying Principles and Practices – Renewals
17
United States Postal Service. Supplying Principles and Practices – 5-13.1 Termination for Convenience