- The Washington Times - Friday, April 5, 2002

Some post offices would close, Saturday mail deliveries might cease and rate increases would be phased in more quickly under a "transformation plan" the U.S. Postal Service delivered to Congress yesterday.
The goal of the plan is to stem growing deficits and help the Postal Service compete with commercial delivery companies and electronic communications like e-mail and faxes.
"It is becoming increasingly clear that the current structure of the Postal Service may soon be unable to support the achievement of that goal," the transformation plan says. "Therefore, it is imperative to explore alternative business models."
Other proposals include contracting out many services to private companies and using automation and electronic information systems to replace employees. Congress and the president must approve any of the reforms before they can begin.
The reforms "will generate $5 billion in savings and cost avoidance through 2006, of which $1 billion will be in post office operations," the plan says. "These savings will enable us to achieve some debt repayment and to hold rates steady from mid-2002 until calendar year 2004."
The plan also recommends restructuring the Postal Service into a "commercial government enterprise" that maintains universal delivery to all registered mailing addresses but leaves most business decisions to administrators rather than government regulators. Among the decisions would be postage rates and frequency of deliveries, such as Saturday service.
The Postal Service had considered ending Saturday deliveries to save money, but federal regulators vetoed the idea.
As reported by The Washington Times last week, the transformation plan presents Congress with three options for restructuring. One would keep the current system as a subsidized government agency but try to improve its efficiency, another would turn the Postal Service into a private corporation and the third is the "commercial government enterprise" strategy.
"Under this model, the Postal Service would be a commercial government enterprise wholly owned by the federal government," the transformation plan says. "Postal Service managers would operate under more businesslike conditions. The Postal Service would offer both traditional and nontraditional products and implement market-based pricing, discounts and incentives and business-based financing."
The plan said the other options lacked popular support because a private corporation could eliminate universal service and a government agency would require subsidies.
The Postal Service can continue under its current system as a government agency "until enough customers abandon the system to make financial failure unavoidable," the plan says.
The recommendation of a commercial government enterprise is not receiving support from labor unions, especially the American Postal Workers Union.
"This is not a way to bring the Postal Service to financial solvency," said William Burrus, APWU president.
He criticized provisions in the plan that would outsource more services to private contractors and would impose collective-bargaining guidelines of the Railway Labor Act on unions. The act allows Congress or the president to block strikes by imposing a settlement on deadlocked labor negotiations if the public interest is threatened.
"That's a non-starter," Mr. Burrus said. "It doesn't lead to collective-bargaining rights."
The outsourcing provisions would increase costs rather than reduce them, he said.
"The basic tenet of outsourcing is you get the work done cheaper," Mr. Burrus said. "The Postal Service has turned that on its head. They pay a premium to outsource, more expensive than it would be if they do it themselves."
Sen. Daniel K. Akaka, Hawaii Democrat, said he plans to hold hearings on the plan later this month or in early May. Mr. Akaka is chairman of the Government Affairs international security, proliferation and federal services subcommittee.
"Evolving technology and the recent recession and terrorist attacks have changed the way information is delivered," Mr. Akaka said in a statement. "The bottom line was that merely raising postage rates would not address the long-term structural, financial and operational issues facing the Postal Service."
In fiscal 2001, the Postal Service ran up a $1.68 billion deficit, which was $199 million more than a year earlier.

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