- The Washington Times - Thursday, March 28, 2002

The U.S. Postal Service next week will announce a plan to restructure the nation's mail system to make it operate more like a private business.
Postal Service officials say the planned revamping of mail service could have a broad effect on the $900-billion-a year mailing industry, affecting everything from the way people choose to send correspondence to thousands of postal jobs.
The most likely scenario would allow Postal Service administrators to decide rates and service changes without the nearly year-long regulatory procedure currently required by the agency's 1970 charter.
Only one of the three scenarios in the "transformational plan" would leave the Postal Service with roughly the same structure as now. However, that scenario also predicts further financial losses and the need for greater government assistance.
The other two scenarios would let supply and demand determine postal rates and services, either in one vast restructuring or in increments.
The Postal Service is scheduled to release the proposal April 4.
"The Postal Service is suggesting that this could really knock everyone's socks off," said Robert Taub, chief of staff for Rep. John M. McHugh, New York Republican, who has proposed reforms to the Postal Service. "The overarching concern is that it's a lot of form and not a lot of substance. This is really their opportunity to articulate a vision. We'll have to see if they deliver on that."
The plan is essentially the same as the rough draft released in August that was created by a mailing industry task force organized by the Postal Service, a high-ranking Postal Service source familiar with the plan told The Washington Times.
The goal is to make the agency financially self-sufficient, rather than depending on government subsidies.
The agency's deficits have grown annually as it competes in lagging efforts with faxes, e-mail and commercial delivery services.
In fiscal 2001, the Postal Service ran up a $1.68 billion deficit, which was $199 million higher than a year earlier.
Even before terrorists sent anthrax through the mail in the fall, which temporarily shut down some mail deliveries and ran up huge costs, the Postal Service was projecting another record deficit this year.
The Brentwood Processing and Distribution Center in the District still is closed, awaiting decontamination, after anthrax killed two postal employees there.
The plan would let Congress choose among three options.
Under the option Congress is most likely to approve, which the transformational plan calls "moderate legislative reform," the Postal Service would be given greater discretion to use private industry marketing techniques.
Among the changes would be a faster rate-setting procedure and separate entities controlling first-class mail and the Postal Service's competitive services, such as overnight delivery.
One possibility is the Postal Rate Commission could decide rate changes without the need to seek approval from the Postal Board of Governors.
Under a second option, the Postal Service would try to improve its current operations with equipment, cost-cutting and streamlined management.
"The model for this phase is continuous improvement of the current Postal Service," the Postal Service said in its first draft of the transformational plan.
Congress is not likely to choose any option that keeps the current structure, Postal Service insiders say.
It is "unsustainable," said Nanci Langley, deputy staff director for Sen. Daniel K. Akaka, Hawaii Democrat and chairman of the Senate Governmental Affairs Committee's international security, proliferation and federal services subcommittee.
The General Accounting Office reached a similar conclusion in a report on the Postal Service's finances released last week.
"The worsening financial situation and outlook require a comprehensive transformation to address its financial, operational and human capital challenges," the GAO said.
The problem with the proposal that keeps the current structure is that it does little to curb mounting losses or to improve competitiveness with electronic and commercial delivery services, Miss Langley said.
Under a third option, the Postal Service would become a for-profit corporation, which the plan calls a "fundamental structural transformation."
"This phase could entail transformation into a for-profit corporate enterprise, owned either by the government, Postal Service employees or the public through an offering of stock," the first draft says.
The third option has been criticized for giving profit margins too much control over the nation's mail system. If, for example, home mail delivery could not be made profitable, the corporate directors potentially could decide to stop the home deliveries.
"People could do that," Miss Langley said. "We're trying to look at preserving universal service. That is key to any postal reform legislation."
Universal service refers to deliveries to any registered mailing address, including private homes.
Of the three options, the one that maintains government oversight but grants the Postal Service greater freedom to set rates and market its services is closest to legislative reforms discussed in Congress in recent years.
Mr. McHugh, a member of the House Government Reform Committee, last year proposed a bill that would streamline the regulatory process for setting rates and give greater discretion to Postal Service administrators based on market conditions.
Rep. Henry A. Waxman, California Democrat, has created a "discussion draft" of a bill intended to give the Postal Service greater flexibility in determining rates and services.
He is soliciting input from other members of Congress before introducing it in the House.
The first draft of the Postal Service plan was circulated to members of Congress, the Postal Rate Commission, the Postal Board of Governors and other interested parties for comment.
Revisions in the plan to be released next week mostly add greater detail.
Judy de Torok, Postal Service spokeswoman, described the plan as "a blueprint of how the Postal Service can meet the changing needs of our customers."
Among those expressing concern about efforts to make the Postal Service more competitive are private delivery services such as United Parcel Service.
"Our practice in the past has been to look very closely at these things and if they are anti-competitive then we raise our voices about it as any business would," said Steve Holmes, spokesman for Atlanta-based UPS. "If it's another attempt to unfairly compete with private enterprise, then, yes, we have an issue with it."

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