A Hearing before the House Subcommittee on Federal Workforce, Postal Service, and the District of Columbia
Notes from a hearing before the House Subcommittee on Federal Workforce, Postal Service, and the District of Columbia on how the U.S. Postal Service, Board of Governors, and the Postal Regulatory are implementing the Act and the act’s impact on the postal community. In convening the hearing, subcommittee chairman Danny Davis noted that providing the Postal Service with market-response flexibility was extremely important to ensuring the nation universal mail service. He noted the progress that already has been made by the Postal Regulatory Commission and the Postal Service in adapting rules and procedures to the requirements of the 2006 postal reform law.
Full committee chairman Henry Waxman expressed concern over nonprofits organized to serve veterans but expend most of their revenue on staff compensation and fund raising. The lack of disclosure on how these veterans charities are using contributions is a serious problem. Waxman said that he had some serious questions about the cooperative mail rule. It allows unscrupulous companies to take advantage of the nonprofits' status for private commercial gain. He wanted to know what the USPS and the PRC are doing to eliminate these deceptive mailings and fund raising abuses.
Witnesses:
Testimony of Dr. Frank Wolak (30 KB)
Testimony of Ms. Katherine Siggerud (401 KB)
Testimony of Postmaster General John Potter (1,005 KB)
Testimony of Mr. James Bilbray (234 KB)
Testimony of Dan Blair (595 KB)
Mr. Frank A. Wolak, Professor, Department of Economics, Stanford University:
The price cap mechanism is intended to provide an incentive for greater postal cost-efficiency and protection against monopoly abuse.
The PRC is required to provide a report to Congress on the Postal Service's universal service obligation.
"Information provision" is a short-hand way of describing the process of data gathering that can ensure operational and financial transparency.
Congress intended the PRC to monitor the USPS' performance on an on-going basis to serve as an early warning device and to ensure a prompt review of proposed postal rate changes.
The trend of decreasing mail volume will continue. The act, however, allows the Postal Service to use its pricing flexibility to maximize its revenue from any mail class.
The availability and analysis of good data makes for better regulation.
It's important for the USPS to know who its customers are, what do they spend, and why do they do the spending. Why are customers moving where they're moving. The USPS needs to get more into customer level surveys.
The data seem to suggest that high-speed internet access is already widespread. This means that household diversion from mail to the internet should begin to slow down. The less intensive internet user is older. The younger are more likely to look to the internet rather than mail.
The USPS' universal service obligation (USO) presents a major challenge to ensuring the Postal Service's success under reform. This will be a key issue going forward. The USPS needs to know what the cost of the USO is in order to derive appropriate prices.
The private sector has greater latitude than the USPS to provide pay-for-performance.
Ms. Katherine A. Siggerud, Director, Physical Infrastructure Issues, U.S. Government Accountability Office:
GAO is encouraged in seeing how the postal system's key constituencies have responded to the challenge of living under the 2006 postal reform law.
Several reports required under the act already have been issued.
The diversion of mail, the slowing of the economy, and the growth in delivery points present significant challenges.
The USPS will be presenting in June its report on reorganization of its network.
The USPS has made strides in improving cost-efficiency and productivity.
It will be important to continue to monitor changing market realities and USPS financial and operational performance.
The USPS is suffering from lower than expected volumes, an economic downturn, and increased costs. While the USPS may be able to adjust sufficiently over the short term, but the longer term is more questionable.
The USPS needs to improve the market-value and appeal of its products and services. It also needs to remove excess capacity from its network.
The USPS' recent losses are due to its need to comply with the law's dictates concerning retiree health costs.
Mr. John E. Potter, Postmaster General/CEO, U.S. Postal Service:
The new law provides the USPS with a new pricing flexibility. This should help the USPS to attain its mission.
The new law, however, does not immunize the Postal Service against changing market trends and economic downturns.
Less mail volume means higher cost per piece.
USPS spending has been reduced. Additional cost cuts are planned, but not at the cost of service.
The USPS must pursue aggressive revenue growth. The USPS is striving to increase revenue from its competitive products.
Potter noted the progress the USPS has made in meeting the many requirements of the new postal law.
Potter said he is very much concerned over the abuses that have been reported with the cooperative mail rule. The USPS is exploring alternatives.
The USPS is suffering from the recent economic downturn.
The USPS has analyzed the information it got from its RFI. The USPS intends to go out with an RFP regarding the outsourcing of BMC-related work.
The USPS is striving to improve its data infrastructure to track productivity and efficiency. The USPS is looking at mail handling errors, machine-related issues, and mailer preparation quality.
The demand for the present end-to-end network is in decline. This poses some real challenges that need to be looked at.
Mr. James H. Bilbray, Member, Board of Governors, U.S. Postal Service:
The USPS has been providing record levels of service to the public.
Strides have been made to meet the requirements of the new law.
There is no immediate need for changes in the new law.
The USPS remains one of the leading employers of women and minorities.
The USPS is moving to increase its recruitment of excellent talent from colleges and universities and the military.
Sarbanes-Oxley has increased the governors' work load. Everything that is done is being done with the goal of transparency.
The work of the governors is becoming almost full-time work. The $300 per meeting stipend, set in 1970, is today inadequate.
Mr. Dan G. Blair, Chairman, Postal Regulatory Commission:
The PRC will continue its work on the development and implementation of service performance standards.
The PRC is reviewing the USPS first annual data submission and its first postal rate change request.
The Commission has begun, through a competitive contract, to look at the many issues regarding the USPS' USO.
There are certain areas where USPS cost studies need to be updated, e.g., carrier street time. The PRC needs the best possible quality data.
Blair noted that while the PRC eliminated of the Office of the Consumer Advocate, the public still will be represented in all proceedings.
The USPS will need to focus on keeping labor costs in line, maximizing network rationalization, develop the best possible data for management and oversight.
The USPS also needs to improve the market appeal of its products and services.