Postal closures would save money, GAO says

A Government Accountability Office report released Thursday offered support for several controversial provisions of a major U.S. Postal Service reform bill backed by House Republicans.

After conducting an audit requested by lawmakers -- including interviews with postal officials, reviews of proposed legislation and financial data -- GAO found that closures and consolidations that the House bill and the U.S. Postal Service itself back “would help USPS by bringing down costs related to excess and inefficient network resources” and help the cash-strapped agency meet its goal to save $22.5 billion by 2016.

In its five-year consolidation plan, USPS has proposed eliminating “excess capacity” by cutting costs needed for transportation between mail facilities, reducing processing equipment and closing 223 processing facilities nationwide, resulting in a loss of up to 35,000 positions.

GAO “reviewed numerous comments from members of Congress, affected communities and employee organizations that have expressed opposition to closing facilities,” the report explained. “Such concerns are particularly heightened for postal facilities identified for closure that may consolidate functions to another state, causing political leaders to oppose and potentially prevent such consolidations.”

The watchdog called for “dramatic changes” in the USPS cost structure and efforts to “bring down costs related to excess and inefficient network resources.” GAO did not make any new recommendations in the report other than urging Congress to pass comprehensive legislation

Backers of the House bill, sponsored by Rep. Darrell Issa, R-Calif., cheered this language, saying it changes the narrative on post office closures and refocuses the debate from creating revenue to cutting costs.

“USPS’ problem is that they have excess capacity. [Expenditures] are not shrinking in line with America’s declining use of mail,” one congressional source said, requesting not to be named because the legislation is still being debated.

“If the Postal Service is not given the flexibility it needs to cut costs, the taxpayers will have to start subsidizing,” the source added, referring to the agency’s Aug. 1 deadline for a $5.5 billion dollar prepayment in health benefits. USPS likely would not be able to make the payment, leaving taxpayers footing the bill -- unless Congress changes the requirement.

The Senate’s comprehensive Postal Service reform legislation would make it more difficult to close post offices in an effort to protect small towns and rural areas. That legislation remains stalled after lawmakers failed to approve bringing it to floor debate in March.

The Senate bill would provide some flexibility for consolidations, recommending USPS consider merging nearby post offices and reducing the number of operating hours.

After the report was released, Sen. Tom Carper, D-Del., acknowledged many in Congress oppose closing more than 200 more processing facilities. “I’ve long maintained that if something is worth having, it’s worth paying for,” Carper said in a statement. “If Congress wants to require the Postal Service to maintain additional mail processing facilities, we have to figure out a way to reduce costs elsewhere or raise revenues.”

The report also backed another much-debated provision in the Issa bill that would create an oversight panel, similar to the Defense Department’s Base Closure and Realignment Commission, through which lawmakers could exert greater oversight over closure and consolidation decisions.

“The proposed Commission on Postal Reorganization could broaden the current focus on individual facility closures -- which are often contentious, time-consuming and inefficient -- to a broader networkwide restructuring, similar to the BRAC approach,” GAO said. “In other restructuring efforts where this approach has been used, expert panels have successfully informed and permitted difficult restructuring decisions, helping to provide consensus on intractable decisions.”

“It would seem unnecessary, as well as inefficient and not as cost-effective, to spend the time, money and other resources needed to create a new government bureaucracy -- such as the proposed Commission on Postal Reorganization -- to do something that USPS can and already is successfully doing,” Emily Spain, a spokeswoman for Carper told Government Executive.

The Congressional Budget Office also has analyzed the two main pieces of legislation. According to its reports, the House bill could save the agency $20 billion over the next decade. The Senate bill, in its current form, could result in a net loss of $6.3 billion over 10 years.