Panel urges Postal Service to consolidate

To improve its financial health, the Postal Service should consolidate its facilities and should consider outsourcing tasks "incidental" to delivering the mail, a nine-member commission appointed to study postal reform said Wednesday.

Those were two of 17 recommendations that the Presidential Commission on the U.S. Postal Service voted unanimously to include in a formal report they will deliver to President Bush by July 31. The commission will reconvene next week to vote on additional recommendations related to the Postal Service's technology and workforce, and will publish its report shortly thereafter.

The commission, appointed by the president in December, has spent the last seven months examining every aspect of the Postal Service's operations and debating a wide range of options for improving the agency's financial viability. Members have agreed that the agency should not be privatized, but should possess the flexibility to operate like a private company in many ways.

If the 850,000-employee Postal Service were a private business, it would rank in the Fortune 500, said Harry Pearce, commission co-chairman and chairman of Hughes Electronic Corp. Lawmakers and the Bush administration should treat it accordingly, he added, giving it the "opportunity to behave like the best of the businesses in this country."

For instance, it takes nearly 18 months for the agency to propose and get approval for a rate hike under its current procedures. The commission adopted a recommendation that would give the Postal Service more flexibility to raise rates quickly in response to market changes, within limits adopted by a regulatory board. This system would have built-in incentives to keep the rates as low as possible, the commission said. Details will be included in the final report.

The Postal Service can also ensure its financial viability by streamlining operations, the commission said. This includes consolidating facilities and selling off underutilized real estate, panel members said. Because consolidations can be controversial, the commission recommended that the agency set up an independent group to assess which facilities could be eliminated or grouped together without an adverse impact on postal customers.

This independent group would be called the "Postal Network Optimization Commission" and would operate similarly to the Defense Department's Base Realignment and Closure (BRAC) commission. The postal reform commission studied Defense's method of closing bases and found that it works well, because the BRAC is a well-regarded, independent body. By having BRAC make proposals as to which bases need closing, Defense avoids the contentious political battles that can accompany closings, the commission said.

In addition to creating the commission, the Postal Service should evaluate its real estate and get rid of facilities that are underused, the commission said. This is one of several areas where it might be appropriate to seek help from private sector experts, the commission recommended. The agency should consider holding competitions for work "incidental to delivering the mail," such as truck repair and managing real estate, the commission concluded.

Competitions would ensure that the Postal Service receives quality work at the lowest cost possible, said commission member James Johnson. "We have an orientation to execution. We don't have a preference as to who performs the tasks," Johnson added.

Commission members also "strongly support" the Postal Service's efforts to provide retail services at venues other than post offices, including banks and grocery stores. There is no reason that customers should have to wait in a long line to buy stamps at the post office, when they could more efficiently purchase them while buying the week's groceries or running other errands, the commission explained. In some areas where there is not an adequate market for postal services, it might even be okay to eliminate physical facilities and make stamps and other services available at alternative locations, the commission said.

The Postal Service needs to get away from the idea that a specially designated building is necessary to provide its services, Pearce said. But, realizing that post offices are important social centers in some communities, the commission has suggested that the agency consult with towns where postal buildings might be eliminated and encourage them to turn the space into some other type of community gathering place.

William Burrus, president of the American Postal Workers Union, said he is very concerned about some of the recommendations the commission voted to include in its report. For instance, the commission's proposal for consolidating offices does not leave enough room for citizen input, he said. If citizens want a post office in their town, they should have a forum to voice their opinions, he said.

Postal employees also know mailing regulations and procedures, Burrus said. Clerks at convenience stores, or other venues that might begin offering postal services, would lack the same expert knowledge, he said.

"People go to the post office because they want to," Burrus added. "There's a number of outlets for selling postage stamps, but you can't provide [other] postal services through alternative means, unless you plan on training the 7-Eleven or supermarket clerk."