[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
                 TREASURY, POSTAL SERVICE, AND GENERAL
                     GOVERNMENT APPROPRIATIONS FOR
                            FISCAL YEAR 1999

========================================================================

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION
                                ________

  SUBCOMMITTEE ON THE TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT 
                             APPROPRIATIONS

                      JIM KOLBE, Arizona, Chairman

FRANK R. WOLF, Virginia          STENY H. HOYER, Maryland
ERNEST J. ISTOOK, Jr., Oklahoma  CARRIE P. MEEK, Florida
MICHAEL P. FORBES, New York      DAVID E. PRICE, North Carolina
ANNE M. NORTHUP, Kentucky        
ROBERT B. ADERHOLT, Alabama      

NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

      Michelle Mrdeza, Bob Schmidt, Jeff Ashford, and Tammy Hughes,
                            Staff Assistants
                                ________

                                 PART 2

                      UNITED STATES POSTAL SERVICE

                              

                                ________

         Printed for the use of the Committee on Appropriations
                                ________

                     U.S. GOVERNMENT PRINTING OFFICE
48-370 O                    WASHINGTON : 1998
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             For sale by the U.S. Government Printing Office            
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                       COMMITTEE ON APPROPRIATIONS                      

                   BOB LIVINGSTON, Louisiana, Chairman                  

JOSEPH M. McDADE, Pennsylvania         DAVID R. OBEY, Wisconsin            
C. W. BILL YOUNG, Florida              SIDNEY R. YATES, Illinois           
RALPH REGULA, Ohio                     LOUIS STOKES, Ohio                  
JERRY LEWIS, California                JOHN P. MURTHA, Pennsylvania        
JOHN EDWARD PORTER, Illinois           NORMAN D. DICKS, Washington         
HAROLD ROGERS, Kentucky                MARTIN OLAV SABO, Minnesota         
JOE SKEEN, New Mexico                  JULIAN C. DIXON, California         
FRANK R. WOLF, Virginia                VIC FAZIO, California               
TOM DeLAY, Texas                       W. G. (BILL) HEFNER, North Carolina 
JIM KOLBE, Arizona                     STENY H. HOYER, Maryland            
RON PACKARD, California                ALAN B. MOLLOHAN, West Virginia     
SONNY CALLAHAN, Alabama                MARCY KAPTUR, Ohio                  
JAMES T. WALSH, New York               DAVID E. SKAGGS, Colorado           
CHARLES H. TAYLOR, North Carolina      NANCY PELOSI, California            
DAVID L. HOBSON, Ohio                  PETER J. VISCLOSKY, Indiana         
ERNEST J. ISTOOK, Jr., Oklahoma        ESTEBAN EDWARD TORRES, California   
HENRY BONILLA, Texas                   NITA M. LOWEY, New York             
JOE KNOLLENBERG, Michigan              JOSE E. SERRANO, New York           
DAN MILLER, Florida                    ROSA L. DeLAURO, Connecticut        
JAY DICKEY, Arkansas                   JAMES P. MORAN, Virginia            
JACK KINGSTON, Georgia                 JOHN W. OLVER, Massachusetts        
MIKE PARKER, Mississippi               ED PASTOR, Arizona                  
RODNEY P. FRELINGHUYSEN, New Jersey    CARRIE P. MEEK, Florida             
ROGER F. WICKER, Mississippi           DAVID E. PRICE, North Carolina      
MICHAEL P. FORBES, New York            CHET EDWARDS, Texas                 
GEORGE R. NETHERCUTT, Jr., Washington  ROBERT E. (BUD) CRAMER, Jr., Alabama
MARK W. NEUMANN, Wisconsin             
RANDY ``DUKE'' CUNNINGHAM, California  
TODD TIAHRT, Kansas                    
ZACH WAMP, Tennessee                   
TOM LATHAM, Iowa                       
ANNE M. NORTHUP, Kentucky              
ROBERT B. ADERHOLT, Alabama            

                 James W. Dyer, Clerk and Staff Director











  TREASURY, POSTAL SERVICE, AND GENERAL GOVERNMENT APPROPRIATIONS FOR 
                                  1999

                              ----------                              

                                          Thursday, March 19, 1998.

                      UNITED STATES POSTAL SERVICE

                               WITNESSES

MARVIN T. RUNYON, POSTMASTER GENERAL, UNITED STATES POSTAL SERVICE
MICHAEL S. COUGHLIN, DEPUTY POSTMASTER GENERAL

                     Opening Comments by Mr. Kolbe

    Mr. Kolbe [presiding]. The Subcommittee will come to order.
    Before I welcome Mr. Runyon and make a brief opening 
statement, let me tell the members of the subcommittee that Mr. 
Hoyer and I have a little business to conduct here. [Laughter.]
    There is a basketball game, this evening, and, as is 
customary, we thought it would be wise for us to make a little 
bet on this game. I might add, a very friendly bet. Nothing 
that would get us into trouble here. So, I am quite confident 
of Arizona's victory this evening, since we won the 
championship last year, although we certainly regard Maryland 
as a worthy sparring partner for us this evening, in this Sweet 
16 round. But we've decided it is, of course, it's a formidable 
opponent. So we're going to have a little bet here.
    First of all, we're going to have this person sit with us 
here today. We're going to look right at Mr. Hoyer all day 
there. This is a U of A wildcat--very ferocious wildcat, here. 
We're friendly, but very ferocious. Now, he's got to stand up 
with all of us here. [Laughter.]
    We have trouble standing. We'll lean up against the--there, 
over there. [Laughter.]
    As I am prepared, in the very unlikely eventuality, that 
the University of Arizona were to lose this evening, I am 
prepared to offer to you and your staff an authentic Mexican 
luncheon or dinner, enchiladas and tamales, tacos, all the good 
stuff, brought in from, I might add--none of this Tex/Mex stuff 
that you are used to getting around here and being sold as, 
pawned off on you as real Mexican food. This will be real stuff 
here. And this will come all the way from Arizona, where we 
really savor good Mexican food. That's in the eventuality, very 
unlikely eventuality, that we would lose. But, I'd be certainly 
happy to entertain an offer from you in the very likely 
opportunity, all likelihood, that you were to lose here. 
[Laughter.]
    Mr. Hoyer. We have drafted a letter, and we will send 
flowers by wire tonight to Lute Olson. He will be the saddest 
human being in the United States of America. Lute Olson is the 
coach of the University of Arizona. We have also sent him a 
telegram today, saying that I have talked to Chairman Kolbe, I 
have great respect for his judgment, and he indicates that he 
believes the University of Maryland will not be any problem at 
all to the University of Arizona, and they really ought not to 
worry about this upstart team from the East. So that he 
probably doesn't even need to bring his first string to play 
tonight. [Laughter.]
    Mr. Kolbe. We do fine with the second string, anyhow. 
That's the depth that we have. [Laughter.]
    But, the fact of the matter is, my staff is going to enjoy 
that Mexican dinner flown in from the state of Arizona. I'm 
glad to hear it's coming from the state of Arizona, and not 
Mexico itself, as a real Mexican dinner. But, we are going to 
have, and we haven't ordered these yet, and don't think we'll 
have to order them. In fact, if we get them, we'll probably eat 
them ourselves, a sufficient quantity, whether it's a bushel or 
more. However hungry the staff might be and the Congressmen, 
the chairman, Maryland crabs. Now, we don't eat terrapin, of 
course, because terrapin are sacred food. [Laughter.]
    Mr. Hoyer. Pretty tasty.
    Mr. Kolbe. I should have brought a Terrapin. I wish--I'm 
thinking--I wish I'd brought a terrapin to sort of slowing, 
amble over there, and push your--what is it?
    Mr. Hoyer. Wildcat. [Laughter.]
    Mr. Kolbe. The wildcat. [Laughter.]
    Mr. Hoyer. Something that looks ferocious to you. 
[Laughter.]
    How could I forget that was a wildcat. [Laughter.]
    It's an obscene animal, obviously. [Laughter.]
    Whatever it is. But, the University of Maryland, I want you 
to know--I want everybody in this room to know, and I hope 
there's some press here that's going to cover this--I am 
currently in the lead of our office pool. Now, we don't bet, of 
course, in my office. The money is just for show. [Laughter.]
    It's sort of like a monopoly game. But, having said that, I 
am in the lead of our pool. Actually, I'm not, I'm second. But 
the person who is leading our pool picked Kansas to win the 
final, so he is essentially out of the pool. I want to tell you 
that I have picked Maryland to go to the finals. It will be an 
all ACC final. It will be Duke and Maryland, and I'm not sure 
that we can get by Duke. But, I am confident that we can get by 
the University of Arizona. We play tonight. I will be watching 
with great expectation today and we may even get a first class 
priority letter delivered on time or ahead of schedule, I'm 
sure, Mr. Postmaster General, from Mr. Olson saying, ``Well, I 
guess you showed the Chairman once again.''
    Mr. Chairman.
    You will have a full crab dinner, for you and your staff--
in the unlikely event that Arizona prevails tonight. Well, I 
think it's a worthy challenge, and, actually, we can say good 
luck to both of the teams here. [Laughter.]
    He's just a little top heavy today here. Boo.
    Mr. Kolbe. Thank you very much. And we will proceed now 
with the hearing, Mr. Runyon. Postmaster General, we welcome 
you and Mr. Coughlin to our Subcommittee this afternoon. And we 
particularly welcome you, since this is your last appearance. 
We congratulate you on your retirement.
    Mr. Hoyer. How much staying power, Mr. General?
    Mr. Kolbe. We congratulate you on your decision. We wish 
you well in your endeavors, wherever they might take you. In 
preparing for this, I was reading, and staff were reading, your 
remarks you delivered at the National Postal Forum in Las Vegas 
at the beginning of the month. I think the accomplishments that 
you had as Postmaster General over the last 6 years are very 
commendable.
    Just three-and-half years ago, you appeared before this 
Subcommittee and explained why service in Washington, D.C. had 
the worst first class mail performance in the nation. And then 
you were averaging only 82 percent on time delivery. Today you 
boast a national on time delivery rate of 92 percent for first 
class letters. There are still concerns about two and three day 
delivery rates in some places, but I think you certainly can be 
congratulated for the progress that you've made.
    I was also struck by the remarks you made at that same 
forum, about your vision of the future of the Postal Service 
you had when you took over six years ago. You spoke of freeing 
the Postal Service from the ``burden of rules and red tape, of 
outdated systems, and cumbersome procedures.'' You also spoke 
about being able to ``keep pace with smaller, more agile 
competitors, lightening fast technologies that were springing 
to life on the communications landscape.'' Although there are 
many in Congress, as well as in the private sector, who will 
criticize you for some of the innovations, as you've looked for 
ways to make the Postal Service more businesslike, I think that 
in the long run your business vision and the expertise in 
management that you've brought to this organization have served 
your customers very well.
    I think the evidence of this is in the last three years, 
the Postal Service has actually earned more than $4.6 billion, 
instead of losing money, as has been the case for the last 23 
years. After nearly four years of steady stamp price increases, 
the Postal Service is looking at raising the price of the first 
class stamp by only $.01. This is less than half the rate of 
inflation, the lowest proposed rate of increase in the 26 years 
of the Postal Service.
    I don't necessarily agree with all the business operations 
that you've pursued, particularly some of those that have a 
real impact on small businesses. But, I think that, in general, 
you have been smart to look for ways to satisfy your customers 
by expanding operations and offering new services. This, too, 
has paid off. The American people have just given the Postal 
Service the highest favorability rating among all the Federal 
agencies, a rating of 89 percent. I am certain that Congress 
does not come close to those levels. We know it doesn't come 
anywhere close to that. So maybe you can give us just a few 
tips as you go out the door hear about what we could do to 
improve our ratings.
    Postmaster General Runyon, I look forward to your testimony 
this afternoon. Before we call on you, let me see if Mr. Hoyer 
has some opening remarks.

                     Opening Comments by Mr. Hoyer

    Mr. Hoyer. Thank you very much, Mr. Chairman. I share your 
remarks, of course. I may not have some of the concerns you 
have. Let me make some comments, however, about General Runyon.
    The United States of America is blessed, on a regular 
basis, by having some extraordinarily capable people who have 
been very big successes in the private sector, who agree at 
very, very, very substantial financial cost to them, to come 
into public service, and to lend to the public service their 
experience and their talent. Their experience from the private 
sector on carrying about the bottom line, so that the 
enterprise which they had, will be a profitable enterprise.
    In the Postal Service, of course, unlike some other 
agencies in government, we can see a bottom line, which makes 
the analysis a little easier. But, Mr. Runyon's tasks, Mr. 
Chairman, you were not on this committee at that point in time, 
but, nevertheless, the subcommittee, but you were on the full 
committee and obviously knew of the challenges that confronted 
the postmaster general when he took over this responsibility. 
He has done a magnificent job. That is a word that I use 
advisedly, not just to guild the lily. He came in at a time 
when the Postal Service performance, even not--the ratings were 
still pretty good because when the Postal Service is down a 
point, you tick off millions of people in terms of delivery.
    The volume they do, if you're not hitting 1,000, the 1 
percent that you don't do right, there are a whole lot of folks 
who are affected, just because of the volume. So, there is a 
lot of criticism. And the Postal Service was not doing nearly 
as well as it should have been doing when Marvin Runyon took 
over the helm.
    There were a number of Members of Congress who wanted him 
to resign before he started. I told them I thought they were 
being a little premature. I was concerned about the 
performance, but they were being premature, and that we ought 
to give somebody who had performed so very, very well in the 
private sector, and so very well in the quasi-public sector--I 
suppose TVA would be somewhat like the Postal Service--a chance 
to exercise his judgment and leadership.
    And, Mr. Postmaster General, all of us who have seen you 
operate in the last six years, I think are very, very proud of 
what you've done. You have done so at times when I think there 
was unfair criticism, and, as is so prevalent in public life 
today, a questioning of your integrity where a lesser person 
could have said, ``I don't need this, I'm gone.'' You did not 
do that. And, I have great respect for you for that reason 
alone.
    But, in this country, it is popular, or sort of fun, to 
poke fun at the Postal Service. But the Chairman is absolutely 
right. I guess there are about 15 government agencies on this 
list of favorability ratings. When the Postal Service is number 
1, and has almost 90 percent of the American public, 9 out of 
every 10 Americans, saying that the Postal Service is an agency 
for which they have a favorable opinion, is a magnificent 
achievement.
    Mr. Chairman, it's an achievement for Mr. Runyon, of 
course. But, as any good manager will tell you, you don't do it 
alone. If you're the quarterback, you need somebody to catch 
the pass, run the ball, and block, and you need a defense that 
can do the job. You can not win the game alone. I don't care if 
you're Michael Jordan in basketball, you've got to have Rodman 
getting the ball off the boards and getting it down, and you've 
go to have Scotty Pippin. They've also got to watch so they 
can't put four people on you. You've got to have a team.
    And the men and women of the United States Postal Service--
management, postal workers, people who deliver the mail, people 
who sort it--every one of those people have responded to Mr. 
Runyon's leadership and, with teamwork, accomplished a great 
deal. Not only for the Postal Service, but, in my opinion, for 
the public's better faith in government.
    Let me say something about your comment on not agreeing on 
some of the things he's done, because of small business. 
Frankly, the United States Postal Service is one of the oldest 
government services we have. And the United States public, Mr. 
Chairman, wanted to have a postal service on which they could 
rely, and they wanted it to be a public service so that it 
would not be solely driven by profit, butbe driven, as well, by 
service. So that even in small communities in Arizona or Maryland, or 
in Kentucky, you would get good service. Obviously, you'd get good 
service in Louisville, or Phoenix, or Bowie, where there are large 
numbers of people and it's economic to do so. So, that's an additional 
challenge.
    But, I think what Mr. Runyon has brought to the Postal 
Service is what I hear on both sides of the aisle--we want 
every leader to bring to government--and that is business 
practices that the public will respond to and, therefore, will 
provide a profit. Again, of either a profit because service is 
better, or profit in terms of bottom line economics.
    And so, Mr. Runyon, not only do I not disagree with that, I 
understand there are some folks in the private sector who are 
also in business of delivering parcels or messages, or 
whatever, and God bless them. I think it makes you, as a Postal 
Service, better. Competition makes us all better. Arizona and 
Maryland are better teams because they've got to gear up for 
one another. If you always play in the boys' club and you are a 
college team, you wouldn't do nearly as well.
    And I know this has been a little extended, Mr. Chairman, 
but I think it is right and proper when we in Congress, who are 
very fast to criticize those who carry out executive 
responsibilities, to make sure that when executive 
responsibilities are carried out with the degree of success 
that Mr. Runyon's service in the United States Postal Service 
has reflected. It is absolutely essential that we acknowledge 
that, congratulate you, and thank you for what you have done 
for your Country, and for the United States Postal Service. 
Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you very much. If there are no other 
opening statements, let me turn to Mr. Runyon for your 
testimony, and remind you that, of course, the full statement 
can be placed in the record, if you wish to summarize it for us 
today. Mr. Runyon.

                 Postmaster General Runyon's Statement

    Mr. Runyon. Well, thank you, and good afternoon, Mr. 
Chairman and members of the committee. Joining me today is the 
Deputy Postmaster General, Mike Coughlin. As you say, I have 
submitted a written statement for the records, and, in the 
interest of time, I'll briefly summarize it, and then Mike and 
I would be pleased to answer any questions that you may have.
    As you said, today marks my final appearance before this 
subcommittee, and I want to thank the members for your strong 
interest in the nation's mail system. Your counsel and support 
have been valuable to me and to the Postal Service. You've also 
been generous with your praise when our employees have 
delivered better service and financial performance, and we 
appreciate that.

                         appropriations request

    We're here today to request an appropriation of 
$100,195,000 for Fiscal Year 1999. That money represents 
postage to the Postal Service. The beneficiaries, however, are 
persons designated by Congress to receive reduced postage 
rates, which in this case, are largely free mail for the blind, 
and overseas voting. The Congress has recognized a special need 
to support communications for the blind, and to ensure that 
Americans abroad are not disenfranchised from their right to 
vote. These two services are also representative of a far and 
larger duty that Congress has entrusted to the Postal Service 
to bind the nation together through universal mail service. As 
a consequence, all Americans rely upon the Postal Service to do 
business, stay in touch, and carry out their civic 
responsibilities.
    There is considerable cost involved with this mission, too. 
The cost of keeping open thousands of small post offices that 
do not pay their own way. The cost of delivering letters at a 
uniform price to all areas of the Country, no matter how great 
the distance or how remote the location. At the same time, the 
Postal Service is chartered to operate like a business in a 
very competitive market place, and to pay its own way. Some see 
these goals as incompatible. The truth is, a self supporting 
universal service must be run like a business, or it will cease 
to be either self supporting or universal.
    I believe during the past six years, the Postal Service has 
shown that it's possible to do both. Recently, as you've said, 
the American people did cast a strong vote of approval for the 
job that the postal employees are doing. As you said, 9 out of 
10 Americans gave the Postal Service the most favorable rating 
among agencies in the Federal Government, and this report also 
said, and I quote, ``The Postal Service stands out from other 
departments.'' The Postal Service stands out because postal 
employees stand out. It's over 770,000 career postal employees 
whose dedicated service makes all of this possible. They've 
brought dramatic change to the Nation's mail, and I am very 
proud of them.

                     postal service transformation

    The Postal Service began a significant transformation in 
1992. It started with a restructuring to make the Postal 
Service less bureaucratic, more efficient, and more customer 
focused. That same focus and intensity has since been brought 
to virtually every facet of our business, and we have 
integrated change, quality, and customer focus into the Postal 
Service through CustomerPerfect, the way we manage our 
business. Based on Malcolm Baldrige business principles, 
CustomerPerfect integrates our plans and programs for maximum 
effectiveness. It brings together everything, market 
assessments, planning, budgeting, training, resource 
allocations, and major initiatives of every kind, in an 
understandable and actionable way. It sets specific performance 
targets, ties them to employee compensation, and tracks our 
progress.
    These targets are included in our five-year strategic plan 
presented to Congress, and they are updated in our yearly 
performance plans to you. More importantly, they are a road map 
and time line to the measurable service improvements. Not just 
for local first class mail, but for two and three day 
deliveries, priority mail, and bulk business mail. We are also 
adopting new ``Ease of Use'' measures, to make it increasingly 
easy for customers to do business with us. We are confident 
these efforts will be successful because they are built on a 
foundation of success.
    The real price of postage is going down. In 1995, after 
four years of price stability, we implemented one of the lowest 
rate increases ever--two full points below inflation. Last 
summer, we requested the lowest increase in our history. It's 
less than half the rate of inflation, and only a single penny 
on the first class stamp. Postal employees have also delivered 
record service. In 1994, 79 percent of local first class mail 
was being delivered overnight. That figure has steadily risen 
to a high of 92 percent at the close of Fiscal Year 1997. 
Service is up across the board. In rural and suburban areas, 
and in all of America's large cities. We expect a new record in 
1998.
    The Postal Service is also well on the road to financial 
health. And, while on road, to fulfilling the legislative 
mandate that our finances break even over time. The $4.6 
billion net income of the last 3 years has cut our accumulated 
losses since reorganization by more than half. We have $4.4 
billion yet to recover, and a strategy in place to do so. 
Achieving that goal is vital. Market price challenges are 
growing. We face competition for every message, package, and 
payment that we deliver.
    The rise of the internet and increasing numbers of personal 
computers in American households threaten half of our first 
class mail volume; the bills, payments, and statements which 
provide nearly 30 percent of our revenue. At risk is not only 
the heart of our business, but the underpinning for the 
universal mail network that has served this Nation so well for 
over two centuries.
    The Postal Service must continue to create customer value 
through cost control, price restraint, and service improvement. 
It must continue to promote growth through opportunities in 
parcel services, global markets, and in satisfying customer 
needs. We've committed $17 billion over the next five years to 
build the infrastructure and capabilities that are required.
    The Postal Service is on the move. We are committed byword, 
deed, and dollar to a transformational path that will keep us a vibrant 
communications force in public service in the 21st century. I 
appreciate the support of this subcommittee and this Congress as we 
move forward.
    Thank you, Mr. Chairman. Mike and I'd be glad to respond to 
any questions you have.
    [The information follows:]

[Pages 8- 15--The official Committee record contains additional material here.]


                       ``non-postal'' operations

    Mr. Kolbe. Thank you very much, Postmaster General Runyon, 
and let me begin by just asking a couple of questions on your 
non-postal commercial operations.
    The report that you submitted to the Committee a month ago 
says that non-mail, or non-postal type of activities helps to 
finance the unprofitable public services. And you say that they 
therefore protect rate payers. In what ways do these non-postal 
operations protect rate payers?
    Mr. Runyon. Any revenues that we obtain in any way help to 
keep our rates low. And we want to keep our rates low and 
constant. As I said before, in the past, well, 6 years, we've 
only had one rate increase. After 3\1/2\ years, we're only 
going to raise our rates one penny, and, I think that it's very 
important that we look at everything we do to see what we can 
do to increase our revenue so that we can maintain a very low 
rate on postage.
    Mr. Kolbe. What are the revenues you generate from the non-
postal operations, as opposed to the postal operations? Just 
give me some comparison.
    Mr. Coughlin. My recollection is that on merchandise, it's 
in the neighborhood of 25, $26 million, and on packaging 
products, it's about $53 million, Mr. Chairman. We can provide 
the specifics of it to you, but----
    Mr. Kolbe. Million?
    Mr. Coughlin. Millions, right.
    Mr. Kolbe. As opposed to what is your postal revenue?
    Mr. Coughlin. About $60 billion. It's very small.
    Mr. Kolbe. So, it's tiny. Some of your non-postal 
operations do lose some money. I think your, what's called the 
Dinero-Seguro program, where Mexican customers can transfer 
money electronically to friends and family in Mexico. Phone 
cards have been revenue losses. How do you make a determination 
as to how long you keep those services around before you decide 
to drop them, since they're obviously not basic to your 
operation. There can be no justification for keeping a money 
losing operation.
    Mr. Runyon. Let me take a shot at that, then you can 
follow. Actually, both of those operations are something that 
we are trying out. We pilot those in certain of our locations 
and then we expand on them. And that's the phase that we're in 
right now. I will say, though, that we issue a lot of money 
orders, and Denero-Seguro is an extension of the money order 
business. I think we had, what, 200 and----
    Mr. Coughlin. 206,000,000 money orders issued last year.
    Mr. Runyon. Yes, for $26.4 billion. So, we have been in the 
money order business for what, over 100.
    Mr. Coughlin. One hundred years.
    Mr. Runyon. One hundred-and-some-odd years, and this is 
just another way of using the money order. And we were asked by 
the Mexican Government to try to figure out how we can help 
them. It's very difficult for them to assure delivery of money 
orders through their mail system. Much more difficult than it 
is for us. We don't have this as a problem like that. And this 
Dinero-Seguro, what that does it provide a way for people to 
receive their money without having to have the chance of it 
disappearing somewhere. So, I think that's a very important 
thing. I think you had some other information on that.
    Mr. Coughlin. I'd comment on, first of all, on the phone 
cards. We have just crossed over into a situation of 
profitability with the phone cards, and we're pretty confident 
that's going to stay that way. How long we stay in that 
business depends. We have, right now, an alliance with an 
external company to provide that. It will go on for the next 3 
years. Denero-Seguro is in a test phase. It now covers about 
900 post offices in the southwest part of the United States. 
We're seeing increasing, we're seeing the revenues and the gap 
between expenses and revenues close over that. And we are 
reasonably confident that that's going to become a profitable 
situation fairly soon. We are due to examine it again later 
this year, and we'll make a determination at that point as to 
whether or not we should go forward.
    Mr. Kolbe. The figures you gave me earlier on non-postal 
operations were net revenues, were they not?
    Mr. Coughlin. They talked about two categories of revenues 
here. One was the merchandise.
    Mr. Kolbe. Right.
    Mr. Coughlin. That's associated largely with.
    Mr. Kolbe. And you said you thought that was about.
    Mr. Coughlin. That's in the range of $25, $26 million, as I 
recall. There is also a whole range of packaging products we 
provide.
    Mr. Kolbe. Right. But those are net, right?
    Mr. Coughlin. No. Those are gross.
    Mr. Kolbe. Those are gross?
    Mr. Coughlin. Those are gross numbers, okay. These do not 
include revenues from--these do not include revenues from the 
phone cards or Denero-Seguro. Those types of----
    Mr. Kolbe. And the other communications kinds of things.
    Mr. Coughlin. Right.
    Mr. Kolbe. One other question here: How do you, make a 
determination about what kinds of services to go into, what 
kinds of non-postal operations to go into? Like any business, 
you would do a marketing study. But, I mean, what is the basic 
thing in which you--the first question you ask--is this 
something we should even be looking at.
    Mr. Coughlin. I think the first thing is it is driven by 
the customer. Is the customer asking for it in any way shape or 
form? Is it an extension. Is it a logical extension of a 
service that we have traditionally provided. I believe, for 
example, Denero-Seguro is. Does it leverage a significant 
institutional asset, such as our stamp program and our stamp 
images. It's those kinds of questions that we ask. And, in 
fact, if you look closely at the activities, the merchandise, 
and the products we're in, you can usually find one, it's 
customer driven, or two, it's related to one of those other 
things.

                          philatelic marketing

    Mr. Kolbe. I was going to ask how selling Looney Tunes ties 
ties in, but you're saying it's tied to your stamps?
    Mr. Coughlin. Absolutely.
    Mr. Kolbe. The marketing of stamps?
    Mr. Coughlin. Yes.
    Mr. Kolbe. Well, these are two marketing things that go 
together.
    Mr. Coughlin. Right.
    Mr. Kolbe. One stamps, one other product. Mr. Hoyer.

                        mail service performance

    Mr. Hoyer. General, I've been very proud of and have 
participated in a number of events with you, and Mike and 
others in the department, and want to say by the way, that 
Mitch King has been terrific to deal with. I mean, he does a 
greatjob for the Postal Service, and I want to thank him for 
all he does. We talked about getting from 68 to 76 to 83 to now we're 
staying pretty stable. In southern Maryland, we're up to 94. I guess, 
last time around, fantastic figures. West Virginia, we had a problem, 
obviously, because, you know, competition always generates somebody who 
wants to make themselves look better by cheating. What happened there 
and where do we stand on that, and how are we making sure that doesn't 
happen in other places?
    Mr. Runyon. We had a group of employees that had figured 
out a way to improve their performance, which was not a way 
that we thought was very good. We took immediate action to 
solve that problem, to get rid of that problem, and we have 
looked at how we can safeguard the entire system from doing 
that, and have put in place things that will safeguard the 
system. So, we had something that went wrong, and we fixed it.
    Mr. Hoyer. And I want to, in an era where the vice 
president is saying, ``do more with less, have an 
entrepreneurial spirit, have an initiative,'' people are going 
to mess up either inadvertently or venally, if you will. And 
we've got to take that risk. The good news is, in this 
instance, and I think it's a perfect example, where you got on 
top of it right away, solved the problem right away, and we're 
moving on. I think the system is better for it, and I wanted to 
bring that out because I think, you know, when you've got, how 
many employees do you have now, 100 and----
    Mr. Runyon. Approximately 825,000.

                            stamp production

    Mr. Hoyer. Yeah. You know, you're going to have some people 
trying to get the edge. But, I thought you handled that well. 
The statistics are fantastic. BEP, as you know, which your 
stamps are a part of this committee's jurisdiction, and the 
director came in and said that stamp demand was going to be 
down. Can you explain that? Why are they projecting stamp 
demand down?
    Mr. Runyon. Well, first, some time ago--I don't know how 
long ago it was--it became apparent that they couldn't handle 
all of our stamp production. And, so, they told us that and we 
had to go outside and find other companies that could actually 
produce stamps. So that now then, we give the stamp production 
to those people placed on price, quality, and, just like you 
buy anything else. I'm not familiar with the fact that they may 
be going down. They may be, but that's not something that I 
keep in touch of all the time. But I'll be glad to supply for 
the record what's happening there.
    [The information follows:]

    The Postal Service has a five-year agreement with the 
Bureau of Engraving and Printing to produce postage stamps from 
1998 through the year 2002.
    Under the terms of the agreement, the Bureau will print a 
minimum of 22 billion stamps in fiscal year 1998; a minimum of 
18 billion stamps in fiscal year 1999; and for fiscal years 
2000 through 2002, a minimum of 15 billion stamps annually.

    Mr. Hoyer. That would be interesting because, obviously, 
they do believe it. But it's not, as you are pointing out, 
because of a lack of business that the Postal Service has.
    Mr. Runyon. No. Capacity and competitiveness enters into 
that, and that's another area where we need to be competitive 
in every area of government. They need to be competitive, too, 
and I think they are.

                         worker's compensation

    Mr. Hoyer. Good. Next question. Worker's compensation. Over 
the past few years there's been a lot of discussion, obviously 
surrounding worker's compensation programs. The Department of 
Labor has been looking at this and various approaches of 
managing health care costs in worker's compensation programs. 
What efforts has the Postal Service taken to review private 
sector approaches as a means of controlling its health care 
costs?
    Mr. Coughlin. Well, we've----
    Mr. Hoyer. Under the worker's compensation claimant? I'll 
ask in that context.
    Mr. Coughlin. We've talked to numerous external consulting 
firms. We've talked to other federal agencies who were involved 
with the Federal worker's compensation program. We've talked to 
those familiar with the State systems, as well. The private 
sector systems. And the upshot of all of that, I think has 
been, what I would characterize as a world class operation on 
worker's compensation, in terms of the way we manage an injury 
if it occurs. And we do that in a variety of ways. We put 
extensive staffing, well trained staffing, out in our field 
organization to manage an injury once it has occurred, dealing 
with the suppliers, the doctors and the hospitals, that type of 
thing. We work directly with the Office of Worker's 
Compensation at the Department of Labor.
    More importantly is managing the safety program, itself, to 
try to avoid those injuries. And I think we've had significant 
success in that area.
    For example, if you look at the Postal Service and its 
industrial type operation, we have this year, so far, a lost 
work day injury rate of 1.65. That compares to an industry 
average in the private sector of about 3.4 lost work day 
injuries. And if you look at similar kinds of companies, 
trucking, courier services, those types of things, you'll see 
lost work day injury rates between 5 and 6. I think we've made 
substantial progress in that area. We're not going to be 
satisfied, though, until we've got both the injury rate itself, 
and obviously, the worker's compensation cost that follows 
those, down to zero.

                    breast cancer semi-postal stamp

    Mr. Hoyer. Very impressive. Thank you. Now, last question, 
if I might, Mr. Chairman. This is a day for kudos, I suppose, 
but it seems like a lot of my good friends are leaving what 
they're doing.
Vic Fazio, one of the finest members of this Congress, is 
leaving. And he wanted me to say thank you, to you. You know, 
he is very interested in the breast cancer stamp, and he wanted 
me to pass along to you his real appreciation for the work that 
you and your staff have done in facilitating the moving ahead 
on this. And can you just briefly tell us about your plans to 
insure the success of the stamp, and what's the time line for 
determining the rate?
    Mr. Runyon. The stamp has to be issued before August 13 by 
legislation, and the Board of Governors will make a decision on 
that, and we're going to be presenting to the board at this 
meeting, some information about what it will cost us to make a 
record of all the stamps we sell. You see we're going to sell 
those for more than the face value. Congress said that we could 
charge up to, I believe, 25 percent, which would be $.08 over 
the $0.32, and the board has to make that decision, as to what 
they want to charge, and what our cost will be. And those are 
interdependent, so we need to figure that out. But, we'll be 
presenting that to our board in April, and we'll have more 
definitive information at that time.
    Mr. Hoyer. Mr. Chairman, I said that's the last, and I know 
I'm trespassing on time, but, I'm sorry. You issued a stamp 
that I think everybody on this committee would want to use, and 
that's the state flag, it was a $0.15 stamp or $0.16. It's very 
old. I'll admit to the fact that you can't keep using a stamp 
you really like by somehow upgrading its value. You don't need 
to answer that question now, but I know when it was a 
viablestamp, every state liked to use it, particularly members and 
politicians, in particular.
    But when we got over the value, you couldn't use it any 
longer. We ought to think about how a popular stamp could be 
upgraded in terms of value. Excuse me, Mr. Chairman. He doesn't 
have to answer that, but, I think everybody on the committee 
would be for it. We'd like to do that.
    Mr. Kolbe. Thank you very much, Mr. Hoyer. Ms. Meek.
    Ms. Meek. I want to congratulate Mr. Runyon for the job 
he's done, and I wish you all the best in whatever you seek to 
do, and I'm hoping the leadership that follows after you will 
have the same kind of outlook you had for the growth of the 
Postal Service.
    Mr. Runyon. Thank you.
    Mr. Kolbe. Thank you very much, Ms. Meek. Ms. Northup.
    Ms. Northup. Yes, thank you.
    Mr. Kolbe. Would you turn your microphone on, please?

                      postal service improvements

    Ms. Northup. Thank you. Mr. Runyon, before I ask you some 
questions that are of concern to me, I do want to tell you that 
I think that the American people and their polled numbers are 
reflected by our own experience when we go to the post office; 
that, in fact, there is a wonderful climate and culture of 
service. It is different than it used to be. The hours are 
changed so that those of us that work always have late hours of 
service. There's always a place you can go for 24-hour service. 
There is a sense that, instead of doing us as postal customers 
a favor, that they are pleased to have us there.
    And, I have to tell you that, it is so distinguishable 
between what maybe Americans knew for years, that it's ruined a 
lot of good jokes from the past. People used to talk about the 
post office, but it's there, and my constituents really 
appreciate it. I really do think that you brought part of the 
culture that's sweeping American businesses to the post office, 
and that is the culture that, if you're going to be successful, 
if you're going to be profitable, that the consumer is No. 1. 
How do you adjust to that culture? You adjust products, 
service, and so forth, to meet the consumers' needs.
    But there's also a difference between the post office and 
business, and that is, that the post office does have a 
monopoly that's guaranteed to the post office. Something that 
no businesses have. In fact, we saw from Microsoft last week 
that, if we suspect any business has contrived to create a 
monopoly, we intervene and ask the Justice Cabinet to 
investigate, and so forth. So, that's a reason that there are 
limitations.
    The challenge to be profitable is to make the monopoly that 
you have more service oriented and more cost efficient. And, I 
recognize that a lot of that has been very tough. The Postal 
Service has seen, I think, just as Ford Motor Company or any 
other company has experienced, that people who have been in a 
job and done the same thing for a long time find that, change 
is hard. They're not sure what direction it's going in.
    There's certainly some consternation among the employees 
who actually carry out the work. And that's something that 
your, the post office has had to work through.
    But, back to the question of a monopoly versus the private 
sector, based on the fact that you have a monopoly, of course, 
if you are so efficient that you actually create a profit, or 
if you do everything you can and you can not create a profit, 
you're able to raise the price of stamps and cover those 
losses. So, likewise, as you branch out into other fields, or 
other endeavors, if your costs don't cover the price of those 
endeavors, you can actually subsidize them with the first class 
postage. And it has been very difficult to understand how you 
can offer the prices and the services that you do when you 
compete with the private sector.

                          global package link

    For example, to ship a 10-pound package from San Francisco 
to Great Britain, using UPS, would cost $94. To ship the same 
package, using DHL, would cost $131. However, the Postal 
Service can ship the same package using GPL, for only $36. To 
ship a 10-pound package via express mail from Washington to 
Baltimore, costs $29, almost the same amount as overseas. So, I 
wonder first of all, how the costs can be so close to deliver 
domestic and international mail, when they aren't for the 
private sector.
    Mr. Runyon. Do you want to answer that?
    Mr. Coughlin. Well, I can't. I can't respond to it 
specifically, off the top of my head. I guess we can provide 
you some information for the record, as we have it available. 
Part of the, and I can't speak to the price and practices of 
DHL or UPS or others, I just don't know. But part of the thing 
you've got to look at is the difference in the handling that 
goes on.
    For example, in your example from Washington to Baltimore, 
as opposed to, was it San Francisco to Washington, or something 
like that, that difference, most of the cost that we incur in 
those kinds of situations, has to do with the personal 
handling, and less with the transportation. So you'll find some 
of the differences in that, as opposed to just simply the 
distance that it is transported.
    Ms. Northup. Well, I guess what I'm saying is, if I mail 
something from here to Baltimore, I pay almost as much as I 
pay, if I send something to England. Can you explain how those 
rates could be the same?
    Mr. Coughlin. Because the handling, there may be little 
difference in the handling. The actual personnel handling 
involved in that. Okay. And, it's the personnel handling that 
generally drives the cost.
    [The information follows:]

    The specific comparison that the $29 cost of a 10 pound 
Express mail item from Washington to Baltimore is almost the 
same as that of a GPL package sent from San Francisco to 
England is a severe apples to oranges distorted comparison. 
Express Mail is the Postal Service's premium service product 
which provides a money-back guaranteed overnight delivery, and 
up to $500 indemnity against loss, damage, or rifling. Express 
Mail items are handled manually as a single piece, and a 
signature is obtained upon delivery. No such service is 
afforded a GPL shipment.
    Further, the example of GPL rates compared with UPS and DHL 
published rates is another comparison of apples and oranges. 
GPL is a bulk package service. A customer must have the 
capability of mailing 10,000 or more packages per year using 
GPL. The rates mentioned for UPS and DHL are published prices 
for a single piece shipment. In fact, GPL rates are not 
substantially lower than bulk services provided by private 
carriers. Customers have told us that we were not awarded 
business because GPL is priced higher than such services.
    All private delivery companies offer volume discounts for 
international and domestic shipments. For example, recent 
newspaper and magazine advertisements for FedEx and American 
Express offer customers 10 percent off domestic shipments and 
20 percent off international shipments if the American Express 
card is used to pay for the shipment. Higher volume customers 
receive higher discounts. These discounts reach 50 percent or 
even more off the published prices. The actual discounts are 
held confidential by the private delivery carriers.
    Both UPS and FedEx provide hundredweight pricing for large 
volume customers that ship 100 pounds or more on pallets to a 
single destination. The rates charged for this service are 
often below GPL rates, ranging from $3.30 to $4.15 per pound.
    In addition to the private delivery companies, freight 
forwarders compete in this market. Their confidential pricing 
is often based upon hundredweight for shipments sent on 
pallets. We have been told by customers that their pricing is 
significantly below GPL pricing, particularly to Canada and 
South America.
    GPL is designed to enable mail order companies to do 
business overseas. It supports American companies to export 
merchandise, particularly to households. GPL pricing covers all 
attributable costs and makes a contribution to institutional 
costs.

    Ms. Northup. Do you have any comparison of the difference 
in personnel costs of UPS and the post office?
    Mr. Coughlin. I, not that I'm aware of. I mean, we note 
generally what their pay rates are, but in terms of their 
costs, no, I don't. I don't think we do.
    Ms. Northup. And how did the pay rates compare?
    Mr. Coughlin. It depends on the category of the employed. 
In some cases, they are above us, in some cases they're below 
us.
    Ms. Northup. So, it would seem sort of odd that it's almost 
four and five times more expensive for them, than you.
    Mr. Coughlin. Well, that depends on how much margin is 
built into those prices. I just don't know.
    Mr. Runyon. We don't build excess margins into our profits. 
We just don't do that. And I don't know what kind of margin 
they have. We have no access to what they do, and how they 
chart it.
    Ms. Northup. When you say ``margins,'' I mean, Mr. Runyon, 
have you actually spent any of your time talking about GPL 
service?
    Mr. Runyon. Yes, I have.
    Ms. Northup. And is some of your salary and your bonuses 
part of what you attribute to the GPL costs?
    Mr. Runyon. No, I don't think it is. First, I don't get a 
bonus. You should know that.
    Ms. Northup. Okay.
    Mr. Runyon. Secondly, excuse me. It's a very small amount 
in GPL, at this present time. I might say to you, though, that 
the reason we're in the GPL business is because our customers 
asked us to get in that business. They asked us to that so that 
we could be a benefit to them.
    Ms. Northup. Well, actually, I can see why, if I'm a 
customer. I'm sorry, Mr. Chairman, could I continue for a 
minute. I really would have made some of the first ones in an 
opening statement. Do you want me to come back? I just had 
quite a few questions.
    Mr. Kolbe. We will have another round of questions. Go 
ahead and finish the question that you're on. I'm just, we have 
indulged it a little, about three or four minutes longer.
    Ms. Northup. Okay, that'd be great. Thank you.
    I guess my question is that if you and the people who 
answer questions about GPL and plan what your customers want as 
part of the functions of management, it seems to me that in any 
other company, a share of those management costs and other 
costs, including computer costs and overhead, are attributed to 
each project. That's what I mean by cross-subsidization--if 
First Class mail is paying for all of these functions. And, as 
far as your customers are concerned, I can see why they want 
it. If I'm a customer, and I want to ship for $36 and right now 
I'm paying $131, really, if somebody could come in and provide 
the service for $18, I'd probably like that.
    Mr. Runyon. Well, what you're talking about is exactly what 
is happening in this country. We have priority mail that we 
ship for $3. Our competitors charge $7, $8, $9 for that. We 
have a good margin of profit in the $3, and, so the same thing 
holds true. In GPL this holds true, in the local market.
    Ms. Northup. But that express mail is part of what is 
overseen by the board and the prices, and you're allowed to 
cross-subsidize your----
    Mr. Runyon. No, we're not.
    Ms. Northup. You're not.
    Mr. Runyon. No. We do not cross-subsidize.
    Ms. Northup. Okay. Thank you, Mr. Chairman.
    Mr. Kolbe. We'll have another round of questioning. Mr. 
Price.
    Mr. Price. Thank you, Mr. Chairman. Mr. Runyon, I want to 
add to the accolades you've received here today.
    Mr. Runyon. Thank you.

                         postage rate increase

    Mr. Price. I'd like to ask you about the proposed penny 
rate increase. In recent years, the Postal Service has been 
running substantial surpluses, I understand. That's one of your 
major successes, in fact. And yet, you are seeking a postage 
rate increase. I'd like to get your read on why it makes sense 
to raise rates now, and I'll tell you why I'm so interested in 
making certain the Postal Service has adequate resources. It 
has to do with facilities.
    Over the last year I've been working closely with three 
one-post communities that have simply outgrown their post 
offices. The lone post office, for example, in Mebane, North 
Carolina, dates back to the Roosevelt era--one of those red 
brick buildings. It's not been expanded or renovated in any 
significant way since its construction. The postmaster tells me 
he's adding one new route about every 18 months. It's a high 
growth area. Space has become so tight that the carriers can 
barely get the mail in and out of the building.
    And this is the case throughout much of North Carolina, 
especially in high growth areas, like the one I represent. In 
fact, we have facilities that have been on the Service's five-
year construction plan since the 1970's, so, of course, it's 
not exactly a five-year plan. But even if the Postal Service 
were willing to commit unlimited resources to constructing all 
the new facilities you need in North Carolina, you would not 
have the resources or the personnel to make it happen.
    One of your young employees, Mr. Don Mackey, has been very 
helpful to me. He's done a good job in going to communities, 
like Mebane, assessing facilities throughout most of North 
Carolina. But with over 200 facilities under his purview, he 
would have to visit one every working day to see them all in a 
year, much less do all the work involved in siting and 
constructing new facilities. So, although you have excellent 
people working for the Postal Service, but they're being taxed 
to the limit. Many of your facilities are being taxed to the 
limit. And ultimately, that's got to affect your ability to 
deliver the mail.
    In light of all this, I think it's important that you 
utilize this rate increase to expand your personnel resources 
and upgrade your facilities. I hope that's what the increase is 
all about, but I would appreciate knowing what your thoughts 
are on moving forward with it and how you plan to utilize it.
    Mr. Runyon. We expect to get PRC recommendations on this 
increase about the middle of May, and, at that time, the board 
will make a decision on when to move forward, and whether to 
accept the recommendations as they are made, or not. But one of 
the reasons, my personal opinion is we need to move forward 
with that increase immediately, when we can, because we do have 
a $17 billion capital investment program for the next five 
years. That's up about twice, from what it was.
    And we need to spend that money for the reasons that you're 
pointing out. We need more automation in to our system, because 
with automation, we can improve the system even more and get it 
more accurate, get deliveries better. So we need to have all of 
that.
    We have increasing costs in this. We've said before, we 
went four years without a rate increase, and now we've gone 
three-and-a-half years without a rate increase. This is while 
our competitors, one competitor, UPS, raises their prices for 
the past three years between 3.5 to 4 percent. During that 
period of time, we've had no increase. And now, then, we're 
talking about a $0.01 increase in June.
    So, it would be our intention, my intention, to move 
forward with that as fast as we can and get the things that we 
need to do in place, so that we can continue to improve our 
facilities, and improve our service. Our service is the most 
important thing to us--service--to make sure that we improve 
it, continually, and we're continuing to do that.
    Mr. Price. Well, there are many components that go 
intoimproving service, including the kind of cultural changes that 
you've made at the Postal Service. But, surely, facilities are a 
critical component of what we're talking about. How common is it around 
the country for communities to find themselves on the so-called five-
year plan for 15, 20 years? Is this unique to North Carolina?
    Mr. Runyon. I don't think it is. We update the five-year 
plan every year, and what happens is that things become more 
critical for some other organization that needs that money 
worse. I don't know that it's a wholesale problem in the Postal 
Service. Like I don't think that every area has got that many 
problems that you're talking about. I intend to look at those 
problems and see what's actually happening to those, as a 
result of what you said. But, I don't think it's a serious 
problem in the Postal Service, other than we do have to 
continue to upgrade our facilities. There's just no question 
about that.
    Mr. Price. And it takes a certain basic level of personnel 
to keep this all up. It appears to me, having gone through this 
recently, that your personnel who are involved in not just in 
the siting, but in the oversight of all these facilities are 
stretched pretty thinly.
    Mr. Runyon. We have very good people. They're able to do a 
very good job for us, and I'm very proud of our people and the 
job they do. And I think that they do go all out to do 
everything they can.
    Mr. Price. Well, we're impressed, as well, and we want to 
give you the support that you need.
    Mr. Runyon. Thank you.
    Mr. Price. Thank you, Mr. Chairman.
    Mr. Kolbe. Thank you very much. Mr. Aderholt.

                           postal facilities

    Mr. Aderholt. Thank you, Postmaster General Runyon, for 
being here today. I just had a, two or three quick questions. 
First, I want to ask about the Postal Service's process for 
studying and evaluating the need for post offices in a 
particular community, and what extent do you work with local 
officials and community leaders in deciding, in deciding this.
    Mr. Runyon. We have a regular procedure that we set up and, 
we've got a copy of that here, that we can have submitted for 
the record.
    [The information follows:]

[Pages 26 - 49--The official Committee record contains additional material here.]


    Mr. Aderholt. Okay.
    Mr. Runyon. The title of it is the, ``Community Relations 
Guide for U.S. Postal Service Facilities Projects,'' and we do 
talk to people in the communities anytime we decide that 
something needs to be done in the facility. We talk to them. 
Sometimes they talk to us first, as Representative Price has 
indicated. But we do deal with them very closely, and make sure 
that we solve the problems in that community.

                      postal uniforms procurement

    Mr. Aderholt. It is my understanding that the Postal 
Service has made the decision to pursue a centralized purchase 
process for employee uniforms. Of course, the program would 
move the Postal Service into the same kind of centralized 
process, used by a lot of Federal civilian agencies such as the 
United States Forest Service, the U.S. Custom Service, and 
others. Some private industries have also adopted the 
centralized purchasing system. In addition to the cost savings 
from such a program, the postal unions agreed to the program 
because of the potential for improved service. I understand the 
program has now been put on hold. I was wondering if you would 
discuss the current status of that situation.
    Mr. Runyon. The reason that has been put on hold is that, 
although what you say is the postal unions did agree with that, 
they have rethought that and we're going to be discussing that 
at our national negotiations in November, again.
    Mr. Coughlin. I might add, one of our principal partners in 
that process, one of the unions asked us to specifically hold 
off on that until we talk about it again in the upcoming 
collective bargaining process. That's really why we've set it 
aside. That, and the fact that, frankly, about 150 members of 
Congress expressed some concerns about the direction we were 
going with the thing.
    Mr. Aderholt. What were the particular concerns that they 
had.
    Mr. Coughlin. There were several. I think the primary one 
was what the potential affect might be on businesses and local 
communities who now either sold or manufactured uniforms for 
the Postal Service. I think we'll by and large satisfy those 
concerns with some of the material and the information we 
provided at the time. But, given particularly, the request we 
got from the American Postal Workers Union, we decided to hold 
off moving forward at this time. They are a partner in this 
process.
    Mr. Runyon. What you're saying is exactly right. That 
that's something we really could be doing, because it's a 
better way to do it. We can guarantee quality better from 5 or 
6 manufacturers of uniforms, with who we'd probably have. We 
wouldn't have just one. But there would be probably 5 or 6, and 
those would be rebid over each few years. We could maintain 
better quality of workmanship than we can now with some 200 
people supplying parts of uniforms. It's the better way of 
doing business, but, again, it's something that we will 
negotiate again with the APWU at negotiations.

                            financial status

    Mr. Aderholt. And lastly, I know that we've had some 
discussion this afternoon about advertising, but I understand 
that the Postal Service spent over $266 million on advertising 
in 1997, which was up from $236 million in 1996. Also, it is my 
understanding that the Postal Service has insisted that it will 
lose $228 million. If that is correct, how do you reconcile a 
not-for-profit Federal entity like the Postal Service spending 
more on advertising than projected losses?
    Mr. Runyon. Well first, the projected loss you're talking 
about is what we had at the beginning of the year, that was our 
budget. Through the time from then until we put in our rate 
case, that was revised, and I think that the number was what, 
$600 million, in the rate----
    Mr. Coughlin. Well, yes. The estimate----
    Mr. Runyon. There was a difference in the estimate, how we 
would end Fiscal Year 1997, that got tied up in the rate case. 
We initially thought we would make about $650 million, as I 
recall, in that past fiscal year. It turned out to be about 
$1.2 billion. Our plan, our financial plan, which was made 
about the same time for 1998, anticipated a $228 million loss 
at that time. We've since updated that. We don't think it's 
going to be, we actually think we'll have a surplus this year. 
But that occurs. When you make a financial plan you pick a 
point in time, you take a photograph, and you stick with that 
plan. But you update it as time passes and circumstances.
    Mr. Aderholt. Had that been the case, would you stillfeel 
that the advertising is crucial in relation to that?
    Mr. Coughlin. Yes.
    Mr. Runyon. Yes.
    Mr. Aderholt. All right. That's all for now.
    Mr. Kolbe. We're pleased to be joined today by a member of 
the full committee, Mr. Wicker, who will be recognized. Mr. 
Wicker.

                         ``nonpostal'' products

    Mr. Wicker. First of all, Mr. Chairman, I want to thank you 
for informing me about this hearing and for expressing an 
invitation to attend. I very much appreciate that. Also, in the 
brief time that I have, I would be remiss if I did not join the 
other members of the Committee in complimenting General Runyon. 
I first knew Mr. Runyon as Chairman Runyon when he came to 
visit Tupelo, Mississippi, the first TVA city, and, I don't 
know which job was more difficult, Mr. Chairman, the Tennessee 
Valley Authority or the Postal Service. But, I, too, want to 
wish General Runyon the best of luck in the future.
    As I'm sure you're aware, I waged a frustrating campaign 
during the last session of the Congress concerning an issue 
that's already been touched on today, and that's the non-postal 
commercial type services that the Postal Service is getting 
into. The chairman has already asked questions about revenue 
from these particular services and observed, I believe, that 
they were tiny, as compared to the total revenue required of 
the Postal Service.
    Mr. Hoyer mentioned that the Postal Service provides 
competition for some of the small businesses that are engaged 
in some similar services. And I think, certainly, we all stand 
for competition. Competition an American principal, but we need 
to make sure that it is fair, and even handed, and that no one 
is given an undue advantage.
    Let me ask you, if I might, about two specific services: 
package supplies, packaging supplies, and then to the pack and 
send proposal. In the report that you submitted, as a result of 
the conference report's request last year, I believe that you 
mentioned that packaging supplies have a gross revenue of 
around $53 million. Are you able to tell me what the net 
revenue is there? Is that a figure that you can arrive at, and 
how long have you been in the business of selling packaging 
supplies?
    Mr. Runyon. I personally can't give you that, but we'll 
supply for the record what that is, if we can figure that out. 
I'm not sure we can.
    Mr. Coughlin. And, Mr. Wicker, I can tell you, with direct 
personal knowledge, that we began selling packaging supplies in 
the Spring of 1972, in Portland, Maine, where I was the 
district manager at the time, and my secretary came in one day 
and said, ``how come I've got to go all the way down the street 
to buy a package to mail something,'' that being a jiffy bag, 
or something we called a jiffy bag at the time. That led to the 
introduction of those things. So they've been around a long 
time.
    Mr. Wicker. Okay. And, are they now sold generally in every 
post office, or most post offices?
    Mr. Runyon. I'd say the majority of the post offices. I 
would like to go back and talk about competition a little bit.
    Mr. Wicker. Well, okay.
    Mr. Runyon. The Postal Service used to deliver every 
package that was delivered in the United States. And then a 
company sprang up, and who now has a, almost a monopoly, on the 
package business. We have about 6 percent of the package 
business, and UPS has about 83 percent of the package business. 
Express mail. We started express mail, that was our product. 
We've kind of let that wain, Fed Ex came along and picked that 
up, but now they have a very large part of that business.
    Mr. Wicker. Why do you think those businesses developed, 
General?
    Mr. Runyon. Because we didn't do a good job. And that is 
why, now we're doing a good job, and we're beginning to hear 
from people who don't like the competition. Now, when they went 
into that business, we were no competition. We were just people 
doing that. We used to have all of the mailboxes in this 
country in the post offices, and somebody figured out a way to 
compete with us on that. And they are, and you know, more power 
to them. That's great. The more competition there is, the 
better we have to be. And, so we're having to be better. The 
pack and ship thing was something we started in California. We 
had----
    Mr. Wicker. When did you start that, General?
    Mr. Runyon. About three years ago.
    Mr. Wicker. Not long ago.

                             pack and send

    Mr. Runyon. Not long ago. We started that at the request of 
customers, because they would come in and they would buy the 
shipping material and say, ``you know, it'd be a lot better if 
you would just take this and do it for us.'' And so, we started 
doing that. We did that to find out if we could do it 
competitively. If we could do it and not lose money on it, 
because we can't lose money on services in the Postal Service. 
That's one of our givens. We just do not have lost leaders. We 
started that; we were questioned about that. The Postal Rate 
Commission came out with a ruling that that was a postal 
product and, therefore, they should set the rates. So we said 
okay, so we stopped doing it. We had to submit a proposal to 
the Rate Commission. They are now studying that proposal and 
they will determine what we should be charging for that 
product. When they make that determination--I don't know where 
we are in the 10 month cycle--it takes 10 months for them to 
figure out what a rate should be on anything. Whether we raise 
rates or reduce rates, it takes 10 months, which is something 
that I would like to change. I don't know how to do that, 
exactly. We've tried, but we haven't got it changed. And then, 
after they come back with that, it goes to our board, and our 
board will make a decision as whether to implement that, or 
not. So that's how that happens.
    Mr. Wicker. Okay. You have had to stop the pack and send, 
which was going to be my next question. I wanted the committee 
to require a little information about your expectations from 
pack and send, but we weren't able to get that through in the 
conference report last year. However, I understand from your 
filing with the Postal Rate Commission, that you expect about 
$5 million the first year, and the second year, $11 million in 
``profit from pack and send.'' Let me just tell you what my 
problem is with this, General Runyon. If you raise postal rates 
a penny, the first class, I'm told you're going to bring in 
$1.5 billion. With pack and send, you hope to make, the second 
year, $11 million. As the Chairman said, it is a tiny, tiny, 
amount, which I can't imagine really is going to affect postal 
rates very much in the long run. But when you do that, in a 
business that you've been trying to get into for three years 
now, you're competing with businesses that have been in this 
business for decades, some of them, small businesses, the kind 
of businesses that we like to encourage in the United States, 
and these are people who pay sales and property taxes. 
Oftentimes, they have a small business loan that they're having 
to pay which they took out when they were on one playing field 
and now, they find themselves faced with a separate playing 
field. They have mortgages on buildings and all of the problems 
that entrepreneurs face; small businessmen face in the United 
States.
    I just wonder if we are going to make such a ton of revenue 
off this, that it would save us from having to pay extra in a 
first class postage stamp, maybe I might be persuaded. But with 
such a tiny, tiny, expected revenue stream, does it seem fair 
to you that the Federal Government and this agency, the Postal 
Service, with all of its powers and size, can come in and 
compete with the guy that's paying sales tax, and paying that 
mortgage. Does that seem fair?
    Mr. Runyon. It goes back to the fact that our customers 
asked us to provide a service, and we're trying to satisfy our 
customers. If they want us to provide that service, we'll make 
every effort to provide it. We may not be able to compete with 
the people that are in that business now,because, I think 
you'll find that those people that are in that business pay less for 
labor than we pay, and we're not going to take a loss. So, that has to 
be figured out.
    I don't really know if we're going to make money or lose 
money. If we lose money, we won't be in that business. We will 
not stay in that business if we are losing money. But, when 
customers ask us to do something like, ``please stay open till 
8:30 at night, because that's when I can get to the post 
office. I work until 7:30,'' we stay open. And that's something 
that we just do. We provide that service. That's known as the 
universal service, and we think we need to provide that. And 
when customers come to us and say, ``we want this service,'' we 
feel obligated to provide it.
    Mr. Wicker. What information can you provide me about 
customers asking for this service? Can you provide me objective 
information about customers asking for this service?
    Mr. Runyon. I will look--I know that we have people that 
come to us. Whether we have writing, that in writing, I don't 
know. But, I'll certainly----
    Mr. Wicker. Okay. If you can provide that for the record.
    Mr. Runyon. I will.
    Mr. Wicker. I'd very much appreciate it. Again, I want to 
wish you the very best, and I thank the Chairman for indulging 
a non-member of the subcommittee.

                         postage rate increase

    Mr. Kolbe. You're always welcome as a member of the full 
committee. We'll go to a second round here, and I think, will 
be quite short. On the rate increase. What's the status. Is it 
still expected to go into effect on May 1.
    Mr. Runyon. We expect to hear from the Postal Rate 
Commission on, I think it's May the 13, somewhere about the 
middle of May. Once we get that back, we would have to present 
that to our board, and all those would have to study that. It 
might not go in effect until the 15th of June, or July the 1st, 
or whenever the board decides. The board makes that final 
decision.
    Mr. Kolbe. Okay. And it's still for $0.01.
    Mr. Runyon. Yes.
    Mr. Kolbe. You've had record earnings, as you pointed out, 
for three years in a row, and you are currently at least 
operating in a surplus for, in this fiscal year. I understand 
the Postal Rate Commission posed the question, ``should the 
Commission recognize actual 1997 Postal Service net income in 
developing rate recommendations,'' in this case? What's your 
position on that?
    Mr. Runyon. Well, I'll let Mike answer that because he's 
worked with the Postal Rate Commission more than I have, but, 
go ahead, Mike.
    Mr. Coughlin. It's been a practice of the Commission to 
take notice of, and take into account, changes in actual 
circumstances that occur during the course of the 10 months in 
litigation. So, my guess is, in fact, I think even today, as we 
speak, there's some testimony going on about the revenue 
requirement over there, at the Commission, and, my guess is 
that the Commission will take some notice of that when they 
come up with a final recommended decision. What form it will 
take, though, we just don't know.
    Mr. Kolbe. What's the--if your operating in surplus--what's 
the justification for a rate increase?
    Mr. Coughlin. We need to continue to restore the financial 
stability of the organization, and its equity. To provide the 
appropriate cash flow to support the $17 billion capital 
program that the Postmaster General mentioned earlier, and 
probably most important, is to continue to build the capability 
of this organization to meet its 5-year strategic plan, 
particularly in the area of improving the quality of service. 
That's the thing that more than anything else, will determine 
whether or not we will succeed in the future. That's why we 
need that rate change.

                               year 2000

    Mr. Kolbe. One other final, quick question. I've asked 
virtually every other agency that's appeared before us, about 
Y2K, year 2000, the millennium. What needs do you have? Is 
there a major problem here? Are your people on top of this? 
What are you doing to prepare for this?
    Mr. Coughlin. Mr. Chairman, this is--it's a significant 
challenge. I notice there was an article again in the paper 
this morning about it, in particularly in the Federal 
Government. We now have in place a program management office 
that has close to 100 people in it. We've identified something 
like 633 systems or applications that have year, Y2K, 
implications. About 400 of those have been identified as 
mission critical. We are in the process of remediation of some 
of them. We are in the process of completing business impact 
assessments on all of them, so that we know which, so that we 
can finally order in some sense of real priority, how we ought 
to address them. Some will fall off the table. We won't 
remediate because we don't need to, or we'll find we can do 
without it. From Mr. Runyon on down, in fact, from our board on 
down, it gets reviewed regularly.
    Mr. Kolbe. How often?
    Mr. Coughlin. Every month by our management committee.
    Mr. Kolbe. Is this primarily your management 
responsibility, Mr. Coughlin?
    Mr. Coughlin. Yes it is.
    Mr. Kolbe. Do you meet personally with this group?
    Mr. Coughlin. Absolutely.
    Mr. Kolbe. Are you satisfied you're going to be ready? In 
other Federal agencies, you don't really come up to this, I 
guess, but in other Federal agencies, the OMB has imposed a 
March of 1999 deadline for them to be ready, so they can be 
tested and fully prepared when the actual date comes. Do you 
anticipate that you're going to meet that deadline or something 
similar to that?
    Mr. Coughlin. Let me just say, I'm nervous, but I'm 
confident we have all the resources in place to do the job. 
And, after all, even when you go out and look for experts, 
there's nobody who's ever done this.
    Mr. Kolbe. How much capital investment do you anticipate 
having to make to do this?
    Mr. Coughlin. Our current rough order of magnitude estimate 
of the cost of this change, total cost over several years, is 
between $600 and $700 million.
    Mr. Kolbe. Thank you very much. Mr. Hoyer.

                           packaging supplies

    Mr. Hoyer. Mr. Chairman, my friend from Mississippi 
referred to my observation. Let me just say to my friend that 
in my area, probably more small businesses have been put out of 
business by Walmart than any other single entity in the 
Country. That's not to denigrate Walmart, because, frankly, 
they have some longer prices and my consumers are somewhat 
happy about that, because they can get everything together. So, 
while my local drugstore, or clothing store, or hardware store 
may say to me, ``Gee whiz, that's awful tough on me.'' It is 
awful tough on them, and that is the free market system. The 
only point I was making is, I didn't know the General was going 
to respond to that. I can see where customers are saying, as 
they have said with respect to the Walmarts of the world, 
``Gee, it'd be really convenient if we had everything 
together.'' But, obviously, if you have everything together, 
and you have one big corporation making somebody a multi-
billionaire, which is fine, and I understand he was a terrific 
human being. Burl Anthony told me that all the time. It was his 
buddy, down in Arkansas. But, the fact of the matter is, a 
whole lot of people in my area don't have businesses because 
Walmart came to Prince Frederick, or it came to Waldorf, or it 
came some place else.
    Mr. Wicker. Would the gentlemen yield on that?
    Mr. Hoyer. Can we discuss it privately? [Laughter.]
    Because what I want to do, I will yield. Yes, I'll yield.
    Mr. Wicker. Well, just for a second or two. When Walmart 
comes in to Maryland, or Tupelo, Mississippi, they do charge 
sales tax on their products. They do comply with OSHA. They do 
pay property taxes, and all of the things that businesses have 
to do, though on a larger scale. And they have an advantage 
because of their size, but they don't have the tremendous 
advantages that I believe the Postal Service has, in not having 
to comply with things that businessmen and women,small or 
large, have to.
    Mr. Hoyer. And I think that's a good point. The issue is 
whether the majority of taxpayers are better served, or not, I 
suppose. Ultimately we'll discuss that. Mr. Chairman, because I 
know she has some, a lot of questions, I want to yield the 
balance of my time to Ms. Northup.
    Mr. Kolbe. Ms. Meek, do you have any questions.
    Mr. Hoyer. Can I yield the balance of my time?
    Mr. Kolbe. You can. I'm sorry, I'm sorry. I thought I would 
just give the balance of time. Let me just see if Ms. Meek has 
any questions.
    Ms. Meek. Mr. Runyon, I understand that the Postal Service 
leases a lot of buildings, instead of owning them. And, of 
course, that's the new thing now. We're not building anymore 
buildings. I'd like to know whether there is a cost 
differential in terms of your overall bottom line, in your 
leasing and your owning. Are you paying out more monies. I'd 
like just to know what the percentages are in some other areas 
of the country.
    Mr. Runyon. There are percentages. I don't know the exact 
percentages, but we do lease a lot of buildings.
    Ms. Meek. That's right.
    Mr. Runyon. As opposed to owning them ourselves. Do you 
know the number?
    Mr. Coughlin. It's about 5 out of 6 of our buildings are 
leased. As a rule of thumb, a building that's a 5,000 feet, 
square feet or less, generally turns out to be more favorable 
to us financially if it's leased.
    Ms. Meek. I see.
    Mr. Coughlin. That's why. So, it's mostly the smaller 
buildings that are leased.
    Ms. Meek. Thank you.
    Mr. Kolbe. Ms. Northup.
    Ms. Northup. Thank you, Mr. Hoyer. I really do thank you. I 
do, also, have people lined up in my office and I know that you 
probably don't want to be here until dinner time either. And I 
do have a real interest in this. It so happened, and I'll be 
very honest. I have concerns because there are a lot of jobs in 
my district that depend on the delivery service. And, all I 
want is a fair playing field.
    And, you know, I think we've all seen back years ago when 
there was the AT&T case, that cross-subsidization was something 
that was the key to that court case. And while, I think AT&T 
claimed in the court case that they did not cross-subsidize, 
and court in this Country would assign costs for management. 
They would assign costs for sharing facilities. They would 
assign costs for workers that do work in more than one area, 
and you wouldn't get away with saying those aren't part of the 
total costs.
    And, my concern is what oversight, what sort of enforcement 
arm do we have just to make sure that because it's one person's 
opinion of, ``oh, your salary shouldn't go to GPL, you don't 
spend much time on it,'' that a court would uphold that, or an 
accountant would uphold it. You know, I'd just like to ask you 
some specific questions. First of all, I know that you all, the 
Federal Government and this Congress, have worked very hard to 
make sure that laws and regulations, and oversight, that apply 
to private sector also apply to the public sector.

                             osha oversight

    One area where we have not extended that oversight into the 
post office is OSHA oversight. I know that there have been some 
inspections. I raised this last year, and OSHA has voluntarily 
gone in and conducted a number of site visits. But do you all 
ever pay an OSHA fine?
    Mr. Runyon. I'm under the--we are covered under OSHA, and 
we operate as if we're covered under OSHA.
    Ms. Northup. I'm sorry. I actually asked OSHA that in the 
hearing across the hall a week ago.
    Mr. Runyon. Right. And their response?
    Ms. Northup. Their response is that they have voluntarily 
made some inspections, but you all are not held to any fines, 
it's a cooperative experience. And maybe, actually, the 
relationship that's so copacetic between the post office and 
OSHA, is maybe what we ought to do, rather than trying to make 
the postal service like private business, have OSHA work with 
private business like they do with the post office. It's all 
just in the best interest of the employee, and not so 
confrontational.
    Mr. Hoyer. Actually, if the general--Actually, Mr. Deer has 
said exactly what you just said. That's what they were trying 
to do. And I think you're right.
    Ms. Northup. Now, I know he said he was trying to do that, 
but unfortunately, their voluntary compliance has moved back to 
the old format of before, where, you either do this our way or 
we are going to throw every book at you. And, you know, that's 
quite a threat to the businesses. I hear from businesses every 
day with that sort of compliance costs, and what threat of 
mandates exists.
    Mr. Coughlin. Could I?
    Ms. Northup. Sure.
    Mr. Coughlin. I don't know. I'm not sure where you're going 
next. The Postal Service is like every other agency. It has a 
relationship with OSHA. No, we are not subject to fines by 
OSHA, but, the fact is, there were almost 300 OSHA conducted 
inspections of the Postal Service last year.
    Ms. Northup. 237, I think.
    Mr. Coughlin. And, we work on a pretty regular basis with 
them. Do we have disagreements at times, particularly on 
ergonomic issues? Yes, we do. But we try to, I think both of us 
try to approach it with an attitude of good will toward the 
subject. It is, after all, our employees who are at stake.
    Ms. Northup. Yes. But, Mr. Coughlin, if you were in the 
private sector, you would know there is a big difference 
between cooperative relationship and mandatory and enforcement 
relationships.
    Mr. Coughlin. And, I don't contest that, but, perhaps the 
issue is between the private sector people who are subject to 
that, and OSHA. Then maybe that's the relationship that needs 
to be fixed.
    Ms. Northup. Well, we've tried. We're trying. Would you 
object to the post office being under the exact same compliance 
and enforcement relationship that the private sector? Would 
that be something that would, you all would object to, if we 
included that in a bill?
    Mr. Coughlin. I think if you're going to apply it to the 
Postal Service, you ought to apply it to the Federal Government 
generally.
    Mr. Runyon. This building is not covered by OSHA, as a 
matter of fact.
    Ms. Northup. Actually, I thought it was. I thought we 
actually changed it in 1995. Let me ask you another question. I 
know that you've had an increase, 44 percent, of labor 
grievances. Do those get appealed, like they do in the private 
sector, up to the NLRB board?
    Mr. Runyon. Even further. People in the Postal Service have 
not only--they've got the National Labor Relations Board to 
deal with, just like a private sector company does. We 
negotiate with our unions under the National Labor Relations 
Act, which is different than other Government agencies. Then 
after that, employees--if that doesn't satisfy them, they have 
other appeals. They can go to the Merit System Protection 
Board.
    Ms. Northup. Right.
    Mr. Runyon. If that fails, they can go to court. The Postal 
Service, however, if we lose in the Merit System Protection 
Board, we cannot go to court. We have to stop right there, and 
the only people that can go to court for us is the Office of 
Personnel Management. We have tried long and hard to get that 
changed so that we could represent ourselves, and not have 
another branch of government, who really has very little to do 
with running the Postal Service. Not any at all, as a matter of 
fact, represent us.

                               marketing

    Ms. Northup. Let me ask you another question. Time magazine 
recently reported that the Postal Service has access to all 
kinds of personal information about consumers' tastes and 
interests. And I think the Time magazine article implied that 
you all actually sell that, and it's my understanding that you 
have clarified that you do not sell it. Is that right?
    Mr. Coughlin. That's absolutely right. We're prohibited 
from sharing that information.
    Ms. Northup. But what I'd like to know, is do you all use 
that information for your own activities?
    Mr. Runyon. I would say that if we knew who the 
philatelists were in this Country, and we may know because we 
sell to them, that we would use that in mailing information to 
them, because they're interested in that subject.
    Ms. Northup. Really.
    Mr. Runyon. Yes.
    Ms. Northup. So you would track what somebody may purchase, 
and so forth, and their interests, and then you would actually 
try to----
    Mr. Runyon. I didn't say we'd track. I said that if we knew 
those people are interested in philatelic products, we might 
tell them about other products that we have.
    Ms. Northup. Well, I think what I understood from the Time 
magazine article, is the fact that you do collect that 
information. The clarification was you don't sell it to other 
people.
    Mr. Runyon. We don't.
    Ms. Northup. So you have the information, and you use it.
    Mr. Runyon. I don't know. You're quoting Time magazine. I'd 
have to understand from our people that that's a true 
statement. I really don't know whether Time magazine got that 
from us, or where they got the information. I'd need to know, 
though. I don't place facts on magazine articles.
    Ms. Northup. Well, okay. This is what I would ask you to 
clarify. Time said you have the information, and you sell it. 
The clarification was, you don't sell it. My question was, do 
you use it for yourself, or for any of your own activities, and 
your answer was, if you have the information, you'd use it.
    Mr. Runyon. I'll be glad to supply for the record exactly 
what we do. It's not something I deal with daily.
    [The information follows:]

    The Time magazine article was not correct in its assertion 
that we track postal customers' preferences regarding items 
purchased through the mails. Certainly, one can imagine that 
major catalog companies may track what their customers purchase 
through their catalogs. However, the Postal Service does not a 
have access to that information and we do not seek it.
    In the philatelic area we currently have a list of customer 
names and addresses who have specifically requested a ``USA 
Philatelic'' catalog. That catalog is published on a quarterly 
basis and mailed to those customers. For catalog purposes, we 
do keep track of customer names and addresses who buy from us, 
and the revenue we earn per catalog.

    Ms. Northup. In the latest revision of H.R. 22, which is 
the Postal Reform Bill, they have suggested and proposed that 
all of the new GPL arrangements that you have with other 
countries actually be negotiated with the trade rep. That would 
be a fair playing field, which, of course, I talked about at 
great length last year. I just wondered if you object to that.
    Mr. Runyon. Yes.
    Ms. Northup. Gosh, you may have given me more time than I 
needed, Mr. Hoyer. I know that comes as a surprise. I'm----
    Mr. Kolbe. We're completed with our questions, so we're--
you're the last one.
    Mr. Hoyer. I just wanted to have all the correct answers 
before the General left.
    Mr. Runyon. Which is a little while, yet, of course.

                          international rates

    Ms. Northup. I do have some questions I want to submit for 
the record. They have to do with expansion of GPL and what your 
numbers are, and the number of countries. There's one other 
question I have. When you provide services overseas, you ship 
packages, and then, overseas, for example the English post 
office, actually delivers them. The rate that they charge you, 
is that the same rate that they would charge, for example, UPS?
    Mr. Runyon. I have no way of knowing that. I don't know 
that they deliver for UPS.
    Ms. Northup. Well, let me reverse it.
    Mr. Runyon. I really don't know.
    Ms. Northup. Let me reverse it. If somebody in England 
sends a package to this country and you deliver it to my 
mother, the charge that you charge England, is that the same 
charge you would charge anybody else, the English post office?
    Mr. Coughlin. We charge it through either a bilaterally 
negotiated terminal dues rate, or we'd charge the standard 
international terminal dues rate that's determined at the UPU. 
It's a standard type of thing. It can be bilateral, it can be 
multilateral, or it can be just the standard UPU rate.
    Ms. Northup. Well, when I send something overseas, I pay 
more, of course than I pay if it's domestic. If somebody sends 
something from overseas to me, they pay more than if they send 
it domestically. Now, the question is----
    Mr. Coughlin. In most cases. That's not always true, but in 
most cases.
    Ms. Northup. If somebody in England mails something to my 
mother, there is a cost that they are going to remit to you. If 
I send something to my mother, is the cost I'm going to pay 
going to be the same as the person in England is going to pay?
    Mr. Coughlin. You've lost me someplace there.
    Ms. Northup. Okay. The person in England pays $0.75 to mail 
a letter to my mother. I pay $0.32. I mail a letter to my 
mother in Louisville, Kentucky from here. I'm going to pay you 
$0.32. Are you going to remit to England $0.32?
    Mr. Coughlin. No, we're going to remit whatever the agreed 
upon terminal dues rate is, whether it's a bilateral 
arrangement, or it's the standard universal postal union 
terminal dues rate.
    Ms. Northup. Any idea about what that would be?
    Mr. Coughlin. Not off the top of my head, no.
    Mr. Runyon. It's different for each country, and we need to 
supply that to you. We'd be glad to do that.
    Ms. Northup. Well, my question is, if somebody has a GPL 
agreement with you, would that make you inclined to sign a 
different rate with them, maybe, for delivering letters? Let's 
say, you had the benefit of diverse services in England, so, 
because of that, would you give them a cheaper rate than you 
would give somebody that was mailing a letter out of France, 
that would come into this country?
    Mr. Runyon. I'm not aware that we've changed any terminal 
dues arrangement based on GPL.
    Ms. Northup. Could you provide that information to me, 
whether there are any changes in that?
    Mr. Runyon. I'd be glad to.
    Ms. Northup. Okay. Thank you.
    Mr. Runyon. And by the way, Representative Northup, I'd 
like to mention that you do have a lot of postal employees in 
your district, also.
    Ms. Northup. I know, and actually, I go and meet with the 
postal employees, and, postmasters. And I have got to tell you, 
they have really been great. They are very interested in their 
jobs. They are very interested in the service. They are very 
concerned about issues regarding bonuses, which I have 
communicated with you about. But they are also glad about what 
UPS does to our economy, and they are glad that we are looking 
for balanced services. And I'm happy to meet with them and will 
continue to meet with them.
    Mr. Runyon. And on the bonuses, I might mention, also, that 
we have offered their representatives to enter into a bonus 
program with us, and they haven't chosen to do so.
    Ms. Northup. I'm glad to know that.
    Mr. Kolbe. Thank you very much, Ms. Northup. I have some 
questions for the record which we'll submit. Anybody else has 
others, as Ms. Northup does, may also do so. Mr. Coughlin, Mr. 
Runyon, thank you very, very much for being with us today, and 
again. [Laughter.]
    No, no. You see, now he does fall over. Mr. Runyon, again 
we congratulate you and wish you very well, and we look forward 
to seeing you during the time remaining before you do leave. 
Thank you very much. This hearing is adjourned.
    [Questions for the record and selected budget justification 
material follows:]


[Pages 62 - 105--The official Committee record contains additional material here.]










                               I N D E X

                               __________
                                                                   Page
Appropriations Request...........................................     6
Breast Cancer Semi-Postal Stamp..................................    19
Financial Status.................................................    50
Global Package Link..............................................    21
International Rates..............................................    60
Mail Service Performance.........................................    18
Marketing........................................................    59
``Non Postal'' Operations........................................    16
``Non Postal'' Products..........................................    51
OSHA Oversight...................................................    57
Pack and Send....................................................    52
Packaging Supplies...............................................    56
Philatelic Marketing.............................................    17
Postage Rate Increase............................................24, 54
Postal Facilities................................................    25
Postal Service Improvements......................................    20
Postal Service Transformation....................................     6
Postal Uniforms Procurement......................................    50
Stamp Production.................................................    18
Workers' Compensation............................................    19
Year 2000........................................................    55