[Senate Hearing 106-480]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 106-480
 
                ANNUAL REPORT OF THE POSTMASTER GENERAL

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


                                HEARING

                               before the

      INTERNATIONAL SECURITY, PROLIFERATION, AND FEDERAL SERVICES 
                              SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 16, 1999

                               __________

      Printed for the use of the Committee on Governmental Affairs





                    U.S. GOVERNMENT PRINTING OFFICE
61-702cc                    WASHINGTON : 2000

______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
         U.S. Government Printing Office, Washington, DC 20402





                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware       JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio            RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania          JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
             Hannah S. Sistare, Staff Director and Counsel
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                  Darla D. Cassell, Administrive Clerk

                                 ------                                

      INTERNATIONAL SECURITY, PROLIFERATION, AND FEDERAL SERVICES 
                              SUBCOMMITTEE

                  THAD COCHRAN, Mississippi, Chairman
TED STEVENS, Alaska                  DANIEL K. AKAKA, Hawaii
SUSAN M. COLLINS, Maine              CARL LEVIN, Michigan
PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
ARLEN SPECTER, Pennsylvania          MAX CLELAND, Georgia
JUDD GREGG, New Hampshire            JOHN EDWARDS, North Carolina
                   Mitchel B. Kugler, Staff Director
              Richard J. Kessler, Minority Staff Director
                      Julie A. Sander, Chief Clerk




                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Cochran..............................................     1
    Senator Stevens..............................................     2
    Senator Akaka................................................     3
    Senator Domenici.............................................     9
    Senator Levin................................................    11

                               WITNESSES
                      Thursday, September 16, 1999

William J. Henderson, Postmaster General, U.S. Postal Service
    Testimony....................................................     4
    Prepared statement...........................................     5

                                APPENDIX

Letter from William J. Henderson, to Senator Levin, dated June 
  15, 1999.......................................................    13
Brochure entitled ``The First Green Post Office,'' Fort Worth, 
  Texas..........................................................    21
Letter from William J. Henderson, to Senator Domenici, dated 
  October 26, 1999...............................................    23
The information entitled ``Domestic Mail Manual,'' section E670 
  supplied for the record........................................    24
  Questions and responses for Mr. Henderson from:
    Senator Akaka................................................    34
    Senator Collins..............................................    36
    Senator Lieberman............................................    37
    Senator Cleland..............................................    38




                ANNUAL REPORT OF THE POSTMASTER GENERAL

                              ----------                              


                      THURSDAY, SEPTEMBER 16, 1999


                                      U.S. Senate  
                Subcommittee on International Security,    
                     Proliferation, and Federal Services,  
                  of the Committee on Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:05 p.m. in 
room 628, Senate Dirksen Building, Hon. Thad Cochran (Chairman 
of the Subcommittee) presiding.
    Present: Senators Cochran, Akaka, Levin, Stevens, and 
Domenici.

              OPENING STATEMENT OF SENATOR COCHRAN

    Senator Cochran. The Subcommittee will please come to 
order.
    I was apologizing to the Postmaster General on the 
condition of the weather outside. As a matter of fact, this 
morning, as I was preparing to come in to the Capitol, I 
thought about the inscription that is supposedly written on the 
General Post Office in the City of New York, and I couldn't 
remember it exactly. Neither could my wife, so we spent a 
little time doing some research.
    For the general edification of those here, the quote is as 
follows: ``Neither snow, nor rain, nor heat, nor gloom of night 
stays these couriers from the swift completion of their 
appointed rounds.''
    We further investigated the source of that, and it is 
Herodotus' history, volume number 8, and he is referring to the 
couriers of Xerxes. And for those of you who want to know who 
or what Xerxes might be, he was King or Emperor of Persia.
    Now that we are all well grounded---- [Laughter.]
    In the subject of today's hearing, I want to welcome the 
distinguished Postmaster General of the United States, who is 
here today to deliver his annual report to the Congress.
    When the Postal Reorganization Act of 1970 was passed, we 
converted, by that act, the Post Office Department from a 
Federal Government department, depending upon substantial 
subsidies from U.S. taxpayers, to an independently-managed U.S. 
Postal Service. Since that time it has become a very large and 
modern enterprise, with almost 800,000 employees and more than 
$60 billion in annual revenues.
    In May of last year, William J. Henderson was appointed to 
serve as U.S. Postmaster General, having served several years 
as the agency's Chief Operating Officer.
    With the rapid development of technology, the question of 
what role the Postal Service will play in e-commerce has become 
the topic of much discussion within the Postal Service and the 
postal community. The Postal Service recently introduced a new 
website to assist businesses using Priority Mail to ship 
products ordered over the Internet, and last month the Postal 
Service introduced a new product called ``PC Postage'' which 
allows customers to print digital stamps from their personal 
computers.
    It will be interesting to hear the Postmaster General bring 
us up to date on these and other developments in the Postal 
Service.
    We welcome you, Mr. Postmaster General, and we look forward 
to your report.
    Before hearing your report, I am going to yield now to our 
distinguished colleagues on the panel--first, if the 
distinguished Senator from Hawaii will permit me, to Senator 
Stevens, who is chairing the Appropriations Committee in a 
markup that meets in 10 minutes, for whatever comments he would 
make, and then to our distinguished Ranking Minority Member, 
Senator Akaka.
    Senator Stevens.

              OPENING STATEMENT OF SENATOR STEVENS

    Senator Stevens. Thank you very much, Mr. Chairman. Thank 
you, Senator Akaka.
    Mr. Postmaster General, I have just told my colleagues that 
I think this is the 31st year that I have listened to this 
report, and it will be the first time that I will have left it 
before it is completed. I am sorry that we do have this 
conflict with the Appropriations Committee and the VA/HUD bill, 
which we have to get to this afternoon.
    I ask unanimous consent that my statement appear in the 
record in full.
    Senator Cochran. Without objection, so ordered.
    [The prepared statement of Senator Stevens follows:]

                 PREPARED STATEMENT OF SENATOR STEVENS
    Thank you Postmaster General Henderson for appearing before this 
Subcommittee today and for your comments about the progress of the 
Postal Service. I also want to thank you publicly for visiting Alaska 
this past March for the dedication of the Arctic Animal Stamps. I often 
say that our true friends are the ones who come to Alaska in the winter 
months.
    The Postal Service is the lifeline of Alaska--many of my colleagues 
who have visited my home State witnessed this first-hand. The bypass 
mail system delivers food and other personal items at a fraction of the 
cost of regular freight. There are many remote areas who do not yet 
have access to the Internet and their television and radio reception is 
very limited. For the residents of those areas, the U.S. Mail is the 
most reliable form of communication.
    I commend you for the Postal Service's recent arrangement in Alaska 
for the new fuel cell system at the Anchorage Mail Processing Center. 
As you know, the new fuel cell will be the primary source of power for 
the Anchorage facility--producing one megawatt of electricity--while 
producing virtually no pollution. This power system not only ensures 
the continued success of the Postal Service in Alaska, but it 
represents a form of power that could revolutionize cost-effective 
electricity throughout America.
    Congratulations on your fifth straight fiscal year of positive net 
income and for your achievements in high delivery rates. However, I am 
concerned that while the Postal Service modernizes and improves the 
traditional mail system, it could miss out or fall behind in the e-
revolution. I note your recent projections that increased use of the 
Internet for business traditionally done through the mail could cost 
you nearly $17 billion. I urge the Postal Service, through your 
leadership and direction, to fully embrace e-commerce and all of its 
capabilities so that the Postal Service remains strong in the new 
millennium. I note that the Postal Service has partially embraced e-
commerce by allowing private companies to develop and sell postage over 
the Internet. I am eager to see the results of this technology as 
information is made available.
    Last, I sit on the Special Committee on the Y2K problem and we 
receive regular reports on the progress of vital services with respect 
to the Y2K bug. You may recall that I asked you last year about the 
Postal Service's efforts in fixing this problem and would like to hear 
about your progress over the past year.
    Thank you again for appearing today and for all that the Postal 
Service does in Alaska and throughout the United States.

    Senator Stevens. I think everyone should realize that this 
is the fifth straight fiscal year of positive income for the 
Postal Service, and on your watch it has gone up, so I 
congratulate you.
    I will tell you, Mr. Chairman, and I often tell others, 
about the time Postmaster Bolger came to Alaska with me; he 
wanted to see what the winters were like, and I took him up to 
Prudhoe Bay. As he got off the plane, we had the bus right 
there so that he could get right on the bus, and we went over 
to the postal substation, which is what I think we had there at 
the time. As we opened up the door, there was a digital 
thermometer there, and it said minus 99. [Laughter.]
    I never had the heart to tell him that that was as far down 
as it would go. [Laughter.]
    It was a wind chill factor thermometer, and the wind chill 
was lower than 100 below. And that Post Office was open; that's 
my point. The Post Office does keep up with and match that 
motto today, and I think Mr. Henderson is an excellent example 
of a person who is really managing this Postal Service of ours 
very well.
    You have some tremendous challenges now, with the Internet 
and the whole concept of the global economy, but I am proud to 
say that I think the Postal Service is staying ahead of the 
curve.
    So thank you very much, and I look forward to reading your 
report, Bill.
    Senator Cochran. Thank you very much, Senator Stevens.
    Senator Akaka.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Mr. Chairman. I am 
pleased to join you in welcoming Postmaster General Henderson 
to our hearing. I met with Mr. Henderson earlier this year and 
came away from that discussion with a renewed appreciation of 
the U.S. Postal Service--not only for its accomplishments, but 
for the challenges it faces in the future.
    We cannot escape the many news reports and articles on 
today's rapidly changing business climate. Not only has the 
Internet opened up a global marketplace for American products, 
but it has also created a growing need to deliver the packages 
generated by e-commerce. I know the Postal Service is 
thoroughly analyzing all aspects of its operations and 
management in order to remain a key player in this arena. 
Competing delivery systems, domestic and international, have 
also resulted in the review of products.
    I understand that the need to develop new revenue sources 
while maintaining increased service levels is one of the 
reasons that the Postal Service supports the McHugh postal 
reform bill. Should postal reform legislation be referred to 
the Senate, I hope our Subcommittee will have ample opportunity 
to review these issues.
    On a more personal note, I would also like to express my 
continued strong support for a U.S. postage stamp to honor Duke 
Kahanamoku, a five-time Olympic medal winner, the father of 
modern surfing, and Hawaii's best-known citizen. Although Duke 
Kahanamoku passed away in 1968, his spirit continues to embody 
all Hawaii, and even part of the mainland. And I will tell you 
that if Senator Stevens were here he would certainly support 
me, because he is an avid surfer. [Laughter.]
    A commemorative stamp celebrating the life of one of my 
State's most respected citizens will be welcomed not only by 
the people of Hawaii, but by sports enthusiasts worldwide. I 
supported this effort for a long time, and I appreciate knowing 
that a proposed stamp is under serious consideration by the 
Citizen Stamp Advisory Committee.
    The time has come to honor the Duke, who holds a place 
unequal to any other person in surfing history, and whose 
Olympic skills are legend in Hawaii and in our country.
    Like Senator Cochran, I look forward, Mr. Postmaster 
General, to your testimony, and your presence here is certainly 
welcome.
    Senator Cochran. Postmaster General Henderson, you may 
proceed.

  STATEMENT OF HON. WILLIAM J. HENDERSON, POSTMASTER GENERAL, 
                      U.S. POSTAL SERVICE

    Mr. Henderson. Thank you, Mr. Chairman. Rather than read my 
testimony back to you--I know you have already reviewed it--I 
will just touch some of the highlights from a personal 
perspective about the Postal Service.
    First let me thank you for sponsoring the Senate Resolution 
designating October as Stamp Collecting Month. That is a great 
hobby; it's a great family hobby, one of the largest hobbies in 
the world, and it does give national recognition to something 
that is very important. And as a result of your action, there 
have been resolutions passed all across this great Nation 
supporting stamp collecting, so I thank you for that.
    The bottom line, the U.S. Postal Service is concluding 
another excellent year. We will have a net income this fiscal 
year, as we predicted, in spite of the fact that our revenues 
fell about $700 million short of what we had planned. The 
revenue shortfall is, in essence, the result of, one, 
aggressive planning; and two, the impact of the sweepstakes 
issue on the country, the fact that people stopped responding 
to sweepstakes for a period of time, and that impacted our 
volume. Also, the rate increase has some impact on our volume. 
But in spite of that $700 million, we are still going to reach 
our predicted net income.
    The most interesting aspect about being in the Postal 
Service today is not only the competition it receives, but also 
the effect of the Internet and how that is changing the 
marketplace very rapidly. The Internet seems to be knocking 
profits out of commodities at a very rapid pace; therefore, 
when people look for shippers, they look for low-cost, high-
quality shippers. And if you buy a CD from AMAZON.COM for $6, 
you're not going to pay $7 to have it delivered. So the Postal 
Service has benefited from its high quality and is taking 
advantage of the Internet, and I think it will prosper as long 
as it maintains low costs and high quality.
    So we see a bright future for our organization, and we 
continue to be very aggressive in the marketplace, making sure 
that Americans have the kind of choice that the U.S. Postal 
Service represents, and that is high quality and low cost.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Henderson follows:]

                  PREPARED STATEMENT OF MR. HENDERSON
    Mr. Chairman and Members of the Subcommittee, I welcome the 
opportunity to discuss the U.S. Postal Service with you today. I 
appreciate the time and energy you invest in oversight and helping us 
fulfill our mission to bind our Nation together by delivering to 
everyone, everywhere, every day.
    Today, I want to talk with you about the performance of the Postal 
Service as we near the end of this century and our plans as we look 
forward to the next.
    In 1999, the Postal Service has put the finishing touches on what 
has been a decade of progress.
    When the decade opened, the Postal Service had just begun 
independently measuring First-Class Mail service performance in 
metropolitan areas. By 1992, when the first overnight results were 
announced, only two out of 86 locations broke 90 percent and the 
national score was just a notch above 84 percent.
    Today, even though we have expanded our measurements to represent 
more than 80 percent of our First-Class delivery volumes, every single 
location in the contiguous United States is at 91 percent or better for 
local mail service. The national average stands at 94 percent or better 
for local mail service. The national average stands at 94 percent, 
tying our record high. Service for First-Class Mail with 2- and 3-day 
commitments is also our best ever.
    When the decade began, we used to enter each holiday mailing 
season, our busiest time of the year, with only the most basic of 
preparations.
    Today, we start the season with integrated, focused fall and 
holiday plans that we begin developing shortly after the last season 
has ended.
    We now gather information on customer mailings well in advance, so 
that we have proper staffing and equipment on hand at our processing 
facilities. We have a national operations center to keep track of 
weather conditions, respond to customer concerns, and prevent 
bottlenecks in our system. We open additional transportation hubs and 
use dedicated air transportation to speed delivery of holiday gifts.
    This season, new automated technologies will help us process record 
holiday volumes more efficiently than ever by reading and barcoding 
more than half of America's handwritten greeting cards.
    At the start of the 1990's, the Postal Service had also requested a 
5-cent increase in stamp prices, and customers were voicing concerns 
about price hikes that were consistently above the rate of inflation in 
the economy.
    This January, we implemented our second straight increase below 
inflation. The rate change was our lowest ever, just a penny more for a 
First-Class stamp and 2.9 percent overall.
    When the decade began, the Postal Service was routinely bleeding 
red ink and had rarely posted surpluses in consecutive years.
    In 1999, even though we imposed a daunting management challenge 
upon ourselves by delaying our smallest ever rate increase by 7 months, 
we will end this fiscal year with our fifth straight positive net 
income, which has helped us significantly reduce prior negative equity. 
And we mastered the challenge of reducing costs by about $700 million 
without eroding service performance. We are confident that we will 
continue that success in FY 2000, even though we will not raise rates 
as we had originally planned. By delaying the implementation of the 
rates and deferring our rate filing by a year, we in essence gave the 
American mailers a dividend of more than $2 billion.
    When the 1990's got underway, the automated processing of letter 
mail was in its infancy and just a fraction of letter mail was 
barcoded.
    Today, after $5 billion worth of investments, more than 88 percent 
of all letter mail currently carries a barcode, and 85 percent of our 
city carriers are receiving 60 percent of their mail sorted in delivery 
order each day. Robotics, sophisticated handling and transport systems, 
and even automation for flats are being introduced into postal plants. 
Within the next several years, fully automated processing facilities 
and a computer-driven information platform will revolutionize the way 
we manage the mail and create an information-rich mail stream that will 
give postal managers and customers alike real-time performance 
information.
    When the decade began, the Postal Service lacked a coordinated 
method of managing its entire operations. Today, we rely upon a 
Baldrige-based performance system to drive consistent improvement by 
focusing the energies and resources of this vast organization on common 
goals and targets.
    The Postal Service is heading into the next century with the best 
performance, planning, technology, and management systems in our 
history. As always, we owe that success to the extraordinary effort of 
our managers, postmasters, supervisors, and craft employees.
    At the same time, though, we enter the new millennium knowing full 
well that the most significant challenges in our history await us.
    Tomorrow's marketplace will offer Americans more powerful and 
plentiful communications choices than ever before.
    Private delivery carriers, already industry heavyweights, will 
continue their aggressive efforts to dominate their respective markets.
    Newly privatized and deregulated foreign posts, hungry for 
revenues, will not only offer an increasing range of international 
services to American customers, but are also likely to begin creating 
delivery networks right here on U.S. soil.
    The revolution in electronic communications may not be proceeding 
as fast as some have predicted, but no one questions its momentum. 
Today, nearly half of America's homes own a computer. More than a third 
have access to the Internet.
    Already, powerful forces in the banking, telecommunications, and 
computer industries are scrambling to create networks for e-payments. 
As the speed, security, and convenience of these networks increase--and 
more and more consumers grow comfortable with logging on to pay their 
bills--these efforts will reach critical mass. The eventual result 
could be the erosion of our total revenues. We believe nearly $17 
billion is at risk.
    The Postal Service cannot predict precisely when or to what extent 
these and other competitive pressures will take their toll on our 
bottom line in the coming century. But our extensive market research 
suggests that First-Class Mail volumes may actually decline over the 
next 5 years, although we will continue to work on increasing the value 
of that mail by keeping costs low and quality high.
    But losing First-Class Mail is a real possibility--this factor, 
along with the rising costs associated with maintaining a national 
infrastructure of 38,000 facilities and a delivery network that grows 
by a million steps a year--means we can't sit still. We have to tap 
into new revenue streams as old ones begin to taper off if we expect to 
maintain affordable prices and continue our investments in better 
service.
    That is why we have been so vocal over the past few years in 
calling for postal reform, and why we have worked closely with John 
McHugh in the House to develop a fair, meaningful reform bill. The 
legislation includes some tradeoffs, but on balance, we believe it 
provides pricing and product flexibilities we need to stay relevant and 
attractive to our customers.
    That is also why--in addition to our many efforts to improve the 
value of the mail for our customers--we are already exploring ideas and 
developing innovative strategies for the future.
    We believe, in fact, that we have a responsibility to the American 
people to ensure a healthy and meaningful postal system in the next 
century. What's at stake is not just the continuation of perhaps the 
most visible and personal of all Federal services, but the endurance of 
a delivery system that touches every American, helps bridge our vast 
distances and differences, and binds our Nation together.
    The mail is an experience that we all share, and it is a powerful 
one. Most of us look forward to getting our mail each day. There are 
magazines and catalogs to browse. There are birthday presents and post 
cards from friends on vacation. There are bills, coupons, and offers 
galore.
    Going to the mailbox is such a pervasive habit that one of the 
leading Internet companies has helped build their business on the 
slogan, ``You've got mail.''
    Mail is a unique moment in our day, a moment at the mailbox, one 
that is happening in every home, in every community, every day.
    In many ways, the mail has become the gateway to the household, a 
channel for commerce and communication that connects families and 
friends, governments and citizens, businesses and customers, publishers 
and readers, charities and sponsors.
    Maintaining that connection in the next century, we believe, may 
well hinge on our ability to blend the trust, security, and ubiquity of 
hardcopy mail with the speed and capabilities of the electronic world.
    Our strategies are just beginning to take shape, and our role vis-
a-vis the private sector will have to be defined in concert with all of 
you and our many stakeholders and customers. Already, though, we see 
several areas of opportunity.
    We will build on our strong Internet presence. Our public homepage 
is the most heavily trafficked government site, receiving about 3 
million ``hits'' each month. Customers use this site to find ZIP Codes, 
calculate rates, buy stamps, track packages, and get other key postal 
information. We intend to use the speed and access of the Internet to 
offer customers information about their mail and access to our products 
and services.
    As on-line purchases continue to explode, both businesses and 
consumers want prompt, reliable delivery, and easy access to a carrier 
who can handle returns. We want to be the carrier of choice for 
merchandise purchased on the Internet and the inevitable returns that 
result. We already have a universal business and residential presence. 
We are low-priced and we don't impose surcharges. Our carriers visit 
every address, everywhere, 6 days a week.
    So, despite many challenges, the Postal Service sees the 21st 
Century as a great opportunity to build on our legacy of service to our 
Nation. During this past decade, we have worked hard to combine the 
efficiency and customer focus of private sector organizations with the 
public service focus of government. We look forward to working with 
this Subcommittee to assure that the American people can continue to 
rely on the Postal Service for high-quality, low-cost mail services.
    Thank you, Mr. Chairman, that concludes my statement.

    Senator Cochran. Thank you very much, Postmaster General.
    You mentioned that you ended the year with a profit--a net 
income balance. I wonder, do you intend to use this profit to 
reduce the cost of postage?
    Mr. Henderson. We will do that in real terms because we 
extend the rate increase--the rate increase which was planned 
to go in this year, or early in the year 2000, we are now 
trying to postpone that rate increase until the year 2001. And 
as you will recall, we also extended the rate increase from 
June of last year; we didn't implement it until January. So we 
are, in effect, giving back our net income, as much as we can, 
to our customers.
    Senator Cochran. These increases that you have planned for 
the future are going to have some effect on mail volumes, won't 
they? Will they negatively affect mail volumes? Will there be 
other ramifications of future rate increases, as well?
    Mr. Henderson. Well, rate increases generally negatively 
affect volume, and customers are demanding more and more for 
less. And so that puts huge pressure on the Postal Service to 
both generate revenue and to control its costs, for which we 
have massive efforts under way right now.
    Senator Cochran. I know a lot of this is affected by the 
rate of inflation. As prices and costs to the Postal Service go 
up, those costs have to be passed on to mailers and the users 
of the Postal Service. Some mailers, such as those who use the 
mail for advertising, have expressed concern to me that their 
rates may go up faster than inflation in this next round of 
increases.
    What's the outlook for price increases in the next rate 
case, and what is the Postal Service doing to control its costs 
and thereby reduce the need for large rate increases?
    Mr. Henderson. Well, we've taken several billion dollars in 
costs out of the organization. I think it is evident to our 
customers that you can see that in both our monthly and our 
quarterly expense reports.
    We agree that it is imperative that we keep rates as low as 
possible, and certainly, Standard A is very sensitive. 
Advertising mail is very sensitive to rate increases. We 
certainly are trying to keep the rate of increase as low as 
possible.
    Senator Cochran. In my opening comments I mentioned the 
fact that there have been some obvious changes in technology 
that have affected the future role of the Postal Service. For 
example, as I understand it, there is a good deal of discussion 
within the Postal Service about e-commerce and how to take 
advantage of these new technologies to improve the way the 
Postal Service provides its customers with what they want and 
what they need.
    You recently introduced a new website, for example, to 
assist businesses using Priority Mail to ship products ordered 
over the Internet, and last month you introduced a new product 
called PC Postage which allows customers to print digital 
stamps from their personal computers.
    Could you tell us more about the specifics of this and how 
it's being received in the marketplace?
    Mr. Henderson. It is probably--short of a new Postmaster 
General being announced, it's probably the most publicity we've 
received over any one event in the 28 years I have been in the 
Postal Service. It has been very well received. There are two 
companies that went commercial August 9, STAMPS.COM and E-
STAMPS. They essentially provide postage off your PC. Each 
postage imprint is unique, so it can't be counterfeited, and 
it's just a way for us to create ease of use for our customers. 
We're trying to use the Internet; it is a new channel, and 
we're trying to make postal services available on that new 
channel, and PC postage is one of the obvious ones. It should 
eventually save us money, depending on how many customers adopt 
it, but it has been received in the marketplace with real 
enthusiasm.
    There are two more companies coming behind E-STAMPS and 
STAMPS.COM; that's Neopost, which is a French company, and 
Pitney-Bowes, both of whom are in the developmental stages.
    So we see a real proliferation of PC postage.
    Senator Cochran. Senator Akaka.
    Senator Akaka. Thank you, Mr. Chairman.
    My question is along environmental issues. As a member of 
both the Energy and Governmental Affairs Committees, I am 
naturally interested in the lead that the Postal Service has 
taken in its efforts to protect the environment.
    I know the Postal Service has received numerous 
environmental awards in recognition of its energy conservation, 
pollution prevention, and recycling programs. The Postal 
Service, as the Nation's largest civilian employer, is well 
positioned to continue its role as a leader in alternative 
energy and fuel use, and I applaud the Postal Service on its 
leadership in this arena.
    Could you describe some of the Postal Service's efforts in 
conserving energy and the benefits that the Postal Service has 
gained from its efforts?
    Mr. Henderson. Well, the U.S. Postal Service has saved 
millions of dollars in its very, very aggressive environmental 
and conservation efforts. We use energy-efficient lights; we 
have an active recycling program that saves millions of 
dollars; and just last month, we ordered 500 electric vehicles. 
I think we are the leader in that area. Also in alternate fuel 
vehicles we are the leader.
    So we are very proud of that program. At one point, when I 
was the Chief Operating Officer, I told the then-Postmaster 
General that the head of our environmental efforts got more 
publicity than he did, because every time I turned around they 
were giving our environmental program an award. Charlie Bravo 
at that time was heading it up; Charlie has moved on to some 
other things, but just for the record, he did an outstanding 
job.
    Senator Akaka. I was interested to hear about your new 
``green'' postal facility in Fort Worth, Texas. Could you 
provide more information on the new facility and whether there 
are more ``green'' facilities in the works?
    Mr. Henderson. Yes, I will. In fact, I went to the ribbon-
cutting in Fort Worth, Texas, at that facility, where we have 
straw in the walls, and it has an R-factor of some phenomenally 
high number for energy conservation. It is a one-of-a-kind, and 
I will be happy to provide you all the background 
information.\1\
---------------------------------------------------------------------------
    \1\ The brochure entitled ``The First Green Post Office,'' appears 
in the Appendix on page 21.
---------------------------------------------------------------------------
    Senator Akaka. Recently the Postal Service implemented a 
new system involving fuel cells for generating power at its 
Anchorage mail processing and distribution facility. This 
system is virtually pollution-free and requires little 
maintenance. What are the expected benefits from this system? 
And will this technology be expanded to other postal facilities 
throughout the country?
    Mr. Henderson. Yes, that is an experiment. The fuel cell is 
much like a battery that generates energy and hot water from a 
chemical reaction. It saves several thousand kilowatts over 
traditional energy sources. It provides our plant and 
distribution center with energy. If, for example, the grid went 
down in Anchorage, our plant would still operate. The energy 
which it generates beyond what is needed is turned back into 
the Chugash Electric Grid, so it does help out the local 
community. We are very interested in seeing how this operates 
over a period of time.
    Senator Akaka. From time to time I receive complaints from 
residents in some of the rural areas of Hawaii expressing 
dissatisfaction with the quality of postal service at contract 
stations. What criteria is used to establish a contract 
station, verses a U.S. Postal Service facility? And what 
oversight exists once a contract station is set up?
    Mr. Henderson. In Hawaii, as in other places, we have very 
strict criteria, much similar to establishment of a Post 
Office. In your case, Ed Broglio, who is the District Manager 
in Hawaii, is directly responsible for that, and I will be 
happy to relay those complaints to him, and I'm sure that he 
will jump right on it.
    Senator Akaka. Mr. Chairman, I have other questions, but I 
will come back to them.
    Senator Cochran. Thank you, Senator.
    Senator Domenici.

             OPENING STATEMENT OF SENATOR DOMENICI

    Senator Domenici. Well, thank you very much, Mr. Chairman.
    I have not had occasion to question you or meet with you 
since you took your new job, and I want to commend you and 
congratulate you. Obviously, the Postal Service is doing very 
well. The revenues the Postal Service is generating mean that 
the subsidies don't have to go up as they have in the past, 
because you've been very innovative.
    But I would like to say, in reading your statement, I think 
you do analyze the problem in future years correctly. The only 
thing is, I read in it that you said, ``Even if the new modes 
of communication are not growing as rapidly as we thought''--
from what I read, they are growing more rapidly in some areas 
than we ever imagined, and they are all more or less 
competitors in some sense.
    So I know you are very concerned about it from the 
standpoint of getting a good analysis and seeing where the 
Postal Service will stand under that kind of competition. But I 
guess I would just like to ask you, what do you go through in 
an effort to analyze just what will happen--whose brains are 
you picking? And what kind of people are giving you advice as 
to where things are going and whether first class mail, which 
is your staple, will be what it is today 15 years from now in 
terms of demand by Americans?
    Mr. Henderson. Well, we talk to a cross-spectrum of people, 
in addition to having our own market research folks. For 
example, I meet with CEOs around the country, folks like Lou 
Gershner at IBM, Jeff Bezos at AMAZON.COM; we pick their brains 
about where--in Mr. Gershner's case, where technology is going, 
and in Jeff Bezos' case, how he is going to use the Internet in 
the future, what's he going to do with it.
    The most vulnerable mail in the U.S. Postal Service are 
bills and payments, which account for about $15 billion. But on 
the other hand, as I mentioned in my opening statement, the 
Postal Service is in a unique position for e-commerce, because 
the Internet has squashed the profits out of products; and as 
profits get squashed out, people look for low-cost delivery 
outfits. I use the example that if you pay $6 for a CD at 
AMAZON.COM, you're not going to pay $7 to have it delivered. I 
mean, it just doesn't make any sense.
    So we sit there at $3.25 with Priority Mail and a unique 
package, and we become AMAZON.COM's shipper of choice because 
of our price and our quality.
    So there are pluses and minuses. Personally, I don't think 
anybody has a handle on where all of this is going. I think it 
changes so rapidly. And to the credit of this country, it is so 
inventive and so innovative that the landscape almost changes 
weekly, so that from Business Week to Time Magazine, you read a 
new angle. So we grope with it as best we can, and we look for 
every opportunity, whether it's PC Postage or being the shipper 
of choice for packages. We're looking at it from every angle, 
as everybody else is.
    Senator Domenici. Well, I'm pleased that you are, and I 
think it's very important.
    Just one parochial issue. In my home State and home city of 
Albuquerque, you have many facilities, but the main one is a 
very old one, located on Broadway and Central Avenue. I have 
heard concerns from some who patronize the place, some who work 
there, some who try to manage things there, that maybe it's in 
need of replacement because of its age, and lack of current 
technological sophistication for current needs.
    I wonder if you would mind having somebody take a look and 
give me some kind of a report as to its status, in your 
opinion?
    Mr. Henderson. Absolutely.\1\
---------------------------------------------------------------------------
    \1\ The letter from Mr. Henderson to Senator Domenici with 
information about the Albuquerque facility project appears in the 
Appendix on page 23.
---------------------------------------------------------------------------
    Senator Domenici. Thank you, Mr. Chairman.
    Senator Cochran. Thank you, Senator Domenici, for your 
contribution to the hearing and the work of this Subcommittee.
    Senator Levin has joined us. Senator, you are recognized 
for any comments or questions you may have.

               OPENING STATEMENT OF SENATOR LEVIN

    Senator Levin. Mr. Chairman, thank you. Welcome, Mr. 
Henderson.
    Mr. Postmaster General, you are very familiar with our 
sweepstakes effort in this Subcommittee. We passed a bill 
recently--I think it was a unanimous vote in the Senate--which 
is aimed at, among other things, giving more authority to the 
Postal Service to stop deceptive mailings, and the Postal 
Service has worked closely with us on that legislation.
    I would like you to comment on that, why you view it as 
being important, whether you think it goes far enough, does it 
give you the tools that you need?
    Mr. Henderson. The answer to whether it goes far enough is, 
we think it does. We think it is a very good piece of 
legislation.
    The practices in the industry were hurting the industry. In 
my opening statement, I said sweepstakes response rates had 
fallen anywhere from 20 to 40 percent, so the whole industry 
was hurt by the deception. I think it was a very responsible 
act to bring some health back to that industry. It hurt our 
volume; our net volume was hurt this year because the American 
public were really put out over deceptive mailings, and I think 
the legislation was a key answer.
    Senator Levin. One of the issues that has come up relative 
to the sweepstakes is the question of postal subsidies for 
nonprofit organizations. I understand that basically, on 
sweepstakes from a profit organization, you do not lose money 
on that mailing; that mass mailing is not a money loser for 
you, there is no subsidy involved in it----
    Mr. Henderson. Right.
    Senator Levin [continuing]. And you might even make a 
little money on it.
    But some of the promotions by some of the nonprofits use 
some of the same deceptive practices that we've seen in the 
profit-making organizations. Some of the techniques that we 
object to from some of the big sweepstakes companies are 
problems, whether they are used by them or whether they are 
used by a nonprofit organization. The difference is that where 
a nonprofit organization uses a sweepstakes which is deceptive, 
at that point we are subsidizing that because there's a subsidy 
for nonprofits in our Postal Service.
    My question is this. If a nonprofit organization which has 
been given a subsidized postal rate is found to have engaged in 
a deceptive practice, can they lose that subsidy? Is that one 
of the remedies you can apply?
    Mr. Henderson. I'm not sure. I don't know. I can provide 
that answer to you.
    I do know that nonprofits that engage in commercial 
activities--and this is a technical thing--can lose their 
nonprofit status, and we would certainly not be supportive of 
any deceptive mailing by anyone.
    Senator Levin. In terms of my question, would you answer 
that one for the record?
    Mr. Henderson. Yes, I will. Sure.

 The Information Submitted by Mr. Henderson for Senator Levin follows:
    An organization is eligible to mail at the Nonprofit Standard Mail 
rates if it is not organized for profit and none of its net income 
accrues to the benefit of any private stockholder or individual. 
Revocation of a nonprofit mailer's eligibility to mail at Nonprofit 
Standard Mail rates is based upon the determination that the 
organization is not qualified to mail at the Nonprofit Standard Mail 
rates in accordance with the regulations in Domestic Mail Manual, 
Section E670. Attached is that section of the ``Domestic Mail Manual'' 
\1\ that applies to eligibility for and revocation of an authorization 
to mail at the Nonprofit Standard Mail rates.
---------------------------------------------------------------------------
    \1\ The information entitled ``Domestic Mail Manual,'' section 
E670, supplied for the record appears in the Appendix on page 24.

    Senator Levin. You and I have had some correspondence about 
semi-postal stamps where the buyer pays more than the cost of a 
first class mailing, and the increment above that cost goes to 
a particular cause. For instance, we did it with breast cancer 
research. The Postal Service issued that. There were many of us 
who thought it was a mistake; I was one of them that did, and 
voted against it, because I thought that it gets us into an 
area where the Postal Service, by its own regulations or 
advice--its own criteria--had decided it would not go anymore. 
Your stamp subject selection criteria specifically says that 
semi-postals shall not be issued; that was your criteria. It 
seems to me it was right because there are so many valuable 
causes. As it was said in this criteria as the reason for it, 
there is such a vast number of worthy fundraising organizations 
in existence that it would be difficult to single out specific 
ones to receive such revenue.
    Now, we recently had a bill that came through our Committee 
which would provide a semi-postal, with the proceeds going, 
apparently, to a nonprofit organization, which I think is also 
perhaps unique, called ``Operation Lifesaver.'' I'm sure it's 
an extremely good organization, but that's not the issue. I 
don't know whether we've ever had public funds going to a 
nonprofit that way through a semi-postal, whether it's ever 
been used in that way.
    But putting that issue aside, no matter how worthy an 
organization it might be, you wrote me a letter urging us not 
to proceed with any additional semi-postal stamps, including 
the ``Look, Listen, and Live'' Stamp Act, S. 712, until the 
sales period of the breast cancer research stamp has expired 
and the GAO has completed its audit.
    I wonder whether you would give us the reasons for why you 
feel that we should hold off on any additional semi-postal 
stamps being authorized until we can see what the audit of the 
breast cancer research stamp looks like?
    Mr. Henderson. When the breast cancer semi-postal was 
introduced, it was introduced for a period of time, in which 
case there would be some look-back to see how successful it 
was, both from an intent to generate money, and from a postal 
obligation to administer production, distribution and sales. I 
think it's just prudent to wait, since breast cancer research 
was the first semi-postal, to wait and do the work on the semi-
postal before we issue additional ones.
    Senator Levin. Mr. Chairman, I would ask that the letter 
from Mr. Henderson to me be included in the record at this 
point.
    Senator Cochran. Without objection, it is so ordered.
    [The referenced letter follows:]

                               United States Postal Service
                               Washington, DC 20260, June 15, 1999.
Honorable Carl Levin
United States Senate
Washington, DC 20510.

    Dear Senator Levin: This is in response to your May 11 letter 
concerning information regarding the breast cancer research semi-postal 
stamp.
    As you know, on August 13, 1997, the President signed into law the 
Stamp Out Breast Cancer Act that mandated the Postal Service to issue 
within 12 months a special first-class postage stamp with a 
differential, not to exceed 25 percent or 8 cents. On July 29, 1998, 
the stamp was issued and will be available to the public for 2 years. 
The Act provides that before the end of the 2-year period, the General 
Accounting Office will perform an audit on the Breast Cancer Research 
Stamp operation.
    The Postal Service historically believed that as America already 
has a philanthropic tradition unmatched by other nations, semi-postals 
would be perceived as yet another solicitation and a public intrusion 
in an area where private initiative and generosity have had very 
beneficial results. We also believed that were the Postal Service to 
issue semi-postal stamps, either we or the Congress would be placed in 
the very difficult position of determining which organizations should 
be funded and which should not.
    However, as the Congress expressed itself so strongly on this 
issue, the Postal Service has enthusiastically embraced the breast 
cancer semi-postal stamp. To ensure the success of stamp sales, the 
Postal Service developed a comprehensive advertising and promotions 
plan to support the national launch of the Breast Cancer Research 
Stamp. The promotional initiatives include post office sales kits, 
television/radio interviews, a video news release featuring First Day 
of Issue ceremony, postal communications to all our employees, and 
press kits to major media and health organizations. To date, over 92 
million of the breast cancer semi-postal stamps have been sold.
    While the Postal Service has developed guidelines for tracking 
costs, we have not yet fully defined which incremental costs associated 
with the stamp will be offset against revenue. We have, however, issued 
payments to the National Institute of Health and Department of Defense, 
as intended by the law, totaling over $6.9 million, after expenses.
    With regard to S. 712, the Stop, Listen and Live Stamp Act, 
introduced by Senator Lott, the Postal Service would prefer that no 
additional semi-postal stamps be authorized until the sales period of 
the Breast Cancer Research Stamp has expired and GAO has completed its 
audit. We are concerned that a competing semi-postal stamp would have a 
negative effect on sales and ultimate success of the Breast Cancer 
Research Stamp. We believe the success and cost of the stamp should be 
fully evaluated before another semi-postal stamp is authorized in order 
to determine the value this type of stamp brings to charitable 
fundraising.
    Thank you for the opportunity to clarify our position on this 
issue. If I may be of assistance in other postal matters, please let me 
know.

            Sincerely,
                                       William J. Henderson

    Senator Levin. And finally, I wonder if you would go back 
into the semi-postal issuances historically and provide for the 
record whether or not there has been an occasion where the 
incremental amount--for instance, $0.07, I think, in breast 
cancer research--has ever gone to a non-governmental entity, 
whether we have ever turned over that funding that is raised to 
a private entity, or whether we'd be setting an example with S. 
712? If you know now, you could please tell us; if not, you 
could tell us for the record.
    Mr. Henderson. There has never been a semi-postal of that 
nature, and the breast cancer stamp was the first semi-postal. 
So we don't have any experience in the past with these sorts of 
things. That's why we wanted to do a full review of the breast 
cancer issuance.
    Senator Levin. Where did the extra money go for that breast 
cancer research?
    Mr. Henderson. It went to the Department of Defense and 
NIH.
    Senator Levin. You said we've never issued a semi-postal?
    Mr. Henderson. I don't believe so.
    Senator Levin. In the history of the country?
    Mr. Henderson. It's the first one ever.
    Senator Levin. Thank you, Mr. Chairman.
    Senator Cochran. Thank you, Senator.
    Mr. Henderson, what is the status of the Postal Service's 
efforts to prepare for the year 2000? We understand that you 
have undertaken to deal with this, and we wonder what you can 
tell us about the status of the Postal Service's preparations 
for providing mail delivery services after the beginning of the 
new year.
    Mr. Henderson. Well, we've had an extensive effort, as you 
might imagine. We have 100 million lines of code in the Postal 
Service, and of those, we have identified 137 systems as 
mission-critical, and we have created over 700 contingency 
plans, and we've had a full dress rehearsal in which the 
systems all worked. We think the Postal Service is well 
prepared for Y2K. We even have a notion of an advertising 
program that when all else fails, you can always put it in the 
mail.
    Senator Cochran. I know that you have tried to identify a 
number of the major challenges that the Postal Service faces 
going into the next decade, as well as the next millennium. Can 
you tell us anything about the priorities that you have set to 
help meet these major challenges?
    Mr. Henderson. Sure. I think that the first and foremost 
challenge that the Postal Service faces internally is to 
maintain a strong vigilance on its costs. The key to being a 
high-quality, low-cost provider is the key to being in the 
marketplace in the new millennium.
    I also think that the Postal Service needs to look 
thoroughly at the Internet to see what opportunities it 
provides Americans from the Postal Service, such as PC Postage, 
ease of use, our website, that you can get Priority Mail. And I 
also think that the Postal Service needs to look at new 
opportunities for revenue--as, for example, facilitating bill 
payments, areas like that.
    But we see a very strong future for the U.S. Postal 
Service. We, in fact, are the only organization that goes to 
every house every day around the same time each day. So as 
people disaggregate and begin to have offices that are only 
connected by PCs, we've become a vital link in connecting the 
physical merchandise to these households.
    Senator Cochran. As you have probably noticed, the bells 
have sounded for a vote over on the Senate Floor, and my 
colleagues have all deserted me. [Laughter.]
    I don't want to be the only Member of the Subcommittee to 
miss the vote, so I am going to suspend the hearing at this 
point, go over and make this vote, and come right back, if you 
will indulge us for just a little.
    Mr. Henderson. Sure.
    Senator Cochran. The Subcommittee will stand in recess.
    [Recess.]
    Senator Cochran. If the Subcommittee will come to order, we 
will resume our hearing.
    One of the areas of interest in the annual report you have 
submitted is the international mail area and the competition 
that is developing, with the Postal Service actually losing 
volume in some areas of the mail market internationally. How do 
you intend to improve upon your competitive relationship in the 
international market for Postal Service delivery and increase 
your international mail volume?
    Mr. Henderson. I think the answer to that lies in the 
answer to many of the other issues, and that is to provide a 
low-cost, high-quality product. As a tactical matter, we have 
partnered with people like DHL to provide consistency in 
transportation, and in some instances, delivery. We have also 
partnered with private posts, such as Japanese Post, and we 
have maintained strict quality control between the two posts.
    But competition is fierce internationally, not just from 
the U.S.-based competitors but also from the foreign posts. You 
know, foreign posts are coming to the United States. Germany 
has an organization, Deutsche Post USA. The British have 
offices in New York, Chicago, and California. The Dutch Post is 
here. So there is a globalization of activity of postal 
administrations around the world.
    One of the principal drivers for our volume drop-off this 
year is that the bulk of international mail had been letter 
mail, and electronic diversion clearly has impacted that 
significantly. The other is the fact that our focus had been on 
Asia, especially with partners like L.L. Bean in Japan, and the 
``Asian flu,'' if you will, the Asian economy created a problem 
for us. But we expect to come back. We will be in the game.
    Senator Cochran. Recently there has been some controversy 
over the proposed amendments that you have developed to 
regulations regarding commercial mail receiving agents, or 
CMRAs as they are called. These regulations govern mail that is 
delivered by the Postal Service to private businesses that rent 
out mail boxes to customers.
    As I understand it, the proposed amendments were intended 
to protect consumers from mail fraud, primarily by requiring 
the boxholders to provide additional information and to list 
the address as a private mailbox. But boxholders and small 
business owners have raised concerns to us about the impact 
that these new requirements may have.
    What has the Postal Service done to address these concerns?
    Mr. Henderson. Well, customers had concerns about their 
stationery, so we extended the period of time to comply so that 
customers would have ample time to change the stationery. That 
was their big issue.
    The PMB, or private mailbox, was another concern. If you 
use a post office box, you have to say, ``Post Office Box 
152.'' On the private mailboxes, folks were using addresses 
like ``Suite 16,'' and then the address of the PMB. A lot of 
fraud was being perpetrated. Law enforcement actually got 
together with the U.S. Postal Inspectors and said, ``We really 
need to remedy this. We need to protect the receiver of the 
mail.'' So we are just requiring CMRA customers to show that 
they are a private mailbox, that's all, so that as a consumer 
you won't think that you are doing business with this ``suite'' 
in some building.
    Senator Cochran. Senator, I have a couple more questions to 
wrap up the hearing, but I am prepared to yield to you for any 
further questions you might have at this point.
    Senator Akaka. I thank you. I have a few more questions 
too, Mr. Chairman.
    Postmaster General, you have touched on one of the areas 
frequently mentioned as a major challenge for the Postal 
Service, and that is labor management relations. How are these 
relations now? And what efforts are planned or needed to 
develop an effective partnership between management and 
employees, management associations, and labor unions?
    Mr. Henderson. I think the biggest success in labor 
management relations in the last year has been the agreements 
with the American Postal Workers Union and the Mail Handlers 
Union. We are currently in negotiations with the National Rural 
Letter Carriers Association.
    The biggest disappointment in labor management relations 
was the inability to reach an agreement with the NALC, which is 
now in arbitration in its final days. Labor management 
relations remain for me a top priority, but it's a huge 
challenge. I think that part of the challenge is that the 
parties have to learn to work together to resolve problems and 
not rely on a third party, and I think the blame for that lies 
both within management and within the unions, and we are--at 
the leadership of the unions and management--trying to do 
something about that.
    Senator Akaka. Over the years, employee violence has been a 
major concern within the Postal Service. What ongoing efforts 
are being undertaken by the Postal Service to address the 
problem of violence?
    Mr. Henderson. Well, we have an independent study being 
done on violence, headed by Joe Califano, and it has other 
distinguished members, like Doug Frazier from the Auto Workers, 
and we expect that report to be concluded in June.
    In addition, we have threat assessment teams all over the 
United States that react to any potential threat. We have an 
extensive employee assistance program that is a model for the 
public and the private sector, and we have employed activities, 
strategies like that--and we think we've made progress in 
communication between employees, which is really important. If 
it gets hostile, we intervene.
    It is, though, a tough issue. It's not one where there is a 
simple formula. Violence in America, as you well know, is a 
tough problem to solve.
    Senator Akaka. It seems as if the employee assistance 
program has been successful in its efforts to combat workplace 
violence, and that program is supported by postal employee 
unions. I have been informed that $2.7 million will be cut.
    What percentage of the program's total budget does this 
represent?
    Mr. Henderson. I couldn't tell you off the top of my head, 
but I will be happy to tell you for the record.
    Senator Akaka. All right. Certainly, we will want that 
information. How will these cuts affect the program?
    Mr. Henderson. Well, it is my recollection that about 30 to 
40 counselors would be reduced. That's what I recall. But we 
don't take that as a lack of support for the program. We do 
housecleaning now; we've said that we're not going on a diet, 
we're changing our lifestyle. We're having to do more with less 
in every aspect of the Postal Service. That's just a part of 
cost containment.
    So while the employee assistance program gets a little 
reduction, so does every other department.
    Senator Akaka. Thank you. You answered the other part of my 
question which was going to be the reason for the cuts.
    In October 1997, a study on postal workforce diversity was 
released that made recommendations intended to help the Postal 
Service address diversity issues and concerns. In response to 
the study, the Postal Service developed initiatives that were 
generally designed to help strengthen the diversity program.
    What progress has the Postal Service made in implementing 
these initiatives?
    Mr. Henderson. There were 23 recommendations, and a task 
force chaired by the Chief Operating Officer and the Chief 
Financial Officer. We have implemented all of the 
recommendations.
    Senator Akaka. How do the Postal Service's recruitment and 
hiring practices help ensure that it has a diverse workforce? 
And what improvements have recently been made in this area?
    Mr. Henderson. We have proactive recruitments in 
communities, in minority communities. We list job postings. We 
talk to minority organizations about opportunities in the 
Postal Service, and we've been very successful with this.
    Senator Akaka. Thank you, Mr. Chairman.
    Senator Cochran. Thank you, Senator.
    I know that other Senators who are Members of the 
Subcommittee may also have questions to submit for answers that 
will be included in the hearing record, and we hope you will be 
able to respond to those in a timely fashion.\2\
---------------------------------------------------------------------------
    \2\ The questions and answers from Senators Collins, Lieberman, and 
Cleland for Mr. Henderson appear in the Appendix on pages 36-41 
respectively.
---------------------------------------------------------------------------
    I have only one concluding question.
    We were in debate last year on the subject of post office 
closings and relocations, and some Senators wanted to write 
into the law some requirements for the Postal Service to follow 
in such situations. As you may remember, there were new 
regulations that the Postal Service came up with for notifying 
communities about changes in their Postal Service buildings.
    Can you tell us how these are working and whether there is 
any need for Federal legislation on this subject, in your 
opinion?
    Mr. Henderson. In my opinion there is no need for Federal 
legislation, certainly no process that would require all of the 
issues in the community to be adjudicated in Washington. It 
would put our capital improvement effort into gridlock 
nationwide.
    We have issued new rules requiring very active, proactive 
community involvement. Essentially, we want to be a friend to 
the community. We don't want to put post offices where the 
community doesn't want them. But at the same time, we can't be 
held hostage by one individual in the community. We have a 
policy of working with the community; for example, taking post 
offices out of downtown areas--we don't ordinarily do that. We 
leave a retail section; we may separate the plant from the 
retail section. So we stress very much to our field officials 
that we want to be a positive part of the community. We do not 
want to be an issue in the community, and I think we've had 
success in that regard.
    Senator Cochran. I want to ask a parochial question. I went 
to a postal facility to buy a Federal duck stamp last year, and 
there was a big, long line at this postal facility. It was one 
of those bad, rainy early-fall days that we have in the south, 
and it seems like that's when everybody wants to go to the post 
office, and we all went at once. There must have been about 20 
people standing in line. There were four or five windows at 
this facility, but there was only one window open and one 
person standing there, it seemed to me, very casually 
interested in serving the public. Of course, I didn't run up 
and say, ``I'm a United States Senator and I'm here to buy my 
duck stamp'' or anything like that. As a matter of fact, I 
tried to be as in disguise as I possibly could because they 
might all hold me responsible for this clerk's very negligent, 
I thought, and carefree attitude about the situation. 
[Laughter.]
    I hear complaints like this, and I've personally 
experienced that one, and I just thought I would bring it to 
your attention. What are you doing about that?
    Mr. Henderson. Well, we have a national policy--obviously 
it wasn't followed in your case--of customers waiting in line 
less than 5 minutes, and obviously we have a range of 
management skills in the field. I think this Postmaster needs a 
little personal counselling. If you will give me the name off 
the record, I assure you that you won't stand in line the next 
time you walk into that post office. [Laughter.]
    Senator Cochran. Well, I'm not interested in it so much for 
myself, but I know the general public runs into that from time 
to time. I hear about it and I'm sure other Members of the 
Senate occasionally hear about the same thing. Senator Akaka 
brought up the contract situation in his State.
    But these are the day-to-day problems that I think a lot of 
Americans are concerned about. Being interested and showing 
that you are interested in serving the consuming public in a 
polite and efficient way, that would really go a long way, I 
think, toward improving the image of the Postal Service and 
improving the way Americans are able to use the Postal Service 
facilities throughout the country.
    I know that's the goal, and I hope you can lend a little 
energy to the effort to instill that attitude into Postal 
Service workers nationwide, most of whom I am sure are very 
courteous and efficient. But there are some who are not. I hope 
that we can get them other work of some kind.
    Mr. Henderson. Maybe in another organization.
    Senator Cochran. Maybe in another part of the building. I 
don't know. Or another job description.
    Well, you have been very good to be patient with our 
questions and give us this interesting and helpful report on 
the status of the Postal Service. We appreciate the good work 
that you have done in this job up until now. I am very 
impressed with the energy and experience that you have brought 
to the job, and I commend you for the effort that you are 
putting into it.
    Mr. Henderson. Thank you, Mr. Chairman.
    Senator Cochran. Senator Akaka.
    Senator Akaka. Yes. I would like to add my applause to what 
you are doing, Postmaster General, and tell you that I 
personally know that you are managing the people in the 
Pacific, and they do a great job for you and our country. We 
look forward to the great leadership that you give to the 
Postal Service. To know that we're in the black and doing 
pretty well and that we are meeting the challenges that are 
ahead--I feel good about that, and I want to thank you so much 
for what you are doing.
    Mr. Henderson. Thank you.
    Senator Cochran. Thank you.
    The hearing is adjourned.
    [Whereupon, at 3:08 p.m., the Subcommittee was adjourned, 
to reconvene at the call of the Chair.]



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