[Senate Hearing 110-320]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 110-320
 
     VIEWS FROM THE POSTAL WORKFORCE ON IMPLEMENTING POSTAL REFORM 

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

                                HEARING

                               before the

                FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
                   INFORMATION, FEDERAL SERVICES, AND
                  INTERNATIONAL SECURITY SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 25, 2007

                               __________

        Available via http://www.access.gpo.gov/congress/senate

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs

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37-365 PDF                 WASHINGTON DC:  2008
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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk


FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, FEDERAL SERVICES, 
                AND INTERNATIONAL SECURITY SUBCOMMITTEE

                  THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan                 TOM COBURN, Oklahoma
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
BARACK OBAMA, Illinois               GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri           PETE V. DOMENICI, New Mexico
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                    John Kilvington, Staff Director
                  Katy French, Minority Staff Director
                       Liz Scranton, Chief Clerk









































                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator Collins [ex officio].................................     3
    Senator Akaka................................................    13

                               WITNESSES
                        Wednesday, July 25, 2007

William Burrus, President, American Postal Workers Union.........     4
John Hegarty, President, National Postal Mail Handlers Union.....     7
Donnie Pitts, President, National Rural Letter Carriers 
  Association....................................................     9
William H. Young, President, National Association of Letter 
  Carriers.......................................................    11
Louis Atkins, Executive Vice President, National Association of 
  Postal Supervisors.............................................    27
Dale Goff, President, National Association of Postmasters of the 
  United States..................................................    29

                     Alphabetical List of Witnesses

Atkins, Louis:
    Testimony....................................................    27
    Prepared statement...........................................    57
Burrus, William:
    Testimony....................................................     4
    Prepared statement...........................................    35
Goff, Dale:
    Testimony....................................................    29
    Prepared statement...........................................    62
Hegarty, John:
    Testimony....................................................     7
    Prepared statement...........................................    38
Pitts, Donnie:
    Testimony....................................................     9
    Prepared statement...........................................    47
Young, William H.:
    Testimony....................................................    11
    Prepared statement...........................................    51

                                APPENDIX

Prepared statements:
    Charles M. Mapa, President of the National League of 
      Postmasters................................................    69
    John V. ``Skip'' Maraney, Executive Director of The National 
      Star Route Mail Contractors Association with attachments...    76


     VIEWS FROM THE POSTAL WORKFORCE ON IMPLEMENTING POSTAL REFORM

                              ----------                              


                        WEDNESDAY, JULY 25, 2007

                                   U.S. Senate,    
          Subcommittee on Federal Financial Management,    
                Government Information, Federal Services,  
                                and International Security,
                            of the Committee on Homeland Security  
                                          and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 3:03 p.m., in 
Room 342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, Chairman of the Subcommittee, presiding.
    Present: Senators Carper, Akaka, and Collins.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. I am tempted to say the Subcommittee will 
come to order, but the Subcommittee has already come to order. 
This is one of the quietest gatherings I have ever seen, at 
least for this crowd.
    We welcome you all and thank you, on behalf of Senator 
Collins and myself, our thanks to our witnesses for taking your 
time to be here today, for preparing for this hearing, and for 
your willingness to respond to our questions. We want to thank 
you for your help, Senator Collins and myself and our 
colleagues here in the Senate and the House, as we worked for 
years to try to update the Postal Service's business model.
    I know that the final Postal reform bill that was signed 
into law by the President in December didn't turn out to be 
exactly as we had all hoped, at least not in some areas, but I 
think your commitment and the commitment of those that you lead 
to getting the bill right, or mostly right, helped us start a 
new era for the Postal Service. Your efforts and those of a lot 
of people who helped us certainly are commendable.
    I think what we were able to accomplish together will, if 
implemented properly, and I would underline that, if 
implemented properly, will be a good thing for the American 
people and for the men and women that you are privileged to 
represent and that we are privileged to represent.
    This is, as you may know, the second of three hearings that 
we are going to be holding this year to hear the views from the 
Postal Service, the Postal Regulatory Commission, and key 
stakeholders in the Postal community on the implementation of 
the Postal Accountability and Enhancement Act. This is also a 
hearing I have been looking forward to. I have always thought 
that Postal employees, that is, the people who interact with 
the public and Postal customers every day, can tell us the most 
about what is working at the Postal Service and what isn't.
    In addition, under the new pricing and regulatory regime 
currently being developed by the Postal Regulatory Commission, 
the Postal Service will need to work closely with its employees 
to find efficiencies and to seek out innovative new ways to 
make Postal products more valuable.
    Postal employees have a lot to add to the discussion about 
what needs to be done going forward to make Postal reform work. 
That is why I have been disappointed by some recent 
developments that have put a strain on labor-management 
relations at the Postal Service. I was troubled to learn that 
the American Postal Workers Union has been forced to sue the 
Postal Service to gain entry to meetings of the Mailers 
Technical Advisory Committee or even to learn anything at all 
about what happens at that group's meetings. I know that this 
group is now called the Mailers and Unions Technical Advisory 
Committee, but I also know that the committee is an important 
body that facilitates the sharing of ideas about how the Postal 
Service can improve the way it does business. I think the 
Postal Service could benefit from giving employee 
representatives a voice in these discussions.
    I have also been troubled by recent developments in the 
area of contracting out. While I have always argued that the 
Postal Service must do all it can to cut costs, taking work 
that is traditionally performed by Postal employees and giving 
it to contractors just because they can do it cheaper is not 
always a good idea. An organization like the Postal Service 
that depends so much on daily direct contact with its customers 
cannot afford, at least in my view, to rely solely on 
contractors to make those contacts.
    I am pleased, then, that the Postal Service has recently 
reached a tentative contract agreement with the National 
Association of Letter Carriers that places some restrictions on 
the contracting out of mail delivery. That agreement also, as I 
understand it, sets up a joint carrier-Postal Service committee 
that will seek to find a more permanent resolution to the 
debate over contracting out. It is my hope that the other 
unions represented here will play a role in that committee's 
discussion at some point down the road. Dialogue with the 
Postal Service, the letter carriers have proven, is how this 
issue will be resolved.
    For now, we look forward to your testimony today on 
contracting out and on the other issues that the Postal Service 
is grappling with as we await the beginning of the new system 
that we created together last year. My thanks for your 
participation, for your presence, and for your hard work and 
all the hard work of the men and women that you are privileged 
to represent.
    Since Dr. Coburn is not here yet--I think he is coming. But 
since he is not here yet, I would like to introduce my 
colleague from Maine, who worked at least as hard as I did, and 
I know her staff did, as well, on this legislation for the last 
God knows how many years. It is a privilege to be here with you 
and you are recognized for as much time as you wish to consume.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. That is a very dangerous invitation to 
ever give a U.S. Senator, to take as much time as she would 
like to consume. I thank you, Mr. Chairman, for your 
graciousness in allowing me to make an opening statement and I 
very much appreciate the opportunity to join you today.
    As the Chairman is well aware, when I was Chairman back in 
the good old days, the Postal issues were handled at the full 
Committee because I felt they were so important and I wanted to 
make sure I had a pivotal role in all the Postal issues that 
come along. With the reorganization, they are now at the 
Subcommittee level, but they are in very good hands with 
Senator Carper as the Chairman of this Subcommittee. But he is 
allowing me occasionally to come to his Subcommittee hearings 
because he knows that my concern and interest in the Postal 
Service and support for its employees remains undiminished, so 
I do appreciate the opportunity to be here.
    When I look out at the crowd and at the witness table 
today, it really is old home week, as well, since the long and 
difficult process of bringing about the most comprehensive 
modernization of the Postal Service in 30 years was successful 
only due to the close consultation that we had with the entire 
range of experts and stakeholders, the Postal Service 
officials, the mailing community, the public, and, of course, 
the Postal employee associations and unions which are 
represented here today. And although we did not agree on every 
issue, and a bill like this always involves compromise, I think 
that all of us can be proud to have played a role in getting 
Postal reform legislation signed into law. The insights and the 
involvement of employee groups were invaluable in this effort.
    But the real test of legislation is not in getting it 
passed, but in seeing that it works. It is essential that the 
steps toward implementation remain true to our original goals, 
and I want to just repeat the three original goals that I know 
we have had since the beginning.
    First was to ensure that affordable universal service 
remains. It is so critical. It is such a part of our heritage 
and I want it to be part of our future as well, and that 
universal service principle was one that has always been very 
important to me.
    Second, we wanted to strengthen the Postal Service because 
it is the linchpin of a $900 billion mailing industry that 
employs nine million Americans.
    And third, we wanted to secure the futures of the more than 
750,000 Postal employees who make this remarkable component of 
American society and our economy work, and this was as 
important as the other two goals. I will never forget the GAO 
coming before our Committee and warning that the Postal Service 
was in a death spiral and raising questions about its very 
viability into the 21st Century.
    We drafted the legislation with those three goals in mind 
and your continual involvement is essential. Whether the 
employees you represent work in a huge distribution plant, in 
the community post office, or alone on a delivery route, in the 
city or in rural America, you provide a level of knowledge and 
experience that is essential. So I look forward to hearing your 
views today.
    Thank you, Mr. Chairman.
    Senator Carper. You bet. I think Senator Akaka is on his 
way. He is going to join us, and when he gets here, I am going 
to offer him the opportunity, if he wants, to offer an opening 
statement.
    But in the meantime, why don't we just go ahead and get 
started. We are working, on the Senate floor today, we are 
working on one of our appropriations bills, the Homeland 
Security appropriations bill which Senator Collins and I have a 
whole lot of interest in. We will probably be interrupted 
somewhere along the line for votes, but I will just ask you to 
bear with us and we will try to do that as quickly as we can.
    Let me make short introductions, if I could, for each of 
our witnesses, and we will start with William Burrus, also 
known as Bill Burrus. He is President of the American Postal 
Workers Union. Bill Burrus was elected President in 2001, 
becoming the first African American ever to be elected 
President of a national union. Mr. Burrus started with the 
Postal Service in 1958 at the age of 12, maybe a little bit 
older, and he served in a number of leadership positions with 
the APWU. He also serves as Vice President of the Executive 
Council of the AFL-CIO and is Chairman of the AFL-CIO's 
Committee on Civil and Human Rights. Welcome.
    John Hegarty became President of the National Postal Mail 
Handlers Union in July 2002 and was reelected to that position 
at the union's national convention in 2004. For the 10 years 
prior to becoming national President, Mr. Hegarty served as the 
president of his union local in New England. Was that in 
Springfield?
    Mr. Hegarty. Springfield. The six south New England States.
    Senator Carper. Alright. He was employed as a mail handler 
in Springfield, Massachusetts, beginning in 1984. Welcome.
    Donnie Pitts is President of the National Rural Letter 
Carriers Association. He is currently serving his second 1-year 
term in that position, after serving two terms as Vice 
President. He served at his union and at the Postal Service for 
a total of 37 years.
    And finally, William H. Young is President of the National 
Association of Letter Carriers. He took office in December 2002 
after serving in a number of national leadership positions for 
the union since 1990. He began his Postal career in 1965, more 
than 40 years ago.
    With those introductions completed, I would ask each of our 
witnesses to try to keep your oral comments to about 5 minutes. 
We won't be too strict on it, but roughly 5 minutes. Your 
entire statements will be part of the record.
    Mr. Burrus, you are recognized and I would invite you to 
proceed. Thank you again for joining us.

  TESTIMONY OF WILLIAM BURRUS,\1\ PRESIDENT, AMERICAN POSTAL 
                         WORKERS UNION

    Mr. Burrus. Thank you, Mr. Chairman. Mr. Chairman and 
Senator Collins, other Members of the Subcommittee as they 
arrive, thank you for providing me this opportunity to testify 
on behalf of the 300,000 dedicated Postal employees who our 
union is privileged to represent.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Burrus appears in the Appendix on 
page 35.
---------------------------------------------------------------------------
    I commend the Subcommittee through your leadership, Mr. 
Chairman, for convening this hearing on the important subject 
of subcontracting and other issues in the U.S. Postal Service. 
In the interest of brevity, Mr. Chairman, I request the 
opportunity to summarize my prepared statement and enter the 
full testimony into the record.
    Senator Carper. Your full testimony will be entered into 
the record, so feel free to proceed.
    Mr. Burrus. Thank you. For more than a decade, virtually 
all of the legislative focus on the U.S. Postal Service was 
based on the belief that absent radical reform, this 
institution faced eminent demise. Our union did not share this 
belief and viewed it as an attempt to undermine collective 
bargaining. However, the Act has become law and we promised to 
lend our best effort to making it work.
    But now with the ink on the legislation barely dry and with 
new regulations spawned by the law yet to be written, we turn 
our attention to the unfinished business of reform, the 
subcontracting of Postal services. Throughout the torturous 
debate over Postal reform, not a single proposal was made to 
privatize the Postal Service. Yet Postal management, in concert 
with private enterprises, has begun to travel resolutely down 
this road without the approval of Congress. The subcontracting 
of delivery routes, which has been the subject of much recent 
discussion, is just one aspect of a dangerous trend: The 
wholesale conversion of a vital public service to one performed 
privately for profit.
    The U.S. Postal Service adoption of a business strategy 
based on outsourcing is especially troubling in view of the 
obligation to military veterans and its responsibility to 
provide career opportunities for all Postal employees. But 
nonetheless, the U.S. Postal Service has adopted a business 
model that strives to privatize transportation, mail 
processing, maintenance, and delivery.
    As the Washington Post reported this month, a prominent 
mailing industry spokesman recently opined, ``In the not-too-
distant future, the Postal Service could evolve into something 
which could be called the master contractor, where it maintains 
its government identity but all the services would be performed 
by private contractors.'' This is a private investor's dream, a 
tax-exempt public monopoly with revenues of $80 billion per 
year. Eager businessmen will seize the opportunity, divide the 
pieces of the Postal Service among themselves for substantial 
private financial gain.
    Perhaps the most insidious example of this march to 
privatization is the operation of the Mailers Technical 
Advisory Committee, a panel composed of high-ranking Postal 
officials and mailing industry executives. At closed-door 
meetings, top-level Postal officials entertain policy 
recommendations by the Nation's biggest mailers, and despite 
the Government in the Sunshine laws the public is excluded from 
their deliberations, as are individual consumers, small 
businesses, and, of course, labor unions representing the 
employees.
    The APWU and the Consumer Alliance for Postal Services have 
filed a lawsuit challenging this secret policy making, which 
has operated for many years in relative obscurity except to 
Postal insiders. But Congress has passed a law prohibiting the 
very secrecy that is being practiced. Under this law, it should 
be fairly easy to find out which Postal policies and programs 
originated and were finalized on the advice of the industry 
representatives in MTAC. The Act requires that committee 
meetings be open to the public and that minutes of meetings be 
available.
    After the removal of the minutes from the official website 
and the request of my union for access, I am informed that such 
minutes are now available in an abbreviated form, but to date, 
they have not responded favorably to our requests for 
membership.
    The secrecy of this powerful advisory committee is now 
taking on an even more ominous tone. The Postal Accountability 
and Enhancement Act maintained that the Postal Service publish 
new service standards in consultation with the Postal 
Regulatory Commission. It is a matter of grave concern that 
representatives of the Commission, rather than awaiting formal 
proposals from the Postal Service, have been invited to attend 
secret MTAC meetings where these standards are under 
discussion. These standards will be the heartbeat of Postal 
services in the future, and no single entity should have undue 
influence on their creation.
    On the issue of privatization of the U.S. Postal Service, 
it is imperative that Congress take a stand, insist on its 
rights and its responsibilities to set public policy. What is 
at stake is whether an independent Federal agency that performs 
a vital public service should be converted to private, for-
profit enterprises.
    I previously testified before the House Subcommittee and 
asked that lawmakers refrain from substituting their judgment 
for that of the parties who are directly involved because the 
road of intervention is a slippery slope. If you adopt a bill 
that addresses subcontracting of a specific Postal service, who 
will resolve the ensuing disputes? Will courts and judges be 
called upon to replace arbitrators and the parties' 
representatives as the interpreters of the provisions that you 
imposed?
    We believe that the USPS and its unions are best suited to 
make the many decisions and compromises that are required in 
all matters involving wages, hours, and working conditions for 
the employees we represent, and I congratulate the Postal 
Service and the National Association of Letter Carriers for 
resolving their major dispute within the framework of 
collective bargaining.
    However, there are issues of such importance that Congress 
must intervene and set public policy. If you believe, as we do, 
that the Nation's mail service demands a level of trust between 
the government and the American people requiring the use of 
dedicated, trustworthy career employees who are official agents 
of the government, you can achieve your objective without 
bargaining in our stead. You can accomplish this goal by 
requiring the Postal Service to negotiate over subcontracting. 
This simple minor modification would place the issue in the 
forum where it belongs. You would not be breaking new ground 
because you have previously granted us the authority to 
bargain. To address the important issues of contracting, we 
need the opportunity, and that will require your assistance.
    Thank you for providing our members the opportunity to 
express our views on these important subjects and I would be 
pleased at the appropriate time to respond to any questions you 
may have. Thank you.
    Senator Carper. President Burrus, thank you very much.
    We have been joined by Senator Akaka and I invite him to 
give an opening statement. I think when we finish this first 
round of witnesses, when they have concluded, when Mr. Young 
concludes his statement, I will call on you for your opening 
statement and then we will go into questions.
    Senator Akaka. Thank you.
    Senator Carper. We are delighted that you are here. Mr. 
Hegarty, welcome.

 TESTIMONY OF JOHN HEGARTY,\1\ PRESIDENT, NATIONAL POSTAL MAIL 
                         HANDLERS UNION

    Mr. Hegarty. Thank you, Chairman Carper, Senator Collins, 
andSenator Akaka, we appreciate the opportunity to testify 
today. The National Postal Mail Handlers Union serves as the 
exclusive bargaining representative for approximately 57,000 
mail handlers employed by the U.S. Postal Service. I will not 
repeat the details of my April statement to your Subcommittee, 
but would ask that it be included in the record of this 
hearing, and I also ask that today's written testimony be 
included as I will only summarize it.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Hegarty appears in the Appendix 
on page 38.
---------------------------------------------------------------------------
    Senator Carper. Without objection.
    Mr. Hegarty. Thank you. You have asked us to address the 
effects of the Postal Accountability and Enhancement Act on 
Postal employees. This is a difficult topic at this early stage 
after enactment of the legislation, but during the 13 years 
that Postal reform was debated, we continued our long history 
of labor stability within the collective bargaining process. At 
this point in time, from the perspective of any individual mail 
handler who works on the floor at any major Postal facility, 
the most significant change made by the new legislation is the 
mandated cut in the workers' compensation program.
    Mr. Chairman, as you know, we often work in dangerous 
conditions. I would like to take this opportunity to thank you 
for your efforts in initiating the studies of the workplace 
injuries in the Postal Service. The Mail Handlers Union is 
engaged in several joint efforts at reducing these dangers, 
including, first, the Mail Security Task Force, which grew out 
of the 2001 anthrax situation and has developed specific 
protocols related to such incidents. The Task Force also 
addresses a potential pandemic flu and natural disaster that 
could disrupt mail processing and delivery.
    Second, the Ergonomic Risk Reduction Program, which has 
been very successful in reducing repetitive motion injuries, 
probably by as much as 35 percent. It has been estimated that 
this program saves, on average, 20 injuries per facility per 
year, about a five-fold return on the dollar.
    Third, the Voluntary Protection Program, which rather than 
looking at recurring injuries looks at the specific cause of a 
specific often traumatic injury. During the past 5 years, there 
have been measurable differences in the injury rates in 
facilities that use this program versus those that do not.
    I bring up these joint management-labor programs for a 
reason. They are one of the value-added benefits of our union. 
Our efforts make the Postal Service more efficient and Postal 
employees more productive. There are no comparable savings with 
a privatized workforce.
    Another important aspect of the Postal reform legislation 
is the flexibility provided to the Postal Service in pricing 
its products and responding to economic crises. The legislation 
specifically is intended to recognize the volatile world in 
which we live, where gasoline can cost $35 a barrel one month 
and $70 a barrel shortly thereafter, or extreme incidents, such 
as the deadly anthrax attack. Consequently, the exigency clause 
and banking provision were strengthened during Congressional 
debate to cover not just extraordinary events, but other 
exceptional circumstances not limited to those I have already 
noted. The Postal Service needs such flexibility.
    Let me also address the public pronouncements of Postal 
management and some members of the Board of Governors 
suggesting that the Postal Service must privatize to stay 
within the price cap set by the Consumer Price Index. We reject 
that notion. We contend that these arguments ignore the true 
cost of privatized labor. It is not simply our wages and 
benefits versus theirs. As we saw at Walter Reed and elsewhere, 
there are hidden costs and perilous dangers in privatizing. 
Furthermore, as I noted in the safety and health areas, unions 
provide an environment that can be a win-win situation for all.
    Some will argue that getting the work performed more 
cheaply is the same as getting the work performed more 
efficiently, more safely, or more securely. The premise of this 
argument, however, that the Postal Service will save money by 
allowing private contractors to perform the work currently 
performed by mail handlers and other career Postal employees is 
totally false. Recent experience has shown that subcontracting 
of mail handler jobs has not worked. In fact, it has had the 
opposite effect.
    For example, the largest subcontract for mail handling work 
ever signed by the Postal Service had Emery Worldwide Airlines 
processing Priority Mail. Nearly 1,000 mail handler jobs were 
privatized. Today, the work at those facilities has been 
returned to mail handlers, but not before the Postal Service 
and its customers suffered severe losses in the hundreds of 
millions of dollars. One governor stated publicly that the 
Emery subcontract was one of the worst decisions that the Board 
of Governors had ever made. The United States Postal Service 
Office of Inspector General released an audit report that 
concluded that Emery cost more and did not meet overall 
processing goals.
    Finally, the Postal Service is an important career for 
millions of Americans, allowing entry into the middle class. A 
Postal career has allowed millions of American families, 
including my own and undoubtedly many other families 
represented here today, to buy a home, send their kids to 
college, and pay their fair share of taxes. We do not believe 
that Congress should encourage a Postal Service of poorly-paid 
employees for whom health care means a visit to the emergency 
room.
    Who handles your personal mail and who has access to your 
identity is a public policy issue. Sending military mail to 
Iraq or Afghanistan via a private subcontractor is also a 
policy issue. The piecemeal privatization of this Nation's 
communications network is a policy issue. We do not believe 
that Postal reform legislation, passed less than 1 year ago, 
should be a convenient excuse to dismantle the Nation's Postal 
system.
    Thank you, Chairman Carper. I will be glad to answer any 
questions that the Subcommittee may have.
    Senator Carper. President Hegarty, thank you very much for 
that statement.
    We now turn to President Donnie Pitts. Welcome. Your full 
statement will be entered into the record.

TESTIMONY OF DONNIE PITTS,\1\ PRESIDENT, NATIONAL RURAL LETTER 
                      CARRIERS ASSOCIATION

    Mr. Pitts. Thank you, sir. Mr. Chairman, Members of the 
Subcommittee, my name is Donnie Pitts and I am President of the 
111,000-member National Rural Letter Carriers Association. I 
want to thank you, Mr. Chairman, for holding the hearing on 
contracting out.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Pitts appears in the Appendix on 
page 47.
---------------------------------------------------------------------------
    As of July 2007, rural carriers are serving on more than 
76,000 rural routes. We deliver to 37.6 million new delivery 
points and drive more than 3.4 million miles per day. We sell 
stamps and Money Orders, accept customer parcels, Express and 
Priority Mail, signature and delivery confirmation, registered 
and certified mail, and serve rural and suburban America to the 
``last mile.''
    Mr. Chairman, I am pleased to report that as of July 17, 
there are 35 cosponsors of Senator Harkin's bill, S. 1457, a 
bill that would prevent the U.S. Postal Service from entering 
into any contracts with any motor carrier or other person for 
the delivery of mail on any route with one or more families per 
mile.
    I am saddened, however, that only one Republican, Senator 
Cochran of Mississippi, is a cosponsor of S. 1457. I had hoped 
this bill would have received more bipartisan support. Is it 
because the Postal Service has suggested that contract delivery 
is a matter for collective bargaining and not a policy 
question? I hope not, because contracting out most certainly 
raises significant policy questions, particularly when the 
safety and security of the mails is at stake.
    Mr. Chairman, I am sure by now that everyone knows that the 
NRLCA and the Postal Service could not reach an agreement 
during our recent contract negotiations and we are headed 
toward interest arbitration. What is less well known is that, 
unlike our friends in the city carrier craft, Contract Delivery 
Services were never brought forward during the union's talks 
with the Postal Service. We don't see what the Postal Service 
is doing now as a collective bargaining issue. We see it as a 
policy issue.
    There are a number of different policies already in place 
with the Postal Service to limit what can and cannot be 
contracted out. Our national agreement with the Postal Service 
contains an article which addresses subcontracting, Article 32. 
Article 32 sets the standards and policies under which routes 
can be subcontracted. The Postal Service's P5 Handbook, which 
``establishes the national policy and procedures for the 
operation and administration of Highway Contract Routes,'' that 
handbook language states that a route that serves less than one 
family per mile may be converted to CDS, or Contract Delivery 
Services.
    Additionally, we have grievances at the national level that 
challenge the improper contracting out of mail delivery. Mr. 
Chairman, we as a union have done everything within our power, 
utilizing policies and agreements with the Postal Service, to 
stop the Postal Service from contracting out delivery of mail. 
Despite this, the Postal Service continues to ignore all these 
policies and agreements and continues to contract out routes. I 
am asking that you support S. 1457 and pass this vital 
legislation to stop Contract Delivery Services.
    In May, the House of Representatives held a site hearing in 
Chicago regarding the slow delivery of mail. Congressmen in New 
Mexico are scheduling meetings with officials from the Postal 
Service to discuss staffing concerns and persistent service 
problems throughout New Mexico. When the Postal Service 
announces the consolidation or closing of a facility within the 
State, that Senator gets involved. During the passage of Postal 
reform, even an issue like work sharing was made into a policy 
issue. Every time the Postal Service enters into work sharing 
agreement with a mailer, the end result is a Postal employee 
not performing the work.
    What I am trying to point out using these examples is that 
when there is a problem with the mail service, closing of 
facilities, security, or other problems, Congress gets involved 
to correct that problem. Why isn't Congress getting involved in 
stopping contracting out? Do they not see this as an issue just 
as important as service problems or consolidation of 
facilities? I have no problem telling you this is an issue that 
is just as important as the others.
    Letter carriers are the face of the Postal Service. We are 
the ones the American public sees out in the streets every day 
delivering their mail. They get to know us, they become our 
friends, and they trust us. This honor for the third year in 
the row has earned the Postal Service the distinction of being 
named the Most Trusted Government Agency by the Ponemon 
Institute.
    I reference this survey because the public perception of 
the Postal Service is delivery. If the Postal Service fails to 
deliver because of here today, gone tomorrow contractors, the 
mailers will find another way to get their message to the 
public. I care about the future of the Postal Service. I want 
the Postal Service to succeed. But hiring non-loyal, non-liable 
contractors is not the way to ensure the success of the Postal 
Service.
    Mr. Chairman, you and Senator Collins spent years passing 
Postal reform to make the Postal Service more viable for the 
21st Century. I would like to thank both of you and the 
Subcommittee for their involvement in passing P.L. 109-435 and 
P.L. 108-18 relieving approximately $105 billion in obligations 
for the Postal Service.
    I thank you for allowing me to testify here today, and if 
there are any questions you would like to ask me, I will be 
glad to try to answer those.
    Senator Carper. Good. President Pitts, thank you very much. 
Thanks for working with us, too.
    President Bill Young, you are batting clean-up here today, 
Mr. Young. Take it away.

     TESTIMONY OF WILLIAM H. YOUNG,\1\ PRESIDENT, NATIONAL 
                 ASSOCIATION OF LETTER CARRIERS

    Mr. Young. Third baseman. I love it. Good afternoon, 
Chairman Carper and Ranking Member and other distinguished 
Members of the Subcommittee. Before I begin, I want to 
congratulate both Senator Carper and Senator Collins on the 
outstanding work that they did in the long debate over Postal 
reform. It wasn't an easy thing to form a consensus on Postal 
reform, but you were able to do it and my hat is off to both of 
you for your efforts and all the other people that worked so 
hard achieving that.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Young appears in the Appendix on 
page 51.
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    Our goals in Postal reform were straightforward, to enhance 
the long-term viability of the most efficient, affordable 
Postal Service in the world and to protect a legitimate 
interest of America's Postal employees in general and letter 
carriers in particular. If properly implemented, I am confident 
the law will do exactly that.
    I want to again express my strongest opposition to 
contracting out the core functions of the Postal Service. As a 
letter carrier and a union leader, I make no apologies for 
standing up for decent jobs for American workers. The trend 
towards outsourcing to contingent low worker, no-benefit 
contractors has been broadly used in both private and public 
sectors in recent years. The results for working people have 
been downright disastrous. At a time of so-called prosperity, 
the ranks of the workers without health insurance or pension 
protections have surged to the tens of millions. The Federal 
Government, the U.S. Postal Service, should not contribute to 
this disgraceful trend. Exploiting contractors who deserve the 
same kind of pay and Congressionally mandated benefit 
protections afforded to career employees is unacceptable.
    But contracting out is also misguided as a business 
strategy. NALC believes that CDS is penny-wise and pound-
foolish and it would damage the brand of the Postal Service by 
undermining America's trust in the service. Mail delivery is 
the core function of the Postal Service. Outsourcing these jobs 
threatens the long-term viability of the agency.
    Now, the Postal Service would have you believe there is a 
strong correlation between the two issues, the new pricing 
indexing system and contracting out. Outsourcing delivery, it 
now maintains, is necessary because the new law contains a 
price indexing system requiring the Postal Service to limit 
rate increases to less than the CPI. However, the decision to 
contract out work was taken long before Postal reform became 
law. The Postal Service took the first steps towards 
outsourcing in 2003. CDS was coming whether Postal reform 
passed or not. The fact is, holding rate hikes in line with the 
CPI is nothing new for the Postal Service. Just examine our 
last 35-year history. We have done it every single time for the 
last 35 years.
    Contracting out is not the Postal Service's only choice. 
Productivity growth and boosts in revenues are preferable 
strategies. Postal labor productivity has increased far more 
than compensation costs over the years and it will continue to 
do so in the future if the Postal Service embraces a 
partnership with its dedicated career workers and their unions. 
Indeed, 2 weeks ago, we reached an agreement on a new 5-year 
contract that seeks to facilitate the smooth introduction of 
flat mail automation technology that will cut labor costs 
significantly.
    That agreement also commits letter carriers to a program 
called Customer Connect that seeks to dramatically increase 
Postal Service revenues. I am proud to tell you that, to date, 
we have increased Postal Service revenues by $300 million 
through this program, and that is with less than one-tenth of 
our total workforce involved in the program. Over the coming 5 
years, we will get more people involved and we fully expect 
that revenue figure will increase substantially.
    I believe it is safe to say that expanding outsourcing was 
the last thing that Congress had in mind when it enacted Postal 
reform. In fact, we believe that outsourcing violates a number 
of key public policies that were reaffirmed by Postal reform. 
For example, the law still gives preference in hiring to 
veterans and mandates with some exceptions collective 
bargaining rights for workers employed by the Postal Service. 
The widespread expansion of Contract Delivery Services would 
make a mockery of these policies. This is why the NALC 
applauded Senator Harkin's bill to limit outsourcing to 
traditional Highway Contract Routes.
    We also want to thank the other 35 Senators who have 
cosponsored the legislation. Together, they sent a strong 
message to the Postal Service. That message was reinforced by 
the overwhelming support that we received from our public 
during the dozens of informational pickets that we conducted 
around the country during the past several months. Plain and 
simple, the American public wants career letter carriers to 
deliver their mail. It is just that easy.
    As I mentioned earlier, the NALC and the Postal Service 
recently reached agreement on a new collective bargaining 
agreement. It contains two Memorandums of Understanding related 
to subcontracting. The memos may be relevant to your 
consideration of S. 1457 or any future legislation on the issue 
of Postal outsourcing. First, we signed an MOU that prohibits 
for the life of the contract, 5 years, the outsourcing of work 
now performed by career letter carriers in 3,000 city carrier 
only installations. Second, we signed another memo that 
established a Joint Committee on Article 32 to review existing 
policies and practices concerning the contracting out of mail 
delivery in other installations. We have a 6-month moratorium 
there.
    I want to address what the two memos mean for the long-term 
debate between the Postal Service and many other interested 
parties about whether outsourcing is a bargaining issue or a 
policy issue. I maintained from the very beginning of this 
debate that the NALC has the ability to represent the letter 
carriers covered by our collective bargaining agreement. But 
who provides service to new deliveries is both a collective 
bargaining issue and a public policy issue. By expanding 
Contract Delivery Services to potentially serve all new 
deliveries, the Postal Service has transformed a contract 
delivery into a public policy issue.
    We have maintained the kind of workers assigned to handle 
new deliveries in the future should not be left alone to Postal 
management to decide. In fact, it shouldn't be left to the 
Postal unions alone to decide. Congress has mandated collective 
bargaining for Postal employees in general and only it can 
decide whether to make exceptions to this policy.
    I believe we have reached a sensible and constructive 
approach to dealing with this difficult issue. Although the 
Postal Service seems to be moving in the right direction, it is 
not committed to abandon CDS altogether. For that reason, I 
welcome this hearing, the Subcommittee's oversight of the 
Postal Service, and I sincerely hope that this is an issue that 
you will continue to monitor.
    Thanks again for all the Members of the Subcommittee for 
holding this hearing. I would be happy to answer any questions 
you might have.
    Senator Carper. President Young, thank you very much. In 
fact, thank you all for very fine statements.
    Senator Collins, thanks for joining us and again for your 
leadership on this front.
    And we have been joined by Senator Akaka, and I want to 
recognize Senator Akaka for any statement that he would like to 
offer, and then we will move on to questions of our panelists. 
Thank you. Welcome.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Chairman Carper. Thank 
you for holding this hearing. I am interested in hearing Postal 
workers' perspectives on implementing Postal reform.
    First, my thanks to Postal workers represented by all of 
our panelists and who are responsible for over 212 billion 
pieces of mail delivered to over 144 million homes and 
businesses across the country. For many Americans, the Postal 
Service is the face of the Federal Government.
    Last year, after several years of work, the Congress 
finally succeeded in passing meaningful reform to the Postal 
Service which should keep the Postal Service strong far into 
the future. However, even after passing the important 
legislation, there remain concerns.
    The United States has always relied on Federal employees to 
perform the most important of tasks. The security and sanctity 
of our mail has been one of these. However, I know that 
increasingly, the Postal Service is relying on contractors to 
deliver and in some cases process the mail. I have been 
concerned for some time about the increasing government-wide 
reliance on contracting out.
    As Chairman of the Subcommittee on Oversight of Government 
Management and the Federal Workforce and the District of 
Columbia, I have directed my Subcommittee staff to examine 
closely the problem of contracting out throughout the Federal 
Government. While there is a place for some contracting, it is 
important that no Postal employee ever lose their job to a 
contractor. Further, those who are contractors must be held to 
the same high standards of excellence and conduct as are our 
outstanding Federal Postal workforce. The Postal Service must 
carefully weigh the benefits and costs of contracting, which we 
know are not merely monetary.
    I am very interested to hear further from you and to hear 
your responses to our questions and look forward to continuing 
to work with you to help our Postal Service be the best.
    Thank you very much, Mr. Chairman.
    Senator Carper. You bet. Senator Akaka, thank you so much 
for coming today and for your help on Postal reform.
    As you know, one of the most contentious provisions in the 
Postal reform bill was the so-called exigency provision laying 
out when the Postal Service should be able to raise rates above 
the CPI rate cap, at least for market-dominant products. Our 
staffs, the mailing community, the Postal Service spent months, 
maybe years, debating how that language should be crafted. We 
were finally able to come to an agreement almost at the 11th 
hour, as you will recall. Now we are at the point where the 
ball is in the court of the Postal Regulatory Commission and 
they are busy trying to figure out how our language should be 
implemented.
    What guidance would each of you give the Commissioners as 
they complete their work? Under what conditions do you think 
the Postal Service should be permitted to breach the rate cap? 
Mr. Hegarty.
    Mr. Hegarty. We don't think right now that the Postal 
Regulatory Commission should be defining the exigency 
circumstances because there are so many different things that 
could happen that we may not foresee. The law says either 
exceptional or extraordinary. That language was put in there 
for a reason and the Postal Service has asked the Postal 
Regulatory Commission to hold off on issuing definitive 
regulations so that each case on a case-by-case basis can be 
addressed.
    Next week there could be a war that breaks out somewhere 
across who knows where that could raise the price of oil, like 
I said in my testimony, from $35 a barrel to $70 a barrel. I 
think that is pretty much a clear-cut example that everyone 
would agree the Postal Service may need to raise rates under 
the exigency provision.
    There are other things we may not be aware of right now 
that could happen. The anthrax attack from 2001 was another 
example where the Postal Service needed to put in protective 
equipment, and thankfully, Congress came to the forefront on 
that and approved funding for that detection equipment.
    So I think that the Postal Regulatory Commission should not 
narrowly define exigency circumstances right now. I think they 
need to be decided on a case-by-case basis as they come up.
    Senator Carper. Thank you, sir. Other presidents, please.
    Mr. Burrus. Yes, Mr. Chairman. I wish they would use a 
different word. I have such a difficult time repeating 
``exigency.''
    Senator Carper. It is refreshing to know I am not the only 
one.
    [Laughter.]
    I have stumbled over that word for months now.
    Mr. Burrus. My union also counsels that they should be as 
flexible as possible. To set in today's conditions at this 
time, to predict the future and try to coin words that reflect 
the unusual extraordinary circumstances that may occur is a 
most difficult task, and by defining what is covered, we are 
also defining what is not covered because though that which is 
not included is by nature of sentence structure, it is 
excluded. So our counsel would be to be as flexible as possible 
to make it possible for the parties to revisit the issue as 
circumstances arise and not put themselves in concrete as to 
what is covered under the clause.
    Senator Carper. Alright. Thank you, sir. President Young.
    Mr. Young. Senator Carper, my union played a significant 
role in this. We were asked by you and Senator Collins to meet 
with a group of mailers and we were the ones that actually 
hammered out ``unusual and exceptional'' or whatever it is now, 
I forget. I apologize for that, because I don't have the bill 
in front of me.
    But I totally agree with the remarks that the two 
presidents made before. The idea was that things that are not 
under control of the Postal Service should not be held against 
them when they are not reflected adequately in the Consumer 
Price Index. A lot of things are in the Consumer Price Index, 
as you well know, but there are other things that are not in 
the Consumer Price Index and we think that when things are 
exceptional, extraordinary, outside of that norm, that they 
should be covered.
    So our guidance would be the same as the two previous 
speakers, that we believe that at this point, it is premature 
for the regulatory body to try to define what was intended by 
those words.
    Senator Carper. OK. Thank you. President Pitts.
    Mr. Pitts. What can I say? It has already been said.
    Senator Carper. You could disagree with the other three.
    Mr. Pitts. I don't disagree at all.
    [Laughter.]
    I think we just need to wait until circumstances justify 
exceeding the CPI Index, because I echo what John and Bill and 
the other Bill have said here. We don't need to try to set 
standards right now that may not be applicable when the time 
comes.
    Senator Carper. OK.
    Mr. Pitts. So that would be my comment, Senator.
    Senator Carper. Alright. Thank you. All of you know better 
than anyone, I think, that the Postal Service has always had 
problems with workplace injuries. What has been done in recent 
years to address the problem? I think at least one of you 
alluded to that in your testimony. I found it very interesting. 
Are there still parts of the country or even individual Postal 
facilities that have serious injury problems? And finally, is 
the Postal Service working with your unions directly to address 
these problems? If you have already spoken to this, I would ask 
you to come back and revisit it. I think the comments that at 
least one of you made are worth repeating.
    Mr. Young. Well, I didn't make those comments. I think 
President Hegarty did. I will just tell you this, Senator. In 
the tentative agreement that we have reached, there is a joint 
commitment toward safety and health. We have been monitoring 
the number. I hate to tell you this, but it is mostly letter 
carriers that comprise it. More letter carriers than any other 
craft employees are injured. There has been tremendous 
improvement in the last 2 years, I mean, off-the-chart 
improvement in the area of injuries and it is a lessening of 
the number of injuries, and I believe it is because during the 
last 3, 4, 5 years, the parties have been working together to 
jointly address these issues. I think if we continue to do it, 
we will get there. I don't promise overnight results, but I 
think, ultimately, we will get where you want us to be.
    Senator Carper. Thank you, sir. President Pitts.
    Mr. Pitts. Yes, sir. We have involvement with the Volunteer 
Protection Program, VPP Program, that allows the employees to 
get involved and to expand safety and health programs to have 
involvement for them to have input when safety issues arise.
    Also, with the Postal Service and the Rural Letter 
Carriers, we have entered into a program that deals with safety 
on our delivery routes, looking for left-hand turns, U-turns, 
backing situations, high-speed areas where the carriers become 
targets out there, trying to eliminate a lot of those items to 
make it safer for employees out on the delivery routes. It is 
bad enough for one employee to lose their life during a year, 
but when you have 9 or 10 or 12 people losing their lives, any 
kind of safety program that you can get involved in, and the 
one we have been involved in takes a look at these areas and 
helps eliminate them. So that is some of the things that we are 
doing to try to make safety better.
    Senator Carper. Good. President Hegarty, you spoke to this, 
but I want you to revisit it again. I found your comments 
especially interesting.
    Mr. Hegarty. Thank you, Mr. Chairman. Yes. We participate 
also in the VPP, which is the Voluntary Protection Program. 
That is a partnership with OSHA, with the APWU and the Mail 
Handlers because we generally work together in the plants where 
that program is rolled out. It has been very successful. You 
have to qualify for the program. You have to demonstrate a good 
safety record, and then you identify within the facility 
potential causes of injuries and eliminate them.
    Similarly, the Ergonomic Risk Reduction Program, which we 
also partner with the APWU and the Postal Service, and we have 
dedicated headquarters personnel to roll this program out 
facility-by-facility around the country, identifying causes of 
repetitive motion injuries, musculoskeletal injuries, where 
people have to have operations for carpal tunnel and rotator 
cuff----
    Senator Carper. Did you say Carper tunnel?
    [Laughter.]
    Mr. Hegarty. Close. That is in Delaware, isn't it?
    [Laughter.]
    Senator Carper. Actually, just a quick aside. We have a 
Gridiron Dinner here in Washington every year and they poke fun 
at the politicians and folks in the media and so forth. We also 
have, I call it a cheap imitation of the Gridiron Dinner in 
Delaware and one of the, really one of the funniest skits was 
on something called Carper Tunnel, and they were poking fun at 
me because I shake hands with everybody who has a hand in 
Delaware.
    Mr. Hegarty. You are prone to it, then.
    Senator Carper. I had a great time with that, so I 
apologize for interrupting you.
    Mr. Hegarty. No, not at all. But that program, also, the 
Ergonomic Risk Reduction Program, works great, and some of the 
solutions are as simple as raising the height of a conveyor 
belt six inches, or putting fatigue mats down so that people 
who are standing all day don't develop joint pain and injury 
such as that, and that has been very successful, as well.
    We also have safety and health committees at the local 
level, the regional level, and the national level. Those have 
been successful over the years. In fact, over the last couple 
of rounds of collective bargaining, we have improved our safety 
and health article in our contract, which is Article 14.
    One thing that President Pitts said that I think is very 
important to point out is that both of these programs are 
employee ownership programs. The employees, the union 
representatives, have a big say in what goes on, and in fact, 
in some instances, are the chairpersons of the committees. So 
the buy-in from the employees on the working floor is much 
better.
    You asked if parts of the country or certain Postal plants 
had problems. I would say you are always going to have problems 
in some Postal plants, whether that is due to the age of the 
plant. We have some of the older plants, such as the one in 
Maine that was just replaced. It was a four-story building that 
was probably built in 1920, elevators transporting mail long 
distances where it really should not have been done. They now 
have a new processing plant in Scarborough. I would say that 
that has been alleviated.
    But what we do is if we find a particular plant that is 
having problems, our union officials will bring it to our 
attention, will try to get it some immediate attention and not 
just wait for the system to work. As far as statistics, I think 
you would have to ask the Postal Service if there were specific 
areas of the country or plants that have higher-than-normal 
injury rates.
    Senator Carper. Thanks very much for those comments.
    President Burrus, a last word on this point?
    Mr. Burrus. Yes. Despite our disagreements with the Postal 
Service on a number of issues, major disagreements, safety and 
health is one of our success stories. We have worked together 
cooperatively. We have brought injuries down. We have in place 
a number of programs, joint programs, where we are addressing 
in a serious way injuries to employees. I think the Postal 
Service and its unions have a joint philosophy, one injury is 
too many, and we are working towards that objective.
    Senator Carper. That is a great philosophy to have. I think 
you are right, President Burrus. This is a success story. I 
don't know how broadly it has been told, but this is one that 
you can feel good about and your members can feel good about 
and I think the management at the Postal Service ought to feel 
proud of, and frankly, we in this body salute you for the great 
progress that you have made.
    Let me turn, if I can, to another issue. There have been 
reports, I guess in just recent months, of some serious service 
problems across the country. Some of the communities, I will 
mention. They include Chicago. I think L.A. has seen maybe the 
worst of it. But my staff and I have heard anecdotal stories 
from Delaware about mail going to its destination a lot later 
than it really ought to be, for example.
    Let me just ask, what do you think is going on out there? 
Have we reached a point where the Postal Service's efforts to 
cut costs might be having a negative impact?
    Mr. Young. I would be happy to go first on that one. 
Absolutely, Senator. It is exactly what you just said, and I 
think is some acknowledgement starting to come out now from the 
Postal Service itself. I was at the hearings at the House when 
Mr. Potter was asked about the Chicago problems. He said some 
maverick postmaster decided not to hire a bunch of people that 
he needed and he was going to put 200, I think is the number he 
said, 200 new letter carriers into Chicago right away to 
alleviate the problems.
    Senator Carper. For what purpose was that decision made by 
the local postmaster?
    Mr. Young. I am not even sure that is accurate. That is 
just what Mr. Potter said. He said that the guy had made it. I 
don't know why a postmaster would make that decision. It 
doesn't make sense. This next panel is a group that represents 
them and they can probably explain the ins and outs of this 
process to you.
    Senator Carper. OK.
    Mr. Young. But make no mistake about it. They have cut 
thousands and thousands of jobs in the last 3 or 4 years from 
the Postal Service, I think over 100,000 total from all of us, 
and it has an effect. If you go too far, you compromise 
service. I have watched this happen, Senator, the 42 years I 
have been in the Post Office, maybe four or five times. It is 
like a cycle. When the finances get bad, the first thing they 
do is go after labor because a lot of the cost is labor, and I 
don't dispute that. I don't agree with their 80 percent, but we 
won't go there. Whatever the cost is, a significant part is our 
wages. So the first part they cut is our wages. That works up 
to a point, and then at the point, it starts to be 
counterproductive and service deteriorates.
    I was in a meeting with the Board of Governors and I was 
very proud of the four representatives from the management 
associations because they sounded like the union in there, 
complaining to the Board of Governors that they had went too 
far with these cuts and that these significant service problems 
were going to occur. In my opinion, they just weren't listened 
to and now it has got to be fixed.
    Senator Carper. Alright. Thank you. Others, please. 
President Pitts.
    Mr. Pitts. Yes. I just had an opportunity to visit the 
great State of New Mexico and was talking with a district 
manager out there who was having problems with getting the mail 
processed in the mail processing centers, and I know Mr. 
Hegarty probably has a better idea of that, and Mr. Burrus. But 
their concern was the staffing. It has been cut back to a bare 
minimum. They don't have the workers to get the mail delivered. 
We see it even in my craft where they have cut back on local 
managers, even using our employees, the rural carriers, in 
higher-level assignments, which puts a problematic area on us 
for having someone to cover the routes, and even going as far 
as to, in the highway contracting, requiring our leave 
replacements, the Rural Carrier Associates, to carry contract 
delivery routes.
    So they are cutting back, and I think a lot of it is 
because of the pay-for-performance. There is an incentive there 
for the manager to cut all the costs he can, but if you cut it 
too far, you get into problems, and that is exactly what has 
happened in some of these situations.
    Senator Carper. OK. Thank you. President Burrus, would you 
comment on this, as well, please?
    Mr. Burrus. Yes. The Postal Service is adopting many of the 
tactics of the private sector of cutting service. If someone 
loses their luggage on an airline, the call to India will take 
weeks on end to recover. If you go into a bank today at 
lunchtime, you are going to wait an extraordinary amount of 
time, or the supermarket. Service in the private sector often 
is less than satisfactory, and the Postal Service has adopted a 
business model that mirrors what they see in the private 
sector. They think they can be more profitable if they reduce 
their employee costs, even though we are a service 
organization.
    And added to the inconvenience it causes to the American 
public, when you incentivize the managers to cut, then you are 
going to find when their bonus is affected by how much, how 
many hours that they cut out of their workload, then it is 
going to have a residual effort, sort of residual impact upon 
the service we provide to the public. So this has become the 
new part of the Postal business model of reducing cost through 
cutting of service, and they can't cut it anywhere else. We are 
a service organization, so if they are going to cut, they are 
going to cut service.
    I think the rate cap for rates is going to feed into future 
cuts. I think there is going to be a cycle. As the Postal 
Service has a need to reduce their costs to save money, the 
place where they are going to look to save that money is in 
service to the American public. That means fewer employees, 
less service to the public.
    Senator Carper. Alright. Thank you. President Hegarty, the 
last word?
    Mr. Hegarty. Yes. We had a meeting with the Postmaster 
General probably about 6 weeks ago on a variety of issues and 
this topic came up, and I asked Postmaster General Potter, I 
said, what do you have in place or do you have something in 
place to prevent another Chicago from happening? Rather than be 
reactive, can you be proactive with it? And he said that they 
did. He said that they were working on that nationwide to make 
sure it doesn't happen again. So I guess I will leave that to 
your Subcommittee to find out from the Postal Service what they 
are doing. We haven't had a follow-up meeting on that yet.
    But I can tell you from experience, traveling the country, 
visiting the mail processing facilities, that it is a problem 
in some facilities, in management in those facilities. I agree 
with the other union presidents that it comes down to budget. 
It comes down to cost cutting. It comes down to: If I can make 
a pay-for-performance bonus by keeping my costs below a certain 
dollar amount, then I just won't hire those 10 mail handlers 
that I know I really need or those 10 letter carriers that I 
know I really need.
    Now, in a big facility like where I am from in Springfield, 
we have in the neighborhood of a thousand mail handlers, so can 
you get the job done with 995 mail handlers? You probably can. 
Can you get the job done with 900? I don't think so. So it is a 
balancing act. The Postal Service has to look at staffing and 
should be staffing to the needs of the service within the 
particular facilities.
    Senator Carper. Alright. Thank you. Thanks for sharing that 
insight, too.
    Before we bring on our second panel, I want to spend a few 
more minutes and let me just delve into contracting out. Before 
I say that, though, I want to just say a word about service. If 
you ask most people in this country how they feel about the 
quality of the service that they receive, it could be from the 
private sector, it could be from the public sector, I think you 
will find that among the entities that they feel best about in 
terms of service are the Postal Service. You have heard those 
numbers, and I have, too. They make me proud and I am sure they 
make you and your colleagues proud, as well.
    Having said that, almost every day, we get in the mail at 
our home an offer for a different credit card, and if we don't 
like the kind of service that they provide--most of them are 
from Delaware, but if don't like the service that we are 
getting from our credit card company, we can try somebody else. 
Maybe not every day, but every week or two, we get something in 
the mail from the folks that provide cable service or different 
companies that provide cellular service. We get something in 
the mail at least every month, usually more often, from folks 
who build cars, trucks, and vans and they want us to take 
advantage of the automotive service that they provide for us.
    I think there is a lot of interest in the private sector to 
provide good service and there is a fair amount of competition. 
For those companies that provide good service, they get 
rewarded with more customers. Those that don't, they get 
rewarded, too.
    The Postal Service, as time goes by, is operating in more 
of a competitive environment than was the case before. It is no 
longer a public entity as it was for many decades, years, 
hundreds of years. Today, it is sort of a quasi-public-private 
sector animal and you have competition and your competitive 
products that the Postal Service offers have competition with 
the likes of UPS and FedEx and others, as well. You have got to 
be good in order to retain the market and to be competitive 
going forward.
    I am just real encouraged by what I have seen. I have been 
in the Senate now for about 6\1/2\ years. I have been on this 
Subcommittee for 6\1/2\ years and the spirit of cooperation 
that you have seen demonstrated here today with respect to 
reducing injuries, making the workplace safer. It is good for 
the folks you represent. It is, frankly, good for us as mailers 
because it brings down our costs and enables them to get better 
service.
    I am encouraged by the fact that the Letter Carriers are 
able to actually hammer something out at the bargaining table, 
a new contract, and to address, at least for now, the issue of 
contracting out. With that, I just want to sort of shift to the 
issue of contracting out and then will thank you for being 
here, but I want you to take some time to talk with me about it 
a bit more. I know you already have in your statements.
    I am going to ask you just to start, if I could, with 
President Young. You spoke to this in your testimony, but I 
want you to come back and just revisit it for us, the process, 
the discussion that you were a part of. My understanding is 
that contracting out has been something that your union has 
bargained with the Postal Service for a number of years, maybe 
even since 1972. We have been asked by you again today to 
consider a legislative fix offered by Senator Harkin which 
would essentially ban any, as I understand it, any contracting 
out, at least for new routes, maybe even for existing ones. But 
this is an issue that historically, I think, has been dealt 
with at the bargaining table by your union, not by all, but 
certainly by yours. Would you just talk with us a little bit 
about how did you end up finally being able to reach agreement 
at the bargaining table?
    I guess I will just close with this. I have said to Senator 
Harkin, I thought that his legislation was helpful. I thought 
it had a salutary effect----
    Mr. Young. Well, it clearly was.
    Senator Carper [continued]. Because what it did is it 
provided a real impetus to the Postal Service to negotiate. Up 
until that point, I don't know that the Postmaster General felt 
that he could, was empowered to, and I think it helped to free 
him up to do that.
    Mr. Young. No question about it. First of all, I do this at 
some risk, Senator, but I want to correct something you said. 
We haven't bargained----
    Senator Carper. My wife does that every day.
    Mr. Young. Okay.
    Senator Carper. Sometimes every hour. Why shouldn't you?
    [Laughter.]
    Mr. Young. Alright. Well, I am reluctant because of the 
distinguished position that you hold, but we have not bargained 
with the Postal Service since 1973 over contracting out. What 
occurred in 1972 is a provision--Article 32--was entered into 
the agreement, which at the time covers all four unions. That 
allows the Postal Service to contract out certain activities, 
and that was part of the give-and-take. We do not have the 
right to strike, but binding arbitration. They got the 
contracting out provision in 1972. Up until the time that 
Senator Harkin introduced a bill and the 282 Resolution started 
moving over in the House, the position of the Postal Service 
was, we are not interested and we don't bargain over Article 
32. That is ours. We don't bargain over it.
    It was only when the Postal Service believed that there was 
a legitimate threat that legislation was going to be passed did 
things change, and they changed in a New York second, or let me 
put it more distinctly, in a Delaware second----
    Senator Carper. That is pretty fast.
    Mr. Young [continuing]. Because I think you were the major 
mover of this, and I say that not facetiously. I mean, it is 
just the truth. I don't think my colleagues got the same chance 
to negotiate on contracting out that I did just because I 
happened to be in the right place at the right time, and 
largely due to your efforts.
    Here is the point, Senator, and I just want to take one 
more second, if I could, to try to define this for you because 
I am not sure we are all on the same page yet. If you are 
talking about existing city letter carrier routes or territory 
that has been assigned through a boundary agreement between the 
Postal Service and our union, I have always had the right to 
bargain for that. You should not go there. That is a collective 
bargaining issue. I agree with what President Burrus said to 
that narrow extent.
    But if you are going to talk about a program that involves 
workers who don't have a union, first of all, I think that is 
against the Postal reform law. Maybe I am reading it wrong, but 
in that reform law, it says the Postal employees will have 
bargaining rights. Who is bargaining for the private 
contractors of America? The answer is no one. They don't have 
anybody to try to get them health benefits, retirement 
benefits, annual leave, sick leave, or any of the other 
benefits that we have. I think the current state of Postal 
reform law requires certain health benefits and certain 
retirement provisions. These folks don't get any of that. There 
is no one there that speaks for them.
    Because of you guys' influence, I have got a chance. That 
is all I have got. It is not a done deal, I am telling you. I 
am going to meet with them. Hopefully, my friends from the 
rural carriers will find their way in there. They have been 
offered the opportunity. That is their decision. I don't speak 
for them. But we are going to try to address it, and here is 
what we hope to accomplish, Senator Carper. We hope that we can 
come up with some criteria that makes sense.
    Now, let me say this. It pains me to say it, but I am going 
to be truthful because I am required to be truthful at these 
hearings. In a pure sense, I wish there was no contracting out, 
but I am a realist. I live in the real world. I supported the 
Postal Service's right to contract out the air transport of the 
mail through FedEx. I supported that. I thought it would help 
the institution. I thought it was the right thing to do. We 
have never grieved what we call HCR routes, the Highway 
Contract Routes, and here is where I want to be very careful 
that I make this distinction again.
    People that drive 50, 60, 70, 80 big sacks that would stand 
up from the ground this tall that are locked up full of mail 
from one Postal installation to another and maybe deliver three 
or four individual deliveries in these real isolated areas that 
Mr. Pitts is talking about, where there is not a box for every 
mile, they don't require the same level of trust, the same 
level of professionalism as the members I represent. That, to 
me, is not synonymous with somebody picking up 500 letters 
addressed to Senator Carper and going through them individually 
to make sure that they are yours and that everything is right 
with them. That takes a different level of trust.
    We never grieved and we are not trying to stop HCRS, and I 
told the lobbyist who is here today from the Star Routes, our 
union is not trying to eliminate Star Routes.\1\ And here is 
the second point I have to disagree with you. I do not believe 
Senator Harkin's bill does that. I think he grandfathers in all 
of the existing Highway Contract Routes.
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    \1\ The prepared statement of from John V. ``Skip'' Maraney, 
Executive Director of The National Star route Mail Contractors 
Association with attachments appears in the Appendix on page 76.
---------------------------------------------------------------------------
    But now let me end it by saying this. Here is the public 
policy issue that I honest to God believe you have to decide, 
and I mean you, the Congress. Are you okay with the Postal 
Service giving deliveries, the final delivery of mail to 
communities, to private contractors side by side with career 
employees? So if your house was built in 1990, you are going to 
have a mailbox on your porch and a career letter carrier is 
going to come to your porch and deliver the mail. But if your 
house wasn't built until 2008, you are going to have a 
neighborhood mailbox located two blocks away from your house 
and some private contractor that you never see or never know is 
going to deliver your mail.
    And all I am suggesting to you is this, that when the 
public finds this out, they are outraged. They don't want these 
private contractors doing the final delivery of their mail. We 
built up over a long period of time their trust and they don't 
want it. I think it was Congresswoman Norton-Holmes said, you 
can't have my mailman. And honest to God, I think she expresses 
the heartfelt opinion of most American people. They want the 
career letter carrier to deliver their mail.
    Again, let me say it. This is not a battle over whether 
there are going to be city letter carriers or private 
contractors. This is a battle over whether there are going to 
be rural carriers or private contractors because the majority 
of the new deliveries go to rural carriers because their costs 
are less than ours, and I know that. I don't like it, but it is 
what it is and that is what happens.
    So I know there is nothing in this for me. The only thing 
in this for me is this: 42 years, I have worked in this Postal 
Service. I have developed all kinds of friends. I know all 
kinds of people and their families that rely on a Postal 
Service for their future and I am worried if they go too far 
with the delivery of private contractors, the American public 
will lose trust in the mail, and if they do that, there are a 
lot of alternatives, as you know, out there that they can use, 
and that is what I think they risk in this effort to reduce the 
cost by using the private contractors.
    So I think in 6 months, after this Subcommittee does its 
work, we will be in a great position to give you all the 
evidence, something that we haven't had for you because we are 
not the owners of that evidence. It is not in our possession. 
This agreement requires the Postal Service to turn over 
everything to us. We can have hearings. We can call members of 
the public there to tell us what their views are. And we will 
give that information to you. In the best of all worlds, I will 
end up with an agreement that makes sense for everybody and I 
will never have to come back here. But if I don't, I am going 
to come back and I am going to say, now we have to have these 
1,547 because we can't get where we need to be if you want 
career letter carriers delivering the mail. Thank you, sir.
    Senator Carper. Thank you, sir.
    Mr. Young. I am sorry I took so long.
    Senator Carper. No, that is quite Alright. Thank you very 
much.
    Let me hear from others on this, please. President Pitts, I 
will just ask a more specific question. President Young 
mentioned that what we have, I don't want to misstate what he 
said, but I think President Young said what we have here is a 
chance or the opportunity to try to work something out. What 
did you say? What were your words, do you recall?
    Mr. Young. I say, we have got a 6-month opportunity to try 
to work out guidelines that we can all agree to that make sense 
for the American public, the workers, and the Postal Service. 
If we can do that, that will be----
    Senator Carper. And then you said it was up to President 
Pitts and the folks he represents to decide whether or not they 
wanted to----
    Mr. Young. Well, yes, because I don't represent them. There 
is one sentence in our agreement that says, if the rural union 
decides they want to be part of this task force, we welcome 
that.
    Senator Carper. Okay. Thank you.
    Mr. Young. Yes.
    Senator Carper. And I would just ask President Pitts, is 
that something you would have an interest in doing?
    Mr. Pitts. Yes, sir. I most definitely would have an 
interest in doing that, and let me clear up one thing.
    Senator Carper. Please.
    Mr. Pitts. One reason we didn't bring Article 32 to the 
table in the contract negotiations is because I feel we have 
got a little stronger language in Article 32 that protects us 
better than my counterpart on my left side here, Mr. Young, 
because the Postal Service, if they are going to step up 
contracting out, they should give us notification of their 
intent to increase the contracting out. And also, there is a 
provision in our Article 32 that says that they have to let us 
know of any policy changes.
    None of that happened. None of this came about as a result 
of contract negotiations. It wasn't mentioned, because we 
didn't feel we had a problem with it. And over the years, we 
have seen through testimony from Jack Potter back in April 
before the House, he made a statement that Contract Delivery 
had averaged about 2 percent per year, which we know, like Mr. 
Young said, Contract Delivery Services have been here. It will 
be here in the future.
    But what concerns us is the fact in that same statement he 
said for the purpose of Contract Delivery Services it only came 
about as a result of Postal reform being passed, and that isn't 
correct. And he also in the same statement said it is 2 percent 
over the past few years on Contract Delivery Services. It has 
now for the year 2006, increased from 2 percent to 6 percent, 
which tells me it is a 4 percent increase. And just last week 
in another hearing, now I am hearing from one of the Board of 
Governors representatives that 92 percent of all new deliveries 
are going on either Bill Young's routes or the NRLCA routes, 
which tells me there is 8 percent now unaccounted for.
    So the numbers continue to escalate, and basically, we are 
trying to protect our craft. We are the growingest craft in the 
Postal Service and we do pick up about 1.2 out of 1.8 million 
new deliveries each year. And I am here to tell you, in doing 
comparisons from this same pay period this year to the same pay 
period last year, we have had a decline of about 258,000 boxes. 
This time last year, we were over a million new deliveries. 
This year, we are at 750-some-odd-thousand deliveries.
    So something is going on here. It is not something I am 
just thinking about. It is happening out there. So we do have 
concerns. We have filed a national level grievance, a step 
forward because they, we feel, have violated our contract. But 
we also feel it is a policy issue because they are changing 
their policy and not trying to negotiate anything through our 
contract when we already have language. So that is my big 
concern.
    Senator Carper. Okay. Thank you. President Hegarty.
    Mr. Hegarty. Well, I would just like to say that we have an 
Article 32, as well. It is the subcontracting article. I am not 
here asking you to rewrite that article or to renegotiate that 
article with the Postal Service. But what I would say is just 
because they can contract out doesn't mean they should contract 
out, and at some point, it becomes a public policy issue. There 
is a fine line between collective bargaining and public policy.
    We did not come to Congress when they subcontracted the 
Emery Priority Mail Centers. We didn't come to Congress when 
they subcontracted empty equipment processing. Those are things 
that we handled in the collective bargaining process. I think 
history proved us correct, certainly on the Emery one and also 
audits were conducted that showed that the Postal Service was 
not saving the type of money they wanted--they said they were 
going to save.
    But when you start contracting airport mail, where mail 
handlers, entrusted Postal employees, other Postal employees 
who have background checks and career jobs are sorting mail for 
loading onto airlines for transportation around the country, 
when you subcontract military mail that is going to our troops 
over in Iraq and Afghanistan and elsewhere in the world, that 
is where I think it becomes a public policy issue, especially 
in the world we live in today. Since 2001, things have changed. 
Since the anthrax attacks, since September 11, 2001, it is a 
different world we live in. It is a different Postal Service, 
and I think that needs to be recognized.
    So I would say that career Postal employees should be 
handling the core Postal functions, not driving a truck from 
Point A to Point B or flying the airplane that the mail is 
being transported in, but certainly the sorting individual 
pieces of mail and people having access to the mail, whether it 
is problems with identity theft, terrorism, whatever you want 
to call it, I think career Postal employees should be handling 
that mail.
    Senator Carper. Alright, thank you. President Burrus, the 
last word, please.
    Mr. Burrus. Yes. My union's solution is to give us the 
opportunity and the right to bargain. I think these issues can 
be resolved at the bargaining table. It takes more than just a 
general opportunity and right to engage in collective 
bargaining, but a decision by Congress requiring the Postal 
Service to bargain on subcontracting, not within the framework 
of collective bargaining, but bargaining over subcontracting.
    And without that right, you will find in the ensuing years 
we will return to Congress repeatedly as each of our bargaining 
units is affected by specific pieces of contracting. Each of 
the previous speakers spoke regarding the subcontracting that 
affected their environment. The Postal Service has a very large 
environment. It involves transportation, maintenance, retail 
services, delivery, processing, and all of us are affected by 
one or more of those. And unless we have the right to 
bargaining on each occasion that it occurs, we will inevitably 
come back before Congress to bail us out.
    We will call it public policy, we will call it collective 
bargaining, we will use whatever words are convenient at the 
time, but we will be seeking out for assistance, and I say you 
can avoid that. Give us the right to bargaining on each and 
every occasion and we will take care of it ourselves.
    Senator Carper. Alright. That is a good note on which to 
conclude.
    This has been, for me, just a most helpful, interesting, 
and valuable panel and I want to thank each of you for your 
preparation for today's hearing, for your presentations and 
particularly for your responses to the questions that have been 
raised. We appreciate the opportunity to work with you and your 
colleagues in recent years as we try to bring the Postal 
Service into the 21st Century. We couldn't have done it without 
you, and I realize it is not perfect and I always like to say, 
if it isn't perfect, make it better. We are still going to try 
to make it better. But thank you very much for being with us 
today and for the leadership that you provide. Thank you.
    Gentlemen, welcome. We are happy that you are here.
    Mr. Atkins, there is some disagreement. Do you pronounce 
your first name ``Louis'' or ``Louie''?
    Mr. Atkins. Both ways, Senator, whatever you feel like 
calling me.
    Senator Carper. If your middle name was Louis, we could 
call you ``Louie, Louie,'' but we won't.
    Mr. Atkins. The famous song.
    Senator Carper. There you go.
    Mr. Atkins. I need royalties off it.
    Senator Carper. Let me just take a moment and introduce you 
first, and then I will turn to introducing Dale Goff and I will 
ask you both to proceed.
    Mr. Atkins is the Executive Vice President of the National 
Association of Postal Supervisors. He took over that position 
in January 2005 after previously serving as Secretary-Treasurer 
and a number of other leadership positions in the Gulf Coast 
region. His Postal career began in 1970. He has been a member 
of the National Association of Postal Supervisors for 30 years, 
is that correct?
    Mr. Atkins. Yes.
    Senator Carper. Alright. Dale Goff is President of the 
National Association of Postmasters of the United States. He 
has also had a long career at the Postal Service. He has been a 
Postmaster for how many years, 27 years?
    Mr. Goff. Twenty-seven years.
    Senator Carper [continuing]. Twenty-seven years, and has 
served in a number of leadership positions with the 
Association. He was even named, is it true, Postmaster of the 
Year in 1994?
    Mr. Goff. Yes, sir.
    Senator Carper. Alright. Can you be Postmaster of the Year 
more than once, or just once?
    Mr. Goff. Just once, I think, is all they said they could 
do for me.
    Senator Carper. Alright. Well, congratulations.
    My notes here indicate that the President of the National 
League of Postmasters was planning to be here today, but he was 
not able to come. I think what he has done is he has sent his 
written testimony, and without any objection, we are going to 
place that in the record.\1\
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    \1\ The prepared statement of Mr. Mapa appears in the Appendix on 
page 69.
---------------------------------------------------------------------------
    Senator Carper. OK. The bells are going off here. We have 
lights going on on our clock. I think we can go ahead. We are 
going to proceed at least for now.
    Mr. Atkins, your entire statement will be entered into the 
record. Feel free to summarize, and if you keep it pretty close 
to 5 minutes, we would appreciate it. If you go a little bit 
over, that is okay, too. Thank you. You are recognized at this 
time. Welcome.

    TESTIMONY OF LOUIS ATKINS,\2\ EXECUTIVE VICE PRESIDENT, 
           NATIONAL ASSOCIATION OF POSTAL SUPERVISORS

    Mr. Atkins. Chairman Carper and other arriving Members 
maybe later on of the Subcommittee, thank you for holding this 
hearing today and for the opportunity to appear on behalf of 
35,000 Postal supervisors, managers, and postmasters who belong 
to the National Association of Postal Supervisors. Throughout 
the 99-year history as a management association, NAPS has 
sought to improve the operation of the Postal Service and the 
compensation and working conditions of our members. Many of our 
members are involved in management and supervising the mail 
processing and delivery operations. We also represent the 
interests of men and women engaged in every function in the 
Postal Service.
---------------------------------------------------------------------------
    \2\ The prepared statement of Mr. Atkins appears in the Appendix on 
page 57.
---------------------------------------------------------------------------
    Indeed, the Postal Service stands at the beginning of a new 
era. The new law crafted on the basis of principle and 
compromise presents opportunity and challenges to the Postal 
Service, opportunity in the sense of greater flexibility within 
the Postal Service to design and price its products, services, 
and challenges because of the heightened competition the Postal 
Service faces in an increasing wide world.
    The Postal Service stands unique as a time-tested public 
institution, while at the same time operating like a business 
without the taxpayers' funds. Now the creation of a new pricing 
framework under the reform law, a price cap limiting increases 
to no more than the rate of inflation will require the Postal 
Service to be more creative and focused than ever in growing 
new business and expanding revenues. At the same time, the 
price cap framework will place new demands upon the Postal 
Service to become smarter in how and where it spends its funds 
and services for its customers. These demands will extend from 
the front-line counter to the back offices, from post office to 
plants, from Maine to Alaska.
    The Postmaster General, his leadership team, and the Postal 
workforce has done an excellent job over the past 6 years in 
increasing productivity, reducing costs, and focusing attention 
on mail that is the core business of the Postal Service. Two 
transformation plans promoted by GAO and mandated by Congress 
have paved the way for policies and operational changes that 
have permitted the Postal Service since 2001 to serve an 
additional 12 million delivery points with a dedicated 
workforce that is approximately 10 percent smaller than it was 
in 1999.
    For a successful Fortune 500 company, the dynamics of 
growing and reshaping its business and operation goes with the 
terrain. Innovation, agility, and speed are the ingredients of 
business success, especially in the service sector. For the 
Postal Service, the will to innovate, accelerate, and compete 
for success has not come as easy. Historically, America's 
indispensible reliance on the mail, the comfort of a quasi-
monopoly, and the size of the USPS bureaucracy have spawned a 
culture more resistant to change, to survive, and thrive. 
However, especially under the new law, the Postal Service will 
need to change faster and smarter, undergoing a greater 
transformation of its people and operations than ever before.
    What does this mean for the Postal Service managers and 
supervisors? Undoubtedly, financial pressures, especially to 
remain within the price cap, will place new demands on managers 
and supervisors to continue to reduce costs, yet continue to 
deliver universal service at the same level of quality. We have 
already seen the financial pressures play out within the 
current policy debate over contracting out of delivery service. 
Unacceptable service levels in Chicago also have demonstrated 
what happens when service quality is allowed to deteriorate. 
The big structural change within the Postal Service is yet to 
come, involving the potential mass alignment and consolidation 
of processing plants and post offices, along with Postal 
transportation network.
    The increasing insistence to do more with less, to maintain 
and exceed expectations with fewer resources, to cut costs, all 
are placing unprecedented demands upon the managers and 
supervisors, demands that are not healthy, either in the long 
run for the Postal Service and for our customers, on the 
vitality and loyalty of its employees.
    When performance goals are arbitrarily set, staffing needs 
go unmet, demands increase to make your numbers, all within a 
context of pay-for-performance, the conduct of managers and 
supervisors is likely to be skewed in perverse ways, getting 
some supervisors into trouble through clock falsification and 
other unacceptable behavior. This is not a path toward 
progress. All of us within the Postal Service, corporate 
executives, mid-level managers, and front-line supervisors, 
need to be increasingly sensitive to avoid the creation of 
expectations and insensitivity that brings about these kinds of 
negative outcomes.
    The broader solution to success within the Postal Service 
will apply upon realistic, jointly arrived at goals, and may I 
add again, I will say it again, jointly arrived at goal 
setting, better communication at all levels, less paperwork, 
training and genuine support of problem solving, and greater 
teamwork at all levels. These are the building blocks of an 
organization whose business success will rely upon sharp-edged 
focus on the bottom line merged with a realistic sense about 
what is possible today and what we need to work together to 
achieve tomorrow. These things cannot be legislated. They can 
come about only through the desire and determination of the 
Postal Service employees at all levels to work together in ways 
that reflect courtesy, dignity, and respect, joined together 
for a common purpose, that is, the timely and affordable 
delivery service to all Americans.
    In that same sense, as the new law becomes implemented and 
as the Postal Service and Postal Regulatory Commission 
undertakes their responsibility, Congress may find it necessary 
to retool the reform law in remedial ways, recognizing that a 
statute as sweeping and comprehensive as the Postal reform law 
is never quite perfect. In the meantime, Mr. Chairman, we look 
forward to continuing to work with you and the Congress in 
making the Postal Service stronger than ever.
    I will be happy to answer any questions at the appropriate 
time that you or any other Members of the Subcommittee may have 
to ask.
    Senator Carper. Good. Thank you for that statement and we 
look forward to asking some questions. Thanks.
    President Goff, you are recognized.

 TESTIMONY OF DALE GOFF,\1\ PRESIDENT, NATIONAL ASSOCIATION OF 
                POSTMASTERS OF THE UNITED STATES

    Mr. Goff. Mr. Chairman, Ranking Member Coburn, and 
distinguished Subcommittee Members, I am Dale Goff, President 
of the 40,500-member National Association of Postmasters of the 
United States, commonly known as NAPUS. I have been a 
Postmaster for 27 years and in the Postal Service for 37 years. 
As Postmaster of Covington, Louisiana, I understand the 
challenges and opportunities that the new law presents to the 
U.S. Postal Service. I also recognize the benefits that my 
customers will reap from the new law as the Postal Service 
meets the new challenges and exploits the opportunities 
presented to it.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Goff appears in the Appendix on 
page 62.
---------------------------------------------------------------------------
    We understand that the Postal Reform Act is still not a 
finished product. Congress did not intend it to be so. Congress 
charged Postal managers, craft employees, the Postal Regulatory 
Commission, Postal stakeholders, and the Postal Service itself 
to complete and perfect the legislative project. Implementation 
is the key to success. Indeed, the Postal community needs to 
put the finishing touches on the legislation. Therefore, 
postmasters are working with the Postal community to help 
guarantee the lasting triumph of Postal reform.
    I have faith that implementing the new law will not be as 
daunting as passing it. Presently, postmasters are discussing 
with Postal headquarters, the PRC, and others strategies on how 
to ensure the new Postal paradigm enhances this Postal system. 
We should recall that this is not the first time the Postal 
world has been apprehensive about legislation. In the 1970s, 
there was anxiety about the creation of the Postal Rate 
Commission and the establishment of a self-sufficient Federal 
entity that was mandated to break even. We succeeded then and 
we will succeed now, because we believe that the new law 
affords the Postal Service with new tools to maintain its high 
standards.
    Presently, NAPUS is working to educate managers in charge 
of the approximately 26,000 post offices about the fresh 
approach necessary under P.L. 105-435. Postmasters have new 
responsibilities under the Act. Obviously, education and 
training are necessary.
    Therefore, it is important for NAPUS, in conjunction with 
the Postal Service--and I will repeat that, in conjunction with 
the Postal Service--to develop an appropriate instructional 
program and to effectively and clearly communicate the new 
processes and expectations to front-line Postal managers. 
Postmasters and the Postal Service are accustomed to a long 
lead time between filing a rate case and the implementation of 
new rates. The new law authorizes periodic, predictable rate 
adjustments. It will be incumbent that the Postal Service 
anticipates these adjustments. The Postal Service will have to 
download new rate data into retail Postal facility pricing 
software.
    At the same time, Congress and the PRC need to recognize 
that there may be a time or times in which the Postal Service 
may be forced to file a much reviled exigent rate case. 
Postmasters understand that they are no longer working with a 
break-even Postal model. However, in order for this new 
business model to operate, postmasters must be allowed to make 
operational decisions without micromanagement from above, and 
with the staff they need.
    Indeed, the Postal Reform Act presents postmasters with the 
prospect of promoting new Postal products to their customers 
and being able to market competitive Postal products. The 
future of the Postal Service may very well depend on how well 
we are able to expand our product line, both in the market and 
in the competitive domain.
    Currently, the Postal Service earns 90 percent of its 
revenue from market-dominant products. These are the items that 
will be indexed to inflation. Postmasters are cognizant of the 
challenge imposed in operating under a price index system. 
Employee productivity, creative management, and committed 
teamwork will afford us the opportunity to use these factors to 
operate under the new rate system.
    We have witnessed the erosion of First-Class Mail, which 
used to represent the preponderance of mail volume. We have 
inherited a Postal culture that relies on volume mailings, not 
necessarily value mailings. It will be important that the 
Postal Service and the Postal Regulatory Commission work 
together to create appropriate incentives to encourage mailers 
to emphasize value in their mail program rather than simply 
generate volume. Certainly, the advent of Intelligent Mail 
creates that ``eureka'' opportunity for the Postal Service.
    Finally, the Postal Service's success with competitive 
products will depend on whether the agency can operate in a 
truly competitive fashion. The Postal Service needs sufficient 
breathing space to bring new, as well as time-tested 
competitive products to the marketplace. The Postal Service 
will need to increase the competitive product generated revenue 
beyond the current 10 percent. As this growth occurs, 
postmasters will need to sharpen their skills and have the 
assets to be an aggressive sales force.
    Mr. Chairman, for implementation of this new law to be 
successful, the Postal Service must be true to its historical 
mission, universal, affordable, and accessible service. 
Moreover, it is equally true that Postal Service, the Postal 
Regulatory Commission, and Postal customers must be willing to 
invest in the infrastructure and the personnel that will be 
needed to support the new Postal business model.
    Thank you, and I will be glad to entertain questions.
    Senator Carper. Good. President Goff, thanks so much. Thank 
you both for excellent statements.
    What I would like to do is start, if I could, President 
Goff, with you. Just to follow up, near the end of your 
testimony, you were talking about how 90 percent of the 
revenues of the Postal Service come from products which we will 
call market-dominant products and the need to grow the revenue 
stream from those that are competitive products. You mentioned 
something called Intelligent Mail. When President Bill Young 
was here from the Letter Carriers, he mentioned something 
called Customer Connect. Could you just tell us a little bit 
more about Intelligent Mail? What is it? What may be helpful 
for us to know? And how does that relate, if at all, to 
Customer Connect?
    Mr. Goff. OK. Intelligent Mail is a process or a system 
that the Postal Service is developing right now. From what they 
are telling us and from different briefings we have had, it is 
going to be a way to track every piece of mail that is sent 
through the system. It is going to be an external measurement-
type system of the mail. The mail will be bar-coded, as well as 
the pallets, and the mail encased with the shrink-wrap that 
comes in. Whatever is bar-coded it is delivered to a processing 
place or a post office, it will be scanned. As each piece of 
that mail goes through, all the way up until it is finally 
delivered, the mailers will be able to know where their mail 
pieces are at the time.
    I know in some of the tests conducted by the Postal 
Service, it has helped a lot of the mailers to correct their 
mailing list and know when mail was actually getting delivered. 
It addresses those things that you had said earlier about the, 
``please get my credit card so we can get the interest rate on 
you'' or things like that. Mailers will know exactly when that 
piece of mail gets delivered from the day it is dropped at a 
post office, until it actually gets to someone's home.
    Senator Carper. And Customer Connect, how familiar are you 
with Customer Connect and can you shed some light on that?
    Mr. Goff. Very familiar with it. One of the first Customer 
Connect success stories was out of Covington, Louisiana. We 
pulled in a customer that was going to spend almost $1 million 
with us sending supplies out for pets and medicines. We 
actually did a video with the Postal Service on the carrier 
that brought the business in to us. It is a very successful 
program. Obviously, the carrier, who else but the carrier, sees 
that one of our competitors pulls up to one of their customers 
every day. We can send somebody in there, or ask the carrier to 
ask that customer, ``Hey, we have this type of service that we 
can give to you. How about I will send somebody out to talk to 
you?'' It has been very successful and I look for it to be 
successful in the future, especially with the unions still 
agreeing to do it.
    Senator Carper. What is the incentive for the carrier to 
help make this connection and to find the new business?
    Mr. Goff. I know what we did in our office. I did something 
locally for the carrier that brought in the business. When you 
bring in a million dollars, you think that there would be some 
type of monetary award, which we did do in a small amount. But 
the incentive is that they are going to bring more business in 
and, again, keep our jobs for the future.
    Senator Carper. Okay. I want to give both of you a chance 
just to think back over the last hour, hour and a half, where 
our first panel of witnesses was testifying and responding to 
questions. I don't normally ask this, but I am going to ask 
you, do either of you have a comment that you would like to 
make on some aspect of the first panel, any of the discussion 
we had on our first panel? Does anything come to mind that you 
would like to just make a quick comment on, not at any length?
    Mr. Atkins. Well, I can make one comment that comes to mind 
right away, is the deterioration of service that they referred 
to and cutback in staffing. All of that is semi. I think 
sometimes it is taken out of context, because overall, 95 
percent of our volume of mail, First-Class overnight, is 
delivered on time.
    My major concern is that some managers are making some 
arbitrary decisions about staffing and because of their selfish 
need for pay-for-performance are making some good people do 
some bad things or developing some bad habits. But in 
conjunction with that, the accountability isn't there when they 
do that. What happens to make headquarters aware of it? They 
have all the numbers that drive the complement in Chicago and 
there is a red alert that says that they are not hiring two 
carriers. Let me see or talk to the division or the district 
manager there and find out what is going on.
    That is the driving force, is that most of our district 
managers are very cognizant and they are very service-oriented 
and they are making the good decisions or we couldn't have a 95 
percent delivery count done by an external firm, EXFC. It would 
not be capable of getting those type of scores if they weren't 
doing the right things throughout the country. But in Chicago 
and in New Mexico, there are some other driving forces.
    Senator Carper. Alright. [Alarms going off.] You win the 
prize.
    Mr. Atkins. I am the millionth customer.
    [Laughter.]
    Senator Carper. President Goff, while we find out for a 
moment what is going on here, any quick observation that 
relates to the discussion of the first panel?
    Mr. Goff. There are many things that the previous panel 
talked about that I could discuss, that is for sure. People 
find it odd these days that management and unions will be in 
agreement on some of these issues. The biggest problem is, as 
Mr. Atkins just talked about is the service. Our major issue is 
the staffing in the field. I wish postmasters would have that 
authority to hire people. When I hear that a postmaster in 
Chicago had the authority to hire people and didn't, I have a 
hard time believing that. We do not have that authority. It 
comes from somebody above us. We don't have that authority.
    I know the contracting out issue. One of the statements 
that I made in one of my previous testimonies is, ``You get 
what you pay for.'' I still stand by that. Any time that you 
are going to take the service of a established delivery, I have 
a problem. How can we come in and just arbitrarily put some 
type of contract route in there.
    Senator Carper. Alright. With that, I am going to ask us to 
just hold. We are evacuating the building. It has nothing to do 
with our hearing. We are not sure what it has to do with. But I 
am going to ask us to go ahead and adjourn the hearing at this 
time.
    We are going to provide questions for the record and we 
will ask you to respond as your schedules allow you, promptly.
    I apologize for this, but I am not sure when we are going 
to be able to come back into the building, so for now, we are 
going to adjourn. Thank you so much. The hearing is adjourned.
    [Whereupon, at 4:46 p.m., the Subcommittee was adjourned.]



































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