[Senate Hearing 118-274]
[From the U.S. Government Publishing Office]
S. Hrg. 118-274
OVERSIGHT OF THE U.S. POSTAL SERVICE
=======================================================================
HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
----------
APRIL 16, 2024
----------
Available via the World Wide Web: http://www.govinfo.gov
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
OVERSIGHT OF THE U.S. POSTAL SERVICE
S. Hrg. 118-274
OVERSIGHT OF THE U.S. POSTAL SERVICE
=======================================================================
HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
APRIL 16, 2024
__________
Available via the World Wide Web: http://www.govinfo.gov
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
______
U.S. GOVERNMENT PUBLISHING OFFICE
55-523 WASHINGTON : 2024
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
GARY C. PETERS, Michigan, Chairman
THOMAS R. CARPER, Delaware RAND PAUL, Kentucky
MAGGIE HASSAN, New Hampshire RON JOHNSON, Wisconsin
KYRSTEN SINEMA, Arizona JAMES LANKFORD, Oklahoma
JACKY ROSEN, Nevada MITT ROMNEY, Utah
JON OSSOFF, Georgia RICK SCOTT, Florida
RICHARD BLUMENTHAL, Connecticut JOSH HAWLEY, Missouri
LAPHONZA BUTLER, California ROGER MARSHALL, Kansas
David M. Weinberg, Staff Director
Christopher J. Mulkins, Director of Homeland Security
Annika W. Christensen, Senior Professional Staff Member
Gauri Verma, Research Assistant
Kelly S. Delaney, U.S. Postal Service Office of the Inspector General
Detailee
William E. Henderson III, Minority Staff Director
Christina N. Salazar, Minority Chief Counsel
Andrew J. Hopkins, Minority Counsel
James P. Priest, Minority Assistant Counsel
Laura W. Kilbride, Chief Clerk
Ashley A. Gonzalez, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Peters............................................... 1
Senator Paul................................................. 2
Senator Johnson.............................................. 17
Senator Hassan............................................... 19
Senator Marshall............................................. 22
Senator Rosen................................................ 24
Senator Lankford............................................. 27
Senator Blumenthal........................................... 29
Senator Carper............................................... 31
Senator Ossoff............................................... 33
Senator Butler............................................... 35
Senator Hawley............................................... 37
Prepared statements:
Senator Peters............................................... 47
WITNESSES
TUESDAY, APRIL 16, 2024
Louis DeJoy, Postmaster General and Chief Executive Officer,
United States Postal Service................................... 4
Honorable Roman Martinez IV, Chairman Board Of Governors, United
States Postal Service.......................................... 6
Honorable Michael Kubayanda, Chairman Postal Regulatory
Commission..................................................... 8
Tammy Hull, Inspector General, United States Postal Service...... 10
Alphabetical List of Witnesses
DeJoy, Louis:
Testimony.................................................... 4
Prepared statement........................................... 49
Hull, Tammy:
Testimony.................................................... 10
Prepared statement........................................... 171
Kubayanda, Hon. Michael:
Testimony.................................................... 8
Prepared statement........................................... 162
Martinez, Hon. Roman IV:
Testimony.................................................... 6
Prepared statement with attachments.......................... 67
APPENDIX
Senator Peters chart............................................. 175
Senator Hawley picture........................................... 176
Mr. DeJoy Supplemental Information for the Record................ 177
Mr. Martinez testimony attachments...............................
Statements submitted for the Record:
America's Credit Unions...................................... 207
Jack Bergman................................................. 209
Coalition for a 21st Century Postal Service.................. 210
Michigan Senate.............................................. 218
National Association of Postal Supervisors................... 220
National Newspaper Association............................... 232
Office of the Governor, Nevada............................... 245
Association for Postal Commerce.............................. 247
White Water Association...................................... 287
Responses to post-hearing questions for the Record:
Mr. Dejoy.................................................... 289
Mr. Martinez................................................. 309
Mr. Kubayanda................................................ 315
Ms. Hull..................................................... 320
OVERSIGHT OF THE U.S. POSTAL SERVICE
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TUESDAY, APRIL 16, 2024
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10 a.m., in room
SD-342, Dirksen Senate Office Building, Hon. Gary Peters, Chair
of the Committee, presiding.
Present: Senators Peters [presiding], Carper, Hassan,
Rosen, Blumenthal, Ossoff, Butler, Paul, Johnson, Lankford,
Scott, Hawley, and Marshall.
OPENING STATEMENT OF SENATOR PETERS\1\
Chairman Peters. The Committee will come to order. Welcome
to today's hearing on oversight of the United States Postal
Service (USPS). I want to take a moment to thank our witnesses
for being here today. This panel includes executives from each
governing body that helps govern and oversee the Postal
Service. Each of them will offer a valuable insight here today.
The Postal Service offers a critical public service. Postal
workers deliver every day to keep our communities connected. As
the only carrier that reaches every address in the nation, the
Postal Service ensures that Americans everywhere can stay in
touch, receive goods, and more no matter where they live.
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\1\ The prepared statement of Senator Peters appears in the
Appendix on page 47.
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This Committee has jurisdiction over the Postal Service,
and we have a responsibility to examine this agency's work to
ensure it effectively is serving the American people. That is
why we are here today.
This hearing comes at a critical time for the Postal
Service. Two years ago, I led the passage of the bipartisan
Postal Service Reform Act (PSRA), the first major reform to the
Postal Service in over 15 years. This legislation set the
agency on more stable financial footing and provided critical
transparency on local service to the public.
This legislation has eliminated unfair financial burdens
that have long undermined the Postal Service, and in total will
provide $50 billion in financial relief over 10 years. The
intent of this law was to help ensure the Postal Service can
keep reliably serving all communities. Two years later, the
Postal Service is implementing this legislation, including
helping postal employees and retirees integrate their health
care with Medicare.
But the agency has also taken a series of changes on its
own, reforms that it claims to help save money and to improve
operations. These operational changes appear to be significant.
The Postal Service plans to make changes to its processing and
delivery network across the country. It plans to consolidate
facilities into larger, more centralized hubs and reducing the
number of times that mail is collected at facilities each day.
In some communities these changes have unfortunately
disrupted or caused declines in services. I remain concerned
about these changes. There's no clear evidence that shows the
changes will improve service in the long run. When I have asked
the Postal Service for detailed studies it has not been
provided to me.
The Postal Service has even said it must execute more
changes before studying their impacts, essentially plowing
ahead without knowing whether service will be harmed. It is
also not clear these changes will actually save money. We know
these changes led to increased cost at one facility, and the
Postal Service has not been transparent about their overall
cost projections.
So far, these changes appear to be moving in the wrong
direction. Service is down, cost is up, and customers are being
let down. I have called on the Postal Service to pause these
changes until it can show they won't undermine the agency's
primary responsibility to provide timely and reliable service
to the community.
Before moving further, the Postal Service must study the
locations that have been altered so far, investigate the root
causes of disruptions, restore normal service, and understand
the long-term implications of this plan. If the Postal Service
continues moving forward at this drastic pace without studying
the impacts, they will harm service and drive customers
nationwide.
The Postal Service must continue adapting to ensure it's
consistently improving service, but it needs to proceed with
caution to ensure it protects on-time delivery for the
communities who rely on the Postal Service each and every day.
This Committee is committed to conducting oversight to hold
the Postal Service to this mission, and I look forward to the
witnesses addressing the concerns that I have raised here
today. I look forward to working to improve the health of the
Postal Service and to make sure that we protect this vital and
critical institution.
With that, I would like to turn over this to Ranking Member
Paul for his opening remarks.
OPENING STATEMENT OF SENATOR PAUL
Senator Paul. Thank you, Mr. Chair. In an 1808 letter,
Thomas Jefferson shared simple wisdom that seems to have evaded
the Federal Government. Jefferson wrote, ``I do not know on
what principles of reasoning it is that good men think that the
public ought to pay more for a thing that they would themselves
if they were buying it themselves.''
It's those principles or reasoning, or rather the lack
thereof that bring us here today. In 2020, Congress was led to
believe that the $107 billion bailout of the Postal Service
would pull the Postal service out of the hole. Instead, we were
told they would break even. We were even told they would break
even by 2031.
Postmaster General (PG) DeJoy sat in front of this
Committee in August of that year and stated, ``I am absolutely
convinced that with some help from Congress and our regulator,
we can do it, and that there is a bright future ahead for the
Postal Service.''
I argued that giving more money to the Postal Service was
equivalent to burning money. However, that may have been a
false equivalency because at least when we burn money, it
provides warmth. Given the continued financial shortfalls of
the Postal Service, it is entirely nonsensical for it to
convert more than 125,000 service workers into career roles
since October 2020, which effectively allows those workers to
make 50 percent more hourly and is insourcing jobs that were
provided at a lower cost by private partners.
During the Postal Service Reform Act, I argued that no
funding should be given to USPS without changing its labor
practices. Instead, no labor changes were made, and now
Americans are left holding the bag of an ever more bloated
Postal Service.
The service has tried to explain away these bad numbers due
to costs that they cannot control. But the service is spending
$9.6 billion in electric delivery vehicles and spending nearly
$40 billion over 10 years to convert and build certain
facilities into hubs that so far do not seem to work.
This has not stopped Congress from throwing even more money
at the Postal Service by way of $10 billion through the CARES
Act Funds, and $3 billion more to buy electric delivery trucks.
For those counting, that's $120 billion in funding relief in
the past four years alone.
While 120 billion is already an astounding number on it's
own, when you consider this sum relative to our nation's dismal
fiscal condition, it suddenly becomes reckless. We have nearly
$35 trillion in debt, or 122 percent of gross domestic product
(GDP). This is the highest level of debt this nation has ever
had, and we show no signs of slowing, slowing down and adding
nearly a $1 trillion to our debt every hundred days.
This year, we have already spent more to pay the interest
on our debt than we have on our own defense. Now, the Postal
Service is asking Congress to provide it with an additional $14
to a $100 billion in taxpayer dollars by transferring funds
from the Office of Personal Management (OPM) to USPS.
At some point, Congress needs to pull its head out of the
sand and stop throwing money we do not have at an agency to
maintain status quo, especially when the status quo means more
deficits. USPS needs massive structural reform, not necessarily
in its network, but in its workforce, hiring, and retention.
Today's hearing will provide Americans transparency in what
their dollars are funding and why their post office is not
meeting their service and delivery goals. It will reveal
Congress's lack of prudence in legislating decisionmaking.
Chairman Peters. Thank you, Ranking Member Paul. It's the
practice of this Committee to swear in witnesses.
You may be seated. Thank you. Our first witness today is
Louis DeJoy. He is the 75th Postmaster General of the United
States and Chief Executive Officer (CEO) of the U.S. Postal
Service. He was appointed by the organization's Board of
Governors and began his tenure in June 2020.
Mr. DeJoy previously spent over three decades in the
private sector running a logistics business as both its
Chairman and its CEO. Mr. DeJoy, it's good to have you here
before us today. You may proceed with your opening comments.
TESTIMONY OF LOUIS DEJOY,\1\ POSTMASTER GENERAL AND CHIEF
EXECUTIVE OFFICER, UNITED STATES POSTAL SERVICE
Mr. DeJoy. Thank you. Good morning, Chair Peters, Ranking
Member Paul, and Members of the Committee. I welcome the
opportunity to testify today and describe and discuss the
challenges that face the United States Postal Service and the
opportunities for our future. I commend the Committee and Chair
Peters for passage of the Postal Service Reform Act of 2022.
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\1\ The prepared statement of Mr. DeJoy appears in the Appendix on
page 49.
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Thankfully, PSRA clarified long-standing questions and
solved several legacy retirement issues, which are immensely
helpful to our long-term prognosis. However, as important for
our current discussion, PSRA did not legislate solutions for
our operational problems or ensure our financial survival.
Instead, more work needs to be done, and the PSRA confirmed
that it's up to the Postal Service to take the appropriate and
necessary actions to save the Postal Service fully.
With the PSRA now law, I am not here with any specific
legislative requests of this Committee. Instead, what we need
now is for our stakeholders to support us in the implementation
of key self-help initiatives outlined in the Delivering for
America (DFA) Plan, that are critically necessary, and that
will ultimately enable our operational and financial success.
I remind this Committee that the DFA Plan played an
important role in gaining support for the passage of the Postal
Service Reform Act of 2022. In addition to the reversal of
unfair requirements for pre-fund retiree healthcare benefits,
certain foundational underpinnings of the DFA were in fact
incorporated in legislation. Such as six day a week delivery
and operating an integrated mail and package network.
I also offered a committee that the DFA very much aligned
with our legislative requirement to be financially self-
sustaining, a fundamental business model concept to which I am
fully and firmly committed to, and which is at the core of
almost every DFA initiative.
As Senators, you understand, the Postal Service had been a
financial and operational death spiral the 14 years prior to my
arrival here in June 2020, and had no effective plan to improve
operations or curtail financial losses. The Postal Service was
destined for financial collapse.
But for the initiatives identified in the DFA plan and the
actions we are now taking to remedy the untenable and
unsustainable financial, organizational and operational
condition, I found the Postal Service in when I assumed this
position. There are simply no alternative strategies that I
have seen that holistically address the legacy elements with
the constraints that exist and put us on the path to long-term
viability.
When I last appeared before this Committee, I was a few
months into my tenure at the Postal Service, and the Nation and
the Postal Service were amid a global pandemic. The pandemic
demonstrated the Postal Service's essential and fundamental
value to the nation's critical infrastructure and our unique
ability to reach every American daily. I now appear before you
with three and a half years of heightened understanding under
my belt and with a sense of urgency regarding the need to
ensure the Postal Service's financial and operational staying
power.
Today, I have a formative team alongside me, the men and
women of the United States Postal Service, working harder and
smarter than ever before to transform this organization so that
it has a relevant and viable future to service the American
people. I am proud of their efforts. This Committee should be
proud of their efforts. The American people should be proud of
their efforts.
The Committee should be fully aware of our significant
progress we have made on our 10-year strategic plan, the DFA
plan, as well as the significant obstacles that lay ahead. We
remain firm in our position that the status quo is not an
option if we want a financially self-sufficient Postal Service
that provides a high quality service expected of us far into
the future.
I ask that you recognize that our pursuit of long-term
viability should have be done over a decade earlier, and that
the damage inflicted on the organization by all stakeholders
failing to react, evolve, or engage has produced an
organization that was defeated and locked into strategies of
the past that proved self-destructive in a modern American
economy, and given the volume in mail mix changes. As a result,
the road to success will not be a straight and easy path.
Rather, it will be a series of accomplishments, struggles, and
recoveries that will be uncomfortable at times.
However, in the end, we will not only produce the operating
and financial successes to which we aspire, but we will also
advance the institutional culture of the organization, enabling
us to engage in our future in a much more logical, organized,
confident, and successful manner--starkly different from how we
engaged our recent past.
My hope is that all stakeholders recognize the challenges
this management team faces in stemming its losses,
reconstituting its infrastructure, and breaking down
longstanding practice that have deprived the American people of
a viable Postal Service. I hope that they join us in
accomplishing the ongoing improvements we aspire. I look
forward to answering any questions you may have.
Chairman Peters. Thank you, Postmaster General DeJoy. Our
second witness is Roman Martinez IV. He was appointed to the
Postal Service Board of Governors and confirmed by the Senate
in August 2019. As Chairman, he is responsible for leading the
Board of Governors, which oversees and approves the Postal
Service's financial, as well as operational plans to ensure
that it's on the right track.
Mr. Martinez' previous career experience is in investment
banking and business, including three decades at Lehman
Brothers. Mr. Martinez you are recognized for your opening
comments.
TESTIMONY OF HONORABLE ROMAN MARTINEZ IV,\1\ CHAIRMAN, BOARD OF
GOVERNORS UNITED STATES POSTAL SERVICE
Mr. Martinez. Thank you, Chair Peters, Ranking Member Paul
and Members of the Committee. Thank you for inviting me to
appear before you today. I am honored to serve as Chair of the
Board of Governors. I joined the Board with almost 50 years of
experience in business and financial markets, including almost
30 years, serving on boards of private public and not-for-
profit organizations.
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\1\ The prepared statement of Mr. Martinez appears in the Appendix
on page 67.
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From experience, I have learned to analyze complex pieces
and financial challenges and to appreciate best practices of
board governance. Three years ago, postal management and our
Board of Governors developed a 10 year Delivering for America
plan to set the Postal Service on a path to fulfill its mission
and to become financially self-sufficient.
The Board of Governors continues to support the DFA plan
and postmaster General DeJoy's efforts to implement this
incredibly complex and critical transformation of the Postal
Service. We fully recognize that these changes will not be
without impacts and temporary service disruptions.
We must learn from such impacts and recover as quickly as
possible. Now, I would like to make some comments on our
financial results because they are very frequently
misunderstood. Because the Postal Service has no control over
some key expenses. It is important to analyze its financial
results by focusing is controllable income laws, which are the
results that may be addressed by management. This is akin to
the operating results of a company, not the extraordinary items
that are sometimes needed to be recorded.
When uncontrollable factors are added to the financial
statements as required by Generally Accepted Accounting
Principles (GAAP), sizable losses are reported. Those losses
are not the correct way to judge the financial results of the
Delivering for America plan. I will explain.
During the first quarter of fiscal year (FY) 2024, the
Postal Service recorded approximately $500 million of
controllable income, but yet a net loss of $2.1 billion under
GAAP. There are three main uncontrollable factors that resulted
in this sizable gap loss. First, in the first quarter, the
amortization of unfunded pension liabilities amounted to
approximately $1.4 billion.
This is a direct consequence of the law that requires USPS
pension contributions be invested exclusively in U.S. Treasury
debt securities. This has resulted in an outsized mismatch of
investment assets and liabilities, liabilities that are subject
to inflation adjustments, particularly disastrous in periods of
negative real rates of interest, as recently experienced.
Other independent agencies like Amtrak and Tennessee Valley
Authority (TVA) are not subject to these limitations. A recent
Inspector General (IG) report found that if Postal retirement
funds had been invested in a diversified 60/40 stock bond
portfolio, our almost a hundred billion of retirement funds
deficit in 2022 would have been an $800 billion surplus, let it
sink in. Because of the law that requires to invest in U.S.
treasury securities, which are mostly, at most medium term, we
have had to record sizable losses that we have no control or
management over.
Second, the Postal Service remains saddled with paying a
disproportionate share of civil service retirement system
(CSRS) costs. These are for postal employees who work for a
predecessor organization, the Post Office Department. A recent
Office of Inspector General (OIG) report noted, that the Postal
Service is expected to cover the full cost of CSRS benefits
while other Federal agencies are not.
If OPM used more modern actuarial methods, the Postal
Service would have roughly a hundred billion more in CSRS fund.
These are funds that we contributed. These were not given to us
by the government. The DFA plan assumed that CSRS reform could
be effectuated by the Executive Branch. About an hour or so
ago, the Office of Legal Counsel (OLC) issued a press release
saying that no, if this were to be changed, they would require
legislative action. I would submit this is an injustice. The
way the Postal Service has been saddled. These two factors
alone accounted for nearly 80 percent of our recorded losses
last year.
When you talk about six billion of losses, you got to take
into account that 80 percent of them, were by things that we
did not control. I urge you to read the two Office of Inspector
General reports that I cited. One is dated April 26, 2023, and
the other one January 8, 2024. They are extremely informative
and lay out exactly the problem that I just described in
detail.
Now, third factor inflating the Postal Service's expenses
is our workers' compensation obligations. The OIG has also
noted on a different report that absent legislative changes,
the organization is limited in its ability to adopt cost saving
initiatives that are often used in private industry. These
expenses total about $1.6 billion annually. If the Postal
Service could adopt some of the best practices used by private
sector, the OIG estimates that potential savings are over $300
million annually.
Furthermore, as if this was not enough under GAAP, the
reported workers comp' liabilities on the books are adjusted by
changes in interest rates. In the first quarter of 2024, it
resulted in a non-cash expense of $1.2 billion. I urge you to
read another report from the OIG of May 26, 2023, that goes
into great detail as to this frankly, travesty.
Now, these are complex issues, but they are critical to
evaluating the Postal Service's financial performance. In
closing, while our finances have improved, as shown in the
first quarter, we estimate a full year controllable loss of 800
million, but that is down from 2.3 billion loss in 2023.
By the way, over the last two or three years, not only have
inflation hurt, our pension returns because of the negative
real rates, but also has impacted our operating results in a
tremendous way. Seventy percent of our costs are salary and
benefits, and they are subject to call adjustments. Another 10
percent are transportation costs, and they are subject to
inflation, as we all know, from fuel prices, and we have been
fighting that.
This result that I have cited, which is an improvement,
have taken into account dealing with those inflationary
impacts. As I know earlier in implementing a restructure of
this magnitude, there will be times when service falls short of
our standards, but the Postal Service will move quickly to
address them while our infrastructure is being modernized and
our workforce stabilize. Simply put, in my view, the Delivering
for America Plan is working, but it needs time to achieve these
goals. With your help and support, we can continue down this
path. I look forward to your questions.
Chairman Peters. Thank you, Governor Martinez. Our third
witness is Michael Kubayanda, and he is Chairman of the Postal
Regulatory Commission (PRC). Which is the Postal Service's
regulator. He has served in that role since January 2021. He
was first appointed to the Commission and confirmed by the
Senate in January 2019, and was confirmed for a second term in
December 2021.
Prior to his appointment, he served with the US Postal
Service Office of Inspector General and the House Oversight
Committee. Mr. Kubayanda, you are recognized for your opening
remarks.
TESTIMONY OF HONORABLE MICHAEL KUBAYANDA,\1\ CHAIRMAN, POSTAL
REGULATORY COMMISSION
Mr. Kubayanda. Thank you. Good morning Chair Peters,
Ranking Member Paul and Members of the Committee. The Postal
Regulatory Commission is a micro agency with a substantial
mission providing transparency and accountability of the U.S.
Postal Service. The Commission recently issued its compliance
determination for 2023 and will soon issue two more reports.
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\1\ The prepared statement of Mr. Kubayanda appears in the Appendix
on page 162.
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The research is alarming. Service, performance, finances,
and efficiency are moving in the wrong direction. These
findings should raise concerns now with election scheduled for
this fall and mail ballots expected to play a role. In Georgia,
Virginia, Texas, and other States, service quality has
continued to decline.
Individual letters and cards mailed within the Atlanta
area, which should arrive in a generous two-day window, met
that standard only 16 percent of the time in March. Atlanta and
Richmond have new processing plants under 2021 strategy, which
was meant to make the Postal Service self-sustaining and high
performing.
Three years later, the Postal Service does not appear to be
closer to meeting those goals. While some disruption should be
expected with these network changes, the bottleneck in Georgia
does suggest some underlying problems. Hopefully, service in
Atlanta is an outlier and will rebound soon, but national
service is also subpar and trend in the wrong direction. Some
context helps in understanding these service problems.
First, the Postal Service has relaxed service standards in
recent years, which should make it easier to achieve a high on
time percentage. Second, the official numbers may actually
under count delays experienced by mailers and recipients. The
postal strategy calls for centralized plans, which increase the
time from when a customer gives mail to the Postal Service
until the first scan. This can take place in a different State.
The Postal Service has also decided to stop picking up mail
from some post offices in the evening.
The official metrics, therefore, may actually under count
delivery times by days, even when the network is operating
smoothly. The Commission is working to understand and address
these issues. Some parts of the postal strategy do make
intuitive sense, especially at first. One might assume that
lower standards, operational changes and slower service have
allowed the Postal Service to cut spending, improve efficiency,
and become self-sustaining. They have not up to this point.
Costs have not been reduced, even though mail volume has
declined. Efficiency fell by a historic amount of four percent
last year. In 2020, the Commission changed a price cap
established by a postal reform law which had locked the cap
into place for 10 years. That new regulation, as well as a
reform law in 2022, provided a boost of over $100 billion to
the postal balance sheet.
With that help and the new strategy, the Postal Service
planned to break even in 2023. Instead, the agency lost over $6
billion, with the caveats that Chairman Martinez mentioned this
morning. I understand that postal employees are working harder
than ever, and that postal management remains committed to its
present course. The Commission lacks the direct legal authority
to stop it.
I hope the Postal Service can turn around in its
performance, and I encourage its leaders to be transparent with
stakeholders, Congress, and oversight bodies as they attempt to
do so. Voters and election officials, for example, must know
the amount of time needed to deliver ballots. Congress created
the advisory opinion process is one venue for such
transparency.
The Commission relies on stakeholder input and detailed
analysis by its staff to understand the impact of network
changes. Advisory opinions, identify potential concerns, and
offer recommendations for addressing them. Commission advisory
opinions in 2021 and 2022 noted concerns that were not fully
addressed. These include the potential for late delivery of
medications, unrealistic projections of cost savings, and lack
of communication with stakeholders.
We have seen these issues pop up again in headlines and in
data, as well as in the OIG's recent audit of Richmond. A new
advisory opinion makes sense as the Postal Service ramps up the
national rollout of new processing plants and transportation
options. These changes are clearly having an impact on service.
Postal leadership has pointed out that the Commission has
stopped or slowed down Postal Service's work. While I believe
the need for oversight is readily apparent, the Commission has
actually streamlined regulation to support the postal ecosystem
where that's appropriate.
Last year, the Commission approved negotiated service
agreements (NSAs), which are specialized contracts between the
Postal service and its customers in 10 days on average, despite
having a staff of fewer than 100 people, that is fast and
flexible regulation where it's warranted. The Commission stands
ready to work with postal leadership and stakeholders to
preserve the postal system consistent with the law and the
public interest. Thank you.
Chairman Peters. Thank you, Chairman Kubayanda. Our final
witness is Tammy Hull. She is the Inspector General of the U.S.
Postal Service. The Governors of the Postal Service appointed
her to that position in 2018. Prior to her appointment, Ms.
Hull served as the Acting Inspector General (AIG) and the
Deputy Inspector General (DIG), and has served as the OIG since
2005. Ms. Hull you are recognized for your opening comment.
TESTIMONY OF TAMMY HULL,\1\ INSPECTOR GENERAL, UNITED STATES
POSTAL SERVICE
Ms. Hull. Thank you. Good morning, Chair Peters, Ranking
Member Paul and Members of the Committee. Thank you for
inviting me to discuss our work. The Postal Service issued its
Delivering for America Plan three years ago, and is now
accelerating network changes across the country. The OIG is
committed to keeping pace with these changes and providing
robust oversight and transparency.
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\1\ The prepared statement of Ms. Hull appears in the Appendix on
page 171.
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We have completed several audits related to the plan and
more are in progress. We are finding that as the Postal Service
implements these changes, significant operational issues are
arising that affect service to customers and take time to
resolve. Our work is showing that better local coordination and
execution could likely prevent some of this disruption.
Last September, we issued an audit examining the initial
Sorting and Delivery Centers (S&DCs) in Florida, Georgia,
Texas, Massachusetts, and New York. Overall, we found these
facilities operated successfully, but there were opportunities
for improvement. The Postal Service did not communicate
sufficiently with high volume customers, often providing
information at the last minute.
In addition, some facilities opened before renovations were
complete, so employees had to work around construction
projects. Transportation changes also delayed delivery to P.O.
Box customers leading to complaints. The Postal Service
launched its first regional processing and distribution center
(RP&DC) last July at an existing plant in Richmond, Virginia.
Our recent audit of the repurposed facility found significant
problems.
Prior to making changes, the Postal Service had not
addressed staffing and other issues that we had raised in our
2021 and 2022 audits of the facility. Transportation planning
for the new facility was also insufficient, leading to a 700
percent increase in extra trips. In addition, on-the-ground
operations did not always match the new integrated plan for the
Richmond plant and its supporting facilities. This was partly
due to inadequate coordination with local management and
ongoing changes after the launch.
Local management said they did not fully understand the new
mail flow within the facility and were not solicited for input.
The Postal Service also did not hold public input meetings for
the Richmond changes. We examined whether the Postal Service
was required to provide public notice and found its policy was
unclear. The Postal Service said its decision not to provide
public notice complied with its longstanding interpretation of
the law, but this interpretation was not documented in policy.
Three months after the opening of the RP&DC, the Postal
Service made an additional change within the region covered by
the Richmond facility. For the first time it implemented its
local transportation optimization initiative. Under this
initiative, at some post offices, collection mail received
throughout the day is held overnight to reduce the number of
trips and associated costs.
In the Richmond region, 86 percent of the affected zip
codes were in rural areas, potentially leaving these rural
customers with slower service. Following implementation First-
Class Mail on-time service performance in the Richmond region
dropped about 21 percentage points to 65 percent.
Unfortunately, we cannot isolate how much of the service
decline resulted from this initiative compared to other events
such as peak season.
As the Postal Service expands this transportation
initiative to other locations, we will monitor it and other
network changes. We have audits currently underway of the
rollout of new RP&DCs in Georgia and Oregon, and additional
S&DCs. We will evaluate implementation challenges that could
both reduce service and increase the risk that the Postal
Service may not achieve its potential savings.
We also continue to focus on service performance more
broadly and recently reviewed clusters of facilities in
Missouri, Minnesota, North Dakota, California, and Washington
D.C. to evaluate service issues and recommend solutions.
Additionally, following media reports of undelivered packages,
we visited a South Houston facility in January and found
384,000 pieces of delayed mail and mostly packages.
The Postal Service had moved operations from another plant,
but staffing, equipment, and logistics were not aligned with a
new workload. Our recent report details these issues. Another
critical focus area for us this year is the Postal Service's
readiness for the November election, particularly as network
changes are made.
We plan to release our election mail readiness audit in
late summer and we will conduct a separate audit of Postal
Service ballot processing during the November election. As we
did in 2020, OIG auditors and investigators will make hundreds
of visits to delivery units and plants around the country to
observe operations and flag problems. We want to help ensure
the Postal Service continues to deliver for voters. Thank you
for the opportunity to share our work, and I am happy to answer
questions.
Chairman Peters. Thank you, Ms. Hull. We have a lot to
unpack here, and we look forward to having a very open
discussion in the time we have remaining together. Postmaster
General DeJoy, as we have heard and you mentioned, and others
have heard, the Postal Service made a number of changes in two
very large facilities in Richmond, Virginia as well as Atlanta,
Georgia.
Unfortunately, that implementation, as we heard from Ms.
Hull, has caused some problems and service disruptions during
that time. I have the chart\1\ here for folks who are in the
audience.
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\1\ The chart referenced by Senator Peters appears in the Appendix
on page 175.
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One time service declined after the Postal Service
implemented changes in Richmond and unfortunately is still
unreliable, as you can see from the chart here. Atlanta is
particularly problematic where we saw service plummet. In fact
inbound First-Class Mail has dropped to only 36 percent on
time. In addition, cost savings have not been realized.
Estimated the Richmond facility, for example, incurred about $8
million in unexpected cost as a result of some of these
changes.
My question for you, sir, is given these service delays and
increased cost is the Postal Service still moving forward with
these planned network changes? And you think it's prudent now
to perhaps try to evaluate exactly what happened in these two
locations to make any changes that may be necessary before you
continue to roll it out on a nationwide basis?
Mr. DeJoy. Yes. First of all you are correct in regards to
the service deteriorating. We recognize that. We apologize to
the constituents that have received that service, but in the
long term, if we do not make these changes, that will be every
day, everywhere around the Nation.
The problems that we are having with regard to both
facilities being open have nothing to do with the fact that we
want to process packages with a conveyor rather than by hand.
That we want to fill trucks and have it run 90 percent full
instead of 30 percent full.
It has nothing to do with how we want to make one trip in
the 300 miles away to pick up no mail versus two trips a day to
pick up no mail. A host of other operational and strategic
initiatives that we have in the plan that enable us to compete
with private industry, because that's the law that you all have
us operating under.
To the extent of the other problems that manifested, this
is an organization that has not engaged in change in over 15
years, right? We are taking longstanding broken practices and
an less than engaged management style and trying to transition
from losing $137 billion over the last 15 years to operate like
Federal Express (FedEx) or United Parcel Service (UPS).
The fact is, issues that we had here were management issues
on the ground, employee attendance issues, and basic management
tactics. I am quite confident. I see the whole team getting
better, understanding the transition that we have to make, and
committing more to the transition that we have to make.
I say, sir, we do not have another choice, but to carry on
is a good plan. It's a simple plan, right? We have $20 billion
worth of deferred maintenance. That's what we are fixing.
Chairman Peters. Postmaster General, I understand that
change is very hard, especially in a very large organization
it's incredibly difficult. The point that I am making is that
we look at these two facilities with the changes that you have
made that have had disruptions and problems. You are not, you
said that's going to happen throughout the system in the long
term, yet we are not seeing that currently in these others.
We are seeing these two particular facilities with these
changes are having this kind of impact. I am not against
change. You and I have had that discussion before. Change is
good. But if you are starting to see that kind of impact with
these changes, in these two facilities, is it time just to
pause a little bit and say, OK, what do we need to tweak? What
do we need to change that's not going to result in this. I am
not going to bury my head in the sand. Say, you got to stay in
the status quo. We know that's not working?
Mr. DeJoy. I understand what you are asking me now. Sir, we
have paused, we have changed, we have reorganized, we have
committed additional resources. I have taken my foot on and off
the pedal as appropriate to capitalize on the momentum that we
have in making the change, the time period that we have before
we run out of cash. But recognizing some of the weaknesses that
we have in deploying. I am very sensitive to that, and have
stopped many initiatives.
There were a few more plants supposed to roll out this
year. But also, within the organization, some of the local
things, these plants will succeed. We are three months, four
months into Atlanta, we moved almost 2000 people from 10
locations around the city into one, right? We went from
processing packages by hand to doing a million a night, right?
I had a conversation with the Richmond OIG last week.
There's a different attitude within the organization there in
terms of learning how to process using in a refurbished plant,
using the proper tools, using the proper instruction. That was
void. That is part of what we are trying to rebuild here.
Engagement with our workforce and standard management
practices. But we are not doing this blindly with an intent to
destroy service.
Chairman Peters. No, and I would never imply that, but I
heard you say that you are slowing things down. You are taking
a look to see as those numbers improve that we have
transparency. As those numbers improve, which you contend will
happen with your changes in both Richmond and Atlanta, you are
slowing down the implementation around the country. Is that
accurate to say?
Mr. DeJoy. I would have construction underway. I am mindful
of the transition to avoid circumstances like that, and that's
how I will deploy myself. Those two plants, Richmond and
Atlanta, and the whole Georgia area, will be the finest running
parts of the organization very shortly. All right. We have to
allow time to transition. There are consequences. I did not
create this problem that exists or this trajectory. We have to
move out and we are very mindful of this. We will make every
effort to stop that from happening.
Chairman Peters. I appreciate that. Great. Thank you. The
Postal Service recently made another change that's causing
issues, and that's the local transportation optimization.
Inspector General Hull, you mentioned that in your opening
comments and the change was implemented in Richmond, which the
Postmaster General mentioned, but your office published a
report yesterday, which you referenced as well showing it had
contributed service declines there briefly. Does this change
have concerns for you, particularly in rural areas which are
tends to be folks that are most vulnerable to these kinds of
changes?
Ms. Hull. Yes. We did issue the report yesterday. We found
that when the Postal Service implemented this in October, that
service declined by 21 percentage points. In the majority of
the zip codes that were impacted by this local transportation
optimization, the vast majority were in rural areas. We have
some concerns, we will be continuing to look at that. But right
now, that was the first one that had been implemented, and we
saw that the service decline was most significant in those
rural areas.
Chairman Peters. Great. We will explore that further in the
remaining time. Ranking Member Paul, you are recognized for
your questions.
Senator Paul. Mr. DeJoy, the post office, I guess, before
postal reform was losing about a billion dollars a quarter,
about $4 billion a year.
Mr. DeJoy. That's correct sir.
Senator Paul. Now it's estimated to lose maybe 1.5 billion
a quarter, or about $6 billion this year. It does not sound
like a whole lot of success with people talking about going in
the right direction. The question is, we have known for, I
don't know, a decade, two decades that what the post office
sells is diminishing. First-Class Mail is a granted monopoly,
but it goes down every year, and I think last year it went down
nine percent.
You have a declining revenue source that you make money
from. Then you decided to add 125,000 jobs that were part-time
jobs and did not have all of the ramifications of government
employment, which are often 50 percent more expensive than
part-time jobs. Why, in a sort of a failing environment of
declining sales and perpetual death, I mean, just into the
future as far as the eye can see, would you want to add more
government employees?
Mr. DeJoy. Yes. The first year I got here, we lost nine and
a half billion dollars. The year before that we lost pretty
much about the same, losses over seven years were $90 billion.
To your point and we have had this discussion on why convert
people, because it was not working, sir, in the environment, we
were in the middle of a pandemic, right?
We had about 60 percent availability of employees. The
management at that particular time treated these people as
disposable people, right? We had significant overtime and in
the middle of the pandemic and trying to move forward. I have a
growth plan and it's growth in the package business. In fact,
we are growing in the package business. But, I have converted
150,000 people to full-time positions because that was the
right thing to do in this availability to bring stability to
the organization.
Senator Paul. Basically, adding significant costs in an era
of perpetual debt.
Mr. DeJoy. No, because of the stability, right? Because of
the attrition rate that we have in the organization? I am about
20,000 people less than what we had when we came in here. I am
50 million hours less to do more business today than when I
walked in the door. That's operational management principles,
sir. That's an obvious if you are not in this type of
environment, right? It's something that we had to stabilize the
workforce.
We will continue to hire and staff. Right now, we have
30,000 less pre-career people, 20,000 more full-time people,
and the stability of the organization peaks. When I got here,
we were hiring 40 and 50,000 people for peak. We hired 8,000
last peak, and we did 133 million more packages than the peak
before.
Senator Paul. The debts continue to mount. I do not see a
whole lot of change. This 10-year projection is rosy on things,
but the immediate debts are getting worse.
Mr. DeJoy. Now, sir, we have taken over so that 50 million
hours is like 4 billion. It's like 5 billion--a couple of
billion dollars out of transportation. We have grown our
revenues significantly to 6.9 billion.
Senator Paul. Private corporations face these kind of
problems and when they do, they do not add to their labor
costs. They try to adjust. If you are in Washington State and
you have union labor and it's costing you too much, you expand
into South Carolina and you hire non-Union labor. It's sort of
the same principle with government unions. Your costs are 70 to
80 percent is labor. You compare yourself to UPS, which is also
unionized. They are about 50 percent cost of labor. FedEx, non-
unionized, about 38 percent.
Everybody admits that the labor cost is a big function of
the problem, not only in the immediate labor cost.
Mr. DeJoy. I have not admitted that.
Senator Paul. Not only in the immediate labor costs, but in
the pensions, as Mr. Martinez pointed out. But those are labor
costs because you have a bigger labor force, you are going to
have bigger pension liabilities. But Mr. Martinez, in the
private world, you have to account if your pension is short and
you are running a private company and you have to make up for
the pension with revenue from your company, you count that,
right? You, count that in how your company is doing for the
year?
Mr. Martinez. Right now we are the defined contribution
plans. They are now in defined benefit plans, which is what we
have here.
Senator Paul. You would not add more people if you were in
private business, you would not add more people to an
undefined. You would have to add them to a defined benefit
because you do not want unlimited costs, you want a limitation
on costs.
Mr. Martinez. Defined benefits is when you are obligated to
pay a certain amount to the employees.
Senator Paul. Right.
Mr. Martinez. Most private sector companies today are
defined contributions.
Senator Paul. Right. But the thing is that by adding
125,000, you are adding to the problem. You are not actually
taking away from the problem.
By adding permanent employees, that will be the same sort
of plan.
Mr. Martinez. But that's a different question.
Senator Paul. It's part of the problem. You have a pension
problem, right? An underfunding of the pension?
Mr. Martinez. We have a problem created by government on
us.
Senator Paul. You have an underfunded pension and you have
to account for it, but you are adding more people onto that
traditional pension. We have a pension problem in Kentucky, and
it's the same kind of thing. It's a defined benefit versus
defined contribution. Most people get what they put in. They do
not just sort of get an amount on and on and on. You get what
you put in based on the contribution. But you are not changing
that model. You are adding more people to that model.
Mr. Martinez. The pension model was thrust on us----
Senator Paul. I know, but you are adding 125,000 new people
to the pension model.
Mr. Martinez. But that's a different package.
Senator Paul. You complain about that but you are adding
employees to it. I do not think you are making your situation
any better. It is not what a private corporation would do.
Mr. Martinez. Well the other corporation is not obligated
to be in every single delivery point in the United States.
Senator Paul. Most private corporations do not have a
monopoly either. There is that as well.
Mr. Martinez. Monopoly is declining.
Senator Paul. But here's my point. When you get to the
pensions being a problem, and you say, most of this is
generated by pensions and past pensions, and this was all
thrust upon you, that's fine. But you are adding people to that
problem. When you add 125,000 people to it, you are making your
problem worse, not better in the long run.
In our State, what we do is we are hiring people with a
different pension plan. They give to a 401k and they are going
to get what they put into it. And that's how you convert. But
that's what you should be doing. You should not hire any new
employees, every year you should get smaller. You should put
people into a different type of a pension plan.
Mr. Martinez. We can have a discussion about that, but we
need legislation for that then.
Senator Paul. No, you do not need legislation to privately
contract. You are converting from the one thing that actually
works at the post office, and that is privately contracting
people who are not in the government union.
It is the only way under today's rules, and I would change
the rules. I would try to fix your pension. Your other point
is, is that the pension causes so many of these costs. When you
actually look at the pension, you say, well, we have to buy
only treasuries. This last year's been the best year for
treasuries in the past 10 years.
Mr. Martinez. I respectfully disagree with that.
Senator Paul. Because interest rates have risen, you have
been in a negative interest environment.
Mr. Martinez. Do you know how the treasury invests?
Senator Paul. You also have interest rates rising, it's
better than any other year you have had.
Mr. Martinez. Do you know how treasury invests our pension
assets? Do you know, I respectfully ask you the question?
Senator Paul. I can't answer you.
Mr. Martinez. I will tell you. We turn over the money and
they basically put it in a latter portfolio of 15 years. We are
locked into a rate. The OIG report, and you might be able to
correct me, I think our average return in 2022 was like 3.4
percent or something in that area.
Senator Paul. Right. That's probably better than it was
five years ago, it would be much less.
Mr. Martinez. 3.4 percent when inflation is running at
eight percent.
Senator Paul. No, I am not saying it's great. It is still a
terrible investment. Nothing makes sense about the pension
program. I am not here to defend your pension program.
Mr. Martinez. What's your question?
Senator Paul. I am against your pension program, but I am
against putting more people in it so you do not quite get it.
You want to quibble over the pension program getting this
because you are adding more people to it. You need to add less
people to it, and you need to convert your labor force. It is
the only way you can survive. Otherwise, we just keep doling
out more massive subsidies to you.
Mr. DeJoy. Senator, we have not added 125,000 people. We
have less employees than we did before. We had 40,000 people a
year.
Senator Paul. Your DFA says you want add 150,000 and you
have added over 100,000 to the government union.
Mr. DeJoy. That's not my plan. We have used 50 million less
work hours this year to do the job. Long range, we will size
our workforce for the work we have to do. That is part of the
plan.
Chairman Peters. Senator Johnson, you are recognized for
your questions.
OPENING STATEMENT OF SENATOR JOHNSON
Senator Johnson. Thank you, Mr. Chair. I will start with
Mr. Martinez. As we are talking about pensions and investments,
when you hold a U.S. Treasury and it's at low interest rate and
the interest goes up, the value of that bond goes down,
correct?
Mr. Martinez. Goes down.
Senator Johnson. Do you have to recognize that on your
income statement or because you are holding these things in
maturity, do you not recognize that loss?
Mr. Martinez. We will do that indirectly. OPM, and not us,
not our auditors, calculate actuarially what our amortization
of unfunded pensions are. To the extent that our value goes
down, then that cost goes up theoretically--but I do not know.
They tell us what it is that we have to put in.
Senator Johnson. Yes, I would be surprised if you had to
down in value because you are holding to maturity. You are just
getting hit by the fact that you are earning a very low rate of
return versus what's available in the marketplace.
By the way, the comment you made in terms of the $800
billion of lost opportunity, had you invested that in just a
normal type of balanced fund would have also been true. For
social security, had we not spent that money and invested that
in--I know it did not exist at the time--ETF, or some kind of a
Dow Jones index fund, we would have $7 or $8 trillion in real
assets, but we did not do that. We spent the money, it's gone.
But that's a different point.
Mr. Martinez. If like we had been able to invest like
Amtrak or TVA on a diversified portfolio, that surplus would
have been money that we would not have had to put into the
pension fund, but rather on our capital investments.
Senator Johnson. This gets me to my next point, and it's
the constraints that the Postmaster General talked about.
Basically, you are operating and reporting to a 400-or 535-
member board of directors here that impose on you certain
business conditions that you would not recognize or you would
not operate that way if you are in the private sector, right?
Mr. Postmaster General.
Mr. DeJoy. We have laws that we need to follow and have
different impacts on us, used to protect the monopoly that no
longer exists.
Senator Johnson. Right. The question I have is what are
those major constraints? Let us get them on the table. What
does Congress force you to do that in any kind of rational
private sector business you would not do because you keep
losing your you know what?
Mr. DeJoy. Yes. I think the first part was the pre-funding
legislation that we worked together to get passed last year.
Senator Johnson. Now you did get an infusion. I never would
have thought this would happen. I was Chairman. $100 billion
plus, to offload parts----
Mr. DeJoy. Well, that's a perspective I do not share.
Mr. Martinez. It was on cash adjustment through the balance
sheet.
Senator Johnson. By the way, how much of the liability were
you relieved of? I am not up to speed on those numbers. Your
total unfunded liability pension was over $200 billion,
correct?
Mr. DeJoy. We still have the same obligations long term to
pay for our retirement.
Mr. Martinez. It is not having to recognize it.
Mr. DeJoy. It is just the pre-funding legislation that was
passed in 2006. Probably the dagger in the heart of the Postal
Service. Between what it did with regard to the pre-funding,
the price fixing that it instituted--that the PRC oversaw--and
through basic division, you were seeing it every year. $10
billion losses, $20 billion loss.
Senator Johnson. We talked about that. Again, that was an
insane bill that was passed in 2000.
Mr. DeJoy. There is a whole bunch of the same things that
have consequences.
Senator Johnson. Again, that's the 535-member genius board
that you report to.
Mr. DeJoy. I appreciate the legislation that you passed.
That gave us room to move forward. I would have liked to see
CSRS signed off, it did not. Moving forward in operational and
financial revenue producing issues, I think the Postal Service
Regulatory Commission needs to be looked at. In terms of what
their impact and effect, I have a Senate-confirmed board, a
Senate-confirmed Commission. This organization is not set up to
deal with what this Congress is asking us to do, which is
compete in the market. We have $39 billion worth of mail. It
costs us $65 billion to deliver it. The only way to make that
up is by driving costs out.
Senator Johnson. Which you are not allowed to do in many
cases. I mean, you are constrained on what you can do.
Mr. DeJoy. We are growing the package market and driving
cost now, too. Go look at the difference in the Atlanta. Go
look at the overall strategy. Before, no strategy existed. This
was a randomly deployed haphazard organization that had no
mission. There's a purpose within the organization now. People
are engaged in terms of trying to make this work. The strategy
is not that complex, it's simple. Load your trucks.
Senator Johnson. Congress does, what it always does, I mean
they will throw more money at the problem. If you get $10's of
billions thrown at you, you can use it to some effective
impact.
Mr. DeJoy. That's what I have asked for. I think we have an
operational path forward to solve a lot of these problems. It
is not without consequence as we do it. But, I am positive
about what to do, everybody's engaged, including our union
leadership.
Senator Johnson. Yes. I would really like to fully
understand what those constraints are. You cannot continue to
do what we keep doing in the declining market environment.
But anyway, I do have one other question submitted by one
of my constituents who actually produced the blue boxes.
Apparently, you are going to hire security blue boxes, and they
are just asking, are you going to be issuing, the specs on
those, some kind of strategic plan so they can plan on it, and
deliver those blue boxes to you as a cost effective manner as
possible?
Mr. DeJoy. I think we have purchased about 25,000 high
security boxes. We have a deployment plan. If you want, I could
get with a retail and delivery group and inspection service.
Senator Johnson. Yes. Could you get us in contact with
somebody?
Mr. DeJoy. Not somebody wants to break into them, is it?
Senator Johnson. Pardon?
Mr. DeJoy. It's not somebody who wants to break into them,
is it?
Senator Johnson. I do not think so. I knew this is a
cooperative type of question, but thank you, Mr. Chair.
Chairman Peters. Thank you. Senator Hassan recognized for
your questions.
OPENING STATEMENT OF SENATOR HASSAN
Senator Hassan. Thanks Chair Peters. Thanks to you and
Ranking Member Paul for holding this hearing, which is
particularly timely for New Hampshire because of the Postal
Service's plans to move operations from the Manchester
Processing and Distribution Center to Boston over the next
year.
Granite Staters reach out to my office daily about delivery
issues that they are experiencing. This new plan from the
Postal Service could exacerbate these issues by leading to more
delayed mail deliveries, delayed absentee ballots, and job
losses for postal employees. That is unacceptable.
Two years ago, we passed the bipartisan Postal Service
Reform Act to help the Postal Service achieve financial
stability. In addition, Senator Collins and I worked together
to help secure $10 billion in relief funds for the Postal
Service during the pandemic.
Congress took action to allow the Postal Service to achieve
its core mission to deliver mail to every customer at least six
days per week. But the Postal Service's current plan
fundamentally lacks a commitment to service. Granite Staters
and all Americans, deserve a new plan for reliable, timely
postal delivery. This is true whether they live in rural or
urban areas, whether they are waiting for a customer's check to
come in, whether they are a grandparent waiting for a birthday
card from their grandchild, or whether they are waiting for
life saving medications.
Let me start with a question to you, Inspector General
Hull. A few years ago, the Postal Service hired an additional
150 postal workers in New Hampshire based on an Inspector
General report that I requested. I appreciate your partnership
on that report and the work of your office. However, as I
noted, service issues persist in New Hampshire. I am
particularly concerned that moving critical operations from
Manchester to Boston will result in significant delivery
delays. I am also concerned that postal employees will face an
impossible choice between commuting to Boston, and for those of
you who do not know, this is ranked as one of the worst
commutes in the country. You are talking about two hours each
way for some of these employees, at least to be reliably on
time at work. It's one of the worst commutes in the country.
They are going to have face this choice to keep their jobs or
leave the Postal Service altogether. Based on your
observations, Inspector General, from previous consolidations,
what can Granite Staters expect when operations move from
Manchester to Boston? Specifically, what delays might customers
see and what will postal employees experience?
Ms. Hull. Yes, thank you, Senator Hassan, and I appreciate
the opportunity to work with your staff on previous
opportunities. I cannot speak to specifics on what will happen
directly in New Hampshire, but I can tell you what we have seen
so far. In Richmond, we have seen challenges, particularly in
service performance, and there is a real need for a better pre-
implementation kind of ground game to get the employees on
board so that they can understand exactly what the changes
involve and how to get them engaged in supporting the change
and working through what those service changes are going to
entail.
As far as employees go, I know a little bit about what that
facility will be moved from and to, but I do not know how many
of those employees will be retained at that local facility and
how many of them will actually have to make decisions that you
spoke of on, on where to go.
But I think if the Postal Service can address some of the
recommendations that we made in Richmond, we are in Atlanta
right now, we will make some similar recommendations on what
the challenges are. They can take these lessons learned and
really focus before they actually implement the change, instead
of after, and trying to recover from the service disruptions
that have occurred.
Senator Hassan. I appreciate that. I would also suggest
that this is not necessarily about getting employees on board,
it's about listening to employees. They are the experts in
delivering mail. They are the experts in their States. They are
the ones who know where a particular address is when somebody
writes the wrong address on an envelope, they are the people
who know this area. You might all start with listening to them
about what they think the impacts will be on service. Service
being the paramount obligation here.
To Chairman Kubayanda, Northern New Hampshire Postal
customers are not served by the Manchester facility. They are
served by White River Junction, Vermont. Under the Postal
Service's plans, operations at the White River Junction
facility also could be consolidated. Now we have Manchester
going to Boston under your plan, and here's the plan for White
River Junction, it's going to Hartford, Connecticut 150 miles
away.
Now we are taking two of the Northern New England States in
the northern part of those States, and just taking out any of
these processing centers. For Granite Staters in the North
Country in particular, the Postal Service is a lifeline. We are
still working on getting high speed Internet to them. The roads
are not optimal and cell service often is not great.
The Postal Service remains particularly important up there,
especially when you are talking about the delivery of
medication and essential goods. It also connects people, and it
is also critical resource for local businesses who rely on the
Postal Service, because no surprise, FedEx and UPS will not
deliver up there.
The Postal Service is all we have. The Postal Regulatory
Commission has the authority to ensure that the Postal Service
meets its service obligations. How could the Postal Regulatory
Commission use its authority to ensure that the Postal Service
meets its service obligations, especially in rural areas like
New Hampshire's North Country?
Mr. Kubayanda. Senator, thank you for the question. I will
say that the portion of the law that requires the Postal
Service to consult with the Commission as it's implementing
service standards is not one that has a lot of teeth. It's a
requirement to consult. However, the Postal Service has the
direct authority over its own operational and service
strategies, and as you can see, they are quite aggressive in
terms of exercising their autonomy.
However, there are things that the Postal Regulatory
Commission can do. The part of the law that has a little bit
more teeth is the advisory opinion process in which the
Commission issues an advisory opinion to the Postal Service.
These are on the record proceedings where stakeholders can come
in and lay out some of those issues that you have pointed to
that will affect stakeholders.
Then the Commission is able to do a deeper dive, to take
into account all those different positions and issue
recommendations. I have to commend our tiny staff did a
tremendous job, and they identified all of the issues that we
have seen: the issues with medications, lack of communication
of stakeholders, and frankly over optimistic forecasts.
I think that that advisory opinion process does have some
teeth and a new advisory opinion might be warranted as you see
this ramp up of Delivering for America. We also have direct
authority to approve the service measurement system. I think
that's a concern. As I mentioned in my testimony, we might be
actually underestimating the delays in many cases. You hear the
stories and also see the statistics heading in the wrong
direction.
That's something we are actually very interested in taking
a look at. I will also say we recently opened up a docket to
reconsider the rate making system, and one of the reasons we
cited was service performance. That is one of the factors
that's in the law as we are conducting this proceeding.
Senator Hassan. I appreciate that, and thank you for your
indulgence. Mr. Chair. again, this is about service. The Postal
Service was established by our founders and is protected in the
United States Constitution, because it's not just any private
business. It has an obligation of service that is essential to
our people and to our economy. Thank you.
Chairman Peters. Senator Marshall, recognized for your
questions.
OPENING STATEMENT OF SENATOR MARSHALL
Senator Marshall. Thank you, Mr. Chair. As I listened to
your testimonies, I am just reminded that no good deed goes
unpunished, and I do not doubt the sincerity of you and your
employees wanting to deliver a good product at an affordable
price for the American taxpayers. I want to start off with
something very positive to report. As you all know, there's a
fentanyl explosion going on across this country, and we are
losing 300 Americans every day to fentanyl poisoning. We have
lost 250,000 Americans to fentanyl poisoning.
Now criminals are using the United States Postal Service
and other private carriers to send those fentanyl tablets to
different locations, including in Kansas. I am proud to report
that your cooperation, the U.S. Postal Service's cooperation
with the Kansas Bureau of Investigation and their canines, they
have been able to capture 66,000 fentanyl pills. I sure hope
the other public entities as well as the private entities, are
all cooperating with this effort as well to stop this horrible
epidemic.
My first question or comment would be to the Postmaster
General. The city of Olathe is perhaps the fastest growing city
in Kansas. It has a thriving downtown. Unfortunately, there's a
railroad right through the middle of downtown, and a very busy
postal office there as well. The city would like to move that
post office somewhere else and they are willing to throw some
money at it as well. And so far, they have met resistance from
that. I am sure this is a blip on your screen, Mr. Postmaster
General, but are you aware of the situation in Olathe?
Mr. DeJoy. No, I am not. But I am aware of other requests
like this from other places.
Senator Marshall. We would sure appreciate your office
taking a little closer look at it. Again, you have a city
that's willing to cooperate, help pay for part of the
situation. I think your operations would be more efficient if
your drivers were not coming in and out of that traffic jam as
well.
Mr. DeJoy. Yes, I will take a look into it, sir.
Senator Marshall. Thank you. The next question is going to
be directed toward the Inspector General Hull, as well. As you
may know, the services and the Kansas City Metro area are of
great concern as well. What I understand is maybe a third of
the mail is late, taking over three days. I believe that's in
your report. Are you familiar with that report in Kansas City
and what were your conclusions concisely?
Ms. Hull. Yes. What we saw in the Kansas, Missouri area,
and we did some work, I think it's been about probably seven or
eight months ago now, but a lot of the problems were related to
staffing and an inability to retain staff in the delivery units
primarily.
As a result, some of the routes were not being delivered
every day because they just were understaffed in some of those
locations. Some of it is due to the inability to hire quickly
and also the challenges in the labor force where wages have
increased maybe in some places faster than the Postal Service
wages.
Senator Marshall. I am going to go through some numbers
here, and I wish I could give them to you. You may want to
write them down, but in 2001, the Postal Service employed
775,000 people and were delivering 103 billion First-Class Mail
a year, 775,000 people, 103 billion First-Class pieces of mail.
In 2013, your numbers bottomed out from employees of
491,000 and 65 billion First-Class Mail were delivered. Then in
2023, 525,000. Increased numbers from the decade before,
525,000 employees and 45 billion pieces of mail.
You point here that there is a problem in a particular area
hiring folks, but yet the number of people employed by the post
office are going up, the volume is less than half of what it
was before. I certainly understand the economic ramifications,
but can you connect those two pieces in any way, shape, or
form?
Ms. Hull. Looks like a disconnect? I think the challenge is
that the Postal Service is everywhere. They are in every
neighborhood every day. You may see big, broad, nationwide
numbers that look like one scenario, and that's one of the
reasons that we do a lot of really focused local work, because
every city, every location in America kind of has its own
story.
What we saw in the nationwide numbers are exactly what you
gave, but in Kansas City specifically, they had real challenges
in hiring in that location.
All postals are not having problems filling positions, but
in other places, it has been a real challenge.
Senator Marshall. Postmaster General, if we could follow up
on that in the private sector, I would assume that they would
move some employees to there. They would figure out a way to
make sure that that customer service is continued. What's your
assessment of the situation?
Mr. DeJoy. Two things. In 2001, 775,000, people, we did not
have packages. Today, we have a whole bunch of packages that we
are moving around the Nation. With regard to rural areas on
delivery, it is pretty simple. An age-old labor position called
the rural carrier associate is probably one of the most ill-
defined worst jobs in the Nation. It's the way we staff
according to different rules that you have to work, everybody's
off day and so on and so forth.
We have been making aggressive efforts to try and change
that process and use the formula method that enables us to
rebalance people. We have done a lot of work in that.
Senator Marshall. But with all due respect, I am not sure I
would call Kansas City Metro area rural.
Mr. DeJoy. Rural carriers with regard to what our
definition of rural is.
Senator Marshall. Kansas City is considered rural?
Mr. DeJoy. This could be areas out in the Kansas City area
that would be rural carrier.
Senator Marshall. Last question to the Postmaster General,
is there a disconnect between leadership positions and the
execution of your plans? Do you feel a significant resistance
from the political appointees or the non-political appointee?
Why are we struggling?
Mr. DeJoy. I think there's a disconnect from me and the
organization when I walked in. Because I am trying to bring in
commercial practices as required by law to deliver mail and
packages in integrated matter and cover our costs. We had no
effort, no practice that did that. We had a random, haphazard,
unmanaged system. I have reorganized probably 13 times since I
have been there in different types of positions to find a
balance.
I have a leadership team that's very much engaging, and now
we will bring it out into the field. We have made significant
gains. We delivered the Covid test kits to 165 million
addresses across the country within two days. In time of crisis
we have made significant gains as we engage in this change. It
is plant by plant, person by person, driver by driver. That has
to take on a new way of working, a new way of thinking.
It is easy to criticize when you show up at the crime scene
and see the damage. But the path there is long and people are
working very hard to change minds and hearts in terms of how we
perform. They are in fact doing that. I am well qualified to
recognize an organization that is changing how it executes.
Versus the way we were stagnant and letting things just happen
to us.
That is why I am optimistic about the changes. It's
probably to no one's satisfaction in this room or in this town,
but it's what we got. This is the plan we are going with, we
are moving forward, it is in fact having an impact, and it will
make the Postal Service better.
Chairman Peters. Senator Rosen, recognized for your
questions.
OPENING STATEMENT OF SENATOR ROSEN
Senator Rosen. Thank you, Chair Peters, and I am going to
quote you. IG Hull ``every location has a story.'' You just
said that. I am going to talk about the story of Northern
Nevada, Mr. DeJoy. I am extremely concerned about your proposal
to downsize the only postal processing and distribution center
in Northern Nevada, one of only two in my entire State.
Your proposed plan includes transferring mail processing
operations from Reno out of State to California, which will
negatively impact mail delivery service for Nevadans. Under
your proposal, if one of my constituents in Reno were to mail a
birthday card to her mother who lives on the other side of
town, the letter's going to be driven 130 miles over to
Sacramento, California, and then send 130 miles back to Nevada
to reach its final destination.
I would like to understand what analysis you undertook to
conclude that moving mail processing from Reno to Sacramento
would actually benefit Nevadans. Your staff has continued to
assert that your plan will not undermine delivery standards for
Nevada, but they have not been able to explain how this is
possible or provide me any of the data you have collected.
Per what you just said, your team, they came and met with
us, but they have not engaged with stakeholders in Nevada. I
have talked to every one of our city councils, they have yet to
receive data. Senator Cortez Masto, myself and Congressman
Amodei did not receive it either. I would like to ask you a few
yes or no questions, please, because my time is limited.
Mr. DeJoy, the Postal Service standard for receiving and
delivering mail in the Reno area is two days. The Postal
Service is already failing to meet the standard with outbound
mail and service in Reno, currently averaging about four days.
I point this out because in order to take local mail from
Reno to Sacramento and back to Reno, as you propose, your
trucks will need to go through the Donner Pass. Hope you are
familiar with that, it's on I80. It's the only way to get
through Reno to Sacramento, which is subject to some of the
most extreme weather conditions in the contiguous United
States, with over 33 feet of snow annually, a hundred mile per
hour winds and treacherous conditions during wildfire season.
Mr. Dejoy, yes or no? Do you happen to know how many days
per year, on average the Donner Pass closed due to extreme
weather conditions?
Mr. DeJoy. Why would I know that?
Senator Rosen. You are the Postmaster General, and you are
saying that you are going to go over this. Let me tell you,
there were 15 road closures for over 37 days of closures just
last winter alone. So yes or no, before you proposed your plan
to move out of Reno, did you collect date on the potential
impact to mail service from severe weather conditions on down
or past? Yes or no, please?
Mr. DeJoy. Yes. Within the organization.
Senator Rosen. Can I have that data? Your team has refused
to give that to us. We are the Oversight Committee. I believe
the U.S. Congress has a right to this information.
Mr. DeJoy. I will give you the data that we have.\1\ I will
get with the team to give you the data that we have.
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\1\ The response to Senator Rosen's question appears in the
Appendix on page 204.
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Senator Rosen. Thank you. How do you plan to get the mail?
Maybe you want to tell us how you plan to get the mail from
Reno to Sacramento and back to Reno. When there's only one
route, I say one route, I80 to take that 260 mile round trip
when it's closed on an average of 37 days per year.
Mr. DeJoy. Let me start with the fact that the we are
investing significantly in the Reno facilities. We repurpose it
for what we feel is the modern day need for the Postal Service.
The mail that we are moving, only 10 percent of it will only
move out----
Senator Rosen. You want to sacrifice 10 percent of my folks
in rural Nevada?
I have rural Nevadans, veterans and seniors that still rely
on this, that 10 percent, if it's your in the 10 percent, it's
everything. A standard contingency plan here, Mr. DeJoy is not
going to work. The extreme conditions in Sierra Nevada
mountains require you to undertake an extensive analysis to
ensure all Nevadans, all Nevadans, even that 10 percent get
their mail on time. You do not get to sacrifice those living in
my rural areas or subject to harsher weather in the name of
cost savings. The Postal Service has an obligation to deliver
to everyone.
Let me ask you this. Before developing this plan to
downsize the Reno facility and transfer operations to
California, did you analyze how your proposed plan would impact
Nevada seniors? Can you provide me that data here today? Yes or
no please.
Mr. DeJoy. We have a process to analyze the movement of
mail.
Senator Rosen. Have you done one that would impact my
Nevada seniors?
Mr. DeJoy. We have looked at that. We treat every delivery
point the same.
Senator Rosen. Do you have one for Nevada Seniors? So you
did not look at how it would impact my seniors? That's
unacceptable. If you did, I expect to see that data as soon as
possible, hopefully by the close of business today, please. I
have to assume the reason I do not have the data is because you
instructed your staff not to provide it to me when we requested
it last month.
Mr. DeJoy. I think that's very inaccurate and presumptuous.
Senator Rosen. It was not provided to me when I asked for
it last month.
And it was not provided when we asked for it last week.
Mr. DeJoy [continuing]. I did not direct my staff to do
anything with regard.
Senator Rosen. Fair enough.
What about the impact of your plan on Nevada's veterans? We
have over 225,000 veterans in Nevada. Yes or no? Did you
collect data on the impact of Nevada veterans?
Mr. DeJoy Have delivered wherever their veterans live? This
should have no impact.
Senator Rosen. Will you provide me that data?
Mr. DeJoy. We can provide our plan as to how the mail will
be transported and transferred.
Senator Rosen. You did not specifically see how it would
impact Nevada veterans. That's actually unacceptable to me as
well. Again, I asked for this information over a month ago,
Mr. Dejoy. If the veteran lives at a delivery point in
Nevada.
Senator Rosen. Nevada, it's Nevada, sir, please say it
correctly. It's Nevada.
Mr. DeJoy. If a veteran lives at a delivery point, our
intention is to give them the mail in a timely service that we
have----
Senator Rosen. You are not giving them in the timely
service now. What makes you think it's going to go in four
days? I hope to see the data by the end of the day, please.
Mr. Dejoy, an inspector general audit, showed that the
Postal Service implemented the same changes to processing and
distribution center in Virginia. Service performance was not
even included as a measure of success. This time around, did
you conduct any analysis on how your proposed changes would
impact mail delivery service time, specifically in northern
Nevada? Yes or no, please.
Mr. Dejoy. Those are two separate operations and separate
types of transactions.
Senator Rosen. I am assuming it's no. You did not feel that
you had a due diligence to understand how Nevada senior
citizens, veterans, small business owners in rural communities
who depend on the post office for their lives and livelihoods.
Mr. DeJoy. Senator, we intend to meet the service
standards.
Senator Rosen. You are not meeting it now, and you have
refused----
Mr. DeJoy. We intend to meet the standards.
Senator Rosen [continuing]. To provide us the data of what
you have made this assessment on. I hope to see that as quickly
as possible. I would like to move on to the next question.
Actually, I have 10 seconds. I will yield and we will wait for
the second round. Thank you.
Chairman Peters. Senator Lankford, you are recognized for
your questions.
OPENING STATEMENT OF SENATOR LANKFORD
Senator Lankford. Thank you all. It's incredibly
complicated. There's a lot that's going on. I had a
conversation with someone sitting at a table last week that
complained to me about where we had 67 cents at this point for
a first class stamp. They complained to me about the cost of
that.
I said, I tell you what, I am going to hand you a letter
and I am going to hand you 67 cents, and I would like you to
take this to somebody in Anchorage, Alaska for me. They just
smiled and said, point given. The complications of this is
immense. I am also amazed as I have listened to other parts of
the dais today about a $4 billion loss for the post office
possibly, or maybe up to six, realizing that today this
Congress overspent $4 billion.
That's our current rate of burn a day right now. It's
always interesting to me when we in Congress start criticizing
any entity for overspending and where things are going because
we have our own challenges on that. Saying all that, this is
complicated. I get that. What I am always grateful for are
specific solutions.
Mr. Martinez, you brought a set of specific solutions to us
on how to be able to handle debt and investing. Quite frankly,
if the post office was allowed to be able to invest the same
way just for Federal and retirees are able to invest, this
would be very different. But the post office has a very
different standard than what Federal retiree benefits actually
have on it for the investment. Those are specific solutions. I
appreciate that. I do have a couple things just to be able to
bring up though, because as we walk through all of these
different issues, I am trying to identify when this gets
better.
We have talked about Richmond, we have talked about Atlanta
and the decline in the service turnaround. We have talked about
the increased cost on it for the service turnaround time
period. Mr. DeJoy, I know you have said over and over again,
give us a little bit more time. The service will get better on
it. What do you anticipate? Just take Atlanta for an example,
because I have Tulsa and Oklahoma City. There's Bartleville,
there's others that impact Oklahoma. They are about to walk
through this process. Is it expectation that every one of these
locations will see a decline and then it will increase as far
as the delivery time period then?
Mr. DeJoy. Atlanta and Richmond opened up other RP&DCs and
they have not been as consequential. I expect these operations
to be stabilized coming into the summertime. There are other
aspects of things that we are doing that impact us,
transportation initiatives to stop running 50,000 empty trucks
around the country and so forth.
There are a lot of things coming together that will prove
this model will in fact work. I think, combined with coming up
on the election, that we will slow down, and a lot of the moves
will continue with the construction sites. These mail
processing facility review (MPFRs) that we are talking about,
like Reno and Tulsa, all will get investments into them to more
appropriately serve the community and package industry, and a
package business, and so forth. We are collecting all the data
to put our project plan to roll out these transitions around 40
locations. Most likely will not happen until the end of the
first year. Nobody's going to have to commute to Boston.
Nobody's going to have to commute to I forget where we are
going in----
Senator Lankford. Oklahoma City. Yes.
Mr. DeJoy. Oklahoma City. We are putting money into these
facilities that have significant deferred maintenance.
Senator Lankford. Give me a little more specifics on the
timeline. You are saying because of the election, there's going
to be a pause to be able to make sure we get through all the
elections delivered?
Mr. DeJoy. These are 40 sites. They are smaller mail moves.
We have done this in the past. This is separate than the
rollout of the network and in Atlanta and so forth. This is
just picking up outgoing mail, moving it to a place where we
can consolidate all the outgoing mail that goes around the
country and refurbishing the facilities and making them more
appropriate for today's business that we are going to be doing.
These are smaller moves, we do not expect to move people.
Atlanta was moving 1500 people out of 10 plants.
Senator Lankford. So, timeline, when you said you are
pausing this, the changes based on the election----
Mr. DeJoy. We are going to collect all the stuff, we will
put a project plan together for all these sites, and most
likely, work will start after the first of the year. The
construction might start earlier on these locations.
Senator Lankford. I have heard that there's no change in
FTEs except by attrition in some of these locations in that.
Tell me how that works?
Mr. DeJoy. Yes. As I said, we attrite 40,000 people a year.
We stop the hiring and the workforce comes down. I expect our
package business to grow in these locations. We are not asking
anybody to move. This is the way the format is put together.
But I expect that we will treat our labor down to the level
that we need, if it goes down. I am also expecting new demands
and services that will in fact grow.
We have a higher turnover rate on our pre-career. But we
are not going to chase people out of these roles.
Senator Lankford. It's the percentage in these locations
that are experiencing change of supervisory to non-supervisory
employees, will that percentage change?
Mr. DeJoy. Say that again, sir?
Senator Lankford. The percentage of change, the ratio of
supervisory employees and non-supervisory employees in these
changes, will there be a difference in the ratio there?
Mr. DeJoy. No, I think those ratios stay pretty
memorialized in terms of how we operate other than for
vacancies or inability to hire. We try and staff to a
complement profile and we will continue to do that. These are
not bad things
Senator Lankford. Right. Senator Paul brought the issue
about insourcing, and I know there's been some areas for the
part-time moving to full-time. I understand that based on the
career changes on this, on the transportation side, there has
been a move toward insourcing on transportation. What's the
cost benefit on that for not having outsourcing for some of the
transportation area?
Mr. DeJoy. I think that the consequence of that is much
exaggerated. We run 55,000 trucks a day on contracted side, we
have made significant changes in terms of our supplier profile.
We were having people go out of business every quarter that we
are moving 5,000, 10,000 trucks around the country that is
changing the profile there. On the local trips, servicing from
processing plants to the new sorting and delivery centers.
S&DCs we are converting to a new driver type postal vehicle
operation (PVO) non commercial driver's license (CDL) driver.
We can train within our own workforce and putting them in
straight trucks, smaller vehicles, to more appropriately
shuttle within the community to serve both the mail and package
business is a common practice.
At the end of the day, it will be more reliable. It will be
just as cost effective. It's the right thing to do with all the
transition that we are doing within some of my work complement.
We added 500 conveyors that gets productivity out. We do not
need as many hands. I need positives also, and this is a
function. I have come out of industry. I have looked at our
wage rates. I have looked at concluding the benefits. I know
where labor is. I knew where labor is going before I got here.
I was in that business.
I think that the postal employee can be successful here.
The service can be successful here. We have to change just
about everything we are doing. Which is what we are embarking
on. But I think it will be more reliable in terms of our
service and flexibility.
Chairman Peters. Senator Blumenthal, recognized for your
questions.
OPENING STATEMENT OF SENATOR BLUMENTHAL
Senator Blumenthal. Thanks, Mr. Chair. Thank you all for
being here. Mr. DeJoy, I want to focus on a number of local
situations in Connecticut where the Postal Service controls
property and where it could be more responsive. In fact, has
been either non-responsive to me, or insufficiently responsive
to me and members of our delegation.
First in the town of Ridgefield, there is a specific piece
of land behind the United States Postal Service facility. The
town wants to use it for overflow parking in the downtown area.
Small businesses are struggling to find parking spaces, that
lot is empty at every hour of the day. Never seen a car in the
lot. We have sent letters, representative Himes and I, to the
Postal Service which has been nonresponsive to date. Are you
familiar with these requests that we have made?
Mr. DeJoy. No.
Senator Blumenthal. Would you respond personally?
Mr. DeJoy. Yes. I was just in Connecticut
Senator Blumenthal. Make available this land to local
business?
Mr. DeJoy. I do not know, I will look at it and I will get
back to you.\1\
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\1\ The response to Senator Blumental's question appears in the
Appendix on page 178.
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Senator Blumenthal. OK.
Mr. DeJoy. If I cannot do it, I will let you know why.
Senator Blumenthal. Second. In the town of Litchfield,
again, part of a post office parking lot is sought by the town
for a temporary construction easement in connection with the
development of the old courthouse into a new facility. I gather
by the look on your face that you are not familiar with the
Litchfield Postal property.
Mr. DeJoy. I am not.
Senator Blumenthal. Again, would you respond to me because
so far there has been inadequate response from the Postal
Service. In Milford, the town is redeveloping, its downtown. As
part of that effort, they want to move the post office location
and also redevelop the property. So far, the Postal Service's
failed to respond to the town or to the developer of the
property. In fact, there is a meeting today of the delegation
to discuss the next steps.
I know you may not be responsive, you may not be familiar
with the details, but if you could respond to me personally
about the Milford situation, Litchfield and Ridgefield, and
finally, in Norwalk, again, the business community, which is
vital to local development and jobs and economic progress, is
creating a large plaza next to the United States Postal Service
facility, as part of the redevelopment of South Norwalk.
The city would like to acquire a portion of that land to
create a connection to commercial garage. In return, provide
the Postal Service with land to create a customer parking lot,
which the facility certainly lacks, very much in your interest,
the town's interest, the business community's interests. Postal
service has been radio silent. Nonresponsive. Would you look
into that situation in Norwalk?
Mr. DeJoy. Yes. I will look into them all and I will get
back to you.
Senator Blumenthal. I want to turn to mail theft and
assault on letter carriers, growing problem in our country in
recent years. Last fall, the Postal Service's office of
Inspector General released a report highlighting these very
troubling trends, noting that carrier robberies and mail theft
are on the rise across the country. In Connecticut, I have
heard from postal employees, lots of them, about the serious
impacts of assaults, robbery, they are increasingly vulnerable.
These attacks have far reaching effects. I do not need to tell
you, hardworking civil servants are afraid to do their jobs and
American's confidence in our rail our mail system is
undermined.
I think there has to be action in response. I am supporting
a measure called the Postal Police Reform Act of 2023, led by
Senator Durbin and Senator Collins, bipartisan, it's a common
sense bipartisan bill that simply clarifies an authority for
postal police officers that can help address the threat of
violence, assault, and robbery. I would like to ask you and the
Inspector General for your support of this measure, the Police
Postal Police Reform Act.
Mr. DeJoy. Yes. I would say that we have done a lot over
the last year with regard to stepping up activities around the
country on postal crime. I have 600 postal police officers in
the country, that's hardly enough to have any impact on the
260,000 routes and 300,000 carriers I have running around the
country. We use our postal police to protect our facilities
where our people and mail are, and I do not have enough of
that. I am stepping up the action on that.
There are places where we have a thousand people and no
security. That's where we are trying to redirect it. But I will
read the bill and there's a legislative requirement that we
cannot patrol the streets.
Senator Blumenthal. Do you think that it remains a problem?
Mr. DeJoy. I think that crime in the city streets doesn't--
--
Senator Blumenthal. No. I am talking about crime against
your employees.
Mr. DeJoy. Yes.
Senator Blumenthal. Your civil servants, they are being
assaulted, are they not?
Mr. Dejoy. They are.
Senator Blumenthal. Ms. Hull, do you think that the Postal
Service is doing enough?
Ms. Hull. As you mentioned, we did the workings, issued the
report in September. We identified some additional things that
the Postal Service could do to address the mail theft issue. We
did not specifically address the postal police problem because
we wanted to see more locally what was happening locally in
various locations. We followed up, we were just finishing up
some work in Queens, some around the country in different local
areas to see what problem really is. Because again, kind of
depends on each location, where the real hotspots are and what
solutions might be available there.
Senator Blumenthal. Isn't better law enforcement key?
Ms. Hull. It is. That's actually one of the things that we
talked about in that higher level work. Some of it there's
local partnerships that are critical to this as Postmaster
General mentioned, but we are looking into where the postal
police situation is when we do the local work.
Senator Blumenthal. Thank you. Thanks, Mr. Chair.
Chairman Peters. Thank you. Senator Carper, you are
recognized for your questions.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. Thank you Mr. Chair. Welcome. One and all
thank you for your service to our country. Some of you, in a
variety of ways. People say to me, why have I over the years
been so interested in Postal Service and it actually goes back
to the Vietnam War. A lot of folks in my generation were
serving in Southeast Asia and then we would fly 12 hour
missions off the coast of Vietnam. About once a week after we
were flying, we would come back and have chow with our crew and
call it a day and, but once a week, the mail came. It was the
best day of the week.
For other veterans who served in a war, and including that
war, you know how important it was to stay in touch with your
family and friends back home. The Postal Service did a great
job. I want to make sure that the Postal Service has what it
needs to continue to do a good job, not just for people in a
war situation or dangerous situation around the world, but
right here at home in all 50 States.
I was proud of the work that this Committee did in the
117th Congress--happy to be a part of that in order to enact
the bipartisan Postal Service Reform Act, which a number of you
provided input to. We appreciate that. But provided nearly $50
billion with a B, $50 billion in financial relief for the
Postal Service over about a decade. The law repealed a
burdensome pre-funding mandate for postal workers retiree
benefits. Something that I tried to do for years. Under the
leadership of this guy right here, we got it done. That the
idea of doing that is the right thing to do, but also to help
put the Postal Service on a more solid financial foundation and
ensure it can fulfill its vital role for generations to come.
Starting this year, the Postal Service and the Office of
Personnel Management are launching the new Postal Service
Health Benefits Program for postal retirees and for their
families, which will help people integrate their healthcare
with Medicare. Something that needed to be done. It will be a
significant feat for the Postal Service and for OPM to
implement this new program.
Mr. DeJoy, with the first open season beginning later this
fall, can you please speak to how the Postal Service and OPM
are beginning to prepare or are preparing for this transition?
Does the Postal Service feel well equipped to offer enough
customer support to employees and to retirees through this
transition in partnership with OPM?
Mr. DeJoy. Yes. I paid a visit over to the OPM director's
office and met with the staff there maybe seven, eight months
ago to have a kickoff discussion, and then brought the OPM team
later to meet with our deputy Postmaster General, who's also
our Chief Human Resources Officer. They have been working
together on the details of this transition since that
particular point in time. My updates are that everything is
moving along well, some potential opportunities in the
selection process that we afford the people that sign up for
Medicare. But all of that from my readings and what I am being
informed is moving nicely along and we will be ready to
implement.
Senator Carper. Alright. Thank you. I want to shift a
little bit and talk a bit about shifting consumer preferences.
Postal services, highest revenue generating mail class has been
first class for as long as I can remember and we have seen, as,
you know dramatic drops in volume over the years, in part
because people will have like, credit cards in our wallets, and
we use credit cards to buy stuff and actually pay our bills and
so forth. But since 2006, First-Class Mail volume has dropped a
little over 50 percent, 53 percent to be exact, reaching lowest
volume, I think since 1968 when I first deployed to Southeast
Asia all those years ago.
It's evident that the Postal Service must adapt to shifting
consumer preferences to ensure its financial sustainability and
its ability to compete with the private sector. The Postal
Service's always worked with the private sector companies in
order to prepare mail and packages. While the Postal Service's
historically excelled at last mile delivery, as you know,
private sector competitors are continuing to expand, they are
continuing to innovate, and in many ways have outperformed the
Postal Service in getting mail and packages to customers
efficiently and at lower costs.
My question, Mr. Dejoy, is given this trend, could you
elaborate for us on the Postal Service's strategy of
diversifying revenue streams to better align with today's
customer preferences? What initiatives or partnerships are
being pursued to capitalize on opportunities to bring the
Postal Service up to par with private sector competitors, and
ultimately provide better service to your customers?
Mr. Dejoy. Yes. I think that you are hitting on the key
point. Mail volume dropped, prices got cut in half, prices did
not rise. We had an ineffective network to continue to make the
deliveries along the standards that we have.
The Delivering for America Plan is trying to make that
network resemble a FedEx or UPS type network, still reach its
standards in five days and integrate the mail and package
movement together to delivery.
We had three different networks in the package, in our
business. I am collapsing it to one. We had a competitive
network that was running around our network, getting to our
delivery units. We did not have products that properly matched
with the consumer wanted and did not create either operational
leverage or revenue leverage.
We introduced a new product back in July, ground advantage,
which enabled us to take packages that are over one pound in
the same net in the same network as a first class network. We
are seeing 450 percent growth in that volume. We did 133
million packages last peak than we did the year before. There's
other methodologies of integrating and preparing us to reach
our last mile, the most magnificent part of the Postal Service,
the last mile delivery route system. We are trying to
effectively reach that with a streamlined, cost effective,
product oriented service and affordable pricing.
I think we are on our way to capitalize on that. That's
going to be our growth of revenue. I have besides taking $5
billion out of cost over the next two years, I have a $3 or $4
billion revenue goal in the package business.
Senator Carper. Alright. Thank you. Am I done? I think it's
a wrap. Thank you very much.
Chairman Peters. Senator Ossoff, I will recognize you for
your questions and also I need to step out to vote real quick.
I will hand the gavel to you till I return.
OPENING STATEMENT OF SENATOR OSSOFF
Senator Ossoff [presiding]. Thank you, Mr. Chair. Mr.
DeJoy, core job of the Postal Service is to deliver mail and
packages on time, correct?
Mr. DeJoy. Yes, sir.
Senator Ossoff. Are mail and packages being delivered on
time in Georgia today?
Mr. DeJoy. No, sir.
Senator Ossoff. Why not?
Mr. DeJoy. We have had significant issues in terms of
transitioning from 11 plants in the Atlanta area into three. We
have taken on a big train. The Atlanta, Georgia area has been
one of our worst served areas over the last 10 years. But
mostly because we had 10, 12 different locations around the
Atlanta area----
Senator Ossoff. Mr. DeJoy, I do not want to talk about the
last 10 years. I want to talk about the last three months.
Do you know, since you made this shift to the new Palmetto
facility what percent of outbound First-Class Mail was
delivered on time in Atlanta?
Mr. DeJoy. It's significantly lower in number.
Senator Ossoff. Yes. 66 percent. Do you know what share of
inbound First-Class Mail is delivered on time?
Mr. DeJoy. It's probably all day late.
Senator Ossoff. So take a guess, how much of it's on time?
Mr. Dejoy. 35 percent.
Senator Ossoff. You are pretty much there. Thirty-six
percent. Thirty-six percent of the mail is being delivered on
time to my constituents. What is the specific nature of the
operational failure?
Mr. DeJoy. The specific nature of the operate, we had to
move 2000 people from all these different plants into one
location. We had strict requirements as to when they move. It's
a big facility that we opened up. We have inbound
transportation issues.
Senator Ossoff. Yes, but you knew it was going to be hard
and complicated?
Mr. DeJoy. Yes. We tried to phase it in over several
months, which we did. We are going to fix it.
Senator Ossoff. When is it going to be fixed?
Mr. DeJoy. You should see it start now, and I think we will
get to where we need to be in about 60 days.
Senator Ossoff. Do you think that one of your private
sector competitors would have rolled out?
Mr. DeJoy. Yes. I think----
Senator Ossoff. Hold on a second, Mr. DeJoy, a new system
that would reduce on time delivery to 36 percent and then say
it's going to take months to fix it? Months?
Mr. DeJoy. Private businesses in taking on operations of
this nature, with the resources that we have, do in fact have
these types of problems.
Senator Ossoff. You do not have months to fix 36 percent of
the mail being delivered on time.
I have constituents with prescriptions that are not being
delivered. I have constituents who cannot pay their rent and
their mortgages. I have businesses who are not able to ship
products or receive supplies. I wrote you on March 14th. Did
you get my letter?
Mr. Dejoy. My office probably got it.
Senator Ossoff. I did not write your office. I wrote you,
did you receive my letter?
Mr. DeJoy. I have not read your letter.
Senator Ossoff. You have not read my letter.
Mr. DeJoy. I tried to speak to you on Friday.
Senator Ossoff. You have not read my letter?
Mr. DeJoy. I have not.
Senator Ossoff. The mail's not on time in Georgia. I am a
Member of the Committee with of jurisdiction. You have not read
my letter? That explains why I have not received a response to
my letter. March 14th, I wrote you with two specific questions.
What update can you provide regarding the aforementioned
reported issues at the Atlanta Regional Processing and
distribution center in Palmetto? Question one. Question two,
how is USPS currently communicating with customers in the metro
Atlanta area reporting delayed and lost packages? You have not
read the letter?
Mr. DeJoy. Letters come in, they put stuff together to
answer it to get----
Senator Ossoff. Let me just give you just a friendly piece
of advice. You should personally read letters from Members of
the U.S. Senate Committee that funds and oversees your
operations, particularly where you are failing abysmally to
fulfill your core mission in my State. Let me be clear, I think
postal workers are out there every single day working their
hearts out to deliver the mail on time.
But if they do not have the infrastructure and the
management competence overhead them, to make a transition like
this without drastically impairing the core function of the
Postal Service, everyone in my State is losing. The amount of
distress this is causing my constituents is massive. I want to
know what you are going to do, what specific steps you are
going to take to fix this within two weeks.
Mr. DeJoy. We have engaged over 50 different management
executives onsite. We are finishing up our staffing at the
remaining three locations. We are revamping our truck
schedules. We are stabilizing the operation in terms of our
machinery. That's what we have deployed there. We are working
better on our--we have special teams down onsite--on working on
our docks, and we are working the rest of the transportation
aspects of this that have been causing a significant amount of
problems.
The two plants where we did a lot of transfers within the
next 10 days, we should have them fully staffed. We had issues
in terms of those transfers. The team is working very hard. I
can assure you that in the long run that you will have probably
the best service in the country.
Senator Ossoff. We know the long run is too long. You have
weeks, not months to fix this. If you do not fix it, 36 percent
on time delivery, I do not think you are fit for this job. I
yield to Senator Butler.
OPENING STATEMENT OF SENATOR BUTLER
Senator Butler. Thank you. I appreciate the advocacy on
behalf of your Georgia constituents. Thank you all for being
here and for your effort, Postmaster DeJoy. I heard you say
something, I wrote it down during your exchange with Senator
Lankford. I just want to give you the opportunity to help me
understand what you meant. You said, coming up on an election,
I expect it will slow down. What does that mean?
Mr. DeJoy. All the activity that we have in terms of the
transition activity.
Senator Butler. I wanted to understand that because as a
State having 40 million constituents that has moved to all mail
ballot, is concerning to me. I really want to understand what
your plan is, and I know California is not the only State where
voters are expecting to get their ballot in the mail. My mother
is actually a constituent of Senator Ossoff's and just this
past election cycle did not get her mail-in ballot, actually on
time, forcing her to go and have to stand in line for three
hours to vote in person. I would like to understand your plan
for what voters should expect from the Postal Service relative
to this upcoming election season?
Mr. DeJoy. The postal voters should expect the same good
service that they have gotten in every election. Over 99
percent of ballots get turned around within two or three days.
We have issued reports every year. I have put together a
specific infrastructure within the organization that works with
all election boards throughout the year.
We have deployed extraordinary measures during election
time where we run extra trips, we put extra people onsite. We
have special oversight areas, you know departments within each
area of the election, as you should expect, the same good
service we have been delivering for since I have been here.
Senator Butler. Thank you for that. I just have to note,
and I will continue with my line of question, but there is an
acceptance of exclusion that continues to sort of show up in
your testimony and your engagement. When you were speaking with
Senator Rosen, there was an acceptance of 10 percent of
Nevadans not getting their mail on time, and an acceptance of
only 30 percent of Atlanta residents getting their mail on
time.
Now we are talking about an acceptance of two percent of
our country's voters not getting their ballots on time. I just
want to note a trend and move forward.
I am going to raise two parts of California that probably
have never been spoken in a Senate hearing. One is a town
called Bridgeport, California in the county of Mono. Bridgeport
is the only post office in this town. Since February 2023, the
post office facility has been unusable.
Now, I may not agree with a number of the political issues
and positions that my colleague Congressman Kiley might put
forward, but he and I are trying to engage and have been trying
to engage your team to figure out how is it that for now on
more than a year, there has been a facility that's been
unusable by a water pipe burst that followed a disastrous
snowstorm. It was not until Congressman Kiley was urging your
office and reminding you that this facility was not in service
that you were then sending out for trailers.
Talk to me about how the voters in Bridgeport, California
can expect the same good service that they have been getting
from you when the same good service for a last year plus has
been a non-functional facility that at this point is operating
out of trailers?
Mr. Dejoy. Yes. We have 31,000 centers around the country,
and $25 billion worth of deferred maintenance. We have deployed
one of the more expansive refurbishment investment strategies
so that the Postal Service has seen in these----
Senator Butler. I understand. You have put forth and I have
listened to you talk about the incredible efforts that you have
made to overcome challenging situations as you walked into your
position and leadership of the Postal Service. A lot of it I
truly believe is to be commended.
I am trying to assess what kind of service I can talk with
the folks in Bridgeport that they should expect, given that the
facility that has been serving them is less than to be expected
from a United States Postal Service facility for the last year.
Here we are, as you noted, coming up on an election season in a
State where the ballots are 100 percent by mail. Let me move
from Bridgeport in Mono County to the great Californians down
in Imperial.
Imperial is one of our most southern counties in the State
of California. In February 2022--maybe it's just a month of
February in California--but in February 2022, a fire rendered
again, the only post office in the town of Nyland, small
majority low income community inoperable, after the fire, the
Postal Service put out a notice to say that the post office
will be closed temporarily, and that the office would reopen as
soon as it was safe to do so. Mr. DeJoy, would you be surprised
to know that two years later it's still not safe to do so?
Mr. DeJoy. No.
Senator Butler. Why is that acceptable?
Mr. DeJoy. It's not acceptable. These are some of the
initiatives that we are trying to roll out and fix. If my staff
have wrote down, and I will look into what the strategies are
for that location and get back with you.\1\ Again, it's, we
have massive quantity of under poor conditions in many of the
post offices around the country.
---------------------------------------------------------------------------
\1\ The response to Senator Butler's question appears in the
Appendix on page 182.
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Senator Butler. I understand, but I am not going to assert
what the condition of these facilities were prior to these
incidents. You and your team know that better than I. But
February 2023, there was a pipe that burst. We are in April
2024, and it is not functioning to serve the people of Mono
County.
Mr. DeJoy. The post office closed?
Senator Butler. The post office is running out of four
trailers. February 2022, a fire happened. Again, I am not
asserting that this is a part of deferred maintenance
obligations. These are incidents that have happened, and, the
residents of California are about to run into an election
season where all of the ballots are delivered by mail, and they
do not have any confidence that they are already not getting
their prescriptions on time.
Mr. Chair, I am running over and I want to be quick, but I
do feel like again, I hear you about deferred maintenance.
These are incidents that happen, and we are two and three years
past those incidents, and nothing is being done that I can tell
to ensure that the service is restored to the level of good
that you said that folks should expect with this election
season coming up.
I appreciate, again, the effort that you are making, the
work that you are implementing in your Delivering for America
plan. But there are some Americans that are not getting it
delivered, and I think we have to do better. Thank you, Mr.
Chair.
Senator Ossoff. Thank you. Senator Hawley.
OPENING STATEMENT OF SENATOR HAWLEY
Senator Hawley. Thank you very much, Mr. Chair. Mr. DeJoy,
nice to see you. I want to talk to you about the post office
facility in Baring, Missouri. Back in August of this last year,
the post office there was closed after severe tornado damage.
Missouri is right in the tornado alley. It has not reopened
since then.
September, I wrote to you asking about a timeline to have
the post office reopened. Your office wrote back later that
month and said, probably 90 days there would be a timeline
announced. We did not hear anything. In January, I wrote again,
actually Chair Peters, we wrote, asking about a timeline. I do
not think I have gotten a response to that letter.
Here's the Baring post office at the moment.\1\ It doesn't
exist. This is a real community in my State. They do not have a
post office at all. What bothers me is I have not heard
anything about the timeline for getting it rebuilt. Can I just
ask for an update on that?
---------------------------------------------------------------------------
\1\ The picture submitted by Senator Hawley appears in the Appendix
on page 176.
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Mr. DeJoy. Yes.
Senator Hawley. Do you have one?
Mr. DeJoy. I do not have an update on the Baring.
Senator Hawley. I am sorry.
Mr. DeJoy. I do not have one, but I will get it to you.\2\
---------------------------------------------------------------------------
\2\ The response to Senator Hawley's question appears in the
Appendix on page 183.
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Senator Hawley. OK. Can we get one? I do not want to
belabor the point here, but, because I think we have heard it
now from multiple people, but in rural Missouri, this
community, you see it, there's no post office here. They cannot
get prescription drugs, they cannot get their bills on time,
they are just stranded.
I am frustrated here by the fact that it's been months and
months, and I was told 90 days in September, and this is now
the middle of April, and here we are. I would like to get your
help on this for these good folks. Let me ask you then about
some delivery issues in the Kansas City area. We have seen a
tripling of casework reports in Kansas City, folks who are
saying they are just not getting the mail when they are not
getting on time. It was so significant.
I asked the Inspector General to look into it and to
recommend some action items to improve this. I just had
constituents telling me that the end of March, they are finally
getting their Christmas cards. I mean, this is not good. This
is happening in Kansas City--it's also, frankly, happening in
St. Louis on the other side of the State.
Can you give me an update on the implementation of the
Inspector General's recommendations for improving service in
Kansas City? Maybe, you know something about the Kansas City
situation and it would be helpful to hear?
Mr. DeJoy. Right before peak season, we had a major
transportation contractor go out of business. They had a big
transfer hub in Kansas City. They actually had eight that we
had about 5,000 truckloads of mail and packages going in and
out of these places. We had to distribute that quickly, over
several weeks, around 20 locations around the Nation. Reroute
5,000 truckloads in and out of Kansas City, was not great on
service to begin with. This just complicated the issue. I think
you should see gradually improving service in the area.
Senator Hawley. Good. I hope it will be more than gradual.
I do not need to tell you this, but it's just incredibly
frustrating for folks not to be able to get their mail and to
have it go on for months and months. It's the Kansas City area.
I am getting a lot of complaints out the St. Louis area. This
got to be a priority.
I want to ask you to be sure to tell all of the postal
workers how grateful I am for them. I know that they are doing
hard, hard work. I am proud of the work that they are doing,
and we rely on them. My State, my gosh, we rely on them. We are
a majority rural State. So, places like Baring, little town
where I grew up, Lexington, other places. Boy, we are grateful
for our postal workers and we are grateful for our post
offices.
I know it's something the Chair and I talk about a lot, and
we do not want to see post offices closed in rural parts of
this country. We want to see the mail delivered on time. Please
thank them for me for all that they are doing. Thank you for
your attention to these to these issues. I appreciate it. Thank
you, Mr. Chair.
Chairman Peters [presiding]. Thank you Senator Hawley. I am
going to get back to the rural. We have heard a lot about rural
places from my colleagues here. We are certainly seeing changes
that are impacting us in Michigan, particularly in the Upper
Peninsula (UP), which is about as rural as you can get. Folks
up there, just like they do all over the country, rely on
timely delivery for the mail.
One particularly important thing that's occurring right now
in the UP is testing drinking water for bacterial
contamination. That requires one day delivery. When you take
those samples and send it off to the lab, it has to get there
in an incredibly timely way for it to be a valid test. That has
become an issue for us in the upper peninsula.
We also know as, all of you know, veterans need access to
their medication. They get that primarily from mail service and
that has to be a continued focus for the Postal Service to make
sure that those meds are getting to our veterans on time. We
had a hearing--or that the Postal Service had--because of some
changes in the UP and actually postal officials were unaware
that we had a Veterans Affairs (VA) facility in the Upper
Peninsula, which was somewhat striking that they would not be
aware of the VA facility that is incredibly important to
veterans who live in the Upper Peninsula.
Postmaster General DeJoy, I know that the Postal Service
has not announced a number of changes to the transportation
policy to several locations. But we found out recently it was
being implemented in Michigan. My question for you is, why
weren't communities notified before these changes were rolling
out? Why isn't there more transparency so that they know what's
happening?
Mr. DeJoy. Yes. We make a lot of different transportation
changes. I am trying to think about if you are talking about
the one day issue or just a local transportation optimization.
Chairman Peters. Local, part of the network changes.
Mr. DeJoy. Yes, because it's not intended to have any
difference in service standards. We run too many trucks with no
mail in it, all over the country. The whole process is to try
and optimize that so we can cut our costs. I have to get a
billion and a half dollars out of local transportation.
The intention of all these initiatives when these items are
rolled out, are not to have a consequence. Within the
standards. The standards are two to five days. We are
delivering 60 percent of the mail and packages across the
country a day in advance.
We are trying to take advantage of that cushion that has
been built in to make sure that we can optimize our freight. We
did not change collection box times. We did not change
anything. The mail sits in the system from the time we get it
somewhere in the postal system across the country, whether that
is the essence of the change. It was not expected to have an
impact. I do not think in the upper peninsula we have had much
of an impact on service. My last check was that for the most
part, everything was running pretty smoothly.
Chairman Peters. Yes. Obviously folks will bring issues up.
We look at data. I look at data as well. One data point that I
think is something we have to be really focused on, because
there's a great deal of concern of people in the Upper
Peninsula. Similar to what you heard from my colleague from
Nevada is that the Postal Service, to my understanding, is
considering a facility change that would mean local mail going
to and from UP residents but going out of State into Wisconsin
instead of the facility that you have in the Upper Peninsula.
We think that's going to likely slow mail. But my question for
you is, are you measuring the impact of these changes on rural
service? So that we can roll it back if it's having that impact
because of the folks?
Mr. DeJoy. Senator, we all look at how the whole
organization looks at service. I have instituted new quality
programs across the organization and so forth. Our intentions
are to make the service on all these moves. In fact, it is
doable with the proper execution of the strategy.
With regard to that particular move, as I said, it's not
being dismissive of 10 percent of the people. The other 90
percent has to get to a central point to be collated, to go
across the country. I cannot collate these collations that are
done at every one of these little locations to get 10 percent
of the mail out to go back adds another step when we get to the
location makes--reduces the density of trays increases the
under utilization of our trucks.
This mail should make it--wherever we send it to, I do not
know exactly where this is going, but it's full intention to
come in to schedule to do outgoing processing on it, postmark
it, cancel it, and turn around the next morning, go back. We
have a two-day standard to get back. All of this is planned out
to work. There are lots of issues in execution that the team is
learning how to make these types of changes. They have not been
under the pressure to perform at a level that we need to, and
using the new equipment and perform to a schedule and make
these changes.
But I am confident we will get there, and they will take a
special eye on all these small moves, as they are not as
consequential as some of the bigger things we did in Richmond
and Atlanta. These are just taking the outgoing mail, routing
the trucks to consolidate, routing to a different plant and
putting it through the normal process. People are already in
place, turning it around and sending it back down on their
trucks. We think this is going to be you know, not
consequential in the deployment.
Chairman Peters. Well I hope so, I mean, what we are
seeing, though, in Richmond and Atlanta for very obvious
reasons is a red flag for us.
Mr. DeJoy. Yes.
Chairman Peters. Again, I am coming to you not as someone
against change because you have to change and you have to
become more efficient. But change also creates challenges as to
actually the implementation. Mr. Kubayanda, you talked about
the advisory opinions that the Commission has to just kind of
take a little bit of a pause to take a look at and talk to
stakeholders around, I think what are your concerns
specifically--could the commission do one of these advisory
opinions? What do you think we would learn from that?
Mr. Kubayanda. Yes, Senator, I believe an advisory opinion
is very valuable and is merited at this time as the Postal
Service ramps up this rollout of DFA with the RPCs and also the
optimized collection. I think combined, those are creating
what's likely to be a nationwide impact on service. We do think
an advisory opinion is appropriate. As I mentioned in previous
advisory opinions in 2021 and 2022 the Commission identified a
number of concerns as the Postal Service started to implement
some changes.
Those concerns included overly optimistic estimates about
cost savings, lack of communication with stakeholders,
potential impact on rural constituents, potential impact on
veterans, and others receiving medications through the mail.
All these have come to fruition that we have seen in the data.
We have seen this in the constituent complaints.
We have seen this in the Inspector General's recent
reports. I think that advisory opinion process has a lot of
value. We believe that the advisory opinion would be timely
right now.
Chairman Peters. Postmaster General DeJoy, when I in my
original round of questions and raised the concerns, and you
came back and said, no, we are willing to slow things down to
make sure that it's all operating correctly. Because you are
success focused. I have grown to know you over the months here.
It seems as if an advisory opinion to kind of take a look at
this while you are continuing to work. I am making sure that
both Richmond and Atlanta are performing.
That's going to be your end of the argument. That's a drop
the mic moment. When Richmond and Atlanta are performing
better, they are coming in below cost. Mail delivery services
are still there. While you are doing that, also taking a
broader look at the impact, would you be open to this advisory
opinion? Is this something that would give you a fresh set of
eyes?
Mr. DeJoy. I want to discuss with counsel, but we are in
the process of considering an advisory opinion with regard to
things that we feel are magnanimous changes to the mail
community and are working through what, in fact, we would ask
an advisory opinion for. It's a broad thing to try and baseline
what we are working through right now. Have been working
through over the last six or eight weeks.
Chairman Peter. I will give you time to answer that. But,
so what kind of timeline do you think that'll--you've been
doing it for six weeks now. When would that determination, what
would the context?
Mr. DeJoy. I would have to take it to the board. It could
be this board meeting, or it could be a special board meeting
afterwards is what we would----
Chairman Peters. It would be great if it could be this
upcoming one and show the----
Mr. DeJoy. We are working on it. We have to figure out what
exactly it is that we want. Because I do not want to do this
again. I kind of have a good understanding of what the
infrastructure looks like. I do not understand what issues are
not making this connected. We still plan to deploy a very good
service.
Chairman Peters. Yes. You can finish.
Mr. Dejoy. Opening up a facility within five miles of 10
facilities. Putting the right equipment and tools and amenities
in it. That's what we are doing across the country--there's
nothing magnanimous about that. Our inability to execute comes
from a long period of time of not executing change in a
constructive manner. And the all, you know, those types of
issues. How to load a truck, when to load a truck, trucks
running late. All of that have been issues within the Postal
Service that we have been working to change since we got here.
We are making progress on that.
It's important to recognize that the strategy is pretty
straightforward. I am in fact investing in more facilities. I
am opening old facilities that were closed to bring different
services with the sorting and delivery centers closer to the
communities. We are adding capacity. We are teaching our people
and so forth. But the fact that we need to change, because we
can do all these things--we could not--I could avoid those all
these critiques, like everyone before me did. We will continue
down the spiral to where everything is much worse and much
broader than what it's today.
That is nothing with regard to the plan. It has to do with
our execution of it. We are working on that. That will you
know, that will get better. But this is where we are on the
360.
Chairman Peters. Again, and I am all about data and I am
all about how changes need to be made and execution has to be
there. This is a really complex situation. I know you walked
into this as well, but you are a data person as well as I have
gotten to know you, that we want to look at the data. The data
does not look great to Richmond. It looks really terrible in
Atlanta.
You can change that narrative pretty dramatically by
showing those numbers are changing. I think you could agree
that a lot of folks get nervous when you see those kinds of
numbers. Why are we going to continue to roll this out? That's
not saying it cannot work. It may very well work, but you just
need to demonstrate that. When you demonstrate that people will
get on board, and that will be a great thing.
But we are just saying, let's step back a little bit. Keep
working on Richmond and Atlanta. That's going to take time to
get that implementation down. You are going to learn a whole
lot of lessons. I am sure that happened and you were very
successful in the private sector. You did that as well. You did
not want to disrupt your customers. You would take time to be
able to figure that out.
Having an advisory opinion coming in as well. Taking it
from a holistic standpoint. Just creates more transparency,
which builds more trust because this is about trust. That's the
biggest part of it. I look forward to seeing what you put
forward on the advisory committee. I think that's very
positive.
Mr. DeJoy. But to be clear, we have been answering from the
chairman, dozens and dozens of questions. Every week we get
questions from the Postal Regulatory Commission about what it
is we are doing, where every post office is in the country, and
other types of things. We have been submitting information. The
PRC as well, I have briefed the PRC quarterly, right? With
regard to what we are doing. It's not that when, and I cannot
think of how to be more transparent. I speak everywhere. We
brief people. We speak to everybody you know, groups that we
can before we do these things. But yes, we will keep you
posted. I will let you know when we fact decide what we are
going to do.
Chairman Peters. I appreciate your desire to be
transparent. I am going to make some requests here. In my
letters to the Postal Service about your plans, I have asked
for several specific sets of information. We have not received
full answers.
Specifically, I would like the Postal Service to provide
the Committee. One, a list of locations, the Postal Service
plans to change with specific timelines for implementation.
Meaning when you actually intend to make those changes on the
ground at these places. Two, full-service data on every
location implemented so far. That means data for every type of
facility before and after implementation. Three documentation
for any cost projections, impact studies that the Postal
Service has conducted. You know that's just data.
You must be looking at this stuff obviously you are looking
at too, I would assume in your due diligence. We would like to
have that from the Committee as well. Would you commit to
providing that information to the Committee by May 1st?
Mr. DeJoy. Let me get back to the office, sir, and I will
have Peter, get in touch with Annika, and we will give you a
date on it.
Chairman Peter. Is that something you think is doable?
Mr. DeJoy. May 1st?
Chairman Peters. May 1st. You should have this information,
I suspect already.
Mr. Dejoy. Yes. Let me just explain one thing about cost
data, right. To drive costs out of the system, we need the
system.
Chairman Peters. You have projections, though. I do not
disagree. You need a system, but when you make those changes,
you are clearly projecting, just like in private industry, you
are going to project profit, you are going to project costs.
Mr. DeJoy. I sent you a letter telling you what I am trying
to get, $5.5 billion out of the system.
Chairman Peters. We would like to have those impact
studies. We will work with your team to try to do that May 1st.
That would be important. Obviously the other piece of all this,
Chairman Martinez in your oversight function in the Board of
Governors as well. I will just end with this kind of question
and thought here. Election mail, obviously, is a very delicate
operation for the Postal Service. You have heard some of my
colleagues talk about it, and it requires a lot of
coordination.
My question for you, sir, is before you allow the Postal
Service to move forward with some of these changes, are you
willing to stop and consider or reconsider potential impacts on
election mail, if you believe that that is a risk. Will you be
very open and transparent about that process, to make sure that
we can count on election mail, getting there in a timely way,
which is essential for our democracy?
Mr. Martinez. To our duty of care is basically to stay
informed as we do as a board, and to provide oversight. We have
been very strong on making sure that elections work very
smoothly and on time. In August 2020, when there was a lot of
criticism about whether that would happen in November 2020, the
board established a special committee--an election mail
committee that was at the time, headed by Governor Moak to make
sure that everything would work and was coordinated with
management to make it sure that the election worked smoothly.
And it did.
After I became chair, we made the special committee
permanent, and now it's a standing committee of the board, and
that's chaired by Governor McReynolds, who's an expert on
election matters. She meets regularly with management. There's
a special task force in management dedicated to election mail
performance. We will be on top of this.
We do not want to come back here in January, February--
although my term expires in December--and face you and say,
Hey, it did not work. You can be assured that we are going to
be on top of it. I cannot make assurances ahead of time of what
we would do or not do, because it would be, frankly non
prudent.
Chairman Peters. Very good. I hope that's the case, and
appreciate your focus on that. I do appreciate that. You know,
I think I speak for everybody on the Committee, we want Postal
Service to be successful. This is just absolutely critical for
our country. It's why we really get support for the postal
reform legislation that passed a while ago.
Postmaster General DeJoy, you were very helpful in getting
us to get that passed as well. I appreciate that. There's other
things that we can do legislatively, and I am certainly open to
those discussions particularly related to investments. Those
are things that need to be looked at. I will say we tried to do
some of those fixes before, and we ran into hurdles to do that.
It's not an easy thing to do, but I do believe it's incredibly
important that we do.
I agree with that, but I am just laser focused as I know
all of you are. It's about service. It's about making sure that
the American people can count on it. You have a really hard
job. You are delivering to every single address in America and
providing that connectivity that was a vision of Benjamin
Franklin. You are living on quite a legacy, the first
Postmaster General, Benjamin Franklin. You are living on that
legacy to be able to do that.
We stand ready to help, but we just need more transparency.
We need to know what's happening. We want some caution in not
just believing that a plan works but also being able to back
that up with data that shows that it's actually happening. If
it's not happening as fast as we would like, we are OK with
that as long as we are working to try to figure out how to fix
it.
But we should not necessarily be potentially reckless in
moving forward with a big change before you have worked out
some of the kinks. When I say kinks, you know, kinks are things
like getting medicine on time. It's like getting your bacterial
test on time to find out if your drinking water is--those are
not just kinks. Those are significant concerns that people
have. The American people have always relied on the U.S. Postal
Service.
I want to continue to rely on the U.S. Postal Service for
another century or more. That's going to require all of us
working together, kind of breaking down turf battles and
fights, know that I am about just trying to solve this problem.
I know all of you want to solve these problems. Let's do that
together. It really starts with having transparency and having
other stakeholders and voices being heard in this process as we
move forward. Thank you for being here.
Mr. DeJoy. If I may add something.
Chairman Peters. Sure.
Mr. Martinez. I can say that the board agrees 100 percent
with the objectives that you have laid out, which are
consistent with what the Postmaster General's objectives are. I
would just point out to keep in mind, this huge restructuring
is happening at the same time that we got to deliver service.
It's not as if we are doing it from scratch.
Chairman Peters. I get it.
Mr. Martinez. OK. It's difficult stuff, and the statistic
that always floors people is, we handled daily, almost 400
million pieces of mail and packages. The scale of this
organization is huge, and that's what we are trying to deal
with and change and improve. Thank you.
Chairman Peters. Yes, we are aware of that. Steering and
changing course is not easy. I served in the U.S. Navy, it's a
lot different steering a destroyer than an aircraft carrier.
You have an aircraft carrier on steroids basically. Let's work
together.
But please Postmaster General DeJoy, please give us this
information. It's really important to have that. Please, let's
just look at data and understand data speaks loud and good data
ends up building a lot of trust as well, which is what we need.
With that, again, thank you for all of you being here
today. The record for this hearing will remain open for 15 days
until 5 p.m. on May 1, 2024, for the submission of statements
and questions for the record. This hearing is now adjourned.
[Whereupon, at 12:27 p.m., the hearing was adjourned.]
A P P E N D I X
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