[Congressional Record Volume 157, Number 24 (Tuesday, February 15, 2011)]
[Senate]
[Pages S751-S753]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS:
  S. 353. A bill to provide for improvements to the United States 
Postal Service, and for other purposes; to the Committee on Homeland 
Security and Governmental Affairs.
  Ms. COLLINS. Mr. President, I rise today to introduce The U.S. Postal 
Service Improvements Act of 2011. This legislation would help the U.S. 
Postal Service regain its financial footing as it adapts to the era of 
increasingly digital communications.
  The storied history of the Postal Service pre-dates our Constitution. 
In 1775, the Second Continental Congress appointed Benjamin Franklin as 
the first Postmaster General and directed the creation of ``a line of 
posts . . . from Falmouth in New England to Savannah in Georgia.'' The 
Constitution also gives Congress the power to establish post offices 
and post roads.
  Today, the Postal Service is the linchpin of a $1 trillion mailing 
industry that employs approximately 7.5 million Americans in fields as 
diverse as direct mail, printing, catalog companies, paper 
manufacturing, and financial services.
  Postal Service employees deliver mail six days a week to hundreds of 
millions of households and businesses. From our largest cities to our 
smallest towns, from the Hawaiian Islands to Alaskan reservations, the 
Postal Service is a vital part of our national communications network 
and an icon of American culture.
  But the financial state of the Postal Service is abysmal. The numbers 
are grim: the Postal Service lost $8.5 billion in fiscal year 2010 and 
recently announced that it posted a net loss of $329 million in the 
first quarter of fiscal year 2011 alone. The ``Great Recession,'' high 
operating costs, and the continuing diversion of mail to electronic 
alternatives have undermined the Postal Service's ability to remain 
solvent.
  Faced with this much red ink, the Postal Service must reinvent 
itself. It must increase revenues by increasing its value to its 
customers and by becoming more cost effective.
  Unfortunately, many of the solutions the Postal Service has proposed 
would only aggravate its problems. Filing for enormous rate increases, 
pursuing significant service reductions--including elimination of 
Saturday mail delivery--and seeking relief from funding its huge 
liabilities are not viable long-term solutions to the challenges 
confronting the Postal Service. These changes will drive more customers 
to less expensive, digital alternatives. That downturn in customers 
will further erode mail volume and lead to a death spiral for the 
Postal Service.
  The Postal Service must chart a new course in this digital age. It 
must adopt a more customer-focused culture. It must see the changing 
communications landscape as an opportunity.
  The Postal Accountability and Enhancement Act of 2006, which I 
authored with Senator Carper, provided the foundation for these long-
term changes, but the Postal Service has been slow to take advantage of 
some of the flexibilities afforded by that law. And, to be fair, the 
Postal Service has encountered problems not of its making, such as a 
severe recession.
  The legislation that I introduce today would help the Postal Service 
achieve financial stability and light the way to future cost savings 
without undermining customer service.
  The legislation would help remedy an enormous overpayment by the 
Postal Service into retirement funds used by both Federal and postal 
employees alike. Based on an independent actuarial analysis, the Postal 
Regulatory Commission estimates the Postal Service has overpaid in 
excess of $50 billion into the Civil Service Retirement System, CSRS, 
and nearly $3 billion into the Federal Employees Retirement System 
pension fund. Another independent actuarial firm, commissioned by the 
Postal Service Inspector General, estimates that the overpayment into 
the CSRS pension fund is even greater, perhaps topping $75 billion. It 
is simply unfair--both to the Postal Service and its customers--not to 
refund these overpayments.
  To address these inequities, the bill would allow the Postal Service 
access to the amounts that it has overpaid into these pension funds. It 
is essential that the Postal Service be permitted to use these funds to 
address other financial obligations, such as its payments for future 
retiree health benefits and unfunded workers' compensation liabilities 
and for repaying its existing debt.
  I have pressed the Office of Personnel Management, OPM, to change its 
calculation method for Postal Service payments into the CSRS fund 
consistent with the 2006 Postal Reform law. OPM officials, however, 
have stubbornly refused to change this methodology or even to admit 
that the 2006 postal law permits them to do so. This has created a 
bureaucratic standoff that is unfair to the Postal Service. The OPM 
holds the life preserver--it could help rescue the Postal Service, but 
it simply refuses to throw it.
  This legislation directs the OPM to exercise its existing authority 
under the 2006 postal reform law and to revise its methodology for 
calculating the Postal Service's obligations to the CSRS pension fund. 
Once OPM exercises this authority, my legislation would allow the 
Postal Service to use any resulting overpayments to cover its annual 
payments into the Retiree Health Benefits Fund, rather than having to 
wait until after September 30, 2015, to access the CSRS overpayment.
  Additionally, the legislation would allow the Postal Service to 
access the nearly $3 billion it has overpaid into the Federal Employees 
Retirement System, FERS, pension fund. The legislation would grant OPM 
this authority by adopting language, similar to Section 802(c) of the 
2006 postal reform law, that allows OPM to recalculate the methodology 
governing Postal Service payments into the FERS pension fund to 
determine a more accurate contribution.
  As with the CSRS overpayment, the Postal Service would be permitted 
to use the FERS overpayment to meet its

[[Page S752]]

statutory obligations to the Retiree Health Benefits Fund. These fund 
transfers would greatly improve the Postal Service's financial 
condition.
  While I was pleased to see that the proposed budget the President 
released yesterday addresses the FERS overpayment, I was disappointed 
that it did not direct OPM to update its methodology to allow the 
Postal Service to access the significant CSRS overpayment. Moreover, I 
am concerned that the 30-year repayment period proposed by the 
President to refund any FERS overpayments is too long given the 
immediate financial needs of the Postal Service.
  If the CSRS and FERS overpayment amounts are sufficient to fully fund 
the Postal Service's obligations to the Retiree Health Benefits Fund, 
this legislation would allow the Postal Service to pay its workers' 
compensation liabilities, which top $1 billion annually. The Postal 
Service may also choose to use these funds to pay down its existing 
debt, which currently is $12 billion.
  Second, the legislation would improve the Postal Service's 
contracting practices and help prevent the kind of ethical violations 
recently uncovered by the Postal Service Inspector General.
  Several months ago, I asked the Postal Service Inspector General to 
review the Postal Service's contracting policies. The IG found stunning 
evidence of costly contract mismanagement, ethical lapses, and 
financial waste.
  In its review of the Postal Service's contracting policies, the IG 
discovered no-bid contracts and examples of apparent cronyism. The 
Postal Service's contract management did not protect against waste, 
fraud, and abuse. Indeed, it left the door wide open.
  In fact, the Postal Service could not even identify how many 
contracts were awarded without competition. Of the no-bid contracts the 
IG reviewed, 35 percent lacked justification.
  In one of the more egregious examples of waste and abuse, the IG 
discovered that more than 2,700 contracts had been awarded to former 
employees since 1991. At least 17 of those contracts were no-bid 
contracts given to career executives within one year of their 
separation from the Postal Service.
  Some of these former executives were brought back at nearly twice 
their former pay to advise newly hired executives--an outrageous 
practice that the IG said raised serious ethical questions, hurt 
employee morale, and tarnished the Postal Service's public image. In 
one example, an executive received a $260,000 no-bid contract in July 
2009, just two months after retiring. The purpose? To train his 
successor.
  My legislation would help remedy many of the contracting issues the 
IG identified. Specifically, the bill would direct the Postmaster 
General to establish a Competition Advocate, responsible for reviewing 
and approving justifications for noncompetitive purchases and for 
tracking the level of competition.
  Earlier this month, the Postmaster General recognized this as an 
essential position by naming a Competition Advocate. My bill would help 
clarify and codify the Competition Advocate's role to ensure that the 
position continues. Under my legislation, the Competition Advocate 
would also be required to submit an annual report on Postal Service 
contracting to the Postmaster General, the Board of Governors, the 
Postal Regulatory Commission, and the Congress.
  To improve transparency and accountability, the bill also would 
require the Postal Service to publish justifications of noncompetitive 
contracts greater than $250,000 on its website. This transparency would 
improve the Postal Service's contracting practices and promote 
competition.
  To resolve the ethical issues documented by the IG, the bill would 
limit procurement officials from contracting with personal or business 
associates for private gain. In a June 2010 report, the IG identified 
several contracts that a former top executive awarded non-competitively 
to former business associates, totaling nearly $6 million. These 
contracts included at least two business associates he hired to manage 
his personal finances and outside business interests. These sorts of 
inappropriate, unethical contracts are unacceptable, and this 
legislation would help prevent similar conflicts of interest in the 
future. In addition, the bill would require the Postal Service's ethics 
official to review any ethics concerns that the contracting office 
identifies prior to awarding a contract.
  Third, the legislation includes several provisions that would enhance 
efficiency and reduce costs. While the Postal Service has made efforts 
to reduce costs over the past several years, more must be done.
  One such area is in the consolidation of area and district offices. 
The IG found that the Postal Service's regional structure--which at the 
time of the report consisted of eight area offices and 74 district 
offices and cost approximately $1.5 billion to maintain in fiscal year 
2009--has significant room for consolidation. The Postal Service 
recently announced the closure of one area office, but it needs to 
conduct a more comprehensive review. My bill would require the Postal 
Service to create a strategic plan to guide consolidation efforts--a 
road map for future savings.
  The bill also would require the Postal Service to develop a plan to 
increase its presence in retail facilities, or co-locate, to better 
serve customers. Before co-location decisions could be made, however, 
the bill would direct the Postal Service to weigh the impact of any 
decision on small communities and rural areas. Moreover, the Postal 
Service would be required to solicit community input before making 
decisions about co-location and to ensure that co-location does not 
diminish the quality of service.
  Fourth, the bill would require the arbitrator to consider the Postal 
Service's financial condition when rendering decisions about collective 
bargaining agreements. This logical provision would allow critical 
financial information to be weighed as a factor in contract 
negotiations.
  Fifth, the bill would require the Postal Service to provide notice of 
any significant proposed changes to mailing rules, solicit and respond 
to comments about the proposed changes, and analyze their potential 
financial impacts. Mandating that the Postal Service adhere to these 
notice-and-comment requirements would help ensure that the Postal 
Service has fully considered the effect that significant changes might 
have on customers and on the Postal Service's bottom-line.
  Sixth, the bill would reduce workforce-related costs government-wide 
by converting retirement eligible postal and Federal employees on 
workers' compensation to retirement when they reach age 65, 5 years 
beyond the average retirement age for postal and Federal employees. 
This is a commonsense change that would significantly reduce expenses 
that both the Postal Service and the Federal Government cannot afford.
  From July 1, 2009, to June 30, 2010, the Department of Labor paid 
approximately $2.78 billion to employees on workers' compensation. 
These workers' compensation benefits serve as a crucial safety net for 
Federal and postal employees who are injured on the job so they can 
recuperate and return to work.
  But, the Department of Labor indicates that postal and Federal 
employees across the government are receiving workers' compensation 
benefits into their 80s, 90s, and even 100s. Because of its benefits 
structure, the workers' compensation program has morphed into a higher-
paying alternative to Federal and postal retirement.
  The Postal Service stands out as an unfortunate example of how 
Federal workers' comp is misused as a retirement system. From July 1, 
2009, to June 30, 2010, postal employees accounted for nearly half of 
all workers' comp benefit payments--about $1.1 billion for 15,470 
recipients. Of that number 2,051 were aged 70 or older; 927 were 80 or 
older; and 132 were 90 or older. Amazingly, three of these postal 
employees were 98 years old.
  I must ask the obvious question: Is there any likelihood that these 
recipients will ever return to work? No.
  Then why aren't they transitioning to the retirement system when they 
reach retirement age?
  This bill reforms the law by converting postal and Federal employees 
on workers' compensation to the retirement system when they reach age

[[Page S753]]

65. This is a commonsense change that would save millions of dollars 
that the Postal Service, the Federal Government, and American taxpayers 
cannot afford to spend.
  The Postal Service is at a crossroads; it must choose the correct 
path. It must take steps toward a bright future. It must reject the 
path of severe service reductions and huge rate hikes, which will only 
alienate customers.
  I have already received letters of support for my bill from various 
organizations, including the Alliance of Nonprofit Mailers, Greeting 
Card Association, Magazine Publishers Association, American Catalog 
Mailers Association, National Newspaper Association, PostCom, National 
Postal Policy Council, Coalition for a 21st Century Postal Service, and 
the National League of Postmasters. I expect to receive more as postal 
stakeholders learn more about how my bill would help the Postal Service 
transform its operations.
  The Postal Service must re-invent itself. It must embrace changes to 
revitalize its business model, enabling it to attract and keep 
customers. The U.S. Postal Service Improvements Act of 2011 will help 
spark new life into this institution, helping it evolve and maintain 
its vital role in American society.
                                 ______