[Federal Register Volume 66, Number 195 (Tuesday, October 9, 2001)]
[Notices]
[Pages 51480-51481]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-25278]


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POSTAL SERVICE


Request for Comments on an Outline for Discussion: Concepts for 
Postal Transformation

AGENCY: Postal Service.

ACTION: Request for comments.

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SUMMARY: At the request of Congress and the Comptroller General, the 
Postal Service is preparing a comprehensive plan for the structural 
transformation of the postal system to meet the challenges of serving 
the American public through the remainder of this decade. The 
Comprehensive Transformation Plan will be presented to Congress and the 
General Accounting Office on December 31, 2001. As an interim step, the 
Postal Service has issued a paper entitled An Outline for Discussion: 
Concepts for Postal Transformation. This Outline for Discussion 
describes the framework and process that we are using to prepare the 
plan. We invite comments and suggestions from all interested parties to 
help us to complete a plan that serves the public interest and advances 
public engagement in shaping the future of America's postal system.

DATES: Comments must be received by November 1, 2001.

ADDRESSES: Those responding are encouraged to email their comments to 
[email protected]. Those wishing to send written comments 
should mail them to Julie S. Moore, Executive Director, Office of 
Transformation, Strategic Planning, Room 4011, United States Postal 
Service Headquarters, 475 L'Enfant Plaza, SW, Washington, DC 20260-
1520.

FOR FURTHER INFORMATION CONTACT: Paul Van Coverden (202) 268-8130.

SUPPLEMENTARY INFORMATION:

Background

    On April 4, 2001, David M. Walker, Comptroller General of the 
United States, advised the House of Representatives Committee on 
Government Reform that the Postal Service ``faces major challenges that 
collectively call for a structural transformation if it is to remain 
viable in the 21st century.'' He called on the Postal Service, in 
conjunction with all stakeholders, to prepare a comprehensive plan 
identifying ``the actions needed to address the Service's financial, 
operational, and human capital challenges and establish a time frame 
and specify key milestones for achieving positive results.'' On April 
24, 2001, Mr. Bernard L. Ungar, Director, Physical Infrastructure 
Issues, U.S. General Accounting Office, wrote to former Postmaster 
General William J. Henderson formally recommending that the Postal 
Service develop such a comprehensive plan. On June 14, 2001, following 
Mr. Walker's testimony before the Senate Committee on Governmental 
Affairs on May 15, 2001, the chair and ranking members of the committee 
and its Postal Oversight Subcommittee wrote to Postmaster General John 
E. Potter endorsing the Comptroller General's recommendation and asking 
for the plan by the end of calendar year 2001. On July 25, 2001, 
Postmaster General Potter advised Congress that the Postal Service 
agreed to prepare a Comprehensive Transformation Plan, as requested.

Outline for Discussion: Concepts for Postal Transformation

    As an interim step in the process, on September 30, 2001, the 
Postal Service provided to Congress and the Comptroller General a paper 
entitled Outline for Discussion: Concepts for Postal Transformation. 
This paper is available on the Postal Service's public Web site at 
www.usps.com/strategicdirection or at www.usps.com keyword: 
transformation. The Outline for Discussion describes in greater detail 
the background and purpose of the Comprehensive Transformation Plan and 
the process that the Postal Service is using to develop the plan, 
including extensive outreach to interested stakeholders. After 
preliminary, informal discussion with many of those who have taken part 
in the public debate over postal reform in recent years, the Outline 
for Discussion frames the guiding question on the table as follows: To 
best serve the needs of the American people and the American economy in 
the 21st century, what should America's postal system look like (or 
transform to) by year 2010?
    The Outline for Discussion describes the fundamental obstacle faced 
by the current postal system that is a clash between service and 
economics. As a nation, how can we best structure our postal system in 
the years ahead so that we pay what we are willing to pay for as much 
service as we can get?
    The Postal Service has a mission to serve every address in a 
growing nation. Its networks, with associated costs, are constantly 
expanding to accommodate new deliveries, adding new facilities and 
delivery routes roughly equivalent to those for a city the size of 
Chicago, year after year. Until recently, during a long period of 
strong economic expansion in the United States, the Postal Service 
benefited from growing mail volumes, with increasing postage revenue 
sufficient to pay for the expanding network, and kept postage rates in 
line with inflation. Over the past year, though, as the economy has 
slowed, mail volume and revenue have also suffered. The Postal Service 
has improved its productivity during this period at an unprecedented 
rate, but lacks many of the tools that private businesses have to deal 
with financial setbacks. In particular, its service responsibilities 
prevent abandoning unprofitable locations or new addresses.
    To break even, the Postal Service currently must earn, on average, 
about $1.85 per delivery address every day to cover the entire cost of 
the postal system. The Outline for Discussion explains that this figure 
may well rise by one third to $2.46 by 2010. If the robust pattern of 
mail volume growth in past years should return, then this may not be a 
problem. But changes in competition and technology suggest that, while 
a system for delivery of hard-copy mail will still be important, the 
volume of mail in the system may not grow enough in the future to keep 
pace with the growth in infrastructure required to serve an ever-
growing number of addresses.
    By all indications, success in 21st century markets will belong to 
those nimble enough to adjust rapidly and continuously, to keep pace 
with advancing technology and changes in business methods and customer 
demand. Yet the Postal Service today is organized under an aging 
statutory framework designed to favor and protect the status quo and to 
route all change through slow, deliberative processes seeking a high 
level of consensus among disparate interests.

Solicitation of Comments

    The United States Postal Service solicits comments on the Outline 
for Discussion that is posted on the Postal Service's Strategic 
Direction web page at: www.usps.com/strategicdirection or at 
www.usps.com keyword: transformation.
    Comments would be welcome on the following core question:
     To best serve the needs of the American people and the 
American

[[Page 51481]]

economy in the 21st century, what should America's postal system be 
like (or transform to) in the next decade?
    Reponses to the following specific questions would also be 
appreciated:
     Should that system provide ``universal service'' and what 
should that entail?
    Traditional concepts of universal service in the United States have 
included a number of characteristics including delivery scope and 
standards, access to Post Offices, uniform pricing, product offerings, 
and security services. Should all of these features continue to be a 
part of postal services? For example, should the Postal Service deliver 
to every neighborhood every day? Should delivery frequency be reduced 
for low mail volume neighborhoods? Should retail service to nearly 
40,000 outlets continue? Should alternative delivery methods be 
encouraged?
     What should the ``core'' services of the future Postal 
Service be?
    Some observers such as the Comptroller General have challenged the 
Postal Service to define its core service more rigorously. What 
comparative advantages does the publicly owned Postal Service (versus 
other providers) bring to the mailing industry? What services should be 
left to the marketplace and to private competitors, and what services 
should be provided by the national postal system?
     How should the nation structure a future postal system to 
be as productive and efficient as possible and while ensuring that 
consumers pay only what they wish to pay for as much service as they 
can afford?
    The design of the operations of the future postal network has many 
variables. Often improvement in productivity and efficiency through 
cost-cutting can come at a cost to improved service. Which values are 
most important? Should maintenance of affordable pricing be more 
important than improving service? Or the reverse? What level of 
productivity and efficiency will guarantee that the cost of postal 
services is low but that service remains high? Should there be more 
rigorous automation standards as there are in other countries? What 
should the characteristics of the future postal operations network be?
     Can the Postal Service continue to provide universal 
service under the current financial arrangements if volume slows or 
declines significantly? Are there other financing mechanisms needed?
    The critical threat to the current economic model is thought by 
many observers to be connected to volume decline. How should the Postal 
Service seek to finance its operations in the event that volume does 
decline? Should the future Postal Service seek support through the 
appropriation of tax revenues? Should the universal services be 
narrowed? Are there other financing mechanisms that should be explored 
even without potential volume declines? Should the Postal Service be 
granted more freedom in financing investments?
     What steps should be taken today to anticipate the human 
capital requirements of the future postal system in a manner that 
embodies core values of respect, dignity, and diversity while providing 
incentives to encourage continuous service improvement?
    How should the balance be struck between individual values and 
improving the efficiency of the postal system? Is there a trade-off 
today? What investments should be made in attracting, training, 
managing, and providing incentives to people to build the future postal 
system? Should incentives be tied to performance? Is the collective 
bargaining process, as it is structured today, going to serve the needs 
of the future Postal Service? Should salary caps be removed? Where 
should the priorities be?
     Is it possible to design a government postal system in the 
United States that operates more commercially and still serves 
important social objectives including universal coverage? 
    How might the Postal Service offer competitive products? If the 
private sector is offering similar services, should the publicly owned 
Postal Service enter markets where it would compete with the private 
providers? There are both advantages and disadvantages for a public 
agency offering services in competitive markets. Is the playing field 
uneven in favor of the public- or private-sector service provider?
     How would a privately owned postal entity or entities 
perform against public expectations for postal services? Are there 
other models that may do a better job for the American people?
    A number of key postal policy voices in recent years have called 
for the privatization of the Postal Service. Is this desirable? Would a 
corporatized Postal Service be able to be more productive? To provide 
better service? To grow the mailing business for the postal industry? 
Or are there other models of fundamental structural reform that should 
be considered? Should the postal system be franchised out to private-
sector providers? Should fundamental structural reform retain the 
continuity of the infrastructure that exists today?

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 01-25278 Filed 10-3-01; 2:29 pm]
BILLING CODE 7710-12-P