National Association of Postal Supervisors
Legislative and Regulatory Update -- January 25, 2008


In this Issue:
The Second Session of the 110th Congress is off-and-running.  House lawmakers returned to Washington last week, and the Senate reconvened on Tuesday.  Over the course of the next two weeks, the most significant attention in the Capitol will be devoted to the President's State of the Union Address, on Monday evening, January 28, and House and Senate consideration of the economic stimulus package.

Here's an update of recent developments on all things postal.

For additional updates and analysis of postal news, check out the "Post Notes" blog, clicking here.


Postal Service Is Disadvantaged Compared to Its Competitors, the FTC Concludes

For years, UPS and others have fanned the flames in Congress, claiming that the Postal Service enjoys an unfair advantage over its competitors.  The UPS strategy also nudged conservative think tanks to drum up studies, pointing to the USPS letter and mailbox monopolies, avoidance of federal, state and local taxes, federal funding for borrowing, implicit subsidies, immunity from lawsuits, all combining to create an unfair competitive advantage for the Postal Service. 

To authoritatively validate those claims, UPS and its allies persuaded Congress in the 2006 postal reform law to instruct the Federal Trade Commission to determine whether the Postal Service is aided by an unfair competitive advantage.

The FTC issued its study report in mid-January and its answer?  The Postal Service actually suffers a unique "net competitive disadvantage versus private carriers."  Sorry Brown.  As the old adage says, be careful what you ask for. 

The FTC concluded that although USPS avoids as much as $117 million in private carrier costs due to its federal status and its borrowing advantage, other federally-imposed constraints on its operations cause the Postal Service to incur as much as $782 million more than its competitors.  Those Congressionally-imposed requirements, including Alaska bypass service, flying mail on American-owned international air carriers, prescription drug plans without federal reimbursement, a 21.2 percent wage premium applied to all bargaining employees, no markup of periodicals, and the obligation to deliver non-profit mail without adequate cost offset -- all represent obligations that private carriers can avoid.
Taking those considerations into account, the FTC recommended that Congress consider remedial action, especially in the management of its labor costs (which comprise nearly 80 percent of USPS expenses) and reduce the statutory and political constraints that limit USPS's flexibility to configure its processing centers and post offices. 

The FTC also recommended more far-reaching actions for Congressional consideration, including: 

-- Relaxing the current mailbox monopoly to allow consumers to choose to have private carriers deliver competitive products to their mailboxes would create net benefits for consumers;

-- Narrowing the postal monopoly to allow greater competition while still maintaining universal service; and

-- Establishing the USPS' competitive products division as a separate corporate entity -- with either private or governmental ownership.

That last set of ideas represents proposals that Congress is not likely to seriously consider for the time being, meaning at least several years, while implementation of the new reform law sorts itself out. 


House Hearing on Social Security Offset Provisions Covers Familiar Ground
 
The House Subcommittee on Social Security of the Committee on Ways and Means held a hearing on January 16 on two Social Security provisions that adversely affect  federal, state and local government employees -- the Government Pension Offset and the Windfall Elimination Provision. 

Though the House lawmakers holding the hearing pledged that the occasion would help them to understand why the provisions exist, how effectively they work, their impact, and the options to modify or repeal them -- the testimony of the two government witnesses and seven retiree representatives was largely a replay of Congressional hearings on the subject in years past.

What was new was the the spotlight the hearing provided to the efforts of two Subcommittee members -- Rep. Ron Lewis (R-KY) and Rep. Kevin Brady (R-TX) and their bills to address the GPO and WEP.

Congressman Lewis has introduced H.R. 1090, the Social Security Guarantee Plus Act, which includes a provision addressing the pension offset. 

Congressman Brady has introduced H.R. 2772, the Public Servant Retirement Protection Act to address the windfall elimination.  Under Mr. Brady's bill, the Social Security retirement benefits of people who worked in and outside of Social Security would be calculated using the standard benefit formula that applies to those who worked in jobs only covered by Social Security, adjusted to reflect career earnings under Social Security.  Public servants would be given credit for their work in jobs covered by Social Security in the same manner as all other working Americans.  The ten-year cost of Mr. Brady's proposal to address the WEP is $4.6 billion, not inexpensive, but considerably less than the $80 billion ten-year price tag associated with the repeal of WEP and GPO.

Given those costs and the volatility of spending that much in an election year, Congress is unlikely to address the GPO/WEP issue this year. 
Next year -- when a new Congress, potentially a Democratic Congress with a larger majority -- may provide an opportunity to seriously tackle GPO and WEP, but fiscal challenges, and the expiration in 2010 of expensive tax cuts, could complicate Congressional priority-setting. 

Meanwhile, the GPO and WEP continue to disrupt the lives of surviving widows and others.  As NAPS President, Ted Keating noted in his statement for inclusion in the January 16 Subcommittee hearing record, " ... in the absence of Congressional action, the unfairness of the GPO and WEP will continue to bear their onerous mark and inflict unwarranted misery upon countless public servants."

 
BMC Outsourcing RFP On the Way?

The Postal Service expects to request proposals next month on how to contract-out some Bulk Mail Center activities, according to APWU.

APWU has reported on its website that its national officers learned of the BMC outsourcing plans during a USPS “pre-decisional briefing” on developments associated with the Request for Information (RFI) Concerning a Time-Definite Surface Network issued by USPS last July.

That document, according to USPS, sought to “identify interested organizations with the capability to implement a time-definite mail distribution and transportation network."

In the RFI, the Postal Service invited private sector companies to indicate whether they were interested in helping to build and operate a private, sub-contracted national or regional network of facilities to support the distribution and transportation of Standard, Periodical and Package mail. Responses were due by September 24.

It appears now, nearly five months later, that USPS received a sufficient positive response from logistics operators to proceed to the next step: soliciting actual proposals on how to outsource some BMC activities.

The Postal Service's interest in privatizing portions of the mail distribution and transportation network represents one of its major cost-containment strategies, according to its updated Transformation Plan.

Attempting to tamp down job anxiety about the impact of potential BMC outsourcing, APWU President William Burrus said, "“While we expect changes to the BMC network and to the employee complement, we do not anticipate that they will result in a significant reduction in the number of USPS employees.” Burrus also held open the possibility of “in-sourcing” some functions that are currently performed by non-USPS employees.


USPS Makes It Official: Here Comes the IMB

The Postal Service proposed rules on January 7 that will require mailers to use the Intelligent Mail BarCode (IMB), beginning a year from now -- in January, 2009 -- in order to receive postage discounts for automation.  The notice in the Federal Register makes official what the Postal Service has been saying about the advent of IMB, and represents another step in USPS efforts to implement intelligent mail. 

The IMB will contain triple the information of previous barcodes, permitting tracking of individual mailpieces at all steps in the process, from creation by the mailer, to its deposit with the Postal Service, through transportation and processing, right up to delivery. 

The USPS rules offer two IMB options: Full Service, which requires mailers to apply unique IMBs to mailpieces, trays sacks, and pallets and submit electronic mailing documentation; and Basic, which requires mailers to apply IMBs to mailpieces only. 


Bruce Moyer
Legislative Counsel to the National Association of Postal Supervisors