Table Of Content

. S. Hrg. 103-584 ANNUAL REPORT OF THE POSTMASTER GENERAL Y 4, G 74/9: S, HRG. 103-584 ftnnujl Report of the Postnaster eea. . HEARING BEFORE THE SUBCOMMITTEE ON FEDERAL SERVICES, POST OFFICE, AND CIVIL SERVICE OF THE COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED THIRD CONGRESS SECOND SESSION MARCH 24, 1994 Printed for the use of the Committee on Governmental Affairs U.S. GOVERNMENT PRINTING OFFICE 78-060cc WASHINGTON : 1994 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-044516-7 . / S. Hrg. 103-584 ANNUAL REPORT OF THE POSTMASTER GENERAL I. G 74/9: S, HRG. 103-584 nl Report of the Postnaster Gea. . HEARING BEFORE THE SUBCOMMITTEE ON FEDERAL SERVICES, POST OFFICE, AND CIVIL SERVICE OF THE COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED THIRD CONGRESS SECOND SESSION MARCH 24, 1994 Printed for the use of the Committee on Governmental Affairs U.S. GOVERNMENT PRINTING OFFICE 78-060cc WASHINGTON : 1994 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-044516-7 COMMITTEE ON GOVERNMENTAL AFFAIRS JOHN GLENN, Ohio, Chairman SAM NUNN. Georgia WILLIAM V. ROTH, Jr., Delaware CARL LEVIN, Michigan TED STEVENS, Alaska JIM SASSER, Tennessee WILLIAM S. COHEN, Maine DAVID PRYOR, Arkansas THAD COCHRAN, Mississippi JDOASNEIEPLH KI.LAIKEABKEAR,MAHaNw,aiCionnecticut JROOBHENRMTcCF.AIBNE,NNArEiTzTon.aUtah BYRON L. DORGAN, North Dakota Leonard Weiss, StaffDirector Franklin G. Polk, Minority StaffDirector and ChiefCounsel Michal Sue Prosser, ChiefClerk Subcommittee on Federal Services, Post Office, and Civil Service DAVID PRYOR, Arkansas, Chairman JIM SASSER, Tennessee TED STEVENS, Alaska DANIEL K. AKAKA, Hawaii THAD COCHRAN. Mississippi Edward J. Gleimsui, StaffDirector Patricia A. Butler, Minority StaffDirector Neuicy Langley, ChiefClerk (II) CONTENTS Opening statements: Page SenatorPryor 1 SenatorStevens 3 SenatorCoverdell 4 SenatorCochran 36 WITNESSES Thursday, March 24, 1994 Hon. Marvin Runyon, Postmaster General and Chief Executive Officer, U.S. Postal Service; accompanied by Michael S. Coughlin, Deputy Postmaster General, Joseph R. Caraveo, Executive Vice President and Chief Oper- ational Officer; Mary S. Elcano, SeniorVice President and General Counsel; and MichaelJ. Riley, SeniorVice President and ChiefFinancial Officer 9 APPENDIX Prepared statement ofSenator Cohen 41 Annual Report ofthe PostmasterGeneral 43 Letterwith enclosure dated March 18, 1994 79 Questions submitted by SenatorPryor 84 U.S. Postal Service Total FactorProductivityAnnual DataTables 1963-1993 89 Questions submitted by SenatorCoverdell 182 Questions submitted by SenatorCohen 187 Questions submitted by SenatorSasser 190 Financial & OperatingStatements 193 Questions submitted by SenatorStevens 205 (III) ANNUAL REPORT OF THE POSTMASTER GENERAL THURSDAY, MARCH 24, 1994 United States Senate, Subcommittee on Federal Services, Post Office, AND Civil Service, Committee on Governmental Affairs, Washington, D.C. The Subcommittee met, pursuant to notice, at 10:05 a.m. in Room SD-342, Dirksen Senate Office Building, Hon. David Pryor, Chairman ofthe Subcommittee, presiding. Present: Senators Pryor, Stevens, Cochran, and Coverdell [ex officio]. OPENING STATEMENT OF SENATOR PRYOR Senator Pryor. Good morning. Our meeting will come to order. If we look a little bit sleepy this morning, it is because we had to come back down to the Hill about 12:30 and cast a couple ofvotes, and so it has been kind of a long evening for the Senators involved and perhaps some of you, and we appreciate all ofyou being here. We want to welcome you. We especially want to welcome our Postmaster General, Marvin Runyon. This is his second oversight hearing, if I recall. We have a number ofissues to discuss here today with the Postmaster Gen- eral. We think that your tenure thus far, Mr. Postmaster General, has been very eventful £ind sometimes controversial. It has been that kind ofyear for the Postal Service. In fact, Mr. Runyon's entire tenure has been marked, I would say, with non-stop activity and initiative. While concerns have been raised about the results, there is no doubt that the reorganization, along with aggressive advertising, a new logo and increased focus on customer service, have put the Postal Service at the forefront ofthose Federal entities attempting to reinvent themselves. It is a period, I think, Mr. Postmaster General and my colleagues, of restructuring and experimentation. It is very timely, and as we approach the end of this century there is some uncertainty as to how the Postal Service will ultimately fit in our Na- tion's evolving communications landscape. Very simply, the decisions made now will likely determine the basic viability ofthe Post- al Service into the next century. As we all know, this hearing is required by law, an annusd oversight hearing of the U.S. Postal Service. It is especially opportune at this moment because earlier this month the Postal Service Board ofGovernors approved a request for an across-the-board rate increase of 10.3 percent. (1) While the business mailers are supportive of this request, it is my understanding that individual posted patrons have expressed their displeasure and concerns for the future. I must confess that I am somewhere in between, Mr. Postmaster Greneral, relieved that a lower request was agreed upon, but apprehensive that the Postal Service may still need an even larger increase in the very near future. So I want us to discuss that this morning, £ind I know my colleagues will want to enter into that discussion. I say this frankly because the economic figures are not encouraging. The Postal Service is currently operating well below its projected financial performance gosds. The workforce is approaching pre-structuring levels, while overtime hours continue to rise. Un- less some real financial improvement is seen over the next year, the 10.3-percent increase may not provide enough revenue for the Postal Service to meet its operating costs in even the first year that these new rates are in effect. On the brighter side, independent tracking surveys suggest that real progress is being made in some areas. I wish more, but in some areas. The Postmaster General has stressed customer service, I think, like no other Postmaster Greneral in history, and his focus seems to be working its way through the Postal Service. — Unfortunately, there are continuing problems with deliver—y ^we are going to talk about some of those problems this morning cou- pled with a number of highly publicized blunders, that have made it especially difficult for the Postal Service to shake its negative image. The only real answer is a sustained level of solid performance over the next several years, which brings us to what I see as the Postal Service's simple but daunting mission, stabilizing its financial position while moving the Nation's mail more efficiently than ever before. This is no easy assignment, but it must be done. Mr. Postmaster General, you have been here for now 2 years and I am anxious for you to share with us your views ofhow the Postal Service is doing and what we can expect in the coming year. While there are important issues to address, I do not intend for this hearing this morning to be merely a forum for pessimism or dire—predictions. Instead, I hope—that we can talk openly and frankly this is the people's business about the things that need to be done not only to correct existing problems, but also to reinforce positive trends. Mr. Postmaster General, we welcome you. PREPARED STATEMENTOF SENATORPRYOR 1 want to welcome all ofyou here today. We are pleased to welcome Postmaster General Marvin Runyon to his second oversight heeiring before this Subcommittee. We have a number of issues to discuss here today. It has been an eventful and sometimes controversial year for the Postal Service. In fact, Mr. Runyon's entire tenure has been marked by nonstop activity and initiative. While concerns have been raised about the results, there is no doubt that the reorganization, along with aggressive advertising, a new logo, and increased focus on customer servicehave put the Postal Service at the forefront ofthose Federal entities attemptingto "reinvent" themselves. This period of restructuring and experimentation is certainly timely. As we approach the end ofthe century, there is some uncertainty as to how the Postal Serv- ice will ultimately fit in our Nation's evolving communications landscape. Very simply, the decisions made now will Ukely determine the viability ofthe Postal Service intothenextcentury. Our hearing this morning is especially opportune because earlier this month, the Postal Service Board ofGovernors approved a request for an across-the-board rate increase of 10.3 percent. While the business mailers are supportive ofthis request, individual postal patrons have expressed their displ—easure and concern for the future. I must confe—ss that I am somewhere in between relieved that a lower request was agreed upon but apprehensive thatthe Postal Service may need an even larg- erincrease in thevery nearfuture. I say this because, frankly, the economic figures are not encouraging. The Postal Service is currently operating well below its projected financial performance goals. The workforce is approaching pre-restructuring levels, while overtime hours continue to rise. Unless some real financial improvement is seen over the next year, the 10.3 percent increase may not provide enough revenue for the Postal Service to meet its operating costs, for even the first year that those new rates are in effect. On the bright side, independent tracking surveys suggest that real progress is being made in some areas. Mr. Runyon has stressed customer service like no other Postmaster General in history, and his focus appears to be working its way through the Postal Service. Unfortunately, continuing problems in major delivery areas cou- pled with a number ofhighly-pubUcized blunders have made it especially difficult forthe Postal Service to shake its negative image. The only real answer is a sustained level ofsolid performance over the next several years. Whic—h brings us to what I see as the Postal Service's simple but daunting mission stabilizing its financial position while moving the Nation's mail more efficiently than ever before. This is no easy assignment, but it must be done. Mr. Runyon has now been Postmaster General for almost 2 years. I am anxious for him to share with us his view ofhow the Postal Service is doing, and what we can expect in the coming year. While there are important issues to address, I do not intend for this hearing to be a forum for pessimism or dire predictions. Instead, I hope that we can talk openly today about the things that need to be done not only to correctexistingproblems, butalsoto reinforce positive trends. Mr. Runyon, I again welcomeyou. I lookforward to hearingyourstatement. Senator Pryor. I jdeld at this time to my colleague, Senator Ste- vens. By the way, we are very pleased to havejoining us this morning our colleague from Georgia, Senator Coverdell, who has a series ofquestions and, I am sure, a statement. Senator Stevens? OPENING STATEMENT OF SENATOR STEVENS Senator Stevens. Well, Mr. Postmaster General, I hope you are more awake than we are. I want to start off by thanking you and the Chairman for agreeing to postpone the hearing. It was sched- uled earlier and, as you know, I had a back operation and I did very much want to be here today and be with you at this annual review ofyour stewardship ofthe Postal Service. We get a lot of questions as we travel around the country about the Postal Service, and many people look at it as being in a difficult period. I remember the real difficult periods of the old Post Office Department. Mr. Postmaster General, I think you have tracked to a great extent the changes that come about on the private enterprise scene in the United States. You had a restructuring. You had a very difficult time for yourselfand postal employees in terms ofmeeting some ofthe changes in technology. Above all, I do think that you have had a difficult time fi'om the postal meter fraud to other issues you have had to face. There has been the new nationsJ air transportation contract. I am sure we are going to have some questions about the executive bonus that ought to go on the record. But as a practical matter, I want you to know as one who has witnessed now a quarter ofcentury ofchange in the Post Office De- partment that I think this period you have been through has been a beneficial one for the future of the United States Postal Service. We do have challenges, like from my good friend on the right, lit- erally and figuratively, and he has some questions for you. They are healthy, too, but my State still depends upon the United States Postal Service probably more than any other area of the country, as you well know, and I thank you for coming up there last year with your team to look at Alaska. We do have the duty, I think, to make certain that you have the authority and the basic law and the assistance that we can give you to insure that the Postal Service goes through this transition and comes out ofthis difficult period. I think before we are through here today, people will understand why we have confidence in your stewardship and why we are very pleased to have an opportunity to go through with you some of the issues that face the great department you head. I am glad to see all ofyour colleagues with you today. I am sure there are going to be some questions for them, too. Mr. Chairman, I can't anticipate the questions and concerns that are going to be expressed here this morning, but I do know that this is as good a team running the Postal Service that I have seen in the time particularly since there has been a Postal Service. So thank you for agreeing to be here, Mr. Postmaster General. It is a function required by law ofall ofus. Thank you very much, Mr. Chairman. Senator Pryor. Thank you. Senator Stevens. Senator Coverdell, we welcome you. OPENING STATEMENT OF SENATORCOVERDELL Senator Coverdell. Well, Mr. Chairman, I appreciate the opportunity to be here this morning. I have a prepared opening statement and I wonder if I might submit it to the Subcommittee for the record and then make just general statements for a moment or two. Senator Pryor. Absolutely. PREPARED STATEMENTOF SENATORCOVERDELL Thankyou, Mr. Chairman Let me begin by saying how much I appreciate the opportunity tojom you today as this Subcommittee meets to hear the annual report of the U.S. Postal Service from PostmasterGeneralRunyon. As you know, Mr. Chairman, my interest in today's heanng lies primarily with a Uttle known enforcement practice associated with the Private Express Statutes and used by the United States Postal Service (USPS) to conduct audits and issue fines against private businesses. I know you share my concerns on this matter, as evidenced by your letter with Senator Sasser to the Postal Service dated August 3, 1992. Also like you, Mr. Chairman, I am aware ofthe concerns voiced by the other side regarding this issue, and I would like to make it clear from the very beginmng thatthe focus ofmy efforts is not to repeal or damage the Private Express Statutes; itis simplyto make themmore reaUstictotoday'smarketplace. theI fUi.rSst.cPaomstealtoStehrivsiciesshueadinbeOectnobeenrgaogfe1d99i3n,awhpreanctIicreeaodf awuidtihtisnogmeansdur&priimsegtphrait- vate businesses who had used private express mail services instead of the Postal Service's Priority Mail. Reports in the Memphis Commercial Appeal, the Atlanta Constitution and the New York Daily News stated that the Postal Service had^au- dited corporations and fined them as much as $500,000 in "back postage fees, for shipping non-urgent mail through couriers such as Airborne Express, Federal Ex- press or United Parcel Service. More surprising than the fines, however, was that the Postal Service was the sole arbiter orjudge as to what constituted "urgent mail forthe business usingprivate express mail service. The Postal Service now admits to some 41 audits and fines against private businesses totallingmore than $1 million duringthe past5 years.