The purpose of the hearing is to examine revenue-generation initiatives recently undertaken by the Postal Service in order to further address the agency’s ongoing financial challenges. In addition, the hearing is also expected to discuss existing barriers to the Postal Service’s ability to innovate its operations through the introduction of new products and services.

As one means of addressing its unprecedented fiscal challenges, the Postal Service has undertaken a series of revenue-generation activities and begun to consider additional innovative services and product offerings. Notably, since June of 2008, the Postal Service has begun to focus its attention on the diversification of its Mailing and Shipping Services, including the pursuit of an integrated business model based on private sector best practices. In addition, the Postal Service recently developed and implemented a Standard Mail Volume Incentive Program, providing eligible mailers with a 30% rebate on certain Standard Mail letters and flats volume during the summer of 2009. Furthermore, the Postal Service has begun to explore the viability of pursuing several new sources of revenue, ranging from the sale of flat rate priority shipping boxes to the implementation of banking, telecommunications, and insurance services in postal retail facilities.

“While the Postal Service, a self-funded government entity, has already implemented a series of cost-cutting efforts in response to its deteriorating financial condition, the current situation also mandates that the agency take significant and innovative steps designed to enhance its products and services and generate revenue,” said Chairman Stephen F. Lynch. “Meaningful oversight of these activities will serve to better ensure that the Postal Service is able to address its financial shortfalls by growing the value of the mail and by generating greater revenue. These actions will in turn minimize the impact of cost-cutting measures on our hardworking postal employees, mailers, postal operations, and the agency’s future viability.”

Witnesses’ testimonies, the Chairman’s opening statement, and a 10:00 a.m. live broadcast of the hearing can be found on the Subcommittee’s website, www.federalworkforce.oversight.house.gov

Subject: Board Memo 132-09

Board Memo 132-09

Executive Board Members,

The resident officers met with Deputy Postmaster General Pat Donahoe on Wednesday, October 28, 2009, along with representatives from NAPUS and the LEAGUE of Postmasters concerning several issues that had been raised in prior meetings with the Postal Service.

The Postal Service announced to the management associations at a recent meeting that they were changing the weighted portion of the NPA for Core goals from the current 30% to 10% for all EAS employees. At the time that this change was first provided to us, we objected as this matter is part of our pay agreement and we were not consulted with as required by Title 39. We requested a meeting with DPMG Donohoe. As a result of our objections, the USPS withdrew this proposed change.

In developing the 2010 Core goals for NPA, the management associations all provided feedback on items that we believed should be changed in the NPA process. The Postal Service accepted some of the recommendations that were made by the management associations yet they rejected other proposals. We wanted to have an opportunity to discuss the reasons that some of our recommendations were not accepted and requested a meeting with DPMG Donahoe.

As a result of our session with DPMG Donahoe on October 28, 2009, we have scheduled an extended meeting for November 3, 2009 where we will discuss some of the NPA issues that we still have pending.

DPMG Donahoe briefed us on some of the current issues;

The USPS projects that the plan for volume for 2010 is 166 billion pieces. The first month of the fiscal year the volume did not meet the projections.

Nearly 20,000 employees took advantage of the incentive to leave with the cash award, approximately 17,500 clerks and 2,500 mailhandlers. Most of the clerks worked in Automation and 500 clerks were BMEU employees. 90% of the employees who took the offer were eligible to retire.

DPMG Donahoe advised us that the field was instructed to make sure that they recognized the employees who were leaving for their years’ of dedicated service. If the management organizations become aware of any area that is short-handed due to the departure of employees who took the incentive, let him know. The lowest response rates for individuals who could have opted for the incentive was in southern Michigan and in Florida .

DPMG Donahoe has advised the field to initiate action to fill critical positions in the field, starting with Postmaster positions and higher level EAS positions. The USPS will continue to pursue opportunities to AMP mail processing and consolidate delivery operations where space permits. DPMG Donahoe also advised that there will be a resolution to the ASP issues very soon and that the USPS will be discussing this with NAPS.

DPMG Donahoe advised all attendees that it is very difficult for the USPS to support offices remaining open where there is no customer base and that he will be discussing this matter with the Postmaster organizations separately.

DPMG Donohoe expressed satisfaction with the efforts that have been made in route adjustments with the NALC and the resultant reductions in workhours.

DPMG Donahoe advised the management organizations that he would work with us on EAS staffing to resolve some of the coverage issues that we have with the current SWC program. As far as the use of iSWC is concerned (in the Pacific Area0 iSWC will not be used for projecting staffing or to budget operations.

DPMG Donahoe stated that the focus for the year will be on NDC operations, office consolidations, Article 12 implementation for relocating craft employees.

The current FSS deployment has been plagued by software issues. The USPS will continue its’ plans to install equipment but the actual deployment from a use standpoint must be resolved by the contractors. DPMG Donahoe advised that the USPS is working with the contractors to resolve the bugs in the system and that the contractor has replaced all of the engineers who have been working to correct the bugs. DPMG Donahoe also advised us that there were no other major initiatives that were being planned for 2010.

DPMG Donahoe said that he expected that Postmasters in small officers would be able to submit schedules for their operations that would conform to an 8 hour work schedule in compliance with FLSA law.

The Stamp Distribution Network is planned to go from 65 centers around the country to just 6. The management organizations stressed that this will cause problems in providing the stamp stock necessary in the field. DPMG Donahoe said that something needs to be worked out to resolve these problems and that it may be necessary to adjust the offices accountability so that they can keep more product on hand for customers.

The white paper is available on the Mailers Council’s website.

According to Mailers Council Board of Directors President James R. O’Brien, “The mailing industry, and the nearly nine million jobs it represents, and every American who depends on a reliable, affordable postal system, need Congress’ help now. Our research shows that recent legislation offers only temporary relief of the agency’s financial problems. Without more significant measures, such as those outlined in our white paper, the Postal Service will soon be unable to meet its financial obligations.”

The Postal Service was recently put back on the General Accountability Office’s High-Risk List, a reflection that the agency’s future is in jeopardy. It ended FY 2009 with a net loss of $3 billion and is expected to report a nearly $7 billion deficit for FY 2010. Mail volume declined by approximately 26 billion pieces in one year. Next year, the Postal Service will be close to its statutory borrowing limit of $15 billion, with no sign of being able to repay these funds anytime soon.

Legislation approved on September 30 gave the Postal Service a one-year reprieve from the large annual payments required to prefund its retiree obligations. However, because of staggering declines in mail volume, changing communication patterns and the ongoing recession, the USPS may be unable to pay its bills or its employees by the end of FY 2010.

The Mailers Council’s white paper offers these recommendations for addressing the Postal Service’s problems:

1. The Postal Service needs to be allowed to reduce its head count.
2. It must be allowed to close unneeded facilities and consolidate its retail network.
3. The Postal Service needs greater control over compensation.
   It should be allowed to adjust its pre-funding schedule for retiree health benefits when economic conditions dictate.
4. An arbitrator should consider the financial health of the Postal Service when making a decision in the collective bargaining process.
5. The Postal Service should complete its study of five-day-a-week delivery and fully present its findings for further discussion.

The Mailers Council is a coalition of corporations, nonprofit organizations, and major mailing associations. Collectively, the Council accounts for 70% of the nation’s mail volume. The Mailers Council believes that the USPS can be operated more efficiently, supports efforts aimed at lowering postal costs, and has the ultimate objective of containing postal rates without compromising service.

The Honorable Paul Hodes
U.S. House of Representatives
Washington, DC 20515

Attention: Sarah Levin

Dear Mr. Hodes:

We received your May 21 letter on behalf of the New Hampshire branch of the National Association of Letter Carriers (NALC). They alleged manipulation of the Time and Attendance Collection System (TACS) by management at the Milford Post Office, Manchester South Station, and Manchester West Station. Specifically, they alleged postal management altered electronic timecards to avoid paying NALC carriers overtime and to falsify the reporting of work hour usage at these facilities.

As background, TACS is the timekeeping system used by the Postal Service to record employees’ work time and to ensure proper payment. TACS also manages budgeted work hours for each facility. Employees are assigned an individual identification card, bearing a magnetic stripe encoded with their personal information. Employees use their cards at an Electronic Badge Reader (EBR). The employees enter the type of clock ring and operation number, if applicable, and then slide their cards through the EBR. This produces a record of the date, time, type of clock ring, and the operation number to TACS.

Every week, postal managers reconcile and download TACS data to the Accounting Service Center (ASC) in Minnesota, which collates this information and uses it to generate employee paychecks. Managers have manual access to the TACS in order to approve overtime and correct timekeeping errors before the information is downloaded to the ASC. Manual access to TACS is individually password protected. When a postal manager makes a manual change, TACS records the nature of the change, the date, time, and the Employee Identification Number of the person making the change.

We conducted an investigation, which included interviews and a review of records and documents. We concluded that management at the Milford Post Office made manual entries to change employees’ clock rings for the period of December 14, 2002, through December 19, 2008. These changes resulted in the removal of straight time, overtime, night differential, and penalty overtime causing, employees to be underpaid. Additionally, we found an apparent flaw in the way that TACS handles hours worked by clerks who also perform carrier work for part of their day. This flaw causes an unintentional loss of pay to employees. We forwarded our findings to postal management for action they deem appropriate.

We concluded that manual entries to change employees’ clock rings were made by management to TACS at the Manchester South Station for the period of December 22, 2007, through June 26, 2009, and at the Manchester West Station for the period of December 23, 2006, through June 26, 2009. These changes resulted in the removal of night differential and overtime causing employees to be underpaid. We forwarded our findings to postal management for action they deem appropriate.

After we began our investigation, we widened our scope to include two other nearby locations, specifically the Somersworth Post Office and the Salem Post Office. Our investigation concluded that at the Somersworth Post Office for the period of the December 22, 2007, through June 12, 2009, and at the Salem Post Office for the period December 22, 2007, through July 1, 2009, manual entries were made to TACS. Management changed employees Move clock rings from one operation number to another, which caused work hours to be posted to operations employees apparently did not perform. These changes resulted in misstatements of budgeted work hour activity at the facilities. These findings were also forwarded to postal management for action.

If you or your staff have any questions related to your inquiry, please contact Betsy Cuthbertson in our Congressional Response unit at (703) 248-2270.

Sincerely,

Lance Carrington
Deputy Assistant Inspector General for Investigations

Congressman Paul Hodes issued the following statement after the Inspector General of the US Postal Service confirmed New Hampshire postal workers’ concerns that management had altered time cards and withheld payment that the workers had earned. Congressman Hodes had called on the Inspector General to investigate these concerns.

“This is a clear and deliberate violation of workers’ rights,” said Congressman Hodes. “New Hampshire families have suffered as a result of this scheme, and these hard-working postal workers deserve the wages that they have earned. The Postal Service should immediately reimburse these workers for the wages that were taken from them.”

Earlier this year, Congressman Hodes wrote to the Inspector General asking for an investigation into claims that management at the Milford Post Office, Manchester South Station, and Manchester West Station had manipulated time cards to cheat workers out of wages they had earned. Postal workers were concerned that management was manually altering time cards in order to avoid paying workers the wages to which they were entitled.

The Inspector General concluded that management altered time entries which, “resulted in the removal of straight time, overtime night differential and penalty overtime causing employees to be underpaid.” Management engaged in these practices at all three of the post office stations in question, and the Inspector General’s investigation revealed other inconsistencies at the Somersworth Post Office and the Salem Post Office. The investigation also revealed a flaw in the way in which clerks’ hours are recorded, which resulted in an “unintentional loss of pay to employees.”

Citing the economic downturn, Vegliante warns that the USPS may end the year with “a corporate NPA score for which the adjective rating would be non-contributor. Employees who worked diligently and contributed to the organizations performance may receive an end of year rating of 3 or less and a personal adjective rating of non-contributor.”

The only solution offered for the program’s failure is the option for evaluators to change the adjective rating of employees receiving a PFP score of 1, 2, or 3 to “contributor”. The score would not change, and the employee would not receive an increase in salary. “This is each evaluator’s decision based solely on the overall performance of the employee throughout the year.”

Dear Leaguers,

Recently your National Board met and decided that the League would no longer support the VOE survey. While the intent behind the survey may be good, the fact of the matter is that the work situation for Postmasters continues to deteriorate. In so many districts dignity and respect for PMs have ceased to exist. The Postal Service deliberately does not staff in order to pile work hours on to Postmasters. Reports and logs continue to proliferate, thereby stretching a long day into a longer day. Discipline for trivial reasons continues and micromanagement reduces Postmasters to mindless robots. You may not be suffering personally from any of these situations, but thousands of Postmasters nationwide are. I urge you, in support of Postmasters everywhere, to simply not fill out the survey. This is one report that you are not required to complete. Please spread the word; the more of us who refuse to participate, the louder our voice of the employee will be.

Respectfully,

Charley Mapa
President
National League of Postmasters

WASHINGTON — The U.S. Postal Service announced today that 371 retail stations and branches remain under consideration for possible consolidation.

Today’s announcement updates a review process begun earlier this summer that examined approximately 3,600 stations and branches in urban and suburban areas across the country, focusing on facilities in relatively close proximity to one another, to determine where consolidations might be feasible, while maintaining customer access to postal services.

With nearly 37,000 Post Offices, stations, branches, contract and community post offices, the Postal Service has the largest retail network in the United States. An additional 56,000 locations such as supermarkets, drug stores, and other retailers sell postage and selected postal services. Nearly 18,000 ATMs also dispense sheets of stamps. But customers do not have to visit a physical building to purchase products and services; postage can be bought at usps.com and printed on personal computers.

The only provider of mail service to every home and business address in the country, the Postal Service is committed to providing reliable, secure, affordable service with convenient access. Unlike most federal agencies, America’s national mail system receives no tax subsidy for operating expenses and relies on the sale of postage, products and services to fund its operations.

Additional efficiency initiatives are continuing. Reducing over-capacity in retail and delivery operations is a good business move. Every effort will be made to maintain and improve customer access to postal services.

Today’s announcement is part of the Station and Branch Optimization and Consolidation initiative that is currently being reviewed by the Postal Regulatory Commission. As part of this proceeding, the Postal Service has filed periodic updates identifying the retail stations and branches that remain under consideration.

The filing does not represent a final decision on consolidation. To date, no facility-specific final decisions have been made as a result of this initiative.

Click here for the list of stations and branches currently being reviewed.

Another posting on the NAPS boards suggests changes are imminent for USPS employees involved in Financial Control & Support, Purchasing and Material Management, and Stamp Distribution. Stay tuned.

Total revenue was down by just under a half billion dollars for the month, and down by $5.9 billion for the year to date. Expenses were reduced by 10.6% for the month, but are down by just 2.7% for the year to date, a reduction of less than $2 billion.