Postal Service announces five-year business plan

Seth Perlman/AP

The U.S. Postal Service unveiled a five-year business plan it hopes will reduce its annual costs by more than $22 billion by 2016.

The plan’s major tenets include enabling the agency to provide its own health benefits to employees -- independent of federal programs -- transitioning to a national five-day delivery schedule, modifying First Class Mail and Standard Mail pricing to adjust for reduced volume, and reducing the number of full-time USPS positions through attrition and retirements.

Last week, the agency reported it had lost $3.3 billion in the first quarter of fiscal 2012, $3.1 billion of which it attributed to payments toward the $5.5 billion mandate to prefund postal service retiree health benefits.

Changes to service proposed in the five-year plan, such as reducing overnight delivery availability and extending the number of days for delivery of items traveling more than 200 miles, will account for $2.5 billion of total run-rate cost savings by 2015.

The plan also would cut Saturday delivery, switching to a five-day schedule, which both President Obama and lawmakers have included in recent proposals.

The National Association of Letter Carriers, which represents USPS employees, said in a statement Thursday that it opposes “any plan that calls for cutting Saturday delivery, downsizing our networks and slowing delivery,” doubting such measures could restore USPS to profitability.

Labor costs account for approximately 80 percent of the agency’s total costs. Of those personnel costs, approximately 40 percent are benefits-related.

Controlling its own health care program, including establishing incentives for Medicare-eligible beneficiaries to participate in Medicare, would save USPS approximately $7 billion annually, the agency estimated. Resolving the prefunding mandate issue through congressional and administrative changes would save $5.8 billion by fiscal 2016, the plan said.

USPS also projected that its workforce will lose 150,000 full-time equivalent employees by fiscal 2016, since half of its career employees are currently retirement eligible. Postal Service Chief Financial Officer Joe Corbett said the service is not considering layoffs at this time.

“We believe that we will be able to get the majority of the work load reductions accomplished through attrition,” Corbett said in a phone conference Thursday.

The plan, which was developed with the help of outside consulting firms, does not include a proposal to reform USPS employee pensions, but Corbett said he believes that is forthcoming.

“They have become lower priorities given everything else we are trying to execute,” he said.

Corbett noted that half of the annual savings required by the strategic plan require legislative action.

“In the absence of legislative reform that quickly enables meaningful operational changes and cost reductions, the Postal Service could incur annual losses as great as $18.2 billion by 2015,” Corbett said in a letter to lawmakers accompanying the report Thursday. “Such an outcome is highly undesirable and entirely avoidable.”

The two USPS reform bills on the table, the Senate’s 21st Century Postal Service Act and the 2011 Postal Reform Act, sponsored by Reps. Darrell Issa, R-Calif., and Dennis Ross, R-Fla., are stalled in committee.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.