Wanted: More details on USPS consolidation plan

PRC and unions seek further information on savings estimates.

Postal Regulatory Commission officials and union leaders pressed the U.S. Postal Service on Thursday on its modified plan for streamlining facilities, revealing that the cash-strapped agency still has many gaps in its analysis of its cost-cutting efforts.

PRC heard testimony Thursday from USPS officials, in advance of issuing an advisory opinion on the agency’s mail processing network consolidation plans. The commission is in the beginning stages of advising USPS on four contentious proposals, including changing nationwide service standards, changing operating hours at thousands of post offices nationwide and enhancing service at post office boxes.

Postal union representatives and PRC commissioners pressed USPS Manager of Network Analytics Emily Rosenberg for more details on how the agency’s modified strategy would change the efficiency of mail delivery, and asked for additional analysis of the extent of the mail volume decline in recent years.

Under the new strategy announced in May, USPS will phase in postal facility consolidations over two years. The agency will pursue consolidations in 140 locations by the spring of 2013, a move it expects will bring $1.2 billion in savings annually. Phase 2 of the plan, slated to be complete by the spring of 2014, will involve streamlining an additional 89 locations for a total of $2.1 billion in savings annually. The plan will reduce the size of the USPS workforce by about 13,000 employees, but it wants to continue to avoid layoffs and to provide alternative options within the agency for the affected employees.

Phase 1 begins this summer at 48 locations, but USPS will suspend consolidations between September and December, in part to help accommodate mail volume during election season.

Additionally, a new USPS rule issued as part of the modified plan in May alters service standards for overnight delivery, allowing consolidations beginning in 2013 and shrinking the geographic reach by 2014.

The American Postal Workers Union plans to file a complaint with PRC because the union remains unsatisfied with USPS’ estimates for loss in revenue as a consequence of the change in service standards. The union is asking that USPS be prohibited from changing its standards without receiving the advisory opinion of the PRC. The commission plans to issue a formal opinion on the USPS modified plan by Labor Day.

“Given the complete lack of analysis and evidence, there’s no basis to evaluate [the modified plan] or receive due process with regards to the advisability of these actions,” APWU counsel Darryl Anderson told the panel Thursday. “We assume there is no justification unless the Postal Service provides that in the record.”

PRC members questioned Rosenberg regarding how USPS arrived at its estimate the plan will produce $2.1 billion in annual savings once Phase 2 is complete. Members expressed skepticism as to how operational changes made as part of the strategy, such as shrinking overnight delivery service, would result in this level of savings.

Rosenberg said the Postal Service is currently working on a “more tailored breakdown” of Phase 1 and will continue to analyze it as it is implemented.

USPS issued a formal response to PRC’s questions on the modified plan accompanying Thursday’s hearing. The response will serve as background for PRC to form its final advisory opinion, following a June 12-15 hearing where USPS can cross-examine witnesses.