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Postal Service to review 1,000 post offices for closure

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The U.S. Postal Service wants to study roughly 1,000 post offices for possible closure – the latest cost-cutting step from an agency that is scrambling to deal with a projected $7 billion deficit this year and larger losses in 2010.

The agency started its review earlier this year with approximately 3,200 post offices, and decided about 1,000 of them are “candidates for further review.” Postal managers say they will consider several factors in deciding whether to close those facilities: mail volume, proximity to other post offices, and the potential savings in labor and utility costs.

Post offices only generate about 71 percent of the Postal Service’s revenues each year; the rest comes through alternative channels, particularly the Postal Service’s Web site.

“Each year more and more postal transactions are now accomplished online,” said Jordan Small, the Postal Service’s acting vice president for network operations. “We consider this a success… [but we need] to determine if there is, indeed, excess capacity in the network.”

The post office review is one recommendation from the Government Accountability Office, which added the Postal Service to its high-risk list last week. GAO analysts say they are deeply concerned about the agency’s finances. Postal officials say they will probably post another $7 billion deficit next year – even after slashing $8 billion in costs.

“The Postal Service urgently needs to restructure,” said Phillip Herr, the GAO’s director of physical infrastructure issues. “With regards to delivery operations, the Postal Service has more than 350,000 carriers, and delivery services represent the largest cost segment.”

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FEHBP open season starts Nov. 9

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The Office of Personnel Management just released guidance on the upcoming open season for choosing next year’s plans under the Federal Employees Health Benefits Program. Federal employees will be able to select health, dental and vision insurance plans and enroll in a Flexible Spending Account between Nov. 9 and Dec. 14.

Anyone already enrolled in a health, dental or vision plan will stay enrolled in their current plan unless they choose to change or cancel it. But Flexible Spending Accounts don’t carry over from one year to another — enrollees must set up an account again if they want to keep directing pretax money to an account used to pay for medical and other expenses.

Last year’s open season was supposed to run from Nov. 10 to Dec. 8, but OPM extended it through January after Blue Cross Blue Shield tried to impose a controversial $7,500 deductible for out-of-network surgeries. OPM said that was a unique occurence, and doesn’t plan to extend this year’s open season.

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OMB to release procurement policies today!

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The Office of Management and Budget will release three policy memos today that promise to reform how government uses contractors.

One memo directs agencies on how to manage the multi-sector workforce. This memo states that agencies don’t have a handle on how contractor employees are used in their offices. It orders agencies to:

  • Coordinate their program, human capital, acquisition and finance offices to strategically plan for outsourcing.
  • Conduct a pilot program to test multi-sector workforce management plans
  • Develop guidelines to insource inherently governmental functions, work that closely supports those functions and work that could be more cheaply performed by federal employees.

A second memo orders agencies to review existing contracts and acquisition practices to “develop a plan that will save 7 percent of baseline contract spending by the end of FY 2011″ and to “reduce by 10 percent the share of dollars obligated in FY 2010 under new contract actions that are awarded with high-risk contracting authorities,” such as cost-reimbursement contracts.  The hope is to save $40 billion governmentwide.

The final memo outlines new a Federal Acquisition Regulation to capture and share more past performance information about government contractors.

OMB is holding a news conference on the new guidance shortly. We’ll have more details for you later on today at FederalTimes.com.

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Senator: Feds welcome in Orlando, Las Vegas

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Sen. Bill Nelson isn’t happy that some federal agencies are shying away from booking conventions and training sessions in resort cities such as Orlando and Las Vegas.

After media reports that some federal agencies had formal or informal policies to avoid scheduling conferences in resort areas because of image concerns, Nelson, D-Fla., took to the Senate floor Monday to defend his state’s reputation.

When you compare the cost of a hotel room in Orlando during the season with the cost of a hotel room, let’s say, in Washington, D.C., during the season, you will find that the Orlando hotels on average are $100 less per night than the other city in that comparison. Likewise, if you look at the cost of airfare as a destination, you will find that the round-trip airfare to a place such as Orlando is considerably less.”

Nelson said he plans to introduce legislation soon to prevent agencies from banning travel to resort cities and expects other senators to co-sponsor the bill, including Sen. Mel Martinez, R-Fla.

I wish it hadn’t come to this, but I have had to draft legislation to make it illegal for the federal government agencies to design travel policies that blacklist certain U.S. cities simply because they are looked at as destination cities for a lot of tourism … It is one thing to avoid nonessential trips for the government to save taxpayers money, but it is taking it a little far when it is another thing that if it is legitimate travel and you then avoid certain cities just because they are where they are.”

The bill is likely to enjoy support in the Senate, with Nevada being home to Senate Majority Leader Harry Reid. Reid wrote a letter in June to White House Chief of Staff Rahm Emanuel asking for clarifications on explicit or implicit federal policies prohibiting federal gatherings in his tourism-dependent state, including in the city of Las Vegas.

In his written response, Emanuel said there is no federal policy dictating where conferences can be held. Some agencies, such as the Social Security Administration and Agriculture Department, have travel policies stating that the use of resort areas is to be minimized and to be used only if it is the most economical option.

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USPS joins GAO high-risk list

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Update, 11:43 a.m.: Here’s a slightly eye-popping statistic from the GAO report: The Postal Service is projecting a $7 billion loss in FY2010 (next year) — even after reducing its expenses by $8 billion. Put another way, there is a $15 billion gap between the Postal Service’s projected FY2010 revenues and its current expenses.

Update, 11:37 a.m.: That was quick. Here’s GAO’s report (pdf) about why the Postal Service is on the list.

Update, 11:25 a.m.: Here’s a link to GAO’s current 2009 high-risk list (pdf). The list was started in 1990 and is updated biennially; it documents agencies that are especially prone to “fraud, waste, abuse and mismanagement,” or those that need “broad-based transformation.”

Original post: The Government Accountability Office will officially add the U.S. Postal Service to its high-risk list today. GAO says it will release more details this afternoon; we’ll let you know when they come in.

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Why is the Fed so unpopular?

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A new Gallup poll finds the Federal Reserve is the least popular among nine “key” federal agencies.

You can read the poll as an example of why government transparency is important — because the Fed’s low ranking is due, in part, to its opacity. There’s a serious debate in economics circles right now about the Fed’s performance during the economic crisis, and whether Ben Bernanke should be reappointed.

But I doubt most of Gallup’s respondents are privy to that debate; many Americans simply don’t understand what the Fed does. It’s just an opaque entity that handles the economy — and with the economy in the middle of a biting recession, the Fed’s popularity is plummeting.

Bernanke is starting to recognize this, which is why he held the Fed’s first-ever town hall meeting last weekend. That isn’t transparency, of course, so much as public relations; many of the Fed’s critics want to see major changes in the way the central bank discloses information (rightly so, in this reporter’s opinion). But this kind of outreach to the public might help the Fed repair its tattered image.

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FedFleet: By the numbers

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FedFleet, the year’s biggest conference for federal fleet managers, officially begins tomorrow in Chicago (although lots of folks are there already, attending agency-sponsored meetings and getting ready for tonight’s welcome reception at Chicago’s Navy Pier).

I’m flying out this afternoon from Washington, but before I do I thought I’d share a few interesting facts that come directly from Becky Rhodes, deputy associate administrator of govermentwide policy at the General Services Administration, which is hosting the conference:

  • 1,490 people were registered to attend the conference as of July 17, which is up slightly from the 1,449 people who attended last year’s event.
  • 38 percent of attendees are new to FedFleet, which Rhodes attributed to significant employee turnover at agencies.
  • 164 exhibitors will showcase their goods or services, up from 145 last year.
  • 22 agency meetings will be taking place during the conference, up from 16 last year.
  • While most of the conference is devoted to vehicle fleets, 25 hours of training are devoted to aviation fleet managers.

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A few billion here and there

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The latest report (pdf) from the Postal Service’s inspector general looks at the payment schedule for the retiree health care trust fund. It concludes that the Postal Service is overpaying. A lot.

If the Postal Service continues the payment schedule required by the Postal Accountability and Enhancement Act of 2006 (the Act), our calculations indicate that the Postal Service could overfund its retiree health care liability by $13.2 billion by the end of fiscal year 2016. The Postal Service could pay on average $4.0 billion less each year from FYs 2009 to 2016 to prefund its retiree health benefits and still achieve the same level of funding anticipated under OPM’s assumptions.

The problem, according to the IG, is that the PAEA estimates 7 percent annual inflation for health care costs; most Fortune 500 companies project 5 percent inflation.

This is a huge mistake. Consider the numbers for this year alone. The Postal Service is scheduled to pay $5.4 billion into the trust fund; it has already made half that payment, with the other half due by September 30. But the IG report says the Postal Service should only need to pay $1.6 billion — a difference of $3.8 billion, or more than half the Postal Service’s deficit for the year.

The Postal Service can’t just decide to pay the reduced amount, of course; Congress would have to amend the PAEA. But this IG report gives added weight to the Postal Service’s claim that the trust fund payments are an unfair burden.

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Towns: Health care bill requires some FEHBP benefit changes

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House Oversight and Government Reform Committee Chairman Edolphus Towns said in a letter yesterday that the health care bill now before Congress would require “some administrative and a small number of benefits-related adjustments” to some plans under the Federal Employees Health Benefits Program. Those changes would be necessary to make sure all FEHBP plans meet the government’s standards of a “qualified health benefits plan,” Towns said in his letter to Ranking Republican Darrell Issa.

The health care bill, HR 3200, would require all citizens to have a minimum level of insurance coverage through a qualified health benefits plan or other form of coverage. Issa asked Towns on July 17 whether federal employees and their dependents enrolled under FEHBP would be in compliance with that requirement.

Towns did not say in his letter what kind of benefit adjustments would need to be made to which plans. Federal Times has put in a call to the committee staff to find out more on this.

Towns said any changes would not need to be made until 2018, and said FEHBP would not need a major overhaul.

Issa had asked Towns to hold a hearing on how the health care bill will affect federal employees, but Towns does not plan to do so.

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NFFE names new secretary-treasurer

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The National Federation of Federal Employees has appointed William Fenaughty as its new national secretary-treasurer.

The post was previously held by William Dougan, who took over the organization after National President Richard Brown died June 30. Fenaughty was approved unanimously by NFFE’s National Executive Council Friday and will take office in the next few weeks, according to a news release.

Dougan said Fenaughty will bring great experience to the job.

There could not be a better man for the job as far as I’m concerned. His knowledge of the issues, opportunities and challenges our union faces brings much-needed expertise to the national office during this period of transition. I look forward to working with him on a daily basis.”

Fenaughty worked for the Defense Department for 34 years at the Watervliet Arsenal in Watervliet, N.Y. Since retiring in 2002, he has served as NFFE’s national assistant directing business representative, the release stated.

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