Despite maxing out a $15 billion line of credit with the U.S. Treasury last month, the U.S. Postal Service can scrape by at least through March.
That’s according to Ruth Goldway, chair of the Postal Regulatory Commission, the agency that oversees the Postal Service. The commission meets with USPS officials following the release of each quarterly financial report, the last of which was in August. In the ensuing review, the Postal Service “projected that they would be able to continue operating without disruption until at least midway through the fiscal year without any action by Congress,” Goldway said in a statement to Federal Times. Fiscal 2013 began this month; the mid-point arrives at the end of March. The projection included the presumption that the Postal Service would hit the $15 billion borrowing cap, a commission spokeswoman said.
The mail carrier reached that unwelcome threshold Sept. 28. In an email, USPS spokesman Dave Partenheimer acknowledged that cash flow will be a particular concern in the second half of fiscal 2013 unless lawmakers approve a comprehensive fix to return the Postal Service to long-term financial stability (a very big if at this point). While declining to comment on any particular date, Partenheimer added that the Postal Service will prioritize payments to ensure that workers and suppliers get paid. Customers “do not need to worry about any interruption in our operations.”
One other factor in the Postal Service’s favor: it expects to pick up a fresh $1.3 billion in fiscal 2013 revenue courtesy of a series of rate hikes scheduled to take effect in late January.
Here’s the dope: Postal Service spent more than $31 million on Lance Armstrong sponsorship, documents indicate
The U.S. Postal Service is getting plenty of free media exposure today, but probably not the kind USPS execs were hoping for when they ponied up big bucks years ago to be a primary sponsor of cyclist Lance Armstrong’s team.
Instead, this is how the organization appears in the U.S. Anti-Doping Agency’s statement on the results of its investigation into Armstrong’s alleged use of performance-enhancing drugs: “The evidence shows beyond any doubt that the U.S. Postal Service Pro Cycling Team ran the most sophisticated, professionalized and successful doping program that sport has ever seen.”
That should sell a lot of stamps.
Of course, there’s no indication that the Postal Service itself had any role in the alleged doping (and please, hold the jokes about speedier delivery), but, as the sponsor, the mail carrier’s name turns up dozens of times in the anti-doping agency’s 202-page report.
USPS spokeswoman Patricia Licata had no comment on the findings. While the Postal Service sponsored the team from 1996 to 2004, officials could not confirm how much was spent “because it was so long ago,” she said in an email. The total was substantial, however, according to contract documents posted online.
A 2003 contract modification, for example, pegged the amount at $31.8 million, but leaves unclear the duration of the agreement.
Postal pooh-bahs may have gotten something out of the deal, too. Another document says that Tailwind Cycling would provide “a complete hospitality package for selected guests of the sponsor at the Tour de France.”
The package would include lodging and meals, as well as transportation in Paris, the document said. Tailwind also agreed to “customize the VIP package for postal officials attending and will bill back those charges to the United States Postal Service for their respective lodging, meals, transportation and other related charges.”
Nice, n’est-ce pas?
[This post has been updated]
For anyone who’s keeping count, a grand total of 4,189 postmasters took advantage of a $20,000 buyout/early-out deal, according to a final tally from the U.S. Postal Service. The vast majority of those left in July; several hundred more departed in August and September.
USPS executives announced the package in May at the same time that they unveiled plans to reduce customer service hours at some 13,000 post offices. The final number is a bit more than the Postal Service had predicted back in August; it represents about one-fifth of all postmaster positions on the rolls earlier this year.
For clerks, drivers and anyone else out there represented by the American Postal Workers Union, if you’re considering (or have already made a decision on) taking the $15,000 buyout offer announced this week, we at Fed Times are interested in speaking with you for a story about the reaction this offer is getting from the USPS career workforce.
Just send me an email at email@example.com and let me know how to reach you and what’s the best time.
Key members of the U.S. Postal Service’s executive lineup will be back in their normal jobs as Ellis Burgoyne, the agency’s chief information officer, returns to work next Monday, according to a notice on an official USPS web site.
Burgoyne has been out since June because of illness. With his return, Joe Corbett—who has been filling in as CIO—will return to his regular job as the Postal Service’s chief financial officer; Steve Masse, who has been acting CFO, will revert to his normal position as vice president for finance and planning; and Cynthia Sanchez-Hernandez, who has been handling Masse’s responsibilities, resumes her job as manager of finance and planning.
Some seven months after inquiring about overseas travel by Postal Regulatory Commission Chairman Ruth Goldway, Sen. Tom Carper is pressing some recommended changes for the commission as a whole. So far, it’s not clear whether the five-member oversight panel will go along.
In a Sept. 6 letter to Goldway, Carper questioned “the amount of time and resources devoted to international travel in recent years, particularly as the commission has struggled at times to fulfill its higher-priority statutory responsibilities in a timely manner.” He urged the PRC to limit such trips to what is “truly necessary” to fulfill its legal role in setting international postal policy. He also pressed the PRC to do more to document that it has explored other options—such as phone, fax and email—to conduct business before putting someone on a plane. Carper, D-Del., chairs the Senate subcommittee that oversees the commission and the U.S. Postal Service.
In a Sept. 11 reply, Goldway said she appreciated the “thoughtful review” and accompanying recommendations, but committed only to giving “serious consideration to those recommendations, which are in the spirit of improvements we have already made to our policies.” She added that the commission has come in “more than 30 percent” under its 2012 travel budget.
A PRC spokeswoman confirmed Friday that Goldway and two commission staff members are attending the Universal Postal Union’s quadrennial congress, which got under way Monday in Doha, Qatar, according to an official web site. Goldway is serving as deputy head of the U.S. delegation, the spokeswoman, Gail Adams, said.
Goldway, however, will be leaving for the event Oct. 3 and returning to Washington on Oct. 12, Adams added in an email. One staffer is already in Doha, while the other leaves today.
As Federal Times reported in February, Goldway at that point had taken 34 trips –11 of them overseas–costing almost $71,000 since becoming PRC chair in August 2009. Her predecessor, Dan Blair, had taken 25 trips worth some $59,000 during a slightly longer tenure. Since then, Goldway has attended a UPU meeting in Switzerland, as well as a weeklong “Postal Regulatory Dialogue” in Rio de Janeiro, where she was a speaker, according to commission records obtained by Federal Times. As of late last month, Goldway was the only commissioner to go abroad this calendar year, although some PRC staff have also attended overseas events.
Goldway has staunchly defended travel as relevant to her work and the commission’s role in helping to set international postal policy. “I know that travel raises questions,” she said in an interview earlier this year, “but I really feel that I’m doing an honest job and the right thing for the Postal Regulatory Commission and the country.”
In case anyone missed it, (this particular FedLine correspondent was away when the decision came down), the Postal Regulatory Commission last week officially dismissed a union complaint seeking to block the U.S. Postal Service’s downsizing of its mail processing plant network.
The complaint, filed in June by the American Postal Workers Union, argued in part that the Postal Service had first to receive an advisory opinion from the PRC on the proposed changes to first-class mail delivery standards that are accompanying the downsizing. But while that approach is “preferred,” it’s not mandatory, the five-member commission ruled in its 16-page order.
The decision is no surprise, given that the commission had earlier declined to issue an emergency injunction to stop the first round of 46 plant consolidations from going forward. The Postal Service wrapped up that round last month and–as previously announced-is taking a breather for the rest of the year “to allow employees to fully focus on the processing and delivery of election mail and the volumes of mail expected during the busy fall and holiday mailing seasons,” a spokeswoman said in an email.
In all, the Postal Service plans to close or consolidate roughly half of its plants during the next two years. The agency currently has 433 processing facilities.
“The wheels of justice turn slowly, but grind exceedingly fine,” a proverb goes.
By that standard, it should come as no surprise that the U.S. Postal Service now has until Oct. 9 to respond to allegations in a $180 million lawsuit filed by contractor Northrop Grumman over the handling of a major automation project.
The suit was filed in early May, with the Postal Service’s response originally due two months later. But Federal Court Claims Judge George Miller later pushed back the deadline until Sept. 3 and—in a ruling this month—delayed it again to Oct. 9 following a motion from USPS attorneys that they still need more time.
While those lawyers are conferring with Postal Service employees and reviewing documents, “scheduling issues and the limited availability of relevant USPS personnel have delayed progress toward filing a response,” Miller wrote in an order summarizing the mail carrier’s rationale for a second postponement. According to the Postal Service, Northrop Grumman did not object.
The U.S. Postal Service’s forthcoming cutbacks at thousands of post offices have gotten a qualified thumbs up from an independent overseer.
In an advisory opinion released today, the five-member Postal Regulatory Commission said that the Post Office Structure Plan, or POStPlan, makes sense from a public policy perspective, but added a few recommendations, such as giving local customers a clear choice between keeping an individual post office open with reduced hours or closing it altogether and providing replacement delivery service.
Under the plan, announced in May, the Postal Service intends to reduce customer service “window” hours to as little as two hours a day at some 13,000 mostly rural post offices in hopes of eventually saving about $500 million annually.
The commission’s opinion is non-binding (in fact, the Postal Service is already winding up a buyout and early retirement deal for postmasters that’s linked to the plan), but its endorsement is further evidence that this approach is a much easier sell than the Postal Service’s now discarded strategy of closing up to 3,700 post offices.
“Given the difficult financial reality facing the Postal Service, I am relieved that the Postal Regulatory Commission has approved the Postal Service’s initial cost-cutting measures,” Sen Tom Carper, D-Del., said in a statement, adding that he is “grateful” that the panel acted expeditiously.
“I will be carefully reviewing the recommendations offered by the commissioners and plan to closely monitor the Postal Service’s implementation of its plan to ensure that it’s done appropriately,” Carper, who heads the Senate subcommittee with responsibility for the mail carrier, continued. “That being said, the hard truth is that cost-saving efforts of this scale are not enough on their own to fundamentally fix the Postal Service’s financial problems. ”
No doubt about it: The U.S. Postal Service’s third-quarter financial report was–on the surface–a bloodbath. With $5.2 billion in red ink spilled in just three months, you might think Freddy Krueger was keeping the books.
Amid all the gore, though, the numbers reflect some faint flickers of hope. The question is whether those glimmers represent: (1) A blip; or (2) An early sign that finances are at least stabilizing, if not actually turning around.
USPS leaders are naturally eager to accentuate the positive, particularly after this month’s failure to make a required $5.5 billion payment into a fund for future retiree health care. During a conference call with reporters last Thursday, acting Chief Financial Officer Stephen Masse called it “unfortunate” that attention focused on those requirements often overshadows the agency’s success “in growing the business.” A case in point was the continued expansion of package and shipping services, where revenue was up by about 10 percent (or almost $950 million) for the first nine months of fiscal 2012 from last October through June.
Longer-term, there is evidence that the Postal Service’s financial slide is bottoming out. Here are the mail carrier’s operating revenues at the nine-month point for every fiscal year since 2007. (Note, incidentally, the recession’s devastating impact in 2009.)
2007: $56.3 billion
2008: $57.2 billion +1.7%
2009: $52.4 billion -8.4%
2010: $51.1 billion -2.4%
2011: $49.9 billion -2.4%
2012: $49.5 billion -.72%
As you can see, revenue for this year almost (but not quite) held steady with last year’s figure. The numbers are still headed in the wrong direction, but at least not as quickly. Other benchmarks aren’t so encouraging. Total mail volume dropped 3.6 percent in the three-month quarter from April through June, a significantly larger decline than in the same period a year ago.
At the same time, however, two big restructuring/downsizing efforts mentioned in the report are gaining traction, thanks in part to what appears to be some politically astute retrenchment.
Just four months ago, for example, a plan to close up to 3,700 post offices was withering on Capitol Hill. For lawmakers eager to score election-year points, defending the sanctity of small-town P.O.s was a godsend. Also in trouble was the push to close or consolidate almost half of about 460 mail processing plants by the end of next year.
What happened? In May, USPS officials dropped the post office closure plan in favor of cutting customer service hours at some 13,000 facilities–but leaving them open. So far, Congress is going along; the projected long-term savings of a half-billion dollars annually are actually more than what had been anticipated from the original closing plan.
On consolidation of the processing plant network, the Postal Service backed off its original schedule and deferred most of the pain until after the November elections. Still, it has made a start toward what is supposed to be a savings of some $2 billion a year.
Of course, any progress is relative and the list of long-range challenges is daunting: The continued loss of business to the Internet; workers’ compensation costs that threaten a cash crunch this October; and Congress’ reluctance thus far to drop or soften the retiree health care pre-funding requirement. Also, the Postal Service is currently benefiting from a boomlet in election-year mail that could bring in an extra $300 million this fall. Come January and revenues will resume their nosedive, said Gene del Polito, president of the Association for Postal Commerce.
Still, it’s worth remembering that at this time a year ago, USPS officials were predicting that the agency would be broke by now. That didn’t happen and it suggests some unexpected–and badly needed–resilience.