Table Of Content.
S. Hrg. 103-584
ANNUAL REPORT OF THE POSTMASTER GENERAL
Y 4, G 74/9: S, HRG. 103-584
ftnnujl Report of the Postnaster eea.
.
HEARING
BEFORE THE
SUBCOMMITTEE ON FEDERAL SERVICES,
POST OFFICE, AND CIVIL SERVICE
OF THE
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED THIRD CONGRESS
SECOND SESSION
MARCH
24, 1994
Printed for the use of the Committee on Governmental Affairs
U.S. GOVERNMENT PRINTING OFFICE
78-060cc WASHINGTON : 1994
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402
ISBN 0-16-044516-7
.
/ S. Hrg. 103-584
ANNUAL REPORT OF THE POSTMASTER GENERAL
I. G 74/9: S, HRG. 103-584
nl Report of the Postnaster Gea.
.
HEARING
BEFORE THE
SUBCOMMITTEE ON FEDERAL SERVICES,
POST OFFICE, AND CIVIL SERVICE
OF THE
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED THIRD CONGRESS
SECOND SESSION
MARCH 24, 1994
Printed for the use of the Committee on Governmental Affairs
U.S. GOVERNMENT PRINTING OFFICE
78-060cc WASHINGTON : 1994
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402
ISBN 0-16-044516-7
COMMITTEE ON GOVERNMENTAL AFFAIRS
JOHN GLENN, Ohio, Chairman
SAM NUNN. Georgia WILLIAM V. ROTH, Jr., Delaware
CARL LEVIN, Michigan TED STEVENS, Alaska
JIM SASSER, Tennessee WILLIAM S. COHEN, Maine
DAVID PRYOR, Arkansas THAD COCHRAN, Mississippi
JDOASNEIEPLH KI.LAIKEABKEAR,MAHaNw,aiCionnecticut JROOBHENRMTcCF.AIBNE,NNArEiTzTon.aUtah
BYRON L. DORGAN, North Dakota
Leonard Weiss, StaffDirector
Franklin G. Polk, Minority StaffDirector and ChiefCounsel
Michal Sue Prosser, ChiefClerk
Subcommittee on Federal Services, Post Office, and Civil Service
DAVID PRYOR, Arkansas, Chairman
JIM SASSER, Tennessee TED STEVENS, Alaska
DANIEL K. AKAKA, Hawaii THAD COCHRAN. Mississippi
Edward J. Gleimsui, StaffDirector
Patricia A. Butler, Minority StaffDirector
Neuicy Langley, ChiefClerk
(II)
CONTENTS
Opening statements: Page
SenatorPryor 1
SenatorStevens 3
SenatorCoverdell 4
SenatorCochran 36
WITNESSES
Thursday, March 24, 1994
Hon. Marvin Runyon, Postmaster General and Chief Executive Officer, U.S.
Postal Service; accompanied by Michael S. Coughlin, Deputy Postmaster
General, Joseph R. Caraveo, Executive Vice President and Chief Oper-
ational Officer; Mary S. Elcano, SeniorVice President and General Counsel;
and MichaelJ. Riley, SeniorVice President and ChiefFinancial Officer 9
APPENDIX
Prepared statement ofSenator Cohen 41
Annual Report ofthe PostmasterGeneral 43
Letterwith enclosure dated March 18, 1994 79
Questions submitted by SenatorPryor 84
U.S. Postal Service Total FactorProductivityAnnual DataTables
1963-1993 89
Questions submitted by SenatorCoverdell 182
Questions submitted by SenatorCohen 187
Questions submitted by SenatorSasser 190
Financial & OperatingStatements 193
Questions submitted by SenatorStevens 205
(III)
ANNUAL REPORT OF THE POSTMASTER
GENERAL
THURSDAY, MARCH 24, 1994
United States Senate,
Subcommittee on Federal Services, Post Office,
AND Civil Service, Committee on Governmental Affairs,
Washington, D.C.
The Subcommittee met, pursuant to notice, at 10:05 a.m. in
Room SD-342, Dirksen Senate Office Building, Hon. David Pryor,
Chairman ofthe Subcommittee, presiding.
Present: Senators Pryor, Stevens, Cochran, and Coverdell [ex
officio].
OPENING STATEMENT OF SENATOR PRYOR
Senator Pryor. Good morning. Our meeting will come to order.
If we look a little bit sleepy this morning, it is because we had to
come back down to the Hill about 12:30 and cast a couple ofvotes,
and so it has been kind of a long evening for the Senators involved
and perhaps some of you, and we appreciate all ofyou being here.
We want to welcome you.
We especially want to welcome our Postmaster General, Marvin
Runyon. This is his second oversight hearing, if I recall. We have
a number ofissues to discuss here today with the Postmaster Gen-
eral. We think that your tenure thus far, Mr. Postmaster General,
has been very eventful £ind sometimes controversial. It has been
that kind ofyear for the Postal Service.
In fact, Mr. Runyon's entire tenure has been marked, I would
say, with non-stop activity and initiative. While concerns have been
raised about the results, there is no doubt that the reorganization,
along with aggressive advertising, a new logo and increased focus
on customer service, have put the Postal Service at the forefront
ofthose Federal entities attempting to reinvent themselves.
It is a period, I think, Mr. Postmaster General and my col-
leagues, of restructuring and experimentation. It is very timely,
and as we approach the end of this century there is some uncer-
tainty as to how the Postal Service will ultimately fit in our Na-
tion's evolving communications landscape. Very simply, the deci-
sions made now will likely determine the basic viability ofthe Post-
al Service into the next century.
As we all know, this hearing is required by law, an annusd over-
sight hearing of the U.S. Postal Service. It is especially opportune
at this moment because earlier this month the Postal Service
Board ofGovernors approved a request for an across-the-board rate
increase of 10.3 percent.
(1)
While the business mailers are supportive of this request, it is
my understanding that individual posted patrons have expressed
their displeasure and concerns for the future. I must confess that
I am somewhere in between, Mr. Postmaster Greneral, relieved that
a lower request was agreed upon, but apprehensive that the Postal
Service may still need an even larger increase in the very near fu-
ture. So I want us to discuss that this morning, £ind I know my col-
leagues will want to enter into that discussion.
I say this frankly because the economic figures are not encourag-
ing. The Postal Service is currently operating well below its pro-
jected financial performance gosds. The workforce is approaching
pre-structuring levels, while overtime hours continue to rise. Un-
less some real financial improvement is seen over the next year,
the 10.3-percent increase may not provide enough revenue for the
Postal Service to meet its operating costs in even the first year that
these new rates are in effect.
On the brighter side, independent tracking surveys suggest that
real progress is being made in some areas. I wish more, but in
some areas. The Postmaster General has stressed customer service,
I think, like no other Postmaster Greneral in history, and his focus
seems to be working its way through the Postal Service. —
Unfortunately, there are continuing problems with deliver—y ^we
are going to talk about some of those problems this morning cou-
pled with a number of highly publicized blunders, that have made
it especially difficult for the Postal Service to shake its negative
image. The only real answer is a sustained level of solid perform-
ance over the next several years, which brings us to what I see as
the Postal Service's simple but daunting mission, stabilizing its fi-
nancial position while moving the Nation's mail more efficiently
than ever before. This is no easy assignment, but it must be done.
Mr. Postmaster General, you have been here for now 2 years and
I am anxious for you to share with us your views ofhow the Postal
Service is doing and what we can expect in the coming year. While
there are important issues to address, I do not intend for this hear-
ing this morning to be merely a forum for pessimism or dire—pre-
dictions. Instead, I hope—that we can talk openly and frankly this
is the people's business about the things that need to be done not
only to correct existing problems, but also to reinforce positive
trends.
Mr. Postmaster General, we welcome you.
PREPARED STATEMENTOF SENATORPRYOR
1 want to welcome all ofyou here today. We are pleased to welcome Postmaster
General Marvin Runyon to his second oversight heeiring before this Subcommittee.
We have a number of issues to discuss here today. It has been an eventful and
sometimes controversial year for the Postal Service. In fact, Mr. Runyon's entire
tenure has been marked by nonstop activity and initiative. While concerns have
been raised about the results, there is no doubt that the reorganization, along with
aggressive advertising, a new logo, and increased focus on customer servicehave put
the Postal Service at the forefront ofthose Federal entities attemptingto "reinvent"
themselves.
This period of restructuring and experimentation is certainly timely. As we ap-
proach the end ofthe century, there is some uncertainty as to how the Postal Serv-
ice will ultimately fit in our Nation's evolving communications landscape. Very sim-
ply, the decisions made now will Ukely determine the viability ofthe Postal Service
intothenextcentury.
Our hearing this morning is especially opportune because earlier this month, the
Postal Service Board ofGovernors approved a request for an across-the-board rate
increase of 10.3 percent. While the business mailers are supportive ofthis request,
individual postal patrons have expressed their displ—easure and concern for the fu-
ture. I must confe—ss that I am somewhere in between relieved that a lower request
was agreed upon but apprehensive thatthe Postal Service may need an even larg-
erincrease in thevery nearfuture.
I say this because, frankly, the economic figures are not encouraging. The Postal
Service is currently operating well below its projected financial performance goals.
The workforce is approaching pre-restructuring levels, while overtime hours con-
tinue to rise. Unless some real financial improvement is seen over the next year,
the 10.3 percent increase may not provide enough revenue for the Postal Service to
meet its operating costs, for even the first year that those new rates are in effect.
On the bright side, independent tracking surveys suggest that real progress is
being made in some areas. Mr. Runyon has stressed customer service like no other
Postmaster General in history, and his focus appears to be working its way through
the Postal Service. Unfortunately, continuing problems in major delivery areas cou-
pled with a number ofhighly-pubUcized blunders have made it especially difficult
forthe Postal Service to shake its negative image.
The only real answer is a sustained level ofsolid performance over the next sev-
eral years. Whic—h brings us to what I see as the Postal Service's simple but
daunting mission stabilizing its financial position while moving the Nation's mail
more efficiently than ever before. This is no easy assignment, but it must be done.
Mr. Runyon has now been Postmaster General for almost 2 years. I am anxious
for him to share with us his view ofhow the Postal Service is doing, and what we
can expect in the coming year. While there are important issues to address, I do
not intend for this hearing to be a forum for pessimism or dire predictions. Instead,
I hope that we can talk openly today about the things that need to be done not only
to correctexistingproblems, butalsoto reinforce positive trends.
Mr. Runyon, I again welcomeyou. I lookforward to hearingyourstatement.
Senator Pryor. I jdeld at this time to my colleague, Senator Ste-
vens. By the way, we are very pleased to havejoining us this morn-
ing our colleague from Georgia, Senator Coverdell, who has a series
ofquestions and, I am sure, a statement.
Senator Stevens?
OPENING STATEMENT OF SENATOR STEVENS
Senator Stevens. Well, Mr. Postmaster General, I hope you are
more awake than we are. I want to start off by thanking you and
the Chairman for agreeing to postpone the hearing. It was sched-
uled earlier and, as you know, I had a back operation and I did
very much want to be here today and be with you at this annual
review ofyour stewardship ofthe Postal Service.
We get a lot of questions as we travel around the country about
the Postal Service, and many people look at it as being in a dif-
ficult period. I remember the real difficult periods of the old Post
Office Department. Mr. Postmaster General, I think you have
tracked to a great extent the changes that come about on the pri-
vate enterprise scene in the United States. You had a restructur-
ing. You had a very difficult time for yourselfand postal employees
in terms ofmeeting some ofthe changes in technology.
Above all, I do think that you have had a difficult time fi'om the
postal meter fraud to other issues you have had to face. There has
been the new nationsJ air transportation contract. I am sure we are
going to have some questions about the executive bonus that ought
to go on the record.
But as a practical matter, I want you to know as one who has
witnessed now a quarter ofcentury ofchange in the Post Office De-
partment that I think this period you have been through has been
a beneficial one for the future of the United States Postal Service.
We do have challenges, like from my good friend on the right, lit-
erally and figuratively, and he has some questions for you. They
are healthy, too, but my State still depends upon the United States
Postal Service probably more than any other area of the country,
as you well know, and I thank you for coming up there last year
with your team to look at Alaska.
We do have the duty, I think, to make certain that you have the
authority and the basic law and the assistance that we can give
you to insure that the Postal Service goes through this transition
and comes out ofthis difficult period. I think before we are through
here today, people will understand why we have confidence in your
stewardship and why we are very pleased to have an opportunity
to go through with you some of the issues that face the great de-
partment you head. I am glad to see all ofyour colleagues with you
today. I am sure there are going to be some questions for them, too.
Mr. Chairman, I can't anticipate the questions and concerns that
are going to be expressed here this morning, but I do know that
this is as good a team running the Postal Service that I have seen
in the time particularly since there has been a Postal Service. So
thank you for agreeing to be here, Mr. Postmaster General. It is
a function required by law ofall ofus.
Thank you very much, Mr. Chairman.
Senator Pryor. Thank you. Senator Stevens.
Senator Coverdell, we welcome you.
OPENING STATEMENT OF SENATORCOVERDELL
Senator Coverdell. Well, Mr. Chairman, I appreciate the oppor-
tunity to be here this morning. I have a prepared opening state-
ment and I wonder if I might submit it to the Subcommittee for
the record and then make just general statements for a moment or
two.
Senator Pryor. Absolutely.
PREPARED STATEMENTOF SENATORCOVERDELL
Thankyou, Mr. Chairman
Let me begin by saying how much I appreciate the opportunity tojom you today
as this Subcommittee meets to hear the annual report of the U.S. Postal Service
from PostmasterGeneralRunyon.
As you know, Mr. Chairman, my interest in today's heanng lies primarily with
a Uttle known enforcement practice associated with the Private Express Statutes
and used by the United States Postal Service (USPS) to conduct audits and issue
fines against private businesses. I know you share my concerns on this matter, as
evidenced by your letter with Senator Sasser to the Postal Service dated August 3,
1992. Also like you, Mr. Chairman, I am aware ofthe concerns voiced by the other
side regarding this issue, and I would like to make it clear from the very beginmng
thatthe focus ofmy efforts is not to repeal or damage the Private Express Statutes;
itis simplyto make themmore reaUstictotoday'smarketplace.
theI fUi.rSst.cPaomstealtoStehrivsiciesshueadinbeOectnobeenrgaogfe1d99i3n,awhpreanctIicreeaodf awuidtihtisnogmeansdur&priimsegtphrait-
vate businesses who had used private express mail services instead of the Postal
Service's Priority Mail. Reports in the Memphis Commercial Appeal, the Atlanta
Constitution and the New York Daily News stated that the Postal Service had^au-
dited corporations and fined them as much as $500,000 in "back postage fees, for
shipping non-urgent mail through couriers such as Airborne Express, Federal Ex-
press or United Parcel Service. More surprising than the fines, however, was that
the Postal Service was the sole arbiter orjudge as to what constituted "urgent mail
forthe business usingprivate express mail service.
The Postal Service now admits to some 41 audits and fines against private busi-
nesses totallingmore than $1 million duringthe past5 years.
