Postal Regulator Tells Congress of Failures in Consolidation Planning

In a rush to redesign its nationwide network of facilities, the Postal Service acted on several misguided and poorly rationalized assumptions, a Postal Regulatory Commission official told Congress in late July.

In testimony before a House of Representatives subcommittee, John D. Waller also cited a lack of consistency in how proposed consolidations are reviewed; a failure to develop criteria for approval or disapproval of proposed consolidations; a failure to seek public input; and “severe tardiness and errors in analysis in post-consolidation reviews.”

Commenting on Waller’s statement, APWU President William Burrus said, “This testimony confirms our members’ criticism of the USPS plan for network realignment. It echoes and reinforces our fundamental objections.”

Waller testified, “The Postal Service recognized that its network redesign program could have a significant impact on service.” However, he said, USPS planners failed to properly consider service implications while making the assessments that are the foundation for the Evolutionary Network Design (END) program:

• The Postal Service failed to provide a reliable estimate of the volume of mail that would experience a downgrade (or upgrade) in the number of days delivery would take; 
• There was no estimate of how often the Postal Service would need to move up collection times; and
• There was no consideration of whether consolidations would result in mail being delivered later in the day.

Another basic flaw in the END program, Waller said, “was the determination to consolidate operations, where possible, from smaller plants into larger plants, rather than from less productive plants into more productive plants.”

Waller, the PRC’s director of Rates, Analysis, and Planning, told the House Subcommittee on Federal Workforce, Postal Service, and the District of Columbia that another problem was that “transportation was not adequately considered in the Network Development plans.”

He testified, “It was not clear how transportation would be realigned since the backbone of the network, the Regional Distribution Centers, was shrouded in uncertainty.” The Postal Service estimated there could be “anywhere from 28 to 100” RDCs, he noted. “To the Commission, it seemed risky to reconfigure the network without first having a better understanding of the nodes and transportation links that would form this backbone.”

Waller also noted that planners failed to consider a major change in mail processing – the pending introduction of the Flat Sequence Sorting machines. “These machines are huge, expensive, and were not incorporated in the planning models. Consolidations implemented without considering the addition of these machines may now require unanticipated facility expansions and use of annexes,” he said. 

Noting that the PRC “endorsed the goals, if not the details, of the Evolutionary Network Development program,” Waller testified that the “Commission’s analysis identified significant problems that could result in a less efficient network with slower service.”

The APWU has waged a vigorous campaign against ill-conceived plant consolidations, citing the detrimental effect they were likely to have on service. The union sought to inform the public and elected officials about the network realignment plan — airing television and radio ads in some affected locations, and staging pickets and other protests. The APWU also was an active participant in PRC proceedings that reviewed END, challenging the Postal Service’s methodology, as well as its conclusions.

The union also condemned the Postal Service’s failure to adequately seek input from affected communities, and encouraged residents and activists to attend public meetings when they were held. At PRC hearings, Margaret L. Yao, an expert in “strengthening citizens’ voices in public decision-making,” testified on the union’s behalf about the Postal Service’s failure to adequately consult with the public.

Regarding the lack of public input on its plan, Waller said that the Postal Service, in apparent recognition of criticisms leveled against it, “revised its original plan for public involvement.” He said, “Among other things, public meetings have been added during the Area Mail Processing feasibility study phase, a communications plan (including public notice) has been introduced for Regional Distribution Center activations, and a formal plan has been developed to guide the Post-Implementation Review process.”

The public has an interest in being notified much earlier in the process, Waller said. “This public interest is not unreasonable in light of what the Evolutionary Network Development program puts into play for individual citizens, businesses and suppliers, and affected communities. The consequences, in fact, appear to have the potential — at least for some stakeholders — to be far-reaching. Accordingly, the Commission recommended that the realignment process be supplemented with additional procedures for public input.

“Communities sought disclosure of more information on a broader range of topics, more meaningful inclusion in town hall meetings, and the opportunity to develop alternatives as well as provide feedback on the results of consolidations.”

While the Postal Service should have flexibility and authority to adjust its operations to meet its business needs, Waller said, “It must be accountable and transparent to all postal customers, and be sensitive to the needs of the communities it serves.”

The PRC is an independent agency that has exercised regulatory oversight over the Postal Service since its creation by the Postal Reorganization Act of 1970. Its primary function is to conduct public hearings on rate proposals, mail classification, and major service changes. Based on these on-the-record hearings, the PRC makes recommendations to the Postal Service Board of Governors.

Regulations establishing service standards are due this December, and a report to Congress is due in June 2008.