USPS Needs to Pause Implementation and Deliver Answers to Questions About the Delivering for America Plan

The U.S. Postal Service is efficient at delivering consistent quarterly losses and poor performance, and its ongoing decline is being noticed by Congress and its regulator, the Postal Regulatory Commission (PRC). Postmaster General Louis DeJoy's Delivering for American (DFA) plan, which promised that the USPS would break even in fiscal year (FY) 2023 but instead suffered a $6.4 billion loss, is an abject failure. The projected loss for FY 2024 is $6.3 billion and for FY 2025 it is $5 billion.

Rather than cutting spending, which any business would do when facing such losses, the USPS missed a chance to save money when it converted 125,000 temporary positions into permanent, unionized career positions with lifetime benefits to replace employees who were retiring. Including wages and benefits, this nearly doubled the cost of these workers. And the USPS is not even getting what it should from these employees due to a decline in labor productivity, which dropped by 2.9 percent in FY 2023 despite mail volumes declining by 8.9 percent.

Another cost-saving technique used by the private sector is outsourcing jobs to save money, based on a cost-benefit analysis. But the USPS is contravening this commonsense practice by insourcing jobs that were previously provided by lower-cost, more efficient private sector partners providing transportation and sales functions. The USPS terminated a local transportation contract in Oklahoma, allegedly to save money, but in a lawsuit, it admitted that it had not been required to do a cost-benefit analysis. The USPS is also insourcing the operation of its 13 Surface Transportation Centers, which are contracted mail facilities that distribute, consolidate, and dispatch mail. Again, there is no cost-benefit analysis, and without one, a presumption can be made that the private sector will do the job more effectively and less expensively.

Spending billions of dollars to build a delivery network that is redundant of the private sector, insourcing functions like transportation previously performed by the private sector, dramatically slowing service nationwide and at the same time rapidly increasing postage rates is a failing strategy to turn around the finances of the USPS.

At the April 16, 2024, Senate Homeland Security and Government Affairs Committee hearing on oversight of the U.S. Postal Service, Chairman Gary Peters' (D-Mich.) opening statement expressed his concerns of the changes to the processing and delivery network, including consolidating facilities into larger hubs and reducing daily mail collection. He said that the disruptions and reduction in service have caused costs to go up and "customers are being let down." The USPS not only failed to provide detailed studies but also said there must be more changes before any studies could be performed. Rather than going ahead, he suggested that the Postal Service should provide proof the changes are effective before proceeding any further. Otherwise, service will continue to be harmed and customers will go elsewhere.

On May 1, 2024, the PRC issued an order asking the Postal Service to agree to an advisory opinion from its regulator or show why it is not appropriate. Given the Postal Service's commitment to the DFA, despite its clear failure, it is unlikely that the PRC will get any cooperation, and indeed, a spokesman for the USPS said there is no requirement to seek any opinion about the DFA plan. Nonetheless, the PRC said that it was "hard to see" how a statutorily review would not be required due to the "change in the nature of service."

The negative impact of the reforms was detailed in a March 28, 2024, USPS Office of Inspector General (IG) report. The IG found that consolidation of processing and delivery services to a new regional facility in Richmond, Virginia, led to a decline in service, reduced availability of employees, and more cancelled and late trips to collect and deliver mail. The PRC noted that the claim of temporary disruptions made by postal leadership could not be substantiated with any evidence.

On May 8, 2024, Senators Peters, Susan Collins (R-Maine), Jacky Rosen (D-Nev.) and Cynthia Lummis (R-Wyo.) led a group of 22 bipartisan senators in sending a letter to the Postmaster General and Postal Service Board of Governors supporting the PRC's May 1, 2024, order that the USPS should promptly request an advisory opinion to analyze the complete impact of the changes in its network, including postal facilities and transportation, before making any more changes. The letter made it clear that, "USPS should pause all changes, including administrative approvals and on-the-ground changes, until the PRC completes this study and USPS incorporates the results. USPS must improve service immediately where changes have been implemented, and restore status quo operations as much as possible."

The USPS Board of Governors is meeting tomorrow, May 9, 2024. The agenda includes the quarterly financial and performance service reports. It will be an opportunity for the Board to hold Postmaster General DeJoy accountable and respond to both Congress and the PRC. He needs to be delivering answers and welcoming scrutiny instead of continuing to claim his plan is working.

Public link

Please use the above public link if you want to share this noodl on another website.