USPS losing $25 million daily with ‘broken business model’

The U.S. Postal Service could become “a significant burden to the taxpayer” if it does not get needed flexibility to change its business operations, Postmaster General Patrick R. Donahoe told Congress Wednesday.

(David Goldman/AP) (David Goldman/AP)

Appearing before a congressional hearing for the first time since the Postal Service had to back away from a plan to reduce delivery days from six to five, Donahoe  told the House Oversight and Government Reform Committee that “the Postal Service is currently operating with a broken business model.”

“We are losing $25 million dollars every day and we are on an unsustainable path,” he added.

Donahoe said USPS needs the flexibility to implement five-day delivery and:

* “To develop and price products quickly.”

* “To control our healthcare and retirement costs.” “To switch to a defined contribution retirement system for new employees.”

* “To quickly realign our mail processing, delivery and retail networks.”

* “To develop “a more streamlined governance model.”

* “And, we need more flexibility in the way we leverage our workforce.”

Donahoe announced in February that a five-day delivery schedule would save $2 billion annually and would begin in August. He had to change course, he said, after congressional action “specifically designed to prevent the Postal Service from changing its delivery schedule.  According to this law, we are now required to deliver mail as if it were the year 1983.”

At the hearing, Donahoe sat at the witness table next to Fredric V. Rolando, president of the National Association of Letter Carriers (NALC). In his written testimony, Rolando said Donahoe “wants to degrade its last-mile delivery network by cutting Saturday delivery.”

Last July, 7,000 delegates to the NALC convention  unanimously approved a “motion of no confidence” in Donahoe.

“[B]ecause we are convinced that the business strategy the Postmaster General (PMG) is following is doomed to failure,” Rolando said in his written statement, “we have called for the PMG’s resignation. We respectfully think you should too.”

Though Donahoe’s five-day plan was blocked, he views it as a delay, rather than a defeat.

“Our customers require certainty – especially about something as fundamental as our delivery schedule,” he said. “And so, we announced that we would delay implementation of our new schedule until we gained legislation giving us the ability to move forward.”

Donahoe was asked after the hearing about the letters containing suspicious substances sent to Congress and President Obama in the last two days. Asked how many postal employees would have handled the mail items, he said: “It’s a fairly small number because everything is automated…none of this mail would be hand-sorted.”

He also said the mail would have passed through postal facilities in Memphis, Capitol Heights, Md. and on V St NE in Washington and that a “couple hundred people” work in each facility.

This story has been updated.

Twitter: @JoeDavidsonWP

Joe Davidson writes the Federal Diary, a column about federal government and workplace issues that celebrated its 80th birthday in November 2012. Davidson previously was an assistant city editor at The Washington Post and a Washington and foreign correspondent with The Wall Street Journal, where he covered federal agencies and political campaigns.



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