The clock ran out on revamping the U.S. Postal Service in 2004, and it looks like the clock could run out again this year.

Sens. Susan Collins (R-Maine) and Thomas R. Carper (D-Del.), chief sponsors of a bill that would overhaul Postal Service business operations, announced yesterday that postal officials support a key provision in their bill.

Collins, chairman of the Senate Homeland Security and Governmental Affairs Committee, would require the Postal Service to operate under a cap linked to the consumer price index, providing flexibility in setting mail rates as long as the average came out to equal inflation. Her plan would provide a fresh start to rate setting and wipe out terms used in case law for the last 30 years.

That has brought a protest from Sen. Christopher S. Bond (R-Mo.), who has put a hold on the Collins bill. He has called for retaining use of a "fair and equitable" standard to ensure that the post office cannot play favorites when setting rates. The House has approved a postal overhaul bill with the fairness standard.

But Collins believes a price cap will ensure fairness, a point endorsed by Thomas G. Day, a postal executive, in a letter to Collins this week. The Senate bill, Day wrote, "ensures the Postal Service cannot unreasonably discriminate between mailers."

The Postal Service, he said, is "strongly opposed" to Bond's effort to modify the bill with a "fair and equitable" amendment.

The Collins-Bond impasse has gone on for three months. During this period, the postal board of governors went public with a list of concerns and said it did not want legislation that would give postal regulators greater sway over internal operations of the post office.

The White House also has problems with the legislation, opposing provisions in the House and Senate bills that would provide some financial relief to the Postal Service.

One dispute concerns whether the Postal Service or the Treasury Department should pay $27 billion in retirement benefits to postal workers for their military service. That obligation was placed on the Postal Service in 2003, even though historically the Treasury has covered such costs.

Another dispute involves the fate of an escrow account set up to hold savings of about $3 billion yearly from postal pension payments. A review by the administration discovered that the Postal Service had been overpaying on some pension obligations. Eliminating the escrow account would let the Postal Service spend the money for capital improvements or hold down rate increases.

The White House is wary that the pension issues could add to budget deficits, and some lobbyists in the mailing industry think the administration will try to kill any compromise bill that emerges from House-Senate negotiations.

NSPS Legal Dance

The government and federal unions have mapped out procedures for a legal challenge to the Pentagon plan for overhauling workplace rules for Defense Department civil service employees.

Under the agreement, presented to a federal judge yesterday for approval, the Pentagon will not implement any changes in labor-management relations or employee appeals procedures before Feb. 1. A coalition of federal unions, led by the American Federation of Government Employees, has filed a lawsuit to stop changes in those areas.

The agreement lays out a series of dates for the unions and the government to file motions with the judge, starting Nov. 23 and running through Jan. 5.

The agreement permits Defense to continue working on internal directives to launch the National Security Personnel System and, if it chooses, to continue collaborating with the unions and the Office of Personnel Management on development of NSPS.

Defense had planned to start its new labor-management rules shortly after Thanksgiving. The Pentagon plans to roll out the first phase of its pay-for-performance system in February.

"AFGE is pleased that we have worked out a method of challenging the legality of NSPS in an orderly fashion. And if that results in the delay of implementation, which it does, that is a useful byproduct of the lawsuit," said Joseph Goldberg, assistant general counsel at the union.

Bush administration officials, including Gordon England, the acting deputy defense secretary, and union officials are scheduled to testify before a Senate committee this morning on NSPS.