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OVERSIGHT OF THE U.S. POSTAL SERVICE: INSPECTOR GENERAL OF THE U.S.
POSTAL SERVICE, GOVERNORS OF THE U.S. POSTAL SERVICE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON THE POSTAL SERVICE
of the
COMMITTEE ON
GOVERNMENT REFORM
AND OVERSIGHT
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
__________
MARCH 19, 1997
__________
Serial No. 105-39
__________
Printed for the use of the Committee on Government Reform and Oversight
U.S. GOVERNMENT PRINTING OFFICE
43-746 WASHINGTON : 1997
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
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COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California
J. DENNIS HASTERT, Illinois TOM LANTOS, California
CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jr., West Virginia
CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York
STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California PAUL E. KANJORSKI, Pennsylvania
ILEANA ROS-LEHTINEN, Florida GARY A. CONDIT, California
JOHN M. McHUGH, New York CAROLYN B. MALONEY, New York
STEPHEN HORN, California THOMAS M. BARRETT, Wisconsin
JOHN L. MICA, Florida ELEANOR HOLMES NORTON, Washington,
THOMAS M. DAVIS, Virginia DC
DAVID M. McINTOSH, Indiana CHAKA FATTAH, Pennsylvania
MARK E. SOUDER, Indiana TIM HOLDEN, Pennsylvania
JOE SCARBOROUGH, Florida ELIJAH E. CUMMINGS, Maryland
JOHN B. SHADEGG, Arizona DENNIS J. KUCINICH, Ohio
STEVEN C. LaTOURETTE, Ohio ROD R. BLAGOJEVICH, Illinois
MARSHALL ``MARK'' SANFORD, South DANNY K. DAVIS, Illinois
Carolina JOHN F. TIERNEY, Massachusetts
JOHN E. SUNUNU, New Hampshire JIM TURNER, Texas
PETE SESSIONS, Texas THOMAS H. ALLEN, Maine
MICHAEL PAPPAS, New Jersey ------
VINCE SNOWBARGER, Kansas BERNARD SANDERS, Vermont
BOB BARR, Georgia (Independent)
------ ------
Kevin Binger, Staff Director
Daniel R. Moll, Deputy Staff Director
Judith McCoy, Chief Clerk
Phil Schiliro, Minority Staff Director
------
Subcommittee on the Postal Service
JOHN M. McHUGH, New York, Chairman
MARSHALL ``MARK'' SANFORD, South CHAKA FATTAH, Pennsylvania
Carolina MAJOR R. OWENS, New York
BENJAMIN A. GILMAN, New York DANNY K. DAVIS, Illinois
STEVEN C. LaTOURETTE, Ohio
PETE SESSIONS, Texas
Ex Officio
DAN BURTON, Indiana HENRY A. WAXMAN, California
Dan Blair, Staff Director
Heea Vazirani-Fales, Professional Staff Member
Robert Taub, Professional Staff Member
Steve Williams, Professional Staff Member
Jane Hatcherson, Professional Staff Member
Jennifer Tracey, Clerk
Cedric Hendricks, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on March 19, 1997................................... 1
Statement of:
Corcoran, Karla W., Inspector General, U.S. Postal Service,
accompanied by Thomas Coogan, Acting Counsel, U.S. Postal
Service; and Sylvia Owens, Deputy Assistant Inspector
General for Investigations, U.S. Postal Service............ 11
Del Junco, Tirso, M.D., chairman, Board of Governors, U.S.
Postal Service; Susan E. Alvarado, Governor, U.S. Postal
Service; Bert H. Mackie, Governor, U.S. Postal Service;
Einar V. Dyhrkopp, Governor, U.S. Postal Service; and S.
David Fineman, Governor, U.S. Postal Service............... 59
Letters, statements, etc., submitted for the record by:
Corcoran, Karla W., Inspector General, U.S. Postal Service:
Followup questions and responses......................... 34
Prepared statement of.................................... 14
Del Junco, Tirso, M.D., chairman, Board of Governors, U.S.
Postal Service, prepared statement of...................... 62
Fattah, Hon. Chaka, a Representative in Congress from the
State of Pennsylvania, prepared statement of............... 9
Gilman, Hon. Benjamin A., a Representative in Congress from
the State of New York, prepared statement of............... 79
McHugh, Hon. John M., a Representative in Congress from the
State of New York, prepared statement of................... 4
OVERSIGHT OF THE U.S. POSTAL SERVICE: INSPECTOR GENERAL OF THE U.S.
POSTAL SERVICE, GOVERNORS OF THE U.S. POSTAL SERVICE
----------
WEDNESDAY, MARCH 19, 1997
House of Representatives,
Subcommittee on the Postal Service,
Committee on Government Reform and Oversight,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:05 p.m., in
room 2154, Rayburn House Office Building, Hon. John McHugh
(chairman of the subcommittee) presiding.
Present: Representatives McHugh, Fattah, and Davis.
Staff present: Dan Blair, staff director; Robert Taub, Heea
Vazirani-Fales, Steve Williams, and Jane Hatcherson,
professional staff members; Jennifer Tracey, clerk; and Cedric
Hendricks, minority professional staff member.
Mr. McHugh. The hearing will come to order. Good afternoon.
I want to welcome you to the first oversight hearing of the
Subcommittee on the Postal Service for the 105th Congress. At
the outset, I want to pay particular welcome to our new ranking
member, the gentleman from Pennsylvania, Mr. Chaka Fattah. I
have no doubt that it's due to his great influence that we have
been elevated to the full committee room and we appreciate
that.
This is an exciting opportunity for us. We do have, I
think, a good mix and balance of people who have been involved
on the subcommittee in prior years and those who are joining us
for the first time. Those of you who have suffered through
these hearings in the past may recall that I tried to
repeatedly say that, while some of us may not have had a great
length of service in this subcommittee, we're trying to make
lemonade out of lemons and use our lack of intelligence, per
se, forge it into an asset, and bring a fresh perspective.
I think that that has been helpful and has added to the
process. And I feel very strongly about those who are joining
the subcommittee for the first time. I look forward to their
participation. I have a formal statement that I'd like to have
submitted for the full record. But I would like to open up,
with an abbreviated statement. As I mentioned, today does
represent our first hearing in the 105th Congress.
Unfortunately, our prior session was rescheduled from last
Wednesday due to the Postmaster General's unexpected illness.
We certainly extend to him our best wishes for a full and
speedy recovery. We look forward to hearing from the Postmaster
General at a later date, hopefully very soon. This afternoon we
are pleased to welcome the new Postal Service Inspector
General, Ms. Karla Corcoran, and the Governors of the Postal
Service.
We all recognize that this is Ms. Corcoran's first
appearance before the subcommittee, and it is our first
opportunity to talk with her. The new office that Ms. Corcoran
holds is the product of efforts to establish an independent
Office of the Inspector General for the Postal Service that
really came to a conclusion during the final session of the
104th Congress.
Ms. Corcoran was appointed to her position by the Governors
this past January and has been working, I understand, very
diligently on establishing the parameters of her new office. We
all recognize that she is starting from scratch in terms of
defining needed resources and areas of responsibility. I would
want the record to show that she has this subcommittee,
certainly this chairman's, full support as she proceeds with
this complex and, probably, very delicate task.
Recognizing that Ms. Corcoran's time has truly been
monopolized by the responsibilities of setting up her new shop,
I hope she can highlight here today those areas she intends to
review, including any investigative initiatives she might have
made so far. We're also interested in hearing from Ms. Corcoran
regarding her thoughts on ways her office can better facilitate
labor and management relations in the Postal Service in the
days ahead.
I also want to welcome our second panel of witnesses, the
Governors of the Postal Service. As the governing body of that
organization, ladies and gentlemen, you have tremendous
responsibilities for helping to shape the course and direction
of the largest agency in the Federal Government. And your job,
I understand, is often a thankless one. Some of us on this
subcommittee can relate to that at times.
Up until recently, you were reimbursed at the same level of
compensation as your predecessors first appointed in 1970. So I
think it's fair to note that, for whatever else may be said, no
one can charge you with being in it for the money. We
appreciate your interest in what we all know is an important
activity in this great country. We also look forward to hearing
from the Governors and the Inspector General detailing, for the
subcommittee, the recently approved designation of functions
between the Inspection Service and the IG.
I also understand that the Governors approved an interim
budget for the IG, which will enable the office to employ the
necessary personnel as well as equip itself appropriately. For
the Governors, we hope that they, as well as the IG, can
comment regarding ways to strengthen the ethics environment for
the Postal Service. Recent news articles have, unfortunately,
cast a shadow on the enforcement provisions regarding
procurement and compliance with conflict of interest
procedures.
Where we fail to observe these important requirements,
there is an understandable loss of confidence on the part of
the public and the institutions that wrongly divert attention
and resources from the need to strengthen the ability of the
Postal Service to perform its core mission. We all are aware of
the tremendous crossroads at which the Postal Service finds
itself. The institution envisioned by the 1970 Postal Reform
Act finds itself at an increasing disadvantage as the
marketplace in which it operates dramatically changes and
continues to change.
While this hearing is devoted to questions of oversight,
the issue of postal reform is obviously inherent in determining
what course the service shall take in the years to come. We
urge the Governors today to give us their sense of the
direction the Postal Service is going and what they believe the
future may hold for this valued institution should the current
statutory structure remain, and if Congress fails to consider
what I, at least, believe are needed reforms.
So with that, we'd like to proceed with the hearing. But
before doing that, I welcome the opportunity to yield to our
new ranking member, the gentleman from Pennsylvania, for any
comments he may wish to make at this time. Mr. Fattah.
[The prepared statement of Hon. John M. McHugh follows:]
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Mr. Fattah. Well, let me thank you, Mr. Chairman. And I do
look forward, as do the other members of the minority on this
subcommittee, to working with you as we seek to perform our
role in terms of oversight. I want to welcome today's
witnesses. I have a formal statement that I will have entered
into the record. But I look forward to hearing from both the
Inspector General and from the chairman and members of the
Board of Governors.
This is a very important function that affects the everyday
lives of Americans throughout our country. And it is an issue
of extraordinary importance, I think, to Members of the
Congress, that we provide a framework that's necessary for the
Postal Service to continue to do its job and to do it well.
Thank you.
[The prepared statement of Hon. Chaka Fattah follows:]
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Mr. McHugh. Well, I thank the gentleman, certainly. There
will be no objection, I know, in having his full statement
placed in the record. Let me restate how happy I am that you
have joined us and how we're all looking forward to working
with you toward the common good. We thank you for your
comments.
With that, I would call forward Ms. Corcoran. Under the
rules of the full committee, it's required that every witness
except Members of Congress have to take an oath that they will
present testimony that's truthful. So if you will raise your
right hand and repeat after me.
[Witnesses sworn.]
Mr. McHugh. Let the record show that Ms. Corcoran and her
two associates have responded in the positive. I will refer to
Ms. Corcoran for the purposes of introduction as she may see
fit. But before we do that, we do have another Member who has
joined us, the gentleman from Illinois, the Hon. Danny Davis. I
would happily defer to him for any opening comments if he
chooses to make them at this time.
Mr. Davis. Thank you very much.
Mr. McHugh. We said awful nice things about you. We're
sorry you missed it. But we thank the gentleman and welcome him
to the subcommittee. And we're looking forward to working with
you. So with that, Ms. Corcoran, the attention of the full room
is yours. We look forward to your comments.
STATEMENTS OF KARLA W. CORCORAN, INSPECTOR GENERAL, U.S. POSTAL
SERVICE, ACCOMPANIED BY THOMAS COOGAN, ACTING COUNSEL, U.S.
POSTAL SERVICE; AND SYLVIA OWENS, DEPUTY ASSISTANT INSPECTOR
GENERAL FOR INVESTIGATIONS, U.S. POSTAL SERVICE
Ms. Corcoran. Mr. Chairman and members of the committee, I
appreciate the opportunity to appear before you today to
discuss our progress in implementing the Inspector General
legislation for the U.S. Postal Service. Joining me are Tom
Coogan, my acting counsel, and Sylvia Owens, my Deputy
Assistant Inspector General for Investigations.
With your permission, I would like to submit my full
statement for the record and take this opportunity to briefly
discuss our major accomplishments.
Mr. McHugh. Without objection. So ordered.
Ms. Corcoran. Thank you, Mr. Chairman. Since 1988, the
Postal Inspection Service has performed the functions of the
Inspector General. However, late last year, Congress enacted
legislation creating a new Office of Inspector General within
the Postal Service. The law required the Postal Service
Governors to appoint an independent Inspector General within 90
days. Further, the requirements necessary to establish an OIG
were to occur no later than 60 days after the Inspector
General's appointment.
I am proud to report that we met these challenging
requirements. I was sworn in as Inspector General on January 6,
1997. One month later, I presented, and the Governors approved,
a pay and benefits package for the organization. This was a
necessary first step to begin recruiting and hiring qualified
candidates. At the March Governors' meeting, I presented, and
the Governors approved, our designation of audit and
investigative functions. During this period, I also assembled a
transition team of 12 people with diverse professional
experiences from other Federal agencies and the Postal Service.
Our first priority was to enter into an interim Memorandum
of Understanding with the Chief Postal Inspector. This ensured
that the Inspection Service would continue to perform the
responsibilities under the Inspector General Act. The agreement
provides that these functions are to be assumed by my office as
positions are filled. As directed in the legislation, we
developed a pay and benefits package that is comparable to
other OIGs.
Additionally, we decided to use pay bands similar to those
used by the General Accounting Office. The use of pay bands was
recognized by the National Performance Review as a better way
to tie compensation to performance. Next, a transition team
identified the functions to be performed by the OIG. We
discussed Postal Service issues with congressional staff,
General Accounting Office representatives and the Postal
Service community, to obtain their perspectives.
We identified current Inspection Service functions that
should be performed by the OIG. We also identified additional
work, including oversight of the Inspection Service, that we
will perform to meet the requirements of the Inspector General
Act. The OIG will focus on functions that lend themselves to
service-wide reviews. For example, the OIG will conduct all
financial statement audit activities above the district level.
This allows the OIG to focus on key events leading to the
consolidated annual financial statement. Additionally, the OIG
will audit postal-wide performance issues, systems development,
contract administration, and new facilities construction over
$10 million. With respect to investigations, the OIG will have
primary responsibility for bribery, kickback, conflict of
interest and service-wide investigations.
We will also be actively involved in the workers'
compensation program by issuing subpoenas, conducting
investigations of health care providers, and partnering with
the Inspection Service. In addition, we will conduct or partner
significant embezzlement cases. All investigations involving
Postal Service executives will be performed by the OIG.
We also identified a number of program areas where
additional or expanded work is necessary. For example, the OIG
will review the Postal Service's ratemaking processes, revenue
generation initiatives and labor-management issues. Further, we
will have a separate division responsible for overseeing the
Inspection Service. This designation of functions meets the
requirements and goals of the Inspector General Act.
It results in three categories of work: Inspector General
work, Inspection Service work, and shared, but not duplicated
work. Also, the designation of functions leverages resources
and minimizes adverse impact on Inspection Service employees.
We are now developing a Memorandum of Understanding with the
Chief Postal Inspector to implement our individual and shared
responsibilities.
My goal for the OIG is to have sufficient positions filled
by June so we can initiate our own audits and investigations.
To date, I have hired the Deputy Assistant Inspector General
for Investigations, Sylvia Owens, and the Director of Contract
Audits, among others. In addition, we are giving priority to
hiring staff that will enable us to issue subpoenas and staff
the hotline.
Our next area of progress has been the development of an
organizational structure to quickly implement the OIG's
functions. We have developed an organizational structure with
Assistant Inspectors General for Audit and Investigations. This
complies with the Inspector General Act. The structure also
supports the primary goals of the Postal Service. Now, I would
like to turn to our progress in developing a budget for the
OIG.
We used the designation of functions as the basis for
developing our budget estimates. We are now refining these
estimates and will provide a budget for the Governors' approval
at their April meeting. The Governors recognized at the March
meeting the need to fund operations in the interim, and
approved a 60-day budget of $5 million. Additionally, at the
March meeting, the Governors approved a resolution authorizing
the office to conduct investigations of postal crimes, carry
firearms, serve subpoenas and warrants, and make arrests.
In closing, I would like to acknowledge the support of the
House and Senate staff, the Governors, and the employees of the
Postal Service. In particular, I would like to thank Chief
Inspector Ken Hunter and the employees of the Inspection
Service for their assistance in helping us gain an
understanding of the programs, activities, and functions of the
Postal Service.
Thank you, Mr. Chairman. I would be happy to respond to
your questions.
[The prepared statement of Ms. Corcoran follows:]
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Mr. McHugh. Thank you, Ms Corcoran. We're looking forward
to that opportunity. In consultation with the ranking member--
as you heard the bells--we thought it would be best if we just
recessed, hopefully for a brief period, while we go cast these
votes, and then come back. So I apologize, but if you can bear
with us, we'll try to return as quickly as possible.
[Recess.]
Mr. McHugh. We're going to reconvene the hearing. I
apologize beforehand, the Murphy's law of legislation and votes
is the minute you try to do something, they have votes. And we
have two 10-minute votes coming up. So we're going to be off
and on. It's just a fact of life. So if we could proceed with
the permission of Mr. Fattah. I appreciate that. First of all,
welcome.
Ms. Corcoran. Thank you.
Mr. McHugh. The provision of this office was a part of the
original Postal Reform Act that we introduced last year. We
felt it was important enough to try to pursue an initiative
separately along with some other questions that we feel very
appropriately and very fortunately were passed. And we're very
much looking forward to your office being established and going
forward with what we think is some very important work.
And I want to state, again, what I tried to make clear last
year. Our interest in creating this new office was not in any
way intended to be a slight toward, particularly those
individuals--Mr. Hunter, especially--involved in the combined
office of years past. Quite the contrary, that particular
gentleman has amassed an exemplary record in service to the
post office and now the Postal Service. That is to be
commended.
But we do feel that there are some important functions and
some impressions of heightened propriety that the creation of
your office--and, now, with you in that position--can further.
I was very pleased to hear, both in your abbreviated statement
and in your full statement that I had the opportunity to read
several nights ago, what I take as a spirit of cooperation
between the Inspection Service and your office as you try to
work your way through what I intended to indicate in my opening
statement must be a rather challenging chore, to draw lines of
demarcation as to who does what.
You mentioned in your comments that you're working on an
MOU with Mr. Hunter. We'd be pleased to hear how you're
progressing with that. Have you encountered any difficulties to
this point that may seem insoluble or of particularly difficult
dimensions, and, also, when you think that MOU will be
completed and executed?
Ms. Corcoran. I expect the MOU to be completed about the
time of the next board meeting, so, hopefully, we can present
it to the board at the same time that we present the budget. We
have not come across any problems in drafting the MOU thus far,
mainly because we had worked out so many of the issues in the
MOU while doing our designation of functions.
What we are doing with the MOU is just putting a lot of
meat around the bones that is shown in the chart that is in the
longer statement concerning the designation of functions. We're
also outlining some notification requirements which will just
make smooth operation between the two offices.
Mr. McHugh. When you say the next board meeting, you mean
the April meeting?
Ms. Corcoran. Yes, sir.
Mr. McHugh. So this is pretty fast track, then?
Ms. Corcoran. We're hoping that it will be on a fairly fast
track so that we can keep things moving.
Mr. McHugh. For the record, it's certainly not my intention
to involve ourselves as a subcommittee directly in the issues
that you're trying to resolve. But I would say that we are
obviously very interested in ensuring that this new office is
empowered to do those things that are consistent with the
Inspector General Act, that we think are consistent with the
objective of a Postal Service that is running as efficiently
and smoothly as it can.
A part of that function, obviously, is your office's
ability to operate as unfettered as possible. We're going to be
very interested and paying close attention to these
developments as they go forward. And so, I would say to you
that if you ever feel there is a need for our having
information on any matter, we would greatly appreciate that
information, just as an open offer and not as a challenge or as
a demand. But we think this is important work.
Ms. Corcoran. Thank you. I appreciate that.
Mr. McHugh. If I could take it one step further. You are
evolving a budget. I think the Governors acted very responsibly
in issuing you the $5 million 60-day budget. But in terms of
resource allocation--and I'm speaking for the Governors where I
have no right to--but let me try to put myself in their
position. Were I to ever be able to aspire to such high and
lofty positions, I would be very concerned about the cost of
the entire operation of the administration of the Postal
Service.
This is a new function, and it's going to cost money. I
would imagine they're trying to see what they can do to try and
limit the increase of costs, vis-a-vis the old combined
service. I've heard talk, for example, about the contemplation
of a dollar for dollar tradeoff. In other words, every dollar
that goes to your operation somehow, by necessity, has to be a
dollar coming out of the old Inspection Service.
Have those kinds of issues been resolved as you work toward
a full budget? Because, before you answer, let me say, I
haven't aspired to such a lofty position. While I understand
and even laud what I suspect is their intention to hold that
down, it is certainly not the intention of this chairman to
have such a dollar for dollar tradeoff, because I don't think
that's possible.
I think your testimony states fairly clearly, in assigned
percentages, the amount of new work that you're going to be
doing, hopefully. So how is your budget talk going? Are we in a
dollar-for-dollar tradeoff situation? And believe me--some of
the Governors are shaking their heads. No, you'll get the
chance to answer those. But I was curious as to Ms. Corcoran's
observations.
Ms. Corcoran. The way that my team has gone about putting
together the budget has been to actually take a look at what we
need to run our operation without real consideration of what
the Inspection Service is doing. Because I work for the
Governors and the Inspection Service is working for management
and the PMG, I have taken what I need to set up this operation
and make it operate efficiently.
The thing we have done with the Inspection Service, and we
are continuing to do, is try to look to see how we can minimize
the impact on the Inspection Service by phasing in our budget
over a 5-year period. But we do have a lot of startup cost and
just things that you need to get an office running that will
make it very hard to keep costs down a lot in terms of making
it budget-neutral.
Mr. McHugh. Thank you for that. As I indicated prior to the
gentleman from Pennsylvania's return, we understand there are
going to be votes. He and his staff have been very gracious
about allowing us to proceed under less than ideal conditions.
So I don't want to hog this time. I'd be happy to yield to the
gentleman for any questions he may have at this time, and, with
that, say thanks, as well, for his cooperation.
Mr. Fattah. Let me thank the chairman. I note that in your
abbreviated testimony, you refer to the fact there were--it's
on page 6 at the bottom--additional program areas where
expanded work would be necessary. And one of them that you
identify is labor-management issues, which is also indicated on
your chart. If you could expound upon that for the benefit of
the committee as to where you see, in terms of the program
area, meaningful work being done?
Ms. Corcoran. The Postal Service, with approximately
850,000 employees, certainly has the nucleus for looking for
new ways to do things and different ways to do things. There
has been talk over years by GAO and other people that there
needs to be improvement in many of the processes. In the past,
the Inspection Service has dealt with labor-management issues
mainly through hotline inquiries. The purpose of this group
will be to actually take an independent look at what is going
on in the workplace, to try to see whether or not there are
improvements that can be made to the environment.
Mr. Fattah. Your previous service was with the Air Force.
Is that correct?
Ms. Corcoran. That is correct.
Mr. Fattah. It's a very large organization in and of
itself.
Ms. Corcoran. That is correct.
Mr. Fattah. And one of the things that the armed services
have been quite successful at is to affirmatively include
people into leadership ranks. One of the labor-management
issues that I have some concerns--or questions, really--not
concerns, because I don't know enough yet about the whole issue
of affirmative inclusion in the operation, the leadership
elements in the police station.
So hopefully, that will be one of the areas that you will
give that you have some expertise from the Air Force--be able
to follow suit with. Let me go back to the question about the
budget that the chairman raised, the $5 million for the 60-day
budget. Do you have any--I know that you're in the budget
preparation process--but do you have any sense of what the
outer limits are of what is going to be necessary for you to be
fully staffed and at what point--I know that you suggest that
in maybe 60 percent of the workload by 2001--when do you plan
on being fully engaged and at what round ballpark figure are we
talking about?
Ms. Corcoran. I plan to present that information to the
Governors April 6th and 7th at their meeting. We are in the
process of still formulating the information. I'd be more than
happy to provide it to you at that time. We are in the process
of trying to make sure that we have included everything. When
you have a startup operation, it's fairly difficult to know
exactly what numbers you need for some of these operations,
because you don't have any history to base them on--like the
labor-management area. So we're still trying to resolve some of
those issues. And as soon as we have them resolved and
presented to the Governors, I'd be more than happy to present
them to you, as well.
Mr. Fattah. Let me ask you one more question on this labor-
management side, which is a big issue with the Postal Service
as I've come to understand. One of the issues is that there's a
significant case load backlog in the grievance procedures. And
perhaps that's an area where some new thinking could apply
itself to how that could be fast tracked in a way in which
legitimate grievances could be heard over some reasonable
period of time and resolved. That might be an area where there
could be some usefulness for your office to engage itself in
early on in this process.
Ms. Corcoran. Thank you. We'll certainly put that on our
list.
Mr. Fattah. Mr. Chairman, I heard the bells go off again,
so I'll yield back to you to get a few more----
Mr. McHugh. Thank you. I thank the gentleman. Let me take
one of the things the ranking member brought up and pose it a
little bit further, because you also mentioned in your comments
about involving yourself in rate setting. How might such a
function work in your estimation? What do you view as your role
in the rate setting process?
Ms. Corcoran. Much of the information that comes and is
used by the Postal Rate Commission is actually generated within
the Postal Service. In the 2\1/2\ months that I've been at the
Postal Service, I've heard much discussion that there's not a
lot of confidence that the data that they receive is valid,
accurate, that the estimates and the modeling used is
appropriate. So I see that within the four walls of the Postal
Service, we will be looking at the data to ensure that it is
valid and it is usable for--useful for what it needs to be used
for.
Mr. McHugh. Listening to you, I almost thought that I gave
you that answer. I want the record to show that I didn't.
Because one of the things I, certainly, have been most
concerned about--or, let me rephrase that--one of the things
that I believe has been a primary obstacle to a better-running
system from all sides--whether it be the Postal Service,
whether it be the PRC, whether it be the customers--is that
there is a great deal of question as to the veracity, validity,
verifiability of data that are used in various processes. If
you can help us through that one and uplift the acceptability
by all parties interested in the process, you've made all of
our efforts worthwhile.
So certainly this subcommittee is very supportive of your
efforts in that regard. I think it's an important one and I'm
delighted that you responded that way. As I said, we are going
to be interrupted. We're down to a 10-minute vote. So with the
ranking member's agreement, we'll recess yet again and beg your
indulgence. We'll be back as soon as we can. Thank you.
[Recess.]
Mr. McHugh. If we could come back to order, please. Just so
everyone is aware, we have about another 10 minutes before a
vote. So we'll be doing this again, because I know it's so much
fun. It's hard to have any sense of continuity here. Ms.
Corcoran, I apologize for the interruptions, but let's talk
about your function as I expect there will be, to ensure that
the contracting procedures with the Postal Service are proper.
How do you view your--for lack of a better term--power to
follow the money? In other words, do you see your duties
stopping--as to questions of propriety--at the post office
door, or do you feel that you have, where there are problems of
questionable contracts, the power to go into those interests
that were actually contracted with the Postal Service, as well?
Ms. Corcoran. I see that it goes beyond the doors of the
Postal Service. But Ms. Owens is an expert in contracting,
which is one of the reasons I brought her on. So maybe you'd
like to address the question?
Ms. Owens. Sure. I don't know if I can say I'm an expert. I
always try and shy away from that title. But I think in the
area of contracting, certainly, there has been, historically, a
lot of fraud, a lot of fraudulent things, a lot of product
substitution. And because of that, I think we have to move,
sometimes, outside of the doors of the post office to make sure
that the customer is getting what we've contracted for as well
as the right product at the right price. So I think there could
be a lot of work outside the door, looking at the contracting
process.
Mr. McHugh. Let us create a hypothetical where it may not
be the question of where the contract with the Postal Service
is receiving the product they envisioned, but, rather, where
there was a contract between the Postal Service and an outside
source that may have been questionable from both sides. In
other words, there may have been--did you use the word
``fraud?''
Ms. Owens. I think I did.
Mr. McHugh. Well, let's use your word. That, rather than
mine. Where there may be fraud or collusion. I'm not suggesting
any circumstance, and I do not know of any, but I'm just
saying, do you have the opportunity, the power and the
prerogatives to pursue that outside contractor who may be
involved in complicity or fraud of some nature?
Ms. Owens. Yes, sir. We would. If it was--as long as it was
on a contract with the post office--with the Postal Service.
And certainly, if not, we would have the ability to refer it to
some agency which would be able to follow it to its logical
conclusion. But we would be able to. Yes.
Mr. McHugh. I appreciate your response. On an attendant
issue, there have been over the years--and I suspect there will
be into the future, as there are with all Federal agencies--
reports by, for example, GAO and others, that have found
problems with, if not accountability problems, with efficient
use of resources to maximize results. The GAO issued a report,
for example, raising what I think any reasonable person would
agree were some serious concerns about lost revenues on bulk
mail. Would it be the role of this office, as you envision it,
to followup on those kinds of reports--No. 1--and No. 2, to
ensure that, even down the road where you may have taken
remedial action, that standards continue to be maintained?
Ms. Corcoran. Absolutely. That would be part of our role.
It is management's job to take the corrective actions, but it
is within the Office of the Inspector General's role to assure
that those changes are appropriate and that they really fix the
problem that was identified.
Mr. McHugh. One of the things that we were talking about
the other night--and it has come up in discussions that we've
had on the issue before--is that the Whistleblower Protection
Acts, as it applies to the Postal Service, are not universal.
It is our understanding, for example, that whistleblower
protection in law is not extended to some administrative
personnel. Has that been something you've had a chance to look
at? And if it is, do you envision that to be a potential
problem in terms of people feeling unfettered to come to you
and share with you, without fear of recrimination, issues that
they feel are just not right?
Ms. Corcoran. We have had some discussions with the legal
department about the Whistleblower Protection Act. I'm going to
ask Mr. Coogan to address this issue further.
Mr. Coogan. My understanding, Mr. Chairman, is that you are
correct. The Whistleblower Protection Act that covers most
other Federal agency employees does not cover Postal Service
employees. Well, that may be a question that we can address,
again, through the Law Department. However, the Inspector
General Act itself has a provision that provides for
whistleblower protection in cases of employee complainants. And
certainly, the Inspector General's Office would treat all
complaints as confidential to the extent possible and would
look into allegations of reprisal and retaliation as a result
of bringing those matters to the attention of the Inspector
General.
Mr. McHugh. So your analysis is that, while there may not
be specific protection, there are, perhaps, cross-references
that protect certain employees because of their inclusion under
other provisions of an act, and even if they're not, you're
going to act in a way that would protect their interest?
Mr. Coogan. Yes.
Mr. McHugh. I appreciate that. May I put before you a
suggestion that, if I were an employee, I think I'd be less
than anxious to come forward if I felt my only shelter would be
found in a cross reference as legally appropriate as that might
be? I am not an attorney, nor I suspect would I be one if I
were over in the Postal Service. I would urge you to re-examine
the coverage under Whistleblower Protection, particularly as it
applies to what I understand are some of the administrative
positions, and see if it might not be helpful to you. Also, if
it might not be the right thing to do, as a matter of equity,
to extend those acts to the employees on a primary reference so
there aren't cross references.
This is not contained, for example, in the Postal Reform
Act that we drew up. But we discussed it the other night, and
it may be. I'd like to have your input on that, because we
don't want to be going down a road that's totally unnecessary.
I think it merits some examination, so I'd appreciate that.
Ms. Corcoran. We'll certainly go back and take a look at
that and get back with the committee to let you know what needs
to be done.
Mr. McHugh. Thank you. I yield back to the gentleman from
Pennsylvania, the ranking member, Mr. Fattah.
Mr. Fattah. Just a few more followup questions. The
Inspection Service, as it relates to its on-going functions
under the Memorandum of Understanding, to the degree that there
are going to be functions phased out and picked up by your
office, how is that going to effect present employees in the
Inspection Service?
Ms. Corcoran. That's probably a question that's really
better addressed to the Chief Inspector and, perhaps, even the
Governors. In part, it will depend on what they do concerning
their budget and how they relate to that. There has been an
agreement made that we will consider inspectors for positions.
If they are the best person for that particular position, they
will be brought on board with us. But we are not necessarily
responsible for hiring those people. So how the transition will
take place is something that's still being worked out.
Mr. Fattah. Well, at the end of this road, there's still
going to be an Inspection Service carrying out certain
functions?
Ms. Corcoran. Absolutely.
Mr. Fattah. Right.
Ms. Corcoran. They have program responsibility that
includes mail theft, burglaries, homicides, much of the
security of the postal buildings, as well as the people who are
carrying the mail, and the mails themselves. And they still
have all those program responsibilities that they need to
handle.
Mr. Fattah. Now, the auditing functions that they have now,
you would not envision that they would have any of those?
Ms. Corcoran. They are going to maintain some of their
auditing functions as indicated in the designation of functions
exhibit. Those are going to be at individual facilities. For
example, under the financial statement audits, they are going
to continue to do about 200 of those audits where they will be
looking at individual post offices to see how well their
internal controls work and the effectiveness of financial
operations within those individual operations. Those will then
be rolled up, and we will use them in our overall scope to look
at how postal-wide operations are doing financially.
Mr. Fattah. Let me thank you for your appearance here
today. And let me also, just for the purposes of the record,
give a mention of the fact that Congressman Clay, in earlier
sessions of the Congress, had promoted this notion--he's the
ranking member for the overall committee--of an independent IG.
And it was through the good efforts of the chairman, the
gentleman from New York, that in last year's Congress, we were
able to get this accomplished. So I want to wish you well. And
I'm sure that we'll be seeing each other again as we go down
this road. Thank you.
Ms. Corcoran. Thank you.
Mr. McHugh. I thank the gentleman for his comments. Indeed,
in its infinite wisdom, I believe the House actually passed
Congressman Clay's IG bill at one point. We're following some
pretty vague and ill-defined footsteps, and we appreciate the
assist that Congressman Clay's earlier work lent us.
Let me return to try to better understand where you may be
headed on your duties. I mentioned in my opening statement the
question of ethics. The issue that comes to mind, at least when
we were preparing that portion of the statement, specifically,
was recently--in March--the Office of Government Ethics sent of
letter to the Governors--to the General Counsel, Mary Elcano,
stating that they--the office, OGE--viewed the Postal Service
in compliance now with ethic standards.
That was an important development. Because it's also my
understanding that prior to that there had been some serious
concerns raised about the implementation of clearly defined,
well understood, and rigorously conveyed ethical standards,
particularly in the procurement area, raised by OGE. And
indeed, while OGE normally reviews departmental ethics program
once every 5 years, they felt it was necessary to review the
ethical practices and standards of the Postal Service some six
times in the last 6 years.
I think that demonstrates a prior level of concern. I
commend the Postal Service for apparently, at least as of
March, meeting that. I think it's fair to say that any program,
be it one of Government ethic standards or be it one of work
shop safety standards, needs oversight on a continuing basis to
ensure that whatever is attained now is attained in the future
as well. Is it your intention to monitor the ethics standards
and practices as they apply through the concerns raised by OGE
in the future, or is that something that you don't think you're
going to be looking at?
Ms. Corcoran. The General Counsel Office, as I understand
it, is the responsible ethics official within the department.
We may look at that in an overall, systemic type look within
the Postal Service. However, it is OGE that routinely comes in
and does these types of reviews and where ethics violations
would be reported. Generally, they are the ones that would be
coming in and doing these types of things. With the many issues
that we have to deal with, that would probably not be one we'd
deal with right now because of how the Office of Government
Ethics has dealt with it.
Mr. McHugh. Yes? You wish to add anything, Mr. Coogan?
Mr. Coogan. Well, Mr. Chairman, what I would add, also, is,
as I'm sure you know, the President's Council on Integrity and
Efficiency and the Executive Council work with the Office of
Government Ethics. The IG's office also works closely with the
Justice Department Public Integrity Section, and is very
sensitive, of course, to these ethics issues. But in general,
the IG's roles are not to be the program administrators of an
ethics program, but rather to oversee the process and the
procedures that should be followed in those programs.
Mr. McHugh. And you will be doing that latter function?
Good. Well, let's go to something that probably is more in your
line. Or, I should say, is it more in your line? Another
instance was one of recent times where there were dramatic
overexpenditures in the advertising accounts. One of the more
frustrating parts of that scenario to those of us on this side
of the room was that it became so significant before it was
apparent that many up the line were aware of it. Would it be
your function to monitor expenditure accounts to ensure that,
whether it's inadvertent, purposeful, whether the ends were
totally justifiable or not, but that you do have dramatic over-
expenditures occurring or any over-expenditures before they
become dramatic? Is that a function that you'd be into or is
that not more universal? Is that too specific?
Ms. Corcoran. Again, we will be looking more at service-
wide issues. Along with that, though, we certainly will be
monitoring for trends or changes in data that would cause a
question, and try to determine what are the reasons for those
changes. So hopefully we would be aware of those before they
became a problem. But like many other things, as you're
auditing, if you're not in the right place at the right time,
you don't necessarily find it. We would monitor and try to pick
up on those types of things. I'm not aware of all the
circumstances involved around that particular situation. And
I'd need to look at that particular situation to see what could
be done to improve the overall system. And once we get our
people on board, we certainly will be looking at that.
Mr. McHugh. Thank you. Current law, as I understand it,
requires that the Postal Service receive an independent
certification of its financial statement, that that has been
done for many years, as far as I'm aware, by Ernst and Young.
I'm not suggesting that my comment is meant to indicate that
there was any problem with Ernst and Young, that they have done
anything but a credible job, but the requirement was placed in
law for the Postal Service prior to that because there was no
independent audit function, I assume. Well, now there is,
obviously. So is it your intention? Do you think you meet the
test of the law if you certified that financial statement,
thereby internalizing that somewhat more?
Ms. Corcoran. That certainly is what the CFO Act has done
for the other IGs throughout Government. It's given them the
opportunity to either certify it internally or to have an
external CPA firm certify it. But certainly I will have the
people on board doing the work, and they could certify the
statements.
Mr. McHugh. I know professionally you could. I want to make
sure I understand your meaning of the word ``could.'' You could
legally, you believe, meet the test of the law, as currently
written, by certifying?
Ms. Corcoran. No, sir. As it's currently written, my
understanding of the law is that it must be by an independent
certified public accounting firm.
Mr. McHugh. OK.
Ms. Corcoran. Which, obviously, we are an internal
independent organization.
Mr. McHugh. OK. However, were the law to be changed, it
would merely put you in conformity with other agencies that
have an audit verification mandate, and do it with an
independent IG. Yes?
Ms. Corcoran. Yes, sir.
Mr. McHugh. Thank you. Well, because of how we've gone
we've taken up almost 1\1/2\ hours of your time and, as you've
heard, we have another interruption. I'm not going to ask you
to stay any further. We do appreciate that and Mr. Fattah
agrees that we should dismiss you. It sounds so funny, doesn't
it. But thank you for being here. As I indicated earlier, we're
looking forward to working with you, are anxious to work with
you in helping you to meet any challenges that may arise, if it
is appropriate in your view. We try not to get on the wrong
side of an IG, despite of what you read in the newspapers. So,
thank you and with that we will recess once again. When we
return we will move on to the Board of Governors, who have all
been waiting very patiently and we appreciate that. So we'll
stand in recess. Thank you very much.
Ms. Corcoran. Thank you.
[Recess.]
[Followup questions and responses follow:]
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Mr. McHugh. We'll come back to order. The chairman of the
Board of Governors tells me that, understandably, some of the
Governors have time constraints because of scheduled airlines
and such. We'll try to move as quickly as we can. The good news
is that we now have about an hour before our next vote, so we
should be able to make some progress. Again, let me welcome you
all here today. As we started with the first panel and, I
believe, as all of you are aware from prior appearances, it is
the rule of the full committee that all witnesses presenting
testimony are required to swear to an oath. So if you would
rise, please.
[Witnesses sworn.]
Mr. McHugh. Thank you. The record will show that all five
witnesses responded in the affirmative. With that and without
further delay, I happily yield the microphone and the attention
of the subcommittee to the chairman of the Board of Governors,
the Honorable Tirso del Junco. Mr. Chairman, welcome.
STATEMENTS OF TIRSO DEL JUNCO, M.D., CHAIRMAN, BOARD OF
GOVERNORS, U.S. POSTAL SERVICE; SUSAN E. ALVARADO, GOVERNOR,
U.S. POSTAL SERVICE; BERT H. MACKIE, GOVERNOR, U.S. POSTAL
SERVICE; EINAR V. DYHRKOPP, GOVERNOR, U.S. POSTAL SERVICE; AND
S. DAVID FINEMAN, GOVERNOR, U.S. POSTAL SERVICE
Dr. del Junco. Thank you very much, Mr. Chairman. And good
afternoon to you and all the Members. I'm Tirso del Junco, the
chairman of the Board of Governors of the Postal Service.
Joining me here today are Governor Alvarado, Governor Dyhrkopp,
Governor Fineman and Governor Mackie. We are very pleased to be
here to talk to you about the performance of the Postal Service
over the last year. As the governing body of the Postal
Service, the Board of Governors is comparable to the board of
directors of a private corporation.
Nine members of the board are appointed by the President
and confirmed by the Senate. The two other members of the Board
are the Postmaster General and the Deputy Postmaster General.
The Governors are chosen to represent the public interest in
general, and not as representatives for a specific interest in
using the Postal Service. They bring a wide variety of
backgrounds and viewpoints to the service on this board. I
would believe that this diversity helps us to guide the
management of this unique and vital public establishment.
Even more than the typical outside directors of a private
corporation, the Governors oversee the activities of executives
and operating management within the organization. The board
reviews business practices, directs and controls expenditures,
and conducts long range planning and sets major policy on all
postal matters. This, we believe, is an important public
service. It requires each Governor to invest many hours each
month in postal work. Serving as a Governor is, in a sense, a
part-time job that requires full time attention.
In return, quite apart from financial compensation, we
experience the satisfaction and the occasional frustration of
guiding the operation of a complex organization with revenues
in excess of $56 billion and more than 760,000 full-time
employees. To help us meet this obligation, the board is
organized into four key committees dealing with audits,
compensation, strategic planning and capital projects. Over
time, we have continued to improve our by-laws, to sharpen the
focus of these standing committees and, indeed, enhance the
level of oversight we can bring to these crucial areas. We
believe that in many areas our efforts have contributed to some
notable successes.
The Postal Service has just completed its two best
financial years in postal history with a total of about $3.4
billion of net income in these 2 past years. To put that figure
into perspective, it is more than the total net income of all
previous years of Postal Service operations. And in accordance
with our directions--and I want to emphasize that--postal
management has devoted a large chunk of that net income to the
restoration of equity and recovery of prior years' losses.
Last year we reduced our negative equity by 37.4 percent,
down to $2.6 billion. Together with previous gains, that means
we have reduced our negative equity by more than half in 2
years. We have also directed management to proceed with the
most ambitious capital investment program in postal history,
totaling $14 billion over the next 5 years.
That's $14 billion with a ``B.'' We are banking on these
investments in facilities, technology and equipment. Together,
with sustained efforts to control labor and transportation
costs over time, we will bring a financially stable and
productive Postal Service into the next century. And if our
efforts continue to succeed, we will be able to keep postal
rates stable and affordable while we do all this. With all our
efforts to secure the financial health of the Postal Service,
we cannot allow ourselves to lose site of the basic reason for
the creation of this institution: to provide a maximum level of
fundamental, universal public service.
For that reason we take particular pleasure in the fact
that overnight delivery scores have been hitting record highs
over the past 2 years, and we are well underway to meeting this
year's goals of 92 percent on time performance. These
achievements are particularly remarkable in light of the Postal
Service's mind boggling work load; 603 million pieces of mail
per day delivered to 128 million addresses 6 days per week,
totaling more than 182 billion pieces of mail per year.
Or to put it another way, about 43 percent of the world
entire mail volume. We recognize in the words of an old folk
saying that ``no condition is permanent.'' Simply maintaining
recent levels of financial and service success will require
constant vigilance and much more hard work. And improving upon
them will require even a greater effort at all levels of the
postal management.
There are two areas that will require our particular
attention in the coming year. One is the improvement of 2 and 3
day services levels where improvement, indeed, is long overdue.
The other is establishing long-term control over the more than
80 percent of postal costs that are linked to labor. But for
today and the immediate future, we can report that the Postal
Service is moving in the right direction. Over the next few
years, the board will have even more tools to monitor and, when
necessary, correct the actions of postal management. One of
those tools, the Government Performance and Results Act of 1993
will be coming into effect at the end of this fiscal year.
We will carefully scrutinize the strategic and performance
plans that are being prepared under that legislation to help us
direct the course of the postal management. In addition, over
the coming months, we will be working with the new Inspector
General of the Postal Service as she begins the operation of
her office. The appointment of the new Inspector General, the
approval of a pay and benefit package for her office, and the
initial designation of functions between the inspection service
and the Inspector General are only the beginning.
Establishing an office of such importance is by no means a
turn-key operation, but, indeed, much more of a developmental
process. We are very pleased with the progress of our new
Inspector General, and want to make it clear that she will have
our utmost confidence and support in this matter. I also want
to say, Mr. Chairman, that the Governors remain committed to
working with you, with the subcommittee, the Congress, the
administration, postal management, and all the many and varied
groups who have a stake in the continued health of the postal
system as we approach this next century.
Thank you very much, Mr. Chairman. That concludes my
prepared statement.
[The prepared statement of Dr. del Junco follows:]
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Mr. McHugh. Thank you, Mr. Chairman. I would, as I hope
would be a minimum act of courtesy, extend the opportunity for
any of the other Governors to make a statement at this time, if
they choose. Hearing none, we'll move on. Well, why don't we
just start with the easy stuff. Can you update the subcommittee
on any plans you might have to file a universal rate increase
this year?
Dr. del Junco. Well, we are currently studying this very
closely, and we have had presentations about the methodology
procedures and the current financial situation. And we expect
to address this in a pretty definite manner within the next 60
or 90 days. And it is indeed true that we're committed not to
have a postal rate increase through 1997. But at the present
time, until we review those figures, we can't commit any
further.
Mr. McHugh. The record will show that Mr. del Junco
exercised his vast ability in Republican politics and didn't
really answer the question.
Dr. del Junco. I apologize----
Mr. McHugh. No, no. I understand what you're saying and----
Dr. del Junco. I would love to tell you it's going to be
1999, year 2000. But I do not want to mislead the committee or
the public.
Mr. McHugh. Well, respecting the process you're in, and I
do, I understand your response. I don't mean to be too
facetious. Let me move to a subset of the question. You noted
very accurately that your revenue picture over the last 2 years
has been on the plus side, to say the least. You have made
decisions, as you are required, to allocate those resources on
the one hand, I presume, to consider forestalling a rate
increase. On the other hand, as your testimony noted, to make,
I think, very appreciable cuts into your negative equity and
your fund balance's prior years' losses.
How do you decide which to do? How do you come about the
process of saying, ``Well, we're going to reduce prior years'
losses and our negative net equity versus putting the money
toward forestalling a rate increase?'' Obviously you know. This
is a subject of much debate amongst the postal community, as it
should be. And it would be interesting, as well as helpful, to
have you comment on that process because I know it's not an
easy one.
Dr. del Junco. Congressman, this is a very complex issue--
that is, the issue of negative equity and the restoration of
that negative equity. I'll try to be as succinct as possible,
and my fellow Governors probably will have to come in and help.
But in 1994, we had reached a negative income of some $9 point
plus billion. The Postal Rate Commission was pressing us very
severely because this had come to very high figures.
We then entered into an agreement with the Postal Rate
Commission that we would retire this negative income--equity
over a period of 9 years. And therefore, this means that we
must retire according to the agreement and because the law
requires that we do not have a permanent negative equity at the
rate of $900 million. And we've been doing so since 1994.
Our revenues have allowed us to do such a retirement. But
as you proceed ahead, since the revenue remains stable and the
cost increases because of commitments through our labor
negotiations, our commitments to capital, and, indeed, the $900
million that we must pay back, this has been drawing
progressively to the degree that we cannot continue unless--and
this is what, by the way--it brings us into the postal rate
issue.
And this is why I cannot tell you exactly until those
figures are presented to us, when and where the decision is
going to be made. I think the impression is out there that we--
No. 1--can engage into a negative equity ad infinitum, and--No.
2--that we don't--are not, and do not have to, by law, retire
that negative equity. We are, right now, complying with the
commitment that this board made to the Postal Rate Commission
in 1994. I hope that answers the question.
Mr. McHugh. It does. I appreciate it. I believe you said
you were going to defer to the other Governors if they wanted
to make a comment.
Mr. Mackie. Mr. Chairman, basically over the last 20 some
years, we have used our surplus income to extend rate cases.
And so, our equity continued to go more and more into the
deficit. As a banker, I won't sleep well until we get our
deficit down to even. And as our chairman mentioned, our income
is fairly level while our expenditures continue to climb. And
hopefully, this will all work and come together, you know,
before our next rate case.
Mr. Fineman. Mr. Chairman, I would just like to emphasize
one point, and that is, that at no time has the repayment of
the negative equity been accelerated. And I think the public
should understand that. We are trying to do this over a 9-year
period of time, but we haven't accelerated the repayment of
equity so that we would, therefore, be forced to have a rate
increase. We are doing this in, what I think, would be a
prudent manner.
Mr. McHugh. Am I correct, then, in the impression I'm
getting, that it is your opinion were you to, say, forestall
for a year any down payment on the retirement of your negative
equity, that you would be in violation with the understanding
of the PRC and would have consequences at your next rate
hearing?
Dr. del Junco. Yes. You're absolutely correct. But over and
above that, I want to point out that 8 years ago our interest,
because of that negative equity, was something in the
neighborhood of $700 million. That interest that in 1996 was
only $250 million. So there is some pluses to begin to retire
this equity, too. But I think it's essential to understand that
we have made a commitment with the Postal Rate Commission, and
rightfully so. I think their demands were just, were absolutely
correct. I mean, there is a limit as to how far you can take
this negative equity.
Mr. McHugh. Thank you for that. I appreciate the other
Governor's response as well. Let me take a break from my
questioning and yield to the gentleman from Pennsylvania, the
ranking member.
Mr. Fattah. Thank you, Mr. Chairman. Let me followup on the
negative equity question with the chairman. I note that your
financing of your debt is through the Federal financing bank.
Does that represent the entirety of your debt obligations, Mr.
Chairman?
Dr. del Junco. Yes. It is. I'm looking to my chief
financial officer.
Mr. Fattah. All right.
Dr. del Junco. I want to be sure that it's not something
else out there.
Mr. Fattah. Is that a limitation that is upon the board in
terms of looking for debt instruments, or is that just a more
useful entity?
Dr. del Junco. Well, it is my understanding that our
capital expenditures cannot exceed $15 billion. We have tried
to shrink that down. We have made some very, very large
commitments in the last 24 months. And also, there is a limit
as to how much we can spend per year--$2 billion.
Mr. Fattah. $2 billion a year. I'm more interested in the
use of the Federal financing bank, that entity versus, you
know, some other vehicle for debt.
Dr. del Junco. Can I refer----
Mr. Fineman. I believe that it is statutory.
Mr. Fattah. My staff is whispering to me that it's
statutory.
Mr. Fineman. And let me just indicate to the chairman that
I know in H.R. 22, which he's introduced, he would change that
provision, I believe, and I think that that would allow--I
speak for myself about this--but would allow for freedom for
that Postal Service to do innovative financing.
Dr. del Junco. More flexibility.
Mr. Fattah. And I also note that you have both a short-term
credit facility and an overnight credit facility, the overnight
at a higher interest, obviously, of $300 million or so. My
question is--and maybe we'll have staff deal with this at some
future point about the decision process that went into that
now, let me go on. The chairman was asking about this whole
issue of the decision to pay off debt versus other
considerations that the board would have--and I guess I should
first back up a minute and recognize my constituent, Governor
Fineman, and to welcome him, and the rest of the Governors who
are here.
And you said that, while you haven't moved the yard stick
along, that you're paying this off within the 9 year window. Is
it correct to assume that that means that you have within the 9
year window accelerated payments also, or just that you're
operating within this window?
Mr. Fineman. I think it's fair to say that we're operating
within this window, but we have not accelerated payments
beyond. If we took one ninth of what that debt was at that
period of time--we went before the Postal Rate Commission--part
of the case that was presented to the Postal Rate Commission
was that we would be repaying that debt. And we have, in
effect, kept that pledge to repay that debt when we went before
the commission as a result of the budget that we supplied to
them.
Mr. Fattah. Let me just say a couple things real quick--and
I'm not a financial wiz--but, clearly, if you were able to
operate in other ways in the market in terms of securing
capital, you could do it at a better interest rate than what's
represented here. But let me move on to some broader questions.
I note through the chairman's opening statement that there's a
lot to be thankful for. I mean, the Postal Service is doing
well.
All of you should be credited for your involvement and you
should be thanked for your service to the Nation. One of the
things that is a concern, I think, for all of the Members of
Congress--we all represent some number of the employees who
work for you. And we hear form them from time to time. And one
of the more pressing issues is this whole issue of labor-
management relations. And I know that you have a tremendous
enterprise that you're engaged in in which, in order to achieve
the results that you've achieved over the last 2 years, that
has taken a great deal of work, principally by these hundreds
of thousands of employees who work for you.
And it has come to my attention that there is not only are
there the normal complaints that we hear about, there's a major
backlog in the grievance procedures of some almost 60,000
cases, some of which have been backlogged for a period of time.
I see in the board structure that you have a number of
committees. I assume this compensation committee is where most
of these labor issues are dealt with, I'm not sure, based on
the semantics that are used.
But I'm interested in whether or not there are other
strategies that you have in terms of beyond making more money
and working harder at what you're doing, to try to improve the
overall relationships between the Postal Service and its
employees, and whether there is some strategic game plan that
you might want to share with this subcommittee?
Dr. del Junco. Well, we have had this on-going question
about labor-management relations for many years. I have been on
this board for 9 years, and this is an on-going attention. We
have a vice-president in charge of labor management relations.
In fact, he just addressed the board at the last board meeting.
And there is--in fact, there are people on this very board who
are extremely interested on the labor issue.
And I don't mind telling you that Governor Fineman
continues to address this thing, as well as other members of
the board. But on the other hand, we do not manage the
grievance committee. We do not address individual problems of
the individual labor, because that is not the function of the
board. There are established procedures, a method to carry this
as far as the 60,000 remaining complaints that we have there. I
would hope that I could address that in writing and refer it to
you so we could have a more concise----
Mr. Fattah. Address it to the chairman, and he'll make sure
that we all get it. Yes.
Dr. del Junco. Mr. Chairman, if you allow me, I would like
to present you with a more explicit answer in writing.
Mr. McHugh. We would welcome that opportunity.
Ms. Alvarado. Mr. Chairman, if I--Mr. Chairman, Mr.
Chairman----
Dr. del Junco. Governor Alvarado.
Ms. Alvarado. If I may, I would just like to say that this
grievance procedure that you mentioned, Congressman Fattah, is
something that the board has not been able to give adequate
attention to until recently. And part of the reason is because
we've been focused elsewhere in all those areas that you gave
accolades to us for.
But it is not that it's not--it is not unimportant to us.
In fact, I hope that through the compensation committee, of
which I am a member, we can take a closer look at these labor-
management issues, because our work force is our greatest
resource. And happy workers are productive workers. And the
fact of the matter is, is if there's a grievance problem, it
brings everybody down.
And that productivity goes down, as well. So we are really
looking into the cause of these and the proliferation of them,
and we hope to get a handle on them through the compensation
committee, initially, and before the full board, eventually.
Mr. Fineman. If I could just add for a minute. Mr.
Chairman, I would say to you that I want to thank you for
pushing the labor summit. I know that that has been something
that has been considered for a long period of time. My basic
feeling is that if there is communication between the labor
unions and management, there is an opportunity to bring about
change. If that communication stops, for whatever reason, there
won't be an opportunity to bring about change.
So I want to congratulate you and thank you for doing that.
But I'd like to--this in my own idea--I have my own feeling
about this, and that is that one of the feelings that we've
seen labor change particularly, municipal government change
over the last 4 or 5 years--I think the Congressman would
agree. And one of the reasons it has is because there's been a
communication between people.
One of the things that's happened, when you're considering
your omnibus legislation--I'm not sure this is the proper time,
but I'll bring it up anyway--when you are considering that, one
of the things that's occurred in industry, private industry,
when there's been an endemic problem of labor-management
relations, what they've considered at times--this is not
radical--it's in the automobile industry, it's in the aviation
industry--they've actually taken members of the labor unions
and placed them on the boards.
It happens at Amtrack. In the telecommunications, as
Governor Alvarado has whispered into my ear. And I think that
it's obviously something different, but I think it's something
that maybe this committee should consider when you're looking
at the legislation.
Mr. Fattah. Let me thank you for that suggestion. And it
will be something that we will work with the chairman on, as he
has an interest in getting this reform bill moved through the
Congress. But this is an issue that is obviously of import.
Because, even with the financial success you've had over the
last 2 years, one of the pressures on the Postal Service is
from competitors who want to, you know, continue to make
headway in of your core business products.
And it would seem to me that productivity is connected to
resolving some of these long-standing issues. This is not
something that's just come up. This is something that has been
with the Postal Service for a very, very long time. And it
would seem to me that this board, since you've been so
successful in attacking some of the other long-standing issues,
that this is something that would deserve your attention as you
go forward and as we approach the next century. I want to just
thank the chairman and I'll yield back to him for a period of
time.
Mr. McHugh. I thank the gentleman. First of all, let me
respond very briefly to Governor Fineman's gracious comments. I
appreciate that. The principle in my eyes of the labor-
management summit was simply as you said, to talk. I'd like to
believe that can't hurt. It should be noted, as to your
suggestion about perhaps a reference in H.R. 22 providing for a
mandated labor representative on the board.
GAO, as I'm sure you're aware, is currently doing a study
of the structure of the Board of Governors, looking at the wide
range. I wouldn't be surprised if that issue were actually
dealt with in that report, which, I'm told, will probably be
put out by August. So it is an issue that is being considered.
I'd like to yield to the gentleman, Mr. Davis from Illinois, if
he might have any questions or comments at this time.
Mr. Davis. Thank you very much, Mr. Chairman. Mr. del
Junco, let me, first of all, just commend you and the other
Governors for the outstanding public work that I think you do.
Also, let me acknowledge the presence of Governor Dyhrkopp from
the great State of Illinois. And I'm delighted to see him. A
few moments ago, we had testimony from the Inspector General
which indicated that she, indeed, was on a fast rack in terms
of identifying problems, recognizing need, and establishing new
structures to try and deal with those. Are you satisfied that
all of the problem areas or potential problem areas have been
identified?
Dr. del Junco. There's no doubt that the accomplishments in
these first 60 days are remarkable. I mean, to be able to put
together this early days, her office. To be able to put
together a budget which is going to be presented to us by--in a
couple of weeks, April 7, is remarkable. I think that the board
was extremely impressed with her presentation about her initial
functions. But I am sure, as questions are brought out by the
chairmen, and are brought out by other people within the
system, those functions will be probably--will be expanded to
cover other areas of great importance. So I do not want to lead
anyone in this room to believe that this is the end of the
project.
Mr. Davis. Well, I, too, have been tremendously impressed
with that kind of success in a relatively short period of time.
And it brought to mind whether or not, and the extent to which
management personnel had been cooperative. Are you in a
position to comment on that or would it require commentary
from----
Dr. del Junco. I believe that, in her presentation to the
board last month, and in every presentation, she has been very
enthused and complimentary to the help that she has received
from the inspectors and also from management at large. And so
far, I am not aware of any major problems that have taken
place.
Mr. Davis. I'm always interested in the level and fast pace
of increased technology which we are experiencing as a Nation,
and, perhaps even, as a society. And in the area of strategic
planning, I'm wondering whether or not we feel that we're
keeping pace with the ever-changing technology. Are we up to
snuff in terms of our planning and are we going to be in a
position to make the most effective use of that?
Dr. del Junco. The board is very sensitive to this. And if
you look at our budget, we have, now, allocated some $14
billion, precisely, to help out with our automation and with
our improvement in technology. We have an extensive R&D program
in place. And indeed, because of this ever-changing turnover in
technology, this represents an additional expense for us.
Because we must keep up with that technology if we are going to
compete in the market place.
Mr. Davis. I noticed that there was a little bit of
conversation with the gentleman from Pennsylvania relative to
the whole question of satisfaction, employee satisfaction, the
interaction, the interrelationships. Are we finding, for
example, that technology is seriously reducing the level or
manpower or manperson or woman-person needs that we have? I
mean, that is something. I happened to go into a store the
other night to make a purchase.
As a new Member of Congress I needed to purchase an ironing
board and an iron. And I went into this particular store and
discovered that I could do the whole thing without ever coming
into contact with a person. And while I was pleased with that
in terms of the efficiency, it sort of concerned me in terms of
whether or not there were going to be ample need or
opportunities for people to work.
Dr. del Junco. That's the ever-existing question that we
have before us. I think that we must understand, as you first
addressed, that this new world of advanced technology. It's
equally necessary so we can keep the quality of service that
people expect. I think it's fair to say that as the U.S. Postal
Service has increased its technologies, has become more
automated, and we've been able to deal with a larger volume of
mail, no employee has been displaced or lost his job.
There has been some attrition. It is true that we do
today--that we deliver 200 billion pieces of mail a year with
about the same amount of personnel that we did 15 years ago.
But this has not been at the expense of displacing any
employee. But it is absolutely necessary for the Postal Service
to keep up with the technology so we can deliver the quality of
services that is required from us.
Mr. Davis. My final question--I know that we don't
necessarily always look at competition as the motivator or
driving force in terms of our own decisionmaking. But how do we
compare, or how would you compare the efficiency of the Postal
Service with that of those other entities that could be called
competitors in this industry.
Dr. del Junco. I'm going to call--do you want to answer
that?
Mr. Fineman. I'm not quite sure I know the numbers. But I
wanted to get some numbers that are significant to your last
question.
Dr. del Junco. That's right.
Mr. Fineman. And then I'll try to answer your second
question for you.
Dr. del Junco. That's why I asked you.
Mr. Fineman. When the Postal Reorganization Act started,
there were approximately 730,000 full-time employees. The
volume was approximately 80 billion pieces of mail. In
September 1996, there were approximately 760,000 full-time
employees. And our volume was 180 billion pieces. So what
you've seen is that as the volume has increased as a result of
automation, we probably have, you know, gained a few employees,
but we almost we're getting toward tripling--we're a little bit
more than two and a half times what our volume is. And I think
that that's significant. As to the so-called people who are
competitors of ours, I don't have the numbers in front of me,
but I remember one statistic--and maybe there are some people
here--within 1 day we deliver more mail than Federal Express
will deliver in a year.
Mr. Davis. Well, thank you very much, Mr. Chairman. That
concludes my questions and I would yield back any additional
time I might have.
Mr. McHugh. Thank you very much, Mr. Davis. Let me follow
on to the question about automation productivity. Have you been
able to place a cost savings figure on the automation measures
that you've made? Have you made estimates as to what your
accrued savings have been?
Dr. del Junco. I don't have those figures with me. I'd like
to answer them in a written form, Mr. Chairman.
Mr. McHugh. Certainly.
Dr. del Junco. It's just too specific. And I don't have
those numbers. We have our return of investments on specific
projects. But collectively, I don't have those numbers.
Mr. McHugh. If you could get that to us in the future, I
think that would be of interest to the subcommittee, please.
Tell me, what's the status of pack and send?
Dr. del Junco. Deceased. No. We have stopped the program,
as you all know--that we've challenged.
Mr. McHugh. Deceased.
Dr. del Junco. And in that challenge, we lost our appeal.
And at the present time, we have sent this back to our legal
department for consideration. But the whole project has been
closed down.
Mr. McHugh. I just want to make sure I understand. You're
right--as I understand it, the PRC said this was a postal
service, therefore subject to their review. This is the
technical status, I believe, at least for the moment, unless
you're making an announcement here today and I guess that's why
I'm asking. Is it your intent to go before the PRC with a pack
and send proposal?
Dr. del Junco. We are considering that. It's been sent to
our lawyers, too. And if we do do anything with it, we will
send it to the PRC and follow the due process. But the decision
has not been made yet, Mr. Chairman.
Mr. McHugh. Will that be before or after you decide on the
rate increase.
Dr. del Junco. I beg your pardon? Let's just not tie them
together, because then we're really in trouble.
Mr. McHugh. OK. You heard me with the IG say that this is
an oversight committee. You're aware of that and it's a
responsibility we take very seriously. We pursued some
questions about ethical reports from the Office of Government
Ethics and such and she responded to that. I noted that,
indeed, in March, OGE had issued a letter to you saying that
your ethics program had now met what they feel were appropriate
standards.
I commend you for that. There's obviously another ethics
situation that is outstanding with regard to the Postal
Service, and that is the questions which have arisen with
respect to the awarding of a proposed sole source contract to
place soda and soft drink vending machines in postal
facilities. I think it's important for the record to say that
this subcommittee is deeply concerned about that particular
issue.
We also want to state that in response to that concern and
in recognition of our oversight responsibilities, we wrote to
the Justice Department asking for an update. They have
responded. I think it's a fair summation to say that they noted
to us this was an on-going investigation and that they believed
it would be inappropriate at this time to disclose any
particular information. I understand that position.
I, as chairman, certainly don't want to do anything to
inappropriately and in an untimely fashion intrude upon a
weighty matter in an on-going Justice Department investigation.
So, while we're aware of the situation, and, while under normal
circumstances, I think it would be an appropriate topic for
discussion, given the Justice Department's position, it's not
my intention to pursue specifics at this time. But we will be
very much involved and carefully weighing whatever reports come
out of Justice.
I am aware the Board has been advised that they are not
subjects of the investigation, but that you have been or will
be consulted in a witness role. I think that's important to
note as well. But having said that, I think it, out of
fairness, is appropriate to me to offer the opportunity for any
of the members of the Board to comment on this situation should
they choose. If they do not, I understand. But I would defer to
you at this moment for that opportunity, Mr. Chairman or any of
the other Members.
Dr. del Junco. Mr. Chairman, I have no comment at this
time. I reserve the right to, in due time, to address the
issue, too. But it's obvious, for very personal reasons, why I
want to restrain myself from making any comments at this time.
Mr. McHugh. I appreciate that and I do understand. Governor
Alvarado.
Ms. Alvarado. Mr. Chairman, thank you for providing this
opportunity. I just think it's important to point out, first of
all, we appreciate your position on this matter. I think it's
the correct one, since the investigation is on-going. I think
it's important, though, to point out that we are, as a board,
individually, and in whatever capacity called upon, cooperating
fully with the Justice Department and its investigation. And at
the appropriate time, deemed appropriate by you or the end of
the on-going process, we'd be happy to answer any questions you
have.
Mr. McHugh. I thank you for that. I would also note that
there have been no accusations, no findings of guilt, and no
official allegations, as I said, of any kind. So I'm certainly
not suggesting that there are those kinds of circumstances
there. But it is an issue that I didn't feel we could ignore.
Yes, Mr. Chairman?
Dr. del Junco. I want to get clear for the record that the
Postal Service is fully cooperating with the on-going
investigation and that we are--we will continue to keep you
informed. Our legal counsel has been advised, I understand has
met with your staff. And he will continue on an on-going basis
communicating with your staff.
Mr. McHugh. I appreciate that. And yes, for the record, we
do and have welcomed that opportunity to discuss that. We look
forward, most importantly, as the issue evolves, to pursue it
further, because we are concerned. I'd be happy to yield to the
ranking member for comment at this time.
Mr. Fattah. Well, I just want to state for the record that
I join in the chairman's concerns as they have been raised. I
do want to draw a distinction between those remarks and my own
in as much as--you know, this is Washington, and it seems as
though on most days everybody is under investigation.
And I don't want to have it prejudged in any way, at least
in my own mind. I think that it is a very open issue. And we
should await all of the facts before rushing to any
conclusions. I've read a lot of headlines, including today's,
involving our own chairman--not our subcommittee chairman, but
the chairman of the full committee--and Washington just seems
to be full of headlines of people being investigated. I think
it's very helpful to wait until the facts are in. And I think
that the board, even though, I'm sure, this brings some level
of discomfort, should in all of its actions not prejudge any of
this, and to--because everyone deserves, I think, an
appropriate presumption that they are acting in accordance with
the law until proven otherwise. And we should not let headlines
ruin people's careers. So I would just want to add my own
remarks to that. I thank the chairman.
Mr. McHugh. I thank the ranking member. When I was
addressing the question earlier to the Inspector General with
respect to the development of a budget and the concern there is
a perception that every dollar to her new office should be a
dollar out of the Inspection Service. Mr. Chairman, you were
nodding your head and I said that you'd have the opportunity to
respond and this is that opportunity.
Dr. del Junco. Well, I believe that, first of all, there
are new functions that she's assuming which are going to have
to be underwritten. But I think the focus should not be
necessarily on the budget of the IG. The board has already
begun and is committed to fund those functions. However, it
should be said that up to now, we have not had a report from
the Inspection Service and we do not know how that's going to
affect the Inspection Service function.
There is a number of audit functions that are going to be
removed. And indeed, the board have talked about how would that
affect the budget of the Inspection Service. And I believe
that's what the--really, the issue is. As we transfer functions
from the Inspection Service to IG, there is going to be a need
for an adjustment. And we intend to have a report and a
presentation from the Chief Inspector in the next 90 days. But
first we want to identify the functions and the budget of the
IG.
Mr. McHugh. I think that's a wise approach. I encourage you
to go about this in a very prudent manner and I know you will.
I just am concerned and I never heard it from any of you. But
the proverbial talk on the street were suggestions that there
was a predetermined policy on a one for one trade.
Dr. del Junco. The talk in Washington is sometimes awfully
cheap.
Mr. McHugh. Sometimes a lot of other things, too. But
that's true. Well, we're comforted by your response, Mr.
Chairman, and appreciate that. Recognizing your time
constraints, we won't be too much longer, I don't believe. In
your comprehensive statement on postal operations for 1996,
your annual report, I noted that--and others noted--your TFP--
total factory productivity--was omitted, and yet, as I
understand it, it's a required part of the report. I was
wondering why that oversight and omission of TFP occurred.
Dr. del Junco. This was an administrative oversight. I have
addressed a letter to the Postmaster General requesting that an
answer be submitted to you immediately, and that in future
reports, I can assure that that will be addressed. You should
be receiving a letter within the next 48, 72 hours. Governor
Dyhrkopp wants to----
Mr. Dyhrkopp. We have been quite concerned about the
matter. It should have been in the report. It wasn't in the
report. The audit committee, which I'm chairman of, have asked
for an investigation of it. We want to know why it was left
out. Whose responsibility it was to have it in there. And who,
if anybody, had it taken out. We're going to thoroughly
investigate that matter and find out why that occurred.
Mr. McHugh. Thank you, Governors, for that. And we'll be
looking for that letter. I'd be happy because of the time
constraints of the Governors and their airline schedules to
yield to either the ranking member or the gentleman from
Illinois, if they have any followup questions. Mr. Davis.
Mr. Davis. I've got just one. Thank you very much. I've got
just one followup. We talked about automation, and then it
occurred to me that just a few days ago we were discussing
whether or not we're equipped to handle breakdowns and what
happens when the equipment doesn't work that we have relied so
much upon. Are you satisfied with the contingency planning that
you're doing to be in a position, should there be any equipment
failure, to still have the kind of efficiency that we're
looking for?
Dr. del Junco. It's hard for me, not being a part of
management, to answer that question. But let me just say a
couple of things. One: before any of that equipment is placed,
there is a considerable amount of research, pilot programs, and
subsequent to that, they have systems to assure that our--there
is not a breakdown, as you say, where we cannot deliver the
mail. These are precautions that are part of the system. And it
doesn't matter what kind of automation we're talking--be at the
level of the optical character readers or the remote controls
or whatever--there are systems in place for that. And if you
need more--a more specific answer, I will have management
address that question for you.
Mr. Davis. Well, let me just say, Mr. Chairman, that I
really appreciate the level at which you are in terms of the
satisfaction. I know that sometimes, in some of the industries
and businesses with which I've been involved, I've seen
computers kind of break down and everything stops. And you
can't get anything done.
Dr. del Junco. We can't afford that.
Mr. Davis. Thank you very much. And I certainly hope that
you don't have that experience.
Mr. Fattah. Mr. Chairman, I'll take one last shot, if I
could, too.
Mr. McHugh. Mr. Fattah.
Mr. Fattah. There was some earlier comment about
competitors. And you referred, Governor Fineman, to FedEx. In
reality, the U.S. Postal Service, as best as I can discern,
doesn't have any competitors here domestically. There's nobody
who is in the same business that you are in, in terms of
universal service. And a part of the issue for many of us to
wrestle with is that since you don't have any competitors for
what your primary public function is and that is to deliver
mail to everyone no matter where they may be that on some of
those functions for which you do bring in revenue through other
activities, to what degree competition in other areas and some
of the structures, the bureaucratic structures that we've set
up, like ratemaking hurts your ability to offer a package are
issues, really, that do need to be grappled with, because we
don't want to be in a circumstance which is a reality in other
places in this world, that you can't get mail sent to anywhere
in the Nation.
And so, I think there are a lot of issues for us as
policymakers to ponder. We look forward to working with you.
But I'd be interested in any response from members of the Board
of Governors on this whole issue that was raised.
Dr. del Junco. You know, there is an area which there's no
competition, we have a monopoly, but there's other areas like
priority mail and express mail and so on and packages and so
on, in which the competition is extremely, extremely heavy. Our
hands are tied down because of the price structure. We are not
allowed to deduct--to any kind of portion of that fee.
And to be quite candid with you, we would love to have a
greater amount of flexibility, where we can compete in the
market place. It's interesting to me that Federal Express has
got the contract at the White House, not only this
administration. During the Republican administration they also
had the contract. And the reason they have it is because they
can discount the service. There are a lot of limitations that
we have imposed upon us in the competitive areas that really,
really does not allow us to bring in the revenues that we
should be bringing in.
Mr. Fineman. Congressman, when you were making those
remarks, I looked up at where you're sitting, next to
Congressman McHugh, and what I said to myself is that we have
to have the ability to deliver mail to every American. And when
I looked at both of your districts--two places that are very
different in America. Congressman McHugh represents one of the
largest rural districts in America, and Congressman Fattah
represents----
Mr. Fattah. I'm not going to hold that against him.
Mr. Fineman. Right. And Congressman Fattah, obviously,
represents portions of the inner city of Philadelphia. Those
two places, unless we continue to have a viable postal service,
those two places and your constituents really won't get mail on
a regular basis and a uniform rate. And I think that that's
what we really are here to protect.
Mr. Fattah. Well, let me thank you for your presence. And
we'll look forward to engaging on this and many other matters
as we go forward. Let me thank the chairman for his indulgence.
Mr. McHugh. Thank you, Mr. Fattah. Let me again say that
we're really delighted you're here and truly appreciate having
both you and Mr. Davis with us through the whole hearing. I'm
not accustomed, at this point in a hearing, looking around and
seeing anybody but me. It's a nice change and I appreciate it.
It's a wonderful change. With that, again, I understand you
have airline schedules. We do have a number of questions that
we'll be submitting for the record. I would certainly offer to
the Members in attendance and others of the subcommittee that
they are welcome to submit written questions should they
choose, that we would forward to you, Mr. Chairman, and the
other Governors, in expectation of your response, as in the
past. We thank you and echo the ranking member's comments about
your presence here today.
Let me repeat our appreciation for the thankless task you
do and for the great way in which you do it. On behalf of all
Americans, we certainly welcome your high level of achievement
and your sense of dedication. With that, I would note that we
will stand adjourned in contemplation of two upcoming
hearings--the next on April 16, involving ratemaking and after
that, April 24th, where the Postmaster General will be
rescheduled to have a hearing with him that was postponed.
So the subcommittee stands adjourned. Thank you.
[Whereupon, at 4:45 p.m., the subcommittee was adjourned.]
[The prepared statement of Hon. Benjamin A. Gilman and
followup questions and responses follow:]
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