Give USPS More Flexibility to Set Rates, Co-Chairs Say

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The U.S. Postal Service should not be privatized but should receive more flexibility to change rates and be operated by a corporate-style board of directors, according to recommendations issued yesterday by the co-chairs of the President's Commission on the U.S. Postal Service.


The recommendations include:


· Transform the USPS' Board of Governors into a corporate-style board of directors with broad authority to oversee postal operations. All directors should be selected based on business acumen and other experience necessary to manage an enterprise of the postal service's size and significance. Terms would be three years with a mandatory retirement age of 70.


· Give the board of directors and senior postal service management greater flexibility to manage without the limits imposed by statutory constraints.


· Transform the Postal Rate Commission into a Postal Regulatory Board with the responsibility to protect the public interest and promote public confidence in the fairness and transparency of postal operations.


· Replace the existing rate-setting process with an incentive-based rate-setting methodology in which the Postal Regulatory Board establishes base-line rates and rate ceilings for non-competitive products and services; reviews rate requests for non-competitive products and services that exceed established rate ceilings; and ensures that rates for competitive products and services are not cross-subsidized by revenue generated by non-competitive products and services.


Two subcommittees also issued their reports yesterday.


The business model subcommittee recommended that the USPS limit its activities to collecting, sorting and delivering mail; maintain its mail monopoly and its sole access to customer mailboxes; and be required to comply with Securities and Exchange Commission regulations.


It also suggested that a commission be established to oversee post office closings similar to the system used to close unnecessary military bases. Once closings are recommended, they would become final unless Congress disapproved of them in their entirety within 45 days.


And the subcommittee supported postal efforts already under way to expand access to retail services at venues other than post offices, such as banks, grocery stores and other locations; and recommended that the board of directors obtain an independent appraisal of the current market values of its major real estate holdings.


The private sector partnership subcommittee recommended that USPS functions that can be performed better and at lower cost by the private sector be outsourced. It also wants the agency to develop additional private-sector partnerships to better serve the consumer and expand access to postal products and services beyond the traditional post office.


The technology challenges subcommittee and the workforce subcommittee will issue their recommendations at the commission's last meeting July 23. Then the commissioners will vote on what to include in the final report to present to President Bush by July 31.


"We are very pleased [that the committees and co-chairs] made several recommendations knowing that this should improve postal service productivity and noted that productive improvements are essential to the postal service," said Bob McLean, executive director of the Mailers Council, Arlington, VA.


Though compromises will be made, the proposals will jump-start the postal reform process, Jerry Cerasale, senior vice president of government affairs at the Direct Marketing Association, said at yesterday's Flats Summit in Washington.


"These are recommendations that go to Congress, and Congress is going to have to vet them," he said. "The biggest thing was the unanimous view of the commission that reform is necessary and some major reform is necessary now to keep the postal service viable in the future."


Bush established the nine-member commission Dec. 11 to uncover problems with the USPS structure and suggest legislative and administrative steps to ensure the long-term viability of postal delivery in the United States.


Senior reporter Scott Hovanyetz contributed to this report.


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