US Congressional panel recommends postal service overhaul

The Postal Service needs more flexibility in setting rates and a strong dose of modernization to survive in the 21st century, Controller General David Walker told lawmakers.

Walker told a House Committee on Government Reform panel looking into overhauling the Postal Service that stiff online competition has contributed to a three-year decline in money-generating deliveries, yet the post office has had to serve more than 5 million more addresses in that time.

The post office, however, had notable successes last year after legislation was passed reducing the service’s payments for its pension obligations, said Walker, who heads the General Accounting Office, Congress’ auditing arm.

The service cut costs, reduced its work force, increased its productivity for a fourth consecutive year, achieved $1.1 billion in cost reductions and cut its debt.

Still, its “respite is likely to be short-lived,” said Walker.

“In our view, the service must have greater flexibility to operate in a businesslike fashion,” Walker said. “Managerial accountability must come from the top, with the service governed by a strong, well-qualified corporate style board that holds its officers responsible and accountable for achieving real results both currently and over time.”

The service, which became an independent government entity in 1970, had annual revenues of $70 billion and nearly 830,000 employees at the end of October 2003. It carries $90 billion in debt and liabilities, including pension obligations.

Walker also said the service’s mission and role need to be clarified by defining the scope of universal service and the postal monopoly and clarifying the role of the service in regard to competition.

A presidential commission on postal service reform recommended in July changing the Postal Service’s business model, private sector partnerships, technology and work force.