USPS Moves Forward With Modified Saturday Delivery Service [UPDATED]

The United States Postal Service (USPS) retained its authority to move forward to implement its modified Saturday delivery service plan, announced on February 6, 2013 under the appropriations bill that will be signed by President Barack Obama.

UPDATE: According to an e-mail statement from Ali Ahmad, a spokesperson of Congressman Darrel Issa, “Congress has done nothing to change the authority that USPS indicated it had when it announced the plan.”

Ahmad explained that although the spending bill maintains the six-day delivery language, it is vague and it does not stop the USPS from changing what products it can deliver on Saturdays, thus it has room to revise its delivery schedule.

In addition, the decision of the U.S. Government Accountability Office regarding the delivery service of the USPS concluded, “Absent of specific legislative language, continuing resolution maintains the status quo regarding government funding and operations. Although the provision at issue here is an operational directive, not an appropriation, we see no language in the Continuing Resolution to indicate that Congress did not expect the provision to continue to apply during the Continuing Resolution.”

USPS Postmaster General Patrick Donahoe announced last month that the agency’s decided to end its Saturday delivery service starting in August to save $2 billion annually. During a hearing conducted by the Committee on Homeland Security and Governmental Affairs on February 13, Donahoe told legislators that the USPS is losing $25 million per day. The postmaster general emphasized that the postal service lost $15.9 billion last year. USPS experienced net losses for five consecutive quarters, and 14 of the last 16 quarters.

Donahoe explained that the postal service defaulted on Retiree Health Benefits (RHB) payments to the United States Treasury for a total of $11.1 billion, and a large part of its losses is due to the prefunding requirement of the RHB. He pointed out that addressing the prefunding requirement will not completely resolve the problems of the USPS. He emphasized that the existing business model of the USPS is unsustainable.

According to him, USPS will be able to return to financial stability if it has an enhanced flexibility to adapt to the rapidly changing marketplace.

“This flexibility will enable us to remain profitable, by giving us the tools to operate more efficiently, create new products and innovations and to control costs. Absent this flexibility, the postal service will continue to experience sustained losses, in spite of our long-term efforts to reduce costs,” he said.

Some lawmakers and trade groups believed that the USPS has no authority to cut its Saturday service and it needs to get an approval from Congress. However, postal officials believed that they have the legal authority to reduce the delivery service since it is currently operating under the government’s stopgap continuing resolution.

Back in February, Donahoe explained to Senator Mark Pryor of Arkansas that based on their interpretation and advice of his the lawyers, the postal service has the legal authority to end the Saturday delivery.

“It is our interpretation, based on what my attorneys have told me, that we are clear to move ahead on this. I would implore this Congress not to put any other restrictions on us from a six-to-five-day perspective,” he said, citing opinion polls showing the American public supports the move,” he said.

Based on a number of surveys, people support the decision of the USPS to end the six-day delivery of first class mail. Congressman Darrell Issa and Senator Tom Coburn support the delivery service plan of the USPS.

The USPS will only affect the delivery of first class mails, magazines and direct mails but it will continue to deliver packages and pharmaceutical drugs on Saturdays.

According to David Partenheimer, spokesperson for Postal Service, “Once the delivery schedule language in the Continuing Resolution becomes law, we will discuss it with our board of governors to determine our next steps.” He emphasized that the new delivery schedule of the USPS would help keep the postal service from becoming a burden to tax payers. In addition, he said that the new schedule responds to the changing needs of customers.

The USPS is an independent agency and does not receive any funding from the federal government. The postal service will need $47 billion bailout money if Congress does not provide flexibility to restructure its business operations.