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What are the major problems of the Postal Service and what can be done to solve them?

Our major problems which we prefer to think
of as major opportunities all add up to a
single challenge to the Postal Service to
continue to find ways of expanding the quantity
and quality of postal service to the public
in an economically responsible manner. This
means continuing to foster cost consciousness
throughout postal management, whether in the
form of alertness to opportunities for reducing
workers' compensation costs by cooperating with
injured employees in rehabilitation programs
or by vigorous employee safety programs, or
in the form of major programs to improve
efficiency by deploying sophisticated automated
equipment. It means endless attention to the
mailing needs of our customers, whether in the
form of courteous treatment at the local post
office window or in that of working with a major
bulk mailer to improve the processing of a million-
piece mailing.

A few years ago, postal officials often stated
that, although most of the major goals of the
Postal Reorganization Act had largely been met,
one goal that of financial self-sufficiency
remained elusive. That goal too has now been
met. Looking at the Postal Service from the
perspective of where it has come from over the
past several years, an observer might be tempted
to say that there are no major problems over-
shadowing its future, and that all that is
needed for continued success is to continue
policies and practices that have proved successful
in the past. Any such observation would be
unrealistically myopic.

The Postal Service runs on volume

currently over 117 billion pieces per year. And nothing is more important to continuing growth of volume than reasonably stable rates at acceptable levels. Since our rates are in large measure determined by our costs, continuing gains in productivity are highly important to our ability to keep rates at acceptable levels. But the methods and measures that contributed so greatly to our productivity gains of the past several years principally the deployment of mechanized

equipment and the encouragement of mail preparation by mailers through presort discounts cannot be expected to yield successive increases in productivity indefinitely into the future: their potential has largely been exploited. Thus, perhaps our greatest single problem/ opportunity is to develop new ways of further improving our productivity. Successful accomplishment of the automation program which is now under way, taking advantage of the major gains in efficiency that are inherent in the use of "ZIP+4", is an illustration of what can be done.

MR. ROYBAL. The Postal Service had a net revenue after expenses of $802 million in 1982 What are your financial projections for 1984 and do you still anticipate a general rate increase in November of this year?

MR. BOLGER. Current projections for Fiscal Year 1984 indicate that the Postal Service will experience an estimated loss of about $1,541 million. Pending economic conditions, inflation, and a successful conclusion of an equitable collective bargaining agreement, it is anticipated that a rate increase may be deferred from November 1983 until March of 1984. However, predicated on changing conditions, it is possible that a rate increase could be deferred beyond that date.

MR. AKAKA. Many rural areas in Hawaii depend upon small post offices and rural delivery routes. Does the Postal Service plan any cuts in service to rural post offices or rural routes in Hawaii?

MR. BOLGER. There are no particular plans to change service to rural post offices or rural routes in Hawaii. This is not to say that changes may not be made in the future; however, I want to emphasize that if changes are necessary, they will always be made in a way that protects the levels of service available

to customers.

MR. AKAKA. The Office of Technology Assessment issued a report in September of 1982 on the "Implications of Electronic Mail and Message Systems for the U.S. Postal Service". Has the Postal Service responded to the OTA report's conclusions? If so, summarize this response.

The information follows [

Mr. Fred B. Wood

Project Director

APR 2 9 1982

Office of Technology Assessment
Congress of the United States
Washington, D.C. 20510

Dear Mr. Wood:

Thank you for providing the Postal Service with an additional opportunity to review your draft report entitled, "Implications of Electronic Mail and Message Systems for the U.S. Postal Service". In the main, I find the report most interesting and a significant contribution to the examination of electronic message service systems and the role of the Postal Service in such systems.

I have had each of the managers and planners who reviewed the initial draft go over the recent product and, based on their comments, I would make the following points. Since the United States Court of Appeals for the District of Columbia Circuit has denied the Department of Justice's petition for relief under the All Writs Act (In Re United States of America, No. 81-2402, April 20, 1982), I ask that the discussions of this litigation at pages eighteen and one hundred forty-two of the report be revised. In addition, I find unworkable the Suggestions at pages one hundred seventeen and one hundred eighteen that five or six-day Generation II EMS delivery might be maintained while regular mail delivery might be reduced to one or two days per week. My staff also points out that the eight cent per piece MAILGFAM cost used in the report is an outdated figure which has since been refined through our revenue and cost analysis process to twenty-four cents. Thus HAILORAH costs are not a good proxy for possible ES costs. While my staff also made a few technical points concerning certain of the costing assumptions used in the report and the precision of some of the analogies used, I will withhold comment at this time so as to facilitate the publication of the report, reserving the right to comment on them later should it become necessary.

stamp with proportional reductions in other rates, would still result in a revenue loss of $180 million per month. Since it would take at least a year to establish new rates, the revenue loss would reach about $2 billion at the lower 18-cent rate level. This $2 billion revenue loss would increase our borrowing requirements by that amount and would require a higher rate level to permit repayment of the additional borrowing.

MR. ROYBAL. What is the status of your mail handling facilities?
What are your long-range plans in this regard?

MR. BOLGER. Over the past ten years, the Postal Servic has invested about $3.7 billion for the construction of new postal buildings, purchases of facilities and building improvements.

We are continuing to improve and modernize our facilities.
Currently, we have eight major mail handling facilities
under construction (Western Nassau, NY; Phoenix, AZ; Santa
Ana, CA; New Castle, PA; Pittsburgh, PA; Green Bay, WI. Sioux

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City, IA; and the Potomac, MD Training and Development facility). of 2 Seven major projects are currently in the design stage (Mid-Island/Hicksville, NY; Springfield, MA; North Bay, CA; Suburban Maryland; Ft. Worth, TX; Nashville, TN; and Salina, KS. New facility projects for Southern Maryland; Stockton, CA; West Palm Beach, CA; San Jose, CA; Knoxville, TN; and Bakersfield, CA, " have been approved and are proceeding on schedule towards award

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