Private Contracting Would Help Postal Service, Experts Say

Fred Lucas | Staff Writer | Tuesday, April 22, 2008

Private Contracting Would Help Postal Service, Experts Say

(CNSNews.com) - A First Class stamp goes up to 42 cents next month, but it likely won't matter much as the U.S. Postal Service lost $5 billion last year.

Meanwhile, the use of more private contractors is considered by some analysts to be the best cost-cutting option for the Postal Service, but it's an option that some members of Congress want to restrict even though private contracting has been used since 1785.

Advocates who want to limit the Postal Service's (USPS) use of private contracting say that it hinders mail delivery service and puts customers at security risk.

But labor accounts for about 80 percent of USPS expenses, according to Robert R. Schrum, a research fellow at the conservative Lexington Institute, who recently completed a report on postal reform.

"The problem is when you raise rates every year, it puts off strategic initiatives," Schrum told Cybercast News Service, pointing out that postage has gone up by about 30 percent over 10 years.

"I don't think that trend is sustainable. It's simple economics. Price increases are going to prompt consumers to use e-mail and online bill paying. When prices are too high, consumers will revolt," he added.

From 1998 to 2007, the number of mail routes served by private firms rose from 5,424 to 6,531, an increase of 20.4 percent. Nonetheless, private contractors serve fewer than 3 percent of all routes and deposit mail in fewer than 2 percent of all delivery points in the United States, according to a Congressional Research Service study in February.

Given those numbers, Schrum said he did not understand the urgency of some congressmen to curtail the Postal Service's authority to use more private contractors, except perhaps because mail-carrier "union leaders desire to grow the memberships."

Sen. Tom Harkin (D-Iowa), however, thinks that outsourcing mail delivery would pose security risks. His bill introduced last year would prevent the USPS from entering into any new contracts on routes with more than one home per mile but would allow existing contracts to remain in effect.

"Outsourcing mail delivery to people who have not undergone the Postal Service's extensive screening and training process leaves open the possibility that convicted felons, identity thieves or other undesirable workers could have access to the sensitive materials that pass through the mail on a daily basis," Harkin said in a statement last May.

In November, Rep. Stephen F. Lynch (D-Mass.) proposed a House version of Harkin's bill, which would require the USPS to enter into an agreement with mail-carrier unions before contracting with a private firm for delivery.

In a letter to lawmakers last summer, U.S. Postmaster General John E. Potter said that 90 percent of private contractors are small minority- and women-owned businesses and that if such legislation was passed, "the ability of the Postal Service to effectively manage its vast delivery operations for transporting and delivery would be eliminated."

He further referenced a 2006 law that restricts stamp-price hikes to the rate of the Consumer Price Index.

"This change was intended to encourage further reductions and efficiencies," said Potter. "In mandating a price cap, the new law did not provide any new cost-control tools. Consequently, the consideration of contracts for delivery service consistent with our established labor agreements remains a critical element in controlling one of our primary costs."

The Postal Service has used private contractors since 1785, Potter said.

The career mail-carriers have no problem with many of those contractors, said Drew Von Bergen, spokesman for the National Association of Letter Carriers, the postal worker's union.

For much of the 20th century, private contracting has been limited to "highway contract routes," or sparsely populated areas, with only delivery points located per every 10 miles or more, Von Bergen said.

The problem now, he said, is that USPS officials want to extend private contracting into populated routes just to save money.

"To tear down the Postal Service in the name of saving it doesn't make much sense," Von Bergen told Cybercast News Service. "To contract areas where it isn't feasible for us, we don't have a problem. Here you are taking the traditional work of city and rural letter-carriers and contracting it out just to avoid the pay and benefits the postal workers get."

For instance, Von Bergen said, a condominium complex in Fort Lauderdale, Fla., - built in the middle of an existing mail route already served by a USPS carrier - was contracted out to a private firm. Also, a building in New York City was also handed over to a private mail carrier, he said.

Von Bergen did not know of any Postal Service jobs that were actually lost to private contractors, but he thinks if the process goes unchecked, it would reach that point.

"A private organization or individual might do a route for six months and then move on and do something else," Von Bergen said. "Postal mail carriers spend their careers there. They care about the customers. We don't feel that would be the case with contract delivery used to save money. It's not the same quality of person doing it."

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