USPS plans reorganization

An ambitious plan to reform the U.S. Postal Service (USPS) and make it operate more like a commercial business is meeting strong skepticism from the private sector. The Postal Service unveiled its transformation plan last month. It includes proposals to cut $5 billion in costs by 2006 and create a business structure, combining both public and private sector operating strategies. By becoming a Commercial

An ambitious plan to reform the U.S. Postal Service (USPS) and make it operate more like a commercial business is meeting strong skepticism from the private sector.

The Postal Service unveiled its transformation plan last month. It includes proposals to cut $5 billion in costs by 2006 and create a “hybrid” business structure, combining both public and private sector operating strategies.

By becoming a Commercial Government Enterprise (CGE) under the plan, USPS would remain a government-owned entity but would enjoy some of the operational and financial flexibility found in the private sector, according to USPS.

As a CGE, USPS would set rates more predictably, be able to retain earnings, work under private sector labor laws and, depending on future legislation, could even pay taxes or dividends to the government. The structure would be similar in form to Fannie Mae, a Congressionally charted but privately owned mortgage company.

Not everyone is thrilled with the plan, including freight transportation providers and key postal customers. In comments to The Washington Post, a spokesman for Atlanta-based United Parcel Service said USPS should focus instead on providing first-class mail service, then getting its finances in order. Currently, USPS has $11.3 billion in debt and faces pension liabilities of $32 billion, the newspaper reported.

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