United States Postal Service

2000 Comprehensive Statement on Postal Operations



Table of Contents



Chapter One Compliance with Statutory Policies 

A. Fundamental Service to the People (39.U.S.C. 101(a)) 

1. General 

2. Board of Governors 

3. Strategic Planning 

4. Quality 

5. Diversity 

B. Service to Small or Rural Communities (39 U.S.C. 101(b)) 

C. Employee Compensation and Career Advancement (39 U.S.C. 101(c)) 

1. Collective Bargaining

2. Personnel 

3. Compensation and Benefits 

4. Employee Development

5. Selection, Evaluation and Recognition 

6. Workplace Environment Improvement 

D. Postal Cost Apportionment and Postal Ratemaking Developments (39 U.S.C. 101(d))

1. Omnibus Rate Case 

2. Other litigation 

E. Transportation Policies (39 U.S.C. 101(e),(f))

1. General

2. Domestic Transportation 

3. International Transportation 

4. Postal-Owned Transportation

5. Mail Transport Equipment 

F. Postal Facilities, Equipment and Employee Working Conditions (39 U.S.C. 101(g))

1. Safety and Health - Safety Management Process 

2. Environmental Programs 

3. Total Resource Management 

4. Facilities 

5. Purchasing and Materials 



Chapter Two Postal Operations 

A. Public Perceptions, Customers Outreach and Mailer Liaison 

1. Customer Feedback Analysis 

2. Customer Outreach and Mailer Liaison 

B. Mail Volume and Service Performance

1. Mail Volume 

2. Service Performance Measurement

3. International Mail 

C. Mail Distribution 

1. Automation Activities 

2. Remote Encoding Centers

3. Process Improvements 

4. Material Handling

5. Integrated Processing Facility 

6. Support Systems for Mail Processing 

D. Delivery Unit Operations 

1. Delivery Point Sequencing 

2. Delivery Operations Information System 

3. Mobile Data Collection Device 

E. Retail Programs 

1. Marketing Calendar

2. Retail Sales 

3. Point-of-Service One 

4. Retail Workforce Strategies

5. Plan for Retail Operations Performance 

6. Postage Technology Initiatives 

7. Self Service 

F. Marketing Technology and Channel Management 

G. Pricing and Product Design 

1. Periodicals Cost Reduction Effort 

2. Business Mail 101 

H. Electronic Commerce

1. Our Web Presence... www.usps.com 

2. Messaging Services 

3. Online Payment Services

4. Bringing Choice to Our Customers 

I. Technology 

1. Strategic Technology Initiatives 

2. Information Technology Infrastructure 

3. Information Technology Assessibility 

4. Information Application Support 

J. Operations Planning 

1. Staffing and Scheduling 

2. Address Management 



Chapter Three Financial Highlights 

A. Financial Summary 

1. Revenue 

2. Expenses 

3. Net Loss 

4. Financing 

B. Productivity 

1. Total Factor Productivity 

2. TFP, 2000 and the Future Plan 

3. TFP, Benchmark Measures 

4. TFP, Additional Considerations 

C. Federal Government Appropriations

D. Breast Cancer Semipostal Research Stamp



Chapter Four Preliminary 2002 Annual Performance Plan 



Chapter Five 2000 Performance Report 



All reference to "2000" or "the year" refer to the government fiscal year ending September 30, 2000.



Chapter 1 Compliance with Statutory Policies 



A. Fundamental Service to

the People

(39 U.S.C 101 (a))



1. General



It began with a successful rollover to the new

century. Years of preparation paid off. When the

year 2000 arrived, the mail kept moving and finan-cial

data and other key information systems

remained intact.



Postal Service employees continued to deliver

record-breaking performance in customer service

and in overnight delivery of First-Class Mail.

Those successes translated to immediate benefit

for our customers.



Customer satisfaction measurements revealed

that 92 percent of households surveyed rated their

level of satisfaction with the Postal Service as

"good," "very good" or "excellent." And, independ-ently

measured delivery scores continued to rise,

with a high 94 percent of local First-Class Mail

delivered on time for the year.



The Vice President's Commission on

Reinventing Government awarded the Postal

Service the prestigious Hammer Award for

achievement in diversity. Fortune magazine mir-rored

that sentiment by placing the Postal Service

among the top ten best workplaces for minorities.

Those successes fueled our efforts and helped to

expand the scope of our multicultural initiatives.

Throughout the year, we sought to reach

under-represented markets through advertising

and product specialization. We contracted help

from three advertising agencies known for their

expertise in reaching specialty markets, including

African Americans, Hispanic Americans and

Asian Americans.



And, we successfully launched our newest web-site,

www.usps.com/correo. Written entirely in the

Spanish language, the website gives our Spanish-speaking

customers access to the full range of

services and employment opportunities offered by

the Postal Service.



We've embraced electronic technology and

began providing the Internet-based products and

services our customers demanded with the

launch of our premier website, www.usps.com.

Since its inception, we've continuously expanded

our electronic services lineup. It now includes

the following:



Postal Service eBillPay, an electronic bill pre-sentment

and payment service for individuals

and businesses, too.



NetPost Mailing Online, a service that brings

the convenience of letter shop operations to

consumers' home computers. It allows users

to electronically transmit their (First-Class

Mail and Standard Mail (A)) in the form of

documents, correspondence and newsletters,

along with their mailing lists, to the Postal

Service via our website at www.usps.com.

The electronic files are securely distributed to

printers who print, insert, add postage, sort

and transport the mailings to the nearest Post

Office for processing and delivery.



The Postal Store, a virtual retail outlet that

brings the speed and convenience of secure

on-line shipping to customers looking to buy

postage and other postal products.



And the most recent addition, Netpost

CardStore, is an Internet-based service, designed to

make sending high-quality, personalized greeting

cards easier and less time-consuming. Its primary

focus is business-to-business and business-to-con-sumer

greeting cards, but consumers can send their

individual greeting cards, too.



With each electronic service initiative, we've

sought to provide convenient, high-value Internet-based

services for our customers, while reaffirming

the relevancy of traditional, hard copy mail. So far

we've been successful.



We are also working to build an organization

of operational excellence. We are continuing our

Breakthrough Productivity Initiative to centralize

functions, eliminate duplication and reduce

administrative staffing. This will help us to cut sig-nificant

costs from our system. Despite these

efforts, an increasingly competitive communica-tions

market and our existing regulatory

environment are working together to create an

increasingly difficult financial outlook for the

Postal Service. With the continued expansion of

electronic communications, forecasts call for signif-icant

diversions of First-Class Mail to other media.

We are also experiencing changes in the patterns of

mail volume growth, with a shift away from

higher-contribution products such as First-Class

Mail to Standard Mail, which makes a smaller con-tribution

to our overhead. In addition, a labor

arbitration process that does not consider the needs

of our customers has contributed to a situation in

which salaries are growing at a rate that exceeds

both our revenue and inflation.



2. Board of Governors



As the governing body of the United States

Postal Service, the 11-member Board of Governors

2000 Comprehensive Statement on Postal Operations|1

Chapter 1 Compliance with Statutory Policies

 1•has responsibilities comparable to a board of direc-tors

of a publicly held corporation. The Board is

composed of nine Governors appointed by the

President of the United States with advice and

consent of the Senate, the Postmaster General and

the Deputy Postmaster General. The Governors

appoint the Postmaster General who serves at their

pleasure without a specific term of office. The

Governors, together with the Postmaster General,

appoint the Deputy Postmaster General (39

U.S.C. 202).



The Board meets on a regular basis and, at

the annual meeting in January, the chairman is

elected by the Governors from among all members

of the Board. The vice chairman is elected by the

full Board.



The Board directs the exercise of the power of

the Postal Service. It establishes policies, basic objec-tives

and long-range goals for the Postal Service in

accordance with Title 39 of the United States Code.

Except for those powers specifically vested in the

Governors, the Board may delegate the authority

vested in it by statute to the Postmaster General

under such terms, conditions and limitations

including the power of redelegation, as it deems

desirable (39 U.S.C. 402). The Governors are

authorized to establish reasonable and equitable

classes of mail and reasonable and equitable rates

of postage and fees for postal service (39 U.S.C.

3621). A specific power reserved by statute for the

Governors alone is to approve, allow under protest,

reject or, by unanimous written decision, modify

recommended decisions of the Postal Rate

Commission on postal rate and mail classification

changes (39 U.S.C. 3625).



During 2000, the Board held regular monthly

meetings for a total of 24 days. Eight of the regular

monthly meetings were held in Washington, DC.

Another four in cities across the country gave

Board members an opportunity to meet mailers

and employees, hear their concerns, visit postal

facilities and observe new technology.



The Board had four standing committees:

Audit, Capital Projects, Compensation and

Strategic Planning. The committees hold regularly

scheduled meetings during the year to consider

matters within their areas of responsibility and

refer items to the full Board for consideration.

A number of these meetings were held prior to the

scheduled Board meetings to facilitate action on

committee activities.



In October 1999, the Board approved the

2000 Economic Value Added (EVA) Variable Pay

Program and a resolution designating the number

of authorized Assistant Postmasters General/Vice

Presidents. They also approved their meeting

schedule for 2000 and the budget of the Office of

the Governors.



In November 1999, the Governors approved

the Recommended Decision of the Postal Rate

Commission for Weighted-Averaged, Nonletter-Sized

Business Reply Mail in Docket No. MC99-2.

The Board approved a resolution setting

February 6, 2000, as the effective date for the new

classification and fees. The Board also approved

filing with the Postal Rate Commission an Exper-imental

Classification for Mailing Online and

extending the contract for external audit services for

one year. The Governors approved the 2000

Performance Plan for the Office of Inspector General.



In December 1999, the Board approved the

1999 audited financial statements and 1999

Annual Report. The Board also held a special

meeting on succession planning by conference call

in December.



In January 2000, the Board approved the

filing of an Omnibus Rate case with the Postal

Rate Commission. The Governors approved a res-olution

relative to the Postmaster General's salary

and the Board approved a resolution on capital

funding. The Board also approved the annual

report to Congress in compliance with the

Government in the Sunshine Act. The Governors

elected Einar V. Dyhrkopp as Chairman of the

Boardand the Board elected Robert F. Rider as

Vice Chairman for 2000.



In February, the Board approved both the

1999 Annual Performance Report and the 2001

Preliminary Annual Performance Plan, in compli-ance

with the Government Performance and

Results Act. The Board also approved the transmis-sion

of the Annual Comprehensive Statement on

Postal Operations to Congress. The Governors

approved the Postal Rate Commission's

Recommended Decision in Docket No. MC00-1,

Experimental Ride-Along Periodicals Classification

Change. The Board approved an implementation

date of February 26, 2000, for the change.



In March, the Board reviewed the prelimi-nary

plans relative to electronic commerce and the

use of the Internet to meet customer demands.



In April, the Board approved the offering of

ePayment services through the Internet. The Board

also approved an Audit Resolution Process for

reports from the Office of Inspector General.



In May, the Board approved a resolution on

International Postage Rates for three categories of

surface printed matter. The Board approved a reso-2|

2000 Comprehensive Statement on Postal Operations| Chapter 1 Compliance with Statutory Policies

 2•lution on Compensation and Benefits for Officers

of the Postal Service that strengthened the approval

and administration of relocation benefits. The

Board approved the Chief Inspector's Semiannual

Report to Congress on the summary of investiga-tive

activities in accordance with the Mail Order

Consumer Protection Amendments of 1983.



In June, the Governors rejected the Postal

Rate Commission Opinion and Recommended

Decision in Docket No. C99-4, Complaint of

Continuity Shippers Association. The Board

approved a resolution for the consideration of

eCommerce initiatives. The Board approved a

resolution for an updated Charter of the Audit

Committee that was based on rules adopted by the

Securities and Exchange Commission, the

exchanges and the Auditing Standards Board.



In July, the Board approved a resolution on

Capital Funding that added developmental real

estate projects to those requiring Board approval

when a project exceeds $10 million.



In August, the Governors approved the

Decision on the Recommended Decision of the

Postal Rate Commission in the Mailing Online

Experiment, Docket No. MC2000-2. The Board

approved a resolution with September 1, 2000, as

the effective date of the new classification. The

Board approved a resolution for Contingent

Borrowing Authority. The authorized the exercise

of the power of the Postal Service to borrow money

under 39 U.S.C. 2005. The Board also approved a

resolution expanding Priority Mail Global Guaran-teed

Service to include non-documents shipments,

effective October 1, 2000.



In September, the Governors approved the

2001 budgets for the Office of Inspector General

and the Postal Rate Commission. The Board

approved a public notice in the Federal Register for

an International Rates Proposal. The Board also

approved transmittal of the Five-Year Strategic Plan

in compliance with the Government Performance

and Results Act.



During the year, the Board considered and

approved 22 capital investment proposals costing

$10 million or more. Funding was approved for

seven automation-related projects, including some

that increased readability and throughput of auto-mated

equipment. Systems approved included

automated induction units for secondary parcel

sorting machines, upgrade of optical character

reader equipment, automated flat sorting machines,

expanded capability for delivery and carrier

sequence bar code sorters, control modifications for

small parcel and bundle sorters upgrade readers and

feeders for flat sorting machines. Eight facility proj-ects

were approved, including Twin Cities Air Mail

Center, St. Paul, MN; new lease for Midtown

Station and additional funding for Ansonia Station,

New York, NY; expansion of the Los Angeles Bulk

Mail Center; Priority Mail Center, Phoenix, AZ;

Crossroads and Topaz Stations, Las Vegas, NV;

advance site and design, Santa Monica, CA; and

Air Mail Center expansion, San Francisco, CA.

Five other projects were approved, including funds

for Mailing Online, PostalOne!, POS ONE Stage

2B, Mail Evaluation, Readability and Lookup

system (MERLIN)and delivery and collection vehi-cles.

Two projects were approved as part of the

information platform, including surface-air man-agement

system and delivery operations

information system.



Governor Sam Winters, serving in his one-year

extension, ended his term on the Board

November 8, 2000. Alan Kessler was appointed to

the Board on November 9, 2000. Governor

Kessler's term expires in December 2008. The

Board appointed John Nolan Deputy Postmaster

General on February 5, 2000.



3. Strategic Planning



The Office of Strategic Planning supports

the Postmaster General and the Management

Committee, within the policy framework set by

the Board of Governors, in the development,

approval and implementation of a Five-Year

Strategic Plan, as required by the Government

Performance and Results Act (GRPA). The Office

is also responsible for preparing the GPRA-required

preliminary and final Annual Performance Plans.



The Office of Strategic Planning also assists

the Strategic Planning Committee of the Board

of Governors and the Management Committee

in addressing long-term strategic issues and pro-vides

support to the annual planning process. The

office publishes an annual Business Environment

Assessment (BEA) at the beginning of the annual

planning cycle. Postal managers are updated

on issues likely to impact the Postal Service in

upcoming years and facilitates discussion

with Postal Service stakeholders on the future of

the Postal Service.



a. The Five-Year Strategic Plan,

Fiscal Year 2001-2005



The GPRA of 1993 required federal govern-ment

agencies, including the Postal Service, to

develop and submit to Congress and the President

a five-year strategic plan. According to the statute,

Chapter 1 Compliance with Statutory Policies 3

 3•this plan should outline the mission of the agency,

describe the challenges faced by the organization

and provide information on how the agency will

address those challenges. Agencies also are required

to provide the objectives, measures and targets that

should be used to define success and evaluate

progress. Finally, agencies need to involve their

stakeholders in discussions on the objectives, strate-gies

and measures.



GPRA requires the Postal Service to update

its Five Year Strategic Plan at least every three

years. The previous strategic plan was provided to

Congress and the President in September 1997.

An updated plan, for 2001-2005, was provided in

September 2000. The revised strategic plan repre-sents

a summary of an ongoing process that

involves extensive work by the Board of

Governors, the Management Committee and

postal stakeholders.



The Postal Service is beset by an outdated

regulatory model that limits flexibility in certain

key areas critical to the organization's future suc-cess.

We are seeking statutory reform that would

provide a new regulatory model with increased

pricing, product, labor and investment flexibility.



The strategic plan underlines the importance

of this goal as it addresses one of our fundamental

challenges - the uncertainty about future mail

volume growth as a result of changing technology.



In the past, the Postal Service was able to

forecast mail volume growth primarily based on

assumptions about the growth of the U.S.

economy. The widespread availability of the

Internet in American homes and businesses and

the development of Internet applications that may

substitute for traditional postal applications, such

as bill presentment and payment, suggest that

business practices and consumer behavior may

change in the future. The Postal Service recognizes

that many external experts predict that such

changes will cause mail volume to decline.



The Postal Service is operating within an

extremely volatile market environment with

competitive pressures unlike any it has experi-enced

in the past. While it is clear that these will

likely contribute to a long-term, negative effect

on mail volume and revenue, the organization

must make strategic decisions for the future

while operating within a changing marketplace.



The plan identifies three major strategic

challenges created by this environment. The first

is the issue of affordability, or maintaining postal

prices at competitive levels, subject to the break-even

requirements of the Postal Reorganization

Act. The postal response to this challenge is a set

of strategies known as the "Blueprint for Progress:

Breakthrough Productivity Initiatives," which

have the goal of reducing costs by about $3-$4

billion over the next several years. The strategies

include targeted reductions in overhead, overall

postal employment, transportation and fuel costs

and improvements in purchasing productivity.

Other strategies focus on improving the Postal

Service operating network and increasing pro-ductivity

of current flat and package handing

operations by implementing automation, mate-rials

and handling, information processing and

other technologies.



A second major challenge is to identify oppor-tunities

for the Postal Service to grow revenue to

replace volume that may be lost to Internet-based

applications such as electronic bill payment and

presentment and e-mail interactive advertising. We

are responding to this challenge in a number of

ways. Our primary focus is maintaining and

strengthening the value and relevance of our core

products and services. We are doing this by main-taining

high service levels, increasing ease of use

and access and adding enhancements and features

that position our core products as the right solu-tions

for customer needs. We are also developing

new electronic and Web-enabled services.



The third challenge identified and described

in the strategic plan is the need for the Postal

Service to become more flexible, innovative and

responsive to customer needs. This is a "vision" of

change that will prepare the Postal Service for the

future. However, such changes press the limits of

the current regulatory and legislative structure

established 30 years ago by the Postal

Reorganization Act of 1970.



The Postal Service is not only seeking signif-icant

improvements in internal processes, but is

also in need of more flexibility in developing and

pricing services, investing and working with

postal unions.



The strategic plan introduced a framework,

called "Gateway to the Household," which

increases the focus on the traditional mission of the

Postal Service to provide prompt, reliable services

to all communities. The "Gateway to the

Household" expands the internal focus on postal

operations to include a more externally oriented

"value chain" that includes mailers, the mailing

industry and the attitudes and behaviors of recipi-ents

of the mail. The future success of the Postal

Service will depend on improvements across the

4 Chapter 1 Compliance with Statutory Policies

 4•entire value chain as mail is increasingly subject to

technological substitution and direct competition.



The strategic plan describes the risks facing

the Postal Service if the strategies for improving

affordability, growth and flexibility are unsuc-cessful.

The traditional mission and infrastructure

of the Postal Service would be under severe pres-sure

for change - change that may be disruptive

and that the American public has shown no will-ingness

to consider.



b. Leadership Support



The process of framing strategic issues,

providing data and analysis, developing policy

options and facilitating leadership discussions is

an intensive and continuous process. Strategic

Planning provides the necessary support to postal

leadership efforts. Initiatives include providing

management with timely and relevant "futures"

seminars, industry and academic experts, strategic

research and consulting support, scenario develop-ment

and other programs that respond to the

changing needs of postal management in a

dynamic, competitive environment.



c. The Business Environment Assessment (BEA)



The BEA supports postal officers and execu-tives

in the development of annual performance

targets. The office integrates data provided by dif-ferent

departments to create a report that

establishes a common foundation for the develop-ment

of functional plans.



The BEA focuses on the impact of legislation

and regulatory changes on the Postal Service, on

changing technology and on trends in postal mar-kets.

It also addresses changes in the economy and

labor market and business practices or processes

that may affect the Postal Service.



The BEA is also used as a training tool in the

development and mentoring of the next generation

of postal leaders and as the basis for discussions

with postal stakeholders about the future of the

Postal Service.



d. Stakeholder Outreach



The Postal Service interacts with its stake-holders

- employees, customers, the public, the

mailing industry and the policy community - in a

number of different ways. Many of these interac-tions

often tend to be fairly specific and related to

immediate, practical issues. In 2000, we conducted

a major initiative to discuss long-term strategic

issues about the future of the Postal Service with the

different stakeholders. In the coming year, the Postal

Service will extend these discussions, using the

Internet to create broader and more interactive par-ticipation

in the planning process.



e. The Annual Performance Plan and the Annual

Performance Report



The Preliminary Annual Performance Plan

for the Postal Service has been included with this

Comprehensive Statement, as required by GPRA.

This Performance Plan describes the goals, sub-goals,

indicators, measures and preliminary targets

for 2002, which begins October 2001.



The targets are set each year after extensive

consultation with both headquarters and field

managers that takes place during the Deploy phase

of the management cycle, which is completed near

the end of each fiscal year. The preliminary targets

are subject to change as data become available or

as changes in the external environment force

changes not foreseen during the planning process.

The Postal Service will provide updated plans to

Congress as necessary.



Chapter 5 of this document is the Annual

Performance Report required by GPRA. The

Performance Report assesses the success of the

Postal Service in achieving the targets outlined in

the Annual Performance Plan. It is intended to

provide the postal policy community with consis-tent,

timely, relevant and accurate data to evaluate

postal performance.



f. Improving Postal Goals and the Planning Process



Appendix 1 of the Postal Service Five-Year

Strategic Plan, 2001-2005, describes the current

planning process in detail. There is strong support

for the annual management cycle and for the

longer-term strategic planning process. The disci-pline

provided by the process has led to such

successes as increased customer approval ratings,

overnight First-Class Mail service performance and

successes in other targeted areas.



However, the current process is likely to

change over the next year to reflect the experience

the Postal Service has gained over the past several

years. This includes extensive research on GPRA

practices of other agencies, benchmarking with

academic experts and leading practitioners in

the private sector and GAO evaluations of the

Annual Plan and Performance Report.

Chapter 1 Compliance with Statutory Policies 5



 5•4. Quality



a. Quality Core Applications



In 2000, a decision was made to phase out

the Field Quality organization over the next three

years. The Headquarters Quality staff resources

normally devoted to field support, course develop-ment

and instructor certification and Quality

application support, have been reassigned to sup-port

our corporate standardization efforts. The

new, reduced Quality organization structure will

bring greater focus to its activities.



Our first Standardization initiative began with

a partnership with the Vehicle Maintenance group,

which wanted to standardize the Scheduled Main-tenance

Process. This effort began in January 2000

and has progressed to the point where a national,

standard Scheduled Maintenance process has been

deployed to all ten Areas. This has driven greater

performance levels and consistency in our Vehicle

Maintenance facilities throughout the system.



Another key opportunity to pilot our

Standardization approach began early in the year

in response to a request by the senior VP, Oper-ations,

to help improve Priority Mail performance.

The Quality Department developed a set of

national indicators for Priority Mail that were

rolled out nationally in October 2000. While the

indicators were being developed and tested,

Quality worked to designate national Process

Owners for critical Priority Mail processes (e.g.,

Mail Prep, Manual Processing, Small Parcel and

Bundle Sorter (SPBS) Processing, Flats Processing,

etc.) these owners began to document the best-performing

processes nationally using Quality's

"Design Lite" approach. As of this writing,

national standard process documentation for Mail

Prep, Manual Processing and SPBS Processing will

be deployed.



Following the decision by senior management

that Flats Processing was rapidly becoming a crit-ical

area for the business, a similar standardization

effort was launched on the deployment of the

Automated Flat Sorting Machine 100s (AFSM)

100 automation equipment. The objective of this

effort is to achieve the Productivity targets that this

equipment is capable of achieving (i.e., approxi-mately

2,850 pieces per hour). In December, the

Postal Service completed documentation of a stan-dard

process for installing and operating the

AFSM 100.



Standardization is a strategic initiative that is

intended to provide Operations personnel with well

designed and capable processes that will, when

operated properly, achieve the CustomerPerfect! tar-gets

established by senior management.



Achieving this level of integration of leader-ship's

direction and the capability of our critical

processes will greatly enhance the Postal Service's

ability to achieve our strategic intent and simulta-neously

drive much greater consistency and

predictability in our service performance

throughout our network. It also removes the

burden from the field of having to develop process

improvements independently in response to cor-porate

performance targets, which is the practice

today. While this has been successful in achieving

sustained performance in First Class External Mail

(EXFC)* scores, for instance, it is nevertheless

time consuming and inefficient for 85 perform-ance

clusters to pursue these improvements by

themselves without the benefit of a national, stan-dard

process developed, tested and proven capable

by the responsible Headquarters function.

Considering the daunting fiscal challenges the

Postal Service is facing, Standardization is viewed

as a key strategy for improving our service levels

while the organization reduces its costs in the face

of shrinking First-Class Mail volume.



In 2000, because of severe revenue shortfalls

and driven by the need to make significant cost

reductions, the Field Quality organization was tar-geted

to be phased out over the next three years

by the Area Vice Presidents. The Headquarters

Quality staff resources normally devoted to field

support, course development and instructor certi-fication,

as well as Quality application support,

have therefore been reassigned to support our cor-porate

Standardization efforts.



b. Quality Development and Applications



The application of Quality tools shifted

emphasis from a role of identifying and mapping

processes to one of using data to measure and ana-lyze

process variation, stability and capability.

Statistical Control tools were introduced to allow

our managers to calculate and illustrate process

control through the use of control charting. These

higher level tools are more effective in giving our

managers the information they need to manage the

processes that make up our business.



The use of process management skills was

greatly expanded through the Quality Practitioner

6 Chapter 1 Compliance with Statutory Policies

* EXFC externally measures collection box to mailbox delivery performance. EXFC continuously tests a panel of 463 ZIP Code areas on the basis of geographic and volume

density from which 90 percent of First-Class Mail volume originates and 80 percent destinates. EXFC is not a system-wide measurement of all First-Class Mail performance.

 6•Chapter 1 Compliance with Statutory Policies 7

program. Across the enterprise, over 600 Quality

Practitioners were trained in the application of

process management methods to increase the capa-bility

of our internal and external processes.



As a result of the 1997 Baldrige assessment,

an initiative was undertaken to develop a strategy

for identifying, collecting and using comparative

data to evaluate Postal Service performance. This

benchmarking methodology will allow us to com-pare

internal standardized "best practices" for

replication across the enterprise as well as to com-pare

Postal Service documented processes against

external world class methods as a means of accel-erating

process improvement.



Another area that received increased atten-tion

was that of project/program management.

The application of sound process management

principles to the initiation and management of

major programs resulted in the identification of a

focused and disciplined approach to managing

large integrated efforts. Use of this program man-agement

process will ensure that major programs

support the strategic objectives of the Postal

Service, make best use of available resources, pro-vide

integration of activities and establish

accountability. A specialized project management

training program also was established to facilitate

implementation of this process.



c. Quality-Enabling Applications



Focus in this area has shifted to providing sup-port

primarily for the enabling process owners with

Breakthrough Productivity Improvement (BPI)

goals. Prioritizing opportunities established through

the BPI effort created the strategic alliance needed

to integrate core and enabling processes. In an

effort to drive the redesign necessary for substantial

cost savings and service improvements, process

owners are utilizing process management tools,

including benchmarking, standardization and data

analysis methodologies. Many of the enabling

process owners are recognizing the benefits of data-driven

decision-making and the value of developing

a process approach to problem-solving and project-management.

The integration of cross-functional

efforts has been a key driver for many of the

improvement/standardization efforts.



5. Diversity



a. General



The Postal Service is facing internal and

external business needs that provide both chal-lenge

and opportunity for improved financial

performance. Internally, we must continue to

create an inclusive environment, build upon our

diverse talents and drive out discrimination and

sexual harassment. External factors include:

retaining talented employees, meeting legal and

regulatory equal employment opportunity man-dates,

enhancing our corporate image as a

responsible corporate citizen of the diverse com-munities

we serve and promoting business and

community partnerships.



To meet these challenges, Diversity

Development is focused on four principal objec-tives:

(1) workplace environment, (2) workplace

management, (3) leadership development and

(4) customer and community relations. During

the upcoming year, Diversity Development will

continue its efforts to help make the Postal

Service a great place to work. This means striving

for a place where everyone's participation is wel-come

and no one is subjected to discrimination

or sexual harassment. It is also a place where

employees have access to programs that help

them advance as far as their talents and desires

will take them.



Diversity Development is providing the

training and messaging to build an inclusive and

harassment-free workplace. This includes special

emphasis programs that encourage our employees

to appreciate each other's differences and to

exclude no one from organizational life because

of those differences. We are making sure that

both personnel selection and development partic-ipation

are inclusive. We are taking steps to

maximize the return on our investment in spon-sorships

in multicultural communities. In

addition, the Diversity Development vice presi-dent

is actively involved with ensuring that the

succession planning process is inclusive by partic-ipating

with the Postmaster General and officers

in their respective succession planning meetings.

We will continue our efforts to help build a

diverse supplier base by welcoming participation

of small, minority- and women-owned busi-nesses.

Realizing that suppliers also are our

customers, our key objectives are to generate rev-enue

from these sources and to increase customer

service and satisfaction.



b. National Diversity Recognition Program



The Postal Service National Awards Program

for Diversity Achievement recognizes individuals

and teams that demonstrate exemplary efforts to

encourage and promote diversity within the

organization. Nominations are submitted for those

 7•employees who focus on the Postal Service

CustomerPerfect! goals which consist of the Voice

of the Customer (VOC) , Voice of the Employee

(VOE) and Voice of the Business (VOB).



In 2000, there were approximately 1,600

nominations, of which 452 were screened by a

team of six postal executives. The categories for

award consideration were Individual,

Partnership, Team, Leadership and the Dot

Sharpe Lifetime Achievement Award. In addi-tion

to these awards, a Vice President category

was established to recognize several employees,

both individually and collectively, who specifi-cally

helped to advance the vision of diversity

within the Postal Service.



Recognizing and valuing diversity continues

to be a business requirement and is key to attaining

CustomerPerfect! goals. Recognizing postal em-ployees

for their support of and accountability to

diversity initiatives will continue to assist the Postal

Service in remaining an inclusive organization.



c. Employment of Individuals with Disabilities



The Postal Service uses regular competitive

procedures in selecting individuals with disabilities

for employment. Individuals with severe disabilities

receive non-competitive employment consideration

through referrals from individual state departments

of vocational rehabilitation or the U.S. Department

of Veterans' Affairs. In 2000, the Postal Service's

career workforce included 49,155 employees with

reported disabilities. Of these, over 7,000 were

employees with targeted disabilities.



Each year, the Postal Service submits an

Affirmative Employment Plan and an Accomplish-ment

Report for Individuals with Disabilities to the

Equal Employment Opportunity Commission.

The Affirmative Employment Plan is disseminated

to Postal Service field installations. Each installation

head is responsible for implementing the plans.



d. Veterans' Employment



The Postal Service is one of the largest em-ployers

of veterans and disabled veterans in the

nation. At the end of 2000, the Postal Service

employed about 244,000 veterans of whom about

80,000 are disabled because of injuries received in

the uniformed services. The Postal Service prepares

an annual Accomplishment Report and Plan

Certification for disabled veterans for submission to

the Office of Personnel Management.



e. Affirmative Employment Programs



The Affirmative Employment Program

(AEP) unit provides national guidance on the

Postal Service's affirmative action and employment

program. During 2000, the following actions were

taken to improve the inclusiveness and retention

of the postal workforce:



Published and distributed the Affirmative

Employment Plan and Accomplishment

Report for individuals with disabilities to

management and the Equal Employment

Opportunity Commission (EEOC).



Published and distributed to management

the Affirmative Employment Plan and

Accomplishment Report for disabled vet-erans

to management and the Office of

Personnel Management.



Implemented the Diversity Quarterly

Tracking Report to monitor affirmative

employment activities nationwide.



Completed AEP Accomplishment Reports

that addressed the prevention of sexual

harassment, employee group representation,

discrimination complaints, recruitment and

hiring, employee development, promotions,

separations, retention, program evaluation,

veterans and people with disabilities.



In accordance with Section 717 of the Equal

Employment Opportunity Act of 1972, the

EEOC requires the submission of the Affirmative

Employment Plan Accomplishment Reports, with

updates for multi-year plans each fiscal year.



The Diversity Reporting System (DVRS)

provides detailed workforce statistical reports used

to analyze postal workforce data and identify

employment trends. Statistical information from

DVRS is provided on request to the General

Accounting Office, the EEOC, Congress and

other external and internal customers.



The Postal Service also administers the

National Hispanic Program (NHP), Women's

Program and Special Emphasis Programs. These

programs focus attention on the special needs,

obstacles and concerns of all groups when they are

under-represented in postal employment. Major

accomplishments for these programs are outlined

as follows:



1. The National Hispanic Program (NHP)



During 2000, the NHP Executive/Managerial

Development Process, through its field network,

continued its mission to address the VOE

and underrepresentation of Hispanics in the

Postal Service.

8 Chapter 1 Compliance with Statutory Policies

 8•Chapter 1 Compliance with Statutory Policies 9



Also during 2000, the NHP sponsored or

attended recruitment and community outreach

activities. One such activity was the Test Battery

460/470 Pre-Test Orientation. The number of

qualified Hispanics applying for and obtaining

Postal Service jobs at all levels has increased

because of this activity. Hispanic Program special-ists

have participated in recruitment drives, Test

Battery 460/470 preparedness seminars, Form

991 preparation and Advanced Leadership

Program recruitment.



In its efforts to respond to the Voices of the

Customer and Business goals, the NHP sponsored

numerous national events involving the National

Council of La Raza, the U.S. Hispanic Chamber of

Commerce, Hispanic Data - the electronic job

posting website, the Hispanic Employees Program

Management, the Hispanic National Bar

Association, the National Organization for

Mexican American Rights, the National Hispanic

Leadership Institute, the Transporte Integrado y

Masivo Hispanic Yearbook, the League of United

Latin American Citizens and the Hispanic Business

Expo of Central Florida. These outreach activities

have helped to establish the Postal Service as a

benchmark among our nation's businesses in

addressing the needs of the Hispanic community.



2. The Women's Program



During 2000, the Postal Service continued its

commitment to improving the status of women in

the workforce. Through structured programs and

positive actions these efforts have assisted with the

removal of barriers and the inclusion of women at

every level in the organization. Some of the major

accomplishments designed to address the Voice of

the Employee and the underrepresentation of

women in the Postal Service were:



Redesign and update of the Women's

Program website. provided information on

recruitment, career development and hyper-links

to national women's organizations.



Establishment and implementation of a

Diversity Executive Advisory Committee to

identify and resolve Special Emphasis

Programs issues.



Sponsorship of the National Association for

Female Executives, the Business Women's

Network Diversity Council and Leaders'

Summit, Business and Professional Women

and Federally Employed Women. These out-reach

activities have furthered the Postal

Service's recruitment, career development

and supplier diversity efforts.



Based on statistics from Quarter 4, 1999 to

Quarter 4, FY 2000, and the Quarterly Workforce

Profile, the nationwide representation of female

employees increased in each level grouping except

for PCES-02:



The National Women's Program plans to

continue its awareness campaign using postal

media, and websites of women's organizations.

The program is designed to assist women with

career development and to facilitate networking

and support. It provides sponsorship to the

Advanced Leadership Program and executive edu-cation

programs at various universities.



The Women's Program will continue to ana-lyze

studies that focus on work and family life and

address issues such as recruitment, retention, men-toring

and succession planning.



3. Special Emphasis Program



During 2000, the Special Emphasis Program

focused on recruitment, retention promotional

opportunities for African Americans, American

Indians, Native Alaskans, Asian Americans and

Pacific Islanders, people with disabilities, veterans

and white males. White females and Hispanics are

addressed by the Women's Program and the

National Hispanic Program, respectively. Some of

the major accomplishments of the Special

Emphasis Program were:



Compliance with the White House Initiative

on Asian Americans and Pacific Islanders.



Compliance with the President's Committee

on Employment of People with Disabilities.

The Special Emphasis Program created a

joint video on disability awareness and asso-ciated

service talks to increase appreciation of

the Postal Service's commitment to

employees and customers with disabilities.



Creation of Diversity Development's Special

Emphasis Web page on the corporate

intranet that strategically addresses topics on

recruitment, presidential proclamations, pub-lications

and links to external organizations.



Sponsorship of external national special

emphasis organizations with the goal of

increasing awareness about availability of

postal products, supplier services and

career opportunities.

EAS 01-14 0.1% Increase

EAS 15-18 0.6% Increase

EAS 19 and above 1.0% Increase

PCES-01 2.9% Increase

PCES-02 0.9% Decrease

 9•10 Chapter 1 Compliance with Statutory Policies



f. National Sexual Harassment Prevention



This year Publication 553, Employees' Guide

to Understanding Sexual Harassment, was mailed to

the home of every postal employee. The guide will

help employees understand sexual harassment and

how to resolve related complaints.



All postal employees were required to take

sexual harassment prevention training in 2000 as

part of their VOE requirements. EAS employees

received 2 hours of training, which included the

Initial Management Inquiry Process. Craft

employees received one hour of training. Each Area

was provided with training films. The sexual harass-ment

course series for EAS employees was

broadcast monthly on the Postal Service Television

Network (PSTN) and the Initial Management

Inquiry Process (IMIP) was broadcast quarterly.

The IMIP helped managers and supervisors effec-tively

identify, investigate, prevent and resolve

sexual harassment situations in the workplace. This

program included a one-hour segment designed to

increase awareness among craft employees of the

serious nature of sexual harassment.



g. Supplier Diversity



The Postal Service's Supplier Diversity pro-gram

is a fundamental element in the Postal

Service's corporate strategy to remain competitive

and profitable in the marketplace. Our record is a

good one and because our business and financial

challenges are more similar to those of the private

sector than those of government agencies, the

Postal Service has adopted more of a private-sector

approach to supplier diversity. That approach is

based on strengthening our supplier base by

reaching out to identify strong suppliers and pro-viding

them with opportunities to compete for our

contracts. When we benchmark our results against

either the public or the private sectors, we find

ourselves clearly among the leaders engaging small

and woman-owned businesses and above average

with regard to minority businesses.



The Postal Service provides a wide range of

programs and efforts aimed at promoting the

involvement of small, minority and woman-owned

businesses in our purchase opportunities. Close

and effective working relationships are maintained

with a number of the national associations and

their affiliates that support supplier development

and diversity throughout the country. These

include, among others, the National Council of La

Raza, the National Urban League, the United

States Hispanic Chamber of Commerce, the

Organization of Chinese Americans, the Women

Business Enterprise National Council, the

National Association of Women Business Owners,

the Business Women's Network, the U.S. Pan

Asian American Chamber of Commerce, the

National Congress of American Indians the

National Minority Supplier Development Council.

The Postal Service actively supports these organiza-tions

and participates in workshops sponsored by

them, as we do in those sponsored by members of

Congress and state and local governments; the

Postal Service participated in an estimated 100

trade, federal, congressional and special-emphasis

supplier-focused events across the country. Further

communication is maintained through a Postal

Service web page that addresses the small,

minority- and woman-owned business communi-ties

and provides information on purchase

opportunities as they arise, contact points, policies

and procedures.



During 2000, the Postal Service focused on

tracking and measuring key elements of the Five-Year

Supplier Diversity Plan issued in 1999.

Efforts centered on three of the Plan's six key areas:

accountability, sourcing and training.



In April, guidelines were issued for setting

performance goals for buying organizations and

individual buyers. Effort-based indicators were

outlined that meet both the Postal Service's sup-plier

diversity policies and legal requirements

applicable to the Postal Service. These indicators

include attending and participating in trade fairs

and events promoting small, minority- and

woman-owned businesses; ensuring that these

entrepreneurs are included in the sourcing process;

debriefing small, minority- and woman-owned

businesses that have unsuccessfully competed for a

contract; tracking use of certified supplier databases

or other methods of identifying qualified suppliers;

and counting the number of purchase opportuni-ties

offered.



As noted, sourcing, which is the process of

locating suppliers, is receiving particular emphasis.

The Postal Service continues to work to improve

and systematize our ability to identify and do busi-ness

with those suppliers that provide best value,

perform reliably, work with the Postal Service to

reduce cost and cycle time, and strive to reduce

risk while improving quality. As part of this effort,

during 2000 the Postal Service sponsored a

Southern California Pilot Program to develop new

approaches to promoting supplier diversity. Major

accomplishments from this effort include the

development of a standardized communications

 10•Chapter 1 Compliance with Statutory Policies 11

packet for suppliers, stronger approaches to estab-lishing

partnerships with trade and industry

associations and state/local government agencies,

as well as the creation of a consolidated sourcing

database for Southern California (Long Beach, Los

Angeles, San Diego, Santa Ana and Van Nuys).

These achievements are now being examined with

an eye toward replicating them nationwide. Lastly,

as a part of ongoing supply chain management

efforts, the Postal Service continued to work with

its prime suppliers and industry resources to iden-tify

and develop a listing of "proven" minority-and

woman-owned businesses. The listing is used

for direct and subcontracting opportunities.



Training continues to be critical to the

overall success of the Supplier Diversity Program.

Mandatory training requirements are in place for

all employees in Postal Service buying functions to

participate in 2-4 hours of cultural and supplier

diversity training. In addition to this ongoing

training, a number of customized training sessions

for our Supplier Diversity Program representatives

and contracting professionals were provided

during 2000. A computer-based training (CBT)

course is being developed for use throughout the

Postal Service.



We also have clarified and strengthened our

subcontracting policies. This has led to marked

improvement in this important area. Suppliers

competing for high-dollar value contracts are now

required to tell us, before award, how they plan to

subcontract with small, minority- and woman-owned

businesses. In addition, new tools to

promote and monitor subcontracting with these

businesses have been launched. These efforts have

had significant results. By the end of 2000, 310

suppliers were submitting quarterly subcontracting

reports as compared with 184 at the end of 1999.

A total of 23,615 subcontracts worth more than

$244.2 million went to minority businesses, while

some 14,202 subcontracts worth $220.6 million

went to woman-owned businesses. We consider

these new policies a success, with more subcon-tracts

being reported, more prime contractors

submitting reports and higher overall dollars

reportedly being spent in the small, minority- and

woman-owned business communities.



Outside of the subcontracting area, during

2000 more than $3.5 billion (representing 69.4

percent of contractual actions) went to small

businesses. More than $336 million (representing

8.9 percent of contractual actions) went to

minority businesses. More than $488 million

(representing 11 percent of contractual actions)

went to woman-owned businesses. Lastly, more

than $16 million worth of contracts or orders

went to Javits-Wagner-O'Day Act institutions,

such as the National Industries for the Blind and

Severely Handicapped.



B. Service to Small or Rural

Communities

(39 U.S.C. 101(b))



Effective March 16, 1998, the United States

Postal Service imposed a moratorium on manage-ment

initiated Post Office closings and

consolidations. With this moratorium, Post Offices

will not be closed unless no other reasonable

choice is available. Some closings (and suspen-sions)

may be necessary or appropriate if

postmasters retire suddenly or catastrophic events

such as flood, fire or earthquake occur.



The Postal Service invited the National

Association of Postmasters of the United States and

the National League of Postmasters of the United

States to work with us. Their representatives and

the Postal Service continue to review all recent and

proposed Post Office closings and emergency sus-pensions

to help determine appropriate courses of

action. During 2000, the Postal Service closed or

consolidated 18 Post Offices, 16 community Post

Offices and 3 classified stations. These Post Offices

were in the process of being closed before the

issuance of the moratorium and thus were allowed

to continue through the closing process. Only one

appeal was docketed with the Postal Rate

Commission. It concerned an office that had been

closed two years previously and was remanded to

the Postal Service for further consideration.



C. Employee Compensation and

Career Advancement

(39 U.S.C. 101 (c))



1. Collective Bargaining



The Postal Service began separate negotia-tions

in August 2000 with the American Postal

Workers Union, AFL-CIO (APWU) and the

National Postal Mail Handlers Union, AFL-CIO

(NPMHU); and in September 2000 with the

National Rural Letter Carriers' Association

(NRLCA) for successor collective bargaining agree-

 11•ments to those set to expire on November 20,

2000. All three unions together represent approxi-mately

514,000 employees. The negotiations with

the NRLCA follows an agreement between the

parties reached in February 2000 on a one year

extension to the 1995-1999 Postal Service-NRLCA

National Agreement. Negotiations with

postal unions cover a full range of topics involving

wages, benefits and conditions of employment.

Collective bargaining with the National

Association of Letter Carriers, AFL-CIO (NALC),

which represents approximately 245,000

employees, over the successor to the three-year

1998 National Agreement, will occur in 2001.



In April 2000, the terms of the collective

bargaining agreement covering approximately

1,100 employees at the Information Service

Centers were established by an interest arbi-tration

award. The Award provides for a

two-year agreement that will expire on

January 20, 2001.



The Postal Service and the Fraternal Order

of Police reached agreement on the terms

of a new four-year labor contract in July

2000. The previous labor agreement had

expired in April 1999, and the parties had

agreed to meet in a final effort to seek agree-ment

in advance of scheduled fact-finding.

The settlement, which will expire in April

2003, covers approximately 1,250 Postal

Police officers.



The collective bargaining agreement between

the Postal Service and the National Postal

Professional Nurses expired on February 11,

2000. The parties failed to reach agreement

on a successor contract. The dispute will be

resolved pursuant to the dispute resolution

procedures of the Postal Reorganization Act

with an outcome expected in 2001.



Agreements between the Postal Service and

certain smaller bargaining units will also

be expiring - for example, Operating

Services APWU on November 20, 2000,

the Mail Equipment Shops - Tool and Die

(International Association of Machinists) on

January 30, 2001.



As an outgrowth of the APWU collective

bargaining agreement, the parties have made

significant strides toward improving the

workplace environment by clarifying the

terms of the labor agreement and its applica-tion.

The APWU and the Postal Service have

agreed to revise the grievance procedure in

order to streamline the grievance process and

reduce the backlog of national cases. Future

refinements to the grievance process will be

addressed during 2000 negotiations.



The Postal Service and the NPMHU have

completed the first year of their test of a

revised grievance-arbitration procedure. The

test procedure, which eliminates the third

step of the grievance process, has produced

a greater resolution of grievances at the local

facility. Future efforts will include a review

of the process with local labor and manage-ment

representatives with emphasis on those

locations where the test procedure has been

less effective.



The parties continue to develop the Contract

Interpretation Manual (CIM), with the ini-tial

draft completed early this year. The

parties are now jointly reviewing each section

for refinement and completion of supporting

references where appropriate.



The Postal Service and the NPMHU hosted

their third annual Quality of Work Life

Conference. This national event, attended by

both craft employees and managers from

participating facilities, continues to showcase

the various processes developed to improve

the workplace environment and Postal

Service operations.



After successfully testing the revised Dispute

Resolution Process (DRP) for two years in

19 test districts, the Postal Service and the

NALC agreed in August of 2000 to imple-ment

the process nationwide beginning in

2001. The parties further agreed to rewrite

Article 15 of the National Agreement to

reflect the new process during 2001

national negotiations. Data from the test

sites reflected an increase in resolution rates

at the local level and a decrease in disputes

appealed to arbitration. The DRP elimi-nates

the current area Step 3 review and

places the authority and responsibility for

the resolution of grievances at the installa-tion

and district levels. It provides for the

training and certification of the district level

Step B representatives, one each from the

NALC and the Postal Service. The imple-mentation

of the new process will include

this training as well as district orientation

for city letter carriers and delivery supervi-sors.

The district-by-district implementation

of the DRP began with a training session

for the candidates nominated to serve as the

12 Chapter 1 Compliance with Statutory Policies

 12•district level Step B representatives in

October of 2000.



In June of 1998, the USPS-NALC pro-duced

the Postal Service-NALC Joint

Contract Administration Manual (JCAM).

This contract resource became widely used

in the field to facilitate the resolution of

workplace disputes, promoting a better

understanding of the proper application of

and compliance with the National Agree-ment.

It has been credited by both the

Postal Service and the NALC with signifi-cant

reductions in appeals to arbitration. In

September of 2000, the Postal Service and

NALC published an updated edition of the

JCAM which was distributed to every city

delivery unit in the system.



In the area of Labor Relations Systems, a

redesign of the Grievance and Arbitration

Tracking System (GATS) was initiated. All

field offices are now required to input griev-ances

at the Step 2 level of the process for

inclusion in GATS. The new system, which

is Y2K compliant, is user-friendly and will

assist management in identifying and ana-lyzing

disputes in the workplace. In addition,

GATS2 will facilitate changes in the griev-ance/

arbitration scheduling process agreed to

during 1998 negotiations.



2. Personnel



a. Postal Career Executive Service (PCES)



There were 970 individuals in the ranks of

the PCES at the close of 2000. Of this total, 813

individuals held PCES I positions. The remainder

(other than officers) served in Executive and

Administrative (EAS) positions. There were 46

PCES II officer positions in the Postal Service at

the end of the fiscal year. The makeup of the

PCES officers and executives is representative of

the Postal Service's diverse workforce.



b. Consultation with Management Associations



In accordance with Title 39, United States

Code, Section 1004, consultations were con-ducted

in 2000 with the National Association of

Postal Supervisors (NAPS), the National

Association of Postmasters of the United States

(NAPUS) and the National League of

Postmasters of the United States (League). These

sessions provided an opportunity for the man-agement

associations to participate directly in

the planning and development of programs and

policies related to pay policies that impact some

80,000 EAS postmasters, supervisors and other

managerial personnel through 2000. Pay consul-tations

will commence sometime in late spring

or early summer 2001, with our continued

emphasis on pay for performance through the

Merit Pay Program and the EVA Variable Pay

Program. The principle of market-based pay will

be a fundamental concept underlying these con-sultations,

ensuring that supervisory and

managerial pay in the Postal Service is compa-rable

to that maintained in the private sector of

the economy as required by the Postal

Reorganization Act.



As in the past, each of the management asso-ciations

will continue to provide representatives to

participate on Headquarters and fieldwork teams

tasked with formulating the testing procedures for

new programs.



During 2000, the labor unions, management

associations and postal management held quar-terly

(or as needed) labor summits, to discuss

issues relevant to the parties. Under the auspices

of the Labor Summit the management associa-tions

and the Postal Service agreed upon a

mediation pilot as an elective step in the current

supervisory disciplinary appeals process (650

Process) and in most other adverse action pro-ceedings.

Once the pilot is completed, it will be

considered for nationwide implementation.



Also in 2000, the Office of Equal

Employment Opportunity (EEO) restructured

throughout the Postal Service. This restructuring

effort allows us to focus the attention of EEO pro-fessionals

at the district level on dispute resolution,

while the responsibility for investigating complaints

that cannot be resolved informally is moved to the

Area level. The number of appeals centers respon-sible

for the EEO process doubled in 2000, and the

Resolve Employment Disputes, Reach Equitable

Solutions Swiftly (REDRESS) mediation program

was integrated into the EEO function. This inte-gration

and restructuring was achieved without any

planned increase in complement and eliminated

the need for the temporary staff formerly required

to support the REDRESS program.



For the second consecutive year, the number

of EEO precomplaint counselings and formal

complaints in the Postal Service decreased. Pre-complaints

decreased by 5.1 percent, from

26,460 to 25,086, while formal complaints fell

13.8 percent, from 12,137 to 10,457. Overall,

the rate of precomplaint counselings that result in

Chapter 1 Compliance with Statutory Policies 13

 13•formal complaints has been reduced from 46 per-cent

in 1999 to 42 percent in 2000. This equates

to 1,680 fewer formal complaints in 2000.



This substantial, continued reduction in

formal complaints is attributable in large measure

to the Postal Service's EEO mediation program,

REDRESS. REDRESSand traditional EEO coun-seling

are both offered as alternatives to

individuals seeking precomplaint counseling. The

mediators in REDRESS are non-postal employees

who are neutral and practice a form of mediation

that is built on the "transformative" model.

Through empowerment and recognition, the par-ties

to the mediation are encouraged to listen and

respond to one another's views effectively and

with better understanding of their differences.



In 1999, the participation rate in REDRESS

for those seeking precomplaint counseling was

nearly 70 percent. In 2000, the participation rate

rose to 73 percent nationally. Successful resolution

of disputes that go through mediation is nearly

twice the rate of resolution of disputes that

remain in the traditional counseling process. The

continuing success of this process is encouraging.

It will continue to be emphasized as a means of

bringing employees and managers face to face to

learn to deal with conflict and misunderstanding

in the workplace.



REDRESS II brings mediation to the formal

complaint process through the hearing stage. In

2000. A program was implemented across the

country through cooperation with the Office of

the General Counsel. Expectations for the success

of this program remain high.



d. Injury Compensation



In 2000, the Postal Service had an increase in

the growth of workers' compensation cash outlays

of approximately $65 million (11.4 percent) over

1999, for a total cash payout of approximately

$633.3 million. Total paid compensation claims

increased by 2,003 (7.1 percent) total medical

claims increased by 7,172 (6 percent).



During 2000, the Postal Service cost control

strategy was again directed through the continued

efforts to manage disability cases. A number of ini-tiatives

support this objective. These include Nurse

Case Manager services that assist the injury com-pensation

staff with medical management

strategies to help employees with work-related

injuries or illnesses move into productive duty in a

safe and positive environment. Specialists also use

enhancements to the case management tools to

track and analyze workers' compensation costs and

return-to-work efforts.



A new training course was developed with

electronic publishing capabilities. The training

course will produce human resources specialists

with the knowledge and skills required to effec-tively

provide medical and case management of

worker's compensation issues.



The Postal Inspection Service continued its

efforts in 2000 to investigate fraud associated with

postal employees' injury compensation claims.

Postal inspectors identified 329 individuals sus-pected

of workers' compensation violations.

Criminal investigations led to 47 arrests. Specific

incidents uncovered by postal inspectors include

fraudulent claims for Federal Employees' Comp-ensation

Act (FECA) benefits and falsification of

investigations involving conspiracy and fraud by

treating physicians and other medical providers.

Compensation cost avoidance on all cases investi-gated

by the Postal Inspection Service was

estimated as nearly $118 million. Additional cost

reduction on cases where Continuation of Pay was

avoided brings the total estimated cost avoidance

to over $122 million. Workers' Compensation

payments represent a growing, long-term cost lia-bility

for the Postal Service.



e. Succession Planning



Succession planning is the deliberate and sys-tematic

effort by the Postal Service to ensure

leadership continuity and build talent from within

the organization. The objectives are to identify

individuals who can move into executive positions,

to develop people for corporate needs and to foster

diversity among the leadership ranks. Individuals

are identified as potential successors based on their

leadership skills, functional and management

expertise and performance results. The Postal

Service's Succession Planning has been designed to

place the right people in the right jobs. After com-pleting

the sixth full year of succession planning,

90 percent of executive vacancies were filled by

identified successors, and 6 percent were filled by

nonsuccessors. Four percent of executive vacancies

were filled from outside hires. Forty-four percent of

vacant executive positions in 2000 were filled by

promotions of EAS employees to PCES. Fifty-two

percent were filled from within the executive ranks.



A strategic initiative, "EAS Leadership

Development," is underway to address our need

for employee retention and leadership develop-ment.

It is a comprehensive, customized process to

identify and develop leadership competencies and

14 Chapter 1 Compliance with Statutory Policies

 14•behaviors to drive success throughout the organiza-tion.

Our goal is to have a cadre of talented

individuals ready to assume key management posi-tions

as they become available.



f. Combined Federal Campaign (CFC)



The Postal Service joins other federal agencies

in the CFC drive each fall. In 2000, postal

employees nationwide pledged a total of nearly

$39 million in payroll deductions to the charities

of their choice. The average gift was $176.



3. Compensation and Benefits



a. Pay Comparability



1. Bargaining Unit Employees' Pay and Benefits.



During 2000, the average pay and benefits

for career bargaining unit employees (excluding

corporate-wide expenses) is $50,103 per work year.

In an attempt to achieve compensation rates

comparable to private industry, negotiations

between the Postal Service and union representa-tives

for the various bargaining units that have

reached negotiated settlements continue to apply

the principle of moderate restraint set forth in past

interest arbitration awards.



2. Nonbargaining Unit Employees' Pay and Benefits.



Pay for supervisors, postmasters and other

nonbargaining staff employees generally meets or

exceeds private sector levels. It also provides an ade-quate

and reasonable differential between first-line

supervisors and bargaining unit clerks and carriers.

The continuation of the EVA Variable Pay

Program for EAS employees aligns this pay prac-tice

with PCES executives and corporate success

measures as established under the CustomerPerfect!

process. This pay package gives management the

framework it needs to drive the necessary behav-ioral

changes that make the Postal Service

competitive in the marketplace.



3. Executive Pay and Benefits.



Due to the limit imposed on Executive

Schedule I salaries by the Postal Reorganization

Act, pay and benefits for Postal Service officers and

some key executives do not meet private sector

comparability standards. During 2000, the average

salary for Postal Service officers was $140,958. The

average executive salary was $101,756.



The Postal Service continued to focus on cor-porate

objectives through the 2000 EVA Variable

Pay Program, which recognizes the significant role

that postal executives and EAS employees play in

achieving corporate success. The EVA Variable Pay

Program awards payouts for achieving break-through

performance.



Furthermore, by using the same performance

measures for officers, executives and EAS

employees, participants become stakeholders in the

success of the Postal Service in achieving its

CustomerPerfect! goals. Finally, to help focus on

continuous improvements and long-term results,

the 2000 payments consisted of a percentage of

prior year's reserve account and current year earned

credit. In 2000, award payouts averaged $2,900 for

exempt nonbargaining EAS employees, $1,000 for

non-exempt nonbargaining employees and $10,100

for executives. While the program was designed to

recognize team performance, provisions were made

to exclude individual employees who did not con-tribute

to the performance of the organization.



b. Leave Programs



Postal Service employees are provided both

sick and annual leave at the same rate as other fed-eral

sector employees. However, postal employees

have a higher annual leave carryover limit than

their federal sector counterparts. Postal employees

used an average of 10.1 days of sick leave per

employee during 2000.



Earned annual leave may be donated to other

career or transitional Postal Service employees who

have exhausted their own leave and have a serious

health problem.



Under the Family and Medical Leave Act,

eligible employees may take up to 12 weeks off

from work for covered conditions. Postal Service

employees may use annual leave, sick leave, or

leave without pay for covered conditions in accor-dance

with applicable collective bargaining

agreements and current leave policies.



Postal Service career nonbargaining unit

employees and some bargaining unit employees

can participate in a leave exchange program

through which a portion of annual leave that

would otherwise be earned in the following leave

year can be exchanged for cash.



The Postal Service allows the use of 80 hours

of accrued sick leave for dependent care under a

policy available to all career employees.



c. Health Insurance



Health care contributions totaled $3.1 bil-lion,

or 6.2 percent of the Postal Service's total pay

and benefits during 2000. Under the Omnibus

Budget Reconciliation Act of 1990, the Postal

Service is required to fund the annuitants' share of

the Federal Employee Health Benefit (FEHB) pre-Chapter

1 Compliance with Statutory Policies 15

 15•miums. During 2000, the cost of funding the

health care benefits for postal annuitants and their

survivors was $744 million.



During 2000, the Postal Service continued

to pay most of the premium cost of employee

health benefit coverage. Career employees are

automatically enrolled to pay their share of

health benefit premium contributions with

pre-tax payroll deductions.



d. Life Insurance



The Federal Employees Group Life Insurance

(FEGLI) program provides life insurance coverage

for Postal Service employees. The Postal Service

assumes the full cost of basic life insurance for eli-gible

employees. During 2000, Postal Service costs

for employee life insurance were $194 million and

the cost of funding life insurance for postal annui-tants

and their survivors was $6.7 million.



In 1999, employees were offered the oppor-tunity

to change life insurance coverage under

the FEGLI Program. More than 90,000

employees made elections to acquire or modify

their coverage during that open enrollment

period. These elections and changes became gen-erally

effective May 6, 2000.



e. Retirement Systems



Postal Service career employees, like federal

career employees, are covered by one of three

retirement systems administered by the U.S. Office

of Personnel Management.



At the end of 2000, there were 785,913

career employees covered by a federal retirement

program. Of this total, 519,509 employees (65

percent) were covered by the Federal Employees

Retirement System (FERS); 263,383 employees

(33.5 percent) were covered by the Civil Service

Retirement System (CSRS); 12,021 employees

(1.5 percent) were covered by CSRS Offset.



CSRS is a defined benefit retirement system.

Annuity benefits are based on an employee's

high-three average salary and years of service.

CSRS Offset is similar to CSRS but requires

Social Security contributions. Upon Social

Security eligibility, the CSRS annuity is reduced

(offset) by any Social Security benefit resulting

from periods of CSRS Offset service, to produce

a benefit equivalent to what would have been

received under CSRS.



FERS is a retirement system with both

defined benefit and defined contribution compo-nents.

Under FERS, employees receive retirement

benefits from a federal retirement annuity, Social

Security and the Thrift Savings Plan (TSP). The

FERS annuity benefit, while also based on an

employee's high-three average salary and years of

service, produces a smaller benefit than CSRS does.



The Postal Service and career employees

make retirement contributions to the Civil Service

Retirement and Disability Fund. For 2000, CSRS

employees contributed 7.25 percent of basic pay to

the Fund. FERS and CSRS Offset employees con-tributed

1.05 percent of basic pay to the Fund and

6.2 percent of gross pay to Social Security.



f. Thrift Savings Plan (TSP)



All career employees may participate in

the TSP, which is administered by the Federal

Retirement Thrift Investment Board. The rules

for TSP participation differ depending on the

employee's retirement system. For FERS employees,

the Postal Service contributes one percent of basic

pay to TSP, fully matches employee contributions up

to 3 percent of basic pay, and matches one-half of

employee contributions from 3 to 5 percent of basic

pay. FERS employees may contribute up to 10 per-cent

of basic pay to TSP on a tax-deferred basis,

subject to IRS maximum limits. The Postal Service

does not match CSRS or CSRS Offset employee

contributions to the TSP. Employees' contributions

are limited to 5 percent of basic pay. At the end of

2000, 411,825 FERS employees and 155,137 CSRS

and CSRS Offset employees participated in TSP.



g. Flexible Spending Accounts (FSAs)



Employees continue to take advantage of

FSAs to pay for certain health care and dependent

care expenses with contributions made through

pretax payroll deductions. FSAs were first offered

in 1992 to certain nonbargaining unit employees

and have since been expanded to include all

employees. In 2000, 53,083 employees were

enrolled in health care FSAs (an 8.5 percent

increase from 1999), with an average contribution

of $1,318. In 2000, 5,957 employees were

enrolled in dependent care FSAs (a 1.5 percent

increase from 1999), with an average contribution

of $2,770. The projected 2000 savings for the

Postal Service resulting from the FSA program is

approximately $2.4 million (net of administrative

expenses). Employees experience tax savings as

well, which vary according to the individual's con-tribution

amounts and marginal tax rates.

16 Chapter 1 Compliance with Statutory Policies

 16•Chapter 1 Compliance with Statutory Policies 17



4. Employee Development



a. General



Employee Development has two main areas

of responsibility: Product Development and

Evaluation, which designs, develops and evaluates

curricula and; and Delivery, which operates at the

William F. Bolger Center for Leadership

Development, Potomac, Maryland and at the

National Center for Employee Development

(NCED), Norman, Oklahoma. Both centers are

self-contained campuses with classrooms, confer-ence

facilities, housing, dining and related

services. There are 85 Postal Employee

Development Centers (PEDCs) throughout the

nation that support operational needs by pro-viding

local training assistance to employees.



While traditional classrooms, on-the-job

instruction and correspondence courses are still

prevalent, delivery platforms increasingly include

satellit networks, videotape, computer-based inter-active

programs, web-based instruction and

combinations of the above.



With the continuation of the Associate

Supervisor Program (ASP), Career Management

Program (CMP) and Advanced Leadership

Program (ALP), the training and development

needs of supervisors and managers at all levels of

the organization are being met.



The 16-week ASP for first-line supervisors

continues to be a national success. All 85

Districts participate in the program. The program

has trained 8,164 graduates. In 2000, 129 classes

were conducted.



The CMP was introduced in the spring of

1999. CMP addresses the needs of supervisors

and managers in the EAS level 15-22 range. In

2000, over 50 offerings were completed for 1,500

EAS employees. There are three entry points or

tracks representing initial and advanced supervi-sory

skills and management development.

Participants complete an assessment based on the

leadership competency model to determine their

appropriate entry point into the program.

Currently the program consists of one week of

classroom instruction for each track. In addition,

functional/technical training is available for

delivery and mail processing supervisors. Several

other functions have functional/technical curricula

already in place for supervisors



The ALP continued to make significant

progress in preparing high-potential managers for

the challenging leadership roles of the future. By

the end of the year, a total of 34 classes with

approximately 42 students per class had entered

the program. Several program design improve-ments

were made. Among them were a new ALP

video describing the Executive Competency

model; an updated enrollment guide and web site;

a new evening speaker series called Executive

Chat; and, the addition of two Postal Vice

Presidents as regularly appearing ALP faculty.

Most notably, ALP was reviewed by the American

Council on Education and was rated as carrying

12 undergraduate college credits. As a result, ALP

students pursuing college degrees will now be able

to apply their ALP experience toward their college

degree requirements.



PBS-The Business Channel continued as an

initiative in 2000. The innovative partnership

offered postal employees quality training programs

via the Postal Satellite Training Network (PSTN).

Training programs were available live five days a

week, with taping available on all telecasts. This

timely, professional and cost-effective training

alternative proved to be an effective way to convey

corporate messages. For example, 86,000

employees received sexual harassment training

through this medium in 2000.



The Safety for Leadership course, designed

to help more than 35,000 postal leaders under-stand

and implement safety programs in the

Postal Service, rolled out at the National Center

for Employee Development this year. This course

has become an integral part of ASP and lays a

foundation for the Joint Labor Management

Safety and Health Committee, Collateral Duty

Facility Safety Coordinator and other safety pro-grams.

Courses were upgraded and refreshed to

meet requirements of the Postal Employee Safety

Enhancement Act (PESEA).



b. Technical and Craft Training



The NCED, Norman, OK, advanced its crit-ical

support of the Postal Service's core business and

employee development. NCED delivered automa-tion

and motor vehicle maintenance and operations

courses on major postal systems and equipment,

plus environmental compliance and automation

management programs. Other initiatives supported

field office course requests, equipment changes and

deployment of national postal goals.



Staff conducted 220 courses, in 3,400 class

offerings, for 61,000 employees. Strict budget con-trols

and revenue achievements delivered this

15 percent increase in students at slightly below

last year's total program and administrative costs.

 17•Efforts continued to expand NCED's curriculum

to support a broader base of postal clients, includ-ing

several new management courses and to

enhance administrative and operating proficiency.

The Center also launched efforts to attract non-postal

clients to generate more of its own

operating revenue and reduce its dependence on

postal headquarters funding.



Staff began creating learning tools to develop

maintenance employees' basic technical skills and

provide continuous learning while in their home

offices. Planned introductory courses will better

prepare postal employees for high-tech, equip-ment-

specific courses at NCED. Additionally,

staff built an electronic technical skills database to

provide maintenance managers and employees

with a skill development tracking reference.



A major undertaking brought a new Web-based

Automated Enrollment System (AES) on line

in 2000. The new Web-AES is user-friendly, acces-sible

and will increase report and tracking

opportunities. The new AES collected field requests

for 2001 programs and distributed available course

seats to district and maintenance offices. It was also

designed to collect fee data in anticipation of

NCED's new revenue-based operation.



NCED transmitted over 4,200 hours of

Postal Satellite Training Network (PSTN) pro-gramming

in 2000. NCED originated over 1,900

broadcast hours of course and technical informa-tion,

and it transmitted another 2,300 broadcast

hours originated elsewhere, including the Business

and Management Channel, the Bolger Center and

USPS-TV Southeast Area District programs. Using

both PSTN and Postal Audio Tele-training

Network (PATN), NCED delivered 30 distance

learning courses to 17,450 employees in their

home offices, for 195,040 total distance learning

training hours.



1. Major NCED Accomplishments



Taught five simultaneous course offerings on

the Identification Code Sortation (ICS)

system to provide maintenance skills for over

800 technicians. ICS uses existing identifica-tion

mail tags as a second source for bar

coding to help keep mail pieces in the auto-mated

mail stream. Ongoing courses will

support national deployment of over 1,700

new ICS computers.



Completed deployment support for the Flat

Mail Optical Character Reader (FMOCR)

by running three tours of course offerings.

Continued two-tour offerings for ongoing

FMOCR support. The FMOCR addition to

the FSM 881 has resulted in significant labor

saving and increased mail throughput.



Provided 12 course offerings on the

new Time and Attendance Collection

System (TACS).



Modified Delivery Bar Code Sorter (DBCS)

programs to support new deployment of the

new DBCS Delivery Input and Output

Subsystem (DIOSS) varied equipment con-figurations

at 380 DBCS sites.



Merged Remote Computer Reader modifica-tions

into maintenance courses. RCR

modifications are expected to increase the

machine acceptance rate for handwritten mail

from 63 to 75 percent by December 2000.



Provided technical support to contractor-delivered

resident and PSTN maintenance

courses for 350 employees on the Phase I

buy of 175 AFSM 100. We also began

instructor and lab preparations for NCED to

deliver maintenance courses beginning

March 2001, concurrent with contractor

offerings. AFSM 100s can process 17,000

pieces of flat mail per hour. AFSM 100

Phase II will deploy another 362 machines

requiring maintenance course support. Each

Phase II machine will replace two to three

existing Flat Sorting Machine 881 systems.



Delivered operator and maintenance courses

on the new (PBSM) 624Bs, upgraded to

read the new $5, $10 and $20 bills. Courses

support the nationwide deployment of

1,000 PBSM 625Bs.



Piloted a new Maintenance Operations

Performance Analysis course. Taught use of

maintenance and inventory management

reports from the Visual Maintenance Activity

Reporting and Scheduling system to analyze

performance factors and improve efficiency.



Prepared automotive technician course on

new Carrier Route Flex Fuel delivery vehicles

to support planned deployment of 10,600

vehicles. Offerings will begin October 2000.



Conducted about 30 environmental health

and safety programs on postal compliance

with national rules and regulations. Courses

included hazard communications, waste

reduction and recycling, refrigerant educa-tion

and certification, asbestos management

and toxic substance control.



Designed classroom labs and supported the

newly centralized Business Mail Acceptance

(BMA) program. This course brought a new

18 Chapter 1 Compliance with Statutory Policies

 18•postal audience to the Center, coaching

clerks in skills to ensure proper revenue col-lection

on volume business mail. By year

end, the BMA program had ramped up to

three simultaneous offerings, and 313

employees had taken the test.



2. Revenue Generation



Center staff captured over $3.2 million in

gross revenue in 2000 to help offset NCED

operating expenses. Revenue sources include

postal and nonpostal conferences, resale of satel-lite

time, housing income from nonstudent

guests and delivery of other postal and non-postal

courses. Housing room nights during

2000 totaled 203,000 of which 22,800 were

for conferees.



c. William F. Bolger Center for

Leadership Development



The Bolger Center has made significant strides

toward becoming self-reliant. In 2000, the Center

piloted a revenue budget concept. Under this con-cept,

the Center identifies its potential through

projected sales goals generated through the services

provided to postal and external customers. The

amount of sales generated from external customers

is tracked and deposited into the Postal Service

General Fund account and the Center is credited

for any profit gained. This process is still in the

pilot stages.



A number of improvements were made to

The Bolger Center and its operations during the

past year. These improvements include installation

of a campus wide Energy Management System,

refurbishment of the North Building West Wing

classrooms and public space, and complete renova-tion

of the 5th floor of the Main Building. A

Postmark America store is scheduled to open at the

Center in early January 2001. Customer satisfac-tion

scores for the year were very high, at 98.9

percent overall satisfied.



The Media Unit produced nearly 250 hours

of PSTN programming, serving clients such as

Sales, Employee Resource Management, Human

Resources and Address Management Delivery

Policies and Programs. The Media Unit also pro-duced

over 20 videotape productions, earning

Telly and Videographer Awards for production

excellence for Computerized Job Bidding,

Supervisor's Guide To Time & Attendance, and

Training Inspectors For the 21st Century. Media

also partnered with Tactical Marketing and Sales

to provide monthly PSTN broadcasts that pro-

vided training and information to field mar-keting

and sales professionals.



Our existing computer training lab was

remodeled, and a new lab was completed that

essentially doubles our computer training capacity.



5. Selection, Evaluation and Recognition



a. Merit Pay Performance Evaluation



In 2000, the Postal Service continued to

emphasize the importance of the Merit Performance

Evaluation process. This process evaluates and

rewards the performance of professional and mana-gerial

personnel. The process employs indices and

measurements tied to the work unit's mission when

establishing employee objectives for the year. These

indices and measurements are used to assess the

employee's success in meeting these mutually

agreed-upon objectives. As with last years' program,

the Merit Performance Evaluation process continues

to be closely aligned with the CustomerPerfect! phi-losophy.

It provides a mechanism to link employee

contributions to corporate goals.



In 2000 an individual Merit Performance

Evaluation process covering executives was con-tinued.

Its primary purpose is to promote

individual accountability to support both corpo-rate

goals and certain critical indicators that

contribute to the success of the Postal Service. One

critical indicator emphasizes diversity and requires

executives to develop individual goals that pro-mote

diversity, while taking into account the

specific activities identified in their organizational

affirmative action plan when setting specific targets

for success. Like the performance evaluations for

professional and managerial employees, the execu-tive

evaluations also link contributions to the

overall achievement of corporate goals.



6. Workplace Environment Improvement (WEI)



The Office of WEI was created in September

1998 to reflect management's commitment to

improving the postal work environment and

bringing focus to "people issues" in the Postal

Service. WEI includes the Employee Assistance

Program, violence prevention and crisis manage-ment

activities, the identification and propagation

of indicators, measures and initiatives for work-place

environment improvement. Key components

of WEI for 2000 and 2001 are to:



Coordinate implementation of recommenda-tions

from report by the independent

Commission on Safe and Secure Workplace.

Chapter 1 Compliance with Statutory Policies 19

 19•



Modify role of Employee Workplace

Intervention Analyst position to play more

strategic and consultative role in field WEI

efforts to oversee threat assessment and crisis

management activities.



Integrate, assess and communicate

employee feedback and other workplace

environment information.



Catalog, assess and support replication of a

broad array of workplace improvement ini-tiatives

and practices.



Identify or develop and deploy measures of

results and indicators of progress.



Communicate throughout the Postal Service

progress in improving workplace environ-ment

recognize successes in this area.

Specific areas in which these components are

carried out are:



a. Employee Assistance Program (EAP)



The Postal Service EAP provides free, volun-tary,

confidential, in-person counseling services to

employees and family members by master's-level

counselors housed in or near local postal facilities.

Counselors are available 24 hours a day, seven

days a week, in convenient locations and assist

employees and family members with a variety of

difficulties that affect their lives and their work,

including emotional, financial, legal, chemical

dependency, marital and family problems.



The EAP provides consultation to managers

and supervisors regarding not only individual

workers, but also the work setting within which

they function. In 2000, Employee and Workplace

Intervention Analysts, career employees who oversee

the EAP in each District EAP counselors provided

approximately 21,837 consultations to management

on such topics as supervision strategies and manage-ment

skills. They also worked with union members

to help resolve issues and prevent workplace disrup-tion.

The EAP intervenes when appropriate through

preventive efforts, such as manager coaching and

educational seminars on communication and stress

management. EAP also provides ameliorative efforts

that include conflict resolution sessions and organi-zational

interventions and restorative actions, such

as debriefings after a critical incident (e.g., suicide,

domestic violence at work, armed robbery, acci-dental

death). In 2000, 46,153 employees and their

family members received counseling from the EAP.



Fully 52 percent percent of postal employees

seeking counseling reported that their problems

negatively affected their job performance. EAP

staff also responded to over 394 critical incidents

and provided assistance to more than 6,392

employees after these incidents. Health and well-ness

seminars on topics ranging from stress

management to elder care to substance abuse were

provided to 53,540 employees.



b. Violence Prevention and Crisis Management



A Workplace Environment Advisory Committee, including 

representatives of employee unions, management associations, 

labor relations and human resources was created 

shortly after the inception of this office in late 1998 with the

Manager, WEI, as chair. This group, working

closely with the Inspection Service and WEI, uses

a standardized protocol for the identification and

resolution of potential "troubled worksites," postal

sites that may be susceptible to threatening or

other undesirable behavior as a result of individual

or systemic problems. In addition, WEI is assisting

the field in ensuring that local threat assessment

and crisis management teams are in place and that

desired training is provided. Finally, WEI staff are

involved, on an ongoing basis, in communication

with and response to potential threats and crisis

incidents throughout the Postal Service to ensure

prompt response, swift resolution and maximum

safety of postal employees.



WEI played a key role in the dissemination

of the report of the independent Commission on

a Safe and Secure Workplace, also known as the

Califano Commission, as it was chaired by Joseph

A. Califano, Jr. The commission conducted a

comprehensive review and analysis of violence in

the Postal Service over a two-year period and

released its findings in August 2000.



The commission found that while postal

employees are not more likely to be victims of vio-lence

at work, they are more fearful than other

employees about violence in the workplace. On the

other hand, postal employees are less angry, aggres-sive,

hostile, depressed and stressed than those in the

national workplace. The commission recognized the

Postal Service's strong efforts in developing a com-prehensive

array of programs to reduce workplace

violence, but made recommendations for the fol-lowing

improvements:



Continue and step up violence prevention

programs already in place and address under-lying

sources of friction.



Screen job applicants more carefully.



Define "zero tolerance" for violence policy.



Continue violence awareness training for em-ployees,

with unions playing a greater role.

20 Chapter 1 Compliance with Statutory Policies



 20•Ensure warning signals of violence are

heeded and employees know how to report

threats and violence.



Establish communication systems such as

cell phones or beepers for carriers on

delivery routes, especially in high crime and

remote areas.



Allay employee concerns about confiden-tiality

of the EAP



Encourage joint local union/management

oversight.



Train managers and union officials to better

handle employee terminations.



Increase training of supervisors and managers

in interpersonal skills.



Strengthen incentives to focus managers on the

workplace environment, in addition to cus-tomer

satisfaction and financial performance.



Also, according to the Commission, Postal

Service, unions and management associations

should overhaul dispute resolution processes

and agree on a system of financial performance

incentives for craft employees. Finally, the

Commission recommended that Congress should

consider revamping compensation systems for

postal managers and employees to eliminate or at

least raise the pay ceiling to attract the best man-agers

and effectively reward good performance of

all postal workers.



WEI is taking the lead in 2001 in ensuring

that the recommendations are implemented where

feasible and that employees are informed about

progress in this area.



c. Integration of Employee Feedback and

Workplace Environment



WEI is playing a pivotal role in increasing

the effectiveness with which data from the VOE

survey and other workplace environment informa-tion

are used. The Board of Governors approved a

compensable indicator using six survey questions

for the 2000 survey. This index will be retained as

a compensable indicator for 2001. WEI provides

technical assistance to the field in interpreting and

responding to these data also facilitates sharing of

information about field and best practices that

impact positively on the work environment.



WEl staff serve as internal consultants on

WEI efforts throughout the country, with an

emphasis on increasing the efficiency and effec-tiveness

of these activities, particularly with regard

to the use of outside consultants. Also, WEI is

propagating information throughout the Postal

Service regarding internal and external resources

for addressing workplace environment issues,

including local and national Postal Service initia-tives

and outside sources which have been shown

to improve workplace relationships and climate.

Finally, WEI will continue to deliver national

messaging in 2001, to ensure that the business

case for improving the workplace is recognized

and accepted.



d. Dependent Care



Pursuant to a Memorandum of

Understanding negotiated with APWU, AFL-CIO

for the 1998-2000 National Agreement, the

Postal Service and the APWU have jointly

selected a vendor to provide a dependent care

resource and referral service to management and

APWU employees. The service allows employees

to get assistance in locating dependent and elder

care resources as well as a variety of options to

help balance work and home life.



D. Postal Cost Apportionment

and Filings and

Ratemaking, Developments

(39 U.S.C. 101 (d))



1. Omnibus Rate Case - Docket No. R2000-1



On January 12, 2000, the Postal Service filed

a Request for a Postal Rate Commission

Recommended Decision on changes in rates and

fees. The proposed overall percentage change was

6.5 percent and included a 1-cent (or 3 percent)

increase from the current 33-cent basic First-Class

rate. The proposed increase was designed to pro-vide

an additional $3.7 billion in revenue.



The filing also included numerous classifica-tion

changes that were responsive to customer

needs and the changing environment. For example,

new work sharing discounts were proposed for

Bound Printed Matter and more affordable options

for reply mail and the return of merchandise were

developed. Also, a restructuring of Post Office box

fees was proposed so that the fees would better

reflect the local costs of providing the service.



Approximately 10 months after the filing of

the request following hearings on the Postal

Service's direct case and intervenors' direct cases

rebuttal testimony, the Postal Rate Commission

issued its Recommended Decision on November

13, 2000. While the Postal Rate Commission rec-ommended

most of the classification changes

Chapter 1 Compliance with Statutory Policies 21

 21•proposed by the Postal Service, along with the

1-cent increase in the first ounce of the First-Class

rate, it substantially reduced the Postal Service's

estimate of required revenue, as developed on the

evidentiary record. As a consequence, the PRC sub-stantially

reduced many of the other rate increases

proposed by the Postal Service. The end result was,

according to the Commission's calculations, a 4.6

percent increase, compared with the 6.5 percent

increase proposed by the Postal Service.



The Postal Service's Governors issued two

Decisions on December 5. In the primary

Decision, the Governors allowed the recommended

rates to take effect under protest, but returned the

matter to the Commission for reconsideration. In

particular, the Governors asked the Commission to

reconsider several items related to the revenue

requirement (which governs the overall size of the

rate increase), along with several other technical

pricing issues. This request for reconsideration is

now pending before the Postal Rate Commission,

after the submission by the Postal Service and the

parties of comments and reply comments in

December and January. Meanwhile, the rates

allowed under protest were implemented on

January 7, 2001. In their second Decision issued

on December 5, the Governors rejected classifica-tion

recommendations from the Commission

pertaining to discounts for First-Class Mail, the

flat-rate Priority Mail envelope and a matter related

to automated Standard Mail (A).



2. Periodicals "Ride-Along" Experiment -Docket

No. MC2000-1.



On September 27, 1999, the Postal Service

filed a case under the Commission's Experimental

rules, which allow for the limited testing of a new

service. Under the then-existing classification

schedule, an enclosure included in mailings of

Periodicals was required to pay the Standard Mail

rate that would apply if the enclosure were mailed

as a separate piece. Under the "ride-along" experi-ment,

the enclosure pays a flat per-piece rate of 10

cents. Not only is this more affordable for mailers,

it is also simpler to administer. Subsequent to the

filing, the Postal Service and the mailing commu-nity

reached an agreement regarding the issues of

the case and filed a stipulation and agreement with

the Postal Rate Commission. On February 3,

2000, the Commission recommended the classifi-cation

and fee based on this agreement. The

experimental classification implemented on

February 26, 2000 will expire on February 20,

2002, unless it is made permanent or another

experiment is put in its place.



3. NetPost Mailing Online Experiment

Docket No. MC2000-2



On November 16, 1999, the Postal Service

filed an experimental case requesting a recom-mended

decision from the Postal Rate

Commission for a Mailing Online classification

and fee schedule (MC2000-2). On June 21,

2000, the Postal Rate Commission issued an

Opinion and Recommended Decision, which the

Governors approved on August 7, 2000, with an

implementation date of September 1, 2000. The

experiment will last approximately three years.



Mailing Online is a hybrid mail product that

permits customers to create mailings electronically.

Customers design documents on their personal

computers, upload the document and a mailing list

to the Postal Service through the USPS.com web-site,

select desired printing options and pay with a

credit card. The Postal Service then combines cus-tomer

jobs, presorts them sends the jobs in batches

to geographically distributed printing partners. The

printers create the physical mailpieces for nearby

entry and delivery by the Postal Service.



4. Bulk Parcel Return Complaint Case -Docket

No. C99-4



On June 9, 1999, the Continuity Shippers

Association filed a complaint with the Rate

Commission arguing that the fee for Bulk Parcel

Return Service (BPRS) was too high. The com-plainant

contended that updated cost studies

showed lower costs than originally estimated and

that the cost coverage should be lower than what

the Commission previously established. On April

14, 2000 the Commission recommended a lower

fee for BPRS based on the lower cost estimate, but

maintained the cost coverage. On June 15, 2000,

the Governors of the Postal Service rejected the

Commission's recommended decision, noting that

all costs change over time and that the

Commission had failed to find the fee unlawful as

required by the Act.



5. PosteCS Complaint Case - Docket No.

C99-1



In October 1998, United Parcel Service (UPS)

filed a complaint with the Postal Rate Commission

concerning the Postal Service's provision of PosteCS,

a wholly electronic, Internet-based document

service designed to support secure electronic com-munications.

The fundamental basis for the UPS

22 Chapter 1 Compliance with Statutory Policies

 22•complaint is the allegation that the Postal Service is

offering PosteCS to the public without first submit-ting

to the Commission a request for a

recommended decision on classification provisions

and rates associated with this service. The complaint

further alleges that provision of PosteCS at no charge

on an introductory basis is contrary to the pricing

standards of the Postal Reorganization Act (Act). In

addition, UPS alleges that the service constitutes a

"nationwide change in service" for which an advi-sory

opinion must be requested under the Act.



The Postal Service moved to dismiss the

complaint. In its motion to dismiss, the Postal

Service maintained that the Commission does

not have subject matter jurisdiction to entertain

the question of whether PosteCS is a "postal"

service. Even if the Commission had jurisdiction

to consider the complaint, PosteCS is plainly not

a "postal" service for purposes of the

Commission's jurisdiction according to the defi-nitions

of that term put forth by the courts, the

Commission, and the Governors of the Postal

Service. On May 3, 1999, the Commission

issued an order denying the Postal Service's

motion to dismiss and ordering further proceed-ings

on the question of whether PosteCS is a

"postal" service for purposes of the Commission's

rate and classification jurisdiction. Throughout

2000, the Commission addressed disputes

related to discovery by UPS. The complaint case

is still pending before the Commission.



E. Transportation Policies

(39 U.S.C. 101 (e),(f ))



1. General



The Postal Service spent $4.7 billion in 2000

for the contractual transportation of mail. This

figure represents a 6.8 percent increase from 1999

transportation expenses. Mail transportation

accounted for more than 7 percent of total postal

expenses for 2000.



2. Domestic Transportation



a. Air Transportation



Air transportation costs in 2000 totaled

$1.7 billion. These costs included the use of

commercial airlines (passenger and freight) and

as dedicated network and air taxi service. The

Postal Service contracted with 56 commercial

airlines to move more than 2.95 billion pounds

of domestic mail last year. Ten of the commercial

airlines handled 68 percent of the total volume.

Of the almost 56,000 commercial airline flights

that are available on a daily basis, the Postal

Service uses approximately 15,000 for the trans-portation

of mail. To supplement the movement

of mail by air, the Postal Service operates its

Eagle Hub in Indianapolis, IN. The hub operates

a nighttime network (ANET) with 28 aircraft

and serves 46 cities directly. The Eagle Hub

transports more that 800,000 pounds of mail

each night; 30 percent is Express Mail, 55 per-cent

is Priority Mail 15 percent is First-Class

Mail. The 240,000 pounds of Express Mail

equates to approximately 70 percent of all

Express Mail that moves by air. In addition,

during the Holiday peak period, the network

expands to encompass a daytime service that

transports more than one million pounds of

Priority Mail each day for a 13-day period.



Additionally, the Postal Service operates a

western dedicated network (WNET) which trans-ports

more than 250,000 pounds of mail

transported daily in the Western and Pacific Areas.

Of the total number of pounds of mail transported

daily on WNET, 12 percent is Express Mail, 48

percent is Priority Mail; and 40 percent is First-Class

Mail.



b. Rail Transportation



Postal Service expenses for all rail trans-portation

were $277 million in 2000. This

represents a 2.2 percent decrease from 1999.

The Postal Service holds contracts with eight

railroads that perform service on approximately

1800 rail segments.



In 2000, the Postal Service paid Amtrak $98

million for rail transportation services. Expanded

service included using a rail/highway combination

vehicle call a RoadRailer vehicle. This vehicle, has

extended the reach and capability of Amtrak

service to meet postal needs. The Amtrak trans-portation

network provides service for the majority

of Periodical Mail.



c. Highway Transportation



The Postal Service expended approximately

$2.1 billion for highway mail transportation in

2000, a 5 percent increase over 1999.



d. Hub and Spoke Program (HASP)



With nine hub and spoke facilities operating

nationally, intermodal operations were imple-mented

when dedicated air taxi service was added

Chapter 1 Compliance with Statutory Policies 23

 23•to the Southeast and Indianapolis HASPs in 1998.

Nineteen aircraft, ranging in size from DC9s to

747s were introduced to support the HASP sur-face

transportation network. These actions reduced

congestion at commercial airline transfer hubs,

improved service and provided a more consistent

arrival profile.



e. Domestic Water Transportation



In 2000, the cost of transporting mail to

domestic offshore destinations was $30 million, a

2 percent increase over 1999.



3. International Transportation



a. International Air Transportation



In 2000, the Postal Service spent $160.3 mil-lion

for international air transportation. U.S. flag

carriers were paid $131.5 million, and foreign flag

carriers received $28.8 million. Foreign flag carriers

are used for airmail service to destinations where no

U.S carrier provides the required service. Selections

of carriers for surface airlift contracts are awarded

on the basis of best value. An additional $137.9

million was spent for military mail, which was

reimbursed by the Department of Defense (DOD).



b. International Surface transportation



During 2000, international surface trans-portation

costs were $7 million. The cost covers all

surface mail sent by sea. The selection of ocean

carriers is based on price and service to the

required destinations.



4. Postal-Owned Transportation

(See Table 1.1)



5. Mail Transport Equipment (MTE)



To further our commitment to suppling our

customers with quality MTE, we support a net-work

of 22 Mail Transport Equipment Centers.

The Mail Transportation Equipment Service

Center (MTESC) program is a network of out-sourced

facilities dedicated to processing, repairing,

storing and redistributing sacks, trays, pallets and

wheeled containers to internal and external cus-tomers.

Separating MTE activities from plant

activities enables mail processing managers to focus

on processing mail. Under the program, emptied

mail transport equipment is dispatched from a mail

processing center to one of the 22 service centers

via dedicated transportation. The used equipment

is inspected, sorted, repaired and made ready for

reuse by either internal or external customers.



Over 2,000 trailer loads of mail transport

equipment requests are filled each day. A profes-sional

logistics contractor, managed at the national

level, provides centralized coordination of inven-tory

management, ordering and fulfillment, data

systems and other supporting activities.



The MTESC program plays an integral role

in achieving the goals set forth in the 1998-2002

Strategic Plan of satisfying our customers,

improving our organizational effectiveness and

strengthening our financial viability.



F. Postal Facilities, Equipment and

Employee Working Conditions

(39 U.S.C. 101 (g))



1. Safety and Health,

Safety Management Process



In the second full year as a "private sector"

employer under the Occupational Safety and

Health Act, the Postal Service faced several unique

challenges. As an independent establishment of the

executive branch of the Government of the United

States, the Postal Service is operated as a basic and

fundamental service provided to the people by the

Government of the United States. In 2000, the

Postal Service performed this vital mission while

also focusing on enhancing safety and health pro-grams

in our facilities and responding to

Occupational Safety and Health Administration

(OSHA) inspection activity in a proactive and posi-tive

manner.

--------------------

TABLE 1.1

Chart Title:  Table 1.1: Postal Service Vehicle Inventory FY 00

Type of Chart:	2-column table, summarizing information

Action or Trend: Table 1.1 presents an overview of the 211,714 vehicles operated by the Postal Service in Fiscal Year 2000. Total numbers of each of 12 types of vehicles are presented in the table. Cost to operate the 205,391 vehicles owned by the Postal Service (the remainder are leased) averages out to $4,010 per vehicle, or $0.75 per mile.

---------------------



Postal management was challenged to improve

safety and health programs beyond basic compli-ance

to involve employees and their representatives.

To measure this performance, management con-ducted

the most comprehensive third-party

evaluation of nationwide safety and health programs

ever undertaken. As a part of the EVA Variable Pay

Program targets as detailed previously in chapter 1,

an independent safety and health firm conducted

program evaluations in 252 large postal facilities

nationwide. These facilities were selected randomly

by the firm. The evaluations were conducted in an

objective manner independent of postal manage-ment.

The third-party experts utilized a safety and

health Program Evaluation Guide (PEG) developed

specifically for the Postal Service. It was based on

OSHA guidance and industry best practices.



All Areas met the PEG threshold goal of a

sound safety and health program. Many facilities far

exceeded basic program elements. There was a dra-matic

improvement in management involvement,

employee participation and OSHA-required written

programs. This was demonstrated by increased

emphasis on Executive and Joint Labor

Management Safety and Health Committees.

Additionally the national EVA goal for lost workday

injuries and illnesses was met.



The Postal Service continued to focus on

motor vehicle safety. In conjunction with the

National Safety Council (NSC), over 135,000

Postal Service drivers were recognized with NSC

Safe Driver Awards. The Postal Service deployed

several national driver safety campaigns including

"schools out," "pedestrian safety," "winter driving"

and "schools in" designed to increase driver aware-ness

and reduce motor vehicle accidents. The Postal

Service also partnered with the National Highway

Traffic Safety Administration in the National Drunk

and Drugged Driving Prevention (3D) month cam-paign.

The first corporate-wide seat belt use survey

was accomplished utilizing the postal Web site. Seat

belt use data were shared with the U.S. Department

of Transportation in support of the "Buckle Up

America" Campaign.



The Postal Service continued to work with

OSHA in a proactive manner on compliance activi-ties.

This included the prompt and thorough

investigation of employee complaints relative to

safety and health and the appropriate resolution of

cited deficiencies.



2. Environmental Programs



a. Fuel Cell, Anchorage, AK



On August 9, 2000, Senator Ted Stevens

(R-AK) and Postmaster General William J.

Henderson dedicated the nation's largest com-mercial

fuel cell system at the Anchorage

Processing & Distribution Center.



The system is energy efficient and environ-mentally

friendly. Producing one megawatt of

electricity, this is the first fuel cell system that

provides power to the utility grid - Alaska's

Chugach Electric.



Fuel cell systems offer one of the lowest-maintenance

forms of electrical power in the

world. As businesses and the Internet create a

greater demand for uninterrupted power, fuel cells

are becoming a cost-effective alternative. This

project demonstrates fuel cell resource flexibility

and commercial viability for meeting today's crit-ical

power needs.



Fuel cells do not burn fuel so the system

eliminates air emissions normally associated with

acid rain and smog dramatically reducing those

associated with global warming.



Compared with electricity generated from the

average combustion-based processes in the United

States, a one-megawatt fuel cell system would elimi-nate

more than 200,000 pounds of air pollution

and 11 million pounds of carbon dioxide from the

atmosphere during each year of operation.



b. Green Electricity



Just in time for Earth Day 2000, the Postal

Service announced one of the largest purchases of

retail green power in U.S. history. The Postal

Service awarded a competitively-bid contract to go-green.

com, the retail operation of Preferred Energy

Services, Inc. to provide 100 percent green power to

1,000 Postal Service facilities throughout California

over a three-year period. The contract called for

delivery of more than 30 million kilowatt hours of

electricity from renewable energy resources for each

of the next three years.



This purchase of 100 percent green power for

more than 1,100 facilities in California demon-strates

our commitment to conducting business in a

socially responsible manner. By doing this, we

remained true to our values while accomplishing

Chapter 1 Compliance with Statutory Policies 25

 25•two very important things: the acquisition of a cost-effective

energy source and the opportunity to make

a contribution to the environmental health of the

communities we serve.



The use of renewable energy resources -

instead of the traditional mix of resources - to

generate 30 million kilowatt hours annually will

save about 25 million pounds of carbon dioxide,

60,000 pounds of oxides of nitrogen and 18,000

pounds of sulfur dioxide each year from being

released into the atmosphere.



The Postal Service received technical assistance

from the Lawrence Berkeley National Laboratory in

developing the solicitation and evaluating the offers

received that led to this purchase. With 40,000

facilities nationwide, the Postal Service is the largest

federal consumer of electricity other than the mili-tary

and plans to deploy 500 electric delivery

vehicles in California next year.



c. Benign Pressure-Sensitive Adhesives



In March 2000 the Postal Service

announced the development of an environmen-tally

benign Pressure-Sensitive Adhesive (PSA),

marking the beginning of a new era in recycling.



This world-class technology will help make

recycling more economical, help decrease costs

for recycling and repulping operations and help

divert tons of valuable waste paper from our

nation's landfills. For years it has been known as

the "sticky" problem. What do you do with adhe-sives

when recycling paper? These adhesives gum

up the works and recycling mills have difficulty

recycling paper with high adhesive content. But

through the leadership of the Postal Service and

cooperation between the public and private

sector, the "sticky" problem may soon be a thing

of the past.



Not only will this new adhesive technology

improve the environmental performance of

postage stamps, it will also reach a much larger

audience of adhesive users.



On April 21, 2000, President Clinton issued

Executive Order 13148, a "Greening the Govern-ment"

Executive Order that recommended all

federal agencies employ the new PSA technology.



The Postal Service has a long history of

leadership in recycling efforts and protection of

the environment. Although stamps were a very

small part of the "sticky" problem, the Postal

Service saw an opportunity for public policy

leadership and took on the task of developing

an environmentally friendly adhesive. In 1994,

the Environmentally Benign Pressure Sensitive

Adhesives Program was initiated as part of the

Postal Service's commitment to develop stamps

and stamp products that do not adversely affect

the environment. Previously, the Postal Service

formed a team of researchers from government

and industry, including members of the Forest

Products Laboratory (U. S. Department of

Agriculture), the adhesive industry, paper manu-facturers,

recyclers, printers and testing

laboratories. This research partnership, spon-sored

and funded by the Postal Service, has been

successful in creating an environmentally

friendly adhesive. It passed a comprehensive

series of tests, meeting all Postal Service stamp

performance and recycling requirements.



d. Per Scholas



In April 2000, the Postal Service

announced its partnership with Per Scholas in

the South Bronx to provide computers to

inner-city youth and families. Per Scholas

is a non-profit organization dedicated to

bridging the digital divide by bringing 21st-century

technology to school children and low-income

families.



The Postal Service is partnering with Per

Scholas to recycle stand-alone computer systems

by donating 15,000 units for recycling as well

as providing postal vehicles to transport com-puters

for reconditioning to the Center and

distributing the refurbished units to families

without home computers.



This partnership with Per Scholas offers

the Postal Service yet another opportunity

to be a leader in the voluntary takeback move-ment

and to reaffirm our commitment to the

diverse communities that we serve, everywhere,

every day.



Started by a consortium of foundations and

corporations, Per Scholas - which comes from

the Latin phrase, "For Schools" - produces

high-quality computers for schools and other

non-profit organizations at substantial savings.

In the last four years, it has placed more than

13,000 computers in over 1,200 schools in 22

states. Per Scholas also offers comprehensive

computer techology training and job placement

for disadvantaged youth. At its new recycling

center, Per Scholas has expanded its operations

to include reconditioning computers donated by

the Postal Service and other organizations and

placing them in disadvantaged homes through

social service agencies. Per Scholas projects that

26 Chapter 1 Compliance with Statutory Policies

 26•Chapter 1 Compliance with Statutory Policies 27

it will provide 10,000 of these computer pack-ages

each year.



e. Resource Recovery from Obsolete Equipment

with Goodwill, Austin, TX



For several years, the Postal Service has been

a leader in electronics equipment reutilization -

the process of salvaging value from discarded

computers and other electronics equipment.

Austin, Texas, has become a magnet for high-tech

firms and consequently has become a hotbed of

creative approaches to dealing with discarded

high-tech equipment. The Postal Service spotted

an opportunity in Austin to break new ground in

materials management.



In 1998, Goodwill Industries of Central

Texas in Austin, established a facility to receive

discarded electronic equipment such as

Integrated Retail Terminals (IRTs). It dismantles

them for harvesting of usable parts, or utilizes

the remaining materials as recyclable scrap. The

USPS/Goodwill program receives approximately

325,000 pounds of equipment (abou