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DoD may outsource mail delivery Print
DoD may outsource mail delivery

January 30, 2006

The Defense Department is starting to move forward on a plan to outsource its billion-dollar-plus mail operation, which would be one of the government’s biggest privatization projects in recent years.
An influential advisory group concluded doing so would save money, improve mail service and free up troops badly needed for war-fighting.

Senior Pentagon leaders appear to favor outsourcing the work, which is performed by 352 civilian employees, 4,470 military personnel and 363 contractors who now handle the military’s mail.
Secretary Donald Rumsfeld asked the Defense Business Board to study the idea in 2004. The board completed its study in December, concluding the mail system should be outsourced.

Pentagon officials have already drafted an internal memo to move forward with the privatization plan, and that memo is under review, according to one industry source who asked not to be identified.
Officials at the Defense Department and Military Postal Service Agency declined to discuss the subject. A spokesman for the Military Postal Service Agency said it was not the agency’s role to either endorse or object to any Pentagon plans.
Pitney Bowes of Stamford, Conn., and FedEx of Memphis told Federal Times they would be interested in competing for the Defense business.
Postal Service impact?
The U.S. Postal Service, which already handles portions of military mail delivery, declined to discuss how a privatized military mail operation would affect it or whether it would have an interest in pursuing more of that business if it were put up for bid.
One postal expert — Neal Denton, until recently executive director of the advocacy group Alliance for Nonprofit Mailers in Washington, before taking a job at the Red Cross — said the Postal Service would probably be capable of assuming military mail services.
“If there is anything the Postal Service is especially good at, it is building a delivery network that is capable of delivering the mail anywhere, and I see no reason why they could not extend their network worldwide,” Denton said.
But he and other postal experts agreed the Postal Service likely could not compete with the private sector for that business even if it were interested.
“This probably would not be an opportunity for [the Postal Service] because they wouldn’t be able to compete with private-sector companies from a cost standpoint,” said Robert McLean, executive director of the advocacy group Mailers Council of Arlington, Va., which represents mailing associations, corporations and nonprofit groups.
“Private-sector companies that operate mail rooms usually do so at wage levels far less than what the Postal Service pays, and the Postal Service would not be able to match that,” McLean said.
Gene Del Polito, head of the advocacy group Association for Postal Commerce, also in Arlington, agreed.
“There is no way in hell the Postal Service is going to get this business because they can’t be competitive. There is no way it will cost less, even compared to using military personnel,” Del Polito said.
If there is any effect on the Postal Service from privatizing military mail delivery, Del Polito said, it would likely be the negative one of establishing a privatizing precedent.
“If you open up military mail to competition, then it would be irrational to keep other parts of the mail system the exclusive preserve of the Postal Service. If cost is the major concern, then the Postal Service should be privatized,” Del Polito said.
Mail manpower shortage
Privatizing military mail service could not only solve worsening manpower problems in military postal units but also help build better morale among troops and families, according to a postal company commander in Iraq and other critics.
The postal manpower situation is “broken and wasteful of valuable military human resources,” Army 1st Lt. Eric Rogers wrote in letters to Army Times, a sister publication of Federal Times, and the Defense Business Board.
At least one industry source supportive of the outsourcing proposal has accused the Military Postal Service Agency of trying to derail the idea. But Rogers said that what he sees around him in Iraq leads him to agree that the recommendation makes sense.
Many troops trained to handle postal duties in war zones are reservists, but the majority of reserve postal platoons have hit their two-year mobilization limit under the law, Rogers said.
As a result, he wrote, nurses, mechanics, administrative clerks and even infantrymen are rushed through overcrowded postal training to fill the shortfall.
“The process continues each rotation as the reserve robs Peter to pay Paul, and other essential nonpostal units are depleted of manpower,” he wrote.
Some postal platoons have almost no one left with prior postal experience, Rogers wrote in response to Army Times reports in late December about the Defense Business Board’s call to privatize military mail.
Dov Zakheim, a member of the board’s military postal service task force and a former Pentagon comptroller, said the manpower situation is a key concern.
“People in uniform don’t have to be postal clerks,” he said. “On the other hand, there are things the military does, like fighting wars, that nobody else can do.”
The Defense Business Board task force said outsourcing would allow the military to shift almost 4,500 active and reserve troops from postal duties to other higher-priority jobs.
“Delivery of mail is not a core military function,” the task force said.
Military Postal Service Agency officials could provide no information about the lack of postal personnel in the field.
“MPSA’s mission is to provide postal policy, procedures and coordination with [the U.S. Postal Service],” said Army spokesman Lt. Col. Kevin Arata, adding that the agency has no role in the management of military postal manpower.
By press time, Army manpower officials did not respond to requests for comment.
The schism in operational oversight underscores the task force’s concerns that the military mail system is “disjointed,” Zakheim said.
As the former top Pentagon budget official, he said he is especially concerned that the military mail system is virtually impossible to audit, a conclusion reached independently by both the Defense Business Board task force and the Government Accountability Office.
Research shows outsourced mail services typically yield cost savings of 30 percent or more, the task force said. But there are issues to be addressed before the military system could be privatized, such as the safety of civilian contract workers.
“Where do contractors fall when it comes to the Geneva Convention? If you pick up a weapon and defend yourself but you are captured, you can be considered a saboteur and executed,” wrote Jason Combs, a Kellogg Brown & Root mail supervisor for several mailrooms in the Baghdad-Hilla region, in a letter to Army Times.
Rogers acknowledged that some locations and mobile missions may not be suitable for civilians, but said the bulk of postal manpower in the war zones is tied up in warehouses and larger Army post offices that could easily be handed to contractors.
Another issue is “organizational interests and resistance to change,” the task force said.
Zakheim noted that outsourcing the military postal system is “not necessarily the Military Postal Service Agency’s point of view.”
MPSA officials said they could not respond to questions about their position on the outsourcing of military mail “because of the ongoing review by the Defense Business Board.”
Opposing forces are already at work, according to one industry source who spoke on condition of anonymity.
Although Defense Secretary Donald Rumsfeld reportedly concurs with the business board’s call to outsource military mail, no action has been taken. An action memorandum has been drafted to implement the recommendations, but it is still awaiting approval, the source said.
“The Military Postal Service Agency and others in the Defense Department are trying to derail the proposal by arguing that they are doing outsourcing already,” said the industry source.
The Defense Business Board said current outsourcing efforts are “piecemeal” and run the risk of “making matters worse by increasing complexity and costs.”
The task force’s research showed the private sector and even parts of government are far ahead of the military mail system in terms of technology that could make the whole system more efficient.
Defense officials should start from scratch and look to private industry for a complete end-to-end solution, the board said.
Cost savings
Defense mail costs — including transportation, payroll, technology, travel, and headquarters operations — are at least $1.8 billion a year, the Defense Business Board study said. But the true total cost is unknown because government auditors cannot calculate it.
One industry source said those costs could be reduced by about 25 percent — and service to customers greatly improved — by using technology to reduce the number of packages that now get returned because they are “undeliverable as addressed.”
Most of this mail could be flagged before it ever left the United States, the source said, using technology that can read address labels and readdress mail to correct destinations.
John Campo, vice president for U.S. postal relations at Pitney Bowes, and FedEx spokeswoman Kristen Krause both said their companies have extensive overseas operations and could take over military operations without much difficulty.
“If they train Marines to be warriors, I’m sure they would rather do that than be mail clerks,” Campo said.
But Murray Comarow, a former senior assistant postmaster general, questions whether turning mail service over to private companies could result in the interruption of service to troops.
“The report doesn’t say what happens if a private company goes on strike or decides [areas such as Iraq are] too dangerous,” Comarow said. “What if they say, ‘It’s too hot for our guys?’”
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