The Postal Service and American Postal Workers Union have reached tentative agreement on a new four and a half year labor contract. Given the Postal Service's precarious financial position, the new contract, if ratified by APWU membership, will greatly influence the Service's ability to deal with declining mail volume and excessive cost.

In keeping with customary procedure, the APWU has provided substantial information about the benefits of the contract to its members and the Postal Service has issued a statement expressing satisfaction that the contract is a good one.
Based on available information, Chairman Darrel Issa (R-CA) of the House Committee on Oversight and Government Reform has announced a hearing on April 5 to explore the tentative settlement and review what he has called a "missed opportunity" to address the Postal Service's financial crisis.

Below are the union's description of the new contract; the Postal Service's press release on the contract; and the statement by the House Committee on Oversight and Government Reform.

New Contract
Below are key components of the tentative agreement between the U.S. Postal Service and the American Postal Workers Union for the 2010-2015 Collective Bargaining Agreement. The four-and-half year contract, which will expire at midnight on May 20, 2015, must be ratified by members of the APWU.
There will be across-the-board pay increases of 3.5 percent over the life of the contract.
Nov. 17, 2012 - 1% increase
Nov. 16, 2013 - 1.5% increase
Nov. 15, 2014 - 1% increase
Cost-of-Living Adjustments
Cost-of-living increases will continue and will be "back-loaded." COLAs for 2011 were waived, and COLAs for 2012 are deferred until 2013.
A March 2012 COLA will become effective in March 2013, together with a March 2013 COLA.
A September 2012 COLA will become effective in September 2013, together with a September 2013 COLA.
Cost-of-Living Adjustments will be made in March and September 2013.
Cost-of-Living Adjustments will be made in March and September 2014.
A Cost-of-Living Adjustment will be made in March 2015.
New Entry-Level Steps
Additional steps will be added to the pay scale for new employees in Levels 3 through 8, with lower starting salaries. Future employees will progress through the new steps onto the current pay scale, but will not be eligible to progress to the current top step.

Health Benefits
There will be no changes to the healthcare benefits of APWU members in 2012. Each year from 2013 through 2016 there will be a slight shift in employees' share of contributions toward healthcare coverage. This will amount to an increase of several dollars per pay period each year. (Similar changes were made in the last contract.)

Limits on Excessing
The agreement limits excessing outside of an installation or craft to no more than 40 miles from the installation in most cases and to no more than 50 miles in any case. If management cannot place employees within 50 miles, the parties will jointly determine what steps may be taken.
Employees will not be required to retreat to crafts they were excessed from if the crafts are represented by the APWU.
There will be designated "moving days" no more frequently than once every three months for excessing from postal installations. This will strengthen seniority when excessing occurs in multiple installations within a geographic area.
Jobs and Job Security
Protection against layoffs continues for all career employees who were on the rolls as of Nov. 20, 2010. The language of Article 6, which governs layoffs and reductions-in-force, remains unchanged.
New provisions on subcontracting give the APWU the opportunity to develop proposals to compete with subcontractors for work, and stipulate that if APWU-represented employees can perform the work less expensively than the subcontractors, the work must be performed by APWU-represented employees.
The tentative agreement protects jobs with a provision that stipulates that the APWU will retain jurisdiction if the duties of union members are moved to facilities that are not currently represented by the APWU.
Jobs in the Clerk Craft
No fewer than 1,100 Call Center jobs that had been contracted out will be returned to the APWU bargaining unit. The Call Center locations will become part of the installation of the nearest Processing & Distribution Center, so that APWU members can bid on these positions.
A minimum of 800 positions will be created in the Clerk Craft to perform administrative and technical duties that are currently performed by EAS personnel.
Lead Clerk, PS-7, positions will be created in mail processing and in retail to perform administrative duties.
At least one Lead Clerk position will be established in any office where there is no supervisor.
At least one Lead Clerk position will be established in any Customer Service office with five or more Clerk Craft employees.
Ratios for the establishment of Lead Clerk positions in mail processing will be as follows:
204Bs will be eliminated from offices with supervisors, except to fill absences of more than 14 days and vacant assignments of more than 14 days.
Part-Time Regular positions will be eliminated from the Clerk Craft.
Jobs in the Maintenance Craft
There will be a joint audit of maintenance work currently performed by contractors to identify duties that can be assigned to the Maintenance Craft where it is cost effective.
Custodial staffing will be established on an installation-wide basis rather than on a facility-wide basis.
Initially 1,500 custodial positions that were contracted out will be returned to the bargaining unit.
Help Desk positions at the MTSC (Maintenance Technical Support Center) in Norman, OK, will be assigned to the bargaining unit.
There will be an audit of EAS positions to determine if non-supervisory duties are being performed. Bargaining unit duties derived from the audit will be returned to the bargaining unit and a minimum of 60 bargaining unit positions will be established.
All in-craft promotions will be on the basis of installation seniority within a "banded" score.
Jobs in the Motor Vehicle Craft
Approximately 740 Vehicle Maintenance Facility positions will be created to perform work that is currently performed by subcontractors. The jobs will be created as follows:
219 Level 8 Technicians 459 Level 9 Lead Technicians 62 Level 10 Lead Technicians
A minimum of 600 Highway Contract Routes (HCRs) will be converted to Postal Vehicle Service (PVS) routes, with a minimum of 25% of the duty assignments given to career employees
The APWU will have the opportunity to review approximately 8,000 additional HCRs, and will have the opportunity to submit proposals for the work.
There will be an audit of EAS positions to determine if non-supervisory duties are being performed. Bargaining unit duties derived from the audit will be returned to the bargaining unit and a minimum of 60 bargaining unit positions will be established.
Part-Time Flexible and Part-Time Regular positions will be eliminated from the MVS Craft.
New, Non-Traditional Positions
The tentative agreement changes the definition of "full-time" in a way that gives the Postal Service and our members greater flexibility.

The "full-time" designation will apply to any position of 30 or more hours per week and to any position of 48 hours or less per week

No current employees can be forced into a full-time position of less than 40 hours per week or more than 44 hours per week.

These provisions will allow for the creation of many non-traditional full-time schedules, including four 10-hour days, three 12-hour days, and four 11-hour days.

There will be no mandatory overtime for employees in non-traditional assisgnments or in functional areas that utilize non-traditional full-time assignments.
To provide the USPS with flexibility, the parties agreed to create a new position for Non-Career Assistants, who will comprise up to 20 percent of the workforce in most functional areas of the Clerk Craft and up to 10 percent in both the Maintenance and Motor Vehicle Crafts. These employees will be paid lower wages than career employees, but higher wages than Transitional Employees and Casuals. They will be part of the APWU bargaining unit and will receive raises, health benefits, and leave. Non-Career Assistants will have access to the grievance procedure, and they will have the opportunity to join the ranks of the permanent, career workforce by seniority.
Transitional Employees and Casuals will be eliminated as workforce categories. Employees who are currently serving as TEs or Casuals will be eligible for conversion to Non-Career Assistants if they have passed the appropriate tests.
Small Offices
There will be no Part-Time Flexibles in Level 21 and above offices. Positions will be staffed with Full-Time Regulars (including non-traditional assignments) and Non-Career Assistants.
In Level 20 and below offices, wherever the union can demonstrate the existence of 30-hour duty assignments, management must create them.
Restrictions will be placed on the amount of bargaining unit work that may be performed by supervisory personnel in small offices. The formula is as follows:
Level 20 offices - No bargaining work by supervisors allowed
Level 18 and below offices - 18 hours per week
Level 16 and below offices - 25 hours per week
Many Contract Postal Units (CPUs) will be returned to the APWU bargaining unit; others will be closed, and a system will be established to evaluate additional CPUs for return to the bargaining unit or closure.
Employees will enjoy unlimited bidding on jobs that do not require training or a deferment period. Such bids will not count toward an employee's allowed number of bids.

Light & Limited Duty
The union's proposals regarding light- and limited-duty positions will proceed to arbitration. Our proposals are intended to protect seniority rights and to provide fair opportunities for accommodation for employees that need it.

Postal Service Statement

WASHINGTON - The U.S. Postal Service and the American Postal Workers Union AFL-CIO (APWU), reached a tentative four-and-a-half-year contract today. Upon ratification by union membership, which is expected to take place within two months, the agreement will run through May 20, 2015, and affect approximately 205,000 employees.
"This is a responsible agreement that is in the best interest of our employees, our customers and the future of the Postal Service," said Postmaster General Patrick R. Donahoe. "The contract will help lay a foundation that is fair to our employees and stakeholders."

Terms of the new APWU contract set the stage for a more flexible and cost-effective workforce to accommodate America's changing mailing trends. While requiring union ratification, key components include:
Economic provisions that address critical Postal Service needs to control labor costs; and,
Enhanced workforce flexibility to match workforce with workload.
Reasonable wages and benefits are critical to helping the Postal Service fully meet its financial obligations and remain strong in the future.

The drop in the economy, coupled with the shift to digital communications, has dramatically reduced mail volume. Mail volume peaked at 213 billion pieces in 2006 and plummeted to 170.6 billion in the fiscal year (FY) ended Sept. 30, 2010. Revenues shrank from $72.6 billion in FY2006 to $67.1 billion. The FY2010 net loss was $8.5 billion.

The Postal Service deals with the challenges of competing with the private sector while continuing to operate under federal regulations and congressional oversight.

Other issues challenge the Postal Service's future:
Created in 2006 under stronger economic conditions, the Postal Accountability and Enhancement Act requires the Postal Service, unlike the private or public sector, to prefund retiree health benefits. This equates to an average of $5.5 billion in cash flow every year through 2016, in addition to the $2 billion it annually pays for current retirees. The Postal Service has asked Congress to restructure retiree health benefits payments to "pay-as-you-go," comparable to what is used by the rest of the federal government and the majority of the private sector.

According to audits conducted by the Postal Service Office of Inspector General, the Postal Service has been overcharged to its Civil Service Retirement System and Federal Employees Retirement Benefit pension funds by $75 billion and $6.9 billion, respectively.

Negotiations with the National Rural Letter Carriers' Association (NRLCA) came to an impasse upon the contract's Nov. 20, 2010, expiration. Absent a negotiated resolution, the parties will continue to follow the current agreement until a third-party determines the outcome of a new contract. Unlike in the private sector, when negotiations come to an impasse, federal employees are not permitted to strike. An arbitrator determines the final outcome and is not legally required to consider the Postal Service's financial obligations when rendering a decision.

The APWU represents 205,000 employees who work as clerks, mechanics, vehicle drivers, custodians and in some administrative positions. Employees represented by the NRLCA deliver mail in primarily rural and suburban areas. The NRLCA represents 67,000 career employees and 48,000 non-career employees who substitute for career employees on their days off. Employees represented by both unions received more than $20 billion in wages and benefits last year.
Two other unions represent most other postal employees. More than 203,000 employees represented by the National Association of Letter Carriers, AFL-CIO (NALC) deliver mail in metropolitan areas and 48,000 employees represented by the National Postal Mail Handlers Union, AFL-CIO (NPMHU) work in mail processing plants and Post Offices.

The NALC and NPMHU begin negotiations next year approximately 90 days prior to the midnight Nov. 20, 2011 contract expiration date.
House Oversight Committee Statement

WASHINGTON- Rep. Darrell Issa (CA-R), Chairman of the House Oversight and Government Reform Committee, today announced a full committee hearing on United States Postal Service (USPS) pay and benefits on April 5th. The Committee expects to hear from the Postal Service on their tentative agreement offered to their largest union, the American Postal Worker Union (APWU), last week. The agreement has yet to be signed.
Issa expressed serious doubt that the APWU contract agreement would improve the fiscal situation that threatens USPS' future.

"Eighty percent of the Postal Service's operating expenses are workforce-related. Costs must be reduced to align them with falling mail volume and declining revenue projections. The union contract renewals are the best chance to find new savings," said Issa. "Unfortunately, this looks like a missed opportunity. The Postal Service must show Congress and the American people that it can pay its own way, because the numbers do not seem to add up."

Rep. Dennis Ross (FL-R), chairman of the Postal Service Subcommittee, expressed serious concerns about postal service pay.

"The Postal Service cannot afford to continue to pay, as their own numbers have estimated, a 34.2% wage premium over comparable private sector labor," said Ross, referring to information presented by economist Michael Wachter in 2003 testimony to the President's Commission on the Postal Service. USPS has hired Wachter to study pay and benefits multiple times since 1980, but USPS does not release the reports citing propriety information concerns.
Issa continued: "This hearing will establish an important baseline for Congress' upcoming work on the Postal Service's structure, fiscal health and self-governance."

Postal Service Announces Organizational Redesign
Postmaster General Pat Donahoe announced a newly redesigned organizational structure on March 24 that will reduce costs by some $750 million when fully implemented. The redesign includes elimination of about 7,500 positions nationwide and the closing of seven district offices.

To help ensure necessary attrition to capture the projected savings, the Postal Service is offering early retirement and financial incentives of $20,000 per employee to separate from the organization. The March 24 announcement focused on administrative and executive positions, with additional staff reductions expected in the network and retail operations.

PRC Issues Five-Day Delivery Advisory Opinion
The Postal Regulatory Commission on March 24 issued its long-awaited advisory opinion on the Postal Service proposal to end Saturday mail delivery. Issuing neither a yes nor no decision, the PRC said the projected annual savings are $1.7 billion, not $3.1 billion as projected by the Postal Service.

Other significant findings include a projection that full savings would not likely be achieved until year three after implementation; net revenue losses due to volume declines would be $600 million, not $200 million as projected by the Postal Service; and customers in rural, remote and non-contiguous areas would be particularly affected by the service change.

In response to the PRC's advisory opinion, Postmaster General Donahoe issued a statement that reiterated the importance of moving to 5-day delivery in order to cope with "tremendous losses in mail volumes and revenues." Calling it "an integral part of our action plan for the future," Mr. Donahoe expressed confidence that the plan would result in a $3.1 billion saving annually.

The Postmaster General went on to say "The Commission's opinion is advisory only and therefore, is not a final determination on the merits of our proposal. We remain convinced of our findings. As such, we will also continue to press our case with the Congress on this matter."

Senator Tom Carper (D-DE.), Chairman of the Senate Subcommittee that oversees the Postal Service, released the following statement reacting to the advisory opinion on Postal Service delivery frequency released by the Postal Regulatory Commission:
"While I have serious concerns about the length of time it took the Postal Regulatory Commission to produce this advisory opinion, I welcome the commissioners' views on this proposal from the Postal Service and look forward to studying their findings more closely.

"While I'm not an advocate for eliminating Saturday delivery, and I continue to question whether taking such a step would be a good move at this time, I do believe that decisions on operational matters such as delivery frequency should be handled by postal management. At a time when the Postal Service is struggling with record budget deficits and facing insolvency, it makes no sense, in my opinion, to tie their hands when it comes to making difficult operational decisions. A significant amount of money could be saved if Saturday delivery is eliminated. I hope it isn't necessary, but taking this step at the right time, and in the right way, might very well be a necessary component of a comprehensive postal recovery plan. It would be irresponsible for Congress, as it does now, to stand in the way and act like a 535-member Board of Directors. No real business could ever function under that type of governance and it's unrealistic to think that the Postal Service would be well served by that type of micromanagement.

"That's why last year I introduced a comprehensive postal reform bill - the Postal Operations Sustainment and Transformation (POST) Act - which would fix the Postal Service's broken retiree benefits system, streamline operations, and allow it to offer additional products and services that could bring in additional revenue. It requires all parties - postal management, employees and customers - to make sacrifices. It also gets Congress out of the way by providing the flexibility and tools necessary to address the problems plaguing the Postal Service in an effective way. While the Senate wasn't able to pass this much needed legislation in the 111th Congress, I plan to reintroduce the bill in the coming weeks."

The Office of Senator Susan Collins issued the following statement in reaction to the
PRC's decision: "The Postal Regulatory Commission released an Advisory Opinion on the U.S. Postal Service five-day delivery plan. The Postal Service must obtain a Commission Advisory Opinion on any change in nationwide service it proposes. The Opinion found annual net savings to be an estimate is $1.7 billion versus the Postal Service's savings estimate of $3.1 billion among other discrepancies. Senator Susan Collins, the Ranking Member of Senate Committee that oversees the Postal Service, issued the following statement. "The PRC found that the Postal Service's estimate of savings was inflated and points out that ending Saturday delivery would delay approximately a quarter of first class and priority mail. While cutting service would save the Postal Service money, it would also drive down the mail volume that is critical to maintaining its solvency. "Moreover, the PRC exposes the Postal Service's failure to even consider the likely harm to rural postal customers. Echoing my warnings, PRC Chairman Ruth Goldway acknowledged in her addendum to the Opinion that five-day delivery would 'unfairly discriminate' against rural postal customers. The Advisory Opinion raises many of the same questions that I have posed over and over. These consequences simply must be addressed before consideration of such a significant service reduction."

New Deputy Postmaster General Announced

The Postal Service announced the selection of Ronald Stroman to be Deputy Postmaster General, effective April 4. The position had been vacant since the appointment of Postmaster General Pat Donahoe last year.

Mr. Stroman has served in government positions for over 30 years, including a recent term as staff director of the House Committee on Oversight and Government Reform. He has also held senior positions in the House of Representatives, General Accounting Office, and Department of Transportation.

The new Deputy Postmaster General "will play the lead role in continuing to work with Congress to restructure the prefunding of retiree health benefits, adjust delivery frequency, and gain greater flexibility in aligning the Postal Service processing, distribution and retail networks. He will work closely to help strengthen relationships with the mailing industry and identify opportunities to improve interactions with postal customers."