Postal Service Considers Contracting Out Priority Mail

The U.S. Postal Service has suggested it may turn over operation of its planned Priority Mail network to one of its competitors.

In what postal spokesmen termed “a significant exploration,” the federal agency published a notice last week asking commercial delivery firms if they would be willing to operate the network of 10 Priority Mail processing centers it had planned to operate with 1,300 postal employees. Priority Mail is the Postal Service’s two-day parcel delivery.

A Postal Service spokesman said the agency planned to exclude large companies such as Federal Express Corp. and United Parcel Service from the bidding. A postal contract would create “a conflict of interest” for such firms because they would be competing for the same customers. A lawyer for Federal Express, one of the nation’s largest overnight delivery services, said the idea still sounded logical.

The contracting proposal brought an immediate protest from the American Postal Workers Union, which has fought previous efforts to “contract out” postal work. “I think it’s a Pearl Harbor bombing without notice,” complained union President Moe Biller. He said postal officials had told the union in January that they might consider having a private contractor operate one of 10 new processing centers, but gave no hint that a commercial firm might operate the entire network.

Under fire from Congress, the agency has dropped its promises of two-day Priority Mail delivery because too many of the parcels were not being delivered in that period. The service announced the new processing centers in January, saying they were necessary for a one-year test to boost the agency’s on-time deliveries to 98%.

At the time, postal officials said they were planning to offer jobs in the new plants to postal workers. Since then, Postmaster General Marvin T. Runyon Jr. has said the agency is considering contracting out thousands of postal jobs, but he did not specify Priority Mail positions until Thursday.

Biller suggested that Runyon had proposed contracting out the Priority Mail jobs in an effort to curry favor with Republicans in Congress.

Postal Service spokesman Frank Brennan said the decision to contract for the Priority Mail service is “not a done deal.”

The proposal appears to reflect the desire of some senior postal executives to move away from using what they believe is costly union labor. About 82 cents of every dollar the Postal Service collects is spent on personnel costs, a figure that has remained constant despite the billions of dollars the agency has spent on automation.