This is to request approval from the Office of Personnel Management (OPM) for an extension of the Voluntary Early Retirement Authority (VERA) for career U.S. Postal Service employees represented by the American Postal Workers Union (APWU] that are covered by the Civil Service Retirement System or Federal Employees Retirement System. The current VERA, authorized on June 13, OPM authority number 2003-078, expires on September 30,

As indicated in our  original request, the Postal Service has committed through its Transformation Plan to achieve $5 billion in cost reductions over a five-year period. To accomplish this, we continue to implement a number of specific measures designed to Improve operational efficiencies. These efficiencies include efforts to automate our mall forwarding operations, to further automate the processing of large envelopes, magazines, and packages, and to reduce our transportation costs by focusing on ways  to maximize our distribution/ transportation network. While our efforts to date have been successful, certain external challenges have surfaced. Our mall volumes continue to be impacted by the recession and electronic diversion of First-Class Mail. The end of Quarter III of this year marked the seventh straight quarter of declines in First-Class Mail. So far this year, our First-Class volume has declined by 2.2 billion pieces over the same period last year. Based on this trend, we project a total decline of three billion pieces of First-Class Mail by the end of this year. We have also experienced similar trends in other classes of mail and as a result we project 2003 to be the third straight year of total volume declines. These decreases in mail volumes require us to review and adjust our complement needs to minimize the impact on our financial stability.

The Postal Reorganization Act mandates that the Postal Service provide universal service to our customers. We have developed management strategies to meet that statutory mandate and to preserve our customers' trust in our ability to deliver the mail timely. To meet our mission, we have reviewed our complement needs and have determined we have surplus positions. Since our original request was approved, we have reexamined the number of excess positions represented by the APWU. Through December 31, 2004, the number of excess positions represented by the APWU will reach approximately 17,500, The extension of this VERA will assist us in reducing a portion of these excess positions, by minimizing the impact of those career employees potentially subject to involuntary reassignments under the various articles of their collective bargaining agreement.

Sincerely

Patrick Donahoe

USPS January 23, 2003 Letter to OPM for Request for Voluntary Early Retirement Authority

Sincerely

Patrick Donahoe