• on Jun 24th, 2013 in Strategy & Public Policy | 5 comments

    The U.S. Postal Service is in the middle of a difficult transition to position itself as a 21st century communications provider. The Postal Service sees new opportunities, but its current cash shortage makes it difficult to invest in modernizing aging facilities and vehicles, or developing new products to serve changing communications and delivery needs. Public-private partnerships (PPPs) are an increasingly popular way for governments to achieve policy goals and develop infrastructure, while shifting short-term financial burdens away from taxpayers and strained government coffers. 

    Unlike a traditional procurement, in a PPP the private sector partner usually shares in the risks and benefits of the project. For example, a company could build and manage a toll road under a contract with a government transportation agency, and recoup its investment by collecting tolls. In the postal sector, a common PPP is for entrepreneurs to manage post offices. The Postal Service has entered into similar partnerships through its contract postal unit program and agreements with several retailers. Some foreign postal operators have gone further by having all or almost all of their post offices run by private partners. If the post office ends up earning less revenue than projected, the postal operator avoids being stuck with a money-losing facility.

    The Postal Service Office of Inspector (OIG) recently released a white paper entitled Public Private Partnerships: Best Practices and Opportunities for the Postal Service. The white paper recommends that the Postal Service consider opportunities for new PPPs to generate cash, reduce costs, make spending flexible so it varies along with volume, and leverage private sector expertise in developing new products for the digital age.

    This white paper reviews lessons learned from PPPs in the international postal sector and from nonpostal U.S. government agencies. Despite PPP’s potential benefits, government agencies should perform careful analysis before entering into one, as they usually involve higher long-term project finance costs in exchange for increased flexibility and risk-sharing. Over the years, government agencies have developed a set of best practices to ensure that a PPP is a good deal for the public. One common lesson is that there are significant benefits to creating a central office to facilitate PPPs, coordinate with private entities, and to collect and share best practices throughout an agency.

    Do you think these types of partnerships would benefit the Postal Service? From your experience and observations, which partnerships have been helpful to the Postal Service and its customers? What specific opportunities exist for additional partnerships between the Postal Service and the private sector? Are there any downsides to such partnerships? 

  • on Sep 26th, 2011 in Ideas Worth Exploring | 9 comments
    The Postal Service has “coupled” its retail and delivery operations, both managerially and physically, since delivery services were first established almost 150 years ago. Historical patterns, or the needs for delivery service efficiencies, primarily determined the location of physical facilities, which typically house both delivery and retail operations. Demands for postal retail services are changing both geographically and demographically as consumers age and population centers shift. Our Risk Analysis Research Center studied the strategic concept of “decoupling” the Postal Service’s delivery and retail operations, examining both the physical and managerial functions. The results appear in the recently released whitepaper titled Retail and Delivery: Decoupling Could Improve Service and Lower Costs. The white paper draws upon the insights of key stakeholders, private sector delivery companies within the United States, foreign postal operators, and expert business consultants. The study found that selective decoupling of retail and delivery operations, mostly outside of rural areas, could result in lower costs, increased revenue, and better service that is more responsive to changing market conditions and diverse customer needs. The paper’s key findings include:
    • A decoupling strategy affords the Postal Service more flexibility to respond to changing customer needs for retail service.
    • The Postal Service too often ignores retail functions, which receive secondary managerial attention when competing with delivery for resources and clerk time.
    • Decoupling could help transform both retail and delivery into separate best-practices driven, strategic business units.
    • Major private-sector delivery companies in the United States as well as foreign posts previously separated their retail and delivery functions with each having its own distinct skills, training, and performance measures.
    Tell us your thoughts in the comment section below. This blog is hosted by the OIG’s Risk Analysis Research Center.

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