• on Oct 18th, 2013 in Strategy & Public Policy | 1 comment

    Last month, the U.S. Postal Service awarded the contract for a pilot program for a cloud-based identity management system called the Federal Cloud Credential Exchange (FCCX). Using a closed communications network, or "digital pipelines", the Postal Service will deliver digital packets ("envelopes") of secure identity data between government agencies and private or public identity providers. The idea is that a person could use an identity from one of many providers, such as a financial institution or utility, to access different government websites, as long as the identity met a required level of security. This should be far more convenient than logging in to separate services with multiple identities and passwords.

    Government and identity provider participants in FCCX have not been finalized. But the Veterans Administration is on board, and other potential participants, such as the Internal Revenue Service, Department of Education, and Social Security Administration, have been working with the Postal Service on the requirements and standards for the pilot.

    Once the digital pipelines have been established, they can be applied to a number of processes that require secure communications. For example, the Internet of Things, the networked interconnection of everyday objects, may include high-risk communications, such as between medical monitors and medication dispensers, mobile payment sites and financial institutions, or electric meters and power companies. The Postal Service recognizes the potential value of playing an enabling role and has made a move to secure a position in the digital world. Nextgov.com reports that the Postal Service has recently filed for a number of digitally oriented trademarks to cover services in data encryption, secure communications, and electronic document management.

    What do you think? Can the Postal Service bring greater security and privacy to online communications and transactions?

  • 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 Jun 17th, 2013 in Strategy & Public Policy | 13 comments

    A recent study from a Washington think tank argues the U.S. Postal Service should provide only last-mile delivery of mail and open all other aspects of the mail system to competition. The report from the non-partisan Information Technology and Innovation Foundation came to a similar conclusion as an earlier proposal from a group of four mailing industry leaders who released a concept paper that also proposed a public-private partnership with the Postal Service focusing on final delivery. Those authors envisioned that this so-called hybrid model would encourage innovation and efficiency.

    A panel of fellows from the National Academy of Public Administrators (NAPA), a nonprofit and non-partisan organization providing expert advice to government leaders, reviewed the earlier paper and concluded that many of the ideas represent expansions of current public-private partnerships already employed by the Postal Service, i.e., worksharing. The panel recommended further study around a host of related areas, including financial, labor-related, operational integration and regulatory issues – all of which could pose a range of new challenges.

    Critics note a number of shortcomings with these hybrid model proposals. First, the papers don’t provide a full cost-benefit analysis of privatizing parts of the system. Revenue could be lost if service were reduced, which could occur with numerous service providers involved in mail transportation and processing. Further, the papers don’t indicate what would become of the Postal Service’s infrastructure of buildings and equipment.

    Papers and studies proposing new business models for the Postal Service are nothing new. Think tanks and academic conferences regularly churned out suggestions for rethinking the Postal Service model, ranging from a return to an appropriated government agency to privatization. Last year, the Postal Service put forward its own business plan for returning to solvency, which it called its Plan to Profitability. Recently, the Board of Governors asked the Postal Service to accelerate many of the action items in that plan.

    The Postal Service’s 5-year plan requires a number of legislative actions from Congress and does not effectively change the current governance model. That is, the Postal Service would remain a self-supporting government entity funded through its own revenues. The plan calls for some greater freedoms around offering new products, greater control of its healthcare costs, and closing facilities but it does not abandon its public service or universal service roles.

    We would like to hear your thoughts. Do you think a hybrid model, like the one considered in the recent papers, has merit? Would such a model add efficiencies or would it merely shift work away from postal workers, as some have claimed? In an era of shrinking mail volume and changing communications, what business model would work best for the Postal Service? How does the Postal Service continue to support its universal service obligation under a new model?

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