Monday, January 11, 2010

Changing Culture and Contracting Violations

The Federal Times reported today on three sole source contracts issued by the Postal Service's Shipping Service to three consultants that had close professional links to Robert Bernstock, the president of the shipping services division.   The story reads like the standard government employees wasting taxpayer money story that most reporters covering the Federal Government can write blindfolded.

The reporter, however, missed the real story which is how difficult it is to change the culture of the Postal Service, and in particular the culture at the Postal Service's headquarters.   In the private sector, if a new division president is hired, and in particular hired to grow a moribund business that should have great growth prospects, he would have brought in an entire new staff with him to
  • develop a new strategic plan to position products in the market place,
  • develop a new marketing plan designed around the new market position of products,
  • develop new approaches to selling services, and
  • evaluate the financial prospects of potential business partners.  The existing employees would have been let go.   
This is not an option at the Postal Service where even the $90,000 salaries cited in the article are far below those of marketing and financial professionals who have successfully transformed other companies.  Recruitment of replacements is difficult and civil service rules make lay offs simply to change organizational culture unheard of.  

Without the option of hiring new staff, the Postal Service has no choice but to hire consultants.   Employees are left with nothing to do because they rose to their position as part of the old culture that allowed the shipping services to increasingly become uncompetitive to services offerred in the private sector. In many ways these headquarters employees sitting idol while contractors are doing the work, are like those clerks placed in "standby rooms."   Management does not want to use them, but cannot get rid of them. 

The change in culture also means a change in the mix of consultants that do the work.   The Postal Service has a number of large consulting firms that can do strategic and marketing consulting under contract.   Many of these firms have worked for the Postal Service for decades, and some since its founding.   While using these consultants would have caused no contracting issues, it is not unreasonable to think that their advice would not represent a break from the strategic and marketing direction that existed in the provision of shipping services prior to the hiring of Mr. Bernstock.

The need for a new culture in the shipping services and the way it thinks about its strategic position and marketing approach is clear.   For years the continuing loss of market share of shipping services was hidden by high margins and relative unimportance to the Postal Service, especially during years when advertising mail was growing rapidly.   This changed when advertising mail plunged in 2008 and 2009 and the long-term decline in First Class Mail accelerated.

The future of Mr. Bernstock as president of Shipping Services may depend on the outcome of the investigation of the Inspector General of the three sole source contracts.  More importantly, this investigation will further illustrate why the current business model cannot make the changes in culture that are necessary to ensure that a self-sustaining Postal Service serves customers first


grayhair said...

The USPS isn't going to change on its own and certainly not from within. Mr. Bernstock did the right thing and frankly, the only viable thing.

Anonymous said...

It is not right. Bringing in your old cronies and hooking them up with contracts is not a change in postal culture. That has happened for years and that is how the USPS got the way it is.

trashman said...

What Mr. Bernstock was wrong. He placed the USPS at risk with this careless act. The liability he placed the USPS in makes him the likely scapegoat if this is indeed found to be an error. He could have still chosen the same contractors after a competitive bid process. He is not obligated to select the lowest bid but can select the best, most qualified bid. This would have saved money for the USPS. He also was not truthful when questions were asked about the situation. He said that he had to hire them this way because time was of the essence when in fact some of the contractors were not even brought on until a year later when they became available. This proves that he just wanted to hire his old cronies. I do hope that this does not reflect poorly on the USPS but just on Mr. Bernstocks reputation.