chapter 1
compliance with statutory policies
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of the carriers. These contracts, worth an estimated $348 million, will allow the Postal Service to enhance its competitive position by using performance data to manage mail flows. The Postal Service will realize a savings of $2.6 million for 2003 and expects to achieve an additional savings of $4.2 million in 2004. In addition to the CAIR- 03 contracts, five alternate methods of transportation contracts were awarded for point-to-point segments where CAIR carriers cannot travel. These contracts will save approximately $5 million per year.

     A contract was awarded for electricity service for approximately 750 Postal Service accounts in New Jersey. The contract is for two years and includes three one-year renewal options. This contract reduces the cost of electricity through the competitive purchase of electricity generation under deregulation, reduces administrative effort through a single contract, and leverages the requirements of all eligible facilities within participating utility service areas. During the initial two-year contract term, preliminary and conservative reductions are estimated between 5 and 10 percent, or $1.1 million to $2.2 million, based on estimated spending of $22 million.

e. Security- and Environmental-Related Purchases

     In response to the anthrax contamination of the mail in 2001, the Postal Service sought methods to quickly and accurately detect biohazards in the mail stream. A Phase One contract was awarded in 2002 for a Biohazard Detection System at a not-to-exceed cost of $175 million. Under the terms of the contract, the supplier will manufacture and install an initial 742 units nationwide. Phase One deployment is planned to begin in January and end in October 2004. If Phase Two is approved, the supplier will deploy an additional 962 units with deployment planned for 2005.

     A $26.4 million, cost-reimbursable contract was awarded for pre-construction consulting services, restoration, and remediation

work for the decontamination of anthrax in the Curseen-Morris P&DC in Washington, DC. This project was completed in December 2003.

     As a result of the September 11, 2001, terrorist attacks, a contract estimated to be between $15 and $20 million was awarded for the renovation and fix-up of the Church Street facility in New York City, which is adjacent to the site of the former World Trade Center. The facility was being renovated at the time of the attacks, but due to environmental concerns, it is now being cleaned. Renovations will take place once the cleaning has been completed.

     A contract was issued for facilities Program Management Services for multidisciplinary professional services to support the Postal Service's real estate and facilities needs nationwide. The supplier may support single or multiple projects for new construction lease, new construction owned, repair and alteration, asset management and development, and specialty projects such as security upgrades and environmental remediation. The not-to-exceed cost of the contract is $900 million.

     A contract for 6,240 alternative fuel carrier route vehicles was awarded in the amount of $121.4 million. This initial purchase will allow the Postal Service to meet its commitment to deploy 15,000 vehicles through 2008 under its labor contract agreement with the National Rural Letter Carriers Association (NRLCA). This acquisition will also meet the alternative fuel requirement of the Energy Policy Act of 1992 that requires 75 percent of fleet purchases to be capable of operating on an alternative fuel.

f. Major Purchases

     In the Design and Construction commodity, a guaranteed maximum price with shared savings contract was negotiated for nearly $167 million for the construction of a 976,340 square-foot processing and distribution center, a vehicle maintenance facility, and a warehouse in Philadelphia.

Chapter 1
Compliance with Statutory Policies Introduction
  1. Fundamental Service to the People
  2. The Workforce
  3. Service to Small or Rural Communities
  4. Postal Cost Apportionment and Postal Ratemaking Developments
  5. Transportation Policies
  6. Postal Service Facilities, Equipment, and Supplies
Chapter 2 Postal Operations

Chapter 3 Financial Highlights

Chapter 4 2003 Performance Report and Preliminary 2005 Annual Performance Plan