Development is well underway to replace the current Postal Service Human Resources legacy systems. In September 2004, the first phase replaced the Organizational Management Staffing System (OMSS), a legacy system that addressed only Executive Administrative Schedule and administrative positions. OMSS was replaced by the first component of the Human Capital Enterprise System (HCES) - Organization Structure and Staffing Management, which serves as the foundation of the HCES. Plans for the reconfiguration of the Human Resources legacy systems are ongoing and by the end of 2006 an additional 29 legacy applications will be replaced.

To support the change, PostalPEOPLE fairs have been hosted in major plants throughout the initial three performance clusters. More than 10 thousand employees attended to learn how to manage their personnel transactions in the new environment.

6. Labor Relations

A. COLLECTIVE BARGAINING

The Postal Service has nine collective bargaining agreements with seven unions covering approximately 684 thousand career and non-career employees. Negotiations with unions cover a full range of topics involving wages, benefits, and conditions of employment.

In June 2005 the Postal Service and the American Postal Workers Union AFL-CIO, reached a tentative agreement for an additional 1-year extension of the current national agreement, through November 20, 2006. The tentative agreement, ratified and executed September 12, 2005 provides for a 1.6 percent wage increase effective March 18, 2006. Other terms include continuing the cost-of-living allowance and health benefits formula, an increase in the uniform allowance, and upgrades to some selected positions.

There are also ratified and signed agreements to extend on substantially similar terms the collective bargaining agreement of two smaller bargaining units represented by the APWU. The Information Technology and Accounting Service Center (IT/ASC) Agreement covers computer and accounting employees at IT/ASC. The Operating Services Division contract covers maintenance employees primarily at postal Headquarters. Additionally, the collective bargaining agreement covering a small number of employees represented by the International Association of Machinists (IAM) was extended earlier this year through February 2007.

In 2005 the Postal Service and the National Association of Letter Carriers(NALC) jointly developed and delivered contract application training and process support to nearly 180 Postal Service and NALC Step B representatives. Step B representatives are responsible for addressing and resolving disputes at the local level. This training component was cooperatively developed by the national parties in the belief that continued success in reducing workplace disputes is dependent on continued support and training at the national level.

The Postal Service and APWU continued nationwide training on the Joint Contract Interpretation Manual (JCIM), with a target audience of supervisors and union officials. In 2005 the Postal Service and APWU jointly trained approximately 50 thousand supervisors and union officials. The purpose of the JCIM is to provide guidance to the field on contract application and to reduce grievances.

The Postal Service and National Postal Mail Handlers Union (NPMHU) also continued joint training on their Contract Interpretation Manual. In addition, for the eighth consecutive year, the parties co-hosted an annual Quality of Work Life Conference.

B. CONSULTATION WITH MANAGEMENT ASSOCIATIONS

During 2005 a program of consultation was conducted with each of the management organizations representing postmasters, managers, supervisors, and other nonbargaining employees within the Postal Service. These sessions presented an opportunity for the organizations - the National League of Postmasters, the National Association of Postmasters of the United States, and the National Association of Postal Supervisors - to participate directly in the planning, development, and implementation of programs and policies impacting approximately 75 thousand managerial employees. National officers of the three organizations collaborated with postal management in support of this effort. Each management association will continue to take an active role in this process.

In addition to regularly scheduled program consultation, the Postal Service entered into EAS Pay Consultations with all three management associations beginning in June 2005, resulting in a 1-year compensation package that continues the elements of the Pay-for-Performance program through 2006.

C. EQUAL EMPLOYMENT OPPORTUNITY

The national Equal Employment Opportunity (EEO) function reorganized and transformed into two components: a service center, National EEO Investigative Services Office (NEEOISO), which manages and processes all EEO complaint investigations, and a field organization through which all EEO field professionals report to Headquarters. This reorganization brings EEO complaint activity directly to the attention of the highest levels of the organization so that issues and barriers to workplace relationships are identified and addressed at a national level. It also strengthens the ability to guarantee accountability in the EEO system and drive the function's performance toward beneficial goals, which include early resolution of workplace disputes, improving workplace environment issues, and reducing costs associated with formal complaint processing.