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entitled 'U.S. Postal Service: Mail Processing Realignment Efforts 
Under Way Need Better Integration and Explanation' which was released 
on July 26, 2007. 

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Report to Congressional Requesters: 

United States Government Accountability Office: 

GAO: 

June 2007: 

U.S. Postal Service: 

Mail Processing Realignment Efforts Under Way Need Better Integration 
and Explanation: 

This report was modified on September 18, 2007, to remove procurement 
sensitive information. 

GAO-07-717: 

GAO Highlights: 

Highlights of GAO-07-717, a report to congressional requesters 

Why GAO Did This Study: 

Major changes in the mailing industry have reinforced the need for the 
U.S. Postal Service (USPS) to reduce costs and increase efficiency. In 
its 2002 Transformation Plan, USPS proposed doing so by realigning its 
mail processing network. The objectives of this requested report are to 
(1) describe the status of the initiatives USPS has developed for 
realignment; (2) evaluate how the planning, impacts, and results of 
these initiatives align with realignment goals; and (3) evaluate USPSís 
communication practices with stakeholders in making realignment 
decisions. 

What GAO Found: 

USPS has developed several initiatives to achieve its overall goal of 
reducing costs while maintaining service. GAO supports USPSís goals for 
realigning its mail processing network and encourages continued 
progress in this area. Four initiatives, which vary in the degree to 
which they have been implemented to date, play central roles in the 
realignment of the processing network. 

Table: Status and Purpose of Key Postal Initiatives: 

Initiative: Area mail processing consolidations; 
Status: In progress; 
Purpose: Increase efficiency and use of existing automation by 
consolidating mail processing operations into facilities with excess 
capacity. 

Initiative: Regional distribution centers; 
Status: Reconsidering; 
Purpose: Provide essential infrastructure for more efficient processing 
network. 

Initiative: Flats Sequencing System; 
Status: In progress; 
Purpose: Increase efficiency by automating the sorting of flat mail, 
such as large envelopes and catalogs. 

Initiative: Surface transportation centers; 
Status: Near completion; 
Purpose: Improve transportation network flexibility and efficiency. 

Source: GAO presentation of USPS data. 

[End of table] 

While USPS has made progress in implementing its realignment 
initiatives, it is not apparent if these initiatives will meet USPS 
network realignment goals. First, realignment goals do not have 
measurable targets, making it unclear how USPS initiatives are 
progressing toward these goals. Second, there is limited clarity in how 
the costs and benefits of each initiative are integrated or affected by 
each other. Third, significant issues still need to be resolved with 
the area mail processing (AMP) consolidation initiative, to which USPS 
attributes most of its progress in reducing excess machine capacity. In 
particular, the criteria USPS uses in selecting facilities for 
potential consolidation and making implementation decisions are 
unclear, it does not use consistent data calculations in making 
decisions and, due to data limitations, it cannot consider actual 
delivery performance in its consolidation decision-making or evaluate 
results. While USPS is in the process of making changes to its AMP 
consolidation process, our review of draft procedures indicates that 
some improvements have been made while other issues continue. 

USPS has also made some improvements to its communication practices, 
but these practices continue to have gaps related to engaging 
stakeholders and the public in the realignment process and effectively 
communicating decisions. AMP communication processes do not provide 
adequate notification to stakeholders, lack transparency into how 
public input is considered when USPS makes AMP consolidation decisions, 
and provide limited information to the public after decisions are made. 
Congress has also indicated in the recent postal reform act that it 
supports USPSís efforts to streamline its networks but required USPS to 
improve its public notice processes, make more information available to 
communities, allow affected persons opportunity to provide input to 
USPS, and to take that input into account in decision making. GAOís 
review of USPSís revised guidance indicates that proposed improvements 
would neither substantively change information provided to the public, 
nor improve the public input process. 

What GAO Recommends: 

To strengthen planning and accountability for USPSís realignment 
efforts, the Postmaster General should ensure that the Facilities Plan, 
required by the Postal Accountability and Enhancement, explains the 
integration of realignment initiatives and establishes measurable 
targets to track USPSís progress in meeting realignment goals. To help 
improve communication about realignment with stakeholders, the 
Postmaster General should modify USPSís communication strategy to 
improve the quality of public notices and engagement, and increase 
transparency in decision making. In response to GAOís draft report, 
USPS agreed with GAOís findings and recommendations and plans to take 
steps to improve its communication and transparency. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-717]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Katherine Siggerud at 
(202) 512-2834 or siggerudk@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

USPS Initiatives for Realigning Its Processing Network Are at Different 
Stages of Development and Implementation: 

It Is Unclear if Network Realignment Initiatives Are Meeting USPS END 
Goals, and Problems Exist with USPS's AMP Consolidation Initiative: 

USPS AMP Communication Practices Do Not Ensure Appropriate Stakeholder 
Engagement in Realignment Decisions: 

Conclusion: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Overview of AMP Consolidation Process: 

Appendix III: Status of USPS 2005 and 2006 AMP Consolidations and PIRs: 

Appendix IV: USPS Notification to Stakeholders as Identified in AMP 
Communication Documentation: 

Appendix V: Comments from the U.S. Postal Service: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Status and Purpose of Central Realignment Initiatives: 

Table 2: Implementation Status of AMP Consolidations Approved in 2005: 

Table 3: Status of 46 AMP Consolidations Initiated in 2006: 

Table 4: Semiannual Post-Implementation Projected Annualized Savings 
Versus Estimated Annualized Savings in AMP Studies Approved in 2005: 

Table 5: Semiannual Post-Implementation Projected Annualized Savings 
Versus Estimated Annualized Savings in AMP Studies Approved in 2005, 
Excluding Fully Consolidated Facility: 

Table 6: Summary of Major Changes to AMP Consolidation Process Included 
in Draft Revised Guidelines: 

Table 7: USPS Area Mail Processing Consolidation Notification and 
Public Input Requirements: 

Table 8: Implementation and PIR Status of AMP Consolidations Approved 
In 2005 (as of May 2007): 

Table 9: Status of 46 AMP Proposed Consolidations Initiated in 2006 (as 
of May 2007): 

Figures: 

Figure 1: USPS's Originating and Destinating Mail Processing Network: 

Figure 2: USPS's Area Mail Processing Consolidation Process and Time 
Line: 

Figure 3: USPS Notification Letter to Waterbury Republican Newspaper, 
Waterbury, Connecticut: 

Abbreviations: 

AMP: area mail processing: 

APWU: American Postal Workers Union: 

END: Evolutionary Network Development: 

EXFC: External First-Class Measurement System: 

FSS: flat sequencing system: 

HASP: Hub and Spoke Program: 

MODS: Management Operating Data Systems: 

ODIS: Origin-Destination Information System: 

PIR: post-implementation review: 

PRC: Postal Regulatory Commission: 

RDC: regional distribution center: 

STC: Surface Transportation Center: 

USPS: U.S. Postal Service: 

United States Government Accountability Office: 
Washington, DC 20548: 

June 21, 2007: 

Congressional Requesters: 

Major changes affecting the U.S. Postal Service (USPS), including 
changes in mail volumes, increasing compensation benefits and costs, 
and a more competitive marketplace, have reinforced the need for USPS 
to increase efficiency and reduce expenses, and one area of focus is in 
its mail processing network. The mail processing network includes over 
600 processing facilities that are responsible for sorting mail once it 
has entered the mail system and preparing it for transportation and 
delivery. USPS's processing network historically focused on the 
processing of First-Class Mail. First-Class Mail volumes have been 
experiencing declines. This trend is expected to continue, which raises 
concerns because traditionally this mail has provided USPS with high 
revenue-per-piece. It also helps USPS cover its operational costs. 
While trends in First-Class Mail volume have been declining, trends in 
the use of worksharing by mailers have increased. Worksharing provides 
mailers with opportunities to earn discounts in postage rates for 
sorting, processing, and transporting their mail to a destination based 
on a level of mail preparation. Increases in the use of worksharing 
have resulted in a large volume of mail bypassing most of USPS's 
processing network, creating excess capacity on the equipment USPS uses 
to process mail. 

To address these trends and other major changes affecting its 
processing network, USPS developed a Transformation Plan in 2002 that 
outlined its vision for the future. In USPS's Strategic Transformation 
Plan Update 2006-2010, USPS stated its commitment to removing $1 
billion from its cost base each year. These plans describe how USPS 
intends to reduce costs and increase efficiency by making changes to 
its mail processing network. USPS has undertaken initiatives aimed at 
developing a processing network suited to current and future processing 
needs, reducing inefficiencies and redundancies, and increasing 
flexibility in its processing operations without impacting service. One 
such initiative focuses on consolidating mail processing among 
facilities in order to make the best use of processing equipment and 
reducing the excess machine capacity that has been created by volume 
and worksharing trends in mail processing, in addition to reducing some 
processing costs. As this consolidation effort continues, it assists 
USPS in positioning itself to better address these trends in the 
future. 

Congress, the President's Commission on the United States Postal 
Service,[Footnote 1] GAO, and others have supported USPS's need to 
realign its processing network, yet concerns still exist about how USPS 
intends to achieve results. In April 2005, we issued a report in 
response to a request that we evaluate USPS's plan for realigning its 
network, concluding that questions remain about how USPS intends to 
realign its processing network.[Footnote 2] We found that the strategy 
at the time lacked clarity, criteria, and accountability, as well as 
excluding mechanisms for stakeholder input (i.e., employees, mailers, 
locally elected officials, and affected communities) and performance 
measures for results. In December 2006, Congress passed the Postal 
Accountability and Enhancement Act and an advisory opinion was issued 
by the Postal Regulatory Commission (PRC),[Footnote 3] both of which 
expressed concern with the lack of transparency USPS provides on its 
realignment efforts, and made recommendations to USPS to better inform 
its stakeholders and the public of its plans and how those plans will 
affect them. 

Several Members of Congress requested that we follow up on our 2005 
report regarding the USPS's mail processing realignment efforts. In 
response, this report addresses three key objectives. First, it 
describes the initiatives USPS has undertaken since 2002 aimed at 
realigning its processing network and the status of these initiatives. 
Second, it evaluates how the planning, impacts, and results to date of 
these initiatives align with the goals of USPS's processing network 
realignment. Finally, it evaluates USPS's communications practices with 
stakeholders in making network realignment decisions and the challenges 
and leading practices associated with public engagement. 

To address these objectives, we interviewed postal officials at USPS 
headquarters and two USPS Area offices,[Footnote 4] as well as 
representatives of national mailing industry associations, and national 
employee union representatives to learn about USPS's realignment 
initiatives, how the initiatives are impacting the mail processing 
network, and to understand how network changes have been communicated 
to stakeholders. We conducted site visits in two states, Connecticut 
and Washington, which have facilities that have recently consolidated 
mail processing operations. In these states, we met with local and 
regional USPS officials, local mailers, business community leaders, and 
local employee union representatives to learn about how these 
consolidations were implemented, the communication practices that took 
place during the process, and what the impacts of the consolidations 
have been. We reviewed documents filed in a PRC advisory hearing, by 
USPS and other industry stakeholders, and the PRC's resulting advisory 
opinion, to gain an understanding of what USPS's plans and processes 
for its future processing network entailed, and to identify industry 
and stakeholder concerns with these plans and processes. We reviewed 
USPS documents and data pertaining to its processing operations 
consolidations and overall realignment strategy, and discussed this 
information with USPS's Senior Vice President, Operations, and Vice 
President, Network Operations, as well as other officials involved in 
the development and implementation of these activities. We conducted 
our review between July 2006 and March 2007 in accordance with 
generally accepted government auditing standards. A more detailed 
discussion of our objectives, scope, and methodology is included in 
appendix I. We requested comments on a draft of this report from USPS, 
and its comments are discussed later in this report and reproduced in 
appendix V. 

Results in Brief: 

USPS has developed several initiatives to achieve its overall goal of 
reducing costs while maintaining service. Four initiatives, which vary 
in the degree to which they have been implemented, play central roles 
in the realignment of the processing and distribution network. These 
four initiatives are as follows: 

* The area mail processing (AMP) consolidation initiative is designed 
to better use the network's capacity by consolidating mail processing 
operations into facilities with excess machine capacity, thereby 
increasing the use of automation in mail processing. Since 2005, USPS 
has studied 57 opportunities for potential AMP consolidations and 
implemented 10 consolidations. Most of the remainder have not been 
approved for implementation. All but 1 of the 10 completed 
consolidations involved moving operations, not closing facilities 
entirely. 

* The regional distribution center initiative, which is still in 
development, is designed to create new or remodeled distribution 
centers to serve as the foundation of USPS's processing network. USPS 
is reconsidering whether to proceed with this initiative in light of 
requirements in recent postal reform legislation for the Postal Service 
to submit a plan to Congress describing its long-term vision for 
realigning its mail processing and other networks, as well as the 
deployment of new automation equipment. 

* A set of automation initiatives designed to reduce costs, standardize 
operations, and raise productivity of the processing network is being 
continued with an effort to deploy machines for automated sorting of 
mail flats (large envelopes, magazines, or catalogs). USPS expects to 
obtain and install these machines from 2008 through 2010. 

* The surface transportation network development initiative is designed 
to improve distribution network flexibility and efficiency by 
increasing the use of less expensive surface transportation vehicles in 
place of air transportation, eliminating redundant surface 
transportation, and maximizing vehicle capacity. The implementation of 
this initiative is nearly complete. 

While USPS has made varying progress in the development and 
implementation of its network realignment initiatives, it is not 
apparent if these initiatives will meet its network realignment goals. 
These goals include (1) developing mail processing and transportation 
networks suited to current and future operational needs, (2) reducing 
inefficiency and redundancy, (3) making operations flexible, and, (4) 
reducing costs. USPS stated that it plans on achieving its goals 
without degrading service to customers. First, USPS's realignment goals 
have evolved over time and do not have targets for measuring USPS's 
progress, making it unclear how USPS is progressing in achieving these 
goals. Second, it is unclear how USPS's realignment initiatives are 
integrated with each other. That is, how the individual and collective 
costs and benefits of these initiatives impact the overall goal of 
network realignment. Third, significant issues still need to be 
resolved with the initiative to which USPS attributes most of its 
progress in reducing excess machine capacity, AMP consolidations. In 
particular, the AMP consolidation process raises the following three 
major concerns: 

* Criteria used in identifying consolidation opportunities and deciding 
whether to implement an AMP consolidation are unclear and, therefore, 
it is uncertain whether USPS is identifying the best possible 
opportunities in selecting facilities for AMP consolidation studies. 

* USPS does not use consistent data calculations when determining 
impacts and costs of AMP consolidations. Without the use of consistent 
data calculations in the feasibility studies, USPS's ability to 
identify all of the foreseeable impacts of the consolidation may be 
limited, and the accuracy of projected and actual savings and impacts 
in its post-implementation evaluations remains questionable. 

* USPS does not have a comprehensive mechanism for measuring mail 
delivery performance so it cannot include actual delivery performance 
in its AMP consolidation studies or post-implementation evaluations. 
Therefore, USPS does not have data that can accurately capture expected 
or actual impacts that the AMP consolidations have had on delivery 
performance. 

While USPS is in the process of changing its AMP consolidation process, 
our review of a draft of its revised consolidation procedures indicates 
that issues related to the standardization of data sources are being 
addressed, but other issues continue. The revised procedures still do 
not clarify the criteria USPS is using in making facility selection 
decisions or deciding whether to implement an AMP consolidation, 
although USPS officials told us that they will begin to prioritize 
implementation of AMP consolidations that are expected to yield $1 
million or more in cost savings annually. Without better data and 
improved evaluations, USPS does not know whether its AMP consolidations 
are resulting in increased efficiency and a reduction in excess 
capacity as intended. 

USPS also made some improvements to its communication practices, but 
these practices continue to have gaps related to engaging its 
stakeholders--mailers, employees, elected officials, the business 
community, and the media--and the public in the realignment process and 
effectively communicating decisions. AMP communication processes, which 
have evolved since 1995, do not provide clear and useful notification 
to stakeholders, lack transparency into how stakeholder and public 
input is considered when USPS makes AMP decisions, and provide limited 
information to stakeholders and the public after decisions are made. 
For example, notification letters to stakeholders are largely form 
letters that do not clearly state the changes USPS is studying or the 
possible outcomes that may result. Although AMP guidance requires USPS 
to fully consider both service and other impacts on the community, 
mailers and others we spoke with expressed concern about the lack of 
transparency in consolidation decisions. A town hall meeting is the 
only formal requirement for public input during the AMP process. 
Stakeholders and others, such as the PRC, have criticized the timing of 
these meetings as occurring too late in the process, after USPS has 
already made major decisions. To help remedy problems with providing 
information and seeking public input, Congress required USPS to improve 
its public notice processes, make more information available to 
communities, allow affected persons opportunity to provide input to 
USPS, and to take that input into account in decision making. USPS's 
planned improvements would generally limit changes to internal 
processes such as clarifying USPS roles and responsibilities for the 
public meeting and making arrangements for the meeting. USPS would 
provide notice of its decisions to stakeholders more frequently, but 
the content of notification letters would generally remain the same, 
and the timing of the town hall meeting would not change. Our review of 
USPS's revised guidance indicates that proposed improvements would 
neither substantively change information provided to the public, nor 
substantially improve the public input process. 

To strengthen planning and accountability for USPS's realignment 
efforts, we are recommending that the Postmaster General ensure that 
the Facilities Plan required by the Postal Accountability and 
Enhancement Act explains the integration of realignment initiatives and 
establishes measurable targets to track USPS's progress in meeting 
realignment goals. To help improve communication about realignment with 
stakeholders, we are recommending that the Postmaster General modify 
USPS's communication strategy to improve the quality of public notices 
and engagement, and increase transparency in decision making. USPS 
generally agreed with our findings and recommendations and stated that 
its compliance with the Postal Accountability and Enhancement Act will 
satisfy our recommendations related to the Facilities Plan, and that it 
will take steps to improve communication about its realignment and 
increase transparency. 

Background: 

As part of its 2002 Transformation Plan, USPS announced plans to review 
and realign its processing and transportation networks to better align 
with trends in the marketplace that include: 

* changing customer needs, 

* eroding mail volumes, and: 

* rising costs. 

At this time, USPS began plans for comprehensively realigning its 
processing network and outlined a strategy[Footnote 5] to create a 
flexible logistics network that would reduce both USPS's and its 
customers' costs, increase overall operational effectiveness, and 
improve consistency of service. This strategy would employ computer 
modeling to provide USPS with the analytical means to evaluate a 
variety of future network alternatives that could be used in 
redesigning its existing network. 

USPS operates a complex processing network for letters, flats, and 
parcels. Most mail is sorted by automated equipment in USPS processing 
facilities and then dispatched for delivery. The processing network is 
interdependent with the transportation network where operations in one 
part affect operations throughout. 

In summer 2003, a report issued by the President's Commission on the 
United States Postal Service reiterated the need for USPS to realign 
its processing network. In January 2004, USPS submitted a report to the 
House Committee on Government Reform stating that, based on the outputs 
of the model, it would realign its network using a hub and spoke 
concept. This report proposed focusing its network on two types of 
"spoke" facilities--those that would process mail at its origin, when 
the sender enters the mail into USPS's network, and those that would 
process mail at its destination, preparing it for delivery. Figure 1 
depicts a basic overview of these two types of facilities.[Footnote 6] 

Figure 1: USPS's Originating and Destinating Mail Processing Network: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

According to the report, the hub and spoke system would create a 
uniform network unlike the existing system that had been developed over 
time and had resulted in wide variations in productivity and capacity 
among processing facilities. In fall of 2004 at the National Postal 
Forum, the Postmaster General announced that USPS would realign its 
network through an evolutionary process. He explained that because 
future mail volumes and advances in technology are not predictable, 
USPS will need to continuously rationalize and optimize its security, 
plants, processing systems, transportation, and workforce in order to 
keep its networks efficient and systems affordable. Accordingly, this 
evolutionary process would have no definitive completion date and would 
continuously examine the processing network for inefficiencies and 
redundancies and standardize the best operational practices. 

In April 2005 we reported on this evolutionary strategy, U.S. Postal 
Service: The Service's Strategy for Realigning Its Mail Processing 
Infrastructure Lacks Clarity, Criteria, and Accountability (GAO-05-
261). This report outlined several major changes that have affected 
USPS's mail processing and distribution operations over time, including 
changes in the marketplace, evolution of infrastructure, developments 
in automation and worksharing, and shifts in national demographics. In 
evaluating USPS's strategy to address these changes, we found that it: 

* lacked clarity--since USPS announced its intent to realign, it had 
developed several different realignment strategies, 

* lacked criteria and processes for eliminating excess capacity in its 
network, 

* excluded stakeholder input in its decision-making processes, 

* was not sufficiently transparent and accountable, and: 

* lacked performance measures for results. 

To address these findings, we recommended that USPS establish a set of 
criteria for evaluating realignment decisions, develop a mechanism for 
informing stakeholders as decisions are made, and develop a process for 
implementing these decisions that includes evaluating and measuring the 
results, as well as the actual costs and savings resulting from the 
decisions. In response to our report, USPS concurred with our 
description of its mail processing and distribution infrastructure and 
the major business and demographic changes that have affected its 
operations but did not respond directly to our conclusions or 
recommendations. 

In 2006, USPS reiterated its commitment to the evolutionary strategy, 
and in February 2006 USPS sought out an advisory opinion from the PRC 
on anticipated changes in the application of current service standards 
that may result from a systemwide review and realignment of its mail 
processing and transportation networks.[Footnote 7] In its filing, USPS 
stated that the goals of its evolutionary network realignment strategy 
are to: 

* develop mail processing and transportation networks suited to current 
and future operational needs, 

* reduce inefficiency and redundancy, 

* make operations flexible, and: 

* reduce postal costs. 

USPS also reiterated that the evolutionary strategy would be 
implemented incrementally and that it would likely take several years 
to review all major components of the mail processing network and to 
implement any resulting operational changes. Progress in implementing 
these changes, primarily with respect to USPS's initiative to 
consolidate mail processing operations among facilities, has been slow 
going due to several factors. In some cases, USPS was not ready to 
proceed with the consolidation. For example, some locations had 
preexisting service issues that needed to be resolved before the 
consolidation was implemented. Additionally, external factors have 
slowed the process. Consolidations have been met with union and 
community resistance. Also, language in the Senate Committee on 
Appropriations report on fiscal year 2007 appropriations directed USPS 
to suspend its consolidation efforts in three locations until this GAO 
report is released.[Footnote 8] 

In December 2006, the PRC issued its advisory opinion and found that 
the goals USPS established for its network realignment were fully 
consistent with the policies and criteria of the Postal Reorganization 
Act and endorsed them. While the PRC found the goals of USPS's 
realignment strategy laudable, it found no assurance that the proposed 
realignment program, as currently envisaged, would meet these declared 
goals. In particular, it found that it contained flawed or incomplete 
information on certain crucial aspects of USPS's plan for network 
realignment, specifically: 

* questionable or incomplete cost and service estimates, 

* inadequate review of local impacts, and: 

* insufficient provisions for public participation. 

Also in December 2006, the Postal Accountability and Enhancement 
Act[Footnote 9] was signed into law in order to address long-standing 
issues with USPS's business model. In addition to addressing issues 
related to USPS's financial challenges, this act also included 
provisions related to the realignment of USPS's processing and 
distribution network. Specifically the act requires USPS to: 

* establish a set of modern service standards for market dominant 
products, one objective of the standards is to provide a system of 
objective external performance measurements for each market-dominant 
product as a basis for measuring USPS's performance, and some factors 
USPS must take into account include the actual level of service that 
its customers receive under any service guidelines previously 
established by USPS and the degree of customer satisfaction with USPS's 
performance in the acceptance, processing, and delivery of mail. 

* develop a Facilities Plan that includes: 

- a strategy for how USPS intends to rationalize the postal facilities 
network and remove excess processing capacity and space from the 
network, including estimated time frames, criteria, and processes to be 
used for making changes to the facilities network, and the process for 
engaging policymakers and the public in related decisions; 

- a discussion of what impact any facility changes will have on the 
workforce and whether USPS has sufficient flexibility to make needed 
workforce changes; 

- an identification of anticipated costs, costs savings, and other 
benefits associated with the infrastructure rationalization 
alternatives discussed in the plan; and: 

- procedures USPS will use to provide adequate public notice to 
communities potentially affected by a proposed rationalization 
decision; make available information regarding any service changes in 
the affected communities, any other effects on customers, any effects 
on postal employees, and any cost savings; afford affected persons 
ample opportunity to provide input on the proposed decision; and take 
such comments into account in making a final decision. 

Congress strongly encouraged USPS to expeditiously move forward in its 
streamlining efforts and keep unions, management associations, and 
local elected officials informed as an essential part of this effort 
and abide by any procedural requirements contained in the national 
bargaining agreements. With respect to existing efforts, USPS was 
directed that effective on the date of enactment of the act (December 
20, 2006), it may not close or consolidate any processing or logistics 
facilities without using procedures for public notice and input 
consistent with those required to be included in the Facilities Plan. 

USPS Initiatives for Realigning Its Processing Network Are at Different 
Stages of Development and Implementation: 

USPS is using an approach called Evolutionary Network Development (END) 
to realign its processing and transportation networks. According to 
USPS, END is evolutionary, meaning the approach will continually 
examine processing and transportation networks for opportunities to 
increase their efficiency. END involves several initiatives that are at 
varying stages of development and implementation. Four of these 
initiatives play central roles in network realignment: AMP 
consolidations, regional distribution center (RDC) development, flats 
sequencing system, and surface and air network development, as 
summarized in table 1. 

Table 1: Status and Purpose of Central Realignment Initiatives: 

Initiative: Area mail processing consolidations; 
Status: In progress; 
Purpose: Increase efficiency and use of existing automation by 
consolidating mail processing operations into facilities with excess 
capacity. 

Initiative: Regional distribution center development; 
Status: Reconsidering; 
Purpose: Provide essential infrastructure for more efficient processing 
network. 

Initiative: Flats Sequencing System; 
Status: Under development; 
Purpose: Increase processing efficiency by automating flat mail sorting 
to carrier delivery sequence. 

Initiative: Surface and air network development; 
Status: Near completion; 
Purpose: Improve transportation network flexibility and efficiency. 

Source: GAO presentation of USPS data. 

[End of table] 

USPS is facilitating the development of the four central network 
realignment initiatives with a computer model that simulates its 
processing and transportation facility networks to identify 
opportunities for reducing costs, increasing transportation efficiency, 
and allowing the network to better adapt to changing conditions and 
workloads. While the model supplies the basis for general planning 
related to these initiatives, it is not designed to incorporate all 
possible variables necessary for future network planning. As a result, 
USPS managers conduct additional analysis to make USPS realignment 
decisions. 

AMP Consolidations Are Under Way but Taking Longer Than Anticipated to 
Complete: 

In 2005 and 2006, USPS initiated 57 studies of opportunities for AMP 
consolidations, but has decided not to implement 34 of these. While 
USPS has carried out AMP consolidations for more than 30 years, in 2002 
it recognized them as a tool to rightsize the network and has since 
focused on expanding their implementation and updating their 
implementation guidelines. 

Status of AMP Consolidations Initiated in 2005 and 2006: 

In 2005 and 2006, most USPS decisions about whether to implement AMP 
consolidation opportunities lagged behind the decision-making time 
frames set forth by its guidelines. According to USPS's 1995 AMP 
guidelines, local offices should not take more than 6 months to 
complete a formal study of the feasibility of a consolidation 
opportunity, after which Area offices and headquarters have 2 months to 
review the study and make a final decision about implementation of the 
consolidation (see fig. 2).[Footnote 10] The majority of the 
consolidation studies and implementation decisions made by USPS in 2005 
and 2006 exceeded these time frames. For further description of the 
consolidation process stipulated by USPS AMP guidelines, see appendix 
II. 

Figure 2: USPS's Area Mail Processing Consolidation Process and Time 
Line: 

[See PDF for image] 

Source: USPS. 

[End of figure] 

The majority of the AMP consolidations that have been implemented since 
END was initiated in 2002 were approved in 2005. As summarized in table 
2, USPS officials told us that in 2005 USPS approved 11 consolidations, 
9 of which it has implemented. USPS area and headquarters officials 
took an average of 4 months to decide to implement these 11 
consolidations, 2 months longer than prescribed by AMP guidelines. USPS 
later decided not to implement one consolidation because, following a 
modification in USPS area boundaries that changed the Area office 
responsible for oversight of the facilities involved, the new Area Vice 
President requested that the AMP not be implemented due to concerns 
about service issues. The final consolidation has not yet occurred due 
to delay in the acquisition and installation of equipment needed in the 
facility that will process the increased mail volumes. It is now 
expected to be fully implemented by the summer of 2007. 

Table 2: Implementation Status of AMP Consolidations Approved in 2005: 

Status of AMP consolidation: Approved for implementation; 
Number: 11. 

Status of AMP consolidation: Implemented; 
Number: 9. 

Status of AMP consolidation: Implementation postponed; 
Number: 1. 

Status of AMP consolidation: Subsequent decision not to implement; 
Number: 1. 

Source: GAO presentation of USPS data. 

Note: Status numbers are from AMPs approved in calendar year 2005. 

[End of table] 

Studies of consolidation opportunities undertaken in 2006 took longer 
than prescribed by USPS guidelines and so far have produced fewer 
decisions to consolidate than in 2005. As summarized in table 3, in 
2006 USPS initiated 46 AMP consolidation studies. As of May 2007, it 
had implemented 1 consolidation, approved but not yet implemented 1 
consolidation, decided not to implement 33 studies (5 placed on 
indefinite "hold"), continued to consider 10 consolidations, and was 
still completing the study of 1 consolidation. The majority of USPS 
decisions about whether to implement the studies lagged behind the 8 
month time frame prescribed by its AMP guidelines. USPS officials 
explained that decisions to place 5 AMP consolidation studies on 
indefinite hold were made by Area offices in light of their observation 
of existing service issues in these facilities, which they wished to 
resolve before considering implementation. USPS officials said that the 
remaining 28 of the 33 decisions not to implement the consolidations 
were made for reasons that included study findings that implementation 
would result in negligible savings or degrade existing service. For 
further detail about the specific facilities involved in 2006 
consolidations, see appendix III. USPS anticipates making final 
decisions for all 10 feasibility studies still under consideration by 
summer of 2007. 

Table 3: Status of 46 AMP Consolidations Initiated in 2006: 

Status of AMP consolidation: AMP approved and implemented;
 Number: 1. 

Status of AMP consolidation: AMP approved, not yet implemented; 
Number: 1. 

Status of AMP consolidation: Decision not to implement proposed AMP[A]; 
Number: 33. 

Status of AMP consolidation: AMP package under review by Area or 
Headquarters; 
Number: 10. 

Status of AMP consolidation: AMP study under development by local 
office; Number: 1. 

Status of AMP consolidation: Total; 
Number: 46. 

Source: GAO presentation of USPS data. 

Note: Status numbers are from AMPs initiated in calendar year 2006. 

[A] Decisions not to implement proposed AMP consolidations include five 
consolidations USPS has placed on indefinite "hold." 

[End of table] 

AMP Consolidations Are Intended to Reduce Excess Capacity: 

AMP consolidations are intended to reduce costs and increase efficiency 
through reducing excess capacity. According to USPS officials, 
declining mail volumes have resulted in excess capacity, including 
excess machine and workhours. Excess machine hours occur when machines 
sit idle because declining amounts of mail are being processed on the 
same amount of equipment, and excess workhours occur when more 
workhours are used than necessary for mail processing. One way to 
reduce excess capacity is to consolidate mail-processing operations 
from one or more facilities into one or more plants. This increases the 
amount of mail processed on machines and decreases workhours used in 
mail processing by reducing the number of staffed machines. AMP 
consolidations are designed to provide machine and workhour efficiency 
and/or improve service for all originating and/or destinating 
operations through transferring the responsibility for processing 
mostly single-piece First-Class Mail from one or more facilities into a 
facility with excess machine capacity.[Footnote 11] Single-piece First- 
Class Mail is mailable matter, 13 ounces or less, including personal 
correspondence, bills, statements of accounts, or handwritten matter 
and comprises a small and decreasing portion of USPS mail volumes--21 
percent in fiscal year 2006 compared with 26 percent in fiscal year 
2000. Meanwhile, postal worksharing, in which mailers prepare, barcode, 
sort, and/or transport mail closer to its destination location to 
qualify for reduced postage rates, is increasing. As mailers enter mail 
into the mailstream closer to its destination location, USPS receives 
less mail to process at the locations where mail originates. By 
decreasing the number of machines used to process remaining single- 
piece First-Class Mail, and thereby the workhours required for its 
processing, AMP consolidations can reduce postal costs. 

Most AMP consolidations have been of processing operations for 
originating mail. Originating mail is mail that was collected in the 
local area and brought to the local USPS facility for processing. By 
definition, AMP consolidations can also consolidate processing 
operations for destinating mail (mail that is prepared for delivery at 
its final destination). Since 2005, however, consolidations of 
processing operations for originating mail have been more common than 
those of destinating processing operations. Only 6 out of 57 
feasibility studies initiated from 2005-2006 were of destinating mail 
processing operations. This may be due to the continued growth in 
delivery points (approximately 1.8 million per year) serviced by USPS. 
Another factor is that more mail is entering the system at its 
destination, resulting in less excess capacity in processing operations 
for destinating mail than for originating mail. 

Although AMP consolidations transfer specific processing operations out 
of facilities and relocate associated mail processing employees, they 
do not generally lead to facility closures. The facilities from which 
operations were transferred still need to process mail in the remaining 
operations and conduct retail operations for which they are 
responsible. Officials told us that USPS generally only considers 
closing a facility if an AMP consolidation transfers out all 
operations, and USPS determines that there is no need for the facility. 
To date, only one AMP consolidation implemented in 2005 has led to a 
facility closure. 

Implementation of the Regional Distribution Center Initiative Has Not 
Begun and Is Being Reconsidered: 

USPS testified to the PRC in February 2006 that it would be undertaking 
an initiative to develop a network of distribution centers to serve as 
the foundation of its processing network, but to date progress in 
developing the RDC initiative has been limited, and USPS has not 
determined if it will proceed with this initiative. USPS's mail 
processing and distribution network, whereby mail is prepared for 
sorting on automation equipment and transported between plants, has 
evolved over time and presently consists of overlapping networks, each 
of which functions to process and distribute a specific class of 
mail.[Footnote 12] Some facilities in these networks are responsible 
for processing a particular type of mail (for example flats, parcels, 
or automated letters), each of which is transported on a separate 
transportation network. USPS explained that the RDC initiative would 
allow USPS to merge these multiple, "single-class" networks into a 
network capable of handling multiple classes of mail. RDCs would serve 
as consolidation centers for mail of the same shape (for example, 
letters, flats, or parcels), which would allow mailers to bring various 
classes of mail to one facility and facilitate the transportation of 
multiple mail classes on a single transportation network. When USPS 
first introduced the concept of RDCs to serve as the foundation of its 
processing network, it projected it would need between 28 and 100 RDCs 
nationally. 

Various developments have caused USPS to reexamine whether it will 
proceed with the RDC initiative. In February 2007, officials told us 
they would be reevaluating processing and transportation network plans 
in light of the December 2006 Postal Accountability and Enhancement 
Act, the PRC opinion, and the deployment of new flat automation 
equipment. In March 2007, USPS's Senior Vice President, Operations, 
told us that USPS is still determining the structure of its processing 
network foundation. He said that similar to the current network, the 
future network would still be designed around USPS's processing and 
distribution centers, but how USPS will make determinations about these 
facilities appears largely uncertain. 

USPS Plans to Begin Deploying Machines to Enhance Automation of Flat 
Sorting in 2008: 

As part of ongoing efforts to automate mail processing, one current 
initiative calls for new equipment to further automate sorting of flat 
mail (larger envelopes, catalogs, circulars, newspapers, and 
magazines). In 2002, USPS introduced high-speed equipment that 
automated the sorting of many--but not all--kinds of flat mail. Mail 
that cannot be handled by these machines must be manually sorted, which 
increases USPS expenses considerably as it costs approximately three 
times as much in labor to process flats manually. A new machine called 
the flat sequencing system (FSS) has the potential to greatly reduce 
the need for manual flat sorting. USPS estimates that this equipment 
will handle approximately 8.5 billion pieces of flat mail per year (16 
percent of total current flat volumes). 

In October of 2006, the Board of Governors[Footnote 13], which USPS 
plans to deploy between October of 2008 and October of 2010. USPS plans 
to place the 100 FSS in 33 facilities, each of which will house at 
least two systems. Although 13 existing facilities will house systems, 
due to their large size (each FSS has a footprint of approximately 
30,000 square feet), USPS plans to expand 15 facilities and construct 5 
new facilities to house the systems. 

The Surface and Air Network Development Initiative Is Nearly Complete: 

USPS also has taken steps to develop a more flexible transportation 
network that is intended to allow it to move greater mail volumes more 
efficiently and at a lower cost. To this end, it has nearly completed a 
surface transportation network designed to maximize its geographic 
coverage, optimize its use of vehicle space, and to dispatch the ideal 
number of vehicles on transportation routes. 

Surface Transportation Centers (STC)[Footnote 14] provide the 
foundation for the new surface and air network by serving as 
concentration points where mail containers from multiple facilities are 
consolidated and transferred to other postal facilities in the same 
vehicles. By enabling USPS to dispatch full vehicles on expanded 
routes, STCs permit mail formerly transported by air to be carried at 
less cost on ground transportation. The revised network will have a 
total of 23 STCs. There are currently 20 STCs in the network, and 3 
additional ones are expected to be opened in 2007. 

USPS reported that it has increased its air transportation reliability 
and flexibility by making air transport contract decisions based on 
performance assessments of its carriers. In 2006, USPS awarded United 
Parcel Service a 3-year contract to provide domestic transport for 
primarily Priority Mail and First-Class Mail, and FedEx a 7-year 
contract that replaced its existing contract to transport Express Mail, 
Priority Mail, and First-Class Mail.[Footnote 15] In efforts to 
increase the efficiency and dependability of its air transportation, 
USPS awarded 5-year contract extensions to seven commercial air 
carriers that met on-time provisions of previous contracts and 
eliminated nonperforming commercial air carriers from transporting 
mail. 

USPS is also developing a tool called the Transportation Optimization 
Planning and Scheduling System to help improve efficiency through 
identifying optimal mail routes and mail volumes for different 
transportation networks. The system will help analyze alternative 
scenarios to determine the lowest cost transportation network given 
USPS mail delivery obligations. 

It Is Unclear if Network Realignment Initiatives Are Meeting USPS END 
Goals, and Problems Exist with USPS's AMP Consolidation Initiative: 

While USPS has made varying degrees of progress in the development and 
implementation of its realignment initiatives, it is unclear if the 
results of these initiatives are meeting its network realignment goals. 
Because the goals lack measurable targets and there is little 
transparency in how USPS's network realignment initiatives are 
integrated with each other, it is not apparent to what extent these 
initiatives are achieving USPS's END goals. Additionally, concerns with 
the AMP consolidation process further illustrate the lack of clarity in 
determining whether this initiative is meeting USPS's realignment 
goals. USPS is taking actions to address the AMP consolidation process, 
but concerns with criteria and USPS's limited ability to measure 
delivery performance still exist. 

USPS's Network Realignment Goals Lack Measurable Targets, and It Is 
Unclear How Initiatives Are Integrated with Each Other: 

USPS has continuously developed initiatives to facilitate realignment 
of its processing network, but it is not clear based on the plans that 
USPS has developed if these initiatives are meeting its END goals. USPS 
has established goals for its END infrastructure realignment initiative 
and is making changes to its processing network with the aim of meeting 
these goals while still maintaining current levels of service. Goals 
are as follows: 

* developing mail processing and transportation networks suited to 
current and future operational needs, 

* reducing inefficiency and redundancy, 

* making operations flexible, and: 

* reducing postal costs. 

While these goals have been supported by GAO, the PRC, and the 
President's Commission, USPS has yet to develop measurable targets for 
achieving these goals.[Footnote 16] With no measurable targets, there 
is no way to determine how much of an impact USPS's network realignment 
initiatives are making on achieving these goals. For example, USPS's 
Senior Vice President, Operations, told us that there are no actual 
targets for cost savings in network realignment, but an indicator of 
success will be the implementation of more AMP consolidations. 

USPS's inability to measure its success in meeting END goals is 
accompanied by the lack of clear information available to stakeholders 
about how USPS is integrating its initiatives. For example, when USPS 
testified in the PRC proceedings in 2006 that it planned to develop 
RDCs as the backbone of its processing network, it had not yet taken 
into consideration the deployment of new processing equipment, the FSS, 
that is expected to result in major changes to how and where flat mail 
is processed even though plans for making a major change to USPS's 
Corporate Flats Strategy was published in May 2003.[Footnote 17] 
Consequently, USPS has put its plans for the RDCs on hold as it 
reconsiders their feasibility as the backbone for the processing 
network. In its Advisory Opinion, the PRC reinforced that it is not 
clear how the network plan USPS proposed would meet END goals. After 
the decision to approve the FSS was made, PRC advised USPS to take 
precautions to ensure that changes it makes to its network will be able 
to accommodate deployment of the FSS without incurring unnecessary 
expense. The PRC has also stated that this piece of equipment is an 
important aspect of USPS's future network and should be given careful 
consideration. At this point, it is unclear how USPS is integrating the 
new equipment into its future network realignment planning. To address 
these concerns, USPS is incorporating the FSS into its network modeling 
and is reevaluating its plans but has not said when it expects to 
complete its updated plans for establishing a backbone for its network. 

In addition to the PRC Advisory Opinion, the Postal Accountability and 
Enhancement Act, passed in December 2006, addressed the lack of clarity 
in understanding how network realignment initiatives are integrated 
with each other. The legislation requires USPS to develop a 
comprehensive Facilities Plan that includes a strategy for how USPS 
intends to rationalize its network and an identification of anticipated 
costs, costs savings, and other benefits associated with the 
infrastructure rationalization alternatives discussed in the plan. 

In light of the recent changes in legislation and the deployment of FSS 
machines, USPS will be reevaluating its processing and transportation 
network plans. USPS is still determining what its backbone 
infrastructure will look like, but it will still be designed around 
USPS's processing and distribution centers and will be composed of 
processing and operations facilities and a surface and air network. 
While USPS officials have repeatedly stated that the design of its 
future processing network is evolutionary in nature, it is unclear--5 
years after its initial announcement--what USPS intends its processing 
network to evolve into. 

Concerns with the AMP Consolidation Process Make it Unclear How This 
Initiative Is Meeting Network Realignment Goals: 

AMP consolidations are the initiative that most clearly address USPS's 
reduction of excess machine capacity due to increased worksharing and 
declining First-Class Mail volumes, yet the limited transparency in the 
AMP consolidation process makes it unclear to what extent this 
initiative is meeting END goals. Many of the concerns about this lack 
of transparency in the planning and evaluation processes are primarily 
related to what criteria USPS used in selecting facilities as 
opportunities for AMP consolidations, the lack of consistent data 
calculations used in the decision making and evaluation processes, and 
the lack of the AMP consolidation's evaluation of impact on service 
performance. USPS is taking steps to address these areas by revising 
its AMP consolidation guidelines, but concerns still exist. 

Criteria USPS Uses in Selecting Facilities as Opportunities for AMP 
Consolidations and Deciding to Implement an AMP Consolidation Are 
Unclear: 

It is neither clear what criteria USPS uses in selecting facilities 
that may serve as potential opportunities for AMP consolidations, nor 
is it clear what criteria USPS uses in deciding whether or not to 
implement a consolidation. Therefore, it is not clear if USPS is 
targeting the best opportunities for consolidation. Before 2005, USPS 
conducted AMP consolidations at the suggestion of local officials who 
identified opportunities for consolidation and were then responsible 
for presenting these opportunities to district and area management. 
USPS supplemented this bottom-up approach in identifying AMP 
consolidation opportunities. With the development of its END model, 
USPS also began using a top-down approach. While USPS officials have 
acknowledged that the opportunities identified by the model may not 
always be feasible in reality, they are now going to use modeling and 
analysis at the national level to identify opportunities in which 
operations could be consolidated. A USPS headquarters official we met 
with said one reason for this is because plant managers should not be 
held responsible for identifying their own plant as an opportunity for 
reduction or potential closure. 

In 2005, USPS reported that the END model identified 139 sets of 
facilities that could potentially be consolidated. Of these, 46 sets of 
facilities were deemed feasible for initiating AMP consolidation 
studies and, of these studies, so far 2 AMP consolidations have been 
approved, and 33 of these 46 sets have been either rejected or put on 
hold. The effectiveness of the use of the END model in identifying 
opportunities for AMP consolidations was called into question in the 
PRC's Advisory Opinion, and the USPS Inspector General is current 
reviewing the AMP consolidation facility selection process. The PRC's 
concerns are related to the fact that the END model does not entirely 
use facility-specific data in identifying opportunities for 
consolidation. Instead the model uses some facility specific data and 
some national productivity averages, which may not adequately target 
facilities that provide the best opportunities for consolidations. 

In addition to unclear criteria in selecting facilities with potential 
for consolidation, USPS does not have specific criteria for deciding 
whether or not to implement an AMP consolidation after the study has 
been completed. USPS's Senior Vice President, Operations, told us they 
are currently prioritizing consolidations of facilities that are 
expected to achieve $1 million or more in cost savings annually. 
Currently, no such threshold exists, and neither do any other 
definitive thresholds or principles in deciding whether or not to 
implement an AMP consolidation. In its Advisory Opinion, the PRC found 
that the AMP consolidation process lacks criteria for approval and 
stated that "without set criteria or guidelines, the decision-making 
process can lose objectivity [and that] both the Office of the Consumer 
Advocate[Footnote 18] and the American Postal Workers Union found the 
lack of criteria to be troublesome. The Office of the Consumer Advocate 
suggested that the PRC should recommend USPS implement decision rules 
and guidelines, and the PRC concurred stating that USPS should 
"establish a set of criteria, or at a minimum, guiding principles for 
making realignment decisions." 

USPS Does Not Use Consistent Data Calculations in Making AMP 
Consolidation Decisions and Evaluating Results: 

In addition to the lack of clarity in the facility selection process, 
USPS does not use consistent data calculations in determining impacts 
and savings of these consolidations, resulting in the potential for 
foreseeable impacts to go unnoticed and inconsistency in anticipated 
savings. USPS bases AMP consolidation impacts on projections determined 
through these calculations. As a result, some facilities may have 
difficulty in handling and processing the additional mail they receive 
through the consolidation. For example, in one of our site visits, 
local and district USPS officials told us that they were concerned that 
the gaining facility would not be able to process the additional mail 
volume that it would be receiving because it was already having 
problems processing its existing volume on time. The projections 
calculated by district managers supported this concern, yet the 
projections calculated by Area managers showed that the AMP 
consolidation was feasible, and it was approved and implemented. 
Several months later, the consolidation was suspended because 
additional equipment was needed at the receiving facility in order to 
accommodate the additional mail volume. A USPS official told us that 
this was primarily due to lack of standardized data calculations used 
in the study and lack of understanding of the study guidelines by 
officials that completed the study. Examples such as these, in which 
foreseeable impacts could have been avoided, may be mitigated through 
the use of consistent data calculations in the AMP consolidation study. 

Inconsistent Data Calculations Result in Differences in Projected Cost 
Savings: 

Inconsistency in data calculations also impacts the ability of USPS to 
accurately determine the expected cost savings of the AMP 
consolidations. The current AMP guidelines neither prescribe 
standardized sources for the data used in completing the worksheets, 
nor is there a standardized methodology for calculating some of the 
data in the worksheets. For example, in its Advisory Opinion, the PRC 
found that work-hour savings in the AMP consolidation studies were 
calculated differently in various studies and that, in some cases, the 
PRC could not determine how the savings were calculated. In our review 
of the pre-and post-implementation data for nine consolidations 
implemented in 2005, we also found that the calculations used in 
determining the projected savings were inconsistent, making it unclear 
what the baseline should be for evaluating actual cost savings. 
Concerns with data calculations used in USPS's AMP consolidation 
process have also been addressed by USPS's Inspector General. For 
example, during a review of one AMP consolidation, the Inspector 
General found discrepancies in the projected cost savings in the AMP 
consolidation study, resulting in savings that may have been 
significantly overstated. 

AMP consolidation guidelines require semiannual and annual post- 
implementation reviews (PIR) of AMP consolidations, which ensure 
management's accountability for implementing an AMP plan. USPS's post- 
implementation review process essentially replicates the AMP 
consolidation study process and compares the estimated annual savings 
submitted in the approved AMP consolidation study against the actual 
savings after 6 months, which is then projected to annualized savings. 
PIRs are completed by local managers, approved by Area Offices and 
subject to final review by headquarters. As of January 30, 2007, PIRs 
for the nine fully implemented consolidations were due to USPS 
headquarters and, as of March 2007, USPS headquarters officials had 
received all of them, and in May 2007 had completed its review of 
three. 

In some cases, reviewing officials in USPS headquarters have made 
significant corrections and changes to the draft PIRs that were 
submitted for their review, resulting in revised projected annualized 
savings that were closer to the original estimates prepared for the AMP 
consolidation studies. As shown in table 4, the sum of estimated annual 
savings in the nine AMP consolidations approved in 2005, as provided in 
the AMP study documents, was about $28 million.[Footnote 19] According 
to the initial draft PIRs for these nine consolidations prepared by 
USPS officials at the local level 6 months after implementation, they 
projected about $19 million in annualized savings. During the review of 
these PIRs by USPS headquarters, this sum was revised to about $28 
million. The headquarters review of the PIRs has been completed for 
only three of the nine PIRs, and additional revisions to the projected 
annualized savings may be made, but USPS officials provided us with the 
most recent data available from their ongoing reviews. 

Table 4: Semiannual Post-Implementation Projected Annualized Savings 
Versus Estimated Annualized Savings in AMP Studies Approved in 2005: 

Number of PIRs: 9; 
Estimated annualized savings in AMP studies: $28,142,829; 
Initial post-implementation projected annualized savings (prepared by 
local officials): $19,017,453; 
Revised post- implementation projected annualized savings (based on 
headquarters review): $28,112,909. 

Source: GAO presentation of USPS data. 

Note: The headquarters review of the PIRs has been completed for only 
three of the nine PIRs, and additional revisions to the projected 
annualized savings may be made, but USPS officials provided us with the 
most recent data available from their ongoing reviews. 

[End of table] 

Of these projected annual savings reported in the headquarters' revised 
PIRs, 60 percent are anticipated to come from a single consolidation in 
which all mail processing operations were consolidated (both 
originating and destinating). As shown in table 5, if anticipated and 
realized savings from this consolidation are excluded, the estimated 
annual savings from the AMP studies of the remaining eight 
consolidations was about $10.7 million, and the initial PIRs projected 
about $2.15 million would actually be realized. However, based on the 
most recently available data from the ongoing headquarters review of 
these PIRs, the revised projected annualized savings was about $11.25 
million. 

Table 5: Semiannual Post-Implementation Projected Annualized Savings 
Versus Estimated Annualized Savings in AMP Studies Approved in 2005, 
Excluding Fully Consolidated Facility: 

Number of PIRs: 8; 
Estimated annualized savings in AMP studies: $10,722,363; 
Initial post-implementation projected annualized savings (prepared by 
local officials): $2,152,827; 
Revised post-implementation projected annualized savings (based on 
headquarters review): $11,248,283. 

Source: GAO presentation of USPS data. 

Note: The headquarters review of the PIRs has been completed for only 
three of the nine PIRs, and additional revisions to the projected 
annualized savings may be made, but USPS officials provided us with the 
most recent data available from their ongoing reviews. 

[End of table] 

While the differences in the savings from the AMP studies' estimated 
annualized savings and the revised PIR projected annualized savings are 
generally small, in the interim, drafts of the PIRs showed different 
projections before USPS headquarters officials made revisions based on 
their review. For example, one of the draft PIRs submitted to USPS 
headquarters stated that the AMP consolidation would result in a loss 
of approximately $2.6 million. Based on the ongoing PIR by USPS 
headquarters officials, the annualized projected savings for this AMP 
consolidation has been revised to just over $1 million--a difference of 
about $3.7 million. In another case, the draft PIR submitted to USPS 
headquarters estimated savings of about $820,000 and was revised during 
the headquarters review to an estimated savings of $2.3 million. USPS's 
Senior Vice President, Operations, told us that the headquarters review 
has shown that when PIRs have not been finalized, they do not always 
account for all of the actual savings achieved by the AMP 
consolidation. Another USPS official stated that the difference in the 
amounts reported in some PIRs and the revised projected annualized 
savings was due to the fact that unexpected events (e.g., changes in 
cost elements, such as work-hour rates) and differences in the 
methodologies used by the individuals calculating the data impact the 
results. He also stated that revised AMP consolidation guidelines, 
which will require the use of specific data and formulas for 
determining savings, should prevent such inconsistencies from happening 
in the future. 

USPS Does Not Have a Mechanism for Determining AMP Consolidation 
Impacts on Delivery Performance: 

Another concern with the AMP consolidation process is that it does not 
evaluate potential impacts to delivery performance; therefore, there is 
no way to determine the actual impact that AMP consolidations are 
having on delivery service. Despite this, USPS has stated that it 
intends on maintaining or improving service performance while it 
implements consolidations, making it unclear how it intends on 
achieving this. This is often a concern from stakeholders in areas 
where consolidations are being considered and has also been identified 
as an area of concern in a recent report from the USPS Inspector 
General's Office.[Footnote 20] 

As we reported in 2006, USPS does not measure and report its delivery 
performance for most types of mail, and less than one-fifth of total 
mail volume is measured.[Footnote 21] No representative measures of 
delivery performance exist for Standard Mail (48 percent of volume), 
bulk First-Class Mail (25 percent of volume), Periodicals (4 percent of 
volume), and most Package Services (less than 1 percent of volume). 
While USPS is taking steps toward developing increased delivery 
performance measurements, currently there are limited mechanisms in 
place to determine how AMP consolidations may potentially impact 
delivery performance or to evaluate the actual impacts after 
implementation. For example, during one of our site visits, mailers we 
met with indicated that they had experienced extensive delays in mail 
delivery since the implementation of the AMP consolidations in their 
area and, in one case, a mailer told us these delays impacted his 
business. This mailer projected that his retail store lost revenue 
because advertising for an annual sale did not reach customers until 
after the sale was complete. (Due to limited performance measurement 
mechanisms, we cannot validate whether these complaints are related to 
AMP consolidations.) USPS has a system in place to measure the delivery 
performance of some of its First-Class Mail and Priority Mail, and if 
the evaluation of the AMP consolidation shows declines in this 
performance after implementation, the facility manager is required to 
create and submit a Service Performance Action Plan to USPS 
headquarters outlining how the facility intends on resolving the 
delivery performance declines.[Footnote 22] 

While the AMP consolidation study does not take delivery performance 
into account, it does review impacts on service standards, which are 
USPS's official standards on the amount of time it should take for 
different classes of mail to be processed between the location where 
USPS receives the mail (originating ZIP codes) and its final 
destination (destinating ZIP codes). The AMP consolidation study 
considers whether standards for different classes of mail will be 
upgraded (a decrease in the amount of time it takes mail to travel 
between certain ZIP codes) or downgraded (an increase in the amount of 
time it takes mail to travel between certain ZIP codes) through 
implementation of the consolidation. While consideration of these 
service standards provides some insight into potential impacts of the 
AMP consolidation on USPS's ability to meet its internal standards, 
without service performance data or the ability to measure the AMP 
consolidation's impacts on delivery performance, it is unclear how USPS 
can accurately determine the cost and service impacts of its AMP 
consolidations. 

USPS recently implemented a "24-hour clock" program in its processing 
facilities, which will standardize the time it takes to process mail by 
holding managers at all postal facilities accountable for meeting 
nationwide targets for and indicators in managing daily mail. Some of 
the activities USPS is standardizing involve the same operations that 
USPS is consolidating. For example, managers must ensure that 80 
percent of single-piece First-Class collection mail is 
cancelled[Footnote 23] by 8:00 p.m. and that the first sort of all 
outgoing mail is conducted by 11:00 p.m. Currently, the AMP 
consolidation study guidelines do not require managers to take into 
account how well the facility that will be gaining mail volume is 
meeting these targets. While meeting these targets is not an indicator 
of delivery performance, they are a useful proxy because the inability 
to meet them can create delays in processing operations. It may be 
valuable for USPS to review how well these targets are currently being 
met in facilities expected to receive additional mail volume through 
consolidations as an indicator of that facility's ability to process 
additional mail volume expediently, potentially reducing delays later 
in the processing and delivery process. 

USPS Is Addressing Several of these Issues through Revised AMP 
Consolidation Guidelines, but Concerns Still Exist: 

USPS is currently in the process of revising its AMP consolidation 
procedural guidelines[Footnote 24] to address the issues that have been 
raised. Drafts of these revised guidelines indicate that the new 
process will provide several changes aimed at standardizing the AMP 
consolidation process and data calculations used in studying potential 
consolidations. USPS officials stated that the revised guidelines are 
currently scheduled to be released in summer 2007.[Footnote 25] Table 6 
shows some of the changes to the AMP consolidation guidelines. 

Table 6: Summary of Major Changes to AMP Consolidation Process Included 
in Draft Revised Guidelines: 

Selection of facilities; 
Current AMP guidelines: Bottom-up approach initiated at local level; 
Draft revised AMP guidelines: Top-down approach added with headquarters 
using computer modeling to identify opportunities. 

Data calculations and sources for use in study; 
Current AMP guidelines: Data collection must be consistent and must 
utilize recognized data sources, such as Management Operating Data 
Systems (MODS), Origin- Destination Information System (ODIS), and 
locally developed statistics; The individual completing the study has 
discretion to determine what data sources to use and what methodology 
to use when making data calculations to complete the study; 
Draft revised AMP guidelines: Formulas used in analysis will also be 
standardized and "hard-coded" in electronic worksheets; Specific 
instructions provided for which data sources to use in completing 
analysis. 

Data time frames for use in study; 
Current AMP guidelines: Guidelines provide annual data periods for AMPs 
and quarterly data requirements for PIRs; While annual requirements 
exist, they do not specify if this information should come from the 
preceding 12 months, the most recent fiscal year, or the most recent 
calendar year; 
Draft revised AMP guidelines: Specific instructions provided for which 
data time frames to use in completing analysis. 

Document retention; 
Current AMP guidelines: Guidelines require documents to be kept on file 
until completion of PIR; There are no instructions for where documents 
should be retained; 
Draft revised AMP guidelines: Specific instructions for keeping all 
supporting documentation on file at the Area office for at least 3 
years. 

Facility evaluation/disposition; 
Current AMP guidelines: None; 
Draft revised AMP guidelines: Worksheet added to AMP consolidation 
study to document potential uses for excess floor space/equipment 
directly related to consolidation. 

Service standard impacts; 
Current AMP guidelines: Review of AMP impact on service standards 
related to First-Class Mail and other categories of mail as applicable 
(i.e., Express Mail, Priority Mail); 
Draft revised AMP guidelines: Review of upgrades and downgrades of AMP 
consolidation impact on service standards related to First-Class Mail, 
Priority Mail, and other mail categories as applicable (i.e., 
Periodicals, Standard Mail, and Package Services). 

Public communication process; 
Current AMP guidelines: Identifies stakeholders to be notified at onset 
of AMP study; 
Draft revised AMP guidelines: Incorporates the use of AMP Consolidation 
Communication Plan and Toolkit, outlining specific stakeholders to be 
notified during different decision points in the AMP consolidation 
process, as well as inclusion of public meetings as part of AMP 
consolidation process; (discussed further in next section of this 
report). 

Delivery service performance; 
Current AMP guidelines: None; 
Draft revised AMP guidelines: External First-Class Measurement System 
(EXFC) summary and analysis. 

Savings threshold for implementation; 
Current AMP guidelines: None; 
Draft revised AMP guidelines: None, although USPS officials stated that 
those AMP consolidations yielding $1 million or more in savings will be 
made a priority. 

Source: GAO presentation of USPS data. 

[End of table] 

Changes included in the draft revisions to the AMP consolidation 
guidelines indicate that data-related issues are being addressed, 
specifically those related to the standardization of data sources, but 
concerns still remain with the fact that USPS is not using facility- 
specific data in identifying facilities to consider for consolidation. 
Therefore, USPS is unable to take into account specific facility 
processing circumstances in initial selection of potential facilities. 
The use of consistent data sources should alleviate some of the delays 
that are currently experienced in the AMP consolidation process. The 
new guidelines also neither include information on what criteria USPS 
uses when deciding to approve an AMP consolidation, nor do they address 
USPS's limited ability to measure delivery performance. 

Although it may be hard to determine what cost savings and subsequent 
impacts USPS has made through AMP consolidations and, while the savings 
that have been reported may appear small, the AMP consolidation 
initiative could be an important effort on USPS's part in meeting its 
future network needs. By eliminating the excess capacity on its 
equipment that processes single-piece First-Class Mail, USPS would be 
addressing its goal of meeting the future needs of its processing 
network. As the volume of this mail declines, there would likely be 
less of a need for infrastructure to support the processing of single- 
piece First-Class Mail and, while flaws in the AMP consolidation 
process exist, the intent of the consolidations addresses this trend. 

USPS AMP Communication Practices Do Not Ensure Appropriate Stakeholder 
Engagement in Realignment Decisions: 

USPS has made improvements to its communication practices, but these 
practices continue to have gaps. Namely, AMP consolidation 
communication processes (1) do not provide clear and useful 
notification to stakeholders, (2) do not provide for meaningful public 
input and lack transparency into the AMP decision-making process, and 
(3) provide limited information to the public after USPS makes AMP 
consolidation decisions. A town hall meeting is the only formal 
requirement for public input during the AMP consolidation process. 
Stakeholders and others have criticized the timing of the meeting as 
occurring too late in the process, after USPS has already made major 
decisions. To help remedy this and other problems, Congress required 
USPS to make improvements to its public communication processes. USPS's 
planned improvements in response to Congress would generally limit 
changes to internal processes, while notice to stakeholders would 
generally remain the same, and the timing of the public input meeting 
would not change. Our review of USPS's revised guidance indicates that 
planned improvements would neither substantively change information 
provided to the public, nor improve the public input process. 

Communication Requirements Have Focused on Post Offices and Employee 
Notification: 

USPS is required to follow certain steps with regard to communicating 
changes and engaging the public as it makes realignment decisions. A 
statutory requirement for public notice for closings and consolidations 
of post offices has been in existence since 1976,[Footnote 26] but it 
did not speak to the consolidation of mail processing operations--the 
result for most approved AMP consolidations. If USPS is considering 
closing a post office, USPS must provide adequate notice and 
regulations prescribe a formal comment period.[Footnote 27] Any 
decision to close or consolidate a post office must include the effect 
on the community served and the effect on the office's postal 
employees. In addition, the following mandatory procedures apply: 

* The public must be given 60 days notice of a proposed action to 
enable the persons served by a post office to evaluate the proposal and 
provide comments. 

* USPS must take any other steps necessary to ensure that the persons 
served by the affected post office understand the nature and 
implications of the proposed action, e.g., meeting with community 
groups and following up on comments received that seem to be based on 
incorrect assumptions or information. 

* After public comments are received and taken into account, any final 
determination to close or consolidate a post office must be made in 
writing and must include findings covering all the required 
considerations. 

* The written determination must be made available to persons served by 
the post office at least 60 days before the discontinuance takes 
effect. 

* Within the first 30 days after the written determination is made 
available, any person regularly served by the affected post office may 
appeal the decision to the PRC. 

In addition to these requirements for closing or consolidating post 
offices, USPS has a collective bargaining agreement--a contract--with 
its employees that requires a certain level of communication when USPS 
is contemplating changes in employee wages, hours, or working 
conditions at any facilities.[Footnote 28] USPS has placed 
consolidations in this category because they can result in employees 
working in different locations, i.e., they can affect employees' 
working conditions. USPS is required to seek employee union input on 
handbooks or guidelines it publishes, including AMP consolidation 
guidelines. According to national union officials, employees may 
request meetings with USPS when proposed changes relate to wages, 
hours, or working conditions. Thus, USPS has generally provided 
employees more information about consolidations than USPS has provided 
to other stakeholders. 

While AMP consolidations have been taking place since the late 1960s, 
and USPS established AMP consolidation guidelines in 1979, until 2006, 
USPS has had no statutory requirement to contact the public (other than 
USPS employees) concerning the consolidation of its operations, unless 
the consolidation would result in a retail facility closure. In the 
Postal Accountability and Enhancement Act, enacted in December 2006, 
Congress strongly encourages USPS to move forward in its streamlining 
efforts and keep unions, management associations, and local elected 
officials informed. Specifically, the law requires USPS, in its 
Facilities Plan, to include procedures that USPS will use to: 

* provide adequate public notice to communities potentially affected by 
a proposed rationalization decision; 

* make available information regarding any service changes in the 
affected communities, any other effects on communities, any other 
effects on customers, any effects on postal employees, and any cost 
savings; 

* afford affected persons ample opportunity to provide input on the 
proposed decision; and: 

* take such comments into account in making a final decision. 

Congress also directed USPS not to close or consolidate any processing 
or logistics facilities without using procedures consistent with those 
described above.[Footnote 29] 

AMP Consolidation Communication Processes Lack Transparency: 

USPS's AMP consolidation communication processes do not provide clear 
and useful notification to stakeholders--mailers, employees, elected 
officials, the business community, and the media--and lack transparency 
into AMP consolidation decision making. Congress encouraged USPS to 
keep employees, local elected officials, and the affected public 
informed. The PRC and others have advised or recommended USPS more 
fully communicate with and engage stakeholders and the public earlier 
in the decision-making process and, once USPS makes decisions, keep 
stakeholders and the public informed. While USPS is updating its 
communication guidance--the AMP Consolidation Communication Plan and 
Toolkit--its proposed improvements would neither substantively improve 
information provided to stakeholders and the public, nor improve the 
public input process. Proposed improvements would help clarify which 
stakeholders USPS notifies but would not improve the content of the 
notifications. Further, the draft AMP consolidation guidelines would 
not provide for transparency into the AMP consolidation decision-making 
process to the extent that Congress has encouraged, and others have 
recommended or advised, for example, by holding the public meeting 
earlier or explaining how USPS uses public input. 

Inconsistent Identification of Stakeholders: 

USPS's AMP consolidation guidelines were updated in 1995--with new 
worksheets and instructions issued in 2004--and established, among 
other things, USPS's communication guidance. They required USPS to 
notify stakeholders only when USPS implemented an AMP consolidation. 
The guidelines did not provide a public input process, such as a public 
meeting. USPS enhanced its communications in 2005 by creating a 
communication plan that required notice to additional stakeholders at 
the point when USPS initiated the AMP consolidation study and 
identified responsibility for notifications by clarifying which USPS 
office had responsibility for providing the notifications. In 2006, 
USPS created additional guidance, its notifications toolkit, which 
complements the AMP guidelines and communication plan and has a public 
meeting requirement. Since the notifications toolkit did not go into 
effect until 2006, none of the AMP consolidations initiated in 2005 was 
subject to these additional requirements. USPS officials told us, 
however, that all 46 AMP studies initiated in 2006 are subject to the 
requirements as stated in the notifications toolkit. 

Among the AMP consolidation packages we reviewed, USPS inconsistently 
identified individual stakeholders in the impacted communities. USPS 
stakeholder categories included employee groups, elected officials, 
media, community organizations, and mailers. USPS guidance regarding 
notifications to stakeholders was unclear and, in some cases, mayors 
and governors were notified of an AMP consolidation study, while in 
others, no local elected officials were contacted. As shown in appendix 
IV, in one AMP consolidation study, USPS identified 158 mailers as 
stakeholders, while in others, no mailers were identified. In one case, 
mailers whom USPS did not identify as affected by the consolidation 
told us their service had been negatively impacted as a result of that 
consolidation. In another case, we spoke with officials from a bank in 
Connecticut that USPS identified as a major mailer and listed as a 
stakeholder, while the company that prepared most of the bank's mail 
and processed more mail volume than the bank was not considered a 
stakeholder.[Footnote 30] 

USPS has made improvements to its draft guidance by clarifying certain 
stakeholder categories and providing examples of "appropriate 
government officials," as well as establishing criteria for local 
mailers.[Footnote 31] The proposed changes would likely help clarify 
stakeholder groups and would allow more consistent identification of 
stakeholders. 

Unclear Content in Notification Letters: 

AMP consolidation notification letters sent to stakeholders were not 
meaningful and provided little detail. Notification letters we reviewed 
were largely form letters and did not simply and clearly state the type 
of change or changes being studied and provided no range of possible 
outcomes for the public to understand. Letters contained jargon, for 
example, they stated that USPS was studying the facility's "total mail 
processing," "originating/destinating mail processing," or "originating 
mail processing" and did not provide the name of the gaining facility. 
Such terms may not be familiar to the public. Further, USPS did not 
explain to stakeholders that "consolidating both originating and 
destinating mail" meant USPS was considering closing the facility, 
whereas consolidation of "either destinating or originating mail" meant 
potential changes only to internal mail processing. Stakeholders we met 
with told us they did not understand what USPS was planning or 
studying. For example, USPS-identified stakeholders in Waterbury, 
Connecticut, said they did not understand the context of the 
notification letter they received or the potential impact of the 
consolidation. Another stakeholder said USPS simply notifies 
stakeholders that changes will be made, without presenting the context 
for the changes or providing any alternatives. See figure 3 for an 
example of a notification letter sent to one of the stakeholders USPS 
identified in Waterbury, Connecticut. 

Figure 3: USPS Notification Letter to Waterbury Republican Newspaper, 
Waterbury, Connecticut: 

[See PDF for image] 

Source: USPS. 

[End of figure] 

With limited information made available to the public throughout the 
process, other stakeholders have filled an information void with 
information to the public that was often not accurate. For example, in 
some cases, unions have expressed concern that employees would lose 
jobs or that postal facilities would be shut down. In fact, according 
to USPS, no layoffs have occurred, and USPS has stated that it does not 
intend to lay off any career employees due to consolidations. Also, 
USPS officials told us only one facility has been closed as a result of 
AMP consolidation studies initiated in 2005 or 2006. Mailers we spoke 
with identified an employee union Web site as their primary source of 
information about the consolidations because USPS does not provide 
adequate AMP consolidation-related information on its Web site. In some 
cases, citizens are concerned that their town's postmark will be taken 
away and jobs lost because USPS has not communicated effectively, and 
others have provided inaccurate information. In the case of the AMP 
consolidation process, the public has been frustrated, and there has 
been a lack of buy-in for some USPS decisions. When USPS has made 
decisions regarding AMP consolidations, it has not clearly communicated 
the progress to the public. For example, the USPS Office of Inspector 
General found that, in one case, USPS notified stakeholders it was 
beginning a review when the USPS local office had already approved the 
AMP consolidation, which the Inspector General said "negatively 
impact[ed] stakeholder relations.[Footnote 32] The Inspector General 
reported that notification letters should have been modified from the 
guidance available to more accurately reflect the progress of the AMP 
consolidation. 

Under the new postal reform legislation, USPS is to provide "adequate 
public notice." USPS is revising its AMP consolidation guidelines and 
communication plan. However, the draft guidance we reviewed, complete 
with notification templates, would provide largely the same 
notification content and lacks basic information, such as the next 
decision points, a date for a public meeting, and how public input 
would be considered. Stakeholders would remain unclear as to what USPS 
is planning. USPS's notifications to the public about AMP 
consolidations would remain unclear and would not simply and clearly 
state the type of change or changes being studied. In terms of 
communicating the status of the AMP consolidation study, the guidance 
is unclear as to the requirement for notifying stakeholders in the 
event of no action taken, the study is placed on hold or resumed, or 
USPS does not approve the AMP consolidation study. 

With limited information made available to the public throughout the 
process, other entities might continue to fill the information void 
with data that may not be accurate. Public participation experts 
recognize that an uninformed public is likely to make up its own facts, 
and misunderstandings become new, separate conflicts that make the 
original problem more difficult to solve, which may slow down the 
consolidation process.[Footnote 33] 

Limited Public Input Process: 

AMP guidance requires USPS to "fully consider" both service and "other 
impacts on the community." Since 2006, there has been a requirement for 
a town hall meeting to provide a forum to collect public input, but 
there are many flaws with that requirement. Other than a town hall 
meeting, there is no formal AMP public input requirement. To date, 
there have only been five town hall meetings open to the public, and 
none have been scheduled for 2007. USPS provided little information 
about the study prior to the meetings--a series of bullets was posted 
on a USPS Web site several days prior to the meetings, and USPS neither 
publicized an agenda for the meetings nor employed a neutral party to 
facilitate them. According to the guidance, it is not until a meeting 
occurs that more information, in the form of briefing slides and a 
video screening, is made available to attendees. Then, a USPS official 
prepares a summary document after a meeting that is to be forwarded to 
USPS headquarters. After a meeting, the stakeholders and the public are 
provided with the opportunity to draft and submit comments to 
USPS.[Footnote 34] 

Public meetings have been held after the AMP consolidation studies are 
forwarded to USPS headquarters, after USPS has gathered and analyzed 
most of its data, including those concerning customer service impacts. 
Stakeholders we spoke with were not satisfied with the public input 
process and told us that their input was only solicited when USPS 
considered the AMP consolidation a "done deal." The PRC has also 
criticized the timing of the public meeting. 

Some of the flaws stakeholders and the PRC identified with the town 
hall meetings held to date include the following: 

* meeting held too late in process, after data gathered; 

* not enough notice to public about meeting; 

* USPS presents limited data at meeting; 

* local USPS official runs meeting and may not be skilled in 
facilitating public meetings; and: 

* unclear how input from meeting is used in AMP consolidation decision. 

USPS officials could not specifically explain how stakeholder and 
public input is used in reaching AMP consolidation decisions. Further, 
USPS has no requirement to notify or seek input from stakeholders or 
the public when evaluating completed AMP consolidations. However, USPS 
officials told us, as a matter of practice, USPS provides employee 
organizations with copies of approved AMP studies and completed AMP 
evaluations. It is unclear how the information collected at the 
meetings, or subsequent to them, factors into the consolidation 
decision. Stakeholders and the public wanted to know how their input to 
USPS--letter, phone calls, public meeting results--is taken into 
consideration when USPS makes its decisions. Mailers said they do not 
need to be involved in all USPS decisions; rather, they want to provide 
input when decisions may impact them, such as changing locations or 
timing for dropping off the mail. 

The Postal Accountability and Enhancement Act requires USPS to use 
procedures that afford affected persons "ample opportunity to provide 
input on the proposed decision" and to "take such comments into account 
in making a final [AMP consolidation] decision." In its draft 
communication guidance, USPS has not substantively revised its public 
meeting requirements. Proposed changes would generally be limited to 
USPS internal processes, such as clarifying USPS roles and 
responsibilities for a public meeting and making arrangements for a 
meeting. USPS has not altered the timing of a public meeting but has 
provided for earlier notice to the public regarding a meeting and more 
time for the public to submit comments after a meeting. Table 7 
provides an overview of USPS AMP communication practices. 

The PRC and others have made several suggestions to improve the AMP 
consolidation public input process. Rather than holding the AMP 
consolidation public meeting after data is collected, USPS could 
consider moving the meeting to the data-gathering phase of the study. 
USPS could share its public meeting agenda so these meetings are 
focused and productive, and the public has opportunity to adequately 
prepare for them. USPS could use a skilled independent, neutral 
facilitator to lead the meetings, draft the summary of public input, 
and explain how it will be used. USPS officials said that holding the 
meeting earlier might be the best thing to do. 

Public participation experts recognize that actively engaging the 
public in decision making can serve not only to educate the public 
about a policy process but can also lead to more informed 
decisions.[Footnote 35] By ensuring public concerns have been heard, 
considered, and addressed, the agency can also establish a level of 
trust and accountability with the public. When making realignment 
decisions, USPS could proactively and consistently engage appropriate 
stakeholders when changes under consideration will affect them. In the 
case of the flats automation strategy, mailers noted that USPS 
solicited input regarding new equipment. Additionally, USPS recently 
provided an update to the mailing industry on its flats automation 
plans. A study on citizen engagement by the IBM Center for the Business 
of Government states that citizens are more satisfied with the decision-
making process when agencies ensure that citizen input is accounted for 
and reflected in final decisions.[Footnote 36] Reflecting public input 
in decisions does not necessarily translate to agreeing with the public 
but to considering citizens' concerns and including them in the 
process. 

Table 7: USPS Area Mail Processing Consolidation Notification and 
Public Input Requirements: 

1995 AMP guidelines; 
Notification requirements: USPS is required to send notification 
letters only at approval or implementation of consolidation; 
GAO assessment: Notification letters sent to select stakeholders and 
number of stakeholders identified varied across AMP consolidations; 
USPS excluded some impacted parties from its stakeholder groups. 

2005 communication plan; 
Notification requirements: USPS required additional notification 
letters at initiation of study; 
GAO assessment: Notification letters sent to select stakeholders and 
number of stakeholders identified varied across AMP consolidations; 
Letters lacked detail of consolidation plan, e.g., very brief and 
provided little context or information; Incomplete information added to 
distrust of USPS decisions and contributed to lack of public buy-in. 

2006 notification toolkit; 
Notification requirements: USPS added notification requirement for 
public input process; USPS provided notification templates for no 
action taken, study placed on hold, and study resumed; 
GAO assessment: USPS clarified roles and responsibilities and USPS 
messaging to stakeholders and public; Additional notifications helped 
inform stakeholders of decisions, but content of letters was not clear 
or useful to stakeholders. 

2007 draft communication guidance[A]; 
Notification requirements: No additional notification required; USPS 
further clarified roles and responsibilities concerning notifications 
and USPS messaging to stakeholders and public; 
GAO assessment: USPS clarified its guidance for identifying certain 
stakeholders that may help ensure more consistent communication across 
AMP consolidations; Content of notification letters remains unclear and 
not useful. Letters provide little detail and contain jargon. Public 
and stakeholders may remain unclear as to whether facility is closing 
or USPS internal mail processing is being consolidated with another 
facility. The guidance is unclear as to the requirement for notifying 
stakeholders in the event of no action taken, study placed on hold or 
resumed, or USPS does not approve the study. 

1995 AMP guidelines and 2005 communication plan; 
USPS public input requirements: USPS had no public input process 
requirement; 
GAO assessment: USPS did not engage stakeholders and the public in two-
way communication regarding AMP decisions. Communication practices were 
generally one-way from USPS or one-way to USPS, without meaningful 
stakeholder or public participation; USPS provided limited transparency 
into how USPS weighed stakeholder and public concerns; Keeping 
stakeholders and the public engaged and informed in decision making (1) 
may lead to better decisions and (2) allows stakeholders and the public 
time to prepare for changes associated with decisions. 

2006 Notification toolkit; 
USPS public input requirements: 2006 notifications toolkit created 
public meeting requirement; Public or town hall meetings are only 
standard forum to capture public input; 
GAO assessment: Meetings generally did not provide for meaningful 
stakeholder or public participation. USPS did not engage stakeholders 
and the public in two-way communication regarding AMP decisions; USPS 
provided limited transparency into how USPS weighed stakeholder and 
public concerns; Keeping stakeholders and the public engaged and 
informed in decision making (1) may lead to better decisions and (2) 
allows stakeholders and the public time to prepare for changes 
associated with decisions. 

2007 draft communication guidance; 
USPS public input requirements: USPS has allowed for earlier notice to 
public about public meeting and additional time for public to submit 
comments after public meeting; 
GAO assessment: Timing of meeting is unchanged. USPS does not engage 
stakeholders and the public in two-way communication regarding AMP 
decisions. Communication practices are generally one-way from USPS or 
one-way to USPS, without meaningful stakeholder or public 
participation; USPS provides limited transparency into how USPS weighs 
stakeholder and public concerns; Keeping stakeholders and the public 
engaged and informed in decision making (1) may lead to better 
decisions and (2) allows stakeholders and the public time to prepare 
for changes associated with decisions. 

Source: GAO analysis of USPS and stakeholder data. 

[A] Includes both 2007 draft AMP guidelines and 2007 draft 
communication plan. 

[End of table] 

Lack of Information to Public: 

USPS does not keep the public adequately informed of its decisions, 
although several mechanisms exist that USPS could employ, such as 
Postal Customer Councils,[Footnote 37] USPS's Web site, and local 
business community newsletters. Stakeholders we spoke with acknowledged 
that USPS goals of efficiency and cost savings are legitimate, but they 
were concerned about the lack of transparency of the consolidation 
decisions. In a case where USPS is considering closing a facility, USPS 
could make that information available in advance and, if necessary, 
reveal its plans for carrying out a closure so that impacted parties 
could prepare for the change. Once decisions are made, stakeholders 
said they wanted timely information so they could plan accordingly, for 
example, to reroute their mail, advise their customers of any changes 
in service, etc. When we spoke with USPS officials, they told us they 
were in the process of developing communication requirements in the 
event of a facility closure not related to AMP consolidations.[Footnote 
38] 

Stakeholders described USPS as unconcerned with the effect the 
consolidations could be having on its customers. One stakeholder noted 
that informing affected parties of significant changes and seeking 
their input is a good business practice. In terms of follow-up and 
communicating its decisions, USPS could improve transparency and 
provide information to stakeholders and the public by using existing 
mechanisms to communicate the status of realignment efforts, especially 
the status of AMP consolidations. In its 2006 Annual Progress Report, 
USPS provided only general information about the AMP consolidation 
initiative. Instead, USPS could use its annual reports to report on the 
status of individual AMP consolidations. USPS can employ established 
entities like its local Postal Customer Councils or local business 
organizations to inform the affected public. Both the national Postal 
Customer Council and local business organization officials we spoke 
with were willing to include USPS realignment status updates and plans 
in their regular communications to members. 

Conclusion: 

In our report 2 years ago, we concluded that USPS did not have answers 
to important questions about how it intended to realign its mail 
processing networks. This conclusion still holds today. USPS has made 
progress on several of its individual initiatives, but it remains 
unclear how these various initiatives are individually and collectively 
contributing to achieving realignment goals. Also, without measurable 
performance targets for these goals, USPS remains unable to demonstrate 
to Congress and other stakeholders the costs and benefits of these 
initiatives. Further, data inconsistencies related to the AMP 
initiative have limited USPS's ability to identify potential impacts in 
its feasibility studies of proposed AMP consolidations and to 
accurately evaluate the results of consolidations after they are 
implemented. In the communication area, despite recent improvements to 
its communication practices, USPS continues to have gaps related to 
engaging stakeholders and the public in its AMP consolidation process 
and effectively communicating decisions. Stakeholder concerns related 
to the lack of clear and useful notification to stakeholders, coupled 
with a lack of public input and transparency into USPS's AMP 
consolidation decision making, have contributed to public frustration 
with USPS's communication regarding its AMP consolidation decisions. 

USPS is currently developing a Facilities Plan, mandated in legislation 
passed in December 2006, explaining how the network will be realigned 
and outlining how USPS will interact with stakeholders in making any 
changes. It is also responding to PRC and USPS Inspector General 
recommendations on a variety of realignment issues, including 
communications with stakeholders. The quality and thoroughness of these 
efforts will be key in overcoming the concerns that stakeholders have 
raised. Matters that will require careful attention include 
establishing a clear relationship between individual initiatives and 
realignment goals, developing ways to measure progress and monitor 
results, and establishing effective communications with stakeholders in 
initiatives such as the AMP consolidation. 

Recommendations for Executive Action: 

To strengthen planning and accountability efforts for USPS's 
realignment efforts, we are making two recommendations to the 
Postmaster General to ensure that the Facilities Plan required by the 
Postal Accountability and Enhancement Act includes the following: 

* A discussion of how the various initiatives that will be used in 
rationalizing the postal facilities network will be integrated with 
each other. 

* The establishment of measurable targets USPS plans on meeting for the 
anticipated cost savings and benefits associated with network 
rationalization, in conjunction with the time line for implementation. 

To help improve the way in which USPS communicates its realignment 
plans and proposals with stakeholders, particularly with regard to 
proposals for consolidations under the AMP consolidation initiative, we 
are making three additional recommendations to the Postmaster General 
to ensure that the following steps are included in USPS's 
communications strategy: 

* Improve public notice. Clarify notification letters by explaining 
whether USPS is considering closing the facility under study or 
consolidating operations with another facility, explaining the next 
decision point, and providing a date for the required public meeting. 

* Improve public engagement. Hold the public meeting during the data- 
gathering phase of the study and make an agenda and background 
information, such as briefing slides, available to the public in 
advance. 

* Increase transparency. Update AMP guidelines to explain how public 
input is considered in the decision-making process. 

Agency Comments and Our Evaluation: 

The U.S. Postal Service provided comments on a draft of this report in 
a letter dated June 1, 2007. These comments are summarized below and 
included as appendix V. USPS concurred with our characterization of its 
network realignment goals and indicated that its mail processing 
realignment efforts have not wavered from the achievement of these 
goals. USPS noted that it has made progress on additional realignment 
initiatives that were not outlined in our report. 

USPS stated that its compliance with the Postal Accountability and 
Enhancement Act will satisfy our recommendations for the Postmaster 
General to ensure that the required Facilities Plan includes (1) a 
discussion of how the various initiatives that will be used in 
rationalizing the postal facilities network will be integrated with 
each other and (2) the establishment of measurable targets USPS plans 
on meeting for the anticipated cost savings and benefits associated 
with network rationalization, in conjunction with the time line for 
implementation. We agree that the required Facilities Plan provides an 
opportunity for USPS to more fully discuss the integration of its 
realignment initiatives and establish measurable targets for meeting 
the anticipated cost savings and benefits of network rationalization. 

In its comments, USPS generally agreed with our recommendations related 
to improving the way in which it communicates its realignment plans and 
proposals with stakeholders, particularly proposals for consolidations 
under the AMP consolidation initiative. However, USPS felt that it 
would be premature to hold a public meeting during the data-gathering 
phase of a feasibility study as we recommended but agreed instead to 
improve public engagement by moving the public meeting earlier in the 
AMP process. We agree that this timing will improve USPS's public 
engagement process, as well as the usefulness of public input in making 
AMP consolidation decisions. Under the updated process, the meeting 
will occur after the District Manager has approved a consolidation and 
before the Area Vice President has made a decision. USPS commented that 
the agenda and briefing slides will be posted on www.usps.com in 
advance of the public meeting. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the Ranking Member of the House Subcommittee on the Federal 
Workforce, Postal Service, and the District of Columbia; Committee on 
Oversight and Government Reform; and the Ranking Member of the Senate 
Subcommittee on Federal Financial Management, Government Information, 
Federal Services and International Security; Committee on Homeland 
Security and Governmental Affairs; the Postmaster General; and other 
interested parties. We also will make copies available to others upon 
request. In addition, the report will be available at no charge on the 
GAO Web site at http://www.gao.gov. 

If you or your staff has any questions regarding this report, please 
contact me at siggerudk@gao.gov or by telephone at (202) 512-2834. 
Contact points for our Office of Congressional Relations and Public 
Affairs may be found on the last page of this report. GAO staff that 
made key contributions to this report are listed in appendix VI. 

Signed by: 

Katherine Siggerud: 
Director, Physical Infrastructure Issues: 

Congressional Requesters: 

The Honorable Joseph I. Lieberman: 
Chairman: 
The Honorable Susan M. Collins: 
Ranking Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Thomas R. Carper, 
Chairman, 
Subcommittee on Federal Financial Management, Government Information, 
Federal Services and International Security: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Henry A. Waxman: 
Chairman: 
The Honorable Tom Davis: 
Ranking Member: 
Committee on Oversight and Government Reform: 
House of Representatives: 

The Honorable Danny K. Davis, 
Chairman, 
Subcommittee on Federal Workforce, Postal Service, and the District of 
Columbia: 
Committee on Oversight and Government Reform: 
House of Representatives: 

The Honorable Tom Harkin: 
United States Senate: 

The Honorable Bernard Sanders: 
United States Senate: 

The Honorable John Thune: 
United States Senate: 

The Honorable Brian Baird: 
House of Representatives: 

The Honorable Xavier Becerra: 
House of Representatives: 

The Honorable Marion Berry: 
House of Representatives: 

The Honorable Jerry Costello: 
House of Representatives: 

The Honorable Susan Davis: 
House of Representatives: 

The Honorable Lloyd Doggett: 
House of Representatives: 

The Honorable Chet Edwards: 
House of Representatives: 

The Honorable Barney Frank: 
House of Representatives: 

The Honorable Stephanie Herseth: 
House of Representatives: 

The Honorable Rush Holt: 
House of Representatives: 

The Honorable Ron Kind: 
House of Representatives: 

The Honorable John M. McHugh: 
House of Representatives: 

The Honorable Dennis Moore: 
House of Representatives: 

The Honorable Ted Poe: 
House of Representatives: 

The Honorable Adam Schiff: 
House of Representatives: 

The Honorable Christopher Shays: 
House of Representatives: 

The Honorable John Shimkus: 
House of Representatives: 

The Honorable Adam Smith: 
House of Representatives: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

Our objectives for this report were to (1) describe the initiatives the 
U.S. Postal Service (USPS) has undertaken since 2002 aimed at 
realigning its processing network and the status of these initiatives; 
(2) evaluate how the planning, impacts, and results to date of these 
initiatives align with the goals of USPS's processing network 
realignment; and (3) evaluate USPS's communications practices with 
stakeholders in making network realignment decisions, and the 
challenges and leading practices associated with public engagement. 

To describe the initiatives USPS is undertaking to realign its mail 
processing network, how these initiatives are integrated, and the 
status of these initiatives we interviewed postal officials at USPS 
headquarters, including USPS's Senior Vice President, Operations, and 
Vice President, Network Operations. We interviewed USPS officials in 
the Northeastern and Western Areas. We interviewed American Postal 
Workers Union headquarters officials to gain their perspective about 
the various initiatives, as well as representatives from several 
national mailing industry associations representing different facets of 
the industry. To provide descriptions and status information about 
these initiatives, we reviewed documents filed by USPS, union 
representatives, and other mailing industry representatives in the PRC 
2006 advisory hearing, as well as the PRC's resulting "Advisory Opinion 
Concerning a Proposed Change in the Nature of Postal Services" issued 
December 19, 2006. 

To describe the area mail processing (AMP) consolidation's process, 
status, impacts, and results, we reviewed AMP consolidation guidelines 
published in 1995 (Handbook PO-408) and a revised draft version of 
these guidelines that USPS is planning to release in the summer of 
2007. We reviewed the studies conducted for all 57 AMP consolidations 
in calendar year 2005 and 2006 and reviewed drafts of post- 
implementation reviews for 9 of the 10 AMP consolidations that were 
implemented. We reviewed USPS Inspector General reports about the AMP 
consolidations, the PRC's advisory opinion, as well as the Postal 
Accountability and Enhancement Act. 

To learn about how AMP consolidations are implemented and the 
communication practices USPS employs while implementing AMP 
consolidations and providing network realignment information to 
stakeholders, we reviewed AMP consolidation guidelines, the AMP 
Communication Plan, the AMP Notification Toolkit, and revised drafts of 
these documents. We reviewed documentation of USPS contact with 
stakeholders as recorded on AMP Worksheet 3 for AMP consolidation 
packages submitted during the Postal Regulatory Commission (PRC) case 
N2006-1. We reviewed notification letters produced by USPS for the AMP 
consolidation studies that took place in 2005 and 2006. We reviewed the 
procedures USPS must follow under 39 U.S.C. 404(b), legislation that 
provides rules that must be applied when closing a USPS retail 
facility, as well as the Postal Accountability and Enhancement Act, 
which directs USPS to make changes to its public input process when 
making realignment decisions, and to provide a facilities plan to 
Congress outlining its infrastructure realignment strategy. We 
conducted site visits in two states, Connecticut and Washington, where 
AMP consolidations were implemented in 2005 and 2006 to learn about the 
AMP consolidation process. During these site visits, we interviewed 
USPS district and facility officials, as well as local union 
representatives to learn about the AMP consolidation process and its 
subsequent impacts and results. To learn how USPS communicated with 
stakeholders, we interviewed USPS officials, employees, mailers, and 
business community members. 

We conducted our review between July 2006 and May 2007 in accordance 
with generally accepted government auditing standards. 

[End of section] 

Appendix II: Overview of AMP Consolidation Process: 

USPS's 1995 AMP Guidelines outline its procedures for AMP 
consolidations. The consolidation process prescribed by the guidelines 
can be broken into four stages: (1) study and proposal, (2) evaluation, 
(3) implementation, and (4) review of consolidation. 

Study and Proposal: 

AMP proposals are initiated at the local level by district managers, 
customer sales and service, and/or plant managers. Initiating plant 
managers are responsible for studying the feasibility of the 
consolidation and assembling an AMP consolidation package containing 
data to support the proposal. Area offices then review the feasibility 
of these consolidations. AMP guidelines specify that the local office 
is responsible for considering the foreseen impacts the consolidation 
will have on service, the community, and employees. If upon these 
considerations the local office makes the preliminary determination 
that service and efficiency can be improved through an AMP 
consolidation, it notifies the Area office of its intention to conduct 
an AMP study. The Area office then notifies headquarters of this 
intention, and managers at the facilities under consideration have 6 
months to undertake a study to analyze the feasibility of relocating 
origination and/or destination operations between locations. 

The study includes 10 worksheets that collectively determine the 
expected impact the consolidation will have on USPS costs, workforce, 
and service. The worksheets calculate anticipated cost changes to 
annual workhours, transportation, and associated costs, as well as one- 
time indemnity and associated costs.[Footnote 39] The worksheets also 
evaluate personnel impacts in terms of positions and workhours that 
will be gained or lost at the facilities involved. In regard to 
service, the AMP consolidation worksheets consider whether standards 
for different classes of mail will be upgraded (a decrease in the 
amount of time it takes mail to travel between certain ZIP codes) or 
downgraded (an increase in the amount of time it takes mail to travel 
between certain ZIP codes) through implementation of the consolidation. 
They also identify stakeholders of the consolidation with whom USPS 
communicates about its proposal. In addition to the completed 
worksheets, local managers complete the AMP consolidation proposal by 
providing a narrative justifying implementation of the consolidation. 
If the consolidation is cancelled for any reason, local managers cancel 
the study and notify Area managers of the decision. Local offices have 
6 months to complete and submit a proposal to the Area office. 

Evaluation of Proposal: 

Upon receipt of the AMP consolidation proposal by the Area office, the 
Vice President of Area Operations evaluates the package and decides 
whether or not to approve the consolidation. First the Vice President 
reviews all aspects of the proposal, ensuring that it is accurate and 
complete. If he/she has concerns, consultations between the local and 
area offices may lead to modifications of the original proposal. The 
Area office must complete evaluation of the proposal within 30 days and 
either disapproves and returns the package to the local originator or 
recommends approval and forwards it to headquarters. 

USPS headquarters is responsible for making the final decision as to 
whether an AMP consolidation will be implemented. Upon receipt of a 
package from the Area office, the Headquarters Cross-Functional Review 
Team reviews the package and has 30 days to evaluate the 
study.[Footnote 40] At this stage, consultations between the Area 
office and headquarters may lead to modifications to the proposal. A 
critical element of the headquarters review is the evaluation of 
potential service standard upgrades and/or downgrades that would result 
if the operational changes proposed by an AMP consolidation were 
implemented.[Footnote 41] Once headquarters completes its review, it 
makes a final decision as to whether the AMP consolidation will be 
implemented. 

Implementation of Consolidation: 

As soon as practicable following approval of an AMP consolidation 
proposal by headquarters, the area, district, and local managers 
affected by the AMP decision determine the schedule for implementing 
the consolidation. Depending on the complexity of a particular AMP 
consolidation, implementation may take up to 6 months to complete. 

Review of Consolidation: 

During the first year after implementation, the AMP Guidelines require 
that semiannual and annual post-implementation reviews (PIR) are 
conducted to determine if the projected savings, improved operational 
efficiency, and management accountability for making decisions 
regarding AMPs have been accomplished. The area management where an AMP 
consolidation takes place is responsible for ensuring completion of 
PIRs, which entails completing a new set of AMP worksheets and 
comparing them with the original worksheets contained in the proposal 
in order to document the observed results relative to the expected 
outcome of the consolidation. Observations from this comparative 
analysis are synthesized in a narrative executive summary, which is 
submitted along with the new set of worksheets to headquarters 
following review for accuracy by the Vice President, Area Operations. 
Upon receipt by headquarters, the PIR analysis is circulated for 
assessment among the functional units that participated in the approval 
process, and headquarters notifies the Area within 30 days after 
receiving the package of the final disposition of the PIR. The 
semiannual PIR, which must be completed within 30 days after the second 
full quarter following implementation, determines whether the 
implementation of an AMP is accomplishing necessary training, 
relocation, transportation, operational changes, and workhour 
adjustments. If these are not being accomplished, the review alerts the 
responsible parties of the necessity to change or correct any 
deficiencies. The annual PIR serves to determine the viability of the 
consolidation and allows management the opportunity for decision 
analysis concerning the AMP plan. 

If a local office deems it necessary to reverse implementation of an 
AMP, it must appeal to headquarters to do so. The local office 
completes a detailed narrative statement, action plan for reversal, and 
time line for intended actions and forwards it to the Area office. Upon 
concurrence, the Area office forwards the proposal for reversal to the 
Senior Vice President, Operations. USPS officials told us that 
reversals of AMP implementation are very rare; in the last 30 years 
only one consolidation implementation has been reversed. 

[End of section] 

Appendix III: Status of USPS 2005 and 2006 AMP Consolidations and PIRs: 

Table 8: Implementation and PIR Status of AMP Consolidations Approved 
In 2005 (as of May 2007): 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Bridgeport, CT/Stamford, CT; 
Implemented: Check; 
Implementation postponed: [Empty]; 
Subsequent decision not to implement: [Empty]; 
Semiannual PIR under review by headquarters: Check; 
Semiannual PIR complete: [Empty]. 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Greensburg, PA/ Pittsburg, PA; 
Implemented: Check; 
Implementation postponed: [Empty]; 
Subsequent decision not to implement: [Empty]; 
Semiannual PIR under review by headquarters: [Empty]; 
Semiannual PIR complete: Check. 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Kinston, NC/ Fayetteville, NC; 
Implemented: [Empty]; 
Implementation postponed: [Empty]; 
Subsequent decision not to implement: Check; 
Semiannual PIR under review by headquarters: [Empty]; 
Semiannual PIR complete: [Empty]. 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Marina, CA/Los Angeles, CA; 
Implemented: Check; 
Implementation postponed: [Empty]; 
Subsequent decision not to implement: [Empty]; 
Semiannual PIR under review by headquarters: [Empty]; 
Semiannual PIR complete: Check. 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Marysville, CA/ Sacramento, CA; 
Implemented: Check; 
Implementation postponed: [Empty]; 
Subsequent decision not to implement: [Empty]; 
Semiannual PIR under review by headquarters: [Empty]; 
Semiannual PIR complete: Check. 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Mojave, CA/Bakersfield, CA; 
Implemented: Check; 
Implementation postponed: [Empty]; 
Subsequent decision not to implement: [Empty]; 
Semiannual PIR under review by headquarters: Check; 
Semiannual PIR complete: [Empty]. 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Monmouth, NJ/ Trenton, NJ & Kilmer, NJ; 
Implemented: Check; 
Implementation postponed: [Empty]; 
Subsequent decision not to implement: [Empty]; 
Semiannual PIR under review by headquarters: Check; 
Semiannual PIR complete: [Empty]. 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Northwest Boston, MA/ Boston, MA; 
Implemented: Check; 
Implementation postponed: [Empty]; 
Subsequent decision not to implement: [Empty]; 
Semiannual PIR under review by headquarters: Check; 
Semiannual PIR complete: [Empty]. 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Olympia, WA/Tacoma, WA; 
Implemented: [Empty]; 
Implementation postponed: Check; 
Subsequent decision not to implement: [Empty]; 
Semiannual PIR under review by headquarters: [Empty]; 
Semiannual PIR complete: [Empty]. 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Pasadena, CA/Santa Clarita, CA & 
Industry, CA; 
Implemented: Check; 
Implementation postponed: [Empty]; 
Subsequent decision not to implement: [Empty]; 
Semiannual PIR under review by headquarters: Check; 
Semiannual PIR complete: [Empty]. 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Waterbury, CT/ Southern Connecticut, CT; 
Implemented: Check; 
Implementation postponed: [Empty]; 
Subsequent decision not to implement: [Empty]; 
Semiannual PIR under review by headquarters: Check; 
Semiannual PIR complete: [Empty]. 

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Total; 
Implemented: 9; 
Implementation postponed: 1; 
Subsequent decision not to implement: 1; 
Semiannual PIR under review by headquarters: 6;
 Semiannual PIR complete: 3. 

Source: GAO presentation of USPS data. 

[End of table] 

Table 9: Status of 46 AMP Proposed Consolidations Initiated in 2006 (as 
of May 2007): 

AMP package under review at district or area management: 1; A
MP package under review by headquarters: 10; 
Proposed AMP review on hold: 5; 
Decision not to implement proposed AMP: 28; AMP approved: 2. 

AMP package under review at district or area management: Daytona Beach, 
FL/ Mid-FL, FL; 
AMP package under review by headquarters: Aberdeen, SD/ Dakotas 
Central,SD; 
Proposed AMP review on hold: Alamogordo, NM/ El Paso, TX; 
Decision not to implement proposed AMP: Beaumont, TX/ Houston, TX; 
AMP approved: Newark, NJ/ Kearny, NJ. 

AMP package under review by headquarters: Bronx, NY/ Morgan, NY; 
Proposed AMP review on hold: Batesville, AR/ Little Rock, AR; 
Decision not to implement proposed AMP: Binghamton, NY/ Syracuse, NY; 
AMP approved: Saint Petersburg, FL/ Tampa, FL. 

AMP package under review by headquarters: Canton, OH/ Akron, OH; 
Proposed AMP review on hold: Carbondale, IL/ Saint Louis, MO; 
Decision not to implement proposed AMP: Bloomington, IN/ Indianapolis, 
IN; 
AMP approved: [Empty]. 

AMP package under review by headquarters: Dallas, TX/ North Texas, TX; 
Proposed AMP review on hold: Centralia, IL/ Saint Louis, MO; 
Decision not to implement proposed AMP: Bryan, TX/ Houston, TX; 
AMP approved: [Empty]. 

AMP package under review by headquarters: Flint, MI/ NE Metro, MI; 
Proposed AMP review on hold: Las Cruces, NM/ El Paso, TX; 
Decision not to implement proposed AMP: Burlington, VT/ White River 
Jnt, VT; 
AMP approved: [Empty]. 

AMP package under review by headquarters: Jackson, TN/ Memphis, TN; 
Proposed AMP review on hold: [Empty]; 
Decision not to implement proposed AMP: Cape Cod, MA/ Brockton, MA; 
AMP approved: [Empty]. 

AMP package under review by headquarters: Kansas City, KS/ Kansas City, 
MO; 
Proposed AMP review on hold: [Empty]; 
Decision not to implement proposed AMP: Carroll, IA/ Des Moines, IA; 
AMP approved: [Empty]. 

AMP package under review by headquarters: Oshkosh, WI/ Green Bay, WI; 
Proposed AMP review on hold: [Empty]; 
Decision not to implement proposed AMP: Cumberland, MD/ Frederick, MD; 
AMP approved: [Empty]. 

AMP package under review by headquarters: Sioux City, IA/ Sioux Falls, 
SD; 
Proposed AMP review on hold: [Empty]; 
Decision not to implement proposed AMP: Fox Valley, IL/ South Suburban, 
IL; 
AMP approved: [Empty]. 

AMP package under review by headquarters: Waco, TX/ Fort Worth/Austin, 
TX; 
Proposed AMP review on hold: [Empty]; 
Decision not to implement proposed AMP: Gaylord, MI/ Traverse City, MI; 
AMP approved: [Empty]. 

Decision not to implement proposed AMP: Glenwood Springs, CO/ Grand 
Junction, CO.

Decision not to implement proposed AMP:Helena, MT/ Great Falls, MT. 

Decision not to implement proposed AMP: Hutchinson, KS/ Wichita, KS. 

Decision not to implement proposed AMP: LA Crosse, WI/ Rochester, MN. 

Decision not to implement proposed AMP: McAllen PO TX/ Corpus Christi, 
TX. 

Decision not to implement proposed AMP: McCook & N. Platte, NE/ Casper, 
WY. 

Decision not to implement proposed AMP: Plattsburg, NY/ Albany, NY. 

Decision not to implement proposed AMP: Portsmouth, NH/ Manchester, NH. 

Decision not to implement proposed AMP: Rockford, IL/ Palatine, IL. 

Decision not to implement proposed AMP: Sheridan, WY/ Casper, WY. 

Decision not to implement proposed AMP: Springfield, MA/ Hartford, CT. 

Decision not to implement proposed AMP: Staten Island, NY/ Brooklyn, 
NY. 

Decision not to implement proposed AMP: Twin Falls, ID/ Boise, ID. 

Decision not to implement proposed AMP: Utica, NY/ Syracuse or Albany, 
NY. 

Decision not to implement proposed AMP: Watertown, NY/ Syracuse, NY. 

Decision not to implement proposed AMP: Wheatland, WY/ Cheyenne, WY. 

Decision not to implement proposed AMP: Yakima, WA/ Pasco, WA. 

Decision not to implement proposed AMP: Zanesville, OH/ Columbus, OH. 

Source: GAO presentation of USPS data. 

Note: This table includes the facilities involved in proposed 
consolidations, both the facility losing operations and the facility 
gaining operations. 

[End of table] 

[End of section] 

Appendix IV: USPS Notification to Stakeholders as Identified in AMP 
Communication Documentation: 

Table 10: : 

AMP consolidations approved in 2005. 

Bridgeport, CT/Stamford, CT; 
Employee groups: 3; 
Local and state elected officials[A]: 0; 
Media: 1; 
Community organizations: 1; 
Major mailers: 1. 

Greensburg, PA/Pittsburgh, PA; 
Employee groups: 3; 
Local and state elected officials[A]: 2; 
Media: 4; 
Community organizations: 2; 
Major mailers: 6. 

Kinston, NC/Fayetteville, NC; 
Employee groups: 2; 
Local and state elected officials[A]: 2; 
Media: 3; 
Community organizations: 1; 
Major mailers: 2. 

Marina, CA/ Los Angeles, CA; 
Employee groups: 3; 
Local and state elected officials[A]: 0; 
Media: 4; 
Community organizations: 2; 
Major mailers: 3. 

Marysville, CA/Sacramento, CA; 
Employee groups: 3; 
Local and state elected officials[A]: 4; 
Media: 8; 
Community organizations: 2; 
Major mailers: 2. 

Mojave, CA/Bakersfield, CA; 
Employee groups: 2; 
Local and state elected officials[A]: 0; 
Media: 2; 
Community organizations: 2; 
Major mailers: 0. 

Monmouth, NJ/Trenton, NJ; 
Employee groups: 2; 
Local and state elected officials[A]: 0; 
Media: 2; 
Community organizations: 2; 
Major mailers: 14. 

NW Boston, MA/Boston, MA; 
Employee groups: 3; 
Local and state elected officials[A]: 0; 
Media: 1; 
Community organizations: 3; 
Major mailers: 9. 

Olympia, WA/Tacoma, WA; 
Employee groups: 2; 
Local and state elected officials[A]: 1; 
Media: 5; 
Community organizations: 10; 
Major mailers: 2. 

Pasadena, CA/Santa Clarita, CA; 
Employee groups: 5; 
Local and state elected officials[A]: 1; 
Media: 1; 
Community organizations: 1; 
Major mailers: 18. 

Waterbury, CT/So. CT, CT; 
Employee groups: 3; 
Local and state elected officials[A]: 0; 
Media: 1; 
Community organizations: 1; 
Major mailers: 0. 

AMP consolidations initiated in 2006. 

Aberdeen, SD/Dakotas Central, SD; 
Employee groups: 6; 
Local and state elected officials[A]: 1; 
Media: 2; 
Community organizations: 1; 
Major mailers: 7. 

Alamogordo, NM/El Paso, TX; 
Employee groups: 2; 
Local and state elected officials[A]: 0; 
Media: 1; 
Community organizations: 2; 
Major mailers: 0. 

Batesville, AR/Little Rock, AR; 
Employee groups: 3; 
Local and state elected officials[A]: 1; 
Media: 1; 
Community organizations: 0; 
Major mailers: 1. 

Beaumont, TX/Houston, TX; 
Employee groups: 4; 
Local and state elected officials[A]: 0; 
Media: 4; 
Community organizations: 1; 
Major mailers: 2. 

Binghamton, NY/Syracuse, NY; 
Employee groups: 12; 
Local and state elected officials[A]: 5; 
Media: 1; 
Community organizations: 11; 
Major mailers: 2. 

Bloomington, IN /Indianapolis, IN; 
Employee groups: 5; 
Local and state elected officials[A]: 0; 
Media: 1; 
Community organizations: 3; 
Major mailers: 2. 

Bronx, NY/Morgan, NY; 
Employee groups: 3; 
Local and state elected officials[A]: 3; 
Media: 4; 
Community organizations: 3; 
Major mailers: 2. 

Bryan, TX/Houston, TX; 
Employee groups: 4; 
Local and state elected officials[A]: 3; 
Media: 0; 
Community organizations: 2; 
Major mailers: 13. 

Burlington, VT/White River Jct ., VT; 
Employee groups: 3; 
Local and state elected officials[A]: 0; 
Media: 0; 
Community organizations: 2; 
Major mailers: 3. 

Canton, OH/Akron, OH; 
Employee groups: 5; 
Local and state elected officials[A]: 0; 
Media: 2; 
Community organizations: 1; 
Major mailers: 1. 

Cape Cod, MA/Brockton, MA; 
Employee groups: 3; 
Local and state elected officials[A]: 0; 
Media: 1; 
Community organizations: 4; 
Major mailers: 4. 

Carbondale, IL/Saint Louis, MO; 
Employee groups: 4; 
Local and state elected officials[A]: 2; 
Media: 1; 
Community organizations: 1; 
Major mailers: 0. 

Carroll, IA/Des Moines, IA; 
Employee groups: 8; 
Local and state elected officials[A]: 2; 
Media: 2; 
Community organizations: 1; 
Major mailers: 0. 

Centralia, IL/Saint Louis, MO; 
Employee groups: 4; 
Local and state elected officials[A]: 2; 
Media: 1; 
Community organizations: 1; 
Major mailers: 0. 

Cumberland, MD/Frederick, MD; 
Employee groups: 10; 
Local and state elected officials[A]: 1; 
Media: 8; 
Community organizations: 3; 
Major mailers: 10. 

Dallas, TX/North Texas, TX; 
Employee groups: 6; 
Local and state elected officials[A]: 1; 
Media: 2; 
Community organizations: 10; 
Major mailers: 0. 

Daytona Beach, FL/Mid-Florida, FL; 
Employee groups: 3; 
Local and state elected officials[A]: 1; 
Media: 6; 
Community organizations: 0; 
Major mailers: 4. 

Flint, MI/NE Metro, MI; 
Employee groups: 33; 
Local and state elected officials[A]: 2; 
Media: 4; 
Community organizations: 0; 
Major mailers: 129. 

Fox Valley, IN/South Suburban, IL; 
Employee groups: 6; 
Local and state elected officials[A]: 1; 
Media: 1; 
Community organizations: 1; 
Major mailers: 0. 

Gaylord, MI/Traverse City, MI; 
Employee groups: 8; 
Local and state elected officials[A]: 1; 
Media: 1; 
Community organizations: 0; 
Major mailers: 0. 

Glenwood Springs, CO/Grand Junction, CO; 
Employee groups: 4; 
Local and state elected officials[A]: 3; 
Media: 1; 
Community organizations: 2; 
Major mailers: 0. 

Helena, MT/Great Falls, MT; 
Employee groups: 15; 
Local and state elected officials[A]: 4; 
Media: 1; 
Community organizations: 1; 
Major mailers: 7. 

Hutchinson, KS/Wichita, KS; 
Employee groups: 12; 
Local and state elected officials[A]: 1; 
Media: 1; 
Community organizations: 4; 
Major mailers: 2. 

Jackson, TN /Memphis, TN; 
Employee groups: 1; 
Local and state elected officials[A]: 0; 
Media: 3; 
Community organizations: 2; 
Major mailers: 4. 

Kansas City, KS /Kansas City, MO; 
Employee groups: 4; 
Local and state elected officials[A]: 2; 
Media: 2; 
Community organizations: 2; 
Major mailers: 158. 

La Crosse, WI/Rochester, MN; 
Employee groups: 5; 
Local and state elected officials[A]: 1; 
Media: 4; 
Community organizations: 1; 
Major mailers: 4. 

Las Cruces, NM/El Paso, TX; 
Employee groups: 3; 
Local and state elected officials[A]: 0; 
Media: 3; 
Community organizations: 2; 
Major mailers: 2. 

McAllen, TX/Corpus Christi, TX; 
Employee groups: 4; 
Local and state elected officials[A]: 1; 
Media: 2; 
Community organizations: 1; 
Major mailers: 1. 

McCook /N. Platte, NE & Casper, WY; 
Employee groups: 6; 
Local and state elected officials[A]: 1; 
Media: 1; 
Community organizations: 1; 
Major mailers: 0. 

Newark, NJ/Dominick V. Daniels & No. NJ Metro, NJ; 
Employee groups: 7; 
Local and state elected officials[A]: 1; 
Media: 2; 
Community organizations: 0; 
Major mailers: 15. 

Oshkosh, WI/Green Bay, WI; 
Employee groups: 2; 
Local and state elected officials[A]: 2; 
Media: 1; 
Community organizations: 1; 
Major mailers: 2. 

Plattsburg, NY/Albany, NY; 
Employee groups: 15; 
Local and state elected officials[A]: 4; 
Media: 1; 
Community organizations: 5; 
Major mailers: 6. 

Portsmouth, NH/Manchester, NH; 
Employee groups: 2; 
Local and state elected officials[A]: 1; 
Media: 3; 
Community organizations: 1; 
Major mailers: 2. 

Rockford, IL/Palatine, IL; 
Employee groups: 6; 
Local and state elected officials[A]: 16; 
Media: 1; 
Community organizations: 5; 
Major mailers: 9. 

Saint Petersburg, FL /Tampa, FL; 
Employee groups: 3; 
Local and state elected officials[A]: 2; 
Media: 7; 
Community organizations: 2; 
Major mailers: 17. 

Sheridan, WY/Casper, WY; 
Employee groups: 3; 
Local and state elected officials[A]: 2; 
Media: 0; 
Community organizations: 2; 
Major mailers: 0. 

Sioux City, IA /Sioux Falls, SD; 
Employee groups: 14; 
Local and state elected officials[A]: 3; 
Media: 1; 
Community organizations: 3; 
Major mailers: 13. 

Springfield, MA/Hartford, CT; 
Employee groups: 19; 
Local and state elected officials[A]: 0; 
Media: 4; 
Community organizations: 6; 
Major mailers: 32. 

Twin Falls, ID/Boise, ID; 
Employee groups: 7; 
Local and state elected officials[A]: 5; 
Media: 2; 
Community organizations: 1; 
Major mailers: 0. 

Utica, NY/Syracuse or Albany, NY; 
Employee groups: 12; 
Local and state elected officials[A]: 6; 
Media: 2; 
Community organizations: 8; 
Major mailers: 9. 

Waco, TX/Fort Worth & Austin TX; 
Employee groups: 3; 
Local and state elected officials[A]: 0; 
Media: 4; 
Community organizations: 1; 
Major mailers: 1. 

Watertown, NY/Syracuse, NY; 
Employee groups: 12; 
Local and state elected officials[A]: 4; 
Media: 1; 
Community organizations: 5; 
Major mailers: 2. 

Wheatland, WY/Cheyenne, WY; 
Employee groups: 6; 
Local and state elected officials[A]: 3; 
Media: 1; 
Community organizations: 1; 
Major mailers: 0. 

Yakima, WA/Pasco, WA; 
Employee groups: 4; 
Local and state elected officials[A]: 2; 
Media: 1; 
Community organizations: 1; 
Major mailers: 1. 

Zanesville, OH/Columbus, OH; 
Employee groups: 5; 
Local and state elected officials[A]: 0; 
Media: 2; 
Community organizations: 1; 
Major mailers: 4. 

Source: GAO presentation of USPS data. 

[A] For all 2005-2006 AMP consolidations, members of Congress are 
identified. Note: This table includes the facilities involved in 
proposed consolidations, both the facility losing operations and the 
facility gaining operations. 

[End of table] 

[End of section] 

Appendix V: Comments from the U.S. Postal Service: 

William P. Galligan: 
Senior Vice President Operations: 
United States Postal Service: 

June 1, 2007: 

Ms. Katherine A. Siggerud: 
Director, Physical Infrastructure: 
United States Government Accountability Office: 
Washington, DC 20548-0001: 

Dear Ms. Siggerud: 

Thank you for providing the U.S. Postal Service with the opportunity to 
review and comment on the draft report titled Mail Processing 
Realignment Efforts Underway Need Better Integration and Explanation 
(GAO-07-717). 

As noted in the report, postal network realignment has four goals: 
develop mail processing and transportation networks suited to current 
and future operational needs, reduce costs, create flexible operations, 
and reduce inefficiency and redundancy. Our mail processing realignment 
efforts have not wavered from the achievement of these goals. 

In addition to area mail processing consolidations, we have also made 
progress on numerous other fronts. For instance, 45 of 55 remote 
encoding centers have been closed since 1999, resulting in significant 
savings. Other network optimization efforts involved the establishment 
of surface transfer centers, elimination of operations at 26 air mail 
centers, and savings negotiated among contracts with cargo and 
commercial air suppliers. 

The Postal Accountability and Enhancement Act requires submission of a 
Facilities Plan that will include a strategy for how the Postal Service 
intends to rationalize its facilities network and remove excess 
processing capacity and space from the network. Additionally, we must 
also identify anticipated costs, cost savings, and other benefits 
associated with the infrastructure rationalization alternatives 
discussed in the plan. Our compliance with the law will satisfy the two 
Government Accountability Office's recommendations regarding the 
Facilities Plan. 

The report also recommends three steps to improve our communication 
strategy for stakeholders affected by area mail processing (AMP): 

1. Drove Public Notice: 

We agree to improve public notice by providing clear and simple 
language detailing the type of change being considered and forecasting 
changes to customer services. We will solicit public input at the 
initiation of a feasibility study. The public notice will outline a 
formal comment period and inform stakeholders that comments will be 
addressed later at a public meeting. 

2. Improve Public Engagement: 

We believe that it would be premature to hold a public meeting during 
the data-gathering phase of a feasibility study. A public meeting held 
at this juncture of the study would raise concerns and promote the 
perception of decreased transparency as there would be no data from 
which to accurately report the possible outcomes of the study. However, 
to improve public engagement, we will move the public meeting earlier 
in the AMP process. Under the updated process, this meeting will occur 
after the approval of the District Manager and prior to a decision made 
by the Area Vice President. The agenda and briefing slides will be 
posted on www.usps.com in advance of the public meeting. 

3. Increase Transparency: 

We agree to increase transparency by adding information to the AMP 
guidelines on how public input is used in the decision-making process. 
Public input information will be appended to the AMP proposal provided 
to the Area Vice President for a decision. This input will be weighed 
against the overall impact to cost savings and service. If the AMP 
proposal is approved, the Area Vice President will forward it along 
with public input information to the Senior Vice President, Operations. 
The final report will be posted on www.usps.com summarizing the savings 
impacts, service impacts, and other stakeholder concerns. 

Our ongoing optimization efforts continue to evolve and will provide a 
more service responsive and cost effective network infrastructure that 
is required by the Postal Accountability and Enhancement Act. Likewise 
the Consumer Price Index price cap imposed on our "market dominant" 
products, which provide 90 percent of our revenue, will require the 
Postal Service to continually scrutinize every dollar spent to ensure 
that we will be able to operate within that cap. Only through these 
efforts will we be able to consistently fulfill our enormous 
responsibility to preserve universal service at affordable rates. 

If you or your staff wish to discuss any of these comments, I am 
available at your convenience. 

Sincerely, 

Signed by: 

William P. Galligan: 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Katherine Siggerud, (202) 512-2834, or siggerudk@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Teresa Anderson, Assistant 
Director; Tida E. Barakat; Kathy Gilhooly; Brandon Haller; Taylor M. 
Matheson; Margaret B. McDavid; Josh Ormond; and Stan Stenerson made key 
contributions to this report. 

FOOTNOTES 

[1] President's Commission on the United States Postal Service, 
Embracing the Future: Making the Tough Choices to Preserve Universal 
Mail Service (Washington, D.C.: July 31, 2003). 

[2] GAO, U.S. Postal Service: The Service's Strategy for Realigning Its 
Mail Processing Infrastructure Lacks Clarity, Criteria, and 
Accountability, GAO-05-261 (Washington, D.C.: Apr. 8, 2005). 

[3] The Postal Regulatory Commission was previously named the Postal 
Rate Commission. Section 604 of the Postal Accountability and 
Enhancement Act (Pub. L. No. 109-435), enacted on December 20, 2006, 
redesignated the Postal Rate Commission as the Postal Regulatory 
Commission. 

[4] USPS has nine Area offices each responsible for different 
geographic regions of the country. 

[5] As outlined in the Transformation Plan, this strategy was called 
Network Integration and Alignment. 

[6] Some mail bypasses the originating USPS processing facility that 
otherwise would initially receive and sort mail and instead be 
transported by the mailers to a USPS facility that generally is closer 
to the final destination of the mail. 

[7] PRC Docket No. N2006-1, Evolutionary Network Development Service 
Changes, 2006. USPS requested the Postal Regulatory Commission issue an 
advisory opinion to determine whether or not changes resulting from 
network realignment would be in violation of the law. 

[8] S. Rept. No. 109-293, at 228 (2006).The three consolidations put on 
hold were: Sioux City, IA; Aberdeen, SD; and Yakima, WA. 

[9] Pub. L. No. 109-435. 

[10] USPS has divided its national network into nine geographic areas, 
each of which is overseen by an Area Vice President. Areas are composed 
of several districts that oversee local offices. 

[11] AMP consolidations handle more than just First-Class Mail. 

[12] Different classes of mail dictate the rate the customer is charged 
to send the mail and the amount of time it should take for the mail to 
be delivered from the time it is sent. 

[13] The USPS Board of Governors is comparable to a board of directors 
of a private corporation and includes nine Governors who are appointed 
by the President. The board directs the exercise of the powers and 
expenditures of USPS, conducts long-range planning, and sets policies 
on all postal matters. 

[14] STCs are virtually identical to what were formerly referred to as 
Hub and Spoke Program (HASP) facilities. 

[15] Express Mail is mail sent by the fastest mail service offered by 
USPS. Priority Mail is First-Class Mail that weighs over 13 ounces. 

[16] In July 2003, the President's Commission provided recommendations 
on ensuring efficient operation of USPS, while minimizing financial 
exposure to the American taxpayers. These recommendations supported 
USPS's realignment of it processing network. 

[17] While plans have been in development since 2002, the USPS Board of 
Governors did not approve plans to move forward with the FSS equipment 
until February 2006. 

[18] The Office of the Consumer Advocate is an office within the PRC 
whose mission is to be a vigorous, responsive, and effective advocate 
for reasonable and equitable treatment of the general public in 
proceedings before the PRC. 

[19] USPS headquarters officials also revised the AMP study estimated 
annual savings for two consolidations, after the consolidations were 
approved, to eliminate duplicated savings, which reduced the total AMP 
study estimated annual savings by $2.8 million. We did not include this 
revised AMP estimate in the table, so that all the data in the table 
would be from consistent sources. 

[20] U.S. Postal Service Office of Inspector General, Service 
Implications of Area Mail Processing Consolidations, EN-AR-07-002 
(Washington, D.C.: Dec. 5, 2006). 

[21] In July 2006, we addressed several limitations in USPS's delivery 
performance measurement. We recommended that USPS take actions to 
facilitate greater progress in developing complete delivery performance 
information. GAO, U.S. Postal Service: Delivery Performance Standards, 
Measurement, and Reporting Need Improvement, GAO-06-733 (Washington, 
D.C.: July 27, 2006). 

[22] This measurement system is limited in its geographic coverage; 
therefore, AMP consolidations may not always be subject to this system. 

[23] Cancellation is when USPS applies a postmark to the mail piece. 

[24] U.S. Postal Service, Area Mail Processing (AMP) Guidelines, PO-408 
(Washington, D.C.: April 1995). 

[25] USPS plans on providing a draft of the guidelines to employee 
unions for their review in May 2007. Unions are allowed 60 to 90 days 
for review and comment. 

[26] 39 U.S.C. 404(b). 

[27] 39 C.F.R. 241.3 (1998). 

[28] 2006-2010 Tentative Collective Bargaining Agreement between 
American Postal Workers Union, AFL-CIO and U.S. Postal Service. 
According to American Postal Workers Union (APWU), the agreement has 
been approved by APWU membership and the text will be official after 
joint review and agreement between USPS and APWU. 

[29] In February 2007, USPS officials told us USPS was developing a set 
of communication requirements that would be used when consolidating or 
closing other processing or "logistics" facilities that were being 
modeled after those procedures established under the Worker Adjustment 
and Retraining Notification Act, Pub. L. No. 100-379 (29 U.S.C. 210l, 
et seq.) The Worker Adjustment and Retraining Notification Act provides 
guidelines for communication requirements that are applicable to the 
private sector when a company meeting certain criteria closes a 
facility or moves out of a community. 

[30] USPS officials told us stakeholders are determined by local and 
district management. The mailers USPS notified are generally managed 
accounts and are identified by Business Mail Entry unit personnel. 

[31] USPS's draft AMP guidelines establish criteria for local mailers 
as being those providing annual postage revenue averaging $5,000- 
$156,000. Often large mailers use consolidators to deliver their mail. 
USPS guidance may preclude consolidators from obtaining notification 
about the status of a potential consolidation. 

[32] U.S. Postal Service Office of Inspector General, Pasadena, 
California Processing and Distribution Center Consolidation, EN-AR-07- 
002 (Washington, D.C.: Sept. 26, 2006). 

[33] Susan Carpenter and W.J.D. Kennedy, Managing Public Disputes: A 
Practical Guide to Handling Conflict and Reaching Agreements, Jossey- 
Bass, San Francisco (1988). 

[34] At the time of the five meetings which have been held, USPS 
afforded stakeholders and the public 5 days to provide comments. USPS 
communication guidance has since been revised to increase the comment 
period to 15 days. 

[35] Susan L. Carpenter and W.J.D. Kennedy, Managing Public Disputes: A 
Practical Guide to Handling Conflict and Reaching Agreements, Jossey- 
Bass, San Francisco (1988). 

[36] IBM Center for the Business of Government, Public Deliberation: A 
Manager's Guide to Citizen's Engagement, Washington, D.C. (2006). 

[37] USPS has a national Postal Customer Council and about 200 local 
Postal Customer Councils. The councils are chapters of mailers and USPS 
representatives. According to USPS, Postal Customer Councils work to 
improve communications between USPS and its customers. 

[38] According to USPS officials, communication requirements would be 
modeled after the Worker Adjustment and Retraining Notification Act, 
Pub. L. No. 100-379 (29 U.S.C. 210l, et seq.) 

[39] Examples of associated costs include training, energy, and 
maintenance. 

[40] In testimony before the PRC, a USPS official defined the "cross- 
functional team" as a team coordinated by the Manager, Processing 
Operations, and includes managers from several functional offices at 
headquarters including: Contract Administration, Maintenance Policies 
and Programs, Integrated Network Development, Field Communications, 
Operations Requirements, Processing Center Operations, Logistics, 
Operations Budget and Performance Management, and Network Modeling and 
Development. An Organizational Design and Management Analyst and a 
Government Liaison are also members of the team. 

[41] The guidelines state that generally a consolidation should not 
result in service degradation. However, if it is not economically wise 
to maintain service standards involving a small amount of mail, in 
order for any trade-off between service standards commitments to be 
approved, the study must clearly established that the overall service 
to cost relationship for the combined service area improves. 

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