U.S. Postal Service:

Transformation Challenges Present Significant Risks

GAO-01-598T: Published: Apr 4, 2001. Publicly Released: Apr 4, 2001.

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This testimony discusses the challenges facing the U.S. Postal Service. Overall the Service faces major challenges that collectively call for a structural transformation if it is to remain viable in the 21st century. The Service's financial outlook has worsened, and it is not clear how the Service will address its mounting financial difficulties and other challenges. These challenges include (1) reduced net income, (2) increased debt, (3) increased competition, (3) management-labor relations problems, and (4) statutory restrictions. Because of the Service's rapidly deteriorating financial situation, GAO is placing the Service on its high-risk list. GAO believes that several actions need to be taken to address the Service's continued problems. Such actions include (1) developing a comprehensive plan to address the financial, operational, and human capital challenges; (2) providing quarterly financial reports to Congress and the public; and (3) identifying, in conjunction with GAO and other stakeholders, improvement options that will cut costs and improve productivity.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Postal Service developed a draft transformation plan, which it circulated for stakeholder input and public comment, and a final transformation plan in April 2002. In developing its plan, the Service consulted with Congress and other stakeholders, such as the postal unions, management associations, mailer community, etc. The plan identified many short-term steps the Service could take under its existing authority to improve its efficiency, key milestone dates, and outlined long-term transformation issues related to its financial, infrastructure, and human capital challenges that would require congressional action. The Service continues to work with stakeholders to implement its plan.

    Recommendation: The U.S. Postal Service should develop a comprehensive plan, in conjunction with Congress and other stakeholders, such as the postal unions and management associations, customers, and the Postal Rate Commission, that would identify the actions needed to address the Service's financial, operational, and human capital challenges and establish a timeframe and specify key milestones for achieving positive results.

    Agency Affected: United States Postal Service

  2. Status: Closed - Implemented

    Comments: Recently, the Postal Service has taken additional steps to provide more transparency related to its financial condition by providing more detailed monthly and quarterly financial reports on its Web site. The quarterly reports have been improved to include more detailed information about what financial indicators have changed and why. Also, the reports include a more detailed explanation of the Service's outlook and anticipated risks for the rest of the fiscal year.

    Recommendation: The U.S. Postal Service should provide summary financial reports to Congress and the public on a quarterly basis. These reports should present sufficiently detailed information for stakeholders to understand the Service's current and projected financial condition, how its outlook may have changed since the previous quarter, and its progress toward achieving the desired results specified in its comprehensive plan.

    Agency Affected: United States Postal Service

 

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