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United States Government Accountability Office: 


Before the Subcommittee on Federal Workforce, U.S. Postal Service and 
Labor Policy, Committee on Oversight and Government Reform, House of 

For Release on Delivery: 
Expected at 1:30 p.m. EDT:
Wednesday, June 15, 2011: 

U.S. Postal Service: 

Dire Financial Outlook and Changing Mail Use Require Network 

Statement of Phillip Herr, Director:
Physical Infrastructure Issues: 


GAO Highlights: 

Highlights of GAO-11-759T, a testimony before the Subcommittee on 
Federal Workforce, U.S. Postal Service and Labor Policy, Committee on 
Oversight and Government Reform, House of Representatives. 

Why GAO Did This Study: 

The U.S. Postal Service (USPS) recently reported that its financial 
results for the first half of this fiscal year—a net loss of $2.6 
billion—are worse than projected. USPS expects continued financial 
challenges as mail volume continues to decline. Most notable is the 
decline of First-Class Mail (its most profitable mail) by over 25 
billion pieces, or about 25 percent, over the past decade. GAO has 
reported on proposals to revise USPS pension and retiree health 
obligations, but such actions alone will not be sufficient to address 
the accelerating volume decline and changing use of the mail. 

This statement discusses (1) why it is important to restructure USPS’s 
networks and (2) what actions are needed to facilitate additional 
progress. This statement is based primarily on past and ongoing GAO 

GAO is not making new recommendations in this statement. Recently, GAO 
has reported that Congress, the administration, and USPS urgently need 
to reach agreement on a package of actions that will address 
constraints and legal restrictions to facilitate progress in 
rightsizing USPS’s operations, networks, and workforce. GAO has also 
recommended that Congress consider providing USPS with financial 
relief, and in doing so, consider all options available to reduce 

What GAO Found: 

USPS urgently needs to restructure its networks and operations as its 
financial condition and outlook are reaching a crisis. USPS has been 
experiencing billion-dollar losses and cash shortfalls over the last 5 
years, and expects to reach its $15 billion borrowing limit this year. 
USPS officials have stated that USPS may default on its retiree health 
payments owed to the federal government in September 2011. These 
financial problems are due to declining mail volume brought on by 
customers’ shift to electronic alternatives and USPS’s difficulty in 
reducing costs and eliminating excess network capacity. USPS faces 
restructuring challenges in three areas: 

* Retail—-Although USPS has provided alternatives to post offices, it 
has been slow to modernize its network. As customer visits to, and 
revenue generated at, post offices have declined, USPS has not made 
commensurate reductions in its number of retail facilities (see 

* Mail processing-—USPS has improved operational efficiency and 
reduced employee work hours, but excess capacity remains as large mail 
volume declines continue. 

* Delivery-—USPS has adjusted routes and deployed new sorting 
equipment to make delivery more efficient, but additional efforts are 
needed, since delivery is USPS’s most costly activity. 

Figure: Postal Retail Facilities, Fiscal Years 2001-2010: 

[Refer to PDF for image: vertical bar graph] 

2001: 38,123; 
2010: 36,222. 

USPS-operated facilities: 
2001: 33,711; 
2010: 32,538. 

Non-USPS-operated facilities: 
2001: 4,412; 
2010: 3,694. 

Source: GAO analysis of USPS data. 

[End of figure] 

Restructuring decisions involve key public policy questions. For 
example, what postal services are needed and what is affordable? In 
order for USPS to be self-sustaining, it needs to significantly reduce 
its costs to match its revenues. Change is needed to facilitate 
restructuring postal networks and operations. GAO has suggested the 
following changes: 

* Revise legal requirements to facilitate network-wide restructuring, 
perhaps similar to the Defense Base Closure and Realignment Commission 

* Improve outreach and the transparency of information used to make 

* Enhance public input by simplifying rules and requirements so that 
they are consistent, timely, and easy for the public to understand. 

View [hyperlink,] or key 
components. For more information, contact Phillip Herr at (202) 512-
2834 or 
[End of section] 

June 15, 2011: 

Chairman Ross, Ranking Member Lynch, and Members of the Subcommittee: 

I am pleased to be here today to participate in this hearing to 
address the challenges facing the U.S. Postal Service (USPS). USPS is 
in a serious financial crisis, and as mail volume continues to 
decline, it has not generated sufficient revenue to cover its expenses 
and financial obligations. At the end of this fiscal year, USPS 
officials project a substantial cash shortfall and report that USPS 
may default on its retiree health payments owed to the federal 
government. Within the next 4 months, critical decisions by Congress 
and USPS are needed to avoid its projected default and set USPS on a 
path to financial solvency. 

My statement today focuses on the urgent need for USPS to rightsize 
its operations and infrastructure in light of the current and 
projected decrease in demand for its services. This means downsizing 
and modernizing its networks to reflect the accelerating decline in 
mail volume resulting from changing mail use by businesses and the 
public. Specifically, my statement addresses (1) why it is important 
to restructure USPS's networks and (2) what actions are needed to 
facilitate progress in restructuring. 

This statement is primarily based on our extensive body of work on 
USPS's activities including our reviews over the past several years of 
USPS's business model, financial condition, networks, and service; 
foreign posts; and postal reform. In addition, it draws on interviews 
with senior USPS officials conducted in May and June 2011. We 
conducted the performance audit work that supports this statement in 
accordance with generally accepted government auditing standards. 
Additional information on our scope and methodology is available in 
each issued report. 

USPS's Dire Financial Outlook and Changing Mail Use Require Network 

USPS urgently needs to restructure its networks and operations as its 
financial condition and outlook reach a crisis level. USPS has 
experienced a cumulative net loss of nearly $20 billion over the last 
5 fiscal years and has already reported a net loss of $2.6 billion 
through the first 6 months of fiscal year 2011. By the end of this 
fiscal year, USPS projects that it will incur a $8.3 billion 
loss[Footnote 1], experience a substantial cash shortfall, reach its 
$15 billion borrowing limit, and be unable to make its scheduled 
retiree health benefits payment to the federal government. USPS's 
financial problems have been building, as customers' mail use has been 
changing--that is, mail volume is declining as customers shift to 
electronic communications and payment alternatives. Total mail volume 
peaked in fiscal year 2006 at 213 billion pieces and declined by about 
20 percent by the end of fiscal year 2010, to about 170 billion 
pieces. In the first 2 quarters of this fiscal year, the volume for 
First-Class Mail--USPS's most profitable product that accounted for 44 
percent of USPS total volume--has declined by almost 7 percent. USPS 
has projected a further drop in total mail volume to 150 billion 
pieces or less by 2020. 

Declining mail volume exposes fundamental weaknesses in USPS's 
business model, which has historically relied on mail volume growth to 
help cover the costs associated with national retail, processing, and 
delivery networks. USPS does not have sufficient revenue to cover the 
growing costs of expanding delivery service to roughly 1 million new 
residences and businesses each year while maintaining about 33,000 
USPS-operated retail[Footnote 2] and processing facilities. 
Furthermore, USPS faces a variety of challenges in trying to reduce 
costs, including an inflexible cost structure; legal and regulatory 
restrictions; stakeholder resistance; difficulty reducing compensation 
and benefit costs, which comprise 80 percent of USPS's total expenses; 
and increasing difficulty in achieving work hour savings. For these 
reasons and more, we placed USPS's financial condition and outlook on 
our 2011 list of high-risk programs and agencies.[Footnote 3] 


USPS currently operates about 32,500 retail facilities. Customers can 
also purchase some USPS products or services at over 70,000 locations, 
including about 3,700 contract postal units and community post offices 
[Footnote 4] and through partnerships with retailers, as well as 
through In fiscal year 2010, about 31 percent of retail 
revenue from USPS products and services was generated through retail 
alternatives, and USPS estimates that by 2020, these alternatives may 
account for nearly 60 percent of retail sales. Meanwhile, fewer 
customers are visiting USPS-operated retail locations. According to 
USPS, customer visits have declined over the last decade by about 21 
percent and retail revenue generated at USPS-operated retail locations 
has dropped by about 16 percent, yet the number of USPS-operated 
facilities has remained largely unchanged since fiscal year 2001. 

Although the number of channels through which customers can access 
USPS's products and services is expanding, USPS has been slow to 
modernize its legacy retail network. Figure 1 compares the number of 
selected groups of postal retail facilities--USPS-operated facilities 
and non-USPS-operated[Footnote 5]--in fiscal years 2001 and 2010. Non- 
USPS facilities may be operated by partners and are therefore less 
costly for USPS and may be more conveniently located where there is 
higher customer traffic. While USPS has slightly reduced the total 
number of USPS-operated and non-USPS-operated retail facilities over 
the last 10 years, the ratio of USPS-operated versus non-USPS-operated 
facilities has barely changed (88 percent in fiscal year 2001 compared 
with 90 percent in fiscal year 2010). Foreign postal operators we 
studied have modernized their legacy brick-and-mortar retail networks 
by drastically reducing the proportion of facilities they operate 
relative to the proportion of those operated by others.[Footnote 6] 

Figure 1: Postal Retail Facilities, Fiscal Years 2001 and 2010: 

[Refer to PDF for image: vertical bar graph] 

2001: 38,123; 
2010: 36,222. 

USPS-operated facilities: 
2001: 33,711; 
2010: 32,538. 

Non-USPS-operated facilities: 
2001: 4,412; 
2010: 3,694. 

Source: GAO analysis of USPS data. 

Note: USPS-operated facilities include post offices, stations, and 
branches. Non-USPS-operated facilities include community post offices 
and contract postal units. 

[End of figure] 

Several factors have constrained USPS's efforts to make significant 
changes to its retail network: 

* Legal requirements: USPS officials have stated that the legal 
process has hindered USPS's ability to make progress in retail 
realignment. Statutory requirements prohibit USPS from closing small 
post offices solely for operating at a deficit,[Footnote 7] and, 
therefore, certain retail facilities cannot be closed based on 
financial performance alone. USPS has reported that about 80 percent 
of postal retail facilities do not generate sufficient revenue to 
cover their costs. Additionally, the Postal Regulatory Commission 
(PRC) has authority to hear appeals on "post office" closures. 
[Footnote 8] However, USPS and the PRC have differed in their 
interpretation of the PRC's statutory authority to review appeals of 
USPS decisions to close stations and branches. Further, when USPS 
proposes changes in the nature of postal services that will generally 
affect service on a nationwide or substantially nationwide basis, it 
must request an advisory opinion from the PRC.[Footnote 9] 

* According to USPS officials, the amount of time taken to complete 
the required statutory process for closing facilities has hindered 
USPS from timely realignment of its retail network. USPS is required 
to provide 60 days advance notice of closing a post office, and any 
person served by the facility may appeal the closure decision. The PRC 
has 120 days after receiving an appeal to make a determination, which 
is made on a case-by-case basis. So far this fiscal year, the PRC has 
received more appeals of retail facility closures than it did in the 
last decade combined (18 in 2011 compared with 8 in fiscal years 2001 
through 2010). Of these 18 appeals, 10 involved stations and branches. 
The PRC may affirm USPS's decision or require USPS to reconsider its 
closure decisions, but the ultimate authority to close a post office 
rests with USPS. Currently, after the PRC's determination, USPS must 
wait at least 90 days to take action after posting a final closure 
determination.[Footnote 10] 

* In its filings with the PRC, USPS has asserted that, in cases where 
the closing involves a station or branch, the PRC lacks subject matter 
jurisdiction to hear appeals that do not involve a "post office." 
Nevertheless, the PRC issues determinations on appeals of USPS 
decisions to close retail facilities, including stations and branches. 
This issue remains unresolved. 

* In 2009, USPS filed a request for a PRC advisory opinion of its 
analysis of over 4,000 stations and branches for possible closure, 
which resulted in the closure of about 145 facilities from this 
proceeding. The PRC's opinion advised USPS to improve public notice 
and input prior to making closure decisions.[Footnote 11] It also 
suggested that USPS implement uniform procedures for closing or 
consolidating all types of retail facilities--post offices, stations, 
or branches. Since then, USPS officials have told us that they plan 
additional closings of certain retail facilities. 

* Stakeholder resistance: USPS has often faced formidable resistance 
from employees, affected communities, and Members of Congress when it 
has attempted to close post offices because of concerns about possible 
effects on service, employees, and communities. Although USPS is 
taking steps to improve its communication for making these retail 
changes, stakeholders continue to protest the closure of postal 

The foreign posts we recently studied have also experienced declining 
mail volume and revenue. Their solutions to addressing stakeholder 
resistance involved regular engagement with stakeholders, including 
strategic communication and outreach efforts. These posts emphasized 
that although a neighborhood post office would be closing, retail 
alternatives were available with local merchants who had extended 
operating hours and were located where customers frequently visit--
such as grocery, convenience, and drug stores. For example, when 
modernizing its retail network, the Swedish postal operator launched a 
nationwide campaign that focused on the post as "a service" instead of 
"a place" and proactively informed customers about how and where they 
could access postal services. The Swedish Post reported that customers 
adapted to the change and preferred the expanded service options. 
Officials we interviewed at Australia Post discussed the importance of 
involving local communities in deciding, for example, whether to 
contract with a local retail partner or close a post office. 

Mail Processing: 

USPS has taken actions to reduce excess capacity and improve 
operational efficiency throughout its mail processing network for 
sorting and transporting mail, but has had difficulty comprehensively 
adjusting its network to respond to the unprecedented mail volume 
decline since fiscal year 2006. As a result, costly excess capacity 
remains.[Footnote 12] USPS's mail processing network comprises over 
500 mail processing facilities and corresponding transportation 
services, equipment, and staff. USPS has made some progress in 
streamlining its processing network, such as by closing smaller 
facilities like Airport Mail Centers and Remote Encoding Centers. 
[Footnote 13] These and other actions have helped USPS eliminate 
nearly 108 million workhours from its processing network over the last 
5 years (or nearly 40 percent of its total workhour reduction over 
that time). 

Costly excess mail processing capacity remains for several reasons: 

* Mail volume has declined, particularly single-piece First-Class 
Mail, which has dropped by about 23 billion pieces over the past 
decade. As a result, less mail is processed end-to-end through USPS's 
processing network. In 2009, for example, a USPS official testified 
that USPS had 50 percent excess plant capacity in its First-Class Mail 
processing operations. 

* Continuing automation improvements enable USPS to sort mail faster 
and more efficiently. Some space once needed for manual sorting is now 

* Eighty-three percent of Standard Mail in fiscal year 2010 was 
destination entered by mailers,[Footnote 14] meaning that it bypassed 
most of USPS's mail processing network and long-distance 
transportation. This increase--16 percent over the last decade--has 
left USPS with excess processing capacity. 

As a result of these factors, USPS's mail processing network could 
handle significantly more mail than is currently going through the 
system. USPS has often faced resistance from employees, affected 
communities, and Members of Congress when it has attempted to 
consolidate its processing operations and networks, close mail 
processing facilities, or both because of concerns about possible 
effects on service, employees, and communities. In particular, we have 
reported that stakeholders have concerns about USPS's ongoing efforts 
to consolidate its Area Mail Processing (AMP) facilities.[Footnote 15] 
Proposals to consolidate these processing operations and facilities 
are intended to reduce costs and increase efficiency by making better 
use of excess capacity or underused resources. The AMP proposals 
consist of consolidating operations from one mail processing facility 
that downsizes its mail processing operations to other facilities 
nearby that gain the processing operations. USPS has improved its 
processes for communicating and implementing its AMP consolidation 
plans and is currently evaluating over 130 proposals for 


USPS has ongoing efforts to increase the efficiency of mail delivery, 
which is its most costly activity and involves more than 310,000 
carriers accounting for approximately 47 percent ($23 billion) of 
USPS's total salary and benefit expenses in fiscal year 2010. Two key 
efforts are underway: 

* Realignment of city delivery routes to remove excess capacity and 
improve efficiency. USPS expects this effort to generate nearly $1 
billion in annual savings by reducing space needs in post offices and 
other facilities and helping provide more consistent delivery service. 

* Installation of new automated systems to sort certain mail, such as 
catalogs and magazines, into delivery order so that costly manual 
sorting by carriers is no longer needed. USPS expects this effort to 
improve delivery accuracy, consistency, and timeliness. 

These efforts, along with other actions and declines in volumes, have 
helped USPS eliminate approximately 70 million delivery work hours 
over the last 5 fiscal years (or nearly a quarter of USPS's total 
workhour reduction over that time). USPS has attempted to further 
reduce delivery costs by asking Congress not to include the language 
in its annual appropriations legislation that requires it to deliver 
mail 6 days a week. USPS officials have stated that moving to 5-day 
delivery would result in annual savings of about $3 billion once the 
change would be fully implemented. 

Because USPS expects mail volume to continue declining, it will need 
to continue working to improve delivery efficiency. According to USPS, 
it generated $1.80 in daily revenue contribution for each delivery 
point in fiscal year 2000; by fiscal year 2009, that number had shrunk 
to $1.40, and by fiscal year 2020, USPS estimates that it could 
decline to about $1.00. While moving to 5-day delivery would not, by 
itself, resolve USPS's considerable financial challenges, this and 
other restructuring strategies will need to be considered to adapt to 
changes in mail use and achieve financial viability. 

USPS and Congress Need to Take Urgent Action to Restructure Networks: 

Congress and USPS urgently need to reach agreement on a package of 
actions that will address difficult constraints and legal restrictions 
and allow USPS to accelerate progress on restructuring its networks. 
Members of the 112th Congress have introduced legislation to promote 
network restructuring, and USPS has proposed regulatory changes. We 
also have recommended in prior reports that USPS realign its postal 
operations, networks, and workforce with changes in mail usage and 
customer behavior. As part of this work, we proposed options for 
action by Congress and USPS to reduce costs and improve efficiency. 

These proposals and options, which are presented in more detail below, 
offer an opportunity to reconsider some of the key statutory 
requirements and processes for closing postal facilities, many of 
which have not changed significantly since the 1970s and may not be 
conducive to the type of networkwide changes that are currently 
needed. Table 1 highlights Congress's, USPS's, and GAO's key retail 
proposals and options. 

Table 1: Retail Proposals and Options for Restructuring: 

Congress has introduced legislation that would, among other factors: 
* Give USPS greater flexibility to close unneeded post offices by 
eliminating the prohibition against closing small post offices solely 
for operating at a deficit[A]; 
* Make procedures for closing or consolidating stations and branches 
the same as those for post offices[B]; 
* Require USPS to submit a plan for the co-location of post offices at 
retail facilities--that is, for moving postal services to non-USPS-
operated facilities--and to report to Congress on its progress in 
implementing this plan[C]; 
* Require USPS to develop a plan for expanding retail alternatives and 
regularly report to Congress on its progress in implementing this 
* Permit USPS to adjust its delivery frequency notwithstanding any 
other provision of the law[A]. 

USPS has introduced a proposed rule that would: 
* Permit USPS to initiate a closure study for a facility where, among 
other factors, the workload at a facility is below an established 
* Shorten the regulatory waiting period for closing a retail facility 
from 90 days to 60 days, after a final closure determination has been 
* Make the retail closure processes uniform, regardless of whether the 
facility is a post office, station, or branch. 

GAO has presented options and strategies for restructuring USPS's 
retail network including: 
* Streamline USPS's retail network by consolidating and closing 
unneeded retail facilities; 
* Modernize customer access by providing services "where the customers 
are," including increasing and enhancing customer access through less 
costly alternatives, such as partnerships, kiosks, and improved online 

Source: GAO analysis. 

[A] S.1010. 

[B] The Post Office Transparency Act, H.R. 2024, 112th Cong. (2011). 

[C] The Postal Service Improvements Act of 2011, S. 353, 112th Cong. 
(2011). Reform the Postal Service for the 21st Century Act, H.R. 1262, 
112th Cong. (2011). 

[End of table] 

In addition to options for retail networks, the following are among 
the options we have previously identified for restructuring USPS's 
mail processing and delivery networks:[Footnote 16] 

Mail processing network options: 

* Close unneeded mail processing facilities. 

* Relax delivery standards[Footnote 17] to facilitate closures and 

Delivery network options: 

* Expand the use of more cost-efficient delivery methods, such as 
clusterboxes and curbline delivery.[Footnote 18] 

* Decrease delivery frequency from 6 to 5 days a week. 

Stakeholders have raised concerns about these restructuring options 
and strategies. For example, postmaster management associations and 
the PRC have raised objections to USPS's proposed rule to modify its 
retail structure.[Footnote 19] Similarly, USPS received a variety of 
comments raising concerns about its 5-day delivery proposal. 

Realigning Postal Networks Involves Key Public Policy Questions and 
Consideration of Changes: 

Restructuring decisions involve key public policy questions as well as 
difficult trade-offs--for example, what postal services are needed and 
what is affordable? Some tension exists between USPS's role as a 
federal government entity expected to provide universal postal 
services, including access to retail service, while also being self- 
financing through businesslike operations. As we have reported, 
Congress's decisions about how to address the following questions will 
shape USPS's future role, operations, networks, and ability to adapt 
to changes in mail use and mail volume: 

* Universal service: What aspects of universal service, including 6-
day delivery, are appropriate in light of fundamental changes in 
customers' use of the mail? What, if any, changes are needed to 
delivery standards? How can USPS improve customers' access to postal 
services through modernizing its retail network to maximize costs 

* Statutory and regulatory changes: What statutory or regulatory 
changes are needed to give USPS the flexibility it needs to 
restructure its operations, networks, and workforce, while also 
assuring appropriate oversight? For example, what changes may be 
needed to clarify whether or not the PRC has the authority to review 
appeals of closures and consolidations of stations and branches? 

* Stakeholder involvement: What role, if any, should Congress, the 
Board of Governors,[Footnote 20] and the PRC have in developing, 
approving, or reviewing decisions to modernize and realign postal 
services? What input should postmasters or other postal employees and 
the public have in these decisions? How and when should USPS notify 
the public of its decisions to modernize and realign services? 

* Accountability: What incentives and oversight mechanisms would help 
to balance the public's expectations of universal service, USPS's need 
for more flexibility to achieve efficiencies, and the government's 
responsibility to ensure sufficient transparency, oversight, and 

In order for USPS to be self-sustaining, it needs to significantly 
reduce its costs to match its revenues. Change is needed to needed to 
facilitate restructuring postal networks and operations. Some changes 
to consider include: 

* Revise legal requirements to facilitate networkwide restructuring. 
This would broaden the current focus on individual facility closures, 
which are often contentious, time consuming and inefficient, to a 
broader networkwide restructuring, perhaps similar to the Defense Base 
Closure and Realignment and Commission (BRAC) approach. Under this 
approach, expert panels have successfully informed and permitted 
difficult restructuring decisions, helping to provide consensus on 
intractable decisions. 

* Adapt PRC review processes to changes made to facilitate networkwide 
review. The current appeals process focuses on decisions USPS has made 
about individual facilities closing. Another oversight approach to 
facilitate networkwide restructuring would be an annual reporting and 
review requirement, whereby USPS would report all service changes, 
including facility closures, completed over the past year and changes 
planned for the next fiscal year in its annual compliance report to 
the PRC. The PRC could then review and comment on any potential 
impacts on service in its annual compliance determination report. 

* Improve outreach and transparency of information used to make 
decisions. For example, strategically communicate and conduct outreach 
with retail customers, government officials, and employee groups; use 
maps and a template of specified data to show all locations of postal 
facilities, alternatives, and retail partners where postal services 
are available in a designated service area; indicate proposed changes 
in this context; and allow the public to submit questions or comments. 

* Enhance public input by simplifying rules and requirements so that 
they are consistent, timely, and easy to understand. For example, 
eliminate references to internal USPS terms that are not clear to the 
public, such as whether a retail facility is a post office, station, 
or branch, and clearly define what is meant by such terms as facility 
closings, consolidations, discontinuance, conversions, or replacements. 

In summary, effectively rightsizing USPS will require both 
congressional support and USPS leadership to address resistance to 
change. USPS senior management will need to provide leadership and 
work with stakeholders for such actions to be successfully 
implemented. USPS must explain its plans in an open and transparent 
manner; engage with its unions, management associations, the mailing 
industry, and political leaders; and then demonstrate the results of 
its actions. In turn, stakeholders need to recognize that major change 
is urgently needed if USPS is to be financially viable and self-
sustaining. It is time for USPS management, unions, the public, 
community leaders, and Members of Congress to take a hard look at what 
postal services residents and businesses need and can afford. The 
status quo is no longer sustainable. Changes are necessary to ensure 
that postal services remain available to all U.S. residents and 
businesses by a USPS that is financially healthy and self-supporting. 

Mr. Chairman, this concludes my prepared statement. I would be pleased 
to answer any questions that you or other Members of the Subcommittee 
may have. 

Contacts and Staff Acknowledgments: 

For further information about this statement, please contact Phillip 
Herr at (202) 512-2834 or Individuals who made key 
contributions to this statement include Susan Ragland, Director, 
Financial Management and Assurance; Amy Abramowitz, Teresa Anderson, 
Joshua Bartzen, Erin Cohen, Shelby Kain, Margaret McDavid, Sara Ann 
Moessbauer, Amrita Sen, and Crystal Wesco. 

[End of section] 


[1] The Postmaster General testified in May 2011 that USPS projects a 
loss of approximately $8.3 billion in fiscal year 2011, before any non-
cash adjustments to workers' compensation liabilities. 

[2] USPS-operated retail facilities include (1) main post offices, 
where local postmasters oversee retail operations in the geographic 
area; (2) postal stations located within a municipality's corporate 
limits; and (3) postal branches located outside a municipality's 
corporate limits. 

[3] GAO, High-Risk Series: An Update, [hyperlink,] (Washington, D.C.: February 

[4] Contract postal units are operated by nonpostal employees in 
privately operated businesses, such as convenience stores, grocery 
stores, greeting card stores, and pharmacies. Community post offices 
are contract postal units that are located in small communities and 
function as main post offices. 

[5] Non-USPS-operated facilities include community post offices and 
contract postal units, described previously. 

[6] GAO, U.S. Postal Service: Foreign Posts' Strategies Could Help 
Inform U.S. Postal Service's Modernization Efforts, [hyperlink,] (Washington, D.C.: Feb. 16, 
2011). We are currently conducting two reviews related to USPS's 
retail network: one on retail alternatives and another on retail 

[7] 39 U.S.C. §101. Also, annual appropriations provisions have 
restricted post office closures. See e.g., Pub. L. No. 111-117 (Dec. 
16, 2009). 

[8] 39 U.S.C. § 404(d)(5). 

[9] 39 U.S.C. § 3661(b). 

[10] USPS has proposed reducing the waiting period from 90 days to 60 
days, consistent with statutory requirements. 76 Fed. Reg. 17794 (Mar. 
31, 2011). 

[11] Advisory Opinion Concerning The Process For Evaluating Closing 
Stations and Branches, Docket No. N2009-1, March 10, 2010. 

[12] We are currently conducting a more detailed review of the excess 
capacity in USPS's mail processing network. 

[13] Airport Mail Centers primarily process mail to expedite its 
transfer to and from different commercial passenger airlines. Remote 
Encoding Centers are separate plants established to apply address 
barcodes on letters that could not be read by the automated equipment 
in the mail processing plants. 

[14] Mail that is destination entered is sorted and transported by 
mailers to USPS facilities that are generally closer to the final 
destination where the mail will be delivered. 

[15] GAO, U.S. Postal Service: Mail Processing Network Initiatives 
Progressing, and Guidance for Consolidating Area Mail Processing 
Operations Being Followed, [hyperlink,] (Washington, D.C., June 16, 

[16] GAO, U.S. Postal Service: Strategies and Options to Facilitate 
Progress toward Financial Viability, [hyperlink,] (Washington, D.C.: Apr. 12, 

[17] Service standards are performance measures for on-time delivery 
of mail. These standards help enable USPS, mailers, and customers to 
set realistic expectations for delivery performance, such as the 
number of days mail takes to be delivered, and to organize their 
activities accordingly. To illustrate a potential reduction, in 2010 
we reported that one senior USPS official estimated that about 70 
processing facilities could be eliminated if local First-Class Mail 
were to be delivered in 2 days instead of overnight. 

[18] Curbline delivery is where mail is delivered to a curbline 
mailbox and a clusterbox is a centralized unit of individually-locked 
compartments for the delivery of mail. 

[19] USPS expects to finalize the proposed rule in summer 2011. 76 
Fed.Reg.17794 (Mar. 31, 2011). 

[20] The USPS Board of Governors, which has responsibilities similar 
to the board of directors of a publicly held corporation, directs the 
exercise of the powers of USPS, directs and controls its expenditures, 
reviews its practices, conducts long-range planning, and sets policies 
on all postal matters. 

[End of section] 

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