U.S. Postal Service:

Bold Action Needed to Continue Progress on Postal Transformation

GAO-04-108T: Published: Nov 5, 2003. Publicly Released: Nov 5, 2003.

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Last year the President established a commission to examine the future of the U.S. Postal Service (the Service). Its report, issued in July 2003, contained a proposed vision for the Service and recommendations to ensure the viability of postal services. GAO was asked to discuss (1) its perspective on the commission's report and (2) suggestions for next steps. This testimony is based on GAO's analysis of the Commission's report and prior GAO reports and testimonies.

The Commission found that the Service faces a bleak fiscal outlook. The Service has an outdated and inflexible business model amid a rapidly changing postal landscape. First-Class Mail appears to be on the brink of long-term decline as Americans take advantage of cheaper electronic alternatives. Thus, universal postal service is at risk. These findings are similar to our past work and point to the need for fundamental reforms to minimize the risk of a significant taxpayer bailout or dramatic postal rate increases. The Commission made recommendations to Congress and the Service aimed at achieving such reforms, which GAO believes merit consideration. GAO agrees with the Commission that now is the time to modernize the nation's postal laws rather than waiting until a financial crisis occurs that limits congressional options. Key aspects of the Service's existing legislative framework that need to be addressed are 1) a broadly defined mission that enables the Service to engage in unprofitable and controversial endeavors, 2) a governance structure that does not ensure governing board members who have the requisite knowledge and skills, 3) the need for additional accountability, oversight, and transparency provisions; 4) a lengthy, burdensome rate-setting process, and 5) provisions that hinder the Service in rationalizing its infrastructure and workforce. GAO also agrees with the Commission that the Service can take steps now to modernize and increase efficiency and effectiveness, improve its financial position, and rationalize its infrastructure and workforce. The Service has begun to implement its Transformation Plan initiatives, cut its costs and the size of its workforce, and improve its efficiency. However, since the Service issued its Transformation Plan in April 2002, it has not provided adequate transparency on its overall plans to rationalize its infrastructure and workforce; the status of initiatives included in its Transformation Plan; and how it plans to integrate the strategies, timing, and funding necessary to move toward becoming a high-performing organization. The Service's vision of rightsizing its infrastructure and workforce is achievable if approached in a comprehensive, integrated fashion, with appropriate communication and coordination with postal stakeholders.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: In December 2006, Congress passed comprehensive postal reform legislation, which the President signed into law on December 20, 2006 (P.L. 109-435). This legislation provides a framework for modernizing the Service's rate-setting processes and addresses many of the issues that GAO identified including, the Service's mission and service standards, its long-term financial obligations, governance qualifications, and oversight responsibilities of the new Postal Regulatory Commission.

    Matter: In view of the Service's continuing financial, operational, and structural problems, as well as trends that increase the urgency of making rapid progress in transforming its organization, Congress may wish to consider the Commission's recommendations as well as GAO's reform suggestions and enact comprehensive postal reform legislation. Some of the key areas that need to be addressed as part of comprehensive reform legislation include clarifying the Service's mission and role; enhancing governance, accountability, oversight, and transparency; improving regulation of postal rates; and making human capital reforms.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On February 2, 2004, the Postal Service provided GAO with the recommended plan entitled "Response to Congress: Infrastructure and Workforce Rationalization: Funding Key Capital Investments." The Service also provided this plan to the Chairmen and the Ranking Minority Members of the Senate Committee on Governmental Affairs and the House Committee on Government Reform.

    Recommendation: To facilitate the Service's progress in implementing actions under the existing system, the Postmaster General should develop an integrated plan to optimize its infrastructure and workforce, in collaboration with its key stakeholders, and make it available to Congress and the general public.

    Agency Affected: United States Postal Service

  2. Status: Closed - Implemented

    Comments: Postal Service agreed with this recommendation. On December 4, 2003, the Postal Service issued the recommended report entitled "Transformation Plan Progress Report" to Congress and made the plan available on its web site at http://www.usps.com/strategicdirection/tpprogressreport.htm.

    Recommendation: In addition, the Postmaster General should provide periodic reports to Congress and the public on the status of implementing its transformation initiatives and other Commission recommendations that fall within the scope of its existing authority.

    Agency Affected: United States Postal Service


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