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Major changes affecting the U.S. Postal Service (USPS)--including declining mail volumes, increasing operating expenses such as rising fuel costs, and a more competitive marketplace--have reinforced the need for USPS to increase efficiency and reduce expenses in its mail processing network. This network includes over 600 facilities that sort mail and prepare it for transportation and delivery. First-Class Mail provides USPS with high revenue per piece and has traditionally helped USPS cover its overhead costs. However, First-Class Mail volumes have been declining since 2001 and this downward trend is expected to continue. Furthermore, while First-Class Mail volumes have been declining, worksharing by mailers has increased. Worksharing allows mailers to earn discounts on postage rates by presorting, preparing, and transporting their mail to a postal facility near the mail's destination. As worksharing has increased, ever-larger volumes of mail have bypassed most of USPS's processing activities, creating excess network capacity. To address these trends affecting its mail processing network, USPS has developed several initiatives to reduce costs and increase efficiency. One such initiative, area mail processing, is designed to consolidate operations at facilities with excess machine capacity, and thereby increase the use of automation in mail processing. In 2005 and 2007, we issued reports that evaluated USPS's network realignment plans and included recommendations for improvement. This report responds to a directive from the House and Senate Committees on Appropriations and assesses the progress USPS has made toward implementing our recommendations to (1) improve realignment planning and accountability by establishing criteria for decision making and a process for evaluating savings and benefits; addressing how the various realignment initiatives are integrated; and establishing measurable performance targets; and (2) improve communication related to realignment plans and proposals by ensuring that its revised Area Mail Processing (AMP) Communication Plan includes steps to improve public notice and engagement and increase transparency.

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