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Testimony:

Before the Subcommittee on Federal Workforce, Postal Service, and the 
District of Columbia, Committee on Oversight and Government Reform, 
House of Representatives:

United States Government Accountability Office: 
GAO:

For Release on Delivery:
Expected at 2:00 p.m. EDT: 
Thursday, July 24, 2008:

U.S. Postal Service:

USPS Has Taken Steps to Strengthen Network Realignment Planning and 
Accountability and Improve Communication:

Statement of Phillip Herr, Director:

Physical Infrastructure Issues:

GAO-08-1022T: 

GAO Highlights:

Highlights of GAO-08-1022T, a testimony before the Subcommittee on 
Federal Workforce, Postal Service, and the District of Columbia, 
Committee on Oversight and Government Reform, House of Representatives. 

Why GAO Did This Study:

GAO has issued reports on the U.S. Postal Serviceís (USPS) strategy for 
realigning its mail processing network and improving delivery 
performance information. These reports recommended that the Postmaster 
General (1) strengthen planning and the overall integration of its 
realignment efforts, and enhance accountability by establishing 
measurable targets and evaluating results, (2) improve delivery service 
standards and performance measures, and (3) improve communication with 
stakeholders by revising its Area Mail Processing (AMP) Communication 
Plan to improve public notice, engagement, and transparency. The 2006 
postal reform act required USPS to develop a network plan by June 2008 
that described its vision and strategy for realigning its network; the 
anticipated costs, cost savings, and other benefits of its realignment 
initiatives; performance measures for its delivery service standards, 
and its communication procedures for consolidating AMP operations. 

This testimony discusses USPSís actions toward addressing GAO 
recommendations to (1) strengthen network realignment planning and 
accountability, (2) improve delivery performance information, and (3) 
improve communication with stakeholders. This testimony is based on 
prior GAO work, a review of USPSís 2008 Network Plan and revised AMP 
Communication Plan, and updated information from USPS officials. USPS 
did not have comments on this testimony.

What GAO Found:

USPS has taken steps to respond to most of GAOís prior recommendations 
to strengthen planning and accountability for its network realignment 
efforts. In its June 2008 Network Plan, USPS clarified how it makes 
realignment decisions, and generally addressed how it integrates its 
realignment initiatives. However, USPS has not established measurable 
performance targets for its realignment initiatives. USPS believes that 
its budgeting process accounts for the cost reductions achieved through 
these initiatives. The Deputy Postmaster General explained that such 
performance targets are captured in USPSís overall annual goal of 
achieving $1 billion in savings. While these measures are not as 
explicit or transparent as GAO had recommended, USPS is required to 
report annually by the end of December to Congress on, among other 
matters, its realignment costs and savings. Also, USPSís annual 
compliance reports to the Postal Regulatory Commission (PRC) will 
provide opportunities for further transparency of performance targets 
and results. USPSís Network Plan notes that to respond to declining 
mail volumes, USPS must increase efficiency and decrease costs across 
all its operations. Given USPSís challenging financial situation, 
effective implementation of network realignment is needed; and USPSís 
annual reports could help inform Congress about the effectiveness of 
its realignment efforts. 

USPS has partially responded to GAOís recommendations to improve its 
delivery performance standards, measurement, and reporting, but full 
implementation of performance measures and reporting is not yet 
completed. USPS established delivery performance standards in December 
2007. USPSís Network Plan stated that USPS would develop targets and 
measures to assess performance against these standards by fiscal year 
2009. In addition, USPS has recently submitted a proposal for measuring 
and reporting on delivery service performance to the PRC. The PRC has 
requested public comment on USPSís proposal, which depends upon USPS 
and mailers implementing new technology. Delivery service performance 
is a critical area that may be affected by the implementation of the 
realignment initiatives. 

USPS has also taken steps to address GAOís recommendations to improve 
communication with its stakeholders as it consolidates its AMP 
operations by: 

* modifying its Communication Plan to improve public notification and 
engagement; 

* increasing transparency by clarifying its processes for addressing 
public comments, and; 

* making additional information available on its Web site.

Going forward, it will be crucial that USPS establishes and maintains 
an ongoing and open dialogue with stakeholders, including congressional 
oversight committees and Members of Congress who have questions or are 
concerned about proposed realignment changes. 

[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-1022T]. 

To view the full product click on the above link. For more information, 
contact Phillip Herr at (202) 512-2834 or herrp@gao.gov. 

[End of section] 

Mr. Chairman, Representative Marchant, and Members of the Subcommittee:

I am pleased today to participate in this oversight hearing on actions 
taken by the U.S. Postal Service (USPS) to address concerns about its 
network realignment initiatives and communication with stakeholders. In 
July 2007, we testified before this committee on issues we identified 
and recommendations we made regarding USPS's strategy for realigning 
its mail processing operations.[Footnote 1] We previously recommended 
that the Postmaster General:

1. strengthen planning and accountability by ensuring that USPS's 
network realignment plans include:

* discussion of how the various network realignment initiatives will be 
integrated with each other to achieve network realignment goals and:

* measurable targets for the anticipated cost savings and benefits 
associated with network rationalization; and:

2. improve the way USPS communicates with stakeholders about its 
realignment plans and proposals, particularly its proposals for 
consolidating Area Mail Processing (AMP) operations[Footnote 2], by 
ensuring that its revised communication plan includes steps to:

* improve public notice; 

* improve public engagement, and:

* increase transparency.[Footnote 3]

Last year, we also reported on USPS's progress in improving delivery 
performance information.[Footnote 4] We recommended to the Postmaster 
General that USPS develop complete delivery performance information for 
all major types of mail by:

* modernizing delivery standards,

* committing to developing delivery performance measures,

* implementing representative delivery performance measures, and:

* improving the transparency of delivery performance standards, 
measures, and results.

Congress has also addressed USPS's network realignment efforts, as 
reflected in the Postal Accountability and Enhancement Act of 2006 
(PAEA), which required USPS to develop a comprehensive Facilities Plan. 
[Footnote 5] This plan was to include USPS's long-term vision and 
strategy for realigning its network; a description of the anticipated 
costs, costs savings, and other benefits associated with the 
infrastructure realignment alternatives discussed in the plan; and 
USPS's communication procedures related to AMP consolidations. In 
response, USPS issued a plan in June 2008 titled "Postal Accountability 
and Enhancement Act ß302 Network Plan," which we refer to as USPS's 
"Network Plan" in this testimony. PAEA also required USPS to report to 
Congress 90 days after the end of each fiscal year on how postal 
decisions or actions taken during the preceding year have impacted or 
will impact rationalization plans, including overall estimated costs 
and cost savings. Further, PAEA required USPS to establish modern 
delivery service standards by December 20, 2007, and submit annual 
reports to the Postal Regulatory Commission (PRC) on the quality of 
service provided, including the speed and reliability of delivery for 
most types of mail (market-dominant products[Footnote 6]), according to 
specific requirements to be established by the PRC.

My comments today will focus on USPS's actions toward addressing our 
prior recommendations related to network realignment and delivery 
performance. Specifically, I will cover USPS's progress in (1) 
strengthening planning and the overall integration of USPS's 
realignment efforts, and enhancing accountability by establishing 
measurable targets and evaluating results, (2) improving delivery 
service standards and performance measures, and (3) improving 
communication with stakeholders by revising its AMP Communication Plan 
to improve public notice, engagement, and transparency. My statement is 
based on our prior work, listed at the end of this document, and 
updated information on the actions USPS has taken related to our 
recommendations. We reviewed the Network Plan USPS issued in June 2008 
and the revised AMP guidelines and revised Communication Plan issued in 
March 2008. We also met with the Deputy Postmaster General and Acting 
Senior Vice President for Operations to discuss USPS's Network Plan and 
its decision-making process related to its network realignment 
initiatives. We asked USPS to comment on the results of our new work 
and USPS officials did not have any comments. We conducted this 
performance audit in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objectives.

Summary:

USPS has taken steps to address our prior recommendations to strengthen 
planning and accountability for its network realignment efforts, which 
are important as USPS moves from planning to implementing its network 
realignment initiatives. One key step is that USPS has developed a 
Network Plan that discusses its overall vision and goals and the major 
strategies or initiatives for meeting its goals. Our review of USPS's 
Network Plan found that it generally addresses topics required by PAEA 
and included in our recommendations. However, it contains limited 
specific information on performance targets or goals or the resulting 
costs and savings related to various realignment initiatives. The 
Network Plan describes an overall goal to create an efficient and 
flexible network that results in lower costs for both USPS and its 
customers, improves the consistency of mail service, and reduces USPS's 
environmental footprint. According to the Deputy Postmaster General, 
the measurable performance targets related to realignment initiatives 
that we recommended USPS establish are captured in USPS's overall 
annual goal of achieving $1 billion in savings, which USPS will present 
in more detail as part of its internal budget. While these measures are 
not as explicit or transparent as we had recommended, USPS is required 
to report annually to Congress on, among other things, its realignment 
costs and savings; and USPS's annual compliance reports to the PRC will 
provide opportunities for USPS to further clarify its performance 
targets and results. Additionally, although the Network Plan generally 
describes how USPS's key realignment efforts are integrated, it 
provides little contextual information about what its future network 
will look like and how its realignment goals are being met. USPS's 
Network Plan notes that to address declining mail volumes, USPS must 
increase efficiency and decrease costs across all its operations. 
Further, USPS's financial report for the 2nd quarter of this fiscal 
year stated that slow economic growth will continue to negatively 
affect revenue and volume, especially if fuel prices remain at their 
current high levels and inflation in other sectors of the economy 
begins to increase. Given USPS's challenging financial situation, we 
recognize that effective implementation of network realignment is 
needed. USPS's annual reports to Congress are an opportunity to make 
its goals and results more transparent and provide information about 
the effectiveness of its realignment efforts.

USPS has also taken steps to improve its delivery performance 
standards, measurement, and reporting, but full implementation of 
performance measures and reporting is not yet completed. USPS is 
required under PAEA to develop modernized delivery standards, and to 
measure and report annually to the PRC on its performance in delivering 
market-dominant products. In December 2007, USPS established delivery 
service standards with input from the public. USPS's Network Plan 
stated that USPS will establish delivery service standard targets 
before the end of fiscal year 2008. In addition, USPS has recently 
submitted a proposal for measuring and reporting on delivery service 
performance to the PRC, and the PRC has requested public comment on 
USPS's proposal. USPS's successful implementation of this proposal 
depends on USPS and mailers adopting new technology.

Further, USPS has taken steps to address our recommendations to improve 
communication with its stakeholders as it consolidates its AMP 
operations. USPS has modified its AMP Communication Plan to improve 
public notification, engagement, and transparency. Notably, USPS has 
moved the public input meeting to an earlier point in the AMP process 
and plans to post a meeting agenda, summary brief, and presentation 
slides on its Web site 1 week before the public meeting. To increase 
transparency, USPS has clarified its processes for addressing public 
comments and plans to make additional information available on its Web 
site. Going forward, as USPS implements its AMP consolidations, it will 
have the opportunity to gather stakeholders' feedback on the updated 
Communication Plan and to assess the effectiveness of these 
modifications.

USPS Has Taken Steps to Improve Realignment Planning and 
Accountability, but Measurement of Most Realignment Efforts Is Limited 
to the Budget Process:

USPS has taken steps to respond to most of our prior recommendations to 
strengthen planning and accountability for its network realignment 
efforts. It has clarified how it makes realignment decisions and 
generally addressed how it integrates its realignment initiatives, but 
it has not established measurable performance targets for these 
initiatives. USPS believes that its budgeting process accounts for the 
cost reductions achieved through these initiatives.

Realignment Measures Are Generally Limited to USPS's Budget Process:

In our 2007 report we stated that without measurable performance 
targets for achieving its realignment goals, USPS remains unable to 
demonstrate to Congress and other stakeholders the costs and benefits 
associated with its network realignment initiatives.[Footnote 7] We 
also reported that although USPS had made progress on several of its 
realignment initiatives, it remained unclear how the various 
initiatives were individually and collectively contributing to the 
achievement of realignment goals because the initiatives lacked 
measurable targets. Appendix I provides a brief description and 
identifies the status of USPS's key realignment initiatives. Appendix 
II provides updated status information for all AMP consolidations 
through July 2008.

PAEA calls for USPS to, among other matters, establish performance 
goals and identify anticipated costs, cost savings, and other benefits 
associated with the infrastructure realignment alternatives in its 
Network Plan. The Network Plan describes an overall goal to create an 
efficient and flexible network that results in lower costs for both the 
Postal Service and its customers, improves the consistency of mail 
service, and reduces the Postal Service's overall environmental 
footprint. In addition, the plan states that USPS's goals are 
continuous improvement and savings of $1 billion per year through 
realignment and other efforts. According to the plan, USPS will achieve 
these savings, in part, through three core realignment initiatives, 
including Airport Mail Center (AMC) closures, AMP consolidations, and 
Bulk Mail Center (BMC) transformations.[Footnote 8] The specificity of 
the expected savings and other benefits related to the core initiatives 
varies in the plan's discussion of measurable goals, targets, and 
results achieved.

* Overall program targets: USPS estimated total savings of $117 million 
for AMC closures--including savings of $57 million in 2008 and $21 
million in 2009--but provided no such figure for the AMP 
consolidations. Postal officials told us USPS is developing an overall 
program target for transforming the BMCs.

* Evaluation of results: USPS has measured the results of its AMP 
consolidations through a post-implementation review. In 2007, we 
identified data consistency problems with this review. USPS has 
addressed these problems in an updated handbook issued in 2008, by 
revising its data calculation worksheets. No analogous process exists 
for measuring the results of USPS's AMC closures, which included 
outsourcing some operations conducted at these facilities, relocating 
some operations to other postal facilities, and closing some 
facilities. We are issuing a report today on USPS's outsourcing 
activities, which discusses USPS's realignment decisions related to its 
AMCs.[Footnote 9] As part of this review, we concluded that USPS does 
not track and could not quantify the results of its outsourcing 
activities. We recommended that USPS establish a process to measure the 
results and effectiveness of those outsourcing activities that are 
subject to collective bargaining, including the AMCs. USPS agreed to 
establish a process for future outsourcing initiatives subject to 
collective bargaining, in which it would compare the financial 
assumptions that supported its outsourcing decision with actual 
contract award data 1 year after project implementation.

When we met with USPS officials in June 2008, we asked why they did not 
have measurable performance goals and targets for the individual 
realignment initiatives. The Deputy Postmaster General explained that 
the realignment targets are captured in USPS's goal of saving $1 
billion per year. Specifically, he explained that USPS will present its 
overall goals and targets in more detail as part of its internal 
budget, which will be presented to the Board of Governors in July 2008. 
USPS will have additional opportunities to provide information about 
its estimated costs and cost savings related to its realignment efforts 
in its annual report to Congress, which is required by the end of 
December. Developing and implementing more transparent performance 
targets and results can help inform Congress about the effectiveness of 
USPS's realignment efforts.

USPS Has Generally Addressed the Integration of Its Various Network 
Realignment Initiatives:

In 2007, we found there was little transparency into how USPS's efforts 
were integrated with each other. We recommended that USPS explain how 
it will integrate the various initiatives that it will use in 
realigning the postal facilities network. In its Network Plan, USPS 
identifies three major realignment efforts: (1) Airport Mail Center 
closures, (2) consolidations of Area Mail Processing operations and (3) 
transformations of Bulk Mail Centers. USPS briefly addresses the 
integration of its network initiatives, stating that their overall 
impact and execution are tightly integrated, and provides a few 
examples, but little contextual information about what its future 
network will look like and how its realignment goals are being met.

In a recent meeting, senior USPS officials provided more information 
that helps to put the integration of USPS's three network realignment 
initiatives in context. They said this integration is expected to 
reduce USPS's network and shrink its mail processing operations. After 
integrating these three efforts, they said, USPS will continue to be 
the "first and last mile"--the "first mile" being the point of entry 
for mail into the system, and the "last mile" being the delivery of 
mail to customers nationwide, as required to meet USPS's universal 
service mission. They expect to lower costs and achieve savings by 
reducing excess processing capacity and fuel consumption, as well as by 
working with the mailing industry to implement new technologies such as 
delivery point sequencing, flats sequencing, and Intelligent Mail.ģ 
[Footnote 10] Going forward, USPS has opportunities, in its annual 
report to Congress and in other reports and strategic plans, to further 
articulate how it plans to integrate these three initiatives and to 
what extent they are helping USPS meet its goals.

USPS Has Established Delivery Service Standards:

USPS has partially responded to our prior recommendations related to 
improving delivery performance information by establishing delivery 
performance standards and committing to develop performance targets 
against these standards and provide them to the PRC in August. However, 
full implementation of performance measures and reporting is not yet 
completed. Delivery service performance is a critical area that may be 
affected by the implementation of the realignment initiatives. Delivery 
standards are essential for setting realistic expectations for mail 
delivery so that USPS and mailers can plan their mailing activities 
accordingly. Delivery performance information is critical for 
stakeholders to understand how USPS is achieving its mission of 
providing universal postal service, including requirements for the 
prompt, expeditious, and reliable delivery of mail throughout the 
nation. Delivery performance data are also necessary for USPS and its 
customers to identify and address delivery problems and to enable 
Congress, the PRC, and others to hold management accountable for 
results and to conduct independent oversight.

Our July 2006 report found that USPS's delivery performance standards, 
measurement, and reporting needed improvement.[Footnote 11] We 
recommended that USPS update its outdated delivery standards, which did 
not reflect postal operations and thus were unsuitable for setting 
realistic expectations and measuring performance. We also recommended 
that the Service implement representative measures of delivery 
performance for all major types of mail because only one-fifth of mail 
volume was being measured and there were no representative measures for 
Standard Mail, bulk First-Class Mail, Periodicals, and most Package 
Services. Furthermore, we recommended that USPS improve the 
transparency of its delivery standards, measurement, and reporting. In 
December 2006, Congress enacted postal reform legislation that required 
USPS to modernize its delivery standards and measure and report to the 
PRC on the speed and reliability of delivery for each market-dominant 
product. Collectively, market-dominant products represent 99 percent of 
mail volume.

In December 2007, USPS issued its new delivery standards and has 
committed to measuring and reporting on delivery performance for market-
dominant products starting in fiscal year 2009. Moreover, USPS provided 
a specific proposal for measuring and reporting its delivery 
performance to the PRC, which has requested public comment on USPS's 
proposal. Full implementation of delivery performance measures and 
reporting for all major types of mail will require both mailers and 
USPS to take actions to barcode mail and track its progress--a system 
referred to as Intelligent Mailģ.

USPS Has Improved Its AMP Communication Plan:

USPS has taken steps to respond to our recommendations that it improve 
its communication of realignment plans and proposals with stakeholders. 
For key realignment efforts such as AMP consolidations, we found it is 
critical for USPS to communicate with and engage the public. 
Stakeholder input can help USPS understand and address customer 
concerns, reach informed decisions, and achieve buy-in. In our 2007 
report, we concluded that USPS was not effectively engaging 
stakeholders and the public in its AMP consolidation process and 
effectively communicating decisions. For example, USPS was not clearly 
communicating to stakeholders what it was planning to study, why 
studies were necessary, and what study outcomes might be. In addition, 
USPS did not provide stakeholders with adequate notice of the public 
input meeting or materials to review in preparation for the meeting. 
Furthermore, according to stakeholders, USPS offered no explanation as 
to how it evaluates and weighs public input in its decision-making 
process.

To help resolve these and other issues concerning how USPS communicates 
its realignment plans with stakeholders, we recommended that USPS take 
the following actions:

* 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.

USPS has incorporated into its 2008 AMP Communication Plan several 
modifications aimed at improving public notification and engagement. 
Most notably, USPS has moved the public input meeting to an earlier 
point in the AMP process and plans posts a meeting agenda, summary 
brief, and presentation slides on its Web site 1 week before the public 
meeting. USPS has increased transparency, largely by clarifying its 
processes for addressing public comments and plans to make additional 
information available to the public on its Web site.

Improving Public Notice:

In 2007, we found that stakeholders potentially affected by AMP 
consolidations could not discern from USPS's initial notification 
letters[Footnote 12] what USPS was planning to study and what the 
outcomes of the study might be. This lack of clarification led to 
speculation on the part of stakeholders, which in turn increased public 
resistance to USPS's realignment efforts. The initial notification 
letters were also confusing to stakeholders because they contained 
jargon and lacked adequate context to understand the purpose of the 
study. Furthermore, in 2007 we reported that stakeholders were not 
given enough notice about the public meeting, and we recommended that 
USPS improve public notice by providing stakeholders with a date for 
the public meeting earlier in the AMP process.

In its 2008 AMP Communication Plan, USPS has eliminated most of the 
jargon from its notification letters and has generally provided more 
context as to why it is necessary for USPS to conduct the feasibility 
studies. For example, letters now name both facilities that would be 
affected by a proposed consolidation, whereas previously, only one 
facility was named. USPS also added a requirement that the public be 
notified at least 15 days in advance of a public meeting.

Improving Public Engagement:

In 2007, we found that public meetings required for AMP consolidations 
were occurring too late in the decision-making process for the public 
to become engaged in this process in any meaningful way. At that time, 
the meetings were held after the area office[Footnote 13] and 
headquarters had completed their reviews of the AMP consolidation 
studies and just before headquarters had made its final consolidation 
decisions. Stakeholders we spoke with were not satisfied with the 
public input process and told us that USPS solicited their input only 
when it considered the AMP consolidation a "done deal." We also found 
that USPS did not publish agendas in advance of public meetings or 
provide the public with much information about the proposed studies. 
The only information available was a series of bullet points posted on 
USPS's Web site several days before the meetings. This lack of timely 
and complete information further inhibited the public's ability to 
meaningfully participate in the process. To make the meetings more 
focused and productive, and to give the public an opportunity to 
adequately prepare for them, we recommended that USPS make an agenda 
and background information available to the public in advance of the 
public meetings.

Although USPS still holds the public meetings after the data-gathering 
phase of the study has been completed, the meeting now occurs earlier 
in the AMP review process. Currently, before the meeting, the study has 
been approved only at the district level--the area office and 
headquarters have not yet completed their reviews or validated the data 
by the time of the meeting. When we asked USPS why it did not move the 
meeting to the data-gathering phase of the study, USPS officials 
responded that it would be difficult to hold the meeting during the 
data-gathering phase because at that point, they do not know what 
operations could potentially be consolidated. However, to ensure that 
the public meeting is held within a reasonable amount of time after the 
study's completion, USPS included a requirement in its 2008 AMP 
Communication Plan that the public meeting take place within 45 days 
after the District Manager forwards the study to the area office and 
headquarters. In addition, the initial notification letter now includes 
contact information for the local Consumer Affairs Manager, to whom the 
public can submit written comments up to 15 days after the public 
meeting; previously, this contact information appeared in the second 
notification letter. To help stakeholders better prepare for the public 
meeting, USPS plans to post a meeting agenda, presentation slides, and 
a summary brief of the AMP proposal on its Web site 1 week before the 
meeting. In addition, USPS plans to inform stakeholders in the public 
meeting notification letter that these materials will be posted on its 
Web site 1 week before the meeting.

Improving Transparency:

In our 2007 report, we found that stakeholders and the public were 
unclear as to how public input factored into USPS's consolidation 
decisions. They wanted to know precisely how USPS took their input-- 
letters, phone calls, public meeting results--into consideration when 
it made its decisions. We recommended that USPS increase the 
transparency of its decision-making process by explaining how it 
considers public input in the decision-making process.

In a recent interview, senior USPS officials identified two additions 
to the 2008 AMP Communication Plan that address stakeholders' concerns 
about how USPS considers public input. First, USPS considers written 
comments from stakeholders before the public input meetings and 
addresses these comments as part of the public input meetings. Second, 
USPS has modified its public input review process so that officials at 
the district, area, and headquarters levels consider, and are 
responsive to, public concerns. Senior USPS officials told us that they 
weigh public input primarily by considering the impact of any 
consolidations on customer services and service standards. 
Additionally, USPS officials told us that as AMP consolidations go 
forward, USPS will post standard information about each consolidation 
on its Web site and update this information regularly. Specifically, 
USPS plans to post initial notifications, a summary brief of the 
proposed AMP consolidation, specifics about the scheduled public 
meeting, a summary of written and verbal public input, and the final 
decision and implementation plans if an AMP consolidation is approved.

Congress has also addressed USPS's communication process. PAEA required 
USPS to describe its communication procedures related to AMP 
consolidations in its Network Plan. In response, the Network Plan 
discusses how USPS will publicly notify communities potentially 
affected by realignment changes and how it will obtain and consider 
public input. In addition, PAEA directed USPS to identify any statutory 
or regulatory obstacles that have prevented it from taking action to 
realign or consolidate facilities. Accordingly, USPS's Network Plan 
identified delays related to implementing AMP consolidations. For 
example, USPS was directed not to implement certain consolidations 
until after GAO has reported to Congress on whether USPS has 
implemented GAO recommendations from its report issued in July 2007 to 
strengthen planning and accountability in USPS's realignment efforts. 
These directions were included in the joint explanatory statement 
accompanying the Consolidated Appropriations Act for fiscal year 2008. 
We have previously discussed the difficulties that stakeholder 
resistance poses for USPS when it tries to close facilities and how 
delays may affect USPS's ability to achieve its cost-reduction and 
efficiency goals. Part of the problem stemmed from USPS's limited 
communication with the public. We believe that USPS has made 
significant progress toward improving its AMP communication processes 
since 2005. Now, it will be crucial for USPS, in going forward, to 
establish and maintain an ongoing and open dialogue with its various 
stakeholders, including congressional oversight committees and Members 
of Congress who have questions or are concerned about proposed 
realignment changes.

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

Contact and Acknowledgments:

For further information about this statement, please contact Phillip 
Herr, Director, Physical Infrastructure Issues, at (202) 512-2834 or at 
herrp@gao.gov. Individuals making key contributions to this statement 
included Teresa Anderson, Kenneth John, Summer Lingard, Margaret 
McDavid, and Jaclyn Nidoh.

[End of section]

Appendix I: Description and Status of USPS's Key Realignment 
Initiatives as of July 2008:

Key realignment initiative: Realignment of Airport Mail Centers (AMC); 
Description: AMCs are postal facilities that have traditionally been 
operated for the purpose of expediting the transfer of mail to and from 
commercial passenger airlines; 
Status: USPS's Network Plan stated that USPS had terminated operations 
at 46 AMCs during fiscal years 2006 and 2007, and another 8 AMCs in 
fiscal year 2008.

Key realignment initiative: Consolidation of Area Mail Processing (AMP) 
operations; 
Description: AMP consolidations of mail processing operations are 
intended to reduce costs and increase efficiency by eliminating excess 
capacity at USPS's more than 400 processing plants; 
Status: From 2005 through July 2008, USPS implemented 11 AMP 
consolidations, decided not to implement 35 studies (5 placed on 
indefinite hold), was continuing to consider 7 consolidations, and had 
closed 1 facility after consolidation.

Key realignment initiative: Bulk Mail Centers (BMC) transformations; 
Description: Because mailers have increased their sorting and transport 
of mail shipments to postal facilities near mail destinations, mailers 
have been bypassing BMCs and the centers are underused. Also, increased 
highway contract expenses and an aging postal distribution 
infrastructure have prompted USPS to evaluate its BMC network to 
determine how it can best support future postal operations; 
Status: In July 2008, USPS issued a Request for Proposal to obtain 
input on a proposal to outsource some of its BMC workload so that USPS 
can use its 21 BMCs for alternative postal work.

Key realignment initiative: Regional Distribution Centers 
transformations; 
Description: The Regional Distribution Centers were expected to perform 
bulk processing operations and act as Surface Transfer Centers and 
mailer entry points; 
Status: The Network Plan stated that this initiative has been 
discontinued because USPS determined that it would not generate the 
benefits originally anticipated.

Source: GAO analysis of USPS data. 

[End of table] 

[End of section]

Appendix II: Status of AMP Consolidations:

Table 1: Status of AMP Consolidations Approved from 2005, as of July 
2008:

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Bridgeport, CT/Stamford, CT; 
Implemented: [Check]; 
Subsequent decision not to implement: [Empty].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Greensburg, PA/Pittsburg, PA; 
Implemented: [Check]; 
Subsequent decision not to implement: [Empty].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Kinston, NC/Fayetteville, NC; 
Implemented: [Empty]; 
Subsequent decision not to implement: [Check].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Marina, CA/Los Angeles, CA; 
Implemented: [Check]; 
Subsequent decision not to implement: [Empty].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Marysville, CA/Sacramento, CA; 
Implemented: [Empty]; 
Subsequent decision not to implement: [Check].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Mojave, CA/Bakersfield, CA; 
Implemented: [Check]; 
Subsequent decision not to implement: [Empty].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Monmouth, NJ/Trenton, NJ & Kilmer, NJ; 
Implemented: [Check]; 
Subsequent decision not to implement: [Empty].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Newark, NJ/Kearny, NJ; 
Implemented: [Check]; 
Subsequent decision not to implement: [Empty].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Northwest Boston, MA/Boston, MA; 
Implemented: [Check]; 
Subsequent decision not to implement: [Empty].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Olympia, WA/Tacoma, WA; 
Implemented: [Check]; 
Subsequent decision not to implement: [Empty].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Pasadena, CA/Santa Clarita, CA & 
Industry, CA; 
Implemented: [Check]; 
Subsequent decision not to implement: [Empty].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Saint Petersburg, FL/Tampa, FL; 
Implemented: [Check]; 
Subsequent decision not to implement: [Empty].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Waterbury, CT/Southern Connecticut, CT; 
Implemented: [Check]; 
Subsequent decision not to implement: [Empty].

Facilities involved in consolidation (facility losing operations/ 
facility gaining operations): Total; 
Implemented: 11; 
Subsequent decision not to implement: 2.

Source: USPS. 

[End of table] 

Table 2: Status of Proposed AMP Consolidations Initiated in 2006 or 
2007, as of July 2008:

AMP package under review by headquarters: Total AMP Proposals; 7; 
* Aberdeen, SD/Dakotas Central, SD; Public meeting held 2-23-06; 
* Bronx, NY/Morgan, NY; Public meeting planned, not scheduled; 
* Canton, OH/Akron, OH; Public meeting held 10-30-07; 
* Detroit, MI/Michigan Metroplex, Pontiac, MI; Public meeting held 10-
23-07; 
* Flint, MI/Michigan Metroplex, Pontiac, MI; Public meeting held 10-22-
07; 
* Kansas City, KS/Kansas City, MO; Public meeting held 6-27-07; 
* Sioux City, IA/Sioux Falls, SD; Public meeting held 4-20-06. 

Proposed AMP review on hold: 5; 
* Alamogordo, NM/El Paso, TX; 
* Batesville, AR/Little Rock, AR; 
* Carbondale, IL/Saint Louis, MO; 
* Centralia, IL/Saint Louis, MO; 
* Las Cruces, NM/El Paso, TX. 

Decision not to implement proposed AMP: 33. 
* Beaumont, TX/Houston, TX; 
* Binghamton, NY/Syracuse, NY; 
* Bloomington, IN/Indianapolis, IN; 
* Bryan, TX/Houston, TX; 
* Burlington, VT/White River Jnt, VT;
* Cape Cod, MA/Brockton, MA;
* Carroll, IA/Des Moines, IA;
* Cumberland, MD/Frederick, MD;
* Dallas, TX/North Texas, TX;
* Daytona Beach, FL/Mid-FL, FL;
* Fox Valley, IL/South Suburban, IL;
* Gaylord, MI/Traverse City, MI;
* Glenwood Springs, CO/Grand Junction, CO;
* Helena, MT/Great Falls, MT;
* Hutchinson, KS/Wichita, KS;
* Jackson, TN/Memphis, TN;
* LA Crosse, WI/Rochester, MN;
* McAllen PO TX/Corpus Christi, TX;
* McCook & N. Platte, NE/Casper, WY;
* Oshkosh, WI/Green Bay, WI;
* Plattsburg, NY/Albany, NY;
* Portsmouth, NH/Manchester, NH;
* Rockford, IL/Palatine, IL;
* Sheridan, WY/Casper, WY;
* Springfield, MA/Hartford, CT;
* Staten Island, NY/Brooklyn, NY;
* Twin Falls, ID/Boise, ID;
* Utica, NY/Syracuse or Albany, NY;
* Waco, TX/Fort Worth/Austin, TX;
* Watertown, NY/Syracuse, NY;
* Wheatland, WY/Cheyenne, WY;
* Yakima, WA/Pasco, WA;
* Zanesville, OH/Columbus, OH.

Source: USPS:

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]

Related GAO Products:

GAO. U.S. Postal Service: Data Needed to Assess the Effectiveness of 
Outsourcing. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-787]. 
Washington, D.C.: July 24, 2008.

GAO. U.S. Postal Service: Progress Made in Implementing Mail Processing 
Realignment Efforts, but Better Integration and Performance Measurement 
Still Needed. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-
1083T]. Washington, D.C.: July 26, 2007.

GAO. U.S. Postal Service: Mail Processing Realignment Efforts Under Way 
Need Better Integration and Explanation. [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-07-717]. Washington, D.C.: June 
21, 2007.

GAO. U.S. Postal Service: Delivery Performance Standards, Measurement, 
and Reporting Need Improvement. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-06-733]. Washington, D.C.: July 27, 2006.

GAO. U.S. Postal Service: The Service's Strategy for Realigning Its 
Mail Processing Infrastructure Lacks Clarity, Criteria, and 
Accountability. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-
261]. Washington, D.C.: April 8, 2005.

GAO. U.S. Postal Service: USPS Needs to Clearly Communicate How Postal 
Services May Be Affected by Its Retail Optimization Plans. [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-04-803]. Washington, D.C.: July 
13, 2004.

GAO. U.S. Postal Service: Bold Action Needed to Continue Progress on 
Postal Transformation. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-04-108T]. Washington, D.C.: November 5, 2003.

[End of section]

Footnotes: 

[1] GAO, U.S. Postal Service: Progress Made in Implementing Mail 
Processing Realignment Efforts, but Better Integration and Performance 
Measurement Still Needed, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-07-1083T] (Washington, D.C.: July 26, 2007).

[2] The area mail processing 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.

[3] GAO, U.S. Postal Service: Mail Processing Realignment Efforts Under 
Way Need Better Integration and Explanation, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-07-717] (Washington, D.C.: June 
21, 2007).

[4] GAO, U.S. Postal Service: Delivery Performance Standards, 
Measurement, and Reporting Need Improvement, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-06-733] (Washington, D.C.: July 
27, 2006).

[5] Section 302 of the Postal Accountability and Enhancement Act (Pub. 
L. No. 109-435) was enacted on December 20, 2006. Whereas the act 
refers to network "rationalization," in our previous products we have 
used the term "realignment" for analogous purposes, which we use 
throughout this testimony.

[6] PAEA defines market-dominant products to include: First-Class Mail-
-single-piece mail (e.g., bill payments and letters) and bulk mail 
(e.g., bills and advertising); Standard Mail (mainly bulk advertising 
and direct mail solicitations); Periodicals (mainly magazines and local 
newspapers); some types of Package Services (i.e., single-piece parcel 
post, media mail, bound printed matter, and library mail); and single- 
piece International Mail. 

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

[8] AMCs are postal facilities that have traditionally been operated 
for the purpose of expediting the transfer of mail to and from 
commercial passenger airlines. AMP consolidations of mail processing 
operations are intended to reduce costs and increase efficiency by 
eliminating excess capacity at USPS's more than 400 processing plants. 
USPS is evaluating its BMC network, where parcels and bulk mail 
shipments are processed, because they are aging and underused. USPS 
recently issued a proposal related to transforming its BMC network, but 
has not yet implemented this proposal. 

[9] GAO, U.S. Postal Service: Data Needed to Assess the Effectiveness 
of Outsourcing, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-
787] (Washington, D.C.: July 24, 2008).

[10] Delivery Point Sequencing is the automated rather than manual 
sorting of letters in the exact order carriers deliver them. Flats 
sequencing is a system that fully automates the processing and delivery 
sequencing of flat-size mail, which generally consists of catalogs, 
envelopes, large cards, magazines and newspapers. Intelligent Mailģ 
uses barcodes which are read by scanning devices to allow postal 
managers and customers to track mail as it moves through the postal 
network.

[11] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-733]. 

[12] USPS provides for notification letters at multiple points during 
the AMP process, e.g., initial notification of intent to perform a 
study, notification of a public meeting, and notification to 
consolidate facilities.

[13] USPS manages its field operations by dividing the nation into nine 
geographic areas. 

[End of section]

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