Major Management Challenges at the U.S. Postal Service
Overall, the U.S. Postal Service (the Service) has made good progress in addressing each of the five key management challenges that GAO identified in 2003. However, each of these management challenges remains, as do the risks threatening the Service's ability to continue fulfilling its mission of providing affordable universal postal services in the 21 st century.
In April 2001, GAO designated U.S. Postal Service transformation efforts and long-term outlook as a high-risk area due to growing risk that the Service would not be able to continue providing universal postal service at reasonable rates while remaining self-supporting through postal revenues. In response, the Service developed a Transformation Plan outlining the steps it planned to take to address the challenges it faced and proposed a new business model to achieve its long-term transformation. The Service has made progress in implementing its Transformation Plan by taking actions on areas that fall within its authority. However, proposed comprehensive postal reform legislation that would address the Service's obsolete business model and major long-term financial challenges has not yet been enacted, as we and others have recommended. The underlying conditions that led to the high-risk designation continue to exist, particularly the continuing decline of First-Class Mail volume that is critical to generating sufficient revenues to maintain affordable, high-quality, universal postal service. Thus, the Service's transformation efforts and long-term outlook remain on GAO's high-risk list. Additional information on the high-risk area entitled “U.S. Postal Service Transformation Efforts and Long-Term Outlook” can be found in High-Risk Series: An Update ( GAO-05-207 ).
The Service has achieved notable results in controlling costs and improving productivity , particularly in achieving cost savings through reducing work hours and the size of its workforce. Despite this progress, the Service's total costs are increasing and will be difficult to contain, especially as wages and health benefits' costs continue rising. Further, mail security costs remain uncertain—as well as the funding to meet security needs. In its fiscal year 2005 budget request, the Service asked Congress for almost $800 million in emergency response funds to help cover its security costs, but has not yet received the full amount. GAO has made several recommendations in the area of mail security, including some related to cost-effectiveness, which the Service is working to implement.
The Service has also made progress in addressing its unresolved financial issues. Notably, the Service has eliminated most of its debt and ended its freeze on capital investment. However, the Service's financial liabilities and obligations continue to exceed its assets and its postretirement health obligations are increasing. GAO has suggested that the Congress consider action to address the Service's postretirement health obligation and its multibillion-dollar escrow account.
In the area of developing strategies to address human capital issues , the Service has made some progress. For example, the Service and its employee organizations have worked together to improve labor-management cooperation in areas such as reducing grievances and starting workplace safety initiatives. Continued progress will be needed, especially on efforts to reduce and reposition the workforce.
Regarding the need to provide complete and reliable financial and performance information , the Service has greatly improved the transparency and quality of its financial information. The Service has enhanced its quarterly financial reports by providing more detailed information to help stakeholders understand changes in its financial situation and outlook. Further, in its annual financial disclosures, the Service has included updated estimates of its postretirement health benefits obligation. However, greater transparency is still needed regarding the Service's performance information in areas such as the timely delivery of all of its major mail products. In addition, GAO has recently recommended that the Service provide improved transparency regarding its plans for optimizing its network of post offices and retail facilities.
Related GAO Products
U.S. Postal Service: Key Reasons for Postal Reform . GAO-04-565T . Washington, D.C.: March 23, 2004.
Need for Comprehensive Postal Reform . GAO-04-455R . Washington, D.C.: February 6, 2004.
U.S. Postal Service: Key Elements of Comprehensive Postal Reform . GAO-04-397T . Washington, D.C.: January 28, 2004.
U.S. Postal Service: Bold Action Needed to Continue Progress on Postal Transformation . GAO-04-108T . Washington, D.C.: November 5, 2003.
U.S. Postal Service: Key Postal Transformation Issues. GAO-03-812T . Washington, D.C.: May 29, 2003.
Cost Cutting, Productivity, and Financial Issues
Postal Service: Progress in Implementing Supply Chain Management Initiatives . GAO-04-540 . Washington, D.C.: May 17, 2004.
Postal Pension Funding Reform: Issues Related to the Postal Service's Proposed Use of Pension Savings . GAO-04-238 . Washington, D.C.: November 26, 2003.
Postal Pension Funding Reform: Review of Military Service Funding Proposals . GAO-04-281 . Washington, D.C.: November 26, 2003.
U.S. Postal Service: A Primer on Postal Worksharing. GAO-03-927 . Washington, D.C.: July 31, 2003.
Federal Real Property: Vacant and Underutilized Properties at GSA, VA, and USPS. GAO-03-747 . Washington, D.C.: August 19, 2003.
Review of the Office of Personnel Management's Analysis of the United States Postal Service's Funding of Civil Service Retirement System Costs. GAO-03-448R . Washington, D.C.: January 31, 2003.
Contract Management: Postal Service's National Office Supply Contract Has Not Been Effectively Implemented. GAO-03-230 . Washington, D.C.: January 17, 2003.
U.S. Postal Service: Better Guidance Is Needed to Ensure an Appropriate Response to Anthrax Contamination. GAO-04-239 . Washington, D.C.: September 9, 2004.
U.S. Postal Service: Clear Communication with Employees Needed before Reopening the Brentwood Facility. GAO-04-205T . Washington, D.C.: October 23, 2003.
U.S Postal Service: Data on Career Employee Diversity. GAO-03-745R . Washington, D.C.: September 15, 2003.
U.S. Postal Service: Issues Associated with Anthrax Testing at the Wallingford Facility. GAO-03-787T . Washington, D.C.: May 19, 2003.
U.S. Postal Service: Better Guidance Is Needed to Improve Communication Should Anthrax Contamination Occur in the Future. GAO-03-316 . Washington, D.C.: April 7, 2003.
Postal Service: Employee Issues Associated with the Potential Closure of the San Mateo IT Center. GAO-03-205 . Washington, D.C.: January 31, 2003.
Financial and Performance Transparency
U.S. Postal Service: Physical Security Measures Have Increased at Some Core Facilities, but Security Problems Continue. GAO-05-48 . Washington, D.C.: November 16, 2004.
U.S. Postal Service: USPS Needs to Clearly Communicate How Postal Services May Be Affected by Its Retail Optimization Plans . GAO-04-803 . Washington, D.C.: July 13, 2004.