In the 2001 Performance and Accountability report on the U.S. Postal Service (the Service), GAO identified financial, operational, and human capital challenges threatening the Service's ability to carry out its mission. Since then, these challenges have continued and its financial difficulties have increased, resulting in GAO's placing the Service's transformation efforts and long-term outlook on its high-risk list. The information in this report is intended to help focus attention and facilitate progress in addressing the key challenges facing the Service. This report is part of a special series on governmentwide and agency-specific issues.

The Service has made progress in addressing its challenges and has developed a Transformation Plan (the Plan) that contains steps to guide it in the future. Challenges remain, however, and leadership and sustained attention by the Service will be critical to carrying out its transformation. Implement the Transformation Plan and determine business model for the 21st century: The Service is struggling to fulfill its mission of providing affordable, high-quality, universal service while remaining self-supporting. The figure shows that despite multiple rate increases, net income has decreased. The Service's business model is at risk as mail volumes decline and competition and alternatives increase. Control costs and improve productivity under the Service's existing authority: The Service's ability to control costs and improve productivity is key to improving its financial situation. The Service historically has had difficulty in achieving cost savings related to two costly areas--its workforce and its expansive physical infrastructure. Address unresolved financial issues: The Service's cash flow from operations has not been sufficient to fund needed capital expenditures and reduce debt pressures. Furthermore, its liabilities continue to exceed its assets, and postretirement health obligations are increasing. Develop strategies to address human capital issues: Progress is needed in realigning the Service's workforce planning and performance systems with its business model. Cooperation between labor and management will be critical to achieving transformation goals. Provide complete and reliable financial and performance information in a timely and transparent manner: The Service has not provided sufficient public information to explain its changing financial condition, outlook, and progress toward meeting its goals.

Below are the reports in this series:

High-Risk Series: An Update GAO-03-119 Jan 1, 2003

High-Risk Series: Strategic Human Capital Management GAO-03-120 Jan 1, 2003

High-Risk Series: Protecting Information Systems Supporting the Federal Government and the Nation's Critical Infrastructures GAO-03-121 Jan 1, 2003

High-Risk Series: Federal Real Property GAO-03-122 Jan 1, 2003

Added later:

Pension Benefit Guaranty Corporation Single-Employer Insurance Program: Long-Term Vulnerabilities Warrant 'High Risk' Designation GAO-03-1050SP Jul 23, 2003

Performance and Accountability Series:

Major Management Challenges and Program Risks: A Governmentwide Perspective GAO-03-95 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Agriculture GAO-03-96 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Commerce GAO-03-97 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Defense GAO-03-98 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Education GAO-03-99 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Energy GAO-03-100 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Health and Human Services GAO-03-101 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Homeland Security GAO-03-102 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Housing and Urban Development GAO-03-103 Jan 1, 2003

Major Management Challenges and Program Risks: Department of the Interior GAO-03-104 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Justice GAO-03-105 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Labor GAO-03-106 Jan 1, 2003

Major Management Challenges and Program Risks: Department of State GAO-03-107 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Transportation GAO-03-108 Jan 1, 2003

Major Management Challenges and Program Risks: Department of the Treasury GAO-03-109 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Veterans Affairs GAO-03-110 Jan 1, 2003

Major Management Challenges and Program Risks: U.S. Agency for International Development GAO-03-111 Jan 1, 2003

Major Management Challenges and Program Risks: Environmental Protection Agency GAO-03-112 Jan 1, 2003

Major Management Challenges and Program Risks: Federal Emergency Management Agency GAO-03-113 Jan 1, 2003

Major Management Challenges and Program Risks: National Aeronautics and Space Administration GAO-03-114 Jan 1, 2003

Major Management Challenges and Program Risks: Office of Personnel Management GAO-03-115 Jan 1, 2003

Major Management Challenges and Program Risks: Small Business Administration GAO-03-116 Jan 1, 2003

Major Management Challenges and Program Risks: Social Security Administration GAO-03-117 Jan 1, 2003

Major Management Challenges and Program Risks: U.S. Postal Service GAO-03-118 Jan 1, 2003