This is the accessible text file for GAO report number GAO-10-191T 
entitled 'U.S. Postal Service: Financial Challenges Continue, with 
Relatively Limited Results from Recent Revenue-Generation Efforts' 
which was released on November 5, 2009. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

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 10:00 a.m. EST:
Thursday, November 5, 2009: 

U.S. Postal Service: 

Financial Challenges Continue, with Relatively Limited Results from 
Recent Revenue-Generation Efforts: 

Statement of Phillip Herr, Director: 
Physical Infrastructure Issues: 

GAO-10-191T: 

GAO Highlights: 

Highlights of GAO-10-191T, a testimony to 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: 

The U.S. Postal Service’s (USPS) financial condition and outlook 
deteriorated significantly during fiscal year 2009. USPS was not able 
to cut costs fast enough to offset declining mail volume and revenues 
resulting from the economic downturn and changing mail use. Facing an 
unprecedented cash shortfall, USPS stated that it would have 
insufficient cash on hand to make its mandated $5.4 billion payment to 
prefund postal retiree health benefits that was due by the end of the 
fiscal year. 

In July, 2009, GAO added USPS’s financial condition to the list of high-
risk areas needing attention by Congress and the executive branch to 
achieve broad-based transformation. GAO stated that USPS urgently needs 
to restructure to address its current and long-term financial 
viability. GAO also stated that USPS needs to use its flexibility to 
generate revenue through new or enhanced products. 

This testimony will (1) update USPS’s financial condition and outlook, 
(2) describe changes made by the Postal Accountability and Enhancement 
Act (PAEA) of 2006 that provided USPS with greater flexibility to 
generate revenues, (3) outline USPS’s revenue-generation actions and 
results using this flexibility, and (4) discuss options for USPS to 
generate increased revenues in the future. This testimony is based on 
GAO’s past and ongoing work. 

What GAO Found: 

USPS’s financial condition for fiscal year 2009 and its financial 
outlook continue to be challenging: 

* In fiscal year 2009, mail volume declined about 28 billion pieces, or 
about 14 percent, from the prior fiscal year, when volume was about 203 
billion pieces; revenue declined from about $75 billion to about $68 
billion. 

* A looming cash shortfall necessitated last-minute congressional 
action to reduce USPS’s mandated payments to prefund retiree health 
benefits by $4 billion. In the absence of congressional action, USPS 
was on track to lose about $7 billion. 

* USPS debt increased at the end of fiscal year 2009 by the annual 
statutory limit of $3 billion, bringing outstanding debt to $10.2 
billion. At this rate, USPS will reach its total $15 billion statutory 
debt limit in fiscal year 2011. 

* USPS projects annual deficits over $7 billion in fiscal years 2010 
and 2011, and continuing large cash shortfalls. 

PAEA and implementing regulations gave USPS more flexibility to set 
prices, test new postal products, and retain earnings. USPS has broad 
latitude to set rates that take effect unless the Postal Regulatory 
Commission finds the rates would violate legal requirements, such as a 
price cap that generally limits rate increases for most mail to the 
rate of inflation. 

Except for annual rate increases, USPS revenue-generation actions since 
PAEA was enacted have generally achieved limited results compared to 
USPS’s deficits. To its credit, USPS has taken actions to use its 
pricing flexibility to address the pressing need for additional 
revenue. These actions generated some revenues, although their positive 
impacts were overwhelmed by the recession—with its cutbacks in consumer 
spending and corporate advertising—and ongoing diversion of mail to 
electronic alternatives. 

Looking forward, USPS has opportunities to continue pursuing the 
flexibilities provided by PAEA to help generate additional revenue from 
postal products and services. However, results will continue to be 
constrained by the economic climate and by changing use of the mail. 
Mail volume has typically returned after past recessions, but much of 
the recent volume decline may not return. Increasing postal rates may 
provide a short-term revenue boost but would risk depressing mail 
volume and revenues in the long-term, in part by accelerating diversion 
of mail to electronic alternatives. USPS has asked Congress to change 
the restrictions established by PAEA so that it could offer new 
nonpostal products and services such as banking and insurance. Allowing 
USPS to compete more broadly with the private sector could lose money, 
and fair competition issues would need to be considered. Thus, in 
addition to its revenue-generation initiatives, USPS will need to 
continue making significant reductions in its workforce and network 
costs. When we recently added USPS’s financial condition to our high-
risk list, we said that restructuring will require USPS to align its 
costs with revenues, generate sufficient earnings to finance capital 
investment, and manage its debt. 

View [hyperlink, http://www.gao.gov/products/GAO-10-191T] or key 
components. For more information, contact Phillip Herr, (202) 512-2834 
or herrp@gao.gov. 

[End of section] 

Chairman Lynch, Ranking Member Chaffetz, and Members of the 
Subcommittee: 

I am pleased to be here today to participate in this oversight hearing 
on the U.S. Postal Service's (USPS) revenue-generation initiatives and 
opportunities. My statement will (1) provide an update on USPS's 
financial condition and outlook, (2) describe the changes made by the 
Postal Accountability and Enhancement Act (PAEA) of 2006[Footnote 1] 
that provided USPS with greater flexibility to generate revenues, (3) 
outline the actions that USPS took and results from using this 
flexibility since 2006, and (4) discuss options for USPS to generate 
increased revenues in the future. 

My statement is based upon our past and ongoing work, including our 
work on postal reform issues and opportunities created by PAEA, 
[Footnote 2] our continuing oversight of the financial condition, 
challenges, and opportunities facing USPS,[Footnote 3] and our past 
reports on USPS's efforts to generate revenue. 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. 

USPS's Financial Condition and Outlook Remain Challenging: 

USPS's financial condition and outlook continue to be challenging 
despite recent congressional action that relieved USPS of $4 billion in 
mandated payments to prefund postal retiree health benefits by 
September 30, 2009.[Footnote 4] Preliminary results from the end of 
fiscal year 2009 and USPS's outlook include: 

* In fiscal year 2009, mail volume declined about 28 billion pieces, or 
about 14 percent, from the prior fiscal year, when volume was about 203 
billion pieces; revenue declined from about $75 billion to about $68 
billion. 

* A looming cash shortfall necessitated last-minute congressional 
action to reduce USPS's mandated payments to prefund retiree health 
benefits from $5.4 billion to $1.4 billion. In the absence of this 
congressional action, USPS was on track to lose about $7 billion. USPS 
and its auditors are currently considering whether the $4 billion in 
relief will be booked in fiscal year 2009 or fiscal year 2010. 
Regardless of the outcome, USPS will have a large net loss for the 
third consecutive fiscal year and one of its largest losses in decades 
(see figure 1). 

* USPS debt at the end of fiscal year 2009 increased by the annual 
statutory limit of $3 billion, bringing outstanding debt to $10.2 
billion. If debt continues to increase by $3 billion annually, USPS 
will reach its total statutory debt limit of $15 billion in fiscal year 
2011. 

* Looking forward, USPS has projected annual deficits exceeding $7 
billion in fiscal years 2010 and 2011, and continuing large cash 
shortfalls.[Footnote 5] 

Figure 1: USPS Net Income (Loss), Fiscal Years 1972 to 2009: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 1972; 
Net income (loss): -$0.175 billion. 

Fiscal year: 1973; 
Net income (loss): -$0.013 billion. 

Fiscal year: 1974; 
Net income (loss): -$0.439 billion. 

Fiscal year: 1975; 
Net income (loss): -$0.989 billion. 

Fiscal year: 1976; 
Net income (loss): -$1.176 billion. 

Fiscal year: 1977; 
Net income (loss): -$0.687 billion. 

Fiscal year: 1978; 
Net income (loss): -$0.38 billion. 

Fiscal year: 1979; 
Net income (loss): $0.47 billion. 

Fiscal year: 1980; 
Net income (loss): -$0.306 billion. 

Fiscal year: 1981; 
Net income (loss): -$0.588 billion. 

Fiscal year: 1982; 
Net income (loss): $0.802 billion. 

Fiscal year: 1983; 
Net income (loss): $0.616 billion. 

Fiscal year: 1984; 
Net income (loss): $0.118 billion. 

Fiscal year: 1985; 
Net income (loss): -$0.251 billion. 

Fiscal year: 1986; 
Net income (loss): $0.304 billion. 

Fiscal year: 1987; 
Net income (loss): -$0.223 billion. 

Fiscal year: 1988; 
Net income (loss): -$0.597 billion. 

Fiscal year: 1989; 
Net income (loss): $0.061 billion. 

Fiscal year: 1990; 
Net income (loss): -$0.874 billion. 

Fiscal year: 1991; 
Net income (loss): -$1.469 billion. 

Fiscal year: 1992; 
Net income (loss): -$0.536 billion. 

Fiscal year: 1993; 
Net income (loss): -$1.765 billion. 

Fiscal year: 1994; 
Net income (loss): -$0.914 billion. 

Fiscal year: 1995; 
Net income (loss): $1.77 billion. 

Fiscal year: 1996; 
Net income (loss): $1.567 billion. 

Fiscal year: 1997; 
Net income (loss): $1.264 billion. 

Fiscal year: 1998; 
Net income (loss): $0.55 billion. 

Fiscal year: 1999; 
Net income (loss): $0.363 billion. 

Fiscal year: 2000; 
Net income (loss): -$0.199 billion. 

Fiscal year: 2001; 
Net income (loss): -$1.68 billion. 

Fiscal year: 2002; 
Net income (loss): -$0.676 billion. 

Fiscal year: 2003; 
Net income (loss): $3.868 billion. 

Fiscal year: 2004; 
Net income (loss): $3.065 billion. 

Fiscal year: 2005; 
Net income (loss): $1.445 billion. 

Fiscal year: 2006; 
Net income (loss): $0.9 billion. 

Fiscal year: 2007; 
Net income (loss): -$5.142 billion. 

Fiscal year: 2008; 
Net income (loss): -$2.806 billion. 

Fiscal year: 2009; 
Net income (loss): -$3 billion. 
Possible additional fiscal year 2009 losses (see note): -$4 billion. 

Source: USPS. 

Note: A looming cash shortfall necessitated last-minute congressional 
action to reduce USPS's mandated payments to prefund retiree health 
benefits from $5.4 billion to $1.4 billion. In the absence of this 
congressional action, USPS was on track to lose about $7 billion. USPS 
and its auditors are currently considering whether the $4 billion in 
relief will be booked in fiscal year 2009 or fiscal year 2010. 

[End of figure] 

As we previously reported, USPS's cost-cutting efforts and rate 
increases have not fully offset the impact of huge declines in mail 
volume (a decline of about 28 billion pieces in fiscal year 2009) and 
other factors--notably semi-annual cost-of-living allowances (COLA) for 
employees covered by union contracts. Compensation and benefits 
constitute close to 80 percent of USPS costs--a percentage that has 
remained similar over the years despite major advances in technology 
and automating postal operations. These costs declined by 1.3 percent 
in the first 11 months of fiscal year 2009 (the most recent data 
available) as compared to the same time period in fiscal year 2008, in 
contrast to other costs such as transportation, supplies and services, 
and depreciation, which together declined 8.2 percent. 

Over this same period, total revenue declined by 8.6 percent, including 
declines of 9.1 percent for market-dominant products[Footnote 6] and 
about 4.0 percent for competitive products.[Footnote 7] (See app. I for 
a summary of market-dominant and competitive products.) About 88 
percent of USPS revenue was generated from market-dominant products and 
services, with competitive products and services generating about 12 
percent of revenues (see fig. 2). 

Figure 2: USPS Revenue by Type of Mail and Service, Fiscal Year 2009: 

[Refer to PDF for image: pie-chart] 

First-Class Mail: 52%; 
Standard Mail: 25%; 
Competitive products and services: 12%; 
Other market-dominant products and services: 11%. 

Source: USPS. 

Note: Data are based on preliminary results for the first 11 months of 
the fiscal year. 

[End of figure] 

Legal Changes Provided USPS with Greater Flexibility to Generate 
Revenues: 

PAEA and implementing Postal Regulatory Commission (PRC) regulations 
provided USPS with greater flexibility to set prices, test new postal 
products, and retain earnings so that it can finance needed capital 
investments and repay its debt. PAEA abolished the former ratemaking 
structure that involved a lengthy, costly, and litigious process. Under 
the new structure, USPS has broad latitude to announce rate changes 
that are implemented in a streamlined process unless PRC determines 
these rates would violate legal requirements. Key requirements and 
flexibilities provided in the law include: 

* A price cap based on the Consumer Price Index generally applies to 
market-dominant classes of mail, such as First-Class Mail and Standard 
Mail. This means that in general, USPS has the flexibility to increase 
some individual rates either above or below the rate of inflation as 
long as the average rate increase for each class of mail does not 
exceed the cap. 

* USPS can request that PRC approve a rate increase that exceeds the 
price cap on the basis of extraordinary or unexpected circumstances 
(postal stakeholders refer to this as an "exigent" rate increase). PRC 
must determine whether such an increase would be reasonable, equitable, 
and necessary "to maintain and continue developing postal services of 
the kind and quality adapted to the needs of the United States." 
[Footnote 8] 

* Worksharing discounts for market-dominant products are generally 
limited to the costs avoided by USPS as a result of specified mailer 
activities.[Footnote 9] 

* Each competitive product must generate sufficient revenues to cover 
its costs. In addition, competitive products must collectively cover 
what PRC determines to be an appropriate share of USPS's overhead 
costs. PRC has determined this share to be 5.5 percent of USPS's 
overhead costs. Within these constraints, USPS was given broad pricing 
flexibility for its competitive products, which are not subject to a 
price cap. USPS can also establish volume discounts for competitive 
products as well as enter into contract rates with individual mailers. 

* PAEA generally restricted USPS to offering postal products and 
services by prohibiting it from initiating new nonpostal products and 
services. USPS was required to discontinue existing nonpostal products--
such as passport photo services and photocopying services--except for 
those that PRC determined should be continued.[Footnote 10] 
Subsequently, PRC determined that most existing USPS nonpostal products 
should be continued. 

USPS Actions to Generate Revenue since PAEA Have Generally Achieved 
Limited Results: 

In the short time since PAEA was enacted, with the exception of annual 
rate increases, revenue-generation actions have generally achieved 
limited results compared to USPS's deficits. We commend USPS for taking 
action to use its pricing flexibility to address the pressing need for 
additional revenue. Although these actions generated some revenues, 
their positive impacts were overwhelmed by the recession--with its 
cutbacks in consumer spending and corporate advertising--and ongoing 
diversion of mail to electronic alternatives. Further, the potential of 
some actions was limited because they applied to types of mail that 
generate only a small fraction of USPS revenues. Other actions, such as 
targeted sales for some types of mail, were implemented this year with 
little advance notice, which may have limited mailer response. Key USPS 
revenue-generation actions since PAEA was enacted are summarized below. 

* Rate Increases for Market-Dominant Mail: Under the ratemaking system 
established by PAEA, USPS annually increased rates in 2008 and 2009 for 
market-dominant classes of mail at virtually the maximum allowable 
amount under the price cap. To put this into context, historically, 
rate increases have been a key action that USPS has taken to remain 
financially viable. 

* Volume-Based Incentives for Specific Types of Market-Dominant Mail: 
USPS has recently implemented three targeted rate incentives to 
stimulate additional mail volume and take advantage of its excess 
operational capacity.[Footnote 11] 

- First, a 2009 "summer sale" for Standard Mail offered lower rates for 
volumes that exceeded specific thresholds, with the goal of increasing 
mail volume during a typically slow period. 

- Second, an ongoing "fall sale" for First-Class Mail aimed at 
commercial mailers is providing lower rates for volume over specific 
thresholds. 

- Third, an ongoing Saturation Mail[Footnote 12] incentive program also 
is providing lower rates for volume over specific thresholds. 

* Negotiated Service Agreements (NSA)[Footnote 13] for Market-Dominant 
Products: According to USPS data, its seven NSAs for market-dominant 
products collectively did not generate any net revenue in fiscal years 
2007 and 2008 combined. These NSAs generally offered mailers lower 
rates for volumes that exceeded specific thresholds. Mailers also 
agreed to actions to reduce some USPS costs, such as the substitution 
of electronic notices in lieu of USPS returning undeliverable 
advertising mail. 

* Rate Changes and Contract Rates for Competitive Products: Under the 
ratemaking system established by PAEA, USPS annually increased rates in 
2008 and 2009 for competitive products such as Priority Mail and 
Express Mail. USPS also made product and pricing changes to enhance 
their competitiveness, such as a new small flat-rate box for Priority 
Mail and the introduction of zone-based rates for Express Mail. USPS 
has introduced volume discounts for Express Mail, Priority Mail, and 
bulk Parcel Post. USPS has also introduced lower rates for electronic 
postage used for some competitive products such as Express Mail and 
Priority Mail. In addition, USPS has entered into close to 90 contracts 
with mailers of competitive products that included Priority Mail, 
Express Mail, bulk Parcel Post, Parcel Return Service, and various 
types of bulk international mail. These contracts are generally volume 
based and have provisions intended to lower USPS's mail handling costs. 
USPS does not publicly report results for its individual contracts 
because it considers this information to be proprietary. 

USPS Revenue-Generation Options Involving Postal Products and Services 
Appear More Promising than Venturing into New Risky Areas: 

Looking forward, USPS has opportunities to continue pursuing the 
flexibilities provided by PAEA to help generate additional revenue from 
postal products and services. For example, USPS is continuing to pursue 
its "Click-N-Ship" initiative that allows customers to print out 
mailing labels with postage, as well as flexible pricing for Express 
Mail, Priority Mail, and bulk Parcel Post. USPS is also promoting 
voting by mail to stimulate additional First-Class Mail volume. 
However, results from USPS revenue-generation efforts will continue to 
be constrained by the economic climate and by changing use of the mail. 
USPS has asked Congress to change the restrictions established by PAEA 
so that it could offer new nonpostal products and services such as 
banking and insurance. However, USPS has not presented a business plan 
which details what markets it might enter, its prospects for 
profitability, and what specific legislative changes would be needed. 
Allowing USPS to compete more broadly with the private sector would 
raise risks and concerns. As with USPS's nonpostal ventures before PAEA 
was enacted, new nonpostal ventures could lose money; and even if they 
were to make money, issues related to unfair competition would need to 
be considered. 

On the other hand, increasing postal rates may provide a short-term 
revenue boost but would risk depressing mail volume and revenues in the 
long term, in part by accelerating diversion of payments, 
communications, and advertising to electronic alternatives. Recognizing 
this, the Postmaster General recently announced that there will not be 
an "exigent" price increase in 2010 for market-dominant products such 
as First-Class Mail and Standard Mail.[Footnote 14] He explained: 
"While increasing prices might have generated revenue for the Postal 
Service in the short term, the long-term effect could drive additional 
mail out of the system." Similarly, increasing rates for competitive 
products such as Express Mail and Priority Mail may provide a short-
term revenue boost but risk long-term losses in mail volume, revenues, 
and USPS competitiveness. Further, the short-term impact of increasing 
competitive rates would likely be limited because competitive products 
and services generate about 12 percent of USPS revenue. USPS has not 
announced whether it will increase rates for competitive products in 
2010. 

Whether USPS should be allowed to engage in nonpostal activities should 
be carefully considered, including its poor past performance in this 
area, as should the risks and fair competition issues. We have 
previously reported that: 

* USPS lost nearly $85 million in fiscal years 1995, 1996, and 1997 on 
19 new products, including electronic commerce services, electronic 
money transfers, and a remittance processing business, among others. 
[Footnote 15] 

* In 2001, we reported that none of USPS's electronic commerce 
initiatives were profitable and that USPS's management of these 
initiatives--such as an electronic bill payment service that was 
eventually discontinued--was fragmented, with inconsistent 
implementation and incomplete financial information.[Footnote 16] 

We testified during the debate on postal reform on some longstanding 
questions about whether USPS should enter into nonpostal initiatives 
and the appropriate role of a federal entity competing with private 
firms, particularly since USPS has a statutory monopoly on letter mail 
and other disparities in legal status vis-ŕ-vis its potential 
competitors, such as exemptions from taxes.[Footnote 17] Questions 
include: 

* Should USPS be allowed to compete in areas where there are already 
private-sector providers, and if so, on what terms? 

* What laws should be applied equally to USPS and its competitors, such 
as anti-trust and consumer protection laws? 

* What transparency and accountability mechanisms would be needed for 
any new nonpostal products and services to prevent unfair competition 
and inappropriate cross-subsidization from postal products and 
services? 

* Should USPS be subject to the same regulatory entities and 
regulations as its competitors if it could compete in banking, 
insurance, and retail services? Would the PRC have an oversight role 
for any new nonpostal activities? 

* If USPS used existing retail presence of 37,000 facilities to offer 
new nonpostal products and services--such as leasing or subleasing 
excess capacity in its facilities--would this be an unfair competitive 
advantage? 

* How would USPS finance its nonpostal activities, considering its 
difficult financial condition? Would USPS be allowed to borrow at 
Treasury rates more favorable than those available to other businesses? 

In conclusion, when we recently added USPS's financial condition to our 
high-risk list, we stated that USPS urgently needs to restructure to 
achieve short-term and long-term financial viability.[Footnote 18] USPS 
has not been able to cut costs fast enough or generate sufficient 
revenue to offset the accelerated decline in mail volume and revenue. 
USPS restructuring will require aligning its costs with revenues, 
generating sufficient earnings to finance capital investment, and 
managing its debt. Although USPS has taken some action to use its 
pricing and product flexibility under PAEA, results to date have been 
limited and will be constrained by the economic climate and changing 
use of the mail. Mail volume has typically returned after past 
recessions, but much of the recent volume decline may not return. 
Nevertheless, USPS has opportunities to generate new revenues from 
postal products and services that appear more promising than venturing 
into new risky nonpostal areas, while also making significant 
reductions in its workforce and network costs. 

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

GAO Contact and Staff Acknowledgments: 

For further information regarding this statement, please contact 
Phillip Herr at (202) 512-2834 or herrp@gao.gov. Individuals who made 
key contributions to this statement include Shirley Abel, Teresa 
Anderson, Gerald P. Barnes, Colin Fallon, Kenneth E. John, Hannah 
Laufe, Daniel Paepke, and Crystal Wesco. 

[End of section] 

Appendix I: Highlights of Market-Dominant and Competitive Products: 

Market-dominant products: First-Class Mail; 
Summary description: Domestic and international single-piece mail 
(e.g., bill payments and letters) and domestic bulk mail (e.g., bills 
and advertising). 

Market-dominant products: Standard Mail; 
Summary description: Mainly bulk advertising and direct mail 
solicitations. 

Market-dominant products: Periodicals; 
Summary description: Mainly magazines and local newspapers. 

Market-dominant products: Package Services; 
Summary description: Mainly the following: 
* Single-piece Parcel Post (e.g., packages and thick envelopes with 
gifts and merchandise); 
* Media Mail (e.g., books, CDs, and DVDs); 
* Library mail (e.g., items on loan from or mailed between academic 
institutions, public libraries, and museums); 
* Bound printed matter (e.g., permanently-bound sheets of advertising, 
or directories such as catalogs and phone books). 

Market-dominant products: Market-dominant special services; 
Summary description: A variety of services, such as: 
* Post office box service; 
* Money orders; 
* Insurance; 
* Delivery receipt services (e.g., Delivery Confirmation, Signature 
Confirmation); 
* Certified Mail and Registered Mail; 
* Address list services (e.g., services to update and correct business 
mailing lists); 
* Caller service (business mail pickup at a USPS facility). 

Market-dominant products: Express Mail; 
Summary description: Guaranteed overnight delivery to most locations 
for time-sensitive letters, documents or merchandise. 

Market-dominant products: Priority Mail; 
Summary description: 2-3 day service to most domestic locations that is 
often used to expedite delivery. 

Market-dominant products: Parcel Select; 
Summary description: Bulk Parcel Post parcel mailings entered at USPS 
facilities that are generally close to the destination of the mail. 

Market-dominant products: International Express Mail; 
Summary description: Expedited delivery of items to foreign countries, 
with guaranteed date-certain service to some locations. 

Market-dominant products: International Priority Mail; 
Summary description: Delivery of items to foreign countries that 
generally has faster service standards than International First-Class 
Mail. 

Market-dominant products: Bulk international mail; 
Summary description: Bulk mailings sent to other countries (e.g., 
bills, statements, advertising, and magazines). 

Market-dominant products: Parcel Return Service; 
Summary description: Business retrieval of returned parcels from USPS 
facilities. 

Market-dominant products: Competitive special services; 
Summary description: A variety of services, such as: 
* Premium Forwarding Service (reshipping mail from a primary 
residential address and some P.O boxes to a temporary address using 
Priority Mail); 
* International delivery receipt services, such as Registered Mail, 
return receipt, and restricted delivery. 

Source: USPS. 

[End of table] 

[End of section] 

Footnotes: 

[1] Pub. L. No. 109-435, 120 Stat. 3198, enacted Dec. 20, 2006. 

[2] GAO, U.S. Postal Service: Postal Reform Law Provides Opportunities 
to Address Postal Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-07-685T] (Washington, D.C.: Apr. 19, 
2007); U.S. Postal Service: Key Elements of Comprehensive Postal 
Reform, [hyperlink, http://www.gao.gov/products/GAO-04-397T] 
(Washington, D.C.: Jan. 28, 2004); U.S. Postal Service: Bold Action 
Needed to Continue Progress on Postal Transformation, [hyperlink, 
http://www.gao.gov/products/GAO-04-108T] (Washington: D.C.: Nov. 5, 
2003). 

[3] GAO, U.S. Postal Service: Restructuring Urgently Needed to Achieve 
Financial Viability, [hyperlink, 
http://www.gao.gov/products/GAO-09-958T] (Washington, D.C.: Aug. 6, 
2009); U.S. Postal Service: Broad Restructuring Needed to Address 
Deteriorating Finances, [hyperlink, 
http://www.gao.gov/products/GAO-09-790T] (Washington, D.C.: July 30, 
2009). 

[4] The change in prefunding payments does not change USPS's 
responsibility to eventually pay for its unfunded retiree health care 
obligation, which was about $53 billion according to USPS's fiscal year 
2008 annual report. 

[5] These projections were provided to GAO in August 2009 and are the 
most recent USPS has made available. 

[6] Market-dominant products primarily include First-Class Mail (e.g., 
correspondence, bills, payments, statements, and advertising), Standard 
Mail (mainly bulk advertising and direct mail solicitations), 
periodicals (mainly magazines and local newspapers), and some types of 
package services (primarily single-piece Parcel Post, Media Mail, 
library mail, and bound printed matter). 

[7] Competitive products primarily include Express Mail, Priority Mail, 
bulk Parcel Post (which USPS calls Parcel Select), and bulk 
international mail. 

[8] 39 U.S.C. § 3622(d)(1)(E). 

[9] Worksharing discounts are defined by law as rate discounts provided 
to mailers for the presorting, prebarcoding, handling, or 
transportation of mail. 39 U.S.C. § 3622(e). 

[10] 39 U.S.C. §404(c). 

[11] Results are not yet available for these recent initiatives. 

[12] Saturation Mail is Standard Mail that is sent to all or most 
addresses on selected carrier routes and meets presorting and mail 
preparation requirements. 

[13] NSAs generally specify mutual agreements between USPS and mailers 
involving the preparation, presentation, acceptance, processing, 
transportation and delivery of mailings under particular rate, 
classification and service conditions, and restrictions that go beyond 
those required of other mailers. 

[14] The price cap is expected to be zero for 2010 because of recent 
declines in the Consumer Price Index, so an "exigent" rate increase 
would be needed to raise average rates for market-dominant products. 

[15] GAO, U.S. Postal Service: Development and Inventory of New 
Products, [hyperlink, http://www.gao.gov/products/GAO/GGD-99-15] 
(Washington, D.C.: Nov. 24, 1998) 

[16] GAO, U.S. Postal Service: Update on E-Commerce Activities and 
Privacy Protections, [hyperlink, 
http://www.gao.gov/products/GAO-02-79] (Washington, D.C.: Dec. 21, 
2001). Also see GAO, U.S. Postal Service: Postal Activities and Laws 
Related to Electronic Commerce, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-00-188] (Washington, D.C.: Sept. 7, 
2000). 

[17] GAO, U.S. Postal Service: Bold Action Needed to Continue Progress 
on Postal Transformation, [hyperlink, 
http://www.gao.gov/products/GAO-04-108T] (Washington, D.C.: Nov. 5, 
2003). 

[18] GAO, High-Risk Series: Restructuring the U.S. Postal Service to 
Achieve Sustainable Financial Viability, [hyperlink, 
http://www.gao.gov/products/GAO-09-937SP] (Washington, D.C.: July 28, 
2009). 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO’s Web site, 
[hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional 
information. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, dawnr@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: