U.S. Postal Service: Action Needed to Maximize Cost-Saving Potential of Alternatives to Post Offices
GAO-12-100
Published: Nov 17, 2011. Publicly Released: Nov 17, 2011.
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Highlights
Declines in mail volume have brought the U.S. Postal Service (USPS) to the brink of financial insolvency. Action to ensure its financial viability is urgently needed. Visits to post offices have also declined, and in an effort to cut costs, USPS is considering closing nearly half of its 32,000 post offices by 2015. In their place, alternatives to post offices, such as the Internet, self-service kiosks, and partnerships with retailers, are increasingly important for providing access to postal services. Retail alternatives also hold potential to help improve financial performance by providing services at a lower cost than post offices. As requested, this report discusses how (1) USPS's efforts to expand access through retail alternatives support its service and financial performance goals, (2) USPS communicates with the public about retail alternatives, and (3) USPS oversees its retail partners. To conduct this work, GAO analyzed USPS documents and data and interviewed USPS officials and stakeholders. GAO also interviewed operators of postal retail partnerships.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| United States Postal Service | To better ensure that USPS's efforts to expand access through retail alternatives support its strategic goals to improve its service and financial performance, the Postmaster General should develop and implement a plan with a timeline to guide efforts to modernize USPS's retail network that addresses both traditional post offices and retail alternatives. This plan should also include: (1) criteria for ensuring the retail network continues to provide adequate access for customers as it is restructured; (2) procedures for obtaining reliable retail revenue and cost data to measure progress and inform future decision making; and (3) a method to assess whether USPS's communications strategy is effectively reaching customers, particularly those customers in areas where post offices may close. |
Although USPS did not disagree with the recommendation when it was made, it reports that its overall approach for retail services has changed. USPS maintains that its strategy for providing retail access continually evolves in response to changing customer demands and other factors and is therefore not documented in a single comprehensive plan. We acknowledge USPS's need to adapt to changing conditions and that it has taken some steps to address the issues we identified. However, we still believe that a plan would provide USPS a clear path for optimizing its retail network. Given the length of time that has elapsed and the fact that USPS has neither developed a plan nor documented a strategy for optimizing its retail network, we believe it is appropriate to close this recommendation as not implemented.
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| United States Postal Service | To help ensure contract postal units and Approved Shippers provide postal products and services in accordance with USPS policies, while making efficient use of its constrained resources, the Postmaster General should establish procedures to focus monitoring of retail partners on those determined to be at a greater risk of not complying with its requirements and procedures. |
Declines in mail volume brought USPS to the brink of financial insolvency. In an effort to bring costs in line with revenue, USPS was considering closing nearly half of its 32,000 post offices by 2015 and replacing them with alternatives to post offices, including self-service options and partnerships with retailers to contain costs while providing access to service. One type of alternative access is the contract postal unit (CPU), which is most comparable to post offices, and is operated and managed by independent retailers-retail partners-that USPS contracts with. In 2011, GAO reported that as USPS expanded its use of retail partners, USPS established procedures for monitoring their performance. USPS's guidance for overseeing CPUs stated that local USPS officials are supposed to conduct quarterly reviews of every CPU-which in 2010 numbered around 3,600-to make sure they are following USPS procedures. According to retail partners and USPS officials, these reviews did not always occur as often as intended because of resource constraints. Cuts in USPS's management-level staffing may contribute to lapses in oversight of retail partners. GAO previously reported that a risk-based approach to oversight can help agencies effectively target constrained resources to better address potential problem areas. Such an approach could help USPS identify which retail partners should be monitored more closely and would give managers flexibility to conduct reviews more or less frequently as warranted by available resources and assessments of risks. Therefore, GAO recommended that USPS should establish procedures to focus monitoring of retail partners on those determined to be at a greater risk of not complying with its requirements and procedures. In 2018, GAO confirmed that USPS had developed a risk-based approach to monitoring CPUs based on their revenue. Under this approach, CPUs that have greater revenue will be monitored more frequently than those with lower revenue. As a result, USPS is in a better position to more efficiently use its constrained management resources and effectively monitor its retail partners to help ensure they follow USPS procedures and provide quality service.
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Cost analysisCustomer serviceFinancial analysisInternal controlsInternetMonitoringPerformance measuresPostal facilitiesPostal servicePublic relationsRetail facilitiesStrategic planningFederal agency reorganizationBusiness operationsFinancial conditionMail processing operationsPolicies and procedures