oversight

U.S. Postal Service: Challenges to Sustaining Performance Improvements Remain Formidable on the Brink of the 21st Century

Published by the Government Accountability Office on 1999-10-21.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                     United States General Accounting Office

GAO                  Testimony
                     Before the Subcommittee on the Postal Service
                     Committee on Government Reform
                     House of Representatives


Not to be Released
Before
10:00 a.m. EDT       U.S. POSTAL SERVICE
Thursday
October 21, 1999


                     Challenges to Sustaining
                     Performance
                     Improvements Remain
                     Formidable on the Brink
                     of the 21st Century
                     Statement by Bernard L. Ungar
                     Director, Government Business Operations Issues
                     General Government Division




GAO/T-GGD-00-2
Summary

U.S. Postal Service: Challenges to Sustaining
Performance Improvements Remain
Formidable on the Brink of the 21st Century
                The Postal Service may be nearing the end of an era. During the past 5
                years, the Service has made notable improvements in its financial position
                and delivery performance. The Service has recorded positive net income
                and has maintained or improved the overall delivery of certain specific
                classes of mail. However, the Service expects declines in its core business
                in the coming years. The growth of the Internet, electronic
                communications, and electronic commerce has the potential to
                substantially affect the Service’s mail volume. As a result, the Service may
                experience growing difficulty in maintaining its position in a dynamic
                communications and delivery environment. These developments make it
                imperative for the Service to resolve long-standing performance
                challenges, which involve four major areas.

              • Maximize performance: The Service’s ability to maximize performance in
                the face of increasing customer demands and choices calls for establishing
                processes to accurately assess performance results and collecting and
                maintaining reliable data to support such assessments.
              • Manage employees: The Service’s management of employees, its greatest
                asset, will in large part involve continued attention to labor-management
                relations problems that have plagued the Service and its unions and
                management associations for several years.
              • Maintain financial viability: The extent to which the Service can maintain
                financial viability by controlling costs and enhancing revenues will involve
                appropriately managing its capital investments in technology and
                infrastructure as well as working to improve productivity.
              • Adapt to competition: The means by which the Service can adapt to a
                rapidly changing communications environment of growing competition
                will involve positioning the organization to meet changing customer needs,
                improve performance, and operate more efficiently.

                GAO is also highlighting the need for the Postal Service to take action to
                address long-standing issues related to the quality of data used in
                ratemaking and recommending that the Postmaster General report to
                congressional oversight subcommittees on the actions taken and planned
                in this area.

                In recent years, the Service has progressed in addressing various
                challenges and is continuing to initiate significant changes that respond to
                                                                                       st
                the challenges. However, as the Service stands on the brink of the 21
                century, time appears to be growing short for the Service to successfully
                address its challenges so that it can sustain and improve current
                performance levels and remain competitive in a rapidly changing
                communications environment.



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Statement

U.S. Postal Service: Challenges to Sustaining
Performance Improvements Remain
Formidable on the Brink of the 21st Century
                        Mr. Chairman and Members of the Subcommittee:

                        We are pleased to be here today to participate in the Subcommittee’s
                        oversight hearing on the U.S. Postal Service. In my testimony, I shall
                        provide an overview of where the Service stands today, as we come to the
                                      th
                        end of the 20 century, by looking back at trends in its financial and
                        service delivery performance and also looking forward to the major
                        challenges confronting the Service at the start of a new millennium. Also, I
                        will discuss ongoing work and work that we have completed since June
                        1998 related to four major challenges facing the Postal Service:

                        • maximizing performance in the face of increasing customer demands
                          and choices;

                        • managing employees, the Service’s most valuable asset, to maximize
                          attainment of agency goals and continuous improvement of employee
                          performance;

                        • maintaining financial viability by controlling costs and enhancing
                          revenues; and

                        • positioning the organization to adapt to a rapidly changing
                          communications and delivery environment with a growing number of
                          competitors.

                        I will also discuss other major postal oversight issues related to work that
                        we have completed during the past year. A list of the reports and
                        testimonies we have issued since June 1, 1998, is included in the
                        attachment to this statement.

                        The Service has continued to report improvements in the areas of financial
Overview of Financial   and service delivery performance and has undertaken a number of
and Service Delivery    initiatives to respond to the four major challenges that we identified.
Performance             Given the nature and extent of the challenges facing the Service, we
                        understand that it will take time to implement and assess the impact of
                        major initiatives intended to address the challenges. And, although the
                        Service has made progress and is continuing to make significant changes,
                        time appears to be growing short for the Service to successfully address
                        these challenges so that it can sustain and improve current performance
                                                                   st
                        levels and remain competitive into the 21 century.




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                           Statement
                           U.S. Postal Service: Challenges to Sustaining Performance Improvements Remain
                           Formidable on the Brink of the 21st Century




The Impact of Increasing   The Service faces growing challenges from competition, notably from
                           private delivery companies and electronic communications alternatives
Competition                such as the Internet. The Service projects that such competition will lead
                           to substantial declines in the Service’s First-Class Mail volume in the next
                           decade. Should this occur, the Service will likely face unprecedented
                           challenges as it seeks to fulfill its primary mission of providing universal
                           postal service at reasonable rates while remaining self-supporting from
                           postal revenues.

                           The Service and other stakeholders agree that growth in the Service’s core
                           business of delivering First-Class Mail has already been affected by the
                           rapid growth of the Internet, electronic communications, and electronic
                           commerce. Although the Service’s mail volume increased in the 1990s to
                           record levels, the rate of growth has slowed. As figure 1 indicates, the
                           Service projects that First-Class Mail volume will decline at an average
                           annual rate of 0.8 percent in fiscal years 1999 to 2008. Specifically, First-
                           Class Mail is projected to grow at an average annual rate of 1.8 percent in
                           fiscal years 1999 to 2002—the projected peak—and then to decline at an
                           average annual rate of 2.5 percent in fiscal years 2003 to 2008. Such a
                           decline would be unprecedented in the Service’s history and would likely
                           create financial and performance challenges. As the Postmaster General
                           has noted, the Service’s environment is changing rapidly, and therefore the
                           Service cannot predict precisely when or to what extent competitive
                           pressures may affect the Service’s revenues.




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                                         U.S. Postal Service: Challenges to Sustaining Performance Improvements Remain
                                         Formidable on the Brink of the 21st Century




Figure 1: U.S. Postal Service Projects
Future Decline in First-Class Mail
Volume




                                         Note 1: The U.S. Postal Service forecasts First-Class Mail to increase by an average annual rate of
                                         1.8 percent in fiscal years 1999 through 2002 and to decline by an average annual rate of 2.5 percent
                                         in fiscal years 2003 through 2008. The Service also forecasts Standard A mail to increase by an
                                         average annual rate of 5.3 percent in fiscal years 1999 through 2002 and to increase by an average
                                         annual rate of 3.3 percent in fiscal years 2003 through 2008.
                                         Note 2: Actual data for fiscal year 1999 are not yet available. Standard A mail is primarily advertising
                                         mail and includes letters, flats, and parcels that are not sent by First-Class Mail or Priority Mail.
                                         Source: U.S. Postal Service.


                                         Historically, increases in mail volume—including the volume of First-Class
                                         Mail—have helped the Service cover its costs. In the 1990s, increasing
                                         postage rates and mail volume helped provide the Service with additional
                                         revenue to finance wage increases, modernization efforts, and
                                         improvements in the quality of delivery service. The Service projects that
                                         total mail volume will continue to increase from fiscal years 2000 through
                                         2008 by an average annual rate of 1.7 percent, with the growth rate
                                         tapering off during the decade and total mail volume peaking in fiscal year
                                         2006.




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U.S. Postal Service: Challenges to Sustaining Performance Improvements Remain
Formidable on the Brink of the 21st Century




Even if total mail volume increases, a decline in First-Class Mail volume
would present the Service with the challenge of making corresponding
reductions in the costs of handling First-Class Mail—that is, in costs that
historically have varied directly or indirectly with changes in First-Class
Mail volume—in order to hold down First-Class rates. Further, in fiscal
year 1998, revenues from First-Class Mail covered about two-thirds of the
                              1
Service’s institutional costs. A substantial reduction in First-Class Mail
volume would reduce its contribution to institutional costs, which could
lead to somewhat higher postage rates in the future.

The Service recently provided us with a detailed explanation of its volume
forecast scenario and why it projects a substantial decline in First-Class
Mail in the next decade. The Service’s Chief Financial Officer wrote us on
September 9, 1999, that First-Class Mail volume is projected to decline on
the basis of the assumption that diversion of mail to electronic
communications alternatives would accelerate in a new and vastly
different environment in which the Service would operate. In this
environment, changes in technology and business would create a climate
in which current hypotheses about mailing behavior may no longer hold.
Notably, the combination of consumer movement to alternative bill
payment methods and the consolidation in the financial sector would
reduce the number of bills, statements, and payments in the mail stream.
Moreover, the movement of advertisers to the Internet would cause a
slowdown in the growth of Standard A mail, while growth in Priority Mail
and Parcel Post would continue to be robust as consumers embrace
electronic commerce and more packages are shipped by Internet retailers.
Specifically, the Service’s forecast was based on the following
assumptions:

• Potential Year 2000-related complications are largely avoided,
  increasing business and consumer confidence in electronic alternatives
  to traditional mail-based bill and statement streams.

• Businesses increase research and development and technology spending
  as a result of the easy Year 2000 transition, resulting in rapid
  implementation of on-line banking and financial applications and the
  spread of Internet-based small business Electronic Data Interchange.




1
Institutional costs do not vary by changes in mail volume, such as costs to maintain a national network
of over 38,000 post offices and postal facilities and to deliver to 130 million addresses 6 days a week.




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                           U.S. Postal Service: Challenges to Sustaining Performance Improvements Remain
                           Formidable on the Brink of the 21st Century




                           • First-Class letter advertising reaches a saturation point because of
                             consolidation in the banking sector, as well as the diversion of bills and
                             payments away from the mail stream.

                           • Advertisers move away from traditional media to Internet-based
                             platforms because of increased consumer use of the Internet.

                           Another key development has been the globalization of the Service’s
                           competitors in the delivery sector, which has contributed to recent
                           declines in the Service’s international mail volume. Further, the Service’s
                           competitors have charged that the Service is using its governmental status
                           to compete unfairly. These developments have fueled the debate over
                           whether the Service should be allowed to introduce new nonpostal
                           products in competition with the private sector, or whether the Service
                           should be limited to offering traditional postal services and wind down its
                           operations as its core business declines. Regardless of how this public
                           policy debate is resolved, the Service has recognized that it must continue
                           to meet customer needs, improve its performance, and operate more
                           efficiently in order to be successful in an increasingly competitive
                           environment.

Financial and Delivery     The Service projects positive results for both financial and service
                           performance for fiscal years 1999 and 2000. As shown in figure 2, the
Performance Continues to   Service projects a net income of $200 million in fiscal year 1999, and its
Show Positive Results      Integrated Financial Plan for fiscal year 2000 projects a net income of $100
                           million.




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                                         Formidable on the Brink of the 21st Century




Figure 2: Trends in Postal Service Net Income Since Postal Reorganization Was Implemented




                                         Source: U.S. Postal Service.


                                         If the Service achieves these net income projections, it will be the first
                                         time that the Service has achieved positive net income for 6 consecutive
                                         years since postal reorganization was implemented in 1971. However, the
                                         Service’s Integrated Financial Plan for fiscal year 2000 has reported that in
                                         order to accomplish net income of $100 million in fiscal year 2000, the
                                         Service would need to realize a 1-percent reduction in workhours. This
                                         plan projected that growth in total mail volume will be 3.8 percent in fiscal
                                         year 2000, which would add to the Service’s workload. Also, according to
                                         Postal Service data, the size of the Service’s city and rural delivery network
                                         has increased more than 1 percent in each of the past 4 years. If the
                                         Service’s delivery network continues to grow, this would further add to the
                                         workload of mail delivery. In addition, the Service has established goals to
                                         maintain or improve mail delivery service in fiscal year 2000.

                                         The Postmaster General has stated that the Postal Service is cutting costs
                                         to preserve affordable rates but that service will not be sacrificed. As
                                         shown in figure 3, during the 1990s, the Service improved on-time delivery
                                         of First Class Mail that is to be delivered overnight, as well as First-Class
                                         Mail that is to be delivered 2 or 3 days after it is mailed. The Service also



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                                   U.S. Postal Service: Challenges to Sustaining Performance Improvements Remain
                                   Formidable on the Brink of the 21st Century




                                   appears to be on track for achieving record delivery service performance
                                   for this year. The Service’s Performance Plan for fiscal year 2000 sets goals
                                   to continue the improved performance in these areas, as well as setting an
                                   additional performance target for on-time delivery of advertising mail.

Figure 3: On-Time Delivery
Performance for First-Class Mail




                                   Source: U.S. Postal Service.


                                   We have identified four major challenges facing the Postal Service as the
Challenges Facing the                 st
                                   21 century quickly approaches: (1) maximizing performance in the face
Service                            of increasing customer demands and choices, (2) managing employees—
                                   the Service’s most valuable asset—to maximize attainment of agency goals
                                   and continuous improvement of employee performance, (3) maintaining
                                   financial viability by controlling costs and enhancing revenues, and (4)
                                   adapting to a rapidly changing communications and delivery environment
                                   with a growing number of competitors.

Maximizing Performance             One of the major and continuing challenges that the Service faces involves
                                   its effort to maximize performance in the face of increasing customer



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                          Formidable on the Brink of the 21st Century




                          demands and choices. As part of this effort, the Service has established a
                          results-oriented planning process. As required by the Government
                          Performance and Results Act of 1993 (the Results Act), the Service has
                          published annual performance plans. These plans were aligned with its
                          planning process and identified the Service’s major goals and objectives,
                          strategies for accomplishing the goals and objectives, and some
                          performance indicators to measure progress toward these goals.

                          The Service’s performance plan should help guide its actions over the next
                          year and provide information useful to the Service’s ongoing dialogue with
                          Congress and other stakeholders. The Preliminary Annual Performance
                          Plan for Fiscal Year 2000 specified goals and targets for the Service’s
                          intended performance in such areas as providing timely delivery,
                          improving workplace relations, and achieving its target for net income. In
                          response to a report we issued in April 1999, the Service agreed to identify
                                                                                           2
                          its top goals for fiscal year 2000 in its final performance plan. Also, the
                          final plan provided updated information on the Service’s projected
                          revenues and costs for fiscal year 2000 as well as an updated summary of
                          the Service’s efforts to reduce its costs.

                          Early next year, the Service is to publish its first annual program
                          performance report under the Results Act as part of its Fiscal Year 2000
                          Comprehensive Statement on Postal Operations. This report should help
                          the Service, Congress, and other stakeholders assess the Service’s
                          performance in the past fiscal year compared to the goals included in its
                          performance plan. In this regard, it will be important to many postal
                          stakeholders for the Service to continue to make tangible progress toward
                          implementing a more complete set of performance measures and targets.
                          For example, in fiscal year 2000, the Service intends to develop new
                          measures of timely delivery of international mail, publications, and bill
                          payments sent through the mail. As we observed in our January 1999
                          report on the Service’s major performance and management challenges,
                          the prospect of declines in the Service’s core business has heightened the
                          need for the Service to resolve long-standing performance issues and
                                                                                  3
                          implement reliable indicators of postal performance.

Ratemaking Data Quality   To date, limited assessments have been made of the reliability of the
                          Service’s performance data. Data integrity is vital to the Service’s

                          2
                           The Results Act: Observations on the Postal Service’s Preliminary Performance Plan for Fiscal Year
                          2000 (GAO/GGD-99-72R, Apr. 30, 1999).
                          3
                           Major Management Challenges and Program Risks: U.S. Postal Service (GAO/OCG-99-21, January
                          1999).




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performance report as well as other mission-critical areas, such as setting
postal rates. One study, which was initiated at the request of this
Subcommittee, established a good beginning by assessing the quality of
data used in postal ratemaking and identifying opportunities to improve
the quality of these data.

The study involved a joint 1997 agreement among the Service, the Postal
Rate Commission, and us to have an outside contractor conduct a
comprehensive assessment of the quality of data used by the Service in
setting postal rates. The study, conducted by A.T. Kearney, Inc., resulted
in a report released earlier this year that included 47 recommendations
designed to improve and enhance the completeness and the accuracy of
                                             4
data the Service provides for ratemaking. The contractor found that
providing sufficiently complete and accurate data is an evolutionary
process that requires the Service to continually improve the quality of its
ratemaking and related data systems. For example, changes in operations
require ongoing improvements to data systems to ensure that appropriate
data are collected.

The contractor concluded that the quality of the data provided by the
Service for ratemaking has generally been sufficiently complete and
accurate to enable subclass rates to be based on reasonably reliable data.
However, the contractor reported concerns that in some instances, the
best available data were used regardless of their inherent levels of error or
obsolescence. The contractor concluded that “…improvements and
enhancements can--and must--be made to ensure future data provided for
rate making will be sufficiently complete and accurate.” Some of the key
recommendations related to the following areas:

• Mail processing: better measure costs related to mail processing;

• Delivery: update and improve the quality of special study data used to
  determine delivery costs;

• Capital and support: improve the measure of capital and support costs;
  and

• Revenue, volume, and weight: improve the completeness and accuracy
  of mail revenue, volume, and weight data as well as develop more
  accurate analyses of the impact of weight on costs.

4
 Data Quality Study, April 16, 1999, prepared by LINX, a division of A.T. Kearney, Inc. This report is
available at the U.S. Postal Service Internet site at http://www.usps.gov/clr/dqs.htm.




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                     U.S. Postal Service: Challenges to Sustaining Performance Improvements Remain
                     Formidable on the Brink of the 21st Century




                     We believe that the study has made an important contribution to analyzing
                     the issues, making the case for change, and offering constructive
                     recommendations for short-term and long-term improvements. Postal
                     officials have indicated that they agree with most of the study’s
                     recommendations. They said that the Service is taking steps to implement
                     some of the recommendations, such as updating some special studies used
                     to help estimate postal costs. For a number of recommendations, they
                     plan to conduct additional evaluation or analysis to assess what followup
                     may be needed. Overall, it is not clear what specific actions the Service
                     plans to take to improve the quality of data used in ratemaking and the
                     timeframes for completion.

                     As you know, Mr. Chairman, you requested this study to address concerns
                     raised by the Chairman of the Postal Rate Commission and others about
                     the data deficiencies in the Postal Service’s 1994 rate filing. Further, issues
                     related to the quality of data used in ratemaking have been an important
                     area of continuing oversight for this Subcommittee. Given the importance
                     of data quality to setting postal rates, as well as the level of congressional
                     concern in this area, we believe it is important for the Postal Service to
                     demonstrate to Congress, the Postal Rate Commission, stakeholders, and
                     the public that it is making progress in improving the quality of data used
                     in ratemaking. Therefore, we are recommending that the Postmaster
                     General report to the congressional oversight subcommittees on the
                     actions taken and planned to improve the quality of data used in
                     ratemaking.

Managing Employees   Management of its employees constitutes one of the Service’s major
                     challenges in meeting goals and maximizing performance. The Service
                     employs nearly one-third of the federal civilian workforce and is the single
                     largest federal civilian agency. To carry out its mission, the Service had a
                     total of about 900,000 career and noncareer employees as of September 30,
                           5
                     1998. To operate effectively in a rapidly changing environment, the
                     Service has recognized that it will need to give human capital issues a
                     higher priority and enhance each employee’s contributions to
                     organizational performance. The Service’s Year 2000 Performance Plan
                     states that its revised Voice of the Employee goal “elevates the quality of
                     the overall workplace environment from a subgoal category to a corporate


                     5
                      According to the Service, career employees generally are persons who have permanent work
                     appointments and include such employees as clerks, postmasters, managers, supervisors, mail
                     handlers, and city and rural letter carriers. Noncareer employees are persons who have limited-term
                     work appointments and include such employees as some data conversion operators who work at
                     postal remote encoding centers and substitutes for rural carriers.




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                             Formidable on the Brink of the 21st Century




                             goal, and emphasizes that the end result should achieve organizational and
                             individual success.”

Labor-Management Relations   We have previously reported on long-standing problems in labor-
                             management relations that have affected the postal workplace
                             environment. Although the Service has continued to make progress in
                             improving its labor-management relations, problems still exist that appear
                             to create barriers between the Service and its main employee
                             organizations, including four major postal labor unions and three
                             management associations. Such barriers have often stood in the way of
                             agreements being reached among the eight organizations, including postal
                             labor unions’ collective bargaining agreements, that could help ensure the
                             most effective management of the Service’s employees. Also,
                             disagreements have prevented the establishment of an overall framework
                             agreement, which we recommended in our 1994 report on postal labor-
                                                     6
                             management relations. Such an agreement could help the eight
                             organizations focus on common approaches for addressing persistent
                             labor-management relations problems so that the Service’s work
                             environment can be improved and its competitive position in a dynamic
                             communications market can be maintained.

                             The Service has identified a number of goals and strategies to improve its
                             workplace relations and to enhance various employee programs, such as
                             its diversity program. However, full success of these efforts is unlikely
                             without a partnership between postal managers and employees. Without
                             such a partnership, difficulties in the postal workplace are likely to persist
                             and hamper the Service’s ability to best achieve its overall performance
                             goals.

                             One area that has historically posed a challenge to the Service and its
                             unions and management associations involves compensation and benefits
                             issues. The most recent contract negotiations occurred during the last
                             year for three of the four major postal labor unions whose contracts
                                                         7
                             expired in November 1998. Negotiations for new contracts between the
                             Service and two of the three unions—the American Postal Workers Union
                             (APWU) and the National Postal Mail Handlers Union (Mail Handlers)--
                             produced settlements without the use of arbitration. However, for one of

                             6
                              U.S. Postal Service: Labor-Management Problems Persist on the Workroom Floor (GAO/GGD-94-
                             201A/B, Sept. 29, 1994).
                             7
                             The three major postal labor unions involved in 1998 contract negotiations with the Service included
                             APWU, NALC, and Mail Handlers. The fourth union—the National Rural Letter Carriers’ Association—
                             did not participate in such negotiations because its contract is not due to expire until November 1999.




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                                 the three unions—the National Association of Letter Carriers (NALC)—
                                 interest arbitration involving a third-party negotiator was used to settle
                                 contract disputes regarding employee wages and benefits and to reach an
                                 agreement last month.

                                 In recent months, concerns about compensation and benefits for
                                 postmasters have also been raised by members of two of the three
                                 management associations, including the National Association of
                                 Postmasters of the United States (NAPUS) and the National League of
                                                                            8
                                 Postmasters of the United States (NLPM). Unlike the unions,
                                 management associations, which generally represent the interests of postal
                                 managers, supervisors, and postmasters, may not collectively bargain for
                                 contract employment terms. However, the Service is required by the
                                 Postal Reorganization Act of 1970 to consult with the management
                                 associations on various issues that affect their members, including
                                 compensation and benefits. We briefed the Subcommittee earlier this year
                                 on the concerns that had been raised by organizations representing
                                 postmasters related to compensation issues. In August 1999, these
                                 management associations reached agreement with the Service on
                                 compensation matters. However, these associations have continuing
                                 concerns related to the extent of the differential in pay between bargaining
                                 unit employees and supervisory and managerial employees.

                                 During the past year, our work related to postal employees has focused
                                 mainly on issues involving diversity and equal employment opportunity
                                 (EEO) and employee safety and health. I would like to briefly discuss the
                                 results of our completed work and provide information about our
                                 continuing work efforts in these areas.

Diversity and Equal Employment   One of the Service’s many challenges involving employees relates to the
Opportunity                      areas of employee diversity and EEO. In large part, our completed work in
                                 these areas has generally addressed the Service’s efforts to achieve
                                 specific diversity goals, such as the promotion of women and minorities
                                 into higher postal management levels, and the Service’s tracking and
                                 monitoring of specific data related to EEO complaints.

                                 Concerning the promotion of women and minorities to higher management
                                 levels, we issued two reports to Congressman Danny Davis, one in



                                 8
                                 The three management associations include NAPUS, NLPM, and the National Association of Postal
                                 Supervisors.




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                          9                                    10
September 1998, and one in February 1999. In the September 1998
report, we discussed the results of our work on the Service’s compliance
                                                      11
with promotion procedures at three postal locations. Specifically, we
obtained and analyzed various data to determine the extent to which
women and minorities were represented at the higher Executive and
Administrative Schedule (EAS) management levels. The results of our
work showed that for 117 promotions that were awarded in 3 postal
locations, many of the applicants (62 percent) and those determined best
qualified (64 percent) were women and minorities. Also, of the employees
promoted to higher level management positions in the three locations,
about 62 percent were women and minorities, compared with the 59
percent at the same grade levels in these locations before the promotions
took place.

In addition, our February 1999 report to Congressman Davis supplemented
the September 1998 report by providing comprehensive data on the extent
to which women and minorities were represented at higher postal
management levels, including promotion-related data. The February 1999
report also included information on other issues, such as (1) the lack of
reliable EEO data on promotion applicants’ progress through the
promotion process and (2) the Service’s progress in responding to specific
recommendations made in 1997 by Aguirre International—an outside firm
that reviewed the Service’s diversity program—that were intended to help
the Service strengthen its program.

In the February 1999 report, we recommended that the Postmaster General
ensure that appropriate Service officials capture and use EEO group data
to help improve the Service’s diversity program, including the
identification of any barriers that might impede promotions to high-level
EAS positions. In response to our recommendation, the Vice President for
Human Resources told us that she would emphasize to postal field
facilities the need to enter data into the appropriate data system so that
more complete and reliable information about promotions could be
maintained and used as a tool to identify the points that impede the
promotions of applicants to high-level EAS positions.

9
U.S. Postal Service: Information About Selected Promotions of Women and Minorities to EAS
Management-Level Positions (GAO/GGD-98-200R, Sept. 21, 1998).
10
     U.S. Postal Service: Diversity in High-Level EAS Positions (GAO/GGD-99-26, Feb. 26, 1999).
11
   The three locations where we reviewed applications for the 117 promotions included the Atlanta,
Dallas, and Van Nuys performance clusters. A performance cluster is 1 of the Service’s 85 geographic
service areas and includes a customer service district, which is responsible for overseeing post offices,
and 1 or more mail processing plants.




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                             Also, the results of some of our completed work in the area of EEO
                             complaints indicated that shortcomings existed in the collection and
                             reporting of specific EEO-related data, such as the bases for complaints
                             and issues involved in the complaints. Without reliable information,
                             managers will not be able to determine how best to address problems
                             regarding the nature and extent of conflict in the postal workplace or
                             assess the extent to which improvements can be made.

                             In addition, as requested by Congressman Chaka Fattah, the
                             Subcommittee’s Ranking Minority Member, we are currently reviewing the
                             Service’s progress in achieving a diverse workforce in its Postal Career
                             Executive Service (PCES), which represents the Service’s senior level
                             officers and executives. We are working to obtain information about
                             diversity within PCES similar to the information that we provided in our
                             February 1999 report about diversity within the Service’s high-level EAS
                             workforce.

Employee Safety and Health   Another significant challenge the Service faces is implementing the Postal
                             Employees Safety Enhancement Act. Prior to the act, the Postal Service
                             was required to comply with Occupational Safety and Health
                             Administration (OSHA) safety and health program requirements for federal
                             agencies. When OSHA found safety and health problems at postal
                             facilities, it issued notices of unsafe or unhealthful working conditions, but
                             it did not issue citations or levy monetary penalties. However, the act,
                             which became effective on September 28, 1998, required the Postal Service
                             to comply with OSHA requirements for private sector employers.
                             Accordingly, OSHA may now impose citations and monetary penalties on
                             the Postal Service for noncompliance.

                             In converting from requirements for federal agencies to provisions for
                             private sector employers, postal officials stated that they would have to
                             review and modify existing safety and health policies, programs,
                             procedures, systems, training, and education programs, as well as modify
                             recordkeeping procedures for accident and injury data. The officials said
                             that challenges associated with implementing the requirements of the act
                             include (1) modifying existing automated systems at the same time that
                             government, industry, and the Service are dedicating their technical
                             resources to ensure Year 2000 compliance; (2) developing and
                             implementing training programs on the judicial and other processes that
                             previously were not applicable to the Postal Service for safety personnel,
                             legal staff, and key operations staff; and (3) modifying the Service’s
                             financial system to track expenses associated with implementing the new
                             requirements.



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Maintaining Financial   The Postal Service’s ability to maintain financial viability by controlling
                        costs, improving productivity, and enhancing revenues also presents a
Viability               continuing challenge. The Service’s strategic plan stated that aggressive
                        cost management would be necessary to guarantee success in mitigating
                        historic cost trends that drive price increases. The Service’s Annual
                        Performance Plan for Fiscal Year 2000 established goals for controlling
                        costs through cost reduction programs as well as by achieving productivity
                        gains. The plan also reported that it is not unusual for the Service’s
                        productivity to fluctuate from one year to another, but over the long run a
                        successful organization will achieve positive growth in productivity.
                        Further, the Service has recognized that it must have strong and effective
                        internal operating controls to avoid unwarranted costs and protect its
                        revenues.

Controlling Costs       Effective management of the Service’s capital investments is critical if the
                        Service is to achieve its projected return on investments. The Service
                        reported that it has made aggressive capital investments in technology and
                        infrastructure to improve the distribution and delivery of mail as well as
                        reduce labor costs.

                        In September 1998, the Postal Service Board of Governors confirmed the
                        Service’s plan to spend $17 billion through fiscal year 2002 on capital
                        investments that are intended to automate and modernize operations and
                        control costs. The Service has reported in the past that it intends to
                        substitute capital for labor to help it achieve its financial goals. As shown
                        in figure 4, labor-related expenses accounted for more than 80 percent of
                        the Service’s total expenses in each of the past 3 decades. The Service’s
                        labor-related expenses declined somewhat during the 1990s but continued
                        to represent 79 percent of the Service’s expenses in fiscal year 1998, the
                        most recent year for which data are available.




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Figure 4: Labor-Related Expenses
Accounted for Most of the Postal
Service’s Total Expenses




                                   Note: Labor-related expenses include such costs as employee compensation and benefits, retroactive
                                   assessments for employee benefits, imputed interest expenses on retroactive assessments for
                                   employee benefits, interest expenses on deferred retirement liabilities, and workers’ compensation
                                   expenses of the former Post Office Department. Percentages shown were compiled by dividing the
                                   Postal Service’s total labor-related expenses for each period by the Service’s total expenses for that
                                   period. Data for fiscal year 1999 are not yet available.
                                   Source: U.S. Postal Service annual reports.


                                   The Service stated in its Five-Year Strategic Plan for fiscal years 1998
                                   through 2002 that the cost paid for labor resources is the primary driver of
                                   Postal Service prices, and that significant revenue growth must be
                                   matched by aggressive cost management for the Service to mitigate
                                   historic cost trends that drive price increases. Further, the Service has
                                   recognized that its stakeholders are also demanding aggressive cost
                                   management.

                                   As mentioned earlier, although the Service has improved its delivery
                                   performance in some areas, questions remain about whether the Service is
                                   adequately realizing the anticipated savings from its capital investments.
                                   Last year, the Board of Governors approved a capital investment budget of
                                   $4.4 billion for fiscal year 1999, of which the largest component--$1.7
                                   billion--was committed to facility projects, and $1.5 billion was committed
                                   to equipment projects. Last year, we reported to the Subcommittee on the



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                                          Service’s shortfalls in reaching its projected carrier workhour savings from
                                                                                             12
                                          its investments in automated sorting equipment.

Improving Productivity                    The Service has reported that its Integrated Financial plan for Fiscal Year
                                          2000 relies on “aggressive productivity improvement” in order for the
                                          Service to meet its “challenging bottom-line target” of $100 million in net
                                          income. The Service’s performance plan for fiscal year 2000 set a target of
                                                                                                    13
                                          increasing total factor productivity (TFP) by 3.1 percent. To put this
                                          challenge into context, figure 5 indicates that TFP increased at least 3
                                          percent in only 4 years since postal reorganization was implemented (1973,
                                          1978, 1990, and 1993).

Figure 5: Growth in Postal Service Productivity




                                          Note: Data for fiscal year 1999 are not yet available.
                                          Source: U.S. Postal Service.




                                          12
                                           U.S. Postal Service: Progress Made in Implementing Automated Letter Sequencing, but Some Issues
                                          Remain (GAO/GGD-98-73, Apr. 17, 1998).
                                          13
                                             TFP measures the changes in the relationship between the Service’s outputs and resources expended
                                          in producing those outputs. The Service’s main outputs are mail volumes and servicing an expanding
                                          delivery network. By tracking outputs and resource usage, TFP provides a measure of historical
                                          performance.




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                     In addition, TFP declined in 4 of the last 5 years for a cumulative decline of
                     about 3 percent. The Service reported that the TFP decline in 1998, the
                     most recent year for which data are available, was linked to an increase in
                     its capital investments and the conversion of many transitional employees
                     to career status. The Service reported that it expects to realize deferred
                     benefits from automation that should help increase its productivity in the
                     future.

                     The Service has reported that its aggressive capital investments, though
                     consistent with its long-term strategy of substituting capital for labor, may
                     have a short-term negative impact on TFP due to implementation costs and
                     the difference between the timing of costs and the realization of savings.
                                                                                 14
                     The Service’s plan for $4.0 billion in capital commitments in fiscal year
                     2000—compared with $3.9 billion in capital commitments in fiscal year
                     1998 when TFP declined by 1.1 percent—points to the challenge of
                     increasing TFP by the target of 3.1 percent in fiscal year 2000. Moreover,
                     the Service has reported that some investments improve service but do not
                     improve TFP.

                     The Service has cautioned that TFP is best used to analyze long-term
                     trends and is not effective as a short-term measure or snapshot in time. In
                     this regard, as figure 5 shows, TFP increased 9.1 percent from the time that
                     postal reorganization was implemented to fiscal year 1998. The Service
                     has recently reported that its objective is to improve TFP over time while
                     maintaining a balance with the service improvements necessary to achieve
                     customer satisfaction and maintain a competitive position in the
                     marketplace.

Enhancing Revenues   Another key area of the Service’s financial goals is to enhance revenues.
                     In the past, we have raised concerns about the adequacy of the Service’s
                     controls over its revenues in areas such as the acceptance of bulk business
                          15
                     mail. In fiscal year 1998, bulk business mail represented 49 percent of the
                     Service’s $58 billion in mail revenues and about 66 percent of the nearly
                     200 billion pieces of mail it processed. We are currently conducting a
                     follow-up review to determine the status of the Service’s actions to
                     implement our recommendations. We expect this report to be issued
                     within the next several weeks.

                     14
                        The Service’s capital commitments in its Capital Investment Plan represent expected contract awards
                     or options. The Service generally does not pay for these expenses until the goods are delivered or a
                     contractor meets its project schedule.
                     15
                      U.S. Postal Service: Stronger Mail Acceptance Controls Could Help Prevent Revenue Losses
                     (GAO/GGD-96-126, June 25, 1996).




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                               The Service has also enhanced its revenues through leasing or selling some
                               of its real estate. We recently issued a report that looked at two real estate
                               projects where the Service leased space to private companies that
                               developed and operated the buildings—the Grand Central Station Post
                                                                                               16
                               Office in New York City and Rincon Center in San Francisco. The
                               Service reported obtaining about $16.5 million annually in revenue from
                               renting space in the renovated buildings while preserving their historical
                               characteristics. In addition, the Service recently sold the Rincon Center
                               for $80.5 million, which the Service reported added to its net revenues.

Competing in a Rapidly         The Service’s ability to adapt to increasing competition is critical if the
Breast Cancer Research Stamp   Service is to maintain a competitive position in the rapidly changing
Changing Environment           communications and delivery environment. Increasing competition,
                               particularly from electronic alternatives, has slowed the Service’s revenue
                               growth and is expected to have a continuing impact on the Service’s
                               revenues in the next decade.

                               Other issues related to the Service’s competitive position have also been
                               raised. Some concerns revolve around types of new products and services
                               that the Service is allowed to develop. We recently provided information
                               on the Postal Service Marketing Department’s process for the review and
                               approval of its new products. Also, some of our work has addressed
                               various concerns regarding the Service’s competitive position with respect
                               to international postal organizations.

New Postal Products            The Service has for several years been concerned that its First-Class Mail
                               business could become threatened as more and more traditional mail
                               migrates to electronic mail. Coupled with this, the Service has
                               encountered competition from the private sector that is significantly more
                               challenging than in past years. To address these situations, postal
                               management, in the early 1990s, established a corporate goal of initiating
                               and growing new businesses, particularly in the electronic
                               communications arena, in order to ensure its commercial viability as a
                               mover of messages, merchandise, and money.

                               As a result of this corporate decision, in the mid-1990s, the Service began
                               focusing resources on the aggressive development and introduction of new
                               products—primarily nonpostal products. In November 1998, we reported
                               on the challenges faced by the Service in moving in this new direction and


                               16
                                Public-Private Partnerships: Key Elements of Federal Building and Facility Partnerships (GAO/GGD-
                               99-23, Feb. 3, 1999).




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                                                                                                  17
                            presented a snapshot of the progress made to date. We reported that the
                            Service’s new products initiative was controversial. Some Members of
                            Congress were concerned that the Service was unfairly expanding its
                            product line to compete in nonpostal-related markets and had introduced
                            legislation to curtail such activity. Some private sector companies also
                            complained about the Service’s entry into nontraditional postal markets.
                            They were concerned that the Service could use its governmental status to
                            an unfair advantage when introducing products that compete with private
                            sector companies. Notwithstanding this controversy, the Service moved
                            ahead with several new products in the mid- to late-1990s.

                            The Service has established a formalized process to govern the
                            introduction of most new products. To facilitate the process of developing
                            and introducing new products and to ensure effective management
                            control, the Service developed a formalized system of checks and balances
                            that requires top management buy-in at critical stages of the product
                            development process. The process is also to be used to review the
                            performance of products and terminate those that do not perform to Postal
                            Service expectations. For those products we reviewed in more detail, we
                            found that the Service had generally followed the tenets of the newly
                            established product development process. We also reported that most of
                            the new products had not yet produced revenues that exceeded expenses.
                            We cautioned, however, that it might not be reasonable to expect all new
                            products to become profitable in their early years, because new products
                            generally take several years to become established and recover their start-
                            up costs.

International Competition   Congress has recently considered one of the major international
                            competition-related concerns involving a potential conflict in the Service’s
                            dual role as the U.S. negotiator of international postal agreements and
                            competitor with private carriers in the international mail arena. In a recent
                            report, we compared the roles of the Service and the Department of State
                            as representatives of the U.S. government in international organizations for
                                                                          18
                            the postal and telecommunications sectors. The Department of State has
                            the lead responsibility for developing U.S. international
                            telecommunications policy and heads a formalized process for policy
                            development. In October 1998, Congress transferred responsibility for
                            formulating, coordinating, and overseeing international postal policy at the
                            international postal organization, the Universal Postal Union (UPU), from
                            17
                                 U.S. Postal Service: Development and Inventory of New Products (GAO/GGD-99-15, Nov. 24, 1998).
                            18
                             U.S. Postal Service: Postal and Telecommunications Sector Representation in International
                            Organizations (GAO/GGD-99-6BR, Oct. 29, 1998).




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                     the Service to the Department of State. We are currently reviewing how
                     effectively the Department of State has implemented its new
                     responsibilities in this area.

                     Our October 1998 report noted that differences in legal requirements
                     contributed to differences in stakeholder involvement and the processes
                     used to develop U.S. policies for international postal and
                     telecommunications issues. One key difference was that the Department
                     of State was legally required to obtain input from the private sector on
                     international telecommunications policy issues; however, the Service was
                     not subject to such legal requirements when it had the lead role for U.S.
                     involvement in the UPU. In the international telecommunications sector,
                     we found that government and private sector stakeholders had more direct
                     involvement in U.S. policy formulation through a structured and
                     documented advisory committee process headed by the Department of
                     State and subject to the requirements of the Federal Advisory Committee
                                  19
                     Act (FACA). FACA requirements include Federal Register notice of
                     advisory committee meetings; detailed minutes of meetings; public access
                     and participation at meetings; and annual reports to the General Services
                     Administration, which is to report to Congress on the activities, status, and
                     any changes in the advisory committees. In the postal sector, the Service
                     was not subject to FACA. The process for involving government and
                     private sector stakeholders in international policy formulation was more
                     informal, involving ad hoc briefings with limited public notice or
                     documentation of meetings. Our ongoing review will examine how the
                     process for U.S. policy formulation, coordination, and oversight has
                     changed this year with respect to U.S. participation in the UPU.

                     Other major issues we recently addressed include monitoring the Service’s
Other Major Issues   actions to meet the challenges of preparing for the Year 2000 as well as
                     protecting consumers from deceptive mail practices, protecting the
                     privacy of address changes, and improving its management of capital
                     facility projects. Currently, we are also reviewing the effectiveness of the
                     Breast Cancer Stamp as a fundraiser.

                     Regarding Year 2000 readiness, we testified that the Service started late in
                     correcting and testing its systems, preparing a master schedule, and
                     developing contingency and business continuity plans. However, the
                     Service has made significant progress in reducing vulnerabilities identified

                     19
                        FACA was enacted to ensure that (1) valid needs exist for establishing and continuing advisory
                     committees, (2) the committees are properly managed and their proceedings are as open as possible to
                     the public, and (3) Congress is kept informed of the committees’ activities.




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                     in previous assessments and in planning a recovery management process
                     to restore its operations if Year 2000 problems should occur.

                     We also testified recently before this Subcommittee on our work related to
                                                                                       20
                     protecting consumers from deceptive mail marketing practices. We
                     provided information on the extent and nature of consumers’ problems
                     with deceptive mail and identified initiatives various federal agencies and
                     other organizations have made to address deceptive mail problems and
                     educate consumers.

                     We also recently released a report on another issue of interest to
                     consumers, the Service’s protection of consumer address information from
                                              21
                     unauthorized disclosure. We followed up on the recommendations we
                     had previously made for specific actions the Service should take to
                     strengthen oversight of its National Change of Address (NCOA) program.
                     The Service had not taken action on our recommendation that it explicitly
                     state, in the acknowledgment form signed by customers of the Service’s
                     address correction licensees, that NCOA program-linked data are not to be
                     used to create or maintain new-movers lists. We have suggested that
                     Congress may wish to consider amending the Postal Reorganization Act of
                     1970 to establish requirements concerning the language in the form so that
                     the Service could help ensure that the use of NCOA program-linked data is
                     limited to the purposes for which they were collected.

Year 2000 Problems   The Postal Service faces a major challenge in updating its computer
                     systems, mail processing equipment, and infrastructure equipment to avoid
                     Year 2000 malfunctions that could disrupt mail delivery. The Service has a
                     special responsibility to correct its computers because a number of private
                     sector and government groups may need to use the Service as a backup
                     delivery system if their computers malfunction. For this reason, the
                     Service is concerned about the prospect of a mail surge in January 2000.
                     An early assessment by the Service’s Office of Inspector General showed
                     that the Service was slow to recognize the scope of the challenge and act
                     to ensure that its computer systems were Year 2000 compliant.
                                              22
                     In February 1999 we identified the major challenges facing the Service,
                     including (1) completing system renovation and mail processing
                     20
                          Deceptive Mail: Consumers’ Problems Appear Substantial (GAO/T-GGD-99-150, Aug. 4, 1999).
                     21
                      U.S. Postal Service: Status of Efforts to Protect Privacy of Address Changes (GAO/GGD-99-102, Jul.
                     30, 1999).
                     22
                      Year 2000 Computing Crisis: Challenges Still Facing the U.S. Postal Service (GAO/T-AIMD-99-86,
                     February 23, 1999).




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equipment correction and testing, (2) ensuring the readiness of hundreds
of local facilities, (3) determining the ability of key suppliers and
electronic data exchange partners to be Year 2000 ready, (4) completing
simulation testing of business process areas, and (5) completing the
development and testing of business continuity and contingency plans.

Since February, the Service has strengthened its management approach to
the Year 2000 problem and made significant progress in fixing its systems
and determining that its key suppliers and electronic data exchange
partners will also be Year 2000 ready. For example, as of this August, the
Service reported to the Office of Management and Budget that it

• completed renovation of 136 of its 137 severe and critical computer
  systems and expected to complete all non-mission critical systems by
  September 30, 1999;

• certified all 38 critical mail processing equipment and embedded chip
  devices as Year 2000 ready;

• performed business impact assessments on all 353 critical field facilities
  and expected to finish remaining readiness activities by October 15,
  1999;

• expected to complete impact assessments by November 30, 1999, for all
  3,500 field activities that have automated systems and functions with life
  safety and security ramifications;

• obtained assurances of Year 2000 readiness for 273, or 99.6 percent, of
  its critical suppliers and completed site visits for all 34 “high profile”
  suppliers, i.e., those most integral to the continuity of mail operations;

• obtained assurances on Year 2000 readiness for 73 percent of suppliers
  critical to the Service’s field operations; and

• certified all 737 severe and critical electronic data exchanges as Year
  2000 compliant and reported that all 106 important, but not critical,
  electronic data exchanges would be certified as compliant by September
  30, 1999.

The Service has also stepped up efforts to test applications and
infrastructure equipment in a production environment---an important
phase of the Year 2000 effort because Year 2000 conversions often involve
numerous large interconnecting systems with many external interfaces



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                            and extensive supporting technology infrastructures. Over 40 applications
                            that support critical business processes were tested in the first of a two-
                            phased testing effort that ended in August 1999. The Service is still
                            analyzing the results of these tests; however, it has reported that at least
                            one application will require additional testing.

                            Finally, the Service has completed over 500 business continuity and
                            component contingency plans for its critical processes. This is another
                            crucial phase of the Year 2000 effort because core processes may still be
                            disrupted by Year 2000-induced failures and by errors in business partner
                            systems or public infrastructure systems, such as power, water,
                            transportation, and telecommunications systems. The Service’s plans
                            include preemptive measures and work-arounds to ensure critical business
                            processes continue in the event of a Year 2000-related disruption or system
                            failure. The field plans were distributed in August 1999, and all rehearsals
                            and adjustments to these plans are expected to be completed by November
                            30, 1999.

                            With these actions under way, the Service is clearly much better
                            positioned to face the upcoming century change. However, the challenge
                            facing the Service is still significant: there are less than 3 months
                            remaining before the Year 2000 deadline, the Service is now entering into
                            the holiday business rush, and many important tasks—including the
                            rehearsal and finalization of contingency and continuity plans—remain.
                            Thus, the Service will need to sustain top management attention to the
                            problem and continue to do everything necessary to ensure that the
                            continuity of important postal operations is maintained into 2000.

Status of Antelope Valley   The importance of sustained management attention was evident in another
                            area where we identified weaknesses in the management of a capital
Project Remains Uncertain   facility project. In August 1999, we reported on the Service’s project
                            approval process for a proposed project to relocate postal operations to a
                                                                                                   23
                            new mail processing facility in the Antelope Valley area in California. We
                            raised concerns about the unresolved status of the proposed project after
                            almost 10 years. The Service purchased a 25-acre site in Lancaster, CA, for
                            $6.5 million in 1991 that has since remained unused due to the Service’s
                            failure to decide on whether the proposed processing facility should be
                            approved. Also, we estimated that accumulated interest costs associated
                            with this $6.5 million investment totaled about $2.9 million from the time
                            the site was purchased in October 1991 through June 1999, and they were

                            23
                             U.S. Postal Service: Deficiencies Continue While Antelope Valley Project Status Remains Uncertain
                            (GAO/GGD-99-147, Aug. 31, 1999).




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                         likely to increase by over $300,000 each year. In addition, the Service has
                         not addressed the long-standing problems, such as mail delivery problems
                         and space deficiencies, that were the basis for the proposed Antelope
                         Valley project. We recommended that the Postmaster General take action
                         to resolve the status of the project and report on planned actions to
                         address the operational deficiencies in the Antelope Valley area.

Breast Cancer Research   One of our ongoing efforts is a review of the Service’s Breast Cancer
                         Research Stamp. The “Stamp Out Breast Cancer Act,” enacted August 13,
Stamp                    1997, required that the Service market, for 2 years, a semipostal stamp for
                         breast cancer research. A semipostal stamp is a stamp that carries a
                         surcharge for a special purpose.

                         The Service issued the First-Class Breast Cancer Research stamp on July
                         29, 1998. The stamp is currently priced at 40 cents—33 cents for postage
                         with a 7-cent surcharge. The stamp is to be available for sale until July 29,
                         2000. The net proceeds from the surcharge are going to the National
                         Institutes of Health and Department of Defense for breast cancer research.
                         The Breast Cancer Research Stamp is the Service’s first-ever semipostal
                         stamp.

                         In addition to requiring the Service to market the Breast Cancer Research
                         Stamp, the act also mandated that the Comptroller General report to
                         Congress, between January 29, 2000, and April 29, 2000, on the
                         effectiveness and appropriateness of using a semipostal stamp to raise
                         funds for breast cancer research. Also, this report is to include
                         information on the monetary and other resources required of the Service
                         to produce and market the Breast Cancer Research Stamp.

                         After 1 year of sales, the Service reports that surcharge revenue generated
                         by the Breast Cancer Research Stamp totaled approximately $8 million.
                         We expect to issue our report on the stamp to Congress in the early part of
                         the year 2000, as mandated by the act.

                         We recommend that the Postmaster General report to the House and
Recommendation           Senate oversight subcommittees on the Postal Service on the actions taken
                         and planned to improve the quality of data used in ratemaking, including

                         • actions taken to improve ratemaking data quality, such as those that
                           relate to the recommendations included in the Data Quality Study
                           conducted by A.T. Kearney; and




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• actions planned to improve ratemaking data quality, including the
  priorities and time frames for short-term and long-term actions.

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

Contact and Acknowledgment

For future contacts regarding this testimony, please contact Bernard L.
Ungar at (202)-512-8387. Individuals making key contributions to this
testimony included Teresa Anderson, Gerald Barnes, Anne Hilleary,
Kenneth John, Sherrill Johnson, Roger Lively, Charles Wicker, and Lisa
Wright-Solomon. Kim Raheb provided graphics support. Carl Urie and
Greg Donnellon provided information on the Postal Service’s Year 2000
compliance.




Page 27                                                                GAO/T-GGD-00-2
Attachment

GAO Postal-Related Products Issued Since
June 1, 1998

                      The Results Act: Observations on the Postal Service’s Preliminary
Performance Issues    Performance Plan for Fiscal Year 2000 (GAO/GGD-99-72R, April 30, 1999).

                      Major Management Challenges and Program Risks: U.S. Postal Service
                      (GAO/OCG-99-21, Jan. 1999).

                      The Results Act: Observations on the Postal Service’s Preliminary Annual
                      Performance Plan (GAO/GGD-98-144, July 10, 1998).

                      Equal Employment Opportunity: The Postal Service Needs to Better
Employee Issues       Ensure the Quality of EEO Complaint Data (GAO/GGD-99-167, Sept. 28,
                      1999).

                      Equal Employment Opportunity: Complaint Caseloads Rising, With
                      Effects of New Regulations on Future Trends Unclear (GAO/GGD-99-128,
                      Aug. 16, 1999).

                      Equal Employment Opportunity: Data Shortcomings Hinder Assessment
                      of Conflicts in the Federal Workplace (GAO/GGD-99-75, May 4, 1999).

                      U.S. Postal Service: Diversity in High-Level EAS Positions (GAO/GGD-99-
                      26, Feb. 26, 1999).

                      U.S. Postal Service: Information About Selected Promotions of Women
                      and Minorities to EAS Management-Level Positions (GAO/GGD-98-200R,
                      Sept. 21, 1998).

                      Equal Employment Opportunity: Rising Trends in EEO Complaint
                      Caseloads in the Federal Sector (GAO/GGD-98-157BR, July 24, 1998).

                      Public-Private Partnerships: Key Elements of Federal Building and Facility
Financial Viability   Partnerships (GAO/GGD-99-23, Feb. 3, 1999).
Issues
                      U.S. Postal Service: Development and Inventory of New Products
Competition Issues    (GAO/GGD-99-15, Nov. 24, 1998).

                      U.S. Postal Service: Postal and Telecommunications Sector
                      Representation in International Organizations (GAO/GGD-99-6BR, Oct. 29,
                      1998).

                      U.S. Postal Service: Competitive Concerns About Global Package Link
                      Service (GAO/GGD-98-104, June 5, 1998).




                      Page 28                                                     GAO/T-GGD-00-2
                        GAO Postal-Related Products Issued Since June 1, 1998




                        U.S. Postal Service: Deficiencies Continue While Antelope Valley Project
Other Major Oversight   Status Remains Uncertain (GAO/GGD-99-147, Aug. 31, 1999).
Issues
                        Deceptive Mail: Consumers’ Problems Appear Substantial (GAO/T-GGD-
                        99-150, Aug. 4, 1999).

                        U.S. Postal Service: Status of Efforts to Protect Privacy of Address
                        Changes (GAO/GGD-99-102, July 30, 1999).

                        Year 2000 Computing Crisis: Challenges Still Facing the U.S. Postal
                        Service (GAO/T-AIMD-99-86, Feb. 23, 1999).

                        Proposed Legislation: Issues Related to Honesty in Sweepstakes Act of
                        1998 (S. 2141) (GAO/T-GGD-98-198, September 1, 1998).




                        Page 29                                                       GAO/T-GGD-00-2
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Page 31   GAO/T-GGD-00-2
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