U.S. Postal Service
USPS Has Taken Steps to Strengthen Network Realignment Planning and Accountability and Improve Communication Gao ID: GAO-08-1022T July 24, 2008GAO has issued reports on the U.S. Postal Service's (USPS) strategy for realigning its mail processing network and improving delivery performance information. These reports recommended that the Postmaster General (1) strengthen planning and the overall integration of its realignment efforts, and enhance accountability by establishing measurable targets and evaluating results, (2) improve delivery service standards and performance measures, and (3) improve communication with stakeholders by revising its Area Mail Processing (AMP) Communication Plan to improve public notice, engagement, and transparency. The 2006 postal reform act required USPS to develop a network plan by June 2008 that described its vision and strategy for realigning its network; the anticipated costs, cost savings, and other benefits of its realignment initiatives; performance measures for its delivery service standards, and its communication procedures for consolidating AMP operations. This testimony discusses USPS's actions toward addressing GAO recommendations to (1) strengthen network realignment planning and accountability, (2) improve delivery performance information, and (3) improve communication with stakeholders. This testimony is based on prior GAO work, a review of USPS's 2008 Network Plan and revised AMP Communication Plan, and updated information from USPS officials. USPS did not have comments on this testimony.
USPS has taken steps to respond to most of GAO's prior recommendations to strengthen planning and accountability for its network realignment efforts. In its June 2008 Network Plan, USPS clarified how it makes realignment decisions, and generally addressed how it integrates its realignment initiatives. However, USPS has not established measurable performance targets for its realignment initiatives. USPS believes that its budgeting process accounts for the cost reductions achieved through these initiatives. The Deputy Postmaster General explained that such performance targets are captured in USPS's overall annual goal of achieving $1 billion in savings. While these measures are not as explicit or transparent as GAO had recommended, USPS is required to report annually by the end of December to Congress on, among other matters, its realignment costs and savings. Also, USPS's annual compliance reports to the Postal Regulatory Commission (PRC) will provide opportunities for further transparency of performance targets and results. USPS's Network Plan notes that to respond to declining mail volumes, USPS must increase efficiency and decrease costs across all its operations. Given USPS's challenging financial situation, effective implementation of network realignment is needed; and USPS's annual reports could help inform Congress about the effectiveness of its realignment efforts. USPS has partially responded to GAO's recommendations to improve its delivery performance standards, measurement, and reporting, but full implementation of performance measures and reporting is not yet completed. USPS established delivery performance standards in December 2007. USPS's Network Plan stated that USPS would develop targets and measures to assess performance against these standards by fiscal year 2009. In addition, USPS has recently submitted a proposal for measuring and reporting on delivery service performance to the PRC. The PRC has requested public comment on USPS's proposal, which depends upon USPS and mailers implementing new technology. Delivery service performance is a critical area that may be affected by the implementation of the realignment initiatives. USPS has also taken steps to address GAO's recommendations to improve communication with its stakeholders as it consolidates its AMP operations by modifying its Communication Plan to improve public notification and engagement, increasing transparency by clarifying its processes for addressing public comments, and making additional information available on its Web site. Going forward, it will be crucial that USPS establishes and maintains an ongoing and open dialogue with stakeholders, including congressional oversight committees and Members of Congress who have questions or are concerned about proposed realignment changes
GAO-08-1022T, U.S. Postal Service: USPS Has Taken Steps to Strengthen Network Realignment Planning and Accountability and Improve Communication
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Testimony:
Before the Subcommittee on Federal Workforce, Postal Service, and the
District of Columbia, Committee on Oversight and Government Reform,
House of Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 2:00 p.m. EDT:
Thursday, July 24, 2008:
U.S. Postal Service:
USPS Has Taken Steps to Strengthen Network Realignment Planning and
Accountability and Improve Communication:
Statement of Phillip Herr, Director:
Physical Infrastructure Issues:
GAO-08-1022T:
GAO Highlights:
Highlights of GAO-08-1022T, a testimony before the Subcommittee on
Federal Workforce, Postal Service, and the District of Columbia,
Committee on Oversight and Government Reform, House of Representatives.
Why GAO Did This Study:
GAO has issued reports on the U.S. Postal Service‘s (USPS) strategy for
realigning its mail processing network and improving delivery
performance information. These reports recommended that the Postmaster
General (1) strengthen planning and the overall integration of its
realignment efforts, and enhance accountability by establishing
measurable targets and evaluating results, (2) improve delivery service
standards and performance measures, and (3) improve communication with
stakeholders by revising its Area Mail Processing (AMP) Communication
Plan to improve public notice, engagement, and transparency. The 2006
postal reform act required USPS to develop a network plan by June 2008
that described its vision and strategy for realigning its network; the
anticipated costs, cost savings, and other benefits of its realignment
initiatives; performance measures for its delivery service standards,
and its communication procedures for consolidating AMP operations.
This testimony discusses USPS‘s actions toward addressing GAO
recommendations to (1) strengthen network realignment planning and
accountability, (2) improve delivery performance information, and (3)
improve communication with stakeholders. This testimony is based on
prior GAO work, a review of USPS‘s 2008 Network Plan and revised AMP
Communication Plan, and updated information from USPS officials. USPS
did not have comments on this testimony.
What GAO Found:
USPS has taken steps to respond to most of GAO‘s prior recommendations
to strengthen planning and accountability for its network realignment
efforts. In its June 2008 Network Plan, USPS clarified how it makes
realignment decisions, and generally addressed how it integrates its
realignment initiatives. However, USPS has not established measurable
performance targets for its realignment initiatives. USPS believes that
its budgeting process accounts for the cost reductions achieved through
these initiatives. The Deputy Postmaster General explained that such
performance targets are captured in USPS‘s overall annual goal of
achieving $1 billion in savings. While these measures are not as
explicit or transparent as GAO had recommended, USPS is required to
report annually by the end of December to Congress on, among other
matters, its realignment costs and savings. Also, USPS‘s annual
compliance reports to the Postal Regulatory Commission (PRC) will
provide opportunities for further transparency of performance targets
and results. USPS‘s Network Plan notes that to respond to declining
mail volumes, USPS must increase efficiency and decrease costs across
all its operations. Given USPS‘s challenging financial situation,
effective implementation of network realignment is needed; and USPS‘s
annual reports could help inform Congress about the effectiveness of
its realignment efforts.
USPS has partially responded to GAO‘s recommendations to improve its
delivery performance standards, measurement, and reporting, but full
implementation of performance measures and reporting is not yet
completed. USPS established delivery performance standards in December
2007. USPS‘s Network Plan stated that USPS would develop targets and
measures to assess performance against these standards by fiscal year
2009. In addition, USPS has recently submitted a proposal for measuring
and reporting on delivery service performance to the PRC. The PRC has
requested public comment on USPS‘s proposal, which depends upon USPS
and mailers implementing new technology. Delivery service performance
is a critical area that may be affected by the implementation of the
realignment initiatives.
USPS has also taken steps to address GAO‘s recommendations to improve
communication with its stakeholders as it consolidates its AMP
operations by:
* modifying its Communication Plan to improve public notification and
engagement;
* increasing transparency by clarifying its processes for addressing
public comments, and;
* making additional information available on its Web site.
Going forward, it will be crucial that USPS establishes and maintains
an ongoing and open dialogue with stakeholders, including congressional
oversight committees and Members of Congress who have questions or are
concerned about proposed realignment changes.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-1022T].
To view the full product click on the above link. For more information,
contact Phillip Herr at (202) 512-2834 or herrp@gao.gov.
[End of section]
Mr. Chairman, Representative Marchant, and Members of the Subcommittee:
I am pleased today to participate in this oversight hearing on actions
taken by the U.S. Postal Service (USPS) to address concerns about its
network realignment initiatives and communication with stakeholders. In
July 2007, we testified before this committee on issues we identified
and recommendations we made regarding USPS's strategy for realigning
its mail processing operations.[Footnote 1] We previously recommended
that the Postmaster General:
1. strengthen planning and accountability by ensuring that USPS's
network realignment plans include:
* discussion of how the various network realignment initiatives will be
integrated with each other to achieve network realignment goals and:
* measurable targets for the anticipated cost savings and benefits
associated with network rationalization; and:
2. improve the way USPS communicates with stakeholders about its
realignment plans and proposals, particularly its proposals for
consolidating Area Mail Processing (AMP) operations[Footnote 2], by
ensuring that its revised communication plan includes steps to:
* improve public notice;
* improve public engagement, and:
* increase transparency.[Footnote 3]
Last year, we also reported on USPS's progress in improving delivery
performance information.[Footnote 4] We recommended to the Postmaster
General that USPS develop complete delivery performance information for
all major types of mail by:
* modernizing delivery standards,
* committing to developing delivery performance measures,
* implementing representative delivery performance measures, and:
* improving the transparency of delivery performance standards,
measures, and results.
Congress has also addressed USPS's network realignment efforts, as
reflected in the Postal Accountability and Enhancement Act of 2006
(PAEA), which required USPS to develop a comprehensive Facilities Plan.
[Footnote 5] This plan was to include USPS's long-term vision and
strategy for realigning its network; a description of the anticipated
costs, costs savings, and other benefits associated with the
infrastructure realignment alternatives discussed in the plan; and
USPS's communication procedures related to AMP consolidations. In
response, USPS issued a plan in June 2008 titled "Postal Accountability
and Enhancement Act §302 Network Plan," which we refer to as USPS's
"Network Plan" in this testimony. PAEA also required USPS to report to
Congress 90 days after the end of each fiscal year on how postal
decisions or actions taken during the preceding year have impacted or
will impact rationalization plans, including overall estimated costs
and cost savings. Further, PAEA required USPS to establish modern
delivery service standards by December 20, 2007, and submit annual
reports to the Postal Regulatory Commission (PRC) on the quality of
service provided, including the speed and reliability of delivery for
most types of mail (market-dominant products[Footnote 6]), according to
specific requirements to be established by the PRC.
My comments today will focus on USPS's actions toward addressing our
prior recommendations related to network realignment and delivery
performance. Specifically, I will cover USPS's progress in (1)
strengthening planning and the overall integration of USPS's
realignment efforts, and enhancing accountability by establishing
measurable targets and evaluating results, (2) improving delivery
service standards and performance measures, and (3) improving
communication with stakeholders by revising its AMP Communication Plan
to improve public notice, engagement, and transparency. My statement is
based on our prior work, listed at the end of this document, and
updated information on the actions USPS has taken related to our
recommendations. We reviewed the Network Plan USPS issued in June 2008
and the revised AMP guidelines and revised Communication Plan issued in
March 2008. We also met with the Deputy Postmaster General and Acting
Senior Vice President for Operations to discuss USPS's Network Plan and
its decision-making process related to its network realignment
initiatives. We asked USPS to comment on the results of our new work
and USPS officials did not have any comments. We conducted this
performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
Summary:
USPS has taken steps to address our prior recommendations to strengthen
planning and accountability for its network realignment efforts, which
are important as USPS moves from planning to implementing its network
realignment initiatives. One key step is that USPS has developed a
Network Plan that discusses its overall vision and goals and the major
strategies or initiatives for meeting its goals. Our review of USPS's
Network Plan found that it generally addresses topics required by PAEA
and included in our recommendations. However, it contains limited
specific information on performance targets or goals or the resulting
costs and savings related to various realignment initiatives. The
Network Plan describes an overall goal to create an efficient and
flexible network that results in lower costs for both USPS and its
customers, improves the consistency of mail service, and reduces USPS's
environmental footprint. According to the Deputy Postmaster General,
the measurable performance targets related to realignment initiatives
that we recommended USPS establish are captured in USPS's overall
annual goal of achieving $1 billion in savings, which USPS will present
in more detail as part of its internal budget. While these measures are
not as explicit or transparent as we had recommended, USPS is required
to report annually to Congress on, among other things, its realignment
costs and savings; and USPS's annual compliance reports to the PRC will
provide opportunities for USPS to further clarify its performance
targets and results. Additionally, although the Network Plan generally
describes how USPS's key realignment efforts are integrated, it
provides little contextual information about what its future network
will look like and how its realignment goals are being met. USPS's
Network Plan notes that to address declining mail volumes, USPS must
increase efficiency and decrease costs across all its operations.
Further, USPS's financial report for the 2nd quarter of this fiscal
year stated that slow economic growth will continue to negatively
affect revenue and volume, especially if fuel prices remain at their
current high levels and inflation in other sectors of the economy
begins to increase. Given USPS's challenging financial situation, we
recognize that effective implementation of network realignment is
needed. USPS's annual reports to Congress are an opportunity to make
its goals and results more transparent and provide information about
the effectiveness of its realignment efforts.
USPS has also taken steps to improve its delivery performance
standards, measurement, and reporting, but full implementation of
performance measures and reporting is not yet completed. USPS is
required under PAEA to develop modernized delivery standards, and to
measure and report annually to the PRC on its performance in delivering
market-dominant products. In December 2007, USPS established delivery
service standards with input from the public. USPS's Network Plan
stated that USPS will establish delivery service standard targets
before the end of fiscal year 2008. In addition, USPS has recently
submitted a proposal for measuring and reporting on delivery service
performance to the PRC, and the PRC has requested public comment on
USPS's proposal. USPS's successful implementation of this proposal
depends on USPS and mailers adopting new technology.
Further, USPS has taken steps to address our recommendations to improve
communication with its stakeholders as it consolidates its AMP
operations. USPS has modified its AMP Communication Plan to improve
public notification, engagement, and transparency. Notably, USPS has
moved the public input meeting to an earlier point in the AMP process
and plans to post a meeting agenda, summary brief, and presentation
slides on its Web site 1 week before the public meeting. To increase
transparency, USPS has clarified its processes for addressing public
comments and plans to make additional information available on its Web
site. Going forward, as USPS implements its AMP consolidations, it will
have the opportunity to gather stakeholders' feedback on the updated
Communication Plan and to assess the effectiveness of these
modifications.
USPS Has Taken Steps to Improve Realignment Planning and
Accountability, but Measurement of Most Realignment Efforts Is Limited
to the Budget Process:
USPS has taken steps to respond to most of our prior recommendations to
strengthen planning and accountability for its network realignment
efforts. It has clarified how it makes realignment decisions and
generally addressed how it integrates its realignment initiatives, but
it has not established measurable performance targets for these
initiatives. USPS believes that its budgeting process accounts for the
cost reductions achieved through these initiatives.
Realignment Measures Are Generally Limited to USPS's Budget Process:
In our 2007 report we stated that without measurable performance
targets for achieving its realignment goals, USPS remains unable to
demonstrate to Congress and other stakeholders the costs and benefits
associated with its network realignment initiatives.[Footnote 7] We
also reported that although USPS had made progress on several of its
realignment initiatives, it remained unclear how the various
initiatives were individually and collectively contributing to the
achievement of realignment goals because the initiatives lacked
measurable targets. Appendix I provides a brief description and
identifies the status of USPS's key realignment initiatives. Appendix
II provides updated status information for all AMP consolidations
through July 2008.
PAEA calls for USPS to, among other matters, establish performance
goals and identify anticipated costs, cost savings, and other benefits
associated with the infrastructure realignment alternatives in its
Network Plan. The Network Plan describes an overall goal to create an
efficient and flexible network that results in lower costs for both the
Postal Service and its customers, improves the consistency of mail
service, and reduces the Postal Service's overall environmental
footprint. In addition, the plan states that USPS's goals are
continuous improvement and savings of $1 billion per year through
realignment and other efforts. According to the plan, USPS will achieve
these savings, in part, through three core realignment initiatives,
including Airport Mail Center (AMC) closures, AMP consolidations, and
Bulk Mail Center (BMC) transformations.[Footnote 8] The specificity of
the expected savings and other benefits related to the core initiatives
varies in the plan's discussion of measurable goals, targets, and
results achieved.
* Overall program targets: USPS estimated total savings of $117 million
for AMC closures--including savings of $57 million in 2008 and $21
million in 2009--but provided no such figure for the AMP
consolidations. Postal officials told us USPS is developing an overall
program target for transforming the BMCs.
* Evaluation of results: USPS has measured the results of its AMP
consolidations through a post-implementation review. In 2007, we
identified data consistency problems with this review. USPS has
addressed these problems in an updated handbook issued in 2008, by
revising its data calculation worksheets. No analogous process exists
for measuring the results of USPS's AMC closures, which included
outsourcing some operations conducted at these facilities, relocating
some operations to other postal facilities, and closing some
facilities. We are issuing a report today on USPS's outsourcing
activities, which discusses USPS's realignment decisions related to its
AMCs.[Footnote 9] As part of this review, we concluded that USPS does
not track and could not quantify the results of its outsourcing
activities. We recommended that USPS establish a process to measure the
results and effectiveness of those outsourcing activities that are
subject to collective bargaining, including the AMCs. USPS agreed to
establish a process for future outsourcing initiatives subject to
collective bargaining, in which it would compare the financial
assumptions that supported its outsourcing decision with actual
contract award data 1 year after project implementation.
When we met with USPS officials in June 2008, we asked why they did not
have measurable performance goals and targets for the individual
realignment initiatives. The Deputy Postmaster General explained that
the realignment targets are captured in USPS's goal of saving $1
billion per year. Specifically, he explained that USPS will present its
overall goals and targets in more detail as part of its internal
budget, which will be presented to the Board of Governors in July 2008.
USPS will have additional opportunities to provide information about
its estimated costs and cost savings related to its realignment efforts
in its annual report to Congress, which is required by the end of
December. Developing and implementing more transparent performance
targets and results can help inform Congress about the effectiveness of
USPS's realignment efforts.
USPS Has Generally Addressed the Integration of Its Various Network
Realignment Initiatives:
In 2007, we found there was little transparency into how USPS's efforts
were integrated with each other. We recommended that USPS explain how
it will integrate the various initiatives that it will use in
realigning the postal facilities network. In its Network Plan, USPS
identifies three major realignment efforts: (1) Airport Mail Center
closures, (2) consolidations of Area Mail Processing operations and (3)
transformations of Bulk Mail Centers. USPS briefly addresses the
integration of its network initiatives, stating that their overall
impact and execution are tightly integrated, and provides a few
examples, but little contextual information about what its future
network will look like and how its realignment goals are being met.
In a recent meeting, senior USPS officials provided more information
that helps to put the integration of USPS's three network realignment
initiatives in context. They said this integration is expected to
reduce USPS's network and shrink its mail processing operations. After
integrating these three efforts, they said, USPS will continue to be
the "first and last mile"--the "first mile" being the point of entry
for mail into the system, and the "last mile" being the delivery of
mail to customers nationwide, as required to meet USPS's universal
service mission. They expect to lower costs and achieve savings by
reducing excess processing capacity and fuel consumption, as well as by
working with the mailing industry to implement new technologies such as
delivery point sequencing, flats sequencing, and Intelligent Mail.®
[Footnote 10] Going forward, USPS has opportunities, in its annual
report to Congress and in other reports and strategic plans, to further
articulate how it plans to integrate these three initiatives and to
what extent they are helping USPS meet its goals.
USPS Has Established Delivery Service Standards:
USPS has partially responded to our prior recommendations related to
improving delivery performance information by establishing delivery
performance standards and committing to develop performance targets
against these standards and provide them to the PRC in August. However,
full implementation of performance measures and reporting is not yet
completed. Delivery service performance is a critical area that may be
affected by the implementation of the realignment initiatives. Delivery
standards are essential for setting realistic expectations for mail
delivery so that USPS and mailers can plan their mailing activities
accordingly. Delivery performance information is critical for
stakeholders to understand how USPS is achieving its mission of
providing universal postal service, including requirements for the
prompt, expeditious, and reliable delivery of mail throughout the
nation. Delivery performance data are also necessary for USPS and its
customers to identify and address delivery problems and to enable
Congress, the PRC, and others to hold management accountable for
results and to conduct independent oversight.
Our July 2006 report found that USPS's delivery performance standards,
measurement, and reporting needed improvement.[Footnote 11] We
recommended that USPS update its outdated delivery standards, which did
not reflect postal operations and thus were unsuitable for setting
realistic expectations and measuring performance. We also recommended
that the Service implement representative measures of delivery
performance for all major types of mail because only one-fifth of mail
volume was being measured and there were no representative measures for
Standard Mail, bulk First-Class Mail, Periodicals, and most Package
Services. Furthermore, we recommended that USPS improve the
transparency of its delivery standards, measurement, and reporting. In
December 2006, Congress enacted postal reform legislation that required
USPS to modernize its delivery standards and measure and report to the
PRC on the speed and reliability of delivery for each market-dominant
product. Collectively, market-dominant products represent 99 percent of
mail volume.
In December 2007, USPS issued its new delivery standards and has
committed to measuring and reporting on delivery performance for market-
dominant products starting in fiscal year 2009. Moreover, USPS provided
a specific proposal for measuring and reporting its delivery
performance to the PRC, which has requested public comment on USPS's
proposal. Full implementation of delivery performance measures and
reporting for all major types of mail will require both mailers and
USPS to take actions to barcode mail and track its progress--a system
referred to as Intelligent Mail®.
USPS Has Improved Its AMP Communication Plan:
USPS has taken steps to respond to our recommendations that it improve
its communication of realignment plans and proposals with stakeholders.
For key realignment efforts such as AMP consolidations, we found it is
critical for USPS to communicate with and engage the public.
Stakeholder input can help USPS understand and address customer
concerns, reach informed decisions, and achieve buy-in. In our 2007
report, we concluded that USPS was not effectively engaging
stakeholders and the public in its AMP consolidation process and
effectively communicating decisions. For example, USPS was not clearly
communicating to stakeholders what it was planning to study, why
studies were necessary, and what study outcomes might be. In addition,
USPS did not provide stakeholders with adequate notice of the public
input meeting or materials to review in preparation for the meeting.
Furthermore, according to stakeholders, USPS offered no explanation as
to how it evaluates and weighs public input in its decision-making
process.
To help resolve these and other issues concerning how USPS communicates
its realignment plans with stakeholders, we recommended that USPS take
the following actions:
* Improve public notice. Clarify notification letters by explaining
whether USPS is considering closing the facility under study or
consolidating operations with another facility, explaining the next
decision point, and providing a date for the required public meeting.
* Improve public engagement. Hold the public meeting during the data-
gathering phase of the study and make an agenda and background
information, such as briefing slides, available to the public in
advance.
* Increase transparency. Update AMP guidelines to explain how public
input is considered in the decision-making process.
USPS has incorporated into its 2008 AMP Communication Plan several
modifications aimed at improving public notification and engagement.
Most notably, USPS has moved the public input meeting to an earlier
point in the AMP process and plans posts a meeting agenda, summary
brief, and presentation slides on its Web site 1 week before the public
meeting. USPS has increased transparency, largely by clarifying its
processes for addressing public comments and plans to make additional
information available to the public on its Web site.
Improving Public Notice:
In 2007, we found that stakeholders potentially affected by AMP
consolidations could not discern from USPS's initial notification
letters[Footnote 12] what USPS was planning to study and what the
outcomes of the study might be. This lack of clarification led to
speculation on the part of stakeholders, which in turn increased public
resistance to USPS's realignment efforts. The initial notification
letters were also confusing to stakeholders because they contained
jargon and lacked adequate context to understand the purpose of the
study. Furthermore, in 2007 we reported that stakeholders were not
given enough notice about the public meeting, and we recommended that
USPS improve public notice by providing stakeholders with a date for
the public meeting earlier in the AMP process.
In its 2008 AMP Communication Plan, USPS has eliminated most of the
jargon from its notification letters and has generally provided more
context as to why it is necessary for USPS to conduct the feasibility
studies. For example, letters now name both facilities that would be
affected by a proposed consolidation, whereas previously, only one
facility was named. USPS also added a requirement that the public be
notified at least 15 days in advance of a public meeting.
Improving Public Engagement:
In 2007, we found that public meetings required for AMP consolidations
were occurring too late in the decision-making process for the public
to become engaged in this process in any meaningful way. At that time,
the meetings were held after the area office[Footnote 13] and
headquarters had completed their reviews of the AMP consolidation
studies and just before headquarters had made its final consolidation
decisions. Stakeholders we spoke with were not satisfied with the
public input process and told us that USPS solicited their input only
when it considered the AMP consolidation a "done deal." We also found
that USPS did not publish agendas in advance of public meetings or
provide the public with much information about the proposed studies.
The only information available was a series of bullet points posted on
USPS's Web site several days before the meetings. This lack of timely
and complete information further inhibited the public's ability to
meaningfully participate in the process. To make the meetings more
focused and productive, and to give the public an opportunity to
adequately prepare for them, we recommended that USPS make an agenda
and background information available to the public in advance of the
public meetings.
Although USPS still holds the public meetings after the data-gathering
phase of the study has been completed, the meeting now occurs earlier
in the AMP review process. Currently, before the meeting, the study has
been approved only at the district level--the area office and
headquarters have not yet completed their reviews or validated the data
by the time of the meeting. When we asked USPS why it did not move the
meeting to the data-gathering phase of the study, USPS officials
responded that it would be difficult to hold the meeting during the
data-gathering phase because at that point, they do not know what
operations could potentially be consolidated. However, to ensure that
the public meeting is held within a reasonable amount of time after the
study's completion, USPS included a requirement in its 2008 AMP
Communication Plan that the public meeting take place within 45 days
after the District Manager forwards the study to the area office and
headquarters. In addition, the initial notification letter now includes
contact information for the local Consumer Affairs Manager, to whom the
public can submit written comments up to 15 days after the public
meeting; previously, this contact information appeared in the second
notification letter. To help stakeholders better prepare for the public
meeting, USPS plans to post a meeting agenda, presentation slides, and
a summary brief of the AMP proposal on its Web site 1 week before the
meeting. In addition, USPS plans to inform stakeholders in the public
meeting notification letter that these materials will be posted on its
Web site 1 week before the meeting.
Improving Transparency:
In our 2007 report, we found that stakeholders and the public were
unclear as to how public input factored into USPS's consolidation
decisions. They wanted to know precisely how USPS took their input--
letters, phone calls, public meeting results--into consideration when
it made its decisions. We recommended that USPS increase the
transparency of its decision-making process by explaining how it
considers public input in the decision-making process.
In a recent interview, senior USPS officials identified two additions
to the 2008 AMP Communication Plan that address stakeholders' concerns
about how USPS considers public input. First, USPS considers written
comments from stakeholders before the public input meetings and
addresses these comments as part of the public input meetings. Second,
USPS has modified its public input review process so that officials at
the district, area, and headquarters levels consider, and are
responsive to, public concerns. Senior USPS officials told us that they
weigh public input primarily by considering the impact of any
consolidations on customer services and service standards.
Additionally, USPS officials told us that as AMP consolidations go
forward, USPS will post standard information about each consolidation
on its Web site and update this information regularly. Specifically,
USPS plans to post initial notifications, a summary brief of the
proposed AMP consolidation, specifics about the scheduled public
meeting, a summary of written and verbal public input, and the final
decision and implementation plans if an AMP consolidation is approved.
Congress has also addressed USPS's communication process. PAEA required
USPS to describe its communication procedures related to AMP
consolidations in its Network Plan. In response, the Network Plan
discusses how USPS will publicly notify communities potentially
affected by realignment changes and how it will obtain and consider
public input. In addition, PAEA directed USPS to identify any statutory
or regulatory obstacles that have prevented it from taking action to
realign or consolidate facilities. Accordingly, USPS's Network Plan
identified delays related to implementing AMP consolidations. For
example, USPS was directed not to implement certain consolidations
until after GAO has reported to Congress on whether USPS has
implemented GAO recommendations from its report issued in July 2007 to
strengthen planning and accountability in USPS's realignment efforts.
These directions were included in the joint explanatory statement
accompanying the Consolidated Appropriations Act for fiscal year 2008.
We have previously discussed the difficulties that stakeholder
resistance poses for USPS when it tries to close facilities and how
delays may affect USPS's ability to achieve its cost-reduction and
efficiency goals. Part of the problem stemmed from USPS's limited
communication with the public. We believe that USPS has made
significant progress toward improving its AMP communication processes
since 2005. Now, it will be crucial for USPS, in going forward, to
establish and maintain an ongoing and open dialogue with its various
stakeholders, including congressional oversight committees and Members
of Congress who have questions or are concerned about proposed
realignment changes.
Mr. Chairman, this concludes my prepared statement. I would be pleased
to respond to any questions that you or Members of the Subcommittee may
have.
Contact and Acknowledgments:
For further information about this statement, please contact Phillip
Herr, Director, Physical Infrastructure Issues, at (202) 512-2834 or at
herrp@gao.gov. Individuals making key contributions to this statement
included Teresa Anderson, Kenneth John, Summer Lingard, Margaret
McDavid, and Jaclyn Nidoh.
[End of section]
Appendix I: Description and Status of USPS's Key Realignment
Initiatives as of July 2008:
Key realignment initiative: Realignment of Airport Mail Centers (AMC);
Description: AMCs are postal facilities that have traditionally been
operated for the purpose of expediting the transfer of mail to and from
commercial passenger airlines;
Status: USPS's Network Plan stated that USPS had terminated operations
at 46 AMCs during fiscal years 2006 and 2007, and another 8 AMCs in
fiscal year 2008.
Key realignment initiative: Consolidation of Area Mail Processing (AMP)
operations;
Description: AMP consolidations of mail processing operations are
intended to reduce costs and increase efficiency by eliminating excess
capacity at USPS's more than 400 processing plants;
Status: From 2005 through July 2008, USPS implemented 11 AMP
consolidations, decided not to implement 35 studies (5 placed on
indefinite hold), was continuing to consider 7 consolidations, and had
closed 1 facility after consolidation.
Key realignment initiative: Bulk Mail Centers (BMC) transformations;
Description: Because mailers have increased their sorting and transport
of mail shipments to postal facilities near mail destinations, mailers
have been bypassing BMCs and the centers are underused. Also, increased
highway contract expenses and an aging postal distribution
infrastructure have prompted USPS to evaluate its BMC network to
determine how it can best support future postal operations;
Status: In July 2008, USPS issued a Request for Proposal to obtain
input on a proposal to outsource some of its BMC workload so that USPS
can use its 21 BMCs for alternative postal work.
Key realignment initiative: Regional Distribution Centers
transformations;
Description: The Regional Distribution Centers were expected to perform
bulk processing operations and act as Surface Transfer Centers and
mailer entry points;
Status: The Network Plan stated that this initiative has been
discontinued because USPS determined that it would not generate the
benefits originally anticipated.
Source: GAO analysis of USPS data.
[End of table]
[End of section]
Appendix II: Status of AMP Consolidations:
Table 1: Status of AMP Consolidations Approved from 2005, as of July
2008:
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Bridgeport, CT/Stamford, CT;
Implemented: [Check];
Subsequent decision not to implement: [Empty].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Greensburg, PA/Pittsburg, PA;
Implemented: [Check];
Subsequent decision not to implement: [Empty].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Kinston, NC/Fayetteville, NC;
Implemented: [Empty];
Subsequent decision not to implement: [Check].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Marina, CA/Los Angeles, CA;
Implemented: [Check];
Subsequent decision not to implement: [Empty].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Marysville, CA/Sacramento, CA;
Implemented: [Empty];
Subsequent decision not to implement: [Check].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Mojave, CA/Bakersfield, CA;
Implemented: [Check];
Subsequent decision not to implement: [Empty].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Monmouth, NJ/Trenton, NJ & Kilmer, NJ;
Implemented: [Check];
Subsequent decision not to implement: [Empty].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Newark, NJ/Kearny, NJ;
Implemented: [Check];
Subsequent decision not to implement: [Empty].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Northwest Boston, MA/Boston, MA;
Implemented: [Check];
Subsequent decision not to implement: [Empty].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Olympia, WA/Tacoma, WA;
Implemented: [Check];
Subsequent decision not to implement: [Empty].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Pasadena, CA/Santa Clarita, CA &
Industry, CA;
Implemented: [Check];
Subsequent decision not to implement: [Empty].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Saint Petersburg, FL/Tampa, FL;
Implemented: [Check];
Subsequent decision not to implement: [Empty].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Waterbury, CT/Southern Connecticut, CT;
Implemented: [Check];
Subsequent decision not to implement: [Empty].
Facilities involved in consolidation (facility losing operations/
facility gaining operations): Total;
Implemented: 11;
Subsequent decision not to implement: 2.
Source: USPS.
[End of table]
Table 2: Status of Proposed AMP Consolidations Initiated in 2006 or
2007, as of July 2008:
AMP package under review by headquarters: Total AMP Proposals; 7;
* Aberdeen, SD/Dakotas Central, SD; Public meeting held 2-23-06;
* Bronx, NY/Morgan, NY; Public meeting planned, not scheduled;
* Canton, OH/Akron, OH; Public meeting held 10-30-07;
* Detroit, MI/Michigan Metroplex, Pontiac, MI; Public meeting held 10-
23-07;
* Flint, MI/Michigan Metroplex, Pontiac, MI; Public meeting held 10-22-
07;
* Kansas City, KS/Kansas City, MO; Public meeting held 6-27-07;
* Sioux City, IA/Sioux Falls, SD; Public meeting held 4-20-06.
Proposed AMP review on hold: 5;
* Alamogordo, NM/El Paso, TX;
* Batesville, AR/Little Rock, AR;
* Carbondale, IL/Saint Louis, MO;
* Centralia, IL/Saint Louis, MO;
* Las Cruces, NM/El Paso, TX.
Decision not to implement proposed AMP: 33.
* Beaumont, TX/Houston, TX;
* Binghamton, NY/Syracuse, NY;
* Bloomington, IN/Indianapolis, IN;
* Bryan, TX/Houston, TX;
* Burlington, VT/White River Jnt, VT;
* Cape Cod, MA/Brockton, MA;
* Carroll, IA/Des Moines, IA;
* Cumberland, MD/Frederick, MD;
* Dallas, TX/North Texas, TX;
* Daytona Beach, FL/Mid-FL, FL;
* Fox Valley, IL/South Suburban, IL;
* Gaylord, MI/Traverse City, MI;
* Glenwood Springs, CO/Grand Junction, CO;
* Helena, MT/Great Falls, MT;
* Hutchinson, KS/Wichita, KS;
* Jackson, TN/Memphis, TN;
* LA Crosse, WI/Rochester, MN;
* McAllen PO TX/Corpus Christi, TX;
* McCook & N. Platte, NE/Casper, WY;
* Oshkosh, WI/Green Bay, WI;
* Plattsburg, NY/Albany, NY;
* Portsmouth, NH/Manchester, NH;
* Rockford, IL/Palatine, IL;
* Sheridan, WY/Casper, WY;
* Springfield, MA/Hartford, CT;
* Staten Island, NY/Brooklyn, NY;
* Twin Falls, ID/Boise, ID;
* Utica, NY/Syracuse or Albany, NY;
* Waco, TX/Fort Worth/Austin, TX;
* Watertown, NY/Syracuse, NY;
* Wheatland, WY/Cheyenne, WY;
* Yakima, WA/Pasco, WA;
* Zanesville, OH/Columbus, OH.
Source: USPS:
Note: This table includes the facilities involved in proposed
consolidations, both the facility losing operations and the facility
gaining operations.
[End of table]
[End of section]
Related GAO Products:
GAO. U.S. Postal Service: Data Needed to Assess the Effectiveness of
Outsourcing. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-787].
Washington, D.C.: July 24, 2008.
GAO. U.S. Postal Service: Progress Made in Implementing Mail Processing
Realignment Efforts, but Better Integration and Performance Measurement
Still Needed. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-
1083T]. Washington, D.C.: July 26, 2007.
GAO. U.S. Postal Service: Mail Processing Realignment Efforts Under Way
Need Better Integration and Explanation. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-717]. Washington, D.C.: June
21, 2007.
GAO. U.S. Postal Service: Delivery Performance Standards, Measurement,
and Reporting Need Improvement. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-06-733]. Washington, D.C.: July 27, 2006.
GAO. U.S. Postal Service: The Service's Strategy for Realigning Its
Mail Processing Infrastructure Lacks Clarity, Criteria, and
Accountability. [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-
261]. Washington, D.C.: April 8, 2005.
GAO. U.S. Postal Service: USPS Needs to Clearly Communicate How Postal
Services May Be Affected by Its Retail Optimization Plans. [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-04-803]. Washington, D.C.: July
13, 2004.
GAO. U.S. Postal Service: Bold Action Needed to Continue Progress on
Postal Transformation. [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-04-108T]. Washington, D.C.: November 5, 2003.
[End of section]
Footnotes:
[1] GAO, U.S. Postal Service: Progress Made in Implementing Mail
Processing Realignment Efforts, but Better Integration and Performance
Measurement Still Needed, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-07-1083T] (Washington, D.C.: July 26, 2007).
[2] The area mail processing consolidation initiative is designed to
better use the network's capacity by consolidating mail processing
operations into facilities with excess machine capacity, thereby
increasing the use of automation in mail processing.
[3] GAO, U.S. Postal Service: Mail Processing Realignment Efforts Under
Way Need Better Integration and Explanation, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-717] (Washington, D.C.: June
21, 2007).
[4] GAO, U.S. Postal Service: Delivery Performance Standards,
Measurement, and Reporting Need Improvement, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-06-733] (Washington, D.C.: July
27, 2006).
[5] Section 302 of the Postal Accountability and Enhancement Act (Pub.
L. No. 109-435) was enacted on December 20, 2006. Whereas the act
refers to network "rationalization," in our previous products we have
used the term "realignment" for analogous purposes, which we use
throughout this testimony.
[6] PAEA defines market-dominant products to include: First-Class Mail-
-single-piece mail (e.g., bill payments and letters) and bulk mail
(e.g., bills and advertising); Standard Mail (mainly bulk advertising
and direct mail solicitations); Periodicals (mainly magazines and local
newspapers); some types of Package Services (i.e., single-piece parcel
post, media mail, bound printed matter, and library mail); and single-
piece International Mail.
[7] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-717].
[8] AMCs are postal facilities that have traditionally been operated
for the purpose of expediting the transfer of mail to and from
commercial passenger airlines. AMP consolidations of mail processing
operations are intended to reduce costs and increase efficiency by
eliminating excess capacity at USPS's more than 400 processing plants.
USPS is evaluating its BMC network, where parcels and bulk mail
shipments are processed, because they are aging and underused. USPS
recently issued a proposal related to transforming its BMC network, but
has not yet implemented this proposal.
[9] GAO, U.S. Postal Service: Data Needed to Assess the Effectiveness
of Outsourcing, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-
787] (Washington, D.C.: July 24, 2008).
[10] Delivery Point Sequencing is the automated rather than manual
sorting of letters in the exact order carriers deliver them. Flats
sequencing is a system that fully automates the processing and delivery
sequencing of flat-size mail, which generally consists of catalogs,
envelopes, large cards, magazines and newspapers. Intelligent Mail®
uses barcodes which are read by scanning devices to allow postal
managers and customers to track mail as it moves through the postal
network.
[11] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-733].
[12] USPS provides for notification letters at multiple points during
the AMP process, e.g., initial notification of intent to perform a
study, notification of a public meeting, and notification to
consolidate facilities.
[13] USPS manages its field operations by dividing the nation into nine
geographic areas.
[End of section]
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