U.S. Postal Service
Broad Restructuring Needed to Address Deteriorating Finances Gao ID: GAO-09-790T July 30, 2009The U.S. Postal Service's (USPS) financial condition has worsened this year, with the recession and changing mail use causing declines in mail volume and revenues despite postal rate increases. GAO testified in May to this subcommittee that USPS expects these declines to lead to a record net loss and an unprecedented cash shortfall even if ambitious cost cutting is achieved. GAO reported that maintaining USPS's financial viability as the provider of affordable, high-quality universal postal service will require actions in a number of areas, such as (1) rightsizing its retail and mail processing networks by consolidating operations and closing unnecessary facilities and (2) reducing the cost and size of its workforce, which generates about 80 percent of its costs. Today GAO is releasing its report on USPS efforts to improve the efficiency of delivery. Delivery accounts for nearly half of USPS salary and benefit costs. This testimony (1) updates USPS's financial condition and outlook and explains GAO's decision to place USPS's financial condition on the High-Risk List and (2) discusses the need for USPS to restructure its mail processing, retail, and delivery networks and its efforts to improve their efficiency. It is based on GAO's past and ongoing work and updated USPS information.
USPS's financial condition and outlook continue to deteriorate with a worsening outlook for mail volume and revenue. USPS now projects mail volume to decline by about 28 billion pieces to about 175 billion pieces in fiscal year 2009, a decline of 13.7 percent. As a result, USPS projects (1) a net loss of about $7 billion even with record savings of about $6 billion; (2) an increase in outstanding debt by the annual $3 billion limit; and, (3) despite this borrowing, an unprecedented $1 billion cash shortfall. Thus, USPS recently reported to Congress that, due to the need to maintain sufficient cash to cover costs, it will not fully make its mandated payment of $5.4 billion for future retiree health benefits due by September 30, 2009, even if it receives $2 billion in relief under pending House legislation. GAO added USPS's financial condition to the High-Risk List this week. GAO reported USPS urgently needs to restructure to address its current and long-term financial viability. Accordingly, GAO calls for USPS to develop and implement a broad restructuring plan--with input from the Postal Regulatory Commission and other stakeholders, and approval by Congress and the administration--that includes key milestones and time frames for actions, addresses key issues, and identifies what steps Congress and other stakeholders may need to take. USPS needs to optimize its retail, mail processing, and delivery networks to eliminate growing excess capacity and maintenance backlogs, reduce costs, and improve efficiency. USPS has a window of opportunity to reduce the cost and size of its workforce through attrition and the large number of upcoming retirements to minimize the need for layoffs. Although USPS has begun efforts to realign and consolidate some mail processing, retail, and delivery operations, much more is urgently needed. GAO recognizes that USPS would face formidable resistance to restructuring with many facility closures and consolidations because of concerns that these actions would affect service, employees, and communities. USPS management will need to provide leadership and work with stakeholders to overcome resistance for its actions to be successfully implemented. USPS must use an open, transparent, fair, and consistent process; engage with its unions, management associations, the mailing industry, and political leaders; and demonstrate results. In turn, these stakeholders and Congress need to recognize that major restructuring is urgently needed for USPS to be financially viable. To its credit, USPS recently began a national initiative to consolidate some of its 3,200 postal retail stations and branches in urban and suburban areas. USPS has begun efforts to consolidate some mail processing operations but has closed only 1 of 400 major mail processing facilities. USPS is realigning city carrier routes to remove excess capacity and improve efficiency, which is expected to save nearly $1 billion annually; has begun to install automated equipment to reduce costly manual sorting of flat-sized mail; and is studying how it could shift to 5-day delivery and the potential savings.
GAO-09-790T, U.S. Postal Service: Broad Restructuring Needed to Address Deteriorating Finances
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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 10:00 a.m. EDT:
Thursday, July 30, 2009:
U.S. Postal Service:
Broad Restructuring Needed to Address Deteriorating Finances:
Statement of Phillip Herr, Director:
Physical Infrastructure Issues:
GAO-09-790T:
GAO Highlights:
Highlights of GAO-09-790T, 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:
The U.S. Postal Service‘s (USPS) financial condition has worsened this
year, with the recession and changing mail use causing declines in mail
volume and revenues despite postal rate increases. GAO testified in May
to this subcommittee that USPS expects these declines to lead to a
record net loss and an unprecedented cash shortfall even if ambitious
cost cutting is achieved. GAO reported that maintaining USPS‘s
financial viability as the provider of affordable, high-quality
universal postal service will require actions in a number of areas,
such as (1) rightsizing its retail and mail processing networks by
consolidating operations and closing unnecessary facilities and (2)
reducing the cost and size of its workforce, which generates about 80
percent of its costs. Today GAO is releasing its report on USPS efforts
to improve the efficiency of delivery. Delivery accounts for nearly
half of USPS salary and benefit costs.
This testimony (1) updates USPS‘s financial condition and outlook and
explains GAO‘s decision to place USPS‘s financial condition on the High-
Risk List and (2) discusses the need for USPS to restructure its mail
processing, retail, and delivery networks and its efforts to improve
their efficiency. It is based on GAO‘s past and ongoing work and
updated USPS information.
What GAO Found:
USPS‘s financial condition and outlook continue to deteriorate with a
worsening outlook for mail volume and revenue. USPS now projects mail
volume to decline by about 28 billion pieces to about 175 billion
pieces in fiscal year 2009, a decline of 13.7 percent. As a result,
USPS projects:
* a net loss of about $7 billion even with record savings of about $6
billion;
* an increase in outstanding debt by the annual $3 billion limit; and,
* despite this borrowing, an unprecedented $1 billion cash shortfall.
Thus, USPS recently reported to Congress that, due to the need to
maintain sufficient cash to cover costs, it will not fully make its
mandated payment of $5.4 billion for future retiree health benefits due
by September 30, 2009, even if it receives $2 billion in relief under
pending House legislation.
GAO added USPS‘s financial condition to the High-Risk List this week.
GAO reported USPS urgently needs to restructure to address its current
and long-term financial viability. Accordingly, GAO calls for USPS to
develop and implement a broad restructuring plan”with input from the
Postal Regulatory Commission and other stakeholders, and approval by
Congress and the administration”that includes key milestones and time
frames for actions, addresses key issues, and identifies what steps
Congress and other stakeholders may need to take.
USPS needs to optimize its retail, mail processing, and delivery
networks to eliminate growing excess capacity and maintenance backlogs,
reduce costs, and improve efficiency. USPS has a window of opportunity
to reduce the cost and size of its workforce through attrition and the
large number of upcoming retirements to minimize the need for layoffs.
Although USPS has begun efforts to realign and consolidate some mail
processing, retail, and delivery operations, much more is urgently
needed. GAO recognizes that USPS would face formidable resistance to
restructuring with many facility closures and consolidations because of
concerns that these actions would affect service, employees, and
communities. USPS management will need to provide leadership and work
with stakeholders to overcome resistance for its actions to be
successfully implemented. USPS must use an open, transparent, fair, and
consistent process; engage with its unions, management associations,
the mailing industry, and political leaders; and demonstrate results.
In turn, these stakeholders and Congress need to recognize that major
restructuring is urgently needed for USPS to be financially viable.
To its credit, USPS recently began a national initiative to consolidate
some of its 3,200 postal retail stations and branches in urban and
suburban areas. USPS has begun efforts to consolidate some mail
processing operations but has closed only 1 of 400 major mail
processing facilities. USPS is realigning city carrier routes to remove
excess capacity and improve efficiency, which is expected to save
nearly $1 billion annually; has begun to install automated equipment to
reduce costly manual sorting of flat-sized mail; and is studying how it
could shift to 5-day delivery and the potential savings.
View [hyperlink, http://www.gao.gov/products/GAO-09-790T] or key
components. For more information, contact Phillip Herr at (202) 512-
2834 or herrp@gao.gov.
[End of section]
Chairman Lynch, Ranking Member Chaffetz, and Members of the
Subcommittee:
I am pleased to participate in this hearing on U.S. Postal Service
(USPS) operations. My statement will (1) update USPS's financial
condition and outlook and explain our recent decision to place USPS's
financial condition on our High-Risk List, and (2) discuss the need for
USPS to restructure its mail processing, retail, and delivery networks
and its efforts to improve their efficiency.
My statement is based upon on our past and ongoing work, including the
report being released today on USPS efforts to improve delivery
efficiency,[Footnote 1] and our report adding USPS to the High-Risk
List,[Footnote 2] as well as our continued monitoring of USPS's
financial condition and outlook. We conducted our work from May 2009 to
July 2009 in accordance with all sections of GAO's quality assurance
framework that are relevant to our objectives. The framework requires
that we plan and perform the engagement to obtain sufficient and
appropriate evidence to meet our stated objectives and to discuss any
limitations in our work. We believe that the information and data
obtained, and the analysis conducted, provide a reasonable basis for
any findings and conclusions in this product.
USPS's Financial Condition Continues to Deteriorate, and Its Financial
Condition Has Been Added to Our High-Risk List:
USPS's financial condition and outlook continue to deteriorate with a
worsening outlook for mail volume and revenue. USPS currently projects
a mail volume decline of 13.7 percent for fiscal year 2009, triple the
4.5 percent decline in fiscal year 2008 and the largest percentage
decline since the Great Depression. As a result, USPS is projecting the
following for fiscal year 2009:
* a net loss of about $7 billion,[Footnote 3] even if it achieves
record cost savings of about $6 billion;
* an increase in outstanding debt by the annual statutory limit of $3
billion;[Footnote 4] and,
* despite this borrowing, an unprecedented $1 billion cash shortfall.
USPS has reported that it does not expect to generate sufficient cash
from operations to fully make its mandated payment of $5.4 billion for
future retiree health benefits that is due by September 30, 2009.
Further, USPS recently reported to Congress that--due to the need to
maintain sufficient cash to cover costs--it will not fully make this
payment, even if it receives $2 billion in relief from fiscal year 2009
retiree health benefits payments that would be provided by H.R. 22,
which has been reported out of the House Committee on Oversight and
Government Reform.
USPS also expects continued financial problems in fiscal year 2010,
with a similar deficit even if it achieves larger cost savings, and an
even larger cash shortfall. Under this scenario, USPS would increase
its outstanding debt by an additional $3 billion, which would bring its
total debt to $13.2 billion at the end of fiscal year 2010--only $1.8
billion less than its $15 billion statutory limit.[Footnote 5]
USPS's projected cost cutting of about $6 billion for this fiscal year
is much larger than its previous annual cost-cutting targets that have
ranged from nearly $900 million to $2 billion since 2001. However, USPS
projects cash shortfalls because cost cutting and rate increases will
not fully offset the impact of mail volume declines and other factors
that increase costs--notably semiannual cost-of-living allowances
(COLA) for employees covered by union contracts. Compensation and
benefits constitute close to 80 percent of its costs--a percentage that
has remained similar over the years despite major advances in
technology and automating postal operations. Also, USPS continues to
pay a higher share of employee health benefit premiums than other
federal agencies. Further, it has high overhead (institutional) costs
that are hard to change in the short term, such as providing universal
service that includes 6-day delivery and maintaining a network of
37,000 post offices and retail facilities, as well as a delivery
network of more than 149 million addresses.
Two days ago, we added USPS's financial condition to the list of high-
risk areas needing attention by Congress and the executive branch to
achieve broad-based transformation. We reported that USPS urgently
needs to restructure to address its current and long-term financial
viability. USPS's cost structure has not been cut fast enough to offset
accelerated decline in mail volume and revenue. In this regard, USPS
has high personnel costs, including those to provide 6-day delivery and
retail services. To achieve financial viability, USPS must align its
costs with revenues, generate sufficient earnings to finance capital
investment, and manage its debt.
We noted that mail use has been changing over the past decade as
businesses and consumers have moved to electronic communication and
payment alternatives. Further innovations in, and use of, e-commerce
and broadband are expected. The percentage of households paying bills
by mail is declining while the percentage of electronic payments is
increasing (see figure 1). Mail volume peaked in 2006, and its decline
has accelerated with the economic recession, particularly among major
mail users in the advertising, financial, and housing sectors. Mail
volume has typically returned after recessions, but USPS's 5-year
forecast suggests that much of the lost volume will not return.
Figure 1: Percentage of Household Bill Payments Made by Mail and
Electronically, Fiscal Years 2000 through 2008:
[Refer to PDF for image: multiple line graph]
Fiscal year: 2000;
Mail payment: 79%;
Electronic payment: 11%.
Fiscal year: 2001;
Mail payment: 80%;
Electronic payment: 13%.
Fiscal year: 2002;
Mail payment: 75%;
Electronic payment: 17%.
Fiscal year: 2003;
Mail payment: 74%;
Electronic payment: 19%.
Fiscal year: 2004;
Mail payment: 69%;
Electronic payment: 24%.
Fiscal year: 2005;
Mail payment: 67%;
Electronic payment: 27%.
Fiscal year: 2006;
Mail payment: 63%;
Electronic payment: 30%.
Fiscal year: 2007;
Mail payment: 62%;
Electronic payment: 32%.
Fiscal year: 2008;
Mail payment: 56%;
Electronic payment: 38%.
Source: USPS.
[End of figure]
For these reasons, we concluded that action is needed in multiple
areas, including possible action and support by Congress, as no single
change will be sufficient to address USPS's challenges.
* The short-term challenge for USPS is to cut costs quickly enough to
offset the unprecedented volume and revenue declines, so that it can
cover its operating expenses.
* The long-term challenge is to restructure USPS operations, networks,
and workforce to reflect changes in mail volume, use of the mail, and
revenue.
Accordingly, we have called for USPS to develop and implement a broad
restructuring plan--with input from the Postal Regulatory Commission
(PRC) and other stakeholders, and approval by Congress and the
administration--that includes key milestones and time frames for
actions, addresses key issues, and identifies what steps Congress and
other stakeholders may need to take. We stated that USPS's
restructuring plan should address how it plans to:
* realign postal services, such as delivery frequency, delivery
standards, and access to retail services, with changes in the use of
mail by consumers and businesses;
* better align costs and revenues, including compensation and benefit
costs;
* optimize its operations, networks, and workforce;
* increase mail volumes and revenues; and:
* retain earnings, so that it can finance needed capital investments
and repay its growing debt.
Network Restructuring Needed to Help USPS Achieve Financial Viability:
USPS needs to optimize its retail, mail processing, and delivery
networks to eliminate growing excess capacity and maintenance backlogs,
reduce costs, and improve efficiency. We recently reported that USPS
needs to rightsize its retail and mail processing networks and reduce
the size of its workforce.[Footnote 6] USPS has a window of opportunity
to further reduce the cost and size of its workforce through attrition
and the large number of upcoming retirements to minimize the need for
layoffs. As the Postmaster General testified this March, about 160,000
USPS employees are eligible for regular retirement this fiscal year,
and this number will grow within the next 4 years to nearly 300,000.
USPS has begun efforts to realign and consolidate some of its mail
processing, retail, and delivery operations, but much more
restructuring is urgently needed. We recognize that USPS would face
formidable resistance to restructuring with many facility closures and
consolidations because of concerns that these actions would impact
service, employees, and local communities. USPS senior management will
need to provide leadership and work with stakeholders to overcome
resistance for its actions to be successfully implemented. USPS must
use an open and transparent process that is fairly and consistently
applied; engage with its unions, management associations, the mailing
industry, and political leaders; and demonstrate results of actions. In
turn, these stakeholders and Congress need to recognize that major
changes are urgently needed for USPS to be financially viable.
USPS Has Recently Begun Efforts to Consolidate Retail Facilities:
To its credit, USPS recently began a national initiative to consolidate
some of its 3,200 postal retail stations and branches in urban and
suburban areas.[Footnote 7] It has nearly completed an initial review
to identify which facilities will be studied for consolidation, and
expects the studies to take about 4 months, with final decisions made
starting this October. USPS has processes for notifying its unions and
management associations, soliciting community input, and notifying
affected employees as it winnows the list of stations and branches it
is considering for consolidation (see figure 2).
Figure 2: Highlights of USPS's Process for Consolidating Retail
Stations and Branches Under Its Ongoing Initiative:
[Refer to PDF for image: illustration]
Over 3,200 stations and branches[A] ’pre-screened:“
Units selected for further analysis: Facility-specific discontinuance
study with stakeholder notification and input;
Outcomes not resulting in closure:
* Consolidation proposal not worth pursuing;
Outcomes resulting in closure:
Consolidation worth pursuing: Additional analysis performed;
Outcomes not resulting in closure:
* Not recommended for closure;
Outcomes resulting in closure:
Recommended for closure:
Outcomes not resulting in closure:
* Not approved;
Outcomes resulting in closure:
Approved: Stakeholders notified;
Facility closed[B].
Source: USPS.
[A] Stations and branches report to the main post office of the
community.
[B] Closures are to be implemented at least 60 days after the final
decision.
[End of figure]
On July 2, 2009, USPS requested that PRC provide an advisory opinion on
USPS's retail consolidation initiative, which has led to a public
process that will provide stakeholders with opportunities for input.
[Footnote 8] In its request, USPS stated it would identify
opportunities to consolidate retail operations and improve efficiency,
but only after concluding that such changes will continue to provide
ready access to essential postal services. USPS noted that the branches
and stations considered for consolidation are often in close proximity
to each other. USPS stated that it could not estimate the savings
because it had not made decisions on how many or which facilities would
be closed. Going forward, issues may include whether stations and
branches will be considered subject to statutory requirements for
maintaining and closing post offices,[Footnote 9] and the similar
question of whether any branches and stations are covered by the long-
standing appropriations provision that restricts post office closures.
[Footnote 10]
USPS is required, among other things, to provide adequate, prompt,
reliable, and efficient services to all communities, including a
maximum degree of effective and regular services in rural areas,
communities, and small towns where post offices are not self-
sustaining.[Footnote 11] USPS is specifically prohibited from closing
small post offices solely for operating at a deficit.[Footnote 12]
Consistent with reasonable economies, USPS is authorized to establish
and maintain facilities as are necessary to provide ready access to
essential services to customers throughout the nation. Before closing a
post office, USPS must, among other things, provide customers with at
least 60 days of notice before the proposed closure date, and any
person served by the post office may appeal its closure to the PRC.
[Footnote 13] However, USPS plans state that customers will have 20
days to comment on a proposed closure of a station or branch and that
no appeals will be permitted. USPS explained that stations and branches
are different from post offices. A recent Congressional Research
Service report discussed this matter and other issues related to the
closure of these retail facilities.[Footnote 14]
To put USPS's retail consolidation initiative into context, we recently
testified before this subcommittee that USPS can streamline its network
of 37,000 post offices, branches, and stations--a network that has
remained largely static despite expanding use of retail alternatives
and shifts in population.[Footnote 15] We have previously reported that
the number of postal retail facilities has varied widely among
comparable counties in urban areas, and a number of facilities we
visited appeared to merit consideration for closure based on leading
federal practices for rightsizing facility networks.[Footnote 16] Our
report also noted that USPS has a maintenance backlog for its retail
facilities, and USPS officials stated that USPS has historically
underfunded its maintenance needs. USPS has limited its capital
expenditures to help conserve cash, which may affect its maintenance
backlog. Fewer retail facilities would reduce maintenance needs.
USPS Has Made Limited Progress in Consolidating Its Mail Processing
Network:
USPS has begun efforts to consolidate some mail processing operations,
but much more needs to be done to restructure this network,
particularly since USPS has closed only 1 of its approximately 400
major mail processing facilities. In the Postal Accountability and
Enhancement Act of 2006,[Footnote 17] Congress encouraged USPS to
expeditiously move forward in its streamlining efforts, recognizing
that the 400 processing facilities are more than USPS needs and
streamlining this network can help eliminate excess costs. USPS has
substantial excess capacity in its processing network that is growing
with declining mail volume. According to USPS, it has 50 percent excess
capacity for processing First-Class Mail.
USPS is using the Area Mail Processing process to propose consolidating
some mail processing operations (see appendix I and [hyperlink,
http://www.usps.com/all/amp.htm]). USPS is also consolidating
processing and transportation operations from Bulk Mail Centers and
Surface Transfer Centers into what it refers to as Network Distribution
Centers, which USPS officials expect to be completed this November (see
hyperlink, http://www.usps.com/all/ndc.htm]). In the past decade, USPS
has closed some smaller facilities, such as 68 Airport Mail Centers and
50 Remote Encoding Centers.[Footnote 18] In 2005, we recommended that
USPS enhance transparency and strengthen accountability of its
realignment efforts to assure stakeholders that such efforts would be
implemented fairly and achieve the desired results.[Footnote 19] We
since testified that USPS took steps to address these recommendations
and should be positioned for action.
USPS Has Ongoing Efforts to Improve Delivery Efficiency:
USPS has ongoing efforts to increase the efficiency of mail delivery,
which is USPS's largest cost segment and includes more than 350,000
carriers that account for approximately 45 percent of salary and
benefit expenses. Two key efforts are (1) realignment of city delivery
routes and (2) installing new Flats Sequencing Systems to automate the
sorting of flat-sized mail--such as catalogs and magazines--into
delivery order, so that time-consuming and costly manual sorting by
carriers is no longer needed.
First, USPS is realigning city carrier routes to remove excess capacity
and improve efficiency, which is expected to generate nearly $1 billion
in annual savings. USPS also expects this effort to result in reduced
facility space needs, increased employee satisfaction, and more
consistent delivery service. Route realignment has been made possible
by collaboration between USPS and the National Association of Letter
Carriers. The parties agreed on the original realignment process, which
resulted in eliminating 2,500 routes. A modified process, which will
cover all city delivery routes, has resulted in the elimination of an
additional 1,800 routes through June 2009 (see fig. 3), and additional
routes may be eliminated. Thus, route realignment should result in
further savings next fiscal year.
Figure 3: Summary of the Process to Realign USPS City Delivery Routes:
[Refer to PDF for image: illustration]
Interim Alternate Route Adjustment Process:
Signed: October 2008;
Routes adjusted: November 2008 - May 2009;
Total city carrier routes: 160,000;
Routes not evaluated: 70,000;
Routes evaluated: 90,000;
Adjustments implemented.
Modified Interim Alternate Route Adjustment Process:
Signed: April 2009;
Routes adjusted: June 2009 - February 2010.
Routes to be evaluated: 70,000;
Possibility of routes being eliminated[A];
Routes to be reevaluated: 87,500;
Possibility of routes being eliminated[A];
Adjustments to be implemented;
All remaining routes to be evaluated again: Up to 157,500;
Possibility of routes eliminated[A].
Adjustments to be implemented.
Source: GAO analysis of USPS operations.
[A] Depending on the results of the route evaluations, a segment of
these routes could be eliminated.
Note: As a result of the modified process, an additional 1,800 routes
were eliminated through June 2009.
[End of figure]
USPS has established policies and procedures to notify customers if
they will be affected by route realignment and taken actions to keep
affected stakeholders informed. For example, USPS has made updated
route information available on the Internet, which the mailing industry
needs to prepare and organize the mail so USPS can efficiently handle
it.
Second, USPS has begun to install 100 automated sorting machines for
its $1.5 billion Flats Sequencing System to sort flat-sized mail into
delivery order, which is scheduled to be completed in October 2010.
USPS expects this to improve delivery accuracy, consistency, and
timeliness. USPS has worked with the mailing industry to facilitate
implementation, since the industry plays a major role in preparing,
transporting, and addressing flat-sized mail for efficient USPS
handling. Mailer representatives have praised USPS communications and
coordination with them--a process that is continuing to address
implementation issues. USPS and the two carrier unions (the National
Association of Letter Carriers and the National Rural Letter Carriers'
Association) reached agreement on revised work rules and procedures to
realign routes and capture work hour savings. Because of mail volume
declines, to maximize program savings, USPS is reconsidering where to
deploy the machines and the number of delivery routes covered by the
program. On routes covered by the machines, city carriers, on average,
will be manually sorting nearly 500 fewer flat-sized mail pieces each
day.
Finally, USPS has proposed moving to 5-day delivery to help address its
financial problems. USPS is studying how 5-day delivery could be
implemented, potential savings, and impacts on its employees. The
study, which USPS expects to complete this fall, will incorporate input
from postal unions and management associations, the mailing industry,
and consumer and market research. Cutting delivery frequency would
affect universal postal service and could further accelerate the
decline in mail volume and revenues. Considering the potential impact
on cost, volume, revenues, employees, and customers, it will be
important for USPS to make its study publicly available so that
Congress and stakeholders can better understand USPS's proposal and
consider the trade-offs involved.
As USPS has recognized, implementing 5-day delivery would require
congressional action because a long-standing appropriations provision
mandates 6-day delivery.[Footnote 20] PRC officials have stated that
USPS would be required to seek an advisory opinion from PRC on such a
change, which would lead to a public hearing with stakeholder input.
According to USPS officials, USPS would need about 6 months to prepare
for and implement 5-day delivery, including moving employees to other
locations, reprogramming payroll systems, and realigning operations.
Mr. Chairman, this concludes my prepared statement. I would be pleased
to answer any questions that you or other Members of the Subcommittee
may have.
GAO Contact and Staff Acknowledgments:
For further information regarding this statement, please contact
Phillip Herr at (202) 512-2834 or herrp@gao.gov. Individuals who made
key contributions to this statement include Shirley Abel, Teresa
Anderson, Gerald P. Barnes, Josh Bartzen, Paul Hobart, Kenneth E. John,
David Hooper, Hannah Laufe, Emily Larson, Josh Ormond, Susan Ragland,
Amy Rosewarne, Travis Thomson, and Crystal Wesco.
[End of section]
Appendix I: Status of 2008-2009 Proposed Area Mail Processing
Consolidations as of July 23, 2009:
Total AMP proposals: 37;
Study started: 9;
Public meeting notice: 1;
Public meeting held: 16;
AMP not approved: 4;
AMP approved: 7.
1.
Area Mail Processing (AMP) study initiated: Aberdeen, SD, to Dakota
Central, SD;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Check];
AMP approved: [Empty].
2.
Area Mail Processing (AMP) study initiated: Athens, GA, to North Metro,
GA;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
3.
Area Mail Processing (AMP) study initiated: Binghamton, NY, to
Syracuse, NY;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
4.
Area Mail Processing (AMP) study initiated: Bloomington, IN, to
Indianapolis, IN;
Study started: [Check];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Empty].
5.
Area Mail Processing (AMP) study initiated: Bronx, NY, to Morgan, NY;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: v;
AMP not approved: [Check];
AMP approved: [Empty].
6.
Area Mail Processing (AMP) study initiated: Canton, OH, to Akron, OH;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Check].
7.
Area Mail Processing (AMP) study initiated: Cape Cod, MA,, to Brockton,
MA;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
8.
Area Mail Processing (AMP) study initiated: Dallas, TX, to North Texas,
TX;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
9.
Area Mail Processing (AMP) study initiated: Detroit, MI to Pontiac, MI;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
10.
Area Mail Processing (AMP) study initiated: Flint, MI to Pontiac, MI;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
11.
Area Mail Processing (AMP) study initiated: Hattiesburg, MS, to
Gulfport, MS;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
12.
Area Mail Processing (AMP) study initiated: Industry, CA, to Santa Ana,
CA, and/or Santa Clarita, CA;
Study started: [Check][A];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Empty].
13.
Area Mail Processing (AMP) study initiated: Kansas City, KS, to Kansas
City, MO;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Check].
14.
Area Mail Processing (AMP) study initiated: Kilmer, NJ, to Dominick V.
Daniels, NJ, and Trenton, NJ;
Study started: [Check];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Empty].
15.
Area Mail Processing (AMP) study initiated: Lakeland, FL, to Tampa, FL;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Check].
16.
Area Mail Processing (AMP) study initiated: Long Beach, CA, to Santa
Ana, CA, and/or Los Angeles, CA;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
17.
Area Mail Processing (AMP) study initiated: Manasota, FL, to Tampa, FL;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Check].
18.
Area Mail Processing (AMP) study initiated: Mansfield, OH, to Akron,
OH;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Check];
AMP approved: [Empty].
19.
Area Mail Processing (AMP) study initiated: Newark, NJ, to Dominick V.
Daniels, NJ;
Study started: [Check];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Empty].
20.
Area Mail Processing (AMP) study initiated: New Castle, PA, to
Pittsburgh, PA;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
21.
Area Mail Processing (AMP) study initiated: Oxnard, CA, to Santa
Clarita, CA;
Study started: [Empty];
Public meeting notice: [Check];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Empty].
22.
Area Mail Processing (AMP) study initiated: Palatine, IL, to Carol
Stream, IL;
Study started: [Check];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Empty].
23.
Area Mail Processing (AMP) study initiated: Plattsburgh, NY, to
Burlington, VT;
Study started: [Check][B];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
MP approved: [Empty].
24.
Area Mail Processing (AMP) study initiated: Portsmouth, NH, to
Manchester, NH;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Check].
25.
Area Mail Processing (AMP) study initiated: Queens, NY, to Brooklyn,
NY;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
26.
Area Mail Processing (AMP) study initiated: Quincy, IL, to Springfield,
IL;
Study started: [Check];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Empty].
27.
Area Mail Processing (AMP) study initiated: Sioux City, IA, to Sioux
Falls, SD;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Check];
AMP approved: [Empty].
28.
Area Mail Processing (AMP) study initiated: South Florida, FL, to Ft.
Lauderdale, FL, and Miami, FL;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Check].
29.
Area Mail Processing (AMP) study initiated: Springfield, MA, to
Hartford, CT;
Study started: [Check];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Empty].
30.
Area Mail Processing (AMP) study initiated: Staten Island, NY, to
Brooklyn, NY;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Check].
31.
Area Mail Processing (AMP) study initiated: Utica, NY, to Syracuse, NY;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
32.
Area Mail Processing (AMP) study initiated: Watertown, NY, to Syracuse,
NY;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
33.
Area Mail Processing (AMP) study initiated: West Jersey, NJ, to
Northern NJ Metro and Kilmer, NJ;
Study started: [Check];
Public meeting notice: [Empty];
Public meeting held: [Empty];
AMP not approved: [Empty];
AMP approved: [Empty].
34.
Area Mail Processing (AMP) study initiated: Western Nassau, NY, to Mid-
Island, NY;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
35.
Area Mail Processing (AMP) study initiated: Wilkes Barre, PA, to
Scranton, PA, and Lehigh Valley, PA;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
36.
Area Mail Processing (AMP) study initiated: Winchester, VA, to Dulles,
VA;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
37.
Area Mail Processing (AMP) study initiated: Zanesville, OH, to
Columbus, OH;
Study started: [Empty];
Public meeting notice: [Empty];
Public meeting held: [Check];
AMP not approved: [Empty];
AMP approved: [Empty].
Source: USPS.
Note: For current information, see [hyperlink,
http://www.usps.com/all/amp.htm].
[A] USPS announced on June 6, 2009, that it had halted the Industry,
California, study because it determined there were no significant
opportunities to improve efficiency or service at that time.
[B] USPS announced on May 5, 2009, that it had halted the Plattsburgh,
New York, study because of unresolved service issues.
[End of table]
[End of section]
Footnotes:
[1] GAO, U.S. Postal Service: Mail Delivery Efficiency Has Improved,
but Additional Actions Needed to Achieve Further Gains, [hyperlink,
http://www.gao.gov/products/GAO-09-696] (Washington, D.C.: July 15,
2009).
[2] GAO, High-Risk Series: Restructuring the U.S. Postal Service to
Achieve Sustainable Financial Viability, [hyperlink,
http://www.gao.gov/products/GAO-09-937SP] (Washington, D.C.: July 28,
2009).
[3] USPS lost $2.8 billion in fiscal year 2008--its second-largest
annual loss since 1971.
[4] 39 U.S.C. §2005(a).
[5] 39 U.S.C. §2005(a).
[6] GAO, U.S. Postal Service: Network Rightsizing Needed to Help Keep
USPS Financially Viable, [hyperlink,
http://www.gao.gov/products/GAO-09-674T] (Washington, D.C.: May 20,
2009).
[7] Stations are subordinate units of a post office located within the
same corporate limits (city or town limits) as the post office;
branches are subordinate units outside these limits. Employees in these
facilities report to the postmaster at the main post office, which
generally is the community's primary retail facility.
[8] Documents in this PRC proceeding, N2009-1, are posted on the PRC
Web site, [hyperlink, http://www.prc.gov]. 39 U.S.C. §3661(b) specifies
requirements for this proceeding.
[9] 39 U.S.C. §§101, 403, and 404.
[10] For example, see Financial Services and General Government
Appropriations Act, 2009, Pub. L. No. 111-8, div. D, title V (Mar. 11,
2009), which provides: "That none of the funds provided in this Act
shall be used to consolidate or close small rural and other small post
offices in fiscal year 2009."
[11] 39 U.S.C. §101(a) and (b).
[12] 39 U.S.C. §101(b).
[13] 39 U.S.C. §404(d).
[14] Congressional Research Service, Post Office and Retail Postal
Facility Closures: Overview and Issues for Congress, R40719
(Washington, D.C: July 23, 2009).
[15] [hyperlink, http://www.gao.gov/products/AO-09-674T].
[16] GAO, U.S. Postal Service Facilities: Improvements in Data Would
Strengthen Maintenance and Alignment of Access to Retail Service,
[hyperlink, http://www.gao.gov/products/GAO-08-41] (Washington, D.C.:
Dec. 10, 2007).
[17] Pub.L. No. 109-435 (Dec. 20, 2006).
[18] Remote Encoding Centers were established as a temporary solution
to automate the processing of mail with handwritten addresses that
could not be read by sorting equipment.
[19] 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/products/GAO-05-261]
(Washington, D.C.: Apr. 8, 2005).
[20] For example, see Financial Services and General Government
Appropriations Act, 2009, Pub. L. No. 111-8, div. D, title V (Mar. 11,
2009). The provision states that, "6-day delivery and rural delivery of
mail shall continue at not less than the 1983 level."
[End of section]
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