We are aware of the concerns certain stakeholders have expressed to GAO. We consulted extensively with our customers as we developed our operating plans. They can be assured that any decision to go to a five-day schedule will carefully balance our universal service responsibility and our statutory duty to operate in an efficient manner in light of prevailing volume, cost and revenue trends. Consideration of such matters will help ensure the financial stability of the Postal Service well into the future.

USPS has realigned parts of its mail processing network since the beginning of fiscal year 2009 and continues to seek additional opportunities to achieve its goal of creating an efficient and flexible network and realize cost savings. Specifically, USPS:

• eliminated all functions of the Airport Mail Centers, closed 9 of these facilities, and now uses the remaining 12 for other purposes, resulting in a realized cost savings of about $12.2 million in fiscal year 2009;
• reorganized the functions of the 21 Bulk Mail Centers into newly developed Network Distribution Centers, resulting in a realized cost savings of about $17.7 million in fiscal year 2009; and
• implemented 23 proposals to consolidate AMP operations and facilities and approved another 6 AMP consolidation proposals. USPS estimated an annual cost savings of about $98.5 million for the 29 approved and implemented AMP proposals.

Additionally, USPS officials stated that they plan to integrate the Surface Transfer Center functions into the Network Distribution Center network to further eliminate redundancy in transporting mail. USPS has developed specific program targets for the ongoing reorganization efforts of the Network Distribution Centers and estimated a cost savings of about $233.8 million for fiscal years 2010 and 2011 from reduction in work hours and transportation costs.

On the basis of GAO’s analysis of 32 AMP proposals that were implemented, approved, or not approved since the beginning of fiscal year 2009, USPS has followed its realignment guidance by completing each step of the process and consistently applying its criteria in its reviews. GAO’s analysis found that it took about 6 months on average—a month more than USPS’s target of 5 months—to complete the review process from initiating an AMP proposal to making a decision. USPS officials noted the importance of the AMP decisions and the need to sometimes take longer than what the guidance suggests to ensure the correct decision. GAO also found that USPS consistently notified stakeholders when key steps of the AMP process were completed, such as when an AMP proposal was initiated, or public meetings were held. For each of the AMP proposals that GAO reviewed, USPS also consistently evaluated its four criteria related to AMP consolidations: (1) impacts on the service standards for all classes of mail, (2) issues important to local customers, (3) impacts to USPS staffing, and (4) savings and costs associated with moving mail processing operations.

Read the full report.

Full story: USPS official discusses GAO report, focusing on small businesses – DMNews.

Sen. Tom Carper (D-Del.), chairman of the Senate subcommittee with oversight authority over the U.S. Postal Service, issued the following statement in response to the Government Accountability Office’s report on the Postal Service’s proposals to reduce costs and streamline operations while protecting universal service:

"I applaud GAO for expediting the release of this critical report on the future viability of the U.S. Postal Service.

"The report confirms what many of us who closely follow postal issues have learned in recent months – that major changes are needed if we expect the Postal Service to continue providing the products and services that so many Americans depend on.

“At one point in the report, GAO suggests that the current recession may have been a ‘tipping point’ of sorts that encouraged many of the Postal Service's most valuable customers to more aggressively seek out alternatives to hard-copy mail. If that is true – and the volume projections that the Postal Service released at the beginning of March tell me that it just might be – it is imperative that Congress, postal management, postal employees, customers and other stakeholders give up on old fights and biases and work together to cut the Postal Service’s costs and adjust its operations to meet a changing environment. Everyone knows the steps that need to be taken. The options have been laid out again by GAO. We just need to take them.

“Last month, the Postal Service stated that it would suffer cumulative losses of more than $230 billion by 2020. But the truth is that the Postal Service’s finances are in such poor shape that there is a risk that it could run out of cash and borrowing room by mid-2011 – even if Congress provides last-minute financial relief this year like it did at the end of FY09. This could result in a shutdown in mail services, something that I find completely unacceptable.

“It is my hope, then, that the Postal Service come forward soon with a detailed plan of the steps it plans to take in response to the GAO findings and the information it released last month. Congress and the Postal Regulatory Commission must move swiftly to deal with their part of this – starting with the Commission’s consideration of the proposal the Postal Service has already made to save more than $3 billion per year by eliminating Saturday delivery.”

Here’s what Walker had to say:

The U.S. Postal Service is under increasing financial pressure as the Internet, electronic bill payment, and growing competition from private delivery companies change the nation’s communication and delivery sectors and negatively impact mail volumes. These changes raise questions about the role of the federal government in providing postal services and whether the Postal Service can remain a self-financing government provider of affordable universal postal services in the 21st century. The Postal Service’s business model, established when it was reorganized in 1970, relies upon growth in mail volume to cover the costs of its ever-increasing nationwide delivery network to all homes and businesses. This business model is increasingly outmoded as First-Class Mail volume declines and the changing mail mix provides less revenue contribution, which has put the Postal Service’s financial viability at risk. The Service is working to cut costs, improve productivity, reduce its workforce, and make other changes under its existing authority. However, comprehensive postal reform legislation is needed to provide the necessary incentives and flexibilities needed for the Service to transition to a modernized business model so that it can continue providing high-quality, universal postal services.

Key Topics Needing Congressional Oversight

• Ensure that the Postal Service maintains services consistent with its standards as it implements changes to reduce costs related to providing postal services.
• Assess the Postal Service’s changes to its mail processing and transportation networks to ensure that they are reasonable, transparent, and coordinated with affected stakeholders, and that they achieve intended cost savings and efficiencies.
• Adopt flexible, performance-oriented, and market-based compensation systems for postal employees.

Suggested Areas for Oversight for the 110th Congress