POSTAL REGULATORY COMMISSION

Analysis of the Postal 

Service’s FY 2014 Program

Performance Report and 

FY 2015 Performance Plan

July 7, 2015

Postal Regulatory Commission

Submitted 7/7/2015 4:19:47 PM

Filing ID: 92717

Accepted 7/7/2015
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TABLE OF CONTENTS

Page

EXECUTIVE SUMMARY.......................................................................................................................................1

CHAPTER 1: INTRODUCTION...........................................................................................................................2

A. Background.................................................................................................................................2

B. The FY 2014 Report and FY 2015 Plan............................................................................4

CHAPTER 2: COMPLIANCE WITH LEGAL REQUIREMENTS.................................................................6

A. Legal Requirements.................................................................................................................6

B. Comments....................................................................................................................................7

C. Commission Analysis ..............................................................................................................8

1. Commission’s Authority ..........................................................................................8

2. FY 2015 Plan ................................................................................................................9

3. FY 2014 Report........................................................................................................ 11

CHAPTER 3: ANALYSIS OF POSTAL SERVICE PERFORMANCE ....................................................... 14

A. Deliver High-Quality Services........................................................................................... 16

1. Background ............................................................................................................... 16

2. Comments .................................................................................................................. 17

3. Commission Analysis............................................................................................. 17

B. Provide Excellent Customer Experiences .................................................................... 22

1. Background ............................................................................................................... 22

2. Comments .................................................................................................................. 26

3. Commission Analysis............................................................................................. 27

C. Ensure a Safe Workplace and Engaged Workforce .................................................. 32

1. Background ............................................................................................................... 32

2. Comments .................................................................................................................. 34

3. Commission Analysis............................................................................................. 34

D. Sustain Controllable Income ............................................................................................. 40

1. Background ............................................................................................................... 40

2. Comments .................................................................................................................. 41

3. Commission Analysis............................................................................................. 42

CHAPTER 4: STRATEGIC INITIATIVES...................................................................................................... 51

A. Background.............................................................................................................................. 51

1. Strategic Initiatives................................................................................................. 51

2. Cross-Portfolio Performance Indicators ........................................................ 54

B. Comments................................................................................................................................. 57

C. Commission Analysis ........................................................................................................... 58

1. Purpose of Strategic Initiatives.......................................................................... 58

2. Observations and Recommendations ............................................................. 58
Analysis of FY 2014 Performance Report Executive Summary

and FY 2015 Performance Plan

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EXECUTIVE SUMMARY

Each year the Postal Service must submit to the Commission copies of its most recent 

performance plan and program performance report. 39 U.S.C. § 3652(g). On December 29, 

2014, the Postal Service filed its fiscal year (FY) 2014 program performance report (FY 

2014 Report) and FY 2015 performance plan (FY 2015 Plan) in Docket No. ACR2014. The 

FY 2015 Plan describes the Postal Service’s performance goals for FY 2015. The FY 2014 

Report discusses the Postal Service’s progress toward its four FY 2014 performance goals:

 Deliver High-Quality Services

 Provide Excellent Customer Experiences

 Ensure a Safe Workplace and Engaged Workforce

 Sustain Controllable Income

In this report, the Commission analyzes three issues. First, it determines whether the 

FY 2014 Report and FY 2015 Plan comply with 39 U.S.C. §§ 2803 and 2804. It finds that the 

FY 2015 Plan complies with all section 2803 requirements except for covering each 

program activity in the Postal Service’s budget. See id. § 2803(a). The FY 2014 Report

complies with most section 2804 requirements, but fails to express fiscal year results 

comparable to FY 2014 targets and include actual results comparable across “the three 

preceding fiscal years” (2011, 2012, and 2013). See id. §§ 2804(b)(1) and (c).

Second, the Commission evaluates whether the Postal Service met each performance goal 

in FY 2014. See 39 U.S.C. § 3653(d). It finds that:

 The Postal Service partially met the Deliver High-Quality Services and Sustain 

Controllable Income goals.

 The Postal Service did not meet the Ensure a Safe Workplace and Engaged 

Workforce goal.

 The Commission cannot determine whether the Postal Service met the Provide 

Excellent Customer Experiences goal due to lack of comparable FY 2014 data.

The Commission provides recommendations for each performance goal to help the Postal 

Service meet the goals and better assess its performance in future years.

Third, the Commission examines strategic initiatives and cross-portfolio performance 

indicators, which measure the performance of strategic initiatives. The Commission finds 

that strategic initiatives should be evaluated in conjunction with performance plans and 

program performance reports. It recommends that the Postal Service establish 

performance measures for each strategic initiative that link only to that strategic initiative, 

allowing the Postal Service to better evaluate progress toward individual strategic 

initiatives.
Analysis of FY 2014 Performance Report Introduction

and FY 2015 Performance Plan

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CHAPTER 1: INTRODUCTION

A. Background

The Postal Service is required by title 39 of the United States Code to submit to the 

Commission for each fiscal year a performance plan covering each program activity 

in the Postal Service’s budget and a program performance report. 39 U.S.C. §§ 2803, 

2804, 3652(g). The Postal Service included its FY 2014 Report and FY 2015 Plan in its 

2014 Annual Report to Congress.

1

The FY 2014 Report discusses the Postal Service’s progress in meeting its 

performance goals for FY 2014. A performance goal is “a target level of performance 

expressed as a tangible, measurable objective, against which actual achievement 

shall be compared ... .” 39 U.S.C. § 2801(3). In its FY 2014 Report, the Postal Service

identified four performance goals for FY 2014:

 Deliver High-Quality Services

 Provide Excellent Customer Experiences

 Ensure a Safe Workplace and Engaged Workforce2

 Sustain Controllable Income

Each performance goal has two or more performance indicators used to measure 

output or outcome. 39 U.S.C. § 2801(4). For example, the performance indicators for 

Deliver High-Quality Services measure the percent of mail delivered on time. Table 

I-1 lists the four performance goals, their corresponding performance indicators, and 

targets and results from FY 2012 through FY 2014. It also displays the performance 

goals, performance indicators, and targets for FY 2015.

 

1

United States Postal Service 2014 Annual Report to Congress, at 37-45 (FY 2014 Annual Report); see Library Reference USPS–FY14–

17, December 29, 2014. This Analysis cites to pages from the FY 2014 Annual Report when referring to the FY 2014 Report and

FY 2015 Plan. The Postal Service does not distinguish the FY 2014 Report from the FY 2015 Plan. This Analysis refers to those 

documents both individually and together as the FY 2014 Report and FY 2015 Plan.

2

FY 2014 Annual Report at 38. This performance goal was initially identified as “Ensure a Safe and Healthy Workplace.” Id. In later 

portions of the FY 2014 Annual Report, it was discussed by the Postal Service under the heading “Ensure a Safe Workplace and 

Engaged Workforce.” Id. at 40. The Commission uses the latter formulation in this Analysis because it more closely aligns with the 

Postal Service’s discussion of this goal. See id.
Analysis of FY 2014 Performance Report Introduction

and FY 2015 Performance Plan

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Table I-1

Performance Goals by Performance Indicator Results and Targets

Performance Goal Performance Indicator FY TARGET

FY RESULT

Target not met FY TARGET

Deliver High Quality 

Services 

(% on-time)

2015 2014 2014 2013 2012 2013 2012

Single-Piece

First-Class Mail

Overnight 96.8% 96.8% 96.0% 96.1% 96.48% 96.7% 96.65%

2-Day 96.5% 96.5% 94.9% 95.3% 94.84% 95.1% 94.15%

3-5 Day 95.25% 95.25%

%

87.7% 91.6% 92.29% 95.0% 92.85%

Presort 

First-Class Mail

Overnight 96.8% 96.8% 97.0% 97.2% n/a 96.7% n/a

2-Day 96.5% 96.5% 96.4% 97.0% n/a 95.1% n/a

3-5 Day 95.25% 95.25% 92.2% 95.1% n/a 95.0% n/a

First-Class Mail Composite 96.0% 96.0% 93.6% n/a n/a n/a n/a

Standard Mail Composite 91.0% 91.0% 86.4% n/a n/a n/a n/a

Provide Excellent 

Customer Experiences

Customer Experience Measurement

Composite Metric n/a 82.5 n/a 78.4 79.0 82.5 82.0**

Customer Insights Measurement

Composite Metric* 86.7 #

n/a 84.65 n/a n/a n/a n/a

Business Service Network* 94.0 n/a 94.05 n/a n/a n/a n/a

Point of Sale* 90.0 n/a 81.59 n/a n/a n/a n/a

Delivery* 90.0 n/a 79.55 n/a n/a n/a n/a

Customer Care Center* 90.0 n/a 74.0 n/a n/a n/a n/a

Ensure a Safe 

Workplace and 

Engaged Workforce

OSHA Illness & Injury Rate 5.1 5.55 6.32 5.61 5.78*** 5.72 #5.72 #

Voice of the Employee 65.1 65.1 65.01 64.7 64.7 64.9 #64.9 #

Sustain Controllable 

Income

Deliveries per Work Hour 42.4 #42.9 #42.0 41.6 41.0 42.7 #42.2

Net Controllable Income (Loss)

($ Billions)

0.5 0.9 #1.37 (1.0) (2.4) (2.0) (3.0)

Shaded result denotes target not met in fiscal year under review.

n/a – not available; no fiscal year performance result or target.

*Results were provided in United States Postal Service Responses to Questions 1-5, 8 and 9 of Chairman’s Information Request No. 5, February 10, 2015, question 

2e. (February 10 Response to CHIR No. 5).

#

Target changed (or later identified) from that originally published. The FY 2015 Plan targets for the Customer Insights Composite Metric and Deliveries per Work 

Hour performance indicators were changed after the FY 2014 Annual Report was published. See United States Postal Service Reply Comments Regarding FY 2014 

Performance Report and FY 2015 Performance Plan, March 4, 2015, at 5; see n.74, infra. The FY 2014 Deliveries per Work Hour target was originally expressed as 

43.3 and the FY 2014 Net Controllable Income (Loss) target was originally expressed as 1.1. Docket No. ACR2013, United States Postal Service 2013 Annual Report 

to Congress, at 39 (FY 2013 Annual Report); see Docket No. ACR2013, Library Reference USPS–FY13–17, December 27, 2013. They were changed in the FY 2014 

Annual Report due to the postponement of Phase 2 of the Network Rationalization Initiative. The FY 2012 and FY 2013 Voice of the Employee targets were 

originally listed as “TBD” and the FY 2013 Deliveries per Work Hour target was originally expressed as 42.9. Docket No. ACR2012, United States Postal Service FY 

2012 Comprehensive Statement, at 34 (FY 2012 Annual Report); see Docket No. ACR2012, Library Reference USPS–FY12–17, December 28, 2012; Docket No. 

ACR2011, United States Postal Service 2011 Comprehensive Statement on Postal Operations, at 33 (FY 2011 Annual Report); see Docket No. ACR2011, Library 

Reference USPS–FY11–17, December 29, 2011. The FY 2012 OSHA Illness & Injury Rate target was originally expressed as 5.57 in the FY 2011 Annual Report at 33. 

The FY 2013 OSHA Illness & Injury Rate target was originally expressed as “1% below SPLY” in the FY 2012 Annual Report at 34. In its Responses of the United 

States Postal Service to Questions 1-3, 5 of Chairman’s Information Request No. 17, May 15, 2015, question 2a. (May 15 Response to CHIR No. 17), the Postal 

Service states that the FY 2012 target was 5.72 and was erroneously listed as 5.57 in the FY 2014 Annual Report.

**FY 2012 Annual Report at 39.

***Updated FY 2012 OSHA Illness & Injury Rate. See May 15 Response to CHIR No. 17, questions 2b. and 2c.

Sources: Table modified from the FY 2014 Annual Report (footnotes omitted) at 39 to reflect the results, targets, or modified targets provided in the published fiscal 

year performance plan and program performance report under review; FY 2013 Annual Report at 39; FY 2012 Annual Report at 34, 39; FY 2011 Annual Report at 33; 

and February 10 Response to CHIR No. 5, question 2e.
Analysis of FY 2014 Performance Report Introduction

and FY 2015 Performance Plan

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The Postal Service’s FY 2015 Plan sets forth the same four performance goals for 

FY 2015 as it used for FY 2014. In some cases, however, the Postal Service has 

modified the performance indicators that will be used to assess performance in the 

FY 2015 program performance report (FY 2015 Report).

Each year, the Commission must evaluate whether the Postal Service met its 

performance goals. 39 U.S.C. § 3653(d). It considers the Postal Service to have met a 

performance goal if results for each performance indicator meet or exceed targets 

established in the applicable performance plan. The Commission may also provide 

recommendations to the Postal Service related to protecting or promoting public

policy objectives in title 39. Id.

B. The FY 2014 Report and FY 2015 Plan

Prior to FY 2013, the Commission included its analyses of program performance 

reports and performance plans as part of its Annual Compliance Determination

(ACD).3 In FY 2013, the Commission determined that its obligations under 39 U.S.C. 

§ 3653(d) are distinguishable from its ACD obligations under 39 U.S.C. § 3653(b). 

The Commission, therefore, issued a separate report analyzing the Postal Service’s 

FY 2013 program performance report (FY 2013 Report) and FY 2014 performance 

plan (FY 2014 Plan).4 Issuing a separate report allowed the Commission to provide a 

more in-depth analysis of the Postal Service’s performance goals than in previous 

years.

As it did in FY 2013, the Commission is issuing its analysis of the FY 2014 Report and

FY 2015 Plan separately from the FY 2014 ACD.5 In conducting this year’s review, the 

Commission designated a Public Representative and invited comments on whether 

the Postal Service met its performance goals and satisfied applicable statutory and 

regulatory provisions.6 It also sought input on public policy recommendations, the 

role of strategic initiatives, and other relevant matters. Order No. 2342 at 3.

 

3

See, e.g., Docket No. ACR2012, Annual Compliance Determination Report, Fiscal Year 2012, March 28, 2013, at 43-46 (FY 2012 ACD).

4

Postal Regulatory Commission, Review of Postal Service FY 2013 Performance Report and FY 2014 Performance Plan, July 7, 2014 

(FY 2013 Review).

5

Postal Regulatory Commission, Annual Compliance Determination Report, Fiscal Year 2014, March 27, 2015 (FY 2014 ACD).

6

Notice Regarding the Postal Service's FY 2014 Performance Report and FY 2015 Performance Plan, February 3, 2015, at 2 (Order No. 

2342). The Commission later issued a notice substituting the Public Representative. Notice and Order Designating Substitute Public 

Representative, February 9, 2015, at 2 (Order No. 2351).
Analysis of FY 2014 Performance Report Introduction

and FY 2015 Performance Plan

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The Chairman issued several information requests to clarify the FY 2014 Report and

FY 2015 Plan.

7 The Postal Service filed responses to all information requests.8 The 

Public Representative submitted comments9 to which the Postal Service provided

reply comments.10

The following chapters set forth the Commission’s analyses of the FY 2014 Report 

and FY 2015 Plan: Chapter 2 analyzes the FY 2014 Report and FY 2015 Plan for 

compliance with legal requirements, Chapter 3 evaluates whether the Postal Service 

met its four performance goals in FY 2014, and Chapter 4 discusses the role of 

strategic initiatives in performance plans and program performance reports.

 

7

See, e.g., Chairman’s Information Request No. 5, February 3, 2015.

8

The Postal Service filed motions for late acceptance of some information requests. See Motion of the United States Postal Service for 

Late Acceptance of Responses to Questions 6 and 7 of Chairman’s Information Request No. 5, February 18, 2015; Motion of the 

United States Postal Service for Late Acceptance of Responses to Questions 1-5, 12-14, 26-27, and 31-33 of Chairman’s Information 

Request No. 13, March 11, 2015; United States Postal Service Motion for Late Acceptance of Responses to Questions 6, 7, 9, 10, 20-

25, 29, 30, 34, and 35 of Chairman’s Information Request No. 13, March 13, 2015; United States Postal Service Motion for Late 

Acceptance of Responses to Questions 8, 11, and 15-19 of Chairman’s Information Request No. 13, March 19, 2015; Motion of the 

United States Postal Service for Late Acceptance of Responses to Questions 1, 4, 5, and 8 of Chairman’s Information Request No. 14, 

March 25, 2015; United States Postal Service Motion for Late Acceptance of Responses to Question 28 of Chairman’s Information

Request No. 13 and Question 6 of Chairman’s Information Request No. 14, March 30, 2015; Motion of the United States Postal Service 

for Late Acceptance of Responses to Questions 1-3 of Chairman’s Information Request No. 16, April 14, 2015; Motion of The United 

States Postal Service for Late Acceptance of Its Response to Question 4 of Chairman’s Information Request No. 17, May 20, 2015. 

These motions are granted.

9

Public Representative Initial Comments on the FY 2014 Performance Report and FY 2015 Performance Plan, February 25, 2015 (PR 

Comments).

10 United States Postal Service Reply Comments Regarding FY 2014 Performance Report and FY 2015 Performance Plan, March 4, 2015 

(USPS Reply Comments).
Analysis of FY 2014 Performance Report Compliance with Legal Requirements

and FY 2015 Performance Plan

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CHAPTER 2: COMPLIANCE WITH LEGAL 

REQUIREMENTS

A. Legal Requirements

The FY 2014 Report and FY 2015 Plan must meet the requirements of 39 U.S.C. 

§§ 2803 and 2804.11 Section 2803 establishes requirements for Postal Service 

performance plans. The Postal Service must cover “each program activity set forth in 

the Postal Service budget ... .” and must:

 Establish objective, quantifiable, and measurable performance goals that 

define a program activity’s performance level.

 Describe the operational processes, skills and technology, and the human, 

capital, information, or other resources needed to meet the performance 

goals.

 Establish performance indicators to measure or assess each program 

activity’s relevant outputs, service levels, and outcomes.

 Compare actual program results with performance goals and describe the 

means to be used to verify and validate measured values.

39 U.S.C. § 2803(a).

Section 2804 sets forth four requirements for Postal Service program performance 

reports. First, it requires the Postal Service to prepare program performance reports 

that review whether it has met the performance goals previously established by the 

performance plan for that fiscal year. Id. § 2804(d)(1). Second, the Postal Service 

must “set forth the performance indicators established in the Postal Service 

performance plan, along with the actual program performance achieved compared 

with the performance goals expressed in the [FY 2014] plan.” Id. § 2804(b)(1). Third, 

the Postal Service must include actual results for the three preceding fiscal years. Id.

§ 2804(c). Fourth, the Postal Service must evaluate the performance plan for the 

current fiscal year (in this case, the FY 2015 Plan) relative to the performance 

achieved toward those goals in the year covered by the performance report (in this 

case, the FY 2014 Report). Id. § 2804(d)(2).

 

11 Chapter 28 of title 39, which includes sections 2803 and 2804, was added by the Government Performance and Results Act (GPRA) 

of 1993, Pub. L. No. 103-62, 107 Stat. 285 (1993). Sections 2803 and 2804 were not affected by the GPRA Modernization Act of 2010, 

which does not apply to the Postal Service. Pub. L. No. 111-352, 124 Stat. 3866 (2011).
Analysis of FY 2014 Performance Report Compliance with Legal Requirements

and FY 2015 Performance Plan

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If the Postal Service does not meet a performance goal, it must explain why the goal 

was not met and its plans and schedules for achieving the performance goal. Id.

§ 2804(d)(3). The Postal Service must also include summary findings of program 

evaluations completed during the fiscal year covered by the report. Id. § 2804(d)(4).

B. Comments

The Public Representative argues that the FY 2015 Plan fails to meet some section 

2803 requirements. PR Comments at 14. She asserts that the FY 2015 Plan does not 

cover each program activity in the Postal Service’s budget. Id. She contends that the 

FY 2015 Plan briefly describes operational resources required to meet the 

performance goals, but states that these descriptions may be insufficient because the 

Postal Service did not meet or only partially met its FY 2014 performance goals. Id.

at 14-15.

The Public Representative asserts that the FY 2014 Report complies with section 

2804 but also expresses concerns that she believes may need to be addressed. Id.

at 15. She notes that in some cases the Postal Service does not provide plans or 

schedules for achieving goals it did not meet in FY 2014. Id. She also points out that 

the FY 2014 Report does not include comparable customer experience results for 

fiscal years 2012, 2013, and 2014 because the Postal Service changed its 

measurement systems in FY 2014. Id.

The Postal Service argues that 39 U.S.C. § 3653(d) limits the Commission’s authority 

to evaluating whether the Postal Service met performance goals and to making 

recommendations relating to the protection or promotion of public policy objectives 

of title 39. USPS Reply Comments at 2. It contends that section 3653(d) does not 

authorize the Commission to evaluate whether the FY 2014 Report and FY 2015 Plan

themselves comply with sections 2803 and 2804 or to direct the Postal Service to 

make specific changes. Id. It asserts that the Public Representative’s conclusions 

regarding compliance of performance plans and program performance reports with 

sections 2803 and 2804 are outside the scope of the Commission’s authority. Id.

The Postal Service also asserts that the performance goals “address the Postal 

Service’s program activities and provide the required metrics.” Id. at 2-3. It contends 

that including each program activity in performance plans in the Postal Service’s 

budget would not add value because the performance goals provide the large scale 

overview relevant to the Commission’s review. Id. at 3.
Analysis of FY 2014 Performance Report Compliance with Legal Requirements

and FY 2015 Performance Plan

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C. Commission Analysis

1. Commission’s Authority

39 U.S.C. § 3653(d) provides, in part, that the Commission “shall also evaluate 

annually whether the Postal Service has met the goals established under sections 

2803 and 2804 ... .” The Postal Service reads this language narrowly to authorize 

Commission evaluation of whether goals were met, and to preclude the Commission 

from evaluating performance plans and program performance reports themselves.

Contrary to the Postal Service’s assertions, 39 U.S.C. § 3653(d) does not limit the 

Commission’s authority in this manner. The Commission’s authority to evaluate 

performance plans and program performance reports flows directly from sections 

2803 and 2804, which provide the foundation upon which the Commission must 

evaluate the Postal Service’s performance goals under section 3653(d).

Section 2803(a)(1) requires performance goals to be “in an objective, quantifiable, 

and measureable form.” Performance goals use performance indicators established 

by the Postal Service under section 2803(a)(4) to measure or assess relevant 

outputs, service levels, and program activity outcomes. Commission oversight is 

essential to ensure performance goals are “objective, quantifiable, and measurable” 

and that performance indicators are appropriate and effective. Without reliable 

performance goals and performance indicators, meaningful Commission evaluations 

of the Postal Service’s performance under section 3653(d) would be compromised.

The need for Commission oversight is also demonstrated by section 2803(b), which 

gives the Postal Service the opportunity to express performance goals in an 

“alternative form.” An alternative form must, among other things, “include separate 

descriptive statements of ... a minimally effective program, and a successful 

program[.]” 39 U.S.C. § 2803(b)(1). However, to use this alternative form, the

descriptive statements must be of “sufficient precision and in such terms that would 

allow for an accurate, independent determination of whether the program activity’s 

performance meets the criteria of either” a minimally effective program and a 

successful program. Id. Without Commission evaluation of alternative forms of 

performance goals themselves, there is no assurance that the alternative form chosen 

by the Postal Service will be either sufficiently precise or capable of allowing for an 

accurate, independent determination of the Postal Service’s performance under 

section 3653(d).

To adopt an alternative form of performance goals, the Postal Service is required to 

“state why it is infeasible or impractical to express a performance goal in any form 

for the program activity.” Id. § 2803(b)(2). Once again, without Commission 

evaluation of claims of infeasibility or impracticability, there can be no assurance 

that such claims warrant the use of an alternative form of performance goals.
Analysis of FY 2014 Performance Report Compliance with Legal Requirements

and FY 2015 Performance Plan

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The FY 2014 Report provides an example of the need for the Commission to evaluate 

performance plans and program performance reports themselves. For the Provide 

Excellent Customer Experiences goal, the FY 2014 Report does not “set forth the 

performance indicators established in the Postal Service performance plan, along 

with the actual program performance achieved compared with the performance 

goals expressed in the [FY 2014] plan....” See id. § 2804(b)(1). As a result, the 

Commission cannot determine whether the Postal Service met the Provide Excellent 

Customer Experiences goal expressed in its FY 2014 Plan. Chapter 3, section B.3.b., 

infra, explores this issue in more detail.

This inability of the Commission to make its required evaluation has been discussed 

by the Commission previously. In reviewing the Postal Service’s FY 2009 program 

performance report and FY 2010 performance plan,12 the Commission found that the 

information the Postal Service provided was “not detailed fully, lack[ed] specificity as 

to performance goals and a basis for comparing results with goals, or [was] not 

addressed at all in terms of performance plans.” Id. at 45. The Commission concluded 

that the information provided made “meaningful evaluation problematic” because 

“what is provided does not allow the Commission to complete the evaluation 

Congress assigned in section 3653(d).” Id. at 44-45.

For the Commission to meaningfully evaluate whether the Postal Service has met the 

performance goals established under 2803 and 2804, the Postal Service’s 

performance plans and program performance reports must themselves satisfy the 

requirements of sections 2803 and 2804. The Commission finds that acceptance of the 

Postal Service’s position could produce results that are contrary to the intent of 

39 U.S.C. §§ 2803 and 2804. Without the authority to evaluate the compliance of 

performance plans and program performance reports with sections 2803 and 2804, the 

Commission would be precluded from producing the meaningful and reliable 

performance evaluation envisioned by 39 U.S.C. § 3653(d).

2. FY 2015 Plan

The Commission finds that the FY 2015 Plan partially meets section 2803 requirements. 

The four performance goals are “objective, quantifiable, and measurable” because the 

Postal Service sets quantitative targets for each goal that can be compared with 

objectively measured results. See 39 U.S.C. §§ 2803(a)(1) and (2). Each performance 

goal has two or more performance indicators that measure or assess relevant 

outputs, service levels, and outcomes of most program activities in the Postal 

Service’s budget. See id. § 2803(a)(4). For example, the Deliver High-Quality Services 

performance goal has eight performance indicators that measure service 

performance results for First-Class Mail and Standard Mail.

 

12 Docket No. ACR2009, FY 2009 Annual Compliance Determination, March 29, 2010, at 41-48 (FY 2009 ACD).
Analysis of FY 2014 Performance Report Compliance with Legal Requirements

and FY 2015 Performance Plan

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The FY 2015 Plan describes “the operational processes, skills and technology, and ... 

other resources required to meet the performance goals[.]” See id. § 2803(a)(3). For 

example, to meet the Ensure a Safe Workplace and Engaged Workforce goal, the 

Postal Service has extended to both career and non-career employees the 

opportunity to participate in the Voice of the Employee survey. FY 2014 Annual 

Report at 40. The Postal Service will also enhance safety program reporting 

capabilities and distribute safety videos focusing on the root causes of accidents. Id.

The FY 2015 Plan provides a basis for comparing actual program results with 

established performance goals by comparing FY 2014 results and targets. See 

39 U.S.C. § 2803(a)(5).

The FY 2015 Plan also verifies and validates measured values for each performance 

indicator based on objective measurement systems. See id. § 2803(a)(6). For 

example, the Deliveries per Work Hour performance indicator verifies and validates 

measured values for the Sustain Controllable Income goal by summarizing the 

effectiveness of its productivity improvement efforts.

However, the FY 2015 Plan fails to “[cover] each program activity set forth in the 

Postal Service budget ... .” Id. § 2803(a).

13 In its FY 2010 ACD, the Commission 

determined that the “Postal Service budget” means its operating budget that is part 

of the Postal Service's Integrated Financial Plan.

14 Thus, the FY 2015 Plan must cover 

each program activity in the FY 2015 Integrated Financial Plan.

15 See 39 U.S.C.

§ 2803(a).

In its FY 2013 Review, the Commission found that the FY 2014 Plan did not cover 

each program activity set forth in the Postal Service’s budget. FY 2013 Review at 40. 

It directed the Postal Service in future performance plans to provide performance 

indicators for each program activity in its budget. Id.

In its reply comments, the Postal Service argues that the performance goals “address 

the Postal Service’s program activities and provide the required metrics.” USPS Reply 

Comments at 2-3. It contends that including each program activity in performance 

plans “would not offer additional value to the Commission” because the performance 

goals provide the large scale overview relevant to the Commission’s review. Id. at 3.

Contrary to the Postal Service’s position, including each program activity in the 

Postal Service’s budget would add value and improve transparency and 

 

13 A “program activity” is “a specific activity related to the mission of the Postal Service[.]” Id. § 2801(5). The Postal Service’s mission is 

“to provide a reliable, efficient, trusted and affordable universal delivery service that connects people and helps businesses grow.” 

FY 2014 Annual Report at 37.

14 Postal Regulatory Commission, Annual Compliance Determination Report Fiscal Year 2010, March 29, 2011, at 50 (FY 2010 ACD).

15 United States Postal Service, Fiscal Year 2015 Integrated Financial Plan, November 24, 2014 (FY 2015 Integrated Financial Plan).
Analysis of FY 2014 Performance Report Compliance with Legal Requirements

and FY 2015 Performance Plan

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accountability by enriching the Commission’s analyses of performance plans. 

Moreover, covering each program activity in the Postal Service’s budget is required 

by 39 U.S.C. § 2803(a). The Commission finds that the FY 2015 Plan does not cover each 

program activity in the Postal Service’s budget as required by 39 U.S.C. § 2803(a). In the 

FY 2016 Plan, the Postal Service must identify all program activities in its budget and 

explain how the FY 2016 Plan covers each one.

3. FY 2014 Report

The Commission finds that the FY 2014 Report meets most, but not all, of section 2804 

requirements. It reviews the Postal Service’s success in achieving its performance 

goals in FY 2014 and provides summary findings of program evaluations completed 

during FY 2014. See 39 U.S.C. §§ 2804(d)(1) and (4). In most cases, the FY 2014 

Report explains why the Postal Service did not meet a performance goal and 

identifies the plans and schedules for achieving the goal in future years. See id.

§ 2804(d)(3). In those cases in which the FY 2014 Report did not itself provide such 

explanations, plans, and schedules, the Postal Service attempted to provide the 

necessary information in responses to information requests.

Program performance reports must “evaluate the performance plan for the current 

fiscal year relative to the performance achieved toward the performance goals in the 

fiscal year covered by the report[.]” Id. § 2804(d)(2). In other words, the Postal 

Service must evaluate the FY 2015 Plan relative to the performance achieved toward 

the four performance goals in FY 2014. The FY 2014 and FY 2015 performance goals 

are the same.16 The FY 2014 Report meets the requirements of section 2804(d)(2) by 

comparing FY 2015 targets with FY 2014 results for each performance indicator. 

Although the FY 2014 Report does not contain any FY 2014 results for the Provide 

Excellent Customer Experiences goal, the Postal Service provided the FY 2014 results

in response to an information request.

However, the FY 2014 Report does not meet two other section 2804 requirements. 

First, it does not “set forth the performance indicators established in the Postal 

Service performance plan, along with the actual program performance achieved 

compared with the performance goals expressed in the [FY 2014] plan” for the 

Provide Excellent Customer Experiences goal. See 39 U.S.C. § 2804(b)(1). This 

provision requires the Postal Service to list FY 2014 performance indicators and 

compare FY 2014 results with FY 2014 targets.

The FY 2014 Report does not meet this requirement because the Postal Service set 

one FY 2014 target for a performance indicator that it discontinued using in FY 2014. 

Although it provided FY 2014 results for the new performance indicators that it 

 

16 United States Postal Service Response to Question 28 of Chairman’s Information Request No. 13, March 30, 2015 (March 30 

Response to CHIR No. 13); file “ChIR13.28b.pdf.” The FY 2015 performance goals are worded differently as Service, Customer 

Experience, Financial, and Workplace. Id.
Analysis of FY 2014 Performance Report Compliance with Legal Requirements

and FY 2015 Performance Plan

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implemented during FY 2014, the Postal Service neither provided the FY 2014 result 

for the old performance indicator nor developed FY 2014 targets for the new 

performance indicators. Thus, the only data for comparison are the original FY 2014 

target (for the old performance indicator) and the FY 2014 results (for the new 

performance indicators).

In the case of that performance goal, the FY 2014 target and results provided by the 

Postal Service are not comparable because they are based on responses from 

different types of customers and consist of different survey responses covering 

different postal service experiences and events. For this reason, the Commission finds 

that the FY 2014 Report fails to “set forth the performance indicators established in the 

Postal Service performance plan, along with the actual program performance achieved 

compared with the performance goals expressed in the [FY 2014] plan ... .” for the 

Provide Excellent Customer Experiences goal as required by 39 U.S.C. § 2804(b)(1). To 

comply with this requirement in future years, targets expressed in performance plans 

must be comparable with results presented in program performance reports. Chapter 

3, section B.3.b., infra, explores this issue in more detail.

Second, the FY 2014 Report does not “include actual results for the three preceding 

fiscal years.” See 39 U.S.C. § 2804(c). The FY 2014 Report must include results for FY 

2014. See id. § 2804(d)(1). It follows that “the three preceding fiscal years” to which 

section 2804(c) refers are fiscal years 2011, 2012, and 2013. The Commission finds 

that the “actual results” must also be comparable across all three preceding fiscal 

years. If results are not provided on a comparable basis, the Commission cannot 

meaningfully evaluate performance across fiscal years 2011, 2012, 2013, and 2014.

The FY 2014 Report does not meet this requirement for the Provide Excellent 

Customer Experiences goal. As discussed above, results of new performance 

indicators used during FY 2014 are not comparable with the result of the old 

performance indicator used in fiscal years 2011, 2012, and 2013. Without 

comparable results, the Commission finds that the FY 2014 Report does not “include 

actual results for the three preceding fiscal years” as required by 39 U.S.C. § 2804(c).

For the FY 2015 Report to comply with 39 U.S.C. § 2804(c), the Postal Service must 

provide comparable results for each performance indicator for, at minimum, fiscal 

years 2012, 2013, 2014, and 2015. The Postal Service can fulfill this requirement by 

providing all results using the same methodology or by explaining how results can be 

compared under different methodologies. If the Postal Service makes any changes that 

affect comparability of results for any performance indicator, the Postal Service must 

do either of the following to ensure that the FY 2015 Report complies with section 

2804(c):
Analysis of FY 2014 Performance Report Compliance with Legal Requirements

and FY 2015 Performance Plan

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 Provide FY 2015 results using the old methodology, if available

 Provide FY 2015 results using the new methodology and explain how results can 

be compared under the old and new methodologies

The Postal Service should also describe any methodology changes in the Annual Report 

to Congress and analyze the impact of methodology changes on results.

Chapter 3 explores this issue in more detail for instances where methodology 

changes are likely to affect comparability of results for certain performance 

indicators in FY 2015. See section A.3.c (Deliver High-Quality Services goal), section 

B.3.b (Provide Excellent Customer Experiences goal), and section C.3.b (Ensure a Safe 

Workplace and Engaged Workforce).
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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CHAPTER 3: ANALYSIS OF POSTAL 

SERVICE PERFORMANCE

The Postal Service’s four performance goals for FY 2014 were:

 Deliver High-Quality Services

 Provide Excellent Customer Experiences

 Ensure a Safe Workplace and Engaged Workforce17

 Sustain Controllable Income

In this chapter the Commission evaluates whether the Postal Service met each 

performance goal in FY 2014. See 39 U.S.C. § 3653(d). It finds that:

 The Postal Service partially met the Deliver High-Quality Services and 

Sustain Controllable Income goals.

 The Postal Service did not meet the Ensure a Safe Workplace and Engaged 

Workforce goal.

 The Commission cannot determine whether the Postal Service met the 

Provide Excellent Customer Experiences goal due to the lack of comparable 

FY 2014 data.

Table III-1 lists each performance goal, whether the goal was met, reasons for not 

meeting the goal, and plans and schedules for achieving the goal in future years. See 

39 U.S.C. § 2804(d)(3).

 

17 This performance goal was initially identified as “Ensure a Safe and Healthy Workplace.” FY 2014 Annual Report at 38. In later 

portions of the FY 2014 Annual Report, it was discussed by the Postal Service under the heading “Ensure a Safe Workplace and 

Engaged Workforce.” Id. at 40. The Commission uses the latter description in this Analysis because it more closely aligns with the 

Postal Service’s discussion of this goal. See n.2, supra.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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Table III-1

FY 2014 Progress Toward Performance Goals

Performance 

Goal

Goal Met Reason for Not Meeting Goal Plans and Schedules

Deliver HighQuality Services 

(% on-time)

Partially

An aggressive work hour stretch 

and the hiring, training, and 

replacement (due to turnover) of 

many new employees

Complete Phase 2 of the Network 

Rationalization Initiative*; benefit from a 

fully-trained non-career workforce to 

supplement career employees

Provide Excellent 

Customer 

Experiences

Cannot 

Determine

FY 2014 target and FY 2014 

performance results are not 

comparable

No Postal Service analysis of performance 

plan or results; no FY 2015 plans or 

schedules identified

Ensure a Safe 

Workplace and 

Engaged 

Workforce

No

Severe winter weather from 

December 2013 through 

February/March 2014

Focus on at-risk employees and new 

employees who are less familiar with safe 

work practices; tailor safety programs to 

address concerns at the local facility level; 

address ergonomic impacts associated 

with lifting, handling, and repetitive 

motions required for delivery 

Redesign employee survey program to 

increase levels of employee engagement; 

provide tools to help managers respond to 

survey results

Sustain 

Controllable 

Income

Partially

Overrun of an aggressive work 

hour plan; failure to capture 

savings from Phase 1 of the 

Network Rationalization Initiative; 

additional work hours from 

Sunday package delivery and 

during the Christmas season; 

hiring and training of many new 

non-career employees; high 

turnover rate for city carrier 

assistants

Implement Phase 2 of the Network 

Rationalization Initiative* and continue the 

POStPlan, load leveling, and voluntary 

centralized delivery programs

*The Postal Service postponed Phase 2 of the Network Rationalization Initiative to FY 2016. See n.27, infra.

Source: FY 2014 Annual Report at 38, 40; Responses of the United States Postal Service to Questions 1-13 of Chairman’s Information Request 

No. 15, question 5, April 6, 2015 (Response to CHIR No. 15).

In the sections that follow, the Commission analyzes each performance goal in-depth 

and provides recommendations to help improve future performance plans and 

program performance reports.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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A. Deliver High-Quality Services

1. Background

The Postal Service uses the percent of mail delivered on time to assess whether its 

performance meets the Deliver High-Quality Services performance goal.18 Progress 

toward this goal is measured by eight performance indicators:

 Single-Piece First-Class Mail

o Overnight

o 2-Day

o 3-5 Day

 Presort First-Class Mail

o Overnight

o 2-Day

o 3-5 Day

 First-Class Mail Composite

 Standard Mail Composite

First-Class Mail Composite combines performance for Single-Piece First-Class Mail 

and bulk-entered Presort First-Class Mail for an aggregate of Overnight, 2-Day, and 

3-5 Day service.19 Standard Mail Composite is a composite of destination entry and 

origin entry service for Standard Mail Letters and Flats.20

In FY 2014, the Postal Service fell short of the target set for each performance 

indicator except for Presort First-Class Mail (Overnight). FY 2014 Annual Report

at 38; see Table I-1, supra. The Postal Service explains that it did not meet FY 2014 

targets “due to an aggressive work hour stretch and the hiring, training and 

replacement (due to turnover) of many new employees.” Id. It asserts that severe 

winter storms during the first and second quarters of FY 2014 significantly impacted 

performance results for many service standards and products.21

 

18 The Postal Service also reports service performance on all Market Dominant products in the Annual Compliance Report. 39 U.S.C. 

§ 3652(a)(2)(B)(i). Service performance reporting in the Annual Compliance Report is independent of service performance reporting in 

performance plans and program performance reports under 39 U.S.C. §§ 2803 and 2804.

19 FY 2014 Annual Report at 39 n.1; see Docket No. ACR2013, Responses of the United States Postal Service to Questions 1-9 of 

Chairman’s Information Request No. 10, question 9, March 4, 2014 (Docket No. ACR2013, Response to CHIR No. 10).

20 Responses of the United States Postal Service to Questions 1, 4-5, and 8 of Chairman’s Information Request No. 14, March 25, 2015, 

question 1 n.1 (March 25 Response to CHIR No. 14). In this response, the Postal Service corrected the Standard Mail Composite

description included in its FY 2014 Report and FY 2015 Plan. See FY 2014 Annual Report at 39 n.2.

21 See Library Reference USPS–FY14–29, December 29, 2014, at 8; Responses of the United States Postal Service to Questions 7, 9, 11, 

and 14 of Chairman’s Information Request No. 2, January 29, 2015, questions 11a., 14a. (January 29 Response to CHIR No. 2).
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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The FY 2015 targets are the same as the FY 2014 targets. Consequently, except for 

Presort First-Class Mail (Overnight), the results for all performance indicators will 

have to improve to meet FY 2015 targets. The improvement needed to meet each 

target ranges from 0.10 to 7.55 points. The Postal Service contends that it will 

improve service performance and meet FY 2015 targets by completing Phase 2 of the 

Network Rationalization Initiative and by benefitting from a fully-trained non-career 

workforce to supplement career employees.

22

2. Comments

The Public Representative observes that the gap between the targets and results for 

five performance indicators exceeds 2 percentage points. PR Comments at 4. 

Although the Postal Service cites employee turnover as one reason why service 

performance scores decreased, the Public Representative notes that the Postal 

Service does not clearly explain how it will address this issue. Id. at 6. She finds the 

Postal Service’s assertion that “FY 2014 performance scores have remained 

remarkably high and relatively stable” to be insufficient.23 She mentions that in 

FY 2013, the Postal Service claimed it would achieve service performance targets in 

FY 2014 by applying Lean Mail Processing principles to improve efficiency, reduce 

cycle time, and eliminate waste. Id. at 6. However, she contends that applying Lean 

Mail Processing principles will not improve service performance immediately 

because its implementation is “an ongoing cycle” that includes “more projects in 

phases.”24 She concludes that service performance will not improve until the Postal 

Service fully implements Lean Mail Processing projects. See PR Comments at 6.

3. Commission Analysis

As noted above, in FY 2014, the Postal Service missed targets for seven out of eight 

performance indicators for its Deliver High-Quality Services goal. FY 2014 Annual 

Report at 38-39. The Commission finds that because the Postal Service met one of the 

service performance targets it partially met the Deliver High-Quality Services 

performance goal in FY 2014.

In this section, the Commission makes observations on the Postal Service's FY 2014 

service performance and recommendations on its plans for meeting FY 2015 targets. 

It also discusses the impact of severe winter weather and two methodology changes 

to the Presort First-Class Mail (Overnight, 2-Day, and 3-5 Day) and Standard Mail 

Composite performance indicators.

 

22 FY 2014 Annual Report at 38. In May 2015, the Postal Service announced that it will defer Phase 2 of the Network Rationalization 

Initiative to FY 2016. See n.27, infra.

23 Id. (citing January 29 Response to CHIR No. 2, question 11a.).

24 Id. (citing Docket No. ACR2013, Responses of the United States Postal Service to Questions 1, 5-6, 8-11 of Chairman’s Information 

Request No. 15, question 10c., March 21, 2014 (Docket No. ACR2013, Response to CHIR No. 15)).
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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a. Observations

The Commission observes that concerns about FY 2014 service performance may be 

alleviated, at least in part, by improvements made to the Service Performance 

Diagnostics tool. This tool enables field managers to examine mail information 

throughout the supply chain and notify shippers of scanning issues so they can 

improve print quality and visibility.25 In FY 2014, the Postal Service enhanced this 

tool to provide greater operational visibility to field managers. FY 2014 Annual 

Report at 50. The Postal Service explains that these enhancements provided new 

insight on service issues and enabled its managers in the field to systematically 

identify root causes for the largest service issues. Id. It asserts that the Service 

Performance Diagnostics tool enabled it to continue to apply Lean Mail Processing 

principles and reduce service variances. Id. at 51.

The Postal Service identifies two plans for improving service and meeting FY 2015 

targets. The Commission is concerned that neither plan will improve service 

performance enough to enable the Postal Service to meet the Deliver High-Quality 

Services goal in FY 2015.

First, the Postal Service states that it will complete Phase 2 of the Network 

Rationalization Initiative. Id. at 38. However, the Postal Service does not explain how 

Phase 2 is expected to improve service performance, and FY 2013 service 

performance results did not exhibit any clear improvement after the completion of 

Phase 1 in FY 2012.

26 Moreover, after comments were filed in Docket No. ACR2014, 

the Postal Service announced that it will defer Phase 2 of the Network 

Rationalization Initiative until FY 2016.27

Second, the Postal Service contends that it will benefit from a fully-trained 

non-career workforce to supplement career employees. Yet many non-career 

employees who resigned in FY 2014 did so for “personal reasons” such as life 

situations that the Postal Service was not able to accommodate.28 If this trend 

continues, non-career employee resignations could continue to limit the Postal 

Service’s ability to sustain a fully-trained non-career workforce to supplement its 

career workforce and thereby improve service performance.

The Postal Service has not explained how Phase 2 of the Network Rationalization 

Initiative will improve service performance. Even if it will, the decision to postpone 

 

25 United States Postal Service, “Delivering Solutions to the Last Mile” (accessed June 29, 2015); https://www.usps.com/lastmile/#.

26 See Docket No. ACR2013, Annual Compliance Determination Report, March 27, 2014, at 104, Table V-2 (FY 2013 ACD).

27 United States Postal Service, Industry Alert: Network Rationalization Initiative, May 27, 2015; 

https://ribbs.usps.gov/industryoutreach/documents/tech_guides/IndustryAlertArchives/2015IndustryAlerts/NetworkRationalizationIni

tiative.pdf.

28 United States Postal Service Responses to Questions 1-5, 12-14, 26, 27, and 31-33 of Chairman’s Information Request No. 13, March 

11, 2015, question 5 (March 11 Response to CHIR No. 13).
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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Phase 2 implementation means that any such improvement will not occur in 

FY 2015. Moreover, it is unclear how the Postal Service will benefit from a 

fully-trained non-career workforce if non-career employees continue to resign for 

personal reasons outside of the Postal Service’s control. The Commission recommends 

that the Postal Service explore and develop other plans for meeting FY 2015 service 

performance targets and include them in the FY 2015 Report and FY 2016 Plan.

b. Severe Winter Weather

The Postal Service asserts, “In FY 2014, the Postal Service experienced one of the 

more challenging winters in recent history.” FY 2014 Annual Report at 51. According 

to American Customer Satisfaction Index (ACSI) analysts,29 severe winter weather 

adversely impacted not only the Postal Service, but also other large national shipping 

companies during the first two quarters of FY 2014.30 The Postal Service’s FY 2014 

service performance results are consistent with the ACSI’s finding that customer 

satisfaction with regular and express delivery services declined during the first two 

quarters of FY 2014. See id. ACSI analysts explain that this decline is mainly due to 

delays caused by weather and strained systems over the winter. Id. Also, because of a 

shorter than usual 2014 holiday season, a surge of packages flooded delivery 

networks in the final days before Christmas. Id. Even the largest carriers were 

unprepared for the rush of last-minute deliveries and packages that did not arrive on 

time for the holidays.31

The Postal Service asserts that its delivery service mission is “most affected by 

extreme weather events which can delay and disrupt mail delivery[,]” but notes that 

it has an existing plan that includes preparing and responding to those events.32

Responses include issuing clear guidance to inform customers what to expect 

regarding mail delivery under severe winter conditions. For example, the Postal 

Service regularly issues news releases for areas where snow and icy conditions may 

be hazardous to mail carriers.33 Postal Service suggestions for maintaining continued 

regular mail delivery and collection are specific during winter weather:

 

29 The ACSI is an independent national measure of customer satisfaction with the quality of products and services available to 

household consumers in the United States. ACSI, About the American Customer Satisfaction Index; http://theacsi.org/about-acsi. Each 

year, around 70,000 customers are surveyed about the products and services they use the most. Id. The data serve as inputs to an 

econometric model that benchmarks customer satisfaction with more than 230 companies, 43 industries, and 10 economic sectors, as 

well as over 100 services, programs, and websites of federal government agencies. Id.

30 ACSI, Utilities, Shipping, and Health Care Report 2014, May 6, 2014, at 6-7, 9; http://www.theacsi.org/news-andresources/customer-satisfaction-reports/reports-2014/acsi-utilities-shipping-and-health-care-report-2014/acsi-utilities-shipping-andhealth-care-report-2014-download.

31 ACSI, ACSI Report: Customer Satisfaction Drops for Energy Utilities, Shipping and Health Care, May 6, 2014, at 2; 

http://www.theacsi.org/news-and-resources/press-releases/press-2014/press-release-utilities-shipping-and-health-care-2014.

32 United States Postal Service, Climate Change Adaptation Plan, June 2014, at 8, 16 (Climate Change Adaptation Plan); 

http://about.usps.com/what-we-are-doing/green/pdf/CCAP_FINAL_2014.pdf.

33 United States Postal Service Press Release, Milwaukee Post Office Reminds Customers to Clear Snow and Ice, January 8, 2014; 

http://about.usps.com/news/state-releases/wi/2014/wi_2014_0108.htm.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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 Door-to-door delivery customers should clear their sidewalks, steps, and 

porches.

 Curbline delivery customers should keep access to their mailboxes clear for 

carriers by removing snow piles left by snow plows.

 Residents and businesses with blue collection boxes near their property 

should clear them of snow and ice.

Id.

During severe winter weather conditions, customers may be inconvenienced when 

carriers curtail mail delivery. However, the Postal Service states that carriers 

carefully consider other options before curtailing mail delivery and do so only as a 

last resort “whenever streets or walkways present hazardous conditions for letter 

carriers or when snow is plowed against mailboxes.” Id. When mail cannot be 

delivered on a given day, carriers attempt to deliver all curtailed mail the next 

delivery day. Id.

In some cases, severe winter weather conditions delay snow removal on public roads 

in some areas, which may adversely affect individuals awaiting time-sensitive mail.34

Some customers may lack the resources or ability to clear snow and ice from mail 

carriers’ paths for several days. To address this issue and improve customer service, 

the Commission recommends providing more local information about holding, storing, 

and delivering time-sensitive mail items when severe winter weather conditions are 

anticipated.

35 The Postal Service would improve customer service by providing this 

type of advance information, especially for more vulnerable individuals or businesses 

that provide essential services.

By providing more current local information to the community during severe winter 

weather conditions, the Postal Service may better inform customers about what to 

expect and what specific options are available in their community for obtaining 

time-sensitive mail. Communicating in advance delivery contingency plans and 

information at the community level to all customers may also benefit the Postal 

Service by decreasing customer calls to the local Post Office and the Customer Care 

Center when delivery is delayed.

The Postal Service does issue service alerts that provide information to consumers, 

small businesses, and business mailers about postal facility service disruptions due 

to weather-related and other natural disasters or events.36 The Postal Service states 

that it reorganized and upgraded its service disruption webpage based on customer 

 

34 See, e.g., CBS Detroit, Plowing Companies Scramble To Prevent Liability Claims Amid Road Salt Shortage, February 27, 2014;

http://detroit.cbslocal.com/2014/02/27/plowing-companies-scramble-to-prevent-liability-claims-amid-road-salt-shortage/.

35 The Commission’s FY 2014 ACD lists winter storms during fiscal quarters 1 and 2, their dates and the affected regions, and 

corresponding Postal Service areas. FY 2014 ACD at 97-98.

36 See United States Postal Service, USPS Service Alerts, May 21, 2015; http://about.usps.com/news/service-alerts/welcome.htm.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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feedback as well as disasters and severe winter weather events that affected the 

mail.37 However, some of the information on the service disruption webpage

appeared to be out of date when the webpage was reviewed by the Commission.

Upgrades to the service alerts webpage help the Postal Service communicate 

important information during events that impact mail service. The Commission urges 

the Postal Service to closely monitor updates to ensure that current and accurate local 

information is posted and communicated on the USPS Service Alerts website.

Severe winter weather during winter 2014 may have contributed to the Postal 

Service’s failure to meet most FY 2014 targets for the Deliver High-Quality Services 

performance indicators. In its FY 2014 ACD, the Commission found that the Postal 

Service’s claim that severe winter weather had an adverse effect on service 

performance results is, on its face, reasonable. FY 2014 ACD at 88. However, it 

concluded that it was unclear if weather alone was responsible for the continuing 

failure of some products to meet intended annual targets. Id.

There is little evidence to suggest that severe winter weather had an adverse impact 

on service performance during the second half of FY 2014. If substantially lower 

service performance in quarters 1 and 2 pulled down the average for the entire fiscal 

year such that the FY 2014 targets were not met, the Postal Service should consider 

further analyzing the times and areas impacted by severe winter weather and including 

more comprehensive service performance information in its FY 2015 Report and 

FY 2016 Plan.

c. Performance Indicators

In FY 2015, the Postal Service plans to make two methodology changes to the Presort 

First-Class Mail (Overnight, 2-Day, and 3-5 Day) and Standard Mail Composite 

performance indicators. March 25 Response to CHIR No. 14, question 1. The Postal 

Service asserts that it will use actual Presort First-Class Mail Flats data rather than 

proxy data. Id. Also, the Standard Mail Composite performance indicator will include 

Every Door Direct Mail. Id. The Postal Service observes that these changes may affect 

comparability of performance indicators for fiscal years 2012, 2013, 2014, and 2015. 

Id.

The proposed methodology changes may impact the Postal Service’s compliance with 

39 U.S.C. § 2804 in two ways. First, the results expressed in program performance 

reports must be comparable with targets for that fiscal year. See 39 U.S.C. 

§ 2804(b)(1); Chapter 2, section C.3, supra. To comply with 39 U.S.C. § 2804(b)(1), the 

Postal Service must develop FY 2015 targets using the new methodology to ensure that 

the results presented in the FY 2015 Report are comparable with FY 2015 targets.

 

37 FY 2013 Annual Report at 57; see Docket No. ACR2013, Library Reference USPS–FY13–17.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

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Second, the FY 2015 Report must include actual results comparable across fiscal 

years 2012, 2013, 2014, and 2015. 39 U.S.C. § 2804(c); see Chapter 2, section C.3, 

supra. If the Postal Service makes any changes that affect comparability of results for 

any performance indicator, to comply with section 2804(c), the Postal Service must 

either provide the FY 2015 results using the old methodology (if available) or provide 

the FY 2015 results using the new methodology and explain how results can be 

compared under the old and new methodologies in its FY 2015 Report. The Postal 

Service should also describe any methodology changes in the Annual Report to Congress 

and analyze the impact of methodology changes on results.

The Presort First-Class Mail (2-Day) performance indicator combines Presort 

First-Class Mail products such as letters, postcards, packages, and flats. In FY 2014, 

the Postal Service calculated results for this performance indicator by combining 

products that met service performance targets (such as letters and cards) with 

products that missed service performance targets by a wide margin (such as flats and 

parcels). See FY 2014 ACD at 96, Table V-4. Because of this, the FY 2014 result for the 

Presort First-Class Mail (2-Day) performance indicator missed the FY 2014 target.

The Commission recommends that the Postal Service include disaggregated delivery 

service performance measurements in its FY 2015 Report for time periods, geographic 

regions, or products in cases where the overall service performance indicator result 

fails to meet the FY 2015 target, yet the disaggregated delivery service performance 

results show service performance met or exceeded FY 2015 targets. Disaggregated 

results may help the Postal Service distinguish between delivery delays caused by issues 

the Postal Service can control and delivery delays caused by severe winter weather and 

other factors that the Postal Service cannot control.38 The Commission also suggests 

that in the FY 2015 Report, the Postal Service discuss which of the disaggregated results 

were impacted by the delay in implementing Phase 2 of the Network Rationalization 

Initiative. The Postal Service should also disaggregate the percent on-time performance 

for those clusters that met FY 2015 targets and were not impacted by the delay in 

implementing Phase 2 of the Network Rationalization Initiative.

B. Provide Excellent Customer Experiences

1. Background

The Postal Service currently uses results from national surveys of residential, 

small/medium business, and large business customers to assess whether its 

performance meets the Provide Excellent Customer Experiences goal. In fiscal years 

 

38 The Postal Service does disaggregate data on Market Dominant products in the Annual Compliance Report. Each year, the 

Commission compares service performance data in the Annual Compliance Report against targets the Postal Service established to 

evaluate annual service performance for each Market Dominant product. See Chapter 5 of the FY 2014 ACD at 87-115. Even so, 

grouping service performance data differently may better illustrate which service performance targets were met during the fiscal year 

under review.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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2012 and 2013, the Postal Service measured performance using one performance 

indicator based on the Customer Experience Measurement (CEM) measurement 

system: the CEM Composite Metric.

39 The CEM Composite Metric weighted and 

combined survey responses of “Very Satisfied” and “Mostly Satisfied” from 

residential and small/medium business customers regarding four overall Postal 

Service experiences: receiving letters or packages, sending letters or packages, Post 

Office experience, and contact experience.40 The Postal Service set a FY 2014 target 

of 82.5 for the CEM Composite Metric performance indicator. FY 2013 Annual Report

at 39.

In FY 2014, the Postal Service began measuring performance using a new Customer 

Insights (CI) measurement system. It is based on five customer surveys the Postal 

Service uses to measure customer experiences. Table III-2 describes each new CI 

survey.

Table III-2

Customer Insights Measurement System

Customer Survey Names and Descriptions

Customer Survey Name Description

Business Service Network

Surveys large business customer accounts in the 

Postal Service CustomerFirst! database that have 

reported service issues

Point of Sale

Surveys retail customers who conduct transactions 

at Postal Service locations with Point of Sale 

equipment

Delivery (Residential) Surveys a random sample of households that 

receive mail delivery

Delivery (Small/Medium Business)

Surveys a random sample of small/medium size 

businesses (i.e., those with fewer than 250 

employees) that receive mail delivery

Customer Care Center

Surveys a random sample of residential customers 

who call the Customer Care Center and talk to a live 

agent

Sources: Library Reference USPS–FY14–38, December 29, 2014, “Preface.pdf” file; FY 2014 Annual Report at 39-40.

The Postal Service established five new performance indicators based on the CI 

surveys:

 

39 FY 2013 Annual Report at 39. Information on customer experience performance indicators in the FY 2013 Annual Report appears to 

be inconsistent with similar information presented in the FY 2012 Annual Report. Compare FY 2013 Annual Report at 39 n.4 with

FY 2012 Annual Report at 39 n.4. Both the FY 2012 and FY 2013 Annual Reports include CEM targets and results. The Postal Service 

confirmed that the FY 2012 CEM Composite Metric was calculated with the same computations as the one in FY 2013. See Docket 

No. ACR2013, Response to CHIR No. 10, questions 3b., 3c. In the FY 2012 Annual Report, the CEM Composite Metric had been 

included as a “cross-portfolio performance indicator.”

40 FY 2013 Annual Report at 39 n.4. The Commission analyzed the FY 2012 and FY 2013 CEM Composite Metric calculation 

methodology in its FY 2013 Review at 13.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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 CI Composite Metric

 Business Service Network

 Point of Sale

 Delivery

 Customer Care Center

Table III-3 lists the names and descriptions of each new CI performance indicator

and the customer survey responses used to measure them.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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Table III-3

Customer Insights Performance Indicators

Customer Survey Responses Used for Performance Indicator

Customer Insights

Performance Indicator

Customer Survey Responses

Used for Performance Indicator* 

Customer Insights Composite Metric**

Combines weighted survey results from the 

Business Service Network, Point of Sale, Delivery, 

and Customer Care Center performance indicators

40% Business Service Network, 20% Point of Sale, 

20% Delivery, and 20% Customer Care Center 

Business Service Network

Measures Overall Customer Satisfaction with 

Business Service Network Representative

“How satisfied are you with the OVERALL service 

provided during this interaction?”

Point of Sale

Measures Retail Customer Overall Satisfaction

“Thinking about this visit to the Post Office, overall, 

how satisfied were you?”

Delivery***

Measures Overall Customer Satisfaction with 

Carrier

“Just thinking about your overall experience with 

the mail or packages you recently RECEIVED, how 

satisfied are you with USPS performance?”

Customer Care Center

Measures Overall Customer Satisfaction with

Live Agent

“Now, please think only about the agent who 

handled your call today, how would you rate the 

agent’s overall quality of service?”

*Based on the top two survey responses (Very Satisfied or Mostly Satisfied).

**Surveys were provided in Library Reference USPS–FY14–38. The CI Composite Metric calculation methodology is shown in the 

“ChIR5.Q1b.Calculation Worksheet” file provided with the February 10 Response to CHIR No. 5, question 1b.

***The Delivery performance indicator combines responses from both the Delivery (Residential) and Delivery (Small/Medium 

Business) surveys.

Source: February 10 Response to CHIR No. 5, question 1a.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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The new CI Composite Metric performance indicator is composed of the four 

weighted metrics from the Business Service Network, Point of Sale, Delivery, and 

Customer Care Center performance indicators. It combines customer-segmentweighted “Very Satisfied” and “Mostly Satisfied” responses to the questions listed in 

Table III-3.41 The Postal Service asserts that the new CI surveys are an improvement 

over the old CEM surveys42 because the old CEM surveys were not sufficiently 

sensitive to small changes in customer perception and did not provide results in a 

timely and efficient manner (fewer than 45 days).43

2. Comments

The Public Representative has several concerns about how the Postal Service uses 

the new CI performance indicators. Concerning the FY 2015 Plan, she states that it is 

unclear how the Postal Service calculated the FY 2015 CI Composite Metric target of 

82.5. PR Comments at 9. She is also concerned that in the FY 2014 Plan the Postal 

Service set the FY 2014 customer experience target for a performance indicator 

under the old CEM measurement system rather than the new CI measurement 

system. Id. She concludes that comparing FY 2014 targets with results appears 

difficult because the old CEM and new CI measurement systems are different. Id. at 8. 

She also asserts that the Postal Service did not provide any other details regarding 

the new CI measurement system and that the Commission in its FY 2013 Review

discussed performance indicators under the old CEM measurement system. Id. 

at 9-10.

The Public Representative expresses her expectation that in the future, the Postal 

Service will provide “adequate and on-time information” about changes to its 

measurement systems. Id. at 10. She contends that doing so will increase 

transparency, help Commission reviews of performance plans and program 

performance reports, and serve the interests of the general public. Id.

In its reply comments, the Postal Service explains how it calculated the FY 2015 CI 

Composite Metric target and notes that it modified the FY 2015 target from 82.5 to 

86.7 after it published the FY 2014 Report and FY 2015 Plan. USPS Reply Comments 

at 5.

 

41 The Postal Service asserts that the customer segment weighting used to calculate the CI Composite Metric is “an improved holistic 

view of customer satisfaction.” Library Reference USPS–FY14–38, “Preface.pdf” file. The Postal Service explains how the CI Composite 

Metric is weighted: “The weighting of each [customer] segment of the different interconnected customer touch points results in a 

more accurate and detailed view of the satisfaction level for the largest core customer segment.” United States Postal Service 

Responses to Questions 1-3 of Chairman’s Information Request No. 11, March 3, 2015, question 1b. (Response to CHIR No. 11).

42 The old CEM surveys consisted of three comprehensive customer surveys for each customer segment: residential customers, 

small/medium business customers, and large business customers. However, the CEM Composite Metric performance indicator only 

used and combined responses from residential and small/medium business customers. See the Residential Survey, Small/Medium 

Business Survey, and Large Business Survey pdf files provided in Docket No. ACR2013, Library Reference USPS–FY13–38, December 

27, 2013.

43 See the discussion in the “C. Methodology” section of the “USPS-FY14 Preface.pdf” file provided in Library Reference USPS–FY14–

38.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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3. Commission Analysis

In this section, the Commission discusses three topics. First, it reviews whether the 

Postal Service effectively addressed key customer experience issues identified in 

FY 2013. Second, it evaluates whether the Postal Service met the Provide Excellent 

Customer Experiences goal in FY 2014. Third, it identifies two issues with the new CI 

performance indicators.

a. Postal Service Efforts to Address FY 2013 Customer 

Experience Issues

In FY 2013, the Postal Service identified two primary reasons why it did not meet the 

Provide Excellent Customer Experiences performance goal: lower customer 

satisfaction with problem resolution and repeat customer complaints.44 To address 

these issues, the Postal Service set targets of 90 percent customer satisfaction with 

problem resolution and a 50 percent reduction in repeat customer complaints by 

FY 2017.45 The Postal Service asserts that in FY 2014 it “standardized the 

complaint-handling and resolution process by providing guidelines that give 

direction from initial contact through completion, with a quality resolution.”46

Because the FY 2014 Report and FY 2015 Plan do not include any numeric evaluation 

or discussion of the Postal Service’s progress toward these customer experience 

performance targets, the Commission requested FY 2014 performance results for 

customer satisfaction with problem resolution and repeat customer complaints to 

assess the efficacy of the Postal Service’s efforts to improve these aspects of the 

customer experience. The Postal Service responded that in FY 2014, less than 21 

percent of customers were satisfied with their problem resolution.47 It explained that 

it did not measure reductions in repeat customer complaints because the 

measurement system was still under development in FY 2014. Id.

The FY 2014 result of less than 21 percent customer satisfaction with problem 

resolution is well below the projected FY 2017 target of 90 percent. The Commission 

recommends that in the FY 2015 Report and FY 2016 Plan, the Postal Service:

 

44 As reported in FY 2013, the Postal Service had planned on providing weekly messaging to inform and engage employees, providing 

diagnostic reports, and reviewing current complaint processes to improve its customer experience performance in FY 2014. See

Docket No. ACR2013, Responses of the United States Postal Service to Questions 1-8 of Chairman’s Information Request No. 12, 

March 14, 2014, questions 6a., 6b. (Docket No. ACR2013, Response to CHIR No. 12).

45 See Docket No. ACR2013, Response to CHIR No. 12, question 6.

46 FY 2014 Annual Report at 40. These are documented in the “ChIR13.24a.Complaint-Guidelines” file provided in United States Postal 

Service Responses to Questions 6, 7, 9, 10, 20-25, 29, 30, 34, and 35 of Chairman’s Information Request No. 13, March 13, 2015, 

question 24a. (March 13 Response to CHIR No. 13).

47 See Response to CHIR No. 15, question 4a.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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 Provide an explanation if the FY 2015 result for customer satisfaction with 

problem resolution indicates that the Postal Service will not meet the FY 2017 

target.

 Include plans for improving customer satisfaction with problem resolution and 

achieving the 90 percent target in FY 2017.

 Provide annual fiscal year updates of its progress toward FY 2017 targets for 

both customer satisfaction with problem resolution and repeat customer 

complaints, as well as annual fiscal year updates of its progress toward other 

long-term targets with performance targets that span multiple years.

b. Evaluating FY 2014 Performance

To evaluate whether the Postal Service met the Provide Excellent Customer 

Experiences goal in FY 2014, the Commission must determine whether the FY 2014 

result meets or exceeds the FY 2014 target. As previously discussed, the Postal 

Service originally set one FY 2014 target for the old CEM Composite Metric 

performance indicator. During FY 2014, it implemented new performance indicators 

based on the new CI measurement system. In the FY 2014 Report and FY 2015 Plan,

the Postal Service does provide FY 2015 targets for each new CI performance 

indicator.48 However, the Postal Service failed to include any FY 2014 targets or 

results for either the old CEM Composite Metric or new CI performance indicators. 

See FY 2014 Annual Report at 39.

To address this failure, the Chairman issued an information request to obtain 

FY 2014 targets and results for the new CI performance indicators.49 The Postal 

Service provided FY 2014 results, but did not include any FY 2014 targets for the 

new CI performance indicators. The Postal Service explains that FY 2014 serves as 

the baseline measure for the new CI measurement system. FY 2014 Annual Report

at 39 n.3. It asserts it did not develop FY 2014 targets for the new CI performance 

indicators because FY 2014 “was a development year.” February 10 Response to 

CHIR No. 5, question 2e. Table III-4 lists available targets and results for the new CI 

performance indicators.

 

48 FY 2014 Annual Report at 39. The Postal Service changed the FY 2015 target for the CI Composite Metric performance indicator 

after the FY 2014 Annual Report was published. USPS Reply Comments at 6. Responding to an information request, the Postal Service 

explains how it set FY 2015 targets for each new CI performance indicator. March 13 Response to CHIR No. 13, question 34. However, 

it is unclear why the values of the expressed FY 2015 targets range from 2 to 16 points higher than the FY 2014 baseline results and 

why the FY 2015 Business Service Network target was set lower than the FY 2014 result.

49 See February 10 Response to CHIR No. 5, question 2e.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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Table III-4

Commission Requested Customer Insights Performance Indicators

Available Targets and Results50

Customer Insights 

Performance Indicator FY 2015 Target FY 2014 Result FY 2014 Target

Customer Insights Composite Metric 86.7* 84.65 Not Developed

Business Service Network 94.0 94.05 Not Developed

Point of Sale 90.0 81.59 Not Developed

Delivery 90.0 79.55 Not Developed

Customer Care Center 90.0 74.00 Not Developed

*The FY 2015 target for the CI Composite Metric changed after the FY 2014 Annual Report was published. See USPS Reply 

Comments at 5.

Source: FY 2014 Annual Report at 39; February 10 Response to CHIR No. 5, question 2e.

Thus, the only available data for the evaluation of FY 2014 performance are the 

FY 2014 target for the old CEM Composite Metric performance indicator and the 

FY 2014 results for the new CI performance indicators.However, the old CEM and 

new CI performance indicators are not comparable because they are based on 

responses from different types of customers and consist of different survey 

responses covering different postal service experiences and events. Without 

comparable FY 2014 performance data, the Commission cannot determine whether the 

Postal Service met the Provide Excellent Customer Experiences goal expressed in its 

FY 2014 Plan.

Moreover, without comparable FY 2014 performance data, the FY 2014 Report does 

not comply with two statutory requirements in 39 U.S.C. § 2804. First, it does not “set 

forth the performance indicators established in the Postal Service performance plan, 

along with the actual program performance achieved compared with the 

performance goals expressed in the [FY 2014] plan....” as required by 39 U.S.C. 

§ 2804(b)(1). This provision requires the FY 2014 Report to list FY 2014 performance 

indicators and compare FY 2014 results with FY 2014 targets. Because FY 2014 

targets and results are not comparable, the FY 2014 Report does not comply with 

section 2804(b)(1).

To enable the Commission to fulfill its responsibilities under 39 U.S.C. § 3653(d), the 

Postal Service should have developed and provided FY 2014 targets for each new CI 

performance indicator. Alternatively, it should have provided the FY 2014 result for 

the old CEM Composite Metric performance indicator.

Second, the FY 2014 Report does not comply with39 U.S.C. § 2804(c). This provision 

requires the FY 2014 Report to include comparable results for fiscal years 2011, 

 

50 Table III-3, supra lists which survey question and responses were used for each new CI performance indicator. The CI performance 

indicator calculation methodology was provided in the “ChIR5.Q1b.Calculation Worksheet” file provided with the February 10 

Response to CHIR No. 5, question 1b.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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2012, 2013, and 2014. See Chapter 2, section C.3, supra. The FY 2014 Report fails to 

comply with section 2804(c) because results from the old CEM and new CI 

performance indicators are not comparable. Thus, it is impossible to meaningfully 

compare results from fiscal years 2011, 2012, 2013 and 2014.

The FY 2015 Report must include actual results comparable across fiscal years 2012, 

2013, 2014, and 2015. 39 U.S.C. § 2804(c); see Chapter 2, section C.3, supra. To do 

this, the Postal Service must either provide the FY 2014 and FY 2015 results using the 

CEM performance indicator (if available) or explain how the FY 2014 and FY 2015 

results derived from the CI surveys can be compared to the FY 2012 and FY 2013 results 

derived from the CEM surveys in the FY 2015 Report. For example, some delivery 

questions from the old CEM survey appear to be comparable to delivery questions in 

the new CI surveys.51 The Postal Service could compare responses to these questions 

to evaluate customer delivery experiences for fiscal years 2012, 2013, 2014, and 

2015. To ensure that the FY 2015 Report complies with section 2804(c) for the Provide 

Excellent Customer Experiences goal, the Postal Service must explain how to compare 

results between the old CEM and new CI surveys for similar customer experiences if it is 

unable to provide comparable results.

c. Concerns with New Customer Insights Surveys

The Commission has identified two concerns with the new surveys used under the CI 

measurement system. First, they do not track some of the key customer experiences 

that were tracked under the old CEM surveys. Although some survey questions may 

be comparable, several important survey questions asked in the old CEM surveys are 

not included in the new CI surveys. For example, the new CI surveys do not ask about 

customers’ experiences sending letters or packages or whether letters and packages 

are consistently delivered when expected.52 Also, business customers are no longer 

asked about their Post Office experiences, and there are far fewer contact points 

surveyed for large business customers’ satisfaction.53 As a result, under the new CI 

measurement system, the Commission is unable to track some key measurable customer 

experiences that the old CEM measurement system tracked previously.

 

51 Compare question 4c. of the Residential and Small/Medium Business CEM surveys: “Now thinking about your overall experience 

with the letters or packages you [your business] recently RECEIVED, how satisfied are you with USPS performance?” with question 1 

of the CI Delivery surveys: “Just thinking about your overall experience with the mail or packages you recently RECEIVED, how 

satisfied are you with USPS performance?” See the respective CEM surveys in Docket No. ACR2013, Library Reference USPS–FY13–38 

and the CI Delivery surveys in Library Reference USPS–FY14–38.

52 See the “Sending Letters or Packages” section (questions 5-8b.) and the “Receiving Letters or Packages” section (question 3, first 

item) of the Residential and Small/Medium Business CEM surveys in Docket No. ACR2013, Library Reference USPS–FY13–38.

53 See the “Visiting Post Office” section (questions 9-12b.) on the Small/Medium Business CEM survey and questions 8, 9, and 9a. of 

the Large Business CEM Survey for questions on comprehensive contact points in Docket No. ACR2013, Library Reference USPS–FY13–

38.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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Second, the Postal Service received certain CI surveys during only part of FY 2014. 

Responding to an information request, the Postal Service reported partial FY 2014 

customer survey data for the new CI surveys, which are shown in Table III-5 below.

54

Table III-5

FY 2014 Customer Insights Surveys 

Time Period Collected and Number Initiated and Received

Customer Insights Survey Name Time Period

Number of 

Surveys 

Initiated

Number 

of Surveys 

Received

Business Service Network November 2013-September 2014 10,794 1,904

Point of Sale December 2013-September 2014 1,049,104,781 173,290

Delivery (Residential) August 2014-September 2014 470,631 7,283

Delivery (Small/Medium Business) August 2014-September 2014 800,017 9,489

Customer Care Center June 2014-September 2014 202,227 11,362

Source: February 10 Response to CHIR No. 5, question 2a.

Table III-5 illustrates that the Postal Service received Business Service Network and 

Point of Sale surveys throughout most of FY 2014. In contrast, the Postal Service 

received both Delivery (Residential) and Delivery (Small/Medium Business) surveys 

for only a two-month period in August and September of FY 2014. Customer Care 

Center surveys were received for a four-month period between June and September 

of FY 2014.

The Postal Service believes results of the Delivery (Residential) and Delivery 

(Small/Medium Business) surveys are representative of the entire fiscal year. 

Response to CHIR No. 15, question 10. However, the Postal Service also asserts that 

severe winter weather caused service performance issues in FY 2014. See Chapter 3, 

section A, supra. If the Delivery surveys had been conducted during the winter 

months (December 2013 through February/March 2014), customer satisfaction 

results would presumably have been lower than those received between August and 

September 2014.

The Commission recommends that the Postal Service provide FY 2015 results for each 

new CI performance indicator based on surveys received throughout FY 2015. In its 

FY 2015 Report, the Postal Service should compare the FY 2015 Delivery performance 

indicator result for those surveys received for August through September 2015 with 

results for Delivery surveys received for August through September 2014. Likewise, the 

Postal Service should compare the FY 2015 Customer Care Center performance 

indicator result for those surveys received for June to September 2015 with results for 

those Customer Care Center surveys received for June to September 2014.

 

54 See February 10 Response to CHIR No. 5, question 2e.; “CI Question Response Counts FY2014” Excel file in Library Reference USPS–

FY14–38.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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C. Ensure a Safe Workplace and Engaged 

Workforce

1. Background

The Postal Service relies on two performance indicators to evaluate progress toward 

its performance goal to Ensure a Safe Workplace and Engaged Workforce. The 

Occupational Safety and Health Administration Illness & Injury frequency rate (OSHA 

I&I Rate) measures performance toward ensuring a safe workplace. The Voice of the 

Employee (VOE) survey performance indicator is intended to measure the Postal 

Service’s performance in creating an engaged workforce.

The OSHA I&I Rate represents the annual number of recordable injuries and illnesses 

per 100 employees.55 In FY 2014, the Postal Service’s OSHA I&I Rate was 6.32, which 

did not meet the FY 2014 target of 5.55. Id. at 39; see Table I-1, supra. The OSHA I&I 

Rate increased by 12 percent from FY 2013. Id. at 40. The Postal Service explains that 

the increase was “due primarily to severe winter weather” during the first two 

quarters of FY 2014. Id. Specifically, the Postal Service states:

“[E]xtreme temperatures and weather events occurred 

both in locations that ordinarily experience such 

weather events and in locations that do not normally 

experience such extremes, and these weather events 

increased the frequency and severity of motor vehicle 

accidents. The cold, ice and snow conditions resulted in

an increase of motor vehicle accidents arising from 

collisions with stationary objects. In addition, the 

extreme weather led to a significant increase in the 

frequency and severity of frost bite claims and accidents 

resulting from slips, trips and falls. Between the months 

of November through March, there was a large spike in 

these recordable accidents.”56

 

55 The Postal Service calculates the OSHA I&I Rate using an industrywide formula recommended by OSHA: total number of OSHA 

injuries and illnesses (multiplied by 200,000 hours divided by the number of exposure hours worked by all employees). FY 2014 

Annual Report at 39 n.4.

56 March 13 Response to CHIR No. 13, question 6. In FY 2013 (the most currently available complete fiscal year), the United States 

Department of Labor Statistics fatal occupational injury data report that 20 Postal Service workers were killed. Sixteen fatalities were 

caused by transportation incidents; fourteen of the fatalities in these incidents were mail carriers. See United States Department of 

Labor, Bureau of Labor Statistics, 2013 Census of Fatal Occupational Injuries (revised 4-22-15) (Department of Labor accessed May 26, 

2015) at 28, http://www.bls.gov/iif/oshwc/cfoi/cftb0277.pdf; United States Department of Labor, Bureau of Labor Statistics, Fatal 

Occupational Injuries by Occupation (Department of Labor accessed May 26, 2015) at 11, 

http://www.bls.gov/iif/oshwc/cfoi/cftb0281.pdf.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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The Postal Service also attributes the OSHA I&I Rate increase to newer employees 

who are less familiar with safety practices as well as ergonomic stressors from 

sorting and delivering a greater volume of packages. FY 2014 Annual Report at 40.

The FY 2015 OSHA I&I Rate target is 5.1, which is better than the missed FY 2014 

target of 5.55. The Postal Service asserts that it will ensure a safer workplace in

FY 2015 by doing three things. First, it will focus on at-risk employees and new 

employees who are less familiar with safe work practices. FY 2014 Annual Report

at 40. Second, it will tailor safety programs to address concerns at the local facility 

level. Id. Third, it will address ergonomic impacts associated with lifting, handling, 

and repetitive motions required for delivery. Id.

The VOE survey performance indicator is based on results from the VOE survey. The 

VOE survey provides Postal Service employees the opportunity to provide their 

opinion about their work environment and the Postal Service’s policies and 

strategies for success. Id. Third-party vendors administer VOE surveys, tabulate the 

results, and report them back to the Postal Service in summary form. FY 2013 Review

at 27. The VOE survey performance indicator is an aggregated measure of responses 

to eight VOE survey questions addressing strategic direction, trust, contribution to 

Postal Service growth, communication, diversity and respect, commitment, personal 

safety, and work effort and quality.57 The Postal Service filed under seal the VOE 

survey questionnaire and summary statistics of the employee responses to each 

question.58

In FY 2014, the VOE survey result (65.01) fell slightly short of the FY 2014 target 

(65.1). FY 2014 Annual Report at 39; see Table I-1, supra. Although the Postal Service 

did not explain why it did not meet the FY 2014 target, it noted that the FY 2014 

result was “a shortfall in meeting the goal by 0.09.” FY 2014 Annual Report at 40 n.1. 

It asserts that its employees continue to express high levels of commitment. Id. at 40. 

It reports that scores for questions concerning employee pride and personal 

responsibility increased by a full percentage point in FY 2014. Id.

The FY 2015 VOE survey target is 65.1, which is the same as the FY 2014 target. Id. 

at 39. To promote increased levels of employee engagement in FY 2015, the Postal 

Service states that it will redesign the VOE survey program by partnering with an 

employee-engagement leader to promote increased levels of employee engagement. 

Id. at 40. In FY 2015, the Postal Service will replace the VOE survey with a simpler 

Postal Pulse survey that was developed in conjunction with Gallup.59

 

57 Docket No. ACR2013, Response to CHIR No. 12, question 7a.

58 Responses of the United States Postal Service to Questions 6 and 7 of Chairman’s Information Request No. 5, February 18, 2015, 

question 6 (February 18 Response to CHIR No. 5); Library Reference USPS–FY14–NP36, February 18, 2015.

59 Response to CHIR No. 15, question 13a.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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2. Comments

The Public Representative asserts that the FY 2014 OSHA I&I Rate not only failed to 

meet the FY 2014 target, but also was the worst since FY 2010. PR Comments at 10. 

She notes that the OSHA I&I Rate reported by the Postal Service in the FY 2014 

Report and FY 2015 Plan differs from the Total Case Rate reported by OSHA for the 

Postal Service for the same period. Id. at 10-11. She contends that the FY 2015 OSHA 

I&I Rate target is unrealistic because it is better than the lowest OSHA I&I Rate in the 

last 5 years and substantially better than the FY 2014 result. Id. at 11.

The Public Representative observes that the VOE survey result improved in FY 2014, 

but did not meet the FY 2014 target. Id. at 12. She argues that the FY 2015 VOE 

survey target, which is the same as the FY 2014 VOE survey target, indicates that the 

Postal Service does not expect employee engagement to improve significantly in 

FY 2015. See id.

3. Commission Analysis

The Postal Service failed to meet FY 2014 targets for both the OSHA I&I Rate and VOE 

survey performance indicators. As a result, the Commission finds that the Postal 

Service did not meet the Ensure a Safe Workplace and Engaged Workforce goal in 

FY 2014. In this section, the Commission evaluates why FY 2014 targets were not met 

for each performance indicator and recommends actions for achieving targets in 

future years.

a. OSHA Illness & Injury Rate Performance Indicator

The Postal Service asserts that the FY 2014 OSHA I&I Rate increased “due primarily 

to severe winter weather” during the first two quarters of FY 2014. FY 2014 Annual 

Report at 40. Illness and injury statistics collected by the Department of Labor also 

show that Postal Service employees filed new work-related illness or injury claims at 

higher rates during this time period. Table III-6 shows the approximate number of 

Postal Service employee cases initiated with the Department of Labor in each fiscal 

quarter of fiscal years 2011-2014. The total number of cases each quarter was 

derived from the Total Case Rates by quarter published on the Department of Labor’s 

website.60 In fiscal years 2012 and 2013, cases were most often initiated during the 

first and fourth quarters. This result differs for fiscal years 2011 and 2014, when 

more new cases were filed during the first and second quarters.

 

60 See United States Department of Labor, Office of Workers' Compensation Programs, Division of Federal Employees' Compensation, 

POWER Performance US Postal Service, (Department of Labor accessed May 26, 2015), 

http://www.wageandhour.dol.gov/owcp/dfec/power/getxls.htm?id=1040000.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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Table III-6

Newly Initiated Postal Service Cases by Fiscal Quarter*

Department of Labor

FY 2014

4th QTR 3rd QTR 2nd QTR 1st QTR

9,899 9,313 12,593 11,539

FY 2013

4th QTR 3rd QTR 2nd QTR 1st QTR

10,167 8,816 9,580 10,285

FY 2012

4th QTR 3rd QTR 2nd QTR 1st QTR

9,725 9,421 8,874 10,211

FY 2011

4th QTR 3rd QTR 2nd QTR 1st QTR

9,569 8,867 11,419 10,211

*Total number of cases initiated by fiscal quarter was derived algebraically from the Total Case 

Rate by fiscal quarter. Because publicly available fiscal quarterly case rate data are cumulative, the 

difference between each quarter’s total number of cases was taken to determine the number of 

cases initiated for each fiscal quarter. The sum of the fiscal year quarterly cases may not equal the 

total number of fiscal year cases shown in Table III-7 due to rounding.

Source:

Number of Postal Service Employees (used in algebraic formula to decompose Total Case Rate by 

Quarter): United States Department of Labor, Occupational Safety & Health Administration, 

Federal Agency Programs: Federal Agency Injury and Illness Statistics by Year, (Department of 

Labor accessed May 26, 2015), https://www.osha.gov/dep/fap/fap-inj-ill-stats.html.

Total Case Rate by Fiscal Year:

United States Department of Labor, Office of Workers’ Compensation Programs, Division of 

Federal Employees’ Compensation, POWER Performance, (Department of Labor accessed May 26, 

2015), http://www.wageandhour.dol.gov/owcp/dfec/power/getxls.htm?id=1040000.

Although the Total Case Rate and the OSHA I&I Rate are calculated differently, the 

Total Case Rate is an important illness and injury performance indicator that is 

tracked for all Federal agencies.

61 Table III-7 illustrates that new Postal Service cases 

and the associated lost time per case increased in FY 2014.

 

61 There have been several presidential initiatives directing federal agencies to establish goals and track performance in four major 

areas. One of these is to reduce the number of total cases reported to the Office of Workers’ Compensation Programs. See, e.g.,

United States Department of Labor, Office of Workers' Compensation Programs, Division of Federal Employees' Compensation, 

POWER Initiative (Department of Labor accessed May 26, 2015), http://www.dol.gov/owcp/dfec/power/; United States Department 

of Labor, Office of Workers' Compensation Programs, Division of Federal Employees' Compensation, Safety, Health And Return-toEmployment (SHARE) Initiative (Department of Labor accessed May 26, 2015), http://www.dol.gov/owcp/dfec/share/.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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Table III-7

Postal Service Total Case Rate and Lost Time Case Rate by Fiscal Year

Fiscal Year Number of Postal Service 

Employees*

Total Number of New 

Cases** Total Case Rate** Lost Time Case Rate***

2014 585,735 43,372 7.40 3.77

2013 587,713 38,847 6.61 3.11

2012 607,814 38,206 6.29 3.30

*The Office of Personnel Management provided OSHA with the most recent available data on the average number of Postal Service

employees from December through March for FY 2012 and FY 2013 and October 2013 through June 2014 for FY 2014.

**The Total Case Rate and Lost Time Case Rate numbers are derived from claims submitted to the Office of Workers’ Compensation 

Programs with “case create” dates of October 1 through September 30 for each fiscal year (not including denied cases). The Total 

Case Rate is the total number of new cases divided by the number of Postal Service employees, multiplied by 100 for a rate per 100 

employees.

***The Lost Time Case Rate is calculated by dividing the total number of lost time cases by the total number of employees. The 

resulting number is then multiplied by 100, for a rate per 100 employees.

Source: United States Department of Labor, Occupational Safety & Health Administration, Federal Injury and Illness Statistics for 

Fiscal Year End of Year Totals (Department of Labor accessed May 26, 2015).

FY 2012: https://www.osha.gov/dep/fap/statistics/fedprgms_stats12_final.html.

FY 2013: https://www.osha.gov/dep/fap/statistics/fedprgms_stats13_final.html.

FY 2014: https://www.osha.gov/dep/fap/statistics/fedrprgrms_stats14_final.html.

The total cost of new workers’ compensation cases for Postal Service employees 

increased from approximately $1.8 billion in FY 2013 to approximately $1.96 billion 

in FY 2014.62 Table III-8 illustrates one component of total workers’ compensation 

costs: continuation of pay for a traumatic job-related illness or injury.63 In FY 2014, 

total continuation of pay costs increased by about 17 percent over FY 2013, but the 

size of the increase varied widely by craft.

 

62 United States Postal Service, 2014 Report on Form 10-K, December 5, 2014, at 29 (FY 2014 Form 10-K).

63 Officers and directors of the United States Postal Service are covered by federal laws relating to compensation for work injuries 

under 5 U.S.C. §§ 8101 et seq. 39 U.S.C. § 1005(c).
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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Table III-8

Continuation of Pay Costs for a Traumatic Job-Related Illness or Injury

by Selected Employee Craft and Fiscal Year

FY 2014 FY 2013 FY 2012 % Change

Selected Employee* Craft Continuation of Pay Costs ($) 2014/2013 2013/2012

City Carriers 27,706,541 22,561,555 21,546,790 22.8% 4.7%

Rural Carriers 9,218,087 7,785,814 6,847,527 18.4% 13.7%

Clerks 4,984,648 4,774,102 5,321,868 4.4% (10.3%)

Mail Handlers 3,289,023 3,221,312 3,485,015 2.1% (7.6%)

Vehicle Service Drivers 865,296 840,841 786,421 2.9% 6.9%

Equipment/Building 

Maintenance and Support

729,326 617,972 770,274 18.0% (19.8%)

Building Service 614,095 474,993 464,070 29.3% 2.4%

Operating Equipment 482,196 371,109 474,187 29.9% (21.7%)

Vehicle Maintenance 228,949 147,344 155,850 55.4% (5.5%)

USPS Total 48,374,636 41,190,875 40,043,829 17.4% 2.9%

*Consolidated employee craft costs.

Source: USPS Periodic Report-National Payroll Hours Summary Report, Pay Period 20, FY 2014, September 26, 2014; USPS Periodic ReportNational Payroll Hours Summary Report, Pay Period 20, FY 2013, February 14, 2014; USPS Periodic Report-National Payroll Hours Summary 

Report, Pay Period 20, FY 2012, December 3, 2012.

In a Government Accountability Office (GAO) report, the Postal Service described 

employees’ injuries as largely due to the nature of their work: physically demanding, 

industrial, and highly repetitive.64 Yet based on GAO’s analysis, in FY 2012, only 

about 36 percent of all Postal Service injuries occurred during mail delivery. Id. at 3.

The Commission recommends that in its FY 2015 Report and FY 2016 Plan, the Postal

Service discuss the most common types of illnesses and injuries by employee activity and 

describe its efforts to prevent each type of injury. To determine the efficacy of the Postal 

Service’s FY 2015 health and safety programs, the Commission also suggests that the 

Postal Service disaggregate its illness and injury data and consider tracking the 

effectiveness of its safety programs by types of illnesses and injuries and employees 

affected. Examining the trends for specific types of injuries should enable the Postal 

Service to better gauge the success of particular safety plans targeted at reducing 

each type of injury.

During FY 2014, the Postal Service promoted workplace safety through increased 

outreach and education efforts. For example, in an employee newsletter related to 

what the Postal Service calls “Polar times,” it included special messaging to keep 

 

64 See U.S. Government Accountability Office, U.S. Postal Service: Information on Workforce Injuries Arising During Mail Delivery,

September 26, 2013, at 3, 5, http://www.gao.gov/assets/660/658174.pdf. Based on its analysis of delivery-related injuries that 

occurred between 2009 and 2012, the most common injuries were caused by falls and dog bites. For rural routes, because delivery is 

most often conducted in a vehicle, vehicular collisions were the most frequently reported cause of injury.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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employees informed about the hazards of severe winter weather conditions.65 In 

another employee newsletter it advised, “Employees should always dress 

appropriately for the weather and notify supervisors immediately if they experience 

any weather-related issues.”66

In some circumstances, safety education efforts alone may be insufficient to prevent 

all illnesses and injuries because obtaining necessary cold-weather gear may be 

delayed, or gear may be unavailable when needed. For example, city carrier 

assistants may not be eligible to receive a postal uniform allowance until they 

complete a 90-day probationary period.67 The Postal Service should consider other 

mitigation and prevention efforts in addition to safety education for new carriers and 

other employees who may not have acquired the appropriate cold-weather gear for the 

weather in their geographic areas. These efforts might include lending carriers 

necessary cold-weather gear in places where winter weather is most severe.

In the Postal Service’s FY 2014 Climate Change Adaptation Plan it states that “all 

employees are continuously educated on a number of topics each year and this 

includes issues relevant to a changing climate, such as dealing with extreme heat and 

cold, and emergency planning.”68 Further, the Postal Service states it “is evaluating its 

extreme temperature-related policies for delivery and employee safety.” Id. at 16. 

The Commission recommends that the Postal Service include more information about 

its extreme temperature-related policies for delivery and employee safety—including 

motor vehicle safety and heat stroke deaths— in its FY 2015 Report and FY 2016 Plan.

The Postal Service states that in FY 2015 it will increase its safety focus for at-risk 

employees who have fewer than 2 years of on-the-job experience in an effort to 

improve its progress toward meeting the Ensure a Safe Workplace and Engaged 

Workforce goal.69 The Commission recommends that in its FY 2015 Report and FY 2016 

Plan, the Postal Service provide performance results and targets for performance 

indicators that specifically measure progress toward meeting its safety goal of reducing 

injuries for at-risk employees.

 

65 United States Postal Service, Polar times: Service continues during frigid temperatures, high winds (News Link January 10, 2014);

https://liteblue.usps.gov/news/link/2014/01jan/news10s1.htm.

66 United States Postal Service, It's cold outside: Dress Warmly for cold weather (News Link January 16, 2014);

https://liteblue.usps.gov/news/link/2014/01jan/news07s3.htm.

67 United States Postal Service, ELM 38 - Employee and Labor Relations Manual (March 2015) § 935.11; 

http://about.usps.com/manuals/elm/html/elmc9_013.htm.

68 United States Postal Service Climate Change Adaptation Plan, June 2014, at 17, http://about.usps.com/what-we-aredoing/green/pdf/CCAP_FINAL_2014.pdf. The Postal Service considers the relevant main climate change impact categories to be

changes in the severity of damages related to extreme storm events, sea level changes, precipitation changes, and temperature 

changes that lead to temperature-related health risks and infrastructure damage. Id. at 8. The Postal Service evaluates policies and

actions that strengthen the entire postal network, including routes, fleet vehicles, facility locations, and the supply chain. Id. at 14.

69 March 13 Response to CHIR No. 13, question 7.
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b. Voice of the Employee Performance Indicator

The Postal Service relies on the VOE survey performance indicator to measure 

employee engagement. In FY 2014, in an effort to engage its entire workforce, the 

Postal Service extended the VOE survey to non-career employees such as postal 

support employees, city carrier assistants, mail handler assistants, rural carrier 

assistants, and casuals. FY 2014 Annual Report at 40. The Postal Service states that its 

VOE survey results improved quarter-over-quarter in FY 2014. Id. Nevertheless, the 

FY 2014 result of 65.01 fell 0.09 short of meeting its FY 2014 target. Id. at 40 n.1.

In FY 2015, the Postal Service will replace the VOE survey with the Postal Pulse 

survey.70 The Postal Service asserts that the new survey “will create more robust 

reporting, analytics and innovative action planning tools to help managers respond 

to their survey results.” FY 2014 Annual Report at 40. However, the Postal Service 

does not expect Postal Pulse survey results to be comparable to VOE survey results 

because “[t]he Postal Pulse survey questions are very different than the 2014 VOE 

survey questions.” Response to CHIR No. 15, question 13a.

The proposed methodology change may impact the Postal Service’s compliance with 

39 U.S.C. § 2804 in FY 2015 in two ways. First, the results expressed in program 

performance reports must be comparable with targets for that fiscal year. See 

39 U.S.C. § 2804(b)(1); Chapter 2, section C.3, supra. To comply with 39 U.S.C. 

§ 2804(b)(1), the Postal Service must develop FY 2015 targets using the Postal Pulse 

performance indicators to ensure that the results presented in the FY 2015 Report are 

comparable with FY 2015 targets.

Second, as previously discussed, the FY 2015 Report must include actual results 

comparable across fiscal years 2012, 2013, 2014, and 2015. 39 U.S.C. § 2804(c); see

Chapter 2, section C.3, supra. The change in performance indicator from the old VOE 

survey to the new Postal Pulse survey will likely affect comparability of results 

across those fiscal years. Response to CHIR No. 15, question 13a. If this occurs, to 

ensure that the FY 2015 Report fulfills the requirements of section 2804(c), the Postal 

Service must either provide the FY 2015 result from a VOE survey conducted in FY 2015 

(if available) or provide the FY 2015 result for the new Postal Pulse survey performance 

indicator and explain how to compare results of the old VOE survey and new Postal 

Pulse survey performance indicators.

The Commission recommends that the Postal Service describe any methodology 

changes in the Annual Report to Congress and analyze the impact of methodology 

changes on results. The Postal Service should evaluate its FY 2015 results to determine 

whether changes in employee engagement are due to differences between the VOE and 

Postal Pulse surveys, or actual employee engagement changes. The Commission

 

70 Response to CHIR No. 15, question 13a.
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encourages the Postal Service to file the FY 2015 Postal Pulse survey results in a public 

library reference along with its FY 2015 Annual Compliance Report.

71

D. Sustain Controllable Income

1. Background

The Postal Service uses two performance indicators to measure progress toward its 

Sustain Controllable Income goal: Deliveries per Work Hour (DPWH) and Net 

Controllable Income (Loss).

The Postal Service explains that DPWH summarizes the effectiveness of its 

productivity improvement efforts. FY 2014 Annual Report at 40. DPWH compares the 

total number of deliveries of all types with the total number of work hours used in all 

employee categories. FY 2013 Review at 23. The total number of deliveries is 

calculated by multiplying the total number of delivery points by the annual number 

of delivery days. Id. This number is then divided by the total number of work hours 

used in all employee categories, including managers and executives. Id. The result is 

the DPWH, which represents the number of annual deliveries completed per 

employee work hour. Id.

In the FY 2014 Plan, the Postal Service initially set the FY 2014 DPWH target at 43.3. 

FY 2013 Annual Report at 39. Later, in the FY 2014 Report, the Postal Service lowered 

the target to 42.9 to reflect the deferral of Phase 2 of the Network Rationalization 

Initiative. FY 2014 Annual Report at 39. In FY 2014, DPWH was 42.0, falling short of 

the revised FY 2014 target of 42.9. Id.; see Table I-1, supra. The Postal Service 

explained that it did not meet its DPWH performance target for a number of reasons:

• Overrun of an aggressive work hour plan.

• Failure to capture all planned savings from Phase I of the Network 

Rationalization Initiative.

• Additional work hours from Sunday package delivery and the holiday season.

• Extra work hours due to the hiring and training of city carrier assistants.

72

• Delay in implementing Phase 2 of the Network Rationalization Initiative.

73

FY 2014 Annual Report at 41; February 10 Response to CHIR No. 5, question 8.

 

71 In Docket No. ACR2010, the Postal Service filed the VOE survey results in Responses of the United States Postal Service to Questions 

1-22, 24-26 of Chairman’s Information Request No. 4, February 28, 2011, question 21b. (Docket No. ACR2010, Response to CHIR 

No. 4).

72 The annual turnover rate for city carrier assistants exceeds 40 percent. FY 2014 Annual Report at 41.

73 After comments were filed, the Postal Service announced that it will defer Phase 2 of the Network Rationalization Initiative to 2016 

to ensure prompt, reliable, and predicable service. See n.27, supra.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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The FY 2015 DPWH target is 42.4, a decrease from the FY 2014 target of 42.9.74 The 

Postal Service asserts that the FY 2015 DPWH target reflects cost-savings 

opportunities and anticipated growth in package workload. FY 2014 Annual Report

at 40. It contends that barring further external delays, there are initiatives in place to 

achieve FY 2015 planned savings. Id. These initiatives include implementing Phase 2 

of the Network Rationalization Initiative and continuing the POStPlan, load leveling, 

and voluntary centralized delivery programs. Response to CHIR No. 15, question 5.

Net Controllable Income (Loss) is a modified version of Net Income (Loss).75 The Net 

Controllable Income (Loss) value is calculated as Revenue minus (Expenses + Other 

Costs).76 It excludes expenses from workers’ compensation discount rate changes, 

actuarial changes of the price of goods or products, and the Postal Service Retiree 

Health Benefit Fund prefunding payments. FY 2014 Annual Report at 41.

The Postal Service initially set the FY 2014 Net Controllable Income (Loss) target in 

the FY 2014 Plan at $1.1 billion. FY 2013 Annual Report at 39. But as with the DPWH 

performance indicator, the Postal Service lowered the target in the FY 2014 Report

(to $0.9 billion) to reflect the deferral of Phase 2 of the Network Rationalization 

Initiative. FY 2014 Annual Report at 39.

In FY 2014, Net Controllable Income (Loss) was $1.37 billion, which was almost $0.4

billion better than the FY 2014 revised target of $0.9 billion. Id. The Postal Service 

explains that revenue increased from the prior year primarily due to the exigent 

surcharge on Market Dominant products implemented in January 2014. Id. at 41. It 

reports that Competitive products revenue increased by 9.1 percent while Standard 

Mail revenue increased by 3.0 percent. Id. It notes, however, that overall volume 

declined by 2.8 billion pieces. Id.

The Net Controllable Income (Loss) target for FY 2015 is $0.5 billion. Id. at 39.

2. Comments

The Public Representative observes that in FY 2014, DPWH increased slightly from 

41.6 to 42, which is consistent with increases in previous years. PR Comments at 13. 

Nonetheless, she notes that the Postal Service did not meet the lowered FY 2014 

target of 42.9. Id. She also points out a discrepancy of 491,169 delivery points 

between the FY 2014 numbers reported in the FY 2014 Annual Report and the Postal 

Service’s Response to CHIR No. 5. Id. She concludes that the Postal Service has fallen 

 

74 In a note included in its DPWH worksheet, the Postal Service stated that the DPWH FY 2015 target published in the FY 2014 Annual 

Report is misstated as 43.3 and should actually be 42.4. See February 18 Response to CHIR No. 5, question 7, “ChIR5.Q7.DPH FY15” 

Excel file, worksheet “FY 15 DPWH Summary” Notes section.

75 In previous years, the Postal Service has also called this performance indicator “Operating Income (Loss).” See, e.g., FY 2013 Annual 

Report at 39.

76 Other costs include Interest Income minus Interest Expense plus separation costs in FY 2012 and FY 2013.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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slightly short of the DPWH target in each year since it changed the performance 

indicator in FY 2011 from Total Factor Productivity to DPWH. Id. at 14.

The Public Representative observes that the Net Controllable Income (Loss) FY 2014 

result of $1.37 billion is a significant improvement compared to the $1 billion loss 

incurred in FY 2013. Id. at 12. She asserts that the primary reason for increased 

FY 2014 revenue is the $1.3 billion exigent surcharge on Market Dominant products, 

as well as revenue from higher volumes of Competitive products. Id. at 12-13. She 

notes that despite this increase, the FY 2015 Net Controllable Income (Loss) target of 

$0.5 billion is lower than the FY 2014 target, even after including expected cost 

savings from delayed implementation of Phase 2 of the Network Rationalization 

Initiative. Id.; see n.27, supra.

In its reply comments, the Postal Service explains that the discrepancy in the number 

of delivery points identified by the Public Representative arises because the delivery 

point data in the FY 2014 Annual Report are limited to active delivery points and 

exclude Post Office Box delivery routes. USPS Reply Comments at 4-5.

3. Commission Analysis

In FY 2014, the Postal Service exceeded the Net Controllable Income (Loss) target, 

but missed the DPWH target. For this reason, the Commission finds that the Postal 

Service partially met the Sustain Controllable Income performance goal in FY 2014.

During FY 2014, the Postal Service lowered FY 2014 targets for both the DPWH and 

Net Controllable Income (Loss) performance indicators to reflect its deferral of Phase 

2 of the Network Rationalization Initiative. In May 2015, the Postal Service 

announced that it will again defer Phase 2 of the Network Rationalization Initiative 

to FY 2016. See n.27, supra. The Commission is concerned that the Postal Service will 

also lower FY 2015 DPWH and Net Controllable Income (Loss) targets to reflect the 

additional delay. If the Postal Service revises FY 2015 targets for either the DPWH or

Net Controllable Income (Loss) performance indicator to reflect the delay in 

implementing Phase 2 of the Network Rationalization Initiative, the Postal Service 

should state this in the FY 2015 Report and explain other methods employed to improve 

progress toward the Sustain Controllable Income goal.

In this section, the Commission analyzes the DPWH and Net Controllable Income 

(Loss) performance indicators in more detail.

a. Deliveries per Work Hour Performance Indicator

DPWH compares the total number of deliveries of all types with the total number of 

work hours used in all employee categories. FY 2013 Review at 23. In FY 2014, DPWH 

improved compared to FY 2013 because total work hours decreased in FY 2014. 

Despite this improvement, the Postal Service did not meet its revised FY 2014 target.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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As the Public Representative observes, the Postal Service has never met the DPWH 

target. However, by reducing work hours annually since DPWH was introduced as a 

performance indicator in FY 2011, the Postal Service has made incremental DPWH 

increases and moved closer to its performance target.

For FY 2014, the Postal Service set a target of reducing total work hours by 24 

million by implementing the Network Rationalization Initiative. However, it reduced 

work hours by only 6.7 million.77 Including all work hour reduction initiatives, the 

FY 2014 Integrated Financial Plan projected a total work hour reduction of 36 

million.78 However, the Postal Service overran its work hour projections for other 

functions, partially offsetting the savings from the Network Rationalization Initiative. 

May 15 Response to CHIR No. 17, question 3. As a result, the net reduction in total 

work hours was only about 3 million hours. Id.

This decrease in the total number of work hours between FY 2013 and FY 2014 is 

broken down by function in Table III-9.

79 Larger work hour reductions in mail 

processing, customer service operations, and postmasters were partially offset by 

increased work hours in city delivery, rural delivery, vehicle maintenance, vehicle 

operations, building services, Customer Care Center, and supervisor customer 

service support.

 

77 May 15 Response to CHIR No. 17, question 3.

78 United States Postal Service, Fiscal Year 2014 Integrated Financial Plan, November 25, 2013, at 5 (FY 2014 Integrated Financial 

Plan).

79 The “Total Work Hours” row in Table III-9 shows a reduction of about 3 million work hours between FY 2013 and FY 2014 because it 

includes work hour overruns from other functions. See May 15 Response to CHIR No. 17, question 3.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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Table III-9

Work Hours by Function

Table III-10 illustrates work hours for selected functions included under “Other” in 

Table III-9. Work hours for Customer Care Center and supervisor customer service 

support increased because the Postal Service launched its fourth Customer Care 

Center in FY 2014 and transitioned from an outside supplier to internally operated 

centers. FY 2014 Annual Report at 58. Work hours from the vehicle maintenance, 

vehicle operations, and building services functions also increased between FY 2013 

and FY 2014.

Table III-10

Work Hours for Selected “Other” Functions

FY 2014 FY 2013 FY 2012 % Change

Function Work Hours (in thousands) 2014/2013 2013/2012

Vehicle Maintenance 7,519 6,956 6,546 8.1% 6.3%

Vehicle Operations 13,935 13,800 13,206 1.0% 4.5%

Building Services 27,385 26,219 25,434 4.4% 3.1%

Customer Care Center 2,502 1,406 514 78.0% 173.5%

Supervisor Customer 

Service Support

1,241 1,177 1,116 5.4% 5.5%

Source: February 18 Response to CHIR No. 5, question 7, “ChIR 5 Q 7 NWHR” Excel file.

Table III-11 shows selected city and rural delivery work hours. Most types of delivery 

work hours increased between FY 2012 and FY 2014. See FY 2014 Annual Report

FY 2014 FY 2013 FY 2012 % Change

Function Work Hours (in thousands) 2014/2013 2013/2012

City Delivery 397,989 393,986 389,219 1.0% 1.2%

Mail Processing 199,133 203,802 210,170 (2.3%) (3.0%)

Rural Delivery 179,466 176,697 177,715 1.6% (0.6%)

Customer Service 

Operations*

136,267 138,477 144,309 (1.6%) (4.0%)

Postmasters 52,171 56,028 58,429 (6.9%) (4.1%)

Other** 141,915 140,841 142,309 0.8% (1.0%)

Total Work Hours 1,106,941 1,109,830 1,122,151 (0.3%) (1.1%)

*Customer Service Operations includes window service at Post Offices.

**Includes Vehicle Maintenance, Vehicle Operations, Building Services, Customer Care Center, Supervisor Customer Service 

Support, Plant Maintenance, Operational Support, and Administration.

Source: February 18 Response to CHIR No. 5, question 7, “ChIR 5 Q 7 NWHR” Excel file.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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at 41. In contrast, work hours for City Delivery (Office Time) declined between 

FY 2012 and FY 2014.

Table III-11

Selected City and Rural Delivery Work Hours

FY 2014 FY 2013 FY 2012 % Change

Type of Delivery Work Hours (Work Hours in thousands) 2014/2013 2013/2012

City Delivery (Street Time) 272,645 270,328 268,454 0.9% 0.7%

Rural Delivery 179,466 176,697 177,715 1.6% (0.6%)

City Delivery (Office Time) 75,397 76,482 78,547 (1.4%) (2.6%)

Overtime 56,024 55,897 51,406 0.2% 8.7%

Supervisor Delivery Services 29,910 29,026 26,961 3.0% 7.7%

Other City Delivery* 9,311 7,862 7,248 18.4% 8.5%

Training – Delivery Services 3,866 3,468 1,184 11.5% 192.9%

*Includes work hours for Sunday delivery of Parcel Post routes.

Source: February 18 Response to CHIR No. 5, question 7, “ChIR 5 Q 7 NWHR” Excel file.

As shown in Tables III-9 and III-12, despite reductions in mail volume, both 

combined city and rural delivery work hours increased between FY 2012 and 

FY 2014 while total delivery costs decreased. While rural delivery costs increased 

each year during this time period, city delivery costs decreased each year.80 The 

largest factor in the reduction in city delivery costs was savings from the lower work 

hour wage of city carrier assistants. See FY 2013 Annual Report at 42.

 

80 Between FY 2013 and FY 2014, the number of rural routes increased. Between FY 2012 and FY 2014, rural delivery points made up 

the largest portion of new delivery points. See id. at 55.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

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Table III-12

Total Rural and City Delivery Costs by Fiscal Year

Type of Cost

Reconciled Total Costs ($ Billions) Cost per mail piece (Cents)

FY 2014 FY 2013 FY 2012 FY 2014 FY 2013 FY 2012

Rural Delivery Cost 6.98 6.78 6.75 0.0449 0.0428 0.0422

City Delivery Cost 15.21 15.63 15.83 0.0979 0.0988 0.0990

Total Delivery Cost 22.19 22.41 22.58 0.1428 0.1416 0.1412

FY Mail Volume (Billions)

155.37 158.30 159.86

Source: Costs—Library Reference USPS–FY14–5, December 29, 2015; Docket No. ACR2013, Library Reference USPS–FY13–5, 

December 27, 2013; Docket No. ACR2012, Library Reference USPS–FY12–5, December 28, 2012. Indirect costs are not included 

in reconciled total costs.

Mail Volumes—FY 2014 Financial Analysis at 75; Postal Regulatory Commission Analysis of United States Postal Service 

Financial Result and 10-K Statement for Fiscal Year 2013, March 18, 2014, at 44 (FY 2013 Financial Analysis); Docket 

No. ACR2012, Library Reference PRC–ACR2012–LR–1, March 28, 2013, in the “12 Summary_LR1” Excel file in the “Previous 

Classification” worksheet.

The Postal Service identifies higher work hour totals than planned as one reason why 

it did not meet the FY 2014 DPWH target. FY 2014 Annual Report at 41. It asserts that 

it has initiatives in place for it to meet the FY 2015 target. Id. However, the Postal 

Service projects that the magnitude of work hour reductions will diminish because 

major efficiency gains have already been achieved. FY 2015 Integrated Financial Plan

at 4. The Postal Service anticipates a limited improvement of only 5 million work 

hours, which includes savings from Phase 2 of the Network Rationalization Initiative 

and the continuation of the POStPlan and load leveling initiatives. Id. These savings 

will be further offset by the delay in implementing Phase 2 of the Network 

Rationalization Initiative, the effects of the expected increase in package volume, and 

the expansion of the Customer Care Center.

The Commission finds that DPWH is not an ideal performance indicator for the Sustain 

Controllable Income goal. Costs are more relevant than work hours to financial 

performance because actual expenses (costs for those work hours) are used and 

grouped into the expenses portion of the Net Controllable Income (Loss) 

calculation.81 Due to the simplicity of the DPWH components and calculation, its 

continued utility as a financial performance indicator appears limited. Moreover, the 

Postal Service has never achieved its DPWH target despite incremental increases 

 

81 Generally, the Net Controllable Income (Loss) calculation is a simple subtraction of revenue minus expenses and other costs, which 

include Interest Income minus Interest Expense plus separation costs in FY 2012 and FY 2013.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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each year since DPWH replaced Total Factor Productivity in FY 2011 as a financial 

performance indicator.82

The Postal Service identified completing Phase 2 of the Network Rationalization 

Initiative as a key component of its plan to meet the FY 2015 DPWH target. Thus, the 

Postal Service is unlikely to meet the FY 2015 DPWH target due to the delay in 

implementing Phase 2 of the Network Rationalization Initiative. The Commission 

recommends that the Postal Service replace DPWH or add other financial and 

productivity performance indicators to measure progress toward the Sustain 

Controllable Income goal. For example, the Postal Service states that it plans to invest 

$0.8 billion in mail processing equipment to “[focus] on improving existing 

equipment and projects that will improve productivity and reduce operating costs.” 

FY 2015 Integrated Financial Plan at 5. The Postal Service could add a performance 

indicator that measures how equipment investments improve productivity and 

reduce costs.

b. Net Controllable Income (Loss) Performance 

Indicator

Net Controllable Income (Loss) is calculated as Revenue minus (Expenses + Other 

Costs).83 As the Postal Service states in its Five-Year Business Plan,

84 labor costs are 

79 percent of its total cost base, and Federal benefits are in turn 48 percent of total 

labor costs. See Five-Year Business Plan at 12. The Postal Service projects rising labor 

costs and asserts that it has limited flexibility in reducing them. Id. at 5. In FY 2015, 

the Postal Service expects employee compensation and benefits to increase by $1.8 

billion, mainly due to contractually-required wage increases and cost of living 

adjustments. FY 2015 Integrated Financial Plan at 4. It also projects $0.3 billion in 

additional costs due to an increase in the Federal Employment Retirement System 

contribution, as well as a $0.4 billion increase in health care premiums. Id.

Table III-13 illustrates the components used to calculate Net Controllable Income 

(Loss) for fiscal years 2012 through 2014 and the target for FY 2015. Despite a 

planned increase in FY 2015 revenue, increased expenses in FY 2015 are projected to 

reduce Net Controllable Income (Loss). As a result, the FY 2015 target for Net 

Controllable Income (Loss) is $0.5 billion, which is $0.4 billion less than the FY 2014 

target.

 

82 In previous years, the Commission recommended using the TFP index rather than DPH as a measure of productivity because DPH 

does not recognize major workload components, such as collecting, processing, transporting, and sequencing of mail for delivery. 

FY 2013 Review at 26; FY 2012 ACD at 41; FY 2011 ACD at 57-58; FY 2010 ACD at 54.

83 Other costs include Interest Income minus Interest Expense plus separation costs in FY 2012 and FY 2013.

84 United States Postal Service, Five-Year Business Plan, April 16, 2013 (Five-Year Business Plan); https://about.usps.com/strategicplanning/five-year-business-plan-2012-2017.pdf.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

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Table III-13

Statement of Operations, Fiscal Years 2012-2015

In Billions ($)

FY 2015

Target

FY 2014

Result

FY 2013

Result

FY 2012

Result

Revenue 69.6 67.8 66.0 65.2

Expenses 69.0 66.3 66.7 67.5

Other Costs* 0.1 0.1 0.3 0.1

Net Controllable 

Income (Loss) ** 0.5 1.4 (1.0) (2.4)

*Other costs include Interest Income minus Interest Expense plus separation costs in FY 2012 

and FY 2013.

**Net controllable income (Loss) excludes retiree health benefits pre-funding and non-cash 

adjustments to workers’ compensation.

Net Controllable Income (Loss) = Revenue – (Expenses + Other Costs)

Source: FY 2015 Integrated Financial Plan at 1; FY 2014 Integrated Financial Plan at 1; United 

States Postal Service, Fiscal Year 2013 Integrated Financial Plan, November 23, 2012, at 1; 

FY 2014 Financial Analysis at 7; FY 2013 Financial Analysis at 3.

As part of its effort to regain financial self-sufficiency, the Postal Service proposed 

initiatives in its Five-Year Business Plan to help it achieve greater cost savings. Some 

of these initiatives focus on mail delivery, its largest labor expense, representing 49 

percent of the Postal Service’s total labor costs. Five-Year Business Plan at 12. For 

example, “Expand centralization of delivery points” is a key item for addressing its 

financial challenges. 85 The Postal Service contends that it can improve delivery 

efficiency by increasing the number of deliveries per carrier stop. FY 2014 Annual 

Report at 56. It asserts that converting deliveries to a more centralized mode reduces 

transportation costs, increases efficiency, and lowers operational work hours. Id.

In FY 2013, the Postal Service implemented voluntary centralization of new business 

delivery points. Id. at 16. It partly attributed its failure to meet its DPWH target that 

year to the fact that the centralization was voluntary, rather than mandatory. 

FY 2013 Annual Report at 42. Table III-14 illustrates the number of existing business 

door delivery points voluntarily converted to centralized delivery during fiscal years 

2013 and 2014, as well as targets for fiscal years 2013, 2014, and 2015.

 

85 In FY 2012, the Postal Service updated delivery mode costs. It estimated that the average annual costs for delivery points is $380 for 

door-to-door, $240 for curbline, and $170 for centralized delivery such as cluster boxes and apartment building mailboxes. United 

States Government Accountability Office, U.S. Postal Service Delivery Mode Conversions Could Yield Large Savings, but More Current 

Data Are Needed, May 2014, at 11, 13 (GAO-14-444) (GAO Delivery Mode Conversions Report). However, according to GAO, these 

estimates have limitations because they rely on cost estimates and data from a 1994 study. Id. at 13. GAO recommended that the 

Postal Service collect updated data on delivery mode costs and the potential savings of converting to less costly modes of delivery. Id.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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Table III-14

Voluntary Conversion of Existing Business Door* Delivery Points to

Centralized Delivery

FY 2015

Target

FY 2014 

Target

FY 2014

Results

FY 2013

Target

FY 2013 

Results

Number of Business Door* 

Delivery Points Converted 

to Centralized Delivery

81,988 34,652 48,787 279,718 43,333

*In the GAO Delivery Mode Conversions Report, the Postal Service referred to these converted delivery points as “Door” delivery 

points and in a FY 2014 ACR information request, it referred to these as delivery points with a mode other than centralized or 

curbline delivery.

Source: United States Postal Service Responses to Questions 8, 11, and 15-19 of Chairman’s Information Request No. 13, March 

19, 2015, questions 15b., 16b. (March 19 Response to CHIR No. 13); GAO Delivery Mode Conversions Report at 16-17. 

The Postal Service recently revised the Postal Operation Manual (POM) procedures 

for serving new delivery points added to the delivery network.86 It also updated 

procedures on centralized delivery equipment that may apply to current delivery 

points as well. Id. These revisions give the Postal Service autonomy in determining 

modes of delivery when adding new delivery points. Id. New business areas receive 

centralized delivery unless the Postal Service approves an exception. Id. Further, the 

default modes for new residential delivery points are curbline delivery and sidewalk 

delivery unless an exception is made or the new homes or businesses are within an 

established block.87 In that case they may receive the same type of delivery service as 

the older homes or businesses in that block. Id.

The Postal Service states that “Postal Service representatives are still required to 

meet with builders and developers early in the process to ensure the best choices are 

made and to assess if the mode of delivery directed to be put in place conforms to the 

policies of the Postal Service.” POM Modes of Delivery Revision. Despite these 

changes, the Postal Service notes that in FY 2014, it “did not set goals for new 

residential and business delivery points because the establishment of new delivery 

points reflects decisions of the construction industry which are not part of the Postal 

Service’s business strategies.”88 Nonetheless, the Postal Service did set a FY 2015 

target of 112,721 new centralized delivery points, which includes both business and 

residential delivery points. March 19 Responses to CHIR No. 13, question 15c.i.

In FY 2014, the Postal Service states it established 61,624 new centralized business 

delivery points and 751,029 new centralized residential delivery points.89 In 

 

86 United States Postal Service, POM Revision: Modes of Delivery and Delivery Equipment, April 5, 2012, http://about.usps.com/postalbulletin/2012/pb22334/html/updt_001.htm (POM Modes of Delivery Revision).

87 See id.; GAO Delivery Mode Conversions Report at 15-16.

88 March 19 Response to CHIR No. 13, question 15c.

89 May 20 Response to CHIR No. 17.
Analysis of FY 2014 Performance Report Analysis of Postal Service Performance

and FY 2015 Performance Plan

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addition, it converted 0.54 percent of all established residential door-to-door 

delivery points and 1.27 percent of all established business or other door-to-door 

delivery points to centralized delivery.90

The Postal Service’s goal of increasing reliance on centralized delivery is 

incorporated into its Five-Year Business Plan, which lists the savings achieved from 

converting curbline and door-to-door delivery points to centralized delivery. 

Five-Year Business Plan at 21. In contrast, in the FY 2014 Annual Report, the Postal 

Service states that it voluntarily converted deliveries to a “more efficient delivery 

mode” instead of to centralized delivery. FY 2014 Annual Report at 56; see also

Response to March 19 CHIR No. 13, questions 16a., 16b. “More efficient delivery 

mode” means that the Postal Service converted delivery points to modes other than 

centralized delivery, such as curbline delivery. Because the Five-Year Business Plan

highlighted centralized delivery as a key component to it achieving its delivery cost 

savings, the Postal Service should discuss how and whether it will achieve its 

expected delivery costs savings identified in its Five-Year Business Plan. In its FY 2015

Report and FY 2016 Plan, the Postal Service should compare the number of new and 

existing delivery points converted to centralized delivery, discuss the differences 

between “more efficient” delivery modes and centralized delivery modes, and explain 

how this aligns with its expected delivery cost savings in its Five-Year Business Plan.

 

90 March 19 Response to CHIR No. 13, question 18.
Analysis of FY 2014 Performance Report Strategic Initiatives

and FY 2015 Performance Plan

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CHAPTER 4: STRATEGIC INITIATIVES

A. Background

1. Strategic Initiatives

Strategic initiatives are temporary projects designed to help the Postal Service 

achieve its performance goals. Reviewing the results of these projects clarifies the 

connection between performance goals and performance indicators, as well as the 

actions necessary to achieve performance goals. USPS Reply Comments at 4; FY 2013 

Review at 31. The Postal Service introduced strategic initiatives in FY 2010 to 

respond to the Commission’s request that the Postal Service provide more 

information on the performance of individual programs and how they relate to the 

performance goals.91

Strategic initiatives support the performance goals. FY 2014 Annual Report at 72. 

Tables IV-1 and IV-2 link each strategic initiative to the performance goal it supports. 

For example, the Optimize Network Operations initiative helps achieve the Deliver 

High-Quality Services goal. Id. at 73. Some strategic initiatives have “cross-portfolio 

performance indicators” that measure the performance of strategic initiatives. 

FY 2013 Review at 35; see Tables IV-4 and IV-5.

Strategic initiatives have evolved since the Postal Service introduced them in

FY 2010. In FY 2010 and FY 2011, the Postal Service focused on nine strategic 

initiatives it selected based on their strategic importance and degree of attention 

required over the next few years. FY 2010 Comprehensive Statement at 51. In

contrast, in FY 2012, the Postal Service developed 23 new strategic initiatives “to 

close the gap between revenue and cost over the next five years.”92 The Postal 

Service explains that the portfolio of strategic initiatives “is dynamic and will change 

as priorities and resources require, and as programs are completed or adjusted 

based on external events.” Id.

Although the strategic initiatives have changed each year since FY 2012, there are 

some similarities that can be compared across years. For example, in its FY 2014 

Annual Report, the Postal Service provides a table listing each FY 2014 strategic 

initiative, the performance goal it supports, and its relationship to the FY 2013 

strategic initiatives. FY 2014 Annual Report at 73. This table is reproduced below in 

 

91 Docket No. ACR2010, Library Reference USPS–FY10–17, December 29, 2010; United States Postal Service, 2010 Comprehensive 

Statement on Postal Operations, December 29, 2010, at 51 (FY 2010 Comprehensive Statement).

92 FY 2012 Annual Report at 38. In FY 2012, the Postal Service began using the term “strategic change initiatives” instead of “strategic 

initiatives.” However, it reverted to using “strategic initiatives” in FY 2013 and FY 2014. In its FY 2013 Review, the Commission 

concluded that “strategic change initiatives” and “strategic initiatives” appear to have the same meaning. FY 2013 Review at 31, n.79. 

To ensure consistency and clarity in this chapter, this Analysis uses the term “strategic initiatives.”
Analysis of FY 2014 Performance Report Strategic Initiatives

and FY 2015 Performance Plan

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Table IV-1. The “Change From Prior Year” column identifies any changes to strategic 

initiatives from the prior fiscal year. These changes are:

 New — Strategic initiative was newly created to address an emerging 

business need.

 Continued — Strategic initiative continued with minimal changes from the 

prior fiscal year.

 Closed — Strategic initiative was closed as a result of a completed activity or 

change in business need.

 Refined — Strategic initiative was refined to reflect the current business 

situation and achieve greater alignment with organizational goals.

 Combined — Strategic initiative was combined with a similar initiative(s) to 

more accurately reflect the current business situation and provide greater 

alignment organizationally.

FY 2014 Annual Report at 72; March 30 Response to CHIR No. 13, question 28.
Analysis of FY 2014 Performance Report Strategic Initiatives

and FY 2015 Performance Plan

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Table IV-1

FY 2013 and FY 2014 Strategic Initiatives Comparison

Performance 

Goal FY 2013 Strategic Initiatives Change From Prior Year FY 2014 Strategic Initiatives

Deliver HighQuality 

Services

(% on-time)

Optimize Network Operations Continued Optimize Network Operations

Optimize Delivery Operations Continued Optimize Delivery Operations

Transform Access Continued Transform Access

Optimize Facility Footprint Continued Optimize Facility Footprint

Build a World-Class Package Platform Continued Build a World-Class Package Platform

Provide 

Excellent 

Customer 

Experiences

Improve Customer Experience Continued Improve Customer Experience

Streamline Commercial Mail Acceptance and 

Enterprise Payment

Continued Streamline Commercial Mail Acceptance 

and Enterprise Payment

Achieve 6-Sigma IT System Reliability Refined Business Innovation Through IT

Achieve 100% Product Visibility Continued Achieve 100% Product Visibility

Ensure a Safe 

Workplace 

and Engaged 

Workforce

Analyze Workforce Needs and Manage the 

Change

Combined Building the Workforce of the Future

Develop Labor Agreements to Build the 

Future Workforce

Improve Employee Availability

Resolve Disputes Effectively

Establish Postal Service Health Care Plan

Leadership Identification and Development

Sustain 

Controllable 

Income

Build Funnel and Launch Innovation Refined Manage Funnel and Launch Innovations

Acquire, Grow, and Retain Customers Refined Customer Growth and Retention

Market New and Existing Products Refined Market New and Existing Services

Grow Small Business Revenue Continued Grow Small Business Revenue

Integrate Costing and Pricing for Profitable 

Growth

Refined Greenfield Costing

Establish the Digital Platform Continued Establish the Digital Platform

Obtain Payment Card Industry Compliance Continued Obtain Payment Card Industry Compliance

Achieve 100% Customer and Revenue 

Visibility

Continued Achieve 100% Customer and Revenue 

Visibility

Enhance Enterprise Risk Management 

Capabilities

Continued Enhance Enterprise Risk Management 

Capabilities

New Revenue Assurance

Source: FY 2014 Annual Report at 73.

In response to an information request, the Postal Service provided a similar 

comparison of the FY 2014 and FY 2015 strategic initiatives. Table IV-2 illustrates

the comparison for those two fiscal years.
Analysis of FY 2014 Performance Report Strategic Initiatives

and FY 2015 Performance Plan

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Table IV-2

FY 2014 and FY 2015 Strategic Initiatives Comparison

Performance 

Goal FY 2014 Strategic Initiatives

Change From 

Prior Year FY 2015 Strategic Initiatives

Deliver HighQuality 

Services

(% on-time)

Optimize Network Operations Continued Optimize Network Operations

Optimize Delivery Operations Continued Optimize Delivery Operations

Transform Access Continued Transform Access

Optimize Facility Footprint Continued Optimize Facility Footprint

Build a World-Class Package Platform Continued Build a World-Class Package Platform

New Modernize Delivery

Provide 

Excellent 

Customer 

Experiences

Improve Customer Experience Continued Improve Customer Experience

Streamline Commercial Mail Acceptance 

and Enterprise Payment Combined Leverage Technology and Data to Drive 

Business Innovation Through IT Business Value

Achieve 100% Product Visibility

Ensure a Safe 

Workplace 

and Engaged 

Workforce

Building the Workforce of the Future Continued Building the Workforce of the Future

New Building an Integrated Human Resource 

System

Sustain 

Controllable 

Income

Manage Funnel and Launch Innovations

Establish the Digital Platform Combined Accelerate Innovation

Customer Growth and Retention Refined Sales Excellence

Market New and Existing Services Closed

Grow Small Business Revenue Closed

New International Competitiveness

Obtain Payment Card Industry 

Compliance Closed

Achieve 100% Customer and Revenue 

Visibility Continued Achieve 100% Customer and Revenue Visibility

Enhance Enterprise Risk Management 

Capabilities Continued Enhance Enterprise Risk Management Capabilities

Revenue Assurance Continued Revenue Assurance

Greenfield Costing Continued Greenfield Costing

Source: March 30 Response to CHIR No. 13, question 28b.

2. Cross-Portfolio Performance Indicators

In FY 2012, the Postal Service developed 10 cross-portfolio performance indicators 

to measure strategic initiative performance. FY 2013 Review at 35. Most crossportfolio performance indicators have remained the same since FY 2012. Table IV-3

compares targets and results for the cross-portfolio performance indicators from 

FY 2012 through FY 2015 Planned.
Analysis of FY 2014 Performance Report Strategic Initiatives

and FY 2015 Performance Plan

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Table IV-3

Cross-Portfolio Performance Indicators

Cross-Portfolio

Performance Indicator

FY TARGET

FY RESULT

FY Target Not Met

FY TARGET

2015 2014 2014 2013 2012 2013 2012

Total DRIVE* Revenue ($ Billions) n/a $5.4 $6.5 $5.1 $0.81 $4.2 $0.94

Estimated Value of Closed Sales and Churn 

Reduction ($ Billions) $5.45 n/a

Total DRIVE* Cost Savings ($ Billions) $0.75 $1.13 #

$0.84 $0.87 $0.35 $1.0 $0.58

Total Work Hours Reduced (Millions) ** 24 6.7 9.8 1.9 12.7 6.0

Total Headcount Reduction (Full-Time Equivalents) n/a 67,000 #

n/a 36,535 29,390 43,000 67,080

Total Facility Square Feet Reduced (Millions) n/a 2.2 2.2 3.0 3.3 1.2 2.2

Gross Consideration (Facilities) ($ Millions) $175 n/a

Commercial Mail in Full Service IMb (%) 85.0% 80.0% #

79.3% 64.0% 45.0% 60.0% 48.0%

IMb Adoption Rate (%) n/a 94.0% #

97.0% 95.1% 81.0% 95.0% 80.0%

Package Scanning Rate (%) ** 97.0% #

96.2% 95.1% 94.0% 98.0% 94.0%

 Shaded result denotes target not met in fiscal year under review. Note: For ease of multi-year review, figures in Table IV-3 have been rounded. In the FY 2012 

Annual Report, the CEM Composite Metric was included with the cross-portfolio performance indicators. In this Analysis, the CEM Composite Metric is shown in 

Chapter 1, Table I-1 rather than Table IV-3.

n/a – not available; no fiscal year performance result or target.

*Delivering Results, Innovation, Value, and Efficiency (DRIVE) is a structured management process for improving business strategy development and progress toward 

performance goals. FY 2014 Annual Report at 72. DRIVE incorporates measurement, analysis, and evaluation of a portfolio of strategic initiatives. Id.

#

Target changed (or later identified) from that originally provided in ACR filing. The Postal Service indicated in its FY 2013 ACR that some FY 2014 targets may change 

due to legislative activity. See Docket No. ACR2013, Response to CHIR No. 15. However, in its FY 2014 ACR, the Postal Service states it eliminated the Total Headcount 

Reduction cross-portfolio performance indicator rather than change its target. Some FY 2014 targets did change, and Table IV-3 reflects those updates provided in its 

FY 2014 ACR. The original FY 2014 targets provided in its FY 2013 ACR were: $1.53 billion for Total DRIVE Cost Savings, 97.0% for both Commercial Mail in Full Service 

IMb and IMb Adoption Rate, and 96.5% for Package Scanning Rate. Compare Docket No. ACR2013, Response to CHIR No. 15, question 5 with March 11 Response to 

CHIR No. 13, question 1.

**In its February 10 Response to CHIR No. 5, question 9, the Postal Service initially stated that these cross-portfolio performance indicators were “Not in DRIVE for 

FY15.” However, in its March 11 Response to CHIR No 13, question 3, Library Reference USPS–FY14–NP39, March 11, 2015, it provided FY 2015 targets under seal.

Sources: February 10 Response to CHIR No. 5, question 9; March 11 Response to CHIR No. 13, questions 1, 3, Library Reference USPS–FY14–NP39; March 30 

Response to CHIR No. 13, question 28c.; May 15 Response to CHIR No. 17, question 3 (corrected FY 2014 Total Work Hours Reduced from 7.7 to 6.7 million); Docket 

No. ACR2013, Response to CHIR No. 15, question 5; Docket No. ACR2013, Response to CHIR No. 10, question 6; FY 2012 Annual Report at 39.

Tables IV-4 and IV-5 list the FY 2014 and FY 2015 strategic initiatives, respectively, 

with their corresponding cross-portfolio performance indicators.
Analysis of FY 2014 Performance Report Strategic Initiatives

and FY 2015 Performance Plan

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Table IV-4

FY 2014 Strategic Initiatives and Cross-Portfolio Performance Indicators

Performance Goal FY 2014 Strategic Initiatives FY 2014 Cross-Portfolio

Performance Indicator(s)

Deliver High-Quality 

Services (% on-time)

Optimize Network Operations

Total DRIVE Cost Savings;

Total Work Hours Reduced 

Optimize Delivery Operations Total DRIVE Cost Savings 

Transform Access Total DRIVE Cost Savings

Optimize Facility Footprint Total DRIVE Revenue; 

Total Facility Square Feet Reduced

Build a World-Class Package Platform None Provided

Provide Excellent Customer 

Experiences

Improve Customer Experience None Provided

Streamline Commercial Mail Acceptance 

and Enterprise Payment None Provided

Business Innovation through IT None Provided

Achieve 100% Product Visibility

Commercial Mail in Full Service IMb;

Package Scanning Rate;

IMb Adoption Rate

Ensure a Safe Workplace 

and Engage Workforce Building the Workforce of the Future None Provided

Sustain Controllable 

Income

Manage Funnel and Launch Innovations None Provided

Customer Growth and Retention Total DRIVE Revenue

Market New and Existing Services None Provided

Grow Small Business Revenue None Provided

Greenfield Costing None Provided

Establish the Digital Platform None Provided

Obtain Payment Card Industry Compliance None Provided

Achieve 100% Customer and Revenue 

Visibility

None Provided

Enhance Enterprise Risk Management 

Capabilities None Provided

Revenue Assurance None Provided

Source: March 11 Response to CHIR No. 13, question 26.
Analysis of FY 2014 Performance Report Strategic Initiatives

and FY 2015 Performance Plan

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Table IV-5

FY 2015 Strategic Initiatives and Cross-Portfolio Performance Indicators

Performance Goal* FY 2015 Strategic Initiatives FY 2015 Cross-Portfolio 

Performance Indicator(s)

Service

Optimize Network Operations

Total Work Hours Reduced;

Total DRIVE Cost Savings 

Optimize Delivery Operations Total DRIVE Cost Savings

Transform Access None Provided

Optimize Facility Footprint Gross Consideration (Facilities)

Build a World-Class Package Platform None Provided

Modernize Delivery Total DRIVE Cost Savings

Customer 

Experience

Improve Customer Experience None Provided

Leverage Technology and Data to Drive 

Business Value

Commercial Mail in Full Service IMb;

Package Scanning Rate

Workplace 

Building the Workforce of the Future Total DRIVE Cost Savings

Building an Integrated Human Resource 

System None Provided

Financial

Accelerate Innovation None Provided

Sales Excellence Estimated Value of Closed Sales and 

Churn Reduction

International Competitiveness None Provided

Achieve 100% Customer and Revenue 

Visibility None Provided

Enhance Enterprise Risk Management 

Capabilities None Provided

Revenue Assurance None Provided

Greenfield Costing None Provided

*The naming convention of the Postal Service’s performance goals vary slightly from year to year in its Annual Reports. The Postal Service identifies the 

FY 2015 strategic initiatives and cross-portfolio performance indicators by performance goal in its response to the information request below. Thus, the 

performance goal names listed in Table IV-5 differ from the performance goal names listed in other tables in this Analysis.

Source: March 30 Response to CHIR No. 13, questions 28b., 28c.

B. Comments

The Public Representative asserts that the Postal Service’s presentation of strategic 

initiatives improved from last year. PR Comments at 16. However, she criticizes the 

Postal Service for including the strategic initiatives in its FY 2014 Annual Report 

rather than in the FY 2014 Report and FY 2015 Plan. Id. She concludes that the 

strategic initiatives “do little to enlighten the reader of the overall intended 

improvement sought by the initiative or the progress of each initiative.” Id. at 17.
Analysis of FY 2014 Performance Report Strategic Initiatives

and FY 2015 Performance Plan

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The Postal Service responds that the strategic initiatives are designed to help the 

Postal Service achieve its performance goals. USPS Reply Comments at 4. It contends 

that they are part of a broader strategic plan to achieve these goals and should not be 

included in performance plans and program performance reports. Id. The Postal 

Service argues that because strategic initiatives function as projects rather than 

performance indicators, they are appropriately presented and discussed in the FY 

2014 Annual Report but not as part of the FY 2014 Report and FY 2015 Plan. Id.

C. Commission Analysis

1. Purpose of Strategic Initiatives

The Postal Service argues that strategic initiatives are not part of performance plans 

and program performance reports. Notwithstanding this assertion, the relationship 

among strategic initiatives, performance plans, and program performance reports is 

well established. Since the Postal Service introduced strategic initiatives in FY 2010, 

the Commission has consistently reviewed them to facilitate its evaluation of 

performance goals under 39 U.S.C. § 3653(d).93

Strategic initiatives are intertwined with performance plans and program 

performance reports. The Postal Service created them for the specific purpose of 

addressing the Commission’s concerns about the sufficiency of performance plans 

and program performance reports. FY 2010 Comprehensive Statement at 51. Strategic 

initiatives were originally “designed to help clarify the connection between 

performance goals and the actions necessary to achieve them.” FY 2013 Review at 31. 

The Postal Service acknowledges that they are the focus of its efforts to meet its 

performance goals. FY 2014 Annual Report at 72. Thus, the Commission evaluates 

strategic initiatives as part of its review of performance plans and program 

performance reports and uses the strategic initiatives to inform its evaluation of 

whether performance goals were met.

Moreover, strategic initiatives cannot stand alone. They lack context if they do not 

relate back to a performance goal, which are part of performance plans and program 

performance reports. For these reasons, the Commission finds that strategic initiatives 

should be evaluated in conjunction with performance plans and program performance 

reports.

2. Observations and Recommendations

The Commission finds that the presentation of strategic initiatives in FY 2014 improved 

compared to FY 2013. Strategic initiatives are difficult to compare from one year to 

the next because they have regularly changed. In the FY 2014 Annual Report, the 

Postal Service includes a table similar to Table IV-1, supra. See FY 2014 Annual 

Report at 73. This table links each strategic initiative to the performance goal it 

 

93 See FY 2010 ACD at 55; FY 2011 ACD at 58; FY 2012 ACD at 44-46; FY 2013 Review at 31, 37.
Analysis of FY 2014 Performance Report Strategic Initiatives

and FY 2015 Performance Plan

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supports and compares FY 2013 and FY 2014 strategic initiatives. The “Change from 

Prior Year” column is a substantial improvement over the strategic initiative 

presentations in past Annual Reports because the column illustrates how strategic 

initiatives changed from FY 2013 to FY 2014. See id. The Postal Service provided a 

similar table comparing FY 2014 and FY 2015 strategic initiatives in response to an 

information request.94 The Commission recommends that the Postal Service include 

updated versions of the same tables in the FY 2015 Annual Report. These tables should 

compare strategic initiatives between FY 2014 and FY 2015 as well as FY 2015 and 

FY 2016.

The Public Representative asserts that the Postal Service should have discussed 

strategic initiatives in its FY 2014 Report and FY 2015 Plan rather than the FY 2014

Annual Report. Because strategic initiatives are part of performance plans and 

program performance reports, the Postal Service should discuss them in those 

documents. Nevertheless, discussing strategic initiatives in the FY 2014 Annual 

Report did not impede the Commission’s review. The Commission is able to evaluate 

whether performance goals were met as long as the information on strategic 

initiatives is available and complete.

The Commission notes that cross-portfolio performance indicators may not be the 

best way to measure the performance of each strategic initiative. As Tables IV-4 and 

IV-5 illustrate, many strategic initiatives do not have a corresponding cross-portfolio 

performance indicator. Also, some cross-portfolio performance indicators are linked 

to multiple strategic initiatives, which may mask outcomes for those strategic 

initiatives.

For example, the “Total DRIVE Cost Savings” cross-portfolio performance indicator 

will measure performance for four strategic initiatives in FY 2015: Optimize Network 

Operations, Optimize Delivery Operations, Modernize Delivery, and Building the 

Workforce of the Future. See Table IV-5. However, it is unclear how cost savings are 

to be distributed among the four strategic initiatives. This reduces the utility of the 

"Total DRIVE Cost Savings" cross-portfolio performance indicator.

The Commission recommends that the Postal Service establish performance measures 

for each strategic initiative. Otherwise, the Postal Service may have difficulty 

measuring progress for strategic initiatives that do not have a corresponding 

performance measure. The Commission also suggests that the Postal Service replace 

cross-portfolio performance indicators with performance measures that link to only 

one strategic initiative. In the FY 2015 Annual Report, it would be helpful to include 

tables similar to Tables IV-4 and IV-5 for the FY 2015 and FY 2016 strategic initiatives 

that link each strategic initiative with a unique performance measure.

 

94 March 30 Response to CHIR No. 13, question 28b.