a

GAO

United States Government Accountability Office

Report to the Chairman, Committee on 

Governmental Affairs, U.S. Senate

July 2004 U.S. POSTAL 

SERVICE

USPS Needs to Clearly 

Communicate How 

Postal Services May 

Be Affected by Its 

Retail Optimization 

Plans

GAO-04-803

This report was initially issued on July 13, 2004. It was reissued on July 16, 2004, with 

the following changes to page 3, paragraph 1, sentences 3 and 4:

“about 95 percent of USPS’s customers” was changed to “most of USPS’s 

customers”

“about 40 percent of customers” was changed to “about 32 percent of 

customers”

“about 33 percent of customers” was changed to “about 41 percent of 

customers”

In addition, in the first line of figure 7 on page 23, the following change was made:

“Provided mail delivery to almost 37 million addresses” was changed to “Provided mail 

delivery to almost 35 million addresses”
www.gao.gov/cgi-bin/getrpt?GAO-04-803.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Mark Goldstein 

at (202) 512-2834 or goldsteinm@gao.gov. 

Highlights of GAO-04-803, a report to the 

Chairman, Committee on Governmental 

Affairs, U.S. Senate 

July 2004

U.S. POSTAL SERVICE

USPS Needs to Clearly Communicate 

How Postal Services May Be Affected by 

Its Retail Optimization Plans 

USPS provides its customers, regardless of where they live, with services 

that include mail delivery at no charge and access to retail services. 

However, differences exist in how, when, and where USPS provides these 

services. These differences have always existed due to the nation’s 

geographic diversity and changes in technology, transportation, and 

communications. Universal postal service is not defined by law, but 

appropriations legislation requires 6-day mail delivery and prohibits USPS 

from closing small, rural post offices. Delivery and retail decisions are made 

primarily by local USPS officials with overarching guidance provided by 

national policies and procedures. Local decisions are based on cost and 

service factors, including the number and location of deliveries, quality of 

roads, employee safety, and mail volume. 

Postal Services Have Been Provided in Different Ways Over Time 

USPS has taken actions, and is planning future actions, to improve the 

efficiency of its delivery and retail networks. Overall, customers in urban 

and rural areas will probably not see significant changes in delivery services 

since most changes are focused on operational improvements. On the retail 

side, USPS plans to provide more cost-effective and convenient service by 

developing new, low-cost alternatives; moving stamp-only transactions away 

from post office counters; and optimizing its retail network. USPS’s retail 

optimization involves tailoring services to communities’ needs and replacing 

“redundant, low-value access points with alternative access methods.” It 

remains unclear how customers in rural areas will be affected by these retail 

initiatives since most are planned for high-growth, high-density areas. 

Generally, postal customers are satisfied with the services provided to them. 

The issues that have raised the greatest concerns from customers include 

inconsistent mail delivery and the threat of post office closings or reductions 

in post office hours. Also, concerns have been raised about USPS’s limited 

communication regarding its planned changes to its networks. USPS’s retail 

optimization could be an opportunity for USPS to reduce its costs while 

improving customer service. However, USPS needs to provide additional 

transparency and accountability mechanisms to better communicate its 

retail optimization plans and raise stakeholders’ confidence that decisions 

will be made in a fair, rational, and fact-based manner. 

A key element of the ongoing 

postal reform deliberations before 

Congress is the U.S. Postal 

Service’s (USPS) ability to carry 

out its mission of providing 

universal mail delivery and retail 

services at reasonable rates. Many 

are concerned that USPS’s mission 

is at risk in the current operating 

environment of increasing 

competition and decreasing mail 

volumes. Preserving universal 

service, particularly in rural areas, 

is a goal of postal reform. GAO 

was asked to discuss (1) how USPS 

provides universal mail delivery 

services and access to postal 

services in both rural and urban 

areas; (2) what changes USPS is 

making or plans to make related to 

providing postal services, including 

changes that may affect rural areas; 

and (3) what are the major issues 

that have been raised related to 

how USPS provides postal services. 

To provide convenient and costeffective services, GAO is 

recommending that the Postmaster 

General provide improved 

transparency and communication 

to Congress and other stakeholders 

through additional information 

related to its retail optimization 

initiative, including the criteria 

USPS will use to guide its 

decisions; USPS’s process for 

involving stakeholders; the impact 

on customers; and the time frames 

for implementation. USPS agreed 

to review its communication 

processes, but not to specify its 

criteria or time frames. 
Page i GAO-04-803 USPS Delivery and Retail Services

Contents

Letter 1

Results in Brief 3

Background 5

Differences Exist in How USPS Provides Delivery and Retail 

Services 9

Actions to Improve Delivery and Retail Services 26

Key Issues Include Delivery Inconsistencies and the Uncertain 

Future of Retail Network 30

Conclusions 37

Recommendation for Executive Action 37

Agency Comments and Our Evaluation 38

Appendixes

Appendix I: Objectives, Scope, and Methodology 40

Appendix II: Number of Post Offices by State, Year-end 2003 42

Appendix III: Agency Comments from the United States Postal Service 44

Tables Table 1: Key Events in Postal History, 1775-2004 6

Table 2: Key Delivery Decisions Made by Local Officials 10

Table 3: USPS Policies and Procedures for Establishing Carrier 

Routes 12

Table 4: Information on Selected Route Types, Fiscal Year 2003 13

Table 5: Post Offices, Stations, and Branches: Fiscal Year 1980 

Compared with Fiscal Year 2003 24

Table 6: Customer Issues Documented by USPS, First 2 Quarters of 

Fiscal Year 2004 32

Figures Figure 1: Number of Post Offices per Capita Has Been 

Decreasing 8

Figure 2: Rural Routes Cumulatively Have Grown at a Much 

Greater Rate Than City Routes 14

Figure 3: Rural Routes Are Becoming More Dense 15

Figure 4: USPS’s Different Modes of Delivery, Fiscal Year 2003 16

Figure 5: Modes of Delivery, Fiscal Year 2003 18

Figure 6: Overview of the Retail Network 20

Figure 7: Retail Alternatives Moving Away from Traditional Post 

Offices 22
Contents

Page ii GAO-04-803 USPS Delivery and Retail Services

Abbreviations

NALC National Association of Letter Carriers

NDCBU Neighborhood Delivery Collection Box Unit

NRLCA National Rural Letter Carriers Association

PRC Postal Rate Commission

USPS United States Postal Service

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.
Page 1 GAO-04-803 USPS Delivery and Retail Services

United States Government Accountability Office

Washington, D.C. 20548

A

July 13, 2004 Letr

The Honorable Susan M. Collins

Chairman, Committee on Governmental Affairs

United States Senate

Dear Chairman Collins:

The challenges facing the U.S. Postal Service (USPS)—that is, record 

declines in mail volumes for some high-margin products, difficulties in 

controlling costs and enhancing revenues, and increases in competition—

are not temporary problems that will fade away. Nevertheless, a common 

message voiced by many postal stakeholders is that although change is 

needed to address these and other significant challenges, the concept of 

universal postal service needs to be preserved. These stakeholders believe 

that providing universal postal service is the cornerstone of USPS’s 

mission; is essential to the nation’s communications network and economy; 

and is vital to the American people, many of whom rely upon the 

consistency of mail delivery and convenient access to the retail postal 

network. The concept of universal postal service, however, is not clearly 

defined in law and has evolved over time with changes in technology, 

transportation, and communications. These changes are continuing today, 

raising some concerns about how they may affect future postal services—

including those in rural areas. USPS has noted that rural delivery continues 

to provide a vital link between urban and rural America. Some Members of 

Congress have stated that post offices are fundamental to the identity of 

small towns, providing them with an economic and social anchor.

A key discussion point in ongoing postal reform deliberations in Congress 

is USPS’s ability to carry out its mission of providing universal mail delivery 

and postal retail services at reasonable rates. In April 2001, we reported on 

the financial, operational, and human capital challenges that threaten 

USPS’s ability to carry out its mission in the 21st century and remain selfsupporting through postal revenues. We placed USPS’s transformation 

efforts and long-term outlook on our high-risk list and recommended that 

USPS develop a comprehensive plan to determine the actions needed to 

address its major challenges. USPS issued its Transformation Plan a year 

later, which identified steps to guide future USPS operations. This plan 

included specific actions aimed at making the delivery and retail networks 

more efficient and convenient for customers, including promoting more 

efficient delivery routes and utilizing low-cost retail transactions. The 

President also recognized the importance of USPS’s role and mission and 
Page 2 GAO-04-803 USPS Delivery and Retail Services

established the President’s Commission on the United States Postal Service 

(the President’s Commission) to examine USPS’s future. The President’s 

Commission issued a report in July 2003 that put forward a proposed vision 

for USPS and recommendations to ensure the future viability of postal 

services.1

 The report emphasized the importance of maintaining 6-day-aweek, affordable, universal postal service and acknowledged that USPS’s 

mission is at risk in the current operating environment of increasing 

competition and decreasing mail volumes. In addition, Congress is also 

interested in maintaining a high level of postal services for the American 

people and has held a number of hearings recently on postal reform issues. 

We testified in November 2003, January 2004, and March 2004 about the 

information in the report issued by the President’s Commission, the 

challenges facing USPS in carrying out its mission, and the key elements of 

postal reform.2

In response to your request, this report addresses three objectives: (1) how 

does USPS provide universal mail delivery service and access to postal 

services in both rural and urban areas; (2) what are the changes USPS is 

making and planning to make related to providing postal services, 

including changes that may affect rural areas; and (3) what are the major 

issues that have been raised related to how USPS provides postal services?

Our review of USPS’s delivery and retail services is based upon an analysis 

of USPS policies and procedures; the roles and responsibilities of postal 

officials involved in making delivery and retail decisions; delivery and retail 

data provided to us from USPS; proposed changes in related documents, 

such as the Transformation Plan and the President’s Commission’s report 

on the U.S. Postal Service; and interviews with key postal stakeholders, 

including USPS officials, representatives from employee unions and 

management associations, and the Postal Rate Commission (PRC). We 

assessed the reliability of the data provided to us from USPS and found 

them to be sufficient for our purposes of providing a basic description of 

USPS’s delivery and retail networks. A more detailed discussion of our 

1

The President’s Commission on the United States Postal Service, Embracing the Future: 

Making the Tough Choices to Preserve Universal Mail Service (Washington, D.C.: July 31, 

2003).

2

U.S. General Accounting Office, U.S. Postal Service: Bold Action Needed to Continue 

Progress on Postal Transformation, GAO-04-108T (Washington, D.C.: Nov. 5, 2003); U.S. 

Postal Service: Key Elements of Comprehensive Postal Reform, GAO-04-397T (Washington, 

D.C.: Jan. 28, 2004); and U.S. Postal Service: Key Reasons for Postal Reform, GAO-04-565T

(Washington, D.C.: Mar. 23, 2004).
Page 3 GAO-04-803 USPS Delivery and Retail Services

objectives, scope, and methodology is included in appendix I. We 

conducted our review at USPS headquarters in Washington, D.C., between 

June 2003 and June 2004 in accordance with generally accepted 

government auditing standards. We requested comments from USPS on a 

draft of this report, and its comments are discussed later in this report and 

reproduced in appendix III.

Results in Brief USPS customers are provided, regardless of where they live, with postal 

services that include mail delivery at no charge and access to USPS’s retail 

services. Differences exist, however, in how USPS provides these services, 

particularly in how, when, and where mail delivery service is provided and 

how customers have access to the postal retail network. For example, 

although most of USPS’s customers receive delivery service 6 days a week, 

deliveries are made less frequently to businesses that are not open 6 days a 

week, seasonal areas that are not open year-round, and some customers in 

remote areas. Also, about 32 percent of customers who receive carrier 

delivery receive mail at their front doors; about 41 percent of customers 

receive it at curbline mailboxes; and about 27 percent of customers receive 

it at centralized delivery points that contain multiple receptacles in one 

location. Further, on the retail side, there is no standard for customer 

access requirements. Customers in more densely populated areas generally 

have access to postal services at more locations than customers in less 

densely populated areas. These differences have existed throughout the 

more than 200 years of postal services in the United States and have 

developed due to the nation’s geographic diversity and changes in 

technology, transportation, and communications. USPS’s statutory 

framework establishes general postal service policy but does not 

specifically define USPS’s universal service obligation or how USPS is to 

carry it out. However, in USPS’s annual appropriations acts, Congress 

requires USPS to continue its 6-day-a-week delivery and rural delivery 

service and prohibits the consolidation or closure of small rural or other 

small post offices. USPS has interpreted its universal service obligation by 

establishing a set of overarching national policies and procedures that 

provide the basis for field staff, such as postmasters who are in charge of 

post offices, to make decisions related to the local provision of delivery and 

retail services. These field officials, who are familiar with the daily 

operations of the areas being served, make their decisions by considering 

such cost and service factors as the number, location, and projected growth 

of delivery points in the area; the quality of the roads and transportation; 

employee safety; mail volume; projected costs and efficiency; customer 

demand; and the type of service offered in nearby areas.
Page 4 GAO-04-803 USPS Delivery and Retail Services

USPS has taken actions, and is planning future actions, to improve the 

efficiency and effectiveness of its delivery and retail networks. In the 

delivery area, USPS is continuing efforts to make delivery operations more 

cost-effective by utilizing efficient routes and delivery locations (e.g., to 

curbline boxes). USPS also is implementing several initiatives—such as 

standardizing its operations and deploying new automation to reduce 

manual mail sortation—aimed at improving the consistency of delivery 

time, reducing delivery workhours, and increasing the number of deliveries 

per route. These actions will not likely result in a noticeable change in 

delivery service for customers in urban or rural areas because most of the 

changes are focused on operational improvements. On the retail side, USPS 

has instituted a strategy of providing low-cost retail alternatives that may 

decrease reliance on post offices; moving simple transactions such as 

stamp purchases away from post office counters; and optimizing its retail 

network. USPS stated in its Transformation Plan that the objective of its 

retail network optimization initiative is to tailor retail services to the 

individual needs of communities and to replace “redundant, low-value 

access points with alternative access methods.” It is not clear how 

customers in rural areas may be affected by these planned retail changes, 

because most of USPS’s initiatives are planned for high-growth, highdensity areas.

USPS survey data show that postal customers are generally satisfied with 

the postal services provided to them; however, when customers have raised 

issues, they generally involve inconsistent services on the delivery side and 

the potential threat of post office closings or reductions in post offices 

hours on the retail side. In addition, customers, postal employees, and 

Congress have raised issues regarding limited communication about 

USPS’s plans to optimize its retail network. Specifically, customers have 

raised issues about how their access and convenience to services may be 

affected; employees have raised issues about how their jobs and 

compensation may be affected; and some Members of Congress are 

concerned about how USPS plans to make decisions related to optimizing 

its infrastructure. USPS has also raised concerns about legal requirements 

and practical constraints that limit its flexibility to make changes to the 

postal network.

We agree that finding efficiencies in the retail network is important for 

USPS and that USPS’s retail optimization initiative could be an opportunity 

for a “win-win” outcome for both USPS and its stakeholders. Through 

improved communication and collaboration with affected stakeholders, 

USPS could demonstrate that it wants to effectively partner with its 
Page 5 GAO-04-803 USPS Delivery and Retail Services

customers in communities, both urban and rural, to provide more 

convenient and cost-effective services, while preserving facilities needed to 

support universal postal service. We are recommending that the 

Postmaster General provide improved transparency and communication to 

inform Congress and other stakeholders of the actions USPS plans to take 

regarding its retail optimization strategy, including the criteria that will 

guide its decisions; the process that will be used to involve postal 

stakeholders; the impact on customers, including those in rural areas; and 

the time frames for implementing all phases of its retail optimization 

initiative. In commenting on a draft of this report, USPS concurred with 

“the spirit of the report’s findings” that improved transparency and 

communication are needed and said it would be reviewing its process for 

communicating changes to the retail network with its local districts and 

other stakeholders. USPS also stated that the criteria used for retail 

decisions vary throughout the postal network, and that it could not provide 

a time frame for implementing all phases of the retail optimization 

initiative. We believe that it is important to establish and communicate the 

criteria it considers as the basis for its retail decisions to help stakeholders 

feel confident that decisions are made in a fair, rational, and fact-based 

manner. Furthermore, we believe that time frames can, and should, be 

established for the different phases of USPS’s retail initiatives in order to 

not only provide postal stakeholders with information on when these 

initiatives will be deployed, but also to help USPS and stakeholders 

evaluate the performance of these initiatives in terms of how they fit into 

the network optimization plans as a whole and their impact on costs, rates, 

and mailers’ business plans.

Background USPS is an independent establishment of the executive branch with a 

mission to bind the nation together through the personal, educational, 

literary, and business correspondence of the people. The Postal 

Reorganization Act of 1970 reorganized the former U.S. Post Office 

Department into the United States Postal Service. USPS’s current legal 

framework 

• requires it to break even over time and intended it to be self-supporting 

from postal operations; 

• requires it to provide a maximum degree of effective and regular postal 

services to rural areas, communities, and small towns where post 

offices are not self-sustaining; and
Page 6 GAO-04-803 USPS Delivery and Retail Services

• prohibits it from closing small post offices solely because they are 

operating at a deficit, it being the specific intent of Congress that 

effective postal services be insured to residents of both urban and rural 

communities.3

USPS’s mission and role, and the processes used to carry out mail delivery 

and retail services, have evolved over time with changes in technology, 

transportation, and communications. Key events in postal history are listed 

in table 1.

Table 1: Key Events in Postal History, 1775-2004

3

39 U.S.C. § 101(b).

Year Event

1775 Benjamin Franklin appointed first Postmaster General under the Continental 

Congress—customers received mail delivery at post offices

1823 Navigable waters designated post roads by Congress

1838 Railroads designated post routes by Congress

1847 U.S. postage stamps issued

1858 Street letter boxes installed

1860 Pony Express started 

1863 Free city delivery instituted; postage rates became uniform regardless of 

distance

1901 Number of post offices reached its peak at 76,945 offices

1902 Rural free delivery became permanent service

1907 United Parcel Service founded

1911 First carriage of mail by airplane

1913 Parcel Post instituted

1950 Residential deliveries reduced from twice a day to once a day

1964 Self-service post offices opened

1970 Postal Reorganization Act created the United States Postal Service

1972 Stamps by Mail instituted

1973 Federal Express began operations

1987 Stamps by Phone instituted
Page 7 GAO-04-803 USPS Delivery and Retail Services

Sources: USPS, www.fedex.com, www.ups.com.

Most customers in the early development of the national post office had to 

pick up their mail from a post office. The first step toward universal 

delivery service was taken in 1863 when Congress declared that free city 

delivery would be established at post offices where income from postage 

was sufficient to pay all expenses of delivery. Mail delivery service was 

gradually extended to smaller cities and was later extended to rural areas 

in 1902. Advances in the delivery of mail coincided with transportation 

improvements. Various transportation modes developed throughout 

history have been used to transport mail, ranging from stagecoaches in the 

1700s; steamboats, trains, and the Pony Express in the 1800s; and finally by 

airplanes, automobiles, and trucks in the 1900s. Furthermore, advances in 

transportation were particularly important in rural areas; rural delivery 

helped stimulate road improvements to these areas because passable roads 

were a prerequisite for establishing new delivery routes.

Throughout the nation’s history, the post office has been a key component 

in the provision of postal services. Post offices proliferated throughout the 

1800s as the United States’ territory grew and new postal routes were 

established. At the turn of the 20th century, the number of post offices 

reached its peak with nearly 77,000 offices, which was an average of 1 post 

office for every 1,000 residents in the country (see fig. 1).

1990 Easy Stamp allowed computer purchase of stamps

1992 Stamps sold through ATMs

1997 Stamps Online instituted

2004 Automated Postal Center self-service machines deployed

(Continued From Previous Page)

Year Event
Page 8 GAO-04-803 USPS Delivery and Retail Services

Figure 1: Number of Post Offices per Capita Has Been Decreasing

The number of post offices per capita declined throughout the 20th century, 

to an average of 1 post office for every 10,000 people in 2000. As 

transportation improved, it became easier for rural carriers to deliver mail 

to a wider area, which decreased reliance on post offices for being the 

primary delivery and collection point. Furthermore, rural carriers provided 

retail services as part of their routes, so customers did not have to travel to 

a post office for these services.

Number of post offices (in thousands)

0

50

100

150

200

250

300

Post offices

U.S. population

Sources: USPS, U.S. Bureau of the Census.

17901800

 1810

182018301840185018601870

1880189019001910192019301940195019601970198019902000

U.S. population (in millions)

0

50

100

150

200

250

300

Year
Page 9 GAO-04-803 USPS Delivery and Retail Services

Differences Exist in 

How USPS Provides 

Delivery and Retail 

Services

Providing mail delivery and access to retail postal services is central to 

USPS’s mission and role. According to USPS officials, all USPS customers 

are eligible for free mail service and most receive delivery 6 days a week. 

Furthermore, all customers have access to retail services provided through 

the postal network, including the ability to purchase stamps from post 

offices or other retail facilities. Differences exist, however, in how USPS 

provides these services, particularly in where, when, and how customers 

receive the mail and have access to the postal network. These differences 

have always existed and have evolved with changes in technology, 

transportation, and communications. Delivery and retail decisions are 

made primarily by local staff (i.e., district employees and local 

postmasters), with overarching guidance provided by national USPS 

policies and procedures. These local field staff consider such factors as the 

number and location of delivery points in the area, the quality of the roads 

and transportation, employee safety, mail volume, projected costs, and the 

type of service offered in nearby areas. The following information in this 

section provides an overview of the current USPS delivery and retail 

networks, recent trends, and how decisions about delivery and retail 

networks are made.

Overview of USPS’s 

Delivery Services

USPS’s legal and statutory framework provides the basis for its delivery 

services. For example, USPS is to

• “provide prompt, reliable, and efficient services to patrons in all areas 

and shall render postal services to all communities”;

• “provide a maximum degree of effective and regular postal services to 

rural areas, communities, and small towns where post offices are not 

self-sustaining”;

• “receive, transmit, and deliver throughout the United States...written 

and printed matter, parcels, and like materials”; and 

• “serve as nearly as practicable the entire population of the United 

States.”4

4

39 U.S.C. § 101(a), 39 U.S.C. § 101(b), and 39 U.S.C. § 403(a).
Page 10 GAO-04-803 USPS Delivery and Retail Services

These provisions are considered key parts of universal service and provide 

the general operational guidance for USPS. USPS has the ability to 

establish delivery service within these broad provisions but by law must 

operate in a break-even manner. A long-standing provision in the 

appropriations acts for USPS requires the continuation of 6-day delivery 

and rural delivery service.5

According to USPS officials, delivery decisions are made at the local levels. 

National policies outline overall operational guidance, but discretion is 

provided to local officials, including area and district managers and 

postmasters, to make delivery decisions in their respective areas. These 

local officials—who, according to national USPS officials, are most familiar 

with the area to be served—make decisions related to the type, frequency, 

and location of delivery service that will be provided to a given address. A 

summary of key decisions is included in table 2, and additional information 

on each of these decisions is provided in the following sections. 

Table 2: Key Delivery Decisions Made by Local Officials

Source: USPS.

According to USPS, local officials select the delivery method that provides 

service in the most efficient and cost-effective manner. They consider such 

factors as the number and location of delivery points in the area, the quality 

5

For example, Transportation, Treasury, and Independent Agencies Appropriations Act, 

2004, Pub. L. No. 108-199, div. F, title IV, 118 Stat. 340 (Jan. 23, 2004); and 39 U.S.C. § 403 

note. The provision states that “6-day delivery and rural delivery of mail shall continue at not 

less than the 1983 level.”

Key decisions Options Useful statistics

Type of service Carrier service or delivery to a USPS retail facility 

to be collected by the customer

Approximately 86% of delivery points are 

served by a carrier.

Frequency of service 6 days a week or less than 6 days a week Most deliveries are 6 days a week.

If carrier service is selected, the following decisions are made: 

Type of carrier route City, rural, or highway contract route 67% of all routes are city routes. Rural routes, 

however, have been increasing in the last 10 

years, while the number of city routes has 

recently declined.

Modes of delivery Door, curbline, or centralized delivery 41% of deliveries are to curbline mailboxes, 

32% are to the door, and 27% are to centralized 

boxes.
Page 11 GAO-04-803 USPS Delivery and Retail Services

of the roads and transportation, employee safety, mail volume, projected 

costs, and the type of service offered in nearby areas. These local officials 

also are provided with specific manuals that contain national guidance on 

establishing delivery service, as well as on how to carry out these 

operations on a day-to-day basis.

Type of Service USPS customers are entitled to receive mail delivery service at no charge in 

one of two ways: via mail carrier or via the customer retrieving his or her 

mail at a designated postal facility. The majority of USPS’s residential and 

business deliveries are made by mail carriers—about 86 percent in fiscal 

year 2003. Approximately 14 percent of USPS’s deliveries are where 

customers travel to a USPS facility, primarily a post office, to retrieve their 

mail. These customers receive mail service either via box service or general 

delivery pick up. Box service may be provided (1) at no charge to 

customers who are not eligible for carrier service—this would represent 

their free mail delivery service—or (2) at a fee to customers to supplement 

their existing delivery service. Customers who are not eligible for carrier 

delivery and whose retail facility does not provide box service are provided 

with general delivery service where they retrieve their mail from a post 

office counter at no charge.

While current mail recipients have access to mail delivery service at no 

charge—the cost of delivery is borne by postal ratepayers—the process by 

which customers are eligible for free delivery has recently been clarified. In 

the 1996 Mail Classification Case before the PRC, USPS proposed 

eliminating the fee for box service that it charged customers who were not 

eligible for carrier delivery. At the time of this case, USPS estimated that 

about 940,000 boxes would be offered free of charge as a result of this 

policy. This proposal, however, did not require USPS to offer a free box to 

all customers ineligible for carrier delivery, such as those ineligible due to 

their proximity to a postal facility (i.e., the quarter-mile rule).6

 These 

customers would only be allowed to receive general delivery service at no 

charge. The PRC, in its ensuing recommendation, raised issues about 

inequities regarding customer eligibility for free box delivery and urged 

USPS to rectify them. USPS dropped the quarter-mile-rule provision during 

the following 1997 rate case, and, as such, customers ineligible for carrier 

service became eligible for free box service.

6

Under the quarter-mile rule, USPS exempted itself from providing carrier delivery service to 

customers who reside within a quarter-mile of noncity delivery post offices (within a halfmile for the smallest post offices).
Page 12 GAO-04-803 USPS Delivery and Retail Services

Frequency of Service According to USPS officials, most customers receive mail delivery 6 days a 

week, but there are customers who do not. These customers include 

businesses that are not open 6 days a week; resort/seasonal areas that are 

not open year-round; or areas that are not easily accessible due to 

transportation constraints, such as remote areas that may require the use 

of boats or airplanes to deliver the mail. For example, mail is transported 

by mules for delivery in the Grand Canyon, by snowmobiles for delivery in 

some areas of Alaska, and by boats for delivery on islands in Maine and 

other states.

Type of Carrier Routes As previously stated, the majority of USPS customers receive carrier 

service. Once it is determined that a customer is eligible for carrier service, 

USPS determines the type of carrier route service that will be provided. 

USPS has three primary carrier route categories—city, rural, and highway 

contract routes—and has national policies and procedures that contain the 

criteria used to establish, manage, and operate the three types of routes. 

Excerpts from these policy and procedure manuals are provided in table 3.

Table 3: USPS Policies and Procedures for Establishing Carrier Routes

City delivery

Establishment is considered when the following requirements are met: 

• Within the area to be served there is a population of 2,500 or more or 750 possible deliveries.

• At least 50 percent of the building lots in the area to be served are improved with houses or business places. Where a house or building 

and its yard or ground covers more than one lot, all lots so covered are considered improved.

• The streets are paved or otherwise improved to permit travel of USPS vehicles at all times, without damage or delay.

• Streets are named and house numbers are assigned by the municipal authorities in accordance with Management Instruction DM-940-

89-03, Addressing Conventions.

• The street signs are in place and the house numbers are displayed.

• The rights-of-way, turnouts, and areas next to the roads and streets are sufficiently improved so that the installation and servicing of 

boxes are not hazardous to the public or USPS employees.

• Satisfactory walks exist for the carrier when required.

• Approved mail receptacles or door slots are installed at designated locations.

Rural delivery

Establishment of rural delivery service is considered when the following requirements are met:

• Customer Density: A newly established route should serve an average of at least one residential or business delivery per mile. On 

routes of less than 10 miles, an average of at least six deliveries per mile should be eligible for service before a route is established. 

Unusual conditions such as the volume and type of mail should be considered.

• Minimum Workloads: In post offices with no existing rural delivery service, the proposed route evaluation should reflect sufficient 

workload to meet minimum rural carrier scheduling requirements efficiently.

• Roads: Roads should generally be public and must be well maintained and passable for delivery vehicles year-round. Rural delivery 

service is not established over roads that are not kept in good condition, that are obstructed by gates, or that cross unbridged streams 

that are not fordable throughout the year. If travel over private roads is proposed, the person responsible for road maintenance must 

provide a written agreement to keep the road passable at all times. If these conditions are not met, delivery can be withdrawn.
Page 13 GAO-04-803 USPS Delivery and Retail Services

Source: USPS.

USPS’s “rural” designation does not necessarily reflect geographically 

defined rural areas, and there is no population threshold for a USPSdesignated rural or city route.7

 Rural carrier routes encompass a wide 

range of geographic areas and may cover both less-densely populated areas 

generally considered to be rural as well as suburban areas generally 

considered to be urban. A USPS rural route such as one in Charlotte, North 

Carolina, or Jacksonville, Florida, may cover a geographically defined 

suburban area and may contain a similar number of delivery points as a city 

route. USPS officials explained that many suburban areas met rural route 

criteria when they were originally established. However, they also stated 

that although the population may have grown in an area that now may be 

considered suburban, USPS maintains existing operations in this situation. 

Thus, it retains the rural route classification. A brief overview of these 

route types is provided in table 4.

Table 4: Information on Selected Route Types, Fiscal Year 2003

Source: USPS.

Highway contract box delivery

Established after USPS solicits contracts for the transportation of mail between post offices or other designated points where mail is 

received or dispatched. These contract carriers are not USPS employees.

• Highway contract route advertisements and contracts state whether box delivery, collection service, or other mail services are required 

and specify the area to be served.

• In addition to usual box delivery and collection service on some routes, carriers are required to provide retail functions, such as selling 

stamps, delivering and accepting special service mail, and accepting money order applications.

(Continued From Previous Page)

7

USPS policies that establish city delivery state the following: “The postal customer 

population may vary greatly from the general census population because of different 

boundary interpretations and designations.”

Type of carrier 

route

Possible 

deliveries 

(millions) Routes

Average 

deliveries 

per route Carriers 

City 84.7 164,975 513 229,404 (USPS employees)

Rural 34.5 72,743 474 Full-time: 61,611 (USPS 

employees)

Part-time: 56,451 

Highway contract 2.2 10,065 220 5,864 (route is served by a 

contract employee)
Page 14 GAO-04-803 USPS Delivery and Retail Services

City routes (67 percent of all routes) tend to be located in densely 

populated areas with high concentrations of delivery points. As figure 2 

shows, growth in city routes has stagnated since 1994 and has been 

declining since 2000, while growth in rural routes continues. 

Figure 2: Rural Routes Cumulatively Have Grown at a Much Greater Rate Than City 

Routes

Rural routes, accounting for only about 29 percent of all routes, are the 

fastest growing type of route. Of the 1.8 million delivery points added in 

fiscal year 2003, 1.2 million delivery points are located on rural routes. 

Rural routes encompass a wide range of areas, with some of the larger 

routes serving hundreds of delivery points and some smaller routes having 

just 1 delivery per mile. Not only are rural routes the fastest growing route 

type, the number of deliveries per route (route density) is also increasing. 

Figure 3 shows that rural routes with 12 or more deliveries per mile have 

been increasing at a much faster rate than rural routes with fewer than 12 

deliveries per mile. Furthermore, as shown in table 4, the average deliveries 

0

10

20

30

40

50

60

70

198319841985198619871988198919901991199219931994199519961997199819992000200120022003

City routes

Rural routes

Source: USPS.

Cumulative percentage change

Fiscal year
Page 15 GAO-04-803 USPS Delivery and Retail Services

per route for city routes and rural routes are relatively similar, 513 and 474, 

respectively.

Figure 3: Rural Routes Are Becoming More Dense

The remaining 4 percent of routes are highway contract routes (10,065 in 

fiscal year 2003), which serve areas that are not serviced by city or rural 

routes. On some of these routes, deliveries are made along the line-of-travel 

to individual addresses as mail is being transported from one facility to 

another.

Modes of Delivery USPS has guidance to help determine the physical location where the mail 

will be delivered. USPS works with local real estate developers when 

determining the locations of delivery for new addresses and has three 

general modes of delivery that specify the physical location of the delivery: 

door, curbline, or a centralized unit that contains mail receptacles for 

multiple customers. Figure 4 provides the number of these modes of 

delivery as of the end of fiscal year 2003.

0

5

10

15

20

25

30

35

40

198319841985198619871988198919901991199219931994199519961997199819992000200120022003

Fewer than 12 deliveries per mile

12+ deliveries per mile

Source: USPS.

Numbers in thousands

Fiscal year
Page 16 GAO-04-803 USPS Delivery and Retail Services

Figure 4: USPS’s Different Modes of Delivery, Fiscal Year 2003

Note: This figure includes the modes of delivery that are used on carrier service. It does not include the 

nearly 20 million deliveries made to USPS retail facilities (i.e., to post office boxes or general 

deliveries).

Door delivery once was the norm in urban settings; however, USPS 

changed its policy in 1978 to limit additional door deliveries to further 

enhance delivery efficiencies (door deliveries remain the most expensive 

mode of delivery). As a result, curbline delivery and centralized delivery are 

the fastest growing modes of delivery. According to USPS delivery officials, 

the only instance where new delivery points would receive door delivery 

would be if the new delivery point is established on a block that currently 

receives door delivery. Centralized units include cluster boxes, 

Neighborhood Delivery Collection Box Units (NDCBU), and apartmentstyle boxes. Cluster box units are centralized units of individually locked 

compartments, while NDCBUs are centralized units of more than eight 

individually locked compartments. Between fiscal years 2001 and 2003, the 

number of curbline boxes increased by more than 2 million; the number of 

centralized boxes has grown by about 1.8 million; and the number of other 

deliveries (primarily door), which are not available for most new deliveries, 

decreased by almost 400,000.

Differences in Delivery 

Service Are Based on Cost 

and Service Considerations

According to USPS, it must balance the legal requirement to operate as a 

break-even entity with the need to serve its customers in a competitive 

environment. As such, the following cost and customer convenience tradeoffs are associated with each of the previously discussed delivery 

decisions.

Sources: USPS, GAO.

Curbline - 49 million Other (primarily door) - 39 million Centralized - 33 million
Page 17 GAO-04-803 USPS Delivery and Retail Services

• Carrier service v. the customer collecting mail from a USPS facility. If 

carrier service is provided, USPS incurs the cost of providing the 

personnel and transportation to support these services, but most 

customers receive their mail closer to their residences or businesses. On 

the other hand, requiring customers to travel to their respective post 

office to collect mail may be more inconvenient for the customer, but 

USPS does not have to incur personnel and transportation costs 

associated with carrier delivery.

• 6-day-a-week delivery v. something less than 6-day-a-week delivery. 

According to USPS, the more days that delivery is provided, the higher 

the cost of providing this service. On the other hand, customers, 

Congress, and the President’s Commission have noted the importance of 

6-day-a-week delivery. USPS studied the impact of eliminating Saturday 

delivery and found that the possible savings were not significant enough 

to offset the potential risks that any reduction in delivery days would 

have a negative impact on USPS’s competitive position.

• City v. rural v. highway contract box delivery routes. Although the 

delivery service provided on each of these routes is generally similar, 

carriers on rural and highway contract routes provide retail services, 

such as stamp sales, while city carriers do not. A USPS official stated 

that there are significant cost differences between the different types of 

routes. USPS estimated that the additional annual cost in fiscal year 

2003 for each city door delivery ($295) was more than twice as 

expensive as rural delivery ($143) and over three times as expensive as 

highway contract deliveries ($90). The USPS official stated that a key 

factor in determining the total cost of a route is the carriers’ 

compensation systems, which differ for each group of carriers. The 

systems for city and rural carriers are collectively bargained between 

USPS and their associated unions—the National Association of Letter 

Carriers (NALC) represents city carriers, and the National Rural Letter 

Carriers Association (NRLCA) represents rural carriers. Generally 

speaking, city carriers are compensated on an hourly basis, while rural 

carriers are compensated on a salary basis. Agreements entered into by 

these groups also establish duties and responsibilities for the carriers 

and USPS management. Compensation for contract carriers are 

established via the contract posted by USPS.

• Door v. curbline v. centralized modes of delivery. According to USPS, 

the cost per delivery generally increases as the delivery is made closer 

to the customer’s door. Delivery to a customer’s door is the least 
Page 18 GAO-04-803 USPS Delivery and Retail Services

efficient mode of delivery because the carrier has to dismount from the 

vehicle. Deliveries to centralized units, such as cluster boxes and 

NDCBUs, are the most efficient form of carrier delivery because carriers 

can make multiple deliveries in one stop. The mode of delivery to be 

provided is considered by USPS when determining the type of service 

that will be used. For example, most deliveries on rural and highway 

contract routes are farther away from the customer’s front door than 

deliveries on city routes. Figure 5 shows that most rural and highway 

contract deliveries in fiscal year 2003 were to the curb rather than at the 

door.

Figure 5: Modes of Delivery, Fiscal Year 2003

USPS local officials select the delivery option that provides service in the 

most efficient and cost-effective manner, and they consider numerous cost 

and customer service factors when making these decisions. This balance 

between cost and customer convenience is further illustrated in our 

discussion of USPS’s retail network.

72%

21%

7%

Curbline delivery

Centralized delivery

Other delivery (primarily door)

City routes Rural routes Highway contract routes

Source: USPS.

45%

32%

23%

17%

82%

1%
Page 19 GAO-04-803 USPS Delivery and Retail Services

Overview of USPS’s Retail 

Services

As part of meeting its universal service obligation, USPS is required to do 

the following: 

• USPS should serve as nearly as practicable the entire U.S. population 

and provide postal facilities in such locations that give postal patrons 

ready access to essential postal services consistent with reasonable 

economies of postal operation.8

• USPS should provide a maximum degree of effective and regular postal 

services to rural areas, communities, and small towns where post 

offices are not self-sustaining. No small post office shall be closed solely 

for operating at a deficit, it being the specific intent of Congress that 

effective postal services be insured to residents of both urban and rural 

communities.9

Historically, post offices, stations, and branches served as the primary 

access points for providing postal services to most customers. These 

facilities were located in towns and communities across the country and 

provided key locations where mail could be collected and delivered. Figure 

6 illustrates the current network of these retail facilities.

8

39 U.S.C. §§ 403(a) & (b)(3).

9

39 U.S.C. § 101 (b).
Page 20 GAO-04-803 USPS Delivery and Retail Services

Figure 6: Overview of the Retail Network

Note: Branches are units of a main post office located outside the corporate limits of a city or town, 

while stations are units of a main post office located inside the corporate limits of a city or town. Also, in 

small communities where the main post office has been discontinued, a contract postal unit will be 

designated as the Community Post Office.

In addition to traditional brick-and-mortar retail facilities, USPS currently 

offers retail services through other alternatives, such as self-serving 

vending machines, ATMs, grocery and drug stores, and the Internet. Figure 

7 illustrates many of these retail alternatives.

Post offices

Classified units

(Owned and operated by USPS)

If additional retail points are needed, then

subordinate retail facilities are used

Classified

stations

Contract units

(Owned and operated by contractors)

Classified

branches

Contract

stations

Contract

branches

Source: USPS.
Page 21 GAO-04-803 USPS Delivery and Retail Services

[This page has been intentionally left blank]
Page 22 GAO-04-803 USPS Delivery and Retail Services

Figure 7: Retail Alternatives Moving Away from Traditional Post Offices

Consignment Program/ATMs

First-Class stamps are distributed to participating retailers (e.g., grocery stores, drug stores, and ATMs). These services 

were available in about 40,000 locations in fiscal year 2003. Partnership with Hallmark Gold Crown Stores for use of 

postage meters and retail services at almost 500 stores at end of fiscal year 2003 (and 700 more in fiscal year 2004).

Self-Service Platform/Automated Postal Center

Funding approved for manufacture and deployment of 2,500 units by November 2004. Self-service kiosks designed to replace aging self-service 

vending equipment. Provide 80% of the services provided at a retail counter and make payments using debit/credit cards. Deployed in post office 

lobbies and high-traffic areas (both postal and nonpostal).

Vending Machines

There were 29,325 revenue-generating machines in 21,292 locations in fiscal year 2003. Located in post offices and other high-traffic areas 

(both postal and nonpostal). Includes stamp machines (both single and booklets) and multicommodity machines (includes various types of 

postage and telephone cards).
Page 23 GAO-04-803 USPS Delivery and Retail Services

Rural and Highway Contract Mail Carriers

Provided mail delivery to almost 35 million addresses in fiscal year 2003. Rural carriers provide/sell stamps; Express, Priority, and 

package services; certified or registered mail service; and money orders. Contract carriers generally provide similar services as 

rural carriers, but is dependent on the contract.

1-800-STAMPS24 and Stamps by Mail

Allow customers to purchase stamps by telephone and by mail. Stamps are delivered with 

the customer’s regular mail.

www.usps.com

Designed to handle most retail transactions that take place in local post offices. Received over 175 million visits in fiscal year 2003, 

an increase of 38% from fiscal year 2002. Provides Stamps On-line (for a $1 fee). New Click-N-Ship program aimed at 

improving customers’ ability to send packages.

Sources: USPS, National Rural Letter Carriers Association, www.usps.com, GAO.
Page 24 GAO-04-803 USPS Delivery and Retail Services

Postal services available through these access points can include 

purchasing stamps and postage, mailing packages, and sending money 

orders. Differences exist, however, in how access to retail service is 

provided to customers across the country. These differences (1) exist in 

terms of what types of retail options customers have access to and where 

these retail options are located and (2) are based on cost and customer 

service determinations made by local USPS officials. This section identifies 

access points currently provided by USPS, describes differences in the 

network, and explains why these differences exist.

The wide variety of retail options currently offered by USPS differs 

significantly from its original retail network. Changes in technology, 

transportation, and geography diminished the need for a large network of 

post offices, and the number of post offices per capita has consistently 

declined since the early 1900s (see fig. 1). Table 5 shows that over the last 

20 years, the number of post offices, stations, and branches has decreased 

by over 1,900 units. This decrease reflects USPS’s movement toward fewer 

“bricks-and-mortar” facilities.

Table 5: Post Offices, Stations, and Branches: Fiscal Year 1980 Compared with 

Fiscal Year 2003

Source: USPS.

USPS still has almost 28,000 post offices nationwide, and these post offices 

remain a key access point for USPS’s nationwide retail network. USPS does 

not have specific standards for establishing post offices on the basis of 

population density or distance between post offices. The number of post 

offices and retail facilities compared with the population of the area served 

differs throughout the country. Appendix II provides information on the 

number of retail postal facilities in each state, along with each state’s 

population. For example, states such as North Dakota and South Dakota 

that have a relatively low-population density tend to have a lower ratio of 

Facility type FY 1980 FY 2003 Change

Percentage 

change

Post offices 30,326 27,556 -2,770 -9.1%

Classified branches and stations 4,109 5,796 1,687 41.1

Contract branches and stations 3,346 2,777 -569 -17.0

Community Post Offices 1,705 1,450 -255 -15.0

Total 39,486 37,579 -1,907 -4.8%
Page 25 GAO-04-803 USPS Delivery and Retail Services

people per USPS retail facility (i.e., fewer than 2,000 residents for every 

USPS retail facility). On the other hand, states such as Florida and 

California that have a relatively high-population density tend to have a 

higher ratio of people per USPS retail facility (i.e., about 15,000 residents 

for every USPS retail facility).

Postal officials told us that customers of smaller post offices tend to be 

more dependent on their post office for access to the postal network. 

Survey data collected for the President’s Commission showed that rural 

customers reported visiting their post offices more often than customers in 

urban areas. This issue of dependency is important to note when 

considering retail access because USPS recognizes that customer use of 

post offices versus other retail alternatives varies. For example, according 

to USPS, many of the new retail alternatives, such as consignment with 

private retailers such as grocery stores and ATMs, have been deployed 

primarily in high-growth, high-population areas (coincidentally, these areas 

are where many retail competitors to USPS are located). Customers in 

these high-growth, high-population areas may not be as dependent on a 

post office for meeting their daily postal needs, and therefore they utilize 

these alternative methods of accessing USPS’s retail network.

Retail Decisions Are Based 

on Cost and Customer 

Access Considerations

Differences exist throughout the postal network in terms of how and where 

customers have access to USPS’s retail network. USPS officials stated that 

USPS’s approach to the retail network requires a balance of cost and 

service considerations and incorporates such factors as customer demand, 

the population of the surrounding area, the post office’s physical location, 

mail volumes, costs, and revenues.

Many of USPS’s retail alternatives are aimed at offering more efficient, 

accessible ways of providing retail service, particularly in high-growth, 

high-revenue areas. When deciding where to deploy these alternatives, 

USPS officials told us that they consider both (1) the location where a retail 

option is needed and (2) the type of retail options that should be deployed. 

They also consider customer access needs while balancing economy and 

efficiency concerns. For example, it is more costly for USPS to provide 

retail service at a post office counter than via its Web site—www.usps.com. 

Some customers, however, may not have Internet service or may prefer 

going to their local post office to conduct their postal transactions. 

Moreover, USPS has stated that opening new post offices is considered 

only when area service needs cannot be met through its current facilities or 

by less costly alternatives. USPS has stated that whenever possible it 
Page 26 GAO-04-803 USPS Delivery and Retail Services

establishes contract postal units, which can provide equal service without 

the costs associated with building and operating new post offices. These 

units are privately owned and operated and, as such, are less expensive. 

USPS opened 666 contract stations and branches in fiscal year 2003.

Actions to Improve 

Delivery and Retail 

Services

USPS faces the continuing challenge of providing high-quality postal 

services while absorbing the costs associated with an ever-increasing 

delivery network. USPS estimated that serving its new delivery points in 

fiscal year 2003 would add roughly $270 million in annually recurring 

delivery costs. At the same time, USPS’s revenue per delivery declined each 

year since fiscal year 2000. USPS and other stakeholders have recognized 

these challenges, which have been highlighted as part of USPS’s 

Transformation Plan and the President’s Commission’s report. USPS has 

taken actions, and is planning future actions, to deal with these challenges 

and improve the efficiency and effectiveness of its delivery and retail 

networks. These actions will include the following: on the delivery side, 

emphasizing cost-effective routes and delivery locations (i.e., to curbline 

boxes); and on the retail side, providing low-cost alternatives and 

optimizing its retail network. The actions planned in the delivery area may 

not result in a noticeable change of service for people in rural areas. 

Customers in rural areas may experience greater access to USPS’s retail 

network via improvements to www.usps.com, but actions to promote other 

low-cost alternatives are primarily targeted toward customers in highgrowth, high-density areas. Furthermore, it is not clear how rural 

customers may be impacted by USPS’s efforts to increase efficiencies by 

optimizing its retail network. This section provides an overview of the 

actions that USPS is planning to take, in both the delivery and retail areas, 

and what these actions are intended to achieve.

Actions to Improve 

Efficiency and Effectiveness 

in USPS’s Delivery Network

USPS has high costs related to its nationwide infrastructure and 

transportation network, which includes delivering mail 6 days a week to 

most of the 141 million addresses nationwide. Achieving efficiencies in this 

area is difficult because the network grows by approximately 1.7 million 

new addresses each year. Mail volumes have recently been decreasing, and 

USPS is facing increasing per-piece delivery costs since carriers must make 

deliveries even if they have fewer letters to deliver. As previously 

discussed, USPS has already taken actions to improve delivery efficiency, 

including promoting rural routes and emphasizing curbline and centralized 
Page 27 GAO-04-803 USPS Delivery and Retail Services

modes of delivery. These actions are likely to continue in both suburban 

and rural areas.

USPS’s initiatives for increasing rural delivery efficiency may not be 

noticeable to rural customers because they relate to improving internal 

USPS operations, rather than changing residential delivery. These 

initiatives include sending managers through a training program to ensure 

that they understand the basic concepts of managing rural delivery; 

distributing electronic operations newsletters that provide specific 

strategies for reducing rural workhours and raising awareness of the need 

to focus on rural management; and implementing a rural time review, 

which is a process to examine and analyze the timekeeping, recording, and 

reporting process for rural delivery.

On a more comprehensive, nationwide basis, USPS has implemented 

initiatives aimed at increasing the efficiency of the overall delivery 

network. USPS has established a route optimization effort meant to help 

determine the best way to route carriers. USPS hopes this effort will lead to 

a reduction in workhours, vehicle mileage, and costs, while at the same 

time improving safety. According to USPS, automation improvements, such 

as the Delivery Point Sequencing of mail, will increase efficiency by 

automating some of the mail sorting activities that are currently done 

manually by mail carriers.10 This automation would decrease the amount of 

time that a carrier would spend sorting the mail and increase the amount of 

time that a carrier could be out making more deliveries.

Actions to Improve 

Efficiency and Customer 

Access to USPS’s Retail 

Network

Both USPS and the President’s Commission have recognized that USPS 

needs to adjust its retail network so that it provides the optimal level of 

retail access at the lowest possible cost. The retail service options available 

to rural customers will largely remain the same, with the exception of rural 

customers who have access to the Internet (www.usps.com). USPS 

officials stated that USPS plans to deploy most other new retail alternatives 

in high-growth, high-density areas, such as fast-growing suburbs. However, 

it is not clear why some retail alternatives that offer greater customer 

convenience, such as stamp purchases at grocery or other retail stores, 

may not be provided to those in rural areas. Further, it is not clear how 

rural customers may be impacted by USPS’s retail optimization efforts to 

10Delivery Point Sequencing is an automated process by which mail is sorted according to 

the individual addresses on the delivery route.
Page 28 GAO-04-803 USPS Delivery and Retail Services

close and/or consolidate retail facilities. In its Transformation Plan, USPS 

stated that its planned efforts to improve access to retail services for all 

customers while becoming more cost-effective include three key 

initiatives:

(1) Create new, low-cost retail alternatives. USPS identified ways to 

provide cost-effective services that improve customer convenience and 

access by utilizing low-cost retail alternatives, such as the Internet, ATMs, 

and supermarkets. According to USPS, most of the alternatives are aimed 

at providing additional access to high-growth, high-revenue areas where 

demand for services is more concentrated and will not be available in lesspopulated areas. For example, many of the 666 contract postal units 

opened in fiscal year 2003 were in urban areas such as Los Angeles, 

California, and Orlando, Florida. However, USPS noted two alternatives 

that would be available to most customers, including those in rural areas—

the Internet, for customers with access, and the recently implemented 

“Click-N-Ship” program. USPS’s Internet Web site is available to customers 

24 hours a day, 7 days a week, and was designed to handle most retail 

transactions that take place in local post offices, such as printing shipping 

labels and postage for packages, buying stamps, sending money orders, and 

filing address changes. USPS’s Click-N-Ship program allows customers to 

print shipping labels for packages and pay for postage using their 

computers. Customers can arrange to have their mail carrier pick up the 

package, or they can leave it in a mail collection box or at their local post 

office. This carrier pick-up service is currently available in urban and 

suburban areas, and USPS and the NRLCA have recently agreed to conduct 

a nationwide pilot that would test this program on rural routes.

(2) Move stamp-only transactions away from the post office window. The 

new, low-cost retail alternatives provide USPS with an opportunity to 

increase the efficiency of postal transactions. In fiscal year 2003, about onethird of the visits to USPS retail facilities included stamp purchases, and 

over 130 million visits were for stamp-only purchases. Smaller post offices 

tend to conduct a higher percentage of stamp-only transactions. As 

indicated in its Transformation Plan, window service at a post office is a 

relatively expensive way to provide stamp purchases when compared with 

low-cost alternatives, such as providing stamp purchases from ATMs, 

through the mail, from the Internet, or from a grocery store. In addition, 

residents on rural and highway contract routes can purchase stamps and 

other retail services from their mail carriers. USPS has begun to promote 

the use of these alternatives for postal transactions; in November 2002, 

USPS launched a national campaign promoting alternative access to postal 
Page 29 GAO-04-803 USPS Delivery and Retail Services

products to create customer awareness of stamp-purchasing alternatives. 

Between fiscal year 2002 and 2003, the number of stamp-only visits at 

postal facilities decreased by about 25 million (a 16 percent reduction), and 

the number of stamp transactions decreased by about 60 million (a 10 

percent reduction).

(3) Optimize the retail network. As simple transactions such as selling 

stamps and printing shipping labels are redirected to lower cost 

alternatives, USPS plans to take actions to tailor retail services to the 

individual community needs and provide the optimal level of retail access 

at the least possible cost. USPS has established a nationwide database of 

its retail network that includes about 150 data points for each of its retail 

postal facilities, such as operating costs, revenues, proximity to other retail 

points, number of deliveries, and customer demographics. This database 

provides USPS with a baseline for evaluating its network, from which it 

plans to first focus its retail strategy on “underserved” locations. USPS then 

plans to focus on high-revenue locations, most of which are located in 

urban and suburban areas. Lastly, USPS will focus on “overrepresented” 

areas. The Transformation Plan stated that USPS would replace 

“redundant, low-value access points” with alternative access methods, but 

it did not provide information on the specific criteria that USPS would use 

to make this determination. It is unclear how post offices in rural areas may 

be affected by this initiative, because, as USPS stated in its Infrastructure 

and Workforce Rationalization Plan to Congress, “the savings from closing 

small post offices are minimal, since the potential savings in personnel and 

office rent are often more than offset by the additional cost of rural delivery 

service needed in lieu of post office box delivery.” Another approach, 

recommended by the President’s Commission, would be for USPS to 

optimize its retail network by assessing its “low-activity” post offices to 

determine if they are needed to ensure the fulfillment of universal service. 

If USPS determines that these post offices are needed, they should be 

retained, even if they are not economical. If not, the President’s 

Commission stated that USPS should work with the affected community to 

consider how to dispose of excess facilities.

USPS has begun taking actions to optimize its retail network by lifting the 

self-imposed moratorium established in 1998 on closing post offices and by 

adjusting post office hours. During fiscal year 2003, USPS formally closed 

about 440 post offices and other retail facilities, more than half of which 

USPS had placed on emergency suspension. A post office can be placed on 

emergency suspension due to circumstances such as a natural disaster, 

sudden loss of the post office building lease when no suitable alternative 
Page 30 GAO-04-803 USPS Delivery and Retail Services

quarters are available, or severe damage to or destruction of the post office 

building. An emergency suspension is one of three circumstances that may 

prompt USPS to initiate a feasibility study to determine whether to close a 

post office. The other two are (1) a postmaster vacancy and (2) special 

circumstances such as the incorporation of two communities into one. 

USPS plans to close 311 post offices in fiscal year 2004 that were placed on 

emergency suspension between February 1983 and June 2003. An 

additional 65 post offices that were placed on emergency suspension 

between August 2002 and November 2003 are not scheduled to close. USPS 

has reported that post office closures will continue, and that in a normal 

year about 100 to 200 small, rural post offices are closed when the 

communities in which these offices are located essentially disappear.

According to USPS, it has also adjusted hours at existing post offices from 

time to time to reflect customer demand. Although USPS could not provide 

information on the number of post offices where changes in hours 

occurred in fiscal year 2003, it did provide a description of how hour 

adjustments are made. According to USPS officials, postmasters are 

responsible for establishing window service hours based on the needs of 

the community within the funding resources. Officials noted that they 

periodically assess the number of transactions and customer visits 

throughout the day to determine the appropriate hours, and that hours may 

be extended or shortened in response to customer demand. USPS reported 

that its efforts to increase efficiencies in its retail area have resulted in a 

decrease of almost 5 million workhours from fiscal years 2002 to 2003.

Key Issues Include 

Delivery 

Inconsistencies and the 

Uncertain Future of 

Retail Network

USPS and the President’s Commission both have recognized the need for 

establishing a postal network that is capable of providing universal service 

in an efficient and cost-effective manner. The actions identified by USPS 

that were discussed in the previous section illustrate that future service 

decisions are being planned with a focus on increasing efficiency and 

customer service. According to surveys conducted both by USPS and for 

the President’s Commission, customers are generally satisfied with the 

services provided by USPS. However, when issues are raised by postal 

stakeholders, including Members of Congress, customers, and USPS 

employees, they generally relate to inconsistent delivery services and 

limited communication related to planned changes to the retail network. 

USPS has also raised issues about legal requirements and practical 

constraints that limit its flexibility to make changes to the postal network. 

Progress toward optimizing the postal retail network will require USPS to 

collaborate and communicate more effectively with stakeholders in order 
Page 31 GAO-04-803 USPS Delivery and Retail Services

to raise their confidence that USPS’s actions will result in improved 

customer service and more cost-efficient operations.

Customer Satisfaction and 

Issues

Data reflect that customers are generally satisfied with the services 

provided by USPS. USPS customer satisfaction data showed that 93 

percent of households nationwide continue to have a positive view of 

USPS. USPS’s Customer Satisfaction Measurement survey gathers 

information from households and businesses throughout the country, and 

the residential survey includes questions on such topics as mail delivery 

service, retail options, time waiting in line at post offices, and USPS 

advertising. A survey was also conducted as part of the President’s 

Commission’s work to determine the public perception of USPS. This 

survey reported that customers throughout the country, including those in 

cities and rural areas, have a favorable view of USPS.11

Although it is reported that overall customer satisfaction is high, when 

customers do raise concerns, many relate to inconsistencies in delivery 

services and changes in access to retail services.12 For example, in the first 

2 quarters of fiscal year 2004, USPS’s customer telephone system—

Corporate Customer Contact—documented over 1.3 million calls that 

raised customer issues. As table 6 shows, these issues fell into five general 

categories. The delivery/mail pickup category contained the most customer 

complaints with over 88 percent of the total customer issues. These calls 

included issues about late deliveries, changes in the location of the 

customers’ deliveries, and misdeliveries.

11Peter D. Hart Research Associates, A Consumer Survey About the U.S. Postal Service, 

May 2003.

12Concerns raised by customers through telephone calls or letters are not necessarily 

representative of the concerns that the whole population of customers may or may not have.
Page 32 GAO-04-803 USPS Delivery and Retail Services

Table 6: Customer Issues Documented by USPS, First 2 Quarters of Fiscal Year 2004

Source: USPS.

We reviewed a sample of letters received by Members of Congress involved 

in the oversight of USPS in 2002 and 2003. Of the 134 letters that we 

reviewed, the most common delivery-related concerns pertained to the 

mode of delivery that was used and mail arriving late or at inconsistent 

times. On the retail side, the issues raised most frequently were concerns 

about potential post office closings or relocations. Several customers 

wrote that closing or relocating post offices would make it difficult or 

inconvenient for them to access retail postal services.

Congressional Issues In addition to constituent letters containing specific questions about USPS 

operations, Congress has raised long-standing issues about the basic 

provisions of universal service and retail access, particularly to customers 

in rural areas. The Postal Reorganization Act contained specific provisions 

requiring that effective postal services would be ensured to residents of 

both urban and rural communities. Congress had additional concerns 

about community involvement in decisions to close or consolidate post 

offices. In 1976, it amended the Postal Reorganization Act and established 

specific requirements for USPS when attempting to close a post office, 

including that USPS must consider the effects on the community served, 

the employees of the facility, and economic savings to USPS that would 

result from the closure, as well as provide notice to customers.13 This 

amendment sought to involve communities in decisions, which would help 

to ensure that these decisions were made in a fair, consistent manner. The 

amendment also established an appeals process to the PRC to allow for 

Category

Number of documented 

issues

Percentage of total 

documented issues 

Delivery/Mail pick-up 1,163,578 88.0%

Personnel 106,684 8.1

Post office/Equipment 35,337 2.7

Retail 14,443 1.1

Web site/Contacting USPS 1,965 0.1

Total 1,322,007 100.0%

1339 U.S.C. § 404 (b).
Page 33 GAO-04-803 USPS Delivery and Retail Services

independent review of decisions to close or consolidate post offices. 

Congress has long included language in USPS annual appropriations 

legislation forbidding the closure or consolidation of small, rural post 

offices.

The closure requirements added by this amendment, however, did not 

apply to postal facilities that were to be expanded, relocated, or newly 

constructed, and Congress remained concerned that communities were not 

sufficiently involved in decisions regarding their post offices. In 1998, USPS 

responded to these concerns by establishing regulations relating to the 

expansion, relocation, or new construction of post offices that required 

local officials and citizens to be notified, provided affected customers with 

a chance to provide comments, and required USPS officials to consider this 

community input.14 However, postal facilities placed in emergency 

suspension were not subject to the post office closure or consolidation 

requirements. A 1999 congressional hearing focused on USPS’s closure 

process when some stakeholders raised concerns that USPS might be using 

its emergency suspension procedures to avoid post office closure 

requirements. We issued a report on emergency suspensions in 1997 and 

found that between the beginning of fiscal year 1992 through March 31, 

1997, USPS had suspended the operations of 651 post offices, some of 

which had been in suspension over 10 years.15 After USPS lifted its 1998 

moratorium on closures in 2003, USPS began to close most of its 

suspended post offices.

Concerns remain about the extent to which customers are included in retail 

decisions as evidenced by the fact that current Members of Congress 

continue to introduce legislation related to USPS’s process for closing post 

offices and ensuring that communities are involved in the decision-making 

process.16

1439 C.F.R. § 241.

15U.S. General Accounting Office, U.S. Postal Service: Information on Emergency 

Suspensions of Operations at Post Offices, GAO/GGD-97-70R (Washington, D.C.: Apr. 23, 

1997).

16S. 1534, Rural Post Office and Community Preservation Act of 2003 and H.R. 3432, Post 

Office Community Partnership Act of 2003.
Page 34 GAO-04-803 USPS Delivery and Retail Services

USPS Employee Issues Employee groups are concerned with USPS’s attempts to make changes to 

the postal network. For example, these groups have raised issues about the 

perceived lack of communication from USPS about how it makes these 

decisions. Carrier unions have also raised issues related to actions taken by 

USPS to establish and categorize carrier routes. Carrier compensation 

represents a significant portion of the total delivery costs, which is a key 

consideration in USPS’s delivery route decisions. For a number of years, 

USPS, the NALC, and the NRLCA have had a continuing dispute over the 

assignment of work jurisdictions for mail delivery. These disputes pertain 

to the conversion of city delivery to rural delivery, or vice versa, and the 

assignment of new deliveries (whether a new route will be a city route or a 

rural route). There were an estimated 1,300 disputes at the national and 

local levels related to this issue at the end of 2003. USPS and the two 

unions established a joint task force in May 2003 to expedite resolution of 

outstanding city/rural jurisdictional disputes. Furthermore, additional 

disputes regarding the process for conducting mail counts and route 

inspections have also been raised. Mail counts and route inspections are 

key factors in determining carrier duties and compensation, and thus total 

delivery costs. Mail counts and route inspections are used to identify the 

amount of mail sorted and handled by carriers during an average workday 

and what determines the efficiency of the current route structure. 

USPS Issues USPS has raised issues about its lack of flexibility to make necessary 

changes to its delivery and retail networks. Changes to USPS’s retail 

infrastructure are limited by both legal requirements and practical 

constraints. As previously mentioned, USPS by law cannot close a small 

post office solely because it is operating at a deficit. Furthermore, Members 

of Congress and other stakeholders have often intervened in the past when 

USPS has attempted to close post offices or consolidate postal facilities. 

Proposed post office closures have provoked intense opposition because 

local post offices are sometimes viewed as (1) a critical means of obtaining 

ready access to postal retail services, (2) a part of American culture and 

business, and (3) critical to the viability of certain towns or central 

business districts. In regards to its delivery network, USPS appropriations 

acts have included provisions on 6-day-a-week delivery and rural mail 

service, and there is strong stakeholder opposition to cuts in the frequency 

or quality of postal services. The President’s Commission agreed that USPS 

might need additional flexibility as part of establishing the proper 

configuration of a 21st century postal network; however, the commission 

stated that mechanisms are needed to ensure accountability and oversight.
Page 35 GAO-04-803 USPS Delivery and Retail Services

Retail Optimization 

Communication Issues

The Postmaster General has stated that without greater flexibility, it may 

become increasingly difficult for USPS to continue achieving cost savings, 

and that if USPS is unable to significantly restrain its costs, it may have to 

reconsider universal service as it is provided today. Although USPS faces 

some constraints to making changes, the previous section of this report 

illustrates that there are actions USPS could take to improve efficiency in 

the delivery and retail areas while improving customer service. For 

example, low-cost retail alternatives, such as the Internet, provide USPS 

with an opportunity to enhance customer access nationwide, while at the 

same time offering cost-effective and convenient ways to provide service. 

However, without more information about how USPS will make decisions 

related to changing its postal network, including closures or consolidations 

of existing facilities, it is difficult for customers to understand how they 

may be affected by these decisions. It is particularly important that 

customers in rural areas, who may be more dependent on their local post 

offices, are informed about how they may be affected by these decisions.

We agree that actions are needed to restrain costs and that some legal and 

practical restraints limit USPS’s flexibility to make changes to its network. 

However, USPS’s communication with Congress and stakeholders about 

what it intends to do and how it intends to optimize its retail network is 

important so that stakeholders will have more confidence in USPS’s 

decisions. Stakeholders, who are a critical component of implementing 

successful changes, have raised concerns about potential changes to 

USPS’s network. Specifically, as previously mentioned, stakeholders have 

been concerned about a perceived lack of communication throughout 

USPS’s decision-making process. Examples include insufficient 

information regarding potential changes such as closing post offices or 

making adjustments to post office hours. Furthermore, recent postal 

reform legislation reflects concerns about the future provision of delivery 

and retail services. Both the House and Senate postal reform legislation 

introduced in May 2004—The Postal Accountability and Enhancement Act, 

H.R. 4341 and S. 2468—included provisions that required a study of 

universal postal service and what the future of universal service may entail. 

The Senate bill required USPS to provide Congress with a discussion of 

potential changes to its infrastructure, including its delivery and retail 

networks. This proposed plan provides an opportunity for USPS to provide 

Congress with additional information that will facilitate better 

understanding of what USPS hopes to accomplish through its optimization 

efforts and how it plans to make its decisions in this area.
Page 36 GAO-04-803 USPS Delivery and Retail Services

We have previously reported on the importance of keeping Congress and 

stakeholders informed throughout the decision-making process to 

successfully transform the Postal Service.17 Last November, we 

recommended that USPS develop an integrated plan to optimize its 

infrastructure and workforce, in collaboration with its key stakeholders, 

and make the plan available to Congress and the public.18 USPS agreed with 

this recommendation and in January 2004 presented its Infrastructure and 

Workforce Rationalization Plan to the House and Senate oversight 

committees. The plan included a section on improving its retail network by 

increasing access and customer convenience in a cost-efficient manner. 

Although this plan included a general discussion of initiatives that USPS is 

planning for its retail and delivery network, it did not explain how USPS 

planned to make decisions—that is, what specific criteria would be used as 

the basis for USPS decisions. For example, USPS has discussed general 

principles that it has established as a basis for its retail optimization 

strategy as outlined in its Transformation Plan and Transformation Plan 

Update. We previously discussed these principles, and they included 

targeting underserved areas, particularly in high-growth areas, and 

replacing redundant, low-value access points with alternative access 

methods. However, the plan did not discuss how USPS would define 

“underserved” areas for determining where new self-service options are to 

be located, or “redundant, low-value access points” that are to be replaced. 

It is not clear if USPS has consulted its customers, including those in rural 

areas, in developing its network optimization plans to determine their 

needs, their preferences on retail alternatives, and which postal facilities 

may be needed to provide postal services. Further, it is not clear if USPS’s 

optimization strategy related to removing redundant or excess postal 

facilities would follow the existing process for closing post offices, which 

essentially is a local decision in response to local circumstances, such as a 

postmaster vacancy, lease expiration, building damage, or an emergency. If 

such an incremental approach based on local decisions is used to 

implement USPS’s retail optimization strategy, it is not clear that the 

implementation would lead to the desired result of a systemwide optimal 

network overall.

17U.S. General Accounting Office, U.S. Postal Service: Deteriorating Financial Outlook 

Increases Need for Transformation, GAO-02-355 (Washington, D.C.: Feb. 28, 2002).

18GAO-04-108T.
Page 37 GAO-04-803 USPS Delivery and Retail Services

Conclusions USPS’s retail optimization strategy could be an opportunity for a “win-win” 

outcome for both USPS and its customers, including those in rural areas, in 

that USPS could reduce its costs while at the same time improving access 

for its customers. According to USPS, it is already in the process of 

providing its customers with greater access to its services through a variety 

of new, more convenient alternatives. USPS has also initiated efforts that 

have increased efficiencies and cut costs and plans further actions in the 

future. However, many stakeholders, including Members of Congress, are 

concerned about the limited information and communication USPS has 

provided regarding its network optimization plans and how customers will 

be affected by its proposed changes. Without more information about how 

USPS will make decisions related to changing the current postal network, 

including closures or consolidations of existing facilities, it will be difficult 

for customers to understand how they may be affected—particularly those 

in rural areas who may be more dependent on their local post offices.

Effective communication is needed to demonstrate that USPS wants to 

partner with its customers in communities nationwide to provide more 

convenient and cost-effective delivery and retail services and to preserve 

post offices needed to support universal service. Improved transparency 

and accountability mechanisms are also needed to raise stakeholder 

confidence that decisions will be made in a fair, rational, and fact-based 

manner. Such mechanisms could include a clear process to ensure that key 

stakeholders are consulted and properly informed of decisions that may 

affect them. Increasing communication and collaboration with key 

stakeholders may also help facilitate better understanding of the different 

challenges and needs facing USPS and its customers in urban and rural 

areas, the rationale for decisions, the cost implications related to budget 

and rate decisions, and the trade-offs involved with actions to achieve a 

more efficient and effective network.

Recommendation for 

Executive Action

To facilitate USPS’s progress in implementing its planned actions aimed at 

improving efficiency in its postal network while increasing customer 

service, we recommend that the Postmaster General provide improved 

transparency and communication to inform Congress and other 

stakeholders of the actions it plans to take regarding its retail optimization 

strategy, including (1) the criteria USPS will use to make decisions related 

to changing its retail network; (2) the process it will use to communicate 

with postal stakeholders throughout the decision-making process; (3) the 
Page 38 GAO-04-803 USPS Delivery and Retail Services

impact on customers, including those in rural areas; and (4) the time 

frames for implementing all phases of its retail optimization initiative.

Agency Comments and 

Our Evaluation

We received written comments on a draft of this report from the Acting 

Vice President of Delivery and Retail for USPS in a letter dated June 30, 

2004. USPS’s comments are summarized below and reprinted in appendix 

III. USPS officials also provided technical and clarifying comments, which 

were incorporated into the report where appropriate. USPS’s letter 

concurred with “the spirit of the report’s findings” and acknowledged that 

USPS must continue to take steps to improve the efficiency and 

effectiveness of its delivery and retail networks. In response to the four 

specific provisions included in our recommendation, USPS stated the 

following:

• The criteria used to make retail decisions vary because retail 

optimization is a dynamic and evolving process, and the key to making 

any postal decision is quality service to customers. There are, however, 

specific criteria for certain elements of the retail network (e.g., 300 

books of stamps must be sold by the retailer each month in order to 

participate in the consignment program).

• USPS will continue to advise postal stakeholders (e.g., congressional 

staff, management associations, labor unions, and employees) of 

changes that affect the retail network.

• It is USPS’s policy to notify customers of changes that impact their 

services. USPS will review how best to communicate those types of 

changes to customers and develop a process for the field to notify 

headquarters of changes in operating hours that could potentially 

impact the community.

• The retail optimization initiative does not have a fixed time frame 

because it is an evolutionary process. As such, USPS said that “it would 

be impossible to provide a time frame for implementing all phases of the 

retail optimization initiative.”

We agree that the retail optimization effort is a dynamic and evolving 

process, and that the actions described by USPS to improve 

communication with its local districts and other stakeholders about 

changes to the retail network are a step in the right direction. However, 

even though there are constant changes in the retail network, it is 
Page 39 GAO-04-803 USPS Delivery and Retail Services

important for stakeholders to feel confident that USPS’s retail decisions are 

made in a fair, rational, and fact-based manner. Therefore, we continue to 

believe that establishing and communicating the criteria that provide the 

basis for USPS’s retail decisions would help to raise this level of 

confidence. Furthermore, although USPS says it has not identified a fixed 

time frame for its retail optimization efforts because it is an evolutionary 

process, this does not mean that time frames for specific projects or 

initiatives are not needed. Time frames can, and should, be established for 

the different phases of USPS’s retail initiatives to provide postal 

stakeholders with information on when these initiatives will be deployed so 

that interested parties, such as mailers, can determine the implications for 

their own business plans. In addition, time frames are needed so that USPS 

and stakeholders can evaluate the performance of these initiatives and how 

they fit into the network optimization plans as a whole, including the 

potential impact on costs and rates.

We will send copies of this report to the Ranking Minority Member of the 

Senate Committee on Governmental Affairs, the Chairmen and Ranking 

Minority Members of the House Committee on Government Reform and the 

House Special Panel on Postal Reform and Oversight, Senator Thomas R. 

Carper, the Postmaster General, the Chairman of the Postal Rate 

Commission, and other interested parties. We will also make copies 

available to others on request. In addition, this report will be available at no 

charge on GAO's Web site at http://www.gao.gov.

If you have any questions about this report, please contact me at (202) 512-

2834 or at goldsteinm@gao.gov. Key contributors to this assignment were 

Teresa Anderson, Joshua Bartzen, and Heather Halliwell.

Sincerely yours,

Mark L. Goldstein

Director, Physical Infrastructure Issues
Page 40 GAO-04-803 USPS Delivery and Retail Services

Appendix I

Objectives, Scope, and Methodology ApApenednxidexiIs

To meet our first objective, which was to provide information on the U.S. 

Postal Service’s (USPS) policies, procedures, and practices for providing 

rural delivery services, and how they compare with those in urban areas, 

we discussed USPS’s basis for providing delivery and retail services, the 

legal framework under which these decisions are made, and the process 

used to carry out these decisions with USPS officials. We supplemented 

this information with (1) USPS documents and manuals describing letter 

carrier duties and the roles of USPS officials in managing delivery services 

and (2) USPS operational guidance for providing service, including 

establishing delivery routes and locations of deliveries, retail alternatives, 

and services/locations of these alternatives. Also, because USPS is subject 

to legal and statutory considerations when making retail and delivery 

decisions, we reviewed the applicable statutes that establish USPS’s 

mission and role as a provider of universal postal service and the collective 

bargaining contracts established with its two sets of bargaining 

employees—the National Rural Letter Carriers Association and the 

National Association of Letter Carriers. We discussed USPS’s current 

policies and procedures with various USPS officials who were 

knowledgeable about the retail and delivery networks, as well as with letter 

carrier and postmaster representatives and Postal Rate Commission 

officials. We obtained, reviewed, and analyzed delivery and retail data 

pertaining to routes, delivery points, and retail network from various 

sources, including USPS officials, the Annual Report, and the 

Comprehensive Statement of Operations. We assessed the reliability of 

data provided by USPS by reviewing the data for inconsistencies and 

checking for duplicate or missing values. In those cases where we found 

discrepancies, we worked with USPS to address the problems. We 

determined that these data were sufficiently reliable for the purposes of 

this report.

To meet the second objective, which was to discuss changes USPS is 

making, and planning to make, related to providing postal services to rural 

areas and the potential impact of these proposed changes, we reviewed, 

analyzed, and discussed with USPS officials actions that were planned as 

part of its Transformation Plan and its related updates, growth plans, 

operational strategies, Infrastructure and Workforce Rationalization plan, 

as well as the recommendations to USPS as part of the President’s
Appendix I

Objectives, Scope, and Methodology

Page 41 GAO-04-803 USPS Delivery and Retail Services

Commission on the United States Postal Service (the President’s 

Commission) report.1

To meet our third objective of identifying issues that USPS may need to 

consider when making decisions related to providing postal services in 

rural areas, we interviewed various USPS officials, such as retail and 

delivery managers, customer contact representatives, and administrators 

of the Customer Satisfaction Management Survey. To gather additional 

information on stakeholder issues and preferences, we interviewed 

representatives from the letter carrier and postmaster groups, analyzed 

stakeholder comments raised before the President’s Commission, reviewed 

the Hart Study that was conducted on behalf of the commission, reviewed 

USPS documentation related to its planned actions, and examined 

newspaper reports of customer concerns about changes in delivery and 

retail access.2

 Due to the current legislation proposed in both houses of 

Congress, we reviewed this proposed legislation as well the pertinent 

legislative history of congressional concerns in the delivery and retail 

areas.

To gain an additional understanding of customer issues with USPS, we met 

with USPS Congressional Relations staff to gather information on the types 

of written customer inquiries that are sent to Members of Congress. These 

staff provided us with a sample of letters related to retail and delivery 

issues that were sent to Members of Congress who then forwarded these 

concerns to USPS for resolution. USPS established categories for 

documenting these issues (e.g., delivery service, delivery method, and retail 

service). We requested copies of letters in selected retail and delivery 

categories that in 2002 and 2003 were sent to Members of Congress who 

provided oversight of USPS. We analyzed these letters and established our 

own set of delivery and retail categories on the basis of information 

presented in the letters. We felt it was necessary to establish our own set of 

categories because some letters contained issues that were raised across 

categorization areas.

1

The President’s Commission on the United States Postal Service, Embracing the Future: 

Making the Tough Choices to Preserve Universal Mail Service (Washington, D.C.: July 31, 

2003).

2

Peter D. Hart Research Associates, A Consumer Survey About the U.S. Postal Service, May 

2003.
Page 42 GAO-04-803 USPS Delivery and Retail Services

Appendix II

Number of Post Offices by State, Year-end 

2003 ApendxiI

State

USPS retail facilitiesa

Populationb

Residents served 

per retail facilityb Post offices

Classified 

stations and 

branches

Contract stations/ 

branches (and 

Community Post 

Offices)

Total USPS retail 

facilities

AK 184 34 79 297 626,932 2,111 

AL 558 83 34 675 4,447,100 6,588 

AR 582 57 35 674 2,673,400 3,966 

AZ 198 97 147 442 5,130,632 11,608 

CA 1,056 721 351 2,128 33,871,648 15,917 

CO 381 88 64 533 4,301,261 8,070 

CT 233 91 26 350 3,405,565 9,730 

DC 1 61 10 72 572,059 7,945 

DE 53 17 4 74 783,600 10,589 

FL 457 377 271 1,105 15,982,378 14,464 

GA 606 153 72 831 8,186,453 9,851 

HI 72 32 21 125 1,211,537 9,692 

IA 892 34 112 1,038 2,926,324 2,819 

ID 226 19 37 282 1,293,593 4,587 

IL 1,225 190 96 1,511 12,419,293 8,219 

IN 716 77 64 857 6,080,485 7,095 

KS 603 44 111 758 2,688,418 3,547 

KY 785 56 71 912 4,041,769 4,432 

LA 468 75 36 579 4,468,976 7,718 

MA 398 234 54 686 6,349,097 9,255 

MD 394 110 44 548 5,296,486 9,665 

ME 433 20 44 497 1,274,923 2,565 

MI 822 140 252 1,214 9,938,444 8,187 

MN 734 90 153 977 4,919,479 5,035 

MO 912 119 105 1,136 5,595,211 4,925 

MS 407 42 51 500 2,844,658 5,689 

MT 312 14 55 381 902,195 2,368 

NC 741 149 81 971 8,049,313 8,290 

ND 341 7 52 400 642,200 1,606 

NE 479 38 65 582 1,711,263 2,940 

NH 227 20 26 273 1,235,786 4,527 

NJ 520 234 30 784 8,414,350 10,733 
Appendix II

Number of Post Offices by State, Year-end 

2003

Page 43 GAO-04-803 USPS Delivery and Retail Services

Sources: USPS, U.S. Bureau of the Census.

a

There are 200 retail facilities in the following United States territories that were not included in this 

analysis: American Samoa, Federated States of Micronesia, Guam, Marshall Islands, Northern 

Mariana Islands, Puerto Rico, Palau, and Virgin Islands.

b

Population figures are from the 2000 Census. The average number of residents per retail facility is an 

estimate and might be affected by changes in population between 2000 and 2003.

NM 286 47 66 399 1,819,046 4,559 

NV 85 53 21 159 1,998,257 12,568 

NY 1,513 438 124 2,075 18,976,457 9,145 

OH 996 251 158 1,405 11,353,140 8,081 

OK 576 57 49 682 3,450,654 5,060 

OR 332 61 93 486 3,421,399 7,040 

PA 1,711 292 128 2,131 12,281,054 5,763 

RI 51 48 7 106 1,048,319 9,890 

SC 360 66 51 477 4,012,012 8,411 

SD 338 6 59 403 754,844 1,873 

TN 533 93 52 678 5,689,283 8,391 

TX 1,409 355 283 2,047 20,851,820 10,187 

UT 176 32 93 301 2,233,169 7,419 

VA 809 182 61 1,052 7,078,515 6,729 

VT 270 15 19 304 608,827 2,003 

WA 443 128 100 671 5,894,121 8,784 

WI 718 53 106 877 5,363,675 6,116 

WV 759 36 40 835 1,808,344 2,166 

WY 176 7 17 200 493,782 2,469 

Total 27,557 5,743 4,180 37,480 281,421,546 7,509

(Continued From Previous Page)

State

USPS retail facilitiesa

Populationb

Residents served 

per retail facilityb Post offices

Classified 

stations and 

branches

Contract stations/ 

branches (and 

Community Post 

Offices)

Total USPS retail 

facilities
Page 44 GAO-04-803 USPS Delivery and Retail Services

Appendix III

Agency Comments from the United States 

Postal Service ApendxiI
Appendix III

Agency Comments from the United States 

Postal Service

(543067) Page 45 GAO-04-803 USPS Delivery and Retail Services
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

Obtaining Copies of 

GAO Reports and 

Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost 

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To 

have GAO e-mail you a list of newly posted products every afternoon, go to 

www.gao.gov and select “Subscribe to Updates.”

Order by Mail or Phone The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to:

U.S. Government Accountability Office

441 G Street NW, Room LM

Washington, D.C. 20548

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Congressional 

Relations

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548

Public Affairs Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548
United States

Government Accountability Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Service Requested

Presorted Standard

Postage & Fees Paid

GAO

Permit No. GI00