U.S. POSTAL 

SERVICE 

Challenges Related to 

Restructuring the 

Postal Service’s Retail 

Network 

Report to Congressional Requesters

April 2012 

GAO-12-433 

United States Government Accountability Office

GAO 
 United States Government Accountability Office 

Highlights of GAO-12-433, a report to 

congressional requesters 

April 2012 

U.S. POSTAL SERVICE

Challenges Related to Restructuring the Postal 

Service’s Retail Network 

Why GAO Did This Study 

Since 2006, USPS has accumulated 

losses of $25 billion and projects a 

$14.1 billion net loss for fiscal year 

2012. In September 2011, the 

Postmaster General testified that 

USPS needed to reduce its annual 

costs by $20 billion, or 27 percent of its 

projected expenses. One effort to 

reduce costs includes restructuring, or 

optimizing, the size of USPS’s retail 

network and workforce. The network 

includes approximately 32,000 USPSoperated facilities, such as traditional 

post offices, as well as alternative nonUSPS-operated locations that sell its 

products and services. To optimize this 

network, USPS plans to evaluate and 

locate its retail facilities to maximize 

revenue and minimize costs while still 

providing access to services. 

As requested, this report discusses (1) 

key actions USPS has taken over the 

past 5 years to restructure its retail 

network, (2) concerns raised by 

stakeholders, and (3) the challenges 

USPS faces in changing its retail 

network. GAO analyzed USPS 

documents, interviewed USPS officials 

and stakeholders, and observed public 

meetings on retail facility closures. 

What GAO Recommends 

GAO makes no recommendations in 

this report, as it has previously 

reported on the urgency for Congress 

to allow USPS to adapt its retail 

network to changing customer 

behavior and reduce costs. USPS 

agreed with GAO’s draft report, noting 

limitations it faces to retail 

restructuring. It also observed that 

maintaining the same level of retail 

services will require solutions to cover 

the costs of those services. 

What GAO Found 

Over the past 5 years, the U.S. Postal Service (USPS) has taken several actions 

to restructure its retail network through reducing its workforce and its footprint 

while expanding retail alternatives. USPS officials estimated that it had saved 

about $800 million from reducing the number of work hours dedicated to retail 

operations. USPS also closed 631 of its post offices, but it did not have costsavings estimates for these closures. Most of the facilities closed (500) were in 

response to a postmaster vacancy or the suspension of operations due to an 

expired lease or irreparable damage following a natural disaster. Fewer closures 

(131) have resulted from nationwide reviews that USPS initiated in 2009 and 

2011. USPS has also restructured its retail network by expanding alternatives 

through self-service options as well as partnerships with other retailers. 

Members of Congress, the Postal Regulatory Commission (PRC), the USPS 

Office of Inspector General (OIG), customers, employee associations, and some 

community residents have raised concerns about USPS’s retail restructuring 

initiatives. The concerns include 

 access to postal services, including community residents’ ability to obtain 

retail services, the adequacy of retail alternatives, and changes to delivery 

services; 

 the impact of facility closures on communities; 

 the adequacy of USPS analysis of facilities facing closure and the reliability 

of USPS data, particularly the accuracy of USPS cost savings estimates; 

 the transparency and equity of USPS closure decisions; 

 the fairness of USPS’s facility closure procedures; and 

 changes in who can manage a post office. 

PRC, USPS OIG, and GAO have recommended improvements to address some 

of these issues. In particular, GAO has recommended that USPS develop a plan 

that addresses both traditional post offices and retail alternatives and ensures 

that USPS has a viable strategy for effectively adapting its networks to changing 

mail use and maintaining adequate service as it reduces costs. USPS officials 

have said they are in the process of addressing these recommendations. 

USPS faces challenges, such as legal restrictions and resistance from some 

Members of Congress and the public, that have limited its ability to change its 

retail network. For example, USPS is supposed to be self-financing, but it is also 

restricted by law from making decisions that businesses would commonly make, 

such as closing unprofitable units. Additionally, some Members of Congress and 

the public have challenged USPS’s plans to close retail facilities in their districts 

or communities. Certain policy issues remain unresolved related to what level of 

retail services USPS should provide, how the cost of these services should be 

paid, and how USPS should optimize its retail network. Pending legislation takes 

differing approaches to addressing these policy issues. If Congress prefers to 

retain the current level of retail service and associated network, decisions will 

need to be made about how USPS will pay for these services, including through 

additional cost reductions or revenue sources. 

View GAO-12-433. For more information, 

contact Lorelei St. James at (202) 512-2834 or 

stjamesl@gao.gov. 
Page i GAO-12-433 U.S. Postal Service 

Letter 1 

Background 4

USPS Has Taken Several Actions to Restructure Its Retail Network 8

Stakeholders Have Expressed Concerns about USPS Retail 

Initiatives 11

Challenges Restrict USPS from Changing Its Retail Network 19

Concluding Observations 23

Agency Comments 23

Appendix I Objectives, Scope, and Methodology 25

Appendix II Comments from the U.S. Postal Service 30

Appendix III GAO Contact and Staff Acknowledgments 31

Tables

Table 1: Retail Network Facts, Fiscal Years 2007-2011 6

Table 2: USPS-Operated Retail Network Workforce, Fiscal Years 

2007-2011 8

Table 3: Summary of USPS Retail Closure Initiatives and Actions 9

Table 4: USPS Retail Alternative Revenue Changes, Fiscal Years 

2007-2011 10

Table 5: Summary of Challenges to Restructuring USPS Retail 

Network and Proposed Options 22

Figure

Figure 1: Percent Changes in USPS-Operated Retail Facilities, 

Transactions, and Customer Visits, Fiscal Years 2007-2011 2

Contents
Page ii GAO-12-433 U.S. Postal Service 

Abbreviations

2009 Retail Initiative Station and Branch Optimization Initiative 

2011 Retail Initiative Retail Access Optimization Initiative 

OIG USPS Office of Inspector General

PRC Postal Regulatory Commission 

USPS U.S. Postal Service

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Page 1 GAO-12-433 U.S. Postal Service 

United States Government Accountability Office 

Washington, DC 20548

April 17, 2012

The Honorable Thomas R. Carper

Chairman

Subcommittee on Federal Financial Management,

Government Information, Federal Services, 

and International Security, 

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Darrell Issa

Chairman

Committee on Oversight and Government Reform

House of Representatives

Congress conceived of the U.S. Postal Service (USPS) as a financially 

self-sufficient entity that was expected to cover its expenses almost 

entirely through postal revenues,1 yet at the end of fiscal year 2011, it had 

incurred a $5.1 billion loss for the year, had $2 billion remaining on its $15 

billion borrowing limit,2 and had not yet made its $5.5 billion scheduled 

retiree health benefits payment to the federal government.3 Approximately 

80 percent of its retail facilities do not generate sufficient revenue to cover 

their costs. Moreover, the number of USPS-operated retail facilities,4

 

1

According to the Postal Reorganization Act of 1970, “[p]ostal rates and fees shall provide 

sufficient revenue so that the total estimated income and appropriations to the Postal 

Service will equal as nearly as practicable total estimated costs of the Postal Service.” 

Pub. L. No. 91-375, 84 Stat. 760 (Aug. 12, 1970) (formerly U.S.C. 39 § 3621). See also, 

Payments on Unfunded Liability by the U.S. Postal Service to Civil Service Retirement 

Fund: Hearing Before the Committee on Post Office and Civil Service, United States 

Senate, on H.R. 29, 93rd Cong. 73-74 (statement by Post Office and Civil Service 

Committee Chairman Gale McGee). 

about 32,000, has remained largely unchanged over the past 5 years 

2

USPS is authorized to borrow $3 billion annually and a maximum of $15 billion. 39 U.S.C. 

§ 2005(a). USPS borrows money from the U.S. Treasury via the Federal Financing Bank. 

3

Originally due at the end of fiscal year 2011, USPS’s $5.5 billion retiree health benefit 

payment was delayed until August 1, 2012. Pub. L. No. 112-74 (Dec. 23, 2011).

4

USPS-operated retail facilities include (1) main post offices, where local postmasters 

oversee retail operations in the geographic area; (2) postal stations located within a 

municipality’s corporate limits; and (3) postal branches located outside a municipality’s 

corporate limits.

 
 

Page 2 GAO-12-433 U.S. Postal Service 

even as visits to, and transactions at, postal retail facilities have 

decreased by about 16 percent and 18 percent, respectively. Also during 

this period, mail volume has declined by about 21 percent, and USPS’s 

financial condition continued to deteriorate as net losses accumulated to 

more than $25 billion. USPS projects a $14.1 billion net loss for fiscal 

year 2012 and faces a continuing decline in the demand for its products 

and services. Figure 1 compares the decline in transactions and visits to 

USPS-operated facilities with the percentage decline in USPS-operated 

facilities over the past 5 years.

Figure 1: Percent Changes in USPS-Operated Retail Facilities, Transactions, and 

Customer Visits, Fiscal Years 2007-2011

To address its financial crisis, the Postmaster General told Congress last 

September that USPS plans to reduce annual costs organization-wide by 

$20 billion—or 27 percent of its projected $73 billion total operating 

expenses—by fiscal year 2015.5

 

5

Statement of Postmaster General Patrick R. Donahoe before the Committee on 

Homeland Security and Governmental Affairs, United States Senate (Sept. 6, 2011).

One of the cost-savings initiatives he 

discussed was optimizing the retail network by reducing the number of 

USPS-operated facilities and increasing the number of lower-cost, 

alternative retail options, such as self-service kiosks and partnerships 

with retailers, that would preserve service close to where customers live, 
 

Page 3 GAO-12-433 U.S. Postal Service 

work and shop. Currently, in addition to USPS-operated facilities, 

customers can purchase postal products or services at over 70,000 

locations, including non-USPS-operated facilities consisting of 3,700 

contract postal units and community post offices,6 retailers that have 

partnered with USPS to sell postal products and services, and on its 

website.7

The scale of the actions that USPS plans to take over the next 3 years is 

greater than anything it has previously undertaken. It plans to review 

approximately half of its retail facilities for possible closure, reduction in 

hours, and alternative access, including transfer of services to a contract 

unit or rural delivery service. In addition, USPS is exploring expansion of 

alterative access through such things as franchising opportunities and use 

of kiosks to create additional channels to access retail services. Some 

Members of Congress have raised concerns about these plans and the 

potential negative impact that closing post offices could have on affected 

communities. Congress has been considering several postal reform bills to 

put USPS on a path to financial viability, and some Members have asked 

USPS to postpone retail facility closures so as not to pre-empt 

congressional action on postal reform. In response, USPS agreed to place 

a moratorium on closing any postal retail facilities until May 15, 2012.

Customers can also order supplies by phone and have 

packages picked up at their door.

To help inform your consideration of actions needed to restructure USPS 

operations and help it achieve financial viability, you asked us to examine 

its retail network. This report discusses (1) key actions USPS has taken 

to restructure its retail network over the past 5 years; (2) concerns raised 

by postal stakeholders, including Congress, the Postal Regulatory 

Commission (PRC), USPS Office of Inspector General (OIG), and postal 

business and residential customers, and USPS’s response to these 

concerns; and (3) the challenges that USPS faces in changing its retail 

network. To address these objectives, we reviewed USPS guidance and 

other documents on its retail actions and initiatives, as well as retail 

network goals, analyzed USPS retail network operating statistics from 

 

6

Contract postal units are operated by nonpostal employees in privately operated 

businesses, such as convenience stores, grocery stores, greeting card stores, and 

pharmacies. Community post offices are contract postal units that are located in small 

communities and function as main post offices. 

7

https://store.usps.com/store. 
 

Page 4 GAO-12-433 U.S. Postal Service 

fiscal years 2007 to 2011, and interviewed agency officials responsible for 

managing and overseeing the retail network. Based on interviews with 

USPS staff about how they collect information and maintain their 

databases, we assessed the reliability of USPS data and noted limitations 

where appropriate. We also noted problems with data and analysis as 

reported by PRC and USPS OIG, and we analyzed regulatory 

proceedings, and proposed legislation addressing postal reform. We 

conducted site visits to the Arkansas and Colorado/Wyoming postal 

districts to observe public meetings8 and obtain information on challenges 

to restructuring the retail network. We selected these sites based on 

several criteria, including the number and timing of upcoming public 

meetings and location.9 We interviewed stakeholders relevant to retail 

network restructuring, including USPS officials involved in district reviews 

of proposed facility closures, PRC officials, and postmaster associations. 

We also reviewed laws, regulations, legislative proposals, and prior work 

by GAO, USPS OIG, PRC, and the Congressional Research Service.10

We conducted this performance audit from April 2011 to April 2012 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

USPS has a universal service obligation, part of which requires it to 

provide access to retail services. Several statutory provisions govern 

USPS when considering changes to its retail network, such as the 

following.

• Section 101 of Title 39 of the U.S. Code states, “The Postal Service 

shall have as its basic function the obligation to provide postal 

 

8

In addition to observing public meetings during site visits, we attended public meetings in 

Maryland, Virginia, and Washington, D.C. 

9

See appendix I for more information on our site visit selections.

10See appendix I for a more detailed description of our scope and methodology.

Background
 

Page 5 GAO-12-433 U.S. Postal Service 

services to bind the Nation together through the personal, 

educational, literary, and business correspondence of the people.”11

• USPS is required to serve the public and provide a maximum degree 

of effective and regular postal services to rural areas, communities, 

and small towns where post offices are not self-sustaining.12

• USPS is authorized to determine the need for post offices and to 

provide such offices as it determines are needed.13

• Regarding post offices, the law requires that no small post office shall 

be closed14 solely for operating at a deficit,15 and language in annual 

appropriations has provided that none of the appropriated funds shall 

be used to consolidate or close small rural and other small post 

offices.16

Further, before closing a post office or other USPS-operated retail facility, 

USPS must, among other steps, consider the effects on the communities 

served, its employees, and the services provided, as well as economic 

savings to be achieved, and it must provide customers with at least 60 

days of notice before the proposed closure date. In addition, any person 

served by the post office may appeal its closure to PRC, and PRC has 

120 days to affirm USPS’s decision or remand it for further 

consideration.17

 

1139 U.S.C. § 101(a).

However, the ultimate authority to close a post office 

rests with the USPS. A more-detailed discussion of USPS’s process for 

1239 U.S.C. § 101(b).

1339 U.S.C. § 404(a)(3). 

14USPS guidance uses the term “discontinuance” to describe ending operations at a 

USPS-operated retail facility, such as a post office, station, or branch. Stations and 

branches are subordinate units of a main post office and generally offer the same 

products and services as post offices. Throughout this report, we use the term “closure,” 

except when referring to USPS guidance. 

1539 U.S.C. § 101(b).

16For example, see Pub. L. No. 112-74, 125 Stat. 786, 923 (Dec. 23, 2011).

1739 U.S.C. § 404(d)(5).
 

Page 6 GAO-12-433 U.S. Postal Service 

closing postal facilities is provided in a recent report by the Congressional 

Research Service.18

The size of USPS’s retail network has remained largely unchanged over 

the past 5 years, although customer visits and transactions have

declined, as shown in table 1.

Table 1: Retail Network Facts, Fiscal Years 2007-2011

Year 2007 2008 2009 2010 2011

Percentage 

change from 

2007-2011

Total USPS-operated 

retail facilities

32,695 32,741 32,662 32,528 32,196 -1.5

Total non-USPSoperated retail facilitiesa 4,026 3,982 3,834 3,694 3,586 -10.9

Total retail transactions 

in USPS-operated retail 

facilities (in billions)b

2.51 2.39 2.27 2.16 2.06 -17.9

Total customer visits to 

USPS-operated retail 

facilities (in billions)b

1.22 1.17 1.12 1.07 1.02 -16.4

Source: USPS.

a

Non-USPS operated includes contract postal units and community post offices. 

b

USPS does not track retail transactions and customer visits at all facilities. Therefore, USPS uses an 

extrapolation to determine the transaction and customer visit information for all USPS-operated retail 

locations. 

In 2002, USPS released a transformation plan19

 

18Congressional Research Service, The U.S. Postal Service: Common Questions about 

Post Office Closures, R41950 (Washington, D.C: Jan. 13, 2012).

that described 

challenges it faced with its retail network and optimization strategy. It also 

described plans to address these challenges—for example, by 

introducing retail alternatives in concert with reducing its retail network 

footprint and operating costs. USPS stated that it would “provide 

customers with easier and more convenient retail access. Postal services 

will be available where customers need them—at home, at work, where 

they shop, or at the post office. The Postal Service will promote the 

convenience of existing, underutilized alternatives and develop new lowcost solutions using technology, partnerships, and product simplification.”

19United States Postal Service Transformation Plan (Washington, D.C.: April 2002). 
 

Page 7 GAO-12-433 U.S. Postal Service 

In 2003, the President’s Commission on the Postal Service issued a 

report that noted many of the nation’s post offices were no longer 

necessary to fulfill USPS’s universal service obligation, given the 

proliferation of alternative retail access points in grocery stores, drug 

stores, ATMs, and other more convenient locales in communities across 

the country.20

We have said that network restructuring is a key action to help USPS 

reduce its costs and improve efficiency. In 2009, we suggested that 

USPS restructure its retail network to eliminate growing excess capacity,

reduce costs, and improve efficiency.

The commission recommended that USPS maximize the 

potential of low-activity post offices by operating those necessary for 

fulfilling the universal service obligation, even if they operate at a 

substantial economic loss. However, where low-activity post offices are 

not necessary, it should have flexibility to dispose of them, with 

appropriate local community involvement, and existing statutes and 

appropriations that limit flexibility should be repealed.

21 Additionally, in 2011, we 

recommended that it develop a plan for optimizing its retail network that 

addresses both traditional post offices and retail alternatives.22

In February 2012, USPS released a 5-year business plan, with an 

organization-wide goal to achieve $22.5 billion in annual cost savings 

through a combination of legislative and operational changes,

 A senior 

USPS official told us in January 2012 that USPS was in the process of 

developing a retail optimization plan.

23

 

20President’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). 

including 

$2 billion in savings from optimizing the retail network. According to 

USPS, it plans to reduce its total workforce of 557,000 employees by 

155,000 within the next 5 years through attrition, as over half of its career 

employees are now retirement-eligible. The plan did not indicate how 

many of these proposed employee reductions would occur as a result of 

changes to its retail network.

21GAO, High Risk Series: Restructuring the U.S. Postal Service to Achieve Sustainable 

Financial Viability, GAO-09-937SP (Washington, D.C. July 2009). 

22GAO, U.S. Postal Service: Action Needed to Maximize Cost-Saving Potential of 

Alternatives to Post Offices, GAO-12-100 (Washington, D.C. Nov. 17, 2011).

23This 5-year business plan is separate from the USPS’s retail optimization plan. 
 

Page 8 GAO-12-433 U.S. Postal Service 

Over the past 5 years, USPS has taken several actions to change its 

retail network through reducing its workforce and retail footprints, while 

expanding retail alternatives. It estimated that it saved about $800 million 

by reducing retail work hours during this period.24 It also closed 631 of its 

post offices, but it did not have cost savings estimates related to these 

closures. Further, most of the facilities closed (500) were post offices 

where operations had first been suspended due to emergencies or a 

postmaster vacancy. Fewer closures (131) have resulted from the 

nationwide reviews that USPS initiated in 2009 and 2011.

Over the past 5 years, USPS reduced the number of retail clerks by 26 

percent and the number of postmasters by 7.4 percent at USPS-operated 

facilities, as shown in table 2. It also created a new noncareer postal 

support employee position, whose wages will be approximately one-third 

of a clerk’s average wage.25

Table 2: USPS-Operated Retail Network Workforce, Fiscal Years 2007-2011

An agreement reached with the American 

Postal Workers Union in May 2011 allows USPS to increase its use of 

noncareer employees by up to 20 percent of clerk positions covered by 

the agreement. In related efforts to cut costs, USPS has reduced total 

retail work hours of clerks and postmasters by about 20 percent since 

fiscal year 2006 through employee attrition and schedule adaptation.

Year 2007 2008 2009 2010 2011

Percentage 

change 

from 

2007-2011

Number of postmasters 25,285 25,250 23,672 23,111 23,426 -7.4

Number of retail clerks 41,086 39, 297 35,321 32,089 30,393 -26.0

Number of retail work 

hours (in millions)a 106.4 103.2 94.1 87.7 85.1 -20.0

Source: USPS.

a

This number includes postmaster and clerk hours dedicated to retail operations. 

 

24In responding to questions about retail savings, USPS provided cost-savings data 

related to retail work-hour reductions only. We requested annual cost-savings data related 

to specific facilities and initiatives for fiscal years 2007 through 2011, but USPS did not 

provide this information. 

25USPS reports that an average hourly rate for a clerk is $42.40, whereas a postal support 

employee will be paid $14.60 per hour.

USPS Has Taken 

Several Actions to 

Restructure Its Retail 

Network

Retail Workforce 

Reductions
 

Page 9 GAO-12-433 U.S. Postal Service 

During the past 5 years, USPS designed two nationwide initiatives—

known as the Station and Branch Optimization Initiative (2009 Retail 

Initiative) and the Retail Access Optimization Initiative (2011 Retail 

Initiative)—to review (1) over 3,000 USPS-operated retail facilities in 

urban and suburban areas and (2) about 3,650 primarily rural facilities for 

possible closure. Table 3 describes key information about these 

initiatives.

Table 3: Summary of USPS Retail Closure Initiatives and Actions

Initiative Time frame Objective Action Results

Station and Branch 

Optimization and 

Consolidation Initiative

Began in 2009. 

Completed in 2011.

Identify and take 

advantage of 

opportunities for 

increased efficiency 

while also ensuring that 

USPS maintains postal 

facilities of such 

character and in such 

locations that postal 

patrons have ready 

access to postal 

services. 

Over 3,000 large stations 

and branches, primarily 

in urban and suburban 

areas, were to be 

considered for potential 

closure. This population 

was reduced by districtled prescreening to 

approximately 760 

facilities.

Closed 131 stations and 

branches by the end of 

fiscal year 2011.

Retail Access 

Optimization Initiative

Began in 2011. Initiative 

is ongoing, but closures 

are on hold.

Evaluate the postal retail 

network to determine 

whether the number of 

facilities could be 

reduced while 

maintaining postal 

facilities needed to 

provide postal 

customers with ready 

access to postal 

services consistent with 

reasonable economies 

of postal operations. 

Headquarters officials 

produced a list of 

facilities to be studied for 

potential closure using 

data-driven criteria; 

districts then conducted 

closure studies. A 

majority of the 

approximately 3,650 

facilities to be studied 

were low-revenue, lowworkload small post 

offices in rural areas.

Due to the December 

2011 moratorium on 

USPS retail facility 

closures, no facilities 

have yet been closed 

under this initiative. The 

moratorium is scheduled 

to be lifted on May 15, 

2012. 

Source: GAO analysis of USPS data.

In addition, over the last 5 years, USPS district offices have identified and 

closed around 500 USPS-operated retail facilities on an individual, ad-hoc 

basis as they determined the need.26

 

26USPS has 7 area and 67 district offices throughout the United States. Officials at the 

district offices are charged with conducting studies on closing USPS-operated retail 

facilities. 

These individual closures were in 

response to a postmaster vacancy or the suspension of operations due to 

Retail Footprint Reduction
 

Page 10 GAO-12-433 U.S. Postal Service 

an expired lease or irreparable damage to the facility following a natural 

disaster. Many of these closures were for facilities that had suspended 

operations years ago, but USPS did not formally close the facility until 

recently.

USPS has continued to expand the number and type of alternatives at 

which customers can access retail postal products and services outside 

of USPS-operated postal facilities. These alternatives include self-service 

options as well as partnerships with retailers, which could help it contain 

facility and labor costs while still providing access for customers. 

Examples of retail alternatives include its website, self-service kiosks, 

contract postal units, rural carrier services, approved shippers, Village 

Post Offices,27

Table 4: USPS Retail Alternative Revenue Changes, Fiscal Years 2007-2011

stamp retailers, orders of supplies by telephone, and 

package pickup at the door. The percentage of retail revenue from these 

alternatives increased from 24 percent in 2007 to 35 percent in 2011, as 

shown in table 4. USPS has projected that by 2020, alternatives to USPSoperated retail facilities may account for 60 percent of its retail revenue.

Year 2007 2008 2009 2010 2011

Percentage 

change from 

2007-2011

Total retail revenue

(in billions)

$18.5 $18.7 $17.7 $17.5 $17.0 -8.1

Retail revenue from 

alternatives (in billions)

$4.4 $4.5 $5.0 $5.4 $6.0 + 36.4

Percentage revenue from 

alternative retail

24 24 28 31 35 +46.0

Source: USPS.

 

27The Village Post Office was announced by USPS at the same time it began the 2011 

Retail Initiative. Village Post Offices will be non-USPS operated facilities that offer a range 

of postal products and services that could include stamps, post office boxes, prepaid flat 

rate shipping boxes, and envelopes. They are meant for communities that either have no 

existing post office or that could be affected by ongoing postal facility closure studies.

Alternative Retail 

Expansion
 

Page 11 GAO-12-433 U.S. Postal Service 

Postal stakeholders, including Members of Congress, PRC, USPS OIG, 

customers, employee associations, and some community residents have 

raised concerns about USPS’s retail restructuring initiatives. These

concerns include

• access to postal services, including community residents’ ability to 

obtain retail services, the adequacy of retail alternatives, and changes 

to delivery services;

• the impact of facility closures on communities;

• the adequacy of data analysis of facilities facing closure and the 

reliability of data, particularly with regard to the accuracy of costsavings estimates;

• the transparency and equity of closure decisions;

• the fairness of facility closure procedures; and

• changes in who can manage a post office.

USPS regulations provide that local management host a community 

meeting to obtain public input when it proposes to close a facility.28

At meetings we attended, community residents also raised questions 

about the adequacy of other available alternatives. For example, one 

One 

of the major concerns of community residents at meetings we attended 

was that the communities’ access to postal services would decline if 

USPS closed the facility and the next closest postal facility was too far. 

For example, at a meeting we attended in Colorado, one resident 

described the community as “isolated” and expressed concern that the 

distance to the next closest post office (about 25 miles) was 

unreasonable. Another resident stated that should the post office close, 

driving about 50 miles round-trip to mail packages was not a viable 

option. At another site we visited in Arkansas, postal officials told us that 

proximity of all post offices is one of the major factors they consider when 

reviewing facilities on the 2011 Retail Initiative study list.

 

2839 C.F.R. § 241.3(d)(3).

Stakeholders Have 

Expressed Concerns 

about USPS Retail 

Initiatives

Access to Postal Services
 

Page 12 GAO-12-433 U.S. Postal Service 

resident said that he could not access retail services on USPS’s website 

because Internet service was not available. Additional concerns about 

retail alternatives were raised by PRC. In the 2011 Retail Initiative, PRC 

questioned whether USPS had adequate alternative retail access options 

available for retail facilities that it proposed closing. PRC said that 

alternative access should be considered concurrently with closure studies 

and be presently available. Postal officials at the meetings we attended 

encouraged customers to provide feedback on proposed retail 

alternatives, and USPS officials told us they have attempted to coordinate 

expanding alternatives with closures. They gave the example of 

introducing the concept of partnering with local businesses to create a 

Village Post Office29

Citizens in the rural communities we visited also had concerns about how 

mail delivery, including post office box locations and addresses would 

change if USPS closed the community’s postal facility. USPS officials 

presented rural route service as an alternative, acknowledging that it 

could require an address change. In addition, according to officials, 

because some customers may not meet the requirements to receive rural 

route delivery, they may have to go to another post office to pick up their 

mail. Some community members who used post office boxes as their only 

mode of delivery were worried about the inconvenience of having to travel 

further to another postal facility to pick up their mail.

along with the announcement of the 2011 Retail 

Initiative. However, Village Post Offices may not offer a realistic 

alternative for customers in some rural areas because there may not be 

businesses in the community to host a post office. As of January 2012, 

nine Village Post Offices were in operation, and 13 others were under 

contract, according to USPS.

30

 

29With Village Post Offices, USPS intends to partner with existing businesses, town halls, 

or government centers to provide a limited array of postal products and services to the 

local community, including mail collection boxes, post office boxes, stamps, and flat-rate 

shipping and mailing products. USPS launched its first Village Post Office in the town of 

Malone, Washington, in the summer of 2011.

Several customers 

30Per USPS policy, postal residential customers receive one free form of mail delivery in 

the United States. In places where USPS does not provide carrier delivery, free post office 

box delivery is provided. Some remote areas do not have rural delivery routes and 

therefore receive free post office box delivery.
 

Page 13 GAO-12-433 U.S. Postal Service 

stated that if their post office were to close, they would prefer having 

some postal physical presence in their town, such as cluster boxes.31

We observed USPS and its customers sometimes had varied 

expectations about its role in the community. For example, community 

residents in one small town stated that they were concerned about loss of 

community identity if the post office were to close.

Appeals filed with the PRC highlight issues similar to those brought up at 

community meetings. For example, various appeals that we examined 

included concerns that

• losing the local post office would have a negative impact on 

community, including loss of identity and inhibiting economic growth;

• because USPS did not have accurate information about the 

community, customers believed USPS did not have complete 

information about the community’s needs.

• USPS had not allowed for adequate community input; at public 

meetings, residents perceived that a decision had already been made 

about the closure; and

• residents believed that the available alternatives were not adequate or 

were too inconvenient.

In written responses to customer concerns in appeals cases, USPS has 

indicated that community identity comes from the interest and vitality of its 

residents and that it would still help to preserve the identity by maintaining 

a community’s ZIP Code. At one community meeting we attended, a 

postal official told those in attendance that the community’s identity is not 

dependent on the post office. USPS has responded to concerns about the 

economic effects of closures by stating that businesses require regular 

and effective service, which would be provided to them by the alternative 

offered to replace the closing facility. It also indicated that its analysis of 

customer questionnaires helps to determine if the potential change would 

 

31Cluster box units are a centralized grouping of individually locked and keyed 

compartments or mailboxes, such as a wall-mounted unit in an apartment building or a 

freestanding neighborhood delivery and collection box unit.

Impact on Communities
 

Page 14 GAO-12-433 U.S. Postal Service 

have a negative impact on local businesses by asking whether customers 

would continue to use those businesses in the event of a facility closure. 

Postal officials we spoke with noted that they used the responses to 

customer questionnaires to see where customers obtained other services, 

such as buying groceries, to figure out which alternative locations could 

offer community residents convenient access to postal services.

Another issue the PRC and other stakeholders raised was related to the 

adequacy of USPS’s analysis and data. For example, in the 2009 Retail 

Initiative, the PRC recommended that USPS improve its financial analysis 

to better reflect potential revenue declines and operational expenses that 

may result from closing a post office. In the 2011 Retail Initiative

proceeding, USPS reported that it had improved its financial analysis 

model, generating data that it determined would provide a better 

assessment of cost savings than the previous model. Despite the change, 

PRC’s 2011 Retail Initiative advisory opinion32

In addition to questions about the overall financial impact of initiatives, the 

adequacy of USPS’s cost-savings estimates for individual facilities has 

also been questioned by the PRC during the appeals process.

 stated that it was unable to 

develop a reasonable estimate of the financial impact of the initiative 

because USPS did not collect facility-specific revenue and cost data or 

separate retail costs from other operational costs.

33

 

32Whenever USPS proposes a change in the nature of postal services that affects service 

on a nationwide basis, USPS must request an advisory opinion on the change from PRC. 

39 U.S.C. § 3661(b).

In fiscal 

year 2011, in six of the nine cases that PRC remanded—that is, where 

the PRC sent the cases back to USPS for further consideration—PRC 

either found that USPS did not adequately consider economic savings 

and asked USPS to clarify aspects of its estimate upon remand or cited 

related concerns such as overestimating savings from postmaster 

salaries or leases.

33When USPS makes a decision to close or consolidate a post office, customers of the 

post office may appeal the decision to PRC. 39 U.S.C. § 404(d)(5). PRC may affirm the 

decision or remand it to USPS for further consideration. USPS and PRC do not agree on 

whether PRC has jurisdiction over appeals for station and branches. 

Adequacy of USPS 

Analysis and Data
 

Page 15 GAO-12-433 U.S. Postal Service 

PRC, USPS OIG, and we have raised concerns about USPS’s retail 

network data.34

• USPS does not collect cost and revenue data separately for post 

offices, stations, and branches. Additionally, operating costs for retail 

activities cannot be separated from nonretail operating costs, 

restricting USPS’s ability to estimate the potential cost savings from 

closures because it makes it difficult to determine the actual costs 

associated with individual retail facilities.

PRC outlined concerns and recommendations, including 

in the following examples, about USPS’s data pertaining to its retail 

network in its advisory opinion on the 2011 Retail Initiative.

• USPS does not collect the data to measure revenue lost due to 

closures, restricting the ability to perform a post-implementation 

analysis on the net financial impact of closures. Postal officials told us 

they were in the process of creating a tool that would estimate total 

demand for retail postal services by geographic area and account for 

the revenue and cost implications of alternatives.

• PRC found that USPS should develop a method to measure how 

successfully it met its goals for the 2011 Retail Initiative and that it 

should attempt to coordinate and estimate the impact of all relevant 

initiatives that could affect customer access to services. This analysis 

would also help ensure that the right data are collected to measure 

stated goals. USPS officials told us that although they have looked at 

the overall effect on customers, they are unable to predict which 

initiatives will eventually be implemented, as some require statutory 

change and therefore they have examined the impact of each initiative 

independently.

Additional data concerns that we and the USPS OIG have raised include 

the following:

• In November 2011, we reported that USPS lacks performance 

measures and data needed to know the extent to which customers 

are aware of and willing to use its various retail alternatives.35

 

34See, for example, 

We also 

GAO-12-100; and GAO, U.S. Postal Service Facilities: Improvements 

in Data Would Strengthen Maintenance and Alignment of Access to Retail Services, 

GAO-08-41 (Washington, D.C. Dec. 10, 2007).

35GAO-12-100. 
 

Page 16 GAO-12-433 U.S. Postal Service 

spoke with USPS officials about customer data, and they stated that 

transaction data and customer visits are not tracked in electronic 

databases for some small post offices—approximately 10 percent of 

the total retail facilities it operates. Lack of tracking makes it difficult to 

match alternatives to the services that customers are demanding or 

using at small post offices. A USPS official commented that it is 

developing a strategic retail plan that includes a charter designed to 

provide greater convenience, lower-cost service, and improve the 

customer experience, but it is unclear how this plan will address the 

lack of data at small post offices.

• In December 2011, the USPS OIG recommended that USPS improve 

the reliability and usefulness of retail facilities data by validating, 

correcting, and updating information in its retail facility database.36

Moreover, we have also recommended improvements to USPS’s 

retail facilities data.37 In both cases, USPS agreed to implement the 

recommendations related to the facilities data.

Recent USPS OIG analyses of the 2009 and 2011 Retail Initiatives found 

that USPS could make improvements in establishing clear criteria for 

evaluating closure decisions and implementing an integrated retail 

network strategy that includes short- and long-term plans, milestones, 

and goals. USPS OIG found that these improvements could raise 

stakeholders’ confidence that USPS will make transparent, equitable, and 

fact-based decisions.38

Other customers raised equity issues with USPS’s decisions. For 

example, some people in a small community at a public meeting we 

attended viewed rural post offices as bearing the brunt of closures and 

viewed urban areas as not being equally affected. Customers also 

USPS agreed with the findings in these reports

but noted that a “one-size-fits-all” approach might not take factors about 

the local community into account and that its retail operations will never 

be uniform across the entire network.

 

36U.S. Postal Service Office of Inspector General, Postal Service-Operated Retail 

Facilities Discontinuance Program, EN-AR-12-002 (Washington, D.C.: Dec. 2011). 

37GAO-08-41. 

38For example, see U.S. Postal Service Office of Inspector General, Stations and 

Branches Optimization and Consolidation Initiative, EN-AR-10-005 (Aug. 17, 2010). 

Transparency and Equity 

Concerns Raised about 

USPS Closure Decisions
 

Page 17 GAO-12-433 U.S. Postal Service 

wanted clarification on the criteria used to decide which facilities would be 

studied and whether other closure initiatives would affect their service. 

Similarly, in an appeals case, customers expressed concerns that the 

nearest post office was also being studied for closure and that if both 

facilities were closed, they would have to travel even further to obtain 

services.

PRC raised a concern in its 2009 Retail Initiative advisory opinion that 

USPS was not providing customers of stations and branches with the 

same rights as customers of post offices in a closure proceeding. The 

advisory opinion also noted that the public does not really understand the 

distinction between various facility types and it is confusing to have 

procedures for stations and branches that are different for post offices. 

Further, PRC found that stations and branches fulfill the same operational 

purposes as post offices and recommended that USPS provide similar 

treatment to customers if their local station, branch, or post office were 

closed. In another PRC proceeding in 2010, PRC raised a similar concern 

about the practice of suspending operations at offices for extended 

periods without giving the public the right to comment as would be 

afforded in a formal closure study.39

In response to PRC concerns, USPS made several changes, including as 

part of the 2011 Retail Initiative and in district office-initiated post office 

closures that began after July 2011. These changes included the 

following:

At some facilities, USPS suspended 

services and took no further action to restore service or proceed with 

closure for, at times, many years.

• Implementing uniform closure procedures for all USPS-operated retail 

facilities. USPS developed standards that were finalized in July 2011 

to address internal and public confusion over different discontinuance 

procedures.40

• Clarifying circumstances that can prompt a closure study. New 

regulations allow USPS headquarters to identify USPS-operated retail 

facilities for studies and also provide details on the particular 

 

39Investigation of Suspended Post Offices, Docket No. PI2010-1.

4076 Fed. Reg. 41413 (July 14, 2011).

Fairness in Facility 

Closure Procedures
 

Page 18 GAO-12-433 U.S. Postal Service 

circumstances that can prompt a study.41 These circumstances 

include: a postmaster vacancy, an emergency suspension, lowworkload levels, insufficient customer demand, and the availability of 

reasonable alternative access to postal services.42

• Creating a web-based data program to guide closure studies. USPS 

created this program and incorporated it into its closure processes as 

of December 2010. The program is used to collect information, such 

as all community comments during the closure process, and to guide 

USPS along a series of required steps. According to USPS, the webbased program has helped streamline the overall closure process and 

improved the internal tracking of facility closures, including customer 

comments and community statistics, such as the number of 

businesses in the community and the nearest retail alternatives.

• Clarifying procedures for reviewing facilities where operations have 

undergone emergency suspensions. USPS issued revised guidance 

in July 2011,

43 affirming that customers of facilities that have

undergone emergency suspensions must be allowed an opportunity to 

comment on the proposed discontinuance.44

In addition, there has been a sharp increase recently in the number of 

appeals filed with PRC related to USPS decisions to close or consolidate 

a post office. In fiscal year 2010, 6 appeals were filed with PRC. In fiscal 

year 2011, PRC received more than 100 post office closing appeals and 

100 were filed in the first quarter of fiscal year 2012. To expedite the 

appeals process, PRC streamlined and simplified its procedures for 

reviewing appeals and simplified the process to make it easier for the 

 This provision

addressed long-standing concerns of stakeholders regarding postal

facilities where USPS suspends services for long periods of time.

 

4139 C.F.R. § 241.3(a)(5).

42In the 2009 Retail Initiative, USPS headquarters supplied USPS district officials with a 

population of facilities and charged the district officials to determine which facilities to 

study for closure. 

43Postal Service-Operated Retail Facilities Discontinuance Guide (Handbook PO-101). 

44An emergency suspension of a post office’s operations occurs due to circumstances 

such as a natural disaster, loss of the post office building lease when no suitable 

alternative location is available, or severe damage to or destruction of the post office 

building. 
 

Page 19 GAO-12-433 U.S. Postal Service 

public to participate in and to understand PRC’s decision-making 

process.45

USPS also changed its regulations related to the staffing of post offices. 

Previously, a postmaster was the only employee who could manage 

operations at a post office. New regulations now allow post offices to be 

operated or staffed by other types of postal employees,46 who would be 

paid less than postmasters and would report to a postmaster. USPS 

expects that this change would give it more staffing flexibility, reduce the 

number of postmasters, and reduce costs. A USPS official explained that 

changes in operations, such as the removal of delivery operations from 

some retail facilities, have resulted in a decreased level of responsibility 

for some postmasters over time. Postmasters filed a complaint with PRC 

about these proposed changes.47 The PRC dismissed this complaint 

because it was filed before this provision of the proposed rule was 

finalized.

USPS faces challenges such as legal restrictions and resistance from 

some Members of Congress and the public that have limited its ability to 

restructure its network. Also, certain policy issues are unresolved, and 

pending legislation takes differing approaches to resolving USPS’s 

challenges.

Some legal restrictions have presented challenges to USPS’s plans to 

restructure its retail network. As described in the background section of 

this report, the law states that no small post office shall be closed solely 

for operating at a deficit.48

 

45See 77 Fed. Reg. 6676 (Feb. 9, 2012). 

Further, language in annual appropriations acts 

has provided that none of the funds appropriated in the acts (about $100 

million for fiscal year 2011) shall be used to consolidate or close small 

4639 C.F.R. § 241.1(a).

47Specifically, commenters expressed the view that the Postmasters Equity Act precluded 

the proposed change that a post office may be staffed by nonpostmaster personnel. 76 

Fed. Reg. 41413 (July 14, 2011).

4839 U.S.C. § 101(b).

Changes in Who Can 

Manage Post Offices

Challenges Restrict 

USPS from Changing 

Its Retail Network

Legal Restrictions and 

Resistance
 

Page 20 GAO-12-433 U.S. Postal Service 

rural and other small post offices.49

In addition to these statutory restrictions, USPS faces resistance from 

some Members of Congress and the public who oppose some facility 

closures. For example, at some public meetings we attended, staff from 

some congressional offices spoke to community members about actions 

they could take to challenge potential closures. For example, they 

encouraged residents to write letters to their Members of Congress and 

cite specific, negative impacts a potential closing might have. At one 

community meeting, congressional staffers said they had received 

several letters from community members. In response to such actions by 

constituents, many Members of Congress have written letters to USPS 

requesting that it not close post offices in their districts. In December 

2011, 20 Senators signed a letter to Senate leaders requesting that they 

consider including language in an appropriations bill that would prevent 

USPS from closing any rural post offices until Congress has passed 

reform legislation. USPS then placed a moratorium on all facility closures 

until May 15, 2012, while Congress considers postal reform bills. USPS 

has encouraged Congress to enact postal reform legislation that would 

provide USPS with more flexibility to make retail closure decisions by 

eliminating statutory restrictions. Further, USPS officials told us that in 

response to resistance to closures, they are considering reducing post 

office operating hours rather than closing some facilities.

On one hand, USPS is supposed to 

“act like a business” and be self-financing, but on the other hand, it is 

restricted by law from making decisions that businesses would commonly 

make, such as closing unprofitable units.

Pending postal reform legislation provides an opportunity for Congress to 

address certain unresolved policy issues related to USPS’s retail 

restructuring plans. These policy issues include

• what level or type of retail services should USPS provide to meet 

customers’ changing use of postal services;

• how should the cost of these services be paid;

 

49For example, see Pub. L. No. 112-74, 125 Stat. 786, 923 (Dec. 23, 2011). Generally, 

USPS has received annual appropriations for revenue forgone by providing free mail for 

the blind and for overseas voters. 

Certain Policy Issues and 

Pending Legislation
 

Page 21 GAO-12-433 U.S. Postal Service 

• how should USPS restructure its operations, networks, and workforce 

to support changes in services; and

• how should Congress provide USPS with flexibility to restructure its 

networks and workforce while still holding USPS accountable to 

Congress and the public?

Several bills related to postal reform have been introduced in the 112th 

Congress, and two have been approved by the Senate and House 

oversight committees—S. 1789 and H.R. 2309.50

• S. 1789 requires USPS to establish retail service standards and 

consider several factors before making a closure decision, including 

consolidating with another facility, reducing hours of operation, and 

procuring a contract to provide retail services within the community. 

The bill also allows USPS to provide retail alternatives to dedicated 

post offices but also puts in place considerations before closing post 

offices.

As seen in the following 

two examples, these bills provide different approaches to addressing the 

legal restrictions and resistance USPS faces to closing facilities and the 

unresolved policy issues.

• H.R. 2309 removes the statutory restriction on post office closures 

“solely for operating at a deficit” and establishes a commission similar 

to the Base Realignment and Closure Commission.51

Table 5 summarizes several challenges to restructuring the retail 

network and some options to address these challenges that are included 

in these bills.

USPS would 

submit a plan to the commission, which would then make closure 

recommendations to Congress that would be implemented unless 

Congress passed a joint resolution of disapproval.

 

5021st Century Postal Service Act of 2011 S. 1789, 112th Cong. (2011) and Postal Reform 

Act of 2011, H.R. 2309, 112th Cong. (2011). 

51The Base Realignment and Closure Commission was established to realign military 

installations within the United States. 
 

Page 22 GAO-12-433 U.S. Postal Service 

Table 5: Summary of Challenges to Restructuring USPS Retail Network and Proposed Options 

Category Challenges Options

Statutory requirements 

related to universal service

• Restrictions on closing post offices solely 

for operating at a deficit and provisions for 

providing a “maximum degree of regular 

and effective service” in rural areas must 

be balanced against requirements for 

USPS to achieve efficiencies and be selffinancing.

• Language in annual appropriations has 

provided that none of the appropriated 

funds shall be used to consolidate or close 

small rural and other small post offices.

• No specific retail service standards exist in 

law, resulting in varied expectations of how 

USPS should meet its universal service 

obligations as it makes changes to its retail 

network.

• H.R. 2309a strikes the “maximum degree” language 

and restrictions on small post offices closures 

“solely for operating at a deficit.”

• H.R. 2309 requires USPS to provide effective and 

regular postal services to rural areas, communities, 

and small towns where post offices are not selfsustaining. It provides that a post office closure 

cannot be appealed if a contract postal unit is 

opened within two miles of the post office.

• S. 1789b requires USPS’s network plan to ensure 

that small communities and rural areas continue to 

receive “regular and effective access to retail postal 

services.” Further it requires USPS, where possible, 

to provide for improved customer access to postal 

services. 

• S. 1789 requires USPS to define service standards 

while taking into consideration certain factors such 

as the proximity of retail services to customers and 

the transportation challenges in the area served.

Congressional and other 

stakeholder resistance to 

USPS facility closures 

• Members of Congress have raised 

concerns about USPS decisions that could 

affect facilities in the areas they represent, 

as well as with USPS’s overall network 

plan. Additionally, some Members have 

opposed USPS’s plans to close retail 

facilities in their districts. A group of 

Senators requested a moratorium to delay 

further closures until the Senate can 

consider USPS’s plans and pending 

legislation. USPS responded by placing a 

moratorium on closures until May 15, 2012.

• S. 1789 prohibits closures, except for health or 

safety issues, until retail standards are established. 

It requires USPS to consider several options before 

making a closure decision, including consolidating 

with another facility, reducing hours of operation, 

and procuring a contract to provide retail services 

within the community.

• S. 1789 allows USPS to provide retail alternatives 

to dedicated post offices, but also puts in place 

considerations before closing post offices.

• H.R. 2309 establishes a commission similar to the 

Base Realignment and Closure Commission. USPS 

submits a plan to an independent third party (the 

Commission on Postal Reorganization) that makes 

closure recommendations to Congress that are 

implemented unless a joint resolution of disapproval 

is passed.

• H.R. 2309 requires USPS, in consultation with PRC, 

to submit a plan for retail closures and 

consolidations that would result in total savings of at 

least $1 billion.

Source: GAO analysis of pending legislation.

a

Postal Reform Act of 2011, H.R. 2309, 112th Cong. (2011). 

b

21st Century Postal Service Act of 2011 S. 1789, 112th Cong. (2011). 
 

Page 23 GAO-12-433 U.S. Postal Service 

USPS must carefully work to ensure a viable strategy to effectively size 

its retail network to reduce costs to match declining mail volume while 

maintaining access to retail services. It is clear that USPS cannot support 

its current level of services and operations from its current revenues. 

USPS’s ability to continue providing its current level of services is in 

jeopardy, and it is up to both Congress and USPS to construct solutions 

that will either reduce the cost of services or increase revenues from 

other sources. But it appears that USPS cannot restructure its retail 

network unless Congress addresses USPS’s financial instability and the 

long-standing challenges that hinder its ability to change its retail network. 

If Congress prefers to retain the current level of service and associated 

network, decisions will need to be made about how USPS’s costs for 

providing these services will be paid, including additional cost reductions 

or revenue sources. Because USPS is in the process of responding to 

several retail restructuring recommendations that its OIG, the PRC, and 

we have made, we are not making any additional recommendations. 

USPS provided written comments on a draft of this report by a letter dated 

April 11, 2012. USPS agreed with our findings, noting limitations 

management faces to restructuring. Further, it observed that its operating 

model is unsustainable and that maintaining the same level of retail 

services will require solutions to cover the costs of those services either 

through cost reductions or revenue enhancements. USPS also provided us 

with technical comments that were incorporated into the final version of this 

report as appropriate. USPS’s comments are reprinted in appendix II. 

Concluding 

Observations

Agency Comments
 

Page 24 GAO-12-433 U.S. Postal Service 

We are sending copies of this report to the appropriate congressional 

committees, the Postmaster General, and other interested parties. In 

addition, the report is available at no charge on GAO’s website at 

http://www.gao.gov. 

If you or your staffs have any questions about this report, please contact 

me at (202) 512-2834 or stjamesl@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

the last page of this report. Key contributors to the report are listed in 

appendix III.

Lorelei St. James

Director

Physical Infrastructure Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 25 GAO-12-433 U.S. Postal Service 

To help inform your consideration of actions needed to restructure U.S. 

Postal Service (USPS) operations and help it achieve financial viability, 

you asked us to examine USPS’s retail network. This report discusses (1) 

key actions USPS has taken to restructure its retail network over the past 

5 years; (2) concerns raised by postal stakeholders, including Congress, 

the Postal Regulatory Commission (PRC), USPS Office of Inspector 

General (OIG), and postal business and residential customers, and 

USPS’s response to these concerns; and (3) the challenges that USPS 

faces in changing its retail network.

To determine what key actions USPS has taken to restructure its retail 

network, we reviewed documents related to the Station and Branch 

Optimization and Consolidation (2009 Retail Initiative) and Retail Access 

Optimization (2011 Retail Initiative), retail alternatives, and individual 

district-initiated discontinuances. We examined criteria and goals of the 

initiatives, the number of facilities studied, and the number of facilities 

closed. In describing trends in the number of USPS-operated facilities, 

retail transactions, and other retail operating statistics, we

• reviewed reports from USPS OIG and documents filed in several 

dockets from PRC related to the 2009 and 2011 Retail Initiatives, and 

other discontinuance procedures in general. We also reviewed past 

GAO work on the development of retail alternatives.

• reviewed USPS documents, including guidance for discontinuance 

processes, background documents on major initiatives, and overall 

goals for the retail network. Our review included examining rule 

changes between old and new discontinuance procedures.

• interviewed USPS officials who oversee retail network restructuring to 

discuss background of initiatives, criteria used for closures, 

discontinuance processes, and relevant data.

• reviewed USPS data from fiscal years 2006-2011 on the facilities, 

costs of the retail network, employees, and customer statistics to 

show trends in number of retail facilities, retail revenues, and 

operating costs over the past 5 years. We also requested estimates 

and projections for fiscal year 2015.

To understand the context of data provided by USPS, we spoke with 

knowledgeable officials to get a more-detailed understanding of how 

databases are used by officials and USPS’s methodology for collecting 

information. We observed a demonstration of USPS’s Change Suspension 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology

Page 26 GAO-12-433 U.S. Postal Service 

Discontinuance Center program, which contains all of the information used 

during the discontinuance process. This demonstration gave us an idea of 

how district officials would use the program in support of discontinuance 

activities. We also interviewed USPS officials to discuss data we 

requested, including how variables were collected, and the methodology for 

cost-savings estimates and future projections. For customer visits and retail 

transaction data, we used an extrapolation provided by USPS since it does 

not collect data for some small post offices. We also reviewed variables 

used to estimate cost savings for individual facilities and the overall cost 

savings USPS provided us for the retail facility closures from fiscal years 

2007 through 2011. We assessed the reliability of USPS data and noted, 

where appropriate, the limitations of certain data. For example, we 

requested annual cost-savings data related to USPS retail facility closures 

for fiscal years 2007 through 2011. USPS initially provided us with 

aggregate annual cost savings, but because it did not provide 

disaggregated data, we were not able to assess the reliability of these data. 

We also discuss in this report the problems with USPS data and analysis 

as reported by PRC and the USPS OIG.

To identify concerns raised by postal stakeholders and to determine what 

challenges USPS faces in restructuring its retail network, we analyzed 

past work by GAO, USPS OIG, and PRC as well as statutory 

requirements regarding facility closures and access to retail services. We 

also identified stakeholder concerns, both from communities and 

Members of Congress, that contributed to resistance to closures and 

reviewed proposed legislation to identify potential options for addressing 

retail network restructuring. We also discussed challenges to retail 

network restructuring with USPS and PRC officials. For example, when 

PRC attempted to estimate the costs and savings of the 2011 Retail 

Initiative, it reported it was unable to develop a reasonable estimate of the 

financial impact of the 2011 Retail Initiative because USPS did not collect 

facility-specific revenue and cost data or separate retail costs from other 

operational costs. In addition to questions about the overall financial 

impact of initiatives, the adequacy of USPS’s cost-savings estimates for 

individual facilities has also been questioned by PRC during the appeals 

process.

• To obtain information on stakeholder issues raised by customers during 

past facility closures and USPS’s communication, we conducted an 

analysis of the PRC appeals docket for fiscal year 2011. We examined 

reasons why facility closures were appealed, alternatives given by 

USPS to replace services provided at closed facilities, customer 
Appendix I: Objectives, Scope, and 

Methodology

Page 27 GAO-12-433 U.S. Postal Service 

concerns and USPS’s responses to the concerns contained in the 

administrative record, and PRC’s analyses of the cases.

• To obtain information on stakeholder concerns for the ongoing 2011 

Retail Initiative and recommendations for improving the initiative, we 

conducted an analysis of the Nature of Service docket on the 2011 

Retail Initiative and the resulting PRC advisory opinion. We examined 

USPS testimony, briefs, and responses to interrogatories, 

summarized major issues brought up by stakeholders (including 

unions, postmaster groups, the National Newspaper Association, and 

the Public Representative), and examined the PRC advisory opinion 

to inform GAO findings on challenges to making progress in 

optimizing the retail network.

• To obtain information on resistance to closing facilities, we observed 

congressional hearings and community meetings, reviewed relevant 

news articles about congressional resistance to closures, and 

interviewed USPS and PRC officials.

To observe stakeholder concerns firsthand, we conducted site visits to 

USPS districts to attend public meetings and to obtain detailed 

information on discontinuance procedures, including criteria for closures 

and the 2009 and 2011 Retail Initiatives. We chose two sites to visit, the 

Arkansas and Colorado/Wyoming districts, based on the following criteria:

• number of upcoming public meetings,

• 2011 Retail Initiative study category,

• time range of meetings,

• proximity of meetings to district offices or cities, and

• cost and convenience of travel.

After applying these criteria to choose site visit locations, we attended two 

to three community meetings per location and met with various district 

officials to discuss the district-level discontinuance review process and 

challenges to closing retail facilities. District officials we met with included: 

district discontinuance coordinators, managers of marketing, managers of 

customer and industry, and managers of post office operations. When 

possible, we met with other relevant stakeholders during the site visits to 

further our understanding of issues to facility closures. In Arkansas, we 
Appendix I: Objectives, Scope, and 

Methodology

Page 28 GAO-12-433 U.S. Postal Service 

spoke with a small business owner who had filed a petition for appeal of a 

closure in a suburban area. In Colorado, we spoke with senior postal 

officials in USPS’s Western area office.

In addition to conducting site visits to areas that had predominantly small 

post offices, we also attended community meetings in urban areas for 

stations and branches. In total, we attended 10 community meetings at 

the following locations:

• Ivan, AR, Post Office.

• Jacksonport, AR, Post Office.

• Conejos, CO, Post Office.

• Chama, CO, Post Office.

• Jaroso, CO, Post Office.

• Theological Seminary Station in Alexandria, VA.

• Leisure World Station in Aspen Hill, MD.

• Market Center Station in Baltimore, MD.

• T Street and Kalorama Stations in Washington, D.C. (2 meetings).

Five meetings were for small post offices we observed during site visits, 

and 5 were for suburban or urban stations and branches in the 

Washington, D.C., area. To analyze which concerns were raised most 

frequently at the meetings we attended, we recorded all of the questions 

and comments made by customers during all of the meetings we attended.

To examine options for addressing challenges to restructuring the retail 

network, we compared provisions in several pieces of proposed postal 

reform legislation. We also spoke with USPS officials to discuss how to get 

an update on their ongoing initiatives, current options to achieve cost 

savings in the retail network, and their strategy for the retail network, 

including the integration of retail alternatives with facility closure initiatives.

We conducted this performance audit from April 2011 to April 2012 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 
Appendix I: Objectives, Scope, and 

Methodology

Page 29 GAO-12-433 U.S. Postal Service 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Comments from the U.S. Postal 

Service 

Page 30 GAO-12-433 U.S. Postal Service 

Appendix II: Comments from the U.S. Postal 

Service 
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 31 GAO-12-433 U.S. Postal Service 

Lorelei St. James, (202) 512-2834 or stjamesl@gao.gov

In addition to the contact named above, Teresa Anderson (Assistant 

Director), Amy Abramowitz, Shelby Kain, Margaret McDavid, SaraAnn 

Moessbauer, Amrita Sen, and Crystal Wesco made key contributions to 

this report.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(546049)
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