U.S. POSTAL 

SERVICE

Field Offices’ Role in 

Cost-Reduction and 

Revenue-Generation 

Efforts

Report to Congressional Requesters

April 2012

GAO-12-506

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-506, a report to 

congressional requesters

April 2012

U.S. POSTAL SERVICE

Field Offices’ Role in Cost-Reduction and Revenue- Generation Efforts

Why GAO Did This Study

USPS has lost $25.3 billion over the 

last 5 years and expects to lose 

another $83.2 billion through fiscal 

year 2016 unless it takes action to 

reduce its costs and improve its 

operational efficiency. USPS has cut 

costs in its retail, mail processing, and 

delivery networks, as well as in its field 

office structure, which includes 7 area 

offices and 67 district offices, and 

plans other cost-cutting actions 

throughout the organization. As 

requested, this report discusses (1) the 

role of area and district employees in 

implementing USPS’s cost-savings 

and revenue-generation efforts and (2) 

USPS’s actions to consolidate its field 

office structure in 2011, and the impact 

of this consolidation. 

GAO analyzed USPS documents 

describing the role of field staff in 

carrying out USPS’s cost-saving and 

revenue-generation efforts; information 

on the impact of the 2011 

consolidation, including anticipated 

cost savings; and USPS’s plan, issued 

in December 2011, for evaluating and 

implementing possible field office 

consolidations. GAO also interviewed 

USPS officials at headquarters and at 

four area and six district offices 

selected based on several factors, 

including geographic dispersion 

throughout the U.S.

What GAO Recommends

GAO is not making recommendations 

in this report. USPS had no comments 

on a draft of this report. 

What GAO Found

Field employees have key roles in the U.S. Postal Service’s (USPS) efforts to 

reduce costs and generate revenue. For example, these employees evaluate the 

feasibility of closing or consolidating facilities, such as post offices and mailprocessing facilities; carry out the closures and consolidations of these facilities; 

and evaluate and consolidate delivery routes. These roles support USPS’s plans 

to save, by 2016, about $9 billion annually by improving its operational efficiency 

and realigning its retail, mail processing, and delivery networks with declining 

mail use. These plans include evaluating about half of its approximately 31,000 

post offices to identify cost-reduction opportunities, closing or reducing 

operations at about half of its 461 mail-processing facilities, and consolidating 

about 20,000 of its 144,000 city delivery routes. Area and district employees also 

have a significant role in USPS’s efforts to generate additional revenue by (1) 

promoting the value of mail to businesses, (2) maintaining and increasing its 

customer base through customer service, and (3) growing the package business. 

In 2011, USPS consolidated its field office structure by, among other actions, 

closing one area office and seven district offices and eliminating 1,946 

positions—actions that it estimated would save about $150 million annually. 

However, several area and district officials expressed concern that this 

consolidation could lessen their ability to carry out ongoing and future costsavings and revenue-generation initiatives, and to recruit and retain future 

managers. In December 2011, USPS issued a plan on how it would evaluate 

additional field offices for possible consolidation and address concerns that the 

USPS Office of Inspector General identified in past field office consolidations. 

These concerns included the need to develop a plan to guide future field office 

consolidations and to consider factors such as workload and proximity to other 

offices. According to USPS officials, the plan also addressed past concerns 

about inadequate documentation and transparency and will lead to postconsolidation reviews to assess lessons learned and measure actual savings. 

Although USPS has a plan to guide future consolidations, according to USPS 

officials, it does not plan additional field office consolidations until it has 

completed ongoing cost-reduction efforts in its retail, mail processing, and 

delivery networks.

View GAO-12-506. For more information, 

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

stjamesl@gao.gov.
Page i GAO-12-506 U.S. Postal Service 

Letter 1 

Background 3

Field Employees Have a Key Role in USPS’s Cost-Reduction and 

Revenue-Generation Efforts 8

In 2011 USPS Closed Field Offices and Eliminated Field Positions, 

Resulting in $150 Million in Estimated Annual Savings 19

Concluding Observations 25

Agency Comments 25

Appendix I Timeline of Recent Field Office Consolidations and Information 

on Selected Centralizations of Administrative Services 28

Appendix II Objectives, Scope, and Methodology 31

Appendix III GAO Contact and Staff Acknowledgments 33

Tables

Table 1: 2011 Area and District Position Reductions, by 

Department 20

Table 2: Baseline of USPS’s Field Structure (1992) and Subsequent 

Field-Office Consolidations Between 2002 and 2011 28

Figures

Figure 1: Location of Field Offices and Information on the Number 

of Post Offices and Mail-Processing Facilities in Each 

USPS Area 4

Figure 2: Change in Number of Area and District Office Employees, 

2002–2011 6

Figure 3: Key Steps in USPS’s Retail Facility Review Process 10

Figure 4: Key Steps in USPS’s Mail-Processing Review Process 13

Contents
Page ii GAO-12-506 U.S. Postal Service 

Abbreviations

USPS U.S. Postal Service

OIG Office of Inspector General

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Page 1 GAO-12-506 U.S. Postal Service 

United States Government Accountability Office 

Washington, DC 20548

April 25, 2012

Congressional Requesters:

The U.S. Postal Service (USPS) continues to face a dire financial 

situation and does not have sufficient revenues to cover its expenses, 

putting its mission to provide prompt, reliable, and efficient postal services 

at risk. As customers increasingly turn to digital communications and 

online payment methods, mail volume has decreased precipitously, falling 

almost 21 percent from fiscal years 2007 through 2011. During this 

period, USPS experienced a cumulative loss of $25.3 billion and between 

2012 and 2016 it expects to lose another $83.2 billion unless it takes 

action to dramatically reduce its costs and improve its operational 

efficiency.

To address its dire financial circumstances, USPS has initiated several 

efforts intended to reduce its costs and improve the efficiency of its retail, 

mail-processing, and delivery networks as well as its field office 

structure—which currently includes 7 area offices and 67 district offices. 

For example, by 2016, USPS plans to review about half of its 31,000 post 

offices1 to identify opportunities to, among other things, close facilities 

and reduce work hours, closing or consolidating at least 223 of its 461 

mail-processing facilities. We and others, including Members of 

Congress, have raised questions about whether USPS’s field offices are 

appropriately organized and staffed for USPS’s operational needs. As 

early as 2003, for example, a presidential commission recommended that 

USPS fully review its field office structure to determine whether and, to 

what extent, each office was needed.2 More recently, in April 2010, we 

reported on the importance of analyzing USPS’s organizational footprint, 

including its field offices, to reduce costs and improve operational 

efficiency.3

 

1

In this report, we refer to all USPS retail offices, including post offices, stations, and 

branches operated by USPS where customers can access postal products and services, 

as post offices. 

We also testified that USPS cannot continue providing 

2

Report of 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).

3

GAO, U.S. Postal Service: Strategies and Options to Facilitate Progress Toward 

Financial Viability, GAO-10-455 (Washington, D.C.: April 2010). 

 
 

Page 2 GAO-12-506 U.S. Postal Service 

services at current levels without dramatic changes in its cost structure.4

To address these objectives, we reviewed documents, including prior 

GAO reports, USPS documents, and the September 6, 2011, 

congressional testimony of the Postmaster General. We also interviewed 

USPS officials from headquarters, area, and district offices; USPS’s 

Office of Inspector General (OIG); and selected USPS shared services 

centers used to provide human resources, accounting, and other 

services. We interviewed managers at four area and six district offices 

that we selected based on, among other factors, geographic dispersion 

and whether the office had recently absorbed responsibilities previously 

performed by other field offices following a consolidation. To describe the 

role of area and district office employees in implementing cost-savings 

and revenue-generation efforts, we reviewed USPS documents 

describing its strategic goals for these efforts and the role of area and 

district employees in implementing these efforts. To describe actions to 

consolidate the field office structure in 2011 and the impacts of these 

efforts, we reviewed USPS documentation including USPS’s December 

2011 plan entitled Area and District Office Structure Evaluations Strategy, 

Policy and Process.

In response to your request, this report describes: (1) the role of area and 

district office employees in implementing USPS’s cost-savings and 

revenue-generation efforts and (2) USPS’s actions to consolidate its field 

office structure in 2011, and the impact of these actions. USPS’s actions 

to consolidate its field offices and to centralize selected administrative 

services previously conducted at these offices are described in appendix I 

of this report.

5

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

accordance with generally accepted government auditing standards. 

Finally, we analyzed USPS financial data on the 

2011 consolidations as well as cost-savings estimates for this 

consolidation and for the centralization efforts undertaken between 2002 

and 2005 and determined that these estimates were sufficiently reliable 

for the purposes of our report.

 

4

GAO, U.S. Postal Service: Financial Crisis Demands Aggressive Action, GAO-10-538T

(Washington, D.C.: Mar. 18, 2010).

5

USPS, Area and District Office Structure Evaluations Strategy, Policy and Process, 

(Washington, D.C.: September 2011). According to USPS officials, this document was 

completed in September 2011 but was not issued until the completion of internal reviews 

on December 7, 2011.
 

Page 3 GAO-12-506 U.S. Postal Service 

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. Appendix II contains a detailed 

discussion of our objectives, scope, and methodology.

USPS’s current field-office structure includes 7 area offices and 67 district 

offices. USPS’s management structure is decentralized, with the area and 

district offices overseeing a vast network of facilities, which, as of 

December 19, 2011, included 31,060 post offices and 461 mailprocessing facilities (see fig. 1). According to USPS data, the operating 

cost of its field offices in fiscal year 2011 totaled about $1.2 billion—the 

majority of which (about $1 billion) was spent operating district offices. 

The total operating costs of USPS’s field offices represented less than 2 

percent of its approximately $71 billion fiscal year 2011 operating 

expenses.

Background
 

Page 4 GAO-12-506 U.S. Postal Service 

Figure 1: Location of Field Offices and Information on the Number of Post Offices and Mail-Processing Facilities in Each 

USPS Area
 

Page 5 GAO-12-506 U.S. Postal Service 

Significant policy and operational decisions are made at USPS 

headquarters and disseminated through the managerial hierarchy, 

including area and district offices. Each of the 67 district offices reports to 

a designated area office, which, in turn, reports to headquarters. 

Employees in the area offices are generally responsible for overseeing 

district offices and facilities that have an area-wide impact, such as mailprocessing facilities, while employees in district offices are typically 

responsible for overseeing post offices and other facilities that serve a 

particular district. For example, as of December 19, 2011, the Southwest 

Area office was responsible for overseeing 90 mail-processing facilities, 

while the 12 district offices in the Southwest Area were responsible for 

overseeing operations at about 5,600 post offices—an average of about 

470 post offices per district. Each area and district office is organized into 

departments, which include operations support, human resources, 

finance, and marketing.

In 2011, USPS had 4,985 field office employees (806 area and 4,179 

district employees), who comprised less than 1 percent of USPS’s 

workforce of about 557,000 career employees. About 85 percent of 

USPS’s career workforce, including most mail carriers and mailprocessing staff, is covered by collective bargaining agreements with 

employment protections, such as no lay-off provisions. In contrast, most 

USPS field employees, which include area and district office managers, 

are not covered by collective bargaining agreements.

From 2002 to 2011, USPS reduced the number of employees in area and 

district offices by almost 56 percent (see fig. 2) by, among other actions, 

closing 4 area offices and 18 district offices and centralizing some 

accounting, human resources, and other services. (App. I provides 

additional information on these office closures and selected 

centralizations of administrative services previously performed in field 

offices.)
 

Page 6 GAO-12-506 U.S. Postal Service 

Figure 2: Change in Number of Area and District Office Employees, 2002–2011

In September 2011, the Postmaster General testified before Congress 

that due to USPS’s urgent need to address its financial situation, USPS 

was undertaking or planning several efforts intended to improve the 

efficiency in its retail, mail-processing, and delivery networks.6

 

6

Statement of the Postmaster General before the Committee on Homeland Security and 

Governmental Affairs, United States Senate, September 6, 2011.

In 

February 2012, USPS issued a 5-year business plan in which it estimated 

that these efforts and others, such as reducing Saturday deliveries, could 

restore USPS to profitability. USPS estimates that it could save $9.1 

billion annually, the majority of which will be achieved by 2016, through 

changes in the following areas:
 

Page 7 GAO-12-506 U.S. Postal Service 

• Retail network: USPS plans to downsize its retail network for 

potential savings of $2 billion annually beginning in 2016.7 As part of 

this effort, USPS plans to review about half of its post offices to 

identify opportunities to close facilities, reduce work hours, and 

expand the use of lower-cost alternatives, such as self-service kiosks, 

and partnerships with retailers.8

• Mail-processing network: USPS plans to downsize its mailprocessing network and reduce costs in its transportation network for 

potential savings of $4.1 billion annually beginning in 2016.9

• Delivery network: USPS is realigning its delivery routes for potential 

savings of $3 billion annually beginning in 2016. As part of this effort, 

USPS plans to eliminate and consolidate approximately 20,000 out of 

its 144,000 city routes.

As part of 

this effort, USPS anticipates closing or consolidating about half of its 

mail-processing facilities and reducing the number of its employees.

While reducing USPS’s network costs is essential, the Postmaster 

General testified that USPS also must generate additional revenue to 

deal with its financial crisis. To help accomplish this, he said he 

implemented a variety of “core business strategies” to, among other 

things, (1) strengthen the value of mail to businesses, (2) improve its 

customers’ experience using USPS’s services, and (3) compete with 

private sector firms for the package business. USPS’s fourth core 

business strategy—becoming a “leaner, faster, and smarter” 

organization—relates to reducing its network costs and includes the 

actions described above.

 

7

Our April 17, 2012, report examines USPS’s efforts to improve efficiency in USPS’s retail 

network. GAO, U.S. Postal Service: Challenges Related to Restructuring the Postal 

Service’s Retail Network, GAO-12-433 (Washington, D.C.: April 2012)

8

USPS operates about 2,500 self-service kiosks that allow customers to buy stamps and 

send mail. Partnerships with retailers include, among other things, contract postal units, 

which are operated and managed by privately operated businesses, such as pharmacies 

and convenience stores. In addition, USPS is also exploring other options to reduce its 

retail facility costs by, for example, reducing employee work hours and shortening 

operating hours at selected retail facilities.

9

On April 12, 2012 we issued a report examining USPS’s efforts to increase efficiency in 

its mail-processing network. GAO, U.S. Postal Service: Mail Processing Network Exceeds 

What Is Needed for Declining Mail Volume, GAO-12-470 (Washington, D.C.: April 2012).
 

Page 8 GAO-12-506 U.S. Postal Service 

To address USPS’s financial problems, several Members of the 112th 

Congress have introduced postal reform legislation which, if enacted, 

would likely impact USPS’s downsizing plans, including its ability to close 

retail and mail-processing facilities. Certain legislative proposals also 

include provisions requiring USPS to develop and submit to Congress 

plans for further consolidating its field offices.10 While USPS needs 

authority from Congress to make some of its planned network changes, it 

currently has the flexibility to continue consolidating area and district 

offices. In December 2011, USPS announced a moratorium on closing its 

post offices and mail-processing facilities until May 15, 2012. The 

moratorium was established in response to congressional requests for 

additional time to enact comprehensive postal reform legislation. In the 

interim, USPS is continuing to review the feasibility of closing retail 

facilities and recently completed studies of mail-processing facilities for 

consolidation and possible closure.

Field employees have key roles in USPS’s efforts to reduce costs in its 

retail, mail-processing, and delivery networks. The extent of area and 

district employees’ involvement in specific cost-reduction efforts varies, 

however. For example, area employees, who comprise 16 percent of the 

field employees, generally provide guidance and oversee the 

implementation of all cost-reduction efforts in their area to ensure 

consistency in how these efforts are implemented. In addition, area 

employees prepare proposals for headquarters on potential 

 

10For example, the U.S. Postal Service Improvement Act of 2011 requires USPS, 

consistent with its consolidation plan, to begin consolidating area and district offices within 

one year. S. 353.112th Cong. (2012). The Postal Reform Act of 2011 creates an 

independent commission responsible for recommending postal facilities, including area 

and district offices, for closure or consolidation. USPS would be required to close or 

consolidate postal facilities recommended by the independent commission unless 

Congress enacts a joint resolution of disapproval. H.R. 2309, 112th Cong. (2012).

Field Employees Have 

a Key Role in USPS’s 

Cost-Reduction and 

Revenue-Generation 

Efforts

Cost-Reduction Efforts
 

Page 9 GAO-12-506 U.S. Postal Service 

consolidations of mail-processing operations, based on information 

gathered and presented by district employees. On the other hand, district 

employees, who account for the remainder of field employees, are directly 

responsible for carrying out both the retail and mail-processing facility 

reviews and other cost-reduction efforts, such as consolidating delivery 

routes.

Since 2006, USPS has reviewed over 3,000 retail facilities and closed 

686—about 23 percent of those reviewed. In 2011, as part of USPS’s 

Retail Access Optimization Initiative, the agency announced plans to 

review another 3,650 retail facilities for possible closure. Reviewing retail 

facilities for possible closure generally involves one to three stages, 

depending on the outcome of each stage. Area officials oversee activities 

related to each stage to ensure compliance with USPS’s requirements. 

District employees are involved in completing work required for each of 

these stages. For example, in the first stage, district employees study and 

prepare a report on the feasibility of closing a particular facility and 

examine the potential effects on (1) services, (2) customers, and (3) 

USPS employees, as well as the potential economic savings associated 

with closing a particular retail facility. To identify these effects, district 

employees collect and analyze operational, financial, and delivery data 

related to the facility. District employees also distribute questionnaires to 

potentially affected customers about the customers’ service needs and 

access to postal services in their vicinity and hold community meetings to 

discuss, among other matters, the reason for the proposed change in 

service and to respond to customer inquiries and concerns. According to 

USPS officials, these questionnaires and community meetings provide 

USPS with local information that headquarters might not otherwise have 

available during its decision-making process. (Fig. 3 provides more 

information on USPS’s process for reviewing retail facilities for possible 

closure.)

Reducing Costs in USPS’s 

Retail Network
 

Page 10 GAO-12-506 U.S. Postal Service 

Figure 3: Key Steps in USPS’s Retail Facility Review Process

When headquarters officials decide to close a retail facility, district 

employees carry out a variety of activities related to the closure. For 

example, district employees must move equipment, realign any affected 

delivery routes, and transfer mail carriers and other employees into other 

locations. Related to this, district employees also are responsible for 

identifying potential positions for staff affected by the closure.
 

Page 11 GAO-12-506 U.S. Postal Service 

None of the 3,650 facilities USPS identified for review in 2011 had been 

closed at the completion of our review. USPS is continuing to review 

these facilities and could decide to close some of them after the 

moratorium on facility closures expires on May 15, 2012. USPS officials 

acknowledge that closing retail postal facilities is highly contentious. As a 

result, according to USPS officials, USPS is exploring additional options 

to reduce its retail facility costs by, for example, reducing employee work 

hours and shortening operating hours at selected facilities.11

Since 2006, USPS has taken several actions to reduce its costs by 

improving the operational efficiency of its mail-processing network. As 

discussed in our April 2012 report, these actions included consolidating 

operations at various types of mail-processing facilities and closing 

unneeded facilities, which, according to USPS, resulted in about $2.4 

billion in cost savings.12

USPS headquarters employees identified mail-processing facilities for 

review and possible consolidation with input from area and district 

employees.

In February 2011, USPS announced it had 

completed Area Mail Processing reviews of 264 of its mail-processing 

facilities to examine the feasibility of consolidating mail-processing 

operations from one or more postal facilities to other facilities to improve 

USPS’s operational efficiency. Of the 264 facilities that were reviewed, 35 

will remain open, 6 are on hold for further study, and 223 have been 

found feasible for consolidation, according to USPS. Area and district 

employees completed these reviews, which examined opportunities to 

consolidate mail origination and destination operations.

13

 

11According to USPS officials, USPS has reduced employee work hours at retail facilities 

by 21 percent since 2006 through employee attrition and work hour changes. 

Area and district employees reviewed and validated 

headquarters’ data and provided headquarters with additional information 

about each facility, such as anomalies in a facility’s configuration that 

might affect a consolidation decision. After headquarters selected mail12As discussed in our April 2012 report, these savings derive from actions in three areas: 

Specifically, USPS (1) closed nearly all of its Remote Encoding Centers (10 of 12) and 

Airport Mail Centers (76 of 77) between 2006 and 2011, (2) moved all of the operations 

previously performed at 21 Bulk Mail Centers into its Network Distribution Centers, and (3) 

completed 100 mail-processing consolidations. GAO-12-470. 

13According to USPS, it considered a variety of criteria in identifying the 264 facilities for 

possible consolidation, including, projected savings, service issues, and capacity within 

processing plants. 

Reducing Costs in USPS’s MailProcessing Network
 

Page 12 GAO-12-506 U.S. Postal Service 

processing facilities for review, district employees analyzed, among other 

things, the facility’s mail volumes, work hours, and services, as well as

the estimated costs and savings of a potential consolidation and prepared 

a report on their findings that was reviewed by headquarters and area 

managers. After considering the results of the feasibility study 

headquarters made a final determination on whether to consolidate one 

or more aspects of the facility’s operations. Figure 4 provides more 

information on USPS’s process for reviewing mail-processing facilities for 

possible closure or consolidation.
 

Page 13 GAO-12-506 U.S. Postal Service 

Figure 4: Key Steps in USPS’s Mail-Processing Review Process
 

Page 14 GAO-12-506 U.S. Postal Service 

a

USPS has service standards for delivering each of its major types of mail. For example, currently, 

local First-Class mail generally has to be delivered overnight, while mail that has a destination beyond 

the contiguous 48 states can take up to 4 days for delivery. USPS has proposed revising its service 

standards, including overnight mail. 

b

If as a result of this process, USPS is able to consolidate all of the operational functions performed at 

the facility, USPS officials complete a separate study, referred to as a node study, to decide whether 

to close the facility. 

If headquarters approves the consolidation of operations at a facility, area 

and district employees perform those activities. For example, area 

employees must move mail-processing equipment and transfer the 

facility’s mail operations and transportation network to other USPS 

facilities. In addition, area and district employees must coordinate on 

repositioning employees into new positions as specified by their collective 

bargaining agreement.14

A key portion of USPS’s cost reduction efforts is linked to its delivery 

network (i.e., delivering its mail more efficiently). Mail delivery is USPS’s 

largest category of costs and generated close to $30 billion in total 

expenses in 2011. The majority of these costs—$21 billion—were for city 

routes, which use mail carriers who are generally expected to work 8 

hours per day.

After the consolidation has been completed, 

area employees conduct—with input from district employees—postimplementation reviews to evaluate, among other matters, the impacts of 

the consolidation and actual cost savings.

15

 

14For example, under the terms of USPS’s current agreement with the American Postal 

Workers Union, USPS is prohibited from, among other things, (1) terminating employees 

who work in mail-processing facilities and (2) transferring these employees to an 

installation further than 50 miles from the employees’ prior duty station. According to an 

area official, mail-processing facility consolidations can be challenging, given the large 

number of employees who work at these facilities. Another area official stated that as 

more mail-processing facilities are closed, the task of finding positions for employees will 

be increasingly challenging. If USPS cannot find appropriate positions for these 

employees, they could be placed on “stand by” status (i.e., idled, but receiving their full 

salaries). 

Declining mail volumes and the introduction of 

technologies that automatically sort most mail for delivery directly reduce 

the amount of time carriers need to manually prepare mail for delivery. 

Consequently, over time, these factors have, in some locations, resulted 

15USPS uses a variety of routes to deliver its mail, but the two principle route types are 

“city” and “rural.” City and rural carriers have different collective bargaining agreements 

and compensation systems. Generally, city carriers are paid by the hour with overtime, as 

applicable, while rural carriers are salaried employees. 

Reducing Costs in USPS’s 

Delivery Network 
 

Page 15 GAO-12-506 U.S. Postal Service 

in routes that city carriers can complete in less than 8 hours.16

Recognizing that these factors cause inefficiencies in USPS’s city delivery 

network,17 in 2008, USPS and the National Association of Letter 

Carriers—the union that represents city carriers—entered into an 

agreement that permits USPS to conduct city route inspections and to 

realign routes that no longer reflect 8 hours of work into more efficient 

routes. In fiscal year 2011, USPS eliminated 6,821 of its 224,485 city and 

rural delivery routes (about 3 percent). In addition, USPS recently 

announced plans to eliminate another 20,000 city routes (about 9 percent 

of current routes) for an estimated $2 billion in annual savings.18

Area and district employees have key roles in realigning city delivery 

routes. Specifically, area employees oversee the city route realignment 

process to ensure consistency across districts in their area, while district 

employees directly carry out the realignments. To do so, district 

employees (1) gather and analyze information on the factors that affect 

delivery time; (2) observe the time a mail carrier spends servicing his or 

her route and, if the route is determined to represent less than a full 8-

hour work day; (3) reconfigure the route so that it is more efficient. To 

evaluate the factors that affect delivery time, district managers consider a 

variety of factors, including the number of addresses and mail volume on 

a particular route, the distance between addresses, the geographic 

location of the route (e.g., the downtown of a major metropolitan area 

versus a small town), and the mode of delivery (e.g., mail delivered to a 

curbside mailbox, a mail slot in a door, or a cluster box). In addition, 

According to USPS officials, realigning delivery routes likely will continue 

well into the future given expected mail volume declines and annual 

increases in addresses receiving mail which, until recently, have 

historically increased by about 1 million addresses per year.

 

16Our July 2009 report provides additional information about USPS’s efforts to increase 

mail delivery efficiencies. See GAO, U.S. Postal Service: Mail Delivery Efficiency Has 

Improved, but Additional Actions Needed to Achieve Further Gains, GAO-09-696

(Washington, D.C.: July 15, 2009). 

17According to USPS officials, the annual method for measuring and adjusting rural carrier 

routes helps provide a more efficient structure for these routes. 

18According to USPS, realigning its delivery routes creates opportunities to reduce its 

personnel costs for carriers, carrier work hours, and overtime. In addition, because USPS 

assigns vehicles to most of its routes, when routes are consolidated or eliminated, USPS 

requires fewer delivery vehicles and uses less fuel. Similarly, with less mail for carriers to 

sort manually, USPS needs less equipment and facility space.
 

Page 16 GAO-12-506 U.S. Postal Service 

district employees physically observe a mail carrier’s daily activities, both 

in the office preparing mail for delivery and transporting and delivering the 

mail, to determine whether the route represents a full 8-hour day.19 If after 

conducting these activities, district employees determine that the 

workload does not fill an 8-hour day, specially trained district employees 

use a computerized management tool—called the Carrier Optimal 

Routing system—to redesign routes. This system uses digital mapping, 

algorithms, and route inspection data to create efficient city carrier routes 

that are more compact and contiguous. As a result, USPS could, for 

example, consolidate portions of other city routes, such as routes that 

necessitate carrier overtime, to complete or augment the prior 

reconfigured route, thereby eliminating the need for overtime. Because 

route realignments reorder mail deliveries along city routes, the 

realignments result in major changes to USPS’s database for managing 

addresses that, according to district managers, requires district Address 

Management Systems Specialists to update the database on an ongoing 

basis. According to USPS field officials, if updates to the database are not 

made in a timely manner, delivery efficiency and customer service would 

be degraded.20

As with USPS’s cost reduction efforts, area and district employees have a 

significant role in several aspects of USPS’s efforts to generate additional 

revenue through three of the Postmaster General’s four core business 

strategies: (1) strengthening the value of mail to businesses, (2) 

improving its retail customers’ experience, and (3) competing for the 

package business.

Area and district employees promote and oversee a variety of efforts 

intended to strengthen the value of mail to businesses. Collectively, these 

efforts are intended to enhance how U.S. businesses contact their 

customers to deliver billing statements and notifications (using First-Class 

Mail) and advertisements and offers (using Standard Mail). For example, 

area and district Business Service Network employees (marketing 

employees) provide direct and ongoing customer service to business 

 

19This entails district employees counting and recording the mail that the carrier handled, 

and recording the time the carrier used for each activity.

20Business mailers also rely on USPS’s updated address data to prepare and organize 

their mail for acceptance at mail-processing facilities. 

Revenue-Generating 

Efforts

Strengthening the Value of Mail 

to Businesses
 

Page 17 GAO-12-506 U.S. Postal Service 

mailers to, among other things, help the mailers conveniently process 

their mail and to correct any mailing problems, such as shipment delays, 

that may arise. In 2011, USPS generated about $50 billion (76 percent of 

its total operating revenue) from business mailers. Of this amount, $40 

billion (60 percent of its total operating revenue) came from business 

mailers that area and district Business Service Network employees 

directly serviced.

Area and district employees also have a role in promoting the value of 

mail with new business mailers. According to the Postmaster General’s 

speech in May 2011, three quarters of U.S. businesses are not using the 

mail to market their businesses to potential customers. Thus, he said 

encouraging these businesses to do so represents an opportunity to 

increase USPS’s revenue. In January 2011, USPS introduced a new 

initiative called Every Door Direct Mail to (1) make it easier for small and 

medium-sized businesses to advertise through the mail, and (2) enable

local businesses to target potential customers by street, as opposed to 

specific mailing addresses. Area employees oversee the implementation 

of this initiative in districts within their area, and monitor performance 

metrics and revenue earned. Similarly, district employees promote the 

initiative in their districts to attract new customers in their locations. 

According to USPS, this initiative generated over $92 million in revenue in 

the 9 months following its introduction in January 2011.

Improving the retail customer experience means maintaining and growing 

the customer base through improved customer service.21 Area employees 

have a key role in monitoring the quality of customer interactions and 

resolving any performance problems identified. For example, area 

employees told us that they regularly monitor the results of, among other 

things, customer surveys in specific post offices as well as in districts as a 

whole.22

 

21Specifically, according to USPS’s 2011 Annual Report to the Congress, improving the 

customers’ experience means creating uniformly positive experiences—easier 

transactions, helpful solutions, and friendly exchanges—whenever a customer conducts 

business with USPS. 

When these data identify specific performance problems, area 

employees share the results with district employees who are then 

expected to work with particular facilities and individuals to correct the 

22The surveys pose questions on the customers’ experience (1) sending and receiving 

mail, (2) during their last contact with a USPS employee, and (3) during their last visit to a 

retail facility, among other topics.

Improving the Retail 

Customers’ Experience
 

Page 18 GAO-12-506 U.S. Postal Service 

identified service-related problems. District employees also track the 

performance and revenue generated by third parties who provide 

alternative access to postal products through contract postal units and 

work with local postmasters, who most directly oversee these facilities, to 

improve service and maximize revenue.

USPS’s field employees also have key roles in helping the USPS 

successfully compete for and grow its package business. Overall, 

according to USPS, its package deliveries have increased from 12.7 

percent of its revenue in fiscal year 2006 to 16.1 percent in fiscal year 

2011. District employees work directly with employees at post offices and 

mail-processing facilities to train employees on how to properly scan 

packages for delivery—a key factor in growing USPS’s package 

business. Proper scanning helps ensure that packages travel through its 

delivery network efficiently and that customers and USPS can track the 

packages to determine their current location. USPS’s competitors offer 

this service, and USPS hopes to improve the reliability of its packagetracking services to capture portions of its competitors’ business. In 

addition, field employees we interviewed in one of the four areas we 

selected for our review developed a program to generate additional 

revenue by targeting small businesses that are not currently using 

USPS’s services. Specifically, in the Southwest Area, area employees 

worked with employees of their Dallas district office to collaborate on 

ways to identify and contact small businesses that generate less than 

$10,000 annually in postage sales and that currently use USPS 

competitors, such as the United Parcel Service, to persuade these 

companies to use USPS for their package mailing needs.23 According to 

USPS from August 1, 2011, through February 10, 2012, this initiative 

generated about $11.9 million in revenue from new small business 

customers. USPS headquarters officials stated that USPS is currently 

considering whether to implement similar revenue-generating efforts 

elsewhere.

 

23The Dallas District initiated this program—referred to as “Revenue Drivers”—in the 

spring of 2011 and subsequently collaborated with the Southwest area to further develop 

the program. The area expanded this program to all of its districts in August 2011.

Competing for the Package 

Business
 

Page 19 GAO-12-506 U.S. Postal Service 

In 2011 USPS consolidated its field offices by closing eight offices, 

centralizing support services, and eliminating field positions for an 

estimated $150 million in annual savings. However, USPS field 

employees we interviewed were concerned that the staffing reductions 

could negatively affect their ability to carry out additional cost-savings and 

revenue-generating efforts. USPS issued a plan in December 2011 to 

evaluate area and district offices for possible consolidation but, according 

to headquarters officials, USPS does not anticipate initiating these 

evaluations until after the completion of cost-reduction efforts in its retail, 

mail-processing, and delivery networks.

Prior to the consolidation, USPS estimated that the 2011 consolidation 

would result in an estimated annual cost savings of $150 million through 

December 2011.24 According to USPS, the goals of this consolidation 

were to, among other things, enhance and strengthen customer service 

and allow USPS to more quickly adapt to changing market forces, such 

as continuing mail volume declines. USPS closed its Southeast area 

office and seven district offices,25 and assigned functions previously 

performed at these locations to other area and district offices within close 

proximity. According to USPS headquarters officials, USPS considered a 

variety of factors in deciding which field offices to close and which 

positions to eliminate, including mail volume, number of customers 

served, population density, number of delivery routes, and revenue 

generated. Overall, USPS reduced its field offices positions by 1,946, or 

26 percent. At the conclusion of the consolidation in September 2011, 

USPS had 817 area and 4,698 district office positions, totaling 5,515 field 

positions.26

 

24USPS has not evaluated its actual cost savings or the operational impacts of its 2011 

consolidation. However according to USPS officials, it intends to do so.

Of the four departments that we selected for review, most of 

the field position reductions were in operations support (35 percent) and 

human resources (35 percent). The smallest reductions (14 percent) were 

in marketing (see table 1).

25In addition to the Southeast area office, USPS closed the Albuquerque, NM; Big Sky, 

MT; Columbus, OH; Southeast Michigan; Southeast New England, RI; South Georgia; and 

Northern Illinois district offices.

26 This data reflects number of authorized positions rather than total personnel.

In 2011 USPS Closed 

Field Offices and 

Eliminated Field 

Positions, Resulting in 

$150 Million in 

Estimated Annual 

Savings

USPS’s 2011 Field-Office 

Consolidation
 

Page 20 GAO-12-506 U.S. Postal Service 

Table 1: 2011 Area and District Position Reductions, by Department

Departments 

Area office 

position 

reductions

District office 

position 

reductions

Total fieldoffice 

position 

reductions 

Total percentage 

of field-office 

position 

reductions

Operations Support 166 519 685 35%

Human Resources 99 575 674 35%

Finance 27 262 289 15%

Marketing 41 239 280 14%

Othera 5 13 18 1%

Total area and district 

office position 

reductions 338 1,608 1,946 100%

Source: GAO analysis of USPS data.

a

USPS also eliminated positions in other field-office departments. Collectively, these positions, which 

included secretarial positions, account for 1 percent of the total positions eliminated. 

As part of this consolidation, USPS also centralized several district 

support services positions, including the following, into other locations 

which resulted in a net reduction of 247 positions.

• USPS centralized Family and Medical Leave Act Coordinators from 

district offices to its Human Resources Shared Services Center in 

Greensboro, North Carolina. Overall, USPS eliminated 106 district 

positions and, according to officials at the center, created 45 positions 

to handle the work previously carried out by the districts’ 

coordinators—a net reduction of 61 positions.

• USPS centralized responsibilities for allocating budgets from district to 

area offices. As part of this change, it eliminated 154 of its 221 district 

budget positions and created 11 positions in its area offices—a net 

reduction of 143 positions. According to area officials, moving this 

responsibility to area offices will help ensure that all facilities within an 

area have standardized and comparable budgets.

• USPS also eliminated 43 of the 78 district Mailpiece Design Analyst 

positions and centralized the remaining 35 positions at area offices.27

 

27Prior to the centralization, each of the district offices had at least one Mailpiece Design 

Analyst.
 

Page 21 GAO-12-506 U.S. Postal Service 

The remaining coordinators now provide design services to USPS 

customers through a centralized hotline.

Appendix I provides additional information on selected centralization 

actions between 2002 and 2005.

Several area and district officials expressed concern about how staff 

reductions and the allocation of field resources could affect their ability to 

manage ongoing and planned cost-reduction and revenue-generation 

efforts. Such concerns include the following:

• Four of the six district operations support managers whom we 

interviewed raised concerns about the number of Address 

Management Systems Specialist positions that USPS eliminated in 

the 2011 consolidation. According to these officials, the loss of these 

positions could limit their ability to perform future route realignments. 

Overall, USPS reduced the number of these district positions from 

624 positions to 427—a 32 percent reduction. As discussed, 

according to field officials, Address Management Systems Specialists 

are critical to USPS’s ongoing efforts to update its address 

management database following route realignments.

• Seven of the 10 area and district marketing managers we interviewed 

also raised concerns about the number of marketing positions 

eliminated in the 2011 consolidation. Of these reductions, 38 percent 

were area and district Business Service Network positions. These 

reductions may have been particularly difficult in the Capital Metro 

Area office because the area gained responsibility for managing 25 

additional business mailer accounts previously handled by the 

Southeast Area office. Several field officials told us that given USPS’s 

increased focus on generating revenue, it is important that area and 

district offices be staffed appropriately to oversee the range of 

marketing activities and to maintain business mailer customers. A 

district marketing manager reiterated this point, indicating that most 

business mailers expect personal service to resolve any mailing 

issues and that consequently, USPS should ensure that these 

business mailers receive consistent and reliable service to reduce the 

possibility of losing their business to competitors. As we have 

Area and District Officials’ 

Concerns about the 2011 

Consolidation

Concerns about the Ability to 

Carry Out Key USPS Efforts
 

Page 22 GAO-12-506 U.S. Postal Service 

reported, businesses that publish mail Periodicals, such as daily or 

weekly news magazines, have expressed concern about USPS’s 

ability to provide reliable service.28

• In addition, 12 of the 30 district managers we interviewed expressed 

concern that when USPS allocated resources for the 2011 

consolidation, it did not fully consider that some offices would be 

picking up additional work from the field office closures. For example, 

several district managers told us that during this consolidation, several 

field position reductions were made that, in their view, did not reflect 

office workload variations. The managers said that their departments 

are now understaffed. For example, the District Manager at the 

Connecticut Valley District told us that following the 2011 

consolidation, her district is now one of the largest districts in the 

country, both with respect to the number of USPS employees and 

geographic size. Specifically, she said her district grew from 11,939 

employees to 15,421—an increase of 29 percent and added over 100 

facilities, while losing 20 district positions. She expressed concern that 

despite overseeing one of the largest districts, she experienced the 

same number of staffing reductions as other districts with smaller 

workloads.

According to these business 

mailers, they will likely (1) accelerate their efforts to shift subscribers 

from hard copy mail to electronic communication or (2) otherwise stop 

using USPS if it is unable to provide reliable service.

Eight field officials told us that long work hours resulting from the 2011 

consolidation combined with other factors, such as employee uncertainty 

about their future employment, have made it difficult to recruit and retain 

area and district employees for management positions. For example, one 

district office manager told us that employees in her department have 

been seeking management opportunities outside USPS because of these 

concerns. Another district manager commented that he has seen a 

decrease in the number of employees willing to move into managerial 

positions because of uncertainty about future promotional opportunities 

and the stress associated with these positions. In addition, 17 field 

officials we talked to expressed concern that the loss of a significant 

number of senior, experienced area and district employees during the 

2011 consolidation might negatively affect USPS’s ability to manage field 

operations.

 

28GAO-12-470. 

Concerns about Recruiting and 

Retaining Future Managers: 
 

Page 23 GAO-12-506 U.S. Postal Service 

USPS headquarters officials stated that while they understand the 

concerns expressed by area and district employees, the changes 

undertaken as part of the 2011 consolidation were intended to align with 

other actions that USPS has taken to standardize and streamline support 

services. For example, according to these officials, USPS has developed 

several Web-based systems to automate and standardize administrative 

tasks that were previously conducted by district staff. As these tasks are 

streamlined, fewer district resources are needed. In addition, as

discussed, USPS headquarters officials told us that USPS considered a 

variety of factors in deciding its 2011 consolidation, including mail volume, 

number of customers, population density, number of delivery routes, and 

revenue generated. In addition, according to USPS headquarters officials, 

USPS also intends to consider workload impacts in its future field-office 

consolidations.

In December 2011, USPS issued a plan for evaluating area and district 

offices for possible consolidation and for carrying out future 

consolidations. According to the OIG, this plan addresses its 

recommendations related to USPS’s 2009 consolidation.29

USPS’s December 2011 plan specifies that it will take numerous steps to 

evaluate field offices for possible consolidation, including:

In particular, 

OIG officials told us that the document addresses recommendations to 

USPS to develop a plan which (1) periodically evaluates area and district 

offices for possible consolidation, (2) guides decisions on future fieldoffice consolidations, and (3) considers factors such as an office’s mail 

volume, workload, and proximity to other offices. In addition, OIG officials 

told us that the plan addresses the agency’s recommendation that USPS 

develop procedures for maintaining adequate documentation of its field 

office evaluations and consolidation decisions.

• conducting periodic evaluations of area and district offices to assess 

the need for consolidations;

 

29United States Postal Service Office of Inspector General, Postal Service Area and 

District Office Field Structure, United States Postal Service Office of Inspector General, 

FF-AR-10-224(R) (Arlington, VA: Sept. 20, 2010).

Issuance of Plan and 

Decision to Hold Off on 

Future Field-Office 

Consolidations
 

Page 24 GAO-12-506 U.S. Postal Service 

• developing a business case, which includes expected cost savings 

and benefits, for proposed field-office consolidations:

• using reliable data sources to evaluate area and district offices for 

potential consolidation; 

• adequately documenting all analyses and data used to make 

consolidation decisions; and

• conducting post-consolidation reviews to identify key achievements 

and actual cost savings, and document lessons learned.30

USPS’s past area and district consolidations have lacked documentation 

and transparency. For example, despite numerous requests, USPS did 

not provide us with any documentation of the analyses it used or the 

approval process for its decision to consolidate field operations in 2011. 

Similarly, in 2010, the OIG reported that USPS could not always provide 

documentation supporting its 2009 and earlier field-office consolidations. 

In addition, USPS has not completed postconsolidation reviews to assess 

either its lessons learned or its actual cost savings. Headquarters officials 

told us that the plan it issued in December 2011 should address these 

past concerns. These officials also said that USPS intends to ensure that 

its future evaluations consider the operational impacts of potential fieldoffice consolidations on ongoing and planned initiatives, such as those 

related to downsizing its retail, mail-processing, and delivery networks.

While USPS’s recent plan indicates that it intends to periodically evaluate 

its field office structure for possible consolidation, it does not specify when 

it will initiate these evaluations. According to headquarters officials, USPS 

does not plan to initiate these evaluations until after the completion of 

cost-reduction efforts in its retail, mail-processing, and delivery networks, 

efforts that USPS intends to complete in 2016. These officials also told us 

that further consolidation of field offices would be counterproductive at 

this time because field employees are key to the successful 

accomplishment of these cost-reduction efforts. In addition, the 

headquarters officials noted that cost savings from future field 

consolidations would be minimal compared to the roughly $9 billion USPS 

estimates can be saved by streamlining its retail, mail-processing, and 

 

30According to USPS officials, USPS also intends to conduct a postconsolidation review of 

its 2011 area and district consolidation actions.
 

Page 25 GAO-12-506 U.S. Postal Service 

delivery networks. Thus, according to these officials, for the time being, 

USPS needs its current field-office structure to focus on other efforts that 

will result in the largest potential cost savings.

USPS’s dire financial outlook necessitates urgent action to align its total 

network and reduce its costs as mail volume continues to decline. To 

reduce costs, USPS reduced the number of employees in its area and 

district offices by almost 56 percent from 2002 to 2011. And, in 2011, it 

announced additional USPS-wide initiatives to save an estimated $9.1 

billion annually by 2016. USPS also recently issued a plan for evaluating 

area and district offices for future consolidations; however, USPS has 

chosen to hold off on future field-office consolidations until after the 

USPS-wide initiatives are complete, which should allow USPS to make 

additional field- office changes, if needed, based on a network that is 

aligned with the reduced mail volume. This decision seems appropriate in 

view of the importance of area and district offices in implementing and 

managing these initiatives. If USPS decides to move forward with future 

field-office evaluations, its plan for doing so should address past concerns 

about inadequate documentation and transparency and lead to 

postconsolidation reviews to assess lessons learned and to measure 

actual savings.

We provided a draft of this report to USPS for review and comment. 

USPS had no comments. 

We are sending copies of this report to the appropriate congressional 

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

addition, the report will be available at no charge on GAO’s Web site at 

http://www.gao.gov. 

Concluding 

Observations

Agency Comments
 

Page 26 GAO-12-506 U.S. Postal Service 

If you or your staffs have any questions on 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. Contact information and key contributors to the report are 

listed in appendix III. 

Lorelei St. James

Director, Physical Infrastructure Issues
 

Page 27 GAO-12-506 U.S. Postal Service 

List of Congressional Requesters

The Honorable Susan Collins

Ranking Member

Committee on Homeland Security 

 and Governmental Affairs

United States Senate

The Honorable Tom 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
Appendix I: Timeline of Recent Field Office 

Consolidations and Information on Selected 

Centralizations of Administrative Services 

Page 28 GAO-12-506 U.S. Postal Service 

Table 2: Baseline of USPS’s Field Structure (1992) and Subsequent Field-Office Consolidations Between 2002 and 2011

Year Office Consolidation Actions

Area 

Offices

District 

Offices

1992 USPS replaced its prior field structure with 10 area offices and 85 district offices.a 10 85

2002 USPS closed the Midwest and Mid-Atlantic Area offices. 8 85

2003 USPS closed five district offices—Springfield, MA; Akron, OH; Lancaster, PA; Long Beach, 

CA; and San Jose, CA.

8 80

2006 USPS opened the Capital Metro Area office. 9 80

2009 USPS closed the New York, NY Metro Area office and six district offices—Central Florida, 

FL; Central New Jersey, NJ; Erie, PA; Massachusetts, MA; Spokane WA; and New 

Hampshire/Vermont (located in Manchester, NH) offices.

8 74

2011 USPS closed the Southeast Area office and seven district offices—Albuquerque, NM; Big 

Sky, MT; Columbus, OH; Southeast Michigan; Southeast New England, RI; South Georgia; 

and Northern Illinois.

7 67

Source: GAO presentation of OIG and USPS data.

a

Prior to 1992, USPS’s field-office structure consisted of 5 regions, 73 field divisions, and 144 

management sectional centers. 

Between 2002 and 2005, USPS centralized numerous support services, 

including accounting, equal opportunity employment investigations, and 

human resources into shared service centers. These services were 

conducted by employees in area and district offices before the 

centralizations. According to USPS headquarters officials, these 

centralization efforts are most noteworthy in terms of cost savings and 

reductions in area and district employee staffing.

USPS centralized some of its accounting services in 2002 and 2003. As 

part of this effort, USPS replaced its prior information technology systems 

with a new computer system—the Standard Accounting for Retail 

System. In addition, USPS reviewed the range of accounting services 

performed at its district offices to identify services that could be 

standardized and streamlined and, as a result of this effort, eliminated 

1,063 district accounting positions. To handle work previously performed 

by district employees, USPS created 295 positions at three accounting 

shared service centers in Eagan, Minnesota; St. Louis, Missouri; and San 

Mateo, California—a net reduction of 768 USPS positions. In fiscal year 

2005, USPS completed a postcentralization review and determined that 

its actions had resulted in cost savings of $56.8 million.

Appendix I: Timeline of Recent Field Office 

Consolidations and Information on Selected 

Centralizations of Administrative Services

Selected Centralizations of 

Administrative Services 

Previously Performed by Area 

and District Offices

Centralization of 

Accounting Services
Appendix I: Timeline of Recent Field Office 

Consolidations and Information on Selected 

Centralizations of Administrative Services 

Page 29 GAO-12-506 U.S. Postal Service 

In 2004, USPS centralized activities related to its investigations of equal 

employment opportunity complaints within a shared service center—the 

National Equal Opportunity Employment Service Office—located in 

Tampa, Florida. To accomplish this centralization, USPS eliminated 169 

area and district human-resource positions and created 47 positions at 

the new center to handle the complaints—a net reduction of 122 

employee positions. According to USPS officials at the center, the goals 

of this centralization were to (1) correct problems in USPS’s equal 

employment opportunity complaint process, (2) reduce a substantial 

backlog of cases, and (3) implement a consistent process for 

investigating future complaints. Among other responsibilities, employees

at this center review complaints filed by USPS employees and applicants 

for employment, assign complaints to contracted investigative personnel, 

and review and make determinations about the investigators’ findings. 

According to USPS officials at the center, centralizing this work resulted 

in about $13 million in cost savings as of fiscal year 2011. In addition, 

beginning in 2005, USPS began soliciting federal agencies to carry out 

their agencies’ equal employment opportunity investigations through the 

center. According to officials at the center, 17 agencies have entered into 

interagency agreements with USPS for this purpose. From 2006 to 2011, 

USPS earned about $3 million in revenue from these agreements, 

according to officials at the center.

In 2005, USPS established its Human Resource Shared Services Center 

in Greensboro, North Carolina, to centralize most of its services related to 

employee benefits; personnel actions; safety and injury compensation; 

and employee hiring, retirements, and reassignments. According to USPS 

officials at the center, the centralization was needed to streamline and 

standardize its human resources services. As part of this effort, USPS 

introduced a new information technology system—the Human Capital 

Enterprise System—which integrated information from a variety of prior 

human resource computer systems. According to USPS officials, the 

introduction of the improved computer system, along with the 

centralization, allowed USPS to reduce its district human resource staff 

by approximately 1,300-1,400 positions.1

 

1

According to USPS officials, the work associated with these human resource positions 

largely involved data entry transactions, such as posting job positions online and 

processing retirement and benefits documentation. 

While USPS eliminated well 

over a thousand district positions, it also created 457 positions at the 

Centralization of Equal 

Employment Opportunity 

Investigations

Centralization of Human 

Resource Services
Appendix I: Timeline of Recent Field Office 

Consolidations and Information on Selected 

Centralizations of Administrative Services 

Page 30 GAO-12-506 U.S. Postal Service 

shared services center to provide these services—a net staff reduction of 

roughly 900 employee positions.2

 

2 According to officials at the Human Resource Shared Services Center, the center’s 

staffing varies with workload fluctuations. For example, the officials told us that during 

open seasons when employees are allowed to change their health care insurance 

providers, USPS hires temporary staff to help accomplish the additional work.

According to a Human Resources 

official, the centralization of human resource services resulted in cost 

savings of about $150 million annually from 2007 through 2011.
Appendix II: Objectives, Scope, and 

Methodology

Page 31 GAO-12-506 U.S. Postal Service 

This report describes: (1) the role of area and district office employees in 

implementing the U.S. Postal Service’s (USPS) cost-savings and 

revenue-generation efforts and (2) USPS’s actions to consolidate its field 

office structure in 2011 and the impact of these actions. This report also 

describes actions taken by USPS between 2002 and 2005 to centralize 

selected services previously conducted at field offices to other USPS 

locations.

To address these objectives, we reviewed numerous documents, 

including prior GAO and USPS Office of Inspector General (OIG) reports, 

USPS documents, and the September 6, 2011, testimony of the 

Postmaster General. We also interviewed USPS officials, including 

headquarters officials and officials in area and district offices. We 

interviewed officials at four area offices—the Capital Metro Area, the 

Northeast Area, the Southwest Area, and the Pacific Area—that we 

selected based on several factors, including geographic dispersion 

throughout the U.S. and whether the office had recently absorbed the 

responsibilities of other offices following a USPS field-office consolidation. 

We selected a mixture of area offices that had been affected by recent 

consolidations and one office that had not been affected. We also 

interviewed officials from six district offices—Connecticut Valley; Dallas; 

Fort Worth; Los Angeles; Northern Virginia; and Santa Ana—which we 

selected based on their proximity (i.e., within about 100 miles) to the four 

area offices we selected. In total, we interviewed over 50 USPS officials, 

including USPS’s Chief Human Resources Officer; Area Vice Presidents; 

District Managers; area and district officials responsible for operations 

support, human resources, finance, and marketing in their locations; and 

managers representing USPS’s accounting, equal opportunity 

employment investigations, and human resources shared services 

centers. We also interviewed representatives from the National 

Association of Postal Supervisors, which represents among others, USPS 

area and district managers.

To describe the role of field office employees in implementing USPS’s 

cost-savings and revenue-generation efforts, we reviewed USPS 

documents describing USPS’s strategic goals and the role of area and 

district employees in carrying out potential consolidations of retail, mailprocessing, and delivery networks. To describe USPS’s actions to 

consolidate its area and district offices in 2011 and the impact of this 

consolidation we reviewed a 2010 OIG report on the 2009 consolidation, 

which included recommendations for USPS related to future field-office 

consolidation actions, and a variety of USPS documents, including 

USPS’s (1) statements on the expectations and goals for the 2011 

Appendix II: Objectives, Scope, and 

Methodology 
Appendix II: Objectives, Scope, and 

Methodology

Page 32 GAO-12-506 U.S. Postal Service 

consolidation, (2) 2011 Annual Report, (3) Form 10-K filing with the 

Securities and Exchange Commission on its 2011 Annual Report, (4) plan 

issued in December 2011 entitled Area and District Office Structure 

Evaluations Strategy, Policy and Process, and (5) 5-Year Business Plan 

issued in February 2012. We also interviewed USPS officials to learn 

about the financial and operational impacts of the 2011 consolidation. In 

addition, we analyzed USPS data on the number of employee positions at 

area and districts offices following the 2011 consolidation, and USPS’s 

cost-savings estimates for this consolidation and for its support service 

centralization efforts between 2002 to 2005. We assessed the reliability of 

these data sources by, among other things, interviewing USPS officials 

and reviewing USPS procedures for maintaining the data and verifying 

their accuracy. Based on this information, we determined that the data 

provided to us were sufficiently reliable for our reporting purposes. Finally, 

we interviewed USPS headquarters officials and OIG officials to obtain 

information on recommendations in the OIG’s 2010 report and USPS’s 

December 2011 plan for future evaluations of area and district offices for 

possible consolidations.

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 and 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 III: GAO Contact and Staff 

Acknowledgments

Page 33 GAO-12-506 U.S. Postal Service 

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

In addition to the contact named above, Kathleen Turner, Assistant 

Director; Patrick Dudley; Delwen Jones; Elke Kolodinski; James Leonard; 

Maria Mercado; Sara Ann Moessbauer; Joshua Ormond; and Crystal 

Wesco made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(544165)
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