U.S. POSTAL

SERVICE

Enhancements

Needed in

Performance Planning

and Reporting

United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on the Postal Service, Committee on

Government Reform

House of Representatives

September 2000

GAO/GGD-00-207

United States General Accounting Office General Government Division

Washington, D.C. 20548

Page 1 GAO/GGD-00-207 Postal Service Performance Planning and Reporting

B-286261

September 19, 2000

The Honorable John M. McHugh

Chairman, Subcommittee on the Postal Service

Committee on Government Reform

House of Representatives

Dear Mr. Chairman:

This letter responds to your request for information on the Postal Service’s

performance measures, reports, and plans. In this, our initial effort to

respond to your request, we focused on the Service’s fiscal year 1999

performance report and its fiscal year 2001 preliminary performance plan

as presented in the Service’s fiscal year 1999 comprehensive statement of

postal operations. Our objectives were to determine (1) how well the

Service’s fiscal year 1999 performance report addressed the Service’s

progress toward achieving the goals established by the fiscal year 1999

performance plan and (2) whether the Service’s fiscal year 2001

preliminary performance plan demonstrates continued progress in

developing a reasonable basis for establishing accountability for results.

This letter also addresses the concerns that you raised regarding both the

performance report and preliminary performance plan in a letter dated

April 24, 2000, to the Postal Service’s Board of Governors.

As you know, this was the Service’s first annual performance report and

third annual preliminary performance plan prepared in response to the

Government Performance and Results Act of 1993 (GPRA). We previously

commented on the Service’s fiscal years 1999 and 2000 preliminary

performance plans, recognizing the positive aspects of each. We also

offered a number of suggestions on how the preliminary plans could be

improved and, for the most part, those suggestions were incorporated into

the Service’s fiscal year 1999 and 2000 plans when they were issued in

final.

Preliminary performance plans are considered provisional until the Postal

Service Board of Governors completes the budget cycle and makes its final

decisions on the allocation of Postal Service resources. Once those

decisions are made, the Service is to make the necessary revisions to the

preliminary performance plan and issue it in final—traditionally in

September of each year.
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The Service’s annual performance report is subject to two key

requirements under GPRA.1

First, the performance report is to compare

actual performance achieved with the performance goals set forth in the

annual performance plan for that fiscal year. Second, the performance

report is to explain and describe, for performance goals not met, (1) why

the goal was not met; (2) plans and schedules for achieving the established

goal; and (3) if the goal is impractical or infeasible, why that is the case

and what action is to be taken.

In general, GPRA requires that annual performance plans (1) establish

performance goals that set forth the results to be achieved by program

activities; (2) identify the measures that will be used to compare actual

results with the established goals; and (3) specify the processes, skills,

technology, and resources required to meet the performance goals.2

Annual performance plans are to be in sufficient detail to provide a

reasonable basis for establishing accountability for results.

Our assessments of the Service’s fiscal year 1999 performance report and

its fiscal year 2001 preliminary performance plan are not as positive as our

prior years’ assessments of the Service’s efforts under GPRA. Although

both the fiscal year 1999 performance report and fiscal year 2001

performance plan contain several positive aspects, we did not see the

continued progression of improvements in the Service’s GPRA-related

documents that we observed in the past. More specifically, we believe that

some aspects of the Service’s fiscal year 1999 performance report were not

as straightforward and clearly stated as intended by GPRA, and some

aspects of the Service’s fiscal year 2001 preliminary performance plan

were not as comprehensive as they had been in prior plans. We also have

concerns about other aspects that may limit the plan’s usefulness.

It appears that some aspects of the Service’s fiscal year 1999 performance

report could be misleading. For example, the Service’s highlighted results

for timely delivery of First-Class Mail could lead readers to mistakenly

conclude that for fiscal year 1999, the Service exceeded its on-time

delivery targets for both overnight and 2- and 3-day deliveries. For fiscal

year 1999, the Service met, but did not exceed, its goal for on-time

overnight deliveries of First-Class Mail and fell a little short of its goal for

2- and 3-day deliveries. This information, however, must be gleaned from

the more detailed text of the report. The report could also mislead readers

1

See 39 U.S.C. 2804.

2

See 39 U.S.C. 2803.

Results in Brief
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into concluding that the Service’s Total Factor Productivity increased

during fiscal year 1999 due to the report’s portrayal of negative postal

productivity as a strongly positive result.

There are also a number of reasons why the Service’s fiscal year 2001

preliminary performance plan may not have been as useful to Congress,

postal managers, and others as it could have been. Those reasons include

instances where (1) without detailed explanation, several prior years’

subgoals—and their associated indicators and targets—were not carried

forward into the fiscal year 2001 preliminary performance plan; (2) the

criteria the Service used to measure its success toward achieving certain

goals were unclear; (3) the descriptions of strategies to accomplish certain

results were incomplete; (4) information contained in prior years’ plans

were carried forward into the current year’s plan without always being

updated to reflect known or anticipated changes; and (5) little or no

explanation was given on why the plan lacked baseline data for some

quantitative indicators.

We identify areas where we believe improvements could be made to the

Service’s future performance reports and plans and make

recommendations to the Postmaster General as to what changes could be

made to enhance those reports and plans. In commenting on a draft of this

report, the Service generally agreed with the facts and planned to

implement the recommendations.

The Service’s fiscal year 1999 performance report and its fiscal year 2001

preliminary performance plan contained several positive aspects. This

was the Service’s first annual performance report and its third preliminary

performance plan issued under GPRA. We previously reported on the

Service’s fiscal year 1999 and fiscal year 2000 preliminary performance

plans. 3

Overall, we reported that the plans exhibited a good effort on the

part of the Service to provide the reader with a reasonable basis for

understanding the Service’s intended performance. While our overall

assessment of the plans was generally positive, we did offer a number of

suggestions for improving the plans. For the most part, those suggestions

were incorporated into the final plans.

3

The Results Act: Observations on the Postal Service’s Preliminary Annual Performance Plan

(GAO/GGD-98-144, July 10, 1998), and The Results Act: Observations on the Postal Service’s

Preliminary Performance Plan for Fiscal Year 2000 (GAO/GGD-99-72R, Apr. 30, 1999).

Positive Aspects of the

Service’s Fiscal Year

1999 Performance

Report and Fiscal Year

2001 Preliminary

Performance Plan
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Like its prior strategic and performance plans, the Service’s fiscal year

1999 performance report contained several positive aspects. For example,

the performance report

• provided a useful summary of the Service’s performance in a number of

areas,

• presented results in a useful tabular format, and

• acknowledged the importance of setting performance goals and targets

linked to the Service’s mission.

The Service’s fiscal year 1999 performance report contained a useful

summary of the Service’s performance in a number of areas, including net

income, restoration of equity, and a composite measure of how easy it is

for customers to do business with the Service. In each of these areas, the

performance report succinctly summarized the goal as stated in the

Service’s performance plan for fiscal year 1999 and the actual level of

performance. The performance report also provided useful information to

put actual performance into perspective, such as pointing out that fiscal

year 1999 was the fifth consecutive year in which the Service achieved

positive net income.

The performance report also included useful summaries of achieving cost

savings, delivering employee training, and ensuring a safe workplace

environment. The performance report summarized how the Service

achieved more than $1 billion in cost reductions in fiscal year 1999,

compared to its goal of achieving $734 million from budgeted cost

reduction programs initiated at headquarters and in the field. In addition,

the “Performance Highlights” section of the performance report contained

useful information on the Service’s cost reduction program and the

reasons cost reductions were deemed necessary. The performance report

also (1) summarized the goals and results by employee group when

discussing required training and (2) identified key elements of the

Service’s safety program when discussing the Service’s progress toward

ensuring a safe workplace environment.

The Service’s fiscal year 1999 performance report used a tabular format for

summarizing all of the Service’s goals, subgoals, indicators, targets, and

performance results that was easy to understand. The format was the

same as that used in the fiscal year 1999 performance plan to summarize

the Service’s performance goals, subgoals, indicators, and targets, except

the format added a column that readily identified actual performance

relative to the target. This tabular format was easy to follow and very userfriendly.
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In acknowledging the importance of performance goals and targets, the

Service stated in its fiscal year 1999 performance report that the “goals,

subgoals, indicators, and targets for management improvement that are

reported on here are central to the ongoing strategic management and

direction of the Service. They are exactly those that the Postal Service

itself employs to assess its performance through its Management Process.”

These acknowledgments in the performance report were useful in

establishing postal management’s active support for setting performance

goals and targets linked to the Service’s mission. These acknowledgments

also made it clear that the goals included in the performance plans and

reports were the same ones that the Service’s management used to hold

itself accountable.

The Service’s fiscal year 2001 preliminary performance plan also contained

several positive aspects, including additional performance indicators and

targets for tracking intended performance in selected subgoals, such as (1)

targets for overall customer satisfaction (residential and business); (2)

resolving employee complaints (Resolving Employee Disputes, Reaching

Equitable Solutions Swiftly--REDRESS); and (3) Voice of the Employee

survey—which is the vehicle used by the Service to improve its

understanding of employee issues and concerns.

The Service’s fiscal year 1999 performance report’s usefulness to

Congress, postal managers, and others, may be reduced because of

instances of possible misleading reporting or incomplete explanations of

results. In a letter dated April 24, 2000, to the Postal Service’s Board of

Governors, Chairman McHugh expressed concerns about the

comprehensiveness of the Service’s fiscal year 1999 performance report.

The Board responded to the Chairman, in a letter dated May 23, 2000, that

it had asked the Postmaster General to review the fiscal year 1999

performance report and recommend an approach for addressing the

Chairman’s concerns in the fiscal year 2000 performance report.

There were several instances where the Service’s fiscal year 1999

performance report appeared to be misleading. For example, the

performance report’s highlighted results for timely delivery of First-Class

Mail could lead readers to conclude incorrectly that for fiscal year 1999,

the Service exceeded its on-time delivery targets for both overnight and 2-

and 3-day (2/3-day) deliveries.

As noted earlier, GPRA requires that agencies set strategic and annual

goals, measure performance, and report on the degree to which goals are

met. The Service’s fiscal year 1999 performance plan established 93 and 87

Some Aspects of the

Service’s Fiscal Year

1999 Performance

Report Were Not As

Straightforward As

They Could Have Been
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percent targets for on-time delivery for overnight and 2/3-day First-Class

Mail, respectively, and portrayed these as annual targets. Nothing in the

Service’s performance plan indicated that these targets were not for the

entire fiscal year.

The Service’s fiscal year 1999 performance report highlighted that the

Service exceeded its on-time delivery performance targets. However, the

report did not acknowledge, in the highlights section, that this

determination was based on performance for selected quarters (i.e.,

quarters 3 and 4), when delivery scores were at their highest point for the

year. That information was found only in the detailed text of the report.

When all 4 quarters of fiscal year 1999 performance data were aggregated,

the Service met, but did not exceed, its goal of 93 percent on-time delivery

of overnight First-Class Mail, and delivered 86 percent of the 2/3-day mail

on-time—one percentage point less than the established target of 87

percent.

We believe that it was misleading for the performance report to highlight

that the Service exceeded its targets for overnight and 2/3-day on-time

deliveries, particularly when there was not an accompanying

acknowledgment that less than a full year’s performance was used in

making that determination. In addition, given that the Service’s

performance for all 4 quarters of fiscal year 1999 either met or came close

to meeting the established targets, we question why the Service chose to

highlight information that did not include performance for the full fiscal

year.

The Board, in responding to a concern raised by Chairman McHugh as to

why only selected quarters were used in highlighting fiscal year 1999 ontime delivery performance, stated that the performance report contained

results for both the third and fourth quarter composite performance and a

4-quarter composite score.

Another example of reporting performance that could be misread was the

Service’s portrayal of negative postal productivity as a strongly positive

result. The fiscal year 1999 performance plan did not expect the Service’s

Total Factor Productivity (TFP) to grow from fiscal year 1998. The plan

explained that the Service did not expect TFP to increase during fiscal

year 1999 primarily due to expenditures to enhance service. 4

Rather, the

4

TFP measures the changes in the relationship between the Service’s outputs and resources expended

in producing those outputs. The Service’s main outputs are mail volumes and servicing an expanding

delivery network. By tracking outputs and resource usage, TFP provides a measure of historical

performance.
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Page 7 GAO/GGD-00-207 Postal Service Performance Planning and Reporting

plan established a target for fiscal year 1999 that anticipated a 0.4 percent

decline from fiscal year 1998. TFP for fiscal year 1999 did decline from

fiscal year 1998, but not as much as the fiscal year 1999 performance plan

anticipated. The fiscal year 1999 performance report, however, presented

that information in such a positive manner that we had to read the report

carefully to understand that TFP for fiscal year 1999 had actually

decreased since fiscal year 1998.

The fiscal year 1999 performance report prominently highlighted that the

Service had achieved 133 percent of its TFP target. Only in the detailed

discussion of performance goals did we fully understand that TFP actually

declined from fiscal year 1998. In other possibly misleading text, the

performance report noted that in addition to the Service achieving 133

percent of its TFP target, it had also improved TFP 2.3 percent in the

fourth quarter of fiscal year 1999. The performance report emphasized

that this was the Service’s largest quarterly improvement in 5 years. While

these are positive trends, we believe the performance report should clearly

inform the reader that TFP for fiscal year 1999 declined from 1998—

although not as much as anticipated. Implicit in GPRA is Congress’ intent

that agencies provide performance data that is clear and understandable,

and allows interested parties to see how well agencies are improving

performance.

In his April 24, 2000, letter to the Board of Governors, Chairman McHugh

noted that the Service’s positive portrayal of TFP in the “Performance

Highlights” lacked proper qualifications to let the reader know that TFP

actually fell 0.3 percent from the previous year. The Board responded that

it concurred with Chairman McHugh’s statements regarding TFP

performance for fiscal year 1999 and, as noted earlier, had asked the

Postmaster General to recommend an approach for addressing the

Chairman’s concerns in the fiscal year 2000 performance report.

There are also other instances where the Service’s fiscal year 1999

performance report may not have been as straightforward as it could have

been. With regard to capital commitments, for example, the fiscal year

1999 performance plan did not compare actual performance with the

targets established in the fiscal year 1999 performance plan. The fiscal

year 1999 performance plan set a target for the Service to commit $4.4

billion in capital spending. However, the fiscal year 1999 performance

report indicated, in the detailed text, that the target had been revised

downward to $4 billion “in the [Service’s] ongoing management planning

cycle and continuous review of major programs.” The performance report

stated that the Service had met all its capital investment objectives with
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only $3.8 billion in commitments, realizing a $200 million savings from plan

and achieving 105 percent of its fiscal year 1999 capital commitment plan

target. The performance report did not fully explain, as intended by GPRA,

why the Service revised its capital commitment target from $4.4 billion

downward, nor did it fully explain how the Service was able to achieve its

stated objectives at less cost.

In responding to Chairman McHugh’s concern that the Service had not

measured actual performance against the targets established in its 1999

performance plan for achieving a capital commitment budget of $4.4

billion, the Board responded that during fiscal year 1999 the Service had

been able to meet its capital investment objectives at a slightly lower

commitment rate, and therefore, committing capital at less than plan was

appropriate.

There were several instances in the Service’s fiscal year 1999 performance

report where the presentation of information on results was incomplete.

For example, the fiscal year 1999 performance plan stated that regarding

Priority Mail, the Service would achieve targeted Priority Mail on-time

performance. Although the performance plan stated that the Service

increased its Priority Mail on-time performance, the fiscal year 1999

performance report did not inform Congress, postal managers, and others

whether or not the Service met its target. The performance report stated

that the Service’s Priority Mail on-time performance information is

proprietary. We believe that the Service could have disclosed whether it

met its target, fell short of its target, or exceeded its target, without

disclosing specific proprietary information.

Other areas where the Service’s fiscal year 1999 performance report

omitted or did not provide complete information, as required by GPRA,

included:

• Ease of Use Indexes. The performance report did not explain why the

Service did not meet its targets relating to three of its five “Ease-of-Use”

indexes, including its Composite Ease-of-Use index, Residential Ease-ofUse index, and Business Ease-of-Use index. The report also omitted plans

and schedules for achieving these targets and, in cases where targets were

considered impractical or infeasible, failed to explain why that was the

case and what action was planned.

• Proficiency Indexes. The performance report did not explain why the

Service did not achieve its targets with regard to increasing (1) retail

unit/process proficiency and (2) automation maintenance and operations

proficiency.
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• Development of Baselines. The performance report did not explain why

the Service did not meet targets in its performance plan regarding the

development of baselines for some of its indicators. For example, the

fiscal year 1999 performance plan stated that the Service would “complete

development of a new indicator for consistency and establish a

performance baseline.” The fiscal year 1999 performance report stated

that the Service had “achieved performance of 100 percent of the target of

developing a new indicator for consistent service.” However, the report

did not indicate that the Service had established a baseline, nor explain

why it had not.

• Employee Knowledge of Goals. The Service’s fiscal year 1999 performance

plan established targets of improving employees’ knowledge of their unit

goals and unit performance to 90 percent. The Service’s fiscal year 1999

performance report stated that the Service achieved 98 percent of those

two targets, but did not explain why the targets were not met. Also, the

report noted that an independent evaluation of the survey used to

determine employees’ knowledge of their unit goals and unit performance

led to the elimination of the survey from the fiscal year 2000 performance

plan. No further explanation was given.

The preliminary performance plan was not as comprehensive as its

predecessor because several subgoals, indicators, and targets that were

included in the Service’s fiscal year 2000 performance plan were not

carried forward into the fiscal year 2001 preliminary performance plan. In

addition, the usefulness of the fiscal year 2001 preliminary performance

plan is further limited because the plan (1) contained criteria that was

unclear to us for measuring the Service’s success toward achieving certain

goals, (2) contained an incomplete description of strategies to accomplish

certain results, (3) failed to always update the information contained in the

fiscal year 2000 performance plan to reflect known or anticipated changes

in certain areas, and (4) failed to fully explain why baseline data for some

quantitative indicators were not included in the plan.

Chairman McHugh raised similar concerns regarding the Service’s fiscal

year 2001 preliminary plan to the Postal Service Board of Governors. In

responding to the Chairman’s concerns, the Board indicated that the

Service’s fiscal year 2001 performance plan will be more comprehensive

when it is issued in final. The Service anticipates issuing the fiscal year

2001 performance plan, in final, in September 2000.

The Service’s fiscal year 2001 preliminary performance plan eliminated

three of the five Voice of the Business subgoals--and their associated

indicators and targets--that had been included in the Service’s final

Some Aspects of the

Service’s Fiscal Year

2001 Preliminary

Performance Plan

Were Not As Useful As

They Could Have Been
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performance plan for fiscal year 2000. The preliminary performance plan

did not fully explain why these subgoals, indicators, and targets were

dropped. Subgoals dropped from the preliminary performance plan for

fiscal year 2001 included:

• Keeping price increases at or below the rate of inflation. The Service had

included a subgoal relating to price increases in its Five-Year Strategic

Plan covering fiscal years 1998 through 2002 and in its performance plans

for fiscal years 1999 and 2000. The Service set a subgoal in its final

performance plan for fiscal year 2000 to “keep price increases at or below

the rate of inflation” as measured by the Consumer Price Index (CPI). The

Postmaster General recently reaffirmed this subgoal when he informed the

House Subcommittee on the Postal Service that “...the Postal Service

strives for rate increases at or below the rate of inflation that will provide

sufficient revenues to enable the organization to maintain, improve, and

develop necessary postal services.” However, the Service dropped this

subgoal from its preliminary plan for fiscal year 2001. In responding to

Chairman McHugh as to why this subgoal was dropped, the Board replied

it was decided that simplification of the Voice of the Business goals and an

increased focus on bottom-line business performance would lead to a

more businesslike and accountable goal framework. This explanation

implies that the Service will have increased accountability by dropping its

subgoal relating to keeping price increases at or below the rate of inflation.

However, in our opinion, if the Service does not set a goal concerning price

increases, it will be more difficult to hold the Service accountable for its

performance in this area.

• Controlling costs by achieving productivity gains. The Service had

included a subgoal of controlling costs by achieving productivity gains in

its Strategic Plan for fiscal years 1998 through 2002 and in its annual

performance plans for fiscal years 1999 and 2000. Specific indicators and

targets had also been developed for this subgoal, including one for overall

productivity. However, this subgoal and its associated indicators and

targets were dropped from the Service’s preliminary performance plan for

fiscal year 2001. The Service stated that it was dropping its overall

productivity TFP target as a measure of productivity for fiscal year 2001

because, in essence, the overall Voice of the Business performance goal

encompasses productivity gains. On April 12, 2000, the Service’s Vice

President for Strategic Planning told us that the fiscal year 2001

preliminary performance plan, in effect, took TFP from a nationwide score

down to individual scores by performance cluster. Nevertheless, during

our discussion, the Vice President for Strategic Planning told us that the

Service would restore a national TFP goal to its fiscal year 2001

performance plan. The Board reiterated this in May 2000, when it told
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Chairman McHugh that it had decided to restore TFP as a national-level

results indicator. We believe the decision to do this was the correct one.

• Restoring equity. According to the Service, it should have maintained an

equity balance transferred to it from the U.S. government when the Postal

Service was established in 1971 from the reorganized U.S. Post Office

Department. Because expenses exceeded revenues in the early years of

the Postal Service, that equity was eroded. The Service, in its Strategic

Plan for fiscal years 1998 through 2002, and in its annual performance

plans for fiscal years 1999 and 2000, set a subgoal of restoring that equity.

However, that subgoal was dropped from the Service’s preliminary

performance plan for fiscal year 2001. The Service said this subgoal was

dropped because simplification of Voice of Business targets and an

increased focus on bottom-line results will lead to a more businesslike and

accountable goal framework—the same reason the Service gave for

dropping the goal relating to keeping rate increases at or below the rate of

inflation. The Service is required by law to break even from its operations.

However, the Service’s expenses exceeded its revenues in the period 1971

through 1994. By the end of 1994, the Service had $9 billion in cumulative

net losses. The Service’s Board of Governors adopted a resolution in July

1995, affirming the Service’s commitment to restore equity by recouping

the accumulated losses. During the period 1995 through 1999, the Service

earned net income totaling $5.5 billion, which has enabled the Service to

recover more than half of the prior years’ losses. At the end of fiscal year

1999, the Service still had $3.5 billion in prior years’ losses. It is not clear

why the Service has dropped this subgoal, but it is clear that its elimination

will remove the restoration of equity from the list of goals and subgoals

that the Service will be held accountable for in its fiscal year 2001

performance report.

In addition, the Service’s fiscal year 2001 preliminary performance plan

eliminated, without detailed explanation, an indicator and associated

target for one of the two remaining Voice of the Business subgoals that had

been included in the fiscal year 2000 performance plan. The indicator that

was eliminated was economic value added, which is a measure used by the

Service to determine financial performance and allocate performance

incentive funds to individuals. This indicator had been included in the

Service’s annual performance plans for fiscal years 1999 and 2000 but was

dropped from the fiscal year 2001 preliminary performance plan with no

reason given. The Board, in responding to Chairman McHugh as to why

this indicator was dropped, stated that the indicator was dropped because

it moves in parallel with corporate net income and is primarily a technical

measure used in a Service performance incentive system.
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We are also concerned that the usefulness of the Service’s fiscal year 2001

performance plan may be limited because the preliminary plan contained

unclear criteria for measuring the Service’s success toward achieving

certain goals. For example, the fiscal year 2001 preliminary plan states

that the Service will “as an Area target, improve productivity over a

threshold value specific to each Area.” However, the threshold values and

baseline data for this target were not disclosed in the preliminary plan. In

addition, the preliminary plan set a performance subgoal of ensuring “an

inclusive and fair environment with opportunities for all employees” that is

to include performance indicators for quarterly management reviews at

various levels regarding (1) representation of all employee groups in

details and special assignments, (2) representation of all employee groups

in succession plans, and (3) activities supporting the affirmative

employment plan. It is not clear what the targets are for this subgoal (i.e.,

whether quantitative targets will be established to measure success, or if

other criteria will be used to define success in achieving this subgoal).

Also, the usefulness of the fiscal year 2001 preliminary performance plan

may be limited because it lacks complete descriptions of strategies to

accomplish certain results. For example, the preliminary performance

plan states that the Service intends to create new products and services

that can respond to changing customer requirements, but provides no

elaboration of what types of new products and services are planned or

how new ones will be identified and developed. In addition, the

preliminary plan provides virtually no discussion of the Service’s ecommerce initiatives. The Board, in responding to concerns raised by

Chairman McHugh in this area, stated that the strategies for new products

and services and e-commerce were not included in the fiscal year 2001

preliminary performance plan because they were in an intermediate stage

of development. The Board assured the Chairman that the final fiscal year

2001 performance plan will include more detail on these strategies.

In addition, the fiscal year 2001 preliminary performance plan’s usefulness

may be limited because it did not always update the discussion of the

linkage between performance goals and major programs contained in the

fiscal year 2000 performance plan to reflect known or anticipated changes.

For example, the description used for the Service’s corporate advertising

program in its fiscal year 2001 preliminary performance plan was

unchanged from the fiscal year 2000 performance plan even though the

Service plans to spend $270 million on corporate advertising in fiscal year

2001, up from the $150 million planned for fiscal year 2000. Further, the

description used for the Service’s expedited supplies program in its fiscal

year 2001 preliminary performance plan was unchanged from the fiscal
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year 2000 performance plan even though the Service plans to spend $57

million in fiscal year 2001, down from the $81 million planned for fiscal

year 2000. No explanation was given in the fiscal year 2001 preliminary

plan for the change in either of these programs. The Board, however, in

responding to concerns raised by Chairman McHugh, said that the

resources to be allocated to these programs are currently under review,

and assured the Chairman that additional details on the status and

resources of these and other major programs would be provided in the

final fiscal year 2001 performance plan.

We are also concerned that the Service’s fiscal year 2001 preliminary

performance plan provided little or no explanation as to why baseline data

for some quantitative indicators were not included in the plan. For

example, the preliminary performance plan does not present baseline data

for the following 10 quantitative indicators and provides little or no

explanation as to why the data are missing:

• on-time delivery of advertising mail;

• accuracy of mail delivery;

• change of address accuracy;

• consistency of delivery;

• overall customer satisfaction (residential and business);

• overall value (residential and business);

• availability of, and participation in, REDRESS, a program to resolve

employee complaints;

• safety program evaluation;

• total accidents per 200,000 workhours; and

• motor vehicle accidents per million miles driven.

In responding to a concern of Chairman McHugh in this area, the Board

stated that most of these indicators are either in the process of being

developed, or have just recently been deployed. It further stated that

baseline data are not reported until the indicators have been deployed and

several quarters of actual results are available to allow detection and

correction of any flaws in the process. The Board did, however, state that

baseline data for the four indicators listed below are being collected and

will be reported in the final fiscal year 2001 performance plan, and the

baseline data for the other six indicators will be reported in future

performance plans as soon as accurate results are available. The

indicators are as follows:

• on-time delivery of advertising mail;
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• availability of, and participation in, REDRESS, a program to resolve

employee complaints;

• total accidents per 200,000 workhours; and

• motor vehicle accidents per million miles driven.

Subsequent to the Board’s response to Chairman McHugh, Service

management told us, in September 2000, that baseline data for safety

program evaluations will also be reported in the Service’s final fiscal year

2001 performance plan. Service management also told us that the Service

will no longer pursue the overall value indicator because customers’

perception of value is actually part of their overall perception of

performance.

Our assessments of the Service’s fiscal year 1999 performance report and

its fiscal year 2001 preliminary performance plan are not as positive as our

assessments of the Service’s prior years efforts under GPRA. Although the

fiscal year 1999 performance report and fiscal year 2001 preliminary

performance plan contain positive aspects, we are concerned that they

may not be as useful to Congress, postal managers, and others as they

could have been.

Our primary concern with the fiscal year 1999 performance report was that

some aspects were not as straightforward and clearly stated as intended by

GPRA and contained possibly misleading information or incomplete

explanations of results. For example, the report contained language that

could lead readers to mistakenly conclude that for fiscal year 1999, the

Service exceeded its on-time delivery targets for both overnight and 2/3-

day deliveries. Similarly, the report attempted to portray negative TFP in a

strongly positive and possibly misleading light.

The fiscal year 2001 preliminary performance plan was also less useful

than it could have been. The performance plan (1) provided little or no

explanation as to why several subgoals, indicators, and targets that were

included in the Service’s fiscal year 2000 performance plan were not

carried forward into the fiscal year 2001 preliminary performance plan, (2)

contained unclear criteria for measuring the Service’s success in achieving

certain goals, (3) did not completely describe strategies to accomplish

some results, (4) failed to adequately update some information contained

in the fiscal year 2000 performance plan to reflect known or anticipated

changes when discussing the linkage between performance goals and

major programs, and (5) failed to provide adequate explanations as to why

baseline data was not provided for some quantitative indicators.

Conclusions
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Page 15 GAO/GGD-00-207 Postal Service Performance Planning and Reporting

We believe that in preparing future performance plans and performance

reports that will assist Congress, postal managers, and others, the Service

needs to focus more acutely on providing and presenting information that

is clear and understandable. Accordingly, interested parties would be able

to more easily determine how well the Service is improving performance

and achieving its goals, as intended by GPRA.

In order to improve the Service’s future performance reports, we

recommend that the Postmaster General ensure that all sections of future

reports reflect straightforward and clearly stated comparisons of planned

targets and results so that readers are not mislead regarding performance.

In order to improve the usefulness of the Service’s future performance

plans, we recommend that the Postmaster General include in the Service’s

future plans (1) detailed explanations when subgoals, indicators, and

targets contained in the prior year’s plan are not carried forward into the

current year plan; (2) clear criteria, including baseline data where possible,

for measuring the Service’s success toward achieving stated goals; (3)

complete descriptions of strategies to accomplish stated goals; (4) updated

information to reflect known or anticipated changes when discussing the

linkage between performance goals and major programs; and (5) where

applicable, explanations as to why baseline data are not being provided.

We received comments from the Service’s Vice President for Strategic

Planning on September 1, 2000. Those comments are summarized below

and reprinted in appendix I. We also incorporated technical comments

provided by Service officials into the report where appropriate. The

Service’s Vice President for Strategic Planning stated that the Service

generally agreed with the report’s recommendations and that future

performance reports and plans will incorporate additional material

responding to concerns raised and recommendations made in this report.

More specifically, he stated that the Service’s final performance plan for

fiscal year 2001 will contain a section describing the reasons why several

subgoals, indicators, and targets that were included in the Service’s fiscal

year 2000 performance plan were not carried forward into the fiscal year

2001 plan. He also stated, with regard to our concerns about the lack of

clear criteria and baseline data for measuring success in achieving certain

goals, that the Service’s fiscal year 2001 final performance plan will, where

practical, include additional information to help clarify the measures that

will be used for determining success. Further, he stated that additional

clarifying information relevant to one of the targets discussed in the

report--Area productivity target--will be provided in the fiscal year 2000

annual performance report since that information will not become

Recommendations

Agency Comments and

Our Evaluation
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Page 16 GAO/GGD-00-207 Postal Service Performance Planning and Reporting

available until after the date the fiscal year 2001 performance plan is

expected to be issued in final.

The Vice President for Strategic Planning stated that the Service’s final

fiscal year 2001 annual performance plan will include new material on goal

achievement strategies to accomplish certain results, particularly for new

products and service initiatives, including e-commerce. He also stated that

the plan will contain a new section that compares the resource levels of

the major programs in fiscal year 2000 with those in fiscal year 2001, and

the plan’s description of major programs will be augmented to reflect any

significant status changes.

The Vice President for Strategic Planning also provided some additional

information regarding baseline data for some quantitative indicators. That

additional information has been incorporated into this report. We believe

that the Service’s future performance reports and plans will be

significantly strengthened and become more useful to Congress, postal

managers, and others by the inclusion of the additional information

delineated in the Service’s September 1, 2000, letter.

Our objectives were to determine (1) how well the Service’s fiscal year

1999 performance report addressed the Service’s progress toward

achieving the goals established by the fiscal year 1999 performance plan

and (2) whether the Service’s fiscal year 2001 preliminary performance

plan demonstrates continued progress in developing a reasonable basis for

establishing accountability for results. Our assessment relied heavily on

our knowledge of the Service’s operations and programs, and on our

numerous reviews of the Service, including our reviews of the Service’s

preliminary performance plans for fiscal years 1999 and 2000. We did not

independently verify the information contained in the Service’s

performance report or plans. We conducted our review in June and July

2000 in accordance with generally accepted government auditing

standards.

We are sending copies of this report to Representative Chaka Fattah,

Ranking Minority Member of your Subcommittee; Senator Thad Cochran,

Chairman, and Senator Daniel K. Akaka, Ranking Minority Member of the

Subcommittee on International Security, Proliferation and Federal

Services, Senate Committee on Governmental Affairs; Mr. William J.

Henderson, Postmaster General and Chief Executive Officer, United States

Postal Service; and other interested parties. Copies will also be made

available to others upon request.

Objective, Scope, and

Methodology
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Page 17 GAO/GGD-00-207 Postal Service Performance Planning and Reporting

Please call me on (202) 512-8387 if you or your staff have any questions.

Key contributors to this report were Gerald P. Barnes, Kenneth E. John,

Charles F. Wicker, and Roger L. Lively.

Sincerely yours,

Bernard L. Ungar

Director, Government Business

Operations Issues
Page 18 GAO/GGD-00-207 Postal Service Performance Planning and Reporting

Contents

1 Letter

Appendix I 20

Comments From the

U.S. Postal Service

Abbreviations

CPI Consumer Price Index

GPRA Government Performance and Results Act of 1993

REDRESS Resolving Employee Disputes, Reaching Equitable Solutions Swiftly

TFP Total Factor Productivity
Page 19 GAO/GGD-00-207 Postal Service Performance Planning and Reporting
Appendix I

Comments From the U.S. Postal Service

Page 20 GAO/GGD-00-207 Postal Service Performance Planning and Reporting
Appendix I

Comments From the U.S. Postal Service

Page 21 GAO/GGD-00-207 Postal Service Performance Planning and Reporting
Appendix I

Comments From the U.S. Postal Service

Page 22 GAO/GGD-00-207 Postal Service Performance Planning and Reporting
Appendix I

Comments From the U.S. Postal Service

Page 23 GAO/GGD-00-207 Postal Service Performance Planning and Reporting
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