U.S. POSTAL SERVICE 

Overview of Initiatives 

to Increase Revenue 

and Introduce 

Nonpostal Services 

and Experimental 

Postal Products

Report to the Chairman, Subcommittee on 

Federal Financial Management, Government 

Information, Federal Services, and International 

Security, Committee on Homeland Security and 

Governmental Affairs, U3 Senate

January 2013

GAO-13-216

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-216, a report to the 

Chairman, Subcommittee on Federal Financial 

Management, Government Information, 

Federal Services, and International Security, 

Committee on Homeland Security and 

Governmental Affairs, U.S. Senate 

January 2013

U.S. POSTAL SERVICE

Overview of Initiatives to Increase Revenue and 

Introduce Nonpostal Services and Experimental 

Postal Products

Why GAO Did This Study

USPS continues to face a dire financial 

situation. Reducing costs is essential, 

but USPS also must generate 

additional revenue through the sale of 

products and services. PAEA, enacted 

in 2006, eliminated USPS’s authority to 

offer nonpostal services unless they 

were offered as of January 1, 2006, 

and expressly grandfathered by the 

PRC. USPS may, however, offer new 

nonpostal services if they are related to 

the grandfathered nonpostal services. 

It may also offer experimental postal 

products that meet certain conditions. 

As requested, this report describes: 

(1) the nonpostal services 

grandfathered after the enactment of 

PAEA, experimental postal products 

offered since enactment of PAEA, and 

discretionary services USPS currently 

performs for other federal agencies; 

(2) initiatives—including nonpostal 

services and experimental postal 

products—USPS is pursuing to 

generate additional revenue and the 

status of these initiatives; and (3) the 

reasons USPS decided not to pursue 

other revenue-generating initiatives

that it had identified. 

GAO reviewed PAEA provisions and 

PRC decisions pertaining to nonpostal

services, experimental postal products, 

and services performed for other 

federal agencies and USPS 

documents related to the initiatives that 

USPS chose to pursue and those it 

decided not to pursue. GAO 

interviewed USPS officials regarding 

these issues. 

In commenting on a draft of this report, 

USPS agreed that its financial viability 

is dependent not only on cutting costs, 

but also on generating additional 

revenue. 

What GAO Found

The U.S. Postal Service (USPS) currently offers 12 nonpostal services (i.e., 

services not directly related to mail delivery) that were grandfathered by the 

Postal Regulatory Commission (PRC) after enactment of the Postal 

Accountability and Enhancement Act (PAEA). These services—which include 

Passport Photo Services, the sale of advertising to support change-of-address 

processing, and others—generated a net income of $141 million in 2011. Since 

enactment of PAEA, USPS has received approval from PRC to offer eight

experimental postal products, which are products that differ significantly from 

other offered products, such as the sale of gift cards loaded with a specified sum 

of money. Lastly, USPS performs at least four discretionary services (i.e., 

services it chooses, rather than is required, to perform) for other federal 

agencies, such as accepting passport applications for the State Department.

USPS is currently pursuing 55 new initiatives that it identified based on outreach 

to postal stakeholders. USPS chose to pursue these initiatives because of their 

potential to increase revenue and add value to the mail, among other reasons. 

Forty-eight initiatives are extensions of existing lines of postal products and 

services, such as offering Post Office Box customers a suite of service 

enhancements (e.g., expanded lobby hours and earlier pickup times) at selected 

locations and increasing public awareness of the availability of postal services at 

retail stores. Three initiatives are extensions of existing nonpostal services, 

including allowing customers to forward their mail to a new address using mobile 

devices. Finally, four of the initiatives involve experimental postal products, such 

as prepaid postage on the sale of greeting cards. These four experimental 

products are among the total of eight experimental products that have received 

PRC approval since enactment of PAEA. Forty-five of the 55 initiatives are 

ongoing; the remaining are under development. 

USPS considered but decided not to pursue 25 other stakeholder-identified 

initiatives, primarily because of financial reasons. Twelve initiatives were 

abandoned because USPS determined they were not likely to be profitable or the 

initial investment was too high. Reasons for not pursuing other initiatives

included insufficient stakeholder interest or lack of statutory authority. USPS

would like to pursue revenue-generating opportunities in three areas—nonpostal 

services, shipments of alcoholic beverages, and services performed for state and 

local governments—if it is provided with statutory authority to do so. USPS

officials said opportunities in these areas could improve USPS’s financial 

position, but they emphasized that additional innovations will not be sufficient to 

return USPS to financial solvency. Results will also be constrained by the 

economic climate and by changing use of the mail. USPS’s multiyear revenue 

plan detailing its competitive strategies is expected in the spring of 2013.

View GAO-13-216. For more information, 

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

stjamesl@gao.gov. 
Page i GAO-13-216 U.S. Postal Service 

Letter 1 

Background 4

USPS Offers 12 Grandfathered Nonpostal Services, 8 Experimental 

Postal Products, and at Least 4 Discretionary Services for 

Federal Agencies 9

USPS’s Efforts to Generate Additional Revenue Include Ongoing 

and Planned Postal and Nonpostal Initiatives 11

USPS Did Not Pursue 25 Initiatives because of Financial and Other 

Reasons, and Believes Additional Statutory Authorities Would 

Provide Opportunities to Increase Revenue 13

Concluding Observations 16

Agency Comments 17

Appendix I USPS’s Grandfathered Nonpostal Services 18

Appendix II USPS’s Approved Market Tests for Experimental 

Postal Products, as of November 30, 2012 21

Appendix III Examples of Services USPS Currently Performs on a 

Discretionary Basis for Federal Agencies 25

Appendix IV Description of Ongoing USPS Initiatives, as of 

November 14, 2012 26

Appendix V Comments from the United States Postal Service 31

Appendix VI GAO Contact and Staff Acknowledgments 32

Contents 
Page ii GAO-13-216 U.S. Postal Service 

Figures

Figure 1: Sole or Primary Reason Cited by USPS for Pursuing 55 

Initiatives 13

Figure 2: Reasons Cited by USPS for Not Pursuing the 25 Initiatives 15

Abbreviations

PAEA Postal Accountability and Enhancement Act 

PRC Postal Regulatory Commission

USPS U.S. Postal Service

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Page 1 GAO-13-216 U.S. Postal Service 

United States Government Accountability Office 

Washington, DC 20548

January 15, 2013

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

Dear Mr. Chairman:

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 service at risk. 

As customers increasingly turn to digital communications and online 

payment methods, total mail volumes have decreased precipitously, 

falling almost 21 percent from fiscal years 2007 through 2011. In 2012, 

USPS reached its $15 billion borrowing limit1 and incurred a $15.9 billion 

net loss.2

According to the Postmaster General, reducing USPS’s costs is essential, 

but generating additional revenue is also necessary. Consequently, the 

Postmaster General implemented a variety of strategies to increase 

revenue, including strategies to strengthen the value of mail to 

businesses, improve the experience of USPS’s customers, and compete 

with private sector firms for the package business.

As requested, this report examines matters related to USPS’s provision of 

nonpostal services (i.e., services not directly related to the delivery of 

mail, such as Passport Photo Services). In particular, you asked us to 

 

1

USPS is authorized by statute to borrow $3 billion annually and a maximum of $15 billion. 

39 U.S.C. § 2005(a).

2

USPS has incurred $41 billion of net losses over the previous 6 years, including a $5.1 

billion net loss in fiscal year 2011. The $15.9 billion net loss includes $11.1 billion for two 

required payments to prefund its future retiree health benefits. Originally due at the end of 

fiscal year 2011, USPS’s $5.5 billion retiree health benefit payment was delayed until 

August 1, 2012. Pub. L. No. 112-74, § 632, 125 Stat. 786, 928 (Dec. 23, 2011). USPS 

missed that payment as well as the $5.6 billion payment that was due on September 30, 

2012. Even though USPS did not make these payments, it recorded a loss for the 

obligation to make these payments.

 
 

Page 2 GAO-13-216 U.S. Postal Service 

review those nonpostal services that were offered at the time the Postal 

Accountability and Enhancement Act (PAEA) was enacted in 2006 and 

that the Postal Regulatory Commission (PRC) determined should be 

continued, or “grandfathered”.3 In addition, as agreed with your staff, we 

also provide information on two other areas with the potential to generate 

revenue: (1) experimental postal products and (2) services that USPS 

performs on a discretionary basis for other federal agencies. PAEA 

granted USPS the authority to offer experimental postal products, which 

are those that are significantly different from all other products USPS 

offers and have certain other characteristics. Such products include a 

same-day delivery service for local buyers in selected metropolitan areas 

and prepaid postage on the sale of greeting cards. Discretionary services 

for other federal agencies are services that USPS may choose to pursue 

but is not required to perform.4

This report describes:

Such services include collecting data on 

vacant addresses for the Department of Housing and Urban 

Development.

1. The nonpostal services grandfathered after the enactment of PAEA, 

the experimental postal products approved for market testing since 

the enactment of PAEA, and the services USPS currently performs for 

other federal agencies.

2. The initiatives—including nonpostal services and experimental postal 

products—USPS is pursuing to generate additional revenue and the 

status of these initiatives.

3. The reasons USPS decided not to pursue other revenue-generating 

initiatives that it had identified.

 

3

Pub. L. No. 109-435, 120 Stat. 3198 (Dec. 20, 2006).

4

We excluded services that USPS is required to perform for other federal agencies, 

including those required by statute or executive order. For example, the Migratory Bird 

Hunting and Conservation Stamp Act requires USPS to print, issue, and sell duck stamps 

(that serve as hunting licenses) for the U.S. Fish and Wildlife Service. Pub. L. No. 73-124, 

48 Stat. 451 (Mar. 16, 1934). Through executive order, USPS also is directed to deliver 

medicines to individuals in the event of a large scale biological attack. Exec. Order No. 

13527, 75 Fed. Reg. 737 (Jan. 6, 2010).
 

Page 3 GAO-13-216 U.S. Postal Service 

To address these objectives, we reviewed and analyzed numerous 

documents, including:

• relevant laws, such as those pertaining to USPS’s authority to engage 

in nonpostal services, experimental postal products, and services for 

federal agencies;

• reports on USPS’s nonpostal services, experimental postal products, 

and services for federal agencies issued by GAO, USPS’s Office of 

Inspector General, and others;

• agreements specifying the terms and conditions for USPS’s ongoing 

cooperation with other federal agencies;

• PRC decisions (orders) and relevant stakeholder filings submitted in 

response to the PRC’s proceedings on USPS’s nonpostal services 

and experimental postal products since PAEA’s enactment;

• the results of USPS’s 2010 outreach to external and internal 

stakeholders to identify potential revenue-generating opportunities, 

including USPS’s 2011 plan for increasing revenue; and

• updated documentation on USPS’s current strategy and plan for

increasing revenue, which is under development, including 

information on initiatives that USPS chose to pursue and those it 

decided not to initiate; USPS’s rationale for these decisions; the status 

of the initiatives that USPS is pursuing; and the available revenue and 

cost estimates for these initiatives.

We also interviewed USPS officials, including the Chief Marketing and 

Sales Officer and Executive Vice President, the Vice President for 

USPS’s Domestic Products, General Counsel staff, and others. Among

other things, we discussed

• USPS’s actions and processes for identifying and assessing 

additional revenue-generating opportunities, including those related to 

nonpostal services, experimental postal products, and discretionary 

services for federal agencies; 

• USPS’s criteria for deciding which opportunities to pursue;

• the status of its decisions; and
 

Page 4 GAO-13-216 U.S. Postal Service 

• the reasons why USPS decided not to pursue certain initiatives and 

obtained USPS’s views on what, if any, statutory authorities USPS 

believes it needs to pursue other, potential revenue-generating 

initiatives.

We also interviewed PRC staff to obtain additional information and 

clarification on the nonpostal services and experimental postal products 

offered by USPS since PAEA’s enactment, and on the services USPS 

provides on a discretionary basis for federal agencies. Finally, we 

obtained information on the status, results, and applicable time frames for 

these services, products, and activities from USPS staff. Appendixes I, II, 

and III provide more detailed information on USPS’s grandfathered 

nonpostal services, approved market tests for experimental postal 

products through November 2012,5

We conducted this performance audit from April 2012 to January 2013 in 

accordance with generally accepted government auditing standards.

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

sufficient, appropriate evidence to provide a reasonable basis for our 

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

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

and examples of services that USPS 

currently performs on a discretionary basis for federal agencies, 

respectively.

The Postal Reorganization Act provided USPS with authority to offer 

nonpostal services.6 USPS used this authority to introduce a wide array of 

products, such as prepaid phone cards; an electronic funds transfer 

service between the United States and Mexico (Dinero Seguro); and retail 

merchandise, such as T-shirts, mugs, and neckties. In 2006, PAEA 

eliminated USPS’s authority to offer nonpostal services unless they were 

offered as of January 1, 2006, and expressly grandfathered by the PRC.7

 

5

PAEA allows USPS to test experimental products under certain conditions in order to 

encourage product innovation and rapid product introduction.

6

Pub. L. No. 91-375, 84 Stat. 724 (Aug. 12, 1970).

7

This authority was eliminated because of stakeholder concerns about the unprofitability 

of some of the offered services and competition with the private sector. See United States 

Postal Service v. Postal Regulatory Commission, 599 F. 3d 705, 706 (Mar. 30, 2010). 

Background
 

Page 5 GAO-13-216 U.S. Postal Service 

PAEA directed the PRC to review USPS’s ongoing nonpostal services 

within 2 years of enactment to determine whether they should continue 

(i.e., be grandfathered), taking into account the public’s need for the 

service and the private sector’s ability to meet that need. The PRC 

defined, for the purposes of its review, a service to be an ongoing 

commercial activity that USPS offered to the public for financial gain.8

With PRC approval, USPS can introduce new, related nonpostal products 

if they fall under the umbrella of one of its grandfathered nonpostal 

services. For example, because the PRC grandfathered Officially 

Licensed Retail Products as a nonpostal service, USPS can offer a 

variety of related products, including stamp dispensers and framed postal 

artwork, as long as they are consistent with the underlying grandfathered 

nonpostal service.

Using this definition, all nonpostal services that were offered as of

January 1, 2006, were ultimately grandfathered by the PRC.

While USPS offers a number of nonpostal products and services, the 

revenue they generate is relatively small. Nonpostal revenue in fiscal year 

2011 was $173 million, accounting for a small fraction of a percent of 

USPS’s total revenue of $65.7 billion.

PAEA required that grandfathered nonpostal services be regulated as 

either market dominant, competitive, or experimental products.”9 Market 

dominant services include those products where USPS exercises 

sufficient market power that it can, among other things, effectively set the 

price of such product substantially above cost without risk of losing a 

significant level of business to other firms offering similar products.10

 

8

Postal Regulatory Commission, Order 154, Review of Nonpostal Services Under the 

Postal Accountability and Enhancement Act, Docket No. MC-2008-1, Dec. 19, 2008, 

Washington, D.C.

For 

example, first-class mail letters and sealed parcels are market-dominant 

products. Competitive services consist of all other products and are those 

9

USPS has not offered experimental nonpostal products. As discussed later, several 

experimental postal products are offered by USPS.

1039 U.S.C. 3642(b).
 

Page 6 GAO-13-216 U.S. Postal Service 

in which USPS competes with the private sector.11

PAEA also authorized USPS to conduct market tests of experimental 

postal products if the product being tested (1) is significantly different from 

all products offered by USPS within the prior 2-year period; (2) will not 

result in an undue market disruption, especially for small business 

concerns; and (3) is correctly classified as either a market dominant or 

competitive product. The PRC, as a matter of practice, considers whether 

these conditions have been met before USPS can begin a market test.

PAEA authorized market tests for products that are not anticipated to 

exceed $10 million in annual revenue and authorized the PRC to exempt 

products from this threshold if the annual revenue will not (or is not 

expected to) exceed $50 million. Generally, a market test may not exceed 

2 years.

USPS is required to 

cover its costs for these services.

12 The purpose of a market test is to determine, among other 

things, if there is a market for the product and, if so, to test various pricing 

scenarios.13 The time frame allows USPS to demonstrate a “nexus” to the 

mail and, consequently, that the product is a postal product.14 If USPS 

believes a market test demonstrates that a product is suitable, it may 

seek approval from the PRC to permanently offer it. USPS also may 

terminate a market test if, for example, the test did not meet USPS’s 

objectives.15

The Postal Reorganization Act authorized USPS to enter into interagency 

agreements to provide property and services to federal agencies.16

 

11PAEA specifies that USPS’s Board of Governors shall establish rates and classes for 

competitive mail products. Pub. L. No. 109-435, § 202, codified at 39 U.S.C. § 3632. 

The 

parties must specify the terms and conditions of their collaboration, 

12If requested by USPS, the PRC may extend the testing period for an additional year. 39 

U.S.C. § 3641(d). 

1339 U.S.C. § 3641(e). 

14A postal service (or product) need not be mailed to constitute a “postal” offering. 

Specifically, PAEA defines a postal service to mean the delivery of letters, printed matter, 

or “mailable” packages, including acceptance, collection, sorting, transportation, or other 

functions ancillary thereto. Pub. L. No. 109-435, § 101.

15Additionally, the PRC is authorized to cancel a market test if it fails to meet the required 

conditions. 39 U.S.C. § 3641(f).

16Pub. L. No. 91-375, § 2, codified at 39 U.S.C. § 411.
 

Page 7 GAO-13-216 U.S. Postal Service 

including the activities to be performed by USPS and the terms of 

reimbursement, if applicable. One such agreement allows USPS to 

accept passport applications on behalf of the U.S. Department of State 

(State Department).

Given declining mail volumes, customers’ changing needs and their use 

of the mail, and a desire to address these issues, USPS began engaging 

with internal and external stakeholders within the postal community to 

generate ideas for innovative products and services that could generate 

additional revenue. In the summer and fall of 2010, USPS held a series of 

discussions, including an innovation symposium with stakeholders 

including business leaders, partners, customers, suppliers, and 

academics, to gather insights on potential innovations and revenue 

opportunities. According to USPS, the outreach generated over 1,500 

potential initiatives, which were evaluated and winnowed down based on 

a variety of factors, such as time to implement, return on investment, and 

strategic fit. According to USPS, its decisions to pursue certain initiatives 

have been guided by several recurring themes, including:

• making it easier and more convenient for businesses and consumers 

to do business;

• promoting mailing best practices, such as those that incorporate 

barcode technology into advertising campaigns; and

• innovating and leading in e-commerce delivery to meet the needs of 

the mobile generation.

In addition to these recurring themes, each initiative is aligned to support 

one of USPS’s three primary marketing strategies. These strategies are: 

(1) First-Class Mail—slow the diversion of First-Class Mail by 

differentiating hard copy from digital mail and embracing new 

opportunities from digital and social media; (2) Marketing Mail—simplify 

the use of marketing mail for businesses and promote emerging 

technologies for marketing mail; and (3) Shipping Services—develop 

solutions to grow shipping services in the e-commerce market.

USPS’s overall strategic direction is described annually in its 

Comprehensive Statement of Postal Operations and the impact of these 

strategies is described in its annual Integrated Financial Plan—both of 
 

Page 8 GAO-13-216 U.S. Postal Service 

which are publically available. While the 2013 Integrated Financial Plan17

We have previously reported that making progress toward financial 

viability would require USPS to take steps to cut costs and increase 

revenue within its current legal authority.

indicates that USPS expects an operating loss of $2 billion in 2013, it 

projects that USPS’s revenue-generating initiatives will help USPS 

increase its shipping revenue by 10 percent and reduce the decline in its 

mailing revenue to 3 percent in fiscal year 2013. USPS plans to complete 

a multiyear revenue plan in the spring of 2013 that will include details on 

its competitive strategies.

18 USPS supported the provision 

in postal reform legislation passed in the Senate that would have provided 

USPS with the authority to undertake new revenue-generating initiatives 

such as offering new nonpostal services and exploring opportunities to 

offer services on behalf of state and local governments.19 We also 

previously identified questions we believe are important to consider 

before USPS is granted such additional authority,20

• How would USPS finance its nonpostal activities, considering its 

difficult financial condition?

including the 

following:

• Should USPS be allowed to compete in areas where there are already 

private-sector providers, and if so, on what terms?

 

17United States Postal Service, Fiscal Year 2013 Integrated Financial Plan (Nov. 23, 

2012). 

18GAO, U.S. Postal Service: Strategies and Options to Facilitate Progress toward 

Financial Viability, GAO-10-455, (Washington, D.C.; Apr. 12, 2010). 

19See 21st Century Postal Service Act of 2012, S. 1789, 112th Cong. (2012).

20GAO, U.S. Postal Service: Financial Challenges Continue, with Relatively Limited 

Results from Recent Revenue-Generation Efforts, GAO-10-191T, (Washington, D.C.; 

Nov. 5, 2009). 
 

Page 9 GAO-13-216 U.S. Postal Service 

At the time PAEA was enacted, USPS was offering 12 nonpostal services 

that it has continued to offer as a result of these services being 

grandfathered by the PRC. Two of these are market dominant services, 

including MoverSource (a service whereby the cost of changing a 

customer’s mailing address is defrayed through the sale of advertising) 

and Philatelic Sales (sales related to the hobby of stamp collecting). The 

remaining 10 are competitive services, including USPS’s Passport Photo 

Service. In fiscal year 2011, USPS reported to the PRC that it generated 

net income totaling $141 million from its 12 nonpostal services and 

related products. Appendix I provides additional information about each of 

these grandfathered nonpostal services.

Since the enactment of PAEA, USPS has received approval from the 

PRC to market test a total of eight experimental postal products. Four of 

the eight approved market tests are for market dominant products, such 

as First Class Tracer, which enables the tracking of First-Class letters 

through the mail stream. The remaining four experimental products are 

competitive products, including USPS’s Gift Cards—experimental product 

to test the feasibility of selling gift cards loaded with a specified sum of 

money to consumers who could choose to mail the cards. Four of these 

experimental products are an outgrowth of USPS’s stakeholder 

discussions on new revenue-generating initiatives and are discussed 

further below.

USPS terminated one of the eight approved market tests—Collaborative 

Logistics—a test to determine whether there was a market for renting 

excess space on USPS’s long-haul delivery trucks. While USPS 

considered the market test successful, it did not seek to make 

USPS Offers 12 

Grandfathered 

Nonpostal Services, 8 

Experimental Postal 

Products, and at Least 

4 Discretionary 

Services for Federal 

Agencies

Nonpostal Services

Experimental Postal 

Products
 

Page 10 GAO-13-216 U.S. Postal Service 

Collaborative Logistics a permanent product. Instead, USPS terminated 

the test in September 2011, indicating that its ongoing facility 

consolidations had resulted in significant opportunities to reduce 

overcapacity and costs within its transportation network. Depending on its 

future financial and operational conditions, USPS said it may seek to 

introduce this product on a permanent basis in the future. Appendix II 

provides more information on each of the experimental postal products for 

which USPS has received PRC approval for market testing since the 

enactment of PAEA.

USPS has the authority to perform services for other federal agencies on 

a discretionary basis by entering into written agreements with these 

agencies. Because any postal officer may enter into such agreements, 

and USPS does not have a centralized office responsible for executing or 

otherwise tracking these agreements, USPS was unable to provide 

comprehensive information on the agreements it currently has. However, 

based on our discussions with USPS officials and our review of related 

reports, we identified at least four services that USPS performs on a 

discretionary basis for federal agencies. For example, USPS collects data 

on vacant addresses for the Department of Housing and Urban 

Development to use in forecasting neighborhood changes, assessing 

neighborhood needs, and measuring the performance of its housingrelated programs. USPS also accepts passport applications at over 6,300 

post offices nationwide for the State Department. By using USPS’s 

extensive network of post offices, the agencies’ agreement is intended to 

provide passport applicants with more convenient access to passport 

acceptance services than the State Department could provide alone, 

particularly in remote U.S. areas. In addition, USPS leases its excess 

space, including parking, office space, and roof areas to federal agencies, 

including the General Services Administration. Finally, USPS processes 

investigations related to equal employment opportunity complaints for 

numerous federal agencies.21

 

21According to USPS officials, USPS initiated this service to generate additional revenue. 

In addition, USPS believed that given its extensive experience in this area, it could use its 

existing contractor workforce to reduce the costs and improve the timeliness and quality of 

other agencies’ equal employment opportunity complaints processing. USPS’s National 

Equal Opportunity Employment Service Office conducts these investigations. 

Appendix III provides more information on 

these services.

Discretionary Services 

Performed for Other 

Federal Agencies
 

Page 11 GAO-13-216 U.S. Postal Service 

As of November 2012, USPS was pursuing 55 stakeholder-identified 

initiatives that it believes respond to the changing needs of consumers 

and businesses and strengthen the relevance of USPS and the mail.22

Forty-eight initiatives are extensions of USPS’s existing lines of postal 

products and services; three are extensions of grandfathered nonpostal 

services; and four are experimental postal products. Forty-five of the 

initiatives are ongoing, and are discussed below and in more detail in 

appendix IV. Ten are under development and are not discussed.

Thirty-nine of the 48 initiatives that are extensions of USPS’s existing 

lines of postal products and services are ongoing. Examples include:

• The reclassification of 6,000 of its post office boxes from market 

dominant to competitive in markets with other mail services in fiscal 

year 2011. This change allowed USPS to offer post office box 

customers additional services such as expanded lobby hours, earlier 

pick-up times, and the use of post office locations for street-styled 

addressing (e.g., 131 South Center St. #3094, instead of P.O. Box 

3094) for an increased fee.

• The launch in fiscal year 2012 of the Partner Campaigns—an initiative 

in which USPS works with retail partners to increase the public’s 

awareness that retail stores also offer postal services. According to 

USPS, the Partner Campaigns are expected to increase customer 

access to postal products and services.

• The launch of 2nd Ounce Free in fiscal year 2012—an initiative that 

enables large mailers, such as banks, to send twice as much mail for 

the 1-ounce price. According to USPS, this product allows mailers to 

use the second ounce for marketing purposes which adds value to 

their mailings. For example, a mailer may choose to combine 

advertising with its bills and statements. If that advertising leads to the 

consumer using return mail, it could lead to greater sales for USPS 

and the mailer and slow the decline in the use of First-Class Mail.

 

22None of the 55 initiatives involve services that USPS intends to perform for one or more 

federal agencies. 

USPS’s Efforts to 

Generate Additional 

Revenue Include 

Ongoing and Planned 

Postal and Nonpostal 

Initiatives

Extensions of Existing 

Postal Products and 

Services
 

Page 12 GAO-13-216 U.S. Postal Service 

USPS is pursuing three stakeholder-identified initiatives that are 

extensions of its existing nonpostal services. Two of these initiatives are 

ongoing, including an effort to allow customers to change their addresses 

using mobile devices, which expands the ways a customer can request 

address changes through MoverSource. USPS is also pursuing four 

stakeholder-identified initiatives involving experimental postal products.23

Two that have completed market testing and are ongoing as permanent 

postal products are Every Door Direct MailTM, which is designed to make 

it easier for small and medium-sized businesses to advertise using the 

mail, and Reinvigorate Samples, which is intended to encourage 

increased mailings of product samples. Market tests for the two other 

experimental postal products—prepaid postage on the sale of greeting 

card and a campaign to involve selected companies in direct mail 

advertising—are under way.

USPS pursued these 55 initiatives for reasons including revenue 

generation and adding value to the mail, among others, as shown in 

figure 1. Twenty-four initiatives (44 percent) were pursued solely or 

primarily to grow revenue, including a First-Class Package Service for 

packages weighing less than 1 pound—the only per-ounce pricing in the 

marketplace, according to USPS officials. To grow revenue, USPS also 

introduced several options for returning unwanted merchandise more 

easily and conveniently. USPS officials could not provide estimates of the 

expected net income for all of the 55 initiatives; however, the officials 

estimated that 9 of them will collectively generate a net contribution of

about $240 million in fiscal year 2012.

 

23These four initiatives are among the eight total experimental products for which USPS 

has received PRC approval for market testing. 

Nonpostal Services and 

Experimental Postal 

Products

Reasons for Pursuing the 

55 Initiatives
 

Page 13 GAO-13-216 U.S. Postal Service 

Figure 1: Sole or Primary Reason Cited by USPS for Pursuing 55 Initiatives

USPS decided not to pursue 25 additional stakeholder-identified 

initiatives because of financial and other reasons. Specifically, 12 of 25 

initiatives, or 48 percent, were abandoned because of financial reasons.

For example, USPS decided not to offer online Identity Management 

Services to educate customers about how to protect themselves from 

identity theft when shopping online. USPS anticipated that the service 

also would provide convenient access for purchasing from online 

companies pre-qualified by USPS. According to USPS, it abandoned this 

initiative because it determined that the initiative would not result in a 

return on USPS’s investment. In other cases, USPS determined that 

initiatives required too high an initial investment or posed other financial 

risks and uncertainties. For example, USPS decided not to pursue a 

domestic money-transfer service and a retail bill-payment initiative 

because the costs would render these financial services unprofitable at 

this time.

USPS Did Not Pursue 

25 Initiatives because 

of Financial and Other 

Reasons, and Believes 

Additional Statutory 

Authorities Would 

Provide Opportunities 

to Increase Revenue
 

Page 14 GAO-13-216 U.S. Postal Service 

USPS decided not to pursue the remaining 13 stakeholder-identified 

initiatives for other reasons.

• USPS eliminated four initiatives that could be viewed as nonpostal 

services because it lacks statutory authority to perform new services 

in this area, as discussed further below.

• USPS eliminated four initiatives because stakeholders were not 

interested in participating in the efforts. For example, USPS wanted to 

expand and digitalize its passport services at self-service kiosks in 

post offices as a potential means to reduce error and fraud. However, 

according to a recent USPS Office of Inspector General report, the 

State Department was not interested in participating because, in its 

view, the kiosks would not be cost effective.24

• USPS eliminated two initiatives because it determined that they 

required a greater initial commitment of resources than other 

initiatives and were therefore of lower priority. For example, USPS 

decided not to provide eligible companies with volume-based discount 

pricing to increase their use of First-Class Mail because companies 

may be unwilling or unable to make the needed investments for the 

initiative to work. Instead, USPS officials said they are focusing on 

other incentives with lower investment thresholds.

USPS also tried to 

partner with the Internal Revenue Service to use personnel at post 

office locations to verify the identities of individuals claiming eligibility

for the Earned Income Tax Credit (a benefit for certain individuals who 

work and have lower wages). According to USPS officials, there was 

limited interest on the part of the Internal Revenue Service because, 

as reported by the Office of Inspector General, the Internal Revenue 

Service decided to implement an alternative solution.

• USPS eliminated two initiatives because it determined that they could 

potentially damage the trust that customers have in the USPS brand.

One initiative involved opening and scanning a customer’s mail—with 

the customer’s permission—to send the mail to them in digital form.

The other initiative envisioned providing companies with tools to 

enable them to better target their mailings to consumers.

 

24U.S. Postal Service Office of Inspector General, Partnerships with Other Government 

Agencies, (Management Advisory), DA-MA-12-006 (Sept. 28, 2012). 
 

Page 15 GAO-13-216 U.S. Postal Service 

• USPS eliminated one initiative that conflicted with ongoing efforts to 

reduce the postal workforce. Specifically, USPS decided not to use its 

Human Resource Shared Services Center to offer retirement 

management services to other federal agencies, in part, because it 

does not currently have sufficient capacity to expand these services.

Figure 2 summarizes the primary reasons cited by USPS for not pursuing 

the 25 initiatives.

Figure 2: Reasons Cited by USPS for Not Pursuing the 25 Initiatives

According to USPS officials, they would like to pursue additional revenuegenerating opportunities in three areas—nonpostal services; shipments of 

beer, wine, and spirits; and cooperation with state and local 

governments—if provided with additional statutory authority. The officials 

stated that USPS staff have briefed congressional members and staff 

about these areas.25

 

25USPS officials noted that proposed legislation introduced provides additional authority 

for USPS to engage in these activities. See S. 1789, 112th Cong. (2012).

In addition, they noted that USPS has outlined its 

interests in publicly available reports, including its March 2010 Action 
 

Page 16 GAO-13-216 U.S. Postal Service 

Plan, which lays out the agency’s position on its need for increased 

flexibility to offer new and innovative products.26 USPS also reiterated its 

interest in acquiring additional statutory authorities in February 2012 

when it issued its 5-year business plan.27 According to USPS, 

opportunities in these three areas could provide significant value to 

customers, improve USPS’s financial position, and take full advantage of 

its resources and competencies. USPS emphasized, however, that 

additional innovations in these areas will not be sufficient to solve USPS’s 

dire financial situation. Results will also be constrained by the economic 

climate and by changing use of the mail.

USPS’s financial viability is dependent not only on cutting costs, but also 

generating additional revenues. USPS generated a net income of $141 

million in 2011 from its offerings of nonpostal services and products.

While beneficial, this income pales in comparison to USPS’s net loss of 

$15.9 billion in 2012. To address its deepening fiscal crisis, USPS 

believes that additional services and products in three areas—including 

nonpostal services, shipments of alcoholic beverages, and cooperation 

with state and local governments—could generate some additional 

revenue; however, additional statutory authority is needed. Legislation 

was introduced to improve USPS’s financial condition. The legislation 

included increased flexibilities to allow USPS to offer new products; 

however, Congress was unable to reach overall agreement on the steps 

needed to sustain and transform USPS. We continue to believe action to 

address the long-standing challenges that hinder USPS’s financial 

viability, including a consideration of options to expand its revenuegenerating potential, remains necessary.

 

26USPS, Ensuring A Viable Postal Service for America, An Action Plan for the Future 

(March 2010). 

27USPS, Plan to Profitability, 5-Year Business Plan (February 16, 2012).

Concluding 

Observations
 

Page 17 GAO-13-216 U.S. Postal Service 

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

written comments, reprinted in appendix V, USPS stated that its financial 

viability is dependent not only on cutting costs but also generating 

additional revenue. USPS also provided technical comments which we 

incorporated, as appropriate. 

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. 

If you or your staff have any questions regarding 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. GAO staff who made key contributions to 

this report are listed in appendix VI.

Sincerely yours,

Lorelei St. James

Director

Physical Infrastructure Issues

Agency Comments
Appendix I: USPS’s Grandfathered Nonpostal 

Services 

Page 18 GAO-13-216 U.S. Postal Service 

No.

Grandfathered 

nonpostal service

(first year offered) Description

Number of 

nonpostal 

products 

under the 

service

Publically 

reported net 

income,a 

fiscal year 

2011b

Market Dominant Nonpostal Services

1 MoverSource 

(1995)

MoverSource is a program involving USPS’s change-of-address orders. 

The program is offered through a multiyear alliance between USPS and 

Imagitas—a subsidiary of Pitney Bowes—and provides USPS customers 

with, among other things, a form for requesting address changes; 

confirmation of the change; and mailings containing move-related tips, 

advertising, and offers. The revenue and cost of the program are shared 

between USPS and Imagitas. USPS also receives a share of the $1 fee 

collected for each internet change-of-address order. In addition, the 

mailings generate postage revenue for USPS that is not shared. 

According to USPS, the MoverSource program adds value to the changeof-address process, while defraying its annual costs for processing these 

changes. USPS typically processes about 40 million change-of-address 

orders annually, of which about one-third are processed online.

None $51.9 million 

2 Philatelic Sales 

(~1850)

USPS sells a wide-range of stamps and stamp-related items to customers 

involved in the hobby of stamp collecting. Examples of philatelic items 

include first day covers,c ceremony programs, uncut press sheets, framed 

stamps, binders for storing stamps, and philatelic guides. USPS satisfies 

its orders for philatelic items through two fulfillment channels—retail 

outlets and USPS’s Stamp Fulfillment Services. Selected philatelic items 

are available at USPS retail facilities, but most are sold through USPS’s 

Stamp Fulfillment Services via USPS.com®, the USA Philatelic catalog, 

phone, and fax. In May 2012, the price of these items ranged from less 

than a dollar for the first day cover of the Common Tern bird stamp to 

$1,440 for a sheet of American Wigeon duck stamps. 

~900 (0.7 million)d

Subtotal: Nonpostal market dominant services. $51.2 million

Competitive Nonpostal Services

3 Affiliates for Website

(2001)

In exchange for a portion of revenue generated, USPS provides its 

website customers with access to other companies (affiliates) that also 

provide mailing services and products. USPS’s website currently hosts 

hyperlinks to three affiliates—Cardstore, Click2Mail, and 

PremiumPostcard—under agreements styled as affiliate marketing 

arrangements. According to USPS, affiliate arrangements provide 

customers with increased access to, among other things, postal products 

and services and generate revenue for USPS through affiliation fees, 

increased website traffic, and additional postage sales. According to 

USPS, its affiliate website agreements are actively managed by both 

parties. As a result, the parties meet monthly and discuss marketing goals 

and objectives to increase the parties’ revenue and website visits. 

3 N/Ae

4 Affiliates – Other 

(Linking Only) (2001)

This program is similar to the one described immediately above, except 

that USPS does not actively manage these affiliate arrangements.

USPS’s website currently hosts hyperlinks to three such affiliates—Start 

Sampling, My Savings, and Maponics—which provide customers with 

products and services ranging from free samples and coupons to maps.

According to the Postmaster General, USPS’s agreements with these 

affiliates can be viewed as leases of USPS’s “virtual real estate.” “Linking 

only” affiliates pay either a flat fee (i.e., “cost per click” as in the case of 

Start Sampling and My Savings) or, in the case of Maponics, share a 

portion of the revenue with USPS for having a link to its website. 

3 N/A

Appendix I: USPS’s Grandfathered Nonpostal 

Services 
Appendix I: USPS’s Grandfathered Nonpostal 

Services 

Page 19 GAO-13-216 U.S. Postal Service 

No.

Grandfathered 

nonpostal service

(first year offered) Description

Number of 

nonpostal 

products 

under the 

service

Publically 

reported net 

income,a 

fiscal year 

2011b

5 Electronic Postmark® 

(1995)

Electronic Postmark is a web-based security program that enables 

customers, using authorized service providers under license with USPS, 

to detect whether documents or files time stamped with an electronic 

postmark have been altered since the postmark was applied. Authorized 

providers generate the “timestamp” (the postmark) on secure servers that 

they own and maintain. Providers pay a quarterly fee for this service, with 

additional fees for usage above a certain threshold. In 2010—the last 

year in which USPS sold this service to a provider—the quarterly fee was 

$75,000 per provider for up to 1.5 million electronic postmarks and $0.02 

for each additional postmark. 

None N/A

6 FedEx® Drop Boxes

(2001)

This nonpostal service involves a non-exclusive lease agreement 

between USPS and FedEx, which for a fee, allows FedEx to place its 

drop boxes at USPS post offices. In September 2012, there were about 

4,870 of these boxes located at USPS retail facilities. According to USPS, 

all responsibilities related to the installation, maintenance, collection, and 

removal of the drop boxes reside with FedEx. 

None N/A

7 Licensing Programs 

Other Than Officially 

Licensed Retail 

Products

(early 1990s)

This program is similar to No. 9 below, except that it involves the sale of 

postal branded merchandise through other (nonpostal) channels. In fiscal 

year 2012, USPS had about 20 licensing agreements with third-party 

vendors for their use of USPS’s intellectual property on thousands of 

products including apparel, fashion accessories, cards and stationery, pet 

products, toys and games, and other types of consumer products. USPS 

charges a nominal fee ($25) for the use of its trademarks or copyrighted 

material for noncommercial or limited commercial purposes. However, it 

negotiates the price for its licensees’ use of patents, and other intellectual 

property involving more extensive commercial purposes. According to 

USPS, it manages its licensed products by, among other things, requiring 

licensees to obtain advance approval for USPS-branded products, 

imposing quality control standards, and policing product use and 

promotion.

~20 N/A

8 Non-sale lease 

agreements – 

nongovernment

(late 1980s/early 

1990s)

USPS has a variety of agreements with private, nongovernmental entities 

to lease excess USPS space, including parking, office, warehouse space, 

and land. For example, USPS leases its rooftop space and excess land to 

advertisers and cellular providers for billboards and antenna towers. In 

fiscal year 2012, USPS had about 600 lease agreements with 

nongovernmental entities. The parties negotiate the price of the lease, 

which vary by agreement.

~600 N/A

9 Officially Licensed 

Retail Products

(mid-1990s)

USPS licenses its intellectual property, including its postal trademarks 

and stamp images, to parties who use these images on merchandise that 

USPS sells in its post offices and on its website. (The program involves 

the actual sale of the licensed retail merchandise—not the royalty 

payments that USPS receives for licensing its intellectual property to 

these parties.) In fiscal year 2012, USPS had 150 licensing agreements 

with third-party vendors for their use of USPS branded items such as 

weight scales, stamp dispensers, teddy bears, passport holders, framed 

artwork, and key chains. In September 2012, prices for these products 

ranged from $1.30 for reflective mailbox stickers to $134.99 for framed 

art.

150 N/A

10 Passport photo service

(early 2000s)

USPS produces and sells passport photos to individuals for a fee of $15 

at more than 5,000 USPS passport application acceptance sites. 

None N/A
Appendix I: USPS’s Grandfathered Nonpostal 

Services 

Page 20 GAO-13-216 U.S. Postal Service 

No.

Grandfathered 

nonpostal service

(first year offered) Description

Number of 

nonpostal 

products 

under the 

service

Publically 

reported net 

income,a 

fiscal year 

2011b

11 Photocopying service

(early 1990s)

USPS offers self-service photocopying services at about 2,540 of its retail 

facilities. In some locations, photocopiers were installed by commercial 

vendors under contracts with USPS. The remaining machines were 

installed by USPS. In September 2012, USPS charged a fee of between 

$0.10 to $0.50 per page for copying.

None N/A

12 Training facilities

(1997-1998) 

USPS rents excess facility space and services at its two training facilities 

to outside parties. The facilities include meeting rooms, housing, and 

exercise areas. Available services include (1) conference-related services 

such as food and the rental of audio-visual equipment, and (2) hospitalityrelated services such as lodging, fitness-related services, banquet 

services, and the onsite sale of sundries. USPS contracts with a company 

to manage each of the facilities. Management companies set the price for 

the services provided and USPS receives a negotiated percentage of net 

profits.

None N/A

Subtotal: Nonpostal competitive services. $89.8 million

Total: All nonpostal services. $141.0 million

Source: GAO analysis of USPS and PRC documents.

a

The Postal Regulatory Commission (PRC) Annual Compliance Determination Report for Fiscal Year 

2011 (Mar. 28, 2012). USPS annually reports financial data on all products, including market dominant 

and competitive products, to the PRC. USPS reports its competitive information to the PRC in 

“nonpublic” reports. The PRC does not publically disclose these data, except in aggregate form.

b

USPS’s fiscal year 2012 financial data for its market dominant and competitive products is not 

expected to be reported until March 2013. 

c

A first day cover is a stamped envelope, post card, or other postal material showing that the stamp 

was cancelled at the post office where the stamp was issued. 

d

USPS reported a net loss of $666,210 for Stamp Fulfillment Services Handling Services for sales in 

fiscal year 2011—$171,954 revenue less $838,164 for expenses. According to USPS, the reported 

loss relates to handling fees assessed on the portion of its customers’ philatelic orders processed by 

its Stamp Fulfillment Service in Kansas City, Mo. and resulted from the PRC’s accepted method for 

allocating revenue and expenses for handling services for Philatelic and Non-Philatelic orders. 

Philatelic Sales (a nonpostal service) and Non-Philatelic Sales (a postal service) are fulfilled through 

USPS’s Stamp Fulfillment Services with handling fees received for order processing and fulfillment. 

However, according to USPS, revenue associated with its “Philatelic Sales” represents handling fees 

paid by customers who order using alternative sales channels such as USPS.com, catalog, phone, 

and mail, and excludes all revenue from product sales. According to USPS, the two sales channels 

“are in practical and operational terms one service” and, consequently, USPS cannot precisely 

allocate revenues and expenses between the two. Also, according to USPS, a portion of USPS’s 

Philatelic Sales occur at retail (“brick and mortar”) outlets where customers do not incur handling 

fees. Finally, USPS’s reported financial data do not include expenses related to its sales of philatelic 

items at retail facilities because USPS has not yet determined how to estimate these costs. 

e

Financial information on USPS’s competitive products is not publically reported. 
Appendix II: USPS’s Approved Market Tests 

for Experimental Postal Products, as of 

November 30, 2012 

Page 21 GAO-13-216 U.S. Postal Service 

No.

Name and 

anticipated 

timeframe for market 

test, at approval Description

Expected 

annual revenue 

at approvala

 Status 

Market Dominant 

1 Alternate Postage 

Payment Method for 

Greeting Cards 

(~Jan. 1, 2011 to 

~Dec. 31, 2012)

Alternate Postage removes a step in the 

mailing process because it enables 

consumers to send greeting cards without 

affixing postage. According to USPS, the 

alternate payment method makes it easier 

and more convenient for customers to 

purchase and mail cards because they do not 

have to determine and affix the proper 

postage before mailing. Instead, the cost of 

postage is included (prepaid) in the price 

consumers pay for the card. To participate, a 

company must produce and distribute 

greeting cards with envelopes bearing 

barcodes and other USPS specified markings 

that allow USPS to identify each envelope in 

the mail stream. Participating companies pay 

USPS in two steps. First, USPS receives 50 

percent of the postage revenue when the card 

is sold to consumers (or distributed to thirdparty vendors)—even if the card is not mailed. 

Second, companies must pay USPS for the 

postage for cards that USPS determines were 

actually mailed.

$10 million– 

50 millionb

Ongoing. While only one greeting card 

company—Hallmark—was participating in 

this test as of November 30, 2012, USPS 

hopes to make prepaid greeting cards 

more widely available by expanding the 

test program to additional partners. 

Further, USPS requested and received 

PRC approval to extend the market test 

beyond December 2012 and seek the 

PRC’s approval of Alternate Postage as a 

permanent product after the market test 

ends. 

Revenue: USPS projects this product will 

result in $12 million in revenue for fiscal 

year 2012 and $17 million in revenue for 

fiscal year 2013

2 Every Door Direct 

MailTM–Retail; formerly 

called Marketing Mail 

Made Easy 

(~Feb. 27, 2011 to 

~Jan. 31, 2013)

Every Door Direct Mail–Retail was a test that 

used simplified addressing, entry, pricing and 

payment options to entice small and mediumsized businesses to advertise to consumers 

within their neighborhoods. By making 

advertising through the mail (direct mail) less 

costly and complex, USPS hoped to attract 

new mail customers and/or increase its mail 

volume and revenues from existing smallvolume business mailers. The test had 

several features. For example, USPS allowed 

small and medium-sized businesses to send 

up to 5,000 mail pieces per day at a reduced 

cost (14.2 cents per piece). USPS also 

reduced the complexity of the mailings by 

allowing the businesses to prepare their mail 

using simplified addressing, such as “Postal 

Customer,” which eliminated the need to 

purchase mailing lists and print specific 

addresses on each of their mail pieces. In 

addition, USPS made it more convenient for 

these businesses to enter mail into the 

mailstream because it allowed them to bring 

their mailings to their local post office instead 

of to a mail-processing plant that may not be 

conveniently located. Finally, USPS waived all 

permitting and mailing fees for the 

businesses’ mailings. 

10 million– 

50 millionb

Revenue: According to USPS, revenue for 

this product has continued to grow and, as 

of October 2012, surpassed $2 million per 

week at its retail locations. USPS 

estimates this product will result in $55 

million in revenues in fiscal year 2012 and 

$100 million in revenue in fiscal year 2013. 

Appendix II: USPS’s Approved Market Tests 

for Experimental Postal Products, as of 

November 30, 2012
Appendix II: USPS’s Approved Market Tests 

for Experimental Postal Products, as of 

November 30, 2012 

Page 22 GAO-13-216 U.S. Postal Service 

No.

Name and 

anticipated 

timeframe for market 

test, at approval Description

Expected 

annual revenue 

at approvala

 Status 

3 Mail Works Guarantee 

(~June 2011 to 

~May 2013)

This test was aimed at demonstrating the 

effectiveness of direct mail advertising 

campaigns to 16 of the country’s “top” 

advertising companies. According to USPS, 

these companies spend $90 billion annually 

for advertising on all media, but spend 

approximately $3 billion (about 3 percent) 

advertising through the mail. Consequently, in 

requesting the PRC’s approval for the market 

test, USPS stated that it saw “huge potential 

revenue” if USPS could involve these 

companies in direct mail advertising 

campaigns using First-Class and Standard 

Mail. To qualify for the test, a company must 

spend at least $250 million on advertising 

annually, but allocate less than 1 percent of 

its total advertising budget to direct mail. In 

addition, it must mail 500,000 to 1 million 

pieces of First-Class Mail or Standard Mail 

during a direct mail campaign. Participating 

companies would be required to pay normal 

postal rates for their mailings, but receive a 

postage back guarantee (i.e., a credit to their 

USPS account of up to $250,000) if a direct 

mail advertising campaign fails to achieve its 

goal. 

≤10 million Ongoing, but unlikely to be successful. As 

of November 30, 2012, USPS had not yet 

found any companies interested in 

participating in the market test. According 

to USPS, the test is not likely to be 

successful because its incentives for 

program participation “were not sufficient 

to cause customers to change their 

behavior.” While the test has not been 

successful thus far, USPS said it is 

continuing to solicit participation from large 

companies with multi-million dollar 

advertising budgets that do not currently 

use the mail as part of their advertising 

mix. In addition, USPS is exploring 

revisions to the test’s participation 

requirements to help attract customers. 

On January 8, 2013, USPS filed to 

terminate the Mail Works Guarantee 

market test with the PRC.

Revenue: None. 

4 First-Class Tracer 

(~Dec. 2011 to 

~Nov. 2013)

This test product is designed to satisfy the 

needs of consumers who want to track their 

First-Class letters through the mail stream. 

Specifically, the product allows customers to 

purchase and affix a barcode label, tracing 

number, and a code which, collectively, 

enable them to track the status (excluding 

delivery confirmation) of their First-Class 

mailings on USPS’s website. According to 

USPS’s request for the test’s approval, USPS 

expected to sell the tracing labels in packages 

of 5 and 10 and to sell the packages at 

differing prices—ranging from $0.99 to $2.99 

depending on the quantity and location—to 

test customer acceptance at 50 retail postal 

locations in the Washington, D.C., 

metropolitan area. 

≤10 million Ongoing. According to USPS, while this 

test was not expected to conclude until 

November 2013, the First-Class Tracer 

had sold out at most of its participating 

retail locations as of mid-October 2012.

Revenue: According to USPS, this product 

generated $3,065 in revenue though midOctober 2012.

 

 

 

 

 

 

 
Appendix II: USPS’s Approved Market Tests 

for Experimental Postal Products, as of 

November 30, 2012 

Page 23 GAO-13-216 U.S. Postal Service 

No.

Name and 

anticipated 

timeframe for market 

test, at approval Description

Expected 

annual revenue 

at approvala

 Status 

Competitive 

5 Collaborative Logistics 

(May 7, 2009 to Sept. 

30, 2011, as extended)

Collaborative Logistics—the first experimental 

market test offered under PAEA—was 

initiated to reduce excess capacity in USPS’s 

highway transportation network. According to 

USPS, its utilization of vehicles across this 

network varied by day of week, time of month, 

and season. As a result, USPS sought to 

optimize its network of purchased highway 

transportation by reselling available space on 

its contractors’ trucks. During the course of 

the test, USPS resold, on a space-available 

basis, truck space to six customers for 

shipments that were required to be loaded on 

pallets. The loads were delivered to large 

postal processing facilities and picked up at 

large downstream postal facilities. USPS 

negotiated the price with each customer 

based on a variety of factors, including the 

customers’ required service standards

≤10 million Terminated in September 2011. USPS 

views this market test as successful, but 

did not seek to make it a permanent postal 

product despite its original intention to do 

so. Instead, USPS terminated the test in 

September 2011, indicating that it had 

reevaluated its plans. USPS explained that 

its ongoing facility consolidations had 

resulted in significant opportunities to 

reduce overcapacity and costs within its 

transportation network. Depending on its 

future financial and operational conditions, 

USPS said it may seek to introduce this 

product on a permanent basis sometime in 

the future. 

Revenue: According to USPS, this product 

generated about $2.1 million over the 

testing time frame.

6 Samples Co-op Box 

(May 2010)

Samples Co-Op Box was a 1-week test 

mailing of parcel boxes containing an 

assortment of samples, such as beauty, 

health, and snack products, from various 

packaged goods companies. USPS partnered 

with a company to prepare and mail the boxes 

and to conduct market research, and USPS 

delivered the boxes to consumers in targeted 

demographic areas without charge. According 

to USPS, while product samples provide an 

effective way for companies to build brand 

awareness for their products, the volume of 

samples sent through the mail has declined in 

recent years. Consequently, this test was 

intended to, among other things, explore ways 

to increase sample mailings that, according to 

USPS, offered “the potential for millions of 

dollars” of additional postal revenue. Another 

purpose of the test was to obtain information 

about the cost-effectiveness of the program 

and its value to product manufacturers and 

consumers. 

0c Completed, now a permanent postal 

product. 

This test was completed in May 2010 

following a 1-week mailing of several 

hundred thousand boxes of samples to 

consumers in Charlotte, N.C. and 

Pittsburgh, Pa. According to USPS, the 

test was well received by both the sample 

recipients and the participating packaged 

goods companies. USPS secured the 

PRC’s approval to add this product as a 

new competitive postal product (Parcel 

Select Contract 1) in March 2011 and 

executed an agreement with Start 

Sampling, a Mail Service Provider that 

offers sample fulfillment services, to 

distribute the sample boxes. USPS 

receives postage revenue for each of the 

“Sample Showcase” boxes plus a share of 

the revenue generated in product sales. 

Revenue: N/Ac
Appendix II: USPS’s Approved Market Tests 

for Experimental Postal Products, as of 

November 30, 2012 

Page 24 GAO-13-216 U.S. Postal Service 

No.

Name and 

anticipated 

timeframe for market 

test, at approval Description

Expected 

annual revenue 

at approvala

 Status 

7 Gift Cards (~May 1, 

2011 to ~April 30, 

2013) 

This market test allows customers to 

purchase gift cards loaded with a specified 

sum of money that may be sent through the 

mail. According to USPS, the sale of gift 

cards at selected retail postal locations 

increases customer convenience and 

enhances postal revenue by encouraging 

customers to use the mail for gifting purposes. 

USPS activates the card and earns a 

negotiated percentage of each card’s 

activation fee. The remainder of the fee is 

remitted to the issuer of the card. In its 

request for approval of the market test, USPS 

indicated that it intended to enter into an 

agreement with one or more card providers. 

USPS also indicated that it might test different 

activation fees, which typically range from 

$3.95 to $5.95 depending on the value and 

type of the gift card.

≤10 million Ongoing. USPS entered into an agreement 

with American Express and currently offers 

this vendor’s gift cards at about 5,200 

USPS retail locations. The test is 

expected to be completed by May 2013. 

Revenue: According to USPS, this 

product generated $96,000 in revenue 

during fiscal year 2011 and is expected to 

generate about $1.1 million during fiscal 

year 2012.

8 Metro PostTM (~Nov. 

2012 to Oct. 2013)

Metro Post is a same-day delivery service for 

local buyers who purchase products from 

participating online e-commerce companies 

(and associated retailers) in selected 

metropolitan areas. According to USPS, it 

anticipates entering into relationships with up 

to 10 online e-commerce companies over the 

course of the market test. Metro Post is 

intended to test the operational feasibility of 

same-day package delivery to/from multiple 

locations and to help USPS determine the 

optimal pricing structure for the service. 

10 million– 

50 millionb

Ongoing. PRC approved the market test 

for Metro Post on November 14, 2012. 

USPS selected San Francisco as the first 

city for testing. The market test began on 

December 17, 2012.

Revenue: Not yet available.

Source: GAO Analysis of USPS and PRC documents.

a

This column provides information on the amount of revenue USPS expected to generate from the 

market test when it announced its intention to initiate the test. 

b

USPS requested, and received, the PRC’s approval to exceed the $10 million annual revenue 

limitation. 

c

This test did not anticipate any revenue to USPS. The agency conducted the test free of charge to 

the parties involved. 
Appendix III: Examples of Services USPS 

Currently Performs on a Discretionary Basis 

for Federal Agencies 

Page 25 GAO-13-216 U.S. Postal Service 

No.

Discretionary services 

performed for federal 

agenciesa

(first year of service) Description

1 USPS accepts passport 

applications for the U.S. 

Department of State 

(State Department)

(1974)

Pursuant to an interagency agreement between USPS and the State Department and authorities 

granted under 39 U.S.C. § 411 and 31 U.S.C. § 686. USPS is authorized to accept passport 

applications on behalf of the Department. Under the terms of the most recent agreement (2000), 

trained USPS personnel, among other things, review each passport application for completeness, 

record pertinent information about the identification the applicant used, collect fees, and send the 

completed application to the State Department. USPS retains a portion ($25) of the collected fees in 

the form of an execution fee. In fiscal year 2011, USPS accepted approximately 5.6 million passport 

applications in over 6,300 post offices nationwide. According to USPS, the applications generated 

net income of $43 million for the period. By using USPS’s extensive network of post offices, the 

agreement is intended to provide passport applicants with more convenient access to passport 

acceptance services than the State Department could provide alone, particularly in remote U.S. 

areas. According to the interagency agreement, either party may terminate the agreement, without 

liability, with 180 days advance notification to the other party.

2 USPS leases excess 

space to other federal 

agencies

(late 1980s/early 1990s)

Through various interagency agreements and authorities granted under 39 U.S.C. §§ 401, 410, and 

411, USPS is authorized to enter into non-sale lease (tenancy) agreements with government 

agencies for such things as excess parking, office space, and roof space for antennae towers. In 

fiscal year 2011, USPS received about $24 million in revenue for 91 non-sale lease (tenancy) 

agreements with federal agencies. Most of USPS’s leases (tenancy agreements) for excess parking 

and office space are with the General Services Administration, while USPS’s roof space is typically 

leased to law enforcement agencies. According to USPS, because its tenancy agreements generate 

revenue for space that USPS is not using, they help maximize the value of USPS’s real estate 

holdings. Note: USPS also enters into non-sale lease agreements with private, nongovernmental 

parties. However, as discussed in appendix I, those agreements are carried out pursuant to a 

grandfathered nonpostal service.

3 USPS processes equal 

employment opportunity 

(EEO) complaints for 

other federal agencies

(2006)

Through various interagency agreements and under authority granted by 39 U.S.C. § 411, in 2006, 

USPS began conducting EEO investigations on behalf of other federal agencies. According to USPS 

officials, USPS initiated this service to generate additional revenue. In addition, USPS believed that 

given its extensive experience in this area, it could use its existing contractor workforce to reduce the 

costs and improve the timeliness and quality of other agencies’ EEO complaints processing. Since 

2006, 17 federal agencies have entered into interagency agreements with USPS for this purpose. In 

fiscal year 2011, USPS’s National EEO Investigative Service Office completed 255 investigations for 

9 federal agencies that generated about $558,000 in net income. According to USPS, interagency 

agreements can be terminated at any time by the mutual agreement of the parties.

4 USPS collects vacant 

address data for the 

Department of Housing 

and Urban Development 

(HUD)

(2005)

Pursuant to authorities granted under 39 U.S.C. § 411 and a 4-year interagency agreement with HUD, 

USPS agreed to provide HUD with data on vacant U.S. residential and business addresses. According 

to the agencies’ most recent agreement (September 2011), HUD intends to use this information to 

forecast neighborhood changes, assess neighborhood needs, and measure the performance of several 

of its programs. HUD agreed to pay USPS $30,000 in 2011 and has options to purchase additional 

data over a 4-year period for a total cost of up to $160,000. The parties specified that the agreement 

may be terminated for no reason or any reason by written notice to the other party.

Source: GAO analysis of USPS and PRC documents and related reports.

a

In addition to services that USPS performs on a discretionary basis for federal agencies, USPS is 

required—either by law or executive order—to perform numerous services on behalf of federal agencies. 

For example, the Migratory Bird Hunting and Conservation Stamp Act requires USPS to print, issue, and 

sell duck stamps (that serve as hunting licenses) for the U.S. Fish and Wildlife Service. Pub. L. No. 73-

124, 48 Stat. 451 (Mar. 16, 1934). Through executive order, USPS also is directed to deliver medicines 

to individuals in the event of a large scale biological attack. Exec. Order No. 13527, 75 Fed. Reg. 737 

(Jan. 6, 2010)

Appendix III: Examples of Services USPS 

Currently Performs on a Discretionary Basis 

for Federal Agencies
Appendix IV: Description of Ongoing USPS 

Initiatives, as of November 14, 2012 

Page 26 GAO-13-216 U.S. Postal Service 

No. Initiative Name Description Reason

First-Class Mai

1 2nd Ounce Free 2nd Ounce Free enables large mailers, such as banks, to send twice as much mail for the 

one-ounce price. According to USPS, this product allows mailers to use the second ounce 

for operational or marketing purposes which increases the potential value of their mailings.

Slow erosion,

add value

2 Alternative Postage 

Payment

Alternate Postage Payment removes a step in the mailing process because it enables 

consumers to send greeting cards without affixing postage. According to USPS, the 

alternative payment method makes it easier and more convenient for customers to 

purchase and mail cards because they do not have to determine and affix the proper 

postage before mailing. Instead, the cost of postage is included (prepaid) in the price 

consumers pay for the card. USPS introduced this product as an experimental product in 

January 2011 and, according to USPS, expects to seek its approval as a permanent 

product at a later date. Appendix II provides additional information on this product 

initiative.

Add value

3 IMb-based 

Initiatives

USPS is pursuing a pricing incentive that will offer customers a higher discount for sending 

First-Class Mail that meets its Intelligent Mail barcode (IMb) requirements. According to 

USPS, this initiative supports USPS’s goal of increasing adoption of its intelligent 

barcodes that, among other things, enhances USPS’s mail-processing efficiency and 

increases its ability to track the location of mail as it moves through the mail stream. 

Add value

4 Negotiated Service 

Agreements/

Total Customer 

Value Contracts

This initiative targets USPS’s largest mailers of First-Class Mail and Standard Mail and is 

carried out through negotiated service agreements between the parties. Participating 

mailers will receive reduced postage costs if they meet specified volume commitments. 

According to USPS, the initiative may be extended to other product categories if it is 

successful. 

Slow erosion

5 Picture Permit 

Imprint Indicia

This initiative allows mailers to enhance the “indicia” area (i.e., the postage block area) of 

a mail piece with a picture or image, including mobile barcodes. According to USPS, the 

images can be used to advertise brands, bring immediate attention to the mail piece, and 

potentially improve the rate in which mail is opened. 

Add value,

support

6 Product 

Rationalization and 

Simplification

This initiative represents USPS’s ongoing process to analyze its First-Class Mail product 

and service offerings. The analysis is intended to result in, among other things, the 

continuous simplification of mail offerings, the optimization of USPS’s First-Class Mail 

products in the marketplace, and the elimination of product redundancies. In addition, 

USPS hopes to reduce the cost and complexity of its customers’ mailings and identify 

gaps between product features and customer needs. According to USPS, the introduction 

of its 2nd Ounce Free initiative was a direct result of this effort. 

Support

7 Stamps This initiative is intended to increase USPS’s sales of stamps and philatelic products.

Specifically, USPS said it intended to renew its emphasis on properly marketing and 

displaying stamps and philatelic products in its retail locations and to expand its Forever 

stamp pricing to its collectible stamp program.

Add value

Marketing Mail 

8 2012 Holiday Mobile 

Shopping Promotion

This promotion ran between November 7-21, 2012, and offered business mailers an 

upfront 2-percent postage discount on qualifying mailings. To qualify, the mailings had to 

include a two-dimensional barcode that when read or scanned by a mobile device, linked 

the recipient to a website for purchasing the advertised product. According to USPS, by 

delivering mobile-optimized promotional offers, coupons, and catalogs to customers in 

time for the Black Friday-Cyber Monday shopping sprees, the initiative was intended to 

spur mobile purchasing.

Add value,

slow erosion

Appendix IV: Description of Ongoing USPS 

Initiatives, as of November 14, 2012 
Appendix IV: Description of Ongoing USPS 

Initiatives, as of November 14, 2012 

Page 27 GAO-13-216 U.S. Postal Service 

No. Initiative Name Description Reason

9 2013 Promotional 

Calendar

This initiative involves a series of short-term promotions designed to provide mailers and 

marketers with incentives to promote innovative uses of the mail that increase its value to 

recipients. In addition, according to USPS, the promotions are intended to accelerate best 

practices among marketers and business mailers, while increasing awareness and 

engagement among consumers. 

Add value,

slow erosion

10 Additional 

Supporting 

Strategies

This initiative involves activities that support overall USPS efforts, such as those related to 

simplifying USPS’s pricing, product lines, and mailing processes. For example, according 

to USPS, it is examining its existing discounts for the presorting of customer mailings and 

is establishing flexible pricing based on location and capacity in its processing and 

transportation networks.

Add value,

grow revenue

11 Advertising Mailing 

Services 

This initiative involved an advertising campaign to promote the value of advertising and 

First-Class Mail to business and residential customers. According to USPS, the campaign 

ran in the fall of 2011 and centered around two television ads—called “Hacked” and 

“Face-to-Face.” 

Grow revenue

12 Direct Mail Hub Direct Mail Hub is a USPS internet site designed to educate small business owners, 

including many first-time business users, on how to use direct mail to advertise their 

businesses to consumers. According to USPS, the site helps small businesses generate 

mailings from start-to-finish and complements its Every Door Direct Mail product. 

Add value,

grow revenue

13 Free Standing 

Inserts

This initiative is intended to respond to the decline in the circulation of newspapers, which 

advertisers often use to deliver inserts, such as circulars, to customers. Instead of being 

inserted in a newspaper, advertisers can—for example—bundle multiple advertising 

leaflets in mailings to consumers. The initiative is carried out through negotiated service 

agreements and, as of November 2012, USPS had negotiated one such agreement.

Grow revenue

14 Mail Works 

Guaranteed

This initiative targets large advertising companies that rely on other media—not mail—to 

advertise to prospective customers. Specifically, USPS hopes to demonstrate the 

effectiveness of direct mail as an advertising medium. Appendix II provides additional 

information on this initiative, which was introduced as an experimental product in June 

2011. On January 8, 2013, USPS filed to terminate the Mail Works Guarantee market test with 

the PRC.

Grow revenue

15 Mobile Commerce & 

Personalization

Promotion 

This initiative offers business mailers a 2 percent postage discount on their qualified 

mailings. To qualify, the mailing must contain a two-dimensional barcode or print/mobile 

technology that can be read or scanned by a mobile device. According to USPS, the 

initiative is designed to encourage marketers to incorporate a “Mobile on Mail” multichannel marketing approach that uses mail as the gateway for driving e-commerce activity 

and transactions. 

Add value,

slow erosion

16 MoverSource This initiative involves a potential enhancement to MoverSource—a program for changing 

a mail recipient’s address. With this initiative, USPS is exploring the feasibility of allowing 

mail recipients to use their mobile devices as another vehicle for changing their mailing 

address. (USPS currently allows mail recipients to change their addresses via a printed 

form, by phone, or online.) Appendix I provides additional information about MoverSource. 

Add value

17 Periodicals This initiative involves an ongoing USPS effort to develop mutually beneficial partnerships 

with companies in the periodical industry. According to USPS, as of November 2012, one 

topic under discussion involved potentially offering magazine subscriptions through USPS 

channels.

Grow revenue

18 Reinvigorate 

Samples

Reinvigorate Samples is an effort aimed at increasing the use of mail to deliver product 

samples. This initiative is a follow-on to Sample-Co-op boxes that USPS initiated as an 

experimental product. Appendix II provides additional information about Sample Co-op 

boxes.

Grow revenue
Appendix IV: Description of Ongoing USPS 

Initiatives, as of November 14, 2012 

Page 28 GAO-13-216 U.S. Postal Service 

No. Initiative Name Description Reason

19 Simplified & 

Saturation Mail 

Incentives/

Every Door Direct 

Mail—Retail

USPS introduced Every Door Direct Mail–Retail as an experimental postal product that 

used simplified addressing, entry, pricing and payment options to entice small and 

medium-sized businesses to advertise to consumers within the businesses’ 

neighborhoods. By making advertising through the mail (direct mail) less costly and 

complex, USPS hopes to attract new mail customers and/or increase its mail volume and 

revenues from existing small-volume business mailers. The PRC approved Every Door 

Direct—Retail as a permanent postal product in September 2012. Appendix II provides 

additional information about this product.

Grow revenue

Shipping Services

20 Digital Channel 

Components

This initiative is intended to make it easier for technology-savvy and mobile customers to, 

among other things, order packing supplies, buy postage, print labels, and schedule free 

package pickups using USPS’s website and other digital channels, such as smart phone 

mobile applications. The increased use of digital channels is intended to provide 

customers with greater access to USPS’s products and services. 

Add value

21 ePostage ePostage is an initiative to provide mobile and technology-savvy customers with greater 

access to USPS’s products and services. As part of this effort, USPS has developed 

commercial shipping tools that, among other things, provide payment and tracking 

services for online retailers. According to USPS, for example, its e-Postage solution is 

currently used by one major online retailer. 

Grow revenue

22 Grow Small and 

Key Accounts

This initiative involves enhancements to USPS’s portfolio of products and services 

targeted toward small businesses. According to USPS, recent enhancements include 

Carrier Pickup and Priority Mail Prepaid Forever Flat Rate Packaging. USPS also has 

extended its flat-rate-shipping options with Priority Mail and Express Mail padded 

envelopes, and upgraded its online Click-N-Ship platform on USPS.com. 

Grow revenue

23 Growth through 

Competitive 

Contracts and 

Pricing 

This initiative involves the renegotiation of USPS’s Parcel Select contracts to adjust its 

pricing for deliveries based on geography. Specifically, USPS adopted a two-tiered pricing 

approach—one tier for suburban areas and another tier for rural areas—that is expected 

to lead to greater volume and revenue. According to USPS, for example, the contract 

changes enable private-sector firms to leverage USPS’s low costs and delivery access to 

provide “last-mile services” to their customers. 

Grow revenue

24 Increase Profitability 

for Lightweight 

Products

This initiative involves a First-Class Package Service for packages weighing less than 1 

pound. According to USPS, this service provides the only per-ounce pricing in the 

marketplace. 

Grow revenue

25 Market-Based 

Pricing and 

Products

This initiative is to better align USPS pricing with market demand and USPS costs. The 

Postal Accountability and Enhancement Act of 2006 required USPS’s market-dominant 

products to cover their costs and any price increases for these products must be tied to 

the rate of inflation. For example, USPS moved Parcel Post®—previously an unprofitable 

market-dominant product—to its competitive product line. According to USPS, this change 

will enable USPS to raise its price for Parcel Post to at least cover the product’s costs. In 

addition, the change is expected to benefit USPS’s Priority Mail® products which, 

according to USPS, had been disadvantaged because these products were previously 

competing against the unprofitable Parcel Post service.

Support goals

26 Marketing, 

Advertising & 

Promotions/ 

Advertising 

Shipping Services

This initiative is intended to help USPS compete for a larger share of the parcel shipment 

business. Specifically, USPS developed a marketing plan to communicate the benefits of 

its products, services, and initiatives through multi-channel marketing campaigns.

According to USPS, one feature of the plan involves reminding customers about the 

benefits and features of existing shipping options which it hopes will “continue to position” 

USPS as the “shipper of choice” for businesses. 

Grow revenue
Appendix IV: Description of Ongoing USPS 

Initiatives, as of November 14, 2012 

Page 29 GAO-13-216 U.S. Postal Service 

No. Initiative Name Description Reason

27 Position Ancillary 

Services for 

Revenue Growth 

and Profitability

USPS plans to give shippers greater control of their packages by, among other things, 

enabling them to request that a mail piece be returned or redirected before final delivery to 

the recipient. For example, Hold For Pickup permits a package to be shipped directly to a 

Post Office and held until picked up. Other ancillary services include Adult Signature 

Required and Adult Signature Restricted Delivery, which are designed to satisfy security 

and privacy concerns for shipments that by law require an adult’s signature. 

Grow revenue

28 Returns 

Management

This initiative provides customers with various self-service returns options, such as the 

ability to print shipping labels that make it easier and more convenient to return 

merchandise through the mail. According to USPS, the introduction of these “return-onyour-own” options is intended to make USPS the preferred channel for business-toconsumer returns. 

Grow revenue

29 Shipping Supplies 

for Customers

This initiative involves an expansion of USPS’s offerings of free packaging supplies to 

increase customer convenience and support growth of its expedited shipping products.

Support

Access to USPS Products and Services

30 Business Mail 

Acceptance

The initiative involves the introduction or improvement of various processes USPS uses to 

accept business mail for processing, including processes that verify and track the 

mailings. In addition, USPS intends to upgrade its infrastructure to allow electronic data on 

mailings to be stored at designated local sites (in addition to the centralized database) to 

address the possibility of network outages.

Increase 

access, grow 

revenue

31 Business Mail Entry This initiative involves the introduction of online resources and streamlined processes 

intended to make it easier for mailers to prepare and enter their mail into the mail stream. 

Increase 

access, grow 

revenue

32 Business Service 

Network Group

This initiative involves the 400 field employees who provide day-to-day assistance to 

USPS’s 27,000 commercial customers throughout the country. According to USPS, in 

addition to customer service, these employees also establish relationships with its 

customers’ key decision makers.

Increase 

access, grow 

revenue

33 Contract 

Mechanisms 

USPS is exploring new tiered pricing structures that would allow customers to earn 

additional mailing discounts once they exceed specified revenue or volume thresholds.

Grow revenue

34 Corporate Customer 

Contact

USPS plans to in-source its customer call-in center in an effort to improve customer 

service and increase the likelihood of customers purchasing postal products. According to 

USPS, this is a high priority initiative which is required under the terms of its latest contract 

with the American Postal Workers’ Union. USPS said the call center will begin operations 

in the fall of 2012 and ramp up its operations through the spring of 2013 to meet its 

contractual commitment to have 1,100 union employees assigned to call center operations

by May 2013.

Increase 

access 

35 Current Product 

Growth/New 

Product 

Introductions

USPS is developing and expanding its line of retail products, such as greeting cards, 

promotional and mail related products, and tote bags. All of these products are aimed at 

extending postal branding in the marketplace, cross promote core postal products, and 

improve the overall shopping experience.

Grow revenue

36 Grow P.O. Box 

Revenue

This initiative targets small business customers that, according to USPS, are looking for 

increased convenience from their post office boxes. Specifically, USPS reclassified 6,000 

of its post office boxes from market dominant to competitive products in markets with other 

mail services in fiscal year 2011. This change allowed USPS to offer post-office-box 

customers additional services such as expanded lobby hours, earlier pick-up times, and 

the use of post office locations for street-styled addressing (e.g., 131 South Center St. 

#3094, instead of P.O. Box 3094) for an increased fee. 

Grow revenue
Appendix IV: Description of Ongoing USPS 

Initiatives, as of November 14, 2012 

Page 30 GAO-13-216 U.S. Postal Service 

No. Initiative Name Description Reason

37 Integrated 

Customer Access 

Plan/Customer 

Experience

This initiative was designed as a communications campaign built around the theme that 

USPS is “Everywhere I Am” with “I” being the customer. USPS is pursuing this initiative as 

an alternative access communications effort. According to USPS, this theme is extremely 

important to customers who are mobile and tech savvy, and therefore, not afraid to use 

remote postal locations to do business.

Increase 

access 

38 Licensing USPS is pursuing licensing opportunities, particularly opportunities that will promote its 

stamp program. According to USPS, its licensing efforts have two goals. First, by 

controlling the use of its postal trademarks, USPS said it protects its brand and ensures 

that its good name is not harmed by indiscriminate use of its trademarks. Second, USPS 

said it has a very valuable collection of American art as part of its stamp image library and 

that private sector organizations want to leverage the collection for their endeavors.

According to USPS, licensing this art helps defray its costs and helps support its stamp 

program. Appendix I provides additional information about USPS’s licensing activities. 

Grow revenue

39 Partner Campaigns This initiative involves working with retail partners to increase awareness of the retailers’ 

stores as locations where customers can obtain postal services.

Increase 

access, grow 

revenue

40 Retail Brick & 

Mortar

This initiative focuses on improving customer service at USPS’s retail facilities. For 

example, USPS plans to test different approaches and staffing options to improve 

customer experience and reduce customer wait time at its retail facilities. In rural America, 

USPS is adjusting service to local demand through its use of Village Post Offices and 

changes to its hours of facility operations. 

Increase 

access 

41 Retail Service 

Incentives

According to USPS, it plans (over the next 5-10 years) to shift the majority of its retail 

volume from USPS-owned facilities to retail partners and stamp partners via its Retail 

Partner Expansion Program. This program will establish regional and national contracts 

that will allow select retailers to provide USPS products and services to their customers.

According to USPS, the program will increase customer access to USPS products and 

services more rapidly and at a lower cost than would be possible through existing 

channels. In addition, USPS believes that the program will increase its market share and 

create a substantial retail platform for introducing new USPS products and services in the 

future, among other benefits. 

Increase 

access, grow 

revenue

42 Sales Strategies This initiative seeks to substantially increase USPS’s revenue from political mail.

Specifically, USPS hopes to generate $500 million in revenue in fiscal years 2012 and 

2013 through a major sales and marketing effort. According to USPS, such an increase 

would double the revenue it received during the previous election season. 

Grow revenue

43 Self-Service 

Components

This initiative is intended to increase customer access to self-service postal options which, 

according to USPS, will substantially lower its costs and improve its customers’ 

experience, among other benefits. Specifically, USPS plans to install self-service kiosks in 

about 2,500 high-traffic USPS facilities to emphasize self-service as the optimal channel 

for accessing postal services. 

Increase 

access 

44 Strategic Account 

Management

This initiative involves realigning USPS’s sales staff to build relationships with its largest 

customers. USPS expects over $60 million in incremental revenue as a result of this 

realignment in 2012. 

Grow revenue

45 Upsell-at-Retail As part of its effort to grow revenue, personnel at post offices are attempting to increase 

their sales of expedited packaging and extra services through a concerted sales effort. 

Grow revenue

Source: GAO analysis of USPS information.
Appendix V: Comments from the United States 

Postal Service 

Page 31 GAO-13-216 U.S. Postal Service 

Appendix V: Comments from the United 

States Postal Service
Appendix VI: GAO Contact and Staff 

Acknowledgments

Page 32 GAO-13-216 U.S. Postal Service 

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

In addition to the contact named above, Kathleen Turner and Heather 

Halliwell (Assistant Directors), Tonnye Conner-White, Delwen Jones, 

Steve Martinez, Josh Ormond, James Russell, and Crystal Wesco made 

key contributions to this report.

Appendix VI: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments

(544177)
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