U.S. Postal Service: USPS Needs to Clearly Communicate How Postal Services May Be Affected by Its Retail Optimization Plans
Published: 2004-07-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: A key element of the ongoing postal reform deliberations before Congress is the U.S. Postal Service's (USPS) ability to carry out its mission of providing universal mail delivery and retail services at reasonable rates. Many are concerned that USPS's mission is at risk in the current operating environment of increasing competition and decreasing mail volumes. Preserving universal service, particularly in rural areas, is a goal of postal reform. GAO was asked to discuss (1) how USPS provides universal mail delivery services and access to postal services in both rural and urban areas; (2) what changes USPS is making or plans to make related to providing postal services, including changes that may affect rural areas; and (3) what are the major issues that have been raised related to how USPS provides postal services.
section_title: What GAO Found
paragraphs: USPS provides its customers, regardless of where they live, with services that include mail delivery at no charge and access to retail services. However, differences exist in how, when, and where USPS provides these services. These differences have always existed due to the nation's geographic diversity and changes in technology, transportation, and communications. Universal postal service is not defined by law, but appropriations legislation requires 6-day mail delivery and prohibits USPS from closing small, rural post offices. Delivery and retail decisions are made primarily by local USPS officials with overarching guidance provided by national policies and procedures. Local decisions are based on cost and service factors, including the number and location of deliveries, quality of roads, employee safety, and mail volume. USPS has taken actions, and is planning future actions, to improve the efficiency of its delivery and retail networks. Overall, customers in urban and rural areas will probably not see significant changes in delivery services since most changes are focused on operational improvements. On the retail side, USPS plans to provide more cost-effective and convenient service by developing new, low-cost alternatives; moving stamp-only transactions away from post office counters; and optimizing its retail network. USPS's retail optimization involves tailoring services to communities' needs and replacing "redundant, low-value access points with alternative access methods." It remains unclear how customers in rural areas will be affected by these retail initiatives since most are planned for high-growth, high-density areas. Generally, postal customers are satisfied with the services provided to them. The issues that have raised the greatest concerns from customers include inconsistent mail delivery and the threat of post office closings or reductions in post office hours. Also, concerns have been raised about USPS's limited communication regarding its planned changes to its networks. USPS's retail optimization could be an opportunity for USPS to reduce its costs while improving customer service. However, USPS needs to provide additional transparency and accountability mechanisms to better communicate its retail optimization plans and raise stakeholders' confidence that decisions will be made in a fair, rational, and fact-based manner.

section_title: Letter
paragraphs: The challenges facing the U.S. Postal Service (USPS)—that is, record  declines in mail volumes for some high-margin products, difficulties in  controlling costs and enhancing revenues, and increases in competition— are not temporary problems that will fade away. Nevertheless, a common  message voiced by many postal stakeholders is that although change is  needed to address these and other significant challenges, the concept of  universal postal service needs to be preserved. These stakeholders believe  that providing universal postal service is the cornerstone of USPS’s  mission; is essential to the nation’s communications network and economy;  and is vital to the American people, many of whom rely upon the  consistency of mail delivery and convenient access to the retail postal  network. The concept of universal postal service, however, is not clearly  defined in law and has evolved over time with changes in technology,  transportation, and communications. These changes are continuing today,  raising some concerns about how they may affect future postal services— including those in rural areas. USPS has noted that rural delivery continues  to provide a vital link between urban and rural America. Some Members of  Congress have stated that post offices are fundamental to the identity of  small towns, providing them with an economic and social anchor.
A key discussion point in ongoing postal reform deliberations in Congress  is USPS’s ability to carry out its mission of providing universal mail delivery  and postal retail services at reasonable rates. In April 2001, we reported on  the financial, operational, and human capital challenges that threaten  USPS’s ability to carry out its mission in the 21st century and remain self- supporting through postal revenues. We placed USPS’s transformation  efforts and long-term outlook on our high-risk list and recommended that  USPS develop a comprehensive plan to determine the actions needed to  address its major challenges. USPS issued its Transformation Plan a year  later, which identified steps to guide future USPS operations. This plan  included specific actions aimed at making the delivery and retail networks  more efficient and convenient for customers, including promoting more  efficient delivery routes and utilizing low-cost retail transactions. The  President also recognized the importance of USPS’s role and mission and  established the President’s Commission on the United States Postal Service  (the President’s Commission) to examine USPS’s future. The President’s  Commission issued a report in July 2003 that put forward a proposed vision  for USPS and recommendations to ensure the future viability of postal  services. The report emphasized the importance of maintaining 6-day-a- week, affordable, universal postal service and acknowledged that USPS’s  mission is at risk in the current operating environment of increasing  competition and decreasing mail volumes. In addition, Congress is also  interested in maintaining a high level of postal services for the American  people and has held a number of hearings recently on postal reform issues.  We testified in November 2003, January 2004, and March 2004 about the  information in the report issued by the President’s Commission, the  challenges facing USPS in carrying out its mission, and the key elements of  postal reform.
In response to your request, this report addresses three objectives: (1) how  does USPS provide universal mail delivery service and access to postal  services in both rural and urban areas; (2) what are the changes USPS is  making and planning to make related to providing postal services,  including changes that may affect rural areas; and (3) what are the major  issues that have been raised related to how USPS provides postal services?
Our review of USPS’s delivery and retail services is based upon an analysis  of USPS policies and procedures; the roles and responsibilities of postal  officials involved in making delivery and retail decisions; delivery and retail  data provided to us from USPS; proposed changes in related documents,  such as the Transformation Plan and the President’s Commission’s report  on the U.S. Postal Service; and interviews with key postal stakeholders,  including USPS officials, representatives from employee unions and  management associations, and the Postal Rate Commission (PRC). We  assessed the reliability of the data provided to us from USPS and found  them to be sufficient for our purposes of providing a basic description of  USPS’s delivery and retail networks. A more detailed discussion of our  objectives, scope, and methodology is included in appendix I. We  conducted our review at USPS headquarters in Washington, D.C., between  June 2003 and June 2004 in accordance with generally accepted  government auditing standards. We requested comments from USPS on a  draft of this report, and its comments are discussed later in this report and  reproduced in appendix III.
subsections: section_title: Background
paragraphs: USPS is an independent establishment of the executive branch with a  mission to bind the nation together through the personal, educational,  literary, and business correspondence of the people. The Postal  Reorganization Act of 1970 reorganized the former U.S. Post Office  Department into the United States Postal Service. USPS’s current legal  framework   requires it to break even over time and intended it to be self-supporting   requires it to provide a maximum degree of effective and regular postal  services to rural areas, communities, and small towns where post  offices are not self-sustaining; and  prohibits it from closing small post offices solely because they are  operating at a deficit, it being the specific intent of Congress that  effective postal services be insured to residents of both urban and rural  communities.
USPS’s mission and role, and the processes used to carry out mail delivery  and retail services, have evolved over time with changes in technology,  transportation, and communications. Key events in postal history are listed  in table 1.
Most customers in the early development of the national post office had to  pick up their mail from a post office. The first step toward universal  delivery service was taken in 1863 when Congress declared that free city  delivery would be established at post offices where income from postage  was sufficient to pay all expenses of delivery. Mail delivery service was  gradually extended to smaller cities and was later extended to rural areas  in 1902. Advances in the delivery of mail coincided with transportation  improvements. Various transportation modes developed throughout  history have been used to transport mail, ranging from stagecoaches in the  1700s; steamboats, trains, and the Pony Express in the 1800s; and finally by  airplanes, automobiles, and trucks in the 1900s. Furthermore, advances in  transportation were particularly important in rural areas; rural delivery  helped stimulate road improvements to these areas because passable roads  were a prerequisite for establishing new delivery routes.
Throughout the nation’s history, the post office has been a key component  in the provision of postal services. Post offices proliferated throughout the  1800s as the United States’ territory grew and new postal routes were  established. At the turn of the 20th century, the number of post offices  reached its peak with nearly 77,000 offices, which was an average of 1 post  office for every 1,000 residents in the country (see fig. 1).
The number of post offices per capita declined throughout the 20th century,  to an average of 1 post office for every 10,000 people in 2000. As  transportation improved, it became easier for rural carriers to deliver mail  to a wider area, which decreased reliance on post offices for being the  primary delivery and collection point. Furthermore, rural carriers provided  retail services as part of their routes, so customers did not have to travel to  a post office for these services.
section_title: Differences Exist in How USPS Provides Delivery and Retail Services
paragraphs: Providing mail delivery and access to retail postal services is central to  USPS’s mission and role. According to USPS officials, all USPS customers  are eligible for free mail service and most receive delivery 6 days a week.  Furthermore, all customers have access to retail services provided through  the postal network, including the ability to purchase stamps from post  offices or other retail facilities. Differences exist, however, in how USPS  provides these services, particularly in where, when, and how customers  receive the mail and have access to the postal network. These differences  have always existed and have evolved with changes in technology,  transportation, and communications. Delivery and retail decisions are  made primarily by local staff (i.e., district employees and local  postmasters), with overarching guidance provided by national USPS  policies and procedures. These local field staff consider such factors as the  number and location of delivery points in the area, the quality of the roads  and transportation, employee safety, mail volume, projected costs, and the  type of service offered in nearby areas. The following information in this  section provides an overview of the current USPS delivery and retail  networks, recent trends, and how decisions about delivery and retail  networks are made.
subsections: section_title: Overview of USPS’s Delivery Services
paragraphs: USPS’s legal and statutory framework provides the basis for its delivery  services. For example, USPS is to  “provide prompt, reliable, and efficient services to patrons in all areas  and shall render postal services to all communities”;  “provide a maximum degree of effective and regular postal services to  rural areas, communities, and small towns where post offices are not  self-sustaining”;  “receive, transmit, and deliver throughout the United States…written  and printed matter, parcels, and like materials”; and   “serve as nearly as practicable the entire population of the United  States.”
These provisions are considered key parts of universal service and provide  the general operational guidance for USPS. USPS has the ability to  establish delivery service within these broad provisions but by law must  operate in a break-even manner. A long-standing provision in the  appropriations acts for USPS requires the continuation of 6-day delivery  and rural delivery service.
According to USPS officials, delivery decisions are made at the local levels.  National policies outline overall operational guidance, but discretion is  provided to local officials, including area and district managers and  postmasters, to make delivery decisions in their respective areas. These  local officials—who, according to national USPS officials, are most familiar  with the area to be served—make decisions related to the type, frequency,  and location of delivery service that will be provided to a given address. A  summary of key decisions is included in table 2, and additional information  on each of these decisions is provided in the following sections.
According to USPS, local officials select the delivery method that provides  service in the most efficient and cost-effective manner. They consider such  factors as the number and location of delivery points in the area, the quality  of the roads and transportation, employee safety, mail volume, projected  costs, and the type of service offered in nearby areas. These local officials  also are provided with specific manuals that contain national guidance on  establishing delivery service, as well as on how to carry out these  operations on a day-to-day basis.
subsections: section_title: Type of Service
paragraphs: USPS customers are entitled to receive mail delivery service at no charge in  one of two ways: via mail carrier or via the customer retrieving his or her  mail at a designated postal facility. The majority of USPS’s residential and  business deliveries are made by mail carriers—about 86 percent in fiscal  year 2003. Approximately 14 percent of USPS’s deliveries are where  customers travel to a USPS facility, primarily a post office, to retrieve their  mail. These customers receive mail service either via box service or general  delivery pick up. Box service may be provided (1) at no charge to  customers who are not eligible for carrier service—this would represent  their free mail delivery service—or (2) at a fee to customers to supplement  their existing delivery service. Customers who are not eligible for carrier  delivery and whose retail facility does not provide box service are provided  with general delivery service where they retrieve their mail from a post  office counter at no charge.
While current mail recipients have access to mail delivery service at no  charge—the cost of delivery is borne by postal ratepayers—the process by  which customers are eligible for free delivery has recently been clarified. In  the 1996 Mail Classification Case before the PRC, USPS proposed  eliminating the fee for box service that it charged customers who were not  eligible for carrier delivery. At the time of this case, USPS estimated that  about 940,000 boxes would be offered free of charge as a result of this  policy. This proposal, however, did not require USPS to offer a free box to  all customers ineligible for carrier delivery, such as those ineligible due to  their proximity to a postal facility (i.e., the quarter-mile rule). These  customers would only be allowed to receive general delivery service at no  charge. The PRC, in its ensuing recommendation, raised issues about  inequities regarding customer eligibility for free box delivery and urged  USPS to rectify them. USPS dropped the quarter-mile-rule provision during  the following 1997 rate case, and, as such, customers ineligible for carrier  service became eligible for free box service.
section_title: Frequency of Service
paragraphs: According to USPS officials, most customers receive mail delivery 6 days a  week, but there are customers who do not. These customers include  businesses that are not open 6 days a week; resort/seasonal areas that are  not open year-round; or areas that are not easily accessible due to  transportation constraints, such as remote areas that may require the use  of boats or airplanes to deliver the mail. For example, mail is transported  by mules for delivery in the Grand Canyon, by snowmobiles for delivery in  some areas of Alaska, and by boats for delivery on islands in Maine and  other states.
section_title: Type of Carrier Routes
paragraphs: As previously stated, the majority of USPS customers receive carrier  service. Once it is determined that a customer is eligible for carrier service,  USPS determines the type of carrier route service that will be provided.  USPS has three primary carrier route categories—city, rural, and highway  contract routes—and has national policies and procedures that contain the  criteria used to establish, manage, and operate the three types of routes.  Excerpts from these policy and procedure manuals are provided in table 3.
USPS’s “rural” designation does not necessarily reflect geographically  defined rural areas, and there is no population threshold for a USPS- designated rural or city route. Rural carrier routes encompass a wide  range of geographic areas and may cover both less-densely populated areas  generally considered to be rural as well as suburban areas generally  considered to be urban. A USPS rural route such as one in Charlotte, North  Carolina, or Jacksonville, Florida, may cover a geographically defined  suburban area and may contain a similar number of delivery points as a city  route. USPS officials explained that many suburban areas met rural route  criteria when they were originally established. However, they also stated  that although the population may have grown in an area that now may be  considered suburban, USPS maintains existing operations in this situation.  Thus, it retains the rural route classification. A brief overview of these  route types is provided in table 4.
City routes (67 percent of all routes) tend to be located in densely  populated areas with high concentrations of delivery points. As figure 2  shows, growth in city routes has stagnated since 1994 and has been  declining since 2000, while growth in rural routes continues.
Rural routes, accounting for only about 29 percent of all routes, are the  fastest growing type of route. Of the 1.8 million delivery points added in  fiscal year 2003, 1.2 million delivery points are located on rural routes.  Rural routes encompass a wide range of areas, with some of the larger  routes serving hundreds of delivery points and some smaller routes having  just 1 delivery per mile. Not only are rural routes the fastest growing route  type, the number of deliveries per route (route density) is also increasing.  Figure 3 shows that rural routes with 12 or more deliveries per mile have  been increasing at a much faster rate than rural routes with fewer than 12  deliveries per mile. Furthermore, as shown in table 4, the average deliveries  per route for city routes and rural routes are relatively similar, 513 and 474,  respectively.
The remaining 4 percent of routes are highway contract routes (10,065 in  fiscal year 2003), which serve areas that are not serviced by city or rural  routes. On some of these routes, deliveries are made along the line-of-travel  to individual addresses as mail is being transported from one facility to  another.
section_title: Modes of Delivery
paragraphs: USPS has guidance to help determine the physical location where the mail  will be delivered. USPS works with local real estate developers when  determining the locations of delivery for new addresses and has three  general modes of delivery that specify the physical location of the delivery:  door, curbline, or a centralized unit that contains mail receptacles for  multiple customers. Figure 4 provides the number of these modes of  delivery as of the end of fiscal year 2003.
Door delivery once was the norm in urban settings; however, USPS  changed its policy in 1978 to limit additional door deliveries to further  enhance delivery efficiencies (door deliveries remain the most expensive  mode of delivery). As a result, curbline delivery and centralized delivery are  the fastest growing modes of delivery. According to USPS delivery officials,  the only instance where new delivery points would receive door delivery  would be if the new delivery point is established on a block that currently  receives door delivery. Centralized units include cluster boxes,  Neighborhood Delivery Collection Box Units (NDCBU), and apartment- style boxes. Cluster box units are centralized units of individually locked  compartments, while NDCBUs are centralized units of more than eight  individually locked compartments. Between fiscal years 2001 and 2003, the  number of curbline boxes increased by more than 2 million; the number of  centralized boxes has grown by about 1.8 million; and the number of other  deliveries (primarily door), which are not available for most new deliveries,  decreased by almost 400,000.
section_title: Differences in Delivery Service Are Based on Cost and Service Considerations
paragraphs: According to USPS, it must balance the legal requirement to operate as a  break-even entity with the need to serve its customers in a competitive  environment. As such, the following cost and customer convenience trade- offs are associated with each of the previously discussed delivery  decisions.
Carrier service v. the customer collecting mail from a USPS facility. If  carrier service is provided, USPS incurs the cost of providing the  personnel and transportation to support these services, but most  customers receive their mail closer to their residences or businesses. On  the other hand, requiring customers to travel to their respective post  office to collect mail may be more inconvenient for the customer, but  USPS does not have to incur personnel and transportation costs  associated with carrier delivery.  6-day-a-week delivery v. something less than 6-day-a-week delivery.
According to USPS, the more days that delivery is provided, the higher  the cost of providing this service. On the other hand, customers,  Congress, and the President’s Commission have noted the importance of  6-day-a-week delivery. USPS studied the impact of eliminating Saturday  delivery and found that the possible savings were not significant enough  to offset the potential risks that any reduction in delivery days would  have a negative impact on USPS’s competitive position.
City v. rural v. highway contract box delivery routes. Although the  delivery service provided on each of these routes is generally similar,  carriers on rural and highway contract routes provide retail services,  such as stamp sales, while city carriers do not. A USPS official stated  that there are significant cost differences between the different types of  routes. USPS estimated that the additional annual cost in fiscal year  2003 for each city door delivery ($295) was more than twice as  expensive as rural delivery ($143) and over three times as expensive as  highway contract deliveries ($90). The USPS official stated that a key  factor in determining the total cost of a route is the carriers’  compensation systems, which differ for each group of carriers. The  systems for city and rural carriers are collectively bargained between  USPS and their associated unions—the National Association of Letter  Carriers (NALC) represents city carriers, and the National Rural Letter  Carriers Association (NRLCA) represents rural carriers. Generally  speaking, city carriers are compensated on an hourly basis, while rural  carriers are compensated on a salary basis. Agreements entered into by  these groups also establish duties and responsibilities for the carriers  and USPS management. Compensation for contract carriers are  established via the contract posted by USPS.
Door v. curbline v. centralized modes of delivery. According to USPS,  the cost per delivery generally increases as the delivery is made closer  to the customer’s door. Delivery to a customer’s door is the least  efficient mode of delivery because the carrier has to dismount from the  vehicle. Deliveries to centralized units, such as cluster boxes and  NDCBUs, are the most efficient form of carrier delivery because carriers  can make multiple deliveries in one stop. The mode of delivery to be  provided is considered by USPS when determining the type of service  that will be used. For example, most deliveries on rural and highway  contract routes are farther away from the customer’s front door than  deliveries on city routes. Figure 5 shows that most rural and highway  contract deliveries in fiscal year 2003 were to the curb rather than at the  door.
Other delivery (primarily door)
USPS local officials select the delivery option that provides service in the  most efficient and cost-effective manner, and they consider numerous cost  and customer service factors when making these decisions. This balance  between cost and customer convenience is further illustrated in our  discussion of USPS’s retail network.
section_title: Overview of USPS’s Retail Services
paragraphs: As part of meeting its universal service obligation, USPS is required to do  the following:   USPS should serve as nearly as practicable the entire U.S. population  and provide postal facilities in such locations that give postal patrons  ready access to essential postal services consistent with reasonable  economies of postal operation.
USPS should provide a maximum degree of effective and regular postal  services to rural areas, communities, and small towns where post  offices are not self-sustaining. No small post office shall be closed solely  for operating at a deficit, it being the specific intent of Congress that  effective postal services be insured to residents of both urban and rural  communities.
Historically, post offices, stations, and branches served as the primary  access points for providing postal services to most customers. These  facilities were located in towns and communities across the country and  provided key locations where mail could be collected and delivered. Figure  6 illustrates the current network of these retail facilities.
In addition to traditional brick-and-mortar retail facilities, USPS currently  offers retail services through other alternatives, such as self-serving  vending machines, ATMs, grocery and drug stores, and the Internet. Figure  7 illustrates many of these retail alternatives.
Postal services available through these access points can include  purchasing stamps and postage, mailing packages, and sending money  orders. Differences exist, however, in how access to retail service is  provided to customers across the country. These differences (1) exist in  terms of what types of retail options customers have access to and where  these retail options are located and (2) are based on cost and customer  service determinations made by local USPS officials. This section identifies  access points currently provided by USPS, describes differences in the  network, and explains why these differences exist.
The wide variety of retail options currently offered by USPS differs  significantly from its original retail network. Changes in technology,  transportation, and geography diminished the need for a large network of  post offices, and the number of post offices per capita has consistently  declined since the early 1900s (see fig. 1). Table 5 shows that over the last  20 years, the number of post offices, stations, and branches has decreased  by over 1,900 units. This decrease reflects USPS’s movement toward fewer  “bricks-and-mortar” facilities.
USPS still has almost 28,000 post offices nationwide, and these post offices  remain a key access point for USPS’s nationwide retail network. USPS does  not have specific standards for establishing post offices on the basis of  population density or distance between post offices. The number of post  offices and retail facilities compared with the population of the area served  differs throughout the country. Appendix II provides information on the  number of retail postal facilities in each state, along with each state’s  population. For example, states such as North Dakota and South Dakota  that have a relatively low-population density tend to have a lower ratio of  people per USPS retail facility (i.e., fewer than 2,000 residents for every  USPS retail facility). On the other hand, states such as Florida and  California that have a relatively high-population density tend to have a  higher ratio of people per USPS retail facility (i.e., about 15,000 residents  for every USPS retail facility).
Postal officials told us that customers of smaller post offices tend to be  more dependent on their post office for access to the postal network.  Survey data collected for the President’s Commission showed that rural  customers reported visiting their post offices more often than customers in  urban areas. This issue of dependency is important to note when  considering retail access because USPS recognizes that customer use of  post offices versus other retail alternatives varies. For example, according  to USPS, many of the new retail alternatives, such as consignment with  private retailers such as grocery stores and ATMs, have been deployed  primarily in high-growth, high-population areas (coincidentally, these areas  are where many retail competitors to USPS are located). Customers in  these high-growth, high-population areas may not be as dependent on a  post office for meeting their daily postal needs, and therefore they utilize  these alternative methods of accessing USPS’s retail network.
section_title: Retail Decisions Are Based on Cost and Customer Access Considerations
paragraphs: Differences exist throughout the postal network in terms of how and where  customers have access to USPS’s retail network. USPS officials stated that  USPS’s approach to the retail network requires a balance of cost and  service considerations and incorporates such factors as customer demand,  the population of the surrounding area, the post office’s physical location,  mail volumes, costs, and revenues.
Many of USPS’s retail alternatives are aimed at offering more efficient,  accessible ways of providing retail service, particularly in high-growth,  high-revenue areas. When deciding where to deploy these alternatives,  USPS officials told us that they consider both (1) the location where a retail  option is needed and (2) the type of retail options that should be deployed.  They also consider customer access needs while balancing economy and  efficiency concerns. For example, it is more costly for USPS to provide  retail service at a post office counter than via its Web site—www.usps.com.  Some customers, however, may not have Internet service or may prefer  going to their local post office to conduct their postal transactions.  Moreover, USPS has stated that opening new post offices is considered  only when area service needs cannot be met through its current facilities or  by less costly alternatives. USPS has stated that whenever possible it  establishes contract postal units, which can provide equal service without  the costs associated with building and operating new post offices. These  units are privately owned and operated and, as such, are less expensive.  USPS opened 666 contract stations and branches in fiscal year 2003.
section_title: Actions to Improve Delivery and Retail Services
paragraphs: USPS faces the continuing challenge of providing high-quality postal  services while absorbing the costs associated with an ever-increasing  delivery network. USPS estimated that serving its new delivery points in  fiscal year 2003 would add roughly $270 million in annually recurring  delivery costs. At the same time, USPS’s revenue per delivery declined each  year since fiscal year 2000. USPS and other stakeholders have recognized  these challenges, which have been highlighted as part of USPS’s  Transformation Plan and the President’s Commission’s report. USPS has  taken actions, and is planning future actions, to deal with these challenges  and improve the efficiency and effectiveness of its delivery and retail  networks. These actions will include the following: on the delivery side,  emphasizing cost-effective routes and delivery locations (i.e., to curbline  boxes); and on the retail side, providing low-cost alternatives and  optimizing its retail network. The actions planned in the delivery area may  not result in a noticeable change of service for people in rural areas.  Customers in rural areas may experience greater access to USPS’s retail  network via improvements to www.usps.com, but actions to promote other  low-cost alternatives are primarily targeted toward customers in high- growth, high-density areas. Furthermore, it is not clear how rural  customers may be impacted by USPS’s efforts to increase efficiencies by  optimizing its retail network. This section provides an overview of the  actions that USPS is planning to take, in both the delivery and retail areas,  and what these actions are intended to achieve.
subsections: section_title: Actions to Improve Efficiency and Effectiveness in USPS’s Delivery Network
paragraphs: USPS has high costs related to its nationwide infrastructure and  transportation network, which includes delivering mail 6 days a week to  most of the 141 million addresses nationwide. Achieving efficiencies in this  area is difficult because the network grows by approximately 1.7 million  new addresses each year. Mail volumes have recently been decreasing, and  USPS is facing increasing per-piece delivery costs since carriers must make  deliveries even if they have fewer letters to deliver. As previously  discussed, USPS has already taken actions to improve delivery efficiency,  including promoting rural routes and emphasizing curbline and centralized  modes of delivery. These actions are likely to continue in both suburban  and rural areas.
USPS’s initiatives for increasing rural delivery efficiency may not be  noticeable to rural customers because they relate to improving internal  USPS operations, rather than changing residential delivery. These  initiatives include sending managers through a training program to ensure  that they understand the basic concepts of managing rural delivery;  distributing electronic operations newsletters that provide specific  strategies for reducing rural workhours and raising awareness of the need  to focus on rural management; and implementing a rural time review,  which is a process to examine and analyze the timekeeping, recording, and  reporting process for rural delivery.
On a more comprehensive, nationwide basis, USPS has implemented  initiatives aimed at increasing the efficiency of the overall delivery  network. USPS has established a route optimization effort meant to help  determine the best way to route carriers. USPS hopes this effort will lead to  a reduction in workhours, vehicle mileage, and costs, while at the same  time improving safety. According to USPS, automation improvements, such  as the Delivery Point Sequencing of mail, will increase efficiency by  automating some of the mail sorting activities that are currently done  manually by mail carriers. This automation would decrease the amount of  time that a carrier would spend sorting the mail and increase the amount of  time that a carrier could be out making more deliveries.
section_title: Actions to Improve Efficiency and Customer Access to USPS’s Retail Network
paragraphs: Both USPS and the President’s Commission have recognized that USPS  needs to adjust its retail network so that it provides the optimal level of  retail access at the lowest possible cost. The retail service options available  to rural customers will largely remain the same, with the exception of rural  customers who have access to the Internet (www.usps.com). USPS  officials stated that USPS plans to deploy most other new retail alternatives  in high-growth, high-density areas, such as fast-growing suburbs. However,  it is not clear why some retail alternatives that offer greater customer  convenience, such as stamp purchases at grocery or other retail stores,  may not be provided to those in rural areas. Further, it is not clear how  rural customers may be impacted by USPS’s retail optimization efforts to  close and/or consolidate retail facilities. In its Transformation Plan, USPS  stated that its planned efforts to improve access to retail services for all  customers while becoming more cost-effective include three key  initiatives: (1) Create new, low-cost retail alternatives. USPS identified ways to  provide cost-effective services that improve customer convenience and  access by utilizing low-cost retail alternatives, such as the Internet, ATMs,  and supermarkets. According to USPS, most of the alternatives are aimed  at providing additional access to high-growth, high-revenue areas where  demand for services is more concentrated and will not be available in less- populated areas. For example, many of the 666 contract postal units  opened in fiscal year 2003 were in urban areas such as Los Angeles,  California, and Orlando, Florida. However, USPS noted two alternatives  that would be available to most customers, including those in rural areas— the Internet, for customers with access, and the recently implemented  “Click-N-Ship” program. USPS’s Internet Web site is available to customers  24 hours a day, 7 days a week, and was designed to handle most retail  transactions that take place in local post offices, such as printing shipping  labels and postage for packages, buying stamps, sending money orders, and  filing address changes. USPS’s Click-N-Ship program allows customers to  print shipping labels for packages and pay for postage using their  computers. Customers can arrange to have their mail carrier pick up the  package, or they can leave it in a mail collection box or at their local post  office. This carrier pick-up service is currently available in urban and  suburban areas, and USPS and the NRLCA have recently agreed to conduct  a nationwide pilot that would test this program on rural routes. (2) Move stamp-only transactions away from the post office window. The  new, low-cost retail alternatives provide USPS with an opportunity to  increase the efficiency of postal transactions. In fiscal year 2003, about one- third of the visits to USPS retail facilities included stamp purchases, and  over 130 million visits were for stamp-only purchases. Smaller post offices  tend to conduct a higher percentage of stamp-only transactions. As  indicated in its Transformation Plan, window service at a post office is a  relatively expensive way to provide stamp purchases when compared with  low-cost alternatives, such as providing stamp purchases from ATMs,  through the mail, from the Internet, or from a grocery store. In addition,  residents on rural and highway contract routes can purchase stamps and  other retail services from their mail carriers. USPS has begun to promote  the use of these alternatives for postal transactions; in November 2002,  USPS launched a national campaign promoting alternative access to postal  products to create customer awareness of stamp-purchasing alternatives.  Between fiscal year 2002 and 2003, the number of stamp-only visits at  postal facilities decreased by about 25 million (a 16 percent reduction), and  the number of stamp transactions decreased by about 60 million (a 10  percent reduction). (3) Optimize the retail network. As simple transactions such as selling  stamps and printing shipping labels are redirected to lower cost  alternatives, USPS plans to take actions to tailor retail services to the  individual community needs and provide the optimal level of retail access  at the least possible cost. USPS has established a nationwide database of  its retail network that includes about 150 data points for each of its retail  postal facilities, such as operating costs, revenues, proximity to other retail  points, number of deliveries, and customer demographics. This database  provides USPS with a baseline for evaluating its network, from which it  plans to first focus its retail strategy on “underserved” locations. USPS then  plans to focus on high-revenue locations, most of which are located in  urban and suburban areas. Lastly, USPS will focus on “overrepresented”  areas. The Transformation Plan stated that USPS would replace  “redundant, low-value access points” with alternative access methods, but  it did not provide information on the specific criteria that USPS would use  to make this determination. It is unclear how post offices in rural areas may  be affected by this initiative, because, as USPS stated in its Infrastructure  and Workforce Rationalization Plan to Congress, “the savings from closing  small post offices are minimal, since the potential savings in personnel and  office rent are often more than offset by the additional cost of rural delivery  service needed in lieu of post office box delivery.”  Another approach,  recommended by the President’s Commission, would be for USPS to  optimize its retail network by assessing its “low-activity” post offices to  determine if they are needed to ensure the fulfillment of universal service.  If USPS determines that these post offices are needed, they should be  retained, even if they are not economical. If not, the President’s  Commission stated that USPS should work with the affected community to  consider how to dispose of excess facilities.
USPS has begun taking actions to optimize its retail network by lifting the  self-imposed moratorium established in 1998 on closing post offices and by  adjusting post office hours. During fiscal year 2003, USPS formally closed  about 440 post offices and other retail facilities, more than half of which  USPS had placed on emergency suspension. A post office can be placed on  emergency suspension due to circumstances such as a natural disaster,  sudden loss of the post office building lease when no suitable alternative  quarters are available, or severe damage to or destruction of the post office  building. An emergency suspension is one of three circumstances that may  prompt USPS to initiate a feasibility study to determine whether to close a  post office. The other two are (1) a postmaster vacancy and (2) special  circumstances such as the incorporation of two communities into one.  USPS plans to close 311 post offices in fiscal year 2004 that were placed on  emergency suspension between February 1983 and June 2003. An  additional 65 post offices that were placed on emergency suspension  between August 2002 and November 2003 are not scheduled to close. USPS  has reported that post office closures will continue, and that in a normal  year about 100 to 200 small, rural post offices are closed when the  communities in which these offices are located essentially disappear.
According to USPS, it has also adjusted hours at existing post offices from  time to time to reflect customer demand. Although USPS could not provide  information on the number of post offices where changes in hours  occurred in fiscal year 2003, it did provide a description of how hour  adjustments are made. According to USPS officials, postmasters are  responsible for establishing window service hours based on the needs of  the community within the funding resources. Officials noted that they  periodically assess the number of transactions and customer visits  throughout the day to determine the appropriate hours, and that hours may  be extended or shortened in response to customer demand. USPS reported  that its efforts to increase efficiencies in its retail area have resulted in a  decrease of almost 5 million workhours from fiscal years 2002 to 2003.
section_title: Key Issues Include Delivery Inconsistencies and the Uncertain Future of Retail Network
paragraphs: USPS and the President’s Commission both have recognized the need for  establishing a postal network that is capable of providing universal service  in an efficient and cost-effective manner. The actions identified by USPS  that were discussed in the previous section illustrate that future service  decisions are being planned with a focus on increasing efficiency and  customer service. According to surveys conducted both by USPS and for  the President’s Commission, customers are generally satisfied with the  services provided by USPS. However, when issues are raised by postal  stakeholders, including Members of Congress, customers, and USPS  employees, they generally relate to inconsistent delivery services and  limited communication related to planned changes to the retail network.  USPS has also raised issues about legal requirements and practical  constraints that limit its flexibility to make changes to the postal network.  Progress toward optimizing the postal retail network will require USPS to  collaborate and communicate more effectively with stakeholders in order  to raise their confidence that USPS’s actions will result in improved  customer service and more cost-efficient operations.
subsections: section_title: Customer Satisfaction and Issues
paragraphs: Data reflect that customers are generally satisfied with the services  provided by USPS. USPS customer satisfaction data showed that 93  percent of households nationwide continue to have a positive view of  USPS. USPS’s Customer Satisfaction Measurement survey gathers  information from households and businesses throughout the country, and  the residential survey includes questions on such topics as mail delivery  service, retail options, time waiting in line at post offices, and USPS  advertising. A survey was also conducted as part of the President’s  Commission’s work to determine the public perception of USPS. This  survey reported that customers throughout the country, including those in  cities and rural areas, have a favorable view of USPS.
Although it is reported that overall customer satisfaction is high, when  customers do raise concerns, many relate to inconsistencies in delivery  services and changes in access to retail services. For example, in the first  2 quarters of fiscal year 2004, USPS’s customer telephone system— Corporate Customer Contact—documented over 1.3 million calls that  raised customer issues. As table 6 shows, these issues fell into five general  categories. The delivery/mail pickup category contained the most customer  complaints with over 88 percent of the total customer issues. These calls  included issues about late deliveries, changes in the location of the  customers’ deliveries, and misdeliveries.
We reviewed a sample of letters received by Members of Congress involved  in the oversight of USPS in 2002 and 2003. Of the 134 letters that we  reviewed, the most common delivery-related concerns pertained to the  mode of delivery that was used and mail arriving late or at inconsistent  times. On the retail side, the issues raised most frequently were concerns  about potential post office closings or relocations. Several customers  wrote that closing or relocating post offices would make it difficult or  inconvenient for them to access retail postal services.
section_title: Congressional Issues
paragraphs: In addition to constituent letters containing specific questions about USPS  operations, Congress has raised long-standing issues about the basic  provisions of universal service and retail access, particularly to customers  in rural areas. The Postal Reorganization Act contained specific provisions  requiring that effective postal services would be ensured to residents of  both urban and rural communities. Congress had additional concerns  about community involvement in decisions to close or consolidate post  offices. In 1976, it amended the Postal Reorganization Act and established  specific requirements for USPS when attempting to close a post office,  including that USPS must consider the effects on the community served,  the employees of the facility, and economic savings to USPS that would  result from the closure, as well as provide notice to customers. This  amendment sought to involve communities in decisions, which would help  to ensure that these decisions were made in a fair, consistent manner. The  amendment also established an appeals process to the PRC to allow for  independent review of decisions to close or consolidate post offices.  Congress has long included language in USPS annual appropriations  legislation forbidding the closure or consolidation of small, rural post  offices.
The closure requirements added by this amendment, however, did not  apply to postal facilities that were to be expanded, relocated, or newly  constructed, and Congress remained concerned that communities were not  sufficiently involved in decisions regarding their post offices. In 1998, USPS  responded to these concerns by establishing regulations relating to the  expansion, relocation, or new construction of post offices that required  local officials and citizens to be notified, provided affected customers with  a chance to provide comments, and required USPS officials to consider this  community input. However, postal facilities placed in emergency  suspension were not subject to the post office closure or consolidation  requirements. A 1999 congressional hearing focused on USPS’s closure  process when some stakeholders raised concerns that USPS might be using  its emergency suspension procedures to avoid post office closure  requirements. We issued a report on emergency suspensions in 1997 and  found that between the beginning of fiscal year 1992 through March 31,  1997, USPS had suspended the operations of 651 post offices, some of  which had been in suspension over 10 years. After USPS lifted its 1998  moratorium on closures in 2003, USPS began to close most of its  suspended post offices.
Concerns remain about the extent to which customers are included in retail  decisions as evidenced by the fact that current Members of Congress  continue to introduce legislation related to USPS’s process for closing post  offices and ensuring that communities are involved in the decision-making  process.
section_title: USPS Employee Issues
paragraphs: Employee groups are concerned with USPS’s attempts to make changes to  the postal network. For example, these groups have raised issues about the  perceived lack of communication from USPS about how it makes these  decisions. Carrier unions have also raised issues related to actions taken by  USPS to establish and categorize carrier routes. Carrier compensation  represents a significant portion of the total delivery costs, which is a key  consideration in USPS’s delivery route decisions. For a number of years,  USPS, the NALC, and the NRLCA have had a continuing dispute over the  assignment of work jurisdictions for mail delivery. These disputes pertain  to the conversion of city delivery to rural delivery, or vice versa, and the  assignment of new deliveries (whether a new route will be a city route or a  rural route). There were an estimated 1,300 disputes at the national and  local levels related to this issue at the end of 2003. USPS and the two  unions established a joint task force in May 2003 to expedite resolution of  outstanding city/rural jurisdictional disputes. Furthermore, additional  disputes regarding the process for conducting mail counts and route  inspections have also been raised. Mail counts and route inspections are  key factors in determining carrier duties and compensation, and thus total  delivery costs. Mail counts and route inspections are used to identify the  amount of mail sorted and handled by carriers during an average workday  and what determines the efficiency of the current route structure.
section_title: USPS Issues
paragraphs: USPS has raised issues about its lack of flexibility to make necessary  changes to its delivery and retail networks. Changes to USPS’s retail  infrastructure are limited by both legal requirements and practical  constraints. As previously mentioned, USPS by law cannot close a small  post office solely because it is operating at a deficit. Furthermore, Members  of Congress and other stakeholders have often intervened in the past when  USPS has attempted to close post offices or consolidate postal facilities.  Proposed post office closures have provoked intense opposition because  local post offices are sometimes viewed as (1) a critical means of obtaining  ready access to postal retail services, (2) a part of American culture and  business, and (3) critical to the viability of certain towns or central  business districts. In regards to its delivery network, USPS appropriations  acts have included provisions on 6-day-a-week delivery and rural mail  service, and there is strong stakeholder opposition to cuts in the frequency  or quality of postal services. The President’s Commission agreed that USPS  might need additional flexibility as part of establishing the proper  configuration of a 21st century postal network; however, the commission  stated that mechanisms are needed to ensure accountability and oversight.
section_title: Retail Optimization Communication Issues
paragraphs: The Postmaster General has stated that without greater flexibility, it may  become increasingly difficult for USPS to continue achieving cost savings,  and that if USPS is unable to significantly restrain its costs, it may have to  reconsider universal service as it is provided today. Although USPS faces  some constraints to making changes, the previous section of this report  illustrates that there are actions USPS could take to improve efficiency in  the delivery and retail areas while improving customer service. For  example, low-cost retail alternatives, such as the Internet, provide USPS  with an opportunity to enhance customer access nationwide, while at the  same time offering cost-effective and convenient ways to provide service.  However, without more information about how USPS will make decisions  related to changing its postal network, including closures or consolidations  of existing facilities, it is difficult for customers to understand how they  may be affected by these decisions. It is particularly important that  customers in rural areas, who may be more dependent on their local post  offices, are informed about how they may be affected by these decisions.
We agree that actions are needed to restrain costs and that some legal and  practical restraints limit USPS’s flexibility to make changes to its network.  However, USPS’s communication with Congress and stakeholders about  what it intends to do and how it intends to optimize its retail network is  important so that stakeholders will have more confidence in USPS’s  decisions. Stakeholders, who are a critical component of implementing  successful changes, have raised concerns about potential changes to  USPS’s network. Specifically, as previously mentioned, stakeholders have  been concerned about a perceived lack of communication throughout  USPS’s decision-making process. Examples include insufficient  information regarding potential changes such as closing post offices or  making adjustments to post office hours. Furthermore, recent postal  reform legislation reflects concerns about the future provision of delivery  and retail services. Both the House and Senate postal reform legislation  introduced in May 2004—The Postal Accountability and Enhancement Act,  H.R. 4341 and S. 2468—included provisions that required a study of  universal postal service and what the future of universal service may entail.  The Senate bill required USPS to provide Congress with a discussion of  potential changes to its infrastructure, including its delivery and retail  networks. This proposed plan provides an opportunity for USPS to provide  Congress with additional information that will facilitate better  understanding of what USPS hopes to accomplish through its optimization  efforts and how it plans to make its decisions in this area.
We have previously reported on the importance of keeping Congress and  stakeholders informed throughout the decision-making process to  successfully transform the Postal Service. Last November, we  recommended that USPS develop an integrated plan to optimize its  infrastructure and workforce, in collaboration with its key stakeholders,  and make the plan available to Congress and the public. USPS agreed with  this recommendation and in January 2004 presented its Infrastructure and  Workforce Rationalization Plan to the House and Senate oversight  committees. The plan included a section on improving its retail network by  increasing access and customer convenience in a cost-efficient manner.  Although this plan included a general discussion of initiatives that USPS is  planning for its retail and delivery network, it did not explain how USPS  planned to make decisions—that is, what specific criteria would be used as  the basis for USPS decisions. For example, USPS has discussed general  principles that it has established as a basis for its retail optimization  strategy as outlined in its Transformation Plan and Transformation Plan  Update. We previously discussed these principles, and they included  targeting underserved areas, particularly in high-growth areas, and  replacing redundant, low-value access points with alternative access  methods. However, the plan did not discuss how USPS would define  “underserved” areas for determining where new self-service options are to  be located, or “redundant, low-value access points” that are to be replaced.  It is not clear if USPS has consulted its customers, including those in rural  areas, in developing its network optimization plans to determine their  needs, their preferences on retail alternatives, and which postal facilities  may be needed to provide postal services. Further, it is not clear if USPS’s  optimization strategy related to removing redundant or excess postal  facilities would follow the existing process for closing post offices, which  essentially is a local decision in response to local circumstances, such as a  postmaster vacancy, lease expiration, building damage, or an emergency. If  such an incremental approach based on local decisions is used to  implement USPS’s retail optimization strategy, it is not clear that the  implementation would lead to the desired result of a systemwide optimal  network overall.
section_title: Conclusions
paragraphs: USPS’s retail optimization strategy could be an opportunity for a “win-win”  outcome for both USPS and its customers, including those in rural areas, in  that USPS could reduce its costs while at the same time improving access  for its customers. According to USPS, it is already in the process of  providing its customers with greater access to its services through a variety  of new, more convenient alternatives. USPS has also initiated efforts that  have increased efficiencies and cut costs and plans further actions in the  future. However, many stakeholders, including Members of Congress, are  concerned about the limited information and communication USPS has  provided regarding its network optimization plans and how customers will  be affected by its proposed changes. Without more information about how  USPS will make decisions related to changing the current postal network,  including closures or consolidations of existing facilities, it will be difficult  for customers to understand how they may be affected—particularly those  in rural areas who may be more dependent on their local post offices.
Effective communication is needed to demonstrate that USPS wants to  partner with its customers in communities nationwide to provide more  convenient and cost-effective delivery and retail services and to preserve  post offices needed to support universal service. Improved transparency  and accountability mechanisms are also needed to raise stakeholder  confidence that decisions will be made in a fair, rational, and fact-based  manner. Such mechanisms could include a clear process to ensure that key  stakeholders are consulted and properly informed of decisions that may  affect them. Increasing communication and collaboration with key  stakeholders may also help facilitate better understanding of the different  challenges and needs facing USPS and its customers in urban and rural  areas, the rationale for decisions, the cost implications related to budget  and rate decisions, and the trade-offs involved with actions to achieve a  more efficient and effective network.
section_title: Recommendation for Executive Action
paragraphs: To facilitate USPS’s progress in implementing its planned actions aimed at  improving efficiency in its postal network while increasing customer  service, we recommend that the Postmaster General provide improved  transparency and communication to inform Congress and other  stakeholders of the actions it plans to take regarding its retail optimization  strategy, including (1) the criteria USPS will use to make decisions related  to changing its retail network; (2) the process it will use to communicate  with postal stakeholders throughout the decision-making process; (3) the  impact on customers, including those in rural areas; and (4) the time  frames for implementing all phases of its retail optimization initiative.
section_title: Agency Comments and Our Evaluation
paragraphs: We received written comments on a draft of this report from the Acting  Vice President of Delivery and Retail for USPS in a letter dated June 30,  2004. USPS’s comments are summarized below and reprinted in appendix  III. USPS officials also provided technical and clarifying comments, which  were incorporated into the report where appropriate. USPS’s letter  concurred with “the spirit of the report’s findings” and acknowledged that  USPS must continue to take steps to improve the efficiency and  effectiveness of its delivery and retail networks. In response to the four  specific provisions included in our recommendation, USPS stated the  following:  The criteria used to make retail decisions vary because retail  optimization is a dynamic and evolving process, and the key to making  any postal decision is quality service to customers. There are, however,  specific criteria for certain elements of the retail network (e.g., 300  books of stamps must be sold by the retailer each month in order to  participate in the consignment program).
USPS will continue to advise postal stakeholders (e.g., congressional  staff, management associations, labor unions, and employees) of  changes that affect the retail network.
It is USPS’s policy to notify customers of changes that impact their  services. USPS will review how best to communicate those types of  changes to customers and develop a process for the field to notify  headquarters of changes in operating hours that could potentially  impact the community.
The retail optimization initiative does not have a fixed time frame  because it is an evolutionary process. As such, USPS said that “it would  be impossible to provide a time frame for implementing all phases of the  retail optimization initiative.”
We agree that the retail optimization effort is a dynamic and evolving  process, and that the actions described by USPS to improve  communication with its local districts and other stakeholders about  changes to the retail network are a step in the right direction. However,  even though there are constant changes in the retail network, it is  important for stakeholders to feel confident that USPS’s retail decisions are  made in a fair, rational, and fact-based manner. Therefore, we continue to  believe that establishing and communicating the criteria that provide the  basis for USPS’s retail decisions would help to raise this level of  confidence. Furthermore, although USPS says it has not identified a fixed  time frame for its retail optimization efforts because it is an evolutionary  process, this does not mean that time frames for specific projects or  initiatives are not needed. Time frames can, and should, be established for  the different phases of USPS’s retail initiatives to provide postal  stakeholders with information on when these initiatives will be deployed so  that interested parties, such as mailers, can determine the implications for  their own business plans. In addition, time frames are needed so that USPS  and stakeholders can evaluate the performance of these initiatives and how  they fit into the network optimization plans as a whole, including the  potential impact on costs and rates.
We will send copies of this report to the Ranking Minority Member of the  Senate Committee on Governmental Affairs, the Chairmen and Ranking  Minority Members of the House Committee on Government Reform and the  House Special Panel on Postal Reform and Oversight, Senator Thomas R.  Carper, the Postmaster General, the Chairman of the Postal Rate  Commission, and other interested parties. We will also make copies  available to others on request. In addition, this report will be available at no  charge on GAO's Web site at http://www.gao.gov.
If you have any questions about this report, please contact me at (202) 512- 2834 or at goldsteinm@gao.gov. Key contributors to this assignment were  Teresa Anderson, Joshua Bartzen, and Heather Halliwell.
section_title: Objectives, Scope, and Methodology
paragraphs: To meet our first objective, which was to provide information on the U.S.  Postal Service’s (USPS) policies, procedures, and practices for providing  rural delivery services, and how they compare with those in urban areas,  we discussed USPS’s basis for providing delivery and retail services, the  legal framework under which these decisions are made, and the process  used to carry out these decisions with USPS officials. We supplemented  this information with (1) USPS documents and manuals describing letter  carrier duties and the roles of USPS officials in managing delivery services  and (2) USPS operational guidance for providing service, including  establishing delivery routes and locations of deliveries, retail alternatives,  and services/locations of these alternatives. Also, because USPS is subject  to legal and statutory considerations when making retail and delivery  decisions, we reviewed the applicable statutes that establish USPS’s  mission and role as a provider of universal postal service and the collective  bargaining contracts established with its two sets of bargaining  employees—the National Rural Letter Carriers Association and the  National Association of Letter Carriers. We discussed USPS’s current  policies and procedures with various USPS officials who were  knowledgeable about the retail and delivery networks, as well as with letter  carrier and postmaster representatives and Postal Rate Commission  officials. We obtained, reviewed, and analyzed delivery and retail data  pertaining to routes, delivery points, and retail network from various  sources, including USPS officials, the Annual Report, and the  Comprehensive Statement of Operations. We assessed the reliability of  data provided by USPS by reviewing the data for inconsistencies and  checking for duplicate or missing values. In those cases where we found  discrepancies, we worked with USPS to address the problems. We  determined that these data were sufficiently reliable for the purposes of  this report.
To meet the second objective, which was to discuss changes USPS is  making, and planning to make, related to providing postal services to rural  areas and the potential impact of these proposed changes, we reviewed,  analyzed, and discussed with USPS officials actions that were planned as  part of its Transformation Plan and its related updates, growth plans,  operational strategies, Infrastructure and Workforce Rationalization plan,  as well as the recommendations to USPS as part of the President’s Commission on the United States Postal Service (the President’s  Commission) report.
To meet our third objective of identifying issues that USPS may need to  consider when making decisions related to providing postal services in  rural areas, we interviewed various USPS officials, such as retail and  delivery managers, customer contact representatives, and administrators  of the Customer Satisfaction Management Survey. To gather additional  information on stakeholder issues and preferences, we interviewed  representatives from the letter carrier and postmaster groups, analyzed  stakeholder comments raised before the President’s Commission, reviewed  the Hart Study that was conducted on behalf of the commission, reviewed  USPS documentation related to its planned actions, and examined  newspaper reports of customer concerns about changes in delivery and  retail access. Due to the current legislation proposed in both houses of  Congress, we reviewed this proposed legislation as well the pertinent  legislative history of congressional concerns in the delivery and retail  areas.
To gain an additional understanding of customer issues with USPS, we met  with USPS Congressional Relations staff to gather information on the types  of written customer inquiries that are sent to Members of Congress. These  staff provided us with a sample of letters related to retail and delivery  issues that were sent to Members of Congress who then forwarded these  concerns to USPS for resolution. USPS established categories for  documenting these issues (e.g., delivery service, delivery method, and retail  service). We requested copies of letters in selected retail and delivery  categories that in 2002 and 2003 were sent to Members of Congress who  provided oversight of USPS. We analyzed these letters and established our  own set of delivery and retail categories on the basis of information  presented in the letters. We felt it was necessary to establish our own set of  categories because some letters contained issues that were raised across  categorization areas.
section_title: Number of Post Offices by State, Year-end 2003
paragraphs: Contract stations/  branches (and  Community Post  Offices)
Contract stations/  branches (and  Community Post  Offices)
section_title: Agency Comments from the United States Postal Service
subsections: section_title: GAO’s Mission
paragraphs: The Government Accountability Office, the audit, evaluation and  investigative arm of Congress, exists to support Congress in meeting its  constitutional responsibilities and to help improve the performance and  accountability of the federal government for the American people. GAO  examines the use of public funds; evaluates federal programs and policies;  and provides analyses, recommendations, and other assistance to help  Congress make informed oversight, policy, and funding decisions. GAO’s  commitment to good government is reflected in its core values of  accountability, integrity, and reliability.
section_title: Obtaining Copies of GAO Reports and Testimony
paragraphs: The fastest and easiest way to obtain copies of GAO documents at no cost  is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts  newly released reports, testimony, and correspondence on its Web site. To  have GAO e-mail you a list of newly posted products every afternoon, go to  www.gao.gov and select “Subscribe to Updates.”
subsections: section_title: Order by Mail or Phone
section_title: To Report Fraud, Waste, and Abuse in Federal Programs
section_title: Congressional Relations
section_title: Public Affairs