U.S. Postal Service: Delivery Performance Standards, Measurement, and Reporting Need Improvement
Published: 2006-07-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: U.S. Postal Service (USPS) delivery performance standards and results, which are central to its mission of providing universal postal service, have been a long-standing concern for mailers and Congress. Standards are essential to set realistic expectations for delivery performance and organize activities accordingly. Timely and reliable reporting of results is essential for management, over-sight, and accountability purposes. GAO was asked to assess (1) USPS's delivery performance standards for timely mail delivery, (2) delivery performance information that USPS collects and reports on timely mail delivery, and (3) progress made to improve delivery performance information.
section_title: What GAO Found
paragraphs: USPS has delivery standards for its major types of mail, but some have not been updated in a number of years to reflect changes in how mail is prepared and delivered. These outdated standards are unsuitable as benchmarks for setting realistic expectations for timely mail delivery, measuring delivery performance, or improving service, oversight, and accountability. USPS plans corrective action to update some standards. Also, some delivery standards are not easily accessible, which impedes mailers from obtaining information to make informed decisions. USPS does not measure and report its delivery performance for most types of mail. Therefore, transparency with regard to its overall performance in timely mail delivery is limited. Representative measures cover less than one-fifth of mail volume and do not include Standard Mail, bulk First-Class Mail, Periodicals, and most Package Services. Despite recent disclosures on its Web site, USPS's reporting is more limited than the scope of measurement. Without sufficient transparency, it is difficult for USPS and its customers to identify and address delivery problems, and for Congress, the Postal Rate Commission, and others to hold management accountable for results and conduct independent oversight. Progress to improve delivery performance information has been slow and inadequate despite numerous USPS and mailer efforts. Some impediments to progress include USPS's lack of continued management commitment and follow through on recommendations made by joint USPS/mailer committees, as well as technology limitations, data quality deficiencies, limited mailer participation in providing needed performance data, and costs. Although USPS has initiatives to improve service and better track mail through its mail processing system, USPS has no current plans to implement and report on additional representative measures of delivery performance. USPS's leadership and effective collaboration with mailers is critical to implementing a complete set of delivery performance measures.

section_title: Letter
paragraphs: The U.S. Postal Service’s (USPS) mail delivery standards and performance,  which are central to its mission of providing postal services to all  communities, have been long-standing concerns for mailers and customers  who receive mail. Delivery performance standards (delivery standards) for  on-time delivery of mail enable USPS, mailers, and customers to set  realistic expectations for delivery performance, such as the number of  days mail takes to be delivered, and to organize their activities  accordingly. USPS and others rely on information about delivery  performance results to understand whether delivery standards are being  met and what is driving performance—that is, identifying which factors  are contributing to both successful and problem areas. This information is  vital for management, oversight, and accountability purposes. Mailers’  concerns revolve around whether standards, measurement, and reporting  are complete, transparent, and useful. These concerns include whether  USPS’s delivery standards reflect its operations and whether they can be  used as a benchmark for measuring performance for all major types of  mail; whether delivery performance measurement is adequate for USPS to  set goals, manage its operations, and improve its delivery performance;  and whether the reporting of delivery performance is adequate for various  stakeholders, such as mailers who need this information for business  planning, as well as USPS’s Board of Governors and the Congress, who  need this information to fulfill their respective oversight and  accountability responsibilities. Delivery performance information also  helps the independent Postal Rate Commission (PRC) review proposed  rates and render advisory opinions on USPS proposals that USPS expects  to affect the quality of postal services nationwide or on a substantially  nationwide basis.
There is little statutory guidance on how USPS establishes delivery  standards. However, USPS is subject to statutory requirements related to  performance measurement and reporting. Since 1976, Title 39 of the U.S.  Code has required USPS to submit an annual Comprehensive Statement to  its congressional oversight and appropriations committees that must  include “data on the speed and reliability of service provided for the  various classes of mail and types of mail service,” among other things. In  addition, the Government Performance and Results Act of 1993 (GPRA)  requires USPS to annually report to Congress and the public on its goals  and actual performance relative to these goals. Sponsors of postal reform  legislation have recognized concerns in the area of delivery standards,  measurement, and reporting; and the House and Senate have passed postal  reform legislation that would clarify USPS’s delivery standards and create  a strong postal regulator who would administer statutory obligations for  USPS to annually report, for most types of mail, the level of service  provided “in terms of speed of delivery and reliability.” The regulator  would be required to annually determine compliance with this reporting  requirement and would have the authority to obtain court orders to  enforce compliance as well as to impose fines in cases of deliberate  noncompliance.  1.  delivery standards for the timely delivery of mail that USPS has  2.  delivery performance information on timely delivery of mail that USPS  measures and reports, and  3.  progress USPS has made in improving its delivery performance  information.
To address these objectives, we based our assessment on applicable  laws—such as laws related to USPS’s mission to provide prompt, reliable,  and effective universal postal service, including the prompt and  expeditious delivery of mail, and statutory reporting requirements related  to USPS’s delivery performance. We also developed criteria based on  practices used by high-performing organizations, including practices for  performance management identified by the American Productivity and  Quality Center (APQC), a nonprofit organization that studies the best  practices of top-performing organizations and benchmarks business  performance to help organizations improve their quality and productivity.  In addition, we based our criteria for practices used by high-performing  organizations on our past work on USPS and other leading organizations.
Our criteria focused on the completeness, transparency, and usefulness of  the delivery standards, measures, and results for various types of mail. We  obtained information primarily from USPS documentation, including its  current delivery standards and other material provided in response to our  requests, publicly available USPS reports, documents filed in PRC  proceedings, and other USPS material available on its Web site. We also  obtained documentation from other sources, such as reports on joint  USPS-mailer committees, articles, and material provided to us by mailers.  We interviewed USPS officials responsible for USPS delivery performance  information and postal stakeholders, including representatives of mailer  groups, individual mailers, PRC, and PRC’s Office of the Consumer  Advocate, which is charged with representing the interests of the general  public. We conducted a data reliability assessment of USPS delivery  performance information that was sufficient for the purposes of our  review. More details about our objectives, scope, and methodology are  included in appendix I. Our work was conducted from August 2005 to July  2006 in accordance with generally accepted government auditing  standards.
subsections: section_title: Background
paragraphs: USPS is an independent establishment of the executive branch mandated  by law to provide postal services to “bind the nation together through the  personal, educational, literary, and business correspondence of the  people.” Established by the Postal Reorganization Act of 1970, USPS is a  vital part of the nation’s communications network, delivering more than  200 billion pieces of mail each year. USPS is required to provide “prompt,  reliable, and efficient services to patrons in all areas” and “postal services  to all communities,” including “a maximum degree of effective and regular  postal services to rural areas, communities, and small towns where post  offices are not self-sustaining.” In determining all policies for postal  services, USPS is mandated to “give the highest consideration to the  requirement for the most expeditious collection, transportation, and  delivery of important letter mail.” Also, in selecting modes of  transportation, USPS is mandated to “give highest consideration to the  prompt and economical delivery of all mail.” More generally, USPS is  mandated to provide adequate and efficient postal services that meet the  needs of different categories of mail and mail users.
USPS has designated improving service as one of its four goals in its  Strategic Transformation Plan. USPS’s strategy to improve service is to  “provide timely, reliable delivery, and improved customer service across  all access points.” Specifically, USPS plans to improve the quality of postal  services by continuing to focus on the end-to-end service performance of  all mail. The quality of mail delivery service has many dimensions,  including the delivery of mail to the correct address within a time frame  that meets standards USPS has established for timely delivery. USPS also  plans to ensure that postal products and services meet customer  expectations and that all customer services and forms of access are  responsive, consistent, and easy to use. USPS has long recognized the  importance of customer satisfaction and measures the satisfaction of its  residential and business customers on a quarterly basis. USPS reports that  its customer satisfaction measurement, which is conducted by the Gallup  Organization, provides actionable information to USPS managers by  identifying opportunities to improve overall customer satisfaction. In  addition to gauging overall customer satisfaction, USPS measures  customer satisfaction related to specific postal functions such as mail  delivery and retail service. As USPS recognizes, dissatisfied customers can  seek and find alternatives to using the mail. USPS faces growing  competition from electronic alternatives to mailed communications and  payments as well as private delivery companies. In this challenging  environment, establishing and maintaining consistently high levels of  delivery service are critical to success.
Recognizing the importance of the timely delivery of mail, USPS has  integrated performance targets and results for some types of mail into its  performance management system. This system is used to establish pay-for- performance incentives for postal management employees. As we have  reported, high-performing organizations use effective performance  management systems as a strategic tool to drive change and achieve  desired results. Among the key practices used is aligning individual  performance expectations with organizational goals by seeking to create  pay, incentive, and reward systems that clearly link employee knowledge,  skills, and contributions to organizational results. Further, high- performing organizations often must fundamentally change their cultures  so that they are more results oriented, customer focused, and  collaborative in nature. As we have reported, the benefit of collecting  performance information is only fully realized when this information is  actually used by managers to make decisions oriented toward improving  results. Performance information can be used to identify problems and  take corrective action; develop strategy and allocate resources; recognize  and reward performance; and identify and share effective approaches.  Practices that can contribute to greater use of performance information  include demonstrating management commitment; aligning agencywide  goals, objectives, and measures; improving the usefulness of performance  information; developing capacity to use performance information; and  communicating performance information clearly and effectively.
section_title: Some USPS Delivery Standards Are Not Useful and Transparent and Do Not Reflect Current Mail Operations
paragraphs: Some USPS standards for timely mail delivery are inadequate because of  limited usefulness and transparency. In general, these standards have not  kept up with changes in the way that USPS and mailers prepare and  process mail for delivery. Outdated standards are unsuitable as  benchmarks for setting realistic expectations for timely mail delivery,  measuring delivery performance, or improving service, oversight, and  accountability.
According to USPS, service standards represent the level of service that   USPS strives to provide to customers. These standards are considered to  be one of the primary operational goals, or benchmarks against which  service performance is to be compared in measurement systems. USPS  has established standards for the timely delivery of each type of mail;  these specify the maximum number of days for “on-time” delivery based  on the time of day, the location at which USPS receives the mail, and the  mail’s final destination. For example, USPS standards for 1-day delivery  require the mail to be received by a specified cutoff time on the day that  the mail is accepted, which varies depending on geographic location and  where the mail is deposited (e.g., in a collection box, at a post office, or at  a mail processing facility). In most cases, 1-day mail deposited before the  cutoff time is considered to be delivered on time if it is delivered on the  next delivery day, which generally excludes Sundays and holidays. USPS  delivery standards vary according to the priority of delivery. Express Mail  has the highest priority, followed by Priority Mail, other First-Class Mail,  Periodicals, Package Services (e.g., packages sent via Parcel Post), and  Standard Mail.
Postal officials, including the Postmaster General, told us that differences  in postage rates for different types of mail reflect differences in delivery  standards and priority. The Postmaster General noted that variability in  the delivery standards and timing of delivery is built into USPS’s pricing  structure. He noted that lower-priced mail with lower delivery priority  receives more variable delivery; this includes mail such as Standard Mail  which receives discounts for presorting by ZIP Code and destination entry  that is generally closer to where the mail is delivered. For example, USPS  can defer the handling of Standard Mail as it moves through its mail  processing, transportation, and delivery networks. Thus, some pieces of a  large mailing of Standard Mail may be delivered faster than others. The  Postmaster General explained that this variability of delivery is consistent  with the relatively low rates afforded to mailers of Standard Mail, who pay  lower rates than mailers of First-Class Mail.
In addition, standards for types of mail within each class can vary. For  example, Parcel Select, a type of Package Service, has a faster delivery  standard than other Package Services because it is made up of bulk  shipments of packages entered into USPS’s system close to the final  destination. Delivery standards for each class and type of mail are  summarized in table 1 and described in greater detail in appendix II.
subsections: section_title: Some USPS Delivery Standards Have Limited Usefulness
paragraphs: Some USPS delivery standards lack usefulness—notably, the delivery  standards for Standard Mail, Periodicals, and most Package Services  mail—because they have not been systematically updated in many years  and do not reflect USPS’s operations or intended service. These standards  are loosely based on distance and have tended to remain static despite  changes in USPS networks, operations, and operational priorities.
subsections: section_title: Delivery Standards for Standard Mail
paragraphs: The delivery standards for Standard Mail are outdated. Although delivery  standards are supposed to represent the level of delivery service USPS  strives to provide to customers, differences between delivery standards  and operational policies and practices for delivery service are evident for  Standard Mail. For example, USPS operational policies state that Standard  Mail entered at the delivery unit, where carriers pick up mail for final  delivery, should be delivered in 2 days, whereas the standards call for such  delivery in 3 days. Also, depending on mail preparation, such as presorting  and destination entry, mail can be delivered faster than the standard.  These differences can impede clear communication to mailers concerned  with setting realistic expectations for when Standard Mail will be  delivered and determining how to maximize the value of their mail.  Correctly anticipating when advertising mail will be delivered is important  to business planning and profitability. For example:    Local retailers, ranging from department stores to restaurants, need  realistic expectations as to when advertising mail will be delivered in  order to effectively promote sales and plan for the appropriate level of  staffing and inventory. To maximize customer response, retailers send  advertising mail so that it will be received shortly before a sale—soon  enough for potential customers to plan to shop during the sale, but not so  early that they will forget about the sale. Also, if the advertising is  delivered far in advance of a weekly sale, it can generate demand that is  difficult to meet with available resources.
Catalog companies also need realistic expectations about when catalogs  will be delivered in order to plan for call center staffing and inventory.
Thus, reliable and predictable delivery of advertising mail helps businesses  efficiently schedule staff and inventory to respond to fluctuations in  demand. Anticipating the level of inventory has become more important  over time with the trend toward just-in-time inventory that helps minimize  storage and financing costs. However, the delivery standards for Standard  Mail are not adequate for advertisers to set realistic expectations for mail  delivery, in part because these standards do not reflect some operational  policies and practices that can lead to mail being delivered faster or  slower than the standards call for.
Substantial changes have occurred in how mailers prepare Standard Mail  and how USPS processes it, but these changes are not reflected in the  standards. Today, most Standard Mail is presorted and entered into the  postal system close to its destination. The degree of presorting and  destination entry alters the amount of handling it receives by USPS and  potentially speeds or slows delivery. For example:    Presorting: Beginning in 1979, USPS provided discounts to mailers who  reduce USPS’s processing costs by presorting their Standard Mail to the  level of carrier delivery routes—discounts extended in 1981 to Standard  Mail presorted to the level of individual ZIP Codes. In fiscal year 2005,  most Standard Mail was presorted by carrier routes (35 percent) or by  individual ZIP Codes or ZIP Codes starting with the first three digits (57  percent). Mail that is presorted by carrier route can move through USPS’s  system faster than mail that is presorted by groups of ZIP Codes because it  does not need as much handling by USPS. However, the delivery standards  for Standard Mail do not take presorting into account.
Destination entry: Starting in 1991, USPS gave destination entry discounts  for mailers that deliver their Standard Mail to a postal facility that  generally is closer to the mail’s destination, such as the delivery unit  facility where carriers pick up their mail or the local mail processing  center that forwards mail to these facilities. Mail that is entered at a  destination facility is delivered faster than other Standard Mail because it  avoids some USPS handling and USPS assigns a low priority to handling  Standard Mail. However, the impact of destination entry is not reflected in  the delivery standards. For example, the delivery standards continue to  call for delivering all Standard Mail in 3 days or more, whereas the Postal  Operations Manual states that Standard Mail that mailers enter at delivery  units should be delivered in 2 days.
USPS also works with mailers to deliver their Standard Mail within a range  of dates that they request. Advertising mailers can request that their  advertising be delivered within this range—known as the “in home” dates.  As mentioned earlier, predictable delivery helps advertisers to plan their  resources and inventory. Requesting “in home” dates may result in delivery  that is faster or slower than the standard. The Postal Operations Manual  states that in such cases, delivery units should attempt to meet the “in  home” dates rather than the delivery standards. According to USPS, its  delivery standards are supposed to be the benchmark against which  delivery performance is compared and reflects the level of service that  USPS strives to provide. In this case, however, the delivery standards for  Standard Mail would not be a suitable benchmark for measuring delivery  performance, because they do not reflect USPS operations.
USPS provided mailers with guidelines in 2000 that recognized that  Standard Mail can be delivered faster than the standard, depending on its  level of presorting, and on whether the mailers deliver it closer to its  destination. The guidelines presented a table for the speed of Standard  Mail delivery depending on how the mail was presorted and where it  entered the mail processing network. However, USPS did not consider  these guidelines to be part of its delivery standards for Standard Mail, and  according to USPS, these guidelines are now obsolete. Nevertheless, USPS  officials told us that USPS continues to maintain internal guidelines for the  desired delivery speed for Standard Mail, depending on its level of  presorting and where it enters the postal network.
In 1992, 1997, and 1999, various committees composed of USPS officials  and mailers recommended that delivery standards be improved for  Standard Mail and other types of mail. In 1999, a working group of USPS  officials and mailers recommended that the delivery standards for  Standard Mail be updated to reflect how it is presorted and where the mail  enters the postal system. USPS did not implement these 1999  recommendations and offered no explanation on why it did not. Then,  when we met with Postmaster General in June 2006, he told us that it  would be difficult for USPS to update its standards to reflect the wide  variety of differences in mail preparation and processing, and that it might  have an impact on the rates for some types of mail, to which he believes  the mailers would object. In contrast, the Association for Postal  Commerce (PostCom), a major mailer group, wrote the following to us in  March 2006: “It is PostCom’s belief that the development and publication  of service standards based on existing USPS operations and networks is a  critical first step toward the development of any service performance  measurement system. There is no barrier to moving forward with defining  service standards for all classes of mail.” PostCom noted it actively  supported the efforts of the 1999 working group, and said its  recommendations—which included calling for standards based on existing  mail processing and transportation environments, which for bulk mail  would also reflect mail preparation and entry point—“largely still apply.”
Because outdated delivery standards are an impediment to measuring and  improving delivery performance, updating these standards could help  increase the value of Standard Mail to businesses that mail advertising. As  previously noted, understanding when Standard Mail will be delivered  helps mailers send this mail so it will be delivered at what they consider to  be the optimum time and helps them to plan for staff and inventory. In  addition, updating the delivery standards for Standard Mail would provide  an appropriate benchmark for measuring Standard Mail delivery  performance.
section_title: Delivery Standards for Package Services
paragraphs: For some of the same reasons as Standard Mail, delivery standards are  likewise outdated for most Package Services mail. Delivery standards for  most Package Services also date to the 1970s and are generally distance- based. These standards are predicated on USPS’s national network of Bulk  Mail Centers (BMCs) that accept and handle packages. USPS told us that  the delivery standards for Package Services “are changed infrequently  since the BMC network has not been appreciably altered since its  inception in the 1970s.” Since the 1970s, USPS has implemented many  changes regarding the handling of packages, including discounts for  presorting Package Services items to the carrier route or ZIP Code, as well  as discounts for destination entry. However, these changes have not been  reflected in changes to the Package Services standards.
A noteworthy exception involves useful delivery standards that USPS  created for a specific type of Package Services mail called Parcel Select,  when it was introduced in 1999. These standards were updated in 2002.  USPS’s standards for Parcel Select differentiate speed of delivery by point  of entry, e.g., 1 day for entry at the destination delivery facility or 2 days  for entry at the mail processing center that forwards the parcels to the  delivery facility. These standards were intended to provide an appropriate  benchmark for delivery performance measurement in order to facilitate  efforts to improve the delivery performance for this mail. USPS  subsequently collaborated with officials of the Parcel Shippers Association  (PSA) to implement delivery performance measurement for Parcel Select  against these standards, and the results are factored into individual pay- for-performance incentives for many USPS managers.
Both USPS and PSA officials told us that incorporating delivery  performance results into these incentives—which was possible due to  useful performance standards and measures—was a primary reason why  on-time delivery performance has improved for Parcel Select. They said  that as a result of improved delivery performance, Parcel Select has been  able to maintain its viability as a low-cost alternative for lightweight  packages within the competitive packages market. In this regard, we have  also reported that both establishing and maintaining consistently high  levels of delivery service are critical to USPS’s success in an increasingly  competitive marketplace. Further, we have noted that USPS had lost  Parcel Post business to private carriers, who had come to dominate the  profitable business-to-business segment of the market because they  offered cheaper and faster service.
Parcel Select provides destination entry discounts for bulk mailings of  Parcel Post. Most of Parcel Select’s volume is tendered to USPS by a  handful of third-party consolidators who receive packages from multiple  companies and consolidate their volume to enable cost-effective  destination entry. By entering parcels closer to their destination, the  consolidators speed delivery and narrow the delivery window. However,  prior to measuring and improving the delivery performance of Parcel  Select, mailers considered Parcel Select to be a low-cost service with a  reputation for low quality delivery. The delivery performance data has  been used to identify delivery problems in a timely manner, such as  problems in timely delivery of Parcel Select in specific geographic areas,  so that corrective action could be taken to maintain and improve delivery  performance. USPS actions to improve the performance of Parcel Select  are consistent with practices we have reported are used by high- performing organizations: using performance information and  performance management systems to become more results oriented,  customer focused, and collaborative in nature; identify problems and take  corrective action; and improve effectiveness and achieve desired results.
section_title: Delivery Standards for Periodicals
paragraphs: As with Standard Mail and most Package Services, delivery standards are  outdated for Periodicals that are delivered outside the local area from  which they are mailed. The distance-based concept for Periodicals  standards has remained the same since the 1980s and does not reflect  mailers presorting mail by carrier route or ZIP Code or destination entry of  mail at destination facilities. Like Standard Mail, USPS told us that the  Periodicals delivery standards are meant to represent the maximum  service standard targets for mail that is not presorted. However, the  impact of presorting has not been incorporated into the Periodicals  delivery standards.
In contrast, to USPS’s credit, it has updated its 1-day delivery standards for  Periodicals delivered within the local area where they are mailed. Further,  it generally updates the standards at the same time for Periodicals and  First-Class Mail that originate and destinate in the same local area so that  the scope of 1-day delivery remains the same for both types of mail.
Looking forward, USPS plans to change the way its mail processing and  transportation networks handle Periodicals mail this summer, which USPS  officials said will lead to changes in some Periodicals delivery standards  so that they reflect current operations. They said that Periodicals that are  moved via ground transportation, which make up a majority of all  Periodicals volume, will be combined with First-Class Mail. As a result,  these Periodicals should receive comparable handling and faster delivery  times than is currently the case. According to Periodicals mailers,  inconsistent delivery performance that does not meet customer  expectations causes renewal rates to decline and leads to customer  service calls that are costly to handle. According to USPS officials,  implementation of these planned changes to postal operations and  standards can be expected to result in updating many of the specific  standards for Periodicals mailed between specific pairs of ZIP Codes.
section_title: Delivery Standards for Priority Mail
paragraphs: Some of the specific delivery standards for Priority Mail may also need to  be updated because they do not reflect USPS’s operations. According to  the Deputy Postmaster General, some Priority Mail delivery standards call  for on-time delivery of Priority Mail in 2 days, but it is often physically  impossible for USPS to meet these standards when that requires moving  the mail across the country. As we reported in 1993, officials of the Postal  Inspection Service questioned whether Priority Mail could be delivered  everywhere within the continental United States within 2 days, which was  then the delivery standard. USPS has since established 3-day delivery  standards for some Priority Mail, but these standards cover less than 5  percent of Priority Mail volume. USPS officials told us that USPS may  make changes to some of the specific Priority Mail standards for mail sent  between specific pairs of ZIP Codes so that the standards reflect USPS  operations.
section_title: Delivery Standards for First- Class Mail
paragraphs: USPS has updated its standards for First-Class Mail over the years with the  intent of reflecting its operations. However, questions have been raised in  PRC proceedings and advisory opinions about some of the changes. By  way of background, when USPS decides on a change in the nature of  postal services that will generally affect service on a nationwide or  substantially nationwide basis, USPS is required by law to submit a  proposal, within a reasonable time frame prior to its effective date, to PRC  requesting an advisory opinion on the change. In 1989, USPS submitted a  proposal to PRC for an advisory opinion that involved a national  realignment of the delivery standards for First-Class Mail. This realignment  involved downgrading the delivery standards for an estimated 10 to 25  percent of First-Class Mail volume, so that these standards would reflect  actual operations or planned changes to operations. In general, these  delivery standards were proposed to be downgraded by reducing the size  of 1-day delivery areas, thereby downgrading some mail to 2-day service,  and likewise reducing the scope of 2-day delivery, thereby downgrading  some mail to 3-day service. USPS also stated that it would make changes  to its operations, including moving some First-Class Mail by truck instead  of by air, and that it expected to provide more reliable service as a result.
PRC advised against adoption of USPS’s proposed national realignment,  explaining that its review suggested the realignment may be an excessive  reaction to what may be localized problems on a limited scale. PRC  questioned if the proposed realignment could bring about significant  improvement in delivery service commensurate with its effect on mail  users. However, PRC agreed that existing delivery standards could not be  met in certain areas, such as the New York City metropolitan area, and on  that basis, said that some specific localized changes to the service  standards to correct anomalies and major problem areas would be a  sensible path for USPS to pursue. USPS proceeded to implement a  national realignment to its First-Class Mail standards from 1990 to 1992.
In 2000 and 2001, USPS again changed many of its First-Class Mail  standards in a manner that USPS said would have a nationwide impact on  service, including downgrading some standards from 2 days to 3 days in  the western United States and upgrading other standards. USPS reported  that these changes were intended to provide consistent and timely delivery  service for 2-day and 3-day mail. USPS also reported that the changes  reflected a general trend toward making 2-day zones more contiguous,  more consistent with the “reasonable reach” of surface transportation  from each originating mail processing facility, and potentially less  dependent on air transportation—which had lacked reliability. USPS did  not seek a PRC opinion on these changes in the year before  implementation.
After a lengthy proceeding regarding the 2000 and 2001 changes, PRC  issued an advisory report earlier this year that suggested that USPS  reconsider its First-Class Mail standards, stating that the service resulting  from the realignment cannot be said to be sufficient to meet the needs of  postal patrons in all areas as required by law and that USPS did not  consistently adhere to the statutory requirement to give highest  consideration to expeditious transportation of important letter mail. PRC  urged USPS to give more effective public notice about First-Class Mail  delivery standards, such as through Web-site postings and collection box  labels. More generally, PRC also urged USPS to actively engage the public  in major policy decisions and fully inform the public about matters of  direct interest that affect USPS operations. PRC said that USPS, as a  government monopoly, has a positive obligation to learn the needs and  desires of its customers and to structure its products to meet them where  doing so is not inconsistent with reasonably feasible and efficient  operations.
In February 2006, USPS sought a PRC advisory opinion, which is pending,  in connection with USPS’s realignment of its mail processing and  transportation networks. USPS is currently planning and implementing a  nationwide realignment of its mail processing and transportation  networks. According to USPS, its long-term operational needs will be met  best if its mail processing network evolves into one in which excess  capacity is reduced and redundant operations and transportation are  eliminated. USPS stated that it is not proposing to change the long- standing delivery standard ranges for any particular mail class; however,  any changes to delivery standards that affect the expected delivery times  from origin to destination between particular 3-digit ZIP Code pairs will be  made incrementally as USPS implements changes to its networks. USPS  also stated that the overall magnitude and scope of potential service  standard upgrades and downgrades for any particular mail class cannot be  known until numerous feasibility reviews have been conducted and  operational changes implemented over the next several years. However,  USPS stated that it expected that changes to its delivery standards are  likely to be most pronounced for First-Class Mail and Priority Mail.
section_title: Delivery Standards for Express Mail
paragraphs: USPS has also made changes to its delivery standards for Express Mail to  reflect changes in operations. Similar to the delivery standards for First- Class Mail, those for Express Mail were discussed in a PRC proceeding  after USPS implemented changes to them. In April 2001, USPS reduced the  scope of the overnight delivery network for Express Mail sent on  Saturdays and the eve of holidays. According to USPS, it had contracted  with FedEx to provide more reliable air transportation for Express Mail;  but, because FedEx provided no service on Saturday or Sunday nights and  some federal holidays, USPS changed its delivery plans for mail pieces  accepted on Saturdays and the eve of holidays. Earlier this year, PRC  issued an advisory report that found the changes to the Express Mail  network had affected service on a substantially nationwide basis in 2001.  PRC criticized the lack of public notice before the changes were made, but  unlike its advisory opinions on changes to First-Class Mail standards, did  not criticize the changes that USPS made to its Express Mail standards.
section_title: Proposed Postal Reform Legislation and Delivery Standards
paragraphs: Over the past year, the House and Senate have passed postal reform  legislation that would clarify USPS’s delivery standards. The House-passed  legislation would require USPS to annually report its delivery standards  for most types of mail and the level of delivery service provided in terms of  speed and reliability. The Senate-passed legislation included more detailed  requirements regarding delivery service standards. This bill would require  USPS to establish “modern service standards” within 1 year after the bill is  enacted. These standards would have four statutory objectives: (1) to  enhance the value of postal services to both senders and recipients; (2) to  preserve regular and effective access to postal services in all communities,  including those in rural areas or where post offices are not self-sustaining;  (3) to reasonably assure USPS customers of the reliability, speed, and  frequency of mail delivery that is consistent with reasonable rates and best  business practices; and (4) to provide a system of objective external  performance measurements for each market-dominant product (e.g., mail  covered by the postal monopoly) as a basis for measuring USPS’s  performance. In addition, USPS would be required to take into account  eight statutory factors in establishing or revising its standards: (1) the  actual level of service that USPS customers receive under any service  guidelines previously established by USPS or service standards  established under the new statutory system; (2) the degree of customer  satisfaction with USPS’s performance in the acceptance, processing, and  delivery of mail; (3) the needs of USPS customers, including those with  physical impairments; (4) mail volume and revenues projected for future  years; (5) the projected growth in the number of addresses USPS will be  required to serve in future years; (6) the current and projected future costs  of serving USPS customers; (7) the effect of changes in technology,  demographics, and population distribution on the efficient and reliable  operation of the postal delivery system; and (8) the policies of Title 39 (i.e.,  the postal laws) and such other factors as USPS determines appropriate.  Like the House-passed bill, the Senate-passed bill would require USPS to  annually report on the speed and reliability of delivery of most types of  mail.
In explaining the rationale for these requirements regarding delivery  standards and service, sponsors of the Senate bill stated that the new  standards would improve service, be used by USPS to establish  performance goals, and continue to ensure daily delivery to every address,  thereby preserving universal service. A Senate committee report on an  earlier version of these requirements stated that they were intended to  ensure that the service USPS provides is consistent with the statutory  definition of universal service, as well as preserving and enhancing the  value of postal products. In this regard, the report expressed concern that  USPS may be tempted to erode service quality in an effort to cut costs, and  stated that the reporting requirements would provide information to  enable the postal regulator and all interested parties to evaluate the  provision of service, with the service standards serving as a benchmark for  measuring USPS’s performance.
section_title: USPS Delivery Standards Lack Adequate Transparency
paragraphs: Although USPS has recently provided information related to its delivery  standards in ongoing PRC proceedings, USPS has not made all of this  information easily accessible to all business mailers and the public. As a  result, some customers are hindered from making informed decisions  about different mailing options with varying rates and service, as well as  from assessing USPS’s delivery performance. Although USPS does have a  CD-ROM with information about its delivery standards that is freely  available to those who are aware of its existence, information about how  to order the CD-ROM is not easily accessible on its Web site. The CD-ROM  contains delivery standards for some types of mail, such as Standard Mail  and Periodicals, which are not available on its Web site. Looking forward,  USPS has the opportunity to further expand the accessibility of  information on its delivery standards, much as USPS has done to improve  the transparency of its financial information in recent years. For example,  in an ongoing PRC proceeding, USPS provided new narrative summaries  that explain its detailed standards; these summaries are posted on the PRC  Web site, but not on the USPS Web site.
section_title: USPS Measurement and Reporting Of Delivery Performance Information Is Inadequate
paragraphs: USPS’s delivery performance measurement and reporting is inadequate— in part because its delivery performance information is incomplete, since  representative measures of delivery performance do not cover most mail,  and in part because its reporting of this delivery performance information  is deficient (see table 2). USPS tracks some mail pieces for diagnostic  purposes, and plans to have more data available as it deploys automated  equipment to sort flat-sized mail into the order it is delivered. However, a  number of impediments have limited USPS’s ability to track mail. The  diagnostic data is not representative and does not amount to delivery  performance measurement. Although USPS recently added a section on  domestic delivery performance to its Web site, it does not provide  complete performance information for some types of mail. Without  complete information, USPS and mailers are unable to diagnose delivery  problems so that corrective action can be implemented. In addition,  stakeholders cannot understand how well USPS is fulfilling its basic  mission, nor can they understand delivery performance results and trends.  Deficiencies in measurement and reporting also impair oversight and  accountability by PRC and Congress.
subsections: section_title: USPS Delivery Performance Measurement Is Not Complete
paragraphs: USPS has not established a complete set of quantitative measures for  delivery performance, largely because its delivery performance  measurement covers less than one-fifth of its total mail volume—that is,  only Express Mail and parts of First-Class Mail, Priority Mail, Package  Services, and International Mail. USPS does not measure delivery  performance for the remaining volume, which includes Standard Mail,  bulk First-Class Mail, Periodicals, and most Package Services. In addition,  the External First-Class Measurement System (EXFC) is limited to single- piece First-Class Mail deposited in collection boxes in selected areas of  the country (see fig. 1). Thus, as USPS has reported, EXFC is not a  systemwide measurement of all First-Class Mail performance. USPS has  stated that it has strong business and operational reasons for using this  EXFC methodology and that the areas selected for testing ensure coverage  of its highest-volume areas. These reasons include EXFC covering areas  from which most First-Class Mail originates and destinates, the ability of  EXFC to provide results for specific geographic areas, and practical  advantages for collecting data from fewer areas of the nation.
Similarly, delivery performance data for Priority Mail are limited because  they only cover Priority Mail volume entered at post offices and other  retail facilities, and for which mailers purchase Delivery Confirmation  Service. Such mail constitutes only 4 percent of all Priority Mail volume.  According to USPS officials, USPS expects the volume of this Priority Mail  to increase, which would increase the scope of delivery performance  measurement. They said that this measure, which replaced the former  Priority End-to-End (PETE) measurement system at the beginning of fiscal  year 2006, covers all types of Priority Mail, including letters, flat-sized mail,  and parcels. However, USPS officials also told us that USPS cannot  currently measure the delivery performance for bulk quantities of Priority  Mail with Delivery Confirmation, such as business mailings of  merchandise, because USPS does not have accurate data on when the mail  entered into its system.
On the positive side, USPS has implemented delivery performance  measurement for Parcel Select and some types of International Mail, both  of which operate in a highly competitive marketplace. It has used this  measurement to establish targets and identify opportunities to improve  service. Although these products are a small fraction of mail volume, USPS  has developed delivery performance measures to address customer needs  for timely delivery. Highlights for measurement of major types of mail are  listed in table 3.
As a result of the measurement gaps listed above, measurement is not  sufficiently complete to understand how well USPS is achieving the  following:    performing its statutory mission of providing prompt and reliable service  to patrons in all areas, including prompt delivery of all mail;   delivering mail with different delivery standards, which helps fulfill the  requirement that USPS provide mail service to meet the needs of different  categories of mail and mail users;   providing expeditious handling of important letter mail, such as bills and  statements sent via First-Class Mail;  fulfilling its statutory requirement 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 identifying delivery problems, understanding the causes, and improving  performance.
The lack of any representative delivery performance data for most mail  volume increases the financial risk to USPS, which faces increasing  competition. If mailers are not satisfied with USPS’s delivery service, they  could take their business elsewhere. For example, Standard Mail and bulk  First-Class Mail are the largest segments not measured, collectively  accounting for close to three-quarters of mail volume and half of mail  revenues. Standard Mail is USPS’s key growth product, but it must  compete against multiple advertising media in a dynamic and highly  competitive marketplace. Bulk First-Class Mail covers a significant share  of USPS’s overhead costs—including maintaining the retail and delivery  networks—but is vulnerable to electronic communications and payment  alternatives. In addition, USPS does not have representative delivery  performance measures for Periodicals, which help USPS fulfill its  statutory mandate to provide postal services to “bind the nation together”  through business, educational, and literary correspondence; and for  Package Services, such as Parcel Post, which provides the public with a  low-cost option for sending packages.
Incomplete information also impedes USPS’s potential for holding its  managers accountable for delivery performance of all types of mail and for  balancing increasing financial pressures with the need to maintain quality  delivery service. Because delivery performance is measured for only some  types of mail, and individual performance incentives are linked to the  results, some mailers are concerned that in practice, this may skew  delivery priorities and performance so that timely delivery is more  important for the mail whose performance is measured than mail whose  performance is not measured. For example, as we have reported, soon  after USPS implemented its EXFC measurement system for First-Class  Mail deposited into collection boxes, USPS increased its emphasis on  timely First-Class Mail service. USPS managers at the local post office  level were instructed to concentrate on particular activities that could  improve EXFC scores, and more emphasis was placed on picking up mail  from collection boxes on schedule.
Conversely, measurement gaps may impede effective collaborative efforts  with mailers to quickly identify and resolve delivery problems, because  both USPS officials and mailers have limited information for diagnostic  purposes. In addition, measurement gaps impede the ability of external  stakeholders, including Congress and PRC, to monitor accountability and  exercise oversight. Measurement gaps cause PRC to consider proposed  postal rates without adequate information on the actual value of the  service provided for each class of mail, which PRC by law must consider  when recommending postal rates. In addition, PRC is hindered in  considering USPS’s proposals for changes in the nature of postal services  that are nationwide or substantially nationwide in scope, including the  ongoing proceeding related to USPS’s network realignment.
section_title: USPS Reporting of Delivery Performance Lacks Adequate Transparency
paragraphs: USPS’s limited performance measurement also affects USPS’s reporting of  its delivery performance and does not provide adequate transparency so  that customers can understand performance results and trends. Although  USPS recently made additional delivery performance information available  on its Web site, it still does not communicate its delivery performance for  all of its major types of mail, particularly those covered by its statutory  monopoly to deliver letter mail.
The main gap in USPS’s reporting of delivery performance results, as  shown in table 4, continues to be for mail entered in bulk quantities,  including Standard Mail and bulk First-Class Mail, which collectively  constitute most of USPS’s mail volume and revenues. USPS also does not  report delivery performance results for Periodicals and most Package  Services. As previously discussed, USPS generally does not collect  information on delivery performance results for these types of mail.
USPS’s reporting of delivery performance information has not adequately  met information needs for congressional oversight purposes. Notably,  USPS’s practices for reporting delivery performance information in its  annual Comprehensive Statement on Postal Operations fall short of the  longstanding statutory requirement for “data on the speed and reliability of  service provided for the various classes of mail and types of mail  service.” This requirement was enacted due to “the need for effective  oversight of postal operations to ensure that the postal services provided  the public shall continue at an effective level and at reasonable rates.”  Specifically, USPS has not included data on the speed and reliability of any  entire class of mail in its annual Comprehensive Statement on Postal  Operations. Instead, USPS has presented only national EXFC data, even  though it collected data on timely delivery performance for all Express  Mail, as well as some Priority Mail. The 2005 Comprehensive Statement on  Postal Operations stated “while Express Mail and Priority Mail  performance is tracked and has improved during the past 5 years, because  these products are competitive, the data was considered proprietary and  not published.” However, USPS reached an agreement with the PRC’s  Office of Consumer Advocate last year to end this restriction and recently  began reporting some delivery performance data on a newly created page  on its Web site for some Express Mail, Priority Mail, First-Class Mail, and  Package Services.
Moreover, USPS’s reporting practices under the Government Performance  and Results Act (GPRA) of 1993 have provided less and less performance  information for oversight purposes. USPS’s latest GPRA report, which  was included in its 2005 Comprehensive Statement on Postal Operations,  provided delivery performance targets (also referred to as performance  goals)  and results only for First-Class Mail measured by EXFC at the  national level, with little accompanying explanation. For example, USPS  reported that 87 percent of 3-day EXFC mail was delivered on time in  fiscal year 2005, which did not meet its GPRA target of 90 percent, but  USPS did not explain, as required by GPRA, why this specific target was  not met. USPS also did not explain whether it considers the 90-percent  goal—which remains unchanged for fiscal year 2006—impractical or  unfeasible, or, alternatively, what plans USPS has for achieving this goal.
subsections: section_title: Delivery Performance Information Has Recently Improved but Remains Incomplete
paragraphs: USPS’s reporting of delivery performance information on its Web site has  recently improved but is still incomplete because it does not include  performance results for all major types of mail. In April 2006, USPS posted  delivery performance information on a newly created page of its Web site,  including selected results for the timely delivery of some Express Mail,  Priority Mail, First-Class Mail, and Package Services. This information is  oriented to members of the general public who make decisions on how to  mail parcels and other items that can be sent using different types of mail.  To facilitate such use, the information is linked to USPS’s Postage Rate  Calculator and is accompanied by brief summaries of the applicable  delivery standards for each type of mail. The new information addresses  USPS’s written agreement with PRC’s Office of the Consumer Advocate  in the 2005 rate case, which was implemented after further discussions  between the two parties. USPS’s recent disclosures are a good step toward  providing easily accessible information on delivery performance results on  its Web site for key types of mail used by the public.
The information on delivery performance results, however, did not cover  major types of mail that are not measured—Standard Mail, bulk First-Class  Mail, Periodicals, and most Package Services. Further, the information  provided to the public was limited. First, performance results covered only  the most recent quarter, although results for some types of mail have  varied by 7 percentage points or more from one quarter to another within  the same fiscal year. Second, only partial information was provided for  Priority Mail and Package Services. For example, the results for Priority  Mail covered only 4 percent of total Priority Mail volume. This limited  scope of measurement was not disclosed on USPS’s Web site. Without  more complete reporting of delivery performance information, Congress  and the American public do not have adequate information to determine  how well USPS is accomplishing its mission of providing prompt and  reliable delivery services.
For the future, a possible model to enhance the completeness and  usefulness of USPS’s reporting of delivery performance information would  be to provide some information similar to the financial information that  USPS already provides on its Web site. In the financial area, USPS has  instituted a dedicated USPS Web page that has links to its financial  reports, related reports and data, and timely disclosure of important  developments. USPS also improved the quarterly financial reports that  provide explanations for results and trends, as well as its financial  outlook.
section_title: Progress In Developing Complete Delivery Performance Measurement Is Unsatisfactory Due To Lack of Management Commitment and Effective Collaboration
paragraphs: USPS has made slow and inadequate progress in modernizing its delivery  standards and in implementing delivery performance measurement for all  major types of mail. USPS’s limited progress has left major gaps in each of  these areas, despite numerous recommendations for improvements that  have been made in these areas over the years, including those by USPS- mailer task forces and working groups, as well as some USPS initiatives to  develop delivery performance measurement. Without management  commitment and effective collaboration with mailers, it will be difficult for  USPS to overcome technical challenges and achieve progress and results  that are in the interest of both USPS and its customers in today’s  competitive marketplace.
subsections: section_title: Key Recommendations from Collaboration Efforts Involving USPS and Mailers Have Not Been Implemented
paragraphs: Some of USPS’s and the mailers’ collaboration efforts over the years have  resulted in successes; but key recommendations from these efforts have  yet to be realized. A broad cross section of mailer groups and mailers who  met with us shared their concerns about delivery standards and related  information; delivery performance measurement and reporting; and  implications of delivery performance information and gaps in this area.  They expressed frustration with the slow pace of USPS’s progress in  improving delivery performance information. As one mailers’ association  recently wrote, “We do not expect the USPS to move tomorrow to the  ultimate service performance measurement system, but the total lethargy  to take any step forward is unacceptable.” Also, “the Postal Service’s lack  of clockwork-like predictability is the number one reason for repeated  industry calls for standards and measurements.”
Many recommendations for improving performance information were  made by committees that comprised USPS and mailers, as noted in table 5  below. Some notable examples include the 1992 Competitive Services  Task Force, the 1997 Blue Ribbon Committee, and the 1999 follow-up  effort by a USPS-mailer working group. We asked USPS what actions, if  any, it had taken on the 1999 recommendations, but we did not receive a  response.
section_title: Impediments Remain to Implementing Performance Measurement for all Major Types of Mail
paragraphs: Multiple impediments have contributed to USPS’s slow progress toward  implementing delivery performance measurement for all major types of  mail. The most important impediment is the lack of management  commitment and effective collaboration with the mailing industry to  follow up on recommendations for improvements and to resolve issues  between USPS and mailers. Additional impediments include technological  limitations, limited mailer participation in providing information needed to  facilitate performance measurement, data quality deficiencies, and costs.
subsections: section_title: Lack of Management Commitment and Effective Collaboration
paragraphs: USPS has not provided management commitment and effectively  collaborated with mailers to develop delivery performance measures for  all major types of mail. To achieve effective collaboration, it is necessary  to build consensus among diverse mailers with different information  needs, as well as between mailers and USPS. Such a challenge requires  leadership and an effective process for follow up, particularly given the  complexity of measurement issues and the time frame that likely will be  required to overcome longstanding issues. Based on our discussions with  mailers and postal officials, some of the commitment and collaboration  challenges have included:    USPS has lacked commitment to implementing delivery performance  measurement and reporting for all major types of mail; particularly, as  some mailers told us, USPS has tended to resist greater transparency,  oversight, and accountability. A USPS senior vice president told us that  USPS had no plans for implementing additional measures of delivery  performance. A second USPS senior vice president explained that  although some pieces of mail may be tracked as automated equipment  reads barcodes on the mail, enabling more information for management  and diagnostic purposes, these pieces are unrepresentative, and USPS has  no plans for using mail tracking data to develop representative measures  of delivery performance. As for major types of mail that are not measured,  USPS has publicly reported that it has no system in place for measuring  service performance for Standard Mail on a systemwide basis and  currently has no plans for the development of such a system. Similarly,  USPS officials told us that it has no plans to develop representative  measures of delivery performance for bulk First-Class Mail, which, after  Standard Mail, is the second-largest volume of mail that is not measured.
Further, USPS stated in its Strategic Transformation Plan that it would be  prepared to extend performance measurement and reporting to additional  mail classes as it achieves high levels of delivery service performance. A  USPS vice president told us that USPS agreed in 2005 to begin reporting  delivery performance results on its Web site for Express Mail and Priority  Mail because USPS had already improved delivery performance for these  types of mail to high levels, and therefore the results could help USPS  promote these types of mail. This statement contrasts with a general  performance principle that a major use, if not the major use, of regularly  collected outcome information should be by program managers  themselves to improve the effectiveness of their programs. As we have  reported, the benefit of collecting performance information is only fully  realized when this information is actually used by managers to make  decisions oriented toward improving results.
Although many groups have issued recommendations to USPS, follow- through on key recommendations did not occur. USPS often did not  officially respond to the recommendations at the time they were made and  did not implement the recommendations, so it was not clear whether  USPS agreed or intended to implement the recommendations. Moreover,  once a group completed its report with recommendations to USPS, it  disbanded, which limited the continuity that otherwise could have been  helpful for follow-up.
Effective collaboration has been impeded by USPS’s resistance to sharing  some diagnostic data it collected with mailers. In general, USPS has  maintained that delivery performance data below the national level are  proprietary, such as data on performance related to any particular mail  processing facility or transportation segment. Therefore, according to  USPS, it should not be required to publicly disclose these data in PRC  proceedings in response to requests by any interested party. However,  voluntarily sharing diagnostic delivery performance information with  mailers experiencing delivery problems could be useful for both USPS and  mailers to collaboratively develop an understanding of whether the  problems are limited to particular mailings or are systemic—resulting  from specific USPS operational problems. Such an understanding can help  in identifying the cause of delivery problems and in implementing  corrective action. Although USPS representatives may communicate with  mailers about these problems, the mailers told us they often lack sufficient  timely and actionable data on delivery problems. They have called for  USPS to share more aggregate delivery performance information.
The absence of management commitment and effective collaboration  matters for the future because give-and-take by both USPS and mailers  will be required to achieve consensus on designing measurement systems  that meet different information needs, finding ways to cover the  associated USPS costs, increasing mailer participation in providing  information needed to facilitate performance measurement, and  overcoming remaining impediments to implementing valid measurement  systems. In this regard, we are encouraged that USPS has engaged in  collaborative efforts to improve performance measurement for Parcel  Select, starting with the Deputy Postmaster General reaching out to the  Parcel Shippers Association (PSA), which represents major Parcel Select  mailers, and offering to engage in collaborative efforts. The Deputy  Postmaster General assigned responsibility to a single manager for follow- up. USPS followed through by reaching consensus on standards,  performance measurement, and the sharing of aggregate data, which  required actions by both USPS and mailers to successfully implement.  According to PSA officials, the standards, measures, and performance  incentives have led to a marked improvement in delivery performance for  Parcel Select; and, as a result, USPS has been able to maintain its viability  within the competitive package services market. The USPS official with  responsibility in this area made similar comments. In addition, USPS  recently proposed requiring mailers to barcode some Parcel Select items;  if this increases barcoding, it will facilitate delivery performance  measurement. USPS’s Parcel Select provides a successful model for  updating the delivery standards for other types of mail, implementing  delivery performance measurement, and holding USPS accountable for  results.
Similarly, USPS worked with other stakeholders to implement delivery  performance measurement for Global Express Mail, which is managed by  an international organization called the Express Mail Service (EMS)  Cooperative. Timely delivery of EMS items, including Global Express  Mail, has reportedly improved since delivery standards and measurement  were implemented.
section_title: Other Impediments for Measuring Delivery Performance
paragraphs: Several other impediments have limited the development of delivery  performance measures for all major types of mail. Two key impediments  involve limitations in technology, which limited USPS’s ability to track  mail from entry to delivery; and limited mailer participation in providing  information needed to facilitate performance measurements, which  limited the representativeness of the performance data collected. In  addition, data quality deficiencies and cost concerns have impeded  progress.
Technological limitations. USPS has not fully implemented technology  that will enable it to track barcoded mail through its mail processing and  transportation networks that could play a part in measuring performance  when completed. Although some implementation, such as upgrading  barcodes for individual mail pieces and mail containers, is under way, full  implementation will take years. According to the Deputy Postmaster  General, USPS expects to make substantial progress in resolving these  technological limitations over the next 5 years. For example, near the end  of this decade, USPS is planning to install new automated equipment to  sort flat-sized mail, such as large envelopes and catalogs, into the order it  is delivered, which promises to greatly expand the automatic scanning of  barcodes on mail pieces. More generally, USPS officials said that USPS is  working toward tracking mailings from acceptance (which they said will  depend on mailers providing accurate data) through USPS’s mail  processing and transportation networks. Such information is a step  toward additional delivery performance measurement. In the interim,  however, major gaps remain in USPS’s ability to track most types of mail.
Limited mailer participation. Mailer participation is low in applying  unique barcodes to mail pieces for tracking purposes, which means that  the tracking data cannot be considered representative of overall  performance. Using USPS’s Confirm Service, mailers can apply unique  barcodes to Standard Mail, First-Class Mail, and Periodicals, when the mail  is letter or flat-sized and can be sorted on USPS automation equipment.  Although these types of mail constitute most of the total mail volume, less  than 2 percent of total mail volume is tracked by the Confirm program.  Participation in Confirm is limited, in part because its use is voluntary,  mailers must pay a fee to participate, and mailers also incur additional  expenses related to their participation, such as for mail preparation.  Although USPS officials expect mailer participation to increase as  improved technology is implemented, they expect participation to  continue to be unrepresentative, with some mailers more likely to  participate than others. They explained that Confirm will continue to be of  greatest interest to large mailers with well-developed capabilities to use  tracking data. These mailers include large companies that track bills and  remittance mail and large advertisers that track mailed catalogs in order to  efficiently schedule staff and inventory.
Another factor in low participation is the mailers’ continuing use of non- USPS delivery performance measurements that they have established or  paid third parties to do so, such as “seeding” their mailings with mail sent  to persons who report when it is received. As long as a nonrandom group  of mailers participates in Confirm—which is likely to be the case for the  foreseeable future—the aggregate results will not be representative as a  measure of overall systemwide performance. Thus, the main options for  obtaining representative results for any given type of mail (such as bulk  First-Class Mail) would appear to be (1) obtaining sufficient participation  by all mailers who send that type of mail or (2) obtaining information on  mail that is sent by a representative sample of mailers. For either option,  USPS, mailer groups, and mailers would need to collaborate to achieve the  level of mailer participation necessary to generate representative  performance data that could be useful to all parties.
Data quality. According to USPS, data quality deficiencies have been  another problem in measuring delivery performance, because USPS has no  way to determine when it receives bulk mail, such as Standard Mail and  Periodicals, which is commonly referred to as obtaining a valid “start the  clock” time. At present, USPS relies on mailer-provided information  submitted with each mailing, which USPS officials told us does not always  include accurate information on when and where the mail was submitted.  Based on their experience, USPS officials do not consider mailer-provided  information to be sufficiently accurate for measuring delivery  performance.
The issue of inaccurate data has persisted for years despite repeated  efforts by working groups composed of USPS and mailer representatives.  In this regard, USPS officials told us that resolving this issue would likely  entail additional costs for mailers, which they said mailers have not been  willing to pay; however, some mailers disagree with this view. On the  positive side, the USPS Senior Vice President for Intelligent Mail and  Address Quality told us that USPS has initiatives under way that should  help ameliorate data quality deficiencies.
Costs. Senior USPS officials told us that currently, it would be too costly  for USPS to create new representative performance measures for any  major type of mail. They said that given current technology, USPS would  incur substantial costs to implement delivery performance measurement  for all major types of mail if USPS were to use bar codes to track every  mail piece from when it enters the postal system to when it is delivered. A  senior USPS official told us that delivery performance measurement for all  mail—which would have involved tracking more than 210 billion pieces of  mail in fiscal year 2005—would cost hundreds of millions of dollars and  expressed doubt that mailers would want to pay those additional costs  even in return for performance data. In this regard, sampling approaches  could be used to obtain representative data on delivery performance that  would likely be much less costly than seeking to measure delivery  performance for every piece of mail.
A related cost issue is how USPS would recover the associated  measurement costs from mailers and the impact of this decision on mailer  participation that would be needed for USPS to measure delivery  performance. As the Confirm program illustrates, a fee-based program  creates a disincentive for mailers to participate. In contrast, USPS chose to  build its tracking costs into the rate base for Parcel Select, so that the  costs would be shared by all Parcel Select mailers. USPS officials told us  they had rejected this approach for other types of mail for several reasons,  including the uncertain benefits to USPS and mailers’ preference for lower  rates, particularly for mailers who would not wish to pay the costs  associated with collecting delivery performance data.
However, some major mailer groups disagree with USPS’s perspectives of  mailer willingness to cover costs as a key impediment to implementing  representative measures of delivery performance for all major types of  mail. The Mailers Council, a coalition of over 50 major mailing  associations, corporations, and nonprofit organizations, told us that its  members would be willing to pay additional USPS costs, within reason, for  delivery performance measurement, stating that such costs would be small  compared to total postal costs. Until USPS commits to developing  additional representative measures of delivery performance for all major  types of mail and considers various approaches for measuring the delivery  performance of its major types of mail, discusses their usefulness and  feasibility with mailers, and estimates the associated costs, it will be  difficult to get beyond USPS’s assertion that measurement is cost- prohibitive and mailers’ assertions that the costs could be relatively low  and that they would be willing to bear them.
section_title: USPS Plans to Improve Service Performance, But Not to Implement Representative Measures of Delivery Performance Across All Product Lines
paragraphs: Although USPS plans to improve its service performance, it has no current  plans to implement additional representative measures of delivery  performance. USPS states in its latest Strategic Transformation Plan that it  plans to improve the quality of postal services by continuing to focus on  the end-to-end service performance of all mail. Further, it states that  “customers expect timely, reliable mail service, and the Postal Service has  delivered. Under the 2002 Transformation Plan, the Postal Service  successfully improved service performance across all product lines.” We  acknowledge and agree with USPS’s emphasis on improved service  performance. However, we do not know whether service has improved  across all product lines, nor does USPS, because as we noted earlier, USPS  does not collect or provide representative delivery performance  information that would be needed to support this statement. USPS has  information from various operational data systems, but this information  does not amount to delivery performance measurement. Gaps in delivery  performance measurement information are hindering USPS and mailers in  identifying opportunities to improve service across all product lines, as  well as effectively addressing these opportunities by understanding  whether problems are specific to a particular mailer or systemic problems  in USPS’s mail processing and transportation networks. Without complete  delivery performance information that is regularly reported, stakeholders  must rely on the publicly available information that USPS chooses to  provide, which often highlights only positive results. For example, in  discussing its strategy for providing timely, reliable end-to-end delivery  service, the Strategic Transformation Plan states “customer satisfaction  scores have never been higher.” Although customer satisfaction  information is valuable and useful to USPS and other organizations that  provide products and services, it does not measure delivery performance.
USPS’s currently available delivery performance information does not  provide sufficient context to determine (1) actual delivery performance  results for all of its product lines, (2) how performance is changing over  time through the assessment of trend information, and (3) whether USPS’s  delivery performance is competitive. Timeliness is a critical factor in  today’s competitive business environment, where many companies  operate with just-in-time inventories and rely on timely delivery to meet  their needs. It is likely to become even more important in the future. Thus,  reliable delivery performance information reported in a timely manner is  critical for high-performing organizations to be successful in this  environment. USPS’s Strategic Transformation Plan discusses strategies  for providing timely, reliable mail delivery, which include plans to improve  the quantity and accuracy of service performance information collected  through passive scanning and improved start-the-clock information,  provide customers with information about their own mailings, and create  better diagnostic data so that bottlenecks can be eliminated throughout  the system. These are all positive steps needed to improve delivery  performance information. However, the Plan falls short of committing to  developing end-to-end delivery performance information that could be  used to measure how well USPS is achieving its strategy of improving  service performance across all product lines. Further, the Plan does not  discuss what delivery performance information USPS plans to report  publicly.
Pending legislation does address what delivery performance information  Congress would like to see USPS report in the future. However, USPS  could demonstrate that it wants to provide leadership in this area by not  waiting for the legislation to be enacted. Instead, USPS could clearly  commit to developing representative end-to-end delivery performance  measures for all of its product lines. USPS could also take the lead in  collaborating with mailers to implement such performance measures. As  we previously stated, effective collaboration with mailers is needed to  resolve the impediments that hinder progress in this area, such as data  quality issues involving how to improve the accuracy of start-the-clock  information. Concerns about cost could be addressed by exploring options  such as sampling in collaboration with the mailers to determine how best  to measure delivery performance at much less cost than attempting to  track every mail piece. Such collaboration would also allow the parties to  determine their information needs, explore cost trade-offs associated with  various options, and resolve associated data quality issues. In its letter to  us, PostCom noted that delivery performance measurement could be  implemented in many ways that would not be costly. PostCom said that  measurement costs could be affected by multiple factors, such as whether  all mail pieces or a sample are tracked; whether tracking is to the point of  delivery vs. the last automated scan plus a “predicted” time for delivery;  whether data is collected automatically by equipment in a passive scan vs.  other methods requiring USPS employees to scan mail; and whether USPS  technology developments will be used exclusively to measure  performance or primarily for processing the mail.
We recognize that it will take time to resolve impediments to implement  additional delivery performance measures. However, USPS’s leadership,  commitment, and effective collaboration with mailers are critical elements  to implementing a complete set of delivery performance measures that will  enable USPS and its customers to understand the quality of delivery  services, identify opportunities for improvement, and track progress in  achieving timely delivery.
section_title: Conclusions
paragraphs: USPS delivery standards are not as useful and transparent as they should  be. Standards for key types of mail—including Standard Mail, USPS’s main  growth product—are largely static, and do not fully reflect current  operations. Thus, they cannot be used to set realistic expectations for mail  delivery, to establish benchmarks for measuring performance, or to hold  individuals accountable through pay-for-performance incentives tied to  measurable results. USPS’s delivery performance measurement and  reporting is not complete, because it does not cover key types of mail— including Standard Mail, bulk First-Class Mail, Periodicals, and most  Package Services. Further, despite recent disclosures on its Web site for  some types of mail, USPS’s reporting remains limited and has fallen short  of statutory requirements to include specified delivery performance  information. Because of gaps in delivery performance measurement and  reporting, stakeholders, including the Congress, cannot understand how  well USPS is fulfilling its basic mission, nor can they understand delivery  performance results and trends. As a result, USPS and mailers are  hindered in identifying and diagnosing delivery problems so that  corrective action can be implemented. This situation increases the  financial risk to USPS, which faces increasing competition. If mailers are  not satisfied with USPS’s delivery service, they could take their business  elsewhere.
Prospects for progress continue to be uncertain, in part because USPS has  not committed itself to modernizing its delivery standards or developing  representative performance measures for all major types of mail. USPS  management commitment and more effective collaboration with mailers  will be critical for resolving impediments to delivery performance  measurement and reporting. Give-and-take by both parties will be required  to achieve consensus on designing measurement systems that meet  different information needs, increasing mailer participation in providing  information needed to facilitate performance measurement, addressing  data deficiencies, finding ways to cover the associated costs, and  overcoming impediments.
section_title: Recommendations for Executive Action
paragraphs: To facilitate greater progress in developing complete delivery performance  information, we recommend that the Postmaster General take the  following four actions:  1.  modernize delivery standards for all major types of mail so that they  reflect USPS operations and can be used as benchmarks for  understanding and measuring delivery performance;  2.  provide a clear commitment in USPS’s Comprehensive Statement on  Postal Operations to develop a complete set of delivery performance  measures for each major type of mail that is representative of overall  delivery performance;  3. implement representative delivery performance measures for all major  types of mail by providing more effective collaboration with mailers  and others to ensure effective working relationships, follow-through,  accountability, and results; and  4. improve the transparency of delivery performance standards,  measures, and results by publicly disclosing more information,  including in its Comprehensive Statement on Postal Operations and  other annual performance reports to Congress, as well as providing  easily accessible information on its Web site.
section_title: Agency Comments and Our Evaluation
paragraphs: USPS provided comments on a draft of this report in a letter from the  Postmaster General dated July 14, 2006. These comments are summarized  below and included as appendix III. In addition, the Postmaster General  provided oral comments in a meeting on June 26, 2006, with suggestions  for further clarifying information, which were incorporated where  appropriate.
USPS’s letter recognized that its delivery performance measurement and  reporting are not complete and provided detailed information about its  ongoing and planned efforts to ultimately measure service performance  and provide transparency for all classes of mail. USPS stated that it  intends to lead the efforts required to reach this goal by working  collaboratively with others in the mailing industry. USPS’s letter further  stated that ultimately, “the core issue is service—and according to all  indicators, we are succeeding in our goal of continuous service  improvement. We are not satisfied with maintaining the status quo.”    USPS stated that although it recognizes the desire for aggregate service  performance results for all mail categories, it believes that it serves  mailers best by focusing first on providing service measurement and  diagnostics to individual customers, then looking to provide aggregate  results. Regarding the draft report’s findings related to service standards,  USPS disagreed that some of its delivery standards are outdated and  stated that its service standards are modern and up-to-date. USPS did not  directly comment on three of our four recommendations. On our fourth  recommendation concerning improving the transparency of delivery  performance standards, measures, and results, USPS commented that its  service standards should be more visible and stated that it is exploring  making information related to its service standards available through  additional channels, including its Web site.
We are encouraged by USPS’s commitment to ultimately measure service  performance and provide transparency for all classes of mail and its  intention to take the lead in working with mailers to achieve this goal.  Further, we recognize in our report USPS’s ongoing efforts to implement  technology that will track mail throughout USPS’s mail processing system,  which is a step toward improved delivery performance measurement. We  also agree, as we noted in our report, that mailer participation is necessary  to generate representative delivery performance measures for all mail  categories. USPS’s letter details many ongoing and planned efforts  necessary to improve performance measurement, as well as specific  actions that USPS calls on mailers to take to enable its vision of  measurement. We agree with USPS’s emphasis on improving service, but  we continue to have questions about whether USPS’s efforts will result in  representative delivery performance measures for all major types of mail.   For most major types of mail, USPS’s vision of service performance  measurement is generally limited to tracking mail through its mail  processing and transportation networks, which is not the same as  measuring end-to-end delivery performance against USPS delivery  standards.  Considering USPS’s lack of commitment to implementing a  complete set of delivery performance measures, as well as the lack of  timeframes in USPS’s letter, we also have questions about how long it will  take to achieve this goal. We recognize that it will take time to implement  many of the ongoing and planned initiatives described in USPS’s letter.  Thus, USPS’s sustained leadership is critical to ensure that effective  collaboration with mailers takes place so that USPS implements and  reports on representative delivery performance measures for all major  types of mail. We also believe that USPS should establish specific  timeframes so that timely progress can be made in this area.
USPS’s letter states that it will first provide individual mailers with  delivery information before working to provide aggregate delivery  performance information, stating that aggregate information on average  performance may be irrelevant to mailers. We do not believe that these are  mutually exclusive goals that have to be addressed sequentially, because  both aggregate and individual performance information have benefits that  would meet varying needs of different postal stakeholders. We recognize  and agree that mailers want to have performance information related to  their own mailings to determine the status of their mail as it moves  through USPS’s system. However, appropriate aggregate information is  needed to put mailer-specific information into context so that USPS and  mailers can understand whether any delivery problems that occur are  specific to particular mailers or reflect systemic issues within USPS’s  processing and transportation networks. Appropriate aggregate  information may need to be more specific than the average performance  for a general type of mail, so that comparisons can take geographic and  other variations in performance into account and thereby provide useful  diagnostic information to USPS and mailers.  USPS has recognized this  principle in its EXFC measure of First-Class Mail deposited into collection  boxes, which provides aggregate data that can be broken down by  geographic area, delivery standard (e.g., results for 1-day, 2-day, and 3-day  mail), and other subgroups of this mail. Moreover, USPS’s diagnostic data  is not representative and does not amount to delivery performance  measurement. USPS’s letter does not fully recognize the critical  importance of aggregate delivery performance measurement for  accountability purposes, by parties both inside and outside USPS. As  USPS’s letter demonstrates, where USPS has delivery performance  measures, it can report on how well it is achieving one of its primary goals  to improve delivery services. However, USPS is not in a position to make  such assessments for more than four-fifths of its mail volume, because it  does not measure and report its delivery performance for most types of  mail.
USPS’s letter also states that “we share the mutual goal of complete  network transparency to provide mailers with a comprehensive view of  the service they receive.” Our view of transparency is broader than  providing mailers with data on their own mail.  As a federal government  entity with a monopoly on some delivery services, USPS is accountable to  the American public, Congress, PRC, USPS’s Board of Governors, and  postal customers for the delivery services it provides. However, as noted  earlier, stakeholders cannot understand how well USPS is fulfilling its  basic mission due to gaps in delivery performance measurement and  reporting, nor can they understand delivery performance results and  trends.  USPS’s letter does not address what actions USPS plans to take to  improve the transparency of publicly available delivery performance  information. Without sufficient transparency, oversight and accountability  are limited.
We disagree with USPS’s comments that its service standards are modern  and up-to-date. Consistent with the input we received from numerous  mailers, we believe that these standards do not work for the mailers and  for USPS. As we noted in our report, some of USPS’s delivery standards,  including those for Standard Mail, some Periodicals and most Package  Services, do not reflect changes in how mail is prepared and delivered.  These standards are unsuitable as benchmarks for setting realistic  expectations for timely mail delivery, for measuring delivery performance,  or improving service, oversight, and accountability.
Specific comments in the USPS letter were organized into the following  six sections: (1) “Focus on Service,” (2) “Service Performance Results,”   (3) “Some Areas of Concern,” (4) “Modern Service Standards,”   (5) “Measurement Systems and Diagnostic Tools,” and (6) “Customer  Collaboration and Reporting.” These comments are summarized below  with our analysis.
Focus on Service: USPS commented that one of its primary goals in its  Strategic Transformation Plan 2006-2010, is to improve service. USPS  said this goal is supported by strategies that include a “balanced  scorecard” that uses service performance metrics to support personal and  unit accountability. Goals for these metrics, which include delivery  performance measures as well as operational indicators that USPS said are  critical to on-time service performance, are incorporated into USPS’s pay- for-performance incentives for its managers. We agree with USPS’s focus  on improving service and holding its managers accountable for results.  Our draft report noted that USPS had recognized the importance of the  timely delivery of mail and integrated performance targets and results for  some types of mail into its performance management system. However,  USPS has not yet achieved its aim of a “balanced scorecard” for delivery  performance because its delivery performance measures cover less than  one-fifth of mail volume, and these measures do not cover Standard Mail,  bulk First-Class Mail, Periodicals, and most Package Services mail. This  gap impedes USPS’s potential for holding its managers accountable for  delivery performance of all types of mail and for balancing increasing  financial pressures with the need to maintain quality delivery service.
Service Performance Results: USPS stated that its focus on service has  resulted in “record performance across all mail categories,” adding that its  measurement systems for First-Class Mail, Priority Mail, and Express Mail  show that USPS had met or exceeded the performance targets it set for  them. However, we do not know whether service has improved across all  mail categories, nor does USPS, because as we noted earlier, USPS does  not collect or provide representative delivery performance information  that would be needed to support this statement. Further, in fiscal year  2005, USPS did not achieve record delivery performance for all categories  of mail that it measured, and did not meet all of the delivery performance  targets it had set. For example, the 2005 Annual Performance Report  included within the 2005 Statement on Comprehensive Operations  reported that on-time performance for First-Class Mail with a 3-day  delivery standard, as measured by EXFC, was 87 percent in fiscal year  2005, down 2 percentage points from the previous fiscal year and falling  short of USPS’s goal of 90 percent. On-time delivery scores for Priority  Mail also declined over the same period.
With respect to reporting on its delivery performance, USPS commented in  its letter that it has posted delivery performance results on its Web site,  including for some of its competitive products. As our draft report stated,  USPS improved its reporting of delivery performance results by starting to  post information on its Web site in April 2006, including selected results  for the past quarter for the timely delivery of some Express Mail, Priority  Mail, First-Class Mail, and Package Services. We stated that USPS’s recent  disclosures are a good step toward providing easily accessible information  on delivery performance results on its Web site for key types of mail used  by the public. However, we also found that the information is incomplete  because it does not include delivery performance results for all major  types of mail.  Some major types of mail are not measured, while the  information on the Web site provided limited information for mail that is  measured, and did not fully disclose the limited scope of this  measurement. We continue to believe that without more complete  reporting of delivery performance information, Congress and the  American public do not have adequate information to determine how well  USPS is accomplishing its mission of providing prompt and reliable  delivery services.
Some Areas of Concern: USPS stated that our draft report did not fully  consider some important issues related to performance measurement.  USPS commented that although our draft report did discuss data quality  issues, it had not accounted for some relevant factors, including the  completeness, accuracy, and validity of mailer information submitted  when mail is entered. However, our draft report included a discussion of  the major impediments that have contributed to USPS’s slow progress  toward implementing delivery performance measures for all major types  of mail, including impediments relating to the quality of mailer information  submitted when mail is accepted into USPS’s system, which is needed for  “start the clock” delivery information. Our draft report provided USPS’s  view that mailers do not provide accurate information on its mailings that  would be needed to “start the clock” for delivery performance  measurement and noted that this issue has been persistent despite  repeated efforts by USPS-mailer committees. In discussing measurement  issues, USPS further commented that the mailing industry must embrace  changes such as improved address quality and increased presort accuracy.  We believe that although these outcomes would facilitate USPS handing of  mail, this should not be a reason to delay measurement of delivery  performance. Other federal entities routinely set performance goals and  measure results for important activities that are partly outside their  control, and use the results to work with their partners to improve their  performance.
On another matter, USPS stated that our report’s discussion of USPS  attempts to measure performance did not account for complexities unique  to Standard Mail and Periodicals. USPS also stated that its experience has  demonstrated that it is particularly difficult to design a broad and effective  measurement system for Standard Mail and Periodicals, explaining that its  previous attempts were unsuccessful for reasons including lack of  information on the acceptance of this mail into USPS’s system and  complexities relating to different types of mail preparation and entry.  We  disagree that our draft report did not adequately account for these  complexities and believe USPS can address these complexities to  successfully implement delivery performance measures for Standard Mail  and Periodicals.  As noted above, our draft report discussed issues in  obtaining information needed to “start the clock” on delivery performance  measurement.  We also recognized that Standard Mail and Periodicals  have complexities in mail preparation and entry that USPS should  incorporate into its delivery performance standards so that they can serve  as suitable benchmarks for measurement.  Further, our draft report  provided a detailed discussion of attempts to measure performance by  task forces and working groups comprised of USPS and mailer  representatives, who were well versed in the complexities of Standard  Mail and Periodicals. These groups repeatedly recommended that USPS  measure the delivery performance of Standard Mail and Periodicals,  including the 1997 recommendations of the Blue Ribbon Panel and the  1999 recommendations of a follow-up USPS/mailer working group that  were made years after USPS’s short-lived attempt to measure delivery  performance of Standard Mail and Periodicals.  The 1999  recommendations stated that USPS should implement performance  measurement for Standard Mail, Periodicals, and other classes of mail in a  manner that would provide aggregate performance data with breakdowns  according to delivery standards, which for bulk mail such as Standard Mail  and Periodicals would reflect how the mail is prepared and the type of  postal facility where it enters USPS’s system.  The working group asked  USPS to begin working on implementing these recommendations  immediately.  As we concluded, gaps in performance measurement mean  that stakeholders cannot understand how well USPS is fulfilling its basic  mission, nor can they understand results and trends—a situation that also  increases the financial risk to USPS, which faces increasing competition.
Modern Service Standards: USPS stated that our draft report did not fully  acknowledge its long history of establishing and revising delivery  standards. We disagree because our report provides a detailed history of  delivery standards, noting that USPS has updated its standards for some  mail, such as First-Class Mail and Parcel Select. Our draft report also  stated that delivery standards are outdated for several types of mail,  including Standard Mail, some Periodicals, and most Package Services,  because they have not been updated in many years to reflect significant  changes in the way mail is prepared and delivered. In addition, USPS  commented that the concept of modernized delivery standards may, for  some, denote upgrading service levels, warning that upgrading service  would result in increased costs and prices. However, our draft report does  not discuss whether service needs to be upgraded and focuses instead on  the need for USPS delivery standards to reflect current USPS operations  including presorting and destination entry.
Measurement Systems and Diagnostic Tools: USPS commented that the  description of USPS performance measurement systems in our draft  report was incomplete and unintentionally misleading. USPS commented  that the draft report overlooked “the fact” that EXFC, which measures  First-Class Mail deposited into collection boxes, is reflective of delivery  performance for all First-Class Mail including bulk First-Class Mail. USPS  stated that bulk First-Class Mail is handled in the same manner as  collection box mail. USPS’s comment about EXFC is contradicted by years  of USPS reporting, including in its annual Comprehensive Statement on  Postal Operations and its quarterly press releases, that “EXFC is not a  systemwide measure of all First-Class Mail performance.” USPS has  repeatedly used this statement in response to a recommendation made in a  report issued in 2000 by the USPS Office of Inspector General, which also  found that EXFC does not consider the delivery performance of bulk First- Class Mail.
Customer Collaboration and Reporting: USPS commented that many of  its service measurement systems and diagnostic tools were designed  jointly or in collaboration with its customers. Our draft report discusses  USPS’s many collaborative efforts with mailers, but, as noted previously,  our concern is that USPS has not implemented key recommendations that  have been made since the early 1990s by numerous USPS/mailer  committees. Further, our work found that the lack of adequate and  continued management commitment and effective collaboration with the  mailing industry to follow through on recommendations for improvements  and to resolve issues is an overall theme in understanding the slow  progress being made in developing and implementing methods of  measuring delivery performance. Thus, while we are encouraged that  USPS presented several initiatives to develop the ability to track mail  through its mail processing and transportation networks, as outlined in  our report and our analysis of USPS’s comment letter, we continue to  believe that there needs to be greater progress in implementing  representative measures of end-to-end delivery performance.
We are sending copies of this report to the Ranking Minority Member of  the Senate Committee on Homeland Security and Governmental Affairs,  the Chairman and Ranking Minority Member of the House Committee on  Government Reform, Rep. John M. McHugh, Rep. Danny K. Davis, the  Chairman of the USPS Board of Governors, the Postmaster General, the  Chairman of the Postal Rate Commission, the USPS Inspector General,  and other interested parties. We also will provide copies to others on  request. In addition, the report will be available at no charge on the GAO  Web site at http://www.gao.gov.
If you or your staff have any questions regarding this report, please  contact me at siggerudk@gao.gov or by telephone at (202) 512-2834.  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 IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to assess (1) the delivery standards for the timely  delivery of mail that the U.S. Postal Service (USPS) has established, (2) the  delivery performance information on the timely delivery of mail that USPS  measures and reports, and (3) the progress USPS has made in improving  its delivery performance information.
We based our assessment of USPS’s delivery standards, measures, and  reporting using the concepts of completeness, transparency, and  usefulness of delivery standards, measures, and reporting (see table 6). We  identified applicable laws related to USPS’s mission, ratemaking, and  reporting; statutes and practices used by high-performing organizations  related to delivery standards, measurement, and reporting, including  practices identified through our past work. The basis of our assessment is  described in greater detail in table 6.
To address the first objective, assessing delivery standards USPS has  established, we obtained information from USPS on its delivery standards  for the timely delivery of mail. Information consisted of USPS’s narrative  description of its standards; documentation of its standards included in  the Domestic Mail Manual and related policies included in the Postal  Operations Manual; and written responses provided to us by USPS. We  also obtained material on delivery standards that USPS provided in Postal  Rate Commission (PRC) proceedings and that were posted to the PRC  Web site. These proceedings included postal rate cases and “nature of  service” proceedings that considered the USPS proposals expected to have  an effect on the nature of postal services on a nationwide or substantially  nationwide basis. We reviewed publicly available material that USPS  reported on its delivery standards, which was posted on the USPS Web  site, including the section of the USPS Web site devoted to the Mailers’  Technical Advisory Committee (MTAC). Our assessment of USPS’s  delivery standards was also informed by the views of mailing  organizations, mailers, PRC, and PRC’s Office of the Consumer Advocate  (OCA), which is charged with representing the interests of the general  public and the views of other postal stakeholders. Some of these views  were provided in written material issued by the stakeholders, including  material provided directly to us, material provided in PRC proceedings,  and articles in the trade press. Other views were provided to us in  interviews we conducted with these organizations.
To address the second objective, delivery performance information USPS  measures and reports, we obtained documentation and related written  material on USPS’s delivery performance measurement systems, which  included the External First-Class Measurement System (EXFC), the  Product Tracking System (PTS), the now-discontinued Priority End-to-End  System (PETE), and other measurement systems for international mail.  We obtained documentation on the data collection procedures and  internal controls for these systems and obtained detailed explanations of  these systems in interviews with USPS officials. In addition, we obtained  publicly available information on these systems from USPS reports,  material that USPS provided PRC in past rate cases, and published articles  about these systems. We conducted a limited data reliability assessment of  EXFC, PTS, and PETE. Our assessment was informed by obtaining the  views of USPS officials, mailing groups, mailers, and other stakeholders,  both in writing and in interviews.
To address the third objective, assessing the progress USPS has made in  improving its delivery performance information, we obtained information  from a variety of sources on the progress USPS has made and its  opportunities for improving delivery performance information. We  obtained information on the history of studies that recommended USPS  improve its delivery standards, measurement, and/or reporting. These  studies included joint USPS-mailer committees, some of which were ad  hoc efforts and some of which were sponsored by MTAC. Information on  these studies included written reports by the committees, documentation  on these groups provided to us by USPS and mailers, and interviews of  USPS, mailer committees, and mailers. More generally, we obtained the  views of USPS officials, mailing groups, mailers, and other stakeholders on  USPS’s progress and remaining opportunities in this area, both in writing  and in interviews.
We requested comments on a draft of this report from USPS; these are  reproduced in appendix III. We conducted our review from August 2005 to  July 2006 in accordance with generally accepted government auditing  standards.
section_title: Appendix II: USPS Delivery Standards
paragraphs: Appendix II: USPS Delivery Standards Explanation of delivery standards and available information  These standards have not been systemically changed since their inception in the 1970s.  As an “approximate overview,” the number of days is loosely based on the number of  postal zones that mail must travel, which in turn are loosely based on a mileage radius to  the destinating Sectional Center Facility (SCF).
Usually, 3 days for mail within the same SCF, depending on the size of the Intra-SCF  area. All other non-Intra-SCF destinations are 4 days or greater.
While the 3- to 10- day range outlines the official USPS standards, USPS sometimes does  have independent “programs,” or “guidelines,” outside of the Service Standards, which  attempt to facilitate the delivery of Standard Mail (sometimes directly in concert with  mailers). In some cases, these time frames are more ambitious or differ from the official  Service Standards.
For example, the Postal Operations Manual (POM) specifies that    some Standard Mail is to be delivered 2 delivery days after it is entered into the postal  system. This applies to mailer-prepared carrier-route presort mail that mailers dropship  to delivery units (including post offices, branches, and stations) where letter carriers  pick up their mail for delivery.    delivery units should make every effort to adhere to mailer-requested, in-home delivery  dates. Mail should not be delivered earlier than the date the mailer has requested. If  delivery units receive Standard Mail with a mailer-requested delivery date later than the  USPS-scheduled delivery day, the USPS-scheduled date should be changed to match  the last requested in-home delivery date, to comply with the mailer’s request. If delivery  units receive Standard Mail with a mailer-requested delivery that has already been  passed, the decision regarding delivery or disposition of this mail (including disposal  without delivery) must be consistent with the current national policy on this subject.
If Standard Mail is mixed with a higher class of mail (e.g., First-Class Mail) in USPS’s mail  processing system in such a manner as it loses its identity, it must be considered  upgraded and treated as the higher class of mail. Technically, such commingled items do  not become the higher mail class. However, USPS enacts this policy in order to not slow  down the ultimate delivery of such pieces by not requiring that they be re-isolated and  “extracted” from the higher mail class and subsequently re-entered with their “correct” mail  class, a process which could possibly slow down delivery and provide worse service than  was originally intended (although the re-segregation of such commingled mail, by mail  class, is always an option, if operationally feasible).
There are no prohibitions against making USPS management agreements below the  national level, which accelerate the delivery expectations for any Standard Mail versus  national policy.
Delivery standards are 3-digit-to-3-digit ZIP Code based. Periodicals mail is a  “preferential” product that travels normally by surface to all valid ZIP Codes. The standard  range of 1 to 7 days is loosely equivalent to the eight Postal Zones (which are also based  on a Mileage Radius), minus 1, as shown in Table 8.
In accordance with policies adopted in 1990 after the conclusion of a PRC proceeding that  began in 1989, the 1-day delivery area should normally be adjusted to be the same as  the overnight area for First-Class Mail, with exceptions subject to regional and  headquarters concurrence.  2 to 3 day standards can be as fast as First-Class Mail but are not usually intended to be  faster. Nearly all of the Service Standard pairs meet this “Mail Class Hierarchy” guideline.
The concept for these standards has not changed since the 1980s. Newly activated ZIP  Codes (or ZIP Code areas that have been revised due to an Area Mail Processing Plan  implementation) are “cloned” to have the same Periodical delivery standards as the other  originating or destinating ZIPs served out of the same processing plant.
2 to 9 days to  most ZIP Codes   2 to 9 days to all valid ZIP Codes within the contiguous 48 states.
There are no established Package Services delivery standards to Alaska, Hawaii, or  offshore destinations (e.g., Guam, Puerto Rico, Virgin Islands).
The delivery standards are 3-digit-to-3-digit ZIP Code based. Package Services mail is a  product that travels normally by surface to all ZIP Codes. The standards are therefore  predicated on the Bulk Mail Center (BMC) network. Normally, the standards would change  only if the Area Mail Processing (AMP) Plan resulted in the origin or destination ZIP Code  moving to within a new BMC area because the gaining facility was located in a different  BMC area than the previous facility. The concept for Package Services service standards  has remained constant since the 1970s. Newly activated ZIP Codes (or revised ZIP  Codes areas due to an AMP Plan implementation) are “cloned” to have the same  Package Services service standards as the other originating or destinating ZIPs served  out of the same BMC or Auxillary Service Facility.
Parcel Select comprises Parcel Post items that are mailed in bulk quantities; are entered  by mailers at USPS facilities, including Destination Bulk Mail Centers (DBMCs),  Destination Sectional Center Facilities (DSCFs), or Destination Delivery Units (DDUs);  and meet other rules for mail preparation and entry. The delivery standards include:    1 day for DDU entry by 4 p.m.    2 days for DSCF entry by 3 p.m.    2 to 3 days (generally 2 days) for DBMC entry by 3 p.m.  2-day versus 3-day for DBMC entry is based on the Parcel Post standard for the 3-digit  ZIP where the DBMC is physically located and the destination 3-digit ZIP of the parcel.  These standards were determined as part of the Parcel Select product creation. Originally,  all BMC entry was 3-day. This change to most 2-day was made in 2002.
Explanation of delivery standards and available information  Delivery standards have existed for Priority Mail since its inception, when it essentially  replaced Air Mail in the late 1970s. The standards currently range from 1 to 3 days to all  valid ZIP Codes. However, Priority Mail is primarily a product that is targeted for delivery  within 2 days. (Over 93 percent of Priority ZIP Code pairs currently have either a 1-day or  2-day standard.) These standards are determined on a case-by-case basis, depending on  processing times and available transportation. Priority Mail service standards are usually  equal to, or faster than, First-Class Mail standards to/from the same domestic ZIP Code  pairs.
Newly activated ZIP Codes (or revised ZIP Codes areas due to an Area Mail Processing  Plan implementation) are cloned to have the same Priority Service standards as the other  originating or destinating ZIPs served out of the same processing plant.
First-Class Mail other than Priority Mail: 1 to 3 days, depending on the 3-digit ZIP Code of  acceptance and the destination address. Standards do not vary by shape, size, or weight.
The same standard applies to all mail originating or destinating in the same 3-digit ZIP  Code area.
USPS policies for First-Class Mail Service Standards are as follows:  1-day (Overnight) Delivery Standard: Overnight delivery standards must include all of the  intra-SCF area. Other areas may be considered for overnight delivery if significant  business/mail volume relationships exist and they are within the reasonable reach of  surface transportation.  2-Day Delivery Standard: Two-day delivery standards must include all areas that currently  have an overnight standard but will not, as proposed, be in the new overnight area. Two- day delivery standards must also include all SCFs with the home state and nearby states  that are within the reasonable reach of surface transportation (as defined by the USPS  Office of Transportation and International Services). In addition, 2-day delivery standards  may include other 3-digit areas outside of the reach of surface transportation if significant  business/mail volume relationships exist and if dependable and timely air transportation is  available.  3-Day Delivery Standard: Three-day delivery standards should include all remaining  destinations.
Service standard changes reflecting the new overnight definition were implemented in  1990 to 1992. In 2000 to 2001, in order to increase the 2-day reach but make it achievable  at a consistently appropriate level, USPS expanded the 2-day reach to include non- overnight offices that were as far away as a 12-hour drive from the originating “parent”  Processing and Distribution Center (P&DC) to the destinating Area Distribution Center  (ADC) via surface transportation.
At the same time, the USPS determined that the existing commercial air transportation  network had deteriorated and had become too unreliable for maintaining the 2-day service  standard for First-Class Mail beyond the reasonable reach of surface transportation.  Accordingly, USPS changed the service standards for this mail from 2 days to 3 days.
Although this deterioration and resulting unreliability of commercial air service made it  infeasible for USPS to continue to apply the 2-day standard to destinations beyond the  reasonable reach of surface transportation, the overall number of origin-destination pairs  with 2-day standards increased in 2000-01 because of the adoption of the 12-hour drive  time definition.
Explanation of delivery standards and available information  Overnight and second-day service to designated areas and post offices, supported by a  money-back guarantee.
Next-day Service provides overnight service to designated 3-digit and 5-digit ZIP Code  delivery areas, facilities, or locations, based on the time of acceptance and available  service-response air and surface transportation.
Second-day Service is offered for areas not on the next-day network, including any 3- digit or 5-digit ZIP Code destination not listed in the Express Mail Next Day Service  directory, but may not be available at or between all post offices or at all times of  deposit.
Second Delivery Day is not a distinct service but applies to mailings to those ZIP Codes  where postal delivery is not provided on Sundays or federal holidays, and delivery is  guaranteed on the next regular delivery day. This typically applies only to mailings  made on Friday to a destination that lacks Sunday/holiday delivery. In that case, the  piece is guaranteed for delivery on the next regular delivery day, which is a Monday, or  Tuesday if Monday is a federal holiday.
Unlike most other types of mail, Express Mail service may involve delivery on Sundays.
At the point of sale, each customer is notified of the specific service standard for the  mailed item. This standard is based on information in an electronic and/or hardcopy  directory containing detailed information about local and destination ZIP Code acceptance  and delivery capabilities. The clerk who accepts the mail annotates the customer receipt  to indicate whether the mailed item was accepted for next- or second-day delivery.
Further, customers can obtain the guaranteed delivery commitments for some individual  pieces of mail through the USPS Web site by entering their originating and destinating 5- digit ZIP Codes.
USPS and its overseas delivery partners establish delivery standards in conjunction with  international organizations including the Universal Postal Union and the International Post  Corporation.
Global Express Mail Guaranteed: 2 to 3 days with date-certain shipping to over 200  countries.
Global Express Mail: 3 to 5 days to over 190 countries with date-certain shipping to  selected countries.
Global Priority Mail includes single-piece mail under 4 pounds sent from the United States  to over 50 countries.
International Priority Air Mail includes mailings of items under 4 pounds, virtually  worldwide, sent in bulk quantities at lower rates than Global Priority Mail.
Global Air Mail letters: 4 to 7 days, including 5 days to Europe; 4 days to Canada; and 1 to  3 days for transit within the United States. Global Economy Mail letters: 4 to 6 weeks.
Global Air Mail parcels: 4 to 10 days to virtually all countries.
Global Economy Mail parcels: 4 to 6 weeks.
Prepaid business reply postcards and letters to virtually all countries.
The number of delivery days after acceptance of the mail, which generally does not include Sundays  or holidays.  http://www.usps.com/global/sendpackages.htm and http://www.usps.com/global/sendmail.htm.
section_title: Appendix III: Comments from the U.S. Postal Service
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Teresa Anderson, Cynthia  Daffron, Tamera L. Dorland, Kathy Gilhooly, Brandon Haller, Kenneth E.  John, Catherine S. Kim, Karen O’Conor, Jacqueline M. Nowicki, and Edda  Emmanuelli-Perez made key contributions to this report.