USPS’s capital investment process incorporates two main activities: planning and project approval (see table 2). In addition, USPS implemented tollgates in December 2006 to enable IRC awareness, involvement, and decision making for all investments greater than $5 million (see fig. 2). According to USPS, tollgates are updates intended to keep the IRC informed by raising and resolving issues throughout the phases of the capital investment review and approval process. However, given its financial position, USPS is limited in its ability to finance capital investments and has spent $17.5 billion on capital investments over the past 10 fiscal years, but has sharply decreased its spending since fiscal year 2007 (see fig. 3). Since 2009, USPS has taken the following actions, to address its financial situation, which affect its management of capital investments. For example: In 2009, USPS implemented a capital-spending freeze to conserve resources. Any capital initiative seeking funding must receive an exception-approval from USPS’s Finance and Planning unit demonstrating that the initiative (1) is needed for safety, health, or legal requirements, or (2) is required to sustain customer service, such as mail delivery, or (3) will have a high return on investment with a short payback period. In 2011, USPS created Delivering Results, Innovation, Value and Efficiency (DRIVE), a portfolio of strategic initiatives, which is intended to improve business strategy development and execution. DRIVE consists of managing a portfolio of 44 initiatives, half of which are active, that are intended to help close USPS’s income gap by 2015. For example, one DRIVE initiative—Build a World Class Package Platform—seeks to build an infrastructure to support and promote USPS’s growing package delivery business. USPS’s executive leaders developed and oversee the DRIVE initiatives. USPS’s Office of Inspector General (OIG) recently assessed DRIVE and found that the management process compares favorably to the identified 20 best-in-class program management practices of 13 companies in the private sector. In 2012, USPS developed a 5-year plan to restructure and modernize its operations and improve its financial situation. The 5-year plan estimates $2 billion annually for capital outlays for fiscal years 2015 through 2017. Notwithstanding these actions, our prior work has shown that although a successful capital investment depends on a range of factors, following leading practices will more likely result in investments that meet mission needs, are well-managed, and achieve cost, schedule, and performance goals. Figure 4 shows the capital investment phases and the leading practices that we identified for each. In summary, we determined that USPS’s conformance to leading practices is medium for planning, selecting, and managing capital investment projects, and low for evaluating them, based on our review of USPS policy and the practices employed for the five selected projects. USPS substantially conformed to three, and partially conformed to two, of five leading practices for planning capital investments (see fig. 6). Specifically, we found that USPS’s process for planning capital investments substantially: Identifies mission needs and gaps in service: Each year, USPS issues a capital commitment budget call to the executive leaders, vice presidents, and budget coordinators to identify mission needs and gaps in services. Executives are to work with their teams to submit their capital investment requests for the next fiscal year and include a brief narrative describing each proposed project, why it is needed, the amount needed for the project, and whether it supports a DRIVE initiative. Reviews and approves the framework for selecting investments: USPS has several different sources of guidance for capital investments. The most comprehensive guidance is USPS’s General Investment Policies and Procedures. Since those policies and procedures were developed, USPS has created its tollgates (see figure 2). Program managers told us that they also use USPS’s Technology Acquisition Management Process Guidelines as their primary guidance.updates made in December 2011. USPS also conducts annual internal investment overviews for selected projects. These various sources comprise USPS’s framework for selecting its investments. USPS officials told us that the current guidance is a slide presentation available on the agency’s internal website. They also said that they are planning to update the guidance, but did not provide a time frame for completing this effort. Thus, while USPS has reviewed and approved a framework for selecting its investments, it does not currently have a clear, single-source, standard set of policies and procedures that reflect the selection framework. A time frame for completing efforts to update its policies and procedures into a single- source guide could better position USPS to hold its managers accountable for completing the effort as intended. Moreover, a single- source guide could enable better transparency for selecting investments. Such transparency would establish crucial accountability for limited resources. This guidance, however, does not include the Develops a long-term capital investment plan: USPS has a 10-year capital investment plan that is used for internal-planning purposes, even though actual capital investments depend on budgetary resources. In addition, we found that USPS’s process for planning capital investments partially: Links investments to its strategic plan: USPS has linked capital investments to strategic initiatives listed in its 5-year business plan, which was developed in 2012 to bring USPS to a point of financial viability. The business plan addresses financial challenges facing USPS, actions the agency plans to take to address its financial outlook, and external factors USPS believes could inhibit it from financial viability. USPS’s 5-year business plan also contains seven “strategic initiatives” that are linked to DRIVE initiatives (see app. II for more detail). USPS refers to its 5-year business plan as its strategic plan. However, USPS’s business plan focuses on the agency’s financial condition while a traditional strategic plan is more comprehensive and is intended to address the agency’s overall mission.traditionally identified in a strategic plan, that could affect USPS’s ability to achieve some of the DRIVE initiatives. Specifically, OMB A-11 guidance states that management should assess whether the investment needs to be undertaken by the requesting agency because no alternative private sector or governmental source can better support the function. private sector entity to support part or all of a processing or delivery function. For example, USPS contracted for the development of its PARS software system, but did not consider whether a private sector entity— either in partnership with USPS or independently—could perform part or all of the function of automatically redirecting undeliverable mail. USPS officials, however, told us that a provision in its labor contracts limits its ability to consider external entities for supporting an entire function; however, USPS is not specifically prohibited from doing so. The officials added that USPS has a Strategic Initiative Action Group that reviews, approves, and monitors proposed outsourcing initiatives to ensure that they meet the requirements of these bargaining unit agreements. However, USPS did not provide evidence that it took such consideration for its mail-processing or delivery functions. It is also not clear whether USPS considered certain strategies used by foreign postal operators. For example, according to the USPS OIG, contracting with private operators to sell aging vehicles could provide immediate cash, and leasing a new fleet of vehicles could result in the operational benefits of having a modern fleet without assuming fixed costs. Until USPS modifies its policies to require such consideration, USPS may not be placing itself in a position to identify the best option for reducing costs and increasing the quality of its capital investments. USPS officials told us, however, that many foreign postal operations have been privatized and are not subject to the same government oversight as USPS. In February 2011, we also reported on how the strategies of foreign posts’ can inform USPS modernization. USPS substantially conformed to three, and partially conformed to two, of five leading practices for selecting capital investments (see fig. 7). Specifically, we found that USPS’s process for selecting capital investments substantially: Ranks and prioritizes investments based on mission needs and projected return on investment: After USPS makes its initial budget call, the executive leaders rank and prioritize capital requests based on need, the expected return on investment, the impact on customer experience, and the ability to support key initiatives. Submits business cases to an external entity: As part of the IRC review process, USPS submits business cases for all projects with total funding over $5 million to its OIG for review. For investments $25 million or greater, USPS OIG shares its assessments and conclusions with the USPS program sponsor, USPS headquarters officials, the IRC, and with Congress. Links investments with budget considerations: USPS links capital investments with the overall budget when developing its annual Integrated Financial Plan. Specifically, as described in table 2, during budget planning, the Finance Infrastructure unit recommends projects for inclusion in the capital budget through a multi-step review process, the results of which are then incorporated into the Integrated Financial Plan. In fiscal year 2013, capital budget requests totaled approximately $2.1 billion, while forecasted capital needs totaled $752 million. USPS partially conformed to developing its business cases and allocating resources toward a desired portfolio. Investment portfolios are broad categories of investments that are linked by similar missions to better fulfill that specific mission and minimize overlapping functions. A portfolio perspective enables an organization to focus on projects that best meet its overall goals, rather than on projects that only meet the objectives of specific program areas. Given USPS’s financial condition, a portfolio approach is especially important. However, with the exception of the DRIVE initiative, USPS develops its business cases for approval and allocates resources by project rather than by portfolio. More specifically, USPS officials develop business cases for each specific project that include projected return on investment for approval and funding.