USPS has a universal service obligation, part of which requires it to provide access to retail services. Several statutory provisions govern USPS when considering changes to its retail network, such as the following. Section 101 of Title 39 of the U.S. Code states, “The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people.” USPS is required to serve the public and provide a maximum degree of effective and regular postal services to rural areas, communities, and small towns where post offices are not self-sustaining. USPS is authorized to determine the need for post offices and to provide such offices as it determines are needed. Regarding post offices, the law requires that no small post office shall solely for operating at a deficit, and language in annual be closed appropriations has provided that none of the appropriated funds shall be used to consolidate or close small rural and other small post offices. 39 U.S.C. § 404(a)(3). USPS guidance uses the term “discontinuance” to describe ending operations at a USPS-operated retail facility, such as a post office, station, or branch. Stations and branches are subordinate units of a main post office and generally offer the same products and services as post offices. Throughout this report, we use the term “closure,” except when referring to USPS guidance. 39 U.S.C. § 404(d)(5). closing postal facilities is provided in a recent report by the Congressional Research Service. The size of USPS’s retail network has remained largely unchanged over the past 5 years, although customer visits and transactions have declined, as shown in table 1. In 2002, USPS released a transformation planchallenges it faced with its retail network and optimization strategy. It also described plans to address these challenges—for example, by introducing retail alternatives in concert with reducing its retail network footprint and operating costs. USPS stated that it would “provide customers with easier and more convenient retail access. Postal services will be available where customers need them—at home, at work, where they shop, or at the post office. The Postal Service will promote the convenience of existing, underutilized alternatives and develop new low- cost solutions using technology, partnerships, and product simplification.” that described In 2003, the President’s Commission on the Postal Service issued a report that noted many of the nation’s post offices were no longer necessary to fulfill USPS’s universal service obligation, given the proliferation of alternative retail access points in grocery stores, drug stores, ATMs, and other more convenient locales in communities across the country. The commission recommended that USPS maximize the potential of low-activity post offices by operating those necessary for fulfilling the universal service obligation, even if they operate at a substantial economic loss. However, where low-activity post offices are not necessary, it should have flexibility to dispose of them, with appropriate local community involvement, and existing statutes and appropriations that limit flexibility should be repealed. We have said that network restructuring is a key action to help USPS reduce its costs and improve efficiency. In 2009, we suggested that USPS restructure its retail network to eliminate growing excess capacity, reduce costs, and improve efficiency. recommended that it develop a plan for optimizing its retail network that addresses both traditional post offices and retail alternatives. A senior USPS official told us in January 2012 that USPS was in the process of developing a retail optimization plan. Additionally, in 2011, we In February 2012, USPS released a 5-year business plan, with an organization-wide goal to achieve $22.5 billion in annual cost savings through a combination of legislative and operational changes, including $2 billion in savings from optimizing the retail network. According to USPS, it plans to reduce its total workforce of 557,000 employees by 155,000 within the next 5 years through attrition, as over half of its career employees are now retirement-eligible. The plan did not indicate how many of these proposed employee reductions would occur as a result of changes to its retail network. GAO, High Risk Series: Restructuring the U.S. Postal Service to Achieve Sustainable Financial Viability, GAO-09-937SP (Washington, D.C. July 2009). Over the past 5 years, USPS has taken several actions to change its retail network through reducing its workforce and retail footprints, while expanding retail alternatives. It estimated that it saved about $800 million by reducing retail work hours during this period. It also closed 631 of its post offices, but it did not have cost savings estimates related to these closures. Further, most of the facilities closed (500) were post offices where operations had first been suspended due to emergencies or a postmaster vacancy. Fewer closures (131) have resulted from the nationwide reviews that USPS initiated in 2009 and 2011. Over the past 5 years, USPS reduced the number of retail clerks by 26 percent and the number of postmasters by 7.4 percent at USPS-operated facilities, as shown in table 2. It also created a new noncareer postal support employee position, whose wages will be approximately one-third of a clerk’s average wage. An agreement reached with the American Postal Workers Union in May 2011 allows USPS to increase its use of noncareer employees by up to 20 percent of clerk positions covered by the agreement. In related efforts to cut costs, USPS has reduced total retail work hours of clerks and postmasters by about 20 percent since fiscal year 2006 through employee attrition and schedule adaptation. During the past 5 years, USPS designed two nationwide initiatives— known as the Station and Branch Optimization Initiative (2009 Retail Initiative) and the Retail Access Optimization Initiative (2011 Retail Initiative)—to review (1) over 3,000 USPS-operated retail facilities in urban and suburban areas and (2) about 3,650 primarily rural facilities for possible closure. Table 3 describes key information about these initiatives. In addition, over the last 5 years, USPS district offices have identified and closed around 500 USPS-operated retail facilities on an individual, ad-hoc basis as they determined the need.response to a postmaster vacancy or the suspension of operations due to These individual closures were in an expired lease or irreparable damage to the facility following a natural disaster. Many of these closures were for facilities that had suspended operations years ago, but USPS did not formally close the facility until recently. USPS has continued to expand the number and type of alternatives at which customers can access retail postal products and services outside of USPS-operated postal facilities. These alternatives include self-service options as well as partnerships with retailers, which could help it contain facility and labor costs while still providing access for customers. Examples of retail alternatives include its website, self-service kiosks, contract postal units, rural carrier services, approved shippers, Village Post Offices, stamp retailers, orders of supplies by telephone, and package pickup at the door. The percentage of retail revenue from these alternatives increased from 24 percent in 2007 to 35 percent in 2011, as shown in table 4. USPS has projected that by 2020, alternatives to USPS- operated retail facilities may account for 60 percent of its retail revenue. Postal stakeholders, including Members of Congress, PRC, USPS OIG, customers, employee associations, and some community residents have raised concerns about USPS’s retail restructuring initiatives. These concerns include access to postal services, including community residents’ ability to obtain retail services, the adequacy of retail alternatives, and changes to delivery services; the impact of facility closures on communities; the adequacy of data analysis of facilities facing closure and the reliability of data, particularly with regard to the accuracy of cost- savings estimates; the transparency and equity of closure decisions; the fairness of facility closure procedures; and changes in who can manage a post office. USPS regulations provide that local management host a community meeting to obtain public input when it proposes to close a facility. One of the major concerns of community residents at meetings we attended was that the communities’ access to postal services would decline if USPS closed the facility and the next closest postal facility was too far. For example, at a meeting we attended in Colorado, one resident described the community as “isolated” and expressed concern that the distance to the next closest post office (about 25 miles) was unreasonable. Another resident stated that should the post office close, driving about 50 miles round-trip to mail packages was not a viable option. At another site we visited in Arkansas, postal officials told us that proximity of all post offices is one of the major factors they consider when reviewing facilities on the 2011 Retail Initiative study list. At meetings we attended, community residents also raised questions about the adequacy of other available alternatives. For example, one resident said that he could not access retail services on USPS’s website because Internet service was not available. Additional concerns about retail alternatives were raised by PRC. In the 2011 Retail Initiative, PRC questioned whether USPS had adequate alternative retail access options available for retail facilities that it proposed closing. PRC said that alternative access should be considered concurrently with closure studies and be presently available. Postal officials at the meetings we attended encouraged customers to provide feedback on proposed retail alternatives, and USPS officials told us they have attempted to coordinate expanding alternatives with closures. They gave the example of introducing the concept of partnering with local businesses to create a Village Post Office along with the announcement of the 2011 Retail Initiative. However, Village Post Offices may not offer a realistic alternative for customers in some rural areas because there may not be businesses in the community to host a post office. As of January 2012, nine Village Post Offices were in operation, and 13 others were under contract, according to USPS.