Following enactment of PAEA in 2006, USPS updated its delivery service standards for market-dominant products, which define the number of days USPS is to take to deliver the mail in a timely manner. USPS’s delivery service standards are set forth in federal regulations and differ depending on the type of mail, the time of day and location at which USPS receives the mail, and the mail’s final destination. For example, USPS standards for delivery of 2-day single-piece First-Class Mail require the mail to be received by a specified cutoff time on the day it 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). This mail must then be delivered on the second regular delivery day (Monday to Saturday) to be considered “on time.” USPS measures delivery performance against its delivery service standards. For a given piece of mail, USPS first measures the transit time—that is, the number of days it takes from the point that the mail is accepted into USPS’s system until its delivery to a home or business. Then USPS compares this delivery time against delivery service standards to determine whether the mail was delivered on time. See figure 1 for USPS’s delivery performance of single-piece First-Class Mail from fiscal years 2011 to 2015. The second quarter of fiscal year 2015 experienced a significant decline in on-time delivery performance that USPS attributes to operational changes enacted in January 2015 coupled with adverse winter weather. However, performance improved in the next quarter. Since 2012, USPS has instituted several initiatives aimed at reducing expenses in its mail delivery and processing operations and networks as part of broader efforts to address its fiscal challenges and move toward financial viability. These initiatives included changing mail delivery service standards for some types of mail and then consolidating 141 mail processing facilities in 2012 and 2013. As we reported in September 2014, USPS changes to its delivery service standards increased the number of days for some mail to be delivered and still be considered on time. Further, effective January 5, 2015, USPS changed the delivery service standard for single-piece First-Class Mail sent to a nearby destination from 1 to 2 days. Table 2 presents these changes for market- dominant mail, which consists of First-Class Mail (e.g., correspondence, bills, payments, and statements); Standard Mail (mainly advertising); Periodicals (mainly magazines and local newspapers); and Package Services (mainly Media/Library Mail and Bound Printed Matter). To understand how changes in service standards affected expected transit times for First-Class Mail, we asked USPS to estimate the volumes of First-Class Mail subject to 1-day, 2-day, and 3-5-day delivery service standards for fiscal years 2011 through the second quarter of fiscal year 2015—the first quarter after USPS made its most recent changes to delivery service standards. USPS estimated that the percentage of First- Class Mail volume subject to a 1-day standard decreased from 38 percent in fiscal year 2011 to 13 percent in the second quarter of fiscal year 2015 (see fig. 2). When on-time delivery of First-Class Mail is redefined from a 1-day standard to a 2-day standard, USPS can take longer to deliver the mail for it to be considered “on time.” Based on delivery service standards, USPS sets annual performance targets for the percentage of mail that is to be delivered on time, and PRC annually assesses and reports USPS’s performance towards meeting these targets. PRC has responsibility for assuring delivery performance data are complete and accurate, and must approve any internal delivery performance measurement systems (i.e., systems administered by USPS as opposed to an external contractor). USPS is subject to legal requirements to create delivery service standards for market-dominant products, measure delivery performance, and report the results. Likewise, PRC is subject to legal requirements to specify how USPS should measure and report delivery performance, as well as requirements for using these data to provide oversight over USPS delivery performance. Key requirements for USPS and PRC are summarized in table 3. USPS uses two primary methods for measuring delivery performance: Tracking Barcoded Mail: Since 2011, USPS has measured and reported delivery performance for most types of market-dominant mail by using the time it is accepted at postal facilities to “start the clock” and scans of barcoded mail pieces to “stop the clock” by external, third-party reporters who receive the mail. This mail transit time is compared against delivery service standards to determine whether mail is delivered within the standard and thus considered on time. Most barcoded mail is tracked through USPS’s Full-Service Intelligent Mail program, which requires participating mailers that send bulk mail (i.e., mail entered in bulk quantities such as bills, advertisements, and magazines) to apply unique Intelligent Mail barcodes to mail pieces and provide USPS with electronic documentation for each mailing. Under this program, USPS uses a census approach that aims to measure all qualifying mail pieces in its mail processing network rather than a sampling approach. USPS commented that a census- type approach enables it to use the information to better manage day- to-day conditions throughout its network and that such visibility would not be available through sampling. Sending Test Mail Pieces: Since 1990, USPS has measured and reported on-time delivery performance for single-piece First-Class Mail through the External First-Class Mail measurement system (EXFC). Under this sampling system, an external contractor arranges for anonymous droppers to send test mail pieces from street collection boxes and private office-building lobby chutes to external, third-party reporters at residences and businesses. As will be discussed in more detail below, in January 2015, USPS proposed replacing its EXFC measurement system for single-piece First-Class Mail in favor of a system based on tracking barcoded mail. USPS’s measurement of on-time delivery performance has expanded greatly over the past 9 years, but remains incomplete because only about 55 percent of market-dominant mail volume is currently included in measurement. The remaining 45 percent is not included in measurement for two main reasons: (1) lack of trackable barcodes or (2) lack of needed information. USPS told us that it wants to include virtually all market-dominant mail in delivery performance measurement. To assess completeness, we determined measurement coverage—the percentage of mail included in measurement—as well as the various causes for why mail is not included in measurement and their possible effect on measured results. To the extent that mail is not included in measurement, performance data are not complete and may not be representative. There is not a minimum threshold of mail that is to be included in measurement for it to be considered representative. In general, the risk that measurement is not representative is greater if mail not included in measurement may be systematically different than mail included in measurement. In particular, if the unmeasured mail has different characteristics than the measured mail, and those characteristics are associated with the likelihood of on-time delivery, then the risk of a non-representative measurement is greater. As of the second quarter of fiscal year 2015, USPS measured on-time delivery performance for about half (55 percent) of market-dominant mail volume—up from only one-sixth of volume (16 percent) in fiscal year 2006 (see fig. 3). This increase in measurement coverage represents noteworthy progress by USPS and the mailing industry, which have devoted management commitment and significant resources to implement and participate in measurement systems for bulk mail that comprise most mail volume. Notably, USPS implemented measurement systems for bulk First-Class Mail, Standard Mail, and Periodicals. The number of pieces of market-dominant bulk mail included in delivery performance measurement has increased greatly in recent years—from 96 million pieces in the first quarter of fiscal year 2010 to 14.9 billion pieces in the second quarter of fiscal year 2015. Thus, the percentage of market-dominant bulk mail included in measurement increased from less than one percent in the first quarter of fiscal year 2010 to 48 percent in the second quarter of fiscal year 2015. Meanwhile, USPS provides performance measurement that covers virtually all single-piece First- Class Mail through mailing test pieces as part of its long-standing EXFC system. However, single-piece First-Class Mail comprises a small and declining percentage of market-dominant mail volume—down from 20 percent in the first quarter of fiscal year 2010 to 14 percent in the second quarter of fiscal year 2015. USPS’s measurement coverage has varied by class of mail (see fig. 4). The percentage of mail included in measurement is greatest for First- Class Mail (both bulk and single-piece mail), followed by Standard Mail, Periodicals, and market-dominant Package Services (mainly Media Mail/Library Mail and Bound Printed Matter) and has improved over time for each class. Most progress began in fiscal year 2011, when mailer participation increased significantly in Full-Service Intelligent Mail—a program that enables business mailers to track the progress of their barcoded mail through USPS’s mail processing system. Meanwhile, USPS’s EXFC measurement system continues to send test mail pieces to measure delivery performance of single-piece First-Class Mail. USPS’s measurement of on-time delivery performance for market- dominant mail remains incomplete because, as noted above, only about half of bulk mail volume was included in measurement as of the second quarter of fiscal year 2015. USPS tracks bulk mail using barcodes and electronic information about the mailing. The main causes for incomplete measurement of bulk mail can be broadly grouped into two different reasons: (1) mailers not applying a unique Intelligent Mail barcode to each mail piece to enable tracking (trackable barcodes)needed information.