U.S. Postal Service: Delivery Performance Standards, Measurement,
and Reporting Need Improvement (27-JUL-06, GAO-06-733). 	 
                                                                 
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.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-733 					        
    ACCNO:   A57548						        
  TITLE:     U.S. Postal Service: Delivery Performance Standards,     
Measurement, and Reporting Need Improvement			 
     DATE:   07/27/2006 
  SUBJECT:   Performance management				 
	     Performance measures				 
	     Policy evaluation					 
	     Postal service					 
	     Reporting requirements				 
	     Standards						 
	     Strategic planning 				 
	     Mail processing operations 			 
	     Transparency					 

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GAO-06-733

     

     * Results in Brief
     * Background
     * Some USPS Delivery Standards Are Not Useful and Transparent
          * Some USPS Delivery Standards Have Limited Usefulness
               * Delivery Standards for Standard Mail
               * Delivery Standards for Package Services
               * Delivery Standards for Periodicals
               * Delivery Standards for Priority Mail
               * Delivery Standards for First-Class Mail
               * Delivery Standards for Express Mail
               * Proposed Postal Reform Legislation and Delivery Standards
          * USPS Delivery Standards Lack Adequate Transparency
     * USPS Measurement and Reporting Of Delivery Performance Infor
          * USPS Delivery Performance Measurement Is Not Complete
          * USPS Reporting of Delivery Performance Lacks Adequate Transp
               * USPS's Delivery Performance Reporting Is Not Adequate to Mee
               * Delivery Performance Information Has Recently Improved but R
     * Progress In Developing Complete Delivery Performance Measure
          * Key Recommendations from Collaboration Efforts Involving USP
          * Impediments Remain to Implementing Performance Measurement f
               * Lack of Management Commitment and Effective Collaboration
               * Other Impediments for Measuring Delivery Performance
          * USPS Plans to Improve Service Performance, But Not to Implem
     * Conclusions
     * Recommendations for Executive Action
     * Agency Comments and Our Evaluation
     * Appendix I: Objectives, Scope, and Methodology
     * Appendix II: USPS Delivery Standards
     * Appendix III: Comments from the U.S. Postal Service
     * Appendix IV: GAO Contact and Staff Acknowledgments
          * GAO Contact
          * Staff Acknowledgments
               * Order by Mail or Phone

Report to Congressional Requesters

United States Government Accountability Office

GAO

July 2006

U.S. POSTAL SERVICE

Delivery Performance Standards, Measurement, and Reporting Need
Improvement

GAO-06-733

Contents

Letter 1

Results in Brief 3
Background 7
Some USPS Delivery Standards Are Not Useful and Transparent and Do Not
Reflect Current Mail Operations 10
USPS Measurement and Reporting Of Delivery Performance Information Is
Inadequate 22
Progress In Developing Complete Delivery Performance Measurement Is
Unsatisfactory Due To Lack of Management Commitment and Effective
Collaboration 31
Conclusions 41
Recommendations for Executive Action 42
Agency Comments and Our Evaluation 42
Appendix I Objectives, Scope, and Methodology 51
Appendix II USPS Delivery Standards 58
Appendix III Comments from the U.S. Postal Service 64
Appendix IV GAO Contact and Staff Acknowledgments 119

Tables

Table 1: Summary of USPS Delivery Standards for Timely Delivery of Mail 11
Table 2: USPS Measurement and Reporting of Timely Delivery Performance 23
Table 3: USPS Delivery Performance Measurement by Type of Mail 25
Table 4: USPS Delivery Performance Reporting by Type of Mail 28
Table 5: Timeline of Actions and Recommendations Related to Delivery
Performance Measurement 32
Table 6: Basis for GAO Assessment of USPS Delivery Standards, Measurement,
and Reporting 52
Table 7: USPS Delivery Standards by Class and Type of Mail 58
Table 8: USPS's Approximate Overview of the Service Standard Ranges for
Standard Mail and Periodicals (not specifically required) 63

Figure

Figure 1: Geographic Coverage of Delivery Performance Measurement for
First-Class Mail Deposited in Collection Boxes as Measured by EXFC 24

Abbreviations

APQC American Productivity and Quality Center BMC Bulk Mail Center DBMC
Destination Bulk Mail Center DDU Destination Delivery Unit DSCF
Destination Sectional Center Facility EMS Express Mail Service EXFC
External First-Class Measurement System GPRA Government Performance and
Results Act of 1993 MTAC Mailers' Technical Advisory Committee OCA Office
of the Consumer Advocate P&DC Processing and Distribution Center PETE
Priority End-to-End POM Postal Operations Manual PRC Postal Rate
Commission PSA Parcel Shippers Association PTS Product Tracking System SCF
Sectional Center Facility USPS U.S. Postal Service

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separately.

United States Government Accountability Office

Washington, DC 20548

July 27, 2006

The Honorable Susan M. Collins Chairman Committee on Homeland Security and
Governmental Affairs United States Senate

The Honorable Tom Carper United States Senate

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;1
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.

1For the purposes of this report, major types of mail include: Express
Mail (also referred to as Expedited Mail); Priority Mail (i.e.,
First-Class Mail that weighs over 13 ounces); First-Class
Mail-single-piece mail (e.g., bill payments and letters sent at the rate
of 39 cents for the first ounce plus 24 cents for each additional ounce)
and bulk mail (e.g., bills and advertising); Periodicals (mainly magazines
and local newspapers); Standard Mail (mainly bulk advertising and direct
mail solicitations); Package Services (e.g., parcels, merchandise,
catalogs, media mail, library mail, and books); and International Mail
(e.g., letters, parcels, and periodicals destinating in foreign
countries).

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."2 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.

This report assesses

           1. delivery standards for the timely delivery of mail that USPS
           has established,
           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.

2H.R. 22, 109th Congress, was passed by the House on July 26, 2005. The
Senate bill was introduced as S. 662, 109th Congress and on Feb. 9, 2006,
the Senate incorporated S. 662 into H.R. 22 and passed H.R. 22 in lieu of
S. 662.

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.

                                Results in Brief

While USPS has developed delivery standards for its major types of mail,
the standards for several types of mail have not been updated in a number
of years to reflect significant changes in the way that mail is prepared
and delivered. As a result, these outdated standards are unsuitable as
benchmarks for setting realistic expectations for timely mail delivery,
measuring delivery performance, or improving service, oversight, and
accountability. For example, the delivery standards for Standard Mail,
USPS's largest volume mail category (48 percent of mail volume), were
established in the 1970s and are generally based on distance. These
standards do not take into account mailer activities, such as presorting
mail to the ZIP Code or carrier delivery route level, and entering mail at
a postal facility that generally is closer to the destination, that have
led to changes in USPS's mail processing and transportation networks. Such
activities became much more prevalent after USPS began providing discounts
to mailers for these activities more than 25 years ago. For example, the
degree of presorting alters the amount of handling the mail receives by
USPS and potentially speeds or slows delivery. For similar reasons,
delivery standards for some Periodicals and most Package Services mail are
outdated and do not reflect changes in the way mailers and USPS process
this mail. USPS officials told us that because of the variety of ways
these types of mail are sorted and enter the postal system, developing
standards to reflect expected speed of delivery is challenging.
Nevertheless, USPS has received several recommendations over the past
decade from committees including USPS and mailers representatives to
update its delivery standards to reflect these trends, but has not
implemented them. Sponsors of postal reform legislation have recognized
the need for action in this area, and Senate and House reform bills passed
in this session of Congress would require USPS to, respectively, modernize
its service standards and report its standards annually. To its credit,
USPS has modernized its standards for some types of mail, such as Parcel
Select. With regard to First-Class Mail (46 percent of mail volume), USPS
has occasionally updated its standards to reflect changes in operations
and performance, but PRC criticized changes that downgraded some of these
standards. In addition, USPS's existing delivery standards for some major
types of mail are not easily accessible, which impedes mailers from
obtaining such information to make informed decisions about different
mailing options with varying rates and service.

USPS does not measure and report its delivery performance for most types
of mail-less than one-fifth of total mail volume is measured-therefore,
transparency with regard to its overall performance in timely mail
delivery is limited. No representative measures of delivery
performance-measures that can be generalized to an entire class or major
type of mail-exist for Standard Mail (48 percent of volume), bulk
First-Class Mail (25 percent of volume), Periodicals (4 percent of
volume), and most Package Services (less than 1 percent of volume).
Similarly, USPS has only reported its delivery performance for a small
portion of its mail volume, concentrating primarily on the single-piece
First-Class Mail that is measured. Further, single-piece First-Class Mail
volume has been declining over the past 15 years and is expected to
continue declining. Since 1976, USPS has been required to provide "data on
the speed and reliability of service provided for the various classes of
mail and types of mail service" in its annual Comprehensive Statement 
that is submitted to USPS's oversight and appropriations committees.3
However, USPS has focused again only on single-piece First-Class Mail in
reporting delivery performance in the Comprehensive Statement. Such
limited measurement also appears to fall short of proposed requirements in
the House- and Senate-passed bills for USPS to report annually on the
level of service provided for most types of mail "in terms of speed of
delivery and reliability." In April 2006, USPS improved its reporting on
its Web site by posting delivery performance information on a newly
created page, including selected results for the past quarter for the
timely delivery of some Express Mail, Priority Mail, First-Class Mail, and
Package Services. The information was provided as a result of an agreement
with PRC's Office of the Consumer Advocate.4 Nevertheless, USPS's
measurement and reporting gaps are an impediment to diagnosing delivery
problems and assessing the extent to which USPS is meeting its statutory
requirements to provide prompt and reliable service to patrons in all
areas of the United States.

USPS's rate of progress in developing a set of delivery performance
measures for all major types of mail has been slow and inadequate, as has
its progress in reporting its performance for these types of mail. In
recent years, USPS has implemented additional delivery performance
measures for some low-volume types of mail that collectively comprise less
than 1 percent of total mail volume. USPS also tracks some mail for
diagnostic purposes. However, several impediments continue to hinder
USPS's ability to develop representative delivery measures for all of its
major types of mail against USPS delivery standards, which specify the
maximum number of days from entry to delivery for mail to be delivered in
a timely manner. Impediments to measure end-to-end delivery time (i.e.,
the time from entry to delivery) include:

           o  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
           between USPS and mailers is an overall theme in understanding the
           slow progress being made in developing and implementing methods of
           measuring performance.
           o  USPS has partially implemented technology that would allow it
           to track barcoded mail through its mail processing and
           transportation networks. Implementation of this technology is a
           multi-year project and could play a part in measuring delivery
           performance when completed.
           o  There has been limited mailer participation in applying unique
           barcodes to mail pieces for tracking purposes.
           o  Incomplete and inaccurate data from USPS and mailers about when
           USPS receives bulk mail make it difficult to know when to "start
           the clock" on measuring delivery performance for this mail.

           While USPS has taken a number of positive steps to transform its
           operations over the years, it has not implemented several key
           recommendations that have been made since the early 1990s to
           improve its delivery standards and measure delivery performance
           for all major types of mail, particularly for high-volume types of
           mail, such as Standard Mail and bulk First-Class Mail. These
           recommendations were made in 1992, 1997, 1999, and 2004 by
           committees consisting of representatives of USPS and the mailing
           industry. Further, USPS has no current plans to implement
           additional representative measures of delivery performance. Senior
           USPS officials told us that it would be too costly for USPS to
           measure delivery performance by tracking all 210 billion pieces of
           mail every year. However, these concerns about cost could be
           addressed by exploring sampling options or other approaches in
           collaboration with 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. We recognize that it will take time to resolve
           impediments to implementing 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.

           We are making recommendations to USPS that include:

           o  modernizing delivery standards for all major types of mail to
           reflect USPS operations;
           o  providing a clear commitment to develop a complete set of
           representative delivery performance measures;
           o  implementing representative delivery performance measures for
           all major types of mail by providing more effective collaboration
           with mailers and others; and,
           o  improving the transparency of delivery performance standards,
           measures, and results by publicly disclosing more information,
           including in its Comprehensive Statement and other annual
           performance reports to Congress, as well as providing easily
           accessible information on its Web site.

           In commenting on a draft of this report, USPS disagreed that some
           of its delivery standards are outdated. However, we did not make
           changes to the report because USPS's outdated standards do not
           reflect changes in how major types mail are prepared and
           delivered. Further, USPS 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 also emphasized improving
           service-an emphasis we agree with-but we continue to have
           questions about whether USPS's measurement 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. 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 standards should be
           more visible and stated that it is exploring making information
           related to its standards available through additional channels,
           including its Web site.

           Background
			  
			  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."5 Established by the Postal
           Reorganization Act of 1970,6 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."7 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."8 Also, in selecting modes of transportation, USPS is
           mandated to "give highest consideration to the prompt and
           economical delivery of all mail."9 More generally, USPS is
           mandated to provide adequate and efficient postal services that
           meet the needs of different categories of mail and mail users.10

           USPS has designated improving service as one of its four goals in
           its Strategic Transformation Plan.11 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 goals12 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.13

           Some USPS Delivery Standards Are Not Useful and Transparent
			  and Do Not Reflect Current Mail Operations
			  
			  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.

339 U.S.C. S:2401(e), initially added as 39 U.S.C. S:2401(g) by Pub. L.
94-421, Postal Reorganization Act Amendments of 1976.

4The PRC's Office of the Consumer Advocate represents the interests of the
general public. The written agreement with USPS is available at
http://www.prc.gov/docs/46/46232/OCA_Notice_with_Letter.pdf .

                                   Background

539 U.S.C. S:101.

6The Postal Reorganization Act of 1970 (Pub. L. No. 91-375) reorganized
the former U.S. Post Office Department into the U.S. Postal Service and
created PRC.

739 U.S.C. S:101.

839 U.S.C. S:101(e).

939 U.S.C. S:101(f).

1039 U.S.C. S:403.

11USPS, Strategic Transformation Plan 2006-2010 (Washington, D.C.: Sept.
2005).

12GAO, Results-Oriented Cultures: Creating a Clear Linkage between
Individual Performance and Organizational Success, GAO-03-488 (Washington,
D.C.: Mar. 14, 2003).

13GAO, Managing for Results: Enhancing Agency Use of Performance
Information for Decision-Making, GAO-05-927 (Washington, D.C.: Sept. 9,
2005).

 Some USPS Delivery Standards Are Not Useful and Transparent and Do Not Reflect
                            Current Mail Operations

Table 1: Summary of USPS Delivery Standards for Timely Delivery of Mail

Source: USPS.

Note: Mail volume data are for fiscal year 2005.

aThe range of days shown in this table summarizes USPS delivery standards
for each class and type of mail, which vary depending on the ZIP Codes
where each mail piece enters the postal system and is delivered.

bStandards range from 2 to 9 days for Package Services mail within the
continental United States, except for Alaska and Hawaii, for which no
Package Service standards exist, and except for Parcel Select, for which
standards range from 1 to 3 days.

cFor purposes of this figure, First-Class Mail does not include Priority
Mail.

Some USPS Delivery Standards Have Limited Usefulness

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.

  Delivery Standards for Standard Mail

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:

           o  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.
           o  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:

           o  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.
           o  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.

           Delivery Standards for Package Services
			  
			  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.14 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.15

           Delivery Standards for Periodicals
			  
			  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.

           Delivery Standards for Priority Mail
			  
			  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.16 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.

           Delivery Standards for First-Class Mail
			  
			  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.17 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.18 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.19 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.20 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.

           Delivery Standards for Express Mail
			  
			  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.21

           Proposed Postal Reform Legislation and Delivery Standards
			  
			  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.22 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.23

           USPS Delivery Standards Lack Adequate Transparency
			  
			  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.

           USPS Measurement and Reporting Of Delivery Performance Information
			  Is Inadequate
			  
			  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.

           Table 2: USPS Measurement and Reporting of Timely Delivery
           Performance

           Source: GAO analysis of USPS information.

           aNo representative measure of delivery performance exists for this
           mail. Some mailers pay an additional fee to obtain data on the
           progress of their mail through USPS's mail processing system.
           However, these data are not representative, cover less than 2
           percent of total mail volume, and do not include data on the date
           of delivery.

           Note: Timely delivery performance is measured based on comparing
           the time for USPS to deliver mail against USPS's delivery
           standards. Reporting includes material on USPS's Web site. For
           purposes of this table, First-Class Mail does not include Priority
           Mail. Volume and revenue data are for fiscal year 2005 and do not
           add up to 100 percent because they do not include some small and
           unrelated types of mail.

           USPS Delivery Performance Measurement Is Not Complete
			  
			  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.

  Delivery Standards for Package Services

  Delivery Standards for Periodicals

14GAO, U.S. Postal Service: New Focus on Improving Service Quality and
Customer Satisfaction, GAO/GGD-96-30 (Washington, D.C.: Dec. 20, 1995).

15 GAO-05-927 , GAO-03-488 .

  Delivery Standards for Priority Mail

  Delivery Standards for First-Class Mail

16GAO, Priority Mail: Advertised 2-Day Service Is Not Guaranteed,
GAO/GGD-93-122 (Washington, D.C.: July 16, 1993).

17Although Priority Mail is classified as a subclass of First-Class Mail,
for purposes of this report, "First-Class Mail" refers to First-Class Mail
that does not include Priority Mail.

18PRC, Commission Report: Complaint on First-Class Mail Standards Service,
Docket No. C2001-3 (Washington, D.C.: Apr. 17, 2006).

19PRC Docket No. N2006-1, Evolutionary Network Development Service
Changes, 2006.

20A 3-digit ZIP Code area includes all addresses with the same first three
digits of the ZIP Code.

  Delivery Standards for Express Mail

  Proposed Postal Reform Legislation and Delivery Standards

21PRC, Order on Complaint on Express Mail, Docket No. C2005-1 (Washington,
D.C.: Apr. 18, 2006).

22The reporting requirements in the House and Senate postal reform bills
do not cover types of mail classified as "competitive" such as Express
Mail and Priority Mail.

23S. Rept. 108-318, to accompany S. 2468, at 22-23 (2004).

USPS Delivery Standards Lack Adequate Transparency

USPS Measurement and Reporting Of Delivery Performance Information Is Inadequate

USPS Delivery Performance Measurement Is Not Complete

Figure 1: Geographic Coverage of Delivery Performance Measurement for
First-Class Mail Deposited in Collection Boxes as Measured by EXFC

Note: Areas covered by EXFC are shaded. Boundaries within states are for
3-digit ZIP Code areas.

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.24 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.

24Delivery Confirmation service provides mailers with the date and time of
delivery or attempted delivery.

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.

Table 3: USPS Delivery Performance Measurement by Type of Mail

Source: GAO analysis of USPS information.

As a result of the measurement gaps listed above, measurement is not
sufficiently complete to understand how well USPS is achieving the
following:

           o  performing its statutory mission of providing prompt and
           reliable service to patrons in all areas, including prompt
           delivery of all mail;
           o  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;
           o  providing expeditious handling of important letter mail, such
           as bills and statements sent via First-Class Mail;
           o  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
           o  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.25 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.

           USPS Reporting of Delivery Performance Lacks Adequate Transparency
			  
			  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 Reporting of Delivery Performance Lacks Adequate Transparency

25GAO, Operational Performance of the United States Postal Service,
GAO/T-GGD-91-9 (Washington, D.C.: Mar. 5, 1991).

Table 4: USPS Delivery Performance Reporting by Type of Mail

Source: GAO analysis of USPS information.

aUSPS manages its field operations by dividing the nation into nine
geographic areas and 80 performance clusters.

bhttp://ribbs.usps.gov/files/mtac/exfc/.

  USPS's Delivery Performance Reporting Is Not Adequate to Meet Oversight Needs

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."26 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."27 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.

2639 U.S.C. S:2401(e), initially added as 39 U.S.C. S:2401(g) by Pub. L.
94-421, Postal Reorganization Act Amendments of 1976.

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.28 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.

  Delivery Performance Information Has Recently Improved but Remains Incomplete

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 Advocate29 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.

27H.R. Rep. No. 94-1444, at 14 (1976).

28GPRA requires that USPS submit strategic plans to the President and
Congress, which are to be updated at least every 3 years, and to submit
annual performance plans and annual performance reports to Congress.

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.

29The PRC's Office of the Consumer Advocate represents the interests of
the general public. The written agreement with USPS is available at
http://www.prc.gov/docs/46/46232/OCA_Notice_with_Letter.pdf .

      Progress In Developing Complete Delivery Performance Measurement Is
Unsatisfactory Due To Lack of Management Commitment and Effective Collaboration

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.

Key Recommendations from Collaboration Efforts Involving USPS and Mailers Have
Not Been Implemented

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.

Table 5: Timeline of Actions and Recommendations Related to Delivery
Performance Measurement

Source: GAO analysis of USPS information and other sources, such as
reports of the above committees.

Impediments Remain to Implementing Performance Measurement for all Major Types
of Mail

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.

  Lack of Management Commitment and Effective Collaboration

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:

           o  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.30 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.31 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.32

           o  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.
           o  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.33 Timely delivery of EMS items,
           including Global Express Mail, has reportedly improved since
           delivery standards and measurement were implemented.

           Other Impediments for Measuring Delivery Performance
			  
			  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.34 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.

           USPS Plans to Improve Service Performance, But Not to Implement
			  Representative Measures of Delivery Performance Across All Product Lines
			  
			  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.

           Conclusions
			  
			  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.

           Recommendations for Executive Action
			  
			  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 USPSï¿½s 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. 

           Agency Comments and Our Evaluation
			  
			  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.35

           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 [email protected] 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.

           Katherine A. Siggerud Director, Physical Infrastructure Issues

Appendix I: Objectives, Scope, and Methodology

           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.
			  
			  Table 6: Basis for GAO Assessment of USPS Delivery Standards, Measurement,
and Reporting

Source: Criteria developed by GAO based on laws, practices used by
high-performing organizations, and past GAO work.

a39 U.S.C. S:101(a).

b39 U.S.C. S:101(b).

c39 U.S.C. S:101(f).

d39 U.S.C. S:101(e).

e39 U.S.C. S:101(f).

f39 U.S.C. S:403(b)(2).

gTypes of domestic mail are established in the Domestic Mail
Classification Schedule, which is incorporated into the PRC subpart of the
Code of Federal Regulations (Appendix A to Subpart C of 39 C.F.R. Part
3001, following 39 C.F.R. S:3001.68). Statutory guidance for domestic mail
classification is specified in 39 U.S.C. S:3623.

hGAO, Major Management Challenges and Program Risks: U.S. Postal Service,
GAO-01-262 (Washington, D.C.: Jan. 2001).

iGAO, The Results Act: Observations on the Postal Service's Preliminary
Annual Performance Plan, GAO/GGD-98-144 (Washington, D.C.: July 10, 1998).

jGAO, Tax Administration: IRS Needs to Further Refine Its Tax Filing
Season Performance Measures, GAO-03-143 (Washington, D.C.: Nov. 22, 2002).

kAPQC, Achieving Organizational Excellence Through the Performance
Measurement System: Consortium Benchmarking Study: Best Practice Report
(Houston, Texas: 1999).

l39 U.S.C. S:2401(e).

m39 U.S.C. S:2803-2804.

n39 U.S.C. S:2803(d).

oLaws restricting private delivery of letters include 39 U.S.C. S:601-606
and 18 U.S.C. S:1693-1699.

pGAO, U.S. Postal Service: Key Elements of Comprehensive Postal Reform,
GAO-04-397T (Washington, D.C.: Jan. 28, 2004), U.S. Postal Service: Bold
Action Needed to Continue Progress on Postal Transformation, GAO-04-108T
(Washington, D.C.: Nov. 5, 2003); Major Management Challenges and Program
Risks: U.S. Postal Service, GAO-03-118 (Washington, D.C.: Jan. 2003).

q GAO-03-118 .

rGAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers
and Organizational Transformation, GAO-03-669 (Washington, D.C.: July 2,
2003).

s39 U.S.C. S:202(a) and S:205(a).

t39 U.S.C. S:3622(b)(2).

uPRC, Presiding Officer's Ruling No. R2000-1/51, Docket No. R2000-1
(Washington, D.C.: Apr. 26, 2000).

v39 U.S.C. S:3623.

w39 U.S.C. S:3661.

x39 U.S.C. S:3662.

yGAO, Managing for Results: Enhancing Agency Use of Performance
Information for Decision-Making, GAO-05-927 (Washington, D.C.: Sept. 9,
2005).

zNational Academy of Public Administration and IBM Endowment for the
Business of Government, How Federal Programs Use Outcome Information:
Opportunities for Federal Managers (Washington, D.C.: May 2003).

aaGAO, Results-Oriented Government: Practices That Can Help Enhance and
Sustain Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.:
Oct. 21, 2005).

bbGAO, Results-Oriented Cultures: Creating a Clear Linkage between
Individual Performance and Organizational Success, GAO-03-488 (Washington,
D.C.: Mar. 14, 2003).

ccGAO, Human Capital: Observations on Final Regulations for DOD's National
Security Personnel System, GAO-06-227T (Washington, D.C.: Nov. 17, 2005).

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.
			  
			  Appendix II: USPS Delivery Standards Appendix II: USPS Delivery Standards

Table 7: USPS Delivery Standards by Class and Type of Mail

Source: USPS.

aThe number of delivery days after acceptance of the mail, which generally
does not include Sundays or holidays.

bUSPS, Direct Testimony of Pranab M. Shah on Behalf of the United States
Postal Service, USPS-T-1, PRC Docket N2006-1 (Washington, D.C.: Feb. 14,
2006). See Table 8 for more detail.

cThe Postal Operations Manual (POM) is incorporated in its entirety into
the Code of Federal Regulations, but is not available on the USPS Web
site.

dPOM 458.341d.

ePOM 458.2h.

fPOM 458.341f.

gPOM 458.341h. Also see USPS, Postal Bulletin 22110, p. 19 (Washington,
D.C.: Sept. 4, 2003), Postal Bulletin 22045, p. 18 (Washington, D.C.: Mar.
8, 2001).

hPOM 458.2b.

iPOM 458.2e.

jUSPS-T-1, PRC Docket N2006-1.

kPRC Docket No. N89-1.

lUSPS policies call for consideration of 2-day standards (as opposed to
3-day standards) in some circumstances, such as when mail flows reach
specified thresholds. For example, 2-day standards are to be considered
when a destinating mail processing facility called an Area Distribution
Center receives more than 0.5 percent of its incoming mail volume from an
originating mail processing facility.

mThe Domestic Mail Manual (DMM) 113.4,
http://pe.usps.com/text/dmm300/113.htm . (The entire DMM is incorporated
by reference into the Code of Federal Regulations.) See USPS Quick Service
Guide 110, Express Mail,
http://pe.usps.gov/cpim/ftp/manuals/qsg300/q110.pdf , for a summary.

nDMM 113.4.1.1, http://pe.usps.com/text/dmm300/113.htm , and POM 674.

oDMM 113.4.3.1, http://pe.usps.com/text/dmm300/113.htm , POM 675.

pMore detailed information is available at
http://www.usps.com/serviceperformance/dayofmailing.htm .

qPOM 126.43.

r http://www.usps.com/global/sendpackages.htm and
http://www.usps.com/global/sendmail.htm .

Table 8: USPS's Approximate Overview of the Service Standard Ranges for
Standard Mail and Periodicals (not specifically required)

Source: USPS.

Note: USPS divides the United States into eight zones. The approximate
delivery standard for Standard Mail is equal to the number of postal zones
from origin (i.e., where the mail is accepted by USPS) to destination
(i.e., where the mail is delivered), plus 2 days. The approximate delivery
standard for Periodicals that traverse at least two postal zones is equal
to the number of zones from origin to destination, minus 1 day. The
specific delivery standards are defined for each combination of origin and
destination 3-digit ZIP Codes and may differ from the approximate overview
in this table.

aUsually, ZIP Codes within the same Sectional Center Facility (SCF) are
targeted for 3 days. Depending on the size of the Intra-SCF area, all
other Non-Intra-SCF destinations are 4 days or greater.

bThis can be equal to First-Class Mail delivery standards between ZIP Code
Pairs, but is not intended to ever be faster.

Appendix III: Comments from the U.S. Postal Service Appendix III: Comments
from the U.S. Postal Service

Appendix IV: GAO Contact and Staff Acknowledgments

                                  GAO Contact

Katherine Siggerud (202) 512-2834

                             Staff Acknowledgments

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.

(542071)

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30USPS response to ValPak interrogatory in Evolutionary Network
Development Service Changes proceeding, USPS-T1-15, PRC Docket No.
N2006-1, filed Apr. 25, 2006.

31National Academy of Public Administration, How Federal Programs Use
Outcome Information: Opportunities for Federal Mangers (Washington, D.C.:
May 2003).

32 GAO-05-927 .

33The EMS Cooperative has more than 130 members, including USPS and
foreign postal administrations.

34For example, Red Tag News Publications Association, a nonprofit
association of 64 magazines and other publications that generate about
830,000 pieces of Periodicals mail annually, has 1,000 monitors who
receive magazines and who report when they arrive.

35USPS Office of the Inspector General, External First-Class Measurement
System, report number DS-AR-00-001 (Arlington, VA: Mar. 27, 2000).

www.gao.gov/cgi-bin/getrpt? GAO-06-733 .

To view the full product, including the scope

and methodology, click on the link above.

For more information, contact Katherine Siggerud at (202) 512-2834 or
[email protected].

Highlights of GAO-06-733 , a report to Congressional requesters

July 2006

U.S. POSTAL SERVICE

Delivery Performance Standards, Measurement, and Reporting Need
Improvement

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.

What GAO Recommends

GAO recommends that USPS take actions to modernize its delivery standards,
implement delivery performance measures for major types of mail by
providing clear commitment and more effective collaboration, and improve
the transparency of delivery performance standards, measures, and results.
In commenting on a draft of this report, USPS disagreed that its standards
are outdated and detailed its vision to improve service measures and
transparency. USPS did not directly comment on three of our four
recommendations. On our transparency recommendation, USPS said that its
standards should be more visible and is exploring providing more of this
information.

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. As shown in the table below,
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.

USPS Delivery Standards, Measurement, and Reporting

Source: GAO analysis of USPS information.

aLess than 0.5 percent.

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.
*** End of document. ***