U.S. Postal Service: Enhancements Needed in Performance Planning and
Reporting (Letter Report, 09/19/2000, GAO/GGD-00-207).
Pursuant to a congressional request, GAO provided information on the
Postal Service's (USPS) performance measures, reports, and plans,
focusing on: (1) how well USPS fiscal year (FY) 1999 performance report
addressed USPS progress toward achieving the goals established by the FY
1999 performance plan; and (2) whether USPS FY 2001 preliminary
performance plan demonstrates continued progress in developing a
resonable basis for establishing accountability for results.
GAO noted that: (1) GAO's assessments of USPS' FY 1999 performance
report and its FY 2001 preliminary performance plan are not as positive
as prior years' assessments of USPS efforts under the Government
Performance and Results Act of 1993 (GPRA); (2) although both the FY
1999 performance report and FY 2001 performance plan contain several
positive aspects, GAO did not see the continued progression of
improvements in USPS' GPRA-related documents that GAO observed in the
past; (3) more specifically, GAO believes that some aspects of USPS' FY
1999 performance report were not as straightforward and clearly stated
as intended by GPRA, and some aspects of USPS' FY 2001 preliminary
performance plan were not as comprehensive as they had been in prior
plans; (4) GAO also has concerns about other aspects that may limit the
plan's usefulness; (5) it appears that some aspects of USPS' FY 1999
performance report could be misleading; (6) the report could mislead
readers into concluding that USPS' Total Factor Productivity increased
during FY 1999 due to the report's portrayal of negative postal
productivity as a strongly positive result; (7) there are also a number
of reasons why USPS' FY 2001 preliminary performance plan may not have
been as useful to Congress, postal managers, and others as it could have
been; and (8) those reasons include instances where: (a) without
detailed explanation, several prior years' subgoals--and their
associated indicators and targets--were not carried forward into FY 2001
preliminary performance plan; (b) the criteria USPS used to measure its
success toward achieving certain goals were unclear; (c) the
descriptions of strategies to accomplish certain results were
incomplete; (d) information contained in prior years' plans were carried
forward into the current year's plan without always being updated to
reflect known or anticipated changes; and (e) little or no explanation
was given on why the plan lacked baseline data for some quantitative
indicators.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-00-207
TITLE: U.S. Postal Service: Enhancements Needed in Performance
Planning and Reporting
DATE: 09/19/2000
SUBJECT: Postal service
Performance measures
Strategic planning
Agency missions
Program evaluation
Public administration
Reporting requirements
IDENTIFIER: Government Performance and Results Act
GPRA
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GAO/GGD-00-207
U. S. POSTAL SERVICE
Enhancements Needed in Performance Planning and Reporting
United States General Accounting Office
GAO Report to the Chairman, Subcommittee on the Postal Service, Committee on
Government Reform House of Representatives
September 2000 GAO/ GGD- 00- 207
United States General Accounting Office General Government Division
Washington, D. C. 20548
Page 1 GAO/ GGD- 00- 207 Postal Service Performance Planning and Reporting
B- 286261 September 19, 2000 The Honorable John M. McHugh Chairman,
Subcommittee on the Postal Service Committee on Government Reform House of
Representatives
Dear Mr. Chairman: This letter responds to your request for information on
the Postal Service's performance measures, reports, and plans. In this, our
initial effort to respond to your request, we focused on the Service's
fiscal year 1999 performance report and its fiscal year 2001 preliminary
performance plan as presented in the Service's fiscal year 1999
comprehensive statement of postal operations. Our objectives were to
determine (1) how well the Service's fiscal year 1999 performance report
addressed the Service's progress toward achieving the goals established by
the fiscal year 1999 performance plan and (2) whether the Service's fiscal
year 2001 preliminary performance plan demonstrates continued progress in
developing a reasonable basis for establishing accountability for results.
This letter also addresses the concerns that you raised regarding both the
performance report and preliminary performance plan in a letter dated April
24, 2000, to the Postal Service's Board of Governors.
As you know, this was the Service's first annual performance report and
third annual preliminary performance plan prepared in response to the
Government Performance and Results Act of 1993 (GPRA). We previously
commented on the Service's fiscal years 1999 and 2000 preliminary
performance plans, recognizing the positive aspects of each. We also offered
a number of suggestions on how the preliminary plans could be improved and,
for the most part, those suggestions were incorporated into the Service's
fiscal year 1999 and 2000 plans when they were issued in final.
Preliminary performance plans are considered provisional until the Postal
Service Board of Governors completes the budget cycle and makes its final
decisions on the allocation of Postal Service resources. Once those
decisions are made, the Service is to make the necessary revisions to the
preliminary performance plan and issue it in final- traditionally in
September of each year.
B- 286261 Page 2 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
The Service's annual performance report is subject to two key requirements
under GPRA. 1 First, the performance report is to compare actual performance
achieved with the performance goals set forth in the annual performance plan
for that fiscal year. Second, the performance report is to explain and
describe, for performance goals not met, (1) why the goal was not met; (2)
plans and schedules for achieving the established goal; and (3) if the goal
is impractical or infeasible, why that is the case and what action is to be
taken.
In general, GPRA requires that annual performance plans (1) establish
performance goals that set forth the results to be achieved by program
activities; (2) identify the measures that will be used to compare actual
results with the established goals; and (3) specify the processes, skills,
technology, and resources required to meet the performance goals. 2 Annual
performance plans are to be in sufficient detail to provide a reasonable
basis for establishing accountability for results.
Our assessments of the Service's fiscal year 1999 performance report and its
fiscal year 2001 preliminary performance plan are not as positive as our
prior years' assessments of the Service's efforts under GPRA. Although both
the fiscal year 1999 performance report and fiscal year 2001 performance
plan contain several positive aspects, we did not see the continued
progression of improvements in the Service's GPRA- related documents that we
observed in the past. More specifically, we believe that some aspects of the
Service's fiscal year 1999 performance report were not as straightforward
and clearly stated as intended by GPRA, and some aspects of the Service's
fiscal year 2001 preliminary performance plan were not as comprehensive as
they had been in prior plans. We also have concerns about other aspects that
may limit the plan's usefulness.
It appears that some aspects of the Service's fiscal year 1999 performance
report could be misleading. For example, the Service's highlighted results
for timely delivery of First- Class Mail could lead readers to mistakenly
conclude that for fiscal year 1999, the Service exceeded its on- time
delivery targets for both overnight and 2- and 3- day deliveries. For fiscal
year 1999, the Service met, but did not exceed, its goal for on- time
overnight deliveries of First- Class Mail and fell a little short of its
goal for 2- and 3- day deliveries. This information, however, must be
gleaned from the more detailed text of the report. The report could also
mislead readers
1 See 39 U. S. C. 2804. 2 See 39 U. S. C. 2803. Results in Brief
B- 286261 Page 3 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
into concluding that the Service's Total Factor Productivity increased
during fiscal year 1999 due to the report's portrayal of negative postal
productivity as a strongly positive result.
There are also a number of reasons why the Service's fiscal year 2001
preliminary performance plan may not have been as useful to Congress, postal
managers, and others as it could have been. Those reasons include instances
where (1) without detailed explanation, several prior years' subgoals- and
their associated indicators and targets- were not carried forward into the
fiscal year 2001 preliminary performance plan; (2) the criteria the Service
used to measure its success toward achieving certain goals were unclear; (3)
the descriptions of strategies to accomplish certain results were
incomplete; (4) information contained in prior years' plans were carried
forward into the current year's plan without always being updated to reflect
known or anticipated changes; and (5) little or no explanation was given on
why the plan lacked baseline data for some quantitative indicators.
We identify areas where we believe improvements could be made to the
Service's future performance reports and plans and make recommendations to
the Postmaster General as to what changes could be made to enhance those
reports and plans. In commenting on a draft of this report, the Service
generally agreed with the facts and planned to implement the
recommendations.
The Service's fiscal year 1999 performance report and its fiscal year 2001
preliminary performance plan contained several positive aspects. This was
the Service's first annual performance report and its third preliminary
performance plan issued under GPRA. We previously reported on the Service's
fiscal year 1999 and fiscal year 2000 preliminary performance plans. 3
Overall, we reported that the plans exhibited a good effort on the part of
the Service to provide the reader with a reasonable basis for understanding
the Service's intended performance. While our overall assessment of the
plans was generally positive, we did offer a number of suggestions for
improving the plans. For the most part, those suggestions were incorporated
into the final plans.
3 The Results Act: Observations on the Postal Service's Preliminary Annual
Performance Plan (GAO/ GGD- 98- 144, July 10, 1998), and The Results Act:
Observations on the Postal Service's Preliminary Performance Plan for Fiscal
Year 2000 (GAO/ GGD- 99- 72R, Apr. 30, 1999). Positive Aspects of the
Service's Fiscal Year 1999 Performance Report and Fiscal Year 2001
Preliminary Performance Plan
B- 286261 Page 4 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
Like its prior strategic and performance plans, the Service's fiscal year
1999 performance report contained several positive aspects. For example, the
performance report
� provided a useful summary of the Service's performance in a number of
areas,
� presented results in a useful tabular format, and
� acknowledged the importance of setting performance goals and targets
linked to the Service's mission.
The Service's fiscal year 1999 performance report contained a useful summary
of the Service's performance in a number of areas, including net income,
restoration of equity, and a composite measure of how easy it is for
customers to do business with the Service. In each of these areas, the
performance report succinctly summarized the goal as stated in the Service's
performance plan for fiscal year 1999 and the actual level of performance.
The performance report also provided useful information to put actual
performance into perspective, such as pointing out that fiscal year 1999 was
the fifth consecutive year in which the Service achieved positive net
income.
The performance report also included useful summaries of achieving cost
savings, delivering employee training, and ensuring a safe workplace
environment. The performance report summarized how the Service achieved more
than $1 billion in cost reductions in fiscal year 1999, compared to its goal
of achieving $734 million from budgeted cost reduction programs initiated at
headquarters and in the field. In addition, the “Performance
Highlights” section of the performance report contained useful
information on the Service's cost reduction program and the reasons cost
reductions were deemed necessary. The performance report also (1) summarized
the goals and results by employee group when discussing required training
and (2) identified key elements of the Service's safety program when
discussing the Service's progress toward ensuring a safe workplace
environment.
The Service's fiscal year 1999 performance report used a tabular format for
summarizing all of the Service's goals, subgoals, indicators, targets, and
performance results that was easy to understand. The format was the same as
that used in the fiscal year 1999 performance plan to summarize the
Service's performance goals, subgoals, indicators, and targets, except the
format added a column that readily identified actual performance relative to
the target. This tabular format was easy to follow and very userfriendly.
B- 286261 Page 5 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
In acknowledging the importance of performance goals and targets, the
Service stated in its fiscal year 1999 performance report that the
“goals, subgoals, indicators, and targets for management improvement
that are reported on here are central to the ongoing strategic management
and direction of the Service. They are exactly those that the Postal Service
itself employs to assess its performance through its Management
Process.” These acknowledgments in the performance report were useful
in establishing postal management's active support for setting performance
goals and targets linked to the Service's mission. These acknowledgments
also made it clear that the goals included in the performance plans and
reports were the same ones that the Service's management used to hold itself
accountable.
The Service's fiscal year 2001 preliminary performance plan also contained
several positive aspects, including additional performance indicators and
targets for tracking intended performance in selected subgoals, such as (1)
targets for overall customer satisfaction (residential and business); (2)
resolving employee complaints (Resolving Employee Disputes, Reaching
Equitable Solutions Swiftly-- REDRESS); and (3) Voice of the Employee
survey- which is the vehicle used by the Service to improve its
understanding of employee issues and concerns.
The Service's fiscal year 1999 performance report's usefulness to Congress,
postal managers, and others, may be reduced because of instances of possible
misleading reporting or incomplete explanations of results. In a letter
dated April 24, 2000, to the Postal Service's Board of Governors, Chairman
McHugh expressed concerns about the comprehensiveness of the Service's
fiscal year 1999 performance report. The Board responded to the Chairman, in
a letter dated May 23, 2000, that it had asked the Postmaster General to
review the fiscal year 1999 performance report and recommend an approach for
addressing the Chairman's concerns in the fiscal year 2000 performance
report.
There were several instances where the Service's fiscal year 1999
performance report appeared to be misleading. For example, the performance
report's highlighted results for timely delivery of First- Class Mail could
lead readers to conclude incorrectly that for fiscal year 1999, the Service
exceeded its on- time delivery targets for both overnight and 2and 3- day
(2/ 3- day) deliveries.
As noted earlier, GPRA requires that agencies set strategic and annual
goals, measure performance, and report on the degree to which goals are met.
The Service's fiscal year 1999 performance plan established 93 and 87 Some
Aspects of the
Service's Fiscal Year 1999 Performance Report Were Not As Straightforward As
They Could Have Been
B- 286261 Page 6 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
percent targets for on- time delivery for overnight and 2/ 3- day First-
Class Mail, respectively, and portrayed these as annual targets. Nothing in
the Service's performance plan indicated that these targets were not for the
entire fiscal year.
The Service's fiscal year 1999 performance report highlighted that the
Service exceeded its on- time delivery performance targets. However, the
report did not acknowledge, in the highlights section, that this
determination was based on performance for selected quarters (i. e.,
quarters 3 and 4), when delivery scores were at their highest point for the
year. That information was found only in the detailed text of the report.
When all 4 quarters of fiscal year 1999 performance data were aggregated,
the Service met, but did not exceed, its goal of 93 percent on- time
delivery of overnight First- Class Mail, and delivered 86 percent of the 2/
3- day mail on- time- one percentage point less than the established target
of 87 percent.
We believe that it was misleading for the performance report to highlight
that the Service exceeded its targets for overnight and 2/ 3- day on- time
deliveries, particularly when there was not an accompanying acknowledgment
that less than a full year's performance was used in making that
determination. In addition, given that the Service's performance for all 4
quarters of fiscal year 1999 either met or came close to meeting the
established targets, we question why the Service chose to highlight
information that did not include performance for the full fiscal year.
The Board, in responding to a concern raised by Chairman McHugh as to why
only selected quarters were used in highlighting fiscal year 1999 ontime
delivery performance, stated that the performance report contained results
for both the third and fourth quarter composite performance and a 4- quarter
composite score.
Another example of reporting performance that could be misread was the
Service's portrayal of negative postal productivity as a strongly positive
result. The fiscal year 1999 performance plan did not expect the Service's
Total Factor Productivity (TFP) to grow from fiscal year 1998. The plan
explained that the Service did not expect TFP to increase during fiscal year
1999 primarily due to expenditures to enhance service. 4 Rather, the
4 TFP measures the changes in the relationship between the Service's outputs
and resources expended in producing those outputs. The Service's main
outputs are mail volumes and servicing an expanding delivery network. By
tracking outputs and resource usage, TFP provides a measure of historical
performance.
B- 286261 Page 7 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
plan established a target for fiscal year 1999 that anticipated a 0.4
percent decline from fiscal year 1998. TFP for fiscal year 1999 did decline
from fiscal year 1998, but not as much as the fiscal year 1999 performance
plan anticipated. The fiscal year 1999 performance report, however,
presented that information in such a positive manner that we had to read the
report carefully to understand that TFP for fiscal year 1999 had actually
decreased since fiscal year 1998.
The fiscal year 1999 performance report prominently highlighted that the
Service had achieved 133 percent of its TFP target. Only in the detailed
discussion of performance goals did we fully understand that TFP actually
declined from fiscal year 1998. In other possibly misleading text, the
performance report noted that in addition to the Service achieving 133
percent of its TFP target, it had also improved TFP 2.3 percent in the
fourth quarter of fiscal year 1999. The performance report emphasized that
this was the Service's largest quarterly improvement in 5 years. While these
are positive trends, we believe the performance report should clearly inform
the reader that TFP for fiscal year 1999 declined from 1998- although not as
much as anticipated. Implicit in GPRA is Congress' intent that agencies
provide performance data that is clear and understandable, and allows
interested parties to see how well agencies are improving performance.
In his April 24, 2000, letter to the Board of Governors, Chairman McHugh
noted that the Service's positive portrayal of TFP in the “Performance
Highlights” lacked proper qualifications to let the reader know that
TFP actually fell 0.3 percent from the previous year. The Board responded
that it concurred with Chairman McHugh's statements regarding TFP
performance for fiscal year 1999 and, as noted earlier, had asked the
Postmaster General to recommend an approach for addressing the Chairman's
concerns in the fiscal year 2000 performance report.
There are also other instances where the Service's fiscal year 1999
performance report may not have been as straightforward as it could have
been. With regard to capital commitments, for example, the fiscal year 1999
performance plan did not compare actual performance with the targets
established in the fiscal year 1999 performance plan. The fiscal year 1999
performance plan set a target for the Service to commit $4.4 billion in
capital spending. However, the fiscal year 1999 performance report
indicated, in the detailed text, that the target had been revised downward
to $4 billion “in the [Service's] ongoing management planning cycle
and continuous review of major programs.” The performance report
stated that the Service had met all its capital investment objectives with
B- 286261 Page 8 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
only $3.8 billion in commitments, realizing a $200 million savings from plan
and achieving 105 percent of its fiscal year 1999 capital commitment plan
target. The performance report did not fully explain, as intended by GPRA,
why the Service revised its capital commitment target from $4.4 billion
downward, nor did it fully explain how the Service was able to achieve its
stated objectives at less cost.
In responding to Chairman McHugh's concern that the Service had not measured
actual performance against the targets established in its 1999 performance
plan for achieving a capital commitment budget of $4. 4 billion, the Board
responded that during fiscal year 1999 the Service had been able to meet its
capital investment objectives at a slightly lower commitment rate, and
therefore, committing capital at less than plan was appropriate.
There were several instances in the Service's fiscal year 1999 performance
report where the presentation of information on results was incomplete. For
example, the fiscal year 1999 performance plan stated that regarding
Priority Mail, the Service would achieve targeted Priority Mail on- time
performance. Although the performance plan stated that the Service increased
its Priority Mail on- time performance, the fiscal year 1999 performance
report did not inform Congress, postal managers, and others whether or not
the Service met its target. The performance report stated that the Service's
Priority Mail on- time performance information is proprietary. We believe
that the Service could have disclosed whether it met its target, fell short
of its target, or exceeded its target, without disclosing specific
proprietary information.
Other areas where the Service's fiscal year 1999 performance report omitted
or did not provide complete information, as required by GPRA, included:
� Ease of Use Indexes. The performance report did not explain why the
Service did not meet its targets relating to three of its five “Ease-
of- Use” indexes, including its Composite Ease- of- Use index,
Residential Ease- ofUse index, and Business Ease- of- Use index. The report
also omitted plans and schedules for achieving these targets and, in cases
where targets were considered impractical or infeasible, failed to explain
why that was the case and what action was planned.
� Proficiency Indexes. The performance report did not explain why the
Service did not achieve its targets with regard to increasing (1) retail
unit/ process proficiency and (2) automation maintenance and operations
proficiency.
B- 286261 Page 9 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
� Development of Baselines. The performance report did not explain why the
Service did not meet targets in its performance plan regarding the
development of baselines for some of its indicators. For example, the fiscal
year 1999 performance plan stated that the Service would “complete
development of a new indicator for consistency and establish a performance
baseline.” The fiscal year 1999 performance report stated that the
Service had “achieved performance of 100 percent of the target of
developing a new indicator for consistent service.” However, the
report did not indicate that the Service had established a baseline, nor
explain why it had not.
� Employee Knowledge of Goals. The Service's fiscal year 1999 performance
plan established targets of improving employees' knowledge of their unit
goals and unit performance to 90 percent. The Service's fiscal year 1999
performance report stated that the Service achieved 98 percent of those two
targets, but did not explain why the targets were not met. Also, the report
noted that an independent evaluation of the survey used to determine
employees' knowledge of their unit goals and unit performance led to the
elimination of the survey from the fiscal year 2000 performance plan. No
further explanation was given.
The preliminary performance plan was not as comprehensive as its predecessor
because several subgoals, indicators, and targets that were included in the
Service's fiscal year 2000 performance plan were not carried forward into
the fiscal year 2001 preliminary performance plan. In addition, the
usefulness of the fiscal year 2001 preliminary performance plan is further
limited because the plan (1) contained criteria that was unclear to us for
measuring the Service's success toward achieving certain goals, (2)
contained an incomplete description of strategies to accomplish certain
results, (3) failed to always update the information contained in the fiscal
year 2000 performance plan to reflect known or anticipated changes in
certain areas, and (4) failed to fully explain why baseline data for some
quantitative indicators were not included in the plan.
Chairman McHugh raised similar concerns regarding the Service's fiscal year
2001 preliminary plan to the Postal Service Board of Governors. In
responding to the Chairman's concerns, the Board indicated that the
Service's fiscal year 2001 performance plan will be more comprehensive when
it is issued in final. The Service anticipates issuing the fiscal year 2001
performance plan, in final, in September 2000.
The Service's fiscal year 2001 preliminary performance plan eliminated three
of the five Voice of the Business subgoals-- and their associated indicators
and targets-- that had been included in the Service's final Some Aspects of
the
Service's Fiscal Year 2001 Preliminary Performance Plan Were Not As Useful
As They Could Have Been
B- 286261 Page 10 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
performance plan for fiscal year 2000. The preliminary performance plan did
not fully explain why these subgoals, indicators, and targets were dropped.
Subgoals dropped from the preliminary performance plan for fiscal year 2001
included:
� Keeping price increases at or below the rate of inflation. The Service had
included a subgoal relating to price increases in its Five- Year Strategic
Plan covering fiscal years 1998 through 2002 and in its performance plans
for fiscal years 1999 and 2000. The Service set a subgoal in its final
performance plan for fiscal year 2000 to “keep price increases at or
below the rate of inflation” as measured by the Consumer Price Index
(CPI). The Postmaster General recently reaffirmed this subgoal when he
informed the House Subcommittee on the Postal Service that “ the
Postal Service strives for rate increases at or below the rate of inflation
that will provide sufficient revenues to enable the organization to
maintain, improve, and develop necessary postal services.” However,
the Service dropped this subgoal from its preliminary plan for fiscal year
2001. In responding to Chairman McHugh as to why this subgoal was dropped,
the Board replied it was decided that simplification of the Voice of the
Business goals and an increased focus on bottom- line business performance
would lead to a more businesslike and accountable goal framework. This
explanation implies that the Service will have increased accountability by
dropping its subgoal relating to keeping price increases at or below the
rate of inflation. However, in our opinion, if the Service does not set a
goal concerning price increases, it will be more difficult to hold the
Service accountable for its performance in this area.
� Controlling costs by achieving productivity gains. The Service had
included a subgoal of controlling costs by achieving productivity gains in
its Strategic Plan for fiscal years 1998 through 2002 and in its annual
performance plans for fiscal years 1999 and 2000. Specific indicators and
targets had also been developed for this subgoal, including one for overall
productivity. However, this subgoal and its associated indicators and
targets were dropped from the Service's preliminary performance plan for
fiscal year 2001. The Service stated that it was dropping its overall
productivity TFP target as a measure of productivity for fiscal year 2001
because, in essence, the overall Voice of the Business performance goal
encompasses productivity gains. On April 12, 2000, the Service's Vice
President for Strategic Planning told us that the fiscal year 2001
preliminary performance plan, in effect, took TFP from a nationwide score
down to individual scores by performance cluster. Nevertheless, during our
discussion, the Vice President for Strategic Planning told us that the
Service would restore a national TFP goal to its fiscal year 2001
performance plan. The Board reiterated this in May 2000, when it told
B- 286261 Page 11 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
Chairman McHugh that it had decided to restore TFP as a national- level
results indicator. We believe the decision to do this was the correct one.
� Restoring equity. According to the Service, it should have maintained an
equity balance transferred to it from the U. S. government when the Postal
Service was established in 1971 from the reorganized U. S. Post Office
Department. Because expenses exceeded revenues in the early years of the
Postal Service, that equity was eroded. The Service, in its Strategic Plan
for fiscal years 1998 through 2002, and in its annual performance plans for
fiscal years 1999 and 2000, set a subgoal of restoring that equity. However,
that subgoal was dropped from the Service's preliminary performance plan for
fiscal year 2001. The Service said this subgoal was dropped because
simplification of Voice of Business targets and an increased focus on
bottom- line results will lead to a more businesslike and accountable goal
framework- the same reason the Service gave for dropping the goal relating
to keeping rate increases at or below the rate of inflation. The Service is
required by law to break even from its operations. However, the Service's
expenses exceeded its revenues in the period 1971 through 1994. By the end
of 1994, the Service had $9 billion in cumulative net losses. The Service's
Board of Governors adopted a resolution in July 1995, affirming the
Service's commitment to restore equity by recouping the accumulated losses.
During the period 1995 through 1999, the Service earned net income totaling
$5.5 billion, which has enabled the Service to recover more than half of the
prior years' losses. At the end of fiscal year 1999, the Service still had
$3.5 billion in prior years' losses. It is not clear why the Service has
dropped this subgoal, but it is clear that its elimination will remove the
restoration of equity from the list of goals and subgoals that the Service
will be held accountable for in its fiscal year 2001 performance report.
In addition, the Service's fiscal year 2001 preliminary performance plan
eliminated, without detailed explanation, an indicator and associated target
for one of the two remaining Voice of the Business subgoals that had been
included in the fiscal year 2000 performance plan. The indicator that was
eliminated was economic value added, which is a measure used by the Service
to determine financial performance and allocate performance incentive funds
to individuals. This indicator had been included in the Service's annual
performance plans for fiscal years 1999 and 2000 but was dropped from the
fiscal year 2001 preliminary performance plan with no reason given. The
Board, in responding to Chairman McHugh as to why this indicator was
dropped, stated that the indicator was dropped because it moves in parallel
with corporate net income and is primarily a technical measure used in a
Service performance incentive system.
B- 286261 Page 12 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
We are also concerned that the usefulness of the Service's fiscal year 2001
performance plan may be limited because the preliminary plan contained
unclear criteria for measuring the Service's success toward achieving
certain goals. For example, the fiscal year 2001 preliminary plan states
that the Service will “as an Area target, improve productivity over a
threshold value specific to each Area.” However, the threshold values
and baseline data for this target were not disclosed in the preliminary
plan. In addition, the preliminary plan set a performance subgoal of
ensuring “an inclusive and fair environment with opportunities for all
employees” that is to include performance indicators for quarterly
management reviews at various levels regarding (1) representation of all
employee groups in details and special assignments, (2) representation of
all employee groups in succession plans, and (3) activities supporting the
affirmative employment plan. It is not clear what the targets are for this
subgoal (i. e., whether quantitative targets will be established to measure
success, or if other criteria will be used to define success in achieving
this subgoal).
Also, the usefulness of the fiscal year 2001 preliminary performance plan
may be limited because it lacks complete descriptions of strategies to
accomplish certain results. For example, the preliminary performance plan
states that the Service intends to create new products and services that can
respond to changing customer requirements, but provides no elaboration of
what types of new products and services are planned or how new ones will be
identified and developed. In addition, the preliminary plan provides
virtually no discussion of the Service's ecommerce initiatives. The Board,
in responding to concerns raised by Chairman McHugh in this area, stated
that the strategies for new products and services and e- commerce were not
included in the fiscal year 2001 preliminary performance plan because they
were in an intermediate stage of development. The Board assured the Chairman
that the final fiscal year 2001 performance plan will include more detail on
these strategies.
In addition, the fiscal year 2001 preliminary performance plan's usefulness
may be limited because it did not always update the discussion of the
linkage between performance goals and major programs contained in the fiscal
year 2000 performance plan to reflect known or anticipated changes. For
example, the description used for the Service's corporate advertising
program in its fiscal year 2001 preliminary performance plan was unchanged
from the fiscal year 2000 performance plan even though the Service plans to
spend $270 million on corporate advertising in fiscal year 2001, up from the
$150 million planned for fiscal year 2000. Further, the description used for
the Service's expedited supplies program in its fiscal year 2001 preliminary
performance plan was unchanged from the fiscal
B- 286261 Page 13 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
year 2000 performance plan even though the Service plans to spend $57
million in fiscal year 2001, down from the $81 million planned for fiscal
year 2000. No explanation was given in the fiscal year 2001 preliminary plan
for the change in either of these programs. The Board, however, in
responding to concerns raised by Chairman McHugh, said that the resources to
be allocated to these programs are currently under review, and assured the
Chairman that additional details on the status and resources of these and
other major programs would be provided in the final fiscal year 2001
performance plan.
We are also concerned that the Service's fiscal year 2001 preliminary
performance plan provided little or no explanation as to why baseline data
for some quantitative indicators were not included in the plan. For example,
the preliminary performance plan does not present baseline data for the
following 10 quantitative indicators and provides little or no explanation
as to why the data are missing:
� on- time delivery of advertising mail;
� accuracy of mail delivery;
� change of address accuracy;
� consistency of delivery;
� overall customer satisfaction (residential and business);
� overall value (residential and business);
� availability of, and participation in, REDRESS, a program to resolve
employee complaints;
� safety program evaluation;
� total accidents per 200,000 workhours; and
� motor vehicle accidents per million miles driven. In responding to a
concern of Chairman McHugh in this area, the Board stated that most of these
indicators are either in the process of being developed, or have just
recently been deployed. It further stated that baseline data are not
reported until the indicators have been deployed and several quarters of
actual results are available to allow detection and correction of any flaws
in the process. The Board did, however, state that baseline data for the
four indicators listed below are being collected and will be reported in the
final fiscal year 2001 performance plan, and the baseline data for the other
six indicators will be reported in future performance plans as soon as
accurate results are available. The indicators are as follows:
� on- time delivery of advertising mail;
B- 286261 Page 14 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
� availability of, and participation in, REDRESS, a program to resolve
employee complaints;
� total accidents per 200,000 workhours; and
� motor vehicle accidents per million miles driven. Subsequent to the
Board's response to Chairman McHugh, Service management told us, in
September 2000, that baseline data for safety program evaluations will also
be reported in the Service's final fiscal year 2001 performance plan.
Service management also told us that the Service will no longer pursue the
overall value indicator because customers' perception of value is actually
part of their overall perception of performance.
Our assessments of the Service's fiscal year 1999 performance report and its
fiscal year 2001 preliminary performance plan are not as positive as our
assessments of the Service's prior years efforts under GPRA. Although the
fiscal year 1999 performance report and fiscal year 2001 preliminary
performance plan contain positive aspects, we are concerned that they may
not be as useful to Congress, postal managers, and others as they could have
been.
Our primary concern with the fiscal year 1999 performance report was that
some aspects were not as straightforward and clearly stated as intended by
GPRA and contained possibly misleading information or incomplete
explanations of results. For example, the report contained language that
could lead readers to mistakenly conclude that for fiscal year 1999, the
Service exceeded its on- time delivery targets for both overnight and 2/
3day deliveries. Similarly, the report attempted to portray negative TFP in
a strongly positive and possibly misleading light.
The fiscal year 2001 preliminary performance plan was also less useful than
it could have been. The performance plan (1) provided little or no
explanation as to why several subgoals, indicators, and targets that were
included in the Service's fiscal year 2000 performance plan were not carried
forward into the fiscal year 2001 preliminary performance plan, (2)
contained unclear criteria for measuring the Service's success in achieving
certain goals, (3) did not completely describe strategies to accomplish some
results, (4) failed to adequately update some information contained in the
fiscal year 2000 performance plan to reflect known or anticipated changes
when discussing the linkage between performance goals and major programs,
and (5) failed to provide adequate explanations as to why baseline data was
not provided for some quantitative indicators. Conclusions
B- 286261 Page 15 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
We believe that in preparing future performance plans and performance
reports that will assist Congress, postal managers, and others, the Service
needs to focus more acutely on providing and presenting information that is
clear and understandable. Accordingly, interested parties would be able to
more easily determine how well the Service is improving performance and
achieving its goals, as intended by GPRA.
In order to improve the Service's future performance reports, we recommend
that the Postmaster General ensure that all sections of future reports
reflect straightforward and clearly stated comparisons of planned targets
and results so that readers are not mislead regarding performance.
In order to improve the usefulness of the Service's future performance
plans, we recommend that the Postmaster General include in the Service's
future plans (1) detailed explanations when subgoals, indicators, and
targets contained in the prior year's plan are not carried forward into the
current year plan; (2) clear criteria, including baseline data where
possible, for measuring the Service's success toward achieving stated goals;
(3) complete descriptions of strategies to accomplish stated goals; (4)
updated information to reflect known or anticipated changes when discussing
the linkage between performance goals and major programs; and (5) where
applicable, explanations as to why baseline data are not being provided.
We received comments from the Service's Vice President for Strategic
Planning on September 1, 2000. Those comments are summarized below and
reprinted in appendix I. We also incorporated technical comments provided by
Service officials into the report where appropriate. The Service's Vice
President for Strategic Planning stated that the Service generally agreed
with the report's recommendations and that future performance reports and
plans will incorporate additional material responding to concerns raised and
recommendations made in this report. More specifically, he stated that the
Service's final performance plan for fiscal year 2001 will contain a section
describing the reasons why several subgoals, indicators, and targets that
were included in the Service's fiscal year 2000 performance plan were not
carried forward into the fiscal year 2001 plan. He also stated, with regard
to our concerns about the lack of clear criteria and baseline data for
measuring success in achieving certain goals, that the Service's fiscal year
2001 final performance plan will, where practical, include additional
information to help clarify the measures that will be used for determining
success. Further, he stated that additional clarifying information relevant
to one of the targets discussed in the report-- Area productivity target--
will be provided in the fiscal year 2000 annual performance report since
that information will not become Recommendations
Agency Comments and Our Evaluation
B- 286261 Page 16 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
available until after the date the fiscal year 2001 performance plan is
expected to be issued in final.
The Vice President for Strategic Planning stated that the Service's final
fiscal year 2001 annual performance plan will include new material on goal
achievement strategies to accomplish certain results, particularly for new
products and service initiatives, including e- commerce. He also stated that
the plan will contain a new section that compares the resource levels of the
major programs in fiscal year 2000 with those in fiscal year 2001, and the
plan's description of major programs will be augmented to reflect any
significant status changes.
The Vice President for Strategic Planning also provided some additional
information regarding baseline data for some quantitative indicators. That
additional information has been incorporated into this report. We believe
that the Service's future performance reports and plans will be
significantly strengthened and become more useful to Congress, postal
managers, and others by the inclusion of the additional information
delineated in the Service's September 1, 2000, letter.
Our objectives were to determine (1) how well the Service's fiscal year 1999
performance report addressed the Service's progress toward achieving the
goals established by the fiscal year 1999 performance plan and (2) whether
the Service's fiscal year 2001 preliminary performance plan demonstrates
continued progress in developing a reasonable basis for establishing
accountability for results. Our assessment relied heavily on our knowledge
of the Service's operations and programs, and on our numerous reviews of the
Service, including our reviews of the Service's preliminary performance
plans for fiscal years 1999 and 2000. We did not independently verify the
information contained in the Service's performance report or plans. We
conducted our review in June and July 2000 in accordance with generally
accepted government auditing standards.
We are sending copies of this report to Representative Chaka Fattah, Ranking
Minority Member of your Subcommittee; Senator Thad Cochran, Chairman, and
Senator Daniel K. Akaka, Ranking Minority Member of the Subcommittee on
International Security, Proliferation and Federal Services, Senate Committee
on Governmental Affairs; Mr. William J. Henderson, Postmaster General and
Chief Executive Officer, United States Postal Service; and other interested
parties. Copies will also be made available to others upon request.
Objective, Scope, and
Methodology
B- 286261 Page 17 GAO/ GGD- 00- 207 Postal Service Performance Planning and
Reporting
Please call me on (202) 512- 8387 if you or your staff have any questions.
Key contributors to this report were Gerald P. Barnes, Kenneth E. John,
Charles F. Wicker, and Roger L. Lively.
Sincerely yours, Bernard L. Ungar Director, Government Business
Operations Issues
Page 18 GAO/ GGD- 00- 207 Postal Service Performance Planning and Reporting
Contents 1 Letter 20 Appendix I Comments From the U. S. Postal Service
Abbreviations
CPI Consumer Price Index GPRA Government Performance and Results Act of 1993
REDRESS Resolving Employee Disputes, Reaching Equitable Solutions Swiftly
TFP Total Factor Productivity
Page 19 GAO/ GGD- 00- 207 Postal Service Performance Planning and Reporting
Appendix I Comments From the U. S. Postal Service
Page 20 GAO/ GGD- 00- 207 Postal Service Performance Planning and Reporting
Appendix I Comments From the U. S. Postal Service
Page 21 GAO/ GGD- 00- 207 Postal Service Performance Planning and Reporting
Appendix I Comments From the U. S. Postal Service
Page 22 GAO/ GGD- 00- 207 Postal Service Performance Planning and Reporting
Appendix I Comments From the U. S. Postal Service
Page 23 GAO/ GGD- 00- 207 Postal Service Performance Planning and Reporting
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