The Results Act: Observations on the Postal Service's June 1997 Draft
Strategic Plan (Correspondence, 07/31/97, GAO/GGD-97-163R).
Pursuant to a congressional request, GAO reviewed the U.S. Postal
Service's draft strategic plan, focusing on: (1) the draft plan's
compliance with the Government Performance and Results Act's
requirements and its overall quality; (2) whether the Postal Service's
major statutory responsibilities are reflected in the plan; (3) whether
the plan addressed major management problems; (4) the Service's capacity
to provide reliable information for measuring results; and (5) whether
the plan evidences input from consultations and interagency coordination
for any cross-cutting functions.
GAO noted that: (1) the Postal Service's draft strategic plan generally
includes the six components required by the Results Act and provides
useful information on the Service's vision of its future and how the
Service plans to achieve its desired results; (2) however, the plan's
discussion of some components could be strengthened to better meet the
purposes of the Act; (3) overall, the draft plan is conceptually
consistent with the Results Act's concept of a systematic management
process that uses results-oriented goals and strategies as well as
performance indicators to measure progress toward these goals; (4)
however, the plan would benefit from a more complete mission statement
that conveys the requirement that the Service is to fulfill its mandate
to bind the nation together while being largely a self-supporting
entity; (5) the general goals and objectives and strategies to achieve
the goals and objectives do not cover some of the Service's major
functions and operations; (6) while the plan contains a useful chart
that helps relate performance measures to general goals/objectives, the
Service acknowledges that it is still in the process of identifying
tangible performance indicators and target levels to measure progress
toward all of its goals; (7) the draft plan generally reflects the
Service's major statutory responsibilities and identifies the 1970
Postal Reorganization Act as the basis for its public service mission;
(8) however, the plan could better discuss how its overall goals,
strategies, and performance measures may be affected by key management
problems that have been identified over the years, such as the need to:
(a) improve labor-management relations; (b) strengthen internal controls
to protect revenues; and (c) ensure the integrity of acquisitions; and
(9) the draft plan does not indicate how the views of stakeholders or
others were considered as a result of consultations or offer evidence of
interagency coordination with executive branch agencies in some areas
where coordination might be appropriate.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-97-163R
TITLE: The Results Act: Observations on the Postal Service's June
1997 Draft Strategic Plan
DATE: 07/31/97
SUBJECT: Strategic planning
Agency missions
Postal service
Public administration
Interagency relations
Systems conversions
Program evaluation
Labor-management relations
Internal controls
Congressional/executive relations
IDENTIFIER: USPS CustomerPerfect Initiative
Dept. of Commerce Malcolm Baldrige Quality Improvement Award
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Cover
================================================================ COVER
September 1997
GAO/GGD-97-163R
The Postal Service's Draft Strategic Plan
(240257)
Abbreviations
=============================================================== ABBREV
BOP - Federal Bureau of Prisons
CFO - Chief Financial Officers
DEA - Drug Enforcement Administration
DOJ - Department of Justice
FBI - Federal Bureau of Investigation
INS - Immigration and Naturalization Service
NPR - National Performance Review
OMB - Office of Management and Budget
Letter
=============================================================== LETTER
B-277565
July 31, 1997
The Honorable Richard K. Armey
Majority Leader
House of Representatives
The Honorable John Kasich
Chairman, Committee on the Budget
House of Representatives
The Honorable Bob Livingston
Chairman, Committee on Appropriations
House of Representatives
The Honorable Dan Burton
Chairman, Committee on Government Reform
and Oversight
House of Representatives
The Honorable John M. McHugh
Chairman, Subcommittee on the Postal Service
Committee on Government Reform and Oversight
House of Representatives
Subject: The Results Act: Observations on the Postal Service's June
1997 Draft Strategic Plan
On June 12, 1997, we were asked by the Majority Leader and Chairmen
Kasich, Livingston, and Burton to review draft strategic plans
submitted by the cabinet departments and selected major agencies for
consultation with Congress as required by the Government Performance
and Results Act of 1993 (the Results Act). Chairman McHugh also
asked that we include the U.S. Postal Service's draft strategic plan
in our review. This letter is our response to the request concerning
the U.S. Postal Service.
OBJECTIVES, SCOPE, AND
METHODOLOGY
------------------------------------------------------------ Letter :1
Our overall objective was to review and evaluate the latest available
version of the Postal Service's draft strategic plan. As you
requested, we specifically (1) assessed the draft plan's compliance
with the Results Act's requirements and its overall quality, (2)
determined whether the Service's major statutory responsibilities are
reflected in the plan, (3) determined whether the plan addressed
major management problems, (4) reviewed the Service's capacity to
provide reliable information for measuring results, and (5)
determined whether the plan evidences input from consultations and
interagency coordination for any cross-cutting functions.
We reviewed the Postal Service's June 16, 1997, draft strategic plan.
Specifically, to determine whether the Service's draft strategic plan
complied with the requirements of the Results Act, we compared the
plan with the Act's requirements using our May 1997 guidance for
congressional review\1 as a tool. Our overall assessment of the
Service's draft strategic plan was generally based on our knowledge
of the Postal Service's operations and programs, and on our numerous
reviews of the Service. We also reviewed the most recent reports on
the Service's financial statements by the independent, certified
public accounting firm of Ernst and Young, LLP.\2 See Related GAO
Products at the end of this letter for a list of our recent major
products related to the Postal Service.
--------------------
\1 See Agencies' Strategic Plans Under GPRA: Key Questions to
Facilitate Congressional Review (GAO/GGD-10.1.16, May 1997).
\2 The Postal Service is required to obtain an annual certification
of the accuracy of its financial statements from an independent,
certified public accounting firm. The Postal Service is unlike many
federal agencies in that it is not subject to the Chief Financial
Officers Act or the Federal Managers Financial Integrity Act.
BACKGROUND
------------------------------------------------------------ Letter :2
The Postal Reorganization Act of 1970 (P.L. 91-375) reorganized the
former U.S. Post Office Department into the U.S. Postal Service, an
independent establishment of the executive branch. It has a public
service obligation to provide postal services to all communities, and
it must largely finance its operations from its own revenue
sources.\3
As we recently reported, mail service is a long-standing part of
American culture and business.\4
The Constitution empowers only Congress to establish post offices,\5
and it is a federal criminal offense for anyone other than the
government to deliver most letters. The letter mail monopoly was
created by Congress to ensure that the Service has sufficient
revenues to carry out its public service mandates, including
providing regular mail delivery service (typically 6 days a week) to
all communities, providing uniform rates for at least one class of
letter mail, and maintaining a national network of post offices.
Since 1970, the Postal Service has gained greater commercial freedom,
the scope of its monopoly has been narrowed, and competition has
increased from private delivery companies and electronic
communications alternatives. The mission of the Postal Service and
its predecessor has long been and continues to be debated, including
the balance between fulfilling its public service responsibilities
and remaining a viable self-financing entity. The House Subcommittee
on the Postal Service is currently considering comprehensive postal
reform legislation (the Postal Reform Act of 1997, H.R. 22) intended
to grant the Service more flexibility in setting postal rates and
introducing new products and services, while ensuring that a viable
universal mail delivery system at reasonable rates remains the
primary mission of the Postal Service.
To carry out its mission, the Service has a presence in every
community across the country. The Postal Service is the nation's
largest civilian employer with more than 860,000 employees as of the
end of fiscal year 1996. In 1996, the Service maintained over 35,000
postal facilities and delivered more than 180 billion pieces of mail
to nearly 130 million households and businesses. In fiscal year
1996, the Service raised more in revenues than those of all but eight
U.S. companies. In many respects, the Postal Service operates much
like a business in that it provides products and services in an
increasingly dynamic competitive environment.
The Results Act calls for the Service to submit a strategic plan to
the President and the Congress by September 30, 1997.\6 The Service
has engaged in strategic planning for several years using its current
management system called "CustomerPerfect!"--which is based on
criteria from the Malcolm Baldrige National Quality Award--to make
improvements.\7 This system includes four major phases: (1)
establishing goals, (2) deploying resources toward achievement of
those goals, (3) implementing improvement actions, and (4) reviewing
performance and adjusting actions. We recognize that the strategic
planning process is ongoing and iterative in nature. Therefore, our
comments on the June 1997 draft plan reflect a snapshot of the
current status of the plan. The Postal Service is continuing work to
revise the draft with input from Congress and other stakeholders.
--------------------
\3 The Postal Service does not depend on appropriations for its basic
operations but receives some funds for, among other things, free and
reduced rate mail, such as mail for the blind. In fiscal year 1996,
the Service reported $56.4 billion in operating revenues, of which
$93.1 million was appropriated for free and reduced rate mail.
\4 Postal Service Reform: Issues Relevant to Changing Restrictions
on Private Letter Delivery (GAO/GGD-96-129A/B, Sept. 12, 1996).
\5 As we recently reported, local post offices have long been a part
of American culture and business, and the Postal Reorganization Act
of 1970 provides that no small post office can be closed for economic
reasons alone. See U.S. Postal Service: Information on Post Office
Closures, Appeals, and Affected Communities (GAO/GGD-97-38BR, Mar.
11, 1997).
\6 Unlike federal executive branch agencies, the Postal Service is
not required to submit its strategic plan to the Office of Management
and Budget (OMB) and is not subject to the provisions of OMB's
Circular No. A-11, part 2.
\7 The Malcolm Baldrige National Quality Award is made annually to
recognize U.S. companies for business excellence. Award recipients
need to demonstrate results and results improvement in a wide range
of indicators: customer-related, operational, and financial.
Results reported need to address all stakeholders, including
customers, employees, owners, suppliers, and the public.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :3
The Postal Service's draft strategic plan generally includes the six
components required by the Results Act and provides useful
information on the Service's vision of its future and how the Service
plans to achieve its desired results. However, the plan's discussion
of some components could be strengthened to better meet the purposes
of the Act. For example, the mission component of the plan could be
more comprehensive, and the goals and objectives could more
completely cover the Service's major functions and operations. The
plan generally reflects the Service's major statutory
responsibilities, but it could be more detailed in discussing how
major management problems could affect the achievement of goals, how
the plan reflects input from consultations, and interagency
coordination. The plan also recognizes that the Service is working
to improve its information capacity so that the Service can measure
progress toward all of its goals.
Overall, the draft plan is conceptually consistent with the Results
Act's concept of a systematic management process that uses
results-oriented goals and strategies as well as performance
indicators to measure progress toward these goals. However, the plan
would benefit from a more complete mission statement that conveys the
requirement that the Service is to fulfill its mandate to bind the
nation together while being largely a self-supporting entity. Also,
the general goals and objectives and strategies to achieve the goals
and objectives do not cover some of the Service's major functions and
operations, specifically those related to providing universal access
to mail services. Further, while the plan contains a useful chart
that helps relate performance measures to general goals/objectives,
the Service acknowledges that it is still in the process of
identifying tangible performance indicators and target levels to
measure progress toward all of its goals.
The draft plan generally reflects the Service's major statutory
responsibilities and identifies the 1970 Postal Reorganization Act as
the basis for its public service mission. However, the plan could
better discuss how its overall goals, strategies, and performance
measures may be affected by key management problems that have been
identified over the years, such as the need to (1) improve
labor-management relations, (2) strengthen internal controls to
protect revenues, and (3) ensure the integrity of acquisitions.
Finally, the draft plan does not indicate how the views of
stakeholders or others were considered as a result of consultations
or offer evidence of interagency coordination with executive branch
agencies in some areas where coordination might be appropriate, such
as with the U.S. Justice Department, which helps enforce laws
related to postal matters.
DRAFT PLAN IS CONSISTENT WITH
THE ACT'S FOCUS ON RESULTS BUT
COULD BE STRENGTHENED
------------------------------------------------------------ Letter :4
The Postal Service's draft strategic plan is a work in process that
provides much useful information on its future vision. The draft
plan shares the Act's focus on a single overriding goal: results.
The draft plan is conceptually consistent with the Act's concept of a
systematic management process that uses results-oriented goals and
strategies as well as quantitative performance indicators to measure
progress toward these goals.\8
Moreover, the draft plan contains an informative discussion of key
external factors, including competitive forces, the general economy,
and proposed postal reform legislation, that could affect the
Service's ability to achieve its goals. The plan also describes the
Service's "continuous improvement" efforts, which include systematic
reviews to track progress against goals and identify additional steps
needed to ensure achievement of goals.
Recognizing that the draft plan has many strengths, we believe it
could be strengthened further to better meet the purposes of the
Results Act. Although the draft plan discusses all six components
required by the Act, in some areas, it could be more comprehensive,
clear, and consistent.
--------------------
\8 Executive Guide: Effectively Implementing the Government
Performance and Results Act (GAO/GGD-96-118, June 1996).
MISSION STATEMENT
---------------------------------------------------------- Letter :4.1
The Results Act requires the strategic plan to contain a
comprehensive mission statement covering the major functions and
operations of the Service. The mission component of the Postal
Service draft plan contains a mission statement and supplemental
explanatory discussion. However, this component could be more
complete and more clearly conveyed.
First, the mission statement could be made more complete by better
conveying the requirement that the Service is to fulfill its mandated
mission to bind the nation together while being a self-supporting
entity. Although the plan recognizes that the Service must depend on
its own revenues to be a viable entity, the mission statement does
not specifically state that the Service fulfills its basic mission
while being largely self-supporting. Much of the current debate
about the Service's mission centers on what products and services it
should be allowed to provide in order to remain a self-supporting
entity.
Second, the explanatory discussion in the mission component of the
plan could more clearly convey the meaning of the basic mission of
the Service to "bind the Nation together" by "render[ing] postal
services to all communities." Specifically, the explanatory
discussion could better communicate that fulfilling this mission
involves providing all communities with regular mail delivery and
ready access to postal retail services. It would also be useful if
the discussion in the mission component better defined the nature of
the Service's mission to bind the nation together. The Postal
Service has long provided nationwide mail delivery and postal retail
services to fulfill its mission of providing universal postal
service, and Congress has affirmed the importance of these functions
and operations.
The remainder of the plan also could be more clear and consistent in
defining universal service. For example, while the draft plan states
that First-Class mail is a product that "remains the only public
universal service,"\9 it also states that the Service continues to
provide "universal service" to a periodicals industry\10 "that has
historically been critical to the democracy and continues to be so
today." Further, the draft plan indicates that the Service could
deliver electronic commerce and communications in the 21st century
through "a combined electronic/paper universal service
infrastructure." Greater clarity and more detailed support in this
area of the draft plan would help stakeholders by demonstrating the
Service's continued commitment to its mission of binding the nation
together as well as indicating whether the Service foresees
fundamental changes in this area.
--------------------
\9 The draft plan contains a footnote that explains that "In an age
of telecommunications reform, this distinction could become more
important."
\10 There is a separate class of mail for delivery of periodicals.
GOALS AND OBJECTIVES
---------------------------------------------------------- Letter :4.2
The Results Act requires that the plan contain general goals and
objectives, including outcome-related goals and objectives, for the
major functions and operations of the Service. This draft of the
plan moves in the right direction by laying out a number of specific
goals and objectives that relate to growing the Service's key
businesses. In particular, the plan sets out three major goals that
are intended to improve (1) customer satisfaction, (2) employee and
organizational effectiveness, and (3) financial performance. These
goals are consistent with the spirit of the Results Act.
One of the key ways in which the draft plan could be more complete is
in the setting of targets for carrying out the Service's major
functions as a provider of universal postal service. The plan did
not contain goals and objectives for carrying out the universal
service functions that the Service performs. While the plan contains
goals for timely delivery of mail, it does not set goals for two main
universal service functions--providing mail delivery service to all
communities and providing ready access to postal retail services.
Developing explicit goals or subgoals for carrying out these
functions could help demonstrate that the Service is continuing to
meet its public service obligations, as well as help build support
for a shared vision of how the Service will fulfill its universal
service mandate in the future.
STRATEGIES TO ACHIEVE GOALS
AND OBJECTIVES
---------------------------------------------------------- Letter :4.3
The Results Act requires the strategic plan to contain a description
of how the goals and objectives are to be achieved, including a
description of the operational processes, skills and technology, and
the human, capital, information, and other resources required to meet
these goals and objectives. The plan contains a section entitled
"How Will We Get There?" that addresses this requirement. The plan
also describes the Service's operational processes used by management
to plan, implement, and review performance against desired goals and
objectives. The plan summarizes the processes the Service uses to
define goals and objectives as well as the resources in the Postal
Service network that will be employed to meet these goals and
objectives. In addition, the plan contains an informative section on
the Service's process for making capital investments necessary to
meet its goals, along with information on specific amounts allocated
for various capital needs.
Providing multiple goals is a strength of the draft plan because
achieving success on multiple dimensions is necessary for
organizational success. However, setting multiple goals creates the
challenge of managing to achieve these goals simultaneously. As we
noted in our recent testimony,\11 while the Postal Service reported
improving overnight delivery of local residential mail to 91 percent
during 1996, during the same period, the rate for on-time delivery of
2-day and 3-day mail--at 80 and 83 percent respectively--was not as
high as that for overnight delivery. Such performance raised concern
that the Postal Service's emphasis on overnight delivery came at the
expense of 2-day and 3-day mail delivery. The Postal Service faces
an even more difficult challenge in successfully implementing the
full set of goals and subgoals in its draft strategic plan. The
draft plan recognizes the challenge of meeting multiple goals, but it
could better explain how postal executives will manage progress
toward multiple priorities.
--------------------
\11 U.S. Postal Service: Continued Challenges to Maintaining
Improved Performance (GAO/T-GGD-97-88, Apr. 24, 1997).
RELATING ANNUAL PERFORMANCE
GOALS/MEASURES TO GENERAL
GOALS AND OBJECTIVES
---------------------------------------------------------- Letter :4.4
The Results Act requires the strategic plan to contain a description
of how the performance goals included in the annual performance plan
are to be related to the general goals and objectives in the
strategic plan. The Service's draft plan meets this requirement, and
includes a useful chart that summarizes the major goals, specific
subgoals, performance indicators, and targets. We consider the chart
to be one of the strengths of the current plan, but we also recognize
that the Service has not developed all of the indicators and targets
that it will need.
The draft strategic plan recognizes that the Service will be
developing and submitting annual performance reports to compare
results with goals and objectives. However, as the Service also
recognizes in the draft plan, it currently does not have a complete
set of performance indicators to measure improvement. For example,
the Service has developed specific targets for on-time delivery of
First-Class mail, but it has yet to determine the indicator(s) and
targets for meeting its goal of enhancing the workplace environment
to improve relationships with employees.
KEY EXTERNAL FACTORS
---------------------------------------------------------- Letter :4.5
The Act requires an identification of those key factors external to
the Postal Service, and beyond its control, that could significantly
affect the achievement of its general goals and objectives. The
Service's plan identifies many external factors, such as the impacts
of growing competition, electronic messaging capabilities, and
changing customer demands. The plan also has an informative
discussion of anticipated economic growth and of how economic and
demographic trends could affect the Service. The plan explicitly
addresses external factors by setting forth a growth strategy
designed "to meet the expanding requirements and specialization
demanded by customers today."
The plan also notes the importance of pending postal reform
legislation that could make changes to the statutory framework
governing the Postal Service. The plan points out that the proposed
legislation contains a significant overhaul of the pricing mechanisms
used to set postal rates and explains how such a change could help
the Service achieve its goals: "By allowing reasonable pricing
changes to occur without extensive regulatory hearings, the Postal
Service would be able to react more quickly to changing market
conditions and focus more directly on the needs of its customers."
However, the plan could also recognize that many other aspects of the
proposed comprehensive postal reform legislation--such as provisions
establishing a presidential postal employee-management commission,
ending Treasury Department control of Postal Service banking,
limiting the postal monopoly, and establishing a demonstration
project to test relaxing the mailbox restriction--could have
implications for its key functions and operations.
PROGRAM EVALUATION
---------------------------------------------------------- Letter :4.6
The Act requires a description of the program evaluations used in
establishing or revising general goals and objectives, with a
schedule for future program evaluations. Under the Act, program
evaluation is defined as an assessment, through objective measurement
and systematic analysis, of the manner and extent to which Postal
Service programs achieve intended objectives. The Service's plan
explains that the Service differs in fundamental ways from other
federal agencies so that classic governmental program evaluation is
less appropriate than other forms of review used by the Service. The
plan describes the Service's review processes for evaluating progress
towards its goals, but in some areas, the plan does not indicate how
the results of review activities relate to specific goals and
objectives.
The plan describes the Service's process for systematic review,
including its overall process management review cycle and three
specialized review processes: capital investment review and
approval, new product development, and reviews of new and ongoing
activities by the Postal Service Inspector General and Inspection
Service. The plan also states that the Service plans to conduct
another assessment of the Postal Service based on criteria drawn from
the Malcolm Baldrige National Quality Award assessment process.
However, the plan varies in the way it explains the linkage between
different review processes and the goals and objectives. For
example, in the area of capital investments, the plan has a clear
summary of the four-step process that is used to develop and monitor
projects from start to finish as well as to determine whether the
projects achieve intended goals. In contrast, the plan contains
little discussion of how the results of other systematic reviews,
such as performance audits by the Postal Service Inspector General,
the Postal Inspection Service,\12 or the Baldrige Award assessment
process, relate to specific goals, objectives, and other components
of the plan. We believe these sections of the plan could be made
more useful to stakeholders through additional explanation of how
these review processes are linked to the Service's goals and
objectives.
--------------------
\12 The Postal Inspection Service, which is part of the Postal
Service, is responsible for enforcing postal laws.
KEY STATUTORY AUTHORITIES
GENERALLY REFLECTED IN THE
SERVICE'S STRATEGIC PLAN
------------------------------------------------------------ Letter :5
To further review the strategic plan's consistency with the intent of
the Results Act, we were asked to determine whether the draft plan
reflects the Service's major statutory responsibilities, and whether
those responsibilities are reflected in the plan's goals. The draft
plan generally reflects the Service's major statutory
responsibilities, although it could be more detailed. For example,
as previously discussed, the mission component of the plan is focused
on the major statutory authority that serves as the basis for its
mission: the 1970 Postal Reorganization Act. However, the plan does
not have specific goals for carrying out the universal service
functions that the Service performs, including providing national
delivery of mail and ready access to postal retail services. In
addition, the plan could place greater emphasis on the statutory
requirement that the Service deliver certain mail at a uniform rate,
a requirement that has long been associated with providing universal
service.
THE DRAFT PLAN COULD ADDRESS
MAJOR MANAGEMENT PROBLEMS MORE
EFFECTIVELY
------------------------------------------------------------ Letter :6
The Act requires the plan to describe how goals and objectives are to
be achieved, and therefore it is helpful for the plan to address
management problems that could affect the achievement of goals. The
draft plan does address a number of major management challenges,
including the need for the Service to improve customer service,
increase productivity, control costs, and increase revenues.
However, the plan does not appear to fully discuss some other
problems that face the Service, such as how labor-management
relations may affect the Service's ability to achieve major goals
related to improving employee and organizational effectiveness and to
control costs by achieving productivity gains. In addition, the plan
could better address other significant problem areas, such as
weaknesses that we have identified in internal controls that may
reduce revenues and compromise the integrity of certain acquisitions.
As we have reported, improving labor-management relations is one of
the major management problems facing the Service.\13 The plan
describes the Service's initiatives to improve labor-management
relations, but the plan could more explicitly discuss how
labor-management relations could affect achievement of goals and the
strategies to address these potential impacts. One of the Service's
core strategies is to manage its operating costs by improving labor
productivity and reducing cost per work hour. However, the Service's
ability to meet its goal of reducing cost per work hour may be
affected by its statutory requirements related to collective
bargaining for wages and other terms and conditions of employment.
If collective bargaining impasses develop, which have occurred as far
back as 1978, binding arbitration by a third party is required.
Labor contracts set wages for bargaining employees. Employee costs
comprise most of the Service's operating costs, and therefore its
ability to control labor costs largely determines whether the Service
meets its cost reduction goals. The plan could be more useful if it
more directly addressed labor-management issues and their potential
effect on the Service's goals and strategies.
In addition, the draft plan contains little discussion of the need to
improve internal controls, which is an area that we have previously
identified as an important management weakness. We recently
testified that improving internal controls to protect revenue remains
a concern.\14 We reported in June 1996 that weaknesses in the Postal
Service's control for accepting bulk business mail prevented it from
having reasonable assurance that all significant amounts of postage
revenue due were received when mailers claimed presort/barcode
discounts.\15 The Service plans to improve the processes used in the
verification of bulk mail, which accounts for nearly half its
revenues. However, the draft plan does not mention revenue
protection initiatives for bulk mail.\16 Other areas of recent
concern have been the overall integrity of Postal Service
acquisitions\17 and strengthening program oversight.\18 The Service
has taken steps to deal with these concerns. However, in our view,
because internal controls over revenue protection, the integrity of
acquisitions, and oversight of postal programs will continue to be
important concerns, the draft plan could be enhanced by placing
greater emphasis on these areas.
--------------------
\13 U.S. Postal Service: Labor-Management Problems Persist on the
Workroom Floor (GAO/GGD-94-201A/B, Sept. 29, 1994).
\14 GAO/T-GGD-97-88.
\15 U.S. Postal Service: Stronger Mail Acceptance Controls Could
Help Prevent Revenue Losses (GAO/GGD-96-126, June 25, 1996).
\16 The draft plan summarized the Service's "aggressive 'ease of use'
program" designed to reduce variations in interpretation and
application of rules and regulations as well as to reduce the number
and complexity of these regulations, when possible.
\17 Postal Service: Conditions Leading to Problems in Some Major
Purchases (GAO/GGD-96-59, Jan. 18, 1996).
\18 U.S. Postal Service: Improved Oversight Needed to Protect
Privacy of Address Changes (GAO/GGD-96-119, Aug. 13, 1996).
THE SERVICE CONTINUES TO
DEVELOP PERFORMANCE INDICATORS
AND INFORMATION SYSTEMS
------------------------------------------------------------ Letter :7
The Service acknowledges in its draft plan that it currently does not
have a sufficient amount of data and information to completely
measure results. The Service also indicates that it plans to
continue developing (1) performance indicators to allow measures of
improvement for all goals in the plan, and (2) measures called
"internal process drivers" that managers can use to evaluate and
improve performance to reach the goals in the plan. Although we have
not reviewed the Service's information or internal assessment
systems, the Service has emphasized that it is developing a
management system that will allow management to track progress and
take additional steps to ensure the achievement of targets.
Another important issue related to performance measurement is the
accuracy and reliability of the data used to measure results. This
issue has been raised in congressional hearings related to the
quality of Service data used for ratemaking. At the request of the
Chairman of the House Subcommittee on the Postal Service, a review of
the quality of the data used in ratemaking is being conducted by a
contractor, whose progress will be monitored by the Postal Service,
the Postal Rate Commission, and us. This study will examine some of
the specific issues that have been raised about the completeness and
accuracy of data used for ratemaking.
Some data, such as financial data that may be used to measure
performance, have been audited by outside parties. For example, the
Service's financial statements, which relate to the Service's
financial performance measures, are audited and some aspects of its
internal control structure reviewed annually by its outside auditor,
Ernst & Young LLP. In the Service's 1996 annual report, Ernst &
Young LLP said that the financial statements presented fairly, in all
material respects, the Service's financial position at September 30,
1996 and 1995, as well as the results of its operations and cash
flows for each of the 3 years for the period ending September 30,
1996, in conformity with generally accepted accounting principles.
The Service plans to use financial data, such as net income, as a key
performance indicator to measure progress toward its financial
performance goal.
Another key data source discussed in the Service's plan is its major
information systems. In its strategic plan, the Postal Service
included a plan to enhance information technology capabilities
throughout its network, such as by developing (1) a new integrated,
managed network service, (2) an improved computer system to support
retail and delivery activities, and (3) a delivery confirmation
system. The plan does not discuss how the Service will address two
high-risk areas that we have identified as governmentwide problems:
computer security and the need for computer systems to be changed to
accommodate dates beyond 1999--the so-called "year 2000 problem."
Additionally, many of the Service's current information systems
directly support key mission functions, such as retail operations,
mail processing, delivery, internal communications, and law
enforcement. Although we have not evaluated the Service's
information systems, they do handle information that needs to be
protected against unauthorized access and disclosure and that may be
vulnerable to problems associated with the year 2000. These issues
have a significant potential impact on all federal agencies' ability
to effectively conduct operations. Accordingly, we believe a
discussion in the plan of both these issues and the steps the Service
has taken, has under way, or plans to take to address them would be
useful to its stakeholders.
DISCUSSION OF COMMENTS OBTAINED
FROM CONSULTATIONS AND
INTERAGENCY COORDINATION COULD
BE MORE COMPLETE
------------------------------------------------------------ Letter :8
The Results Act requires that in developing its plan, the Service
consider the views and suggestions of those entities potentially
affected by or interested in such a plan. The plan describes how the
Service solicited input from stakeholders, but it does not explain
what input was received or how it was addressed. Although the
Service interacts with a number of agencies in carrying out its
operations, such as the enforcing of laws related to postal matters
and the printing of stamps, the plan does not offer evidence of
interagency coordination with executive branch agencies. Further
development of this section would help Congress and other
stakeholders to be more informed about the substance of the
consultations that took place.
The Service's draft plan does not discuss the substance of the
comments that it received from stakeholders or how the comments were
addressed in the plan. In addition, some concerns were raised that
the timing of the development of the plan did not allow for
sufficient stakeholder review and input on the actual draft. Now
that the plan is drafted, the Service has an opportunity to continue
consultations with Congress and other key stakeholders to obtain
meaningful input on the mission, goals, and measures in the plan.
Such consultations could also help build support for the plan.
Although the Postal Service plays a largely unique role in the
federal government, it does interact with a number of federal
agencies. However, the draft strategic plan does not evidence
interagency coordination with executive branch agencies, such as with
(1) the U.S. Justice Department, which helps enforce laws relating
to postal matters; (2) the Bureau of Engraving and Printing, which
prints many stamps; and (3) the Census Bureau, which works with the
Postal Service to develop the address list for the decennial census.
To the extent that the Service's relationships with other agencies
could affect achievement of the Service's goals, a discussion of
interagency coordination would be helpful.
AGENCY COMMENTS
------------------------------------------------------------ Letter :9
On July 29, 1997, we met with, and obtained oral comments on a draft
of this letter from, Postal Service officials, including the Vice
President, Controller; and the Vice President, Strategic Planning.
They stated that they found our observations to be helpful and said
they would address our suggested improvements in the August 1997
draft of their plan and in their planning for fiscal year 1999 along
with suggestions they have received from others. In addition, they
said that they would include additional specificity on goals and
performance measures in the annual performance plans. They also
noted, and we agree, that the Postal Service's "CustomerPerfect!"
management system provided a good foundation for the Service to
address Results Act requirements.
---------------------------------------------------------- Letter :9.1
We will send copies of this report to the Minority Leader of the
House of Representatives; Ranking Minority Members of your Committees
and Subcommittees; the Chairman and Ranking Minority Member of the
Subcommittee on International Security, Proliferation and Federal
Services, Senate Committee on Governmental Affairs; the Postmaster
General; and other interested parties. Copies will also be made
available to others upon request.
Major contributors to this letter are listed in the enclosure. If
you have any questions, please call me on (202) 512-4232.
Bernard L. Ungar
Director, Government Business
Operations Issues
Enclosure
MAJOR CONTRIBUTORS TO THIS REPORT
=================================================== Appendix Enclosure
GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C.
------------------------------------------------- Appendix Enclosure:1
Teresa Anderson, Assistant Director
Kenneth E. John, Senior Social Science Analyst
ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION
------------------------------------------------- Appendix Enclosure:2
Nancy W. Kong, Auditor
OFFICE OF THE GENERAL COUNSEL
------------------------------------------------- Appendix Enclosure:3
Alan N. Belkin, Assistant General Counsel
Jill P. Sayre, Senior Attorney
============================================================ Chapter 0
============================================================ Chapter 1
============================================================ Chapter 2
RELATED GAO PRODUCTS
============================================================ Chapter 3
U.S. Postal Service: Information About Restrictions on Mailbox
Access (GAO/GGD-97-85, May 30, 1997).
U.S. Postal Service: Continued Challenges to Maintaining Improved
Performance (GAO/T-GGD-97-88, Apr. 24, 1997).
U.S. Postal Service: Information on Emergency Suspensions of
Operations at Post Offices (GAO/GGD-97-70R, Apr. 23, 1997).
U.S. Postal Service: Information on Post Office Closures, Appeals,
and Affected Communities (GAO/GGD-97-38BR, Mar. 11, 1997).
Postal Reform in Canada: Canada Post Corporation's Universal Service
and Ratemaking (GAO/GGD-97-45BR, Mar. 5, 1997).
U.S. Postal Service: Revenue Losses From Express Mail Accounts Have
Grown (GAO/GGD-97-3, Oct. 24, 1996).
Postal Service Controls Over Postage Meters (GAO/GGD-96-194R, Sept.
26, 1996).
Inspectors General: A Comparison of Certain Activities of the Postal
IG and Other IGs (GAO/AIMD-96-150, Sept. 20, 1996).
Postal Service Reform: Issues Relevant to Changing Restrictions on
Private Letter Delivery (GAO/GGD-96-129A/B, Sept. 12, 1996).
U.S. Postal Service: Improved Oversight Needed to Protect Privacy
of Address Changes (GAO/GGD-96-119, Aug. 13, 1996).
U.S. Postal Service: Stronger Mail Acceptance Controls Could Help
Prevent Revenue Losses (GAO/GGD-96-126, June 25, 1996).
U.S. Postal Service: Unresolved Issues in the International Mail
Market (GAO/GGD-96-51, Mar. 11, 1996).
Postal Service: Conditions Leading to Problems in Some Major
Purchases (GAO/GGD-96-59, Jan. 18, 1996).
*** End of document. ***