The Results Act: Observations on the Postal Service's Preliminary Annual
Performance Plan (Letter Report, 07/10/1998, GAO/GGD-98-144).

The U.S. Postal Service's preliminary annual performance plan, which was
prepared in response to the Government Performance and Results Act,
provides a partial picture of the Postal Service's intended performance
for fiscal year 1999. Although the plan generally has performance goals
and related measures that are quantifiable and results-oriented, the
plan could be more helpful if it (1) articulated current performance
levels, or baselines, from which to gauge progress and (2) more clearly
linked program activities in the Postal Service's budget to performance
goals. In addition, the plan could better link particular strategies and
resources to performance goals, which would provide a better
understanding of how the Postal Service intends to achieve its goals.
The plan does a good job of discussing how the Postal Service plans to
measure and review results and recognizes the role of management and
some stakeholders, such as the Inspector General, in reviewing and
evaluating programs. The plan is relatively silent, however, on how the
Postal Service plans to verify and validate the data that will be used
to measure results.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-98-144
     TITLE:  The Results Act: Observations on the Postal Service's
	     Preliminary Annual Performance Plan
      DATE:  07/10/1998
   SUBJECT:  Performance measures
	     Postal service
	     Data integrity
	     Agency missions
	     Strategic planning
	     Program evaluation
	     Reporting requirements
	     Public administration
	     Congressional/executive relations
IDENTIFIER:  GPRA
	     Government Performance and Results Act

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GAO/GGD-98-144

Cover
================================================================ COVER

Report to the Chairman, Subcommittee on the Postal Service, Committee
on Government Reform and Oversight, House of Representatives

July 1998

THE RESULTS ACT - OBSERVATIONS ON
THE POSTAL SERVICE'S PRELIMINARY
ANNUAL PERFORMANCE PLAN

GAO/GGD-98-144

Preliminary Annual Performance Plan

(240301)

Abbreviations
=============================================================== ABBREV

  GPRA -
  OMBOffice of Management and Budget

Letter
=============================================================== LETTER

B-277565

July 10, 1998

The Honorable John M.  McHugh
Chairman, Subcommittee on the Postal Service
Committee on Government Reform and Oversight
House of Representatives

Dear Mr.  Chairman:

In February 1998, you asked that we review and comment on the U.S.
Postal Service's preliminary annual performance plan (preliminary
plan) for fiscal year 1999, which was prepared in response to the
Government Performance and Results Act of 1993 (GPRA or the Results
Act).  As you know, the Postal Service filed its preliminary plan in
February 1998, in accordance with the Results Act and as part of its
annual comprehensive statement for 1997.  The preliminary plan was
designed to present performance goals, targets, and strategies for
fiscal year 1999; however, the plan is 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.  The Postal Service's final annual performance plan for
fiscal year 1999 is expected to be published on September 30, 1998,
after the Board of Governors adopts the Service's budget.

This report provides our observations on the Postal Service's
preliminary annual performance plan.  To conduct our review, we used
the criteria in the Results Act, our February 1998 guidance for
congressional review of the plans, and our evaluator guidance for
assessing the annual performance plans.\1 The Results Act states that
the Postal Service shall prepare an annual performance plan covering
each program activity set forth in the Postal Service budget; and the
plan shall

(1) establish performance goals to define the level of performance to
be achieved by a program activity;

(2) express such goals in an objective, quantifiable, and measurable
form, unless an alternative form is used;\2

(3) briefly describe the operational processes, skills and
technology, and the human, capital, information, or other resources
required to meet the performance goals;

(4) establish performance indicators to be used in measuring or
assessing the relevant outputs, service levels, and outcomes of each
program activity;

(5) provide a basis for comparing actual program results with the
established performance goals; and

(6) describe the means to be used to verify and validate measured
values.

We performed our work in April and May, 1998, in accordance with
generally accepted government auditing standards.  We requested
comments on a draft of this report from the Postmaster General or his
designee.  On June 19, 1998, Postal Service officials provided
written comments on the draft report, which are discussed at the end
of this letter and reprinted in appendix I.

--------------------
\1 See Agencies' Annual Performance Plans Under the Results Act:  An
Assessment Guide to Facilitate Congressional Decisionmaking
(GAO/GGD/AIMD-10.1.18; Feb.  1998, Version 1) and The Results Act:
An Evaluator's Guide to Assessing Agency Annual Performance Plans
(GAO/GGD-10.1.20; Apr.  1998, Version 1).

\2 The Results Act states that if the Postal Service determines that
it is not feasible to express the performance goals for a particular
program activity in an objective, quantifiable, and measurable form,
the Postal Service may use an alternative form.  Such an alternative
form shall (1) include separate descriptive statements of a minimally
effective program and a successful program, with sufficient precision
and in such terms that would allow for an accurate, independent
determination of whether the program activity's performance meets the
criteria of either description or (2) state why it is infeasible or
impractical to express a performance goal in any form for the program
activity.

   BACKGROUND
------------------------------------------------------------ Letter :1

In recent years, public sector organizations have faced demands that
they become more effective and less costly.  These organizations are
also facing a growing movement toward a performance-based approach to
management.  Congress enacted the Results Act in 1993 to address
these twin demands and to instill performance-based management in the
federal government.  The Results Act seeks to shift the focus of
government decisionmaking and accountability away from a
preoccupation with activities to focus on the results of those
activities--such as real gains in timeliness, productivity, and
responsiveness to customer expectations.  Under the Act, federal
agencies are to develop strategic plans, annual performance plans,
and annual program performance reports.

Although the Results Act contains separate provisions for the Postal
Service, the Act requires that strategic and performance plans and
performance reports developed by the Service are to be similar to
those developed by executive branch agencies.  However, the law
recognizes that the Postal Service has a unique statutory mission and
that the Service does not depend on federal appropriations for its
basic operations.\3 Unlike other agencies, for example, the Postal
Service is not required to submit its strategic and performance plans
and performance reports to the Office of Management and Budget (OMB)
and is not subject to the provisions of OMB's Circular No.  A-11,
part 2.  Instead, the Results Act requires that the Postal Service
submit (1) strategic plans to the President and Congress and (2)
performance plans and performance reports to Congress.  Performance
plans and performance reports are to be filed as part of the Postal
Service's annual Comprehensive Statement on Postal Operations, which
is required under 39 U.S.C.  2401(e).\4 In contrast, performance
plans and performance reports prepared by executive branch agencies
are sent to OMB with the agency's budget request and sent to
Congress.

Another difference in how the Results Act applies to executive branch
agencies and the Postal Service occurs in how performance plans and
performance reports are developed from a budget perspective.  Under
the Act and related OMB guidance, executive branch agencies are
required to link performance goals in their plans to their specific
program activities in the federal budget.  Under the Results Act, for
executive branch agencies, the term "program activity" is defined as
"a specific activity or project listed in the federal budget."
Although the Postal Service provisions of the Act also require the
Service to link performance goals to program activities in the Postal
Service budget, the Act defines the term "program activity"
differently for the Postal Service than for other federal agencies.
For the Postal Service, a program activity is defined as "a specific
activity related to the mission of the Postal Service."\5

On September 30, 1997, the Postal Service fulfilled the first of its
Results Act responsibilities and filed its first 5-year strategic
plan covering fiscal years 1998 through 2002.\6 As previously
mentioned, in February 1998, the Postal Service filed its preliminary
annual performance plan and is expected to file its final performance
plan on September 30, 1998.\7 Like the strategic plan, the
preliminary performance plan was designed to complement the Postal
Service's current management system called "CustomerPerfect!," which
is a long-term approach for making management improvements that are
based on criteria from the Malcolm Baldrige National Quality Award.\8
This management system, which has been in place for several years,
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.

--------------------
\3 The Postal Service receives appropriated funds for some
congressionally mandated services, such as free and reduced-rate mail
for the blind.  In fiscal year 1997, the Postal Service reported
$58.2 billion in operating revenues, of which about $83 million was
from appropriated funds for free and reduced-rate mail.

\4 Under 39 U.S.C.  2401(e), the Postal Service is required to submit
to its Senate and House appropriations and oversight committees an
annual statement discussing in detail its current and planned
operations, policies, financial expenditures, and obligations.

\5 See 39 U.S.C.  2801(5).

\6 See The Results Act:  Observations on the Postal Service's June
1997 Draft Strategic Plan (GAO/GGD-97-163R, July 31, 1997) for our
assessment of the Postal Service's draft strategic plan.

\7 The Act requires that the Postal Service file its first annual
program performance report as part of its fiscal year 2000 annual
comprehensive statement.  Under the law, that report is to cover
actual performance achieved in the preceding fiscal year.  The
performance report for fiscal year 2001 is to cover actual results
for the 2 preceding years, and subsequent reports are to cover actual
performance for the 3 preceding years.

\8 The Malcolm Baldrige National Quality Award is given annually to
recognize U.S.  companies for business excellence.  Award recipients
must demonstrate results and results improvement in a wide range of
indicators, including the customer-related, operational, and
financial areas.  The results reported must address all stakeholders,
including customers, employees, owners, suppliers, and the public.

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :2

The Postal Service's preliminary performance plan provides a partial
picture of the Service's intended performance for fiscal year 1999.
Although the preliminary plan generally has performance goals and
related measures that are quantifiable and results- oriented, the
plan could be more helpful if it (1) articulated current performance
levels, or baselines, from which to gauge progress and (2) more
clearly linked program activities in the Postal Service's budget to
performance goals.  In addition, the plan could better link
particular strategies and resources to performance goals.  Without
clear linkages in these areas, it may be difficult for stakeholders
reviewing the plan to understand how the Postal Service intends to
achieve its goals.  The plan does a good job of discussing how the
Postal Service plans to measure and review results and recognizes the
role of management and some stakeholders, such as the Inspector
General, in reviewing and evaluating programs.  However, the plan is
relatively silent on how the Postal Service plans to verify and
validate the data that will be used to measure results to provide
confidence that its performance information will be credible.

   PRELIMINARY PLAN PROVIDES A
   PARTIAL PICTURE OF INTENDED
   PERFORMANCE WITHIN THE POSTAL
   SERVICE
------------------------------------------------------------ Letter :3

The Postal Service's preliminary performance plan articulates well
performance goals for many areas that define expected performance and
are quantifiable and results-oriented.  The preliminary plan also (1)
describes many performance indicators and targets that should be
useful for measuring results and (2) indicates areas where
performance indicators are to be developed, such as delivery targets
for additional classes of mail.  However, the plan could be more
useful if it articulated current performance levels or baselines that
could be used to gauge progress.

In addition, the preliminary plan does a good job of showing linkages
between strategic goals and performance goals; however, the
preliminary plan does not fully connect to the Postal Service
strategic plan because the preliminary plan does not fully capture
the mission statement articulated in the strategic plan.  Although
the preliminary plan discusses budgetary considerations--including
revenues and expenses, major program costs, and cost reduction
programs, it does not link the program activities in the Postal
budget to performance goals.  Without this linkage, it is difficult
to determine how the Postal Service's budget will be allocated to
achieve its performance goals.

      DEFINING EXPECTED
      PERFORMANCE
---------------------------------------------------------- Letter :3.1

The preliminary performance plan provides a succinct and concrete
statement of expected performance for subsequent comparison with
actual performance in many program areas.  In fact, the preliminary
plan is consistent with the intent of the Results Act that annual
performance goals be results-oriented, quantifiable, and measurable.
Nonetheless, the performance plan could be more useful if it
articulated current performance or baselines.  For example, the
preliminary plan discusses the performance goal of providing timely
delivery, which has as one of its indicators and targets to "increase
the on-time delivery for 2- and 3-day First-Class mail to 87
percent." However, the performance plan does not state the current
percentage of on-time delivery for 2- and 3-day First-Class mail.
Without this information, the reader cannot assess the likelihood
that the Postal Service will achieve its stated goals or be able to
gauge its progress over the course of the performance period.
Likewise, the performance goal of ensuring a safe work environment
has an indicator and target of "decreasing lost workdays due to
injury per 200,000 workhours to 2.04." However, the plan does not
discuss the current level of lost workdays due to injury so that the
reader can ascertain how much performance is expected to improve over
the period.

In other areas, the plan was helpful in identifying the performance
goals where indicators and targets are still under development.
These areas include goals to provide timely delivery for additional
classes of mail, improve the consistency and accuracy of service, and
improve employee proficiency.

      CONNECTING MISSION, GOALS,
      AND ACTIVITIES
---------------------------------------------------------- Letter :3.2

The Postal Service's performance goals are clearly linked to the
three strategic goals listed in both the preliminary plan and the
Postal Service's strategic plan.  Nonetheless, the preliminary plan
does not fully capture the Postal Service mission.  More
specifically, we observed that the mission statement as stated in the
strategic plan articulates the breadth of the Postal Service's
mission and services provided, but the mission as stated in the
performance plan is more narrowly described as focusing on the
"delivery of the public's personal and business mail." In addition,
the mission statement in the strategic plan is anchored in the terms
"prompt, reliable, and efficient services," whereas the condensed
mission statement in the preliminary plan emphasizes "efficient"
without discussing "prompt and reliable." Although there is a solid
link between strategic goals and performance goals, the absence of
key mission-related terms in the preliminary plan (1) could confuse
stakeholders and decisionmakers when they attempt to link the two
documents and (2) may inadvertently focus too much attention on only
one aspect of the Postal Service mission.  The Postal Service's
mission is particularly important in light of the Results Act's
emphasis on the relationship between the Service's program activities
and its mission.

We also observed that the preliminary plan does not show a clear
connection between performance goals and program activities and
funding in the Postal Service's budget.\9

According to the Results Act, the Postal Service is to prepare an
annual performance plan covering each program activity set forth in
the Service's budget.  Our comparison of the preliminary plan with
the budget showed that some of the program activities outlined in the
budget were listed in the plan, but they were not linked to any
particular performance goal.  In addition, the preliminary plan
mentions programs like the time-critical, Year 2000 program\10 and
even discusses performance issues; however, the plan does not have
corresponding goals, indicators, and targets that relate to this
program and could help decisionmakers and stakeholders focus on these
programs, monitor their progress, and better understand the expected
results.

The preliminary plan could better explain how the Postal Service's
budget will be allocated to achieve performance if the plan showed
funding levels, by program activity, associated with performance
goals.  We recognize that the Postal Service, unlike most other
federal agencies, is financially independent and self-supporting.
These are factors that set the Postal Service apart from other
agencies in terms of the federal budget.  We also recognize that the
Postal Service has a performance management system, which
incorporates a planning process that complements the main features of
the Results Act.  Nonetheless, we believe that linking the Postal
Service's performance goals to the program activities and funding
levels discussed in the Service's budget is a critical step so that
stakeholders can better understand how the Service plans to use its
budgetary resources to achieve its goals.

Although the Postal Service is not subject to OMB's Circular No.
A-11, some of the guidance in this circular may be useful in
establishing a clearer linkage between performance goals and their
associated funding levels.  The circular suggests that agencies
consider changes to their budget account structure that present both
budget and performance information in a more thematic or functional
way, thereby facilitating the understanding of programs and measures
of performance.  It is also recognized that modifications to budget
structures will take time to develop as agencies and Congress acquire
more experience with performance plans and reports.

--------------------
\9 See United States Postal Service Fiscal Year 1999 Budget
Congressional Submission.

\10 For the past several decades, automated information systems have
typically represented the year using two digits rather than four in
order to conserve electronic data storage space and reduce operating
costs.  In this format, however, 2000 is indistinguishable from 1900
because both are represented only as 00.  As a result, if not
modified, computer systems or applications that use dates or perform
date- or time-sensitive calculations may generate incorrect results
beyond 1999.

   PRELIMINARY PLAN DOES NOT
   COMPLETELY DISCUSS HOW
   STRATEGIES AND RESOURCES WILL
   HELP THE POSTAL SERVICE ACHIEVE
   ITS GOALS
------------------------------------------------------------ Letter :4

The Postal Service's preliminary performance plan does not completely
discuss the strategies--that is, how it will use its operations
processes, skills, and technologies--and resources (i.e., human,
capital, information, or other resources) that will be needed to
achieve its goals.  Without this discussion, stakeholders and
decisionmakers do not have the contextual framework for understanding
how the Postal Service plans to achieve its performance goals.

      CONNECTING STRATEGIES TO
      PERFORMANCE GOALS
---------------------------------------------------------- Letter :4.1

The Postal Service's preliminary performance plan does not fully
discuss the Service's strategies for achieving its performance goals.
The Results Act requires that performance plans should briefly
describe the strategies--operational processes, skills, and
technologies--required to meet performance goals.  Specifically, we
found that the Postal Service's preliminary plan does not always
articulate what strategies the Service intends to use to achieve
performance goals.

For example, the performance goal--"provide timely delivery"--has an
indicator and target stating that the Postal Service will "increase
or maintain overnight on-time delivery to 92 percent." However, the
goal, indicator, and target do not discuss a corresponding strategy
for achieving this target.  Likewise, the performance goal--"ensure a
safe work environment"--has an indicator and target stating that the
Postal Service will "ensure a safe work environment by decreasing
lost workdays due to injury per 200,000 work hours to 2.04." Although
the preliminary plan does contain some discussion about safety issues
relative to the overall workplace environment, it does not address
the strategy that the Service will take to decrease lost workdays to
the target level.  In contrast, the preliminary plan discusses the
strategies to be used to achieve other goals; namely, the two
performance goals--"grow net income from existing or enhanced
products and services" and "grow net income from new products and
services"--have indicators and targets associated with
revenue-generating initiatives.  From a strategic standpoint, the
narrative accompanying these goals also points out that the Postal
Service intends to build business activities, such as advertising
mail and international services to in fact "grow" the business and
achieve these goals.

Although the Results Act does not require that performance plans
specifically discuss the impact of external factors and major
management problems in achieving performance goals, we believe that a
discussion of such factors would provide additional context regarding
an agency's anticipated performance.  In its September 1997 strategic
plan, the Postal Service identified several major challenges (i.e.,
regulatory constraints, technology, competition, changing consumer
expectations, and management challenges) that could significantly
affect the achievement of general goals and objectives.  Some of the
strategic plan's discussion associated with achieving performance
goals mentions issues such as competitive markets and consumer
expectations.  However, a more explicit discussion of these issues
and other management factors, such as the Year 2000 problem and
labor-management relations, would help decisionmakers and
stakeholders better understand how external factors and major
management challenges could influence the Postal Service's ability to
achieve the intended level of performance and how the Service intends
to mitigate or use these factors.

      CONNECTING RESOURCES TO
      PERFORMANCE GOALS
---------------------------------------------------------- Letter :4.2

The Postal Service's preliminary performance plan does not fully
discuss the resources it will use to achieve the performance goals.
The Results Act specifies that performance plans should briefly
describe the human, capital, information, or other resources that the
agency will use to achieve its performance goals.  The preliminary
plan does contain a broad-based, holistic discussion of the resources
and programs needed to achieve the goals.  This discussion includes a
statement that the final Postal Service performance plan will
describe the resource allocation plan.  However, the preliminary plan
would be more useful if a discussion about potential or provisional
resource commitments were articulated and clearly linked to
performance goals.  Again, the Year 2000 program is an example of a
major program that could be more clearly linked to resources and
performance goals.  By having this information, stakeholders and
decisionmakers could be in a better position to weigh how the Postal
Service plans to manage cost-effective mixtures of limited resources.

   PRELIMINARY PLAN PROVIDES
   PARTIAL CONFIDENCE THAT
   PERFORMANCE INFORMATION WILL BE
   CREDIBLE
------------------------------------------------------------ Letter :5

The preliminary performance plan partially meets the Results Act
criteria related to ensuring the credibility of performance
information by describing the Postal Service's processes for
reviewing progress toward intended results.  However, it is not as
clear how the Postal Service plans to verify and validate the data
that will be used to measure performance as required by the Results
Act.  The Postal Service plan contains a detailed discussion of the
CustomerPerfect!  management cycle, which includes a discussion of
how the management system is the subject of ongoing review.  This
discussion touches on such things as how officers and managers will
be involved in the identification of goals, subgoals, indicators, and
targets; how programs will be reviewed and evaluated; and how the
Postal Service plans to measure results against goals.  The
attachment to the preliminary plan also discusses the review phase of
the plan and recognizes the role of the Office of the Inspector
General and the Inspection Service in providing reviews of new and
ongoing activities.

However, the preliminary plan does not always describe particular
steps or means to be used to verify and validate measured values.
For instance, the indicators associated with First-Class mail contain
targets, but the discussion about these indicators does not show the
steps the Postal Service plans to take to ensure that the data used
to measure results will be verified and validated.  The preliminary
plan would be more helpful if it highlighted some of the specific
controls that the Postal Service may use for its major systems to
verify and validate performance information on an ongoing basis.
Such controls could include periodic data reliability tests, computer
edit controls, and supervisory reviews of the data used to develop
performance measures.  A succinct discussion of the major procedures
and controls that are in place to ensure credible data, at least for
the more important information systems, would be more helpful to
decisionmakers and stakeholders in assessing the reliability of the
data being used to gauge progress.

   CONCLUSIONS
------------------------------------------------------------ Letter :6

Overall, the Postal Service's preliminary performance plan
articulates well the performance goals that define expected
performance and are quantifiable and results-oriented.  In addition,
the preliminary plan describes performance indicators and targets
that should be useful for measuring results.  Nonetheless, the plan
could be more useful if it (1) articulated current performance levels
or baselines from which to gauge progress and (2) more clearly linked
program activities in the Postal Service's budget to performance
goals.  Without these linkages, it is unclear how the Postal
Service's budget will be allocated to achieve the performance
intended.  The plan also contains the same overall goals and subgoals
contained in the Postal Service's strategic plan; however, the
preliminary plan does not fully capture the mission statement
articulated in the strategic plan--which is a factor that could
de-emphasize the important link between the two documents.

Furthermore, although the preliminary plan broadly discusses the
strategies and resources necessary to achieve its goals, it does not
show how particular strategies and resources will contribute to the
achievement of performance goals.  Without this linkage, it may be
difficult for stakeholders reviewing the plan to understand how the
Postal Service intends to achieve its goals.  The plan does a good
job of discussing how the Postal Service plans to measure and review
results and recognizes the role of management and some stakeholders,
such as the Inspector General, in reviewing and evaluating programs.
However, the plan is relatively silent on how the Postal Service
plans to verify and validate the data that will be used to measure
results.  Finally, the plan could be enhanced with a discussion of
the major management problems and external factors that the Postal
Service could face in achieving its performance goals.

We recognize that this is the first performance plan developed by the
Postal Service under the Results Act; and, as such, it represents a
good start.  Typically, there is a long learning process in
understanding what constitutes a good plan.  In addition, it is
recognized that making linkages between the budget and performance
goals may take some time to develop and that incremental adjustments
to the plan may be necessary.  This is particularly true given the
unique nature of the Postal Service and its budgeting process,
especially in relation to other agencies covered by the Results Act.
Determining how best to make these linkages is an effort that could
benefit from the participation of congressional and other major
stakeholders.  The Postal Service's plan to issue its final plan
later in 1998 provides it with an opportunity to revise it to more
closely reflect the requirements and intent of the Results Act.

   RECOMMENDATIONS
------------------------------------------------------------ Letter :7

We recommend that the Postmaster General modify the preliminary
performance plan so that the Postal Service's final performance plan
for fiscal year 1999 more fully conforms with the Results Act and
gives stakeholders and decisionmakers a better framework for gauging
the Service's performance.  Specifically, in developing the final
performance plan, we recommend that the Postmaster General take steps
to

  -- include current levels of performance, or baselines, so that
     readers can gauge the Postal Service's progress in achieving its
     goals;

  -- start the process to develop and communicate linkages, including
     incremental adjustments as the linkages are developed, between
     the Postal Service budget and the performance goals in the
     performance plan;

  -- fully articulate the Postal Service mission as stated in the
     strategic plan so that readers can more clearly understand the
     link between the two documents;

  -- more completely link strategies and resources for achieving
     goals with the performance goals discussed in the preliminary
     plan;

  -- discuss steps that the Postal Service plans to take to ensure
     that the data used to measure performance are both verifiable
     and valid; and

  -- discuss external factors and major management problems that
     could impede the Service's ability to achieve its intended goals
     and how the Service plans to address such impediments.

   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

The Postal Service provided comments on a draft of this report in a
letter dated June 19, 1998, signed by the Vice President, Controller,
and Vice President, Strategic Planning.  In general, the Postal
Service stated that the report was balanced and helpful in providing
guidance to improve its preliminary annual performance plan.  The
Service also agreed with our conclusions and recommendations and
indicated how it plans to respond to each recommendation.  In
addition, the Service agreed to continue discussions with us on how
best to align the budget and performance plans.  We recognize the
difficulty of this task and welcome the opportunity to continue
working with the Service in this effort.

---------------------------------------------------------- Letter :8.1

We are sending copies of this report to the Ranking Minority Member
of your Subcommittee; the Chairman and Ranking Minority Member of the
House Committee on Government Reform and Oversight; the Chairmen and
Ranking Minority Members of the Senate Subcommittee on International
Security, Proliferation and Federal Services and the 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 appendix II.  If you
have any questions, please call me on (202) 512-8387.

Sincerely yours,

Bernard L.  Ungar
Director, Government Business
 Operations Issues

(See figure in printed edition.)APPENDIX I
COMMENTS FROM THE U.S.  POSTAL
SERVICE
============================================================== Letter

(See figure in printed edition.)

MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix II

GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C.

Teresa Anderson, Assistant Director
John Mortin, Assistant Director
Melvin J.  Horne, Senior Evaluator

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION

Laura Castro, Senior Evaluator

OFFICE OF THE GENERAL COUNSEL

Alan N.  Belkin, Assistant General Counsel
Jill P.  Sayre, Senior Attorney

*** End of document. ***