Postal Service. In my testimony, I shall briefly discuss the Service’s overall performance during fiscal year 1997, including the Service’s reported successes and remaining challenges. Also, I will discuss work that we have completed since the spring of 1997, when we last testified at the Subcommittee’s Postal Service oversight hearing. In addition, I shall provide information on our ongoing work, which relates primarily to the issues of competition and diversity. Service Performance Has Continued to Improve in Some Areas, but Challenges Remain

First, I would like to briefly discuss the continuation of the Service’s reported performance successes and mention some areas of concern and challenges that still remain. In fiscal year 1997, the overall delivery score for the on-time delivery of overnight mail reached a 3-year high of 92 percent, and total mail volume increased to about 191 billion pieces. Although such performance results appear to be encouraging, other information suggests that some areas of concern and challenges remain. The topics we addressed included (1) labor-management relations; (2) automated letter sequencing, also known as Delivery Point Sequencing (DPS); and (3) the Service’s plans prepared in response to the Government Performance and Results Act (Results Act). However, the underlying problems that have hampered good relationships between the Service and most of its labor unions remain and pose significant challenges to the Service and its unions. The Service has made substantial progress in implementing DPS, despite initial obstacles. The Service acknowledged that it had been overly optimistic in its DPS expectations. Subsequently, it revised goals and benchmarks for the implementation of DPS to be completed by the end of fiscal year 1998. In its 1997 Comprehensive Statement on Postal Operations, the Service included a preliminary version of the Annual Performance Plan for fiscal year 1999. To provide you with additional information on the mailbox restriction, among other things, we obtained the views of over 1,000 randomly selected adults in the continental United States and other postal stakeholders, including the Service and the seven major postal labor unions and management associations. In addition, we said a variety of other factors, such as a reduction in First-Class Mail volume due to increased use of electronic media along with costs, inflation, and service quality, could in the long run, in combination with any change in the scope of the postal monopoly, have an impact on the Service’s ability to provide affordable universal service. Ongoing GAO Work Related to Competition and Diversity Issues

I would now like to discuss our ongoing work, most of which has been initiated at your request, Mr. Chairman, or at the request of members of your Subcommittee, in which we are focusing on various postal activities that in large part relate to the issues of competition and diversity. Postal Service: Little Progress Made in Addressing Persistent Labor-Management Problems (GAO/GGD-98-1, Oct. 1, 1997).
Why GAO Did This Study

GAO discussed: (1) the Postal Service's overall performance during fiscal year (FY) 1997, including the Service's reported successes and remaining challenges; (2) work that GAO has completed since the spring of 1997; and (3) information on ongoing work, which relates primarily to the issues of competition and diversity.

What GAO Found

GAO noted that: (1) as the Postal Service stands ready to enter the 21st century, it faces significant challenges that call for vigilance and attention as it strives to sustain and expand on reported performance improvements; (2) in FY 1997, the Postal Service ended another year of overall high performance in some of its operational areas, sustaining 3 years of encouraging results; (3) with reported net income of over $1 billion and increasing on-time delivery scores for first-class mail, the Service has shown that it can maintain a high income level while providing its customers with improved service; (4) also, in some management areas, such as automation of mail processes and labor-management relations, GAO acknowledges that some progress has been made; (5) however, challenges remain for the Service to sustain performance and continue on a progressive path toward accomplishing established goals and objectives and improving operations; and (6) sustaining and expanding on recent progress will be dependent upon the extent to which Congress, the Service, and other major postal stakeholders continue to focus attention on key issues, particularly: (a) labor-management relations, in which efforts to address persistent problems continue, although the sometimes adversarial nature of the relationships among the Service and many of its labor unions can affect progress in implementing improvements; (b) postal reform, in which fundamental issues are still being considered, such as defining universal service obligations and the scope of the postal monopoly; (c) competition, in which the Service is continually striving to deal with competitors so that it can maintain a firm position in a dynamic communications environment; and (d) the effectiveness with which the Service implements the Government Performance and Results Act, particularly with respect to the implementation of its strategic plan and the development and execution of its 1999 and beyond annual performance plans.