These changes  appear to have placed First-Class Mail volume in the early stages of what  may be a long-term decline. All options for statutory and discretionary change  need to be on the table for discussion. The Commission’s findings are generally consistent with our  past work, and its recommendations address postal reform issues in a  comprehensive manner. We agree with the Commission that the Service has significant  opportunities to improve its efficiency through best execution  strategies in which those who can do it best and at the best price would  perform postal activities while the Service rightsizes its infrastructure  and workforce. The starting point is  to consider the Commission’s recommendation that Congress amend the  nation’s postal laws “to clarify that the mission of the Postal Service is to  provide high-quality, essential postal services to all persons and  communities by the most cost-effective and efficient means possible at  affordable, and where appropriate, uniform rates.” This recommendation  is coupled with proposals to create a mechanism for change by giving  broad authority to a newly created Postal Regulatory Board, including  authority to review and issue binding decisions on certain Postal Service  proposals to redefine delivery frequency requirements; uniform postal  rates; and the Postal Service’s monopoly to deliver mail and place items in  mailboxes. However, we agree with the Commission’s conclusion that  the legacy governance structure of the Service is increasingly at odds  with its mission in the modern environment and that the Service’s  governing structure needs to consist of members with the requisite  knowledge and experience. Since then, the Service has  improved its quarterly financial reports. On the Service’s overall financial  situation and transformation efforts? 3). The  P-NOC would be charged with making recommendations to Congress and  the President relating to the consolidation and rationalization of the  Service’s mail processing and distribution infrastructure. Taking advantage of  this opportunity could better position the Service for the future. Thus, we believe that now is the time to “get it right” and modernize the  statutory framework that governs the Service. The  Commission’s vision of rightsizing the Service’s infrastructure and  workforce is achievable if approached in a comprehensive, integrated  fashion, and supported by postal stakeholders. However, since the Service issued its Transformation Plan in April 2002, it  has not provided adequate transparency on its plans to rationalize its  infrastructure and workforce; the status of initiatives included in its  Transformation Plan; and how it plans to integrate the strategies, timing,  and funding necessary to implement its plans. Some of  the key areas that need to be addressed as part of comprehensive reform  legislation include clarifying the Service’s mission and role; enhancing  governance, accountability, oversight, and transparency; improving  regulation of postal rates; and making human capital reforms.
Why GAO Did This Study

Last year the President established a commission to examine the future of the U.S. Postal Service (the Service). Its report, issued in July 2003, contained a proposed vision for the Service and recommendations to ensure the viability of postal services. GAO was asked to discuss (1) its perspective on the commission's report and (2) suggestions for next steps. This testimony is based on GAO's analysis of the Commission's report and prior GAO reports and testimonies.

What GAO Found

The Commission found that the Service faces a bleak fiscal outlook. The Service has an outdated and inflexible business model amid a rapidly changing postal landscape. First-Class Mail appears to be on the brink of long-term decline as Americans take advantage of cheaper electronic alternatives. Thus, universal postal service is at risk. These findings are similar to our past work and point to the need for fundamental reforms to minimize the risk of a significant taxpayer bailout or dramatic postal rate increases. The Commission made recommendations to Congress and the Service aimed at achieving such reforms, which GAO believes merit consideration. GAO agrees with the Commission that now is the time to modernize the nation's postal laws rather than waiting until a financial crisis occurs that limits congressional options. Key aspects of the Service's existing legislative framework that need to be addressed are 1) a broadly defined mission that enables the Service to engage in unprofitable and controversial endeavors, 2) a governance structure that does not ensure governing board members who have the requisite knowledge and skills, 3) the need for additional accountability, oversight, and transparency provisions; 4) a lengthy, burdensome rate-setting process, and 5) provisions that hinder the Service in rationalizing its infrastructure and workforce. GAO also agrees with the Commission that the Service can take steps now to modernize and increase efficiency and effectiveness, improve its financial position, and rationalize its infrastructure and workforce. The Service has begun to implement its Transformation Plan initiatives, cut its costs and the size of its workforce, and improve its efficiency. However, since the Service issued its Transformation Plan in April 2002, it has not provided adequate transparency on its overall plans to rationalize its infrastructure and workforce; the status of initiatives included in its Transformation Plan; and how it plans to integrate the strategies, timing, and funding necessary to move toward becoming a high-performing organization. The Service's vision of rightsizing its infrastructure and workforce is achievable if approached in a comprehensive, integrated fashion, with appropriate communication and coordination with postal stakeholders.