The Key Requirements Related to Postal Outsourcing, the Service’s Process for Making Outsourcing Decisions, and the Extent of Its Outsourcing

The Service has no statutory restrictions on the type of work it may  outsource, but union collective bargaining agreements impose some  limitations. The Service did provide data related to some of its outsourcing,  including in its retail, processing, and delivery functions. First, it must address five factors—public  interest, cost, efficiency, availability of equipment, and qualification of  employees—when evaluating the need to outsource. Although the specific  requirements vary by agreement, the Service must always notify the  affected union of its intent to consider outsourcing and must consider  union input before making a decision. If the SIAG determines that  an outsourcing initiative will have a significant impact on work performed  by bargaining unit employees, the affected unions must be notified and  allowed to provide input into the analysis considered when comparing the  performance of proposed work by postal employees and by a contractor. The unions have also addressed concerns about outsourcing through  collective bargaining. The Extent of the Postal Service’s Outsourcing Is Unknown

Overall, the Service could not provide information on the total extent of its  outsourcing activities that have impacted bargaining unit work because  the contracts related to bargaining unit work are not separately tracked. The Service Holds Both Contractors and Postal Employees to Similar Standards but Uses Different Processes to Manage Them

The Service evaluates contractors and postal employees using similar  suitability and performance standards, while holding them accountable  using different management processes. In the fall of 2007, the Service  revised its drug screening procedures so that it had similar criteria to  evaluate both potential delivery service contractors and applicants. Without data to demonstrate results, Service management,  stakeholders, and Congress are not able to assess the risk and value of  outsourcing, accountability for results is limited, and the Service is not  able to effectively address union concerns. The Service has a long history of outsourcing  mail transportation, delivery services and other functions, much of which  has been carried out within the framework of the Service’s collective  bargaining agreements with its employee unions. Conclusions

Although the Service has outsourced activities related to many of its key  functions, its employee unions are now challenging its ability to expand  outsourcing in areas where postal employees have performed or could  perform these activities. A key challenge for both the Service and its  unions will be to reach agreement on outsourcing issues through  collective bargaining. Appendix I: Objectives, Scope, and Methodology

Our objectives for this report were to assess (1) the circumstances under  which the Service can outsource postal functions, how it decides to  outsource, and the extent to which it has outsourced; (2) how the  Service’s management processes, including suitability (hiring and  screening procedures) and performance evaluation, for contractors  compare to those for postal employees; and (3) the results—including any  costs savings, or other outcomes—of the Service’s outsourcing efforts and  the challenges facing the Service related to outsourcing. To compare the Service’s suitability, performance evaluation, and  management processes for postal employees and contractors, we  reviewed the Service’s policies and procedures on qualifications, screening  requirements, and performance evaluation for contractors and postal  employees.
Why GAO Did This Study

The U.S. Postal Service (the Service) has a long history of contracting out postal functions, such as mail transportation, mail delivery in rural areas, vehicle and equipment maintenance, and retail postal services. However, postal employees also perform many of these same functions and unions representing these employees have concerns about the scope and impact of outsourcing. The objectives of this requested report are to assess (1) the circumstances under which the Service can outsource postal functions, how it decides to outsource, and the extent to which it has outsourced; (2) how the Service's management processes compare for contractors and postal employees; and (3) the results, including any savings, and key challenges related to the Service's outsourcing activities. GAO reviewed applicable statutes, collective bargaining agreements, postal processes and outsourcing data, and interviewed postal union and management officials.

What GAO Found

The Service has no statutory restrictions on the type of work it may outsource, but collective bargaining agreements with its unions impose some process requirements and limitations. When evaluating outsourcing proposals, the Service must consider five factors--public interest, cost, efficiency, availability of equipment, and qualification of employees--and determine whether outsourcing will have a "significant impact" on work performed by postal employees covered by collective bargaining agreements. If so, it must compare the costs of performing proposed work with postal employees and with a contractor, notify the affected union that it is considering outsourcing, and consider union input before making a decision. We could not determine the Service's total outsourcing contracts related to bargaining unit work, because the Service does not separately track these contracts. It did provide data on some outsourcing that has impacted work by employees of its four major unions in the areas of retail, processing, transportation, and delivery. The Service evaluates contractors and postal employees using similar suitability and performance standards, but uses different management processes. The Service recently revised its drug screening procedures so they are now similar for both groups. The Service manages contractors through specific performance requirements, as compared to Service policies and collective bargaining agreements for postal employees. Finally, the Service has mechanisms to evaluate performance and take actions related to performance problems for both, but does not compile performance data to permit comparisons between contractors and postal employees. The Service does not have a comprehensive mechanism for measuring results, including any actual savings; therefore, it could not provide information on the effectiveness of its outsourcing. Without cost-savings data, postal managers, stakeholders and Congress cannot assess the risk and value of outsourcing. Also, accountability for results is limited. The Service has stated that it will explore outsourcing opportunities, and postal unions are concerned that the Service's use of contractors for delivery service is growing as shown below. Proposed legislation to limit the Service's outsourcing is pending in Congress, which the Service says could limit its ability to contain costs. Key challenges include whether the Service and its unions can reach agreement on outsourcing issues through collective bargaining and whether the Service can provide analysis to substantiate the benefits of outsourcing.