It also  described plans to address these challenges—for example, by  introducing retail alternatives in concert with reducing its retail network  footprint and operating costs. recommended that it develop a plan for optimizing its retail network that  addresses both traditional post offices and retail alternatives. GAO, High Risk Series: Restructuring the U.S. USPS Has Taken Several Actions to Restructure Its Retail Network

Over the past 5 years, USPS has taken several actions to change its  retail network through reducing its workforce and retail footprints, while  expanding retail alternatives. It estimated that it saved about $800 million  by reducing retail work hours during this period. It also closed 631 of its  post offices, but it did not have cost savings estimates related to these  closures. Fewer closures (131) have resulted from the  nationwide reviews that USPS initiated in 2009 and 2011. In addition, over the last 5 years, USPS district offices have identified and  closed around 500 USPS-operated retail facilities on an individual, ad-hoc  basis as they determined the need.response to a postmaster vacancy or the suspension of operations due to   These individual closures were in  an expired lease or irreparable damage to the facility following a natural  disaster. These alternatives include self-service  options as well as partnerships with retailers, which could help it contain  facility and labor costs while still providing access for customers. Stakeholders Have Expressed Concerns about USPS Retail Initiatives

Postal stakeholders, including Members of Congress, PRC, USPS OIG,  customers, employee associations, and some community residents have  raised concerns about USPS’s retail restructuring initiatives. These  concerns include access to postal services, including community residents’ ability to  obtain retail services, the adequacy of retail alternatives, and changes  to delivery services;  the impact of facility closures on communities;  the adequacy of data analysis of facilities facing closure and the  reliability of data, particularly with regard to the accuracy of cost- savings estimates;  the transparency and equity of closure decisions;  the fairness of facility closure procedures; and  changes in who can manage a post office. Moreover, we have also recommended improvements to USPS’s  retail facilities data. USPS  expects that this change would give it more staffing flexibility, reduce the  number of postmasters, and reduce costs. Challenges Restrict USPS from Changing Its Retail Network

USPS faces challenges such as legal restrictions and resistance from  some Members of Congress and the public that have limited its ability to  restructure its network. Also, certain policy issues are unresolved, and  pending legislation takes differing approaches to resolving USPS’s  challenges. Further, language in annual appropriations acts  has provided that none of the funds appropriated in the acts (about $100  million for fiscal year 2011) shall be used to consolidate or close small  rural and other small post offices.“act like a business” and be self-financing, but on the other hand, it is  restricted by law from making decisions that businesses would commonly  make, such as closing unprofitable units. These policy issues include what level or type of retail services should USPS provide to meet  customers’ changing use of postal services; how should the cost of these services be paid; how should USPS restructure its operations, networks, and workforce  to support changes in services; and how should Congress provide USPS with flexibility to restructure its  networks and workforce while still holding USPS accountable to  Congress and the public? Concluding Observations

USPS must carefully work to ensure a viable strategy to effectively size  its retail network to reduce costs to match declining mail volume while  maintaining access to retail services. If Congress prefers to retain the current level of service and associated  network, decisions will need to be made about how USPS’s costs for  providing these services will be paid, including additional cost reductions  or revenue sources. USPS agreed with our findings, noting limitations  management faces to restructuring. Further, it observed that its operating  model is unsustainable and that maintaining the same level of retail  services will require solutions to cover the costs of those services either  through cost reductions or revenue enhancements. This report discusses (1)  key actions USPS has taken to restructure its retail network over the past  5 years; (2) concerns raised by postal stakeholders, including Congress,  the Postal Regulatory Commission (PRC), USPS Office of Inspector  General (OIG), and postal business and residential customers, and  USPS’s response to these concerns; and (3) the challenges that USPS  faces in changing its retail network.
Why GAO Did This Study

Since 2006, USPS has accumulated losses of $25 billion and projects a $14.1 billion net loss for fiscal year 2012. In September 2011, the Postmaster General testified that USPS needed to reduce its annual costs by $20 billion, or 27 percent of its projected expenses. One effort to reduce costs includes restructuring, or optimizing, the size of USPSs retail network and workforce. The network includes approximately 32,000 USPS-operated facilities, such as traditional post offices, as well as alternative non-USPS-operated locations that sell its products and services. To optimize this network, USPS plans to evaluate and locate its retail facilities to maximize revenue and minimize costs while still providing access to services.
As requested, this report discusses (1) key actions USPS has taken over thepast 5 years to restructure its retail network, (2) concerns raised by stakeholders, and (3) the challenges USPS faces in changing its retail network. GAO analyzed USPS documents, interviewed USPS officials and stakeholders, and observed public meetings on retail facility closures.

What GAO Found

Over the past 5 years, the U.S. Postal Service (USPS) has taken several actions to restructure its retail network through reducing its workforce and its footprint while expanding retail alternatives. USPS officials estimated that it had saved about $800 million from reducing the number of work hours dedicated to retail operations. USPS also closed 631 of its post offices, but it did not have cost-savings estimates for these closures. Most of the facilities closed (500) were in response to a postmaster vacancy or the suspension of operations due to an expired lease or irreparable damage following a natural disaster. Fewer closures (131) have resulted from nationwide reviews that USPS initiated in 2009 and 2011. USPS has also restructured its retail network by expanding alternatives through self-service options as well as partnerships with other retailers.
Members of Congress, the Postal Regulatory Commission (PRC), the USPS Office of Inspector General (OIG), customers, employee associations, and some community residents have raised concerns about USPSs retail restructuring initiatives. The concerns include
access to postal services, including community residents ability to obtain retail services, the adequacy of retail alternatives, and changes to delivery services;
the impact of facility closures on communities;
the adequacy of USPS analysis of facilities facing closure and the reliability of USPS data, particularly the accuracy of USPS cost savings estimates; ·
the transparency and equity of USPS closure decisions;
the fairness of USPSs facility closure procedures; and
changes in who can manage a post office.
PRC, USPS OIG, and GAO have recommended improvements to address some of these issues. In particular, GAO has recommended that USPS develop a plan that addresses both traditional post offices and retail alternatives and ensures that USPS has a viable strategy for effectively adapting its networks to changing mail use and maintaining adequate service as it reduces costs. USPS officials have said they are in the process of addressing these recommendations.
USPS faces challenges, such as legal restrictions and resistance from some Members of Congress and the public, that have limited its ability to change its retail network. For example, USPS is supposed to be self-financing, but it is also restricted by law from making decisions that businesses would commonly make, such as closing unprofitable units. Additionally, some Members of Congress and the public have challenged USPSs plans to close retail facilities in their districts or communities. Certain policy issues remain unresolved related to what level of retail services USPS should provide, how the cost of these services should be paid, and how USPS should optimize its retail network. Pending legislation takes differing approaches to addressing these policy issues. If Congress prefers to retain the current level of retail service and associated network, decisions will need to be made about how USPS will pay for these services, including through additional cost reductions or revenue sources.

What GAO Recommends

GAO makes no recommendations in this report, as it has previously reported on the urgency for Congress to allow USPS to adapt its retail network to changing customer behavior and reduce costs. USPS agreed with GAOs draft report, noting limitations it faces to retailrestructuring. It also observed that maintaining the same level of retail services will require solutions to cover the costs of those services.