USPS Is Revising Its Management Structure and Processes for Developing and Overseeing Its E-Commerce Initiatives

Overall management of USPS’ e-commerce program has been fragmented and inconsistent across the nine business units involved in developing and managing e-commerce and Internet-related initiatives. In September 2001, the Postmaster General announced a sweeping management restructuring, changing both the reporting structure and managers responsible for its e-commerce program. Without complete, accurate, and consistent information, USPS will not be in a position to assess progress toward meeting its overall financial performance goal that e-commerce products and services in the aggregate are to cover their incremental costs and thus not be cross-subsidized. Reported Performance for E-Commerce Initiatives Has Not Met Expectations

To date, performance of the e-commerce initiatives has reportedly fallen short of USPS’ expectations. Concerns continue to be raised in Congress about whether USPS’ e- commerce initiatives in the aggregate are being cross-subsidized by other postal products and services. Without comprehensive policies and procedures in this area, inconsistencies in reporting are likely to continue. Recommendations for Executive Action

To ensure that USPS develops reliable and consistent financial information for all of its new products and services, we recommend that the Postmaster General   develop a comprehensive set of policies and procedures for capturing, attributing, and reporting revenues and expenses associated with its new products and services and that are consistent with PRC’s cost attribution policies;   provide an annual report to the Senate Committee on Governmental Affairs, House Committee on Government Reform, and PRC showing its revenues and expenses for new products and services individually and in aggregate that has been audited by an independent entity for the purpose of determining that the report was prepared in accordance with the Service’s policies and procedures and generally accepted accounting principles; and   provide the audited report for fiscal year 2001 by May 1, 2002, and by May 1 for each subsequent year. USPS reportedly has developed privacy policies and practices for its e- commerce customers that exceed those required by federal law, and is also voluntarily engaging in additional self-regulatory privacy practices to safeguard customers’ personal information.
Why GAO Did This Study

Management of the U.S. Postal Service's (USPS) e-commerce program has been fragmented, and implementation of e-commerce initiatives has varied at different business units. Overall, USPS' performance in this area has fallen short of expectations. Last year, the Postmaster General announced a sweeping management restructuring that changed both the reporting structure and program managers. USPS also revised its procedures for approving and implementing new Internet initiatives, including e-commerce. However, concerns persist about whether USPS' e-commerce initiatives are being cross-subsidized by other postal products and services. USPS managers contend that e-commerce products and services must cover their incremental costs.

What GAO Found

GAO found that this goal has not been met and it is unclear when it might be achieved. Without accurate, complete, and consistent financial information, USPS cannot assess its progress toward its financial performance goals for e-commerce. USPS also lacks clear and comprehensive policies and procedures for reporting direct and indirect revenues and costs for e-commerce and other new products and services. As a result, reporting inconsistencies are likely to continue. In contrast, USPS has reportedly developed privacy policies and practices for its e-commerce customers that exceed those required by federal law.