GAO, in response to a Congressional request, conducted an independent analysis of the Postal Service‘s cost savings estimate as well as the criticisms of the estimate. In a March 2011 report, GAO concluded that the Postal Service was likely to achieve ―significant cost savings‖ by reducing delivery to five days, but noted that some of those savings would depend on the extent to which the Saturday workload could be absorbed through more efficient operations the rest of the week.53 GAO identified as a particular area of uncertainty whether there was excess capacity in city-delivery operations, as the Postal Service has asserted. In other words, if, because of reduced mail volume, urban mail carriers were not delivering as much mail as they could, Saturday mail could be added to the existing workload without increasing costs; on the other hand, if urban mail carriers were already working to capacity, additional routes and personnel – and therefore costs – might be needed to handle the additional mail that would have previously been delivered on Saturday. GAO also noted that a move from six-day to five-day service would not alone be sufficient to put the Postal Service on stable financial footing.
It is clear that a shift to five-day delivery has the potential to save the Postal Service a substantial amount of money but there is not agreement on what the potential cost savings might be. Changing a delivery schedule that has been in place for nearly 150 years is a significant step and one that involves difficult tradeoffs, including the potential to reduce mail volume further and to eliminate an advantage that the Postal Service has over its competitors – the provision of Saturday delivery at no additional cost.
As a result, and because public and customer reaction to the Postal Service‘s five-day delivery proposal has been mixed, S. 1789 prohibits the elimination of Saturday delivery for two full years while other savings initiatives are implemented. After that period, five-day delivery could only be adopted if it is truly the last, but still necessary resort. Specifically, the bill requires that the Postal Service first implement alternative measures (authorized elsewhere in the bill) to increase revenue and reduce costs; that it identify, and develop measures to ameliorate any disproportionate negative impact that the change to five-day delivery may have on particular categories of customers and communities; and that it submit a report describing the actions it has taken to Congress, GAO, and the PRC. GAO is then directed to submit an independent report evaluating the measures the Postal Service has undertaken and assessing whether a change in delivery service is necessary for the Postal Service to become profitable by 2015 and achieve long-term financial solvency. Finally, the PRC is to issue, and submit to Congress, an advisory opinion determining 1) whether the measures developed by the Postal Service ameliorate any disproportionate, negative impact that a shift to five-day delivery may have on certain customers and communities; and 2) whether, based on the GAO‘s report, the change to five-day service is financially necessary. Only if the PRC determines that the Comptroller General has concluded that the change is necessary to allow the Postal Service to become profitable by fiscal year 2015 and to achieve long-term financial solvency, may the Postal Service implement a five-day delivery schedule.54
53 GAO, U.S. Postal Service: Ending Saturday Delivery Would Reduce Costs, but Comprehensive Restructuring Is Also Needed, GAO-11-270, at p.11 (March, 2011).
54 Note that the bill provides that the Postal Service‘s ability to implement a five-day delivery schedule is dependent only on the PRC‘s determination regarding the Comptroller General‘s conclusions and does not depend on whether the PRC itself determines that such a change is advisable.
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Finally, the Postal Service is not seeking – and S. 1789 makes clear that the switch to five-day delivery to street addresses does not authorize – changes in schedules for post offices, for delivery to post office boxes, or for competitive mail products such as Express Mail, or to reduce the delivery schedule for any route for which mail delivery is currently provided less frequently than six days per week. The bill also provides that there may not be more than two consecutive days without mail delivery service, even in the case of federal holidays and three-day weekends.
Nonpostal Products and Services
As mail volumes and revenues continue to decline, the Postal Service might consider new ways to increase its revenues through nonpostal products and services. Current law limits the Postal Service to postal products and services and to certain nonpostal services approved under criteria set out in the 2006 Postal Accountability and Enhancement Act (PAEA).55 Specifically, PAEA authorized the Postal Service to continue providing nonpostal services that were offered as of January 1, 2006, and that the PRC determined should continue. PAEA required the PRC, when making its determination, to take into account ―the public need for the service‖ and ―the ability of the private sector to meet the public need for the service.‖56 These grandfathered nonpostal services include officially licensed retail products such as USPS apparel and china. In addition to the grandfathered nonpostal services, current law authorizes the Postal Service to provide services to federal government agencies.57 Under this authority, the Postal Service provides services for such as passport applications and the sale of migratory bird hunting and conservation stamps for the U.S. Fish and Wildlife Service.58
In 2009, the Postal Service asked Congress to pass legislation allowing it to expand into new nonpostal areas.59 The Congressional Research Service (CRS) has indicated that the Postal Service could increase revenue by offering more nonpostal products and services.60 However, there are differing views about the wisdom of such a move. GAO reviewed the nonpostal products and services that the Postal Service offered prior to the enactment of PAEA in 2006 and found that 19 products marketed or under development during fiscal years 1995, 1996, and 1997 resulted in a net loss of nearly $85 million through fiscal year 1997 and a net loss of $3.7 million during the first three quarters of fiscal year 1998.61 GAO stated that ―whether USPS should be allowed to engage in nonpostal activities should be carefully considered, including its poor past performance in this area, as should the risks and fair competition issues.‖62
55 39 U.S.C. § 404(e)
56 Postal Accountability and Enhancement Act, P.L. 109-435.
57 39 U.S.C. § 411.
58 U.S. Postal Service FY 2010 Annual Compliance Report, at p.71 (Dec. 29, 2010).
59 U.S. Postal Service in Crisis: Hearing Before the Subcomm. on Federal Financial Management of the Senate Committee on Homeland Security and Governmental Affairs, 111th Cong. (Aug. 6, 2009)(Testimony of John E. Potter, Former Postmaster General, at p.15).
60 CRS, The U.S. Postal Service‘s Financial Condition: Overview and Issues for Congress, R41024 at p.8 (Dec. 16, 2011).
61 GAO, U.S. Postal Service: Strategies and Options to Facilitate Progress toward Financial Viability, GAO-10-455, at p.43 (Apr. 2010)[hereinafter GAO 10-455]; GAO, U.S. Postal Service: Development and Inventory of New Products, GAO/GGD-99-15, at p. 20 ( Nov. 1998).
62 GAO 10-455, at p.42.
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S. 1789 attempts to provide the Postal Service with the flexibility to generate revenue through