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GAO takes USPS off high-risk list

The Government Accountability Office, the investigative wing of Congress, has taken the U.S. Postal Service off its “high-risk” list based on the agency’s success in reducing its debts and the enactment of legislation to modernize its operations.

The GAO reports biennially on government agencies and operations it has designated as high risk due to greater vulnerabilities to fraud, waste, abuse or mismanagement. The USPS first was named to the list in 2001. The newest report was published last month.

“In 2001, we designated the postal service’s transformation efforts and long-term outlook as high risk because the [agency’s] financial outlook had deteriorated significantly,” U.S. comptroller general David M. Walker said in the report.

In its reports, the GAO had called for a comprehensive transformation plan and increased financial reporting from the USPS, and for Congress to enact reform legislation.

However, since the GAO’s 2005 report, the USPS has continued to address its challenges, the office said. The USPS paid off its debt by the end of fiscal year 2005. And as of the end of fiscal year 2006, it had achieved seven consecutive years of productivity gains, positive net income for fiscal years 2003 through 2006, $5 billion in cost savings since 2001 and a work force reduced by 95,000 since 2001.

Moreover, the USPS in December 2006 reached tentative compensation contract agreements with three of its four major unions, the GAO said.

The report noted that “progress was also made when Congress enacted comprehensive postal reform legislation in December 2006, which provides a framework for modernizing the [USPS’s] rate-setting processes and addresses the [USPS’s] long-term financial obligations … “

USPS management also has demonstrated a commitment to implementing the agency’s Transformation Plan and addressing financial and human capital challenges, the GAO said. Also, the postal reform law gives the USPS more pricing flexibility and lets it retain earnings, which provide additional mechanisms to address continuing challenges related to the agency’s increasingly competitive environment amid new and emerging technologies.

The GAO cited these challenges for the USPS:

  • Generating sufficient revenue as First Class Mail volume declines and the changing mail mix provides less revenue contribution than First Class Mail.
  • Controlling costs as compensation and benefit costs rise.
  • Continuing work-hour reductions while maintaining service.
  • Optimizing its infrastructure and work force to reduce costs and improve operational efficiency.
  • Providing reliable data to assess performance.

“We plan to closely monitor these challenges to ensure that they are addressed,” the GAO said. “We will also monitor the implementation of the postal reform legislation to determine how the results and impacts compare with legislative intentions.”

The postal service was pleased with the news.

“We are gratified that the GAO has recognized the substantial progress we have made over the last several years in addressing the financial and human capital challenges faced by the postal service,” said David Partenheimer, a USPS spokesman.

Another program that was removed from the high-risk list in this report was the Housing and Urban Development single-family mortgage insurance program. Federal programs involving food safety, transportation spending and technology security were added to the list – those programs joined 24 others. As in the past, defense-related programs and operations dominated the list.

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