united states postal service 2000 comprehensive statement ... · chapter 1 compliance with...

United States Postal Service

2000 Comprehensive Statement on Postal Operations

Table of ContentsChapter One Compliance with Statutory Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

A. Fundamental Service to the People (39.U.S.C. 101(a)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. Board of Governors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13. Strategic Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34. Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65. Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

B. Service to Small or Rural Communities (39 U.S.C. 101(b)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

C. Employee Compensation and Career Advancement (39 U.S.C. 101(c)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111. Collective Bargaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112. Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133. Compensation and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154. Employee Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175. Selection, Evaluation and Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196. Workplace Environment Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

D. Postal Cost Apportionment and Postal Ratemaking Developments (39 U.S.C. 101(d)) . . . . . . . . . . . . . . . . 211. Omnibus Rate Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212. Other litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

E. Transportation Policies (39 U.S.C. 101(e),(f)) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232. Domestic Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233. International Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244. Postal-Owned Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245. Mail Transport Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

F. Postal Facilities, Equipment and Employee Working Conditions (39 U.S.C. 101(g)). . . . . . . . . . . . . . . . . . . . 241. Safety and Health – Safety Management Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242. Environmental Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253. Total Resource Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 274. Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285. Purchasing and Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Chapter Two Postal Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

A. Public Perceptions, Customers Outreach and Mailer Liaison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331. Customer Feedback Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332. Customer Outreach and Mailer Liaison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

B. Mail Volume and Service Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411. Mail Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 412. Service Performance Measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 423. International Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

C. Mail Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451. Automation Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452. Remote Encoding Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453. Process Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 464. Material Handling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475. Integrated Processing Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496. Support Systems for Mail Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

D. Delivery Unit Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511. Delivery Point Sequencing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512. Delivery Operations Information System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513. Mobile Data Collection Device . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

E. Retail Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511. Marketing Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512. Retail Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523. Point-of-Service One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524. Retail Workforce Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525. Plan for Retail Operations Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 526. Postage Technology Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

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7. Self Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

F. Marketing Technology and Channel Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

G. Pricing and Product Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551. Periodicals Cost Reduction Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562. Business Mail 101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

H. Electronic Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561. Our Web Presence… www.usps.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562. Messaging Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563. Online Payment Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574. Bringing Choice to Our Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

I. Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 571. Strategic Technology Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572. Information Technology Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583. Information Technology Assessibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 584. Information Application Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

J. Operations Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581. Staffing and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 582. Address Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Chapter Three Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

A. Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651. Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 652. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653. Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 654. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

B. Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 671. Total Factor Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 672. TFP, 2000 and the Future Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673. TFP, Benchmark Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674. TFP, Additional Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

C. Federal Government Appropriations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

D. Breast Cancer Semipostal Research Stamp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Chapter Four Preliminary 2002 Annual Performance Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Chapter Five 2000 Performance Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

All reference to “2000” or “the year” refer to the government fiscal year ending September 30, 2000.

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Chapter 1 Compliance with Statutory Policies |2000 Comprehensive Statement on Postal Operations|1

A. Fundamental Service to the People(39 U.S.C 101 (a))

1. GeneralIt began with a successful rollover to the new

century. Years of preparation paid off. When theyear 2000 arrived, the mail kept moving and finan-cial data and other key information systemsremained intact.

Postal Service employees continued to deliverrecord-breaking performance in customer serviceand in overnight delivery of First-Class Mail. Those successes translated to immediate benefit for our customers.

Customer satisfaction measurements revealedthat 92 percent of households surveyed rated theirlevel of satisfaction with the Postal Service as “good,” “very good” or “excellent.” And, independ-ently measured delivery scores continued to rise,with a high 94 percent of local First-Class Maildelivered on time for the year.

The Vice President’s Commission onReinventing Government awarded the PostalService the prestigious Hammer Award forachievement in diversity. Fortune magazine mir-rored that sentiment by placing the Postal Serviceamong the top ten best workplaces for minorities.Those successes fueled our efforts and helped toexpand the scope of our multicultural initiatives.

Throughout the year, we sought to reachunder-represented markets through advertising and product specialization. We contracted helpfrom three advertising agencies known for theirexpertise in reaching specialty markets, includingAfrican Americans, Hispanic Americans and Asian Americans.

And, we successfully launched our newest web-site, www.usps.com/correo. Written entirely in theSpanish language, the website gives our Spanish-speaking customers access to the full range ofservices and employment opportunities offered bythe Postal Service.

We’ve embraced electronic technology andbegan providing the Internet-based products andservices our customers demanded with thelaunch of our premier website, www.usps.com.Since its inception, we’ve continuously expandedour electronic services lineup. It now includesthe following:

■ Postal Service eBillPay, an electronic bill pre-sentment and payment service for individualsand businesses, too.

■ NetPost Mailing Online, a service that bringsthe convenience of letter shop operations toconsumers’ home computers. It allows usersto electronically transmit their (First-ClassMail and Standard Mail (A)) in the form ofdocuments, correspondence and newsletters,along with their mailing lists, to the PostalService via our website at www.usps.com.The electronic files are securely distributed toprinters who print, insert, add postage, sortand transport the mailings to the nearest PostOffice for processing and delivery.

■ The Postal Store, a virtual retail outlet thatbrings the speed and convenience of secureon-line shipping to customers looking to buypostage and other postal products.

And the most recent addition, NetpostCardStore, is an Internet-based service, designed tomake sending high-quality, personalized greetingcards easier and less time-consuming. Its primaryfocus is business-to-business and business-to-con-sumer greeting cards, but consumers can send theirindividual greeting cards, too.

With each electronic service initiative, we’vesought to provide convenient, high-value Internet-based services for our customers, while reaffirmingthe relevancy of traditional, hard copy mail. So farwe’ve been successful.

We are also working to build an organizationof operational excellence. We are continuing ourBreakthrough Productivity Initiative to centralizefunctions, eliminate duplication and reduceadministrative staffing. This will help us to cut sig-nificant costs from our system. Despite theseefforts, an increasingly competitive communica-tions market and our existing regulatoryenvironment are working together to create anincreasingly difficult financial outlook for thePostal Service. With the continued expansion ofelectronic communications, forecasts call for signif-icant diversions of First-Class Mail to other media.We are also experiencing changes in the patterns ofmail volume growth, with a shift away fromhigher-contribution products such as First-ClassMail to Standard Mail, which makes a smaller con-tribution to our overhead. In addition, a laborarbitration process that does not consider the needsof our customers has contributed to a situation inwhich salaries are growing at a rate that exceedsboth our revenue and inflation.

2. Board of GovernorsAs the governing body of the United States

Postal Service, the 11-member Board of Governors

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has responsibilities comparable to a board of direc-tors of a publicly held corporation. The Board iscomposed of nine Governors appointed by thePresident of the United States with advice andconsent of the Senate, the Postmaster General andthe Deputy Postmaster General. The Governorsappoint the Postmaster General who serves at theirpleasure without a specific term of office. TheGovernors, together with the Postmaster General,appoint the Deputy Postmaster General (39U.S.C. 202).

The Board meets on a regular basis and, atthe annual meeting in January, the chairman iselected by the Governors from among all membersof the Board. The vice chairman is elected by thefull Board.

The Board directs the exercise of the power ofthe Postal Service. It establishes policies, basic objec-tives and long-range goals for the Postal Service inaccordance with Title 39 of the United States Code.Except for those powers specifically vested in theGovernors, the Board may delegate the authorityvested in it by statute to the Postmaster Generalunder such terms, conditions and limitationsincluding the power of redelegation, as it deemsdesirable (39 U.S.C. 402). The Governors areauthorized to establish reasonable and equitableclasses of mail and reasonable and equitable rates of postage and fees for postal service (39 U.S.C.3621). A specific power reserved by statute for theGovernors alone is to approve, allow under protest,reject or, by unanimous written decision, modifyrecommended decisions of the Postal RateCommission on postal rate and mail classificationchanges (39 U.S.C. 3625).

During 2000, the Board held regular monthlymeetings for a total of 24 days. Eight of the regularmonthly meetings were held in Washington, DC.Another four in cities across the country gaveBoard members an opportunity to meet mailersand employees, hear their concerns, visit postalfacilities and observe new technology.

The Board had four standing committees:Audit, Capital Projects, Compensation andStrategic Planning. The committees hold regularlyscheduled meetings during the year to considermatters within their areas of responsibility andrefer items to the full Board for consideration. A number of these meetings were held prior to thescheduled Board meetings to facilitate action oncommittee activities.

In October 1999, the Board approved the2000 Economic Value Added (EVA) Variable PayProgram and a resolution designating the number

of authorized Assistant Postmasters General/VicePresidents. They also approved their meetingschedule for 2000 and the budget of the Office ofthe Governors.

In November 1999, the Governors approvedthe Recommended Decision of the Postal RateCommission for Weighted-Averaged, Nonletter-Sized Business Reply Mail in Docket No. MC99-2. The Board approved a resolution setting February 6, 2000, as the effective date for the newclassification and fees. The Board also approvedfiling with the Postal Rate Commission an Exper-imental Classification for Mailing Online andextending the contract for external audit services forone year. The Governors approved the 2000Performance Plan for the Office of Inspector General.

In December 1999, the Board approved the1999 audited financial statements and 1999Annual Report. The Board also held a specialmeeting on succession planning by conference callin December.

In January 2000, the Board approved thefiling of an Omnibus Rate case with the PostalRate Commission. The Governors approved a res-olution relative to the Postmaster General’s salaryand the Board approved a resolution on capitalfunding. The Board also approved the annualreport to Congress in compliance with theGovernment in the Sunshine Act. The Governorselected Einar V. Dyhrkopp as Chairman of theBoardand the Board elected Robert F. Rider asVice Chairman for 2000.

In February, the Board approved both the1999 Annual Performance Report and the 2001Preliminary Annual Performance Plan, in compli-ance with the Government Performance andResults Act. The Board also approved the transmis-sion of the Annual Comprehensive Statement onPostal Operations to Congress. The Governorsapproved the Postal Rate Commission’sRecommended Decision in Docket No. MC00-1,Experimental Ride-Along Periodicals ClassificationChange. The Board approved an implementationdate of February 26, 2000, for the change.

In March, the Board reviewed the prelimi-nary plans relative to electronic commerce and theuse of the Internet to meet customer demands.

In April, the Board approved the offering ofePayment services through the Internet. The Boardalso approved an Audit Resolution Process forreports from the Office of Inspector General.

In May, the Board approved a resolution onInternational Postage Rates for three categories ofsurface printed matter. The Board approved a reso-

2|2000 Comprehensive Statement on Postal Operations| Chapter 1 Compliance with Statutory Policies


lution on Compensation and Benefits for Officersof the Postal Service that strengthened the approvaland administration of relocation benefits. TheBoard approved the Chief Inspector’s SemiannualReport to Congress on the summary of investiga-tive activities in accordance with the Mail OrderConsumer Protection Amendments of 1983.

In June, the Governors rejected the PostalRate Commission Opinion and RecommendedDecision in Docket No. C99-4, Complaint ofContinuity Shippers Association. The Boardapproved a resolution for the consideration ofeCommerce initiatives. The Board approved a resolution for an updated Charter of the AuditCommittee that was based on rules adopted by theSecurities and Exchange Commission, theexchanges and the Auditing Standards Board.

In July, the Board approved a resolution onCapital Funding that added developmental realestate projects to those requiring Board approvalwhen a project exceeds $10 million.

In August, the Governors approved theDecision on the Recommended Decision of thePostal Rate Commission in the Mailing OnlineExperiment, Docket No. MC2000-2. The Boardapproved a resolution with September 1, 2000, asthe effective date of the new classification. TheBoard approved a resolution for ContingentBorrowing Authority. The authorized the exerciseof the power of the Postal Service to borrow moneyunder 39 U.S.C. 2005. The Board also approved aresolution expanding Priority Mail Global Guaran-teed Service to include non-documents shipments,effective October 1, 2000.

In September, the Governors approved the2001 budgets for the Office of Inspector Generaland the Postal Rate Commission. The Boardapproved a public notice in the Federal Register foran International Rates Proposal. The Board alsoapproved transmittal of the Five-Year Strategic Planin compliance with the Government Performanceand Results Act.

During the year, the Board considered andapproved 22 capital investment proposals costing$10 million or more. Funding was approved forseven automation-related projects, including somethat increased readability and throughput of auto-mated equipment. Systems approved includedautomated induction units for secondary parcelsorting machines, upgrade of optical characterreader equipment, automated flat sorting machines,expanded capability for delivery and carriersequence bar code sorters, control modifications forsmall parcel and bundle sorters upgrade readers and

feeders for flat sorting machines. Eight facility proj-ects were approved, including Twin Cities Air MailCenter, St. Paul, MN; new lease for MidtownStation and additional funding for Ansonia Station,New York, NY; expansion of the Los Angeles BulkMail Center; Priority Mail Center, Phoenix, AZ;Crossroads and Topaz Stations, Las Vegas, NV;advance site and design, Santa Monica, CA; andAir Mail Center expansion, San Francisco, CA.Five other projects were approved, including fundsfor Mailing Online, PostalOne!, POS ONE Stage2B, Mail Evaluation, Readability and Lookupsystem (MERLIN)and delivery and collection vehi-cles. Two projects were approved as part of theinformation platform, including surface-air man-agement system and delivery operationsinformation system.

Governor Sam Winters, serving in his one-year extension, ended his term on the BoardNovember 8, 2000. Alan Kessler was appointed tothe Board on November 9, 2000. GovernorKessler’s term expires in December 2008. TheBoard appointed John Nolan Deputy PostmasterGeneral on February 5, 2000.

3. Strategic PlanningThe Office of Strategic Planning supports

the Postmaster General and the ManagementCommittee, within the policy framework set by the Board of Governors, in the development,approval and implementation of a Five-YearStrategic Plan, as required by the GovernmentPerformance and Results Act (GRPA). The Officeis also responsible for preparing the GPRA-requiredpreliminary and final Annual Performance Plans.

The Office of Strategic Planning also assiststhe Strategic Planning Committee of the Board of Governors and the Management Committee in addressing long-term strategic issues and pro-vides support to the annual planning process. Theoffice publishes an annual Business EnvironmentAssessment (BEA) at the beginning of the annualplanning cycle. Postal managers are updatedon issues likely to impact the Postal Service inupcoming years and facilitates discussion with Postal Service stakeholders on the future ofthe Postal Service.

a. The Five–Year Strategic Plan, Fiscal Year 2001–2005

The GPRA of 1993 required federal govern-ment agencies, including the Postal Service, todevelop and submit to Congress and the Presidenta five-year strategic plan. According to the statute,



this plan should outline the mission of the agency,describe the challenges faced by the organizationand provide information on how the agency willaddress those challenges. Agencies also are requiredto provide the objectives, measures and targets thatshould be used to define success and evaluateprogress. Finally, agencies need to involve theirstakeholders in discussions on the objectives, strate-gies and measures.

GPRA requires the Postal Service to updateits Five Year Strategic Plan at least every threeyears. The previous strategic plan was provided toCongress and the President in September 1997.An updated plan, for 2001–2005, was provided inSeptember 2000. The revised strategic plan repre-sents a summary of an ongoing process thatinvolves extensive work by the Board ofGovernors, the Management Committee andpostal stakeholders.

The Postal Service is beset by an outdatedregulatory model that limits flexibility in certainkey areas critical to the organization’s future suc-cess. We are seeking statutory reform that wouldprovide a new regulatory model with increasedpricing, product, labor and investment flexibility.

The strategic plan underlines the importanceof this goal as it addresses one of our fundamentalchallenges — the uncertainty about future mailvolume growth as a result of changing technology.

In the past, the Postal Service was able toforecast mail volume growth primarily based onassumptions about the growth of the U.S.economy. The widespread availability of theInternet in American homes and businesses andthe development of Internet applications that maysubstitute for traditional postal applications, suchas bill presentment and payment, suggest thatbusiness practices and consumer behavior maychange in the future. The Postal Service recognizesthat many external experts predict that suchchanges will cause mail volume to decline.

The Postal Service is operating within anextremely volatile market environment withcompetitive pressures unlike any it has experi-enced in the past. While it is clear that these willlikely contribute to a long-term, negative effecton mail volume and revenue, the organizationmust make strategic decisions for the futurewhile operating within a changing marketplace.

The plan identifies three major strategicchallenges created by this environment. The firstis the issue of affordability, or maintaining postalprices at competitive levels, subject to the break-even requirements of the Postal Reorganization

Act. The postal response to this challenge is a setof strategies known as the “Blueprint for Progress:Breakthrough Productivity Initiatives,” whichhave the goal of reducing costs by about $3–$4billion over the next several years. The strategiesinclude targeted reductions in overhead, overallpostal employment, transportation and fuel costsand improvements in purchasing productivity.Other strategies focus on improving the PostalService operating network and increasing pro-ductivity of current flat and package handingoperations by implementing automation, mate-rials and handling, information processing andother technologies.

A second major challenge is to identify oppor-tunities for the Postal Service to grow revenue toreplace volume that may be lost to Internet-basedapplications such as electronic bill payment andpresentment and e-mail interactive advertising. Weare responding to this challenge in a number ofways. Our primary focus is maintaining andstrengthening the value and relevance of our coreproducts and services. We are doing this by main-taining high service levels, increasing ease of useand access and adding enhancements and featuresthat position our core products as the right solu-tions for customer needs. We are also developingnew electronic and Web-enabled services.

The third challenge identified and describedin the strategic plan is the need for the PostalService to become more flexible, innovative andresponsive to customer needs. This is a “vision” ofchange that will prepare the Postal Service for thefuture. However, such changes press the limits ofthe current regulatory and legislative structureestablished 30 years ago by the PostalReorganization Act of 1970.

The Postal Service is not only seeking signif-icant improvements in internal processes, but isalso in need of more flexibility in developing andpricing services, investing and working withpostal unions.

The strategic plan introduced a framework,called “Gateway to the Household,” whichincreases the focus on the traditional mission of thePostal Service to provide prompt, reliable servicesto all communities. The “Gateway to theHousehold” expands the internal focus on postaloperations to include a more externally oriented“value chain” that includes mailers, the mailingindustry and the attitudes and behaviors of recipi-ents of the mail. The future success of the PostalService will depend on improvements across the



entire value chain as mail is increasingly subject totechnological substitution and direct competition.

The strategic plan describes the risks facingthe Postal Service if the strategies for improvingaffordability, growth and flexibility are unsuc-cessful. The traditional mission and infrastructureof the Postal Service would be under severe pres-sure for change — change that may be disruptiveand that the American public has shown no will-ingness to consider.

b. Leadership Support

The process of framing strategic issues, providing data and analysis, developing policyoptions and facilitating leadership discussions isan intensive and continuous process. StrategicPlanning provides the necessary support to postalleadership efforts. Initiatives include providingmanagement with timely and relevant “futures”seminars, industry and academic experts, strategicresearch and consulting support, scenario develop-ment and other programs that respond to thechanging needs of postal management in adynamic, competitive environment.

c. The Business Environment Assessment (BEA)

The BEA supports postal officers and execu-tives in the development of annual performancetargets. The office integrates data provided by dif-ferent departments to create a report thatestablishes a common foundation for the develop-ment of functional plans.

The BEA focuses on the impact of legislationand regulatory changes on the Postal Service, onchanging technology and on trends in postal mar-kets. It also addresses changes in the economy andlabor market and business practices or processesthat may affect the Postal Service.

The BEA is also used as a training tool in thedevelopment and mentoring of the next generationof postal leaders and as the basis for discussionswith postal stakeholders about the future of thePostal Service.

d. Stakeholder Outreach

The Postal Service interacts with its stake-holders — employees, customers, the public, themailing industry and the policy community — in anumber of different ways. Many of these interac-tions often tend to be fairly specific and related toimmediate, practical issues. In 2000, we conducteda major initiative to discuss long-term strategicissues about the future of the Postal Service with thedifferent stakeholders. In the coming year, the Postal

Service will extend these discussions, using theInternet to create broader and more interactive par-ticipation in the planning process.

e. The Annual Performance Plan and the AnnualPerformance Report

The Preliminary Annual Performance Planfor the Postal Service has been included with thisComprehensive Statement, as required by GPRA.This Performance Plan describes the goals, sub-goals, indicators, measures and preliminary targetsfor 2002, which begins October 2001.

The targets are set each year after extensiveconsultation with both headquarters and fieldmanagers that takes place during the Deploy phaseof the management cycle, which is completed nearthe end of each fiscal year. The preliminary targetsare subject to change as data become available oras changes in the external environment forcechanges not foreseen during the planning process.The Postal Service will provide updated plans toCongress as necessary.

Chapter 5 of this document is the AnnualPerformance Report required by GPRA. ThePerformance Report assesses the success of thePostal Service in achieving the targets outlined inthe Annual Performance Plan. It is intended toprovide the postal policy community with consis-tent, timely, relevant and accurate data to evaluatepostal performance.

f. Improving Postal Goals and the Planning Process

Appendix 1 of the Postal Service Five-YearStrategic Plan, 2001–2005, describes the currentplanning process in detail. There is strong supportfor the annual management cycle and for thelonger-term strategic planning process. The disci-pline provided by the process has led to suchsuccesses as increased customer approval ratings,overnight First-Class Mail service performance andsuccesses in other targeted areas.

However, the current process is likely tochange over the next year to reflect the experiencethe Postal Service has gained over the past severalyears. This includes extensive research on GPRApractices of other agencies, benchmarking withacademic experts and leading practitioners in the private sector and GAO evaluations of theAnnual Plan and Performance Report.



4. Quality

a. Quality Core Applications

In 2000, a decision was made to phase outthe Field Quality organization over the next threeyears. The Headquarters Quality staff resourcesnormally devoted to field support, course develop-ment and instructor certification and Qualityapplication support, have been reassigned to sup-port our corporate standardization efforts. Thenew, reduced Quality organization structure willbring greater focus to its activities.

Our first Standardization initiative began witha partnership with the Vehicle Maintenance group,which wanted to standardize the Scheduled Main-tenance Process. This effort began in January 2000and has progressed to the point where a national,standard Scheduled Maintenance process has beendeployed to all ten Areas. This has driven greaterperformance levels and consistency in our VehicleMaintenance facilities throughout the system.

Another key opportunity to pilot ourStandardization approach began early in the yearin response to a request by the senior VP, Oper-ations, to help improve Priority Mail performance.The Quality Department developed a set ofnational indicators for Priority Mail that wererolled out nationally in October 2000. While theindicators were being developed and tested,Quality worked to designate national ProcessOwners for critical Priority Mail processes (e.g.,Mail Prep, Manual Processing, Small Parcel andBundle Sorter (SPBS) Processing, Flats Processing,etc.) these owners began to document the best-performing processes nationally using Quality’s“Design Lite” approach. As of this writing,national standard process documentation for MailPrep, Manual Processing and SPBS Processing willbe deployed.

Following the decision by senior managementthat Flats Processing was rapidly becoming a crit-ical area for the business, a similar standardizationeffort was launched on the deployment of theAutomated Flat Sorting Machine 100s (AFSM)100 automation equipment. The objective of thiseffort is to achieve the Productivity targets that thisequipment is capable of achieving (i.e., approxi-mately 2,850 pieces per hour). In December, thePostal Service completed documentation of a stan-dard process for installing and operating theAFSM 100.

Standardization is a strategic initiative that isintended to provide Operations personnel with welldesigned and capable processes that will, whenoperated properly, achieve the CustomerPerfect! tar-gets established by senior management.

Achieving this level of integration of leader-ship’s direction and the capability of our criticalprocesses will greatly enhance the Postal Service’sability to achieve our strategic intent and simulta-neously drive much greater consistency andpredictability in our service performancethroughout our network. It also removes theburden from the field of having to develop processimprovements independently in response to cor-porate performance targets, which is the practicetoday. While this has been successful in achievingsustained performance in First Class External Mail(EXFC)* scores, for instance, it is neverthelesstime consuming and inefficient for 85 perform-ance clusters to pursue these improvements bythemselves without the benefit of a national, stan-dard process developed, tested and proven capableby the responsible Headquarters function.Considering the daunting fiscal challenges thePostal Service is facing, Standardization is viewedas a key strategy for improving our service levelswhile the organization reduces its costs in the faceof shrinking First-Class Mail volume.

In 2000, because of severe revenue shortfallsand driven by the need to make significant costreductions, the Field Quality organization was tar-geted to be phased out over the next three yearsby the Area Vice Presidents. The HeadquartersQuality staff resources normally devoted to fieldsupport, course development and instructor certi-fication, as well as Quality application support,have therefore been reassigned to support our cor-porate Standardization efforts.

b. Quality Development and Applications

The application of Quality tools shiftedemphasis from a role of identifying and mappingprocesses to one of using data to measure and ana-lyze process variation, stability and capability.Statistical Control tools were introduced to allowour managers to calculate and illustrate processcontrol through the use of control charting. Thesehigher level tools are more effective in giving ourmanagers the information they need to manage theprocesses that make up our business.

The use of process management skills wasgreatly expanded through the Quality Practitioner


*EXFC externally measures collection box to mailbox delivery performance. EXFC continuously tests a panel of 463 ZIP Code areas on the basis of geographic and volume

density from which 90 percent of First-Class Mail volume originates and 80 percent destinates. EXFC is not a system-wide measurement of all First-Class Mail performance.



program. Across the enterprise, over 600 QualityPractitioners were trained in the application ofprocess management methods to increase the capa-bility of our internal and external processes.

As a result of the 1997 Baldrige assessment,an initiative was undertaken to develop a strategyfor identifying, collecting and using comparativedata to evaluate Postal Service performance. Thisbenchmarking methodology will allow us to com-pare internal standardized “best practices” forreplication across the enterprise as well as to com-pare Postal Service documented processes againstexternal world class methods as a means of accel-erating process improvement.

Another area that received increased atten-tion was that of project/program management.The application of sound process managementprinciples to the initiation and management ofmajor programs resulted in the identification of afocused and disciplined approach to managinglarge integrated efforts. Use of this program man-agement process will ensure that major programssupport the strategic objectives of the PostalService, make best use of available resources, pro-vide integration of activities and establishaccountability. A specialized project managementtraining program also was established to facilitateimplementation of this process.

c. Quality-Enabling Applications

Focus in this area has shifted to providing sup-port primarily for the enabling process owners withBreakthrough Productivity Improvement (BPI)goals. Prioritizing opportunities established throughthe BPI effort created the strategic alliance neededto integrate core and enabling processes. In aneffort to drive the redesign necessary for substantialcost savings and service improvements, processowners are utilizing process management tools,including benchmarking, standardization and dataanalysis methodologies. Many of the enablingprocess owners are recognizing the benefits of data-driven decision-making and the value of developinga process approach to problem-solving and project-management. The integration of cross-functionalefforts has been a key driver for many of theimprovement/standardization efforts.

5. Diversity

a. General

The Postal Service is facing internal andexternal business needs that provide both chal-lenge and opportunity for improved financial

performance. Internally, we must continue tocreate an inclusive environment, build upon ourdiverse talents and drive out discrimination andsexual harassment. External factors include:retaining talented employees, meeting legal andregulatory equal employment opportunity man-dates, enhancing our corporate image as aresponsible corporate citizen of the diverse com-munities we serve and promoting business andcommunity partnerships.

To meet these challenges, DiversityDevelopment is focused on four principal objec-tives: (1) workplace environment, (2) workplacemanagement, (3) leadership development and(4) customer and community relations. Duringthe upcoming year, Diversity Development willcontinue its efforts to help make the PostalService a great place to work. This means strivingfor a place where everyone’s participation is wel-come and no one is subjected to discriminationor sexual harassment. It is also a place whereemployees have access to programs that helpthem advance as far as their talents and desireswill take them.

Diversity Development is providing thetraining and messaging to build an inclusive andharassment-free workplace. This includes specialemphasis programs that encourage our employeesto appreciate each other’s differences and toexclude no one from organizational life becauseof those differences. We are making sure thatboth personnel selection and development partic-ipation are inclusive. We are taking steps tomaximize the return on our investment in spon-sorships in multicultural communities. Inaddition, the Diversity Development vice presi-dent is actively involved with ensuring that thesuccession planning process is inclusive by partic-ipating with the Postmaster General and officersin their respective succession planning meetings.We will continue our efforts to help build adiverse supplier base by welcoming participationof small, minority- and women-owned busi-nesses. Realizing that suppliers also are ourcustomers, our key objectives are to generate rev-enue from these sources and to increase customerservice and satisfaction.

b. National Diversity Recognition Program

The Postal Service National Awards Programfor Diversity Achievement recognizes individualsand teams that demonstrate exemplary efforts toencourage and promote diversity within theorganization. Nominations are submitted for those


employees who focus on the Postal ServiceCustomerPerfect! goals which consist of the Voiceof the Customer (VOC) , Voice of the Employee(VOE) and Voice of the Business (VOB).

In 2000, there were approximately 1,600nominations, of which 452 were screened by ateam of six postal executives. The categories foraward consideration were Individual,Partnership, Team, Leadership and the DotSharpe Lifetime Achievement Award. In addi-tion to these awards, a Vice President categorywas established to recognize several employees,both individually and collectively, who specifi-cally helped to advance the vision of diversitywithin the Postal Service.

Recognizing and valuing diversity continuesto be a business requirement and is key to attainingCustomerPerfect! goals. Recognizing postal em-ployees for their support of and accountability todiversity initiatives will continue to assist the PostalService in remaining an inclusive organization.

c. Employment of Individuals with Disabilities

The Postal Service uses regular competitiveprocedures in selecting individuals with disabilitiesfor employment. Individuals with severe disabilitiesreceive non-competitive employment considerationthrough referrals from individual state departmentsof vocational rehabilitation or the U.S. Departmentof Veterans’ Affairs. In 2000, the Postal Service’scareer workforce included 49,155 employees withreported disabilities. Of these, over 7,000 wereemployees with targeted disabilities.

Each year, the Postal Service submits anAffirmative Employment Plan and an Accomplish-ment Report for Individuals with Disabilities to theEqual Employment Opportunity Commission.The Affirmative Employment Plan is disseminatedto Postal Service field installations. Each installationhead is responsible for implementing the plans.

d. Veterans’ Employment

The Postal Service is one of the largest em-ployers of veterans and disabled veterans in thenation. At the end of 2000, the Postal Serviceemployed about 244,000 veterans of whom about80,000 are disabled because of injuries received inthe uniformed services. The Postal Service preparesan annual Accomplishment Report and PlanCertification for disabled veterans for submission tothe Office of Personnel Management.

e. Affirmative Employment Programs

The Affirmative Employment Program(AEP) unit provides national guidance on thePostal Service’s affirmative action and employmentprogram. During 2000, the following actions weretaken to improve the inclusiveness and retentionof the postal workforce:

■ Published and distributed the AffirmativeEmployment Plan and AccomplishmentReport for individuals with disabilities tomanagement and the Equal EmploymentOpportunity Commission (EEOC).

■ Published and distributed to managementthe Affirmative Employment Plan andAccomplishment Report for disabled vet-erans to management and the Office ofPersonnel Management.

■ Implemented the Diversity QuarterlyTracking Report to monitor affirmativeemployment activities nationwide.

■ Completed AEP Accomplishment Reportsthat addressed the prevention of sexualharassment, employee group representation,discrimination complaints, recruitment andhiring, employee development, promotions,separations, retention, program evaluation,veterans and people with disabilities.

In accordance with Section 717 of the EqualEmployment Opportunity Act of 1972, theEEOC requires the submission of the AffirmativeEmployment Plan Accomplishment Reports, withupdates for multi-year plans each fiscal year.

The Diversity Reporting System (DVRS)provides detailed workforce statistical reports usedto analyze postal workforce data and identifyemployment trends. Statistical information fromDVRS is provided on request to the GeneralAccounting Office, the EEOC, Congress andother external and internal customers.

The Postal Service also administers theNational Hispanic Program (NHP), Women’sProgram and Special Emphasis Programs. Theseprograms focus attention on the special needs,obstacles and concerns of all groups when they areunder-represented in postal employment. Majoraccomplishments for these programs are outlinedas follows:

1. The National Hispanic Program (NHP)

During 2000, the NHP Executive/ManagerialDevelopment Process, through its field network,continued its mission to address the VOE and underrepresentation of Hispanics in thePostal Service.




Also during 2000, the NHP sponsored orattended recruitment and community outreachactivities. One such activity was the Test Battery460/470 Pre-Test Orientation. The number ofqualified Hispanics applying for and obtainingPostal Service jobs at all levels has increasedbecause of this activity. Hispanic Program special-ists have participated in recruitment drives, TestBattery 460/470 preparedness seminars, Form991 preparation and Advanced LeadershipProgram recruitment.

In its efforts to respond to the Voices of theCustomer and Business goals, the NHP sponsorednumerous national events involving the NationalCouncil of La Raza, the U.S. Hispanic Chamber ofCommerce, Hispanic Data — the electronic jobposting website, the Hispanic Employees ProgramManagement, the Hispanic National BarAssociation, the National Organization forMexican American Rights, the National HispanicLeadership Institute, the Transporte Integrado yMasivo Hispanic Yearbook, the League of UnitedLatin American Citizens and the Hispanic BusinessExpo of Central Florida. These outreach activitieshave helped to establish the Postal Service as abenchmark among our nation’s businesses inaddressing the needs of the Hispanic community.

2. The Women’s Program

During 2000, the Postal Service continued itscommitment to improving the status of women inthe workforce. Through structured programs andpositive actions these efforts have assisted with theremoval of barriers and the inclusion of women atevery level in the organization. Some of the majoraccomplishments designed to address the Voice ofthe Employee and the underrepresentation ofwomen in the Postal Service were:

■ Redesign and update of the Women’sProgram website. provided information onrecruitment, career development and hyper-links to national women’s organizations.

■ Establishment and implementation of aDiversity Executive Advisory Committee toidentify and resolve Special EmphasisPrograms issues.

■ Sponsorship of the National Association forFemale Executives, the Business Women’sNetwork Diversity Council and Leaders’Summit, Business and Professional Womenand Federally Employed Women. These out-reach activities have furthered the PostalService’s recruitment, career developmentand supplier diversity efforts.

Based on statistics from Quarter 4, 1999 toQuarter 4, FY 2000, and the Quarterly WorkforceProfile, the nationwide representation of femaleemployees increased in each level grouping exceptfor PCES-02:

The National Women’s Program plans tocontinue its awareness campaign using postalmedia, and websites of women’s organizations. The program is designed to assist women withcareer development and to facilitate networkingand support. It provides sponsorship to theAdvanced Leadership Program and executive edu-cation programs at various universities.

The Women’s Program will continue to ana-lyze studies that focus on work and family life andaddress issues such as recruitment, retention, men-toring and succession planning.

3. Special Emphasis Program

During 2000, the Special Emphasis Programfocused on recruitment, retention promotionalopportunities for African Americans, AmericanIndians, Native Alaskans, Asian Americans andPacific Islanders, people with disabilities, veteransand white males. White females and Hispanics areaddressed by the Women’s Program and theNational Hispanic Program, respectively. Some ofthe major accomplishments of the SpecialEmphasis Program were:

■ Compliance with the White House Initiativeon Asian Americans and Pacific Islanders.

■ Compliance with the President’s Committeeon Employment of People with Disabilities.The Special Emphasis Program created ajoint video on disability awareness and asso-ciated service talks to increase appreciation ofthe Postal Service’s commitment toemployees and customers with disabilities.

■ Creation of Diversity Development’s SpecialEmphasis Web page on the corporateintranet that strategically addresses topics onrecruitment, presidential proclamations, pub-lications and links to external organizations.

■ Sponsorship of external national specialemphasis organizations with the goal ofincreasing awareness about availability ofpostal products, supplier services andcareer opportunities.

EAS 01-14 0.1% IncreaseEAS 15-18 0.6% IncreaseEAS 19 and above 1.0% IncreasePCES-01 2.9% IncreasePCES-02 0.9% Decrease



f. National Sexual Harassment Prevention

This year Publication 553, Employees’ Guideto Understanding Sexual Harassment, was mailed tothe home of every postal employee. The guide willhelp employees understand sexual harassment andhow to resolve related complaints.

All postal employees were required to takesexual harassment prevention training in 2000 aspart of their VOE requirements. EAS employeesreceived 2 hours of training, which included theInitial Management Inquiry Process. Craftemployees received one hour of training. Each Areawas provided with training films. The sexual harass-ment course series for EAS employees wasbroadcast monthly on the Postal Service TelevisionNetwork (PSTN) and the Initial ManagementInquiry Process (IMIP) was broadcast quarterly.The IMIP helped managers and supervisors effec-tively identify, investigate, prevent and resolvesexual harassment situations in the workplace. Thisprogram included a one-hour segment designed toincrease awareness among craft employees of theserious nature of sexual harassment.

g. Supplier Diversity

The Postal Service’s Supplier Diversity pro-gram is a fundamental element in the PostalService’s corporate strategy to remain competitiveand profitable in the marketplace. Our record is agood one and because our business and financialchallenges are more similar to those of the privatesector than those of government agencies, thePostal Service has adopted more of a private-sectorapproach to supplier diversity. That approach isbased on strengthening our supplier base byreaching out to identify strong suppliers and pro-viding them with opportunities to compete for ourcontracts. When we benchmark our results againsteither the public or the private sectors, we findourselves clearly among the leaders engaging smalland woman-owned businesses and above averagewith regard to minority businesses.

The Postal Service provides a wide range ofprograms and efforts aimed at promoting theinvolvement of small, minority and woman-ownedbusinesses in our purchase opportunities. Closeand effective working relationships are maintainedwith a number of the national associations andtheir affiliates that support supplier developmentand diversity throughout the country. Theseinclude, among others, the National Council of LaRaza, the National Urban League, the UnitedStates Hispanic Chamber of Commerce, the

Organization of Chinese Americans, the WomenBusiness Enterprise National Council, theNational Association of Women Business Owners,the Business Women’s Network, the U.S. PanAsian American Chamber of Commerce, theNational Congress of American Indians theNational Minority Supplier Development Council.The Postal Service actively supports these organiza-tions and participates in workshops sponsored bythem, as we do in those sponsored by members ofCongress and state and local governments; thePostal Service participated in an estimated 100trade, federal, congressional and special-emphasissupplier-focused events across the country. Furthercommunication is maintained through a PostalService web page that addresses the small,minority- and woman-owned business communi-ties and provides information on purchaseopportunities as they arise, contact points, policiesand procedures.

During 2000, the Postal Service focused ontracking and measuring key elements of the Five-Year Supplier Diversity Plan issued in 1999.Efforts centered on three of the Plan’s six key areas:accountability, sourcing and training.

In April, guidelines were issued for settingperformance goals for buying organizations andindividual buyers. Effort-based indicators were outlined that meet both the Postal Service’s sup-plier diversity policies and legal requirementsapplicable to the Postal Service. These indicatorsinclude attending and participating in trade fairsand events promoting small, minority- andwoman-owned businesses; ensuring that theseentrepreneurs are included in the sourcing process;debriefing small, minority- and woman-ownedbusinesses that have unsuccessfully competed for acontract; tracking use of certified supplier databasesor other methods of identifying qualified suppliers;and counting the number of purchase opportuni-ties offered.

As noted, sourcing, which is the process oflocating suppliers, is receiving particular emphasis.The Postal Service continues to work to improveand systematize our ability to identify and do busi-ness with those suppliers that provide best value,perform reliably, work with the Postal Service toreduce cost and cycle time, and strive to reducerisk while improving quality. As part of this effort,during 2000 the Postal Service sponsored aSouthern California Pilot Program to develop newapproaches to promoting supplier diversity. Majoraccomplishments from this effort include thedevelopment of a standardized communications



packet for suppliers, stronger approaches to estab-lishing partnerships with trade and industryassociations and state/local government agencies,as well as the creation of a consolidated sourcingdatabase for Southern California (Long Beach, LosAngeles, San Diego, Santa Ana and Van Nuys).These achievements are now being examined withan eye toward replicating them nationwide. Lastly,as a part of ongoing supply chain managementefforts, the Postal Service continued to work withits prime suppliers and industry resources to iden-tify and develop a listing of “proven” minority-and woman-owned businesses. The listing is usedfor direct and subcontracting opportunities.

Training continues to be critical to theoverall success of the Supplier Diversity Program.Mandatory training requirements are in place forall employees in Postal Service buying functions toparticipate in 2-4 hours of cultural and supplierdiversity training. In addition to this ongoingtraining, a number of customized training sessionsfor our Supplier Diversity Program representativesand contracting professionals were providedduring 2000. A computer-based training (CBT)course is being developed for use throughout thePostal Service.

We also have clarified and strengthened oursubcontracting policies. This has led to markedimprovement in this important area. Supplierscompeting for high-dollar value contracts are nowrequired to tell us, before award, how they plan tosubcontract with small, minority- and woman-owned businesses. In addition, new tools topromote and monitor subcontracting with thesebusinesses have been launched. These efforts havehad significant results. By the end of 2000, 310suppliers were submitting quarterly subcontractingreports as compared with 184 at the end of 1999.A total of 23,615 subcontracts worth more than$244.2 million went to minority businesses, whilesome 14,202 subcontracts worth $220.6 millionwent to woman-owned businesses. We considerthese new policies a success, with more subcon-tracts being reported, more prime contractorssubmitting reports and higher overall dollarsreportedly being spent in the small, minority- andwoman-owned business communities.

Outside of the subcontracting area, during2000 more than $3.5 billion (representing 69.4percent of contractual actions) went to smallbusinesses. More than $336 million (representing8.9 percent of contractual actions) went tominority businesses. More than $488 million(representing 11 percent of contractual actions)

went to woman-owned businesses. Lastly, morethan $16 million worth of contracts or orderswent to Javits-Wagner-O’Day Act institutions,such as the National Industries for the Blind andSeverely Handicapped.

B. Service to Small or RuralCommunities(39 U.S.C. 101(b))

Effective March 16, 1998, the United StatesPostal Service imposed a moratorium on manage-ment initiated Post Office closings andconsolidations. With this moratorium, Post Officeswill not be closed unless no other reasonablechoice is available. Some closings (and suspen-sions) may be necessary or appropriate ifpostmasters retire suddenly or catastrophic eventssuch as flood, fire or earthquake occur.

The Postal Service invited the NationalAssociation of Postmasters of the United States andthe National League of Postmasters of the UnitedStates to work with us. Their representatives andthe Postal Service continue to review all recent andproposed Post Office closings and emergency sus-pensions to help determine appropriate courses ofaction. During 2000, the Postal Service closed orconsolidated 18 Post Offices, 16 community PostOffices and 3 classified stations. These Post Officeswere in the process of being closed before theissuance of the moratorium and thus were allowedto continue through the closing process. Only oneappeal was docketed with the Postal RateCommission. It concerned an office that had beenclosed two years previously and was remanded tothe Postal Service for further consideration.

C. Employee Compensation andCareer Advancement(39 U.S.C. 101 (c))

1. Collective BargainingThe Postal Service began separate negotia-

tions in August 2000 with the American PostalWorkers Union, AFL-CIO (APWU) and theNational Postal Mail Handlers Union, AFL-CIO(NPMHU); and in September 2000 with theNational Rural Letter Carriers’ Association(NRLCA) for successor collective bargaining agree-


ments to those set to expire on November 20,2000. All three unions together represent approxi-mately 514,000 employees. The negotiations withthe NRLCA follows an agreement between theparties reached in February 2000 on a one yearextension to the 1995–1999 Postal Service-NRLCA National Agreement. Negotiations withpostal unions cover a full range of topics involvingwages, benefits and conditions of employment.Collective bargaining with the NationalAssociation of Letter Carriers, AFL-CIO (NALC),which represents approximately 245,000employees, over the successor to the three-year1998 National Agreement, will occur in 2001.

■ In April 2000, the terms of the collectivebargaining agreement covering approximately1,100 employees at the Information ServiceCenters were established by an interest arbi-tration award. The Award provides for atwo-year agreement that will expire onJanuary 20, 2001.

■ The Postal Service and the Fraternal Orderof Police reached agreement on the terms of a new four-year labor contract in July2000. The previous labor agreement hadexpired in April 1999, and the parties hadagreed to meet in a final effort to seek agree-ment in advance of scheduled fact-finding.The settlement, which will expire in April2003, covers approximately 1,250 PostalPolice officers.

■ The collective bargaining agreement betweenthe Postal Service and the National PostalProfessional Nurses expired on February 11,2000. The parties failed to reach agreementon a successor contract. The dispute will beresolved pursuant to the dispute resolutionprocedures of the Postal Reorganization Actwith an outcome expected in 2001.

■ Agreements between the Postal Service andcertain smaller bargaining units will also be expiring — for example, OperatingServices APWU on November 20, 2000, the Mail Equipment Shops — Tool and Die(International Association of Machinists) onJanuary 30, 2001.

■ As an outgrowth of the APWU collectivebargaining agreement, the parties have madesignificant strides toward improving theworkplace environment by clarifying theterms of the labor agreement and its applica-tion. The APWU and the Postal Service haveagreed to revise the grievance procedure inorder to streamline the grievance process and

reduce the backlog of national cases. Futurerefinements to the grievance process will beaddressed during 2000 negotiations.

■ The Postal Service and the NPMHU havecompleted the first year of their test of arevised grievance-arbitration procedure. Thetest procedure, which eliminates the thirdstep of the grievance process, has produced a greater resolution of grievances at the localfacility. Future efforts will include a review of the process with local labor and manage-ment representatives with emphasis on thoselocations where the test procedure has beenless effective.

■ The parties continue to develop the ContractInterpretation Manual (CIM), with the ini-tial draft completed early this year. Theparties are now jointly reviewing each sectionfor refinement and completion of supportingreferences where appropriate.

■ The Postal Service and the NPMHU hostedtheir third annual Quality of Work LifeConference. This national event, attended byboth craft employees and managers fromparticipating facilities, continues to showcasethe various processes developed to improvethe workplace environment and PostalService operations.

■ After successfully testing the revised DisputeResolution Process (DRP) for two years in19 test districts, the Postal Service and theNALC agreed in August of 2000 to imple-ment the process nationwide beginning in2001. The parties further agreed to rewriteArticle 15 of the National Agreement toreflect the new process during 2001national negotiations. Data from the testsites reflected an increase in resolution ratesat the local level and a decrease in disputesappealed to arbitration. The DRP elimi-nates the current area Step 3 review andplaces the authority and responsibility forthe resolution of grievances at the installa-tion and district levels. It provides for thetraining and certification of the district levelStep B representatives, one each from theNALC and the Postal Service. The imple-mentation of the new process will includethis training as well as district orientationfor city letter carriers and delivery supervi-sors. The district-by-district implementationof the DRP began with a training sessionfor the candidates nominated to serve as the



district level Step B representatives inOctober of 2000.

■ In June of 1998, the USPS-NALC pro-duced the Postal Service-NALC JointContract Administration Manual (JCAM).This contract resource became widely usedin the field to facilitate the resolution ofworkplace disputes, promoting a betterunderstanding of the proper application ofand compliance with the National Agree-ment. It has been credited by both thePostal Service and the NALC with signifi-cant reductions in appeals to arbitration. InSeptember of 2000, the Postal Service andNALC published an updated edition of theJCAM which was distributed to every citydelivery unit in the system.

■ In the area of Labor Relations Systems, aredesign of the Grievance and ArbitrationTracking System (GATS) was initiated. Allfield offices are now required to input griev-ances at the Step 2 level of the process forinclusion in GATS. The new system, whichis Y2K compliant, is user-friendly and willassist management in identifying and ana-lyzing disputes in the workplace. In addition,GATS2 will facilitate changes in the griev-ance/arbitration scheduling process agreed toduring 1998 negotiations.

2. Personnel

a. Postal Career Executive Service (PCES)

There were 970 individuals in the ranks ofthe PCES at the close of 2000. Of this total, 813individuals held PCES I positions. The remainder(other than officers) served in Executive andAdministrative (EAS) positions. There were 46PCES II officer positions in the Postal Service atthe end of the fiscal year. The makeup of thePCES officers and executives is representative ofthe Postal Service’s diverse workforce.

b. Consultation with Management Associations

In accordance with Title 39, United StatesCode, Section 1004, consultations were con-ducted in 2000 with the National Association ofPostal Supervisors (NAPS), the NationalAssociation of Postmasters of the United States(NAPUS) and the National League ofPostmasters of the United States (League). Thesesessions provided an opportunity for the man-agement associations to participate directly in

the planning and development of programs andpolicies related to pay policies that impact some80,000 EAS postmasters, supervisors and othermanagerial personnel through 2000. Pay consul-tations will commence sometime in late springor early summer 2001, with our continuedemphasis on pay for performance through theMerit Pay Program and the EVA Variable PayProgram. The principle of market-based pay willbe a fundamental concept underlying these con-sultations, ensuring that supervisory andmanagerial pay in the Postal Service is compa-rable to that maintained in the private sector ofthe economy as required by the PostalReorganization Act.

As in the past, each of the management asso-ciations will continue to provide representatives toparticipate on Headquarters and fieldwork teamstasked with formulating the testing procedures fornew programs.

During 2000, the labor unions, managementassociations and postal management held quar-terly (or as needed) labor summits, to discussissues relevant to the parties. Under the auspicesof the Labor Summit the management associa-tions and the Postal Service agreed upon amediation pilot as an elective step in the currentsupervisory disciplinary appeals process (650Process) and in most other adverse action pro-ceedings. Once the pilot is completed, it will beconsidered for nationwide implementation.

Also in 2000, the Office of EqualEmployment Opportunity (EEO) restructuredthroughout the Postal Service. This restructuringeffort allows us to focus the attention of EEO pro-fessionals at the district level on dispute resolution,while the responsibility for investigating complaintsthat cannot be resolved informally is moved to theArea level. The number of appeals centers respon-sible for the EEO process doubled in 2000, and theResolve Employment Disputes, Reach EquitableSolutions Swiftly (REDRESS) mediation programwas integrated into the EEO function. This inte-gration and restructuring was achieved without anyplanned increase in complement and eliminatedthe need for the temporary staff formerly requiredto support the REDRESS program.

For the second consecutive year, the numberof EEO precomplaint counselings and formalcomplaints in the Postal Service decreased. Pre-complaints decreased by 5.1 percent, from26,460 to 25,086, while formal complaints fell13.8 percent, from 12,137 to 10,457. Overall,the rate of precomplaint counselings that result in



formal complaints has been reduced from 46 per-cent in 1999 to 42 percent in 2000. This equatesto 1,680 fewer formal complaints in 2000.

This substantial, continued reduction informal complaints is attributable in large measureto the Postal Service’s EEO mediation program,REDRESS. REDRESS and traditional EEO coun-seling are both offered as alternatives toindividuals seeking precomplaint counseling. Themediators in REDRESS are non-postal employeeswho are neutral and practice a form of mediationthat is built on the “transformative” model.Through empowerment and recognition, the par-ties to the mediation are encouraged to listen andrespond to one another’s views effectively andwith better understanding of their differences.

In 1999, the participation rate in REDRESSfor those seeking precomplaint counseling wasnearly 70 percent. In 2000, the participation raterose to 73 percent nationally. Successful resolutionof disputes that go through mediation is nearlytwice the rate of resolution of disputes thatremain in the traditional counseling process. Thecontinuing success of this process is encouraging.It will continue to be emphasized as a means ofbringing employees and managers face to face tolearn to deal with conflict and misunderstandingin the workplace.

REDRESS II brings mediation to the formalcomplaint process through the hearing stage. In2000. A program was implemented across thecountry through cooperation with the Office ofthe General Counsel. Expectations for the successof this program remain high.

d. Injury Compensation

In 2000, the Postal Service had an increase inthe growth of workers’ compensation cash outlaysof approximately $65 million (11.4 percent) over1999, for a total cash payout of approximately$633.3 million. Total paid compensation claimsincreased by 2,003 (7.1 percent) total medicalclaims increased by 7,172 (6 percent).

During 2000, the Postal Service cost controlstrategy was again directed through the continuedefforts to manage disability cases. A number of ini-tiatives support this objective. These include NurseCase Manager services that assist the injury com-pensation staff with medical managementstrategies to help employees with work-relatedinjuries or illnesses move into productive duty in asafe and positive environment. Specialists also useenhancements to the case management tools to

track and analyze workers’ compensation costs andreturn-to-work efforts.

A new training course was developed withelectronic publishing capabilities. The trainingcourse will produce human resources specialistswith the knowledge and skills required to effec-tively provide medical and case management ofworker’s compensation issues.

The Postal Inspection Service continued itsefforts in 2000 to investigate fraud associated withpostal employees’ injury compensation claims.Postal inspectors identified 329 individuals sus-pected of workers’ compensation violations.Criminal investigations led to 47 arrests. Specificincidents uncovered by postal inspectors includefraudulent claims for Federal Employees’ Comp-ensation Act (FECA) benefits and falsification ofinvestigations involving conspiracy and fraud bytreating physicians and other medical providers.Compensation cost avoidance on all cases investi-gated by the Postal Inspection Service wasestimated as nearly $118 million. Additional costreduction on cases where Continuation of Pay wasavoided brings the total estimated cost avoidanceto over $122 million. Workers’ Compensationpayments represent a growing, long-term cost lia-bility for the Postal Service.

e. Succession Planning

Succession planning is the deliberate and sys-tematic effort by the Postal Service to ensureleadership continuity and build talent from withinthe organization. The objectives are to identifyindividuals who can move into executive positions,to develop people for corporate needs and to fosterdiversity among the leadership ranks. Individualsare identified as potential successors based on theirleadership skills, functional and managementexpertise and performance results. The PostalService’s Succession Planning has been designed toplace the right people in the right jobs. After com-pleting the sixth full year of succession planning,90 percent of executive vacancies were filled byidentified successors, and 6 percent were filled bynonsuccessors. Four percent of executive vacancieswere filled from outside hires. Forty-four percent ofvacant executive positions in 2000 were filled bypromotions of EAS employees to PCES. Fifty-twopercent were filled from within the executive ranks.

A strategic initiative, “EAS LeadershipDevelopment,” is underway to address our needfor employee retention and leadership develop-ment. It is a comprehensive, customized process toidentify and develop leadership competencies and



behaviors to drive success throughout the organiza-tion. Our goal is to have a cadre of talentedindividuals ready to assume key management posi-tions as they become available.

f. Combined Federal Campaign (CFC)

The Postal Service joins other federal agenciesin the CFC drive each fall. In 2000, postalemployees nationwide pledged a total of nearly$39 million in payroll deductions to the charitiesof their choice. The average gift was $176.

3. Compensation and Benefits

a. Pay Comparability

1. Bargaining Unit Employees’ Pay and Benefits.

During 2000, the average pay and benefitsfor career bargaining unit employees (excludingcorporate-wide expenses) is $50,103 per work year.

In an attempt to achieve compensation ratescomparable to private industry, negotiationsbetween the Postal Service and union representa-tives for the various bargaining units that havereached negotiated settlements continue to applythe principle of moderate restraint set forth in pastinterest arbitration awards.

2. Nonbargaining Unit Employees’ Pay and Benefits.

Pay for supervisors, postmasters and othernonbargaining staff employees generally meets orexceeds private sector levels. It also provides an ade-quate and reasonable differential between first-linesupervisors and bargaining unit clerks and carriers.

The continuation of the EVA Variable PayProgram for EAS employees aligns this pay prac-tice with PCES executives and corporate successmeasures as established under the CustomerPerfect!process. This pay package gives management theframework it needs to drive the necessary behav-ioral changes that make the Postal Servicecompetitive in the marketplace.

3. Executive Pay and Benefits.

Due to the limit imposed on ExecutiveSchedule I salaries by the Postal ReorganizationAct, pay and benefits for Postal Service officers andsome key executives do not meet private sectorcomparability standards. During 2000, the averagesalary for Postal Service officers was $140,958. Theaverage executive salary was $101,756.

The Postal Service continued to focus on cor-porate objectives through the 2000 EVA VariablePay Program, which recognizes the significant rolethat postal executives and EAS employees play inachieving corporate success. The EVA Variable Pay

Program awards payouts for achieving break-through performance.

Furthermore, by using the same performancemeasures for officers, executives and EASemployees, participants become stakeholders in thesuccess of the Postal Service in achieving itsCustomerPerfect! goals. Finally, to help focus oncontinuous improvements and long-term results,the 2000 payments consisted of a percentage ofprior year’s reserve account and current year earnedcredit. In 2000, award payouts averaged $2,900 forexempt nonbargaining EAS employees, $1,000 fornon-exempt nonbargaining employees and $10,100for executives. While the program was designed torecognize team performance, provisions were madeto exclude individual employees who did not con-tribute to the performance of the organization.

b. Leave Programs

Postal Service employees are provided bothsick and annual leave at the same rate as other fed-eral sector employees. However, postal employeeshave a higher annual leave carryover limit thantheir federal sector counterparts. Postal employeesused an average of 10.1 days of sick leave peremployee during 2000.

Earned annual leave may be donated to othercareer or transitional Postal Service employees whohave exhausted their own leave and have a serioushealth problem.

Under the Family and Medical Leave Act,eligible employees may take up to 12 weeks offfrom work for covered conditions. Postal Serviceemployees may use annual leave, sick leave, orleave without pay for covered conditions in accor-dance with applicable collective bargainingagreements and current leave policies.

Postal Service career nonbargaining unitemployees and some bargaining unit employeescan participate in a leave exchange programthrough which a portion of annual leave thatwould otherwise be earned in the following leaveyear can be exchanged for cash.

The Postal Service allows the use of 80 hoursof accrued sick leave for dependent care under apolicy available to all career employees.

c. Health Insurance

Health care contributions totaled $3.1 bil-lion, or 6.2 percent of the Postal Service’s total payand benefits during 2000. Under the OmnibusBudget Reconciliation Act of 1990, the PostalService is required to fund the annuitants’ share ofthe Federal Employee Health Benefit (FEHB) pre-



miums. During 2000, the cost of funding thehealth care benefits for postal annuitants and theirsurvivors was $744 million.

During 2000, the Postal Service continuedto pay most of the premium cost of employeehealth benefit coverage. Career employees areautomatically enrolled to pay their share ofhealth benefit premium contributions with pre-tax payroll deductions.

d. Life Insurance

The Federal Employees Group Life Insurance(FEGLI) program provides life insurance coveragefor Postal Service employees. The Postal Serviceassumes the full cost of basic life insurance for eli-gible employees. During 2000, Postal Service costsfor employee life insurance were $194 million andthe cost of funding life insurance for postal annui-tants and their survivors was $6.7 million.

In 1999, employees were offered the oppor-tunity to change life insurance coverage underthe FEGLI Program. More than 90,000employees made elections to acquire or modifytheir coverage during that open enrollmentperiod. These elections and changes became gen-erally effective May 6, 2000.

e. Retirement Systems

Postal Service career employees, like federalcareer employees, are covered by one of threeretirement systems administered by the U.S. Officeof Personnel Management.

At the end of 2000, there were 785,913career employees covered by a federal retirementprogram. Of this total, 519,509 employees (65percent) were covered by the Federal EmployeesRetirement System (FERS); 263,383 employees(33.5 percent) were covered by the Civil ServiceRetirement System (CSRS); 12,021 employees(1.5 percent) were covered by CSRS Offset.

CSRS is a defined benefit retirement system.Annuity benefits are based on an employee’shigh-three average salary and years of service.CSRS Offset is similar to CSRS but requiresSocial Security contributions. Upon SocialSecurity eligibility, the CSRS annuity is reduced(offset) by any Social Security benefit resultingfrom periods of CSRS Offset service, to producea benefit equivalent to what would have beenreceived under CSRS.

FERS is a retirement system with bothdefined benefit and defined contribution compo-nents. Under FERS, employees receive retirement

benefits from a federal retirement annuity, SocialSecurity and the Thrift Savings Plan (TSP). TheFERS annuity benefit, while also based on anemployee’s high-three average salary and years ofservice, produces a smaller benefit than CSRS does.

The Postal Service and career employeesmake retirement contributions to the Civil ServiceRetirement and Disability Fund. For 2000, CSRSemployees contributed 7.25 percent of basic pay tothe Fund. FERS and CSRS Offset employees con-tributed 1.05 percent of basic pay to the Fund and6.2 percent of gross pay to Social Security.

f. Thrift Savings Plan (TSP)

All career employees may participate in the TSP, which is administered by the FederalRetirement Thrift Investment Board. The rules for TSP participation differ depending on theemployee’s retirement system. For FERS employees,the Postal Service contributes one percent of basicpay to TSP, fully matches employee contributions upto 3 percent of basic pay, and matches one-half ofemployee contributions from 3 to 5 percent of basicpay. FERS employees may contribute up to 10 per-cent of basic pay to TSP on a tax-deferred basis,subject to IRS maximum limits. The Postal Servicedoes not match CSRS or CSRS Offset employeecontributions to the TSP. Employees’ contributionsare limited to 5 percent of basic pay. At the end of2000, 411,825 FERS employees and 155,137 CSRSand CSRS Offset employees participated in TSP.

g. Flexible Spending Accounts (FSAs)

Employees continue to take advantage ofFSAs to pay for certain health care and dependentcare expenses with contributions made throughpretax payroll deductions. FSAs were first offeredin 1992 to certain nonbargaining unit employeesand have since been expanded to include allemployees. In 2000, 53,083 employees wereenrolled in health care FSAs (an 8.5 percentincrease from 1999), with an average contributionof $1,318. In 2000, 5,957 employees wereenrolled in dependent care FSAs (a 1.5 percentincrease from 1999), with an average contributionof $2,770. The projected 2000 savings for thePostal Service resulting from the FSA program isapproximately $2.4 million (net of administrativeexpenses). Employees experience tax savings aswell, which vary according to the individual’s con-tribution amounts and marginal tax rates.




4. Employee Development

a. General

Employee Development has two main areasof responsibility: Product Development andEvaluation, which designs, develops and evaluatescurricula and; and Delivery, which operates at theWilliam F. Bolger Center for LeadershipDevelopment, Potomac, Maryland and at theNational Center for Employee Development(NCED), Norman, Oklahoma. Both centers areself-contained campuses with classrooms, confer-ence facilities, housing, dining and relatedservices. There are 85 Postal EmployeeDevelopment Centers (PEDCs) throughout thenation that support operational needs by pro-viding local training assistance to employees.

While traditional classrooms, on-the-jobinstruction and correspondence courses are stillprevalent, delivery platforms increasingly includesatellit networks, videotape, computer-based inter-active programs, web-based instruction andcombinations of the above.

With the continuation of the AssociateSupervisor Program (ASP), Career ManagementProgram (CMP) and Advanced LeadershipProgram (ALP), the training and developmentneeds of supervisors and managers at all levels ofthe organization are being met.

The 16-week ASP for first-line supervisorscontinues to be a national success. All 85Districts participate in the program. The programhas trained 8,164 graduates. In 2000, 129 classeswere conducted.

The CMP was introduced in the spring of1999. CMP addresses the needs of supervisorsand managers in the EAS level 15-22 range. In2000, over 50 offerings were completed for 1,500EAS employees. There are three entry points ortracks representing initial and advanced supervi-sory skills and management development.Participants complete an assessment based on theleadership competency model to determine theirappropriate entry point into the program.Currently the program consists of one week ofclassroom instruction for each track. In addition,functional/technical training is available fordelivery and mail processing supervisors. Severalother functions have functional/technical curriculaalready in place for supervisors

The ALP continued to make significantprogress in preparing high-potential managers forthe challenging leadership roles of the future. By

the end of the year, a total of 34 classes withapproximately 42 students per class had enteredthe program. Several program design improve-ments were made. Among them were a new ALPvideo describing the Executive Competencymodel; an updated enrollment guide and web site;a new evening speaker series called ExecutiveChat; and, the addition of two Postal VicePresidents as regularly appearing ALP faculty.Most notably, ALP was reviewed by the AmericanCouncil on Education and was rated as carrying12 undergraduate college credits. As a result, ALPstudents pursuing college degrees will now be ableto apply their ALP experience toward their collegedegree requirements.

PBS-The Business Channel continued as aninitiative in 2000. The innovative partnershipoffered postal employees quality training programsvia the Postal Satellite Training Network (PSTN).Training programs were available live five days aweek, with taping available on all telecasts. Thistimely, professional and cost-effective trainingalternative proved to be an effective way to conveycorporate messages. For example, 86,000employees received sexual harassment trainingthrough this medium in 2000.

The Safety for Leadership course, designedto help more than 35,000 postal leaders under-stand and implement safety programs in thePostal Service, rolled out at the National Centerfor Employee Development this year. This coursehas become an integral part of ASP and lays afoundation for the Joint Labor ManagementSafety and Health Committee, Collateral DutyFacility Safety Coordinator and other safety pro-grams. Courses were upgraded and refreshed tomeet requirements of the Postal Employee SafetyEnhancement Act (PESEA).

b. Technical and Craft Training

The NCED, Norman, OK, advanced its crit-ical support of the Postal Service’s core business andemployee development. NCED delivered automa-tion and motor vehicle maintenance and operationscourses on major postal systems and equipment,plus environmental compliance and automationmanagement programs. Other initiatives supportedfield office course requests, equipment changes anddeployment of national postal goals.

Staff conducted 220 courses, in 3,400 classofferings, for 61,000 employees. Strict budget con-trols and revenue achievements delivered this 15 percent increase in students at slightly belowlast year’s total program and administrative costs.


Efforts continued to expand NCED’s curriculumto support a broader base of postal clients, includ-ing several new management courses and toenhance administrative and operating proficiency.The Center also launched efforts to attract non-postal clients to generate more of its ownoperating revenue and reduce its dependence onpostal headquarters funding.

Staff began creating learning tools to developmaintenance employees’ basic technical skills andprovide continuous learning while in their homeoffices. Planned introductory courses will betterprepare postal employees for high-tech, equip-ment-specific courses at NCED. Additionally,staff built an electronic technical skills database toprovide maintenance managers and employeeswith a skill development tracking reference.

A major undertaking brought a new Web-based Automated Enrollment System (AES) on linein 2000. The new Web-AES is user-friendly, acces-sible and will increase report and trackingopportunities. The new AES collected field requestsfor 2001 programs and distributed available courseseats to district and maintenance offices. It was alsodesigned to collect fee data in anticipation ofNCED’s new revenue-based operation.

NCED transmitted over 4,200 hours ofPostal Satellite Training Network (PSTN) pro-gramming in 2000. NCED originated over 1,900broadcast hours of course and technical informa-tion, and it transmitted another 2,300 broadcasthours originated elsewhere, including the Businessand Management Channel, the Bolger Center andUSPS-TV Southeast Area District programs. Usingboth PSTN and Postal Audio Tele-trainingNetwork (PATN), NCED delivered 30 distancelearning courses to 17,450 employees in theirhome offices, for 195,040 total distance learningtraining hours.

1. Major NCED Accomplishments■ Taught five simultaneous course offerings on

the Identification Code Sortation (ICS)system to provide maintenance skills for over800 technicians. ICS uses existing identifica-tion mail tags as a second source for barcoding to help keep mail pieces in the auto-mated mail stream. Ongoing courses willsupport national deployment of over 1,700new ICS computers.

■ Completed deployment support for the FlatMail Optical Character Reader (FMOCR)by running three tours of course offerings.Continued two-tour offerings for ongoing

FMOCR support. The FMOCR addition tothe FSM 881 has resulted in significant laborsaving and increased mail throughput.

■ Provided 12 course offerings on the new Time and Attendance CollectionSystem (TACS).

■ Modified Delivery Bar Code Sorter (DBCS)programs to support new deployment of thenew DBCS Delivery Input and OutputSubsystem (DIOSS) varied equipment con-figurations at 380 DBCS sites.

■ Merged Remote Computer Reader modifica-tions into maintenance courses. RCRmodifications are expected to increase themachine acceptance rate for handwritten mailfrom 63 to 75 percent by December 2000.

■ Provided technical support to contractor-delivered resident and PSTN maintenancecourses for 350 employees on the Phase Ibuy of 175 AFSM 100. We also beganinstructor and lab preparations for NCED todeliver maintenance courses beginningMarch 2001, concurrent with contractorofferings. AFSM 100s can process 17,000pieces of flat mail per hour. AFSM 100Phase II will deploy another 362 machinesrequiring maintenance course support. EachPhase II machine will replace two to threeexisting Flat Sorting Machine 881 systems.

■ Delivered operator and maintenance courseson the new (PBSM) 624Bs, upgraded toread the new $5, $10 and $20 bills. Coursessupport the nationwide deployment of1,000 PBSM 625Bs.

■ Piloted a new Maintenance OperationsPerformance Analysis course. Taught use ofmaintenance and inventory managementreports from the Visual Maintenance ActivityReporting and Scheduling system to analyzeperformance factors and improve efficiency.

■ Prepared automotive technician course onnew Carrier Route Flex Fuel delivery vehiclesto support planned deployment of 10,600vehicles. Offerings will begin October 2000.

■ Conducted about 30 environmental healthand safety programs on postal compliancewith national rules and regulations. Coursesincluded hazard communications, wastereduction and recycling, refrigerant educa-tion and certification, asbestos managementand toxic substance control.

■ Designed classroom labs and supported thenewly centralized Business Mail Acceptance(BMA) program. This course brought a new



postal audience to the Center, coachingclerks in skills to ensure proper revenue col-lection on volume business mail. By yearend, the BMA program had ramped up tothree simultaneous offerings, and 313employees had taken the test.

2. Revenue Generation

Center staff captured over $3.2 million ingross revenue in 2000 to help offset NCEDoperating expenses. Revenue sources includepostal and nonpostal conferences, resale of satel-lite time, housing income from nonstudentguests and delivery of other postal and non-postal courses. Housing room nights during2000 totaled 203,000 of which 22,800 were for conferees.

c. William F. Bolger Center for Leadership Development

The Bolger Center has made significant stridestoward becoming self-reliant. In 2000, the Centerpiloted a revenue budget concept. Under this con-cept, the Center identifies its potential throughprojected sales goals generated through the servicesprovided to postal and external customers. Theamount of sales generated from external customersis tracked and deposited into the Postal ServiceGeneral Fund account and the Center is creditedfor any profit gained. This process is still in thepilot stages.

A number of improvements were made toThe Bolger Center and its operations during thepast year. These improvements include installationof a campus wide Energy Management System,refurbishment of the North Building West Wingclassrooms and public space, and complete renova-tion of the 5th floor of the Main Building. APostmark America store is scheduled to open at theCenter in early January 2001. Customer satisfac-tion scores for the year were very high, at 98.9percent overall satisfied.

The Media Unit produced nearly 250 hoursof PSTN programming, serving clients such asSales, Employee Resource Management, HumanResources and Address Management DeliveryPolicies and Programs. The Media Unit also pro-duced over 20 videotape productions, earningTelly and Videographer Awards for productionexcellence for Computerized Job Bidding,Supervisor’s Guide To Time & Attendance, andTraining Inspectors For the 21st Century. Mediaalso partnered with Tactical Marketing and Salesto provide monthly PSTN broadcasts that pro-

vided training and information to field mar-keting and sales professionals.

Our existing computer training lab wasremodeled, and a new lab was completed thatessentially doubles our computer training capacity.

5. Selection, Evaluation and Recognition

a. Merit Pay Performance Evaluation

In 2000, the Postal Service continued toemphasize the importance of the Merit PerformanceEvaluation process. This process evaluates andrewards the performance of professional and mana-gerial personnel. The process employs indices andmeasurements tied to the work unit’s mission whenestablishing employee objectives for the year. Theseindices and measurements are used to assess theemployee’s success in meeting these mutuallyagreed-upon objectives. As with last years’ program,the Merit Performance Evaluation process continuesto be closely aligned with the CustomerPerfect! phi-losophy. It provides a mechanism to link employeecontributions to corporate goals.

In 2000 an individual Merit PerformanceEvaluation process covering executives was con-tinued. Its primary purpose is to promoteindividual accountability to support both corpo-rate goals and certain critical indicators thatcontribute to the success of the Postal Service. Onecritical indicator emphasizes diversity and requiresexecutives to develop individual goals that pro-mote diversity, while taking into account thespecific activities identified in their organizationalaffirmative action plan when setting specific targetsfor success. Like the performance evaluations forprofessional and managerial employees, the execu-tive evaluations also link contributions to theoverall achievement of corporate goals.

6. Workplace Environment Improvement (WEI)The Office of WEI was created in September

1998 to reflect management’s commitment toimproving the postal work environment andbringing focus to “people issues” in the PostalService. WEI includes the Employee AssistanceProgram, violence prevention and crisis manage-ment activities, the identification and propagationof indicators, measures and initiatives for work-place environment improvement. Key componentsof WEI for 2000 and 2001 are to:

■ Coordinate implementation of recommenda-tions from report by the independentCommission on Safe and Secure Workplace.



■ Modify role of Employee WorkplaceIntervention Analyst position to play morestrategic and consultative role in field WEIefforts to oversee threat assessment and crisismanagement activities.

■ Integrate, assess and communicateemployee feedback and other workplaceenvironment information.

■ Catalog, assess and support replication of abroad array of workplace improvement ini-tiatives and practices.

■ Identify or develop and deploy measures ofresults and indicators of progress.

■ Communicate throughout the Postal Serviceprogress in improving workplace environ-ment recognize successes in this area.

Specific areas in which these components arecarried out are:

a. Employee Assistance Program (EAP)

The Postal Service EAP provides free, volun-tary, confidential, in-person counseling services toemployees and family members by master’s-levelcounselors housed in or near local postal facilities.Counselors are available 24 hours a day, sevendays a week, in convenient locations and assistemployees and family members with a variety ofdifficulties that affect their lives and their work,including emotional, financial, legal, chemicaldependency, marital and family problems.

The EAP provides consultation to managersand supervisors regarding not only individualworkers, but also the work setting within whichthey function. In 2000, Employee and WorkplaceIntervention Analysts, career employees who overseethe EAP in each District EAP counselors providedapproximately 21,837 consultations to managementon such topics as supervision strategies and manage-ment skills. They also worked with union membersto help resolve issues and prevent workplace disrup-tion. The EAP intervenes when appropriate throughpreventive efforts, such as manager coaching andeducational seminars on communication and stressmanagement. EAP also provides ameliorative effortsthat include conflict resolution sessions and organi-zational interventions and restorative actions, suchas debriefings after a critical incident (e.g., suicide,domestic violence at work, armed robbery, acci-dental death). In 2000, 46,153 employees and theirfamily members received counseling from the EAP.

Fully 52 percent percent of postal employeesseeking counseling reported that their problemsnegatively affected their job performance. EAPstaff also responded to over 394 critical incidents

and provided assistance to more than 6,392employees after these incidents. Health and well-ness seminars on topics ranging from stressmanagement to elder care to substance abuse wereprovided to 53,540 employees.

b. Violence Prevention and Crisis Management

A Workplace Environment AdvisoryCommittee, including representatives of employeeunions, management associations, labor relationsand human resources was created shortly after theinception of this office in late 1998 with theManager, WEI, as chair. This group, workingclosely with the Inspection Service and WEI, usesa standardized protocol for the identification andresolution of potential “troubled worksites,” postalsites that may be susceptible to threatening orother undesirable behavior as a result of individualor systemic problems. In addition, WEI is assistingthe field in ensuring that local threat assessmentand crisis management teams are in place and thatdesired training is provided. Finally, WEI staff areinvolved, on an ongoing basis, in communicationwith and response to potential threats and crisisincidents throughout the Postal Service to ensureprompt response, swift resolution and maximumsafety of postal employees.

WEI played a key role in the disseminationof the report of the independent Commission ona Safe and Secure Workplace, also known as theCalifano Commission, as it was chaired by JosephA. Califano, Jr. The commission conducted acomprehensive review and analysis of violence inthe Postal Service over a two-year period andreleased its findings in August 2000.

The commission found that while postalemployees are not more likely to be victims of vio-lence at work, they are more fearful than otheremployees about violence in the workplace. On theother hand, postal employees are less angry, aggres-sive, hostile, depressed and stressed than those in thenational workplace. The commission recognized thePostal Service’s strong efforts in developing a com-prehensive array of programs to reduce workplaceviolence, but made recommendations for the fol-lowing improvements:

■ Continue and step up violence preventionprograms already in place and address under-lying sources of friction.

■ Screen job applicants more carefully.■ Define “zero tolerance” for violence policy.■ Continue violence awareness training for em-

ployees, with unions playing a greater role.



■ Ensure warning signals of violence are heeded and employees know how to reportthreats and violence.

■ Establish communication systems such ascell phones or beepers for carriers ondelivery routes, especially in high crime andremote areas.

■ Allay employee concerns about confiden-tiality of the EAP

■ Encourage joint local union/managementoversight.

■ Train managers and union officials to betterhandle employee terminations.

■ Increase training of supervisors and managersin interpersonal skills.

■ Strengthen incentives to focus managers on theworkplace environment, in addition to cus-tomer satisfaction and financial performance.

Also, according to the Commission, PostalService, unions and management associationsshould overhaul dispute resolution processes and agree on a system of financial performanceincentives for craft employees. Finally, theCommission recommended that Congress shouldconsider revamping compensation systems forpostal managers and employees to eliminate or atleast raise the pay ceiling to attract the best man-agers and effectively reward good performance ofall postal workers.

WEI is taking the lead in 2001 in ensuringthat the recommendations are implemented wherefeasible and that employees are informed aboutprogress in this area.

c. Integration of Employee Feedback and Workplace Environment

WEI is playing a pivotal role in increasingthe effectiveness with which data from the VOEsurvey and other workplace environment informa-tion are used. The Board of Governors approved acompensable indicator using six survey questionsfor the 2000 survey. This index will be retained asa compensable indicator for 2001. WEI providestechnical assistance to the field in interpreting andresponding to these data also facilitates sharing ofinformation about field and best practices thatimpact positively on the work environment.

WEl staff serve as internal consultants onWEI efforts throughout the country, with anemphasis on increasing the efficiency and effec-tiveness of these activities, particularly with regardto the use of outside consultants. Also, WEI ispropagating information throughout the PostalService regarding internal and external resources

for addressing workplace environment issues,including local and national Postal Service initia-tives and outside sources which have been shownto improve workplace relationships and climate.Finally, WEI will continue to deliver nationalmessaging in 2001, to ensure that the businesscase for improving the workplace is recognizedand accepted.

d. Dependent Care

Pursuant to a Memorandum ofUnderstanding negotiated with APWU, AFL-CIOfor the 1998–2000 National Agreement, thePostal Service and the APWU have jointlyselected a vendor to provide a dependent careresource and referral service to management andAPWU employees. The service allows employeesto get assistance in locating dependent and eldercare resources as well as a variety of options tohelp balance work and home life.

D. Postal Cost Apportionment and Filings and Ratemaking, Developments(39 U.S.C. 101 (d))

1. Omnibus Rate Case - Docket No. R2000-1On January 12, 2000, the Postal Service filed

a Request for a Postal Rate CommissionRecommended Decision on changes in rates andfees. The proposed overall percentage change was6.5 percent and included a 1-cent (or 3 percent)increase from the current 33-cent basic First-Classrate. The proposed increase was designed to pro-vide an additional $3.7 billion in revenue.

The filing also included numerous classifica-tion changes that were responsive to customerneeds and the changing environment. For example,new work sharing discounts were proposed forBound Printed Matter and more affordable optionsfor reply mail and the return of merchandise weredeveloped. Also, a restructuring of Post Office boxfees was proposed so that the fees would betterreflect the local costs of providing the service.

Approximately 10 months after the filing ofthe request following hearings on the PostalService’s direct case and intervenors’ direct casesrebuttal testimony, the Postal Rate Commissionissued its Recommended Decision on November13, 2000. While the Postal Rate Commission rec-ommended most of the classification changes



proposed by the Postal Service, along with the 1-cent increase in the first ounce of the First-Classrate, it substantially reduced the Postal Service’sestimate of required revenue, as developed on theevidentiary record. As a consequence, the PRC sub-stantially reduced many of the other rate increasesproposed by the Postal Service. The end result was,according to the Commission’s calculations, a 4.6percent increase, compared with the 6.5 percentincrease proposed by the Postal Service.

The Postal Service’s Governors issued twoDecisions on December 5. In the primaryDecision, the Governors allowed the recommendedrates to take effect under protest, but returned thematter to the Commission for reconsideration. Inparticular, the Governors asked the Commission toreconsider several items related to the revenuerequirement (which governs the overall size of therate increase), along with several other technicalpricing issues. This request for reconsideration isnow pending before the Postal Rate Commission,after the submission by the Postal Service and theparties of comments and reply comments inDecember and January. Meanwhile, the ratesallowed under protest were implemented onJanuary 7, 2001. In their second Decision issuedon December 5, the Governors rejected classifica-tion recommendations from the Commissionpertaining to discounts for First-Class Mail, theflat-rate Priority Mail envelope and a matter relatedto automated Standard Mail (A).

2. Periodicals “Ride-Along” Experiment -Docket No. MC2000-1.

On September 27, 1999, the Postal Servicefiled a case under the Commission’s Experimentalrules, which allow for the limited testing of a newservice. Under the then-existing classificationschedule, an enclosure included in mailings ofPeriodicals was required to pay the Standard Mailrate that would apply if the enclosure were mailedas a separate piece. Under the “ride-along” experi-ment, the enclosure pays a flat per-piece rate of 10cents. Not only is this more affordable for mailers,it is also simpler to administer. Subsequent to thefiling, the Postal Service and the mailing commu-nity reached an agreement regarding the issues ofthe case and filed a stipulation and agreement withthe Postal Rate Commission. On February 3,2000, the Commission recommended the classifi-cation and fee based on this agreement. Theexperimental classification implemented onFebruary 26, 2000 will expire on February 20,

2002, unless it is made permanent or anotherexperiment is put in its place.

3. NetPost Mailing Online ExperimentDocket No. MC2000-2

On November 16, 1999, the Postal Servicefiled an experimental case requesting a recom-mended decision from the Postal RateCommission for a Mailing Online classificationand fee schedule (MC2000-2). On June 21,2000, the Postal Rate Commission issued anOpinion and Recommended Decision, which theGovernors approved on August 7, 2000, with animplementation date of September 1, 2000. Theexperiment will last approximately three years.

Mailing Online is a hybrid mail product thatpermits customers to create mailings electronically.Customers design documents on their personalcomputers, upload the document and a mailing listto the Postal Service through the USPS.com web-site, select desired printing options and pay with acredit card. The Postal Service then combines cus-tomer jobs, presorts them sends the jobs in batchesto geographically distributed printing partners. Theprinters create the physical mailpieces for nearbyentry and delivery by the Postal Service.

4. Bulk Parcel Return Complaint Case -Docket No. C99-4

On June 9, 1999, the Continuity ShippersAssociation filed a complaint with the RateCommission arguing that the fee for Bulk ParcelReturn Service (BPRS) was too high. The com-plainant contended that updated cost studiesshowed lower costs than originally estimated andthat the cost coverage should be lower than whatthe Commission previously established. On April14, 2000 the Commission recommended a lowerfee for BPRS based on the lower cost estimate, butmaintained the cost coverage. On June 15, 2000,the Governors of the Postal Service rejected theCommission’s recommended decision, noting thatall costs change over time and that theCommission had failed to find the fee unlawful asrequired by the Act.

5. PosteCS Complaint Case - Docket No.C99-1

In October 1998, United Parcel Service (UPS)filed a complaint with the Postal Rate Commissionconcerning the Postal Service’s provision of PosteCS,a wholly electronic, Internet-based documentservice designed to support secure electronic com-munications. The fundamental basis for the UPS



complaint is the allegation that the Postal Service isoffering PosteCS to the public without first submit-ting to the Commission a request for arecommended decision on classification provisionsand rates associated with this service. The complaintfurther alleges that provision of PosteCS at no chargeon an introductory basis is contrary to the pricingstandards of the Postal Reorganization Act (Act). Inaddition, UPS alleges that the service constitutes a“nationwide change in service” for which an advi-sory opinion must be requested under the Act.

The Postal Service moved to dismiss thecomplaint. In its motion to dismiss, the PostalService maintained that the Commission doesnot have subject matter jurisdiction to entertainthe question of whether PosteCS is a “postal”service. Even if the Commission had jurisdictionto consider the complaint, PosteCS is plainly nota “postal” service for purposes of theCommission’s jurisdiction according to the defi-nitions of that term put forth by the courts, theCommission, and the Governors of the PostalService. On May 3, 1999, the Commissionissued an order denying the Postal Service’smotion to dismiss and ordering further proceed-ings on the question of whether PosteCS is a“postal” service for purposes of the Commission’srate and classification jurisdiction. Throughout2000, the Commission addressed disputesrelated to discovery by UPS. The complaint caseis still pending before the Commission.

E. Transportation Policies(39 U.S.C. 101 (e),(f ))

1. GeneralThe Postal Service spent $4.7 billion in 2000

for the contractual transportation of mail. Thisfigure represents a 6.8 percent increase from 1999transportation expenses. Mail transportationaccounted for more than 7 percent of total postalexpenses for 2000.

2. Domestic Transportation

a. Air Transportation

Air transportation costs in 2000 totaled$1.7 billion. These costs included the use ofcommercial airlines (passenger and freight) andas dedicated network and air taxi service. ThePostal Service contracted with 56 commercialairlines to move more than 2.95 billion pounds

of domestic mail last year. Ten of the commercialairlines handled 68 percent of the total volume.Of the almost 56,000 commercial airline flightsthat are available on a daily basis, the PostalService uses approximately 15,000 for the trans-portation of mail. To supplement the movementof mail by air, the Postal Service operates itsEagle Hub in Indianapolis, IN. The hub operatesa nighttime network (ANET) with 28 aircraftand serves 46 cities directly. The Eagle Hubtransports more that 800,000 pounds of maileach night; 30 percent is Express Mail, 55 per-cent is Priority Mail 15 percent is First-ClassMail. The 240,000 pounds of Express Mailequates to approximately 70 percent of allExpress Mail that moves by air. In addition,during the Holiday peak period, the networkexpands to encompass a daytime service thattransports more than one million pounds ofPriority Mail each day for a 13-day period.

Additionally, the Postal Service operates awestern dedicated network (WNET) which trans-ports more than 250,000 pounds of mailtransported daily in the Western and Pacific Areas.Of the total number of pounds of mail transporteddaily on WNET, 12 percent is Express Mail, 48percent is Priority Mail; and 40 percent is First-Class Mail.

b. Rail Transportation

Postal Service expenses for all rail trans-portation were $277 million in 2000. Thisrepresents a 2.2 percent decrease from 1999.The Postal Service holds contracts with eightrailroads that perform service on approximately1800 rail segments.

In 2000, the Postal Service paid Amtrak $98million for rail transportation services. Expandedservice included using a rail/highway combinationvehicle call a RoadRailer vehicle. This vehicle, hasextended the reach and capability of Amtrakservice to meet postal needs. The Amtrak trans-portation network provides service for the majorityof Periodical Mail.

c. Highway Transportation

The Postal Service expended approximately$2.1 billion for highway mail transportation in2000, a 5 percent increase over 1999.

d. Hub and Spoke Program (HASP)

With nine hub and spoke facilities operatingnationally, intermodal operations were imple-mented when dedicated air taxi service was added



to the Southeast and Indianapolis HASPs in 1998.Nineteen aircraft, ranging in size from DC9s to747s were introduced to support the HASP sur-face transportation network. These actions reducedcongestion at commercial airline transfer hubs,improved service and provided a more consistentarrival profile.

e. Domestic Water Transportation

In 2000, the cost of transporting mail todomestic offshore destinations was $30 million, a2 percent increase over 1999.

3. International Transportation

a. International Air Transportation

In 2000, the Postal Service spent $160.3 mil-lion for international air transportation. U.S. flagcarriers were paid $131.5 million, and foreign flagcarriers received $28.8 million. Foreign flag carriersare used for airmail service to destinations where noU.S carrier provides the required service. Selectionsof carriers for surface airlift contracts are awardedon the basis of best value. An additional $137.9million was spent for military mail, which wasreimbursed by the Department of Defense (DOD).

b. International Surface transportation

During 2000, international surface trans-portation costs were $7 million. The cost covers allsurface mail sent by sea. The selection of oceancarriers is based on price and service to therequired destinations.

4. Postal-Owned Transportation(See Table 1.1)

5. Mail Transport Equipment (MTE)To further our commitment to suppling our

customers with quality MTE, we support a net-work of 22 Mail Transport Equipment Centers.The Mail Transportation Equipment ServiceCenter (MTESC) program is a network of out-sourced facilities dedicated to processing, repairing,storing and redistributing sacks, trays, pallets andwheeled containers to internal and external cus-tomers. Separating MTE activities from plantactivities enables mail processing managers to focuson processing mail. Under the program, emptiedmail transport equipment is dispatched from a mailprocessing center to one of the 22 service centersvia dedicated transportation. The used equipmentis inspected, sorted, repaired and made ready forreuse by either internal or external customers.

Over 2,000 trailer loads of mail transportequipment requests are filled each day. A profes-sional logistics contractor, managed at the nationallevel, provides centralized coordination of inven-tory management, ordering and fulfillment, datasystems and other supporting activities.

The MTESC program plays an integral rolein achieving the goals set forth in the 1998–2002Strategic Plan of satisfying our customers,improving our organizational effectiveness andstrengthening our financial viability.

F. Postal Facilities, Equipment andEmployee Working Conditions(39 U.S.C. 101 (g))

1. Safety and Health,Safety Management ProcessIn the second full year as a “private sector”

employer under the Occupational Safety andHealth Act, the Postal Service faced several uniquechallenges. As an independent establishment of theexecutive branch of the Government of the UnitedStates, the Postal Service is operated as a basic andfundamental service provided to the people by the


TABLE 1.1 POSTAL SERVICE VEHICLE INVENTORY FY 00

Vehicle Type Inventory

1/4 - Ton 11,861

1/2 - Ton 161,333

1 - Ton 1,357

2- and 2 1/2 -Ton 7,221

Cargo Vans 2,468

Tractors 1,819

Spotters 401

Trailers 5,049

Service 5,013

Administrative 5,544

Law Enforcement 2,960

Mobile Post Office 223

Miscellaneous 142

Total Owned 205,391

Leased Vehicles 6,323

Grand Total 211,714

Postal Service Vehicle Operating Trends 2000

Number of Vehicles 205,391

Miles traveled (millions) 1,144

Miles per gallon 9.8

Cost per vehicle $ 4,010

Cost per mile $ 0.75


Government of the United States. In 2000, thePostal Service performed this vital mission whilealso focusing on enhancing safety and health pro-grams in our facilities and responding toOccupational Safety and Health Administration(OSHA) inspection activity in a proactive and posi-tive manner.

Postal management was challenged to improvesafety and health programs beyond basic compli-ance to involve employees and their representatives.To measure this performance, management con-ducted the most comprehensive third-partyevaluation of nationwide safety and health programsever undertaken. As a part of the EVA Variable PayProgram targets as detailed previously in chapter 1,an independent safety and health firm conductedprogram evaluations in 252 large postal facilitiesnationwide. These facilities were selected randomlyby the firm. The evaluations were conducted in anobjective manner independent of postal manage-ment. The third-party experts utilized a safety andhealth Program Evaluation Guide (PEG) developedspecifically for the Postal Service. It was based onOSHA guidance and industry best practices.

All Areas met the PEG threshold goal of asound safety and health program. Many facilities farexceeded basic program elements. There was a dra-matic improvement in management involvement,employee participation and OSHA-required writtenprograms. This was demonstrated by increasedemphasis on Executive and Joint LaborManagement Safety and Health Committees.Additionally the national EVA goal for lost workdayinjuries and illnesses was met.

The Postal Service continued to focus onmotor vehicle safety. In conjunction with theNational Safety Council (NSC), over 135,000Postal Service drivers were recognized with NSCSafe Driver Awards. The Postal Service deployedseveral national driver safety campaigns including“schools out,” “pedestrian safety,” “winter driving”and “schools in” designed to increase driver aware-ness and reduce motor vehicle accidents. The PostalService also partnered with the National HighwayTraffic Safety Administration in the National Drunkand Drugged Driving Prevention (3D) month cam-paign. The first corporate-wide seat belt use surveywas accomplished utilizing the postal Web site. Seatbelt use data were shared with the U.S. Departmentof Transportation in support of the “Buckle UpAmerica” Campaign.

The Postal Service continued to work withOSHA in a proactive manner on compliance activi-ties. This included the prompt and thorough

investigation of employee complaints relative tosafety and health and the appropriate resolution ofcited deficiencies.

2. Environmental Programs

a. Fuel Cell, Anchorage, AK

On August 9, 2000, Senator Ted Stevens (R-AK) and Postmaster General William J.Henderson dedicated the nation’s largest com-mercial fuel cell system at the AnchorageProcessing & Distribution Center.

The system is energy efficient and environ-mentally friendly. Producing one megawatt ofelectricity, this is the first fuel cell system that provides power to the utility grid — Alaska’sChugach Electric.

Fuel cell systems offer one of the lowest-maintenance forms of electrical power in theworld. As businesses and the Internet create agreater demand for uninterrupted power, fuel cellsare becoming a cost-effective alternative. Thisproject demonstrates fuel cell resource flexibilityand commercial viability for meeting today’s crit-ical power needs.

Fuel cells do not burn fuel so the systemeliminates air emissions normally associated withacid rain and smog dramatically reducing thoseassociated with global warming.

Compared with electricity generated from theaverage combustion-based processes in the UnitedStates, a one-megawatt fuel cell system would elimi-nate more than 200,000 pounds of air pollutionand 11 million pounds of carbon dioxide from theatmosphere during each year of operation.

b. Green Electricity

Just in time for Earth Day 2000, the PostalService announced one of the largest purchases ofretail green power in U.S. history. The PostalService awarded a competitively-bid contract to go-green.com, the retail operation of Preferred EnergyServices, Inc. to provide 100 percent green power to1,000 Postal Service facilities throughout Californiaover a three-year period. The contract called fordelivery of more than 30 million kilowatt hours ofelectricity from renewable energy resources for eachof the next three years.

This purchase of 100 percent green power formore than 1,100 facilities in California demon-strates our commitment to conducting business in asocially responsible manner. By doing this, weremained true to our values while accomplishing



two very important things: the acquisition of a cost-effective energy source and the opportunity to makea contribution to the environmental health of thecommunities we serve.

The use of renewable energy resources —instead of the traditional mix of resources — togenerate 30 million kilowatt hours annually willsave about 25 million pounds of carbon dioxide,60,000 pounds of oxides of nitrogen and 18,000pounds of sulfur dioxide each year from beingreleased into the atmosphere.

The Postal Service received technical assistancefrom the Lawrence Berkeley National Laboratory indeveloping the solicitation and evaluating the offersreceived that led to this purchase. With 40,000facilities nationwide, the Postal Service is the largestfederal consumer of electricity other than the mili-tary and plans to deploy 500 electric deliveryvehicles in California next year.

c. Benign Pressure-Sensitive Adhesives

In March 2000 the Postal Serviceannounced the development of an environmen-tally benign Pressure-Sensitive Adhesive (PSA),marking the beginning of a new era in recycling.

This world-class technology will help makerecycling more economical, help decrease costsfor recycling and repulping operations and helpdivert tons of valuable waste paper from ournation’s landfills. For years it has been known asthe “sticky” problem. What do you do with adhe-sives when recycling paper? These adhesives gumup the works and recycling mills have difficultyrecycling paper with high adhesive content. Butthrough the leadership of the Postal Service andcooperation between the public and privatesector, the “sticky” problem may soon be a thingof the past.

Not only will this new adhesive technologyimprove the environmental performance ofpostage stamps, it will also reach a much largeraudience of adhesive users.

On April 21, 2000, President Clinton issuedExecutive Order 13148, a “Greening the Govern-ment” Executive Order that recommended allfederal agencies employ the new PSA technology.

The Postal Service has a long history ofleadership in recycling efforts and protection ofthe environment. Although stamps were a verysmall part of the “sticky” problem, the PostalService saw an opportunity for public policyleadership and took on the task of developingan environmentally friendly adhesive. In 1994,the Environmentally Benign Pressure Sensitive

Adhesives Program was initiated as part of thePostal Service’s commitment to develop stampsand stamp products that do not adversely affectthe environment. Previously, the Postal Serviceformed a team of researchers from governmentand industry, including members of the ForestProducts Laboratory (U. S. Department ofAgriculture), the adhesive industry, paper manu-facturers, recyclers, printers and testinglaboratories. This research partnership, spon-sored and funded by the Postal Service, has beensuccessful in creating an environmentallyfriendly adhesive. It passed a comprehensiveseries of tests, meeting all Postal Service stampperformance and recycling requirements.

d. Per Scholas

In April 2000, the Postal Serviceannounced its partnership with Per Scholas inthe South Bronx to provide computers to inner-city youth and families. Per Scholas is a non-profit organization dedicated tobridging the digital divide by bringing 21st-century technology to school children and low-income families.

The Postal Service is partnering with PerScholas to recycle stand-alone computer systemsby donating 15,000 units for recycling as well as providing postal vehicles to transport com-puters for reconditioning to the Center anddistributing the refurbished units to familieswithout home computers.

This partnership with Per Scholas offersthe Postal Service yet another opportunity to be a leader in the voluntary takeback move-ment and to reaffirm our commitment to thediverse communities that we serve, everywhere,every day.

Started by a consortium of foundations andcorporations, Per Scholas — which comes fromthe Latin phrase, “For Schools” — produceshigh-quality computers for schools and othernon-profit organizations at substantial savings.In the last four years, it has placed more than13,000 computers in over 1,200 schools in 22states. Per Scholas also offers comprehensivecomputer techology training and job placementfor disadvantaged youth. At its new recyclingcenter, Per Scholas has expanded its operationsto include reconditioning computers donated bythe Postal Service and other organizations andplacing them in disadvantaged homes throughsocial service agencies. Per Scholas projects that




it will provide 10,000 of these computer pack-ages each year.

e. Resource Recovery from Obsolete Equipmentwith Goodwill, Austin, TX

For several years, the Postal Service has beena leader in electronics equipment reutilization —the process of salvaging value from discardedcomputers and other electronics equipment.Austin, Texas, has become a magnet for high-techfirms and consequently has become a hotbed ofcreative approaches to dealing with discardedhigh-tech equipment. The Postal Service spottedan opportunity in Austin to break new ground inmaterials management.

In 1998, Goodwill Industries of CentralTexas in Austin, established a facility to receivediscarded electronic equipment such asIntegrated Retail Terminals (IRTs). It dismantlesthem for harvesting of usable parts, or utilizesthe remaining materials as recyclable scrap. TheUSPS/Goodwill program receives approximately325,000 pounds of equipment (about 5,000IRTs annually) from Postal Service facilitiesnationwide. This equipment is disassembled into22 separate component parts (various plastics,metals, wiring, etc.), with each being sold sepa-rately to vendors of recyclables. Notably, theemployees engaged in the sophisticated disas-sembly process are largely workers previouslyunskilled and unemployed, many with severephysical or cognitive challenges and trained byGoodwill. The hiring of needy employees, whilea hallmark of Goodwill nationwide, is nonethe-less a vital feature of this program — not justlife-enhancing for the employees and their fami-lies, but enriching to the community at large.

Establishment of the program gave vendors ofrecyclables a firm foothold in the Austin area. Theysaw the steady stream of materials coming fromAustin as a sustainable source of “raw materials.”Moreover, through an enviable feedback loop, thesevendors informed Goodwill of ways to make theraw materials cleaner (e.g., fewer metals in a load ofplastics). Goodwill was able to separate recyclablesmore thoroughly, thereby fetching higher prices.Prices for scrap integrated circuit boards haveincreased by over 60 percent as a result of this feed-back mechanism. Prices for virtually all otherrecyclables are up 20-30 percent.

This project has been nominated for theInn-ovations in American Government Award,sponsored by the John F. Kennedy School of

Gov-ernment at Harvard and the FordFoundation.

The Postal Service is committed to puttingsustainable development concepts into practice.We believe that what began at Goodwill will bean example for other governmental entities tofollow. Think globally. Act locally

f. Energy and Environmental Contracting

Purchasing and Materials continues to workwith Engineering’s Environmental ManagementPolicy organization in examining how purchasingand materials business practices can contribute tothe Postal Service’s — and our nation’s — environ-mental goals. Several notable achievements weremade during 2000.

In April, the Postal Service made one of itslargest ever “green” purchases when it awarded acontract for the delivery of more than 30 millionkilowatt hours of electricity from renewableenergy sources over each of the next three years.The electricity will be used at more than 1,000Postal Service facilities throughout California.The use of renewable resources will save about25 million pounds of carbon dioxide, 60,000pounds of oxides from nitrogen 18,000 poundsof sulfur dioxide from being released into theatmosphere annually.

Ongoing efforts include:■ Shared energy savings contracts that continue

to promote energy efficiency and reap annualcosts savings of $8.9 million. More than$200 million worth of recycled products arepurchased annually.

■ The Postal Service has the nation’s largestcompressed natural gas delivery fleet (morethan 7,500 long-life vehicles have been con-verted to this alternate fuel)

■ During 2000, the Postal Service contractedfor 500 electric-powered delivery vehicles.Deployment begins in 2001. These vehicleswill be joined by more than 21,000 flexiblefuel ethanol vehicles.

3. Total Resource ManagementThe Postal Service buys more equipment

annually, but recovers little residual value fromobsolete equipment and is liable for environmentalcosts/fines. Just three percent recovery could gen-erate $30 million annually in new revenue for thePostal Service. Estimated disposition of annual costsavings could reach $10 million. Potential environ-mental liability would be reduced and the


corporate image of the Postal Service as a publicpolicy leader would be enhanced.

Environmental Management Policy spon-sored the Total Resource Management project — a cross-functional team formed to develop cost-effective, environmentally beneficial alternativesfor Postal Service equipment.

This project reviewed past and planned auto-mated equipment contracts, disposition plans,actual dispositions and financial/environmentalimpacts. It also reviewed and analyzed currentPostal Service policy and actual practice with con-sideration for policy change, cost-benefit,investment recovery and environmental impact.The supporting data and management tools wereused to develop policy recommendations.

The project received the Postal Service’sExcellence in Project Management award.

4. Facilities

a. Building Standards/Safety

Facilities has increased its attention tobuilding standards and safety. As part of theArchitectural Barriers Act of 1968 (ABA), Designand Construction implemented a case trackingsystem to review, document and respond to allaccessibility complaints filed against the PostalService. Building standards and guidance forfuture projects are the focus of monitoring theOccupational Safety and Health activities in PostalService facilities nationwide. And, for operationalsafety, enhanced employee well-being Facilities’Boiler and Elevator inspectors conducted over10,000 safety inspections on mechanical equip-ment, including boilers, elevators, escalators andcompressed air tanks.

b. Design and Construction Initiatives

1. Green Showcase Facility

The new Post Office in Corrales, NewMexico was the first modern Post Office con-structed using straw bales. Straw is a sustainablerenewable re-source and has an insulation factortwo to three times better than standard wall con-struction. The straw-filled walls were covered withstucco on the exterior and gypsum boards on theinterior to look the same as standard construction.

Other conservation measures used in thefacility included installation of ceramic lobby tilesmade of recycled materials, a roof rainwater collec-tion system for irrigation, energy efficient lighting,permeable concrete pavers in parking areas andrecycling of construction wastes. The resultingfacility serves as a showcase for sustainable develop-ment and a test of alternate constructiontechniques. It is a resource-efficient building thatfits comfortably into its rural western environment.

The Postal Service received a White HouseYear 2000 Closing the Circle Award for the CorralesPost Office.

c. Special Alaska Facilities Program

In February 1999, a Special Alaska FacilitiesProgram was established to replace or refurbish 32 existing Post Offices in rural areas of Alaska.The logistics, weather conditions and effortrequired to clear the selected sites were amongmany challenges that had to be overcome. TheAlaska Facilities Program is making sorely neededimprovements to the affected Post Offices, helpingto boost the local economy and create employmentopportunities during construction.

To date, sites have been selected for all 32 projects. Ten of these sites have been com-pleted. The remaining 22 projects are planned forcompletion by early fall 2002.

d. Realty Asset Management

Realty Asset Management is charged withmaximizing the return on underutilized and sur-plus real property assets controlled by the PostalService. This organization generates income fromreal estate assets by maximizing postal propertyvalue through its highest and best use, leasing orsubleasing excess postal space to government andpublic tenants and selling surplus real property.During 2000, revenue totaling $147.4 million wasgenerated by Realty Asset Management from thefollowing sources:


TABLE 1.2 POSTAL SERVICE REAL ESTATE INVENTORYTotal owned facilities 7,848

Total owned interior square feet 214,547,159

Total owned land in square feet 829,972,377

Total leased facilities 26,797

Total leased interior square feet 102,943,016

Total GSA/other government facilities 452

Total GSA/other government interior square feet 214,547,159

Annual rent paid to lessors 214,547,159


e. Postal Service Facilities Workload

f. Community Relations Regulations

Since the Postal Service implemented itsexpanded Community Relations regulations inOctober 1998, there has been a greater communityinvolvement with decisions to expand, relocate orconstruct new facilities. The regulations provide asystematic approach to helping local communitiesunderstand what various projects are designed toachieve and seek to build partnerships with com-munities as decisions are made. We believe thisfulfills a need in our ever changing environment.

g. Priority Mail Processing Centers

Facilities supported the anticipated transfer often leased facilities to the Postal Service fromEmery Worldwide Airlines. A project managementsystem was created. All technical and contractualinformation was obtained and technical assessmentswere made of all sites and buildings.

5. Purchasing and Materials

a. Purchasing and Materials’ Strategic Plan

Fiscal Year 2000 was the fourth year ofPurchasing and Materials’ Five-Year Strategic Plan.The Plan is centered on the Postal Service’sCustomerPerfect! management system and wasdesigned to transform Purchasing and Materialsfrom a transaction-based organization to the busi-ness customer of choice for internal Postal Servicecustomers and external suppliers. Many successeshave been realized under the plan. During 2000,one of its central thrusts — supply chain manage-ment — received primary attention.

b. Supply Chain Management

The Strategic Plan identifies supply chainmanagement as one of the most important aspectsof successful contemporary businesses. It hasbecome the standard operating philosophy forPostal Service purchasing and materials manage-ment, as well as a major tenet of the PostalService’s Breakthrough Productivity Initiative(BPI). In general terms, supply chain managementis the analysis of the purchase process and thesupply stream, from the supplier’s supplier to thecustomer’s use, in order to increase customer satis-faction and decrease overall cost. Effective supplychain management involves a number of businesspractices, including close interaction among endusers, buyers and suppliers, long-term contracts,and ongoing analysis and improvement of oper-ating and administrative processes.

Supply chain Centers of Excellence (COE)teams have been established throughout Pur-chasing and Materials. They are using supplychain management business practices to benefitthe Postal Service. During 2000, more than 60COE teams were established within Purchasingand Materials’ 35 business units. The teams arecross-functional, representing both purchasingand internal customers. Each is commodity-focused, investigating how customer satisfactioncan be improved and savings realized. As a result,strategic partnerships have been developed with,among others, suppliers providing office products,mail transport equipment cellular phones andservices. These partnerships offer quick deliveryand, often, cost savings through electronic com-merce. The Postal Service also receives discountsand rebates depending on the amount of businessdone with the particular supplier. Due to the widevariety of goods and services purchased by the

Projects Projects

Completed Ongoing

During as of End

2000 of 2000

New construction, major

renovations and expansion projects 263 683

Building purchases 96 174

New lease construction 278 462

Other lease actions

(alternate quarters, new leases,

and lease renewals) 5,155 1,501

Expense repair and

alteration projects 9,758 5,413

Capital repair and

alteration projects 10,297 6,345

TABLE 1.4 FACILITIES PROJECTS

Leasing to private tenants $ 24.2 million

Leasing to government

tenants $ 28.0 million

Sales of excess property $ 84.0 million

Rent from developmental

property $ 11.2 million

TABLE 1.3 REALTY ASSET MANAGEMENT



Postal Service, such partnerships will grow, as willthe customer service and financial benefitsreceived through them.

Another commodity receiving particularattention is fuel, which annually costs the PostalService more than $700 million. A FuelManagement Program has been established, basedon a pilot test that began in 1998. The pilotresulted in savings of more than $1.5 million fordiesel fuel. The Postal Service established a sup-plier partnership under which the supplier willprovide below-retail diesel directly to highway mailtransportation suppliers, with obvious cost savings.Savings are also being realized in aviation fuelcosts; more than $1.5 million per year will besaved by purchasing such fuel directly from sup-pliers. Finally, a fuel credit card (which can also beused for vehicle maintenance services) is nowbeing used nationally. The card simplifies the pur-chase of fuel and maintenance services and its usegenerates rebates to the Postal Service.

Innovative business practices are also beingused to further the SCM program and BPI objec-tives. Reverse auctioning, an Internet-basedbusiness practice, was used during 2000 forselected commodities. In one case, reverse auc-tioning led to the award of a six-year contract forthe lease of more than 4,000; trailers estimatedsavings are more than $2 million annually. Reverseauctioning allows potential suppliers to adjust theirproposed price on-line as they react to the pro-posed prices of their competitors. The results forbuyers are lower prices, a better negotiating posi-tion, shorter purchasing cycles and improvedproductivity. Although reverse auctioning is notthe best sourcing approach for all Postal Servicepurchases, it will be used increasingly.

Purchasing policies are also being aligned withsupply chain management principles. During 2000,a major effort was undertaken to review and reducethe documentation normally used in Postal Servicesolicitations and contracts. The intent is to establishstandard terms and conditions that reduce theadministrative burden placed on both buyers andsuppliers, thereby lowering cost and effort. Thenew terms and conditions will be published in thePostal Service Purchasing Manual in 2001.

Meaningful data and measurement are essen-tial to supply chain management. Purchasing andMaterials is therefore measuring supplier perform-ance. Supplier process management and controlsystems are periodically reviewed and performanceis tracked over time. The Supplier Measurementand Tracking system has been assessing supplier

performance and has provided suppliers andbuyers with useful feedback for the past five years.Key or critical suppliers are also required to supplyprocess and performance related metrics. As aresult of these efforts, the Postal Service has devel-oped a Supplier Rating System that began nationaltesting in 2000. When this system is fully imple-mented, it will provide buyers with comprehensivesupplier performance information.

The Postal Service continues to recognize itsbest performers with the Quality Supplier Awardprogram. In June, ten suppliers from both the largeand small business communities received the 2000Postal Service Quality Supplier Award. The awardhas been given since 1989. Over the life of the pro-gram, winners have included small and largebusinesses whose performance and commitment toquality have been found to be outstanding.

c. Process Management (PM)

Since early 1997, Purchasing and Materialshas been using PM tools and techniques toimprove customer service. This effort began in thematerials discipline and has since been usedincreasingly in purchasing operations. During2000, Purchasing and Materials had largely estab-lished PM as its means of doing business.

It has become one of the most importanttools in our supply chain management initiatives.Process management systems are now available onthe Postal Service Intranet process managementreviews have been integrated into semi-annualbusiness reviews for process owners. Current initia-tives include identifying and developing candidatesfor Quality Practitioners, who will act as internalconsultants for Purchasing and Materials staff,again, exploiting the use of process managementtools in Supply Chain Management initiatives.

Valid and reliable data are central to effectiveprocess management. Recognizing this, Purchasingand Materials established a purchasing-processesdatabase to capture spend data for purchasingtransactions. This is in large part made possible by the implementation of a software-based pur-chasing system, SNAPS, used for supplies, servicesand equipment. Similar data gathering andanalysis has been underway for the past threeyears in the material management area has led tomarked improvement in inventory control andwarehouse operations.

d. Materials

Materials is responsible for managing thou-sands of line items required for daily Postal Service



operations, providing purchasing and materialssupport to the Areas through ten Purchasing andMaterials Service Centers (PMSC), and managingtwo Material Distribution Centers (MDCs). TheMaterials cataloging function maintains over24,000 stocked items and over 6,000 direct sup-plier items. Availability rate for stocked items at theend of 2000 was 99 percent. The MDCs processednearly 2.5 million order lines; the customer servicelevel provided (fill rate) was 94.7 percent.

Gross sales for the Materials wholesale opera-tions was $348 million in parts, supplies, printedmaterial and equipment. Issues from wholesaleinventories amounted to $189 million, while electronic commerce, based direct sales from 60 suppliers amounted to $159 million, a 20 per-cent increase over last year. At the same time, the Label Printing Center produced more than twobillion mail processing labels the Mail EquipmentShops produced more than one million sacks andpouches and 400,000 locks and keys.

Building on earlier process managementefforts, Materials partnered with other Postal Serviceorganizations to take advantage of the most currentand effective inventory and material distributionbusiness practices. One example of the success inthis area was the partnership with Retail on the dis-tribution of merchandise to all Postal Stores andoutlets. By reducing the number of fulfillment oper-ations and by treating these companies as partners,cycle times and inventory levels were greatlyreduced while customer satisfaction was improved.Over $6 million has been saved, along with a 25percent reduction in inventories system wide.

Partnerships with other postal organizationsyielded similar successes. At the request of Con-sumer Affairs, a pilot was established to teston-line auctioning of unclaimed and recoveredmail parcels. While the test will not be completeduntil mid-2001, initial results have shown anational interest in this material and an increase inper unit sales prices.

Work with the Maintenance Management andMTE organizations resulted in the application ofthe existing maintenance management software tosupplier-operated MTE Service Centers. This elimi-nated system development costs while standardizingtracking and ordering processes.

A joint venture with Acquisition ManagementAutomation and Purchasing the supplier was able topush the design for a new flat mail processing cartfrom design approval to field deployment, in lessthan two months.

Incorporated into these arrangements wereapplication, of electronic commerce and payments,simplified ordering processes for the customers andsavings in transportation costs. As a result of theseefforts, Materials is increasingly employed as an in-house consultant and manager of acquisition,storage, distribution and customer service.

Materials programs begun in 2000 willgreatly affect the Postal Service’s use of freighttransportation. Materials Distribution alsobegan using the Freight Traffic ManagementSystem (FTMS) in 2000. This Web-based soft-ware system creates freight shipmenttransactions, calculates expected freight chargesand allows users to select the best value carrier.Material Management Specialists at theDistricts, Areas and in Material Distributionwill use the system to replace existingGovernment Bill of Lading software.

The Field Inventory Reduction objectivestarted in 1998 continued in 2000. This objec-tive involves the ten Purchasing and MaterialsService Centers using a number of processeswith their customers to better manage theirinventories. Results were more than $17.6 mil-lion in inventory returned to the MDCsdisposal of over $4.5 million in surplus parts.These sites also were able to nationally generate$2.2 million in revenue from the sale of surplusmaterial, while avoiding costs through the redis-tribution of excess inventory.

e. Professional Development

Purchasing and Materials manages one of thefederal government’s most comprehensive and rig-orous professional development programs. Eighteencourses, addressing such areas as contract adminis-tration, commercial purchasing, inventory controland orientation for prospective contracting officer’srepresentatives, are offered and must be successfullycompleted in order to attain contracting officerstatus. All of the courses receive college credit rec-ommendations from the American Council onEducation. During 2000, more than 800 individ-uals, including both purchasing and materialmanagement professionals and other Postal Serviceemployees, attended 39 courses. In addition, cul-tural and supplier diversity training was provided toemployees throughout Purchasing and Materials.This training addressed subjects such as best prac-tices used to further supplier diversity, culturalcompetencies and the dynamics of diversity.

Because of changes and improvements in thepurchasing and materials disciplines, particularly



the development of the supply chain managementphilosophy and its successful implementation inthe private sector, the focus of Purchasing andMaterials curriculum has begun to change. Overrecent years, Purchasing and Materials began aphased-in approach toward achieving full imple-mentation and management of an integratedsupply chain. Improvements are being made tocore processes through process management initia-tives. To achieve organizational capability and tore-skill purchasing and supply management profes-sionals, most of the in-house curriculum discussedabove is being phased out. Plans call for the transi-tion to commercially available courses to ensurethat Purchasing and Materials employees have theknowledge, skills and abilities to ensure the successof the supply chain management initiatives.

f. Systems Integration

The Postal Service is using its purchasingand materials systems to further supply chainmanagement and take advantage of existing anddeveloping technologies. Expanded use ofeCommerce tools and capabilities can reduceadministrative time and cost and quicken delivery.

During 2000, the Postal Service madeprogress in establishing an Internet-based buyingsystem. This system, known as Web-based pur-chasing, provides users with a fully integratedelectronic (hence, paperless) system that handlesrequisitioning, approval, ordering certificationand payment processes. Orders are made byaccessing catalogs available from the PostalService supplier base. Savings will be realized byreducing transaction cost, inventory and prices.Just as important, Web-based purchasing allowsbuyers and purchase teams to focus on strategicsourcing rather than the ordering process. Thiswill result in more effective business decisionsbased on the Postal Service’s business objectives.During 2000, pilot testing began on the system.It will be expanded and play a key role in thefuture of Postal Service purchasing.

For several years, the Postal Service has usedtwo systems applications to communicate pur-chasing information to suppliers and to informbuying organizations of their capabilities. The firstof these, the Business Opportunity Bulletin(BOB), provides suppliers with information,including purchase opportunities. Users downloadsolicitations and relevant information. The second,Supplier Automated Database on the Internet(SADI) allows suppliers to provide Postal Servicebuyers with information about their companies

and capabilities, their socioeconomic status andthe regions of the country in which they prefer todo business. BOB will be replaced as the PostalService takes advantage of the expanded capabili-ties of the General Service Administration’sElectronic Posting System to alert suppliers to pur-chase opportunities.

As noted above, Materials is makingincreased use of technology in its disposal of sur-plus assets and recovered mail and its managementof freight. Internet-based auctions of excess equip-ment have also been piloted and have shownpromise in both disposing of excess and increasingrevenue Use of this technology will expand overthe coming years.

Data warehousing is critical to effectivesupply chain management during 2000 the PostalService made significant strides in this area. Datawarehousing is the collection and analysis of pur-chasing and payment history facilitates trendanalysis and better-informed decision making.During the past year, such analysis was performedon supplies and services purchases and paymentstransportation commitment and capital expendi-tures will be similarly analyzed during 2001. Theresult of these efforts will be a more comprehen-sive understanding of demand trends and moreeffective purchasing.



Chapter 2 Postal Operations|2000 Comprehensive Statement on Postal Operations|33

A. Public Perceptions, CustomerOutreach and Mailer Liaison

1. Customer Feedback AnalysisThe Postal Service uses a variety of methods to

communicate with customers about our services,products, policies and personnel. The aggregateddata from these sources allow the Postal Service toformally integrate the voice of the individual con-sumer into our business practices and to providefeedback to operations where we can take action,respond and improve. In 2000, the number of cus-tomer contacts through traditional methods ofcommunication (i.e., letter, phone calls customerwalk-ins) increased slightly. The number of cus-tomer inquiries via Internet, an alternative customercommunication vehicle, nearly doubled.

The Postal Service logged 807,685 customercontacts during 2000, an approximate 5 percentincrease. Of these, 4 percent were compliments, 3 percent were general information requests and 92 percent were service issues. The volume ofInternet inquiries skyrocketed, reaching 91,025 e-mails — a 48,000 increase over the previous year.

The increase in customer contacts occurred inall ten Postal Service Areas.

2. Customer Outreach and Mailer Liaison

a. Consumer Advisory Councils (CACs)

Consumer Advisory Councils (CACs) offer aunique opportunity for the Postal Service to main-tain contact with residential customers nationwide.Customer Advisory Councils operate at the PostOffice level and are made up of a cross-section ofcommunity and local postal officials. TheConsumer Advocate provides functional guidanceand support to our Customer Advisory Councils.Based on the results of a 1999 benchmarkingstudy, the Consumer Advocate identified long-range strategies for tying local council activity tothe Postal Service’s corporate objectives, ensuringthat the voice of the consumer is heard at the cor-porate level.

b. Mail Recovery Centers (MRCs)

The Postal Service operates three MailRecovery Centers in San Francisco, CA; St. Paul,MN; and Atlanta, GA. These facilities are respon-sible for the final disposition of undeliverable mail.During 2000, they processed approximately 1.4million parcels and 105.6 million letters. To better

serve customers, the Postal Service uses MRCs asdiagnostic tools to pinpoint specific problem areasthat affect mail volumes received at our facilities.By communicating these problems to our mailers,they are able to improve their mail preparationand/or packaging. We work closely with mailerorganizations to determine ways we can worktogether to provide better service. A direct result ofthis process was the Expanded Return Program,whereby undeliverable mail items found in com-pany-identifiable packaging are returned in bulk,postage due, to the 35 participating companies.Approximately 340,000 pieces were returnedthrough this program during 2000. The MailRecovery Program also has initiated partnershipswith various internal partners, such as Operations,Delivery Programs, Retail and the InspectionService, to improve organizational efficiency.

c. Corporate Call Management (CCM)

Corporate Call Management gives postal cus-tomers easy access to a broad range of servicesthrough a network of National Service Centers(NSCs). The overall goal of CCM is to improvecustomer service and operating efficiency, decreaseredundant calls to Post Offices and increase rev-enue through establishment of an effectivenational call-handling infrastructure. Presently, twocenters, located in Denver, CO and Kansas City,MO respond to 55 percent of the nation’sinquiries regarding general information, mailingrates, hours and locations of local postal facilitiesand service opportunities. NSCs also handle callsfor national programs including Express Mail,Delivery Confirmation and DineroSeguro.

Call center responsibilities were transferredto the Vice President and Consumer Advocate’soffice. Consumer Affairs is in the process ofmaking customer-friendly enhancements to thecall center phone prompts. One such exampleaffords customers the option of receiving localPost Office phone numbers in order to resolveother local issues directly.

d. Sales

During 2000, the Postal Service underwent amajor reorganization of its sales organizations.The growth of eCommerce and the increasinglycompetitive world of commercial business ship-ping, demanded that the new sales organizationbe structured to reflect customer needs and inter-ests, rather than internal postal interests.

The new group’s responsibilities includedevelopment, implementation and evaluation of

Chapter 2 Postal Operations


all commercial sales and account managementplans and programs and policies nationwide,including customer service and satisfaction activi-ties. The new structure has placed the bulk offormer local and national sales positions into asingle Headquarters organization, that reportsthrough the Senior Vice President, Sales to theChief Operating Officer (COO). In doing so,customer needs are more easily heard and fac-tored into operational decisions, giving the PostalService the ability to balance operating costs withcustomer needs.

The sales force has been organized into fourgeographic regions — Northeast, Southeast,Central and West — rather than the former 85local Districts. Each region is headed by an asso-ciate vice president, Sales, who reports to theSenior Vice President, Sales.

National Account Managers, who formerlyreported to 11 Area Offices, have been organizedinto five different business segments, each headedby an executive manager who reports directly tothe Senior Vice President of Sales. These businesssegments, are Services (including hospitality,entertainment and tourism, business services, etc.)Mail Order and Retail, Financial Services,Advertising Mail and Sales Partners.

Sales Partners are companies that generatebusiness for the Postal Service, such as lettershops, parcel consolidators, publishers and theprinters. This segmentation allows sales represen-tatives within each function to develop indepthknowledge of specific business lines and bringvalue-added assistance when providing shippingsolutions for customers.

A small national support staff assists thenational Sales staff. This group has responsibilityfor lead generation, research, the AccountManagement process and other matters that sup-port Sales. An Operations Integration and Servicegroup and a Finance group, which operate out ofSales Headquarters in Arlington, VA, also providenational support.

The final segment of the new Sales organiza-tion is the Business Service Network, a nationwidenetwork of service centers that provide National andPremier customers (established accounts) a localpoint-of-contact for resolving local concerns. Thenetwork is strategically housed at major postal opera-tional points around the country.

e. USPS Pro Cycling Team

The Postal Service has four primary objec-tives for the sponsorship of its top-ranked cycling

team, led by Lance Armstrong, the two-timewinner of the Tour de France, the world’s mostprestigious cycling competition:

■ Generating revenue by making sales to companies and individuals affiliated with cycling;

■ Enhancing the Postal Service brand throughactivities that will positively impact customerperceptions of the Postal Service in a com-petitive business environment;

■ Reaping the public relations value of spon-sorship through a variety of activitiesfocused on both customers and employees;and,

■ Leveraging retail sales on-site at domesticcycling events, on the team’s Internet site andat Postmark America.

Sales has leveraged the business relationshipsdeveloped through the cycling sponsorship, closingmore than $18 million in new sales in the pastthree years. Above and beyond the revenue gener-ated in the Sales function and through retailpromotions, the Postal Service benefits from thetremendous pubic relations value of LanceArmstrong’s victories in the 1999 and 2000 Toursde France.

The team’s top-notch performance through-out the year, also has a strong impact on employeepride, connecting the notion of winning with thePostal Service. This combination of forces — pos-itive publicity and employee sense of pride —helps customers feel good about the Postal Serviceas an organization. In a competitive environment,this helps build business. The title sponsorship hasbeen retained for 2001.

f. Core Business

The Postal Service has a fundamental require-ment to provide products and services that meetthe needs of its different business and consumercustomers. The Postal Service continues to improveits monitoring of the business environmentthrough market research, customer satisfaction/loy-alty measurements and Customer Value Analysisfor specific products and customer segments.

The Postal Service underwent a major effortto identify and develop strategic assessments of keyindustries. We also developed a new consumer seg-mentation structure designed to improve ourstrategic planning.

In 2000, a comprehensive analysis was con-ducted to determine customer needs andrequirements, determine marketplace dynamics, and

34|2000 Comprehensive Statement on Postal Operations|Chapter 2 Postal Operations



evaluate ever-changing customer business models.This analysis was used to establish strategies and tac-tics to improve our core product offerings. The dataalso were used to define service requirements, infor-mation needs and pricing sensitivities as part of theCustomerPerfect! process. Further, it was used to helpthe Commercial Sales group develop its sellingstrategies against targeted milestones.

1. First-Class Mail.

Effective and efficient service is the foundationof our flagship product, First-Class Mail. This year,record service performance was achieved, as meas-ured by the External First-Class Measurementsystem (EXFC). Our continued focus on transac-tions mail (bills, statements and payments) haspositioned the Postal Service to continue to be theprimary enabler for businesses and consumers toconduct financial transactions. Expansion of theNational Firm Holdout program, redesign ofBusiness Reply Mail (BRM) service, and increasedattention to two-and three-day service performancehave all supported improved service in this criticalpart of the First-Class Mail base. Core BusinessMarketing developed a model to assist remittancecustomers in improving “float” based on remittancecenter locations, volumes and service standards.

Improvements to CONFIRM, our new lettermail tracking system, were introduced to betterserve the information needs of major mailers.CONFIRM enables senders or recipients of mailto track the delivery of letters and achieve desiredbusiness results through the use of unique barcodes called PLANET CODEs. A more robustproduction system was developed which is suffi-cient to serve an unlimited number of customers.Deployment of hardware and software to enableall bar code sorters in major processing plants toread PLANET CODE indicia was achieved.Deployment of the CONFIRM capability for barcode sorters in smaller associate offices anddelivery units has begun, with completion antici-pated in 2001.

Core Business Marketing began testing severalnew First-Class Mail application enhancements,including MicroPayment and Friend-To-FriendMail in 2000, both of which utilize PLANETCODE technology. The MicroPayment conceptuses stamps as a form of currency. MicroPaymentdesign reply cards — either business reply or cour-tesy reply — offer customers the option of usingstamps as payment for low price point-of-sale pur-chases valued between $1 and $10.

Friend-To-Friend Mail capitalizes onCONFIRM’s ability to recognize a specific type of

mailpiece and offers marketers the ability to usepostcards as a vehicle to expand the reach of theiradvertising message. Friend-To-Friend Mail allowsmarketers to use postage-paid postcards to carry anadvertising message that can be sent to any thirdparty. The advertiser pays the postage only whenthe card is entered into the mailstream by the cus-tomer, as determined by a unique PLANETCODE indicia.

2. Advertising Mail, Standard Mail (A)

Standard Mail (A) is the lead service forattracting advertising content to the mailbox. It is avaluable medium for the distribution of informationabout products and services (catalogs and directmail), organizations (fundraising) and individuals(campaign material).

To better serve our customers, Core BusinessMarketing developed a comprehensive website,www.uspsdirectmail.com, which offers a variety ofon-line help to marketers who wish to sell productsand services, drive traffic to their location, acquirenew customers and retain existing customersthrough relationship management activities. Thisnew customer contact channel brings value to bothbeginning and experienced mailers through fourinteractive environments.

■ A tutorial leads marketers through basic con-siderations and elements of a successful directmail campaign.

■ The Online Consultant provides a “wizard-like” process to developing a campaign.

■ The Reference option provides a quick look-up tool for experienced mailers.

■ The Vendor Support option provides elec-tronic service assistance with campaigns.

Sales support and direct marketing materialswere developed for Postal Service account represen-tatives and national account managers to improvethe level of support they can give to customers whoadvertise. Core Business Marketing partnered withlocal field organizations to conduct advertising mailseminars, equipping those small businesses thatattended with information and tools needed toachieve their business objectives.

Working with Operations, industry associa-tions, and the direct mail and mail order industries,led to increased attention to service, improvementsin delivery predictability and better coordinationwith the mailing community at large.

3. Periodicals Mail

The Postal Service is the primary deliverer ofsubscription publications in the United States.Working closely with the periodicals industry, thePostal Service has identified opportunities for cost


reduction, service improvement and businessgrowth. Over the past year, Core Business hasworked with cross functional groups on such effortsas future flats strategies, package integrity, servicemeasurement and mail irregularity feedback. CoreBusiness also initiated several process efficiencies,including customer and operations training pack-ages and standard operating procedures for ourprocessing plants and airmail facilities.

In terms of communications, we have estab-lished an electronic communications vehicle thatlinks publishers and printers with Postal Servicedelivery units, sufficient to identify and resolvesubscriber delivery and service issues. In combina-tion with Area marketing and operationsfunctions, quarterly Periodicals Focus Groupmeetings are conducted with industry representa-tives to educate, inform and collaborate on issuesdesigned to facilitate customer service and period-icals business growth.

Core Business Marketing looks forward tocontinuing our business building initiativesthrough a periodicals Web page, electronic distri-bution of newspapers and opportunities to increasesubscription marketing for publishers.

4. Special Services

Postal Service Special Services add value toFirst-Class Mail, package services and other cate-gories of mail. As stated earlier, there are a varietyof accountable mail special services that give othercustomers the opportunity to confirm receipt anddelivery of their mailpieces, obtain signatures,ensure mail contents, officially register mailpiecesand have the Postal Service perform Collect onDelivery (COD) services. Customers also can pur-chase domestic and international money orders andsecure an official Post Office box.

■ Core Business Marketing executed a majoreffort to transform all accountable mail spe-cial services labels and forms to a bar codedformat. This effort will enable electronic cap-ture and retrieval of data and information,giving customers faster and more reliableservice. Bar coded special service labels arescanned on delivery and, together with signa-ture capture software and equipment,electronic records are created for each mail-piece. Records are stored in a centralizeddatabase, making it easier for both customersand the Postal Service to retrieve information.

■ The Postal Service has established a standard-ized system for monitoring and tracking PostOffice box usage, availability and pricing

schedules, allowing the Postal Service tobetter meet the needs of customers. Thissystem is used in over 12,000 postal loca-tions, representing about 80 percent of thetotal Post Office boxes available to customers.

■ To enhance the value and relevance of specialservices, the Postal Service continues to mon-itor the business environment throughmarket research and customer satisfactionmeasurements to address key customer andmarketplace requirements.

g. Expedited/Package Services

Expedited/Package Services (E/PS) serves asthe focal point for the Postal Service’s objective —provide to consumers a uniformly first rate,affordable and dependable parcel delivery service.

E/PS seeks to position the Postal Service asthe product of choice in the package deliverymarket by emphasizing customer value withservice to everyone, everywhere, every day. Theroad map to achieving this objective is the E/PSBusiness Plan, a dynamic document that is pro-vided to senior Postal managers annually.

The E/PS Business Plan provides guidanceon how the Postal Service can grow the packagebusiness; ensure our price advantage; increase cus-tomer ease-of-use; improve performance andenhance current product and service offerings.The E/PS Business Plan describes what these ini-tiatives are and how they will be realized.

Establishing the Postal Service as the bestvalue provider entails the following objectives:

■ Price — Ensuring price advantage is a keystrategy that is critical to maintaining thecompetitive advantage.

■ Service — Improved, consistent perform-ance is a key customer need within thepackage industry and is critical to growingmarket share.

■ Features — Enhancement of currentproduct and service offerings responds tomarket demand and positions the PostalService as a player in the package industry.

■ Image — Increased customer ease-of-useallows customers enhanced access to PostalService expedited and package services.

As illustrated within the E/PS Business Plan,each of these strategies is aligned with PostalService corporate goals.

1. Package Products

In 2000, E/PS worked with other functionalunits within the Postal Service to develop strategies



intended to enhance the growth and developmentof Express Mail, Priority Mail Standard Mail (B),which includes Parcel Post and the relatively newbut growing service, Parcel Select.

Priority Mail remains the market share leaderin the two-to three-day product category. ThePostal Service continued to work to protect andgrow that leading share by maintaining its afford-able rates, providing higher levels of service byadding features and ease of use shipping solutionsto facilitate that growth. Two-to three-day deliveryis an attractive value proposition to the rapidlygrowing population of online shippers.

Express Mail continued to show modest butsteady growth as more customers came to view itas a reliable and reasonably priced alternative inthe overnight market.

Parcel Post maintained its position as the valuechoice in the non-time sensitive delivery category.

Parcel Select has emerged as a growing forcein the package delivery market as consolidators andshippers have begun to realize the savings potentialof Postal-business work share agreements.

The product represents a real value alterna-tive for parcel mailers who can save on their parcelshipping costs and choose a level of service whichbest meets their shipping needs. The Parcel Selectbrand provides three levels of rate incentives basedon how deep into the postal distribution networka shipper enters their parcels for delivery.

The concept behind Parcel Select originatesfrom a term that parcel shippers have known foryears — zone skipping. Through this concept,parcel shippers who can provide their own trans-portation are able to bring their parcels directly tothe postal facility responsible for a certain destina-tion ZIP Code, reducing the distance between theentry and delivery points for the parcels. Since dis-tance and transportation are major cost factors inpostage rates, the Postal Service is able to reduce itscosts and pass those savings on to the shipper aspostage discounts. The closer the mail is broughtto its final destination, the greater the savings. Inaddition, zone skipping dramatically reduces thetime needed for postal handling of parcels, whichleads to improved delivery service.

In a related development, two private sectordelivery companies have chosen to take advantageof the savings offered as a part of the Parcel Selectoption. Airborne Express launchedAirborne@Home and Emery Worldwide Airwaysannounced its intention to bring to market a highvalue multi-piece shipment service, Parcel@Home.

Overall, Parcel Select is an economical way toreap the benefits of the Postal Service’s greateststrength, its nationwide six-day a week neighbor-hood delivery network.

2. Global Express Guaranteed ™ (GXG) Service

Global Express Guaranteed is fast becomingrecognized as a leader in the international expediteddelivery market. GXG, developed by E/PS andInternational Business, was created as part of astrategic alliance with DHL Worldwide Express.GXG has shown steady growth since inception. Itsdevelopment was enhanced further in 2000.Originally launched as Priority Mail GlobalGuaranteed (PMGG) in April 1999, this premierguaranteed international service is now a permanentpostal service, having been so designated by thePostal Service Board of Governors in August 2000.

Renamed GXG, this service’s reach broad-ened from its initial 19 destinating countries andterritories to more than 200. Likewise, the numberof acceptance locations grew from 3,500 PostOffices in 11 metropolitan areas to more than20,000 retail locations.

In the early stages of its existence, GXGservice was for documents only. In the autumn of2000, a new class of GXG service was created andoffered. Now in its fifth state of expansion, anonline shipping solution is planned for GXG,thereby ensuring greater convenience and ease ofuse for commercial customers.

3. Confirmation of Delivery Services■ E/PS developed and implemented of the

new signature capture process and elec-tronic record management. As a result,E/PS forever changed the way the PostalService captures, stores and retrieves signa-tures for every signature special service andExpress Mail item. This improvement inmanaging delivery records provides oppor-tunities to better meet customer needs forproof of delivery services, fraud reductionand indemnity claim processing. Deliveryrecord look-up from Postal Service Intranetsite now takes seconds rather than days —an effective way of managing over 400 mil-lion delivery records annually.

■ Conversion from a manual paper processto a more efficient electronic systeminvolved adding bar codes to all specialservice labels and delivery receipts and therollout of 225 Optical Work Stations toevery Computerized Forwarding Systemsin the country. Also key was the download



of new “smart” software to over 330,000hand held scanners, one of the largest ofits kind. Once all the hardware and soft-ware was in place, more than 500,000delivery employees were trained on thenew process.

■ Fast on the heels of the new signature cap-ture process came the pilot test of SignatureConfirmation™ service in August of 2000.Building on the Delivery Confirmation™

infrastructure, this new proof of deliveryservice gives customers the ability to receivethe recipient’s name with their delivery infor-mation and to easily request a copy of thesigned delivery record by phone or online.Signature Confirmation is scheduled to beavailable to retail and commercial customersin spring 2001.

■ Delivery Confirmation service scan scorescontinue to exceed expectations since theofficial service launch in March of 1999.Also, customer acceptance has been strongwith volume sales topping 100 million, evenbefore the end of the fiscal year in 2000.

■ E/PS, on behalf of Priority Mail, renewed itssponsorship for the “Help Stamp OutHunger” Food Drive conducted annually bythe thousands of members of the NationalAssociation of Letter Carriers (NALC). ThePriority Mail logo appears on each of the100 million plus cards delivered to Americanhomes alerting residents to the upcomingdrive. In 2000, the NALC effort resulted inthe collection of more than 64 millionpounds of non-perishable food that wasdelivered to food banks for the needy acrossthe country. The sponsorship reflects notonly strong support for the drive, but alsoappreciation for the job the carriers do everyday of the year.

■ www.USPSPriorityMail.com. E-commercecontinues to play a significant role in theparcel delivery business and as such, remainsan important focal point for E/PS planningand development. The growth of retail e-commerce (e-tailing) and the correspondentgrowth in consumer package deliveries, hasgive E/PS a key opportunity to help positionthe Postal Service as the preferred onlinedelivery provider for Internet-to-consumerfulfillment. One element of the E/PS pro-gram is the sponsorship of a successfuladvertising program with television, printand direct mail asking the now familiar ques-

tion, “What’s Your e-Priority?” This effort tolink well-known Internet companies withPriority Mail is further supported by thewebsite www.USPSPriorityMail.com. There,potential shippers will find several softwaretools they can download, integrate into theirsystems and use to improve customer serviceby offering Priority Mail.

In addition, the website offers online retailersthe opportunity to utilize the electronic merchan-dise return option, Returns@ease. This option,which has been received enthusiastically in theInternet community, allows a retailer to authorizeits consumers to download and print pre-paidpostage label that can be affixed to the item anddropped in the mail.

The boundaries of the e-commerce revolu-tion have yet to be determined. E/PS remainscommitted to meeting its challenges and equip-ping the Postal Service with the tools it needs tofulfill customer needs.

4. Prime Time TV Advertising And American Business Review TV Program

Since its inception in 1997, E/PS has consis-tently promoted Postal Service products andservices by crafting and placing high-quality com-mercial advertisements and feature programs onnational television. During the Holiday 2000mailing season, E/PS saturated prime commercialair time with advertising spots featuring GlobalExpress Guaranteed, Priority Mail, Express Mailand Electronic Merchandise Return Service

In July 2000, E/PS taped key deliveryindustry spokespersons for a three-minute featuredocumentary highlighting the Postal Service’s everchanging role in the world of e-Commerce. Thisprogram, titled American Business Review andhosted by news anchor Morley Safer, was distrib-uted nationwide for television broadcast inautumn 2000.

5. Selling Integrated Package Solutions

To help equip the Sales force with the toolsnecessary to attain their goal of increasing rev-enue, E/PS helped develop the Selling IntegratedPackage Solutions training program. The jewel inthis program’s crown was the June 1, 2000PSTN broadcast which targeted sales employeesthroughout the nation. This 3-1/2 hour livebroadcast featured a call-in question and answersegment, encouraging viewer interaction.

6. Sales and Service In The Fall Holiday Mailing Season

To reinforce sales force training and toincrease revenue during the Holiday 2000 mailing



season, E/PS and Sales aired the PSTN broadcast,Sales and Service in the Fall Holiday MailingSeason. This live program, broadcast in September2000, contained a call-in question and answer seg-ment, to help ensure viewers’ understanding of thematerial presented.

h. Stamp Services

1. Stamp Program.

In 2000, the Postal Service produced a widevariety of commemorative and definitive stamps.The stamps that were issued were recommended bythe Citizens’ Stamp Advisory Committee (CSAC),recognizing great people and their achievements inthe American experience, important historicalevents and the natural beauty and wildlife of theUnited States.

Of the 23 stamp events held in 2000,numerous significant stamps were dedicated.Among them were the Space Achievement andExploration stamps, which featured a number offirsts. There were four hologram stamps, a circularstamp and five pentagonal stamps. In November,these stamps were selected as the “Best of Show”winner by the International HologramManufacturers Association (IHMA) andReconnaissance International, receiving the topaward for the most outstanding holographic proj-ects for the year 2000. Five Hubble telescopeimages from deep space created a special pane ofstamps issued prior to the World Stamp Expo2000 stamp show. A unique pane of 20 designsfeaturing the evolution of the American flag waswell received by the public and collectors. Stampsfeaturing children’s art, chosen from over 27,000designs submitted depicting the future, also wereissued at the Expo. Our first-ever Prestige bookletof stamps honoring the 100th anniversary of theU.S. submarine force was dedicated in spring2000. Four Distinguished Soldiers includingAudie Murphy, Alvin York, Omar Bradley andJohn Hine, were saluted with stamps, as well asSenator Claude Pepper and Patricia RobertsHarris. Anniversaries were observed throughstamps for the Library of Congress and Californiastatehood. A stamp for adoption was the focalpoint of a massive campaign to build awareness ofthis important issue.

The stamp program for 2001 was successfullycompleted earlier for than past years. The acceler-ated schedule affords earlier development of stampand retail products and earlier release of designs tothe media, field offices and public.

2. Production Activities.

During 2000, significant strides were madein cost reduction, expedited production activitiesand continued environmental affairs.

■ The Year 2000 stamp was issued onDecember 27. Given a mandate to produceand distribute the stamp in record time,Stamp Acquisition and Distribution did sowithin four weeks of receipt of the artworkfrom Stamp Design.

■ March 5–8, 2000 the Postal Service co-sponsored the Technical Association ofPaper Pulping Industries 2000 RecyclingSymposium. During the conference, discus-sion was held regarding the benign adhesiveproject that has been spearheaded by StampAcquisition and Distribution. As a result ofthis effort, the Postal Service was officiallyrecognized by the White House Office ofEnvironmental Policy. An Executive Orderwas released mandating federal agency com-pliance with the benign adhesive protocolspecifications pioneered by the Postal Service.

■ Stamp Acquisition and Distributionexpanded the multi-print pricing tables tomaximize cost savings in producing wateractivated and self-adhesive panes.

■ We continued production of the two-sidedbooklet, first introduced in the spring of1999, with the production of the first two-sided special size definitive booklets. Thisnew innovation increases productivity andreduces production costs.

■ We successfully met all stamp productionand distribution commitments for both the commemorative and definitive stamp programs.

3. Direct Marketing.

The USA Philatelic catalog continues to bethe major mail order vehicle for stamps and stampproducts. Orders are fulfilled through StampFulfillment Services (SFS). A comprehensive listingof all stamps and stamp products available to ourcustomers, USA Philatelic is the source of a majorportion of total philatelic mail order sales revenue.In 2000, sales through SFS, exceeded $111 millionwith the vast majority of sales attributed directly tocustomer orders from the USA Philatelic catalog.Based on customer ZIP Codes, all sales are cred-ited to local offices. Through the catalog, fieldoffices receive unplanned philatelic revenue fromSFS, which require no funding and no fieldresources. The catalog also contributes to increased



philatelic purchases at Post Offices. There weremarked increases in customer response, ordervolume and revenue per catalog. Revenue-basedReturn on Investment (ROI) for Core Customersis over 800 percent. The foreign customer segment(one of the smallest segments) is the most prof-itable, producing an ROI of above 1,400 percent.

Separate multi-year catalog contracts, one forcreative design and the other for printing, con-tinue to result in cost savings of over $1 millionper year. As this design and print process isrefined, costs are expected to decrease even further.

Marketing and “win-back” efforts haveadded more than 115,000 new “core” customersto our database for 2000. Reactivated customersnow make up nearly 14 percent of this core cus-tomer group. The catalog has responded to ourcustomers needs by giving them the informationthey need about our stamps and stamp products— further satisfying the “Voice of the Customer.”

4. Youth Program.

The integrated youth program continued tobuild and nurture relationships with America’syouth at home, in schools and in communities.The Postal Service distributed to Stampers® mem-bers, between ages 8–12, an annual calendar thatfeatured this year’s stamp program; and fourStampers Cool-lectiblesTM magazines which fea-tured this year’s stamps, historical informationpertaining to the stamps and fun, educationalactivities and games. More than 300,000 teachers,educators and librarians received three educationalkits. In addition:

■ The Wee DeliverTM program in elementaryschools continues to be very successful.

■ We successfully partnered with theEnvironmental Management Office insponsoring a Pollution Solution essay con-test. The grand prizewinners of this contestwill receive trips to the Pacific Coast RainForest during the summer of 2001. Over6,000 contest entries were received.

■ We made our National Stamp CollectingMonth materials available on our PostalService website, http://www.usps.com.

■ During World Stamp Expo this year, morethan 3,400 children participated in ourStampers Kids Area activities. The WorldKids’ Congress also was held and the win-ners of the Stampin’ The Future Contestfrom 18 different postal administrationsattended this event.

5. Celebrate the Century.

February 1998 through May 2000, the PostalService issued a series of ten sheets of 15 stampscommemorating each decade of the 20th century.The Citizen’s Stamp Advisory Committee (CSAC)recommended subjects for the first five decades —1900 through 1940. The remaining decades —1950 through 1990 — were selected by nation-wide balloting of the American public. Thenationwide balloting process, which ended in May1999, afforded the public the opportunity tochoose subjects that represented the last fivedecades of the 20th century. Increased interest inthe hobby of stamp collecting during this periodcan be directly attributed to the American public’sinvolvement in the voting process, which allowedthem to select subjects of their choice to appearon stamps commemorating the great people andevents of the century.

In conjunction with the issuance of theCelebrate the Century (CTC) stamps, the PostalService launched the CTC Express Train in March1999. The CTC Express traveled some 25,000miles throughout the nation, visiting over 68 loca-tions in 35 states. CTC sought to deliver America’spast to America’s future, spreading history andgood will, as well as information about the historicvalue of stamps to America’s heritage. Over287,000 visitors toured the train during its 18-month tour. The CTC Express train ended its tourin Savannah, GA, on November 5, 2000.

i. Licensing Program

In January, 2000, the Office of BrandManagement and Licensing, made a decisive step towards implementing a broad scale licensingprogram by competitively selecting Equity Man-agement Incorporated (EMI) as the exclusiveworldwide licensing agency for the Postal Service.Over the past year, Postal Service has been workingwith EMI to increase royalty revenue to a level con-sistent with Postal Service’ intellectual propertypotential.

As a result of this strategic collaboration withEMI, during 2000 Postal Service executed over 25new contracts with licensees. The effect of theseinitiatives has been to begin maximizing PostalService trademark equities and to enhance thePostal Service brand with high quality products,while aggressively pursuing revenue growth.

The Licensing Program also made inroadsinto protecting Postal Service intellectual propertyand brands by communicating internally and exter-nally the consistent message about licensing



requirements. Since early 2000, every response toinquiries regarding Postal Service intellectual prop-erty, including stamp images, has clearly articulatedthat the Postal Service actively protects its copy-rights and trademarks, as well as its otherintellectual property. Organizations wishing to sellproducts bearing Postal Service copyrighted imagesor marks must obtain a license from the PostalService. Furthermore, in conjunction with thePostal Service Law Department, Licensing has beenprotecting Postal Service intellectual property inassets represented by urls such as www.usps.com,and postoffice.com.

In August 2000 senior Postal Service manage-ment issued a memorandum to all Postal Serviceofficers notifying the organization that the Officeof Brand Management and Licensing, is respon-sible for all standards pertaining to the use ofPostal Service intellectual property. This began theprocess of developing an authorized vendor pro-gram to streamline brand protection and brandenhancement. Other existing and pilot projectsinclude selling retail products via the internet, theOn-line Web Store featuring the branded productline, testing and marketing a co-branded productline branded mailing supplies through commercialretail venues.

B. Mail Volume and ServicePerformance

1. Mail VolumeAs shown in Table 2.1, mail volume grew

modestly in 2000 despite a significant declinein First-Class single piece letters1 and growingeconomic uncertainty. Total mail volumeincreased by 6.2 billion pieces to 207.9 billionpieces, a growth of 3.1 percent. For 2001, theprojected total volume growth is one half ofone percent (0.5%). Even this relatively minis-cule growth rate will be difficult to achievehowever, should a recession occur in 2001.

Under the present regulatory system,Postal Service rates are set rigidly in advance ofany “rate cycle” and are based upon antici-pated economic circumstances. This systemrigidly holds the Postal Service to those fixedrates and prohibits the Postal Service frommaking logical, reasonable pricing responses toeconomic and marketplace realities.

Flexible pricing, one of the five essential ele-ments of Postal Reform, would allow the PostalService to accommodate unanticipated increases incosts and to increase mail volumes by offering avariety of pricing incentives to customers. In slowmailing periods, customers could be offered lowerrates whereas premium rates could fairly be chargedfor mailing during high volume mailing periodswhen service is more costly. Such pricing flexibilityis more than a commonplace business practice incompetitive markets; it is a universal necessity.

Revenue in 2000 grew in line with volume.As compared to 1999, First-Class revenue per piecebenefited from higher prices and heavier pieces.The first three months of 2000 benefited fromR97-1 prices when compared with the same weeksin 1999. Average weight per piece was one half ofone percent higher in 2000 for First-Class letters.Offsetting the factors that lead to higher revenueper piece were mix changes resulting in loweryields. One example of the mix change is thatStandard Mail (A) grew faster (5.1 percent) thanFirst-Class Mail (1.6 percent growth). This is sig-nificant because Standard Mail (A) has less thanhalf as much revenue per piece compared to First-Class Mail. Within First-Class Mail, single pieceletters fell 2.6 percent. Although this partly repre-sented the continuing historical shift fromsingle-piece letters to workshared letters, the PostalService has concerns that this decline may resultfrom the loss of traditional applications of the mail.

Within subclasses of mail, revenue yield gen-erally reflected increased customer use ofworksharing discounts. For 2001, the Postal


1 First Class letters refer to First Class letters, flats and irregular parcels and pieces (IPPS), i.e. all First Class other than cards. 2 They were over 41 percent of 2000 revenue and over 44 percent of 1999 contribution.

(millions of pieces)

1999 2000 Projected 2001* Projected 2002*

First-Class Mail 101.9 103.5 103.3 104.7

Priority Mail 1.2 1.2 1.2 1.2

Express Mail 0.1 0.1 0.1 0.1

Periodical Mail 10.3 10.4 10.2 10.2

Standard Mail (A) 85.8 90.1 91.5 94.1

Package Services (formerly Standard Mail (B)) 1.0 1.1 1.1 1.2

International 1.0 1.1 1.1 1.1

Other 0.4 0.4 0.4 0.4

Total Mail 201.7 207.9 208.9 213.0

The Postal Service projects year end losses will be between $2.0 and $3.0 billion in 2001

and between $2.5 and $3.5 billion in 2002. These volume projections fall within these ranges.

TABLE 2.1 HISTORICAL AND PROJECTED MAIL VOLUME BY FISCAL YEAR



Service anticipates that the falling yield per piecewill continue to influence revenue. Key categorieswith above average unit revenue will decline. First-Class Mail will shrink by about 0.2 percent, led byFirst-Class single piece letters, and Priority Mailwill decline. These two categories of mail consti-tute major portions of Postal Service revenue andcover a substantial portion of the Service’s institu-tional costs.2 Standard Mail (A) volume isexpected to grow.(See Table 2.1.)

The projections of mail volumes shown inTable 2.1 reflect a slowing economy, R2000-1rates, and recent experience. Should an actualrecession occur, results could be worse.

Recently, economic forecasters have beenrevising their projections downward. InCongressional testimony, Federal Reserve BoardChairman Alan Greenspan, forecast a “substantialslowdown, on balance, for the year as a whole” andstated that “for the period ahead, downside riskspredominate.” Economic indicators support thesecautions. They show that the manufacturing sectoris in recession and has slowed. Business and con-sumer confidence is unstable and weakening.

Because of this extensive pronounced eco-nomic uncertainty, the Postal Service concludesthat the projections in Table 2.1 do not representthe full range of results that reasonably may beexpected to occur. Taking economic uncertaintyinto account, the Postal Service projects year-endlosses will be between $2.0 and $3.0 billion in2001 and between $2.5 and $3.5 billion in 2002.

2. Service Performance MeasurementFirst-Class Mail service performance results are

measured through the Transit Time MeasurementSystem (TTMS), which measures service perform-ance from the time mail is entered into the systemat an induction point until the time it is received inthe home or small business. TTMS is independ-ently administered by PricewaterhouseCoopersunder a contract with the Vice President andConsumer Advocate.

TTMS’ main goal is to measure service performance from the customer’s point of view.The information gathered determines the effec-tiveness of system performance in satisfyingcustomer requirements. EXFC provides quarterlyestimates of First-Class Mail destination serviceperformance for 85 Performance Clusters, encom-passing 463, three-digit ZIP Codes, from theirovernight, two-day and three-day service commit-ment areas. The network represents 80 percent of

the nation’s originating First-Class stamped andmetered mail volume. The EXFC measurementsystem has been in existence since 1990. Theindependent TTMS showed an average nationalovernight performance of 94 percent for 2000.National service performance for two-and three-day service commitment areas averaged 86 and 84percent respectively.

Measuring customer satisfaction is an ever-evolving process. Customer SatisfactionMeasurement (CSM) is composed of three dis-tinct processes: one that measures residentialsatisfaction CSM-R, one that measures businesscustomer satisfaction CSM-B one that measuresevent-based customer satisfaction CSM-EVB.

The CSM survey also supports the goal ofthe Voice of the Customer under theCustomerPerfect! process. Customer satisfaction ismeasured independently by The GallupOrganization through a contract with the VicePresident and Consumer Advocate.

The CSM-R results showed that 92 percentof the nation’s households rated their overall satis-faction with the Postal Service as “excellent,” “verygood,” or “good” at the end of the fiscal year. TheCSM Residential survey was redesigned in 2000 tobetter reflect consumers’ current expectations ofdelivery products and services and to bettermeasure postal corporate strategies. Given thechanges in technology and the marketplace, anoverhaul of the questionnaire was warranted.Additional questions anchored in observablebehaviors were included to provide more action-able data to field postal managers. The revisedCSM Residential survey was implemented inSeptember 2000.

For the CSM-B, national accounts reported anoverall satisfaction rating of 95 percent, an increaseof 2 percent over the same period last year. Thesebusiness customers have been identified as thePostal Service’s largest customers. Approximately250 accounts are designated as National Accounts.

The Premier accounts reported an overallsatisfaction rating of 92 percent, a decrease of 1percent over the same period last year. These arethe second largest group of business customers.There are approximately 12,000 Premier accounts.

Business accounts reported an overall satis-faction rating of 90 percent, unchanged from thesame period last year. Business accounts are allother business customers not identified asNational or Premier Accounts. See Table 2.2



As the Federal Benchmarking Report recentlystated, organizations need to operate with a senseof urgency. There are two types of companies; thosethat recognize customer needs and meet them thosewho either do not recognize the need, or refuse tochange. For the Postal Service, the marketplace dic-tated the change and we responded.

3. International MailDuring 2000, International Business focused

on developing key international markets; improvedcommunications and service with customers,restructured its product offerings reaffirmed its rela-tionship with foreign postal administrationsthrough joint product development.

a. New Services

The Postal Service has made its new GlobalExpress Guaranteed Service (formerly Priority MailGlobal Guaranteed) a permanent service offering.This premium expedited service is offered via analliance with DHL Worldwide Express, Inc. Theservice has been expanded to nearly all countriesand now includes merchandise as well as docu-ment service.

To better serve the North American market,the Postal Service and Canada Post Corporation(CPC) launched Xpresspost, a priority retailproduct offered in Canada serving destinations inthe United States. The product benefits from worksharing in that it is drop shipped by CPC to sixhubs in the United States having been first pre-sorted at origin to addresses in the service area ofeach U.S. hub. Likewise, the Postal Service, withthe cooperation of CPC, continued its deploymentof Admail service into Canada, a service that meetsthe needs of commercial customers in the UnitedStates. In addition, International Business recordedsignificant first year volume and revenue resultsfrom the introduction of International PriorityAirmail (IPA) service to Canada. All three initia-tives have been designed to satisfy and enhance theexpanding requirements of cross-border customersin both countries.

b. Volume and Revenue

In 2000, international mail totaled 1.028 bil-lion pieces and generated $1.654 billion in revenuerepresenting increases of 0.2 percent and 1.8 per-cent, respectively, compared to the prior fiscal year.International mail revenue is primarily derivedfrom outbound air and surface letter post items,parcels, Express Mail International Service (EMS),International Surface Airlift (ISAL), IPA and pay-ments by foreign postal administrations for thehandling and delivery of foreign origin mail. Thesepayments include internal air conveyance, transitcharges, imbalance charges, terminal due andinward land rates.

Airmail service accounted for 59.7 percent of outbound mail volume and 54.5 percent of therevenue. Airmail volume of 613.9 million piecesdecreased by 5.2 percent principally due to ero-sion in airmail letters, cards printed matter,although air parcels showed a modest gain of 3.3 percent. Airmail revenue of $901.33 were vir-tually unchanged from 1999, with gains inprinted matter (1.8 percent) and parcels (7.5 per-cent) being nearly offset by declines (2.4 percent)in air LC. The increases in component revenuereflect the May 1999 international rate adjustment.

EMS recorded a 7.5 percent gain in revenueon a 6.9 percent increase in volume. ISAL posted a4.1 percent gain in volume with a corresponding3.5 percent increase in revenue to $95.7 million.IPA posted a remarkable 60 percent revenuegrowth on a 107 percent increase in volume. IPAperformance reflected the results of market-basedpricing first introduced during 1999.

c. Product/Rate Restructuring

The international product line and priceswere restructured to make it easier to do businesswith the Postal Service. The changes, developedduring 2000, become effective January 2001.Content-based rate distinctions were eliminatedfor retail customers and our product lines werereorganized according to delivery speed. Pricinganomalies that have confused customers andemployees were eliminated; our prices now clearlyreflect differences in delivery speed and reliability.The rates most international mailers pay were sim-plified. Twelve different rates for documentsweighing 1 ounce or less were replaced by tworates: 60 cents for North America and 80 cents forthe rest of the world. Other changes were made tothe international rates to ensure appropriate levelsof cost coverage. Categories of mail that have con-sistently lost money or that cannot be offered at

(in percent)

Performance by Quarter 1st 2nd 3rd 4th

National 93 92 94 95

Premier 93 92 93 92

Small/Large Business 89 90 90 90

Residential 92 92 92 92

TABLE 2.2 CUSTOMER SATISFACTION: BUSINESS AND RESIDENTIAL PERFORMANCE IN 2000


reasonable prices given the level of service wereeliminated. International rates have always beenorganized by groups of countries to reflect differ-ences in transportation and foreign delivery costs.These country groupings were updated to reflectsignificant changes in foreign delivery charges setby the Universal Postal Union.

d. Cost Management/Cost Reductions

The Postal Service has limited control over two-thirds of the costs it incurs to provide internationalmail service. Payments made by the Postal Service toforeign postal administrations for the delivery of ouroutbound, international mail constitute 50 percent ofthe total costs of outbound international mail. Therates postal administrations pay for foreign deliveryare, for the most part, established by the UniversalPostal Union (UPU) at international meetings heldevery five years. Another 16 percent of the costs ofproviding outbound international mail service are forinternational transportation. The Department ofTransportation sets the prices the Postal Service pays toairlines for transporting mail overseas.

The Postal Service has some ability to influ-ence the decisions made by the UPU. The UnitedStates actively participates in working groups estab-lished by the UPU to propose adjustments toforeign delivery rates that better align with deliverycosts. Our efforts have been focused on makingthese payments reflective of actual delivery cost. Wealso establish bilateral agreements with individualcountries when we believe such agreements yieldrates that more accurately reflect delivery costs.

e. Growing Inbound Business Traffic

International Business has developed agree-ments with private international mail consolidators,large international customers and foreign postaladministrations to generate new inbound interna-tional revenue. Under the agreements, the providersaccept shipments and transport them to the UnitedStates. for delivery by the Postal Service, primarily asPriority Mail, at full, published domestic rates. Thespecific international markets targeted for theseagreements are Europe, Canada, Mexico, LatinAmerica, Asia/Pacific and other emerging markets.

f. State Department Coordination

In 2000, the Postal Service has continued towork in cooperation with the U.S. Departmentof State, which has primary responsibility to for-mulate, coordinate and oversee policy withrespect to U.S. representation in the UPU. TheDepartment of State leads a consultation process

on postal policy issues with all stakeholders,including the Postal Service, other governmentagencies, customers and private providers ofdelivery services. This responsibility was grantedto the Department of State through legislationthat Congress passed in October 1998. TheDepartment of State’s role is to ensure that thePostal Service not enter into any agreement thatprovides any undue or unreasonable preference tothe Postal Service, a private provider of postalservices or any other person.

In addition, the Postal Service, Departmentof State and Postal Rate Commission agreed tosponsor a joint study of the remail provisions ofArticle 43 of the Convention of the UPU andtheir impact on key stakeholders. The results ofthis study, carried out by an independent con-sultant, shall contribute to formulation of U.S.policy on the fees postal administrations pay forthe delivery of international letter mail. ThePostal Service shall also continue its effortsthrough the UPU to implement a more cost-based terminal dues system for industrializedcountries with a link to service quality in 2004.This system, adopted at the UPU Congress inBeijing in 1999, provides a transition to a morecost-based terminal dues system for all countries.

The Postal Service also participated on theU.S. delegation to the UPU High Level Group,which was created by the Beijing Congress in 1999to address issues of UPU reform and wider partici-pation by key stakeholders in postal issues. Thisdelegation was led by the Department State andincluded representatives from other governmentagencies and the private sector.

g. Customs Service

In 2000, the Postal Service, in conjunctionwith the U.S. Customs Service, initiated a jointstudy, mandated by Congress, to develop an oper-ating agreement regarding enforcement of customslaws. This study will address inspection of inboundand outbound items, electronic manifesting,timely collection of fees, targeting and other issuesof parity in the treatment of the Postal Service andprivate carriers by Customs.



C. Mail Distribution

1. Automation ActivitiesThe Postal Service continues to focus on

automating mail distribution operations toimprove efficiency and reduce costs. The founda-tion of this effort is based on bar codetechnology, which includes generating bar codedmail, processing bar coded mail in automatedoperations and adjusting the workforce as neces-sary to capture savings.

a. Letter Mail Automation

In 2000, customers generated over 83 billionbar coded letters, representing about 59 percent oftotal letters. The Postal Service generated bar codesfor another 43 billion — about 30 percent of allletters. Of the bar codes we generated and appliedto letters, Multiline Optical Character Readers(MLOCRs) and the Remote Bar Coding System(RBCS) each accounted for about 20 billion.Other operations accounted for the remainder.

1. New Equipment and Software

During this year, the Postal Service continuedits campaign to improve automated processing ofletter mail through deployment of additional hard-ware and software. New automation equipment isallowing postal operations to keep pace with theincreasing volume of letter mail.

The deployment included 332 Delivery BarCode Sorters (DBCS), 194 Input/Output Sub-System Kits (DIOSS) 429 Output Sub-System Kits(OSS). This equipment allows mail that was beingprocessed manually to enter the automated mailstream, thereby reducing work hour requirements.

During 2000, the Postal Service worked toincrease the physical limits of mail that can beprocessed on automation equipment, thusincreasing the amount of automated mail andreducing the amount of manual mail. Currently,about 8 percent of letter mail is processed manu-

ally. Yet it accounts for one-half of the total lettermail processing labor costs. Letters can beprocessed using automation equipment at one-tenth the cost of manual processing.

In support of this effort, six prototypeDelivery Bar Code Sorter Expanded Capability(DBCS-EC) machines have been deployed at threemajor processing plants. Near the end of the year,a contract for an additional 106 ExpandedCapability kits was awarded. These EC kits, whenadded to our existing DBCS machines, will allowthem to process a wider range of mail than is cur-rently possible. The DBCS-EC machines will becapable of handling flimsy mail pieces, thick andheavy mail pieces items such as compact discs.

Letter mail recognition rates continued to risein 2000 as we deployed additional hardware andsoftware upgrades for our existing Multi-lineOptical Character Reader (MLOCR) equipmentand Remoter Computer Readers (RCRs). The RCR2000 program targets a 75 percent handwrittenaddress encode rate with incentives based on incre-mental performance improvements. The systembaseline for this program was a 57 percent hand-written encode rate by the end of 2000, this ratehad risen to 72 percent. The RCR 2001 program isprojected to yield over an 80 percent encode rate by2002 without adversely affecting the error rate.

The Recognition Improvement Programprovides hardware and software enhancementsfor resolving primarily machine-printed addresseson letter mail. During 2000, we conducted acompetitive test of four suppliers that had sub-mitted proposed recognition improvements.Development of these improvements was accom-plished at their expense and the Postal Servicewas able to select those with the highest returnon investment. The evaluation was based on“system encode rate improvement” consideringboth the on-line MLOCR equipment and theoff-line RCR and their respective potential costsavings. This program resulted in a 6 percentimprovement in the system encode rate.

During 2001, the Postal Service will betesting and deploying additional handwrittenand machine-imprint recognition improvements.Incrementally released software enhancementswill be evaluated and purchased on a pay-for-performance basis.

2. Remote Encoding CentersWhen all electronic means of resolving

address information have been exhausted, the mailpiece image is sent to Remote Encoding Centers

Automated Flat Sorting Machine (AFSM) 100s 362

Collection and Delivery Vehicles 2,400

CSBCS Stacker Modules 353

Delivery Bar Code Sorter Expanded Capability Kits 106

Mail Entry Verification Systems 200

Parcel Singulators/Readers 42

Recognition Improvement - Typed & Printed Addresses 1,086

Small Parcel and Bundle Sorter Control Systems 192

TOTAL 4,741

TABLE 2.3 NEW CONTRACTS WERE AWARDED FOR:



(RECs) where operators use video display terminalsand keyboards to process the address information.Providing partial RCR results with the image oftenallows the operator to process the address withminimal keystrokes. The results of RBCS activitiesare bar codes sent electronically to a bar code sorter.There, the bar code is applied to the mail piece,keeping it in the automated mail stream.

Since September 1999, reduced keyingrequirements due to recognition improvementrates have allowed us to close 23 of the original 55RECs. By June 2001, we plan to close an addi-tional five. That will reduce the number RECs stillin operation to 27. Other consolidation optionsalso are being considered that could result in theclosure of four additional RECs.

3. Process Improvements

a. Sorting Technology

The Identification Code Sort (ICS) Systemenables mail pieces with unreadable POSTNETbar codes to be sorted by reading the unique mailpiece identification tag and obtaining the associ-ated ZIP Code, using a database lookup of theRCR or REC-derived result. The ICS Systemeliminates the need to relabel and reprocess thesemail pieces, saving two additional passes throughthe bar code sorters as well as associated labor andlabel material costs.

■ The ICS system is being added to all of ourexisting bar code sorters, including DeliveryBar Code Sorters (DBCSs), Carrier SequenceBar Code Sorters (CSBCSs) Mail ProcessingBar Code Sorters (MPBCSs). When deploy-ment is complete in early 2001, over 9,000bar code sorters will have been retrofittedwith an ICS upgrade kit. This upgrade isincreasing bar code sorter efficiency.

■ We nearly completed deployment of 438 Manual Modification kits for ourMLOCRs during 2000. This enhancementallows the MLOCRs to process a wider rangeof mail, including thick mail pieces that pre-viously had to be sorted manually. Thismodification has improved the machine’sperformance by reducing the jam rate, whichis resulting in higher throughputs andreduced mail damage.

■ The Postal Service awarded a contract todesign, manufacture and deploy 353 CSBCSStacker Modification Kits during 2000. This21- or 25-stacker addition will provide the

CSBCS with the capability of sorting to agreater number of delivery points eventhough the volume of mail in the route (orcombination of routes) may not havechanged. The operating window will con-tinue to be met. Bin overflows, manualprocessing requirements, processing costs anddelays in getting mail to the carrier will begreatly reduced. Deployment of the kits isexpected to begin in spring 2001.

b. Flat Mail Automation

Over 45 billion pieces annually fall into theflat mail category. In 2000, customers generatedbar codes for almost 39 percent of them. Postalcomputer forwarding system activities also gener-ated a small percentage of bar codes as part of theforwarding process.

■ An important addition to our automationprocessing capability has been theAutomated Flat Sorting Machine (AFSM)100. Deployment of 175 AFSM 100s beganin April 2000 and is scheduled for comple-tion in January 2001. This machine isallowing us to sort flat mail in the most effi-cient, cost-effective way possible by using thelatest technologies available. Its enhancedfeatures have enabled us to expand the bene-fits of automation to the flat mail stream.These features include three automaticfeeding stations yielding a throughput ofover 17,000 pieces per hour, OCR readingwith on-line video coding (i.e., real-timekeying) of OCR rejects and a tray take-awaysystem with adaptability to robotic handlingsystems. This initial purchase is providingadditional flat sorting capacity. Deploymentof another 362 AFSM 100s, which will pri-marily be used to replace our older and lesscapable FSM 881s, is scheduled to begin inJanuary 2001 and end in April 2002.

■ We also are planning to add automatedfeeders and optical character readers to allFlat Sorting Machine (FSM) 1000s, whichwill result in higher machine throughputsand lower staffing requirements. Thesemachines are able to process the mail thatcannot be handled by our primary flatsorters, the FSM 881 and AFSM 100,including newspapers and poly-wrappedmaterial. During 2000, we conducted a com-petitive test of these enhancements. Weexpect to award a contract for their purchase



in early 2001, with deployment expected tobegin in 2002.

■ The Postal Service has nearly completeddeployment of PLANET/CONFIRM capa-bility for flat mailers. This program isdesigned to meet the needs of a number ofcustomers, particularly national mailers whowant to improve their business processes orrefine customer data. PLANET/CONFIRMprovides mailers information regarding originor destination confirmation, address correc-tion, forwarding tracking. During 2000, thiscapability was added to the FSM 881s andFSM 1000s; it will be extended to the AFSM100s in early 2001.

c. Parcel Automation

The increase in bar coded packages is drivingefforts to improve processing efficiency, includingpackage singulation. During 2000, we awarded acontract to purchase 42 Parcel Singulator InductionUnits for deployment to our Bulk Mail Centers(BMCs). These singulators will reduce the laborrequired to process parcels.

■ During 2000, we deployed 49 new SmallParcel and Bundle Sorter (SPBS) FeedSystems, bringing the total number in use to264. Eight additional feed systems are sched-uled to be deployed during 2001. Each ofthese systems feeds one SPBS, reducing alliedlabor required to feed the SPBS equipment.

■ We also worked on the development of anext-generation sorter that takes advantage ofthe latest technology available to performsmall parcel and bundle processing. This newequipment, known as the AutomatedPackage Processing System (APPS), willautomate the existing package processingnetwork by providing automatic package sin-gulation and address reading through anOptical Character Reader/Bar codeReader/Video Coding System(OCR/BCR/VCS). The APPS will be com-patible with the Postal Service’s InformationPlatform and will provide the capability ofin-route tracking of Delivery Confirmationcodes. The APPS includes automated con-tainer unloading at both ends of the machineto support the high throughput require-ments. The camera tunnel consists of anarray of cameras positioned at differentangles to capture multiple images of a mailpiece (six-sided imaging). As mail moves bythe cameras, they record the images of the

different surfaces on the package. Theseimages go to an OCR/BCR processor thattries to determine the correct ZIP Code andthe type of package (letter, flat bundle orparcel). Unresolved images go to the VCS formanual coding. A competitive test is plannedfor Spring 2001 and an APPS productioncontract award is expected shortly thereafter.

d. Other Automation ■ In an effort to automate the labor intensive,

manual process of evaluating mailings forautomation compliance at Bulk Mail EntryUnits, (BMEU) the Postal Service hasdeveloped a Mailing Evaluation Readabilityand Lookup INstrument (MERLIN).MERLIN is able to perform multiple mailverifications (mail height, weight, length,width, etc.) as well as bar code analysis forboth letters and flats. It can produce all thereports necessary for the acceptance of amailing. The 200 MERLIN units purchasedby the Postal Service this year are scheduledfor deployment during 2001.

■ Development of the Postal AutomatedRedirections System (PARS) continuedduring 2000. This system will handleUndeliverable-As-Addressed (UAA) lettermail more efficiently than today’s process.The UAA mail will be intercepted earlier inthe sorting process, resulting in a reductionin total handlings and reduced processingcosts. The initial phase of this program willfocus on improvements to our Change ofAddress forms processing system.

4. Material HandlingLong recognized as a leader in the material

handling environment, the United States PostalService uses the latest in robotic and other materialhandling technologies to accomplish its global mis-sion of providing uniform service to the public.

■ This year the Postal Service extended itsdevelopment of sophisticated material han-dling systems to include additional TrayManagement Systems (TMSs) and the devel-opment of a Universal Transport System(UTS). Common to both systems is theability to automate the movement of letterand flat trays. These trays of mail are trans-ported, based on operational need, to eachseparate area in the plant where mail isprocessed and then from the last processing




operation to dispatch. Featuring state-of-the-art material handling technologies andinformation systems, this equipment willenable the Postal Service to contain workhour growth while providing for improvedwork and information flow within our pro-cessing plants.

The UTS supports the Integrated ProcessingFacility (IPF) vision and includes significant mailtracking capabilities. The first UTS is beinginstalled at the IPF in Ft. Myers, FL and isexpected to be operational in early 2001.

■ Another technology under development isAutomated Guided Vehicle (AGV) systems.This technology is used in other industriesand is being customized to support Postalapplications. AGVs are computer-controlleddriverless vehicles that can be used to trans-port containers of mail to and from truckload and unload operations and betweenplant operations. Implementing AGV sys-tems will reduce facility manual labor hoursby automating container movement nor-mally done by people. AGV control systemsare planned to connect with other systemssuch as UTS to enable facility informationmanagement and tracking of mail. One suc-cessful installation has been completed thisyear at the IPF in Ft. Myers, which cur-rently has three AGVs in operation. Moredeployments are expected after the tech-nology has been refined. This is anothersystem that will support the IPF’s auto-mated processing environment.

■ During 2000, the Postal Service begandeployment of new rectangular array robotsand Automatic Airline Assignment systems.Additional material handling technologiesthat have been developed and will be univer-sally deployed during 2001 includeequipment that will automatically removethe sleeve (or covering) from different typesof letter mail trays. This equipment willremove the shipping strap from the tray thatholds the sleeve in place. The mail tray willthen be held in position with robotic armswhile a separate mechanical device removesthe tray from the sleeve. The tray continuesto be processed and the sleeve is saved forreuse in dispatch operations. Similarly, whenmail is ready for dispatch form the facility,trays of mail must have sleeves and strappingapplied to secure the mail during transport.

■ In addition to improvements in the handlingof our letter mail, development is on-goingfor automating the handling of larger piecesof mail called flats. Flat mail, such as maga-zines and periodicals, is transported in traysthat have lids. These flat trays are alsostrapped to prevent damage during ship-ment. An automatic flats unlidder has beenprototyped and pre-production units will bedeployed during 2001.

These pieces of equipment will automatethose current manual tasks required to prepare andpresent both letter and flat mail trays for their var-ious downstream processing operations as well asfor dispatch. This will provide for a more auto-mated and controlled processing environment.

a. Tray Management System

The Tray Management System (TMS) is anintelligent material handling system used to supportletter and flat mail operations in some of our majorprocessing plants. It has improved plant efficiencyby providing an even flow of trayed mail from oper-ation to operation. This equipment, which isproviding mail at the right place at the right time, ishelping to optimize operating schedules, reducecycle times and improve employee productivity.

This year, the Postal Service continueddeployment of TMS at existing and new facilities.In addition to the three original prototype sites(Ft. Lauderdale, FL; Charlotte, NC; andMiddlesex-Essex, MA), 17 facilities now haveoperating systems. Design and/or installation workis underway at 11 additional sites.

This year saw the design, development instal-lation of a Universal Transport System in our pilotIPF located in Ft. Myers, FL. The UTS expandsthe automation of container mail from trays toinclude most all postal products such as parcels,parcel trays, mail cartridges, rigid trays, sacks andbundles. With its increased information gatheringcapabilities and expanded product lines, the UTSwill form both the physical and informationalbackbone of the IPF. Fully functional by earlyspring 2001, the UTS will form the connectingnetwork for various robotic cells both at dispatchand with the introduction of the Mail CartridgeSystem, for individual piece letter mail processingsystems. The combination of these technologieswill provide the Postal Service with the ability toaccommodate increased volumes in this demo-graphically expanding area while reducing costs,increasing throughput and providing a betterworking environment for our employees.


b. Automated Seamless Dispatch System

The Automated Seamless Dispatch Systemwill automate, streamline and organize mail dis-patch operations. It consists of three primarymaterial handling components: the AutomaticTray Sleeving (ATS) system, the Automatic AirlineAssignment (AAA) system and the RoboticsContainerization System (RCS).

Deployment of 123 ATS systems, whichautomatically sleeve all sizes of fiber board orplastic letter trays used in Postal operations, isexpected to begin in January 2001.

The AAA system is designed to automaticallyprocess sleeved and strapped letter mail trays orflat tubs for integration into a facility’s tray dis-patch line. Deployment of 222 AAA systemsbegan in October 1999 and is expected to end inJuly 2001. The Semi-Automatic Scan Where YouBand (SASWYB) devise is a related material han-dling unit which provides a semi-automated meansof processing and assigning all types of mail to air-line flights. It is designed to efficiently scan thedistribution label, weigh the item and dischargethe mail piece after the operator attaches theprinted Dispatch and Routing label. Deploymentof 166 SASWYB devices is expected to begin inMarch 2001.

The RCS is designed to automatically sortand load letter trays and flat tubs into a mail con-tainer or onto a pallet for dispatch. Letter and flattrays are forwarded to the dispatch area either man-ually or via conveyors. Sorting and loading traysinto the proper dispatch container is now a manualoperation. The RCS is a self-contained module thatcan be integrated into the site’s existing source con-veyor system. It is equipped to automatically sortall letter trays and flat tubs into a mail container oronto a pallet for dispatch. RCS automatically takesmail off the conveyor and distributes trays and tubsinto containers at up to 24 positions. It is com-pletely enclosed by a safety system, eliminatingpotential safety hazards to employees working inthe area. Deployment of 100 RCS units is expectedto finish by September 2001.

These systems are critical new componentsthat support dispatch operations and will beintegrated with UTS and other systems to pro-vide information-rich, automated materialhandling operations.

c. Mail Cartridge System (MCS) and DirectConnect System (DCS)

During 2000, the Postal Service continueddevelopment of the Mail Cartridge System (MCS)

and the Direct Connect System (DCS), which arethe results of prior research efforts associated withthe Integrated Buffer System. The MCS is a keydevelopmental area for automating the feeding andsweeping of Delivery Bar Code Sorters. It providesan automated feed system that will recirculate localmail for two-pass sorting and, by replacing theDBCS sort pockets with a lightweight bar codedcartridge, allow robotic sweepside equipment toremove full cartridges and sort them onto racksaccording to their destination. MCS will eliminatework hours associated with feeding and sweepingthe DBCS while also reducing sweeping errors.Testing of a pre-production MCS unit is scheduledfor February 2001.

The DCS automatically transports mail froman Advanced Facer Canceler System (AFCS) to aDBCS. It allows the mail processed by an AFCS tobe routed directly to a DBCS by accepting theletter mail stream from the AFCS, properly ori-enting the mail pieces, moving them throughoverhead transports to the sorting area thenfeeding the mail into a DBCS. A prototype systemis currently operational at the IPF in Ft. Myers,where it is processing about 50,000 pieces of maileach day. Following successful completion of aformal test of the system in early 2001, we expectto make an initial purchase of 200 DCSs. Thesesystems will allow use of the existing feeders on theDBCS so that mail can be manually fed to supple-ment the flow from DCS during times when nomail is being sent through it.

5. Integrated Processing Facility (IPF)The Operations Strategic Action Plan was

implemented in May 1996. One objective of thisplan was to substantially alter the future operatingcost structure of our plants. To achieve this objec-tive, the Postal Service devised a long-term strategyfor reducing the labor intensity of processing oper-ations by creating a network of highly automatedprocessing plants called Integrated ProcessingFacilities. The process of planning and imple-menting new technologies and new processescontinues to be demonstrated at the working IPFin Fort Myers, FL.

When fully operational, the IPF will be acompletely automated processing facility. It willintegrate such technologies as Robotics, image liftat the Advanced Facer Canceler System, the DirectConnect System, the Mail Cartridge System, intel-ligent material handling systems, AutomaticGuided Vehicles and numerous other initiatives



related to the processing of letters, flats and pack-ages. Once these and future technologies are fullyintegrated, the IPF will be the processing plant ofthe future with a significant reduction in the needfor manual labor to load, transport, unload, feedand sweep machines.

This year an AFSM 100, two RoboticContainerization Systems and three AGVs havebeen installed and accepted. The Integrated BufferSystems were removed and replaced with DCS.Installation of the UTS and the first MCS is cur-rently underway with acceptance expected inSpring 2001. Simulation of the mail flows withinand between these various technology componentshas continued design planning has taken place forthe creation of a facility-wide IPF control systemto tie all of the elements of the IPF together.

The IPF is a multiyear program and signifi-cant progress was made along several fronts this year. Next year, major equipment installationsand continued system integration are planned forthe IPF. The Postal Service is striving to completethe first IPF at Ft. Myers by 2008.

6. Support Systems for Mail ProcessingCurrent cost savings initiatives have redi-

rected the Logistics’ focus to maintaining criticalsystems and replacing obsolete ones.

a. Transportation Information ManagementEvaluation System (TIMES)

TIMES is a data collection system designedto track highway contractor performance as well asmail volume and content. TIMES is currentlyoperational in approximately 460 P&DCs, AirMail Centers (AMCs) Airport Mail Facilities andat the hub-and-spoke program sites.

b. Dedicated Air Tracking (DATS)

The Postal Service Dedicated Air Operationsgroup controls the consistency of the movement ofmail on postal dedicated aircraft through several airnetworks including the Expedited Aircraft Network(ANET), the Daytime Dedicated Network(DNET), the Western Expedited Network(WNET) Christmas Dedicated Networks (CNET).DATS provides the Postal Service with the infor-mation and tools to monitor air and truckoperations within these dedicated air networks, tosupervise air cargo contractors involved in movingthe mail, and to supply accurate and timely reportsto postal management. DATS allows users to trackand manage mail from either a hub or Point-To-Point (PTP) network perspective.

DATS provides real-time operational data thatallows users and managers to manage the trans-portation of expedited mail, and to review thecurrent day’s operations. The information and auto-mated tools provided by DATS assist users inensuring that service standards are achieved, dedi-cated aircraft are effectively utilized, and operationalalerts are dealt with on a timely basis.

DATS manages all dedicated postal networks24 hours a day, 52 weeks a year, providing a wealthof timely operational information to all levels ofpostal management. It represents the latest in com-puter technology and provides the Postal Servicewith a solid foundation for further improvementsin the management of its dedicated air networks.

c. Surface Air Management System (SAMS)

In 1998, the Postal Service initiated a projectto design, develop and provide national implemen-tation of a SAMS. The system was designed to bean integral component of a standardized dispatchprocess known as ASD.

The SAMS server utilizes a routing file fromour nationally hosted planning system — NationalAir and Surface System (NASS). Headquarters andArea office personnel use NASS to set optimalroutings based upon mail class, dispatch window,existing transportation and the service standard forthe origin and destination city pair.

The SAMS server provides an individualrouting assignment, with unique serial identifica-tion, to each item presented for dispatch at one ofthe ASD workstations. The routing assignmentand serial number are bar code printed on a self-adhesive tag, which is applied to the item beingdispatched. The bar-coded tag will enable down-stream data collection that can be used for internalperformance and contractor compliance measures.

An initial stress test of SAMS was conductedin Grand Rapids MI and a field trail is currentlyunderway at the Washington Dulles Airport Mail Center and surrounding facilities in theCapital Metro and Mid-Atlantic Areas. The fieldtrial will continue through the Christmas 2000operating season. Network Operations manage-ment will analyze the results from the field trialwith a view toward determining a timetable fornational deployment.



D. Delivery Unit Operations

1. Delivery Point Sequencing (DPS)Today, over 9,600 zones receive their mail in

Delivery Point Sequence order. These 9,600 zonesaccount for over 80 percent of all city carrierroutes and 58 percent of our rural routes, witheach route averaging approximately 1,300 DPSletter pieces daily.

At the end of 2000, the number of citydelivery points was approximately 83.2 million,rural deliveries totaled approximately 29.7 million,Post Office box deliveries were 19.7 million, andhighway contract routes served 1.9 million deliv-eries, for a total of 134.5 million delivery points.

2. Delivery Operations Information System(DOIS)

DOIS replaces the Decision SupportInformation System (DSIS) and the RouteExamination System (RES). DOIS was designed toprovide actionable data to Delivery UnitSupervisors, assisting them in managing the in-office activities, planning of the street activities andmanaging the route inspection and adjustmentactivities. Used properly, the actionable data pro-vided by DOIS will assist the Delivery UnitSupervisors in making sound business decisionsrelated to carrier operations.

In 1998, the Board of Governors approvedthe DOIS Research and Development initiative.The research and development phase concluded inDecember 1999. The Board of Governorsapproved a plan to deploy the system nationwidein August 2000, with deployment to the first threeArea’s beginning in spring 2001. Nationwidedeployment will be completed by March of 2003.

DOIS is currently deployed to 343 deliveryunits in six Customer Service Districts — NewHampshire, Salt Lake City, Sacramento, Erie,Lancaster and Fort Worth.

3. Mobile Data Collection DeviceIn March 1999, the Postal Service launched its

Delivery Confirmation service for Priority Mail andparcels. In addition to Priority Mail and parcels, thenew system supports Express Mail, internationalshipments and accountable mail. The main goal ofDelivery Confirmation is to provide date and timeof delivery or attempted delivery verification. Amajor technology component of this service is theMobile Data Collection Device (MDCD) hand-held scanner. Over 325,000 hand-held scanners are

deployed to 36,000 postal facilities to capturedelivery data at the point of delivery. The scannersare also used to support data acquisition for theCollection Box Management System. The MDCDsystem provides an infrastructure that enablesgrowth and expansion. Signature Confirmationservice is another initiative that will be supportedwith the MDCD. It will be launched in 2001.

E. Retail Programs

1. Marketing CalendarA major target for improvement is the use

of in-store marketing materials and the planningand execution of retail promotions. Traditionalcustomer communications have been a functionof discrete promotional efforts produced as partof a larger product promotion. Once a promo-tional “window” was closed, there was little orno ongoing information to help guide customersor support ongoing revenue-generation programsfor products such as Priority Mail.

Managed by headquarters and coordinatedthrough the Areas, the calendar concentratesadvertising resources against products targetedfor growth and periods during the year whencustomers are most willing to buy. These times,called drive periods, include Holiday, Valentine’sDay, Tax, Spring, Summer and Fall.

With the new fiscal year, Retail Marketingwill continue to implement promotions andcommunications in all Post Offices and contractoutlets to ensure that all customers see consis-tent branding.

Each drive period campaign will include anappropriate level of stamp-themed products anddisplays, in-store promotional support,employee communications, consumer and smallbusiness direct mail advertising. Holiday andSpring are major campaigns that will featurenational television and magazine advertising,local radio and print ads. The remaining cam-paigns will include a mix of local radio andprint advertising.

Sustaining point-of-purchase systems are animportant component of retail marketing andcommunications. These systems, composed ofstandard product/service signs and hanging hard-ware, provide fixed, semi-permanent promotionof Priority Mail®, Express Mail®, Global PriorityMail®, International Express Mail®, Priority MailGlobal Express Guaranteed ServiceTM and special



services. Standard elements include menu boardsto hang at the full-service counter along withcompanion banners in the self-service area, PostOffice box full-service lobbies.

2. Retail SalesRoughly 89 percent of all retail revenue and

96 percent of all retail operating expense accruefrom the Postal Service’s classified Post Officeand contract unit full-service options. They areaugmented by Stamps By Mail, over 32,000vending machines and stamp sales at thousandsof commercial retail outlets and ATMs.

Retail is the way most Americans buy anduse mail. This provides local access for the coreproduct applications of correspondence andtransaction mailing, domestic and internationalpackage shipping and special services, includingdelivery through more than 18 million PostOffice boxes. Our major customer segments aresmall businesses and consumers (customers whouse the mail for personal, rather than businessreasons). It is estimated that consumers and smallfirms generate Postal Service retail revenue of$7.4 billion and $8.7 billion, respectively(meters, permits and corporate accounts notincluded).

3. Point-of-Service One (POS ONE)In 2000, the Postal Service continued the

rollout of a new point-of-service system designedto take advantage of commercial learning andtechnology. POS ONE is replacing current inte-grated retail terminals (IRTs) with state-of-the-art hardware and software, along with sup-port services and training. Postal customersreceive improved and timely information aboutavailable services and have immediate access tooptions and costs to make quick, informed deci-sions. Future key features will includeautomated, online check and debit/creditauthorization, bilingual customer displays andimproved inventory management.

By the end of December 2000, POS ONEwas deployed to 7,650 sites with plans for greaterexpansion in 2001.

POS ONE is enabling the development of aretail data warehouse for collecting, storing,linking and reporting critical business informationused for sales and market analysis. Informationabout products and services will be readily avail-able for retail sales personnel, assisting both thecustomer and the employee.

4. Retail Workforce StrategiesEmployees in the retail workforce influence

customer perceptions of the Postal Service everyday customers are rating their experiences favorably.Beginning in January 2000, a series of changes toimprove support for the 125,000 strong retailworkforce were implemented.

A new title, Sales and Services Associate,replaces the old window clerk designation.Supporting the change in title is a new job descrip-tion that updates duties and responsibilities toreflect an emphasis on customer service.

A newly designed core skills training programfor new associates was implemented early in theyear. Test scores indicate significant improvement.The course shifts emphasis from rules and regula-tions to product knowledge and customer serviceskills training. Most of the learning occurs in astructured on-the-job learning format, whichresults in a reduction of total class time withoutsacrificing any content. Thus, cycle time for fillingvacancies has been reduced by one week.

The first in a series of courses for supervisoryemployees with retail operations responsibilitieswas developed in 2000 and will be piloted andimplemented next year. This curriculum will bedistributed on-line via the Postal Service intranet.In the past, formal retail operations managementtraining has not been available in any format.

An improved image to match new titles andimproved skills was implemented in the form of anew uniform design. Phase 1 (tops only) wascompleted in 2000. The remaining two phaseswill complete a wardrobe that features variety. Thedesign was developed based on employee and customer research.

5. Plan for Retail Operations Performance(PROP)

Success in retail services rests largely on per-formance at the local level. However, in manyrespects, the absence of dedicated retail manage-ment and processes has meant that managers mustfocus on two operations, delivery and retail. Thedemands of delivery operations have consumed ahigh percentage of field manager’s time. ThePostal Service is implementing more focused retailmanagement processes across all Areas. Thisactivity, called the PROP, provides a systemwideplanning framework to improve postal retail. Boththe planning framework (PROP) and the piloteffort were directed toward improving bottom-line performance.



PROP utilizes the existing organization andresources. An operations team composed ofHeadquarters and District managers and postmas-ters guides PROP. The team’s charter was to createa standardized, progressive and measurable planthat engages key field managers in efforts toimprove retail performance in key categories. The categories are Service, Employees, Access andProfitability. In recognition of the fact that dif-ferent Districts are starting at differentperformance baselines, the team built the plan ona performance maturity continuum, setting per-formance targets at four successive levels. Theserange from an initial state of retail readiness (Level1) to one of continuously improving retail per-formance (Level 4).

Former chief operating officer, ClarenceLewis, set targets for achievement in 2000. TheService category calls for “retail clean” Post Offices— facilities that are neat, orderly and attractive,with merchandising guidelines followed. Coreproducts and services must be more consistentlyavailable and accessible for all customers. TheEmployee category requires that all employeeswear proper attire and that standard procedures arefollowed to provide consistently high levels ofcourteous and professional service to retail cus-tomers. The Access category calls on Districts toexpand nonfacility customer access points, such asstamps by mail or ATM. Additionally, the Accesscategory focuses on an increased understanding ofcustomer requirements and market profiles. This isachieved through mapping assists in the facilitydevelopment process. In the Profitability category,each District has been assigned retail work hours,revenue targets and are monitoring and communi-cating progress to retail personnel.

Indicators from nationally recognized metricshave been determined for each category. Serviceand employee improvement are measured by theMystery Shopper Program and the CustomerSatisfaction Measurement CSM program, Ease ofUse. Mystery Shopper is an independently con-ducted customer evaluation of designated retailunits nationwide. It measures retail service pro-vided to customers in five categories. For 2000,Mystery Shopper, Ease of Use and Retail UnitProficiency measure employee competency targets.Finally, retail revenue and revenue per work hourproductivity will measure our progress in theaccess and profitability categories. For each targetindicator, baseline measurements have been takenand targets assigned to each District.

PROP was deployed to postal Areas for thestart of 2000. Progress to these plan targets isbeing monitored each accounting period andpostal quarter. Best practices and success storieswill be communicated directly to field Districtsand Area offices.

6. Postage Technology InitiativesLeveraging the security architecture of its rev-

enue protection strategy, Postage TechnologyManagement (PTM) expanded its perspective in2000 to embrace technology for purposes of costsavings, cost avoidance and revenue generation.PTM continues this three-prong strategy to effec-tively enhance security of postage evidencingthrough the introduction of advanced technology.In addition to increased revenue protection, anoutgrowth of the organization’s deliberate activitiesto migrate the postage metering industry to moresecure technology has been the introduction ofnew products, new providers and new revenue.

a. Secure Metering Systems

The goal in this area is to move the industryto safer, more secure postage evidencing systems tosafeguard against revenue loss due to tamperingand misuse.

In August 1999, the Postal Service introduceda new product category — PC Postage with theauthorization of two new Internet postage systems.PC Postage products allow customers to purchaseand apply postage using the Internet and standardpersonal computers and printers. These productsare developed in response to performance criteriaproduced by the Information Based IndiciaProgram (IBIP), which requires a tamper-resistantPostal Security Device as the postage value vault.Requirements for the postal security device andadditional security features under PC Postage andother IBI systems have effectively raised the base-line of security requirements for all postage meters.

In addition, migration of manual set toremote set meters is currently underway as part of the overall strategy for more secure postage evidencing. The migration to remote set metersalso means cost avoidance of manually settingmeters. Under the migration strategy, the retire-ment of manually set electronic meters began inFebruary 2000 with the stop-placement of anynew manually set meters. PTM reported a 34 percent reduction in the manual reset meterpopulation in 2000.



b. New Forms of Secure Postage Evidencing: the Information Based Indicia (IBI)

The IBI Program introduced an entirely new form of postage evidencing — theInformation Based Indicia (IBI) as part of thePTM security architecture and the objective tosecure postage against counterfeit attack. Unliketraditional postage meter indicia, each IBI isunique. IBIP performance criteria incorporatescryptographic services and a two-dimensional barcode containing, among other information, certain“security critical” data elements.

In addition, because it conveys digital data onthe mail piece and has the capacity to encode addi-tional information, the IBI provides potentialbenefit beyond revenue security in two areas; 1)IBI enables value-added services to customers 2)IBI is a valuable data contributor to theInformation Platform. The current data elementsof the IBI could be used by the InformationPlatform to support tracking of product, marketand related information throughout the mail-stream as well as to enhance Postal Service productmeasurement and analysis.

c. Centralized Data Management

PTM continues the enhancement of its cen-tralized databases to track and manage products,customers and revenue. These centralized databasesinclude the Centralized Meter Licensing System(CMLS) and the Meter Accounting and TrackingSystem (MATS). These systems are used to providethe data necessary to conduct full loop audit andreview procedures as part of the revenue protectionsecurity architecture.

CMLS captures information relating to thecustomer and provides a centralized licensing data-base that allows for automated record updating andreconciliation of applicable records with metermanufacturers/product service providers. Thesecond phase of CMLS, the Meter TrackingSystem, tracks meter movements including lost,stolen and missing meters. This allows the PostalService to know the exact status of any postagemeter. CMLS is in the process of developing onlinelicensing capability for instant licensing.

7. Self ServiceDuring 2000, the Self Service office focused

on improving performance, increasing accesspoints for consumer stamp purchase generatingrevenue. Additionally, considerable emphasis wasplaced on increasing consumer awareness of alter-native locations for stamp purchases. This was

accomplished through an advertising campaignthat included commercials, print ads and directmail. Additional information is provided below.

a. Improve Performance of Vending Operations

Approximately 7 percent of the retail revenueis generated from self-service vending. During2000, the Postal Service focused on the self-servicevending program as follows:

■ There are approximately 32,000 revenue-generating vending machines currentlyinstalled at postal and non-postal locations.3,000 new branded vending machines werepurchased and distributed to the field forinstallation during 2000.

■ Approximately 48 percent of vendingmachines classified as “out of date” wereremoved and offered for recycling.

■ New currency acceptors were purchased and distributed to the field. Approximately85 percent were installed during 2000.These new currency acceptors enable allmodels of vending equipment to utilize thesame acceptors, thereby reducing service-wide parts inventory and reducing trainingtime for new technicians and operators. Thenew currency acceptors enable the use ofthe new $20 bills as well as the new $5 and$10 bills. Updates to the new acceptors forfuture changes to currency will be accom-plished via software upgrades.

The Postal Service was recognized by the U.S.Mint for our ability to accept and dispense the newdollar coin when it was introduced in January2000. No retrofits were required on any of themachines accepting and dispensing dollar coins.

b. Incorporate New Features to IncreaseConvenience/Improve Efficiency

The Debit Credit/Vending Activity ReportingMarket Test offered debit/credit options as well asremote system monitoring. Completed during2000, analysis of this market test will be used toimplement the long-term vision of providing cus-tomers with options to use debit and credit cards.Also, findings from the market test support ourplans to network the vending machines to enablelocal management functionality while also offeringmore accurate sales and performance data.

This capability will allow the Postal Service tooffer more options and more reliable services toour consumers while also improving the cost-effec-tiveness of the existing machines.



c. Provide New Services

The Automated Postal Center is a self-serviceoffering that enables consumers to weigh, rate, printpostage (using the information-based indicia tech-nology) and mail packages. It also offers the abilityto purchase sheetlets of stamps and phone cards aswell as to obtain general mailing information. Thisuse of new technology further leverages our plans toreduce costs and improve customer satisfaction.

d. Offer Consumers More Alternative Access Pointsfor Purchasing Stamps

Approximately 8 percent of the retail revenueis generated from the Stamps on Consignmentprogram. During 2000, the Postal Service focusedon this program designed to offer consumers alter-native access points to purchase stamps. Thesealternative locations include grocery, drug andconvenience stores as well as ATMs in variousbank branches. Access locations increased byapproximately 15,000 during 2000.

F. Marketing Technology andChannel Management

Marketing Technology and ChannelManagement achievements in 2000 were built onthe simple fundamentals of results. Its operationsand programs provided essential bridges of com-munication and service to the business mailcommunity, a community that represents over 46percent of Postal Service revenue.

For example, MERLIN (Mailing EvaluationReadability, Lookup Instrument), the automatedsystem designed for use by Business Mail EntryUnits (BMEUs), moved from the prototype teststage to Board of Governors approval for 200additional systems. MERLIN’s use by BMEUs inthe acceptance of mail simultaneously verifies barcode quality, address accuracy, presort makeup,postage validation, and tray label accuracy.

In addition, through the Mailpiece DesignAnalysis (MDA) Workstations effort, approxi-mately 175 portable workstations, developed toevaluate mailpieces at postal centers or customerfacilities, were deployed during 2000. This deploy-ment of MDA workstations provided the ability toelectronically send and receive mailpiece images toand from customers for evaluation and approval.

Approximately 1,100 Bar code Scanners werealso provided to Business Mail Entry Units during

the year. These scanners improve the quality ofcustomer-generated bar codes and are used by theBMEUs to determine the accuracy and quality ofbar coded sack and tray labels, parcel bar codesand special service bar codes.

Building on solid foundations put in placeduring the previous year, in 2000 PostalOne! —Phase I established a solid infrastructure, including afile standard that captures all data elements neces-sary to meet both mailer and Postal Servicerequirements for postal applications. Phase I alsoestablished a Data Transfer and Storage Capability(Database) that secures customer data transferredfrom their system through the Internet and throughPostal Service internal firewall security. In addition,the WEB Information Portal was established, aWEB presence built to enable all users to logon andbegin using PostalOne! Applications.

And our commitment to creating electronicbusiness partnerships with major mailers, which isthe defined mission and purpose of PostalOne!,remained solid throughout 2000. Enhancementsto its suite of electronic business options providedto customers led to development of the e-Information capability, allowing the mailingcommunity and postal operations to view the con-tents of a mailing and enabling secure Internetaccess to proprietary customer data in managingmultiple events of the mailing process cycle. Theseenhancements also resulted in development of thee-Documentation capability, enabling the mailer toeliminate volumes of standardized verificationprocess paperwork providing a more comprehen-sive approach in ensuring revenue accuracy. Thee-Transportation business capability was also fine-tuned, developing high volume and desktopshipping systems flexible enough for future pro-duction and deployment.

G. Pricing and Product Design

Key among the accomplishments of Pricing and Product Design in 2000 were theagreement with the Periodicals Cost Reductionworkgroup on broad operational changes anddevelopment of a Website for beginning mailers.




1. Periodicals Cost Reduction EffortAs part of the periodicals cost reduction

effort, we worked with mailers to implement sev-eral changes that optimize mail preparation,transportation equipment use by reducing thenumber of sacks and trays employed and increasingthe level of presort. Resulting decreases in bundlebreakage and carrier costs alone are expected to savemore than $50 million annually. Overall periodicalscost reduction is expected to be $65.3 millionannually. These changes support the PostmasterGeneral’s commitment to reduce Postal Serviceoperational costs for periodicals mail.

2. Business Mail 101Business Mail 101: Smart Choices for

Beginning Mailers is a unique Postal Service.comwebsite that guides beginning mailers through crit-ical mailing preparation decision points. Anarrative combines existing rules, information andInternet tools with common sense “tips and tricks”from Business Mail Entry Unit professionals. Theentire tool is designed to meet the mail prepara-tion information needs of key market segmentsnot currently managed by Postal Service salesefforts: new mailers in small and medium-sizedservice companies, small retailers, wholesalers andcharitable organizations.

H. Electronic Commerce:Fast, Reliable, Convenient Secure Choices

The Internet has opened the door to a worldof opportunities and new ways to provide uni-versal service to the changing needs of individualsand businesses. Today’s technology allows us toprovide customers convenient access to products,services information and faster, more reliabledelivery of their important communications andtransactions with the same high level of confi-dence our customers expect and have enjoyed formore than 200 years.

1. Our Web Presence: www.usps.comEach and every day, more and more people

around the world are connecting to the world wideweb as their preferred method to conduct businessand get information quickly and easily.

It is our fundamental service obligation tothe American people and businesses to provide fastonline access to services and information thatmakes their personal and business lives easier.Additionally, we will continually improve the per-formance and the usability of our web presence soeveryone can have secure access and rest assuredthat the Postal Service is protecting his/her privacy.

The Postal Service’s convenient onlinechannel is www.usps.com. Today customers canlookup ZIP Codes, track and confirm delivery,buy stamps, calculate rates, pay bills, get forms,send electronic documents and mailings andretrieve important information.

We will continue to listen to the voice of ourcustomer and strive to enrich and improve ourchannel to better meet the needs of the Americanpeople and businesses. Soon we will allow them toconveniently change their address online currentlythey can access government information at theFederal, State and Local levels via www.usps.com.This new site call Hi Citizen provides convenientaccess to 74,000 agencies, easy access to over1,300 forms thousands of instructions. The addi-tion of this rich content empowers the Americanpeople to contact their government and helps gov-ernment agencies comply with the GovernmentPaperwork Elimination Act.

2. Messaging Services: Raising CustomerConfidence and Converging Electronic andHard copy CommunicationsThe Postal Service is exploring new ways to

transmit important communications leveragingtoday’s technology to provide the same level ofconfidence and security our customers are accus-tomed to via hard copy mail.

In May, the Postal Service launched PosteCS,a global electronic courier service. PosteCS notifiesa recipient where to pick up a document at a secureonline location. PosteCS gives senders more controlover their documents, end-to-end security, confiden-tiality and integrity, tracking and delivery receipt.

In September 2000, the Postal Service nation-ally launched its hybrid mail service, NetPostMailing Online. This service allows customers toprepare electronic communications on their per-sonal computers and electronically transmit themvia the Internet to the Postal Service along with amailing list. Once received, the communication isrouted to a network of printers, printed, insertedenvelopes and entered into the mail stream at alocal Post Office. This service is available to cus-


tomers anytime, anywhere and saves them bothtime in preparation and speed in delivery.

The Postal Service is developing and nearingthe launch of a new service Netpost Certified,which provides government agencies the right solu-tion for a secure and authenticated Internet-baseddocument delivery service. Additionally, we willexamine ways to provide higher levels of authenti-cation and security for Web-based transactions viasmart cards and other emerging technologies.

The Postal Service Electronic Postmark pro-vides a digitally signed date and time stamp againsttampering of electronic documents and transac-tions. Today, this technology is integrated intoPosteCS, NetPost Mailing Online, and other com-mercial messaging technology to provide customersthe same level of confidence they value today in thepostmarking of hard copy mail.

3. Online Payment Services: ExtendingTraditional Value in Today’s Marketplace

In April 2000, the Postal Service nationallylaunched the first component of a suite of conven-ient online payment services, eBillPay. It offers theAmerican people another way to pay their billsthrough the Postal Service with the same level oftrust, security reliance we have provided for hun-dreds of years. Very soon we will integrate ourPostal Service Electronic Postmark into eBillPay toprovide a higher level of consumer confidence inthe marketplace.

The Postal Service will continue to explorenew and better ways to extend and enhance ourtraditional products by leveraging today’s quicklyevolving technology. We will explore taking ourtraditional domestic and international moneyorder services online to make it easier for cus-tomers to pay for services and transact business inthe United States and abroad.

4. Bringing Choices to Our CustomersThe Postal Service has leveraged new tech-

nology and innovations for many, many years toprovide faster, better more secure service to our cus-tomers. Traditionally, we have done this throughcontractual arrangements and we will continue thismethodology as appropriate. However, we relyheavily on strategic alliances and partnerships tohelp us deliver more choices and services to ourcustomers. This type of arrangement improvesspeed-to-market and leverages best technologiesand core competencies of other companies to meetthe needs of our customers.

I. Technology

During 2000, the strategic range of tech-nology functions was broadened to encompassgreater responsibility for stimulating Postal Servicegrowth in the new century. Consequently, thefocus on incorporating emerging technologies toimprove the value and availability of postal products and services was sharpened. By using the power of the Internet, upgrading existinginformation systems and enhancing the information platform to electronically connectoperations, services and customers, our technologyunits are beginning to transform the service ofpostal business.

1. Strategic Technology InitiativesFrom induction through delivery, the entire

information platform has sought to gather accuratedata from the mail only once and use it to acheivea higher level of service for internal and externalcustomers. In 2000, several cornerstone initiativesof the platform continued through developmentand implementation phases.

■ The pilot project for PostalOne! demon-strated that the system does streamline theinduction process and eliminate most of thepaperwork for large-volume mailers.Similarly, the pilot project for the DeliveryOperations Information System (DOIS),which will contribute tools for betterresource management and productivityimprovement, was completed and nationaldeployment was approved. Also approved fornational implementation was the Surface-AirManagement System (SAMS) that will betteraddress the assignment of transportationservices on the ground and in the air.

■ The immense Processing OperationsInformation System (POIS), designed tofocus on inter-facility procedures and incor-porate data from other parts of theplatform, entered into pilot mode. Thesystem will function as an integrated deci-sion-support tool to provide supervisorswith real-time data for timely adjustmentsto improve performance. Pilot projects alsocontinued for the Time and AttendanceCollection System (TACS) and the activity-based costing system.

■ CONFIRM, Delivery Confirmation andSignature Confirmation Services, wereimplemented or upgraded nationwide



during 2000. These programs enhancedcustomers’ relationships with their mail bygiving them more information about thestatus of their deliveries.

2. Information Technology InfrastructureExpansion of the postal information tech-

nology infrastructure, which connects postaloperating units, customers and suppliers, con-tinued. This infrastructure is a key enabler ofbusiness initiatives and business process improve-ments. It provides a standard foundation uponwhich systems can be deployed quickly and effec-tively. However, in order to more effectively andefficiently achieve the communication goals of theinformation platform, additional standards arebeing put into place throughout the network.

■ The associate office infrastructure wasextended to more than 7,500 postal facilities,providing them with a common communica-tions and computing platform. It will beextended further in the coming year.

■ Several of the Postal Service’s Large plantsreceived enhanced wiring. In general, work continued to obtain approval fornationwide implementation.

■ Research to change the current 8-digit and10-digit tray labels to 24 digits also con-tinued; approval to implement the change isexpected in the near future.

■ The Identification Code Sort program, alsoon the infrastructure agenda, will support thedelivery sortation of mail that bears a specialsubscription bar code.

3. Information Technology AssessibilityThe Workforce Investment Act of 1998

amended the Rehabilitation Act of 1973. Itrequires that electronic and information technologydeveloped, procured, maintained or used by thefederal government, including the Postal Service, beaccessible to persons with disabilities. This setencompasses Computer hardware, software,telecommunications equipment, Web-based sites,pages, vending machines, kiosks, printers, facsimilemachines and applications.

The Web is where the Postal Service is atgreatest risk because of the large number of externaland internal web pages and applications that wehave deployed. Therefore, Web AccessibilityGuidelines were issued to help site owners remedyapplications to comply with Section 508. Theguidelines provide direction for the universal acces-

sibility of web applications and compatibility withthe “assistive technology” devices that allow peoplewith disabilities to access information. JAWS, aprogram that vocally reads words from a computerscreen, is an example of an assistive technology. Weare complying with the spirit and intent of the law,not only because of the legal mandate, but becauseit is the right thing to do.

4. Information Application SupportWork was completed to ready all systems for

flawless functionality in the new century. By thebeginning of the year, the Y2K focus had movedbeyond the remediation and contingency phasesinto the recovery management phase geared toresolve any problems that might arise. The PostalService Y2K program was thorough, systematic,focused and successful.

Our technology units capitalized on thenational infrastructure to expand Web utilities.This included helping other functions developapplications, such as the portal that will allowemployees to complete transactions by choosingamong various benefit options electronically, thusreducing costs and increasing accuracy. Anotherimportant aspect of this area is that the web is theinitial area of focus for compliance with Section508 of the Rehabilitation Act, as described above.

In addition, our technology units, both atHeadquarters and in field offices, continued tosupport the application development and maintenance of major programs managed by otherfunctional areas that are described elsewhere in thisdocument. Examples of the programs supportedinclude the delivery confirmation, point of service,mailing online and shipping online programs.

J. Operations Planning

1. Staffing and SchedulingOur future success as an organization will be

significantly influenced by our ability to use workhours efficiently and to maintain stability in ourstaffing relative to workload. In a joint effort withHuman Resources, the Integrated ResourceManagement (IRM) program was successfullyimplemented in 19 pilot sites nationwide. TheIntegrated Resource Management program wasmodeled after the Denver Processing andDistribution Center’s program, which has consis-tently maintained exemplary sick leave rates, wellbelow the national average, for the past three years.



A major component of the IRM initiative is theResource Management Database, an automatedtool that is used to help management record, trackand manage our leave administration policies. The19 pilot sites have experienced significant cost sav-ings, which is directly attributed to reductions insick leave hours. Plans are underway to expandIRM to 90 additional sites at the start of calendaryear 2001. Operations Planning will play a signifi-cant role in the expansion of IRM, trainingapproximately 300 employees on the use of RMDas well as assisting in the development of eRMS,the Web-based version of the ResourceManagement Database.

Ongoing efforts will be focused on ensuringuniformity and consistency in staffing and inmaintaining flexibility to adjust staffing as work-loads shift. Many current staffing authorizationsare outgrowths of organizations that no longerexist and do not accurately reflect the work per-formed. Where this occurs, new staffing guidelineswill be developed or existing guidelines revised.These administrative staffing criteria reviews willfollow a three-step process.

First, the Postal Service will determine therole and range of responsibilities to be carried outwithin various jobs and organizations. We will dothis by analyzing the work content and expecta-tions of functional area managers. Then, will makehard decisions about what we specifically expect.Second we will identify (1) the factors that deter-mine workload and (2) a way to link assignedduties to specific factors that predict workload.Finally, the Postal Service will establish a methodfor measuring the workload and linking theprocess of allocating positions nationwide withoutincreasing overall staffing unless justified from aworkload standpoint. Operations Planning staff, aswell as knowledgeable personnel from the Areaoffices and Performance Clusters, will performthese analyses. This type of systematic staffingreview provides an opportunity to explore the useof new and more effective methods of determiningworkload-based staffing levels.

2. Address ManagementThe success of our automation program is

dependent upon our ability to ensure that each mailpiece has a correct bar code. Our address management services provide that capability bymaintaining current data on each delivery pointserved by the Postal Service and by regularly pro-viding that data to postal facilities and customers.

a. Forwarding

The Postal Service uses the ComputerizedForwarding System (CFS) to forward mail to the17 percent of the nation’s population that moveseach year. Over 2 billion pieces of forwarded mailand 44 million change-of-address cards wereprocessed in 2000. CFS sites are located in 224 postal facilities nationwide. Each CFS sitepresently consists of a centralized computer, mech-anized terminals for processing letters andnonmechanized terminals for processing flats andmagazines. The CFS database provides the data forall address correction activities.

b. 100 percent Database Quality

Address Management has continued to makeprogress toward the goal of 100 percent AddressManagement Systems (AMS) database quality bypursuing an aggressive policy of ongoing qualityreviews and the development and implementationof technological and procedural improvements toensure better communication between Deliveryand field AMS sites. This has resulted in con-tinued improvements to AMS database quality.AMS now provides more timely delivery pointaddressing information for use in all automatedmail processing, bar coding and sorting opera-tions. It also is the source of all addressinformation products required by the commercialindustry to prepare automation compatible mail-ings. In 2000, we initiated the National AMSStreet Review Program. Moving responsibility forAMS data quality measurements from the Areasto Headquarters and ensuring that their measure-ments are applied evenly across the nation.

c. Address Quality Improvement

Improving address quality reduces theamount of undeliverable-as-addressed mail andimproves the effectiveness of automated mail-processing operations. The Postal Service makesproducts and services available to assist mailersin attaining and maintaining 100 percent deliv-erable address lists. the Postal Service makesavailable the products and services outlinedbelow to assist mailers in attaining and main-taining 100 percent deliverable address lists.These mailers produce more deliverable mail-pieces and gain access to worksharing discounts.

1. Address Element Correction (AEC) service

The AEC service was designed to correctaddresses that could not be matched to thenational ZIP+4 file using Coding Accuracy



Support System (CASS) certified address-matchingsoftware. AEC corrects deficient addresses andidentifies those that do not exist. Already, millionsof addresses in mailers’ files have been examinedand corrected, leading to improved customer satis-faction. AEC uses a variety of computer logicresolution processes to correct as many addresses aspossible, and it produces a diagnostic report aboutthe mailer’s list management practices. Currentelectronic success rates average 35 to 50 percent ofthe previously unmatched addresses. More than37.5 million addresses were processed in 2000with six million addresses corrected.

2. Bar Code Certification

To ensure the accuracy of the bar codesapplied by mailers, the Postal Service evaluates theability of customers’ hardware and software to pro-duce properly constructed bar codes that meetPostal Service automation requirements. Duringthe current year to date, eight vendors participatedin the certification program. Six printers and twosoftware packages were certified as producing barcodes that meet required physical characteristics.

3. Coding Accuracy Support System

Coding Accuracy Support System improvesthe accuracy of carrier route, five-digit ZIP, ZIP+4delivery point codes that appear on mailpieces. Theprogram is a quality control measure that ensuresthat software vendors provide accurate, updatedinformation and software to customers who pur-chase this information to process their mailing lists.CASS is available to all mailers, service bureaus andsoftware vendors who want to evaluate theiraddress-matching software and improve the qualityof their ZIP+4, carrier route five-digit coding accu-racy. The Postal Service’s National CustomerSupport Center (NCSC) grades this process andthe results are returned to mailers to provide usefuldiagnostics for correcting deficiencies. CASSenables the Postal Service to evaluate the accuracyof address-matching software programs in threeareas: (a) ZIP+4 delivery point coding, (b) carrierroute coding and (c) five-digit coding. CASS allowsvendors/mailers the opportunity to test theiraddress-matching software packages and, afterachieving a minimum percentage of accuracy, becertified by the Postal Service.

4. Correct Address Notification

Responding to requests from the mailingindustry and the need for consumers to use com-plete and correct addresses, the Postal Servicedeveloped a system of customer address notifica-tion. The notification effort seeks to influence thepublic to use all the elements of a complete andcorrect address. Notification mailpieces weredelivered to approximately 275,000 customersduring 2000.

5. Customer Notification Letter

The Customer Notification Letter is a notifi-cation to postal customers who have submittedchange-of-address (COA) orders (PS Form 3575).The notifications include details of the COAorder, providing customers an opportunity toverify the COA information on file with thePostal Service. Customers are instructed to con-tact the Post Office serving their old address if anyof the COA information is not correct. The tele-phone numbers for both the old and new PostOffices are provided. The notifications alsoinclude a question and answer section advisingcustomers what to do if they are not receivingmail at their new address. There is also informa-tion on how customers may notify others of theirnew address, and a reminder to register or rereg-ister to vote. In 2000, approximately 7 millioncustomer notifications were mailed.

6. Delivery Sequence File

The Delivery Sequence File is a comprehensivelicensed address data system that expands the levelof information beyond the ZIP+4 code. The systemcontains a complete address register with carrierdelivery sequence information. Mailers who matchtheir address records to DSF can validate the exis-tence of the address and identify deficient elements.Consistent with other address quality systems, DSFstandardizes the addresses submitted by mailers toensure automation compatibility. Mailers in 2000matched more than 18 billion addresses.

7. Locatable Address Conversion System

The Locatable Address Conversion Systemprocess enables business mailers to electronicallyupdate their rural-style addresses with new, locat-able city-style addresses in areas that areexperiencing 911 emergency response address con-versions. There are currently 4 million convertedaddresses in the LACS file. Improved addressquality increases mailer access to work-sharing dis-counts and improves deliverability. The PostalService licensed 13 firms to assist mailers in



updating their address records or to perform thematching service for business mailers.

8. Move Validation Letter

In April 1996, the Postal Service implementeda process to circumvent the fraudulent submissionof COA orders. The solution, a Move ValidationLetter (MVL), is a notification that is mailed topostal customers at their old address alerting themthat a request has been made to forward mail fromthe old address. If a potentially fraudulent situationexists, the customer is instructed to contact theirlocal Post Office for assistance. The telephonenumber of the local Post Office is provided. Thesenotifications are generated for COAs entered intothe Computerized Forwarding System (CFS) data-base on a daily basis. They are mailed within 24hours of receipt by the National Customer SupportCenter (NCSC) in Memphis, TN. In 2000, morethan 35 million notifications were mailed.

9. Multiline Accuracy Support System

The Multiline Accuracy Support System is anextension of the CASS, which is a process designedin cooperation with the mailing industry toimprove the accuracy of postal codes that appearon mail. Whereas CASS focuses on the processingof addresses stored electronically in computer datafiles, MASS tests the quality of address matchingoccurring on MLOCR equipment and direct-viewencoding stations. These systems have to lift anaddress image directly from a mailpiece to accom-plish processing. MASS allows vendors/mailers theopportunity to test their machines and, afterachieving a minimum percentage of accuracy, becertified by the Postal Service.

10. Presort Accuracy, Validation Evaluation

The Presort Accuracy, Validation Evaluation(PAVE) program is a process designed in coopera-tion with the mailing industry to evaluate presortsoftware and determine its accuracy in sortingaddress files according to Domestic Mail Manual(DMM) standards. PAVE is available only to soft-ware and hardware developers — companies thatdevelop presort software or manufacture presortingequipment for resale or internal use. Participation inthe program is purely voluntary. Although this pro-gram evaluates and validates presort productsmanufactured by the developers, PAVE does notguarantee acceptance of mail prepared using PAVE-certified hardware and/or software; however, it doesprovide national approval of computer-generatedfacsimiles of Postal Service postage statements, stan-dardized documentation and other presortdocumentation.

11. Rapid Information Bulletin Board System

Rapid Information Bulletin Board System wasintroduced to provide members of the mailingindustry with rapid access to postal information.Some of the information in RIBBS includesCustomer Support Rulings, Federal Registernotices, weather and natural disaster conditionreports, DMM labeling lists, certified vendor infor-mation, office locator services, reports and data forADVANCE participants and minutes of theMailers’ Technical Advisory Committee meetings.

12. Delivery Confirmation Certification

Delivery Confirmation, a recently imple-mented program for Priority Mail and StandardMail, provides a method for customers to verifythe delivery status of packages. Customerschoosing the electronic file option are required toparticipate in a certification process to ensure theaccuracy and quality of customer-generated datathat is entered into the Delivery ConfirmationSystem. The Postal Service certifies the customer’sability to accurately format and populate mailpieceinformation in the required fields of the DeliveryConfirmation electronic file and to accuratelytransmit that file to the Postal Service’s host com-puter. Bar coded labels, used to capture deliverydata, are physically examined and scanned forreadability and compliance with the DeliveryConfirmation requirements. To date, over 1,389customers have successfully completed electronicfile and bar coded label certification.

d. The Mover’s Guide

The Mover’s Guide is an all-in-one guide tomoving, designed to improve customer satisfactionand reduce costs. The booklet provides PostalService change-of-address forms, mail-forwardinginformation, moving-related commercial adver-tising, advertiser discount coupons and tips onmoving. Consumer reaction continues to be posi-tive. Customers are provided with a greaterunderstanding of the activities associated with for-warding mail. The Mover’s Guide, a result of astrategic alliance with a private company, isdesigned, printed and produced at no cost to thePostal Service or its customers. A strategic alliancewith the company to continue the distribution ofboth the English and Spanish versions of TheMover’s Guide has been extended to year 2002.

e. MoversNet Website

In July 1996, the Postal Service introduced aservice for customers who use a personal computer



and are planning to move: a mover’s Internet sitewww.usps.gov/moversnet/. MoversNet, a moreinformative, feature-rich, on-line version of TheMover’s Guide, is designed to offer time- andmoney-saving options to help the rapidly growingpopulation of computer-equipped movers. Currentfeatures include the following: an interactivechange-of-address form; before- and after-the-movechecklists; packing tips; a link to the IRS website toobtain income tax forms on demand; answers to fre-quently asked mail forwarding questions; a ZIPCode lookup for all addresses; a phone number andaddress directory of the Post Office serving eachaddress; commercial advertising and money-savingcoupons; and a Spanish translation of the entire rite.Providing at-home convenience and the correctaddress format with ZIP+4 code for the mover’s oldand new addresses, the change-of-address form canbe filled in on a consumer’s personal computer, thenprinted, signed and mailed in. Customer feedbackand media reports have been highly favorable.Additional enhancements are planned for 2000. Anenhanced version of MoversNet was developed in2000. Deployment of the enhancedMoversGuide.com website is planned for 2001.This version offers an additional customer choice tofile a change-of-address and it will allow change-of-address orders to be accepted electronically via theInternet, with proper identity validation. Thisenhanced version does not change or affect any ofthe other currently acceptable methods. In additionto the ability to submit change-of-address orderselectronically over the Internet, the enhanced web-site will also offer a wide variety of value-addedservices to customers such as setting up utilityhookups and cable connections, establish long-dis-tance service and order packing supplies etc. fromthe MoversGuide.com website.

f. The Welcome Kit

The Welcome Kit is a new value-added pro-gram for customers who have recently moved. It is designed to reduce Postal Service costs andimprove service. Beginning in 1996, the kits weretest-marketed in Boston, Buffalo, Indianapolis,San Antonio and Sacramento. During 1997, thetest was expanded nationwide. The Welcome Kitcontains the following: the customer’s addresschange Confirmation Notification Letter; localphone numbers and addresses for the customer’snew area; a Settling-In Guide, with helpful infor-mation and advice on getting settled; savings onproducts and services customers typically needafter moving; and information on how customers

can notify the Bureau of Motor Vehicles, the IRSand voter registration offices of their new address.

g. Move Update Implementation

The Move Update requirement ofClassification Reform, which became effective July1, 1997, was established to reduce the estimated$1.5 billion annual expense and negative servicestandard impacts that undeliverable-as-addressedmail creates. The requirement specifies thataddresses used to obtain all First-Class presortedand automation discount rates must be updated formove activity within 180 days (six months) prior tothe date of mailing by a Postal Service-approvedmethod. Address Management has direct responsi-bility for all approved methods with the exceptionof the manual address correction process, which ismailpiece endorsement based. The AddressManagement methods include the following:

1. National Change-of-Address

The National Change-of-Address processprovides business mailers with change-of-addressinformation for customers on their mailing listsprior to mailing, thus ensuring that subsequentcommunications are directed to the currentaddress. This process reduces the amount of unde-liverable mail and promotes the use ofautomation-compatible address formats byensuring that all addresses submitted are standard-ized with complete and accurate information,including ZIP+4 codes. More than 5.6 billionaddress corrections were provided to businessmailers through the NCOA service during 2000,an increase of 24 percent from 1999.

2. Address Change Service

The Address Change Service offers mailersautomated address-correction service following theissuance of their mailings. Address correction noti-fications are generated from change-of-addressorders (PS Form 3575) submitted to the PostalService by customers who move. This change-of-address data is maintained in the CFS database. Inorder to participate in ACS, mailers are required tomodify the address label or address block of eachmailpiece for which an electronic ACS notificationis requested. They are also required to utilize anACS compatible ancillary service endorsement.ACS electronic notifications are provided at a feeof $0.20 per notification. However, participationin ACS does not eliminate the provision of manualaddress correction notifications (hardcopies),which are provided at the manual address correc-tion fee of $0.50 each. By rapidly updating their



address lists, mailers improve the deliverability oftheir mail. In 2000, the number of correctionsprocessed through ACS was 165 million.

3. FASTforwardSM

In 1997, Address Management deployed to the mailing industry, under Postal Servicelicense, cutting-edge technology that provides aneffective means for mailers to update addresses onmailpieces processed on MLOCRs. This tech-nology, known as FASTforward, will directmailpieces to the customer’s new mailing addresswhen a change-of-address order has been filedwith the Postal Service. FASTforward provides afast, accurate, safe and secure method for users ofMLOCRs to apply new address information andthe correct bar code for the new address as themailpieces are being processed. In 2000, morethan 3 billion mailpieces were processed and over39 million mailpieces were forwarded.

Concurrent with the MLOCR effort, AddressManagement also provides a second version ofFASTforward technology for Mailing ListCorrection (MLC). This version of FASTforwardprovides correction to computerized address fileswhen a change-of-address is identified for a cus-tomer’s address record. In 2000, more than 12billion address records were processed and over216 million corrections were provided to businessmailers using FASTforward for MLC, representinga 50 percent increase over 1999.

4. Alternate Qualification Method

A Postal Service stand-alone testing process,based on FASTforward technology, allows mailersto demonstrate that they have their own process inplace to update address changes on mailing listswith 99 percent accuracy. If the Postal Service veri-fies this, the mailers’ lists are then qualified for aperiod of 12 months.

h. Electronic Publication Watch System(ePUBWATCH)

The Electronic Publication Watch System,commonly referred to as ePUBWATCH, is a web-based periodicals complaint tracking applicationthat allows registered publishers to enter a sub-scriber postal-related complaint, request anelectronic publication watch or request the assis-tance of a Periodical Service Improvement Teammember. This newly improved and expanded pro-gram is designed to help resolve postal-relatedsubscriber complaints for any size publication.This is a vast improvement over the existing paper-based publication watch program.

ePUBWATCH consists of a publisher’s webpage, an administrative reports web page (which is used by the National Customer Support Centerin Memphis and Area and District postal per-sonnel) and a Delivery Unit Web page. At thistime, our plan is to begin national deploymentin February 2001.

i. The Collection Box Management System

The Collection Box Management System(CBMS) provides a monitoring tool for deliveryunit management to ensure adherence to our col-lection box schedules and policies. The systemconsists of a data collection device that scans a barcode located inside a collection box to collect time,location and date information. The informationcollected by the scanner is then placed in a datatransfer device at the delivery unit for down-loading into the Delivery Unit Computer. Thedata is then loaded into the CBMS software pro-gram, which allows management to quicklyascertain the status of each collection. A small per-centage of delivery units still utilize thewand/button technology to manage collections.

j. ADVANCE Notification and Tracking System

The ADVANCE Notification and TrackingSystem, commonly referred to as ADVANCE, isdesigned as a delivery confirmation system to meetthe time-sensitive mailing needs of our externalcustomers and for postal managers to use a real-time management tracking tool to ensure thatdelivery expectations and reporting compliance aremet. ADVANCE tracks the delivery performanceof qualified Standard Mail (A) and periodicalsmailings in over 7,000 delivery units and approxi-mately 11,000 five-digit ZIP Codes. In 2000,ADVANCE tracked over 3.4 billion mailpieces.

Participating mailers submit their mailinginformation to the National Customer SupportCenter (NCSC) at least eight days prior to therequested “begin date” for in-home delivery.Delivery units receive advance notification of amailing via an ADVANCE web page and mustreport when the mail was located, when deliverybegan and when delivery is completed. Thesedelivery event dates are provided to the customerthrough the ADVANCE mailer web page and theRapid Information Bulletin Board System (RIBBS).

ADVANCE adds business value in severalimportant areas:

■ It provides advance notification of time-sen-sitive mailings to delivery units, which



allows them to meet the delivery needs ofour time-sensitive advertisers.

■ It provides advance notification of time-sen-sitive mailings to Area and District offices,which allows them to monitor the deliveryand reporting compliance.

■ It provides delivery confirmation informa-tion to our external Standard Mail (A) andperiodical customers. By allowing our cus-tomers to specify their requested in-homedelivery windows and offering real-timeDelivery Confirmation information; thePostal Service expects to retain the existingtime-sensitive mail volume/revenue forthese mail classes and facilitate growth intime-sensitive mailing revenue.



Chapter 3 Financial Highlights|2000 Comprehensive Statement on Postal Operations|65

A. Financial Summary

1. RevenueRevenue in 2000 grew 2.9 percent or $1.8 bil-

lion, to end the year at $64.5 billion. Compared tothe two previous years, the rate of growth declined.In 1998, revenue grew 3.2 percent. In the followingyear, when a general rate increase was implemented,growth was 4.4 percent. Revenue in 2000 was morethan $800 million below what had been estimated,as First-Class Mail grew less than expected; mailersshifted their choices of mail classes to reap the pricebenefits of the automated mail classes; and as diver-sion of messaging from hard copy mail to electronicmedia continued. Tables 3.1 and 3.2 show the pro-portionate percentages of total revenue and volumeheld by each class of mail.

2. ExpensesPostal Service expenses are

dominated by personnel compen-sation and benefits that comprisemore than 76 percent of ourexpenses. In 2000, this expensecategory increased by 4.6 percent,or $2.2 billion. This is a fasterrate of growth than was seen ineither the Consumer Price Index (3.2 percent) or the EmploymentCost Index (4.0 percent). This isattributable primarily to theincrease in our average cost perwork hour, which was driven byhigher base pay, overtime and pre-miums as well as retirement,workers’ compensation and healthand other benefits. This expense increase occurreddespite the reduction of 6,200 work years.Worker’s compensation costs, a component ofcompensation and benefits, were up by more than$300 million in 2000, significantly more than wehad planned. This increase occurred, despite arefinement in methodology used to estimate ourworkers’ compensation liability. Without thischange, expenses would have been $423 millionhigher. We anticipate that some of the trends thatcaused this increase will continue. For example,average cost per medical claim increased by almost14 percent, reflecting the resurgence of medicalinflation. Historical fluctuations in workers’ com-pensation expense can be seen in Table 3.4.

Transportation expenses soared in 2000, dueprimarily to higher fuel prices. We estimate thatfuel prices increased transportation costs byapproximately $275 million. Oil prices have risenfrom a low of $10 a barrel in 1998 to over $37during 2000.

3. Net LossAfter four years of net income that totaled

$3,744 million, we posted a net loss $199 millionin 2000 on operating revenue of $64,540 million.

Chapter 3 Financial Highlights

As directed by Congress, the Postal Service has sought to eliminate redundancy between our 2000 Annual Report and this

2000 Comprehensive Statement. In this chapter, we present Financial Highlights in a condensed format and limit discussion

and analysis to Postal Service financial results for 2000; aspects of our financial management on which Congress has

requested that we report, such as Productivity; business programs on which we are required to report, such as the Breast

Cancer Semipostal Research program; and, topics of particular interest to Congress, such as Appropriations. The financial

results of our operations for 2000 are discussed and analyzed in considerable detail in the 2000 Annual Report of the United

States Postal Service.

(in percent)

2000 1999

First-Class Mail 49.80 50.55

Standard Mail (A) 43.32 42.48

Periodials 4.99 5.10

Priority Mail 0.59 0.59

Standard Mail (B) 0.54 0.52

International 0.53 0.51

Other 0.23 0.25

100.00 100.00

TABLE 3.2 VOLUME BY CLASS OF MAIL

(in percent)

2000 1999

First-Class Mail 55.09 55.75

Standard Mail (A) 23.57 23.04

Priority Mail 7.50 7.23

Special Services 3.40 3.57

Periodicals 3.37 3.38

Standard Mail (B) 2.97 2.92

International 2.57 2.60

Express Mail 1.54 1.50

100.00 100.00

TABLE 3.1 REVENUE BY CLASS OF MAIL

(in percent)

2000 1999

Personnel compensation 57.09 57.52

Personnel benefits 19.32 18.35

Transportation 7.27 6.84

Supplies and services 4.60 5.82

Interest/deferred liability 2.42 2.55

Depreciation and write-off’s 3.19 2.93

Other 2.11 1.99

Rent and communication 1.74 1.70

Vehicle/building maintenance 0.91 0.95

Utilities 0.72 0.71

Interest 0.34 0.25

Advertising 0.23 0.39

100.00 100.00

TABLE 3.3 ANALYSIS OF EXPENSES


66|2000 Comprehensive Statement on Postal Operations|Chapter 3 Financial Highlights

We consider this a virtual break-evenresult for the year. The net loss equates toless than one-half of one days cashreceipts. Postal rates remained staticthroughout the year as inflationary pres-sures in the general economy impactedour costs. The unanticipated reduction inthe growth rate of mail volumes andinflationary increases in compensationand benefits as well as in fuel prices werethe primary causes of the net loss.

Concurrently, we realized an out-standing gain in productivity, achieving aTotal Factor Productivity (TFP) increaseof 2.5 percent, a seven-year high. Thisgain in TFP equated to approximately$1.6 billion in expense reductions for theyear, lessening what otherwise would havebeen an even greater net loss. Thisaccomplishment took place even as ourvolume and delivery workload increased.We delivered an additional 6.2 billionpieces of mail while our delivery networkexpanded to include America’s 1.7 millionnew home and business addresses. Ourproductivity success is explained in greaterdetail in Section B of this chapter.

4. FinancingThe amount we borrow is largely

determined by the difference between ourcash flow from operations and our capitalcash outlays. Starting in 1998, our capitaloutlays have exceeded our cash flow fromoperations. So we increased our year-enddebt by $549 million in 1998, $496 mil-lion in 1999 and $2.4 billion in 2000.We anticipate a net increase in our debtand cash balance in 2001. Debt out-standing at the end of the fiscal year was$9.3 billion, of which $2.5 billion waslong-term debt at a weighted averageinterest rate of 5.6 percent. Our total debtis still below the peak we reached in1992. Because we actively manage ourcredit lines, our average outstanding debtduring the year was far less than the year-end balance. Our average outstandingdebt increased to $4.7 billion in 2000from $3.9 billion in 1999, and theinterest we paid on our financing totaled$220 million in 2000 compared with$158 million in 1999.

Year-End Average Interest

Debt Debt Expense

($ billions) ($ billions) ($ millions)

1996 $ 5.9 $ 5.4 $ 368

1997 5.9 4.4 307

1998 6.4 3.2 167

1999 6.9 3.9 158

2000 9.3 4.7 220

TABLE 3.6 FINANCING HISTORY

(dollars in millions)

Net2000 1999 Difference Change percent

Income

Mail revenue $ 62,284 $ 60,418 $ 1,866 3.1%

Special services 2,192 2,237 (45) -2.0%

Revenue forgone appropriation 64 71 (7) -9.9%

Operating revenue 64,540 62,726 1,814 2.9%

Expense

Compensation and benefits 49,532 47,333 2,199 4.6%

Other costs 13,460 13,309 151 1.1%

Operating expense 62,992 60,642 2,350 3.9%

Income from operations 1,548 2,084 (536) -25.7%

Interest income 41 29 12 41.4%

Interest expense on deferred

retirement liabilities (1,568) (1,592) 24 -1.5%

Interest expense on borrowings (220) (158) (62) 39.2%

Net (loss) income $ (199) $ 363 $ (562)

TABLE 3.5 INCOME AND EXPENSE STATEMENT


Estimated Annual Payments to DOLIncrease/Decrease Administrative Total for Postal Service

Fiscal in Liability for Charge Annual Active Claims andYear Active Claims (DOL) Expenses Admin. Charges**

1990 $ 753 $ 15 $ 768 $ 671

1991 174 9 183 397

1992 1,071 14 1,085 454

1993 928 17 945 487

1994 311 16 327 501

1995 860 17 877 520

1996 718 19 737 531

1997 187 19 206 538

1998 739 21 760 567 ***

1999 583 20 603 585

2000 891 20 911 671

* Excludes Post Office Department (POD) expenses and payments

** Amounts in this this column reflect payments to the Department of Labor.

*** Previously-reported number changed to exclude POD portion of payment from Postal Service total payments

TABLE 3.4 WORKERS COMPENSATION EXPENSE AND CASH PAYMENTS*


B. Productivity

1. Total Factor Productivity (TFP), The Productivity Measure

The Postal Service measure of productivity,TFP, is calculated on all the factors of productionin a given year. Over time, TFP measures thechanges in the relationship between outputs andinputs, or resources, expended in producing those outputs.

The Postal Service’s main outputs are mailvolumes and service within its expanding deliverynetwork. The Labor Productivity (LP) measureuses only labor input as a measure of resource use.Since labor productivity is a partial measure, itdoes not distinguish whether the increase is due to increases in the other inputs (capital and mate-rials) or due to increases in Postal Service efficiency.To account for variations in the labor factorexpended in mail volumes, TFP weights differenttypes of mail volumes according to their workloadcontent. That weighting is determined by factorssuch as size, mail piece weight, preparation require-ments including bar coding and presorting and themode of transportation used, such as air orhighway. TFP also accounts for capital and mate-rials inputs, such as mechanized and automatedequipment, facilities, transportation and othernon-personnel costs.

TFP growth is affected by multiple factorsthat may cause it to vary in the short term.Expenditures to enhance service and improve cus-tomer satisfaction may cause short-term declines inTFP growth. TFP can also fluctuate from one yearto another because of time lags between majorinvestments and the realization of savings resultingfrom those investments. Consequently, assessmentsof productivity performance should include consid-eration of the factors affecting TFP growth.

2. TFP, 2000 and the Future PlanThe Postal Service’s TFP growth of 2.5 per-

cent in 2000 was the highest since 1993 and thefifth largest in our history. As reported above, thisTFP result is equivalent to achieving a $1.6 billionreduction in expenses. Labor productivity growthwas 2.1 percent for the year, also the highest since 1993.

Compared to other years with strong positiveTFP growth, the 2000 result is significant. In prioryears, TFP growth was driven largely by workloadincreases. During the 1990’s, TFP grew 0.4 percentannually, on average, while workload grew 1.9 per-

cent annually, on average. In 2000, however, TFPgrowth of 2.5 percent was accomplished throughmanaged restraint on resource usage growth. Workhours declined by 0.6 percent and the PostalService used 5.1 percent less in materials. The 2000TFP results also are attributable to returns on theinvestments in infrastructure upgrades, automationand mechanization that were made by postal man-agement throughout the 1990's.

The Postal Service plans to continue toimprove TFP over time. This objective is balancedagainst the need for service improvements toimprove customer satisfaction and remain competi-tive in the marketplace.

3. TFP, Benchmark MeasuresTraditionally, Postal Service TFP has been

benchmarked against Multifactor Productivity(MFP), an index of private nonfarm business pro-ductivity reported by the Bureau of Labor Statistics(BLS). In recent years, MFP has become less usefulas a benchmark measure for this productivity com-parison. As the economy has become more heavilyweighted with the high-technology or “informationbusinesses” sector, so has MFP. Productivity growthin this economic sector far outstrips that of theindustrial and service sectors that are more akin tothe Postal Service.

Table 3.7 shows annual and cumulative TFPand LP compared with MFP for the years 1990through 2000. Over the long run, a successfulorganization will average positive growth in pro-ductivity, as has the Postal Service, but year-to-yearfluctuations in TFP and LP are common. In 1990and 1993, TFP and LP showed exceptional growth.


Total–Factor Labor Multi factor

Productivity Productivity Productivity1

Annual Cumulative Annual Cumulative Annual Cumulative

1990 3.0 3.0 3.1 3.1 (0.1) (0.1)

1991 (1.7) 1.3 (0.2) 2.9 (0.9) (1.0)

1992 0.4 1.7 1.0 3.9 2.0 1.0

1993 3.8 5.5 4.4 8.3 0.5 1.5

1994 (0.1) 5.4 0.7 9.0 1.0 2.5

1995 (1.8) 3.6 (1.3) 7.6 0.5 3.0

1996 (1.2) 2.4 (0.2) 7.4 1.4 4.4

1997 1.3 3.7 1.6 9.0 0.9 5.3

1998 (1.2) 2.5 1.2 10.2 1.5 6.8

1999 (0.3) 2.3 0.7 10.9 1.1 7.9

2000 2.5 4.8 2.1 13.0 1.7 9.6

1 1999 and 2000 MFP data are estimates of DRI/McGraw Hill. BLS data for these years has not yet been released.

TABLE 3.7 PRODUCTIVITY 1990-2000



Slow growth or declines followed in 1994 through1996 positive growth was achieved again in 1997.In 1998 and 1999, we reported declines in TFPwhile LP increased. In 2000, we achieved stronggrowth in both TFP and LP.

4. TFP, Additional Considerations Worksharing discounts to mailers impact our

productivity performance. Worksharing incentiveshave shifted a greater proportion of the workloadassociated with automation compatible mail tobusiness mailers. Worksharing discounts providecost savings for the Postal Service and also enhancethe productivity of the economy as a whole.Worksharing, however, transfers the Postal Service’sprime opportunities for productivity improvementto our partners, the mailers. In contrast, the BLSmulti-factor productivity does not have the abilityto factor out self service or worksharing on the partof the customer.

Cumulative TFP growth for the Postal Servicefrom 1990 through 2000 was 4.8 percent, or anaverage annual rate of more than 0.4 percent.Postal Service TFP growth is approximately one-

half the cumulative growth in MFP of 9.6 percentover the same time period.

C. Federal GovernmentAppropriations

By law, the Postal Service can receive threetypes of appropriations from the federal govern-ment. Those are appropriations for public service;transitional costs and revenue forgone. Currently,appropriation is made for revenue forgone only.This accounted for only 0.1 percent of total rev-enue in 2000. During 1971, the year prior tocreation of the Postal Service, these appropria-tions totaled almost one quarter of Post OfficeDepartment (POD) total revenue.

The Postal Service currently is authorized torequest up to $460 million for public servicecosts. This is the amount authorized by statute in1970 and is not intended to represent the presentcost of providing universal service. The Postal

Service has neither requestednor received any public servicereimbursement since 1982.

The transitional cost cat-egory of reimbursementprovides a means to fund costsrelated to the former PODand shelters current ratepayersfrom such costs. Worker’sCompensation claims arisingprior to July 1, 1971, are thelast known POD cost. In theBalanced Budget Reform Actof 1997, Congress transferredresponsibility for these costs tothe Postal Service. Therefore,we have not received transi-tional cost appropriationssince 1997.

In 2000, the PostalService recognized a revenueforgone reimbursement of $64million to fund free mail forthe blind and for overseasvoting. That reimbursementwas paid in October 2000,shortly after the close of thefiscal year. (See chart 3.8)


AppropriationTotal Mail Revenue Income as a percentMail Without Appropriation from of Total

Year Revenue Appropriations Category Appropriation Mail Revenue

Deficiency in rates and fees;

1971* $ 8,752 $ 6,665 and Public Service $ 2,087 23.8%

Free and Reduced Rate Mail 725

Reconciliation for Prior Years none

Public Service 920

1976 $ 12,844 $ 11,199 $ 1,645 ** 12.8%

Free and Reduced Rate Mail 750

Reconciliation for Prior Years (34)

Public Service none

1986 $ 30,818 $ 30,102 $ 716 ** 2.3%

Free Mail for the Blind and

Overseas Voting Material 71

Reconciliation for Prior Years (7)

Public Service none

2000 $ 64,540 $ 64,476 $ 64 0.1%

* The figures for FY1971 are from the old Post Office Department prior to the creation of the Postal Service on July 1, 1971.

** This figure does not include the appropriation for Post Office Department Transitional Costs, which, upon receipt, are paid directly to the Department of Labor.

TABLE 3.8 HISTORICAL AND PRESENT-YEAR IMPACT OF CONGRESSIONAL APPROPRIATIONS ON MAIL REVENUE, 1971, 1976, 1986, 2000



D. Breast Cancer SemipostalResearch (BCR) Stamp

In 1997, Congress authorized the issuance ofthe first semipostal stamp for the specific purposeof raising funds from the American public to assistin finding a cure for breast cancer. The stamp issold for 40 cents and is valid for the current cost ofa one-ounce First-Class letter. Congress directedthat the difference between the price of the stampand the First-Class Mail rate, less program costs,be directed to two designated research agencies, theNational Institutes of Health (NIH) and theDepartment of Defense (DOD) Medical ResearchProgram. In accordance with the law, the GeneralAccounting Office (GAO) has reviewed this pro-gram. The Office of the Inspector General (OIG)of the Postal Service has also audited the programand issued a report on its findings.

Our initial projections called for the printingof 200 million stamps. Since that time, in order tokeep inventories in line with demand, we printedan additional 180 million stamps. From inceptionthrough December 2000, approximately 240 mil-lion stamps had been sold. Two years of sales raiseda net voluntary contribution of $16.8 million, ofwhich $8.2 million was raised in 2000.

The law provides for semiannual payments tobe made on a schedule agreed to by the researchagencies and the Postal Service. Payments havebeen made to the research agencies to cover salesfrom July 28, 1998, through early September 2000.

The costs associated with the BCR stampinclude design, printing, packaging, advertising,promotion, training, legal fees, market research,programming for retail automation and receiptprinting costs. The Postal Service has chosen todeduct selected incremental costs from our pay-ments to the research agencies. A total of slightlymore than $500,000 was deducted from our first five payments, which covered sales from July 28, 1998, through early September 2000.

For six decades, the Postal Service has issuedstamps to help raise awareness for a variety ofhealth and social issues including drug abuse,AIDS awareness, environmental protection andconservation. The BCR semipostal stamp went astep farther and also raised funds. The stamp’soriginal run was from July 28, 1998, through July28, 2000. On July 28, 2000, President Clintonsigned a bill extending issuance an additional two years, through July 28, 2002. We will continue toaggressively promote the sale of this productthroughout our organization.


Chapter 4 Preliminary 2002 Annual Performance Plan|2000 Comprehensive Statement on Postal Operations|71

A. Introduction

1. Government Performance and ResultsAct (GPRA) Documents

The United States Postal Service published itsfirst Five-Year Strategic Plan in compliance withGPRA in 1997. That plan, which covered theperiod 1998-2002,1 was updated as required bythe Act and published in September 2000, for theperiod 2001-2005. These plans describe the evolu-tion of the Postal Service’s corporate performancegoals, strategies, targets and indicators. The nextformal update of the Five-Year Strategic Plan willbe published in September 2003 for the period2004-2008.

Since the publication of the first Five-YearStrategic Plan, Preliminary Annual PerformancePlans and final Annual Performance Plans have been published in accordance with theGPRA statute.2

2. The Mission of the Postal ServicePostal planning is framed by the goal of

achieving the mission of the Postal Service, asstated in the Postal Reorganization Act of 1970.The nation’s Postal Service is still perceived by theAmerican public and its representatives as a coregovernment function. The goals, strategies, targetsand indicators in this plan support the PostalService’s mission as a government service providinguniversal postal service to the country.

Today, the role of the Postal Service in con-necting all Americans at uniform rates is moreimportant than ever, even as new electronic serv-ices fragment the communications marketplaceand provide alternatives to traditional mail servicesfor some customers.

3. The Business EnvironmentThe strategic planning process includes an

intensive review of the Postal Service’s environ-

ment, as required by GPRA. This review has beenundertaken with full stakeholder consultation.3

The central assumption that has historically guidedpostal planning — that mail volume and the asso-ciated growth in revenue would always besufficient to cover the cost of delivering mail to agrowing country at affordable prices — can nolonger be taken for granted. The postal environ-ment is changing rapidly, and postal planning isadapting in order to keep up with the challenges.4

The Postal Service faces unprecedenteduncertainty — particularly with respect to theimpact that Internet applications will have on mailvolume. First-Class Mail volume growth is slowingand may decline in the future.5 Furthermore, anassociated assumption of the past — that incre-mental cost increases could always be passed alongto postal customers through higher rates withoutsignificantly impacting mail volumes — is also lesscertain. Business mailers and households havealternatives to traditionally mailed applicationssuch as bills and statements, business communica-tions and personal correspondence, ordering andfulfillment, entertainment, information, andadvertising.6

4. Our Vision of the FutureAs a result of this review, the following vision

statement for the Postal Service in the 21st centurywas adopted:

Within the decade ahead, the Postal Servicemust be transformed into a high-performing enter-prise, able to compete with agile competitors, to beresponsive to more sophisticated customer demands,and to establish goals aligned with the vision ofbecoming the service customers choose to use, ratherthan have to use. All employees must have appro-priate incentives and tools, not only to service theircustomers, but also to meet or exceed competitors’offerings. We must, in short, develop an operationallyexcellent, financially sound, performance-based cul-ture and mindset.

This chapter provides the Preliminary 2002 Annual Performance Plan of the United States

Postal Service, based on the requirements of the 1993 Government Performance and Results

Act (GPRA).

1 Unless otherwise noted, all references to years in this document will denote fiscal rather than calendar years.

2 The Postal Service’s Preliminary Annual Performance Plans are published in February of each year in the Annual Comprehensive Statement on Postal Operations, along with

the Annual Performance Report. Final Annual Performance Plans are published as stand-alone documents at the conclusion of each fiscal year.3

This process is described in Chapter 5 of the USPS Five-Year Strategic Plan.4

Described in Chapter 1 of the Comprehensive Statement on Postal Operations.5

First-Class Mail accounts for about 56% of the revenue of the Postal Service, and, more importantly, 70% of the coverage of “institutional costs” of the operating

infrastructure. A reduction in this revenue source would put the ability of the Postal Service to finance the universal service mission at risk. 6

The changing business environment of the Postal Service is described in Chapter 2 of the USPS Five-Year Strategic Plan.

Chapter 4 Preliminary 2002 Annual Performance Plan


Given our expectations and beliefs about thefuture marketplace, it is imperative that the PostalService achieves a state of operational excellence andcompetitive performance sufficient to provide cus-tomer value without relying on the monopoly.

Achieving this vision will allow the PostalService to improve performance, to search for waysto grow both its revenue and those of the mailingindustry, and to find solutions to the challengesraised by technology and major shifts in the busi-ness environment. The framework for integratingstrategies to achieve the vision will be an under-standing of the Postal Service as the “gateway” tothe nation’s households and businesses.

5. The Evolution of Goals, Sub-goals,Indicators, and Targets

The new statement of future vision andstrategic direction led in turn to amendments ofthe Postal Service’s three corporate goal statementsincorporated in the 2000 Annual PerformancePlan. These amendments reflected the organiza-tion’s decision to strengthen its goal statementsrelative to its increasingly challenging marketplace,its need to improve its workplace environment,and improve its overall business performance.

Following publication of the 2000 AnnualPerformance Plan in September 1999, a number ofother changes were made. These changes werereflected in the Preliminary 2001 AnnualPerformance Plan. Additional amendments wereadopted for 2001 and were described in the final2001 Performance Plan.

The planning process in the Postal Service,and the associated goals, sub-goals, indicators,and targets will continue to evolve as the marketand the U.S. economy changes. Stakeholdersshould expect further evolution as the PostalService seeks to transform itself to meet the chal-lenges of the future.

6. Universal Service and Postal Performance

Government Accounting Office (GAO)reviews of the Five-Year Strategic Plan and subse-quent discussions on legislative reform have yieldedsuggestions of the need to develop measures relatedto the Postal Service’s responsibility to provide uni-versal service. Several of the “Voice of theCustomer” measures discussed here such as relia-bility of service to consumers and performance of

the basic first-Class Mail product, are related to thefulfillment of the Postal Service mission. The ques-tion of additional performance measures related toother elements of universal service remains open.

The Postal Service has been involved in anongoing research effort to understand how universalservice has been defined in other enterprises and toassess service requirements based on these defini-tions. The experience of industries such astelecommunications and of other postal administra-tions that have sought to define universal service hasrelevance to this effort. A review of universal servicein other postal administrations was presented in the2000 Annual Performance Plan and a review of uni-versal service in other industries was included in thePreliminary 2001 Annual Performance Plan.Proposed statutory reform would have required thedevelopment of a definition.

For the public and mailers, the automaticextension of delivery services to new householdsand businesses is a fundamental part of the missionof universal service. In 2002, about 1.5 millionnew deliveries will be added, increasing the cost ofthe Postal Service infrastructure. At the same time,the United States Postal Service is required tomaintain an extensive retail infrastructure, regard-less of economic justification, to provide access tothe network and to satisfy other public servicerequirements. In 2002, the Postal Service will con-tinue to work with stakeholders to refine the policyoptions available for the continuation of universalservice in the future. The current legal and regula-tory practice retains a very broad and generalworking definition of the Postal Service’s publicservice obligation.

Until universal service is more specificallydefined,7 the “overall customer satisfaction” indi-cator described in the “Voice of the Customer”section, will continue to be used as a summarymeasure of the Postal Service’s performance inachieving its mission.

B. Linkage Between AnnualPerformance Plan andStrategic Plan

1. Creating AlignmentThe Postal Service’s organization-wide goals

are to grow the business by providing quality prod-

72|2000 Comprehensive Statement on Postal Operations|Chapter 4 Preliminary 2002 Annual Performance Plan

7See Chapter 1 in the USPS Five-Year Strategic Plan, 2001-2005.


ucts and services at competitive prices; to create amotivated, productive and inclusive workforce;and to provide affordable services. This balancedapproach supports the efforts of the Postal Serviceto continue to perform its mission. These goals,and the associated sub-goals, indicators, and tar-gets, undergo further review in each annualmanagement cycle dictated by the Postal Service’sperformance management system.8

The updated Five-Year Strategic Plandescribes the strategies that the Postal Servicewill use to respond to the changing businessenvironment. These strategies seek a balanceamong multiple objectives: achieving afford-ability, being responsive to employeerequirements, ensuring financial viability,responding to customer needs, and investing inthe future. As required by the GPRA, the Five-Year Strategic Plan 2001-2005 discusses thecurrent Postal Service business environment anddescribes the process used to obtain commentson the Postal Service’s proposed strategic direc-tion from its stakeholders.

The updated Strategic Plan also describesthe performance indicators and targets that havebeen adopted by management for the2001-2005 planning horizon. Thegoals, sub-goals, indicators and targetsdescribed in this 2002 AnnualPerformance Plan are consistent withthose expressed in the Strategic Plan.

2. Government Performanceand Results ActRequirements

The GPRA legislation establishedthe content requirements for PostalService Annual Performance Plans:

■ Establish performance goals todefine the level of performance tobe achieved by a programactivity;

■ Express such goals in an objec-tive, quantifiable, andmeasurable form unless an alter-native form is used;

■ Briefly describe the operationalprocesses, skills, and tech-nology, and the human, capital,

information, or other resources requiredto meet the performance goals;

■ Establish performance indicators to be usedin measuring or assessing the relevant out-puts, service levels, and outcomes of eachprogram activity;

■ Provide a basis for comparing actual programresults with the established performancegoals; and

■ Describe the means to be used to verify andvalidate measured values.

[Title 39, U.S. Code, Sec. 2803(a)]In addition, the Postal Service has received a

number of recommendations for improving theAnnual Performance Plan.9 These recommendationshave been incorporated as follows:

As a result of statutory requirements plusmultiple reviews it is useful here to clarify theexpanded requirements for annual performanceplans. The Preliminary Annual Performance Planof the Postal Service is published at an early stagein the annual management cycle after the prelimi-nary indicators and targets are established, butbefore the resources are deployed. The Final Planwill expand the discussion of the performance


8See Appendix A of the 1999 Annual Performance Plan for a more complete description of the CustomerPerfect! system.

9Comments from Postal Service Subcommittee Chairman John McHugh, in an April 24, 2000 letter to Postal Service Board of Governors Chairman Dyrhkopp, and the GAO

report of August 14, 2000, “Enhancements Needed in Performance Planning and Reporting.” These comments were addressed in detail in the 2001 plan.

Recommendation Response

TABLE 4.1 RESPONSES TO COMMENTS ON POSTAL PERFORMANCE PLANNING

Provide detailed explanations when goals, sub-

goals, indicators and targets contained in the prior

year’s plans are not carried forward into the cur-

rent year’s plan.

Provide clear criteria, including baseline data where

possible, for measuring the Service’s success toward

achieving desired goals.

Include complete description of strategies to accom-

plish stated goals.

Update information to reflect known or anticipated

changes when discussing the linkage between perform-

ance goals and major programs.

Where applicable, explain why baseline data is not

being provided

Changes are discussed in detail for each of the three

major goals or “voices.”

The Postal Service is attempting to provide clearer

descriptions of the goals. Baseline data is provided

in Chapter 5 of the Comprehensive Statement on

Postal Operations.

The 2002 Preliminary Annual Performance Plan is

provided shortly after the update of the Five-Year

Strategic Plan. Details were provided in that docu-

ment. Also, Chapters 1-3 of the Comprehensive

Statement provide additional details on key pro-

grams relevant to this requirement.

The Preliminary Annual Performance Plan incorpo-

rates such recent events as the impact of the slowing

economy, expected diversion of traditional mail

volume, and actions of the Postal Rate Commission.

Baseline data is provided as Chapter 5, Annual

Performance Report, in the Comprehensive

Statement. When the final 2002 Performance Plan is

published at the end of 2001, this information, where

available, will be updated.



goals to include information on resource alloca-tion that is developed during the “deploy” process.

C. Postal Service Performance GoalsFor 2002The preliminary corporate goals, performance

sub-goals, indicators and targets for 2002 presentedbelow are under development in a planning processthat will be concluded in September 2001.

1. Corporate Goal Categories: The Three-Voice Structure

The Voice of the Customer categoryaddresses growing the business by providing timelyand consistent service, improving reliability andcustomer satisfaction. Revenue growth is essentialto meet the break-even requirements of the PostalReorganization Act, especially as the Postal Servicemust absorb the costs of extending more than 1.5million new deliveries each year.

The Voice of the Employee categoryfocuses on creating a motivated, productive andinclusive workforce.

The Voice of the Business category seeks tokeep postal services affordable by achieving per-formance that assures financial viability andincreased efficiency.

These three categories support three criticalelements of the Postal Service: service to the cus-

tomer, the employee on whom the quality of thisservice depends, and the financial base or the busi-ness that must match revenue and cost. The goalsare summarized in Table 4.2.

Achieving these broad goals will allow thePostal Service to continuously improve service,ensure an effective and stimulating workplaceenvironment and achieve superior financial per-formance. The service sub-goals will be expandedto include all major product lines while sus-taining the core mission of universal service. Thehuman assets of the organization will be thefocus of investment that provides employees with

the knowledge, tools, training and encourage-ment that will allow them to contribute to thesuccess of the Postal Service and its customers.The costs of service enhancements and invest-ments will be managed to assure that the PostalService can financially sustain its mission of pro-viding service to the nation.

The three Voice categories are supported byperformance sub-goals that are aligned with rele-vant indicators. These sub-goals frame the criticalactions needed to achieve the goals.

Specific performance targets are linked toeach sub-goal. The Postal Service’s managementsystem is an annual cycle of setting performancegoals, deploying resources against those goals,measuring and rewarding performance, and evalu-ating and reviewing targets and performance.Each operating year is preceded by a planningyear in which goals are set and resources are allo-cated. The cycle’s objective is continuousorganizational improvement.

The specific performance goals, sub-goals,indicators, and targets for 2002 are summarized inTable 4.4. A three-year history of performanceagainst the targets is provided in the followingchapter, the Annual Performance Report. Whenthe Final Annual Performance Plan is published,the performance data will be updated andincluded in that document.

2. Voice of the Customer

a. Performance Goals, Sub-goals, Indicators, and Targets

The performance goals and sub-goals of theVoice of the Customer are shown in Table 4.3

b. Performance Indicators and Targets for“Timeliness and Consistency”

For 2002, the Postal Service will:

■ Achieve destinating overnight First-ClassMail on-time performance of at least 93.5percent for Postal Quarters 1, 3, and 4, asmeasured by the External First-ClassMeasurement System (EXFC). Quarter 2 isexcluded due to the unpredictable impact ofextreme weather during this period.

■ Achieve targeted on-time performance fororiginating and destinating compositeExpress Mail focusing on the surface networkand the FedEx network, for Postal Quarters3 and 4, as measured by the Express MailReporting System (EMRS). The Postal

TABLE 4.2 2002 POSTAL SERVICE GOAL CATEGORIES

Voice Category Goal Statement

Voice of the Customer Growth

Voice of the Employee Motivated, Productive,

and Inclusive Workforce

Voice of the Business Affordability


Service expects significant improvementsbased on the use of the FedEx system insteadof scheduled airlines, and a new baseline willbe established.

■ Achieve Priority Mail on-time performance,as measured by Delivery Confirmation data.The focus will be on the two-day network,for Postal Quarters 3 and 4.

■ Develop a performance baseline for StandardMail, using the CONFIRM system toreplace ADVANCE.10 Adoption of CON-FIRM requires recalibration of performancemeasures. The focus will be on providingdelivery service within a “delivery window”for Carrier Route Bundles, and providingdelivery service within the delivery standardsfor all other categories of Standard A Mail.

■ Develop a performance baseline for on-timeperformance of destination-entered groundparcels (Parcel Select), as measured by theDelivery Confirmation system.

c. Performance Indicators and Targets for “Reliability”


Improve the accuracy of delivery as measuredby the Accuracy of Delivery Index, identifyproblem areas, and achieve a 5% reduction fromthe 2001 baseline error rate.

d. Performance Indicator and Targets for “ImproveCustomer Satisfaction”


■ Improve the overall residential customer satis-faction score by 1% over PQ4 of the previousyear, and improve the “Excellent” ratings by2% (based on responses to CustomerSatisfaction Measurement survey questions).

■ Improve the overall business customer satis-faction score by 1% over PQ4 of the previousyear, and improve the “Excellent” ratings by2% (based on responses to CustomerSatisfaction Measurement survey questions).

3. High Priority VOC Targets

For 2002, the high-priority VOC performance targets are:

■ On-time performance for Priority Mail.Field operating units will be held account-able primarily for deliveries within 500 miles,reached by surface transportation, while rele-vant headquarters functions will beaccountable for the performance of PostalService air service suppliers.

■ On-time Express Mail (AM and PM service).■ Maintain the On-time performance for

overnight First-Class Mail, as measured by EXFC.

These high-priority goals will be included inthe Postal Service’s Economic Value Added (EVA)performance incentive program for 2002. Theincentive for the first two goals is “variable,” inthat the amount of the incentive depends on theactual indicator value achieved. The First-Classgoal will be considered a “threshold” target for theVOC category, in which an incentive is earnedonly if the threshold value is achieved or exceeded.The long-range goal is to provide consistency ofperformance across classes of mail against pub-lished service standards.

4. Changes to VOC GoalsUnder the Postal Service’s annual manage-

ment cycle process, the various performance goals,sub-goals, indicators, and targets are reviewed andsometimes revised in response to significantchanges in the external and internal environments.

The 2001 VOC performance goals were toprovide timely delivery, reliable service, andimprove customer satisfaction. These remain thefocus for 2002, although the wording has beensimplified in order to make organizational com-munication more effective. However, the followingdevelopments should be noted:

■ The Postal Service has achieved consistentlyhigh levels of performance and customer sat-isfaction for First-Class Mail. In 2002, thePostal Service will focus on maintaining thisperformance while focusing on improvingservice in the competitive markets.

■ The 2001 performance indicator for “ease ofuse” will not be used as a corporate strategicindicator in 2002. It will be used primarily asa tactical measure of specific customer con-tact programs, such as retail and bulkacceptance, rather than as a corporatestrategic measure.

■ The Postal Service will continue to use“overall customer satisfaction” as a measure of

TABLE 4.3 VOICE OF THE CUSTOMER PERFORMANCE GOALS

The Goal Growth

Performance Sub-Goal 1 Timeliness and Consistency

Performance Sub-Goal 2 Reliability

Performance Sub-Goal 3 Customer Satisfaction


10 The ADVANCE system allows business customers to use the Internet to give local postal managers timely notice of mailings scheduled for delivery. An electronic image of the

scheduled mail piece aids recognition. Detailed compliance and performance reports are accessible to both postal supervisors and mailing customers. CONFIRM replaces

these manual systems with a process based on automatic reading of barcodes.



corporate performance. While many privatesector firms use some form of customer satis-faction measurement as part of their strategicperformance evaluation, the literature on thesubject and consultation with experts in thefield note the limitations. As noted in the

2001 Annual Performance Report, the PostalService has used concepts such as “loyalty”ratings and “Customer Value Analysis” toimprove its understanding of performance.The Postal Service will continue to developmore sophisticated approaches to use for

TABLE 4.4 2002 PRELIMINARY ANNUAL PERFORMANCE GOALS, INDICATORS AND TARGETS

Destinating First-Class Mail Overnight On Time, 93.5%

PQ 1, 3,&4 (EXFC )

Originating and Destinating Composite Express Proprietary

Mail On Time-Surface and on FedEx Network,

PQ 3,4 (EMRS)

Priority Mail On Time — Two Day Network, Proprietary

PQ3,4 (Delivery Confirmation)

Standard A — Carrier Route Bundles within Baseline

Delivery Window, All Others within Standard

Improve Parcel Select Proprietary

Accuracy of Delivery Index (ADI) 5% reduction in error rate

(from 2001 Baseline)

Overall Satisfaction — Residential 1 point improvement in overall rating

(Customer Satisfaction Survey) over PQ4-Previous Year, and 2 point

improvement in “Excellent” Ratings.

Overall Satisfaction — Business

(Customer Satisfaction Survey)

OSHA Accident/ Illness Rate 2% improvement in National rate,

allocated by opportunity.

“Available for Duty” Rate Baseline

VOE Survey Equal or Better than FY2001

Training in Prescribed Curriculum 97% of EAS 15 & over: 20 hrs.

97% of EAS 14 & below: 8 hrs.

100% craft employee work units: 8 hours

REDRESS 100% Availability

70% Participation Rate

Inclusive/Fair Environment Indicators Included in PCES Merits

are Part of Merit System

• Representation of All Groups in Special Details, Quarterly Reviews

Assignments, and Succession Plans • Areas with COO

• Activities Supporting the Affirmative • PC’s with AVP’s

Employment Plan • HQ with Mngt Committee

Total Factor Productivity (TFP) At Least 1% over FY2001

Area Productivity Improvement Improve over Hurdle

Performance Cluster Productivity Improvement Improve over Hurdle

Flats and Parcels Contribution Develop Indicator

Retail Revenue TBD upon completion of Deploy

Commercial Revenue TBD upon completion of Deploy

Expense Budget TBD upon completion of Deploy

Timeliness and Consistency

Reliability

Customer Satisfaction

Minimize Impact from Accidents

and Absences

Employees Committed to USPS Success

Skilled Workforce

Dispute Resolution Processes Are Sound

Inclusive Workforce

Improve Productivity to Control Costs

and Improve Contribution Levels and

Grow the Business

Improve Financial Strength

Voice of the Customer (VOC)

Growth

Voice of the Employee (VOE)

Motivated, Productive and

Inclusive Workforce

Voice of the Business (VOB)

Affordability

Goal Sub-Goal Indicator Target

ESTABLISH TEAM, 2/20/01


detailed internal evaluations, and for theanalysis of performance by segment, by issue,and by geographic location.

■ During 2000, operational and process per-formance indicators were developed forPeriodicals performance jointly with publica-tion mailers. Publishers requested thatspecific feedback about individual mailingsbe the Postal Service’s primary focus. As aresult, methods for uploading computer-gen-erated point and time of entry data weredeveloped that allowed mailers to track andverify individual mailings through BusinessMail Entry Units. These mailer-specific indi-cators are intended to identify opportunitiesfor process improvement, and are not suit-able for measuring aggregate national or localperformance. Additional enhancements tothese indicators are planned.

■ An indicator for on-time performance ofInternational Mail is still not included on the2002 list of national-level CustomerPerfect!measures, although the Postal Service is con-tinuing to explore ways to measureinternational network performance at a rea-sonable cost.

■ The Sales and Marketing organization is inthe process of aligning its various functionswith Customer Relationship Management(CRM) practices. These practices recognizethe need to coordinate all of its customercontact programs and align them to cus-tomer expectations and needs. This shouldincrease the timeliness, relevance, and effec-tiveness of customer contact programs andbenefit Postal Service commercial customersby providing better customer service.

5. Goal Achievement StrategiesThe Five-Year Strategic Plan for 2001-2005

presents the organizational strategies for achievingthe longer-term goals of the Postal Service under its“Blueprint for Progress” initiative. Specific strategiesfor managing the organization, supporting thepeople, improving pricing, increasing revenue gen-eration, and ensuring the effectiveness of capitalinvestment are described in Chapter 4 of theStrategic Plan and Chapter 3 of the ComprehensiveStatement on Postal Operations. More detail onadditional initiatives will be provided in the Final2002 Performance Plan in September.

Service Programs — The 2002 Deployprocess has yet to take place. The current financial

situation suggests that there will be no additionalresources available to allocate to new 2002 initia-tives. However, the following programs shouldsupport service improvement goals in 2002:

■ Automation: The primary emphasis will beon improving flat and package handlingproductivity and service performance byinstalling additional automation andrelated equipment.

■ Operations Discipline: Quality control,operations standardization, and improve-ments to the postal network should alsoresult in improved service improvement.

■ Transportation: More consistent schedulingof air transportation through use of theAutomatic Airline Assignment system andthe implementation of a new service agree-ment with FedEx to carry mail and packageswill increase consistency and reliability. Inaddition, the movement of some mailvolume to surface transportation from lessreliable air transportation is expected toimprove service.

■ Information Systems: The deployment ofInformation Platform programs should pro-vide managers and supervisors with moretimely, relevant and accurate data to improveacceptance, processing, transportation, anddelivery operations, with correspondingimprovements on service performance.

■ Technical Support Services: A variety ofprograms, from Postal One! in bulk accept-ance to the Business Service Network andMail Equipment Centers, will enablemailers to better prepare and enter the mailin order to obtain the best possible service.

6. Voice of the Employee

a. Performance Goal, Sub-goals, Indicators, and Targets

The performance goal and sub-goals for theVoice of the Employee are presented in Table 4.5.

b. Performance Indicator and Target for “MinimizeImpact from Accidents and Absences”


■ Improve the National OSHA accident and ill-ness rate by 2%, allocating the improvementsto field units based on opportunities that varywith past performance and local conditions.Develop a new indicator to measure “avail-ability for duty” rates, and create a baseline.




c. Performance Indicator and Target for“Employees Committed to USPS Success”


■ Achieve results equal to or better than the 2001 baseline, as measured in theVOE Survey.

d. Performance Indicator and Target for “Skilled Workforce”


■ Provide training in a prescribed cur-riculum, which includes four hours ofinterpersonal skills training, in the fol-lowing amounts:■ 20 hours for 97 percent of employees in

grades EAS 15 and above.■ 8 hours for 97 percent of employees in

grades EAS 14 and below.■ 8 hours for craft employees in all work

units nationwide.As measured by postal training records.

e. Performance Indicator and Target for “DisputeResolution Process are Sound”


■ Maintain and extend the use of REDRESS(100 percent availability, 70 percent partici-pation rate).

f. Performance Indicator and Targets for “Inclusive Workforce”


■ Ensure that inclusive/fair environment indicators are part of management merit system.

■ Ensure that all groups are represented in special details, assignments, and succes-sion plans.

■ Ensure that activities supporting the affir-mative employment plan are implemented.

Data developed by the Diversity Departmentwill be used to support the merit process and man-agement reviews.

g. High Priority VOE Targets

To drive desired behaviors, two of the VOEperformance targets will be considered high-pri-ority for purposes of the EVA variable payprogram in 2002. The first initiative is the VOESurvey Index, which has been introduced toimprove understanding of and response toemployee issues and concerns. This index incor-porates six components of the VOE Survey

relating to recognition/rewards and treatment bysupervisors. Improvement targets are set for eachPerformance Cluster. The second initiative isachievement of the OSHA accident/illness target,which will be the “threshold” for evaluating eligi-bility for compensation for this category.

h. Changes to VOE Goals

The VOE performance goals for 2002 areessentially the same as those presented in the2001 Annual Performance Plan. However, as dis-cussed below, several changes to the 2001performance indicators are likely to be intro-duced in the final plan:

■ The bulk mail proficiency indicators arestill being used to track Bulk Mail EntryUnit performance at the PerformanceCluster level. Goal achievement will be tiedto individual employee incentive awards toencourage ongoing and successful programparticipation. However, these will be pro-gram indicators, rather than strategicnational performance indicators.

■ The motor vehicle accident data is incor-porated into the OSHA Accident/Illnessindicator.

■ In 2000, the report of the Commission on aSafe and Secure Workplace was published.The findings have been discussed extensivelythroughout the organization. Teams havebeen formed around four main topics: 1)selections and assignment, 2) skills andknowledge, 3) work environment, and 4)motivation and incentives. Some of the rec-ommendations will be completed within athree to six month period while others areconsidered continuous improvement proj-ects. Recommendations from these teamscan be expected to result in changes or addi-tions to goals.

■ A major goal of the Postal Service in thefuture will be to change the organizationalculture to foster an entrepreneurial andresults-oriented mindset. The VOEsurvey responses will be used as an indi-cator while the Postal Service considersother measures for the future. One suchindicator that will be developed will be an“available for duty” rate.


i. Goal Achievement Strategies

Longer-term VOE strategies are described inChapter 4 of the Five-Year Strategic Plan for 2001-2005. Programs under the “Supporting thePeople” strategy include compensation, employeesuggestions, succession planning, and workplacerelations, and are described in Chapter 1 of theComprehensive Statement.

The Postal Service’s 2002 goal of building aninclusive and welcoming workplace that fosterssuccess will be driven by strategies and programplans in the six areas listed below.

■ REDRESS (Resolve Employee Disputes,Reach Equitable Solutions Swiftly) — Thismediation program was fully deployed in2000 to resolve and expedite employee com-plaints at the lowest possible level, and hasalready contributed to a substantial reductionin the number of formal complaints filed.For 2002, the emphasis will be on main-taining at least a 70 percent participation ratein the program.

■ Labor Relations — During 2002, a varietyof initiatives will be pursued that aredesigned to contribute to a reduction ingrievance activity and improvements in thework environment, employee attitudes and,ultimately, overall performance and produc-tivity. Further expansion of alternativedispute resolution mechanisms to other com-pliance and appeals process is also underway.Introduction of mediation into the internalappeals process available to non-bargainingunit employees began in 2000 as a pilotproject in three locations, and after refine-ment is expected to be available nationwidein 2002. Additionally, the Postal Service isworking with the League of Postmasters andthe National Association of Postmasters to

design a mediation program to address issuesof national concern.

■ Training — An ongoing improvement effortto excel in the development of leaders isreflected by the investment in the training ofnew managers and supervisors in communi-cation conflict management and leadershipskills. In 2002, the Postal Service will con-tinue development and deployment ofnational training courses such as theAssociate Supervisor Program and theAdvanced Leadership Program (ALP), whichactively develop desired leadership and man-agement skills. The Training group and theStrategic Planning office will cooperate in aprogram that uses ALP graduates as focusgroups for the development and review ofstrategic issues, thereby building on the skillsdeveloped during training while providingbroader, more interactive participation in thestrategic planning process.

■ Safety and Health — Low accident andinjury frequency statistics are aligned withPostal Service corporate goals to reinforceemployee commitment, customer satisfactionand cost reduction. In 2002, the key sup-porting programs will enhance linemanagement accountability for safety andhealth performance.

■ Workplace Environment Improvement —In 2002, program activities will include the Employee Assistance Program, violenceprevention and crisis management activities,and identification and propagation of indica-tors, measures, and tools for workplaceenvironment improvement.

■ Diversity — To achieve maximum corpo-rate success in 2002, the Postal Servicewill continue to develop and implementstrategies and objectives to promote aninclusive environment at all levels of the organization. In 2001, the PostalService will examine the feasibility ofusing investigative services from an outside source for equal opportunity complaints. This study will be evaluatedand a decision made by 2002. If suc-cessful, the Postal Service would expect to have all of its administrative investiga-tions of equal opportunity complaintshandled by an independent party.


TABLE 4.5VOICE OF THE EMPLOYEE PERFORMANCE GOALS AND SUB-GOALSThe Goal Motivated, Productive and

Inclusive Workforce

Performance Sub-Goal 1 Minimize Impact from

Accidents and Absences

Performance Sub-Goal 2 Employees Committed to

USPS Success

Performance Sub-Goal 3 Skilled Workforce

Performance Sub-Goal 4 Dispute Resolution Processes

Are Sound

Performance Sub-Goal 5 Inclusive Workforce


7. Voice of the Business

a. Performance Goal, Sub-goals, Indicators and Targets

The financial performance goal and sub-goal for the Voice of the Business are pre-sented in Table 4.6.

b. Performance Indicators and Targets for ImproveContribution Levels and Grow the Business”


■ Improve Total Factor Productivity (TFP) byat least 1 percent over 2001 levels.

■ Improve Performance Cluster productivityover a “hurdle” rate unique to eachPerformance Cluster. The rate is the per-centage improvement over prior yearperformance that a Performance Clustermust achieve to ensure achievement of itsbudget plan for the VOB portion of theEconomic Value Added program.

■ Improve Area productivity over a “hurdle”rate. The hurdle rate is the percentage produc-tivity improvement over the threshold that isnecessary to meet the national net incometarget. It is recalculated each accountingperiod, and is the same for each Area.11

■ Focus on improving the contribution levelsfor flats and parcels. Indicators and targetswill be developed for future implementation.

c. Performance Indicators and Targets for“Improve Financial Strength”


■ Generate new retail revenue. Retail sales tar-gets will be developed by PerformanceCluster based on past performance, localopportunities, and relevant program support.

■ Generate new commercial revenue.Commercial sales goals will be assigned, anda method will be developed to shareaccountability between the Sales organiza-tion and the operating units that provide therelevant services.

■ Achieve expense budgets.

d. High Priority VOB targets

For 2002, the high-priority performance targets are:

■ Improve Total Factor Productivity (TFP).■ Improve overall business performance, as

measured by achievement of Area andPerformance Cluster productivity improve-ment targets.

TFP Productivity improvement is a“threshold” goal for the Voice of the Business cate-gory. If the threshold is met, managers are eligiblefor EVA consideration based on performance inimproving local productivity. Merit considerationwill be given for achievements in:

■ Generating new revenue from retail andcommercial customers.

■ Achieving expense budget targets.■ Improving the contribution for flats and

package services.

e. Changes to VOB Goals

The VOB performance goals presented in theFinal 2001 Annual Performance Plan, as amendedJanuary 3, 2001, were: improve overall VOB per-formance (as measured by indexed EconomicValue Added), and control costs by achieving pro-ductivity gains (as measured by TFP and laborproductivity). For 2002, the following changes tothe preliminary performance sub-goals, indicators,or targets have been made:

■ The uncertain impact of the recommenda-tion of the Postal Rate Commission, thepotential impact of labor arbitration deci-sions, the unexpected slowing of the growthof the U.S. economy, and the unknownfuture effect of technological diversion ofmail volume has made forecasting 2002 rev-enue and costs extremely difficult.Accordingly, Net Income was dropped as aVOB goal in 2002 because its value as anindicator of organizational success hasdecreased. Improving productivity willbecome the primary VOB goal because it iswithin the control of the Postal Service.

■ Upon approval of the Integrated FinancialPlan by the Postal Service Board ofGovernors, 2002 revenue and cost estimateswill be provided and will be published in theFinal Performance Plan in September 2001.

■ Final productivity hurdle rates for 2002cannot be computed until final auditedfinancial statements, volume, and revenuereports for 2001 are completed.


11 The specific numerical Area productivity targets for 2002 are not yet available. They will not be finalized until the baseline data are final and all technical adjustments for cost

and pay rate changes are completed. Additional information on Area productivity targets and achievement will be provided in the 2001 Annual Performance Report.

TABLE 4.6VOICE OF THE BUSINESS PERFORMANCE GOALSAND SUB-GOALS

The Goal Affordability

Performance Sub-Goal 1 Improve Productivity to Control

Costs, Improve Contribution

Levels and Grow the Business

Performance Sub-Goal 2 Improve Financial Strength



f. Goal Achievement Strategies

Longer-term VOB strategies are described inChapter 4 of the Five-Year Strategic Plan for 2001-2005. These include the Postal Service’sbreakthrough productivity initiative, improve-ments to product pricing strategies, and revenuegeneration opportunities.

Achievement of the near-term VOB goals for2002 is supported by a number of expense andcapital investment programs, as described in theResources and Programs section and elsewhere inthe Comprehensive Statement on PostalOperations. In addition, the VOC strategiesinclude the breakthrough productivity andeCommerce initiatives described below.

■ Breakthrough Productivity Initiative —The Breakthrough Productivity Initiative(BPI) is a comprehensive and integratedapproach to accomplishing productivityimprovement and cost reductions in the fol-lowing areas:■ Administration ■ Purchasing ■ Transportation ■ Mail Processing and Post Office Operations

The overall objective of BPI is to provide asystematic corporate focus on driving costs out ofthe organization by improving productivity. TheBPI approach, which is common to all the initia-tives, is as follows:

■ Identify current common causes for poorproductivity (poor practices).

■ Provide a methodical approach to imple-menting standard improved practices andmethods.

■ Provide diagnostic and corrective tools.■ Define new metrics to identify cost reduc-

tion opportunities based on internal andexternal benchmarks.

■ Adjust budgets based on identified opportunity.

The specific tactics for each of the BPI initia-tives are listed below:

■ Administration■ Reduce paper transactions through use of

electronic technology.■ Eliminate unnecessary transactions and

combine redundant transactions.■ Centralize administration by creating

shared services organizations.■ Purchasing

■ Supply chain management.■ Strategic sourcing.■ Leveraging size for better prices.

■ Revising purchasing methods utilizing21st Century technology.

■ Motivating suppliers to compete.■ Web-based purchasing through

electronic catalogs.■ Transportation

■ Improve utilization of existing surface transportation.

■ Revise modal decision process. ■ Leverage size for transportation purchasing.■ Revise purchasing method using

new technology for both services and equipment.

■ Mail Processing and Post Office Operations■ Implement standard complement plan-

ning and tracking processes.■ Provide standard scheduling tools to opti-

mize workforce utilization.■ Implement a national Operations

performance measurement and management system.

■ Identify and implement standard provenmethods and practices.

■ Identify critical knowledge shortages andcorrect through aggressive supervisor andmanagement training.

■ Growth Initiatives — The following pro-grams will be implemented during 2002:

Core Business — The Postal Service willfocus on improving service, convenienceand new features to its core services to addto their value in the market. Commercialmailers will find it easier to do businesswith the Postal Service through improve-ments in online access, customer service,and business mail acceptance. New fea-tures, such as Delivery Confirmation andCONFIRM, will provide accurate andtimely information to mailers about theirmailings.Retail — Small business and consumercustomers will find courteous, knowl-edgeable clerks, using the latest in retailtechnology, providing accurate andprompt services in improved facilities.The focus of USPS efforts, however,will be to improve customer conven-ience and reduce postal costs byproviding alternatives to a trip to thePost Office to purchase postage by pro-viding increased access throughconsignment, contract un its, self-service, “Post Office on Wheels,” andonline services.


Strategic Marketing — The Postal Servicewill increase its efforts to reach the “mid-market” commercial customers andmulti-cultural markets.Sales — The postal sales program hasbeen organized around customer seg-ments in order to improve the ability todevelop relevant solutions to businessneeds. New Business Development — ThePostal Service will continue to workwith partners and other governmentagencies to develop relevant new serviceswhere the Postal Service can enable theuse of new technologies that bind thenation together or otherwise providevalue to its customers.

D. Managing the Postal ServiceAs described in its Five-Year Strategic Plan for

2001-2005, the Postal Service uses a managementsystem based on the criteria of the MalcolmBaldrige National Quality Award. Consistent withthe principle of excellence through continuousimprovement, the performance of the manage-ment system itself and opportunities forimprovement are subjects of ongoing review.Recent and planned improvements to the manage-ment system are described below.

1. Assessing the Management SystemDuring 1998, the Postal Service undertook a

full assessment of its management system, using asa benchmark the Malcolm Baldrige Quality Awardcriteria. The assessment documented the nationalapproaches to addressing the core categories of theBaldrige Award. Following a series of site visits, ateam of outside examiners facilitated a series ofmeetings in which the Postal Service’s officersreceived feedback on the Baldrige assessment andthen identified five key opportunities for processimprovements: people, human resource strategy,process management, comparative data, and align-ment of direction.

In 1999, 39 project teams were formed torespond to the findings of the 1998 Baldrigeassessment, and project plans were developed foreach outcome. Several of these projects were com-pleted during 1999, and responsibility formonitoring the outcomes of the remaining proj-ects was transferred to the senior vice presidents in2000. During 2001, assessment of the manage-

ment system continued, and additional opportuni-ties for improving overall Postal Servicecompetitiveness were identified.

For 2002, additional changes have beenmade. The field Vice-President Co-Chair of theDeploy team is being added to the Establish team.This will provide field input during the Establishphase and facilitate increased continuity betweenEstablish and Deploy. The proposed goals andsub-goals will be accompanied by a “business case”supporting the market need and describing thealignment with USPS strategic direction. Toincrease focus and attention to detail, the EstablishTeam will review the top 25 headquarters pro-grams.12 Headquarters review will be completedprior to the start of field review so that changesthat may adversely impact major programs can befactored into the field’s feedback, performancecommitments, and resource requirements.

In 2002, measurements will be developed forthe 25 major programs of the Postal Service,adding an intermediate level of goals, measures,indicators, and targets between the overall corpo-rate goals and the field operational goals. Many ofthese goals will be headquarters program goals,and headquarters functional departments will beheld accountable for their achievement.

2. Business Operations PlanningThe Business Operations Planning process was

launched in 1999 to develop an integrated BusinessOperations Plan to support the Postal Service’sannual management cycle. During business opera-tions planning, a cross-functional committee ofsenior officers provides oversight on the developmentof functional implementation plans in marketing,operations, technology, human resources, labor rela-tions, capital investment, and financial planning.The Business Operations Planning Committee alsomanages the preparation of an enterprise-wideBusiness Operations Plan that links the functionalplans and sets an overall direction for implementa-tion planning during the next year. A CoordinatingCommittee of senior managers responsible forimplementation in all Postal Service functional areassupports the Business Operations PlanningCommittee throughout the year in developing thefunctional and overall business plans.

During 2000, both groups met regularly, com-pleted their anticipated tasks, and provided inputinto the Establish 2001 portion of the managementcycle. These inputs included sets of common andplan-specific assumptions for use in integrated plan-


12For further detail on the development of program management in the Postal Service, see the 2001 Annual Performance Plan.



ning efforts and a “Business Operations PlanningMatrix” designed to ensure that the various func-tional plans align with each other and with corporategoals and strategies. For 2002, the Committee plansto update these outputs as appropriate and develop amore formal integrated planning document.

Also in 2002, a subcommittee of the managersresponsible for strategic or long-range planning inthe various functions will meet regularly under thedirection of the Strategic Planning Office to discusslong term trends and to share relevant informationthat may influence the various functional activities ofthe Postal Service. The formal output of this groupwill be an annual business environment assessment.

3. Technology Investment PlanningThe ability of the Postal Service to improve

performance, reduce costs, and to develop relevantnew services will increasingly depend upon theeffectiveness of its investment in technology withinthe constraints of a limited budget. A TechnologyInvestment Committee, composed of senior postalofficers and supported by a cross-functional execu-tive-level working group, was established to reviewUSPS investments and to assist in implementationof technology programs.

4. Resources and ProgramsThe United States Postal Service is funded by

revenue generated from its business services. Thatrevenue must cover the cost of providing those serv-ices, the cost of the public service infrastructure, andmust fund necessary investments in future improve-ments. Chapters 1 through 3 of the ComprehensiveStatement provide detail on the major programs thePostal Service has been using to achieve its goals,and these programs will continue to contribute tothe achievement of 2002 goals. However, Table 4.7highlights some of the key programs described inthose chapters.

5. 2002 Operating Projections The Postal environment is changing rapidly

and the Postal Service currently faces unprece-dented uncertainty resulting from alternatives thatmailers now have to traditional mail services, suchas Internet-based applications. This may change thehistorical assumption that the growth in mailvolume and the associated revenue will always besufficient to cover the cost of delivering mail to agrowing country.

We are currently projecting a net loss during2002 of between $2.5 and $3.5 billion.

Due to substantial uncertainties resulting fromthe implementation of the Postal RateCommission’s recommended rates, as well as theslowing economic environment, revenue andexpense projections for 2002 are not yet finalized.Management has estimated that total revenue willbe in a range from $67.5 billion to $68.5 billion asreflected in Table 4.8. Management has estimatedthat total expenses will be $71.0 billion as reflectedin Table 4.9. Likewise, major projects costs are sub-ject to change by Postal Management and the Boardof Governors. Given adverse rate recommendationsand economic trends, the budget modifications areexpected to be severe. However, more detailedanalysis is required and will be included in the finalAnnual Performance Plan to be published followingthe completion of the Deploy cycle.

6. 2002 Major Program CostThe General Accounting Office has noted that

the USPS needs to discuss specific strategies toaccomplish individual performance goals. The finalAnnual Performance Plan will contain such detailwhen it is published as a stand-alone document inSeptember 2001. This year, the 2002 PreliminaryPerformance Plan is published shortly after theSeptember publication of the updated Five–YearStrategic Plan, 2001-2005. The discussion in thatdocument has been referenced in the PreliminaryPlan, and need not be repeated here. Furthermore,the inclusion of the preliminary plan as part of theannual Comprehensive Statement on PostalOperations reduces the need to discuss specific pro-grams in detail in the Preliminary Plan. Finally, thepublication of the 2000 Performance Report, also aspart of the Comprehensive Statement, permits thecross-referencing of baseline performance data.However, Table 4.10 provides a preliminary sum-mary of the major 2002 program costs.

Table 4.11 provides an outline of the majorcost reduction programs for 2002. As noted, Boardof Governors review and management action arelikely to cause adjustments in these preliminary esti-mates. Details on these programs will be providedin the final Annual Performance Plan.

E. Performance MeasurementSystems and Review Processes The specific Postal Service systems and

processes used for verification and validation of thevarious performance goals are listed below. Many



of these measurement systems are based on surveysconducted by independent firms retained by thePostal Service to ensure the integrity of the results.

■ Provide timely delivery (VOC) — Mailservice performance results for overnight, 2-day and 3-day First-Class Mail and PriorityMail are measured by the Transit TimeMeasurement System (TTMS), which isindependently administered byPricewaterhouseCoopers. Within TTMS,First-Class Mail results are measured byEXFC and Priority Mail service performance

has been measured by the DeliveryConfirmation System.13 These systems trackthe mail piece from the time it enters thesystem until it is received in a home or smallbusiness and provides quarterly results ofdelivery performance. For Ad Mail, theADVANCE System, administered by postalpersonnel, provides data on delivery timeli-ness and area coverage. In 2002, this systemwill be replaced by CONFIRM.

■ Accurate service (VOC) — In its existingtransit time measurement survey processes,PricewaterhouseCoopers surveys a sample ofits reporters on the number of mail piecesreceived that were for the wrong address orwere damaged. The contractor utilizes aquality-checking process to assure the accu-racy of the data.

■ Improve customer satisfaction (VOC) —Customer Satisfaction Measurement (CSM)surveys provide direct feedback from cus-tomers on a variety of rating and diagnosticquestions that are designed to assess actualcustomer experiences with postal productsand services. The Gallup Organization, anindependent research firm, is under contractwith the Postal Service to administer theCSM survey process, which includes con-ducting surveys, tabulating data, performingquality checks and forwarding results to thePostal Service. Responses to selected ques-tions are used at the Postal Service tomeasure residential household and businesscustomer satisfaction. Survey results are alsoused to develop Ease-of-Use measures.

■ Improve workplace relations by buildingleadership skills and behaviors (VOE):■ REDRESS participation rate — based on

Mediation Activity Tracking reports, thisindicator measures the percentage ofemployees within each PerformanceCluster who elect mediation in lieu of tra-ditional EEO counseling.

■ Improve understanding of employee issuesand concerns (VOE) — A survey is adminis-tered quarterly to a sample of employees toobtain information to enhance the workplaceenvironment and improve relationships withemployees. An independent contractor,Market Facts Inc., conducts these surveys,including distribution, scoring and compila-tion of the results.

■ Ensure that each and every employee is giventhe knowledge, tools, training and encour-

TABLE 4.7 MAJOR POSTAL SERVICE PROGRAMS

Program Description and Link with Strategic Goals

Strategic Planning Provides analysis of business environment, supports management

committee and Board of Governors, and develops reports (Strategic Plan,

Annual Performance Plan)

Quality Supports standardization of postal programs, trains “Quality Practitioners”

working throughout USPS (VOB-improve productivity and contribution)

Diversity Supports the development of inclusive environment within USPS

(VOE — inclusive workplace)

Collective Bargaining Determines the cost of postal labor through negotiation (VOB — affordability)

Labor Relations Develops and administers workplace programs

(VOE-sound dispute resolution processes)

Compensation and Benefits Administers postal pay and benefits programs (VOE-motivated employees)

Employee Development Develops and administers training and development programs

(VOE-skilled employees)

Workplace Environment Develops and administers safety and employee assistance programs

Improvement (VOE — minimize impact from accidents and absences)

Pricing Develops postal pricing proposals, based on cost and other criteria

(VOC-Growth, and VOC –Affordability)

Transportation Manages about $5 billion in expenses (VOC-timeliness, consistency,

and reliability; customer satisfaction; and VOB — control costs)

Facilities Manages the construction and maintenance of postal buildings

(VOB — control costs)

Environmental Protection Develops and administers environmental programs

(VOE — minimize impact from accidents, and VOB — control costs)

Purchasing Develops and administers purchasing programs (VOB- control costs)

Customer Outreach Creates programs to inform customers, and improve convenience

or ease of use (VOC — improve customer satisfaction)

Core Business Introduces service improvements, enhancements, new features

(VOC — Growth, and VOB — commercial revenue)

Service Performance Provides relevant and timely data to improve service performance

Measurement (VOC — Growth)

International Mail Introduces service improvements, enhancements, new features

(VOC — Growth, and VOB — commercial revenue)

Mail Distribution Develops programs to improve service and reduce cost (VOC and VOB)

Retail Programs Develops programs to improve service, generate revenue, and reduce cost

(VOC and VOB)

Mail Acceptance Develops programs to improve customer service (VOC and VOB)

Business Development Develops new products and services

(VOC — Growth, and VOB — Improve Financial Strength)

Technology Develops equipment (VOC — Grow Business, and VOB — Affordability)

Address Management Develops programs to support customers and operations

(VOC-Growth, and VOB- Control Costs)

13In previous years, performance for Priority Mail was measured by the Priority End to End System (PETE). However, the Delivery Confirmation System more closely

represents actual customer experience. The PETE system will continue to be used to validate Delivery Confirmation data.



agement to successfully meet the expecta-tions for their positions (VOE):■ Training in prescribed curriculum — Two

systems, the Local Employee TrainingSystem and the National TrainingDatabase maintained by the HumanResources Technology Managementoffice, are used to record training hoursand compare the data with training tar-gets for both EAS and craft employees.

■ Improve employees’ safety, security and well-being (VOE):■ In 2002, the Postal Service will use an

accident/illness rate as an integrated safetyindicator that incorporates the previousindicators (Total Accidents/Motor VehicleAccidents). The indicator is based on datafrom the Postal Service’s NationalAccident Reporting System, and con-forms to OSHA reporting requirements.

■ The Postal Service is currently developingan “available for duty” indicator, whichwill be tested in 2002, providing a base-line for future performance measure.

■ Improve overall business unit financial performance (VOB):■ Economic Value Added (EVA) — An

integral part of the EVA process is anincentive payment system that rewardsemployees for improved financial per-formance, customer service, and employeecommitment. It encourages employees tocontrol expenses, reduce waste, improveproducts, and improve employee effective-ness. Operating results that form the basisfor determining EVA payouts are subjectto the internal controls of the various datasystems. The calculations are reviewed by

the Office of the Inspector General andby Ernst & Young during its annualfinancial statement audit of the PostalService. Also, the Board of Governors hasretained its own independent consultantto review and advise on EVA issues.

■ Financial Statements (VOB) — Ernst &Young LLP, an independent certifiedpublic accounting firm hired by the Boardof Governors, audits financial results. Also,during the year the Office of InspectorGeneral and the Inspection Service (in2000 only) conducted various financialaudits and internal control reviews toassess the integrity of financial records.

■ Controlling costs by achieving produc-tivity gains (VOB) — The data sources

TABLE 4.8 PRELIMINARY 2002 REVENUE PROJECTIONS

Revenue Category Revenue ($ billions)

First-Class Mail 36.0

Priority Mail 5.3

Express Mail 1.1

Periodicals 2.4

Standard A 17.0

Standard B 1.9

International 1.8

Special Services 2.1

Other 0.4

Total 68.0

TABLE 4.9 PRELIMINARY 2002 EXPENSE PROJECTIONS

Expense Category ($ billions)

Personnel Expenses 53.4

Compensation 39.0

Benefits 14.4

Non-Personnel Expenses 17.6

Transportation 5.9

Supplies and Services 4.5

Building Occupancy 1.8

Depreciation/Write-offs 2.5

Interest Expense:

Deferred Retirement Liability 1.7

Borrowing 0.5

Research and Development 0.1

Other Miscellaneous 0.6

Grand Total Expenses 71.0

TABLE 4.10 PRELIMINARY 2002 MAJOR PROGRAM COSTS

Program Name Capital ($ millions) Expense ($ millions)

MTE Service Center - 333.0

Corporate Advertising - 160.0

Stamp Manufacturing 1.0 166.0

Point of Service 369.0 162.0

Recurring Mail Transportation - 160.0

Expedited Supplies - 144.0

Corporate Call Management 10.0 118.0

Associate Office Infrastructure 1.0 91.0

Delivery Confirmation - 74.0

Field Infrastructure - 50.0



used to calculate Total FactorProductivity (TFP) and LaborProductivity are the same as those usedto prepare the financial statements.Accordingly, the data are subject tonormal internal controls and accuracychecks by the General AccountingOffice, the Office of the InspectorGeneral, the Inspection Service, andthe certified public accounting firmengaged to audit the financial state-ments. Actual operating resultsachieved within established budgetparameters would indicate that thesecost reductions have been achieved.

1. Performance Review ProcessesDescriptions of the distinct roles of the

General Accounting Office, the Office ofInspector General and the Postal InspectionService in verifying and validating the PostalService’s performance data are provided below.

a. General Accounting Office (GAO)

The United States General AccountingOffice (GAO) is the investigative arm of theCongress and conducts studies and reviews ofPostal Service operations and programs. Requestsfor studies are received typically from the Houseand Senate oversight committees and occasionallyfrom individual Representatives and Senators.Studies may focus on activities unique to thePostal Service, such as an evaluation of mail pro-cessing automation, or they may involvegovernment-wide issues, such as Year 2000 com-puter readiness. GAO conducts its studies of thePostal Service in conformance with its

“Government Auditing Standards” which pre-scribes certain data verification and validationprocedures to assure a high level of confidence inthe data sources upon which GAO bases its find-ings and recommendations. GAO’s studiesprovide the Congress and the public with infor-mation, evaluations, analyses andrecommendations for improvement concerningPostal Service programs, activities and initiatives.At any one time GAO may have eight to tenstudies in progress that involve the Postal Service.

b. Office of the Inspector General (OIG)

The Office of Inspector General (OIG) isan oversight entity within the Postal Service,headed by the Inspector General who reportsdirectly to the Governors of the Postal Service.The OIG’s mission is to perform audits andinvestigations that promote economy and effi-ciency in the programs and operations of thePostal Service. The OIG is also responsible fordetecting and preventing fraud, waste, abuse,and mismanagement of Postal Service programs.Requests for audits and studies may be receivedfrom the Board of Governors, from the Houseand Senate oversight committees, from indi-vidual members of Congress, or from PostalService senior management.

The OIG may, at its discretion, initiateaudits or investigations based on informationreceived from the public or from employees. TheOIG conducts its audits of the Postal Service inconformance with GAO’s “Government AuditingStandards.” The OIG’s audits, investigations andconsulting services provide a means for keepingthe Board of Governors, postal management andthe Congress fully informed about problems anddeficiencies relating to the administration ofPostal Service programs and operations. At anyone time the OIG may have 50-60 studies orinvestigations in progress.

c. Postal Inspection Service

The Postal Inspection Service is the lawenforcement and security branch of the PostalService. The Chief Postal Inspector has a directreporting relationship to the Postmaster General/Chief Executive Officer. The Inspection Servicesupports the Postal Service’s management system.Their goals, indicators and targets are based onthe three primary initiatives for the PostalService, which are the Voice of the Customer,Voice of the Employee and Voice of the Business.

TABLE 4.11PRELIMINARY 2002 COST REDUCTION PROGRAMS

Program Revenue ($ millions)

Flat Sorting Machines 246

REC Sites 64

Tray Handling Systems 22

Time and Attendance 18

Control Systems

Identification Code Sort Program 11

Parcel Singulator 9

Robotics 9

Delivery Bar Code Sorters 8

Automatic Airline Assignment 7



Currently, the primary mission of the InspectionService is to protect the U.S. Postal Service, itsemployees and customers from criminal attackand to protect the nation’s mail system fromcriminal misuse. This will be accomplished byproviding investigative, security and preventiveservices and by enforcing federal statutes thatprotect postal employees, the mail, customersand assets.

As a result of the Omnibus ReconciliationAct signed into law in 1996, the InspectionService, by agreement, shared responsibility of theaudit function with the Postal Service Office ofInspector General. 2000 was the last fiscal year inwhich audits were included as part of theInspection Service’s programs. During 2000, theInspection Service worked with the Office ofInspector General (OIG) to transition theremaining audit programs to the OIG. The transi-tion process included joint performance ofselected audits and exchange of dialogue on auditprocedures and selection processes. The Office ofInspector General will be responsible for all auditsbeginning in 2001.

d. Verification and Validation: Ensuring Accuracy

A vast array of data and resources is avail-able to measure success in meeting the variousperformance goals of the Postal Service. Manyof the data systems utilized, especially in thearea of finance, have a series of internal controlsimbedded within their procedures to safeguardthe integrity of the results.

The General Accounting Office, the Officeof Inspector General, the Postal InspectionService, and a certified public accounting firmappointed by the Postal Service Board ofGovernors conduct independent ongoingreviews and audits of Postal Service data andrender periodic reports on their findings andrecommendations.

The final 2000 and 2001 AnnualPerformance Plan listed a variety of studies andreports completed by the General AccountingOffice, the Office of Inspector General, and theInspection Service as part of ongoing efforts toverify and validate data related to theCustomerPerfect! performance goals.14 Table 4.12presents a list of selected studies and reports onthe Postal Service that have been recently com-pleted by these organizations and the certifiedpublic accounting firm.

F. Planning and Managing in UncertaintyChanges in customer requirements, the evo-

lution of technologies affecting the postalenvironment, the emergence of foreign postaladministrations as competitors in the U.S.domestic market, and uncertainty about thedirection of the U.S. economy, are all elementsof an environment completely unlike anythingthe Postal Service has faced before. Postal man-agers and customers will have to manage in amuch more dynamic market, where directionsare not clear but whose pace is accelerating. Inthe past, postal policy was developed in the con-text of growing mail volume that providedsufficient revenue, with periodic incrementalprice increases, to support the public serviceinfrastructure. Mail volume may continue togrow. However, it is also likely that key mail cat-egories will begin to decline. In that case, aviable Postal Service will have to be muchsmaller, especially in terms of employees andfacilities, as well as much more efficient.

It is not certain that the Postal Service willbe able to be responsive enough to marketchanges or will be able to find new sources ofrevenue to replace traditional mail applicationsexpected to be diverted by technological substi-tutes. If mail volume decline is much more rapid,as many market observers predict, then the fun-damental mission of the Postal Service, ascurrently defined, will be at risk. This suggestseven more dramatic change that would impactnot just postal employees and suppliers, but keycustomer groups and the public.

The Postal Service will need increased flexi-bility in this environment if it is to continue togenerate sufficient revenue to support the uni-versal service mission and other public services.Much of this flexibility will have to come fromsignificant changes within the Postal Service —to its operations and culture — if it is to becomemuch more focused on operational excellenceand cost control.

However, internal transformation strategiesalone will not enable the Postal Service toaddress key elements of pricing, product devel-opment, strategic partnerships, and cost control.The thirty-year-old structure of the PostalReorganization Act requires reform. The natureof reform will be subject to the complex polit-ical environment of the Postal Service, and the

14See Table 2.7 of the 2000 Annual Performance Plan, published on September 30, 1999.



results cannot be reliably predicted. With thecooperation of the stakeholders, the PostalService will be able to make modifications in itslegal and legislative framework to permit thishistoric institution to continue to serve its cus-tomers — the American people and theirbusinesses — well into the 21st century.

TABLE 4.12SCHEDULED DATA VERIFICATION AND VALIDATION REPORTS FOR PERFORMANCE GOALS

Performance Goal Verification/Validation of Data Source/Report

Source Report Title

Provide timely delivery (VOC) General Accounting Office Postal Activities and Laws Relating to Electronic Commerce

(GAO/GCD-00-188, 09/07/00)

Office of Inspector General Mail Processing Delays at Worldways Airport Mail

Center in Los Angeles (AC-MA-00-002, 04/28/00)

Unprocessed Mail in Dallas, TX (DE-MA-00-001, 09/29/00)

Inspection Service International Air Carrier Service (027-1277924-SI2, 02/18/00)

Accurate Service (VOC) General Accounting Office Status of Efforts to Protect Privacy of Address Changes

(GAO/GGD-99-102 07/30/99)

Office of Inspector General Tray Management System Software Management

(#DA-MA-99-002 06/28/99)

USPS Equipment Preventive Maintenance Program

(#AC-MA-99-001 09/20/99)

Improve workplace relations Office of Inspector General Fiscal Year 1998 Leadership Conference

by building leadership skills (#OV-MA-99-00309/30/99)

and behaviors (VOE) Inspection Service FLSA Reviews (042-1290280-PA-2, 01/03/00)

Improve safety, security Office of Inspector General Criteria for Workplace Violence Prevention

and well-being (VOE) and Response (LB-AR-00-003-09/29/00)

Inspection Service Aviation Security Screening (071-1307159-SI-2, 05/08/00)

Improve understanding of Office of Inspector General Complaint Resolution Process, Mankato Post Office

employee issues and (#DS-MA-99-006 09/10/99)

concerns (VOE)

Ensure an inclusive and General Accounting Office Equal Employment Opportunity: The Postal Service Needs

fair environment with to Better Ensure the Quality of EEO Complaint Data

opportunities for all (GAO/GGD-99-16709/28/99)

employees (VOE) U.S. Postal Service: Diversity in the Postal Career Executive

Service (GAO/GGD-00-76 3/30/00)

Diversity in District Management Level Positions

(GAO/GCD-00-142, 06/30/00)

Improve overall General Accounting Office Challenges to Sustaining Performance Improvements Remain

business performance (VOB) Formidable on the Brink of the 21st Century

(GAO/T-GGD-00-2 3/21/99)

Office of Inspector General Point of Service One (#DA-AR-99-002 09/20/99)

Plant Verified Drop Shipment System (# AC-AR-99-001 09/28/99)

Inspection Service HASP Operations (#039-1279813-PA(2) 09/08/99)

Controlling costs by achieving Office of Inspector Genera Revenue Assurance Process (AC-AR-00-003, 07/14/00)

productivity gains (VOB) Plant Verified Drop Shipment Program (AC-AR-00-002, 05/11/00)

Postal Rate Making Process (MK-AR-00-002, 6/30/00)

Inspection Service Processing and Distribution of First-Class and Overnight

Mail (#312-1272877-PA(3) 05/25/99)

Net Income (VOB) Ernst & Young LLP Unqualified Opinion on 2000 Financial Statements


Chapter 5 Performance Report|2000 Comprehensive Statement on Postal Operations|89

A. Introduction

In this chapter, the Postal Service presents itsreview of its actual performance compared to the2000 Annual Performance Plan.

The Postal Service developed the 2000Annual Performance Plan through its CustomerPerfect! 1 management process and in consultationwith Congress. The plan sets objectives forachievement for the year, as defined by specificgoals, subgoals, indicators and targets. Those 2000goals and subgoals were approved by the PostalService Board of Governors and were submitted toCongress in the United States Postal Service 2000Annual Performance Plan.

These performance levels go to the heart ofthe Postal Service’s mission. As stated in the dis-cussion of the 2002 Performance Plan in thepreceding chapter, “the goals, strategies, subgoalsand indicators in this plan enhance the speed, reli-ability and efficiency of the mail’s delivery. In sodoing, they support the Postal Service’s missionand role as a government service providing uni-versal postal service to the country.”

These performance measures drove fulfill-ment of another aspect of the Postal Servicecharter: to be self-sustaining. Postal Service activi-ties and programs support the organization’sunique statutory mission to provide universalservice and fund its operations through revenuegenerated by its products and services.

This report meets the requirements of theGovernment Performance and Results Act(GPRA), which mandates that the report:

■ Review the success of achieving the perform-ance goals of the fiscal year.

■ Evaluate the performance plan for the current fiscal year [2001] relative to theperformance achieved towards the perform-ance goals in the fiscal year covered by thereport [2000].

■ Explain and describe, where a performancegoal has not been met (including when aprogram activity’s performance is deter-mined not to have met the criteria of asuccessful program activity): why the goalwas not met; those plans and schedules forachieving the established performance goal;

and if the performance goal is impracticalor infeasible, why that is the case and whataction is recommended

■ Include the summary findings of those pro-gram evaluations completed during the yearcovered by the report.

This report includes a section highlightingthe Postal Service’s performance in 2000; a tableitemizing our performance for each subgoal; a sec-tion detailing the performance for each goal; and,a table listing changes made to the 2001 Plan’sgoals and subgoals as a result of 2000 perform-ance. A report on Evaluations of Programs,indicators and subgoals has been included inChapter 4.

On the following page, Table 5.1 itemizesour performance to each target. Detailed discus-sion of Postal Service performance to specificIndicators and Subgoals of the 2000 Plan followthis table.

B. Year in Review

The year 2000 proved even more challengingfor the Postal Service than had been forecast inthe Annual Performance Plan. Anticipating bothstructural and inflationary pressures on postal revenue, the plan had called for a virtually break-even net income of $100 million. To realize thatresult, management implemented aggressive pro-ductivity initiatives.

1. Business PerformanceIn 2000, however, structural and inflationary

pressures exceeded forecast levels and outstrippedthe cost efficiencies gained through management’sintensive productivity programs. Declining rates ofmail volume growth and the diversion of tradi-tional hardcopy mail volumes to electronic mediareduced revenue from our plan by over $800 mil-lion. Workers’ compensation claims and costsexceeded plan by approximately $180 million.Inflation-driven increases to wages were $58 mil-lion above those of the plan and rising fuel pricesincreased costs of operations by $275 million. As aresult, the Postal Service reported a net loss of$199 million in 2000.

1CustomerPerfect! is our name for our internal management system, which has four phases: Establish; Deploy; Implement;

and Review. This organization-wide system sets up an annual management cycle based on constant refining and revising of

goals based on result-focused data. The first phase, Establish, assesses current strategic goals, strategies, indicators and subgoal

and sets plans for the current year The Deploy phase communicates these provisional subgoal throughout the organization and agreement is reached through the budget

process on a set of funded programs aimed at achieving the subgoal. Implementation is the carrying out of these programs during the year. Review is senior management’s

responsibility throughout the year to review the progress of these programs. 2

Details of the index used to measure this indicator appear in the detailed results portion of this chapter.

Chapter 5 Performance Report


Goal Subgoal Indicator

Provide timely delivery. First-Class Mail on time:

EXFC overnight

EXFC 2/3 day

Priority Mail on time

Advertising on time

Ground Parcels on time

Periodical on-time

International Mail on time

Provide consistent service. Customer Satisfaction Measurement of

delivery within 30 minutes of the scheduled time

Provide accurate service. Customer Satisfaction Measurement of

complaints or claims for misdelivery, damage, or loss

Ensure that the service is easy to use. Ease-of-Use Indices:

Composite

Residential

Premier Accounts

Business

National Accounts

Explore customer needs segmentation. Segmentation Scheme

Develop best value criteria. Customer Value Analysis

Explore concept of customer loyalty. Customer Satisfaction Measurement survey responses

Improve workplace relations by building REDRESS 100% available

leadership skills and behaviors. Indicator for labor relations performance

Indicators for EEO program performance

Ensure that each and every employee is given Provide at least four hours of interpersonal skills training

the knowledge, tools, training and encouragement

to successfully meet the expectations for Provide one hour of sexual harassment training for all

their positions. craft work units and two hours of training for all

EAS employees

Proficiency index for Bulk Mail Acceptance Unit employees

Improve employees’ safety, security and well-being. OSHA Safety Program Evaluation indicators to match

OSHA compliance requirements

Lost workdays due to injury per 200,000 work hours

Total accidents per 200,000 work hours

Motor vehicle accidents per million miles driven

Improve understanding of employee issues and VOE Survey Index

concerns.

Ensure an inclusive and fair environment with A fair and inclusive environment

opportunities for all employees. An environment where opportunities are

provided for all employee groups

Improve overall VOB performance. Economic Value Added (EVA)

Capital commitments

Generate net income. Net Income

Control costs by achieving productivity gains. Total Factor Productivity

Labor Productivity

Keep price increases at or below the rate of inflation Price change vs. CPI

Restore original equity. 2000 — Net income greater than BOG resolution.

90|2000 Comprehensive Statement on Postal Operations|Chapter 5 Performance Report

VOE

Foster an inclusive and welcoming work-

place consistent with Postal Service

values of fairness, opportunity, safety

and security: where everyone is given

the knowledge, tools, training and

encouragement to be successful; and

where everyone is recognized for and

takes pride in their participation in cus-

tomers’ and the Postal Service’s success.

VOC

Earn customers’ business in a market-

place where they have choices by

providing them with world-class quality

at competitive prices.

VOB

Generate financial performance that

assures commercial viability as a service

provider in a changing competitive mar-

ketplace and generate cash flow to

finance high-yield investments for the

future while providing competitively

priced products and services.

TABLE 5.1 PERFORMANCE 2000: GOALS AND RESULTS



Preliminary Target Final Target 2000 Results

93 93 94

87 1% point increase 87

or at least 87%

Proprietary information No change Proprietary information

1% improvement No change 97.9

Proprietary information No change Proprietary information

Develop indicators and baseline No change Developed indicator but not baseline

Develop indicators and baseline No change Indicators and baseline not developed

Set Target No change Target not set

Set Target No change Target not set

710 672 654

760 700 688

700 650 625

740 660 659

677 677 643

Develop indicators and subgoal No change Indicators and subgoal not developed

Develop indicators and subgoal No change Indicators and subgoal not developed

Develop indicators and subgoal No change Indicators and subgoal developed

Develop indicator and baseline No change Achieved goals

Develop indicator and baseline No change Indicator and baseline developed

Develop indicators and baseline No change Indicator and baseline developed

To 100% of craft work units; No change 95% of Craft work units and achieved

And 97% of EAS goal for EAS

To 100% of craft work units; No change 99.97% of craft work units and

And 100% of EAS achieved goal for EAS employees

10 percent improvement over 1999 No change Achieved goal

Develop indicators and baseline, set target No change Achieved goal

below 1.90 No change 1.93



Develop Indicator and baseline, set subgoal No change Achieved target of developing indicator,

baseline and setting target

Develop indicator and baseline No change Achieved subgoal

Develop indicator and baseline No change Achieved target

Positive Indexed EVA No change $1.8 billion

$4.0 billion $3.5 billion $3.2 billion

$100 million net income No change -$199 million net loss

3.1% 2.1% 2.5%

3.1% 2.6% 2.1%

Maintain current rates No change 100%

Approximate provision for recovery of No change -$199 million net loss

prior years loss over current rate cycle


Postal rates were kept constant, as called for inthe plan, unchanged since January 1999. Duringthe same period, as measured by the ConsumerPrice Index, inflation rose by 6.0 percent. Withpostal rates set in advance, productivity improve-ment programs afforded the Postal Service the onlymeans to attempt to overcome the shortfall in rev-enue and increases in cost.

2. Total Factor Productivity 1993–2000The effectiveness of these efforts is most

apparent in the stunning gains the Postal Serviceachieved in productivity through managed restrainton resource usage. The realized gain of 2.5 percentin Total Factor Productivity (TFP) is equivalent to$1.6 billion in expense reductions and is thehighest TFP growth achieved by the Postal Servicesince 1993. As presented in the 2000 PerformancePlan, the original target for 2000 TFP growth was3.1 percent. That target was based upon projected1999 performance results. Actual performanceresults revealed that 1999 TFP gains were 1 percentgreater than projected and, to account for thatgain, the 2000 TFP growth target was revised to2.1 percent. In terms of absolute budget perform-ance, this revised target of 2.1 percent growth inTFP equals that of the 3.1 percent target that hadbeen set in the preliminary plan. In this context,the actual 2.5 percent gain in TFP in 2000 exceedsthat of our original goal.

These gains in productivity paralleled man-agement’s efforts to reduce work years. This year,6,200 fewer work years were used despite dramatic

increases in the postal workload, evidenced by thedelivery of an additional 6.2 billion pieces of mailand 1.7 million new delivery points. These produc-tivity gains were overcome by the impact of thedecline in both the mail volume growth rate andrevenue growth, however, and Labor FactorProductivity grew at 2.1 percent, half a percentagepoint below the targeted rate of growth.

Confronted with these extraordinary chal-lenges, the Postal Service still met its goals ofimproving business performance, as measured byEconomic Value Added (EVA), and the capitalcommitment budget target. Positive indexedEVA was $1,789 million. The revised capitalbudget of $3.5 billion was achieved with com-mitments of $3.2 billion. The completed capitalprogram did not require postponement of asingle major program.

3. Customer ServiceThroughout 2000, the Postal Service main-

tained its primary focus on its mission ofdelivering outstanding customer service and valueto the American people. The Postal Serviceexceeded the target for on-time performance forits flagship product, Overnight First-ClassMailTM, achieving 94 percent on-time perform-ance both for the period of measurement and forthe year in total. The target was 93 percent on-time performance.

For EXFC two-and three-day mail, thePostal Service matched 1999 on-time perform-ance of 87 percent but

did not meet the higher target of88 percent set for 2000. ThePriority Mail on-time target, whichis proprietary, was not met becauseof the inability of scheduled air-lines to provide reliable flightservice due to job actions andother factors. The targeted meas-urement of on-time performancefor International mail did notoccur. Indicators were developedbut not deployed due to reprioriti-zation of funding needs.

For many of the specific cus-tomer classifications measured inthe Ease-of-Use indices, perform-ance in 2000 exceeded the 1999performance but did not meet thehigher subgoal set for 2000. Thiswas true of the Premier Ease-of-Use


% G

row

th

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

20001999199819971996199519941993

TABLE 5.2 TOTAL FACTORY PRODUCTIVITY 1993-2000


Index, the Business Ease-of-Use Index, and theNational Ease-of-Use Index. Aggressive 2000 sub-goal for the Composite Ease-of-Use Index and forthe Residential Ease-of-Use Index were not met.The Composite Index target was 672, and 654 wasachieved. The Residential Ease-of-Use Index targetwas 700, and 688 was achieved as several retail ini-tiatives were developed and implemented with thegoal of improving customers’ overall ease-of-usewith the postal “lobby” experience. During theyear, the need for addressing still broader customerexperiences was ascertained and resources for thisinitiative were allocated to improving broader areasof customer service and to other program needs.This Residential performance goal has beendropped from the plan for 2001 and will not bereactivated until more sophisticated metrics can bedeveloped to measure the wider array of customerneeds for ease-of-use that have been identified as aresult of efforts conducted this year.

Two goals of Customer Service in 2000, thatof exploring customer needs segmentation andthat of developing best value criteria for Ad Mailand Priority Mail, were addressed with strategicstudies. Detailed analyses were compiled for bothareas of inquiry, and findings from the studies havebeen incorporated in ongoing Postal Service busi-ness planning. The objectives having beenachieved, neither of these initiatives is nowrequired, and the performance goals will no longerbe included in the annual plan.

4. Employees and the Workplace In 2000, the Postal Service continued its vig-

orous commitment to an inclusive and welcomingworkplace. Consistent with its values of fairness,opportunity, safety and security, the Postal Servicepursued goals aimed at ensuring that all employeesare given the knowledge and training to be suc-cessful and that all are recognized for and takepride in contributing to the success of customersand the Postal Service.

This year, workplace relations were improvedby building leadership skills and behaviors. Thesubgoal for making the REDRESS process availableto all Performance Cluster employees wereexceeded with a 73 percent rate of participation.Achieving the goal for EEO and labor perform-ance, the REDRESS process was fully incorporatedin the EEO process, and all employees were giventhe option of using mediation under theREDRESS program for EEO complaints.

Employee training programs, stipulated asgoals, were offered in Interpersonal Skills

Training, Sexual Harassment Avoidance trainingand in improving the proficiency of Bulk MailAcceptance Unit employees. The program targetfor interpersonal skills training of 97 percent ofEAS employees was exceeded as 100 percent par-ticipation was achieved; the target of 100 percentcraft work unit participation was not achieved as95.05 percent received training. Exceeding thegoal, all EAS employees received two hours ofSexual Harassment Avoidance training, but craftwork unit employees participated at the rate of99.7 percent in the one-hour course required ofthem, short of the goal. Human ResourceManagement will place new emphasis on the craftwork unit goal in 2001 and will gain the support ofline managers for its achievement. The proficiencygoal of a 10 percent improvement in the Bulk MailAcceptance Unit process was achieved.

Significant progress was made in improvingpostal employees’ safety, security and well-being.Meeting and exceeding the subgoal set in the planfor the year, new Safety Program Evaluation indi-cators were developed in 2000 and then wereimplemented and their targeted baselines exceeded.This new Program Evaluation Guide (PEG) wasdeveloped specifically for the Postal Service and isbased on OSHA guidance and industry best prac-tices. Threshold performance subgoal of 3.0 on a5.0 scale were set and were met by all Area, andexceeded by many facilities. As a measure of theimportance of this goal to the Postal Service, thePEG program was made a compensable goalunder the 2000 EVA pay for performance pro-gram. Evaluations of the PEG program find thatit has been institutionalized successfully through-out the Postal Service as a means of evaluatingsafety program effectiveness. For this reason, andbecause of the costs of continuing to field thePEG evaluations, the PEG threshold was droppedfrom the 2001 EVA goals. Nevertheless, the PEGprocess itself continues to be a leading indicatorof Postal Service safety performance and a processmanagement tool for evaluation, feedback andaccountability. Postal Service employee and work-place safety in 2001 will be measured by the newOSHA Illness Injury Indicator.

The Postal Service achieved the target of 1.90 Lost Workday Injuries per 200,000 workhours, with a .05 variance, allowed by the plan.The national measurement on this indicator was1.93. As with other safety indicators of the 2000plan, this indicator and target have been altered inthe 2001 plan, conforming to new requirementsfor Postal Service reporting. In 2001, pursuant to




the requirements of the Postal Employees’ SafetyEnhancement Act of 1998, the OSHA IllnessInjury Indicator will be adopted as a universalworkplace safety measure.

The target of another workplace safety pro-gram, reducing motor vehicle accidents to 11.00 per million miles driven, was not achieved.Actual performance on this indicator was 11.47,despite extensive emphasis on driver safety programs and despite the National Safety Councilrecognition of more than 135,000 Postal Servicedrivers with Safe Driver awards.

The goal of reducing all workplace accidentsto 11.49 per 200,000 work hours was notachieved, and the actual measure on this indicatorwas 12.52. The indicator for this goal has beenchanged for 2001, when the new OSHA IllnessInjury Indicator becomes effective.

In 2000, the Postal Service met the subgoalfor developing a Voice of the Employee SurveyIndex, establishing a performance baseline andsetting subgoal for improvement in under-standing of employee issues and concerns.Specific subgoal were set but proved too ambi-tious for their first year and were not met. Toaddress the concerns of employees reported in thesurvey, greater emphasis is being placed onincreasing employee communications andbuilding supervisors’ human relations skills.

The subgoal set for the goal of ensuring aninclusive and fair workplace environment withopportunities for all employees were achieved.Indicators and baselines were established and man-agers were made accountable for the inclusive andfair workplace goal in their own merit evaluationprocess. The vice president for Diversity conductsthe targeted quarterly reviews of AffirmativeEmployment Plans.

C. The Voice Structureand Performance Goals

In this section, the Postal Service reports onits measured performance to specific indicatorsand subgoal that comprise the fundamental ele-ments of the 2000 Annual Performance Plan. This Performance Plan was developed as part of the ongoing planning process that responds tothe 1993 Government Performance and ResultsAct. The plan was communicated to Congress infour steps. First, the Preliminary 2000 AnnualPerformance Plan was submitted to Congress in

February 1999. The 2000 Plan was amendedthereafter to reflect the commentary of both theGeneral Accounting Office (GAO) and the Officeof Inspector General, and the 2000 AnnualPerformance Plan was submitted to Congress andthe American people in September 1999. Third,the plan was reviewed during the preparation oflast year’s 1999 Performance Report included asChapter 5 of the 1999 Comprehensive Statement.Indicators and subgoals in the 2000 Plan werereevaluated at that time and adjusted to reflectactual 1999 results and the experience of the firsthalf of the year. The 1999 ComprehensiveStatement, containing updated goals and subgoalsfor 2000, was submitted to Congress in January2000. And last, as necessary correspondence hasbeen sent to Congress to provide information onany needed changes necessary to the plan. Forexample, final productivity targets cannot be setuntil actual results of the prior year are knownbecause targeted TFP is calculated upon multiplefactors of those actual results. We provide Congresswith a preliminary target for TFP in the AnnualPerformance Plan and inform Congress of the finalproductivity target when it is calculated.

As stated in the 2000 Annual PerformancePlan, the Postal Service organizes its corporate goalsin a three-voice structure that reflects its CustomerPerfect! management system:The Voice of the Customer goal category centers oncustomer satisfaction. The Voice of the Employee goal category focuses oncreating a workplace environment that fosters success andembraces the values of fairness, opportunity, safety andsecurity. The focus of the Voice of the Business goal category ison financial performance to assure commercial viability,bottom-line results and sufficient capital for futureinvestments.

D. Postal Service GoalCategories and GoalStatements

For each Voice, a goal statement focuses on the overall performance sought. For 2000,these are:

■ Voice of the Customer — Earn customers’business in a marketplace where they havechoices by providing them with world-classquality at competitive prices.



■ Voice of the Employee — Foster an inclu-sive and welcoming workplace consistentwith Postal Service values of fairness, oppor-tunity, safety and security: where everyone isgiven the knowledge, tools, training andencouragement to be successful; and whereeveryone is recognized for and takes pride intheir participation in customers’ and thePostal Service’s success.

■ Voice of the Business — Generate financialperformance that ensures the commercial via-bility of the Postal Service as a service providerin a changing, competitive marketplace; and,generate cash flow to finance high-yield invest-ments for the future while providingcompetitively-priced products and services.

The following assesses Postal Service perform-ance in each of these categories as measuredaccording to the specific goals, subgoals, indicatorsand targets set for each.

E. Voice of the CustomerPerformance Goals: Customer Satisfaction

Postal Service Annual Performance Plan Goal:

Earn customers’ business in a marketplacewhere they have choices by providing them withworld-class quality at competitive prices.

Performance Goal 1

■ Provide timely delivery.

As stated in the plan, 2000 indicators and targets for this subgoal are:

■ Achieve overnight First-Class Mail on-time3

performance of at least 93 percent.■ Increase two- and three-day First-Class

Mail on-time performance by one percentagepoint over 1999 performance, or at least to87 percent.

■ Achieve targeted Priority Mail on-time per-formance, as measured by the PriorityEnd-to-End (PETE) system.

■ Increase on-time performance for Ad Maildelivered within a requested sales window byone percentage point over 1999 performanceusing the ADVANCE measurement system.

■ Continue development of a ground parcelon-time performance indicator; establish aperformance baseline; and set a target whendata are available.

■ Develop on-time performance indicators and baselines for Periodicals andInternational mail.

With performance measured against each indicator and subgoal for this subgoal, in 2000, the Postal Service:

■ Exceeded the performance target of 93 per-cent for on-time delivery of OvernightFirst-Class Mail with indexed performanceat 94 percent. The established index for this External First-Class (EXFC) measuredtarget is the weighted origin/destinationcombined result of Postal Quarter (PQ) III and IV performance. For 2000, in total, the Postal Service achieved OvernightFirst-Class Mail on-time performance of 94 percent, which exceeded the target forthe period of external measurement.

■ Did not achieve the performance target forEXFC Two-and Three-Day mail of at least one percentage point improvement over the1999 performance of 87.7 percent. ThePostal Service did meet the secondary targetof achieving a minimum level of perform-ance of 87 percent. The established index forthis External First-Class (EXFC) measuredtarget is the weighted origin/destinationcombined result of PQ III and IV perform-ance. For all four postal quarters, in total, for2000, the Postal Service achieved two- andthree-day combined First-Class Mail on-timeperformance of 85 percent.

■ Did not achieve the target for Priority Mail on-time performance due to opera-tional shortfalls and scheduled airlines’inability to provide reliable flight servicebecause of job actions and other factors. The Postal Service did, however, maintainthe 1999 performance level for Priority Mail.The specific target and associated informa-tion is proprietary.

■ Exceeded the target for Ad Mail delivered within a requested sales window ofone percentage point over 1999 performance(94 percent) by almost 3 percent on-time,with performance at 97.9 percent as meas-ured by the ADVANCE system.

(TTMS), which measures service performance from the time mail is entered into the system at an induction point until the time it is received in the home or small business.

TTMS is independently administered by PricewaterhouseCoopers under a contract with the Vice President and Consumer Advocate. The system provides quarterly

estimates of First-Class Mail destination service performance for 85 Performance Clusters from their overnight, two-day, and three-day service commitments in 463 3-digit

ZIP Code Areas.

3First-Class Mail service performance results are measured with an index called External First-Class (EXFC). This index is generated by the Transit Time Measurement System



■ Developed an indicator for ground parcelon-time performance. The proposed indi-cator would use existing Postal ServiceDelivery Confirmation systems as a measuring tool for Standard B, Parcel Post volume and performance within thePostal Service.

Implementing this indicator as an effectivemeasurement of performance would require integration of Information Systems Standard Bservice measurement tables and files with theProduct Tracking System (PTS) where the DeliveryConfirmation database currently resides. Before thenew performance measurement system could beincorporated system-wide, significant alteration offield operations procedures and infrastructure wouldhave to occur. The Postal Service is continuing todevelop these supporting systems and proceduresand anticipates implementing this new indicatorand establishing baseline measurements in 2001.

■ In cooperation with publications mailers,developed an indicator for on-time deliveryof Periodicals that was responsive to cus-tomers’ needs for information and service.Before that indicator could be implementedand baseline measurement undertaken, how-ever, mailing customers requested that thePostal Service shift its focus on Periodicalsservice measurement to individual Periodicalsmailings, which publications mailers believedto be a greater service priority.

In response, the Postal Service then devel-oped an enhanced Electronic Publication WatchSystem which will allow publishers to enter complaints into a centralized database; request an electronic publication watch that will trackdelivery of individual mailings of specific publica-tions; and request resolution of a systemic service,related problem. Pilot testing of the enhancedElectronic Publication Watch System will be con-ducted in 2001.

The Postal Service continues to track Period-icals in its ADVANCE system but, because of thisshift in customers’ priorities, does not now trackon-time delivery of Periodicals.

■ Did not meet the target of setting anInternational performance indicator andbaseline. Because of funding needs, we developed, but did not deploy, indicators forseveral International mail types. This goal hasbeen dropped for 2001.

Performance Goal 2:

■ Provide consistent service.

As stated in the plan, the 2000 Indicator and target for thissubgoal are:

■ Set a performance target using ■ Customer Satisfaction Measurement

indicators of delivery within 30 minutes of the scheduled time.

In 2000, the Postal Service:

■ Did not meet the target, as set, because wereevaluated the indicator and the definitionof consistent service. In its stead, a transit-time indicator was developed, based onNetwork Service Performance rather thanon customer perception, and a baseline forthis indicator will be established in 2001.

Performance Goal 3

■ Provide accurate service.

As stated in the plan, the 2000 Indicator and target for thissubgoal are:

■ Set a performance target using CustomerSatisfaction Measurement indicators of complaints or claims for misdelivery, damage or loss.


■ Developed and piloted an indicator for accu-rate service. A baseline will be established in2001 and the new indicator has been sched-uled for monitoring in 2002.

Performance Goal 4

■ Ensure that the service is easy to use.

As stated in the plan, 2000 target and indicators for this sub-goal are:

Improve performance against Ease-of-UseIndices, which use customer satisfaction surveys to measure how easy it is for customers to do busi-ness with the Postal Service. Both composite andcustomer segment Ease-of-Use Index goals are shown below (based on a maximum indexvalue of 1000):

■ Increase the Composite Ease-of-Use Index to 672.

■ Increase Residential Ease-of-Use Index to 700.

■ Increase Premier Accounts Ease-of-Use Indexto 650.

■ Increase Business Ease-of-Use Index to 660.■ Increase National Account Ease-of-Use Index

to 677.

EXFC is an external mail measurement system of collection box to mailbox delivery performance. EXFC continuously tests a panel of 463 3-digit ZIP Code Areas selected

on the basis of geographic and volume density from which 90 percent of the First-Class Mail volume originates and to which 80 percent destinates. EXFC is not a

systemwide measurement of all First-Class mail performance.



In 2000, the Postal Service:■ Achieved an Ease-of-Use Composite index

performance of 654, 18 points below the target of 672.

■ Achieved an indexed performance of 688 forthe Residential Ease-of-Use, 12 points belowthe target of 700.

Even though this aggressive target was notmet, several retail initiatives were implemented to improve our customers’ Post Office “lobby”experiences. For example, Retail Associatetraining, focusing on several behaviors that affectcustomer interaction, was developed and imple-mented. During this process, it was discoveredthat the Ease-of-Use experience included all cus-tomer contact points, not just the Post Officelobby experience. Resources were then reallocatedto a much broader array of customer experiencesand program needs.

This performance goal was dropped for 2001and will not be restored until a more sophisticatedmetric that more fully addresses customers’ Ease-of-Use with Postal products, services andmulti-contact/access points, especially as it relatesto Internet access, can be developed.

■ Achieved an indexed performance of 625 forthe Premier Ease-of-Use Index, 25 pointsbelow the target of 650, and exceeded the1999 performance measurement by 4 points.

■ Achieved an indexed performance of 659 forthe Business Ease-of-Use Index, just one point below the target of 660, andexceeded the 1999 performance measure-ment by 9 points.

■ Achieved an indexed performance of 643 for the National Ease-of-Use Index,34 points below the target of 677, andexceeded the 1999 performance measure-ment by 7 points.

Business, Premier and National account Ease-of-Use went through a transition period in 2000. ABusiness Service Network (BSN) was established tomeet commercial customers’ special requirements.Metrics were put into place that tracked perform-ance of BSN customer interactions and fulfillment.Resources were shifted to support the BSN and, tomeet customer needs, new priorities were set forboth Postal sales and service efforts.

During 2001, Business Ease-of-Use will be re-evaluated to determine whether the Ease-of-Usemetrics encompass the full range of customer expe-riences. Segmentation analysis has reaffirmed theneed for enhanced service support and other out-

reach processes that are beyond the current defini-tions of Ease-of-Use for Business customers.

Performance Goal 5

■ Explore customer needs segmentation.

As stated in the plan, the 2000 Indicator and target for thisgoal is:

■ Explore customer needs segmentation as analternative to product segmentation.

In 2000, the Postal Service:■ Undertook major initiatives to enhance

our knowledge of the needs of our cus-tomers in both the commercial andconsumer segments. As a result, in thecommercial marketplace, distinct segmentswere identified.

■ Developed strategic analyses of several keyindustry segments. These analyses focused onthe segments’ value chains and needs forcommunications and merchandise services.The analyses have allowed us to determinethe opportunities for the Postal Service toadd value to our customers’ businessprocesses to acquire, fulfill, and retain theirown customers and to identify their require-ments for improved service.

■ In the consumer marketplace, a new segmen-tation structure was developed, reflecting:■ households’ use of mail, ■ households’ family structure and lifestyle,■ households’ family location.

By combining these three factors, 14 distinctsegments were identified. Focusing on these 14segments will enable us to understand more fullytheir needs for service and how to serve and reachthem in our marketing outreach efforts.

The knowledge gained through this initiativewill be incorporated in our ongoing business plan-ning activities. We will continue to update thisinformation. A specific Voice of the Customer sub-goal is no longer required for this initiative.

Performance Goal 6

■ Develop best value criteria.

As stated in the plan, the 2000 indicator and target for thisgoal is:

■ Develop “best value” criteria based onCustomer Value Analysis.

In 2000, the Postal Service:■ Conducted strategic studies to develop the

Customer Value Analysis for Ad Mail andPriority Mail.

Our results showed that, as concerns adver-tising mail, the two most important attributes



sought for in selecting an advertising medium arecost effectiveness and the ability to measure results.These are followed in importance by the ability tocreate a message, the ability to target audiencesand, ease of placement.

Overall, when selecting a package deliveryservice, reliability of service is the most importantattribute. This attribute is followed by the trackand trace information service, pick-up service, cus-tomer servicing, and price, all comparable inimportance levels.

The knowledge gained through the CustomerValue Analysis initiative will be incorporated ourongoing business planning activities. We will con-tinue to update this information. A specific Voiceof the Customer subgoal is no longer required forthis initiative.

Performance Goal 7

■ Explore concept of customer loyalty for competitive products.

As stated in the plan, the 2000 indicator and target for thisgoal are:

■ Using Customer Satisfaction Measurement survey responses, develop customer loyaltyindicators and subgoal.


■ Conducted studies of Customer loyalty and incorporated these findings into the business plan of the organization. For 2001,this goal has been renamed, “ImproveCustomer Satisfaction.”

F. Voice of the EmployeePerformance Goals: OrganizationalEffectiveness

Postal Service Annual Performance PlanGoal:

Foster an inclusive and welcoming workplaceconsistent with Postal Service values of fairness,opportunity, safety and security: where everyone isgiven the knowledge, tools, training and encour-agement to be successful; and where everyone isrecognized for and takes pride in their participa-tion in customers’ and the Postal Service’s success.

Performance Goal 1

■ Improve workplace relations by buildingleadership skills and behaviors.

As stated in the plan, 2000 indicators and target for this sub-goal are:

■ Make the REDRESS process available to allPerformance Cluster (PC) employees, with70 percent participation.

■ Develop indicators and performance base-lines for labor relations performance andEEO program performance.

In 2000, the Postal Service:■ Achieved the objective of making the

REDRESS process available in 100 percentof Performance Clusters and exceeded the 70 percent target rate of employee participa-tion with a rate of 73.4 percent participation.

■ Achieved the objective for labor relations and EEO program performance by fullyintegrating the REDRESS program into the EEO function and establishing it as apart of the administrative EEO process, withoptional mediation of EEO complaints beingmade available to 100 percent of employees.

Performance Goal 2

■ Ensure that each and every employee is giventhe knowledge, tools, training and encour-agement to successfully meet theexpectations for their positions.

As stated in the plan, 2000 indicators and target for thisSubgoal are:

■ Provide at least four hours of interpersonalskills training for all craft employees’ work units and at least 97 percent of EAS employees.

■ Provide one hour of sexual harassmentavoidance training for all craft employees’work units and two hours of training for allEAS employees.

■ Improve the proficiency index for Bulk MailAcceptance Unit employees by 10 percentcompared to the 1999 measurement

In 2000, the Postal Service:■ Achieved the target of providing Interper-

sonal Skills training for EAS employees and,although we did not meet the target for craftemployees, we did provide four hours ofInterpersonal Skills training to 95.05 percentof craft employees’ work units.

■ Achieved the target of providing SexualHarassment Avoidance training for EASemployees and, although we did not meetthe target for training 100 percent of craftemployees, we did provide the scheduledfour hours of training to 99.97 percent ofcraft employees’ work units.



Originally, this goal was compensable for allEAS employees, nationwide. In 2000, the goalbecame part of the executive merit process and was applied in the evaluation of each executive’sperformance. Individual executives’ decisions toemphasize other competing Postal Service goalsaffected national performance achievements onthis indicator.

Senior human resource management willreview the process to ensure continued visibility of this goal and will bring this issue to the attentionof line managers to gain their support for meetingthe goal.

■ Achieved the target of a 10 percent improve-ment in the Bulk Mail Acceptance Unitprocess.

Performance Goal 3

■ Improve employees’ safety, security and well-being.


■ Develop Safety Program Evaluation indicators to match OSHA compliancerequirements, develop performance baselinesand set subgoal.

■ Keep lost workdays due to injury per200,000 work hours below 1.90.

■ Keep total accidents per 200,000 work hoursbelow 11.49.

■ Keep motor vehicle accidents per millionmiles driven below 11.0.

In 2000, the Postal Service:■ Achieved the target of developing Safety

Program Evaluation indicators with theProgram Evaluation Guide (PEG), devel-oped specifically for the Postal Service. PEGis based on OSHA guidance and industrybest practices. A threshold target of 3.0 on a5.0 scale was set as the measure of a func-tioning sound safety and health programand that target was met by all Areas and farexceeded by many facilities. This target wasa threshold requirement under the EVA payfor performance program, in the VOE areain 2000.

The Postal Service now applies the standardsand practices of the PEG program throughout theorganization. These PEG standards and safety pro-gram guides will continue to be used as a leadingindicator for safety programs and as a measure ofmanagers’ accountability for those programs.Although safety performance will continue to bemeasured through program evaluations, PEG willnot be included as an EVA goal in 2001. The cost-

effectiveness of the PEG program was evaluated andit was determined that funds for this program werebetter allocated to focusing on the new OSHAInjury Illness Indicator, which is effective in 2001.

■ Achieved the target of 1.90 lost workdayinjuries per 200,000 work hours, with a .05 variance, allowed by the plan. The nat-ional measurement on this indicator was1.93. This goal has been altered for 2001, toconform to new reporting requirements ofthe Postal Employees’ Safety EnhancementAct of 1998. That law requires the PostalService to adopt established private sectoraccident and injury reporting requirements.The new indicator for workplace safety, theOSHA Illness Injury Indicator, will be effec-tive in 2001.

■ Did not achieve the target of reducing motorvehicle accidents to 11.00 per million milesdriven. Actual performance on this indicatorwas 11.47 motor vehicle accidents per mil-lion miles driven, despite Postal Serviceinvestment of significant organizationalresources toward meeting this target anddespite its continued focus on motor vehiclesafety in programs designed to increase driverawareness and reduce motor vehicle acci-dents. More than, over 135,000 PostalService drivers earned recognition by theNational Safety Council (NSC) and receivedNSC Safe Driver Awards in 2000.

Although the Postal Service will continue to emphasize motor vehicle safety and measureprogress against this objective, this indicator and target have been altered in the plan for 2001.The new OSHA Injury Illness Indicator, measuringuniversal workplace safety, replaces these measures.

■ Did not achieve the target of reducing allworkplace accidents to 11.49 per 200,000work hours. The actual rate of accidents was12.52 per 200,000 work hours. The goalhas been altered for 2001. The OSHAIllness Injury Indicator has been adoptedfor all workplace safety goals and will beeffective in 2001

Performance Goal 4

■ Improve understanding of employee issuesand concerns.

As stated in the plan, the 2000 indicator and target for thissubgoal is:

■ Develop a VOE Survey Index and a per-formance baseline, and set subgoal.




■ Developed the VOE Survey Index estab-lished a performance baseline and concerns at the national level. As a baseline, we use the 1999 performance and set the 2000target at 58.8. While our performance of57.5 was an improvement over 1999, it didnot achieve the target, which was too ambi-tious for the first year. The 2001 target iscontinuous improvement over this result. To achieve the goal in 2001, greateremphasis is being placed on improving work-place relationships and climate, increasingemployee communications and buildingsupervisors’ human relation skills.

Performance Goal 5

■ Ensure an inclusive and fair environmentwith opportunities for all employees.

As stated in the plan, the 2000 indicator and target for thisgoal is:

■ Develop indicators and performance base-lines that reflect a fair and inclusiveenvironment and opportunities for allemployee groups.

In 2000, the Postal Service:■ Achieved the target of making managers

accountable for a fair and inclusive workenvironment by including that responsibilityin the merit evaluations of Postal CareerExecutive Services (PCES) managers.

■ Achieved the target of establishing and conducting quarterly reviews of Affirm-ative Employment Plans. The reviews areconducted by the vice president forDiversity Development.

G. Voice of the BusinessPerformance Goals: Financial Performance

Postal Service Annual Performance PlanGoal:

Generate financial performance that ensuresthe commercial viability of the Postal Service as aservice provider in a changing, competitive marketplace; and generate cash flow to finance high-yieldinvestments for the future while providing com-petitively-priced products and services.

Performance Goal 1

■ Improve overall business performance.


■ Achieve positive indexed economic value added (EVA).

■ Achieve a capital commitment budget of $3.5 billion.

In 2000, the Postal Service:■ Achieved positive indexed economic value

added (EVA) of $1,789 million.■ Achieved the revised capital budget subgoal

with capital commitments totaling $3.2 bil-lion and representing 4.9 percent of total2000 operating revenue. The capital budgetwas successfully completed with a lowerlevel of commitment without delaying asingle major program.

Performance Goal 2:

■ Generate net income.

As stated in the plan, the 2000 indicator and target for thissubgoal is:

■ Achieve an overall net income of $100 million.

In 2000, the Postal Service:■ Posted a net loss of $199 million, failing to

meet the net income performance goal. In allplanning for the goal, there was no expecta-tion that inflation in fuel prices and, thus, theConsumer Price Index (CPI) would drivecosts upward by more than $1 billion.Neither were workers compensation costsexpected to skyrocket. During the year, man-agement concentrated on reducing workyears. As a result, in 2000, over 6,200 fewerwork years were used than in 1999. Thisraised our productivity and improved ourfinances, even as our volume and deliveryworkload increased. This workload increaseincluded an additional 6.2 billion pieces ofmail, and delivery to America’s 1.7 million new home and business addresses.Chapter 3 of this Comprehensive Statementprovides more information on our finances,and a complete analysis is provided in our2000 Annual Report. The 2001 AnnualPerformance Plan discusses our strategy tocope with the uncertainties we face in 2001.

Performance Goal 3:

■ Control costs by achieving productivity gains



As revised from the plan, based upon actual 1999 results andthe 2000 budget, the 2000 indicators and target for thissubgoal are:

■ Achieve a Total Factor Productivity (a measure of total resource usage efficiency,including capital) gain of 2.1 percent.

■ Achieve a Labor Productivity (a measure oflabor resource usage efficiency) gain of 2.6 percent.

In 2000, the Postal Service:■ Exceeded the target for Total Factor

Productivity (TFP) Growth, achieving TFP growth of 2.5 percent. This achieve-ment is equivalent to $1.6 billion in expensereductions and is the highest TFP growthachieved by the Postal Service since 1993.The growth of TFP in 2000 was broughtabout by managed restraint on resourceusage. Work hours declined by 0.6 percentand materials use fell by 5.1 percent whilemail volumes increased.

The TFP target is an outgrowth of the pro-ductivity gain implicit in our budget and must be determined through calculations based onactual figures.

The target for TFP that was listed in ourfinal Annual Performance Plan was 3.1 percent.That target was based on projections of 1999 pro-ductivity growth and the budget and productivityprojections for 2000. When the actual year-endand productivity results for 1999 were calculated,they were much higher than initially estimated.This caused the productivity rate of growthimplicit in the 2000 budget to be lower than ini-tially projected. The final 2.1 percent productivitygrowth rate goal for 2000 represents the sameabsolute level of budget performance as the initial3.1 percent target. The Postal Service exceeded theefficiencies included in the 2000 budget.

In 2000, net income, not TFP growth, wasthe priority focus of the Voice of the Business. For 2001, the priority Voice of the Business focuswill be TFP growth since efficiencies and serviceare the only missions that postal managers canaffect directly.

■ Did not meet the target for Labor Product-ivity growth, which grew at a rate of 2.1 percent, 0.5 percentage point below thetarget. When mail volumes were lower thananticipated in 2000, management reduced all resource usage, including the labor usecomponent of TFP. This was sufficient toallay but not obviate the impact of lower

volume growth rates on the LaborProductivity factor.

Performance Goal 4

■ Keep price increases at or below the rateof inflation.

As stated in the plan, the 2000 indicator and target for thisperformance goal is:

■ Maintain current rates.

In 2000, the Postal Service:■ Achieved the target of maintaining current

rates. In fact, there was no general rateincrease after that of January 1999. Duringthe same period, inflation rose by 6.0 percentas measured by the Consumer Price Index.

Performance Goal 5

■ Restore original equity.

As stated in the plan, the 2000 indicator and targets for thisperformance goal is:

■ Restore a portion of original equity byachieving an average net income over thecurrent rate cycle that approximates the pro-vision for recovery of prior years’ lossesincluded in current postage rates.


■ Posted a net loss, and therefore failed torestore equity of $377 million, the amount consistent with BoardResolution 95-9. Over the past six years,however, the Postal Service has restoredequity of $5.3 billion, an amount greaterthan the cumulative total scheduled to beachieved by the end of 2000.

H. Evaluation of 2000Performance andChanges to Goals andSubgoals in the 2001Plan

In this section, the Postal Service evaluatesthe performance plan for 2001, relative to the per-formance achieved toward the performance goalsof Fiscal Year 2000 covered by this report.

In complying with GPRA requirements to report this evaluation, the Postal Service sub-mits four tables: Table 5.1, Table 5.3, Table 5.4,Table 5.5.



TABLE 5.3 PERFORMANCE 2001: UPDATED GOALS, SUBGOALS, IN

Goal

VOE

Foster an inclusive and welcoming workplace consistent

with Postal Service values of fairness, opportunity, safety

and security; where everyone is given the knowledge, tools,

training and encouragement to be successful; and where

everyone is recognized for and takes pride in their partici-

pation in customers’ and the Postal Service’s success.

VOC

Earn customers’ business in a marketplace where they

have choices by providing them with world-class quality at

competitive prices.

VOB

Generate financial performance that ensures commercial

viability as a service provider in a changing, competitive

marketplace and generate cash flow to finance high-yield

investments for the future while providing competitively

priced products and services.

Table 5.1, “Performance 2001: goals, subgoals, indicators and target,” leads this

chapter. It itemizes 2000 performance to each goal,subgoal, indicator and target of the 2000 AnnualPerformance Plan.

Table 5.3, “Performance 2001: goals, subgoals,indicators, and targets,” follows here. This tablelists all Fiscal Year 2001 Goals, Subgoals, Indicatorsand subgoal of the latest 2001 Annual PerformancePlan for each of the three Voices of the PostalService Management Process: the Voice of theCustomer; the Voice of the Employee; and theVoice of the Business.

Table 5.4, “Changes to VOC and VOBPerformance Goals and Subgoals,” identifies 2000Goals and Subgoals that have been altered in the2001 Plan; lists the new 2001 Plan Goals andSubgoals; and provides an explanation for change forthose. there were no changes to the VOE Goals andSubgoals.

Table 5.5, Area Productivity BaselineInformation, is provided as requested by Congress,provides baseline information on Area productivity.The initial target and performance information foreach area are provided for 2000. The 2001 subgoalwill not be set until baseline data are final and alltechnical adjustments for cost and pay rate changesare completed and audited.



Provide timely delivery. First-Class Mail on time:

EXFC overnight 93%

EXFC 2/3 day 87%

Delivery within standard + 1 day Develop performance baseline

(overnight & 2/3-day)

Priority Mail on time Proprietary information

Advertising Mail on time

(delivered within a sales window) 98%

Parcel Select (ground parcels) on time Proprietary information

Periodicals on time Develop indicators and baseline

Express Mail on-time (AM & PM) Proprietary information

Provide reliable service. Accuracy of delivery index Develop performance baseline

Improve customer satisfaction. Overall satisfaction — residential 1% improvement over 2000

(CSM survey results)

Overall satisfaction — residential 1% improvement over 2000

(CSM survey results)

Improve workplace relations by REDRESS 100% available 100% available, 70% participation

building leadership skills and behaviors.

Ensure an inclusive and fair environment Inclusive/fair environment indicators Included in PCES merits

with opportunities for all employees. are part of merit process

Representation of all groups in details and Quarterly reviews of affirmative

special assignments employment plan (Areas with COO,

Representation of all groups in succession plans PC’s with AVP’s, and HQ with

Activities supporting the affirmative employment plan Management Committee)

Ensure that each and every employee is given Training in prescribed curriculum (including 4 hours of 97% of EAS 15 & over employees:

the knowledge, tools, training and mandatory workplace environment interpersonal 20 hours

encouragement to successfully meet the skills training) 97% of EAS 14 & below employees:

expectations for their positions. 8 hours

100% of craft work units: 8 hours

Improve employees’ safety, security OSHA injury/illness rate 7.96

and well-being. Motor vehicle accidents per million miles driven Below 10.9

Improve understanding of employees. VOE Survey Index Improvement over 2000

issues and concern. VOE Survey Index score of 57.5

Improve overall VOB performance. Area Productivity improvement Improvement over hurdle

PC Productivity improvement Improvement over threshold

Capital commitments $2.6 billion

Control costs by achieving Total Factor Productivity 0.7%

productivity gains. Labor Productivity 2.0%

S, INDICATORS AND SUB-GOAL VOICE OF THE CUSTOMER

Subgoal Indicator Target


104|2000 2000 Comprehensive Statement on Postal Operations|Chapter 5 Performance Report

2000 Goal 2001 Goal Explanation for Change

Earn customers’ business in a marketplace where they Earn customers’ business in a marketplace where No change

have choices by providing them with world-class they have choices by providing them with world-

quality at competitive prices. class quality at competitive prices.

2000 Subgoals 2001 Subgoals Explanation for Change

Provide timely delivery of three indicators for 2000. Provide timely delivery. No change to goal or subgoal.

However, three indicators for 2000

have been changed for 2001.

Consistency Provide reliable service. Consistency and Accurate service

were combined into a more general

performance goal to better reflect

the set of measures that were most

important to the consumer.

Accurate service

Ease-of-Use Dropped While still available for the field to use

to evaluate specific programs, this

performance goal was not included in

2001 so that it could be reevaluated

using customer feedback.

Explore customer needs segmentation. Complete Not included in 2001 because the because the

exploration of alternative segmentation

scheme was completed.

Develop best value criteria. Complete Not included in 2001, because a strategic study

was completed and the knowledge gained

incorporated in the new business planning.

Explore concept of customer loyalty. Improve customer satisfaction. The performance goal was revised to

sharpen focus.

2000 Goal 2001 Goal Explanation for Change

Generate financial performance that ensures the Generate financial performance that ensures No change

commercial viability of the Postal Service as a the commercial viability of the Postal Service as a

service provider in a changing, competitive market service provider in a changing, competitive market-

place; and generate cash flow to finance high-yield place; and generate cash flow to finance high-yield

investments for the future while providing investments for the future while providing

competitively priced products and services. competitively priced products and services.

2000 Subgoals 2001 Subgoals Explanation for Change

Improve overall business performance. No change to subgoal however the measurement Indexed EVA replaced with

indicators have been changed. Area and Performance

Cluster Productivity measure

Capital commitments unchanged

Generate net income. Dropped Shifted focus to area we can control,

such as productivity, and away from

those, such as net income, controlled by

external factors.

Control costs by achieving productivity gains. No change

Keep price increases at or below the rate of inflation. Dropped Simplification and increased

focus on financial performance

Restore original equity. Dropped Simplification and considered

redundant to the net

income goal.

TABLE 5.4 CHANGES TO VOC GOALS AND SUBGOALS

TABLE 5.4 CHANGES TO VOB GOALS AND SUBGOALS CON.T



Area 2000 Target 2000 Performance

Allegheny 1.83 1.42

Capitol Metro 1.83 1.86

Great Lakes 1.83 3.16

Mid-Atlantic 1.83 1.04

Midwest 1.83 2.32

Northeast 1.83 1.87

New York Metro 1.83 2.27

Pacific 1.83 1.78

Southeast 1.83 1.71

Southwest 1.83 2.56

Western 1.83 1.38

TABLE 5.5 AREA PRODUCTIVITY BASELINE INFORMATION

The Eagle Head Design is a registered trademark of the United States Postal Service. The

following trademarks used herein are owned by the United States Postal Service: CERTIFIED

MAIL™, CUSTOMER PERFECT™, DINEROSEGURO®, SURE MONEY™, EXPRESS MAIL®, FIRST-

CLASS MAIL®, GLOBAL DELIVERY SERVICES™, GLOBAL EXPRESS GUARANTEED™, DELIVERY

CONFIRMATION™, SIGNATURE CONFIRMATION™, USPS eBILLPAY™, POSTeCS®, ELECTRONIC

POSTMARK™, NETPOST MAILING ONLINE™, NETPOST CERTIFIED™, NETPOST CARDSTORE™,

GLOBAL PRIORITY MAIL®, MOVER’S GUIDE™, STAMPS BY PHONE™, STAMPS BY MAIL®, THE

POSTAL STORE™, usps.com®, POSTAL SERVICE™, PRIORITY MAIL®, ZIP CODE™, 1-800-ASK-

USPS™, REDRESS™ and usps.com/correo™.


106|2000 Comprehensive Statement on Postal Operations|Index

Index

Address Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 59, 62, 63, 84 ADVANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61, 63, 75, 84, 95, 96Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4, 35, 38, 51, 54, 61, 62, 69, 71, 97, 98Affirmative Employment Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53, 54Automation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 6, 17, 31, 45-48, 59, 60, 67-69, 77, 86Automated Seamless Dispatch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49Bargaining Unit Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-16, 79Board of Governors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 3, 4, 21, 37, 51, 55, 73, 80, 83-87, 89Breast Cancer Semipostal Research (BCR) Stamp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65, 69 Business Environment Assessment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 5, 83Business Mail Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18, 81Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3, 32, 66, 72, 76, 81, 82, 85, 92, 100, 101, 105, 106Celebrate The Century . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Collection Box Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51, 63Collective Bargaining . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 12, 15, 84Combined Federal Campaign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Compensation and Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 15, 65, 66, 84Customer Notification Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60Corporate Call Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35, 87Cost Reduction Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83, 86Customer Advisory Councils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Customer Satisfaction Measurement (CSM) . . . . . . . . . . . . . . . . . . . 1, 36, 42, 52, 74, 76, 84, 90, 96, 98Database Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59Dedicated Air Tracking (DATS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50Delivery Unit Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Delivery Point Sequencing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Delivery Operations Information System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7-11, 14, 19, 31, 78, 79, 84, 88, 94, 100Equal Employment Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 8, 13, 88Employee Assistance Program (EAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 20, 79, 84Employee Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 14, 16, 17, 84Energy Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 18, 23, 25-28, 39, 40, 69, 84Executives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 8, 12, 14, 15, 19, 98Expedited/Package Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15, 16, 18, 22, 65-66, 83-85Facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 6, 12, 16, 20, 23-29, 33, 36, 48-52, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54, 58, 59, 67, 81, 84, 87, 93, 99Field Retail Operations Pilot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Flat Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32, 48-50Flexible Spending Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Forwarding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38, 46, 47, 59, 61, 62, 84Health Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Hispanic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-10Information Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58Injury Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Integrated Processing Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48-49International Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43, 44, 77, 84, 90, 92, 95, 96Leave Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Letter Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35, 44, 45, 47-49Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Licensing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 41, 54Mail Recovery Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Mail Transport Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24, 29Mailers’ Technical Advisory Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61Mail Volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4, 6, 33, 40-43, 50, 64, 66, 67, 71, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73, 77, 80, 83, 87, 89, 92, 96, 101


Index|2000 Comprehensive Statement on Postal Operations|107

Management Associations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 20, 21Material Handling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49-50Mobile Data Collection Device . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51Move Validation Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61Mail Cartridge System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47-50Merit Performance Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19MERLIN (Mailing Evaluation Readability and Lookup INstrument) . . . . . . . . . . . . . . . . . . . . . 3, 47, 55 Mobile Data Collection Device. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Nonbargaining Unit Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Office of Inspector General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3, 85-88, 94Omnibus Rate Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 6, 22, 31, 33, 34, 36-38, 41, 43, 47, 48, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50-51, 55, 75-76, 80, 86, 90, 95-96, 105PC Postage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Plan for Retail Operations Performance (PROP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52Point-Of-Service One (POS ONE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 52Postage Meters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53, 54Postal Career Executive Service (PCES) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 13-15, 76, 100, 105Postal Inspection Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 86-87Priority Mail Global Guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37, 43Production. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 35, 39, 47-49, 55, 67Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4, 6-7, 29-30, 39, 48, 53, 57, 65, 68, 76-77,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79-81, 84, 86, 88-89, 90, 92, 94, 100-102, 104-106Purchasing Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Realty Asset Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-29Recognition Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7REDRESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 14, 78, 76, 79, 84, 90, 92-93, 98, 105Remote Encoding Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46Restored Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101Retail Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51, 84Retirement Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 4, 6, 7, 17-19, 21-22, 28, 31-34, 38-44,

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51-55, 65, 68, 71-72, 74, 76-77, 80-89, 92, 100Safety and Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 24, 25, 28. 79, 99Self Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52, 54-55, 58, 81Self-Service Vending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56Service Performance Measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42, 84Sexual Harassment Prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Staffing and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58Stamp Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39-40Supplier Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-11, 31Strategic Nat’l Automated Purchasing System (SNAPS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Succession Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 7, 9, 14, 79 Supply Chain Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 29-32, 81Supplier Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 11Thrift Savings Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-7, 10-12, 14, 17-21, 26, 31, 36, 38-39, 52, 54, 59,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69, 74, 76, 78-79, 81, 84, 90, 93, 95-96, 98, 104-105

Transit Time Measurement System (TTMS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42, 84, 94-95Transportation Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23, 65Tray Management System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47-48, 88Unions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 11-13, 15, 2-21, 44USPSPriorityMail.com . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 6, 17-18, 23-27, 30, 33, 35-36, 39, 48, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50, 62, 65, 78, 85, 90, 94, 99, 105Vending Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Veteran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 9Web-Based . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-18, 31-32, 57-59, 63, 81Workforce Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52Workers’ Compensation Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65Workplace Environment Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 79, 884Youth Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26, 40
