In addition to its revenue-generation initiatives, USPS will need to continue making significant reductions in its workforce and network costs, GAO told the House federal workforce subcommittee recently.
The Postal Service recently signed an agreement with two large postal unions to offer buyouts, hoping to save $500 million in labor-related costs. It has also consolidated facilities and reduced work hours.
However, in fiscal 2009 it was unable to cut costs fast enough to offset declining mail volume and revenues resulting from the economic downturn and changing mail use. It projects annual deficits over $7 billion in fiscal 2010 and 2011, as well as continuing large cash shortfalls.
USPS urgently needs to restructure to address its current and long-term financial viability, as well as use its flexibility to generate revenue through new or enhanced products, according to GAO-10-191T.
However, GAO also noted that allowing the Postal Service to compete more broadly with the private sector could lose money, adding that fair competition issues would need to be considered.
While the 2006 Postal Accountability and Enhancement Act gave USPS more flexibility to set prices, test new postal products, and retain earnings, revenue-generation actions since that law was enacted pale in comparison to its deficits, GAO said.
