The short-term financial position of the United States Postal Service is improving based on congressional action, an improving economy, and continued postal financial discipline and productivity improvements.

The Postal Service's five major management challenges are as follows:

The Postal Service is a labor-intensive organization, with one of the largest, most diverse workforces in the nation. The size and scope of its operations is significant.

The Postal Service must provide timely, reliable and accurate delivery services for a variety of products to a growing network of households and businesses, and must provide customers in every community with convenient access to postal products and services.

The universal delivery network continues to expand at a rate of about 1.6 million new deliveries a year. The growth of the number of delivery addresses, coupled with the increased cost of fuel for vehicles and utility costs for facilities, is increasing the cost of operations despite significant improvements in Postal Service productivity. The exponential rise in health benefit costs, coupled with the $27 billion military service pension costs, imposed by Public Law 108-18, cannot be sustained by current postal rates.

The fundamental problem facing the Postal Service is that mail volume is not increasing enough to pay for the increase in costs despite improved postal productivity. The availability of technological substitutes and direct competitors limits the ability of the Postal Service to simply pass on increasing costs through rate increases.

The 30-year old legislative framework of the Postal Service established by the Postal Reorganization Act of 1970 requires adjustment to increase the operational and market flexibility needed to respond to a dynamic, competitive market.

These challenges provide the foundation for the strategic goals, objectives, performance measures, and performance targets for the Postal Service.

This report provides the American public and other stakeholders with information to evaluate the performance targets of the United States Postal Service, based on the requirements of the Government Performance and Results Act of 1993 (GPRA).