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Chapter 4
2005 Performance Report and Preliminary
2007 Annual Performance Plan

Government Performance and Results Act Requirements

The Government Performance and Results Act (GPRA) requires that the Postal Service:

  • Establish strategic goals and objectives.
  • Describe strategies to achieve targets.
  • Set annual improvement targets.
  • Provide performance results.

The Postal Service has four strategic goals and associated objectives that are discussed in the following sections and detailed in its Strategic Transformation Plan 2006 — 2010:2 generate revenue; reduce costs; achieve results with a customer-focused, performance-based culture; and improve service.

1. Generate Revenue: Total National Revenue

The Postal Service must rely on the sales of its mail services to customers in competitive markets to generate the revenue necessary to support the natural growth of the universal delivery network at a rate of approximately two million new delivery points annually. Much like a utility, the price of postal products is set to cover costs. Unlike most other federal government agencies, taxpayer dollars do not fund Postal Service operations. Future improvements in volume growth and total national revenue generation depend on the health of the economy, competitor initiatives, Postal Service initiatives, and congressional action on pending legislation.

5-YEAR TREND FROM 2001 – 2005 AND GOALS FOR 2005 – 2007

Economic trends and the timing of postage rate increases affect the revenue requirement on an annual basis. Postage rates have not increased since mid-2002, despite a turbulent economy that included increases in fuel costs, significant natural disasters that generated extra workload and replacement costs, and continuing initiatives by competitors that seek to make their products more attractive.

2The Strategic Transformation Plan 2006—2010 describes the strategic goals, objectives, and strategies to meet those goals. The Plan also describes in detail the related indicators and measurement systems for performance results. The 2006 Annual Performance Plan is a part of the Strategic Transformation Plan 2006—2010 and will be updated annually. It can be found on

Table 4-1 National Total Revenue to Plan Performance
($ millions)
2001 Actual 2002 Actual 2003 Actual 2004 Actual 2005 Actual 2005 Target 2006 Target 2007 Preliminary
Total Revenue
65,869 66,688 68,764 69,029 69,993 Positive Plan 72,340 Based on 2006
Percent to Plan
97.0 96.9 97.6 100.2 102.4 Positive Plan Positive Plan Based on 2006

Source: Annual reports and operating statistics.

From 2003 to 2005, the Postal Service benefited from Public Law (P.L.) 108–18, which adjusted overpayments to the Civil Service Retirement Fund. However, the benefit from this law has ended as P.L. 108–18 requires the "savings" from this legislation be placed into escrow starting in 2006.
In April 2005, the Board approved filing an omnibus rate case with the Postal Rate Commission, in which the revenue requirement was based solely on the ability to make the payment into the escrow account. On November 15, the Governors accepted the PRC’s decision and implementation was set for January 8, 2006. All rate requests were filed with the PRC according to their rules and regulations. Please refer to the PRC’s Web site at for additional detail.

As the Postal Service becomes more customer-focused, it has developed additional customer and market data systems. The Postal Service intends to supplement its current revenue indicator, and different options will be examined and tested over the next several years.

2. Reduce Costs: Total Factor Productivity

While generating sufficient revenues to cover costs, the Postal Service is also expected to provide service as efficiently as possible in order to sustain reasonable prices to customers. The Postal Service has adopted Total Factor Productivity (TFP) as an indicator of its efficiency. This comprehensive measure is similar to the Multifactor Productivity index used by the U.S. Department of Labor.

TFP is a ratio of the workload to resources used and is impacted by many factors in the economy, including the growth in delivery points. As such, the gains in efficiency can be volatile year to year. The trend in Postal productivity shows continued improvement in each of the last 6 years, resulting in significant cost savings. As a result of these efficiencies and the Civil Service Retirement System cost reductions from P. L. 108–18, postage rates were last increased in mid-2002 and will not be increased until January, 2006.


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