Chapter 1 Compliance with Statutory Policies


In 1976 the Postal Service filed its first annual comprehensive statement to comply with an amendment to the 1970 Postal Reorganization Act. The amendment, now codified as Title 39, United States Code (USC), Section 2401 (e), required that a comprehensive statement accompany the annual Postal Service budget submission to Congress. The amendment further required the Postal Service to explain and address (1) the plans, policies, and procedures designed to comply with the statutory mission of the Postal Service; (2) general postal operations, including data on service standards, mail volume, productivity, trends in postal operations, and analyses of the impact of internal and external factors upon the Postal Service; (3) financial information relating to expenditures and obligations incurred; and (4) other matters necessary to ensure that Congress is “fully and currently consulted and informed on postal operations.”

Unlike the annual report of the Postal Service, which has been published since 1789 and which focuses primarily on Postal Service finances, the comprehensive statement summarizes the initiatives, accomplishments, and challenges faced by the Postal Service in the previous year. The comprehensive statements published since 1976 describe how the Postal Service has evolved during that period, the policy decisions that directed the changes, and the factors that influenced those policy decisions.

The format of comprehensive statements has remained consistent since the first publication. Chapter 1 deals with statutory requirements and details how the Postal Service met those requirements for the year. Chapter 2 reviews operational changes, including automation and technological improvements, and explains current products and services. Chapter 3 provides an overview of Postal Service finances for the year. Chapter 4 includes the annual performance report for the preceding year and the annual performance plan for the next year, as required by the Government Performance and Results Act (GPRA).

For policymakers, stakeholders, and members of the general public interested in the Postal Service, the 2006 Comprehensive Statement on Postal Operations and the 2006 Annual Report provide detailed information about what the Postal Service accomplished in 2006. The Strategic Transformation Plan 2006–2010 looks toward the future and describes the organization’s strategic goals and plans for achieving them. Combined, these documents provide a comprehensive overview of the Postal Service. These three documents may be found on the Internet at www.usps. com/about/welcome.htm.

A. Fundamental Service to the People

1. General

The year 2006 was uniquely challenging. The Postal Service implemented a rate change solely to fund a $3 billion escrow account mandated by Public Law 108–18. At the same time, because of rising energy and inflation-triggered employee benefits costs, the organization proposed a rate adjustment to go into effect in 2007.

The Postal Service continued to fulfill its mandate to provide reliable, affordable universal service by delivering a record 213 billion pieces of mail in 2006. It stayed focused on its core business and strategies to promote revenue growth, improve service and productivity, and engage employees to deliver consistent, high-performance. This year the Postal Service took the next step in advancing change by publishing the Strategic Transformation Plan 2006–2010. The Plan builds on the foundation of the 2002 Transformation Plan and continues its momentum: helping ensure the organization can respond to changing customer needs, market and technological developments, and legal requirements. The Postal Service pledged to continue its commitment to take $1 billion out of the cost base each year through 2010.

For the first time since 2002, the Postal Service proposed a price adjustment to cover growth in operational costs. As one of the nation’s largest transportation and delivery organizations, the Postal Service is extremely sensitive to rising energy costs. Postal Service costs go up $8 million a year for every 1-cent increase in a gallon of gasoline. Like other businesses, the Postal Service also experienced significant growth in health benefit payments. The addition of more than 1.8 million new addresses also increased cost pressures. The price adjustment proposal included a 3-cent increase in the price of a First-Class Mail stamp, pricing incentives based on shape, and the introduction of a “forever stamp,” which would be good for any future single-piece First-Class Mail letter. The annual effect of the price adjustment proposal is well below $6 for the average household. Mail remains a great bargain.

The Postal Service continued improvements to produce better, more consistent service. The Postal Service delivers 50% more mail than it did 20 years ago, with the same number of employees. The Postal Service completed the deployment of its first Automated Package Processing System machines, which can process parcels and bundles of mail at more than 9,500 pieces per hour. A ground-breaking Intelligent Mail barcode, named for its four vertical bar types, was introduced. It provides mailers with a powerful new business tool and helps the Postal Service process letters and larger flat-shaped pieces more efficiently. A new scanning system provides real-time visibility for mail as it moves through the surface transportation network. Planning and preparation continued for a Flats Sequencing System that will allow the sequencing of larger mailpieces in the order of delivery.

Consumers benefited from the standardization of messaging and merchandise in retail locations, making it easier to find the right services for their shipping and mailing needs. Extended retail hours came to more than 1,400 postal locations, providing greater access and convenience. The Postal Service continued to improve the value of its products by introducing new features like the Priority Mail shoe box and additional Customized