This report responds to an August 7, 2020, congressional request regarding concerns that Postmaster General Louis DeJoy’s modifications to U.S. Postal Service staffing and policies had an adverse effect on Postal Service operations, leading to slower and less reliable mail delivery. This report also responds to a number of recent similar congressional requests. We are issuing a separate report to the Postmaster General which details these issues with recommendations for corrective action.
Our objective was to address specific concerns related to Postal Service changes put in place after the Postmaster General was sworn in on June 15, 2020, and their effect on operations; whether the changes comply with internal policies and legal requirements and sufficient notice was provided to Congress and customers; and whether the Postmaster General complied with ethical requirements.
The Postal Service is required to fulfill its universal service obligation and meet other statutory obligations in a self-sufficient manner by covering its costs through revenue generated from the sale of its products and services. Since 2007, the Postal Service has experienced sizeable financial losses, resulting from a combination of legislative and economic factors, as well as the shift in consumer and business behavior toward digital correspondence, transactions, and advertising. In its 2020 Integrated Financial Plan, the Postal Service projected a net loss of $7.6 billion for fiscal year (FY) 2020.
Unexpected at the time of these projections was the global novel coronavirus (COVID-19) disease outbreak. The effects of this pandemic are still being felt across the country and its impact on the Postal Service continues to be significant. While the Postal Service experienced a sizeable increase in package volume in the initial months following the emergency declaration, letter and flat mail volume has declined by up to 20 percent since the pandemic began in March 2020.
As we have noted in a series of reports, the Postal Service has struggled in recent years to meet mail service performance standards, which it measures based on mail speed and reliability. In FY 2019, it met annual performance targets for only seven of 22 mail products (32 percent). Our recent reports have also noted that the Postal Service has numerous opportunities for greater efficiencies and cost savings.
On May 6, 2020, the Postal Service’s Board of Governors announced its selection of Louis DeJoy to serve as the 75th Postmaster General. In his remarks at an August 7, 2020, Board of Governors meeting, Mr. DeJoy announced implementation of an organizational realignment and noted that the Postal Service’s financial position was dire, stemming from substantial declines in mail volume, a broken business model, and a management strategy that has not adequately addressed these issues. Given the current situation, he noted it was critical that the Postal Service review operations and make necessary adjustments.
In June and July 2020, Postal Service operations executives initiated various significant cost reduction strategies on top of three initiatives the Postmaster General launched to achieve financial targets. No analysis of the service impacts of these various changes was conducted and documentation and guidance to the field for these strategies was very limited and almost exclusively oral. The resulting confusion and inconsistency in operations at postal facilities compounded the significant negative service impacts across the country.
Although the Postal Service followed applicable legal and policy requirements regarding notification of the Postal Regulatory Commission (PRC), these requirements are limited. We also found that documentation of the operational changes provided to Congress and customers was generally accurate but incomplete. Information the OIG reviewed to date indicates that Mr. DeJoy has met the ethics requirements related to disclosure, recusal, and divestment.