Objective

The Postal Service develops a range of financial projections as part of its financial planning. A financial projection is an estimate or forecast of a future situation or trend based on a study of present and historical trends. The main projection the Postal Service completes is the annual financial plan, which estimates revenue, volume, and expenses for each fiscal year. The fiscal year (FY) 2020 plan was approved by the U.S. Postal Service Board of Governors in February 2020.

On March 13, 2020, the President of the United States issued the national emergency declaration concerning the COVID-19 pandemic (pandemic). During the ongoing pandemic, the Postal Service has provided essential services as part of the nation’s critical infrastructure by continuously processing and delivering mail and packages. The pandemic continues to have an unpredictable impact on the economy, the Postal Service, and Postal Service finances.

Our objective was to evaluate the reasonableness of the Postal Service’s projected financial scenarios as a result of the impact of the pandemic.

Findings

In efforts to expeditiously respond to pandemic financial projection requests from Congress, Postal Service management did not always document processes or save supporting materials used for assumptions, inputs, and calculations. For example, management was unable to provide a documented methodology for how they determine volume projections. Further, management could not calculate any of the projected scenarios using existing models because they did not have enough historical data to reflect the economic impacts of the pandemic. Therefore, to project the impact of the pandemic, management relied on a large degree of professional judgment.

While we agree that the decision to use professional judgement as described by Postal Service management was reasonable, we were unable to assess the reasonableness of the projected scenarios because documentation or a thorough explanation for key components of the methodology were not always provided or available for our review.

Although the full impact of the pandemic could not be accurately estimated by any agency, documenting assumptions and methodologies used to develop projections is important as the data collected from these events could be helpful in revising future assumptions and analyses, as well as identifying and developing plans for future financial impacts.

Additionally, while the Postal Service’s Emergency Response Checklists suggest that conducting reviews after natural disasters to update plans, procedures, and contacts based on the experience of a particular event is necessary, there is no guidance that outlines what should be evaluated and included as a part of this review and management has not developed a checklist specific to financial or other unanticipated crisis.

Management stated there are no existing statutory or regulatory mandates that require them to conduct or document an After-Action Report (AAR). As the pandemic is still ongoing and continues to have an unpredictable impact on the national economy and the Postal Service, management is unable to develop an AAR at this time. We agree that it would be too early to conduct an AAR at this time but believe that such a study would be valuable once the pandemic subsides. Having an AAR process would allow the Postal Service to develop financial scenarios during the pandemic to determine what decisions did and did not work to support decisions made in the event of a future financial crisis.

Recommendations

We recommended management:

  • Establish a process to document actions taken, such as assumptions and methodologies developed, during significant unanticipated or catastrophic events.
  • Enhance the Postal Service’s ability to respond to future significant, unanticipated events by requiring an AAR to include specific guidance outlining what needs to be examined and included.

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Comments (3)

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  • anon

    Please be safe, however the postal forwarding system might need some clarification regarding what is forwarded and what is not . My order from a Pharmacist was returned because I made change of address notification to the postal service. This has created a confusion?

    Mar 12, 2021
  • anon

    Thank you for the excellent service.

    Feb 24, 2021
  • anon

    I believe that the USPS should consider the fallout and backlash from their recent extreme drop in performance when developing their financial projection. Until recent events, I used the USPS exclusively for shipping. I never considered using any other shipping company and had been a loyal customer and supporter for years. In recent times however, it has been my experience that shipping (locally) via USPS Priority Mail takes an average of 8 days for delivery. This is completely unacceptable to me. It represents a 400% decrease in productivity. It is with deep regret that I have lost all faith in our postal service and now rely on other carriers for shipping. I cannot justify spending money with the USPS when shipping times are that poor and I'm almost certain that I'm not the only one who has had this experience; I feel USPS will lose many customers because of their drastic drop in performance.

    Feb 17, 2021