Report: Postal Service mismanaging e-commerce efforts

The Postal Service's ability to harness the power of the Internet is being hampered by mismanagement, according to the General Accounting Office. In a new report, "U.S. Postal Service: Update on E-Commerce Activities and Privacy Protections," (GAO-02-79) GAO argued that the Postal Service has not met its expectations for e-commerce programs, such as electronic bill payment and online stamp sales. The Postal Service expected to generate $104 million from e-commerce initiatives last year. According to data provided to GAO, e-commerce initiatives generated less 1 percent of that in actual revenue. "USPS continues to have difficulty defining, identifying and classifying its Internet-related initiatives, including e-commerce initiatives. Additionally, inconsistency remains in the implementation of its processes and controls for developing, approving and monitoring the performance of e-commerce initiatives," the report said. The report also criticized the Postal Service for failing to provide complete, accurate and consistent financial information on e-commerce and Internet-related activities. GAO levied similar complaints in a September 2000 report. "In our opinion, a major factor contributing to USPS' limited progress in this area has been its management approach," the report stated. "Overall, the management of USPS' e-commerce program has been fragmented, and implementation of e-commerce initiatives has been inconsistent across the various business units involved in these activities." By contrast, GAO reported that the Postal Service has taken aggressive steps to put in place a privacy program for its e-commerce initiatives. GAO did not review the actual privacy practices. "USPS has created a focused privacy program headed by a chief privacy officer and reportedly has developed privacy policies and practices for its e-commerce customers that exceed those required by federal law," GAO noted. That is no small task, given the complex web of laws USPS must comply with. The agency must contend with a slew of laws directed at both federal agencies and private-sector companies. In a written response to GAO's new recent report, Deputy Postmaster General John Nolan said the agency is taking significant steps to improve e-commerce programs. He pointed out that the Postal Service embarked on a restructuring effort last September that brought all marketing units-including e-commerce-under one division. The restructuring will increase management oversight, program discipline and financial control, Nolan said. Additionally, Nolan refuted GAO's claim that it has difficulty defining e-commerce initiatives. USPS defines e-commerce as "those products and services that require the Internet for the customer to do business with the Postal Service and whose primary objective is to generate new revenue." GAO recommended that the Postal Service develop a comprehensive set of policies to collect data on its e-commerce efforts. The report also suggested that USPS report annually on the performance of all of its new products and services.