Postal Service Rapped on E-Commerce

The U.S. Postal Service's e-commerce activities may be in their infancy, but they face an uphill battle to meet the standards of federal watchdogs, according to testimony presented at a Senate hearing Thursday.

The agency's e-commerce activities, including Stamps Online and ePayments, suffer from three main problems, according to the testimony of Bernard Ungar, director of the General Accounting Office's government business operations issues:

* Inconsistent definitions of e-commerce.

* Not adhering to formal project approval requirements and not properly documenting those that are approved.

* Inconsistent financial reporting for cost and revenue data.

Ungar presented the GAO report, "U.S. Postal Service: Postal Activities and Laws Related to Electronic Commerce," to the Senate Governmental Affairs Committee's International Security, Proliferation and Federal Services Subcommittee.

To ensure more effective management and oversight, GAO recommended that the Postmaster General enact these moves to counter the e-commerce problems:

* Properly identify e-commerce programs and maintain accurate information related to their status.

* Follow processes and controls for developing and approving the activities.

* Provide complete data on costs and revenues for the financial data on these activities.

"We embrace the GAO recommendations," said John Nolan, deputy postmaster general, adding that the agency's definition of e-commerce is "anything that requires the Internet and gets revenue through either user charges or license fees."

Nolan said USPS has already begun to address the GAO's concerns, including instituting a new approval process for e-commerce activities that will provide quarterly status reports to its Board of Governors.

"It is difficult to assess the effectiveness of the Postal Service's e-commerce initiatives thus far," said Robert Rider, vice chairman of the Board of Governors. "It is also hard to establish meaningful benchmarks in an industry that is in its infancy. Nevertheless, management has proven its ability in other challenging modernization efforts, and the board expects no less in this challenging arena."

But some at the hearing questioned whether USPS should be in the e-commerce business at all. Edward Gleiman, chairman of the Postal Rate Commission, said the bottom-line issue is whether the agency's e-commerce products can be relied on to produce revenue.

"All things considered, I would have to say the signs are not encouraging," Gleiman said, noting that a market test of the Mailing Online service that guaranteed a printing contractor a minimum revenue of US$325,000 only produced about $23,000.

"Pursuit of e-commerce for its own sake may only serve to distract postal management, and divert resources, from the critical demands of performing its public mission," Gleiman said.