Postal Service rapped on e-commerce

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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 eBillPay,

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 USPS' 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 $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.

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