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GAO discussed the operational performance of the U.S. Postal Service (USPS) during fiscal year (FY) 1990 and the outlook for FY 1991. GAO noted that: (1) the extent of the tradeoff between reduced service and increased productivity in 1990 was not clear; (2) field officials cited several reasons for the service decline in 1990, including significant pressure on managers to improve productivity; (3) responding to budget cuts, managers tried to process more mail through less labor-intensive automated sorting equipment; (4) some officials reported that several non-budget factors significantly influenced service during 1990, including inclement weather, backlogs, and changes in operating procedures; (5) to meet the Postmaster General's objective of keeping costs below the rate of inflation, productivity levels will need to continue; (6) new USPS and contractor initiatives created to measure and improve performance included the External First-Class Measurement System, the Customer Satisfaction Index Survey, and the Third-Class Mail Analysis System; (7) the results of the 1990 Consumer Service Card Program, which showed a 7-percent increase in customer service concerns, were consistent with other sources showing downward trends in service; (8) even though USPS had several external measurement programs for service improvement, postal managers sought ways to improve service internally; (9) although greater reliance on automation increased productivity, it did not always yield effective mail processing; and (10) about 25 percent of the planned USPS automation was in place.