Background

The U.S. Postal Service uses workshare discounts to increase its operational efficiencies. It offers these discounts to mailers for mail preparation and distribution activities it would otherwise have to perform. The Postal Regulatory Commission approves the discounts. The Postal Accountability and Enhancement Act of 2006 states that workshare discounts should not exceed the costs the Postal Service avoids when mailers perform these preparation and distribution activities. For the Postal Service to realize the full benefits of workshare discounts, worksharing must align with its mail processing operations.

Our objective was to review workshare discounts related to automated mail processing to identify those that may no longer be valuable to the Postal Service. We also reviewed opportunities for new workshare discounts to encourage network efficiency.

What The OIG Found

Some workshare discounts for automated mail processing no longer benefit the Postal Service’s processing network. Recent changes to the network offer an opportunity to re-evaluate discounted rates and potentially add new workshare discounts.  Specifically, we identified workshare discounts for sorting mail into carrier route delivery point sequencing that duplicate Postal Service functions. As a result, we estimate a revenue difference of $438 million annually for mail volume that was processed in the same manner but received different rates.  We also identified obsolete or unnecessary discounts and product prices that could be eliminated. Specifically, unnecessary workshare discounts exist in the current Flats Sequencing System pricing schedule. This may add complexity to the pricing structure that could deter mailers from establishing or expanding relationships with the Postal Service.

There may be opportunities for new workshare discounts that reflect current network operations. For example, mailers suggested the Postal Service could consider discounts to encourage increased participation in the Seamless Acceptance program. This program automates bulk mail acceptance and verification using data provided by mailers and gathered during mail processing. Increased participation may reduce costs associated with mail verification by business mail entry unit personnel.  The Postal Service could lose opportunities to grow revenue, partner with mailers, and gain operational efficiencies if it does not update workshare discounts periodically to reflect current network operations.

What The OIG Recommended

We recommended management work with the Postal Regulatory Commission to periodically review existing workshare discounts for opportunities to eliminate obsolete discounts. We also recommended management periodically evaluate potential workshare discounts and add those where opportunities for greater efficiency exist.

Source: USPS Office of Inspector General