USPS OIG Management Advisory: MODS Flat Mail Exceptions

The U.S. Postal Service initially deployed the Management Operating Data System (MODS) to collect data to evaluate plant efficiency. The Postal Service uses MODS data to assign labor costs to Postal Service products and to calculate productivities for plant operations.

New employees are initially assigned a labor code that assigns workhours to a default MODS operation number. At each MODS facility employees should be assigned a MODS base operation number to replace the default operation number. If base operation numbers are not given, workhours can be incorrectly assigned to the default operation number. MODS Operation 179 is the default for the manual processing of letters, flats, parcels, and Priority Mail. In addition to workhours, mail volume recorded in Operation 179 is automatically credited from automated flat operations; therefore, workhours should have corresponding mail volume.

The Postal Accountability and Enhancement Act of 2006 requires Postal Service products to cover their attributable costs. Some MODS-based productivities are also used in Postal Service cost avoidance models.

Our objective was to determine whether Postal Service facilities are accurately reporting MODS Operation 179 workhours and mail volume.

What the OIG Found
MODS Operation 179 workhours and mail volume are not being accurately reported. For fiscal years (FY) 2013–2014 we found errors in MODS Operation 179 related to workhours recorded without corresponding mail volume and mail volume without associated workhours.

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Workhour errors occurred because management did not assign base operation numbers; therefore, workhours defaulted to MODS Operation 179. Mail volume errors occurred because MODS Operation 179 automatic credits were not updated to reflect current plant operations. Plants no longer performed MODS Operation 179 activities, but mail volume continued to be automatically credited. A recent pilot study in Birmingham, AL, reduced MODS errors from 58 percent to 2 percent. We believe the lessons learned from this study are applicable nationwide.

Additionally, Network Operations issues a weekly exception report that highlights locations with the highest number of MODS operation errors in an effort to identify those facilities with error rates generally greater than 50 percent. A lower, target threshold to highlight errors in the MODS exception report may reduce the number of default operation workhour errors.

MODS errors can impact the allocation of Postal Service labor costs to products and MODS-based productivity calculations used for evaluating plant operations. Further, if workhours inaccurately reported in Operation 179 should have been reported in a worksharing related operation, there could be an inaccuracy for some worksharing discounts. For all manual flat mail operations, $316 million in labor costs were accrued and $310 million were attributed to mail products. We identified $51.6 million of those accrued costs as at risk for cost misallocation in FYs 2013 and 2014.

What the OIG Recommended
We recommended the vice president, Network Operations, direct the manager, Processing Operations, to implement the processes and controls established in the Birmingham, AL, pilot program nationwide; ensure facilities are assigning base operation numbers to employees to replace default operation numbers initially assigned; and in the interim, establish a target threshold for highlighting default operation number exceptions to be included in the MODS exception report.

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Source: Management Advisory – Management Operating Data System Flat Mail Exceptions | USPS Office of Inspector General

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