Postal Service

Remote barcoding is a process in which barcodes are added to addresses on the mail that cannot be read by the Postal Service's automated mail processing equipment. Images of these pieces of mail are sent over telephone line to off-site locations whether operators read and key in enough address information to allow the equipment to produce a barcode. The Service began remote barcoding in 1991 at two test sites run by contractors. Following a July 1991 decision to contract out all remote barcoding, the Service established 17 more contractor-operated remote keying sites serving 25 postal facilities. This report compares the direct costs to the Service of contracting out for remote barcoding versus having the work done by postal employees. GAO also identifies various advantages and disadvantages of using postal workers rather than contractors for these services.

GAO found that: (1) in-house barcoding would cost an estimated 6 percent more than using contractors, based on a mix of 89 percent transitional and 11 percent career employee workhours; (2) the cost differential is expected to increase to 14 percent annually to process 23 billion letters, based on an union agreement of 70 percent transitional and 30 percent career employee workhours; (3) if transitional employees receive benefits similar to career employees, as the union has requested, the cost differential would increase to 28 percent or $174 million annually; (4) using postal employees for barcoding would result in improved relations with the union; and (5) the postal union believes that using postal employees for barcoding provides the opportunity for the Postal Service and the union to cooperate in establishing and operating remote barcoding sites.