U.S. Postal Service

The Postal Service derived almost half ($23 billion) of its total mail revenue from bulk business mail in fiscal year 1994. Mailers compute the postage owed on each bulk business mailing. To guard against accepting improperly prepared mailings, Postal Service clerks are supposed to verify the accuracy of bulk business mailings. Because of weak controls for accepting bulk business mail, however, the Postal Service cannot be sure that significant amounts of postal revenue due are received when mailers claim presort/barcode discounts. The Postal Service took steps in 1989 and 1990 to manage its bulk mail acceptance system more effectively. However, the system deteriorated after a 1992 reorganization. With an estimated $8 billion in discounts allowed in fiscal year 1994, and larger amounts expected as the Postal Service reclassifies its postage rates and moves closer to full automation in 1997, sustained top-level management attention is needed to establish and maintain adequate controls over bulk business mail acceptance. Recently, the Postal Service launched several initiatives to improve the bulk business mail acceptance system. Although it is too soon to know whether these initiatives will correct the Postal Service's internal control problems, GAO believes that if they are implemented as planned and monitored appropriately, the initiatives can improve bulk mail acceptance operations.

GAO found that during fiscal year 1994: (1) 40 percent of required bulk mail verifications were not performed and postal supervisors did less than 50 percent of required follow-up verifications; (2) rejected mailings were resubmitted and accepted into the mail stream without proper corrections or postage; (3) mail acceptance clerks were not given adequate tools to determine whether increasing volumes of mailer-applied barcodes met USPS standards; and (4) postal management was unable to make informed decisions concerning the adequacy of bulk mail acceptance controls or determine the amount of revenue lost through improperly prepared mailings. GAO also found that: (1) USPS needs to determine the management strategy and financial investment necessary to minimize revenue loss; (2) the random method of selecting bulk business mailings for in-depth verification may not result in the best use of available staff; (3) USPS could better target its verification efforts based on risk by considering such factors as mailer histories and the postage value of mailings; (4) postal managers are developing a bulk business mail acceptance system, updating acceptance handbooks, acquiring barcoding verification equipment, and requesting field units to submit verification reports; and (5) USPS is also exploring a new risk-based approach for in-depth verification, improving revenue controls, and planning to install its new bulk mail system by 1997.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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